CIRRUS LOGIC INC, 10-K filed on 5/24/2019
Annual Report
v3.19.1
Document and Entity Information - USD ($)
12 Months Ended
Mar. 30, 2019
May 21, 2019
Sep. 29, 2018
Document and Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Entity Registrant Name CIRRUS LOGIC INC    
Entity Central Index Key 0000772406    
Entity Filer Category Large Accelerated Filer    
Smaller Reporting Company false    
Emerging Growth Company false    
Entity Shell Company false    
Entity Well-known Seasoned Issuer Yes    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Document Period End Date Mar. 30, 2019    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Current Fiscal Year End Date --03-30    
Entity Common Stock, Shares Outstanding (in shares)   58,325,259  
Entity Public Float     $ 1,498,568,379
v3.19.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 30, 2019
Mar. 31, 2018
Current assets:    
Cash and cash equivalents $ 216,172 $ 235,604
Marketable securities 70,183 26,397
Accounts receivable, net 120,656 100,801
Inventories 164,733 205,760
Prepaid assets 30,794 31,235
Other current assets 22,445 13,877
Total current assets 624,983 613,674
Long-term marketable securities 158,968 172,499
Property and equipment, net 186,185 191,154
Intangibles, net 67,847 111,547
Goodwill 286,241 288,718
Deferred tax assets 8,727 14,716
Other assets 19,689 37,809
Total assets 1,352,640 1,430,117
Current liabilities:    
Accounts payable 48,398 69,850
Accrued salaries and benefits 29,289 35,721
Software license agreements 21,514 21,981
Other accrued liabilities 16,339 12,657
Total current liabilities 115,540 140,209
Long-term liabilities:    
Software license agreements 8,662 27,765
Non-current income taxes 78,309 92,753
Other long-term liabilities 9,889 7,662
Total long-term liabilities 96,860 128,180
Stockholders’ equity:    
Preferred stock, 5.0 million shares authorized but unissued 0 0
Common stock, $0.001 par value, 280,000 shares authorized, 58,954 shares and 61,960 shares issued and outstanding at March 30, 2019 and March 31, 2018, respectively 59 62
Additional paid-in capital 1,363,677 1,312,372
Accumulated deficit (222,430) (139,345)
Accumulated other comprehensive loss (1,066) (11,361)
Total stockholders’ equity 1,140,240 1,161,728
Total liabilities and stockholders’ equity $ 1,352,640 $ 1,430,117
v3.19.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
Mar. 30, 2019
Mar. 31, 2018
Statement of Financial Position [Abstract]    
Preferred stock, shares authorized but unissued (in shares) 5,000,000 5,000,000
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 280,000,000 280,000,000
Common stock, shares issued (in shares) 58,954,000 61,960,000
Common stock, shares outstanding (in shares) 58,954,000 61,960,000
v3.19.1
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Mar. 30, 2019
Mar. 31, 2018
Mar. 25, 2017
Income Statement [Abstract]      
Net sales $ 1,185,524 $ 1,532,186 $ 1,538,940
Cost of sales 588,027 771,470 781,125
Gross profit 597,497 760,716 757,815
Operating expenses      
Research and development 375,139 366,444 303,658
Selling, general and administrative 126,502 131,811 127,265
Gain on sale of assets (4,913) 0 0
Asset impairment 0 0 9,842
Total operating expenses 496,728 498,255 440,765
Income from operations 100,769 262,461 317,050
Interest income 8,017 4,762 1,676
Interest expense (1,057) (1,153) (3,600)
U.K. pension settlement (13,768) 0 0
Other expense (217) (971) (79)
Income before income taxes 93,744 265,099 315,047
Provision for income taxes 3,753 103,104 53,838
Net income $ 89,991 $ 161,995 $ 261,209
Basic earnings per share (in dollars per share) $ 1.50 $ 2.55 $ 4.12
Diluted earnings per share (in dollars per share) $ 1.46 $ 2.46 $ 3.92
Basic weighted average common shares outstanding (in shares) 60,116 63,407 63,329
Diluted weighted average common shares outstanding (in shares) 61,583 65,951 66,561
v3.19.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
12 Months Ended
Mar. 30, 2019
Mar. 31, 2018
Mar. 25, 2017
Statement of Comprehensive Income [Abstract]      
Net income $ 89,991 $ 161,995 $ 261,209
Other comprehensive income (loss), before tax      
Foreign currency translation gain (loss) (3,125) 2,791 (826)
Unrealized gain (loss) on marketable securities 2,823 (2,380) 47
U.K. pension settlement 13,814 0 0
Actuarial loss on defined benefit pension plan 0 (14,729) (79)
Reclassification of actuarial gain to net income 0 0 (89)
Benefit (provision) for income taxes (3,217) 3,530 42
Comprehensive income $ 100,286 $ 151,207 $ 260,304
v3.19.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Mar. 30, 2019
Mar. 31, 2018
Mar. 25, 2017
Cash flows from operating activities:      
Net income $ 89,991 $ 161,995 $ 261,209
Adjustments to net cash provided by operating activities:      
Depreciation and amortization 79,826 81,399 63,433
Stock-based compensation expense 49,689 48,741 39,593
Deferred income taxes 1,717 11,646 10,885
(Gain) loss on retirement or write-off of long-lived assets (2,713) 626 10,387
Charges (payments) for defined benefit pension plan 11,189 (10,929) 116
Other non-cash charges 429 (3,864) 8,980
Net change in operating assets and liabilities:      
Accounts receivable, net (14,316) 19,173 (31,442)
Inventories 40,636 (37,865) (25,880)
Other assets 965 16,824 575
Accounts payable (21,965) 143 1,772
Accrued salaries and benefits (6,432) (4,469) 18,951
Income taxes payable (7,974) 22,983 10,969
Other accrued liabilities (14,348) 12,308 203
Net cash provided by operating activities 206,694 318,711 369,751
Cash flows from investing activities:      
Maturities and sales of available-for-sale marketable securities 70,840 138,221 212,863
Purchases of available-for-sale marketable securities (98,864) (238,434) (231,432)
Purchases of property, equipment and software (31,615) (55,180) (41,849)
Investments in technology (4,143) (29,323) (9,447)
Proceeds from the sale of assets 9,120 0 0
Net cash used in investing activities (54,662) (184,716) (69,865)
Cash flows from financing activities:      
Principal payments on long-term revolver 0 (60,000) (100,439)
Debt issuance costs 0 0 (2,152)
Payments on capital lease agreements 0 0 (699)
Issuance of common stock, net of shares withheld for taxes 1,616 4,417 16,518
Repurchase of stock to satisfy employee tax withholding obligations (13,083) (17,806) (14,089)
Repurchase and retirement of common stock (159,997) (175,776) (15,439)
Contingent consideration payments 0 (392) (1,213)
Net cash used in financing activities (171,464) (249,557) (117,513)
Net (decrease) increase in cash and cash equivalents (19,432) (115,562) 182,373
Cash and cash equivalents at beginning of period 235,604 351,166 168,793
Cash and cash equivalents at end of period 216,172 235,604 351,166
Cash payments during the year for:      
Income taxes 20,617 34,385 8,001
Interest $ 612 $ 835 $ 2,947
v3.19.1
Consolidated Statements of Stockholders' Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Income / (Loss)
Cumulative effect of adoption of new ASU | Accounting Standards Update 2016-09 $ 5,649     $ 5,649  
Balance (in shares) at Mar. 26, 2016   62,630      
Balance at Mar. 26, 2016 859,483 $ 63 $ 1,203,433 (344,345) $ 332
Net income 261,209     261,209  
Change in unrealized gain (loss) on marketable securities, net of tax 31       31
Change in defined benefit pension plan liability, net of tax (110)       (110)
Change in foreign currency translation adjustments (826)       (826)
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes (in shares)   2,145      
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes 2,429 $ 2 16,516 (14,089)  
Repurchase and retirement of common stock (in shares)   (480)      
Repurchase and retirement of common stock (15,439) $ (1)   (15,438)  
Amortization of deferred stock compensation 39,593   39,593    
Excess tax benefit from employee stock awards (327)   (327)    
Balance (in shares) at Mar. 25, 2017   64,295      
Balance at Mar. 25, 2017 1,151,692 $ 64 1,259,215 (107,014) (573)
Cumulative effect of adoption of new ASU | Accounting Standards Update 2016-16 (747)     (747)  
Net income 161,995     161,995  
Change in unrealized gain (loss) on marketable securities, net of tax (1,630)       (1,630)
Change in defined benefit pension plan liability, net of tax (11,949)       (11,949)
Change in foreign currency translation adjustments 2,791       2,791
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes (in shares)   1,054      
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes (13,389) $ 1 4,416 (17,806)  
Repurchase and retirement of common stock (in shares)   (3,389)      
Repurchase and retirement of common stock (175,776) $ (3)   (175,773)  
Amortization of deferred stock compensation 48,741   48,741    
Balance (in shares) at Mar. 31, 2018   61,960      
Balance at Mar. 31, 2018 1,161,728 $ 62 1,312,372 (139,345) (11,361)
Net income 89,991     89,991  
Change in unrealized gain (loss) on marketable securities, net of tax 2,231       2,231
Change in defined benefit pension plan liability, net of tax 11,189       11,189
Change in foreign currency translation adjustments (3,125)       (3,125)
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes (in shares)   964      
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes (11,466) $ 1 1,616 (13,083)  
Repurchase and retirement of common stock (in shares)   (3,970)      
Repurchase and retirement of common stock (159,997) $ (4)   (159,993)  
Amortization of deferred stock compensation 49,689   49,689    
Balance (in shares) at Mar. 30, 2019   58,954      
Balance at Mar. 30, 2019 $ 1,140,240 $ 59 $ 1,363,677 $ (222,430) $ (1,066)
v3.19.1
Description of Business
12 Months Ended
Mar. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business
Description of Business

