Maxim Integrated Reports Results For The First Quarter Of Fiscal 2014 - Revenue: $585 million

- Gross Margin: 59.3% GAAP (60.7% excluding special items)

- EPS: $0.36 GAAP ($0.41 excluding special items)

- Cash, cash equivalents, and short term investments: $1.03 billion

- Fiscal first quarter results exclude Volterra Semiconductor

- Fiscal second quarter revenue outlook: $605 million to $635 million, including $35 million to $37 million of revenue from Volterra

SAN JOSE, Calif., Oct. 24, 2013 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $585 million for its first quarter of fiscal 2014 ended September 28, 2013, a 4% decrease from the $608 million revenue recorded in the prior quarter. Fiscal first quarter results exclude Volterra Semiconductor.

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Tunc Doluca, President and Chief Executive Officer, commented, "We are pleased that our first quarter results came in as expected as our diversified business model continues to serve us well. We also completed the acquisition of Volterra Semiconductor earlier this month and are excited to have the team on board."

Fiscal Year 2014 First Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the September quarter was $0.36. The results were affected by special items which primarily consisted of:

  • $12 million pre-tax charge for acquisition related items
  • $3 million pre-tax charge for expenses related to the Volterra acquisition
  • $6 million pre-tax charge for restructuring and severance

GAAP earnings per share, excluding special items, was $0.41. 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 2014, total cash, cash equivalents and short term investments was $1.03 billion, a decrease of $165 million from the prior quarter. Notable items include:

  • Cash flow from operations: $96 million
  • Net capital expenditures: $33 million
  • Dividends: $74 million ($0.26 per share)
  • Stock repurchases: $154 million

Business Outlook
The Company's 90 day backlog at the beginning of the second fiscal quarter of 2014 was $417 million including $27 million of Volterra backlog. Based on our beginning backlog and expected turns, results for the December 2013 quarter including Volterra are expected to be:

  • Revenue: $605 million to $635 million (including $35 million to $37 million from Volterra)
  • Gross Margin: 58% to 61% GAAP (59% to 62% excluding special items)
  • EPS: $0.34 to $0.38 GAAP ($0.37 to $0.41 excluding special items)

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

Dividend
A cash dividend of $0.26 per share will be paid on December 5, 2013, to stockholders of record on November 21, 2013.

Conference Call
Maxim Integrated has scheduled a conference call on October 24, 2013, at 2:00 p.m. Pacific Time to discuss its financial results for the first quarter of fiscal 2014 and its business outlook. To listen via telephone, dial (866) 802-4305 (toll free) or (703) 639-1317.  This call will be webcast by Shareholder.com and can be accessed at the Company's website at www.maximintegrated.com/company/investor.

 


CONSOLIDATED STATEMENTS OF INCOME



(Unaudited)





Three Months Ended





September 28,


June 29,


September 29,





2013


2013


2012





(in thousands, except per share data)



Net revenues


$       585,241


$   608,194


$       623,075



Cost of goods sold


238,045


236,795


237,384



        Gross margin


347,196


371,399


385,691



Operating expenses:









    Research and development


129,902


132,009


132,930



    Selling, general and administrative


77,430


82,083


80,187



    Intangible asset amortization


3,436


3,670


4,049



    Impairment of long-lived assets 


-


-


2,707



    Severance and restructuring expenses (1)


5,547


442


-



    Other operating expenses (income), net (2)


2,272


2,105


415



       Total operating expenses 


218,587


220,309


220,288



          Operating income


128,609


151,090


165,403



Interest and other income (expense), net (3)


(3,463)


(6,830)


(5,742)



Income before provision for income taxes


125,146


144,260


159,661



Provision for income taxes 


22,026


25,246


31,773



   Net income


$       103,120


$   119,014


$       127,888












Earnings per share:









    Basic 


$              0.36


$          0.41


$              0.44



    Diluted 


$              0.36


$          0.40


$              0.43












Shares used in the calculation of earnings per share: 









    Basic


284,654


290,146


292,213



    Diluted 


290,260


296,756


298,782












Dividends paid per share 


$              0.26


$          0.24


$              0.24





















SCHEDULE OF SPECIAL EXPENSE ITEMS



(Unaudited)





Three Months Ended





September 28,


June 29,


September 29,





2013


2013


2012





(in thousands)



Cost of goods sold:









      Intangible asset amortization


$               8,092


$           7,777


$               9,454



 Total 


$               8,092


$           7,777


$               9,454












 Operating expenses: 









     Intangible asset amortization


$               3,436


$           3,670


$               4,049



     Impairment of long-lived assets 


-


-


2,707



     Severance and restructuring (1) 


5,547


442


-



     Other operating expenses (income), net (2)


2,272


2,105


415



 Total 


$             11,255


$           6,217


$               7,171












     Interest and other expense (income), net (3) 


$                         -


$              700


$                        -



 Total 


$                         -


$              700


$                        -





















(1) Includes severance charges associated with the reorganization of various business units and manufacturing operations.


