Exhibit 99.1
Cirrus Logic Reports Fiscal Q3 2005 Financial Results
AUSTIN, Texas--(BUSINESS WIRE)--Jan. 26, 2005--Cirrus Logic Inc.
(Nasdaq:CRUS) today announced financial results for the third quarter
of fiscal year 2005, ended Dec. 25, 2004.
The company reported third quarter fiscal year 2005 revenue of
$44.0 million compared with $51.3 million in the prior quarter. These
results do not include $2.2 million of product shipped during the
December quarter for which we have been unable to determine what
amount should properly be recognized as revenue in the December
quarter. Consequently, the company has not included this in the
revenue for the quarter and has deferred recognizing this revenue
until such time as this determination can be made.
Third quarter gross margin was 39.1 percent, compared with 44.7
percent in the prior quarter. Third quarter gross margin was adversely
impacted by a net charge of $5.0 million for excess and obsolete
inventory, which had a negative impact on gross margin of 10.8
percentage points and was further negatively impacted by 2.8
percentage points relating to the revenue deferral. Third quarter
combined research and development and selling, general and
administrative expenses were $25.1 million, compared with $31.0
million in the prior quarter.
Net income in the third fiscal quarter was $2.5 million, or $0.03
per share. The third quarter results include a $15.2 million income
tax benefit, a $2.3 million reclaimed Goods and Services tax for the
years 1997 to 2000 in SG&A, a $0.6 million legal expense accrual
reduction associated with a prior patent transaction, partially offset
by $6.5 million of expenses primarily for amortization of acquired
intangibles, restructuring-related items and abandonment of software,
as well as a $5.0 million net inventory charge. In comparison, the
company reported a net loss of $15.1 million in the prior quarter, or
a loss of $0.18 per share, which included $8.0 million in charges
primarily for abandoned software, restructuring- and
acquisition-related items.
Total cash and marketable securities at the end of the third
quarter was $178.4 million, compared with $177.7 million at the end of
the prior quarter.
"As we mentioned in our Dec. 16, 2004, press announcement, results
were negatively impacted by the continued slow demand for consumer
integrated circuits, especially audio converters sold into the Chinese
DVD player market where we have a large market share," said David D.
French, president and CEO of Cirrus Logic Inc. "Sales of our ICs used
in DVD recording applications were also below our expectations going
into the just completed quarter."
Cirrus Logic announced on Dec. 16, 2004, actions to better align
its resources to address anticipated market opportunities and to
reduce operating expenses. During the December quarter, the company
implemented a new product-centric organizational structure. The
company also initiated a workforce reduction and began facility
consolidation activities, which are expected to provide annualized
savings of $8 million to $12 million, beginning in the March quarter.
Outlook and Guidance
"As we plan for the March quarter, we have limited demand
visibility and remain cautious with regard to channel and customer
inventories and consumer demand. While we believe that we will see a
continued reduction in component inventories in many of the markets we
serve, our guidance reflects a conservative view," said French.
The following outlook does not include an estimate for the
recognition of the deferred revenue from the third fiscal quarter.
Fourth Quarter FY 05 (ending March 26, 2005)
-- Sales are expected to range between $40 million and $42
million;
-- Gross margin is expected to range between 51 percent and 53
percent.
-- Combined R&D and SG&A expenses are expected to range between
$25 million and $26 million.
-- Completion of the restructuring activity announced on Dec. 16,
2004, is expected to result in a charge of between $1.0
million and $2.0 million.
-- Net inventory is expected to be reduced by $3 million to $5
million through operational activities.
Conference Call
Cirrus Logic management will hold a conference call to discuss
these results today, Jan. 26, at 4:00 p.m. Central Time. Those wishing
to join should dial 201-689-8044 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 Feb. 9, 2005. To access the replay,
dial 201-612-7415 (account #: 2445; conference #: 133018). A live and
an archived webcast of the conference call will also be available via
the company's Web site at www.cirrus.com.
