Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2014 - Revenue: $606 million

- Gross Margin: 56.1% GAAP (60.1% excluding special items)

- EPS: $0.42 GAAP ($0.43 excluding special items)

- Cash, cash equivalents, and short term investments: $1.23 billion

- Fiscal fourth quarter revenue outlook: $635 million to $665 million

SAN JOSE, Calif., April 24, 2014 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $606 million for its third quarter of fiscal 2014 ended March 29, 2014, a 2% decrease from the $620 million revenue recorded in the prior quarter.

Tunc Doluca, President and Chief Executive Officer, commented, "We achieved better-than-seasonal results for our mix of businesses, driven by growth in automotive, industrial and communications, as market requirements converge on the need for lower power, higher functionality, and more integrated designs. " Mr. Doluca continued, "Looking forward, we expect continued growth in these businesses, accompanied by strength in mobility."

Fiscal Year 2014 Third Quarter Results

Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was $0.42. Earnings per share included an intellectual property licensing income amount of $17 million, included in Interest and Other Income. 

The results were affected by special items which primarily consisted of a $35 million pre-tax charge for items related to acquisitions and a $35 million benefit for income taxes. GAAP earnings per share, excluding special items was $0.43. 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 the third quarter of fiscal 2014, total cash, cash equivalents and short term investments was $1.23 billion, an increase of $81 million from the prior quarter. Notable items included:

  • Cash flow from operations: $212 million
  • Net capital expenditures: $26 million
  • Dividends: $73 million ($0.26 per share)
  • Stock repurchases: $51 million

Business Outlook

The Company's 90-day backlog at the beginning of the fourth fiscal quarter of 2014 was $413 million. Based on the beginning backlog and expected turns, results for the June 2014 quarter are expected to be as follows:

  • Revenue: $635 million to $665 million
  • Gross Margin: 58% to 60% GAAP (61% to 63% excluding special items)
  • EPS: $0.38 to $0.42 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, or other business combinations that may be completed during the quarter.

Dividend

A cash dividend of $0.26 per share will be paid on June 5, 2014, to stockholders of record on May 22, 2014.

Conference Call

Maxim Integrated has scheduled a conference call on April 24, 2014, at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal 2014 and its business outlook. To listen via telephone, dial (866) 804-3547 (toll free) or (703) 639-1328.  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






March 29,


December 28,


March 30,






2014


2013


2013






(in thousands, except per share data)




Net revenues


$  605,681


$       620,274


$  604,884




Cost of goods sold


265,744


291,602


228,782




        Gross margin


339,937


328,672


376,102




Operating expenses:










    Research and development


141,493


142,971


134,138




    Selling, general and administrative


80,680


83,471


81,954




    Intangible asset amortization


4,863


4,968


3,903




    Impairment of long-lived assets


-


5,197


-




    Severance and restructuring expenses (1)


3,338


10,227


151




    Acquisition-related costs


(88)


4,137


-




    Other operating expenses (income), net (2)


2,913


7,307


1,678




       Total operating expenses 


233,199


258,278


221,824




          Operating income


106,738


70,394


154,278




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


5,174


(5,833)


(2,669)




Income before provision for income taxes


111,912


64,561


151,609




Provision (benefit) for income taxes (4)


(10,632)


20,208


22,824




    Income from continuing operations


122,544


44,353


128,785




    Income from discontinued operations, net of tax 


-


-


2,603




    Net income


$  122,544


$         44,353


$  131,388














Earnings per share: Basic










    From continuing operations


$        0.43


$             0.16


$        0.44




    From discontinued operations, net of tax


-


-


0.01




    Basic


$        0.43


$             0.16


$        0.45














Earnings per share: Diluted










    From continuing operations


$        0.42


$             0.15


$        0.43




    From discontinued operations, net of tax


-


-


0.01




    Diluted


$        0.42


$             0.15


$        0.44














Shares used in the calculation of earnings per share: 










    Basic


282,627


282,664


292,888




    Diluted 


288,575


288,565


300,082














Dividends paid per share 


$        0.26


$             0.26


$        0.24














(1)  Includes severance, retention and lease abandonment charges related to acquisitions, and severance charges related to the reorganization of various business units and manufacturing operations.




