8-K
CIRRUS LOGIC, INC. (CRUS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 3, 2020
CIRRUS LOGIC INC
(Exact name of Registrant as specified in its charter)
| Delaware | 000-17795 | 77-0024818 |
|---|---|---|
| (State or Other Jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
| 800 W. 6th Street,<br> Austin, Texas | 78701 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant's telephone number, including area code: (512) 851-4000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class | Trading Symbol | Name |
|---|---|---|
| Common stock, $0.001 par value | CRUS | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 3, 2020, the Company issued a press release announcing its financial results for its first quarter of fiscal year 2021. The full text of the press release is furnished as Exhibit No. 99.1 to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
On August 3, 2020, in addition to issuing a press release, the Company posted on its website a shareholder letter to investors summarizing the financial results for its first quarter of fiscal year 2021. The full text of the shareholder letter is furnished as Exhibit No. 99.2 to this Current Report on Form 8-K.
Use of Non-GAAP Financial Information
To supplement Cirrus Logic's financial statements presented on a GAAP basis, Cirrus has provided non-GAAP financial information, including non-GAAP net income, diluted earnings per share, operating income and profit, operating expenses, gross margin and profit, tax expense, tax expense impact on earnings per share, and effective tax rate. A reconciliation of the adjustments to GAAP results is included in the press release below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.
The information contained in Items 2.02, 7.01, and 9.01 in this Current Report on Form 8-K and the exhibits furnished hereto contain forward-looking statements regarding the Company and cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated. In addition, this information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
| Exhibit 99.1 | Cirrus Logic, Inc. press release dated August 3, 2020 |
|---|---|
| Exhibit 99.2 | Cirrus Logic, Inc. shareholder letter dated August 3, 2020 |
| --- | --- |
| Exhibit 104 | Cover Page Interactive Data File (formatted as Inline XBRL) |
| --- | --- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CIRRUS LOGIC, INC. | ||
|---|---|---|
| Date: August 3, 2020 | By: | /s/ Thurman K. Case |
| Name: Thurman K. Case | ||
| Title : Chief Financial Officer |
EXHIBIT INDEX
Exhibit No. Description
| 99.1 | Registrant’s press<br> release dated August 3, 2020 |
|---|---|
| 99.2 | Cirrus Logic, Inc.<br> shareholder letter August 3, 2020 |
| --- | --- |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) |
| --- | --- |
_______________________________________________________________________
Exhibit 99.1
Exhibit 99.2
Exhibit 104
| Exhibit 99.1 |
|---|
Cirrus Logic Reports Q1 FY21 Revenue of $242.6 Million
Results Reflect Strong Demand for Products Shipping in Certain Tablets and Smartphones
AUSTIN, Texas--(BUSINESS WIRE)--August 3, 2020--Cirrus Logic, Inc. (Nasdaq: CRUS) **** today posted on its website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the first quarter fiscal year 2021, which ended June 27, 2020, as well as the company’s current business outlook.
“We are pleased with our results in the June quarter as we experienced robust demand for certain products shipping in tablets and smartphones,” said Jason Rhode, chief executive officer. “Despite the continuing challenges and adverse economic effects associated with COVID-19, design activity and new product development efforts were encouraging during the quarter. The company remains focused on leveraging our strong customer relationships and mixed-signal processing expertise to broaden our penetration in audio, voice and other mixed-signal domains and position the company for growth in the coming years.”
Reported Financial Results – First Quarter FY21
- Revenue of $242.6 million;
- GAAP and non-GAAP gross margin of 52.6 percent;
- GAAP operating expenses of $108.8 million and non-GAAP operating expenses of $92.4 million;
- GAAP earnings per share of $0.30 and non-GAAP earnings per share of $0.53.
A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.
Business Outlook – Second Quarter FY21
- Revenue is expected to range between $290 million and $330 million;
- GAAP gross margin to be between 51 percent and 53 percent; and
- Combined GAAP R&D and SG&A expenses to range between $114 million and $120 million, including approximately $15 million in stock-based compensation expense and $3 million in amortization of acquired intangibles.