(2) Other operating expenses (income), net are primarily for  certain payroll taxes, contingent consideration adjustments related to certain acquisitions, loss (gain) relating to sale of land and buildings, acquisition related expenses and  loss on lease abandonment.


(3) Includes impairment of investment in a privately held company.










 

 


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


(Unaudited)












Three Months Ended September 28, 2013

  Stock Options


  Restricted Stock
Units


  Employee Stock
Purchase Plan


  Total



Cost of goods sold 

$             349


$              1,918


$                475


$   2,742



Research and development expense

1,836


6,440


1,322


$   9,598



Selling, general and administrative expense

1,264


4,527


609


$   6,400



       Total

$          3,449


$            12,885


$             2,406


$ 18,740













Three Months Ended June 29, 2013










Cost of goods sold 

$             320


$              1,999


$                559


$   2,878



Research and development expense

1,673


6,748


1,226


9,647



Selling, general and administrative expense

1,333


4,488


507


6,328



       Total

$          3,326


$            13,235


$             2,292


$ 18,853













Three Months Ended September 29, 2012










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












 

 










CONSOLIDATED  BALANCE SHEETS



(Unaudited)




September 28,


June 29,


September 29,




2013


2013


2012




(in thousands) 



ASSETS



Current assets:








    Cash and cash equivalents

$ 1,009,547


$ 1,174,986


$    849,850



    Short-term investments

25,036


25,060


75,283



        Total cash, cash equivalents and short-term investments

1,034,583


1,200,046


925,133



    Accounts receivable, net 

297,888


285,438


316,538



    Inventories

278,218


275,640


258,689



    Deferred tax assets

54,854


82,173


71,561



  Other current assets

116,225


96,609


94,875



        Total current assets

1,781,768


1,939,906


1,666,796



Property, plant and equipment, net

1,374,544


1,373,124


1,359,882



Intangible assets, net

145,618


157,146


195,410



Goodwill

422,004


422,004


422,083



Other assets

40,063


43,730


60,403



              TOTAL ASSETS

$ 3,763,997


$ 3,935,910


$ 3,704,574











LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:








    Accounts payable 

$    101,060


$    105,322


$    127,306



    Income taxes payable

21,799


22,437


19,437



    Accrued salary and related expenses

124,954


187,970


132,847



    Accrued expenses 

55,561


60,592


72,510



    Current portion of long term debt

4,804


2,015


303,272



    Deferred income on shipments to distributors

27,179


26,557


27,025



        Total current liabilities

335,357


404,893


682,397



Long term debt

500,955


503,573


5,592



Income taxes payable

294,728


282,697


226,001



Deferred tax liabilities

205,221


206,855


195,893



Other liabilities

29,300


29,894


26,254



        Total liabilities 

1,365,561


1,427,912


1,136,137











Stockholders' equity:








    Common stock

283


288


292



    Retained earnings 

2,412,262


2,523,457


2,583,060



    Accumulated other comprehensive loss

(14,109)


(15,747)


(14,915)



        Total stockholders' equity

2,398,436


2,507,998


2,568,437



              TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 

$ 3,763,997


$ 3,935,910


$ 3,704,574










 

 


CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




Three Months Ended




September 28,


June 29,


September 29,




2013


2013


2012




(in thousands)



Cash flows from operating activities: 








Net income

$      103,120


$      119,014


$      127,888



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








      Stock-based compensation 

18,740


18,853


22,497



      Depreciation and amortization 

51,133


51,191


53,674



      Deferred taxes 

25,529


(2,813)


22,772



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

36


1,380


(51)



      Tax benefit (shortfall) related to stock-based compensation 

(3,488)


358


1,335



      Impairment of long-lived assets

-


-


2,707



      Excess tax benefit from stock-based compensation 

(1,697)


(2,792)


(5,219)



      Changes in assets and liabilities: 








          Accounts receivable 

(12,450)


14,608


923



          Inventories 

(2,301)


(7,657)


(16,015)



          Other current assets 

(18,546)


(2,132)


(7,839)



          Accounts payable 

(9,162)


(6,961)


(26,466)



          Income taxes payable 

11,393


13,118


10,461



          Deferred revenue on shipments to distributors 

622


706


745



          All other accrued liabilities 

(67,035)


17,527


(50,667)



Net cash provided by (used in) operating activities 

95,894


214,400


136,745











Cash flows from investing activities: 








          Payments for property, plant and equipment 

(36,329)


(48,922)


(50,703)



          Proceeds from sales of property, plant and equipment

3,048


4,538


344



          Proceeds from sales of property, plant and equipment through note receivable

-


10,786


-



          Acquisitions

-


(2,767)


-



          Purchases of privately-held companies securities

-


(500)


