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What changed in CIRRUS LOGIC, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CIRRUS LOGIC, INC.'s 2023 and 2024 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 2024 report.

+231 added−218 removedSource: 10-K (2024-05-24) vs 10-K (2023-05-19)

Top changes in CIRRUS LOGIC, INC.'s 2024 10-K

231 paragraphs added · 218 removed · 194 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

45 edited+2 added−4 removed37 unchanged
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.
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., STATS ChipPAC Pte. Ltd., Amkor Technology, Inc., SFA Semicon Co., Ltd., and Siliconware Precision Industries Co., Ltd.
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.
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”), and our third-party partners' and customers’ IP.
Since the components we produce are largely proprietary and generally not available from secondary sources, we generally consider our end customer to be the entity specifying the use of our component in their design. These end customers may then purchase our products directly from us, through distributors or third-party manufacturers contracted to produce their designs.
Since the components we produce are largely proprietary and generally not available from secondary sources, we generally consider our end customer to be the entity specifying the use of our component in their design. These end customers may then purchase our products directly from us, through distributors, or indirectly from third-party manufacturers contracted to produce their designs.
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.
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 both new and existing components.
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.
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, l aptops, tablets, AR/VR headsets, wearables, home theater systems, automotive entertainment systems and professional audio systems.
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”).
We have an extensive portfolio of products: amplifiers; “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; and standalone digital signal processors (“DSPs”).
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.
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 virtual mental health support, and ergonomic assessments.
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.
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 developing highly differentiated components that address their technical and price requirements across product tiers.
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.
We do not anticipate any material effect on our business due to any patents expiring in 2024, 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.
To receive a free copy of this Annual Report on Form 10-K, please forward your written request to Cirrus Logic, Inc., Attn: Investor Relations, 800 W. 6 th Street, Austin, Texas 78701, or via email at Investor@cirrus.com.
To receive a free copy of this Annual Report on Form 10-K, please forward your written request to Cirrus Logic, Inc., Attn: Investor Relations, 800 W. 6 th Street, Austin, Texas 78701, or via email at [email protected] .
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 .
See Note 10 - Revenues for disclosure of revenue by product line categories. The following provides a detailed description of our audio and HPMS product lines. Audio Products : 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, and battery and power ICs .
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.
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, 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 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.
In fiscal year 2024, 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 to health and safety at our facilities, nor have we ever had a work-related fatality.
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.
Our U.S. patents expire in calendar years 2024 through 2045. While our patents are an important element of our success, our business as a whole is not dependent on any one patent or group of patents.
We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (the “SEC”).
We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
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.
Additionally, in calendar year 2023, we reported zero recordable and lost-time incidents to the U.S. Occupational Safety and Health Administration. 7 Table of Contents Following the Covid-19 pandemic, our employees have returned to working in the office at least two days per week.
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.
As of March 30, 2024, 14 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 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.
Our primary competitors include, but are not limited to, AKM Semiconductor Inc., Analog Devices Inc., Realtek Semiconductor Corporation, Renesas Electronics Corporation, Shanghai Awinic Technology Co., Ltd., Shenzhen Goodix Technology Co, Ltd., Skyworks Solutions Inc., ST Microelectronics N.V., Synaptics Incorporated and Texas Instruments, Inc.
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.
For fiscal year 2024, 2023 and 2022, our ten largest end customers, represented approximately 95 percent, 92 percent and 93 percent of our sales, respectively.
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.
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 30, 2024, we held approximately 3,880 pending and issued patents worldwide, which include approximately 1,500 granted U.S. patents, 360 U.S. pending patent applications and various international patents and applications.
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.
HPMS PRODUCTS Drawing on our extensive mixed-signal design and low-power processing expertise, Cirrus Logic has expanded beyond our traditional audio domain to now also provide a range of HPMS products, such as camera controllers, haptic and sensing solutions, and battery and power ICs.
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 Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker ("CODM") 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 CEO receives and uses enterprise-wide financial information to assess financial performance and allocate resources.
Our future success is highly dependent upon our ability to develop complex new products, transfer new products to volume production, introduce them into the marketplace in a timely fashion, and have them selected for design into products of systems manufacturers.
We also fund certain advanced-process technology development, as well as other emerging product opportunities. Our future success is highly dependent upon our ability to develop complex new products, transfer new products to volume production, introduce them into the marketplace in a timely fashion, and have them selected for design into products of systems manufacturers.
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 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.
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.
As of March 30, 2024, our global workforce was 81 percent male and 19 percent female, and based on self-reported identification, our workforce in the United States was composed of 53 percent White, 35 percent Asian, 8 percent Hispanic or Latino, 2 percent Black or African American, and 2 percent Other.
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.
For fiscal years 2024, 2023, and 2022, we had one end customer, Apple, Inc., who purchased through multiple contract manufacturers and represented approximately 87 percent, 83 percent, and 79 percent, of the Company’s total sales, respectively.
See Note 20—Segment Information, of the Notes to Consolidated Financial Statements contained in Item 8 for further detail and for additional disclosure regarding sales and property, plant and equipment, net, by geographic locations.
Our worldwide sales force provides geographically specific support to our customers and specialized selling of product lines with unique customer bases. See Note 20—Segment Information, of the Notes to Consolidated Financial Statements contained in Item 8 for further detail and for additional disclosure regarding sales and property, plant and equipment, net, by geographic locations.
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.
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.
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.
Our product lines have similar characteristics and customers and 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.
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.
To date, we have not incurred significant expenditures relating to environmental compliance at our facilities. 6 Table of Contents 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.
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.
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 all of the risks that may be associated with an investment in our securities.
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.
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. This enables us to collect information that helps to identify and address challenges and continuously improve.
For example, certain of our Chinese customers, or their affiliated entities, have been added to the BIS Entity List in the last couple of years, which limits our ability to support these customers.
For example, certain of our Chinese customers, or their affiliated entities, have been added to the BIS Entity List, which limits our ability to support these customers. We cannot guarantee that export control restrictions or sanctions imposed in the future will not prevent, or materially limit, our ability to conduct business with certain customers or in certain countries.
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.
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, subsidized daycare and backup care for children and elders, benefits for surrogacy and adoption assistance programs, and programs for new parents.
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 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.