(2) Other operating expenses (income), net are primarily for legal settlement, in-process research and development abandoned, contingent consideration adjustments related to certain acquisitions and legal expenses related to Volterra acquisition.




(3) Includes impairment of investments in privately-held companies.




(4) Includes one-time fixed asset tax basis adjustments relating to prior year depreciation expense.







 


 






SCHEDULE OF SPECIAL EXPENSE ITEMS




(Unaudited)






Three Months Ended






March 29,


December 28,


March 30,






2014


2013


2013






(in thousands)




Cost of goods sold:










      Intangible asset amortization


$    18,542


$         19,098


$      7,777




      Acquisition-related inventory write-up


5,518


13,066


-




 Total 


$    24,060


$         32,164


$      7,777














 Operating expenses: 










   Intangible asset amortization


$      4,863


$           4,968


$      3,903




   Impairment of long-lived assets


-


5,197


-




   Severance and restructuring (1)


3,338


10,227


151




    Acquisition-related costs


(88)


4,137


-




   Other operating expenses (income), net (2)


2,913


7,307


1,678




 Total 


$    11,026


$         31,836


$      5,732














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


$      3,723


$                   -


$              -




 Total 


$      3,723


$                   -


$              -














Provision (benefit) for income taxes:










     Fixed assets tax basis adjustment (4) 


$   (34,562)


$                    -


$              -




     Research & development tax credits 


-


-


(3,899)




 Total 


$   (34,562)


$                    -


$     (3,899)














Discontinued operations:










     Income from discontinued operations, net of tax 


$              -


$                    -


$     (2,603)




 Total 


$              -


$                    -


$     (2,603)














(1)  Includes severance, retention and lease abandonment charges related to acquisitions, and severance charges related to the reorganization of various business units and manufacturing operations.




(2) Other operating expenses (income), net are primarily for legal settlement, in-process research and development abandoned, contingent consideration adjustments related to certain acquisitions and legal expenses related to Volterra acquisition.




(3) Includes impairment of investments in privately-held companies.




(4) Includes one-time fixed asset tax basis adjustments relating to prior year depreciation expense.























 












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


(Unaudited)












Three Months Ended March 29, 2014

  Stock Options


  Restricted Stock Units


  Employee Stock Purchase Plan


  Total



Cost of goods sold 

$                 451


$                  2,108


$                    594


$     3,153



Research and development expense

2,124


7,917


1,623


11,664



Selling, general and administrative expense

1,391


5,186


663


7,240



       Total

$              3,966


$                15,211


$                 2,880


$   22,057













Three Months Ended December 28, 2013










Cost of goods sold 

$                 438


$                  2,395


$                    533


$     3,366



Research and development expense

2,616


8,728


1,153


12,497



Selling, general and administrative expense

1,476


4,996


534


7,006



       Total

$              4,530


$                16,119


$                 2,220


$   22,869













Three Months Ended March 30, 2013










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






















 










CONSOLIDATED  BALANCE SHEETS



(Unaudited)




March 29,


December 28,


March 30,




2014


2013


2013




(in thousands) 



ASSETS



Current assets:








    Cash and cash equivalents

$   1,231,248


$    1,149,909


$   1,547,980



    Short-term investments

-


-


25,095



        Total cash, cash equivalents and short-term investments

1,231,248


1,149,909


1,573,075



    Accounts receivable, net 

304,128


288,285


300,046



    Inventories

290,518


297,234


268,018



    Deferred tax assets

74,038


69,154


81,809



    Other current assets

79,346


85,554


113,010



        Total current assets

1,979,278


1,890,136


2,335,958



Property, plant and equipment, net

1,355,268


1,372,393


1,368,905



Intangible assets, net

384,167


404,652


165,591



Goodwill

597,676


596,898


422,004



Other assets

38,176


42,803


41,660



              TOTAL ASSETS

$   4,354,565


$    4,306,882


$   4,334,118











LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:








    Accounts payable 

$        94,315


$         99,009


$      114,629



    Income taxes payable

20,720


21,717


20,200



    Accrued salary and related expenses

168,336


140,738


182,894



    Accrued expenses 

81,232


91,145


59,075



    Current portion of long-term debt

2,526


2,965


304,314



    Deferred income on shipments to distributors

24,259


25,542


25,851



        Total current liabilities

391,388


381,116


706,963



Long-term debt

1,000,871


1,000,871


503,573



Income taxes payable

352,294


337,053


271,815



Deferred tax liabilities

171,431


202,435


213,138



Other liabilities

37,977


29,343


26,063



        Total liabilities 

1,953,961


1,950,818


1,721,552











Stockholders' equity:








    Common stock and capital in excess of par value

283


283


292



    Retained earnings 

2,412,627


2,368,350


2,629,895



    Accumulated other comprehensive loss

(12,306)


(12,569)


(17,621)



        Total stockholders' equity

2,400,604


2,356,064


2,612,566



              TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 

$   4,354,565


$    4,306,882


$   4,334,118


















 


CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




Three Months Ended




March 29,


December 28,


March 30,




2014


2013


2013




(in thousands)



Cash flows from operating activities: 








    Net income

$             122,544


$         44,353


$      131,388



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








        Stock-based compensation 

22,057


22,869


19,613



        Depreciation and amortization 

64,665


64,404


50,391



        Deferred taxes 

(36,482)


(11,705)


18,392



        In-process research and development written-off

2,580


-


2,800



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

818


265


(2,397)



        Tax benefit (shortfall) related to stock-based compensation 

3,204


(726)


1,317



        Impairment of long-lived assets

-


5,197


-



        Impairment of investments in privately-held companies

3,723


-


-



        Excess tax benefit from stock-based compensation 

(5,139)


(2,459)


(4,297)



        Loss (gain) on sale of discontinued operations

-


-


(3,285)



        Changes in assets and liabilities: 








            Accounts receivable 

(15,566)


33,056


(35,501)



            Inventories 

7,717


14,030


(12,143)



            Other current assets 

7,194


30,330


(14,653)



            Accounts payable 

(4,044)


(3,252)


10,453



            Income taxes payable 

14,244


19,002


9,100



            Deferred revenue on shipments to distributors 

(1,283)


(1,637)


489



            All other accrued liabilities 

25,466


20,704


40,026



Net cash provided by (used in) operating activities 

211,698


234,431


211,693











Cash flows from investing activities: 








        Purchase of property, plant and equipment

(26,407)


(46,133)


(54,945)



        Proceeds from sales of property, plant and equipment

618


-


10,199



        Payments in connection with business acquisition, net of cash acquired

(5,750)


(453,506)


-



        Proceeds from maturity of available-for-sale securities

-


27,000


50,000



Net cash provided by (used in) investing activities 

(31,539)


(472,639)


5,254











Cash flows from financing activities: 








        Excess tax benefit from stock-based compensation

5,139


2,459


4,297



        Contingent consideration paid

(104)


(4,601)


-



        Dividends paid

(73,481)


(73,324)


(70,421)



        Repayment of notes payable

(439)


(1,839)


(903)



        Issuance of debt

-


497,795


491,145



        Debt issuance cost

-


(3,431)


-



        Repurchase of common stock

(51,083)


(59,101)


(66,330)



        Issuance of ESPP shares under employee stock purchase program 

-


19,096


-



        Net issuance of restricted stock units

(8,390)


(7,106)


(7,941)



        Proceeds from stock options exercised

29,538


8,622


26,079



Net cash provided by (used in) financing activities 

(98,820)


378,570


375,926











Net increase (decrease) in cash and cash equivalents 

81,339


140,362


592,873



Cash and cash equivalents: 








          Beginning of period

1,149,909


1,009,547


955,107



          End of period

$          1,231,248


$    1,149,909


$   1,547,980











Total cash, cash equivalents, and short-term investments

$          1,231,248


$    1,149,909


$   1,573,075


















 


ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES



(Unaudited)





