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Description of Business
Cirrus Logic, Inc. (“Cirrus Logic,” “Cirrus,” “We,” “Us,” “Our,” or the “Company”) develops high-precision, analog and mixed-signal integrated circuits (“ICs”) for a broad range of consumer and industrial markets. Building on our diverse analog and mixed-signal patent portfolio, Cirrus Logic delivers highly optimized products for consumer and commercial audio, automotive entertainment, and targeted industrial applications including energy control, energy measurement and energy exploration. We also develop ICs, board-level modules and hybrids for high-power amplifier applications branded as the Apex Precision Power™ (“Apex”) line of products. We also provide complete system reference designs based on our technology that enable our customers to bring products to market in a timely and cost-effective manner.
We were incorporated in California in 1984, became a public company in 1989, and were reincorporated in the State of Delaware in February 1999. Our primary facilities housing engineering, sales and marketing, administration, and test operations are located in Austin, Texas. In addition, we have engineering, administrative and assembly facilities in Tucson, Arizona and sales locations internationally and throughout the United States. We also serve customers from international sales offices in Europe and Asia, including the People’s Republic of China, Hong Kong, South Korea, Japan, Singapore, Taiwan, and the United Kingdom. Our common stock, which has been publicly traded since 1989, is listed on the NASDAQ Global Select Market under the symbol CRUS.
Basis of Presentation
We prepare financial statements on a 52- or 53-week year that ends on the last Saturday in March. Fiscal years 2011 and 2010 were 52-week years, whereas fiscal year 2012 was a 53-week year.
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Reclassifications
Certain reclassifications have been made to prior year balances in order to conform to the current year’s presentation of financial information.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires the use of management estimates. These estimates are subjective in nature and involve judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at fiscal year-end and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
|
|||
2. Summary of Significant Accounting Policies
Cash and cash equivalents consist primarily of money market funds, commercial paper, and U.S. Government Treasury and Agency instruments with original maturities of three months or less at the date of purchase.
As of March 31, 2012, and March 26, 2011, we had restricted investments of zero and $5.8 million, respectively, in support of our letters of credit needs. The letters of credit primarily secured certain obligations under our operating lease agreement for our headquarters and engineering facility in Austin, Texas, which expired in fiscal year 2012.
We determine the appropriate classification of marketable securities at the time of purchase and reevaluate this designation as of each balance sheet date. We classify these securities as either held-to-maturity, trading, or available-for-sale. As of March 31, 2012, and March 26, 2011, all marketable securities and restricted investments were classified as available-for-sale securities. The Company classifies its investments as “available for sale” because it expects to possibly sell some securities prior to maturity. The Company’s investments are subject to market risk, primarily interest rate and credit risk. The Company’s investments are managed by an outside professional manager within investment guidelines set by the Company. Such guidelines include security type, credit quality, and maturity, and are intended to limit market risk by restricting the Company’s investments to high quality debt instruments with relatively short-term maturities. The fair value of investments is determined using observable or quoted market prices for those securities.
Available-for-sale securities are carried at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive loss. Realized gains and losses, declines in value judged to be other than temporary, and interest on available-for-sale securities are included in net income. The cost of securities sold is based on the specific identification method.
We use the lower of cost or market method to value our inventories, with cost being determined on a first-in, first-out basis. One of the factors we consistently evaluate in the application of this method is the extent to which products are accepted into the marketplace. By policy, we evaluate market acceptance based on known business factors and conditions by comparing forecasted customer unit demand for our products over a specific future period, or demand horizon, to quantities on hand at the end of each accounting period.
On a quarterly and annual basis, we analyze inventories on a part-by-part basis. Inventory quantities on hand in excess of forecasted demand are considered to have reduced market value and, therefore, the cost basis is adjusted to the lower of cost or market. Typically, market values for excess or obsolete inventories are considered to be zero. Product life cycles and the competitive nature of the industry are factors considered in the estimation of customer unit demand at the end of each quarterly accounting period.
Inventories were comprised of the following (in thousands):
|
|
|
|
|
|
Year Ended |
|
|
|
March 31, 2012 |
March 26, 2011 |
|
$ 30,921 |
$ 22,048 |
|
|
24,994 |
18,449 |
|
|
$ 55,915 |
$ 40,497 |
|
Property, plant and equipment is recorded at cost, net of depreciation and amortization. Depreciation and amortization is calculated on a straight-line basis over estimated economic lives, ranging from three to 39 years. Leasehold improvements are depreciated over the shorter of the term of the lease or the estimated useful life. Furniture, fixtures, machinery, and equipment are all depreciated over a useful life of three to 10 years, while buildings are depreciated over a period of up to 39 years. In general, our capitalized software is amortized over a useful life of three years, with capitalized enterprise resource planning software being amortized over a useful life of 10 years. Gains or losses related to retirements or dispositions of fixed assets are recognized in the period incurred.
Property, plant and equipment was comprised of the following (in thousands):
|
2012 |
2011 |
|
|
|
$ 22,410 |
$ 19,051 |
|
|
|
4,320 |
4,215 |
|
|
|
6,765 |
6,732 |
|
|
|
37,481 |
29,583 |
|
|
|
23,459 |
22,579 |
|
|
|
28,497 |
2,986 |
|
|
|
122,932 |
85,146 |
|
|
|
(55,954) |
(50,583) |
|
|
|
$ 66,978 |
$ 34,563 |
|
The increase in the construction in progress balance in fiscal year 2012 was primarily attributable to costs incurred during the construction of the new headquarters facility. Depreciation and amortization expense on property, plant, and equipment for fiscal years 2012, 2011 and 2010 was $6.3 million, $4.8 million, and $4.3 million, respectively. During fiscal year 2011 we retired fully depreciated assets with an original cost of $3.7 million.
Other-Than-Temporary Impairment
All of the Company’s available-for-sale investments and other investments are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. Marketable securities are evaluated for impairment if the decline in fair value below cost basis is significant and/or has lasted for an extended period of time. Other investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. For investments accounted for using the cost method of accounting, management evaluates information (e.g., budgets, business plans, financial statements) in addition to quoted market price, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults, and subsequent rounds of financings at an amount below the cost basis of the investment. When a decline in value is deemed to be other-than-temporary, we recognize an impairment loss in the current period's operating results to the extent of the decline.
Intangible assets include purchased technology licenses and patents that are reported at cost and are amortized on a straight-line basis over their useful lives, generally ranging from one to ten years. Acquired intangibles include existing technology, core technology or patents, license agreements, trademarks, covenants not-to-compete and customer agreements. These assets are amortized on a straight-line basis over lives ranging from four to fifteen years. Goodwill is recorded at the time of an acquisition and is calculated as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired.
Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. If the assumptions and estimates used to allocate the purchase price are not correct, or if business conditions change, purchase price adjustments or future asset impairment charges could be required. The value of our intangible assets, including goodwill, could be impacted by future adverse changes such as: (i) any future declines in our operating results, (ii) a decline in the valuation of technology company stocks, including the valuation of our common stock, (iii) a significant slowdown in the worldwide economy and the semiconductor industry, or (iv) any failure to meet the performance projections included in our forecasts of future operating results. The Company tests goodwill and indefinite lived intangibles for impairment on an annual basis or more frequently if the Company believes indicators of impairment exist. Impairment evaluations involve management estimates of asset useful lives and future cash flows. Significant management judgment is required in the forecasts of future operating results that are used in the evaluations. It is possible, however, that the plans and estimates used may be incorrect. If our actual results, or the plans and estimates used in future impairment analysis, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges in a future period. There are no impairments of goodwill in 2012, 2011, and 2010.
We test for impairment losses on long-lived assets and definite-lived intangibles used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. We measure any impairment loss by comparing the fair value of the asset to its carrying amount. We estimate fair value based on discounted future cash flows, quoted market prices, or independent appraisals.
All of our international subsidiaries have the U.S. dollar as the functional currency. The local currency financial statements are remeasured into U.S. dollars using current rates of exchange for assets and liabilities. Gains and losses from remeasurement are included in other income (expense), net. Revenue and expenses from our international subsidiaries are remeasured using the monthly average exchange rates in effect for the period in which the items occur. For all periods presented, our foreign currency remeasurement expense was not significant.
Financial instruments that potentially subject us to material concentrations of credit risk consist primarily of cash equivalents, restricted investments, marketable securities, long-term marketable securities, and trade accounts receivable. We are exposed to credit risk to the extent of the amounts recorded on the balance sheet. By policy, our cash equivalents, restricted investments, marketable securities, and long-term marketable securities are subject to certain nationally recognized credit standards, issuer concentrations, sovereign risk, and marketability or liquidity considerations.
In evaluating our trade receivables, we perform credit evaluations of our major customers’ financial condition and monitor closely all of our receivables to limit our financial exposure by limiting the length of time and amount of credit extended. In certain situations, we may require payment in advance or utilize letters of credit to reduce credit risk. By policy, we establish a reserve for trade accounts receivable based on the type of business in which a customer is engaged, the length of time a trade account receivable is outstanding, and other knowledge that we may possess relating to the probability that a trade receivable is at risk for non-payment.
