MAXIM INTEGRATED PRODUCTS, INC. 
By SUNNYVALE, Calif., Jan. 26, 2012 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $591 million for its fiscal 2012 second quarter ended December 31, 2011, a 7% decrease from the record $636 million revenue recorded in the prior quarter.
Tunc Doluca, President and Chief Executive Officer, commented, "Our customers maintained a cautious outlook during the December quarter and continued to reduce inventory, particularly in the distribution channel. We are encouraged however by an increase in bookings beginning in December. As a result, we forecast our revenue to return to normal trends in the March quarter."
Fiscal Year 2012 Second Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the December quarter was $0.29. The results were affected by certain pre-tax expenses which primarily consisted of:
-- $14.2 million for acquisition related items
-- $6.0 million for restructuring and severance
GAAP earnings per share excluding special expense items was $0.34.
Cash Flow Items
At the end of our fiscal 2012 second quarter total cash, cash equivalents and short term investments was $817 million, an increase of $56 million from the prior quarter. Notable items include:
-- Cash flow from operations: $249 million (42% of revenue)
-- Capital expenditures: $67 million
-- Dividends: $64 million ($0.22 per share)
-- Stock repurchases: $72 million
Business Outlook
The Company's 90 day backlog at the beginning of the third fiscal quarter was $365 million. Based on our beginning backlog and expected turns, results for the March 2012 quarter are expected to be:
-- Revenue: $555 million to $585 million
-- Gross Margin: 55% to 58% GAAP (57% to 60% excluding special expense
items)
-- EPS: $0.22 to $0.26 GAAP ($0.25 to $0.29 excluding special expense
items)
Maxim'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 $0.22 per share will be paid on March 7, 2012, to stockholders of record on February 22, 2012.
Conference Call
Maxim has scheduled a conference call on January 26, 2012, at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter of fiscal year 2012 and its business outlook. To listen via telephone, dial (866) 219-5268 (toll free) or (703) 639-1120. This call will be webcast by Shareholder.com and can be accessed at Maxim's website at www.maxim-ic.com/Investor.
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CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
------------------
December,
December 31, September 24, 25
2011 2011 2010
---- ---- ----
(in thousands, except per share data)
Net revenues $591,359 $636,002 $612,936
Cost of
goods sold
(1, 2, 3) 243,399 240,529 232,661
------- ------- -------
Gross profit 347,960 395,473 380,275
Operating
expenses:
Research and
development
(1) 142,084 140,213 130,001
Selling,
general and
administrative
(1) 80,826 82,456 72,240
Intangible
asset
amortization
(2) 4,338 4,321 4,447
Severance
and
restructuring 6,047 492 488
Other
operating
expenses
(income),
net (4) 155 (4,389) 21,100
--- ------ ------
Total
operating
expenses 233,450 223,093 228,276
------- ------- -------
Operating
income 114,510 172,380 151,999
Interest and
other
income
(expense),
net (5) 2,374 (4,100) (4,100)
----- ------ ------
Income
before
provision
for income
taxes 116,884 168,280 147,899
Provision
for income
taxes (6) 28,754 34,834 38,309
------ ------ ------
Net income $88,130 $133,446 $109,590
======= ======== ========
Earnings per
share:
Basic $0.30 $0.45 $0.37
===== ===== =====
Diluted $0.29 $0.44 $0.36
===== ===== =====
Shares used
in the
calculation
of earnings
per share:
Basic 291,824 294,475 296,550
======= ======= =======
Diluted 299,290 301,076 303,260
======= ======= =======
Dividends
paid per
share $0.22 $0.22 $0.21
===== ===== =====
SCHEDULE OF STOCK BASED COMPENSATION EXPENSES
(Unaudited)
Three Months Ended
------------------
December 31, September 24, December,25
2011 2011 2010
---- ---- ----
(in thousands)
Cost of
goods sold $3,692 $3,257 $3,748
Research and
development 12,909 13,261 13,916
Selling,
general and
administrative 6,873 6,947 6,858
----- ----- -----
Total $23,474 $23,465 $24,522
======= ======= =======
SCHEDULE OF SPECIAL EXPENSE ITEMS
(Unaudited)
Three Months Ended
------------------
December 31, September 24, December,25
2011 2011 2010
---- ---- ----
(in thousands)
Cost of
goods sold:
Intangible
asset
amortization
(2) $8,080 $9,434 $7,919
Acquisition
related
inventory
write up
(3) 1,801 - 1,320
----- --- -----
Total $9,881 $9,434 $9,239
====== ====== ======
Operating
expenses:
Intangible
asset
amortization
(2) $4,338 $4,321 $4,447
Severance
and
restructuring 6,047 492 488
Other
operating
expenses
(income),
net (4) 155 (4,389) 21,100
--- ------ ------
Total $10,540 $424 $26,035
======= ==== =======
Interest and
other
(income),
net (5) $(1,776) $- $-
------- --- ---
Total $(1,776) $- $-
======= === ===
Provision
for income
taxes:
International
restructuring
(6) $- $(2,655) $-
--- ------- ---
Total $- $(2,655) $-
=== ======= ===
(1) Includes stock-based compensation charges as
shown in the Schedule of Stock Based Compensation
Expenses.
