Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2013

-- Revenue: $605 million

-- Gross Margin: 62.2% GAAP (63.5% excluding special items)

-- EPS: $0.44 GAAP ($0.45 excluding special items)

-- Cash, cash equivalents, and short term investments: $1.57 billion

-- Fiscal fourth quarter revenue outlook: $610 million to $640 million

25 Apr, 2013, 16:00 ET from Maxim Integrated Products, Inc.

SAN JOSE, Calif., April 25, 2013 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $605 million for its third quarter of fiscal 2013 ended March 30, 2013, unchanged from the prior quarter.

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

Tunc Doluca, President and Chief Executive Officer, commented, "While Maxim's Mobility business has driven our revenue growth for several quarters, it is good to see strength in orders for our Industrial business. Our diverse business model has positioned Maxim to participate in growth across multiple end markets."

Fiscal Year 2013 Third Quarter Results Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was $0.44. The results were affected by special items which primarily consisted of:

  • $14 million pre-tax charge for acquisition related items
  • $4 million tax benefit  for  re-instatement of R&D tax credit for fiscal year 2012

GAAP earnings per share, excluding special items, was $0.45. 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 third quarter of fiscal 2013, total cash, cash equivalents and short term investments was $1.57 billion, an increase of $543 million from the prior quarter. Notable items include:

  • Cash flow from operations: $212 million
  • Net capital expenditures: $45 million
  • Dividends:  $70 million ($0.24 per share)
  • Stock repurchases: $66 million
  • Cash from issuance of debt: $491 million

Business Outlook The Company's 90 day backlog at the beginning of the fourth fiscal quarter of 2013 was $386 million. Based on our beginning backlog and expected turns, results for the June 2013 quarter are expected to be:

  • Revenue: $610 million to $640 million
  • Gross Margin: 60% to 63% GAAP (61% to 64% excluding special items)
  • EPS: $0.42 to $0.46 GAAP ($0.45 to $0.49 excluding special 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 June 5, 2013, to stockholders of record on May 22, 2013.

Conference Call Maxim Integrated has scheduled a conference call on April 25, 2013, at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal 2013 and its business outlook. To listen via telephone, dial (866) 804-3545 (toll free) or (703) 639-1326.  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

March 30,

December 29,

March 31,

2013

2012

2012

(in thousands, except per share data)

Net revenues

$   604,884

$   605,306

$       571,212

Cost of goods sold

228,782

241,931

235,782

        Gross margin

376,102

363,375

335,430

Operating expenses:

    Research and development

134,138

135,742

136,075

    Selling, general and administrative

81,954

80,058

78,011

    Intangible asset amortization

3,903

3,903

4,029

    Impairment of long-lived assets (1)

-

22,222

7,712

    Severance and restructuring expenses

151

2,236

228

    Other operating expenses (income), net (2)

1,678

1,666

(2,511)

       Total operating expenses 

221,824

245,827

223,544

          Operating income

154,278

117,548

111,886

Interest and other income (expense), net 

(2,669)

(2,798)

(230)

Income before provision for income taxes

151,609

114,750

111,656

Provision for income taxes (3)

22,824

38,128

88,948

       Income from continuing operations 

128,785

76,622

22,708

       Income from discontinued operations, net of tax (4)

2,603

-

31,809

      Net income

$   131,388

$     76,622

$         54,517

Earnings per share: basic

    From continuing operations 

$         0.44

$         0.26

$             0.08

    From discontinued operations, net of tax 

0.01

-

0.11

    Basic

$         0.45

$         0.26

$             0.19

Earnings per share: diluted

    From continuing operations 

$         0.43

$         0.26

$             0.07

    From discontinued operations, net of tax

0.01

-

0.11

    Diluted

$         0.44

$         0.26

$             0.18

Shares used in the calculation of earnings per share: 

    Basic

292,888

292,075

292,276

    Diluted 

300,082

298,759

300,221

Dividends paid per share 

$         0.24

$         0.24

$             0.22

SCHEDULE OF SPECIAL ITEMS

(Unaudited)

Three Months Ended

March 30,

December 29,

March 31,

2013

2012

2012

(in thousands)

Cost of goods sold:

      Intangible asset amortization

$           7,777

$           8,986

$               9,787

 Total 

$           7,777

$           8,986

$               9,787

 Operating expenses: 

     Intangible asset amortization

$           3,903

$           3,903

$               4,029

     Impairment of long-lived assets (1)

-

22,222

7,712

     Severance and restructuring 

151

2,236

228

     Other operating expenses (income) , net (2)

1,678

1,666

(2,511)

 Total 

$           5,732

$         30,027

$               9,458

Provision for income taxes:

     Reversal of tax reserves

$                    -

$                     -

$             (2,272)

     International restructuring implementation (3) 

-

18,726

65,293

     Fiscal year 2012 research & development tax credits 

(3,899)

-

-

 Total 

$         (3,899)

$         18,726

$             63,021

 Discontinued operations: 

     Income from discontinued operations, net of tax (4)

$         (2,603)

$                   -

$           (31,809)

Total

$         (2,603)

$                   -

$           (31,809)

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

(2) Other operating expenses (income), net are primarily for in-process research and development, contingent consideration adjustments related to certain acquisitions, gain relating to sale of land and buildings, and stock option related litigation.

