LEARN MORE AT www.cirrus.com NORTH AMERICA EUROPE CORPORATE HEADQUARTERS CIRRUS LOGIC INTERNATIONAL CIRRUS LOGIC K.K. 800 West Sixth Street Austin, Texas 78701 United States T +1-512-851-4000 Toll-Free +1-800-888-5016 (U.K.) LTD. Westfield House 26 Westfield Road Edinburgh EH11 2QB United Kingdom T +44 (0) 131-272-7000 JAPAN Annex 8F DBC Shinagawa Tokyu Building 1-7-18 Konan Minato-ku Tokyo, Japan 108-0075 T +81 (3) 5782-8180 ASIA PACIFIC CIRRUS L OGIC CHINA HOLDINGS, I NC. 2401-2402 Aerospace Building 4019 Shen Nan Road Shenzhen, 518031 China T +86 (755) 8379-7561 © 2015 Cirrus Logic, Inc. All rights reser ved. Cirrus Logic, Cirrus, the Cirrus Logic logo designs are trademarks of Cirrus Logic, Inc. 2015 Annual Report UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended March 28, 2015 ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number 0-17795 CIRRUS LOGIC, INC. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 77-0024818 (I.R.S. Employer Identification No.) 800 W. 6th Street, Austin, TX 78701 (Address of principal executive offices) Registrant’s telephone number, including area code: (512) 851-4000 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 Par Value Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES Í NO ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ‘ NO Í Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES Í NO ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES Í NO ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Í Smaller reporting company ‘ Non-accelerated filer ‘ Accelerated filer ‘ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ‘ NO Í The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates was $964,427,123 based upon the closing price reported on the NASDAQ Global Select Market as of September 26, 2014. Stock held by directors, officers and stockholders owning 5 percent or more of the outstanding common stock were excluded as they may be deemed affiliates. This determination of affiliate status is not a conclusive determination for any other purpose. As of May 22, 2015, the number of outstanding shares of the registrant’s common stock, $0.001 par value, was 63,411,134. DOCUMENTS INCORPORATED BY REFERENCE Certain information contained in the registrant’s proxy statement for its annual meeting of stockholders to be held July 29, 2015 is incorporated by reference in Part II – Item 5. and Part III of this Annual Report on Form 10-K. CIRRUS LOGIC, INC. FORM 10-K For The Fiscal Year Ended March 28, 2015 INDEX PART I Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 7 Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . 26 Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . 76 Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 PART III Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . 77 Item 14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 PART IV Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Page 2 of 80 ITEM 1. Business PART I Cirrus Logic, Inc. (“Cirrus Logic,” “We,” “Us,” “Our,” or the “Company”) develops high-precision, analog and mixed-signal integrated circuits (“ICs”) for a broad range of innovative customers. Building on our diverse analog and mixed-signal product portfolio, Cirrus Logic delivers highly optimized products for a variety of audio, industrial and energy-related applications. We were incorporated in California in 1984, became a public company in 1989 and were reincorporated in the State of Delaware in February 1999. Our primary facility housing engineering, sales and marketing, and administrative functions is located in Austin, Texas. We also have offices in various other locations in the United States, United Kingdom, Australia, and Asia, including the People’s Republic of China, Hong Kong, South Korea, Japan, Singapore, and Taiwan. Our common stock, which has been publicly traded since 1989, is listed on the NASDAQ Global Select Market under the symbol CRUS. We maintain a website with the address www.cirrus.com. We are not including the information contained on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. We 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 also routinely post other important information on our website, including information specifically addressed to investors. We intend for the investor relations section of our website to be a recognized channel of distribution for disseminating information to the securities marketplace in general. 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. 6th Street, Austin, Texas 78701, or via email at Investor.Relations@cirrus.com. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements filed electronically with the SEC by Cirrus Logic. Segments We determine our operating segments in accordance with Financial Accounting Standards Board (“FASB”) guidelines. 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: Portable Audio and Non-Portable Audio and Other. Our CEO receives and uses enterprise- wide financial information to assess financial performance and allocate resources, rather than detailed information at a product line level. Additionally, our product lines have similar characteristics and customers. They share 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. For fiscal years 2015, 2014, and 2013, Portable Audio product sales were $740.3 million, $562.7 million, and $652.0 million, respectively. For fiscal years 2015, 2014, and 2013, Non- Portable Audio and Other product sales were $176.3 million, $151.6 million, and $157.8 million, respectively. See Note 18 - Segment Information, of the Notes to Consolidated Financial Statements contained in Item 8 for further details including sales and property, plant and equipment, net, by geographic locations. Company Strategy Cirrus Logic targets growing markets where we can leverage our expertise in analog and digital signal processing to solve complex problems. 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. We focus on building strong engineering relationships with the product teams at these customers and work to develop highly differentiated products that address their specific needs. Our products are comprised of our best-in-class hardware and a combination of our own intellectual property (“IP”), algorithms that have been ported to our platform by an ecosystem of third-party partners, and our customers’ IP. When we have been successful with this approach, one initial design win has often expanded into additional products. This strategy gives us the opportunity to increase our content with a customer over time through the incorporation of new features, the integration of other system components into our products and the addition of new components. Page 3 of 80 Markets and Products The following provides a detailed discussion regarding our portable audio and non-portable audio and other product lines: Portable Audio Products: High-precision analog and mixed-signal components designed for mobile devices including smartphones, tablets, wearables, smart accessories and portable media players. Non-Portable Audio and Other Products: High-precision analog and mixed-signal components targeting the consumer, automotive, energy and industrial markets. PORTABLE AUDIO PRODUCTS We are a leading provider of analog and mixed-signal audio converter and digital signal processing products in many of today’s mobile applications. As the only IC supplier with the complete end-to-end solution from capture to playback, we have an extensive portfolio of “codecs” - chips that integrate analog-to-digital converters (“ADCs”) and digital-to-analog converters (“DACs”) into a single IC, “smart codecs” – codecs with digital signal processing integrated, active noise cancelling (“ANC”), amplifiers, micro-electromechanical systems (“MEMS”) microphones, as well as standalone digital signal processors (“DSPs”). Additionally, the Company’s SoundClear® technology consists of a broad portfolio of tools, software and algorithms that help to differentiate our customers’ products by improving the user experience with features such as enhanced voice quality, voice capture and audio playback. Our products are designed for use in a wide array of mobile applications, including smartphones, tablets, portable media players, wearables and smart accessories such as headsets and headphones. NON-PORTABLE AUDIO AND OTHER PRODUCTS We provide high-precision analog and mixed-signal ICs for a variety of products in the consumer, automotive, industrial and energy applications. The Company supplies a wide range of products including ICs, codecs, ADCs, DACs, digital interface and amplifiers. Within the consumer market our products are utilized in laptops, audio/video receivers (AVRs”), home theater systems, set-up boxes, portable speakers, digital camcorders, musical instruments and professional audio products. Applications for products in the automotive market include satellite radio systems, telematics and multi-speaker car-audio systems. Our products are also used in a wide array of high-precision industrial and energy-related applications including digital utility meters, power supplies, energy control, energy measurement, and energy exploration applications. Customers, Marketing, and Sales We offer products worldwide through both direct and indirect sales channels. Our major customers are among the world’s leading electronics manufacturers. We target both large existing and emerging customers that derive value from our expertise in advanced analog and mixed-signal design processing, systems-level integrated circuit engineering and embedded software development. We derive our revenues from both domestic and international sales, including sales in the People’s Republic of China, the European Union, Hong Kong, Japan, South Korea, Taiwan, Australia, and the United Kingdom. Our domestic sales force includes a network of direct sales offices located in California and Texas. International sales offices and staff are located in Hong Kong, Japan, Shanghai and Shenzhen in the People’s Republic of China, Singapore, South Korea, Taiwan, and the United Kingdom. We also have sales staff located in Germany. We supplement our direct sales force with external sales representatives and distributors. 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. See Note 18 - 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. Since the components we produce are largely proprietary and generally not available from second 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. For fiscal years 2015, 2014, and 2013, our ten largest end customers, represented approximately 87 percent, 88 percent, and 89 percent, of our sales, respectively. For fiscal Page 4 of 80 years 2015, 2014, and 2013, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 72 percent, 80 percent, and 82 percent, of the Company’s total sales, respectively. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2015, 2014, or 2013. 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 including Taiwan Semiconductor Manufacturing Company, Limited, MagnaChip Semiconductor Corporation and GLOBALFOUNDRIES. The Company’s primary assembly and test houses include Advanced Semiconductor Engineering, Inc., Amkor Technology Inc., Nepes Corporation, Siliconware Precision Industries Co., Ltd. and STATS ChipPAC 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. 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. While we do have some redundancy of fabrication processes by using multiple outside foundries, any interruption of supply by one or more of these foundries could materially impact the Company. As a result, we maintain some amount of business interruption insurance to help reduce the risk of wafer supply interruption, but we are not fully insured against such risk. Our supply chain management organization is responsible for the management of all aspects of the manufacturing, assembly, and testing of our products, including process and package development, test program development, and production testing of products in accordance with our ISO-certified quality management system. Although our products are made from basic materials (principally silicon, metals and plastics), all of which are available from a number of suppliers, capacity at wafer foundries sometimes becomes constrained. The limited availability of certain materials may impact our suppliers’ ability to meet our demand needs or impact the price we are charged. The prices of certain other basic materials, such as metals, gases and chemicals used in the production of circuits can increase as demand grows for these basic commodities. In most cases, we do not procure these materials ourselves; nevertheless, we are reliant on such materials for producing our products because our outside foundry and package and test subcontractors must procure them. To help mitigate risks associated with constrained capacity, we use multiple foundries, assembly and test sources. 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 28, 2015, we held approximately 2,200 pending and issued patents worldwide, which include approximately 1,100 granted U.S. patents, 274 U.S. pending patent applications and various international patents and applications. Our U.S. patents expire in calendar years 2015 through 2033. 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 do not anticipate any material effect on our business due to any patents expiring in 2015, 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, WOLFSON, CRYSTAL, and SoundClear, among others. These U.S. registrations may be renewed as long as the marks continue to be used in interstate commerce. We have also filed or obtained foreign registration for these marks in other countries or jurisdictions where we conduct, or anticipate conducting, international business. To complement our own research and development efforts, we have also licensed and expect to continue to license, a variety of intellectual property and technologies important to our business from third parties. 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. Expenditures for research and development in fiscal years 2015, 2014, and 2013 Page 5 of 80 were $197.9 million, $126.2 million, and $114.1 million, respectively. 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. Our future success may also depend on 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. Competition Markets for our products are highly competitive and we expect that competition will continue to increase. Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit key engineering talent, execute on new product developments, partner with customers to include these new products into their applications, and provide cost efficient versions of existing products. We compete with other semiconductor suppliers that offer standard semiconductors, application-specific standard products and fully customized ICs, including embedded software, chip and board-level products. While no single company competes with us in all of our product lines, we face significant competition in all markets where our products are available. Within Portable Audio, Cirrus Logic is the only IC supplier with the complete end-to-end solution from capture to playback including amplifiers, codecs, DSP and MEMS microphones. We expect to face additional competition from new entrants in our markets, which may include both large domestic and international IC manufacturers and smaller, emerging companies. Our primary competitors include, but are not limited to AAC Technologies, AKM Semiconductor Inc., Analog Devices Inc., Audience, Inc., Austriamicrosystems AG, DSP Group, ESS Technology, Inc., GoerTek Inc., InvenSense, Inc., Knowles Corporation, Maxim Integrated Products Inc., NXP Semiconductors N.V., Qualcomm Incorporated, Realtek Semiconductor Corporation, ST Microelectronics N.V., and Texas Instruments, Inc. The principal competitive factors in our markets include: time to market; quality of hardware/software design and end-market systems expertise; price; product performance, features, quality and compatibility with standards; access to advanced process and packaging technologies at competitive prices; and sales and technical support, which includes assisting our customers with integration of our components into their new products and providing support from the concept stage through design, launch and production ramp. Product life cycles may vary greatly by product category. For example, many consumer electronic devices have shorter design-in cycles; therefore, our competitors have increasingly frequent opportunities to achieve design wins in next-generation systems. Conversely, this also provides us frequent opportunities to displace competitors in products that have previously not utilized our design. The industrial and automotive markets typically have longer life cycles, which provide continued revenue streams over longer periods of time. Backlog Sales are made primarily pursuant to short-term purchase orders for delivery of products. The quantity actually ordered by the customer, as well as the shipment schedules, are frequently revised, without significant penalty, to reflect changes in the customer’s needs. The majority of our backlog is typically requested for delivery within six months. In markets where the end system life cycles are relatively short, customers typically request delivery in six to twelve weeks. We believe a backlog analysis at any given time gives little indication of our future business except on a short-term basis, principally within the next 60 days. We utilize backlog as an indicator to assist us in production planning. However, backlog is influenced by several factors including market demand, pricing, and customer order patterns in reaction to product lead times. Quantities actually purchased by customers, as well as prices, are subject to variations between booking and delivery because of changes in customer needs or industry conditions. As a result, we believe that our backlog at any given time is an incomplete indicator of future sales. Employees As of March 28, 2015, we had 1,104 full-time employees, an increase of 353 employees, or 47 percent, from the end of fiscal year 2014. The increase was primarily due to headcount increases as a result of the Wolfson Microelectronics plc. (“Wolfson”) acquisition (the “Acquisition”) in August 2014. Of our full-time employees, Page 6 of 80 66 percent were engaged in research and product development activities, 26 percent in sales, marketing, general and administrative activities, and 8 percent in manufacturing-related activities. Our future success depends, in part, on our ability to continue to attract, retain and motivate highly qualified technical, marketing, engineering, and administrative personnel. We have never had a work stoppage and none of our employees are represented by collective bargaining agreements. We consider our employee relations to be good. Forward—Looking Statements This Annual Report on Form 10-K and certain information incorporated herein by reference contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included or incorporated by reference in this Annual Report on Form 10-K, other than statements that are purely historical, are forward-looking statements. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “estimates,” and “intend.” Variations of these types of words and similar expressions are intended to identify these forward-looking statements. Any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by our forward-looking statements are those discussed in Item 1A. Risk Factors and elsewhere in this report, as well as in the documents filed by us with the SEC, specifically the most recent reports on Form 10- Q and 8-K, each as it may be amended from time to time. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K, and we undertake no obligation to update this information to reflect events or circumstances after the filing of this report with the SEC, except as required by law. All forward- looking statements, expressed or implied, included in this Annual Report on Form 10-K and attributable to Cirrus Logic are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we may make or persons acting on our behalf may issue. We undertake no obligation to revise or update publicly any forward- looking statement for any reason. ITEM 1A. Risk Factors Our business faces significant risks. The risk factors set forth below may not be the only risks that we face and there is a risk that we may have failed to identify all possible risk factors. Additional risks that we are not aware of yet or that currently are not significant may adversely affect our business operations. You should read the following cautionary statements in conjunction with the factors discussed elsewhere in this and other Cirrus Logic filings with the SEC. 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. 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. While we generate sales from a broad base of customers worldwide, the loss of any of our key customers, or a significant reduction in sales or selling prices to any key customer, or reductions in selling prices made to retain key customer relationships, would significantly reduce our revenue, margins and earnings and adversely affect our business. For the twelve-month periods ending March 28, 2015 and March 29, 2014, our ten largest end customers represented approximately 87 percent and 88 percent of our sales, respectively. For the twelve-month periods ending March 28, 2015 and March 29, 2014, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 72 percent and 80 percent of the Company’s total sales, respectively. Page 7 of 80 We may not be able to maintain or increase sales to certain of our key customers for a variety of reasons, including the following: ▪ 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 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. In addition, our dependence on a limited number of key customers may make it easier for them to pressure us on price reductions. We have experienced pricing pressure from certain key customers and we expect that the average selling prices for certain of our products will decline from time to time, potentially reducing our revenue, our margins and our earnings. Our key customer relationships often require us to develop new products that may involve significant technological challenges. Our customers frequently place considerable pressure on us to meet their tight development schedules. In addition, we may from time to time enter into customer agreements providing for exclusivity periods during which we may only sell specified products or technology to that customer. Accordingly, we may have to devote a substantial amount of resources to strategic relationships, which could detract from or delay our completion of other important development projects or the development of next generation products and technologies. Our lack of diversification in our revenue and customer base increases the risk of an investment in our company, and our consolidated financial condition, results of operations, and stock price may deteriorate if we fail to diversify. Although we continue to invest in and investigate 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. Larger companies have the ability to manage their risk by product, market, and customer diversification. However, we lack diversification, in terms of both the nature and scope of our business, which increases the risk of an investment in our company. If we cannot diversify our customer and revenue opportunities, our financial condition and results of operations could deteriorate. We have entered into joint development agreements, custom product arrangements, and strategic relationships with some of our largest customers. These arrangements subject us to a number of risks, and any failure to execute on any of these arrangements could have a material adverse effect on our business, results of operations, and financial condition. We have entered into joint development, product collaboration and technology licensing arrangements with some of our largest customers, and we expect to enter into new strategic arrangements of these kinds from time to time in the future. Such arrangements can magnify several risks for us, including loss of control over the development and development timeline of jointly developed products, risks associated with the ownership of the intellectual property that is developed pursuant to such arrangements, and increased risk that our joint development activities may result in products that are not commercially successful or that are not available in a timely fashion. In addition, any third party with whom we enter into a joint development, product collaboration or technology licensing arrangement may fail to commit sufficient resources to the project, change its policies or Page 8 of 80 priorities or abandon or fail to perform its obligations related to such arrangement. In addition, we may from time to time enter into customer product arrangements that provide for exclusivity periods during which we may only sell specified products or technologies to that particular customer. Any failure to timely develop commercially successful products through our joint development activities as a result of any of these and other challenges could have a material adverse effect on our business, results of operations, and financial condition. The Wolfson acquisition may not generate the results expected and could be difficult to integrate, divert the attention of key personnel, disrupt our business, dilute stockholder value and impair our financial results. In August 2014, we concluded the acquisition of Wolfson. There can be no assurance that the Wolfson acquisition will generate the expected returns and other projected results we anticipate. For example, we may not be able to achieve the anticipated synergies of the Acquisition, including expected increases in revenue and cost savings. Wolfson’s product lines may have lower margins than our existing business. As a result of these and other risks, if we fail to manage the integration of Wolfson effectively, the business and financial results of Cirrus Logic, Wolfson and the combined company could be adversely affected. Specifically, the Wolfson acquisition may involve numerous risks, any of which could harm our business, including: ▪ ▪ ▪ ▪ ▪ ▪ difficulties in integrating the manufacturing, operations, technologies, products, offices, systems, existing contracts, accounting, personnel and culture and realizing the anticipated synergies of the combined businesses; difficulties in supporting and transitioning existing customers; diversion of financial and management resources from our existing operations; risks associated with entering new markets in which we have limited or no experience, including risks related to technology, customers, competitors, product cycles, customer demand, terms and conditions and other industry specific issues; potential loss of key employees; and some existing customers, including key customers, of Cirrus Logic and/or Wolfson may have concerns about purchasing products from the combined company if, for example, the combined company is also selling products to their competitors. We may acquire other companies or technologies, which may create additional risks associated with our ability to successfully integrate them 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. If we are able to acquire companies, products or technologies that would enhance our business, we could experience difficulties in integrating them. Integrating acquired businesses involves a number of risks, including, but not limited to: ▪ ▪ ▪ ▪ ▪ ▪ the potential disruption of our ongoing business; unexpected costs or incurring unknown liabilities; the diversion of management resources from other strategic and operational issues; the inability to retain the employees of the acquired businesses; difficulties relating to integrating the operations and personnel of the acquired businesses; adverse effects on our existing customer relationships or the existing customer relationships of acquired businesses; Page 9 of 80 ▪ ▪ ▪ the potential incompatibility of the acquired business or their business customers; adverse effects associated with entering into markets and acquiring technologies in areas in which we have little experience; and acquired intangible assets becoming impaired as a result of technological advancements or worse-than- expected performance of the acquired business. If we are unable to successfully address any of these risks, our business could be harmed. Our failure to develop and ramp new products into production in a timely manner could harm our operating results. Our success depends upon our ability to develop new products for new and existing customers, and to introduce these products in a timely and cost-effective manner. New product introductions involve significant investment of resources and potential risks. Delays in new product introductions or less-than-anticipated market acceptance of our new products are possible and would have an adverse effect on our sales and earnings. The development of new products is highly complex and, from time-to-time, we have experienced delays in developing and introducing these new products. 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 the 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. Both sales and/or margins may be materially affected if new product introductions are delayed, or if our products are not designed into successive generations of new or existing customers’ products. Our failure to develop and introduce new products successfully could harm our business and operating results. In addition, difficulties associated with adapting our technology and product design to the proprietary process technology and design rules of outside foundries can lead to reduced yields of our products. Since low yields may result from either design or process technology failures, yield problems may not be effectively determined or resolved until an actual product exists that can be analyzed and tested to identify process sensitivities relating to the design rules that are used. As a result, yield problems may not be identified until well into the production process, and resolution of yield problems may require cooperation between our manufacturer and us. This risk could be compounded by the offshore location of certain of our manufacturers, increasing the effort and time required to identify, communicate and resolve manufacturing yield problems. 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 are subject to risks relating to product concentration. We derive a substantial portion of our revenues from a limited number of products, and we expect these products to represent a large percentage of our revenues in the near term. Customer acceptance of these products is critical to our future success. 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; Page 10 of 80 ▪ ▪ ▪ failure of our products to achieve continued market acceptance; competitive products; new technological standards or changes to existing standards that we are unable to address with our products; ▪ manufacturing or supply issues that prevent us from meeting our customers’ demand for these products; ▪ a failure to release new products or enhanced versions of our existing products on a timely basis; and ▪ the failure of our new products to achieve market acceptance. In general, our customers may cancel or reschedule orders on short notice without incurring significant penalties; therefore, our sales and operating results in any quarter are difficult to forecast. In general, we rely on customers issuing purchase orders to buy our products rather than long-term supply contracts. Customers may cancel or reschedule orders on short notice without incurring significant penalties. Therefore, cancellations, reductions, or delays of orders from any significant customer could have a material adverse effect on our business, financial condition, and results of operations. In addition, a significant portion of our sales and earnings in any quarter depends upon customer orders for our products that we receive and fulfill in that quarter. Because our expense levels are based in part on our expectations as to future revenue and to a large extent are fixed in the short term, we likely will be unable to adjust spending on a timely basis to compensate for any unexpected shortfall in sales or reductions in average selling prices. Accordingly, any significant shortfall of sales in relation to our expectations could hurt our operating results. Our debt obligations may be a burden on our future cash flows and cash resources. On August 29, 2014, we entered into a credit agreement (the “Credit Agreement”), which provides for a $250 million senior secured revolving credit facility. As of March 28, 2015, the Company had an outstanding balance of $180.4 million under the facility. The credit facility matures on August 29, 2017. Our ability to repay the principal of, to pay interest on or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive, regulatory and other factors, some of which are beyond our control. 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 generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance the indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the Credit Agreement. Our Credit Agreement contains restrictions that limit our flexibility in operating our business. Our Credit Agreement contains various covenants that limit our ability to engage in specified types of transactions. These covenants limit our ability to, among other things: ▪ ▪ pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments; incur additional indebtedness or issue certain preferred shares; ▪ make certain investments; ▪ sell certain assets; ▪ ▪ ▪ create liens; consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and enter into certain transactions with our affiliates. Page 11 of 80 A breach of any of these covenants could result in a default under Credit Agreement. In the event of a default under the Credit Agreement, the lenders could elect to declare all amounts outstanding to be immediately due and payable. If our lenders accelerate the repayment of borrowings, we may not have sufficient assets to repay our debt obligations. If we were unable to repay amounts due to the lenders under our credit facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. 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 in order to complete the final assembly of an end product. If one or more of these other component suppliers are unable to deliver their required component(s) in order for the final end product to be assembled, our customers may delay, or ultimately cancel, their orders from us. Strong competition in the semiconductor market may harm our business. The IC industry is intensely competitive and is frequently characterized by rapid technological change, price erosion, technological obsolescence, and a push towards IC component integration. Because of shortened product life cycles and even shorter design-in cycles in a number of the markets that we serve, our competitors have increasingly frequent opportunities to achieve design wins in next-generation systems. 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. Our principal competitors in these markets include AAC Technologies, AKM Semiconductor Inc., Analog Devices Inc., Audience, Inc., Austriamicrosystems AG, DSP Group, ESS Technology, Inc., GoerTek Inc., InvenSense, Inc., Knowles Corporation, Maxim Integrated Products Inc., NXP Semiconductors N.V., Qualcomm Incorporated, Realtek Semiconductor Corporation, ST Microelectronics N.V., and Texas Instruments, Inc. Many of these competitors have greater financial, engineering, manufacturing, marketing, technical, distribution, and other resources; broader product lines; broader intellectual property portfolios; and longer relationships with customers. We also expect intensified competition from emerging companies and from customers who develop their own IC products. In addition, some of our current and future competitors maintain their own fabrication facilities, which could benefit them in connection with cost, capacity, and technical issues. Increased competition could adversely affect our business. We cannot provide assurances that we will be able to compete successfully in the future or that competitive pressures will not adversely affect our financial condition and results of operations. Competitive pressures could reduce market acceptance of our products and result in price reductions and increases in expenses that could adversely affect our business and our financial condition. In particular, we have seen increased pricing pressures in the portable audio market, which will likely impact revenues and gross margins in the future. We frequently develop our products for the specific system architecture of our customers’ end products. If our customers were to change system architectures or incorporate some of the features of our products into other parts of the system, we risk the potential loss of revenue and reduced average selling prices. Our customers, particularly in the portable audio market, could potentially transition to different audio architectures, develop their own competing technologies and integrated circuits, or integrate the functionality that our integrated circuits and software have historically provided into other components in their audio systems. If our customers were to transition to these different system architectures, our results could be adversely affected by the elimination of the need for our current technology and products, resulting in reduced average selling prices for our components and loss of revenue. Page 12 of 80 We have recently increased our investment in our MEMS microphone business. We have limited experience in this market, which leads to a number of risks, including risks related to technology, customers, competition, and other industry specific issues. We may not be successful in this market, which could result in reduced overall operating margins. We are currently increasing our investment in our recently acquired MEMS microphone business. This is a competitive market with historically lower gross margins than our existing businesses. Our investment in new markets in which we have limited or no experience increases risks related to technology, customers, competitors, and other industry specific issues. Further, there can be no assurance that we will generate the expected returns and other projected results we anticipate. For example, we may incur costs in excess of what we anticipate and the product line may generate lower gross margins than our existing businesses, which may reduce our overall operating margins. We may be unable to protect our intellectual property rights. Our success depends in part on our ability to obtain patents and to preserve our other intellectual property rights covering our products. We seek patent protection for those inventions and technologies for which we believe such protection is suitable and is likely to provide a competitive advantage to us. 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 work actively to foster continuing technological innovation to maintain and protect our competitive position. We cannot provide assurances that steps taken by us to protect our intellectual property will be adequate, that our competitors will not independently develop or design around our patents, or that our intellectual property will not be misappropriated. 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. Any such litigation could be expensive, take significant time, and divert management’s attention from other business concerns. We are dependent on third-party manufacturing and supply relationships for the majority of our products. Our reliance on third-party foundries and suppliers involves certain risks that may result in increased costs, delays in meeting our customers’ demand, and loss of revenue. We do not own or operate a semiconductor fabrication facility and do not have the resources to manufacture the majority of our products internally. We use third parties to manufacture, assemble, package and test the vast majority of our products. As a result, we are subject to risks associated with these third parties, including: ▪ ▪ ▪ ▪ ▪ ▪ ▪ insufficient capacity available to meet our demand; inadequate manufacturing yields and excessive costs; inability of these third parties to obtain an adequate supply of raw materials; difficulties selecting and integrating new subcontractors; limited warranties on products supplied to us; potential increases in prices; and increased exposure to potential misappropriation of our intellectual property. Our outside foundries and assembly and test suppliers generally manufacture our products on a purchase order basis, and we have few long-term supply arrangements with these suppliers. Therefore, our third-party manufacturers and suppliers are not obligated to supply us with products for any specific period of time, quantity, or price, except as may be provided in any particular purchase order or in relation to an existing supply agreement. A manufacturing or supply disruption experienced by one or more of our outside suppliers or a disruption of our relationship with an outside foundry could negatively impact the production of certain of our products for a substantial period of time. Page 13 of 80 In addition, difficulties associated with adapting our technology and product design to the proprietary process technology and design rules of outside foundries can lead to reduced yields of our products. Since low yields may result from either design or process technology failures, yield problems may not be effectively determined or resolved until an actual product exists that can be analyzed and tested to identify process sensitivities relating to the design rules that are used. As a result, yield problems may not be identified until well into the production process, and resolution of yield problems may require cooperation between our manufacturer and us. This risk could be compounded by the offshore location of certain of our manufacturers, increasing the effort and time required to identify, communicate and resolve manufacturing yield problems. 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, we are subject to the risk that a producer will cease production of an older or lower-volume process that it uses to produce our parts. We cannot provide any assurance that our external foundries will continue to devote resources to the production of parts for our products or continue to advance the process design technologies on which the manufacturing of our products are based. Each of these events could increase our costs, lower our gross margin, and cause us to hold more inventories, or materially impact our ability to deliver our products on time. Our products are 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. The greater integration of functions and complexity of operations of our products increases the risk that we or our customers or end users could discover latent defects or subtle faults after volumes of product have been shipped. This could result in material costs and other adverse consequences to us, including, but not limited to: ▪ ▪ ▪ ▪ ▪ ▪ ▪ reduced margins; damage to our reputation; a material recall and replacement costs for product warranty and support; payments to our customers related to recall claims 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; and a diversion of the attention of our engineering personnel from our product development efforts. 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. 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. Due to the complex nature of our products, quality and reliability issues may arise after significant volumes of a product have shipped. This could result in damage to our reputation as a high quality supplier; a material recall or significant product warranty costs; a delay in recognition of revenue; loss of customers and market share; lower manufacturing yields; or a diversion of our engineering personnel from our product development efforts. While we believe that we are reasonably insured against some of these risks and that we have attempted to contractually limit our financial exposure with many of our customers, a warranty or product liability claim against us in excess of our available insurance coverage and established reserves, or a requirement that we participate in a customer product recall, could have material adverse effects on our business, results of operations, and financial condition. Page 14 of 80 Because we depend on subcontractors internationally to perform key manufacturing functions for us, we are subject to political, economic, and natural disaster risks that could disrupt the fabrication, assembly, packaging, or testing of our products. We depend on third-party subcontractors, primarily in Asia, for the fabrication, assembly, packaging, and testing of most of our products. International operations may be subject to a variety of risks, including political instability, global health conditions, currency controls, exchange rate fluctuations, changes in import/export regulations, tariff and freight rates, as well as the risks of natural disasters such as earthquakes, tsunamis, and floods. Although we seek to reduce our dependence on any one subcontractor, this concentration of subcontractors and manufacturing operations in Asia subjects us to the risks of conducting business internationally, including associated political and economic conditions. If we experience manufacturing problems at a particular location, or a supplier is unable to continue operating due to financial difficulties, natural disasters, or other reasons, we would be required to transfer manufacturing to a backup supplier. Converting or transferring manufacturing from a primary supplier to a backup facility could be expensive and time consuming. 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. Our products may be subject to average selling prices that decline over time. If we are unable to maintain average selling prices for existing products, increase our volumes, introduce new or enhanced products with higher selling prices, or reduce our costs, our business and operating results could be harmed. Historically in the semiconductor industry, average selling prices of products have decreased over time. Moreover, our dependence on a limited number of key customers may make it easier for key customers to pressure us to reduce the prices of the products we sell to them. If the average selling price of any of our products declines and we are unable to increase our unit volumes, introduce new or enhanced products with higher margins, and/or reduce manufacturing costs to offset anticipated decreases in the prices of our existing products, our operating results may be adversely affected. In addition, because of procurement lead times, we are limited in our ability to reduce total costs quickly in response to any reductions in prices or sales shortfalls. Because of these factors, we may experience material adverse fluctuations in our future operating results on a quarterly or annual basis. Costs related to product defects and errata may harm our results of operations and business. Costs associated with unexpected product defects and errata (deviations from published specifications) due to, for example, unanticipated problems in our design and manufacturing processes, could include: ▪ writing off or reserving the value of inventory of such products; ▪ disposing of products that cannot be fixed; ▪ ▪ ▪ recalling such products that have been shipped to customers; providing product replacements for, or modifications to, such products; and defending against litigation related to such products. These costs could be substantial and may increase our expenses and lower our margins and profitability. In addition, our reputation with our customers or users of our products could be damaged as a result of such product defects and errata, and the demand for our products could be reduced. The announcement of product defects and/ or errata could cause customers to purchase products from our competitors as a result of anticipated shortages of our components or for other reasons. These factors could harm our financial results and the prospects for our business. As we carry only limited insurance coverage, any incurred liability resulting from uncovered claims could adversely affect our financial condition and results of operations. Our insurance policies may not be adequate to fully offset losses from covered incidents, and we do not have coverage for certain losses. For example, there is limited coverage available with respect to the services Page 15 of 80 provided by our third party foundries and assembly and test subcontractors. 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, and other unforeseen catastrophes that could adversely affect our financial condition and results of operations. 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. We rely on independent foundries and assembly and test houses to manufacture our products. Our reliance on these third party suppliers involves certain risks and uncertainties. For example, shifts in industry-wide capacity from shortages to oversupply, or from oversupply to shortages, may result in significant fluctuations in our quarterly and annual operating results. In addition, we may order wafers and build inventory in advance of receiving purchase orders from our customers. Because our industry is highly cyclical and is subject to significant downturns resulting from excess capacity, overproduction, reduced demand, order cancellations, or technological obsolescence, there is a risk that we will forecast inaccurately and produce excess inventories of particular products. In addition, if we experience supply constraints or manufacturing problems at a particular supplier, we could be required to switch suppliers or qualify additional suppliers. Switching and/or qualifying additional suppliers could be an expensive process and take as long as six to twelve months to complete, which could result in material adverse fluctuations to our operating results. We generally order our products through non-cancelable purchase orders from third-party foundries based on our sales forecasts, and our customers can generally cancel or reschedule orders they place with us without significant penalties. If we do not receive orders as anticipated by our forecasts, or our customers cancel orders that are placed, we may experience increased inventory levels. Due to the product manufacturing cycle characteristic of IC manufacturing and the inherent imprecision in the accuracy of our customers’ forecasts, product inventories may not always correspond to product demand, leading to shortages or surpluses of certain products. As a result of such inventory imbalances, future inventory write-downs and charges to gross margin may occur due to lower of cost or market accounting, excess inventory, and inventory obsolescence. We may experience difficulties transitioning to advanced manufacturing process technologies, which could materially adversely affect our results. Our future success depends in part on our ability to transition our current development and production efforts to advanced manufacturing process technologies on circuit geometries of 55 nano-meter and smaller. To the extent that we do not timely transition to smaller geometries, experience difficulties in shifting to smaller geometries, or have significant quality or reliability issues at these smaller geometries, our results could be materially adversely affected. We have historically experienced fluctuations in our operating results and expect these fluctuations to continue in future periods. Our quarterly and annual operating results are affected by a wide variety of factors that could materially and adversely affect our net sales, gross margin, and operating results. If our operating results fall below expectations of market analysts or investors, the market price of our common stock could decrease significantly. We are subject to business cycles and it is difficult to predict the timing, length, or volatility of these cycles. These business cycles may create pressure on our sales, gross margin, and/or operating results. 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; Page 16 of 80 ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ 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; increases in our effective tax rate; and product obsolescence, price erosion, competitive developments, and other competitive factors. We have significant international sales, and risks associated with these sales could harm our operating results. International sales represented 95 percent of our net sales in fiscal year 2015, and 94 percent of our net sales in each of fiscal years 2014 and 2013. We expect international sales to continue to represent a significant portion of product sales. This reliance on international sales subjects us to the risks of conducting business internationally, including risks associated with political and economic instability, global health conditions, currency controls, exchange rate fluctuations and changes in import/export regulations, tariff and freight rates, as well as the risks of natural disaster, especially in Asia. For example, the political or economic instability in a given region may have an adverse impact on the financial position of end users in the region, which could affect future orders and harm our results of operations. Our international sales operations involve a number of other risks including, but not limited to: ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ unexpected changes in government regulatory requirements; 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; fluctuations in tax expense and net income due to differing statutory tax rates in various domestic and international jurisdictions; changes to countries’ banking and credit requirements; changes in diplomatic and trade relationships; delays resulting from difficulty in obtaining export licenses for technology; tariffs and other barriers and restrictions; competition with non-U.S. companies or other domestic companies entering the non-U.S. markets in which we operate; longer sales and payment cycles; problems in collecting accounts receivable; and the burdens of complying with a variety of non-U.S. laws. In addition, our competitive position may be affected by the exchange rate of the U.S. dollar against other currencies. Consequently, increases in the value of the dollar would increase the price in local currencies of our products in non-U.S. markets and make our products relatively more expensive. Alternatively, decreases in the value of the dollar will increase the relative cost of operations that are based overseas. We cannot provide assurances that regulatory, political and other factors will not adversely affect our operations in the future or require us to modify our current business practices. Page 17 of 80 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. 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; failure of non-U.S. laws to adequately protect our U.S. intellectual property, patent, trademarks, copyrights, know-how, and other proprietary rights; global health conditions and potential natural disasters; political and economic instability in international regions; international currency controls and exchange rate fluctuations; vulnerability to terrorist groups targeting American interests abroad; and legal uncertainty regarding liability and compliance with non-U.S. laws and regulatory requirements. If we are unable to successfully manage the demands of our international operations, it may have a material adverse effect on our business, financial condition, or results of operations. We may be adversely impacted by global economic conditions. As a result, our financial results and the market price of our common shares may decline. 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. 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. If that were to occur, we may be required to increase our allowance for doubtful accounts and our days sales outstanding would increase. We cannot predict the timing, strength, or duration of any economic slowdown or subsequent economic recovery. If the economy or markets in which we operate were to deteriorate, our business, financial condition, and results of operations will likely be materially and/or adversely affected. Our foreign currency exposures may change over time as the level of activity in foreign markets grows and could have an adverse impact upon financial results. As a global enterprise, we face exposure to adverse movements in foreign currency exchange rates. Certain of our assets, including certain bank accounts, exist in non-U.S. dollar-denominated currencies, which are sensitive to foreign currency exchange rate fluctuations. The non-U.S. dollar-denominated currencies are principally in British Pound Sterling. We also have a significant number of employees that are paid in foreign currency, the largest group being United Kingdom-based employees who are paid in British Pound Sterling. If the value of the U.S. dollar weakens relative to these specific currencies, the cost of doing business in terms of U.S. dollars rises. With the growth of our international business, our foreign currency exposures may grow and under certain circumstances, could harm our business. We do not currently hedge currency exposures relating to operating expenses incurred outside of the United States, but we may do so in the future. 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. Page 18 of 80 After the acquisition of Wolfson, we began restructuring our corporate organization to more closely align with the international nature of our business activities. In addition to the primary operational benefits, we expect to achieve certain ancillary tax benefits as a result of our corporate restructuring. However, if we do not achieve those benefits, our financial condition and operating results could be adversely affected. After the acquisition and subsequent integration of Wolfson, we began restructuring our corporate organization to more closely align our corporate structure with the international nature of our business activities. We expect this corporate restructuring activity to provide certain operational benefits and to also reduce our overall effective tax rate through changes in how we develop and use our intellectual property and changes in the structure of our international procurement and sales operations. There can be no assurance that the taxing authorities of the jurisdictions in which we operate or to which we are otherwise deemed to have sufficient tax nexus will not challenge the tax benefits that we expect to realize as a result of the restructuring. In addition, future changes to U.S. or non-U.S. tax laws could negatively impact the anticipated tax benefits of the proposed restructuring. Any benefits to our tax rate will also depend on our ability to operate our business in a manner consistent with the restructuring of our corporate organization and applicable taxing provisions. If the intended tax treatment is not accepted by the applicable taxing authorities, changes in tax law negatively impact the proposed structure or we do not operate our business consistent with the restructuring and applicable tax provisions, we may fail to achieve the financial efficiencies that we anticipate as a result of the restructuring and our future operating results and financial condition may be negatively impacted. We could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities. We are subject to taxes in the U.S. and numerous foreign jurisdictions, including the United Kingdom, where a number of our subsidiaries are organized. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. 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. We are also subject to the examination of our tax returns and other tax matters by the Internal Revenue Service of the United States (IRS) and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations. If our effective tax rates were to increase, particularly in the U.S. or the United Kingdom, or if the ultimate determination of taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected. Significant judgment is required in the calculation of our tax provision and the resulting tax liabilities. Our estimates of future taxable income and the regional mix of this income can change as new information becomes available. Any such changes in our estimates or assumptions can significantly impact our tax provision in a given period. In addition, failure to comply with complex tax accounting regulations could result in a restatement our financial statements. Restatements are generally costly and could adversely impact our results of operations or have a negative impact on the trading price of our common stock. We hold cash and cash equivalents at various foreign subsidiaries that may not be readily available to meet domestic cash requirements. Although we currently hold the substantial majority of our cash and cash equivalents in the United States, we expect our various foreign subsidiaries, in particular subsidiaries in the United Kingdom, to increase holdings in cash and cash equivalents over time. Any cash balances held outside the United States may not be readily available, or may not be available without an additional tax burden, to meet our domestic cash requirements. We require a substantial amount of cash in the United States for operating requirements, purchases of property and equipment, debt service, and potentially for future acquisitions. If we are unable to meet our domestic cash requirements using domestic cash flows from operations, domestic cash and cash equivalents, by settling loans receivable with our foreign subsidiaries, or by domestic borrowing, it may be necessary for us to consider repatriation of earnings that we have designated as permanently reinvested. This may require us to record additional income tax expense and remit additional taxes, which could have a material effect on our results of operations, cash flows and financial condition. Page 19 of 80 Our results may be affected by the fluctuation in sales in the consumer entertainment and smartphone markets. Because we sell products primarily in the consumer entertainment and smartphone markets, we are likely to be affected by seasonality in the sales of our products and the cyclical nature of these markets. Further, a decline in consumer confidence and consumer spending relating to economic conditions, terrorist attacks, armed conflicts, oil prices, global health conditions, natural disasters, and/or the political stability of countries that we operate in or sell into could have a material 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. The IC industry is characterized by frequent litigation regarding patent and other intellectual property rights. We may find it necessary to initiate a lawsuit to assert our patent or other intellectual property rights. These legal proceedings could be expensive, take significant time, and divert management’s attention from other business concerns. We cannot provide assurances that we will ultimately be successful in any lawsuit, nor can we provide assurances that any patent owned by us will not be invalidated, circumvented, or challenged. We cannot provide assurances that rights granted under our patents will provide competitive advantages to us, or that any of our pending or future patent applications will be issued with the scope of the claims sought by us, if at all. As is typical in the IC industry, our customers and we have, from time to time, received and may in the future receive, communications from third parties asserting patents, mask work rights, or copyrights. In the event third parties were to make a valid intellectual property claim and a license was not available on commercially reasonable terms, our operating results could be harmed. Litigation, which could result in substantial cost to us and diversion of our management, technical and financial resources, may also be necessary to defend us against claimed infringement of the rights of others. An unfavorable outcome in any such suit could have an adverse effect on our future operations and/or liquidity. System security risks, data protection breaches, cyber-attacks and other related cyber security issues could disrupt our internal operations, and any such disruption could increase our expenses, damage our reputation and adversely affect our stock price. Experienced computer programmers and hackers may be able to penetrate our security controls and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack our websites, products or otherwise exploit any security vulnerabilities of our websites and products. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions. We manage and store various proprietary information and sensitive or confidential data relating to our business. In addition, we manage and store a significant amount of proprietary and sensitive confidential information from our customers. Any breach of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. Page 20 of 80 If we fail to attract, hire and retain qualified personnel, we may not be able to develop, market, or sell our products or successfully manage our business. Competition for highly qualified personnel in our industry is intense. The number of technology companies in the geographic areas in which we operate is greater than it has been historically and we expect competition for qualified personnel to intensify. There are only a limited number of individuals in the job market with the requisite skills. Our Human Resources organization focuses significant efforts on attracting and retaining individuals in key technology positions. The loss of the services of key personnel or our inability to hire new personnel with the requisite skills could restrict our ability to develop new products or enhance existing products in a timely manner, sell products to our customers, or manage our business effectively. If we fail to effectively manage our hiring needs and successfully assimilate new talent, our ability to meet development schedules, productivity, employee morale and retention could be impacted, resulting in an adverse effect on our business and operating results. We continue to experience rapid growth in hiring new employees. As we continue to grow, we must effectively integrate, develop and motivate a large number of new employees, while at the same time not losing key personnel. While managing those risks, we still must sustain the beneficial aspects of our award-winning corporate culture, which we believe fosters innovation, teamwork and mitigates voluntary turnover. We intend to make substantial investments to expand our engineering, research and development organizations. The challenges of integrating a rapidly growing employee base into our corporate culture are exacerbated by the tight product development schedules for our key customers. Therefore, if we fail to effectively manage our hiring needs and successfully assimilate new talent, our ability to meet development schedules, productivity, employee morale and retention could be impacted, resulting in an adverse effect on our business and operating results. We are subject to the export control regulations of the U.S. Department of State and the Department of Commerce. A violation of these export control regulations could have a material adverse effect on our business or our results of operations, cash flows, or financial position. The nature of our international business subjects us to the export control regulations of the U.S. Department of State and the Department of Commerce. If these export control regulations are violated, it could result in monetary penalties and denial of export privileges. The U.S. government is very strict with respect to compliance and has served notice generally that failure to comply with these regulations may subject violators to fines and/or imprisonment. Although we are not aware of any material violation of any export control regulations, a failure to comply with any of the above mentioned regulations could have a material adverse effect on our business. Our stock price has been and is likely to continue to be volatile. The market price of our common stock fluctuates significantly. This fluctuation has been or may be the result of numerous factors, including, but not limited to: ▪ ▪ ▪ ▪ ▪ ▪ ▪ actual or anticipated fluctuations in our operating results; announcements concerning our business or those of our competitors, customers, or suppliers; loss of a significant customer, or customers; changes in financial estimates by securities analysts or our failure to perform as anticipated by the analysts; news, commentary, and rumors emanating from the media relating to our customers, the industry, or us. These reports may be unrelated to the actual operating performance of the Company, and in some cases, may be potentially misleading or incorrect; announcements regarding technological innovations or new products by us or our competitors; announcements by us of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; Page 21 of 80 ▪ ▪ ▪ ▪ ▪ ▪ announcements by us of significant divestitures or sale of certain assets or intellectual property; litigation arising out of a wide variety of matters, including, among others, employment matters and intellectual property matters; departure of key personnel; single significant stockholders selling for any reason; general conditions in the IC industry; and general market conditions and interest rates. We have provisions in our Certificate of Incorporation and Bylaws, and are subject to certain provisions of Delaware law, which could prevent, delay or impede a change of control of our company. These provisions could affect the market price of our stock. Certain provisions of Delaware law and of our Certificate of Incorporation and Bylaws could make it more difficult for a third party to acquire us, even if our stockholders support the acquisition. These provisions include, but are not limited to: ▪ ▪ ▪ the inability of stockholders to call a special meeting of stockholders; a prohibition on stockholder action by written consent; and a requirement that stockholders provide advance notice of any stockholder nominations of directors or any proposal of new business to be considered at any meeting of stockholders. We are also subject to the anti-takeover laws of Delaware that may prevent, delay or impede a third party from acquiring or merging with us, which may adversely affect the market price of our common stock. Our failure to manage our distribution channel relationships could adversely affect our business. The future of our business, as well as the future growth of our business, will depend in part on our ability to manage our relationships with current and future distributors and external sales representatives and to develop additional channels for the distribution and sale of our products. The inability to successfully manage these relationships could adversely affect our business. We are subject to the risks of owning real property. We currently own our U.S. headquarters in Austin, Texas as well as Wolfson’s former corporate headquarters in Edinburgh, Scotland, United Kingdom. The ownership of our U.S. and United Kingdom properties subjects us to the risks of owning real property, which may include: ▪ ▪ ▪ the possibility of environmental contamination and the costs associated with correcting any environmental problems; adverse changes in the value of these properties, due to interest rate changes, changes in the neighborhood in which the property is located, or other factors; and the risk of financial loss in excess of amounts covered by insurance, or uninsured risks, such as the loss caused by damage to the buildings as a result of fire, floods, or other natural disasters. ITEM 1B. Unresolved Staff Comments None. ITEM 2. Properties As of May 1, 2015, our principal facilities are located in Austin, Texas and Edinburgh, Scotland, United Kingdom. The Company’s corporate headquarters, which we own, consists of approximately 155,000 square feet Page 22 of 80 of office space and is primarily occupied by research and development personnel and testing equipment. The Company has purchased surrounding properties that consist of approximately 25,000 square feet of space. In addition, our failure analysis and reliability facility occupies approximately 27,000 square feet. We expect to staff these facilities with a mixture of administrative and research and development personnel, and house testing equipment as needed, in these facilities. Additionally, we have various leased facilities in Austin, Texas, consisting of approximately 88,000 square feet. This includes approximately 59,000 square feet of leased space that houses a mixture of administrative personnel as well as research and development personnel. Pursuant to the acquisition of Wolfson on August 21, 2014, the former corporate headquarters located in Edinburgh, Scotland, United Kingdom transferred to the Company. This building, which we now own, consists of approximately 50,000 square feet of office space and is primarily occupied by research and development personnel and testing equipment. Additionally as part of the acquisition, the Company acquired leased facilities in Newbury, England, United Kingdom, consisting of approximately 16,000 square feet that houses primarily research and development personnel. The Company closed operations in Tucson, Arizona during fiscal year 2013, which included 28,000 square feet of leased office space that was primarily occupied by engineering personnel. A portion of this leased facility has been subleased through the term of the existing lease, which extends through May 2015. Below is a detailed schedule that identifies our principal locations of occupied leased and owned property as of May 1, 2015, with various lease terms through calendar year 2019: Design Centers Austin, Texas Mesa, Arizona Edinburgh, Scotland, United Kingdom Newbury, England, United Kingdom Melbourne, Australia Sales Support Offices – International Hong Kong, China Shanghai, China Shenzhen, China Tokyo, Japan Singapore Seoul, South Korea Taipei, Taiwan See Note 13 - Commitments and Contingencies of the Notes to Consolidated Financial Statements contained in Item 8 for further detail. ITEM 3. Legal Proceedings From time to time, we are involved in legal proceedings concerning matters arising in connection with the conduct of our business activities. We regularly evaluate the status of legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred and to determine if accruals are appropriate. We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made. On June 4, 2012, U.S. Ethernet Innovations, LLC (the “Plaintiff”) filed suit against Cirrus Logic and two other defendants in the U.S. District Court, Eastern District of Texas. The Plaintiff alleges that Cirrus Logic infringed four U.S. patents relating to Ethernet technology. In its complaint, the Plaintiff indicated that it is seeking unspecified monetary damages, including up to treble damages for willful infringement. We answered the complaint on June 29, 2012, denying the allegations of infringement and seeking a declaratory judgment that the patents in suit were invalid and not infringed. The parties entered into a settlement agreement on May 30, 2013. In exchange for a full release of claims as it relates to the asserted patent, we paid the Plaintiff $0.7 million. This amount is recorded as a separate line item on the Consolidated Statements of Income under the caption “Patent infringement settlements, net.” On June 17, 2014, Enterprise Systems Technologies S.a.r.l. (the “Plaintiff”) filed suit against Cirrus Logic, Inc. in the U.S. District Court, District of Delaware. The Plaintiff alleged that Cirrus Logic indirectly infringed Page 23 of 80 two U.S. patents through the manufacture and sale of digital signal processors, audio codecs, audio processors, and other components included in communications and consumer electronic devices such as smartphones and computers. The Plaintiff sought unspecified monetary damages. On July 23, 2014, the Plaintiff filed an amended complaint removing allegations associated with one of the two patents. On August 25, 2014, the lawsuit was stayed pending resolution of the proceedings in the International Trade Commission (“ITC”) described below. The suit was concluded on March 6, 2015, when the Plaintiff dismissed with prejudice any claims against Cirrus Logic. On July 16, 2014, the Plaintiff requested the ITC to investigate the impact of certain products that allegedly infringe the same patent asserted in the District Court of Delaware. The Plaintiff was seeking a limited exclusion order against certain Apple, Inc. products that incorporate the Company’s components. The matter was concluded when the ITC terminated its investigation as it related to Cirrus Logic on March 9, 2015, and on March 30, 2015, the ITC made such termination decision final. ITEM 4. Mine Safety Disclosures Not applicable. PART II 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 Global Select Market under the symbol CRUS. As of May 22, 2015, there were approximately 567 holders of record of our common stock. We have not paid cash dividends on our common stock and currently intend to continue a policy of retaining any earnings for reinvestment in our business. The information under the caption “Equity Compensation Plan Information” in the proxy statement to be delivered to stockholders in connection with our Annual Meeting of Stockholders to be held on July 29, 2015 (the “Proxy Statement”) is incorporated herein by reference. The following table shows, for the periods indicated, the high and low intra-day sales prices for our common stock. Fiscal year ended March 28, 2015 First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fiscal year ended March 29, 2014 First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Low $24.06 25.00 23.94 34.46 $23.48 25.27 25.91 20.87 $18.42 21.17 16.80 22.63 $16.46 17.36 18.55 16.81 Page 24 of 80 Stock Price Performance Graph The following graph and table show a comparison of the five-year cumulative total stockholder return, calculated on a dividend reinvestment basis, for Cirrus Logic, the Standard & Poor’s 500 Composite Index (the “S&P 500 Index”), and the Semiconductor Subgroup of the Standard & Poor’s Electronics Index (the “S&P 500 Semiconductors Index”). COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Assumes Initial Investment of $100 March 2015 450.00 400.00 350.00 300.00 250.00 200.00 150.00 100.00 50.00 0.00 3/27/2010 3/26/2011 3/31/2012 3/30/2013 3/29/2014 3/28/2015 Cirrus Logic Inc. S&P 500 Index - Total Returns S&P 500 Semiconductors Index Cirrus Logic, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . S&P 500 Semiconductors Index . . . . . . . . . . . . . . 100.00 100.00 100.00 268.19 114.87 111.54 301.65 125.86 128.31 288.34 143.44 115.99 247.40 173.41 149.26 421.93 196.35 188.92 3/27/2010 3/26/2011 3/31/2012 3/30/2013 3/29/2014 3/28/2015 (1) The graph assumes that $100 was invested in our common stock and in each index at the market close on March 27, 2010, and that all dividends were reinvested. 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. 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 Securities Exchange Act of 1934, as amended. Page 25 of 80 ITEM 6. Selected Financial Data The information contained below should be read along with Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8 — Financial Statements and Supplementary Data (amounts in thousands, except per share amounts). Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . Financial position at year end: Cash, cash equivalents, restricted investments and marketable securities . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . 2015 2014 Fiscal Years 2013 2012 2011 (1) $ 916,568 55,178 0.88 0.85 $ $ (1) $714,338 108,111 1.72 1.65 $ $ (1) $809,786 136,598 2.12 2.00 $ $ $426,843 87,983 1.35 1.29 $ $ $369,571 203,503 3.00 2.82 $ $ 260,719 $1,148,778 275,335 215,429 $ 756,771 384,510 $724,744 392,810 4,863 $637,358 236,547 $651,347 351,455 10,094 $548,174 184,788 $544,462 278,602 5,620 $465,857 215,055 $496,621 267,416 6,188 $438,379 1) Refer to the consolidated financial statements and the Notes thereto contained in Item 8 of this Form 10- K for fiscal years 2015, 2014, and 2013, for an expanded discussion of factors that materially affect the comparability of the information reflected in the selected consolidated financial data presented above. ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Please read the following discussion in conjunction with our audited historical consolidated financial statements and notes thereto, which are included elsewhere in this Form 10-K. Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. Actual results could differ materially because of the factors discussed in Part I, Item 1A. “Risk Factors” of this Form 10-K. Critical Accounting Policies Our discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements included in this report, which have been prepared in accordance with U. S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts. We evaluate the estimates on an on-going basis. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. We believe the following critical accounting policies involve significant judgments and estimates that are used in the preparation of the consolidated financial statements: ▪ We provide for the recognition of deferred tax assets if realization of such assets is more likely than not. The Company evaluates the ability to realize its deferred tax assets based on all the facts and circumstances, including projections of future taxable income and expiration dates of carryover attributes. The calculation of our tax liabilities involves assessing uncertainties with respect to the application of complex tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Page 26 of 80 Revenue Service or other taxing jurisdiction. If our estimates of these taxes are greater or less than actual results, an additional tax benefit or charge will result. See Note 17 — Income Taxes of the Notes to Consolidated Financial Statements contained in Item 8 for additional details. ▪ We recognize revenue when all of the following criteria are met: persuasive evidence that an arrangement exists, delivery of goods has occurred, the sales price is fixed or determinable and collectability is reasonably assured. We evaluate our distributor arrangements, on a distributor by distributor basis, with respect to each of the four criteria above. For a majority of our distributor arrangements, we provide rights of price protection and stock rotation. Revenue is deferred at the time of shipment to our domestic distributors and certain international distributors due to the determination that the ultimate sales price to the distributor is not fixed or determinable. Once the distributor has resold the product, and our final sales price is fixed or determinable, we recognize revenue for the final sales price and record the related costs of sales. For certain of our smaller international distributors, we do not grant price protection rights and provide minimal stock rotation rights. For these distributors, revenue is recognized upon delivery to the distributor, less an allowance for estimated returns, as the revenue recognition criteria have been met upon shipment. Further, the Company defers the associated cost of goods sold on our Consolidated Balance Sheet, net within the deferred income caption. The Company routinely evaluates the products held by our distributors for impairment to the extent such products may be returned by the distributor within these limited rights and such products would be considered excess or obsolete if included within our own inventory. Products returned by distributors and subsequently scrapped have historically been immaterial to the Company. ▪ Inventories are recorded at the lower of cost or market, with cost being determined on a first-in, first-out basis. We write down inventories to net realizable value based on forecasted demand, product release schedules, product life cycles, management judgment, and the age of inventory. Actual demand and market conditions may be different from those projected by management, which could have a material effect on our operating results and financial position. See Note 2 — Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements contained in Item 8. ▪ We evaluate the recoverability of property, plant, and equipment and intangible assets by testing for impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. An impairment loss is recognized in the event the carrying value of these assets exceeds the fair value of the applicable assets. Impairment evaluations involve management estimates of asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management, which could have a material effect on our operating results and financial position. See Note 6 — Goodwill and Intangibles, net of the Notes to Consolidated Financial Statements contained in Item 8. ▪ ▪ The Company evaluates the collectability of accounts receivable. We maintain allowances for doubtful accounts for estimated losses resulting from the inability or failure of our customers to make required payments. We regularly evaluate our allowance for doubtful accounts based upon the age of the receivable, our ongoing customer relations, as well as any disputes with the customer. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required, which could have a material effect on our operating results and financial position. Additionally, we may maintain an allowance for doubtful accounts for estimated losses on receivables from customers with whom we are involved in litigation. See Note 5 – Accounts Receivable, net of the Notes to Consolidated Financial Statements contained in Item 8. The Company evaluates goodwill and other intangible assets. Goodwill is recorded at the time of an acquisition and is calculated as the difference between the total consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. The Company tests goodwill and other intangible assets for impairment on an annual basis or more frequently if the Company believes indicators of impairment exist. Impairment evaluations involve management’s assessment of qualitative factors to determine whether it is more likely than not that goodwill and other intangible assets are Page 27 of 80 impaired. If management concludes from its assessment of qualitative factors that it is more likely than not that impairment exists, then a quantitative impairment test will be performed involving management estimates of asset useful lives and future cash flows. Significant management judgment is required in the forecasts of future operating results that are used in these evaluations. If our actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges in a future period. The Company has recorded no goodwill impairments in fiscal years 2015, 2014 and 2013. There were no material intangible asset impairments in fiscal years 2015, 2014 and 2013. ▪ Our available-for-sale investments, non-marketable securities and other investments are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. This determination requires significant judgment and actual results may be materially different than our estimate. Marketable securities are evaluated for impairment if the decline in fair value below cost basis is significant and/or has lasted for an extended period of time. Non-marketable securities or other investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. For investments accounted for using the cost method of accounting, we evaluate information (e.g., budgets, business plans, financial statements) in addition to quoted market prices, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults, and subsequent rounds of financings at an amount below the cost basis of the investment. This list is not all inclusive and we weigh all quantitative and qualitative factors in determining if an other-than- temporary decline in value of an investment has occurred. When a decline in value is deemed to be other-than-temporary, we recognize an impairment loss in the current period’s operating results to the extent of the decline. Actual values could be different from those estimated by management, which could have a material effect on our operating results and financial position. See Note 3 — Marketable Securities of the Notes to Consolidated Financial Statements contained in Item 8. ▪ We are subject to the possibility of loss contingencies for various legal matters. See Note 14 — Legal Matters of the Notes to Consolidated Financial Statements contained in Item 8. We regularly evaluate current information available to us to determine whether any accruals should be made based on the status of the case, the results of the discovery process and other factors. If we ultimately determine that an accrual should be made for a legal matter, this accrual could have a material effect on our operating results and financial position and the ultimate outcome may be materially different than our estimate. Recently Issued Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this ASU provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact of this ASU and expects no material modifications to its financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (ASC Topic 606). The purpose of this ASU is to converge revenue recognition requirements per GAAP and International Financial Reporting Standards (IFRS). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this ASU are effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption not permitted by the FASB; however, in April 2015 the FASB issued for public comment a proposal to delay the effective date of this ASU to annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of this ASU on its consolidated financial position, results of operations and cash flows. Page 28 of 80 In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is to be applied retrospectively and represents a change in accounting principle. This ASU is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Earlier adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the effect that the adoption of this ASU will have on its financial statements. Overview Cirrus Logic develops high-precision analog and mixed-signal ICs for a broad range of innovative customers. We track operating results in one reportable segment, but report revenue performance by product line, currently portable audio and non-portable audio and other products. In fiscal year 2015, the Company grew its diverse analog and mixed-signal product portfolio, delivering optimized products for a variety of audio, industrial and energy-related applications. The Company continued to target fast-growing markets and develop innovative products. We acquired Wolfson in the current year, and with it, the Company reported a revenue increase of 28 percent from the prior fiscal year, including a contribution from Wolfson of approximately $98.3 million and an increase in the investment in research and development of $71.7 million, discussed below. Fiscal Year 2015 Fiscal year 2015 net sales of $ 916.6 million represented a 28 percent increase over fiscal year 2014 net sales of $714.3 million. Portable audio product line sales of $740.3 million in fiscal year 2015 represented a 32 percent increase over fiscal year 2014 sales of $562.7 million, attributable primarily to Wolfson contributions and significant increases in the sales of certain portable audio products for the period. Non-portable audio and other product line sales of $176.3 million represented a 16 percent increase from fiscal year 2014 sales of $151.6 million, which was primarily attributable to Wolfson contributions for the current fiscal year, as well as increases in certain computer and DAC products. Overall, gross margin for fiscal year 2015 was 46 percent. The decrease in gross margin for fiscal year 2015 was primarily due to the increase in inventory write-downs compared to fiscal year 2014, which had a 1.5% negative impact on fiscal year 2015 margin. Additionally, gross margin was negatively affected by approximately 1% due to the fair value adjustments made to inventory in the current year as a result of the Acquisition. The Company’s number of employees increased to 1,104 as of March 28, 2015. The Company achieved net income of $55.2 million in fiscal year 2015, which included an income tax provision in the amount of $36.4 million. Fiscal Year 2014 Fiscal year 2014 was a year focused on developing innovative new products, strengthening existing customer relationships and establishing new relationships with key players in the markets we serve. With the addition of the embedded SoundClear® technology and existing hardware, the Company leveraged its engineering expertise to develop custom and general market audio subsystems that intelligently solve system design issues. Also in fiscal year 2014, we expanded our footprint in portable audio with the addition of several new top tier smartphone customers, while reducing investment in LED lighting. Fiscal year 2014 net sales of $714.3 million represented a 12 percent decrease over fiscal year 2013 net sales of $809.8 million. Portable audio product line sales of $562.7 million in fiscal year 2014 represented a 14 percent decrease over fiscal year 2013 sales of $652.0 million, attributable to lower sales of portable audio products due to reduced average selling prices (“ASPs”) to certain customers. Non-portable audio and other product line sales of $151.6 million in fiscal year 2014 represented a 4 percent decrease from fiscal year 2013 sales of $157.8 million, which was attributable, primarily to the absence of revenue related to the products associated with our Tucson office asset sale. Overall, gross margin for fiscal year 2014 was 50 percent. The increase in gross margin for fiscal year 2014 was primarily due to the absence of the significant inventory write-down, including scrapped inventory, Page 29 of 80 experienced in the prior fiscal year, which had a 3.1% negative impact on fiscal year 2013 margin. The Company achieved net income of $108.1 million in fiscal year 2014, which included an income tax provision in the amount of $47.6 million. Additionally, the Company’s number of employees increased to 751 as of March 29, 2014. Fiscal Year 2013 Fiscal year 2013 was a year focused on ramping new custom products and introducing general market portable audio and non-portable audio and other products that we expected to drive revenue growth and customer diversification longer-term. The Company targeted tier-one customers in growing markets who were able to differentiate their products with our innovative technology, highlighted by the fact that our top ten end customer concentration had increased to 89 percent of sales in fiscal year 2013, from 74 percent in fiscal year 2012. Fiscal year 2013 net sales of $809.8 million represented a 90 percent increase over fiscal year 2012 net sales of $426.8 million. Portable audio product line sales of $652.0 million in fiscal year 2013 represented a 161 percent increase over fiscal year 2012 sales of $249.7 million, attributable primarily to higher sales of custom portable audio products. Non-portable audio and other product line sales of $157.8 million in fiscal year 2013 represented an 11 percent decrease from fiscal year 2012 sales of $177.1 million, which was attributable, primarily to the absence of revenue related to the products associated with our Tucson office asset sale, coupled with decreased sales from our power meter components. Additionally, the restructuring discussed in Note 10 – Restructuring Costs of the consolidated financial statements contributed to this decrease. In fiscal year 2013, we experienced substantial growth in our revenue and operating profit, significantly expanded our footprint in portable audio, and continued our investments in new LED lighting products. Overall, gross margin for fiscal year 2013 was 49 percent. Decreases in gross margin for fiscal year 2013 were primarily due to inventory write-downs, including scrapped inventory, and unfavorable product mix. The Company achieved net income of $136.6 million in fiscal year 2013, which included an income tax provision in the amount of $64.6 million. Additionally, the Company’s number of employees decreased slightly to 652 in fiscal year 2013, due to the restructuring discussed in Note 10, partially offset by an increase in new hires. Results of Operations The following table summarizes the results of our operations for each of the past three fiscal years as a percentage of net sales. All percentage amounts were calculated using the underlying data, in thousands: Fiscal Years Ended March 28, March 29, March 30, 2014 2013 2015 Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Patent infringement settlements, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 46% 21% 11% 2% 0% 0% 12% 0% -1% -1% 10% 4% 6% 100% 50% 18% 10% 0% 0% 0% 22% 0% 0% 0% 22% 7% 15% 100% 49% 14% 10% 0% 0% 0% 25% 0% 0% 0% 25% 8% 17% Page 30 of 80 Net Sales We report sales in two product categories: portable audio products and non-portable audio and other products. Our sales by product line are as follows (in thousands): March 28, 2015 Fiscal Years Ended March 29, 2014 March 30, 2013 Portable Audio Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-Portable Audio and Other Products . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 740,301 176,267 $ 562,718 151,620 $ 651,974 157,812 $ 916,568 $ 714,338 $ 809,786 Net sales for fiscal year 2015 increased 28 percent, to $916.6 million from $714.3 million in fiscal year 2014. The increase in net sales reflects a $177.6 million increase in portable audio product sales and a $24.7 million increase in non-portable audio and other product sales. The portable audio products group experienced an increase in net sales attributable to Wolfson contributions of $83.9 million, as well as significant increases in the sales of certain portable audio products for the current fiscal year. Non-portable audio and other product line sales of $176.3 million represented a 16 percent increase from fiscal year 2014 sales of $151.6 million, which was attributable to Wolfson contributions of $14.4 million, a $5.6 million increase in custom computer products and a $4.6 million increase in DAC products for the period. Net sales for fiscal year 2014 decreased 12 percent, to $714.3 million from $809.8 million in fiscal year 2013. The decrease in net sales reflects an $89.3 million decrease in portable audio product sales and a $6.2 million decrease in non-portable audio and other product sales. The portable audio products group experienced a decline in sales, primarily due to anticipated declines in ASPs. The decline in non-portable audio and other product group sales was attributable primarily to the absence of revenue related to the products associated with our Tucson office asset sale. Export sales, principally to Asia, including sales to U.S.-based customers that manufacture products at plants overseas, were approximately $869.9 million in fiscal year 2015, $673.7 million in fiscal year 2014, and $764.9 million in fiscal year 2013. Export sales to customers located in Asia were 92 percent of net sales in fiscal years 2015 and 2014 and 91 percent in fiscal year 2013. All other export sales represented 3 percent of net sales in each of fiscal years 2015, 2014 and 2013. Our sales are denominated primarily in U.S. dollars. During fiscal year 2015, we acquired foreign currency hedging contracts related to the Acquisition. The contracts expired in fiscal year 2015. No foreign currency hedging contracts were entered into in fiscal year 2014 or 2013. Gross Margin Overall gross margin of 46 percent for fiscal year 2015 reflects a decrease from fiscal year 2014 gross margin of 50 percent. The decrease was primarily attributable to the increase in excess and obsolete inventory charges, including scrapped inventory, of $13.8 million from fiscal year 2014, resulting in a 1.5% negative impact on margin in the current year. Gross margin was also negatively affected by approximately 1% due to the fair value adjustments made to inventory in the current year as a result of the Acquisition. Fiscal year 2015 sales of product written down in prior periods contributed $1.8 million to gross margin compared to $12.2 million, in fiscal year 2014. Overall gross margin of 50 percent for fiscal year 2014 reflects an increase from fiscal year 2013 gross margin of 49 percent. The increase was primarily attributable to the absence of a significant inventory write- down, which occurred during the 2013 fiscal year in the amount of $25.5 million, partially offset by changes in product mix. Fiscal year 2014 sales of product written down in prior periods contributed $12.2 million to gross margin compared to less than $0.1 million, in fiscal year 2013. In total, excess and obsolete inventory charges, including scrapped inventory, decreased by $33.6 million from fiscal year 2013 and resulted in an increase of gross margin of 4.7 percent. Page 31 of 80 Research and Development Expenses Fiscal year 2015 research and development expenses of $197.9 million reflect an increase of $71.7 million, or 57 percent, from fiscal year 2014. The increase was primarily attributable to a 45 percent increase in research and development headcount (both at Cirrus Logic and due to the Acquisition) and the associated salary and employee-related expenses. As a result of the Acquisition, we experienced increased amortization costs on acquisition-related intangibles, as well as higher product development costs in the current year. The Company also experienced an 80% increase in R&D expense related to the amortization of software maintenance contracts, primarily CAD software. Fiscal year 2014 research and development expenses of $126.2 million reflect an increase of $12.1 million, or 11 percent, from fiscal year 2013. The increase was primarily attributable to a 23 percent increase in research and development headcount and associated salary-related expenses. Additionally, during fiscal year 2014, we experienced higher headcount and associated facilities costs, driving increased depreciation and amortization costs. CAD software costs also increased for the year. Selling, General and Administrative Expenses Fiscal year 2015 selling, general and administrative expenses of $99.5 million reflect an increase of $24.6 million, or 33 percent, compared to fiscal year 2014. The increase was primarily attributable to the Acquisition, resulting in increased SG&A headcount and related salary and employee-related expenses, as well as higher costs associated with outside professional services. Fiscal year 2014 selling, general and administrative expenses of $74.9 million reflect a decrease of $2.1 million, or 3 percent, compared to fiscal year 2013. The decrease was primarily attributable to decreases in variable compensation, sales commissions and travel expenses for the period, despite an increase in headcount of 7 percent. Acquisition related costs The Company reported $18.1 million in costs in conjunction with the Acquisition for the year ended March 28, 2015. The majority of the costs included in this amount were associated with bank and legal fees, as well as certain expenses for stock compensation related to the Acquisition. Restructuring and other, net Restructuring costs related to the Acquisition were $1.5 million for the year ended March 28, 2015, primarily made up of severance payments associated with the Acquisition in the current fiscal year and the consolidation of our sales functions. The credits included in this line item for the prior fiscal year related to changes in estimates for the Tucson, Arizona design center facility, due to a new sublease on the vacated property in connection with the closing of this facility. One-time charges for relocation, severance-related items and facility-related costs made up the fiscal year 2013 restructuring costs in relation to the closing of the Tucson, Arizona design center facility. Patent Infringement Settlements, Net The Company reported a $0.7 million expense in the first quarter of fiscal year 2014 in connection with the settlement of the U.S. Ethernet Innovations, LLC case discussed in Note 14 — Legal Matters. This item is presented as a separate line item on the Consolidated Statements of Income within operating expenses under the caption “Patent infringement settlements, net.” Interest Income Interest income in fiscal years 2015, 2014, and 2013, was $0.6 million, $0.8 million, and $0.4 million, respectively. The decrease from fiscal year 2014 was due to lower cash and cash equivalent balances for the year compared to prior year. The increase in interest income in fiscal year 2014 was due to higher cash and cash equivalent balances, compared to fiscal year 2013. Page 32 of 80 Interest expense The Company reported interest expense of $5.6 million for the year ended March 28, 2015, primarily as a result of the new $250 million revolving credit facility described in Note 9. No interest expense was recorded for fiscal years 2014 or 2013. Other expense For the year ended March 28, 2015, the Company reported $12.2 million in other expense primarily related to recognized losses on expired contracts during the fiscal year and the foreign currency exchange losses on hedges purchased in relation to the Acquisition during the second quarter of the current fiscal year. The corresponding amounts in the prior fiscal years are immaterial. Provision for Income Taxes We recorded income tax expense of $36.4 million in fiscal year 2015 on a pre-tax income of $91.5 million, yielding an effective tax provision rate of 39.7 percent. Our effective tax rate was higher than the U.S. statutory rate of 35 percent, primarily due to the inclusion of foreign losses from the date of acquisition of Wolfson to the end of the fiscal year at foreign statutory rates below the U.S. federal statutory rate. The impact of these losses was partially offset by the federal research and development credit, which was extended through December 31, 2014 by the Tax Increase Prevention Act of 2014, which was enacted on December 19, 2014. We recorded income tax expense of $47.6 million in fiscal year 2014 on a pre-tax income of $155.7 million, yielding an effective tax provision rate of 30.6 percent. Our effective tax rate was lower than the U.S. statutory rate of 35 percent, primarily due to the effect of a tax benefit of $6.3 million provided by the Extraterritorial Income Exclusion Act, an elective provision of the Internal Revenue Code. Another factor causing our tax expense to be below the federal statutory rate was the federal research and development credit which was in effect through December 31, 2013 as a result of the American Taxpayer Relief Act of 2013, which was enacted on January 2, 2013. We recorded income tax expense of $64.6 million in fiscal year 2013 on a pre-tax income of $201.2 million, yielding an effective tax provision rate of 32.1 percent. Our effective tax rate was lower than the U.S. statutory rate of 35 percent, primarily as a result of federal research and development credits that were recorded during the year due to the retroactive extension of the credit by the enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013. Our effective tax rate was also lowered slightly by the release of $2.6 million of valuation allowance that had been placed on our federal capital loss carryforward from the capital gain income generated by the sale of assets associated with the Company’s Apex products. We evaluate our ability to realize our deferred tax assets on a quarterly basis. The deferred tax assets that we have recognized result from a more likely than not assessment that these assets will be realized. Outlook Our long-term gross margin goal is to remain in the mid-40 percent range with operating profit of approximately 20 percent. We anticipate significant revenue growth for fiscal year 2016, with continued production ramps of our latest smart codecs. Liquidity and Capital Resources In fiscal year 2015, our net cash provided by operating activities was $163.5 million. The positive cash flow from operating activities was predominantly due to the cash components of our net income, including a $17.3 million increase in changes to working capital, primarily due to decreases in inventory when excluding the impact of inventory obtained through the Acquisition, offset by a larger increase in accounts payable for the period. In fiscal year 2014, our net cash provided by operating activities was $228.0 million. The positive cash flow from operating activities was predominantly due to the cash components of our net income, and a $48.1 million increase in changes to working capital, primarily due to decreases in inventory for the period. In fiscal year 2013, our net cash provided by operating activities was $160.8 million. The positive cash flow from operating activities was predominantly due to the cash components of our net income, partially offset by a $76.1 million reduction in changes to working capital, primarily due to an increase in inventory and accounts receivable as our business grew. Page 33 of 80 In fiscal year 2015, approximately $324.4 million was used in investing activities, primarily due to the $444.1 million, net of cash obtained, used in conjunction with the Acquisition discussed in Note 7. An additional use of cash for the period was the $32.3 million in property, equipment and software purchases for the year. These uses of cash were offset by net proceeds from the sale of marketable securities of $168.4 million in anticipation of financing the Acquisition, referenced above, in the current fiscal year. In fiscal year 2014, we used approximately $220.3 million in cash for investing activities, principally due to the net purchases of marketable securities of $182.5 million, $15.1 million in capital expenditures and $20.4 million related to the Acoustic Technologies, Inc. (“Acoustic”) acquisition. In fiscal year 2013, we used approximately $84.8 million in cash for investing activities, principally due to the net purchases of marketable securities of $51.5 million and $52.9 million in capital expenditures, partially offset by $22.2 million in proceeds from the sale of assets associated with the Company’s Apex business in Tucson, Arizona. In fiscal year 2015, the Company received $205.5 million in cash provided by financing activities, principally as a result of the new long-term revolving credit facility entered into in the second quarter of the current fiscal year. The related influx of $226.4 million was offset by payments against the revolver balance of $46.0 million for the period. During fiscal years 2015, 2014, and 2013, we generated $0.7 million, $1.5 million, and $10.3 million, respectively from the issuance of common stock, net of shares withheld and repurchased to satisfy tax withholdings. In fiscal years 2015, 2014 and 2013, the Company utilized approximately $10.5 million, $52.1 million and $86.1 million, respectively, in cash to repurchase and retire portions of its outstanding common stock as part of the $200 million stock repurchase program announced in the third quarter of fiscal year 2013. Additionally, excess tax benefits related to employee stock options exercises generated $37.7 million, $8.4 million and $0.1 million, in fiscal years 2015, 2014 and 2013, respectively. The Company began expansion of operations in fiscal year 2014 with the acquisition and building of additional facilities in Austin. We anticipate future costs related to the current expansion to be approximately $7 million over the next year. We anticipate these cash uses to be funded from current cash sources. Our future capital requirements will depend on many factors, including the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential acquisitions of companies or technologies and the expansion of our sales and marketing activities. We believe our expected future cash earnings, existing cash, cash equivalents, investments and available borrowings under our Credit Facility will be sufficient to meet our capital requirements through at least the next 12 months, although we could be required, or could elect, to seek additional funding prior to that time. Revolving Credit Facilities On August 29, 2014, Cirrus Logic entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the Lenders party thereto. The Credit Agreement provides for a $250 million senior secured revolving credit facility (the “Credit Facility”). The Credit Facility replaced Cirrus Logic’s Interim Credit Facility described below, and may be used for general corporate purposes. The Credit Facility matures on August 29, 2017. The Credit Facility is required to be guaranteed by all of Cirrus Logic’s material domestic subsidiaries (the “Subsidiary Guarantors”). The Credit Facility is secured by substantially all of the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets. Borrowings under the Credit Facility may, at Cirrus Logic’s election, bear interest at either (a) a Base Rate plus the Applicable Margin (“Base Rate Loans”) or (b) a LIBOR Rate plus the Applicable Margin (“LIBOR Rate Loans”). The Applicable Margin ranges from 0% to .25% per annum for Base Rate Loans and 1.50% to 2.00% per annum for LIBOR Rate Loans based on Cirrus Logic’s Leverage Ratio (discussed below). A Commitment Fee accrues at a rate per annum ranging from 0.25% to 0.35% (based on the Leverage Ratio) on the average daily unused portion of the Commitment of the Lenders. The Credit Agreement contains customary affirmative covenants, including, among others, covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the Credit Agreement contains customary negative Page 34 of 80 covenants limiting the ability of Cirrus Logic or any Subsidiary to, among other things, incur debt, grant liens, make investments, effect certain fundamental changes, make certain asset dispositions, and make certain restricted payments. The Credit Facility also contains certain financial covenants providing that (a) the ratio of consolidated funded indebtedness to consolidated EBITDA for the prior four consecutive quarters must not be greater than 2.00 to 1.00 (the “Leverage Ratio”) and (b) the sum of cash and Cash Equivalents, which includes marketable securities, of Cirrus Logic and its Subsidiaries on a consolidated basis must not be less than $100 million. At March 28, 2015, the Company was in compliance with all covenants under the Credit Agreement. As of March 28, 2015, the Company had $180.4 million of indebtedness outstanding under the Credit Facility, which is included in long-term liabilities on the consolidated balance sheets. The borrowings were primarily used for refinancing the Interim Credit Facility described below (which was used for financing the Acquisition). Cirrus Logic entered into a credit agreement (the “Interim Credit Agreement”) with Wells Fargo Bank, National Association as administrative agent and lender, on April 29, 2014, in connection with the Acquisition. The Interim Credit Agreement provided for a $225 million senior secured revolving credit facility (the “Interim Credit Facility”). The Interim Credit Facility was to be used for, among other things, payment of the offer consideration in connection with the Acquisition. The Interim Credit Facility would have matured on the earliest to occur of (a) January 23, 2015, (b) the date of termination of the Commitments as a result of a permanent reduction of all of the Commitments (as defined in the Interim Credit Agreement) by Cirrus Logic or (c) the date of termination of the Commitments as a result of an event of default. The Interim Credit Facility was replaced with the Credit Facility described above and matured under scenario (b) above with no outstanding borrowings or accrued interest on the maturity date. See also Note 9 — Revolving Line of Credit. Off Balance Sheet Arrangements As of March 28, 2015, the Company did not have any material off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. Contractual Obligations In our business activities, we incur certain commitments to make future payments under contracts such as debt agreements, purchase orders, operating and capital leases and other long-term contracts. Maturities under these contracts are set forth in the following table as of March 28, 2015: Revolving line of credit . . . Facilities leases, net . . . . . . Equipment leases . . . . . . . . Capital leases . . . . . . . . . . . Wafer purchase commitments . . . . . . . . . Assembly purchase $ — $ 4,361 26 246 98,244 commitments . . . . . . . . . 5,528 Outside test purchase commitments . . . . . . . . . 10,161 Other purchase < 1 year Payment due by period (in thousands) > 5 years 1 - 3 years 3 - 5 years 180,439 5,988 31 491 $ — 1,584 4 245 $ — $ 193 — — — — — — — — — — — — Total 180,439 12,126 61 982 98,244 5,528 10,161 46,772 commitments . . . . . . . . . 19,175 27,133 464 Total . . . . . . . . . . . . . . . . $ 137,741 $ 214,082 $ 2,297 $ 193 $ 354,313 Certain of our operating lease obligations include escalation clauses. These escalating payment requirements are reflected in the table. Page 35 of 80 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risks associated with interest rates on our debt securities, currency movements on non-U.S. dollar denominated assets and liabilities, and the effect of market factors on the value of our marketable equity securities. 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 29, 2015. Actual results may differ materially. Interest Rate Risk Our primary financial instruments include cash equivalents, marketable securities, accounts receivable, accounts payable, and accrued liabilities. The Company’s investments are managed by outside professional managers within investment guidelines set by the Company. These guidelines include security type, credit quality, and maturity, and are intended to limit market risk by restricting the Company’s investments to high quality debt instruments with relatively short-term maturities. The Company does not currently use derivative financial instruments in its investment portfolio. Due to the short-term nature of our investment portfolio and the current low interest rate environment, our downside exposure to interest rate risk is minimal. To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of our investment portfolio. At March 28, 2015, an immediate one percent, or 100 basis points, increase or decrease in interest rates could result in a $2.6 million fluctuation in our annual interest income. However, our investment portfolio holdings as of March 28, 2015, yielded less than 100 basis points, which reduces our downside interest rate risk to the amount of interest income recognized in fiscal year 2015, or $0.6 million. At March 29, 2014, an immediate one percent, or 100 basis points, increase or decrease in interest rates could result in a $3.4 million fluctuation in our annual interest income. However, our investment portfolio holdings as of March 29, 2014, yielded less than 100 basis points, which reduces our downside interest rate risk to the amount of interest income recognized in fiscal year 2014, or $0.8 million. At March 30, 2013, an immediate one percent, or 100 basis points, increase or decrease in interest rates could result in a $1.8 million fluctuation in our annual interest income. However, our investment portfolio holdings as of March 30, 2013, yielded less than 100 basis points, which reduces our downside interest rate risk to the amount of interest income recognized in fiscal year 2013, or $0.4 million. For all of these fiscal years, the risks associated with fluctuating interest rates were limited to our annual interest income and not the underlying principal as we generally have the ability to hold debt related investments to maturity. The amounts disclosed in this paragraph are based on a 100 basis point fluctuation in interest rates applied to the average cash balance for that fiscal year. Foreign Currency Exchange Risk Our revenue and spending is transacted primarily in U.S. dollars; however, in fiscal years 2015, 2014, and 2013, we entered into routine transactions in other currencies to fund the operating needs of our technical support, and sales offices outside of the U.S. As of March 28, 2015 and March 29, 2014, a ten percent change in the value of the related currencies would not have a material impact on our results of operations and financial position. During fiscal years 2014 and 2013, we did not enter into any foreign currency hedging contracts. In fiscal year 2015, the Company acquired foreign currency hedging contracts that expired within the same fiscal year. In addition to the direct effects of changes in exchange rates on the value of open exchange contracts, we may, from time to time, have changes in exchange rates that can also affect the volume of sales or the foreign currency sales prices of our products and the relative costs of operations based overseas. See additional information on foreign currency exchange risk in Note 8. Page 36 of 80 ITEM 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheets as of March 28, 2015 and March 29, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Income for the Fiscal Years Ended March 28, 2015, March 29, 2014, and 38 40 March 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Consolidated Statements of Comprehensive Income for the Fiscal Years Ended March 28, 2015, March 29, 2014, and March 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Consolidated Statements of Cash Flows for the Fiscal Years Ended March 28, 2015, March 29, 2014, and March 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended March 28, 2015, March 29, 2014, and March 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 45 Page 37 of 80 Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of Cirrus Logic, Inc. We have audited the accompanying consolidated balance sheets of Cirrus Logic, Inc. (the Company) as of March 28, 2015 and March 29, 2014, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended March 28, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cirrus Logic, Inc. at March 28, 2015 and March 29, 2014, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended March 28, 2015, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cirrus Logic, Inc.’s internal control over financial reporting as of March 28, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 27, 2015 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Austin, Texas May 27, 2015 Page 38 of 80 The Board of Directors and Stockholders of Cirrus Logic, Inc. Report of Independent Registered Public Accounting Firm We have audited Cirrus Logic, Inc.’s (the Company) internal control over financial reporting as of March 28, 2015, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Cirrus Logic, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Wolfson Microelectronics Plc., which is included in the 2015 consolidated financial statements of Cirrus Logic, Inc. and constituted 15% of total assets as of March 28, 2015 and 11% of revenues for the year then ended. Our audit of internal control over financial reporting of Cirrus Logic, Inc. also did not include an evaluation of the internal control over financial reporting of Wolfson Microelectronics Plc. In our opinion, Cirrus Logic, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 28, 2015, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cirrus Logic, Inc. as of March 28, 2015 and March 29, 2014, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended March 28, 2015 of Cirrus Logic, Inc. and our report dated May 27, 2015 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Austin, Texas May 27, 2015 Page 39 of 80 CIRRUS LOGIC, INC. CONSOLIDATED BALANCE SHEETS (in thousands) March 28, 2015 March 29, 2014 Current assets: Assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,401 124,246 112,608 84,196 18,559 27,093 8,810 451,913 60,072 144,346 175,743 263,115 25,593 27,996 $ 31,850 263,417 63,220 69,743 22,024 15,062 10,017 475,333 89,243 103,650 11,999 16,367 25,065 3,087 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,148,778 $ 724,744 Current liabilities: Liabilities and Stockholders’ Equity Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Software license agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 112,213 24,132 6,105 18,711 15,417 $ Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176,578 Long-term liabilities: Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Software license agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,439 26,204 8,786 Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,429 Stockholders’ equity: 51,932 13,388 5,631 7,023 4,549 82,523 — 853 4,010 4,863 Preferred stock, 5.0 million shares authorized but unissued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Common stock, $0.001 par value, 280,000 shares authorized, 63,085 shares and 61,956 shares issued and outstanding at March 28, 2015 and March 29, 2014,respectively . . . . . . . . . . . . . . Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated deficit Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 63 1,159,431 (400,613) (2,110) 62 1,078,816 (440,634) (886) Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 756,771 637,358 Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,148,778 $ 724,744 The accompanying notes are an integral part of these financial statements. Page 40 of 80 CIRRUS LOGIC, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) Fiscal Years Ended March 28, March 29, March 30, 2014 2015 2013 Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $916,568 490,820 $714,338 358,175 $809,786 414,595 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,748 356,163 395,191 Operating expenses Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Patent infringement settlements, net 197,878 99,509 18,137 1,455 — 126,189 74,861 — (598) 695 114,071 76,998 — 3,292 — Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316,979 201,147 194,361 Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,769 579 (5,627) (12,172) 91,549 36,371 155,016 848 — (127) 155,737 47,626 200,830 440 — (80) 201,190 64,592 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,178 108,111 136,598 Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic weighted average common shares outstanding . . . . . . . . . . . . . . . . . . . . Diluted weighted average common shares outstanding . . . . . . . . . . . . . . . . . . . $ $ 0.88 0.85 62,503 65,235 $ $ 1.72 1.65 62,926 65,535 $ $ 2.12 2.00 64,580 68,454 The accompanying notes are an integral part of these financial statements. Page 41 of 80 CIRRUS LOGIC, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except per share amounts) Fiscal Years Ended March 28, March 29, March 30, 2014 2015 2013 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,178 108,111 136,598 Other comprehensive income (loss), before tax Net changes to available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized gain (loss) on marketable securities . . . . . . . . . . . . . . . . . . . . . Net changes to pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss on pension plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 (31) (157) (1,625) 294 — 64 — — Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $53,954 $108,144 $136,441 The accompanying notes are an integral part of these financial statements. Page 42 of 80 CIRRUS LOGIC, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Fiscal Years Ended March 28, March 29, March 30, 2014 2015 2013 Cash flows from operating activities: Net change in operating assets and liabilities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments to reconcile net income to net cash provided by operating activities: . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stock compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss on retirement or write-off of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss on defined benefit pension plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Excess tax benefit from employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55,178 $ 108,111 $ 136,598 34,855 37,549 32,238 1,618 292 (37,692) 22,167 (37,344) 16,077 321 — 36,504 7,047 (77) (639) (4,581) 14,883 23,074 35,959 568 — (8,445) 5,760 6,815 49,557 — 1,239 (9,443) (3,169) 660 9,496 (7,027) 13,562 21,495 60,600 — — (106) 4,792 (25,232) (67,606) — 134 22,423 3,260 (2,272) 263 (7,087) Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,513 228,038 160,824 Cash flows from investing activities: Proceeds from sale of available for sale marketable securities . . . . . . . . . . . . . . . . . . . Purchases of available for sale marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . Purchases of property, equipment and software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss on foreign exchange hedging activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of Wolfson, net of cash obtained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of Acoustic Technologies, net of cash obtained . . . . . . . . . . . . . . . . . . . . Proceeds from sale of Apex assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Increase) decrease in deposits and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301,847 (133,436) (32,311) (4,387) (11,976) (444,138) — — (36) 139,037 (321,519) (15,058) (2,296) — — (20,402) — (111) 127,336 (178,847) (52,902) (3,009) — — — 22,220 402 Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (324,437) (220,349) (84,800) Cash flows from financing activities: Proceeds from long-term revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Principal payments on long-term revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issuance of common stock, net of shares withheld for taxes . . . . . . . . . . . . . . . . . . . . Repurchase of stock to satisfy employee tax withholding obligations . . . . . . . . . . . . . Repurchase and retirement of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Excess tax benefit from employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226,439 (46,000) (2,825) 5,327 (4,624) (10,534) 37,692 — — — 5,320 (3,868) (52,138) 8,445 — — — 12,008 (1,674) (86,059) 106 Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205,475 (42,241) (75,619) Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,551 31,850 (34,552) 66,402 405 65,997 Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 76,401 $ 31,850 $ 66,402 Supplemental disclosures of cash flow information Cash payments during the year for: Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,973 2,391 $ $ 2,118 — 5,125 — The accompanying notes are an integral part of these financial statements. Page 43 of 80 CIRRUS LOGIC, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Balance, March 31, 2012 . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in unrealized gain (loss) on marketable securities, net of tax . . . . . . . . . . . . . . . . . . . Issuance of stock under stock option plans and other, net of shares withheld for employee taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase and retirement of common Common Stock Shares Amount Additional Paid-In Capital Accumulated Other Accumulated Comprehensive Deficit Loss Total 64,394 64 — — 1,008,164 (541,609) — 136,598 — — — — (762) — (157) 465,857 136,598 (157) 1,907 2 12,006 (1,674) stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,010) (3) — (86,056) Amortization of deferred stock compensation . . . . . . . . . . . . . . . . . . . . . . . . — — 21,495 Excess tax benefit from employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 106 — — Balance, March 30, 2013 . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in unrealized gain (loss) on marketable securities, net of tax . . . . . . . . . . . . . . . . . . . Issuance of stock under stock option plans and other, net of shares withheld for employee taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase and retirement of common 63,291 63 — — 1,041,771 (492,741) — 108,111 (919) — — — — — 1,301 1 5,319 (3,868) stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,636) (2) — (52,136) Amortization of deferred stock compensation . . . . . . . . . . . . . . . . . . . . . . . . — — 23,281 Excess tax benefit from employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 8,445 — — Balance, March 29, 2014 . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in unrealized gain (loss) on marketable securities, net of tax . . . . . . . . . . . . . . . . . . . Change in pension liability, net of tax . . . . . . . Change in foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . Issuance of stock under stock option plans and other, net of shares withheld for employee taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase and retirement of common 61,956 62 — — 1,078,816 — (440,634) 55,178 — — — — — — — — (29) — — — 1,709 2 5,326 (4,624) stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (580) (1) — (10,533) Amortization of deferred stock compensation . . . . . . . . . . . . . . . . . . . . . . . . — — 37,626 Excess tax benefit from employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 37,692 — — — — — — 33 — — — — (886) — 69 (1,293) — — — — — 10,334 (86,059) 21,495 106 548,174 108,111 33 1,452 (52,138) 23,281 8,445 637,358 55,178 69 (1,293) (29) 704 (10,534) 37,626 37,692 Balance, March 28, 2015 . . . . . . . . . . . . . . . . . 63,085 63 1,159,431 (400,613) (2,110) 756,771 The accompanying notes are an integral part of these financial statements. Page 44 of 80 CIRRUS LOGIC, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Business Description of Business Cirrus Logic, Inc. (“Cirrus Logic,” “We,” “Us,” “Our,” or the “Company”) develops high-precision, analog and mixed-signal integrated circuits (“ICs”) for a broad range of innovative customers. Building on our diverse analog and mixed-signal product portfolio, Cirrus Logic delivers highly optimized products for a variety of audio, industrial and energy-related applications. We were incorporated in California in 1984, became a public company in 1989, and were reincorporated in the State of Delaware in February 1999. Our primary facility housing engineering, sales and marketing, and administration functions is located in Austin, Texas. We also have offices in various other locations in the United States, United Kingdom, Australia and Asia, including the People’s Republic of China, Hong Kong, South Korea, Japan, Singapore, and Taiwan. Our common stock, which has been publicly traded since 1989, is listed on the NASDAQ Global Select Market under the symbol CRUS. Basis of Presentation We prepare financial statements on a 52- or 53-week year that ends on the last Saturday in March. Fiscal years 2015, 2014 and 2013 were 52-week years. Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Reclassifications Certain reclassifications have been made to prior year balances in order to conform to the current year’s presentation of financial information. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires the use of management estimates. These estimates are subjective in nature and involve judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at fiscal year-end and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. 2. Summary of Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents consist primarily of money market funds, commercial paper, and U.S. Government Treasury and Agency instruments with original maturities of three months or less at the date of purchase. Marketable Securities We determine the appropriate classification of marketable securities at the time of purchase and reevaluate this designation as of each balance sheet date. We classify these securities as either held-to-maturity, trading, or available-for-sale. As of March 28, 2015 and March 29, 2014, all marketable securities were classified as available-for-sale securities. The Company classifies its investments as “available for sale” because it expects to possibly sell some securities prior to maturity. The Company’s investments are subject to market risk, primarily interest rate and credit risk. The Company’s investments are managed by an outside professional manager within Page 45 of 80 investment guidelines set by the Company. Such guidelines include security type, credit quality, and maturity, and are intended to limit market risk by restricting the Company’s investments to high quality debt instruments with relatively short-term maturities. The fair value of investments is determined using observable or quoted market prices for those securities. Available-for-sale securities are carried at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive loss. Realized gains and losses, declines in value judged to be other than temporary, and interest on available-for-sale securities are included in net income. The cost of securities sold is based on the specific identification method. Inventories We use the lower of cost or market method to value our inventories, with cost being determined on a first- in, first-out basis. One of the factors we consistently evaluate in the application of this method is the extent to which products are accepted into the marketplace. By policy, we evaluate market acceptance based on known business factors and conditions by comparing forecasted customer unit demand for our products over a specific future period, or demand horizon, to quantities on hand at the end of each accounting period. On a quarterly and annual basis, we analyze inventories on a part-by-part basis. Product life cycles and the competitive nature of the industry are factors considered in the evaluation of customer unit demand at the end of each quarterly accounting period. Inventory quantities on-hand in excess of forecasted demand is considered to have reduced market value and, therefore, the cost basis is adjusted to the lower of cost or market. Typically, market values for excess or obsolete inventories are considered to be zero. Inventory charges recorded in fiscal year 2015 for excess and obsolete inventory, including scrapped inventory, amounted to $7.2 million, primarily associated with a customer build forecast that exceeded actual market demand, resulting in excess inventory levels for certain high volume products. No significant inventory charges were recorded in fiscal year 2014. Inventories were comprised of the following (in thousands): Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $64,663 19,533 $37,967 31,776 $84,196 $69,743 March 28, March 29, 2015 2014 Property, Plant and Equipment, net Property, plant and equipment is recorded at cost, net of depreciation and amortization. Depreciation and amortization is calculated on a straight-line basis over estimated economic lives, ranging from three to 39 years. Leasehold improvements are depreciated over the shorter of the term of the lease or the estimated useful life. Furniture, fixtures, machinery, and equipment are all depreciated over a useful life of three to 10 years, while buildings are depreciated over a period of up to 39 years. In general, our capitalized software is amortized over a useful life of three years, with capitalized enterprise resource planning software being amortized over a useful life of 10 years. Gains or losses related to retirements or dispositions of fixed assets are recognized in the period incurred. Page 46 of 80 Property, plant and equipment was comprised of the following (in thousands): March 28, 2015 March 29, 2014 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capitalized software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,332 49,963 10,281 2,525 79,682 25,000 22,922 $ 23,806 37,899 9,440 2,387 59,552 24,437 3,797 Total property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . 216,705 (72,359) 161,318 (57,668) Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $144,346 $103,650 Depreciation and amortization expense on property, plant, and equipment for fiscal years 2015, 2014, and 2013, was $15.4 million, $12.1 million, and $10.2 million, respectively. Goodwill and Intangibles, net Intangible assets include purchased technology licenses and patents that are reported at cost and are amortized on a straight-line basis over their useful lives, generally ranging from one to ten years. Acquired intangibles include existing technology, core technology or patents, license agreements, trademarks, tradenames, and customer relationships. These assets are amortized on a straight-line basis over lives ranging from one to fifteen years. Goodwill is recorded at the time of an acquisition and is calculated as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. If the assumptions and estimates used to allocate the purchase price are not correct, or if business conditions change, purchase price adjustments or future asset impairment charges could be required. The value of our intangible assets, including goodwill, could be impacted by future adverse changes such as: (i) any future declines in our operating results, (ii) a decline in the valuation of technology company stocks, including the valuation of our common stock, (iii) a significant slowdown in the worldwide economy and the semiconductor industry, or (iv) any failure to meet the performance projections included in our forecasts of future operating results. The Company tests goodwill and indefinite lived intangibles for impairment on an annual basis or more frequently if the Company believes indicators of impairment exist. Impairment evaluations involve management’s assessment of qualitative factors to determine whether it is more likely than not that goodwill and other intangible assets are impaired. If management concludes from its assessment of qualitative factors that it is more likely than not that impairment exists, then a quantitative impairment test will be performed involving management estimates of asset useful lives and future cash flows. Significant management judgment is required in the forecasts of future operating results that are used in these evaluations. If our actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges in a future period. The Company has recorded no goodwill impairments in fiscal years 2015, 2014 and 2013. There were no material intangible asset impairments in fiscal years 2015, 2014, or 2013. Long-Lived Assets We test for impairment losses on long-lived assets and definite-lived intangibles used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. We measure any impairment loss by comparing the fair value of the asset to its carrying amount. We estimate fair value based on discounted future cash flows, quoted market prices, or independent appraisals. Page 47 of 80 Foreign Currency Translation All of our international subsidiaries have the U.S. dollar as the functional currency. The local currency financial statements are translated into U.S. dollars using current rates of exchange for assets and liabilities. Gains and losses from remeasurement are included in other expense. Hedging and Forwards Hedging and forward contracts are accounted for based upon the provisions of Accounting Standards Codification (“ASC) Topic 815, “Derivatives and Hedging” and ASC Topic 820, “Fair Value Measurements and Disclosures.” All derivative instruments shall be carried at fair value per ASC 820. If a derivative instrument meets certain hedge accounting criteria, the provisions of ASC 815 may be applied. The Company regularly reviews all financial instruments and contracts. When a derivative is identified, it is evaluated against the criteria in ASC 815 to determine the appropriate accounting methodology. Derivatives that qualify for hedge accounting per ASC 815 are classified as one of the following: fair value hedge, cash flow hedge or foreign currency hedge. Pension Defined benefit pension plans are accounted for based upon the provisions of ASC Topic 715, “Compensation – Retirement Benefits.” The funded status of the plan is recognized in the consolidated balance sheets. Subsequent re-measurement of plan assets and benefit obligations, if deemed necessary, would be reflected in the consolidated balance sheets in the subsequent interim period to reflect the overfunded or underfunded status of the plan. The Company will engage external actuaries on at least an annual basis to provide a valuation of the plan’s assets and projected benefit obligation and to record the net periodic pension cost. On a quarterly basis, the Company will evaluate current information available to us to determine whether the plan’s assets and projected benefit obligation should be re-measured. Concentration of Credit Risk Financial instruments that potentially subject us to material concentrations of credit risk consist primarily of cash equivalents, marketable securities, long-term marketable securities, and trade accounts receivable. We are exposed to credit risk to the extent of the amounts recorded on the balance sheet. By policy, our cash equivalents, marketable securities, and long-term marketable securities are subject to certain nationally recognized credit standards, issuer concentrations, sovereign risk, and marketability or liquidity considerations. In evaluating our trade receivables, we perform credit evaluations of our major customers’ financial condition and monitor closely all of our receivables to limit our financial exposure by limiting the length of time and amount of credit extended. In certain situations, we may require payment in advance or utilize letters of credit to reduce credit risk. By policy, we establish a reserve for trade accounts receivable based on the type of business in which a customer is engaged, the length of time a trade account receivable is outstanding, and other knowledge that we may possess relating to the probability that a trade receivable is at risk for non-payment. We had two contract manufacturers, Hongfujin Precision and Protek, who represented 26 percent and 15 percent, respectively, and one direct customer, Samsung Electronics who represented 22 percent of our consolidated gross trade accounts receivable as of the end of fiscal year 2015. For fiscal year 2014, we had three contract manufacturers, Futaihua Industrial, Hongfujin Precision and Protek who represented 14 percent, 44 percent, and 12 percent, respectively, of our consolidated gross trade accounts receivable. Additionally, in fiscal year 2014, we had one distributor, Avnet, Inc. who represented 11 percent of our consolidated gross trade accounts receivable. No other distributor or customer had receivable balances that represented more than 10 percent of consolidated gross trade accounts receivable as of the end of fiscal year 2015 or 2014. Since the components we produce are largely proprietary and generally not available from second sources, we 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, from a distributor, or through a third party manufacturer contracted to produce their end product. For fiscal years 2015, 2014, and 2013, our ten largest end Page 48 of 80 customers represented approximately 87 percent, 88 percent, and 89 percent, of our sales, respectively. For fiscal years 2015, 2014, and 2013, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 72 percent, 80 percent, and 82 percent, of the Company’s total sales, respectively. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2015, 2014, or 2013. Revenue Recognition We recognize revenue when all of the following criteria are met: persuasive evidence that an arrangement exists, delivery of goods has occurred, the sales price is fixed or determinable and collectability is reasonably assured. We evaluate our distributor arrangements, on a distributor by distributor basis, with respect to each of the four criteria above. For a majority of our distributor arrangements, we provide rights of price protection and stock rotation. As a result, revenue is deferred at the time of shipment to our domestic distributors and certain international distributors due to the determination that the ultimate sales price to the distributor is not fixed or determinable. Once the distributor has resold the product, and our final sales price is fixed or determinable, we recognize revenue for the final sales price and record the related costs of sales. For certain of our smaller international distributors, we do not grant price protection rights and provide minimal stock rotation rights. For these distributors, revenue is recognized upon delivery to the distributor, less an allowance for estimated returns, as the revenue recognition criteria have been met upon shipment. Further, for sales where revenue is deferred, the Company defers the associated cost of goods sold on our Consolidated Balance Sheet, net within the deferred income caption. The Company routinely evaluates the products held by our distributors for impairment to the extent such products may be returned by the distributor within these limited rights and such products would be considered excess or obsolete if included within our own inventory. Products returned by distributors and subsequently scrapped have historically been immaterial to the Company. Warranty Expense We warrant our products and maintain a provision for warranty repair or replacement of shipped products. The accrual represents management’s estimate of probable returns. Our estimate is based on an analysis of our overall sales volume and historical claims experience. The estimate is re-evaluated periodically for accuracy. Shipping Costs Our shipping and handling costs are included in cost of sales for all periods presented in the Consolidated Statements of Income. Advertising Costs Advertising costs are expensed as incurred. Advertising costs were $1.1 million, $1.4 million, and $1.5 million, in fiscal years 2015, 2014, and 2013, respectively. Stock-Based Compensation Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards and is recognized as an expense, on a ratable basis, over the vesting period, which is generally between zero and four years. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates used in calculating the grant-date fair value of stock options and performance awards (also called market stock units). The Company calculates the grant-date fair value for stock options and market stock units using the Black-Scholes valuation model and the Monte Carlo simulation, respectively. The use of valuation models requires the Company to make estimates of assumptions such as expected volatility, expected term, risk- free interest rate, expected dividend yield, correlation of the Company’s stock price with the Philadelphia Semiconductor Index (“the Index”) and forfeiture rates. The grant-date fair value of restricted stock units is the market value at grant date multiplied by the number of units. Page 49 of 80 Income Taxes We provide for the recognition of deferred tax assets if realization of such assets is more likely than not. The Company evaluates the ability to realize its deferred tax assets based on all the facts and circumstances, including projections of future taxable income and expiration dates of carryover attributes on a quarterly basis. The calculation of our tax liabilities involves assessing uncertainties with respect to the application of complex tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing jurisdiction. We recognize liabilities for uncertain tax positions based on the two-step process. The first step requires us to determine if the weight of available evidence indicates that the tax position has met the threshold for recognition; therefore, we must evaluate whether it is more likely than not that the position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step requires us to measure the tax benefit of the tax position taken, or expected to be taken, in an income tax return as the largest amount that is more than 50 percent likely of being realized upon ultimate settlement. We reevaluate the uncertain tax positions each quarter based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, expirations of statutes of limitation, effectively settled issues under audit, and new audit activity. If our estimates of these taxes are greater or less than actual results, an additional tax benefit or charge will result. Although we believe the measurement of our liabilities for uncertain tax positions is reasonable, we cannot assure that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals. If additional taxes are assessed as a result of an audit or litigation, it could have a material effect on our income tax provision and net income in the period or periods for which that determination is made. We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues which may require an extended period of time to resolve and could result in additional assessments of income tax. We believe adequate provisions for income taxes have been made for all periods. Net Income Per Share Basic net income per share is based on the weighted effect of common shares issued and outstanding and is calculated by dividing net income by the basic weighted average shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of common shares used in the basic net income per share calculation, plus the equivalent number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. These potentially dilutive items consist primarily of outstanding stock options and restricted stock grants. The following table details the calculation of basic and diluted earnings per share for fiscal years 2015, 2014, and 2013, (in thousands, except per share amounts): 2015 2014 2013 Numerator: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $55,178 $108,111 $136,598 Denominator: Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . Effect of dilutive securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average diluted shares . . . . . . . . . . . . . . . . . . . . . . . . 62,503 2,732 65,235 62,926 2,609 65,535 64,580 3,874 68,454 Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $ 0.88 0.85 $ $ 1.72 1.65 $ $ 2.12 2.00 The weighted outstanding options excluded from our diluted calculation for the years ended March 28, 2015, March 29, 2014, and March 30, 2013 were 718 thousand, 833 thousand, and 453 thousand, respectively, as the exercise price exceeded the average market price during the period. Page 50 of 80 Accumulated Other Comprehensive Loss Our accumulated other comprehensive loss is comprised of foreign currency translation adjustments from prior years when we had subsidiaries whose functional currency was not the U.S. Dollar, unrealized gains and losses on investments classified as available-for-sale and actuarial gains and losses on our pension plan assets. See Note 16 – Accumulated Other Comprehensive Loss for additional discussion. Recently Issued Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this ASU provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact of this ASU and expects no material modifications to its financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (ASC Topic 606). The purpose of this ASU is to converge revenue recognition requirements per GAAP and International Financial Reporting Standards (IFRS). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this ASU are effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption not permitted by the FASB; however, in April 2015 the FASB issued for public comment a proposal to delay the effective date of this ASU to annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of this ASU on its consolidated financial position, results of operations and cash flows. In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is to be applied retrospectively and represents a change in accounting principle. This ASU is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Earlier adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the effect that the adoption of this ASU will have on its financial statements. 3. Marketable Securities The Company’s investments that have original maturities greater than 90 days have been classified as available-for-sale securities in accordance with U.S. GAAP. Marketable securities are categorized on the Consolidated Balance Sheet as marketable securities, as appropriate. The following table is a summary of available-for-sale securities (in thousands): As of March 28, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (Net Carrying Amount) Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial paper U.S. Treasury securities . . . . . . . . . . . . . . . . $153,896 2,485 28,010 Total securities . . . . . . . . . . . . . . . . . . . . . . . $184,391 $ 8 2 — $10 $(68) — (15) $(83) $153,836 2,487 27,995 $184,318 Page 51 of 80 The Company’s specifically identified gross unrealized losses of $83 thousand relates to 34 different securities with a total amortized cost of approximately $154.3 million at March 28, 2015. Because the Company does not intend to sell the investments at a loss and the Company will not be required to sell the investments before recovery of its amortized cost basis, it did not consider the investment in these securities to be other-than- temporarily impaired at March 28, 2015. Further, the securities with gross unrealized losses had been in a continuous unrealized loss position for less than 12 months as of March 28, 2015. As of March 29, 2014 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (Net Carrying Amount) Corporate debt securities . . . . . . . . . . . . . . . U.S. Treasury securities . . . . . . . . . . . . . . . . Agency discount notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial paper Certificates of deposit . . . . . . . . . . . . . . . . . . $246,878 56,986 2,008 41,962 5,006 Total securities . . . . . . . . . . . . . . . . . . . . . . . $352,840 $52 10 1 10 — $73 $(245) (2) — (2) (4) $(253) $246,685 56,994 2,009 41,970 5,002 $352,660 The Company’s specifically identified gross unrealized losses of $253 thousand relates to 74 different securities with a total amortized cost of approximately $207.8 million at March 29, 2014. Because the Company does not intend to sell the investments at a loss and the Company will not be required to sell the investments before recovery of its amortized cost basis, it did not consider the investment in these securities to be other-than- temporarily impaired at March 29, 2014. Further, the securities with gross unrealized losses had been in a continuous unrealized loss position for less than 12 months as of March 29, 2014. The cost and estimated fair value of available-for-sale investments by contractual maturity were as follows: March 28, 2015 March 29, 2014 Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . After 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $124,275 60,116 $124,246 60,072 $263,418 89,422 $263,417 89,243 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $184,391 $184,318 $352,840 $352,660 4. Fair Value of Financial Instruments The Company has determined that the only assets and liabilities in the Company’s financial statements that are required to be measured at fair value on a recurring basis are the Company’s cash equivalents, investment portfolio, pension plan assets/liabilities and foreign currency derivative assets/liabilities. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ▪ ▪ Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Page 52 of 80 ▪ Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s cash equivalents and investment portfolio assets consist of corporate debt securities, money market funds, U.S. Treasury securities, obligations of U.S. government-sponsored enterprises, commercial paper, and certificates of deposit and are reflected on our Consolidated Balance Sheet under the headings cash and cash equivalents, marketable securities, and long-term marketable securities. The Company determines the fair value of its investment portfolio assets by obtaining non-binding market prices from its third-party portfolio managers on the last day of the quarter, whose sources may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. The Company’s long-term revolving facility, described in Note 9, bears interest at a base rate plus applicable margin or LIBOR plus applicable margin. As of March 28, 2015, the fair value of the Company’s long-term revolving facility approximates carrying value based on estimated margin. As of March 28, 2015 and March 29, 2014, the Company classified all investment portfolio assets and pension plan assets (discussed in Note 11) as Level 1 or Level 2 assets. The Company has no Level 3 assets. There were no transfers between Level 1, Level 2, or Level 3 measurements for the years ending March 28, 2015 and March 29, 2014. The following summarizes the fair value of our financial instruments, exclusive of pension plan assets detailed in Note 11, at March 28, 2015 (in thousands): Quoted Prices in Active Markets for Identical Assets Level 1 Significant Other Significant Observable Unobservable Inputs Level 2 Inputs Level 3 Total Assets: Cash equivalents Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 996 $ — $ — $ 996 Available-for-sale securities Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial paper $ — $153,836 27,995 — 2,487 — $27,995 $156,323 $ — — — $ — $153,836 27,995 2,487 $184,318 Page 53 of 80 The following summarizes the fair value of our financial instruments at March 29, 2014 (in thousands): Quoted Prices in Active Markets for Identical Assets Level 1 Significant Other Significant Observable Unobservable Inputs Level 2 Inputs Level 3 Cash equivalents Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial paper $20,456 — $ — 1,878 Available-for-sale securities Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . . Agency discount notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial paper Certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,456 $ 1,878 $ — $246,685 56,994 — 2,009 — 41,970 — 5,002 — $56,994 $295,666 $ — — $ — $ — — — — — $ — 5. Accounts Receivable, net The following are the components of accounts receivable, net (in thousands): Total $ 20,456 1,878 $ 22,334 $246,685 56,994 2,009 41,970 5,002 $352,660 Gross accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $112,964 (356) $63,449 (229) Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $112,608 $63,220 The following table summarizes the changes in the allowance for doubtful accounts (in thousands): March 28, 2015 March 29, 2014 Balance, March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bad debt expense, net of recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(371) 70 Balance, March 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bad debt expense, net of recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, March 29, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bad debt expense, net of recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (301) 72 (229) (127) Balance, March 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(356) 6. Intangibles, net The intangibles, net balance included on the Consolidated Balance Sheets was $175.7 million and $12.0 million at March 28, 2015 and March 29, 2014, respectively. The increase in the intangibles balance primarily resulted from the Acquisition discussed below in Note 7 - Acquisition. Page 54 of 80 The following information details the gross carrying amount and accumulated amortization of our intangible assets (in thousands): Intangible Category / Weighted-Average Amortization period (in years) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization March 28, 2015 March 29, 2014 Core technology (a) . . . . . . . . . . . . . . . . . . . . . . License agreement (a) . . . . . . . . . . . . . . . . . . . . . Existing technology (6.5) . . . . . . . . . . . . . . . . . . In-process research & development (“IPR&D”) (7.3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trademarks and tradename (5.4) . . . . . . . . . . . . Customer relationships (10.0) . . . . . . . . . . . . . . . Technology licenses (3.1) . . . . . . . . . . . . . . . . . . $ 1,390 440 98,645 $ (1,390) (440) (13,596) $ 1,390 440 9,826 $ (1,390) (440) (4,206) 72,750 3,037 15,381 23,018 (3,918) (1,141) (1,117) (17,316) — 1,600 2,400 18,000 — (384) (120) (15,117) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $214,661 $(38,918) $33,656 $(21,657) (a) Intangible assets are fully amortized. Amortization expense for intangibles in fiscal years 2015, 2014, and 2013 was $18.2 million, $2.8 million, and $3.4 million, respectively. The following table details the estimated aggregate amortization expense for all intangibles owned as of March 28, 2015, for each of the five succeeding fiscal years and in the aggregate thereafter (in thousands): For the year ended March 26, 2016 . . . . . . . . . . . . . . . . . . . . . For the year ended March 25, 2017 . . . . . . . . . . . . . . . . . . . . . For the year ended March 31, 2018 . . . . . . . . . . . . . . . . . . . . . For the year ended March 30, 2019 . . . . . . . . . . . . . . . . . . . . . For the year ended March 28, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter $ 32,304 $ 29,020 $ 27,742 $ 27,053 $ 26,370 $ 33,266 7. Acquisition On August 21, 2014, Cirrus Logic completed the acquisition of Wolfson Microelectronics plc (the “Acquisition”), a public limited company incorporated in Scotland (“Wolfson”). Upon completion of the acquisition, Wolfson was re-registered as a private limited company. Wolfson is a supplier of high performance, mixed-signal audio solutions for the consumer electronics market. The Acquisition accelerates Cirrus Logic’s strategic roadmap, further strengthens our technology portfolio with the addition of MEMS microphones and extensive software capabilities, while significantly expanding our development capacity. The enterprise value for Wolfson in connection with the Acquisition was approximately £283 million (approximately $469 million, and was based on the agreed upon offer of £2.35 per share (the “Offer”) for the entire issued and to be issued share capital of Wolfson. Cirrus Logic financed the Acquisition through a combination of existing cash on Cirrus Logic’s balance sheet and $225 million in debt funding from Wells Fargo Bank, National Association, as discussed below in Note 9. Upon the completion of the Acquisition, in the second quarter of fiscal year 2015, the Company recorded approximately $12.0 million of realized losses on foreign currency contracts used to hedge the purchase of Wolfson’s share capital which was denominated in pounds sterling. The contracts were not accounted for under ASC 815. The loss is included in the consolidated statements of income under the caption “Other expense” for the year ended March 28, 2015. Page 55 of 80 The Acquisition was accounted for as a business purchase pursuant to ASC Topic 805, Business Combinations, and the operations of Wolfson have been included in the Company’s consolidated financial statements since August 21, 2014, the date of acquisition. The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition as of March 28, 2015 (in thousands): Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total identifiable assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liability — current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total identifiable liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net identifiable assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amount $ 25,342 30,530 16,226 27,398 175,987 1,625 $277,108 (11,958) (551) (39,417) (2,449) $ (54,375) $222,733 246,748 Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $469,481 The goodwill of $246.7 million arising from the Acquisition is attributable primarily to expected synergies and the product and customer base of Wolfson. None of the goodwill is expected to be deductible for income tax purposes. As of March 28, 2015, the changes in the recognized amounts of goodwill resulting from the Acquisition are as follows (in thousands): September 27, 2014 Fair Value Adjustments March 28, 2015 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liability - current . . . . . . . . . . . . . . . . . . . . . . . . Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,658 15,633 29,093 (11,483) (41,417) $ 1,872 593 (1,695) (475) 2,000 $ 30,530 16,226 27,398 (11,958) (39,417) Total Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $249,043 $(2,295) $246,748 Page 56 of 80 The acquired intangible assets and related weighted average amortization periods are detailed below (in thousands): Intangible assets Developed technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Technology intellectual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IPR&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amount $ 74,247 14,572 1,437 72,750 12,981 Weighted-average Amortization Period (years) 6.2 5.3 1.3 7.3 10.0 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $175,987 The IPR&D intangible assets included the following research and development projects acquired through the Acquisition (in thousands): (1) intellectual property (“IP”) migration and product development at 152 nm process technology (“152 nm”); (2) IP migration and product development at 55 and 65 nm process technology (“55/65 nm”); (3) MEMs transducer development (“MEM”); and (4) single die monolithic integration of MEMS structures and ASICS (“integrated MEMs”). IPR&D intangible assets 152 nm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55/65 nm . . . . . . . . . . . . . . . . . . . . . . . . . . . . MEMs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Integrated MEMs . . . . . . . . . . . . . . . . . . . . . Amount $ 8,905 36,807 15,596 11,442 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $72,750 Approximate Costs to Complete Estimated Cost Completion Date (calendar year) $ 862 17,350 604 2,784 $21,600 2015 2019 2015 2016 The fair value of the IPR&D acquired intangible assets was determined using the multi-period excess earnings (“MPEEM”) method, which is a variation of the income approach. The method estimates an intangible asset’s value based on the present value of the incremental after-tax cash flows, or excess earnings, attributable to the intangible asset. The present value is calculated using a discount rate commensurate with the risk inherent in the IPR&D intangible asset as well as any tax benefits related to ownership. The initial allocation of the purchase price is preliminary and subject to completion, including the areas of taxation, where valuation assessments are in progress. The adjustments arising from the completion of the outstanding matters may materially affect the preliminary purchase accounting and would be retroactively reflected in the financial statements as of March 28, 2015, and for the interim periods affected. The Company recognized a total of $18.1 million of acquisition related costs that were expensed in the second and third quarters of fiscal year 2015. The majority of the costs included in this amount were associated with bank and legal fees, as well as certain expenses for stock compensation related to the Acquisition. These costs are included in the consolidated statements of income in the line item entitled “Acquisition related costs.” Restructuring costs related to the Acquisition were $1.5 million for the year ended March 28, 2015, primarily related to severance payments and the consolidation of our sales functions. These costs are included in the line item “Restructuring and other, net” on the consolidated statements of income. Prior year credits related to changes in estimates for the Tucson, Arizona design center facility, due to a new sublease on the vacated property in connection with the closing of this facility. The Company’s consolidated statements of income for the year ending March 28, 2015 included $98.3 million of revenue attributable to Wolfson, from the acquisition date to the end of the period. Earnings disclosure related to Wolfson for the year ending March 28, 2015, is excluded as it would be impracticable, due to the integration of Wolfson’s operations with the Company’s operations, resulting in the inability to allocate costs and services shared across both companies’ product lines. Page 57 of 80 Giving pro forma effect to the Acquisition as if it had occurred as of March 31, 2013, the beginning of the Company’s fiscal year 2014, and after applying the Company’s accounting policies and adjusting the results to reflect these changes since March 31, 2013, $142.5 million and $179.4 million of pro forma revenue would have been attributable to Wolfson for the fiscal year ended March 28, 2015 and March 29, 2014, respectively. Disclosure of pro forma earnings attributable to Wolfson is excluded as it would be impracticable, due to the integration of Wolfson’s operations with the Company’s operations, resulting in the inability to allocate costs and services shared across both companies’ product lines. 8. Derivative Financial Instruments Our primary objective for holding derivative financial instruments is to manage currency exchange rate risk. Currency Exchange Rate Risk We are exposed to currency exchange rate risk and may hedge our exposures, generally with currency forward contracts. Substantially all of our revenue is transacted in U.S. dollars. However, a portion of our operating expenditures are incurred in or exposed to other currencies, primarily the British pound. We have established a forecasted transaction currency risk management program to monitor and protect against fluctuations in the volatility of the functional currency equivalent of future cash flows caused by changes in exchange rates. This program may reduce, but not eliminate, the impact of currency exchange movements. At March 28, 2015, changes in the fair value of derivative instruments as well as recognized gains / losses are included in the line item “Other expense” in the consolidated statements of income. At March 28, 2015, all of our currency forward contracts have expired. 9. Revolving Line of Credit On August 29, 2014, Cirrus Logic entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the Lenders party thereto. The Credit Agreement provides for a $250 million senior secured revolving credit facility (the “Credit Facility”). The Credit Facility replaced Cirrus Logic’s Interim Credit Facility described below, and may be used for general corporate purposes. The Credit Facility matures on August 29, 2017. The Credit Facility is required to be guaranteed by all of Cirrus Logic’s material domestic subsidiaries (the “Subsidiary Guarantors”). The Credit Facility is secured by substantially all of the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets. Borrowings under the Credit Facility may, at Cirrus Logic’s election, bear interest at either (a) a Base Rate plus the Applicable Margin (“Base Rate Loans”) or (b) a LIBOR Rate plus the Applicable Margin (“LIBOR Rate Loans”). The Applicable Margin ranges from 0% to .25% per annum for Base Rate Loans and 1.50% to 2.00% per annum for LIBOR Rate Loans based on Cirrus Logic’s Leverage Ratio (discussed below). A Commitment Fee accrues at a rate per annum ranging from 0.25% to 0.35% (based on the Leverage Ratio) on the average daily unused portion of the Commitment of the Lenders. The Credit Agreement contains customary affirmative covenants, including, among others, covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the Credit Agreement contains customary negative covenants limiting the ability of Cirrus Logic or any Subsidiary to, among other things, incur debt, grant liens, make investments, effect certain fundamental changes, make certain asset dispositions, and make certain restricted payments. The Credit Facility also contains certain financial covenants providing that (a) the ratio of consolidated funded indebtedness to consolidated EBITDA for the prior four consecutive quarters must not be greater than 2.00 to 1.00 (the “Leverage Ratio”) and (b) the sum of cash and Cash Equivalents, which includes marketable securities, of Cirrus Logic and its Subsidiaries on a consolidated basis must not be less than $100 million. At March 28, 2015, the Company was in compliance with all covenants under the Credit Agreement. The Company had borrowed $180.4 million under this facility as of March 28, 2015, which is included in long-term liabilities on the consolidated balance sheets under the caption “Debt.” The borrowings were primarily used for refinancing the Interim Credit Facility described below (which was used for financing the Acquisition). Page 58 of 80 Cirrus Logic entered into a credit agreement (the “Interim Credit Agreement”) with Wells Fargo Bank, National Association as administrative agent and lender, on April 29, 2014, in connection with the Acquisition. The Interim Credit Agreement provided for a $225 million senior secured revolving credit facility (the “Interim Credit Facility”). The Interim Credit Facility was to be used for, among other things, payment of the Offer Consideration in connection with the Acquisition. The Interim Credit Facility would have matured on the earliest to occur of (a) January 23, 2015, (b) the date of termination of the Commitments as a result of a permanent reduction of all of the Commitments (as defined in the Interim Credit Agreement) by Cirrus Logic or (c) the date of termination of the Commitments as a result of an event of default. The Interim Credit Facility was replaced with the Credit Facility described above and matured under scenario (b) above with no outstanding borrowings or accrued interest on the maturity date. 10. Restructuring Costs The current fiscal year restructuring costs incurred related to the Acquisition discussed above in Note 7. In the third quarter of fiscal year 2013, the Company committed to a plan to close its Tucson, Arizona design center and move those operations to the Company’s headquarters in Austin, Texas. As a result, the Company incurred a one-time charge for relocation, severance-related items and facility-related costs to operating expenses totaling $3.5 million in the third quarter of fiscal year 2013. The charge included $1.5 million in severance and relocation-related costs and $2.0 million in facility and other related charges. In fiscal year 2014, the Company recorded a credit of approximately $0.6 million related to changes in estimates for the facility, due to new subleases on the vacated property. This information is presented in a separate line item on the Consolidated Statements of Income in operating expenses under the caption “Restructuring and other, net.” Of the net $2.9 million expense incurred, approximately $2.8 million has been completed, and consisted of severance and relocation-related costs of approximately $1.2 million, an asset impairment charge of approximately $1.0 million, and facility-related costs of approximately $0.6 million. As of March 28, 2015, we have a remaining restructuring accrual of $0.1 million, included in “Other accrued liabilities” on the Consolidated Balance Sheet. 11. Postretirement Benefit Plans Pension Plan As a result of the Acquisition, the Company now fully funds a defined benefit pension scheme (“the Scheme”) maintained by Wolfson, for employees in the United Kingdom, which was closed to new participants as of July 2, 2002. As of April 30, 2011, the participants in the Scheme no longer accrue benefits and therefore the Company will not be required to pay contributions in respect to future accrual. The Scheme is a trustee-administered fund that is legally separate from Wolfson, which holds the pension plan assets to meet long-term pension liabilities. The pension fund trustees comprise one employee and one employer representative and an independent chairman. The trustees are required by law to act in the best interests of the Scheme’s beneficiaries and the trustees are responsible, in consultation with Wolfson and the Company, for setting certain policies (including the investment policies and strategies) of the fund. Prior to the Acquisition, Wolfson paid deficit contributions of approximately $1.65 million in April 2014. As of March 28, 2015, the Company was obligated, and subsequently paid, approximately $1.4 million to the Scheme by April 30, 2015 and is obligated to pay approximately $0.6 million by April 30, 2016, which is recorded on the consolidated balance sheets in “Accrued salaries and benefits” and “Other long-term liabilities,” respectively. The Company expects to completely close the Scheme over the next ten years. Page 59 of 80 The following tables set forth the benefit obligation, the fair value of plan assets, and the funded status of the Scheme (in thousands): Change in benefit obligation: Beginning balance at August 21, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total benefit obligation at March 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in plan assets: $22,959 16 544 (255) 3,827 27,091 Beginning balance at August 21, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,021 1,969 (255) Fair value of plan assets at March 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,735 Funded status of Scheme at March 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (356) The assets and obligations of the Scheme are denominated in British Pounds. Based on an actuarial study performed as of March 28, 2015, the Scheme is underfunded and a long-term liability is reflected in the Company’s consolidated balance sheet under the caption “Other long-term liabilities”. The weighted-average discount rate assumption used to determine benefit obligations as of March 28, 2015 was 3.2%. The components of the Company’s net periodic pension expense (income) are as follows (in thousands): Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fiscal Years Ended March 28, March 29, 2015 $ 16 544 (792) $(232) 2014 $ — — — $ — The following weighted-average assumptions were used to determine net periodic benefit costs for the year ended March 28, 2015: Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected long-term return on plan assets . . . . . . . . . . . . . . . . . . . 4.00% 5.36% We report and measure the plan assets of our defined benefit pension at fair value. The Company’s pension plan assets consist of cash, equity securities, corporate debt securities, and diversified growth funds. The fair value of the pension plan assets is determined through an external actuarial valuation, following a similar process of obtaining inputs as described above. The expected long-term return on plan assets is comparable to the discount rate used to value plan liabilities. Page 60 of 80 The table below sets forth the fair value of our plan assets as of March 28, 2015, using the same three-level hierarchy of fair-value inputs described in Note 4. Plan Assets: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Quoted Prices in Active Markets for Identical Assets Level 1 Significant Other Significant Observable Unobservable Inputs Level 2 Inputs Level 3 $1,160 — $1,160 $ — 25,575 $25,575 $ — — $ — Total $ 1,160 25,575 $26,735 Amounts recognized in accumulated other comprehensive income (loss) for the period that have not yet been recognized as components of net periodic benefit cost consist of (in thousands): Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated other comprehensive loss, before tax . . . . . . . Fiscal Year 2015 $1,625 $1,625 The Company will amortize the actuarial loss over a period of twenty-five years based on actuarial assumptions, including life expectancy. The following table provides the estimated amount that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in fiscal year 2016 (in thousands): Transition (asset) obligation . . . . . . . . . . . . . . . . . . . . . . . . . Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $— — 65 Fiscal Year 2016 The Company expects to contribute $1.4 million to the pension plan in fiscal year 2016 for deficit contributions discussed above. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the following fiscal years (in thousands): 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit Payments $ 384 305 314 487 570 2,865 Page 61 of 80 The expected long-term return on plan assets is based on historical actual return experience and estimates of future long-term performance with consideration to the expected investment mix of the plan assets. It is the policy of the Trustees and the Company to review the investment strategy periodically. The Trustees’ investment objectives and the processes undertaken to measure and manage the risks inherent in the Scheme investment strategy are illustrated by the current asset allocation. The current mix is 33% equity securities, 42% corporate debt securities, 21% diversified growth funds and 4% cash. See the related fair value of the assets above. The Scheme exposes the Company to actuarial risks such as investment (market) risk, interest rate risk, mortality risk, longevity risk and currency risk. A decrease in corporate bond yields, a rise in inflation or an increase in life expectancy would result in an increase to the Scheme liabilities and may give rise to increased benefit expenses in future periods. Caps on inflationary increases are currently in place to protect the Scheme against extreme inflation, however. The indicative impact on net periodic benefit cost based on defined sensitivities is as follows: Change Approximate impact on liabilities Decrease discount rate by 0.1%, per year . . . . . . . . . . . . . . Increase inflation linked assumptions by 0.1%, per year . . . . . . . . . . . . . . . . . . . . . Increase life expectancy by 1 year 2% increase 2% increase (of inflation-linked liabilities) 2% increase 401(k) Plan We have a 401(k) Profit Sharing Plan (the “401(k) Plan”) covering all of our qualifying domestic employees. Under the 401(k) Plan, employees may elect to contribute any percentage of their annual compensation up to the annual IRS limitations. Beginning in the fourth quarter of fiscal year 2014, the Company matches 50 percent of the first 8 percent of the employees’ annual contribution; prior to that, the Company matched 50 percent of the first 6 percent of the employee’s annual contribution. We made matching employee contributions of $2.5 million, $1.8 million, and $1.5 million during fiscal years 2015, 2014, and 2013, respectively. 12. Equity Compensation The Company is currently granting equity awards from the 2006 Stock Incentive Plan (the “Plan”), which was approved by stockholders in July 2006. The Plan provides for granting of stock options, restricted stock awards, performance awards, phantom stock awards, and bonus stock awards, or any combination of the foregoing. To date, the Company has granted stock options, restricted stock awards, phantom stock awards (also called restricted stock units), and performance awards (also called market stock units) under the Plan. Each stock option granted reduces the total shares available for grant under the Plan by one share. Each full value award granted (including restricted stock awards, restricted stock units and market stock units) reduces the total shares available for grant under the Plan by 1.5 shares. Stock options generally vest between zero and four years, and are exercisable for a period of ten years from the date of grant. Generally, restricted stock awards are subject to vesting schedules up to four years. Restricted stock units are generally subject to vesting from one to three years, depending upon the terms of the grant. Market stock units are subject to a vesting schedule of three years. Page 62 of 80 The following table summarizes the activity in total shares available for grant (in thousands): Balance, March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plans terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, March 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plans terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, March 29, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plans terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shares added . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, March 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shares Available for Grant 6,257 — (1,600) 468 5,125 — (1,785) 207 3,547 — 3,300 (3,181) 230 3,896 As of March 28, 2015, approximately 12.6 million shares of common stock were reserved for issuance under the Plan. Stock Compensation Expense The following table summarizes the effects of stock-based compensation on cost of goods sold, research and development, sales, general and administrative, pre-tax income, and net income after taxes for shares granted under the Plan (in thousands, except per share amounts): Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sales, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 747 11,222 25,580 $ 864 10,392 11,818 Fiscal Year 2014 2015 2013 $ 751 10,549 10,195 Effect on pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income Tax Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,549 (37,692) 23,074 (8,445) 21,495 (106) Total share-based compensation expense (benefit) (net of taxes) . . . . . . . . . . . (143) 14,629 21,389 Share-based compensation effects on basic earnings per share . . . . . . . . . . . . . . . Share-based compensation effects on diluted earnings per share . . . . . . . . . . . . . . Share-based compensation effects on operating activities cash flow . . . . . . . . . . . Share-based compensation effects on financing activities cash flow . . . . . . . . . . . $ 1.20 1.15 (143) 37,692 $ 0.50 0.48 14,629 8,445 $ 0.33 0.32 21,389 106 The total share based compensation expense included in the table above and which is attributable to restricted stock awards, restricted stock units and market stock units was $34.0 million, $18.6 million, $16.3 million, for fiscal years 2015, 2014, and 2013, respectively. As of March 28, 2015, there was $40.7 million of compensation costs related to non-vested stock options, restricted stock units, and market stock units granted under the Company’s equity incentive plans not yet recognized in the Company’s financial statements. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.27 years for stock options, 1.50 years for restricted stock units, and 2.51 years for market stock units. Page 63 of 80 Stock Options We estimated the fair value of each stock option granted on the date of grant using the Black-Scholes option-pricing model using a dividend yield of zero and the following additional assumptions: March 28, 2015 Year Ended March 29, 2014 March 30, 2013 Expected stock price volatility . . . . . . . . . . . . . . Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . Expected term (in years) . . . . . . . . . . . . . . . . . . . 38.79 - 42.12% 51.93 - 54.34% 0.47 - 0.52% 0.49 - 0.91% 2.46 - 2.61 2.15 - 2.87 63.42% 0.31% 2.46 The Black-Scholes valuation calculation requires us to estimate key assumptions such as stock price volatility, expected term, risk-free interest rate and dividend yield. The expected stock price volatility is based upon implied volatility from traded options on our stock in the marketplace. The expected term of options granted is derived from an analysis of historical exercises and remaining contractual life of stock options, and represents the period of time that options granted are expected to be outstanding after becoming vested. The risk- free interest rate reflects the yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption. Finally, we have never paid cash dividends, do not currently intend to pay cash dividends, and thus have assumed a zero percent dividend yield. Using the Black-Scholes option valuation model, the weighted average estimated fair values of employee stock options granted in fiscal years 2015, 2014, and 2013, were $7.26, $10.45, and $20.43, respectively. During fiscal years 2015, 2014, and 2013, we received a net $5.2 million, $5.1 million, $12.0 million, respectively, from the exercise of 0.7 million, 0.8 million, and 1.7 million, respectively, stock options granted under the Company’s Stock Plan. The total intrinsic value of stock options exercised during fiscal year 2015, 2014, and 2013, was $12.8 million, $12.4 million, and $48.6 million, respectively. Intrinsic value represents the difference between the market value of the Company’s common stock at the time of exercise and the strike price of the stock option. Additional information with respect to stock option activity is as follows (in thousands, except per share amounts): Outstanding Options Weighted Average Number Exercise Price Balance, March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, March 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, March 29, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,904 264 (1,746) (144) — 4,278 318 (834) (10) (27) 3,725 310 (696) (5) (1) $ 8.23 37.22 6.88 12.52 20.25 $10.42 23.45 6.12 15.33 19.52 $12.42 21.69 7.47 19.94 4.65 Balance, March 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,333 $14.31 Page 64 of 80 Additional information with regards to outstanding options that are vesting, expected to vest, or exercisable as of March 28, 2015 is as follows (in thousands, except years and per share amounts): Number of Options Weighted Average Exercise price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Vested and expected to vest . . . . . . . . . . . . . . . . . Exercisable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,311 2,670 $14.25 $11.83 5.43 4.66 $64,449 $58,150 In accordance with U.S. GAAP, stock options outstanding that are expected to vest are presented net of estimated future option forfeitures, which are estimated as compensation costs are recognized. Options with a fair value of $4.4 million, $4.8 million, and $4.8 million, became vested during fiscal years 2015, 2014, and 2013, respectively. The following table summarizes information regarding outstanding and exercisable options as of March 28, 2015 (in thousands, except per share amounts): Range of Exercise Prices Number $2.82 - $5.53 . . . . . . . . . $5.55 - $5.55 . . . . . . . . . $5.66 - $7.87 . . . . . . . . . $8.06 - $16.25 . . . . . . . . $16.28 - $23.34 . . . . . . . $23.80 - $38.99 . . . . . . . 306 688 568 764 656 351 3,333 Options Outstanding Options Exercisable Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price 3.67 4.53 2.26 5.79 8.29 7.89 5.45 $ 5.19 5.55 7.39 15.29 21.48 35.11 $14.31 306 688 568 710 218 180 2,670 $ 5.19 5.55 7.39 15.28 20.90 36.49 $11.83 As of March 28, 2015 and March 29, 2014, the number of options exercisable was 2.7 million and 3.0 million, respectively. Page 65 of 80 Restricted Stock Awards The Company periodically grants restricted stock awards (“RSA’s”) to select employees. The grant date for these awards is equal to the measurement date and the awards are valued as of the measurement date and amortized over the requisite vesting period, which is no more than four years. A summary of the activity for RSA’s in fiscal years 2015, 2014, and 2013, is presented below (in thousands, except per share amounts): Weighted Average Grant Date Fair Value (per share) Number of Shares March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 29, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 27 (62) — 5 — — — 5 — (5) — — $ 7.19 28.24 15.45 — 17.28 — — — 17.28 — 17.28 — $ — There were no RSA’s outstanding as of March 28, 2015. RSA’s with a fair value of $86 thousand and $951 thousand became vested during fiscal years 2015 and 2013, respectively. No RSA’s became vested during fiscal year 2014. Page 66 of 80 Restricted Stock Units Commencing in fiscal year 2011, the Company began granting restricted stock units (“RSU’s”) to select employees. These awards are valued as of the grant date and amortized over the requisite vesting period. Generally, RSU’s vest 100 percent on the first to third anniversary of the grant date depending on the vesting specifications. A summary of the activity for RSU’s in fiscal year 2015, 2014, and 2013 is presented below (in thousands, except year and per share amounts): March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 29, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted Average Fair Value $16.52 37.26 20.56 21.46 23.66 22.55 17.71 25.81 25.26 22.04 19.52 26.17 Shares 1,616 864 (193) (216) 2,071 977 (626) (113) 2,309 1,887 (1,224) (151) March 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,821 $25.57 The aggregate intrinsic value of RSU’s outstanding as of March 28, 2015 was $93.9 million. Additional information with regards to outstanding restricted stock units that are expected to vest as of March 28, 2015, is as follows (in thousands, except year and per share amounts): Weighted Average Fair Value Weighted Average Remaining Contractual Term (years) Shares Expected to vest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,646 $25.57 1.46 RSU’s outstanding that are expected to vest are presented net of estimated future forfeitures, which are estimated as compensation costs are recognized. RSU’s with a fair value of $23.9 million and $11.1 million became vested during fiscal years 2015 and 2014, respectively. The majority of RSUs that vested in 2015 and 2014 were net settled such that the Company withheld a portion of the shares at fair value to satisfy tax withholding requirements. In fiscal years 2015 and 2014, the vesting of RSU’s reduced the authorized and unissued share balance by approximately 1.2 million and 0.6 million, respectively. Total shares withheld and subsequently retired out of the Plan were approximately 0.2 million and 0.2 million, and total payments for the employees’ tax obligations to taxing authorities were $4.6 million and $3.9 million for fiscal years 2015 and 2014, respectively. A portion of RSUs that vested in fiscal year 2015 and 2014 were cash settled such that the Company received cash from employees in lieu of withholding shares to satisfy tax withholding requirements. The total amount received from cash settled shares during fiscal year 2015 and 2014 was $0.1 million and $0.2 million, respectively. Market Stock Units In fiscal year 2015, the Company began granting market stock units (“MSU’s”) to select employees. MSU’s vest based upon the relative total shareholder return (“TSR”) of the Company as compared to that of the Index. The requisite service period for these MSU’s is also the vesting period, which is three years. The fair value of Page 67 of 80 each MSU granted was determined on the date of grant using the Monte Carlo simulation, which calculates the present value of the potential outcomes of future stock prices of the Company and the Index over the requisite service period. The projection of the stock prices are based on the risk-free rate of return, the volatilities of the stock price of the Company and the Index, the correlation of the stock price of the Company with the Index, and the dividend yield. The fair values estimated from the Monte Carlo simulation were calculated using a dividend yield of zero and the following additional assumptions: Expected stock price volatility . . . . . . . . . . . . . . . . . . . . . . . Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Year Ended March 28, 2015 39.65% 1.00% 3.00 Using the Monte Carlo simulation, the weighted average estimated fair value of the MSU’s granted in fiscal year 2015 was $22.00. A summary of the activity for MSU’s in fiscal year 2015 is presented below (in thousands, except year and per share amounts): March 29, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted Average Fair Value Shares — 35 — — 35 $ — 22.00 — — $22.00 The aggregate intrinsic value of MSU’s outstanding as of March 28, 2015 was $1.2 million. Additional information with regard to outstanding MSU’s that are expected to vest as of March 28, 2015 is as follows (in thousands, except year and per share amounts): Expected to vest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 $22.00 2.51 Weighted Average Fair Value Weighted Average Remaining Contractual Term (years) Shares No MSU’s became vested in 2015. 13. Commitments and Contingencies Facilities and Equipment Under Operating and Capital Lease Agreements We currently own our corporate headquarters, our UK headquarters, and select surrounding properties. We lease certain of our other facilities and certain equipment under operating lease agreements, some of which have renewal options. Certain of these arrangements provide for lease payment increases based upon future fair market rates. As of May 1, 2015, our principal facilities are located in Austin, Texas and Edinburgh, Scotland, United Kingdom. The Company closed operations in Tucson, Arizona during fiscal year 2013, which included 28,000 square feet of leased office space which was primarily occupied by engineering personnel. The term of this lease extends through May 2015. Total rent expense under operating leases was approximately $4.0 million, $2.8 million, and $3.2 million, for fiscal years 2015, 2014, and 2013, respectively. Sublease rental income was $0.1 million, $0.1 million, and $0.1 million, for fiscal years 2015, 2014, and 2013, respectively. Page 68 of 80 As of March 28, 2015, there was equipment held under a capital lease with a cost basis of $1.1 million. The Company has recorded accumulated depreciation related to this equipment of $0.1 million as of March 28, 2015. The future minimum rental commitments under the capital lease are approximately $246 thousand for fiscal year 2016, $246 thousand for fiscal year 2017, $245 thousand for fiscal year 2018 and $245 thousand for fiscal year 2019. The aggregate minimum future rental commitments under all operating leases, net of sublease income, for the following fiscal years are (in thousands): Facilities Subleases Net Facilities Commitments Equipment Commitments Total Commitments 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,388 3,914 2,074 1,083 501 193 Total minimum lease payment . . . . . . . . . . . . . . $12,153 $27 — — — — — $27 $ 4,361 3,914 2,074 1,083 501 193 $12,126 $26 22 9 4 — — $61 $ 4,387 3,936 2,083 1,087 501 193 $12,187 Wafer, Assembly, Test and Other Purchase Commitments We rely primarily on third-party foundries for our wafer manufacturing needs. As of March 28, 2015, we had agreements with multiple foundries for the manufacture of wafers. On December 22, 2011, the Company entered into a $10 million Capacity Investment and Loading Agreement with STATS ChipPAC Ltd (Supplier Agreement) in order to secure assembly and test capacity for certain products. As part of the agreement, we were eligible to receive rebates on our purchases up to the full amount of the specified $10 million in the Supplier Agreement upon our meeting certain purchase volume milestones. As of March 28, 2015, the full amount related to the agreement rebates had been received. Other than the previously mentioned agreement, our foundry agreements do not have volume purchase commitments and primarily provide for purchase commitments based on purchase orders, with the exception of a few “take or pay” clauses included in vendor contracts that are immaterial at March 28, 2015. Cancellation fees or other charges may apply and are generally dependent upon whether wafers have been started or the stage of the manufacturing process at which the notice of cancellation is given. As of March 28, 2015, we had foundry commitments of $98.2 million. In addition to our wafer supply arrangements, we contract with third-party assembly vendors to package the wafer die into finished products. Assembly vendors provide fixed-cost-per-unit pricing, as is common in the semiconductor industry. We had non-cancelable assembly purchase orders with numerous vendors totaling $5.5 million at March 28, 2015. Test vendors provide fixed-cost-per-unit pricing, as is common in the semiconductor industry. Our total non-cancelable commitment for outside test services as of March 28, 2015 was $10.2 million. Other purchase commitments primarily relate to multi-year tool commitments, and were $46.8 million at March 28, 2015. 14. Legal Matters From time to time, we are involved in legal proceedings concerning matters arising in connection with the conduct of our business activities. We regularly evaluate the status of legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred and to determine if accruals are appropriate. We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made. On June 4, 2012, U.S. Ethernet Innovations, LLC (the “Plaintiff”) filed suit against Cirrus Logic and two other defendants in the U.S. District Court, Eastern District of Texas. The Plaintiff alleges that Cirrus Logic infringed four U.S. patents relating to Ethernet technology. In its complaint, the Plaintiff indicated that it is Page 69 of 80 seeking unspecified monetary damages, including up to treble damages for willful infringement. We answered the complaint on June 29, 2012, denying the allegations of infringement and seeking a declaratory judgment that the patents in suit were invalid and not infringed. The parties entered into a settlement agreement on May 30, 2013. In exchange for a full release of claims as it relates to the asserted patent, we paid the Plaintiff $0.7 million. This amount is recorded as a separate line item on the Consolidated Statements of Income under the caption “Patent infringement settlements, net.” On June 17, 2014, Enterprise Systems Technologies S.a.r.l. (the “Plaintiff”) filed suit against Cirrus Logic, Inc. in the U.S. District Court, District of Delaware. The Plaintiff alleged that Cirrus Logic indirectly infringed two U.S. patents through the manufacture and sale of digital signal processors, audio codecs, audio processors, and other components included in communications and consumer electronic devices such as smartphones and computers. The Plaintiff sought unspecified monetary damages. On July 23, 2014, the Plaintiff filed an amended complaint removing allegations associated with one of the two patents. On August 25, 2014, the lawsuit was stayed pending resolution of the proceedings in the International Trade Commission (“ITC”) described below. The suit was concluded on March 6, 2015, when the Plaintiff dismissed with prejudice any claims against Cirrus Logic. On July 16, 2014, the Plaintiff requested the ITC to investigate the impact of certain products that allegedly infringe the same patent asserted in the District Court of Delaware. The Plaintiff was seeking a limited exclusion order against certain Apple, Inc. products that incorporate the Company’s components. The matter was concluded when the ITC terminated its investigation with respect to Cirrus Logic on March 9, 2015, and on March 30, 2015, the ITC made such termination decision final. 15. Stockholders’ Equity Share Repurchase Program On November 20, 2012, we announced that our Board of Directors authorized a share repurchase program of up to $200 million of the Company’s common stock. As of March 28, 2015, the Company had repurchased 6.2 million shares at a cost of approximately $148.3 million, or an average cost of $23.87 per share. Of this total, 0.6 million shares were purchased in the current fiscal year at a cost of $10.5 million, or an average cost of $18.17 per share. As of March 28, 2015, approximately $51.7 million remains available for repurchase under this plan. All of these shares were repurchased in the open market and were funded from existing cash. All shares of our common stock that were repurchased were retired as of March 28, 2015. Preferred Stock We have 5.0 million shares of Preferred Stock authorized. As of March 28, 2015, we have not issued any of the authorized shares. 16. Accumulated Other Comprehensive Loss Our accumulated other comprehensive loss is comprised of foreign currency translation adjustments, unrealized gains and losses on investments classified as available-for-sale, and actuarial gains and losses on our pension plan assets. The foreign currency translation adjustments are not currently adjusted for income taxes because they relate to indefinite investments in non-U.S. subsidiaries that have since changed from a foreign functional currency to a U.S dollar functional currency. Page 70 of 80 The following table summarizes the changes in the components of accumulated other comprehensive loss, net of tax (in thousands): Balance, March 31, 2012 . . . . . . . . . . . . Current period marketable securities activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax effect Balance, March 30, 2013 . . . . . . . . . . . . Current period marketable securities activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax effect Balance, March 29, 2014 . . . . . . . . . . . . Current period marketable securities activity . . . . . . . . . . . . . . . . . . . . . . Current period actuarial gain/loss activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax effect Foreign Currency Unrealized Gains (Losses) on Securities Actuarial Gains (Losses) on Pension Plan Total $(770) $ 8 $ — $ (762) — — $(770) — — (157) — $(149) (31) 64 — — (157) — $ — $ (919) — — (31) 64 $(770) $(116) $ — $ (886) — — — 107 — (38) — 107 (1,625) 332 (1,625) 294 Balance, March 28, 2015 . . . . . . . . . . . . $(770) $ (47) $(1,293) $(2,110) 17. Income Taxes Income before income taxes consisted of (in thousands): United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $133,295 (41,746) $155,431 306 March 28, 2015 Year Ended March 29, 2014 March 30, 2013 $200,124 1,066 $ 91,549 $155,737 $201,190 The provision (benefit) for income taxes consists of (in thousands): Year Ended March 28, March 29, March 30, 2014 2013 2015 Current: Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $42,102 63 445 $10,550 258 335 $ 3,537 323 243 Total current tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . $42,610 $11,143 $ 4,103 Deferred: U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,136 (8,375) 36,543 (60) 60,506 (17) Total deferred tax provision (benefit) . . . . . . . . . . . . . . . . . . . (6,239) 36,483 60,489 Total tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,371 $47,626 $64,592 Page 71 of 80 The effective income tax rates differ from the rates computed by applying the statutory federal rate to pretax income as follows (in percentages): Year Ended March 28, March 29, March 30, 2014 2013 2015 Expected income tax provision at the U.S. federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.0 35.0 35.0 Valuation allowance changes affecting the provision of income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign taxes at different rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . R&D credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recognition of prior year benefit Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3) 7.3 (3.6) (0.8) — 2.3 (0.2) (0.1) 0.1 (0.9) (0.1) (4.1) 0.5 0.2 (1.3) (0.1) (2.1) 0.1 — 0.3 0.2 Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.7 30.6 32.1 Significant components of our deferred tax assets and liabilities as of March 28, 2015 and March 29, 2014 are (in thousands): Deferred tax assets: March 28, 2015 March 29, 2014 Inventory valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research and development tax credit carryforwards . . . . . . . . . . . . . . . . . . . State tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capitalized research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other $ 6,377 4,705 57,878 14,567 225 1,793 30,695 $ 7,692 3,905 29,062 15,164 231 3,485 28,627 Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valuation allowance for deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . $116,240 (33,190) $ 88,166 (32,159) Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 83,050 $ 56,007 Deferred tax liabilities: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,827 35,242 $ 5,709 3,209 Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,069 $ 8,918 Total net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,981 $ 47,089 These net deferred tax assets have been categorized on the Consolidated Balance Sheets as of March 28, 2015 and March 29, 2014 as follows: Current deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,559 25,593 (3,171) $22,024 25,065 — Total net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,981 $47,089 March 28, March 29, 2015 2014 Page 72 of 80 The current and long-term deferred tax assets are disclosed separately under their respective captions on the Consolidated Balance Sheets. The long-term deferred tax liabilities are included in “Other long-term liabilities” on the Consolidated Balance Sheets. The valuation allowance increased by $1.0 million in fiscal year 2015 from fiscal year 2014. The increase during fiscal year 2015 was primarily due to the acquisition of stock of Wolfson Microelectronics, Inc., a U.S. corporation previously owned by Wolfson. Wolfson Microelectronics, Inc. had a Federal net operating loss that will not be fully realized due to the limitations of Internal Revenue Code Section 382. The Company maintained its valuation allowance on various state net operating losses and credits due to the likelihood that they will expire or go unutilized because the Company no longer has a significant apportionment in the jurisdiction in which the attribute was created. With regard to the remaining deferred tax assets, management believes that the Company’s results from future operations will generate sufficient taxable income such that it is more likely than not that these deferred tax assets will be realized. At March 28, 2015, we had gross federal net operating loss carryforwards of $26.2 million. All of the $26.2 million relates to acquired companies and are, therefore, subject to certain limitations under Section 382 of the Internal Revenue Code. We had gross state net operating losses in various states that total $88.3 million. The federal net operating loss carryforwards expire in fiscal years 2019 through 2034. The state net operating loss carryforwards expire in fiscal years 2016 through 2034. We also have gross non-U.S. net operating losses of $147.6 million, which do not expire. At March 28, 2015, we had $5.1 million of Federal research and development credit carryforwards, none of which are reflected as deferred tax assets at the end of the fiscal year since, under the “with and without method”, they are deemed to have been utilized for U.S. GAAP purposes. Of the $14.6 million of state research and development credits reflected as deferred tax assets, $2.9 million will expire in fiscal years 2022 through 2027. The remaining $11.7 million of state research and development credits are not subject to expiration. The cumulative undistributed earnings in our non-U.S. subsidiaries is currently negative. We have no unrecognized deferred tax liability on these earnings. We record unrecognized tax benefits for the estimated risk associated with tax positions taken on tax returns. The unrecognized tax benefits balance was zero at March 28, 2015 and March 29, 2014. Due to the Wolfson acquisition and subsequent post-acquisition integration, it is reasonably possible that the total amount of unrecognized tax benefits could increase within the next 12 months. An estimate of the range of increase is impracticable as of March 28, 2015. We accrue interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. As of March 28, 2015, the balance of accrued interest and penalties was zero. No interest or penalties were incurred during fiscal year 2015 or 2014. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. Fiscal years 2012 through 2015 remain open to examination by the major taxing jurisdictions to which we are subject. 18. Segment Information We determine our operating segments in accordance with Financial Accounting Standards Board (“FASB”) guidelines. Our Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker under these guidelines. The Company operates and tracks its results in one reportable segment, but reports revenue performance in two product lines, which currently are portable audio and non-portable audio and other. Our CEO receives and uses enterprise-wide financial information to assess financial performance and allocate resources, rather than detailed information at a product line level. Additionally, our product lines have similar characteristics and customers. They share 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 Page 73 of 80 functions of human resources, legal, finance and information technology. Therefore, there is no complete, discrete financial information maintained for these product lines. Revenue from our product lines are as follows (in thousands): Portable Audio Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-Portable Audio and Other Products . . . . . . . . . . . . . . . . . . . March 28, 2015 $740,301 176,267 Fiscal Years Ended March 29, 2014 $562,718 151,620 March 30, 2013 $651,974 157,812 $916,568 $714,338 $809,786 Geographic Area The following illustrates sales by geographic locations based on the sales office location (in thousands): United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . European Union (excluding United Kingdom) . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-U.S. countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 28, 2015 $ 31,977 13,629 2,805 728,413 15,087 14,353 69,327 15,272 10,991 14,714 Fiscal Years Ended March 29, 2014 $ 35,582 13,125 1,513 617,850 6,057 5,150 9,338 13,739 11,112 872 March 30, 2013 $ 38,670 17,601 1,610 700,051 8,590 9,299 8,975 11,694 10,387 2,909 Total consolidated sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $916,568 $714,338 $809,786 The following illustrates property, plant and equipment, net, by geographic locations, based on physical location (in thousands): Fiscal Years Ended March 28, 2015 March 29, 2014 United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $114,935 28,925 245 1 3 3 216 18 $103,287 16 265 2 12 5 52 11 Total consolidated property, plant and equipment, net . . . . . . . . . . . . . . . . . $144,346 $103,650 Page 74 of 80 19. Quarterly Results (Unaudited) The following quarterly results have been derived from our audited annual consolidated financial statements. In the opinion of management, this unaudited quarterly information has been prepared on the same basis as the annual consolidated financial statements and includes all adjustments, including normal recurring adjustments, necessary for a fair presentation of this quarterly information. This information should be read along with the financial statements and related notes. The operating results for any quarter are not necessarily indicative of results to be expected for any future period. The unaudited quarterly statement of operations data for each quarter of fiscal years 2015 and 2014 were as follows (in thousands, except per share data): Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic income per share . . . . . . . . . . . . . . . . . . . . . . Diluted income per share . . . . . . . . . . . . . . . . . . . . . Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic income per share . . . . . . . . . . . . . . . . . . . . . . Diluted income per share . . . . . . . . . . . . . . . . . . . . . 1st Quarter $152,565 75,375 10,248 0.17 0.16 $ 1st Quarter $155,125 79,498 20,642 0.33 0.31 $ Fiscal Year 2015 3rd Quarter 2nd Quarter $210,214 100,567 852 0.01 0.01 $ $298,606 130,831 22,729 0.36 0.35 $ Fiscal Year 2014 3rd Quarter 2nd Quarter $190,671 99,448 33,367 0.53 0.50 $ $218,883 103,849 41,500 0.66 0.63 $ 4th Quarter $255,183 118,975 21,349 0.34 0.32 $ 4th Quarter $149,659 73,368 12,602 0.20 0.20 $ Page 75 of 80 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. ITEM 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15(e) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a- 15(b) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-K. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission. Based upon the evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of March 28, 2015 at the reasonable assurance level. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined under Rule 13a-15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we assessed the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on the framework in “Internal Control- Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate. Based on its assessment of internal control over financial reporting, management has concluded that our internal control over financial reporting was effective as of March 28, 2015, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Wolfson has been excluded from management’s assessment of internal control over financial reporting as of March 28, 2015, because it was acquired by the Company in an acquisition in August, 2014. Wolfson is a 100% owned subsidiary whose total assets and total sales represent approximately 15% and 11%, respectively, of the related consolidated financial statement amounts of the Company as of and for the year ended March 28, 2015. Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on management’s assessment of our internal control over financial reporting as of March 28, 2015, included in Item 8 of this report. Changes in Internal Control Over Financial Reporting There has been no change in the Company’s internal control over financial reporting during the quarter ended March 28, 2015, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 10. Directors , Executive Officers and Corporate Governance PART III The information set forth in the proxy statement to be delivered to stockholders in connection with our Annual Meeting of Stockholders to be held on July 29, 2015 (the “Proxy Statement”) under the headings Corporate Governance — Board Meetings and Committees, Corporate Governance – Audit Committee, Page 76 of 80 Proposals to be Voted on - Proposal No. 1 - Election of Directors, Summary of Executive Compensation, and Section 16(a) Beneficial Ownership Reporting Compliance is incorporated herein by reference. ITEM 11. Executive Compensation The information set forth in the Proxy Statement under the headings Director Compensation Arrangements, Compensation Discussion and Analysis, Compensation Committee Report, and Proposals to be Voted on – Proposal No. 3 – Advisory Vote to Approve the Compensation of Named Executive Officers, Proposal No. 4— Approval of the Third Amendment to, and the Restatement of, the 2006 Stock Incentive Plan and Proposal No. 5 – Approval of Material Terms of the 2006 Incentive Plan, as amended and restated by the Third Amendment, for purposes of complying with the requirements of Section 162(m) of the Internal Revenue Code are incorporated herein by reference. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information set forth in the Proxy Statement under the headings Equity Compensation Plan Information and Security Ownership of Certain Beneficial Owners and Management is incorporated herein by reference. ITEM 13. Certain Relationships and Related Transactions, and Director Independence The information set forth in the Proxy Statement under the headings Certain Relationships and Related Transactions and Corporate Governance is incorporated herein by reference. ITEM 14. Principal Accountant Fees and Services The information set forth in the Proxy Statement under the headings Audit and Non-Audit Fees and Services and Proposal No. 2 — Ratification of Appointment of Independent Registered Public Accounting Firm is incorporated herein by reference. PART IV ITEM 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this Report: 1. Consolidated Financial Statements ▪ Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm. ▪ Consolidated Balance Sheets as of March 28, 2015 and March 29, 2014. ▪ Consolidated Statements of Income for the fiscal years ended March 28, 2015, March 29, 2014, and March 30, 2013. ▪ Consolidated Statements of Comprehensive Income for the fiscal years ended March 28, 2015, March 29, 2014, and March 30, 2013. ▪ Consolidated Statements of Cash Flows for the fiscal years ended March 28, 2015, March 29, 2014, and March 30, 2013. ▪ Consolidated Statements of Stockholders’ Equity for the fiscal years ended March 28, 2015, March 29, 2014, and March 30, 2013. ▪ Notes to Consolidated Financial Statements. 2. Financial Statement Schedules All schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or notes thereto. Page 77 of 80 3. Exhibits The following exhibits are filed as part of or incorporated by reference into this Annual Report on Form 10-K: Number Description 2.1 3.1 3.2 10.1+ 10.2+ 10.3+ 10.4+ 10.5+ 10.6+ 10.7+ 10.8+* 10.9+ 10.10+ 10.11+* 10.12+ 10.13+ 10.14 10.15 10.16 10.17 14.1* 21.1* 23.1* 24.1* Cooperation Agreement dated April 29, 2014 between the Company and Wolfson Microelectronics plc. (1) Certificate of Incorporation of Registrant, filed with the Delaware Secretary of State on August 26, 1998. (2) Amended and Restated Bylaws of Registrant. (3) Cirrus Logic, Inc. 1996 Stock Plan, as amended and restated as of December 4, 2007. (4) 2002 Stock Option Plan, as amended. (5) Cirrus Logic, Inc. 2006 Stock Incentive Plan, amended and restated as of July 28, 2014. (13) Form of Stock Option Agreement for options granted under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (7) Form of Notice of Grant of Stock Option for options granted under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (6) Form of Stock Option Agreement for Outside Directors under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (8) Form of Restricted Stock Unit Agreement for U.S. Employees under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (7) Form of Restricted Stock Unit Agreement for U.K. Employees under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. Form of Notice of Grant of Restricted Stock Units granted under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (7) Form of Performance Award Agreement for U.S. Employees under the Cirrus Logic, Inc. 2006 Stock Incentive Plan. (15) Form of Notice of Performance Award Agreement for U .S. Employees under the Cirrus Logic Inc. 2006 Stock Incentive Plan. 2007 Executive Severance and Change of Control Plan, effective as of October 1, 2007, as amended and restated on March 4, 2014. (9) 2007 Management and Key Individual Contributor Incentive Plan, as amended on May 28, 2013. (10) The Revised Stipulation of Settlement dated March 10, 2009. (11) Credit Agreement dated April 19, 2012, among the Company, Wells Fargo Bank, National Association, as Administrative Agent and Issuing Lender, Barclays Bank, as Syndication Agent, Wells Fargo Securities, LLC and Barclays Capital, as Joint Lead Arrangers and Co-Book Managers, and the lenders referred to therein. (12) Credit Agreement dated April 29, 2014 among the Company, Wells Fargo Bank and National Association, as Administrative Agent and Lender. (1) Credit Agreement dated August 29, 2014 among Registrant, Wells Fargo Bank and National Association, as Administrative Agent and Initial Issuing Lender. (14) Code of Conduct, dated March 24, 2015. List of Subsidiaries. Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. Power of Attorney (see signature page). Page 78 of 80 Number Description 31.1* 31.2* 32.1* 32.2* 101.INS* 101.SCH* 101.CAL* 101.LAB* 101.PRE* 101.DEF* Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document + Indicates a management contract or compensatory plan or arrangement. * Filed with this Form 10-K. (1) (2) (3) (4) (5) (6) (7) (8) (9) Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on April 29, 2014 (Registration No. 000-17795). Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 31, 2001, filed with the SEC on June 22, 2001 (Registration No. 000-17795). Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on September 20, 2013. Incorporated by reference from Registrant’s Report on Form 10-Q filed with the SEC on January 30, 2008. Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 29, 2003, filed with the SEC on June 13, 2003 (Registration No. 000-17795). Incorporated by reference from Registration’s Statement on Form S-8 filed with the SEC on August 1, 2006 (Registration No. 000-17795), as amended on Form 8-K filed with the SEC on March 4, 2014 (Registration No. 000-17795). Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on October 7, 2010. Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on August 1, 2007. Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on March 10, 2014. (10) Incorporated by reference from Registrant’s Report on Form 10-K for the fiscal year ended March 30, 2013, filed with the SEC on May 29, 2013 (Registration No. 000-17795). (11) Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on April 1, 2009. (12) Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on April 25, 2012. (13) Incorporated by reference from Registration’s Statement on Form S-8 filed with the SEC on December 15, 2014 (Registration No. 333-200968). (14) Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on September 3, 2014. (15) Incorporated by reference from Registrant’s Report on Form 8-K filed with the SEC on September 22, 2014. Page 79 of 80 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized. Signatures CIRRUS LOGIC, INC. By: /S/ THURMAN K. CASE Thurman K. Case Vice President, Chief Financial Officer and Chief Accounting Officer May 27, 2015 KNOW BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Thurman K. Case, his attorney-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of the attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant, in the capacities and on the dates indicated have signed this report below: Signature Title Date /s/ JASON P. RHODE President and Chief Executive Officer May 27, 2015 Jason P. Rhode /S/ THURMAN K. CASE Thurman K. Case Vice President, Chief Financial Officer and Chief Accounting Officer May 27, 2015 /S/ JOHN C. CARTER Director May 27, 2015 John C. Carter /S/ ALEX DAVERN Director May 27, 2015 Alex Davern /S/ TIMOTHY R. DEHNE Director May 27, 2015 Timothy R. Dehne /S/ CHRISTINE KING Director May 27, 2015 Christine King /S/ ALAN R. SCHUELE Director May 27, 2015 Alan R. Schuele /S/ WILLIAM D. SHERMAN Director May 27, 2015 William D. Sherman /S/ SUSAN WANG Susan Wang Director May 27, 2015 Page 80 of 80 JASON P. RHODE President and Chief Executive Officer June 2, 2015 To our Stockholders: I would like to invite you to participate in the Annual Meeting of Stockholders of Cirrus Logic, Inc. to be held on Wednesday, July 29, 2015, at 11:00 a.m. Central Time. We are pleased to announce that this year’s Annual Meeting will once again be completely virtual. You will be able to participate, vote, and submit your questions during the meeting on a live webcast at www.virtualshareholdermeeting.com/CRUS2015. To access this website and enter the meeting, you should have available your control number, which is included with the proxy materials. You will not be able to attend the Annual Meeting in person. We also are continuing to provide our stockholders with the proxy materials electronically via the Internet. If a stockholder chooses, he or she may obtain paper copies; however, by providing the information online, our stockholders will have immediate access to the proxy materials at their discretion. Even if you plan to participate in the Annual Meeting by live webcast, I hope you will vote as soon as possible. Although you may vote the day of the Annual Meeting, you may also vote in advance via the Internet, as well as by telephone, or by mailing a proxy card. Voting over the Internet, by telephone, or by written proxy will ensure your representation at the Annual Meeting if you do not participate in the virtual meeting. Please review the instructions on the Notice of Internet Availability or the proxy card regarding each of these voting options. Cirrus Logic, Inc. values the participation of its stockholders. Your vote is an important part of our system of corporate governance, and I strongly encourage you to participate. Sincerely, Jason P. Rhode President and Chief Executive Officer TABLE OF CONTENTS Notice of Annual Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Questions and Answers About the Proxy Materials, the Annual Meeting, and Voting Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proposals To Be Voted On . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proposal No. 1: Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1 2 7 15 15 Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Proposal No. 3: Advisory Vote To Approve the Compensation of Named Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Proposal No. 4: Approval of the Third Amendment to, and the Restatement of, the 2006 Stock Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Proposal No. 5: Approval of Material Terms of the 2006 Stock Incentive Plan, as Amended and Restated by the Third Amendment, for Purposes of Complying with the Requirements of Section 162(m) of the Internal Revenue Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compensation Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consideration of Risk Related to Compensation Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Compensation Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity Compensation Plan Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Report of the Audit Committee of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audit And Non-Audit Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Householding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Communicating with Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 30 31 33 34 54 55 56 68 69 70 71 72 72 74 75 Exhibit A: Cirrus Logic, Inc. 2006 Stock Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 A copy of Cirrus Logic, Inc.’s Annual Report on Form 10-K is included with this Proxy Statement. Copies of this document are also available on our website at www.cirrus.com. You also may receive copies of this document at no charge upon request directed to: Cirrus Logic, Inc. Investor Relations 800 W. Sixth Street, Austin, Texas 78701 telephone: (512) 851-4125; email: Investor.Relations@cirrus.com 2015 Annual Meeting of Stockholders July 29, 2015 YOUR VOTE IS IMPORTANT NOTICE OF ANNUAL MEETING OF STOCKHOLDERS Cirrus Logic, Inc. (the “Company,” “our,” or “we”) will hold its 2015 Annual Meeting of Stockholders as follows: Wednesday, July 29, 2015 11:00 A.M. (Central Daylight Time) Cirrus Logic, Inc. 800 W. Sixth Street Austin, Texas 78701 We are pleased to announce that this year’s Annual Meeting will again be completely virtual. You will be able to attend, vote, and submit your questions during the meeting on a live webcast via the Internet at www.virtualshareholdermeeting.com/CRUS2015. To access this website and enter the meeting, you must have your control number available. You will not be able to attend the Annual Meeting in person. At the meeting, stockholders will vote on the following matters: (i) (ii) (iii) (iv) (v) the election of eight Company directors for one-year terms; the ratification of the appointment of Ernst &Young LLP as our independent registered public accounting firm for the fiscal year ending March 26, 2016; an advisory vote to approve the compensation of the Company’s named executive officers; the approval of the third amendment to, and the restatement of, the 2006 Stock Incentive Plan; the approval of material terms of the 2006 Stock Incentive Plan, as amended and restated by the third amendment, for purposes of complying with the requirements of Section 162(m) of the Internal Revenue Code (such code, the “IRC,” and such section, “Section 162(m)”); and (vi) such other business as may properly come before the meeting. You can vote four different ways. You can vote by participating in the virtual meeting, by telephone, by the Internet, or by proxy card. For specific voting information, please see “Questions and Answers about the Proxy Materials, the Annual Meeting, and Voting Procedures” on page 2. Stockholders of record at the close of business on June 1, 2015, are entitled to vote. On that day, approximately 63,414,934 shares of the Company common stock were outstanding. Each share entitles the holder to one vote. A complete list of the stockholders entitled to vote at the meeting will be open to the examination of any stockholder for any purpose germane to the meeting for at least 10 days prior to the meeting. The Board of Directors of the Company asks you to vote in favor of these proposals. This proxy statement provides you with detailed information about each proposal. We are also using this proxy statement to discuss our corporate governance and compensation practices and philosophies. We encourage you to read this proxy statement carefully. In addition, you may obtain information about the Company from the Annual Report to Stockholders and from other documents that we have filed with the Securities and Exchange Commission. PROXY STATEMENT 2015 ANNUAL MEETING OF STOCKHOLDERS To Be Held Wednesday, July 29, 2015 Cirrus Logic, Inc. 800 W. Sixth Street Austin, Texas 78701 www.cirrus.com These proxy materials are furnished to you in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Cirrus Logic, Inc. (the “Company,” “our,” or “we”) for use at our 2015 Annual Meeting of Stockholders and any adjournments or postponements of the meeting (the “Annual Meeting”). The Annual Meeting will be held on July 29, 2015, at 11:00 a.m., Central Daylight Time, and may be accessed on a live webcast via the Internet at www.virtualshareholdermeeting.com/CRUS2015. Beginning on or about June 19, 2015, Cirrus Logic will make available on the Internet or deliver paper copies of these proxy materials by mail in connection with the solicitation of proxies by the Board for proposals to be voted on at the Annual Meeting. QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS, THE ANNUAL MEETING, AND VOTING PROCEDURES Q: Why am I receiving these materials? A: The Board, on behalf of the Company, is soliciting your proxy for the Annual Meeting of Stockholders to take place on July 29, 2015. As a stockholder, you are invited to participate in the meeting and are entitled to and requested to vote on the proposals described in this proxy statement. Q: What information is contained in these materials? A: The information included in this proxy statement relates to the proposals to be voted on at the meeting, the voting process, the compensation of directors and our most highly paid executive officers, and certain other required information. Our 2015 Annual Report to Stockholders on Form 10-K for the fiscal year ended March 28, 2015, is also included. If you requested and received a copy of these materials by mail or email, then the proxy materials also include a proxy card or a voting instruction card for the Annual Meeting. Q: Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the proxy materials? A: We are complying with the U.S. Securities and Exchange Commission (the “SEC”) rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to our stockholders a Notice of Internet Availability of the proxy materials instead of a paper copy of the proxy materials. All stockholders receiving the Notice of Internet Availability will have the ability to access the proxy materials over the Internet, or alternatively, request to receive a copy of the proxy materials by mail or email. Q. How can I access the proxy materials over the Internet? A: Your Notice of Internet Availability of the proxy materials contains instructions regarding how to: Š Š Š view the proxy materials for the Annual Meeting on the Internet; request a paper copy of the proxy materials for the Annual Meeting; and instruct us to send future proxy materials to you electronically by email. 2 Q: How may I obtain a paper copy of the proxy materials? A: Your Notice of Internet Availability of the proxy materials contains instructions regarding how to obtain a paper copy of the proxy materials. Q: What if I receive more than one Notice of Internet Availability of the proxy materials or more than one paper copy of the proxy materials? A: If you receive more than one Notice of Internet Availability or set of proxy materials, it means your shares are registered differently or are in more than one account. To vote all your shares by proxy, you must vote all Notices of Internet Availability you receive, or all proxy cards and voting instruction cards you received. Q: What proposals will be voted on at the meeting? A: There are five proposals scheduled to be voted on at the meeting: the election of eight Company directors for one-year terms; the ratification of the appointment of Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the fiscal year ending March 26, 2016; (1) (2) (3) an advisory (non-binding) vote to approve the compensation of the Company’s named (4) (5) executive officers; the approval of the third amendment to, and the restatement of, the 2006 Stock Incentive Plan; and the approval of material terms of the 2006 Stock Incentive Plan, as amended and restated by the third amendment, for purposes of complying with the requirements of Section 162(m) of the Internal Revenue Code. Q: Will I be able to attend the Annual Meeting? A: We will host the Annual Meeting live via the Internet. You will not be able to attend the meeting in person. Any stockholder can listen to and participate in the Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/CRUS2015. The webcast will begin at 11:00 a.m., Central Daylight Time, on July 29, 2015. Stockholders may vote and submit questions while connected to the Annual Meeting via the Internet. Q: What do I need to do to be able to participate in the Annual Meeting online? A: The Annual Meeting will be held live via the Internet. You will not be able to attend the meeting in person. A summary of the information you need to attend the meeting online is provided below: Š Any stockholder can listen to the meeting and participate live via the Internet at www.virtualshareholdermeeting.com/CRUS2015. Š Webcast begins at 11:00 a.m. Central Daylight Time on July 29, 2015. Š Š Š Stockholders may vote and submit questions while connected to the meeting via the Internet. Please have your control number to enter the meeting. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/CRUS2015. Š A webcast replay of the meeting will be available after the meeting at www.virtualshareholdermeeting.com/CRUS2015. Q: What is the Company’s voting recommendation? A: The Board recommends that you vote your shares as follows: Š Š Š “FOR” each of the director nominees; “FOR” the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the fiscal year ending March 26, 2016; “FOR” the approval, on a non-binding, advisory basis, of the compensation of the Company’s named executive officers; 3 Š Š “FOR” the approval of the third amendment to, and the restatement of, the 2006 Stock Incentive Plan; and “FOR” the approval of material terms of the 2006 Stock Incentive Plan, as amended and restated by the third amendment, for purposes of complying with the requirements of Section 162(m) of the Internal Revenue Code. Q: Who is entitled to vote at the Annual Meeting? A: Stockholders of record at the close of business on June 1, 2015 (the “Record Date”) are entitled to vote. Q: What shares owned by me can be voted? A: All shares owned by you as of the close of business on the Record Date may be voted by you. These shares include (1) shares held directly in your name as the stockholder of record, and (2) shares held for you as the beneficial owner through a stockbroker, bank, or other nominee. Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner? A: Most stockholders of the Company hold their shares through a stockbroker, bank, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. Stockholder of Record If your shares are registered directly in your name with the Company’s transfer agent, Computershare Investor Services, you are considered, with respect to those shares, the stockholder of record, and you have the right to vote by proxy by following the instructions in the Notice of Internet Availability of the proxy materials or to vote online at the meeting. Beneficial Owner If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and your stockbroker, bank, or other nominee is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your stockbroker, bank, or other nominee how to vote, and you are also invited to participate in the meeting. Q: How can I vote my shares at the meeting? A: Shares may be voted at the Annual Meeting via the Internet on a live webcast at www.virtualshareholdermeeting.com/CRUS2015. To access the meeting and vote your shares, you must have your control number. Even if you currently plan to participate in the Annual Meeting via the live webcast, we recommend that you submit your proxy in advance of the meeting so that your vote will be counted if you later decide not to attend the meeting. Q: How can I vote my shares without participating in the meeting? A: Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct your vote without participating in the meeting. You may vote by granting a proxy or by submitting voting instructions to your stockbroker, bank, or other nominee for shares held in street name. In most instances, you will be able to do this over the Internet, by telephone, or by mail. If you are the stockholder of record, please refer to the summary instructions below and those included on your Notice of Internet Availability of the proxy materials. If you hold shares in street name, you should refer to the voting instruction card provided to you by your stockbroker, bank, or other nominee. Stockholders who have requested and received a paper copy of a proxy card or voting instruction card by mail may also vote over the Internet by following the instructions included with those materials. 4 BY INTERNET – If you have Internet access, you may vote by following the instructions on the Notice of Internet Availability of the proxy materials. If you have requested and received a paper copy of a proxy card or voting instruction card, you may also vote over the Internet by following the instructions included with those materials. BY TELEPHONE – If you have requested and received a paper copy of a proxy card or voting instruction card, you may vote by telephone by following the instructions on the proxy card. You will need to have the control number that appears on your Notice of Internet Availability of the proxy materials available when voting by telephone. BY MAIL – If you have requested and received a paper copy of a proxy card or voting instruction card by mail, you may submit a proxy by signing your proxy card and mailing it in the enclosed, postage prepaid and addressed envelope. If you sign but do not provide instructions, your shares will be voted as described in “How are votes counted?” below. Q: What if I hold shares in street name and do not transmit voting instructions before the stockholder meeting to my stockbroker, bank, or other nominee? A: Your stockbroker is no longer permitted to vote on your behalf on non-routine matters if you are a beneficial owner of shares held in street name and you do not transmit your voting instructions before the stockholder meeting to your stockbroker or nominee. The election of directors (Proposal No. 1), the advisory vote to approve the compensation of the Company’s named executive officers (Proposal No. 3), the vote to approve the third amendment to, and the restatement of, the 2006 Stock Incentive Plan (Proposal No. 4), and the vote to approve material terms of the 2006 Stock Incentive Plan, as amended and restated by the third amendment, for purposes of complying with the requirements of Section 162(m) of the Internal Revenue Code (Proposal No. 5) are considered non-routine matters. Therefore, if you do not transmit your voting instructions to your stockbroker or other nominee, then they cannot vote on these non-routine matters and your vote will be counted as “broker non-votes” as further described in the response to “How are abstentions and broker non-votes counted?” below. Q: Can I revoke my proxy? A: You may revoke your proxy instructions at any time prior to the vote at the Annual Meeting. For shares held directly in your name, you may revoke your proxy instructions by granting a new proxy bearing a later date (that automatically revokes the earlier proxy) or by voting during the Annual Meeting. For shares held beneficially by you, you may revoke your proxy by submitting a new proxy to your stockbroker, bank, or other nominee. Q: What is the quorum requirement for the meeting? A: The quorum requirement for holding the meeting and transacting business is the presence, either in person or represented by proxy, of the holders of a majority of the outstanding shares entitled to be voted at the Annual Meeting. For the Annual Meeting, both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. Q: How are votes counted? A: In the election of directors, you may vote “FOR” all of the nominees or you may “WITHHOLD” your vote with respect to one or more of the nominees. For all other proposals you may vote “FOR,” “AGAINST,” or “ABSTAIN.” If you “ABSTAIN” on any of these matters, it has the same effect as a vote “AGAINST.” If you sign your proxy card with no further instructions, your shares will be voted in accordance with the recommendations of the Board. 5 Q: What is the voting requirement to approve each of the proposals? A: In the election of directors, the eight persons receiving the highest number of “FOR” votes will be elected. All other proposals require the affirmative “FOR” vote of a majority of those shares present and entitled to vote. If you are a beneficial owner and do not provide your stockbroker, bank, or other nominee with voting instructions on a non-routine matter such as a director election, your shares may constitute broker non-votes, as described in “How are abstentions and broker non-votes counted?” below. Q: How are abstentions and broker non-votes counted? A: Abstentions and broker non-votes are counted as present for purposes of determining the shares present and entitled to vote. However, an abstention is treated as a vote cast for purposes of counting votes, and therefore the effect of an abstention will be the same as a vote against a proposal as described in “How are votes counted?” above. Broker non-votes are not counted as votes cast for, and therefore have no impact on, non-routine matters. Generally, broker non-votes occur when shares held by a stockbroker for a beneficial owner are not voted with respect to a particular proposal because the proposal is not a routine matter, the stockbroker has not received voting instructions from the beneficial owner, and the stockbroker lacks discretionary voting power to vote the shares. Q: Where can I find the voting results of the meeting? A: We will announce preliminary voting results at the meeting and will file with the SEC via EDGAR a Current Report on Form 8-K within four business days of the meeting with the final voting results. If final voting results are not available at the time of such filing, the Company intends to disclose preliminary voting results at the time of the filing and file an amended Current Report on Form 8-K within four business days after obtaining the final results. Q: What happens if additional proposals are presented at the meeting? A: Other than the proposals described in this proxy statement, we do not expect any matters to be presented for a vote at the Annual Meeting. If you grant a proxy, the persons named as proxy holders, Gregory Scott Thomas, our Corporate Secretary, and Thurman Case, our Chief Financial Officer, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any unforeseen reason any of our nominees is not available as a candidate for director, the persons named as proxy holders will vote your shares for such other candidate or candidates as may be nominated by the Board. Q: What classes of shares are entitled to be voted? A: Each share of common stock of the Company (“common stock”) outstanding as of the Record Date is entitled to one vote on each item being voted upon at the Annual Meeting. On the Record Date, we had approximately 63,414,934 shares of common stock outstanding. Q: Is cumulative voting permitted for the election of directors? A: No. Q: Who will count the votes? A: A representative of Broadridge Investor Communications Solutions will tabulate the votes. A representative of the Company will act as the inspector of election. Q: Is my vote confidential? A: Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties except (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote, or (3) to facilitate a successful proxy solicitation by the Board. 6 Q: Who will bear the cost of soliciting votes for the meeting? A: The Company will pay the entire cost of soliciting proxies to be voted, along with the costs of preparing, assembling, printing, mailing, and distributing the proxy materials. If you choose to access the proxy materials and/or submit your proxy over the Internet or by telephone, however, you are responsible for Internet access or telephone charges you may incur. In addition to the mailing of the proxy materials, the solicitation of proxies or votes may be made by our directors, officers, and employees, either in person, by telephone, or by electronic communication. Our directors, officers, and employees will not receive any additional compensation for the solicitation activities. We will also reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our stockholders. Q: May I propose actions for consideration at next year’s annual meeting of stockholders or nominate individuals to serve as directors? A: You may make nominations and submit proposals for consideration at future stockholder meetings. Any proposal that a stockholder wishes to include in the Company’s proxy materials for the 2016 annual meeting of stockholders, in accordance with the regulations of the SEC, must be received by no later than 120 calendar days prior to the anniversary date that the Company released this proxy statement for the Annual Meeting. The written proposal will need to comply with the regulations of the SEC under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Any proposal or nomination for election of directors that a stockholder wishes to propose for consideration at the 2016 annual meeting of stockholders, whether or not the stockholder wishes to include such proposal or nomination in our proxy statement under the applicable SEC rules, must be submitted in accordance with our Bylaws. To be considered timely, our Bylaws provide that such notice must be received at our principal executive offices no later than 120 calendar days prior to the anniversary date that the Company released this proxy statement for the Annual Meeting. Proposals and nominations should be addressed to: Corporate Secretary, Cirrus Logic, Inc., 800 W. Sixth Street, Austin, Texas 78701. Copy of Bylaw Provisions: You may contact the Corporate Secretary at our headquarters, 800 W. Sixth Street, Austin, Texas 78701, for a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. CORPORATE GOVERNANCE Board Meetings and Committees During the fiscal year ended March 28, 2015, the Board held 15 meetings. Each director is expected to attend each meeting of the Board and the committees of the Board (the “Committees”) on which he or she serves. No director attended less than 75% of the aggregate of (i) the total number of Board meetings and (ii) the total number of meetings held by all Committees on which he or she served. Directors are also expected to attend the Company’s Annual Meeting of Stockholders absent a valid reason. All of the directors attended the Company’s 2014 annual meeting of stockholders. We have three Committees: Audit, Compensation, and Governance and Nominating. Each member of the Audit, Compensation, and Governance and Nominating Committees is independent in accordance with the applicable SEC rules and applicable Nasdaq Stock Market, Inc. (the “Nasdaq”) listing standards. Each Committee has a written charter that has been approved by the Board. The current members of the Board and of each Committee are identified in the following table, and the function of each Committee is described below. No later than at the time of this year’s Annual Meeting, Susan Wang will retire from the Board and is therefore not included among this year’s list of 7 Board nominees. On occasion, the Board may appoint special committees or designate directors to undertake special assignments on behalf of the Board. Name of Director John C. Carter Alexander M. Davern Timothy R. Dehne Christine King Jason P. Rhode Alan R. Schuele William D. Sherman Susan Wang Number of Meetings Held in Fiscal Year ended March 28, 2015 Independent Yes Yes Yes Yes No Yes Yes Yes Audit X Compensation X Governance and Nominating Chair X X X Chair X Chair 9 4 2 Audit Committee The Audit Committee is currently composed of three directors. The responsibilities of the Audit Committee include: Š selecting, retaining, compensating, overseeing, evaluating, and, where appropriate, terminating the Company’s independent auditors; Š Š Š Š Š Š Š Š resolving any disagreements between management and the independent auditors regarding financial reporting; adopting and implementing pre-approval policies and procedures for audit and non-audit services to be rendered by the independent auditors; reviewing with management and the independent auditors the financial information and the Management’s Discussion and Analysis proposed to be included in each of the Company’s Quarterly Reports on Form 10-Q prior to their filing; reviewing before release the unaudited interim financial results in the Company’s quarterly earnings release; reviewing with management and the independent auditors, at the completion of the annual audit, the audited financial statements and the Management’s Discussion and Analysis proposed to be included in the Company’s Annual Report on Form 10-K prior to its filing and provide or review judgments about the quality, not only the acceptability, of accounting principles, and such other matters required to be discussed with the independent auditors under generally accepted auditing standards; reviewing and approving, if appropriate, material changes to the Company’s auditing and accounting principles and practices as suggested by the independent auditors or management; establishing procedures for (i) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and evaluating the professional competency of the financial staff and the internal auditors, as well as the quality of their performance in discharging their respective responsibilities. 8 The Board has determined that each of the members of the Audit Committee is able to read and understand fundamental financial statements and is independent under applicable SEC rules and applicable Nasdaq listing standards. The Board has determined that Susan Wang is an “audit committee financial expert” as defined under applicable SEC rules. Upon the retirement of Ms. Wang, the Board intends to appoint Alexander M. Davern as Chair of the Audit Committee, contingent upon his election to the Board this year. The Board has determined that Mr. Davern is an “audit committee financial expert” as defined under applicable SEC rules. For additional information relating to the Audit Committee, see the Report of the Audit Committee of the Board on page 69 of this proxy statement and the Audit Committee Charter, which is available under the Corporate Governance section of our “Investors” page on our website at investor.cirrus.com. Compensation Committee The Compensation Committee is composed of three directors, each of whom is independent under applicable Nasdaq listing standards. The Compensation Committee reviews and approves salaries and other matters relating to executive compensation and administers the Company’s stock incentive plans, including reviewing and granting stock incentive awards to executive officers and other employees and reviewing and approving policies and procedures for awarding grants under these plans. The Compensation Committee also reviews and recommends to the Board for approval various other Company compensation plans, policies, and matters related to the Company’s non-employee directors. For additional information relating to the Compensation Committee, see the Compensation Committee Charter, which is available under the Corporate Governance section of our “Investors” page on our website at investor.cirrus.com. Please see the “Compensation Discussion and Analysis” section of this proxy statement for additional information regarding the Compensation Committee’s processes and procedures for the consideration and determination of executive officer compensation, including the Compensation Committee’s engagement of Compensia, Inc. (“Compensia”) as its external compensation consultant. Governance and Nominating Committee The Governance and Nominating Committee is composed of three directors, each of whom is independent under the applicable Nasdaq listing standards. The Governance and Nominating Committee provides counsel to the Board with respect to Board organization, membership, and function, as well as committee structure and membership. The Governance and Nominating Committee is also responsible for defining the qualifications for candidates for director positions, evaluating qualified candidates, recommending candidates to the Board for election as directors, and proposing a slate of directors for election by stockholders at each annual meeting. For more information relating to the Governance and Nominating Committee, see the Governance and Nominating Committee Charter, which is available under the Corporate Governance section of our “Investors” page on our website at investor.cirrus.com. The Governance and Nominating Committee annually reviews the needs of the Board for various skills, experience, expected contributions, and other characteristics in determining the director candidates to be nominated at the Annual Meeting of Stockholders. The Governance and Nominating Committee will evaluate candidates for directors proposed by directors, stockholders, or management in light of the Governance and Nominating Committee’s views of the current needs of the Board for certain skills; the candidate’s background, skills, experience, or other characteristics; and the expected contributions and the qualification standards established from time to time by the Governance and Nominating Committee. If the Governance and Nominating Committee believes that the Board requires additional candidates for nomination, the Governance and Nominating Committee may engage a third-party search firm to assist in identifying qualified candidates. All directors and nominees will 9 submit a completed form of directors’ and officers’ questionnaire as part of the nominating process. The process may also include interviews and additional background and reference checks for non- incumbent nominees, at the discretion of the Governance and Nominating Committee. Although the Board does not have a formal policy specifying how diversity should be considered in making determinations regarding nominations of directors, the Governance and Nominating Committee does take into account the benefits of diverse backgrounds, viewpoints, and experiences, as well as the benefits of a constructive working relationship among directors, when evaluating candidates for the Board. The Governance and Nominating Committee believes that members of the Board should possess certain basic personal and professional qualities in order to properly discharge their fiduciary duties to stockholders, provide effective oversight of the management of the Company, and monitor the Company’s adherence to principles of sound corporate governance. Therefore, the Governance and Nominating Committee has determined that nominees for election as director should have the following qualifications: (i) possess the highest personal and professional ethics, integrity, and values; (ii) be committed to representing the long-term interests of the Company’s stockholders; (iii) have an inquisitive and objective perspective and mature judgment; (iv) possess strong business and financial acumen and judgment acquired through education, training, or experience; (v) possess experience at policy-making levels in business, government, education, or technology, and in areas that are relevant to the Company’s global business activities; (vi) have experience in matters of corporate governance; (vii) have experience in positions with a high degree of responsibility in the companies or institutions with which they are affiliated; and (viii) be prepared to devote appropriate time and attention to the Board and Committee duties required of a public company board member. Additionally, for non- employee director candidates, the nominees should have personal and business circumstances that permit them to serve on one or more of the various Committees. These are not meant to be the exclusive criteria, however, and the Governance and Nominating Committee will also consider the contributions that a candidate can be expected to make to the collective functioning of the Board based upon the totality of the candidate’s credentials, experience, and expertise; the composition of the Board at the time; and other relevant circumstances. Stockholders are able to recommend individuals to the Governance and Nominating Committee for consideration as potential director nominees by submitting their names, together with appropriate biographical information and background materials, and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than 5% of common stock for at least one year as of the date such recommendation is made. An eligible stockholder wishing to recommend a candidate must submit the following no later than 120 calendar days prior to the anniversary date that the Company released this proxy statement for the Annual Meeting: (A) a recommendation that identifies the candidate and provides contact information; (B) the written consent of the candidate to serve as a director of the Company, if elected; and (C) documentation establishing that the stockholder making the recommendation is an eligible stockholder. Recommendations should be submitted to: Governance and Nominating Committee c/o Corporate Secretary Cirrus Logic, Inc. 800 W. Sixth Street Austin, Texas 78701 10 The Governance and Nominating Committee will consider stockholder-recommended candidates pursuant to the Director Nominations Process outlined in the Corporate Governance Guidelines, which are available under the Corporate Governance section of our “Investors” page on our website at investor.cirrus.com. Stockholders also have the right under the Company’s Bylaws to nominate candidates for election as directors by following the procedures, providing the information, and conforming to the submission deadlines specified in the Company’s Bylaws. Please see “Questions and Answers about the Proxy Materials, the Annual Meeting and Voting Procedures: May I propose actions for consideration at next year’s annual meeting of stockholders or nominate individuals to serve as directors?” for further information. Determination of Independence The Board, which currently consists of eight directors, has determined that six of the eight nominated directors are independent as defined by the applicable listing and regulatory standards. Specifically, the Governance and Nominating Committee has reviewed the independence of each director and determined that nominees Carter, Davern, Dehne, Schuele, Sherman, and King qualify as independent directors under these standards. Nominee Tupman does not qualify as an independent director under these standards because of a consulting arrangement with the Company that expires on June 28, 2015. Corporate Governance Guidelines On an annual basis, the Company reviews its corporate governance practices in light of any changes to applicable law, the rules of the SEC, and the Nasdaq listing standards. Among other matters, the Corporate Governance Guidelines include the following requirements: Š Š Š Š Š Š Two-thirds of the members of the Board must be independent directors as defined in the Corporate Governance Guidelines. If the Chairman of the Board is not an independent director, the Board will designate a “lead independent director.” Directors shall retire at the age of 75. The Board will have an Audit Committee, Compensation Committee, and Governance and Nominating Committee, each of which shall consist solely of independent directors. The independent directors shall meet in executive session either before or after each regularly scheduled Board meeting. In considering stockholder proposals and candidates recommended by stockholders for the Board, the Governance and Nominating Committee will follow the procedures outlined in the Corporate Governance Guidelines. For additional details, see the Corporate Governance Guidelines, which are available under the Corporate Governance section of our “Investors” page on our website at investor.cirrus.com. Board Leadership Structure The Board is committed to maintaining an independent Board comprised primarily of independent directors. To enhance the independence of the Board from management, we separate the roles of our Chief Executive Officer (“CEO”), Jason Rhode, and Chairman of the Board, Alan Schuele. We believe that this leadership structure demonstrates our commitment to good corporate governance and benefits our stockholders by enhancing the oversight of management by the Board, balancing power on the Board, and encouraging balanced decision making. 