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Cost Reductions Lower Pro Forma Break-even Revenue Point to Approximately $90 Million/Quarter |
| AUSTIN, Texas--(BUSINESS
WIRE)--July 22, 2002--Cirrus Logic Inc. (Nasdaq:CRUS) today announced financial results
for its first quarter of fiscal 2003, ended June 29, 2002. Fiscal first quarter revenue was $76.0 million, down eight percent from $82.8 million in the fiscal fourth quarter. As previously reported, the reduction in Q1 revenue was due primarily to decreased demand for Cirrus products used in DVD game consoles. First quarter pro forma gross margins were 49 percent, up 200 basis points from 47 percent gross margin in the fourth fiscal quarter. The Q1 margin improvement was due to a more favorable product mix. Pro forma loss for fiscal Q1 improved to $7.7 million, compared with a pro forma loss of $9.4 million in the prior quarter. Pro forma loss per share was $0.09 on 83 million shares outstanding, compared with a pro forma loss per share of $0.11 on 83 million shares outstanding in the prior quarter. First quarter pro forma operating expenses were $46.0 million, down from $49.7 million in Q4. The operating expense improvement was due to continued expense management and cost reduction efforts throughout the company. In line with Cirrus' expense reduction activities, the company's eMicro joint venture in Singapore ceased operation in the first quarter. Its operating results in our current and historical periods have been recorded as discontinued operations in accordance with generally accepted accounting principles (GAAP). In order to facilitate comparison of Cirrus' current operating results with those of prior periods, this release excludes eMicro's results of discontinued operations from both current and historical pro forma results. In accordance with GAAP, first quarter net loss was $15.8 million, compared with a net loss of $80.8 million in the prior quarter. The prior quarter GAAP net loss included a $73.3 million charge related to disputed receivables from Western Digital and Fujitsu Ltd. The GAAP net loss per share was $0.19 on 83 million shares outstanding in Q1, compared with a net loss per share of $0.98 on 83 million shares in the prior quarter. In the first quarter, the company recorded $1.7 million severance costs and $0.4 million non-cash facilities restructuring costs associated with previously announced workforce reductions. On a GAAP basis, Q1 gross margins were 51 percent, compared with 49 percent in the fourth quarter. Cash and cash equivalents at the end of the first quarter were $145 million, compared with $153 million at the end of Q4. Cost Reductions Lower Pro Forma Revenue Break-even Point During the June and September quarters, the company is reducing its workforce by 155 employees worldwide, or about 13 percent of total headcount. The ongoing expense control, cost reduction efforts, and the workforce reduction will allow the company to recognize savings of $15 million to $20 million annually. "We are aligning staff functions with our business objectives and lowering expenses to enhance earnings growth opportunities in coming quarters," said David D. French, president and CEO of Cirrus Logic. "Our pro forma break-even revenue point will be reduced to approximately $90 million per quarter, down from the $105 million in revenue per quarter that we had previously estimated. "Our audio product line was especially strong in the first quarter, up more than 20 percent over fourth quarter," said Mr. French. "We are continuing to see important design wins in key markets, and believe we are gaining share in many of the emerging consumer entertainment electronics markets we are targeting." Customer Highlights:
Technology Highlights:
As previously stated, the company expects GAAP charges consisting of acquisition-related amortization of intangibles and compensation charges to total approximately $6 million to $7 million each quarter for the remainder of fiscal 2003. Conference Call Cirrus Logic management will hold a conference call to discuss these results today, July 22, at 4 p.m. Central Time/5 p.m. Eastern Time. Those wishing to join should dial 630/395-0021, passcode "Cirrus Logic" at approximately 3:45 p.m. A live webcast of the conference call will also be available via the company's Web site at www.cirrus.com. A replay of the call will be available starting one hour after the completion of the call until July 29, 2002. To access the replay, please dial 402/220-0357. About Cirrus Logic Cirrus Logic is a 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 with offices in California, Colorado, 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, including our estimates of second fiscal quarter revenues, pro forma loss per share, GAAP loss per share, operating expense levels, gross margin levels, sequential growth rates, savings from cost reductions, and break-even revenue levels are forward-looking statements that are dependent on certain risks and uncertainties including such factors, among others, as overall conditions in the semiconductor market; the expansion of the consumer digital entertainment electronics market; the ability of the Company to successfully integrate its acquisitions into its operations and realize the anticipated synergies; the ability of the Company to introduce new products on a timely basis and to deliver products that perform as anticipated; risks associated with international sales and international operations; customer cancellations of orders, or the failure to place orders consistent with forecasts; the successful resolution of the Company's litigation with Western Digital and Fujitsu; rival chip architectures; pricing pressures; hardware or software deficiencies; a shortage of manufacturing capacity; the ability of the Company to make continued substantial investments in research and development; final determination of appropriate inventory write-downs based on the outlook at the end of each quarter; actual operational spending; the retention of key employees; and the risk factors listed in the company's Form 10-K for the year ended March 30, 2002, 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, except as required by law. Cirrus Logic is a trademark of Cirrus Logic Inc. Summary financial data follows: CIRRUS LOGIC INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
