CIRRUS LOGIC, INC.

Previous wording

Inventories are stated at the lower of cost or net realizable value, with cost being determined on a first-in, first-out basis. The Company writes down inventories to net realizable value based on forecasted customer unit demand while taking into account product release schedules and product life cycles. The Company also reviews and writes down inventory, as appropriate, based on the age and condition of the inventory. Actual demand and market conditions may be different from those projected by management, which could have a material effect on our operating results and financial position.

Current wording

Inventories are stated at the lower of cost or net realizable value on a first-in, first-out basis. Cost is computed using standard costs, which approximate actual cost. The Company writes down inventories to net realizable value based on forecasted customer unit demand while taking into account product release schedules and product life cycles. The Company also reviews and writes down inventory, as appropriate, based on the age and condition of the inventory. Actual demand and market conditions may be different from those projected by management, which could have a material effect on our operating results and financial position.

Previous wording

For a discussion of recently issued accounting pronouncements, refer to Note 2 of the Notes to the Consolidated Financial Statements.

Current wording

For a discussion of recently issued accounting pronouncements, refer to Note 2 - Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements.

Previous wording

Cirrus Logic develops low-power, high-precision mixed-signal processing solutions for a broad range of customers. We track operating results in one reportable segment, but report revenue performance by product line: audio and HPMS products. In fiscal year 2024, the Company made good progress executing on our strategic initiatives. In our flagship audio business we completed design work on, and sampled, two next-generation products: a boosted amplifier and a smart codec during the year. We also introduced our third-generation camera controller, and gained traction in the laptop market.

Current wording

Cirrus Logic develops low-power, high-precision mixed-signal processing solutions for a broad range of customers. We track operating results in one reportable segment, but report revenue performance by product line: Audio and HPMS products. In fiscal year 2025, the Company made good progress executing on strategic initiatives. In our flagship smartphone audio business we began shipping the latest-generation of our boosted amplifier and first 22-nanometer smart codec. We also expanded our HPMS content in smartphones as we benefited from increased unit shipments of our camera controllers and broadened our footprint with our general market haptic components.

Previous wording

Fiscal year 2023 net sales of $1.90 billion represented an increase over fiscal year 2022 net sales of $1.78 billion. HPMS product line sales of $725.6 million represented a 22.1 percent increase from fiscal year 2022 sales of $594.3 million, primarily attributable to content gains in smartphones and higher ASPs. Audio product line sales of $1.17 billion in fiscal year 2023 decreased from fiscal year 2022 sales of $1.19 billion. The most significant driver of the decrease was the softening in general market and smartphone demand, partially offset by ASP increases during fiscal year 2023.

Current wording

Fiscal year 2025 net sales of $1.90 billion represented an increase over fiscal year 2024 net sales of $1.79 billion. Audio product line sales of $1.14 billion in fiscal year 2025 increased 5 percent from fiscal year 2024 sales of $1.08 billion. The most significant drivers of the increase were sales associated with our latest-generation products and higher smartphone volumes, partially offset by weakness in general market sales versus the prior fiscal year. HPMS product line sales of $758.9 million represented an 8 percent increase from fiscal year 2024 sales of $705.0 million, largely attributable to higher content in smartphones and sales associated with latest-generation products, partially offset by lower general market sales.

Previous wording

Overall, gross margin for fiscal year 2024 was 51.2 percent. The increase in gross margin for fiscal year 2024 was primarily attributable to a decline in supply chain costs, including the absence of wafer premiums and lower freight expense, in addition to a reduction in inventory reserves, partially offset by a less favorable product mix. The Company’s number of employees decreased to 1,625 as of March 30, 2024. The Company achieved net income of $274.6 million in fiscal year 2024, which included an income tax provision in the amount of $89.4 million.

Current wording

Overall, gross margin for fiscal year 2025 was 52.5 percent. The increase in gross margin for fiscal year 2025 reflects a more favorable product mix. This was partially offset by unfavorable inventory reserve expense and higher supply chain costs. The Company’s number of employees increased from 1,625 as of March 30, 2024 to 1,660 as of March 29, 2025. The Company achieved net income of $331.5 million in fiscal year 2025, which included an income tax provision in the amount of $113.4 million.

Previous wording

Net sales for fiscal year 2023 increased by 6.5 percent, to $1.90 billion from $1.78 billion in fiscal year 2022. The increase in net sales reflects a $131.3 million increase in HPMS product sales, or 22.1 percent, from fiscal year 2022 sales of $594.3 million, which was primarily attributable to content gains in smartphones and higher ASPs. Additionally, audio product sales decreased $15.1 million in fiscal year 2023. The most significant driver of the decrease was the softening in general market and smartphone demand, partially offset by ASP increases versus fiscal year 2022.

