Cirrus Logic Reports December Quarter Revenue Up 15 Percent Sequentially to $218.9 Million

AUSTIN, Texas--(BUSINESS WIRE)--

Cirrus Logic, Inc. CRUS, a leader in high-precision analog and digital signal processing components, today posted on its investor relations website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2014, which ended Dec. 28, as well as the company's current business outlook.

“We delivered strong revenue, operating profit and EPS results for the third quarter,” said Jason Rhode, president and chief executive officer. “While our business is typically driven by product cycles that weight our revenue more heavily towards the September and December quarters, we expect to exceed our operating profit goal of 20 percent in FY14 and we remain committed to this long-term target. We are extremely excited to be taping out a wave of new products in advanced geometries this year as we look to capitalize on strategic opportunities in audio with new and existing customers, especially the growing trend of voice as a powerful interface to a wide variety of devices. We anticipate these products will contribute to future revenue growth as early as calendar year 2015.”

Reported Financial Results – Third Quarter FY14

• Revenue of $218.9 million;
• Gross margin of 47.4 percent;
• GAAP operating expenses of $51 million and non-GAAP operating expenses of $45 million; and
• GAAP diluted earnings per share of $0.63 and non-GAAP diluted earnings per share of $0.89.

A reconciliation of the non-GAAP charges is included in the tables accompanying this press release.

Business Outlook – Fourth Quarter FY14

• Revenue is expected to range between $130 million and $150 million;
• Gross margin is expected to be between 47 percent and 49 percent; and
• Combined R&D and SG&A expenses are expected to range between $51 million and $55 million, which includes approximately $6 million in share-based compensation and amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 p.m. EST today to answer questions related to its financial results and business outlook. Participants may listen to the conference call on the Cirrus Logic website. Participants who would like to submit a question to be addressed during the call are requested to email investor.relations@cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (404) 537-3406, or toll-free at (855) 859-2056 (Access Code: 27210276).

Cirrus Logic, Inc.

Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of innovative customers. Building on its diverse analog and signal-processing patent portfolio, Cirrus Logic delivers highly optimized products for a variety of audio and energy-related applications. The company operates from headquarters in Austin, Texas, with offices in Phoenix, Ariz., Europe, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com.

Use of non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, Cirrus has provided non-GAAP financial information, including operating expenses, net income, operating profit and diluted earnings per share. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements, including our estimates of fourth quarter fiscal year 2014 revenue, gross margin, combined research and development and selling, general and administrative expense levels, share-based compensation expense and amortization of acquired intangibles. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances 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. These risks and uncertainties include, but are not limited to, the following: the level of orders and shipments during the fourth quarter of fiscal year 2014, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; and the risk factors listed in our Form 10-K for the year ended March 30, 2013, and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. 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)
			Three Months Ended												Nine Months Ended
			Dec. 28,				Sep. 28,				Dec. 29,				Dec. 28,				Dec. 29,
			2013				2013				2012				2013				2012
			Q3'14				Q2'14				Q3'13				Q3'14				Q3'13
Audio products			$	206,388			$	179,912			$	300,010			$	529,966			$	558,671
Energy products				12,495				10,759				10,123				34,713				44,242
Net revenue				218,883				190,671				310,133				564,679				602,913
Cost of sales				115,034				91,223				152,083				281,884				291,336
Gross Profit				103,849				99,448				158,050				282,795				311,577
Gross Margin				47.4	%			52.2	%			51.0	%			50.1	%			51.7	%
Research and development				32,426				29,722				29,608				90,678				83,986
Selling, general and administrative				18,625				19,215				19,021				57,038				57,274
Restructuring and other costs				12				(154	)			3,539				(572	)			3,539
Gain on sale of asset				-				-				(247	)			-				(247	)
Patent settlements, net				-				-				-				695				-
Total operating expenses				51,063				48,783				51,921				147,839				144,552
Operating income				52,786				50,665				106,129				134,956				167,025
Interest income, net				222				201				76				581				334
Other income (expense), net				(45	)			(38	)			(31	)			(100	)			(94	)
Income before income taxes				52,963				50,828				106,174				135,437				167,265
Provision (benefit) for income taxes				11,463				17,461				38,312				39,928				57,027
Net income			$	41,500			$	33,367			$	67,862			$	95,509			$	110,238
Basic earnings per share:			$	0.66			$	0.53			$	1.04			$	1.51			$	1.70
Diluted earnings per share:			$	0.63			$	0.50			$	0.99			$	1.45			$	1.60
Weighted average number of shares:
Basic				62,854				63,217				65,055				63,170				64,859
Diluted				65,368				66,125				68,866				65,894				68,946
Prepared in accordance with Generally Accepted Accounting Principles

