Consolidated Condensed Statements of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
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Jun. 26, 2021 |
Jun. 27, 2020 |
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Income Statement [Abstract] | ||
Net sales | $ 277,253 | $ 242,573 |
Cost of sales | 137,307 | 115,101 |
Gross profit | 139,946 | 127,472 |
Operating expenses | ||
Research and development | 85,696 | 78,741 |
Selling, general and administrative | 35,147 | 29,704 |
Restructuring costs | 0 | 352 |
Total operating expenses | 120,843 | 108,797 |
Income from operations | 19,103 | 18,675 |
Interest income | 1,020 | 1,835 |
Interest expense | (259) | (259) |
Other income (expense) | (242) | 111 |
Income before income taxes | 19,622 | 20,362 |
Provision for income taxes | 2,413 | 2,153 |
Net income | $ 17,209 | $ 18,209 |
Basic earnings per share (in dollars per share) | $ 0.30 | $ 0.31 |
Diluted earnings per share (in dollars per share) | $ 0.29 | $ 0.30 |
Basic weighted average common shares outstanding (in shares) | 57,582 | 58,313 |
Diluted weighted average common shares outstanding (in shares) | 59,513 | 60,280 |
Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
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Jun. 26, 2021 |
Jun. 27, 2020 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 17,209 | $ 18,209 |
Other comprehensive income (loss), before tax | ||
Foreign currency translation gain (loss) | (52) | 1,014 |
Unrealized gain (loss) on marketable securities | (1,123) | 9,488 |
Benefit (provision) for income taxes | 236 | (1,992) |
Comprehensive income | $ 16,270 | $ 26,719 |
Basis of Presentation |
3 Months Ended |
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Jun. 26, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of PresentationThe consolidated condensed financial statements have been prepared by Cirrus Logic, Inc. (“Cirrus Logic,” “we,” “us,” “our,” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). The accompanying unaudited consolidated condensed financial statements do not include complete footnotes and financial presentations. As a result, these financial statements should be read along with the audited consolidated financial statements and notes thereto for the year ended March 27, 2021, included in our Annual Report on Form 10-K filed with the Commission on May 21, 2021. In our opinion, the financial statements reflect all material adjustments, including normal recurring adjustments, necessary for a fair presentation of the financial position, operating results and cash flows for those periods presented. The preparation of financial statements in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported assets, liabilities, revenues and expenses. Actual results could differ from those estimates and assumptions. Moreover, the results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the entire year. |
Recently Issued Accounting Pronouncements |
3 Months Ended |
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Jun. 26, 2021 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company adopted this ASU in the first quarter of fiscal year 2022, with no material impact to the financial statements. In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321) - Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force). This ASU clarifies the interaction of the accounting for equity securities and investments accounted for under the equity method of accounting, and the accounting for certain forward contracts and purchased options. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company adopted this ASU in the first quarter of fiscal year 2022, with no material impact to the financial statements. In May 2020, the SEC adopted final rules that amend the financial statement requirements for significant business acquisitions and dispositions. Among other things, the rules modify the significance tests and improve the disclosure requirements for acquired or to be acquired businesses and related pro forma financial information, the periods those financial statements must cover, and the form and content of the pro forma financial information. The final rules were effective January 1, 2021. The Company is currently evaluating the final rules and will incorporate applicable changes in conjunction with its recently-announced business acquisition described in Note 16 - Subsequent Events.
