Company: CRUS
Filing Date: 2025-05-23
Form Type: 10-K
Source: 0000772406-25-000014
Chunk: 88

Company: CIRRUS LOGIC, INC.
Filing Date: 2025-05-23
Form: 10-K
Item: Item 8
Chunk 88
---
 upon in the customer contract. Variable pricing includes rights of return, price protection and stock rotation.  Rights of return costs are estimated using the "most likely amount" method by reviewing historical returns to determine the most likely customer return rate and applying materiality thresholds.  Price protection includes price adjustments available to certain distributors based upon established book price and a stated adjustment period.  Stock rotation is also available to certain distributors based on a stated maximum of prior billings.  The Company estimates all variable consideration at the most likely amount which it expects to be entitled.  The estimate is based on current and historical information available to the Company, including recent sales activity and pricing.  Variable consideration is only included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.  The Company defers all variable consideration that does not meet the revenue recognition criteria.  Shipping CostsOur shipping and handling costs are included in cost of sales for all periods presented in the consolidated statements of income.Advertising CostsAdvertising costs are expensed as incurred.  Advertising costs were $0.3 million, $0.3 million, and $0.5 million, in fiscal years 2025, 2024, and 2023, respectively.Stock-Based CompensationStock-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 1 and 4 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 market stock units.  The Company calculates the grant-date fair value for stock options and market stock units ("MSUs") 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, and forfeiture rates.  The grant-date fair value of restricted stock units ("RSUs") is the market value at grant date multiplied by the number of units.  The grant-date fair value of performance stock units ("PSUs") is the market value at grant date multiplied by the target number of award units.Income TaxesWe are required to calculate income taxes in each of the jurisdictions in which we operate.  This process involves calculating the actual current tax liability