Description of Business
Cirrus Logic, Inc. (“Cirrus Logic,” “We,” “Us,” “Our,” or the “Company”) is a leader in high-performance, low-power integrated circuits (“ICs”) for audio, voice and other signal-processing applications. Cirrus Logic’s products span the entire audio signal chain, from capture to playback, providing innovative products for the world’s top smartphones, tablets, digital headsets, wearables and emerging smart home applications.
We were incorporated in California in 1984, became a public company in 1989, and were reincorporated in the State of Delaware in February 1999. Our primary facility housing engineering, sales and marketing, and administration functions is located in Austin, Texas. We also have offices in various other locations in the United States, United Kingdom, Spain, Australia and Asia, including the People’s Republic of China, Hong Kong, South Korea, Japan, Singapore, and Taiwan. Our common stock, which has been publicly traded since 1989, is listed on the NASDAQ's 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 2017 and 2019 were 52-week years. Fiscal year 2018 was a 53-week year.
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Reclassifications
Certain reclassifications have been made to prior year balances in order to conform to the current year’s presentation of financial information.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires the use of management estimates. These estimates are subjective in nature and involve judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at fiscal year-end and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
v3.19.1
Summary of Significant Accounting Policies
12 Months Ended
Mar. 30, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Cash and Cash Equivalents
Cash and cash equivalents consist primarily of money market funds, commercial paper, and U.S. Government Treasury and Agency instruments with original maturities of three months or less at the date of purchase.
Inventories
We use the lower of cost or net realizable value 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. Product life cycles and the competitive nature of the industry are factors considered in the evaluation of customer unit demand at the end of each quarterly accounting period. Inventory on-hand in excess of forecasted demand is considered to have reduced market value and, therefore, the cost basis is adjusted to the lower of cost or net realizable value. Typically, market values for excess or obsolete inventories are considered to be zero. Inventory charges recorded for excess and obsolete inventory, including scrapped inventory, were $6.2 million and $9.7 million, in fiscal year 2019 and 2018, respectively. Inventory charges in fiscal year 2019 and 2018 related to a combination of quality issues and inventory exceeding demand.
Inventories were comprised of the following (in thousands):
 
 
March 30, 2019
 
March 31, 2018
Work in process
$
80,100

 
$
97,138

Finished goods
84,633

 
108,622

 
$
164,733

 
$
205,760


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 3 to 39 years. Leasehold improvements are depreciated over the shorter of the term of the lease or the estimated useful life. Furniture, fixtures, machinery, and equipment are all depreciated over a useful life of 3 to 10 years, while buildings are depreciated over a period of up to 39 years. In general, our capitalized software is amortized over a useful life of 3 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. Additionally, if impairment indicators exist, the Company will assess the carrying value of the associated asset. In the fourth quarter of fiscal year 2017, the Company reassessed the carrying value of the property located in Edinburgh, Scotland, resulting in an asset impairment charge of $9.8 million. This property was subsequently sold in the fourth quarter of fiscal year 2019 for a $4.9 million gain presented separately in the Consolidated Statements of Income as "Gain on sale of assets".
Property, plant and equipment was comprised of the following (in thousands):
 
 
March 30, 2019
 
March 31, 2018
Land
$
23,853

 
$
26,379

Buildings
63,172

 
71,354

Furniture and fixtures
22,762

 
22,138

Leasehold improvements
45,286

 
35,569

Machinery and equipment
157,994

 
143,509

Capitalized software
25,763

 
25,949

Construction in progress
3,689

 
6,086

Total property, plant and equipment
342,519

 
330,984

Less: Accumulated depreciation and amortization
(156,334
)
 
(139,830
)
Property, plant and equipment, net
$
186,185

 
$
191,154


Depreciation and amortization expense on property, plant, and equipment for fiscal years 2019, 2018, and 2017 was $32.0 million, $27.7 million, and $26.1 million, respectively.
Goodwill and Intangibles, net
Intangible assets include purchased technology licenses and patents that are reported at cost and are amortized on a straight-line basis over their useful lives, generally ranging from 1 to 10 years. Acquired intangibles include existing technology, core technology or patents, license agreements, in-process research & development, trademarks, tradenames, customer relationships, non-compete agreements, and backlog. These assets are amortized on a straight-line basis over lives ranging from 1 to 15 years.
Goodwill is recorded at the time of an acquisition and is calculated as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. 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’s assessment of qualitative factors to determine whether it is more likely than not that goodwill and other intangible assets are impaired. If management concludes from its assessment of qualitative factors that it is more likely than not that impairment exists, then a quantitative impairment test will be performed involving 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 these evaluations. If our actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges in a future period. The Company has recorded no goodwill impairments in fiscal years 2019, 2018, and 2017. There were no material intangible asset impairments in fiscal years 2019, 2018, or 2017.
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
Some of the Company's subsidiaries utilize the local currency as the functional currency. The Company’s main entities, including the entities that generate the majority of sales and employ the majority of employees, are US dollar functional.