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Marketable Securities |
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Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | Marketable Securities The Company’s investments have been classified as available-for-sale securities in accordance with U.S. GAAP. Marketable securities are categorized on the consolidated condensed balance sheet as "Marketable securities", within the short-term or long-term classification, as appropriate. The following table is a summary of available-for-sale securities at June 26, 2021 (in thousands):
The Company typically invests in highly-rated securities with original maturities generally ranging from to three years. The Company's specifically identified gross unrealized losses of $0.3 million related to securities with total amortized costs of approximately $125.6 million at June 26, 2021. There were no securities that had been in a continuous unrealized loss position for more than 12 months as of June 26, 2021. The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipated or actual changes in credit rating and duration management. The Company records an allowance for credit loss when a decline in investment market value is due to credit-related factors. When evaluating an investment for impairment, the Company reviews factors including the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, changes in market interest rates and whether it is more likely than not the Company will be required to sell the investment before recovery of the investment’s cost basis. As of June 26, 2021, the Company does not consider any of its investments to be impaired. The following table is a summary of available-for-sale securities at March 27, 2021 (in thousands):
The Company's specifically identified gross unrealized losses of $0.3 million related to securities with total amortized costs of approximately $92 million at March 27, 2021. There were no securities that had been in a continuous unrealized loss position for more than 12 months as of March 27, 2021. As of March 27, 2021, the Company did not consider any of its investments to be impaired. The cost and estimated fair value of available-for-sale securities by contractual maturities were as follows (in thousands):
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company has determined that the only material 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 and marketable securities portfolio. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). •Level 1 - Quoted prices in active markets for identical assets or liabilities. •Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. •Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s cash equivalents and marketable securities portfolio consist of money market funds, debt securities, non-U.S. government securities and securities of U.S. government-sponsored enterprises and are reflected on our consolidated condensed balance sheets under the headings cash and cash equivalents, marketable securities, and long-term marketable securities. The Company determines the fair value of its marketable securities portfolio by obtaining non-binding market prices from third-party pricing providers on the last day of the quarter, whose sources may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. The Company's long-term revolving credit facility, described in Note 8, bears interest at a base rate plus applicable margin or LIBOR plus applicable margin. As of June 26, 2021, there are no amounts drawn under the credit facility and the fair value is zero. As of June 26, 2021 and March 27, 2021, the Company has no material Level 3 assets or liabilities. There were no transfers between Level 1, Level 2, or Level 3 measurements for the three months ended June 26, 2021. The following summarizes the fair value of our financial instruments at June 26, 2021 (in thousands):
The following summarizes the fair value of our financial instruments at March 27, 2021 (in thousands):
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments Foreign Currency Forward Contracts The Company uses foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on non-functional currency balance sheet exposures. The Company recognizes both the gains and losses on foreign currency forward contracts and the gains and losses on the remeasurement of non-functional currency assets and liabilities within "Other income (expense)" in the consolidated condensed statements of income. The Company does not apply hedge accounting to these foreign currency derivative instruments. As of June 26, 2021, the Company held one foreign currency forward contract denominated in British Pound Sterling with a notional value of $12.1 million. The fair value of this contract was not material as of June 26, 2021. The before-tax effect of derivative instruments not designated as hedging instruments was as follows (in thousands):
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Accounts Receivable, net |
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Accounts Receivable, after Allowance for Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, net | Accounts Receivable, netThe following are the components of accounts receivable, net (in thousands):
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | InventoriesInventories are comprised of the following (in thousands):
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Revolving Credit Facility |
3 Months Ended |
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Jun. 26, 2021 | |
Line of Credit Facility [Abstract] | |
Revolving Credit Facility | Revolving Credit Facility On July 12, 2016, Cirrus Logic entered into an amended and restated credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the Lenders party thereto, for the purpose of refinancing an existing credit facility and providing ongoing working capital. The Credit Agreement provides for a $300 million senior secured revolving credit facility (the “Credit Facility”). The Credit Facility is required to be guaranteed by all of Cirrus Logic’s material domestic subsidiaries (the “Subsidiary Guarantors”). The Credit Facility is secured by substantially all of the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets. Borrowings under the Credit Facility may, at our election, bear interest at either (a) a base rate plus the applicable margin (“Base Rate Loans”) or (b) a LIBOR rate plus the applicable margin (“LIBOR Rate Loans”). The applicable margin ranges from 0% to 0.50% per annum for Base Rate Loans and 1.25% to 2.00% per annum for LIBOR Rate Loans based on the Leverage Ratio (as defined below). A commitment fee accrues at a rate per annum ranging from 0.20% to 0.30% (based on the Leverage Ratio) on the average daily unused portion of the commitment of the lenders. The Credit Agreement contains certain financial covenants providing that (a) the ratio of consolidated funded indebtedness to consolidated EBITDA for the prior four fiscal quarters must not be greater than 3.00 to 1.00 (the “Leverage Ratio”) and (b) the ratio of consolidated EBITDA for the prior four consecutive fiscal quarters to consolidated fixed charges (including amounts paid in cash for consolidated interest expenses, capital expenditures, scheduled principal payments of indebtedness, and income taxes) for the prior four consecutive fiscal quarters must not be less than 1.25 to 1.00 as of the end of each fiscal quarter. The Credit Agreement also contains negative covenants limiting the Company’s or any Subsidiary’s ability to, among other things, incur debt, grant liens, make investments, effect certain fundamental changes, make certain asset dispositions, and make certain restricted payments. As of June 26, 2021, the Company had no amounts outstanding under the Credit Facility and was in compliance with all covenants under the Credit Agreement. See Note 16 - Subsequent Events for details on second amended and restated credit agreement related to this Credit Facility.
