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Last updated on April 18, 2014 at 14:37 EDT

Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2013

April 25, 2013

– Revenue: $605 million

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.


Source: PR Newswire