Maxim Integrated Reports Results For The Second Quarter Of Fiscal 2013

-- Revenue: $605 million

-- Gross Margin: 60.0% GAAP (61.5% excluding special expense items)

-- EPS: $0.26 GAAP ($0.42 excluding special items)

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

-- Fiscal third quarter revenue outlook: $580 million to $610 million

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

SAN JOSE, Calif., Jan. 24, 2013 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $605 million for its second quarter of fiscal 2013 ended December 29, 2012, a 3% decrease from $623 million revenue recorded in the prior quarter.

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

Tunc Doluca, President and Chief Executive Officer, commented, "We are pleased that the breadth of our businesses allowed us to achieve revenues near the midpoint of our guidance range despite ongoing uncertainty. We have an attractive product portfolio with design wins for new model launches in the mobility market and we are also well positioned to benefit from a recovery in the industrial and communications markets."

Fiscal Year 2013 Second Quarter Results

Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the December quarter was $0.26. The results were affected by special items which primarily consisted of:

  • $13 million pre-tax charge for acquisition related items
  • $22 million pre-tax charge for impairment of long-lived assets
  • $19 million tax charge for international restructuring

GAAP earnings per share, excluding special items, was $0.42. 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 second quarter of fiscal 2013, total cash, cash equivalents and short term investments was $1.03 billion, an increase of $105 million from the prior quarter. Notable items include:

  • Cash flow from operations: $255 million
  • Net capital expenditures: $58 million
  • Dividends:  $70 million ($0.24 per share)
  • Stock repurchases: $50 million

Business Outlook

The Company's 90 day backlog at the beginning of the third fiscal quarter of 2013 was $353 million. Based on our beginning backlog and expected turns, results for the March 2013 quarter are expected to be:

  • Revenue: $580 million to $610 million
  • Gross Margin: 58% to 61% GAAP (60% to 63% excluding special expense items)
  • EPS: $0.39 to $0.43 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 March 6, 2013, to stockholders of record on February 20, 2013.

Conference Call

Maxim Integrated has scheduled a conference call on January 24, 2013, at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter of fiscal 2013 and its business outlook. To listen via telephone, dial (866) 206-6154 (toll free) or (703) 639-1107.  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

December 29,

September 29,

December 31,

2012

2012

2011

(in thousands, except per share data)

Net revenues

$         605,306

$          623,075

$       591,359

Cost of goods sold

241,931

237,384

243,399

        Gross margin

363,375

385,691

347,960

Operating expenses:

    Research and development

135,742

132,930

142,084

    Selling, general and administrative

80,058

80,187

80,826

    Intangible asset amortization

3,903

4,049

4,338

    Impairment of long-lived assets (1)

22,222

2,707

-

    Severance and restructuring

2,236

-

6,047

    Other operating expenses (income), net (2)

1,666

415

155

       Total operating expenses 

245,827

220,288

233,450

          Operating income

117,548

165,403

114,510

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

(2,798)

(5,742)

2,374

Income before provision for income taxes

114,750

159,661

116,884

Provision for income taxes (4)

38,128

31,773

28,754

      Net income

$         76,622

$          127,888

$         88,130

Earnings per share: 

    Basic 

$             0.26

$                0.44

$             0.30

    Diluted 

$             0.26

$                0.43

$             0.29

Shares used in the calculation of earnings per share: 

    Basic

292,075

292,213

291,824

    Diluted 

298,759

298,782

299,290

Dividends paid per share 

$             0.24

$                0.24

$             0.22

SCHEDULE OF SPECIAL EXPENSE ITEMS

(Unaudited)

Three Months Ended

December 29,

September 29,

December 31,

2012

2012

2011

(in thousands)

Cost of goods sold:

      Intangible asset amortization

$               8,986

$                  9,454

$               8,080

      Acquisition related inventory write up

-

-

1,801

 Total 

$               8,986

$                  9,454

$               9,881

 Operating expenses: 

     Intangible asset amortization

$               3,903

$                  4,049

$               4,338

     Impairment of long-lived assets (1)

22,222

2,707

-

     Severance and restructuring 

2,236

-

6,047

     Other operating expenses (income) , net (2)

1,666

415

155

 Total 

$             30,027

$                  7,171

$             10,540

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

$                       -

$                          -

$             (1,776)

 Total 

$                       -

$                          -

$             (1,776)

Provision for income taxes:

     International restructuring implementation (4) 

$             18,726

$                         -

$                     -

 Total 

$             18,726

$                         -

$                     -

(1) Includes impairment charges relating to land and buildings held for sale, wafer fab and end of line manufacturing equipment.