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Revenues |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | Revenues Disaggregation of revenue We disaggregate revenue from contracts with customers by product line and ship to location of the customer. During the fourth quarter of fiscal year 2021, we adjusted how we report product line revenue to better represent our business and strategic focus. Sales are designated in the product line categories of Audio and High-Performance Mixed-Signal. Total net sales based on the product line disaggregation criteria described above are shown in the table below (in thousands). Prior periods were retrospectively adjusted to conform to the new product line categories.
The geographic regions that are reviewed are China, the United States, and the rest of the world. Total net sales based on the geographic disaggregation criteria described are as follows (in thousands):
Performance obligations The Company's single performance obligation is the delivery of promised goods to the customer. The promised goods are explicitly stated in the customer contract and are comprised of either a single type of good or a series of goods that are substantially the same, have the same pattern of transfer to the customer, and are neither capable of being distinct nor separable from the other promised goods in the contract. This performance obligation is satisfied upon transfer of control of the promised goods to the customer, as defined per the shipping terms within the customer's contract. The vast majority of the Company's contracts with customers have an original expected term length of one year or less. As allowed by Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, the Company has not disclosed the value of any unsatisfied performance obligations related to these contracts. The Company’s products typically include a warranty period of to three years. These warranties qualify as assurance-type warranties, as goods can be returned for product non-conformance and defect only. As such, these warranties are accounted for under ASC 460, Guarantees, and are not considered a separate performance obligation. Contract balances Payments are typically due within 30 to 60 days of invoicing and terms do not include significant financing components or noncash consideration. There have been no material impairment losses on accounts receivable. There are no material contract assets or contract liabilities recorded on the consolidated condensed balance sheets. Transaction price The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods to the customer. Fixed pricing is the consideration that is agreed upon in the customer contract. Variable pricing includes rebates, rights of return, warranties, price protection and stock rotation. Rebates are granted as a customer account credit, based on agreed-upon sales thresholds. Rights of return and warranty costs are estimated using the "most likely amount" method by reviewing historical returns to determine the most likely customer return rate and applying materiality thresholds. Price protection includes price adjustments available to certain distributors based upon established book price and a stated adjustment period. Stock rotation is also available to certain distributors based on a stated maximum of prior billings. The Company estimates all variable consideration at the most likely amount that it expects to be entitled to receive. The estimate is based on current and historical information, including recent sales activity and pricing, available to the Company. Variable consideration is only included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company defers all variable consideration that does not meet the revenue recognition criteria.
