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What changed in CIRRUS LOGIC, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CIRRUS LOGIC, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+278 added−268 removedSource: 10-K (2023-05-19) vs 10-K (2022-05-20)

Top changes in CIRRUS LOGIC, INC.'s 2023 10-K

278 paragraphs added · 268 removed · 205 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSee Note 15 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional details. The Company’s primary assembly and test houses include Advanced Semiconductor Engineering, Inc., Siliconware Precision Industries Co., Ltd., STATS ChipPAC Pte. Ltd., Amkor Technology, Inc. and SFA Semicon Co., Ltd.
Biggest changeThe Company’s primary assembly and test houses include Advanced Semiconductor Engineering, Inc., Amkor Technology, Inc., STATS ChipPAC Pte. Ltd., SFA Semicon Co., Ltd., and Siliconware Precision Industries Co., 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.
Cirrus Logic provides retirement planning programs with matching contributions, such as a 401(k) plan in the United States and defined contribution pension plans for our employees in other countries. We believe that these benefits, combined with our corporate culture, contribute to low voluntary employee turnover.
Cirrus Logic provides retirement planning programs with matching contributions, such as a 401(k) plan in the United States and defined contribution pension plans for our employees in other countries. We believe that these benefits, combined with our employee-centric culture, contribute to low voluntary employee turnover.
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 and assembly and test sources.
In most cases, we do not procure these materials ourselves; nevertheless, we are reliant on such materials for manufacturing 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 and assembly and test sources.
We do not anticipate any material effect on our business due to any patents expiring in 2022, 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.
We do not anticipate any material effect on our business due to any patents expiring in 2023, 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.
AUDIO PRODUCTS Cirrus Logic is a leading supplier of low-power, low-latency, high-precision audio components that are used in a variety of applications including smartphones, tablets, truly wireless headsets, l aptops, AR/VR headsets, home theater systems, automotive entertainment systems and professional audio systems.
AUDIO PRODUCTS Cirrus Logic is a leading supplier of low-power, low-latency, high-precision audio components that are used in a variety of applications including smartphones, tablets, l aptops, AR/VR headsets, home theater systems, automotive entertainment systems and professional audio systems.
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.
Our supply chain management organization is responsible for the management of all aspects of the fabrication, 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.
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 louder, high-fidelity sound, high-quality audio playback, voice capture, hearing augmentation and active noise cancellation.
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 louder, high-fidelity sound, high-quality audio playback, voice capture, and hearing augmentation.
We have an extensive portfolio of products: “codecs,” 3 Table of Contents which are components that integrate analog-to-digital converters (“ADCs”) and digital-to-analog converters (“DACs”) into a single integrated circuit ("IC"); “smart codecs,” which are codecs with integrated digital signal processing; boosted amplifiers; and standalone digital signal processors (“DSPs”).
We have an extensive portfolio of products: “codecs,” which are components that integrate analog-to-digital converters (“ADCs”) and digital-to-analog converters (“DACs”) into a single integrated circuit ("IC"); “smart codecs,” which are codecs with integrated digital signal processing; boosted amplifiers; and standalone digital signal processors (“DSPs”).
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, the People’s Republic of China, South Korea, Japan, Singapore, and Taiwan.
Our primary facility, which houses 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, the People’s Republic of China, South Korea, Japan, Singapore, and Taiwan.
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: Audio and High-Performance Mixed-Signal.
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: Audio and HPMS.
Our domestic sales force includes direct sales offices located primarily 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 derive our revenues from both domestic and international sales. Our domestic sales force includes direct sales offices located primarily 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.
The prices of certain 4 Table of Contents other basic materials, such as metals, gases and chemicals used in the production of circuits can increase as demand grows for these basic commodities.
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.
The Company also provides fitness facilities and classes at several locations, as well as other employee benefits including health screenings, COVID-19 testing and vaccinations, expanded time off for COVID-19, flu shots, free confidential mental health support and ergonomic assessments.
The Company also provides fitness facilities and classes at several locations, as well as other employee benefits including health screenings, COVID-19 testing and vaccinations, flu shots, free confidential mental health support, and ergonomic assessments.
Our U.S. patents expire in calendar years 2022 through 2041. 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.
Our U.S. patents expire in calendar years 2023 through 2042. 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.
For further discussion relating to the potential effects that compliance with government regulation may have upon our business, refer to "Item 1A. Risk Factors." Human Capital Our long-term success depends, in part, on our ability to continue to attract and retain highly qualified technical, marketing, engineering and administrative personnel.
For further discussion relating to the potential effects that compliance with government regulation may have upon our business, refer to "Item 1A. Risk Factors." Human Capital Our long-term success depends, in part, on attracting and retaining highly qualified technical, marketing, engineering and administrative talent.
As of March 26, 2022, our global workforce was 82 percent male and 18 percent female, and based on self-reported identification, our workforce in the United States was composed of 54 percent White, 34 percent Asian, 8 percent Hispanic or Latino, 2 percent Black or African American, and 2 percent Other.
As of March 25, 2023, our global workforce was 82 percent male and 18 percent female, and based on self-reported identification, our workforce in the United States was composed of 54 percent White, 33 percent Asian, 9 percent Hispanic or Latino, 2 percent Black or African American, and 2 percent Other.
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 26, 2022, we held approximately 4,000 pending and issued patents worldwide, which include approximately 1,350 granted U.S. patents, 440 U.S. pending patent applications and various international patents and applications.
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, 2023, we held approximately 4,300 pending and issued patents worldwide, which include approximately 1,430 granted U.S. patents, 430 U.S. pending patent applications and various international patents and applications.
HIGH-PERFORMANCE MIXED-SIGNAL PRODUCTS Drawing on our extensive mixed-signal design and low-power processing expertise, Cirrus Logic has expanded beyond our traditional audio domain into new categories where we provide a range of high-performance mixed-signal products, including haptic driver and sensing solutions, camera controllers, power conversion and control ICs and fast-charging ICs.
HPMS PRODUCTS Drawing on our extensive mixed-signal design and low-power processing expertise, Cirrus Logic has expanded beyond our traditional audio domain into new categories where we provide a range of HPMS products, including camera controllers, haptic and sensing solutions, and battery and power ICs.
In fiscal year 2022, our voluntary turnover rate was 9 percent, below the technology industry benchmarks (2021 Radford Salary Increase and Turnover Study). As of March 26, 2022, we had 1,591 full-time employees, of whom 71 percent were engaged in research and product development activities, 25 percent in sales, marketing, general and administrative activities, and 4 percent in manufacturing-related activities.
In fiscal year 2023, our voluntary turnover rate was 8 percent, below the technology industry benchmarks (2022 Aon/Radford Salary Increase and Turnover Study). As of March 25, 2023, we had 1,702 full-time employees, of whom 71 percent were engaged in research and product development activities, 24 percent in sales, marketing, general and administrative activities, and 5 percent in manufacturing-related activities.
While we continue to see new opportunities for growth in the coming years with audio products in both smartphones and applications beyond smartphones, we believe the largest opportunity to drive product diversification and fuel exciting avenues of growth in the coming years is with our high-performance mixed-signal product line.
Markets and Products The Company's product line categories are audio and HPMS. While we continue to see new opportunities for growth with audio products in both smartphones and applications beyond smartphones, we believe the largest opportunity to drive product diversification and fuel exciting avenues of growth in the coming years is with our HPMS product line.
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 in which we can leverage our expertise in advanced mixed-signal processing to solve complex problems.
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 low-power, high-precision mixed-signal processing to solve complex problems that span the analog to digital divide.
Our primary competitors include, but are not limited to, AKM Semiconductor Inc., Analog Devices Inc., Goodix Technology, Qualcomm Incorporated, Realtek Semiconductor Corporation, Renesas Electronics Corporation, Richtek, Shanghai Awinic 5 Table of Contents Technology Co., Ltd., Skyworks Solutions Inc., Southchip Semiconductor Technology (China), ST Microelectronics N.V., Synaptics Incorporated and Texas Instruments, Inc.
Our primary competitors include, but are not limited to, AKM Semiconductor Inc., Analog Devices Inc., Goodix Technology, Infineon Technologies, Monolithic Power Systems, Inc., Realtek Semiconductor Corporation, Renesas Electronics Corporation, Shanghai Awinic Technology Co., Ltd., Skyworks Solutions Inc., Southchip Semiconductor Technology (China), ST Microelectronics N.V., Synaptics Incorporated and Texas Instruments, Inc.
As of March 26, 2022, 13 percent of our employees worldwide were foreign nationals and 62 percent of our total workforce reside in the U.S., with 38 percent residing offshore. We also employ individuals on a temporary basis and use the services of contractors as necessary.
As of March 25, 2023, 16 percent of our employees worldwide were foreign nationals and 64 percent of our total workforce reside in the U.S., with 36 percent residing offshore. We also employ individuals on a temporary basis and use the services of contractors as necessary.
Our major customers are among the world’s leading electronics manufacturers. We target both large existing and emerging customers that obtain 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.
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 obtain value from our expertise in advanced analog and mixed-signal design processing, systems-level integrated circuit engineering and embedded software development.
See Note 10 - Revenues of the Notes to Consolidated Financial Statements contained in Item 8 for further details including sales by product line. See Note 20 — Segment Information, for details on sales and property, plant and equipment, net, by geographic locations.
Therefore, there is no discrete financial information maintained for these product lines. 5 Table of Contents See Note 10 - Revenues of the Notes to Consolidated Financial Statements contained in Item 8 for further details including sales by product line. See Note 20 — Segment Information, for details on sales and property, plant and equipment, net, by geographic locations.
See Note 10 - Revenues for disclosure of revenue by product line categories. The following provides a detailed discussion regarding our audio and high-performance mixed-signal product lines. Audio Products : Boosted amplifiers, codecs, smart codecs, analog-to-digital converters, digital-to-analog converters and standalone digital signal processors.
See Note 10 - Revenues for disclosure of revenue by product line categories. The following provides a detailed discussion regarding our audio and HPMS product lines. Audio Products : Boosted amplifiers, codecs, smart codecs, analog-to-digital converters, digital-to-analog converters and standalone digital signal processors. HPMS Products : Camera controllers, haptics and sensing solutions, battery and power ICs .
