CIRRUS LOGIC INC, 10-Q filed on 1/30/2019
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
9 Months Ended
Dec. 29, 2018
Jan. 25, 2019
Document and Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Entity Registrant Name CIRRUS LOGIC INC  
Entity Central Index Key 0000772406  
Entity Filer Category Large Accelerated Filer  
Document Period End Date Dec. 29, 2018  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Current Fiscal Year End Date --03-30  
Entity Emerging Growth Company false  
Entity Small Business false  
Entity Common Stock, Shares Outstanding   59,142,413
v3.10.0.1
Consolidated Condensed Balance Sheets - USD ($)
$ in Thousands
Dec. 29, 2018
Mar. 31, 2018
Current assets:    
Cash and cash equivalents $ 219,319 $ 235,604
Marketable securities 59,793 26,397
Accounts receivable, net 142,135 100,801
Inventories 167,879 205,760
Prepaid assets 32,335 31,235
Other current assets 18,816 13,877
Total current assets 640,277 613,674
Long-term marketable securities 165,063 172,499
Property and equipment, net 191,324 191,154
Intangibles, net 76,389 111,547
Goodwill 286,678 288,718
Deferred tax assets 13,131 14,716
Other assets 24,003 37,809
Total assets 1,396,865 1,430,117
Current liabilities:    
Accounts payable 108,022 69,850
Accrued salaries and benefits 23,566 35,721
Software license agreements 22,147 21,981
Other accrued liabilities 16,028 12,657
Total current liabilities 169,763 140,209
Long-term liabilities:    
Software license agreements 11,969 27,765
Non-current income taxes 78,532 92,753
Other long-term liabilities 6,800 7,662
Total long-term liabilities 97,301 128,180
Stockholders' equity:    
Capital stock 1,349,941 1,312,434
Accumulated deficit (217,871) (139,345)
Accumulated other comprehensive loss (2,269) (11,361)
Total stockholders' equity 1,129,801 1,161,728
Total liabilities and stockholders' equity $ 1,396,865 $ 1,430,117
v3.10.0.1
Consolidated Condensed Statements of Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Dec. 29, 2018
Dec. 30, 2017
Dec. 29, 2018
Dec. 30, 2017
Income Statement [Abstract]        
Net sales $ 324,295 $ 482,741 $ 945,083 $ 1,229,013
Cost of sales 161,115 247,653 472,225 620,927
Gross profit 163,180 235,088 472,858 608,086
Operating expenses        
Research and development 88,575 96,978 282,888 270,888
Selling, general and administrative 30,364 34,604 96,308 95,504
Total operating expenses 118,939 131,582 379,196 366,392
Income from operations 44,241 103,506 93,662 241,694
Interest income 1,999 1,191 5,510 3,125
Interest expense (259) (279) (798) (894)
U.K. pension settlement (13,768) 0 (13,768) 0
Other income (expense) 101 322 (67) (813)
Income before income taxes 32,314 104,740 84,539 243,112
Provision for income taxes 2,381 70,961 705 93,121
Net income $ 29,933 $ 33,779 $ 83,834 $ 149,991
Basic earnings per share (in dollars per share) $ 0.50 $ 0.53 $ 1.39 $ 2.36
Diluted earnings per share (in dollars per share) $ 0.49 $ 0.52 $ 1.35 $ 2.26
Basic weighted average common shares outstanding (in shares) 59,511 63,453 60,482 63,655
Diluted weighted average common shares outstanding (in shares) 60,783 65,557 62,076 66,377
v3.10.0.1
Consolidated Condensed Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Dec. 29, 2018
Dec. 30, 2017
Dec. 29, 2018
Dec. 30, 2017
Statement of Comprehensive Income [Abstract]        
Net income $ 29,933 $ 33,779 $ 83,834 $ 149,991
Other comprehensive income (loss), before tax        
Foreign currency translation gain (loss) (731) (811) (2,717) 2,500
Unrealized gain (loss) on marketable securities 545 (842) 784 (794)
U.K. pension settlement 13,814 0 13,814 0
Actuarial gain on pension plan 0 0 0 792
(Provision) benefit for income taxes (2,739) 194 (2,789) 43
Comprehensive income $ 40,822 $ 32,320 $ 92,926 $ 152,532
v3.10.0.1
Consolidated Condensed Statements of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Dec. 29, 2018
Dec. 30, 2017
Cash flows from operating activities:    
Net income $ 83,834 $ 149,991
Adjustments to reconcile net income to net cash generated by operating activities:    
Depreciation and amortization 62,638 59,175
Stock compensation expense 37,106 36,208
Deferred income taxes (2,247) 13,260
Loss on retirement or write-off of long-lived assets 2,226 461
Net charges for defined benefit pension plan 11,189 658
Other non-cash adjustments 322 (3,692)
Net change in operating assets and liabilities:    
Accounts receivable, net (35,795) (97,645)
Inventories 37,490 (25,072)
Other assets (4,760) 7,631
Accounts payable and other accrued liabilities 8,741 27,361
Income taxes payable (3,608) 44,687
Net cash generated by operating activities 197,136 213,023
Cash flows from investing activities:    
Maturities and sales of available-for-sale marketable securities 41,389 128,536
Purchases of available-for-sale marketable securities (66,729) (215,878)
Purchases of property, equipment and software (23,421) (38,606)
Investments in technology (2,700) (23,280)
Net cash used in investing activities (51,461) (149,228)
Cash flows from financing activities:    
Principal payments on long-term revolver 0 (60,000)
Issuance of common stock, net of shares withheld for taxes 404 6,315
Repurchase of stock to satisfy employee tax withholding obligations (12,367) (19,086)
Repurchase and retirement of common stock (149,997) (115,550)
Net cash used in financing activities (161,960) (188,321)
Net decrease in cash and cash equivalents (16,285) (124,526)
Cash and cash equivalents at beginning of period 235,604 351,166
Cash and cash equivalents at end of period $ 219,319 $ 226,640
v3.10.0.1
Basis of Presentation
9 Months Ended
Dec. 29, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
Basis of Presentation
    
