Cirrus Logic Reports Fiscal Q2 2005 Financial Results.AUSTIN Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum , Texas -- 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: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 year 2005, ended Sept. 25, 2004. The company reported second quarter fiscal year 2005 revenue of $51.3 million, compared with $59.1 million in the prior quarter and $50.1 million reported in the second quarter of fiscal year 2004. Second quarter gross margin was 44.7 percent, compared with 53.6 percent in the prior quarter and 51.9 percent in the second quarter one year ago. Second quarter gross margin included a net charge of $3.9 million, for excess and obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. , which had a 7.6 percent negative impact on gross margin. Second quarter fiscal year 2005 combined research and development and selling, general and administrative expenses were $31.0 million, compared with $31.2 million in the prior quarter and $32.6 million in the second fiscal quarter of 2004. Net loss in the second quarter fiscal year 2005 was $15.1 million, or a loss of $0.18 per share. The net loss includes $8.0 million of expense primarily for software write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. , restructuring- and acquisition-related items. In comparison, the company reported a net loss of $3.4 million in the prior quarter, which included $5.7 million of expense for acquisition- and restructuring-related items and a $0.7 million 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 . The company reported net income of $21.1 million in the second quarter of fiscal year 2004, which included benefits of $31.7 million resulting from various positive events. Total cash and marketable securities at the end of the second quarter of fiscal year 2005 was $178 million, compared with $198 million at the end of the prior quarter. The decline was primarily due to an increase in inventory levels built in the first half of fiscal year 2005, and to a lesser extent, a $4.3 million lease buy out in the September September: see month. quarter, as well as facility consolidations and expenses associated with workforce reductions. "As we indicated in our Sept. 23 press announcement, sales of audio converters In signal processing, an audio converter or digital audio converter is a type of electronic hardware technology which converts an analog audio signal to a digital audio format, either on the input (Analog-to-digital converter or ADC), or the output (Digital-to-analog for 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. , predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. to Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. manufacturers, were lower than we had expected due in part to an industry-wide inventory correction within the supply chain. Demand for our video ICs was also lower than we anticipated as the emerging 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) market, particularly 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. , has taken longer to develop into a consumer mass market. Despite this slower-than-expected growth in the DVD recorder market, we are encouraged by a number of design wins with top-tier accounts, such as LG, Samsung and Sony SONY Standard Oil of New York (common, but untrue; it's an urban legend) , that are now entering volume production," 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. Outlook and Guidance "Our outlook for the December December: see month. quarter -- typically a strong quarter -- is cautious. We believe that the audio converter inventory imbalance imbalance /im·bal·ance/ (im-bal´ans) 1. lack of balance, such as between two opposing muscles or between electrolytes in the body. 2. dysequilibrium (2). at our customers is in part, but not completely, behind us. To reduce our IC inventories, we have reduced wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. starts across all of our major product lines and anticipate lower inventory levels at our company and in the channel this quarter. Looking ahead, we are encouraged by the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. demand trends and our customer design-in activity for our core, high-margin industrial analog products," said French. Third Quarter FY 05 (ending Dec. 25, 2004) --Revenue is expected to be between $50 million and $55 million, with revenue contribution from the following product categories: --Analog, which includes the company's audio converter, industrial analog, and processor product lines, is expected to range between $43 million and $46 million, and --Video is expected to range between $7 million and $9 million. --Gross margin is expected to range between 51 percent and 53 percent. --Combined R&D and SG&A expenses are expected to range between $28 million and $29 million. Conference Call Cirrus Logic management will hold a conference call to discuss these results today, Oct. 20, at 4:00 p.m. Central Time. Those wishing to join should dial 201-689-8044 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 Nov. 3, 2004. To access the replay, dial 201-612-7415 (account #: 2445; conference #: 119505). A live and an archived web cast 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 several upcoming conferences -- the Silicon Hills Summit in Austin, Texas on Oct. 28; the AeA Classic Financial Conference in Monterey Monterey (mŏntərā`), city (1990 pop. 31,954), Monterey co., W Calif., a port on Monterey Bay; founded 1770, inc. 1850. It is a popular resort, the home of many artists and writers, and one of California's oldest cities. , Calif., on Nov. 8-9; Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/[1]) (ISIN: DE0005140008, NYSE: DB) (English: German Bank 2004 Global Semiconductor and Semi Capital Equipment Conference on Nov. 10 in Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. ; and 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. "T4 -- Technology and Telecom Trends for Tomorrow" 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 