EX-99.1 2 a51614860_ex991.htm EXHIBIT 99.1

Exhibit 99.1

Cirrus Logic Reports Q1 FY18 Revenue of $320.7 Million

Demand for Portable Audio Components Expected to Fuel Sequential Growth in Q2 FY18

AUSTIN, Texas--(BUSINESS WIRE)--August 2, 2017--Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high performance, low-power ICs for audio and voice signal processing applications, today posted on its investor relations website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the first quarter fiscal year 2018, which ended June 24, 2017, as well as the company’s current business outlook.

“Cirrus Logic delivered solid results in the June quarter as demand for portable audio products was in line with expectations,” said Jason Rhode, president and chief executive officer. “We are extremely pleased as design activity remained strong across our portfolio and we achieved several new product development milestones over the past several months. As demand for innovative audio and voice solutions continues to increase across a wide range of end markets we believe our diversified product portfolio and roadmap will continue to position us for success for many years to come.”

Reported Financial Results – First Quarter FY18

- Revenue of $320.7 million;
- GAAP gross margin of 50.4 percent and non-GAAP gross margin of 50.5 percent;
- GAAP operating expenses of $114.4 million and non-GAAP operating expenses of $95.8 million; and
- GAAP diluted earnings per share of $0.64 and non-GAAP diluted earnings per share of $0.81.

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

Business Outlook – Second Quarter FY18

- Revenue is expected to range between $390 million and $430 million;
- GAAP gross margin is expected to be between 48 percent and 50 percent; and
- Combined GAAP R&D and SG&A expenses are expected to range between $119 million and $125 million, which includes approximately $13 million in share-based compensation and $12 million in amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 p.m. EDT 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 (416) 621-4642, or toll-free at (800) 585-8367 (Access Code: 47484323).

Cirrus Logic, Inc.

Cirrus Logic is a leader in high performance, low-power ICs for audio and voice signal processing applications. Cirrus Logic’s products span the entire audio signal chain, from capture to playback, providing innovative products for the world’s top smartphones, tablets, digital headsets, wearables and emerging smart home applications. With headquarters in Austin, Texas, Cirrus Logic is recognized globally for its award-winning corporate culture. Check us out 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 net income, diluted earnings per share, operating income, operating expenses, gross margins, tax expenses and tax expense impact on 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 second quarter fiscal year 2018 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 second quarter of fiscal year 2018, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the timing and success of new product ramps; and the risk factors listed in our Form 10-K for the year ended March 25, 2017 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 registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.

Summary financial data follows:

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
|  |  |  | Three Months Ended
|  |  |  | Jun. 24, |  |  | Mar. 25, |  |  | Jun. 25,
|  |  |  | 2017 |  |  | 2017 |  |  | 2016
|  |  |  | Q1'18 |  |  | Q4'17 |  |  | Q1'17
Portable audio products |  |  |  | $ | 280,688 |  |  |  | $ | 290,658 |  |  |  | $ | 216,068 |
Non-portable audio and other products |  |  |  |  | 40,047 |  |  |  |  | 37,206 |  |  |  |  | 43,360 |
Net sales |  |  |  |  | 320,735 |  |  |  |  | 327,864 |  |  |  |  | 259,428 |
Cost of sales |  |  |  |  | 159,019 |  |  |  |  | 163,585 |  |  |  |  | 132,743 |
Gross profit |  |  |  |  | 161,716 |  |  |  |  | 164,279 |  |  |  |  | 126,685 |
Gross margin |  |  |  |  | 50.4 | % |  |  |  | 50.1 | % |  |  |  | 48.8 | %
Research and development |  |  |  |  | 83,557 |  |  |  |  | 77,972 |  |  |  |  | 73,934 |
Selling, general and administrative |  |  |  |  | 30,859 |  |  |  |  | 31,752 |  |  |  |  | 30,540 |
Asset impairment |  |  |  |  | - |  |  |  |  | 9,842 |  |  |  |  | - |
Total operating expenses |  |  |  |  | 114,416 |  |  |  |  | 119,566 |  |  |  |  | 104,474 |
Income from operations |  |  |  |  | 47,300 |  |  |  |  | 44,713 |  |  |  |  | 22,211 |
Interest income (expense), net |  |  |  |  | 594 |  |  |  |  | 118 |  |  |  |  | (689 | )
Other income (expense), net |  |  |  |  | (19 | ) |  |  |  | 82 |  |  |  |  | 147 |
Income before income taxes |  |  |  |  | 47,875 |  |  |  |  | 44,913 |  |  |  |  | 21,669 |
Provision for income taxes* |  |  |  |  | 4,963 |  |  |  |  | 9,855 |  |  |  |  | 3,598 |
Net income* |  |  |  | $ | 42,912 |  |  |  | $ | 35,058 |  |  |  | $ | 18,071 |
Basic earnings per share*: |  |  |  | $ | 0.67 |  |  |  | $ | 0.55 |  |  |  | $ | 0.29 |
Diluted earnings per share*: |  |  |  | $ | 0.64 |  |  |  | $ | 0.52 |  |  |  | $ | 0.27 |
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |
Basic |  |  |  |  | 64,097 |  |  |  |  | 64,232 |  |  |  |  | 62,450 |
Diluted* |  |  |  |  | 67,160 |  |  |  |  | 67,062 |  |  |  |  | 65,723 |

