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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
☒     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 25, 2017
☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from                  to                 

Commission File Number 0-17795
CIRRUS LOGIC, INC.
(Exact name of registrant as specified in its charter)

DELAWARE	 	77-0024818	
(State or other jurisdiction of incorporation or organization)	 	(I.R.S. Employer Identification No.)	
800 W. 6 th Street, Austin, TX 78701
(Address of principal executive offices)
Registrant’s telephone number, including area code: (512) 851-4000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  ☑        NO  ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES  ☐        NO  ☑
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  ☑        NO  ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  ☑        NO  ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☑	  	Accelerated filer  ☐	  	Non-accelerated filer  ☐	  	Smaller reporting company  ☐	  	Emerging growth company  ☐	
	  		  	(Do not check if a smaller reporting company)	  		
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    YES  ☐        NO  ☑
The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates was $2,115,130,259 based upon the closing price reported on the NASDAQ Global Select Market as of September 24, 2016. Stock held by directors, officers and stockholders owning 5 percent or more of the outstanding common stock were excluded as they may be deemed affiliates. This determination of affiliate status is not a conclusive determination for any other purpose.
As of May 19, 2017, the number of outstanding shares of the registrant’s common stock, $0.001 par value, was 63,891,409.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information contained in the registrant’s proxy statement for its annual meeting of stockholders to be held July 28, 2017 is incorporated by reference in Part II – Item 5. and Part III of this Annual Report on Form 10-K.

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CIRRUS LOGIC, INC.
FORM 10-K
For The Fiscal Year Ended March 25, 2017
 INDEX

PART I	  				
			
Item 1.	 	Business	  	 	3	 	
			
Item 1A.	 	Risk Factors	  	 	7	 	
			
Item 1B.	 	Unresolved Staff Comments	  	 	22	 	
			
Item 2.	 	Properties	  	 	22	 	
			
Item 3.	 	Legal Proceedings	  	 	22	 	
			
Item 4.	 	Mine Safety Disclosures	  	 	23	 	
		
PART II	  				
			
Item 5.	 	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	  	 	23	 	
			
Item 6.	 	Selected Financial Data	  	 	25	 	
			
Item 7.	 	Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	 	25	 	
			
Item 7A.	 	Quantitative and Qualitative Disclosures about Market Risk	  	 	37	 	
			
Item 8.	 	Financial Statements and Supplementary Data	  	 	38	 	
			
Item 9.	 	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	  	 	76	 	
			
Item 9A.	 	Controls and Procedures	  	 	76	 	
		
PART III	  				
			
Item 10.	 	Directors, Executive Officers and Corporate Governance	  	 	76	 	
			
Item 11.	 	Executive Compensation	  	 	77	 	
			
Item 12.	 	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	  	 	77	 	
			
Item 13.	 	Certain Relationships and Related Transactions, and Director Independence	  	 	77	 	
			
Item 14.	 	Principal Accounting Fees and Services	  	 	77	 	
		
PART IV	  				
			
Item 15.	 	Exhibits and Financial Statement Schedules	  	 	77	 	
			
	 	Signatures	  	 	80	 	
 
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PART I
 ITEM 1.   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 and voice signal processing applications. Cirrus Logic’s products span the entire audio signal chain, from capture to playback, providing innovative components 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 administrative functions is located in Austin, Texas. We also have offices in various other locations in the United States, United Kingdom, Sweden, Spain, Australia, the People’s Republic of China, South Korea, Japan, Singapore, and Taiwan. Our common stock, which has been publicly traded since 1989, is listed on the NASDAQ Global Select Market under the symbol CRUS.
We maintain a website with the address www.cirrus.com . We are not including the information contained on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (the “SEC”). We also routinely post other important information on our website, including information specifically addressed to investors. We intend for the investor relations section of our website to be a recognized channel of distribution for disseminating information to the securities marketplace in general. To receive a free copy of this Annual Report on Form 10-K, please forward your written request to Cirrus Logic, Inc., Attn: Investor Relations, 800 W. 6 th Street, Austin, Texas 78701, or via email at Investor.Relations@cirrus.com. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements filed electronically with the SEC by Cirrus Logic.
Company Strategy
Cirrus Logic targets growing markets where we can leverage our expertise in analog and digital signal processing to solve complex problems. Our approach has been to develop custom and general market components that embody our latest innovations, which we use to engage key players in a particular market or application. We focus on building strong engineering relationships with our customers’ product teams and work to develop highly differentiated components that address their technical and price requirements across product tiers. Many of our products include programmable aspects and are comprised of our best-in-class hardware which incorporates software algorithms from some combination of our own intellectual property (“IP”), algorithms that have been ported to our platform by an ecosystem of third-party partners, and our customers’ IP. When we have been successful with this approach, one initial design win has often expanded into additional products. This strategy gives us the opportunity to increase our content with a customer over time through the incorporation of new features, the integration of other system components into our products and the addition of new components.
Markets and Products
The following provides a detailed discussion regarding our portable audio and non-portable audio and other product lines:
Portable Audio Products :  High-precision analog and mixed-signal components designed for mobile devices including smartphones, tablets, digital headsets, speakers and wearables.
Non-Portable Audio and Other Products :  High-precision analog and mixed-signal components targeting the consumer market, including emerging smart home applications, and the automotive, energy and industrial markets.
 
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PORTABLE AUDIO PRODUCTS
We are a leading supplier of analog and mixed-signal audio converter and digital signal processing products in many of today’s mobile applications. Providing a complete end-to-end solution from capture to playback, we have an extensive portfolio of products that target flagship and mid-tier devices, including “codecs” - chips that integrate analog-to-digital converters (“ADCs”) and digital-to-analog converters (“DACs”) into a single IC, “smart codecs” – codecs with digital signal processing integrated, amplifiers, micro-electromechanical systems (“MEMS”) microphones, as well as standalone digital signal processors (“DSPs”). Additionally, the Company’s SoundClear ® technology consists of a broad portfolio of tools, software and algorithms that help to differentiate our customers’ products by improving the user experience with features such as enhanced voice quality, voice capture and audio playback. Our products are designed for use in a wide array of portable applications, including smartphones, tablets, digital headsets, speakers and wearables, such as smart watches, VR headsets, action cameras and smart bands.
NON-PORTABLE AUDIO AND OTHER PRODUCTS
We provide high-precision analog and mixed-signal ICs for a variety of products in consumer applications, including the emerging smart home market, automotive, industrial and energy. The Company supplies a wide range of products including ICs, codecs, ADCs, DACs, digital interface and amplifiers. Within the consumer market our products are utilized in laptops, audio/video receivers (AVRs”), home theater systems, set-top boxes, musical instruments and professional audio products. Applications for products in the automotive market include satellite radio systems, telematics and multi-speaker car-audio systems. Our products are also used in a wide array of high-precision industrial and energy-related applications including digital utility meters, power supplies, energy control, energy measurement, and energy exploration applications.
Customers, Marketing, and Sales
We offer products worldwide through both direct and indirect sales channels. Our major customers are among the world’s leading electronics manufacturers. We target both large existing and emerging customers that derive value from our expertise in advanced analog and mixed-signal design processing, systems-level integrated circuit engineering and embedded software development. We derive our revenues from both domestic and international sales, including sales in Asia, Australia and Europe. Our domestic sales force includes a network of direct sales offices located in California and Texas. International sales offices and staff are located in Japan, People’s Republic of China, Singapore, South Korea, Taiwan, and the United Kingdom. We supplement our direct sales force with external sales representatives and distributors. We have technical support centers in China, South Korea, Taiwan and the United States. Our worldwide sales force provides geographically specific support to our customers and specialized selling of product lines with unique customer bases. See Note 16—Segment Information, of the Notes to Consolidated Financial Statements contained in Item 8 for further detail and for additional disclosure regarding sales and property, plant and equipment, net, by geographic locations.
Since the components we produce are largely proprietary and generally not available from second sources, we generally 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, through distributors or third party manufacturers contracted to produce their designs. For fiscal years 2017, 2016, and 2015, our ten largest end customers, represented approximately 92 percent, 89 percent, and 87 percent, of our sales, respectively. For fiscal years 2017, 2016, and 2015, we had one end customer, Apple, Inc., who purchased through multiple contract manufacturers and represented approximately 79 percent, 66 percent, and 72 percent, of the Company’s total sales, respectively. Samsung Electronics represented approximately 15 percent of the Company’s total sales for fiscal year 2016. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2017, 2016, or 2015.
Manufacturing
As a fabless semiconductor company, we contract with third parties for wafer fabrication and product assembly and test. We use a variety of foundries in the production of wafers including Taiwan Semiconductor
 
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Manufacturing Company, Limited, MagnaChip Semiconductor Corporation and GLOBALFOUNDRIES. The Company’s primary assembly and test houses include Advanced Semiconductor Engineering, Inc., Amkor Technology Inc., Nepes Corporation, Siliconware Precision Industries Co., Ltd. and STATS ChipPAC Pte.Ltd. Our outsourced manufacturing strategy allows us to concentrate on our design strengths and minimize fixed costs and capital expenditures while giving us access to advanced manufacturing facilities. It also provides the flexibility to source multiple leading-edge technologies through strategic relationships. After wafer fabrication by the foundry, third-party assembly vendors package the wafer die. The finished products are then tested before shipment to our customers. While we do have some redundancy of fabrication processes by using multiple outside foundries, any interruption of supply by one or more of these foundries could materially impact the Company. As a result, we maintain some amount of business interruption insurance to help reduce the risk of wafer supply interruption, but we are not fully insured against such risk. Our supply chain management organization is responsible for the management of all aspects of the manufacturing, assembly, and testing of our products, including process and package development, test program development, and production testing of products in accordance with our ISO-certified quality management system.
Although our products are made from basic materials (principally silicon, metals and plastics), all of which are available from a number of suppliers, capacity at wafer foundries sometimes becomes constrained. The limited availability of certain materials may impact our suppliers’ ability to meet our demand needs or impact the price we are charged. The prices of certain other basic materials, such as metals, gases and chemicals used in the production of circuits can increase as demand grows for these basic commodities. In most cases, we do not procure these materials ourselves; nevertheless, we are reliant on such materials for producing our products because our outside foundry and package and test subcontractors must procure them. To help mitigate risks associated with constrained capacity, we use multiple foundries, assembly and test sources.
Patents, Licenses and Trademarks
We rely on patent, copyright, trademark, and trade secret laws to protect our intellectual property, products, and technology. As of March 25, 2017, we held approximately 2,560 pending and issued patents worldwide, which include approximately 1,050 granted U.S. patents, 310 U.S. pending patent applications and various international patents and applications. Our U.S. patents expire in calendar years 2017 through 2036. While our patents are an important element of our success, our business as a whole is not dependent on any one patent or group of patents. We do not anticipate any material effect on our business due to any patents expiring in 2017, and we continue to obtain new patents through our ongoing research and development.
We have maintained U.S. federal trademark registrations for CIRRUS LOGIC, CIRRUS, Cirrus Logic logo designs, and SoundClear, among others. These U.S. registrations may be renewed as long as the marks continue to be used in interstate commerce. We have also filed or obtained foreign registration for these marks in other countries or jurisdictions where we conduct, or anticipate conducting, international business. To complement our own research and development efforts, we have also licensed and expect to continue to license, a variety of intellectual property and technologies important to our business from third parties.
Segments
We determine our operating segments in accordance with Financial Accounting Standards Board (“FASB”) guidelines. Our Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker as defined by 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 operations support functions such as sales, public relations, supply chain management, various research and development and engineering support, in addition to the general and administrative functions of human resources, legal, finance and information technology. Therefore, there is no discrete financial information maintained for these product lines. For fiscal years 2017, 2016, and 2015, Portable Audio product sales were
 
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$1.4 billion, $989.1 million, and $740.3 million, respectively. For fiscal years 2017, 2016, and 2015, Non-Portable Audio and Other product sales were $165.1 million, $180.2 million, and $176.3 million, respectively.
See Note 16 — Segment Information, of the Notes to Consolidated Financial Statements contained in Item 8 for further details including sales and property, plant and equipment, net, by geographic locations.
Research and Development
We concentrate our research and development efforts on the design and development of new products for each of our principal markets. We also fund certain advanced-process technology development, as well as other emerging product opportunities. Expenditures for research and development in fiscal years 2017, 2016, and 2015 were $303.7 million, $269.2 million, and $197.9 million, respectively. Our future success is highly dependent upon our ability to develop complex new products, transfer new products to volume production, introduce them into the marketplace in a timely fashion, and have them selected for design into products of systems manufacturers. Our future success may also depend on assisting our customers with integration of our components into their new products, including providing support from the concept stage through design, launch and production ramp.
Competition
Markets for our products are highly competitive and we expect that competition will continue to increase. Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit key engineering talent, execute on new product developments, partner with customers to include these new products into their applications, and provide cost efficient versions of existing products. We compete with other semiconductor suppliers that offer standard semiconductors, application-specific standard products and fully customized ICs, including embedded software, chip and board-level products.
While no single company competes with us in all of our product lines, we face significant competition in all markets where our products are available. Within Portable Audio, Cirrus Logic is the leading IC supplier with the complete end-to-end solution from capture to playback including amplifiers, codecs, DSP and MEMS microphones. We expect to face additional competition from new entrants in our markets, which may include both large domestic and international IC manufacturers and smaller, emerging companies. Our primary competitors include, but are not limited to AAC Technologies, AKM Semiconductor Inc., Analog Devices Inc., Austriamicrosystems AG, Avnera Corp., Conexant Systems, Inc., Dialog Semiconductor PLC, DSP Group, ESS Technology, Inc., GoerTek Inc., Knowles Corporation, Maxim Integrated Products Inc., MediaTek Inc., Qualcomm Incorporated, NXP Semiconductors N.V., Realtek Semiconductor Corporation, ST Microelectronics N.V., and Texas Instruments, Inc.
The principal competitive factors in our markets include: time to market; quality of hardware/software design and end-market systems expertise; price; product performance, features, quality and compatibility with standards; access to advanced process and packaging technologies at competitive prices; and sales and technical support, which includes assisting our customers with integration of our components into their new products and providing support from the concept stage through design, launch and production ramp.
Product life cycles may vary greatly by product category. For example, many portable audio devices have shorter design-in cycles; therefore, our competitors have increasingly frequent opportunities to achieve design wins in next-generation systems. Conversely, this also provides us frequent opportunities to displace competitors in products that have previously not utilized our design. The non-portable audio and other markets typically have longer life cycles, which provide continued revenue streams over longer periods of time.
Backlog
Sales are made primarily pursuant to short-term purchase orders for delivery of products. The quantity actually ordered by the customer, as well as the shipment schedules, are frequently revised, without significant penalty, to reflect changes in the customer’s needs. The majority of our backlog is typically requested for delivery within six months. In markets where the end system life cycles are relatively short, customers typically
 
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request delivery in six to twelve weeks. We believe a backlog analysis at any given time gives little indication of our future business except on a short-term basis, principally within the next 60 days.
We utilize backlog as an indicator to assist us in production planning. However, backlog is influenced by several factors including market demand, pricing, and customer order patterns in reaction to product lead times. Quantities actually purchased by customers, as well as prices, are subject to variations between booking and delivery because of changes in customer needs or industry conditions. As a result, we believe that our backlog at any given time is an incomplete indicator of future sales.
Employees
As of March 25, 2017, we had 1,444 full-time employees, an increase of 153 employees, or 12 percent, from the end of fiscal year 2016. The increase was primarily due to expanding our capabilities in the area of research and development. Of our full-time employees, 71 percent were engaged in research and product development activities, 23 percent in sales, marketing, general and administrative activities, and 6 percent in manufacturing-related activities. We also employ individuals on a temporary basis and use the services of contractors as necessary, particularly in our software development and test organization. Our future success depends, in part, on our ability to continue to attract, retain and motivate highly qualified technical, marketing, engineering, and administrative personnel.
We have never had a work stoppage and the majority of our employees are not represented by collective bargaining agreements. We consider our employee relations to be good.
Forward—Looking Statements
This Annual Report on Form 10-K and certain information incorporated herein by reference contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included or incorporated by reference in this Annual Report on Form 10-K, other than statements that are purely historical, are forward-looking statements. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “estimates,” “will,” “would,” “could,” “can,” “may,” “plan,” and “intend”, and other similar types of words and expressions. Variations of these types of words and similar expressions are intended to identify these forward-looking statements. Any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that could cause actual results to differ materially from those indicated by our forward-looking statements include, but are not limited to, those discussed in Item 1A. Risk Factors and elsewhere in this report, as well as in the documents filed by us with the SEC, specifically the most recent reports on Form 10-Q and 8-K, each as it may be amended from time to time.
We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K, and we undertake no obligation to revise or update this information to reflect events or circumstances after the filing of this report with the SEC, except as required by law. All forward-looking statements, expressed or implied, included in this Annual Report on Form 10-K and attributable to Cirrus Logic are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we may make or persons acting on our behalf may issue. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.
 ITEM 1A.   Risk Factors 
Our business faces significant risks. The risk factors set forth below may not be the only risks that we face and there is a risk that we may have failed to identify all possible risk factors. Additional risks that we are not aware of yet or that currently are not significant may adversely affect our business operations. You should read
 
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the following cautionary statements in conjunction with the factors discussed elsewhere in this and other Cirrus Logic filings with the SEC. These cautionary statements are intended to highlight certain factors that may affect the financial condition and results of operations of Cirrus Logic and are not meant to be an exhaustive discussion of risks that apply to companies such as ours.
We depend on a limited number of customers and distributors for a substantial portion of our sales, and the loss of, or a significant reduction in orders from, or pricing on products sold to, any key customer or distributor could significantly reduce our sales and our profitability.
While we generate sales from a broad base of customers worldwide, the loss of any of our key customers, or a significant reduction in sales or selling prices to any key customer, or reductions in selling prices made to retain key customer relationships, would significantly reduce our revenue, margins and earnings and adversely affect our business. For the twelve-month periods ending March 25, 2017 and March 26, 2016, our ten largest end customers represented approximately 92 percent and 89 percent of our sales, respectively. For the twelve-month periods ending March 25, 2017 and March 26, 2016, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 79 percent and 66 percent of the Company’s total sales, respectively. Samsung Electronics represented approximately 15 percent of the Company’s total sales for fiscal year 2016.
We may not be able to maintain or increase sales to certain of our key customers for a variety of reasons, including the following:
 
 	◾	 	most of our customers can stop incorporating our products into their own products with limited notice to us and suffer little or no penalty;	
 
 	◾	 	our agreements with our customers typically do not require them to purchase a minimum quantity of our products;	
 
 	◾	 	many of our customers have pre-existing or concurrent relationships with our current or potential competitors that may affect the customers’ decisions to purchase our products;	
 
 	◾	 	many of our customers have sufficient resources to internally develop technology solutions and semiconductor components that could replace the products that we currently supply in our customers’ end products;	
 
 	◾	 	our customers face intense competition from other manufacturers that do not use our products; and	
 
 	◾	 	our customers regularly evaluate alternative sources of supply in order to diversify their supplier base, which increases their negotiating leverage with us and their ability to either obtain or dual source components from other suppliers.	
In addition, our dependence on a limited number of key customers may make it easier for them to pressure us on price reductions. We have experienced pricing pressure from certain key customers and we expect that the average selling prices for certain of our products will decline from time to time, potentially reducing our revenue, our margins and our earnings.
Our key customer relationships often require us to develop new products that may involve significant technological challenges. Our customers frequently place considerable pressure on us to meet their tight development schedules. In addition, we may from time to time enter into customer agreements providing for exclusivity periods during which we may only sell specified products or technology to a specific customer. Accordingly, we may have to devote a substantial amount of resources to strategic relationships, which could detract from or delay our completion of other important development projects or the development of next generation products and technologies.
Our lack of diversification in our revenue and customer base increases the risk of an investment in our company, and our consolidated financial condition, results of operations, and stock price may deteriorate if we fail to diversify.
Although we continue to investigate, invest in, and develop opportunities to diversify our revenue and customer base, our sales, marketing, and development efforts have historically been focused on a limited number
 
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of customers and opportunities. Larger companies have the ability to manage their risk by product, market, and customer diversification. However, we lack diversification, in terms of both the nature and scope of our business, which increases the risk of an investment in our company. If we cannot diversify our customer and revenue opportunities, our financial condition and results of operations could deteriorate.
We frequently develop our products for the specific system architecture of our customers’ end products. If our customers were to change system architectures, develop competing technologies and integrated circuits, or incorporate some of the functionality of our products into other parts of the system, we risk the potential loss of revenue and reduced average selling prices.
Our customers, particularly in the portable audio market, could potentially transition to different audio architectures, develop their own competing technologies and integrated circuits, or integrate the functionality that our integrated circuits and software have historically provided into other components in their audio systems. In addition, some of the audio and voice functionality that we have historically provided could be performed outside of our customers’ end product — for example, through the use of “cloud-based” systems to perform audio and voice processing. If our customers were to transition to these different system architectures, our results of operations could be adversely affected by the elimination of the need for our current technology and products, resulting in reduced average selling prices for our components and loss of revenue.
We have entered into joint development agreements, custom product arrangements, and strategic relationships with some of our largest customers. These arrangements subject us to a number of risks, and any failure to execute on any of these arrangements could have a material adverse effect on our business, results of operations, and financial condition.
We have entered into joint development, product collaboration and technology licensing arrangements with some of our largest customers, and we expect to enter into new strategic arrangements of these kinds from time to time in the future. Such arrangements can magnify several risks for us, including loss of control over the development and development timeline of jointly developed products, risks associated with the ownership of the intellectual property that is developed pursuant to such arrangements, and increased risk that our joint development activities may result in products that are not commercially successful or that are not available in a timely fashion. In addition, any third party with whom we enter into a joint development, product collaboration or technology licensing arrangement may fail to commit sufficient resources to the project, change its policies or priorities or abandon or fail to perform its obligations related to such arrangement. In addition, we may from time to time enter into customer product arrangements that provide for exclusivity periods during which we may only sell specified products or technologies to that particular customer. Any failure to timely develop commercially successful products through our joint development activities as a result of any of these and other challenges could have a material adverse effect on our business, results of operations, and financial condition.
Our failure to develop and ramp new products into production in a timely manner could harm our operating results.
Our success depends upon our ability to develop new products for new and existing customers, and to introduce these products in a timely and cost-effective manner. New product introductions involve significant investment of resources and potential risks. Delays in new product introductions or less-than-anticipated market acceptance of our new products are possible and would have an adverse effect on our sales and earnings. The development of new products is highly complex and, from time-to-time, we have experienced delays in developing and introducing these new products. Successful product development and introduction depend on a number of factors including, but not limited to:
 
 	◾	 	proper new product definition;	
 
 	◾	 	timely completion of design and testing of new products;	
 
 	◾	 	assisting our customers with integration of our components into their new products, including providing support from the concept stage through design, launch and production ramp;	
 
 	◾	 	successfully developing and implementing the software necessary to integrate our products into our customers’ products;	
 
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 	◾	 	achievement of acceptable manufacturing yields;	
 
 	◾	 	availability of wafer fabrication, assembly, and test capacity; and	
 
 	◾	 	market acceptance of our products and the products of our customers.	
Both sales and/or margins may be materially affected if new product introductions are delayed, or if our products are not designed into successive generations of new or existing customers’ products. Our failure to develop and introduce new products successfully could harm our business and operating results.
In addition, difficulties associated with adapting our technology and product design to the proprietary process technology and design rules of outside foundries can lead to reduced yields of our products. Since low yields may result from either design or process technology failures, yield problems may not be effectively determined or resolved until an actual product exists that can be analyzed and tested to identify process sensitivities relating to the design rules that are used. As a result, yield problems may not be identified until well into the production process, and resolution of yield problems may require cooperation between our manufacturer and us. This risk could be compounded by the offshore location of certain of our manufacturers, increasing the effort and time required to identify, communicate and resolve manufacturing yield problems. Manufacturing defects that we do not discover during the manufacturing or testing process may lead to costly product recalls. These risks may lead to increased costs or delayed product delivery, which would harm our profitability and customer relationships.
We continue to invest in research and development efforts for several new markets, including voice biometrics. If we are unable to commercialize these technologies, our future results and profits could be negatively affected.
Our investments into new markets subjects us to additional risks. We may have limited or no experience in these markets, and our customers may not adopt our new offerings. These new offerings may present new and difficult challenges, including risks related to technology, customers, competitors, product cycles, customer demand, terms and conditions and other industry specific issues which could negatively affect our operating results.
We have recently increased our investment in our MEMS microphone business. We have limited experience in high volume manufacturing in this market, which leads to a number of risks, including risks related to technology, customers, competition, and other industry specific issues. We may not be successful in this market, which could result in reduced overall operating margins.
We are currently increasing our investment in our MEMS microphone business. This is a competitive market with historically lower gross margins than our existing businesses. In addition, our MEMS microphone business involves different manufacturing technologies, materials, and processes than our traditional semiconductor businesses. Therefore, our investment in new markets in which we have limited experience in high volume manufacturing in those markets increases risks related to technology, customers, competitors, and other industry specific issues.
Further, there can be no assurance that we will generate the expected returns and other projected results we anticipate. For example, we may incur costs in excess of what we anticipate and the product line may generate lower gross margins than our existing businesses, which may reduce our overall operating margins.
We are subject to risks relating to product concentration.
We derive a substantial portion of our revenues from a limited number of products, and we expect these products to represent a large percentage of our revenues in the near term. Customer acceptance of these products is critical to our future success. Our business, operating results, financial condition and cash flows could therefore be adversely affected by:
 
 	◾	 	a decline in demand for any of our more significant products;	
 
 	◾	 	a decline in the average selling prices of our more significant products;	
 
 	◾	 	failure of our products to achieve continued market acceptance;	
 
 	◾	 	competitive products;	
 
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 	◾	 	new technological standards or changes to existing standards that we are unable to address with our products;	
 
 	◾	 	manufacturing or supply issues that prevent us from meeting our customers’ demand for these products;	
 
 	◾	 	a failure to release new products or enhanced versions of our existing products on a timely basis; and	
 
 	◾	 	the failure of our new products to achieve market acceptance.	
In general, our customers may cancel or reschedule orders on short notice without incurring significant penalties; therefore, our sales and operating results in any quarter are difficult to forecast.
In general, we rely on customers issuing purchase orders to buy our products rather than long-term supply contracts. Customers may cancel or reschedule orders on short notice without incurring significant penalties. Therefore, cancellations, reductions, or delays of orders from any significant customer could have a material adverse effect on our business, financial condition, and results of operations.
In addition, a significant portion of our sales and earnings in any quarter depends upon customer orders for our products that we receive and fulfill in that quarter. Because our expense levels are based in part on our expectations as to future revenue and to a large extent are fixed in the short term, we likely will be unable to adjust spending on a timely basis to compensate for any unexpected shortfall in sales or reductions in average selling prices. Accordingly, any significant shortfall of sales in relation to our expectations could hurt our operating results.
Strong competition in the semiconductor market may harm our business.
The IC industry is intensely competitive and is frequently characterized by rapid technological change, price erosion, technological obsolescence, and a push towards IC component integration. Because of shortened product life cycles and even shorter design-in cycles in a number of the markets that we serve, our competitors have increasingly frequent opportunities to achieve design wins in next-generation systems. In the event that competitors succeed in supplanting our products, our market share may not be sustainable and our net sales, gross margin and operating results would be adversely affected.
We compete in a number of markets. Our principal competitors in these markets include AAC Technologies, AKM Semiconductor Inc., Analog Devices Inc., Austriamicrosystems AG, Avnera Corp., Conexant Systems, Inc., Dialog Semiconductor PLC, DSP Group, ESS Technology, Inc., GoerTek Inc., Knowles Corporation, Maxim Integrated Products Inc., MediaTek Inc., Qualcomm Incorporated, NXP Semiconductors N.V., Realtek Semiconductor Corporation, ST Microelectronics N.V., and Texas Instruments, Inc. Many of these competitors have greater financial, engineering, manufacturing, marketing, technical, distribution, and other resources; broader product lines; and broader intellectual property portfolios. We also expect intensified competition from emerging companies and from customers who develop their own IC products. In addition, some of our current and future competitors maintain their own fabrication facilities, which could benefit them in connection with cost, capacity, and technical issues.
Increased competition could adversely affect our business. We cannot provide assurances that we will be able to compete successfully in the future or that competitive pressures will not adversely affect our financial condition and results of operations. Competitive pressures could reduce market acceptance of our products and result in price reductions and increases in expenses that could adversely affect our business and our financial condition.
Our sales could be materially impacted by the failure of other component suppliers to deliver required parts needed in the final assembly of our customers’ end products.
The products we supply our customers are typically a portion of the many components provided from multiple suppliers in order to complete the final assembly of an end product. If one or more of these other component suppliers are unable to deliver their required component(s) in order for the final end product to be assembled, our customers may delay, or ultimately cancel, their orders from us.
 
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We may acquire other companies or technologies, which may create additional risks associated with our ability to successfully integrate them into our business.
We continue to consider future acquisitions of other companies, or their technologies or products, to improve our market position, broaden our technological capabilities, and expand our product offerings. If we are able to acquire companies, products or technologies that would enhance our business, we could experience difficulties in integrating them. Integrating acquired businesses involves a number of risks, including, but not limited to:
 
 	◾	 	the potential disruption of our ongoing business;	
 
 	◾	 	unexpected costs or incurring unknown liabilities;	
 
 	◾	 	the diversion of management resources from other strategic and operational issues;	
 
 	◾	 	the inability to retain the employees of the acquired businesses;	
 
 	◾	 	difficulties relating to integrating the operations and personnel of the acquired businesses;	
 
 	◾	 	adverse effects on our existing customer relationships or the existing customer relationships of acquired businesses;	
 
 	◾	 	the potential incompatibility of the acquired business or their business customers;	
 
 	◾	 	adverse effects associated with entering into markets and acquiring technologies in areas in which we have little experience; and	
 
 	◾	 	acquired intangible assets becoming impaired as a result of technological advancements or worse-than-expected performance of the acquired business.	
If we are unable to successfully address any of these risks, our business could be harmed.
We are dependent on third-party manufacturing and supply relationships for the majority of our products. Our reliance on third-party foundries and suppliers involves certain risks that may result in increased costs, delays in meeting our customers’ demand, and loss of revenue.
We do not own or operate a semiconductor fabrication facility and do not have the resources to manufacture the majority of our products internally. We use third parties to manufacture, assemble, package and test the vast majority of our products. As a result, we are subject to risks associated with these third parties, including:
 
 	◾	 	insufficient capacity available to meet our demand;	
 
 	◾	 	inadequate manufacturing yields and excessive costs;	
 
 	◾	 	inability of these third parties to obtain an adequate supply of raw materials;	
 
 	◾	 	difficulties selecting and integrating new subcontractors;	
 
 	◾	 	limited warranties on products supplied to us;	
 
 	◾	 	potential increases in prices; and	
 
 	◾	 	increased exposure to potential misappropriation of our intellectual property.	
Our outside foundries and assembly and test suppliers generally manufacture our products on a purchase order basis, and we have few long-term supply arrangements with these suppliers. Therefore, our third-party manufacturers and suppliers are not obligated to supply us with products for any specific period of time, quantity, or price, except as may be provided in any particular purchase order or in relation to an existing supply agreement. A manufacturing or supply disruption experienced by one or more of our outside suppliers or a disruption of our relationship with an outside foundry could negatively impact the production of certain of our products for a substantial period of time.
In addition, difficulties associated with adapting our technology and product design to the proprietary process technology and design rules of outside foundries can lead to reduced yields of our products. Since low
 
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yields may result from either design or process technology failures, yield problems may not be effectively determined or resolved until an actual product exists that can be analyzed and tested to identify process sensitivities relating to the design rules that are used. As a result, yield problems may not be identified until well into the production process, and resolution of yield problems may require cooperation between our manufacturer and us. This risk could be compounded by the offshore location of certain of our manufacturers, increasing the effort and time required to identify, communicate and resolve manufacturing yield problems. Manufacturing defects that we do not discover during the manufacturing or testing process may lead to costly product recalls. These risks may lead to increased costs or delayed product delivery, which would harm our profitability and customer relationships.
In some cases, our requirements may represent a small portion of the total production of the third-party suppliers. As a result, we are subject to the risk that a producer will cease production of an older or lower-volume process that it uses to produce our parts. We cannot provide any assurance that our external foundries will continue to devote resources to the production of parts for our products or continue to advance the process design technologies on which the manufacturing of our products are based. Each of these events could increase our costs, lower our gross margin, and cause us to hold more inventories, or materially impact our ability to deliver our products on time.
We may experience difficulties transitioning to advanced manufacturing process technologies, which could materially adversely affect our results.
Our future success depends in part on our ability to transition our current development and production efforts to advanced manufacturing process technologies. We are currently making a significant investment to transition our products and intellectual property to circuit geometries of 55 and 28 nanometer. To the extent that we do not timely transition to smaller geometries, experience difficulties in shifting to smaller geometries, or have significant quality or reliability issues at these smaller geometries, our results could be materially adversely affected.
Our products are increasingly complex and could contain defects, which could result in material costs to us.
Product development in the markets we serve is becoming more focused on the integration of multiple functions on individual devices. There is a general trend towards increasingly complex products. The greater integration of functions and complexity of operations of our products increases the risk that we or our customers or end users could discover latent defects or subtle faults after volumes of product have been shipped. Quality and reliability issues could result in material costs and other adverse consequences to us, including, but not limited to:
 
 	◾	 	reduced margins;	
 
 	◾	 	damage to our reputation;	
 
 	◾	 	replacement costs for product warranty and support;	
 
 	◾	 	payments to our customers related to recall claims, or the delivery of product replacements as part of a recall claim, as a result of various industry or business practices, contractual requirements, or in order to maintain good customer relationships;	
 
 	◾	 	an adverse impact to our customer relationships by the occurrence of significant defects;	
 
 	◾	 	a delay in recognition or loss of revenues, loss of market share, or failure to achieve market acceptance;	
 
 	◾	 	writing off or reserving the value of inventory of such products; and	
 
 	◾	 	a diversion of the attention of our engineering personnel from our product development efforts.	
In addition, any defects or other problems with our products could result in financial losses or other damages to our customers who could seek damages from us for their losses. A product liability or warranty claim brought against us, even if unsuccessful, would likely be time consuming and costly to defend. In particular, the sale of systems and components that are incorporated into certain applications for the automotive industry involves a high degree of risk that such claims may be made.
 
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While we believe that we are reasonably insured against some of these risks and that we have attempted to contractually limit our financial exposure with many of our customers, a warranty or product liability claim against us in excess of our available insurance coverage and established reserves, or a requirement that we participate in a customer product recall, could have material adverse effects on our business, results of operations, and financial condition.
We have significant international sales, and risks associated with these sales could harm our operating results.
International sales represented 97 percent of our net sales in fiscal year 2017, 93 percent of our net sales in fiscal year 2016, and 95 percent of our net sales in fiscal year 2015. We expect international sales to continue to represent a significant portion of product sales. This reliance on international sales subjects us to the risks of conducting business internationally, including risks associated with political and economic instability, global health conditions, currency controls, exchange rate fluctuations and changes in import/export regulations, and tariff and freight rates. For example, the political or economic instability in a given region may have an adverse impact on the financial position of end users in the region, which could affect future orders and harm our results of operations. Our international sales operations involve a number of other risks including, but not limited to:
 
 	◾	 	unexpected changes in government regulatory requirements;	
 
 	◾	 	sales, VAT, or other indirect tax regulations and treaties and potential changes in regulations and treaties in the United States and in and between countries in which we manufacture or sell our products;	
 
 	◾	 	changes to countries’ banking and credit requirements;	
 
 	◾	 	changes in diplomatic and trade relationships;	
 
 	◾	 	delays resulting from difficulties in obtaining export licenses for technology;	
 
 	◾	 	tariffs and other barriers and restrictions;	
 
 	◾	 	competition with non-U.S. companies or other domestic companies entering the non-U.S. markets in which we operate;	
 
 	◾	 	longer sales and payment cycles;	
 
 	◾	 	problems in collecting accounts receivable;	
 
 	◾	 	changes to economic, social, or political conditions in countries such as China, where we have significant operations; and	
 
 	◾	 	the burdens of complying with a variety of non-U.S. laws.	
In addition, our competitive position may be affected by the exchange rate of the U.S. dollar against other currencies. While our sales are predominately denominated in U.S. dollars, increases in the value of the dollar would increase the price in local currencies of our products in non-U.S. markets and make our products relatively more expensive. We cannot provide assurances that regulatory, political and other factors will not adversely affect our operations in the future or require us to modify our current business practices.
We hold cash and cash equivalents at various foreign subsidiaries that may not be readily available to meet domestic cash requirements.
We expect our various foreign subsidiaries, in particular subsidiaries in the United Kingdom, to increase holdings in cash, cash equivalents, and marketable securities over time. Any cash balances held outside the United States may not be readily available, or may not be available without an additional tax burden, to meet our domestic cash requirements. We require a substantial amount of cash in the United States for operating requirements, purchases of property and equipment, debt service, returning capital to investors, and potentially for future acquisitions. If we are unable to meet our domestic cash requirements using domestic cash flows from operations, domestic cash, cash equivalents, and marketable securities, or by domestic borrowing, it may be necessary for us to consider repatriation of earnings that we have designated as indefinitely reinvested. This may require us to record additional income tax expense and remit additional taxes, which could have a material effect on our results of operations, cash flows and financial condition.
 
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We could be subject to changes in tax laws, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities.
We are subject to taxes in the U.S. and numerous foreign jurisdictions, including the United Kingdom, where a number of our subsidiaries are organized. Due to economic and political conditions, tax laws in various jurisdictions may be subject to significant change. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation, including in the U.S. and the United Kingdom. We are also subject to the examination of our tax returns and other tax matters by the Internal Revenue Service of the United States (the “IRS”) and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations. If our effective tax rates were to increase, particularly in the U.S. or the United Kingdom, or if the ultimate determination of taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected.
Significant judgment is required in the calculation of our tax provision and the resulting tax liabilities. Our estimates of future taxable income and the regional mix of this income can change as new information becomes available. Any such changes in our estimates or assumptions can significantly impact our tax provision in a given period. In addition, failure to comply with complex tax accounting regulations could result in a restatement our financial statements. Restatements are generally costly and could adversely impact our results of operations or have a negative impact on the trading price of our common stock.
Our international operations subject our business to additional political and economic risks that could have an adverse impact on our business.
In addition to international sales constituting a large portion of our net sales, we maintain international operations, sales, and technical support personnel. International expansion has required, and will continue to require, significant management attention and resources. There are risks inherent in expanding our presence into non-U.S. regions, including, but not limited to:
 
 	◾	 	difficulties in staffing and managing non-U.S. operations;	
 
 	◾	 	failure in non-U.S. regions to adequately protect our intellectual property, patent, trademarks, copyrights, know-how, and other proprietary rights;	
 
 	◾	 	global health conditions and potential natural disasters;	
 
 	◾	 	political and economic instability in international regions;	
 
 	◾	 	international currency controls and exchange rate fluctuations;	
 
 	◾	 	vulnerability to terrorist groups targeting American interests abroad; and	
 
 	◾	 	legal uncertainty regarding liability and compliance with non-U.S. laws and regulatory requirements.	
If we are unable to successfully manage the demands of our international operations, it may have a material adverse effect on our business, financial condition, or results of operations.
On June 23, 2016, the United Kingdom (U.K.) held a referendum in which voters approved an exit from the European Union (the “E.U.”), commonly referred to as “Brexit.” Following the referendum result, the British government invoked Article 50 of the Lisbon Treaty on March 29, 2017 and have two years from that date to negotiate the terms of the U.K.’s withdrawal from the E.U. and the U.K.’s future relationships with E.U. member states. Although it is unknown what those terms will be, it is possible that there will be greater restrictions on immigration between the U.K. and E.U. countries that make it more difficult to staff our U.K. operations, changes in tax laws that negatively impact our effective tax rate, restrictions on imports and exports between the U.K. and E.U. member states, and increased regulatory complexities. These changes may adversely affect our operations and financial results.
 
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Because we depend on subcontractors internationally to perform key manufacturing functions for us, we are subject to political, economic, and natural disaster risks that could disrupt the fabrication, assembly, packaging, or testing of our products.
We depend on third-party subcontractors, primarily in Asia, for the fabrication, assembly, packaging, and testing of most of our products. International operations may be subject to a variety of risks, including political instability, global health conditions, currency controls, exchange rate fluctuations, changes in import/export regulations, tariff and freight rates, as well as the risks of natural disasters such as earthquakes, tsunamis, and floods. Although we seek to reduce our dependence on any one subcontractor, this concentration of subcontractors and manufacturing operations in Asia subjects us to the risks of conducting business internationally, including associated political and economic conditions. If we experience manufacturing problems at a particular location, or a supplier is unable to continue operating due to financial difficulties, natural disasters, or other reasons, we would be required to transfer manufacturing to a backup supplier. Converting or transferring manufacturing from a primary supplier to a backup facility could be expensive and time consuming. As a result, delays in our production or shipping by the parties to whom we outsource these functions could reduce our sales, damage our customer relationships, and damage our reputation in the marketplace, any of which could harm our business, results of operations, and financial condition.
Our products may be subject to average selling prices that decline over time. If we are unable to maintain average selling prices for existing products, increase our volumes, introduce new or enhanced products with higher selling prices, or reduce our costs, our business and operating results could be harmed.
Historically in the semiconductor industry, average selling prices of products have decreased over time. Moreover, our dependence on a limited number of key customers may make it easier for key customers to pressure us to reduce the prices of the products we sell to them. If the average selling price of any of our products declines and we are unable to increase our unit volumes, introduce new or enhanced products with higher margins, and/or reduce manufacturing costs to offset anticipated decreases in the prices of our existing products, our operating results may be adversely affected. In addition, because of procurement lead times, we are limited in our ability to reduce total costs quickly in response to any reductions in prices or sales shortfalls. Because of these factors, we may experience material adverse fluctuations in our future operating results on a quarterly or annual basis.
As we carry only limited insurance coverage, uninsured or under-insured losses could adversely affect our financial condition and results of operations.
Our insurance policies may not be adequate to fully offset losses from covered incidents, and we do not have coverage for certain losses. For example, there is limited coverage available with respect to the services provided by our third party foundries and assembly and test subcontractors. Although we believe that our existing insurance coverage is consistent with common practices of companies in our industry, our insurance coverage may be inadequate to protect us against product recalls, natural disasters, and other unforeseen catastrophes that could adversely affect our financial condition and results of operations.
Shifts in industry-wide capacity and our practice of ordering and purchasing our products based on sales forecasts may result in significant fluctuations in inventory and our quarterly and annual operating results.
We rely on independent foundries and assembly and test houses to manufacture our products. Our reliance on these third party suppliers involves certain risks and uncertainties. For example, shifts in industry-wide capacity from shortages to oversupply, or from oversupply to shortages, may result in significant fluctuations in our quarterly and annual operating results. In addition, we may order wafers and build inventory in advance of receiving purchase orders from our customers. Because our industry is highly cyclical and is subject to significant downturns resulting from excess capacity, overproduction, reduced demand, order cancellations, or technological obsolescence, there is a risk that we will forecast inaccurately and produce excess inventories of particular products. In addition, if we experience supply constraints or manufacturing problems at a particular supplier, we could be required to switch suppliers or qualify additional suppliers. Switching and/or qualifying additional suppliers could be an expensive process and take as long as six to twelve months to complete, which could result in material adverse fluctuations to our operating results.
 
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We generally order our products through non-cancelable purchase orders from third-party foundries based on our sales forecasts, and our customers can generally cancel or reschedule orders they place with us without significant penalties. If we do not receive orders as anticipated by our forecasts, or our customers cancel orders that are placed, we may experience increased inventory levels.
Due to the product manufacturing cycle characteristic of IC manufacturing and the inherent imprecision in the accuracy of our customers’ forecasts, product inventories may not always correspond to product demand, leading to shortages or surpluses of certain products. As a result of such inventory imbalances, future inventory write-downs and charges to gross margin may occur due to lower of cost or market accounting, excess inventory, and inventory obsolescence.
We have historically experienced fluctuations in our operating results and expect these fluctuations to continue in future periods.
Our quarterly and annual operating results are affected by a wide variety of factors that could materially and adversely affect our net sales, gross margin, and operating results. If our operating results fall below expectations of market analysts or investors, the market price of our common stock could decrease significantly. We are subject to business cycles and it is difficult to predict the timing, length, or volatility of these cycles. These business cycles may create pressure on our sales, gross margin, and/or operating results.
Factors that could cause fluctuations and materially and adversely affect our net sales, gross margin and/or operating results include, but are not limited to:
 
 	◾	 	the volume and timing of orders received;	
 
 	◾	 	changes in the mix of our products sold;	
 
 	◾	 	market acceptance of our products and the products of our customers;	
 
 	◾	 	excess or obsolete inventory;	
 
 	◾	 	pricing pressures from competitors and key customers;	
 
 	◾	 	our ability to introduce new products on a timely basis;	
 
 	◾	 	the timing and extent of our research and development expenses;	
 
 	◾	 	the failure to anticipate changing customer product requirements;	
 
 	◾	 	disruption in the supply of wafers, assembly, or test services;	
 
 	◾	 	reduction of manufacturing yields;	
 
 	◾	 	certain production and other risks associated with using independent manufacturers, assembly houses, and testers;	
 
 	◾	 	increases in our effective tax rate; and	
 
 	◾	 	product obsolescence, price erosion, competitive developments, and other competitive factors.	
Our debt obligations may be a burden on our future cash flows and cash resources.
On August 29, 2014, we entered into a credit agreement (the “Credit Agreement”), which provides for a $250 million senior secured revolving credit facility. On July 12, 2016, we amended the Credit Agreement to increase the facility to $300 million. As of March 25, 2017, the Company had an outstanding balance of $60.0 million under the facility. The credit facility matures on July 12, 2021. Our ability to repay the principal of, to pay interest on or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive, regulatory and other factors, some of which are beyond our control. Our business may not generate cash flow from operations in the future sufficient to satisfy our obligations or to make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, or refinancing
 
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or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance the indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the Credit Agreement.
Our Credit Agreement contains restrictions that limit our flexibility in operating our business.
Our Credit Agreement contains various covenants that limit our ability to engage in specified types of transactions. These covenants limit our ability to, among other things:
 
 	◾	 	pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments;	
 
 	◾	 	incur additional indebtedness or issue certain preferred shares;	
 
 	◾	 	make certain investments;	
 
 	◾	 	sell certain assets;	
 
 	◾	 	create liens;	
 
 	◾	 	consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and	
 
 	◾	 	enter into certain transactions with our affiliates.	
A breach of any of these covenants could result in a default under Credit Agreement. In the event of a default under the Credit Agreement, the lenders could elect to declare all amounts outstanding to be immediately due and payable. If our lenders accelerate the repayment of borrowings, we may not be able to repay our debt obligations. If we were unable to repay amounts due to the lenders under our credit facility, those lenders could proceed against the collateral granted to them to secure that indebtedness.
System security risks, data protection breaches, cyber-attacks and other related cyber security issues could disrupt our internal operations, and any such disruption could increase our expenses, damage our reputation and adversely affect our stock price.
Our security measures are subject to third-party security breaches, employee error, malfeasance, faulty password management, and other irregularities. For example, experienced computer programmers and hackers may be able to penetrate our security controls and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack our websites, products or otherwise exploit any security vulnerabilities of our websites and products. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions.
We manage and store various proprietary information and sensitive or confidential data relating to our business. In addition, we manage and store a significant amount of proprietary and sensitive confidential information from our customers. Any breach of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business.
We may be adversely impacted by global economic conditions. As a result, our financial results and the market price of our common shares may decline.
Global economic conditions could make it difficult for our customers, our suppliers, and us to accurately forecast and plan future business activities, and could cause global businesses to defer or reduce spending on our
 