CIRRUS LOGIC, INC.
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share data)
(not prepared in accordance with GAAP)
Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.
			Three Months Ended												Nine Months Ended
			Dec. 28,				Sep. 28,				Dec. 29,				Dec. 28,			Dec. 29,
			2013				2013				2012				2013			2012
Net Income Reconciliation			Q3'14				Q2'14				Q3'13				Q3'14			Q3'13
GAAP Net Income			$	41,500			$	33,367			$	67,862			$	95,509		$	110,238
Amortization of acquisition intangibles				275				-				-				275			604
Stock based compensation expense				6,016				5,739				6,026				17,529			15,762
International sales reorganization charges				-				-				(47	)			-			(47	)
Restructuring and other costs, net				12				(154	)			3,539				(572	)		3,539
Gain on asset sale				-				-				(247	)			-			(247	)
Patent settlements, net				-				-				-				695			-
Provision (benefit) for income taxes				10,300				16,378				35,667				36,839			52,602
Non-GAAP Net Income			$	58,103			$	55,330			$	112,800			$	150,275		$	182,451
Earnings Per Share Reconciliation
GAAP Diluted earnings per share			$	0.63			$	0.50			$	0.99			$	1.45		$	1.60
Effect of Amortization of acquisition intangibles				-				-				-				-			0.01
Effect of Stock based compensation expense				0.10				0.09				0.09				0.27			0.23
Effect of Restructuring and other costs, net				-				-				0.05				(0.01	)		0.05
Effect of Patent settlements, net				-				-				-				0.01			-
Effect of Provision (benefit) for income taxes				0.16				0.25				0.51				0.56			0.76
Non-GAAP Diluted earnings per share			$	0.89			$	0.84			$	1.64			$	2.28		$	2.65
Operating Income Reconciliation
GAAP Operating Income			$	52,786			$	50,665			$	106,129			$	134,956		$	167,025
GAAP Operating Profit				24	%			27	%			34	%			24	%		28	%
Amortization of acquisition intangibles				275				-				-				275			604
Stock compensation expense - COGS				332				239				218				577			455
Stock compensation expense - R&D				2,834				2,158				3,234				7,846			7,574
Stock compensation expense - SG&A				2,850				3,342				2,574				9,106			7,733
International sales reorganization charges				-				-				(47	)			-			(47	)
Restructuring and other costs, net				12				(154	)			3,539				(572	)		3,539
Gain on asset sale				-				-				(247	)			-			(247	)
Patent settlements, net				-				-				-				695			-
Non-GAAP Operating Income			$	59,089			$	56,250			$	115,400			$	152,883		$	186,636
Non-GAAP Operating Profit				27	%			30	%			37	%			27	%		31	%
Operating Expense Reconciliation
GAAP Operating Expenses			$	51,063			$	48,783			$	51,921			$	147,839		$	144,552
Amortization of acquisition intangibles				(275	)			-				-				(275	)		(604	)
Stock compensation expense - R&D				(2,834	)			(2,158	)			(3,234	)			(7,846	)		(7,574	)
Stock compensation expense - SG&A				(2,850	)			(3,342	)			(2,574	)			(9,106	)		(7,733	)
International sales reorganization charges				-				-				47				-			47
Restructuring and other costs, net				(12	)			154				(3,539	)			572			(3,539	)
Gain on asset sale				-				-				247				-			247
Patent settlements, net				-				-				-				(695	)		-
Non-GAAP Operating Expenses			$	45,092			$	43,437			$	42,868			$	130,489		$	125,396

CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
			Dec. 28,				Sep. 28,				Dec. 29,
			2013				2013				2012
ASSETS
Current assets
Cash and cash equivalents			$	74,690			$	68,886			$	87,452
Restricted investments				-				-				-
Marketable securities				215,792				199,423				60,717
Accounts receivable, net				109,535				97,640				170,683
Inventories				69,985				91,247				135,023
Deferred tax asset				33,155				38,398				53,140
Other current assets				25,662				23,978				21,775
Total Current Assets				528,819				519,572				528,790
Long-term marketable securities				37,115				40,254				-
Property and equipment, net				102,542				101,885				100,534
Intangibles, net				13,427				4,734				4,920
Goodwill				16,335				6,027				6,027
Deferred tax asset				17,354				16,638				36,466
Other assets				6,848				10,051				15,761
Total Assets			$	722,440			$	699,161			$	692,498
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable			$	60,493			$	56,868			$	95,493
Accrued salaries and benefits				13,937				16,894				13,752
Other accrued liabilities				12,881				6,313				13,992
Deferred income on shipments to distributors				4,998				4,858				5,579
Total Current Liabilities				92,309				84,933				128,816
Other long-term obligations				5,108				11,231				10,131
Stockholders' equity:
Capital stock				1,069,113				1,055,256				1,033,549
Accumulated deficit				(443,322	)			(451,532	)			(479,225	)
Accumulated other comprehensive loss				(768	)			(727	)			(773	)
Total Stockholders' Equity				625,023				602,997				553,551
Total Liabilities and Stockholders' Equity			$	722,440			$	699,161			$	692,498
Prepared in accordance with Generally Accepted Accounting Principles