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Restructuring Costs |
3 Months Ended |
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Jun. 26, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring CostsDuring the fourth quarter of fiscal year 2020, the Company approved a restructuring plan (the “MEMS Restructuring”), including discontinuing efforts relating to the microelectromechanical systems ("MEMS") microphone product line, which allowed the Company to concentrate resources on projects with an anticipated larger return on investment. The MEMS Restructuring was substantially complete as of the first quarter of fiscal year 2021 with a $0.4 million "Restructuring Costs" charge to the income statement. No additional restructuring charges have been incurred since the first quarter of fiscal year 2021. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Our provision for income taxes is based on estimated effective tax rates derived from an estimate of annual consolidated earnings before taxes, adjusted for nondeductible expenses, other permanent items, and any applicable income tax credits. The following table presents the provision for income taxes (in thousands) and the effective tax rates:
Our income tax expense was $2.4 million and $2.2 million for the first quarters of fiscal years 2022 and 2021, respectively, resulting in effective tax rates of 12.3% and 10.6% for the first quarters of fiscal years 2022 and 2021, respectively. Our effective tax rate for the first quarter of fiscal year 2022 was lower than the federal statutory rate primarily due to the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate. Our effective tax rate for the first quarter of fiscal year 2021 was lower than the federal statutory rate primarily due to the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate and excess tax benefits from stock-based compensation. The Company records unrecognized tax benefits for the estimated risk associated with tax positions taken on tax returns. At June 26, 2021, the Company had unrecognized tax benefits of $32.9 million, all of which would impact the effective tax rate if recognized. The Company’s total unrecognized tax benefits are classified as “Non-current income taxes" in the consolidated condensed balance sheets. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of June 26, 2021, the balance of accrued interest and penalties, net of tax, was $4.4 million. On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. et al. v. Commissioner which concluded that the regulations relating to the treatment of stock-based compensation expense in intercompany cost-sharing arrangements were invalid. In 2016 the U.S. Internal Revenue Service appealed the decision to the U.S. Court of Appeals for the Ninth Circuit (the “Ninth Circuit”). On July 24, 2018, the Ninth Circuit issued a decision that was subsequently withdrawn and a reconstituted panel conferred on the appeal. On June 7, 2019, the Ninth Circuit reversed the decision of the U.S. Tax Court and upheld the cost-sharing regulations. On February 10, 2020, Altera Corp. filed a Petition for a Writ of Certiorari with the Supreme Court of the United States, which was denied by the Supreme Court on June 22, 2020. Although the issue is now resolved in the Ninth Circuit, the Ninth Circuit's opinion is not binding in other circuits. The potential impact of this issue on the Company, which is not located within the jurisdiction of the Ninth Circuit, is unclear at this time. We will continue to monitor developments related to this issue and the potential impact of those developments on the Company's current and prior fiscal years. 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 2017 through 2021 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 2017 may be adjusted upon examination by the tax authorities if they have been, or will be, used in a future period. The Company's federal income tax returns for fiscal years 2017, 2018, and 2019 are under examination by the U.S. Internal Revenue Service. The Company believes it has accrued adequate reserves related to the matters under examination. The Company is not under an income tax audit in any other major taxing jurisdiction.
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Net Income Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share | Net Income Per Share Basic net income per share is based on the weighted effect of common shares issued and outstanding and is calculated by dividing net income by the basic weighted average shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of common shares used in the basic net income per share calculation, plus the equivalent number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. These potentially dilutive items consist primarily of outstanding stock options and restricted stock grants. The following table details the calculation of basic and diluted earnings per share for the three months ended June 26, 2021 and June 27, 2020 (in thousands, except per share amounts):
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Legal Matters |
3 Months Ended |
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Jun. 26, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters | Legal Matters From time to time, we are involved in legal proceedings concerning matters arising in connection with the conduct of our business activities. We regularly evaluate the status of legal proceedings in which we are involved in order to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred, and to determine if accruals are appropriate. We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made. Based on current knowledge, management does not believe that there are any pending matters that could potentially have a material adverse effect on our business, financial condition, results of operations or cash flows. However, we are engaged in various legal actions in the normal course of business. There can be no assurances in light of the inherent uncertainties involved in any potential legal proceedings, some of which are beyond our control, and an adverse outcome in any legal proceeding could be material to our results of operations or cash flows for any particular reporting period.
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Stockholders' Equity |
3 Months Ended |
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Jun. 26, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock The Company issued a net 0.1 million shares of common stock during each of the three months ended June 26, 2021 and June 27, 2020, pursuant to the Company's equity incentive plans. Share Repurchase Program In January 2019, the Company announced that the Board of Directors authorized a share repurchase program of up to $200 million of the Company's common stock. During the three months ended June 26, 2021, the Company completed share repurchases under the 2019 plan. In January 2021, the Board of Directors authorized the repurchase of an additional $350 million of the Company’s common stock. Approximately $2.5 million of the Company’s common stock has been repurchased under the Company’s 2021 share repurchase program, leaving approximately $347.5 million available for repurchase under this plan as of June 26, 2021. During the three months ended June 26, 2021, the Company repurchased 0.2 million shares of its common stock under these combined plans for $12.5 million, at an average cost of $75.19 per share.