Current wording

Net sales for fiscal year 2025 increased by 6 percent, to $1.90 billion from $1.79 billion in fiscal year 2024. Audio product sales increased $53.2 million, or 5 percent in fiscal year 2025. The most significant drivers of the increase were sales associated with our latest-generation products and higher smartphone volumes, offset by weakness in general market sales versus the prior fiscal year. The increase in net sales also reflects a $54.0 million increase in HPMS product sales, or 8 percent, from fiscal year 2024 sales of $705.0 million, primarily due to higher content in smartphones and sales associated with latest-generation products, partially offset by lower general market sales.

Previous wording

International sales, including sales to U.S.-based end customers that manufacture products through contract manufacturers or plants located overseas, were approximately $1.8 billion in each of fiscal years 2024, 2023, and 2022, representing 99 percent, 97 percent, and 98 percent of net sales in fiscal year 2024, 2023, and 2022, respectively. Our sales are denominated primarily in U.S. dollars.

Current wording

International sales, including sales to U.S.-based end customers that manufacture products through contract manufacturers or plants located overseas, were approximately $1.9 billion in 2025 and $1.8 billion in each of fiscal years 2024 and 2023, representing 99 percent, 99 percent, and 97 percent of net sales in fiscal year 2025, 2024, and 2023, respectively. Our sales are denominated primarily in U.S. dollars.

Previous wording

Overall gross margin of 51.2 percent for fiscal year 2024 increased from fiscal year 2023 gross margin of 50.4 percent. The increase was primarily due to a decline in supply chain costs, including the absence of wafer premiums and lower freight expense, in addition to a reduction in inventory reserves compared to fiscal year 2023. The increase was partially offset by a less favorable product mix. Changes in excess and obsolete inventory charges, including scrapped inventory, and sales of product written down in prior periods did not have a material impact on margin in fiscal year 2024.

Current wording

Overall gross margin of 52.5 percent for fiscal year 2025 increased from fiscal year 2024 gross margin of 51.2 percent. The increase reflects a more favorable product mix. This was partially offset by unfavorable inventory reserve expense and higher supply chain costs, compared to fiscal year 2024. Changes in excess and obsolete inventory charges, including scrapped inventory, and sales of product written down in prior periods did not have a material impact on margin in fiscal year 2025.

Previous wording

Fiscal year 2024 research and development expenses of $426.5 million reflect a decrease of $31.9 million, or 7.0 percent, from fiscal year 2023. The decrease was attributable to reduced amortization of acquisition intangibles expense, increased R&D incentives compared to the prior fiscal year, and a decrease in acquisition-related charges, variable compensation and product development costs, partially offset by an increase in employee-related expenses, stock-based compensation and facilities-related costs. See Note 2 - Summary of Significant Accounting Policies - Government Assistance for additional details relating to R&D incentives.

Current wording

Fiscal year 2025 research and development expenses of $434.7 million reflect an increase of $8.2 million, or 2 percent, from fiscal year 2024. The increase was attributable to increased employee-related, variable compensation, and facilities-related costs, offset by decreased stock-based compensation, and acquisition-related costs, in addition to increased R&D incentives versus fiscal year 2024. See Note 2 - Summary of Significant Accounting Policies - Government Assistance of the Notes to Consolidated Financial Statements in Item 8 for additional details relating to R&D incentives.

Previous wording

Fiscal year 2023 selling, general and administrative expenses of $153.1 million reflect an increase of $2.1 million, or 1.4 percent, compared to fiscal year 2022. The increase was primarily attributable to increased employee-related and stock-based compensation costs, partially offset by reduced variable compensation costs in fiscal year 2023.

Current wording

Fiscal year 2025 selling, general and administrative expenses of $151.0 million reflect an increase of $6.8 million, or 5 percent, compared to fiscal year 2024. The increase was primarily attributable to increased employee-related and variable compensation costs in fiscal year 2025.

Previous wording

During the fourth quarter of fiscal year 2023, as part of our strategy to improve operational efficiency, the Company abandoned or subleased office space at various properties to align our real property lease arrangements with our anticipated operating needs. In fiscal year 2024, the Company recorded an additional $2.0 million in net costs related to a workforce reduction action taken in the second quarter of fiscal year 2024 and the described events above. The Company recorded restructuring costs of $10.6 million related to impairment of right-of-use lease assets and leasehold improvements of $6.9 million, as well as other related charges of $3.7 million in fiscal year 2023. See Note 12 - Restructuring for additional details.