The consolidated condensed financial statements have been prepared by Cirrus Logic, Inc. (“Cirrus Logic,” “we,” “us,” “our,” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”).  The accompanying unaudited consolidated condensed financial statements do not include complete footnotes and financial presentations.  As a result, these financial statements should be read along with the audited consolidated financial statements and notes thereto for the year ended March 31, 2018, included in our Annual Report on Form 10-K filed with the Commission on May 30, 2018.  In our opinion, the financial statements reflect all material adjustments, including normal recurring adjustments, necessary for a fair presentation of the financial position, operating results and cash flows for those periods presented.  The preparation of financial statements in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported assets, liabilities, revenues and expenses, as well as disclosure of contingent assets and liabilities.  Actual results could differ from those estimates and assumptions.  Moreover, the results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the entire year.  Additionally, certain prior period amounts have been reclassified to conform to current year presentation, with no impact to earnings.
v3.10.0.1
Recently Issued Accounting Pronouncements
9 Months Ended
Dec. 29, 2018
Accounting Changes and Error Corrections [Abstract]  
Recently Issued Accounting Pronouncements
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 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 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 currently intends to adopt 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 expect to elect 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 currently expect to elect 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 currently expect not to separate lease and non-lease components for all of our leases. We expect that most of our operating lease commitments will be 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.

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 is currently evaluating the impact of this ASU, 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.
v3.10.0.1
Marketable Securities
9 Months Ended
Dec. 29, 2018
Marketable Securities [Abstract]  
Marketable Securities
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 U.S. GAAP.  Marketable securities are categorized on the consolidated condensed balance sheet as short- and long-term marketable securities, as appropriate.

The following table is a summary of available-for-sale securities at December 29, 2018 (in thousands):
As of December 29, 2018
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
(Net Carrying
Amount)
Corporate debt securities
$
212,338

 
$
142

 
$
(1,703
)
 
$
210,777

Non-US government securities
13,704

 
2

 
(84
)
 
13,622

Agency discount notes
459

 

 
(2
)
 
457

Total securities
$
226,501

 
$
144

 
$
(1,789
)
 
$
224,856


    
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 $1.8 million related to securities with total amortized cost of approximately $185.0 million at December 29, 2018.  Securities in a continuous unrealized loss position for more than 12 months as of December 29, 2018 had an aggregate amortized cost of $132.5 million and an aggregate unrealized loss of $1.4 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 December 29, 2018, the Company does not consider any of its investments to be other-than-temporarily impaired.   