11 The Board’s Role in Risk Oversight Although management is responsible for identifying, assessing, and managing the material risks facing the Company, the Board plays an ongoing and active role in the oversight of the Company’s risk management processes, along with the oversight of the most significant strategic and operational risks faced by the Company and management’s efforts to mitigate those risks. The Board is involved in the setting of the Company’s business strategy, which necessarily entails a determination of what constitutes an appropriate level of risk for the Company. Each of the Committees also considers risk within the Committee’s area of responsibility. Our Audit Committee regularly reviews with management the Company’s major financial and regulatory risk exposures and the steps management has taken to monitor and control such exposures. Also, in designing our compensation programs and structuring awards, the Compensation Committee considers whether such compensation programs may lead to undue risk taking. Finally, our Governance and Nominating Committee oversees risks relating to corporate governance policies and related governance matters. Code of Conduct The Company has adopted a Code of Conduct that applies to all of its directors, officers, and employees (including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions). A copy of the Code of Conduct is available under the Corporate Governance section of our “Investors” page on our website at investor.cirrus.com. The Code of Conduct, as applied to the Company’s senior financial officers, constitutes the Company’s “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and constitutes the Company’s “code of conduct” under the Nasdaq listing standards. 12 DIRECTOR COMPENSATION ARRANGEMENTS Non-employee directors receive a combination of cash and equity-based compensation. Directors who are employed by the Company do not receive any additional compensation for their Board service. Independent directors may not receive consulting, advisory, or other compensatory fees from the Company in addition to their Board compensation. The following table sets forth the quarterly cash payments paid to non-employee directors for Board service during the fiscal year ended March 28, 2015: Director Compensation Retainers Quarterly Director Retainer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Board Chairman Quarterly Retainer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audit Chair Quarterly Retainer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audit Committee Member Quarterly Retainer . . . . . . . . . . . . . . . . . . . . . . Compensation Committee Chair Quarterly Retainer . . . . . . . . . . . . . . . . . Compensation Committee Member Quarterly Retainer . . . . . . . . . . . . . . . Governance and Nominating Committee Chair Quarterly Retainer . . . . . . Governance and Nominating Committee Member Quarterly Retainer . . . Lead Independent Director Quarterly Retainer . . . . . . . . . . . . . . . . . . . . . . $11,250 $ 8,750 $ 5,000 $ 2,000 $ 3,500 $ 1,750 $ 1,500 $ 750 $ 2,500 The Company also reimburses non-employee directors for all reasonable out-of-pocket expenses incurred for attending Board and Committee meetings. On May 26, 2015, the independent directors of the Board approved modifications to the retainer fees for the non-employee directors based on a recommendation by the Company’s Compensation Committee, which had analyzed the Company’s director compensation compared to the Company’s Proxy Group (as defined below in the section of the proxy statement entitled, “The Positioning Information We Use for Comparisons”). In particular, the independent directors of the Board approved the following modifications: Š Š Š Š Š Š Š the Quarterly Director Retainer was increased from $11,250 to $12,500; the Audit Chair Quarterly Retainer was increased from $5,000 to $6,250; the Audit Committee Member Quarterly Retainer was increased from $2,000 to $2,500; the Compensation Committee Chair Quarterly Retainer was increased from $3,500 to $3,750; the Compensation Committee Member Quarterly Retainer was increased from $1,750 to $1,875; the Governance and Nominating Committee Chair Quarterly Retainer was increased from $1,500 to $2,500; and the Governance and Nominating Committee Member Quarterly Retainer was increased from $750 to $1,250. These modifications become effective beginning the second quarter of fiscal year 2016. In addition to the cash compensation described above, each non-employee director receives equity- based compensation. Upon re-election to the Board, each non-employee director receives a full value stock award that vests immediately. In fiscal year 2015, the total number of shares subject to this award granted to each non-employee director had a fair market value up to $150,000 as estimated on the date of grant. For newly elected non-employee directors, the Company awards an option to purchase shares of common stock of the Company at an exercise price equal to the fair market value of the stock on the date of grant upon becoming a director, with 25% vesting after one year and the remainder vesting ratably each month over the following 36 months. The total number of stock options granted to each newly elected non-employee director for 2015 had a fair market value of $225,000 as estimated on the date of grant. 13 On May 26, 2015, the independent directors of the Board approved a modification concerning the stock award that is granted upon a non-employee director’s re-election to the Board. Effective after the 2016 annual meeting, for any director who is re-elected after having been appointed to the Board since the previous year’s annual meeting, his or her grant upon re-election will be prorated to reflect the actual duration of service as a director since his or her appointment. The following table sets forth the information regarding the cash and equity-based compensation paid to our non-employee directors for services as members of the Board or any Committee during fiscal year 2015. DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2015 Name (a) John Carter (4) Tim Dehne (5) Christine King (6) Al Schuele (7) William D. Sherman (8) Susan Wang (9) Alex Davern Fees Earned or Paid in Cash (1) ($) (b) $60,000 $69,000 $49,717 $85,283 $62,000 $75,283 $ — Stock Awards (2) ($) Option Awards (3) ($) Total (c) $149,983 $149,983 $149,983 $149,983 $149,983 $149,983 — (d) $245,309 ($) (h) $209,983 $218,983 $199,700 $235,266 $211,983 $225,266 $245,309 (1) Represents fees earned or paid in cash for services as a director during the fiscal year ended March 28, 2015, including quarterly retainer fees and Committee chairmanship and membership retainer fees. (2) On July 28, 2014, upon their re-election as directors at the Company’s 2014 annual meeting of stockholders, directors Carter, Dehne, King, Schuele, Sherman, and Wang received a full value stock award that vested immediately upon re-election to the Board having a fair market value of up to $150,000 on the date of grant. Amounts reported in this column represent the aggregate grant date fair value of the stock awards granted in fiscal year 2014, computed in accordance with FASB ASC Topic 718. (3) On March 25, 2015, upon his appointment as a director, Mr. Davern received an option to purchase shares of common stock with an exercise price equal to the closing price of common stock reported on Nasdaq on the date of grant. Amounts in this column represent the aggregate grant date fair value of the options computed in accordance with FASB ASC Topic 718 at the time of grant. See Note 12 to our consolidated financial statements in our 2015 Annual Report for additional detail regarding the assumptions underlying the value of these awards. (4) At the end of fiscal year 2015, Mr. Carter had 40,000 options outstanding. (5) At the end of fiscal year 2015, Mr. Dehne had 35,000 options outstanding. (6) At the end of fiscal year 2015, Ms. King had 9,320 options outstanding. (7) At the end of fiscal year 2015, Mr. Schuele had 19,447 options outstanding. (8) At the end of fiscal year 2015, Mr. Sherman had no options outstanding. (9) At the end of fiscal year 2015, Ms. Wang had 3,242 options outstanding. 14 PROPOSALS TO BE VOTED ON Proposal No. 1: Election of Directors The Board approved eight nominees for election to the Board this year. Information regarding the business experience of each nominee and the particular experience, qualifications, attributes, or skills that qualify that person to serve as a director of the Company is provided below. All directors are elected annually to serve until the next annual meeting and until their respective successors are elected, or until their earlier resignation or removal. There are no family relationships among the Company’s executive officers and directors. Vote Required In the election of directors, the eight persons receiving the highest number of “FOR” votes will be elected. Director Resignation Policy Any nominee for director who receives a greater number of “WITHHOLD” votes than “FOR” votes in an uncontested election of directors shall tender to the Board his or her resignation as a director promptly following the certification of the election results. For purposes of this policy, (i) an “uncontested” election is one in which the Secretary determines that the number of nominees does not exceed the number of directors to be elected as of the date seven days prior to the scheduled mailing date of the proxy statement for such meeting, and (ii) abstentions and broker non-votes will not be considered as either “WITHHOLD” votes or “FOR” votes. The Governance and Nominating Committee will consider any resignation tendered under this policy and recommend to the Board whether to accept or reject it and the Board will act on such resignation, taking into account the Governance and Nominating Committee’s recommendation, within 90 days following the certification of the election results. The Governance and Nominating Committee in making its recommendation, and the Board in making its decision, may consider any information it deems appropriate including without limitation any reasons given by stockholders for their “WITHHOLD” votes, the qualifications of the Director, and his or her contributions to the Board and the Company. The Board will promptly disclose publicly its decision to accept or reject such a resignation and, if rejected, the reasons for doing so. Information about Nominees JOHN C. CARTER Director since 2009 Mr. Carter, age 60, is currently a Principal at TCGen, which is a management consulting and advisory services firm that Mr. Carter founded in 2002 and is located in Menlo Park, California. Between November 2007 and January 2008, Mr. Carter was an Executive in Residence at Vantage Point Venture Partners, a venture capital firm in San Bruno, California, where he assisted in the management of several portfolio companies. Mr. Carter also served as Chief Technical Officer at Klipsch Group, a manufacturer of speakers in Indianapolis, Indiana, between February 2005 and October 2007. Mr. Carter began his career as an engineer at Bose Corporation in 1978, later becoming its Chief Engineer. Mr. Carter holds a B.S. in Engineering from Harvey Mudd College in Claremont, CA, and a Master’s in Electrical Engineering from the Massachusetts Institute of Technology. The Governance and Nominating Committee believes that Mr. Carter’s extensive management experience with companies in the consumer audio market and his knowledge of that market, in addition to his background in venture and private equity investment transactions, make him well qualified to be on the Board. Mr. Carter also has relevant prior engineering and technical experiences in the markets we serve. 15 ALEXANDER M. DAVERN Director since March 25, 2015 Mr. Davern, age 48, is currently the Chief Operating Officer, Executive Vice President, Chief Financial Officer and Treasurer of National Instruments Corporation (“NI”), an Austin-based supplier of measurement and automation products used by engineers and scientists in a wide range of industries. He joined NI in February 1994 and previously served in numerous leadership positions, including as NI’s Chief Financial Officer, Senior Vice President, IT and Manufacturing Operations and Treasurer from December 2002 to October 2010. Prior to joining NI, Mr. Davern worked both in Europe and in the United States for the international accounting firm of Price Waterhouse, LLP. Mr. Davern received his bachelor’s degree in Commerce and a diploma in professional accounting from University College in Dublin, Ireland. The Governance and Nominating Committee believes that Mr. Davern is well qualified to be on the Board based on his extensive leadership experience in all aspects of managing a high technology company in Austin, Texas. In addition, Mr. Davern has extensive international finance experience within the technology industry. The Governance and Nominating Committee further believes that his experiences, along with his financial expertise, his familiarity with acquisitions and integrations, and his international tax experience make him well qualified to provide valuable insights to the Board and to serve a role in the oversight of our financial reporting and accounting practices as a member of the Audit Committee. TIMOTHY R. DEHNE Director since 2009 Mr. Dehne, age 49, is currently the Vice President of Engineering for Briggo, Inc., a privately held corporation in Austin, Texas. Prior to this position, he served as the Vice President, Global Marketing, at Luminex Corporation between May 2012 and August 2013, an Austin-based company that develops, manufactures, and markets innovative biological testing technologies with applications throughout the life science and diagnostic industries. Prior to his appointment to Vice President, Global Marketing, Mr. Dehne held the position of Vice President of Systems Research and Development, a position he held between July 2009 and May 2012. He previously worked at National Instruments Corporation, an Austin-based supplier of measurement and automation products used by engineers and scientists in a wide range of industries. Mr. Dehne spent over 21 years at National Instruments Corporation where he held many leadership positions while helping to significantly grow the company to more than 4,000 employees and over $800 million in annual revenue. At National Instruments Corporation, he held the position of Senior Vice President, Research & Development. Prior to his role as Senior Vice President, Research & Development at National Instruments Corporation, Mr. Dehne served in various executive positions in marketing and engineering. Mr. Dehne holds a B.S. in Electrical Engineering from Rice University and serves on the Board of Directors for Asset Intertech, a privately held company, where he also is Chairman of its Compensation Committee. The Governance and Nominating Committee believes that Mr. Dehne is well qualified to be on the Board based on his extensive leadership experience in all aspects of managing a high technology company in Austin, Texas, and his unique insight into significantly growing revenue at a high technology company while maintaining an innovative corporate culture and a great work environment. His leadership skills, experience in creating and capturing business opportunities, and experience in scaling up a business to enable growth are valuable to the Company and the Board. 16 CHRISTINE KING Director Since October 2013 Ms. King, age 66, was formerly a director and President and Chief Executive Officer of Standard Microsystems Corporation, an analog and mixed signal semiconductor provider for the consumer electronics, automotive, and industrial markets, from October 2008 until August 2012. From September 2001 until March 2008, Ms. King served as President and Chief Executive Officer of AMI Semiconductor, Inc. Prior to that, Ms. King spent over 23 years at International Business Machines Corporation in various management roles, including her last assignment as Vice President of Semiconductor Solutions. Ms. King currently serves as a director of IDACORP, Inc., and its principal operating subsidiary Idaho Power Company. She also currently serves on the Board of Directors of QLogic Corporation, a supplier of high performance network infrastructure products that provide, enhance, and manage computer data communication, and Skyworks Solutions, Inc., a supplier of high performance analog semiconductors. She previously served on the boards of AMI Semiconductor, Inc. from 2003 until its acquisition by ON Semiconductor Corporation in March 2008; ON Semiconductor Corporation from March 2008 until October 2008; Analog Devices, Inc. from June 2003 to March 2008; and Atheros Communications from April 2008 until its acquisition in May 2011. The Governance and Nominating Committee believes that Ms. King’s senior management and operational experience in a number of high technology and semiconductor companies, prior Board service, and knowledge of the semiconductor industry provide the Board with significant financial, strategic, and operational expertise. JASON P. RHODE Director since 2007 Dr. Rhode, age 45, was appointed President and CEO, and a director of the Company, in May 2007. Dr. Rhode joined the Company in 1995 and served in various engineering positions until he became Director of Marketing for analog and mixed-signal products in November 2002. He was appointed Vice President, General Manager, Mixed-Signal Audio Products, in December 2004, a role he served in until his appointment as President and CEO. Dr. Rhode holds a B.S. in Electrical Engineering from San Diego State University, as well as M.S. and doctorate degrees in Electrical Engineering from North Carolina State University. The Governance and Nominating Committee believes that Dr. Rhode’s prior experience as a semiconductor designer and his current role as CEO of the Company make him well qualified to be on the Board based on his detailed and unique knowledge of the Company’s operations, opportunities, and challenges. In addition, the Governance and Nominating Committee believes that having Dr. Rhode serve on the Board helps to bridge the gap between the Board and management, to facilitate the regular flow of information between management and the Board, and to ensure that the Board and management act with a common purpose to execute our strategic initiatives and business plans. ALAN R. SCHUELE Director Since 2011 Mr. Schuele, age 69, has been a general partner since 2000 with Sevin Rosen Funds, a high tech venture capital firm. While at Sevin Rosen Funds, Mr. Schuele led the investments in a number of semiconductor companies, including Cicada Semiconductor (acquired by Vitesse), Zilker Labs and D2Audio Corporation (both acquired by Intersil), and Javelin Semiconductor (acquired by Avago Technologies, Ltd.). Prior to working at Sevin Rosen, he was Chief Executive Officer of Benchmarq Microelectronics and served as President and Chief Operating Officer of Unitrode Corporation after its merger with Benchmarq. Over his nearly 30-year career in the semiconductor industry, he has held various executive and sales management positions in several semiconductor companies including the 17 Company, Crystal Semiconductor, Cypress Semiconductor, and Mostek. Mr. Schuele was also previously a director at InfoNow Corp., a leading provider of SaaS-based channel management solutions, where he served as a director between 2008 and November 2011. In addition to Mr. Schuele’s extensive executive management and sales experience at semiconductor companies, he has played key roles in major mergers and acquisitions and has worked extensively in Asian markets. The Governance and Nominating Committee believes that these experiences, along with his experience in advising entrepreneurs on how to turn their emerging technologies into winning companies, make him well qualified to contribute strategic, operational, and industry expertise to the Board. WILLIAM D. SHERMAN Director since 2001 Mr. Sherman, age 72, is a former partner of the law firm of Morrison & Foerster LLP, where he worked between 1987 and December 2013. He specialized in corporate and corporate securities practice. He has extensive experience working with public companies, the SEC, and the Financial Industry Regulatory Authority, formerly known as the National Association of Securities Dealers. Mr. Sherman is also a recognized specialist on corporate governance matters by way of his representation of various public and private companies, and he regularly participates in panel discussions on executive compensation and corporate governance topics. In 1972, Mr. Sherman received a law degree from the University of California – Berkeley, School of Law, and an MBA degree from the Haas School of Business at the University of California – Berkeley. During his tenure with Morrison & Foerster LLP, Mr. Sherman had extensive experience with the legal, regulatory, and governance issues faced by a public company. The Governance and Nominating Committee believes that his background and experience position him to contribute significant corporate governance expertise to the Board and to serve as Chairman of the Company’s Governance and Nominating Committee. DAVID J. TUPMAN Director Nominee Mr. Tupman, age 52, is currently the CEO of Details Lab Inc., an advisory firm focusing on scaling organizations for high-growth, technology development and new product introduction. From 2001 to 2011, Mr. Tupman rose from manager to Vice President of hardware engineering at Apple, Inc., where he led the hardware engineering and technology teams for multiple mobile devices. Prior to Apple, Mr. Tupman worked at Psion Computers in London, England from 1995 to 2001 as a hardware- engineering manager, developing a number of personal digital assistant products. From 1988 to 1995, Mr. Tupman was a Principal Design Engineer at Schlumberger in Farnborough, England, where he developed low power, high precision sensors for the gas, fuel and aerospace industries. Mr. Tupman holds a Bachelor’s degree in Electronics Engineering from the University of Salford, England. Mr. Tupman is named as an inventor on more than 30 U.S. patents. Mr. Tupman has also served as a director of Pixelworks, Inc., a company that develops video display processing technology, since April 2014. The Governance and Nominating Committee believes that Mr. Tupman is well qualified to be on the Board based on his extensive engineering and technology experience in the consumer electronics and industrial markets. The Board recommends a vote “FOR” the election to the Board of each of the foregoing nominees. 18 Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm The Audit Committee has appointed Ernst & Young LLP (“Ernst & Young”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the fiscal year ending March 26, 2016. During the fiscal year that ended March 28, 2015, Ernst & Young served as the Company’s independent registered public accounting firm and also provided certain tax services. The Audit Committee pre-approves and reviews all audit and non-audit services provided by Ernst & Young. In considering the services to be provided by Ernst & Young, the Audit Committee considers whether the provision of non-audit services is compatible with maintaining the independence of Ernst & Young. For additional information relating to the Audit Committee, see the Report of the Audit Committee of the Board on page 69 of this proxy statement, as well as the Audit Committee Charter, which is available under the Corporate Governance section of our “Investors” page on our website at investor.cirrus.com. A representative of Ernst & Young is expected to attend the Annual Meeting and be available to respond to questions and, if he or she desires, to make a statement. The Board recommends a vote “FOR” the ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm for the fiscal year ending March 26, 2016. If the appointment is not ratified, the Audit Committee will consider this an indication to select other auditors for the following fiscal year. Ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm for the fiscal year ending March 26, 2016, requires the affirmative vote of a majority of the shares of common stock present or represented by proxy and entitled to vote at the meeting. Proposal No. 3: Advisory Vote to Approve the Compensation of Named Executive Officers Section 14A of the Securities Exchange Act of 1934 enables our stockholders to vote to approve, on an advisory, non-binding basis, the compensation of the Named Executive Officers as disclosed in this proxy statement in accordance with the rules of the SEC. This vote is advisory, and, therefore, not binding on the Company, the Compensation Committee, or the Board. However, the Board and the Compensation Committee value the opinions of our stockholders and to the extent there is a significant vote against the compensation of the Named Executive Officers as disclosed in this proxy statement, we will consider our stockholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. As described in detail in the section of this proxy statement entitled, “Compensation Discussion and Analysis,” our executive compensation program is designed to attract, motivate, and retain executive officers, while aligning their interests with those of our stockholders. Under this program, our executive officers are rewarded for the achievement of strategic and operational objectives and the realization of increased stockholder value. Please read the Compensation Discussion and Analysis and the accompanying compensation tables of this proxy statement for additional information about our executive compensation program, including information about the compensation of the Named Executive Officers for fiscal year 2015. 19 The Compensation Committee regularly reviews our executive compensation program to ensure that it achieves the desired goal of aligning our executive compensation structure with the interests of our stockholders and current market practices. We believe our executive compensation program is well designed, appropriately aligns executive pay with Company performance, and has demonstrated that it incentivizes desirable behavior from our executives. Therefore, we are asking our stockholders to indicate their support for the compensation of the Named Executive Officers as described in this proxy statement. This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on the compensation of the Named Executive Officers. Please note that this vote is not intended to address any specific item of compensation, but rather the overall compensation of the Named Executive Officers and the philosophy, policies, and practices described in this proxy statement. We ask our stockholders to vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that the compensation paid to the company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.” The Board recommends a vote “FOR” the approval of the compensation of the Company’s Named Executive Officers, as disclosed in this proxy statement. Proposal No. 4: Approval of the Third Amendment to, and the Restatement of, the 2006 Stock Incentive Plan Background and Purpose of the Proposal The Board originally adopted the Cirrus Logic, Inc. 2006 Stock Incentive Plan (the “Plan”) on May 10, 2006, subject to stockholder approval, and the Company’s stockholders approved the Plan on July 28, 2006. The Plan has been amended twice since its initial adoption, and effective May 26, 2015, the Board approved a third amendment to the Plan that would increase the number of shares available for issuance pursuant to the Plan by 4,900,000 shares. At the Annual Meeting, stockholders will be asked to approve the increase in the number of shares available for issuance under the Plan (the “Third Amendment”), which is included as Exhibit A to this proxy statement. If approved by the Company’s stockholders at the Annual Meeting, the Third Amendment will become effective July 29, 2015. Summary of the Third Amendment to the Plan The use of stock-based awards under the Plan continues to be a key element of the Company’s compensation program. The purpose of the Third Amendment is to increase the number of shares of common stock that the Company may issue under the Plan by 4,900,000 shares, from 20,300,000 to 25,200,000 shares. As of March 28, 2015, 2,857,081 shares associated with RSUs and RSAs were expected to vest, and there were 3,322,141 options vested and unvested. No other equity awards were outstanding under the Plan as of such date. Of the 20,300,000 shares currently authorized for issuance under the Plan, there remain only 3,887,234 shares available for grant as of March 28, 2015. The Plan is a broad-based plan under which the Company grants awards to its current and prospective employees, including officers, its directors, and consultants. The Company continues to believe that its long-term interests are best advanced by aligning the interests of its nonemployee directors and key employees with the interests of its stockholders. Therefore, to attract, retain and motivate nonemployee directors, officers and key management employees of exceptional abilities and, in recognition of the significant contributions to the long-term performance and growth of the Company and its subsidiaries made by these individuals, the Board has adopted the Third Amendment to, and a restatement of, the 20 Plan, subject to stockholder approval. Approval of the Third Amendment will permit the Company to continue to use stock-based compensation to align stockholder and employee interests and to motivate employees and others providing services to the Company or any subsidiary. While the Board is cognizant of the potential dilutive effect of compensatory stock awards, it also recognizes the significant motivational and performance benefits that are achieved from making such awards. The Board determined that an increase of 4,900,000 shares was appropriate based on a number of factors, including: an increase in burn rate related to retention grants associated with the acquisition of Wolfson Microelectronics plc (“Wolfson”), the current number of shares available under the Plan, the number of shares that remain subject to outstanding options and restricted stock units, the potential dilutive effects on the Company’s stockholders, the Company’s historical annual burn rates, and the anticipated future needs for equity to be able to attract and retain key employees and members of our leadership team. Assuming the presence of a quorum, the affirmative vote of a majority of the shares present, in person or by proxy, to vote at the Annual Meeting is necessary for approval of the Third Amendment to, and restatement of, the Plan. Consequences of Failing to Approve the Proposal Failure of the Company’s stockholders to approve this Proposal will not affect the rights of existing award holders under the Plan or under any previously granted awards under the Plan; however, the Company may be required to reevaluate its compensation structure since adequate shares may not be available for grant in the future. Summary of the Amended Plan The following summary of the Plan, as amended by the Third Amendment (the “Amended Plan”), does not purport to be a complete description of all provisions of the Amended Plan. Assuming that the Third Amendment is approved, the Amended Plan shall be amended and restated in its entirety to incorporate all applicable changes to the Plan document. The Amended Plan should be read in conjunction with, and is qualified in its entirety by reference to the complete text of the proposed Amended Plan (as fully amended and restated), which is attached to this proxy statement as Exhibit A. The Amended Plan gives the Compensation Committee the ability to award stock options, stock appreciation rights (“SARs”), restricted stock (“Restricted Stock Awards”), restricted stock units (referred to as “Phantom Stock Awards” in the Plan) (“Restricted Stock Units”), bonus stock, and performance awards. Unless earlier terminated by action of the Board, the Amended Plan will terminate on July 28, 2024. Awards granted prior to the termination date of the Amended Plan will continue to be effective in accordance with their terms and conditions. Persons Who May Participate. Employees, consultants and directors of the Company and its affiliates are eligible to receive an award under the Amended Plan. Only individuals who are employees of the Company or one of its corporate subsidiaries are eligible to receive Incentive Options (defined below). The Compensation Committee determines in its discretion which eligible persons will receive awards under the Amended Plan. As of March 28, 2015, there were approximately 1,100 employees and 8 directors eligible to receive awards under the Amended Plan. Shares Subject to the Amended Plan. Subject to stockholder approval of the Third Amendment to the Plan and the adjustments described below, the total aggregate number of shares of common stock that may be subject to awards under the Amended Plan, since the inception of the Plan, is 25,200,000 shares. As of March 27, 2015 (the last trading day of fiscal year 2015), the price per share of the Company’s common stock was $33.29. The shares issued pursuant to awards under the Amended Plan may be authorized and unissued shares or shares that the Company reacquired, including shares purchased in the open market. To the extent that a share of common stock is subject to an outstanding 21 Full-Value Award, that award will reduce the aggregate share limit by 1.5 shares of common stock. To the extent that a share of common stock is subject to an outstanding award other than a Full-Value Award, the award reduces the aggregate share limit by one share of common stock. Shares withheld to satisfy any tax withholding obligation or shares tendered in payment of the exercise price of an option are counted in full against the number of shares available for award under the Plan. Awards that are settled in cash or are canceled or forfeited are not counted against the aggregate share limit and will be available for issuance pursuant to additional awards granted under the Amended Plan. The aggregate share limit may not be increased by repurchasing shares using option exercise proceeds. No participant may be granted awards intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”) under the Amended Plan covering more than 400,000 shares in any one calendar year, subject to certain anti-dilution and other adjustments. The maximum amount of compensation that may be paid under all performance awards denominated in cash (including the fair market value of any shares of common stock paid in satisfaction of such performance awards) granted to any one individual during any calendar year may not exceed $5,000,000. Administration. The Amended Plan will be administered by the Compensation Committee or another Committee of two or more directors selected by the Board who are “outside directors” as defined in Section 162(m) and “Non-Employee directors” as defined in SEC Rule 16b-3. Subject to the provisions of the Amended Plan, the Compensation Committee has the power to (i) determine which employees, consultants, or directors receive an award, the time or times when such award will be made, and the type, value and amount of the award that will be granted, (ii) construe the Amended Plan and the respective agreements executed under the Plan, (iii) prescribe rules and regulations relating to the Amended Plan, (iv) determine the terms, restrictions, and provisions of the agreements relating to each award, and (v) make all other determinations necessary or advisable for administering the Amended Plan. Awards under the Amended Plan. Stock Options. Options granted under the Amended Plan may be either incentive stock options qualifying under Internal Revenue Code (“IRC”) Section 422 (“Incentive Option”) or options that are not intended to qualify as incentive stock options (“Nonstatutory Option”). Under the terms of the Amended Plan, the exercise price for any stock option must be equal to or greater than the fair market value of common stock on the date of grant and, if granted to a participant who owns stock possessing more than 10% of the combined voting power of all classes of stock of the Company, must be equal to or greater than 110% of the fair market value of common stock on the date of grant. Options may not be granted with a term in excess of ten years (five years, in the case of an Incentive Option granted to a participant owning more than 10% of the Company’s voting power). Otherwise, the Compensation Committee has discretion to determine the number of shares subject to an option (subject to the Amended Plan’s stated limits), the vesting, expiration and forfeiture provisions for options, the restrictions on transferability of an option, and any other terms and conditions otherwise consistent with the Amended Plan. The exercise price of an option may be paid through various means acceptable to the Compensation Committee, including in cash or, to the extent allowed by the Compensation Committee, by delivering previously owned shares, by withholding shares deliverable upon the exercise of the option or by delivering to the Company the proceeds from the sale of shares of the Company’s stock issuable under an option. Other than in connection with a change in the Company’s capitalization or a reorganization (as outlined in more detail in the Amended Plan), the Amended Plan prohibits repricing stock options or the repurchase of underwater options for cash without stockholder approval. 22 Stock Appreciation Rights. A stock appreciation right or SAR provides the right to the monetary equivalent of the increase in the value of a specified number of the Company’s shares over a specified period of time after the right is granted. SARs may be paid in stock, cash or a combination thereof. SARs may be granted either in tandem with or as a component of other awards granted under the Amended Plan or not in conjunction with other awards and may, but need not, relate to a specific option. SARs are generally subject to the same terms and limitations as options or, when granted tandem to other awards, to the same terms as those other awards. Restricted Stock Awards and Restricted Stock Units. A Restricted Stock Award is an award of shares, and a Restricted Stock Unit award is an award of units that represent the right to receive, at settlement, a number of shares or the cash value of a number of shares, in each case, the grant, issuance, retention and/or vesting of which is subject to such performance and other conditions as are specified by the Compensation Committee. The Compensation Committee has discretion to determine the terms of any Restricted Stock Award or Restricted Stock Unit award, including the number of shares subject to such award (subject to the Amended Plan’s stated limits), the price (if any) paid for shares subject to a Restricted Stock Award or Restricted Stock Units, and the minimum period over which a Restricted Stock Award or Restricted Stock Units may vest or be settled. Participants holding shares subject to a Restricted Stock Award may exercise full voting rights with respect to the shares during the restriction period and will be entitled to receive all dividend and other distributions with respect to the shares, subject to any requirement imposed by the Compensation Committee that such dividend or distribution amounts be reinvested in additional shares subject to a Restricted Stock Award or remain subject to the same restrictions as the Restricted Stock Award. Holders of Restricted Stock Units will be entitled to receive dividend equivalents only to the extent provided by the Compensation Committee. Performance Award Units. The Amended Plan authorizes the grant of performance award units, pursuant to which participants are awarded bonus opportunities that are paid contingent upon the achievement of performance criteria specified by the Compensation Committee. The Compensation Committee has discretion to determine the terms of any performance award unit, including the maximum amount payable (subject to the Amended Plan’s stated limits), the performance period (which is generally at least one year), the performance criteria (which may be based on financial performance and/or personal performance evaluations) and level of achievement versus these criteria, the timing of any payment, restrictions on a performance award unit prior to actual payment, forfeiture provisions, and any other terms and conditions consistent with the Amended Plan. The Compensation Committee may specify the percentage of the target performance award unit that is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) using “qualifying performance criteria” described below. Performance award units are payable in cash or shares of common stock as determined by the Compensation Committee. The Committee, in its sole discretion, may provide for an adjustable performance award value based upon the level of achievement of performance measures. Notwithstanding satisfaction of any performance goals, the number of shares issued under or the amount paid under an award may, to the extent specified in the award agreement, be reduced by the Compensation Committee on the basis of such further considerations as the Compensation Committee in its sole discretion shall determine. Qualifying Performance Criteria. Qualifying performance criteria will be based upon (1) the price of a share of common stock, (2) the Company’s earnings per share, (3) the Company’s market share, (4) the market share of a business unit of the Company designated by the Compensation Committee, (5) the Company’s sales, (6) the sales of a business unit of the Company designated by the Compensation Committee, (7) the net income (before or after taxes) of the Company or any business unit of the Company designated by the Compensation Committee, (8) the cash flow return on investment of the Company or any business unit of the Company designated by the Compensation Committee, (9) the 23 earnings before or after interest, taxes, depreciation, and/or amortization of the Company or any business unit of the Company designated by the Compensation Committee, (10) the economic value added, (11) the return on stockholders’ equity achieved by the Company, (12) the total stockholders’ return achieved by the Company, or (13) a combination of any of the foregoing. Bonus Stock. Each bonus stock award constitutes a transfer of unrestricted common shares on such terms and conditions as the Compensation Committee determines. Bonus stock awards will be made in shares of common stock and need not be subject to performance criteria or objectives or to forfeiture. The purchase price, if any, for common stock issued in connection with a bonus stock award will be determined by the Compensation Committee in its discretion. Transferability. Unless otherwise provided for by the Compensation Committee, awards under the Amended Plan are generally only transferable by the will or laws of descent and distribution or pursuant to a domestic relations order entered or approved by a court of competent jurisdiction. The Compensation Committee does have the discretion to permit the transfer of an award (other than an Incentive Option) under certain other circumstances. Tax Withholding. A participant must satisfy any applicable federal, state, local or foreign tax withholding obligations that arise due to an award made under the Amended Plan, and the Compensation Committee will not be required to issue any shares or make any payment until the participant satisfies those obligations in a manner satisfactory to the Company. The Compensation Committee may permit tax withholding obligations to be satisfied by having the Company withhold a portion of the cash or shares that would otherwise be issued to the participant under an award or by allowing the participant to tender previously acquired shares. Corporate Change and Other Adjustments. The Amended Plan provides that, upon a Corporate Change (as defined in the Amended Plan), the Compensation Committee may accelerate the vesting of options, cancel options and cause the Company to make payments in respect thereof in cash, or adjust the outstanding options as appropriate to reflect such Corporate Change (including, without limitation, adjusting an option to provide that the number and class of shares of common stock covered by such option will be adjusted so that the option will thereafter cover securities of the surviving or acquiring corporation or other property (including cash) as determined by the Compensation Committee). Upon the occurrence of a Corporate Change, the Compensation Committee may adjust the outstanding Restricted Stock Awards as appropriate to reflect such Corporate Change or fully vest such outstanding Restricted Stock Awards and, upon such vesting, all restrictions applicable to such Restricted Stock will terminate. Further, upon the occurrence of a Corporate Change, the Compensation Committee may adjust the outstanding performance awards or Restricted Stock Units as appropriate to reflect such Corporate Change, or cancel any of such outstanding awards and cause the Company to make payments in respect thereof in cash, which payments will be prorated in the event that the applicable performance or vesting period with respect to such awards has not been completed. The maximum number of shares that are intended to comply with Section 162(m) and may be issued under the Amended Plan, and the maximum number of shares that may be issued to any one individual and the other individual award limitations, as well as the number and price of shares of common stock or other consideration subject to an award under the Amended Plan, will be appropriately adjusted by the Compensation Committee in the event of changes in the outstanding common stock by reason of recapitalizations, reorganizations, mergers, consolidations, combinations, split-ups, split-offs, spin- offs, exchanges or other relevant changes in capitalization or distributions to the holders of common stock occurring after an award is granted. Amendment and Termination. The Board may from time to time amend, alter, or terminate the Amended Plan; however, any change that would impair the rights of a participant with respect to an 24 award theretofore granted will require the participant’s consent. Further, without the prior approval of our stockholders, the Board may not amend the Amended Plan to change the class of eligible individuals, increase the number of shares of common stock that may be issued under the Amended Plan, or amend or delete the provisions of the Amended Plan that prevent the Compensation Committee from amending any outstanding option contract to lower the option price or paying cash for underwater options. Federal Income Tax Consequences The following discussion is for general information only and is intended to summarize briefly the U.S. federal tax consequences to participants arising from participation in the Amended Plan. This description is based on current law, which is subject to change (possibly retroactively). The tax treatment of participants in the Amended Plan may vary depending on the particular situation and therefore may be subject to special rules not discussed below. No attempt has been made to discuss any potential foreign, state or local tax consequences. Incentive Options; Nonstatutory Options; SARs. Participants will not realize taxable income upon the grant of a Nonstatutory Option or an SAR. Upon the exercise of a Nonstatutory Option or SAR, a participant will recognize ordinary compensation income (subject to withholding) in an amount equal to the excess of (i) the amount of cash and the fair market value of common stock received, over (ii) the exercise price (if any) paid therefore. A participant will generally have a tax basis in any shares of common stock received pursuant to the exercise of an SAR, or pursuant to the cash exercise of a Nonstatutory Option, that equals the fair market value of such shares on the date of exercise. Subject to the discussion under “Federal Income Tax Consequences – Tax Code Limitations on Deductibility” below, the Company or its subsidiary (as applicable) will be entitled to a deduction for federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by a participant under the foregoing rules. Participants eligible to receive an Incentive Option will not recognize taxable income on the grant of an Incentive Option. Upon the exercise of an Incentive Option, a participant will not recognize taxable income, although the excess of the fair market value of the shares of common stock received upon exercise of the Incentive Option (“ISO Stock”) over the exercise price will increase the alternative minimum taxable income of the participant, which may cause such participant to incur alternative minimum tax. The payment of any alternative minimum tax attributable to the exercise of an Incentive Option would be allowed as a credit against the participant’s regular tax liability in a later year to the extent the participant’s regular tax liability is in excess of the alternative minimum tax for that year. Upon the disposition of ISO Stock that has been held for the requisite holding period (generally, at least two years from the date of grant and more than one year from the date of exercise of the Incentive Option), a participant will generally recognize capital gain (or loss) equal to the excess (or shortfall) of the amount received in the disposition over the exercise price paid by the participant for the ISO Stock. However, if a participant disposes of ISO Stock that has not been held for the requisite holding period (a “Disqualifying Disposition”), the participant will recognize ordinary compensation income in the year of the Disqualifying Disposition in an amount equal to the amount by which the fair market value of the ISO Stock at the time of exercise of the Incentive Option (or, if less, the amount realized in the case of an arm’s-length disposition to an unrelated party) exceeds the exercise price paid by the participant for such ISO Stock. A participant would also recognize capital gain to the extent the amount realized in the Disqualifying Disposition exceeds the fair market value of the ISO Stock on the exercise date. If the exercise price paid for the ISO Stock exceeds the amount realized (in the case of an arm’s-length disposition to an unrelated party), such excess would ordinarily constitute a capital loss. 25 Generally, the Company will not be entitled to any federal income tax deduction upon the grant or exercise of an Incentive Option, unless a participant makes a Disqualifying Disposition of the ISO Stock. If a participant makes a Disqualifying Disposition, the Company will then, subject to the discussion below under “Federal Income Tax Consequences – Tax Code Limitations on Deductibility,” be entitled to a tax deduction that corresponds as to timing and amount with the compensation income recognized by a participant under the rules described in the preceding paragraph. Under current rulings, if a participant transfers previously held shares of common stock (other than ISO Stock that has not been held for the requisite holding period) in satisfaction of part or all of the exercise price of a Nonstatutory Option or Incentive Option, no additional gain will be recognized on the transfer of such previously held shares in satisfaction of the Nonstatutory Option or Incentive Option exercise price (although a participant would still recognize ordinary compensation income upon exercise of an Nonstatutory Option in the manner described above). Moreover, that number of shares of common stock received upon exercise which equals the number of shares of previously held common stock surrendered therefore in satisfaction of the Nonstatutory Option or Incentive Option exercise price will have a tax basis that equals, and a capital gains holding period that includes, the tax basis and capital gains holding period of the previously held shares of common stock surrendered in satisfaction of the Nonstatutory Option or Incentive Option exercise price. Any additional shares of common stock received upon exercise will have a tax basis that equals the amount of cash (if any) paid by the participant, plus the amount of compensation income recognized by the participant under the rules described above. The Amended Plan allows the Compensation Committee to permit the transfer of awards in limited circumstances. See “Summary of the Amended Plan – Transferability.” For income and gift tax purposes, certain transfers of Nonstatutory Options and SARs generally should be treated as completed gifts, subject to gift taxation. The IRS has not provided formal guidance on the income tax consequences of a transfer of Nonstatutory Options (other than in the context of divorce) or SARs. However, the IRS has informally indicated that after a transfer of stock options (other than in the context of divorce pursuant to a domestic relations order), the transferor will recognize income, which will be subject to withholding, and FICA/FUTA taxes will be collectible at the time the transferee exercises the stock options. In addition, if a participant transfers a vested Nonstatutory Option to another person and retains no interest in or power over it, the transfer is treated as a completed gift. The amount of the transferor’s gift (or generation-skipping transfer, if the gift is to a grandchild or later generation) equals the value of the Nonstatutory Option at the time of the gift. The value of the Nonstatutory Option may be affected by several factors, including the difference between the exercise price and the fair market value of the stock, the potential for future appreciation or depreciation of the stock, the time period of the Nonstatutory Option and the illiquidity of the Nonstatutory Option. The transferor will be subject to a federal gift tax, which will be limited by (i) the annual exclusion of $14,000 (for 2015) per donee, (ii) the transferor’s lifetime exclusion, or (iii) the marital or charitable deduction rules. The gifted Nonstatutory Option will not be included in the participant’s gross estate for purposes of the federal estate tax or the generation-skipping transfer tax. This favorable tax treatment for vested Nonstatutory Options has not been extended to unvested Nonstatutory Options. Whether such consequences apply to unvested Nonstatutory Options is uncertain, and the gift tax implications of such a transfer are a risk the transferor will bear upon such a disposition. The IRS has not specifically addressed the tax consequences of a transfer of SARs. Restricted Stock Awards; Restricted Stock Units; Cash Awards. A participant will recognize ordinary compensation income upon receipt of cash pursuant to a cash award or, if earlier, at the time the cash is 26 otherwise made available for the participant to draw upon. A participant will not have taxable income at the time of grant of a stock award in the form of Restricted Stock Units denominated in common stock, but rather, will generally recognize ordinary compensation income at the time he or she receives cash or common stock in settlement of the Restricted Stock Units in an amount equal to the cash or the fair market value of common stock received. In general, a participant will recognize ordinary compensation income as a result of the receipt of common stock pursuant to a Restricted Stock Award in an amount equal to the fair market value of common stock when such stock is received; provided that, if the stock is not transferable and is subject to a substantial risk of forfeiture when received, a participant will recognize ordinary compensation income in an amount equal to the fair market value of common stock (i) when the common stock first becomes transferable or is no longer subject to a substantial risk of forfeiture, in cases where a participant does not make an valid election under Section 83(b) of the IRC, or (ii) when common stock is received, in cases where a participant makes a valid election under Section 83(b) of the IRC. A participant will be subject to withholding for federal, and generally for state and local, income taxes at the time he or she recognizes income under the rules described above with respect to common stock or cash received. Dividends that are received by a participant prior to the time that common stock is taxed to the participant under the rules described in the preceding paragraph are taxed as additional compensation, not as dividend income. The tax basis in common stock received by a participant will equal the amount recognized by him as compensation income under the rules described in the preceding paragraph, and the participant’s capital gains holding period in those shares will commence on the later of the date the shares are received or the restrictions lapse. Subject to the discussion immediately below, the Company or one of its subsidiaries (as applicable) will be entitled to a deduction for federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by a participant under the foregoing rules. Tax Code Limitations on Deductibility. In order for the amounts described above to be deductible, such amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary and necessary business expenses. The Company’s ability (or the ability of one of its subsidiaries, as applicable) to obtain a deduction for future payments under the Amended Plan could also be limited by the golden parachute payment rules of Section 280G of the IRC, which prevent the deductibility of certain excess parachute payments made in connection with a change in control of an employer-corporation. Finally, the Company’s ability (or the ability of one of its subsidiaries, as applicable) to obtain a deduction for amounts paid under the Amended Plan could be limited by Section 162(m), which limits the deductibility, for federal income tax purposes, of compensation paid to Covered Employees of a publicly traded corporation to $1,000,000 with respect to any such officer during any taxable year of the corporation. However, an exception applies to this limitation in the case of certain performance- based compensation. In order to exempt performance-based compensation from the $1,000,000 deductibility limitation, the grant or vesting of the award relating to the compensation must be based on the satisfaction of one or more performance goals as selected by the Compensation Committee. Performance-based awards intended to comply with Section 162(m) may not be granted in a given period if such awards relate to shares of common stock which exceed a specified limitation or, alternatively, the performance-based awards may not result in compensation, for a participant, in a given period which exceeds a specified limitation. If the Amended Plan is approved at the Annual Meeting, a participant who receives an award or awards intended to satisfy the performance-based exception to the $1,000,000 deductibility limitation may not receive performance-based awards relating to more than 400,000 shares of common stock or, with respect to awards not related to shares of common stock, $5,000,000, in any given fiscal year. Although the Amended Plan has been drafted 27 to satisfy the requirements for the performance-based compensation exception, the Company may determine that it is in its best interests not to satisfy the requirements for the exception. See “Summary of the Amended Plan – Awards under the Amended Plan – Performance Award Units” and “Summary of the Amended Plan – Awards under the Amended Plan – Qualifying Performance Criteria.” New Plan Benefits A summary of the material features of the Amended Plan, including the class of persons eligible to participate therein and the number of persons in such class, is included above under the title “Summary of Amended Plan.” The awards, if any, that will be made to eligible persons under the Amended Plan are subject to the discretion of the Compensation Committee and, thus, the Company cannot currently determine the benefits or number of shares subject to awards that may be granted in the future to its executive officers, employees and directors under the Amended Plan. Therefore, the New Plan Benefits Table is not provided. The Company made its annual equity awards under the Plan for fiscal year 2015 to the Named Executive Officers, nonemployee directors, and to its other eligible employees. The grants to the Named Executive Officers are reflected in the “Fiscal Year 2015 Grants of Plan-Based Awards” section that can be found on page 57 of this proxy statement. The fiscal year 2015 grant to the nonemployee directors is reflected in the Director Compensation Table on page 14. Options Previously Awarded The following table states the amount of options that have been previously granted pursuant to the Plan as of March 28, 2015: Name and Position, or Group, as Applicable All Named Executive Officers: Š Š Š Š Š Jason P. Rhode, President and CEO Thurman K. Case, Vice President, Chief Financial Officer and Principal Accounting Officer Andrew Brannan, Vice President of Worldwide Sales Rashpal Sahota, Vice President and Audio General Manager, Cirrus Logic International Eric C. Smith, Vice President and General Manager, Advanced Mixed-Signal Products (AMP) Division All Current Executive Officers as a Group All Current Directors as a Group Each Nominee for Election as a Director: Š Š Š Š Š Š John C. Carter Alexander M. Davern Timothy R. Dehne Christine King Jason P. Rhode Alan R. Schuele 28 Number of Options Previously Granted 1,975,000 1,545,000 360,000 0 0 70,000 3,293,000 1,839,151 65,000 21,731 65,000 20,562 1,545,000 25,929 Name and Position, or Group, as Applicable Number of Options Previously Granted Š William D. Sherman Š David J. Tupman All Employees as a Group, Excluding Current Executive Officers Vote Required and Board Recommendation 70,000 0 2,166,465 Approval of the Third Amendment to the Plan, which increases the number of shares of common stock that the Company may issue under the Plan by 4,900,000 shares, from 20,300,000 to 25,200,000 shares, requires the affirmative vote of the holders of a majority of the total number of shares of common stock present in person or by proxy and entitled to vote on the matter. Unless marked to the contrary, proxies received will be voted FOR approval. The Board believes strongly that the approval of the Third Amendment to the Plan is essential to the Company’s continued success. For the reasons stated above, the stockholders are being asked to approve this Proposal. The Board recommends a vote “FOR” the approval of the third amendment to, and the restatement of, the 2006 Stock Incentive Plan. Proposal No. 5: Approval of Material Terms of the 2006 Stock Incentive Plan, as Amended and Restated by the Third Amendment, for Purposes of Complying with the Requirements of Section 162(m) of the Internal Revenue Code Background and Purpose of the Proposal In addition to the amendment and restatement of the Plan, the Board is also requesting that stockholders reapprove the material terms of the Amended Plan so that certain designated awards under the Amended Plan qualify for exemption from the deduction limitations of Section 162(m). As discussed in Proposal No. 4 above, under Section 162(m), the federal income tax deductibility of compensation paid to the CEO and three other most highly compensated officers (other than the CEO or the Company’s Chief Financial Officer) determined pursuant to the executive compensation disclosure rules under the Securities Exchange Act of 1934 (“Covered Employees”) may be limited to the extent such compensation exceeds $1,000,000 in any taxable year. However, the Company may deduct compensation paid to its Covered Employees in excess of that amount if it qualifies as “performance-based compensation” as defined in Section 162(m). In addition to certain other requirements, in order for awards under the Amended Plan to constitute “performance-based compensation,” the material terms of the Amended Plan must be disclosed to and approved by the Company’s stockholders no later than the first stockholder meeting that occurs in the fifth year following the year in which stockholders previously approved the Plan, or at the time of a material amendment to the plan, whichever occurs first. Because the Company is seeking stockholder approval in Proposal No. 4 of a material amendment to the plan, we are also seeking this separate stockholder approval for purposes of Section 162(m). Under the Section 162(m) regulations, the material terms of the Amended Plan are (i) the maximum amount of compensation that may be paid to a participant under the Amended Plan in any fiscal year, (ii) the employees eligible to receive compensation under the Amended Plan, and (iii) the business criteria on which the performance goals are based. The Company intends that awards under the Amended Plan continue to qualify for exemption from the deduction limitations of Section 162(m). Accordingly, the Company is asking its stockholders to reapprove the material terms of the Amended Plan for Section 162(m) purposes so that awards under the Amended Plan that are intended to qualify 29 as “performance-based compensation” within the meaning of Section 162(m) will be fully deductible by the Company. The material terms of the Amended Plan are disclosed above in Proposal No. 4 as follows: (i) the maximum amount of compensation is described in the section entitled “Summary of the Third Amendment to the Plan” (ii) the eligible employees are described in the section entitled “Summary of the Amended Plan – Persons Who May Participate,” and (iii) the business criteria are described in the section entitled “Summary of the Amended Plan – Awards under the Amended Plan – Qualifying Performance Criteria.” Consequences of Failing to Approve the Proposal Failure of the Company’s stockholders to approve this Proposal will not affect the rights of existing award holders under the Amended Plan or under any previously granted awards under the Amended Plan. However, if this Proposal is not approved, the Company may be required to reevaluate its compensation structure since compensation paid to Covered Employees in future years may not be deductible by the Company to the extent it exceeds $1,000,000. Vote Required and Board Recommendation Approval of the material terms of the Amended Plan for Section 162(m) purposes requires the affirmative vote of the holders of a majority of the total number of shares of common stock present in person or by proxy and entitled to vote on the matter. For these purposes, broker non-votes are not treated as entitled to vote. Unless marked to the contrary, proxies received will be voted FOR approval. The Board believes strongly that the approval of the material terms of the Amended Plan for purposes of Section 162(m) is essential to the Company’s continued success. For the reasons stated above, the stockholders are being asked to approve this Proposal. The Board recommends a vote “FOR” the approval of material terms of the 2006 Stock Incentive Plan, as amended and restated by the Third Amendment, for purposes of complying with the requirements of Section 162(m) of the Internal Revenue Code. OTHER MATTERS The Company knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the Proxy to vote the shares they represent as the Board may recommend. Discretionary authority with respect to such other matters is granted by the execution of the Proxy. 