Current wording

In fiscal year 2024, the Company recorded $2.0 million in net costs primarily related to a workforce reduction action taken in the second quarter of fiscal year 2024.

Previous wording

Interest income in fiscal years 2024, 2023, and 2022, was $21.5 million, $10.0 million, and $1.6 million, respectively. The increases in interest income in fiscal year 2024 and 2023 versus prior years were a function of higher interest rates on average cash, cash equivalent, and marketable securities balances throughout the year.

Current wording

Interest income in fiscal years 2025 and 2024 was $34.0 million and $21.5 million, respectively. The increase in interest income in fiscal year 2025 versus prior year was a function of higher yields on higher combined average cash, cash equivalent, and marketable securities balances throughout the year.

Previous wording

The Company reported interest expense of $0.9 million, $0.9 million and $0.9 million for fiscal years 2024, 2023, and 2022, respectively, primarily as a result of commitment fees under the Revolving Credit Facility, described in Note 9.

Current wording

The Company reported interest expense of $0.9 million and $0.9 million for fiscal years 2025 and 2024, respectively, primarily as a result of commitment fees under the Revolving Credit Facility, described in Note 8 of the Notes to Consolidated Financial Statements in Item 8.

Previous wording

In fiscal years 2024, 2023, and 2022 the Company reported $(0.1) million, $(3.4) million, and $1.7 million respectively, in other income (expense), related to remeasurement on foreign currency denominated monetary assets and liabilities and other non-operating income and expenses. Additionally, in fiscal year 2023, the Company recorded a $2.7 million write down related to a technology start-up equity investment.

Current wording

In fiscal years 2025 and 2024, the Company reported $1.5 million and $(0.1) million, respectively, in other income (expense), related to remeasurement on foreign currency denominated monetary assets and liabilities and other non-operating income and expenses.

Previous wording

We recorded income tax expense of $89.4 million in fiscal year 2024 on pre-tax income of $363.9 million, yielding an effective tax rate of 24.6 percent. We recorded income tax expense of $78.0 million in fiscal year 2023 on pre-tax income of $254.7 million, yielding an effective tax rate of 30.6 percent. Our effective tax rates in both fiscal year 2024 and 2023 were higher than the U.S. statutory rate of 21.0 percent, primarily due to U.S. tax paid on our foreign earnings resulting from an increase in global intangible low-taxed income (GILTI), which is treated as a period cost, and a reduction in foreign tax credits. GILTI is unfavorably impacted by a provision in the Tax Cuts and Jobs Act of 2017 that requires research and development expenditures incurred starting in fiscal year 2023 to be capitalized and amortized ratably over five or fifteen years depending on the location in which the research activities are conducted. In addition, U.S. tax rules introduced in fiscal year 2023 related to refundable tax credits, including R&D expenditure credits available to us in the United Kingdom, reduce the amount of foreign tax credits available to offset GILTI.

Current wording

Our effective tax rates in fiscal years 2025 and 2024 were higher than the U.S. statutory rate of 21.0 percent, primarily due to U.S. tax paid on our foreign earnings resulting from an increase in global intangible low-taxed income (GILTI), which is treated as a period cost, and a reduction in foreign tax credits. GILTI is unfavorably impacted by a provision in the Tax Cuts and Jobs Act of 2017 that requires research and development expenditures incurred starting in fiscal year 2023 to be capitalized and amortized ratably over five or fifteen years depending on the location in which the research activities are conducted. In addition, U.S. tax rules introduced in fiscal year 2023 related to refundable tax credits, including R&D expenditure credits available to us in the United Kingdom, reduce the amount of foreign tax credits available to offset GILTI.

Previous wording

The Organization for Economic Cooperation and Development has announced an Inclusive Framework on Base Erosion and Profit Shifting, including Pillar Two Model Rules for a global minimum tax that call for the taxation of large multinational corporations at a minimum rate of 15%. Certain jurisdictions, including the United Kingdom, have enacted Pillar Two legislation that will start to become effective for our fiscal year 2025. Based on enacted laws, Pillar Two is not expected to have a material impact on our consolidated financial statements.

Current wording

The Organization for Economic Cooperation and Development has announced an Inclusive Framework on Base Erosion and Profit Shifting, including Pillar Two Model Rules for a global minimum tax that call for the taxation of large multinational corporations at a minimum rate of 15%. Certain jurisdictions in which we operate, including the United Kingdom, have enacted Pillar Two legislation. There was no material impact on our consolidated financial statements in fiscal year 2025.

