crus-20220924

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 24, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ____ to ____

Commission File Number 0-17795

CIRRUS LOGIC, INC.

(Exact name of registrant as specified in its charter)

Delaware

77-0024818

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

800 W. 6th Street

Austin,

Texas

78701

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code:

(512)

851-4000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, $0.001 par value

CRUS

The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		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 pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

The number of shares of the registrant's common stock, $0.001 par value, outstanding as of October 28, 2022 was 55,060,601.

CIRRUS LOGIC, INC.

FORM 10-Q QUARTERLY REPORT

QUARTERLY PERIOD ENDED SEPTEMBER 24, 2022

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION








Item 1.	Financial Statements

	Consolidated Condensed Balance Sheets - September 24, 2022 (unaudited) and March 26, 2022	3

	Consolidated Condensed Statements of Income (unaudited) - Three and Six Months Ended September 24, 2022 and September 25, 2021	4

	Consolidated Condensed Statements of Comprehensive Income (unaudited) - Three and Six Months Ended September 24, 2022 and September 25, 2021	5

	Consolidated Condensed Statements of Cash Flows (unaudited) - Six Months Ended September 24, 2022 and September 25, 2021	6

	Consolidated Condensed Statements of Stockholders' Equity (unaudited) - Three and Six Months Ended September 24, 2022 and September 25, 2021	7

	Notes to Consolidated Condensed Financial Statements (unaudited)	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21

Item 4.	Controls and Procedures	22

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Mine Safety Disclosures	25

Item 5.	Other Information	25

Item 6.	Exhibits	26

	Signatures	26

Part I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CIRRUS LOGIC, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)


	September 24,		March 26,
	2022		2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	355,043	$	369,814
Marketable securities	23,869		10,601
Accounts receivable, net	304,546		240,264
Inventories	164,571		138,436
Prepaid assets	42,357		40,822
Other current assets	66,181		40,078
Total current assets	956,567		840,015

Long-term marketable securities	49,013		63,749
Right-of-use lease assets	162,859		171,003
Property and equipment, net	158,722		157,077
Intangibles, net	141,909		158,145
Goodwill	435,936		435,791
Deferred tax assets	13,094		11,068
Long-term prepaid wafers	174,787		195,000
Other assets	71,180		91,552
Total assets	$	2,164,067	$	2,123,400

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	118,000	$	115,417
Accrued salaries and benefits	59,140		65,261
Software license agreements	22,925		21,736
Current lease liabilities	13,583		14,680
Acquisition-related liabilities	45,984		30,964
Other accrued liabilities	22,733		16,725
Total current liabilities	282,365		264,783

Long-term liabilities:

Non-current lease liabilities	152,294		163,162
Non-current income taxes	65,255		73,383
Long-term acquisition-related liabilities	—		8,692
Software license agreements	9,539		13,563

Total long-term liabilities	227,088		258,800

Stockholders' equity:
Capital stock	1,618,177		1,578,427
Accumulated earnings	40,927		23,435
Accumulated other comprehensive loss	(4,490)		(2,045)
Total stockholders' equity	1,654,614		1,599,817
Total liabilities and stockholders' equity	$	2,164,067	$	2,123,400

The accompanying notes are an integral part of these consolidated condensed financial statements.

CIRRUS LOGIC, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(in thousands, except per share amounts; unaudited)


	Three Months Ended				Six Months Ended
	September 24,		September 25,		September 24,		September 25,
	2022		2021		2022		2021
Net sales	$	540,574	$	465,886	$	934,213	$	743,139
Cost of sales	269,288		230,442		460,293		367,749
Gross profit	271,286		235,444		473,920		375,390
Operating expenses
Research and development	115,471		102,116		225,187		187,812
Selling, general and administrative	39,598		38,132		78,240		73,279

Total operating expenses	155,069		140,248		303,427		261,091
Income from operations	116,217		95,196		170,493		114,299
Interest income	1,528		288		2,051		1,308
Interest expense	(243)		(253)		(461)		(512)
Other income	295		1,859		801		1,617
Income before income taxes	117,797		97,090		172,884		116,712
Provision for income taxes	30,609		11,994		45,989		14,407
Net income	$	87,188	$	85,096	$	126,895	$	102,305

Basic earnings per share	$	1.56	$	1.48	$	2.27	$	1.78
Diluted earnings per share	$	1.52	$	1.43	$	2.20	$	1.72
Basic weighted average common shares outstanding	55,726		57,364		56,002		57,473
Diluted weighted average common shares outstanding	57,418		59,451		57,620		59,485

The accompanying notes are an integral part of these consolidated condensed financial statements.