(2) Other operating expenses (income), net are primarily for contingent consideration adjustments related to certain acquisitions, certain payroll taxes, interest and penalties and loss relating to sale of land and building.

(3) Includes gain on sale of privately-held companies.

(4) Includes impact due to international restructuring.

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

(Unaudited)

Three Months Ended December 29, 2012

  Stock Options

  Restricted Stock Units

  Employee Stock Purchase Plan

  Total

Cost of goods sold 

$                  477

$               2,572

$                  634

$               3,683

Research and development expense

2,288

8,401

1,451

12,140

Selling, general and administrative expense

1,286

5,152

584

7,022

       Total

$               4,051

$             16,125

$               2,669

$             22,845

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

Three Months Ended December 31, 2011

Cost of goods sold 

$                  565

$               2,657

$                  470

$               3,692

Research and development expense

2,440

9,207

1,262

12,909

Selling, general and administrative expense

1,704

4,778

391

6,873

       Total

$               4,709

$             16,642

$               2,123

$             23,474

CONSOLIDATED  BALANCE SHEETS

(Unaudited)

December 29,

September 29,

December 31,

2012

2012

2011

(in thousands) 

ASSETS

Current assets:

    Cash and cash equivalents

$           955,107

$           849,850

$           741,160

    Short-term investments

75,192

75,283

75,375

        Total cash, cash equivalents and short-term investments

1,030,299

925,133

816,535

    Accounts receivable, net 

264,545

316,538

246,229

    Inventories

257,690

258,689

233,404

    Deferred tax assets

80,991

71,561

87,636

    Other current assets

90,470

94,875

81,396

        Total current assets

1,723,995

1,666,796

1,465,200

Property, plant and equipment, net

1,359,014

1,359,882

1,365,815

Intangible assets, net

182,521

195,410

237,776

Goodwill

422,083

422,083

432,809

Other assets

50,940

60,403

19,055

              TOTAL ASSETS

$        3,738,553

$        3,704,574

$        3,520,655

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

    Accounts payable 

$           110,495

$           127,306

$           118,427

    Income taxes payable

22,146

19,437

7,866

    Accrued salary and related expenses

152,122

132,847

159,651

    Accrued expenses 

58,900

72,510

62,579

    Current portion of long term debt

304,794

303,272

-

    Deferred income on shipments to distributors

25,362

27,025

31,136

        Total current liabilities

673,819

682,397

379,659

Long term debt

3,997

5,592

308,700

Income taxes payable

260,770

226,001

108,462

Deferred tax liabilities

192,434

195,893

197,839

Other liabilities

26,321

26,254

21,529

        Total liabilities 

1,157,341

1,136,137

1,016,189

Stockholders' equity:

    Common stock

7,040

292

292

    Retained earnings 

2,589,619

2,583,060

2,517,166

    Accumulated other comprehensive loss

(15,447)

(14,915)

(12,992)

        Total stockholders' equity

2,581,212

2,568,437

2,504,466

              TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 

$        3,738,553

$        3,704,574

$        3,520,655

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

December 29,

September 29,

December 31,

2012

2012

2011

(in thousands)

Cash flows from operating activities: 

Net income

$            76,622

$      127,888

$        88,130

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

      Stock-based compensation 

22,845

22,497

23,474

      Depreciation and amortization 

51,880

53,674

51,995

      Deferred taxes 

(12,979)

22,772

(368)

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

(88)

(51)

124

      Loss (Gain) from sale of investments in privately-held companies

-

-

(1,811)

      Tax benefit (shortfall) related to stock-based compensation 

5,187

1,335

(2,581)

      Impairment of long-lived assets

22,222

2,707

-

      Excess tax benefit from stock-based compensation

(6,615)

(5,219)

(4,242)

      Changes in assets and liabilities: 

          Accounts receivable 

51,993

923

82,760

          Inventories 

570

(16,015)

19,045

          Other current assets 

4,091

(7,839)

(1,615)

          Accounts payable 

(9,536)

(26,466)

(18,397)

          Income taxes payable 

37,477

10,461

12,619

          Deferred income on shipments to distributors 

(1,663)

745

(3,444)

          All other accrued liabilities 

13,091

(50,667)

3,631

Net cash provided by operating activities 

255,097

136,745

249,320

Cash flows from investing activities: 

