COMPANY PRESS RELEASE: Cirrus Logic has announced financial results for its third quarter of fiscal 2002, ended December 29, 2001.
Fiscal third quarter revenue was $77.0 million, compared with $67.7 million reported in ongoing businesses during the prior quarter. Ongoing businesses exclude products for magnetic hard disk drives, which the company exited in fiscal Q2. Total reported Q2 revenues were $77.3 million.
Pro forma net loss for fiscal Q3 was $15.1 million, including a $1.9 million tax benefit, versus the pro forma net loss of $14.6 million in the prior quarter. Pro forma loss per share was $0.19 on 79 million shares outstanding, and includes a $0.02 per share tax benefit. This is compared with pro forma loss per share of $0.20 on 74 million shares outstanding in the prior quarter. As expected, pro forma results for the third quarter exclude $34.4 million in charges due to acquisitions, consisting of a $29.4 million write-off of in-process R&D, and $5.0 million in amortization of intangibles and other acquisition-related costs. Pro forma results also exclude $34.0 million in charges resulting from the corporate restructuring and workforce reductions in October 2001. These charges include a $25.3 million inventory write-off, $5.5 million severance and facility consolidation costs, and $3.2 million of other non-cash charges.
In accordance with generally accepted accounting principals (GAAP), third quarter net loss was $85.4 million. The GAAP net loss per share was $1.08.
Third quarter pro forma gross margins were 41 percent, up from the 39 percent gross margins the company reported in the second fiscal quarter. The company benefited from favorable wafer prices it had negotiated earlier in the fiscal year.
We are pleased to have achieved our second consecutive quarter of double-digit revenue growth in our ongoing businesses, said David D. French, president and CEO of Cirrus Logic. Design win activity increased across most product lines, an encouraging indication of our growth potential in the rapidly growing digital entertainment electronics market. Revenue from our DVD optical controllers was especially strong in the third quarter.
During Q3 we completed the acquisitions of ShareWave, Inc., LuxSonor Semiconductors, Inc., and Stream Machine Company, greatly enhancing our position as the largest pure-play semiconductor company in digital entertainment electronics. The integration of these businesses, which have leadership technologies in wireless home networking, DVD video decoders and MPEG-2 video recording, is progressing even better than we had expected. Operational functions were consolidated within one week of each closing. We are already seeing marketing and sales benefits, including key program wins at major customers including Bose, Motorola and Samsung.
At the recent Consumer Electronics Show, Cirrus demonstrated new products in all core areas of our business: a new 32-bit DSP for high-end A/V receivers, a new video DVD processor, a recently announced 802.11 wireless networking solution, a video compression codec and an early prototype of a CD player solution with MP3 playback capability, Mr. French said.
Third quarter pro forma operating expenses increased to $49.1 million from $46.7 million in Q2. The increase was due to ongoing operating expenses from acquisitions, which were partially offset by the company’s previously announced cost reduction efforts.
Cash at the end of the third quarter was $149 million, down from $177 million at the end of fiscal Q2 due to acquisition related costs, cash costs associated with Q3 restructuring and the net operating loss in Q3. At the end of Q3, receivables included $73 million in disputed receivables associated with ongoing litigation with Western Digital and Fujitsu, which the company believes will be collected.