30 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table contains information regarding the beneficial ownership of common stock as of May 12, 2015 by: Š The stockholders we know to beneficially own more than 5% of outstanding common stock; Š Each director named in this proxy statement; Š Each executive officer named in the Summary Compensation Table included in this proxy statement; and Š All of our directors and executive officers as a group. Common stock is the only class of voting securities issued by the Company. Unless otherwise indicated in the footnotes, the beneficial owner has sole voting and investment power with respect to the securities beneficially owned, subject only to community property laws, if applicable. Beneficial Owner 5% or Greater Stockholders: FMR LLC(2) Shares Beneficially Owned Number Percent(1) 245 Summer Street Boston, MA 02210 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,873,675 Blackrock, Inc.(3) 55 East 52nd Street New York, NY 10055 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,601,841 The Vanguard Group, Inc.(4) PO Box 2600 Valley Forge, PA 19482 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,481,694 Directors and Named Executive Officers: Jason P. Rhode, President, Chief Executive Officer and Director(5) Thurman K. Case, Vice President, Chief Financial Officer and Principal . . . . . . . . . . 1,101,232 Accounting Officer(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Timothy R. Dehne, Director(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John C. Carter, Director(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alan R. Schuele, Director(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eric C. Smith, Vice President(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Christine King, Director(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . William D. Sherman, Director(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Susan Wang, Director(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Andrew Brannan, Vice President, Worldwide Sales . . . . . . . . . . . . . . . . . . . . . . Alexander Davern, Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rashpal Sahota, Vice President, Audio GM, Cirrus Logic Int’l. . . . . . . . . . . . . . David J. Tupman, Director Nominee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . All current directors and executive officers as a group (18 persons)(14) 131,139 60,931 60,488 49,833 17,543 15,028 12,434 5,943 0 0 0 0 . . . . . . 2,073,053 12.4% 10.4% 7.1% 1.7% * * * * * * * * * * * * 3.3% * Less than 1% of the outstanding common stock (1) Percentage ownership is based on 63,384,875 shares of common stock issued and outstanding on May 12, 2015. Shares of common stock issuable under stock options that are currently exercisable or will become exercisable within 60 days after May 12, 2015, and shares of common stock subject to restricted stock units (“RSUs”) that will vest and be issued within 60 days after May 12, 2015, are deemed to be outstanding and beneficially owned by the person holding such options or 31 RSUs for the purpose of computing the number of shares beneficially owned and the percentage ownership of such person, but are not deemed outstanding for the purpose of computing the percentage of any other person or group. This table does not include options, RSUs or MSUs that vest more than 60 days after May 12, 2015. (2) Based on a Schedule 13G filed with the SEC on January 12, 2015, FMR LLC is the beneficial owner of 7,873,675 shares, with sole voting power as to 3,347,484 shares and sole dispositive power as to 7,873,675 shares. (3) Based on a Schedule 13G filed with the SEC on January 9, 2015, Blackrock Inc. is the beneficial owner of 6,601,841 shares, with sole voting power as to 6,394,613 shares, and sole dispositive power as to 6,601,841 shares. (6) (5) (4) Based on a Schedule 13G filed with the SEC on February 11, 2015, The Vanguard Group Inc. is the beneficial owner of 4,481,694 shares, with sole voting power as to 82,542 shares, sole dispositive power as to 4,404,052 shares, and shared dispositive power as to 77,642 shares. Includes 1,002,359 shares issuable upon exercise of options held by Dr. Rhode and 98,873 shares held directly. Includes 112,936 shares issuable upon exercise of options held by Mr. Case and 18,203 shares held directly. Includes 35,000 shares issuable upon exercise of options held by Mr. Dehne and 25,931 shares held directly. Includes 40,000 shares issuable upon exercise of options held by Mr. Carter and 20,488 shares held directly. Includes 18,906 shares issuable upon exercise of options held by Mr. Schuele and 30,927 shares held directly. (8) (7) (9) (10) Includes 17,499 shares issuable upon exercise of options held by Mr. Smith and 44 shares held directly. (11) Includes 8,566 shares issuable upon exercise of options held by Ms. King and 6,462 shares held directly. (12) All shares are directly held. (13) Includes 2,701 shares issuable upon exercise of options held by Ms. Wang and 3,242 shares held directly. (14) Includes options held by all executive officers and directors to purchase an aggregate of 1,781,768 shares of common stock that are exercisable within 60 days of May 12, 2015. 32 EXECUTIVE OFFICERS Scott A. Anderson – Senior Vice President and General Manager, Mixed-Signal Audio Division Mr. Anderson, age 61, was appointed Senior Vice President and General Manager, Mixed-Signal Audio Division, in October 2007. Prior to joining the Company, Mr. Anderson served as the President and Chief Operating Officer of Freescale Semiconductor between March 2004 and February 2005, and as President and Chief Executive Officer of Motorola Semiconductor Products Sector between February 2003 and December 2003. Jo-Dee M. Benson – Vice President, Chief Culture Officer Ms. Benson, age 55, was appointed Vice President, Chief Culture Officer, as of July 2011. She joined the Company in July 1995 and served in various marketing communications management roles. Prior to being appointed to her current position, Ms. Benson served as Vice President, Corporate Communications and Human Resources from July 2005 to July 2011, and as Vice President, Corporate Marketing Communications between January 2001 and July 2005. Andrew Brannan – Vice President Worldwide Sales Mr. Brannan, age 48, joined Cirrus Logic as part of the Wolfson acquisition in August 2014. Mr. Brannan had worked at Wolfson since 2009, where he was Chief Commercial Officer. Immediately before joining Wolfson, Mr. Brannan served as a board member and Executive Vice President of Sales and Customer Operations at Symbian Software Limited. Randy Carlson – Vice President of Supply Chain Mr. Carlson, age 49, was appointed Vice President of Supply Chain in February 2010. Mr. Carlson previously worked as Director of Supply Chain between May 2008 and February 2010. Thurman K. Case – Vice President, Chief Financial Officer and Principal Accounting Officer Mr. Case, age 58, was appointed Chief Financial Officer (“CFO”) in February 2007. He joined the Company in October 2000 and was appointed Vice President, Treasurer, Financial Planning & Analysis, in September 2004. Prior to being appointed to his current position, Mr. Case served as Vice President, Finance between June 2002 and September 2004, and as Director of Finance between October 2000 and June 2002. Brad Fluke – Vice President and General Manager, MEMS Division Mr. Fluke, age 53, was appointed Vice President and General Manager, MEMS Division in May 2015. He joined the company in 2013, originally serving as Vice President of Strategy. Previously, from 2008 to 2013, Mr. Fluke served as the President, Chief Executive Officer, and the Chairman of the Board at Javelin Semiconductor, Inc. Allan Hughes – Vice President Cirrus Logic International Mr. Hughes, age 54, joined Cirrus Logic as part of the Wolfson acquisition in August 2014. Mr. Hughes joined Wolfson in March 2009 as Vice President Marketing and Applications. In 2013, he assumed the role of Chief Operating Officer. Jason P. Rhode – President and Chief Executive Officer, and Director Nominee Dr. Rhode, age 45, was appointed President and CEO of the Company in May 2007. Dr. Rhode joined the Company in 1995 and served in various engineering positions until he became Director of Marketing for analog and mixed-signal products in November 2002. He was appointed Vice President, General Manager, Mixed-Signal Audio Products, in December 2004, a role he served in until his appointment as President and CEO. 33 Rashpal Sahota – Vice President and Audio General Manager, Cirrus Logic International Mr. Sahota, age 55, joined Cirrus Logic as part of the Wolfson acquisition in August 2014. Mr. Sahota had worked at Wolfson since 2008, where he acted as Vice President, General Manager, Audio. Gregory Scott Thomas – Vice President, General Counsel and Corporate Secretary Mr. Thomas, age 49, was appointed Vice President, General Counsel and Corporate Secretary in December 2003. He joined the Company in December 2000 as Vice President and Associate General Counsel, Intellectual Property. COMPENSATION DISCUSSION AND ANALYSIS The purpose of this Compensation Discussion and Analysis is to explain the Compensation Committee’s philosophy for determining the compensation program for the Chief Executive Officer (“CEO”), the Company’s Chief Financial Officer (“CFO”), and the three other most highly compensated executive officers (collectively, “Named Executive Officers”) for fiscal year 2015 and to discuss why and how the fiscal year 2015 compensation decisions for these executives were reached. As used in this Compensation Discussion and Analysis, all references to the 2015 fiscal year are applicable to the time period that began on March 30, 2014 and ended on March 28, 2015. Following this discussion are tables that include compensation information for the Named Executive Officers. This analysis contains descriptions of various employee compensation and benefit plans. These descriptions are qualified in their entirety by reference to the full text or detailed descriptions of the plans that are filed as exhibits to the Company’s 2015 Annual Report on Form 10-K for fiscal year 2015. The Named Executive Officers for fiscal year 2015 were as follows: Š Jason P. Rhode, President and CEO; Š Thurman K. Case, Vice President, Chief Financial Officer and Principal Accounting Officer; Š Andrew Brannan, Vice President of Worldwide Sales; Š Rashpal Sahota, Vice President and Audio General Manager, Cirrus Logic International; and Š Eric C. Smith, Vice President and General Manager, Advanced Mixed-Signal Products (AMP) Division. Executive officer Smith was hired by the Company in April 2014, shortly after fiscal year 2015 began and received one-time, new-hire equity grants shortly thereafter, in May 2014. Mr. Smith qualifies as a Named Executive Officer based on his fiscal year 2015 compensation while an employee at the Company as calculated and reportable under current Securities and Exchange Commission (“SEC”) guidelines and as a result of his new-hire equity grants. As of May 7, 2015, Mr. Smith was no longer an executive officer of the Company. But for Mr. Smith’s new-hire equity grants he would not have qualified as a Named Executive Officer. Executive officers Brannan and Sahota (“Wolfson Named Executive Officers”) joined the Company in connection with the Company’s acquisition in August 2014 of Wolfson Microelectronics plc (“Wolfson”). Each qualifies as a Named Executive Officer based on his fiscal year 2015 compensation while an employee at the Company as calculated and reportable under current SEC guidelines. Each received equity awards in connection with the acquisition of Wolfson, and these awards resulted in their inclusion as Named Executive Officers for fiscal year 2015. But for such awards, they would not have qualified as Named Executive Officers. Because of the Wolfson acquisition and its timing, certain compensation discussions, analyses, and comparisons performed during fiscal year 2015 for the Named Executive Officers not formerly at 34 Wolfson – our CEO, our CFO, and Mr. Smith (“Cirrus Named Executive Officers”) – were not undertaken for the Wolfson Named Executives; instead, compensation decisions such as base salary, cash incentive awards, and long-term equity grants were generally adopted for the Wolfson Named Executives to maintain or approximate arrangements that were in place at Wolfson prior to our acquisition. I. Our Business Highlights for Fiscal Year 2015 The following business highlights are presented as a backdrop to the present analysis: Š We reported annual revenue of $916.6 million, which included $98.3 million of contribution from Wolfson. Excluding Wolfson’s contribution, our annual revenue was $818.3 million, which represents a 15 percent year-over-year increase; Š We anticipate that the acquisition of Wolfson will strengthen our position as a leader in audio and voice markets with a broad, global customer base and end-to-end signal processing solutions, including integrated circuits and software for portable audio applications; Š Š Through the acquisition, we strengthened our product portfolio through the addition of new product lines; Strong demand for audio products drove sales above our expectations in the second half of the fiscal year; and Š We significantly grew our share with an existing Tier-1 smartphone customer in the fourth quarter. II. An Executive Summary of Our Compensation Actions For fiscal year 2015, and as additionally described in this analysis, our Compensation Committee took the following significant actions with respect to the compensation of our Named Executive Officers: Š Š Š Š Š Set executive officer Smith’s initial base salary and kept base salaries of all other named executive officers constant; Approved annual cash incentive awards to the Cirrus Named Executive Officers and executive officer Brannan under the Cirrus Logic, Inc. 2007 Management and Key Individual Contributor Incentive Plan (“Incentive Plan”) tied to fiscal year 2015 financial performance; Approved a quarterly Wolfson Microelectronics Limited – All Employee Transition Bonus Plan (“Wolfson Transition Bonus Plan”) for former Wolfson employees, other than executive officer Brannan, applicable in the third and fourth quarters of fiscal year 2015; Approved restricted stock unit (“RSU”) and stock option grant awards to Company executive officers under Cirrus Logic Inc.’s 2006 Stock Incentive Plan (“Stock Plan”), including RSU grant awards to former Wolfson employees and executives as part of the Wolfson acquisition; and Approved the addition of Market Stock Unit (“MSU”) awards to the long-term incentive compensation opportunity available to our CEO. The Company is committed to paying executive officers based on Company and individual performance. A significant portion of each executive officer’s compensation is based on the achievement of short- and long-term profitable growth of the Company. The Compensation Committee believes that the compensation paid to our executive officers as reflected in this proxy statement is fully supported by the Company’s performance over the relevant 35 time periods. For the three years preceding the August 2014 data-gathering efforts in support of the Company’s annual review of executive compensation, Cirrus Logic, Inc.’s revenue growth was positioned in the highest quadrant of the Proxy Group (as defined below in the section of the proxy statement entitled, “The Positioning Information We Use for Comparisons”). For the one year preceding such data-gathering efforts, Cirrus Logic Inc.’s revenue growth was positioned in the lowest quadrant of the Proxy Group; by the conclusion of fiscal year 2015, however, the Company’s year- over-year revenue growth (excluding the contribution from Wolfson) reached 15 percent, which would represent a position again in the top quadrant of the Proxy Group. A. Base Salary Determinations For fiscal year 2015, the base salaries of our CEO and CFO were kept constant. As compared to market data, our CEO’s base salary falls between the 25th and 50th percentiles, and our CFO’s base salary falls below the 25th percentile. Executive officer Smith was hired by the Company shortly after fiscal year 2015 began, and his base salary was set, and then maintained during fiscal year 2015, at a level that falls below the 25th percentile of market data. The base salaries of our Wolfson Named Executive Officers were kept at the same levels they were prior to our acquisition. B. Cash Incentive Awards The Cirrus Named Executive Officers earned payments under the Company’s Incentive Plan of 56% of each individual’s target bonus in the first semi-annual bonus period of fiscal year 2015 and 250% of each individual’s target bonus in the second semi-annual bonus period. Executive officer Smith’s earned payment for the first semi-annual bonus period was prorated to take into account his hire date falling shortly after fiscal year 2015 had begun. These payments to the Cirrus Named Executive Officers were based on Cirrus Logic, Inc.’s financial results, excluding Wolfson, and reflected strong performance in the second half of the fiscal year, and particularly the Company’s strong operating profit of 27% as calculated under the Incentive Plan (13.5% on a GAAP basis) and year-over-year revenue growth of 27% for the second six-month bonus cycle. The reduced payment of 56% under the Incentive Plan for the first half of the fiscal year reflected a 21% operating profit margin as calculated under the Incentive Plan (9.4% on a GAAP basis) but only 1% in year-over-year revenue growth for the first six-month bonus cycle. Executive officer Brannan, formerly at Wolfson, also earned payments under the Incentive Plan, but his bonus amounts were tied to the combined financial results of Wolfson and Cirrus Logic, Inc. for the second six-month bonus cycle. Mr. Brannan earned 192% of his target bonus in the second half of the fiscal year, based on the combined Wolfson and Cirrus Logic, Inc. financial results of 22% operating profit margin as calculated under the Incentive Plan (14% on a GAAP basis) and 26% revenue growth. For the third and fourth quarters of fiscal year 2015, the Company implemented the Wolfson Transition Bonus Plan to effectively replace the cash incentive bonus plan that was in place at Wolfson prior to the acquisition. Under the Wolfson Transition Bonus Plan, former Wolfson employees other than Mr. Brannan received payments based on a target bonus percentage, their quarterly salary, and a company performance weighting factor that depended upon Wolfson’s quarterly operating profits. In the third quarter of fiscal year 2015, no bonus was paid under the Wolfson Transition Bonus Plan. In the fourth quarter of fiscal year 2015, former Wolfson employees, excluding executive officer Brannan, earned payments of 47% of their individual target bonus under the Wolfson Transition Bonus Plan. As compared to market data concerning target total cash compensation, the base salary plus cash incentives awarded during fiscal year 2015: (a) to our CEO would fall between the 50th and 75th percentile and (b) to our CFO and executive officer Smith would fall below the 25th percentile. 36 C. Long-Term Incentive Awards For the first time, the Company in fiscal year 2015 granted MSUs to our CEO as part of the CEO’s long-term incentive awards, representing a new performance-based equity component of the CEO’s total compensation. The number of shares earned at the end of a three-year performance period, relative to a target number of shares, will be based on a consideration of the Company’s percentile ranking as compared against companies forming the components of the Philadelphia Semiconductor Index. In fiscal year 2015, the Company granted equity awards to our CEO (RSUs, stock options, and MSUs), CFO (RSUs and stock options), and executive officer Smith (RSUs and stock options, primarily in the form of new-hire grants). As compared to market data concerning target total direct compensation, the base salary plus cash incentives plus equity awarded during fiscal year 2015: (a) to our CEO and CFO would fall below the 25th percentile and (b) to executive officer Smith would fall between the 50th and 75th percentile, primarily due to his new-hire equity grants. Equity awards to the Wolfson Named Executive Officers consisted of RSUs granted as part of the Wolfson acquisition, designed to take the place of a pre-existing Wolfson share plan; as such, these grants were not compared against the market data because of their incommensurable nature. III. Our General Philosophy and Overall Compensation Framework We provide our executive officers with compensation opportunities that are based on their personal performance, the financial performance of the Company, and their contribution to that performance, through a mix of base salary, annual cash incentive awards, and equity compensation. These opportunities are designed to attract and retain highly skilled individuals and to align management’s incentives with the long-term interests of our stockholders. We believe that the amounts payable under the compensation program for our executive officers should reflect the Company’s performance and the value created for our stockholders. In addition, the compensation program should balance the short- and long-term strategic goals and objectives of the Company and reward individual contribution to the Company’s success. We are engaged in a very competitive industry, and the Company’s success depends on its ability to attract and retain qualified executives through the competitive compensation packages we offer. A. Advisory Vote on Executive Compensation and Last Year’s Result We conducted our fourth stockholder advisory vote on executive compensation at our 2014 annual meeting of stockholders. While this vote was not binding on the Company, it gives our stockholders an opportunity to vote on the compensation of our Named Executive Officers on an annual basis as a means to express their views regarding our executive compensation philosophy, our compensation policies and programs, and our decisions regarding executive compensation, all as disclosed in our proxy statements. The Board and the Compensation Committee value the opinions of our stockholders and, to the extent that there is any significant vote against the compensation of our Named Executive Officers as disclosed in this proxy statement, we will consider our stockholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. At the Company’s 2014 annual meeting of stockholders, more than 97% of the votes cast on our executive compensation proposal were voted in favor of our Named Executive Officers’ compensation as disclosed in the proxy statement, and as a result, our Named Executive Officers’ compensation was approved. The Compensation Committee reviewed the final vote results and determined that, given the significant level of support, no changes to our executive compensation philosophy or general policies and decisions were necessary. 37 We provide our stockholders with the opportunity to cast an advisory vote on executive compensation each year. For more information, see “Proposal No. 3 – Advisory Vote to Approve the Compensation of Named Executive Officers.” B. How We Generally Set Target Total Direct Compensation The Compensation Committee annually reviews and establishes each executive officer’s target total direct compensation package. The Compensation Committee considers a broad range of facts and circumstances in setting executive compensation, including Company performance, individual performance, external pay practices of peer companies, the strategic importance of the executive officer’s position, history of pay adjustments, as well as internal pay equity and the executive officer’s time in the position. The weight given to each of these factors by the Compensation Committee may differ from year to year, and among the individual executive officers. The Company’s executive compensation program is heavily weighted toward performance-based compensation that rewards achievement of short- and long-term corporate goals and objectives. In setting target total direct compensation for our executive officers, the Compensation Committee seeks to strike a balance between providing compensation that is competitive with the compensation paid to executives of peer companies, while ensuring that a significant percentage of compensation is coupled to the Company’s performance, individual performance, and stock price appreciation. Please see the section of this proxy statement entitled, “The Elements Making Up Compensation and Our Target Market Positioning” for additional information regarding the target total direct compensation for our Named Executive Officers. C. Our Use of a Compensation Consultant To support the Compensation Committee in fulfilling its duties, the Compensation Committee directly retained an external compensation consultant to assist with its design and evaluation of compensation for our CEO, executive officers, and directors. Pursuant to its charter, the Compensation Committee is authorized to retain and terminate any consultant, as well as approve the consultant’s fees and other terms of retention. During fiscal year 2015, the Compensation Committee retained Compensia, Inc. (“Compensia”) to provide executive and director compensation consulting services. At the direction of the Compensation Committee, Compensia performed a comprehensive review of our CEO’s and other executive officers’ compensation. In addition to a complete review of executive compensation, Compensia reviewed, developed, and proposed a compensation peer group to use for purposes of analyzing executive and director compensation. Compensia further reviewed the Company’s Incentive Plan and proposed use of MSUs and provided analysis of management’s recommendations in setting the performance criteria under these programs for fiscal year 2015. Due at least to the timing of the Wolfson acquisition, certain salary and other compensation analyses and comparisons discussed in relation to the Cirrus Named Executive Officers were not undertaken by Compensia with respect to the Wolfson Named Executive Officers. As required by the Nasdaq listing standards, the Compensation Committee performed an independence assessment of Compensia. The Compensation Committee determined that Compensia should be considered independent based on the following factors: Š Compensia provided no services to the Company other than its work for the Compensation Committee; Š The fees paid to Compensia by the Company were less than 1% of Compensia’s revenues for the year; 38 Š Compensia has developed and provided to the Company a Conflict of Interest Policy; Š The advisers from Compensia have no business or personal relationship with any members of the Company’s Compensation Committee or the Company’s executive officers; and Š None of the advisers from Compensia own any shares of our common stock. Accordingly, the Compensation Committee determined that the services provided by Compensia to the Compensation Committee for fiscal year 2015 did not give rise to any conflicts of interest. D. The Positioning Information We Use for Comparisons To aid the Compensation Committee’s annual executive compensation review, Compensia prepared and presented a compensation assessment of the Company’s executive compensation program. Compensia’s data gathering and assessment were performed before the acquisition of Wolfson was complete. Because of this timing, along with other considerations concerning the acquisition, the Compensation Committee did not analyze or review compensation for the Wolfson Named Executive Officers to the same extent undertaken for the Cirrus Named Executive Officers. Compensia’s assessment was based on market data obtained from the Radford Global Technology Survey specific to companies in the semiconductor industry with median revenues of approximately $960 million (the “Survey Group”) and publicly available data gathered from a group of specific companies that are considered comparable to the Company (the “Proxy Group”). The Proxy Group generally consists of public companies listed on U.S. stock exchanges in the semiconductor industry that are similar in size (as measured by revenue and market capitalization) and share common characteristics with the Company, including location and similarity of business model and product lines. In determining the Proxy Group, the Compensation Committee also considered whether a proposed peer was historically in the Company’s peer group to maintain some consistency in the executive compensation analysis on a year-over-year basis. Finally, the Compensation Committee also considered the likelihood that the Company might compete for executive talent with companies selected for the Proxy Group. In the spring of 2014, based on these criteria, and with input from the Board on companies to consider for inclusion in the Proxy Group, Compensia reviewed the then-existing Proxy Group and recommended the removal of TriQuint Semiconductor, Inc. (which announced a merger agreement with RF Micro Devices in February 2014, the merger being completed in January 2015). After reviewing Compensia’s recommendations, the Compensation Committee therefore approved the following group of 14 companies for the Proxy Group: (1) Atmel; (2) Cypress Semiconductor; (3) Fairchild Semiconductor; (4) Integrated Device Technology, Inc.; (5) International Rectifier; (6) Intersil Corp.; (7) Microsemi Corp.; (8) OmniVision Technologies Inc.; (9) PMC-Sierra, Inc.; (10) Power Integrations, Inc.; (11) RF Micro Devices; (12) Semtech Corp.; (13) Silicon Laboratories, Inc.; and (14) Skyworks Solutions. From the data derived from the Survey Group and the Proxy Group, Compensia developed market composite data for each Cirrus Logic executive officer reflecting a blend of the data from each group (“Market Composite Data”). In some cases, Proxy Group data was not available for an executive officer, and Compensia’s analysis and subsequent compensation recommendations were based on the Survey Group data. Certain data for executives formerly at Wolfson was (a) not complete due to the timing of the acquisition and/or (b) incommensurable due to it being part of the Wolfson acquisition transaction. 39 E. The Role of Our Executive Officers in Establishing Compensation Our Human Resources and Legal departments support the Compensation Committee in its work and in fulfilling various functions in administering our compensation programs. This support generally consists of assistance with providing Survey Group data, proposals of potential ranges of various components of compensation for our executive officers, and information regarding available shares under the Company’s Stock Plan. Regular meetings of the Compensation Committee are generally attended by our CEO, Chief Culture Officer, and our General Counsel. Because each of the Company’s executive officers (other than the CEO) reports directly to the CEO, the Compensation Committee relies upon input and recommendations from our CEO in determining an executive officer’s compensation. The Compensation Committee considers and sets the compensation of our CEO when no members of management are present. In addition, members of management are not present while their specific compensation is being discussed and determined. F. The Elements Making Up Compensation and Our Target Market Positioning Each executive officer’s compensation package comprises the following elements: (i) base salary that reflects individual performance, (ii) annual cash incentive awards tied to the Company’s achievement of specific performance objectives, (iii) long-term incentives in the form of equity awards designed to strengthen the mutuality of interests between the executive officers and the Company’s stockholders, (iv) in the case of our CEO, additional long-term equity incentives explicitly tied to certain Company performance-based criteria, (v) other benefits that are generally available to the Company’s employees, including a 401(k) (or other retirement plan) and medical, vision, and dental plans, and (vi) post- employment compensation. In general, we have attempted to establish a strong relationship between total cash compensation, the Company’s performance, and individual executive performance by typically targeting base salaries at approximately the 50th percentile range of the Market Composite Data and by providing additional incentive opportunities that typically position the target total cash compensation opportunity (base salary plus target annual cash incentive compensation) also within the 50th percentile range, with the potential to earn above the 50th percentile level for higher levels of performance while maintaining internal pay equity. We also provide additional long-term incentives in the form of equity awards so that an executive officer’s target total direct compensation opportunity is analyzed with a view toward setting compensation at or near the 50th percentile level (e.g., the size of an equity award is a function of the difference between the 50th percentile target total direct compensation and the 50th percentile of target total cash compensation). All of these percentile percentages are intended only as guidelines for evaluating and establishing each executive officer’s compensation and are not applied on a rigid or formulaic basis. Sometimes, depending on the totality of the circumstances for particular executive officers, compensation levels may fall within substantially different percentile ranges as compared to market data. The Compensation Committee exercises sole discretion over each executive officer’s total compensation package. Executive officers may also receive 401(k) retirement (or other retirement plan) and health and welfare benefits that are generally available to all employees of the Company. In addition, executive officers are also eligible to receive certain severance payments and benefits upon termination of their employment other than for cause, as further described in the sections of this proxy statement entitled, “Our Post-Employment Compensation” and “Potential Payments upon Termination or Change of Control.” 40 IV. Executive Compensation Review for Fiscal Year 2015 Each year, the Compensation Committee reviews our executive officers’ compensation at a regularly scheduled Compensation Committee meeting in September. For fiscal year 2015, while the September meeting occurred shortly after the Wolfson acquisition was complete, the Compensation Committee relied on data and related assessments Compensia performed before the acquisition. At the September meeting, the Compensation Committee also reviews the Company’s performance as compared to the Proxy Group. As part of the review, the Compensation Committee considers any changes to an executive officer’s base salary or target amounts for his or her annual cash incentive awards. The Compensation Committee further considers any annual equity awards for our executive officers. The timing of the annual executive compensation review and any proposed equity awards is aligned with the Company’s annual grant of equity awards to our key employees, which has historically occurred in October each year through fiscal year 2015, but which has since been moved to November. See the section of this proxy statement entitled, “Administrative and Timing Aspects of Our Equity Awards.” A. Executive Compensation Considerations Specific to Wolfson While Compensia presented base salary and target total cash compensation values for certain Wolfson executives relative to market data, its analysis, and the associated actions of the Compensation Committee, are distinguishable from those related to the Cirrus Named Executive Officers. Namely, action related to compensation for the Wolfson Named Executive Officers (and other Wolfson executives) was generally handled and approved as part of the overall Wolfson acquisition transaction, rather than the process discussed in other sections of this report, which generally involve Compensia’s detailed analysis that in turn helps inform the Compensation Committee’s determinations and decisions. To the extent possible, we therefore present compensation outcomes for fiscal year 2015 for the Wolfson Named Executives separately in this section. 1. Wolfson’s Base Salaries As part of the Wolfson acquisition transaction, the base salaries of the Wolfson Named Executive Officers were maintained at the same levels that were in place at Wolfson prior to the acquisition. 2. Wolfson’s Transition Bonus Plan In the third and fourth quarters of fiscal year 2015, executive officer Sahota (and other former Wolfson employees other than executive officer Brannan) participated in the Wolfson Transition Bonus Plan. During those same quarters, executive officer Brannan participated in the Company’s existing Incentive Plan, as discussed further below. The Wolfson Transition Bonus Plan was adopted to cover the two full quarters of fiscal year 2015 immediately following the acquisition of Wolfson: the period from September 28, 2014 to March 28, 2015. The Wolfson Transition Bonus Plan effectively replaced Wolfson’s then-existing annual bonus plan and was therefore largely derivative of the Wolfson plan. The Wolfson Transition Bonus Plan, like its predecessor, was designed to provide employees with incentives to improve company performance through the achievement of pre-established financial goals. The Wolfson Transition Bonus Plan’s calculations were based solely on Wolfson’s financial results for the third and fourth quarters of fiscal year 2015. Pursuant to the Wolfson Transition Bonus Plan, participants were eligible to earn quarterly cash bonus payments. Target bonus levels, relative to quarterly salary, generally ranged from 10–50% depending on former Wolfson pay grade. Executive officer Sahota had a target bonus level of 50%. The amount payable to an eligible participant for each quarter was calculated by multiplying together the following 41 three figures: (1) the employee’s target bonus level percentage, (2) his or her quarterly salary, and (3) an applicable Company Performance Weighting. The Company Performance Weighting was, in turn, calculated as: 15% of Wolfson’s quarterly operating profit (excluding Wolfson’s Transition Bonus Plan, other bonus accruals, and “Excluded Items” as defined in the section of this proxy entitled, “Annual Cash Incentive Awards: Our Incentive Plan”) divided by the sum of every participant’s quarterly salary multiplied by his or her respective bonus level percentage. No bonus is paid if the Company Performance Weighting is less than 6%, and the Company Performance Weighting shall not exceed 150%. In the third quarter of fiscal year 2015, the Company Performance Weighting was less than 6%, so no bonus was paid under the Wolfson Transition Bonus Plan. In the fourth quarter of fiscal year 2015, the Company Performance Weighting was 47%, and bonuses were paid to executive officer Sahota, and other former Wolfson employees excluding executive officer Brannan, according to such weighting and their individual bonus levels and quarterly salaries. Beginning in fiscal year 2016, the Wolfson Named Executive Officers and other former Wolfson employees will be eligible for participation in the existing bonus plans of the Company, including the Company’s Incentive Plan. The Wolfson Transition Bonus Plan will, at that time, cease. 3. Wolfson’s Acquisition Equity Grants In fiscal year 2015, and as part of the Wolfson acquisition, the Compensation Committee approved long- term equity awards under our Stock Plan to the Wolfson Named Executive Officers to effectively replace certain awards from a Wolfson share plan that was in place prior to the acquisition. As such, these grants were not compared against the Market Composite Data because of their incommensurable nature. Under a Wolfson Microelectronics 2006 Performance Share Plan (which was in place prior to the acquisition of Wolfson), certain awards would vest to Wolfson employees on a change in control. As part of the acquisition of Wolfson and in lieu of accelerating the vesting of these prior awards, holders of 2014 nil cost option awards under the Wolfson Microelectronics 2006 Performance Share Plan were provided with our RSUs under our Stock Plan. The provided RSUs were of equivalent value to the nil cost options, thereby effectively replacing awards under the previous Wolfson plan. RSUs awarded to the Wolfson Named Executive Officers vest in equal annual tranches over a three-year period. The RSUs will vest in full if employment is terminated by the Company but not if the holder resigns voluntarily or if his or her termination is for cause. B. Company Compensation Considerations, Not Specific to Wolfson 1. Base Salary Determinations The base salary for each executive officer is designed to be commensurate with the salary levels for comparable positions within the Survey Group and Proxy Group to reflect each individual’s personal performance during the year, to take into consideration the individual’s responsibilities within the Company, and to be consistent with our internal salary alignment. The relative weight given to each factor varies with each executive officer and is within the discretion of the Compensation Committee. In setting base salaries, the Compensation Committee reviews at least (i) the Market Composite Data; (ii) the recommendations of our CEO; and (iii) each executive officer’s individual performance for the year. The Company’s profitability and operational performance and the history of past salary adjustments may also be factors in determining the base salaries of our executive officers. The Compensation Committee uses a largely discretionary approach for determining any adjustment to an individual executive officer’s base salary and looks collectively at all of these factors. Ultimately, the decision to adjust an executive officer’s base salary is subjective and made in the sole discretion of the Compensation Committee. 42 In September 2014, the Compensation Committee maintained our CEO’s annual base salary at $625,000, which falls between the 25th and 50th percentiles of the applicable Market Composite Data. The Compensation Committee maintained our CFO’s annual base salary at $307,400, which falls below the 25th percentile of the applicable Market Composite Data. The Compensation Committee approved, and then maintained during fiscal year 2015, executive officer Smith’s initial annual base salary of $250,000, which falls below the 25th percentile of the applicable Market Composite Data. The Compensation Committee decided to maintain the base salaries of our CEO and CFO based on the Company’s performance in the previous 12 months, and particularly its performance around the time of its compensation review, its increase in base salaries in the previous year, and its assessment of the competitive market base salary for positions of similar scope and responsibility. 2. Annual Cash Incentive Awards: Our Incentive Plan In fiscal year 2015, the Cirrus Named Executive Officers (and other executive officers who were not formerly with Wolfson) participated in our existing Incentive Plan. Executive officer Brannan, formerly with Wolfson, also participated in the Company’s existing Incentive Plan, but only for the second half of fiscal year 2015 and based on the combined financial results of Wolfson and Cirrus Logic, Inc. for that period. The Incentive Plan was not changed from last year and remains designed to provide employees who are in management or leadership positions in the Company, or who are key individual contributors whose efforts potentially have a material impact on the Company’s performance, with incentives to improve the Company’s performance through the achievement of pre-established financial goals. With the exception of cash bonus amounts for executive officer Brannan, all bonus calculations under the existing Incentive Plan for fiscal year 2015 excluded the financial results of Wolfson. Mr. Brannan’s calculations included financial results of Wolfson because Mr. Brannan’s job responsibilities encompassed the combined activities of Wolfson and Cirrus Logic, Inc. The Compensation Committee accordingly believed it was appropriate to measure the financial performance of the combined entities when calculating his cash bonus award. Pursuant to the Incentive Plan, participants are eligible to earn semi-annual cash bonus payments. For fiscal year 2015, the Incentive Plan continued to set our CEO and CFO’s target bonus for each semi- annual performance period at 50% and 25%, respectively, of annual base salary. Mr. Smith’s target bonus for each semi-annual performance period was set at 25% of his annual base salary, and Mr. Brannan’s target bonus for the second semi-annual performance period of fiscal year 2015 was also set at 25% of annual base salary. Payments are determined based on the achievement of certain internal company performance target levels for operating profit margin and revenue growth, which are set by the Compensation Committee prior to the commencement of each semi-annual performance period. For purposes of the Incentive Plan, “Operating Profit Margin” is defined as the Company’s consolidated GAAP operating income excluding (a) Incentive Plan and other bonus accruals and (b) any non-recurring items such as gains on sales of assets not otherwise included in revenue, losses on sales of assets, restructuring charges, merger-related costs including amortization or impairments of acquisition-related intangible assets, deferred tax adjustments, stock compensation expense, asset write-offs, write-downs, and impairment charges, and such other items as the Compensation Committee may determine in its sole discretion (part (b) collectively termed as “Excluded Items”). These performance measures are designed to balance short- and long-term financial and strategic objectives for building stockholder value and are further based on a review of the operating results of other peer companies and competitors, including the performance of the Proxy Group. The Compensation Committee sets the target levels for these performance measures so that participants will 43 earn their target bonuses only if the Company’s Operating Profit Margin and revenue growth goals are achieved during the measurement period. As designed, the Operating Profit Margin and revenue growth goals were intended by the Compensation Committee to be based on the Company’s long-term strategic plan, not the Company’s annual operating plan. The Incentive Plan further provides that no payments may be made unless a specified Operating Profit Margin threshold level is met. As opposed to the target levels for the Incentive Plan, typically the Compensation Committee has set the threshold levels for payments based in part on a review of the Company’s annual operating plan along with current economic and market conditions. In determining the amount of a bonus payment for an individual participant, the Incentive Plan provides that the Compensation Committee will establish a formula for each measurement period for determining the pay-out percentage (the “Incentive Plan Pay-Out Percentage”) based on the actual performance of the Company relative to the target levels for each of the performance measures. The Incentive Plan further provides that payments may exceed the target payouts when the Company’s financial performance exceeds the achievement of those performance target levels. Payments under the Incentive Plan may not exceed 250% of a participant’s target bonus for any applicable performance period and are further subject to a cap of 12% of the Company’s non-GAAP operating profit on total payments under the Company’s variable compensation plans. The Compensation Committee first instituted a cap in fiscal year 2010 because it determined that the proposed targets and thresholds under the Incentive Plan created a risk that a large percentage of the Company’s operating profit for the period could be paid out as bonuses if the revenue growth of the Company continued to increase as anticipated. The Compensation Committee set the cap at 12% based on its desire to provide a reasonable payout for achieving the Company’s performance target levels while maintaining a reasonable cap on payments under all of the Company’s variable compensation plans. If a participant’s employment with the Company is terminated by reason of death or disability (as disability is defined within the Incentive Plan) during a semi-annual performance period, then that participant will still receive the same payment under the Incentive Plan that he or she would have received if he or she were still employed on the last day of the semi-annual performance period, but such amount will be prorated based on the number of calendar days that the participant was employed with the Company during such performance period. Payment under the Incentive Plan would no longer be received if a participant’s employment was terminated for a reason other than death or disability during a semi-annual performance period. If, in the event of a change of control of the Company, the Incentive Plan is not assumed or replaced with a comparable plan by the Company’s successor, each participant under the Incentive Plan will receive a pro rata cash payment of his or her target bonus, based upon the number of calendar days completed in the current semi-annual performance period prior to the occurrence of the change of control. For more information, please see the section of this Proxy Statement entitled, “Potential Payments Upon Termination or Change of Control.” For the first and second semi-annual performance periods in fiscal year 2015, the performance target levels for the two performance measures were set such that a participant would receive 100% of his or her target bonus if the Company achieved an operating profit margin, calculated as set forth in the Incentive Plan (the “Operating Profit Margin”) of 20% and annual revenue growth of 15% during the semi-annual performance period. Specifically, the formula for determining the Incentive Plan Pay-Out Percentage for each semi-annual performance period was set by the Compensation Committee and depends on (1) an operating profit payout percentage and (2) a revenue growth multiplier as follows: (1) The operating profit payout percentage was determined based on the Company’s Operating Profit Margin for the semi-annual performance period. If the Company failed to achieve a 44 threshold Operating Profit Margin of 10%, then no bonus payments would be made for the performance period. (2) At the threshold Operating Profit Margin of 10%, the operating profit payout percentage would be 25%. At the target Operating Profit Margin of 20%, the operating profit payout percentage would be 100%. For Operating Profit Margin performance between the threshold level of 10% and the target level of 20%, the operating profit percentage payout would be determined by using straight-line interpolation between the threshold and target levels. For example, if the Company achieved an Operating Profit Margin of 16%, the operating profit payout percentage would be calculated as 70% (25% + (3/5 x 75%)). (3) For performance above the target Operating Profit Margin of 20%, the operating profit payout percentage would increase linearly by 10% for each percentage point of Operating Profit Margin in excess of 20%. For example, if the Company achieved an Operating Profit Margin of 25%, the operating profit payout percentage would be calculated as 150% (100% + (5 x 10%)). In graphical form, the operating profit payout percentage can be summarized as follows: Operating Profit Payout Percentage 300% 250% 200% 150% 100% 50% 0% t u o y a P t i f o r P g n i t a r e p O 0% 5% 10% 25% Company Operating Profit Margin 15% 20% 30% 35% (4) Once the operating profit payout percentage was determined, the Incentive Plan Pay-out Percentage was calculated by multiplying the operating profit percentage by a revenue growth multiplier. (5) For fiscal year 2015, the revenue growth multiplier was set at 50% for revenue growth below 5% and 100% for target revenue growth of 15%. For revenue growth performance between 5% and 15%, the revenue growth multiplier would be determined using straight-line interpolation between these points. For example, if the Company achieved 10% revenue growth during the period, the revenue growth multiplier would be calculated as 75% (50% + (5/10 x 50%)). (6) For performance levels above the target revenue growth of 15%, the revenue growth multiplier would increase linearly by 5% for each percentage point of revenue growth in excess of 15%. 45 For example, if the Company achieved annual revenue growth of 20% in the relevant period, the revenue growth multiplier would be calculated as 125% (100% + (5% x 5)). In graphical form, the revenue growth multiplier can be summarized as follows: Revenue Growth Multiplier r e i l p i t l u M h t w o r G e u n e v e R 225% 200% 175% 150% 125% 100% 75% 50% 25% 0% 5% 10% 15% 20% 25% 30% 35% Revenue Growth Using the calculations above, one can determine the Company’s Incentive Plan Payout Percentage for a given semi-annual performance period: Incentive Plan Payout Percentage = Operating Profit Payout Percentage * Revenue Growth Multiplier Multiplying this figure by a particular individual’s target bonus level and his/her appropriate base salary amount yields the specific cash bonus payment amount for a given semi-annual performance period. As a result of the Company’s performance in the first half of fiscal year 2015, our executive officers subject to the Incentive Plan earned payments of 56% of each individual’s target bonus for the first semi-annual performance period. The Incentive Plan Payout Percentage for the first half of fiscal year 2015 for these individuals was calculated based on an Operating Profit Margin of 21% (9.4% on a GAAP basis) and revenue growth of 1%. Executive officer Smith’s earned payment for the first semi- annual payout period was prorated to take into account his hire date falling shortly after fiscal year 2015 had begun. As a result of the Company’s performance in the second half of fiscal year 2015, our executive officers subject to the Incentive Plan other than executive officer Brannan earned payments of 250% of each individual’s target bonus for the second semi-annual performance period. The Incentive Plan Payout Percentage for the second half of fiscal year 2015 for these individuals was calculated based on an Operating Profit Margin (excluding Wolfson financials) of 27% (13.5% on a GAAP basis) and revenue growth (excluding Wolfson financials) of 27%. As a result of the Company’s performance in the second half of fiscal year 2015, Mr. Brannan earned payments of 192% of his target bonus for the second semi-annual performance period. Mr. Brannan’s Incentive Plan Payout Percentage for the second half of fiscal year 2015 was calculated based on an Operating Profit Margin (including Wolfson financials) of 22% (14% on a GAAP basis) and revenue growth (including Wolfson financials) of 26%. 46 As compared to the Market Composite Data concerning target total cash compensation, the base salary plus cash incentives awarded during fiscal year 2015: (a) to our CEO would fall between the 50th and 75th percentile and (b) to our CFO and executive officer Smith would fall below the 25th percentile. A reconciliation of the Company’s GAAP operating profit margin to the Operating Profit Margin used in the Incentive Plan calculations is included as an annex to this proxy statement. 3. Long-Term Incentive Awards: Equity Grants We provide long-term incentive opportunities in the form of equity awards to motivate and reward our executive officers for their contributions to achieving our business objectives by tying incentives to the performance of our stock over the long term. Further, with respect to the Company’s CEO, we have added a performance-based equity component in addition to our existing RSU and stock option awards; in view of this expanded set of equity components, the Compensation Committee reviewed possible relative value weights that can be assigned to each component to achieve a suitable, overall CEO compensation package. The use of equity further reinforces the link between the interests of our executive officers and our stockholders. Generally, equity awards are made annually by the Compensation Committee to each of our executive officers under our Stock Plan. a. Our Use of Stock Options and RSUs Generally Prior to fiscal year 2010, we used stock options as our principal long-term incentive vehicle because of our belief that there was a near universal expectation by employees and executive officers in our industry that they would receive stock option grants. Options have provided an effective compensation opportunity for companies, like ours, focused on growth. Options are designed to align the interests of our executive officers and employees with those of our stockholders and provide each individual with a significant incentive to manage the Company from the perspective of an owner with an equity stake in the business. Each option award enables the recipient to purchase shares of common stock at a fixed price per share (the market price of common stock on the grant date) over a specified period of time (up to ten years). Each option typically becomes exercisable in a series of installments over a specified period – over four years, with one-year cliff vesting for 25% of the options on the first anniversary of the grant date and 1/36 of the remaining options vesting on a monthly basis over the following three years – contingent upon the recipient’s continued employment with the Company. Accordingly, the options provide a potential return to the employee or executive officer only if he or she remains employed by the Company during the vesting period, and then only if the market price of common stock appreciates over the option term. In September 2010, the Compensation Committee moved to a long-term incentive framework based on an award mix of stock options and RSUs based on the aggregate grant date fair value of the awards. This award mix remains consistent with the Company’s Proxy Group practices in which stock options are commonly used in combination with full value awards with time or performance-based vesting. The decision to use time-vested RSUs balances the benefits of stock options with the executive retention and stockholder dilution benefits that RSUs provide. In particular, the Compensation Committee believes that the use of time-vested RSUs with a three-year “cliff” vesting condition helps further our retention objectives by encouraging our executive officers to remain with the Company and fully execute our long-term strategies, which generally take a number of years to be fully implemented and reflected in our financial performance. And because RSUs are typically granted at a lower number of shares than an equivalent option grant, the dilutive impact of our long-term incentive awards as a whole is reduced by using a mix of these two types of equity vehicles. 