Previous wording

For additional discussion about our income taxes, see Note 19 - Income Taxes.

Current wording

For additional discussion about our income taxes, see Note 17 - Income Taxes of the Notes to Consolidated Financial Statements in Item 8.

Previous wording

In fiscal year 2024, cash flow from operations was $421.7 million. Operating cash flow during fiscal year 2024 was related to the cash components of our net income and an $18.4 million favorable change in working capital. The favorable change in working capital was driven primarily by prepaid wafer usage (related to the Capacity Reservation Agreement), decreases in other assets and increased income taxes payable, partially offset by decreased accounts payable and acquisition-related liabilities, as well as increases in accounts receivable. In fiscal year 2023, cash flow from operations was $339.6 million. Operating cash flow during fiscal year 2023 was related to the cash components of our net income and a $55.6 million unfavorable change in working capital, primarily driven by an increase in inventory and decreases in accounts payable and other accrued liabilities, partially offset by a decrease in accounts receivable. In fiscal year 2022, cash flow from operations was $124.8 million. Operating cash flow during fiscal year 2022 was related to the cash components of our net income and a $316.1 million unfavorable change in working capital, primarily as a result of increases in long-term prepaid wafers associated with terms of the Capacity Reservation Agreement with GlobalFoundries (discussed further in Note 15 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements), accounts receivables and other assets (a portion of which resulted from terms of the Capacity Reservation Agreement with GlobalFoundries), partially offset by increases in acquisition-related liabilities and decreases in inventory for the period.

Current wording

In fiscal year 2025, cash flow from operations was $444.4 million. Operating cash flow during fiscal year 2025 was related to the cash components of our net income and a $23.4 million unfavorable change in working capital. The unfavorable change in working capital was driven primarily by increases in inventory and accounts receivable, partially offset by prepaid wafer usage (related to the Capacity Reservation Agreement). In fiscal year 2024, cash flow from operations was $421.7 million. Operating cash flow during fiscal year 2024 was related to the cash components of our net income and an $18.4 million favorable change in working capital, primarily driven by prepaid wafer usage (related to the Capacity Reservation Agreement), decreases in other assets and increased income taxes payable, partially offset by decreased accounts payable and acquisition-related liabilities, as well as increases in accounts receivable.

Previous wording

In fiscal year 2024, the Company used $163.0 million in cash for investing activities primarily related to $124.7 million in net purchases of marketable securities and capital expenditures and technology investments of $38.3 million. In fiscal year 2023, the Company used $33.3 million in cash for investing activities principally related to capital expenditures and technology investments of $36.7 million, offset by $3.4 million in net sales of marketable securities. In fiscal year 2022, the Company used approximately $18.4 million in cash for investing activities primarily related to $276.9 million associated with the acquisition of Lion and capital expenditures and technology investments of $30.0 million, partially offset by $288.5 million in net sales of marketable securities.

Current wording

In fiscal year 2025, the Company used $124.3 million in cash for investing activities primarily related to $95.5 million in net purchases of marketable securities and capital expenditures and technology investments of $28.8 million. In fiscal year 2024, the Company used $163.0 million in cash for investing activities primarily related to $124.7 million in net purchases of marketable securities and capital expenditures and technology investments of $38.3 million.

Previous wording

In fiscal years 2024, 2023, and 2022, the Company used $201.7 million, $230.3 million, and $178.7 million, respectively, related to financing activities. In fiscal years 2024, 2023, and 2022, the Company utilized approximately $186.0 million, $191.4 million, and $167.5 million, respectively, in cash to repurchase and retire portions of its outstanding common stock. See Note 17 - Stockholders' Equity for a description of our share repurchase authorization.

Current wording

In fiscal years 2025 and 2024, the Company used $283.2 million and $201.7 million, respectively, related to financing activities. In fiscal years 2025 and 2024, the Company utilized approximately $261.0 million and $186.0 million, respectively, in cash to repurchase and retire portions of its outstanding common stock. See Note 15 - Stockholders' Equity of the Notes to Consolidated Financial Statements in Item 8 for a description of our share repurchase authorization.

Previous wording

See Note 9 — Revolving Credit Facility for additional information including material terms and related covenants.

Current wording

See Note 8 — Revolving Credit Facility of the Notes to Consolidated Financial Statements in Item 8 for additional information including material terms and related covenants.