For fiscal years 2012 and 2011, we had one contract manufacturer, Futaihua Industrial, who represented 28 percent and 42 percent, respectively of our consolidated gross accounts receivable. In fiscal year 2012, we had one contract manufacturer, Hongfujin Precision, who represented 14 percent of our consolidated gross accounts receivable. For fiscal year 2011, we had one distributor, Avnet, Inc. who represented 17 percent, of our consolidated gross accounts receivable. No other distributor or customer had receivable balances that represented more than 10 percent of consolidated gross accounts receivable as of the end of fiscal years 2012 or 2011.
Since the components we produce are largely proprietary and generally not available from second sources, we consider our end customer to be the entity specifying the use of our component in their design. These end customers may then purchase our products directly from us, from a distributor, or through a third party manufacturer contracted to produce their end product. For fiscal years 2012, 2011, and 2010, our ten largest end customers represented approximately 74 percent, 62 percent, and 54 percent of our sales, respectively. For fiscal years 2012, 2011, and 2010, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 62 percent, 47 percent, and 35 percent of the Company’s total sales, respectively. Further, we had one distributor, Avnet, Inc., that represented 15 percent, 24 percent, and 26 percent of our sales for fiscal years 2012, 2011, and 2010, respectively. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2012, 2011, or 2010.
We recognize revenue when all of the following criteria are met: persuasive evidence that an arrangement exists, delivery of goods has occurred, the sales price is fixed or determinable and collectability is reasonably assured. We evaluate our distributor arrangements, on a distributor by distributor basis, with respect to each of the four criteria above. For a majority of our distributor arrangements, we provide rights of price protection and stock rotation. As a result, revenue is deferred at the time of shipment to our domestic distributors and certain international distributors due to the determination that the ultimate sales price to the distributor is not fixed or determinable. Once the distributor has resold the product, and our final sales price is fixed or determinable, we recognize revenue for the final sales price and record the related costs of sales. For certain of our smaller international distributors, we do not grant price protection rights and provide minimal stock rotation rights. For these distributors, revenue is recognized upon delivery to the distributor, less an allowance for estimated returns, as the revenue recognition criteria have been met upon shipment.
Further, the Company defers the associated cost of goods sold on our consolidated balance sheet, net within the deferred income caption. The Company routinely evaluates the products held by our distributors for impairment to the extent such products may be returned by the distributor within these limited rights and such products would be considered excess or obsolete if included within our own inventory. Products returned by distributors and subsequently scrapped have historically been immaterial to the Company.
We warrant our products and maintain a provision for warranty repair or replacement of shipped products. The accrual represents management’s estimate of probable returns. Our estimate is based on an analysis of our overall sales volume and historical claims experience, and the sales volume and historical claims experience at our largest customer, Apple, Inc. The estimate is re-evaluated periodically for accuracy.
Our shipping and handling costs are included in cost of sales for all periods presented.
Advertising costs are expensed as incurred. Advertising costs were $1.8 million, $1.3 million, and $1.0 million, in fiscal years 2012, 2011, and 2010, respectively.
Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards and is recognized as an expense, on a ratable basis, over the vesting period, which is generally between zero and four years. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates used in calculating the grant-date fair value of stock options. The Company calculates the grant-date fair value for stock options using the Black-Scholes valuation model. The use of valuation models requires the Company to make estimates of assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield, and forfeiture rates.
We recognize deferred tax assets if realization of such assets is more likely than not. We have provided a valuation allowance against a portion of our net U.S. deferred tax assets due to uncertainties regarding their realization. We evaluate our ability to realize our deferred tax assets on a quarterly basis.
We recognize liabilities for uncertain tax positions based on the two-step process. The first step requires us to determine if the weight of available evidence indicates that the tax position has met the threshold for recognition; therefore, we must evaluate whether it is more likely than not that the position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step requires us to measure the tax benefit of the tax position taken, or expected to be taken, in an income tax return as the largest amount that is more than 50 percent likely of being realized upon ultimate settlement. We reevaluate the uncertain tax positions each quarter based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Depending on the jurisdiction, such a change in recognition or measurement may result in the recognition of a tax benefit or an additional charge to the tax provision in the period.
Basic net income per share is based on the weighted effect of common shares issued and outstanding and is calculated by dividing net income by the basic weighted average shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of common shares used in the basic net income per share calculation, plus the equivalent number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. These potentially dilutive items consist primarily of outstanding stock options and restricted stock awards.
The weighted outstanding options excluded from our diluted calculation for the years ended March 31, 2012, March 26, 2011, and March 27, 2010, were 1,052,000, 615,000, and 8,043,000, respectively, as the exercise price exceeded the average market price during the period.
Accumulated Other Comprehensive Loss
Our accumulated other comprehensive loss is comprised of foreign currency translation adjustments from prior years when we had subsidiaries whose functional currency was not the U.S. Dollar, as well as unrealized gains and losses on investments classified as available-for-sale. See Note 13 – Accumulated Other Comprehensive loss for additional discussion.
Recently Issued Accounting Pronouncements
In May 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Accounting Standards Codification (“ASC”) Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this ASU result in common fair value measurement and disclosure requirements in U.S. GAAP and international financial reporting standards (“IFRS”). The ASU provides for certain changes in current GAAP disclosure requirements, including the measurement of level 3 assets and measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity. The amendments in this ASU are to be applied prospectively, and are effective during interim and annual periods beginning after December 15, 2011. The adoption of this guidance is not anticipated to have a material impact on our consolidated financial position, results of operations or cash flows.
In May 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (ASC Topic 220) — Presentation of Comprehensive Income. With this update, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. Current U.S. GAAP allows reporting entities the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity; this update eliminates that option. The amendments in this ASU should be applied retrospectively, and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. This ASU was further revised in ASU No. 2011-12, Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 that was issued in December 2011. The adoption of this guidance will affect financial statement presentation only and therefore, will not have a material impact on our consolidated financial position, results of operations or cash flows.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles—Goodwill and Other (Topic 350 - Testing Goodwill for Impairment. Under the amendments in this ASU, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test and proceed as dictated in previous FASB guidance. Under the amendments in this ASU, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. An entity may resume performing the qualitative assessment in any subsequent period. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this guidance is not anticipated to have a material impact on our consolidated financial position, results of operations or cash flows, but will result in an additional statement of other comprehensive income.
|
|||
3. Marketable Securities
The Company’s investments that have original maturities greater than 90 days have been classified as available-for-sale securities in accordance with US GAAP. Marketable securities are categorized on the consolidated balance sheet as restricted investments and marketable securities, as appropriate.
The following table is a summary of available-for-sale securities (in thousands):
|
As of March 31, 2012: |
Cost |
Gains |
Losses |
Estimated Fair Value (Net Carrying Amount) |
|
Corporate securities – U.S................................................. |
48,011 |
33 |
(19) |
48,025 |
|
U.S. Treasury securities...................................................... |
30,264 |
1 |
(4) |
30,261 |
|
Agency discount notes....................................................... |
16,789 |
8 |
(1) |
16,796 |
|
Commercial paper.............................................................. |
23,719 |
5 |
(15) |
23,709 |
|
Total securities................................................................. |
$ 118,783 |
$ 47 |
$ (39) |
$ 118,791 |
The Company’s specifically identified gross unrealized losses of $39 thousand relates to 37 different securities with a total amortized cost of approximately $72.6 million at March 31, 2012. Because the Company does not intend to sell the investments at a loss and the Company will not be required to sell the investments before recovery of its amortized cost basis, it did not consider the investment in these securities to be other-than-temporarily impaired at March 31, 2012. Further, the securities with gross unrealized losses had been in a continuous unrealized loss position for less than 12 months as of March 31, 2012.
|
As of March 26, 2011: |
Cost |
Gains |
Losses |
Estimated Fair Value (Net Carrying Amount) |
|
Corporate securities – U.S................................................. |
64,228 |
22 |
(38) |
64,212 |
|
U.S. Treasury securities...................................................... |
35,268 |
13 |
— |
35,281 |
|
Agency discount notes....................................................... |
16,588 |
5 |
(2) |
16,591 |
|
Commercial paper.............................................................. |
56,130 |
23 |
(7) |
56,146 |
|
Total securities................................................................. |
$ 172,214 |
$ 63 |
$ (47) |
$ 172,230 |
The Company’s specifically identified gross unrealized losses of $47 thousand relates to 28 different securities with a total amortized cost of approximately $61.8 million at March 26, 2011. Because the Company does not intend to sell the investments at a loss and the Company will not be required to sell the investments before recovery of its amortized cost basis, it did not consider the investment in these securities to be other-than-temporarily impaired at March 26, 2011. Further, the securities with gross unrealized losses had been in a continuous unrealized loss position for less than 12 months as of March 26, 2011.
The cost and estimated fair value of available-for-sale investments by contractual maturity were as follows:
|
|
|
|
|
|
|
|
March 31, 2012 |
March 26, 2011 |
||
|
|
Amortized Cost |
Estimated Fair Value |
Amortized Cost |
Estimated Fair Value |
|
Within 1 year....................................................................... |
$ 115,871 |
$ 115,876 |
$ 159,516 |
$ 159,528 |
|
After 1 year......................................................................... |
2,912 |
2,915 |
12,698 |
12,702 |
|
|
$ 118,783 |
$ 118,791 |
$ 172,214 |
$ 172,230 |
|
|||
4. Fair Value of Financial Instruments
The Company has determined that the only assets and liabilities in the Company’s financial statements that are required to be measured at fair value on a recurring basis are the Company’s investment portfolio assets. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The Company’s investment portfolio assets consist of corporate debt securities, money market funds, U.S. Treasury securities, obligations of U.S. government-sponsored enterprises, and commercial paper, and are reflected on our consolidated balance sheet under the headings cash and cash equivalents, restricted investments, marketable securities, and long-term marketable securities. The Company determines the fair value of its investment portfolio assets by obtaining non-binding market prices from its third-party portfolio managers on the last day of the quarter, whose sources may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value.
