Cirrus Logic Reports 23 Percent Sequential Revenue Growth in Fiscal Q2; Audio and Video Product Sales Increase, Balance Sheet Strengthens.Business Editors/High-Tech Writers AUSTIN, Texas--(BUSINESS WIRE)--Oct. 22, 2003 Cirrus Logic (company) Cirrus Logic - A manufacturer of integrated circuits including the Advanced RISC Machine and display interface processors and cards for use as Windows accelerators (requiring dedicated driver software). http://cirrus.com/. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CRUS crus (krus) pl. cru´ra [L.] 1. leg (1). 2. a leglike part. crus ce´rebri ) today announced financial results for the second quarter of fiscal 2004, ended Sept. 27, 2003. The company reported second quarter revenue of $50.1 million, up 23 percent from $40.7 million reported in the first quarter. Second quarter gross margins were 51.9 percent, up from 48.5 percent in the first quarter. Second quarter combined research and development and selling, general and administrative expenses were $32.6 million, an improvement from $33.2 million in the prior quarter. Included in these second quarter expenses were $1.1 million related to legal expenses associated with a recently settled lawsuit with Western Digital Corporation and amortization of acquisition-related deferred compensation. Net income in the second quarter was $21.1 million, or $0.25 per share, compared with a net loss of $24.3 million, or a loss of $0.29 per share, in the first quarter. The second quarter net income included benefits of $31.7 million resulting from favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlements with nVidia Corporation and ATI Technologies “ATI” redirects here. For other uses, see Ati. ATI Technologies U.L.C. ATI is a major Canadian designer and supplier of graphics processing units, motherboard chipsets, and video display cards. totaling $14.4 million, net of expenses; $10.1 million associated with a realized gain Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. on the sale of marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and a related payment from SigmaTel; and a $7.2 million income tax benefit due to the release of a reserve following the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of the statute of limitations A type of federal or state law that restricts the time within which legal proceedings may be brought. Statutes of limitations, which date back to early Roman Law, are a fundamental part of European and U.S. law. . The second quarter results also included amortization of acquisition-related intangibles totaling $3.8 million and a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $0.4 million. Total cash at the end of the second quarter increased to $127.3 million, compared with $115.5 million at the end of the first quarter. Total cash increased primarily due to $20.8 million from one-time events, including the nVidia settlement, the SigmaTel transaction, and cash received from the sale of assets to ChipPAC. "Revenue from both our audio and video product lines grew in the second quarter. Revenue from our audio products, which represented 84 percent of total revenue, increased 13 percent in the quarter, as customers replenished inventories and introduced new products incorporating our chips. Revenue from our video product line increased to $8.1 million from $3.0 million in the prior quarter, with our digital video encoding See encode. products for DVD recorder (1) A recordable or rewritable DVD drive that is connected to the computer. It may be an internal or external device. See DVD drives, DVD-R, DVD-RW, DVD+R and DVD+RW. (2) applications contributing strongly to our sales growth," said David D. French, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Cirrus Logic, Inc. "During the second quarter, we strengthened our consumer audio position by demonstrating at the CEDIA CEDIA Custom Electronics Design and Installation Association CEDIA Cloned Enzyme Donor Immunoassay CEDIA Century Diamond Expo production-ready Dolby Pro Logic See Dolby Surround. (R) IIx audio digital signal processors A digital signal processor (DSP) is a specialized microprocessor designed specifically for digital signal processing, generally in real-time computing. Characteristics of typical Digital Signal Processors
Founded in 1953 by Dr. and Marantz, were the first to announce plans to introduce new products implementing the new Dolby Pro Logic IIx standard using our chips. "After beginning shipments two quarters ago, we have quickly gained market share in the high-growth DVD DVD: see digital versatile disc. DVD in full digital video disc or digital versatile disc Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. recording semiconductor market. Our digital video encoding and decoding de·code tr.v. de·cod·ed, de·cod·ing, de·codes 1. To convert from code into plain text. 2. To convert from a scrambled electronic signal into an interpretable one. 3. chips are enabling mass-market DVD recorders in time for this year's holiday sales period. Earlier this month, we launched our newest family of encoding chips, which allows consumers to record home video content from their camcorders onto DVD disks at lower cost," said French. "We are working with OEMs to shorten time to market, improve supply chain dependability dependability - software reliability , rapidly reduce costs as drive technology matures, and provide a roadmap of software compatible product upgrades. Collaboration with a wide array of drive manufacturers is essential to achieving these goals. At the Hong Kong Electronics Fair Hong Kong Electronics Fair is an event organised by Hong Kong Trade Development Council and held at Hong Kong Convention & Exhibition Centre. It is the largest expo of its kind in Asia.