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products, or increase the costs of manufacturing our products. During challenging economic times our customers and distributors may face issues gaining timely access to sufficient credit, which could impact their ability to make timely payments to us. If that were to occur, we may be required to increase our allowance for doubtful accounts and our days sales outstanding would increase.
We cannot predict the timing, strength, or duration of any economic slowdown or subsequent economic recovery. If the economy or markets in which we operate were to deteriorate, our business, financial condition, and results of operations will likely be materially and/or adversely affected.
Our foreign currency exposures may change over time as the level of activity in foreign markets grows and could have an adverse impact upon financial results.
As a global enterprise, we face exposure to adverse movements in foreign currency exchange rates. Certain of our assets, including certain bank accounts, exist in non-U.S. dollar-denominated currencies, which are sensitive to foreign currency exchange rate fluctuations. The non-U.S. dollar-denominated currencies are principally the British Pound Sterling. We also have a significant number of employees that are paid in foreign currency, the largest group being United Kingdom-based employees who are paid in British Pounds Sterling.
If the value of the U.S. dollar weakens relative to these specific currencies, the cost of doing business in terms of U.S. dollars rises. With the growth of our international business, our foreign currency exposures may grow and under certain circumstances, could harm our business.
We do not currently hedge currency exposures relating to operating expenses incurred outside of the United States, but we may do so in the future. If we do not hedge against these risks, or our attempts to hedge against these risks are not successful, our financial condition and results of operations could be adversely affected.
Our results may be affected by the fluctuation in sales in the consumer entertainment and smartphone markets.
Because we sell products primarily in the consumer entertainment and smartphone markets, we are likely to be affected by seasonality in the sales of our products and the cyclical nature of these markets. Further, a decline in consumer confidence and consumer spending relating to economic conditions, terrorist attacks, armed conflicts, oil prices, global health conditions, natural disasters, and/or the political stability of countries in which we operate or sell products could have a material adverse effect on our business.
We may be unable to protect our intellectual property rights.
Our success depends in part on our ability to obtain patents and to preserve our other intellectual property rights covering our products. We seek patent protection for those inventions and technologies for which we believe such protection is suitable and is likely to provide a competitive advantage to us. We also rely on trade secrets, proprietary technology, non-disclosure and other contractual terms, and technical measures to protect our technology and manufacturing knowledge. We actively work to foster continuing technological innovation to maintain and protect our competitive position. We cannot provide assurances that steps taken by us to protect our intellectual property will be adequate, that our competitors will not independently develop or design around our patents, or that our intellectual property will not be misappropriated. In addition, the laws of some non-U.S. countries may not protect our intellectual property as well as the laws of the United States.
Any of these events could materially and adversely affect our business, operating results, or financial condition. Policing infringement of our technology is difficult, and litigation may be necessary in the future to enforce our intellectual property rights. Any such litigation could be expensive, take significant time, and divert management’s attention.
Potential intellectual property claims and litigation could subject us to significant liability for damages and could invalidate our proprietary rights.
The IC industry is characterized by frequent litigation regarding patent and other intellectual property rights. We may find it necessary to initiate lawsuits to assert our patent or other intellectual property rights. These legal
 
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proceedings could be expensive, take significant time, and divert management’s attention. We cannot provide assurances that we will ultimately be successful in any lawsuit, nor can we provide assurances that any patent owned by us will not be invalidated, circumvented, or challenged. We cannot provide assurances that rights granted under our patents will provide competitive advantages to us, or that any of our pending or future patent applications will be issued with the scope of the claims sought by us, if at all.
As is typical in the IC industry, our customers and we have, from time to time, received and may in the future receive, communications from third parties asserting patents, mask work rights, or copyrights. In the event third parties were to make a valid intellectual property claim and a license was not available on commercially reasonable terms, our operating results could be harmed. Litigation, which could result in substantial cost to us and diversion of our management, technical and financial resources, may also be necessary to defend us against claimed infringement of the rights of others. An unfavorable outcome in any such litigation could have an adverse effect on our future operations and/or liquidity.
If we fail to attract, hire and retain qualified personnel, we may not be able to develop, market, or sell our products or successfully manage our business.
Competition for highly qualified personnel in our industry is intense. The number of technology companies in the geographic areas in which we operate is greater than it has been historically and we expect competition for qualified personnel to intensify. There are only a limited number of individuals in the job market with the requisite skills. Our Human Resources organization focuses significant efforts on attracting and retaining individuals in key technology positions. The loss of the services of key personnel or our inability to hire new personnel with the requisite skills could restrict our ability to develop new products or enhance existing products in a timely manner, sell products to our customers, or manage our business effectively.
If we fail to effectively manage our hiring needs and successfully assimilate new talent, or are unable to hire contractors to support our development efforts, our ability to meet development schedules, productivity, employee morale and retention could be impacted, resulting in an adverse effect on our business and operating results.
We continue to experience rapid growth in hiring new employees. As we continue to grow, we must effectively integrate, develop and motivate a large number of new employees, while at the same time not losing key personnel. While managing those risks, we still must sustain the beneficial aspects of our award-winning corporate culture, which we believe fosters innovation, teamwork and mitigates voluntary turnover.
We intend to make substantial investments to expand our engineering, research and development organizations. The challenges of integrating a rapidly growing employee base into our corporate culture are exacerbated by the tight product development schedules for our key customers. Therefore, if we fail to effectively manage our hiring needs and successfully assimilate new talent, our ability to meet development schedules, productivity, employee morale and retention could be impacted, resulting in an adverse effect on our business and operating results.
In connection with our efforts to cost-effectively manage our headcount growth, we have also increasingly relied on contractors for various functions, including our research and development efforts, and in particular, our software development and test functions. If our contractors do not perform effectively or are unable to provide sufficient resources to meet our growing needs, our product introductions may be delayed and we may incur additional costs.
We are subject to the export control regulations of the U.S. Department of State and the Department of Commerce. A violation of these export control regulations could have a material adverse effect on our business or our results of operations, cash flows, or financial position.
The nature of our international business subjects us to the export control regulations of the U.S. Department of State and the Department of Commerce. Violation of these export control regulations could result in monetary penalties and denial of export privileges. The U.S. government is very strict with respect to compliance and has served notice generally that failure to comply with these regulations may subject violators to fines and/or
 
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imprisonment. Although we are not aware of any material violation of any export control regulations, a failure to comply with any of these regulations could have a material adverse effect on our business.
Our stock price has been and is likely to continue to be volatile.
The market price of our common stock fluctuates significantly. This fluctuation has been or may be the result of numerous factors, including, but not limited to:
 
 	◾	 	actual or anticipated fluctuations in our operating results;	
 
 	◾	 	announcements concerning our business or those of our competitors, customers, or suppliers;	
 
 	◾	 	loss of a significant customer, or customers;	
 
 	◾	 	changes in financial estimates by securities analysts or our failure to perform as anticipated by the analysts;	
 
 	◾	 	news, commentary, and rumors emanating from the media relating to our customers, the industry, or us. These reports may be unrelated to the actual operating performance of the Company, and in some cases, may be potentially misleading or incorrect;	
 
 	◾	 	announcements regarding technological innovations or new products by us or our competitors;	
 
 	◾	 	announcements by us of significant acquisitions, strategic partnerships, joint ventures, or capital commitments;	
 
 	◾	 	announcements by us of significant divestitures or sale of certain assets or intellectual property;	
 
 	◾	 	litigation arising out of a wide variety of matters, including, among others, employment matters and intellectual property matters;	
 
 	◾	 	departure of key personnel;	
 
 	◾	 	single significant stockholders selling for any reason;	
 
 	◾	 	general conditions in the IC industry; and	
 
 	◾	 	general market conditions and interest rates.	
We have provisions in our Certificate of Incorporation and Bylaws, and are subject to certain provisions of Delaware law, which could prevent, delay or impede a change of control of our company. These provisions could affect the market price of our stock.
Certain provisions of Delaware law and of our Certificate of Incorporation and Bylaws could make it more difficult for a third party to acquire us, even if our stockholders support the acquisition. These provisions include, but are not limited to:
 
 	◾	 	the inability of stockholders to call a special meeting of stockholders;	
 
 	◾	 	a prohibition on stockholder action by written consent; and	
 
 	◾	 	a requirement that stockholders provide advance notice of any stockholder nominations of directors or any proposal of new business to be considered at any meeting of stockholders.	
We are also subject to the anti-takeover laws of Delaware that may prevent, delay or impede a third party from acquiring or merging with us, which may adversely affect the market price of our common stock.
We are subject to the risks of owning real property.
We currently own our U.S. headquarters in Austin, Texas as well as property in Edinburgh, Scotland, United Kingdom. The ownership of our U.S. and United Kingdom properties subjects us to the risks of owning real property, which may include:
 
 	◾	 	the possibility of environmental contamination and the costs associated with correcting any environmental problems;	
 
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 	◾	 	adverse changes in the value of these properties, due to interest rate changes, changes in the neighborhood in which the property is located, or other factors; and	
 
 	◾	 	the risk of financial loss in excess of amounts covered by insurance, or uninsured risks, such as the loss caused by damage to the buildings as a result of fire, floods, or other natural disasters.	
 ITEM 1B.   Unresolved Staff Comments 
None.
 ITEM 2.   Properties 
As of March 25, 2017, our principal facilities are located in Austin, Texas and Edinburgh, Scotland, United Kingdom. The Austin facilities, which we own, consist of approximately 155,000 square feet of office space and are primarily occupied by research and development personnel and testing equipment. In addition, our failure analysis and reliability facility occupies approximately 27,000 square feet.
Additionally, we have various leased facilities in Austin, Texas, consisting of approximately 88,000 square feet. This includes approximately 59,000 square feet of leased space that houses a mixture of administrative personnel as well as research and development personnel.
In connection with our acquisition of Wolfson Microelectronics (“ Wolfson ”, the “ Acquisition ”) on August 21, 2014, we acquired Wolfson’s corporate headquarters located in Edinburgh, Scotland, United Kingdom. This building consists of approximately 50,000 square feet of office space and is primarily occupied by research and development personnel and testing equipment. We have entered into an agreement to lease approximately 70,000 square feet of new office space in Edinburgh. With the completion of this new space at the beginning of calendar year 2017, the majority of our Edinburgh employees have relocated to the new office space. The Company is evaluating our future needs related to the use of the previously-mentioned building. A $9.8 million asset impairment was recorded in the fourth quarter of fiscal year 2017, as the future use and fair value of the property were assessed. This charge is presented as a separate line item in the Consolidated Statements of Income as “ Asset impairment”. See further details below in Results of Operation.
Below is a detailed schedule that identifies our principal locations of occupied leased and owned property as of March 25, 2017, with various lease terms through calendar year 2026. We believe that these facilities are suitable and adequate to meet our current operating needs.

Design Centers	    	 	    	Sales Support Offices – International	
Austin, Texas	    		    	Hong Kong, China	
Mesa, Arizona	    		    	Shanghai, China	
Edinburgh, Scotland, United Kingdom	    		    	Shenzhen, China	
Newbury, England, United Kingdom	    		    	Tokyo, Japan	
London, England, United Kingdom	    		    	Singapore	
Melbourne, Australia	    		    	Seoul, South Korea	
Madrid, Spain	    		    	Taipei, Taiwan	
Stockholm, Sweden	    		    		
See Note 11 — Commitments and Contingencies of the Notes to Consolidated Financial Statements contained in Item 8 for further detail.
 ITEM 3.   Legal Proceedings 
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 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.
 
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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. While there can be no assurances in light of the inherent uncertainties involved in any potential legal proceedings, some of which are beyond our control, an adverse outcome in any legal proceeding could be material to our results of operations or cash flows for any particular reporting period.
 ITEM 4.   Mine Safety Disclosures 
Not applicable.
PART II
 
 ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 	
Our common stock is traded on the NASDAQ Global Select Market under the symbol CRUS.
As of May 19, 2017, there were approximately 482 holders of record of our common stock.
We have not paid cash dividends on our common stock and currently intend to continue a policy of retaining any earnings for reinvestment in our business, repayment of debt, potential acquisition, or share repurchases.
The information under the caption “Equity Compensation Plan Information” in the proxy statement to be delivered to stockholders in connection with our Annual Meeting of Stockholders to be held on July 28, 2017 (the “Proxy Statement”) is incorporated herein by reference.
The following table shows, for the periods indicated, the high and low intra-day sales prices for our common stock.

 	  	High	 	  	Low	 	
Fiscal year ended March 25, 2017	  				  				
First quarter	  	$	40.98	 	  	$	31.00	 	
Second quarter	  	 	58.08	 	  	 	34.82	 	
Third quarter	  	 	59.78	 	  	 	49.05	 	
Fourth quarter	  	 	64.16	 	  	 	52.00	 	
Fiscal year ended March 26, 2016	  				  				
First quarter	  	$	38.20	 	  	$	31.95	 	
Second quarter	  	 	37.60	 	  	 	24.56	 	
Third quarter	  	 	36.03	 	  	 	28.11	 	
Fourth quarter	  	 	36.95	 	  	 	25.09	 	
The Company did not purchase any equity securities registered by the Company pursuant to Section 12 of the Exchange Act during the three months ended March 25, 2017. See Note 13 for a description of our Share Repurchase Program.
 
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Stock Price Performance Graph
The following graph and table show a comparison of the five-year cumulative total stockholder return, calculated on a dividend reinvestment basis, for Cirrus Logic, the Standard & Poor’s 500 Composite Index (the “S&P 500 Index”), and the Semiconductor Subgroup of the Standard & Poor’s Electronics Index (the “S&P 500 Semiconductors Index”).
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
March 2017

 
																									
 	  	3/31/2012	 	  	3/30/2013	 	  	3/29/2014	 	  	3/28/2015	 	  	3/26/2016	 	  	3/25/2017	 	
Cirrus Logic, Inc.	  	 	100.00	 	  	 	95.59	 	  	 	82.02	 	  	 	139.87	 	  	 	144.83	 	  	 	252.35	 	
S&P 500 Index	  	 	100.00	 	  	 	113.96	 	  	 	137.77	 	  	 	156.00	 	  	 	157.45	 	  	 	185.18	 	
S&P 500 Semiconductors Index	  	 	100.00	 	  	 	90.39	 	  	 	116.32	 	  	 	147.23	 	  	 	148.33	 	  	 	204.82	 	
 
 	(1)	The graph assumes that $100 was invested in our common stock and in each index at the market close on March 31, 2012, and that all dividends were reinvested. No cash dividends were declared on our common stock during the periods presented.	
 
 	(2)	Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.	
The information in this Annual Report on Form 10-K appearing under the heading “Stock Price Performance Graph” is being “furnished” pursuant to Item 201(e) of Regulation S-K under the Securities Act of 1933, as amended, and shall not be deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
 
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 ITEM 6.	Selected Financial Data 	
The information contained below should be read along with Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8 – Financial Statements and Supplementary Data (amounts in thousands, except per share amounts).

 	  	Fiscal Years	 	
 	  	2017	 	 	2016	 	 	2015	 	 	2014	 	  	2013	 	
	  	 	(1)	 	 	 	(1)	 	 	 	(1)	 	 				  				
Net sales	  	$	1,538,940	 	 	$	1,169,251	 	 	$	916,568	 	 	$	714,338	 	  	$	809,786	 	
Net income	  	 	261,209	 	 	 	123,630	 	 	 	55,178	 	 	 	108,111	 	  	 	136,598	 	
Basic earnings per share	  	$	4.12	 	 	$	1.96	 	 	$	0.88	 	 	$	1.72	 	  	$	2.12	 	
Diluted earnings per share	  	$	3.92	 	 	$	1.87	 	 	$	0.85	 	 	$	1.65	 	  	$	2.00	 	
Financial position at year end:	  				 				 				 				  				
Cash, cash equivalents, restricted investments and marketable securities	  	 	450,979	 	 	 	250,006	 	 	 	260,719	 	 	 	384,510	 	  	 	236,547	 	
Total assets	  	$	1,413,470	 	 	$	1,181,883	 	 	$	1,148,778	 	 	$	724,744	 	  	$	651,347	 	
Working capital	  	 	631,853	 	 	 	378,005	 	 	 	275,335	 	 	 	392,810	 	  	 	351,455	 	
Long-term liabilities	  	 	117,703	 	 	 	194,276	 	 	 	215,429	 	 	 	4,863	 	  	 	10,094	 	
Total stockholders’ equity	  	$	1,151,692	 	 	$	859,483	 	 	$	756,771	 	 	$	637,358	 	  	$	548,174	 	
 
 	1)	Refer to the consolidated financial statements and the Notes thereto contained in Item 8 of this Form 10-K for fiscal years 2017, 2016, and 2015, for an expanded discussion of factors that materially affect the comparability of the information reflected in the selected consolidated financial data presented above.	
 ITEM 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations 
Please read the following discussion in conjunction with our audited historical consolidated financial statements and notes thereto, which are included elsewhere in this Form 10-K. Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. Actual results could differ materially because of the factors discussed in Part I, Item 1A. “Risk Factors” of this Form 10-K.
Critical Accounting Policies
Our discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements included in this report, which have been prepared in accordance with U. S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts. We evaluate the estimates on an on-going basis. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.
We believe the following critical accounting policies involve significant judgments and estimates that are used in the preparation of the consolidated financial statements:
 
 	◾	 	We report income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the financial reporting basis and tax basis of assets and liabilities, which are measured using the enacted tax laws and tax rates that will be in effect when the differences are expected to reverse. We assess the likelihood that the deferred tax assets will be realized. A valuation allowance is established against deferred tax assets to	
 
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 	the extent the Company believes that it is more likely than not that the deferred tax assets will not be realized, taking into consideration the level of historical taxable income and projections for future taxable income over the periods in which the temporary differences are deductible.	
The calculation of our tax liabilities involves assessing uncertainties with respect to the application of complex tax rules. Uncertain tax positions must meet a more likely than not threshold to be recognized in the financial statements and the tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon final settlement. See Note 15 — Income Taxes of the Notes to Consolidated Financial Statements contained in Item 8 for additional details .
 
 	◾	 	We recognize revenue when all of the following criteria are met: persuasive evidence that an arrangement exists, delivery of goods has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Prior to the fourth quarter of fiscal year 2016, we had a number of arrangements with distributors whereby we deferred revenue at the time of shipment of our products to those distributors. As part of those arrangements, when a distributor resold those products to an end customer, the Company would credit the distributor the difference between (1) the original distributor price and the distributor’s agreed upon margin and (2) the final sales price to the end customer (known as the “Ship and Debit Arrangement”). For those transactions, revenue was deferred until the product was resold by the distributor and we determined that the final sales price to the distributor was fixed or determinable. For certain of our smaller distributors, we did not have similar Ship and Debit Arrangements and the distributors were billed at a fixed upfront price. For those transactions, revenue was recognized upon delivery to the distributor based upon the distributor’s individual shipping terms, less an allowance for estimated returns, as the Company determined that the revenue recognition criteria were met.	
In light of the fact that the distributor program had been declining as a portion of the overall business for several years, in fiscal year 2016 the Company performed a review of all distributor arrangements in an effort to streamline our distribution program and reduce overhead costs. Based upon this review, the Company terminated its Ship and Debit Arrangements with Distributors during the fourth quarter of fiscal year 2016. Subsequent to the termination of the Ship and Debit Arrangements, the Company began recognizing revenue for all distributors upon delivery to the distributor based upon the distributor’s individual shipping terms, less an allowance for estimated returns, as the Company’s final sales price to the distributor was fixed and determinable and the Company determined that all four criteria for revenue recognition were met.
Although the Company terminated its Ship and Debit Arrangements with all distributors along with certain ancillary agreements related to the Ship and Debit Arrangements, the Company continues to grant varying levels of stock rotation and price protection rights based on individual distributor agreements. To the extent these rights are implicated in any transaction with a distributor, we continue to evaluate their effect on when the revenue recognition criteria have been met.
 
 	◾	 	Inventories are recorded at the lower of cost or net realizable value, following the adoption of ASU 2015-11 (as discussed below), with cost being determined on a first-in, first-out basis. We write down inventories to net realizable value based on forecasted demand while taking into account product release schedules and product life cycles, which may drive management judgment. We also review and write down inventory, as appropriate, based on the age and condition of the inventory. Actual demand and market conditions may be different from those projected by management, which could have a material effect on our operating results and financial position. See Note 2 — Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements contained in Item 8.	
 
 	◾	 	We evaluate the recoverability of property, plant, and equipment and intangible assets by testing for impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. An impairment loss is recognized in the event the carrying value of these assets exceeds the fair value of the applicable assets. Impairment evaluations involve management estimates of asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated	
 
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 	by management, which could have a material effect on our operating results and financial position. See Note 6 — Intangibles, net and Goodwill of the Notes to Consolidated Financial Statements contained in Item 8.	
 
 	◾	 	The Company evaluates goodwill and other intangible assets. Goodwill is recorded at the time of an acquisition and is calculated as the difference between the total consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. The Company tests goodwill and other intangible assets 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 2017, 2016, and 2015. There were no material intangible asset impairments in fiscal years 2017, 2016, and 2015.	
 
 	◾	 	We are subject to the possibility of loss contingencies for various legal matters. See Note 12 — Legal Matters of the Notes to Consolidated Financial Statements contained in Item 8 . We regularly evaluate current information available to us to determine whether any accruals should be made based on the status of the case, the results of the discovery process and other factors. If we ultimately determine that an accrual should be made for a legal matter, this accrual could have a material effect on our operating results and financial position and the ultimate outcome may be materially different than our estimate.	
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 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 is currently in the process of reviewing our customers’ contracts in respect of performance obligation identification and satisfaction, pricing, warranties, and return rights, among other considerations. Through this process, the Company currently expects no material modifications to its financial statements upon adoption of this ASU.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern . The amendments in this ASU provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company adopted this ASU in the fourth quarter of fiscal year 2017 with no material modifications to the Company’s financial statements as a result.
In April 2015, the FASB issued ASU No. 2015-03,  Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . The amendments in this update require that debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of that debt liability and that the amortization of debt issuance costs is reported as interest expense. ASU 2015-03 is to be applied retrospectively and represents a change in accounting principle. In August 2015, the FASB issued FASB ASU No. 2015-15, Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit
 
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Arrangements . ASU 2015-15 clarified the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. Debt issuance costs related to a line-of-credit arrangement may be presented in the balance sheet as an asset and subsequently amortized ratably over the term of the arrangement regardless of whether there are any outstanding borrowings. Both ASU 2015-03 and ASU 2015-15 are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Earlier adoption is permitted for financial statements that have not been previously issued. The Company adopted these ASUs in fiscal year 2017 with no material impact to its financial statements.
In April 2015, the FASB issued ASU No. 2015-04, Compensation — Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets.  The ASU is part of the FASB’s “Simplification Initiative” to reduce complexity in accounting standards. The FASB decided to permit entities to measure defined benefit plan assets and obligations as of the month-end that is closest to their fiscal year-end. An entity is required to disclose the accounting policy election and the date used to measure defined benefit plan assets and obligations in accordance with the amendments in this update. The amendments in this update are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with earlier application permitted. The Company adopted this ASU in the first quarter of fiscal year 2017, with no material impact to its financial statements.
In July 2015, ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory was issued. This ASU requires companies to subsequently measure inventory at the lower of cost and net realizable value versus the previous lower of cost or market. The amendments in this update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, to be applied prospectively. Early application is permitted. The Company early adopted this ASU in fiscal year 2017 with no material modifications to its financial statements as a result.
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 terms 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 Company is currently evaluating the impact of this ASU.
In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This ASU requires all excess tax benefits and deficiencies to be recognized as income tax benefit / expense in the income statement and presented as an operating activity in the statement of cash flows. Forfeitures can be calculated based on either the estimated number of awards that are expected to vest, as required by current guidance, or when forfeitures actually occur. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted, but all amendments must be adopted in the same period and any adjustments should be reflected as of the beginning of the fiscal year if adopted in an interim period. The Company early adopted in the third quarter of fiscal year 2017, which resulted in the following:
 
 	◾	 	We recorded excess tax benefits within income tax expense, rather than in additional paid-in capital (“APIC”), of $2.2 million, $8.0 million, $10.8 million and $1.9 million for the first, second, third and fourth quarters of fiscal year 2017, respectively.	
 
 	◾	 	We recorded a cumulative-effect adjustment as of March 27, 2016 to increase retained earnings by $5.6 million, with a corresponding increase to deferred tax assets, to recognize net operating loss and tax credit carryforwards attributable to excess tax benefits on stock-based compensation that had not been previously recognized.	
 
 	◾	 	We now include the excess tax benefits in net operating cash rather than net financing cash in our Consolidated Statements of Cash Flows.	
 
