The company reported fourth quarter fiscal year 2006 revenue of $42.2 million, compared with $40.4 million of total revenue and $36.8 million of analog, mixed-signal and embedded products in the same period one year ago. This represents 15 percent growth among the analog, mixed-signal and embedded products on a comparable basis from the prior year. Fourth quarter gross margin was 58.1 percent compared to 53.1 percent for the fourth quarter of fiscal year 2005. Combined research and development (R&D) and selling, general and administrative (SG&A) expenses for the fourth fiscal quarter of 2006 were $19.8 million.
Net income for the fourth fiscal quarter was $15.4 million, or $0.17 per diluted share. Fourth fiscal quarter results included a one-time $7.0 million gain associated with amendments to an existing licensing agreement and a $1.2 million benefit from certain international tax-related events. Non-GAAP net income, excluding the income associated with the licensing agreement amendment and international tax-related events for the fourth fiscal quarter, was $7.2 million or $0.08 per diluted share.
Total cash and marketable securities at the end of the fourth fiscal quarter was $243.5 million, compared with $179.7 million at the end of the prior fiscal year, which is an increase of $63.8 million.
"I am pleased with our fourth-quarter results, as we delivered strong earnings with expanding gross margins and year-over-year growth, in what has been historically our seasonally weakest quarter," said David D. French, president and chief executive officer, Cirrus Logic. "After improving gross margins further and introducing several new products during the past quarter, we believe that we have strengthened our foundation for continuing profit and free cash flow expansion."
Outlook for First Quarter FY 2007 (ending June 24, 2006):
-- Revenue is expected to range between $44 million and $48 million;
-- Gross margin is expected to be between 56 percent and 58 percent;
-- Combined R&D and SG&A expenses are expected to range between $22 million and $24 million, including share-based compensation expense of approximately $2.0 million.
Use of Non-GAAP Financial Information
Cirrus Logic has included in this release certain financial information that has not been prepared in accordance with GAAP. A reconciliation of such non-GAAP financial information to the most directly comparable GAAP information 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. This non-GAAP financial information is not meant as a substitute for the company's GAAP results, but is included solely for informational and comparative purposes. Cirrus Logic management believes that certain non-GAAP financial information is useful to investors because it can enhance their understanding of the results and trends in the company's business, and therefore uses this non-GAAP financial information internally to evaluate and manage the company's operations. The non-GAAP financial information that the company uses may differ from that used by other companies. This non-GAAP financial information should be considered in addition to, and not as a substitute for, the company's results that were prepared in accordance with GAAP.
Conference Call
Cirrus Logic management will hold a conference call to discuss the company's results for the fourth quarter and full year of fiscal year 2006, on April 26, 2006, at 5:00 p.m. EDT. Those wishing to join should call 303-262-2137 (passcode: Cirrus Logic) at approximately 4:50 p.m. EDT. A replay of the conference call will also be available beginning one hour after the completion of the call, until May 3, 2006. To access the recording, call 303-590-3000 (passcode: 11056613 #). 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 financial conferences:
-- Piper Jaffray's 8th Annual Hardware & Communications Conference on May 11 in New York; and
-- Citigroup 7th Annual Semiconductor Conference on June 1 in Boston.
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 contain forward-looking statements, including our estimates of first quarter fiscal year 2007 sales, gross margin, combined research and development and selling, general and administrative expense levels, share-base compensation expense, and expectations regarding our revenue growth and fiscal year 2007 results. In some cases, forward-looking statements are identified by words such as we "expect," "anticipate," "target," "project," "believe," "goals," "estimates," and "intend," and 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 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 level of orders and shipments during the first quarter of fiscal year 2007, 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 sufficient 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 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.
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Quarter Ended
-----------------------------
Mar. 25, Dec. 24, Mar. 26,
2006 2005 2005
--------- --------- ---------
Net revenue $42,158 $48,253 $40,415
Cost of sales 17,678 21,686 18,955
--------- --------- ---------
Gross Margin 24,480 26,567 21,460
--------- --------- ---------
Gross Margin Percentage 58.1% 55.1% 53.1%
Operating expenses:
Research and development 10,378 10,442 18,270
Selling, general and administrative 9,437 10,740 7,127
Restructuring and other costs - - 485
License agreement (7,000) - -
--------- --------- ---------
Total operating expenses 12,815 21,182 25,882
--------- --------- ---------
Total operating expenses as a
percent of revenue 30.4% 43.9% 64.0%
Income (loss) from operations 11,665 5,385 (4,422)
Operating income (loss) as a percent of
revenue 27.7% 11.2% (10.9%)
Realized gain on marketable equity
securities - - 137
Interest income, net 2,510 2,131 962
Other expense, net 21 53 116
--------- --------- ---------
Income (loss) before income taxes 14,196 7,569 (3,207)
Benefit for income taxes (1,241) (5,261) (5,745)
--------- --------- ---------
Net income (loss) $15,437 $12,830 $2,538
========= ========= =========
Basic income (loss) per share: $0.18 $0.15 $0.03
Diluted income (loss) per share: $0.17 $0.15 $0.03
Basic weighted average common shares
outstanding 86,718 86,399 85,124
Diluted weighted average common shares
outstanding 88,924 88,101 86,151
See Reconciliation to the 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.
