Item 1.01 Entry into a Material Definitive Agreement.
Capacity Reservation and Wafer Supply Commitment Agreement
On July 28, 2021 (the "Effective Date"), Cirrus Logic, Inc. (the "Company"),
under the backdrop of the current global supply environment, entered into a
Capacity Reservation and Wafer Supply Commitment Agreement (the "Commitment
Agreement") with GLOBALFOUNDRIES Singapore Pte. Ltd. ("GF") to provide the
Company a wafer capacity commitment and wafer pricing for calendar years 2022 -
2026 (the "Commitment Period").
The Commitment Agreement requires GF to provide, and the Company to purchase, a
defined number of wafers on a quarterly basis for the Commitment Period, subject
to shortfall payments by GF if GF fails to deliver the required wafers within
defined grace periods. Any quarterly shortfall payments required to be paid by
GF would be based on a percentage of the average price of products that were
either delivered or were required to be delivered under accepted purchase orders
during the quarter.
In exchange for GF's capacity commitment, the Company agreed to pay a $50
million non-refundable capacity reservation fee. In addition, the Company
agreed to pre-pay GF $175 million for future wafer purchases, which will be
credited back to the Company as a portion of the price of wafers purchased
beginning in the third quarter of calendar year 2023. GF will issue an invoice
for the reservation fee and the pre-payment after the Effective Date, to be paid
by the Company within thirty days of the invoice date.
The Company currently estimates that it will purchase at least approximately
$1.6 billion of wafers from GF for years 2022 to 2026 under the Commitment. The
Commitment Agreement may be terminated if: either party is in material breach,
and such breach is not cured within 60 days of written notice of the breach; one
party is insolvent, is generally unable to pay its debts as they become due, or
admits in writing its inability to pay its debts as they become due; or GF fails
to meet at least 70% of its capacity commitment for two consecutive quarters, or
the Company fails to purchase 70% of its purchase commitment for two consecutive
quarters.
In addition, the Commitment Agreement provides the Company an option to reserve
a specified portion of the capacity commitment for wafers that include certain
additional technology beginning in calendar year 2023. If the Company exercises
that option by August 31, 2021, then GF agrees to provide up to a maximum
portion of the wafers pursuant to the capacity commitment with the additional
technology. In exchange for the capacity commitment with the additional
technology, the Company would pay an additional $10 million non-refundable fee
and pre-pay an additional $20 million for future wafer purchases.
Item 2.02 Results of Operations and Financial Condition.
On July 28, 2021, Cirrus Logic, Inc. ("Cirrus Logic" or the "Company") issued a
press release announcing its financial results for its first quarter of fiscal
year 2022. The full text of the press release is furnished as Exhibit No. 99.1
to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
On July 28, 2021, in addition to issuing a press release, the Company posted on
its website a shareholder letter to investors summarizing the financial results
for its first quarter of fiscal year 2022. 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, tax expense impact on earnings
per share, and effective tax rate. A reconciliation of the adjustments to GAAP
results is included in the press release below. 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 1.01, 2.02, 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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
Exhibit 99.1 Cirrus Logic, Inc. press release dated July 28, 2021
Exhibit 99.2 Cirrus Logic, Inc. shareholder letter dated July 28, 2021
Exhibit 104 Cover Page Interactive Data File (formatted as Inline XBRL)
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses