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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-K
 
þ  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For The Fiscal Year Ended March 28, 2009
 
o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Transition Period from            to           
 
 
Commission File Number 0-17795
 
CIRRUS LOGIC, INC.
 
         
DELAWARE   2901 Via Fortuna, Austin, TX 78746   77-0024818
(State of incorporation)   (512) 851-4000   (I.R.S. ID)
 
Securities registered pursuant to Section 12(b) of the Act:
 
None
 
Securities registered pursuant to Section 12(g) of the Act:
 
Common Stock, $0.001 Par Value
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  YES o     NO þ
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YES o     NO þ
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.  YES þ     NO o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o     No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  YES o     NO þ
 
The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates was approximately $288 million based upon the closing price reported on the NASDAQ Global Select Market as of September 26, 2008. Stock held by directors, officers and stockholders owning 5% or more of the outstanding common stock were excluded as they may be deemed affiliates. This determination of affiliate status is not a conclusive determination for any other purpose.
 
As of May 27, 2009, the number of outstanding shares of the registrant’s Common Stock, $0.001 par value, was 65,263,588.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Certain information contained in the registrant’s proxy statement for its annual meeting of stockholders to be held July 24, 2009 is incorporated by reference in Part III of this Annual Report on Form 10-K.
 
 
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CIRRUS LOGIC, INC.
 
FORM 10-K
 
For The Fiscal Year Ended March 28, 2009
 
INDEX
 
                 
          3  
          8  
          17  
          17  
          18  
          19  
 
PART II
          20  
          23  
          23  
          34  
          36  
          68  
          68  
 
PART III
          69  
          69  
          69  
          69  
          69  
 
PART IV
          70  
            72  
               
       
Financial Certifications
       
 EX-23.1
 EX-31.1
 EX-31.2
 EX-32.1
 EX-32.2
 
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PART I
 
ITEM 1. 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 audio and energy markets. Building on our diverse analog mixed-signal patent portfolio, Cirrus Logic delivers highly optimized products for consumer and commercial audio, automotive entertainment and targeted industrial and energy-related applications. We develop ICs, board-level modules and hybrids for high-power amplifier applications branded as the Apex Precision Powertm line of products and 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 founded in 1984 and were reincorporated in the State of Delaware in February 1999. Our primary facility, housing engineering, sales and marketing, and administrative functions is located in Austin, Texas. In addition, we have an administrative and assembly facility in Tucson, Arizona, as well as sales locations 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.
 
We maintain a Web site with the address www.cirrus.com. We are not including the information contained on our Web site as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available free of charge through our Web site our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (the “SEC”). To receive a free copy of this Form 10-K, please forward your written request to Cirrus Logic, Inc., Attn: Investor Relations, 2901 Via Fortuna, Austin, Texas 78746, or via email at InvestorRelations@cirrus.com. In addition, the SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements filed electronically with the SEC by Cirrus Logic.
 
Background of the Semiconductor Industry
 
In general, the semiconductor industry produces three types of products: analog, digital and mixed-signal. Analog semiconductors process a continuous range of signals that can represent functions such as temperature, speed, pressure and sound. Digital semiconductors process information represented by discrete values, for example, 0s and 1s. Mixed-signal semiconductors combine analog and digital circuits in a single product.
 
The convergence and sophistication of our customers’ products, such as portable audio applications, as well as home and automotive entertainment devices, is made possible in part by advances in semiconductor technology. Manufacturers are attempting to differentiate their products based on offering new features and functionality to consumers, while at the same time shrinking product sizes, reducing power consumption, and lowering overall system costs.
 
Due to the extremely high costs involved in developing and operating a wafer fabrication facility, many semiconductor companies rely on third party foundries to manufacture their IC’s. The design of the analog component of a mixed-signal IC is particularly complex and difficult, and requires experienced engineers to optimize speed, power and resolution within standard manufacturing processes.
 
Markets and Products
 
We are focused on becoming a leader in analog and digital signal processing components for a broad range of audio and energy markets. We sell audio converters, audio interface devices, audio processors and audio amplification products. We also develop hybrids and modules for high-power applications. Our primary product lines include:
 
Audio Products: High-precision analog and mixed-signal components, as well as audio digital signal processor (“DSP”) products for consumer, professional and automotive entertainment markets.
 
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Energy Products: High-precision analog and mixed-signal components for energy-related applications, such as energy measurement, energy exploration and energy control systems. Energy products also include ICs, board-level modules and hybrids for high-power pulse width modulation (“PWM”) and power amplifier applications.
 
AUDIO PRODUCTS
 
We are a recognized leader in analog and mixed-signal audio converter and audio DSP products that enable today’s new consumer, professional and automotive entertainment applications. Our products include analog-to-digital converters (“ADCs”), digital-to-analog converters (“DACs”), chips that integrate ADCs and DACs into a single IC, otherwise known as coder-decoders (“CODECs”), digital interface ICs, volume controls and digital amplifiers, as well as audio DSPs for consumer electronics applications such as A/V receivers, digital TVs, and CobraNet ICs and modules for networked audio applications. Our broad portfolio of approximately 250 active proprietary products includes the following products, which have been added in the past fiscal year:
 
  §   The CS47048, an advanced 32-bit audio DSP with integrated audio converters. This product is an audio system-on-a-chip that targets automotive audio amplifier applications. By combining an advanced 32-bit audio DSP, high performance multichannel audio codec and a digital audio receiver/transmitter into a single IC, the CS47048 dramatically reduces overall board space requirements and system cost.
 
  §   The CS42L55, Cirrus Logic’s flagship audio codec for portable media devices that features patent-pending Class H technology, reduces power consumption by nearly 50 percent compared to current Class A/B amplification solutions and offers a strong overall combination of performance, feature integration and small size.
 
  §   The CS8422, a 24-bit, 192 kHz digital audio receiver with a low-jitter (noise reducing) PLL and integrated asynchronous sample rate converter. The CS8422 gives designers of consumer and professional audio applications a top-value solution for receiving a variety of incoming digital audio sources — such as from set top boxes, Blu-ray® Disc players and game consoles — and ensures audio quality is maintained throughout the entire signal processing chain from digital audio input to analog output.
 
  §   The CS4353, a 24-bit DAC for consumer electronics applications. The CS4353 marks significant progress in simplifying the design of analog output sections circuitry by reducing the need for multiple system components and lowering implementation costs.
 
  §   The CS49DV8, an eight-channel, dual-core 32-bit audio DSP featuring Dolby® Volume technology, allows consumers to set their TV and home theater volume to their preferred listening level and have it stay that way, regardless of the audio source. The CS49DV8 targets multichannel surround sound applications such as audio/video receivers, home theater-in-a-box applications, and speaker bars. Cirrus Logic also introduced other products that feature similar audio volume leveling technologies from companies such as SRS Labs and Audyssey.
 
Our products are used in a wide array of consumer applications, including audio/video receivers (“AVRs”), DVD players and recorders, complete home theater systems, set-top boxes, MP3 players, gaming devices, sound cards and digital televisions. Applications for products within professional markets include digital mixing consoles, multitrack digital recorders and effects processors. Applications for products within automotive markets include amplifiers, satellite radio systems, telematics and multi-speaker car-audio systems. In networked digital audio applications, our proprietary CobraNet controller ICs and modules enable delivery of uncompressed digital audio over Ethernet networks, co-existing with standard Ethernet network data traffic.
 
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ENERGY PRODUCTS
 
We provide high-precision analog and mixed-signal ICs for targeted energy control, energy measurement and energy exploration applications, as well as ICs, board-level modules, and hybrids from the Apex Precision Power brand of products for high-power PWM and power amplifier applications. We have more than 450 active proprietary products which include ADCs, DACs, linear amplifiers, PWM amplifiers and successive approximation register (“SAR”) converters and amplifier ICs. Our products are used in a wide array of high-precision, energy measurement applications including motor control, consumer utility, power measurement, energy exploration and high-power systems. New additions to our proprietary product portfolio in the past fiscal year include:
 
  §   The SA306 and SA57, the industry’s highest-current PWM ICs targeted at the fractional horsepower DC motor drive market. For the first time, designers can choose a single-packaged solution for driving three-phase brushless DC motors, or brush DC motors, in the <9 V to 60 V supply range. The ICs target motor control circuits used in industrial applications, such as factory and office automation, robotic controls, product handlers, as well as aircraft seating and positioning controls in the aerospace and military markets.
 
Longer term, we’re introducing our first power factor correction (“PFC”) chip. We have begun to demonstrate our PFC to key potential customers, and the feedback has been even more positive than we anticipated. This is a market that has been traditionally dominated by analog solutions. We believe that we bring unique digital signal processing technology to this market that will enable more efficient, smaller power supply products that eliminate the need for numerous passive components. Additionally, our PFC maintains high efficiency across the full range of load, which is a key differentiating factor going forward in this market.
 
Customers and Sales
 
We offer approximately 700 products to more than 2,500 end-customers worldwide through both direct and indirect sales channels. Our major customers are among the world’s leading electronics manufacturers. We target both large existing and emerging growth consumer electronic and energy markets that derive value from our expertise in advanced analog and mixed-signal design processing, systems-level integrated circuit engineering and embedded software development. We derive our sales both domestically and from a variety of locations across the world, including the People’s Republic of China, the European Union, Hong Kong, Japan, South Korea, Taiwan, and the United Kingdom.
 
Because the components we produce are largely proprietary and 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. During fiscal year 2009, our ten largest end customers represented approximately 36% of our sales. We had one end customer that purchased through multiple contract manufacturers and represented more than 15% of the Company’s total sales for fiscal year 2009. None of those contract manufacturers represented 10 percent or more of the Company’s sales for fiscal year 2009.
 
Manufacturing
 
As a fabless semiconductor company, we contract with third parties for wafer fabrication and nearly all of our assembly and test operations. The company owns a 54,000 square foot facility in Tucson, Arizona, which continues to serve as the assembly and test facility for its Apex Precision Power (“Apex”) product line. With the exception of these Apex products, our outsourced manufacturing strategy allows us to concentrate on our design strengths, minimize fixed costs and capital expenditures, while giving us access to advanced manufacturing facilities and provides the flexibility to source multiple leading-edge technologies through strategic relationships. After wafer fabrication by the foundry, third-party assembly vendors package the wafer die. The finished products are then sent for testing before shipment to our customers. We use multiple wafer foundries, assembly sources and test houses in the production of our inventory. Our supply chain management organization is responsible for the management of all aspects of the manufacturing, assembly, and testing of
 
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our products, including process and package development, test program development, and production testing of products in accordance with our ISO-certified quality management system.
 
Patents, Licenses and Trademarks
 
We rely on trade secret, patent, copyright and trademark laws to protect our intellectual property products and technology. We intend to continue this practice in the future to protect our products and technologies. As of March 28, 2009, we held 1,094 U.S. patents, 136 U.S. pending patent applications and various corresponding international patents and applications. Our U.S. patents expire in calendar years 2009 through 2027.
 
We have maintained U.S. federal trademark registrations for CIRRUS LOGIC with accompanied design, CIRRUS, CRYSTAL and APEX MICROTECHNOLOGY, as well as for our Cirrus Logic logo design. These U.S. registrations may be renewed as long as the marks continue to be used in interstate commerce. We have also filed or obtained foreign registration for these marks in other countries or jurisdictions where we conduct, or anticipate conducting, international business.
 
To complement our own research and development efforts, we have also licensed and expect to continue to license, a variety of intellectual property and technologies important to our business from third parties.
 
Research and Development
 
We concentrate our research and development efforts on the design and development of new products for each of our principal markets. We also fund certain advanced-process technology development, as well as other emerging product opportunities. Expenditures for research and development in fiscal years 2009, 2008, and 2007, were $44.3 million, $48.5 million, and $44.0 million, respectively. These amounts include amortization of acquired intangibles of $1.5 million, $1.4 million, and $0.3 million, in fiscal years 2009, 2008, and 2007, respectively. Our future success is highly dependent upon our ability to develop complex new products, to transfer new products to volume production in a timely fashion, to introduce them to the marketplace ahead of the competition and to have them selected for design into products of systems manufacturers. Our future success may also depend on assisting our customers with integration of our components into their new products, including providing support from the concept stage through design, launch and production ramp.
 
Competition
 
Markets for our products are highly competitive and we expect that competition will continue to increase. We compete with other semiconductor suppliers that offer standard semiconductors, application-specific standard product and fully customized ICs, including embedded software, chip and board-level products. Our strategy involves providing lower-cost versions of existing products and new, more advanced products for customers’ new designs.
 
While no single company competes with us in all of our product lines, we face significant competition in each of our major product lines. We expect to face additional competition from new entrants in our markets, which may include both large domestic and international IC manufacturers and smaller, emerging companies.
 
The principal competitive factors in our markets include time to market; quality of hardware/software design and end-market systems expertise; price; product benefits that are characterized by performance, features, quality and compatibility with standards; access to advanced process and packaging technologies at competitive prices; and sales and technical support, which includes assisting our customers with integration of our components into their new products and providing support from the concept stage through design, launch and production ramp.
 
Product life cycles vary greatly by product category. For example, many consumer electronic devices have shorter design-in cycles; therefore, our competitors have increasingly frequent opportunities to achieve design wins in next-generation systems. Conversely, this also provides us more frequent opportunities to displace competitors in products that have previously not utilized our design. The industrial and automotive markets typically have longer life cycles, which provide continued revenue streams over long periods of time.
 
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Sales, Marketing and Technical Support
 
Export sales, which include sales to customers with manufacturing plants outside the United States, were 68 percent of net sales in fiscal year 2009, and 62 percent in fiscal years 2008 and 2007. We maintain a worldwide sales force, which is intended to provide geographically specific support to our customers and specialized selling of product lines with unique customer bases.
 
Our domestic sales force includes a network of regional direct sales offices located in California, Florida, Massachusetts, Maryland, New Hampshire, Ohio, Nevada, and Texas. International sales offices and staff are located in France, Germany, Hong Kong, Shanghai in the People’s Republic of China, Singapore, South Korea, Taiwan, Japan and the United Kingdom. We supplement our direct sales force with external sales representatives and distributors. Our technical support staff is located in Texas and Arizona.
 
Backlog
 
Sales are made primarily pursuant to standard short-term purchase orders for delivery of standard products. The quantity actually ordered by the customer, as well as the shipment schedules, are frequently revised, without significant penalty, to reflect changes in the customer’s needs. We utilize backlog as an indicator to assist us in production planning. However, backlog is influenced by several factors including market demand, pricing and customer order patterns in reaction to product lead times. Quantities actually purchased by customers, as well as prices, are subject to variations between booking and delivery to reflect changes in customer needs or industry conditions. As a result, we believe that our backlog at any given time is an incomplete indicator of future sales.
 
Employees
 
As of March 28, 2009, we had 479 full-time employees, of whom 46 percent were engaged in research and product development activities, 36 percent in sales, marketing, general and administrative activities and 18 percent in manufacturing-related activities. Our future success depends, in part, on our ability to continue to attract, retain and motivate highly qualified technical, marketing, engineering and administrative personnel.
 
We have never had a work stoppage and none of our employees are represented by collective bargaining agreements. We consider our employee relations to be good.
 
Forward Looking Statements
 
This Annual Report on Form 10-K and certain information incorporated herein by reference contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities the Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included or incorporated by reference in this Annual Report on Form 10-K, other than statements that are purely historical, are forward-looking statements. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “estimates,” and “intend.” Variations of these types of words and similar expressions are intended to identify these forward-looking statements. Any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by our forward-looking statements are those discussed in Item 1A — Risk Factors and elsewhere in this report, as well as in the documents filed by us with the SEC, specifically the most recent reports on Form 10-Q and 8-K, each as it may be amended from time to time. These risks include, but are not limited to, the following:
 
  §   The impact of the current global financial crisis on our business, financial condition and results of operation;
 
  §   Market demand for semiconductors, particularly in the consumer entertainment market;
 
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  §   Shifts in industry-wide capacity that differ from our sales forecasts;
 
  §   Losses or significant reductions in orders from key customers;
 
  §   Our ability to timely introduce new products that gain market acceptance in a timely and cost-effective manner;
 
  §   Product liability claims based on a defect in a product containing a Cirrus part;
 
  §   Economic, social and political conditions in the countries in which Cirrus or its subcontractors operate, including possible disruptions in the fabrication, assembly, packaging, or testing of our products;
 
  §   Our ability to manage our current and future distribution channel relationships;
 
  §   Our ability to maintain or improve profit margins in an intensely competitive and cyclical industry;
 
  §   Our ability to obtain patents and licenses and to preserve our other intellectual property rights; and
 
  §   Our ability to attract, hire and retain qualified personnel.
 
Should one or more of the risks or uncertainties described above or elsewhere in this Form 10-K occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.
 
We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report, and we undertake no obligation to update this information to reflect events or circumstances after the filing of this report with the SEC, except as required by law. All forward-looking statements, expressed or implied, included in this Form 10-K and attributable to Cirrus are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we may make or persons acting on our behalf may issue. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.
 
Item 1A.  Risk Factors
 
Our business faces significant risks. The risk factors set forth below may not be the only risks that we face. Additional risks that we are not aware of yet or that currently are not significant may adversely affect our business operations. You should read the following cautionary statements in conjunction with the factors discussed elsewhere in this and other Cirrus Logic’s filings with the SEC. These cautionary statements are intended to highlight certain factors that may affect the financial condition and results of operations of Cirrus Logic and are not meant to be an exhaustive discussion of risks that apply to companies such as ours.
 
We may be adversely impacted by the recent global financial crisis. As a result, our financial results and the market price of our common shares may decline.
 
Recent global credit and financial markets have been experiencing extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, volatile energy costs, increases in unemployment rates, and uncertainty about economic stability. As a result, in the third quarter of fiscal year 2009, we experienced a significant slowdown in orders and we anticipate that these lower sales levels could continue for the foreseeable future. These conditions make it difficult for our customers, our suppliers and us to accurately forecast and plan future business activities, and could cause global businesses to defer or reduce spending on our products. During challenging economic times our customers and distributors may face issues gaining timely access to sufficient credit, which could impact their ability to make timely payments to us. If that were to occur, we may be required to increase our allowance for doubtful accounts and our days sales outstanding would increase.
 
We cannot predict the timing, strength or duration of any economic slowdown or subsequent economic recovery. If the economy or markets in which we operate continue to deteriorate, our business, financial condition and results of operations will likely be materially and/or adversely affected.
 
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We have historically experienced fluctuations in our operating results and expect these fluctuations to continue in future periods, which may result in volatility in our stock price.
 
Our quarterly and annual operating results are affected by a wide variety of factors that could materially and adversely affect our net sales, gross margins and operating results. If our operating results fall below expectations of market analysts or investors, the market price of our common stock could decrease substantially. We are subject to business cycles and it is difficult to predict the timing, length or volatility of these cycles. These business cycles may create pressure on our sales, gross margins and/or operating results.
 
Factors that could cause fluctuations and materially and adversely affect our net sales, gross margins and operating results include, but are not limited to:
 
  §   the volume and timing of orders received;
 
  §   changes in the mix of our products sold;
 
  §   market acceptance of our products and the products of our customers;
 
  §   competitive pricing pressures;
 
  §   our ability to introduce new products on a timely basis;
 
  §   the timing and extent of our research and development expenses;
 
  §   the failure to anticipate changing customer product requirements;
 
  §   disruption in the supply of wafers, assembly or test services;
 
  §   certain production and other risks associated with using independent manufacturers, assembly houses and testers; and
 
  §   product obsolescence, price erosion, competitive developments, and other competitive factors.
 
Our results may be affected by the fluctuation in sales in the consumer entertainment market.
 
Because we sell products in the consumer entertainment market, we are likely to be affected by seasonality in the sales of our products. Further, a decline in consumer confidence and consumer spending relating to economic conditions, terrorist attacks, armed conflicts, oil prices, global health conditions and/or the political stability of countries that we operate or sell into could have a material adverse effect on our business.
 
Because we do not have long-term agreements with our customers and generally do not have a significant backlog of unfilled orders, our sales and operating results in any quarter are difficult to forecast and are substantially dependent upon customer orders received and fulfilled in that quarter.
 
We do not have long-term purchase agreements with customers. Our customers generally place purchase orders for deliveries no more than three months in advance. These purchase orders generally have limited cancellation or rescheduling penalty provisions. Therefore, cancellations, reductions or delays of orders from any significant customer could have a material adverse effect on our business, financial condition and results of operations.
 
A significant portion of our sales and earnings in any quarter depends upon customer orders for our products that we receive and fulfill in that quarter. Because our expense levels are based in part on our expectations as to future revenue and to a large extent are fixed in the short term, we likely will be unable to adjust spending on a timely basis to compensate for any unexpected shortfall in sales. Accordingly, any significant shortfall of sales in relation to our expectations could hurt our operating results.
 
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Shifts in industry-wide capacity and our practice of purchasing our products based on sales forecasts may result in significant fluctuations in our quarterly and annual operating results.
 