Cirrus Logic will host a live Q&A session at 5 p.m. EDT today to answer questions related to its financial results and business outlook. Participants may listen to the conference call on the Cirrus Logic website. Participants who would like to submit a question to be addressed during the call are requested to email investor.relations@cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (416) 621-4642, or toll-free at (800) 585-8367 (Access Code: 1899640).
Cirrus Logic, Inc.
Cirrus Logic is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world’s top mobile and consumer applications. With headquarters in Austin, Texas, Cirrus Logic is recognized globally for its award-winning corporate culture. Check us out at www.cirrus.com.
Cirrus Logic, Cirrus and the Cirrus Logic logo are registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.
Use of non-GAAP Financial Information
To supplement Cirrus Logic's financial statements presented on a GAAP basis, the company has provided non-GAAP financial information, including non-GAAP net income, diluted earnings per share, operating income and profit, operating expenses, gross margin and profit, tax expense, tax expense impact on earnings per share, and effective tax rate. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.
Safe Harbor Statement
Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements including our statements about broadening our penetration in audio, voice, and other domains, and positioning the company for growth in the coming years, along with estimates for the second quarter fiscal year 2021 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense and amortization of acquired intangibles. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances 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 and readers should not place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following: the effects of the global COVID-19 outbreak and the measures taken to limit the spread of COVID-19, including any disruptions to our business that could result from measures to contain the outbreak that may be taken by governmental authorities in the jurisdictions in which we and our supply chain operate; the susceptibility of the markets we address to economic downturns, including as a result of the COVID-19 outbreak and the actions taken to mitigate the spread of COVID-19; the risks of doing business internationally, including increased import/export restrictions and controls (e.g., the effect of the U.S. Bureau of Industry and Security of the U.S. Department of Commerce placing Huawei Technologies Co., Ltd. and certain of its affiliates on the Bureau’s Entity List), imposition of trade protection measures (e.g., tariffs or taxes), security and health risks, possible disruptions in transportation networks, and other economic, social, military and geo-political conditions in the countries in which we, our customers or our suppliers operate; the level of orders and shipments during the second quarter of fiscal year 2021, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the risk factors listed in our Form 10-K for the year ended March 28, 2020 and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.
Summary financial data follows:
| CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | |||||||||
| (in thousands, except per share data) | |||||||||
| Three Months Ended | |||||||||
| Jun. 27, | Mar. 28, | Jun. 29, | |||||||
| 2020 | 2020 | 2019 | |||||||
| Q1'21 | Q4'20 | Q1'20 | |||||||
| Portable products | $ | 210,661 | $ | 249,731 | $ | 202,938 | |||