As of March 26, 2011, the Company classified all investment portfolio assets as Level 1 inputs. In fiscal year 2012, the Company determined that certain of its available-for-sale marketable securities should have been classified as Level 2. These changes in the disclosed classification had no effect on the reported fair values of these investments. Prior period amounts have been reclassified to properly present the securities as Level 2. The Company has no Level 3 assets.
The fair value of our financial assets at March 31, 2012, was determined using the following inputs (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
in Active |
|
|
Significant |
|
|
|
|
|
|
|
||||
|
|
|
Markets for |
|
|
Other |
|
|
Significant |
|
|
|
|
||||
|
|
|
Identical |
|
|
Observable |
|
|
Unobservable |
|
|
|
|
||||
|
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
|
||||
|
Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds........................................... |
|
$ |
40,557 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
40,557 |
|
|
Commercial paper............................................... |
|
|
— |
|
|
|
15,952 |
|
|
|
— |
|
|
|
15,952 |
|
|
Corporate debt securities.................................... |
|
|
— |
|
|
|
1,112 |
|
|
|
— |
|
|
|
1,112 |
|
|
|
|
$ |
40,557 |
|
|
$ |
17,064 |
|
|
$ |
— |
|
|
$ |
57,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities.................................... |
|
$ |
— |
|
|
$ |
48,025 |
|
|
$ |
— |
|
|
$ |
48,025 |
|
|
U.S. Treasury securities..................................... |
|
|
30,261 |
|
|
|
— |
|
|
|
— |
|
|
|
30,261 |
|
|
Agency discount notes........................................ |
|
|
— |
|
|
|
16,796 |
|
|
|
— |
|
|
|
16,796 |
|
|
Commercial paper............................................... |
|
|
— |
|
|
|
23,709 |
|
|
|
— |
|
|
|
23,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
$ |
30,261 |
|
|
$ |
88,530 |
|
|
$ |
— |
|
|
$ |
118,791 |
|
The fair value of our financial assets at March 26, 2011, was determined using the following inputs (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
in Active |
|
|
Significant |
|
|
|
|
|
|
|
||||
|
|
|
Markets for |
|
|
Other |
|
|
Significant |
|
|
|
|
||||
|
|
|
Identical |
|
|
Observable |
|
|
Unobservable |
|
|
|
|
||||
|
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
|
||||
|
Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds................................................ |
|
$ |
17,700 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,700 |
|
|
Commercial paper................................................... |
|
|
— |
|
|
|
4,999 |
|
|
|
— |
|
|
|
4,999 |
|
|
U.S. Treasury securities........................................... |
|
|
— |
|
|
|
10,500 |
|
|
|
— |
|
|
|
10,500 |
|
|
|
|
$ |
17,700 |
|
|
$ |
15,499 |
|
|
$ |
— |
|
|
$ |
33,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities......................................... |
|
$ |
— |
|
|
$ |
64,212 |
|
|
$ |
— |
|
|
$ |
64,212 |
|
|
U.S. Treasury securities........................................... |
|
|
35,281 |
|
|
|
— |
|
|
|
— |
|
|
|
35,281 |
|
|
Agency discount notes............................................. |
|
|
— |
|
|
|
16,591 |
|
|
|
— |
|
|
|
16,591 |
|
|
Commercial paper................................................... |
|
|
— |
|
|
|
56,146 |
|
|
|
— |
|
|
|
56,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
$ |
35,281 |
|
|
$ |
136,949 |
|
|
$ |
— |
|
|
$ |
172,230 |
|
|
|||
5. Accounts Receivable, net
The following are the components of accounts receivable, net (in thousands):
The following table summarizes the changes in the allowance for doubtful accounts (in thousands):
|
|||
The following information details the gross carrying amount and accumulated amortization of our intangible assets (in thousands):
|
|
|
|
|
|
|
|
March 31, 2012 |
March 26, 2011 |
||
|
Intangible Category (Weighted-Average Amortization Period (years)) |
Gross Amount |
Accumulated Amortization |
Gross Amount |
Accumulated Amortization |
|
Core technology (9.0).............................................. |
$ 1,390 |
$ (1,390) |
$ 1,390 |
$ (1,390) |
|
License agreements (9.0)......................................... |
440 |
(440) |
440 |
(440) |
|
Existing technology (13.3)...................................... |
17,235 |
(7,318) |
17,235 |
(6,321) |
|
Trademarks (4.0) (a)................................................ |
2,758 |
(320) |
2,758 |
(320) |
|
Non-compete agreements (5.0).............................. |
398 |
(258) |
398 |
(179) |
|
Customer relationships (14.6)................................ |
4,682 |
(1,515) |
4,682 |
(1,179) |
|
Technology licenses (3.3)........................................ |
14,187 |
(11,608) |
16,928 |
(13,877) |
|
|
$ 41,090 |
$ (22,849) |
$ 43,831 |
$ (23,706) |
(a) Trademarks also includes $2.4 million of indefinite-lived assets, which are not included in the weighted-average amortization period above.
Amortization expense for all intangibles in fiscal years 2012, 2011, and 2010 was $3.7 million, $3.3 million, and $3.6 million, respectively. The following table details the estimated aggregate amortization expense for all intangibles owned as of March 31, 2012, for each of the five succeeding fiscal years (in thousands):
|
|
|
|
$ 2,734 |
|
|
$ 2,176 |
|
|
$ 1,623 |
|
|
$ 1,303 |
|
|
$ 1,273 |
|
|||
We have a 401(k) Profit Sharing Plan (the “Plan”) covering all of our qualifying domestic employees. Under the Plan, employees may elect to contribute any percentage of their annual compensation up to the annual IRS limitations. We match 50 percent of the first 6 percent of the employees’ annual contribution to the plan. We made matching employee contributions of $1.3 million, $1.0 million, and $0.9 million during fiscal years 2012, 2011, and 2010, respectively.
|
|||
Stock Compensation Expense
The Company is currently granting equity awards from the 2006 Stock Incentive Plan (the “Plan”), which was approved by stockholders in July 2006. The Plan provides for granting of stock options, restricted stock awards, restricted stock units, performance awards, phantom stock awards, and bonus stock awards, or any combination of the foregoing. To date, the Company has granted stock options, restricted stock awards, and restricted stock units under the Plan. Stock options generally vest between zero and four years, and are exercisable for a period of ten years from the date of grant. Generally, restricted stock awards are subject to vesting schedules up to four years. Restricted stock units are generally subject to vesting from one to three years, depending upon the terms of the grant.
The following table summarizes the effects of stock-based compensation on cost of goods sold, research and development, sales, general and administrative, pre-tax income (loss), and net income after taxes for options granted under the Company’s equity incentive plans (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
Fiscal Years Ended |
|||
|
|
March 31, 2012 |
March 26, 2011 |
March 27, 2010 |
|
|
$ 398 |
$ 243 |
$ 212 |
||
|
Research and development...................................................................... |
5,590 |
2,641 |
1,882 |
|
|
Sales, general and administrative............................................................ |
6,190 |
5,257 |
3,224 |
|
|
Effect on pre-tax income .................................................................. |
12,178 |
8,141 |
5,318 |
|
|
Income Tax Benefit.................................................................................. |
— |
— |
— |
|
|
Total share based compensation expense (net of taxes)............ |
$ 12,178 |
$ 8,141 |
$ 5,318 |
|
|
|
|
|
|
|
Share based compensation effects on basic earnings (loss) per share .. |
$ 0.19 |
$ 0.12 |
$ 0.08 |
|
Share based compensation effects on diluted earnings (loss) per share |
$ 0.18 |
$ 0.11 |
$ 0.08 |
|
|
|
|
|
|
Share based compensation effects on operating activities cash flow.... |
12,178 |
8,141 |
5,318 |
|
Share based compensation effects on financing activities cash flow.... |
— |
— |
— |
The total share based compensation expense included in the table above and which is attributable to restricted stock awards and restricted stock units was $6.3 million, $1.1 million, and $0.1 million for fiscal years 2012, 2011, and 2010, respectively.
As of March 31, 2012, there was $24.7 million of compensation costs related to non-vested stock options, restricted stock awards, and restricted stock units granted under the Company’s equity incentive plans not yet recognized in the Company’s financial statements. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.03 years for stock options, 0.37 years for restricted stock awards, and 1.94 years for restricted stock units.
Stock Option Awards
We estimated the fair value of each stock option grant on the date of grant using the Black-Scholes option-pricing model using a dividend yield of zero and the following additional assumptions:
The Black-Scholes valuation calculation requires us to estimate key assumptions such as stock price volatility, expected term, risk-free interest rate and dividend yield. The expected stock price volatility is based upon implied volatility from traded options on our stock in the marketplace. The expected term of options granted is derived from an analysis of historical exercises and remaining contractual life of stock options, and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate reflects the yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption. Finally, we have never paid cash dividends, do not currently intend to pay cash dividends, and thus have assumed a zero percent dividend yield.