We rely on independent foundries and assembly and test houses to manufacture, or provide components for, our products. Our reliance on these third parties involves certain risks and uncertainties. For example, shifts in industry-wide capacity from shortages to oversupply, or from oversupply to shortages, may result in significant fluctuations in our quarterly and annual operating results. We may order wafers and build inventory in advance of receiving purchase orders. Because our industry is highly cyclical and is subject to significant downturns resulting from excess capacity, overproduction, reduced demand, order cancellations, or technological obsolescence, there is a risk that we will forecast inaccurately and produce excess inventories of particular products.
 
In addition, we generally order our products through non-cancelable purchase orders from third-party foundries based on our sales forecasts, and our customers can generally cancel or reschedule orders they place with us without significant penalties. If we do not receive orders as anticipated by our forecasts, or our customers cancel orders that are placed, we may experience increased inventory levels.
 
Due to the product manufacturing cycle characteristic of IC manufacturing and the inherent imprecision in the accuracy of our customers’ forecasts, product inventories may not always correspond to product demand, leading to shortages or surpluses of certain products. As a result of such inventory imbalances, future inventory write-downs and charges to gross margin may occur due to lower of cost or market accounting, excess inventory, and inventory obsolescence.
 
We depend on a limited number of customers for a substantial portion of our sales, and the loss of, or a significant reduction in orders from, any key customer could significantly reduce our sales.
 
While we generate sales from a broad base of customers worldwide, the loss of any of our key customers, or a significant reduction in sales to any one of them, would significantly reduce our sales and adversely affect our business. For the twelve month period ending March 28, 2009, our ten largest customers represented approximately 36% of our revenues. For the twelve month period ending March 28, 2009, we had one end customer whose sales revenues represented more than 15% of the Company’s total revenues for the period.
 
We may not be able to maintain or increase sales to certain of our key customers for a variety of reasons, including the following:
 
  §   most of our customers can stop incorporating our products into their own products with limited notice to us and suffer little or no penalty;
 
  §   our agreements with our customers typically do not require them to purchase a minimum quantity of our products;
 
  §   many of our customers have pre-existing or concurrent relationships with our current or potential competitors that may affect the customers’ decisions to purchase our products;
 
  §   our customers face intense competition from other manufacturers that do not use our products; and
 
  §   our customers regularly evaluate alternative sources of supply in order to diversify their supplier base, which increases their negotiating leverage with us and their ability to obtain components from alternative sources.
 
These relationships often require us to develop new products that may involve significant technological challenges. Our customers frequently place considerable pressure on us to meet their tight development schedules. Accordingly, we may have to devote a substantial amount of resources to strategic relationships, which could detract from or delay our completion of other important development projects or the development of next generation products and technologies. Delays in development could impair our relationships with strategic customers and negatively impact sales of the products under development.
 
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Our products may be subject to average selling prices that decline over short time periods. If we are unable to increase our volumes, introduce new or enhanced products with higher selling prices or reduce our costs, our business and operating results could be harmed.
 
Historically in the semiconductor industry, average selling prices of products have decreased over time. If the average selling price of any of our products decline and we are unable to increase our unit volumes, introduce new or enhanced products with higher margins and/or reduce manufacturing costs to offset anticipated decreases in the prices of our existing products, our operating results may be adversely affected. In addition, because of procurement lead times, we are limited in our ability to reduce total costs quickly in response to any sales shortfalls. Because of these factors, we may experience material adverse fluctuations in our future operating results on a quarterly or annual basis.
 
Our failure to develop and timely introduce new products that gain market acceptance could harm our operating results.
 
Our success depends upon our ability to develop new products for new and existing markets, to introduce these products in a timely and cost-effective manner, and to have these products gain market acceptance. New product introductions involve significant risks. For example, delays in new product introductions or less-than-anticipated market acceptance of our new products are possible and would have an adverse effect on our sales and earnings. The development of new products is highly complex and, from time-to-time, we have experienced delays in developing and introducing these new products. Successful product development and introduction depend on a number of factors including, but not limited to:
 
  §   proper new product definition;
 
  §   timely completion of design and testing of new products;
 
  §   assisting our customers with integration of our components into their new products, including providing support from the concept stage through design, launch and production ramp;
 
  §   successfully developing and implementing the software necessary to integrate our products into our customers’ products;
 
  §   achievement of acceptable manufacturing yields;
 
  §   availability of wafer fabrication, assembly and test capacity;
 
  §   market acceptance of our products and the products of our customers; and
 
  §   obtaining and retaining industry certification requirements.
 
Both revenues and margins may be materially affected if new product introductions are delayed, or if our products are not designed into successive generations of our customers’ products. We may not be able to meet these challenges, or adjust to changing market conditions as quickly and cost-effectively as necessary to compete successfully. Our failure to develop and introduce new products successfully could harm our business and operating results.
 
Successful product design and development is dependent on our ability to attract, retain and motivate qualified design engineers, of which there is a limited number. Due to the complexity and variety of analog and high-precision analog and mixed-signal circuits, the limited number of qualified integrated circuit designers and the limited effectiveness of computer-aided design systems in the design of analog and mixed-signal ICs, we cannot provide assurances that we will be able to successfully develop and introduce new products on a timely basis.
 
Our products are complex and could contain defects, which could result in material costs to us.
 
Product development in the markets we serve is becoming more focused on the integration of multiple functions on individual devices. There is a general trend towards increasingly complex products. The greater integration of functions and complexity of operations of our products increases the risk that our customers or
 
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end users could discover latent defects or subtle faults after volumes of product have been shipped. This could result in, but are not limited to:
 
  §   damage to our reputation;
 
  §   a material recall and replacement costs for product warranty and support;
 
  §   payments to our customer related to the recall claims as a result of various industry or business practices, or in order to maintain good customer relationships;
 
  §   an adverse impact to our customer relationships by the occurrence of significant defects;
 
  §   a delay in recognition or loss of revenues, loss of market share, or failure to achieve market acceptance; and
 
  §   a diversion of the attention of our engineering personnel from our product development efforts.
 
In addition, any defects or other problems with our products could result in financial or other damages to our customers who could seek damages from us for their losses. A product liability claim brought against us, even if unsuccessful, would likely be time consuming and costly to defend. In particular, the sale of systems and components into certain applications for the automotive industry involves a high degree of risk that such claims may be made.
 
While we believe that we are reasonably insured against these risks and contractually limit our financial exposure, we cannot provide assurances that we will be able to obtain sufficient insurance, in terms of amounts or scope, to provide us with adequate coverage against all potential liability.
 
We have significant international sales, and risks associated with these sales could harm our operating results.
 
Export sales, principally to Asia, include sales to U.S-based customers with manufacturing plants overseas and represented 68 percent, 62 percent, and 62 percent of our net sales in fiscal years 2009, 2008, and 2007, respectively. We expect export sales to continue to represent a significant portion of product sales. This reliance on international sales subjects us to the risks of conducting business internationally, including risks associated with political and economic instability, global health conditions, currency controls, exchange rate fluctuations and changes in import/export regulations, tariff and freight rates, as well as the risks of natural disaster, especially in Asia. For example, the financial instability in a given region may have an adverse impact on the financial position of end users in the region, which could affect future orders and harm our results of operations. Our international sales operations involve a number of other risks including, but not limited to:
 
  §   unexpected changes in government regulatory requirements;
 
  §   changes to countries’ banking and credit requirements;
 
  §   changes in diplomatic and trade relationships;
 
  §   delays resulting from difficulty in obtaining export licenses for technology;
 
  §   tariffs and other barriers and restrictions;
 
  §   competition with non-U.S. companies or other domestic companies entering the non-U.S. markets in which we operate;
 
  §   longer sales and payment cycles;
 
  §   problems in collecting accounts receivable;
 
  §   political instability; and
 
  §   the burdens of complying with a variety of non-U.S. laws.
 
In addition, our competitive position may be affected by the exchange rate of the U.S. dollar against other currencies. Consequently, increases in the value of the dollar would increase the price in local currencies of
 
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our products in non-U.S. markets and make our products relatively more expensive. Alternatively, decreases in the value of the dollar will increase the relative cost of our and our vendors’ operations that are based overseas. We cannot provide assurances that regulatory, political and other factors will not adversely affect our operations in the future or require us to modify our current business practices.
 
We are subject to the export control regulations of the U.S. Department of State and the Department of Commerce. A violation of these export control regulations could have a material adverse effect on our business or our results of operations, cash flows, or financial position.
 
The nature of our international business, and in particular, the manufacture and sale of certain products from our Apex Precision Power Product line, subjects us to the export control regulations of the U.S. Department of State and the Department of Commerce. If these export control regulations are violated, it could result in monetary penalties and denial of export privileges. The government is very strict with respect to compliance and has served notice generally that failure to comply with these regulations may subject guilty parties to fines and/or imprisonment. Although we are not aware of any material violation of any export control regulations, a failure to comply with any of the above mentioned regulations could have a material adverse effect on our business.
 
Our failure to manage our distribution channel relationships could adversely affect our business.
 
The future of our business, as well as the future growth of our business, will depend in part on our ability to manage our relationships with current and future distributors and external sales representatives and to develop additional channels for the distribution and sale of our products. The inability to successfully manage these relationships could adversely affect our business.
 
Our international operations subject our business to additional political and economic risks that could have an adverse impact on our business.
 
In addition to export sales constituting a large portion of our net sales, we maintain international operations, sales and technical support personnel. We are also using contract manufacturers in Asia and Europe for foundry, assembly and test operations. International expansion has required, and will continue to require, significant management attention and resources. There are risks inherent in expanding our presence into non-U.S. regions, including, but not limited to:
 
  §   difficulties in staffing and managing non-U.S. operations;
 
  §   failure of non-U.S. laws to adequately protect our U.S. intellectual property, patent, trademarks, copyrights know-how and other proprietary rights;
 
  §   global health conditions and potential natural disasters;
 
  §   political and economic instability in international regions;
 
  §   international currency controls and exchange rate fluctuations;
 
  §   additional vulnerability from terrorist groups targeting American interests abroad; and
 
  §   legal uncertainty regarding liability and compliance with non-U.S. laws and regulatory requirements.
 
Because we depend on subcontractors internationally to perform key manufacturing functions for us, we are subject to political and economic risks that could disrupt the fabrication, assembly, packaging, or testing of our products.
 
We depend on third-party subcontractors, primarily in Asia, for the fabrication, assembly, packaging and testing of most of our products. International operations and sales may be subject to political and economic risks, including changes in current tax laws, political instability, global health conditions, currency controls, exchange rate fluctuations and changes in import/export regulations, tariff and freight rates, as well as the risks of natural disaster. Although we seek to reduce our dependence on any one subcontractor, this concentration of subcontractors and manufacturing operations subjects us to the risks of conducting business internationally,
 
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including associated political and economic conditions. If we experience manufacturing problems at a particular location, or a supplier is unable to continue operating due to financial difficulties or other reasons, we would be required to transfer manufacturing to a backup supplier. Converting or transferring manufacturing from a primary supplier to a backup fabrication facility could be expensive and could take as long as six to 12 months. As a result, delays in our production or shipping by the parties to whom we outsource these functions could reduce our sales, damage our customer relationships and damage our reputation in the marketplace, any of which could harm our business, results of operations and financial condition.
 
Strong competition in the semiconductor market may harm our business.
 
The IC industry is intensely competitive and is frequently characterized by rapid technological change, price erosion, technological obsolescence, and a push towards IC component integration. Because of shortened product life cycles and even shorter design-in cycles in a number of the markets that we serve, our competitors have increasingly frequent opportunities to achieve design wins in next-generation systems. In the event that competitors succeed in supplanting our products, our market share may not be sustainable and our net sales, gross margins and operating results would be adversely affected. Additionally, further component integration could eliminate the need for our products.
 
We compete in a number of fragmented markets. Our principal competitors in these markets include AKM, Analog Devices, Austriamicrosystems, Freescale Semiconductor, Infineon Technologies, Linear Technologies, Maxim, NXP Semiconductor, ON Semiconductor, Realtek, ST Micro, Teridian Semiconductor, Texas Instruments/Burr Brown and Wolfson Microelectronics-many of whom have substantially greater financial, engineering, manufacturing, marketing, technical, distribution and other resources, broader product lines, broader intellectual property portfolios and longer relationships with customers. We also expect intensified competition from emerging companies and from customers who develop their own IC products. In addition, some of our current and future competitors maintain their own fabrication facilities, which could benefit them in connection with cost, capacity and technical issues.
 
Increased competition could adversely affect our business. We cannot provide assurances that we will be able to compete successfully in the future or that competitive pressures will not adversely affect our financial condition and results of operations. Competitive pressures could reduce market acceptance of our products and result in price reductions and increases in expenses that could adversely affect our business and our financial condition.
 
We may be unable to protect our intellectual property rights.
 
Our success depends on our ability to obtain patents and licenses and to preserve our other intellectual property rights covering our products. We seek patent protection for those inventions and technologies for which we believe such protection is suitable and is likely to provide a competitive advantage to us. We also rely substantially on trade secrets, proprietary technology, non-disclosure and other contractual terms, and technical measures to protect our technology and manufacturing knowledge. We work actively to foster continuing technological innovation to maintain and protect our competitive position. We cannot provide assurances that steps taken by us to protect our intellectual property will be adequate, that our competitors will not independently develop or patent substantially equivalent or superior technologies or will not be able to design around our patents, or that our intellectual property will not be misappropriated. In addition, the laws of some non-U.S. countries may not protect our intellectual property as well as the laws of the United States.
 
Any of these events could materially adversely affect our business, operating results and financial condition. Policing infringement of our technology is difficult, and litigation may be necessary in the future to enforce our intellectual property rights. Any such litigation could be expensive, take significant time and divert management’s attention from other business concerns.
 
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Potential intellectual property claims and litigation could subject us to significant liability for damages and could invalidate our proprietary rights.
 
The IC industry is characterized by frequent litigation regarding patent and other intellectual property rights. We may find it necessary to initiate a lawsuit to assert our patent or other intellectual property rights. These legal proceedings could be expensive, take significant time and divert management’s attention from other business concerns. We cannot provide assurances that we will ultimately be successful in any lawsuit, nor can we provide assurances that any patent owned by us will not be invalidated, circumvented, or challenged. We cannot provide assurances that rights granted under our patents will provide competitive advantages to us, or that any of our pending or future patent applications will be issued with the scope of the claims sought by us, if at all.
 
As is typical in the IC industry, we and our customers have, from time to time, received and may in the future receive, communications from third parties asserting patents, mask work rights, or copyrights. In the event third parties were to make a valid intellectual property claim and a license was not available on commercially reasonable terms, our operating results could be harmed. Litigation, which could result in substantial cost to us and diversion of our management, technical and financial resources, may also be necessary to defend us against claimed infringement of the rights of others. An unfavorable outcome in any such suit could have an adverse effect on our future operations and/or liquidity.
 
If we fail to attract, hire and retain qualified personnel, we may not be able to develop, market, or sell our products or successfully manage our business.
 
Competition for highly qualified personnel in our industry is intense. The number of technology companies in the geographic areas in which we operate is greater than it has been historically and we expect competition for qualified personnel to intensify. There are only a limited number of people in the job market with the requisite skills. Our Human Resources organization focuses significant efforts on attracting and retaining individuals in key technology positions. For example, start-up companies generally offer larger equity grants to attract individuals from more established companies. The loss of the services of key personnel or our inability to hire new personnel with the requisite skills could restrict our ability to develop new products or enhance existing products in a timely manner, sell products to our customers, or manage our business effectively.
 
We may acquire other companies or technologies, which may create additional risks associated with our ability to successfully integrate them into our business.
 
We continue to consider future acquisitions of other companies, or their technologies or products, to improve our market position, broaden our technological capabilities and expand our product offerings. However, we may not be able to acquire, or successfully identify, the companies, products or technologies that would enhance our business.
 
In addition, if we are able to acquire companies, products or technologies, we could experience difficulties in integrating them. Integrating acquired businesses involves a number of risks, including, but not limited to:
 
  §   the potential disruption of our ongoing business;
 
  §   unexpected costs or incurring unknown liabilities;
 
  §   the diversion of management resources from other strategic and operational issues;
 
  §   the inability to retain the employees of the acquired businesses;
 
  §   difficulties relating to integrating the operations and personnel of the acquired businesses;
 
  §   adverse effects on the existing customer relationships of acquired companies;
 
  §   the potential incompatibility of business cultures;
 
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  §   adverse effects associated with entering into markets and acquiring technologies in areas in which we have little experience; and
 
  §   acquired intangible assets becoming impaired as a result of technological advancements, or worse-than-expected performance of the acquired company.
 
If we are unable to successfully address any of these risks, our business could be harmed.
 
Future transactions may limit our ability to use our net operating loss carryforwards.
 
As of March 28, 2009, we had U.S. federal tax net operating loss (“NOL”) carryforwards of approximately $473.9 million. These NOL carryforwards may be used to offset future taxable income and thereby reduce our U.S. federal income taxes otherwise payable. There is a risk we may not be able to generate taxable income in the future in the amount necessary to fully utilize all of these NOLs. Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), imposes an annual limit on the ability of a corporation that undergoes an “ownership change” to use its NOL carry forwards to reduce its tax liability. Due in part to potential changes in our stockholder base, we may at some point in the future experience an “ownership change” as defined in Section 382 of the Code. Accordingly, our use of the net operating loss carryforwards and credit carryforwards may be limited by the annual limitations described in Sections 382 and 383 of the Code.
 
Our stock price may be volatile.
 
The market price of our common stock fluctuates significantly. This fluctuation is the result of numerous factors, including, but not limited to:
 
  §   actual or anticipated fluctuations in our operating results;
 
  §   announcements concerning our business or those of our competitors, customers or suppliers;
 
  §   changes in financial estimates by securities analysts or our failure to perform as anticipated by the analysts;
 
  §   announcements regarding technological innovations or new products by us or our competitors;
 
  §   announcements by us of significant acquisitions, strategic partnerships, joint ventures, or capital commitment;
 
  §   announcements by us of significant divestitures or sale of certain assets or intellectual property;
 
  §   litigation arising out of a wide variety of matters, including, among others, employment matters and intellectual property matters;
 
  §   departure of key personnel;
 
  §   single significant stockholders selling for reasons unrelated to the business;
 
  §   general assumptions made by securities analysts;
 
  §   general conditions in the IC industry; and
 
  §   general market conditions and interest rates.
 
We have provisions in our charter, and are subject to certain provisions of Delaware law, which could prevent, delay or impede a change of control of our company. These provisions could affect the market price of our stock.
 
Certain provisions of our Certificate of Incorporation and By-Laws, and Delaware law could make it more difficult for a third party to acquire us, even if our stockholders support the acquisition. These provisions include, but are not limited to:
 
  §   the inability of stockholders to call a special meeting of stockholders;
 
  §   a prohibition on stockholder action by written consent; and
 
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  §   a requirement that stockholders provide advance notice of any stockholder nominations of directors or any proposal of new business to be considered at any meeting of stockholders.
 
We are also subject to the anti-takeover laws of Delaware that may prevent, delay or impede a third party from acquiring or merging with us, which may adversely affect the market price of our common stock.
 
ITEM 1B.  Unresolved Staff Comments
 
None.
 
ITEM 2.  Properties
 
As of May 1, 2009, 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 with lease terms that extend into calendar year 2012, excluding lease extension options, and 17,000 square feet of leased space at our failure analysis facility with lease terms that extend into calendar year 2013. We have subleased approximately 33,000 square feet of space at our Austin headquarters. The sublease extends into calendar year 2012.
 
As a result of our facilities consolidation activities, which began in fiscal year 1999 concurrent with the move of our headquarters from California to Texas, as of May 1, 2009, we do not have any leased space in California. We had one California facility, which consisted of approximately 90,000 square feet of leased office and engineering space, expire in April 2009. Further, during fiscal year 2009, we terminated another leased facility in Fremont, California that was approximately 80,000 square feet in size.
 
During fiscal year 2008, the Company acquired 100 percent of the voting equity interests in Apex. As a result of the acquisition, Cirrus owns a 54,000 square foot facility in Tucson, Arizona, which continues to serve as the assembly and test facility for the Apex product line.
 
We also continue to lease our former design facility in Boulder, Colorado following the move of the design activities to our headquarters in Austin, Texas. This design facility is approximately 12,000 square feet and has a lease that expires in calendar year 2010. We have subleased approximately 10,000 square feet of this office space and continue to actively pursue sublease tenants for the remaining space.
 
We currently do not anticipate difficulty in either retaining occupancy at any of our facilities through lease renewals prior to expiration or replacing them with equivalent facilities, and we believe that our existing facilities are suitable and adequate for our present purposes.
 
Below is a detailed schedule that identifies our occupied leased and owned property locations as of May 1, 2009 with various lease terms through calendar year 2013:
 
         
Design Centers
 
Sales Support Offices – USA
  Sales Support Offices – International
 
Austin, Texas
  Burlington, Massachusetts   Hong Kong, China
Tucson, Arizona
      Shanghai, China
        Tokyo, Japan
        Singapore
        Seoul, South Korea
        Taipei, Taiwan
        Buckinghamshire, United Kingdom
 
See Notes 7 and 10 of the Notes to Consolidated Financial Statements contained in Item 8 for further detail.
 