| Non-portable and other products | 31,912 | 29,560 | 35,315 | ||||||
| Net sales | 242,573 | 279,291 | 238,253 | ||||||
| Cost of sales | 115,101 | 133,056 | 115,759 | ||||||
| Gross profit | 127,472 | 146,235 | 122,494 | ||||||
| Gross margin | 52.6 | % | 52.4 | % | 51.4 | % | |||
| Research and development | 78,741 | 81,865 | 88,830 | ||||||
| Selling, general and administrative | 29,704 | 32,464 | 29,520 | ||||||
| Restructuring costs | 352 | 21,925 | - | ||||||
| Total operating expenses | 108,797 | 136,254 | 118,350 | ||||||
| Income from operations | 18,675 | 9,981 | 4,144 | ||||||
| Interest income | 1,576 | 2,474 | 2,285 | ||||||
| Other income (expense) | 111 | (106 | ) | (378 | ) | ||||
| Income before income taxes | 20,362 | 12,349 | 6,051 | ||||||
| Provision for income taxes | 2,153 | 2,191 | 1,433 | ||||||
| Net income | $ | 18,209 | $ | 10,158 | $ | 4,618 | |||
| Basic earnings per share: | $ | 0.31 | $ | 0.17 | $ | 0.08 | |||
| Diluted earnings per share: | $ | 0.30 | $ | 0.17 | $ | 0.08 | |||
| Weighted average number of shares: | |||||||||
| Basic | 58,313 | 58,527 | 58,540 | ||||||
| Diluted | 60,280 | 60,683 | 60,258 | ||||||
| Prepared in accordance with Generally Accepted Accounting Principles |
| RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION (unaudited, in thousands, except per share data) (not prepared in accordance with GAAP) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. | |||||||||
| Three Months Ended | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Jun. 27, | Mar. 28, | Jun. 29, | |||||||
| 2020 | 2020 | 2019 | |||||||
| Net Income Reconciliation | Q1'21 | Q4'20 | Q1'20 | ||||||
| GAAP Net Income | $ | 18,209 | $ | 10,158 | $ | 4,618 | |||
| Amortization of acquisition intangibles | 2,998 | 3,000 | 7,228 | ||||||
| Stock-based compensation expense | 13,306 | 14,052 | 11,786 | ||||||
| Restructuring costs | 352 | 20,602 | - | ||||||
| Adjustment to income taxes | (2,982 | ) | (6,320 | ) | (2,803 | ) | |||
| Non-GAAP Net Income | $ | 31,883 | $ | 41,492 | $ | 20,829 | |||
| Earnings Per Share Reconciliation | |||||||||
| GAAP Diluted earnings per share | $ | 0.30 | $ | 0.17 | $ | 0.08 | |||
| Effect of Amortization of acquisition intangibles | 0.05 | 0.05 | 0.12 | ||||||
| Effect of Stock-based compensation expense | 0.22 | 0.23 | 0.20 | ||||||
| Effect of Restructuring costs | 0.01 | 0.34 | - | ||||||
| Effect of Adjustment to income taxes | (0.05 | ) | (0.11 | ) | (0.05 | ) | |||
| Non-GAAP Diluted earnings per share | $ | 0.53 | $ | 0.68 | $ | 0.35 | |||
| Operating Income Reconciliation | |||||||||
| GAAP Operating Income | $ | 18,675 | $ | 9,981 | $ | 4,144 | |||
| GAAP Operating Profit | 7.7 | % | 3.6 | % | 1.7 | % | |||
| Amortization of acquisition intangibles | 2,998 | 3,000 | 7,228 | ||||||
| Stock-based compensation expense - COGS | 207 | 213 | 241 | ||||||
| Stock-based compensation expense - R&D | 8,653 | 9,446 | 7,240 | ||||||
| Stock-based compensation expense - SG&A | 4,446 | 4,393 | 4,305 | ||||||
| Restructuring costs | 352 | 20,602 | - | ||||||
| Non-GAAP Operating Income | $ | 35,331 | $ | 47,635 | $ | 23,158 | |||
| Non-GAAP Operating Profit | 14.6 | % | 17.1 | % | 9.7 | % | |||
| Operating Expense Reconciliation | |||||||||
| GAAP Operating Expenses | $ | 108,797 | $ | 136,254 | $ | 118,350 | |||
| Amortization of acquisition intangibles | (2,998 | ) | (3,000 | ) | (7,228 | ) | |||
| Stock-based compensation expense - R&D | (8,653 | ) | (9,446 | ) | (7,240 | ) | |||
