Exhibit 99.1
Cirrus Logic Reports 23 Percent Sequential Revenue Growth in Fiscal
Q2; Audio and Video Product Sales Increase, Balance Sheet Strengthens
AUSTIN, Texas--(BUSINESS WIRE)--Oct. 22, 2003--Cirrus Logic, Inc.
(NASDAQ:CRUS) today announced financial results for the second quarter
of fiscal 2004, ended Sept. 27, 2003.
The company reported second quarter revenue of $50.1 million, up
23 percent from $40.7 million reported in the first quarter. Second
quarter gross margins were 51.9 percent, up from 48.5 percent in the
first quarter. Second quarter combined research and development and
selling, general and administrative expenses were $32.6 million, an
improvement from $33.2 million in the prior quarter. Included in these
second quarter expenses were $1.1 million related to legal expenses
associated with a recently settled lawsuit with Western Digital
Corporation and amortization of acquisition-related deferred
compensation.
Net income in the second quarter was $21.1 million, or $0.25 per
share, compared with a net loss of $24.3 million, or a loss of $0.29
per share, in the first quarter. The second quarter net income
included benefits of $31.7 million resulting from favorable patent
infringement litigation settlements with nVidia Corporation and ATI
Technologies totaling $14.4 million, net of expenses; $10.1 million
associated with a realized gain on the sale of marketable securities
and a related payment from SigmaTel; and a $7.2 million income tax
benefit due to the release of a reserve following the expiration of
the statute of limitations. The second quarter results also included
amortization of acquisition-related intangibles totaling $3.8 million
and a restructuring charge of $0.4 million.
Total cash at the end of the second quarter increased to $127.3
million, compared with $115.5 million at the end of the first quarter.
Total cash increased primarily due to $20.8 million from one-time
events, including the nVidia settlement, the SigmaTel transaction, and
cash received from the sale of assets to ChipPAC.
"Revenue from both our audio and video product lines grew in the
second quarter. Revenue from our audio products, which represented 84
percent of total revenue, increased 13 percent in the quarter, as
customers replenished inventories and introduced new products
incorporating our chips. Revenue from our video product line increased
to $8.1 million from $3.0 million in the prior quarter, with our
digital video encoding products for DVD recorder applications
contributing strongly to our sales growth," said David D. French,
president and CEO of Cirrus Logic, Inc.
"During the second quarter, we strengthened our consumer audio
position by demonstrating at the CEDIA Expo production-ready Dolby Pro
Logic(R) IIx audio digital signal processors. Leading audio system
companies, including Harman Kardon and Marantz, were the first to
announce plans to introduce new products implementing the new Dolby
Pro Logic IIx standard using our chips.
"After beginning shipments two quarters ago, we have quickly
gained market share in the high-growth DVD recording semiconductor
market. Our digital video encoding and decoding chips are enabling
mass-market DVD recorders in time for this year's holiday sales
period. Earlier this month, we launched our newest family of encoding
chips, which allows consumers to record home video content from their
camcorders onto DVD disks at lower cost," said French.
"We are working with OEMs to shorten time to market, improve
supply chain dependability, rapidly reduce costs as drive technology
matures, and provide a roadmap of software compatible product
upgrades. Collaboration with a wide array of drive manufacturers is
essential to achieving these goals. At the Hong Kong Electronics Fair
earlier this month, we were pleased to show progress with several
high-quality drive manufacturers, including AccessTech, Behavior
Technology Corporation (BTC), BenQ, Digital Video Systems (DVS), M.E.T
Technology, NEC, Philips, and Ricoh, in demonstrating the
interoperability of their drives with our DVD recording reference
platform," said French.
Leading manufacturer BenQ recently announced that it is using
Cirrus Logic chips in its first single-board DVD recorder, which it
expects will accelerate system cost reduction. It will sample the new
DVD recorder this month and expects to begin volume production in the
first quarter of calendar 2004.
"Reducing system cost in collaboration with other industry
participants is essential to expanding the DVD recorder market. These
collaborative efforts are helping to bring the industry close to the
$300 retail price point, which we expect to be a major stimulus to
consumer demand of DVD recording products. Further integration, such
as the single-board recorder platform, is likely to facilitate retail
prices below $200 by the end of calendar 2004, further expanding
demand," said French.
Outlook and Guidance
"Although December quarter revenues for semiconductors targeted
towards end consumers in North America are often flat with, or
slightly down from September levels, we believe our product and design
momentum in exciting, high-growth markets will enable us to continue
to grow in the December quarter," said French.