 
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ITEM 3.  Legal Proceedings
 
Derivative Lawsuits
 
On January 5, 2007, a purported stockholder filed a derivative lawsuit in the state district court in Travis County, Texas against current and former officers and directors of Cirrus Logic and against the Company, as a nominal defendant, alleging various breaches of fiduciary duties, conspiracy, improper financial reporting, insider trading, violations of the Texas Securities Act, unjust enrichment, accounting, gross mismanagement, abuse of control, rescission, and waste of corporate assets related to certain prior grants of stock options by the Company. Our response to the lawsuit was filed on April 20, 2007. On June 12, 2007, the state district court stayed the lawsuit until a final determination is reached in the District Court actions described below.
 
Two additional lawsuits arising out of the same claims have been filed in federal court in the United States District Court for the Western District of Texas — Austin Division. Between March 19, 2007, and March 30, 2007, two purported stockholders filed derivative lawsuits related to the Company’s prior stock option grants against current and former officers and directors of Cirrus Logic and against the Company, as a nominal defendant. The individual defendants named in these lawsuits overlap, but not completely, with the state suit. The lawsuits allege many of the causes of action alleged in the Texas state court suit, but also include claims for alleged violations of Section 10(b) of the Exchange Act and Rule 10b-5, violations of Section 14(a) of the Exchange Act and violations of Section 20(a) of the Exchange Act.
 
On July 16, 2007, the plaintiffs in the two federal cases filed a motion to voluntarily dismiss their claims in the federal court and indicated their intent to coordinate their efforts in the state district court case. After a hearing on the plaintiffs’ motion, the court denied the plaintiff’s motion and required the two purported stockholders to file a consolidated complaint in federal court. A consolidated complaint, including substantially similar allegations to the two previous complaints, was filed on October 11, 2007.
 
In response to the consolidated complaint, Cirrus Logic filed a motion to dismiss on November 15, 2007 based on the plaintiffs’ failure to make demand on the Board of Directors of Cirrus Logic (the “Board”) prior to filing this action (the “demand futility” motion). The plaintiffs filed their opposition to the motion on December 14, 2007. Cirrus Logic filed a reply brief on August 13, 2008, approximately eight months after the Court extended briefing deadlines to accommodate mediation discussions. On August 28, 2008, the Court denied Cirrus Logic’s demand futility motion.
 
On December 19, 2008, a Stipulation of Settlement (the “Original Stipulation”) between the parties was filed with the federal court. The Original Stipulation provided for the proposed settlement of all pending stockholder derivative lawsuits relating to the Company’s historical stock option granting practices. The terms of the settlement included: (1) the adoption by Cirrus Logic of a variety of corporate governance measures, including measures that relate to and address many of the underlying issues in the derivative lawsuits; (2) a release of claims against all defendants and the dismissal of the derivative lawsuits with prejudice; and (3) the payment by the Company’s Directors’ and Officers’ insurer of $2.85 million to the plaintiffs’ lawyers in payment in full of plaintiffs’ claims for attorney’s fees and expenses. As part of the Original Stipulation, the defendants denied any wrongdoing or liability against them as it relates to the claims and contentions alleged by the plaintiffs in the lawsuits. On December 30, 2008, the federal court denied the parties’ proposed stipulation.
 
On March 13, 2009, a Revised Stipulation of Settlement (the “Revised Stipulation”) was filed with the federal court. The Revised Stipulation modified the terms of the Original Stipulation to address the concerns of the Court raised in the Court’s denial of the Original Stipulation. Specifically, the terms of the Revised Stipulation include: (1) the extension of the term of the proposed corporate governance changes to seven years rather than four years, and the extension of governance changes specifically regarding stock options to remain in effect indefinitely, subject to stockholder approved changes after seven years; (2) a release of claims against all defendants and the dismissal of the derivative lawsuits with prejudice; (3) the payment by the Company’s Directors’ and Officers’ insurer of $2.85 million to the Company; and (4) the withdrawal by plaintiffs of any request for an award of their attorneys’ fees and expenses.
 
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On March 25, 2009, the Court preliminarily approved the settlement and scheduled a hearing for May 28, 2009, to consider whether to provide final approval of the settlement and enter judgment thereon.
 
At this stage of the litigation, we cannot predict the ultimate outcome and we do not think that any potential liability exists. Any potential proceeds, when received, will be recorded in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 5, “Accounting For Contingencies.”
 
Silvaco Data Systems
 
On December 8, 2004, Silvaco Data Systems (“Silvaco”) filed suit against us, and others, in Santa Clara County Superior Court (the “Court”), alleging misappropriation of trade secrets, conversion, unfair business practices, and civil conspiracy. Silvaco’s complaint stems from a trade secret dispute between Silvaco and a software vendor, Circuit Semantics, Inc., who supplied us with certain software design tools. Silvaco alleges that our use of Circuit Semantic’s design tools infringes upon Silvaco’s trade secrets and that we are liable for compensatory damages in the sum of $10 million. Silvaco has not indicated how it will substantiate this amount of damages and we are unable to reasonably estimate the amount of damages, if any.
 
On January 25, 2005, we answered Silvaco’s complaint by denying any wrong-doing. In addition, we filed a cross-complaint against Silvaco alleging breach of contract relating to Silvaco’s refusal to provide certain technology that would enable us to use certain unrelated software tools.
 
On July 5, 2007, the Court granted our motion for judgment on the pleadings, determining that all claims except for the misappropriation of trade secrets claims were pre-empted by trade secret law. On October 15, 2007, the Court granted our motion for summary judgment on the trade secret misappropriation claim because we presented undisputed evidence that Silvaco will be unable to prove that Cirrus misappropriated Silvaco’s trade secrets.
 
On February 12, 2008, we settled our cross-complaint against Silvaco, whereby Silvaco agreed to pay Cirrus $30,000 as full and final restitution of all claims that could have been alleged in the cross-complaint.
 
Based on these orders and the settlement of the cross-complaint, the Court entered judgment in our favor on Silvaco’s complaint and our cross-complaint on March 4, 2008. As a result of the favorable judgment, on May 16, 2008, the court awarded approximately $59,000 for our expenses in defending the suit.
 
On April 7, 2008, Silvaco filed a notice of appeal on these matters. We anticipate that the appeal will be heard by the Court of Appeal of the State of California, Sixth Appellate District in the last half of calendar year 2009.
 
At this stage of the litigation, we cannot predict the ultimate outcome and we are unable to estimate any potential liability we may incur.
 
Other Claims
 
From time to time, other various claims, charges and litigation are asserted or commenced against us arising from, or related to, contractual matters, intellectual property, employment disputes, as well as other issues. Frequent claims and litigation involving these types of issues are not uncommon in our industry. As to any of these claims or litigation, we cannot predict the ultimate outcome with certainty.
 
ITEM 4.  Submission of Matters to a Vote of Security Holders
 
None.
 
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PART II
 
ITEM 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Our Common Stock is traded on the NASDAQ Global Select Market under the symbol CRUS. The following table shows, for the periods indicated, the high and low sales prices for our Common Stock.
 
                 
   
High
   
Low
 
 
Fiscal year ended March 28, 2009
               
First quarter
         $ 7.63                 $ 5.50  
Second quarter
    6.55       4.46  
Third quarter
    5.95       2.28  
Fourth quarter
    4.35       2.16  
Fiscal year ended March 29, 2008
               
First quarter
    $ 8.93       $ 7.04  
Second quarter
    8.85       6.19  
Third quarter
    7.45       4.47  
Fourth quarter
    6.81       4.00  
 
As of May 26, 2009, there were approximately 915 holders of record of our Common Stock.
 
We have not paid cash dividends on our Common Stock and currently intend to continue a policy of retaining any earnings for reinvestment in our business.
 
On January 29, 2009, we announced that our Board authorized a share repurchase program of up to $20 million. The repurchases will be funded from existing cash and may be effected from time to time depending on general market and economic conditions and in accordance with applicable securities laws. No share repurchases under this program have occurred as of March 28, 2009. Our prior repurchase program, which was announced in January 2008 and authorized the repurchase of up to $150 million of our common stock, was completed in April 2008 for a total of $150 million with 24.5 million shares repurchased. All shares of our common stock that were repurchased under this program were cancelled as of June 28, 2008.
 
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Stock Price Performance Graph
 
The following graph and table show a comparison of the five-year cumulative total stockholder return, calculated on a dividend reinvestment basis, for Cirrus Logic, the S&P 500 Composite Index (the “S&P 500”), and the Semiconductor Subgroup of the S&P Electronics Index (the “S&P Semiconductors Index”).
 
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Cirrus Logic, Inc., The S&P 500 Index
And The S&P Semiconductors Index
(PERFORMANCE GRAPH)
 
  $100 invested on 3/31/04 in stock or index, including reinvestment of dividends.
Fiscal year ending March 31.
 
Copyright© 2009 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
 
Copyright© 2009 Standard & Poor’s, a division of The McGraw-Hill Companies Inc. All rights reserved.
(www.researchdatagroup.com/S&P.htm)
 
                                                     
 
    3/04     3/05     3/06     3/07     3/08     3/09      
 
 
                                                     
Cirrus Logic, Inc. 
    100.00       59.63       111.87       101.06       88.65       49.60      
S&P 500
    100.00       106.69       119.20       133.31       126.54       78.34      
S&P Semiconductors
    100.00       84.76       91.80       84.76       80.50       57.01      
 
Stockholder returns over the indicated periods should not be considered indicative of future stockholder returns.
 
The information in this Form 10-K appearing under the heading “Stock Price Performance Graph” is being “furnished” pursuant to Item 2.01(e) of Regulation S-K under the securities Act of 1933, as amended, and shall not be deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
 
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Equity Compensation Plan Information
 
The following table provides information about the Company’s common stock that may be issued upon the exercise of options, warrants and rights under all of the Company’s existing equity compensation plans as of March 28, 2009, including the Company’s 1987 Stock Option Plan, the 1989 Employee Stock Purchase Plan, the 1990 Directors’ Stock Option Plan, the 1996 Stock Plan, the 2002 Stock Option Plan, the 2006 Stock Incentive Plan, the Audio Logic 1992 Plan, the Peak Audio, Inc. 2001 Stock Plan, the LuxSonor Semiconductors, Inc. 1995 Stock Option Plan, the ShareWave, Inc. 1996 Flexible Stock Incentive Plan, the Stream Machine Company 1996 Stock Plan, the Stream Machine 2001 Stock Plan, and the Stream Machine Company non-statutory stock option grants made outside of a plan (in thousands, except per share amounts):
 
                         
    (A)     (B)     (C)  
                Number of Securities
 
                remaining available for
 
    Number of Securities
          future issuance under
 
    to be issued upon
    Weighted-average
    equity compensation
 
    exercise of
    exercise price of
    plans (excluding
 
    outstanding options,
    outstanding options,
    securities reflected in
 
    warrants, and rights     warrants, and rights     column (A))  
 
Equity compensation plans approved by security holders(1)
    6,519     $ 8.04       12,883   (2)
Equity compensation plans not approved by security holders(3)
    2,544     $ 5.96        
                         
Total
    9,063     $ 7.45       12,883  
                         
 
  1.   The Company’s stockholders have approved the Company’s 1989 Employee Stock Purchase Plan, the 1990 Directors’ Stock Option Plan, and the 2006 Stock Incentive Plan. The following plans were assumed by the Company at the time of acquisition, and Cirrus Logic stockholder approval was not required for these plans or their respective outstanding grants, as they were approved by the acquired companies stockholders: the LuxSonor Semiconductors, Inc. 1995 Stock Option Plan, the ShareWave, Inc. 1996 Flexible Stock Incentive Plan, the Stream Machine Company 1996 Stock Plan, and the Stream Machine Company non-statutory stock option grants made outside of a plan.
 
  2.   In addition to shares available for issuance under our 2006 Stock Incentive Plan, the number reported includes 58,338 shares available for grant under the 1990 Directors Stock Option Plan, which was suspended following the stockholder’s approval of the 2006 Stock Incentive Plan, and 778,685 shares available for issuance under the Company’s 1989 Employee Stock Purchase Plan. The 1989 Employee Stock Purchase Plan expired on May 26, 2009, and the 1990 Directors’ Stock Option Plan is set to expire on January 16, 2010. In addition, our board discontinued all future grants under the option plans we assumed in connection with our past acquisitions, including the LuxSonor Semiconductors, Inc. 1995 Stock Option Plan, the ShareWave, Inc. 1996 Flexible Stock Incentive Plan, and the Stream Machine Company 1996 Stock Plan, so shares under these plans have not been included in the total. Approximately 44,000 shares have been deducted from the 2006 available for grant options due to the 1.5 full value award multiplier applied to restricted stock awards.
 
  3.   In August 2002, the Board approved the 2002 Stock Option Plan, which permits awards of fair market value stock options to non-executive employees. As of July 2006, when our stockholders approved the adoption of the 2006 Stock Incentive Plan, we cancelled all remaining options available for grant under the 2002 Stock Option plan.
 
As of March 28, 2009, the Company was granting equity awards only under the 2006 Stock Incentive Plan.
 
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ITEM 6.  Selected Consolidated Financial Data
(Amounts in thousands, except per share amounts)
 
The information contained below should be read along with Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8 — Financial Statements and Supplementary Data.
 
                                         
    Fiscal Years  
    2009     2008     2007     2006     2005  
    (1)     (1)     (1)     (3)     (4)  
 
Net sales
    $  174,642       $  181,885       $ 182,304       $ 193,694       $ 194,900  
Net Income (loss)
    3,475       (5,846 )     27,895       52,426       (13,496 )
Basic earnings (loss) per share
    $  0.05       $     (0.07 )     $     0.32       $     0.61       $     (0.16 )
Diluted earnings (loss) per share
    $  0.05       $     (0.07 )     $     0.31       $     0.60       $     (0.16 )
Financial position at year end:
                                       
Cash, cash equivalents, restricted investments and marketable securities(2)
    $  120,232       $  187,498       $ 271,715       $ 243,468       $ 179,713  
Total assets
    209,496       298,306       353,060       319,041       262,810  
Working capital
    126,908       194,665       286,417       232,189       183,283  
Long-term obligations
    8,328       9,381       13,503       14,803       12,353  
Total stockholders’ equity(2)
    $  172,928       $  240,935       $ 304,937       $ 264,270       $ 203,206  
 
  1)  Refer to the consolidated financial statements and the Notes thereto contained within this Form 10-K for fiscal years 2007, 2008, and 2009 for an expanded discussion of factors which materially affect the comparability of the information reflected in the selected consolidated financial data presented above.
 
  2)  The reduction in cash, cash equivalents, restricted investments, and marketable securities, as well as total stockholders equity, in fiscal years 2008 and 2009 is primarily attributable to the completion of a $150 million stock repurchase program, which commenced in late fiscal year 2008 and was completed in April 2008 or fiscal year 2009.
 
  3)  Net income in fiscal year 2006 was favorably impacted by a $24.8 million litigation settlement, a $7.0 million gain from a license agreement amendment, and $2.3 million in restructuring related activities.
 
  4)  Net income for fiscal year 2005 was impacted by a $9.5 million restructuring charge associated with the sale of the digital video product line assets and a $20.8 million release of various tax reserves.
 
ITEM 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included elsewhere in this Form 10-K. Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. Actual results could differ materially because of the factors discussed in Part I, Item 1A. “Risk Factors” of this Form 10-K.
 
Overview
 
We were incorporated in California in 1984, became a public company in 1989 and were reincorporated in the State of Delaware in February 1999. Through most of our corporate existence, we provided ICs for personal computer applications, including personal computer (“PC”) graphics and storage. In 2001, we refocused our business efforts away from these areas, which we believed had become commodity-like in terms of pricing and offered diminished opportunities for sustained product differentiation and profitability. We reinforced our commitment to operate efficiently and profitably by taking strategic actions beginning in 2005 to improve our top and bottom line growth, including: (1) improving efficiencies by focusing on our product lines including mixed-signal audio, audio DSP, and energy products, (2) divesting ourselves of our digital
 
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video product line assets and non-core products to focus on our core strengths, and (3) enhancing our capital structure by completing a $150 million stock repurchase program in fiscal year 2008 to increase long-term stockholder value. We continued this process in fiscal year 2009 with focusing on winning new designs, growing our market share in portable audio products in particular, and by laying the foundation for growth in our DSP and energy products.
 
The credit market crisis and other macro-economic challenges currently affecting the global economy impacted both the semiconductor industry and our own results of operations in fiscal year 2009. The recession reduced both business and consumer spending, which impacted sales of end-user products that incorporate our components. Consequently, for fiscal year 2009 net sales were down approximately 4 percent from the preceding year. However, our strength in revenue from new products and prudent expense management were key drivers in the Company maintaining bottom-line profitability for the year as a whole while establishing a solid base for future growth. Additionally, in the fourth quarter of fiscal year 2009, we announced a $20 million stock repurchase program. No share repurchases under this program have occurred as of March 28, 2009.
 
During fiscal year 2008, we acquired 100 percent of the outstanding stock of Apex for a purchase price of approximately $42.8 million, consisting primarily of cash and direct acquisition costs. Apex designs and produces integrated circuits, hybrids and modules used in a wide range of industrial and aerospace applications that require high-power precision analog products, such as PWM’s and power amplifiers. These precision amplifiers are used for driving motors and piezoelectric devices, programmable power supplies and other devices requiring high power and precision control. In fiscal year 2008 we took additional steps to improve our competitive cost structure. First, we committed to a plan to close Caretta Integrated Circuits (“Caretta”), a subsidiary based in Shanghai, China. We also made a strategic decision to further streamline our organization structure which resulted in an additional headcount reduction of 61 employees. Finally, on January 30, 2008, we announced that our Board authorized a share repurchase program of up to $150 million. The Company completed this share repurchase program on April 28, 2008 and purchased a total of 24.5 million shares, or approximately 28% of the total number of shares outstanding prior to the program. All shares of our common stock that were repurchased were cancelled as of June 28, 2008.
 
Results of Operations
 
The following table summarizes the results of our operations for each of the past three fiscal years as a percentage of net sales. All percentage amounts were calculated using the underlying data in thousands:
 
                         
    Fiscal Years Ended  
    March 28,
    March 29,
    March 31,
 
    2009     2008     2007  
 
Net sales
      100 %       100 %       100 %
Gross margin
    56 %     57 %     60 %
Research and development
    26 %     27 %     24 %
Selling, general and administrative
    26 %     29 %     29 %
Restructuring costs and other, net
    %     6 %     1 %
Impairment of non-marketable securities
    %     2 %     2 %
Acquired in process research and development
    %     1 %     1 %
Provision for litigation expenses
    1 %     %     %
Impairment of intangible assets
    1 %     %     %
                         
Income (loss) from operations
    2 %     (8 %)     3 %
Realized gain on marketable securities
    %     %     %
Interest income
    2 %     7 %     7 %
Other income (expense), net
    %     %     %
                         
Income (loss) before income taxes
    4 %     (1 %)     10 %
Provision (benefit) for income taxes
    2 %     2 %     (5 %)
                         
Net income (loss)
    2 %     (3 %)     15 %
                         
 
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Net Sales
 
Commencing with fiscal year 2009, we report sales in two product categories: audio products and energy products. The energy product category had previously been referred to as “industrial,” but has been revised to reflect our focus on integrated circuits designed for a variety of energy exploration, measurement and control applications. Revenue in the new energy product line category includes certain product revenue such as ARM and Communication that is not an ongoing focus or typically considered an energy related product. Our sales by product line is as follows (in thousands):
 
                         
    March 28,
    March 29,
    March 31,
 
    2009     2008     2007  
 
Audio products
  $ 97,293     $ 100,097     $ 105,913  
Energy products
    77,349       81,788       76,391  
                         
Total
  $  174,642     $  181,885     $  182,304  
                         
 
Net sales for fiscal year 2009 decreased 4 percent, to $174.6 million from $181.9 million in fiscal year 2008. The drop in net sales reflects a $4.4 million decrease in energy product sales and a $2.8 million decrease in audio product sales. Within the energy product group, sales decreases were primarily attributable to seismic, industrial A/D converters and amplifiers, communications, and ARM processor-based products. These decreases were partially offset by an increase in Apex Precision Power product sales, primarily attributable to a full years contributions in fiscal year 2009, as Apex was acquired by the Company on July 24, 2007. The audio products group experienced substantial growth from its’ portable products, which were partially offset by decreases in DAC and ADC product sales.
 
Net sales for fiscal year 2008 were $181.9 million, virtually unchanged versus sales of $182.3 million in fiscal year 2007. Fiscal year 2008 net sales were impacted by a contribution of $12.6 million from Apex Precision Power products, which were acquired by the Company on July 24, 2007, and by a $9.1 million increase in sales of portable products from our audio product line. These sales increases were offset by unfavorable sales variances from various products within the audio and energy product lines. In particular, DAC, interface, and ADC products within the audio products group experienced sales reductions in fiscal year 2008 versus fiscal year 2007, while seismic and communications products incurred unfavorable sales variances within the energy product group.
 
Export sales, principally to Asia, including sales to U.S.-based customers with manufacturing plants overseas, were approximately $119.5 million in fiscal year 2009, $112.5 million in fiscal year 2008, and $112.8 million in fiscal year 2007. Export sales to customers located in Asia were 48 percent of net sales in fiscal year 2009, 40 percent of net sales in fiscal year 2008, and 44 percent of net sales in fiscal year 2007. All other export sales represented 20 percent, 22 percent, and 18 percent of net sales in fiscal years 2009, 2008, and 2007, respectively.
 