(not prepared in accordance with GAAP)
Quarter Ended
-------------------------------------
Jun. 29, Mar. 30, Jun. 30,
2002 2002 2001
----------- ----------- -----------
Net sales $ 76,024 $ 82,769 $ 179,083
Costs and expenses:
Cost of sales (Note 1) 39,014 43,712 121,828
Research and development
(Note 2) 27,214 27,252 27,375
Selling, general and
administrative (Note 3) 18,787 22,399 24,938
Restructuring costs (Note 4) -- -- --
----------- ----------- -----------
Total costs and expenses 85,015 93,363 174,141
Income (loss) from operations (8,991) (10,594) 4,942
Realized gain on the sale of
marketable equity securities
(Note 5) -- -- --
Interest income and (expense),
net (Note 6) 615 566 2,821
Other income (expense), net 74 (284) 574
----------- ----------- -----------
Income (loss) before income
taxes and loss from
discontinued operations (8,302) (10,312) 8,337
Provision (benefit) for
income taxes (Note 7) (559) (924) --
----------- ----------- -----------
Income (loss) from continuing
operations (7,743) (9,388) 8,337
Loss from discontinued
operations (Note 8) -- -- --
----------- ----------- -----------
Net income (loss) $ (7,743) $ (9,388) $ 8,337
=========== =========== ===========
Basic earnings per share $ (0.09) $ (0.11) $ 0.11
Diluted earnings per share $ (0.09) $ (0.11) $ 0.11
Weighted average common shares
outstanding:
Basic 83,018 82,748 74,253
Diluted 83,018 82,748 76,862
See notes to Pro Forma Consolidated Condensed Statement of Operations
CIRRUS LOGIC INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited -- quarterly)
This pro forma presentation reflects the historical financial
results adjusted for the following non-recurring or unusual items:
(Note 1) Q1 FY'03 -- Pro Forma cost of sales excludes the benefit
of $1.2 million in reserves released on product sold during the
quarter and $0.4 million related to the reversal of a portion of the
Q1 FY'02 charge recorded in conjunction with exiting the magnetic
storage product line. Q4 FY'02 -- Pro Forma cost of sales excludes the
benefit of $1.3 million in reserves released on product sold during
the quarter. Q1 FY'02 -- Pro Forma cost of sales excludes $36.6
million in inventory charges associated with the exit from our
magnetic storage product line.
(Note 2) Q1 FY'03 -- Pro Forma research and development expense
excludes $4.7 million related to the amortization of acquired
intangible assets and $0.7 million related to acquisition bonus and
deferred compensation expense. Q4 FY'02 -- Pro Forma research and
development expense excludes $4.8 million related to the amortization
of acquired intangible assets and $0.9 million related to acquisition
bonus and deferred compensation expense. Q1 FY'02 -- Pro Forma
research and development expense excludes $1.9 million related to the
write-off of in-process research and development associated with the
acquisition of Peak Audio and $1.1 million related to the amortization
of acquired intangible assets.
(Note 3) Q1 FY'03 -- Pro Forma selling, general and administrative
expense excludes $0.9 million related to acquisition bonus and
deferred compensation expense, $0.5 million related to facility exit
costs, and $0.2 million related to legal costs associated with
magnetic storage products and $0.1 million related to merger and
acquisition activities. Q4 FY'02 -- Pro Forma selling, general and
administrative expense excludes a $73.3 million charge to reserve
disputed magnetic storage receivables from Western Digital and
Fujitsu, Ltd., $1.1 million related to acquisition bonus and deferred
compensation expense and $0.2 million related to legal costs
associated with magnetic storage products.
(Note 4) Q1 FY'03 -- Pro Forma restructuring costs excludes $2.1
million related to costs associated with our announced workforce
reduction and consolidation of our facilities. Q4 FY'02 -- Pro Forma
restructuring costs excludes $3.5 million related to costs associated
with consolidation of our facilities. Q1 FY'02 -- Pro Forma
restructuring costs excludes $1.9 million related to workforce
reductions.
(Note 5) Q1 FY'03 -- Pro Forma realized gain on the sale of
marketable equity securities excludes a gain of $1.4 million related
to the holdback from the sale of our interest in Basis Communications.
Q1 FY'02 -- Pro Forma realized gain on the sale of marketable equity
securities excludes a gain of $9.8 million related to the sale of our
interest in Basis Communications and $1.2 million related to the sale
of call options in Openwave Systems Inc. (formerly known as Phone.com)
common stock.
(Note 6) Q1 FY'03 -- Pro Forma interest income and (expense), net
excludes $0.1 million in interest income associated with the sale of
our interest in Basis Communications. Q4 FY'02 -- Pro Forma interest
income and (expense), net excludes $2.4 million related to interest
received on income tax refunds for prior years.
