AUSTIN, Texas – Jan. 26, 2005 – Cirrus Logic Inc. (Nasdaq: CRUS) today announced financial results for the third quarter of fiscal year 2005, ended Dec. 25, 2004.
The company reported third quarter fiscal year 2005 revenue of $44.0 million compared with $51.3 million in the prior quarter. These results do not include $2.2 million of product shipped during the December quarter for which we have been unable to determine what amount should properly be recognized as revenue in the December quarter. Consequently, the company has not included this in the revenue for the quarter and has deferred recognizing this revenue until such time as this determination can be made.
Third quarter gross margin was 39.1 percent, compared with 44.7 percent in the prior quarter. Third quarter gross margin was adversely impacted by a net charge of $5.0 million for excess and obsolete inventory, which had a negative impact on gross margin of 10.8 percentage points and was further negatively impacted by 2.8 percentage points relating to the revenue deferral. Third quarter combined research and development and selling, general and administrative expenses were $25.1 million, compared with $31.0 million in the prior quarter.
Net income in the third fiscal quarter was $2.5 million, or $0.03 per share. The third quarter results include a $15.2 million income tax benefit, a $2.3 million reclaimed Goods and Services tax for the years 1997 to 2000 in SG&A, a $0.6 million legal expense accrual reduction associated with a prior patent transaction, partially offset by $6.5 million of expenses primarily for amortization of acquired intangibles, restructuring-related items and abandonment of software, as well as a $5.0 million net inventory charge. In comparison, the company reported a net loss of $15.1 million in the prior quarter, or a loss of $0.18 per share, which included $8.0 million in charges primarily for abandoned software, restructuring- and acquisition-related items.
Total cash and marketable securities at the end of the third quarter was $178.4 million, compared with $177.7 million at the end of the prior quarter.
"As we mentioned in our Dec. 16, 2004 press announcement, results were negatively impacted by the continued slow demand for consumer integrated circuits, especially audio converters sold into the Chinese DVD player market where we have a large market share," said David D. French, president and CEO of Cirrus Logic Inc. "Sales of our ICs used in DVD recording applications were also below our expectations going into the just completed quarter."
Cirrus Logic announced on Dec. 16, 2004, actions to better align its resources to address anticipated market opportunities and to reduce operating expenses. During the Dec. quarter, the company implemented a new product-centric organizational structure. The company also initiated a workforce reduction and began facility consolidation activities, which are expected to provide annualized savings of $8 million to $12 million, beginning in the March quarter.
Outlook and Guidance
"As we plan for the March quarter, we have limited demand visibility and remain cautious with regard to channel and customer inventories and consumer demand. While we believe that we will see a continued reduction in component inventories in many of the markets we serve, our guidance reflects a conservative view," said French.
The following outlook does not include an estimate for the recognition of the deferred revenue from the third fiscal quarter.
Fourth Quarter FY 05 (ending March 26, 2005)
Conference Call
Cirrus Logic management will hold a conference call to discuss these results today, Jan. 26, 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 Feb. 9, 2005. To access the replay, dial (201) 612-7415 (account #: 2445; conference #: 133018). A live and an archived web cast of the conference call will also be available.
Upcoming Conference
Cirrus Logic management will be presenting at the Thomas Weisel Partners Technology Conference on Feb. 8 in San Francisco. Those wishing to listen to management's presentation can hear a live and/or an archived web cast of these available events.
Cirrus Logic Inc.
Cirrus Logic is a premier supplier of high-performance analog, mixed-signal and digital 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.
Safe Harbor Statement
Except for historical information contained herein, the matters set forth in this news release, including our estimates of fourth quarter fiscal year 2005 sales, gross margin, combined research and development and selling, general and administrative expense levels, restructuring activities, inventory reduction, and expectations regarding our revenue growth 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 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; the results of any potential and pending litigation matters; the level of orders and shipments during the fourth 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 and other costs, such as work force reductions and facility consolidations; and the risk factors listed in our Form 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.
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Thurman Case Chief Financial Officer (512) 851-4125 |
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