Our sales are denominated primarily in U.S. dollars. During fiscal years 2009, 2008, and 2007, we did not enter into any foreign currency hedging contracts.
 
Sales to Avnet, Inc., our largest distributor, represented 33 percent, 27 percent, and 29 percent of net sales in fiscal years 2009, 2008, and 2007, respectively. The increase in sales to Avnet from fiscal year 2008 to fiscal year 2009 is partially related to Avnet’s acquisition of Azzurri Technology Ltd., a former distributor for Cirrus Logic, early in fiscal year 2009. We had one end customer whose sales revenues represented more than 15% of the Company’s net sales for the fiscal year ending March 28, 2009, while sales to our ten largest customers represented approximately 36% of our revenues. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2009, 2008, or 2007. The loss of a significant customer or a significant reduction in their orders could have an adverse affect on our sales.
 
Gross Margin
 
Gross margin was 56 percent in fiscal year 2009, down from 57 percent in fiscal year 2008. The decrease in margin from fiscal year 2008 was mainly due to changes in both customer and product mix. The audio product group experienced a reduction in margin from fiscal year 2008 to fiscal year 2009, which was partially
 
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offset by an increase in energy product margin for this same period. The sale of product that had been written down in prior fiscal years contributed approximately $1.6 million, or 0.9 percent, to gross margin compared to contribution of approximately $1.1 million, or 0.6 percent, in fiscal year 2008. In total, excess and obsolete inventory charges decreased by $1.4 million from fiscal year 2008, which increased gross margin by 0.8 percentage points.
 
Gross margin was 57 percent in fiscal year 2008, down from 60 percent in fiscal year 2007. The decrease in margins from fiscal year 2007 was mainly due to changes in both customer and product mix. Both the audio product group margin and energy product group margin experienced slight decreases in fiscal year 2008 versus fiscal year 2007. The sale of product that had been written down in prior fiscal years contributed approximately $1.1 million, or 0.6 percent, to gross margin compared to contribution of approximately $1.9 million, or 1.0 percent, in fiscal year 2007. In total, excess and obsolete inventory charges increased by $0.4 million from fiscal year 2007, which decreased gross margin by 0.2 percentage points.
 
Research and Development Expenses
 
Fiscal year 2009 research and development expenses decreased $4.2 million from fiscal year 2008. The decrease was primarily due to a decrease in product development expenses of $1.9 million, as a result of lower mask expenses and engineering wafer costs. In addition, salary and benefit costs associated with research and development personnel decreased by $1.5 million. Finally, non-recurring engineering worked performed and billed to third parties resulted in an additional $0.7 million reduction in research and development expenses.
 
Fiscal year 2008 research and development expenses increased $4.5 million from fiscal year 2007. Depreciation and amortization charges increased $2.2 million, substantially due to the acquisition of Apex on July 24, 2007, and also due to the acquisition of certain assets from Tripath Technologies, Inc. for $3.5 million in the first quarter of fiscal year 2008. Salary and benefits costs increased by $1.3 million, largely attributable to the acquisition of Apex. Finally, product development expenses increased by $0.9 million due to higher spending for outsourced firmware, engineering test time, and tape outs.
 
Selling, General and Administrative Expenses
 
Selling, general and administrative expenses decreased $8.3 million in fiscal year 2009, or 15 percent, compared to fiscal year 2008. The decrease was primarily attributable to a $3.7 million reduction in professional expenses caused by the absence of fees associated with the internal stock option investigation performed in fiscal year 2008 and the reduction in Silvaco lawsuit expenses. See also Part 1 — Item 3 “Legal Proceedings” for additional discussion regarding the Silvaco Data Systems lawsuit. Commission expense decreased $1.2 million due primarily to lower sales and fluctuations in commissionable product mix in fiscal year 2009 versus fiscal year 2008. Salaries and benefits costs were $1.5 million lower in fiscal year 2009 versus fiscal year 2008, primarily due to reduced headcount and other associated employee costs. Finally, occupancy costs in fiscal year 2009 were $0.9 million lower than in fiscal year 2008, primarily due to the termination of a lease in Fremont, California.
 
Selling, general and administrative expenses increased $1.8 million in fiscal year 2008 compared to fiscal year 2007, largely due to a $2.9 million increase in professional expenses, primarily legal fees attributable to the SEC stock option investigation and the Silvaco lawsuit. These increases were partially offset by reductions in fees attributable to our internal stock option investigation expenses incurred in fiscal year 2007.
 
Restructuring Costs and Other, net
 
During fiscal year 2008, we recorded net restructuring charges of $10.5 million as a separate line item on the statement of operations in operating expenses under the caption “Restructuring costs and other, net.” This net charge was comprised primarily of two separate steps taken to improve our competitive cost structure. First, we committed to a plan to close Caretta, a subsidiary based in Shanghai, China. This action eliminated approximately 30 positions in China during the Company’s fourth fiscal quarter, and resulted in the Company recording primarily a non-cash charge for the assets and goodwill related to Caretta of $10.2 million, as well as $0.9 million in cash payments for the affected employees. Also in the fourth quarter of fiscal year 2008, we
 
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reduced headcount by 61 employees. The restructuring charge associated with this activity amounted to $0.9 million, and were primarily related to employee severance costs. Also in fiscal year 2008, in connection with the expiration of a lease agreement in Fremont, California in December 2007, we recorded a $1.5 million reduction to the fiscal year 2004 and 2006 restructuring liabilities to reduce the accrual to the estimated final settlement amounts. See also Note 10 - Restructuring Costs and Other of the Notes to Consolidated Financial Statements contained in Item 8 for additional discussion on these restructuring activities.
 
During fiscal year 2007, we recorded restructuring charges of $1.0 million to operating expenses primarily related to the transition of design activities from our Boulder, Colorado office to our headquarters in Austin, Texas. The restructuring costs for the closure of the Boulder design center were composed of $0.7 million in severance and relocation costs and $0.3 million in facility related charges. Approximately 20 employees were affected by this action, five of whom relocated to our Austin headquarters.
 
As of March 28, 2009, we have a remaining restructuring accrual for all of our past restructurings of $2.0 million, primarily related to future lease payments net of anticipated subleases that will be paid over the respective lease terms through fiscal year 2013. We have classified $0.9 million of this restructuring accrual as long-term.
 
Impairment of Non-Marketable Securities
 
During the second quarter of fiscal year 2008, we determined an impairment indicator existed related to our remaining cost method investment in Magnum Semiconductor, Inc. (“Magnum”), as Magnum had received additional capital funding from other sources, and our portion of the investment was diluted. We performed a fair value analysis of our cost method investment in Magnum in accordance with Emerging Issues Task Force No. 03-1 (“EITF 03-1”), “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” Based on the results of the analysis on September 29, 2007, we recognized an impairment of $3.7 million to reduce the carrying value of the Magnum cost method investment to zero. The impairment was recorded as a separate line item on the statement of operations in operating expenses under the caption “Impairment of non-marketable securities.”
 
We previously determined, during the fourth quarter of fiscal year 2007, an impairment indicator existed related to our cost method investment in Magnum. We obtained an independent valuation of the fair value of our cost method investment in Magnum in accordance with EITF 03-1. Based on the results of the independent valuation, at March 31, 2007, we recognized an impairment of $4.3 million to reduce the carrying value of the Magnum cost method investment to $3.7 million. The impairment was recorded as a separate line item on the statement of operations in operating expenses under the caption “Impairment of non-marketable securities.” For more details regarding our investment in Magnum, please see Note 4 — Non-Marketable Securities of the Notes to Consolidated Financial Statements contained in Item 8.
 
Acquired In-Process Research and Development
 
On July 24, 2007, we acquired 100 percent of the outstanding stock of Apex. The results of Apex’s operations have been included in our consolidated financial statements since the acquisition date. We acquired Apex for a purchase price of approximately $42.8 million, consisting primarily of cash and direct acquisition costs. Approximately $1.8 million of the purchase price was allocated to in-process research and development and was included in total operating expenses on the consolidated statement of operations under the caption “Acquired in process research and development.” Of the remaining purchase price, $21.2 million was allocated to acquired intangible assets, $16.9 million was allocated to identified assets including fixed assets, accounts receivable, and inventory, $6.2 million was allocated to goodwill, and $3.3 million was allocated to net liabilities assumed. In fiscal year 2009, a refund of $0.2 million related to income taxes was received, which reduced goodwill to $6.0 million.
 
During fiscal year 2007, we acquired 100 percent of the voting equity interests in Caretta, a company based in Shanghai, China that specialized in designing power management integrated circuits for the single-cell lithium ion battery market. In allocating the $11.3 million purchase price, we immediately recognized an expense of $1.9 million for research and development that was defined as “in-process” at the time of
 
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acquisition. This charge is included in total operating expenses on the consolidated statement of operations under the caption “Acquired in process research and development.” Of the remaining purchase price, $4.1 million was allocated to acquired technology, $6.5 million was allocated to goodwill and $1.2 million was allocated to net liabilities assumed. Due to the closure of this office, all technology and goodwill was written off in the fourth quarter of fiscal year 2008. See Note 10 — Restructuring Costs and Other of the Notes to Consolidated Financial Statements contained in Item 8 for further discussion.
 
Provision For Litigation Expenses
 
During the second quarter of fiscal year 2009, we recognized a $1.8 million charge related to previously incurred and current legal fees and expenses associated with our ongoing derivative lawsuits. Approximately $0.8 million of those costs were capitalized in “Other current assets” on the consolidated balance sheets as of March 29, 2008. Based on a proposed settlement of the derivative lawsuits in December 2008, the Company believed that it was more likely than not that previously incurred and current legal fees and expenses of $1.8 million related to this matter would not ultimately be recovered under the Company’s Directors and Officers insurance policy and should be expensed. The charge was recorded as a separate line item on the consolidated statement of operations in operating expenses under the heading “Provision for litigation expenses,” with a corresponding reduction in “Other current assets.” Additional costs were incurred throughout fiscal year 2009 related to this matter resulting in a cumulative amount of $2.2 million in provisions for litigation expenses as of March 28, 2009. On December 19, 2008, the initial Stipulation of Settlement (the “Original Stipulation”) between the parties with respect to the derivative lawsuit was filed with the federal court. On December 30, 2008, the federal court denied the parties’ proposed stipulation. On March 13, 2009, a Revised Stipulation of Settlement (the “Revised Stipulation”) was filed with the federal court. The Revised Stipulation modified the terms of the Original Stipulation to address the concerns of the Court raised in the Court’s denial of the Original Stipulation. On March 25, 2009, the Court preliminarily approved the settlement and scheduled a hearing for May 28, 2009, to consider whether to provide final approval of the settlement and enter judgment thereon. The ultimate disposition of the case may result in additional financial consequences, which we are unable to predict at this time, and any such adjustments will be recorded in accordance with FASB No. 5, “Accounting for Contingencies.” See Note 8, Legal Matters, to the Consolidated Financial Statements for additional information.
 
Impairment of Intangible Assets
 
In the fourth quarter of fiscal year 2009, we noted several impairment indicators surrounding our patents acquired from Tripath in June, 2007. We performed an impairment analysis under Statement of Financial Accounting Standard No. 144 (“SFAS No. 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets,” and noted that the undiscounted cash flows estimated to be generated from these patents were less than the carrying amount of the assets. We then compared the estimated fair value of these assets to their carrying amount and recognized an impairment loss of $2.1 million. These assets have a remaining carrying value of $0.2 million at March 28, 2009. The impairment was recorded as a separate line item on the statement of operations in operating expenses under the caption “Impairment of intangible assets.”
 
Realized Gain on Marketable Securities
 
During the first quarter of fiscal year 2007, we sold all of our shares in Prudential Financial Inc. (“Prudential”) and realized a gain of $0.2 million. We received these shares as we were a policy holder at the time of Prudential’s demutualization.
 
Interest Income
 
Interest income in fiscal years 2009, 2008, and 2007 was $2.8 million, $12.1 million, and $13.1 million respectively. The decrease in interest income in fiscal year 2009 compared to fiscal years 2008 and 2007 was attributable to two factors: to lower average cash and cash equivalent balances on which interest was earned, principally attributable to the cash requirements associated with the Company’s common stock repurchases occurring in the fourth quarter of fiscal year 2008 and the first quarter of fiscal year 2009; and also to lower
 
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yields on invested capital. On January 28, 2008 our Board of Directors authorized a share repurchase program of up to $150 million. The Company completed the stock repurchase program on April 28, 2008, for a total of $150 million with 24.5 million shares repurchased.
 
Income Taxes
 
We recorded an income tax provision of $2.7 million in fiscal year 2009 on a pre-tax income of $6.2 million, yielding an effective tax rate of 44 percent. Our effective tax rate was higher than the U.S. statutory rate of 35 percent primarily due to a $2.7 million charge to tax expense in the fourth quarter of fiscal year 2009 to increase the valuation allowance on our U.S. deferred tax assets. This increase in the valuation allowance was based on an evaluation of the net U.S. deferred tax assets we expect to utilize in the upcoming year as a result of projected tax basis net income.
 
We recorded an income tax provision of $3.0 million in fiscal year 2008 on a pre-tax loss of $2.8 million, yielding an effective tax rate of 109 percent. Our effective tax rate was higher than the U.S. statutory rate of 35 percent primarily due to a $4.6 million charge to tax expense to increase the valuation allowance on our U.S. deferred tax assets.
 
In fiscal year 2007, we released $7.8 million of the valuation allowance that had been placed on our U.S. deferred tax assets. This release was based on our history of utilizing deferred tax assets and our expectation to do so again in fiscal year 2008. We recorded an income tax benefit of $8.4 million in fiscal year 2007 on pre-tax income of $19.5 million, yielding an effective tax benefit rate of 43.1 percent. Our effective tax rate was lower than the U.S. statutory rate of 35 percent primarily as a result of the realization of deferred tax assets that had been fully reserved and the release of a portion of the valuation allowance on certain deferred tax assets that have not yet been utilized. Our effective tax rate also reflected a nonrecurring tax benefit of $0.7 million that was generated by the reversal of prior year non-U.S. tax liabilities due to the expiration of statutes of limitations for the years in which certain potential non-U.S. tax liabilities had existed.
 
We evaluate the realizability of the deferred tax assets on a quarterly basis. We have deferred tax assets generated in non-U.S. jurisdictions that we have recognized since it is more likely than not that these assets will be realized.
 
Outlook
 
The credit market crisis and other macro-economic challenges currently affecting the global economy impacted both the semiconductor industry and our own results of operations in fiscal year 2009. Global business and consumer spending decreased, resulting in lower end user demand for our products — particularly during the third and fourth quarters of fiscal year 2009. In turn, our customers reacted to the lower end user demand by reducing their orders for many of our products. Since we cannot predict the severity, duration or precise impact of the economic downturn on our future financial results, our reported results for the fourth quarter and fiscal year 2009 may not be indicative of our future results. Our outlook for fiscal year 2010 reinforces our commitment to drive to consistent operating profitability exclusive of any unusual, non-recurring events, such as acquisitions, divestures, impairments, or litigation events. Given current indicators, we expect to maintain operating profitability, exclusive of unforeseen events or a further deterioration in the macro economic environment, by achieving design wins and market share growth and continuing to focus on developing outstanding analog and digital signal processing components for the audio and energy markets. We remain committed to being a profitable company and utilizing our engineering and intellectual property resources to achieve growth.
 
We are focused on building a leadership position in our audio and energy product lines. We believe that we will continue to build on our success in portable audio applications, as we focus on expanding our market reach to include smart phone applications. In addition, we have new products that support home audio applications, such as sound bars, as well as new automotive audio applications. During fiscal year 2009, we also launched new energy products which provide new market opportunities related to motor control. We look to expand our reach into the smart energy markets, as we begin sampling new power factor correction products this year.
 
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Overall, we believe that we are well positioned to face the challenges presented by the current economic environment, but future sales, costs, margins, profits and profitability are all influenced by numerous factors, all of which are inherently difficult to forecast. Please refer to Item 1A — Risk Factors for additional information on these factors.
 
Liquidity and Capital Resources
 
In fiscal year 2009, our operating activities generated $23.1 million in cash. The positive cash flow from operating activities is predominantly due to the cash components of our net income as well as a $9.3 million decrease in accounts receivable and a $2.7 million decrease in inventory, which were partially offset by a $6.3 million decrease in accounts payable and a $4.3 million decrease in other accrued liabilities. In fiscal year 2008, our operating activities generated $31.4 million in cash. The positive cash flow from operating activities was predominantly due to the cash components of our net loss as well as a $4.9 million increase in accounts payable, a $2.3 million increase in other accrued liabilities, and a $2.3 million increase in deferred revenue. These increases were partially offset by a $3.3 million increase in inventories and a $1.7 million decrease in accrued salaries and benefits. In fiscal year 2007, our operating activities generated $35.6 million in cash. The positive cash flow from operating activities was predominantly due to the cash components of our net income as well as a $2.4 million and $2.2 million decrease in inventories and accounts receivable, respectively. These increases were partially offset by a $3.7 million decrease in accounts payable.
 
In fiscal year 2009, we generated approximately $36.5 million in cash from investing activities, principally due to the net sale of $41.8 million in marketable securities. In addition, during fiscal year 2009 we invested $3.1 million in property, equipment, and capitalized software and $2.1 million in technology. In fiscal year 2008, we generated approximately $2.9 million in cash from investing activities, principally due to the net sale of $53.4 million in marketable securities, substantially offset by our purchase of Apex for approximately $42.8 million, net of cash acquired. In addition, during fiscal year 2008 we invested $3.8 million and $3.7 million in technology and property, equipment, and capitalized software, respectively. In fiscal year 2007, we used approximately $71.5 million in cash for investing activities. This was principally due to the net purchase of $56.7 million in marketable securities and our purchase of Caretta for approximately $10.7 million, net of cash acquired. In addition, during fiscal year 2007 we invested $3.3 million and $2.0 million in technology and property, equipment, and capitalized software, respectively.
 
During fiscal years 2009, 2008, and 2007, we generated $2.6 million, $5.6 million and $7.2 million, respectively, in cash from financing activities related to the receipt of cash from common stock issuances as a result of the exercises of employee stock options and our employee stock purchase plan. During the first quarter of fiscal year 2009, the Company utilized approximately $87.2 million in cash to repurchase and retire portions of its outstanding common stock, as previously discussed in Part II — Item 5 — Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. During the fourth quarter of fiscal year 2008, the Company utilized approximately $71.1 million in cash to repurchase and retire portions of its outstanding common stock under this same stock repurchase program.
 
As of March 28, 2009, we had restricted investments of $5.8 million, which primarily secures certain obligations under our lease agreement for our principal facility located in Austin, Texas. This facility is 197,000 square feet and houses our headquarters and engineering operations. The lease agreement for our headquarters and engineering facility includes a letter of credit in the amount of $5.1 million until November 2011, at which point the requirement decreases to $2.6 million with the letter of credit ceasing in May 2012.
 
Although we cannot provide assurances to our stockholders that we will be able to generate cash in the future, we anticipate that our existing capital resources and cash flow generated from future operations will enable us to maintain our current level of operations for at least the next 12 months.
 
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Off-Balance Sheet Arrangements
 
In our business activities, we incur certain commitments to make future payments under contracts such as purchase orders, operating leases and other long-term contracts. Maturities under these contracts are set forth in the following table as of March 28, 2009:
 
                                         
    Payment due by period (in thousands)  
    < 1 year     1 – 3 years     3 – 5 years     > 5 years     Total  
 
Facilities leases, net
  $ 4,794     $ 8,477     $ 1,748     $     $ 15,019  
Equipment leases
    16       8                   24  
Wafer purchase commitments
    6,458                         6,458  
Assembly purchase commitments
    712                         712  
Outside test purchase commitments
    1,254                         1,254  
Manufacturing raw materials
    534                         534  
Other purchase commitments
    133                         133  
                                         
Total
  $   13,901     $  8,485     $  1,748     $   —     $   24,134  
                                         
 
Recently Issued Accounting Pronouncements
 
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS No. 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” The implementation of this standard is not expected to have a material impact on our consolidated financial position, results of operations or cash flows.
 
In April 2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3, “Determination of the Useful Life of Intangible Assets,” (FSP 142-3) that amends the factors considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142. FSP 142-3 requires a consistent approach between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of an asset under SFAS No. 141(revised) “Business Combinations” (“SFAS No. 141R”). The FSP also requires enhanced disclosures when an intangible asset’s expected future cash flows are affected by an entity’s intent and/or ability to renew or extend the arrangement. FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and is applied prospectively. Early adoption is prohibited. We do not expect the adoption of FSP 142-3 to have a material impact on our consolidated results of operations or financial condition.
 
In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 141R, “Business Combinations.” SFAS No. 141R provides for several changes in the manner in which an entity accounts for business combinations. It establishes principles and requirements for how an acquirer recognizes fair values of acquired assets, including goodwill, and assumed liabilities. SFAS No. 141R requires the acquirer to recognize 100% of the fair values of acquired assets and liabilities, including goodwill, even if the acquirer has acquired less than 100% of the target. As a result, the current step-acquisition model will be eliminated. SFAS No. 141R requires that transaction costs be expensed as incurred and are not considered part of the fair value of an acquirer’s interest. Under SFAS No. 141R, acquired research and development value will no longer be expensed at acquisition, but instead will be capitalized as an indefinite-lived intangible asset, subject to impairment accounting throughout its development stage and then subject to amortization and impairment after development is complete. SFAS No. 141R is effective for fiscal years beginning after December 15, 2008. Adoption is prospective and early adoption is not permitted. The impact of adopting SFAS No. 141R will be dependent on the future business combinations that the Company may pursue.
 
