AUSTIN, Texas – Oct. 19, 2005 – Cirrus Logic Inc. (Nasdaq: CRUS), a leader in high-precision analog, mixed-signal and embedded products for audio and industrial markets, today announced financial results for the second quarter of Fiscal Year 2006, which ended Sept. 24, 2005.
The company reported second quarter Fiscal Year 2006 revenue of $50.5 million compared with $52.8 million in the prior fiscal quarter ended June 25, 2005. Core product revenue for the second fiscal quarter was $48.3 million related to our analog, mixed-signal and embedded products, an increase of 11 percent compared with $43.7 million in revenue during the prior quarter and a three percent increase year-over-year. Second-quarter gross margin was 53.2 percent compared with 51.7 percent in the prior quarter. The gross margin for its core products was 55.4 percent in the second quarter of fiscal year 2006, down slightly from 56.3 percent in the prior quarter. Combined research and development (R&D) and selling, general and administrative (SG&A) expenses for the second fiscal quarter were $26.4 million, compared with $28.0 million in the prior quarter. R&D and SG&A expense included digital video related spending of approximately $1.7 million, and there was also a $3.3 million contingency related to excess leased office space. Without these items, R&D and SG&A for the quarter was $21.4 million.
Second fiscal quarter results also included a $2.3 million net restructuring charge primarily related to the sale of the digital video product line and a $207,000 foreign tax benefit. The net loss in the second fiscal quarter was $99,000, or $0.00 per share. In the prior quarter, the company reported net income of $26.0 million, or $0.30 per diluted share, which included a $24.8 million net gain related to a legal settlement. The non-GAAP net income for the quarter was $6.8 million or $0.08 per diluted share as compared to a non-GAAP net income of $4.3 million and $0.05 per diluted share in the previous quarter.
Total cash and marketable securities at the end of the second fiscal quarter were $225.1 million, compared with $214.5 million at the end of the prior fiscal quarter. Inventories were $17.0 million, down 13 percent, or $2.5 million, from the end of the June quarter.
On June 30, 2005, Cirrus Logic announced the completion of the sale of its digital video product line assets to Magnum Semiconductor in exchange for a non-controlling interest valued at $7.9 million.
“I am pleased with the company’s financial performance in Q2, as we have completed the restructuring of the company around our core analog mixed-signal and embedded products with our core products showing sequential revenue growth of 11 percent,” said David D. French, president and chief executive officer, Cirrus Logic. “Our focus on these product lines is leading us to sustained profitability, strong gross margins and a solid cash position.”
Outlook and Guidance
“We achieved better than expected core revenue growth of 11 percent due to strong seasonal purchasing patterns,” French continued. “However, we remain cautious as the traditional peak season nears completion during our third fiscal quarter.”
Third Quarter FY 06 (ending December 24, 2005):
Use of Non-GAAP Financial Information
Cirrus Logic reports its financials in accordance with GAAP, which includes non-recurring items. A reconciliation of GAAP to non-GAAP is included in the financial statements portion of this release as well as on our website in the Investors section at www.cirrus.com. The core product revenue, core product gross margin, core product R&D and SG&A expense provided in this press release are non-GAAP numbers. Non-GAAP results are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. Cirrus Logic management believes the non-GAAP financial information is useful to investors because it can enhance the understanding of the results and trends in our business, and therefore uses non-GAAP reporting internally to evaluate and manage the company’s operations. The criteria for determining non-GAAP results may differ from other companies’ methods. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.
Conference Call
Cirrus Logic management will hold a conference call to discuss these results today, Oct. 19, 2005 at 5:00 p.m. EDT. Those wishing to join should dial (303) 205-0066 (passcode: Cirrus Logic) 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 Nov. 2, 2005. To access the replay, dial (303) 590-3000 (passcode: 11040464#). A live and an archived webcast of the conference call will also be available.
Upcoming Conferences
Cirrus Logic management will be presenting at the following conferences:
Those wishing to listen to these presentations can hear live and archived webcasts of the events.
Cirrus Logic Inc.
Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of consumer and industrial markets. Building on its diverse 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 third quarter fiscal year 2006 sales, gross margin, combined research and development and selling, general and administrative expense levels, and expectations regarding our revenue growth and increased cash position 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; the results of any potential and pending litigation matters; the level of orders and shipments during the third quarter of fiscal year 2006, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; overall economic pressures; 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; and the risk factors listed in our Form 10-K for the year ended March 26, 2005, 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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