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We applied this change in presentation prospectively and thus prior years have not been adjusted.
We elected not to change our policy on accounting for forfeitures and continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period.
The adoption of this new guidance impacted our previously reported quarterly results for fiscal year 2017 as follows:

 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	June 25, 2016	 	 	September 24, 2016	 	 	September 24, 2016	 	
 	 	As reported	 	 	As adjusted	 	 	As reported	 	 	As adjusted	 	 	As reported	 	 	As adjusted	 	
 	 	(in thousands, except per share data)	 	
Consolidated Condensed Statements of Income:	 				 				 				 				 				 				
Income tax expense	 	$	5,805	 	 	$	3,598	 	 	$	24,608	 	 	$	16,634	 	 	$	30,413	 	 	$	20,232	 	
Net income	 	$	15,864	 	 	$	18,071	 	 	$	78,065	 	 	$	86,039	 	 	$	93,929	 	 	$	104,110	 	
Basic net income per share	 	$	0.25	 	 	$	0.29	 	 	$	1.24	 	 	$	1.37	 	 	$	1.50	 	 	$	1.66	 	
Diluted net income per share	 	$	0.24	 	 	$	0.27	 	 	$	1.19	 	 	$	1.30	 	 	$	1.43	 	 	$	1.58	 	
Weighted average shares used in diluted net income per share computation	 	 	65,232	 	 	 	65,723	 	 	 	65,717	 	 	 	66,410	 	 	 	65,521	 	 	 	66,101	 	
Consolidated Condensed Statements of Cash Flows:	 				 				 				 				 				 				
Net cash provided by operating activities	 	$	12,226	 	 	$	12,756	 	 	$	19,990	 	 	$	24,091	 	 	$	32,216	 	 	$	36,847	 	
Net cash used in financing activities	 	$	(13,140	) 	 	$	(13,670	) 	 	$	(13,859	) 	 	$	(17,960	) 	 	$	(26,999	) 	 	$	(31,630	) 	
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 with no expected material impact.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . This ASU covers several cash flow issues, including the presentation of contingent consideration payments made after a business combination. Cash payments up to the amount of the liability recognized at the acquisition date (including measurement-period adjustments) should be classified as financing activities. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted, including in an interim period, with a required retrospective transition method applied to each period presented. The Company early adopted in the fourth quarter of fiscal year 2017. See Statement of Cash Flows for presentation of contingent consideration payment.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory . This ASU relates to income tax consequences of non-inventory intercompany asset transfers. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted, as of the beginning of an annual reporting period. The guidance requires companies to apply a modified retrospective approach with a cumulative catch-up adjustment to beginning retained earnings in the period of adoption. The Company is currently evaluating the impact of this ASU with no expected material impact.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . The update states that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business, and should be treated as an asset acquisition instead. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is
 
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permitted under specific circumstances, including in an interim period, with prospective application. The Company is currently evaluating the financial statement impact of this ASU, which is dependent upon the specific terms of any applicable future acquisitions or dispositions.
In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323). This ASU amends the disclosure requirements for ASU 2014-09, Revenue from Contracts with Customers (Topic 606), ASU 2016-02, Leases (Topic 842) and ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU states that if a registrant does not know or cannot reasonably estimate the impact that the adoption of the above ASUs is expected to have on the financial statements, then in addition to making a statement to that effect, the registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted. This ASU was effective upon issuance. The adoption did not have a material impact on the Company’s financial statements.
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.
Overview
Cirrus Logic develops high-precision analog and mixed-signal ICs for a broad range of innovative customers. We track operating results in one reportable segment, but report revenue performance by product line, currently portable audio and non-portable audio and other products. In fiscal year 2017, the Company introduced a variety of new products related to flagship and mid-tier smartphones and the emerging digital headset market. The Company benefited from several new technology trends including the transition from the traditional 3.5mm headset jack to a digital interface. Increasing interest in boosted amplifiers was fueled by the desire of OEMs to deliver louder and higher quality sound output, including a shift toward dual speakers to drive stereo sound. We also saw certain key flagship features trickling into mid-tier phones as OEMs pushed to enable a differentiated audio experience in these devices. In China, providing high-fidelity music content and playback on mobile devices continued to be a critical feature and drove the need for high performance hi-fi DACs.
Fiscal Year 2017
Fiscal year 2017 net sales of $1.5 billion represented a 32 percent increase over fiscal year 2016 net sales of $1.2 billion. Portable audio product line sales of $1.4 billion in fiscal year 2017 represented a 39 percent increase over fiscal year 2016 sales of $989.1 million, attributable primarily to significant increases in the sales of smart codecs and boosted amplifiers for the period, which was partially offset by a reduction in revenue generated by certain general market smart codecs as a leading Android customer reverted to a dual sourcing strategy on core chipsets. Non-portable audio and other product line sales of $165.1 million represented an 8 percent decrease from fiscal year 2016 sales of $180.2 million.
Overall, gross margin for fiscal year 2017 was 49 percent. The increase in gross margin for fiscal year 2017 was primarily due to higher volumes and supply chain efficiencies versus the prior year. The Company’s number of employees increased to 1,444 as of March 25, 2017. The Company achieved net income of $261.2 million in fiscal year 2017, which included an income tax provision in the amount of $53.8 million.
 
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Fiscal Year 2016
Fiscal year 2016 net sales of $1.2 billion represented a 28 percent increase over fiscal year 2015 net sales of $916.6 million. Portable audio product line sales of $989.1 million in fiscal year 2016 represented a 34 percent increase over fiscal year 2015 sales of $740.3 million, attributable primarily to significant increases in the sales of smart codecs and boosted amplifiers for the period. Non-portable audio and other product line sales of $180.2 million represented a 2 percent increase from fiscal year 2015 sales of $176.3 million.
Overall, gross margin for fiscal year 2016 was 47 percent. The increase in gross margin for fiscal year 2016 was primarily due to the absence of the fair market adjustments related to the Acquisition discussed below, creating an approximate 1% favorable impact to gross margin versus fiscal year 2015. The Company’s number of employees increased to 1,291 as of March 26, 2016. The Company achieved net income of $123.6 million in fiscal year 2016, which included an income tax provision in the amount of $52.4 million.
Fiscal Year 2015
Fiscal year 2015 net sales of $916.6 million represented a 28 percent increase over fiscal year 2014 net sales of $714.3 million. Portable audio product line sales of $740.3 million in fiscal year 2015 represented a 32 percent increase over fiscal year 2014 sales of $562.7 million, attributable primarily to Wolfson contributions and significant increases in the sales of certain portable audio products for the period. Non-portable audio and other product line sales of $176.3 million represented a 16 percent increase from fiscal year 2014 sales of $151.6 million, which was primarily attributable to Wolfson contributions for the prior fiscal year, as well as increases in certain computer and DAC products.
Overall, gross margin for fiscal year 2015 was 46 percent. The decrease in gross margin for fiscal year 2015 was primarily due to the increase in inventory write-downs compared to fiscal year 2014, which had a 1.5% negative impact on fiscal year 2015 margin. Additionally, fiscal year 2015 gross margin was negatively affected by approximately 1% due to the fair value adjustments made to inventory as a result of the Acquisition. The Company’s number of employees increased to 1,104 as of March 28, 2015. The Company achieved net income of $55.2 million in fiscal year 2015, which included an income tax provision in the amount of $36.4 million.
Results of Operations
The following table summarizes the results of our operations for each of the past three fiscal years as a percentage of net sales. All percentage amounts were calculated using the underlying data, in thousands:

 	  	Fiscal Years Ended	 	
 	  	March 25,
2017	 	 	March 26,
2016	 	 	March 28,
2015	 	
Net sales	  	 	100	% 	 	 	100	% 	 	 	100	% 	
Gross margin	  	 	49	% 	 	 	47	% 	 	 	46	% 	
Research and development	  	 	20	% 	 	 	23	% 	 	 	21	% 	
Selling, general and administrative	  	 	8	% 	 	 	10	% 	 	 	11	% 	
Acquisition related costs	  	 	0	% 	 	 	0	% 	 	 	2	% 	
Restructuring and other, net	  	 	0	% 	 	 	0	% 	 	 	0	% 	
Asset impairment	  	 	0	% 	 	 	0	% 	 	 	0	% 	
Patent agreement and other	  	 	0	% 	 	 	-1	% 	 	 	0	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	21	% 	 	 	15	% 	 	 	12	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Interest income	  	 	0	% 	 	 	0	% 	 	 	0	% 	
Interest expense	  	 	0	% 	 	 	0	% 	 	 	-1	% 	
Other expense	  	 	0	% 	 	 	0	% 	 	 	-1	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	21	% 	 	 	15	% 	 	 	10	% 	
Provision for income taxes	  	 	4	% 	 	 	4	% 	 	 	4	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	17	% 	 	 	11	% 	 	 	6	% 	
 
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Net Sales
We report sales in two product categories: portable audio products and non-portable audio and other products. Our sales by product line are as follows (in thousands):

 	  	Fiscal Years Ended	 	
 	  	March 25,
2017	 	  	March 26,
2016	 	  	March 28,
2015	 	
Portable Audio Products	  	$	1,373,848	 	  	$	989,101	 	  	$	740,301	 	
Non-Portable Audio and Other Products	  	 	165,092	 	  	 	180,150	 	  	 	176,267	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	1,538,940	 	  	$	1,169,251	 	  	$	916,568	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Net sales for fiscal year 2017 increased 32 percent, to $1.5 billion from $1.2 billion in fiscal year 2016. The increase in net sales reflects a $384.7 million increase in portable audio product sales and a $15.1 million decrease in non-portable audio and other product sales. The portable audio products group experienced an increase in net sales attributable to significant increases in the sales of smart codecs and boosted amplifiers for fiscal year 2017. Non-portable audio and other product line sales of $165.1 million represented an 8 percent decrease from fiscal year 2016 sales of $180.2 million, which was primarily attributable to a decrease in sales of DAC and surround codec products for the period.
Net sales for fiscal year 2016 increased 28 percent, to $1.2 billion from $916.6 million in fiscal year 2015. The increase in net sales reflected a $248.8 million increase in portable audio product sales and a $3.9 million increase in non-portable audio and other product sales. The portable audio products group experienced an increase in net sales attributable to significant increases in the sales of smart codecs and boosted amplifiers for fiscal year 2016, which includes a full year revenue effect of the Wolfson acquisition. Non-portable audio and other product line sales of $180.2 million represented a 2 percent increase from fiscal year 2015 sales of $176.3 million, which was primarily attributable to an increase in ADC and power meter products for the period. In addition, during fiscal year 2016, the Company realized an additional $5.4 million of net sales, primarily related to non-portable audio, due to the conversion to a point-of-purchase model for our larger distributors.
Sales to foreign customers, principally located in Asia, including sales to U.S.-based customers that manufacture products at plants overseas, were approximately $1.5 billion in fiscal year 2017, $1.1 billion in fiscal year 2016, and $869.9 million in fiscal year 2015. Sales to foreign customers located in Asia, excluding Japan, were 95 percent in net sales in fiscal year 2017, 89 percent in net sales in fiscal year 2016 and 92 percent of net sales in fiscal year 2015. Sales to foreign customers in Japan and Europe represented 2 percent of net sales in fiscal year 2017, 4 percent of net sales in fiscal year 2016 and 3 percent of net sales in fiscal year 2015.
Our sales are denominated primarily in U.S. dollars. During fiscal year 2015, we acquired foreign currency hedging contracts related to the Acquisition. The contracts expired in fiscal year 2015. No foreign currency hedging contracts were entered into in fiscal year 2017 or 2016.
Gross Margin
Overall gross margin of 49 percent for fiscal year 2017 reflects an increase from fiscal year 2016 gross margin of 47 percent. The increase was primarily attributable to supply chain efficiencies in the current fiscal year versus the prior year. Changes in excess and obsolete inventory charges, including scrapped inventory, and sales of product written down in prior periods did not have a material impact on margin in fiscal year 2017.
Overall gross margin of 47 percent for fiscal year 2016 reflected an increase from fiscal year 2015 gross margin of 46 percent. The increase was primarily attributable to the absence of the fair market adjustments related to the Acquisition discussed below, in the 2016 fiscal year versus fiscal year 2015. This contributed an approximate 1% favorable impact to gross margin in fiscal year 2016. Changes in excess and obsolete inventory charges, including scrapped inventory, and sales of product written down in prior periods did not have a material impact on margin in fiscal year 2016.
 
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Research and Development Expenses
Fiscal year 2017 research and development expenses of $303.7 million reflect an increase of $34.5 million, or 13 percent, from fiscal year 2016. The increase was primarily attributable to a 16 percent increase in research and development headcount and the associated salary and employee-related expenses. The Company also experienced higher facilities-related costs in the fiscal year 2017 versus fiscal year 2016, partially offset by the adjustment to the contingent consideration liability discussed in Note 4, the UK’s Research and Development Expenditure Credit (RDEC), which went into effect beginning in fiscal year 2017, and a sales tax refund in the third quarter of fiscal year 2017.
Fiscal year 2016 research and development expenses of $269.2 million reflected an increase of $71.3 million, or 36 percent, from fiscal year 2015. The increase was primarily attributable to a 20 percent increase in research and development headcount and the associated salary and employee-related expenses, due in part to including a full year of expenses over the prior year, associated with the Acquisition. The Company also experienced higher product development costs during the fiscal year.
Selling, General and Administrative Expenses
Fiscal year 2017 selling, general and administrative expenses of $127.3 million reflect an increase of $10.2 million, or 9 percent, compared to fiscal year 2016. The increase was primarily attributable to increased salary and employee-related expenses, as well as higher occupancy costs in fiscal year 2017.
Fiscal year 2016 selling, general and administrative expenses of $117.1 million reflect an increase of $17.6 million, or 18 percent, compared to fiscal year 2015. The increase was primarily attributable to a full year of expenses over the prior year associated with the Acquisition. Overall, SG&A headcount increased along with related salary and employee expenses, as well as higher occupancy and maintenance and supplies costs in the fiscal year.
Acquisition Related Costs
The Company reported $18.1 million in costs in conjunction with the Acquisition for the year ended March 28, 2015. The majority of the costs included in this amount were associated with bank and legal fees, as well as certain expenses for stock compensation related to the Acquisition. Acquisition related costs incurred in fiscal years 2017 and 2016 were immaterial.
Restructuring and Other, net
There were no restructuring costs for fiscal years 2017 and 2016. Restructuring costs related to the Acquisition were $1.5 million for the year ended March 28, 2015, primarily made up of severance payments associated with the Acquisition and the consolidation of our sales functions. These charges are shown as a separate line item in the Consolidated Statements of Income under the caption “ Restructuring and other, net.”
Asset Impairment
In the fourth quarter of fiscal year 2017, the Company reported an asset impairment charge of $9.8 million related to a building owned by the Company in Edinburgh, Scotland. The Company determined that the undiscounted cash flows associated with the property of the asset was less than the carrying value. Considering the fact that the building will no longer be used as the primary office space for Edinburgh employees and that market conditions had weakened, the Company hired an independent consultant to assess the fair value of the building. The variance in the assessed valuation amount and the carrying value was recorded and is presented as a separate line item on the Consolidated Statements of Income under the caption “Asset impairment.”
Patent Agreement and Other
On May 8, 2015, we entered into a patent purchase agreement for the sale of certain Company-owned patents relating to our LED lighting products. As a result of this agreement, on June 22, 2015, the Company received cash consideration of $12.5 million from the purchaser. Under the agreement, the Company undertook
 
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to no longer be engaged in LED lighting and received a license under the sold patents for all other fields of use. The proceeds were recorded during fiscal year 2016 as a recovery of costs previously incurred and are reflected as a separate line item on the Consolidated Statements of Income in operating expenses under the caption “Patent agreement and other.” Additionally, in the second quarter and third quarter of fiscal year 2016, the Company recorded $0.8 million and $0.1 million, respectively, in expense related to a negotiated adjustment to a legal settlement.
Interest Income
Interest income in fiscal years 2017, 2016, and 2015, was $1.7 million, $0.9 million, and $0.6 million, respectively. The increase in interest income in fiscal year 2017 and 2016 was due to higher average cash, cash equivalent, and marketable securities balances throughout the year versus the previous year.
Interest Expense
The Company reported interest expense of $3.6 million, $3.3 million and $5.6 million for fiscal years 2017, 2016 and 2015, respectively, primarily as a result of the revolving credit facilities described in Note 7. Additional costs were incurred in fiscal year 2015 in relation to an interim revolving facility.
Other Expense
In fiscal year 2016, the Company reported $1.8 million in other expense, primarily foreign exchange costs. For the year ended March 28, 2015, the Company reported $12.2 million in other expense primarily related to recognized losses on expired contracts during the prior fiscal year and the foreign currency exchange losses on hedges purchased in relation to the Acquisition during the second quarter of fiscal year 2015. The corresponding amounts in fiscal year 2017 are immaterial.
Provision for Income Taxes
We recorded income tax expense of $53.8 million in fiscal year 2017 on a pre-tax income of $315.0 million, yielding an effective tax provision rate of 17.1 percent. Our effective tax rate was lower than the U.S. statutory rate of 35 percent, primarily due to income earned in jurisdictions with a lower statutory tax rate, excess tax benefits from stock based compensation due to the early adoption of the ASU 2016-09 accounting standard, and research and development tax credits in the U.S.
We recorded income tax expense of $52.4 million in fiscal year 2016 on a pre-tax income of $176.0 million, yielding an effective tax provision rate of 29.8 percent. Our effective tax rate was lower than the U.S. statutory rate of 35 percent, primarily due to research and development tax credits in the U.S. and the impact of earnings in jurisdictions with a lower statutory tax rate.
We recorded income tax expense of $36.4 million in fiscal year 2015 on a pre-tax income of $91.5 million, yielding an effective tax provision rate of 39.7 percent. Our effective tax rate was higher than the U.S. statutory rate of 35 percent, primarily due to the inclusion of foreign losses from the date of acquisition of Wolfson to the end of the fiscal year at foreign statutory rates below the U.S. federal statutory rate. The impact of these losses was partially offset by the federal research and development credit, which was extended through December 31, 2014 by the Tax Increase Prevention Act of 2014, which was enacted on December 19, 2014.
Outlook
Looking ahead, we anticipate gross margin to remain in the upper 40 percent range for the foreseeable future with a long-term target operating profit model in the mid-20 percent range. We anticipate modest revenue growth for fiscal year 2018.
Liquidity and Capital Resources
In fiscal year 2017, our net cash provided by operating activities was $369.8 million. The positive cash flow from operations was predominantly due to the cash components of our net income, offset by a $24.9 million
 
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increase in working capital, driven primarily by an increase in accounts receivable and inventories, partially offset by a decrease in payables for the year. In fiscal year 2016, our net cash provided by operating activities was $149.0 million. The positive cash flow from operations was predominantly due to the cash components of our net income, offset by a $108.7 million increase in working capital, driven primarily by an increase in inventories and a decrease in accounts payable for the year. In fiscal year 2015, our net cash provided by operating activities was $163.5 million. The positive cash flow from operations was predominantly due to the cash components of our net income, as well as a $17.3 million decrease in working capital, primarily due to a decrease in inventory and increase in accounts payable, offset by an increase in accounts receivable for the period.
In fiscal year 2017, the Company used approximately $69.9 million in cash related to investing activities principally related to $18.6 million in net purchases of marketable securities, and capital expenditures and technology investments of $51.3 million. In fiscal year 2016, the Company received approximately $20.2 million in cash provided by investing activities, principally due to the net maturities and sales of marketable securities of $103.1 million, partially offset by $46.1 million in capital expenditures and technology investments, and acquisitions of $36.8 million. In fiscal year 2015, approximately $324.4 million was used in investing activities, primarily due to the $444.1 million, net of cash obtained, used in conjunction with the Wolfson acquisition. An additional use of cash for the period was the $36.7 million in capital expenditures and technology investments. These uses of cash were offset by net maturities and sales of marketable securities of $168.4 million in anticipation of financing the Acquisition.
In fiscal year 2017, the Company used $117.5 million in financing activities. In fiscal year 2016, the Company used $76.9 million in financing activities. In fiscal year 2015, the Company received $205.5 million in cash provided by financing activities, principally as a result of the long-term revolving credit facility entered into in the second quarter of fiscal year 2015. The related influx of $226.4 million was offset by payments against the revolver balance of $46.0 million for the period. Payments against revolver balances in fiscal year 2017 and 2016 were $100.4 million and $20.0 million, respectively. See Note 7 and Revolving Credit Facilities below for more information relating to debt agreements and terms that existed during the periods. Beginning in fiscal year 2017 with the adoption of ASU 2016-09, excess tax benefits or shortfalls are not shown separately as a financing activity, as the income tax effects of employee stock-based compensation are shown as a component of net income as an operating activity. Excess tax benefits related to employee stock-based compensation generated $3.9 million and $37.7 million, in fiscal years 2016, and 2015, respectively. Additionally, in fiscal years 2017, 2016, and 2015, the Company utilized approximately $15.4 million, $60.5 million, and $10.5 million, respectively, in cash to repurchase and retire portions of its outstanding common stock. See Note 13 for a description of our Share Repurchase Program.
Our future capital requirements will depend on many factors, including the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential acquisitions of companies or technologies and the expansion of our sales and marketing activities. While we expect our offshore cash to represent a greater portion of our total cash over time, we believe our expected future cash earnings, existing cash, cash equivalents, investment balances, and available borrowings under our Credit Facility will be sufficient to meet our capital requirements both domestically and internationally, through at least the next 12 months, although we could be required, or could elect, to seek additional funding prior to that time.
Revolving Credit Facilities
On August 29, 2014, Cirrus Logic entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the Lenders party thereto. The Credit Agreement provided for a $250 million senior secured revolving credit facility (the “Credit Facility”). Borrowings under The Credit Facility were used for general corporate purposes.
On July 12, 2016, Cirrus Logic entered into an amended and restated credit agreement (the “Amended Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the Lenders party thereto, for the purpose of amending the Credit Agreement and providing ongoing working capital. The Amended Credit Agreement provides for a $300 million senior secured revolving credit facility (the “Amended
 
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Facility”). The Amended Facility matures on July 12, 2021. Cirrus Logic must repay the outstanding principal amount of all borrowings, together with all accrued but unpaid interest thereon, on the maturity date. The Amended Facility is required to be guaranteed by all of Cirrus Logic’s material domestic subsidiaries (the “Subsidiary Guarantors”) and is secured by substantially all of the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets.
Borrowings under the Amended 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 .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 Amended 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 Amended 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. At March 25, 2017, the Company was in compliance with all covenants under the Amended Credit Agreement and had $60.0 million of indebtedness outstanding under the Amended Facility, which is included in long-term liabilities on the Consolidated Balance Sheet.
See also Note 7 — Revolving Line of Credit.
Off Balance Sheet Arrangements
As of March 25, 2017, the Company did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, that were reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Contractual Obligations
In our business activities, we incur certain commitments to make future payments under contracts such as debt agreements, purchase orders, operating leases and other long-term contracts. Maturities under these contracts are set forth in the following table as of March 25, 2017:

 	  	Payment due by period (in thousands)	 	
 	  	< 1 year	 	  	1-3 years	 	  	3-5 years	 	  	> 5 years	 	  	Total	 	
Revolving line of credit	  	$	—	 	  	$	—	 	  	$	60,000	 	  	$	—	 	  	$	60,000	 	
Interest on revolving line of credit (1)	  	 	1,942	 	  	 	5,296	 	  	 	735	 	  	 	—	 	  	 	7,973	 	
Facilities leases, net	  	 	6,688	 	  	 	19,508	 	  	 	18,397	 	  	 	38,212	 	  	 	82,805	 	
Equipment and other commitments	  	 	67	 	  	 	225	 	  	 	220	 	  	 	432	 	  	 	944	 	
Wafer purchase commitments	  	 	182,331	 	  	 	—	 	  	 	—	 	  	 	—	 	  	 	182,331	 	
Assembly purchase commitments	  	 	3,557	 	  	 	—	 	  	 	—	 	  	 	—	 	  	 	3,557	 	
Outside test purchase commitments	  	 	14,482	 	  	 	—	 	  	 	—	 	  	 	—	 	  	 	14,482	 	
Other purchase commitments	  	 	18,445	 	  	 	3,148	 	  	 	—	 	  	 	—	 	  	 	21,593	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	227,512	 	  	$	28,177	 	  	$	79,352	 	  	$	38,644	 	  	$	373,685	 	

 	(1)	Our debt is subject to a variable interest rate based on LIBOR. The interest included in the table above is based on the indexed rate in effect at the balance sheet date.	
 