(3) Includes impact due to international restructuring.

(4) Includes gain on sale, net of tax relating to certain businesses divested.

 

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

(Unaudited)

Three Months Ended March 30, 2013

  Stock Options

  Restricted Stock Units

  Employee Stock Purchase Plan

  Total

Cost of goods sold 

$                  337

$               2,120

$                  598

$               3,055

Research and development expense

1,440

7,116

1,480

10,036

Selling, general and administrative expense

1,157

4,764

601

6,522

       Total

$               2,934

$             14,000

$               2,679

$             19,613

Three Months Ended December 29, 2012

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 March 31, 2012

Cost of goods sold 

$                  470

$               2,217

$                  412

$               3,099

Research and development expense

1,742

8,203

1,602

11,547

Selling, general and administrative expense

1,836

5,072

484

7,392

       Total

$               4,048

$             15,492

$               2,498

$             22,038

 

CONSOLIDATED  BALANCE SHEETS

(Unaudited)

March 30,

December 29,

March 31,

2013

2012

2012

(in thousands) 

ASSETS

Current assets:

    Cash and cash equivalents

$        1,547,980

$           955,107

$           860,551

    Short-term investments

25,095

75,192

75,405

        Total cash, cash equivalents and short-term investments

1,573,075

1,030,299

935,956

    Accounts receivable, net 

300,046

264,545

296,255

    Inventories

268,018

257,690

220,153

    Deferred tax assets

81,809

80,991

105,298

    Other current assets

113,010

90,470

79,584

        Total current assets

2,335,958

1,723,995

1,637,246

Property, plant and equipment, net

1,368,905

1,359,014

1,361,300

Intangible assets, net

165,591

182,521

222,354

Goodwill

422,004

422,083

423,073

Other assets

41,660

50,940

26,264

              TOTAL ASSETS

$        4,334,118

$        3,738,553

$        3,670,237

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

    Accounts payable 

$           114,629

$           110,495

$           132,906

    Income taxes payable

20,200

22,146

21,807

    Accrued salary and related expenses

182,894

152,122

181,943

    Accrued expenses 

59,075

58,900

72,242

    Current portion of long term debt

304,314

304,794

-

    Deferred income on shipments to distributors

25,851

25,362

28,729

        Total current liabilities

706,963

673,819

437,627

Long term debt

503,573

3,997

308,700

Income taxes payable

271,815

260,770

192,842

Deferred tax liabilities

213,138

192,434

205,727

Other liabilities

26,063

26,321

22,143

        Total liabilities 

1,721,552

1,157,341

1,167,039

Stockholders' equity:

    Common stock

292

7,040

9,125

    Retained earnings 

2,629,895

2,589,619

2,507,298

    Accumulated other comprehensive loss

(17,621)

(15,447)

(13,225)

        Total stockholders' equity

2,612,566

2,581,212

2,503,198

              TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 

$        4,334,118

$        3,738,553

$        3,670,237

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

March 30,

December 29,

March 31,

2013

2012

2012

(in thousands)

Cash flows from operating activities: 

Net income

$      131,388

$        76,622

$        54,517

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

      Stock-based compensation 

19,613

22,845

22,038

      Depreciation and amortization 

50,391

51,880

53,476

      Deferred taxes 

18,392

(12,979)

(9,942)

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

(2,397)

(88)

(6,487)

      Tax benefit (shortfall) related to stock-based compensation 

1,317

5,187

2,957

      Impairment of long-lived assets

-

22,222

7,712

      Excess tax benefit from stock-based compensation

(4,297)

(6,615)

(5,172)

      In-process research and development written-off

2,800

-

1,600

      Loss (gain) on sale of discontinued operations

(3,285)

-

(45,372)

      Changes in assets and liabilities: 

          Accounts receivable 

(35,501)

51,993

(50,026)

          Inventories 

(12,143)

570

12,412

          Other current assets 

(14,653)

4,091

2,332

          Accounts payable 

10,453

(9,536)

27,228

          Income taxes payable 

9,100

37,477

98,321

          Deferred revenue on shipments to distributors 

489

(1,663)

(2,407)

          All other accrued liabilities 

40,026

13,091

33,312

Net cash provided by (used in) operating activities 

211,693

255,097

196,499

Cash flows from investing activities: 

          Payments for property, plant and equipment

(54,945)

(62,102)

(70,053)

          Proceeds from sales of property, plant and equipment

10,199

4,115

13,774

          Proceeds from sale of discontinued operations

-

-

56,607

          Purchases of available-for-sale securities

-

-

(1,980)

          Proceeds from maturity of available-for-sale securities

50,000

-

-

Net cash provided by (used in) investing activities 

5,254

(57,987)

(1,652)

Cash flows from financing activities: 

         Excess tax benefit from stock-based compensation

4,297

6,615

5,172

         Dividends paid

(70,421)

(70,063)

(64,384)

         Repayment of notes payable

(903)

(74)

-

         Issuance of debt, net of issuance costs

491,145

-

-

         Contingent consideration paid

-

(7,476)

-

         Repurchase of common stock

(66,330)

(50,435)

(28,970)

         Issuance of ESPP

-

16,768

-

         Net issuance of restricted stock units

(7,941)

(6,538)

(7,669)

         Proceeds from stock options exercised

26,079

19,350

20,395

Net cash provided by (used in) financing activities 

375,926

(91,853)

(75,456)

Net increase (decrease) in cash and cash equivalents 

592,873

105,257

119,391

Cash and cash equivalents: 

          Beginning of period

955,107

849,850

741,160

          End of period

$   1,547,980

$      955,107

$      860,551

Total cash, cash equivalents, and short-term investments

$   1,573,075

$   1,030,299

$      935,956

 

ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

March 30,

December 29,

March 31,

2013

2012

2012

(in thousands, except per share data)

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

GAAP gross profit

$           376,102

$              363,375

$           335,430

GAAP gross profit %

62.2%

60.0%

58.7%

Special expense items:

      Intangible asset amortization

7,777

8,986

9,787

 Total special expense items 

7,777

8,986

9,787

 GAAP gross profit excluding special expense items 

$           383,879

$              372,361

$           345,217

 GAAP gross profit % excluding special expense items 

63.5%

61.5%

60.4%

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

GAAP operating expenses

$           221,824

$              245,827

$           223,544

Special expense (income) items:

      Intangible asset amortization

3,903

3,903

4,029

      Impairment of long-lived assets (1)

-

22,222

7,712

     Severance and restructuring 

151

2,236

228

     Other operating expenses (income), net (2) 

1,678

1,666

(2,511)

 Total special expense items 

5,732

30,027

9,458

 GAAP operating expenses excluding special expense items 

$           216,092

$              215,800

$           214,086

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

GAAP net income

$           131,388

$                76,622

$             54,517

Special expense (income) items:

      Intangible asset amortization

11,680

12,889

13,816

      Impairment of long-lived assets (1)

-

22,222

7,712

     Severance and restructuring 

151

2,236

228

     Other operating expenses (income) , net (2) 

1,678

1,666

(2,511)

                     Pre-tax total special expense items 

13,509

39,013

19,245

     Tax effect of special items 

(3,806)

(9,555)

(5,445)

     Reversal of tax reserves 

-

-

(2,272)

     International restructuring implementation (3) 

-

18,726

65,293

     Fiscal year 2012 research & development tax credits 

(3,899)

-

-

     Discontinued operations, net of tax (4) 

(2,603)

-

(31,809)

 GAAP net income excluding special expense items 

$           134,589

$              124,806

$             99,529

 GAAP net income per share excluding special expense items: 

    Basic 

$             0.46

$                0.43

$             0.34

    Diluted 

$             0.45

$                0.42

$             0.33

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

    Basic

292,888

292,075

292,276

    Diluted 

300,082

298,759

300,221

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

(2) Other operating expenses (income), net are primarily for in-process research and development, contingent consideration adjustments related to certain acquisitions, gain relating to sale of land and buildings, and stock option related litigation.

(3) Includes impact due to international restructuring.

(4) Includes gain on sale, net of tax relating to certain businesses divested.

 

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; gain related to the sale of land and buildings; stock option related litigation; the tax provision impacts due to international restructuring implementation; reversal of tax reserves; fiscal year 2012 research and development tax credits; and gain on sale, net of tax relating to certain business divested. 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; gain related to the sale of land and buildings; and stock option related litigation.  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; gain related to the sale of land and buildings; stock option related litigation; the tax provision impacts due to international restructuring implementation; reversal of tax reserves; fiscal year 2012 research and development tax credits; and gain on sale, net of tax relating to certain business divested. 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 fourth quarter of fiscal 2013 ending in June 2013, which includes revenue, gross margin and earnings per share, as well as the Company's belief that its diverse business model has positioned the Company to participate in growth across multiple end 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.



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