Exhibit 99.1
Media Contacts: Investor Contact:
Stan Victor Brian Heuckroth Mary McGowan
(512) 912-3643 (408) 435-7113 (650) 470-0200
Cirrus Logic, Inc. Stream Machine Company Stapleton Communications
Inc.
svictor@crystal.cirrus.com brianh@streammachine.com mary@stapleton.com
Cirrus Logic To Acquire Stream Machine for $110 Million
Adds MPEG-2 Digital Video Recording to Consumer Entertainment Focus
AUSTIN, Texas - August 9, 2001 - Cirrus Logic Inc. (Nasdaq: CRUS), the premier
supplier of high-performance analog and DSP chip solutions for consumer
entertainment electronics, today announced it signed a definitive agreement to
acquire Stream Machine Company, a leading supplier of MPEG-2 video recording
technology based in Milpitas, CA. Stream Machine's proprietary compression
technology provides the highest quality video for multiple home entertainment
applications, such as digital-video-disc (DVD) recorders, personal video
recorders (PVRs), digital camcorders and PC video peripherals. This acquisition
will strengthen Cirrus Logic's vision of providing Total Entertainment (Total-
E(TM)) solutions for next generation, networked home entertainment applications.
Cirrus Logic will pay an estimated $110 million for Stream Machine in
this stock-for-stock transaction. The acquisition has been approved by the
boards of directors of both companies and is expected to close in October
following customary regulatory approvals. Based on Cirrus Logic's current
forecasts, it is anticipated to be accretive to pro forma EPS within three
quarters following the quarter in which it closes. This is the fourth
acquisition announced in five months by Cirrus Logic, representing an aggregate
total of $278 million in primarily stock-for-stock transactions.
"This acquisition will complement our audio entertainment leadership
by providing the encoding technology needed to pursue exciting new growth
opportunities in consumer entertainment," said David D. French, president and
chief executive officer of Cirrus Logic. "The combination of audio, video and
networking technologies, made possible through this acquisition, the acquisition
of Peak Audio, the pending acquisitions
of LuxSonor Semiconductors and ShareWave, plus Cirrus Logic's current audio
expertise, will enable us to lead the consumer entertainment revolution."
Market Size
Market research firm Cahners In-Stat predicts that products which use
MPEG encoding, such as Personal Video Recorders and DVD Recorders, will grow
dramatically in the next few years. PVRs will grow from approximately 520,000
units in 2001 to more than 11 million units in 2005, and DVD recorders will grow
from 540,000 units this year to more than 17 million units in 2005. Clearly, the
world is adopting digital video recording at a rapid rate.
Cahners In-Stat also predicts that the total MPEG-2 encoder chip
market will grow 135 percent annually, from under two million units this year to
more than 35 million units in 2005, representing a semiconductor market
opportunity in excess of $370 million in 2005, up from $38 million this year.
Market Vision
"Stream Machine and Cirrus Logic share the same home entertainment
market vision," said Michael L. Canning, president and CEO of Stream Machine.
"Our products are already shipping in next-generation systems, and we have
strong design win momentum. Stream Machine was the first to demonstrate a viable
Home Media Center reference design that adds streaming to Personal Video
Recorders, enabling the consumer to watch what they want, when they want and
wherever they want on TVs and PCs connected to a home network. We are already
demonstrating the use of this Home Media Center with the ShareWave wireless
networking technology to present a complete solution for networked home
entertainment. Our technology, when combined with Cirrus Logic's global customer
base and audio leadership, will make a very compelling business proposition for
companies designing next-generation home entertainment products."
With representative offices in Beijing and Shenzhen, China, Stream
Machine is a five-year-old, privately held, fabless semiconductor company with
about 55 employees. Stream Machine develops innovative semiconductor solutions
that enable affordable, high quality, digital audio and video products for home
entertainment applications. Stream Machine's team of experts has extensive
experience in digital audio and video, including architecture, algorithms and
compression technology. The company
has been awarded four patents and has 11 patents pending. Mr. Canning will
become general manager of the Stream Machine division, reporting to Mr. French.