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 of the Notes to Consolidated Financial Statements contained in Item 8 for further details including sales by product line.
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.
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.
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.
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. Cirrus Logic prides itself on providing continuous learning and development opportunities, such as, technical training and professional development programs to support our employees’ growth.
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.
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.
This summary should be read in conjunction with the remainder of this “
Summary of Risk Factors The following summarizes the principal factors that make an investment in the Company speculative or risky. This summary should be read in conjunction with the remainder of this “
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.
As of March 30, 2024, we had 1,625 employees, 99 percent of whom were full-time, 72 percent were engaged in research and product development activities, 23 percent in sales, marketing, general and administrative activities, and 5 percent in manufacturing-related activities.
We cannot guarantee that export control restrictions or sanctions imposed in the future will not prevent, or materially limit, our ability to conduct business with certain customers or in certain countries. Any failure to comply with these laws could result in governmental enforcement actions, including substantial monetary penalties and denial of export privileges.
Any failure to comply with these laws could result in governmental enforcement actions, including substantial monetary penalties and denial of export privileges. For further discussion relating to the potential effects that compliance with government regulation may have upon our business, refer to "Item 1A.
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.
Risk Factors." Human Capital Our long-term success depends, in part, on attracting and retaining highly qualified technical, marketing, engineering and administrative talent. At Cirrus Logic, our goal is to maintain an employee-centric culture that encourages innovation, teamwork, and individual growth.
Research and Development We concentrate our research and development efforts on the design and development of new products for each of our principal markets. We also fund certain advanced-process technology development, as well as other emerging product opportunities.
See Note 20 — Segment Information, for details on sales and property, plant and equipment, net, by geographic locations. 5 Table of Contents Research and Development We concentrate our research and development efforts on the design and development of new products for each of our principal markets.
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").
No other customer or distributor represented more than 10 percent of net sales in fiscal years 2024, 2023, or 2022. 4 Table of Contents Manufacturing As a fabless semiconductor company, we contract with third parties for wafer fabrication and product assembly and test.
Removed
We have technical support centers in China, South Korea, Taiwan and the United States. Our worldwide sales force provides geographically specific support to our customers and specialized selling of product lines with unique customer bases.
Added
We maintain business interruption insurance to help reduce the risk of wafer supply interruption; however, the impact of an interruption could exceed our insurance.
Removed
Our CEO receives and uses enterprise-wide financial information to assess financial performance and allocate resources, rather than detailed information at a product line level. Additionally, our product lines have similar characteristics and customers.
Added
In fiscal year 2024, our voluntary turnover rate was 6 percent, below the technology industry benchmarks (2023 Radford Salary Increase and Turnover Study).
Removed
We believe that our properties and operations comply in all material respects with applicable laws protecting the environment and worker health and safety.
Removed
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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

89 edited+21 added−5 removed155 unchanged
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.
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; - our customers may be subject to investigations and litigation that could result in injunctive or other relief that negatively impacts sales of their products, which in turn would result in a decrease in demand for our products; - 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; and - our current customers may be hesitant in some cases to award new business to us based on their desire to manage their supply chain risks around any potential over-dependence on a supplier or supply chain.
In an effort to alleviate some of our future expected supply constraints, the Company entered into a Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries on July 28, 2021 to reserve capacity and set wafer pricing for products purchased pursuant to the agreement through 2026.
In 2021, in an effort to alleviate some of our future expected supply constraints, the Company entered into a Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries on July 28, 2021 to reserve capacity and set wafer pricing for products purchased pursuant to the agreement through 2026.
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, we are subject to risks associated with these third parties, including: - insufficient capacity available to meet our demand on time; - inability for our suppliers to obtain the equipment or replacement parts necessary to fully operate their facilities or expand available manufacturing capacity; - inadequate manufacturing yields and excessive costs; - inability of these third parties to obtain an adequate supply of raw materials; - extended lead times on supplies used in the manufacturing of our products; - difficulties selecting and integrating new subcontractors; - limited warranties on products supplied to us; - potential increases in prices (including the cost of freight); and - increased exposure to potential misappropriation of our intellectual property.
As a result, we are subject to risks associated with these third parties, including: - insufficient capacity available to meet our demand on time; - inability of our suppliers to obtain the equipment or replacement parts necessary to fully operate their facilities or expand available manufacturing capacity; - inadequate manufacturing yields and excessive costs; - inability of these third parties to obtain an adequate supply of raw materials; - extended lead times on supplies used in the manufacturing of our products; - difficulties selecting and integrating new subcontractors; - limited warranties on products supplied to us; - potential increases in prices (including the cost of freight); and - increased exposure to potential misappropriation of our intellectual property.
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.
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; 17 Table of Contents - 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 Taiwan and China, where we have significant operations.
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.
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.
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.
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 11 Table of Contents if we conclude or are notified by the U.S. government that such business presents a risk of noncompliance with U.S. regulations.
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.
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.
Business & Operational Risks • Risks related to dependence on a limited number of customers and distributors and a lack of diversification in our revenue base, including risks related to the loss of, or a significant reduction in orders from, or pricing on products sold to, any key customer or distributor • Risks related to third-party manufacturing and supply chain relationships • Risks related to our long-term capacity reservation and wafer supply agreement with GlobalFoundries • Risks related to fluctuation in sales in the consumer electronics and smartphone markets • Risks related to global economic conditions, including economic downturns or recessions and the effects of inflationary pressures • Risks related to our international operations, including government trade policies and delays or disruptions to our international subcontractors, which may be impacted by political/economic factors • Risks related to system security, cyber-attacks, and data breaches • Risks related to strong competition in the semiconductor market, including competition to attract, hire, and retain highly qualified personnel • Risks related to our fabless business model • Risks related to acquiring other companies or technologies • Risks related to product concentration, difficulty in forecasting sales due to customers' ability to cancel or reschedule orders, and declining average selling prices Strategic & Industry Risks • Risks related to joint development or other custom product collaborations, including the development of products for specific system architectures • Risks related to the timely development, production, and acceptance of new and advanced technologies • Risks related to increasing complexity of our products and the potential for security vulnerabilities or other product defects and difficulties in transitioning to advanced manufacturing process technologies • Risks related to changes in the system architecture of our customers' end products • Risks related to our ability to protect our intellectual property rights Financial Risks • Risks related to exposure to tax liabilities and changes in tax laws • Risks related to fluctuations in inventory, including risks related to our customers’ ability to cancel/reschedule orders on short notice • Risks related to fluctuations in operating results, stock price, and foreign currency exposures • Risks related to debt obligations, including under our Second Amended Credit Agreement 8 Table of Contents Legal & General Risks • Risks related to intellectual property claims and litigation and export control regulations • Risks related to certain provisions of Delaware law and our Certificate of Incorporation and Bylaws • Risks related to corporate social responsibility initiatives and ESG matters • Risks related to owning real property Business and Operational Risks We depend on a limited number of customers and distributors for a substantial portion of our sales, and the loss of, or a significant reduction in orders from, or pricing on products sold to, any key customer or distributor could significantly reduce our sales and our profitability.