"In addition, we continue to focus our development activities. In
the current quarter, we have already made targeted headcount
reductions that should allow us to sequentially reduce combined R&D
and SG&A expenses for the seventh consecutive quarter. As we complete
the shift of development resources from standalone DVD players towards
recording applications, we expect to further reduce operating expenses
by the March quarter."
Third Quarter FY04 (ending Dec. 27, 2003)
-- Revenue is expected to be $53 million to $56 million.
-- Gross margins are expected to be 50 percent to 52 percent.
-- Combined R&D and SG&A expenses are expected to total $31
million to $33 million.
-- Total cash at the end of the third quarter is expected to be
in the range of $172 million to $177 million, an increase of
$45 million to $50 million, and reflects the receipt earlier
this month of $9 million from the settlement with ATI
Technologies recorded in the second quarter and $45 million
for the previously announced litigation settlement with
Western Digital Corporation.
Conference Call
Cirrus Logic management will hold a conference call to discuss
these results today, Oct. 22, at 4 p.m. Central Time. Those wishing to
join should dial (617) 847-8707 (pass code: Cirrus Logic) at
approximately 3:50 p.m. Central Time. A replay of the call will be
available starting one hour after the completion of the call until
Oct. 29, 2003. To access the replay, dial (617) 801-6888 (pass code:
83104155). A live web cast of the conference call will also be
available via the company's web site at www.cirrus.com.
Upcoming Investor Conferences
Cirrus Logic management will be presenting at the AeA Classic
Financial Conference in San Diego on Nov. 3-4, the Lehman Brothers
2003 Semiconductor and Computer Systems Conference in San Francisco on
Nov. 19, the Pacific Growth Equities Bus Tour in the Bay Area on Dec.
2, and the Needham Conference in New York on Jan. 6-8. Those wishing
to listen to management's presentations can hear a live and/or an
archived web cast via the company's web site at www.cirrus.com.
Cirrus Logic, Inc.
Cirrus Logic is a premier supplier of high-performance analog,
mixed-signal and digital processing solutions for consumer
entertainment electronics, automotive entertainment and industrial
product applications. Building on its global market leadership in
audio ICs and its rich mixed-signal patent portfolio, Cirrus Logic
targets audio, video and precision mixed-signal applications in these
growing markets. The company operates from headquarters in Austin,
Texas, with offices in California, Colorado, Europe, Japan and Asia.
More information about Cirrus Logic is available at www.cirrus.com.
Safe Harbor Statement
Except for historical information contained herein, the matters
set forth in this news release, including our estimates of third
fiscal quarter revenues, combined research and development and
selling, general and administrative expense levels, gross margin and
cash levels, expectations regarding our revenue growth opportunities,
including the introduction of new products by other companies
containing our components during the third quarter of fiscal 2004 and
calendar 2004, our anticipated reduction in operating expenses and our
estimates regarding future retail prices, are forward-looking
statements. These forward-looking statements are based on our current
expectations and are subject to certain risks and uncertainties that
could cause actual results to differ materially from our current
expectations and the forward-looking statements made in this press
release. These risks and uncertainties include, but are not limited
to, the following: overall conditions in the semiconductor market; the
expansion of the consumer digital entertainment electronics market;
our ability to introduce new products on a timely basis and to deliver
products that perform as anticipated; risks associated with
international sales and international operations; the level of orders
and shipments during the third fiscal quarter of 2004, as well as
customer cancellations of orders, or the failure to place orders
consistent with forecasts; our expectations regarding our potential
cost savings and the benefits of the ChipPAC outsourcing transaction,
as well as a successful transition of this outsourcing; pricing
pressures; hardware or software deficiencies; a shortage of
manufacturing capacity; our ability to make continued substantial
investments in research and development; foreign currency
fluctuations; the retention of key employees; the impact of
restructuring and other costs, such as work force reductions and
facility consolidations; asset impairment charges; and the risk
factors listed in our Form 10-K for the year ended March 29, 2003, and
