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TheStreet Open House

Cirrus Logic Reports September Quarter Revenue Up 23 Percent Sequentially To $190.7 Million

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 second quarter fiscal year 2014, which ended Sept. 28, as well as the company’s current business outlook.

“Q2 was another great quarter for Cirrus Logic as portable audio continued to be a key driver of our success and we made significant progress on our strategic initiatives,” said Jason Rhode, president and chief executive officer. “We are especially pleased with the addition of Acoustic Technologies to the Cirrus Logic team as they are expected to accelerate our progress toward our vision of being the preferred supplier of signal processing components.”

Reported Financial Results – Second Quarter FY14

  • Revenue of $190.7 million;
  • Gross margin of 52 percent;
  • GAAP operating expenses of $48.8 million and non-GAAP operating expenses of $43.4 million; and
  • GAAP diluted earnings per share of $0.50 and non-GAAP diluted earnings per share of $0.84.




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

Business Outlook – Third Quarter FY14

  • Revenue is expected to range between $200 million and $220 million;
  • 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 $50 million and $54 million, which includes approximately $7 million in share-based compensation and acquisition related items.

Cirrus Logic will host a live Q&A session at 5 p.m. EDT 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: 76914741).

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 and energy-related applications. The company operates from headquarters in Austin, Texas, with offices in Phoenix, Ariz., 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 operating expenses, net income, operating profit 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 third quarter fiscal year 2014 revenue, gross margin, combined research and development and selling, general and administrative expense levels, share-based compensation expense and acquisition related items. 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 third quarter of fiscal year 2014, 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 30, 2013, 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 and Cirrus are trademarks of Cirrus Logic, Inc.

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

Three Months Ended

Six Months Ended

 
Sep. 28, Jun. 29, Sep. 29, Sep. 28, Sep. 29,
2013 2013 2012 2013 2012
Q2'14 Q1'14 Q2'13 Q2'14 Q2'13
Audio products $ 179,912 $ 143,666 $ 177,915 $ 323,578 $ 258,662
Energy products   10,759     11,459     15,859     22,218     34,118  
Net revenue   190,671     155,125     193,774     345,796     292,780  
Cost of sales   91,223     75,627     93,687     166,850     139,253  
Gross Profit 99,448 79,498 100,087 178,946 153,527
Gross Margin 52.2 % 51.2 % 51.7 % 51.7 % 52.4 %
 
Research and development 29,722 28,530 29,468 58,252 54,378
Selling, general and administrative 19,215 19,198 20,194 38,413 38,253
Restructuring and other costs (154 ) (430 ) - (584 ) -
Patent settlements, net   -     695     -     695     -  
Total operating expenses   48,783     47,993     49,662     96,776     92,631  
 
Operating income 50,665 31,505 50,425 82,170 60,896
 
Interest income, net 201 158 131 359 258
Other expense, net   (38 )   (17 )   (40 )   (55 )   (63 )
Income before income taxes 50,828 31,646 50,516 82,474 61,091
Provision for income taxes   17,461     11,004     15,067     28,465     18,715  
Net income $ 33,367   $ 20,642   $ 35,449   $ 54,009   $ 42,376  
 
Basic earnings per share: $ 0.53 $ 0.33 $ 0.55 $ 0.85 $ 0.65
Diluted earnings per share: $ 0.50 $ 0.31 $ 0.51 $ 0.82 $ 0.61
 
Weighted average number of shares:
Basic 63,217 63,363 64,924 63,329 64,697
Diluted 66,125 66,188 69,207 66,203 68,920

 
 

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.

   
Three Months Ended

Six Months Ended

Sep. 28,   Jun. 29,   Sep. 29, Sep. 28,   Sep. 29,
2013 2013 2012 2013 2012
Net Income Reconciliation Q2'14 Q1'14 Q2'13 Q2'14 Q2'13
GAAP Net Income $ 33,367 $ 20,642 $ 35,449 $ 54,009 $ 42,376
Amortization of acquisition intangibles - - 251 - 604
Stock based compensation expense 5,739 5,774 5,563 11,513 9,736
Restructuring and other costs, net (154 ) (430 ) - (584 ) -
Patent settlements, net - 695 - 695 -
Provision for income taxes   16,378     10,161     13,580     26,539     16,935  
Non-GAAP Net Income $ 55,330   $ 36,842   $ 54,843   $ 92,172   $ 69,651  
 