Concentration of Credit Risk
Financial instruments that potentially subject us to material concentrations of credit risk consist primarily of cash equivalents, 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, marketable securities, and long-term marketable securities are subject to certain nationally recognized credit standards, issuer concentrations, sovereign risk, and marketability or liquidity considerations.
In evaluating our trade receivables, we perform credit evaluations of our major customers’ financial condition and monitor closely all of our receivables to limit our financial exposure by limiting the length of time and amount of credit extended. In certain situations, we may require payment in advance or utilize letters of credit to reduce credit risk. By policy, we establish a reserve for trade accounts receivable based on the type of business in which a customer is engaged, the length of time a trade account receivable is outstanding, and other knowledge that we may possess relating to the probability that a trade receivable is at risk for non-payment.
We had three contract manufacturers, Hongfujin Precision, Pegatron, and Foxconn who represented 22 percent, 19 percent, and 11 percent, respectively of our consolidated gross trade accounts receivable as of the end of fiscal year 2019. Pegatron, Jabil Circuits and Hongfujin Precision represented 24 percent, 18 percent, and 11 percent, respectively of our consolidated gross trade accounts receivable as of the end of fiscal year 2018. No other distributor or customer had receivable balances that represented more than 10 percent of consolidated gross trade accounts receivable as of the end of fiscal year 2019 and 2018.
Since the components we produce are largely proprietary and generally not available from second sources, we consider our end customer to be the entity specifying the use of our component in their design. These end customers may then purchase our products directly from us, from a distributor, or through a third-party manufacturer contracted to produce their end product. For fiscal years 2019, 2018, and 2017, our ten largest end customers represented approximately 91 percent, 92 percent, and 92 percent, of our sales, respectively. For fiscal years 2019, 2018, and 2017, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 78 percent, 81 percent, and 79 percent, of the Company’s total sales, respectively. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2019, 2018, or 2017.
Revenue Recognition
We recognize revenue upon the transfer of promised goods or services to customers, in an amount that reflects the consideration the Company expects to be entitled in exchange for those goods or services.

Performance Obligations
The Company’s contracts with customers contain a single performance obligation, which is the delivery of promised goods to the customer. The promised goods are explicitly stated in the customer contract and are comprised of either a single type of good or a series of goods that are substantially the same, have the same pattern of transfer to the customer, and are neither capable of being distinct nor separable from the other promised goods in the contract. This performance obligation is satisfied upon transfer of control of the promised goods to the customer, as defined per the shipping terms within the customer’s contract. The vast majority of the Company’s contracts with customers have an original expected term of one year or less. As allowed by ASC 606, the Company has not disclosed of the value of any unsatisfied performance obligations related to these contracts.

The Company’s products typically include a warranty period of one to three years. These warranties qualify as assurance-type warranties, as goods can be returned for product non-conformance and defect only. As such, these warranties are accounted for under ASC 460, Guarantees, and are not considered a separate performance obligation.

Contract balances
Payments are typically due within 30 to 60 days of invoicing and terms do not include a significant financing component or noncash consideration. There have been no material impairment losses on accounts receivable. There are no material contract assets or contract liabilities recorded on the consolidated balance sheets.

Transaction price
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods to the customer. Fixed pricing is the consideration that is agreed upon in the customer contract. Variable pricing includes rebates, rights of return, warranties, price protection and stock rotation. Rebates are granted as a customer account credit, based on agreed-upon sales thresholds. Rights of return and warranty costs are estimated using the "most likely amount" method by reviewing historical returns to determine the most likely customer return rate and applying materiality thresholds. Price protection includes price adjustments available to certain distributors based upon established book price and a stated adjustment period. Stock rotation is also available to certain distributors based on a stated maximum of prior billings.
The Company estimates all variable consideration at the most likely amount which it expects to be entitled. The estimate is based on current and historical information available to the Company, including recent sales activity and pricing. Variable consideration is only included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company defers all variable consideration that does not meet the revenue recognition criteria.
Warranty Expense
We warrant our products and maintain a provision for warranty repair or replacement of shipped products. The accrual represents management’s estimate of probable returns. Our estimate is based on an analysis of our overall sales volume and historical claims experience. The estimate is re-evaluated periodically for accuracy.
Shipping Costs
Our shipping and handling costs are included in cost of sales for all periods presented in the Consolidated Statements of Income.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs were $1.0 million, $1.4 million, and $1.7 million, in fiscal years 2019, 2018, and 2017, respectively.
Stock-Based Compensation
Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards and is recognized as an expense, on a ratable basis, over the vesting period, which is generally between 0 and 4 years. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates used in calculating the grant-date fair value of stock options and performance awards (also called market stock units). The Company calculates the grant-date fair value for stock options and market stock units using the Black-Scholes valuation model and the Monte Carlo simulation, respectively. The use of valuation models requires the Company to make estimates of assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield, and forfeiture rates. The grant-date fair value of restricted stock units is the market value at grant date multiplied by the number of units.
Income Taxes
We are required to calculate income taxes in each of the jurisdictions in which we operate. This process involves calculating the actual current tax liability as well as assessing temporary differences in the recognition of income or loss for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our Consolidated Balance Sheet. We record a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The Company evaluates the ability to realize its deferred tax assets based on all the facts and circumstances, including projections of future taxable income and expiration dates of carryover tax attributes.
The calculation of our tax liabilities involves assessing uncertainties with respect to the application of complex tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing jurisdiction. We recognize liabilities for uncertain tax positions based on the required two-step process. The first step requires us to determine if the weight of available evidence indicates that the tax position has met the threshold for recognition; therefore, we must evaluate whether it is more likely than not that the position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step requires us to measure the tax benefit of the tax position taken, or expected to be taken, in an income tax return as the largest amount that is more than 50 percent likely of being realized upon ultimate settlement. We reevaluate the uncertain tax positions each quarter based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, expirations of statutes of limitation, effectively settled issues under audit, and new audit activity. A change in the recognition step or measurement step would result in the recognition of a tax benefit or an additional charge to the tax provision in the period.
Although we believe the measurement of our liabilities for uncertain tax positions is reasonable, we cannot assure that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals. If additional taxes are assessed as a result of an audit or litigation, it could have a material effect on our income tax provision and net income in the period or periods for which that determination is made. We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues which may require an extended period of time to resolve and could result in additional assessments of income tax. We believe adequate provisions for income taxes have been made for all periods.
Net Income Per Share
Basic net income per share is based on the weighted effect of common shares issued and outstanding and is calculated by dividing net income by the basic weighted average shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of common shares used in the basic net income per share calculation, plus the equivalent number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. These potentially dilutive items consist primarily of outstanding stock options and restricted stock grants.
The following table details the calculation of basic and diluted earnings per share for fiscal years 2019, 2018, and 2017, (in thousands, except per share amounts):
 
 
Fiscal Years Ended
 
March 30, 2019
 
March 31, 2018
 
March 25, 2017
Numerator:
 
 
 
 
 
Net income
$
89,991

 
$
161,995

 
$
261,209

Denominator:
 
 
 
 
 