Three Months Ended





March 29,


December 28,


March 30,





2014


2013


2013





(in thousands, except per share data)



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









GAAP gross profit


$     339,937


$       328,672


$     376,102



GAAP gross profit %


56.1%


53.0%


62.2%












Special items:









      Intangible asset amortization 


18,542


19,098


7,777



      Acquisition-related inventory write-up


5,518


13,066


-



 Total special items 


24,060


32,164


7,777



 GAAP gross profit excluding special items 


$     363,997


$       360,836


$     383,879



 GAAP gross profit % excluding special items 


60.1%


58.2%


63.5%












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









GAAP operating expenses


$     233,199


$       258,278


$     221,824












Special items:









    Intangible asset amortization 


4,863


4,968


3,903



    Impairment of long-lived assets 


-


5,197


-



    Severance and restructuring (1) 


3,338


10,227


151



     Acquisition-related costs


(88)


4,137


-



   Other operating expenses (income), net (2) 


2,913


7,307


1,678



 Total special items 


11,026


31,836


5,732



 GAAP operating expenses excluding special items 


$     222,173


$       226,442


$     216,092












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









GAAP net income


$     122,544


$         44,353


$     131,388












Special items:









      Intangible asset amortization


23,405


24,066


11,680



      Acquisition-related inventory write-up


5,518


13,066


-



      Impairment of long-lived assets


-


5,197


-



     Severance and restructuring (1) 


3,338


10,227


151



     Acquisition-related costs


(88)


4,137


-



     Other operating expenses (income), net (2) 


2,913


7,307


1,678



     Interest and other expense, net (3) 


3,723


-


-



                     Pre-tax total special items 


38,809


64,000


13,509



     Tax effect of special items 


(3,658)


(5,894)


(3,806)



     Fixed asset tax basis adjustment (4) 


(34,562)


-


-



     Research & development tax credits 


-


-


(3,899)



     Discontinued operations, net of tax 


-


-


(2,603)



 GAAP net income excluding special items 


$     123,133


$       102,459


$     134,589












 GAAP net income per share excluding special items: 









    Basic 


$           0.44


$             0.36


$           0.46



    Diluted 


$           0.43


$             0.36


$           0.45












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









    Basic


282,627


282,664


292,888



    Diluted 


288,575


288,565


300,082












(1)  Includes severance, retention and lease abandonment charges related to acquisitions, and severance charges related to the reorganization of various business units and manufacturing operations.



(2) Other operating expenses (income), net are primarily for legal settlement, in-process research and development abandoned, contingent consideration adjustments related to certain acquisitions and legal expenses related to Volterra acquisition.



(3) Includes impairment of investments in privately-held companies.



(4) Includes one-time fixed asset tax basis adjustments relating to prior year depreciation expense.














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; impairment of long-lived assets; severance and restructuring; acquisition-related costs; contingent consideration adjustments relating to certain acquisitions; legal settlement; in-process research and development abandoned; legal expenses related to Volterra; impairment of investments in privately-held companies; tax provision impacts due to fixed asset tax basis adjustments; research and development tax credits; and discontinued operations, net of tax. 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 and acquisition-related inventory write-up. 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; acquisition-related costs; contingent consideration adjustments relating to certain acquisitions; in-process research and development abandoned; legal settlement; and legal expenses related to Volterra. 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; acquisition-related inventory write-up; impairment of long-lived assets; severance and restructuring; acquisition-related costs; contingent consideration adjustments relating to certain acquisitions; legal settlement; in-process research and development abandoned; legal expenses related to Volterra; impairment of investments in privately-held companies; research and development tax credits; discontinued operations, net of tax; and the tax provision impacts due to fixed asset tax basis adjustments. 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 2014 ending in June 2014, which includes revenue, gross margin and earnings per share, as well as looking forward, the Company's expects continued growth in its automotive, industrial and communications businesses, accompanied by strength in mobility." 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 29, 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 
Kathy Ta
Managing Director, Investor Relations 
(408) 601-5697

Photo - http://photos.prnewswire.com/prnh/20120912/SF71654LOGO

SOURCE Maxim Integrated Products, Inc.



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