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Segment Information |
3 Months Ended |
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Jun. 26, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We determine our operating segments in accordance with FASB guidelines. Our Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker under these guidelines. The Company operates and tracks its results in one reportable segment, but reports revenue in two product lines, Audio and High-Performance Mixed-Signal. Our CEO receives and uses enterprise-wide financial information to assess financial performance and allocate resources, rather than detailed information at a product line level. Additionally, our product lines have similar characteristics and customers. They share support functions such as sales, public relations, supply chain management, various research and development and engineering support, in addition to the general and administrative functions of human resources, legal, finance and information technology. Therefore, there is no complete, discrete financial information maintained for these product lines. Revenue by product line is disclosed in Note 9 - Revenues.
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Subsequent Events |
3 Months Ended |
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Jun. 26, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Acquisition On July 8, 2021, the Company announced that it had entered into an agreement to acquire Lion Semiconductor (the "Acquisition") for $335 million in cash. The Acquisition closed on July 20, 2021. The Acquisition is expected to bring unique intellectual property and products for power applications in smartphones, laptops and other devices and accelerate growth of the Company’s high-performance mixed-signal product line. Second Amended Credit Agreement Also on July 8, 2021, the Company entered into a second amended and restated credit agreement (the “Second Amended Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the Lenders party thereto. The Second Amended Credit Agreement provides for a $300 million senior secured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility matures on July 8, 2026 (the “Maturity Date”). The Revolving Credit Facility is required to be guaranteed by all of Cirrus Logic’s Subsidiary Guarantors. The Revolving Credit Facility is secured by substantially all the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets. Borrowings under the Revolving Credit Facility may, at Cirrus Logic’s election, bear interest at either (a) Base Rate Loans or (b) LIBOR Rate Loans. The Applicable Margin ranges from 0% to 0.75% per annum for Base Rate Loans and 1.00% to 1.75% per annum for LIBOR Rate Loans based on the ratio of consolidated funded indebtedness to consolidated EBITDA for the most recently ended period of four consecutive fiscal quarters (the “Consolidated Leverage Ratio”). The Second Amended Credit Agreement further provides a method for determining an alternative rate of interest if the LIBOR Rate is no longer available or upon the occurrence of certain other events. A Commitment Fee accrues at a rate per annum ranging from 0.175% to 0.275% (based on the Consolidated Leverage Ratio) on the average daily unused portion of the Commitment of the Lenders. The Second Amended Credit Agreement contains customary affirmative covenants, including, among others, covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements, and compliance with applicable laws and regulations. Further, the Second Amended Credit Agreement contains customary negative covenants limiting the ability of Cirrus Logic or any Subsidiary to, among other things, incur debt, grant liens, make investments, effect certain fundamental changes, make certain asset dispositions, and make certain restricted payments. The Revolving Credit Facility also contains certain financial covenants providing that (a) the ratio of consolidated funded indebtedness (minus up to $200 million of unrestricted cash and cash equivalents available on such date) to consolidated EBITDA for the prior four consecutive quarters must not be greater than 3.00 to 1.00 (the “Consolidated Net Leverage Ratio”) and (b) the ratio of consolidated EBITDA for the prior four consecutive quarters to consolidated interest expense paid or payable in cash for the prior four consecutive quarters must not be less than 3.00 to 1.00 (the “Consolidated Interest Coverage Ratio”). Capacity Reservation and Wafer Supply Commitment Agreement On July 28, 2021, the Company entered into a Capacity Reservation and Wafer Supply Commitment Agreement (the “Commitment Agreement”) with GLOBALFOUNDRIES Singapore Pte. Ltd. (“GlobalFoundries”) to provide the Company a wafer capacity commitment and wafer pricing for Company products for calendar years 2022-2026 (the “Commitment Period”). The Commitment Agreement requires GlobalFoundries to provide, and the Company to purchase, a defined number of wafers on a quarterly basis for the Commitment Period, subject to shortfall payments. In exchange for GlobalFoundries’ capacity commitment, the Company agreed to pay a $50 million non-refundable capacity reservation fee. In addition, the Company agreed to pre-pay GlobalFoundries $175 million for future wafer purchases, which will be credited back to the Company as a portion of the price of wafers purchased beginning in the third quarter of calendar year 2023. The Company currently estimates that it is obligated to purchase at least approximately $1.6 billion of wafers from GlobalFoundries for calendar years 2022 to 2026 under the Commitment Agreement. In addition, the Commitment Agreement provides the Company an option to reserve a specified portion of the capacity commitment for wafers that include certain additional technology beginning in calendar year 2023. If the Company exercises that option by August 31, 2021, then GlobalFoundries agrees to provide up to a maximum portion of the wafers pursuant to the capacity commitment with the additional technology. In exchange for the capacity commitment with the additional technology, the Company would pay an additional $10 million non-refundable fee and pre-pay an additional $20 million for future wafer purchases.
