Company: CRUS
Filing Date: 2025-05-23
Form Type: 10-K
Source: 0000772406-25-000014
Chunk: 72

Company: CIRRUS LOGIC, INC.
Filing Date: 2025-05-23
Form: 10-K
Item: Item 7A
Chunk 72
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ITEM 7A.    Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks associated with interest rates on drawn balances of our Revolving Credit Facility and marketable securities, and to currency movements on non-functional currency assets and liabilities.  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, 2025.  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, our downside exposure to interest rate risk is minimal.

To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, the Company performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of the investment portfolio assuming a 100 basis point parallel shift in the yield curve.  Based on investment positions as of March 29, 2025 and March 30, 2024, a hypothetical 100 basis point increase in interest rates across all maturities would result in a $4.1 million and $3.5 million decline in the fair market value of the portfolio, respectively.  Such losses would only be realized if the Company sold the investments prior to maturity. 

Foreign Currency Exchange Risk

Our revenue and spending is transacted primarily in U.S. dollars; however, in fiscal years 2025, 2024, and 2023, we entered into routine transactions in other currencies to fund the operating needs of certain legal entities outside of the U.S.  Our balance sheet also reflects monetary assets and liabilities in certain entities which are remeasured to each entity’s functional currency.  We use forward contracts to manage exposure to foreign currency exchange risk attributable to certain non-functional currency balance sheet exposures.  Gains and losses from these foreign currency forward contracts are recognized currently in earnings along with the gains and losses resulting from remeasuring the underlying exposures.  Because