Weighted average shares outstanding
60,116

 
63,407

 
63,329

Effect of dilutive securities
1,467

 
2,544

 
3,232

Weighted average diluted shares
61,583

 
65,951

 
66,561

Basic earnings per share
$
1.50

 
$
2.55

 
$
4.12

Diluted earnings per share
$
1.46

 
$
2.46

 
$
3.92


The weighted outstanding shares excluded from our diluted calculation for the years ended March 30, 2019March 31, 2018, and March 25, 2017 were 872 thousand, 326 thousand, and 389 thousand, respectively, as the exercise price of certain outstanding stock options exceeded the average market price during the period.
Accumulated Other Comprehensive Loss
Our accumulated other comprehensive loss is comprised of foreign currency translation adjustments, unrealized gains and losses on investments classified as available-for-sale and actuarial gains and losses on our defined benefit pension plan assets, prior to plan settlement in fiscal year 2019. See Note 14 — Accumulated Other Comprehensive Loss for additional discussion.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (ASC Topic 606). The purpose of this ASU is to converge revenue recognition requirements per U.S. GAAP and International Financial Reporting Standards (“IFRS”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date after public comment supported a proposal to delay the effective date of this ASU to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company completed the process of reviewing our customers’ contracts in respect of performance obligation identification and satisfaction, pricing, warranties, and return rights, among other considerations, in the first quarter of fiscal year 2019. According to the standard, the Company could adopt by full retrospective method, which applies retrospectively to each prior period presented, or by modified retrospective method with the cumulative effect adjustment recognized in beginning retained earnings as of the date of adoption. The Company adopted this standard using the modified retrospective adoption method in the first quarter of fiscal year 2019 with no income statement impact, and therefore no beginning retained earnings impact. See Summary of Significant Accounting Policies - Revenue Recognition within this footnote as well as Note 8 - Revenues for additional details.
The effects of the changes made to our balance sheet at adoption were as follows (in thousands):
 
Balance at March 31, 2018
 
Impact from ASU 2014-09 Adoption
 
Balance at April 1, 2018
Financial statement line item:
 
 
 
 
 
Accounts receivable
$
100,801

 
$
5,539

 
$
106,340

Inventories
205,760

 
(391)

 
205,369

Other current assets
13,877

 
391

 
14,268

Other accrued liabilities
$
(12,657
)
 
$
(5,539
)
 
$
(18,196
)

  
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The FASB issued this update to increase transparency and comparability by recognizing lease assets and lease liabilities on the balance sheet and disclosing key leasing arrangement details. Lessees would recognize operating leases on the balance sheet under this ASU - with the future lease payments recognized as a liability, measured at present value, and the right-of-use (“ROU”) asset recognized for the lease term. A single lease cost would be recognized over the lease term. For initial terms of less than twelve months, a lessee would be permitted to make an accounting policy election to recognize lease expense for such leases generally on a straight-line basis over the lease term. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The modified retrospective approach was previously the only allowed adoption method.
In July 2018, the FASB issued the related ASU 2018-10 - Leases (Topic 842): Targeted Improvements. This ASU offers a new transition adoption method, which will not require adjustments to comparative periods. The Company adopted using the latter method in the first quarter of fiscal year 2020. The new standard provides a number of optional practical expedients in transition. We elected the use-of-hindsight practical expedient and the ‘package of practical expedients’ which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. This means, for qualifying leases, typically those with terms of less than twelve months, we will not recognize ROU assets or lease liabilities. We also do not separate lease and non-lease components for all classes of assets. Most of our operating lease commitments were subject to the new standard and recognized as right-of-use assets and operating lease liabilities upon adoption, which will materially increase the total assets and total liabilities that we report relative to such amounts prior to adoption of this ASU.
On adoption, we recognized additional operating liabilities of approximately $158.0 million, with corresponding ROU assets based on the present value of the remaining minimum rental payments under current leasing contracts for existing operating leases. In addition, existing capitalized initial direct costs of $2.8 million and accrued lease payments of $11.1 million were reclassified from prepayments and accruals to the ROU asset, resulting in a ROU asset of $149.7 million. There was no income statement impact on adoption.
In applying the use-of-hindsight practical expedient, we re-assessed whether we were reasonably certain to exercise extension options within our lease agreements. This resulted in the lease term being extended on a number of leases. The previously capitalized initial direct costs and lease creditor were recalculated assuming these extended lease terms had always applied, resulting in an adjustment of $1.0 million to opening retained earnings on transition.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  This ASU requires credit losses on available-for-sale debt securities to be presented as an allowance rather than a write-down. Unlike current U.S. GAAP, the credit losses could be reversed with changes in estimates, and recognized in current year earnings.  This ASU is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods.  Early adoption is permitted for annual periods beginning after December 15, 2018, including interim periods.  The Company is currently evaluating the impact of this ASU, but does not expect a material impact to the financial statements upon adoption.
In January 2017, the FASB issued ASU 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.  This ASU eliminates step two of the goodwill impairment test. An impairment charge is to be recognized for the amount by which the current value exceeds the fair value. This ASU is effective for annual periods beginning after December 15, 2019, including interim periods.  Early adoption is permitted, for interim or annual goodwill impairment tests performed after January 1, 2017, and should be applied prospectively. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this update. The Company is currently evaluating the impact of this ASU, but does not expect a material impact to the financial statements upon adoption.
In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires an employer to disaggregate the service cost component from the other components of net benefit cost. It also provides guidance on income statement presentation for service cost and other components of net benefit cost. This ASU is effective for annual periods beginning after December 15, 2017, including interim periods. The Company adopted this ASU in the first quarter of fiscal year 2019. The impact of adoption included the buy-out settlement of the defined benefit pension plan as discussed in Note 9.
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU applies to any company that changes the terms or conditions of a share-based award, considered a modification. Modification accounting would be applied unless certain conditions were met related to the fair value of the award, the vesting conditions and the classification of the modified award. This ASU is effective for annual periods beginning after December 15, 2017, with early adoption permitted. The standard should be applied prospectively to an award modified on or after the adoption date. The Company adopted this ASU in the first quarter of fiscal year 2019 with no financial statement impact as no awards were modified in the current period.
In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU allows for the classification of stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income to retained earnings. This ASU is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The standard should be applied in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in tax rate is recognized. The Company is currently evaluating the impact of this ASU, but does not expect a material impact to the financial statements upon adoption.
In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees and will apply to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year, with early adoption permitted. The Company intends to adopt this guidance in the first quarter of fiscal year 2020, but does not expect a material impact to the financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. This ASU adjusts current required disclosures related to fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year, with early adoption permitted. The Company is currently evaluating the impact of this ASU, but does not expect a material impact to the financial statements.
In August 2018, the Commission adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The final rule was published in the Federal Register on October 4, 2018, effective November 5, 2018. The additional disclosure is not required until the quarterly filing covering the period beginning after the effective date of the amendments, which will be the Company's first quarter fiscal year 2020 filing. The Company is evaluating the impact of this guidance on its financial statements, but does not expect a material impact to the financial statements upon adoption.
v3.19.1
Marketable Securities
12 Months Ended
Mar. 30, 2019
Marketable Securities [Abstract]  
Marketable Securities
Marketable Securities

The Company’s investments have been classified as available-for-sale securities in accordance with U.S. GAAP. Marketable securities are categorized on the Consolidated Balance Sheet as “Marketable securities” within the short-term or long-term classification, as appropriate.