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Recently Issued Accounting Pronouncements (Policies) |
3 Months Ended |
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Jun. 26, 2021 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company adopted this ASU in the first quarter of fiscal year 2022, with no material impact to the financial statements. In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321) - Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force). This ASU clarifies the interaction of the accounting for equity securities and investments accounted for under the equity method of accounting, and the accounting for certain forward contracts and purchased options. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company adopted this ASU in the first quarter of fiscal year 2022, with no material impact to the financial statements. In May 2020, the SEC adopted final rules that amend the financial statement requirements for significant business acquisitions and dispositions. Among other things, the rules modify the significance tests and improve the disclosure requirements for acquired or to be acquired businesses and related pro forma financial information, the periods those financial statements must cover, and the form and content of the pro forma financial information. The final rules were effective January 1, 2021. The Company is currently evaluating the final rules and will incorporate applicable changes in conjunction with its recently-announced business acquisition described in Note 16 - Subsequent Events.
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Fair Value of Financial Instruments | The Company has determined that the only material 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 and marketable securities portfolio. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). •Level 1 - Quoted prices in active markets for identical assets or liabilities. •Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. •Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s cash equivalents and marketable securities portfolio consist of money market funds, debt securities, non-U.S. government securities and securities of U.S. government-sponsored enterprises and are reflected on our consolidated condensed balance sheets under the headings cash and cash equivalents, marketable securities, and long-term marketable securities. The Company determines the fair value of its marketable securities portfolio by obtaining non-binding market prices from third-party pricing providers on the last day of the quarter, whose sources may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value.
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Revenues | Disaggregation of revenue We disaggregate revenue from contracts with customers by product line and ship to location of the customer. During the fourth quarter of fiscal year 2021, we adjusted how we report product line revenue to better represent our business and strategic focus. Sales are designated in the product line categories of Audio and High-Performance Mixed-Signal. Performance obligations The Company's single performance obligation is the delivery of promised goods to the customer. The promised goods are explicitly stated in the customer contract and are comprised of either a single type of good or a series of goods that are substantially the same, have the same pattern of transfer to the customer, and are neither capable of being distinct nor separable from the other promised goods in the contract. This performance obligation is satisfied upon transfer of control of the promised goods to the customer, as defined per the shipping terms within the customer's contract. The vast majority of the Company's contracts with customers have an original expected term length of one year or less. As allowed by Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, the Company has not disclosed the value of any unsatisfied performance obligations related to these contracts. The Company’s products typically include a warranty period of to three years. These warranties qualify as assurance-type warranties, as goods can be returned for product non-conformance and defect only. As such, these warranties are accounted for under ASC 460, Guarantees, and are not considered a separate performance obligation. Contract balances Payments are typically due within 30 to 60 days of invoicing and terms do not include significant financing components or noncash consideration. There have been no material impairment losses on accounts receivable. There are no material contract assets or contract liabilities recorded on the consolidated condensed balance sheets. Transaction price The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods to the customer. Fixed pricing is the consideration that is agreed upon in the customer contract. Variable pricing includes rebates, rights of return, warranties, price protection and stock rotation. Rebates are granted as a customer account credit, based on agreed-upon sales thresholds. Rights of return and warranty costs are estimated using the "most likely amount" method by reviewing historical returns to determine the most likely customer return rate and applying materiality thresholds. Price protection includes price adjustments available to certain distributors based upon established book price and a stated adjustment period. Stock rotation is also available to certain distributors based on a stated maximum of prior billings. The Company estimates all variable consideration at the most likely amount that it expects to be entitled to receive. The estimate is based on current and historical information, including recent sales activity and pricing, available to the Company. Variable consideration is only included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company defers all variable consideration that does not meet the revenue recognition criteria.
