Item 2.02 Results of Operations and Financial Condition.
On January 29, 2020, the Company issued a press release announcing its financial
results for its third quarter of fiscal year 2020. The full text of the press
release is furnished as Exhibit No. 99.1 to this Current Report on Form 8-K.
Item 2.05 Costs Associated with Exit or Disposal Activities.
On January 27, 2020, the Board of Directors of the Company approved management's
recommendation to discontinue efforts relating to microelectromechanical systems
("MEMS") microphones. This decision to exit follows the Company's previous
announcement that it would evaluate options for this product line and reallocate
resources to focus on projects expected to have a larger return on investment.
The Company decided to take the present action after no strategic alternatives
proved to be viable.
The Company estimates that its exit from MEMS microphones will result in a
charge to operating expenses of approximately $22.0 million in the fourth
quarter of fiscal year 2020. This charge will encompass approximately $19.0
million in non-cash charges associated with the disposal of tangible and
intangible assets related to MEMS microphones, and approximately $3.0 million of
cash expenditures associated with severance and the settlement of prior purchase
commitments for engineering materials. The Company anticipates the exit to be
materially complete by the first quarter of fiscal year 2021.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
John Forsyth, age 46, has been appointed as President of the Company, effective
January 27, 2020. Jason Rhode will continue to serve as the Company's Chief
Executive Officer and a member of the Company's Board of Directors. Dr. Rhode
had also served as the Company's President until Mr. Forsyth's appointment.
Mr. Forsyth joined the Company in August 2014 through the acquisition of Wolfson
Microelectronics, where he served as Vice President of Audio Products.
Following that acquisition, from August 2014 until June 2018, Mr. Forsyth served
as the Company's Vice President of Product Marketing. From June 2018 until his
appointment as President, he served as the Company's Chief Strategy Officer.
There are no family relationships between Mr. Forsyth and any director or
executive officer of the Company, and Mr. Forsyth has no direct or indirect
material interest in any transaction required to be disclosed pursuant to Item
404(a) of Regulation S-K.
In his role as President, Mr. Forsyth will receive an annual base salary of
$400,000 and will continue to participate in the Company's 2007 Management and
Key Individual Contributor Incentive Plan ("Management Plan"). Under the
Management Plan, Mr. Forsyth is eligible to earn a cash semiannual target bonus
of 37.5% of his base annual salary. The bonus is subject to adjustment in
accordance with the Management Plan as described in the Company's definitive
proxy statement dated June 5, 2019 ("Proxy Statement").
In addition, in connection with his promotion to President, the Compensation
Committee approved an award of restricted stock units under the Company's 2018
Long Term Incentive Plan with a grant date value of $1.5 million. These
restricted stock unit awards will be granted on the Company's next regularly
scheduled monthly grant date of February 5, 2020, and 100% of the shares
underlying the restricted stock unit awards will vest on the third anniversary
of the grant date. The awards are subject to continued service through the
vesting date.
Mr. Forsyth will also continue to participate in the Company's 2007 Executive
Severance and Change of Control Plan ("2007 Severance Plan"). In the event of
Mr. Forsyth's involuntary termination other than for "cause" (as defined in the
2007 Severance Plan) he would be eligible to receive: (i) a continuation of base
salary for a period of up to six months following termination, and (ii) payment
in full of a reasonable estimate of COBRA premiums for three months. If his
employment is terminated either by the Company without "cause" or by him for
"good reason" within 12 months following a "change of control" of the Company
(as each quoted term is defined in the 2007 Severance Plan), he would be
eligible to receive a change of control termination payment, which is comprised
of: (i) a lump sum payment equal to 12 months' base salary, (ii) acceleration in
full of any unvested stock options or any other securities or similar incentive
awards that have been granted or issued to him as of the employment termination
date, and (iii) payment in full of a reasonable estimate of COBRA premiums for
12 months. In addition, he would have until six months from the employment
termination date to exercise any vested options, except that no option would be
exercisable after the option's original expiration date.
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Mr. Forsyth's compensation will be subject to the standard annual review and
adjustment by the Company's Compensation Committee as described in the Proxy
Statement.
On January 29, 2020, the Company issued a press release announcing Mr. Forsyth's
appointment as President. A copy of the press release is attached hereto as
Exhibit 99.3 and is incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Upon recommendation of the Governance and Nominating Committee, the Board of
Directors of the Company approved an amendment and restatement of the Company's
bylaws ("Bylaws") effective January 27, 2020 to (i) more clearly define the
roles of chief executive officer and president to reflect that those positions
may be held by separate individuals, and (ii) effect additional minor
clarifications and revisions.
The foregoing does not constitute a complete summary of the amendments to the
Company's restated Bylaws and is qualified in its entirety by reference to the
complete text of the restated Bylaws, which is attached hereto as Exhibit 3.1
and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On January 29, 2020, in addition to issuing a press release, the Company posted
on its website a shareholder letter to investors summarizing the financial
results for its third quarter of fiscal year 2020. The full text of the
shareholder letter is furnished as Exhibit No. 99.2 to this Current Report on
Form 8-K.
Use of Non-GAAP Financial Information
To supplement Cirrus Logic's financial statements presented on a GAAP basis,
Cirrus has provided non-GAAP financial information, including non-GAAP net
income, diluted earnings per share, operating income and profit, operating
expenses, gross margin and profit, tax expense and tax expense impact on
earnings per share. A reconciliation of the adjustments to GAAP results is
included in the tables to the press release furnished as Exhibit 99.1 to the
Current Report on Form 8-K. Non-GAAP financial information is not meant as a
substitute for GAAP results, but is included because management believes such
information is useful to our investors for informational and comparative
purposes. In addition, certain non-GAAP financial information is used
internally by management to evaluate and manage the company. The non-GAAP
financial information used by Cirrus Logic may differ from that used by other
companies. These non-GAAP measures should be considered in addition to, and not
as a substitute for, the results prepared in accordance with GAAP.
The information contained in Items 2.02, 2.05, 5.02, 7.01, and 9.01 in this
Current Report on Form 8-K and the exhibits furnished hereto contain
forward-looking statements regarding the Company and cautionary statements
identifying important factors that could cause actual results to differ
materially from those anticipated. In addition, this information shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities
of that section, nor shall they be deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as expressly set forth by specific reference in such a filing.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
Exhibit 3.1 Amended and Restated Bylaws of Cirrus Logic, Inc.
Exhibit 99.1 Cirrus Logic, Inc. press release dated January 29, 2020
Exhibit 99.2 Cirrus Logic, Inc. shareholder letter dated January 29, 2020
Exhibit 99.3 Cirrus Logic, Inc. press release dated January 29, 2020
Exhibit 104 Cover Page Interactive Data File (formatted as Inline XBRL) /
(embedded within the Inline XBRL document) / Inline XBRL for the
cover page of this Current Report on Form 8K
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