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Cirrus Logic Reports Fiscal Q4 and FY 2005 Financial Results
28 April 2005
Cirrus Logic Inc. (NASDAQ:CRUS - News) today announced financial results for the fourth fiscal quarter and fiscal year 2005, ended March 26, 2005.
The company reported fourth quarter fiscal year 2005 revenue of $40.4 million compared with $44.0 million in the prior quarter. Fourth quarter gross margin was 53.1 percent, compared with 39.1 percent in the third quarter. The third quarter was impacted by inventory charges that reduced gross margin by 10.8 percentage points and a revenue deferral that further negatively impacted gross margin by 2.8 percentage points. Fourth fiscal quarter combined research and development and selling, general and administrative expenses were $22.0 million, compared with $25.1 million in the prior fiscal quarter.
Net income in the fourth fiscal quarter was $2.5 million, or $0.03 per share. In the prior fiscal quarter, the company also reported net income of $2.5 million, or $0.03 per share. The fourth fiscal quarter operating expenses included a $3.0 million favorable sales tax benefit in SG&A, partially offset by $3.9 million of expenses primarily for amortization of acquired intangibles and restructuring-related items as announced in the third fiscal quarter. The company also recorded a $6.0 million income tax benefit during the fourth fiscal quarter. The third fiscal quarter results included a net benefit to income totaling $11.5 million, which primarily included various tax-related benefits partially offset by amortization of acquired intangibles and restructuring-related items.
Total cash and marketable securities at the end of the fourth fiscal quarter was $179.7 million, compared with $178.4 million at the end of the prior fiscal quarter. Inventories were $26.6 million, down 18 percent or $5.7 million, from the end of December 2004.
"We are pleased to have met our financial expectations for the quarter and to have successfully reduced inventory levels, despite the traditional post-holiday softening in demand," said David D. French, president and chief executive officer, Cirrus Logic. "We are particularly pleased with the strong gross margins delivered for our core products."
As announced on April 25, 2005, Cirrus Logic intends to divest its digital video product line and focus operations around its core, high-precision analog, mixed-signal and embedded integrated circuits (ICs) for audio and industrial applications. In the fourth quarter of fiscal year 2005, the company's core analog, mixed-signal and embedded products represented revenue of $36.7 million and the digital video product line represented revenue of $3.7 million. This compares with the prior fiscal quarter in which core analog, mixed-signal and embedded products represented revenue of $40.9 million and the digital video product line represented revenue of $3.1 million. The video product line gross margin for the fourth fiscal quarter was approximately 54 percent compared with the third fiscal quarter video product line gross margin loss of approximately 150 percent. In the fourth fiscal quarter, research and development and selling, general and administrative expenses associated with the digital video product line were estimated to range between $4.0 million to $4.5 million. Other operating expenses related to the video product line for the fourth fiscal quarter include the amortization of acquired intangibles of $3.2 million. The company does not track expenses to the detail level by product line and the video product line expenses are estimates. Inventory related to the digital video product line as of March 26, 2005 was valued at $5.2 million.
"Based on our intent to divest the digital video product line, we expect to have greater focus on the strengths of the company, which are the analog, mixed-signal and embedded product lines. With a strong balance sheet, we enter fiscal year 2006 with the prospect of being profitable, even in a difficult period within the semiconductor industry," said French. On another note, French added, "I am encouraged by the strong gross margins for our core products and I am enthusiastically looking ahead at the growth opportunities for Cirrus Logic as we have positioned the company for profitability and growth within its broad, expanding customer base for analog, mixed-signal and embedded markets."
Outlook and Guidance
The company is providing the following guidance and will include the outlook for the digital video product line separately:
First Quarter FY 06 for analog, mixed-signal and embedded product ICs
(ending June 25, 2005)
-- Sales are expected to range between $40 million and $41
million, an increase from $36.7 million in the fourth fiscal
quarter of 2005;
-- Gross margin is anticipated 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;
-- Inventory is expected to be reduced by 10 percent.
First Quarter FY 06 for the digital video product line (ending
June 25, 2005)
-- Sales are expected to range between $6 million and $8 million,
an increase from $3.7 million in the fourth fiscal quarter of
2005;
-- Gross margin is anticipated to be between 44 percent and 46
percent;
-- Combined R&D and SG&A expenses are expected to range between
$4 million and $4.5 million;
-- Inventory is expected to be reduced by 50 percent.
Conference Call
Cirrus Logic management will hold a conference call to discuss these results today, April 27, 2005 at 5:00 p.m. EDT. Those wishing to join should dial 201-689-8044 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 May 11, 2005. To access the replay, dial 201-612-7415 (account #: 2445; conference #: 146363). 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 two upcoming conferences in New York: The CIBC Communications & Technology Conference on May 11, 2005 and the Piper Jaffray Technology Conference on May 13, 2005. Those wishing to listen to these presentations can hear a live and an archived webcast of these events via the company's Web site at www.cirrus.com.
Cirrus Logic, Inc.
Cirrus Logic develops high-precision, analog-rich mixed-signal integrated circuits for a broad range of consumer and industrial markets. Building on its broad 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 first quarter fiscal year 2006 sales, gross margin, combined research and development and selling, general and administrative expense levels, 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; 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; our ability to successfully complete the divestiture of the digital video product line; the results of any potential and pending litigation matters; the level of orders and shipments during the first quarter of fiscal year 2006, 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.
