EX-99.1 2 a51932489ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

Cirrus Logic Reports Q3 FY19 Revenue of $324.3 Million

Company Announces $200 Million Share Repurchase Program

AUSTIN, Texas--(BUSINESS WIRE)--January 30, 2019--Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-performance, low-power ICs for audio and voice signal processing applications, today posted on its website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2019, which ended Dec. 29, 2018, as well as the company’s current business outlook.

“Cirrus Logic reported revenue for the third quarter in line with our revised expectations as we experienced the effects of the turbulent macroeconomic environment and reduced demand for smartphones,” said Jason Rhode, president and chief executive officer. “Despite these challenges, we are encouraged to see continued broad-based interest for low-latency, low-power signal processing across a wide range of product categories. We are making considerable investments in technologies addressing audio, voice and other adjacent applications that we believe will fuel growth opportunities in the coming years.”

Reported Financial Results – Third Quarter FY19

- Revenue of $324.3 million;
- GAAP and non-GAAP gross margin of 50.3 percent and 50.4 percent, respectively;
- GAAP operating expenses of $118.9 million and non-GAAP operating expenses of $100.3 million; and
- GAAP earnings per share of $0.49 and non-GAAP earnings per share of $0.91.

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

Business Outlook – Fourth Quarter FY19

- Revenue is expected to range between $200 million and $240 million;
- GAAP gross margin is expected to be between 49 percent and 51 percent; and
- Combined GAAP R&D and SG&A expenses are expected to range between $119 million and $125 million, which includes approximately $12 million in share-based compensation and $7 million in amortization of acquired intangibles.

Share Repurchase Authorization

The company also announced that its Board of Directors recently authorized the repurchase of up to an additional $200 million of the company's common stock, in addition to the $50 million remaining from the Board’s previous share repurchase authorization in January 2018. The repurchases will be funded from working capital and anticipated cash from operations and may occur from time to time depending on a variety of factors, including general market and economic conditions and other corporate considerations. The share repurchase program is designed to comply with all applicable securities laws and may be suspended or discontinued at any time without notice.

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 (416) 621-4642, or toll-free at (800) 585-8367 (Access Code: 9569708).

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.

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.

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 and profit, operating expenses, gross margin and profit, tax expense 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 statements about our future growth opportunities, along with estimates for the fourth quarter fiscal year 2019 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 2019, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the risk factors listed in our Form 10-K for the year ended March 31, 2018 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.

