Cirrus Logic Reports Revenue of $298.6 Million

By: Cirrus Logic, Inc. via Business Wire News Releases

January 28, 2015 at 16:00 PM EST

Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision analog and digital signal processing components, today posted on its investor relations website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2015, which ended Dec. 27, 2014, as well as the company’s current business outlook.

“Q3 was an excellent quarter for Cirrus Logic, as strength in portable audio fueled revenue growth and operating profit expansion,” said Jason Rhode, president and chief executive officer. “We are very excited about the outlook for Cirrus Logic. We expect to deliver year-over-year revenue growth in Q4 and FY16 driven by a continued strong market for our innovative audio and voice products, a compelling lineup of new product introductions, and significantly improved contributions from the Wolfson acquisition.”

Reported Financial Results – Third Quarter FY15

Revenue of $298.6 million;
GAAP gross margin of 43.8 percent and non-GAAP gross margin of 46.2 percent;
GAAP operating expenses of $86.5 million and non-GAAP operating expenses of $70.6 million; and
GAAP diluted earnings per share of $0.35 and non-GAAP diluted earnings per share of $0.97.

A reconciliation of the non-GAAP charges is included in the tables accompanying this press release.

Business Outlook – Fourth Quarter FY15

Revenue is expected to range between $220 million and $240 million;
GAAP gross margin is expected to be between 45 percent and 47 percent; and
Combined R&D and SG&A expenses are expected to range between $88 million and $92 million, which includes approximately $8 million in share-based compensation and $7 million in amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 p.m. EST today to answer questions related to its financial results and business outlook. Participants may listen to the conference call on the Cirrus Logic website. Participants who would like to submit a question to be addressed during the call are requested to email investor.relations@cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (404) 537-3406, or toll-free at (855) 859-2056 (Access Code: 61707935).

Cirrus Logic, Inc.

Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of innovative customers. Building on its diverse analog and signal-processing patent portfolio, Cirrus Logic delivers highly optimized products for a variety of audio, industrial and energy-related applications. The company operates from headquarters in Austin, Texas, with offices in the United States, United Kingdom, Europe, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com.

Use of non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, Cirrus has provided non-GAAP financial information, including gross margins, operating expenses, net income, operating profit and income, and diluted earnings per share. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements, including our estimates of fourth quarter fiscal year 2015 revenue, gross margin, combined research and development and selling, general and administrative expense levels, share-based compensation expense and amortization of acquired intangibles. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions.In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, the following: the level of orders and shipments during the fourth quarter of fiscal year 2015, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; and the risk factors listed in our Form 10-K for the year ended March 29, 2014, and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Cirrus Logic, Cirrus and Wolfson are registered trademarks of Cirrus Logic, Inc. or its subsidiaries. All other company or product names noted herein may be trademarks of their respective holders.

Summary financial data follows:



CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)

	Three Months Ended									Nine Months Ended
	Dec. 27,			Sep. 27,			Dec. 28,			Dec. 27,			Dec. 28,
	2014			2014			2013			2014			2013
	Q3'15			Q2'15			Q3'14			Q3'15			Q3'14
Portable products	$	253,355		$	163,563		$	181,749		$	529,487		$	449,305
Consumer, automotive and other products		45,251			46,651			37,134			131,898			115,374
Net sales		298,606			210,214			218,883			661,385			564,679
Cost of sales		167,775			109,647			115,034			354,612			281,884
Gross profit		130,831			100,567			103,849			306,773			282,795
Gross margin		43.8	%		47.8	%		47.4	%		46.4	%		50.1	%

Research and development		55,474			44,557			32,426			139,808			90,678
Selling, general and administrative		27,783			21,545			18,625			69,011			57,038
Acquisition related costs		3,200			14,937			-			18,137			-
Restructuring and other		-			1,455			12			1,455			(572	)
Patent infringement settlements, net		-			-			-			-			695
Total operating expenses		86,457			82,494			51,063			228,411			147,839

Income from operations		44,374			18,073			52,786			78,362			134,956

Interest income (expense), net		(1,042	)		(2,670	)		222			(4,179	)		581
Other expense		(1,071	)		(11,994	)		(45	)		(12,564	)		(100	)
Income before income taxes		42,261			3,409			52,963			61,619			135,437
Provision for income taxes		19,532			2,557			11,463			27,790			39,928
Net income	$	22,729		$	852		$	41,500		$	33,829		$	95,509

Basic earnings per share:	$	0.36		$	0.01		$	0.66		$	0.54		$	1.51
Diluted earnings per share:	$	0.35		$	0.01		$	0.63		$	0.52		$	1.45

Weighted average number of shares:
Basic		62,885			62,241			62,854			62,386			63,170
Diluted		65,214			65,085			65,368			65,024			65,894

Prepared in accordance with Generally Accepted Accounting Principles

CIRRUS LOGIC, INC.
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share data)
(not prepared in accordance with GAAP)

Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. Certain modifications to prior year non-GAAP presentation has been made and had no material effect on the results of operations.