in other filings with the Securities and Exchange Commission. 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. All
other 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)
Quarter Ended
-----------------------------
Sep. 27, Jun. 28, Sep. 28,
2003 2003 2002
-------- -------- --------
Net sales $ 50,130 $ 40,724 $ 73,314
Costs and expenses:
Cost of sales 24,132 20,989 37,227
Research and development 20,427 20,646 25,955
Selling, general and administrative 12,203 12,517 19,939
Restructuring and other costs 395 7,640 3,102
Amortization of acquired intangibles 3,778 3,778 4,661
Patent infringement settlements, net (14,402) - -
-------- -------- --------
Total costs and expenses 46,533 65,570 90,884
-------- -------- --------
Income (loss) from operations 3,597 (24,846) (17,570)
Realized gain (loss) on marketable
equity securities 10,080 - (947)
Interest income and (expense), net 247 623 541
Other income (expense), net 8 (73) (354)
-------- -------- --------
Income (loss) before income taxes and
loss from discontinued operations 13,932 (24,296) (18,330)
Provision (benefit) for income taxes (7,122) 21 29
-------- -------- --------
Income (loss) from continuing operations 21,054 (24,317) (18,359)
Loss from discontinued operations - - -
-------- -------- --------
Net income (loss) $ 21,054 $(24,317) $(18,359)
======== ======== ========
Basic income (loss) per share:
From continuing operations $ 0.25 $ (0.29) $ (0.22)
Discontinued operations - - -
-------- -------- --------
$ 0.25 $ (0.29) $ (0.22)
======== ======== ========
Diluted income (loss) per share:
From continuing operations $ 0.25 $ (0.29) $ (0.22)
Discontinued operations - - -
-------- -------- --------
$ 0.25 $ (0.29) $ (0.22)
======== ======== ========
Basic weighted average common shares
outstanding 83,946 83,763 83,413
Diluted weighted average common shares
outstanding 85,556 83,763 83,413
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Six Months Ended
------------------
Sep. 27, Sep. 28,
2003 2002
-------- --------
Net sales $ 90,854 $149,338
Costs and expenses:
Cost of sales 45,121 74,618
Research and development 41,073 53,918
Selling, general and administrative 24,720 40,410
Restructuring and other costs 8,035 5,187
Amortization of acquired intangibles 7,556 9,347
Patent infringement settlements, net (14,402) -
-------- --------
Total costs and expenses 112,103 183,480
-------- --------
Income (loss) from operations (21,249) (34,142)
Realized gain on marketable equity securities 10,080 453
Interest income and (expense), net 870 1,281
Other income (expense), net (65) (280)
-------- --------
Income (loss) before income taxes and loss from
discontinued operations (10,364) (32,688)
Provision (benefit) for income taxes (7,101) 58
-------- --------
Income (loss) from continuing operations (3,263) (32,746)
Loss from discontinued operations - (1,452)
-------- --------
Net income (loss) $ (3,263) $(34,198)
======== ========
Basic income (loss) per share:
From continuing operations $ (0.04) $ (0.39)
Discontinued operations - (0.02)
-------- --------
$ (0.04) $ (0.41)
======== ========
Diluted income (loss) per share:
From continuing operations $ (0.04) $ (0.39)
Discontinued operations - (0.02)
-------- --------
$ (0.04) $ (0.41)
======== ========
Basic weighted average common shares outstanding 83,855 83,215
Diluted weighted average common shares
outstanding 83,855 83,215
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
Sep. 27, Jun. 28, Sep. 28,
2003 2003 2002
--------- --------- ---------
ASSETS
Current assets
Cash and cash equivalents $ 119,059 $ 103,667 $ 114,332
Restricted cash 8,265 11,844 12,807
Marketable equity securities 1,654 754 526
Accounts receivable, net 21,860 23,627 35,011
Inventories 25,130 21,185 28,752
Other current assets 19,243 10,617 16,246
--------- --------- ---------
Total Current Assets 195,211 171,694 207,674
Property and equipment, net 25,317 26,987 36,685
Goodwill and intangibles, net 37,035 34,082 183,300
Other assets 5,220 5,895 4,932
--------- --------- ---------
Total Assets $ 262,783 $ 238,658 $ 432,591
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 53,342 $ 43,900 $ 57,658
Current maturities of long-term
debt and capital lease obligations - - 141
Income taxes payable 30,319 37,531 41,530
--------- --------- ---------
Total Current Liabilities 83,661 81,431 99,329
Long-term obligations 16,587 17,077 5,809
Minority interest in eMicro - - 599
Stockholders' equity:
Capital stock 869,238 868,827 866,531
Accumulated deficit (707,175) (728,229) (538,897)
Accumulated other comprehensive
income (loss) 472 (448) (780)
--------- --------- ---------
Total Stockholders' Equity 162,535 140,150 326,854
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $ 262,783 $ 238,658 $ 432,591
========= ========= =========
CONTACT: Stapleton Communications Inc.
Mary McGowan, 650-470-0200
mary@stapleton.com