[1][2] References 1. earlier this month, we were pleased to show progress with several high-quality drive manufacturers, including AccessTech, Behavior Technology Corporation (BTC BTC Baku-Tbilisi-Ceyhan (crude oil pipeline) BTC Belgische Technische Coöperatie (Dutch: Belgian Technical Cooperation) BTC Berlinale Talent Campus BTC Business Travel Coalition ), BenQ, Digital Video Systems (DVS DVS Det Vill Säga (Swedish) DVS Descriptive Video Service DVS Dynamic Voltage Scaling DVS Driver and Vehicle Services (Minnesota) DVS Digital Video System DVS Digital Video Services ), M.E.T Technology, NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98). NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. , Philips, and Ricoh, in demonstrating the interoperability The capability of two or more hardware devices or two or more software routines to work harmoniously together. For example, in an Ethernet network, display adapters, hubs, switches and routers from different vendors must conform to the Ethernet standard and interoperate with each other. of their drives with our DVD recording reference platform," said French. Leading manufacturer BenQ recently announced that it is using Cirrus Logic chips in its first single-board DVD recorder, which it expects will accelerate system cost reduction. It will sample the new DVD recorder this month and expects to begin volume production in the first quarter of calendar 2004. "Reducing system cost in collaboration with other industry participants is essential to expanding the DVD recorder market. These collaborative efforts are helping to bring the industry close to the $300 retail price point, which we expect to be a major stimulus to consumer demand of DVD recording products. Further integration, such as the single-board recorder platform, is likely to facilitate retail prices below $200 by the end of calendar 2004, further expanding demand," said French. Outlook and Guidance "Although December quarter revenues for semiconductors targeted towards end consumers in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. are often flat with, or slightly down from September levels, we believe our product and design momentum in exciting, high-growth markets will enable us to continue to grow in the December quarter," said French. "In addition, we continue to focus our development activities. In the current quarter, we have already made targeted headcount reductions that should allow us to sequentially reduce combined R&D and SG&A expenses for the seventh consecutive quarter. As we complete the shift of development resources from standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. DVD players A stand-alone device that plays DVDs. It contains a DVD drive and the electronics to decode the digital video. The device may play only manufactured DVDs, or it may be able to play DVD-R, DVD-RW and DVD+RW discs. DVD players are cabled to a TV or home theater system for display. towards recording applications, we expect to further reduce operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. by the March quarter." Third Quarter FY04 (ending Dec. 27, 2003) -- Revenue is expected to be $53 million to $56 million. -- Gross margins are expected to be 50 percent to 52 percent. -- Combined R&D and SG&A expenses are expected to total $31 million to $33 million. -- Total cash at the end of the third quarter is expected to be in the range of $172 million to $177 million, an increase of $45 million to $50 million, and reflects the receipt earlier this month of $9 million from the settlement with ATI (ATI Technologies Inc., Markham Ontario, http://ati.amd.com) A leading manufacturer of graphics chips and display adapters. Founded in 1985 by K. Y. Ho, Benny Lau and Lee Lau, ATI chips and boards are widely used by OEMs. Technologies recorded in the second quarter and $45 million for the previously announced litigation settlement with Western Digital Corporation. Conference Call Cirrus Logic management will hold a conference call to discuss these results today, Oct. 22, at 4 p.m. Central Time. Those wishing to join should dial (617) 847-8707 (pass code: Cirrus Logic) at approximately 3:50 p.m. Central Time. A replay of the call will be available starting one hour after the completion of the call until Oct. 29, 2003. To access the replay, dial (617) 801-6888 (pass code: 83104155). A live web cast of the conference call will also be available via the company's web site at www.cirrus.com. Upcoming Investor Conferences Cirrus Logic management will be presenting at the AeA Classic Financial Conference in San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. on Nov. 3-4, the Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. 2003 Semiconductor and Computer Systems Conference in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden on Nov. 19, the Pacific Growth Equities Bus Tour in the Bay Area on Dec. 2, and the Needham Conference in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of on Jan. 6-8. Those wishing to listen to management's presentations can hear a live and/or an archived web cast via the company's web site at www.cirrus.com. Cirrus Logic, Inc. Cirrus Logic is a premier supplier of high-performance analog, mixed-signal and digital processing Digital processing is the process of altering digital data in any form. The most common situations where digital processing is involved are computer graphics and digital audio processing. solutions for consumer entertainment electronics, automotive entertainment and industrial product applications. Building on its global market leadership in audio ICs and its rich mixed-signal patent portfolio, Cirrus Logic targets audio, video and precision mixed-signal applications in these growing markets. The company operates from headquarters in Austin, Texas, with offices in California, Colorado, Europe, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Except for historical information contained herein, the matters set forth in this news release, including our estimates of third fiscal quarter revenues, combined research and development and selling, general and administrative expense levels, gross margin and cash levels, expectations regarding our revenue growth opportunities, including the introduction of new products by other companies containing our components during the third quarter of fiscal 2004 and