          Payments for property, plant and equipment

(62,102)

(50,703)

(68,361)

          Proceeds from sales of property, plant and equipment

4,115

344

1,709

          Acquisitions

-

-

(12,018)

          Purchases of available-for-sale securities

-

-

(25,108)

          Proceeds from sales of investments in privately-held companies

-

-

3,225

Net cash used in investing activities 

(57,987)

(50,359)

(100,553)

Cash flows from financing activities: 

         Excess tax benefit from stock-based compensation

6,615

5,219

4,242

         Dividends paid

(70,063)

(70,199)

(64,158)

         Repayment of notes payable

(74)

(224)

(4,189)

         Contingent consideration paid

(7,476)

-

-

         Repurchase of common stock

(50,435)

(65,149)

(72,486)

         Issuance of ESPP

16,768

-

14,906

         Net issuance of restricted stock units

(6,538)

(7,107)

(7,976)

         Proceeds from stock options exercised

19,350

19,864

12,013

Net cash used in financing activities 

(91,853)

(117,596)

(117,648)

Net increase (decrease) in cash and cash equivalents 

105,257

(31,210)

31,119

Cash and cash equivalents: 

          Beginning of period

849,850

881,060

710,041

          End of period

$          955,107

$      849,850

$      741,160

Total cash, cash equivalents, and short-term investments

$       1,030,299

$      925,133

$      816,535

ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL EXPENSE ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

December 29,

September 29,

December 31,

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

$           363,375

$              385,691

$           347,960

GAAP gross profit %

60.0%

61.9%

58.8%

Special expense items:

      Intangible asset amortization

8,986

9,454

8,080

      Acquisition related inventory write up 

-

-

1,801

 Total special expense items 

8,986

9,454

9,881

 GAAP gross profit excluding special expense items 

$           372,361

$              395,145

$           357,841

 GAAP gross profit % excluding special expense items 

61.5%

63.4%

60.5%

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

GAAP operating expenses

$           245,827

$              220,288

$           233,450

Special expense (income) items:

      Intangible asset amortization

3,903

4,049

4,338

      Impairment of long-lived assets (1)

22,222

2,707

-

     Severance and restructuring 

2,236

-

6,047

     Other operating expenses (income), net (2) 

1,666

415

155

 Total special expense items 

30,027

7,171

10,540

 GAAP operating expenses excluding special expense items 

$           215,800

$              213,117

$           222,910

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

GAAP net income

$             76,622

$              127,888

$             88,130

Special expense (income) items:

      Intangible asset amortization

12,889

13,503

12,418

      Acquisition related inventory write up 

-

-

1,801

      Impairment of long-lived assets (1)

22,222

2,707

-

     Severance and restructuring 

2,236

-

6,047

     Other operating expenses (income) , net (2) 

1,666

415

155

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

-

-

(1,776)

                     Pre-tax total special expense items 

39,013

16,625

18,645

     Tax effect of special items 

(9,555)

(5,371)

(6,102)

     International restructuring implementation (4) 

18,726

-

-

 GAAP net income excluding special expense items 

$           124,806

$              139,142

$           100,673

 GAAP net income per share excluding special expense items: 

    Basic 

$                0.43

$                   0.48

$                0.34

    Diluted 

$                0.42

$                   0.47

$                0.34

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

    Basic

292,075

292,213

291,824

    Diluted 

298,759

298,782

299,290

(1) Includes impairment charges relating to land and buildings held for sale, wafer fab and end of line manufacturing equipment.

(2) Other operating expenses (income), net are primarily for contingent consideration adjustments related to certain acquisitions, certain payroll taxes, interest and penalties and loss relating to sale of land and building.

(3) Includes gain on sale of privately-held companies.

(4) Includes impact due to international restructuring.

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; acquisition related inventory write up to fair value; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; certain payroll taxes, interest and penalties; gain on sale of privately-held companies; and 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 and acquisition related inventory write up to fair value.  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; acquisition related inventory write up to fair value; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; 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; acquisition related inventory write up to fair value; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; certain payroll taxes, interest and penalties; gain on sale of 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 business outlook and financial projections for its third quarter of fiscal 2013 ending in March 2013, which includes revenue, gross margin and earnings per share, as well as the Company's belief that it has an attractive product portfolio with design wins for new model launches in the mobility market and it is also well positioned to benefit from a recovery in the industrial and communications markets. 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.



RELATED LINKS

http://www.maxim-ic.com