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
|  |  | Three Months Ended |  |  |  | Nine Months Ended
|  |  | Dec. 29, |  |  | Sep. 29, |  |  | Dec. 30, |  |  |  | Dec. 29, |  |  | Dec. 30,
|  |  | 2018 |  |  | 2018 |  |  | 2017 |  |  |  | 2018 |  |  | 2017
|  |  | Q3'19 |  |  | Q2'19 |  |  | Q3'18 |  |  |  | Q3'19 |  |  | Q3'18
Portable audio products |  |  | $ | 288,640 |  |  |  | $ | 324,049 |  |  |  | $ | 438,650 |  |  |  |  | $ | 824,950 |  |  |  | $ | 1,101,099 |
Non-portable audio and other products |  |  |  | 35,655 |  |  |  |  | 42,256 |  |  |  |  | 44,091 |  |  |  |  |  | 120,133 |  |  |  |  | 127,914 |
Net sales |  |  |  | 324,295 |  |  |  |  | 366,305 |  |  |  |  | 482,741 |  |  |  |  |  | 945,083 |  |  |  |  | 1,229,013 |
Cost of sales |  |  |  | 161,115 |  |  |  |  | 181,186 |  |  |  |  | 247,653 |  |  |  |  |  | 472,225 |  |  |  |  | 620,927 |
Gross profit |  |  |  | 163,180 |  |  |  |  | 185,119 |  |  |  |  | 235,088 |  |  |  |  |  | 472,858 |  |  |  |  | 608,086 |
Gross margin |  |  |  | 50.3 | % |  |  |  | 50.5 | % |  |  |  | 48.7 | % |  |  |  |  | 50.0 | % |  |  |  | 49.5 | %
Research and development |  |  |  | 88,575 |  |  |  |  | 96,381 |  |  |  |  | 96,978 |  |  |  |  |  | 282,888 |  |  |  |  | 270,888 |
Selling, general and administrative |  |  |  | 30,364 |  |  |  |  | 33,160 |  |  |  |  | 34,604 |  |  |  |  |  | 96,308 |  |  |  |  | 95,504 |
Total operating expenses |  |  |  | 118,939 |  |  |  |  | 129,541 |  |  |  |  | 131,582 |  |  |  |  |  | 379,196 |  |  |  |  | 366,392 |
Income from operations |  |  |  | 44,241 |  |  |  |  | 55,578 |  |  |  |  | 103,506 |  |  |  |  |  | 93,662 |  |  |  |  | 241,694 |
Interest income (expense), net |  |  |  | 1,740 |  |  |  |  | 1,525 |  |  |  |  | 912 |  |  |  |  |  | 4,712 |  |  |  |  | 2,231 |
U.K. pension settlement |  |  |  | (13,768 | ) |  |  |  | - |  |  |  |  | - |  |  |  |  |  | (13,768 | ) |  |  |  | - |
Other income (expense), net |  |  |  | 101 |  |  |  |  | (378 | ) |  |  |  | 322 |  |  |  |  |  | (67 | ) |  |  |  | (813 | )
Income before income taxes |  |  |  | 32,314 |  |  |  |  | 56,725 |  |  |  |  | 104,740 |  |  |  |  |  | 84,539 |  |  |  |  | 243,112 |
Provision (benefit) for income taxes |  |  |  | 2,381 |  |  |  |  | (1,448 | ) |  |  |  | 70,961 |  |  |  |  |  | 705 |  |  |  |  | 93,121 |
Net income |  |  | $ | 29,933 |  |  |  | $ | 58,173 |  |  |  | $ | 33,779 |  |  |  |  | $ | 83,834 |  |  |  | $ | 149,991 |
Basic earnings per share: |  |  | $ | 0.50 |  |  |  | $ | 0.96 |  |  |  | $ | 0.53 |  |  |  |  | $ | 1.39 |  |  |  | $ | 2.36 |
Diluted earnings per share: |  |  | $ | 0.49 |  |  |  | $ | 0.93 |  |  |  | $ | 0.52 |  |  |  |  | $ | 1.35 |  |  |  | $ | 2.26 |
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  |  | 59,511 |  |  |  |  | 60,472 |  |  |  |  | 63,453 |  |  |  |  |  | 60,482 |  |  |  |  | 63,655 |
Diluted |  |  |  | 60,783 |  |  |  |  | 62,431 |  |  |  |  | 65,557 |  |  |  |  |  | 62,076 |  |  |  |  | 66,377 |
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 |  |  |  | Nine Months Ended
|  |  | Dec. 29, |  |  | Sep. 29, |  |  | Dec. 30, |  |  |  | Dec. 29, |  |  | Dec. 30,