The following table is a summary of available-for-sale securities at March 31, 2018 (in thousands):
໿
໿
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 total amortized cost of approximately $198.2 million at March 31, 2018. There were no securities that have been in a continuous 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 securities by contractual maturities were as follows (in thousands):
໿

December 29, 2018
 
March 31, 2018

Amortized
 
Estimated
 
Amortized
 
Estimated

Cost
 
Fair Value
 
Cost
 
Fair Value
Within 1 year
$
60,157

 
$
59,793

 
$
26,560

 
$
26,397

After 1 year
166,344

 
165,063

 
174,765

 
172,499

Total
$
226,501

 
$
224,856

 
$
201,325

 
$
198,896



v3.10.0.1
Fair Value of Financial Instruments
9 Months Ended
Dec. 29, 2018
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 and, prior to the pension settlement in the third quarter of fiscal year 2019, pension plan assets / liabilities.  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 (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 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 condensed balance sheets 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.

As of December 29, 2018 and March 31, 2018, the Company classified all investment portfolio and pension plan assets and liabilities as Level 1 or Level 2 assets and liabilities.  The Company has no Level 3 assets.  There were no transfers between Level 1, Level 2, or Level 3 measurements for the three months ending December 29, 2018

The following summarizes the fair value of our financial instruments at December 29, 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
$
170,151

 
$

 
$

 
$
170,151

 
 
 
 
 
 
 
 
Available-for-sale securities
 

 
 

 
 

 
 

Corporate debt securities
$

 
$
210,777

 
$

 
$
210,777

Non-US government securities

 
13,622

 

 
13,622

Agency discount notes

 
457

 

 
457


$

 
$
224,856

 
$

 
$
224,856


໿
The following summarizes the fair value of our financial instruments at March 31, 2018, exclusive of pension plan assets and liabilities (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


໿
v3.10.0.1
Accounts Receivable, net
9 Months Ended
Dec. 29, 2018
Accounts Receivable, Net [Abstract]  
Accounts Receivable, net
Accounts Receivable, net

The following are the components of accounts receivable, net (in thousands):

December 29,
 
March 31,

2018
 
2018
Gross accounts receivable
$
142,338

 
$
101,004

Allowance for doubtful accounts
(203
)
 
(203
)
Accounts receivable, net
$
142,135

 
$
100,801


    
The significant increase in accounts receivable is due primarily to the volume and timing of shipments in the current fiscal year.
v3.10.0.1
Inventories
9 Months Ended
Dec. 29, 2018
Inventory Disclosure [Abstract]  
Inventories
Inventories

Inventories are comprised of the following (in thousands):

December 29,
 
March 31,

2018
 
2018
Work in process
$
90,287

 
$
97,138

Finished goods
77,592

 
108,622


$
167,879

 
$
205,760



v3.10.0.1
Revolving Credit Facility
9 Months Ended
Dec. 29, 2018
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 our 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 fiscal 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 December 29, 2018, the Company had no amounts outstanding under the Credit Facility and was in compliance with all covenants under the Credit Agreement.
v3.10.0.1
Revenues
9 Months Ended
Dec. 29, 2018
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:
 
Three Months Ended
 
Nine Months Ended
 
December 29,
 
December 30,
 
December 29,
 
December 30,
 
2018
 
2017
 
2018
 
2017
Non-United States
$
318,739

 
$
474,109

 
$
924,182

 
$
1,206,066

United States
5,556

 
8,632

 
20,901

 
22,947

 
$
324,295

 
$
482,741

 
$
945,083

 
$
1,229,013



Performance obligations

The Company's single performance obligation is delivering the promised goods to the customer. Performance obligations are satisfied upon transfer of product control to the customer, as defined per the shipping terms within the customer's contract. As allowed by ASC 606, disclosure of the value of unsatisfied performance obligations for contracts with an original expected term length of one year or less is not required. The vast majority of the Company's contracts have an original expected term length of one year or less. As of December 29, 2018, the Company had no unsatisfied performance obligations.

The Company’s products primarily include a standard one-year warranty. Warranties qualify as assurance-type warranties, as goods can be returned for product non-conformance and defect only. As such, they are not considered a separate performance obligation.

Contract balances

The Company's standard terms do not include significant financing components 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 condensed balance sheets.

