AUSTIN, Texas – Apr. 27, 2005 – Cirrus Logic Inc. (Nasdaq: CRUS) today announced financial results for the fourth fiscal quarter and fiscal year 2005, ended March 26, 2005.
The company reported fourth quarter fiscal year 2005 revenue of $40.4 million compared with $44.0 million in the prior quarter. Fourth quarter gross margin was 53.1 percent, compared with 39.1 percent in the third quarter. The third quarter was impacted by inventory charges that reduced gross margin by 10.8 percentage points and a revenue deferral that further negatively impacted gross margin by 2.8 percentage points. Fourth fiscal quarter combined research and development and selling, general and administrative expenses were $22.0 million, compared with $25.1 million in the prior fiscal quarter.
Net income in the fourth fiscal quarter was $2.5 million, or $0.03 per share. In the prior fiscal quarter, the company also reported net income of $2.5 million, or $0.03 per share. The fourth fiscal quarter operating expenses included a $3.0 million favorable sales tax benefit in SG&A, partially offset by $3.9 million of expenses primarily for amortization of acquired intangibles and restructuring-related items as announced in the third fiscal quarter. The company also recorded a $6.0 million income tax benefit during the fourth fiscal quarter. The third fiscal quarter results included a net benefit to income totaling $11.5 million, which primarily included various tax-related benefits partially offset by amortization of acquired intangibles and restructuring-related items.
Total cash and marketable securities at the end of the fourth fiscal quarter was $179.7 million, compared with $178.4 million at the end of the prior fiscal quarter. Inventories were $26.6 million, down 18 percent or $5.7 million, from the end of December 2004.
"We are pleased to have met our financial expectations for the quarter and to have successfully reduced inventory levels, despite the traditional post-holiday softening in demand," said David D. French, president and chief executive officer, Cirrus Logic. "We are particularly pleased with the strong gross margins delivered for our core products."
As announced on April 25, 2005, Cirrus Logic intends to divest its digital video product line and focus operations around its core, high-precision analog, mixed-signal and embedded integrated circuits (ICs) for audio and industrial applications. In the fourth quarter of fiscal year 2005, the company's core analog, mixed-signal and embedded products represented revenue of $36.7 million and the digital video product line represented revenue of $3.7 million. This compares with the prior fiscal quarter in which core analog, mixed-signal and embedded products represented revenue of $40.9 million and the digital video product line represented revenue of $3.1 million. The video product line gross margin for the fourth fiscal quarter was approximately 54 percent compared with the third fiscal quarter video product line gross margin loss of approximately 150 percent. In the fourth fiscal quarter, research and development and selling, general and administrative expenses associated with the digital video product line were estimated to range between $4.0 million to $4.5 million. Other operating expenses related to the video product line for the fourth fiscal quarter include the amortization of acquired intangibles of $3.2 million. The company does not track expenses to the detail level by product line and the video product line expenses are estimates. Inventory related to the digital video product line as of March 26, 2005 was valued at $5.2 million.
"Based on our intent to divest the digital video product line, we expect to have greater focus on the strengths of the company, which are the analog, mixed-signal and embedded product lines. With a strong balance sheet, we enter fiscal year 2006 with the prospect of being profitable, even in a difficult period within the semiconductor industry," said French. On another note, French added, "I am encouraged by the strong gross margins for our core products and I am enthusiastically looking ahead at the growth opportunities for Cirrus Logic as we have positioned the company for profitability and growth within its broad, expanding customer base for analog, mixed-signal and embedded markets."
Outlook and Guidance
The company is providing the following guidance and will include the outlook for the digital video product line separately:
First Quarter FY 06 for analog, mixed-signal and embedded product ICs (ending June 25, 2005)
First Quarter FY 06 for the digital video product line (ending June 25, 2005)
Conference Call
Cirrus Logic management will hold a conference call to discuss these results today, April 27, 2005 at 5:00 p.m. EDT. Those wishing to join should dial (201) 689-8044 at approximately 4:50 p.m. EDT. A replay of the call will be available starting one hour after the completion of the call, through May 11, 2005. To access the replay, dial (201) 612-7415 (account #: 2445; conference #: 146363). A live and an archived webcast of the conference call will also be available.
Upcoming Conferences
Cirrus Logic management will be presenting at two upcoming conferences in New York: The CIBC Communications & Technology Conference on May 11, 2005 and the Piper Jaffray Technology Conference on May 13, 2005. Those wishing to listen to these presentations can hear a live and an archived webcast of these events.
Cirrus Logic Inc.
Cirrus Logic develops high-precision, analog-rich mixed-signal integrated circuits for a broad range of consumer and industrial markets. Building on its broad analog mixed-signal patent portfolio, Cirrus Logic delivers highly optimized products for consumer and commercial audio, automotive entertainment and industrial applications. The company operates from headquarters in Austin, Texas, with offices in 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 first quarter fiscal year 2006 sales, gross margin, combined research and development and selling, general and administrative expense levels, 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; 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; our ability to successfully complete the divestiture of the digital video product line; the results of any potential and pending litigation matters; the level of orders and shipments during the first quarter of fiscal year 2006, 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.
Summary financial data follows:
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Thurman Case Chief Financial Officer (512) 851-4125 |
Mary McGowan Summit IR Group (408) 404-5401 |
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