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

24 Oct, 2013, 16:00 ET from Maxim Integrated Products, Inc.

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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