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FORM 8-K
CURRENT REPORT
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report July 19, 1999
CIRRUS LOGIC, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 0-17795 77-0024818
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
3100 West Warren Avenue, Fremont, CA 94538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 623-8300
- -------------------------------------------------------------
(Former name or former address, if changed since last report)
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CIRRUS LOGIC, INC.
INDEX
Page
Item 2. Acquisition or Disposition of Assets 3
Item 7. Financial Statements and Exhibits 4
Signatures 4
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Item 2. Acquisition or Disposition of Assets
Disposition of the Company's Interest in the MiCRUS Joint Venture
During June of 1999 Cirrus Logic, Inc. (the "Company" or the "Registrant")
signed a Restructuring Agreement with International Business Machines
Corporation ("IBM") to divest the Company's interest in one of the Company's
manufacturing joint ventures, MiCRUS.
On July 19, 1999, the closing date, the Company was required to pay $135 million
in cash to IBM and to transfer to IBM shares of common stock of the Company
valued at $32 million. The Company also transferred to IBM the Company's
partnership interest and certain assets relating to the partnership's operation,
and will forgive certain debts owed to the Company by IBM and/or MiCRUS relating
to the use of certain assets prior to the closing date.
In exchange for this consideration, IBM will release the Company of its
obligations to support the partnership and to maintain certain lease payment
guarantees issued jointly and severally with IBM. IBM will be responsible for
the costs associated with winding down the partnership, including costs
associated with employee terminations and the dismantling of equipment, except
costs incurred by the partnership prior to the closing date. The Company also
committed to an amended wafer purchase agreement.
The Company agreed to use its best efforts to file an effective shelf
registration statement with the U.S. Securities & Exchange Commission listing
IBM as a selling shareholder such that IBM may sell the transferred Cirrus
Logic, Inc. shares in the future. Additionally, the Company guaranteed to IBM
the value of the transferred shares in the event that the Company is unable to
complete an effective registration statement or to the extent that IBM realizes
losses in the market value of the transferred shares pending closure of this
transaction. IBM will split with the Company any share appreciation in excess of
the guaranteed value up to a maximum of $48 million.
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Item 7. Financial Statements and Exhibits
b) Pro Forma Financial Information*
c) Restructuring Agreement among Cirrus Logic, Inc., International
Business Machines Corporation, Cirel Inc., Micrus Holdings Inc.,
and Micrus *
* Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Cirrus Logic, Inc.
July 30, 1999
Date /s/ GLENN C. JONES
Glenn C. Jones
Vice President, Chief
Financial Officer,
Treasurer and Secretary
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Cirrus Logic Unaudited Pro-Forma Condensed Consolidated Financial Statements
The following unaudited pro forma consolidated balance sheet at March 27, 1999
gives effect to the estimated financial impact of the MiCRUS Joint Venture
Restructuring Agreement (the "Agreement") with IBM. The pro forma consolidated
balance sheet as of March 27, 1999, gives pro forma effect to the Agreement as
if such transactions were consummated on that date. The Company has not
presented a pro forma statement of operations for any period as it believes that
any recurring adjustments, which primarily arise from the revised wafer purchase
commitment, will occur subsequent to the disposition of the equity investment in
MiCRUS and will be based on the level of future wafer purchases and are not
currently factually supportable.
The Unaudited Pro Forma Condensed Consolidated Pro Forma Financial Statements
should be read in conjunction with the audited consolidated financial statements
and notes thereto that are included in the Company's Form 10-K filed with the
Securities and Exchange Commission on June 14, 1999. The Unaudited Consolidated
Pro Forma Financial Statements have been prepared by Cirrus Logic management and
are not necessarily indicative of the presentation of the Company's balance
sheet or results of operations for any future period.
March 27, 1999
-----------------------------------------
Cirrus Pro Forma Cirrus
Historical Adjustments Pro Forma
--------- --------- ---------
Balance Sheet Data (in thousands):
Current assets:
Cash and cash equivalents $ 144,457 $(135,000) A 9,457
Restricted cash 86,277 -- 86,277
Short-term investments 74,616 -- 74,616
Accounts receivable, net 66,063 -- 66,063
Inventories 40,262 -- 40,262
Other current assets 19,039 -- 19,039
--------- --------- ---------
Total current assets 430,714 (135,000) 295,714
Property & equipment, net 48,024 -- 48,024
Investment in joint venture 14,000 -- 14,000
Deposits & other assets 39,892 -- 39,892
--------- --------- ---------
$ 532,630 $(135,000) 397,630
========= ========= =========
Liabilities & Net Capital Deficiency:
Current liabilities:
Accounts payable and other accrued
liabilities $ 193,309 $ (18,069) A $ 175,240
Accrued salaries and benefits 13,724 -- 13,724
Current maturities of long-term
debt and capital lease obligations 23,076 -- 23,076
Income taxes payable 36,593 -- 36,593
--------- --------- ---------
Total current liabilities 266,702 -- 248,633
Capital lease obligations
and long term debt 14,417 -- 14,417
Other long-term obligations 9,231 -- 46,031
Convertible subordinated notes 300,000 -- 300,000
Net capital deficiency (57,720) (116,931) A (174,651)
--------- --------- ---------
$ 532,630 (135,000) $ 397,630
========= ========= =========
Notes to Unaudited Pro-Forma Condensed Consolidated Financial Data
(A) The Agreement requires the Company to pay $135 million in cash to IBM and
issue into an escrow account shares of the Company's common stock with a
fair value (based on the average closing price of the Company's common
stock for the 20 days prior to closing) of $32 million. Under the escrow
arrangement, the escrow period ends on April 1, 2000, wherein some or all
of the shares will be released to IBM. If the fair value of the shares on
April 1, 2000 is less than $32 million, Cirrus must pay the difference to
IBM in cash. If the fair value of the shares exceeds $32 million, shares
equal to one-half of the excess over $32 million are returned to the
Company and the remaining shares are released to IBM.
During the six month period following April 1, 2000, IBM may sell on the
open market the Cirrus stock it received. If at the end of the six month
period on October 1, 2000, IBM has sold at least 15% of the Cirrus stock,
it can require Cirrus to purchase the remaining shares for cash such that
the total received by IBM, including the amounts IBM received in open
market sales, is $32 million. If during the six month period ending on
October 1, 2000, the Cirrus stock received by IBM appreciates to over $32
million, IBM may keep all proceeds from the sale of stock in excess of $32
million up to a maximum of $48 million. Amounts received by IBM in excess
of $48 million must be returned to Cirrus.
Because Cirrus has guaranteed IBM a minimum of $32 million in cash, either
through open market sales of Cirrus stock or through repurchase of the
stock directly by Cirrus, the fair value of the shares placed in escrow as
well as the value associated with the embedded stock derivative granted to
IBM has been reflected in the accompanying pro forma balance sheet as a
liability. The fair value of the embedded stock derivative was estimated by
the Company based on discussions with outside investment advisors.
A summary of the pro forma impact on the balance sheet is as follows:
Cash payments to IBM $135,000
Stock issued into escrow 32,000
Embedded derivative 4,800
Reduction of wafer purchase commitment (54,869)
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Total impact on Net Capital Deficiency $116,931
The total loss of $116,931 has not been reflected in the unaudited pro
forma consolidated condensed statement of operations since such amount is
non-recurring in nature.
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EXHIBIT INDEX
Exhibit Page
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2.1 Restructuring Agreement among Cirrus Logic, Inc., International
Business Machines Corporation, Cirel Inc., Micrus Holdings Inc.,
and Micrus