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.
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.
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.
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”), our third-party partners' and customers’ IP.
These laboratories may maintain small quantities of hazardous materials. While we believe we are in material compliance with applicable law concerning the safeguarding of these materials and with respect to other matters relating to health, safety and the environment, the risk of liability relating to hazardous conditions or materials cannot be eliminated completely.
While we believe we are in material compliance with applicable law concerning the safeguarding of these materials and with respect to other matters relating to health, safety and the environment, the risk of liability relating to hazardous conditions or materials cannot be eliminated completely. To date, we have not incurred significant expenditures relating to environmental compliance at our facilities.
These products are primarily used in smartphones to help deliver a more immersive and compelling user experience. This product line also includes legacy industrial and energy applications such as digital utility meters, power supplies, energy control, energy measurement and energy exploration. Customers, Marketing, and Sales We offer products worldwide through both direct and indirect sales channels.
These products are primarily used in smartphones to help deliver a more immersive and compelling user experience while also improving battery health and performance. This product line also includes legacy industrial and energy applications such as digital utility meters, power supplies, energy control, energy measurement and energy exploration.
The finished products are then tested before shipment to our customers. While we believe we are able to mitigate certain risks in the fabrication processes by using multiple outside foundries, an interruption of supply by one or more of these foundries could materially impact the Company.
While we believe we are able to mitigate certain risks in the fabrication processes by using multiple outside foundries, an interruption of supply by one or more of these foundries could materially impact the Company. We maintain business interruption insurance to help reduce the risk of wafer supply interruption; however, the impact of an interruption could exceed our insurance.
We also routinely post other important information on our website, including information specifically addressed to investors or posted on the "Ask the CEO" portion of our website. 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.
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 for purposes of complying with our disclosure obligations under SEC Regulation Fair Disclosure.
For each of fiscal years 2022, 2021, and 2020, our ten largest end customers, represented approximately 93 percent of our sales. For fiscal years 2022, 2021, and 2020, we had one end customer, Apple, Inc., who purchased through multiple contract manufacturers and represented approximately 79 percent, 83 percent, and 79 percent, of the Company’s total sales, respectively.
For fiscal years 2023, 2022, and 2021, we had one end customer, Apple, Inc., who purchased through multiple contract manufacturers and represented approximately 83 percent, 79 percent, and 83 4 Table of Contents percent, of the Company’s total sales, respectively. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2023, 2022, or 2021.
To date, we have not incurred significant expenditures relating to environmental compliance at our facilities nor have we experienced any material issues relating to employee health and safety. In addition to environmental and worker health and safety laws, our business is subject to various rules and regulations and executive orders relating to export controls and trade sanctions.
In addition to environmental and worker health and safety laws, our business is subject to various rules and regulations and executive orders relating to export controls and trade sanctions.
Our comprehensive benefits, such as health insurance coverage and emotional well-being support are tailored for each country. Our benefits focus on family care, including fertility coverage, paid parental leave, discounts for childcare, backup care and programs for new parents.
Our benefits focus on family care, including fertility coverage, paid parental leave, discounts for childcare, backup care, benefits for surrogacy and adoption assistance programs, and programs for new parents.
Cirrus Logic focuses on building strong engineering relationships with our customers’ product teams and works to develop highly differentiated components that address their technical and price requirements across product tiers.
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. 3 Table of Contents Cirrus Logic focuses on building strong engineering relationships with our customers’ product teams and works to develop highly differentiated components that address their technical and price requirements across product tiers.
We use a variety of foundries in the production of wafers, primarily supplied by GLOBALFOUNDRIES Inc., (“GlobalFoundries”) and Taiwan Semiconductor Manufacturing Company, Limited ("TSMC"). In fiscal year 2022, the Company entered a Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries to reserve capacity and set wafer pricing for products purchased pursuant to the agreement through calendar year 2026.
In fiscal year 2022, the Company entered a Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries to reserve capacity and set wafer pricing for products purchased pursuant to the agreement through calendar year 2026. See Note 15 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional details.
We expect to face additional competition from new entrants in our markets, which may include both large domestic and international IC manufacturers, as well as smaller, emerging companies.
Cirrus Logic is a leading supplier of audio and high-performance mixed-signal processing solutions including boosted amplifiers, codecs, smart codecs, camera controllers, haptic and sensing solutions, and battery and power ICs. We expect to face additional competition from new entrants in our markets, which may include both large domestic and international IC manufacturers, as well as smaller, emerging companies.
We believe that our properties and operations comply in all material respects with applicable laws protecting the environment and worker health and safety. As a fabless semiconductor company, we do not manufacture our own products but do maintain research and laboratory space at certain of our facilities to facilitate the development, evaluation and testing of our products.
As a fabless semiconductor company, we do not manufacture our own products but do maintain research and laboratory space at certain of our facilities to facilitate the development, evaluation, and testing of our 6 Table of Contents products. These laboratories may maintain small quantities of hazardous materials.
For more information on the commitment to our employees and other Environmental, Social and Governance ("ESG") topics visit https://www.cirrus.com/company/esg. 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 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. ITEM 1A. Risk Factors Our business faces significant risks.
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.
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.
In fiscal year 2022, we had no monetary losses as a result of legal proceedings associated with employee health and safety violations. Throughout the ongoing COVID-19 pandemic, we streamlined our safety protocols as appropriate for each location.
In fiscal year 2023, the Company had no monetary losses as a result of legal proceedings associated with employee health and safety violations, and have not received any notices of violation related 7 Table of Contents to health and safety at our facilities, nor have we ever had a work-related fatality.
We believe that we offer competitive compensation, training programs, and health and wellness benefits, designed to improve the quality of our employees’ lives, build long-term employee loyalty and attract top talent. Cirrus Logic prides itself on maintaining a robust employee training and professional development program to maximize our employees’ success.
This enables us to collect information that helps to identify and address challenges and continuously improve. We believe that we offer competitive compensation, learning and development programs, and health and wellness benefits, designed to improve the quality of our employees’ lives.
The Company strives to cultivate an inclusive workplace where all employees feel they belong, diverse backgrounds and perspectives are valued, and everyone has an opportunity to succeed. We have adopted strategies to create an even more inclusive and positive work environment.
At Cirrus Logic, our goal is to maintain an employee-centric culture that encourages innovation, teamwork, and individual growth. The Company strives to cultivate an inclusive workplace where all employees feel they belong, diverse backgrounds and perspectives are valued, and everyone has an opportunity to reach their full potential. Additionally, we value our employees' feedback and regularly seek their input.
No other customer or distributor represented more than 10 percent of net sales in fiscal years 2022, 2021, or 2020. Manufacturing As a fabless semiconductor company, we contract with third parties for wafer fabrication and product assembly and test.
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, primarily supplied by GLOBALFOUNDRIES Inc., (“GlobalFoundries”) and Taiwan Semiconductor Manufacturing Company, Limited ("TSMC").
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The Company has identified three growth vectors that are expected to fuel opportunities in the coming years. First, we anticipate maintaining our leadership position in smartphone audio. Second, we are focused on broadening sales of audio components in key profitable applications beyond smartphones. Third, we are applying our mixed-signal engineering expertise to develop solutions in new, adjacent high-performance mixed-signal applications.
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The Company is committed to our three-pronged strategy for growing our business: first, maintaining our leadership position in smartphone audio; second, increasing high-performance mixed-signal ("HPMS") content in smartphones; and third, leveraging our strength in audio and HPMS to expand into additional applications and markets with new and existing components.
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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. In fiscal year 2022, we also expanded our high-performance mixed-signal power products with the addition of fast-charging solutions through the Lion Semiconductor acquisition.
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For fiscal year 2023 and each of fiscal years 2022 and 2021, our ten largest end customers, represented approximately 92 percent and 93 percent of our sales, respectively.
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Markets and Products The Company's product line categories are Audio and High-Performance Mixed-Signal.
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We believe that our properties and operations comply in all material respects with applicable laws protecting the environment and worker health and safety.
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High-Performance Mixed-Signal Products : Camera controllers, haptic driver and sensing solutions, power conversion and control ICs and fast-charging ICs .
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Cirrus Logic prides itself on providing continuous learning and development opportunities, such as, technical training and professional development programs to support our employees’ growth. Our comprehensive benefits, such as health insurance coverage and emotional well-being support are tailored for each country.
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We maintain business interruption insurance to help reduce the risk of wafer supply interruption; however, the impact of an interruption could exceed our insurance.
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Additionally, in fiscal year 2023, we reported zero recordable and lost-time incidents to the U.S. Occupational Safety and Health Administration. Following the Covid-19 pandemic, our employees have returned to working in the office at least two days per week.
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Cirrus Logic is a leading supplier of audio and high-performance mixed-signal processing solutions including boosted amplifiers, codecs, smart codecs, haptic driver and sensing solutions, camera controllers, power conversion and control ICs and fast-charging ICs.
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We believe it is important to create opportunities for our hybrid workforce to collaborate and to make connections with their colleagues, supporting our culture of innovation. For more information on the commitment to our employees and other Environmental, Social and Governance ("ESG") topics visit https://www.cirrus.com/company/esg.
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Cirrus Logic’s goal, as it pertains to our employees, is to foster an employee-centric corporate culture that encourages innovation, teamwork and individual growth. We do this by creating programs and practices that motivate and reward our employees while helping their families thrive. We center everything we 6 Table of Contents do around our corporate vision, mission and core values.
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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 material may adversely affect our business operations.
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Additionally, in fiscal year 2022, we introduced new inclusive benefits for surrogacy and adoption assistance programs, that provide employees with reimbursement for certain related expenses.
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You should read the following cautionary statements in conjunction with the factors discussed elsewhere in this and other Cirrus Logic filings with the SEC.
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Our global programs are designed to keep our employees safe at work and provide resources and support to protect their social, emotional and physical well-being. We also continue to offer flexibility for remote working to enable our employees to remain productive while maintaining work-life balance.
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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. Summary of Risk Factors The following summarizes the principal factors that make an investment in the Company speculative or risky.