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Segment Information | We determine our operating segments in accordance with FASB guidelines. Our Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker under these guidelines. The Company operates and tracks its results in one reportable segment, but reports revenue in two product lines, Audio and High-Performance Mixed-Signal. Our CEO receives and uses enterprise-wide financial information to assess financial performance and allocate resources, rather than detailed information at a product line level. Additionally, our product lines have similar characteristics and customers. They share support functions such as sales, public relations, supply chain management, various research and development and engineering support, in addition to the general and administrative functions of human resources, legal, finance and information technology. Therefore, there is no complete, discrete financial information maintained for these product lines. Revenue by product line is disclosed in Note 9 - Revenues.
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Marketable Securities (Tables) |
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Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-sale Securities | The following table is a summary of available-for-sale securities at June 26, 2021 (in thousands):
The following table is a summary of available-for-sale securities at March 27, 2021 (in thousands):
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Schedule of Cost and Estimated Fair Value of Available-for-sale Securities by Contractual Maturity | The cost and estimated fair value of available-for-sale securities by contractual maturities were as follows (in thousands):
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Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Financial Assets and Liabilities | The following summarizes the fair value of our financial instruments at June 26, 2021 (in thousands):
The following summarizes the fair value of our financial instruments at March 27, 2021 (in thousands):
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Derivative Financial Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Before-Tax Effect of Derivative Instruments Not Designated as Hedging Instruments | The before-tax effect of derivative instruments not designated as hedging instruments was as follows (in thousands):
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Accounts Receivable, net (Tables) |
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Accounts Receivable, after Allowance for Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accounts Receivable, net | The following are the components of accounts receivable, net (in thousands):
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Inventories (Tables) |
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Jun. 26, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories are comprised of the following (in thousands):
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Revenues (Tables) |
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Jun. 26, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Total net sales based on the product line disaggregation criteria described above are shown in the table below (in thousands). Prior periods were retrospectively adjusted to conform to the new product line categories.
The geographic regions that are reviewed are China, the United States, and the rest of the world. Total net sales based on the geographic disaggregation criteria described are as follows (in thousands):
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Income Taxes (Tables) |
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Jun. 26, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Provision for Income Taxes and Effective Tax Rates | The following table presents the provision for income taxes (in thousands) and the effective tax rates:
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Net Income Per Share (Tables) |
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Jun. 26, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table details the calculation of basic and diluted earnings per share for the three months ended June 26, 2021 and June 27, 2020 (in thousands, except per share amounts):
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Marketable Securities (Narrative) (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 26, 2021
USD ($)
security
|
Mar. 27, 2021
USD ($)
security
|
|
Debt Securities, Available-for-sale [Line Items] | ||
Gross unrealized losses | $ 324 | $ 315 |
Amortized cost on available for sale securities held at gross unrealized loss | $ 125,600 | $ 92,000 |
Securities in a continuous unrealized loss position for more than 12 months, number of securities | security | 0 | 0 |
Minimum | ||
Debt Securities, Available-for-sale [Line Items] | ||
Maturity period for highly-rated securities | 1 year | |
Maximum | ||
Debt Securities, Available-for-sale [Line Items] | ||