*Q1 FY17 results have been updated to reflect Cirrus Logic’s adoption of the Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The adoption of this guidance impacted our previously reported quarterly results.
Prepared in accordance with Generally Accepted Accounting Principles

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
|  |  |  | Jun. 24, |  |  | Mar. 25, |  |  | Jun. 25,
|  |  |  | 2017 |  |  | 2017 |  |  | 2016
Net Income Reconciliation |  |  |  | Q1'18 |  |  | Q4'17 |  |  | Q1'17
GAAP Net Income* |  |  |  | $ | 42,912 |  |  |  | $ | 35,058 |  |  |  | $ | 18,071 |
Amortization of acquisition intangibles |  |  |  |  | 11,600 |  |  |  |  | 8,255 |  |  |  |  | 8,363 |
Stock based compensation expense |  |  |  |  | 11,403 |  |  |  |  | 10,888 |  |  |  |  | 9,310 |
Acquisition-related items |  |  |  |  | (4,048 | ) |  |  |  | - |  |  |  |  | - |
Asset impairment |  |  |  |  | - |  |  |  |  | 9,842 |  |  |  |  | - |
Adjustment to income taxes |  |  |  |  | (7,257 | ) |  |  |  | (7,289 | ) |  |  |  | (6,846 | )
Non-GAAP Net Income* |  |  |  | $ | 54,610 |  |  |  | $ | 56,754 |  |  |  | $ | 28,898 |
Earnings Per Share Reconciliation |  |  |  |  |  |  |  |  |  |
GAAP Diluted earnings per share* |  |  |  | $ | 0.64 |  |  |  | $ | 0.52 |  |  |  | $ | 0.27 |
Effect of Amortization of acquisition intangibles |  |  |  |  | 0.17 |  |  |  |  | 0.13 |  |  |  |  | 0.13 |
Effect of Stock based compensation expense |  |  |  |  | 0.17 |  |  |  |  | 0.16 |  |  |  |  | 0.14 |
Effect of Acquisition-related items |  |  |  |  | (0.06 | ) |  |  |  | - |  |  |  |  | - |
Effect of Asset impairment |  |  |  |  | - |  |  |  |  | 0.15 |  |  |  |  | - |
Effect of Adjustment to income taxes |  |  |  |  | (0.11 | ) |  |  |  | (0.11 | ) |  |  |  | (0.10 | )
Non-GAAP Diluted earnings per share* |  |  |  | $ | 0.81 |  |  |  | $ | 0.85 |  |  |  | $ | 0.44 |
Operating Income Reconciliation |  |  |  |  |  |  |  |  |  |
GAAP Operating Income |  |  |  | $ | 47,300 |  |  |  | $ | 44,713 |  |  |  | $ | 22,211 |
GAAP Operating Profit |  |  |  |  | 15 | % |  |  |  | 14 | % |  |  |  | 9 | %
Amortization of acquisition intangibles |  |  |  |  | 11,600 |  |  |  |  | 8,255 |  |  |  |  | 8,363 |
Stock compensation expense - COGS |  |  |  |  | 338 |  |  |  |  | 324 |  |  |  |  | 230 |
Stock compensation expense - R&D |  |  |  |  | 6,260 |  |  |  |  | 5,987 |  |  |  |  | 5,216 |
Stock compensation expense - SG&A |  |  |  |  | 4,805 |  |  |  |  | 4,577 |  |  |  |  | 3,864 |
Acquisition-related items |  |  |  |  | (4,048 | ) |  |  |  | - |  |  |  |  | - |