The following table is a summary of available-for-sale securities (in thousands):
 
As of March 30, 2019
Amortized
Cost
 
Gross Unrealized
Gains
 
Gross Unrealized
Losses
 
Estimated Fair Value
(Net Carrying Amount)
Corporate debt securities
$
215,098

 
$
1,027

 
$
(600
)
 
$
215,525

Non-US government securities
13,209

 
8

 
(40
)
 
13,177

Agency discount notes
450

 

 
(1
)
 
449

Total securities
$
228,757

 
$
1,035

 
$
(641
)
 
$
229,151


The Company typically invests in highly-rated securities with original maturities generally ranging from one to three years. The Company's specifically identified gross unrealized loss of $0.6 million related to securities with a total amortized cost of approximately $123.1 million at March 30, 2019. Securities in a continuous unrealized loss position for more than 12 months as of March 30, 2019 had an aggregate amortized cost of $120.3 million and an aggregate unrealized loss of $0.6 million. The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipated or actual changes in credit rating and duration management.  When evaluating an investment for other-than-temporary impairment, the Company reviews factors including the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, changes in market interest rates and whether it is more likely than not the Company will be required to sell the investment before recovery of the investment’s cost basis. As of March 30, 2019, the Company does not consider any of its investments to be other-than-temporarily impaired.
 
As of March 31, 2018
Amortized
Cost
 
Gross Unrealized
Gains
 
Gross Unrealized
Losses
 
Estimated Fair Value
(Net Carrying Amount)
Corporate debt securities
$
185,636

 
$
4

 
$
(2,318
)
 
$
183,322

Non-US government securities
14,730

 

 
(111
)
 
14,619

Certificates of deposit
500

 

 

 
500

Agency discount notes
459

 

 
(4
)
 
455

Total securities
$
201,325

 
$
4

 
$
(2,433
)
 
$
198,896


The Company’s specifically identified gross unrealized losses of $2.4 million related to securities with a total amortized cost of approximately $198.2 million at March 31, 2018. There were no securities that have been in a continuous unrealized loss position for more than 12 months as of March 31, 2018. The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipated or actual changes in credit rating and duration management.  When evaluating an investment for other-than-temporary impairment, the Company reviews factors including the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, changes in market interest rates and whether it is more likely than not the Company will be required to sell the investment before recovery of the investment’s cost basis. As of March 31, 2018, the Company did not consider any of its investments to be other-than-temporarily impaired.
The cost and estimated fair value of available-for-sale investments by contractual maturity were as follows:
 
 
March 30, 2019
 
March 31, 2018
 
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
Within 1 year
$
70,490

 
$
70,183

 
$
26,560

 
$
26,397

After 1 year
158,267

 
158,968

 
174,765

 
172,499

Total
$
228,757

 
$
229,151

 
$
201,325

 
$
198,896

v3.19.1
Fair Value of Financial Instruments
12 Months Ended
Mar. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
Fair Value of Financial Instruments

The Company has determined that the only assets and liabilities in the Company’s financial statements that are required to be measured at fair value on a recurring basis are the Company’s cash equivalents, investment portfolio, pension plan assets/liabilities (through the second quarter of fiscal year 2019) and contingent consideration (through the third quarter of fiscal year 2018). The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
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.
The Company’s cash equivalents and investment portfolio assets consist of corporate debt securities, money market funds, non-U.S government securities, securities of U.S. government-sponsored enterprises, and certificates of deposit and are reflected on our Consolidated Balance Sheet under the headings cash and cash equivalents, marketable securities, and long-term marketable securities. The Company determines the fair value of its investment portfolio assets by obtaining non-binding market prices from its third-party pricing providers on the last day of the quarter, whose sources may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value.
In connection with one of the Company’s second quarter fiscal year 2016 acquisitions, the Company reported contingent consideration based upon achievement of certain milestones.  This liability was classified as Level 3 prior to payout in the fourth quarter of fiscal year 2018 and was valued using a discounted cash flow model.  The assumptions used in preparing the discounted cash flow included discount rate estimates and cash flow amounts. The final payment related to the contingent consideration was made in the fourth quarter of fiscal year 2018 and no further liability remains at March 30, 2019.
The Company’s long-term revolving facility, described in Note 7, bears interest at a base rate plus applicable margin or LIBOR plus applicable margin. As of March 30, 2019, there are no amounts drawn under the facility and the fair value is zero.
As of March 30, 2019 and March 31, 2018, the Company has no Level 3 assets or liabilities. There were no transfers between Level 1, Level 2, or Level 3 measurements for the years ending March 30, 2019 and March 31, 2018.
The following summarizes the fair value of our financial instruments at March 30, 2019 (in thousands):
 
 
Quoted Prices
in Active
Markets for
Identical
Assets
Level 1
 
Significant
Other
Observable
Inputs
Level 2
 
Significant
Unobservable
Inputs
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Cash equivalents
 
 
 
 
 
 
 
Money market funds
$
216,172

 
$

 
$

 
$
216,172

Available-for-sale securities
 
 
 
 
 
 
 
Corporate debt securities
$

 
$
215,525

 
$

 
$
215,525

Non-US government securities

 
13,177

 

 
13,177

Agency discount notes

 
449

 

 
449

 
$

 
$
229,151

 
$

 
$
229,151


The following summarizes the fair value of our financial instruments, exclusive of pension plan assets detailed in Note 9, at March 31, 2018 (in thousands):
 
 
Quoted Prices
in Active
Markets for
Identical
Assets
Level 1
 
Significant
Other
Observable
Inputs
Level 2
 
Significant
Unobservable
Inputs
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Cash equivalents
 
 
 
 
 
 
 
Money market funds
$
211,891

 
$

 
$

 
$
211,891

Available-for-sale securities
 
 
 
 
 
 
 
Corporate debt securities
$

 
$
183,322

 
$

 
$
183,322

Non-US government securities

 
14,619

 

 
14,619

Certificates of deposit

 
500

 

 
500

Agency discount notes

 
455

 

 
455

 
$

 
$
198,896

 
$

 
$
198,896


Contingent consideration
The following summarizes the fair value of the contingent consideration at March 31, 2018:
 
 
Maximum Value if
Milestones Achieved
(in thousands)
 
Estimated
Discount
Rate (%)
 
Fair Value
(in thousands)
Tranche B — 30 month earn out period
5,000

 
7.7
 


 
 
 
Fiscal Year Ended
 
 
March 31, 2018
 
 
(in thousands)
Beginning balance
 
$
4,695

Adjustment to estimates (research and development expense)
 
(4,328
)
Payout of Tranche B contingent consideration
 
(392
)
Fair value charge recognized in earnings (research and development expense)
 
25

Ending balance
 
$


The valuation of contingent consideration was based on a weighted-average discounted cash flows model.  The fair value was reviewed and estimated on a quarterly basis based on the probability of achieving defined milestones and interest rates.  Changes in any of the unobservable inputs used in the fair value measurement of contingent consideration resulted in a lower or higher fair value.  A change in projected outcomes if milestones were achieved was accompanied by a directionally similar change in fair value.  A change in discount rate was accompanied by a directionally opposite change in fair value.  Changes to the fair value due to changes in assumptions were reported in research and development expense in the Consolidated Statements of Income. In the first quarter of the fiscal year 2018, changes in the probability of achieving certain milestones associated with Tranche B of the earn-out were determined following a review of product shipment forecasts within the earn-out period.  The revised estimates reduced the fair value of the liability prior to the pay out in the fourth quarter of fiscal year 2018.
v3.19.1
Accounts Receivable, Net
12 Months Ended
Mar. 30, 2019
Accounts Receivable, Net [Abstract]  
Accounts Receivable, Net
Accounts Receivable, net

The following are the components of accounts receivable, net (in thousands):
 
 
 
March 30, 2019
 
March 31, 2018
Gross accounts receivable
 
$
120,926

 
$
101,004

Allowance for doubtful accounts
 
(270
)
 