Summary financial data follows:
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Quarter Ended
-------------------------------
Mar. 26, Dec. 25, Mar. 27,
2005 2004 2004
---------- --------- --------
Net sales $40,415 $44,036 $50,214
Cost of sales 18,955 26,834 23,921
---------- --------- --------
Gross Margin 21,460 17,202 26,293
---------- --------- --------
Gross Margin Percentage 53.1% 39.1% 52.4%
Operating expenses:
Research and development 14,851 15,480 16,871
Selling, general and administrative 7,127 9,611 14,635
Restructuring and other costs 485 3,107 595
Amortization of acquired intangibles 3,419 3,419 3,419
Patent agreement, net -- (593) (17,000)
---------- --------- --------
Total operating expenses 25,882 31,024 18,520
---------- --------- --------
Total operating expenses as a
percent of revenue 64.0% 70.5% 36.9%
Income (loss) from operations (4,422) (13,822) 7,773
Operating income (loss) as a percent
of revenue (10.9%) (31.4%) 15.5%
Realized gain on marketable equity
securities 137 -- 1,967
Interest income, net 962 946 555
Other income (expense), net 116 272 (11)
---------- --------- --------
Income (loss) before income taxes and
loss from discontinued operations (3,207) (12,604) 10,284
Benefit for income taxes (5,745) (15,134) (33)
---------- --------- --------
Net income $2,538 $2,530 $10,317
========== ========= ========
Basic and diluted income per share: $0.03 $0.03 $0.12
Basic weighted average common shares
outstanding 85,124 84,773 84,355
Diluted weighted average common
shares outstanding 86,151 86,159 86,729
Prepared in accordance with Generally Accepted Accounting Principles
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Twelve Months
Ended
----------------------------
Mar. 26, Mar. 27,
2005 2004
-------------- -----------
Net sales $194,900 $196,338
Cost of sales 101,637 95,594
-------------- -----------
Gross Margin 93,263 100,744
-------------- -----------
Gross Margin Percentage 47.9% 51.3%
Operating expenses:
Research and development 66,831 76,168
Selling, general and administrative 42,394 51,518
Restructuring and other costs 9,463 9,526
Amortization of acquired
intangibles 13,676 14,394
Patent infringement settlements,
net -- (14,402)
Litigation settlement -- (45,000)
Patent agreement, net (593) (17,000)
-------------- -----------
Total operating expenses 131,771 75,204
-------------- -----------
Total operating expenses as a
percent of revenue 67.6% 38.3%
Income (loss) from operations (38,508) 25,540
Operating income (loss) as a percent
of revenue (19.8%) 13.0%
Realized gain on marketable equity
securities 806 12,047
Interest income, net 3,208 1,875
Other income (expense), net 317 (18)
-------------- -----------
Income (loss) before income taxes and
loss from discontinued operations (34,177) 39,444
Benefit for income taxes (20,789) (7,059)
-------------- -----------
Net income (loss) $(13,388) $46,503
============== ===========
Basic income (loss) per share: $(0.16) $0.55
Diluted income (loss) per share: $(0.16) $0.54
Basic weighted average common
shares outstanding 84,746 84,019
Diluted weighted average common
shares outstanding 84,746 85,602
Prepared in accordance with Generally Accepted Accounting Principles
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)
Mar. 26, Dec. 25, Mar. 27,
2005 2004 2004
----------- ----------- ---------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $79,235 $93,432 $157,893
Restricted investments 7,898 7,784 8,159
Marketable securities 91,559 61,893 27,093
Accounts receivable, net 18,593 21,050 19,804
Inventories 26,649 32,330 29,632
Other current assets 6,600 7,249 10,547
----------- ----------- ---------
Total Current Assets 230,534 223,738 253,128
Long-term marketable securities 1,021 15,319 6,996
Property and equipment, net 17,572 19,934 22,663
Intangibles, net 10,786 14,807 28,638
Other assets 2,897 2,907 3,247
----------- ----------- ---------
Total Assets $262,810 $276,705 $314,672
=========== =========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $10,546 $14,914 $19,317
Accrued salaries and benefits 8,164 8,974 9,459
Other accrued liabilities 10,799 15,809 20,447
Deferred income on shipments to
distributors 7,935 7,877 3,506
Income taxes payable 9,276 15,075 30,107
----------- ----------- ---------
Total Current Liabilities 46,720 62,649 82,836
Long-term restructuring accrual 3,678 3,411 7,114
Other long-term obligations 8,675 9,848 10,623
Stockholders' equity:
Capital stock 875,687 875,216 871,679
Accumulated deficit (670,797) (673,335) (657,409)
Accumulated other comprehensive
income (loss) (1,153) (1,084) (171)
----------- ----------- ---------
Total Stockholders' Equity 203,737 200,797 214,099
----------- ----------- ---------
Total Liabilities and
Stockholders' Equity $262,810 $276,705 $314,672
=========== =========== =========
Prepared in accordance with Generally Accepted Accounting Principles
--------------------------------------------------------------------------------
Contact:
Cirrus Logic, Inc., Austin
Investor Contact:
John Kurtzweil, 512-912-3222
InvestorRelations@cirrus.com
or
Summit IR Group Inc.
Mary McGowan, 408-404-5401
Mary@summitirgroup.com
--------------------------------------------------------------------------------
Source: Cirrus Logic, Inc.
Source: Business Wire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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