Upcoming Conference
Cirrus Logic management will be presenting at the Thomas Weisel
Partners Technology Conference on Feb. 8 in San Francisco. Those
wishing to listen to management's presentation can hear a live and/or
an archived webcast of these available events 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 fourth
quarter fiscal year 2005 sales, gross margin, combined research and
development and selling, general and administrative expense levels,
restructuring activities, inventory reduction, and expectations
regarding our revenue growth 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
from our current expectations, estimates and assumptions 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 results of any potential and pending
litigation matters; the level of orders and shipments during the
fourth quarter of fiscal year 2005, as well as customer cancellations
of orders, or the failure to place orders consistent with forecasts;
pricing pressures; hardware or software deficiencies; our dependence
on subcontractors for assembly, manufacturing, packaging and testing
functions; 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; and the risk
factors listed in our Form 10-K for the year ended March 27, 2004, 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
(in thousands, except per share amounts; unaudited)
Quarter Ended
---------------------------
Dec. 25, Sept. 25, Dec. 27,
2004 2004 2003
-------- --------- --------
Net sales $44,036 $51,332 $55,270
Cost of sales 26,834 28,404 26,552
-------- --------- --------
Gross Margin 17,202 22,928 28,718
-------- --------- --------
Gross Margin Percentage 39.1% 44.7% 52.0%
Operating expenses:
Research and development 15,480 17,793 18,224
Selling, general and administrative 9,611 13,162 12,163
Amortization of acquired intangibles 3,419 3,419 3,419
Restructuring and other costs 3,107 4,148 896
Litigation settlement -- -- (45,000)
Patent agreement (593) -- --
-------- --------- --------
Total operating expenses 31,024 38,522 (10,298)
-------- --------- --------
Total operating expenses as a percent
of revenue 70.5% 75.0% (18.6%)
Income (loss) from operations (13,822) (15,594) 39,016
Operating income (loss) as a percent
of revenue (31.4%) (30.4%) 70.6%
Interest income (expense), net 946 604 450
Other income (expense), net 272 (5) 58
-------- --------- --------
Income (loss) before income taxes (12,604) (14,995) 39,524
Provision (benefit) for income taxes (15,134) 66 75
-------- --------- --------
Net income (loss) $2,530 $(15,061) $39,449
======== ========= ========
Basic income (loss) per share $0.03 $(0.18) $0.47
Diluted income (loss) per share $0.03 $(0.18) $0.46
Basic weighted average common shares
outstanding 84,773 84,671 84,015
Diluted weighted average common shares
outstanding 86,159 84,671 86,440
Prepared in accordance with Generally Accepted Accounting Principles
CIRRUS LOGIC INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share amounts; unaudited)
Nine Months Ended
----------------------
Dec. 25, Dec. 27,
2004 2003
--------- ---------
Net sales $154,485 $146,124
Cost of sales 82,682 71,673
--------- ---------
Gross Margin 71,803 74,451
--------- ---------
Gross Margin Percentage 46.5% 51.0%
Operating expenses:
Research and development 51,980 59,297
Selling, general and administrative 35,267 36,883
Amortization of acquired intangibles 10,257 10,975
Restructuring and other costs 8,978 8,931
Litigation settlement -- (45,000)
Patent agreement and settlement, net (593) (14,402)
--------- ---------
Total operating expenses 105,889 56,684
--------- ---------
Total operating expenses as a percent
of revenue 68.5% 38.8%
Income (loss) from operations (34,086) 17,767
Operating income (loss) as a percent of revenue (22.1%) 12.2%
Realized gain on marketable equity securities 669 10,080
Interest income (expense), net 2,246 1,320
Other income (expense), net 201 (7)
--------- ---------
Income (loss) before income taxes (30,970) 29,160
Benefit for income taxes (15,044) (7,026)
--------- ---------
Net income (loss) $(15,926) $36,186
========= =========
Basic income (loss) per share $(0.19) $0.43
Diluted income (loss) per share $(0.19) $0.42
Basic weighted average common shares
outstanding 84,621 83,908
Diluted weighted average common shares
outstanding 84,621 85,258
Prepared in accordance with Generally Accepted Accounting Principles
CIRRUS LOGIC INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
Dec. 25, Sept. 25, Dec. 27,
2004 2004 2003
--------- --------- ---------
ASSETS
Current assets
Cash and cash equivalents $93,432 $100,050 $172,268
Restricted investments 7,784 7,184 7,751
Marketable securities 61,893 45,435 2,466
Accounts receivable, net 21,050 28,677 18,710
Inventories 32,330 42,582 26,836
Other current assets 7,249 5,372 11,181
--------- --------- ---------
Total Current Assets 223,738 229,300 239,212
Long-term marketable securities 15,319 25,053 --
Property and equipment, net 19,934 21,843 23,814
Intangibles, net 14,807 19,923 32,663
Other assets 2,907 2,862 4,676
--------- --------- ---------
Total Assets $276,705 $298,981 $300,365
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $14,914 $22,407 $12,486
Accrued salaries and benefits 8,974 9,355 10,516
Other accrued liabilities 15,809 18,257 21,480
Deferred income on shipments
to distributors 7,877 7,869 5,740
Income taxes payable 15,075 30,299 30,185
--------- --------- ---------
Total Current Liabilities 62,649 88,187 80,407
Long-term restructuring accrual 3,411 3,515 7,035
Other long-term obligations 9,848 10,389 9,079
Stockholders' equity:
Capital stock 875,216 873,634 870,714
Accumulated deficit (673,335) (675,865) (667,726)
Accumulated other comprehensive
income (loss) (1,084) (879) 856
--------- --------- ---------
Total Stockholders' Equity 200,797 196,890 203,844
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $276,705 $298,981 $300,365
========= ========= =========
CONTACT: Cirrus Logic Inc., Austin
John Kurtzweil, 512-912-3222