| Stock-based compensation expense - SG&A | (4,446 | ) | (4,393 | ) | (4,305 | ) | |||
| Restructuring costs | (352 | ) | (20,724 | ) | - | ||||
| Non-GAAP Operating Expenses | $ | 92,348 | $ | 98,691 | $ | 99,577 | |||
| Gross Margin/Profit Reconciliation | |||||||||
| GAAP Gross Profit | $ | 127,472 | $ | 146,235 | $ | 122,494 | |||
| GAAP Gross Margin | 52.6 | % | 52.4 | % | 51.4 | % | |||
| Stock-based compensation expense - COGS | 207 | 213 | 241 | ||||||
| Restructuring costs - COGS | - | (122 | ) | - | |||||
| Non-GAAP Gross Profit | $ | 127,679 | $ | 146,326 | $ | 122,735 | |||
| Non-GAAP Gross Margin | 52.6 | % | 52.4 | % | 51.5 | % | |||
| Effective Tax Rate Reconciliation | |||||||||
| GAAP Tax Expense | $ | 2,153 | $ | 2,191 | $ | 1,433 | |||
| GAAP Effective Tax Rate | 10.6 | % | 17.7 | % | 23.7 | % | |||
| Adjustments to income taxes | 2,982 | 6,320 | 2,803 | ||||||
| Non-GAAP Tax Expense | $ | 5,135 | $ | 8,511 | $ | 4,236 | |||
| Non-GAAP Effective Tax Rate | 13.9 | % | 17.0 | % | 16.9 | % | |||
| Tax Impact to EPS Reconciliation | |||||||||
| GAAP Tax Expense | $ | 0.04 | $ | 0.04 | $ | 0.02 | |||
| Adjustments to income taxes | 0.05 | 0.11 | 0.05 | ||||||
| Non-GAAP Tax Expense | $ | 0.09 | $ | 0.15 | $ | 0.07 |
| CONSOLIDATED CONDENSED BALANCE SHEET | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| unaudited; in thousands | |||||||||
| Jun. 27, | Mar. 28, | Jun. 29, | |||||||
| 2020 | 2020 | 2019 | |||||||
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 285,922 | $ | 292,119 | $ | 198,077 | |||
| Marketable securities | 29,943 | 22,008 | 52,350 | ||||||
| Accounts receivable, net | 136,539 | 153,998 | 111,497 | ||||||
| Inventories | 199,332 | 146,725 | 146,317 | ||||||
| Other current assets | 38,231 | 35,346 | 55,834 | ||||||
| Total current Assets | 689,967 | 650,196 | 564,075 | ||||||
| Long-term marketable securities | 290,186 | 283,573 | 205,079 | ||||||
| Right-of-use lease assets | 139,492 | 141,274 | 146,035 | ||||||
| Property and equipment, net | 154,286 | 158,244 | 182,042 | ||||||
| Intangibles, net | 31,185 | 34,430 | 62,496 | ||||||
| Goodwill | 287,399 | 287,088 | 286,370 | ||||||
| Deferred tax asset | 6,970 | 10,052 | 9,394 | ||||||
| Other assets | 44,554 | 27,820 | 14,625 | ||||||
| Total assets | $ | 1,644,039 | $ | 1,592,677 | $ | 1,470,116 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Current liabilities | |||||||||
| Accounts payable | $ | 95,523 | $ | 78,412 | $ | 60,408 | |||
| Accrued salaries and benefits | 28,768 | 42,439 | 23,416 | ||||||
| Current lease liability | 13,887 | 13,580 | 14,517 | ||||||
| Other accrued liabilities | 24,866 | 24,206 | 32,865 | ||||||
| Total current liabilities | 163,044 | 158,637 | 131,206 | ||||||
| Non-current lease liability | 129,627 | 129,312 | 137,180 | ||||||
| Non-current income taxes | 69,130 | 71,143 | 79,484 | ||||||
| Other long-term liabilities | 9,949 | 3,806 | 4,996 | ||||||
| Stockholders' equity: | |||||||||
| Capital stock | 1,451,297 | 1,434,929 | 1,375,777 | ||||||
| Accumulated deficit | (184,049 | ) | (201,681 | ) | (258,899 | ) | |||
| Accumulated other comprehensive income (loss) | 5,041 | (3,469 | ) | 372 | |||||
| Total stockholders' equity | 1,272,289 | 1,229,779 | 1,117,250 | ||||||
| Total liabilities and stockholders' equity | $ | 1,644,039 | $ | 1,592,677 | $ | 1,470,116 | |||
| Prepared in accordance with Generally Accepted Accounting Principles |
Contacts
Thurman K. Case
Chief Financial Officer
Cirrus Logic, Inc.
\(512\) 851-4125
Investor.Relations@cirrus.com
| Exhibit 99.2 |
|---|