Business & Operational Risks • Risks related to dependence on a limited number of customers and distributors and a lack of diversification in our revenue base, including risks related to the loss of, or a significant reduction in orders from, or pricing on products sold to, any key customer or distributor • Risks related to third-party manufacturing and supply chain relationships • Risks related to our long-term capacity reservation and wafer supply agreement with GlobalFoundries • Risks related to fluctuation in sales in the consumer electronics and smartphone markets • Risks related to global economic conditions, including economic downturns or recessions and the effects of inflationary pressures • Risks related to our international operations, including government trade policies and delays or disruptions to our international subcontractors, which may be impacted by political/economic factors • Risks related to system security, cyber-attacks, and data breaches • Risks related to strong competition in the semiconductor market, including competition to attract, hire, and retain highly qualified personnel • Risks related to our fabless business model • Risks related to the use or application of emerging technologies, including artificial intelligence • Risks related to acquiring other companies or technologies • Risks related to product concentration, difficulty in forecasting sales due to customers' ability to cancel or reschedule orders, and declining average selling prices Strategic & Industry Risks • Risks related to joint development or other custom product collaborations, including the development of products for specific system architectures • Risks related to the timely development, production, and acceptance of new and advanced technologies while complying with increasingly stringent environmental regulations • Risks related to increasing complexity of our products and the potential for security vulnerabilities or other product defects and difficulties in transitioning to advanced manufacturing process technologies • Risks related to changes in the system architecture of our customers' end products • Risks related to our ability to protect our intellectual property rights Financial Risks • Risks related to exposure to tax liabilities and changes in tax laws • Risks related to fluctuations in inventory, including risks related to our customers’ ability to cancel/reschedule orders on short notice • Risks related to fluctuations in operating results, stock price, and foreign currency exposures 8 Table of Contents • Risks related to debt obligations, including under our Second Amended Credit Agreement Legal & General Risks • Risks related to intellectual property claims and litigation and export control regulations • Risks related to certain provisions of Delaware law and our Certificate of Incorporation and Bylaws • Risks related to corporate social responsibility initiatives and ESG matters • Risks related to owning real property Business and Operational Risks We depend on a limited number of customers and distributors for a substantial portion of our sales, and the loss of, or a significant reduction in orders from, or pricing on products sold to, any key customer or distributor could significantly reduce our sales and our profitability.
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.
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 9 Table of Contents 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.
Further, we have made commitments not to exceed certain pricing with some key customers on some of our products, and as a result, we may not be able to pass on any unexpected or additional costs increases or fees associated with our suppliers.
Further, we have made commitments not to exceed certain pricing with some key customers on some of our products, and as a result, we may not be able to pass on any unexpected or additional cost increases or fees associated with our suppliers.
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 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. We are dependent on third-party manufacturing and supply chain relationships for all of our products.
Because we operate a fabless business model, we may not be eligible for such incentives from the U.S. government at this time. However, many of our current and future competitors maintain their own 15 Table of Contents fabrication facilities and may secure such funding, which could benefit them in connection with cost, capacity, and technical issues.
Because we operate a fabless business model, we may not be eligible for such incentives from the U.S. government at this time. However, many of our current and future competitors maintain their own fabrication facilities and may secure such funding, which could benefit them in connection with cost, capacity, and technical issues.
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.
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.
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.
Manufacturing defects that we do not discover during the manufacturing or testing process may lead to costly product recalls. These risks may lead to increased costs or delayed product delivery, which would harm our profitability and customer relationships. In some cases, our requirements may represent a small portion of the total production of the third-party suppliers.
As a result, 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.
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, 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 10 Table of Contents 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.
Although we are not aware of any violation of any export control regulations, a failure to comply with any of these regulations could have an adverse effect on our business. Potential intellectual property claims and litigation could subject us to significant liability for damages and could invalidate our proprietary rights.
Although we are not aware of any violation of any export control regulations, a failure to comply with any of these 25 Table of Contents regulations could have an adverse effect on our business. Potential intellectual property claims and litigation could subject us to significant liability for damages and could invalidate our proprietary rights.
See further discussion of the research and development expenditure credit in the U.K. in Note 2, "Government Assistance." 21 Table of Contents Shifts in industry-wide capacity and our practice of ordering and purchasing our products based on sales forecasts may result in significant fluctuations in inventory and our quarterly and annual operating results.
See further discussion of the research and development expenditure credit in the U.K. in Note 2, "Government Assistance." Shifts in industry-wide capacity and our practice of ordering and purchasing our products based on sales forecasts may result in significant fluctuations in inventory and our quarterly and annual operating results.
The Company makes estimates of the RDEC receivable as of each balance sheet date, based upon facts known at the time. Although the Company does not expect its estimates to be materially different from the amounts ultimately recognized, its estimates could differ from actual results.
The Company makes estimates of the RDEC receivable as of each balance sheet date, based upon facts known at the time. Although the 22 Table of Contents Company does not expect its estimates to be materially different from the amounts ultimately recognized, its estimates could differ from actual results.
If we do not hedge against these risks, or our attempts to hedge against these risks are not successful, our financial condition and results of operations could be adversely affected. Our debt obligations may be a burden on our future cash flows and cash resources.
If we do not hedge against these risks, or our attempts to hedge against these risks are not successful, our financial condition and results of operations could be adversely affected. 24 Table of Contents Our debt obligations may be a burden on our future cash flows and cash resources.
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.
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 27 Table of Contents 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 (including those related to changes in climate).
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.
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 26 Table of Contents or the Company’s directors, officers, and other employees.