-



          Proceeds from sales of investments of privately-held companies

-


585


-



Net cash provided by (used in) investing activities 

(33,281)


(36,280)


(50,359)











Cash flows from financing activities: 








         Excess tax benefit from stock-based compensation

1,697


2,792


5,219



         Contingent consideration paid

-


(6,305)


-



         Dividends paid

(73,744)


(69,532)


(70,199)



         Repayment of notes payable

-


(302,299)


(224)



         Issuance of debt

100


-


-



         Debt issuance cost

-


(671)


-



         Repurchase of common stock

(154,386)


(193,221)


(65,149)



         Issuance of ESPP

-


19,529


-



         Net issuance of restricted stock units

(6,966)


(7,456)


(7,107)



         Proceeds from stock options exercised

5,247


6,049


19,864



Net cash provided by (used in) financing activities 

(228,052)


(551,114)


(117,596)











Net increase (decrease) in cash and cash equivalents 

(165,439)


(372,994)


(31,210)



Cash and cash equivalents: 








          Beginning of period

1,174,986


1,547,980


881,060



          End of period

$   1,009,547


$   1,174,986


$      849,850











Total cash, cash equivalents, and short-term investments

$   1,034,583


$   1,200,046


$      925,133










 

 


ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL EXPENSE ITEMS DISCLOSURES



(Unaudited)





Three Months Ended





September 28,


June 29,


September 29,





2013


2013


2012





(in thousands, except per share data)



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









GAAP gross profit


$        347,196


$ 371,399


$        385,691



GAAP gross profit %


59.3%


61.1%


61.9%












Special expense items:









      Intangible asset amortization


8,092


7,777


9,454



                     Total special expense items


8,092


7,777


9,454



 GAAP gross profit excluding special expense items 


$        355,288


$ 379,176


$        395,145



 GAAP gross profit % excluding special expense items 


60.7%


62.3%


63.4%












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









GAAP operating expenses


$        218,587


$ 220,309


$        220,288












Special expense (income) items:









      Intangible asset amortization


3,436


3,670


4,049



      Impairment of long-lived assets 


-


-


2,707



     Severance and restructuring (1) 


5,547


442


-



     Other operating expenses (income), net (2) 


2,272


2,105


415



                     Total special expense items


11,255


6,217


7,171



 GAAP operating expenses excluding special expense items 


$        207,332


$ 214,092


$        213,117












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









GAAP net income


$        103,120


$ 119,014


$        127,888












Special expense (income) items:









      Intangible asset amortization


11,528


11,447


13,503



      Impairment of long-lived assets 


-


-


2,707



     Severance and restructuring (1) 


5,547


442


-



     Other operating expenses (income) , net (2) 


2,272


2,105


415



     Interest and other expense, net (3) 


-


700


-



                     Pre-tax total special expense items 


19,347


14,694


16,625



     Tax effect of special items 


(2,981)


(4,231)


(5,371)



 GAAP net income excluding special expense items 


$        119,486


$ 129,477


$        139,142












 GAAP net income per share excluding special expense items: 









    Basic 


$          0.42


$   0.45


$          0.48



    Diluted 


$          0.41


$   0.44


$          0.47












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







    Basic


284,654


290,146


292,213



    Diluted 


290,260


296,756


298,782












(1) Includes severance charges associated with the reorganization of various business units and manufacturing operations.


(2) Other operating expenses (income), net are primarily for  certain payroll taxes, contingent consideration adjustments related to certain acquisitions, loss (gain) relating to sale of land and buildings, acquisition related expenses and  loss on lease abandonment.


(3) Includes impairment of investment in a privately held company.




 

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 items related to intangible asset amortization; impairment of long-lived assets; severance and restructuring; in-process research and development; contingent consideration adjustments relating to certain acquisitions; loss (gain) relating to sale of land and buildings; certain payroll taxes; loss on lease abandonment; acquisition related expenses; and an impairment of investment in a privately held company. 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 items
The use of GAAP gross profit excluding special 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 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 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 items
The use of GAAP operating expenses excluding special 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 items including intangible asset amortization; impairment of long-lived assets; severance and restructuring; in-process research and development; contingent consideration adjustments relating to certain acquisitions; loss (gain) relating to sale of land and buildings; certain payroll taxes; loss on lease abandonment; and acquisition related expenses. 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 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; in-process research and development; contingent consideration adjustments relating to certain acquisitions; loss (gain) relating to sale of land and buildings; certain payroll taxes; loss on lease abandonment; acquisition related expenses; and an impairment of investment in a privately held company. 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 business outlook and financial projections for its second quarter of fiscal 2014 ending in December 2013, which includes revenue, gross margin and earnings per share. 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 28, 2013 (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 2013, we reported revenues of $2.4 billion. For more information, go to www.maximintegrated.com.

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

SOURCE Maxim Integrated Products, Inc.



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