Using the Black-Scholes option valuation model, the weighted average estimated fair values of employee stock options granted in fiscal years 2012, 2011, and 2010, were $7.58, $9.61, and $2.89, respectively.
During fiscal year 2012, 2011, and 2010, we received a net $4.1 million, $31.0 million, and $2.0 million, respectively, from the exercise of 0.6 million 4.7 million, and 0.4 million, respectively, stock options granted under the Company’s stock Plan.
The total intrinsic value of stock options exercised during fiscal year 2012, 2011, and 2010 was $7.6 million, $50.4 million, and $0.8 million, respectively. Intrinsic value represents the difference between the market value of the Company’s common stock at the time of exercise and the strike price of the stock option.
As of March 31, 2012, approximately 12.2 million shares of common stock were reserved for issuance under the stock option Plan.
Additional information with respect to stock option activity is as follows (in thousands, except per share amounts):
Additional information with regards to outstanding options that are vesting, expected to vest, or exercisable as of March 31, 2012 is as follows (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
Number of Options |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term (years) |
Aggregate Intrinsic Value |
|
Vested and expected to vest.................................................. |
||||
|
Exercisable................................................................................ |
In accordance with U.S. GAAP, stock options outstanding that are expected to vest are presented net of estimated future option forfeitures, which are estimated as compensation costs are recognized. Options with a fair value of $6.3 million, $6.0 million, and $4.0 million, became vested during fiscal years 2012, 2011, and 2010, respectively.
The following table summarizes information regarding outstanding and exercisable options as of March 31, 2012 (in thousands, except per share amounts):
As of March 31, 2012 and March 26, 2011, the number of options exercisable was 3.8 million and 2.9 million, respectively.
Restricted Stock Awards
The Company periodically grants restricted stock awards (“RSA’s”) to select employees. The grant date for these awards is equal to the measurement date and the awards are valued as of the measurement date and amortized over the requisite vesting period. Generally, the current unreleased RSA awards vest 100 percent on the fourth anniversary of the grant date. Each full value award, including RSA’s, reduces the total shares available for grant under the Plan at a rate of 1.5 shares per RSA granted. As of March 31, 2012, approximately 0.1 million shares attributable to RSA awards were reserved for issuance under the Plan. A summary of the activity for RSA’s in fiscal year 2012, 2011, and 2010 is presented below (in thousands, except per share amounts):
|
|
|
|
|
|
|
Number of |
Weighted |
Aggregate Intrinsic value (1) |
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
(1) |
Represents the value of Cirrus stock on the date that the restricted stock vested. |
The weighted average remaining recognition period for RSA’s outstanding as of March 31, 2012 was 0.37 years. RSA’s with a fair value of $637 thousand, $37 thousand, and $37 thousand became vested during fiscal years 2012, 2011, and 2010, respectively.
Restricted Stock Units
Commencing in fiscal year 2011, the Company began granting restricted stock units (“RSU’s”) to select employees. These awards are valued as of the grant date and amortized over the requisite vesting period. Generally, RSU’s vest 100 percent on the first to third anniversary of the grant date depending on the vesting specifications. Each full value award, including RSU’s, reduces the total shares available for grant under the 2006 option plan at a rate of 1.5 shares per RSU granted. As of March 31, 2012, approximately 2.4 million shares attributable to RSU awards were reserved for issuance under the Plan, which includes the additional shares associated with this full value award multiplier. A summary of the activity for RSU’s in fiscal year 2012 and 2011 is presented below (in thousands, except per share amounts):
Additional information with regards to outstanding restricted stock units that are vesting or expected to vest as of March 31, 2012, is as follows (in thousands, except year reference):
|
|
|
|
|
|
|
Shares |
Weighted |
Weighted Average Remaining Contractual Term (years) |
RSU’s outstanding that are expected to vest are presented net of estimated future forfeitures, which are estimated as compensation costs are recognized. No RSU’s became vested during fiscal year 2012.
|
|||
9. Commitments and Contingencies
With the exception of the Apex facility in Tucson, Arizona and our corporate headquarters under construction, we lease our facilities and certain equipment under operating lease agreements, some of which have renewal options. Certain of these arrangements provide for lease payment increases based upon future fair market rates. As of May 1, 2012, our principal leased facilities, located in Austin, Texas, consisted of approximately 214,000 square feet of office space. This leased space includes our headquarters and engineering facility, which has 197,000 square feet, of which we have subleased approximately 15,000 square feet. Our principal leased facilities in Austin, Texas also include 17,000 square feet of leased space at our failure analysis facility with lease terms that extend into calendar year 2013. Both the lease and subleases at our current headquarters and engineering facility have terms ending in August 2012. Additional leased space related to the new corporate headquarters consists of approximately 30,000 square feet of office space in Austin, Texas. We expect the five year lease term to commence on our anticipated arrival date beginning June 2012. The Company also has approximately 28,000 square feet of office space in Tucson, Arizona with terms ending May 2015.
The aggregate minimum future rental commitments under all operating leases, net of sublease income, for the following fiscal years are (in thousands):
Total rent expense was approximately $4.7 million, $4.6 million, and $4.4 million, for fiscal years 2012, 2011, and 2010, respectively. Sublease rental income was $0.4 million, $1.1 million, and $1.2 million, for fiscal years 2012, 2011, and 2010, respectively.
Wafer, Assembly and Test Purchase Commitments
We rely primarily on third-party foundries for our wafer manufacturing needs. As of March 31, 2012, we had agreements with multiple foundries for the manufacture of wafers. On December 22, 2011, the Company entered into a $10 million Capacity Investment and Loading Agreement with STATS ChipPAC Ltd (Supplier Agreement) in order to secure assembly and test capacity for certain products. We paid an initial $5 million payment on January 24, 2012, and the remaining $5 million payment is due thirty days after certain capacity expansion commitments have been achieved by STATS ChipPAC and is recorded on the consolidated balance sheet under the caption “Supplier Agreement”. As part of the agreement, we are eligible to receive rebates on our purchases up to the full amount of the specified $10 million in the Supplier Agreement upon our meeting certain purchase volume milestones. Based on our current projections, we expect to receive the full amount of our $10 million payments back in rebates during the term of the agreement. Other than the previously mentioned agreement, our foundry agreements do not have volume purchase commitments or "take or pay" clauses and provide for purchase commitments based on purchase orders. Cancellation fees or other charges may apply and are generally dependent upon whether wafers have been started or the stage of the manufacturing process at which the notice of cancellation is given. As of March 31, 2012, we had foundry commitments of $46.3 million.
In addition to our wafer supply arrangements, we contract with third-party assembly vendors to package the wafer die into finished products. Assembly vendors provide fixed-cost-per-unit pricing, as is common in the semiconductor industry. We had non-cancelable assembly purchase orders with numerous vendors totaling $1.0 million at March 31, 2012.
Test vendors provide fixed-cost-per-unit pricing, as is common in the semiconductor industry. Our total non-cancelable commitment for outside test services as of March 31, 2012 was $2.7 million.
Other open purchase orders as of March 31, 2012 amount to $0.9 million and primarily relate to raw material costs incurred in our facility in Tucson, Arizona, which continues to serve as the assembly and test facility for our Apex products.
|
|||
From time to time, we are involved in legal proceedings concerning matters arising in connection with the conduct of our business activities. We regularly evaluate the status of legal proceedings in which we are involved, to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred and determine if accruals are appropriate. We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made, if accruals are not appropriate.
On September 1, 2011, HSM Portfolio LLC and Technology Properties Limited LLC (collectively, the “Plaintiffs”) filed suit against Cirrus Logic and 17 other defendants in the U.S. District Court, District of Delaware. The Plaintiffs allege that Cirrus Logic infringed U.S. Patent No. 5,030,853. In their complaint, the Plaintiffs indicated that they are seeking unspecified monetary damages, including up to treble damages for willful infringement. On March 8, 2012, Cirrus Logic settled the matter and paid the Plaintiffs $100 thousand to fully resolve the lawsuit. The case was dismissed effective March 28, 2012.
In fiscal year 2011 the Company recorded $162 thousand in settlement for certain litigation expenses settled during the year.
In fiscal year 2010, a combined net proceeds of $2.6 million from various settled litigation was recorded.
|
|||
On July 13, 2010, we entered into a patent purchase agreement for the sale of certain Company owned patents. As a result of this agreement, on August 31, 2010, the Company received cash consideration of $4.0 million from the purchaser. The proceeds were recorded as a recovery of costs previously incurred and are reflected as a separate line item on the consolidated statement of operations in operating expenses under the caption “Patent agreement, net.”
On June 11, 2009, we entered into a patent purchase agreement for the sale of certain Company owned patents and on August 26, 2009, the Company received cash consideration of $1.4 million from the purchaser. The proceeds were recorded as a recovery of costs previously incurred and are reflected as a separate line item on the consolidated statement of operations in operating expenses under the caption “Patent agreement, net.”
|
|||
Share Repurchase Program
On November 4, 2010, we announced that an $80 million share repurchase program had been approved by our Board of Directors. As of March 31, 2012, we have repurchased approximately 5.1 million shares at a cost of $79.5 million, or an average price of $15.51 per share. Of this total, during the current fiscal year we have repurchased 4.9 million shares at a cost of $76.8 million, or an average cost of $15.63 per share.