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.
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; 23 Table of Contents - 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.
Although we believe that our existing insurance coverage is consistent with common practices of companies in our industry, our insurance coverage may be inadequate to protect us against product recalls, natural disasters, cybersecurity and/or information security breaches, and other unforeseen catastrophes that could adversely affect our financial condition and results of operations.
Although we believe that our existing insurance coverage is consistent with common practices of companies in our industry, our insurance coverage may be inadequate to protect us against product recalls, natural disasters (including those related to changes in climate), cybersecurity and/or information security breaches, and other unforeseen catastrophes that could adversely affect our financial condition and results of operations.
In addition, our dependence on a limited number of key customers may make it easier for them to pressure us on price reductions or to not accept price increases resulting from unexpected or additional cost increases or fees associated with our suppliers.
In addition, our dependence on a limited number of key customers may make it easier for them to demand favorable commercial terms or to pressure us on price reductions or to not accept price increases resulting from unexpected or additional cost increases or fees associated with our suppliers.
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.
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. We are subject to risks relating to product concentration.
We also rely on trade secrets, proprietary technology, non-disclosure and other contractual terms, and technical measures to protect our technology and manufacturing knowledge. We actively work to foster continuing technological innovation to maintain and protect our competitive position.
We also rely on trade secrets, proprietary technology, non- 21 Table of Contents disclosure and other contractual terms, and technical measures to protect our technology and manufacturing knowledge. We actively work to foster continuing technological innovation to maintain and protect our competitive position.
As markets mature and components become commoditized, competitors that can tolerate lower margins/operating income pose a risk to our profitability and growth. In the event that competitors succeed in supplanting our products, our market share may not be sustainable and our net sales, gross margin and operating results would be adversely affected. We compete in a number of markets.
As markets mature and components become 13 Table of Contents commoditized, competitors that can tolerate lower margins/operating income pose a risk to our profitability and growth. In the event that competitors succeed in supplanting our products, our market share may not be sustainable and our net sales, gross margin and operating results would be adversely affected.
For the twelve-month periods ending March 25, 2023, March 26, 2022, and March 27, 2021, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 83 percent, 79 percent and 83 percent of the Company’s total sales, respectively.
For the twelve-month periods ending March 30, 2024, March 25, 2023, and March 26, 2022, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 87 percent, 83 percent and 79 percent of the Company’s total sales, respectively.
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.
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.
For example, we receive a research and development expenditure credit in the United Kingdom ("RDEC"), which is recorded for accounting purposes as an offset to research and development expenses in the Company’s consolidated income statement and resulted in a benefit of $26.2 million in fiscal year 2023.
For example, we receive a research and development expenditure credit in the United Kingdom ("RDEC"), which is recorded for accounting purposes as an offset to research and development expenses in the Company’s consolidated income statement and resulted in a benefit of $40.9 million in fiscal year 2024.
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.
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.
In addition to our own systems, our business also is reliant upon the security of various third parties in our supply chain, and any breach of their systems and securities could result in our being subjected to the numerous risks and adverse consequences noted above.
In addition to our own systems, our business also is reliant upon the security of various third parties in our supply chain, and any breach of their systems and securities could result in our being subjected to the numerous risks and adverse consequences noted above. Strong competition in the semiconductor market may harm our business.
Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation, including in the U.S. and the United Kingdom.
Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation.
In addition, one or more of our customers have also requested, and other customers may in the future request, that we achieve certain carbon emission reductions and/or commit to the use of renewable energy in the manufacture of our goods.
In addition, one or more of our customers has required, and other customers may in the future request, that we achieve certain carbon emission reductions and/or commit to the use of renewable energy in the manufacture of our goods.
We do not agree with the IRS’s positions and we intend to vigorously dispute the proposed adjustments. We intend to pursue resolution through the administrative process with the IRS Independent Office of Appeals and, if necessary, through judicial remedies. We expect it could take a number of years to reach resolution on these matters.
We do not agree with the IRS’s positions and we are vigorously defending against the proposed adjustments. We are pursuing resolution through the administrative process with the IRS Independent Office of Appeals and, if necessary, through judicial remedies. We expect it could take a number of years to reach resolution on these matters.
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 business may not generate cash flow from operations in the future sufficient to satisfy our obligations or to make necessary capital expenditures.
If we are unable to 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.
We continue to invest in research and development efforts for several new markets. 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.
If our customers were to transition to these different system architectures or to eliminate certain functionality in their future end products, our results of operations could be adversely affected, resulting in reduced average selling prices for our components and loss of revenue. We may be unable to protect our intellectual property rights.
If our customers were to transition to these different system architectures or to eliminate certain functionality in their future end products, our results of operations could be adversely affected, resulting in reduced average selling prices for our components and loss of revenue.
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.
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. 16 Table of Contents Our international operations subject our business to additional political and economic risks that could have an adverse impact on our business.
Although we continue to investigate, invest in, and try to develop opportunities to diversify our revenue and customer base, our sales, marketing, and development efforts have historically been focused on a limited number of customers and opportunities. Many companies have the ability to manage their risk by product, market, and customer diversification.
Although we continuously explore opportunities to diversify our revenue and customer base, our sales, marketing, and development efforts have historically been focused on a limited number of customers and opportunities. Many companies have the ability to manage their risk by product, market, and customer diversification.
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.
Additionally, 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.
As of March 25, 2023, the Company did not have an outstanding balance under the Revolving Credit Facility.
As of March 30, 2024, the Company did not have an outstanding balance under the Revolving Credit Facility.
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.
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. Our products may be subject to average selling prices that decline over time.
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.
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 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.
For the twelve-month periods ending March 30, 2024, March 25, 2023, and March 26, 2022, our ten largest end customers represented approximately 95 percent, 92 percent and 93 percent of our sales, respectively.
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.
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. Historically in the semiconductor industry, average selling prices of products have decreased over time.
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.
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.
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.
We compete in a number of markets. Our principal competitors in these markets include AKM Semiconductor Inc., Analog Devices Inc., Realtek Semiconductor Corporation, Renesas Electronics Corporation, Shanghai Awinic Technology Co., Ltd., Shenzhen Goodix Technology Co, Ltd., Skyworks Solutions Inc., ST Microelectronics N.V., Synaptics Incorporated and Texas Instruments, Inc.
In addition, inflationary pressures could also result in a decline in consumer confidence and spending, potentially impacting demand for our customers' end products in the consumer electronics and smartphone markets. Any such decline would likely impact our business, operating results, and financial condition.
In addition, inflationary pressures could also result in a decline in consumer confidence and spending, potentially impacting demand for our customers' end products in the consumer electronics and smartphone markets.
The IRS has proposed adjustments that would increase U.S. taxable income related to transfer pricing matters with respect to our U.S. and U.K. affiliated companies and on May 17, 2022, the IRS issued a Revenue Agent’s Report asserting additional tax of approximately $170.5 million, plus interest and imposing penalties of approximately $63.7 million.
The IRS has proposed adjustments that would increase U.S. taxable income related to transfer pricing matters with respect to our U.S. and U.K. affiliated companies. The final Revenue Agent’s Report asserted additional tax of approximately $168.3 million, excluding interest, and imposing penalties of approximately $63.7 million.
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, 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.
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.
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. 20 Table of Contents We may experience difficulties developing and transitioning to advanced manufacturing process technologies, which could materially adversely affect our results.
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.
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, we regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation ("FDIC") insurance limit or at financial institutions located outside the U.S. where FDIC insurance does not apply.
Any such decline would likely impact our business, operating results, and financial condition. 12 Table of Contents Moreover, we regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation ("FDIC") insurance limit or at financial institutions located outside the U.S. where FDIC insurance does not apply.
If such credit is modified or rescinded, or we are no longer eligible for such credit, our financial results could be adversely impacted, including increasing our R&D expenses, decreasing our profitability, and adversely affecting our cash flows.
To date, there have not been any material adjustments to the Company's prior estimates of RDEC receivables. If such credit is modified or rescinded, or we are no longer eligible for such credit, our financial results could be adversely impacted, including increasing our R&D expenses, decreasing our profitability, and adversely affecting our cash flows.
Our hardware and software products, including software tools deployed by our customers, may be vulnerable to cyber-attacks. An attack could disrupt the proper functioning of our products, disrupt or cause errors in our customers' products, allow unauthorized access to our or our customers' proprietary information, or cause other destructive outcomes.
An attack could disrupt the proper functioning of our products, disrupt or cause errors in our customers' products, allow unauthorized access to our or our customers' proprietary information, or cause other destructive outcomes.
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.
Moreover, our dependence on a limited number of key customers may make it easier for key customers to pressure us to reduce prices.
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.
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.
We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations.
We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations. The Company’s fiscal year 2017, 2018, and 2019 federal income tax returns are under examination by the IRS.
The sophistication, scale and frequency of cyber-attacks has continued to increase and evolve at a rapid pace, and the risk of attack may be heightened when our employees are working remotely or as a result of geopolitical events, including Russia's invasion of Ukraine.
The sophistication, scale and frequency of cyber-attacks has continued to increase and evolve at a rapid pace, and the risk of attack may be heightened when our employees are working remotely. The risk of state-sponsored or geopolitical-related cybersecurity incidents has also increased recently due to geopolitical tensions or incidents, such as the war in Ukraine or the Israel-Hamas war.
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.
International sales represented 99 percent, 97 percent, and 98 percent of our net sales in fiscal year 2024, 2023, and 2022, respectively. We expect international sales to continue to represent a significant portion of product sales.
We may acquire other companies or technologies, which may create additional risks, including risks associated with our ability to successfully integrate these acquisitions into our business. We continue to consider future acquisitions of other companies, or their technologies or products, to improve our market position, broaden our technological capabilities, and expand our product offerings.
We continue to consider future acquisitions of other companies, or their technologies or products, to improve our market position, broaden our technological capabilities, and expand our product offerings.
Changes in tax laws and regulations may impact both our international and domestic tax liabilities and result in increased complexity and costs.
These and other changes in tax laws and regulations may impact both our international and domestic tax liabilities and result in increased complexity and uncertainty and may adversely affect our provision for income taxes.
Any increased trade barriers or restrictions on global trade could have a materially adverse impact on our business and financial results.
Any increased trade barriers or restrictions on global trade could have a materially adverse impact on our business and financial results. Our results may be affected by fluctuation in sales in the consumer electronics and smartphone 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.
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. 19 Table of Contents Our products are increasingly complex and could contain defects, which could result in material costs to us.
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.
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 currently making a significant investment to transition our products and intellectual property to next-generation circuit geometries, for example 22 nanometers. If we are unable to reliably model behaviors required for circuit design and product requirements, then our product development may be adversely impacted.
If we are unable to reliably model behaviors required for circuit design and product requirements, then our product development may be adversely impacted.
Accordingly, we expect competition for qualified personnel to intensify because there are only a limited number of individuals in the job market with the skills that we require. There also is a risk that changes in immigration laws and regulations, or their administration or enforcement, can impair our ability to attract and retain qualified engineering personnel.
There also is a risk that changes in immigration laws and regulations, or their administration or enforcement, can impair our ability to attract and retain qualified engineering personnel.
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.
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.
We cannot predict the timing, strength, or duration of any economic slowdown or subsequent economic recovery. However, recently, inflation has been a significant issue in the U.S. and overseas, resulting in rising transportation, wages, and other costs. Inflation has and may continue to increase our cost of labor, manufacturing, and other costs.
However, inflation continues to be an issue in the U.S. and overseas, resulting in rising transportation, wages, and other costs. Inflation has and may continue to increase our cost of labor, manufacturing, and other costs.
For example, some of the audio and voice functionality that we have historically provided in smartphones could be performed outside of our customers’ end product.
Some of the audio and voice functionality and/or some of our high-performance mixed-signal functionality that we have historically provided could be performed outside of our components.
Changes in government trade policies, including the imposition of tariffs and export restrictions, could have an adverse impact on our business operations and sales. The United States or foreign governments may enact changes in government trade policies that could adversely impact our ability to sell products in certain countries.
The United States or foreign governments may enact changes in government trade policies that could adversely impact our ability to sell products in certain countries. For example, the U.S. government has imposed tariffs on certain Chinese imports and, in return, the Chinese government has imposed or proposed tariffs on certain U.S. products.