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Certain of our operating lease obligations include escalation clauses. These escalating payment requirements are reflected in the table.
We are unable to make a reasonably reliable estimate as to when or if a cash settlement with taxing authorities will occur related to our unrecognized tax benefits. Therefore, our liability of $30.9 million for unrecognized tax benefits is not included in the table above. See Note 15 — Income Taxes, to the Consolidated Financial Statements for additional information.
 ITEM 7A.     Quantitative and Qualitative Disclosures about Market Risk 
We are exposed to market risks associated with interest rates on our debt securities, currency movements on non-U.S. dollar denominated assets and liabilities, and the effect of market factors on the value of our marketable equity securities. We assess these risks on a regular basis and have established policies that are designed to protect against the adverse effects of these and other potential exposures. All of the potential changes noted below are based on sensitivity analyses as of March 25, 2017. Actual results may differ materially.
Interest Rate Risk
Our primary financial instruments include cash equivalents, marketable securities, accounts receivable, pension plan assets / liabilities, accounts payable, and accrued liabilities. The Company’s investments are managed by outside professional managers within investment guidelines set by the Company. These guidelines include security type, credit quality, and maturity, and are intended to limit market risk by restricting the Company’s investments to high quality debt instruments with relatively short-term maturities. The Company does not currently use derivative financial instruments in its investment portfolio. Due to the short-term nature of our investment portfolio and the current low interest rate environment, our downside exposure to interest rate risk is minimal.
To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, the Company performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of the investment portfolio assuming a 100 basis point parallel shift in the yield curve. Based on investment positions as of March 25, 2017 and March 26, 2016, a hypothetical 100 basis point increase in interest rates across all maturities would result in a $0.9 million and $0.4 million decline in the fair market value of the portfolio, respectively. The larger hypothetical decline in fair value at the end of fiscal year 2017 was due to the larger balance in total marketable securities, when compared to fiscal year 2016. Such losses would only be realized if the Company sold the investments prior to maturity.
Foreign Currency Exchange Risk
Our revenue and spending is transacted primarily in U.S. dollars; however, in fiscal years 2017, 2016, and 2015, we entered into routine transactions in other currencies to fund the operating needs of our technical support, and sales offices outside of the U.S. As of March 25, 2017 and March 26, 2016, a ten percent change in the value of the related currencies would not have a material impact on our results of operations and financial position. During fiscal years 2017 and 2016, we did not enter into any foreign currency hedging contracts. In fiscal year 2015, the Company acquired foreign currency hedging contracts that expired within the same fiscal year.
 
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 ITEM 8.   Financial Statements and Supplementary Data 
Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm...	  	 	39	 	
Consolidated Balance Sheets as of March 25, 2017 and March 26, 2016	  	 	41	 	
Consolidated Statements of Income for the Fiscal Years Ended March 25, 2017, March  26, 2016, and March 28, 2015	  	 	42	 	
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended March 25, 2017,  March 26, 2016, and March 28, 2015	  	 	43	 	
Consolidated Statements of Cash Flows for the Fiscal Years Ended March 25, 2017, March  26, 2016, and March 28, 2015	  	 	44	 	
Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended March 25, 2017,  March 26, 2016, and March 28, 2015	  	 	45	 	
Notes to Consolidated Financial Statements	  	 	46	 	
 
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 Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of Cirrus Logic, Inc.
We have audited the accompanying consolidated balance sheets of Cirrus Logic, Inc. as of March 25, 2017 and March 26, 2016, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended March 25, 2017. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cirrus Logic, Inc. at March 25, 2017 and March 26, 2016, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended March 25, 2017, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for stock compensation in 2017.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cirrus Logic, Inc.’s internal control over financial reporting as of March 25, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 24, 2017 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Austin, Texas
May 24, 2017
 
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Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of Cirrus Logic, Inc.
We have audited Cirrus Logic, Inc.’s internal control over financial reporting as of March 25, 2017, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Cirrus Logic, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Cirrus Logic, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 25, 2017, based on the COSO criteria .
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cirrus Logic, Inc. as of March 25, 2017 and March 26, 2016, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended March 25, 2017 of Cirrus Logic, Inc. and our report dated May 24, 2017 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Austin, Texas
May 24, 2017
 
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CIRRUS LOGIC, INC.
 CONSOLIDATED BALANCE SHEETS
(in thousands)

 	  	March 25,	 	 	March 26,	 	
 	  	2017	 	 	2016	 	
Assets	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	351,166	 	 	$	168,793	 	
Marketable securities	  	 	99,813	 	 	 	60,582	 	
Accounts receivable, net	  	 	119,974	 	 	 	88,532	 	
Inventories	  	 	167,895	 	 	 	142,015	 	
Prepaid assets	  	 	24,987	 	 	 	29,924	 	
Other current assets	  	 	12,093	 	 	 	16,283	 	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	775,928	 	 	 	506,129	 	
Long-term marketable securities	  	 	—	 	 	 	20,631	 	
Property and equipment, net	  	 	168,139	 	 	 	162,656	 	
Intangibles, net	  	 	135,188	 	 	 	162,832	 	
Goodwill	  	 	286,767	 	 	 	287,518	 	
Deferred tax assets	  	 	32,841	 	 	 	25,772	 	
Other assets	  	 	14,607	 	 	 	16,345	 	
	  	 	 	 	 	 	 	 	
Total assets	  	$	1,413,470	 	 	$	1,181,883	 	
	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity	  				 				
Current liabilities:	  				 				
Accounts payable	  	$	73,811	 	 	$	71,619	 	
Accrued salaries and benefits	  	 	40,190	 	 	 	21,239	 	
Software license agreements	  	 	14,990	 	 	 	20,308	 	
Other accrued liabilities	  	 	15,084	 	 	 	14,958	 	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	144,075	 	 	 	128,124	 	
Long-term liabilities:	  				 				
Debt	  	 	60,000	 	 	 	160,439	 	
Software license agreements	  	 	3,146	 	 	 	8,136	 	
Other long-term liabilities	  	 	54,557	 	 	 	25,701	 	
	  	 	 	 	 	 	 	 	
Total long-term liabilities	  	 	117,703	 	 	 	194,276	 	
Stockholders’ equity:	  				 				
Preferred stock, 5.0 million shares authorized but unissued	  	 	—	 	 	 	—	 	
Common stock, $0.001 par value, 280,000 shares authorized, 64,295 shares and 62,630 shares issued and outstanding at March 25, 2017 and March 26, 2016, respectively	  	 	64	 	 	 	63	 	
Additional paid-in capital	  	 	1,259,215	 	 	 	1,203,433	 	
Accumulated deficit	  	 	(107,014	) 	 	 	(344,345	) 	
Accumulated other comprehensive (loss) income	  	 	(573	) 	 	 	332	 	
	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	1,151,692	 	 	 	859,483	 	
	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	1,413,470	 	 	$	1,181,883	 	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these financial statements.
 
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CIRRUS LOGIC, INC.
 CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	 	March 26,	 	 	March 28,	 	
 	  	2017	 	 	2016	 	 	2015	 	
Net sales	  	$	1,538,940	 	 	$	1,169,251	 	 	$	916,568	 	
Cost of sales	  	 	781,125	 	 	 	614,411	 	 	 	490,820	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	757,815	 	 	 	554,840	 	 	 	425,748	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses	  				 				 				
Research and development	  	 	303,658	 	 	 	269,217	 	 	 	197,878	 	
Selling, general and administrative	  	 	127,265	 	 	 	117,082	 	 	 	99,509	 	
Acquisition related costs	  	 	—	 	 	 	—	 	 	 	18,137	 	
Restructuring and other, net	  	 	—	 	 	 	—	 	 	 	1,455	 	
Asset impairment	  	 	9,842	 	 	 	—	 	 	 	—	 	
Patent agreement and other	  	 	—	 	 	 	(11,670	) 	 	 	—	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	440,765	 	 	 	374,629	 	 	 	316,979	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	317,050	 	 	 	180,211	 	 	 	108,769	 	
Interest income	  	 	1,676	 	 	 	877	 	 	 	579	 	
Interest expense	  	 	(3,600	) 	 	 	(3,308	) 	 	 	(5,627	) 	
Other expense	  	 	(79	) 	 	 	(1,791	) 	 	 	(12,172	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	315,047	 	 	 	175,989	 	 	 	91,549	 	
Provision for income taxes	  	 	53,838	 	 	 	52,359	 	 	 	36,371	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	261,209	 	 	 	123,630	 	 	 	55,178	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings per share	  	$	4.12	 	 	$	1.96	 	 	$	0.88	 	
Diluted earnings per share	  	$	3.92	 	 	$	1.87	 	 	$	0.85	 	
Basic weighted average common shares outstanding	  	 	63,329	 	 	 	63,197	 	 	 	62,503	 	
Diluted weighted average common shares outstanding	  	 	66,561	 	 	 	65,993	 	 	 	65,235	 	
The accompanying notes are an integral part of these financial statements.
 
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CIRRUS LOGIC, INC.
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	 	March 26,	 	 	March 28,	 	
 	  	2017	 	 	2016	 	 	2015	 	
Net income	  	$	261,209	 	 	$	123,630	 	 	$	55,178	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss), before tax	  				 				 				
Foreign currency translation (gain) loss	  	 	(826	) 	 	 	294	 	 	 	—	 	
Unrealized (gain) loss on marketable securities	  	 	47	 	 	 	(24	) 	 	 	107	 	
Actuarial (gain) loss on pension plan	  	 	(79	) 	 	 	2,660	 	 	 	(1,625	) 	
Reclassification of actuarial (gain) loss to net income	  	 	(89	) 	 	 	49	 	 	 	—	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Benefit (provision) for income taxes	  	 	42	 	 	 	(537	) 	 	 	294	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	  	$	260,304	 	 	$	126,072	 	 	$	53,954	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these financial statements.
 
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CIRRUS LOGIC, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 	  	Year Months Ended	 	
 	  	March 25,	 	 	March 26,	 	 	March 28,	 	
 	  	2017	 	 	2016	 	 	2015	 	
Cash flows from operating activities:	  				 				 				
Net income	  	$	261,209	 	 	$	123,630	 	 	$	55,178	 	
Adjustments to reconcile net income to net cash provided by operating activities:	  				 				 				
Depreciation and amortization	  	 	63,433	 	 	 	58,060	 	 	 	34,855	 	
Stock compensation expense	  	 	39,593	 	 	 	33,506	 	 	 	37,549	 	
Deferred income taxes	  	 	10,885	 	 	 	23,202	 	 	 	32,238	 	
Loss on retirement or write-off of long-lived assets	  	 	10,387	 	 	 	2,753	 	 	 	1,618	 	
Actuarial loss amortization on defined benefit pension plan	  	 	116	 	 	 	729	 	 	 	292	 	
Excess tax benefit from employee stock awards	  	 	—	 	 	 	(3,850	) 	 	 	(37,692	) 	
Other non-cash charges	  	 	8,980	 	 	 	19,702	 	 	 	22,167	 	
Net change in operating assets and liabilities:	  				 				 				
Accounts receivable, net	  	 	(31,442	) 	 	 	24,156	 	 	 	(37,344	) 	
Inventories	  	 	(25,880	) 	 	 	(57,819	) 	 	 	16,077	 	
Other assets	  	 	575	 	 	 	(1,522	) 	 	 	285	 	
Accounts payable and other accrued liabilities	  	 	1,772	 	 	 	(41,456	) 	 	 	36,504	 	
Accrued salaries and benefits	  	 	18,951	 	 	 	(2,993	) 	 	 	7,047	 	
Deferred income	  	 	—	 	 	 	(6,105	) 	 	 	(77	) 	
Income taxes payable	  	 	10,969	 	 	 	(11,807	) 	 	 	(639	) 	
Other accrued liabilities	  	 	203	 	 	 	(11,140	) 	 	 	(4,581	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	369,751	 	 	 	149,046	 	 	 	163,477	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	  				 				 				
Maturities and sales of available-for-sale marketable securities	  	 	212,863	 	 	 	125,660	 	 	 	301,847	 	
Purchases of available-for-sale marketable securities	  	 	(231,432	) 	 	 	(22,570	) 	 	 	(133,436	) 	
Purchases of property, equipment and software	  	 	(41,849	) 	 	 	(41,569	) 	 	 	(32,311	) 	
Investments in technology	  	 	(9,447	) 	 	 	(4,519	) 	 	 	(4,387	) 	
Loss on foreign exchange hedging activities	  	 	—	 	 	 	—	 	 	 	(11,976	) 	
Acquisition of Wolfson, net of cash obtained	  	 	—	 	 	 	—	 	 	 	(444,138	) 	
Acquisition of businesses, net of cash obtained	  	 	—	 	 	 	(36,759	) 	 	 	—	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in) provided by investing activities	  	 	(69,865	) 	 	 	20,243	 	 	 	(324,401	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from financing activities:	  				 				 				
Proceeds from long-term revolver	  	 	—	 	 	 	—	 	 	 	226,439	 	
Principal payments on long-term revolver	  	 	(100,439	) 	 	 	(20,000	) 	 	 	(46,000	) 	
Debt issuance costs	  	 	(2,152	) 	 	 	—	 	 	 	(2,825	) 	
Payments on capital lease agreements	  	 	(699	) 	 	 	—	 	 	 	—	 	
Issuance of common stock, net of shares withheld for taxes	  	 	16,518	 	 	 	6,617	 	 	 	5,327	 	
Repurchase of stock to satisfy employee tax withholding obligations	  	 	(14,089	) 	 	 	(6,861	) 	 	 	(4,624	) 	
Repurchase and retirement of common stock	  	 	(15,439	) 	 	 	(60,503	) 	 	 	(10,534	) 	
Excess tax benefit from employee stock awards	  	 	—	 	 	 	3,850	 	 	 	37,692	 	
Contingent consideration payments	  	 	(1,213	) 	 	 	—	 	 	 	—	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in) provided by financing activities	  	 	(117,513	) 	 	 	(76,897	) 	 	 	205,475	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net increase in cash and cash equivalents	  	 	182,373	 	 	 	92,392	 	 	 	44,551	 	
Cash and cash equivalents at beginning of period	  	 	168,793	 	 	 	76,401	 	 	 	31,850	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	351,166	 	 	$	168,793	 	 	$	76,401	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Supplemental disclosures of cash flow information	  				 				 				
Cash payments during the year for:	  				 				 				
Income taxes	  	$	8,001		 	$	23,785		 	$	4,973		
Interest	  	 	2,947		 	 	3,318		 	 	2,391		
The accompanying notes are an integral part of these financial statements.
 
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CIRRUS LOGIC, INC.
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)

 	 	Common Stock	 	 	Additional
Paid-In
Capital	 	 	Accumulated
Deficit	 	 	Accumulated
Other
Comprehensive
Income / (Loss)	 	 	Total	 	
 	 	Shares	 	 	Amount	 	 			 			 			 			
Balance, March 29, 2014	 	 	61,956		 	$	62		 	$	1,078,816		 	$	(440,634	) 	 	$	(886	) 	 	$	637,358		
Net income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	55,178		 	 	—	 	 	 	55,178		
Change in unrealized gain (loss) on marketable securities, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	69		 	 	69		
Change in pension liability, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(1,293	) 	 	 	(1,293	) 	
Change in foreign currency translation adjustments	 	 	—	 	 	 	—	 	 	 	(29	) 	 	 	—	 	 	 	—	 	 	 	(29	) 	
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes	 	 	1,709		 	 	2		 	 	5,326		 	 	(4,624	) 	 	 	—	 	 	 	704		
Repurchase and retirement of common stock	 	 	(580	) 	 	 	(1	) 	 	 	—	 	 	 	(10,533	) 	 	 	—	 	 	 	(10,534	) 	
Amortization of deferred stock compensation	 	 	—	 	 	 	—	 	 	 	37,626		 	 	—	 	 	 	—	 	 	 	37,626		
Excess tax benefit from employee stock awards	 	 	—	 	 	 	—	 	 	 	37,692		 	 	—	 	 	 	—	 	 	 	37,692		
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, March 28, 2015	 	 	63,085		 	 	63		 	 	1,159,431		 	 	(400,613	) 	 	 	(2,110	) 	 	 	756,771		
Net income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	123,630		 	 	—	 	 	 	123,630		
Change in unrealized gain (loss) on marketable securities, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(15	) 	 	 	(15	) 	
Change in pension liability, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,163		 	 	2,163		
Change in foreign currency translation adjustments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	294		 	 	294		
Issuance of stock under stock option plans and other, net of shares withheld for employee taxes	 	 	1,552		 	 	2		 	 	6,617		 	 	(6,861	) 	 	 	—	 	 	 	(242	) 	
Repurchase and retirement of common stock	 	 	(2,007	) 	 	 	(2	) 	 	 	—	 	 	 	(60,501	) 	 	 	—	 	 	 	(60,503	) 	
Amortization of deferred stock compensation	 	 	—	 	 	 	—	 	 	 	33,535		 	 	—	 	 	 	—	 	 	 	33,535		
Excess tax benefit from employee stock awards	 	 	—	 	 	 	—	 	 	 	3,850		 	 	—	 	 	 	—	 	 	 	3,850		
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, March 26, 2016	 	 	62,630		 	 	63		 	 	1,203,433		 	 	(344,345	) 	 	 	332		 	 	859,483		
Net income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	261,209		 	 	—	 	 	 	261,209		
Change in unrealized gain (loss) on marketable securities, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	31		 	 	31		
Change in pension 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	 	 	2,145		 	 	2		 	 	16,516		 	 	(14,089	) 	 	 	—	 	 	 	2,429		
Cumulative effect of adoption of ASU 2016-09	 	 	—	 	 	 	—	 	 	 	—	 	 	 	5,649		 	 	—	 	 	 	5,649		
Repurchase and retirement of common stock	 	 	(480	) 	 	 	(1	) 	 	 	—	 	 	 	(15,438	) 	 	 	—	 	 	 	(15,439	) 	
Amortization of deferred stock compensation	 	 	—	 	 	 	—	 	 	 	39,593		 	 	—	 	 	 	—	 	 	 	39,593		
Excess tax benefit from employee stock awards	 	 	—	 	 	 	—	 	 	 	(327	) 	 	 	—	 	 	 	—	 	 	 	(327	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, March 25, 2017	 	 	64,295		 	$	64		 	$	1,259,215		 	$	(107,014	) 	 	$	(573	) 	 	$	1,151,692		
The accompanying notes are an integral part of these financial statements.
 
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CIRRUS LOGIC, INC . 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.	Description of Business	
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 and voice 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, Sweden, 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 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, 2016, and 2015 were 52-week years. The next 53-week year will be fiscal year 2018.
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.
 
2.	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, following the adoption of ASU 2015-11, 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.
 
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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 quantities 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, represented $6.7 million and $4.8 million, in fiscal year 2017 and 2016, respectively. Inventory charges in fiscal year 2017 and 2016 related to a combination of quality issues and inventory exceeding demand.
Inventories were comprised of the following (in thousands):

 	  	March 25,	 	  	March 26,	 	
 	  	2017	 	  	2016	 	
Work in process	  	$	83,332	 	  	$	67,827	 	
Finished goods	  	 	84,563	 	  	 	74,188	 	
	  	 	 	 	  	 	 	 	
	  	$	167,895	 	  	$	142,015	 	
	  	 	 	 	  	 	 	 	
Property, Plant and Equipment, net
Property, plant and equipment is recorded at cost, net of depreciation and amortization. Depreciation and amortization is calculated on a straight-line basis over estimated economic lives, ranging from three to 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 three 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 three years, with capitalized enterprise resource planning software being amortized over a useful life of 10 years. Gains or losses related to retirements or dispositions of fixed assets are recognized in the period incurred. 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.
Property, plant and equipment was comprised of the following (in thousands):

 	  	March 25,	 	  	March 26,	 	
 	  	2017	 	  	2016	 	
Land	  	$	26,379	 	  	$	26,379	 	
Buildings	  	 	74,266	 	  	 	73,513	 	
Furniture and fixtures	  	 	14,231	 	  	 	13,226	 	
Leasehold improvements	  	 	4,355	 	  	 	2,637	 	
Machinery and equipment	  	 	123,054	 	  	 	105,880	 	
Capitalized software	  	 	24,839	 	  	 	25,127	 	
Construction in progress	  	 	22,972	 	  	 	5,411	 	
	  	 	 	 	  	 	 	 	
Total property, plant and equipment	  	 	290,096	 	  	 	252,173	 	
Less: Accumulated depreciation and amortization	  	 	(121,957	) 	  	 	(89,517	) 	
	  	 	 	 	  	 	 	 	
Property, plant and equipment, net	  	$	168,139	 	  	$	162,656	 	
	  	 	 	 	  	 	 	 	
Depreciation and amortization expense on property, plant, and equipment for fiscal years 2017, 2016, and 2015 was $26.1 million, $22.3 million, and $15.4 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 one to ten years. Acquired
 
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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 one to fifteen years.
Goodwill is recorded at the time of an acquisition and is calculated as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. 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 2017, 2016, and 2015. There were no material intangible asset impairments in fiscal years 2017, 2016, or 2015.
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
Prior to the fiscal year 2015 acquisition of Wolfson Microelectronics (“ Wolfson, ” the “ Acquisition ”), each Cirrus Logic legal entity was US dollar functional. Additionally, each of the acquired Wolfson legal entities were also designated as US dollar functional. These designations were determined individually by Cirrus Logic and Wolfson prior to the Acquisition. Subsequent to the integration of Wolfson, the Company reassessed the functional currencies of each legal entity based on the relevant facts and circumstances, as well as in accordance with the applicable accounting guidance contained in Accounting Standards Codification (“ASC”) 830-10, “Foreign Currency Matters.” Based on its analysis and on the change in operating structure brought about by the Acquisition, the Company determined that the functional currency of some of its subsidiaries had changed from the US dollar to the local currency. The Company’s main entities, including the entities that generate the majority of sales and employ the majority of employees, remain US dollar functional. The change was effective beginning in fiscal year 2016 and had an immaterial effect on the financial statements. Beginning in fiscal year 2016 foreign currency translation gains and losses are reported as a component of Accumulated Other Comprehensive Gain / (Loss).
Pension
Defined benefit pension plans are accounted for based upon the provisions of ASC Topic 715, “ Compensation — Retirement Benefits. ”
The funded status of the plan is recognized in the Consolidated Balance Sheet. Subsequent re-measurement of plan assets and benefit obligations, if deemed necessary, would be reflected in the Consolidated Balance Sheet in the subsequent interim period to reflect the overfunded or underfunded status of the plan.
The Company engages external actuaries on at least an annual basis to provide a valuation of the plan’s assets and projected benefit obligation and to record the net periodic pension cost. On a quarterly basis, the Company will evaluate current information available to us to determine whether the plan’s assets and projected benefit obligation should be re-measured.
 