Transaction price

Pricing is established and agreed upon by the customer prior to an order being placed. Variable pricing currently includes rebates, rights of returns, 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.
v3.10.0.1
Pension Plan
9 Months Ended
Dec. 29, 2018
Retirement Benefits [Abstract]  
Pension Plan
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 insured 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 has been recognized within other non-operating expense as "U.K. pension settlement" in the period ended December 29, 2018, with the corresponding tax benefit of $2.6 million being recognized within "Provision for income taxes" in the Consolidated Condensed Statement of Income. As the buy-out transaction has fully settled, there will be no further contributions to the Scheme.
v3.10.0.1
Income Taxes
9 Months Ended
Dec. 29, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
໿
Our provision for income taxes is based on estimated effective tax rates derived from an estimate of annual consolidated earnings before taxes, adjusted for nondeductible expenses, other permanent items and any applicable credits.

The following table presents the provision for income taxes (in thousands) and the effective tax rates:

Three Months Ended
 
Nine Months Ended

December 29,
 
December 30,
 
December 29,
 
December 30,

2018
 
2017
 
2018
 
2017
Income before income taxes
$
32,314

 
$
104,740

 
$
84,539

 
$
243,112

Provision for income taxes
$
2,381

 
$
70,961

 
$
705

 
$
93,121

Effective tax rate
7.4
%
 
67.7
%
 
0.8
%
 
38.3
%

Our income tax expense for the third quarter of fiscal year 2019 was $2.4 million compared to $71.0 million in income tax expense for the third quarter of fiscal year 2018, resulting in effective tax rates of 7.4% and 67.7% for the third quarter of fiscal year 2019 and 2018, respectively.  Our income tax expense was $0.7 million for the first nine months of fiscal year 2019 compared to $93.1 million of tax expense for the first nine months of fiscal year 2018, resulting in effective tax rates of 0.8% and 38.3%, respectively. Our effective tax rates for the third quarter and first nine months of fiscal year 2019 were lower than the federal statutory rate primarily due to the U.S. federal research and development tax credit and the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate; our effective tax rate for the first nine months of fiscal year 2019 was further reduced by adjustments recorded to reduce the provisional amount of the Tax Act's transition tax. Our effective tax rates for the third quarter and first nine months of fiscal year 2018 were higher than the federal statutory rate primarily due to the impact of the Tax Act enacted in the third quarter of fiscal year 2018, partially offset by the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate and excess tax benefits from stock-based compensation.

The Tax Act was enacted on December 22, 2017. The Tax Act reduced the U.S. federal corporate income tax rate from 35.0% to 21.0%, restricted the deductibility of certain business expenses, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax-deferred and created new taxes on certain foreign sourced earnings, among other provisions. In accordance with SEC Staff Accounting Bulletin No. 118 ("SAB 118"), we recorded adjustments to the enactment-date effects of the Tax Act. We applied the guidance in SAB 118 when accounting for the enactment-date effects of the Tax Act under ASC 740, Income Taxes, for the following aspects: remeasurement of deferred tax assets and liabilities, one-time transition tax, and tax on global intangible low taxed income ("GILTI"). During the first nine months of fiscal year 2019, we recognized adjustments of $11.1 million that decreased the enactment-date provisional amounts recorded at March 31, 2018.
The one-time transition tax represents the tax on our total post-1986 earnings and profits, which was previously deferred from U.S. income taxes under prior U.S. law. We recorded a provisional amount for our one-time transition tax liability for each of our foreign subsidiaries, resulting in a transition tax liability of $53.9 million at March 31, 2018. Upon further analysis of the Tax Act, subsequent Internal Revenue Service ("IRS") guidance, and regulations proposed by the U.S. Department of the Treasury and the IRS, we finalized our calculations of the transition tax liability during the third quarter of fiscal year 2019. We recognized a decrease of $11.2 million and an increase of $0.2 million to the transition tax provisional amount in the second and third quarters of fiscal year 2019, respectively, which are included as a component of income tax expense from continuing operations.
We remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future, which was generally 21%, by recording a provisional amount of $6.1 million at March 31, 2018. We finalized our calculations and recognized a decrease of $0.1 million to our provisional amount in the third quarter of fiscal year 2019, which is included as a component of income tax expense from continuing operations.
The Tax Act subjects a U.S. shareholder to current tax on certain earnings of foreign subsidiaries under a provision commonly known as GILTI. Under U.S. GAAP, an accounting policy election can be made to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years, or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI in the year the tax is incurred.
The Company records unrecognized tax benefits for the estimated risk associated with tax positions taken on tax returns.  At December 29, 2018, the Company had unrecognized tax benefits of $40.0 million, all of which would impact the effective tax rate if recognized.  The Company recorded gross increases of $0.7 million, $0.9 million, and $0.9 million to its current year unrecognized tax benefits in the first, second, and third quarters of fiscal year 2019, respectively, and gross decreases of $12.5 million and $5.1 million to its prior year unrecognized tax benefits in the second and third quarters of fiscal year 2019, respectively. The Company’s total unrecognized tax benefits are classified as “Non-current income taxes" in the consolidated condensed balance sheets.
 