Maturity period for highly-rated securities | 3 years |
Marketable Securities (Schedule of Cost and Estimated Fair Value of Available-for-sale Securities by Contractual Maturity) (Details) - USD ($) $ in Thousands |
Jun. 26, 2021 |
Mar. 27, 2021 |
---|---|---|
Amortized Cost | ||
Within 1 year | $ 59,717 | $ 54,895 |
After 1 year | 310,288 | 310,297 |
Amortized Cost | 370,005 | 365,192 |
Estimated Fair Value | ||
Within 1 year | 60,503 | 55,698 |
After 1 year | 311,643 | 312,758 |
Estimated Fair Value | $ 372,146 | $ 368,456 |
Fair Value of Financial Instruments - Narrative (Details) |
Jun. 26, 2021
USD ($)
|
---|---|
Fair Value Disclosures [Abstract] | |
Amounts drawn under the credit facility | $ 0 |
Credit facility, fair value | $ 0 |
Derivative Financial Instruments (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 26, 2021
USD ($)
derivtive
|
Jun. 27, 2020
USD ($)
|
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Number of foreign currency derivatives held | derivtive | 1 | |
Notional value of foreign currency forward contract | $ 12,100 | |
Foreign currency forward contracts | Not Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain recognized in income | $ 332 | $ 1,183 |
Accounts Receivable, net (Components of Accounts Receivable, net) (Details) - USD ($) $ in Thousands |
Jun. 26, 2021 |
Mar. 27, 2021 |
---|---|---|
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Gross accounts receivable | $ 136,534 | $ 108,712 |
Allowance for doubtful accounts | 0 | 0 |
Accounts receivable, net | $ 136,534 | $ 108,712 |
Inventories (Schedule of Inventories) (Details) - USD ($) $ in Thousands |
Jun. 26, 2021 |
Mar. 27, 2021 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Work in process | $ 83,453 | $ 92,073 |
Finished goods | 109,269 | 81,190 |
Total inventories | $ 192,722 | $ 173,263 |
Revenues - Summary of Product Lines (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 26, 2021 |
Jun. 27, 2020 |
|
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 277,253 | $ 242,573 |
Audio Products | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 217,355 | 206,449 |
High-Performance Mixed-Signal Products | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 59,898 | $ 36,124 |
Revenues - Summary of Geographic Disaggregation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 26, 2021 |
Jun. 27, 2020 |
|
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 277,253 | $ 242,573 |
China | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 168,325 | 195,471 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 6,019 | 4,076 |
Rest of World | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 102,909 | $ 43,026 |
Revenues - Narrative (Details) |
3 Months Ended |
---|---|
Jun. 26, 2021 | |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Product warranty, term | 1 year |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Product warranty, term | 3 years |
Restructuring Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 26, 2021 |
Jun. 27, 2020 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs | $ 0 | $ 352 |
MEMS Restructuring | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs | $ 400 |
Income Taxes (Provision for Income Taxes) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 26, 2021 |
Jun. 27, 2020 |
|
Income Tax Disclosure [Abstract] | ||
Income before income taxes | $ 19,622 | $ 20,362 |
Provision for income taxes | $ 2,413 | $ 2,153 |
Effective tax rate | 12.30% | 10.60% |
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 26, 2021 |
Jun. 27, 2020 |
|
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 2,413 | $ 2,153 |
Effective tax rate | 12.30% | 10.60% |
Unrecognized tax benefits | $ 32,900 | |
Unrecognized tax benefits that would impact effective tax rate | 32,900 | |
Balance of accrued interest and penalties, net of tax | $ 4,400 |
Net Income Per Share (Calculation of Basic and Diluted Earnings (Loss) Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 26, 2021 |
Jun. 27, 2020 |
|
Numerator: | ||
Net income | $ 17,209 | $ 18,209 |
Denominator: | ||
Weighted average shares outstanding (in shares) | 57,582 | 58,313 |
Effect of dilutive securities (in shares) | 1,931 | 1,967 |
Weighted average diluted shares (in shares) | 59,513 | 60,280 |
Basic earnings per share (in dollars per share) | $ 0.30 | $ 0.31 |
Diluted earnings per share (in dollars per share) | $ 0.29 | $ 0.30 |
Net Income Per Share (Narrative) (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jun. 26, 2021 |
Jun. 27, 2020 |
|
Earnings Per Share [Abstract] | ||
Weighted average shares outstanding excluded from diluted calculation (in shares) | 114 | 240 |
Stockholders' Equity (Common Stock) (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Jun. 26, 2021 |
Jun. 27, 2020 |
|
Stockholders' Equity Note [Abstract] | ||
Common stock issued as part of stock incentive plan (in shares) | 0.1 | 0.1 |
Segment Information (Details) |
3 Months Ended |
---|---|
Jun. 26, 2021
product_line
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | segment | 1 |
Number of product lines | product_line | 2 |