SAN JOSE, Calif., Jan. 23, 2014 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $620 million for its second quarter of fiscal 2014 ended December 28, 2013, a 6% increase from the $585 million revenue recorded in the prior quarter. Reported revenue included $35 million from Volterra. Excluding Volterra, revenue was flat compared to the prior quarter.
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Tunc Doluca, President and Chief Executive Officer, commented, "We achieved good revenue performance in a soft quarter for our industry." Mr. Doluca continued, "We are pleased with our diversification efforts, with strength in both communication and industrial businesses, the addition of Volterra and broadening of our mobility business."
Fiscal Year 2014 Second Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the December quarter was $0.17. The results were negatively affected by the following pre-tax charges:
-- $40 million for Volterra acquisition-related items -- $13 million for items related to prior acquisitions -- $5 million for impairment of long-lived assets -- $18 million for warranty expense
GAAP earnings per share, excluding special items was $0.36, after a $0.05 reduction due to the warranty expense. In addition, the warranty expense caused our GAAP gross margin, excluding special items to be 2.9 percentage points lower for the quarter. An analysis of GAAP versus GAAP excluding special items is provided in the last table of this press release. Warranty expense is not considered a special item and is not included in the analysis.
Cash Flow Items
At the end of the second quarter of fiscal 2014, total cash, cash equivalents and short term investments was $1.15 billion, an increase of $115 million from the prior quarter. Notable items included:
-- Cash flow from operations: $234 million -- Net capital expenditures: $46 million -- Dividends: $73 million ($0.26 per share) -- Stock repurchases: $59 million -- Volterra acquisition: $454 million -- Proceeds from debt issuance: $494 million
Business Outlook
The Company's 90-day backlog at the beginning of the third fiscal quarter of 2014 was $366 million. Based on the beginning backlog and expected turns, results for the March 2014 quarter are expected to be as follows:
-- Revenue: $590 million to $620 million -- Gross Margin: 56% to 58% GAAP (60% to 62% excluding special items) -- EPS: $0.28 to $0.32 GAAP ($0.37 to $0.41 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 March 6, 2014, to stockholders of record on February 20, 2014.
Conference Call
Maxim Integrated has scheduled a conference call on January 23, 2014, at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter of fiscal 2014 and its business outlook. To listen via telephone, dial (866) 802-4305 (toll free) or (703) 639-1317. This call will be webcast by Shareholder.com and can be accessed at the Company's website at www.maximintegrated.com/company/investor.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended ------------------ December 28, September 28, December 29, 2013 2013 2012 ---- ---- ---- (in thousands, except per share data) Net revenues $620,274 $585,241 $605,306 Cost of goods sold 291,602 238,045 241,931 ------- ------- ------- Gross margin 328,672 347,196 363,375 ------- ------- ------- Operating expenses: Research and development 142,971 129,902 135,742 Selling, general and administrative 83,471 77,430 80,058 Intangible asset amortization 4,968 3,436 3,903 Impairment of long- lived assets (1) 5,197 - 22,222 Severance and restructuring expenses (2) 10,227 5,547 2,236 Acquisition-related costs 4,137 2,934 - Other operating expenses (income), net (3) 1,306 (662) 1,666 Total operating expenses 252,277 218,587 245,827 ------- ------- ------- Operating income 76,395 128,609 117,548 Interest and other income (expense), net (5,833) (3,463) (2,798) ------ ------ ------ Income before provision for income taxes 70,562 125,146 114,750 Provision for income taxes 21,240 22,026 38,128 ------ ------ ------ Net income $49,322 $103,120 $76,622 ======= ======== ======= Earnings per share: Basic $0.17 $0.36 $0.26 ===== ===== ===== Diluted $0.17 $0.36 $0.26 ===== ===== ===== Shares used in the calculation of earnings per share: Basic 282,664 284,654 292,075 ======= ======= ======= Diluted 288,565 290,260 298,759 ======= ======= ======= Dividends paid per share $0.26 $0.26 $0.24 ===== ===== ===== SCHEDULE OF SPECIAL EXPENSE ITEMS (Unaudited) Three Months Ended ------------------ December 28, September 28, December 29, 2013 2013 2012 ---- ---- ---- (in thousands) Cost of goods sold: Intangible asset amortization $19,098 $8,092 $8,986 Acquisition-related inventory write-up 13,066 - - Total $32,164 $8,092 $8,986 ======= ====== ====== Operating expenses: Intangible asset amortization $4,968 $3,436 $3,903 Impairment of long- lived assets (1) 5,197 - 22,222 Severance and restructuring (2) 10,227 5,547 2,236 Acquisition-related costs 4,137 2,934 - Other operating expenses (income), net (3) 1,306 (662) 1,666 Total $25,835 $11,255 $30,027 ======= ======= ======= Provision for income taxes: International restructuring implementation $ - $ - $18,726 ------------------ -------------------- ------- Total $ - $ - $18,726 ================== ==================== ======= (1) Includes impairment charges relating to fab tools, land and buildings held-for-sale, and end of line manufacturing equipment. (2) Includes severance & retention charges and lease abandonment charges related to the Volterra acquisition, and severance charges related to the reorganization of various business units and manufacturing operations. (3) Other operating expenses (income), net are primarily for contingent consideration adjustments related to certain acquisitions and certain payroll taxes.