|  |  | 2018 |  |  | 2018 |  |  | 2017 |  |  |  | 2018 |  |  | 2017
Net Income Reconciliation |  |  | Q3'19 |  |  | Q2'19 |  |  | Q3'18 |  |  |  | Q3'19 |  |  | Q3'18
GAAP Net Income |  |  | $ | 29,933 |  |  |  | $ | 58,173 |  |  |  | $ | 33,779 |  |  |  |  | $ | 83,834 |  |  |  | $ | 149,991 |
Amortization of acquisition intangibles |  |  |  | 7,630 |  |  |  |  | 12,867 |  |  |  |  | 11,600 |  |  |  |  |  | 33,763 |  |  |  |  | 34,800 |
Stock based compensation expense |  |  |  | 11,181 |  |  |  |  | 13,131 |  |  |  |  | 12,512 |  |  |  |  |  | 37,106 |  |  |  |  | 36,207 |
U.K. pension settlement |  |  |  | 13,768 |  |  |  |  | - |  |  |  |  | - |  |  |  |  |  | 13,768 |  |  |  |  | - |
Acquisition-related items |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  |  | - |  |  |  |  | (4,048 | )
Adjustment to income taxes |  |  |  | (7,003 | ) |  |  |  | (17,054 | ) |  |  |  | 46,273 |  |  |  |  |  | (27,983 | ) |  |  |  | 31,756 |
Non-GAAP Net Income |  |  | $ | 55,509 |  |  |  | $ | 67,117 |  |  |  | $ | 104,164 |  |  |  |  | $ | 140,488 |  |  |  | $ | 248,706 |
Earnings Per Share Reconciliation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
GAAP Diluted earnings per share |  |  | $ | 0.49 |  |  |  | $ | 0.93 |  |  |  | $ | 0.52 |  |  |  |  | $ | 1.35 |  |  |  | $ | 2.26 |
Effect of Amortization of acquisition intangibles |  |  |  | 0.13 |  |  |  |  | 0.21 |  |  |  |  | 0.18 |  |  |  |  |  | 0.54 |  |  |  |  | 0.52 |
Effect of Stock based compensation expense |  |  |  | 0.18 |  |  |  |  | 0.21 |  |  |  |  | 0.19 |  |  |  |  |  | 0.60 |  |  |  |  | 0.55 |
Effect of U.K. pension settlement |  |  |  | 0.23 |  |  |  |  | - |  |  |  |  | - |  |  |  |  |  | 0.22 |  |  |  |  | - |
Effect of Acquisition-related items |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  |  | - |  |  |  |  | (0.06 | )
Effect of Adjustment to income taxes |  |  |  | (0.12 | ) |  |  |  | (0.27 | ) |  |  |  | 0.70 |  |  |  |  |  | (0.45 | ) |  |  |  | 0.48 |
Non-GAAP Diluted earnings per share |  |  | $ | 0.91 |  |  |  | $ | 1.08 |  |  |  | $ | 1.59 |  |  |  |  | $ | 2.26 |  |  |  | $ | 3.75 |
Operating Income Reconciliation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
GAAP Operating Income |  |  | $ | 44,241 |  |  |  | $ | 55,578 |  |  |  | $ | 103,506 |  |  |  |  | $ | 93,662 |  |  |  | $ | 241,694 |
GAAP Operating Profit |  |  |  | 14 | % |  |  |  | 15 | % |  |  |  | 21 | % |  |  |  |  | 10 | % |  |  |  | 20 | %
Amortization of acquisition intangibles |  |  |  | 7,630 |  |  |  |  | 12,867 |  |  |  |  | 11,600 |  |  |  |  |  | 33,763 |  |  |  |  | 34,800 |
Stock compensation expense - COGS |  |  |  | 220 |  |  |  |  | 170 |  |  |  |  | 386 |  |  |  |  |  | 589 |  |  |  |  | 1,052 |
Stock compensation expense - R&D |  |  |  | 6,761 |  |  |  |  | 6,834 |  |  |  |  | 6,995 |  |  |  |  |  | 20,845 |  |  |  |  | 19,289 |
Stock compensation expense - SG&A |  |  |  | 4,200 |  |  |  |  | 6,127 |  |  |  |  | 5,131 |  |  |  |  |  | 15,672 |  |  |  |  | 15,866 |
Acquisition-related items |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  |  | - |  |  |  |  | (4,048 | )