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In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB 51” (“SFAS No. 160”). This statement amends Accounting Research Bulletin (ARB) 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This statement is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008, which was March 29, 2009 for Cirrus. As of the date of the adoption, SFAS No. 160 did not have a material impact on our financial position or results of operations.
 
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. In February 2008, the FASB released Staff Position No. FAS 157-2,Effective Date of FASB Statement No. 157,” which provides for delayed application of SFAS No. 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008, and interim periods within those years. The Company adopted certain provisions of SFAS No. 157 effective March 30, 2008 (see Note 9, Fair Value Measurements, to the Condensed Consolidated Financial Statements for additional information). We adopted the provisions of SFAS 157 with respect to our non-financial assets and non-financial liabilities effective March 29, 2009 pursuant to the requirements of FSP 157-2. The implementation of this standard is not expected to have a material impact on our consolidated financial position, results of operations or cash flows.
 
Critical Accounting Policies
 
Our discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements included in this report, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts. We evaluate the estimates on an on-going basis. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. We also have policies that we consider to be key accounting policies, such as our policies for revenue recognition, including the deferral of revenues and cost of sales on sales to our distributors, and our stock option granting practices; however, these policies do not meet the definition of critical accounting estimates because they do not generally require us to make estimates or judgments that are difficult or subjective.
 
We believe the following critical accounting policies involve significant judgments and estimates that are used in the preparation of the consolidated financial statements:
 
  §   For purposes of determining the variables used in the calculation of stock compensation expense under the provisions of the Financial Accounting Standard Board’s Statement of Financial Accounting Standards No. 123 (R) “Share-Based Payment” (“SFAS No. 123(R)”), we perform an analysis of current market data and historical company data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, we use these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in our Consolidated Statement of Operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on our financial statements. See Note 12 — Stockholders’ Equity of the Notes to Consolidated Financials Statements contained in Item 8.
 
  §   We maintain allowances for doubtful accounts for estimated losses resulting from the inability or failure of our customers to make required payments. We regularly evaluate our allowance for doubtful
 
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  accounts based upon the age of the receivable, our ongoing customer relations, as well as any disputes with the customer. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required, which could have a material effect on our operating results and financial position. Additionally, we may maintain an allowance for doubtful accounts for estimated losses on receivables from customers with whom we are involved in litigation. See Note 3 — Accounts Receivable, net of the Notes to Consolidated Financial Statements contained in Item 8.
 
  §   Inventories are recorded at the lower of cost or market, with cost being determined on a first-in, first-out basis. We write down inventories to net realizable value based on forecasted demand, management judgment and the age of 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. See Note 1 — Description of Business and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements contained in Item 8.
 
  §   We evaluate the recoverability of property, plant and equipment and intangible assets in accordance with Statement of Financial Accounting Standard No. 144 (“SFAS No. 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets.” We test for impairment losses on long-lived assets 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. An impairment loss is recognized in the event the carrying value of these assets exceeds the fair value of the applicable assets. Impairment evaluations involve management estimates of asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management, which could have a material effect on our operating results and financial position. See Note 6 — Intangibles, net of the Notes to Consolidated Financial Statements contained in Item 8.
 
  §   The Company accounts for goodwill and other intangible assets in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). 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. Accounting for acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired, including in-process research and development (IPR&D). 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. In accordance with SFAS No. 142, the Company tests goodwill 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.
 
  §   Our available-for-sale investments, non-marketable securities and other investments are subject to a periodic impairment review pursuant to FSP 115-1 and FSP 124-1. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. This determination requires significant judgment and actual results may be materially different than our estimate. 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. Non-marketable securities or other investments are
 
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  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, we evaluate information (e.g., budgets, business plans, financial statements, etc.) 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. This list is not all inclusive and we weigh all quantitative and qualitative factors in determining if an other-than-temporary decline in value of an investment has occurred. 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. Actual values could be different from those estimated by management, which could have a material effect on our operating results and financial position. See Note 2 — Marketable Securities and Note 4 — Non-Marketable Securities of the Notes to Consolidated Financial Statements contained in Item 8.
 
  §   In accordance with Statement of Financial Accounting Standards No. 109 (“SFAS No. 109”), “Accounting for Income Taxes,” we provide for the recognition of deferred tax assets if realization of such assets is more likely than not. We have provided a valuation allowance against a substantial portion of our net U.S. deferred tax assets due to uncertainties regarding their realization. We evaluate the realizability of our deferred tax assets on a quarterly basis by determining whether or not the anticipated pre-tax income for the upcoming twelve months is expected to be sufficient to utilize the deferred tax assets that we have recognized. If our future income is not sufficient to utilize the deferred tax assets that we have recognized, we increase the valuation allowance to the point at which all of the remaining recognized deferred tax assets will be utilized by the anticipated future pre-tax income for the next twelve months. An increase in the valuation allowance results in a simultaneous increase to income tax expense or, in some cases, a decrease in contributed capital. If our anticipated future pre-tax income is sufficient to conclude that additional deferred tax assets should be recognized, we decrease the valuation allowance. This results in a simultaneous decrease to income tax expense or, possibly, an increase in contributed capital. See Note 14 — Income Taxes of the Notes to Consolidated Financial Statements contained in Item 8.
 
  §   Restructuring charges for workforce reductions and facilities consolidations reflected in the accompanying financial statements were accrued based upon specific plans established by management, in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” We use an estimated borrowing rate as the discount rate for all of our restructuring accruals made under SFAS No. 146. Our facilities consolidation accruals are based upon our estimates as to the length of time a facility would be vacant, as well as the amount of sublease income we would receive once we sublet the facility, after considering current and projected market conditions. Changes in these estimates could result in an adjustment to our restructuring accruals in a future quarter, which could have a material effect on our operating results and financial position. See Note 10 — Restructuring Costs and Other of the Notes to Consolidated Financial Statements contained in Item 8.
 
  §   We are subject to the possibility of loss contingencies for various legal matters. See Note 8 — Legal Matters of the Notes to Consolidated Financial Statements contained in Item 8. We regularly evaluate current information available to us to determine whether any accruals should be made based on the status of the case, the results of the discovery process and other factors. If we ultimately determine that an accrual should be made for a legal matter, this accrual could have a material effect on our operating results and financial position and the ultimate outcome may be materially different than our estimate.
 
ITEM 7A.  Quantitative and Qualitative Disclosures about Market Risk
 
We are exposed to market risks associated with interest rates on our debt securities, currency movements on non-U.S. dollar denominated assets and liabilities, and the affect of market factors on the value of our non-marketable equity securities. We assess these risks on a regular basis and have established policies to protect against the adverse effects of these and other potential exposures. All of the potential changes noted below are based on sensitivity analyses as of March 28, 2009. Actual results may differ materially.
 
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Interest Rate Risk
 
At March 28, 2009, an immediate one percent, or 100 basis points, increase or decrease in interest rates could result in a $1.5 million fluctuation in our annual interest income. At March 29, 2008, an immediate one percent, or 100 basis points, increase or decrease in interest rates could have resulted in a $2.3 million fluctuation in our annual interest income. At March 31, 2007, an immediate one percent, or 100 basis points, increase or decrease in interest rates could have resulted in a $2.6 million fluctuation in our annual interest income. For all of these fiscal years, the risks associated with fluctuating interest rates were limited to our annual interest income and not the underlying principal as we generally have the ability to hold debt related investments to maturity. The decreased interest rate risk is based solely on a decrease in total cash and marketable securities. The amounts disclosed in this paragraph are based on a 100 basis point fluctuation in interest rates applied to the average cash balance for that fiscal year.
 
Foreign Currency Exchange Risk
 
Our revenue and spending is transacted primarily in U.S. dollars; however, in fiscal years 2009, 2008, and 2007, we entered into minimal transactions in other currencies to fund the operating needs of our design, technical support and sales offices outside of the U.S. As of March 28, 2009 and March 29, 2008, a ten percent change in the value of the related currencies would not have a material impact on our results of operations and financial position.
 
In addition to the direct effects of changes in exchange rates on the value of open exchange contracts, we may, from time to time, have changes in exchange rates that can also affect the volume of sales or the foreign currency sales prices of our products and the relative costs of operations based overseas.
 
Non-Marketable Securities Risk
 
Our investments in non-marketable securities are affected by many of the same factors that could result in an adverse movement of market prices, although the impact cannot be directly quantified. Such a movement and the underlying economic conditions would negatively affect the prospects of the companies we invest in, their ability to raise additional capital and the likelihood of our being able to realize our investments through liquidity events such as initial public offerings, mergers or private sales. These types of investments involve a great deal of risk, and there can be no assurance that any specific company will grow or become successful; consequently, we could lose all or part of our investment. As of March 31, 2007, our investments in non-marketable securities had a carrying value of $3.6 million. This carrying amount approximated fair value as of March 31, 2007. During the second quarter of fiscal year 2008, we determined an impairment indicator existed related to our remaining cost method investment in Magnum, as Magnum had participated in another round of capital funding from other sources, and our portion of the investment was diluted. We performed a fair value analysis of our cost method investment in Magnum in accordance with EITF 03-1. Based on the results of that analysis as of September 29, 2007, we recognized an impairment of $3.7 million to reduce the carrying value of the Magnum cost method investment to zero. The impairment is recorded as a separate line item on the statement of operations in operating expenses under the caption “Impairment of non-marketable securities.” At March 28, 2009, we had no remaining investments in non-marketable securities that have not been fully impaired.
 
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ITEM 8.   Financial Statements and Supplementary Data
 
Index to Consolidated Financial Statements
 
         
    37  
    39  
    40  
    41  
    42  
    43  
 
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Report of Independent Registered Public Accounting Firm
 
The Board of Directors and Stockholders of Cirrus Logic, Inc.
 
We have audited the accompanying consolidated balance sheets of Cirrus Logic, Inc. as of March 28, 2009 and March 29, 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended March 28, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cirrus Logic, Inc. at March 28, 2009 and March 29, 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 28, 2009, in conformity with U.S. generally accepted accounting principles.
 
As discussed in Note 1 to the consolidated financial statements, effective April 1, 2007, the Company adopted Financial Accounting Standards Board Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cirrus Logic, Inc.’s internal control over financial reporting as of March 28, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 29, 2009 expressed an unqualified opinion thereon.
 
/s/ Ernst & Young LLP
 
Austin, Texas
May 29, 2009
 
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Report of Independent Registered Public Accounting Firm
 
 
The Board of Directors and Stockholders of Cirrus Logic, Inc.
 
We have audited Cirrus Logic, Inc.’s internal control over financial reporting as of March 28, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Cirrus Logic, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, Cirrus Logic, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 28, 2009, based on the COSO criteria.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cirrus Logic, Inc. as of March 28, 2009 and March 29, 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended March 28, 2009 of Cirrus Logic, Inc. and our report dated May 29, 2009 expressed an unqualified opinion thereon.
 
/s/ Ernst & Young LLP
 
Austin, Texas
May 29, 2009
 
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CIRRUS LOGIC, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
 
         
    March 28,
  March 29,
    2009   2008
 
Assets
Current assets:
       
Cash and cash equivalents
  $31,504   $56,614
Restricted investments
  5,755   5,755
Marketable securities
  79,346   125,129
Accounts receivable, net
  13,306   22,652
Inventories
  19,878   22,464
Prepaid assets
  2,527   2,744
Other current assets
  2,832   7,297
         
Total current assets
  155,148   242,655
Long-term marketable securities
  3,627  
Property, plant and equipment, net
  19,367   20,961
Intangibles, net
  23,309   26,044
Goodwill
  6,027   6,194
Other assets
  2,018   2,452
         
    $209,496   $298,306
         
Liabilities and Stockholders’ Equity
Current liabilities:
       
Accounts payable
  $9,886   $16,164
Accrued salaries and benefits
  6,432   7,085
Deferred income on shipments to distributors
  5,918   6,584
Other accrued liabilities
  6,004   18,157
         
Total current liabilities
  28,240   47,990
Lease commitments and contingencies
  2,077   2,924
Long-term restructuring accrual
  931   1,818
Other long-term liabilities
  5,320   4,639
Stockholders’ Equity:
       
Preferred stock, 5.0 million shares authorized but unissued
   
Common stock, $0.001 par value, 280,000 shares authorized, 65,241 shares and 75,899 shares issued and outstanding at March 28, 2009 and March 29, 2008, respectively
  65   76
Additional paid-in capital
  945,390   937,640
Accumulated deficit
  (771,951)   (696,557)
Accumulated other comprehensive loss
  (576)   (224)
         
Total stockholders’ equity
  172,928   240,935
         
    $209,496   $298,306
         
 
The accompanying notes are an integral part of these financial statements.
 
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CIRRUS LOGIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
                         
    Fiscal Years Ended  
    March 28,
    March 29,
    March 31,
 
    2009     2008     2007  
 
Net sales
  $ 174,642     $ 181,885     $ 182,304  
Cost of sales
    77,458       78,652       73,290  
                         
Gross margin
    97,184       103,233       109,014  
                         
Operating expenses:
                       
Research and development
    44,315       48,484       43,961  
Selling, general and administrative
    45,304       53,554       51,755  
Restructuring costs and other, net
          10,542       1,106  
Impairment of non-marketable securities
          3,657       4,290  
Acquired in-process research and development
          1,761       1,925  
Provision for litigation expenses
    2,205              
Impairment of intangible assets
    2,144              
                         
Total operating expenses
    93,968       117,998       103,037  
                         
Income (loss) from operations
    3,216       (14,765 )     5,977  
Realized gain on marketable securities
                193  
Interest income
    2,777       12,068       13,146  
Other income (expense), net
    164       (104 )     177  
                         
Income (loss) before income taxes
    6,157       (2,801 )     19,493  
Provision (benefit) for income taxes
    2,682       3,045       (8,402 )
                         
Net income (loss)
  $ 3,475     $ (5,846 )   $ 27,895  
                         
Basic earnings (loss) per share:
  $ 0.05     $ (0.07 )   $ 0.32  
Diluted earnings (loss) per share
  $ 0.05     $ (0.07 )   $ 0.31  
Weighted average common shares outstanding:
                       
Basic
    65,530       87,967       87,643  
Diluted
    65,711       87,967       88,805  
 
The accompanying notes are an integral part of these financial statements.
 
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CIRRUS LOGIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
                         
    Fiscal Years Ended  
    March 28,
    March 29,
    March 31,
 
    2009     2008     2007  
 
Cash flows from operating activities:
                       
Net income (loss)
  $ 3,475     $ (5,846 )   $ 27,895  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                       
Depreciation and amortization
    8,168       8,582       6,382  
Acquired in-process research and development
          1,761       1,925  
Loss on retirement or write-off of long-lived assets
    113       8       235  
Amortization of lease settlement
    (995 )     (249 )     (746 )
Deferred income taxes
    2,701       4,222       (7,553 )
Realized gain on marketable securities
                (193 )
Stock compensation expense
    5,166       5,274       5,481  
Impairment of intangible assets
    2,144       10,433        
Impairment of non-marketable securities
          3,657       4,290  
Changes in operating assets and liabilities:
                       
Accounts receivable, net
    9,346       (666 )     2,150  
Inventories
    2,744       (3,259 )     2,396  
Other assets
    2,201       (332 )     1,623  
Accounts payable
    (6,278 )     4,868       (3,721 )
Accrued salaries and benefits
    (653 )     (1,672 )     1,196  
Deferred revenues
    (666 )     2,294       (2,808 )
Income taxes payable
          (3 )     (667 )
Other accrued liabilities
    (4,399 )     2,278       (2,260 )
                         
Net cash provided by operating activities
    23,067       31,350       35,625  
                         
Cash flows from investing activities:
                       
Proceeds from sale of marketable securities
    148,941       250,549       161,524  
Purchases of available for sale marketable securities
    (107,137 )     (197,119 )     (218,186 )
Purchases of property, plant and equipment
    (3,060 )     (3,699 )     (1,981 )
Investments in technology
    (2,127 )     (3,750 )     (3,282 )
Acquisition of businesses, net of cash acquired
    (550 )     (42,753 )     (10,713 )
Proceeds from sale of property, plant and equipment
                52  
Decrease (increase) in deposits and other assets
    414       (360 )     1,062  
                         
Net cash provided by (used in) investing activities
    36,481       2,868       (71,524 )
                         
Cash flows from financing activities:
                       
Repurchase and retirement of common stock
    (87,242 )     (71,119 )      
Issuance of common stock, net of issuance costs
    2,584       5,555       7,184  
                         
Net cash provided by (used in) financing activities
    (84,658 )     (65,564 )     7,184  
                         
Net decrease in cash and cash equivalents
    (25,110 )     (31,346 )     (28,715 )
Cash and cash equivalents at beginning of year
    56,614       87,960       116,675  
                         
Cash and cash equivalents at end of year
  $ 31,504     $ 56,614     $ 87,960  
                         
Supplemental disclosures of cash flow information
                       
Cash payments (refunds) during the year for:
                       
Interest expense
  $     $     $  
Income taxes
    174       141       (165 )
 
The accompanying notes are an integral part of these financial statements.
 
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CIRRUS LOGIC, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
 
                                                 
                            Accumulated
       
                Additional
          Other
       
    Common Stock     Paid-in
    Accumulated
    Comprehensive
       
    Shares     Amount     Capital     Deficit     Income (Loss)     Total  
 
Balance, March 25, 2006
    86,816     $ 87     $ 914,148     $ (649,075 )   $ (890 )   $ 264,270  
                                                 
Components of comprehensive income (loss):
                                               
Net income
                      27,895             27,895  
Change in unrealized loss on marketable securities
                            300       300  
Realized gain on marketable securities
                            (193 )     (193 )
                                                 
Total comprehensive income
                                  28,002  
                                                 
Issuance of stock under stock plans
    1,347       1       7,183                   7,184  
Amortization of deferred stock compensation
                5,481                   5,481  
                                                 
Balance, March 31, 2007
    88,163       88       926,812       (621,180 )     (783 )     304,937  
                                                 
Components of comprehensive income (loss):
                                               
Net loss
                      (5,846 )           (5,846 )
Change in unrealized gain on marketable securities
                            559       559  
                                                 
Total comprehensive income
                                  (5,287 )
                                                 
Issuance of stock under stock plans
    1,043       1       5,554                   5,555  
Cumulative effect of initial adoption of FIN 48
                      1,575             1,575  
Repurchase and retirement of common stock
    (13,307 )     (13 )           (71,106 )           (71,119 )
Amortization of deferred stock compensation
                5,274                   5,274  
                                                 
Balance, March 29, 2008
    75,899       76       937,640       (696,557 )     (224 )     240,935  
                                                 
Components of comprehensive income (loss):
                                               
Net income
                      3,475             3,475  
Change in unrealized gain on marketable securities
                            (352 )     (352 )
                                                 
Total comprehensive income
                                  3,123  
                                                 
Issuance of stock under stock plans
    579             2,584                   2,584  
Repurchase and retirement of common stock
    (11,237 )     (11 )           (78,869 )           (78,880 )
Amortization of deferred stock compensation
                5,166                   5,166  
                                                 
Balance, March 28, 2009
    65,241     $ 65     $ 945,390     $ (771,951 )   $ (576 )   $ 172,928  
                                                 
 
The accompanying notes are an integral part of these financial statements.
 
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CIRRUS LOGIC, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.   Description of Business and Summary of Significant Accounting Policies
 
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. We also develop ICs, board-level modules and hybrids for high-power amplifier applications branded as the Apex Precision Powertm (“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 founded in 1984 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 an administrative and manufacturing facility 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 2009 and 2008 were 52-week years whereas fiscal year 2007 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 and include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
 
Use of Estimates
 
The preparation of financial statements in accordance with U.S. generally accepted accounting principles require 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.
 
Cash and Cash Equivalents
 
Cash and cash equivalents consist primarily of money market funds, commercial paper, U.S. Government Treasury and Agency instruments with original maturities of three months or less at the date of purchase.
 
Restricted Investments
 
As of March 28, 2009 and March 29, 2008, we had restricted investments of $5.8 million in support of our letters of credit needs. The letters of credit primarily secure certain obligations under our operating lease agreement for our headquarters and engineering facility in Austin, Texas and are scheduled for periodic declines in amount.
 
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Marketable Securities
 
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 in accordance with Statement of Financial Accounting Standards No. 115 (“SFAS No. 115”), “Accounting for Certain Investments in Debt and Equity Securities.” As of March 28, 2009 and March 29, 2008, 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 income (loss). The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method and is included in interest income. 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.
 
Inventories
 
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. The short 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):
 
                 
    March 28,
    March 29,
 
    2009     2008  
 
Work in process
  $ 11,516     $ 12,329  
Finished goods
    8,362       10,135  
                 
Inventories
  $ 19,878     $ 22,464  
                 
 
Property, Plant and Equipment, net
 
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 30 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 five years, while buildings are depreciated over a period of 30 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.
 