In fiscal year 2011, the Company completed the repurchase of approximately 1.8 million shares of the Company’s common stock, at a total cost of $22.8 million, or $12.94 per share. Of this amount, 1.5 million shares of the Company’s common stock were repurchased pursuant to the remaining portion of the $20 million share repurchase program authorized by the Board of Directors in January 2009. The remaining 0.3 million shares came from the $80 million share repurchase program announced on November 4, 2010. As of March 31, 2012, approximately $0.5 million remains available for share repurchases under this $80 million share repurchase program.
All shares of our common stock that were repurchased under these share repurchase programs were cancelled upon consummation of the daily repurchase transactions.
We have 5.0 million shares of Preferred Stock authorized. As of March 31, 2012 we have not issued any of the authorized shares.
|
|||
13. Accumulated Other Comprehensive Loss
Our accumulated other comprehensive loss is comprised of foreign currency translation adjustments and unrealized gains and losses on investments classified as available-for-sale. The foreign currency translation adjustments are not currently adjusted for income taxes because they relate to indefinite investments in non-U.S. subsidiaries that have since changed from a foreign functional currency to a U.S dollar functional currency.
The following table summarizes the changes in the components of accumulated other comprehensive loss, net of tax (in thousands):
|
|||
Income before income taxes consisted of (in thousands):
|
|
|
|
|
|
|
Year Ended |
||
|
|
March 31, 2012 |
March 26, 2011 |
March 27, 2010 |
|
$ 79,425 |
$ 83,569 |
$ 24,289 |
|
|
558 |
645 |
2,394 |
|
|
|
$ 79,983 |
$ 84,214 |
$ 26,683 |
The provision (benefit) for income taxes consists of (in thousands):
The provision (benefit) for income taxes differs from the amount computed by applying the statutory federal rate to pretax income as follows (in percentages):
|
|
|
|
|
|
|
|
Year Ended |
|||
|
|
March 31, 2012 |
March 26, 2011 |
March 27, 2010 |
|
|
Expected income tax provision at the U.S. federal statutory rate................... |
35.0 |
35.0 |
35.0 |
|
|
Valuation allowance changes affecting the provision of income taxes........ . |
(46.7) |
(178.6) |
(80.5) |
|
|
— |
0.1 |
(2.7) |
||
|
— |
— |
0.2 |
||
|
— |
— |
(0.3) |
||
|
1.0 |
(0.1) |
4.2 |
||
|
0.1 |
1.1 |
0.4 |
||
|
0.6 |
0.9 |
(0.2) |
||
|
(10.0) |
(141.6) |
(43.9) |
||
Significant components of our deferred tax assets and liabilities are (in thousands):
|
|
|
|
|
|
Year Ended |
|
|
|
March 31, 2012 |
March 26, 2011 |
|
Deferred tax assets: |
|
|
|
$ 3,240 |
$ 4,494 |
|
|
3,656 |
3,017 |
|
|
105,220 |
131,331 |
|
|
36,032 |
37,464 |
|
|
244 |
250 |
|
Capitalized research and development............................................................................ |
9,779 |
14,773 |
Depreciation and Amortization......................................................................................... |
— |
159 |
|
18,747 |
14,807 |
|
|
$ 176,918 |
$ 206,295 |
|
|
(29,075) |
(68,380) |
|
|
$ 147,843 |
$ 137,915 |
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
$ 287 |
$ — |
|
|
5,348 |
5,861 |
|
|
$ 5,635 |
$ 5,861 |
|
|
$ 142,208 |
$ 132,054 |
|
These net deferred tax assets have been categorized on the Consolidated Balance Sheets as follows:
The current and long-term deferred tax assets are disclosed separately under their respective captions on the consolidated balance sheets, while the long term deferred tax liabilities are aggregated under the caption “Other long- term liabilities” on the consolidated balance sheets.
The valuation allowance decreased by $39.3 million in fiscal year 2012 and $157.8 million in fiscal year 2011. In 2012 and 2011, the Company evaluated the ability to realize its deferred tax assets by using a three year forecast to determine the amount of net operating losses and other deferred tax assets that would be utilized if we achieved the results set forth in our three-year forecast. The forecasted income was more than sufficient to absorb the remaining Federal net operating losses, research credits and most other Federal deductions; therefore, the valuation allowance that had remained on these deferred tax assets was released except for research credits that expire within the next year. A valuation allowance was maintained on the Company’s capital loss carryforward because it will likely expire without being utilized. A valuation allowance was also maintained on various state net operating losses and credits due to the likelihood that they will expire or go unutilized because the Company no longer has a significant apportionment in the jurisdiction in which the attribute was created.
At March 31, 2012, we had federal net operating loss carryforwards of $353.8 million. Of that amount, $36.6 million related to companies we acquired during fiscal year 2002 and are, therefore, subject to certain limitations under Section 382 of the Internal Revenue Code. Because the Company has elected the “with and without” method for purposes of tracking its excess stock deductions, the amount of Federal net operating loss included in deferred tax assets is $276 million, which yields a tax effected deferred tax asset of $96.6 million. The Company had $77.8 million of excess stock deductions which are not included in deferred tax assets. The tax benefit from these deductions will increase additional paid-in capital when they are deemed realized under the “with and without” method. We had net operating losses in various states that total $104.8 million. The federal net operating loss carryforwards expire in fiscal years 2019 through 2029. The state net operating loss carryforwards expire in fiscal years 2013 through 2029. We also have non-U.S. net operating losses of $2.1 million, which do not expire.
There are federal research and development credit carryforwards of $21.4 million that expire in fiscal years 2013 through 2032. There are $14.6 million of state research and development credits. Of that amount, $2.9 million will expire in fiscal years 2022 through 2027. The remaining $11.7 million of state research and development credits are not subject to expiration.
We have approximately $185 thousand of cumulative undistributed earnings in certain non-U.S. subsidiaries. We have not recognized a deferred tax liability on these undistributed earnings because the Company currently intends to reinvest these earnings in operations outside the U.S. The unrecognized deferred tax liability on these earnings is approximately $66 thousand.
We record unrecognized tax benefits for the estimated risk associated with tax positions taken on tax returns. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):
|
Balance at March 26, 2011................................................................................................................................... |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
$ 0 |
The Company does not believe that its unrecognized tax benefits will significantly increase or decrease during the next 12 months.
We accrue interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. We did not record any interest or penalties during fiscal year 2012.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. Fiscal years 2009 through 2012 remain open to examination by the major taxing jurisdictions to which we are subject.
|
|||
We determine our operating segments in accordance with FASB guidelines. Our Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker under these guidelines.
The Company operates and tracks its results in one reportable segment based on the aggregation of activity from its two product lines. Our CEO receives and uses enterprise-wide financial information to assess financial performance and allocate resources, rather than detailed information at a product line level. Additionally, our product lines have similar characteristics and customers. They share operations support functions such as sales, public relations, supply chain management, various research and development and engineering support, in addition to the general and administrative functions of human resources, legal, finance and information technology. Therefore, there is no complete, discrete financial information maintained for these product lines. Revenue from our product lines are as follows (in thousands):
|
|
|
|
|
|
|
Year Ended |
||
|
|
March 31, 2012 |
March 26, 2011 |
March 27, 2010 |
|
Audio products.................................................................................. |
$ 350,743 |
$ 264,840 |
$ 153,661 |
|
Energy products................................................................................. |
76,100 |
104,731 |
67,328 |
|
Total........................................................................................... |
$ 426,843 |
$ 369,571 |
$ 220,989 |
Geographic Area
The following illustrates sales by geographic locations based on the sales office location (in thousands):
|
|
|
|
|
|
|
Year Ended |
||
|
|
March 31, 2012 |
March 26, 2011 |
March 27, 2010 |
|
United States................................................................................................... |
$ 50,230 |
$ 66,701 |
$ 47,936 |
|
23,927 |
27,398 |
17,156 |
|
|
China......................................................................................................................... |
294,143 |
205,775 |
103,992 |
|
Hong Kong............................................................................................................... |
8,671 |
9,216 |
5,611 |
|
Japan......................................................................................................................... |
15,196 |
16,902 |
12,335 |
|
South Korea............................................................................................................. |
9,781 |
12,413 |
10,134 |
|
Taiwan...................................................................................................................... ........ |
10,662 |
13,073 |
10,585 |
|
Other Asia................................................................................................................. |
13,063 |
16,012 |
12,381 |
|
1,170 |
2,081 |
859 |
|
|
$ 426,843 |
$ 369,571 |
$ 220,989 |
|
The following illustrates property, plant and equipment, net, by geographic locations, based on physical location (in thousands):
|
|
|
|
|
|
Year Ended |
|
|
|
March 31, 2012 |
March 26, 2011 |
|
United States....................................................................................................................... |
$ 66,530 |
$ 33,977 |
|
United Kingdom................................................................................................................. |
20 |
29 |
|
China.................................................................................................................................... |
158 |
117 |
|
Hong Kong.......................................................................................................................... |
3 |
3 |
|
Japan.................................................................................................................................... |
167 |
377 |
|
South Korea........................................................................................................................ |
6 |
4 |
|
Taiwan................................................................................................................................. |
83 |
44 |
|
Other Asia............................................................................................................................ |
11 |
12 |
|
Total consolidated property, plant and equipment, net...................................... |
$ 66,978 |
$ 34,563 |
|
|||
16. Quarterly Results (Unaudited)
The following quarterly results have been derived from our audited annual consolidated financial statements. In the opinion of management, this unaudited quarterly information has been prepared on the same basis as the annual consolidated financial statements and includes all adjustments, including normal recurring adjustments, necessary for a fair presentation of this quarterly information. This information should be read along with the financial statements and related notes. The operating results for any quarter are not necessarily indicative of results to be expected for any future period.