Non-GAAP Operating Income |  |  | $ | 63,052 |  |  |  | $ | 81,576 |  |  |  | $ | 127,618 |  |  |  |  | $ | 164,531 |  |  |  | $ | 308,653 |
Non-GAAP Operating Profit |  |  |  | 19 | % |  |  |  | 22 | % |  |  |  | 26 | % |  |  |  |  | 17 | % |  |  |  | 25 | %
Operating Expense Reconciliation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
GAAP Operating Expenses |  |  | $ | 118,939 |  |  |  | $ | 129,541 |  |  |  | $ | 131,582 |  |  |  |  | $ | 379,196 |  |  |  | $ | 366,392 |
Amortization of acquisition intangibles |  |  |  | (7,630 | ) |  |  |  | (12,867 | ) |  |  |  | (11,600 | ) |  |  |  |  | (33,763 | ) |  |  |  | (34,800 | )
Stock compensation expense - R&D |  |  |  | (6,761 | ) |  |  |  | (6,834 | ) |  |  |  | (6,995 | ) |  |  |  |  | (20,845 | ) |  |  |  | (19,289 | )
Stock compensation expense - SG&A |  |  |  | (4,200 | ) |  |  |  | (6,127 | ) |  |  |  | (5,131 | ) |  |  |  |  | (15,672 | ) |  |  |  | (15,866 | )
Acquisition-related items |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  |  | - |  |  |  |  | 4,048 |
Non-GAAP Operating Expenses |  |  | $ | 100,348 |  |  |  | $ | 103,713 |  |  |  | $ | 107,856 |  |  |  |  | $ | 308,916 |  |  |  | $ | 300,485 |
Gross Margin/Profit Reconciliation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
GAAP Gross Profit |  |  | $ | 163,180 |  |  |  | $ | 185,119 |  |  |  | $ | 235,088 |  |  |  |  | $ | 472,858 |  |  |  | $ | 608,086 |
GAAP Gross Margin |  |  |  | 50.3 | % |  |  |  | 50.5 | % |  |  |  | 48.7 | % |  |  |  |  | 50.0 | % |  |  |  | 49.5 | %
Stock compensation expense - COGS |  |  |  | 220 |  |  |  |  | 170 |  |  |  |  | 386 |  |  |  |  |  | 589 |  |  |  |  | 1,052 |
Non-GAAP Gross Profit |  |  | $ | 163,400 |  |  |  | $ | 185,289 |  |  |  | $ | 235,474 |  |  |  |  | $ | 473,447 |  |  |  | $ | 609,138 |
Non-GAAP Gross Margin |  |  |  | 50.4 | % |  |  |  | 50.6 | % |  |  |  | 48.8 | % |  |  |  |  | 50.1 | % |  |  |  | 49.6 | %
Effective Tax Rate Reconciliation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
GAAP Tax Expense (Benefit) |  |  | $ | 2,381 |  |  |  | $ | (1,448 | ) |  |  | $ | 70,961 |  |  |  |  | $ | 705 |  |  |  | $ | 93,121 |
GAAP Effective Tax Rate |  |  |  | 7.4 | % |  |  |  | -2.6 | % |  |  |  | 67.7 | % |  |  |  |  | 0.8 | % |  |  |  | 38.3 | %
Adjustments to income taxes |  |  |  | 7,003 |  |  |  |  | 17,054 |  |  |  |  | (46,273 | ) |  |  |  |  | 27,983 |  |  |  |  | (31,756 | )
Non-GAAP Tax Expense |  |  | $ | 9,384 |  |  |  | $ | 15,606 |  |  |  | $ | 24,688 |  |  |  |  | $ | 28,688 |  |  |  | $ | 61,365 |
Non-GAAP Effective Tax Rate |  |  |  | 14.5 | % |  |  |  | 18.9 | % |  |  |  | 19.2 | % |  |  |  |  | 17.0 | % |  |  |  | 19.8 | %
Tax Impact to EPS Reconciliation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
GAAP Tax Expense (Benefit) |  |  | $ | 0.04 |  |  |  | $ | (0.02 | ) |  |  | $ | 1.08 |  |  |  |  | $ | 0.01 |  |  |  | $ | 1.40 |
Adjustments to income taxes |  |  |  | 0.12 |  |  |  |  | 0.27 |  |  |  |  | (0.70 | ) |  |  |  |  | 0.45 |  |  |  |  | (0.48 | )
Non-GAAP Tax Expense |  |  | $ | 0.16 |  |  |  | $ | 0.25 |  |  |  | $ | 0.38 |  |  |  |  | $ | 0.46 |  |  |  | $ | 0.92 |

CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands
|  |  | Dec. 29, |  |  | Mar. 31, |  |  | Dec. 30,
|  |  | 2018 |  |  | 2018 |  |  | 2017
ASSETS |  |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | $ | 219,319 |  |  |  | $ | 235,604 |  |  |  | $ | 226,640 |
Marketable securities |  |  |  | 59,793 |  |  |  |  | 26,397 |  |  |  |  | 12,822 |
Accounts receivable, net |  |  |  | 142,135 |  |  |  |  | 100,801 |  |  |  |  | 217,619 |
Inventories |  |  |  | 167,879 |  |  |  |  | 205,760 |  |  |  |  | 192,967 |
Other current assets |  |  |  | 51,151 |  |  |  |  | 45,112 |  |  |  |  | 29,445 |
Total current Assets |  |  |  | 640,277 |  |  |  |  | 613,674 |  |  |  |  | 679,493 |
Long-term marketable securities |  |  |  | 165,063 |  |  |  |  | 172,499 |  |  |  |  | 173,717 |
Property and equipment, net |  |  |  | 191,324 |  |  |  |  | 191,154 |  |  |  |  | 187,143 |
Intangibles, net |  |  |  | 76,389 |  |  |  |  | 111,547 |  |  |  |  | 126,183 |
Goodwill |  |  |  | 286,678 |  |  |  |  | 288,718 |  |  |  |  | 288,481 |
Deferred tax asset |  |  |  | 13,131 |  |  |  |  | 14,716 |  |  |  |  | 16,467 |
Other assets |  |  |  | 24,003 |  |  |  |  | 37,809 |  |  |  |  | 21,841 |
Total assets |  |  | $ | 1,396,865 |  |  |  | $ | 1,430,117 |  |  |  | $ | 1,493,325 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |  |
Accounts payable |  |  | $ | 108,022 |  |  |  | $ | 69,850 |  |  |  | $ | 116,274 |
Accrued salaries and benefits |  |  |  | 23,566 |  |  |  |  | 35,721 |  |  |  |  | 29,543 |
Other accrued liabilities |  |  |  | 38,175 |  |  |  |  | 34,638 |  |  |  |  | 29,903 |
Total current liabilities |  |  |  | 169,763 |  |  |  |  | 140,209 |  |  |  |  | 175,720 |
Non-current income taxes |  |  |  | 78,532 |  |  |  |  | 92,753 |  |  |  |  | 54,652 |
Other long-term liabilities |  |  |  | 18,769 |  |  |  |  | 35,427 |  |  |  |  | 51,587 |
Stockholders' equity: |  |  |  |  |  |  |  |  |
Capital stock |  |  |  | 1,349,941 |  |  |  |  | 1,312,434 |  |  |  |  | 1,301,800 |
Accumulated deficit |  |  |  | (217,871 | ) |  |  |  | (139,345 | ) |  |  |  | (92,402 | )
Accumulated other comprehensive income (loss) |  |  |  | (2,269 | ) |  |  |  | (11,361 | ) |  |  |  | 1,968 |
Total stockholders' equity |  |  |  | 1,129,801 |  |  |  |  | 1,161,728 |  |  |  |  | 1,211,366 |
Total liabilities and stockholders' equity |  |  | $ | 1,396,865 |  |  |  | $ | 1,430,117 |  |  |  | $ | 1,493,325 |
Prepared in accordance with Generally Accepted Accounting Principles

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