Intelligent Thinking `Inside' The Box
In addition to the multi-channel audio experience, the image quality
of digital video explains in part why the DVD player has become the fastest
growing consumer electronics product in history. The next phase in the digital
revolution is to connect the various digital appliances so that the rich media
flooding into the home can be conveniently captured and managed and enable
consumers to watch what they want, when they want, wherever they want. Stream
Machine's advanced video compression technology not only provides consumers with
the best viewing quality available but provides it in efficient video streams
that make the best use of the available bandwidth and storage.
Convenience is another factor that drives the consumer toward digital
media. Freedom from rewinding, the emergence of new sources of content via
broadband connections, and the ability to move that content from PCs to home
entertainment products to portable devices and back again are major benefits of
digital technology.
Stream Machine is unique in enabling multiple high-quality video
streams over today's home networks, due to the efficiency of its proprietary
compression technology. This means that products designed with Stream Machine
chips can offer more channels of video over today's home networking technology,
such as the 802.11 wireless home networking enabled by ShareWave, another
pending Cirrus Logic acquisition. It also means that Advanced Set-Top Boxes
(STBs) which utilize Stream Machine chips can fit more content onto hard disk
drives without sacrificing quality, thus improving storage capacity for
consumers and lowering the cost to STB manufacturers and cable operators.
About Cirrus Logic
Cirrus Logic is the premier supplier of high-performance analog and DSP
chip solutions for consumer entertainment electronics that allow people to see,
hear, connect, and enjoy digital entertainment. Building on its global market
share leadership in audio integrated circuits and its rich mixed-signal patent
portfolio, the company targets mainstream audio, video and Internet
entertainment applications in the consumer
entertainment market. Cirrus Logic operates from headquarters in Austin, Texas
and major sites located in Fremont, California and Broomfield, Colorado, as well
as offices in Europe, Japan and Asia. More information about Cirrus Logic is
available at www.cirrus.com.
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About Stream Machine
Stream Machine is at the heart of digital home entertainment,
providing cost-effective semiconductor solutions that enable industry-leading
video and audio compression. Stream Machine's proprietary compression technology
offers the highest quality video over the widest range of bit-rates and is
compatible with all the important consumer standards, including MPEG-2, MP3, and
Dolby Digital. Stream Machine's high level of integration provides the low
system cost necessary to bring top-quality digital video and audio entertainment
to consumers at a price they can't resist. For more information, please visit
http://www.streammachine.com. Phone 408.435.9166 (USA) or 86-10-8453-4071/4075
(Beijing, China).
Except for historical information contained herein, the matters set forth in
this news release are forward-looking statements that are dependent on certain
risks and uncertainties including such factors, among others, as the ability of
the Company to successfully integrate Stream Machine into its operations; the
ability of the Company to realize synergies anticipated as a result of the
Stream Machine acquisition; overall conditions in the semiconductor market; the
ability of the Company to complete future acquisitions to acquire additional
technologies, as well as successfully integrate its pending and recent
acquisitions; the resolution of the Company's litigation with Western Digital;
the Company's shift away from magnetic storage and towards consumer-
entertainment electronics; the rate of consumer electronics market adoption of
new products; customer cancellations of orders, or the failure to place orders
consistent with forecasts; hardware or software deficiencies; delays in
customer qualification of key new products; final determination of appropriate
inventory write-downs based on the outlook at the end of each quarter; the
possibility of additional inventory write-downs based on the Company's inability
to predict future demand in the market; actual operational spending; and the
risk factors listed in the company's Form 10-K for the year ended March 31,
2001, and in other filings with the Securities and Exchange Commission. The
foregoing information concerning Cirrus Logic's business outlook represents our
outlook as of the date of this news release, and Cirrus Logic undertakes no
obligation to update or revise any forward-looking statements, whether as a
result of new developments or otherwise.
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