The unaudited quarterly statement of operations data for each quarter of fiscal years 2012 and 2011 were as follows (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2012 |
|||
|
|
1st Quarter |
2nd Quarter |
3rd Quarter |
4th Quarter |
|
|
|
|
|
(1) |
|
Net sales...................................................................................... |
$ 101,602 |
$ 122,368 |
$ 110,631 |
|
|
54,355 |
66,030 |
62,347 |
||
|
11,247 |
16,731 |
50,827 |
||
|
$ 0.17 |
$ 0.26 |
$ 0.79 |
||
|
0.17 |
0.25 |
0.75 |
||
|
|
|
|
|
|
|
|
Fiscal Year 2011 |
|||
|
|
1st Quarter |
2nd Quarter |
3rd Quarter |
4th Quarter |
|
|
|
|
|
(2) |
|
Net sales...................................................................................... |
$ 81,915 |
$ 100,598 |
$ 95,625 |
$ 91,433 |
|
46,735 |
56,780 |
52,462 |
46,018 |
|
|
17,602 |
30,874 |
24,621 |
130,406 |
|
|
$ 0.26 |
$ 0.45 |
$ 0.36 |
$ 1.91 |
|
|
0.25 |
0.42 |
0.34 |
1.80 |
|
|
|
|
|
|
|
(1) The $39.5 million tax benefit recorded in the fourth quarter of 2012 favorably impacted net income, as a result of a $37.3 million release in valuation allowance on deferred tax assets.
(2) Net income was favorably impacted by a $117.0 million benefit to tax expense to decrease the valuation allowance on our U.S. deferred tax assets, which was partially offset by reduced gross margins attributable to a charge of approximately $4.2 million due to a production issue with a new audio device that entered high volume production in March 2011.
|
|||
On April 19, 2012, the Company entered into a revolving credit agreement (“Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent and issuing lender, Barclays Bank, as syndication agent, Wells Fargo Securities, LLC and Barclays Capital, as joint lead arrangers and co-book managers. The aggregate borrowing limit under the unsecured revolving credit facility is $100 million with a $15 million letter of credit sublimit and is intended to provide the Company with short-term borrowings for working capital and other general corporate purposes. The interest rate payable is, at the Company's election, (i) a base rate plus the applicable margin, where the base rate is determined by reference to the highest of 1) the prime rate publicly announced by the administrative agent, 2) the Federal Funds Rate plus 0.50%, and 3) LIBOR for a one month period plus the difference between the applicable margin for LIBOR rate loans and the applicable margin for base rate loans, or (ii) the LIBOR rate plus the applicable margin that varies according to the leverage ratio of the borrower. Certain representations and warranties are required under the Credit Agreement, and the borrower must be in compliance with specified financial covenants, including (i) the requirement that the Company maintain a ratio of consolidated funded indebtedness to consolidated EBITDA of not greater than 1.75 to 1.0, computed in accordance with the terms of the Credit Agreement, and (ii) a minimum ratio of consolidated EBITDA to consolidated interest expense of not less than 3.50 to 1.0.
|
|||
Cash and cash equivalents consist primarily of money market funds, commercial paper, and U.S. Government Treasury and Agency instruments with original maturities of three months or less at the date of purchase.
As of March 31, 2012, and March 26, 2011, we had restricted investments of zero and $5.8 million, respectively, in support of our letters of credit needs. The letters of credit primarily secured certain obligations under our operating lease agreement for our headquarters and engineering facility in Austin, Texas, which expired in fiscal year 2012.
We determine the appropriate classification of marketable securities at the time of purchase and reevaluate this designation as of each balance sheet date. We classify these securities as either held-to-maturity, trading, or available-for-sale. As of March 31, 2012, and March 26, 2011, all marketable securities and restricted investments were classified as available-for-sale securities. The Company classifies its investments as “available for sale” because it expects to possibly sell some securities prior to maturity. The Company’s investments are subject to market risk, primarily interest rate and credit risk. The Company’s investments are managed by an outside professional manager within investment guidelines set by the Company. Such guidelines include security type, credit quality, and maturity, and are intended to limit market risk by restricting the Company’s investments to high quality debt instruments with relatively short-term maturities. The fair value of investments is determined using observable or quoted market prices for those securities.
Available-for-sale securities are carried at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive loss. Realized gains and losses, declines in value judged to be other than temporary, and interest on available-for-sale securities are included in net income. The cost of securities sold is based on the specific identification method.
We use the lower of cost or market method to value our inventories, with cost being determined on a first-in, first-out basis. One of the factors we consistently evaluate in the application of this method is the extent to which products are accepted into the marketplace. By policy, we evaluate market acceptance based on known business factors and conditions by comparing forecasted customer unit demand for our products over a specific future period, or demand horizon, to quantities on hand at the end of each accounting period.
On a quarterly and annual basis, we analyze inventories on a part-by-part basis. Inventory quantities on hand in excess of forecasted demand are considered to have reduced market value and, therefore, the cost basis is adjusted to the lower of cost or market. Typically, market values for excess or obsolete inventories are considered to be zero. Product life cycles and the competitive nature of the industry are factors considered in the estimation of customer unit demand at the end of each quarterly accounting period.
Inventories were comprised of the following (in thousands):
|
|
|
|
|
|
Year Ended |
|
|
|
March 31, 2012 |
March 26, 2011 |
|
$ 30,921 |
$ 22,048 |
|
|
24,994 |
18,449 |
|
|
$ 55,915 |
$ 40,497 |
|
Property, plant and equipment is recorded at cost, net of depreciation and amortization. Depreciation and amortization is calculated on a straight-line basis over estimated economic lives, ranging from three to 39 years. Leasehold improvements are depreciated over the shorter of the term of the lease or the estimated useful life. Furniture, fixtures, machinery, and equipment are all depreciated over a useful life of three to 10 years, while buildings are depreciated over a period of up to 39 years. In general, our capitalized software is amortized over a useful life of three years, with capitalized enterprise resource planning software being amortized over a useful life of 10 years. Gains or losses related to retirements or dispositions of fixed assets are recognized in the period incurred.
Property, plant and equipment was comprised of the following (in thousands):
|
2012 |
2011 |
|
|
|
$ 22,410 |
$ 19,051 |
|
|
|
4,320 |
4,215 |
|
|
|
6,765 |
6,732 |
|
|
|
37,481 |
29,583 |
|
|
|
23,459 |
22,579 |
|
|
|
28,497 |
2,986 |
|
|
|
122,932 |
85,146 |
|
|
|
(55,954) |
(50,583) |
|
|
|
$ 66,978 |
$ 34,563 |
|
The increase in the construction in progress balance in fiscal year 2012 was primarily attributable to costs incurred during the construction of the new headquarters facility. Depreciation and amortization expense on property, plant, and equipment for fiscal years 2012, 2011 and 2010 was $6.3 million, $4.8 million, and $4.3 million, respectively. During fiscal year 2011 we retired fully depreciated assets with an original cost of $3.7 million.
Other-Than-Temporary Impairment
All of the Company’s available-for-sale investments and other investments are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. Marketable securities are evaluated for impairment if the decline in fair value below cost basis is significant and/or has lasted for an extended period of time. Other investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. For investments accounted for using the cost method of accounting, management evaluates information (e.g., budgets, business plans, financial statements) in addition to quoted market price, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults, and subsequent rounds of financings at an amount below the cost basis of the investment. When a decline in value is deemed to be other-than-temporary, we recognize an impairment loss in the current period's operating results to the extent of the decline.
Intangible assets include purchased technology licenses and patents that are reported at cost and are amortized on a straight-line basis over their useful lives, generally ranging from one to ten years. Acquired intangibles include existing technology, core technology or patents, license agreements, trademarks, covenants not-to-compete and customer agreements. These assets are amortized on a straight-line basis over lives ranging from four to fifteen years. Goodwill is recorded at the time of an acquisition and is calculated as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired.
Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. If the assumptions and estimates used to allocate the purchase price are not correct, or if business conditions change, purchase price adjustments or future asset impairment charges could be required. The value of our intangible assets, including goodwill, could be impacted by future adverse changes such as: (i) any future declines in our operating results, (ii) a decline in the valuation of technology company stocks, including the valuation of our common stock, (iii) a significant slowdown in the worldwide economy and the semiconductor industry, or (iv) any failure to meet the performance projections included in our forecasts of future operating results. The Company tests goodwill and indefinite lived intangibles for impairment on an annual basis or more frequently if the Company believes indicators of impairment exist. Impairment evaluations involve management estimates of asset useful lives and future cash flows. Significant management judgment is required in the forecasts of future operating results that are used in the evaluations. It is possible, however, that the plans and estimates used may be incorrect. If our actual results, or the plans and estimates used in future impairment analysis, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges in a future period. There are no impairments of goodwill in 2012, 2011, and 2010.
We test for impairment losses on long-lived assets and definite-lived intangibles used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. We measure any impairment loss by comparing the fair value of the asset to its carrying amount. We estimate fair value based on discounted future cash flows, quoted market prices, or independent appraisals.
All of our international subsidiaries have the U.S. dollar as the functional currency. The local currency financial statements are remeasured into U.S. dollars using current rates of exchange for assets and liabilities. Gains and losses from remeasurement are included in other income (expense), net. Revenue and expenses from our international subsidiaries are remeasured using the monthly average exchange rates in effect for the period in which the items occur. For all periods presented, our foreign currency remeasurement expense was not significant.
Financial instruments that potentially subject us to material concentrations of credit risk consist primarily of cash equivalents, restricted investments, marketable securities, long-term marketable securities, and trade accounts receivable. We are exposed to credit risk to the extent of the amounts recorded on the balance sheet. By policy, our cash equivalents, restricted investments, marketable securities, and long-term marketable securities are subject to certain nationally recognized credit standards, issuer concentrations, sovereign risk, and marketability or liquidity considerations.
In evaluating our trade receivables, we perform credit evaluations of our major customers’ financial condition and monitor closely all of our receivables to limit our financial exposure by limiting the length of time and amount of credit extended. In certain situations, we may require payment in advance or utilize letters of credit to reduce credit risk. By policy, we establish a reserve for trade accounts receivable based on the type of business in which a customer is engaged, the length of time a trade account receivable is outstanding, and other knowledge that we may possess relating to the probability that a trade receivable is at risk for non-payment.
For fiscal years 2012 and 2011, we had one contract manufacturer, Futaihua Industrial, who represented 28 percent and 42 percent, respectively of our consolidated gross accounts receivable. In fiscal year 2012, we had one contract manufacturer, Hongfujin Precision, who represented 14 percent of our consolidated gross accounts receivable. For fiscal year 2011, we had one distributor, Avnet, Inc. who represented 17 percent, of our consolidated gross accounts receivable. No other distributor or customer had receivable balances that represented more than 10 percent of consolidated gross accounts receivable as of the end of fiscal years 2012 or 2011.
Since the components we produce are largely proprietary and generally not available from second sources, we consider our end customer to be the entity specifying the use of our component in their design. These end customers may then purchase our products directly from us, from a distributor, or through a third party manufacturer contracted to produce their end product. For fiscal years 2012, 2011, and 2010, our ten largest end customers represented approximately 74 percent, 62 percent, and 54 percent of our sales, respectively. For fiscal years 2012, 2011, and 2010, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 62 percent, 47 percent, and 35 percent of the Company’s total sales, respectively. Further, we had one distributor, Avnet, Inc., that represented 15 percent, 24 percent, and 26 percent of our sales for fiscal years 2012, 2011, and 2010, respectively. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2012, 2011, or 2010.
We recognize revenue when all of the following criteria are met: persuasive evidence that an arrangement exists, delivery of goods has occurred, the sales price is fixed or determinable and collectability is reasonably assured. We evaluate our distributor arrangements, on a distributor by distributor basis, with respect to each of the four criteria above. For a majority of our distributor arrangements, we provide rights of price protection and stock rotation. As a result, revenue is deferred at the time of shipment to our domestic distributors and certain international distributors due to the determination that the ultimate sales price to the distributor is not fixed or determinable. Once the distributor has resold the product, and our final sales price is fixed or determinable, we recognize revenue for the final sales price and record the related costs of sales. For certain of our smaller international distributors, we do not grant price protection rights and provide minimal stock rotation rights. For these distributors, revenue is recognized upon delivery to the distributor, less an allowance for estimated returns, as the revenue recognition criteria have been met upon shipment.
Further, the Company defers the associated cost of goods sold on our consolidated balance sheet, net within the deferred income caption. The Company routinely evaluates the products held by our distributors for impairment to the extent such products may be returned by the distributor within these limited rights and such products would be considered excess or obsolete if included within our own inventory. Products returned by distributors and subsequently scrapped have historically been immaterial to the Company.
We warrant our products and maintain a provision for warranty repair or replacement of shipped products. The accrual represents management’s estimate of probable returns. Our estimate is based on an analysis of our overall sales volume and historical claims experience, and the sales volume and historical claims experience at our largest customer, Apple, Inc. The estimate is re-evaluated periodically for accuracy.
Our shipping and handling costs are included in cost of sales for all periods presented.
Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards and is recognized as an expense, on a ratable basis, over the vesting period, which is generally between zero and four years. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates used in calculating the grant-date fair value of stock options. The Company calculates the grant-date fair value for stock options using the Black-Scholes valuation model. The use of valuation models requires the Company to make estimates of assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield, and forfeiture rates.
We recognize deferred tax assets if realization of such assets is more likely than not. We have provided a valuation allowance against a portion of our net U.S. deferred tax assets due to uncertainties regarding their realization. We evaluate our ability to realize our deferred tax assets on a quarterly basis.
We recognize liabilities for uncertain tax positions based on the two-step process. The first step requires us to determine if the weight of available evidence indicates that the tax position has met the threshold for recognition; therefore, we must evaluate whether it is more likely than not that the position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step requires us to measure the tax benefit of the tax position taken, or expected to be taken, in an income tax return as the largest amount that is more than 50 percent likely of being realized upon ultimate settlement. We reevaluate the uncertain tax positions each quarter based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Depending on the jurisdiction, such a change in recognition or measurement may result in the recognition of a tax benefit or an additional charge to the tax provision in the period.
Basic net income per share is based on the weighted effect of common shares issued and outstanding and is calculated by dividing net income by the basic weighted average shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of common shares used in the basic net income per share calculation, plus the equivalent number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. These potentially dilutive items consist primarily of outstanding stock options and restricted stock awards.
The weighted outstanding options excluded from our diluted calculation for the years ended March 31, 2012, March 26, 2011, and March 27, 2010, were 1,052,000, 615,000, and 8,043,000, respectively, as the exercise price exceeded the average market price during the period.
Accumulated Other Comprehensive Loss
Our accumulated other comprehensive loss is comprised of foreign currency translation adjustments from prior years when we had subsidiaries whose functional currency was not the U.S. Dollar, as well as unrealized gains and losses on investments classified as available-for-sale. See Note 13 – Accumulated Other Comprehensive loss for additional discussion.
Recently Issued Accounting Pronouncements
In May 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Accounting Standards Codification (“ASC”) Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this ASU result in common fair value measurement and disclosure requirements in U.S. GAAP and international financial reporting standards (“IFRS”). The ASU provides for certain changes in current GAAP disclosure requirements, including the measurement of level 3 assets and measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity. The amendments in this ASU are to be applied prospectively, and are effective during interim and annual periods beginning after December 15, 2011. The adoption of this guidance is not anticipated to have a material impact on our consolidated financial position, results of operations or cash flows.
In May 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (ASC Topic 220) — Presentation of Comprehensive Income. With this update, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. Current U.S. GAAP allows reporting entities the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity; this update eliminates that option. The amendments in this ASU should be applied retrospectively, and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. This ASU was further revised in ASU No. 2011-12, Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 that was issued in December 2011. The adoption of this guidance will affect financial statement presentation only and therefore, will not have a material impact on our consolidated financial position, results of operations or cash flows.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles—Goodwill and Other (Topic 350 - Testing Goodwill for Impairment. Under the amendments in this ASU, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test and proceed as dictated in previous FASB guidance. Under the amendments in this ASU, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. An entity may resume performing the qualitative assessment in any subsequent period. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this guidance is not anticipated to have a material impact on our consolidated financial position, results of operations or cash flows, but will result in an additional statement of other comprehensive income.