Earnings Per Share Reconciliation
GAAP Diluted earnings per share $ 0.50 $ 0.31 $ 0.51 $ 0.82 $ 0.61
Effect of Amortization of acquisition intangibles - - - - 0.01
Effect of Stock based compensation expense 0.09 0.09 0.08 0.17 0.14
Effect of Restructuring and other costs, net - - - (0.01 ) -
Effect of Patent settlements, net - 0.01 - 0.01 -
Effect of Provision for income taxes   0.25     0.15     0.20     0.40     0.25  
Non-GAAP Diluted earnings per share $ 0.84   $ 0.56   $ 0.79   $ 1.39   $ 1.01  
 
Operating Income Reconciliation
GAAP Operating Income $ 50,665 $ 31,505 $ 50,425 $ 82,170 $ 60,896
GAAP Operating Profit 27 % 20 % 26 % 24 % 21 %
Amortization of acquisition intangibles - - 251 - 604
Stock compensation expense - COGS 239 6 119 245 237
Stock compensation expense - R&D 2,158 2,854 2,097 5,012 4,340
Stock compensation expense - SG&A 3,342 2,914 3,347 6,256 5,159
Restructuring and other costs, net (154 ) (430 ) - (584 ) -
Patent settlements, net   -     695     -     695     -  
Non-GAAP Operating Income $ 56,250   $ 37,544   $ 56,239   $ 93,794   $ 71,236  
Non-GAAP Operating Profit 30 % 24 % 29 % 27 % 24 %
 
Operating Expense Reconciliation
GAAP Operating Expenses $ 48,783 $ 47,993 $ 49,662 $ 96,776 $ 92,631
Amortization of acquisition intangibles - - (251 ) - (604 )
Stock compensation expense - R&D (2,158 ) (2,854 ) (2,097 ) (5,012 ) (4,340 )
Stock compensation expense - SG&A (3,342 ) (2,914 ) (3,347 ) (6,256 ) (5,159 )
Restructuring and other costs, net 154 430 - 584 -
Patent settlements, net   -     (695 )   -     (695 )   -  
Non-GAAP Operating Expenses $ 43,437   $ 41,960   $ 43,967   $ 85,397   $ 82,528  

 
 
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)
  Sep. 28,   Jun. 29,   Mar. 30,   Sep. 29,
2013 2013 2013 2012
(unaudited) (unaudited) (unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 68,886 $ 67,170 $ 66,402 $ 67,846
Marketable securities 199,423 165,540 105,235 66,731
Accounts receivable, net 97,640 63,642 69,289 130,870
Inventories 91,247 110,624 119,300 144,881
Deferred tax asset 38,398 54,774 64,937 53,144
Other current assets   23,978     20,810     19,371     19,845  
Total Current Assets 519,572 482,560 444,534 483,317
 
Long-term marketable securities 40,254 39,408 64,910 -
Property and equipment, net 101,885 99,169 100,623 86,992
Intangibles, net 4,734 4,714 4,650 5,208
Goodwill 6,027 6,027 6,027 6,027
Deferred tax asset 16,638 16,732 16,671 72,150
Other assets   10,051     11,289     13,932     21,402  
Total Assets $ 699,161   $ 659,899   $ 651,347   $ 675,096  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 56,868 $ 47,341 $ 60,827 $ 103,366
Accrued salaries and benefits 16,894 13,476 16,592 15,594
Other accrued liabilities 6,313 9,532 10,704 14,218
Deferred income on shipments to distributors   4,858     4,419     4,956     6,580  
Total Current Liabilities 84,933 74,768 93,079 139,758
 
Other long-term obligations 11,231 9,706 10,094 10,042
 
Stockholders' equity:
Capital stock 1,055,256 1,048,497 1,041,834 1,025,272
Accumulated deficit (451,532 ) (472,180 ) (492,741 ) (499,233 )
Accumulated other comprehensive loss   (727 )   (892 )   (919 )   (743 )
Total Stockholders' Equity   602,997     575,425     548,174     525,296  
Total Liabilities and Stockholders' Equity $ 699,161   $ 659,899   $ 651,347   $ 675,096  
 
Prepared in accordance with Generally Accepted Accounting Principles




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