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Property, plant and equipment was comprised of the following (in thousands):
 
                 
    March 28,
    March 29,
 
    2009     2008  
 
Land and buildings
  $ 8,120     $ 8,120  
Furniture and fixtures
    4,324       4,415  
Leasehold improvements
    6,503       7,390  
Machinery and equipment
    25,586       25,914  
Capitalized software
    19,936       18,853  
                 
Total property, plant and equipment
    64,469       64,692  
Less: Accumulated depreciation and amortization
    (45,102 )     (43,731 )
                 
Property, plant and equipment, net
  $ 19,367     $ 20,961  
                 
 
Depreciation and amortization expense on property, plant and equipment for fiscal years 2009, 2008, and 2007 was $4.7 million, $4.7 million, and $4.6 million, respectively.
 
Non-Marketable Securities and Other Investments
 
Investments in companies in which Cirrus does not have significant influence are accounted for at cost if the investment is not publicly traded. These non-marketable securities and other investments have been classified as other current assets, other assets, or specifically identified in accordance with Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” Dividends and other distributions of earnings from investments accounted for at cost are included in income when declared. Any gain will be recorded at the time of liquidation of the non-marketable security or other investment.
 
Other-Than-Temporary Impairment
 
All of the Company’s available-for-sale investments, non-marketable securities and other investments are subject to a periodic impairment review pursuant to FASB Staff Position (“FSP”) No. 115-1 and 124-1 “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” 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. Non-marketable securities or 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, etc.) 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, Cirrus recognizes an impairment loss in the current period’s operating results to the extent of the decline.
 
Goodwill and Intangibles, net
 
The Company accounts for goodwill and other intangible assets in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets.” Intangible assets include purchased technology licenses and patents that are recorded at cost and are amortized on a straight-line basis over their useful lives, generally ranging from three to ten years. Acquired intangibles recorded in connection with our acquisitions include existing technology, core technology/patents, license agreements, trademarks, covenants not-to-compete and customer agreements. These assets are amortized on a straight-line basis over lives ranging from one 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. Accounting for acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired, including IPR&D. Goodwill
 
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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. In accordance with SFAS No. 142, 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.
 
Long-Lived Assets
 
In accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”, 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.
 
Foreign Currency Translation
 
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.
 
Concentration of Credit Risk
 
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. We sell a significant amount of products in the Asian countries. 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.
 
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The following table summarizes the receivable balance of distributors and customers that represented more than 10 percent of consolidated gross accounts receivable:
 
                 
    March 28,
    March 29,
 
    2009     2008  
 
Avnet, Inc. 
    21 %     26 %
Hon Hai Precision Industry Co., LTD. 
    11 %      
 
No other distributors or customers had receivable balances that represented more than 10 percent of consolidated gross accounts receivable as of the end of fiscal years 2009 and 2008.
 
Sales to one distributor, Avnet, Inc., represented 33 percent, 27 percent and 29 percent of total sales in fiscal years 2009, 2008 and 2007, respectively. We had one end customer that accounted for more than 15% of the Company’s total revenues for fiscal year 2009. No other customers or distributors accounted for more than 10 percent of net sales in fiscal years 2009, 2008 and 2007. The loss of a significant customer, distributor, or end customer or a significant reduction in a customer’s or distributor’s orders could have an adverse effect on our sales.
 
Revenue Recognition
 
We recognize revenue in accordance with the SEC’s Staff Accounting Bulletin No. 104 (“SAB 104”), “Revenue Recognition.” Revenue from products sold directly to international customers and to certain international distributors is recognized upon title passage of inventory. For sales made directly to international customers and to international distributors, title generally passes at the port of destination, which coincides with delivery to the international distributors. For sales made directly to domestic customers, title generally passes upon shipment. Sales made to domestic distributors and certain international distributors are recorded as deferred revenue until the final sale to the end customer has occurred. Generally, distributor agreements allow certain rights of return and price protection. License and royalty revenue is recognized as it is earned per unit shipped or when a milestone is reached.
 
Warranty Expense
 
We warrant that our products, when delivered, will be free from defects in material workmanship under normal use and service. Our obligations are generally limited to replacing, repairing or giving credit for, at our option, any products that are returned within one year after the date of shipment and if notice is given to us in writing within 30 days of the customer learning of such problem. Warranty expense was not significant for any period presented.
 
Shipping Costs
 
Our shipping and handling costs are included in cost of sales for all periods presented.
 
Advertising Costs
 
Advertising costs are expensed as incurred. Advertising costs were $1.5 million, $1.2 million, and $1.2 million in fiscal years 2009, 2008, and 2007, respectively.
 
Stock-Based Compensation
 
In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123(R) “Share-Based Payment,” which supersedes Accounting Principles Board Opinion No. 25 (“APB No. 25”), “Accounting for Stock Issued to Employees,” SFAS No. 123, “Accounting for Stock-Based Compensation” and related implementation guidance. We adopted this pronouncement as of March 26, 2006, the first day of our 2007 fiscal year. In periods prior to adoption, we applied the intrinsic value method in accounting for our stock option and stock purchase plans in accordance with APB No. 25.
 
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Income Taxes
 
We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” which provides for the recognition of deferred tax assets if realization of such assets is more likely than not. We have provided a valuation allowance against a substantial portion of our net U.S. deferred tax assets due to uncertainties regarding their realization. We evaluate the realizability of our deferred tax assets on a quarterly basis.
 
We adopted FASB Financial Interpretation No. (FIN) 48, “Accounting for Uncertainty in Income Taxes,” at the beginning of fiscal year 2008. As a result of the adoption of FIN 48, we recognize liabilities for uncertain tax positions based on the two-step process prescribed by the interpretation. 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% 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.
 
Net Income (Loss) Per Share
 
Basic net income (loss) per share is based on the weighted effect of common shares issued and outstanding and is calculated by dividing net income (loss) by the basic weighted average shares outstanding during the period. Diluted net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares used in the basic net income (loss) 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.
 
Incremental weighted average common shares attributable to the assumed exercise of outstanding options of 181,000 shares for the year ended March 29, 2008 were excluded from the computation of diluted net income (loss) per share because the effect would be anti-dilutive due to our loss position during the year. The weighted outstanding options excluded from our diluted calculation for the years ended March 28, 2009, March 29, 2008, and March 31, 2007 were 7,796,000, 5,623,000, and 5,975,000, respectively, as the exercise price exceeded the average market price during the period.
 
Accumulated Other Comprehensive Income (loss)
 
We report our accumulated other comprehensive income (loss) based upon Statement of Financial Accounting Standard No. 130, “Reporting Comprehensive Income.” 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.
 
Recently Issued Accounting Pronouncements
 
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS No. 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” The implementation of this standard is not expected to have a material impact on our consolidated financial position, results of operations or cash flows
 
In April 2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of Intangible Assets,” that amends the factors considered in developing renewal or extension assumptions used to determine the
 
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useful life of a recognized intangible asset under SFAS 142. FSP 142-3 requires a consistent approach between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of an asset under SFAS No. 141(revised) “Business Combinations” (“SFAS No. 141R”). The FSP also requires enhanced disclosures when an intangible asset’s expected future cash flows are affected by an entity’s intent and/or ability to renew or extend the arrangement. FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and is applied prospectively. Early adoption is prohibited. We do not expect the adoption of FSP 142-3 to have a material impact on our consolidated results of operations or financial condition.
 
In December 2007, the FASB issued SFAS No. 141R, “Business Combinations.” SFAS No. 141R provides for several changes in the manner in which an entity accounts for business combinations. It establishes principles and requirements for how an acquirer recognizes fair values of acquired assets, including goodwill, and assumed liabilities. SFAS No. 141R requires the acquirer to recognize 100% of the fair values of acquired assets and liabilities, including goodwill, even if the acquirer has acquired less than 100% of the target. As a result, the current step-acquisition model will be eliminated. SFAS No. 141R requires that transaction costs be expensed as incurred and are not considered part of the fair value of an acquirer’s interest. Under SFAS No. 141R, acquired research and development value will no longer be expensed at acquisition, but instead will be capitalized as an indefinite-lived intangible asset, subject to impairment accounting throughout its development stage and then subject to amortization and impairment after development is complete. SFAS No. 141R is effective for fiscal years beginning after December 15, 2008. Adoption is prospective and early adoption is not permitted. The impact of adopting SFAS No. 141R will be dependent on the future business combinations that the Company may pursue.
 
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB 51” (“SFAS No. 160”). This statement amends Accounting Research Bulletin (ARB) 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This statement is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008 which was March 29, 2009 for Cirrus. As of the date of the adoption, SFAS No. 160 did not have a material impact on our financial position or results of operations.
 
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. In February 2008, the FASB released Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which provides for delayed application of SFAS No. 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008, and interim periods within those years. The Company adopted certain provisions of SFAS No. 157 effective March 30, 2008 (see Note 9, Fair Value Measurements, to the Condensed Consolidated Financial Statements for additional information). The adoption of this standard is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows.
 
2.   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 SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” Marketable securities are categorized on the Balance Sheet as Restricted investments and Marketable securities, as appropriate.
 
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The following table is a summary of available-for-sale securities (in thousands):
 
                                 
    Amortized
    Gross Unrealized
    Gross Unrealized
    Estimated Fair Value
 
As of March 28, 2009:   Cost     Gains     Losses     (Net Carrying Amount)  
 
Corporate securities – U.S. 
  $ 29,585     $ 40     $ (153 )   $ 29,472  
Corporate securities – government guaranteed
    4,600       7             4,607  
U.S. Government securities
    32,886       157       (2 )     33,041  
Agency discount notes
    21,463       147       (2 )     21,608  
                                 
Total debt securities
    88,534       351       (157 )     88,728  
Marketable equity securities
                       
                                 
    $ 88,534     $ 351     $ (157 )   $ 88,728  
                                 
 
                                 
    Amortized
    Gross Unrealized
    Gross Unrealized
    Estimated Fair Value
 
As of March 29, 2008:   Cost     Gains     Losses     (Net Carrying Amount)  
 
Corporate securities – U.S. 
  $ 30,241     $ 106     $ (130 )   $ 30,217  
U.S. Government securities
    56,453       164       (10 )     56,607  
Agency discount notes
    43,644       416             44,060  
                                 
Total debt securities
    130,338       686       (140 )     130,884  
Marketable equity securities
                       
                                 
    $ 130,338     $ 686     $ (140 )   $ 130,884  
                                 
 
The cost and estimated fair value of available-for-sale investments by contractual maturity were as follows:
 
                                 
    March 28, 2009     March 29, 2008  
    Amortized
    Estimated
    Amortized
    Estimated
 
    Cost     Fair Value     Cost     Fair Value  
 
Within 1 year
  $ 84,901     $ 85,101     $ 130,338     $ 130,884  
After 1 year
    3,633       3,627              
                                 
Total debt securities
    88,534       88,728       130,338       130,884  
Equity securities
                       
                                 
    $ 88,534     $ 88,728     $ 130,338     $ 130,884  
                                 
 
The decrease in available-for-sale investments during fiscal year 2009 is primarily attributable to the Company’s repurchase and retirement of common stock.
 
3.   Accounts Receivable, net
 
The following are the components of accounts receivable (in thousands):
 
                 
    March 28,
    March 29,
 
    2009     2008  
 
Gross accounts receivable
  $ 13,757     $ 23,056  
Less: Allowance for doubtful accounts
    (451 )     (404 )
                 
Accounts receivable, net
  $ 13,306     $ 22,652  
                 
 
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The following table summarizes the changes in the allowance for doubtful accounts (in thousands):
 
         
Balance, March 31, 2007
  $ (105 )
Write-off of uncollectible accounts, net of recoveries
    (299 )
         
Balance, March 29, 2008
    (404 )
Write-off of uncollectible accounts, net of recoveries
    (47 )
         
Balance, March 28, 2009
  $ (451 )
         
 
During the fourth quarter of fiscal year 2008, we received a $0.2 million payment associated with claims in a bankruptcy case for past-due receivables that had been written off in fiscal year 1998.
 
4.   Non-Marketable Securities
 
During the fourth quarter of fiscal year 2007, we determined an impairment indicator existed related to our cost method investment in Magnum. We obtained an independent valuation of the fair value of our cost method investment in Magnum in accordance with Emerging Issues Task Force No. 03-1 (“EITF 03-1”), “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.”. Based on the results of the independent valuation, at March 31, 2007, we recognized an impairment of $4.3 million to reduce the carrying value of the Magnum cost method investment to $3.7 million as the combination of recurrent losses and reduced forecasts indicated that our full investment was not recoverable within a reasonable period of time. The impairment was recorded as a separate line item on the statement of operations in operating expenses under the caption “Impairment of non-marketable securities.”
 
During the second quarter of fiscal year 2008, we determined an impairment indicator existed related to our remaining cost method investment in Magnum, as Magnum had participated in another round of capital funding from other sources, and our portion of the investment was diluted. We performed a fair value analysis of our cost method investment in Magnum in accordance with EITF 03-1. Based on the results of that analysis as of September 29, 2007, we recognized an impairment of $3.7 million to reduce the carrying value of the Magnum cost method investment to zero, as the decrease in the value of our investment was deemed to be other-than-temporary in nature due to our liquidation preferences. The impairment was recorded as a separate line item on the statement of operations in operating expenses under the caption “Impairment of non-marketable securities.”
 
5.   Acquisitions
 
On December 8, 2008, we executed an asset purchase agreement with Thaler Corporation of Tucson, Arizona, an entity specializing in the manufacture of precision analog and mixed signal devices. The purchase price of the acquisition was $1.1 million, which consisted primarily of intangible assets and inventory. The intangible assets, which were $0.8 million of the purchase price, are being amortized over a period of 5 years. Fifty percent of the purchase price, or $550 thousand, was paid in cash at closing, and the remaining balance was paid on April 8, 2009. This remaining balance of $550 thousand is recorded as “Other accrued liabilities” on the consolidated balance sheet as of March 28, 2009.
 
On July 24, 2007, we acquired 100 percent of the outstanding stock of Apex. Apex designs and produces integrated circuits, hybrids and modules used in a wide range of industrial and aerospace applications that require high-power precision analog products, such as PWM’s and power amplifiers. These precision amplifiers are used for driving motors and piezoelectric devices, programmable power supplies and other devices requiring high power and precision control. The acquisition was undertaken to strengthen and diversify our existing product lines. The results of Apex’s operations have been included in our consolidated financial statements since the acquisition date. We acquired Apex for a purchase price of approximately $42.8 million, consisting primarily of cash and direct acquisition costs. The purchase price was allocated to the estimated fair value of assets acquired and liabilities assumed based on independent appraisals and management estimates. We recorded acquired intangible assets of $21.2 million, which are being amortized, excluding the acquired trade name, which is not being amortized, over a composite life of 15 years. The acquisition resulted in a purchase price that was in excess of the fair value of the net assets acquired and, as a result, the Company recorded goodwill of $6.2 million. During fiscal year 2009, we received approximately $0.2 million in
 
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proceeds from a tax settlement that reduced the goodwill recognized on this purchase. The goodwill will not be deductible for tax purposes. Approximately $1.8 million of the purchase price was allocated to in-process research and development and was expensed upon completion of the acquisition, which was recorded as a separate line item on the Statement of Operations under the caption “Acquired in-process research and development” in operating expenses.
 
6.   Intangibles, net
 
The following information details the gross carrying amount and accumulated amortization of our intangible assets (in thousands):
 
                                 
    March 28, 2009     March 29, 2008  
    Gross
    Accumulated
    Gross
    Accumulated
 
    Amount     Amortization     Amount     Amortization  
 
Core technology
  $ 1,390     $ (1,223 )   $ 1,390     $ (1,068 )
License agreements
    440       (387 )     440       (338 )
Existing technology
    17,235       (4,328 )     17,012       (3,365 )
Trademarks
    2,758       (320 )     2,758       (320 )
Non-compete agreements
    398       (20 )            
Customer relationships
    4,682       (508 )     4,506       (199 )
Technology licenses
    14,950       (11,758 )     16,019       (10,791 )
                                 
    $ 41,853     $ (18,544 )   $ 42,125     $ (16,081 )
                                 
 
In the fourth quarter of fiscal year 2009, we noted several impairment indicators surrounding our patents acquired from Tripath in June, 2007. We performed an impairment analysis under SFAS No. 144 and noted that the undiscounted cash flows estimated to be generated from these patents were less than the carrying amount of the assets. We then compared the estimated fair value of these assets to their carrying amount and recognized an impairment loss of $2.1 million. These assets have a remaining carrying value of $0.2 million at March 28, 2009. The impairment was recorded as a separate line item on the statement of operations in operating expenses under the caption “Impairment of intangible assets.”
 
Amortization expense for all intangibles in fiscal years 2009, 2008, and 2007 was $3.5 million, $3.9 million, and $1.8 million, respectively. The following table details the estimated aggregate amortization expense for all intangibles owned as of March 28, 2009 for each of the five succeeding fiscal years (in thousands):
 
         
For the year ended March 27, 2010
  $ 3,229  
For the year ended March 26, 2011
  $ 2,169  
For the year ended March 31, 2012
  $ 1,986  
For the year ended March 30, 2013
  $ 1,462  
For the year ended March 29, 2014
  $ 1,421  
 
7.   Commitments and Contingencies
 
Facilities and Equipment Under Operating Lease Agreements
 
With the exception of the Apex facility in Tucson, Arizona, 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, 2009, 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 with lease terms that extend into calendar year 2012, excluding lease extension options, and 17,000 square feet of leased space at our failure analysis facility with lease terms that extend into calendar year 2013. We have subleased approximately 33,000 square feet of space at our Austin headquarters. The sublease extends into calendar year 2012.
 
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The aggregate minimum future rental commitments under all operating leases, net of sublease income, for the following fiscal years are (in thousands):
 
                                         
                Net Facilities
    Equipment
    Total
 
    Facilities     Subleases     Commitments     Commitments     Commitments  
 
2010
  $ 5,623     $ 829     $ 4,794     $ 17     $ 4,811  
2011
    5,257       799       4,458       6       4,464  
2012
    4,806       787       4,019       1       4,020  
2013
    2,042       332       1,710             1,710  
2014
    38             38             38  
Thereafter
                             
                                         
Total minimum lease payments
  $ 17,766     $ 2,747     $ 15,019     $ 24     $ 15,043  
                                         
 
Total rent expense was approximately $5.9 million, $7.3 million, and $8.5 million, for fiscal years 2009, 2008, and 2007, respectively. Sublease rental income was $2.1 million, $3.0 million, and $4.0 million, for fiscal years 2009, 2008, and 2007, respectively.
 
During fiscal year 2009, we recorded approximately $0.1 million in charges to operating expense to adjust our loss contingency accrual for a change in sublease assumptions with regards to our facilities in Austin, Texas and Fremont, California.
 
During fiscal year 2008, we recorded approximately $0.8 million in charges to operating expense to adjust our loss contingency accrual for a change in sublease assumptions with regards to a facility in Fremont, California.
 
During fiscal year 2007, we recorded approximately $1.0 million and $0.7 million in charges to operating expense to adjust our loss contingency accruals for a change in sublease assumptions with regards to our facilities in Austin, Texas and Fremont, California, respectively. We also transitioned our design activities at our Boulder, Colorado design facility to our headquarters in Austin, Texas. This design facility is approximately 12,000 square feet in size and has a lease which expires in fiscal year 2011 however, there is an early termination option provided to us in the lease. If we choose to exercise that option, we will be released from our obligations under the lease in fiscal year 2009. The cost of exercising this option is immaterial.
 
On January 29, 2008, Cirrus Investments, L.P. (“Cirrus Investments”), an entity unrelated to the Company, filed suit against the Company, and others, in the Superior Court of California, County of Santa Clara, alleging breach of commercial leases and holdover rent with respect to two properties we leased from Cirrus Investments in Fremont, California. Cirrus Investments’ complaint primarily related to alleged violations of certain restoration obligations that the Company had at the end of the lease term of these two properties. Cirrus Logic settled this matter on October 8, 2008 via execution of a Settlement Agreement for payment of approximately $1.0 million to Cirrus Investments.
 
As of March 28, 2009, a total of $2.9 million related to these vacated leases remained accrued. Where appropriate, these amounts are classified as either long-term or short-term. These amounts are included in the table above. The $2.0 million in facilities restructuring accruals that existed for these leases as of March 28, 2009 are discussed in greater detail in Note 10 - Restructuring Costs and Other.
 
Wafer, Assembly and Test Purchase Commitments
 
We rely primarily on third-party foundries for our wafer manufacturing needs. As of March 28, 2009, we had agreements with multiple foundries for the manufacture of wafers. None of these foundry agreements have volume purchase commitments or “take or pay” clauses. The agreements 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 28, 2009, we had foundry commitments of $6.5 million.
 
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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 $0.7 million at March 28, 2009.
 
We have transitioned the majority of our test services to outside third party contractors. 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 28, 2009 was $1.3 million.
 
Other open purchase orders as of March 28, 2009 amount to $0.7 million and primarily relate to raw materials costs incurred in our facility in Tucson, Arizona, which continues to serve as the assembly and test facility for our Apex Precision Powertm products.
 