47 b. Our Performance-Based Restricted Stock Unit Program In September 2014, the Compensation Committee approved the use of a performance-based equity component that we term Market Stock Units (“MSUs”) as part of the mix of pay for the Company’s CEO. For fiscal year 2015, the Compensation Committee recommended the following approximate value weighting to be followed with respect to the three equity vehicles available for long-term CEO equity incentives: one-third stock options, one-third time-based RSU awards, and one-third MSU awards. Despite this initial weighting, the Compensation Committee will continue to use a largely discretionary approach for determining future modifications or adjustments to these value weights based on the myriad of factors it considers when making compensation decisions. The MSU awards for fiscal year 2015 involved RSUs with a three-year cliff vesting condition, therefore defining a three-year performance period. The number of shares earned, relative to a target number of shares, will be based on a total shareholder return (“TSR”) measurement relative to the component companies of the Philadelphia Semiconductor Index (“Index”). Thus, the measurement entails determining our ranking among the companies that make up the components of the Index. The TSR determines a payout percentage ranging between 0–200%, which is then multiplied by a target number of MSUs. To determine the payout percentage, the Company’s TSR for the performance period is compared against the companies in the Index to yield a Percentile Measurement (for example, if our Company would rank in the 75th percentile of the performance of companies in the Index during the performance period, our Percentile Measurement would be 75%). The payout percentage is a function of the Percentile measurement as follows: If our Percentile Measurement is less than 25%, the payout percentage is zero; Š Š Threshold performance: if our Percentile Measurement is 25%, the payout percentage is 25%; Š Target performance: if our Percentile Measurement is 50%, the payout percentage is 100%; Š Maximum performance: if our Percentile Measurement is 75% or higher, the payout percentage is 200%; Š A straight line connects the threshold and target performance points, and the target and maximum performance points; and Š If the Company’s TSR is negative during the performance period, the maximum payout percentage is 100%. In graphical form, the MSU payout percentage can be summarized as follows: PSU Payout Percentage 250% 200% 150% 100% 50% 0% e g a t n e c r e P t u o y a P U S P 0% 25% 50% TSR 48 75% 100% The Compensation Committee first approved use of MSUs only for our CEO to allow for adequate evaluation of their use, including evaluation of related reporting and accounting systems. The Compensation Committee currently intends to investigate an expansion of the MSU program to all executive officers. c. Our Equity Grants and Comparisons to Market Composite Data As discussed above, the Compensation Committee’s long-term incentive compensation philosophy is typically to grant awards to our executive officers that position target total direct compensation approximately at the market 50th percentile, subject to other considerations. For example, the Compensation Committee also takes into account past increases or decreases in overall compensation and the number, and current unrealized value of, outstanding options held by each executive officer to maintain an appropriate level of equity-based incentive for that individual. The Compensation Committee further considers the Company’s current equity burn rate and dilution in setting the amount of equity available for grant to our executive officers. The size of the equity award to each executive officer is set by the Compensation Committee at a level that is intended to create a meaningful opportunity for stock price appreciation based upon the individual’s position with the Company, current performance, anticipated future contribution based on that performance, and ability to affect corporate and/or business unit results. The Compensation Committee uses a largely discretionary approach for determining the value of the equity awards awarded to an individual executive officer and looks collectively at all of these factors. Ultimately, the decision with respect to the size of these equity awards is subjective and made in the sole discretion of the Compensation Committee. For fiscal year 2015, based on Compensia’s analysis of competitive market practices and the other relevant factors summarized above, the Compensation Committee approved the grant of an approximate 50% mix of stock options and 50% RSUs (relative to valuation) to our executive officers, excluding the CEO and excluding executives formerly with Wolfson, in conjunction with the Company’s annual review of equity awards for all employees. Additionally, with respect to executive officer Smith, the Compensation Committee earlier approved separate equity grants of stock options and RSUs as part of his new-hire package, based on the Company’s internal review of Radford market data and internal comparison data. With respect to the CEO, the Compensation Committee approved the grant of stock options and RSUs as well as newly-implemented MSUs; the Compensation Committee weighted the relative value of each of these long term equity award categories generally as one-third RSUs, one-third stock options, and one-third MSUs. 49 The following charts show the components of our CEO’s fiscal year 2015 compensation, along with the performance-based percentage of that compensation: CEO Compensation FY2015 21% 17% 16% 19% 26% Base Salary Equity Awards - RSUs Cash Incentive Awards Equity Awards - Stock Options Equity Awards - MSUs CEO % of Performance-Based Compensation, FY2015 37% Non-Performance- Based Performance-Based 63% In the chart above, the following were counted towards performance-based compensation: cash incentive awards, stock option awards (which provide a potential return only if the market price of common stock appreciates over the option term), and MSUs. The new-hire equity awards to executive officer Mr. Smith were granted in May 2014, while the other equity awards to our Named Executive Officers (including additional equity grants to Mr. Smith) were granted in October 2014 on the Company’s Monthly Grant Date. Starting in fiscal year 2016, we expect to begin granting annual equity awards, if any, in November (see the section of this proxy statement entitled, “Administrative and Timing Aspects of Our Equity Awards”). 50 As compared to the Market Composite Data concerning target total direct compensation, the base salary plus cash incentives plus equity awarded during fiscal year 2015: (a) to our CEO and CFO would fall below the 25th percentile and (b) to executive officer Smith would fall between the 50th and 75th percentile, primarily due to his new-hire equity grants. The Compensation Committee determined that the size of its equity awards was warranted and appropriate in view of the totality of circumstances, including Company performance at or near the time of compensation analyses and in view of previous compensation adjustments. d. Administrative and Timing Aspects of Our Equity Awards The Compensation Committee has implemented a process whereby new employee equity awards and special stock awards are granted and priced on the first Wednesday of each calendar month (the “Monthly Grant Date”). The purpose of this process is to minimize the administrative burdens that would be created with multiple monthly grant dates and to ensure that all required approvals are obtained on or before the Monthly Grant Date. If the Monthly Grant Date occurs on a Company holiday, or on other days that the Company or Nasdaq is closed for business, the Monthly Grant Date will be the next regularly scheduled business day. The Compensation Committee does not have any program, plan, or practice to time option grants or other stock awards to our executive officers in coordination with the release of material non-public information. We have historically granted annual equity grants to employees and executive officers in October each year (including in fiscal year 2015). Starting in fiscal year 2016, such annual grants will take place in November. The Compensation Committee decided to move our annual grant date from October to November so that future vesting of RSU grants will likely take place during a period after the Company has reported its financial earnings. C. Our Perquisites and Other Benefits All of our employees, including our executive officers, are eligible to participate in the Company’s standard welfare and health benefit programs. The Cirrus Logic, Inc. 401(k) Plan is a tax-qualified profit sharing and Section 401(k) plan. Under the plan, as of the fourth quarter of fiscal year 2015, we match 50% of up to the first 8% of a U.S. employee’s pre-tax deferrals, subject to the IRS compensation limits. Our CEO and other executive officers participate in our welfare and health benefit programs to the same extent as all other salaried employees based in the United States or United Kingdom as applicable. Although perquisites are not a material part of our compensation programs for executive officers and are generally not provided, we do reimburse up to $500 for an annual physical examination for each of our executive officers to the extent the physical examination is not covered under our standard health care plans. The Wolfson Named Executive Officers, and certain other Wolfson executives, were provided with some perquisites prior to the acquisition that are not included in our compensation programs. Namely, the Wolfson Named Executive Officers received a car allowance, family private medical insurance, and pension scheme matching contributions. These programs were continued in their existing states for certain former Wolfson executives including the Wolfson Named Executive Officers during the third and fourth quarters of fiscal year 2015. Those programs (except reimbursement for an annual medical exam, which our Company also provides), however, were discontinued starting in fiscal year 2016. At that time, Wolfson executives including the Wolfson Named Executive Officers transitioned to our perquisite programs discussed above. 51 V. Our Post-Employment Compensation We do not maintain separate individual severance or change of control agreements with our Named Executive Officers; however, on July 26, 2007, after a review of other companies’ practices with respect to management severance plans, the Compensation Committee approved and adopted an Executive Severance and Change of Control Plan (the “2007 Severance Plan”). The 2007 Severance Plan provides certain payments and other benefits to eligible executive officers (“Eligible Executives”), including each of our Named Executive Officers, whose employment is involuntarily terminated by the Company (other than for cause) or whose employment terminates following a change of control of the Company. The 2007 Severance Plan became effective on October 1, 2007. The 2007 Severance Plan provides that, in the event of an Eligible Executive’s termination of employment by the Company without cause, he or she is eligible to receive: (i) a continuation of base salary for a period of up to six months (up to 12 months for our CEO) following termination, and (ii) payment in full of a reasonable estimate of COBRA premiums for three months of continued health care coverage. The 2007 Severance Plan further provides that, if an Eligible Executive’s employment is terminated within 12 months following a change in control of the Company, either by the Company without cause or by the Eligible Executive for good reason, the Eligible Executive is eligible to receive (in lieu of the payments and benefits described above): (i) a lump sum payment equal to 12 months’ base salary (or 24 months’ base salary in the case of the CEO), (ii) acceleration in full of any unvested stock options or any other securities or similar incentive awards that have been granted or issued to the Eligible Executive as of the employment termination date, and (iii) payment in full of a reasonable estimate of COBRA premiums for 12 months. In addition, the Eligible Executive will have six months from the employment termination date to exercise any vested options. The 2007 Severance Plan may not be amended or terminated without the consent of any Eligible Executive during the one year prior to or following the occurrence of a change in control of the Company, if such amendment would be adverse to the interest of such Eligible Executive. In order to receive severance payments and benefits under the 2007 Severance Plan, an Eligible Executive must execute a general release of all claims against the Company. Additional details and specific terms of the Severance Plan are set forth in the section of this proxy statement entitled “Potential Payments upon Termination or Change of Control.” We maintain the 2007 Severance Plan because we believe it is consistent with the practices of peer companies and helps ensure that we are able to attract and retain top talent. Further, we believe that our plan provides a level of stability to Eligible Executives during volatile business conditions that have historically existed in our industry so that they remain focused on their responsibilities and the long- term interests of the Company during such times. The 2007 Severance Plan provides for “double- trigger” rather than “single-trigger” payment and benefits in the event of a change of control of the Company. In other words, payments to an Eligible Executives are contingent upon an involuntarily termination of employment following a change of control. This plan design is intended to provide a level of security to Eligible Executives negotiating a transaction to avoid any misalignment with the interests of our stockholders without resulting in a windfall to Eligible Executives who remain employed following such a transaction. VI. Our Prohibition Against Short Selling and Hedging The Company prohibits directors, officers, and employees from investing in derivative securities based on or related to the Company’s common stock, engaging in any short sale or hedging transactions involving the Company’s common stock, and pledging any shares of the Company’s common stock as collateral for any margin account or any other similar account or debt instrument where a sale of the 52 Company’s stock could occur. Our policy does not restrict the ownership of Company-granted equity awards, such as stock options, restricted stock, RSUs, or other equity awards issued by the Company. VII. Tax Considerations Related to Compensation Section 162(m) of the Internal Revenue Code (“IRC”) disallows a tax deduction to publicly-held companies for compensation paid to our CEO and any of the three most highly compensated officers (other than the CEO and our principal financial officer) to the extent that compensation exceeds $1,000,000 per covered officer in any fiscal year. The limitation applies only to compensation that is not considered to be “performance-based compensation.” Under the Treasury Regulations corresponding to Section 162(m), compensation received through the exercise of a stock option will not be subject to the $1,000,000 limit if it qualifies as “performance-based compensation” within the meaning of Section 162(m). It is the Compensation Committee’s objective, so long as it is reasonable and consistent with the Company’s overall business, compensation, and retention objectives, to endeavor to design executive officer compensation programs that keep executive compensation deductible for federal income tax purposes. However, the Compensation Committee maintains its discretion to approve compensation to covered officers that is not deductible for purposes of Section 162(m). At the 2013 annual meeting of stockholders, the stockholders approved an amended 2007 Management and Key Individual Contributor Incentive Plan that allowed qualified future payments under that plan to become eligible for deduction under Section 162(m). At the 2014 annual meeting of stockholders, the stockholders approved the 2006 Stock Incentive Plan, as amended and restated, so that qualified payments under this plan (e.g., stock options and full value awards with performance-based vesting) are also eligible for deduction under Section 162(m). In fiscal year 2015, the Company had a tax deduction disallowance under Section 162(m) of approximately $399,196 related to the compensation received by our CEO. This disallowance was the result of his salary in combination with the vesting of RSUs that were not “performance based” for purposes of Section 162(m). Section 280G of the IRC disallows the deduction of any “excess parachute payment” paid in connection with certain events. A portion of amounts payable under the 2007 Severance Plan may constitute “excess parachute payments” to our executive officers. Accordingly, the 2007 Severance Plan provides for a modified Section 280G “cut back” pursuant to which payments and benefits under the 2007 Severance Plan will be reduced in the event such reduction produces a greater after-tax benefit to an executive officer. See the section of this proxy statement entitled, “Potential Payments Upon Termination or Change of Control.” VIII. Compensation Committee Interlocks and Insider Participation The Compensation Committee currently consists of Timothy R. Dehne (Chair), John C. Carter, and Christine King. None of our executive officers has ever served as a member of the board of directors or the compensation committee of another entity that has or has had, at the time of his or her service or during the same fiscal year, one or more executive officers serving as a member of the Board or the Compensation Committee. The members of the Compensation Committee are considered independent under the Board and the Compensation Committee independence standards as set forth in the Corporate Governance Guidelines, which are posted at the following link: http://investor.cirrus.com/corporate-governance/corporate-governance-guidelines/ 53 COMPENSATION COMMITTEE REPORT We, the Compensation Committee of the Board of Directors, have reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) required by Item 402(b) of Regulation S-K with management of the Company. Based on such review and discussion, we have recommended to the Board of Directors that the CD&A be included as part of this proxy statement. Submitted by the Compensation Committee of the Board of Directors: Timothy R. Dehne, Chairman John C. Carter Christine King 54 CONSIDERATION OF RISK RELATED TO COMPENSATION PROGRAMS The Compensation Committee structures our executive compensation program to provide incentives to appropriately reward our executive officers without undue risk taking. Our approach is similar for the compensation practices and polices applicable to all employees throughout the Company. Overall, we believe that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company. In general, we attempt to align our compensation programs with the long-term interests of the Company and its stockholders and mitigate the likelihood of inducing excessive risk-taking behavior. More specifically, we believe the following program features and policies help to mitigate the likelihood of inducing excessive risk-taking behavior: Š The Company pays a mix of fixed and variable compensation, with variable compensation tied both to short-term objectives and the long-term value of our stock price. Š Our annual cash incentive program is based on a mix of bottom-line objectives (i.e., operating profit goals) and top-line objectives (e.g., revenue growth) in order to avoid the risk of excessive focus on one goal or performance measure. Š To prevent the risk that our annual cash incentive program pays bonuses despite weak short- term performance, no payout may occur without a threshold level of operating profit performance being met. Š The aggregate payout under our annual cash incentive program for our executive and leadership team is capped at a percentage of overall operating profit to prevent the risk of excessive payout of the Company’s operating profit. Š The individual payout under our annual cash incentive program for our executive and leadership team is further capped so that no participant may receive a payout of greater than 250% of his or her target payout. Š Long-term incentives are awarded to our executive officers in the form of equity awards that vest over a significant period of time, typically three or four years. The vesting period is intended to align the interests of our executive officers with the long-term interests of stockholders and to provide an incentive for our executive officers to remain with the Company. Š Long-term incentives are typically granted annually so our executive officers will have unvested awards that may decrease in value if our business is not managed with long-term goals in mind. Š We use a mix of stock options and RSUs (and, in the case of our CEO, MSUs) to create an overall long-term incentive package that aligns with stockholder interests, appropriately balances risk and performance, and provides competitive incentives for the purpose of executive retention. Š We use performance-based equity based on the Company’s total shareholder return (“TSR”) as a means to align a portion of our CEO’s compensation with the interests of our shareholders. In addition, we cap the payout of these awards at a 100% payout if the Company’s TSR is negative over the performance period (typically, three years). Š The Compensation Committee retains an independent compensation consultant and uses market data, when available, to inform our focus on pay for performance. 55 EXECUTIVE COMPENSATION TABLES Fiscal Year 2015 Summary Compensation Table The following table provides certain summary information concerning the compensation awarded to, earned by, or paid to our Named Executive Officers. The table sets forth compensation for services rendered by our Named Executive Officers for the fiscal years ended March 28, 2015; March 29, 2014; and March 30, 2013 as applicable. A note on foreign currency: For the Wolfson Named Executive Officers, cash compensation (e.g., salary and incentive plan compensation) is paid in the currency of the United Kingdom – the pound sterling. For purposes of the disclosures and tables in this proxy statement, we have converted pound sterling payment amounts to U.S. dollars by applying the following methodology. We first calculated eight average monthly exchange rates corresponding to the months August 2014 (the month in which the acquisition of Wolfson was completed) through March 2015 (the month ending fiscal year 2015). We then averaged those eight monthly exchange rates to arrive at an overall average exchange rate of 1.5766 U.S. dollars per pound. We used this overall average for conversions. Name and Principal Position Year Salary Stock Awards(1) Option Awards(1) (b) 2015 2014 2013 2015 2014 2013 ($) (c) $625,000 575,000 500,000 $307,400 298,700 280,057 ($) (e) $1,482,950 700,200 1,169,700 $ 254,625 233,400 389,900 ($) (f) $ 594,076 1,155,587 2,162,115 $ 165,023 210,108 393,113 Non-Equity Incentive Plan Compensation(2) ($) (g) $ 955,625 819,112 1,150,176 $ 235,007 219,466 327,029 All Other Compensation ($) (i) $10,070 9,420 9,003 $12,160 11,967 8,502 (3) (4) (5) (6) (7) (8) 2015 $207,614 (12) $1,561,521 (13) $ — $ 154,480 $23,716 (9)(12) 2015 $240,385 $ 497,700 (14) $ 557,053 (15) $ 188,059 $11,558 (10) Total ($) (j) $3,667,721 3,259,319 4,990,994 $ 974,215 973,641 1,398,600 $1,947,331 — — $1,494,755 — — 2015 $166,342 (12) $1,251,100 (13) $ — $ 15,691 $16,854 (11)(12) $1,449,987 (a) Jason P. Rhode, President and Chief Executive Officer Thurman K. Case, Chief Financial Officer, Vice President of Finance Andrew Brannan, Vice President, Worldwide Sales Eric C. Smith, VP of AMP Division Rashpal Sahota, VP & Audio GM, Cirrus Logic Int’l (1) The amounts reported in the column entitled “Stock Awards” represent the RSUs granted to the Named Executive Officers and also, in the case of our CEO, the MSUs granted. The amounts reported in the column entitled “Option Awards” represent the stock options granted to the Named Executive Officers. In each case, the value reported is the aggregate grant date fair value calculated pursuant to FASB ASC Topic 718, excluding any assumptions regarding potential forfeitures. The assumptions underlying the calculation under FASB ASC Topic 718 are discussed under Note 12, Equity Compensation, in our Annual Report on Form 10-K for the fiscal year ended March 28, 2015. (2) This column, entitled “Non-Equity Incentive Plan Compensation,” represents the amounts earned for fiscal year 2015 under the Incentive Plan or, in the case of executive officer Sahota, the Wolfson Transition Bonus Plan, each of which is described in further detail in the “Compensation Discussion and Analysis” section of this proxy statement. Payments earned in the second semi-annual period of fiscal year 2015 are included in this table for fiscal year 2015 but were paid in fiscal year 2016. (3) This amount includes $8,750 in matched contributions under our 401(k) plan, $749 associated with the value of insurance premiums paid with respect to life insurance for the benefit of Dr. Rhode, and $571 in tax gross-ups paid to all employees of the Company with respect to the Company’s long-term disability plan. (4) This amount includes $8,188 in matched contributions under our 401(k) plan, $660 associated with the value of insurance premiums paid with respect to life insurance for the benefit of Dr. Rhode, and $572 in tax gross-ups paid to all employees of the Company with respect to the Company’s long-term disability plan. 56 (5) This amount includes $7,771 in matched contributions under our 401(k) plan, $660 associated with the value of insurance premiums paid with respect to life insurance for the benefit of Dr. Rhode, and $572 in tax gross-ups paid to all employees of the Company with respect to the Company’s long-term disability plan. (6) This amount includes $8,750 in matched contributions under our 401(k) plan, $2,838 associated with the value of insurance premiums paid with respect to life insurance for the benefit of Mr. Case, and $572 in tax gross-ups paid to all employees of the Company with respect to the Company’s long-term disability plan. (7) This amount includes $8,618 in matched contributions under our 401(k) plan, $2,787 associated with the value of insurance premiums paid with respect to life insurance for the benefit of Mr. Case, and $562 in tax gross-ups paid to all employees of the Company with respect to the Company’s long-term disability plan. (8) This amount includes $5,336 in matched contributions under our 401(k) plan, $2,632 associated with the value of insurance premiums paid with respect to life insurance for the benefit of Mr. Case, and $534 in tax gross-ups paid to all employees of the Company with respect to the Company’s long term disability plan. (9) This amount includes $9,500 in car allowance, $493 in private medical insurance, $12,059 in matched contributions under our (formerly Wolfson’s) defined contribution pension scheme in the United Kingdom, and $1,664 in additional Company contribution (made in return for his individual salary sacrifice) toward that defined contribution pension scheme. (10) This amount includes $9,615 in matched contributions under our 401(k) plan, $1,485 associated with the value of insurance premiums paid with respect to life insurance for the benefit of Mr. Smith, and $458 in tax gross-ups paid to all employees of the Company with respect to the Company’s long term disability plan. (11) This amount includes $4,750 in car allowance, $664 in private medical insurance, $9,662 in matched contributions under our (formerly Wolfson’s) defined contribution pension scheme in the United Kingdom, and $1,778 in additional Company contribution (made in return for his individual salary sacrifice) toward that defined contribution pension scheme. (12) These amounts were converted from pound sterling to U.S. dollars. See “A note on foreign currency” above for details concerning the conversion. (13) The RSUs granted to executive officers Brannan and Sahota were granted as part of the acquisition of Wolfson. (14) Certain RSUs granted to executive officer Smith were associated with Mr. Smith’s new-hire package. (15) Certain stock options granted to executive officer Smith were associated with Mr. Smith’s new-hire package. Fiscal Year 2015 Grants of Plan-Based Awards The following table sets forth certain information with respect to grants of plan-based awards for the fiscal year ended March 28, 2015, to our Named Executive Officers. All of the stock options, RSUs, and MSUs (with respect to our CEO) that are reflected in the table were granted under our 2006 Stock Incentive Plan. Each stock option has a maximum term of ten years, subject to earlier termination if the optionee’s services are terminated. Unless noted, the exercisability of options vests with respect to 25% of the shares underlying the option one year after the date of grant and with respect to the remaining shares underlying the option thereafter in 36 equal monthly installments. The exercise price of each stock option is equal to the closing price of common stock as reported on Nasdaq on the date of grant. RSUs granted to the Wolfson Named Executive Officers and the new-hire RSU grant to executive officer Smith vest in equal annual tranches over a three-year period. All other RSUs granted to the Cirrus Named Executive Officers will vest with respect to 100% of the shares underlying the award on the third anniversary of the grant date. Holders of RSUs are not eligible to receive any dividends or dividend equivalents with respect to outstanding RSUs. Special accelerated vesting provisions applicable to the equity awards upon a Named Executive Officer’s termination of employment or upon a change of control of the Company are described in the section of this proxy statement entitled, “Potential Payments Upon Termination or Change of Control.” 57 The amounts reported in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column below set forth potential payouts under the Company’s Incentive Plan, which is described further in the “Compensation Discussion and Analysis” section of this proxy statement. The amounts reported in the “Estimated Future Payouts Under Equity Incentive Plan Awards” column below set forth potential payouts, with respect to our CEO, that are associated with MSUs. The MSUs granted to our CEO will vest as to the number of shares earned on the third anniversary of the grant date. The number of MSUs that vest, if any, is based on Company performance during this three-year period and is determined relative to the target number of shares as described further in the “Compensation Discussion and Analysis” section of this proxy statement. Holders of MSUs are not eligible to receive any dividends or dividend equivalents with respect to outstanding MSUs. Special accelerated vesting provisions applicable to the equity awards upon the CEO’s termination of employment or upon a change of control of the Company are described in the section of this proxy statement entitled, “Potential Payments Upon Termination or Change of Control.” Name Grant Date(1) Approval Date(1) Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) Estimated Future Payouts Under Equity Incentive Plan Awards(3) (a) Jason P. Rhode, President and Chief Executive Officer (b) 10/1/14 9/15/14 10/1/14 9/15/14 10/1/14 9/15/14 Thurman K. Case, Chief Financial Officer, Vice President of Finance 10/1/14 9/15/14 10/1/14 9/15/14 Andrew Brannan, Vice President, Worldwide Sales Eric C. Smith, VP of AMP Division Rashpal Sahota, VP & Audio GM, Cirrus Logic Int’l 8/22/14 8/20/14 5/7/14 3/25/14 10/1/14 9/15/14 5/7/14 3/25/14 10/1/14 9/15/14 8/22/14 8/20/14 Threshold ($) (c) Target ($) (d) Maximum ($) (e) Threshold (#) (f) Target (#) (g) Maximum (#) (h) 8,750 35,000 70,000 $156,250 $625,000 $1,562,500 $ 38,425 $153,700 $ 384,250 $ 43,069 (5) $172,275 (5) $ 430,689 (5) $ 31,250 $125,000 $ 312,500 $ 34,507 (5) $138,028 (5) $ 345,071 (5) All Other Stock Awards: Number of Shares of Stock or Units All Other Option Awards: Number of Securities Underlying Option Exercise or Base Price of Option Awards ($/Sh) (#) (i) 35,000 12,500 (#) (j) (k) 90,000 $20.37 25,000 $20.37 64,499 (6) — (7) 17,500 5,000 60,000 (8) 10,000 $22.62 $20.37 51,677 (6) — Grant Date Fair Value of Stock and Option Awards(4) (l) $ 712,950 $ 770,000 $ 594,076 $ 254,625 $ 165,023 $1,561,521 $ 395,850 $ 101,850 $ 491,045 66,008 $ $1,251,100 (1) The Company’s policy is to grant equity awards on the first Wednesday of the month (the “Monthly Grant Date”) after the Compensation Committee approves the award. If the Monthly Grant Date occurs on a Company holiday, or on other days that the Company or Nasdaq is closed for business, the Monthly Grant Date is the next regularly scheduled business day when the Company and Nasdaq are open for business. (2) The amounts reported in this column reflect potential payment amounts under the Incentive Plan. Actual amounts paid under this plan and the Wolfson Transition Bonus Plan (with respect to executive officer Sahota) for the 2015 fiscal year are reported in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above. Payments may be made under the Incentive Plan only if certain financial prerequisites, such as operating profit margin thresholds, are achieved, as described further in the “Compensation Discussion and Analysis” section of this proxy statement. The threshold amounts reported in this column reflect the minimum amount payable assuming achievement of the applicable financial- result thresholds. The target amounts reported above reflect the target amount awarded to each Named Executive Officer. The maximum amounts represent 250% of the target amount for each Named Executive Officer. (3) The amounts reported in this column are with respect to our CEO and reflect potential payment amounts for MSUs under the Company’s Performance-Based Restricted Stock Unit Program granted in fiscal year 2015. The number of MSUs that will vest, if any, is based on Company performance during a three-year performance period and is determined as further described in the “Compensation Discussion and Analysis” section of this proxy statement. (4) Amounts in this column represent the aggregate grant date fair value of the equity awards computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions underlying the calculation under 58 FASB ASC Topic 718 are discussed under Note 12, Equity Compensation, in the Company’s Form 10-K for the fiscal year ended March 28, 2015. (5) These amounts were converted from pound sterling to U.S. dollars. See “A note on foreign currency” above for details concerning the conversion. (6) The RSUs granted to executive officers Brannan and Sahota were granted as part of the acquisition of Wolfson and vest in equal tranches over a three-year period. (7) RSUs granted to executive officer Smith on May 7, 2014 were associated with Mr. Smith’s new-hire package and vest in equal annual tranches over a three year period. (8) Stock options granted to executive officer Smith on May 7, 2014 were associated with Mr. Smith’s new-hire package. 59 Fiscal Year 2015 Outstanding Equity Awards at Fiscal Year-End Table The following table provides information concerning the outstanding equity award holdings of our Named Executive Officers as of March 28, 2015. Option Awards Number of Securities Underlying Unexercised Options Exercisable (#) Number of Securities Underlying Unexercised Options Unexercisable(1) (#) Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (b) 30,000 34,844 290,156 7,048 18,018 236,982 6,153 128,847 115,312 66,458 1,071 37,887 25,000 10,000 7,000 6,381 18,619 21,354 12,083 1,728 5,355 (c) (d) 19,688 43,542 11,781 59,261 4,909 85,091 — — — — 3,646 7,917 11,664 1,253 5,043 19,957 17,680 42,320 10,000 60 Option Exercise Price ($) Option Expiration Date(2) (e) $ 8.06 $ 7.87 $ 7.87 $ 5.25 $ 5.55 $ 5.55 $16.25 $16.25 $15.41 $38.99 (f) 3/1/16 6/6/17 6/6/17 10/1/18 10/7/19 10/7/19 10/6/20 10/6/20 10/5/21 10/3/22 $23.34 $23.34 $20.37 $20.37 10/02/2013 10/02/2013 10/01/2014 10/01/2014 $ 5.25 $ 5.55 $ 5.55 $16.25 $16.25 $15.41 $38.99 10/01/2008 10/07/2009 10/07/2009 10/06/2010 10/06/2010 10/05/2011 10/03/2012 $23.34 $23.34 $20.37 $20.37 10/02/2013 10/02/2013 10/01/2014 10/01/2014 $22.62 $22.62 $20.37 5/7/24 5/7/24 10/1/24 Name (a) Jason P. Rhode, President and Chief Executive Officer Thurman K. Case, Chief Financial Officer, Vice President of Finance Andrew Brannan, Vice President, Worldwide Sales Eric C. Smith, VP of AMP Division Rashpal Sahota, VP & Audio GM, Cirrus Logic lnt’1 Number of Shares or Units of Stock That Have Not Vested(3) (#) Stock Awards Market Value of Shares or Units of Stock That Have Not Vested(4) ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5) (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(6) ($) (g) (h) (i) (j) 30,000 30,000 $ 998,700 $ 998,700 35,000 $1,165,150 35,000 $1,165,150 10,000 10,000 $ 332,900 $ 332,900 12,500 64,499 $ 416,125 $2,147,172 17,500 $ 582,575 5,000 51,677 $ 166,450 $1,720,327 (1) Unless otherwise noted within this table, all stock options vest over four years, with one-year cliff vesting for 25% of the options on the first anniversary of the grant date, and 1/36 of the remaining options vesting on a monthly basis over the following three years. (2) Options have a maximum 10-year term. Therefore, the grant date is 10 years prior to the Option Expiration Date listed in this column. (3) RSUs granted to the Wolfson Named Executive Officers and the new-hire RSU grant to executive officer Smith (17,500 shares) will vest in equal annual tranches over a three year period. Other RSUs granted to the Cirrus Named Executive Officers will vest with respect to 100% of the shares underlying the award on the third anniversary of the grant date. (4) The market value of unvested RSUs reported in column (h) is calculated by multiplying the number of shares of common stock subject to each award reported in column (g) by the closing market price of common stock on March 27, 2015 (the last trading day of fiscal year 2015), which was $33.29. (5) This column represents the target number of MSUs granted to our CEO in fiscal year 2015. The number of shares that vest, if any, will be based on Company performance and relative to the target number of shares as further described in the “Compensation Discussion and Analysis” section of this proxy statement. Such vesting will occur on the third anniversary of the grant date. (6) The market value of unvested MSUs reported in this column is calculated by multiplying the target number of shares subject to each award reported in column (i) by the closing market price of common stock on March 27, 2015 (the last trading day of fiscal year 2015), which was $33.29. Fiscal Year 2015 Options Exercised and Stock Vested Table The following table provides information on the value realized by each Named Executive Officer as a result of options that were exercised and stock awards that vested during the Company’s 2015 fiscal year. Name (a) Jason P. Rhode, President and Chief Executive Officer Thurman K. Case, Chief Financial Officer, Vice President of Finance Andrew Brannan, Vice President, Worldwide Sales Eric C. Smith, VP of AMP Division Rashpal Sahota, VP & Audio GM, Cirrus Logic Int’l Option Awards Stock Awards Number of Shares Acquired on Exercise (#) (b) Value Realized on Exercise(l) ($) (c) Number of Shares Acquired on Vesting (#) (d) Value Realized on Vesting(2) ($) (e) 12,000 $ 208,200 37,500 $ 772,875 107,615 $ 2,531,685 12,500 $ 257,625 — — — $ $ $ — — — — — — $ $ $ — — — (1) The value realized on the exercise of stock options was computed by determining the difference between the market price of common stock underlying each option on the date of exercise and the exercise price of the options for each share exercised. (2) The value realized on the vesting of stock awards was computed by multiplying the number of shares acquired on vesting (column d) by the market price of common stock on the date of vesting. 61 Pension Benefits and Nonqualified Deferred Compensation The Company does not sponsor or maintain either a defined benefit pension plan or a nonqualified deferred compensation plan for the benefit of our executive officers. Potential Payments upon Termination or Change of Control. The Company does not maintain individual employment, severance, or change of control agreements with our Named Executive Officers; however, the Company does maintain the 2007 Severance Plan, which provides for certain payments and benefits to individuals employed by the Company and its subsidiaries at the level of Chief Executive Officer and Vice President or above and reporting directly to the Chief Executive Officer (“Eligible Executives”) in the event that the employment of such an executive officer is involuntarily terminated other than for cause or in certain circumstances following a change of control of the Company. The 2007 Severance Plan became effective on October 1, 2007. Each of our Named Executive Officers is considered an Eligible Executive under the 2007 Severance Plan. The Company maintains the 2007 Severance Plan because we believe it helps to ensure that we are able to attract and retain top talent. Further, we believe that our the 2007 Severance Plan provides a level of stability for our executives during volatile business conditions that have historically existed so that they remain focused on their responsibilities and the long-term interests of the Company during such times. The 2007 Severance Plan provides that, in the event of an Eligible Executive’s involuntary termination of employment by the Company other than for “cause,” he or she will be eligible to receive: (i) a continuation of base salary for a period of up to six months (up to 12 months in the case of our CEO) following termination of employment, and (ii) payment in full of a reasonable estimate of COBRA premiums for three months (collectively, the “Termination Payment”). The 2007 Severance Plan further provides that, if an Eligible Executive’s employment is terminated either by the Company without “cause” or by the Eligible Executive for “good reason” within 12 months following a “change of control” (as each such term is defined below for purposes of the 2007 Severance Plan) of the Company, he or she will 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 (but in the case of our CEO, 24 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 or her as of the employment termination date, and (iii) payment in full of a reasonable estimate of COBRA premiums for 12 months. In addition, the Eligible Executive will have until six months from the employment termination date to exercise any vested options, except that no option will be exercisable after the option’s original expiration date. In the event of an Eligible Executive’s death or “disability” (as such term is defined below for purposes of the 2007 Severance Plan), the Eligible Executive or his or her estate, as applicable, will receive the Termination Payment described above. If the death or disability has occurred within 12 months following a change of control of the Company, he or she or his or her estate, as applicable, will receive the Change of Control Termination Payment described above. For purposes of the 2007 Severance Plan: Š “cause” means (i) gross negligence or willful misconduct in the performance of an executive officer’s duties; (ii) a material and willful violation of any federal or state law that if made public would injure the business or reputation of the Company; (iii) a refusal or willful failure to comply with any specific lawful direction or order of the Company or the material policies and procedures of the Company including but not limited to the Company’s Code of Conduct 62 Š Š Š and the Company’s Insider Trading Policy as well as any obligations concerning proprietary rights and confidential information of the Company; (iv) a conviction (including a plea of nolo contendere ) of a felony, or of a misdemeanor that would have a material adverse effect on the Company’s goodwill if the executive officer were to continue to be retained as an employee of the Company; or (v) a substantial and continuing willful refusal to perform duties ordinarily performed by an employee in the same position and having similar duties as the executive officer. “good reason” means: (i) without the executive officer’s express written consent, a material reduction of the executive officer’s duties, authority, or responsibilities relative to the executive’s duties, authority, or responsibilities as in effect immediately prior to such reduction; (ii) a material reduction by the Company in the base salary of an executive officer as in effect immediately prior to such reduction; or (iii) the relocation of an executive officer’s principal work location to a facility or a location more than 50 miles from executive officer’s then present principal work location. “Good reason” shall not exist unless the executive officer provides written notice of the circumstances alleged to give rise to good reason within 30 days of their occurrence and the Company (or our successor) fails to cure such circumstances within 30 days. “disability” means a mental or physical disability, illness or injury, evidenced by medical reports from a duly qualified medical practitioner, which renders an Eligible Executive unable to perform any one or more of the essential duties of his or her position after the provision of reasonable accommodation, if applicable, for a period of greater than ninety (90) days within a one year period. “change of control” means the occurrence of one or more of the following with respect to the Company: (i) the acquisition by any person (or related group of persons), whether by tender or exchange offer made directly to the Company’s stockholders, open market purchases or any other transaction or series of transactions, of stock of the Company that, together with stock of the Company held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the then outstanding stock of the Company entitled to vote generally in the election of the members of the Company’s Board of Directors; (ii) a merger or consolidation in which the Company is not the surviving entity, except for a transaction in which both (A) securities representing more than 50% of the total combined voting power of the surviving entity are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934), directly or indirectly, immediately after such merger or consolidation by persons who beneficially owned common stock of the Company immediately prior to such merger or consolidation, and (B) the members of the Board of Directors immediately prior to the transaction (the “Existing Board”) constitute a majority of the Board of Directors immediately after such merger or consolidation; (iii) any reverse merger in which the Company is the surviving entity but in which either (A) persons who beneficially owned, directly or indirectly, common stock of the Company immediately prior to such reverse merger do not retain immediately after such reverse merger direct or indirect beneficial ownership of securities representing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities or (B) the members of the existing Board do not constitute a majority of the Board of Directors immediately after such reverse merger; or (iv) the sale, transfer or other disposition of all or substantially all of the assets of the Company (other than a sale, transfer or other disposition to one or more subsidiaries of the Company). 63 The 2007 Severance Plan may not be amended or terminated without the consent of any Eligible Executive during the one year prior to or following the occurrence of a change in control, if such amendment would be adverse to the interest of such Eligible Executive. If any payment or benefit under the 2007 Severance Plan would be a “parachute payment” (within the meaning of Section 280G of the IRC) and would therefore result in the imposition of an excise tax, an Eligible Executive’s payments and benefits will not exceed the amount that produces the greatest after-tax benefit to the executive. To receive payments and benefits under the 2007 Severance Plan, an Eligible Executive must execute a release of all claims against the Company. If the Eligible Executive is considered a “specified employee” under Section 409A of the IRC at the time of his or her termination of employment, any amounts payable under the 2007 Severance Plan will be delayed for a period of six months if it is determined that such a delay is necessary in order to prevent the payment from imposing excise taxes on the executive officer. In addition, a participant in the Incentive Plan, as described further in the Compensation Discussion and Analysis of this proxy statement, may also receive payments upon termination of employment or a change of control. Pursuant to the Incentive Plan, a participant, including each of our Named Executive Officers, must be continuously employed through the last day of the applicable semi-annual performance period and through the date that cash bonuses under the Incentive Plan for such semi- annual performance period are actually paid. However, participants whose employment terminates due to death or “disability” during a semi-annual performance period will be eligible to receive a pro rata cash bonus payment based on the number of days the participant was employed during that semi- annual performance period and the Company’s actual performance during the semi-annual performance period. The pro rata bonus amount will be paid to the terminated participant on or before the 15th day of the third month after the later of (i) the last day of the calendar year in which such participant died or incurred a “disability” or (ii) the last day of the Company’s taxable year in which such participant died or incurred a “disability.” In addition, if a change of control occurs and our successor does not assume or comparably replace the Incentive Plan, each participant will receive a pro rata cash payment of his or her target bonus, based on the number of calendar days completed in the current semi-annual performance period prior to the occurrence of the change of control. For purposes of the Incentive Plan: Š Š “disability” means total and permanent disability as defined in accordance with the Company’s Long-Term Disability Plan. “change of control” means (i) the sale, lease, conveyance or other disposition of all or substantially all of the Company’s assets as an entirety or substantially as an entirety to any person, entity or group of persons acting in concert, (ii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, or (iii) consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least 50% of the voting power represented by the voting securities of the Company or such surviving entity (or parent) outstanding immediately after such merger or consolidation. 64 The discussion and tables below present an estimate of the amount of compensation and/or other benefits payable to our Named Executive Officers in the event of their termination of employment and/ or in the event of a change of control of the Company. The amounts disclosed assume that such termination and/or the occurrence of such change of control was effective as of March 28, 2015, the last day of fiscal year 2015. We also assume that each Named Executive Officer was continuously employed by the Company and under the 2007 Severance Plan and the Incentive Plan throughout at least the second half of fiscal year 2015. The amounts below have been calculated using assumptions, such as these, that we believe to be reasonable, along with further assumptions that are described in more detail below. The actual amounts that would be paid out under each scenario depend on various factors, which may or may not exist at the time a Named Executive Officer’s employment is actually terminated and/or a change of control actually occurs. Therefore, such amounts and disclosures should be considered “forward-looking statements.” Conditions Involving Involuntary Termination or Death/Disability The estimated amount payable to each of our Named Executive Officers pursuant to the 2007 Severance Plan and the Incentive Plan in the event of an involuntary termination of employment by the Company other than for cause, or due to the Named Executive Officer’s death or disability, in each case, assuming such termination occurred on March 28, 2015 and in view of the other assumptions above, is set forth in the table below: Name Salary Continuation(l) Health Benefits (up to 3 months)(2) Cash Bonus Under Incentive Plan(3) Accelerated Vesting of Unvested Equity(4) Total Jason P. Rhode, President and Chief Executive Officer Thurman K. Case, Vice President, Chief Financial Officer and Principal Accounting Officer Andrew Brannan, Vice President, Worldwide Sales Eric C. Smith, VP of AMP Division $ 625,000 $ 3,654 $ 312,500 $ 941,154 $ 153,700 $ 1,657 $ 76,850 $ 232,207 $ 172,275(5) $ — $ 86,138(5) $2,147,172 $ 2,405,585 $ 125,000 $ 4,910 $ 62,500 $ 192,410 Rashpal Sahota, VP & Audio GM, Cirrus Logic Int’l $ 138,028(5) $ — $ 69,014(5) $1,720,327 $ 1,927,370 (1) The salary continuation payment for our CEO represents the value of 12 months of his base salary, based on his base salary level in effect on March 28, 2015. For each of the other Named Executive Officers, the amount is based on six months of base salary, at the level in effect on March 28, 2015. (2) The valuation of the healthcare benefits has been computed based on an estimate of the COBRA payments required for the three-month period payable by the Company at the rates in effect as of March 28, 2015. COBRA payments are U.S. specific and are therefore not applicable to the Wolfson Named Executive Officers. (3) The Named Executive Officers would only receive the payments enumerated in this column in the event of a termination due to death or disability. In the event employment terminated for any other reason, the noted executive would forfeit these amounts because the executive would not be employed with the Company on the date of payment. On a termination due to death or disability, the executive would be entitled to a pro-rata payment of their bonus under the Incentive Plan. Because March 28, 2015 is the last day of the semi-annual performance period, the executive 65 would be entitled to a full payment of the semi-annual bonus. As such, we have calculated the cash bonus under the Incentive Plan as the target Incentive Plan Payout Percentage (100%) applied to each individual’s current target bonus under the Incentive Plan for the semi- annual performance period ending on March 28, 2015. (4) The valuation of accelerated vesting of unvested equity has been computed based on the value of the RSUs granted to the Wolfson Named Executive Officers as part of the Wolfson acquisition, using the closing market price of our stock on March 27, 2015 (the last trading day prior to March 28, 2015). See the section of this proxy statement entitled, “Wolfson’s Acquisition Equity Grants” for additional details regarding the RSU grants to the Wolfson Named Executive Officers. (5) These amounts were converted from pound sterling to U.S. dollars. See “A note on foreign currency” above for details concerning the conversion. Conditions Additionally Involving a Change of Control The estimated amount payable to each of our Named Executive Officers pursuant to (i) the Incentive Plan in the event of a change of control in which the Incentive Plan is not assumed or comparably replaced, and (ii) the 2007 Severance Plan in the event of termination of employment following a change of control of the Company either other than for cause by the Company, by the executive officer for good reason, or due to the executive officer’s death or disability, is set forth in the table below. The possible application of any cutback required under the 2007 Severance Plan due to the operation of Sections 280G and 4999 of the IRC has not been included in these calculations: Name Lump Sum Salary Payment(1) Accelerated Vesting of Unvested Equity(2) Health Benefits (up to 12 months)(3) Cash Bonus Under Incentive Plan(4) Total Jason P. Rhode, President and Chief Executive Officer Thurman K. Case Vice President, Chief Financial Officer and Principal Accounting Officer Andrew Brannan, Vice President, Worldwide Sales Eric C. Smith, VP of AMP Division Rashpal Sahota, VP & Audio GM, Cirrus Logic Int’l $ 1,250,000 $ 6,549,389 $ 14,617 $ 312,500 $ 8,126,506 $ $ $ $ 307,400 $ 1,598,640 $ 6,628 $ 76,850 $ 1,989,517 344,551(5) $ 2,147,172 $ — $ 86,138(5) $ 2,577,860 250,000 $ 1,518,425 $ 19,639 $ 62,500 $ 1,850,564 276,057(5) $ 1,720,327 $ — $ 69,014(5) $ 2,065,399 (1) The lump sum salary payment for our CEO represents the value of 24 months of his base salary, based on his base salary level in effect on March 28, 2015. For each of the other Named Executive Officers, the amount is based on 12 months of base salary, at the level in effect on March 28, 2015. (2) The valuation of accelerated vesting of unvested equity has been computed based on: (1) the estimated value that would have been realized based on the difference between the exercise price of the options that were subject to accelerated vesting and the closing market price of our common stock on March 27, 2015 (the last trading day prior to March 28, 2015), which was $33.29, and (2) the value of RSUs (and, in the case of our CEO, the target number of MSU shares) subject to accelerated vesting based on that same closing market price. (3) The valuation of healthcare benefits is based on an estimate of the COBRA payments required for the 12-month period payable by the Company at the rates in effect as of March 28, 2015. COBRA payments are U.S. specific and are therefore not applicable to the Wolfson Named Executive Officers. 66 (4) The figures in this column represent a pro rata cash payment of target bonuses under the Incentive Plan, based on the number of calendar days completed in the semi-annual performance period prior to the occurrence of the change of control. Because the change in control is deemed to occur on the last day of the fiscal year, the figures above represent the target Incentive Plan Payout Percentage (100%) applied to each individual’s current target bonus under the Incentive Plan for the semi-annual performance period ending on March 28, 2015. (5) These amounts were converted from pound sterling to U.S. dollars. See “A note on foreign currency” above for details concerning the conversion. 67 EQUITY COMPENSATION PLAN INFORMATION The following table provides information about common stock that may be issued upon the exercise of options, warrants, and rights under all of the Company’s existing equity compensation plans as of March 28, 2015, including the 1996 Stock Plan, the 2002 Stock Option Plan, and the 2006 Stock Incentive Plan: (A) Number of Securities to be issued upon exercise of outstanding options (B) Weighted-average exercise price of outstanding options (C) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) Equity Compensation Plans Approved by Security Holders(1)(4) . . . . . . . . . . 6,130,870(2) $14.28(3) 3,887,234 Equity Compensation Plans Not Approved by Security Holders(5) . . . TOTAL . . . . . . . . . . . . . . . . . . . . . . . 58,194 6,189,064 $ 7.30 $14.22 — 3,887,234 (1) The Company’s stockholders have approved the Company’s 1996 Stock Plan and the 2006 (2) Stock Incentive Plan. Includes 2,855,681 shares granted under the 2006 Stock Incentive Plan that are issuable upon the vesting of the outstanding RSUs and MSUs. (3) The weighted average exercise price does not take into account the shares issuable upon the vesting of the outstanding RSUs and MSUs, which have no exercise price. (4) As of March 28, 2015, the Company was granting equity awards only under the 2006 Stock Incentive Plan. Approximately 2,526,417 shares have been deducted from the shares available for future issuance under the 2006 Stock Incentive Plan due to a 1.5 full value award multiplier applied to restricted stock awards and RSUs granted pursuant to the 2006 Stock Incentive Plan. In August 2002, the Board approved the 2002 Stock Option Plan, which permits awards of fair market value stock options to non-executive employees. As of July 2006, when our stockholders approved the adoption of the 2006 Stock Incentive Plan, we canceled all remaining options available for grant under the 2002 Stock Option Plan. (5) 68 REPORT OF THE AUDIT COMMITTEE OF THE BOARD The Audit Committee is comprised solely of independent directors, as defined by the applicable Nasdaq listing standards and rules of the SEC, and it operates under a written charter adopted by the Board, which is available under the Corporate Governance section of our “Investors” page on our website at investor.cirrus.com. The composition of the Audit Committee, the attributes of its members, and the responsibilities of the Audit Committee, as reflected in its charter, are intended to comply with applicable requirements for corporate audit committees. The Sarbanes-Oxley Act added provisions to federal law to strengthen the authority of, and increase the responsibility of, corporate audit committees. In 2004, Nasdaq also adopted, and the SEC approved, additional rules concerning audit committee structure, membership, authority, and responsibility. The Audit Committee amended and restated its charter in response to the Sarbanes-Oxley Act and the Nasdaq listing standards, and continues to review and assess the adequacy of its charter on an annual basis, and will revise it to comply with other new rules and regulations as they are adopted. As described more fully in its charter, the primary focus of the Audit Committee is to assist the Board in its general oversight of the Company’s financial reporting, internal control, and audit functions. Management is responsible for the preparation, presentation, and integrity of the Company’s financial statements; accounting and financial reporting principles; internal controls; and procedures designed to assure compliance with accounting standards, applicable laws and regulations. The Company’s independent registered public accounting firm, Ernst & Young, is responsible for performing an independent audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”). In accordance with the Sarbanes-Oxley Act and the Nasdaq listing standards, the Audit Committee has ultimate authority and responsibility to select, compensate, evaluate and, when appropriate, replace the Company’s independent registered public accounting firm. The Audit Committee serves an oversight role for the Board in which it provides advice, counsel, and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors, and the experience of the Audit Committee’s members in business, financial and accounting matters. The Audit Committee members are not professional auditors, and their functions are not intended to duplicate or to certify the activities of management and the independent auditors, nor can the Audit Committee certify that the independent auditors are “independent” under applicable rules. In this context, the Audit Committee has met and held discussions with management and Ernst & Young. Management represented to the Audit Committee that the audited financial statements of the Company contained in the Company’s Annual Report to Stockholders for the year ended March 28, 2015, were prepared in accordance with U.S. generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent auditors. The Audit Committee discussed with Ernst & Young matters required to be discussed by Auditing Standards No. 16, Communications with Audit Committees as required by the PCAOB. The Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young required by PCAOB Rule 3526 regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with Ernst & Young the firm’s independence. In addition, the Audit Committee has considered whether the provision of non-audit services is compatible with maintaining Ernst & Young’s independence. 69 Based upon the Audit Committee’s discussions with management and the independent auditors, the Audit Committee’s review of the representations of management, and the report of the independent auditors to the Audit Committee, the Audit Committee recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended March 28, 2015, as filed with the SEC. Submitted by the Audit Committee of the Board: Susan Wang, Chair John C. Carter William D. Sherman AUDIT AND NON-AUDIT FEES AND SERVICES Audit and Related Fees The following table shows the fees paid or accrued by the Company for the audit and other services provided by Ernst & Young for fiscal years 2015 and 2014. All fees were pre-approved by the Audit Committee. Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audit-Related Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . All Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 $1,344,000 $ 140,600 $1,685,095 $ 3,713 $3,173,408 2014 $625,122 0 $ $ 70,701 $ 200 $696,023 Audit Fees. Audit services consisted of the audit of the Company’s consolidated financial statements and of management’s assessment of the operating effectiveness of internal control over financial reporting included in the Company’s Annual Report on Form 10-K, the review of the Company’s financial statements included in its quarterly reports on Form 10-Q, and statutory audits required internationally. Audit-Related Fees. Audit-related services generally include fees for accounting consultations and registration statements filed with the SEC. Tax Fees. Tax services include tax compliance services, technical tax advice, international tax planning, administrative fees, as well as certain expatriate services. All Other Fees. The other fees for fiscal year 2015 correspond to an Ernst & Young research tool, and the other fees for fiscal year 2014 correspond to an Ernst & Young seminar. Pre-Approval Policies and Procedures The Audit Committee has adopted a policy for the pre-approval of audit, audit-related, and non-audit services provided by the Company’s independent registered public accounting firm. For audit and audit-related services, the independent auditor will provide the Audit Committee with an engagement letter and estimated budget for formal acceptance and approval. A list of non-audit services and estimated budget for such services for the upcoming fiscal year shall be submitted to the Audit Committee by Company management for pre-approval. To ensure prompt handling of unexpected non-budgeted non-audit related services, the Audit Committee has delegated to its Chair the authority to amend or modify the list of approved permissible non-audit services and fees if the cost of the service is less than $100,000. Any such unexpected services for which the cost is more than $100,000 shall be approved by the Audit Committee. If the Chair takes any action, the Chair will report such action to the Audit Committee at the next Audit Committee meeting. 