Dec. 8-10. Those wishing to listen to management's presentation can hear a live and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. an archived web cast of these available events at www.cirrus.com. Cirrus Logic Inc. Cirrus Logic is a premier supplier of high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" 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 California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , Colorado Colorado, state, United States Colorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. , 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 quarter fiscal year 2005 revenues, combined research and development and selling, general and administrative expense levels, gross margin, and expectations regarding our revenue growth 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, estimates and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially from our current expectations, estimates and assumptions 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 results of any potential and pending 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. matters; the level of orders and shipments during the third quarter of fiscal year 2005, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; pricing pressures; hardware or software deficiencies; our dependence on subcontractors for assembly, manufacturing, packaging and testing functions; our ability to make continued substantial investments in research and development; foreign currency fluctuations; the retention of key employees; the impact of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other costs, such as work force reductions and facility consolidations; 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 27, 2004, 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
------------------------------
Sept. 25, Jun. 26, Sept. 27,
2004 2004 2003
--------- --------- ----------
Net sales $51,332 $59,117 $50,130
Cost of sales 28,404 27,444 24,132
--------- --------- ----------
Gross Margin 22,928 31,673 25,998
--------- --------- ----------
Gross Margin Percentage 44.7% 53.6% 51.9%
Operating expenses:
Research and development 17,793 18,707 20,427
Selling, general and administrative 13,162 12,494 12,203
Restructuring and other costs 4,148 1,723 395
Amortization of acquired intangibles 3,419 3,419 3,778
Patent infringement settlements, net - - (14,402)
--------- --------- ----------
Total operating expenses 38,522 36,343 22,401
--------- --------- ----------
Total operating expenses as a
percent of revenue 75.0% 61.5% 44.7%
Income (loss) from operations (15,594) (4,670) 3,597
Operating income (loss) as a percent of
revenue (30.4%) (7.9%) 7.2%
Realized gain on marketable equity
securities - 669 10,080
Interest income and other, net 599 630 255
--------- --------- ----------
Income (loss) before income taxes and
loss from discontinued operations (14,995) (3,371) 13,932
Provision (benefit) for income taxes 66 24 (7,122)
--------- --------- ----------
Net income (loss) $(15,061) $(3,395) $21,054
========= ========= ==========
Basic and diluted income (loss) per
share $(0.18) $(0.04) $0.25
Basic weighted average common shares
outstanding 84,671 84,419 83,946
Diluted weighted average common
shares outstanding 84,671 84,419 85,556
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Six Months Ended
---------------------
Sept. 25, Sept. 27,
2004 2003
---------- ----------
Net sales $110,449 $90,854
Cost of sales 55,848 45,121
---------- ----------
Gross Margin 54,601 45,733
---------- ----------
Gross Margin Percentage 49.4% 50.3%
Operating expenses:
Research and development 36,500 41,073
Selling, general and administrative 25,656 24,720
Restructuring and other costs 5,871 8,035
Amortization of acquired intangibles 6,838 7,556
Patent infringement settlements, net - (14,402)
---------- ----------
Total operating expenses 74,865 66,982
---------- ----------
Total operating expenses as a percent of
revenue 67.8% 73.7%
Loss from operations (20,264) (21,249)
Operating loss as a percent of revenue (18.3%) (23.4%)
Realized gain on marketable equity securities 669 10,080
Interest income and other, net 1,229 805
---------- ----------
Loss before income taxes (18,366) (10,364)
Provision (benefit) for income taxes 90 (7,101)
---------- ----------
Net loss $(18,456) $(3,263)
========== ==========
Basic and diluted loss per share $(0.22) $(0.04)
Basic and diluted weighted average common shares
outstanding 84,545 83,855
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(unaudited)
(in thousands)
Sept. 25, Jun. 26, Sept. 27,
2004 2004 2003
--------- --------- ---------
ASSETS
Current assets
Cash and cash equivalents $100,050 $168,976 $119,059
Restricted cash 7,184 8,159 8,265
Marketable securities 45,435 18,438 1,654
Accounts receivable, net 28,677 27,927 21,860
Inventories 42,582 40,988 25,130
Other current assets 5,372 8,597 19,243
--------- --------- ---------
Total Current Assets 229,300 273,085 195,211
Long-term marketable securities 25,053 2,112 -
Property and equipment, net 21,843 22,982 25,317
Intangibles, net 19,923 24,929 37,035
Other assets 2,862 2,912 5,220
--------- --------- ---------
Total Assets $298,981 $326,020 $262,783
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $22,407 $32,347 $14,296
Accrued salaries and benefits 9,355 10,027 10,444
Other accrued liabilities 18,257 18,389 24,155
Deferred revenue 7,869 5,962 4,447
Income taxes payable 30,299 30,124 30,319
--------- --------- ---------
Total Current Liabilities 88,187 96,849 83,661
Long-term restructuring accrual 3,515 7,610 7,498
Other long-term obligations 10,389 9,915 9,089
Stockholders' equity:
Capital stock 873,634 873,319 869,238
Accumulated deficit (675,865) (660,804) (707,175)
Accumulated other comprehensive
income (loss) (879) (869) 472
--------- --------- ---------
Total Stockholders' Equity 196,890 211,646 162,535
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $298,981 $326,020 $262,783
========= ========= =========
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