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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 (the "Exchange Act").
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This summary should be read in conjunction with the remainder of this “
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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.
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Variations of these types of words and similar expressions are intended to identify these forward-looking statements. Any statements that refer to our plans, beliefs, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements.
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Readers are cautioned that these forward-looking statements are predictions based on management's expectations as of the date of this filing 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.
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Factors that could cause actual results to differ materially from those indicated or implied by our forward-looking statements include, but are not limited to, those discussed in Item 1A.
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Risk Factors 7 Table of Contents and elsewhere in this report, as well as in the documents we file with the SEC, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
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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, and expressly disclaim any duty, to revise or update this information, whether as a result of new information, events or circumstances after the filing of this report with the SEC, except as required by law.
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We urge readers to carefully review and consider the various disclosures made in this Annual Report on Form 10–K and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business.
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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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

97 edited+37 added−22 removed115 unchanged
Biggest changeFor the twelve-month periods ending March 26, 2022, March 27, 2021, and March 28, 2020, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 79 percent, 83 percent and 79 percent of the Company’s total sales, respectively. 9 Table of Contents We may not be able to maintain or increase sales to certain of our key customers for a variety of reasons, including: ▪ 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.
Biggest changeWe may not be able to maintain or increase sales to certain of our key customers for a variety of reasons, including: - 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.
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.
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.
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.
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, including goodwill, becoming impaired as a result of technological advancements or worse-than-expected performance of the acquired business.
Acquiring companies or technologies 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, including goodwill, becoming impaired as a result of technological advancements or worse-than-expected performance of the acquired business.
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, including as a result of geopolitical conflict; ▪ delays resulting from difficulties in obtaining export licenses for technology, particularly in China; ▪ any changes in U.S. trade policy, including potential adoption and expansion of trade restrictions, higher tariffs, or cross border taxation by the U.S. government involving other countries, particularly China, that might impact overall customer demand for our products or affect our ability to manufacture and/or sell our products overseas; ▪ tariffs and other barriers and restrictions, particularly in China; ▪ competition with non-U.S. companies or other domestic companies entering non-U.S. markets in which we operate; ▪ longer sales and payment cycles; 14 Table of Contents ▪ problems in collecting accounts receivable; ▪ the burdens of complying with a variety of non-U.S. laws; and ▪ changes to economic, social, or political conditions in countries such as China, where we have significant operations.
Our international sales operations involve a number of other risks including, but not limited to: 13 Table of Contents - 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, including as a result of geopolitical conflict; - delays resulting from difficulties in obtaining export licenses for technology, particularly in China; - any changes in U.S. trade policy, including potential adoption and expansion of trade restrictions, higher tariffs, or cross border taxation by the U.S. government involving other countries, particularly China, that might impact overall customer demand for our products or affect our ability to manufacture and/or sell our products overseas; - tariffs and other barriers and restrictions, particularly in China; - competition with non-U.S. companies or other domestic companies entering non-U.S. markets in which we operate; - longer sales and payment cycles; - problems in collecting accounts receivable; - the burdens of complying with a variety of non-U.S. laws; and - changes to economic, social, or political conditions in countries such as China, where we have significant operations.
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.
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 adverse fluctuations in our future operating results on a quarterly or annual basis.
The forum selection provision may increase costs to bring a claim, discourage claims, or limit a stockholder’s ability to bring a claim in a judicial forum that such stockholder finds favorable for disputes with the Company or the Company’s directors, officers, or other employees, which may discourage such lawsuits against the Company or the Company’s directors, officers, and other employees.
This forum selection provision may increase costs to bring a claim, discourage claims, or limit a stockholder’s ability to bring a claim in a judicial forum that such stockholder finds favorable for disputes with the Company or the Company’s directors, officers, or other employees, which may discourage such lawsuits against the Company or the Company’s directors, officers, and other employees.
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, including compliance with local employment regulations; ▪ failure in non-U.S. regions to adequately protect our intellectual property, patent, trademarks, copyrights, know-how, and other proprietary rights and the risk of potential theft or compromise of our intellectual property; ▪ global health conditions and potential natural disasters, including those resulting from climate change; ▪ power or water shortages or other operational disruptions, including those resulting from extreme weather conditions; ▪ political, social and economic instability in international regions, including wars; ▪ international currency controls and exchange rate fluctuations; ▪ financial accounting and reporting burdens and complexities; ▪ vulnerability to terrorist groups targeting U.S. interests abroad; ▪ legal uncertainty regarding liability and compliance with non-U.S. laws and regulatory requirements; and ▪ changing U.S. regulation of foreign operations, including potential sanctions.
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, including compliance with local employment regulations; 17 Table of Contents - failure in non-U.S. regions to adequately protect our intellectual property, patent, trademarks, copyrights, know-how, and other proprietary rights and the risk of potential theft or compromise of our intellectual property; - global health conditions and potential natural disasters, including those resulting from climate change; - power or water shortages or other operational disruptions, including those resulting from extreme weather conditions; - political, social and economic instability in international regions, including wars; - international currency controls and exchange rate fluctuations; - financial accounting and reporting burdens and complexities; - vulnerability to terrorist groups targeting U.S. interests abroad; - legal uncertainty regarding liability and compliance with non-U.S. laws and regulatory requirements; and - changing U.S. regulation of foreign operations, including potential sanctions.
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.
We have entered into, and may enter into in the future, 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.
Our 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.
Our industry is intensely competitive and is frequently characterized by rapid technological change, price erosion, technological obsolescence, and a push towards integrated circuit ("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.
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 software necessary to integrate our products into our customers’ products; ▪ 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.
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; 18 Table of Contents - successfully developing and implementing software necessary to integrate our products into our customers’ products; - 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.
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; 19 Table of Contents ▪ news, commentary, and rumors emanating from the media relating to our customers, the industry, or us.
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.
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.
If we are unable to commercialize these technologies, our future results and profits could be negatively affected. Our investments into new markets subject us to additional risks. We may have limited or no experience in these markets, and our customers may not adopt our new offerings.
Our Bylaws provide, to the fullest extent permitted by law, that, unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware or, if the Court of Chancery does not have jurisdiction, 21 Table of Contents a state court located within the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware, will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for certain legal actions between the Company and its stockholders.
Our Bylaws provide, to the fullest extent permitted by law, that, unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware or, if the Court of Chancery does not have jurisdiction, a state court located within the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware, will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for certain legal actions between the Company and its stockholders.
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; ▪ 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.
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; - 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; - the failure of our new products to achieve market acceptance; and - any changes to a customer's future product plans.
The ownership of our U.S. 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; ▪ 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. 22 Table of Contents ITEM 1B.
The ownership of our U.S. 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; - 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 26 Table of Contents the buildings as a result of fire, floods, or other natural disasters.
Despite our receipt of licenses, BIS Entity List restrictions may also encourage foreign customers to seek a greater supply of similar or substitute products from competitors or other third parties who are not subject to these restrictions or to develop their own solutions, especially as the Chinese government develops its domestic semiconductor industry.
Despite our receipt of licenses, BIS Entity List restrictions may also encourage foreign customers to seek a greater supply of similar or substitute products from competitors or other third parties who are not subject to these restrictions or to develop their own solutions, especially as the Chinese government develops its domestic semiconductor 12 Table of Contents industry.
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.
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. 10 Table of Contents In some cases, our requirements may represent a small portion of the total production of the third-party suppliers.
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. For example, we rely on several third-party suppliers located in Taiwan.
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. 16 Table of Contents For example, we rely on several third-party suppliers located in Taiwan.
If significant tariffs or other restrictions are placed on goods exported from China or any related countermeasures are taken, our revenue and results of operations may be materially harmed. These tariffs may also make our customers’ products more expensive for consumers, which may reduce consumer demand.
If significant tariffs or other restrictions are placed on goods exported from China or any related counter-measures are taken, our revenue and results of operations may be materially harmed. These tariffs may also make our customers' products more expensive for consumers, which may reduce consumer demand.
Our customers, particularly in the portable market, could potentially transition to different audio and system architectures, develop their own competing technologies and integrated circuits, integrate the functionality that our integrated circuits and software have historically provided into other components in their systems, or eliminate certain functionality that our products provide in their future end products.
Our customers, particularly in the portable market, could potentially transition to different audio and system architectures, develop their own competing technologies and ICs, integrate the functionality that our ICs and software have historically provided into other components in their systems, or eliminate certain functionality that our products provide in their future end products.
In the U.S., where a significant portion of our research and 12 Table of Contents development teams are located, tightening of immigration controls may adversely affect the employment status of non-U.S. engineers and other key technical employees or further impact our ability to hire new non-U.S. employees.
In the U.S., where a significant portion of our research and development teams are located, tightening of immigration controls may adversely affect the employment status of non-U.S. engineers and other key technical employees or further impact our ability to hire new non-U.S. employees.
These government trade policies may materially adversely affect sales and operations with current customers and impede our ability to develop relationships with new customers.
These government trade policies may materially adversely affect our sales and operations with current customers as well as impede our ability to develop relationships with new customers.
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. 16 Table of Contents We continue to invest in research and development efforts for several new markets.
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.
Additionally, export restrictions imposed by the U.S. government, including the addition of licensing requirements by the BIS through the addition of companies to the BIS Entity List as well as trade restrictions imposed by the U.S. related to goods imported from regions in China with records of forced labor and other human rights issues, may require us to suspend our business with certain international customers and/or manufacturing entities if we conclude or are notified by the U.S. government that such business presents a risk of noncompliance with U.S. regulations.
Additionally, export restrictions imposed by the U.S. government, including the addition of licensing requirements by the United States Department of Commerce's Bureau of Industry and Security ("BIS") through the addition of companies to the BIS Entity List, as well as trade restrictions imposed by the U.S. related to goods imported from regions in China with records of forced labor and other human rights issues, may require us to suspend our business with certain international customers and/or manufacturing entities if we conclude or are notified by the U.S. government that such business presents a risk of noncompliance with U.S. regulations.
Although the final resolution of these matters is uncertain, 18 Table of Contents the Company believes adequate amounts have been reserved for any adjustments to the provision for income taxes that may ultimately result.
