7/23/2002 - 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.”
Outlook and Guidance
Second Quarter FY03 (ending September 2002)
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.
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 is also available. 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.
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.
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