	Three Months Ended									Nine Months Ended
	Dec. 27,			Sep. 27,			Dec. 28,			Dec. 27,			Dec. 28,
	2014			2014			2013			2014			2013
Net Income Reconciliation	Q3'15			Q2'15			Q3'14			Q3'15			Q3'14
GAAP Net Income	$	22,729		$	852		$	41,500		$	33,829		$	95,509
Amortization of acquisition intangibles		5,151			2,524			275			7,921			275
Stock based compensation expense		7,815			6,496			6,016			19,933			17,529
Provision for litigation expenses and settlements		-			-			-			-			695
Restructuring and other costs, net		-			1,455			12			1,455			(572	)
Wolfson acquisition items		9,903			30,875			-			43,082			-
Provision (benefit) for income taxes		17,714			1,764			10,300			24,704			36,839
Non-GAAP Net Income	$	63,312		$	43,966		$	58,103		$	130,924		$	150,275

Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	0.35		$	0.01		$	0.63		$	0.52		$	1.45
Effect of Amortization of acquisition intangibles		0.08			0.04			-			0.12			-
Effect of Stock based compensation expense		0.12			0.10			0.10			0.31			0.27
Effect of Provision for litigation expenses and settlements		-			-			-			-			0.01
Effect of Restructuring and other costs, net		-			0.03			-			0.02			(0.01	)
Effect of Wolfson acquisition items		0.15			0.47			-			0.66			-
Effect of Provision (benefit) for income taxes		0.27			0.03			0.16			0.38			0.56
Non-GAAP Diluted earnings per share	$	0.97		$	0.68		$	0.89		$	2.01		$	2.28

Operating Income Reconciliation
GAAP Operating Income	$	44,374		$	18,073		$	52,786		$	78,362		$	134,956
GAAP Operating Profit		15	%		9	%		24	%		12	%		24	%
Amortization of acquisition intangibles		5,151			2,524			275			7,921			275
Stock compensation expense - COGS		273			253			332			757			577
Stock compensation expense - R&D		2,904			2,781			2,834			8,228			7,846
Stock compensation expense - SG&A		4,638			3,462			2,850			10,948			9,106
Provision for litigation expenses and settlements		-			-			-			-			695
Restructuring and other costs, net		-			1,455			12			1,455			(572	)
Wolfson acquisition items		9,903			16,547			-			28,642			-
Non-GAAP Operating Income	$	67,243		$	45,095		$	59,089		$	136,313		$	152,883
Non-GAAP Operating Profit		23	%		21	%		27	%		21	%		27	%

Operating Expense Reconciliation
GAAP Operating Expenses	$	86,457		$	82,494		$	51,063		$	228,411		$	147,839
Amortization of acquisition intangibles		(5,151	)		(2,524	)		(275	)		(7,921	)		(275	)
Stock compensation expense - R&D		(2,904	)		(2,781	)		(2,834	)		(8,228	)		(7,846	)
Stock compensation expense - SG&A		(4,638	)		(3,462	)		(2,850	)		(10,948	)		(9,106	)
Provision for litigation expenses and settlements		-			-			-			-			(695	)
Restructuring and other costs, net		-			(1,455	)		(12	)		(1,455	)		572
Wolfson acquisition items		(3,200	)		(14,937	)		-			(20,329	)		-
Non-GAAP Operating Expenses	$	70,564		$	57,335		$	45,092		$	179,530		$	130,489

Gross Margin/Profit Reconciliation
GAAP Gross Margin	$	130,831		$	100,567		$	103,849		$	306,773		$	282,795
GAAP Gross Profit		43.8	%		47.8	%		47.4	%		46.4	%		50.1	%
Wolfson acquisition items		6,703			1,610			-			8,313			-
Stock compensation expense - COGS		273			253			332			757			577
Non-GAAP Gross Margin	$	137,807		$	102,430		$	104,181		$	315,843		$	283,372
Non-GAAP Gross Profit		46.2	%		48.7	%		47.6	%		47.8	%		50.2	%



CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)

	Dec. 27,			Mar. 29,			Dec. 28,
	2014			2014			2013
	(unaudited)						(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	66,607		$	31,850		$	74,690
Marketable securities		106,061			263,417			215,792
Accounts receivable, net		148,386			63,220			109,535
Inventories		73,896			69,743			69,985
Deferred tax asset		14,143			22,024			33,155
Other current assets		27,081			25,079			25,662
Total current Assets		436,174			475,333			528,819

Long-term marketable securities		3,404			89,243			37,115
Property and equipment, net		137,291			103,650			102,542
Intangibles, net		181,675			11,999			13,427
Goodwill		264,879			16,367			16,335
Deferred tax asset		24,991			25,065			17,354
Other assets		16,654			3,087			6,848
Total assets	$	1,065,068		$	724,744		$	722,440

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	77,195		$	51,932		$	60,493
Accrued salaries and benefits		20,164			13,388			13,937
Deferred income		5,417			5,631			4,998
Other accrued liabilities		27,402			11,572			12,881
Total current liabilities		130,178			82,523			92,309

Long-term debt		200,439			-			-
Other long-term liabilities		21,073			4,863			5,108

Stockholders' equity:
Capital stock		1,135,719			1,078,878			1,069,113
Accumulated deficit		(421,514	)		(440,634	)		(443,322	)
Accumulated other comprehensive loss		(827	)		(886	)		(768	)
Total stockholders' equity		713,378			637,358			625,023
Total liabilities and stockholders' equity	$	1,065,068		$	724,744		$	722,440

Prepared in accordance with Generally Accepted Accounting Principles

Contacts:

Cirrus Logic, Inc.
Thurman K. Case, 512-851-4125
Chief Financial Officer
Investor.Relations@cirrus.com