Although the final resolution of these matters is uncertain, the Company believes adequate amounts have been reserved for any adjustments to the provision for income taxes that may ultimately result.
We have significant international sales, and risks associated with these sales could harm our operating results. International sales represented 98 percent of our net sales in each of fiscal years 2022 and 2021, and 99 percent of our net sales in fiscal year 2020. We expect international sales to continue to represent a significant portion of product sales.
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 2023 and 98 percent in each of fiscal years 2022 and 2021. We expect international sales to continue to represent a significant portion of product sales.
Capacity constraints could further result in increased prices in our supply chain, which, if we are unable 8 Table of Contents to increase our selling prices or if we have previously committed to pricing, could result in lower revenues and margins that could adversely affect our financial results.
Capacity constraints could further result in increased prices in our supply chain, which, if we are unable to increase our selling prices or if we have previously committed to pricing, could result in lower revenues and margins that could adversely affect our financial results.
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.
If the average selling price of any of our products declines or we are unable to pass on increased supply costs to our customers, 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.
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; and ▪ product obsolescence, price erosion, competitive developments, and other competitive factors.
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; and - product obsolescence, price erosion, competitive developments, and other competitive factors. 22 Table of Contents Our stock price has been and is likely to continue to be volatile.
We use third parties to manufacture, assemble, package, and test the vast majority of our products.
We use third parties to fabricate, assemble, package, and test the vast majority of our products.
To the extent that we do not timely develop additional capacity or transition to smaller geometries, experience difficulties in shifting to smaller geometries, or have significant quality or reliability issues, our results could be materially adversely affected.
To the extent that we do not timely develop or 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.
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.
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. 19 Table of Contents 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.
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.
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. We have been and may continue to be adversely impacted by global economic conditions.
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 we will ultimately be 24 Table of Contents successful in any lawsuit, nor can we provide assurances that any patent owned by us will not be invalidated, circumvented, or challenged.
Our business may not generate cash flow from operations in the future sufficient to satisfy our obligations or to make necessary capital expenditures.
Our 23 Table of Contents business may not generate cash flow from operations in the future sufficient to satisfy our obligations or to make necessary capital expenditures.
Our principal competitors in these markets include AKM Semiconductor Inc., Analog Devices Inc., Goodix Technology, Qualcomm Incorporated, Realtek Semiconductor Corporation, Renesas Electronics Corporation, Richtek Technology, Shanghai Awinic Technology Co., Ltd., Skyworks Solutions Inc., Southchip Semiconductor Technology (China), ST Microelectronics N.V., Synaptics Incorporated and Texas Instruments, Inc.
Our principal competitors in these markets include AKM Semiconductor Inc., Analog Devices Inc., Goodix Technology, Infineon Technologies, Monolithic Power Systems, Inc., Realtek Semiconductor Corporation, Renesas Electronics Corporation, Shanghai Awinic Technology Co., Ltd., Skyworks Solutions Inc., Southchip Semiconductor Technology (China), ST Microelectronics N.V., Synaptics Incorporated and Texas Instruments, Inc.
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.
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.
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.
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.
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 and our operating results could be harmed.
Because our expense levels 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 and our operating results could be harmed in any particular quarter.
The number of technology companies in the geographic areas in which we operate is greater than it has been historically. In addition, some companies in our industry have announced plans to adopt flexible remote work arrangements that further increase competition for talent.
Competition for highly qualified personnel in our industry, particularly for employees with technical backgrounds, is intense. The number of technology companies in the geographic areas in which we operate is greater than it has been historically. In addition, some companies in our industry have announced plans to adopt flexible remote work arrangements that further increase competition for talent.
Even if additional capacity is available elsewhere, the switching and/or qualifying of additional suppliers could be an expensive process and could take as long as six to twelve months to complete, which could result in material adverse fluctuations to our operating results.
Other suppliers may not be available at the time we seek to switch or qualify additional suppliers. Even if additional capacity is available elsewhere, the switching and/or qualifying of additional suppliers could be an expensive process and could take as long as six to twelve months to complete, which could result in material adverse fluctuations to our 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.
In addition, difficulties associated with adapting our technology and product design to the proprietary process technology and design rules of new foundries can lead to complications resulting in delays and/or reduced yields of our products.
As of March 26, 2022, the Company did not have an outstanding balance under the Revolving Credit Facility.
As of March 25, 2023, the Company did not have an outstanding balance under the Revolving Credit Facility.
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, including software or firmware developed by us and/or third parties.
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, including software or firmware developed by us and/or third parties.
For each of the twelve-month periods ending March 26, 2022, March 27, 2021, and March 28, 2020, our ten largest end customers represented approximately 93 percent of our sales.
For the twelve-month period ending March 25, 2023, and each of the twelve-month periods ending March 26, 2022, and March 27, 2021 our ten largest end customers represented approximately 92 percent and 93 percent of our sales, respectively.
These covenants could 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. 20 Table of Contents A breach of any of these covenants could result in a default under the Second Amended Credit Agreement.
These covenants could 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.
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.
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.
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. Our results may be affected by fluctuation in sales in the consumer electronics and smartphone markets.
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.
If market conditions change and wafer prices in the market decrease significantly below what is contemplated in the agreement, the agreement may put us at a competitive disadvantage relative to our competitors.
Additionally, the agreement sets forth pricing for wafer purchases pursuant to the agreement through 2026. If market conditions change and wafer prices in the market decrease significantly below what is contemplated in the agreement, the agreement may put us at a competitive disadvantage relative to our competitors.
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.
Legal and Regulatory Risks 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.
These developing products and market segments may not grow as significantly as projected, or at all, and we may not realize an adequate return on our investments or may be required to write-down the value of certain tangible and intangible assets. Our products are increasingly complex and could contain defects, which could result in material costs to us.
These developing products and market segments may not grow as significantly or as quickly as projected, or at all, and we may not realize an adequate return on our investments or may be required to write-down the value of certain tangible and intangible assets.
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.
Our products may be subject to average selling prices that decline over time. If we are unable to maintain or increase 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.
A failure to prevent or mitigate such an attack could harm our business reputation, diminish our competitive position in the market, and expose us to significant expense and liability. 17 Table of Contents The costs to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, phishing attempts, ransomware, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not succeed and could result in interruptions, delays, an inability to access information, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions.
The costs to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, phishing attempts, ransomware, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not succeed and could result in interruptions, delays, an inability to access information, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions.
Any such litigation could be expensive, take significant time, and divert management’s attention. Financial Risks 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.
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. Financial Risks 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.
Further, we are subject to increased government laws, regulations, and other standards that impose operational and reporting requirements related to ESG matters, and we will likely be subject to further evolving ESG reporting standards in the future. Collecting, measuring, and reporting ESG information and metrics in response to these increased requirements can be costly, difficult, and time consuming.
Further, we are subject to increased government laws, regulations, and other standards that impose operational and reporting requirements related to ESG matters, and we will likely be subject to further evolving ESG reporting standards in the future.
Cancellations, reductions, or delays of orders from any significant customer could have an adverse effect on our business, financial condition, and results of operations.
Cancellations, reductions, or delays of orders from any significant customer could have an adverse effect on our business, financial condition, and results of operations and may require us to recognize excess inventory write-off charges.
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.
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. 20 Table of Contents Any of these events could materially and adversely affect our business, operating results, or financial condition.
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.
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.
Moreover, certain immigration policies in the U.S. may make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the U.S., additionally limiting the pool of available talent.
Moreover, certain immigration policies in the U.S. may make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the U.S., additionally limiting the pool of available talent. There are significant costs to the Company associated with attracting and retaining qualified personnel in key technology positions.
Moreover, our reliance on certain customers may continue to increase, which could heighten the risks associated with having key customers, including making us more vulnerable to significant reductions in revenue, margins and earnings, pricing pressure, and other adverse effects on our business.
Our reliance on certain customers may continue to increase, which could heighten the risks associated with having key 9 Table of Contents customers, including making us more vulnerable to significant reductions in revenue, margins and earnings, pricing pressure, and other adverse effects on our business. We are dependent on third-party manufacturing and supply chain relationships for all of our products.
Our prioritization of security measures and remediation of known vulnerabilities may prove inadequate and we may be unable to anticipate or protect against attacks.
Our prioritization of security measures and remediation of known vulnerabilities may prove inadequate and we may be unable to anticipate or protect against attacks. If an incident occurs, we may be unable to detect it for an extended period of time.
This risk is potentially heightened for those customers with whom we have less experience regarding the reliability of their forecasts. While the industry is experiencing manufacturing capacity constraints, it is also possible that some customers may place orders for our products that exceed their actual demand and may cancel all or portions of their order if circumstances change.
Additionally, while the industry is experiencing manufacturing capacity constraints, it is possible that some customers may place orders for our products that exceed their actual demand and may cancel all or portions of their order if circumstances change.
Any of the foregoing could materially harm our liquidity, financial condition and results of operations and could put us at a disadvantage relative to our competitors.
Any of the foregoing could materially harm our liquidity, financial condition and results of operations and could put us at a disadvantage relative to our competitors. Our results may be affected by fluctuation in sales in the consumer electronics and smartphone markets.
If an incident occurs, we may be unable to detect it for an extended period of time. 11 Table of Contents Any breach of our security measures or the loss, inadvertent disclosure, or unapproved dissemination of proprietary information or sensitive or confidential data about us, our customers, our suppliers or our employees, including the potential loss or disclosure of such information or data, could result in numerous risks and adverse consequences.
Any breach of our security measures or the loss, inadvertent disclosure, or unapproved dissemination of proprietary information or sensitive or confidential data about us, our customers, our suppliers or our employees, including the potential loss or disclosure of such information or data, could result in numerous risks and adverse consequences.
There are significant costs to the Company associated with attracting and retaining qualified personnel in key technology positions. Recruiting and employee costs, such as cash and stock-based compensation, have increased relative to historic levels and may continue to increase, which could adversely affect our results of operations.
Recruiting and employee costs, such as cash and stock-based compensation, have increased relative to historic levels and may continue to increase, which could adversely affect our results of operations.