Our sales could be materially impacted by the failure of other component suppliers to deliver required parts needed in the final assembly of our customers’ end products. The products we supply our customers are typically a portion of the many components provided from multiple suppliers to complete the final assembly of an end product.
The products we supply our customers are typically a portion of the many components provided from multiple suppliers to complete the final assembly of an end product. If other component suppliers are unable to deliver their required component(s) for the final end product to be assembled, our customers may delay, or ultimately cancel, their orders from us.
If that were to occur, we may be required to increase our allowance for doubtful accounts and our days sales outstanding would increase. Additionally, if our own supply chain or others from whom our customers source are financially impacted and ultimately unable to deliver their required component(s), then our customers may delay or cancel their orders from us.
Additionally, if our own supply chain or others from whom our customers source are financially impacted and ultimately unable to deliver their required component(s), then our customers may delay or cancel their orders from us. We cannot predict the timing, strength, or duration of any economic slowdown or subsequent economic recovery.
Providing public disclosures regarding ESG matters, for example sustainability reporting, is becoming more broadly expected by investors, shareholders, existing and potential employees, customers, and other third parties. Certain organizations currently, and other organizations may in the future, use such disclosures to evaluate companies regarding ESG activities and publish scores or ratings based upon ESG or “sustainability” metrics.
Certain organizations currently, and other organizations may in the future, use such disclosures to evaluate companies regarding ESG activities and publish scores or ratings based upon ESG or “sustainability” metrics.
Further, the loss of the services of key personnel or our inability to hire new personnel with the requisite skills or to assimilate talent could restrict our ability to develop new products or timely enhance existing products, sell products to our customers, or manage our business effectively. Strong competition in the semiconductor market may harm our business.
Further, the loss of the services of key personnel or our inability to hire new personnel with the requisite skills or to assimilate talent could restrict our ability to develop new products or timely enhance existing products, sell products to our customers, or manage our business effectively. 14 Table of Contents Our sales could be materially impacted by the failure of other component suppliers to deliver required parts needed in the final assembly of our customers’ end products.
Further, if there are delays from such development or transition, we may have insufficient capacity to meet customer demand, which may impact our future operating results. Security vulnerabilities may exist in our products, which could expose us to significant costs and damage our business.
Further, if there are delays from such development or transition, we may have insufficient capacity to meet customer demand, which may impact our future operating results. We frequently develop our products for the specific system architecture of our customers’ end products.
If we are unable to successfully manage the demands of our international operations, it may have an adverse effect on our business, financial condition, or results of operations. Strategic and Industry Risks We have entered into, and may enter into in the future, joint development agreements, custom product arrangements, and strategic relationships with some of our largest customers.
If we are unable to successfully manage the demands of our international operations, it may have an adverse effect on our business, financial condition, or results of operations. We have significant international sales, and risks associated with these sales could harm our operating results.

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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 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.
Biggest changeDesign Centers Sales Support Offices – International Austin, Texas Beijing, China Chandler, Arizona Shanghai, China Cupertino, California Shenzhen, China Greensboro, North Carolina Tokyo, Japan Edinburgh, Scotland, United Kingdom Singapore Newbury, England, United Kingdom Seoul, South Korea Taipei, Taiwan See Note 11 — Leases of the Notes to Consolidated Financial Statements contained in Item 8 for further detail. 28 Table of Contents
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.
ITEM 2. Properties As of March 30, 2024, 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 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.
Below is a detailed schedule that identifies our principal locations of occupied leased and owned property as of March 30, 2024, with various contractual lease terms through calendar year 2034. 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 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.
Biggest changeStock 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 Russell 3000 Index, the Philadelphia Semiconductor Index, and the NASDAQ Composite Index. 3/30/2019 3/28/2020 3/27/2021 3/26/2022 3/25/2023 3/30/2024 Cirrus Logic, Inc. 100.00 147.18 197.31 208.43 250.95 219.95 Russell 3000 Index 100.00 89.43 147.70 165.63 145.75 195.39 Philadelphia Semiconductor Index 100.00 108.78 230.38 264.61 237.87 378.21 NASDAQ Composite Index 100.00 98.09 173.16 187.97 158.27 221.02 (1) The graph assumes that $100 was invested in our common stock and in each index at the market close on March 30, 2019, and that all dividends were reinvested.
The information in this Annual Report on Form 10-K appearing under the heading “Stock Price Performance Graph” is being “furnished” pursuant to Item 201(e) of Regulation S-K under the Securities Act of 1933, as amended, and shall not be deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act.
The information in this Annual Report on Form 10-K appearing under the heading “Stock Price Performance Graph” is being “furnished” pursuant to Item 201(e) of Regulation S-K under the Securities Act of 1933, as amended, and shall not be deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act. 30 Table of Contents ITEM 6. [Reserved]
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.
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.
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 29 Table of Contents Company repurchased 0.5 million shares of its common stock for $50.0 million during the fourth quarter of fiscal year 2024. All shares of our common stock that were repurchased were retired as of March 30, 2024.
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.
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 30, 2024 (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 31, 2023 - January 27, 2024 — $ — — $ 365,126 January 28, 2024 - February 24, 2024 451 90.96 451 324,130 February 25, 2024 - March 30, 2024 97 92.51 97 315,133 Total 548 $ 91.23 548 $ 315,133 (1) The Company currently has one active share repurchase authorization: $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. (3) Prior to fiscal year 2023, the Company presented the S&P 500 Index and the S&P 500 Semiconductors Index, included above.
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) For fiscal year 2024, the Company selected the Russell 3000 Index to include in its stock price performance graph.
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.
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 22, 2024, there were 324 holders of record of our common stock. Dividend Policy We have not paid any dividends on our capital stock.
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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.
Added
In fiscal year 2024, the Company's net stock repurchases were subject to a 1 percent excise tax under the Inflation Reduction Act, which are a reduction to accumulated earnings (deficit) in the Consolidated Condensed Statements of Stockholders' Equity. Disclosure of repurchased amounts and related average price paid per share in the table above excludes the impact of excise taxes.
Removed
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.
Added
The Company is making the change away from using the NASDAQ Composite Index due to recent changes to the index used in the Company's performance-based equity grants to executives. This year's stock price performance graph includes both the newly selected index and the index used in the immediately preceding fiscal year.
Removed
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.
Removed
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 changeFiscal 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.