70 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Indemnification and Insurance. Our Bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. We have entered into indemnification agreements with all of our directors and executive officers and have purchased directors’ and officers’ liability insurance. Procedures for Review, Approval, and Ratification of Related Person Transactions. The Board recognizes that Related Person Transactions (as defined below) can present conflicts of interest and questions as to whether transactions are in the best interests of the Company. Accordingly, the Board has documented and implemented certain procedures for the review, approval, or ratification of Related Person Transactions. Pursuant to these procedures, the Audit Committee must review, approve, or ratify any transactions with Related Persons (as defined below). When it is impractical to wait for a scheduled Audit Committee meeting, a proposed Related Person Transaction may be submitted to the Audit Committee Chair for approval and then subsequently reported to the Audit Committee at the next Audit Committee meeting. This procedure seeks to ensure that Company decisions are based on the merits of the transaction and the interests of the Company and its stockholders. It is the Company’s preference to avoid Related Person Transactions but when, in the course of business, transactions with related parties are unavoidable, this procedure sets forth a methodology for considering a proposed Related Person Transaction. The standard to be applied when evaluating a proposed Related Person Transaction is whether such transaction is at arm’s length and on terms comparable to those terms provided to other unrelated entities in the marketplace. For these purposes, a “Related Person” is any person who is: (1) a director or executive officer of the Company, (2) a nominee for director (if the information called for is being presented in a proxy or information statement relating to the election of that nominee for director), (3) an immediate family member of a director or executive officer of the Company, (4) an immediate family member of a nominee for director (if the information called for is being presented in a proxy or information statement relating to the election of that nominee for director), (5) a security holder of 5% or more of any class of common stock (or other equity security) (if a transaction in which the person had a direct or indirect material interest occurred or existed), or (6) an immediate family member of a security holder of 5% or more of any class of common stock (or other equity security) (if a transaction in which the person had a direct or indirect material interest occurred or existed). For these purposes, a “Related Person Transaction” is any transaction, arrangement, or relationship (or any series of similar transactions, arrangements or relationships) in which the Company (including any of its subsidiaries) was, is, or will be a participant and in which a Related Person had, has, or will have a direct interest. The Company has not established a materiality limit for purposes of defining a Related Person Transaction. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers and directors and persons who own more than 10% of a registered class of the Company’s equity securities to file an initial report of ownership on Form 3 and changes in ownership on Form 4 or 5 with the SEC. Executive officers, directors, and greater than 10% stockholders are also required by the federal securities rules to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of copies of the Forms 3, 4 and 5 received by the Company or representations from certain reporting persons, the Company believes that, during the fiscal year 2015, all 71 Section 16(a) filing requirements applicable to its officers, directors, and greater than 10% stockholders were met in a timely manner except with respect to reporting the sale of 5,311 Restricted Stock Units by Mr. Timothy R. Dehne. The Form 4 filing for this transaction was due no later than August 26, 2014, but due to administrative error, this filing was not made until August 27, 2014. HOUSEHOLDING The SEC has adopted rules that permit companies and intermediaries (such as stockbrokers) to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our annual report and proxy materials, including the Notice of Internet Availability of proxy materials, unless the affected stockholder has provided contrary instructions. This procedure reduces printing costs and postage fees. This year, we expect that a number of stockbrokers with account holders who beneficially own common stock will be “householding” our annual report and proxy materials, including the Notice of Internet Availability of the proxy materials. A single Notice of Internet Availability of the proxy materials and, if applicable, a single set of annual report and other proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your stockbroker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their consent at any time by contacting Broadridge ICS, either by calling toll-free (800) 542-1061, or by writing to Broadridge ICS, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. If you contact Broadridge ICS using the contact information above, we will promptly deliver to you a separate copy of our Annual Report, Notice of Internet Availability of the proxy materials, and the proxy materials for the 2015 Annual Meeting, and for future meetings, if you so request. Please also contact Broadridge ICS if you wish to request delivery of a single copy of those materials if you currently receive multiple copies. COMMUNICATING WITH US Communicating with the Board If you would like to contact the Board, including a Committee, you may write to the following address: Board of Directors c/o Corporate Secretary Cirrus Logic, Inc. 800 W. Sixth Street Austin, Texas 78701 The Corporate Secretary or Chair of the Governance and Nominating Committee, as appropriate, reviews all correspondence addressed to the Board and regularly forwards to the Board all such correspondence that, in the opinion of the Corporate Secretary or Chair of the Governance and Nominating Committee, deals with the functions of the Board or the Committees. Directors may at any time review a log of all correspondence received by the Company that is addressed to the Board or individual Board members. Concerns relating to accounting, internal controls, or auditing issues will be immediately brought to the attention of the Chair of the Audit Committee. 72 Other Communications If you would like to receive information about the Company, you may use one of these convenient methods: 1. 2. To have information such as our latest Annual Report on Form 10-K or Quarterly Report on Form 10-Q mailed to you, please call our Investor Relations Department at (512) 851-4125. To view our home page on the Internet, use our website address: www.cirrus.com. Our home page provides you access to product, marketing and financial data, job listings, and an online version of this proxy statement, our Annual Report on Form 10-K, and other filings with the SEC. If you would like to write to us, please send your correspondence to the following address: Cirrus Logic, Inc. Attention: Investor Relations 800 W. Sixth Street Austin, TX 78701 If you would like to inquire about stock transfer requirements, lost certificates, and change of stockholder address, please contact our transfer agent, Computershare Investor Services, at (877) 373- 6374 (toll free) or (781) 575-2879 or by email to shareholder@computershare.com. You may also visit their website at www.computershare.com for step-by-step transfer instructions. If you would like to report any inappropriate, illegal, or criminal conduct by any employee, agent, or representative of the Company; any violation of the Company’s Code of Conduct; or any complaint or concern regarding accounting, internal accounting controls or auditing matters, you may file an anonymous and confidential report by contacting EthicsPoint, an independent reporting system provider, by telephone at 1-866-384-4277 (1-866-ETHICSP), or through its website at www.ethicspoint.com. 73 ANNUAL REPORT On May 27, 2015, we filed with the SEC an Annual Report on Form 10-K for the fiscal year ended March 28, 2015. The Annual Report on Form 10-K has been provided concurrently with this proxy statement to all stockholders entitled to notice of, and to vote at, the Annual Meeting. Stockholders may also obtain a copy of the Annual Report on Form 10-K and any of our other SEC reports, free of charge, (1) from the SEC’s website at www.sec.gov , (2) from our website at investor.cirrus.com, or (3) by writing to Investor Relations, Cirrus Logic, Inc., 800 W. Sixth Street, Austin, TX 78701. The Annual Report on Form 10-K is not incorporated into this proxy statement and is not considered proxy solicitation material. BY ORDER OF THE BOARD OF DIRECTORS Jason P. Rhode President and Chief Executive Officer Austin, Texas June 2, 2015 74 ANNEX INCENTIVE PLAN RECONCILIATION Incentive Plan excluding Wolfson financial results (as applied to the Cirrus Named Executive Officers). Net Revenue Cost of Sales Gross Profit Total Operating Expenses Total Operating Income Operating Income Percentage Revenue Reconciliation Net Revenue Wolfson Revenue Revenue Used for Bonus Plan Operating Income Reconciliation GAAP Operating Income Wolfson GAAP Operating Loss Adjustment Amortization of acquisition intangibles Excl. Wolfson Stock compensation expense – Excl. Wolfson Other adjustments ** Bonus VCP, Executive, Leadership Plan Exclusion Non GAAP Operating Income Used for Bonus Plans Non GAAP Operating Income Percentage Used for Bonus Plans 6 Months Ended 2H’15 $ 553,790 $ 303,982 $ 249,807 $ 175,023 $ 74,784 1H’15 $ 362,779 $ 186,838 $ 175,941 $ 141,956 $ 33,985 14% 9% $ 553,790 $ (85,297) $ 468,493 $ 362,779 $ (13,024) $ 349,755 $ 74,784 $ 27,027 $ 492 $ 11,843 $ 524 $ 10,254 $ 124,924 $ 33,985 $ 14,881 $ 492 $ 12,119 $ 8,719 3,847 $ $ 74,043 27% 21% ** Other adjustments may include certain litigation expenses, facility charges, patent agreements, international sales reorganizations, or other. Incentive Plan including Wolfson financial results (as applied to executive officer Brannan). Net Revenue Cost of Sales Gross Profit Total Operating Expenses Total Operating Income Operating Income Percentage Operating Income Reconciliation GAAP Operating Income Amortization of acquisition intangibles Stock compensation expense Other adjustments ** Bonus VCP, Executive, Leadership Plan Exclusion Non GAAP Operating Income Used for Bonus Plans Non GAAP Operating Income Percentage Used for Bonus Plans 6 Months Ended 2H’15 $553,790 $303,982 $249,807 $175,023 $ 74,784 14% $ 74,784 $ 12,291 $ 15,552 $ 9,903 $ 11,231 $123,761 22% ** Other adjustments may include certain litigation expenses, facility charges, patent agreements, international sales reorganizations, or other. 75 EXHIBIT A: CIRRUS LOGIC, INC. 2006 STOCK INCENTIVE PLAN CIRRUS LOGIC, INC. 2006 STOCK INCENTIVE PLAN (Amended and Restated as of May 26, 2015) 1. PURPOSE 1.1 Purpose. The purpose of the Cirrus Logic, Inc. 2006 Stock Incentive Plan (the “Plan”) is to provide a means through which Cirrus Logic, Inc. (the “Company”) may attract able persons to serve as employees, directors, or consultants of the Company or its Affiliates and to provide a means whereby those individuals upon whom the responsibilities of the successful administration and management of the Company rest, and whose present and potential contributions to the welfare of the Company are of importance, may acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company. A further purpose of the Plan is to provide such individuals with additional incentive and reward opportunities designed to enhance the profitable growth of the Company. Accordingly, the Plan provides for granting Incentive Stock Options, options that do not constitute Incentive Stock Options, Restricted Stock Awards, Performance Awards, Phantom Stock Awards, and Bonus Stock Awards, or any combination of the foregoing, as is best suited to the circumstances of the particular employee, consultant, or director as provided in the Plan. 2. DEFINITIONS 2.1 Definitions. Whenever the following capitalized words or phrases are used, the following definitions will be applicable throughout the Plan, unless specifically modified by any Section: 2.1.1 “Affiliate” means any corporation, partnership, limited liability company or partnership, association, trust or other organization which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise. 2.1.2 “Award” means, individually or collectively, any Option, Restricted Stock Award, Performance Award, Phantom Stock Award, or Bonus Stock Award. 2.1.3 “Board” means the board of directors of the Company. 2.1.4 “Bonus Stock Award” means an Award granted under Section 11 of the Plan. 2.1.5 “Change of Control Value” means the amount determined in accordance with Section 12.4. 2.1.6 “Code” means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code will be deemed to include any amendments or successor provisions to such section and any regulations under such section. 2.1.7 “Committee” means a committee of the Board that is selected by the Board as provided in Section 4.1. 2.1.8 “Common Stock” means the common stock, $0.001 par value, of the Company or any security into which such common stock may be changed by reason of any transaction or event of the type described in Section 12. A-1 2.1.9 “Company” means Cirrus Logic, Inc., a Delaware corporation. 2.1.10 “Consultant” means any person who is not an Employee or Director and who is providing services to the Company or any Affiliate as an advisor, consultant, or other non-common law employee. 2.1.11 “Corporate Change” means either (i) the Company will not be the surviving entity in any merger, share exchange, or consolidation (or survives only as a subsidiary of an entity), (ii) the Company sells, leases, or exchanges all or substantially all of its assets to any other person or entity, (iii) the Company is dissolved and liquidated, (iv) any person or entity, including a “group” as contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of the outstanding shares of the Company’s voting stock (based upon voting power), or (v) at such time as the Company becomes a reporting company under the 1934 Act, as a result of or in connection with a contested election of Directors, the persons who were Directors of the Company before such election will cease to constitute a majority of the Board; provided, however, that a Corporate Change will not include (A) any reorganization, merger, consolidation, sale, lease, exchange, or similar transaction, which involves solely the Company and one or more entities wholly-owned, directly or indirectly, by the Company immediately prior to such event or (B) the consummation of any transaction or series of integrated transactions immediately following which the record holders of the voting stock of the Company immediately prior to such transaction or series of transactions continue to hold 50% or more of the voting stock (based upon voting power) of (1) any entity that owns, directly or indirectly, the stock of the Company, (2) any entity with which the Company has merged, or (3) any entity that owns an entity with which the Company has merged. 2.1.12 “Director” means (i) an individual elected to the Board by the stockholders of the Company or by the Board under applicable corporate law who either is serving on the Board on the date the Plan is adopted by the Board or is elected to the Board after such date and (ii) for purposes of and relating to eligibility for the grant of an Award, an individual elected to the board of directors of any Affiliate. 2.1.13 “Employee” means any person in an employment relationship with the Company or any Affiliate. The payment of a Director’s fee by the Company shall not be sufficient in and of itself to constitute employment by the Company. 2.1.14 “Fair Market Value” means, as of any specified date, (i) the closing sales price of the Common Stock either (A) if the Common Stock is traded on the National Market System of the NASDAQ, as reported on the National Market System of NASDAQ on that date (or if no sales occur on that date, on the last preceding date on which such sales of the Common Stock are so reported), or (B) if the Common Stock is listed on a national securities exchange, as reported on the stock exchange composite tape on that date (or if no sales occur on that date, on the last preceding date on which such sales of the Common Stock are so reported); (ii) if the Common Stock is not traded on the National Market System of the NASDAQ or a national securities exchange but is traded over the counter at the time a determination of its fair market value is required to be made under the Plan, the closing sales price (or if selling prices are not reported, the average between the closing bid and asked prices of Common Stock) on the most recent date on which Common Stock was publicly traded; (iii) in the event Common Stock is not publicly traded at the time a determination of its value is required to be made under the Plan, the amount determined by the Committee in its discretion in such manner as it deems appropriate; or (iv) on the date of an initial public offering of common stock, the offering price under such initial public offering. 2.1.15 “Forfeiture Restrictions” will have the meaning assigned to such term in Section 8.2. A-2 2.1.16 “Full-Value Award” means an Award other than an Option, a Stock Appreciation Right, or other Award whose intrinsic value is solely dependent on appreciation in the price of the Common Stock after the date of grant. 2.1.17 “Holder” means an Employee, Consultant, or Director who has been granted an Award. 2.1.18 “Incentive Stock Option” means an incentive stock option within the meaning of section 422 of the Code. 2.1.19 “1934 Act” means the Securities Exchange Act of 1934, as amended. 2.1.20 “Nonstatutory Stock Option” means Options that do not constitute Incentive Stock Options. 2.1.21 “Option” means an Award granted under Section 7 and includes both Incentive Stock Options and options that do not constitute Incentive Stock Options. 2.1.22 “Option Agreement” means a written agreement between the Company and a Holder with respect to an Option, including the accompanying “Notice of Grant of Stock Option.” 2.1.23 “Performance Award” means an Award granted under Section 9 of the Plan. 2.1.24 “Performance Award Agreement” means a written agreement between the Company and a Holder with respect to a Performance Award. 2.1.25 “Phantom Stock Award” means an Award granted under Section 10 of the Plan. 2.1.26 “Phantom Stock Award Agreement” means a written agreement between the Company and a Holder with respect to a Phantom Stock Award. 2.1.27 “Plan” means the Cirrus Logic, Inc. 2006 Stock Incentive Plan, as amended from time to time. 2.1.28 “Restricted Stock Agreement” means a written agreement between the Company and a Holder with respect to a Restricted Stock Award. 2.1.29 “Restricted Stock Award” means an Award granted under Section 8. 2.1.30 “Rule 16b-3” means SEC Rule 16b-3 promulgated under the 1934 Act, as such may be amended from time to time, and any successor rule, regulation, or statute fulfilling the same or a similar function. 2.1.31 “Stock Appreciation Right” will have the meaning assigned to such term in Subsection 7.4.4. 2.2 Number and Gender. Wherever appropriate in the Plan, words used in the singular will be considered to include the plural, and words used in the plural will be considered to include the singular. The masculine gender, where appearing in the Plan, will be deemed to include the feminine gender. 2.3 Headings. The headings of Sections and Subsections in the Plan are included solely for convenience, and, if there is any conflict between such headings and the text of the Plan, the text will control. All references to Sections and Subsections are to this document unless otherwise indicated. 3. EFFECTIVE DATE AND DURATION OF THE PLAN 3.1 Effective Date. The Plan will become effective upon the date of its adoption by the Board, provided that the Plan is approved by the stockholders of the Company within 12 months after such adoption. Notwithstanding any provision in the Plan or in any Option Agreement, Restricted Stock A-3 Agreement, Performance Award Agreement, or Phantom Stock Award Agreement, no Option will be exercisable, no Restricted Stock Award or Bonus Stock Award will be granted, and no Performance Award or Phantom Stock Award will vest or become satisfiable prior to such stockholder approval. 3.2 Duration of Plan. No further Awards may be granted under the Plan after ten years from July 28, 2024. The Plan will remain in effect until all Options granted under the Plan have been exercised, forfeited, assumed, substituted, satisfied or expired, all Restricted Stock Awards granted under the Plan have vested or been forfeited, and all Performance Awards, Phantom Stock Awards, and Bonus Stock Awards have been satisfied or expired. 4. ADMINISTRATION 4.1 Composition of Committee. The Plan will be administered by a committee of, and appointed by, the Board. In the absence of the Board’s appointment of such Committee to administer the Plan, the Board will serve as the Committee. Notwithstanding the foregoing, from and after the date upon which the Company becomes a “publicly held corporation” (as defined in section 162(m) of the Code and applicable interpretive authority under the Code), the Plan will be administered by a committee of, and appointed by, the Board that will be comprised solely of two or more outside Directors (within the meaning of the term “outside directors” as used in section 162(m) of the Code and applicable interpretive authority under the Code and within the meaning of “Non-Employee Director” as defined in Rule 16b-3). 4.2 Powers. Subject to the express provisions of the Plan, the Committee will have authority, in its discretion, to determine which Employees, Consultants, or Directors will receive an Award, the time or times when such Award will be made, whether an Incentive Stock Option or Nonstatutory Stock Option will be granted, the number of shares to be subject to each Option or Restricted Stock Award, the number of shares subject to or the value of each Performance Award or Bonus Stock Award, and the number of shares or the value of each Phantom Stock Award. In making such determinations, the Committee will take into account the nature of the services rendered by the respective Employees, Consultants, or Directors, their present and potential contribution to the Company’s success, and such other factors as the Committee in its discretion will deem relevant. 4.3 Additional Powers. The Committee will have such additional powers as are delegated to it by the other provisions of the Plan. Subject to the express provisions of the Plan, this will include the power (1) to construe the Plan and the respective agreements executed under the Plan, (2) to prescribe rules and regulations relating to the Plan, (3) to determine the terms, restrictions, and provisions of the agreement relating to each Award, including such terms, restrictions, and provisions as will be requisite in the judgment of the Committee to cause designated Options to qualify as Incentive Stock Options, and (4) to make all other determinations necessary or advisable for administering the Plan. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan or in any agreement relating to an Award in the manner and to the extent it will deem expedient to carry it into effect. The determinations of the Committee on the matters referred to in this Section will be conclusive and binding on all persons. 5. STOCK SUBJECT TO THE PLAN 5.1 Stock Offered. Subject to the limitations set forth in Section 5.2, the stock to be offered pursuant to the grant of an Award may be (1) authorized but unissued Common Stock or (2) previously issued and outstanding Common Stock reacquired by the Company. Any of such shares that remain unissued and are not subject to outstanding Awards at the termination of the Plan will cease to be subject to the Plan, but until termination of the Plan, the Company will at all times make available a sufficient number of shares to meet the requirements of the Plan. A-4 5.2 Plan and Individual Limitations on Shares. 5.2.1 Subject to adjustment in the same manner as provided in Section 12 with respect to shares of Common Stock subject to Options then outstanding, the aggregate maximum number of shares of Common Stock that may be issued under the Plan, and the aggregate maximum number of shares of Common Stock that may be issued under the Plan through Incentive Stock Options, will not exceed 25,200,000 shares. To the extent that a share of Common Stock is subject to an outstanding Full-Value Award, such share shall reduce the aggregate share limit set forth in this Subsection by 1.5 shares of Common Stock. To the extent that a share of Common Stock is subject to an outstanding Award other than a Full-Value Award, such share shall reduce the aggregate share limit set forth in this Subsection by one share of Common Stock. Stock Appreciation Rights to be settled in shares of Common Stock pursuant to Section 7.4(d) or Section 10 shall be counted in full against the number of shares available for award under the Plan, regardless of the number of shares issued upon settlement of the Stock Appreciation Rights. In addition, any shares withheld to satisfy any tax withholding obligation pursuant to Section 14.5 or shares tendered in payment of the exercise price of an Option shall be counted in full against the number of shares available for award under the Plan. The aggregate share limit set forth in this Subsection may not be increased by repurchasing shares using Option exercise proceeds. 5.2.2 Notwithstanding any provision in the Plan to the contrary, and to the extent an award is intended to comply with the requirements of section 162(m) of the Code, the maximum number of shares of Common Stock that may be subject to any award granted under the Plan to any one individual during any calendar year may not exceed 400,000 shares (as adjusted from time to time in accordance with the provisions of the Plan), and the maximum amount of compensation that may be paid under an award denominated in cash (including the Fair Market Value of any shares of Common Stock paid in satisfaction of such award) granted to any one individual during any calendar year may not exceed $5,000,000. 5.2.3 Shares will be deemed to have been issued under the Plan only to the extent actually issued and delivered pursuant to an Award. To the extent that an Award lapses or the rights of its Holder terminate, any shares of Common Stock subject to such Award will again be available for the grant of an Award, and the aggregate share limit set forth in Subsection 5.2(a) will be increased by the number of shares subtracted from such limit with respect to the grant of such lapsed Award. From and after the date upon which the Company becomes a “publicly held corporation” (as defined in section 162(m) of the Code and applicable interpretive authority under the Code), the limitation set forth in the preceding sentences will be applied in a manner that will permit compensation generated under the Plan to constitute “performance-based” compensation for purposes of section 162(m) of the Code, including, without limitation, counting against such maximum number of shares, to the extent required under section 162(m) of the Code and applicable interpretative authority under the Code, any shares subject to Options that are canceled or repriced. 6. GRANT OF AWARDS 6.1 Eligibility for Award. Awards may be granted only to persons who, at the time of grant, are Employees, Consultants, or Directors. 6.2 Grant of Awards. The Committee may from time to time in its discretion grant Awards to one or more Employees, Consultants, or Directors determined by it to be eligible for participation in the Plan in accordance with the provisions of Section 6.1. An Award may be granted on more than one occasion to the same person, and, subject to the limitations set forth in the Plan, such Award may include an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Performance Award, a Phantom Stock Award, a Bonus Stock Award, or any combination thereof. A-5 6.3 Restrictions on Waiver of Vesting Periods. Notwithstanding any provision in the Plan to the contrary, the Committee shall not have the discretionary authority to waive the vesting period applicable to a Full-Value Award, except in the case of death, disability, retirement, or Corporate Change. 7. STOCK OPTIONS 7.1 Option Period. The term of each Option will be as specified by the Committee at the date of grant, but in no event will an Option be exercisable after the expiration of ten years from the date of grant. 7.2 Limitations on Vesting and/or Exercise of Option. An Option will be vested and/or exercisable in whole or in part and at such times as determined by the Committee and set forth in the Notice of Grant and Option Agreement. The Committee in its discretion may provide that an Option will be vested or exercisable upon (1) the attainment of one or more performance goals or targets established by the Committee, which are based on (i) the price of a share of Common Stock, (ii) the Company’s earnings per share, (iii) the Company’s market share, (iv) the market share of a business unit of the Company designated by the Committee, (v) the Company’s sales, (vi) the sales of a business unit of the Company designated by the Committee, (vii) the net income (before or after taxes) of the Company or a business unit of the Company designated by the Committee, (viii) the cash flow return on investment of the Company or any business unit of the Company designated by the Committee, (ix) the earnings before or after interest, taxes, depreciation, and/or amortization of the Company or any business unit of the Company designated by the Committee, (x) the economic value added, or (xi) the return on stockholders’ equity achieved by the Company; (2) the Holder’s continued employment as an Employee with the Company or continued service as a Consultant or Director for a specified period of time; (3) the occurrence of any event or the satisfaction of any other condition specified by the Committee in its sole discretion; or (4) a combination of any of the foregoing. Each Option may, in the discretion of the Committee, have different provisions with respect to vesting and/ or exercise of the Option. 7.3 Special Limitations on Incentive Stock Options. 7.3.1 An Incentive Stock Option may be granted only to an individual who is employed by the Company or any parent or subsidiary corporation (as defined in section 424 of the Code) at the time the Option is granted. 7.3.2 No Incentive Stock Option will be granted to an individual if, at the time the Option is granted, such individual owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation, within the meaning of section 422(b)(6) of the Code, unless (1) at the time such Option is granted the option price is at least 110% of the Fair Market Value of the Common Stock subject to the Option and (2) such Option by its terms is not exercisable after the expiration of five years from the date of grant. 7.3.3 If an Option is designated as an Incentive Stock Option in the Notice of Grant of Stock Option, to the extent that such Option (together with all Incentive Stock Options granted to the Optionee under the Plan and all other stock option plans of the Company and its parent and subsidiaries) becomes exercisable for the first time during any calendar year for shares having a Fair Market Value greater than $100,000, the portion of each such Incentive Stock Option that exceeds such amount will be treated as a Nonstatutory Stock Option. For purposes of this Subsection, Options designated as Incentive Stock Options are taken into account in the order in which they were granted, and the Fair Market Value of Common Stock is determined as of the time the Option with respect to such Common Stock is granted. If the Code is amended to provide for a different limitation from that A-6 set forth in this Subsection, such different limitation will be deemed incorporated in the Plan effective as of the date required or permitted by such amendment to the Code. If the Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Subsection, the Optionee may designate which portion of such Option the Optionee is exercising. In the absence of such designation, the Optionee will be deemed to have exercised the Incentive Stock Option portion of the Option first. 7.3.4 An Incentive Stock Option (1) will not be transferable otherwise than by will or the laws of descent and distribution and (2) will be exercisable during the Holder’s lifetime only by such Holder or his guardian or legal representative. 7.3.5 The price at which a share of Common Stock may be purchased upon exercise of an Incentive Stock Option will not be less than 100% of the Fair Market Value of a share of Common Stock on the date such Option is granted. 7.4 Option Agreement. 7.4.1 Each Option will be evidenced by an Option Agreement in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee from time to time will approve, including, without limitation, provisions to qualify an Incentive Stock Option under section 422 of the Code and provisions relating to vesting and exercisability. The terms and conditions of the Options and respective Option Agreements need not be identical. Subject to the consent of the Holder, the Committee may, in its sole discretion, amend an outstanding Option Agreement from time to time in any manner that is not inconsistent with the provisions of the Plan (including, without limitation, an amendment that accelerates the time at which the Option, or a portion of the Option, may be exercisable). 7.4.2 Each Option Agreement will specify the effect of termination of (1) employment, (2) the consulting, advisory, or other non-common law employee relationship, or (3) membership on the Board, as applicable, on the vesting and/or exercisability of the Option. 7.4.3 An Option Agreement may provide for the payment of the option price, in whole or in part, by the delivery of a number of shares of Common Stock (plus cash if necessary) having a Fair Market Value equal to such option price. Moreover, an Option Agreement may provide for a “cashless exercise” of the Option through procedures satisfactory to, and approved by and in the sole discretion of, the Committee. Generally, and without limiting the Committee’s absolute discretion, a “cashless exercise” will only be permitted at such times in which the shares underlying this Option are publicly traded. 7.4.4 An Option Agreement may provide for the surrender of the right to purchase shares under the Option in return for a payment in cash or shares of Common Stock or a combination of cash and shares of Common Stock equal in value to the excess of the Fair Market Value of the shares with respect to which the right to purchase is surrendered over the option price for such shares (“Stock Appreciation Right”), on such terms and conditions as the Committee in its sole discretion may prescribe. In the case of any such Stock Appreciation Right that is granted in connection with an Incentive Stock Option, such right will be exercisable only when the Fair Market Value of the Common Stock exceeds the price specified for such Common Stock in the Option or the portion of the Option to be surrendered. 7.5 Option Price, Payment, and Exercise. Subject to Subsection 7.3.2 with respect to Incentive Stock Options, the price at which a share of Common Stock may be purchased upon exercise of an Option will be determined by the Committee, but such purchase price shall not be less than the Fair Market Value of a share of Common Stock on the date such Option is granted. The Option or portion A-7 of the Option may be exercised by delivery of an irrevocable notice of exercise to the Secretary of the Company, except as may otherwise be provided in the Option Agreement. The purchase price of the Option or portion of the Option will be paid in full in the manner prescribed by the Committee. 7.6 Stockholder Rights and Privileges. The Holder will be entitled to all the privileges and rights of a stockholder only with respect to such shares of Common Stock as have been purchased under the Option and for which certificates of stock have been registered in the Holder’s name. 7.7 Options and Rights in Substitution for Stock Options Granted by Other Corporations. Options and Stock Appreciation Rights may be granted under the Plan from time to time in substitution for stock options and such rights held by individuals employed by corporations who become Employees, Consultants, or Directors as a result of a merger, consolidation, or other business combination of the employing corporation with the Company or any Affiliate. 7.8 Restrictions on Repricing of Options. Except as provided in Section 12, the Committee may not, without approval of the stockholders of the Company, amend any outstanding Option Agreement to lower the option price (or cancel and replace any outstanding Option Agreement with Option Agreements having a lower option price), or to repurchase underwater options for cash. 8. RESTRICTED STOCK AWARDS 8.1 Restricted Stock Agreement. At the time any Award is made under this Section, the Company and the Holder will enter into a Restricted Stock Agreement setting forth each of the matters contemplated by the Plan and such other matters as the Committee may determine to be appropriate. The terms and provisions of the respective Restricted Stock Agreements need not be identical. Subject to the consent of the Holder and the restriction set forth in the last sentence of Section 8.4 below, the Committee may, in its sole discretion, amend an outstanding Restricted Stock Agreement from time to time in any manner that is not inconsistent with the provisions of the Plan. 8.2 Forfeiture Restrictions. Shares of Common Stock that are the subject of a Restricted Stock Award will be subject to restrictions on disposition by the Holder and an obligation of the Holder to forfeit and surrender the shares to the Company under certain circumstances (the “Forfeiture Restrictions”). The Forfeiture Restrictions will be determined by the Committee in its sole discretion, and the Committee may provide that the Forfeiture Restrictions will lapse upon (1) the attainment of one or more performance goals or targets established by the Committee, which are based on (i) the price of a share of Common Stock, (ii) the Company’s earnings per share, (iii) the Company’s market share, (iv) the market share of a business unit of the Company designated by the Committee, (v) the Company’s sales, (vi) the sales of a business unit of the Company designated by the Committee, (vii) the net income (before or after taxes) of the Company or a business unit of the Company designated by the Committee, (viii) the cash flow return on investment of the Company or any business unit of the Company designated by the Committee, (ix) the earnings before or after interest, taxes, depreciation, and/or amortization of the Company or any business unit of the Company designated by the Committee, (x) the economic value added, or (xi) the return on stockholders’ equity achieved by the Company; (2) the Holder’s continued employment as an Employee with the Company or continued service as a Consultant or Director for a specified period of time; (3) the occurrence of any event or the satisfaction of any other condition specified by the Committee in its sole discretion; or (4) a combination of any of the foregoing. The performance measures described in clause (1) of the preceding sentence may be subject to adjustment for specified significant extraordinary items or events, and may be absolute, relative to one or more other companies, or relative to one or more indexes, and may be contingent upon future performance of the Company or any Affiliate, division, or department thereof. Each Restricted Stock Award may, in the discretion of the Committee, have different Forfeiture Restrictions. A-8 8.3 Other Terms and Conditions. Unless otherwise provided in the Restricted Stock Agreement, the Holder will have the right to receive dividends with respect to Common Stock subject to a Restricted Stock Award, to vote Common Stock subject to such Restricted Stock Agreement, and to enjoy all other stockholder rights, except that (1) the Holder will not be entitled to delivery of the stock certificate until the Forfeiture Restrictions have lapsed, (2) the Company will retain custody of the stock until the Forfeiture Restrictions have lapsed, (3) the Holder may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the stock until the Forfeiture Restrictions have lapsed, and (4) a breach of the terms and conditions established by the Committee pursuant to the Restricted Stock Agreement will cause a forfeiture of the Restricted Stock Award. At the time of such Award, the Committee may, in its sole discretion, prescribe additional terms, conditions, or restrictions relating to Restricted Stock Awards, including, but not limited to, rules pertaining to the termination of employment or service as a Consultant or Director (by retirement, disability, death, or otherwise) of a Holder prior to lapse of the Forfeitures Restrictions. Such additional terms, conditions, or restrictions will be set forth in the Restricted Stock Agreement made in conjunction with the Award. 8.4 Committee’s Discretion to Accelerate Vesting of Restricted Stock Awards. The Committee may, in its discretion and as of a date determined by the Committee, fully vest any or all Common Stock awarded to a Holder pursuant to a Restricted Stock Award, and, upon such vesting, all restrictions applicable to such Restricted Stock Award will lapse as of such date. Any action by the Committee pursuant to this Section may vary among individual Holders and may vary among the Restricted Stock Awards held by any individual Holder. Notwithstanding the preceding provisions of this Section, from and after the date upon which the Company becomes a “publicly held corporation” (as defined in section 162(m) of the Code and applicable interpretive authority under the Code), the Committee may not take any action described in this Section with respect to a Restricted Stock Award that has been granted after such date to a “covered employee” (within the meaning of Treasury Regulation section 1.162-27(c)(2)) if such Award has been designed to meet the exception for performance-based compensation under section 162(m) of the Code. 8.5 Payment for Restricted Stock. The Committee will determine the amount and form of any payment for Common Stock received pursuant to a Restricted Stock Award, provided that, in the absence of such a determination, a Holder will not be required to make any payment for Common Stock received pursuant to a Restricted Stock Award, except to the extent otherwise required by law. 9. PERFORMANCE AWARDS 9.1 Performance Award Agreements. At the time any Award is made under this Section, the Company and the Holder will enter into a Performance Award Agreement setting forth each of the matters contemplated by the Plan and such additional matters as the Committee may determine to be appropriate. The terms and provisions of the respective Performance Award Agreements need not be identical. 9.2 Performance Period. The Committee shall establish, with respect to and at the time of each Performance Award, the number of shares of Common Stock subject to, or the maximum value of, the Performance Award and the performance period over which the performance applicable to the Performance Award will be measured. 9.3 Performance Measures. A Performance Award shall be awarded to a Holder contingent upon future performance of the Company or any Affiliate, division, or department thereof during the performance period. The Committee shall establish the performance measures applicable to such performance either (i) prior to the beginning of the performance period or (ii) within 90 days after the beginning of the performance period if the outcome of the performance targets is substantially uncertain at the time such targets are established, but not later than the date that 25% of the A-9 performance period has elapsed; provided such measures may be made subject to adjustment for specified significant extraordinary items or events. The performance measures may be absolute, relative to one or more other companies, or relative to one or more indexes. The performance measures established by the Committee may be based upon (1) the price of a share of Common Stock, (2) the Company’s earnings per share, (3) the Company’s market share, (4) the market share of a business unit of the Company designated by the Committee, (5) the Company’s sales, (6) the sales of a business unit of the Company designated by the Committee, (7) the net income (before or after taxes) of the Company or any business unit of the Company designated by the Committee, (8) the cash flow return on investment of the Company or any business unit of the Company designated by the Committee, (9) the earnings before or after interest, taxes, depreciation, and/or amortization of the Company or any business unit of the Company designated by the Committee, (10) the economic value added, (11) the return on stockholders’ equity achieved by the Company, (12) the total stockholders’ return achieved by the Company, or (13) a combination of any of the foregoing. The Committee, in its sole discretion, may provide for an adjustable Performance Award value based upon the level of achievement of performance measures. 9.4 Awards Criteria. In determining the value of Performance Awards, the Committee will take into account a Holder’s responsibility level, performance, potential, other Awards, and such other considerations as it deems appropriate. The Committee, in its sole discretion, may provide for a reduction in the value of a Holder’s Performance Award during the performance period. 9.5 Payment. Following the end of the performance period, the Holder of a Performance Award will be entitled to receive payment of an amount not exceeding the number of shares of Common Stock subject to, or the maximum value of, the Performance Award, based on the achievement of the performance measures for such performance period, as determined and certified in writing by the Committee. Notwithstanding any provision in this Section to the contrary, any payment due with respect to a Performance Award shall be paid no later than ten years after the date of grant of such Performance Award. Payment of a Performance Award may be made in cash, Common Stock, or a combination thereof, as determined by the Committee. Payment shall be made in a lump sum or in installments as prescribed by the Committee. If a Performance Award covering shares of Common Stock is to be paid in cash, such payment shall be based on the Fair Market Value of the Common Stock on the payment date or such other date as may be specified by the Committee in the Performance Award Agreement. 9.6 Other Terms and Conditions. Dividends or dividend equivalents, as applicable, will not be paid to the Holders of Performance Awards that are unvested or unearned. In the event that a Performance Award is structured as a Restricted Stock Award with performance conditions, the dividend amounts paid with respect to each share of underlying Common Stock during the period that the Performance Award is unvested or unearned will be accrued and paid out to the Holder following the vesting of the Performance Award. 9.7 Termination of Award. A Performance Award shall terminate if the Holder does not remain continuously in the employ of the Company and its Affiliates or does not continue to perform services as a Consultant or a Director for the Company and its Affiliates at all times during the applicable performance period, except as may be determined by the Committee. 10. PHANTOM STOCK AWARDS 10.1 Phantom Stock Award Agreements. At the time any Award is made under this Section, the Company and the Holder will enter into a Phantom Stock Award Agreement setting forth each of the matters contemplated by the Plan and such additional matters as the Committee may determine to be appropriate. The terms and provisions of the respective Phantom Stock Award Agreements need not be identical. A-10 10.2 Phantom Stock Awards. Phantom Stock Awards are rights to receive shares of Common Stock (or the Fair Market Value thereof), or rights to receive an amount equal to any appreciation or increase in the Fair Market Value of Common Stock over a specified period of time, which vest over a period of time as established by the Committee, without satisfaction of any performance criteria or objectives. The Committee may, in its discretion, require payment or other conditions of the Holder respecting any Phantom Stock Award. A Phantom Stock Award may include, without limitation, a Stock Appreciation Right that is granted independently of an Option. 10.3 Award Period. The Committee shall establish, with respect to and at the time of each Phantom Stock Award, a period over which the Award will vest with respect to the Holder. 10.4 Awards Criteria. In determining the value of Phantom Stock Awards, the Committee will take into account a Holder’s responsibility level, performance, potential, other Awards, and such other considerations as it deems appropriate. 10.5 Payment. Following the end of the vesting period for a Phantom Stock Award (or at such other time as the applicable Phantom Stock Award Agreement may provide), the Holder of a Phantom Stock Award will be entitled to receive payment of an amount, not exceeding the maximum value of the Phantom Stock Award, based on the then vested value of the Award. Payment of a Phantom Stock Award may be made in cash, Common Stock, or a combination thereof as determined by the Committee. Payment shall be made in a lump sum or in installments as prescribed by the Committee. Any payment to be made in cash shall be based on the Fair Market Value of the Common Stock on the payment date or such other date as may be specified by the Committee in the Phantom Stock Award Agreement. Cash dividend equivalents may be paid during or after the vesting period with respect to a Phantom Stock Award, as determined by the Committee. 10.6 Termination of Award. A Phantom Stock Award shall terminate if the Holder does not remain continuously in the employ of the Company and its Affiliates or does not continue to perform services as a Consultant or a Director for the Company and its Affiliates at all times during the applicable vesting period, except as may be otherwise determined by the Committee. 11. BONUS STOCK AWARDS 11.1 Bonus Stock Awards. Each Bonus Stock Award granted to a Holder will constitute a transfer of unrestricted Common Stock on such terms and conditions as the Committee shall determine. Bonus Stock Awards will be made in shares of Common Stock and need not be subject to performance criteria or objectives or to forfeiture. The purchase price, if any, for Common Stock issued in connection with a Bonus Stock Award will be determined by the Committee in its sole discretion. 12. RECAPITALIZATION OR REORGANIZATION 12.1 No Effect on Board’s or Stockholders’ Power. The existence of the Plan and the Awards granted under the Plan will not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize (1) any adjustment, recapitalization, reorganization, or other change in the Company’s or any Affiliate’s capital structure or its business, (2) any merger, share exchange, or consolidation of the Company or any Affiliate, (3) any issue of debt or equity securities ranking senior to or affecting Common Stock or the rights of Common Stock, (4) the dissolution or liquidation of the Company or any Affiliate, (5) any sale, lease, exchange, or other disposition of all or any part of the Company’s or any Affiliate’s assets or business, or (6) any other corporate act or proceeding. 12.2 Adjustment in the Event of Stock Subdivision, Consolidation, or Dividend. The shares with respect to which Awards may be granted are shares of Common Stock as presently constituted, but if, and whenever, prior to the expiration of an Award theretofore granted, the Company will effect A-11 a subdivision or consolidation of shares of Common Stock or the payment of a stock dividend on Common Stock without receipt of consideration by the Company, the number of shares of Common Stock with respect to which such Award may thereafter be exercised (1) in the event of an increase in the number of outstanding shares, will be proportionately increased, and the purchase price per share will be proportionately reduced, and (2) in the event of a reduction in the number of outstanding shares, will be proportionately reduced, and the purchase price per share will be proportionately increased. Any fractional share resulting from such adjustment will be rounded up to the next whole share. 12.3 Adjustment in the Event of Recapitalization or Corporate Change. 12.3.1 If the Company recapitalizes, reclassifies its capital stock, or otherwise changes its capital structure (a “recapitalization”), the number and class of shares of Common Stock covered by an Award theretofore granted will be adjusted so that such Award will thereafter cover the number and class of shares of stock and securities to which the Holder would have been entitled pursuant to the terms of the recapitalization if, immediately prior to the recapitalization, the Holder had been the holder of record of the number of shares of Common Stock then covered by such Award. 12.3.2 If a Corporate Change occurs, then no later than (1) 10 days after the approval by the stockholders of the Company of a Corporate Change, other than a Corporate Change resulting from a person or entity acquiring or gaining ownership or control of more than 50% of the outstanding shares of the Company’s voting stock, or (2) 30 days after a Corporate Change resulting from a person or entity acquiring or gaining ownership or control of more than 50% of the outstanding shares of the Company’s voting stock, the Committee, acting in its sole discretion and without the consent or approval of any Holder, will effect one or more of the following alternatives, which alternatives may vary among individual Holders and which may vary among Options held by any individual Holder, but will be conditioned upon the actual consummation of the Corporate Change occurring: 12.3.2.1 Accelerate the vesting of any Options (or any portion of any Option) then outstanding; 12.3.2.2 Accelerate the time at which some or all of the Options (or any portion of the Options) then outstanding may be exercised so that such Options (or any portion of such Options) may be exercised for a limited period of time on or before a specified date (before or after such Corporate Change) fixed by the Committee, after which specified date all unexercised Options and all rights of Holders under such Options will terminate; 12.3.2.3 Require the mandatory surrender to the Company by selected Holders of some or all of the outstanding Options (or any portion of such Options) held by such Holders (irrespective of whether such Options (or any portion of such Options) are then vested or exercisable under the provisions of the Plan) as of a date, before or after such Corporate Change, specified by the Committee, in which event the Committee will then cancel such Options (or any portion of such Options) and cause the Company to pay each Holder an amount of cash per share equal to the excess, if any, of the Change of Control Value of the shares subject to such Option over the exercise price(s) under such Options for such shares; 12.3.2.4 Make such adjustments to Options (or any portion of such Options) then outstanding as the Committee deems appropriate to reflect such Corporate Change (provided, however, that the Committee may determine in its sole discretion that no adjustment is necessary to one or more Options (or any portion of such Options) then outstanding); or 12.3.2.5 Provide that the number and class of shares of Common Stock covered by an Option (or any portion of such Option) theretofore granted will be adjusted so that such Option will thereafter cover the number and class of shares of stock or other securities or property (including, A-12 without limitation, cash) to which the Holder would have been entitled pursuant to the terms of the agreement of merger, consolidation, or sale of assets or dissolution if, immediately prior to such merger, consolidation, or sale of assets or dissolution, the Holder had been the holder of record of the number of shares of Common Stock then covered by such Option. 12.4 Change of Control Value. For purposes of Subsection 12.3.2.3 above, the “Change of Control Value” will equal the amount determined in one of the following clauses, whichever is applicable: 12.4.1 The per share price offered to stockholders of the Company in any such merger, consolidation, sale of assets, or dissolution transaction; 12.4.2 The price per share offered to stockholders of the Company in any tender offer or exchange offer whereby a Corporate Change takes place; or 12.4.3 If such Corporate Change occurs other than pursuant to a tender or exchange offer, the fair market value per share of the shares into which such Options being surrendered are exercisable, as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Options. 12.5 In the event that the consideration offered to stockholders of the Company in any transaction described in this Section or in Section 12.3 above consists of anything other than cash, the Committee will determine in its discretion the fair cash equivalent of the portion of the consideration offered that is other than cash. 12.6 Other Adjustments. In the event of changes in the outstanding Common Stock by reason of recapitalizations, mergers, consolidations, reorganizations, liquidations, combinations, split-ups, split- offs, spin-offs, exchanges, issuances of rights or warrants, or other relevant changes in capitalization or distributions to the holders of Common Stock occurring after the date of grant of any Award and not otherwise provided for by this Section, (1) such Award and any agreement evidencing such Award will be subject to adjustment by the Committee in its discretion as to the number and price of shares of Common Stock or other consideration subject to such Award, and (2) the aggregate number of shares available under the Plan, the aggregate number of shares that may be issued under the Plan through Incentive Stock Options, and the maximum number of shares that may be subject to Awards to any one individual may be appropriately adjusted by the Committee, whose determination will be conclusive and binding on all parties. Notwithstanding the foregoing, except as otherwise provided by the Committee, upon the occurrence of a Corporate Change, the Committee, acting in its sole discretion without the consent or approval of any Holder, may require the mandatory surrender to the Company by selected Holders of some or all of the outstanding Performance Awards and Phantom Stock Awards as of a date, before or after such Corporate Change, specified by the Committee, in which event the Committee shall thereupon cancel such Performance Awards and Phantom Stock Awards and the Company shall pay (or cause to be paid) to each Holder an amount of cash equal to the maximum value (which maximum value may be determined, if applicable and in the discretion of the Committee, based on the then Fair Market Value of the Common Stock) of such Performance Award or Phantom Stock Award which, in the event the applicable performance or vesting period set forth in such Performance Award or Phantom Stock Award has not been completed, will be multiplied by a fraction, the numerator of which is the number of days during the period beginning on the first day of the applicable performance or vesting period and ending on the date of the surrender, and the denominator of which is the aggregate number of days in the applicable performance or vesting period. 12.7 Stockholder Action. If any event giving rise to an adjustment provided for in this Section requires stockholder action, such adjustment will not be effective until such stockholder action has been taken. A-13 12.8 No Adjustment Except as Provided in the Plan. Except as expressly provided in the Plan, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class for cash, property, labor, or services, upon direct sale, upon the exercise of rights or warrants to subscribe for such shares or other securities, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, will not affect, and no adjustment by reason thereof will be made with respect to, the number of shares of Common Stock subject to Awards theretofore granted or the purchase price per share, if applicable. 13. AMENDMENT AND TERMINATION OF THE PLAN 13.1 Termination of Plan. The Board in its discretion may terminate the Plan at any time with respect to any shares of Common Stock for which Awards have not theretofore been granted. 13.2 Amendment of Plan. The Board will have the right to alter or amend the Plan or any part of the Plan from time to time; provided that no change in any Award theretofore granted may be made that would impair the rights of the Holder without the consent of the Holder; and provided, further, that the Board may not, without approval of the stockholders, amend the Plan to (1) increase the maximum aggregate number of shares that may be issued under the Plan, (2) increase the maximum number of shares that may be issued under the Plan through Incentive Stock Options, (3) change the class of individuals eligible to receive Awards under the Plan, or (4) amend or delete Section 7.8 of the Plan. 14. MISCELLANEOUS 14.1 No Right To An Award. Neither the adoption of the Plan nor any action of the Board or of the Committee will be deemed to give any individual any right to be granted an Option, a right to a Restricted Stock Award, a right to a Performance Award, a right to a Phantom Stock Award, a right to a Bonus Stock Award, or any other rights under the Plan except as may be evidenced by an Award agreement duly executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth in such Agreement. 14.2 Unfunded Plan. The Plan will be unfunded. The Company will not be required to establish any special or separate fund or to make any other segregation of funds or assets to insure the payment of any Award. 14.3 No Employment/Consulting/Membership Rights Conferred. Nothing contained in the Plan will (1) confer upon any Employee or Consultant any right with respect to continuation of employment or of a consulting, advisory, or other non-common law relationship with the Company or any Affiliate or (2) interfere in any way with the right of the Company or any Affiliate to terminate any Employee’s employment or any Consultant’s consulting, advisory, or other non-common law relationship at any time. Nothing contained in the Plan will confer upon any Director any right with respect to continuation of membership on the Board. 14.4 Compliance with Other Laws. The Company will not be obligated to issue any Common Stock pursuant to any Award granted under the Plan at any time when the shares covered by such Award have not been registered under the Securities Act of 1933, as amended, and such other state and federal laws, rules, or regulations as the Company or the Committee deems applicable and, in the opinion of legal counsel to the Company, there is no exemption from the registration requirements of such laws, rules, or regulations available for the issuance and sale of such shares. No fractional shares of Common Stock will be delivered, nor will any cash in lieu of fractional shares be paid. 14.5 Withholding. The Company will have the right to deduct or cause to be deducted in connection with all Awards any taxes required by law to be withheld and to require any payments required to satisfy applicable withholding obligations. A-14 14.6 No Restriction on Corporate Action. Nothing contained in the Plan will be construed to prevent the Company or any Affiliate from taking any corporate action that is deemed by the Company or such Affiliate to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No Employee, Consultant, Director, beneficiary, or other person will have any claim against the Company or any Affiliate as a result of any such action. 14.7 Restrictions on Transfer. Except as otherwise provided by the Committee as set forth in this Section, an Award (other than an Incentive Stock Option, which will be subject to the transfer restrictions set forth in Section 7.3) will not be transferable otherwise than by will or the laws of descent and distribution or pursuant to a domestic relations order entered or approved by a court of competent jurisdiction upon delivery to the Company of written notice of such transfer and a certified copy of such order. The Committee shall have the discretion to permit the transfer of an Award (other than an Incentive Stock Option); provided, however, that such transfer shall be limited to members of a Holder’s immediate family (as defined in Rule 16(a)- 1(e) of the 1934 Act), trusts, and partnerships established for the primary benefit of such family members or to charitable organizations; and provided further, that such transfer is not made for consideration to the Holder. 14.8 Governing Law. The Plan shall be governed by, and construed in accordance with, the laws of the state of Delaware, without regard to conflicts of laws principles thereof. A-15 LEARN MORE AT www.cirrus.com NORTH AMERICA CORPORATE HEADQUARTERS 800 West Sixth Street Austin, Texas 78701 United States T +1-512-851-4000 Toll-Free +1-800-888-5016 EUROPE CIRRUS LOGIC INTERNATIONAL (U.K.) LTD. JAPAN CIRRUS LOGIC K.K. Westfield House 26 Westfield Road Edinburgh EH11 2QB United Kingdom T +44 (0) 131-272-7000 Annex 8F DBC Shinagawa Tokyu Building 1-7-18 Konan Minato-ku Tokyo, Japan 108-0075 T +81 (3) 5782-8180 ASIA PACIFIC CIRRUS L OGIC CHINA HOLDINGS, I NC. 2401-2402 Aerospace Building 4019 Shen Nan Road Shenzhen, 518031 China T +86 (755) 8379-7561 © 2015 Cirrus Logic, Inc. All rights reser ved. Cirrus Logic, Cirrus, the Cirrus Logic logo designs are trademarks of Cirrus Logic, Inc. 2015 Annual Report