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.
In general, we rely on customers issuing purchase orders to buy our products rather than long-term supply contracts. Customers on occasion cancel, reschedule, or change future product plans on short notice without incurring significant penalties.
These supply challenges are currently limiting our ability to fully satisfy increases in demand for some of our products.
These supply challenges have impacted, and may continue to impact, our ability to fully satisfy increases in demand for some of our products.
Moreover, our dependence on a limited number of key customers may make it easier for key customers to pressure us to reduce prices.
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 prices.
Strategic and Industry Risks 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.
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.
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 products, or increase the costs of manufacturing our products.
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 products, or increase the costs of manufacturing our products. 11 Table of Contents 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.
Competitive pressures could reduce market acceptance of our products, reduce selling prices, and increase expenses, which could adversely affect our business and financial condition. Because we depend on subcontractors internationally to perform key manufacturing functions for us, we are subject to political, economic, climate and natural disaster risks that could disrupt the fabrication, assembly, packaging, or testing of our products.
Because we depend on subcontractors internationally to perform key manufacturing functions for us, we are subject to political, economic, climate 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.
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.
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.
We are also subject to the examination of our tax returns and other tax matters by the U.S Internal Revenue Service (“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.
For discussion of our income taxes, see Note 19, "Income Taxes." We are also subject to the examination of our tax returns and other tax matters by the U.S Internal Revenue Service (“IRS”) and other tax authorities and governmental bodies.
In the event of a default under the Second Amended 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.
A breach of any of these covenants could result in a default under the Second Amended Credit Agreement. In the event of a default under the Second Amended Credit Agreement, the lenders could elect to declare all amounts outstanding to be immediately due and payable.
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.
Accordingly, we have in the past and may in the future 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, and notwithstanding our efforts, our customers may not be obligated to purchase new products that we develop for them, which could impact our operating results, financial condition, and cash flows.
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.
For example, there is limited coverage available with respect to the services provided by our third-party foundries and assembly and test subcontractors.
In addition, we have, and may again in the future, entered into customer agreements providing for exclusivity periods during which we may only sell specified products or technology to a specific customer. Even without exclusivity periods, the products that we develop are often specific to our customer's system architecture and frequently cannot be sold to other customers.
Our customers frequently place considerable pressure on us to meet tight development schedules. In addition, we have entered, and may again enter in the future, into customer agreements providing for exclusivity periods during which we may only sell specified products or technology to a specific customer.
Alternatively, if a court were to find the forum selection provision contained in the Company’s Bylaws to be inapplicable or unenforceable in an action, the Company could incur additional costs associated with resolving such action in other jurisdictions.
Alternatively, if a court were to find the forum selection provision contained in the Company’s Bylaws to be inapplicable or unenforceable in an action, the Company could incur additional costs associated with resolving such action in other jurisdictions. 25 Table of Contents General Risks Corporate social responsibility initiatives, specifically related to environmental, social and governance ("ESG") matters, may impose additional costs and expose us to emerging areas of risk.
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, margins, and earnings.
We have experienced pricing pressure from certain key customers and we expect that the average selling prices ("ASPs") for certain of our products will decline from time to time, potentially reducing our revenue, margins, and earnings. Our key customer relationships often require us to develop new products that may involve significant technological challenges.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDesign Centers Sales Support Offices – International Austin, Texas Beijing, China Mesa, Arizona Shanghai, China Salt Lake City, Utah Shenzhen, China San Francisco, California Tokyo, Japan Edinburgh, Scotland, United Kingdom Singapore Newbury, England, United Kingdom Seoul, South Korea London, England, United Kingdom Taipei, Taiwan See Note 11 — Leases of the Notes to Consolidated Financial Statements contained in Item 8 for further detail.
Biggest changeDesign Centers Sales Support Offices – International Austin, Texas Beijing, China Mesa, Arizona Shanghai, China Cupertino, California Shenzhen, China Edinburgh, Scotland, United Kingdom Tokyo, Japan Newbury, England, United Kingdom Singapore Seoul, South Korea Taipei, Taiwan See Note 11 — Leases of the Notes to Consolidated Financial Statements contained in Item 8 for further detail.
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 281,000 square feet. This includes approximately 275,000 square feet of leased space that houses a mixture of administrative personnel as well as research and development personnel.
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 281,000 square feet, which includes approximately 275,000 square feet of leased space that houses a mixture of administrative personnel as well as research and development personnel.
ITEM 2. Properties As of March 26, 2022, 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.
ITEM 2. Properties As of March 25, 2023, 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.
Below is a detailed schedule that identifies our principal locations of occupied leased and owned property as of March 26, 2022, with various contractual lease terms through calendar year 2033. We believe that these facilities are suitable and adequate to meet our current operating needs.
Below is a detailed schedule that identifies our principal locations of occupied leased and owned property as of March 25, 2023, with various contractual lease terms through calendar year 2033. We believe that these facilities are suitable and adequate to meet our current operating needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe program does not have an expiration date, does not obligate the Company to repurchase any particular amount of common stock, and may be modified or suspended at any time at the Company's discretion. 24 Table of Contents 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”). 3/25/2017 3/31/2018 3/30/2019 3/28/2020 3/27/2021 3/26/2022 Cirrus Logic, Inc. 100.00 67.65 70.05 103.09 138.21 146.00 S&P 500 Index 100.00 114.93 125.85 115.08 183.07 212.22 S&P 500 Semiconductors Index 100.00 138.11 144.78 151.57 272.04 355.96 (1) The graph assumes that $100 was invested in our common stock and in each index at the market close on March 25, 2017, and that all dividends were reinvested.
Biggest changeBased on our analysis of this provision, we do not believe that this legislation will have a material impact on our financial statements. 28 Table of Contents Stock Price Performance Graph The following graph and table show a comparison of the five-year cumulative total stockholder return ("TSR"), calculated on a dividend reinvestment basis, for Cirrus Logic, the NASDAQ Composite, the Philadelphia Semiconductor Index, 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”). 3/31/2018 3/30/2019 3/28/2020 3/27/2021 3/26/2022 3/25/2023 Cirrus Logic, Inc. 100.00 103.54 152.40 204.30 215.82 259.84 NASDAQ Composite Index 100.00 110.63 108.51 191.57 207.95 175.09 Philadelphia Semiconductor Index 100.00 107.11 116.51 246.76 283.42 254.78 S&P 500 Index 100.00 109.50 100.13 159.29 184.65 164.18 S&P 500 Semiconductors Index 100.00 104.83 109.75 196.98 257.74 236.23 (1) The graph assumes that $100 was invested in our common stock and in each index at the market close on March 31, 2018, and that all dividends were reinvested.
We do not anticipate declaring or paying in the foreseeable future any dividends on our capital stock. Any future determination to pay dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend upon our results of operations, financial condition, contractual restrictions, capital requirements, and other factors.
Any future determination to pay dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend upon our results of operations, financial condition, contractual restrictions, capital requirements, and other factors.
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's Global Select Market under the symbol CRUS. As of May 18, 2022, there were approximately 351 holders of record of our common stock.
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's Global Select Market under the symbol CRUS.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information about purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the three months ended March 26, 2022 (in thousands, except per share amounts): Monthly Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) December 26, 2021 - January 22, 2022 — $ — — $ 267,514 January 23, 2022 - February 19, 2022 631 83.94 631 214,589 February 20, 2022 - March 26, 2022 261 84.56 261 192,514 Total 892 $ 84.12 892 $ 192,514 (1) The Company currently has one active share repurchase program: the $350 million share repurchase program authorized by the Board of Directors in January 2021.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information about purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the three months ended March 25, 2023 (in thousands, except per share amounts): Monthly Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) December 25, 2022 - January 21, 2023 — $ — — $ 536,131 January 22, 2023 - February 18, 2023 134 105.45 134 521,979 February 19, 2023 - March 25, 2023 203 102.54 203 501,131 Total 337 $ 103.70 337 $ 501,131 (1) The Company currently has two active share repurchase authorizations: $350 million in share repurchases authorized by the Board of Directors in January 2021 and $500 million in share repurchases authorized by the Board of Directors in July 2022.
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.
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. (3) Prior to fiscal year 2023, the Company presented the S&P 500 Index and the S&P 500 Semiconductors Index, included above.
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 29, 2022 (the “Proxy Statement”) is incorporated herein by reference. 23 Table of Contents Dividend Policy We have not paid any dividends on our capital stock.
As of May 17, 2023, there were approximately 344 holders of record of our common stock. 27 Table of Contents 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, 2023 (the “Proxy Statement”) is incorporated herein by reference.
The Company repurchased 0.9 million shares of its common stock for $75.0 million during the fourth quarter of fiscal year 2022. 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 26, 2022.
The Company repurchased 0.3 million shares of its common stock for $35.0 million during the fourth quarter of fiscal year 2023. All shares of our common stock that were repurchased were retired as of March 25, 2023.
The repurchases are to be funded from existing cash and intended to be effected from time to time in accordance with applicable securities laws through the open market or in privately negotiated transactions. The timing of the repurchases and the actual amount purchased depend on a variety of factors including general market and economic conditions and other corporate considerations.
The repurchases are to be funded from existing cash and intended to be effected from time to time in accordance with applicable securities laws through the open market, including pursuant to a Rule 10b5-1 trading plan, or in privately negotiated transactions.
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Dividend Policy We have not paid any dividends on our capital stock. We do not anticipate declaring or paying in the foreseeable future any dividends on our capital stock.
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The timing of the repurchases and the actual amount purchased depend on a variety of factors including general market and economic conditions and other corporate considerations. The program does not have an expiration date, does not obligate the Company to repurchase any particular amount of common stock, and may be modified or suspended at any time at the Company's discretion.
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On August 16, 2022, the U.S. government enacted the Inflation Reduction Act, which, among other things, implemented a 1 percent excise tax on net stock repurchases.
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The change in indices in the current fiscal year was made to include: (i) the Nasdaq Composite Index - the exchange where the Company's equity securities are traded; and (ii) the Philadelphia Semiconductor Index, a published semiconductor industry index used to determine certain components of the Company's compensation to executives.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change“Risk Factors” of this Form 10-K and elsewhere in this report, as well as in the documents we file with the SEC, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. 25 Table of Contents Critical Accounting Estimates 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.
Biggest changeCritical Accounting Estimates 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 recorded income tax expense of $27.9 million in fiscal year 2021 on pre-tax income of $245.2 million, yielding an effective tax rate of 11.4 percent.
We recorded income tax expense of $27.9 million in fiscal year 2021 on pre-tax income of $245.2 million, yielding an effective tax provision rate of 11.4 percent.
Operating cash flow during fiscal year 2022 was related to the cash components of our net income and a $316.1 million unfavorable change in working capital, primarily as a result of increases in long-term prepaid wafers associated with terms of the Capacity Reservation Agreement with GlobalFoundries (discussed further in Note 15 - Commitments and Contingencies of the Notes to the Consolidated Financial 29 Table of Contents Statements), accounts receivables and other assets (a portion of which resulted from terms of the Capacity Reservation Agreement with GlobalFoundries), partially offset by increases in acquisition-related liabilities and decreases in inventory for the period.
Operating cash flow during fiscal year 2022 was related to the cash components of our net income and a $316.1 million unfavorable change in working capital, primarily as a result of increases in long-term prepaid wafers associated with terms of the Capacity Reservation Agreement with GlobalFoundries (discussed further in Note 15 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements), accounts receivables and other assets (a portion of which resulted from terms of the Capacity Reservation Agreement with GlobalFoundries), partially offset by increases in acquisition-related liabilities and decreases in inventory for the period.
Interest Expense The Company reported interest expense of $0.9 million, $1.1 million and $1.1 million for fiscal years 2022, 2021, and 2020, respectively, primarily as a result of the Revolving Credit Facility, described in Note 9.
Interest Expense The Company reported interest expense of $0.9 million, $0.9 million and $1.1 million for fiscal years 2023, 2022, and 2021, respectively, primarily as a result of the Revolving Credit Facility, described in Note 9.
In fiscal year 2021, cash flow from operations was $348.9 million. Operating cash flow during fiscal year 2021 was related to the cash components of our net income and a $33.2 million favorable change in working capital.
In fiscal year 2021, cash flow from operations was $348.9 million. Operating cash flow during fiscal year 2021 was related to the cash components of our net income, offset by a $33.2 million favorable change in working capital.
International sales, including sales to U.S.-based end customers that manufacture products through contract manufacturers or plants located overseas, were approximately $1.8 billion in fiscal year 2022 and $1.3 billion in each of fiscal years 2021 and 2020, representing 98 percent of net sales in fiscal years 2022 and 2021, and 99 percent in fiscal year 2020.
International sales, including sales to U.S.-based end customers that manufacture products through contract manufacturers or plants located overseas, were approximately $1.8 billion in in each of fiscal years 2023 and 2022, and $1.3 billion in fiscal year 2021, representing 97 percent of net sales in fiscal year 2023, and 98 percent in fiscal years 2022 and 2021.
Provision for Income Taxes We recorded income tax expense of $42.3 million in fiscal year 2022 on pre-tax income of $368.7 million, yielding an effective tax rate of 11.5 percent.
We recorded income tax expense of $42.3 million in fiscal year 2022 on pre-tax income of $368.7 million, yielding an effective tax rate of 11.5 percent.
Investing Activities In fiscal year 2022, the Company used $18.4 million in cash for investing activities primarily related to $276.9 million associated with the acquisition of Lion Semiconductor, Inc. ("Lion") and capital expenditures and technology investments of $30.0 million, partially offset by $288.5 million in net sales of marketable securities.
In fiscal year 2022, the Company used approximately $18.4 million in cash for investing activities principally related to $276.9 million associated with the acquisition of Lion and capital expenditures and technology investments of $30.0 million, partially offset by $288.5 million in net sales of marketable securities.
See Part II, Item 8 Notes to Consolidated Financial Statements Note 9 - Revolving Credit Facility, Note 11 - Leases and Note 15 - Commitments and Contingencies for additional information related to these contractual obligations. 30 Table of Contents
See Part II, Item 8 Notes to Consolidated Financial Statements Note 9 - Revolving Credit Facility, Note 11 - Leases and Note 15 - Commitments and Contingencies for additional information related to these contractual obligations.
Other Income (Expense) In fiscal years 2022, 2021, and 2020 the Company reported $1.7 million, $2.8 million, and $(1.6) million respectively, in other income (expense), related to remeasurement on foreign currency denominated monetary assets and liabilities and other non-operating income and expenses.
Other Income (Expense) In fiscal years 2023, 2022, and 2021 the Company reported $(3.4) million, $1.7 million, and $2.8 million respectively, in other income (expense), related to remeasurement on foreign currency denominated monetary assets and liabilities and other non-operating income and expenses.
We believe our expected future cash earnings, existing cash, cash equivalents, investment balances, and available borrowings under our Revolving 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.
We believe our expected future cash earnings, existing cash, cash equivalents, investment balances, and available borrowings under our Revolving Credit Facility will be sufficient to meet our capital requirements both domestically and internationally, in the short-term (i.e. the next 12 months) and in the long-term, although we could be required, or could elect, to seek additional funding prior to that time.
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 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.
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 2022. Overall gross margin of 51.7 percent for fiscal year 2021 reflects a decrease from fiscal year 2020 gross margin of 52.6 percent.
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 2023. Overall gross margin of 51.8 percent for fiscal year 2022 reflects a slight increase from fiscal year 2021 gross margin of 51.7 percent.
The increase was attributable to increased employee-related expenses, primarily driven by a 9.0 percent increase in total R&D headcount, which was mostly associated with the expansion of our power-related products team, amortization of acquisition intangibles, variable compensation, acquisition-related, stock-based compensation, and facilities-related costs, offset by increased R&D incentives and reduced product development costs.
The increase was attributable to increased employee-related expenses, primarily driven by a 9.0 percent increase in total R&D headcount, amortization of acquisition intangibles, variable compensation, acquisition-related, stock-based compensation, and facilities-related costs, offset by increased R&D incentives and reduced product development costs.
The Company achieved net income of $217.3 million in fiscal year 2021, which included an income tax provision in the amount of $27.9 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.
The Company achieved net income of $326.4 million in fiscal year 2022, which included an income tax provision in the amount of $42.3 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 26, 2022 March 27, 2021 March 28, 2020 Net sales 100 % 100 % 100 % Gross margin 52 % 52 % 53 % Research and development 23 % 25 % 27 % Selling, general and administrative 8 % 10 % 10 % Restructuring — % — % 2 % Income from operations 21 % 17 % 14 % Interest income — % 1 % — % Interest expense — % — % — % Other expense — % — % — % Income before income taxes 21 % 18 % 14 % Provision for income taxes 3 % 2 % 2 % Net income 18 % 16 % 12 % 27 Table of Contents Net Sales We report sales in two product categories: audio products and high-performance mixed-signal products.
All percentage amounts were calculated using the underlying data, in thousands: Fiscal Years Ended March 25, 2023 March 26, 2022 March 27, 2021 Net sales 100 % 100 % 100 % Gross margin 50 % 52 % 52 % Research and development 24 % 23 % 25 % Selling, general and administrative 8 % 8 % 10 % Lease impairments and restructuring 1 % — % — % Intangibles impairment 4 % — % — % Income from operations 13 % 21 % 17 % Interest income — % — % 1 % Interest expense — % — % — % Other expense — % — % — % Income before income taxes 13 % 21 % 18 % Provision for income taxes 4 % 3 % 2 % Net income 9 % 18 % 16 % 31 Table of Contents Net Sales We report sales in two product categories: audio products and HPMS products.
The increase in net sales reflects a $329.2 million increase in high-performance mixed-signal product sales, or 124.1 percent, from fiscal year 2021 sales of $265.2 million, which was primarily attributable to content gains in smartphones, and to a lesser extent, higher sales of fast-charging ICs in smartphones. Additionally, audio product sales increased $83.1 million in fiscal year 2022.
The increase in net sales reflects a $329.2 million increase in HPMS product sales, or 124.1 percent, from fiscal year 2021 sales of $265.2 million, which was primarily attributable to content gains in smartphones, and to a lesser extent, higher sales of general market battery and power products. Additionally, audio product sales increased $83.1 million in fiscal year 2022.
In fiscal year 2021, the Company used approximately $77.7 million in cash for investing activities principally related to $57.2 million in net purchases of marketable securities, and capital expenditures and technology investments of $20.5 million.
In fiscal year 2021, the Company used approximately $77.7 million in cash for investing activities primarily related to $57.2 million in net purchases of marketable securities, and capital expenditures and technology investments of $20.5 million. Financing Activities In fiscal years 2023, 2022, and 2021, the Company used $230.3 million, $178.7 million, and $121.2 million, respectively, related to financing activities.
Capital Requirements 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, the Acquisition (discussed further in Note 8 - Acquisition of the Notes to the Consolidated Financial Statements and Item 1A.
Capital Requirements 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, and potential future acquisitions of companies or technologies, commitments under the Capacity Reservation Agreement with GlobalFoundries (discussed further in Note 15 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements and Item 1A.
The favorable change in working capital was driven primarily by a decrease in accounts receivable and an increase in accounts payable, partially offset by an increase in inventories. In fiscal year 2020, cash flow from operations was $295.8 million.
The favorable change in working capital was driven primarily by a decrease in accounts receivable and an increase in accounts payable, partially offset by an increase in inventories.
Our accounting policies are more fully described in Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements contained in Item 8.
Actual results may differ from these estimates under different assumptions and conditions. Our accounting policies are more fully described in Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements contained in Item 8.
See Note 17 - Stockholders' Equity for a description of our share repurchase programs. Revolving Credit Facility 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.
Revolving Credit Facility 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”).
Recently Adopted and Issued Accounting Pronouncements For a discussion of recently adopted and issued accounting pronouncements, refer to Note 2 of the Notes to the Consolidated Financial Statements. Overview Cirrus Logic develops low-power, high-precision mixed-signal processing solutions for a broad range of customers.
Recently Adopted Accounting Pronouncements For a discussion of recently adopted accounting pronouncements, refer to Note 2 of the Notes to the Consolidated Financial Statements. Overview Cirrus Logic develops low-power, high-precision mixed-signal processing solutions for a broad range of customers. We track operating results in one reportable segment, but report revenue performance by product line: audio and HPMS products.
High-performance mixed-signal product line sales of $594.3 million represented a 124.1 percent increase from fiscal year 2021 sales of $265.2 million, primarily attributable to content gains in smartphones and, to a lesser extent, higher sales of fast-charging ICs in smartphones. Audio product line sales of $1.19 billion in fiscal year 2022 increased from fiscal year 2021 sales of $1.10 billion.
HPMS product line sales of $594.3 million represented a 124.1 percent increase from fiscal year 2021 sales of $265.2 million, primarily attributable to content gains in smartphones and, to a lesser extent, higher sales of general market battery and power products.
The increase was primarily attributable to increased employee-related expenses, professional services, variable compensation and stock-based compensation costs in fiscal year 2022. 28 Table of Contents Fiscal year 2021 selling, general and administrative expenses of $127.0 million reflect a decrease of $4.1 million, or 3.1 percent, compared to fiscal year 2020.
The increase was primarily attributable to increased employee-related and stock-based compensation costs, partially offset by reduced variable compensation costs in fiscal year 2023. 32 Table of Contents Fiscal year 2022 selling, general and administrative expenses of $151.0 million reflect an increase of $24.0 million, or 18.9 percent, compared to fiscal year 2021.
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 material domestic subsidiaries (the "Subsidiary Guarantors").
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 material domestic subsidiaries (the "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.
Selling, General and Administrative Expenses Fiscal year 2022 selling, general and administrative expenses of $151.0 million reflect an increase of $24.0 million, or 18.9 percent, compared to fiscal year 2021.
Selling, General and Administrative Expenses Fiscal year 2023 selling, general and administrative expenses of $153.1 million reflect an increase of $2.1 million, or 1.4 percent, compared to fiscal year 2022.
In fiscal year 2020, the Company used approximately $100.2 million in cash for investing activities primarily related to $78.6 million in net purchases of marketable securities, and capital expenditures and technology investments of $21.6 million. Financing Activities In fiscal year 2022, the Company used $178.7 million related to financing activities.
Investing Activities In fiscal year 2023, the Company used $33.3 million in cash for investing activities primarily related to capital expenditures and technology investments of $36.7 million and $3.4 million in net sales of marketable securities.
The most significant driver of the increase was higher sales of audio products in laptops. Overall, gross margin for fiscal year 2022 was 51.8 percent. The increase in gross margin for fiscal year 2022 was primarily attributable to the impact of higher ASPs, which were mostly offset by increased supply chain costs.
The increase in gross margin for fiscal year 2022 was primarily attributable to the impact of higher ASPs, which were mostly offset by increased supply chain costs. The Company’s number of employees increased to 1,591 as of March 26, 2022.
Fiscal Years Ended March 26, 2022 March 27, 2021 March 28, 2020 Audio Products $ 1,187,126 $ 1,104,060 $ 1,109,958 High-Performance Mixed-Signal Products 594,334 265,170 171,166 $ 1,781,460 $ 1,369,230 $ 1,281,124 Net sales for fiscal year 2022 increased by 30.1 percent, to $1.78 billion from $1.37 billion in fiscal year 2021.
Fiscal Years Ended March 25, 2023 March 26, 2022 March 27, 2021 Audio Products $ 1,172,007 $ 1,187,126 $ 1,104,060 HPMS Products 725,610 594,334 265,170 $ 1,897,617 $ 1,781,460 $ 1,369,230 Net sales for fiscal year 2023 increased by 6.5 percent, to $1.90 billion from $1.78 billion in fiscal year 2022.
See Note 12 - Restructuring Costs for additional details. Interest Income Interest income in fiscal years 2022, 2021, and 2020, was $1.6 million, $6.3 million, and $10.5 million, respectively. The fluctuations in interest income in fiscal year 2022 and 2021 versus prior years were a function of earnings on average cash, cash equivalent, and marketable securities balances throughout the year.
The fluctuations in interest income in fiscal year 2023 and 2022 versus prior years were a function of earnings on average cash, cash equivalent, and marketable securities balances throughout the year.
The most significant driver of the increase was higher sales of audio products in laptops. Net sales for fiscal year 2021 increased by 6.9 percent, to $1.37 billion from $1.28 billion in fiscal year 2020.
Audio product line sales of $1.19 billion in fiscal year 2022 increased from fiscal year 2021 sales of $1.10 billion. The most significant driver of the increase was higher sales of audio products in laptops. Overall, gross margin for fiscal year 2022 was 51.8 percent.
Fiscal year 2021 research and development expenses of $342.8 million reflect a decrease of $4.9 million, or 1.4 percent, from fiscal year 2020.
Research and Development Expenses Fiscal year 2023 research and development expenses of $458.4 million reflect an increase of $52.1 million, or 12.8 percent, from fiscal year 2022.
In fiscal year 2021, the Company used $121.2 million in financing activities. In fiscal year 2020, the Company used $119.6 million in financing activities. In fiscal years 2022, 2021, and 2020, the Company utilized approximately $167.5 million, $110.0 million, and $120.0 million, respectively, in cash to repurchase and retire portions of its outstanding common stock.
In fiscal years 2023, 2022, and 2021, the Company utilized approximately $191.4 million, $167.5 million, and $110.0 million, respectively, in cash to repurchase and retire portions of its outstanding common stock. See Note 17 - Stockholders' Equity for a description of our share repurchase authorization.
As of March 26, 2022, the Company did not have any off-balance-sheet arrangements, that were reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
As of March 25, 2023, the Company did not have any off-balance-sheet arrangements, that were reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 34 Table of Contents Contractual Cash 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.
Operating cash flow during fiscal year 2020 was related to the cash components of our net income, offset by a $2.8 million unfavorable change in working capital. The unfavorable change in working capital was driven primarily by an increase in accounts receivable, partially offset by an increase in accounts payable during the period.
The unfavorable 33 Table of Contents change in working capital was driven primarily by an increase in inventory and decreases in accounts payable and other accrued liabilities, partially offset by a decrease in accounts receivable. In fiscal year 2022, cash flow from operations was $124.8 million.
The Company’s number of employees increased to 1,591 as of March 26, 2022. The Company achieved net income of $326.4 million in fiscal year 2022, which included an income tax provision in the amount of $42.3 million. Fiscal Year 2021 Fiscal year 2021 net sales of $1.37 billion represented an increase over fiscal year 2020 net sales of $1.28 billion.
("Lion") acquisition (the "Acquisition"). The Company’s number of employees increased to 1,702 as of March 25, 2023. The Company achieved net income of $176.7 million in fiscal year 2023, which included an income tax provision in the amount of $78.0 million.
Our sales are denominated primarily in U.S. dollars. Gross Margin Overall gross margin of 51.8 percent for fiscal year 2022 reflects a slight increase from fiscal year 2021 gross margin of 51.7 percent. The increase was primarily attributable to the impact of higher ASPs, which were mostly offset by increased supply chain costs.
Our sales are denominated primarily in U.S. dollars. Gross Margin Overall gross margin of 50.4 percent for fiscal year 2023 reflects a decrease from fiscal year 2022 gross margin of 51.8 percent.
The Revolving Credit Facility is secured by substantially all the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets. As of March 26, 2022, the Company had no amounts outstanding under the Revolving Credit Facility and was in compliance with all covenants under the Second Amended Credit Agreement.
As of March 25, 2023, the Company had no amounts outstanding under the Revolving Credit Facility and was in compliance with all covenants under the Second Amended Credit Agreement. See Note 9 — Revolving Credit Facility for additional information including material terms and related covenants.
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 2021. Research and Development Expenses Fiscal year 2022 research and development expenses of $406.3 million reflect an increase of $63.5 million, or 18.5 percent, from fiscal year 2021.
The increase was primarily attributable to the impact of higher ASPs, which were mostly offset by increased supply chain costs. 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 2022.
The overall decrease was attributable to reduced amortization of acquisition intangibles, travel and employee events expenses, depreciation and amortization costs on non-acquisition-related intangibles, and product development costs after exiting the MEMS product line, partially offset by increases in employee-related expenses, primarily salaries, variable compensation and stock-based compensation.
The increase was attributable to increased stock-based compensation, product development costs, employee-related expenses, primarily driven by a 7.0 percent increase in total R&D headcount, facilities-related costs, amortization of acquisition intangibles, and acquisition-related expenses, partially offset by reduced variable compensation and increased R&D incentives compared to the prior fiscal year.
The increase in net sales reflects a $94.0 million increase in high-performance mixed-signal product sales, or 54.9 percent, from fiscal year 2020 sales of $171.2 million, which was primarily attributable to content gains in smartphones. This increase was offset by a $5.9 million decrease in audio product sales.
The increase in net sales reflects a $131.3 million increase in HPMS product sales, or 22.1 percent, from fiscal year 2022 sales of $594.3 million, which was primarily attributable to content gains in smartphones and higher ASPs. Audio product sales decreased $15.1 million in fiscal year 2023.
High-performance mixed signal product line sales of $265.2 million represented a 54.9 percent increase from fiscal year 2020 sales of $171.2 million, primarily attributable to content gains in smartphones.
Fiscal Year 2023 Fiscal year 2023 net sales of $1.90 billion represented an increase over fiscal year 2022 net sales of $1.78 billion. HPMS product line sales of $725.6 million represented a 22.1 percent increase from fiscal year 2022 sales of $594.3 million, primarily attributable to content gains in smartphones and higher ASPs.
We recorded income tax expense of $21.8 million in fiscal year 2020 on pre-tax income of $181.3 million, yielding an effective tax provision rate of 12.0 percent.
Additionally, in fiscal year 2023, the Company recorded a $2.7 million write down related to a technology start-up equity investment. Provision for Income Taxes We recorded income tax expense of $78.0 million in fiscal year 2023 on pre-tax income of $254.7 million, yielding an effective tax rate of 30.6 percent.