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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, Protek, and Jabil Circuits who represented 20 percent, 15 percent, and 13 percent, respectively of our consolidated gross trade accounts receivable as of the end of fiscal year 2017. Hongfujin Precision and Protek represented 23 percent and 11 percent, respectively, and Samsung Electronics, a direct customer, represented 23 percent of our consolidated gross trade accounts receivable as of the end of fiscal year 2016. 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 2017 and 2016.
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 2017, 2016, and 2015, our ten largest end customers represented approximately 92 percent, 89 percent, and 87 percent, of our sales, respectively. For fiscal years 2017, 2016, and 2015, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 79 percent, 66 percent, and 72 percent, of the Company’s total sales, respectively. Samsung Electronics represented 15 percent of the Company’s total sales in fiscal year 2016. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2017, 2016, or 2015.
Revenue Recognition
We recognize revenue when all of the following criteria are met: persuasive evidence that an arrangement exists, delivery of goods has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Prior to the fourth quarter of fiscal year 2016, we had a number of arrangements with distributors whereby we deferred revenue at the time of shipment of our products to those distributors. As part of those arrangements, when a distributor resold those products to an end customer, the Company would credit the distributor the difference between (1) the original distributor price and the distributor’s agreed upon margin and (2) the final sales price to the end customer (known as the “Ship and Debit Arrangement”). For those transactions, revenue was deferred until the product was resold by the distributor and we determined that the final sales price to the distributor was fixed or determinable. For certain of our smaller distributors, we did not have similar Ship and Debit Arrangements and the distributors were billed at a fixed upfront price. For those transactions, revenue was recognized upon delivery to the distributor based upon the distributor’s individual shipping terms, less an allowance for estimated returns, as the Company determined that the revenue recognition criteria were met.
In light of the fact that the distributor program had been declining as a portion of the overall business for several years, in fiscal year 2016 the Company performed a review of all distributor arrangements in an effort to streamline our distribution program and reduce overhead costs. Based upon this review, the Company terminated its Ship and Debit Arrangements with Distributors during the fourth quarter of fiscal year 2016. Subsequent to the termination of the Ship and Debit Arrangements, the Company began recognizing revenue for all distributors upon delivery to the distributor based upon the distributor’s individual shipping terms, less an allowance for
 
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estimated returns, as the Company’s final sales price to the distributor was fixed and determinable and the Company determined that all four criteria for revenue recognition were met.
Although the Company terminated its Ship and Debit Arrangements with all distributors along with certain ancillary agreements related to the Ship and Debit Arrangements, the Company continues to grant varying levels of stock rotation and price protection rights based on individual distributor agreements. To the extent these rights are implicated in any transaction with a distributor, we continue to evaluate their effect on when the revenue recognition criteria have been met.
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 $1.7 million, $1.6 million, and $1.1 million, in fiscal years 2017, 2016, and 2015, 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 zero and four 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, correlation of the Company’s stock price with the Philadelphia Semiconductor Index (“ the Index ”) 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
 
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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 2017, 2016, and 2015, (in thousands, except per share amounts):

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	  	March 26,	 	  	March 28,	 	
 	  	2017	 	  	2016	 	  	2015	 	
Numerator:	  				  				  				
Net income	  	$	261,209	 	  	$	123,630	 	  	$	55,178	 	
Denominator:	  				  				  				
Weighted average shares outstanding	  	 	63,329	 	  	 	63,197	 	  	 	62,503	 	
Effect of dilutive securities	  	 	3,232	 	  	 	2,796	 	  	 	2,732	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Weighted average diluted shares	  	 	66,561	 	  	 	65,993	 	  	 	65,235	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Basic earnings per share	  	$	4.12	 	  	$	1.96	 	  	$	0.88	 	
Diluted earnings per share	  	$	3.92	 	  	$	1.87	 	  	$	0.85	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
The weighted outstanding options excluded from our diluted calculation for the years ended March 25, 2017, March 26, 2016, and March 28, 2015 were 389 thousand, 468 thousand, and 718 thousand, respectively, as the exercise price exceeded the average market price during the period.
Accumulated Other Comprehensive Income (Loss)
Our accumulated other comprehensive income (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 pension plan assets. See Note 14 — Accumulated Other Comprehensive Income (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 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
 
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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 is currently in the process of reviewing our customers’ contracts in respect of performance obligation identification and satisfaction, pricing, warranties, and return rights, among other considerations. Through this process, the Company currently expects no material modifications to its financial statements upon adoption of this ASU.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern . The amendments in this ASU provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company adopted this ASU in the fourth quarter of fiscal year 2017 with no material modifications to the Company’s financial statements as a result.
In April 2015, the FASB issued ASU No. 2015-03,  Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . The amendments in this update require that debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of that debt liability and that the amortization of debt issuance costs is reported as interest expense. ASU 2015-03 is to be applied retrospectively and represents a change in accounting principle. In August 2015, the FASB issued FASB ASU No. 2015-15, Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements . ASU 2015-15 clarified the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. Debt issuance costs related to a line-of-credit arrangement may be presented in the balance sheet as an asset and subsequently amortized ratably over the term of the arrangement regardless of whether there are any outstanding borrowings. Both ASU 2015-03 and ASU 2015-15 are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Earlier adoption is permitted for financial statements that have not been previously issued. The Company adopted these ASUs in fiscal year 2017 with no material impact to its financial statements.
In April 2015, the FASB issued ASU No. 2015-04, Compensation — Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets.  The ASU is part of the FASB’s “Simplification Initiative” to reduce complexity in accounting standards. The FASB decided to permit entities to measure defined benefit plan assets and obligations as of the month-end that is closest to their fiscal year-end. An entity is required to disclose the accounting policy election and the date used to measure defined benefit plan assets and obligations in accordance with the amendments in this update. The amendments in this update are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with earlier application permitted. The Company adopted this ASU in the first quarter of fiscal year 2017, with no material impact to its financial statements.
In July 2015, ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory was issued. This ASU requires companies to subsequently measure inventory at the lower of cost and net realizable value versus the previous lower of cost or market. The amendments in this update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, to be applied prospectively. Early application is permitted. The Company early adopted this ASU in fiscal year 2017 with no material modifications to its financial statements as a result.
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 terms
 
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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 Company is currently evaluating the impact of this ASU.
In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This ASU requires all excess tax benefits and deficiencies to be recognized as income tax benefit / expense in the income statement and presented as an operating activity in the statement of cash flows. Forfeitures can be calculated based on either the estimated number of awards that are expected to vest, as required by current guidance, or when forfeitures actually occur. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted, but all amendments must be adopted in the same period and any adjustments should be reflected as of the beginning of the fiscal year if adopted in an interim period. The Company early adopted in the third quarter of fiscal year 2017, which resulted in the following:
 
 	◾	 	We recorded excess tax benefits within income tax expense, rather than in additional paid-in capital (“APIC”), of $2.2 million, $8.0 million, $10.8 million and $1.9 million for the first, second, third and fourth quarters of fiscal year 2017, respectively.	
 
 	◾	 	We recorded a cumulative-effect adjustment as of March 27, 2016 to increase retained earnings by $5.6 million, with a corresponding increase to deferred tax assets, to recognize net operating loss and tax credit carryforwards attributable to excess tax benefits on stock-based compensation that had not been previously recognized.	
 
 	◾	 	We now include the excess tax benefits in net operating cash rather than net financing cash in our Consolidated Statements of Cash Flows.	
We applied this change in presentation prospectively and thus prior years have not been adjusted.
We elected not to change our policy on accounting for forfeitures and continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period.
The adoption of this new guidance impacted our previously reported quarterly results for fiscal year 2017 as follows:

 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	June 25, 2016	 	 	September 24, 2016	 	 	September 24, 2016	 	
 	 	As reported	 	 	As adjusted	 	 	As reported	 	 	As adjusted	 	 	As reported	 	 	As adjusted	 	
 	 	(in thousands, except per share data)	 	
Consolidated Condensed Statements of Income:	 				 				 				 				 				 				
Income tax expense	 	$	5,805	 	 	$	3,598	 	 	$	24,608	 	 	$	16,634	 	 	$	30,413	 	 	$	20,232	 	
Net income	 	$	15,864	 	 	$	18,071	 	 	$	78,065	 	 	$	86,039	 	 	$	93,929	 	 	$	104,110	 	
Basic net income per share	 	$	0.25	 	 	$	0.29	 	 	$	1.24	 	 	$	1.37	 	 	$	1.50	 	 	$	1.66	 	
Diluted net income per share	 	$	0.24	 	 	$	0.27	 	 	$	1.19	 	 	$	1.30	 	 	$	1.43	 	 	$	1.58	 	
Weighted average shares used in diluted net income per share computation	 	 	65,232	 	 	 	65,723	 	 	 	65,717	 	 	 	66,410	 	 	 	65,521	 	 	 	66,101	 	
Consolidated Condensed Statements of Cash Flows:	 				 				 				 				 				 				
Net cash provided by operating activities	 	$	12,226	 	 	$	12,756	 	 	$	19,990	 	 	$	24,091	 	 	$	32,216	 	 	$	36,847	 	
Net cash used in financing activities	 	$	(13,140	) 	 	$	(13,670	) 	 	$	(13,859	) 	 	$	(17,960	) 	 	$	(26,999	) 	 	$	(31,630	) 	
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
 
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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 with no expected material impact.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . This ASU covers several cash flow issues, including the presentation of contingent consideration payments made after a business combination. Cash payments up to the amount of the liability recognized at the acquisition date (including measurement-period adjustments) should be classified as financing activities. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted, including in an interim period, with a required retrospective transition method applied to each period presented. The Company early adopted in the fourth quarter of fiscal year 2017. See Statement of Cash Flows for presentation of contingent consideration payment.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory . This ASU relates to income tax consequences of non-inventory intercompany asset transfers. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted, as of the beginning of an annual reporting period. The guidance requires companies to apply a modified retrospective approach with a cumulative catch-up adjustment to beginning retained earnings in the period of adoption. The Company is currently evaluating the impact of this ASU.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . The update states that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business, and should be treated as an asset acquisition instead. This ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted under specific circumstances, including in an interim period, with prospective application on or after the effective date. The Company is currently evaluating the financial statement impact of this ASU, which is dependent upon the specific terms of any applicable future acquisitions or dispositions.
In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323). This ASU amends the disclosure requirements for ASU 2014-09, Revenue from Contracts with Customers (Topic 606), ASU 2016-02, Leases (Topic 842) and ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU states that if a registrant does not know or cannot reasonably estimate the impact that the adoption of the above ASUs is expected to have on the financial statements, then in addition to making a statement to that effect, the registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted. This ASU was effective upon issuance. The adoption did not have a material impact on the Company’s financial statements.
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.
 
3.	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.
 
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The following table is a summary of available-for-sale securities (in thousands):

As of March 25, 2017	  	Amortized
Cost	 	  	Gross Unrealized
Gains	 	  	Gross Unrealized
Losses	 	 	Estimated Fair Value
(Net Carrying Amount)	 	
Corporate debt securities	  	$	33,350	 	  	$	—	 	  	$	(20	) 	 	$	33,330	 	
Commercial paper	  	 	66,518	 	  	 	—	 	  	 	(35	) 	 	 	66,483	 	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total securities	  	$	99,868	 	  	$	—	 	  	$	(55	) 	 	$	99,813	 	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
The Company’s specifically identified gross unrealized losses of $55 thousand relates to 18 different securities with a total amortized cost of approximately $99.9 million at March 25, 2017. Four securities had been in a continuous unrealized loss position for more than 12 months as of March 25, 2017. The gross unrealized loss on these securities was less than one tenth of one percent of the position value. Because the Company does not intend to sell the investments at a loss and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost basis, the Company did not consider the investment in these securities to be other-than-temporarily impaired at March 25, 2017.

As of March 26, 2016	  	Amortized
Cost	 	  	Gross Unrealized
Gains	 	  	Gross Unrealized
Losses	 	 	Estimated Fair Value
(Net Carrying Amount)	 	
Corporate debt securities	  	$	81,310	 	  	$	3	 	  	$	(100	) 	 	$	81,213	 	
The Company’s specifically identified gross unrealized losses of $100 thousand relates to 21 different securities with a total amortized cost of approximately $64.7 million at March 26, 2016. Two securities had been in a continuous unrealized loss position for more than 12 months as of March 26, 2016, both of which matured in fiscal year 2017. Because the Company did not intend to sell the investments at a loss and it was not more likely than not that the Company would be required to sell the investments before recovery of its amortized cost basis, the Company did not consider the investment to be other-than-temporarily impaired at March 26, 2016.
The cost and estimated fair value of available-for-sale investments by contractual maturity were as follows:

 	  	March 25, 2017	 	  	March 26, 2016	 	
 	  	Amortized	 	  	Estimated	 	  	Amortized	 	  	Estimated	 	
 	  	Cost	 	  	Fair Value	 	  	Cost	 	  	Fair Value	 	
Within 1 year	  	$	99,868	 	  	$	99,813	 	  	$	60,603	 	  	$	60,582	 	
After 1 year	  	 	—	 	  	 	—	 	  	 	20,707	 	  	 	20,631	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	99,868	 	  	$	99,813	 	  	$	81,310	 	  	$	81,213	 	

4.	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 and contingent consideration. 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.	
 
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 	◾	 	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, U.S. Treasury securities, and commercial paper 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 portfolio managers 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 reports contingent consideration based upon achievement of certain milestones. This liability is classified as Level 3 and is valued using a discounted cash flow model. The assumptions used in preparing the discounted cash flow include discount rate estimates and cash flow amounts.
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 25, 2017, the fair value of the Company’s long-term revolving facility approximates carrying value based on estimated margin.
As of March 25, 2017 and March 26, 2016, the Company classified all investment portfolio assets and pension plan assets (discussed in Note 9) as Level 1 or Level 2 assets and liabilities. The only Level 3 liability is the contingent consideration described above and below. The Company has no Level 3 assets. There were no transfers between Level 1, Level 2, or Level 3 measurements for the years ending March 25, 2017 and March 26, 2016.
The following summarizes the fair value of our financial instruments, exclusive of pension plan assets detailed in Note 9, at March 25, 2017 (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	  	$	313,982	 	  	$	—	 	  	$	—	 	  	$	313,982	 	
Available-for-sale securities	  				  				  				  				
Corporate debt securities	  	$	—	 	  	$	33,330	 	  	$	—	 	  	$	33,330	 	
Commercial paper	  	 	—	 	  	 	66,483	 	  	 	—	 	  	 	66,483	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Liabilities:	  	$	—	 	  	$	99,813	 	  	$	—	 	  	$	99,813	 	
Other accrued liabilities	  				  				  				  				
Contingent consideration — short-term	  	$	—	 	  	$	—	 	  	$	4,695	 	  	$	4,695	 	
 
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The following summarizes the fair value of our financial instruments at March 26, 2016 (in thousands):

 	  	Quoted Prices
in Active
Markets for
Identical
Assets
Level 1	 	  	Significant
Other
Observable
Inputs
Level 2	 	  	Significant
Unobservable
Inputs
Level 3	 	  	Total	 	
Cash equivalents	  				  				  				  				
Money market funds	  	$	79,256	 	  	$	—	 	  	$	—	 	  	$	79,256	 	
Available-for-sale securities	  				  				  				  				
Corporate debt securities	  	$	—	 	  	$	81,213	 	  	$	—	 	  	$	81,213	 	
Liabilities:	  				  				  				  				
Other accrued liabilities	  				  				  				  				
Contingent consideration — short-term	  	$	—	 	  	$	—	 	  	$	4,709	 	  	$	4,709	 	
Other long-term liabilities	  				  				  				  				
Contingent consideration — long-term	  	$	—	 	  	$	—	 	  	$	4,359	 	  	$	4,359	 	
Contingent consideration
The following summarizes the fair value of the contingent consideration at March 25, 2017:

 	  	Maximum Value if
Milestones Achieved
(in thousands)	 	  	Estimated
Discount
Rate (%)	 	  	Fair Value
(in thousands)	 	
Tranche A — 18 month earn out period	  	$	5,000	 	  	 	7.0	 	  	$	—	 	
Tranche B — 30 month earn out period	  	 	5,000	 	  	 	7.7	 	  	 	4,695	 	
	  	 	 	 	  				  	 	 	 	
	  	$	10,000	 	  				  	$	4,695	 	

 	  	Fiscal year ended
March  25, 2017
(in thousands)	 	
Beginning balance	  	$	9,068	 	
Adjustment to estimates (research and development expense)	  	 	(3,579	) 	
Payout of Tranche A contingent consideration	  	 	(1,213	) 	
Fair value charge recognized in earnings (research and development expense)	  	 	419	 	
	  	 	 	 	
Ending balance	  	$	4,695	 	
The valuation of contingent consideration is based on a weighted-average discounted cash flows model. The fair value is reviewed and estimated on a quarterly basis based on the probability of achieving defined milestones and current interest rates. Significant changes in any of the unobservable inputs used in the fair value measurement of contingent consideration could result in a significantly lower or higher fair value. A change in projected outcomes if milestones are achieved would be accompanied by a directionally similar change in fair value. A change in discount rate would be accompanied by a directionally opposite change in fair value. Changes to the fair value due to changes in assumptions would be reported in research and development expense in the Consolidated Statements of Income. In the second quarter of fiscal year 2017, changes in milestone estimates of Tranche A occurred 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 2017.
 
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5.	Accounts Receivable, net	
The following are the components of accounts receivable, net (in thousands):

 	  	March 25,	 	  	March 26,	 	
 	  	2017	 	  	2016	 	
Gross accounts receivable	  	$	120,408	 	  	$	89,007	 	
Allowance for doubtful accounts	  	 	(434	) 	  	 	(475	) 	
	  	 	 	 	  	 	 	 	
Accounts receivable, net	  	$	119,974	 	  	$	88,532	 	
	  	 	 	 	  	 	 	 	
The following table summarizes the changes in the allowance for doubtful accounts (in thousands):

Balance, March 29, 2014	  	$	(229	) 	
Bad debt expense, net of recoveries	  	 	(127	) 	
	  	 	 	 	
Balance, March 28, 2015	  	 	(356	) 	
Bad debt expense, net of recoveries	  	 	(119	) 	
	  	 	 	 	
Balance, March 26, 2016	  	 	(475	) 	
Bad debt expense, net of recoveries	  	 	41	 	
	  	 	 	 	
Balance, March 25, 2017	  	$	(434	) 	
	  	 	 	 	
Recoveries on bad debt were immaterial for the three years presented above.
 
6.	Intangibles, net and Goodwill	
The intangibles, net balance included on the Consolidated Balance Sheet was $135.2 million and $162.8 million at March 25, 2017 and March 26, 2016, respectively.
The following information details the gross carrying amount and accumulated amortization of our intangible assets (in thousands):

 	  	March 25, 2017	 	  	March 26, 2016	 	
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 (6.1)	  	 	117,975	 	  	 	(53,960	) 	  	 	117,975	 	  	 	(32,873	) 	
In-process research & development (“IPR&D”) (7.3)	  	 	72,750	 	  	 	(24,245	) 	  	 	72,750	 	  	 	(14,082	) 	
Trademarks and tradename (10.0)	  	 	3,037	 	  	 	(2,208	) 	  	 	3,037	 	  	 	(2,076	) 	
Customer relationships (10.0)	  	 	15,381	 	  	 	(4,191	) 	  	 	15,381	 	  	 	(2,655	) 	
Backlog (a)	  	 	220	 	  	 	(220	) 	  	 	220	 	  	 	(147	) 	
Non-compete agreements (a)	  	 	470	 	  	 	(470	) 	  	 	470	 	  	 	(209	) 	
Technology licenses (3.1)	  	 	24,540	 	  	 	(13,891	) 	  	 	16,661	 	  	 	(11,620	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	236,203	 	  	$	(101,015	) 	  	$	228,324	 	  	$	(65,492	) 	

 	(a)	Intangible assets are fully amortized.	
Amortization expense for intangibles in fiscal years 2017, 2016, and 2015 was $37.4 million, $35.7 million, and $18.2 million, respectively. The following table details the estimated aggregate amortization expense for all
 
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intangibles owned as of March 25, 2017, for each of the five succeeding fiscal years and in the aggregate thereafter (in thousands):

For the year ended March 31, 2018	  	$	37,563	 	
For the year ended March 30, 2019	  	$	35,660	 	
For the year ended March 28, 2020	  	$	26,499	 	
For the year ended March 27, 2021	  	$	15,895	 	
For the year ended March 26, 2022	  	$	12,145	 	
Thereafter	  	$	8,523	 	
The goodwill balance included on the Consolidated Balance Sheet is $286.8 million and $287.5 million at March 25, 2017 and March 26, 2016, respectively.
 
7.	Revolving Line of Credit	
On August 29, 2014, Cirrus Logic entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the Lenders party thereto. The Credit Agreement provided for a $250 million senior secured revolving credit facility (the “Credit Facility”). Borrowings under the Credit Facility were used for general corporate purposes.
On July 12, 2016, Cirrus Logic entered into an amended and restated credit agreement (the “Amended Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the Lenders party thereto, for the purpose of amending the Credit Agreement and providing ongoing working capital. The Amended Credit Agreement provides for a $300 million senior secured revolving credit facility (the “Amended Facility”). The Amended Facility matures on July 12, 2021. Cirrus Logic must repay the outstanding principal amount of all borrowings, together with all accrued but unpaid interest thereon, on the maturity date. The Amended Facility is required to be guaranteed by all of Cirrus Logic’s material domestic subsidiaries (the “Subsidiary Guarantors”) and is secured by substantially all of the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets.
Borrowings under the Amended 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 .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 Amended 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 Amended 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.
At March 25, 2017, the Company was in compliance with all covenants under the Amended Credit Agreement. The Company had borrowed $60.0 million under the Amended Facility as of March 25, 2017, which is included in long-term liabilities on the Consolidated Balance Sheet under the caption “ Debt .”
 
8.	Restructuring and Other, net	
The fiscal year 2015 restructuring costs incurred relate to the Wolfson acquisition and consisted primarily of bank and legal fees, as well as certain expenses for stock compensation. The related charges are shown as a separate line item captioned “ Restructuring and other, net” in the Consolidated Statements of Income.
As of March 25, 2017 and March 26, 2016, we have no remaining restructuring accrual on the Consolidated Balance Sheet.
 
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9.	Postretirement Benefit Plans	
Pension Plan
As a result of the Acquisition in fiscal year 2015, the Company now fully funds a defined benefit pension scheme (“the Scheme”), formerly maintained by Wolfson, for some of the employees in the United Kingdom. The Scheme was closed to new participants as of July 2, 2002. As of April 30, 2011, the participants in the Scheme no longer accrue benefits and therefore the Company will not be required to pay contributions in respect of future accrual.
The Scheme is a trustee-administered fund that is legally separate from Wolfson, which holds the pension plan assets to meet long-term pension liabilities. The pension fund trustees comprise one employee and one employer representative and an independent chairman. The trustees are required by law to act in the best interests of the Scheme’s beneficiaries and the trustees are responsible, in consultation with Wolfson and the Company, for setting certain policies (including the investment policies and strategies) of the fund.
As of March 26, 2016, the Company was obligated to contribute approximately $0.5 million to the Scheme, which was recorded on the fiscal year 2016 Consolidated Balance Sheet in “ Accrued salaries and benefits ”. On April 25, 2016, the Company paid the $0.5 million, which was previously accrued. No further obligations are accrued as of March 25, 2017.
The Company initiated an Enhanced Transfer Value (ETV) offer to 49 Scheme participants in fiscal year 2017. The ETV offer expired on December 23, 2016, and nine participants accepted. As a result, the Company paid the required ETV contribution of $0.5 million and recorded the associated pension expense of $0.4 million. The Company expects to completely close the Scheme over the next ten years.
The following tables set forth the benefit obligation, the fair value of plan assets, and the funded status of the Scheme (in thousands):

 	  	March 25,	 	  	March 26,	 	
 	  	2017	 	  	2016	 	
Change in benefit obligation:	  				  				
Beginning balance	  	$	23,968	 	  	$	27,091	 	
Expenses	  	 	—	 	  	 	15	 	
Interest cost	  	 	759	 	  	 	821	 	
Plan settlements	  	 	(4,517	) 	  	 	—	 	
Benefits paid and expenses	  	 	(264	) 	  	 	(1,095	) 	
Change in foreign currency exchange rate	  	 	(2,763	) 	  	 	(1,221	) 	
Actuarial (gain) / loss	  	 	3,940	 	  	 	(1,643	) 	
	  	 	 	 	  	 	 	 	
Total benefit obligation ending balance	  	 	21,123	 	  	 	23,968	 	
Change in plan assets:	  				  				
Beginning balance	  	 	25,688	 	  	 	26,735	 	
Actual return on plan assets	  	 	3,933	 	  	 	(155	) 	
Employer contributions	  	 	990	 	  	 	1,409	 	
Plan settlements	  	 	(5,243	) 	  	 	—	 	
Change in foreign currency exchange rate	  	 	(2,961	) 	  	 	(1,206	) 	
Benefits paid and expenses	  	 	(264	) 	  	 	(1,095	) 	
	  	 	 	 	  	 	 	 	
Fair value of plan assets ending balance	  	 	22,143	 	  	 	25,688	 	
	  	 	 	 	  	 	 	 	
Funded status of Scheme at end of year	  	$	1,020	 	  	$	1,720	 	
	  	 	 	 	  	 	 	 	
The assets and obligations of the Scheme are denominated in British Pound Sterling. Based on an actuarial study performed as of March 25, 2017, the Scheme is overfunded and a long-term asset is reflected in the
 
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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. The weighted-average discount rate assumption used to determine benefit obligations as of March 25, 2017 March 26, 2016 and March 28, 2015 was 2.7%, 3.6%, and 3.2%, respectively.
The components of the Company’s net periodic pension expense (income) are as follows (in thousands):

