Maxim Integrated Reports Results For The First Quarter Of Fiscal 2013 - Revenue: $623 million

- Gross Margin: 61.9% GAAP (63.4% excluding special expense items)

- EPS: $0.43 GAAP ($0.47 excluding special items)

- Cash, cash equivalents, and short term investments: $925 million

- Fiscal second quarter revenue outlook: $595 million to $625 million

SAN JOSE, Calif., Oct. 25, 2012 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $623 million for its first quarter of fiscal 2013 ended September 29, 2012, a 3% increase from $605 million revenue recorded in the prior quarter.

(Logo:  http://photos.prnewswire.com/prnh/20120912/SF71654LOGO)

Tunc Doluca, President and Chief Executive Officer, commented, "Maxim Integrated continues to perform very well in the current environment of macro uncertainty. Our fiscal Q1 financial performance and our fiscal Q2 guidance illustrate the effectiveness of our strategy to provide high integration solutions."

Fiscal Year 2013 First Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the September quarter was $0.43. The results were affected by certain items which primarily consisted of a $13.5 million pre-tax charge for acquisition related items.

GAAP earnings per share, excluding special items, was $0.47. An analysis of GAAP versus GAAP excluding special items is provided in the last table of this press release.

Cash Flow Items
At the end of our first quarter of fiscal 2013, total cash, cash equivalents and short term investments was $925 million, a decrease of $31 million from the prior quarter. Notable items include:

  • Cash flow from operations: $137 million
  • Net capital expenditures: $50 million
  • Dividends: $70 million ($0.24 per share)
  • Stock repurchases: $65 million

Business Outlook
The Company's 90 day backlog at the beginning of the second fiscal quarter of 2013 was $400 million. Based on our beginning backlog and expected turns, results for the December 2012 quarter are expected to be:

  • Revenue: $595 million to $625 million
  • Gross Margin: 58% to 61% GAAP (60% to 63% excluding special expense items)
  • EPS: $0.36 to $0.40 GAAP ($0.39 to $0.43 excluding special expense items)

Maxim Integrated's business outlook does not include the potential impact of any restructuring activity or mergers, acquisitions, divestitures, or other business combinations that may be completed during the quarter.

Dividend
A cash dividend of $0.24 per share will be paid on December 5, 2012, to stockholders of record on November 21, 2012.

Conference Call
Maxim Integrated has scheduled a conference call on October 25, 2012, at 2:00 p.m. Pacific Time to discuss its financial results for the first quarter of fiscal 2013 and its business outlook. To listen via telephone, dial (866) 793-1307 (toll free) or (703) 639-1309.  This call will be webcast by Shareholder.com and can be accessed at the Company's website at www.maximintegrated.com.

Contact
Venk Nathamuni
Managing Director, Investor Relations
(408) 601-5293

 

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 



Three Months Ended



September 29,


June 30,


September 24,



2012


2012


2011



(in thousands, except per share data)

Net revenues


$       623,075


$          604,956


$       636,002

Cost of goods sold


237,384


232,967


240,529

        Gross margin


385,691


371,989


395,473

Operating expenses:







    Research and development


132,930


134,007


140,213

    Selling, general and administrative


80,187


79,980


82,456

    Intangible asset amortization


4,049


4,049


4,321

    Impairment of long-lived assets


2,707


22,383


-

    Severance and restructuring


-


18


492

Other operating expenses (income), net (1)


415


(4,469)


(4,389)

  Total operating expenses 


220,288


235,968


223,093

  Operating income


165,403


136,021


172,380

  Interest and other expense, net (2)


(5,742)


(108)


(4,100)

Income before provision for income taxes


159,661


135,913


168,280

Provision for income taxes


31,773


25,279


34,834

      Net income


$       127,888


$          110,634


$       133,446








Earnings per share: 







    Basic 


$             0.44


$                0.38


$             0.45

    Diluted 


$             0.43


$                0.37


$             0.44








Shares used in the calculation of earnings per share: 







    Basic


292,213


292,757


294,475

    Diluted 


298,782


299,793


301,076








Dividends paid per share 


$             0.24


$                0.22


$             0.22















SCHEDULE OF SPECIAL EXPENSE ITEMS

(Unaudited)

