Exhibit 99.1
Cirrus Logic Reports Fiscal Q2 2006 Financial Results;
Revenue from Core Products Grows 11 Percent Sequentially
AUSTIN, Texas--(BUSINESS WIRE)--Oct. 19, 2005--Cirrus Logic Inc.
(Nasdaq:CRUS), a leader in high-precision analog, mixed-signal and
embedded products for audio and industrial markets, today announced
financial results for the second quarter of Fiscal Year 2006, which
ended Sept. 24, 2005.
The company reported second quarter Fiscal Year 2006 revenue of
$50.5 million compared with $52.8 million in the prior fiscal quarter
ended June 25, 2005. Core product revenue for the second fiscal
quarter was $48.3 million related to our analog, mixed-signal and
embedded products, an increase of 11 percent compared with $43.7
million in revenue during the prior quarter and a three percent
increase year-over-year. Second-quarter gross margin was 53.2 percent
compared with 51.7 percent in the prior quarter. The gross margin for
its core products was 55.4 percent in the second quarter of fiscal
year 2006, down slightly from 56.3 percent in the prior quarter.
Combined research and development (R&D) and selling, general and
administrative (SG&A) expenses for the second fiscal quarter were
$26.4 million, compared with $28.0 million in the prior quarter. R&D
and SG&A expense included digital video related spending of
approximately $1.7 million, and there was also a $3.3 million
contingency related to excess leased office space. Without these
items, R&D and SG&A for the quarter was $21.4 million.
Second fiscal quarter results also included a $2.3 million net
restructuring charge primarily related to the sale of the digital
video product line and a $207,000 foreign tax benefit. The net loss in
the second fiscal quarter was $99,000, or $0.00 per share. In the
prior quarter, the company reported net income of $26.0 million, or
$0.30 per diluted share, which included a $24.8 million net gain
related to a legal settlement. The non-GAAP net income for the quarter
was $6.8 million or $0.08 per diluted share as compared to a non-GAAP
net income of $4.3 million and $0.05 per diluted share in the previous
quarter.
Total cash and marketable securities at the end of the second
fiscal quarter were $225.1 million, compared with $214.5 million at
the end of the prior fiscal quarter. Inventories were $17.0 million,
down 13 percent, or $2.5 million, from the end of the June quarter.
On June 30, 2005, Cirrus Logic announced the completion of the
sale of its digital video product line assets to Magnum Semiconductor
in exchange for a non-controlling interest valued at $7.9 million.
"I am pleased with the company's financial performance in Q2, as
we have completed the restructuring of the company around our core
analog mixed-signal and embedded products with our core products
showing sequential revenue growth of 11 percent," said David D.
French, president and chief executive officer, Cirrus Logic. "Our
focus on these product lines is leading us to sustained profitability,
strong gross margins and a solid cash position."
Outlook and Guidance
"We achieved better than expected core revenue growth of 11
percent due to strong seasonal purchasing patterns," French continued.
"However, we remain cautious as the traditional peak season nears
completion during our third fiscal quarter."
Third Quarter FY 06 (ending December 24, 2005):
-- Revenue is expected to range between $45 million and $49
million;
-- Gross margin is expected to be between 55 percent and 57
percent;
-- Combined R&D and SG&A expenses are expected to range between
$20 million and $22 million;
-- Cash generated from operations is estimated to be $5 million
to $8 million.
Use of Non-GAAP Financial Information
Cirrus Logic reports its financials in accordance with GAAP, which
includes non-recurring items. A reconciliation of GAAP to non-GAAP is
included in the financial statements portion of this release as well
as on our Web site in the Investors section at www.cirrus.com. The
core product revenue, core product gross margin, core product R&D and
SG&A expense provided in this press release are non-GAAP numbers.
Non-GAAP results are not meant as a substitute for GAAP, but are
included solely for informational and comparative purposes. Cirrus
Logic management believes the non-GAAP financial information is useful
to investors because it can enhance the understanding of the results
and trends in our business, and therefore uses non-GAAP reporting
internally to evaluate and manage the company's operations. The
criteria for determining non-GAAP results may differ from other
companies' methods. These non-GAAP measures should be considered in
addition to, and not as a substitute for, the results prepared in
accordance with GAAP.