CIRRUS LOGIC, INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands; unaudited)


	Three Months Ended				Six Months Ended
	September 24,		September 25,		September 24,		September 25,
	2022		2021		2022		2021
Net income	$	87,188	$	85,096	$	126,895	$	102,305
Other comprehensive income (loss), before tax
Foreign currency translation loss	(736)		(165)		(1,703)		(217)
Unrealized loss on marketable securities	(460)		(1,983)		(940)		(3,106)

Benefit for income taxes	97		417		198		653
Comprehensive income	$	86,089	$	83,365	$	124,450	$	99,635

The accompanying notes are an integral part of these consolidated condensed financial statements.

CIRRUS LOGIC, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(in thousands; unaudited)


	Six Months Ended
	September 24,		September 25,
	2022		2021
Cash flows from operating activities:
Net income	$	126,895	$	102,305
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,734		27,710
Stock-based compensation expense	38,621		31,536
Deferred income taxes	(4,456)		(8,976)
Loss on retirement or write-off of long-lived assets	303		331

Other non-cash adjustments	185		200
Net change in operating assets and liabilities:
Accounts receivable, net	(64,282)		(165,529)
Inventories	(26,135)		(7,422)
Prepaid wafers	—		(195,000)
Other assets	(1,942)		(101,368)
Accounts payable and other accrued liabilities	(6,098)		280,941
Income taxes payable	7,201		4,320
Acquisition-related liabilities	6,328		33,329
Net cash provided by operating activities	110,354		2,377

Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities	6,655		357,636
Purchases of available-for-sale marketable securities	(6,036)		(68,163)
Purchases of property, equipment and software	(16,987)		(14,728)
Investments in technology	(484)		(3,102)
Acquisition of business, net of cash obtained	—		(275,642)


Net cash used in investing activities	(16,852)		(3,999)

Cash flows from financing activities:

Debt issuance costs	—		(1,716)
Issuance of common stock, net of shares withheld for taxes	1,131		3,203
Repurchase of stock to satisfy employee tax withholding obligations	(3,022)		(2,785)
Repurchase and retirement of common stock	(106,382)		(52,503)
Net cash used in financing activities	(108,273)		(53,801)

Net decrease in cash and cash equivalents	(14,771)		(55,423)

Cash and cash equivalents at beginning of period	369,814		442,164
Cash and cash equivalents at end of period	$	355,043	$	386,741

The accompanying notes are an integral part of these consolidated condensed financial statements.

CIRRUS LOGIC, INC.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands; unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total
Three Months Ended	Shares	Amount
Balance, June 26, 2021	57,547	$	58	$	1,514,491	$	(109,754)	$	1,936	$	1,406,731
Net income	—	—		—		85,096		—		85,096
Change in unrealized gain (loss) on marketable securities, net of tax	—	—		—		—		(1,566)		(1,566)
Change in foreign currency translation adjustments	—	—		—		—		(165)		(165)
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes	86	—		2,458		(1,012)		—		1,446
Repurchase and retirement of common stock	(505)	(1)		—		(40,002)		—		(40,003)
Stock-based compensation	—	—		16,551		—		—		16,551
Balance, September 25, 2021	57,128	$	57	$	1,533,500	$	(65,672)	$	205	$	1,468,090

Balance, June 25, 2022	55,899	$	56	$	1,596,628	$	5,894	$	(3,391)	$	1,599,187
Net income	—	—		—		87,188		—		87,188
Change in unrealized gain (loss) on marketable securities, net of tax	—	—		—		—		(363)		(363)
Change in foreign currency translation adjustments	—	—		—		—		(736)		(736)
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes	110	—		1,011		(2,156)		—		(1,145)
Repurchase and retirement of common stock	(583)	(1)		—		(49,999)		—		(50,000)
Stock-based compensation	—	—		20,483		—

SEC Form 10-Q filed by Cirrus Logic Inc.