calendar 2004, our anticipated reduction in operating expenses and our estimates regarding future retail prices, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These forward-looking statements are based on our current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from our current expectations 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; the expansion of the consumer digital entertainment electronics 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 Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; the level of orders and shipments during the third fiscal quarter of 2004, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; our expectations regarding our potential cost savings and the benefits of the ChipPAC outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. transaction, as well as a successful transition of this outsourcing; pricing pressures; hardware or software deficiencies; a shortage of manufacturing capacity; 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; asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges; and the risk factors listed in our Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended March 29, 2003, 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. All other product names noted herein may be trademarks of their respective holders. Summary financial data follows:
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Quarter Ended
-----------------------------
Sep. 27, Jun. 28, Sep. 28,
2003 2003 2002
-------- -------- --------
Net sales $ 50,130 $ 40,724 $ 73,314
Costs and expenses:
Cost of sales 24,132 20,989 37,227
Research and development 20,427 20,646 25,955
Selling, general and administrative 12,203 12,517 19,939
Restructuring and other costs 395 7,640 3,102
Amortization of acquired intangibles 3,778 3,778 4,661
Patent infringement settlements, net (14,402) - -
-------- -------- --------
Total costs and expenses 46,533 65,570 90,884
-------- -------- --------
Income (loss) from operations 3,597 (24,846) (17,570)
Realized gain (loss) on marketable
equity securities 10,080 - (947)
Interest income and (expense), net 247 623 541
Other income (expense), net 8 (73) (354)
-------- -------- --------
Income (loss) before income taxes and
loss from discontinued operations 13,932 (24,296) (18,330)
Provision (benefit) for income taxes (7,122) 21 29
-------- -------- --------
Income (loss) from continuing operations 21,054 (24,317) (18,359)
Loss from discontinued operations - - -
-------- -------- --------
Net income (loss) $ 21,054 $(24,317) $(18,359)
======== ======== ========
Basic income (loss) per share:
From continuing operations $ 0.25 $ (0.29) $ (0.22)
Discontinued operations - - -
-------- -------- --------
$ 0.25 $ (0.29) $ (0.22)
======== ======== ========
Diluted income (loss) per share:
From continuing operations $ 0.25 $ (0.29) $ (0.22)
Discontinued operations - - -
-------- -------- --------
$ 0.25 $ (0.29) $ (0.22)
======== ======== ========
Basic weighted average common shares
outstanding 83,946 83,763 83,413
Diluted weighted average common shares
outstanding 85,556 83,763 83,413
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Six Months Ended
------------------
Sep. 27, Sep. 28,
2003 2002
-------- --------
Net sales $ 90,854 $149,338
Costs and expenses:
Cost of sales 45,121 74,618
Research and development 41,073 53,918
Selling, general and administrative 24,720 40,410
Restructuring and other costs 8,035 5,187
Amortization of acquired intangibles 7,556 9,347
Patent infringement settlements, net (14,402) -
-------- --------
Total costs and expenses 112,103 183,480
-------- --------
Income (loss) from operations (21,249) (34,142)
Realized gain on marketable equity securities 10,080 453
Interest income and (expense), net 870 1,281
Other income (expense), net (65) (280)
-------- --------
Income (loss) before income taxes and loss from
discontinued operations (10,364) (32,688)
Provision (benefit) for income taxes (7,101) 58
-------- --------
Income (loss) from continuing operations (3,263) (32,746)
Loss from discontinued operations - (1,452)
-------- --------
Net income (loss) $ (3,263) $(34,198)
======== ========
Basic income (loss) per share:
From continuing operations $ (0.04) $ (0.39)
Discontinued operations - (0.02)
-------- --------
$ (0.04) $ (0.41)
======== ========
Diluted income (loss) per share:
From continuing operations $ (0.04) $ (0.39)
Discontinued operations - (0.02)
-------- --------
$ (0.04) $ (0.41)
======== ========
Basic weighted average common shares outstanding 83,855 83,215
Diluted weighted average common shares
outstanding 83,855 83,215
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
Sep. 27, Jun. 28, Sep. 28,
2003 2003 2002
--------- --------- ---------
ASSETS
Current assets
Cash and cash equivalents $ 119,059 $ 103,667 $ 114,332
Restricted cash 8,265 11,844 12,807
Marketable equity securities 1,654 754 526
Accounts receivable, net 21,860 23,627 35,011
Inventories 25,130 21,185 28,752
Other current assets 19,243 10,617 16,246
--------- --------- ---------
Total Current Assets 195,211 171,694 207,674
Property and equipment, net 25,317 26,987 36,685
Goodwill and intangibles, net 37,035 34,082 183,300
Other assets 5,220 5,895 4,932
--------- --------- ---------
Total Assets $ 262,783 $ 238,658 $ 432,591
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 53,342 $ 43,900 $ 57,658
Current maturities of long-term
debt and capital lease obligations - - 141
Income taxes payable 30,319 37,531 41,530
--------- --------- ---------
Total Current Liabilities 83,661 81,431 99,329
Long-term obligations 16,587 17,077 5,809
Minority interest in eMicro - - 599
Stockholders' equity:
Capital stock 869,238 868,827 866,531
Accumulated deficit (707,175) (728,229) (538,897)
Accumulated other comprehensive
income (loss) 472 (448) (780)
--------- --------- ---------
Total Stockholders' Equity 162,535 140,150 326,854
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $ 262,783 $ 238,658 $ 432,591
========= ========= =========
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