|
|||
|
|||||||||||||||
|
As of March 31, 2012: |
Cost |
Gains |
Losses |
Estimated Fair Value (Net Carrying Amount) |
|
Corporate securities – U.S................................................. |
48,011 |
33 |
(19) |
48,025 |
|
U.S. Treasury securities...................................................... |
30,264 |
1 |
(4) |
30,261 |
|
Agency discount notes....................................................... |
16,789 |
8 |
(1) |
16,796 |
|
Commercial paper.............................................................. |
23,719 |
5 |
(15) |
23,709 |
|
Total securities................................................................. |
$ 118,783 |
$ 47 |
$ (39) |
$ 118,791 |
|
As of March 26, 2011: |
Cost |
Gains |
Losses |
Estimated Fair Value (Net Carrying Amount) |
|
Corporate securities – U.S................................................. |
64,228 |
22 |
(38) |
64,212 |
|
U.S. Treasury securities...................................................... |
35,268 |
13 |
— |
35,281 |
|
Agency discount notes....................................................... |
16,588 |
5 |
(2) |
16,591 |
|
Commercial paper.............................................................. |
56,130 |
23 |
(7) |
56,146 |
|
Total securities................................................................. |
$ 172,214 |
$ 63 |
$ (47) |
$ 172,230 |
|
|
|
|
|
|
|
|
March 31, 2012 |
March 26, 2011 |
||
|
|
Amortized Cost |
Estimated Fair Value |
Amortized Cost |
Estimated Fair Value |
|
Within 1 year....................................................................... |
$ 115,871 |
$ 115,876 |
$ 159,516 |
$ 159,528 |
|
After 1 year......................................................................... |
2,912 |
2,915 |
12,698 |
12,702 |
|
|
$ 118,783 |
$ 118,791 |
$ 172,214 |
$ 172,230 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
in Active |
|
|
Significant |
|
|
|
|
|
|
|
||||
|
|
|
Markets for |
|
|
Other |
|
|
Significant |
|
|
|
|
||||
|
|
|
Identical |
|
|
Observable |
|
|
Unobservable |
|
|
|
|
||||
|
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
|
||||
|
Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds........................................... |
|
$ |
40,557 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
40,557 |
|
|
Commercial paper............................................... |
|
|
— |
|
|
|
15,952 |
|
|
|
— |
|
|
|
15,952 |
|
|
Corporate debt securities.................................... |
|
|
— |
|
|
|
1,112 |
|
|
|
— |
|
|
|
1,112 |
|
|
|
|
$ |
40,557 |
|
|
$ |
17,064 |
|
|
$ |
— |
|
|
$ |
57,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities.................................... |
|
$ |
— |
|
|
$ |
48,025 |
|
|
$ |
— |
|
|
$ |
48,025 |
|
|
U.S. Treasury securities..................................... |
|
|
30,261 |
|
|
|
— |
|
|
|
— |
|
|
|
30,261 |
|
|
Agency discount notes........................................ |
|
|
— |
|
|
|
16,796 |
|
|
|
— |
|
|
|
16,796 |
|
|
Commercial paper............................................... |
|
|
— |
|
|
|
23,709 |
|
|
|
— |
|
|
|
23,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
$ |
30,261 |
|
|
$ |
88,530 |
|
|
$ |
— |
|
|
$ |
118,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
in Active |
|
|
Significant |
|
|
|
|
|
|
|
||||
|
|
|
Markets for |
|
|
Other |
|
|
Significant |
|
|
|
|
||||
|
|
|
Identical |
|
|
Observable |
|
|
Unobservable |
|
|
|
|
||||
|
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
|
||||
|
Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds................................................ |
|
$ |
17,700 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,700 |
|
|
Commercial paper................................................... |
|
|
— |
|
|
|
4,999 |
|
|
|
— |
|
|
|
4,999 |
|
|
U.S. Treasury securities........................................... |
|
|
— |
|
|
|
10,500 |
|
|
|
— |
|
|
|
10,500 |
|
|
|
|
$ |
17,700 |
|
|
$ |
15,499 |
|
|
$ |
— |
|
|
$ |
33,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities......................................... |
|
$ |
— |
|
|
$ |
64,212 |
|
|
$ |
— |
|
|
$ |
64,212 |
|
|
U.S. Treasury securities........................................... |
|
|
35,281 |
|
|
|
— |
|
|
|
— |
|
|
|
35,281 |
|
|
Agency discount notes............................................. |
|
|
— |
|
|
|
16,591 |
|
|
|
— |
|
|
|
16,591 |
|
|
Commercial paper................................................... |
|
|
— |
|
|
|
56,146 |
|
|
|
— |
|
|
|
56,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
$ |
35,281 |
|
|
$ |
136,949 |
|
|
$ |
— |
|
|
$ |
172,230 |
|
|
|||
|
|||
|
|
|
|
|
|
|
|
March 31, 2012 |
March 26, 2011 |
||
|
Intangible Category (Weighted-Average Amortization Period (years)) |
Gross Amount |
Accumulated Amortization |
Gross Amount |
Accumulated Amortization |
|
Core technology (9.0).............................................. |
$ 1,390 |
$ (1,390) |
$ 1,390 |
$ (1,390) |
|
License agreements (9.0)......................................... |
440 |
(440) |
440 |
(440) |
|
Existing technology (13.3)...................................... |
17,235 |
(7,318) |
17,235 |
(6,321) |
|
Trademarks (4.0) (a)................................................ |
2,758 |
(320) |
2,758 |
(320) |
|
Non-compete agreements (5.0).............................. |
398 |
(258) |
398 |
(179) |
|
Customer relationships (14.6)................................ |
4,682 |
(1,515) |
4,682 |
(1,179) |
|
Technology licenses (3.3)........................................ |
14,187 |
(11,608) |
16,928 |
(13,877) |
|
|
$ 41,090 |
$ (22,849) |
$ 43,831 |
$ (23,706) |
|
|||
|
|
|
|
|
|
|
|
Fiscal Years Ended |
|||
|
|
March 31, 2012 |
March 26, 2011 |
March 27, 2010 |
|
|
$ 398 |
$ 243 |
$ 212 |
||
|
Research and development...................................................................... |
5,590 |
2,641 |
1,882 |
|
|
Sales, general and administrative............................................................ |
6,190 |
5,257 |
3,224 |
|
|
Effect on pre-tax income .................................................................. |
12,178 |
8,141 |
5,318 |
|
|
Income Tax Benefit.................................................................................. |
— |
— |
— |
|
|
Total share based compensation expense (net of taxes)............ |
$ 12,178 |
$ 8,141 |
$ 5,318 |
|
|
|
|
|
|
|
Share based compensation effects on basic earnings (loss) per share .. |
$ 0.19 |
$ 0.12 |
$ 0.08 |
|
Share based compensation effects on diluted earnings (loss) per share |
$ 0.18 |
$ 0.11 |
$ 0.08 |
|
|
|
|
|
|
Share based compensation effects on operating activities cash flow.... |
12,178 |
8,141 |
5,318 |
|
Share based compensation effects on financing activities cash flow.... |
— |
— |
— |
|
|
|
|
|
|
|
|
Number of Options |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term (years) |
Aggregate Intrinsic Value |
|
Vested and expected to vest.................................................. |
||||
|
Exercisable................................................................................ |
|
|
|
|
|
|
|
Number of |
Weighted |
Aggregate Intrinsic value (1) |
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
(1) |
Represents the value of Cirrus stock on the date that the restricted stock vested. |
|
|||
|
|||
|
|||
|
|
|
|
|
|
|
|
Year Ended |
|||
|
|
March 31, 2012 |
March 26, 2011 |
March 27, 2010 |
|
|
Expected income tax provision at the U.S. federal statutory rate................... |
35.0 |
35.0 |
35.0 |
|
|
Valuation allowance changes affecting the provision of income taxes........ . |
(46.7) |
(178.6) |
(80.5) |
|
|
— |
0.1 |
(2.7) |
||
|
— |
— |
0.2 |
||
|
— |
— |
(0.3) |
||
|
1.0 |
(0.1) |
4.2 |
||
|
0.1 |
1.1 |
0.4 |
||
|
0.6 |
0.9 |
(0.2) |
||
|
(10.0) |
(141.6) |
(43.9) |
||
|
|
|
|
|
|
Year Ended |
|
|
|
March 31, 2012 |
March 26, 2011 |
|
Deferred tax assets: |
|
|
|
$ 3,240 |
$ 4,494 |
|
|
3,656 |
3,017 |
|
|
105,220 |
131,331 |
|
|
36,032 |
37,464 |
|
|
244 |
250 |
|
Capitalized research and development............................................................................ |
9,779 |
14,773 |
Depreciation and Amortization......................................................................................... |
— |
159 |
|
18,747 |
14,807 |
|
|
$ 176,918 |
$ 206,295 |
|
|
(29,075) |
(68,380) |
|
|
$ 147,843 |
$ 137,915 |
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
$ 287 |
$ — |
|
|
5,348 |
5,861 |
|
|
$ 5,635 |
$ 5,861 |
|
|
$ 142,208 |
$ 132,054 |
|
|
|||
|
|
|
|
|
|
|
Year Ended |
||
|
|
March 31, 2012 |
March 26, 2011 |
March 27, 2010 |
|
Audio products.................................................................................. |
$ 350,743 |
$ 264,840 |
$ 153,661 |
|
Energy products................................................................................. |
76,100 |
104,731 |
67,328 |
|
Total........................................................................................... |
$ 426,843 |
$ 369,571 |
$ 220,989 |
|
|
|
|
|
|
|
Year Ended |
||
|
|
March 31, 2012 |
March 26, 2011 |
March 27, 2010 |
|
United States................................................................................................... |
$ 50,230 |
$ 66,701 |
$ 47,936 |
|
23,927 |
27,398 |
17,156 |
|
|
China......................................................................................................................... |
294,143 |
205,775 |
103,992 |
|
Hong Kong............................................................................................................... |
8,671 |
9,216 |
5,611 |
|
Japan......................................................................................................................... |
15,196 |
16,902 |
12,335 |
|
South Korea............................................................................................................. |
9,781 |
12,413 |
10,134 |
|
Taiwan...................................................................................................................... ........ |
10,662 |
13,073 |
10,585 |
|
Other Asia................................................................................................................. |
13,063 |
16,012 |
12,381 |
|
1,170 |
2,081 |
859 |
|
|
$ 426,843 |
$ 369,571 |
$ 220,989 |
|
|
|
|
|
|
|
Year Ended |
|
|
|
March 31, 2012 |
March 26, 2011 |
|
United States....................................................................................................................... |
$ 66,530 |
$ 33,977 |
|
United Kingdom................................................................................................................. |
20 |
29 |
|
China.................................................................................................................................... |
158 |
117 |
|
Hong Kong.......................................................................................................................... |
3 |
3 |
|
Japan.................................................................................................................................... |
167 |
377 |
|
South Korea........................................................................................................................ |
6 |
4 |
|
Taiwan................................................................................................................................. |
83 |
44 |
|
Other Asia............................................................................................................................ |
11 |
12 |
|
Total consolidated property, plant and equipment, net...................................... |
$ 66,978 |
$ 34,563 |
|
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