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	  	March 26,	 	  	March 28,	 	
 	  	2017	 	  	2016	 	  	2015	 	
Expenses	  	$	—	 	  	$	15	 	  	$	16	 	
Interest cost	  	 	759	 	  	 	821	 	  	 	544	 	
Expected return on plan assets	  	 	(1,126	) 	  	 	(1,212	) 	  	 	(792	) 	
Settlement (gain) loss	  	 	1,063	 	  	 	—	 	  	 	—	 	
Amortization of actuarial (gain) loss	  	 	(89	) 	  	 	49	 	  	 	—	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	607	 	  	$	(327	) 	  	$	(232	) 	
The following weighted-average assumptions were used to determine net periodic benefit costs for the year ended March 25, 2017, March 26, 2016, and March 28, 2015:

 	  	2017	 	 	2016	 	 	2015	 	
Discount rate	  	 	3.60	% 	 	 	3.20	% 	 	 	4.00	% 	
Expected long-term return on plan assets	  	 	4.93	% 	 	 	4.65	% 	 	 	5.36	% 	
We report and measure the plan assets of our defined benefit pension at fair value. The Company’s pension plan assets consist of cash, equity securities, corporate debt securities, and diversified growth funds. The fair value of the pension plan assets is determined through an external actuarial valuation, following a similar process of obtaining inputs as described above.
The table below sets forth the fair value of our plan assets as of March 25, 2017, 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:	  				  				  				  				
Cash	  	$	160	 	  	$	—	 	  	$	—	 	  	$	160	 	
Pension funds	  	 	—	 	  	 	21,983	 	  	 	—	 	  	 	21,983	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	160	 	  	$	21,983	 	  	$	—	 	  	$	22,143	 	
The table below sets forth the fair value of our plan assets as of March 26, 2016, (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:	  				  				  				  				
Cash	  	$	42	 	  	$	—	 	  	$	—	 	  	$	42	 	
Pension funds	  	 	—	 	  	 	25,646	 	  	 	—	 	  	 	25,646	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	42	 	  	$	25,646	 	  	$	—	 	  	$	25,688	 	
 
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Amounts recognized in accumulated other comprehensive income (loss) for the period that have not yet been recognized as components of net periodic benefit cost consist of (in thousands):

 	  	Fiscal Year	 	
 	  	2017	 	
Net actuarial loss	  	$	(79	) 	
	  	 	 	 	
Accumulated other comprehensive income, before tax	  	$	(79	) 	
The Company will amortize the actuarial gain over a period of twenty-five years based on actuarial assumptions, including life expectancy. The following table provides the estimated amount that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in fiscal year 2018 (in thousands):

 	  	Fiscal Year	 	
 	  	2018	 	
Transition (asset) obligation	  	$	—	 	
Prior service cost	  	 	—	 	
Actuarial loss (gain)	  	 	(37	) 	
The Company contributed $0.5 million to the pension plan in fiscal year 2017 as discussed above.
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the following fiscal years (in thousands):

 	  	Benefit	 	
 	  	Payments	 	
2018	  	$	266	 	
2019	  	 	411	 	
2020	  	 	481	 	
2021	  	 	472	 	
2022	  	 	415	 	
Thereafter	  	 	2,765	 	
The expected long-term return on plan assets is based on historical actual return experience and estimates of future long-term performance with consideration to the expected investment mix of the plan assets. It is the policy of the Trustees and the Company to review the investment strategy periodically. The Trustees’ investment objectives and the processes undertaken to measure and manage the risks inherent in the Scheme investment strategy are illustrated by the current asset allocation. The current mix of the assets is as follows:

 	  	Actual Allocation	 	
 	  	2017	 	 	2016	 	
Equity securities	  	 	33	% 	 	 	32	% 	
Corporate bonds	  	 	48	 	 	 	47	 	
Diversified growth	  	 	19	 	 	 	21	 	
Cash	  	 	—	 	 	 	—	 	
	  	 	 	 	 	 	 	 	
Total	  	 	100	% 	 	 	100	% 	
See the related fair value of the assets above.
The Scheme exposes the Company to actuarial risks such as investment (market) risk, interest rate risk, mortality risk, longevity risk and currency risk. A decrease in corporate bond yields, a rise in inflation or an increase in life expectancy would result in an increase to the Scheme liabilities and may give rise to increased benefit expenses in future periods. Caps on inflationary increases are currently in place to protect the Scheme against extreme inflation, however.
 
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The indicative impact on net periodic benefit cost based on defined sensitivities is as follows:

Change	  	Approximate impact on liabilities	
Decrease discount rate by 0.1%, per year	  	2% increase	
Increase inflation linked assumptions by 0.1%, per year	  	2% increase (of inflation-linked liabilities)	
Increase life expectancy by 1 year	  	2% increase	
401(k) Plans
We have 401(k) Profit Sharing Plans (the “401(k) Plans”) covering all of our qualifying employees. Under the 401(k) Plans, employees may elect to contribute any percentage of their annual compensation up to the annual IRS limitations. The Company matches 50 percent of the first 8 percent of the employees’ annual contribution. We made matching employee contributions of $5.5 million, $4.3 million, and $2.5 million during fiscal years 2017, 2016, and 2015, respectively.
 
10.	Equity Compensation	
The Company is currently granting equity awards from the 2006 Stock Incentive Plan (the “Plan”), which was approved by stockholders in July 2006. The Plan provides for granting of stock options, restricted stock awards, performance awards, phantom stock awards, and bonus stock awards, or any combination of the foregoing. To date, the Company has granted stock options, restricted stock awards, phantom stock awards (also called restricted stock units), and performance awards (also called market stock units) under the Plan. 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 one 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 29, 2014	  	 	3,547	 	
Shares added	  	 	3,300	 	
Granted	  	 	(3,181	) 	
Forfeited	  	 	230	 	
	  	 	 	 	
Balance, March 28, 2015	  	 	3,896	 	
Shares added	  	 	4,900	 	
Granted	  	 	(2,676	) 	
Forfeited	  	 	167	 	
	  	 	 	 	
Balance, March 26, 2016	  	 	6,287	 	
Shares added	  	 	—	 	
Granted	  	 	(1,719	) 	
Forfeited	  	 	124	 	
	  	 	 	 	
Balance, March 25, 2017	  	 	4,692	 	
As of March 25, 2017, approximately 13.3 million shares of common stock were reserved for issuance under the Plan.
 
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Stock Compensation Expense
The following table summarizes the effects of stock-based compensation on cost of goods sold, research and development, sales, general and administrative, pre-tax income, and net income after taxes for shares granted under the Plan (in thousands, except per share amounts):

 	  	Fiscal Year	 	
 	  	2017	 	 	2016	 	 	2015	 	
Cost of sales	  	$	1,071	 	 	$	1,145	 	 	$	747	 	
Research and development	  	 	21,186	 	 	 	17,173	 	 	 	11,222	 	
Sales, general and administrative	  	 	17,336	 	 	 	15,188	 	 	 	25,580	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Effect on pre-tax income	  	 	39,593	 	 	 	33,506	 	 	 	37,549	 	
Income Tax Benefit	  	 	(12,482	) 	 	 	(10,306	) 	 	 	(11,467	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total share-based compensation expense (net of taxes)	  	 	27,111	 	 	 	23,200	 	 	 	26,082	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Share-based compensation effects on basic earnings per share	  	$	0.43	 	 	$	0.37	 	 	$	0.42	 	
Share-based compensation effects on diluted earnings per share	  	 	0.41	 	 	 	0.35	 	 	 	0.40	 	
The total share based compensation expense included in the table above and which is attributable to restricted stock awards, restricted stock units and market stock units was $35.5 million, $30.3 million, $34.0 million, for fiscal years 2017, 2016, and 2015, respectively. Share based compensation expense recognized is presented within operating activities in the Consolidated Statement of Cash Flows.
As of March 25, 2017, there was $75.2 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 1.29 years for stock options, 1.45 years for restricted stock units, and 1.70 years for market stock units.
In addition to the income tax benefit of share-based compensation expense shown in the table above, the Company recognized excess tax benefits of $22.9 million in fiscal year 2017 as a result of the Company’s early adoption of ASU 2016-09, discussed in Note 2. No excess tax benefits were recognized within income tax expense in fiscal years 2016 or 2015.
Stock Options
We estimated the fair value of each stock option granted on the date of grant using the Black-Scholes option-pricing model using a dividend yield of zero and the following additional assumptions:

 	  	March 25, 2017	 	 	March 26, 2016	 	 	March 28, 2015	 	
Expected stock price volatility	  	 	47.66	% 	 	 	40.13 - 45.07	% 	 	 	38.79 - 42.12	% 	
Risk-free interest rate	  	 	1.13	% 	 	 	0.94 - 1.05	% 	 	 	0.49 - 0.91	% 	
Expected term (in years)	  	 	2.79	 	 	 	2.72 - 2.97	 	 	 	2.15 - 2.87	 	
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.
 
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Using the Black-Scholes option valuation model, the weighted average estimated fair values of employee stock options granted in fiscal years 2017, 2016, and 2015, were $22.84, $12.58, and $7.26, respectively.
During fiscal years 2017, 2016, and 2015, we received a net $16.4 million, $6.5 million, $5.2 million, respectively, from the exercise of 1.4 million, 0.8 million, and 0.7 million, respectively, stock options granted under the Company’s Stock Plan.
The total intrinsic value of stock options exercised during fiscal year 2017, 2016, and 2015, was $52.2 million, $19.7 million, and $12.8 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	 	
 	  	 	 	 	Weighted	 	
 	  	 	 	 	Average	 	
 	  	Number	 	 	Exercise Price	 	
Balance, March 29, 2014	  	 	3,725	 	 	$	12.42	 	
Options granted	  	 	310	 	 	 	21.69	 	
Options exercised	  	 	(696	) 	 	 	7.47	 	
Options forfeited	  	 	(5	) 	 	 	19.94	 	
Options expired	  	 	(1	) 	 	 	4.65	 	
	  	 	 	 	 				
Balance, March 28, 2015	  	 	3,333	 	 	$	14.31	 	
Options granted	  	 	387	 	 	 	31.39	 	
Options exercised	  	 	(773	) 	 	 	8.46	 	
Options forfeited	  	 	—	 	 	 	—	 	
Options expired	  	 	(22	) 	 	 	35.41	 	
	  	 	 	 	 				
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	 	
Additional information with regards to outstanding options that are vesting, expected to vest, or exercisable as of March 25, 2017 is as follows (in thousands, except years and per share amounts):

 	  	 	 	  	Weighted	 	  	Weighted Average	 	  	 	 	
 	  	Number of	 	  	Average	 	  	Remaining Contractual	 	  	Aggregate	 	
 	  	Options	 	  	Exercise price	 	  	Term (years)	 	  	Intrinsic Value	 	
Vested and expected to vest	  	 	1,757	 	  	$	27.24	 	  	 	6.40	 	  	$	57,674	 	
Exercisable	  	 	1,128	 	  	$	21.77	 	  	 	5.18	 	  	$	43,196	 	
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 $3.8 million, $3.4 million, and $4.4 million, became vested during fiscal years 2017, 2016, and 2015, respectively.
 
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The following table summarizes information regarding outstanding and exercisable options as of March 25, 2017 (in thousands, except per share amounts):

 	  	Options Outstanding	 	  	Options Exercisable	 	
 	  	 	 	  	Weighted Average	 	  	 	 	  	 	 	  	 	 	
 	  	 	 	  	Remaining	 	  	Weighted	 	  	 	 	  	Weighted	 	
 	  	 	 	  	Contractual Life	 	  	Average Exercise	 	  	Number	 	  	Average	 	
Range of Exercise Prices	  	Number	 	  	(years)	 	  	Price	 	  	Exercisable	 	  	Exercise Price	 	
$2.90 - $15.41	  	 	371	 	  	 	3.33	 	  	$	11.01	 	  	 	371	 	  	$	11.01	 	
$16.21 - $20.37	  	 	328	 	  	 	5.81	 	  	 	18.63	 	  	 	242	 	  	 	18.02	 	
$20.40 - $24.14	  	 	265	 	  	 	6.48	 	  	 	23.29	 	  	 	203	 	  	 	23.30	 	
$31.25 - $31.25	  	 	331	 	  	 	8.61	 	  	 	31.25	 	  	 	91	 	  	 	31.25	 	
$32.29 - $38.99	  	 	248	 	  	 	5.97	 	  	 	38.00	 	  	 	221	 	  	 	38.60	 	
$54.65 - $54.65	  	 	215	 	  	 	9.61	 	  	 	54.65	 	  	 	—	 	  	 	—	 	
	  	 	 	 	  				  				  	 	 	 	  				
	  	 	1,758	 	  	 	6.40	 	  	$	27.25	 	  	 	1,128	 	  	$	21.77	 	
	  	 	 	 	  				  				  	 	 	 	  				
As of March 25, 2017 and March 26, 2016, the number of options exercisable was 1.1 million and 2.2 million, respectively.
Restricted Stock Awards
The Company periodically grants restricted stock awards (“RSA’s”) to select employees. The grant date for these awards is equal to the measurement date and the awards are valued as of the measurement date and amortized over the requisite vesting period, which is no more than four years.
There were no RSA’s outstanding as of March 25, 2017. RSA’s with a fair value of $86 thousand became vested during fiscal year 2015. No RSA’s became vested during fiscal year 2016 and 2017.
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 2017, 2016, and 2015 is presented below (in thousands, except year and per share amounts):

 	  	 	 	  	Weighted	 	
 	  	 	 	  	Average	 	
 	  	Shares	 	  	Fair Value	 	
March 29, 2014	  	 	2,309	 	  	$	25.26	 	
Granted	  	 	1,887	 	  	 	22.04	 	
Vested	  	 	(1,224	) 	  	 	19.52	 	
Forfeited	  	 	(151	) 	  	 	26.17	 	
	  	 	 	 	  	 	 	 	
March 28, 2015	  	 	2,821	 	  	 	25.57	 	
Granted	  	 	1,437	 	  	 	31.51	 	
Vested	  	 	(992	) 	  	 	32.48	 	
Forfeited	  	 	(103	) 	  	 	24.75	 	
	  	 	 	 	  	 	 	 	
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	 	

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The aggregate intrinsic value of RSU’s outstanding as of March 25, 2017 was $179.9 million. Additional information with regards to outstanding restricted stock units that are expected to vest as of March 25, 2017, is as follows (in thousands, except year and per share amounts):

 	  	 	 	  	Weighted	 	  	Weighted Average	 	
 	  	 	 	  	Average	 	  	Remaining Contractual	 	
 	  	Shares	 	  	Fair Value	 	  	Term (years)	 	
Expected to vest	  	 	2,870	 	  	$	34.64	 	  	 	1.43	 	
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 $25.5 million and $32.2 million became vested during fiscal years 2017 and 2016, respectively. The majority of RSUs that vested in 2017 and 2016 were net settled such that the Company withheld a portion of the shares at fair value to satisfy tax withholding requirements. In fiscal years 2017 and 2016, the vesting of RSU’s reduced the authorized and unissued share balance by approximately 1.0 million and 1.0 million, respectively. Total shares withheld and subsequently retired out of the Plan were approximately 0.3 million and 0.2 million, and total payments for the employees’ tax obligations to taxing authorities were $14.1 million and $6.9 million for fiscal years 2017 and 2016, respectively. A portion of RSUs that vested in fiscal year 2017 and 2016 were cash settled such that the Company received cash from employees in lieu of withholding shares to satisfy tax withholding requirements. The total amount received from cash settled shares during fiscal year 2017 and 2016 was $0.1 million and $0.1 million, 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 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 projection of the stock prices 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 25,	 	 	March 26,	 	
 	  	2017	 	 	2016	 	
Expected stock price volatility	  	 	47.66	% 	 	 	45.07	% 	
Risk-free interest rate	  	 	0.98	% 	 	 	1.16	% 	
Expected term (in years)	  	 	3.00	 	 	 	3.00	 	
 
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Using the Monte Carlo simulation, the weighted average estimated fair value of the MSU’s granted in fiscal year 2017 was $75.58. A summary of the activity for MSU’s in fiscal year 2017, 2016 and 2015 is presented below (in thousands, except year and per share amounts):

 	  	 	 	  	Weighted	 	
 	  	 	 	  	Average	 	
 	  	Shares	 	  	Fair Value	 	
March 29, 2014	  	 	—	 	  	$	—	 	
Granted	  	 	35	 	  	 	22.00	 	
Vested	  	 	—	 	  	 	—	 	
Forfeited	  	 	—	 	  	 	—	 	
	  	 	 	 	  	 	 	 	
March 28, 2015	  	 	35	 	  	$	22.00	 	
	  	 	 	 	  	 	 	 	
Granted	  	 	90	 	  	 	39.86	 	
Vested	  	 	—	 	  	 	—	 	
Forfeited	  	 	—	 	  	 	—	 	
	  	 	 	 	  	 	 	 	
March 26, 2016	  	 	125	 	  	$	34.85	 	
	  	 	 	 	  	 	 	 	
Granted	  	 	55	 	  	 	75.58	 	
Vested	  	 	—	 	  	 	—	 	
Forfeited	  	 	—	 	  	 	—	 	
	  	 	 	 	  	 	 	 	
March 25, 2017	  	 	180	 	  	$	47.30	 	
	  	 	 	 	  	 	 	 	
The aggregate intrinsic value of MSU’s outstanding as of March 25, 2017 was $10.8 million. Additional information with regard to outstanding MSU’s that are expected to vest as of March 25, 2017 is as follows (in thousands, except year and per share amounts):

 	  	 	 	  	Weighted	 	  	Weighted Average	 	
 	  	 	 	  	Average	 	  	Remaining Contractual	 	
 	  	Shares	 	  	Fair Value	 	  	Term (years)	 	
Expected to vest	  	 	171	 	  	$	46.89	 	  	 	1.69	 	
No MSU’s became vested in 2017, 2016 and 2015.
 
11.	  Commitments and Contingencies	
Facilities and Equipment Under Operating and Capital Lease Agreements
We currently own our corporate headquarters and select surrounding properties, and a UK office. We lease certain of our other facilities and certain equipment under operating lease agreements, some of which have renewal options. Certain of these arrangements provide for lease payment increases based upon future fair market rates. As of March 25, 2017, our principal facilities are located in Austin, Texas and Edinburgh, Scotland, United Kingdom.
Total rent expense under operating leases was approximately $8.2 million, $5.2 million, and $4.0 million, for fiscal years 2017, 2016, and 2015, respectively. Sublease rental income was $0.4 million, $0.3 million, and $0.1 million, for fiscal years 2017, 2016, and 2015, respectively.
As of March 26, 2016, there was equipment held under a capital lease with a cost basis of $1.0 million and accumulated depreciation related to this equipment of $0.3 million, which was paid off in fiscal year 2017, leaving no related future capital lease commitments.
 
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The aggregate minimum future rental commitments under all operating leases, net of sublease income for the following fiscal years are (in thousands):

 	  	Facilities	 	  	Subleases	 	  	Net Facilities
Commitments	 	  	Equipment
and Other
Commitments	 	  	Total
Commitments	 	
2018	  	$	7,074	 	  	$	386	 	  	$	6,688	 	  	$	67	 	  	$	6,755	 	
2019	  	 	10,354	 	  	 	391	 	  	 	9,963	 	  	 	115	 	  	 	10,078	 	
2020	  	 	9,811	 	  	 	266	 	  	 	9,545	 	  	 	110	 	  	 	9,655	 	
2021	  	 	9,580	 	  	 	245	 	  	 	9,335	 	  	 	110	 	  	 	9,445	 	
2022	  	 	9,313	 	  	 	251	 	  	 	9,062	 	  	 	110	 	  	 	9,172	 	
Thereafter	  	 	39,071	 	  	 	859	 	  	 	38,212	 	  	 	432	 	  	 	38,644	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total minimum lease payment	  	$	85,203	 	  	$	2,398	 	  	$	82,805	 	  	$	944	 	  	$	83,749	 	
Wafer, Assembly, Test and Other Purchase Commitments
We rely primarily on third-party foundries for our wafer manufacturing needs. Generally, our foundry agreements do not have volume purchase commitments and primarily provide for purchase commitments based on purchase orders, with the exception of a few “take or pay” clauses included in vendor contracts that are immaterial at March 25, 2017. Cancellation fees or other charges may apply and are generally dependent upon whether wafers have been started or the stage of the manufacturing process at which the notice of cancellation is given. As of March 25, 2017, we had foundry commitments of $182.3 million.
In addition to our wafer supply arrangements, we contract with third-party assembly vendors to package the wafer die into finished products. Assembly vendors provide fixed-cost-per-unit pricing, as is common in the semiconductor industry. We had non-cancelable assembly purchase orders with numerous vendors totaling $3.6 million at March 25, 2017.
Test vendors provide fixed-cost-per-unit pricing, as is common in the semiconductor industry. Our total non-cancelable commitment for outside test services as of March 25, 2017 was $14.5 million.
Other purchase commitments primarily relate to multi-year tool commitments, and were $21.6 million at March 25, 2017.
 
12.	  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 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.
 
13.	  Stockholders’ Equity	
Share Repurchase Program
On October 28, 2015, the Company announced that the Board of Directors authorized a share repurchase program of up to $200 million of the Company’s common stock. As of March 25, 2017, the Company had repurchased 0.8 million shares under this plan at a cost of approximately $24.2 million, or an average cost of $31.93 per share. Of this total, 0.5 million shares were purchased in fiscal year 2017 at a cost of $15.4 million, or an average cost of $32.13 per share. Approximately $175.8 million remains available for repurchase under this plan. 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 March 25, 2017.
Preferred Stock
We have 5.0 million shares of Preferred Stock authorized. As of March 25, 2017, we have not issued any of the authorized shares.
 
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14.	  Accumulated Other Comprehensive Income (Loss)	
Our accumulated other comprehensive income (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 pension plan assets.
The following table summarizes the changes in the components of accumulated other comprehensive income (loss), net of tax (in thousands):

 	  	Foreign
Currency	 	  	Unrealized Gains
(Losses) on Securities	 	  	Actuarial Gains
(Losses) on
Pension Plan	 	  	Total	 	
Balance, March 28, 2015	  	$	(770	) 	  	$	(47	) 	  	$	(1,293	) 	  	$	(2,110	) 	
Current period foreign exchange translation	  	 	294	 	  	 	—	 	  	 	—	 	  	 	294	 	
Current period marketable securities activity	  	 	—	 	  	 	(24	) 	  	 	—	 	  	 	(24	) 	
Current period actuarial gain/loss activity	  	 	—	 	  	 	—	 	  	 	2,660	 	  	 	2,660	 	
Current period amortization of actuarial loss	  	 	—	 	  	 	—	 	  	 	49	 	  	 	49	 	
Tax effect	  	 	—	 	  	 	9	 	  	 	(546	) 	  	 	(537	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Balance, March 26, 2016	  	 	(476	) 	  	 	(62	) 	  	 	870	 	  	 	332	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Current period foreign exchange translation	  	 	(826	) 	  	 	—	 	  	 	—	 	  	 	(826	) 	
Current period marketable securities activity	  	 	—	 	  	 	47	 	  	 	—	 	  	 	47	 	
Current period actuarial gain/loss activity	  	 	—	 	  	 	—	 	  	 	(79	) 	  	 	(79	) 	
Current period amortization of actuarial loss	  	 	—	 	  	 	—	 	  	 	(89	) 	  	 	(89	) 	
Tax effect	  	 	—	 	  	 	(16	) 	  	 	58	 	  	 	42	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Balance, March 25, 2017	  	$	(1,302	) 	  	$	(31	) 	  	$	760	 	  	$	(573	) 	

15.	  Income Taxes	
Income before income taxes consisted of (in thousands):

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	  	March 26,	 	  	March 28,	 	
 	  	2017	 	  	2016	 	  	2015	 	
U.S.	  	$	137,654	 	  	$	108,133	 	  	$	133,295	 	
Non-U.S.	  	 	177,393	 	  	 	67,856	 	  	 	(41,746	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	315,047	 	  	$	175,989	 	  	$	91,549	 	

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The provision (benefit) for income taxes consists of (in thousands):

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	  	March 26,	 	  	March 28,	 	
 	  	2017	 	  	2016	 	  	2015	 	
Current:	  				  				  				
U.S.	  	$	28,940	 	  	$	28,313	 	  	$	42,165	 	
Non-U.S.	  	 	7,234	 	  	 	703	 	  	 	445	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total current tax provision	  	$	36,174	 	  	$	29,016	 	  	$	42,610	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Deferred:	  				  				  				
U.S.	  	 	2,576	 	  	 	18,242	 	  	 	2,136	 	
Non-U.S.	  	 	15,088	 	  	 	5,101	 	  	 	(8,375	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total deferred tax provision (benefit)	  	 	17,664	 	  	 	23,343	 	  	 	(6,239	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total tax provision	  	$	53,838	 	  	$	52,359	 	  	$	36,371	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
The effective income tax rates differ from the rates computed by applying the statutory federal rate to pretax income as follows (in percentages):

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	  	March 26,	 	  	March 28,	 	
 	  	2017	 	  	2016	 	  	2015	 	
U.S. federal statutory rate	  	 	35.0	 	  	 	35.0	 	  	 	35.0	 	
Foreign income taxed at different rates	  	 	(8.6	) 	  	 	(0.6	) 	  	 	7.3	 	
Research and development tax credits	  	 	(1.8	) 	  	 	(5.6	) 	  	 	(3.6	) 	
Stock based compensation	  	 	(7.3	) 	  	 	—	 	  	 	—	 	
Nondeductible expenses	  	 	—	 	  	 	0.1	 	  	 	2.3	 	
Other	  	 	(0.2	) 	  	 	0.9	 	  	 	(1.3	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Effective tax rate	  	 	17.1	 	  	 	29.8	 	  	 	39.7	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
As disclosed in Note 2 — Summary of Significant Accounting Policies, the Company adopted ASU 2016-09 in the third quarter of fiscal year 2017. The effect of the adoption reduced the provision for income taxes by $22.9 million for the year ended March 25, 2017.
 
