Cirrus Logic Inc. (CRUS)
F3Q09 (Qtr End 12/27/08) Earnings Call
January 28, 2009 5:00 p.m. ET
Jason Rhode - President & CEO
Thurman Case - CFO
Dan Morris - Oppenheimer & Company
Heidi Poon - Thomas Weisel Partners
Adam Benjamin - Jefferies & Company
Vernon Essi - Needham & Company
Christopher Longiaru - Sidoti & Company
Carl LeStrange - Oppenheimer & Company
Previous Statements by CRUS
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Thank you, and good afternoon. Joining me on today's call is Jason Rhode, Cirrus Logic's President and Chief Executive Officer. Before we begin, you’re reminded that during the course of this conference call, we will make projections and other forward-looking statements regarding, among other things, our estimates for our fourth quarter fiscal year 2009 revenues, gross margin levels, operating expense, amortization of acquired intangibles, and share-based compensation expense, as well as our estimates and assumptions regarding our future revenue growth and market share growth.
These statements are predictions that are subject to risks and uncertainties that may cause actual results to differ materially from our projections. By providing this information, we undertake no obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise. Please refer to our press release issued today, which is available on our website at cirrus.com, our latest Form 10-K for the fiscal year ending March 29th, 2008, as well as our other filings made with the Securities and Exchange Commission for additional discussion of risk factors that could cause actual results to differ materially from our current expectations.
I also want to mention before we proceed that all financial numbers are prepared, unless noted, in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial information provided in today's call to the most directly comparable GAAP information is included in today’s press release and in our website in the investor section. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because we believe such information is useful to our investors for informational and comparative purposes.
In addition, we use certain non-GAAP financial information internally to evaluate and manage our operations. As a note, the non-GAAP financial information we use may differ from that used by other companies. These non-GAAP measures should be considered in addition to and not a substitute for the results prepared in accordance with GAAP.
Net revenue in the December quarter was $43.8 million down 10% from $48.9 million in the quarter a year ago and down 18% from $53.3 million in the September quarter. Individually sales of audio products contributed $25.9 million in revenue compared to $27.3 million in the quarter a year ago and down sequentially from $30.6 million in revenue in the September quarter. Energy product sales generated $17.9 million down from $21.6 million in the December quarter a year ago and down sequentially from $22.7 million in the September quarter. The declines in revenue for both audio and energy products were spread across the multiple product lines as well as in customers and (inaudible).
We note a significant decrease in new orders throughout November and December. However, the percentage of revenue from new products in particular our portable products grew sequentially. Historical revenue breakdown by product category are available on our website.
Gross margin for the December quarter was 55% compared to 56% in both the quarter a year ago and in the September quarter. Total GAAP operating expenses were $22 million compared to $24.2 million for the previous quarter. Operating expenses included $1.25 million in stock-based compensation expense and approximately $350,000 in acquisition-related amortization of intangibles. Non-GAAP operating expenses excluding these items were $20.4 million for the quarter compared to $20.9 million in non-GAAP operating expenses during the September quarter. And I’d like to point out that our direct SG&A and R&D expenses have decreased in each of the last four quarters.
Income from operations on a GAAP basis was $2.1 million representing an operating margin of 5%. Excluding the items noted above, income from operations on a non-GAAP basis was $3.8 million, representing an operating margin of 9%. We reported GAAP net income for the quarter of $2.8 million or $0.04 per share based on 65.3 million diluted shares. In the same quarter a year ago, we reported GAAP net income of $4.2 million or $0.05 earnings per share based on 89.5 million diluted shares.
On a non-GAAP basis, net income for the quarter was $4.4 million or $0.07 per share. In the December quarter a year ago, we reported non-GAAP net income of $6 million or $0.07 per share.
I’d like to mention that on December 8, 2008, we close the transaction to purchase the assets of Taylor Corporation (ph) in Tucson, Arizona for $1.1 million; 50% of the purchase price was paid on the day of closing while the remaining 550,000 is to be paid later this year.
We ended the December quarter with 473 employees up slightly from 470 employees at the end of September. These numbers are inclusive of employees associated with the Taylor asset purchase.