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share data)
(not prepared in accordance with GAAP)
Quarter Ended
--------------------------
Mar. 25, Dec. 24, Mar. 26,
2006 2005 2005
-------- -------- --------
GAAP revenue $40,415
Non-GAAP adjustments:
Video product line revenue; video assets
sold June 30, 2005 (3,659)
--------
Non-GAAP revenue $36,756
========
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 $12,815
Non-GAAP adjustments:
License agreement 7,000
--------
Non-GAAP operating expenses $19,815
========
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.
GAAP net income $15,437
Non-GAAP adjustments:
Subtract tax benefit due to expiration of
statute of limitations in foreign
jurisdictions (1,254)
Adjust for non-GAAP operating expenses
listed above (7,000)
--------
Non-GAAP net income $7,183
========
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.
GAAP diluted earnings per share $0.17
Non-GAAP adjustments:
Effect of the tax benefit due to expiration
of statute of limitations in foreign
jurisdictions (0.01)
Effect for non-GAAP operating expenses
listed above (0.08)
--------
Non-GAAP net income $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
(in thousands, except per share data)
Twelve Months Ended
---------------------
Mar. 25, Mar. 26,
2006 2005
---------- ----------
(unaudited)
Net revenue $193,694 $194,900
Cost of sales 88,482 101,637
---------- ----------
Gross Margin 105,212 93,263
---------- ----------
Gross Margin Percentage 54.3% 47.9%
Operating expenses:
Research and development 45,101 80,507
Selling, general and administrative 50,243 42,394
Restructuring and other costs 2,311 9,463
Litigation settlement, net (24,758) -
License agreement (7,000) -
Patent agreement, net - (593)
---------- ----------
Total operating expenses 65,897 131,771
---------- ----------
Total operating expenses as a percent of
revenue 34.0% 67.6%
Income (loss) from operations 39,315 (38,508)
Operating income (loss) as a percent of revenue 20.3% (19.8%)
Realized gain on marketable equity securities 388 806
Interest income, net 7,461 3,208
Other expense, net (54) 317
---------- ----------
Income (loss) before income taxes and loss from
discontinued operations 47,110 (34,177)
Benefit for income taxes (7,035) (20,789)
---------- ----------
Net income (loss) $54,145 $(13,388)
========== ==========
Basic income (loss) per share: $0.63 $(0.16)
Diluted income (loss) per share: $0.62 $(0.16)
Basic weighted average common shares
outstanding 86,036 84,746
Diluted weighted average common shares
outstanding 87,775 84,746
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.
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)
Mar. 25, Dec. 24, Mar. 26,
2006 2005 2005
---------- ----------- ----------
ASSETS (unaudited) (unaudited)
Current assets
Cash and cash equivalents $116,675 $114,947 $79,235
Restricted investments 5,755 5,755 7,898
Marketable securities 102,335 107,330 91,559
Accounts receivable, net 20,937 21,442 18,593
Inventories 18,708 17,049 26,649
Other current assets 7,747 6,978 6,600
---------- ----------- ----------
Total Current Assets 272,157 273,501 230,534
Long-term marketable securities 18,703 4,935 1,021
Property and equipment, net 14,051 14,012 17,572
Intangibles, net 2,966 3,441 10,786
Other assets 11,164 10,837 2,897
---------- ----------- ----------
Total Assets $319,041 $306,726 $262,810
========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $14,129 $17,149 $10,546
Accrued salaries and benefits 6,460 6,329 8,164
Other accrued liabilities 9,909 12,223 10,799
Deferred income on shipments to
distributors 7,098 6,108 7,935
Income taxes payable 2,228 3,145 9,276
---------- ----------- ----------
Total Current Liabilities 39,824 44,954 46,720
Long-term restructuring accrual 4,694 4,545 3,678
Other long-term obligations 10,109 9,428 8,675
Stockholders' equity:
Capital stock 881,956 880,930 875,687
Accumulated deficit (616,652) (632,089) (670,797)
Accumulated other comprehensive
loss (890) (1,042) (1,153)
---------- ----------- ----------
Total Stockholders' Equity 264,414 247,799 203,737
---------- ----------- ----------
Total Liabilities and
Stockholders' Equity $319,041 $306,726 $262,810
========== =========== ==========
Contact:
Cirrus Logic, Inc., Austin John Kurtzweil, 512-912-3222 Email Contact or Summit IR Group Inc. Mary McGowan, 408-404-5401 Email Contact