Asset impairment |  |  |  |  | - |  |  |  |  | 9,842 |  |  |  |  | - |
Non-GAAP Operating Income |  |  |  | $ | 66,255 |  |  |  | $ | 73,698 |  |  |  | $ | 39,884 |
Non-GAAP Operating Profit |  |  |  |  | 21 | % |  |  |  | 22 | % |  |  |  | 15 | %
Operating Expense Reconciliation |  |  |  |  |  |  |  |  |  |
GAAP Operating Expenses |  |  |  | $ | 114,416 |  |  |  | $ | 119,566 |  |  |  | $ | 104,474 |
Amortization of acquisition intangibles |  |  |  |  | (11,600 | ) |  |  |  | (8,255 | ) |  |  |  | (8,363 | )
Stock compensation expense - R&D |  |  |  |  | (6,260 | ) |  |  |  | (5,987 | ) |  |  |  | (5,216 | )
Stock compensation expense - SG&A |  |  |  |  | (4,805 | ) |  |  |  | (4,577 | ) |  |  |  | (3,864 | )
Acquisition-related items |  |  |  |  | 4,048 |  |  |  |  | - |  |  |  |  | - |
Asset impairment |  |  |  |  | - |  |  |  |  | (9,842 | ) |  |  |  | - |
Non-GAAP Operating Expenses |  |  |  | $ | 95,799 |  |  |  | $ | 90,905 |  |  |  | $ | 87,031 |
Gross Margin/Profit Reconciliation |  |  |  |  |  |  |  |  |  |
GAAP Gross Profit |  |  |  | $ | 161,716 |  |  |  | $ | 164,279 |  |  |  | $ | 126,685 |
GAAP Gross Margin |  |  |  |  | 50.4 | % |  |  |  | 50.1 | % |  |  |  | 48.8 | %
Stock compensation expense - COGS |  |  |  |  | 338 |  |  |  |  | 324 |  |  |  |  | 230 |
Non-GAAP Gross Profit |  |  |  | $ | 162,054 |  |  |  | $ | 164,603 |  |  |  | $ | 126,915 |
Non-GAAP Gross Margin |  |  |  |  | 50.5 | % |  |  |  | 50.2 | % |  |  |  | 48.9 | %
Effective Tax Rate Reconciliation |  |  |  |  |  |  |  |  |  |
GAAP Tax Expense* |  |  |  | $ | 4,963 |  |  |  | $ | 9,855 |  |  |  | $ | 3,598 |
GAAP Effective Tax Rate |  |  |  |  | 10.4 | % |  |  |  | 21.9 | % |  |  |  | 16.6 | %
Adjustments to income taxes |  |  |  |  | 7,257 |  |  |  |  | 7,289 |  |  |  |  | 6,846 |
Non-GAAP Tax Expense* |  |  |  | $ | 12,220 |  |  |  | $ | 17,144 |  |  |  | $ | 10,444 |
Non-GAAP Effective Tax Rate |  |  |  |  | 18.3 | % |  |  |  | 23.2 | % |  |  |  | 26.5 | %
Tax Impact to EPS Reconciliation |  |  |  |  |  |  |  |  |  |
GAAP Tax Expense* |  |  |  | $ | 0.07 |  |  |  | $ | 0.15 |  |  |  | $ | 0.05 |
Adjustments to income taxes |  |  |  |  | 0.11 |  |  |  |  | 0.11 |  |  |  |  | 0.10 |
Non-GAAP Tax Expense* |  |  |  | $ | 0.18 |  |  |  | $ | 0.26 |  |  |  | $ | 0.15 |

*Q1 FY17 results have been updated to reflect Cirrus Logic’s adoption of the Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The adoption of this guidance impacted our previously reported quarterly results.

CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
|  |  |  | Jun. 24, |  |  | Mar. 25, |  |  | Jun. 25,
|  |  |  | 2017 |  |  | 2017 |  |  | 2016
ASSETS |  |  |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  |  | $ | 163,918 |  |  |  | $ | 351,166 |  |  |  | $ | 143,591 |
Marketable securities |  |  |  |  | 11,380 |  |  |  |  | 99,813 |  |  |  |  | 91,090 |
Accounts receivable, net |  |  |  |  | 162,437 |  |  |  |  | 119,974 |  |  |  |  | 140,893 |
Inventories |  |  |  |  | 202,429 |  |  |  |  | 167,895 |  |  |  |  | 154,043 |
Other current assets |  |  |  |  | 38,342 |  |  |  |  | 37,080 |  |  |  |  | 44,106 |
Total current Assets |  |  |  |  | 578,506 |  |  |  |  | 775,928 |  |  |  |  | 573,723 |
Long-term marketable securities |  |  |  |  | 134,851 |  |  |  |  | - |  |  |  |  | 3,923 |
Property and equipment, net |  |  |  |  | 170,829 |  |  |  |  | 168,139 |  |  |  |  | 160,875 |
Intangibles, net |  |  |  |  | 143,107 |  |  |  |  | 135,188 |  |  |  |  | 156,949 |
Goodwill |  |  |  |  | 287,049 |  |  |  |  | 286,767 |  |  |  |  | 287,518 |
Deferred tax asset* |  |  |  |  | 31,971 |  |  |  |  | 32,841 |  |  |  |  | 34,085 |
Other assets |  |  |  |  | 20,337 |  |  |  |  | 14,607 |  |  |  |  | 14,776 |
Total assets |  |  |  | $ | 1,366,650 |  |  |  | $ | 1,413,470 |  |  |  | $ | 1,231,849 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  |  | $ | 85,995 |  |  |  | $ | 73,811 |  |  |  | $ | 105,138 |
Accrued salaries and benefits |  |  |  |  | 31,113 |  |  |  |  | 40,190 |  |  |  |  | 21,854 |
Other accrued liabilities |  |  |  |  | 28,767 |  |  |  |  | 30,074 |  |  |  |  | 31,068 |
Total current liabilities |  |  |  |  | 145,875 |  |  |  |  | 144,075 |  |  |  |  | 158,060 |
Long-term debt |  |  |  |  | - |  |  |  |  | 60,000 |  |  |  |  | 160,439 |
Other long-term liabilities* |  |  |  |  | 60,070 |  |  |  |  | 57,703 |  |  |  |  | 34,290 |
Stockholders' equity: |  |  |  |  |  |  |  |  |  |
Capital stock* |  |  |  |  | 1,272,570 |  |  |  |  | 1,259,279 |  |  |  |  | 1,215,209 |
Accumulated deficit* |  |  |  |  | (112,258 | ) |  |  |  | (107,014 | ) |  |  |  | (336,708 | )
Accumulated other comprehensive income (loss) |  |  |  |  | 393 |  |  |  |  | (573 | ) |  |  |  | 559 |
Total stockholders' equity |  |  |  |  | 1,160,705 |  |  |  |  | 1,151,692 |  |  |  |  | 879,060 |
Total liabilities and stockholders' equity |  |  |  | $ | 1,366,650 |  |  |  | $ | 1,413,470 |  |  |  | $ | 1,231,849 |

*Q1 FY17 results have been updated to reflect Cirrus Logic’s adoption of the Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The adoption of this guidance impacted our previously reported quarterly results.
Prepared in accordance with Generally Accepted Accounting Principles

CONTACT:
Cirrus Logic, Inc.
Thurman K. Case, 512-851-4125
Chief Financial Officer
Investor.Relations@cirrus.com