Exhibit 99.1
Cirrus Logic Reports Fiscal Q3 2006
Financial Results; Eighteen Percent Year-Over-Year Revenue Growth From
Analog, Mixed-Signal and Embedded Products
AUSTIN, Texas--(BUSINESS WIRE)--January 25, 2006--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 third quarter of Fiscal Year 2006,
which ended Dec. 24, 2005.
The company reported third quarter Fiscal Year 2006 revenue of
$48.3 million compared with $44.0 million in the same period one year
ago. All revenue during the third fiscal quarter was analog,
mixed-signal and embedded products related. This represents
year-over-year growth of 18 percent when compared to revenue of $40.9
million for the same period one year ago, which excludes the revenue
related to the digital video-related products of $3.1 million. The
second fiscal quarter revenue related to the analog, mixed-signal and
embedded products was $48.3 million.
Third quarter gross margin was 55.1 percent compared with 55.4
percent for the analog, mixed-signal and embedded products in the
second quarter of fiscal year 2006. Combined research and development
(R&D) and selling, general and administrative (SG&A) expenses for the
third fiscal quarter were $21.2 million, compared with $26.4 million
in the prior quarter. In the second fiscal quarter, R&D and SG&A
expense included digital video-related spending of approximately $1.7
million as well as a $3.3 million contingency charge related to excess
leased office space. Without these items, R&D and SG&A for the second
fiscal quarter was $21.4 million.
Net income for the third fiscal quarter was $12.8 million, or
$0.15 per diluted share. In the second quarter, the company reported a
net loss of $99,000 or ($0.00) per diluted share. Third fiscal quarter
results also included a one-time $5.3 million foreign tax benefit. The
second fiscal quarter results also included a $2.3 million net
restructuring charge primarily related to the sale of the digital
video product line assets and a $207,000 foreign tax benefit. Net
income excluding the foreign tax benefit for the third fiscal quarter
was $7.6 million or $0.09 per diluted share, compared with net income
of $6.8 million or $0.08 per diluted share in the second fiscal
quarter, excluding the digital video related items, restructuring
charges and the foreign tax benefit.
Total cash and marketable securities at the end of the third
fiscal quarter was $233.0 million, compared with $225.1 million at the
end of the prior fiscal quarter. Inventories were $17.0 million,
approximately the same as at the end of the September quarter.
"The company has begun to deliver profitable year-over-year growth
in our analog, mixed-signal and embedded products," said David D.
French, president and chief executive officer, Cirrus Logic. "We
achieved 18 percent year-over-year growth in these product categories,
we have a strong cash position, and the underlying fundamentals of the
business are strong."
Outlook and Guidance
"As we look to our Fourth Fiscal Quarter, we are forecasting
continued strong year-over-year growth of our analog, mixed-signal and
embedded product revenues between 12 and 22 percent," French
continued. "However, we are cautious as the March quarter is
traditionally our seasonally weakest quarter. Nevertheless, we expect
a strong start to our Fiscal Year 2007 as we begin to build
incremental inventory in preparation for a higher revenue run rate in
Q1 FY 07."
Fourth Quarter FY 06 (ending March 25, 2006):
-- Revenue is expected to range between $41 million and $45
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 is expected to increase between $3 million and $5
million;
-- Inventory is anticipated to increase $2 million to $3 million
in preparation for growth in the first fiscal quarter of 2007.
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.
Non-GAAP results are not meant as a substitute for GAAP, but are
included solely for informational and comparative purposes. Cirrus
Logic management believes that 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, Jan. 25, 2006 at 5:00 p.m. EST. Those wishing to
join should dial 303-262-2142 (passcode: Cirrus Logic) at
approximately 4:50 p.m. EST. A replay of the call will also be
available, starting one hour after the completion of the call, until
Feb. 8. To access the recording, dial 303-590-3000 (Passcode: 11050686
#). 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:
-- Thomas Weisel Partners Technology Conference, Feb. 8 in San
Francisco;
-- Deutsche Bank Small Cap Growth Conference, Feb. 16 in Miami;
-- Roth Capital Growth Conference Feb. 21 in San Diego;
-- Piper Jaffray China Internet & Technology Conference , Feb. 28
in Beijing;
-- Prudential Technology Conference, March 2 in Chicago; and
-- CIBC World Markets 3rd Annual Semiconductor Summit, March 16
in Vail, Colo.
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 fourth
quarter fiscal year 2006 sales, gross margin, combined research and
development and selling, general and administrative expense levels,
and expectations regarding our revenue growth, fiscal year 2007
results, anticipated inventory build 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 fourth 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 STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Quarter Ended
--------------------------
Dec. 24, Sep. 24, Dec. 25,
2005 2005 2004
-------- -------- --------
Net sales $48,253 $50,461 $44,036
Cost of sales 21,686 23,596 26,834
-------- -------- --------
Gross Margin 26,567 26,865 17,202
-------- -------- --------
Gross Margin Percentage 55.1% 53.2% 39.1%
Operating expenses:
Research and development 10,442 10,630 18,899
Selling, general and administrative 10,740 15,765 9,611
Restructuring and other costs -- 2,311 3,107
Patent agreement, net -- -- (593)
-------- -------- --------
Total operating expenses 21,182 28,706 31,024
-------- -------- --------
Total operating expenses as a
percent of revenue 43.9% 56.9% 70.5%
Income (loss) from operations 5,385 (1,841) (13,822)
Operating income (loss) as a percent of
revenue 11.2% (3.6%) (31.4%)
Interest income, net 2,131 1,684 946
Other income (expense), net 53 (109) 272
-------- -------- --------
Income (loss) before income taxes 7,569 (266) (12,604)
Provision (benefit) for income taxes (5,261) (167) (15,134)
-------- -------- --------
Net income (loss) $12,830 $(99) $2,530
======== ======== ========
Basic and diluted income (loss) per share: $0.15 $-- $0.03
Basic weighted average common shares
outstanding 86,399 85,804 84,773
Diluted weighted average common shares
outstanding 88,101 85,804 86,159
See reconciliation of Non-GAAP financial measures
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.