8.   Legal Matters
 
Derivative Lawsuits
 
On January 5, 2007, a purported stockholder filed a derivative lawsuit in the state district court in Travis County, Texas against current and former officers and directors of Cirrus Logic and against the Company, as a nominal defendant, alleging various breaches of fiduciary duties, conspiracy, improper financial reporting, insider trading, violations of the Texas Securities Act, unjust enrichment, accounting, gross mismanagement, abuse of control, rescission, and waste of corporate assets related to certain prior grants of stock options by the Company. Our response to the lawsuit was filed on April 20, 2007. On June 12, 2007, the state district court stayed the lawsuit until a final determination is reached in the District Court actions described below.
 
Two additional lawsuits arising out of the same claims have been filed in federal court in the United States District Court for the Western District of Texas — Austin Division. Between March 19, 2007, and March 30, 2007, two purported stockholders filed derivative lawsuits related to the Company’s prior stock option grants against current and former officers and directors of Cirrus Logic and against the Company, as a nominal defendant. The individual defendants named in these lawsuits overlap, but not completely, with the state suit. The lawsuits allege many of the causes of action alleged in the Texas state court suit, but also include claims for alleged violations of Section 10(b) of the Exchange Act and Rule 10b-5, violations of Section 14(a) of the Exchange Act and violations of Section 20(a) of the Exchange Act.
 
On July 16, 2007, the plaintiffs in the two federal cases filed a motion to voluntarily dismiss their claims in the federal court and indicated their intent to coordinate their efforts in the state district court case. After a hearing on the plaintiffs’ motion, the court denied the plaintiff’s motion and required the two purported stockholders to file a consolidated complaint in federal court. A consolidated complaint, including substantially similar allegations to the two previous complaints, was filed on October 11, 2007.
 
In response to the consolidated complaint, Cirrus Logic filed a motion to dismiss on November 15, 2007 based on the plaintiffs’ failure to make demand on the Board of Directors of Cirrus Logic (the “Board”) prior to filing this action (the “demand futility” motion). The plaintiffs filed their opposition to the motion on December 14, 2007. Cirrus Logic filed a reply brief on August 13, 2008, approximately eight months after the Court extended briefing deadlines to accommodate mediation discussions. On August 28, 2008, the Court denied Cirrus Logic’s demand futility motion.
 
On December 19, 2008, a Stipulation of Settlement (the “Original Stipulation”) between the parties was filed with the federal court. The Original Stipulation provided for the proposed settlement of all pending stockholder derivative lawsuits relating to the Company’s historical stock option granting practices. The terms of the settlement included: (1) the adoption by Cirrus Logic of a variety of corporate governance measures, including measures that relate to and address many of the underlying issues in the derivative lawsuits; (2) a release of claims against all defendants and the dismissal of the derivative lawsuits with prejudice; and (3) the payment by the Company’s Directors’ and Officers’ insurer of $2.85 million to the plaintiffs’ lawyers in payment in full of plaintiffs’ claims for attorney’s fees and expenses. As part of the Original Stipulation, the defendants denied any wrongdoing or liability against them as it relates to the claims and contentions alleged
 
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by the plaintiffs in the lawsuits. On December 30, 2008, the federal court denied the parties’ proposed stipulation.
 
On March 13, 2009, a Revised Stipulation of Settlement (the “Revised Stipulation”) was filed with the federal court. The Revised Stipulation modified the terms of the Original Stipulation to address the concerns of the Court raised in the Court’s denial of the Original Stipulation. Specifically, the terms of the Revised Stipulation include: (1) the extension of the term of the proposed corporate governance changes to seven years rather than four years, and the extension of governance changes specifically regarding stock options to remain in effect indefinitely, subject to stockholder approved changes after seven years; (2) a release of claims against all defendants and the dismissal of the derivative lawsuits with prejudice; (3) the payment by the Company’s Directors’ and Officers’ insurer of $2.85 million to the Company; and (4) the withdrawal by plaintiffs of any request for an award of their attorneys’ fees and expenses.
 
On March 25, 2009, the Court preliminarily approved the settlement and scheduled a hearing for May 28, 2009, to consider whether to provide final approval of the settlement and enter judgment thereon.
 
At this stage of the litigation, we cannot predict the ultimate outcome and we do not think that any potential liability exists. Any potential proceeds will be recorded when received in accordance with SFAS No. 5, “Accounting for Contingencies.”
 
Silvaco Data Systems
 
On December 8, 2004, Silvaco Data Systems (“Silvaco”) filed suit against us, and others, in Santa Clara County Superior Court (the “Court”), alleging misappropriation of trade secrets, conversion, unfair business practices, and civil conspiracy. Silvaco’s complaint stems from a trade secret dispute between Silvaco and a software vendor, Circuit Semantics, Inc., who supplied us with certain software design tools. Silvaco alleges that our use of Circuit Semantic’s design tools infringes upon Silvaco’s trade secrets and that we are liable for compensatory damages in the sum of $10 million. Silvaco has not indicated how it will substantiate this amount of damages and we are unable to reasonably estimate the amount of damages, if any.
 
On January 25, 2005, we answered Silvaco’s complaint by denying any wrong-doing. In addition, we filed a cross-complaint against Silvaco alleging breach of contract relating to Silvaco’s refusal to provide certain technology that would enable us to use certain unrelated software tools.
 
On July 5, 2007, the Court granted our motion for judgment on the pleadings, determining that all claims except for the misappropriation of trade secrets claims were pre-empted by trade secret law. On October 15, 2007, the Court granted our motion for summary judgment on the trade secret misappropriation claim because we presented undisputed evidence that Silvaco will be unable to prove that Cirrus misappropriated Silvaco’s trade secrets.
 
On February 12, 2008, we settled our cross-complaint against Silvaco, whereby Silvaco agreed to pay Cirrus $30,000 as full and final restitution of all claims that could have been alleged in the cross-complaint.
 
Based on these orders and the settlement of the cross-complaint, the Court entered judgment in our favor on Silvaco’s complaint and our cross-complaint on March 4, 2008. As a result of the favorable judgment, on May 16, 2008, the court awarded approximately $59,000 for our expenses in defending the suit.
 
On April 7, 2008, Silvaco filed a notice of appeal on these matters. We anticipate that the appeal will be heard by the Court of Appeal of the State of California, Sixth Appellate District in the last half of calendar year 2009.
 
At this stage of the litigation, we cannot predict the ultimate outcome and we are unable to estimate any potential liability we may incur.
 
Other Claims
 
From time to time, other various claims, charges and litigation are asserted or commenced against us arising from, or related to, contractual matters, intellectual property, employment disputes, as well as other
 
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issues. Frequent claims and litigation involving these types of issues are not uncommon in our industry. As to any of these claims or litigation, we cannot predict the ultimate outcome with certainty.
 
9.   Fair Value Measurements
 
The Company adopted SFAS No. 157 as of March 30, 2008, the beginning of fiscal year 2009, to measure the fair value of certain of its financial assets required to be measured on a recurring basis. Under SFAS No. 157, based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
 
  §   Level 1 — Quoted prices in active markets for identical assets or liabilities.
 
  §   Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
  §   Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
As of March 28, 2009, the Company’s cash equivalents and restricted investments of $37.3 million, and short and long-term investments of $83.0 million, are all valued using quoted prices generated by market transactions involving identical assets, or Level 1 assets as defined under SFAS No. 157.
 
10.   Restructuring Costs and Other
 
During fiscal year 2008, we recorded net restructuring charges of $10.5 million as a separate line item on the statement of operations in operating expenses under the caption “Restructuring costs and other, net.” This net charge was comprised primarily of two separate steps taken to improve our competitive cost structure. First, we committed to a plan to close Caretta, a subsidiary based in Shanghai, China. This action eliminated approximately 30 positions in China during the Company’s fourth fiscal quarter, and resulted in the Company recording a charge of approximately $11.1 million, which consisted primarily of non-cash charges of $6.5 million for goodwill and $3.6 million related to intangibles, as well as approximately $0.9 million in cash payments for the affected employees. These charges reduced the carrying value of the Caretta-related intangible assets to zero, an amount that reflects the Company’s decision to no longer market Caretta’s power management IC’s for the single-cell lithium ion battery market. Also in the fourth quarter of fiscal year 2008, we made a strategic decision to streamline our organization structure, which resulted in a further worldwide headcount reduction of 61 employees. The restructuring charge associated with this activity amounted to $0.9 million, and were primarily related to employee severance costs. Also in fiscal year 2008, in connection with the expiration of a lease agreement in Fremont, California in December 2007, we recorded a $1.5 million reduction to the fiscal year 2004 and 2006 restructuring liabilities to reduce the accrual to the estimated final settlement amounts.
 
During fiscal year 2007, we recorded restructuring charges of $1.1 million to operating expenses primarily related to the transition of design activities from our Boulder, Colorado office to our headquarters in Austin, Texas. The restructuring costs for the closure of the Boulder design center were composed of $0.7 million in severance and relocation costs and $0.3 million in facility related charges. Approximately 20 employees were affected by this action, five of whom were relocated to our Austin headquarters.
 
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The following table sets forth the activity in our fiscal year 2008 restructuring accrual (in thousands):
 
                         
          Facilities
       
    Severance     Abandonment     Total  
 
Balance, March 31, 2007
  $     $     $  
Fiscal year 2008 provision
    2,167             2,167  
Cash payments, net
    (1,788 )           (1,788 )
                         
Balance, March 29, 2008
  $ 379     $     $ 379  
                         
Fiscal year 2009 provision
                 
Cash payments, net
    (379 )           (379 )
                         
Balance, March 28, 2009
  $     $     $  
                         
 
During fiscal year 2009, all accrued severance payments were completed, and the restructuring balance was reduced to zero as of March 28, 2009.
 
The following table sets forth the activity in our fiscal year 2007 restructuring accrual (in thousands):
 
                         
          Facilities
       
    Severance     Abandonment     Total  
 
Balance, March 25, 2006
  $     $     $  
Fiscal year 2007 provision
    716       278       994  
Cash payments, net
    (521 )     (74 )     (595 )
                         
Balance, March 31, 2007
    195       204       399  
Fiscal year 2008 provision
    (146 )     13       (133 )
Cash payments, net
    (49 )     (212 )     (261 )
                         
Balance, March 29, 2008
          5       5  
Fiscal year 2009 provision
                 
Cash payments, net
          (5 )     (5 )
                         
Balance, March 28, 2009
  $     $     $  
                         
 
During fiscal year 2009, all accrued facilities abandonment payments were completed, and the restructuring balance was reduced to zero as of March 28, 2009. During fiscal year 2008, we adjusted the severance accrual by $0.1 million to the remaining net realizable value, and all of these payments were completed during fiscal year 2008. During fiscal year 2007, we accrued an additional $0.1 million for severance activities. With respect to our facilities abandonment accruals, we increased our restructuring accrual by $0.3 million and $0.1 million to account for additional property taxes and other facilities costs, respectively, on certain facilities in Fremont, California.
 
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The following table sets forth the activity in our fiscal year 2004 restructuring accrual (in thousands):
 
                         
          Facilities
       
    Severance     Abandonment     Total  
 
Balance, March 29, 2003
  $     $     $  
Fiscal year 2004 provision
    1,688       6,205       7,893  
Cash payments, net
    (1,514 )     (908 )     (2,422 )
                         
Balance, March 27, 2004
    174       5,297       5,471  
Fiscal year 2005 provision
          178       178  
Cash payments, net
    (174 )     (944 )     (1,118 )
                         
Balance, March 26, 2005
          4,531       4,531  
Fiscal year 2006 provision
          627       627  
Cash payments, net
          (954 )     (954 )
                         
Balance, March 25, 2006
          4,204       4,204  
Fiscal year 2007 provision
          214       214  
Cash payments, net
          (1,124 )     (1,124 )
                         
Balance, March 31, 2007
          3,294       3,294  
Fiscal year 2008 provision
          14       14  
Cash payments, net
          (1,069 )     (1,069 )
                         
Balance, March 29, 2008
          2,239       2,239  
Fiscal year 2009 provision
          147       147  
Cash payments, net
          (423 )     (423 )
                         
Balance, March 28, 2009
  $     $ 1,963     $ 1,963  
                         
 
Fiscal year 2009 activity reflected a net reduction in the 2004 restructuring accrual of $0.3 million, which included an increase in the provision for normal accretion for the period. Fiscal year 2008 activity included a $0.3 million reduction to the facilities abandonment accrual in recognition of the end of the lease term in December 2007. This reduction was offset by additions to the accrual for accretion during the period.
 
As of March 28, 2009, we have a remaining restructuring accrual for all of our past restructurings of $2.0 million, primarily related to net lease expenses that will be paid over the respective lease terms through fiscal year 2013, along with other anticipated lease termination costs. We have classified the short-term portion of our restructuring activities, $1.0 million, as “Other accrued liabilities.”
 
11.   Employee Benefit Plans
 
We have a 401(k) Profit Sharing Plan (the “Plan”) covering substantially 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 $0.9 million, $0.8 million, and $0.8 million during fiscal years 2009, 2008, and 2007, respectively.
 
12.   Stockholders’ Equity
 
Share Repurchase Program
 
On January 29, 2009, we publicly announced that our Board authorized a share repurchase program of up to $20 million. The repurchases will be funded from existing cash and may be effected from time to time depending on general market and economic conditions and in accordance with applicable securities laws. As of March 28, 2009, no share repurchases have occurred under this share repurchase program.
 
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On January 30, 2008, we announced that our Board authorized a share repurchase program of up to $150 million. The Company repurchased 13.3 million shares of its common stock for $71.1 million during fiscal year 2008, which included $8.3 million of accrued share repurchases that were cash-settled in fiscal year 2009. During the first quarter of fiscal year 2009, we continued our stock repurchase activity by repurchasing a total of 11.2 million shares of our common stock for $78.9 million as part of this program. As of April 28, 2008, the share repurchase program was completed, with a cumulative 24.5 million shares acquired at a total cost of $150 million. All of these shares were repurchased in the open market and were funded from existing cash. All shares of our common stock that were repurchased were cancelled as of June 28, 2008.
 
Employee Stock Purchase Plan
 
In March 1989, we adopted the 1989 Employee Stock Purchase Plan (“ESPP”). As of March 28, 2009, 0.8 million shares of common stock were reserved for future issuance under this plan. During fiscal years 2009, 2008, and 2007, we issued 63,000, 36,000, and 48,000 shares, respectively, under the ESPP. In fiscal year 2006, the Board approved amendments to the ESPP eliminating the six-month look back feature of the plan and reducing the purchase price discount from 15 percent to 5 percent. These modifications became effective for all ESPP options granted beginning with fiscal year 2007. Based on these modifications, the plan is no longer compensatory and the company does not recognize any compensation expense associated with the ESPP grants. In fiscal year 2009, the final purchase of shares under the plan occurred on December 26, 2008. The plan has a 20 year duration, and expired under its own terms effective May 26, 2009.
 
Preferred Stock
 
On May 24, 2005, the Board approved an amendment (the “Amendment”) to the Amended and Restated Rights Agreement, dated as of February 17, 1999, between the Company and BankBoston, N.A., as Rights Agent. The Amendment accelerated the termination of the Company’s preferred stock purchase rights (the “Rights”) from the close of business on May 4, 2008, to the close of business on May 26, 2005. On May 25, 2005, the Chief Financial Officer (“CFO”) signed a Certificate of Elimination that was subsequently filed with the Secretary of State of the State of Delaware which had the effect of eliminating from the Company’s Certificate of Incorporation all references to the Series A Participating Preferred Stock of the Company and returning these shares to the status of undesignated shares of authorized Preferred Stock of the Company. We have not issued any of the authorized 1.5 million shares of Series A Participating Preferred Stock.
 
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Stock Compensation Expense
 
The following table summarizes the effects of stock-based compensation on cost of goods sold, research and development, sales, general and administrative, income from continuing operations before taxes, and net income after taxes for options granted under the Company’s equity incentive plans (in thousands, except per share amounts; unaudited):
 
                         
    Fiscal Years Ended  
    March 28,
    March 29,
    March 31,
 
    2009     2008     2007  
 
Cost of sales
  $ 212     $ 190     $ 63  
Research and development
    1,923       1,897       2,050  
Sales, general and administrative
    3,031       3,187       3,368  
                         
Effect on income from continuing operations (before taxes)
    5,166       5,274       5,481  
Income Tax Benefit
                 
                         
Total share based compensation expense (net of taxes)
  $ 5,166     $ 5,274     $ 5,481  
                         
Share based compensation effects on basic earnings (loss) per share
  $ 0.08     $ 0.06     $ 0.06  
Share based compensation effects on diluted earnings (loss) per share
  $ 0.08     $ 0.06     $ 0.06  
Share based compensation effects on operating activities cash flow
    5,166       5,274       5,481  
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 was $0.2 million for both fiscal years 2009 and 2008.
 
During fiscal year 2009, we received a net $2.4 million from the exercise of options granted under the Company’s Stock Plans, and an additional $0.2 million from the issuance of stock under the Employee Stock Purchase Plan.
 
The total intrinsic value of options exercised during fiscal year 2009, 2008, and 2007 was $0.9 million, $2.1 million, and $4.1 million, respectively. Intrinsic value represents the difference between the market value of Cirrus Logic common stock at the time of exercise and the strike price of the option.
 
As of March 28, 2009, there was $9.8 million of compensation cost related to non-vested stock option awards 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 2.43 years.
 
The Company currently is 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, performance awards, phantom stock awards, and bonus stock awards, or any combination of the foregoing. To date, the Company has granted incentive stock options and restricted stock awards under the Plan. Incentive stock options generally vest over a four-year period and are exercisable for a period of ten years from the date of grant. Restricted stock awards generally vest ratably over a period of four years.
 
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As of March 28, 2009, approximately 21.2 million shares of common stock were reserved for issuance under the Option Plans. Additional information with respect to stock option activity is as follows (in thousands, except per share amounts):
 
                         
          Outstanding Options  
                Weighted
 
    Options Available
          Average
 
    for Grant     Number     Exercise Price  
 
Balance, March 25, 2006
    17,055       11,960     $ 8.93  
Shares authorized for issuance
    20,473              
Option plans terminated
    (22,463 )            
Options granted
    (421 )     421       7.52  
Options exercised
          (1,299 )     5.26  
Options forfeited
    2,062       (812 )     6.54  
Options expired
          (1,250 )     16.68  
                         
Balance, March 31, 2007
    16,706       9,020     $ 8.54  
Shares authorized for issuance
                 
Option plans terminated
    (2,311 )            
Options granted
    (3,072 )     3,011       6.71  
Options exercised
          (1,006 )     5.50  
Options forfeited
    2,489       (525 )     7.00  
Options expired
          (1,964 )     12.43  
                         
Balance, March 29, 2008
    13,812       8,536     $ 7.94  
Shares authorized for issuance
                 
Option plans terminated
    (652 )            
Options granted
    (2,117 )     2,068       5.18  
Options exercised
          (501 )     4.72  
Options forfeited
    1,061       (436 )     6.71  
Options expired
          (604 )     9.31  
                         
Balance, March 28, 2009
    12,104       9,063     $ 7.45  
                         
 
Additional information with regards to outstanding options that are vesting, expected to vest, or exercisable as of March 28, 2009 is as follows:
 
                                 
    Number of
    Weighted
    Weighted Average
    Aggregate
 
    Options
    Average
    Remaining Contractual
    Intrinsic Value
 
    (thousands)     Exercise Price     Term (years)     (thousands)  
 
Vested and expected to vest
    8,573     $ 7.19       6.72     $ 392  
Exercisable
    5,181     $ 8.01       5.32     $ 283  
 
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The following table summarizes information regarding outstanding and exercisable options as of March 28, 2009:
 
                                         
    Options Outstanding     Options Exercisable  
          Weighted Average
    Weighted
    Number
    Weighted
 
    Number
    Remaining
    Average Exercise
    Exercisable
    Average
 
Range of Exercise Prices
  (in thousands)     Contractual Life     Price     (in thousands)     Exercise Price  
 
$ 1.83 - $ 4.58
    945       5.57     $ 3.77       743     $ 3.83  
$ 4.60 - $ 5.20
    857       5.56       5.14       805       5.14  
$ 5.25 - $ 5.25
    1,630       9.51       5.25       0       0.00  
$ 5.27 - $ 6.20
    680       7.98       5.74       304       5.82  
$ 6.51 - $ 6.51
    1,405       8.40       6.51       512       6.51  
$ 6.56 - $ 7.26
    1,641       6.04       7.08       1,286       7.10  
$ 7.33 - $ 8.06
    1,058       6.77       7.80       726       7.79  
$ 8.17 - $23.50
    702       2.84       14.35       660       14.72  
$32.56 - $32.56
    130       1.51       32.56       130       32.56  
$44.13 - $44.13
    15       1.50       44.13       15       44.13  
                                         
      9,063       6.85     $ 7.45       5,181     $ 8.01  
                                         
 
As of March 28, 2009, and March 29, 2008, the number of options exercisable was 5.2 million and 4.7 million, respectively.
 
In accordance with the provisions of SFAS No. 123(R), 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 $4.3 million, $3.9 million and $4.8 million became vested during fiscal years 2009, 2008 and 2007, respectively.
 