Biggest changeHPMS 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. Audio product line sales of $1.17 billion in fiscal year 2023 decreased from fiscal year 2022 sales of $1.19 billion.
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.
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. Additionally, audio product sales decreased $15.1 million in fiscal year 2023.
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.
Recently Issued Accounting Pronouncements For a discussion of recently 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. We track operating results in one reportable segment, but report revenue performance by product line: audio and HPMS products.
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 provision rate of 11.5 percent.
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 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 fiscal year 2022.
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.
In fiscal year 2022, the Company used approximately $18.4 million in cash for investing activities primarily 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.
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.
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.
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 believe our expected future cash earnings, existing cash, cash equivalents, 35 Table of Contents 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.
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.
As of March 30, 2024, 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.
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.
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 2024, 2023, and 2022, was $21.5 million, $10.0 million, and $1.6 million, respectively.
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.
In fiscal year 2023, the Company used $33.3 million in cash for investing activities principally related to capital expenditures and technology investments of $36.7 million, offset by $3.4 million in net sales of marketable securities.
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.
The Company recorded 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 in fiscal year 2023. See Note 12 - Restructuring for additional details.
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.
Other Income (Expense) In fiscal years 2024, 2023, and 2022 the Company reported $(0.1) million, $(3.4) million, and $1.7 million respectively, in other income (expense), related to remeasurement on foreign currency denominated monetary assets and liabilities and other non-operating income and expenses.
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.
See Note 9 - Revolving Credit Facility, Note 11 - Leases and Note 15 - Commitments and Contingencies, of the notes to the Consolidated Financial Statements in Item 8, for additional information related to these contractual obligations.
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.
Interest Expense The Company reported interest expense of $0.9 million, $0.9 million and $0.9 million for fiscal years 2024, 2023, and 2022, respectively, primarily as a result of commitment fees under the Revolving Credit Facility, described in Note 9.
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.
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 each of fiscal years 2024, 2023, and 2022, representing 99 percent, 97 percent, and 98 percent of net sales in fiscal year 2024, 2023, and 2022, respectively. Our sales are denominated primarily in U.S. dollars.
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.
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 $89.4 million in fiscal year 2024 on pre-tax income of $363.9 million, yielding an effective tax rate of 24.6 percent.
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.
All percentage amounts were calculated using the underlying data, in thousands: Fiscal Years Ended March 30, 2024 March 25, 2023 March 26, 2022 Net sales 100 % 100 % 100 % Gross margin 51 % 50 % 52 % Research and development 24 % 24 % 23 % Selling, general and administrative 8 % 8 % 8 % Restructuring — % 1 % — % Intangibles impairment — % 4 % — % Income from operations 19 % 13 % 21 % Interest income 1 % — % — % Interest expense — % — % — % Other income (expense) — % — % — % Income before income taxes 20 % 13 % 21 % Provision for income taxes 5 % 4 % 3 % Net income 15 % 9 % 18 % 32 Table of Contents Net Sales We report sales in two product line categories: audio products and HPMS products.
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 increases in interest income in fiscal year 2024 and 2023 versus prior years were a function of higher interest rates on average cash, cash equivalent, and marketable securities balances throughout the year.
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.
See Note 2 - Summary of Significant Accounting Policies - Government Assistance for additional details relating to R&D incentives. 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.
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 decrease was primarily attributable to decreased employee-related and variable compensation costs, partially offset by increased stock-based compensation costs in fiscal year 2024. 33 Table of Contents 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.
For additional discussion about our income taxes, see Note 19 - Income Taxes. Liquidity and Capital Resources Operating Activities In fiscal year 2023, cash flow from operations was $339.6 million. Operating cash flow during fiscal year 2023 was related to the cash components of our net income and a $55.6 million unfavorable change in working capital.
For additional discussion about our income taxes, see Note 19 - Income Taxes. 34 Table of Contents Liquidity and Capital Resources Operating Activities In fiscal year 2024, cash flow from operations was $421.7 million. Operating cash flow during fiscal year 2024 was related to the cash components of our net income and an $18.4 million favorable change in working capital.
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.
The most significant driver of the decrease was 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.
The increase was primarily attributable to increased employee-related expenses, professional services, variable compensation and stock-based compensation costs in fiscal year 2022.
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.
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 decrease was attributable to reduced amortization of acquisition intangibles expense, increased R&D incentives compared to the prior fiscal year, and a decrease in acquisition-related charges, variable compensation and product development costs, partially offset by an increase in employee-related expenses, stock-based compensation and facilities-related costs.
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.
Overall gross margin of 50.4 percent for fiscal year 2023 decreased from fiscal year 2022 gross margin of 51.8 percent. 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.
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”).
See Note 17 - Stockholders' Equity for a description of our share repurchase authorization. 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 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 increase was partially offset by a less favorable product mix. 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 2024.
On March 20, 2023, the Company, entered into the First Amendment (the "Amendment") to its Second Amended Credit Agreement, with the lending institutions party thereto and Wells Fargo Bank, National Association, as administrative agent.
The Revolving Credit Facility is secured by substantially all the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets. On March 20, 2023, the Company, entered into the First Amendment (the "Amendment") to its Second Amended Credit Agreement, with the lending institutions party thereto and Wells Fargo Bank, National Association, as administrative agent.
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.
Fiscal Years Ended March 30, 2024 March 25, 2023 March 26, 2022 Audio Products $ 1,083,939 $ 1,172,007 $ 1,187,126 HPMS Products 704,951 725,610 594,334 $ 1,788,890 $ 1,897,617 $ 1,781,460 Net sales for fiscal year 2024 decreased by 5.7 percent, to $1.79 billion from $1.90 billion in fiscal year 2023.
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.
Operating cash flow during fiscal year 2023 was related to the cash components of our net income and a $55.6 million unfavorable change in working capital, primarily driven by an increase in inventory and decreases in accounts payable and other accrued liabilities, partially offset by a decrease in accounts receivable.
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.
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").
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.
GILTI is unfavorably impacted by a provision in the Tax Cuts and Jobs Act of 2017 that requires research and development expenditures incurred starting in fiscal year 2023 to be capitalized and amortized ratably over five or fifteen years depending on the location in which the research activities are conducted.
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.