(203
)
Accounts receivable, net
 
$
120,656

 
$
100,801


The Company regularly evaluates the collectability of accounts receivable based on age, historical customer payment trends and ongoing customer relations. The following table summarizes the changes in the allowance for doubtful accounts (in thousands):
 
Balance, March 26, 2016
$
(475
)
Bad debt expense, net of recoveries
41

Balance, March 25, 2017
(434
)
Bad debt expense, net of recoveries
231

Balance, March 31, 2018
(203
)
Bad debt expense, net or recoveries
(67
)
Balance, March 30, 2019
$
(270
)

Recoveries on bad debt were immaterial for the three years presented above.
v3.19.1
Intangibles, net and Goodwill
12 Months Ended
Mar. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangibles, net and Goodwill
Intangibles, net and Goodwill

The intangibles, net balance included on the Consolidated Balance Sheet was $67.8 million and $111.5 million at March 30, 2019 and March 31, 2018, respectively.
The following information details the gross carrying amount and accumulated amortization of our intangible assets (in thousands):
 
 
 
March 30, 2019
 
March 31, 2018
Intangible Category / Weighted-Average Amortization
period (in years)
 
Gross
Amount
 
Accumulated
Amortization
 
Gross
Amount
 
Accumulated
Amortization
Core technology (a)
 
$
1,390

 
$
(1,390
)
 
$
1,390

 
$
(1,390
)
License agreement (a)
 
440

 
(440
)
 
440

 
(440
)
Existing technology (6.3)
 
117,976

 
(94,136
)
 
117,976

 
(75,048
)
In-process research & development (“IPR&D”) (7.3)
 
97,972

 
(69,794
)
 
97,972

 
(49,556
)
Trademarks and tradename (10.0)
 
3,037

 
(2,461
)
 
3,037

 
(2,333
)
Customer relationships (10.0)
 
15,381

 
(7,270
)
 
15,381

 
(5,732
)
Backlog (a)
 
220

 
(220
)
 
220

 
(220
)
Non-compete agreements (a)
 
470

 
(470
)
 
470

 
(470
)
Technology licenses (3.0)
 
28,336

 
(21,194
)
 
28,063

 
(18,213
)
Total
 
$
265,222

 
$
(197,375
)
 
$
264,949

 
$
(153,402
)

 
(a)
Intangible assets are fully amortized.
Amortization expense for intangibles in fiscal years 2019, 2018, and 2017 was $47.8 million, $53.7 million, and $37.4 million, respectively. The following table details the estimated aggregate amortization expense for all intangibles owned as of March 30, 2019, for each of the five succeeding fiscal years and in the aggregate thereafter (in thousands):
 
For the year ended March 28, 2020
$
28,443

For the year ended March 27, 2021
$
17,750

For the year ended March 26, 2022
$
12,755

For the year ended March 25, 2023
$
6,663

For the year ended March 30, 2024
$
1,695

Thereafter
$
541


The goodwill balance included on the Consolidated Balance Sheet is $286.2 million and $288.7 million at March 30, 2019 and March 31, 2018, respectively.
v3.19.1
Revolving Credit Facility
12 Months Ended
Mar. 30, 2019
Line of Credit Facility [Abstract]  
Revolving Credit Facility
Revolving Credit Facility

On July 12, 2016, Cirrus Logic entered into an amended and restated credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the Lenders party thereto, for the purpose of refinancing an existing credit facility and providing ongoing working capital. The Credit Agreement provides for a $300 million senior secured revolving credit facility (the “Credit Facility”). The Credit Facility matures on July 12, 2021.  The Credit Facility is required to be guaranteed by all of Cirrus Logic’s material domestic subsidiaries (the “Subsidiary Guarantors”). The Credit Facility is secured by substantially all of the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets.
Borrowings under the Credit Facility may, at Cirrus Logic’s election, bear interest at either (a) a base rate plus the applicable margin (“Base Rate Loans”) or (b) a LIBOR Rate plus the applicable margin (“LIBOR Rate Loans”).  The applicable margin ranges from 0% to 0.50% per annum for Base Rate Loans and 1.25% to 2.00% per annum for LIBOR Rate Loans based on the Leverage Ratio (as defined below). A commitment fee accrues at a rate per annum ranging from 0.20% to 0.30% (based on the Leverage Ratio) on the average daily unused portion of the commitment of the lenders. The Credit Agreement contains certain financial covenants providing that (a) the ratio of consolidated funded indebtedness to consolidated EBITDA for the prior four consecutive quarters must not be greater than 3.00 to 1.00 (the “Leverage Ratio”) and (b) the ratio of consolidated EBITDA for the prior four consecutive fiscal quarters to consolidated fixed charges (including amounts paid in cash for consolidated interest expenses, capital expenditures, scheduled principal payments of indebtedness, and income taxes) for the prior four consecutive fiscal quarters must not be less than 1.25 to 1.00 as of the end of each fiscal quarter.  The Credit Agreement also contains negative covenants limiting the Company’s or any Subsidiary’s ability to, among other things, incur debt, grant liens, make investments, effect certain fundamental changes, make certain asset dispositions, and make certain restricted payments.
As of March 30, 2019, the Company had no amounts outstanding under the Credit Facility and was in compliance with all covenants under the Credit Facility.
v3.19.1
Revenues
12 Months Ended
Mar. 30, 2019
Revenue from Contract with Customer [Abstract]  
Revenues
Revenues

Disaggregation of revenue
We disaggregate revenue from contracts with customers based on the ship to location of the customer. The geographic regions that are reviewed are the United States and countries outside of the United States (primarily located in Asia).
Total net sales based on the disaggregation criteria described above are as follows:

 
Year Ended
 
March 30,
 
March 31,
 
March 25,
 
2019
 
2018
 
2017
Non-United States
$
1,159,342

 
$
1,498,454

 
$
1,502,916

United States
26,182

 
33,732

 
36,024

 
$
1,185,524

 
$
1,532,186

 
$
1,538,940


See Note 2 - Summary of Significant Accounting Policies for additional discussion surrounding revenue recognition considerations.
v3.19.1
Postretirement Benefit Plans
12 Months Ended
Mar. 30, 2019
Retirement Benefits [Abstract]  
Pension Benefit Plans
Postretirement Benefit Plans

Defined Benefit Pension Plan
As a result of our acquisition of Wolfson in fiscal year 2015, the Company had a defined benefit pension scheme (“the Scheme”), for some individuals in the United Kingdom. Following the acquisition, the participants in the Scheme no longer accrued benefits and therefore the Company was not required to make contributions in respect of future accruals.
During fiscal year 2018, the Company authorized the termination of the Scheme under which 60 participants had accrued benefits. On March 16, 2018, the Scheme completed a buy-in transaction whereby the assets of the Scheme, together with a final contribution from the Company of $11.0 million, were invested in a bulk purchase annuity contract that fully insures the benefits payable to the members of the Scheme at that time.
The bulk purchase annuity contract was structured to enable the Scheme to move to full buy-out (following which the insurance company became directly responsible for the pension payments). On November 30, 2018, the insurance company confirmed that the buy-out was completed and individual policies had been established for each member. Completion of the buy-out confirms full and final settlement of the Scheme, and the unamortized loss previously recorded within Accumulated Other Comprehensive Income ("AOCI") of $13.8 million was recognized within other non-operating expense as "U.K. pension settlement" in the third quarter of fiscal year 2019, with the corresponding tax benefit of $2.6 million being recognized within "Provision for income taxes" in the Consolidated Statements of Income. As the buy-out transaction has fully settled, there will be no further contributions to the Scheme.
The following tables set forth the benefit obligation, the fair value of plan assets, and the funded status of the Scheme (in thousands): 
 