 



Three Months Ended



September 29,


June 30,


September 24,



2012


2012


2011



(in thousands)

Cost of goods sold:







      Intangible asset amortization


$               9,454


$                  9,392


$               9,434

 Total 


$               9,454


$                  9,392


$               9,434








 Operating expenses: 







     Intangible asset amortization


$               4,049


$                  4,049


$               4,321

     Impairment of long-lived assets


2,707


22,383


-

     Severance and restructuring 


-


18


492

Other operating expenses (income) , net (1)


415


(4,469)


(4,389)

 Total 


$               7,171


$                21,981


$                  424








Interest and other expense, net (2) 


$                     -


$                     550


$                     -

 Total 


$                     -


$                     550


$                     -








Provision for income taxes:







     International restructuring implementation 


$                     -


2,751


(2,655)

 Total 


$                     -


$                  2,751


$             (2,655)








(1) Other operating expenses (income), net are primarily for contingent consideration adjustments related to certain acquisitions, stock option related litigation and certain payroll taxes, interest and penalties.

(2) Includes impairment of privately-held companies.

STOCK-BASED COMPENSATION BY TYPE OF AWARD (in thousands)

(Unaudited)










Three Months Ended September 29, 2012

Stock Options


Restricted Stock Units


Employee Stock Purchase Plan


Total


Cost of goods sold

$ 398


$ 2,171


$ 419


$ 2,988


Research and development expense

1,829


9,210


1,284


12,323


Selling, general and administrative expense

1,555


5,119


512


7,186


Total

$ 3,782


$ 16,500


$ 2,215


$22,497











Three Months Ended June 30, 2012









Cost of goods sold

$ 462


$ 2,206


$ 423


$ 3,091


Research and development expense

1,607


8,331


1,413


11,351


Selling, general and administrative expense

1,468


4,518


462


6,448


Total

$ 3,537


$ 15,055


$ 2,298


$20,890











Three Months Ended September 24, 2011









Cost of goods sold

$ 517


$ 2,307


$ 433


$ 3,257


Research and development expense

2,055


9,958


1,248


13,261


Selling, general and administrative expense

1,428


5,125


394


6,947


Total

$ 4,000


$ 17,390


$ 2,075


$23,465


















 

CONSOLIDATED BALANCE SHEETS


(Unaudited)



September 29,

2012

June 30,

2012

September 24,

 2011


(in thousands)


ASSETS


Current assets:







   Cash and cash equivalents

$ 849,850


$ 881,060


$ 710,041


   Short-term investments

75,283


75,326


50,299


      Total cash, cash equivalents and short-term investments

925,133


956,386


760,340


   Accounts receivable, net

316,538


317,461


328,989


Inventories

258,689


242,162


253,159


   Deferred tax assets

71,561


98,180


77,885


   Other current assets

94,875


85,177


83,569


      Total current assets

1,666,796


1,699,366


1,503,942


Property, plant and equipment, net

1,359,882


1,353,606


1,328,832


Intangible assets, net

195,410


208,913


257,016


Goodwill

422,083


423,073


411,241


Other assets

60,403


52,988


20,552


TOTAL ASSETS

$ 3,704,574


$3,737,946


$ 3,521,583









LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:







   Accounts payable

$ 127,306


$ 147,086


$ 126,794


   Income taxes payable

19,437


22,589


5,059


   Accrued salary and related expenses

132,847


191,846


147,168


   Accrued expenses

72,510


64,092


68,560


   Current portion of long term debt

303,272


303,496


4,506


   Deferred income on shipments to distributors

27,025


26,280


34,580


      Total current liabilities

682,397


755,389


386,667


Long term debt

5,592


5,592


311,792


Income taxes payable

226,001


212,389


98,650


Deferred tax liabilities

195,893


198,502


189,763


Other liabilities

26,254


27,797


22,155


      Total liabilities

1,136,137


1,199,669


1,009,027









Stockholders' equity:







   Common stock

292


293


293


   Retained earnings

2,583,060


2,553,418


2,526,598


   Accumulated other comprehensive loss

(14,915)