Restricted Stock Awards
 
In fiscal year 2009, the Company granted restricted stock awards to select employees. The grant date for these awards is equal to the measurement date. These awards are valued as of the measurement date and amortized over the requisite vesting period. A summary of the activity for restricted stock awards in fiscal years 2009 and 2008, which is a subset of the stock option information presented above, is presented below (in thousands, except for per share amounts):
 
                         
          Weighted
       
          Average
       
          Grant Date
    Aggregate
 
    Number of
    Fair Value
    Intrinsic
 
    Shares     (per share)     value(1)  
 
March 31, 2007
                   
Granted
    61     $ 7.75          
Vested
                 
Forfeited
                   
                         
March 29, 2008
    61       7.75          
Granted
    48       5.73          
Vested
    (15 )           86  
Forfeited
    (21 )              
                         
March 28, 2009
    73     $ 6.86          
                         
 
(1) Represents the value of Cirrus stock on the date that the restricted stock vested.
 
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Stock-Based Compensation
 
We estimated the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model using a dividend yield of zero and the following additional weighted-average assumptions:
 
                         
    March 28, 2009     March 29, 2008     March 31, 2007  
 
Employee Option Plans:
                       
Expected stock price volatility
    47.23-59.22 %     39.13-50.08 %     36.73-47.80 %
Risk-free interest rate
    1.48-2.99 %     2.26-4.95 %     4.65-4.99 %
Expected lives (in years)
    4.08-4.23       2.51-3.19       1.45-3.09  
 
Using the Black-Scholes option valuation model, the weighted average estimated fair values of employee stock options granted in fiscal years 2009, 2008, and 2007, were $2.82, $2.70, and $2.97, respectively.
 
13.   Accumulated Other Comprehensive Income (Loss)
 
Our accumulated other comprehensive income (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 income (loss) (in thousands):
 
                         
    Foreign
    Unrealized Gains
       
    Currency     (Losses) on Securities     Total  
 
Balance, March 31, 2007
  $ (770 )   $ (13 )   $ (783 )
Current-period activity
          559       559  
                         
Balance, March 29, 2008
    (770 )     546       (224 )
Current-period activity
          (352 )     (352 )
                         
Balance, March 28, 2009
  $ (770 )   $ 194     $ (576 )
                         
 
14.   Income Taxes
 
Income (loss) before income taxes consisted of (in thousands):
 
                         
    March 28,
    March 29,
    March 31,
 
    2009     2008     2007  
 
United States
  $ 3,739     $ 9,606     $ 21,226  
Non-U.S. 
    2,418       (12,407 )     (1,733 )
                         
    $ 6,157     $ (2,801 )   $ 19,493  
                         
 
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The provision (benefit) for income taxes consists of (in thousands):
 
                         
    March 28,
    March 29,
    March 31,
 
    2009     2008     2007  
 
Current:
                       
Federal
  $ (142 )   $     $  
State
    6              
Non-U.S. 
    167       258       (780 )
                         
Total current tax provision (benefit)
  $ 31     $ 258     $ (780 )
                         
Deferred:
                       
U.S. 
  $ 2,660     $ 4,568     $ (7,797 )
Non-U.S. 
    (9 )     (1,781 )     175  
                         
Total deferred tax provision (benefit)
    2,651       2,787       (7,622 )
                         
Total tax provision (benefit)
  $ 2,682     $ 3,045     $ (8,402 )
                         
 
The provision (benefit) for income taxes differs from the amount computed by applying the statutory federal rate to pretax income (loss) as follows (in percentages):
 
                         
    March 28,
    March 29,
    March 31,
 
    2009     2008     2007  
 
Expected income tax provision (benefit) at the U.S. federal statutory rate
    35.0       (35.0 )     35.0  
Foreign earnings repatriation
          82.5        
In-process research and development
          22.0       3.5  
Valuation allowance changes affecting the provision of income taxes
    (12.4 )     (98.0 )     (79.2 )
Foreign taxes at different rates
    (11.6 )     108.4       0.3  
Foreign earnings taxed in the U.S. 
    6.6       1.5        
Refundable R&D credit
    (2.3 )            
Reversals of previously accrued taxes and tax refunds
                (3.7 )
Stock compensation
    17.3       26.4       0.9  
Nondeductible expenses
    11.3       2.0       0.3  
Other
    (0.3 )     (1.1 )     (0.2 )
                         
Provision (benefit) for income taxes
    43.6       108.7       (43.1 )
                         
 
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Significant components of our deferred tax assets and liabilities are (in thousands):
 
                 
    March 28,
    March 29,
 
   
2009
   
2008
 
 
Deferred tax assets:
               
Inventory valuation
  $ 3,123     $ 3,619  
Accrued expenses and allowances
    2,949       3,328  
Net operating loss carryforwards
    174,418       173,551  
Research and development tax credit carryforwards
    36,278       35,749  
State tax credit carryforwards
    539       572  
Capitalized research and development
    27,980       32,463  
Depreciation and Amortization
    442        
Other
    13,859       12,290  
                 
Total deferred tax assets
  $ 259,588     $ 261,572  
Valuation allowance for deferred tax assets
    (252,551 )     (251,136 )
                 
Net deferred tax assets
  $ 7,037     $ 10,436  
                 
Deferred tax liabilities:
               
Depreciation and Amortization
  $     $ 182  
                 
Acquisition intangibles
    6,960       7,476  
                 
Total deferred tax liabilities
  $ 6,960     $ 7,658  
                 
Total net deferred tax assets
  $ 77     $ 2,778  
                 
 
The valuation allowance increased by $1.4 million in fiscal year 2009 and decreased by $14.3 million in fiscal year 2008. During fiscal year 2009, we increased the valuation allowance on our U.S. deferred tax assets by $2.7 million. This increase was based on an evaluation of the deferred tax assets that we consider being more likely than not to be utilized. At March 28, 2009, we had federal net operating losses carryforwards of $473.9 million. Of that amount, $75.4 million relates to companies we acquired during fiscal year 2002 and are, therefore, subject to certain limitations under Section 382 of the Internal Revenue Code. In addition, approximately $32.4 million of the federal net operating loss is attributable to employee stock option deductions, the benefit from which will be allocated to additional paid-in capital rather than current earnings if subsequently realized. We have net operating losses in various states that total $115 million. The federal net operating loss carryforwards expire in fiscal years 2010 through 2029. The state net operating loss carryforwards expire in fiscal years 2010 through 2029. We also have non-U.S. net operating losses of $6.2 million of which $2.1 million does not expire. The remaining $4.1 million expires in calendar years 2009 through 2013.
 
There are federal research and development credit carryforwards of $21.6 million that expire in fiscal years 2010 through 2029. There are $14.7 million of state research and development credits. Of that amount, $3.0 million will expire in fiscal years 2021 through 2026. The remaining $11.7 million of state research and development credits are not subject to expiration. The state investment credits of $0.3 million will expire in fiscal year 2010.
 
We have approximately $84 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 $31 thousand. With our current tax attributes, if the earnings were distributed, we would most likely not accrue any additional current income tax expense because this income would be offset by our net operating loss carryforwards and other future deductions.
 
We adopted the provisions of FIN 48 on April 1, 2007. As a result of the adoption of this new pronouncement, we recognized a $1.6 million decrease in the liability for unrecognized tax benefits with a
 
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corresponding increase to the balance of retained earnings as of April 1, 2007. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):
 
         
Balance at March 30, 2008
    $  183  
Additions based on tax positions related to the current year
     
Reductions for tax positions of prior years
    (98 )
Settlements
     
Reductions related to expirations of statutes of limitation
     
         
Balance at March 28, 2009
    $     85  
         
 
The majority of the reduction in unrecognized tax benefits is related to stock basis in entities sold in a prior year. All of the unrecognized tax benefits are associated with tax carryforwards that, if recognized, would have no effect on the effective tax rate because of the valuation allowance that has been placed on substantially all of our U.S. deferred tax assets. 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 upon adoption of FIN 48 or during the fiscal year 2009.
 
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 2006 through 2009 remain open to examination by the major taxing jurisdictions to which we are subject. Our fiscal year 2006 U.S. Federal income tax return is currently under examination by the Internal Revenue Service. We have responded fully to all requests for information. The auditor has not proposed any adjustments to date.
 
15.   Segment Information
 
We are focused on becoming a leader in high-precision analog and mixed-signal ICs for a broad range of audio and energy markets. We sell audio converters, audio interface devices, audio processors and audio amplification products. We also develop hybrids and modules for high-power applications. 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 determine our operating segments in accordance with Statement of Financial Accounting Standard No. 131 (“SFAS No. 131”), “Disclosures about Segments of an Enterprise and Related Information.” Our CEO has been identified as the chief operating decision maker as defined by SFAS No. 131.
 
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 discrete financial information maintained for these product lines. Commencing with fiscal year 2009, we report revenue in two product categories: audio products and energy products. The energy product category had previously been referred to as “industrial,” but has been revised to reflect our focus on integrated circuits designed for a variety of energy exploration, measurement and control applications. Our revenue by product line is as follows (in thousands):
 
                         
    March 28,     March 29,     March 31,  
    2009     2008     2007  
 
Audio products
  $ 97,293     $ 100,097     $ 105,913  
Energy products
    77,349       81,788       76,391  
                         
Total
  $  174,642     $  181,885     $  182,304  
                         
 
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Geographic Area
 
The following illustrates revenues by geographic locations based on the sales office location (in thousands):
 
                         
    March 28, 2009     March 29, 2008     March 31, 2007  
 
United States
  $ 53,309     $ 68,219     $ 69,515  
European Union
    25,580       13,727       17,415  
United Kingdom
    426       4,400       3,245  
China
    46,266       29,169       22,693  
Hong Kong
    5,937       9,518       7,064  
Japan
    10,062       14,972       14,822  
South Korea
    7,021       6,347       9,979  
Taiwan
    10,862       13,888       10,878  
Other Asia
    12,408       12,811       14,506  
Other non-U.S. countries
    2,771       8,834       12,187  
                         
Total consolidated revenues
  $ 174,642     $ 181,885     $ 182,304  
                         
 
The following illustrates property, plant and equipment, net, by geographic locations, based on physical location (in thousands):
 
                 
    March 28, 2009     March 29, 2008  
 
United States
  $ 19,058     $ 20,576  
United Kingdom
    2       15  
China
    183       252  
Hong Kong
    30       11  
Japan
    19       22  
South Korea
    43       37  
Taiwan
    9       12  
Other Asia
    23       36  
                 
Total consolidated property, plant and equipment, net
  $ 19,367     $ 20,961  
                 
 
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.
 
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The unaudited quarterly statement of operations data for each quarter of fiscal years 2009 and 2008 were as follows (in thousands, except per share data):
 
                                 
    Fiscal Year 2009  
    4th
    3rd
    2nd
    1st
 
   
Quarter
   
Quarter
   
Quarter
   
Quarter
 
    (2)           (1)        
 
Net sales
  $ 33,520     $ 43,833     $ 53,278     $ 44,011  
Gross margin
    18,469       24,078       29,986       24,651  
Net income (loss)
    (7,768 )     2,750       6,355       2,138  
Basic income (loss) per share
  $ (0.12 )   $ 0.04     $ 0.10     $ 0.03  
Diluted income (loss) per share
  $ (0.12 )   $ 0.04     $ 0.10     $ 0.03  
 
                                 
    Fiscal Year 2008  
    4th
    3rd
    2nd
    1st
 
   
Quarter
   
Quarter
   
Quarter
   
Quarter
 
    (4)           (3)        
 
Net sales
  $ 44,822     $ 48,905     $ 47,034     $ 41,124  
Gross margin
    24,707       27,340       26,821       24,365  
Net income
    (13,685 )     4,182       (332 )     3,989  
Basic income per share
  $ (0.16 )   $ 0.05           $ 0.05  
Diluted income per share
  $ (0.16 )   $ 0.05           $ 0.04  
 
 
  (1)  Net income was impacted by a $1.8 million provision for litigation expenses.
 
  (2)  Net income was impacted by a $2.7 million charge to tax expense to increase the valuation allowance on our U.S. deferred tax assets, a $2.1 million charge for the impairment of intangible assets, and a $0.4 million provision for litigation expenses.
 
  (3)  Net income was impacted by a $3.7 million impairment of non-marketable securities and a $1.8 million charge for acquired in-process research and development.
 
  (4)  Net income was impacted by a $10.5 million charge for restructuring costs and a $4.6 million charge to tax expense to increase the valuation allowance on our U.S. deferred tax assets.
 
ITEM 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
None.
 
Item 9A.  Controls and Procedures
 
Disclosure Controls and Procedures
 
The Company’s management carried out an evaluation, under the supervision and with the participation of the CEO and CFO, of the effectiveness of the design and operation of Company’s disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of March 28, 2009. Based on that evaluation, the Company’s CEO and CFO have concluded that such disclosure controls and procedures were effective in alerting them in a timely manner to material information relating to the Company required to be included in its periodic reports filed with the SEC.
 
Management’s Annual Report on Internal Control Over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined under Rule 13a-15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we assessed the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on the framework in “Internal
 
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Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.
 
Based on its assessment of internal control over financial reporting, management has concluded that our internal control over financial reporting was effective as of March 28, 2009 to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
 
Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on management’s updated assessment of our internal control over financial reporting as of March 28, 2009, included in Item 8 of this report.
 
Changes in Internal Control Over Financial Reporting
 
There has been no change in the Company’s internal control over financial reporting during the quarter ended March 28, 2009, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
PART III
 
ITEM 10.  Directors and Executive Officers of the Registrant
 
The information set forth in the Proxy Statement to be delivered to stockholders in connection with our Annual Meeting of Stockholders to be held on July 25, 2008 under the headings Corporate Governance — Board Meetings and Committees, Corporate Governance — Audit Committee, Proposals to be Voted on — Proposal No. 1 — Election of Directors, Executive Compensation — Executive Officers, and “Section 16(a) Beneficial Ownership Reporting Compliance” is incorporated herein by reference.
 
ITEM 11.  Executive Compensation
 
The information set forth in the Proxy Statement under the headings Compensation Discussion and Analysis and Compensation Committee Report is incorporated herein by reference.
 
ITEM 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
The information set forth in the Proxy Statement under the headings Equity Compensation Plan Information and Ownership of Securities is incorporated herein by reference.
 
ITEM 13.  Certain Relationships and Related Transactions
 
The information set forth in the Proxy Statement under the headings Certain Relationships and Related Transactions and Corporate Governance is incorporated herein by reference.
 
ITEM 14.  Principal Accountant Fees and Services
 
The information set forth in the Proxy Statement under the heading Audit and Non-Audit Fees and Services is incorporated herein by reference.
 
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PART IV
 
ITEM 15.  Exhibit and Financial Statement Schedules
 
(a)  The following documents are filed as part of this Report:
 
1. Consolidated Financial Statements
 
  §   Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm.
 
  §   Consolidated Balance Sheets as of March 28, 2009 and March 29, 2008.
 
  §   Consolidated Statements of Operations for the fiscal years ended March 28, 2009, March 29, 2008, and March 31, 2007.
 
  §   Consolidated Statements of Cash Flows for the fiscal years ended March 28, 2009, March 29, 2008, and March 31, 2007.
 
  §   Consolidated Statements of Stockholders’ Equity for the fiscal years ended March 28, 2009, March 29, 2008, and March 31, 2007.
 
  §   Notes to Consolidated Financial Statements.
 
2. Financial Statement Schedules
 
All schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or notes thereto.
 
3. Exhibits
 
The following exhibits are filed as part of or incorporated by reference into this Report:
 
     
3.1
  Certificate of Incorporation of Registrant, filed with the Delaware Secretary of State on August 26, 1998. (1)
3.2
  Amended and Restated Bylaws of Registrant. (2)
10.1+
  1989 Employee Stock Purchase Plan, as amended September 21, 2005. (3)
10.2+
  1990 Directors’ Stock Option Plan, as amended. (4)
10.3+
  Cirrus Logic, Inc. 1996 Stock Plan, as amended and restated as of December 4, 2007. (5)
10.4+
  2002 Stock Option Plan, as amended. (6)
10.5+
  Cirrus Logic, Inc. 2006 Stock Incentive Plan. (7)
10.6+
  Form of Stock Option Agreement for options granted under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (7)
10.7+
  Form of Notice of Grant of Stock Option for options granted under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (7)
10.8+
  Form of Stock Option Agreement for Outside Directors under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (8)
10.9+
  Form of Restricted Stock Award Agreement under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (9)
10.10+
  2007 Executive Severance and Change of Control Plan, effective as of October 1, 2007. (10)
10.11+
  2007 Management and Key Individual Contributor Incentive Plan, as amended on February 15, 2008 (17).
10.12
  Lease Agreement by and between Desta Five Partnership, Ltd. and Registrant, dated November 10, 2000 for 197,000 square feet located at 2901 Via Fortuna, Austin, Texas. (1)
10.13
  Amendment No. 1 to Lease Agreement by and between Desta Five Partnership, Ltd. and Registrant dated November 10, 2000. (11)
10.14
  Amendment No. 2 to Lease Agreement by and between Desta Five Partnership, Ltd. and Registrant dated November 10, 2000. (6)
10.15
  Amendment No. 3 to Lease Agreement by and between Desta Five Partnership, Ltd. and Registrant dated November 10, 2000. (12)
10.16
  Agreement and Plan of Merger, dated July 11, 2007 (13)
10.17+
  Resignation Agreement between David D. French and Cirrus Logic, Inc. dated March 5, 2007 (14)
10.18
  Agreement on Termination of Employment Contract between Bin Wu and Registrant dated March 13, 2008. (16)
10.19
  Letter Agreement by and between Bin Wu and Registrant dated April 9, 2008. (16)
10.20
  The Revised Stipulation of Settlement dated March 10, 2009 (18)
14
  Code of Conduct. (15)
23.1*
  Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
24.1*
  Power of Attorney (see signature page).
 
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31.1*
  Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
  Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
  Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*
  Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
+ Indicates a management contract or compensatory plan or arrangement.
 
* Filed with this Form 10-K.
 
   (1)  Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 31, 2001, filed with the SEC on June 22, 2001 (Registration No. 000-17795).
 
   (2)  Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on September 21, 2005.
 
   (3)  Incorporated by reference from Registrant’s Report on Form 10-Q filed with the SEC on October 25, 2005.
 
   (4)  Incorporated by reference from Registrant’s Registration Statement on Form S-8 filed with the SEC on August 8, 2001 (Registration No. 333-67322).
 
   (5)  Incorporated by reference from Registrant’s Report on Form 10-Q filed with the SEC on January 30, 2008.
 
   (6)  Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 29, 2003, filed with the SEC on June 13, 2003 (Registration No. 000-17795).
 
   (7)  Incorporated by reference from Registration’s Statement on Form S-8 filed with the SEC on August 1, 2006.
 
   (8)  Incorporated by reference from Registrant’s Report on Form 10-Q filed with the SEC on August 1, 2007.
 
   (9)  Incorporated by reference from Registrant’s Report on Form 10-Q filed with the SEC on November 5, 2007.
 
  (10)  Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on October 3, 2007.
 
  (11)  Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 30, 2002, filed with the SEC on June 19, 2002 (Registration No. 000-17795).
 
  (12)  Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 25, 2006 filed with the SEC on May 25, 2006.
 
  (13)  Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on July 12, 2007.
 
  (14)  Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on March 7, 2007.
 
  (15)  Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 27, 2004, filed with the SEC on June 9, 2004 (Registration No. 000-17795).
 
  (16)  Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 29, 2008, filed with the SEC on May 29, 2008 (Registration No. 000-17795).
 
  (17)  Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 29, 2008, filed with the SEC on May 29, 2008 (Registration No. 000-17795).
 
  (18)  Incorporated by reference from Registrant’s Report on Form 10-Q filed with the SEC on April 1, 2009.
 
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Signatures
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized.
 
CIRRUS LOGIC, INC.
 
  By: 
/s/  Thurman K. Case
Thurman K. Case
Vice President, Chief Financial Officer and
Chief Accounting Officer
May 29, 2009
 
KNOW BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Thurman K. Case, his attorney-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of the attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant, in the capacities and on the dates indicated have signed this report below:
 
             
Signature
 
Title
 
Date
 
         
/s/  Michael L. Hackworth

Michael L. Hackworth
  Chairman of the Board and Director   May 29, 2009
         
/s/  Jason P. Rhode

Jason P. Rhode
  President and Chief Executive Officer   May 29, 2009
         
/s/  Thurman K. Case

Thurman K. Case
  Vice President, Chief Financial Officer and Chief Accounting Officer   May 29, 2009
         
/s/  D. James Guzy

D. James Guzy
  Director   May 29, 2009
         
/s/  Suhas S. Patil

Suhas S. Patil
  Chairman Emeritus and Director   May 29, 2009
         
/s/  Walden C. Rhines

Walden C. Rhines
  Director   May 29, 2009
         
/s/  William D. Sherman

William D. Sherman
  Director   May 29, 2009
         
/s/  Robert H. Smith

Robert H. Smith
  Director   May 29, 2009
 
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Exhibit Index
 
(a) The following exhibits are filed as part of this Report:
 
     
Number
 
Description
 
23.1
  Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
24.1
  Power of Attorney (see signature page).
31.1
  Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
  Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
  Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
  Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
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