The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes.  As of December 29, 2018, the balance of accrued interest and penalties, net of tax, was $2.1 million

Fiscal years 2015 through 2018 remain open to examination by the Company's major taxing jurisdictions, although carry forward attributes that were generated in tax years prior to fiscal year 2015 may be adjusted upon examination by the tax authorities if they have been, or will be, used in a future period.  The Company's United Kingdom subsidiaries are currently under a limited scope tax audit for certain income tax matters related to fiscal year 2016. The Company's fiscal year 2017 federal income tax return is under examination by the U.S. Internal Revenue Service. The Company believes it has accrued adequate reserves related to the matters under examination.  The Company is not under an income tax audit in any other major taxing jurisdiction.
v3.10.0.1
Net Income Per Share
9 Months Ended
Dec. 29, 2018
Earnings Per Share [Abstract]  
Net Income Per Share
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 units.

The following table details the calculation of basic and diluted earnings per share for the three and nine months ended December 29, 2018 and December 30, 2017 (in thousands, except per share amounts):
໿

Three Months Ended
 
Nine Months Ended

December 29,
 
December 30,
 
December 29,
 
December 30,

2018
 
2017
 
2018
 
2017
Numerator:
 
 
 
 
 
 
 
Net income
$
29,933

 
$
33,779

 
$
83,834

 
$
149,991

Denominator:
 

 
 

 
 

 
 

Weighted average shares outstanding
59,511

 
63,453

 
60,482

 
63,655

Effect of dilutive securities
1,272

 
2,104

 
1,594

 
2,722

Weighted average diluted shares
60,783

 
65,557

 
62,076

 
66,377

Basic earnings per share
$
0.50

 
$
0.53

 
$
1.39

 
$
2.36

Diluted earnings per share
$
0.49

 
$
0.52

 
$
1.35

 
$
2.26



The weighted outstanding shares excluded from our diluted calculation for the three and nine months ended December 29, 2018 were 1,398 thousand and 1,668 thousand, respectively, as the shares were anti-dilutive. The weighted outstanding shares excluded from our diluted calculation for the three and nine months ended December 30, 2017 were 824 thousand and 273 thousand, respectively, as the shares were anti-dilutive.
v3.10.0.1
Legal Matters
9 Months Ended
Dec. 29, 2018
Loss Contingency, Information about Litigation Matters [Abstract]  
Legal Matters
Legal Matters
From time to time, we are involved in legal proceedings concerning matters arising in connection with the conduct of our business activities.  We regularly evaluate the status of legal proceedings in which we are involved in order to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred, and to determine if accruals are appropriate.  We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made.    

Based on current knowledge, management does not believe that there are any pending matters that could potentially have a material adverse effect on our business, financial condition, results of operations or cash flows.  However, we are engaged in various legal actions in the normal course of business.  There can be no assurances in light of the inherent uncertainties involved in any potential legal proceedings, some of which are beyond our control, and an adverse outcome in any legal proceeding could be material to our results of operations or cash flows for any particular reporting period.
v3.10.0.1
Stockholders' Equity
9 Months Ended
Dec. 29, 2018
Stockholders' Equity Note [Abstract]  
Stockholders' Equity
Stockholders’ Equity

Common Stock 
 
The Company issued a net 0.7 million and 0.9 million shares of common stock during the three and nine months ending December 29, 2018, respectively, pursuant to the Company's equity incentive plans. The Company issued a net 0.6 million and 1.0 million shares during the three and nine months ending December 30, 2017, respectively, pursuant to the Company's equity incentive plans.