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. Research and Development Expenses Fiscal year 2024 research and development expenses of $426.5 million reflect a decrease of $31.9 million, or 7.0 percent, from fiscal year 2023.
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.
Investing Activities In fiscal year 2024, the Company used $163.0 million in cash for investing activities primarily related to $124.7 million in net purchases of marketable securities and capital expenditures and technology investments of $38.3 million.
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.
Selling, General and Administrative Expenses Fiscal year 2024 selling, general and administrative expenses of $144.2 million reflect a decrease of $9.0 million, or 5.9 percent, compared to fiscal year 2023.
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.
The most significant driver of the decrease was the softening in general market and smartphone demand, partially offset by ASP increases versus fiscal year 2022.
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.
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.
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.
Financing Activities In fiscal years 2024, 2023, and 2022, the Company used $201.7 million, $230.3 million, and $178.7 million, respectively, related to financing activities. In fiscal years 2024, 2023, and 2022, the Company utilized approximately $186.0 million, $191.4 million, and $167.5 million, respectively, in cash to repurchase and retire portions of its outstanding common stock.
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.
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.
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.
As of March 30, 2024, 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.
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.
Our effective tax rates in both fiscal year 2024 and 2023 were higher than the U.S. statutory rate of 21.0 percent, primarily due to U.S. tax paid on our foreign earnings resulting from an increase in global intangible low-taxed income (GILTI), which is treated as a period cost, and a reduction in foreign tax credits.
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.
The increase in gross margin for fiscal year 2024 was primarily attributable to a decline in supply chain costs, including the absence of wafer premiums and lower freight expense, in addition to a reduction in inventory reserves, partially offset by a less favorable product mix. The Company’s number of employees decreased to 1,625 as of March 30, 2024.
Fiscal Year 2022 Fiscal year 2022 net sales of $1.78 billion represented an increase over fiscal year 2021 net sales of $1.37 billion.
The Company achieved net income of $274.6 million in fiscal year 2024, which included an income tax provision in the amount of $89.4 million. 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.
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.
The decrease in net sales also reflects a $20.7 million decrease in HPMS product sales, or 2.8 percent, from fiscal year 2023 sales of $725.6 million, largely due to a decline in general market sales, primarily in non-smartphone applications. Net sales for fiscal year 2023 increased by 6.5 percent, to $1.90 billion from $1.78 billion in fiscal year 2022.
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.
HPMS product line sales of $705.0 million represented a 2.8 percent decrease from fiscal year 2023 sales of $725.6 million, largely attributable to a decline in general market sales, primarily in non-smartphone applications. Overall, gross margin for fiscal year 2024 was 51.2 percent.
Removed
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.
Added
In fiscal year 2024, the Company made good progress executing on our strategic initiatives. In our flagship audio business we completed design work on, and sampled, two next-generation products: a boosted amplifier and a smart codec during the year. We also introduced our third-generation camera controller, and gained traction in the laptop market.
Removed
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.
Added
While we are proud of our achievements in fiscal year 2024, we also encountered and successfully navigated through short-term challenges that were associated with our new HPMS product not coming to market as planned in fall 2023.
Removed
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.
Added
Throughout the year we remained committed to disciplined execution, seeking to increase both operational efficiency and the efficiency and competitiveness within our supply chain. 31 Table of Contents Fiscal Year 2024 Fiscal year 2024 net sales of $1.79 billion represented a decrease over fiscal year 2023 net sales of $1.90 billion.
Removed
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.
Added
Audio product line sales of $1.08 billion in fiscal year 2024 decreased 7.5 percent from fiscal year 2023 sales of $1.17 billion. The most significant drivers of the decrease were continued weakness in general market sales, and to a lesser extent, a reduction in components shipping in tablets versus the prior fiscal year.
Removed
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.
Added
Audio product sales decreased $88.1 million, or 7.5 percent in fiscal year 2024. The most significant drivers of the decrease were continued weakness in general market sales, primarily in non-smartphone applications, and to a lesser extent, a reduction in components shipping in tablets versus the prior fiscal year.
Removed
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.
Added
Gross Margin Overall gross margin of 51.2 percent for fiscal year 2024 increased from fiscal year 2023 gross margin of 50.4 percent. The increase was primarily due to a decline in supply chain costs, including the absence of wafer premiums and lower freight expense, in addition to a reduction in inventory reserves compared to fiscal year 2023.
Removed
The most significant driver of the increase was higher sales of audio products in laptops.
Added
In fiscal year 2024, the Company recorded an additional $2.0 million in net costs related to a workforce reduction action taken in the second quarter of fiscal year 2024 and the described events above.
Removed
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.
Added
The Organization for Economic Cooperation and Development has announced an Inclusive Framework on Base Erosion and Profit Shifting, including Pillar Two Model Rules for a global minimum tax that call for the taxation of large multinational corporations at a minimum rate of 15%.
Removed
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, the release of prior year unrecognized tax benefits during fiscal year 2021, and excess tax benefits from stock-based compensation.
Added
Certain jurisdictions, including the United Kingdom, have enacted Pillar Two legislation that will start to become effective for our fiscal year 2025. Based on enacted laws, Pillar Two is not expected to have a material impact on our consolidated financial statements.
Removed
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.
Added
The favorable change in working capital was driven primarily by prepaid wafer usage (related to the Capacity Reservation Agreement), decreases in other assets and increased income taxes payable, partially offset by decreased accounts payable and acquisition-related liabilities, as well as increases in accounts receivable. In fiscal year 2023, cash flow from operations was $339.6 million.
Removed
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.
Added
In fiscal year 2022, cash flow from operations was $124.8 million.
Added
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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed8 unchanged
Biggest changeBased 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.
Biggest changeBased on investment positions as of March 30, 2024 and March 25, 2023, a hypothetical 100 basis point increase in interest rates across all maturities would result in a $3.5 million and $0.8 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.
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.
Foreign Currency Exchange Risk Our revenue and spending is transacted primarily in U.S. dollars; however, in fiscal years 2024, 2023, and 2022, 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 25, 2023. 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 30, 2024. Actual results may differ materially.
See Note 5 - Derivative Financial Instruments for additional information related to our hedging activities. 35 Table of Contents
See Note 5 - Derivative Financial Instruments for additional information related to our hedging activities. 36 Table of Contents

Other CRUS 10-K year-over-year comparisons