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share data)
(not prepared in accordance with GAAP)
Quarter Ended
--------------------------
Dec. 24, Sep. 24, Dec. 25,
2005 2005 2004
-------- -------- --------
GAAP revenue $50,461 $44,036
Non-GAAP adjustments:
Video product line revenue; video assets
sold June 30, 2005 (2,152) (3,094)
-------- --------
Non-GAAP revenue $48,309 $40,942
======== ========
GAAP gross margin $26,865 $17,202
Non-GAAP adjustments:
Impact of Video product line inventory reserve,
video assets sold June 30, 2005 (121) 4,621
-------- --------
Non-GAAP gross margin $26,744 $21,823
======== ========
55.4% 53.3%
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 since we have sold the video product line
assets.
GAAP operating expenses $28,706
Non-GAAP adjustments:
Video product line operating expenses; video
assets sold June 30, 2005 (1,633)
Restructuring and other charges, net (2,311)
Patent agreement legal expense savings --
Loss contingencies on subleased
facilities (3,319)
Goods and Sales tax refund --
Litigation expenses related to the
magnetic storage product line --
Impairment of Computer Aided Design tools --
--------
Non-GAAP operating expenses $21,443
========
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 of the ongoing business due to the uniqueness of these
charges as the Company was refocused on our core technology.
GAAP net income (loss) $12,830 $(99)
Non-GAAP adjustments:
Subtract tax benefit due to expiration of
statutue of limitations in foreign
jurisdictions (5,271) (207)
Add non-GAAP operating expenses listed
above -- 7,263
Adjust for non-GAAP gross margin impact -- (121)
Subtract bankruptcy proceeds impact -- --
-------- --------
Non-GAAP net income $7,559 $6,836
======== ========
Non-GAAP diluted earnings per share: $0.09 $0.08
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.
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Nine Months Ended
--------------------
Dec. 24, Dec. 25,
2005 2004
--------- ---------
Net sales $151,536 $154,485
Cost of sales 70,804 82,682
--------- ---------
Gross Margin 80,732 71,803
--------- ---------
Gross Margin Percentage 53.3% 46.5%
Operating expenses:
Research and development 34,723 62,237
Selling, general and administrative 40,806 35,267
Restructuring and other costs 2,311 8,978
Litigation settlement, net (24,758) --
Patent agreement, net -- (593)
--------- ---------
Total operating expenses 53,082 105,889
--------- ---------
Total operating expenses as a percent of
revenue 35.0% 68.5%
Income (loss) from operations 27,650 (34,086)
Operating income (loss) as a percent of revenue 18.2% (22.1%)
Realized gain on marketable equity securities 388 669
Interest income, net 4,951 2,246
Other income (expense), net (75) 201
--------- ---------
Income (loss) before income taxes and loss from
discontinued operations 32,914 (30,970)
Benefit for income taxes (5,794) (15,044)
--------- ---------
Net income (loss) $38,708 $(15,926)
========= =========
Basic income (loss) per share: $0.45 $(0.19)
Diluted income (loss) per share: $0.44 $(0.19)
Basic weighted average common shares
outstanding 85,811 84,621
Diluted weighted average common shares
outstanding 87,436 84,621
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.
CONSOLIDATED CONDENSED BALANCE SHEET
(unaudited)
(in thousands)
Dec. 24, Sep. 24, Dec. 25,
2005 2005 2004
--------- --------- ---------
ASSETS
Current assets
Cash and cash equivalents $114,947 $112,347 $93,432
Restricted investments 5,755 5,755 7,784
Marketable securities 107,330 92,163 61,893
Accounts receivable, net 21,442 21,579 21,050
Inventories 17,049 17,014 32,330
Other current assets 6,978 6,287 7,249
--------- --------- ---------
Total Current Assets 273,501 255,145 223,738
Long-term marketable securities 4,935 14,869 15,319
Property and equipment, net 14,012 14,329 19,934
Intangibles, net 3,441 4,090 14,807
Other assets 10,837 11,372 2,907
--------- --------- ---------
Total Assets $306,726 $299,805 $276,705
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $17,149 $15,181 $14,914
Accrued salaries and benefits 6,329 6,756 8,974
Other accrued liabilities 12,223 14,072 15,809
Deferred income on shipments to
distributors 6,108 6,807 7,877
Income taxes payable 3,145 8,526 15,075
--------- --------- ---------
Total Current Liabilities 44,954 51,342 62,649
Long-term restructuring accrual 4,545 4,807 3,411
Other long-term obligations 9,428 10,062 9,848
Stockholders' equity:
Capital stock 880,930 879,560 875,216
Accumulated deficit (632,089) (644,919) (673,335)
Accumulated other comprehensive loss (1,042) (1,047) (1,084)
--------- --------- ---------
Total Stockholders' Equity 247,799 233,594 200,797
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $306,726 $299,805 $276,705
========= ========= =========
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