 
March 30,
2019
 
March 31,
2018
Change in benefit obligation:
 
 
 
 
Beginning balance
 
$
40,601

 
$
21,123

Interest cost
 

 
651

Plan settlements
 
(40,601
)
 

Benefits paid and expenses
 

 
(312
)
Change in foreign currency exchange rate
 

 
2,869

Actuarial loss
 

 
16,270

Total benefit obligation ending balance
 

 
40,601

Change in plan assets:
 
 
 
 
Beginning balance
 
40,601

 
22,143

Actual return on plan assets
 

 
2,700

Employer contributions
 

 
12,877

Plan settlements
 
(40,601
)
 

Change in foreign currency exchange rate
 

 
3,193

Benefits paid and expenses
 

 
(312
)
Fair value of plan assets ending balance
 

 
40,601

Funded status of Scheme at end of year
 
$

 
$


The assets and obligations of the Scheme are denominated in British Pound Sterling. Following the purchase of the bulk purchase annuity contract as of March 31, 2018, the Scheme was fully insured and the net funded status is zero as reflected in the Company’s Consolidated Balance Sheet under the caption “Other assets”. The Company’s plan assets and obligations are measured as of the fiscal year-end. As of March 31, 2018, the plan assets and obligations were measured with reference to the price of the bulk purchase annuity contract.
The components of the Company’s net periodic pension expense (income) presented within “Research and development” expenses in the Consolidated Statements of Income are as follows (in thousands):
 
 
 
Fiscal Years Ended
 
 
March 30,
2019
 
March 31,
2018
 
March 25,
2017
Expenses
 
$

 
$

 
$

Interest cost
 

 
651

 
759

Expected return on plan assets
 

 
(1,159
)
 
(1,126
)
Settlement loss
 

 

 
1,063

Amortization of actuarial gain
 

 

 
(89
)
 
 
$

 
$
(508
)
 
$
607


The following weighted-average assumptions were used to determine net periodic benefit costs for the year ended March 30, 2019March 31, 2018 and March 25, 2017:
 
 
 
2019
 
2018
 
2017
Discount rate
 
n/a
 
2.70
%
 
3.60
%
Expected long-term return on plan assets
 
n/a
 
4.23
%
 
4.93
%

The table below sets forth the fair value of our plan assets as of March 31, 2018, using the same three-level hierarchy of fair-value inputs described in Note 4 (in thousands): 
 
 
Quoted Prices
in Active
Markets for
Identical
Assets
Level 1
 
Significant
Other
Observable
Inputs
Level 2
 
Significant
Unobservable
Inputs
Level 3
 
Total
Plan Assets:
 
 
 
 
 
 
 
 
Insurance contracts
 
$

 
$
40,601

 
$

 
$
40,601



The Company contributed $12.9 million to the pension plan in fiscal year 2018. As the buy-out transaction has fully settled, there will be no further contributions to the Scheme as discussed above.
Defined Contribution Plans
We have Defined Contribution Plans (“the Plans”) covering all of our qualifying employees. Under the Plans, employees may elect to contribute any percentage of their annual compensation up to the annual regulatory limits. The Company made matching employee contributions of $7.7 million, $6.7 million, and $5.5 million during fiscal years 2019, 2018, and 2017, respectively.
v3.19.1
Equity Compensation
12 Months Ended
Mar. 30, 2019
Share-based Compensation [Abstract]  
Equity Compensation
Equity Compensation

The Company is currently granting equity awards from the 2018 Long Term Incentive Plan (the “Plan”), which was approved by stockholders in August 2018. 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 stock options, restricted stock awards, phantom stock awards (also called restricted stock units), and performance awards (also called market stock units). Each stock option granted reduces the total shares available for grant under the Plan by one share. Each full value award granted (including restricted stock awards, restricted stock units and market stock units) reduces the total shares available for grant under the Plan by 1.5 shares. Stock options generally vest between zero and four years, and are exercisable for a period of ten years from the date of grant.  Restricted stock units are generally subject to vesting from zero to three years, depending upon the terms of the grant. Market stock units are subject to a vesting schedule of three years.
The following table summarizes the activity in total shares available for grant (in thousands):
 
 
Shares
 
Available for
 
Grant
Balance, March 26, 2016
6,287

Shares added

Granted
(1,719
)
Forfeited
124

Balance, March 25, 2017
4,692

Shares added

Granted
(1,755
)
Forfeited
128

Balance, March 31, 2018
3,065

Shares added
2,509

Granted
(2,371
)
Forfeited
120

Balance, March 30, 2019
3,323



Stock-based Compensation Expense
The following table summarizes the effects of stock-based compensation on cost of goods sold, research and development, sales, general and administrative, pre-tax income, and net income after taxes for shares granted under the Plan (in thousands, except per share amounts):
 
 
 
Fiscal Year
 
 
2019
 
2018
 
2017
Cost of sales
 
$
877

 
$
1,474

 
$
1,071

Research and development
 
29,115

 
26,137

 
21,186

Sales, general and administrative
 
19,697

 
21,130

 
17,336

Effect on pre-tax income
 
49,689

 
48,741

 
39,593

Income Tax Benefit
 
(5,748
)
 
(5,953
)
 
(12,482
)
Total stock-based compensation expense (net of taxes)
 
43,941

 
42,788

 
27,111

Stock-based compensation effects on basic earnings per share
 
$
0.73

 
$
0.67

 
$
0.43

Stock-based compensation effects on diluted earnings per share
 
0.71

 
0.65

 
0.41


The total stock-based compensation expense included in the table above and which is attributable to restricted stock units and market stock units was $45.5 million, $44.2 million, $35.5 million, for fiscal years 2019, 2018, and 2017, respectively. Stock-based compensation expense is presented within operating activities in the Consolidated Statement of Cash Flows.
As of March 30, 2019, there was $88.7 million of compensation costs related to non-vested stock options, restricted stock units, and market stock units granted under the Company’s equity incentive plans not yet recognized in the Company’s financial statements. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.3 years for stock options, 1.64 years for restricted stock units, and 1.66 years for market stock units.
In addition to the income tax benefit of stock-based compensation expense shown in the table above, the Company recognized excess tax benefits of $0.9 million, $11.7 million and $22.9 million in fiscal years 2019, 2018, and 2017 respectively, as a result of the Company’s early adoption of ASU 2016-09.
Stock Options
We estimate the fair value of each stock option on the date of grant using the Black-Scholes option-pricing model using a dividend yield of zero and the following additional assumptions:
 
 
 
March 30, 2019
 
March 31, 2018
 
March 25, 2017
Expected stock price volatility
 
38.00-38.14 %
 
37.36
%
 
47.66
%
Risk-free interest rate
 
2.57-2.94 %
 
1.67
%
 
1.13
%
Expected term (in years)
 