Our effective tax rate was lower than the U.S. statutory rate of 21.0 percent, primarily due to the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate, excess tax benefits from stock-based compensation, and the release of prior year unrecognized tax benefits during fiscal year 2020.
Our effective tax rate was higher than the U.S. statutory rate of 21.0 percent, primarily due to an increase in U.S. tax paid on our foreign earnings.
Removed
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.
Added
“Risk Factors” of this Form 10-K and elsewhere in this report, as well as in the documents we file with the SEC, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Removed
Accounting for Acquisitions The Company accounts for business combinations using the acquisition method of accounting and allocates the fair value of acquisition consideration to the assets acquired and liabilities assumed based on their fair values at the acquisition date.
Added
In fiscal year 2023, the Company delivered record revenue, driven by higher sales of products shipping in smartphones. This past year, we believe that we made excellent progress in many areas of our long-term growth strategy. The Company remained a leader in our foundational business of smartphone audio, with a number of customers launching flagship devices using our components.
Removed
The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed is recorded as goodwill. The fair value of identifiable intangible assets was determined primarily using the income approach, which required the Company to project discounted future cash flows.
Added
Moreover, our team began design of our next-generation boosted amplifier and smart codec, both of which are in advanced stages of development today and are expected to extend our market leadership and deliver significant revenue for many years following their introduction. Additionally, the Company completed the successful production qualification for our next-generation camera controller for introduction in fiscal year 2024.
Removed
The significant estimation uncertainty is primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business and the limited historical data and market data on which those assumptions are based. The Company's estimates are based upon assumptions believed to be reasonable, but are inherently uncertain and unpredictable.
Added
In the past year the Company saw both our R&D investment and the number of opportunities in high-performance mixed-signal ("HPMS") increase. Among the HPMS opportunities we have previously discussed in shareholder communications, a new product previously scheduled for introduction this fall is no longer expected to come to market as planned.
Removed
Incorrect estimates could result in future impairment charges, and those charges could be material to the results of operations. See Note 8 — Acquisition of the Notes to Consolidated Financial Statements contained in Item 8 for additional details .
Added
Our customer 30 Table of Contents relationship remains very strong and we continue to collaborate on a range of technologies and products in the HPMS space. We continue to believe that the HPMS product line represents a significant opportunity to grow and diversify revenue.
Removed
We track operating results in one reportable segment, but report revenue performance by product line: audio and high-performance mixed-signal products. In fiscal year 2022, the Company delivered record revenue and EPS, driven by high-performance mixed-signal dollar content gains in smartphones.
Added
Audio product line sales of $1.17 billion in fiscal year 2023 decreased from fiscal year 2022 sales of $1.19 billion. The most significant drivers of the decrease were the softening in general market and smartphone demand, partially offset by ASP increases during fiscal year 2023. Overall, gross margin for fiscal year 2023 was 50.4 percent.
Removed
This past year, we made significant progress driving both product diversification and revenue growth through our high-performance mixed-signal business as we shipped our first-generation power conversion and control IC, broadened our power footprint with the addition of fast-charging solutions, and increased the attach rate of our camera controllers.
Added
The decrease in gross margin for fiscal year 2023 was primarily attributable to an increase in supply chain costs, partially offset by higher ASPs and the absence of the purchase price fair value adjustment to inventory, which was a one-time event in the second quarter of fiscal year 2022, as a result of the Lion Semiconductor, Inc.
Removed
In audio, we maintained our leadership position in smartphones while also expanding our presence in laptops. Cirrus Logic continues to experience demand significantly above available capacity and are actively working with our suppliers to meet as much demand as possible while also balancing our customer relationships and financial health.
Added
The most significant drivers of the decrease were the softening in general market and smartphone demand, partially offset by ASP increases versus the prior fiscal year. Net sales for fiscal year 2022 increased by 30.1 percent, to $1.78 billion from $1.37 billion in fiscal year 2021.
Removed
In the second quarter of fiscal year 2022, we entered into a long-term Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries, a foundry partner for many of our strategic products.
Added
The most significant driver of the increase was higher sales of audio products in laptops.
Removed
This expands our ability to address 26 Table of Contents existing and incremental demand and provides customers with much-needed supply assurance, while also providing the company with the flexibility to pursue additional capacity.
Added
The decrease reflects an increase in supply chain costs, partially offset by higher ASPs and the absence of the purchase price fair value adjustment to inventory, as a result of the Acquisition.
Removed
Additionally, the Company has observed increased competition in hiring and retaining qualified executives and employees, which is expected to result in increased research and development costs in future periods. For more information, please see Item 1A. "Risk Factors".
Added
See Note 2 - Summary of Significant Accounting Policies / Government Assistance for additional details relating to R&D incentives. Fiscal year 2022 research and development expenses of $406.3 million reflect an increase of $63.5 million, or 18.5 percent, from fiscal year 2021.
Removed
Audio product line sales of $1.10 billion in fiscal year 2021 decreased from fiscal year 2020 sales of $1.11 billion, attributable to headwinds in wired headset codecs and decreased smart codec sales in Android. The decrease was partially offset by higher unit volumes in smartphones as well as content gains in smartphones, tablets and wearables.
Added
The increase was primarily attributable to increased employee-related expenses, professional services, variable compensation and stock-based compensation costs in fiscal year 2022.
Removed
Overall, gross margin for fiscal year 2021 was 51.7 percent. The decrease in gross margin for fiscal year 2021 was primarily due to a shift in product mix and pricing reductions on certain products, partially offset by cost reductions associated with exiting the MEMS product line. The Company’s number of employees increased to 1,481 as of March 27, 2021.
Added
Lease Impairments and Restructuring During the fourth quarter of fiscal year 2023, as part of our strategy to improve operational efficiency, the Company abandoned or subleased office space at various properties to align our real property lease arrangements with our anticipated operating needs.
Removed
The audio product line experienced a decrease in net sales attributable to headwinds in wired headset codecs and decreased smart codec sales in Android. The decrease was partially offset by higher unit volumes in smartphones as well as content gains in smartphones, tablets and wearables.
Added
The Company recorded lease impairments and restructuring costs of $10.6 million related to impairment of right-of-use lease assets and leasehold improvements of $6.9 million, as well as other related charges of $3.7 million. See Note 12 - Lease Impairments and Restructuring for additional details.
Removed
The decrease was primarily attributable to a shift in product mix and pricing reductions on certain products. This was partially offset by cost reductions associated with exiting the MEMS product line.
Added
Intangibles Impairment Due to the prolonged weakness in the China smartphone market, the sales of our general market battery and power products associated with the Acquisition were adversely affected. As a result, the Company revalued the acquired intangible assets recorded in purchase accounting.
Removed
The primary drivers of the decrease were reduced travel and employee events expenses in fiscal year 2021. Restructuring Costs During the fourth quarter of fiscal year 2020, the Company approved a restructuring plan (the "MEMS Restructuring"), including discontinuing efforts relating to the MEMS microphone product line.
Added
In the fourth quarter of fiscal year 2023, the Company impaired the related acquired intangible assets by $85.8 million. See additional details in Note 7 - Intangibles, net and Goodwill. Interest Income Interest income in fiscal years 2023, 2022, and 2021, was $10.0 million, $1.6 million, and $6.3 million, respectively.
Removed
The Company recorded charges of approximately $0.4 million in the first quarter of fiscal year 2021 and $21.9 million in fiscal year 2020, as part of the MEMS Restructuring, which included equipment disposal costs, asset impairment and write-off of intangible assets, and other nonrecurring costs. No additional restructuring charges were incurred for the remainder of fiscal year 2021 or 2022.
Added
A provision in the Tax Cuts and Jobs Act of 2017 requires research and development expenditures incurred in tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years depending on the location in which the research activities are conducted, resulting in higher global intangible low-taxed income (GILTI), which is treated as a period cost.
Removed
For additional discussion about our income taxes, see Note 19 - Income Taxes. Outlook Given the wide array of uncertainties surrounding the implications of the COVID-19 pandemic, industry-wide supply constraints and the timing of when these challenges will be alleviated, it is difficult to predict our revenue, gross margin and operating expense outlook for fiscal year 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur balance sheet also reflects monetary assets and liabilities in certain entities which are remeasured to each entity’s functional currency. Beginning in the first quarter of fiscal year 2020, we use forward contracts to manage exposure to foreign currency exchange risk attributable to certain non-functional currency balance sheet exposures.
Biggest changeOur balance sheet also reflects monetary assets and liabilities in certain entities which are remeasured to each entity’s functional currency. W e use forward contracts to manage exposure to foreign currency exchange risk attributable to certain non-functional currency balance sheet exposures.
Foreign Currency Exchange Risk Our revenue and spending is transacted primarily in U.S. dollars; however, in fiscal years 2022, 2021, and 2020, we entered into routine transactions in other currencies to fund the operating needs of certain legal entities outside of the U.S.
Foreign Currency Exchange Risk Our revenue and spending is transacted primarily in U.S. dollars; however, in fiscal years 2023, 2022, and 2021, we entered into routine transactions in other currencies to fund the operating needs of certain legal entities outside of the U.S.
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 26, 2022. Actual results may differ materially.
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, 2023. Actual results may differ materially.
See Note 5 - Derivative Financial Instruments for additional information related to our hedging activities. 31 Table of Contents
See Note 5 - Derivative Financial Instruments for additional information related to our hedging activities. 35 Table of Contents
Based on investment positions as of March 26, 2022 and March 27, 2021, a hypothetical 100 basis point increase in interest rates across all maturities would result in a $1.1 million and $6.2 million decline in the fair market value of the portfolio, respectively. Such losses would only be realized if the Company sold the investments prior to maturity.
Based on investment positions as of March 25, 2023 and March 26, 2022, a hypothetical 100 basis point increase in interest rates across all maturities would result in a $0.8 million and $1.1 million decline in the fair market value of the portfolio, respectively. Such losses would only be realized if the Company sold the investments prior to maturity.
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.
Due to the short-term nature of our investment portfolio, our downside exposure to interest rate risk is minimal.

Other CRUS 10-K year-over-year comparisons