Share Repurchase Program   
    
Since inception, $150.0 million of the Company’s common stock has been repurchased under the Company’s 2018 $200 million share repurchase program, leaving $50.0 million available for repurchase under this plan as of December 29, 2018.  During the three and nine months ended December 29, 2018, respectively, the Company repurchased 1.4 million shares of its common stock, for $55.0 million, at an average cost of $39.03 per share and 3.7 million shares of its common stock, for $150.0 million, at an average cost of $40.41 per share.  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 retired as of December 29, 2018.
v3.10.0.1
Segment Information
9 Months Ended
Dec. 29, 2018
Segment Reporting [Abstract]  
Segment Information
Segment Information

We determine our operating segments in accordance with FASB guidelines.  Our Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker under these guidelines. 

The Company operates and tracks its results in one reportable segment, but reports revenue performance in two product lines, Portable Audio and Non-Portable Audio and Other.  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 support functions such as sales, public relations, supply chain management, various research and development and engineering support, in addition to the general and administrative functions of human resources, legal, finance and information technology.  Therefore, there is no complete, discrete financial information maintained for these product lines.
Revenues from our product lines are as follows (in thousands):

Three Months Ended
 
Nine Months Ended

December 29,
 
December 30,
 
December 29,
 
December 30,

2018
 
2017
 
2018
 
2017
Portable Audio Products
$
288,640

 
$
438,650

 
$
824,950

 
$
1,101,099

Non-Portable Audio and Other Products
35,655

 
44,091

 
120,133

 
127,914


$
324,295

 
$
482,741

 
$
945,083

 
$
1,229,013

v3.10.0.1
Subsequent Event
9 Months Ended
Dec. 29, 2018
Subsequent Events [Abstract]  
Subsequent Event
Subsequent Event

In January 2019, the Board of Directors authorized the repurchase of up to an additional $200 million of the Company’s common stock, in addition to the $50.0 million remaining from the Board’s previous share repurchase authorization in January 2018, described above in Note 13.
v3.10.0.1
Recently Issued Accounting Pronouncements (Policies)
9 Months Ended
Dec. 29, 2018
Accounting Changes and Error Corrections [Abstract]  
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 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 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 currently intends to adopt 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 expect to elect 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 currently expect to elect 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 currently expect not to separate lease and non-lease components for all of our leases. We expect that most of our operating lease commitments will be 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.

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 is currently evaluating the impact of this ASU, 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.
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 and, prior to the pension settlement in the third quarter of fiscal year 2019, pension plan assets / liabilities.  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 (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 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 condensed balance sheets 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.
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).
Performance obligations

The Company's single performance obligation is delivering the promised goods to the customer. Performance obligations are satisfied upon transfer of product control to the customer, as defined per the shipping terms within the customer's contract. As allowed by ASC 606, disclosure of the value of unsatisfied performance obligations for contracts with an original expected term length of one year or less is not required. The vast majority of the Company's contracts have an original expected term length of one year or less. As of December 29, 2018, the Company had no unsatisfied performance obligations.

The Company’s products primarily include a standard one-year warranty. Warranties qualify as assurance-type warranties, as goods can be returned for product non-conformance and defect only. As such, they are not considered a separate performance obligation.

Contract balances

The Company's standard terms do not include significant financing components 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 condensed balance sheets.

Transaction price

Pricing is established and agreed upon by the customer prior to an order being placed. Variable pricing currently includes rebates, rights of returns, 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.
Segment Information
The Company operates and tracks its results in one reportable segment, but reports revenue performance in two product lines, Portable Audio and Non-Portable Audio and Other.  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 support functions such as sales, public relations, supply chain management, various research and development and engineering support, in addition to the general and administrative functions of human resources, legal, finance and information technology.  Therefore, there is no complete, discrete financial information maintained for these product lines.
v3.10.0.1
Recently Issued Accounting Pronouncements (Tables)
9 Months Ended
Dec. 29, 2018
Accounting Changes and Error Corrections [Abstract]  
Effects of the Changes Made to Balance Sheet at Adoption
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
)
v3.10.0.1
Marketable Securities (Tables)
9 Months Ended
Dec. 29, 2018
Marketable Securities [Abstract]  
Schedule of Available-for-sale Securities
The following table is a summary of available-for-sale securities at December 29, 2018 (in thousands):
As of December 29, 2018
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
(Net Carrying
Amount)
Corporate debt securities
$
212,338

 
$
142

 
$
(1,703
)
 
$
210,777

Non-US government securities
13,704

 
2

 
(84
)
 
13,622

Agency discount notes
459

 

 
(2
)
 
457

Total securities
$
226,501

 
$
144

 
$
(1,789
)
 