(Note 7) Q1 FY'03 -- Pro Forma benefit for income taxes includes a
$0.6 million benefit resulting from reclaiming a portion of the FY'01
Pro Forma income tax expense. Q4 FY'02 -- Pro Forma benefit for income
taxes excludes $10.6 million related to income tax refunds for prior
years. Pro Forma benefit for income taxes includes a $0.9 million
benefit resulting from reclaiming a portion of the FY'01 Pro Forma
income tax expense.
(Note 8) Q1 FY'03 -- Pro Forma financial statements exclude the
$1.5 million loss from discontinued operations of eMicro Corporation
("eMicro"). During Q1, the shareholders of eMicro voted to dissolve
eMicro, a joint venture in which we own a 75% interest. Q4 FY'02 --
The Pro Forma financial statements exclude the $0.6 million loss from
discontinued operations of eMicro. Q1 FY'02 -- The Pro Forma financial
statements exclude the $0.8 million loss from discontinued operations
of eMicro.
CIRRUS LOGIC INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Quarter Ended
-------------------------------------
Jun. 29, Mar. 30, Jun. 30,
2002 2002 2001
----------- ----------- -----------
Net sales $ 76,024 $ 82,769 $ 179,083
Costs and expenses:
Cost of sales (Note 1) 37,391 42,414 158,413
Research and development
(Note 2) 32,649 32,938 30,369
Selling, general and
administrative (Note 3) 20,471 97,071 24,938
Restructuring costs (Note 4) 2,085 3,544 1,919
----------- ----------- -----------
Total costs and expenses 92,596 175,967 215,639
Income (loss) from operations (16,572) (93,198) (36,556)
Realized gain on the sale of
marketable equity securities
(Note 5) 1,400 -- 10,967
Interest income and (expense),
net (Note 6) 740 2,950 2,821
Other income (expense), net 74 (284) 574
----------- ----------- -----------
Income (loss) before income
taxes and loss from
discontinued operations (14,358) (90,532) (22,194)
Provision (benefit) for income
taxes (Note 7) 29 (10,370) --
----------- ----------- -----------
Income (loss) from continuing
operations (14,387) (80,162) (22,194)
Loss from discontinued
operations (Note 8) (1,452) (633) (803)
----------- ----------- -----------
Net income (loss) $ (15,839) $ (80,795) $ (22,997)
=========== =========== ===========
Basic earnings per share:
From continuing operations $ (0.17) $ (0.97) $ (0.30)
Discontinued operations (0.02) (0.01) (0.01)
----------- ----------- -----------
Basic earnings per share $ (0.19) $ (0.98) $ (0.31)
=========== =========== ===========
Diluted earnings per share:
From continuing operations $ (0.17) $ (0.97) $ (0.30)
Discontinued operations (0.02) (0.01) (0.01)
----------- ----------- -----------
Diluted earnings per share $ (0.19) $ (0.98) $ (0.31)
=========== =========== ===========
Weighted average common shares
outstanding:
Basic 83,018 82,748 74,253
Diluted 83,018 82,748 74,253
See notes to Pro Forma Consolidated Condensed Statement of Operations
Prepared in accordance with Generally Accepted Accounting Principles
CIRRUS LOGIC INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
Jun. 29, Mar. 30, Jun. 30,
2002 2002 2001
----------- ----------- -----------
(unaudited) (unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 131,897 $ 140,529 $ 151,512
Restricted cash 12,807 12,807 10,000
Marketable equity securities 2,174 2,258 11,356
Accounts receivable, net 28,889 42,158 139,795
Inventories, net 36,591 27,985 81,901
Other current assets 19,593 19,928 18,463
----------- ----------- -----------
Total Current Assets 231,951 245,665 413,027
Property and equipment, net 33,816 36,549 47,240
Goodwill and intangibles, net 190,248 194,660 19,961
Other assets 3,445 4,756 8,115
----------- ----------- -----------
Total Assets $ 459,460 $ 481,630 $ 488,343
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities 68,214 75,936 89,212
Current maturities of
long-term debt and capital
lease obligations 248 566 2,040
Income taxes payable 42,175 42,178 40,672
----------- ----------- -----------
Total Current Liabilities 110,637 118,680 131,924
Long-term obligations 3,658 3,709 3,766
Minority interest in eMicro 599 1,092 1,431
Stockholders' equity:
Capital stock 865,380 862,729 663,162
Accumulated deficit (520,538) (504,699) (321,417)
Accumulated other
comprehensive income (276) 119 9,477
----------- ----------- -----------
Total Stockholders' Equity 344,566 358,149 351,222
----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $ 459,460 $ 481,630 $ 488,343
=========== =========== ===========
Contact: Cirrus Logic Inc., Austin
Steve Overly, 512/445-7222
InvestorRelations@cirrus.com
or
Stapleton Communications Inc.
Mary McGowan, 650/470-0200
mary@stapleton.com
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