Cirrus Logic Reports Fiscal Q2 2010 Financial Results

Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision analog and digital signal processing components, today announced financial results for the second quarter of fiscal year 2010, which ended Sept. 26, 2009.

Revenue for the quarter was $55.7 million compared to $53.3 million during the second quarter of fiscal year 2009 and $37.5 million in the previous quarter. Gross margin for the quarter was 52 percent, down from 56 percent in the quarter a year ago and flat compared to 52 percent reported for the previous quarter.

Total GAAP operating expenses for the quarter were approximately $22.5 million, up from $19.8 million in the previous quarter. GAAP operating expenses in the second quarter included a net benefit of approximately $1.4 million related to the sale of certain patents as well as an additional $165,000 in facilities restructuring credits. GAAP operating expenses also include charges of $1.3 million for stock-based compensation and $400,000 in acquisition-related amortization of intangibles. Non-GAAP operating expenses for the quarter were approximately $22.4 million, compared to $20.9 million for the June quarter.

Income from operations on a GAAP basis was approximately $6.4 million. Excluding the items noted above, non-GAAP income from operations was $6.7 million.

Cirrus Logic reported second quarter GAAP net income of approximately $6.8 million, or $0.10 per share based on 65.5 million average diluted shares outstanding. Excluding the items noted above, on a non-GAAP basis the company reported net income of $7.0 million, or $0.11 per share.

“We are extremely pleased with our Q2 results, as revenue and gross margin exceeded our expectations, driven by both new audio product ramps as well as a modest recovery across our other product lines,“ said Jason Rhode, president and chief executive officer, Cirrus Logic. “We expect further revenue growth in Q3, coupled with gross margin improvements due to a higher mix of Energy revenue as well as continued improvements to our product cost structures.”

Outlook for Third Quarter FY 2010 (ending December 26, 2009):

• Revenue is expected to range between $58 million and $62 million;
• Gross margin is expected to be between 52 percent and 54 percent; and
• Combined R&D and SG&A expenses are expected to range between $23 million and $25 million, which include approximately $2 million in share-based compensation and amortization of acquisition-related intangibles expenses.

Conference Call

Cirrus Logic management will hold a conference call to discuss the company’s results for the second quarter of fiscal year 2010, on Oct. 20, 2009 at 10:30 a.m. EDT. Those wishing to join should call 480-629-9820, or 877-941-8631 (Conference ID: 4165423) at approximately 10:20 a.m. EDT. A replay of the conference call will also be available beginning one hour after the completion of the call, until Oct. 27, 2009. To access the recording, dial 303-590-3030, or toll-free at 800-406-7325 (Conference ID: 4165423). A live and an archived webcast of the conference call will also be available via the investor section of the company’s website at www.cirrus.com.

Cirrus Logic, Inc.

Celebrating its 25th year as a leading fabless semiconductor company in 2009, 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 Tucson, 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 non-GAAP operating expenses, non-GAAP net income, non-GAAP net income from operations, and non-GAAP 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. 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.

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 third quarter fiscal year 2010 revenue, gross margin, combined research and development and selling, general and administrative expense levels, share-based compensation expense, and amortization of acquired intangible expenses. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” and “intend,” variations of these types of words and similar expressions are intended to identify these forward-looking statements. 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: overall economic pressures and general market and economic conditions; overall conditions in the semiconductor market; the level of orders and shipments during the third quarter of fiscal year 2010, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; the loss of a key customer; pricing pressures; and the risk factors listed in our Form 10-K for the year ended March 28, 2009, 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												Six Months Ended
		Sep. 26,				Jun. 27,				Sep. 27,				Sep. 26,				Sep. 27,
		2009				2009				2008				2009				2008
		Q2'10				Q1'10				Q2'09				Q2'10				Q2'09
Audio products		$	41,271			$	24,787			$	30,604			$	66,058			$	52,634
Energy products			14,403				12,727				22,674				27,130				44,655
Net revenue			55,674				37,514				53,278				93,188				97,289
Cost of sales			26,700				17,927				23,292				44,627				42,652
Gross Profit			28,974				19,587				29,986				48,561				54,637
Operating expenses:
Research and development			12,355				12,508				10,864				24,863				22,469
Selling, general and administrative			11,746				10,071				11,597				21,817				23,600
Restructuring and other costs			(165	)			-				-				(165	)			-
Provision for litigation expenses			-				(2,745	)			1,771				(2,745	)			1,771
Patent agreement, net			(1,400	)			-				-				(1,400	)			-
Total operating expenses			22,536				19,834				24,232				42,370				47,840
Operating income (loss)			6,438				(247	)			5,754				6,191				6,797
Interest income, net			376				463				637				839				1,573
Other income (expense), net			(21	)			(18	)			(52	)			(39	)			143
Income (loss) before income taxes			6,793				198				6,339				6,991				8,513
Provision (benefit) for income taxes			29				(23	)			(16	)			6				20
Net income (loss)		$	6,764			$	221			$	6,355			$	6,985			$	8,493
Basic income (loss) per share:
Basic income (loss) per share:		$	0.10			$	-			$	0.10			$	0.11			$	0.13
Diluted income (loss) per share:		$	0.10			$	-			$	0.10			$	0.11			$	0.13
Weighted average number of shares:
Basic			65,281				65,254				64,971				65,268				65,797
Diluted			65,473				65,341				65,317				65,392				66,264
Prepared in accordance with Generally Accepted Accounting Principles

CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)
							Sep. 26,				Mar. 28,				Sep. 27,
							2009				2009				2008
							(unaudited)								(unaudited)
	ASSETS
	Current assets
		Cash and cash equivalents					$	20,692			$	31,504			$	55,566
		Restricted investments						5,755				5,755				5,755
		Marketable securities						62,191				79,346				48,565
		Accounts receivable, net						26,160				10,814				25,556
		Inventories						22,497				19,878				28,106
		Other current assets						4,618				5,359				7,794
		Total Current Assets						141,913				152,656				171,342
	Long-term marketable securities							35,391				3,627				-
	Property and equipment, net							18,788				19,367				20,779
	Intangibles, net							22,856				23,309				24,559
	Goodwill							6,027				6,027				6,194
	Other assets							1,925				2,018				2,301
		Total Assets					$	226,900			$	207,004			$	225,175
	LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities
		Accounts payable					$	20,758			$	9,886			$	17,620
		Accrued salaries and benefits						6,873				6,432				7,552
		Other accrued liabilities						4,894				6,004				8,657
		Deferred income on shipments to distributors						3,728				3,426				7,751
		Total Current Liabilities						36,253				25,748				41,580
	Long-term restructuring accrual							548				931				1,285
	Other long-term obligations							7,265				7,397				7,093
	Stockholders' equity:
		Capital stock						948,371				945,455				942,853
		Accumulated deficit						(764,966	)			(771,951	)			(766,933	)
		Accumulated other comprehensive loss						(571	)			(576	)			(703	)
		Total Stockholders' Equity						182,834				172,928				175,217
		Total Liabilities and Stockholders' Equity					$	226,900			$	207,004			$	225,175
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)
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.
		Three Months Ended												Six Months Ended
		Sep. 26,				Jun. 27,				Sep. 27,				Sep. 26,				Sep. 27,
		2009				2009				2008				2009				2008
Net Income Reconciliation		Q2'10				Q1'10				Q2'09				Q2'10				Q2'09
GAAP Net Income		$	6,764			$	221			$	6,355			$	6,985			$	8,493
Acquisition related items			404				404				364				808				36
Stock based compensation expense			1,383				1,353				1,230				2,736				2,900
Facility and other related adjustments			-				(22	)			(34	)			(22	)			216
Provision for Litigation expenses			-				(2,745	)			1,771				(2,745	)			1,771
Restructing and other costs, net			(165	)			-				-				(165	)			-
Impairment of Intangibles			-				-				-				-				11
Patent agreement, net			(1,400	)			-				-				(1,400	)			-
Non-GAAP Net Income (Loss)		$	6,986			$	(789	)		$	9,686			$	6,197			$	13,427
Earnings Per Share reconciliation
GAAP Diluted income per share		$	0.10			$	-			$	0.10			$	0.11			$	0.13
Effect of Acquisition related items			0.01				0.01				-				0.01				-
Effect of Stock based compensation expense			0.02				0.02				0.02				0.04				0.04
Effect of Facility and other related adjustments			-				-				-				-				-
Effect of Provision for Litigation expenses			-				(0.04	)			0.03				(0.04	)			0.03
Effect of Restructing and other costs, net			-				-				-				-				-
Effect of Impairment of Intangibles			-				-				-				-				-
Effect of Patent agreement, net			(0.02	)			-				-				(0.02	)			-
Non-GAAP Net income (loss) per share		$	0.11			$	(0.01	)		$	0.15			$	0.10			$	0.20
Operating Income Reconciliation
GAAP Operating Income (Loss)		$	6,438			$	(247	)		$	5,754			$	6,191			$	6,797
Stock compensation expense - COGS			43				52				48				95				245
Stock compensation expense - R&D			428				514				446				942				1,023
Stock compensation expense - SG&A			912				787				736				1,699				1,632
Amortization of acquisition intangibles			404				404				364				808				36
Facility and other related adjustments			-				(22	)			(34	)			(22	)			216
Provision for litigation expenses			-				(2,745	)			1,771				(2,745	)			1,771
Restructing and other costs, net			(165	)			-				-				(165	)			-
Impairment of Intangibles			-				-				-				-				11
Patent agreement, net			(1,400	)			-				-				(1,400	)			-
Non-GAAP Operating Income (Loss)		$	6,660			$	(1,257	)		$	9,085			$	5,403			$	11,731
Operating Expense Reconciliation
GAAP Operating Expenses		$	22,536			$	19,834			$	24,232			$	42,370			$	47,840
Stock compensation expense - R&D			(428	)			(514	)			(446	)			(942	)			(1,023	)
Stock compensation expense - SG&A			(912	)			(787	)			(736	)			(1,699	)			(1,632	)
Amortization of acquisition intangibles			(404	)			(404	)			(364	)			(808	)			(36	)
Facility and other related adjustments			-				22				34				22				(216	)
Provision for litigation expenses			-				2,745				(1,771	)			2,745				(1,771	)
Restructing and other costs, net			165				-				-				165				-
Impairment of Intangibles			-				-				-				-				(11	)
Patent agreement, net			1,400				-				-				1,400				-
Non-GAAP Operating Expenses		$	22,357			$	20,896			$	20,949			$	43,253			$	43,151