$
224,856

The following table is a summary of available-for-sale securities at March 31, 2018 (in thousands):
໿
໿
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



Schedule of Cost and Estimated Fair Value of Available-for-sale Securities by Contractual Maturity
The cost and estimated fair value of available-for-sale securities by contractual maturities were as follows (in thousands):
໿

December 29, 2018
 
March 31, 2018

Amortized
 
Estimated
 
Amortized
 
Estimated

Cost
 
Fair Value
 
Cost
 
Fair Value
Within 1 year
$
60,157

 
$
59,793

 
$
26,560

 
$
26,397

After 1 year
166,344

 
165,063

 
174,765

 
172,499

Total
$
226,501

 
$
224,856

 
$
201,325

 
$
198,896

v3.10.0.1
Fair Value of Financial Instruments (Tables)
9 Months Ended
Dec. 29, 2018
Fair Value Disclosures [Abstract]  
Schedule of Fair Value of Financial Assets and Liabilities
The following summarizes the fair value of our financial instruments at December 29, 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
$
170,151

 
$

 
$

 
$
170,151

 
 
 
 
 
 
 
 
Available-for-sale securities
 

 
 

 
 

 
 

Corporate debt securities
$

 
$
210,777

 
$

 
$
210,777

Non-US government securities

 
13,622

 

 
13,622

Agency discount notes

 
457

 

 
457


$

 
$
224,856

 
$

 
$
224,856


໿
The following summarizes the fair value of our financial instruments at March 31, 2018, exclusive of pension plan assets and liabilities (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

v3.10.0.1
Accounts Receivable, net (Tables)
9 Months Ended
Dec. 29, 2018
Accounts Receivable, Net [Abstract]  
Components of Accounts Receivable, net
The following are the components of accounts receivable, net (in thousands):

December 29,
 
March 31,

2018
 
2018
Gross accounts receivable
$
142,338

 
$
101,004

Allowance for doubtful accounts
(203
)
 
(203
)
Accounts receivable, net
$
142,135

 
$
100,801

v3.10.0.1
Inventories (Tables)
9 Months Ended
Dec. 29, 2018
Inventory Disclosure [Abstract]  
Schedule of Inventories
Inventories are comprised of the following (in thousands):

December 29,
 
March 31,

2018
 
2018
Work in process
$
90,287

 
$
97,138

Finished goods
77,592

 
108,622


$
167,879

 
$
205,760

v3.10.0.1
Revenues (Tables)
9 Months Ended
Dec. 29, 2018
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue
Total net sales based on the disaggregation criteria described above are as follows:
 
Three Months Ended
 
Nine Months Ended
 
December 29,
 
December 30,
 
December 29,
 
December 30,
 
2018
 
2017
 
2018
 
2017
Non-United States
$
318,739

 
$
474,109

 
$
924,182

 
$
1,206,066

United States
5,556

 
8,632

 
20,901

 
22,947

 
$
324,295

 
$
482,741

 
$
945,083

 
$
1,229,013

v3.10.0.1
Income Taxes (Tables)
9 Months Ended
Dec. 29, 2018
Income Tax Disclosure [Abstract]  
Schedule of Provision for Income Taxes and Effective Tax Rates
The following table presents the provision for income taxes (in thousands) and the effective tax rates:

Three Months Ended
 
Nine Months Ended

December 29,
 
December 30,
 
December 29,
 
December 30,

2018
 
2017
 
2018
 
2017
Income before income taxes
$
32,314

 
$
104,740

 
$
84,539

 
$
243,112

Provision for income taxes
$
2,381

 
$
70,961

 
$
705

 
$
93,121

Effective tax rate
7.4
%
 
67.7
%
 
0.8
%
 
38.3
%
v3.10.0.1
Net Income Per Share (Tables)
9 Months Ended
Dec. 29, 2018
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
The following table details the calculation of basic and diluted earnings per share for the three and nine months ended December 29, 2018 and December 30, 2017 (in thousands, except per share amounts):
໿

Three Months Ended
 
Nine Months Ended

December 29,
 
December 30,
 
December 29,
 
December 30,

2018
 
2017
 
2018
 
2017
Numerator:
 
 
 
 
 
 
 
Net income
$
29,933

 
$
33,779

 
$
83,834

 
$
149,991

Denominator:
 

 
 

 
 

 
 