(15,434)


(14,335)


      Total stockholders' equity

2,568,437


2,538,277


2,512,556


TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$ 3,704,574


$3,737,946


$ 3,521,583









 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Three Months Ended


September 29,


June 30,


September 24,


2012


2012


2011


(in thousands)

Cash flows from operating activities:






Net income

$ 127,888


$ 110,634


$ 133,446

Adjustments to reconcile net income to net cash provided by operating activities:






   Stock-based compensation

22,497


20,890


23,465

   Depreciation and amortization

53,674


53,554


52,071

   Deferred taxes

22,772


1,224


39,845

   Loss (Gain) from sale of property, plant and equipment

(51)


(1,412)


127

   Tax benefit related to stock-based compensation

1,335


1,309


1,428

   Impairment of long-lived assets

2,707


22,933


-

   Excess tax benefit related to stock-based compensation

(5,219)


(5,247)


(2,821)

   Changes in assets and liabilities:






      Accounts receivable

923


(21,206)


(30,790)

      Inventories

(16,015)


(22,090)


(9,799)

      Other current assets

(7,839)


(5,634)


(11,840)

      Accounts payable

(26,466)


11,802


4,882

      Income taxes payable

10,461


20,329


3,698

      Deferred income on shipments to distributors

745


(2,449)


(2,301)

      All other accrued liabilities

(50,667)


5,457


(80,602)

Net cash provided by operating activities

136,745


190,094


120,809







Cash flows from investing activities:






   Payments of property, plant and equipment

(50,703)


(76,610)


(49,324)

   Proceeds from sales of property, plant and equipment

344


1,400


-

   Acquisitions

-


(2,257)


(154,269)

   Investment in privately-held companies

-


(1,500)


-

   Net cash used in investing activities

(50,359)


(78,967)


(203,593)







Cash flows from financing activities:






   Excess tax benefit from stock-based compensation plan

5,219


5,247


2,821

   Dividends paid

(70,199)


(64,408)


(64,781)

   Repayment of notes payable

(224)


(400)


(16,217)

   Repurchase of common stock

(65,149)


(56,282)


(88,674)

   Issuance of ESPP

-


18,807


-

   Net issuance of restricted stock units

(7,107)


(6,929)


(7,016)

   Proceeds from stock options exercised

19,864


13,347


4,151

Net cash used in financing activities

(117,596)


(90,618)


(169,716)







Net increase (decrease) in cash and cash equivalents

(31,210)


20,509


(252,500)

Cash and cash equivalents:






   Beginning of period

881,060


860,551


962,541

   End of period

$ 849,850


$ 881,060


$ 710,041







Total cash, cash equivalents, and short-term investments

$ 925,133


$ 956,386


$ 760,340








 

ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL EXPENSE ITEMS DISCLOSURES

(Unaudited)

 



Three Months Ended



September 29,


June 30,


September 24,



2012


2012


2011



(in thousands, except per share data)

Reconciliation of GAAP gross profit to GAAP gross profit excluding special expense items:







GAAP gross profit


$           385,691


$              371,989


$           395,473

GAAP gross profit %


61.9%


61.5%


62.2%








Special expense items:







      Intangible asset amortization


9,454


9,392


9,434

 Total special expense items 


9,454


9,392


9,434

 GAAP gross profit excluding special expense items 


$           395,145


$              381,381


$           404,907

 GAAP gross profit % excluding special expense items 


63.4%


63.0%


63.7%








Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special expense items:







GAAP operating expenses


$           220,288


$              235,968


$           223,093








Special expense (income) items:







   Intangible asset amortization


4,049


4,049


4,321

   Impairment of long-lived assets


2,707


22,383


-

  Severance and restructuring 


-


18


492

  Other operating expenses (income), net (1) 


415


(4,469)


(4,389)

Total special expense items 


7,171


21,981


424

 GAAP operating expenses excluding special expense items 


$           213,117


$              213,987


$           222,669








Reconciliation of GAAP net income to GAAP net income excluding special expense items:







GAAP net income


$           127,888


$              110,634


$           133,446








Special expense (income) items:







  Intangible asset amortization


13,503


13,441


13,755

  Impairment of long-lived assets


2,707


22,383


-

 Severance and restructuring 


-


18


492

 Other operating expenses (income) , net (1) 


415


(4,469)


(4,389)

 Interest and other expense, net (2) 


-


550


-

                     Pre-tax total special expense items 


16,625


31,923


9,858

     Tax effect of special items 


(5,371)


(10,613)


(3,474)

  International restructuring   implementation 


-


2,751


(2,655)

 GAAP net income excluding special expense items 


$           139,142


$              134,695


$           137,175








 GAAP net income per share excluding special expense items: 







    Basic 


$             0.48


$                0.46


$             0.47

    Diluted 


$             0.47


$                0.45


$             0.46








Shares used in the calculation of earnings per share excluding special expense items: 






    Basic


292,213


292,757


294,475

    Diluted 


298,782


299,793


301,076








(1) Other operating expenses (income), net are primarily for contingent consideration adjustments related to certain acquisitions, stock option related litigation and certain payroll taxes, interest and penalties.

(2) Includes impairment of privately-held companies.

   

Non-GAAP Measures
To supplement the consolidated financial results prepared under GAAP, Maxim Integrated uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude special expense items related to intangible asset amortization; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; stock option related litigation; certain payroll taxes, interest and penalties; impairment of investments in privately-held companies; the tax provision impacts due to implementation of international restructuring. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim Integrated's current performance. Many analysts covering Maxim Integrated use the non-GAAP measures as well. Given management's use of these non-GAAP measures, Maxim Integrated believes these measures are important to investors in understanding Maxim Integrated's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in Maxim Integrated's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative to GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized it may not be possible to compare these financial measures with other companies' non-GAAP financial measures, even if they have similar names. The non-GAAP measures displayed in the table above include the following:

GAAP gross profit excluding special expense items
The use of GAAP gross profit excluding special expense items allows management to evaluate the gross margin of the Company's core businesses and trends across different reporting periods on a consistent basis, independent of special expense items including intangible asset amortization.  In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP gross profit excluding special expense items to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of Maxim Integrated's core businesses.

GAAP operating expenses excluding special expense items
The use of GAAP operating expenses excluding special expense items allows management to evaluate the operating expenses of the Company's core businesses and trends across different reporting periods on a consistent basis, independent of special expense items including intangible asset amortization; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; stock option related litigation; and certain payroll taxes, interest and penalties.  In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP operating expenses excluding special expense items to enable investors and analysts to evaluate our core business and its direct operating expenses.   

GAAP net income and GAAP net income per share excluding special items
The use of GAAP net income and GAAP net income per share excluding special items allow management to evaluate the operating results of Maxim Integrated's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; stock option related litigation; certain payroll taxes, interest and penalties; impairment of investments in privately-held companies; and the tax provision impacts due to implementation of international restructuring. In addition, they are important components of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP net income and GAAP net income per share excluding special items to enable investors and analysts to understand the results of operations of Maxim Integrated's core businesses and to compare our results of operations on a more consistent basis against that of other companies in our industry.

"Safe Harbor" Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include the Company's financial projections for its second quarter of fiscal 2013 ending in December 2012, which includes revenue, gross margin and earnings per share, as well as the Company's belief that its fiscal Q1 financial performance and its fiscal Q2 guidance illustrate the effectiveness of its strategy to provide high integration solutions. These statements involve risk and uncertainty. Actual results could differ materially from those forecasted based upon, among other things, general market and economic conditions and market developments that could adversely affect the growth of the mixed-signal analog market, product mix shifts, the loss of all or a substantial portion of our sales to one of our large customers,  customer cancellations and price competition, as well as other risks described in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2012 (the "10-K") and Quarterly Reports on Form 10-Q filed after the 10-K.

All forward-looking statements included in this news release are made as of the date hereof, based on the information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement except as required by law.

About Maxim Integrated
At Maxim Integrated, we put analog together in a way that sets our customers apart. In Fiscal 2012, we reported revenues of $2.4 billion. For more information, go to www.maximintegrated.com.

SOURCE Maxim Integrated Products, Inc.



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