Conference Call
Cirrus Logic management will hold a conference call to discuss
these results today, Oct. 19, 2005 at 5:00 p.m. EDT. Those wishing to
join should dial 303-205-0066 (passcode: Cirrus Logic) at
approximately 4:50 p.m. EDT. A replay of the call will be available
starting one hour after the completion of the call through Nov. 2,
2005. To access the replay, dial 303-590-3000 (passcode: 11040464#). 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 Conferences
Cirrus Logic management will be presenting at the following
conferences:
-- Prudential Technology Conference, Oct. 27 in New York;
-- Silicon Hills Summit 2005, Nov. 1 in Austin;
-- AeA Classic Financial Conference, Nov. 7-8 in San Diego;
-- Lehman Brothers Global Technology Conference, Dec. 7-9 in San
Francisco;
-- Needham & Co. Growth Stock Conference, Jan. 10-13 in New York.
Those wishing to listen to these presentations can hear live and
archived webcasts of the events via the company's Web site at
www.cirrus.com.
Cirrus Logic Inc.
Cirrus Logic develops high-precision, analog and mixed-signal
integrated circuits for a broad range of consumer and industrial
markets. Building on its diverse analog mixed-signal patent portfolio,
Cirrus Logic delivers highly optimized products for consumer and
commercial audio, automotive entertainment and industrial
applications. The company operates from headquarters in Austin, Texas,
with offices in 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
quarter fiscal year 2006 sales, gross margin, combined research and
development and selling, general and administrative expense levels,
and expectations regarding our revenue growth and increased cash
position 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; 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 third quarter of
fiscal year 2006, as well as customer cancellations of orders, or the
failure to place orders consistent with forecasts; overall economic
pressures; 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; and the risk factors
listed in our Form 10-K for the year ended March 26, 2005, 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.
Summary financial data follows:
CIRRUS LOGIC INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(unaudited)
(in thousands)
Sep. 24, Jun. 25, Sep. 25,
2005 2005 2004
--------- --------- ---------
ASSETS
Current assets
Cash and cash equivalents $112,347 $89,938 $100,050
Restricted investments 5,755 7,987 7,184
Marketable securities 92,163 100,311 45,435
Accounts receivable, net 21,579 23,457 28,677
Inventories 17,014 19,544 42,582
Other current assets 6,287 11,769 5,372
--------- --------- ---------
Total Current Assets 255,145 253,006 229,300
Long-term marketable securities 14,869 16,311 25,053
Property and equipment, net 14,329 15,707 21,843
Intangibles, net 4,090 4,689 19,923
Other assets 11,372 3,210 2,862
--------- --------- ---------
Total Assets $299,805 $292,923 $298,981
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $15,181 $14,542 $22,407
Accrued salaries and benefits 6,756 8,350 9,355
Other accrued liabilities 14,072 10,824 18,257
Deferred income on shipments to
distributors 6,807 7,435 7,869
Income taxes payable 8,526 8,788 30,299
--------- --------- ---------
Total Current Liabilities 51,342 49,939 88,187
Long-term restructuring accrual 4,807 3,526 3,515
Other long-term obligations 10,062 8,541 10,389
Stockholders' equity:
Capital stock 879,560 876,763 873,634
Accumulated deficit (644,919) (644,820) (675,865)
Accumulated other comprehensive
loss (1,047) (1,026) (879)
--------- --------- ---------
Total Stockholders' Equity 233,594 230,917 196,890
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $299,805 $292,923 $298,981
========= ========= =========
CIRRUS LOGIC INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Quarter Ended
----------------------------
Sep. 24, Jun. 25, Sep. 25,
2005 2005 2004
--------- -------- ---------
Net sales $50,461 $52,822 $51,332
Cost of sales 23,596 25,522 28,404
--------- -------- ---------
Gross Margin 26,865 27,300 22,928
--------- -------- ---------
Gross Margin Percentage 53.2% 51.7% 44.7%
Operating expenses:
Research and development 10,630 13,651 21,212
Selling, general and administrative 15,765 14,301 12,818
Restructuring and other costs 2,311 - 4,148
Litigation settlement, net - (24,758) 344
--------- -------- ---------
Total operating expenses 28,706 3,194 38,522
--------- -------- ---------
Total operating expenses as a
percent of revenue 56.9% 6.0% 75.0%
Income (loss) from operations (1,841) 24,106 (15,594)
Operating income (loss) as a percent of
revenue (3.6%) 45.6% (30.4%)
Realized gain on marketable equity
securities - 388 -
Interest income, net 1,684 1,136 604
Other expense, net (109) (19) (5)
--------- -------- ---------
Income (loss) before income taxes (266) 25,611 (14,995)
Provision (benefit) for income taxes (167) (366) 66
--------- -------- ---------
Net income (loss) $(99) $25,977 $(15,061)
========= ======== =========
Basic and diluted income (loss) per share: $- $0.30 $(0.18)
Basic weighted average common shares
outstanding 85,804 85,230 84,671
Diluted weighted average common shares
outstanding 85,804 86,183 84,671
See notes to Non-GAAP Consolidated Condensed Statement of Operations
Prepared in accordance with Generally Accepted Accounting Principles
Certain income statement reclassifications have been made to the
fiscal year 2005 financial statements to conform to the fiscal year
2006 presentation. We now report the amortization of acquired
intangibles as a component of our research and development expenses.