STOCK-BASED COMPENSATION BY TYPE OF AWARD (in thousands) (Unaudited) Three Months Ended December 28, 2013 Stock Options Restricted Stock Units Employee Stock Purchase Plan Total ------------- ---------------------- ---------------------------- ----- 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 September 28, 2013 Cost of goods sold $349 $1,918 $475 $2,742 Research and development expense 1,836 6,440 1,322 9,598 Selling, general and administrative expense 1,264 4,527 609 6,400 Total $3,449 $12,885 $2,406 $18,740 ====== ======= ====== ======= Three Months Ended 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 ====== ======= ====== =======
CONSOLIDATED BALANCE SHEETS (Unaudited) December 28, September 28, December 29, 2013 2013 2012 ---- ---- ---- (in thousands) ASSETS Current assets: Cash and cash equivalents $1,149,909 $1,009,547 $955,107 Short-term investments - 25,036 75,192 --- ------ ------ Total cash, cash equivalents and short- term investments 1,149,909 1,034,583 1,030,299 Accounts receivable, net 288,285 297,888 264,545 Inventories 297,234 278,218 257,690 Deferred tax assets 69,154 54,854 80,991 Other current assets 84,522 116,225 90,470 ------ ------- ------ Total current assets 1,889,104 1,781,768 1,723,995 Property, plant and equipment, net 1,372,393 1,374,544 1,359,014 Intangible assets, net 404,652 145,618 182,521 Goodwill 596,898 422,004 422,083 Other assets 42,803 40,063 50,940 TOTAL ASSETS $4,305,850 $3,763,997 $3,738,553 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $99,009 $101,060 $110,495 Income taxes payable 21,717 21,799 22,146 Accrued salary and related expenses 140,738 124,954 152,122 Accrued expenses 85,145 55,561 58,900 Current portion of long-term debt 2,965 4,804 304,794 Deferred income on shipments to distributors 25,542 27,179 25,362 ------ ------ ------ Total current liabilities 375,116 335,357 673,819 Long-term debt 1,000,871 500,955 3,997 Income taxes payable 337,053 294,728 260,770 Deferred tax liabilities 202,435 205,221 192,434 Other liabilities 29,343 29,300 26,321 Total liabilities 1,944,818 1,365,561 1,157,341 --------- --------- --------- Stockholders' equity: Common stock 283 283 7,040 Retained earnings 2,373,318 2,412,262 2,589,619 Accumulated other comprehensive loss (12,569) (14,109) (15,447) Total stockholders' equity 2,361,032 2,398,436 2,581,212 --------- --------- --------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $4,305,850 $3,763,997 $3,738,553 ========== ========== ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended ------------------ December 28, September 28, December 29, 2013 2013 2012 ---- ---- ---- (in thousands) Cash flows from operating activities: Net income $49,322 $103,120 $76,622 Adjustments to activities: reconcile net income to net cash provided by operating Stock- based compensation 22,869 18,740 22,845 Depreciation and amortization 64,404 51,133 51,880 Deferred taxes (11,705) 25,529 (12,979) Loss (gain) from sale of property, plant and equipment 265 36 (88) Tax benefit (shortfall) related to stock- based compensation (726) (3,488) 5,187 Impairment of long- lived assets 5,197 - 22,222 Excess tax benefit from stock- based compensation (2,459) (1,697) (6,615) Changes in assets and liabilities: Accounts receivable 33,056 (12,450) 51,993 Inventories 14,030 (2,301) 570 Other current assets 31,362 (18,546) 4,091 Accounts payable (3,252) (9,162) (9,536) Income taxes payable 19,002 11,393 37,477 Deferred revenue on shipments to distributors (1,637) 622 (1,663) All other accrued liabilities 14,704 (67,035) 13,091 Net cash provided by (used in) operating activities 234,432 95,894 255,097 ------- ------ ------- Cash flows from investing activities: Purchase of property, plant and equipment (46,133) (36,329) (62,102) Proceeds from sales of property, plant and equipment - 3,048 4,115 Payments in connection with business acquisition, net of cash acquired (453,506) - - Proceeds from maturity of available- for- sale securities 27,000 - - Net cash provided by (used in) investing activities (472,639) (33,281) (57,987) -------- ------- ------- Cash flows from financing activities: Excess tax benefit from stock- based compensation 2,459 1,697 6,615 Contingent consideration paid (4,601) - (7,476) Dividends paid (73,325) (73,744) (70,063) Repayment of notes payable (1,839) - (74) Issuance of debt 497,795 100 - Debt issuance cost (3,431) - - Repurchase of common stock (59,101) (154,386) (50,435) Issuance of ESPP shares under employee stock purchase program 19,096 - 16,768 Net issuance of restricted stock units (7,106) (6,966) (6,538) Proceeds from stock options exercised 8,622 5,247 19,350 Net cash provided by (used in) financing activities 378,569 (228,052) (91,853) ------- -------- ------- Net increase (decrease) in cash and cash equivalents 140,362 (165,439) 105,257 Cash and cash equivalents: Beginning of period 1,009,547 1,174,986 849,850 --------- --------- ------- End of period $1,149,909 $1,009,547 $955,107 ========== ========== ======== Total cash, cash equivalents, and short- term investments $1,149,909 $1,034,583 $1,030,299 ========== ========== ==========
ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES (Unaudited) Three Months Ended ------------------ December 28, September 28, December 29, 2013 2013 2012 ---- ---- ---- (in thousands, except per share data) Reconciliation of GAAP gross profit to GAAP gross profit excluding special items: ------------------ GAAP gross profit $328,672 $347,196 $363,375 GAAP gross profit % 53.0% 59.3% 60.0% Special items: Intangible asset amortization 19,098 8,092 8,986 Acquisition-related inventory write-up 13,066 - - Total special items 32,164 8,092 8,986 ------ ----- ----- GAAP gross profit excluding special items $360,836 $355,288 $372,361 GAAP gross profit % excluding special items 58.2% 60.7% 61.5% Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items: ------------------- GAAP operating expenses $252,277 $218,587 $245,827 Special items: Intangible asset amortization 4,968 3,436 3,903 Impairment of long- lived assets (1) 5,197 - 22,222 Severance and restructuring (2) 10,227 5,547 2,236 Acquisition-related costs 4,137 2,934 - Other operating expenses (income), net (3) 1,306 (662) 1,666 Total special items 25,835 11,255 30,027 ------ ------ ------ GAAP operating expenses excluding special items $226,442 $207,332 $215,800 ======== ======== ======== Reconciliation of GAAP net income to GAAP net income excluding special items: ------------------- GAAP net income $49,322 $103,120 $76,622 Special items: Intangible asset amortization 24,066 11,528 12,889 Acquisition-related inventory write-up 13,066 - - Impairment of long- lived assets (1) 5,197 - 22,222 Severance and restructuring (2) 10,227 5,547 2,236 Acquisition-related costs 4,137 2,934 - Other operating expenses (income) , net (3) 1,306 (662) 1,666 ----- ---- ----- Pre-tax total special items 57,999 19,347 39,013 Tax effect of special items (4,862) (2,981) (9,555) International restructuring implementation - - 18,726 GAAP net income excluding special items $102,459 $119,486 $124,806 ======== ======== ======== GAAP net income per share excluding special items: Basic $0.36 $0.42 $0.43 ===== ===== ===== Diluted $0.36 $0.41 $0.42 ===== ===== ===== Shares used in the calculation of earnings per share excluding special items: Basic 282,664 284,654 292,075 ======= ======= ======= Diluted 288,565 290,260 298,759 ======= ======= ======= (1) Includes impairment charges relating to fab tools, land and buildings held-for-sale, and end of line manufacturing equipment. (2) Includes severance & retention charges and lease abandonment charges related to the Volterra acquisition, and severance charges related to the reorganization of various business units and manufacturing operations. (3) Other operating expenses (income), net are primarily for contingent consideration adjustments related to certain acquisitions and certain payroll taxes.
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; certain payroll taxes; and the tax provision impacts due to implementation of international restructuring. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim Integrated's current performance. Many analysts covering Maxim Integrated use the non-GAAP measures as well. Given management's use of these non-GAAP measures, Maxim Integrated believes these measures are important to investors in understanding Maxim Integrated's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in Maxim Integrated's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative to GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized it may not be possible to compare these financial measures with other companies' non-GAAP financial measures, even if they have similar names. The non-GAAP measures displayed in the table above include the following:
GAAP gross profit excluding special 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; and certain payroll taxes. 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; certain payroll taxes; and the tax provision impacts due to implementation of international restructuring. In addition, they are important components of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP net income and GAAP net income per share excluding special items to enable investors and analysts to understand the results of operations of Maxim Integrated's core businesses and to compare our results of operations on a more consistent basis against that of other companies in our industry.
"Safe Harbor" Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include the Company's business outlook and financial projections for its third quarter of fiscal 2014 ending in March 2014, which includes revenue, gross margin and earnings per share. These statements involve risk and uncertainty. Actual results could differ materially from those forecasted based upon, among other things, general market and economic conditions and market developments that could adversely affect the growth of the mixed-signal analog market, product mix shifts, the loss of all or a substantial portion of our sales to one of our large customers, customer cancellations and price competition, as well as other risks described in the Company's Annual Report on Form 10-K for the fiscal year ended June 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
SOURCE Maxim Integrated Products, Inc.