3.12-3.73
 
3.03

 
2.79


The Black-Scholes valuation calculation requires us to estimate key assumptions such as stock price volatility, expected term, risk-free interest rate and dividend yield. The expected stock price volatility is based upon implied volatility from traded options on our stock in the marketplace. The expected term of options granted is derived from an analysis of historical exercises and remaining contractual life of stock options, and represents the period of time that options granted are expected to be outstanding after becoming vested. The risk-free interest rate reflects the yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption. Finally, we have never paid cash dividends, do not currently intend to pay cash dividends, and thus have assumed a zero percent dividend yield.
Using the Black-Scholes option valuation model, the weighted average estimated fair values of employee stock options granted in fiscal years 2019, 2018, and 2017, were $16.27, $19.87, and $22.84, respectively.
During fiscal years 2019, 2018, and 2017, we received a net $1.6 million, $4.4 million, and $16.4 million, respectively, from the exercise of 0.1 million, 0.2 million, and 1.4 million, respectively, stock options granted under the Company’s Stock Plan.
The total intrinsic value of stock options exercised during fiscal year 2019, 2018, and 2017, was $2.6 million, $9.8 million, and $52.2 million, respectively. Intrinsic value represents the difference between the market value of the Company’s common stock at the time of exercise and the strike price of the stock option.
Additional information with respect to stock option activity is as follows (in thousands, except per share amounts):
 
 
 
Outstanding Options
 
 
Number
 
Weighted
Average
Exercise Price
Balance, March 26, 2016
 
2,925

 
$
17.96

Options granted
 
215

 
54.65

Options exercised
 
(1,382
)
 
11.87

Options forfeited
 

 

Options expired
 

 

Balance, March 25, 2017
 
1,758

 
$
27.25

Options granted
 
216

 
55.72

Options exercised
 
(234
)
 
18.84

Options forfeited
 

 

Options expired
 

 

Balance, March 31, 2018
 
1,740

 
$
31.91

Options granted
 
280

 
40.41

Options exercised
 
(108
)
 
15.03

Options forfeited
 
(38
)
 
49.62

Options expired
 
(9
)
 
55.01

Balance, March 30, 2019
 
1,865

 
$
33.68


Additional information with regards to outstanding options that are vesting, expected to vest, or exercisable as of March 30, 2019 is as follows (in thousands, except years and per share amounts):
 
 
 
Number of
Options
 
Weighted
Average
Exercise price
 
Weighted Average
Remaining Contractual
Term (years)
 
Aggregate
Intrinsic Value
Vested and expected to vest
 
1,858

 
$
33.64

 
5.64
 
$
20,786

Exercisable
 
1,322

 
$
28.97

 
4.49
 
$
19,733


In accordance with U.S. GAAP, stock options outstanding that are expected to vest are presented net of estimated future option forfeitures, which are estimated as compensation costs are recognized. Options with a fair value of $4.1 million, $3.8 million, and $3.8 million, became vested during fiscal years 2019, 2018, and 2017, respectively.
The following table summarizes information regarding outstanding and exercisable options as of March 30, 2019 (in thousands, except per share amounts):
 
 
 
Options Outstanding
 
Options Exercisable
 
 
 
 
Weighted Average
Remaining
Contractual Life
 
Weighted
Average Exercise
 
Number
 
Weighted
Average
Range of Exercise Prices
 
Number
 
(years)
 
Price
 
Exercisable
 
Exercise Price
$5.00 - $16.25
 
345

 
1.83
 
$
14.32

 
345

 
$
14.32

$16.28 - $23.34
 
326

 
4.85
 
21.78

 
326

 
21.78

$23.80 - $32.29
 
309

 
6.28
 
31.23

 
255

 
31.22

$33.38 - $38.99
 
303

 
5.45
 
38.27

 
210

 
38.37

$41.49 - $54.65
 
387

 
8.23
 
48.21

 
118

 
54.65

$55.72 - $55.72
 
195

 
7.93
 
55.72

 
68

 
55.72

 
 
1,865

 
5.65
 
$
33.68

 
1,322

 
$
28.97


As of March 30, 2019 and March 31, 2018, the number of options exercisable was 1.3 million and 1.2 million, respectively.
Restricted Stock Units
Commencing in fiscal year 2011, the Company began granting restricted stock units (“RSU’s”) to select employees. These awards are valued as of the grant date and amortized over the requisite vesting period. Generally, RSU’s vest 100 percent on the first to third anniversary of the grant date depending on the vesting specifications. A summary of the activity for RSU’s in fiscal year 2019, 2018, and 2017 is presented below (in thousands, except year and per share amounts):
 
 
 
Shares
 
Weighted
Average
Fair Value
March 26, 2016
 
3,163

 
$
26.14

Granted
 
947

 
52.40

Vested
 
(1,032
)
 
24.67

Forfeited
 
(83
)
 
28.40

March 25, 2017
 
2,995

 
34.91

Granted
 
936

 
55.79

Vested
 
(1,077
)
 
24.79

Forfeited
 
(85
)
 
41.09

March 31, 2018
 
2,769

 
45.70

Granted
 
1,416

 
40.57

Vested
 
(1,176
)
 
33.65

Forfeited
 
(175
)
 
48.15

March 30, 2019
 
2,834

 
$
47.99



The aggregate intrinsic value of RSU’s outstanding as of March 30, 2019 was $119.2 million. Additional information with regards to outstanding restricted stock units that are expected to vest as of March 30, 2019, is as follows (in thousands, except year and per share amounts):
 
 
 
Shares
 
Weighted
Average
Fair Value
 
Weighted Average
Remaining Contractual
Term (years)
Expected to vest
 
2,738

 
$
48.07

 
1.63

RSU’s outstanding that are expected to vest are presented net of estimated future forfeitures, which are estimated as compensation costs are recognized. RSU’s with a fair value of $39.6 million and $26.7 million became vested during fiscal years 2019 and 2018, respectively. The majority of RSUs that vested in 2019 and 2018 were net settled such that the Company withheld a portion of the shares to satisfy tax withholding requirements. In fiscal years 2019 and 2018, the vesting of RSU’s reduced the authorized and unissued share balance by approximately 1.2 million and 1.1 million, respectively. Total shares withheld and subsequently retired out of the Plan were approximately 0.3 million and 0.3 million, and total payments for the employees’ tax obligations to taxing authorities were $13.1 million and $17.8 million for fiscal years 2019 and 2018, respectively.
Market Stock Units
In fiscal year 2015, the Company began granting market stock units (“MSU’s”) to select employees. MSU’s vest based upon the relative total shareholder return (“TSR”) of the Company as compared to that of the Philadelphia Semiconductor Index (“the Index”). The requisite service period for these MSU’s is also the vesting period, which is three years. The fair value of each MSU granted was determined on the date of grant using the Monte Carlo simulation, which calculates the present value of the potential outcomes of future stock prices of the Company and the Index over the requisite service period. The fair value is based on the risk-free rate of return, the volatilities of the stock price of the Company and the Index, the correlation of the stock price of the Company with the Index, and the dividend yield.
The fair values estimated from the Monte Carlo simulation were calculated using a dividend yield of zero and the following additional assumptions:
 
 
 
Year Ended
 
 
March 30,
2019
 
March 31,
2018
Expected stock price volatility
 
38.00-38.14 %
 
37.36
%
Risk-free interest rate
 
2.62-3.01 %
 
1.74
%
Expected term (in years)
 
3.00
 
3.00



Using the Monte Carlo simulation, the weighted average estimated fair value of the MSU’s granted in fiscal year 2019 was $53.13. A summary of the activity for MSU’s in fiscal year 2019, 2018, and 2017 is presented below (in thousands, except year and per share amounts):
 
 
 
Shares
 
Weighted
Average
Fair Value
March 26, 2016
 
125

 
$
34.85

Granted
 
55

 
75.58

Vested
 

 

Forfeited
 

 

March 25, 2017
 
180

 
$
47.30

Granted
 
89

 
47.26

Vested
 
(70
)
 
22.00

Forfeited
 

 

March 31, 2018
 
199