These reclassifications had no effect on the results of operations or
stockholders' equity.
CIRRUS LOGIC INC.
NON-GAAP CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
(not prepared in accordance with GAAP)
Quarter Ended
---------------------------
Sep. 24, Jun. 25, Sep. 25,
2005 2005 2004
--------- -------- --------
Net sales $48,309 $43,693 $47,016
Cost of sales 21,565 19,089 23,632
--------- -------- --------
Gross Margin 26,744 24,604 23,384
--------- -------- --------
Gross Margin Percentage 55.4% 56.3% 49.7%
Operating expenses:
Research and development 10,295 10,667 13,656
Selling, general and administrative 11,148 10,782 11,131
--------- -------- --------
Total operating expenses 21,443 21,449 24,787
--------- -------- --------
Total operating expenses as a
percent of revenue 44.4% 49.1% 52.7%
Income (loss) from operations 5,301 3,155 (1,403)
Operating income (loss) as a percent of
revenue 11.0% 7.2% (3.0%)
Interest income, net 1,684 1,136 604
Other expense, net (109) (19) (5)
--------- -------- --------
Income (loss) before income taxes and loss
from discontinued operations 6,876 4,272 (804)
Provision (benefit) for income taxes 40 (64) 66
--------- -------- --------
Net income (loss) $6,836 $4,336 $(870)
========= ======== ========
Basic and diluted income (loss) per share: $0.08 $0.05 $(0.01)
Basic weighted average common shares
outstanding 85,804 85,230 84,671
Diluted weighted average common shares
outstanding 87,838 86,183 84,671
See notes to Non-GAAP Consolidated Condensed Statement of Operations
CIRRUS LOGIC INC.
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(unaudited)
(in thousands, except per share data)
(not prepared in accordance with GAAP)
Quarter Ended
----------------------------
Sep. 24, Jun. 25, Sep. 25,
2005 2005 2004
--------- -------- ---------
Net sales (Note 1) $2,152 $9,129 $4,316
Cost of sales (Note 2) 2,031 6,433 4,772
--------- -------- ---------
Gross Margin 121 2,696 (456)
--------- -------- ---------
Operating expenses:
Research and development (Note 3) 335 2,984 7,556
Selling, general and administrative
(Note 4) 4,617 3,519 1,687
Restructuring and other costs (Note 5) 2,311 - 4,148
Litigation settlement, net (Note 6) - (24,758) 344
--------- -------- ---------
Total operating expenses 7,263 (18,255) 13,735
--------- -------- ---------
Income (loss) from operations (7,142) 20,951 (14,191)
Realized gain on marketable equity
securities (Note 7) - 388 -
--------- -------- ---------
Income (loss) before income taxes and loss
from discontinued operations (7,142) 21,339 (14,191)
Benefit for income taxes (Note 8) (207) (302) -
--------- -------- ---------
Net income (loss) $(6,935) $21,641 $(14,191)
========= ======== =========
Basic and diluted income (loss) per share: $(0.08) $0.25 $(0.17)
On October 19, 2005 the Company held a conference call with the public
to discuss its second quarter fiscal year 2006 financial results.
During that call, the Company made reference to non-GAAP financial
measures. The above schedule is provided to comply with SEC Regulation
G. This table provides the reconciliation between the Consolidated
Condensed Statement of Operations on a GAAP and non-GAAP reporting
basis. We use these non-GAAP financial numbers to assist us in the
management of the Company because we believe that this information
provides a more consistent and complete understanding of the
underlying results and trends in our business.
This non-GAAP presentation reflects the historical financial results
adjusted for the following non-recurring or unusual items:
(Note 1) Q2 FY'06 -- Non-GAAP net sales exclude $2.2 million in
revenue related to the digital video product line, product line assets
that were sold on June 30, 2005. Q1 FY'06 -- Non-GAAP net sales
exclude $9.1 million in revenue related to the digital video product
line, product line assets that were sold on June 30, 2005. Q2 FY'05 --
Non-GAAP net sales exclude $4.3 million in revenue related to the
digital video product line, product line assets that were sold on June
30, 2005.
(Note 2) Q2 FY'06 -- Non-GAAP cost of sales excludes $2.0 million in
product costs related to the digital video product line, product line
assets that were sold on June 30, 2005. Q1 FY'06 -- Non-GAAP cost of
sales excludes $6.4 million in product costs related to the digital
video product line, product line assets that were sold on June 30,
2005. Q2 FY'05 -- Non-GAAP cost of sales excludes $4.8 million in
product costs related to the digital video product line, product line
assets that were sold on June 30, 2005.
