AUSTIN, Texas -- Jan. 23, 2002 -- Cirrus Logic, Inc. (Nasdaq: CRUS) today announced financial results for its third quarter of fiscal 2002, ended December 29, 2001.

Fiscal third quarter revenue was $77.0 million, compared with $67.7 million reported in ongoing businesses during the prior quarter. Ongoing businesses exclude products for magnetic hard disk drives, which the company exited in fiscal Q2. Total reported Q2 revenues were $77.3 million.

Pro forma net loss for fiscal Q3 was $15.1 million, including a $1.9 million tax benefit, versus the pro forma net loss of $14.6 million in the prior quarter. Pro forma loss per share was $0.19 on 79 million shares outstanding, and includes a $0.02 per share tax benefit. This is compared with pro forma loss per share of $0.20 on 74 million shares outstanding in the prior quarter. As expected, pro forma results for the third quarter exclude $34.4 million in charges due to acquisitions, consisting of a $29.4 million write-off of in-process R&D, and $5.0 million in amortization of intangibles and other acquisition-related costs. Pro forma results also exclude $34.0 million in charges resulting from the corporate restructuring and workforce reductions in October 2001. These charges include a $25.3 million inventory write-off, $5.5 million severance and facility consolidation costs, and $3.2 million of other non-cash charges.

In accordance with generally accepted accounting principals (GAAP), third quarter net loss was $85.4 million. The GAAP net loss per share was $1.08.

Third quarter pro forma gross margins were 41 percent, up from the 39 percent gross margins the company reported in the second fiscal quarter. The company benefited from favorable wafer prices it had negotiated earlier in the fiscal year.

"We are pleased to have achieved our second consecutive quarter of double-digit revenue growth in our ongoing businesses," said David D. French, president and CEO of Cirrus Logic. "Design win activity increased across most product lines, an encouraging indication of our growth potential in the rapidly growing digital entertainment electronics market. Revenue from our DVD optical controllers was especially strong in the third quarter.

"During Q3 we completed the acquisitions of ShareWave, Inc., LuxSonor Semiconductors, Inc., and Stream Machine Company, greatly enhancing our position as the largest pure-play semiconductor company in digital entertainment electronics. The integration of these businesses, which have leadership technologies in wireless home networking, DVD video decoders and MPEG-2 video recording, is progressing even better than we had expected. Operational functions were consolidated within one week of each closing. We are already seeing marketing and sales benefits, including key program wins at major customers including Bose, Motorola and Samsung.

"At the recent Consumer Electronics Show, Cirrus demonstrated new products in all core areas of our business: a new 32-bit DSP for high-end A/V receivers, a new video DVD processor, a recently announced 802.11 wireless networking solution, a video compression codec and an early prototype of a CD player solution with MP3 playback capability," Mr. French said.

Third quarter pro forma operating expenses increased to $49.1 million from $46.7 million in Q2. The increase was due to ongoing operating expenses from acquisitions, which were partially offset by the company’s previously announced cost reduction efforts.

Cash at the end of the third quarter was $149 million, down from $177 million at the end of fiscal Q2 due to acquisition related costs, cash costs associated with Q3 restructuring and the net operating loss in Q3. At the end of Q3, receivables included $73 million in disputed receivables associated with ongoing litigation with Western Digital and Fujitsu, which the company believes will be collected.

Customer highlights:

• Bose chose Cirrus to provide an advanced DVD video processor in the new line of Bose DVD home entertainment systems
• Motorola Broadband selected Cirrus’ wireless technology for its Evr-8401 Enhanced TV Viewer
• Sanyo selected the Cirrus Maverick® processor to power its portable digital audio player
• Intel selected the Cirrus six-channel multimedia sound capabilities for its concept PC
• Samsung selected the Cirrus CS92288 MPEG audio/video codec chip for its combination Personal Video Recorder (PVR)/DVD player

Technology highlights:

• Showcased its digital entertainment products at the Consumer Electronics Show including Cirrus’ DVD Home Theater, Wireless Home Networking, Internet TV, Enhanced DVD, Media Streaming and DVD Receiver technologies
• First in the industry to demonstrate multiple high-quality video streams over wireless home networks
  
  
• Introduced industry’s first 32-bit audio DSP targeted for mass market applications
• Launched a new DVD processor that combines the video decoder, a 32-bit audio DSP and analog TV interface into a single chip solution
• Introduced the first 802.11b "Wi-Fi" wireless networking solution developed specifically for the home environment
• Launched an audio codec that offers the best sound playback and recording capabilities for portable electronics
• Unveiled the world’s highest performance 6 and 8 channel audio D/A converters, offering consumers a studio-quality audio experience

Outlook and Guidance

Fourth Quarter FY02 (ending March 2002)

• Revenue is expected to grow in the 5 to 7 percent range, to be approximately $81 - $83 million
• Pro forma loss per share is expected to be $0.11 - $0.15 (basic and diluted)
• Pro forma gross margins are expected to increase to 44 - 46 percent
• Pro forma operating expenses are expected to be $50 million - $52 million
• Pro forma income tax benefits on operating losses are estimated at 7 - 9%
• Primary & diluted share count is forecast at 83 million

First Quarter FY03 (ending June 2002)

• Revenue is expected to grow approximately 5 percent
• Pro forma loss per share is expected to be $0.07 - $0.11 (basic and diluted)
• Pro forma gross margins are expected to increase to 46 - 48 percent
• Pro forma operating expenses are expected to be in the $50 million - $52 million range
• Pro forma income tax benefits on operating losses are estimated at 15 - 20 percent
• Primary & diluted share count is forecast at 83 million

Litigation Update

• The company remains confident it will collect $53 million from Western Digital, including $27 million in disputed receivables
• The company remains confident it will collect $47 million from Fujitsu in disputed receivables.

Conference Call

Cirrus Logic management will hold a conference call to discuss these results today, January 23, at 4 p.m. Central Time. Those wishing to join should dial (712) 257-3320, passcode "Cirrus Logic" at approximately 3:45 p.m. A live webcast of the conference call will also be available via the company’s website at www.cirrus.com. A replay of the call will be available starting one hour after the completion of the call until January 31, 2002. To access the replay, please dial (402) 220-0369.

About Cirrus Logic

Cirrus Logic is the premier supplier of high-performance analog and DSP chip solutions for consumer entertainment electronics that allow people to see, hear, connect, and enjoy digital entertainment. Building on its global market share leadership in audio integrated circuits and its rich mixed-signal patent portfolio, the company targets mainstream audio, video and Internet entertainment applications in the consumer entertainment market. Cirrus Logic operates from headquarters in Austin, Texas and major sites located in Fremont and El Dorado Hills, Calif., Broomfield and Boulder, Colorado, as well as offices in Europe, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com.

Except for historical information contained herein, the matters set forth in this news release are forward-looking statements that are dependent on certain risks and uncertainties including such factors, among others, as the ability of the Company to successfully integrate its acquisitions into its operations and realize the anticipated synergies; the ability of the Company to deliver products that perform as anticipated; the successful resolution of the Company’s litigation with Western Digital and Fujitsu; overall conditions in the semiconductor market; the rate of consumer electronics market adoption of new products; and the risk factors listed in the company's Form 10-K for the year ended March 31, 2001, and in other filings with the Securities and Exchange Commission. The foregoing information concerning Cirrus Logic’s business outlook represents our outlook as of the date of this news release, and Cirrus Logic undertakes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Cirrus Logic is a trademark of Cirrus Logic Inc.

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