Weighted average shares outstanding
59,511

 
63,453

 
60,482

 
63,655

Effect of dilutive securities
1,272

 
2,104

 
1,594

 
2,722

Weighted average diluted shares
60,783

 
65,557

 
62,076

 
66,377

Basic earnings per share
$
0.50

 
$
0.53

 
$
1.39

 
$
2.36

Diluted earnings per share
$
0.49

 
$
0.52

 
$
1.35

 
$
2.26

v3.10.0.1
Segment Information (Tables)
9 Months Ended
Dec. 29, 2018
Segment Reporting [Abstract]  
Schedule of Segment Revenue from Product Lines
Revenues from our product lines are as follows (in thousands):

Three Months Ended
 
Nine Months Ended

December 29,
 
December 30,
 
December 29,
 
December 30,

2018
 
2017
 
2018
 
2017
Portable Audio Products
$
288,640

 
$
438,650

 
$
824,950

 
$
1,101,099

Non-Portable Audio and Other Products
35,655

 
44,091

 
120,133

 
127,914


$
324,295

 
$
482,741

 
$
945,083

 
$
1,229,013

v3.10.0.1
Recently Issued Accounting Pronouncements (Details) - USD ($)
$ in Thousands
Dec. 29, 2018
Apr. 01, 2018
Mar. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Accounts receivable $ 142,135 $ 106,340 $ 100,801
Inventories 167,879 205,369 205,760
Other current assets 18,816 14,268 13,877
Other accrued liabilities $ (16,028) (18,196) (12,657)
Calculated under Revenue Guidance in Effect before Topic 606      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Accounts receivable     100,801
Inventories     205,760
Other current assets     13,877
Other accrued liabilities     $ (12,657)
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Accounts receivable   5,539  
Inventories   (391)  
Other current assets   391  
Other accrued liabilities   $ (5,539)  
v3.10.0.1
Marketable Securities (Schedule of Available-for-sale Securities) (Details) - USD ($)
$ in Thousands
Dec. 29, 2018
Mar. 31, 2018
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost $ 226,501 $ 201,325
Gross Unrealized Gains 144 4
Gross Unrealized Losses (1,789) (2,433)
Estimated Fair Value (Net Carrying Amount) 224,856 198,896
Corporate debt securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 212,338 185,636
Gross Unrealized Gains 142 4
Gross Unrealized Losses (1,703) (2,318)
Estimated Fair Value (Net Carrying Amount) 210,777 183,322
Non-US government securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 13,704 14,730
Gross Unrealized Gains 2 0
Gross Unrealized Losses (84) (111)
Estimated Fair Value (Net Carrying Amount) 13,622 14,619
Certificates of deposit    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost   500
Gross Unrealized Gains   0
Gross Unrealized Losses   0
Estimated Fair Value (Net Carrying Amount)   500
Agency discount notes    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 459 459
Gross Unrealized Gains 0 0
Gross Unrealized Losses (2) (4)
Estimated Fair Value (Net Carrying Amount) $ 457 $ 455
v3.10.0.1
Marketable Securities (Narrative) (Details) - USD ($)
$ in Thousands
9 Months Ended
Dec. 29, 2018
Mar. 31, 2018
Debt Securities, Available-for-sale [Line Items]    
Gross unrealized losses $ 1,789 $ 2,433
Amortized cost on available for sale securities held at gross unrealized loss 185,000 $ 198,200
Securities in a continuous unrealized loss position for more than 12 months, amortized cost 132,500  
Securities in a continuous unrealized loss position for more than 12 months, aggregate unrealized loss $ 1,400  
Minimum    
Debt Securities, Available-for-sale [Line Items]    
Maturity period for highly-rated securities 1 year  
Maximum    
Debt Securities, Available-for-sale [Line Items]    
Maturity period for highly-rated securities 3 years  
v3.10.0.1
Marketable Securities (Schedule of Cost and Estimated Fair Value of Available-for-sale Securities by Contractual Maturity) (Details) - USD ($)
$ in Thousands
Dec. 29, 2018
Mar. 31, 2018
Amortized Cost    
Within 1 year $ 60,157 $ 26,560
After 1 year 166,344 174,765
Amortized Cost 226,501 201,325
Estimated Fair Value    
Within 1 year 59,793 26,397
After 1 year 165,063 172,499
Estimated Fair Value $ 224,856 $ 198,896