Cirrus Logic Reports Q3 Revenue of $347.9 Million

Company Continues to Expect Strong Year-Over-Year Growth in FY16 and FY17

AUSTIN, Texas--- Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision analog and digital signal processing products, today posted on its investor relations website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2016, which ended Dec. 26, 2015, as well as the company’s current business outlook.

“While short term weakness for certain portable audio products drove our fiscal Q3 results and Q4 outlook lower than anticipated, we are on track to deliver 27 percent year over year growth for full FY16, based on the midpoint of Q4 guidance, and we remain confident in our ability to deliver strong growth in FY17,” said Jason Rhode, president and chief executive officer. “With a comprehensive roadmap of innovative audio and voice products targeting the mobile phone, smart accessory and digital headset markets, the company is focused on execution, diversification and sustained growth in the coming years.”

Reported Financial Results – Third Quarter FY16

Revenue of $347.9 million;
GAAP gross margin of 47.4 percent and non-GAAP gross margin of 47.5 percent;
GAAP operating expenses of $101 million; non-GAAP operating expenses of $84.7 million; and
GAAP diluted earnings per share of $0.63 and non-GAAP diluted earnings per share of $0.82.

A reconciliation of the non-GAAP charges is included in the tables accompanying this press release.

Business Outlook – Fourth Quarter FY16

Revenue is expected to range between $210 million and $240 million;
GAAP gross margin is expected to be between 47 percent and 49 percent; and
Combined GAAP R&D and SG&A expenses are expected to range between $100 million and $104 million, which includes approximately $8 million in share-based compensation and $9 million in amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 p.m. EST 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 This email address is being protected from spambots. You need JavaScript enabled to view it.. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (404) 537-3406, or toll-free at (855) 859-2056 (Access Code: 8524794).

Cirrus Logic, Inc.

Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of innovative customers. Building on its diverse analog and signal-processing patent portfolio, Cirrus Logic delivers highly optimized products for a variety of audio, industrial and energy-related applications. The company operates from headquarters in Austin, Texas, with offices in the United States, United Kingdom, Australia, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com.

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 gross margins, operating expenses, net income, operating profit and income, tax expenses and diluted earnings per share. 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 future growth opportunities and our estimates of fourth quarter fiscal year 2016 revenue, gross margin, combined research and development and selling, general and administrative expense levels, share-based 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. These risks and uncertainties include, but are not limited to, the following: the level of orders and shipments during the fourth quarter of fiscal year 2016, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the timing and success of future product ramps; and the risk factors listed in our Form 10-K for the year ended March 28, 2015, 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 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 registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.


CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)

	Three Months Ended									Nine Months Ended

	Dec. 26,			Sep. 26,			Dec. 27,			Dec. 26,			Dec. 27,
	2015			2015			2014			2015			2014
	Q3'16			Q2'16			Q3'15			Q3'16			Q3'15
Portable audio products	$	308,803		$	257,152		$	253,355		$	801,821		$	529,487
Non-portable audio and other products		39,060			49,604			45,251			135,431			131,898
Net sales		347,863			306,756			298,606			937,252			661,385
Cost of sales		182,952			164,535			167,775			497,666			354,612
Gross profit		164,911			142,221			130,831			439,586			306,773
Gross margin		47.4	%		46.4	%		43.8	%		46.9	%		46.4	%

Research and development		70,290			67,258			55,474			203,383			139,808
Selling, general and administrative		30,632			30,103			27,783			89,854			69,011
Acquisition related costs		-			-			3,200			-			18,137
Restructuring and other		-			-			-			-			1,455
Patent agreement and other		78			752			-			(11,670	)		-
Total operating expenses		101,000			98,113			86,457			281,567			228,411

Income from operations		63,911			44,108			44,374			158,019			78,362

Interest expense, net		(591	)		(601	)		(1,042	)		(1,830	)		(4,179	)
Other expense, net		(925	)		(524	)		(1,071	)		(1,313	)		(12,564	)
Income before income taxes		62,395			42,983			42,261			154,876			61,619
Provision for income taxes		21,011			8,103			19,532			45,258			27,790
Net income	$	41,384		$	34,880		$	22,729		$	109,618		$	33,829

Basic earnings per share:	$	0.65		$	0.55		$	0.36		$	1.73		$	0.54
Diluted earnings per share:	$	0.63		$	0.53		$	0.35		$	1.66		$	0.52

Weighted average number of shares:
Basic		63,328			63,346			62,885			63,316			62,386
Diluted		65,761			66,329			65,214			66,184			65,024

Prepared in accordance with Generally Accepted Accounting Principles


CIRRUS LOGIC, INC.
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. Certain modifications to prior year non-GAAP presentation has been made and had no material effect on the results of operations.



	Three Months Ended									Nine Months Ended

	Dec. 26,			Sep. 26,			Dec. 27,			Dec. 26,			Dec. 27,
	2015			2015			2014			2015			2014
Net Income Reconciliation	Q3'16			Q2'16			Q3'15			Q3'16			Q3'15
GAAP Net Income	$	41,384		$	34,880		$	22,729		$	109,618		$	33,829
Amortization of acquisition intangibles		8,634			8,133			5,151			23,908			7,921
Stock based compensation expense		7,761			8,688			7,815			24,720			19,933
Patent agreement and other		78			752			-			(11,670	)		-
Restructuring and other costs, net		-			-			-			-			1,455
Wolfson acquisition items		-			-			9,903			-			43,082
Adjustment to income taxes		(3,737	)		(9,492	)		17,714			(13,404	)		24,704
Non-GAAP Net Income	$	54,120		$	42,961		$	63,312		$	133,172		$	130,924

Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	0.63		$	0.53		$	0.35		$	1.66		$	0.52
Effect of Amortization of acquisition intangibles		0.13			0.12			0.08			0.36			0.12
Effect of Stock based compensation expense		0.12			0.13			0.12			0.37			0.31
Effect of Patent agreement and other		-			0.01			-			(0.18	)		-
Effect of Restructuring and other costs, net		-			-			-			-			0.02
Effect of Wolfson acquisition items		-			-			0.15			-			0.66
Effect of Adjustment to income taxes		(0.06	)		(0.14	)		0.27			(0.20	)		0.38
Non-GAAP Diluted earnings per share	$	0.82		$	0.65		$	0.97		$	2.01		$	2.01

Operating Income Reconciliation
GAAP Operating Income	$	63,911		$	44,108		$	44,374		$	158,019		$	78,362
GAAP Operating Profit		18	%		14	%		15	%		17	%		12	%
Amortization of acquisition intangibles		8,634			8,133			5,151			23,908			7,921
Stock compensation expense - COGS		213			380			273			918			757
Stock compensation expense - R&D		4,183			4,126			2,904			12,177			8,228
Stock compensation expense - SG&A		3,365			4,182			4,638			11,625			10,948
Patent agreement and other		78			752			-			(11,670	)		-
Restructuring and other costs, net		-			-			-			-			1,455
Wolfson acquisition items		-			-			9,903			-			28,642
Non-GAAP Operating Income	$	80,384		$	61,681		$	67,243		$	194,977		$	136,313
Non-GAAP Operating Profit		23	%		20	%		23	%		21	%		21	%

Operating Expense Reconciliation
GAAP Operating Expenses	$	101,000		$	98,113		$	86,457		$	281,567		$	228,411
Amortization of acquisition intangibles		(8,634	)		(8,133	)		(5,151	)		(23,908	)		(7,921	)
Stock compensation expense - R&D		(4,183	)		(4,126	)		(2,904	)		(12,177	)		(8,228	)
Stock compensation expense - SG&A		(3,365	)		(4,182	)		(4,638	)		(11,625	)		(10,948	)
Patent agreement and other		(78	)		(752	)		-			11,670			-
Restructuring and other costs, net		-			-			-			-			(1,455	)
Wolfson acquisition items		-			-			(3,200	)		-			(20,329	)
Non-GAAP Operating Expenses	$	84,740		$	80,920		$	70,564		$	245,527		$	179,530

Gross Margin/Profit Reconciliation
GAAP Gross Margin	$	164,911		$	142,221		$	130,831		$	439,586		$	306,773
GAAP Gross Profit		47.4	%		46.4	%		43.8	%		46.9	%		46.4	%
Wolfson acquisition items		-			-			6,703			-			8,313
Stock compensation expense - COGS		213			380			273			918			757
Non-GAAP Gross Margin	$	165,124		$	142,601		$	137,807		$	440,504		$	315,843
Non-GAAP Gross Profit		47.5	%		46.5	%		46.2	%		47.0	%		47.8	%

Effective Tax Rate Reconciliation
GAAP Tax Expense	$	21,011		$	8,103		$	19,532		$	45,258		$	27,790
GAAP Effective Tax Rate		33.7	%		18.9	%		46.2	%		29.2	%		45.1	%
Adjustments to income taxes		3,737			9,492			(17,714	)		13,404			(24,704	)
Non-GAAP Tax Expense	$	24,748		$	17,595		$	1,818		$	58,662		$	3,086
Non-GAAP Effective Tax Rate		31.4	%		29.1	%		2.8	%		30.6	%		2.3	%

Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.32		$	0.12		$	0.30		$	0.68		$	0.43
Adjustments to income taxes		0.06			0.14			(0.27	)		0.20			(0.38	)
Non-GAAP Tax Expense	$	0.38		$	0.26		$	0.03		$	0.88		$	0.05


CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)

	Dec. 26,			Mar. 28,			Dec. 27,
	2015			2015			2014
ASSETS	(unaudited)						(unaudited)
Current assets
Cash and cash equivalents	$	159,572		$	76,401		$	66,607
Marketable securities		67,148			124,246			106,061
Accounts receivable, net		127,754			112,608			148,386
Inventories		137,723			84,196			73,896
Deferred tax asset		19,404			18,559			14,143
Other current assets		37,982			35,903			27,081
Total current Assets		549,583			451,913			436,174

Long-term marketable securities		22,327			60,072			3,404
Property and equipment, net		159,149			144,346			137,291
Intangibles, net		171,664			175,743			181,675
Goodwill		287,518			263,115			264,879
Deferred tax asset		27,581			25,593			24,991
Other assets		18,099			27,996			16,654
Total assets	$	1,235,921		$	1,148,778		$	1,065,068

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	114,483		$	112,213		$	77,195
Accrued salaries and benefits		22,438			24,132			20,164
Deferred income		4,162			6,105			5,417
Other accrued liabilities		36,301			34,128			27,402
Total current liabilities		177,384			176,578			130,178

Long-term debt		160,439			180,439			200,439
Other long-term liabilities		38,223			34,990			21,073

Stockholders' equity:
Capital stock		1,198,547			1,159,494			1,135,719
Accumulated deficit		(336,653	)		(400,613	)		(421,514	)
Accumulated other comprehensive loss		(2,019	)		(2,110	)		(827	)
Total stockholders' equity		859,875			756,771			713,378
Total liabilities and stockholders' equity	$	1,235,921		$	1,148,778		$	1,065,068

Prepared in accordance with Generally Accepted Accounting Principles

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Contact:

Cirrus Logic, Inc.
Thurman K. Case, 512-851-4125
Chief Financial Officer
This email address is being protected from spambots. You need JavaScript enabled to view it.

Cirrus Logic Inc ( CRUS )

Cirrus Logic Reports Q3 Revenue of $347.9 Million