(Note 3) Q2 FY'06 -- Non-GAAP research and development excludes $0.3
million of digital video related expenses. Q1 FY'06 -- Non-GAAP
research and development excludes $2.3 million in digital video
related expenses and $0.7 million related to the amortization of
acquired intangibles from our 2002 and 2000 acquisitions. Q2 FY'05 --
Non-GAAP research and development excludes $3.5 million related to the
amortization of acquisition related intangibles and compensation from
our 2002 and 2000 acquisitions and $4.1 million in digital video
related expenses.
(Note 4) Q2 FY'06 -- Non-GAAP selling, general and administrative
expense excludes $1.3 million in digital video related expenses and
$3.3 million in facility related accruals due to losses on new
subleases. Q1 FY'06 -- Non-GAAP selling, general and administrative
expense excludes $2.5 million in digital video related expenses and
$1.1 million in facility related accruals due to losses on new
subleases. Q2 FY'05 -- Non-GAAP selling, general and administrative
expense excludes $1.7 million in digital video related expenses.
(Note 5) Q2 FY'06 -- Non-GAAP restructuring and other costs excludes a
$3.1 million expense related to facilities consolidation and severance
partially offset by a $0.8 million gain on the sale of our digital
video product line. Q2 FY'05 -- Non-GAAP restructuring and other costs
excludes $1.5 million related to costs associated with our announced
workforce reduction and $3.1 million related to the write-off of
computer aided software tools that we will no longer use partially
offset by a release of $0.5 million related to a buyout of a long-term
facilities lease obligation.
(Note 6) Q1 FY'06 -- Non-GAAP litigation settlement, net excludes a
$25.0 million benefit from a litigation settlement finalized during
the quarter related to Fujitsu, LTD partially offset by $0.2 million
in litigation fees related to this settlement. Q2 FY'05 -- Non-GAAP
litigation settlement, net excludes $0.3 million in legal costs
associated with a lawsuit related to a previously exited product line.
(Note 7) Q1 FY'06 -- Non-GAAP realized gain on marketable equity
securities excludes a $0.4 million benefit from the proceeds related
to the sale of an investment in another publicly traded company.
(Note 8) Q2 FY'06 -- Non-GAAP benefit for income taxes excludes a $0.2
million income tax benefit resulting from the expiration of foreign
statute of limitations for the years in which we had previously
recorded potential tax liabilities. Q1 FY'06 -- Non-GAAP benefit for
income taxes excludes a $0.3 million income tax benefit resulting from
the expiration of foreign statute of limitations for the years in
which we had previously recorded potential tax liabilities.
CIRRUS LOGIC INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Six Months Ended
----------------------
Sep. 24, Sep. 25,
2005 2004
----------- ----------
Net sales $103,283 $110,449
Cost of sales 49,118 55,848
----------- ----------
Gross Margin 54,165 54,601
----------- ----------
Gross Margin Percentage 52.4% 49.4%
Operating expenses:
Research and development 24,281 43,338
Selling, general and administrative 30,066 25,113
Restructuring and other costs 2,311 5,871
Litigation settlement, net (24,758) 543
----------- ----------
Total operating expenses 31,900 74,865
----------- ----------
Total operating expenses as a percent of
revenue 30.9% 67.8%
Income (loss) from operations 22,265 (20,264)
Operating income (loss) as a percent of revenue 21.6% (18.3%)
Realized gain on marketable equity securities 388 669
Interest income, net 2,820 1,300
Other expense, net (128) (71)
----------- ----------
Income (loss) before income taxes and loss from
discontinued operations 25,345 (18,366)
Provision (benefit) for income taxes (533) 90
----------- ----------
Net income (loss) $25,878 $(18,456)
=========== ==========
Basic and diluted income (loss) per share: $0.30 $(0.22)
Basic weighted average common shares
outstanding 85,517 84,545
Diluted weighted average common shares
outstanding 87,051 84,545
Prepared in accordance with Generally Accepted Accounting Principles
Certain income statement reclassifications have been made to the
fiscal year 2005 financial statements to conform to the fiscal year
2006 presentation. We now report the amortization of acquired
intangibles as a component of our research and development expenses.
These reclassifications had no effect on the results of operations or
stockholders' equity.
CONTACT: Cirrus Logic Inc., Austin
John Kurtzweil, 512-912-3222
InvestorRelations@cirrus.com
or
Summit IR Group Inc.
Mary McGowan, 408-404-5401
Mary@summitirgroup.com