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Significant components of our deferred tax assets and liabilities as of March 25, 2017 and March 26, 2016 are (in thousands):

 	  	March 25,	 	  	March 26,	 	
 	  	2017	 	  	2016	 	
Deferred tax assets:	  				  				
Accrued expenses and allowances	  	$	9,002	 	  	$	3,761	 	
Net operating loss carryforwards	  	 	6,294	 	  	 	24,592	 	
Research and development tax credit carryforwards	  	 	13,977	 	  	 	9,649	 	
Stock based compensation	  	 	17,356	 	  	 	16,071	 	
Other	  	 	9,141	 	  	 	9,976	 	
	  	 	 	 	  	 	 	 	
Total deferred tax assets	  	$	55,770	 	  	$	64,049	 	
Valuation allowance for deferred tax assets	  	 	(12,570	) 	  	 	(10,773	) 	
	  	 	 	 	  	 	 	 	
Net deferred tax assets	  	$	43,200	 	  	$	53,276	 	
	  	 	 	 	  	 	 	 	
Deferred tax liabilities:	  				  				
Depreciation and amortization	  	$	13,837	 	  	$	13,607	 	
Acquisition intangibles	  	 	16,301	 	  	 	21,844	 	
	  	 	 	 	  	 	 	 	
Total deferred tax liabilities	  	$	30,138	 	  	$	35,451	 	
	  	 	 	 	  	 	 	 	
Total net deferred tax assets	  	$	13,062	 	  	$	17,825	 	
	  	 	 	 	  	 	 	 	
Deferred tax assets and liabilities are recorded for the estimated tax impact of temporary differences between the tax basis and book basis of assets and liabilities. A valuation allowance is established against a deferred tax asset when it is more likely than not that the deferred tax asset will not be realized. The valuation allowance increased by $1.8 million in fiscal year 2017 with no material impact to income tax expense. The Company continued to record a valuation allowance on various state net operating losses and tax credits due to the likelihood that they will expire or go unutilized because the Company does not expect to recognize sufficient income in the jurisdictions in which the tax attributes were created. Management believes that the Company’s results from future operations will generate sufficient taxable income in the appropriate jurisdictions and of the appropriate character such that it is more likely than not that the remaining deferred tax assets will be realized.
At March 25, 2017, the Company had gross federal net operating loss carryforwards of $12.9 million, all of which related to acquired companies and are, therefore, subject to certain limitations under Section 382 of the Internal Revenue Code. The federal net operating loss carryforwards expire in fiscal years 2019 through 2034. The Company had $8.5 million of alternative minimum tax credit carryforwards that may be carried forward indefinitely. The Company also had $4.0 million of federal research and development credit carryforwards which will expire in 2037.
At March 25, 2017, the Company had gross state net operating loss carryforwards of $44.7 million. The state net operating loss carryforwards expire in fiscal years 2018 through 2033. In addition, the Company had $15.4 million of state research and development tax credit carryforwards. Certain of these state tax credits will expire in fiscal years 2022 through 2032. The remaining state tax credit carryforwards do not expire.
At March 25, 2017, the Company does not have any foreign operating loss carryforward.
At March 25, 2017, the undistributed earnings of our foreign subsidiaries of approximately $201.3 million are intended to be indefinitely reinvested outside the U.S. Accordingly, no provision for U.S. federal income and foreign withholding taxes associated with a distribution of these earnings has been made. The amount of unrecognized deferred tax liability related to these undistributed earnings is estimated to be $65.5 million.
 
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The following table summarizes the changes in the unrecognized tax benefits (in thousands):

 	  	March 25,	 	  	March 26,	 	
 	  	2017	 	  	2016	 	
Beginning balance	  	$	18,796	 	  	$	—	 	
Additions based on tax positions related to the current year	  	 	12,127	 	  	 	12,592	 	
Additions based on tax positions related to prior years	  	 	—	 	  	 	6,204	 	
Reductions based on tax positions related to the prior years	  	 	(65	) 	  	 	—	 	
	  	 	 	 	  	 	 	 	
Ending balance	  	$	30,858	 	  	$	18,796	 	
	  	 	 	 	  	 	 	 	
The Company records unrecognized tax benefits for the estimated risk associated with tax positions taken on tax returns. At March 25, 2017, the Company had gross unrecognized tax benefits of $30.9 million, all of which would impact the effective tax rate if recognized. The Company believes it is reasonably possible that the gross unrecognized tax benefits could decrease by approximately $2.3 million in the next 12 months due to the lapse of the statute of limitations applicable to a tax deduction claimed on a prior year tax return. During fiscal year 2017, the Company had gross increases of $12.1 million related to current year unrecognized tax benefits, as well as a $0.1 million decrease related to tax positions taken in prior years. The Company’s unrecognized tax benefits are classified as “ Other long-term liabilities ” in the Consolidated Balance Sheet.
The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. During fiscal year 2017 we recognized interest expense, net of tax, of approximately $0.2 million. No interest or penalties were recognized during fiscal year 2016.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. Fiscal years 2014 through 2017 remain open to examination by the major taxing jurisdictions to which the Company is subject, although carry forward attributes that were generated in tax years prior to fiscal year 2014 may be adjusted upon examination by the tax authorities if they have been, or will be, used in a future period. The Company is not currently under an income tax audit in any major taxing jurisdiction.
 
16.	  Segment Information	
We determine our operating segments in accordance with Financial Accounting Standards Board (“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, which currently are 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 operations support functions such as sales, public relations, supply chain management, various research and development and engineering support, in addition to the general and administrative functions of human resources, legal, finance and information technology. Therefore, there is no complete, discrete financial information maintained for these product lines. Revenue from our product lines are as follows (in thousands):

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	  	March 26,	 	  	March 28,	 	
 	  	2017	 	  	2016	 	  	2015	 	
Portable Audio Products	  	$	1,373,848	 	  	$	989,101	 	  	$	740,301	 	
Non-Portable Audio and Other Products	  	 	165,092	 	  	 	180,150	 	  	 	176,267	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	1,538,940	 	  	$	1,169,251	 	  	$	916,568	 	

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Geographic Area
The following illustrates sales by geographic locations based on the sales office location (in thousands):

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	  	March 26,	 	  	March 28,	 	
 	  	2017	 	  	2016	 	  	2015	 	
United States	  	$	36,024	 	  	$	73,889	 	  	$	31,977	 	
European Union (excluding United Kingdom)	  	 	9,809	 	  	 	12,745	 	  	 	13,629	 	
United Kingdom	  	 	5,741	 	  	 	5,687	 	  	 	2,805	 	
China	  	 	1,249,325	 	  	 	823,843	 	  	 	728,413	 	
Hong Kong	  	 	181,283	 	  	 	10,647	 	  	 	15,087	 	
Japan	  	 	11,819	 	  	 	27,898	 	  	 	14,353	 	
South Korea	  	 	2,403	 	  	 	193,388	 	  	 	69,327	 	
Taiwan	  	 	14,426	 	  	 	9,249	 	  	 	15,272	 	
Other Asia	  	 	16,585	 	  	 	8,657	 	  	 	10,991	 	
Other non-U.S. countries	  	 	11,525	 	  	 	3,248	 	  	 	14,714	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total consolidated sales	  	$	1,538,940	 	  	$	1,169,251	 	  	$	916,568	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
The following illustrates property, plant and equipment, net, by geographic locations, based on physical location (in thousands):

 	  	Fiscal Years Ended	 	
 	  	March 25,	 	  	March 26,	 	
 	  	2017	 	  	2016	 	
United States	  	$	120,212	 	  	$	125,674	 	
European Union (excluding United Kingdom)	  	 	793	 	  	 	253	 	
United Kingdom	  	 	44,981	 	  	 	34,632	 	
China	  	 	565	 	  	 	483	 	
Hong Kong	  	 	5	 	  	 	1	 	
Japan	  	 	243	 	  	 	260	 	
South Korea	  	 	202	 	  	 	110	 	
Taiwan	  	 	231	 	  	 	180	 	
Other Asia	  	 	50	 	  	 	29	 	
Other non-U.S. countries	  	 	857	 	  	 	1,034	 	
	  	 	 	 	  	 	 	 	
Total consolidated property, plant and equipment, net	  	$	168,139	 	  	$	162,656	 	

17.	  Quarterly Results (Unaudited)	
The following quarterly results have been derived from our audited annual consolidated financial statements. In the opinion of management, this unaudited quarterly information has been prepared on the same basis as the annual consolidated financial statements and includes all adjustments, including normal recurring adjustments, necessary for a fair presentation of this quarterly information. This information should be read along with the financial statements and related notes. The operating results for any quarter are not necessarily indicative of results to be expected for any future period.
As a result of the early adoption of ASU 2016-09, discussed in more detail in Note 2, the net income and EPS for the first two quarters of fiscal year 2017 have been recast to conform to the new presentation.
 
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The unaudited quarterly statement of operations data for each quarter of fiscal years 2017 and 2016 were as follows (in thousands, except per share data):

 	  	Fiscal Year 2017	 	
 	  	1st	 	  	2nd	 	  	3rd	 	  	4th	 	
 	  	Quarter	 	  	Quarter	 	  	Quarter	 	  	Quarter	 	
Net sales	  	$	259,428	 	  	$	428,619	 	  	$	523,029	 	  	$	327,864	 	
Gross profit	  	 	126,685	 	  	 	211,699	 	  	 	255,152	 	  	 	164,279	 	
Net income	  	 	18,071	 	  	 	86,039	 	  	 	122,041	 	  	 	35,058	 	
Basic income per share	  	$	0.29	 	  	$	1.37	 	  	$	1.91	 	  	$	0.55	 	
Diluted income per share	  	 	0.27	 	  	 	1.30	 	  	 	1.83	 	  	 	0.52	 	

 	  	Fiscal Year 2016	 	
 	  	1st	 	  	2nd	 	  	3rd	 	  	4th	 	
 	  	Quarter	 	  	Quarter	 	  	Quarter	 	  	Quarter	 	
Net sales	  	$	282,633	 	  	$	306,756	 	  	$	347,863	 	  	$	231,999	 	
Gross profit	  	 	132,454	 	  	 	142,221	 	  	 	164,911	 	  	 	115,254	 	
Net income	  	 	33,354	 	  	 	34,880	 	  	 	41,384	 	  	 	14,012	 	
Basic income per share	  	$	0.53	 	  	$	0.55	 	  	$	0.65	 	  	$	0.22	 	
Diluted income per share	  	 	0.50	 	  	 	0.53	 	  	 	0.63	 	  	 	0.21	 	
 
18.	  Subsequent Event	
On April 14, 2017, the Company purchased a small, privately-held technology group that augments our product offerings in the voice and speech domains. The immaterial purchase was funded with existing cash.
 
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 ITEM 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
None.
 ITEM 9A.   Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(e) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our chief executive officer (CEO) and chief financial officer (CFO), the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(b) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-K. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based upon the evaluation, our management, including our CEO and CFO, has concluded that our disclosure controls and procedures were effective as of March 25, 2017.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined under Rule 13a-15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we assessed the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).
Because of its inherent limitation, internal control over financial reporting may not prevent or detect all errors and all fraud. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.
Based on its assessment of internal control over financial reporting, management has concluded that our internal control over financial reporting was effective as of March 25, 2017, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on management’s assessment of our internal control over financial reporting as of March 25, 2017, included in Item 8 of this report.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the quarter ended March 25, 2017, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART III
 ITEM 10.   Directors, Executive Officers and Corporate Governance 
The information set forth in the proxy statement to be delivered to stockholders in connection with our Annual Meeting of Stockholders to be held on July 28, 2017 (the “Proxy Statement”) under the headings Corporate Governance — Board Meetings and Committees, Corporate Governance — Audit Committee, Proposals to be Voted on — Proposal No. 1 — Election of Directors, Summary of Executive Compensation, and Section 16(a) Beneficial Ownership Reporting Compliance is incorporated herein by reference.
 
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 ITEM 11.   Executive Compensation 
The information set forth in the Proxy Statement under the headings Director Compensation Arrangements , Compensation Discussion and Analysis, Compensation Committee Report, and Proposals to be Voted on — Proposal No. 3 — Advisory Vote to Approve Executive Compensation and Proposal No. 4 — Advisory Vote on the Frequency of Future Advisory Votes to Approve Executive Compensation are incorporated herein by reference. 
 ITEM 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 
The information set forth in the Proxy Statement under the headings Equity Compensation Plan Information and Security Ownership of Certain Beneficial Owners and Management is incorporated herein by reference.
 ITEM 13.   Certain Relationships and Related Transactions, and Director Independence 
The information set forth in the Proxy Statement under the headings Certain Relationships and Related Transactions and Corporate Governance is incorporated herein by reference.
 ITEM 14.   Principal Accountant Fees and Services 
The information set forth in the Proxy Statement under the headings Audit and Non-Audit Fees and Services and Proposal No. 2 — Ratification of Appointment of Independent Registered Public Accounting Firm is incorporated herein by reference.
PART IV
 ITEM 15.    Exhibits and Financial Statement Schedules 
 
(a)	The following documents are filed as part of this Report:	
 
 	1.	Consolidated Financial Statements	
 
 	◾	 	Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm.	
 
 	◾	 	Consolidated Balance Sheets as of March 25, 2017 and March 26, 2016.	
 
 	◾	 	Consolidated Statements of Income for the fiscal years ended March 25, 2017, March 26, 2016, and March 28, 2015.	
 
 	◾	 	Consolidated Statements of Comprehensive Income for the fiscal years ended March 25, 2017, March 26, 2016, and March 28, 2015.	
 
 	◾	 	Consolidated Statements of Cash Flows for the fiscal years ended March 25, 2017, March 26, 2016, and March 28, 2015.	
 
 	◾	 	Consolidated Statements of Stockholders’ Equity for the fiscal years ended March 25, 2017, March 26, 2016, and March 28, 2015.	
 
 	◾	 	Notes to Consolidated Financial Statements.	
 
 	2.	Financial Statement Schedules	
All schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or notes thereto.
 
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 	3.	Exhibits	
The following exhibits are filed as part of or incorporated by reference into this Annual Report on Form 10-K:

Number	  	Description	
		
2.1	  	Cooperation Agreement dated April 29, 2014 between the Company and Wolfson Microelectronics plc. (1)	
		
3.1	  	Certificate of Incorporation of Registrant, filed with the Delaware Secretary of State on August 26, 1998. (2)	
		
3.2	  	Amended and Restated Bylaws of Registrant. (3)	
		
10.1+	  	Cirrus Logic, Inc. 2006 Stock Incentive Plan, amended and restated as of May 26, 2015. (8)	
		
10.2+	  	Form of Stock Option Agreement for options granted under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (4)	
		
10.3+	  	Form of Stock Option Agreement for options for U.K. Employees under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (13)	
		
10.4+	  	Form of Notice of Grant of Stock Option for options granted under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (4)	
		
10.5+	  	Form of Stock Option Agreement for Outside Directors under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (6)	
		
10.6+	  	Form of Restricted Stock Unit Agreement for U.S. Employees under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (5)	
		
10.7+	  	Form of Restricted Stock Unit Agreement for U.K. Employees under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (11)	
		
10.8+	  	Form of Notice of Grant of Restricted Stock Units granted under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (5)	
		
10.9+	  	Form of Performance Award Agreement for U.S. Employees under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (10)	
		
10.10+	  	Form of Notice of Performance Award Agreement for U.S. Employees under the Cirrus Logic Inc. 2006 Stock Incentive Plan (11)	
		
10.11+	  	Form of Performance Award Agreement for U.K. Employees under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (13)	
		
10.12+	  	2007 Executive Severance and Change of Control Plan, effective as of October 1, 2007, as amended and restated on March 4, 2014. (7)	
		
10.13+	  	2007 Management and Key Individual Contributor Incentive Plan, as amended on May 20, 2016. (13)	
		
10.14	  	Credit Agreement dated April 29, 2014 among the Company, Wells Fargo Bank and National Association, as Administrative Agent and Lender. (1)	
		
10.15	  	Credit Agreement dated August 29, 2014 among Registrant, Wells Fargo Bank and National Association, as Administrative Agent and Initial Issuing Lender. (9)	
		
10.16	  	First Amendment to Credit Agreement among Cirrus Logic, Inc., the Lenders party thereto and Wells Fargo Bank, National Association, as Lender and Administrative Agent. (12)	
		
10.17	  	Amended and Restated Credit Agreement among the Company, Wells Fargo Bank, National Association, as Administrative Agent and Initial Issuing Lender, and Bank of America, N.A., as Syndication Agent. (14)	
 
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Number	  	Description	
		
14.1	  	Code of Conduct, dated March 24, 2015. (13)	
		
21.1*	  	List of Subsidiaries.	
		
23.1*	  	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.	
		
24.1*	  	Power of Attorney (see signature page).	
		
31.1*	  	Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
		
31.2*	  	Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
		
32.1*	  	Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
		
32.2*	  	Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
		
101.INS*	  	XBRL Instance Document	
		
101.SCH*	  	XBRL Taxonomy Extension Schema Document	
		
101.CAL*	  	XBRL Taxonomy Extension Calculation Linkbase Document	
		
101.LAB*	  	XBRL Taxonomy Extension Label Linkbase Document	
		
101.PRE*	  	XBRL Taxonomy Extension Presentation Linkbase Document	
		
101.DEF*	  	XBRL Taxonomy Extension Definition Linkbase Document	
 
+	Indicates a management contract or compensatory plan or arrangement.	
*	Filed with this Form 10-K.	
 
 	(1)	Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on April 29, 2014 (Registration No. 000-17795).	
 	(2)	Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 31, 2001, filed with the SEC on June 22, 2001 (Registration No. 000-17795).	
 	(3)	Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on September 20, 2013.	
 	(4)	Incorporated by reference from Registration’s Statement on Form S-8 filed with the SEC on August 1, 2006 (Registration No. 000-17795), filed with the SEC on March 4, 2014 (Registration No. 000-17795).	
 	(5)	Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on October 7, 2010.	
 	(6)	Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on August 1, 2007.	
 	(7)	Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on March 10, 2014.	
 	(8)	Incorporated by reference to Exhibit A of the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on June 2, 2015.	
 	(9)	Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on September 3, 2014.	
 	(10)	Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on September 22, 2014.	
 	(11)	Incorporated by reference from Registrant’s Report on Form 10-K filed with the SEC on May 27, 2015 (Registration No. 000-17795).	
 	(12)	Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on June 26, 2015.	
 	(13)	Incorporated by reference from Registrant’s Report on Form 10-K filed with the SEC on May 25, 2016 (Registration No. 000-17795).	
 	(14)	Incorporated by reference from Registrant’s Report on Form 8-K with the SEC on July 15, 2016 (Registration No. 000-17795).	
 
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Table of Contents
 Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized.

CIRRUS LOGIC, INC.	
		
By:	 	/ S / T HURMAN K. C ASE	
	 	Thurman K. Case	
	 	Vice President, Chief Financial Officer and Chief Accounting Officer	
	 	May 24, 2017	
KNOW BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Thurman K. Case, his attorney-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of the attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant, in the capacities and on the dates indicated have signed this report below:

Signature	  	Title	 	Date	
			
/s/ J ASON P. R HODE
Jason P. Rhode	  	President and Chief Executive Officer	 	May 24, 2017	
			
/ S / T HURMAN K. C ASE
Thurman K. Case	  	Vice President, Chief Financial Officer and Chief Accounting Officer	 	May 24, 2017	
			
/ S / J OHN C. C ARTER
John C. Carter	  	Director	 	May 24, 2017	
			
/ S / A LEX D AVERN
Alex Davern	  	Director	 	May 24, 2017	
			
/ S / T IMOTHY R. D EHNE
Timothy R. Dehne	  	Director	 	May 24, 2017	
			
/ S / C HRISTINE K ING
Christine King	  	Director	 	May 24, 2017	
			
/ S / A LAN R. S CHUELE
Alan R. Schuele	  	Director	 	May 24, 2017	
			
/ S / W ILLIAM D. S HERMAN
William D. Sherman	  	Director	 	May 24, 2017	
			
/ S / D AVID J. T UPMAN
David J. Tupman	  	Director	 	May 24, 2017	
 
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EXHIBIT 21.1
Significant Subsidiaries of the Registrant
The following are significant subsidiaries of Cirrus Logic, Inc. as of March 25, 2017 and the jurisdictions in which they are organized. Indentation indicates the principal parent of each subsidiary. The names of particular subsidiaries have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute, as of the end of the year covered by this report, a “significant subsidiary” as that term is defined in Rule 1-02(w) of Regulation S-X under the Securities Exchange Act of 1934.

Name	  	Jurisdiction of Entity	
		
Cirrus Logic UK International Holding Co., Ltd.	  	United Kingdom	
Cirrus Logic International Semiconductor Ltd.	  	United Kingdom	
Cirrus Logic International (UK) Ltd.	  	United Kingdom	

Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-101119, 333-107808, 333-117741, 333-136219, 333-200968, and 333-208577) pertaining to the following: the Cirrus Logic, Inc. 2002 Stock Option Plan and the Cirrus Logic, Inc. 2006 Stock Incentive Plan of our reports dated May 24, 2017, with respect to the consolidated financial statements of Cirrus Logic, Inc., and the effectiveness of internal control over financial reporting of Cirrus Logic, Inc., included in this Annual Report (Form 10-K) for the fiscal year ended March 25, 2017.
/s/ Ernst & Young LLP
Austin, Texas
May 24, 2017

Exhibit 31.1

 
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jason P. Rhode, certify that:
 
1.	I have reviewed this annual report on Form 10-K of Cirrus Logic, Inc.;	
 
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 
 	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 
 	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 
 	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 
 	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
 
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
 
 	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 
 	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

Date:     May 24, 2017	 		 	Signature:	 	/s/ Jason P. Rhode	
	 		 	Jason P. Rhode	
	 		 	President and Chief Executive Officer	

Exhibit 31.2

 
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Thurman K. Case, certify that:
 
1.	I have reviewed this annual report on Form 10-K of Cirrus Logic, Inc.;	
 
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 
 	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 
 	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 
 	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 
 	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
 
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
 
 	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 
 	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

Date:     May 24, 2017	 		 	Signature:	 	/s/ Thurman K. Case	
	 		 	Thurman K. Case	
	 		 	Vice President, Chief Financial Officer and Principal Accounting Officer	

Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350, 
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Cirrus Logic, Inc. (the “Company”) on Form 10-K for the period ended March 25, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jason P. Rhode, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to my knowledge:
 
 	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and	
 
 	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Date:     May 24, 2017	 		 		 	/s/ Jason P. Rhode	
	 		 		 	Jason P. Rhode	
	 		 		 	President and Chief Executive Officer	

Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350, 
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Cirrus Logic, Inc. (the “Company”) on Form 10-K for the period ended March 25, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thurman K. Case, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to my knowledge:
 
 	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and	
 
 	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Date:     May 24, 2017	 		 		 	/s/ Thurman K. Case	
	 		 		 	Thurman K. Case	
	 		 		 	Vice President, Chief Financial Officer and Principal Accounting Officer