(2) Includes intangible
asset amortization
related to acquisitions.
(3) Includes expense related to fair value write up
of inventory acquired as part of acquisitions.
(4) Other operating expenses, net are primarily for
stock option related litigation, certain payroll
taxes, interest and penalties and loss on sale of
land and buildings.
(5) Includes
gain on
sale of
equity
investment.
(6) Includes impact due to
implementation of international
restructuring.
STOCK-BASED COMPENSATION BY TYPE OF AWARD (in thousands)
(Unaudited)
Three Months Ended Employee
December 31, 2011 Stock Restricted Stock Total
Purchase
Options Stock Plan -----
------- Units --------
-----
Cost of goods sold $565 $2,657 $470 $3,692
Research and
development
expense 2,440 9,207 1,262 12,909
Selling, general
and
administrative
expense 1,704 4,778 391 6,873
Total $4,709 $16,642 $2,123 $23,474
====== ======= ====== =====
Three Months Ended
September 24,
2011
Cost of goods sold $517 $2,307 $433 $3,257
Research and
development
expense 2,055 9,958 1,248 13,261
Selling, general
and
administrative
expense 1,428 5,125 394 6,947
Total $4,000 $17,390 $2,075 $23,465
====== ======= ====== =====
Three Months Ended
December 25, 2010
Cost of goods sold $729 $2,637 $382 $3,748
Research and
development
expense 2,710 9,914 1,292 13,916
Selling, general
and
administrative
expense 1,659 4,847 352 6,858
----- ----- --- -----
Total $5,098 $17,398 $2,026 $24,522
====== ======= ====== =====
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December
31, June 25,
2011 2011
---- ----
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $741,160 $962,541
Short-term investments 75,375 50,346
---- ----
Total cash, cash equivalents
and short-term investments 816,535 1,012,887
Accounts receivable, net 246,229 297,632
Inventories 233,404 237,928
Income tax refund receivable 1,236 483
Deferred tax assets 87,636 113,427
Other current assets 80,160 65,495
---- ----
Total current assets 1,465,200 1,727,852
Property, plant and
equipment, net 1,365,815 1,308,850
Intangible assets, net 237,776 204,263
Goodwill 432,809 265,125
Other assets 19,055 21,653
TOTAL ASSETS $3,520,655 $3,527,743
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $118,427 $110,153
Income taxes payable 7,866 3,912
Accrued salary and related
expenses 159,651 215,627
Accrued expenses 62,579 47,767
Deferred income on shipments
to distributors 31,136 36,881
------ ------
Total current liabilities 379,659 414,340
Long term debt 308,700 300,000
Income taxes payable 108,462 96,099
Deferred tax liabilities 197,839 183,715
Other liabilities 21,529 22,771
Total liabilities 1,016,189 1,016,925
------- -------
Stockholders' equity:
Common stock 292 296
Retained earnings 2,517,166 2,524,790
Accumulated other
comprehensive loss (12,992) (14,268)
Total stockholders' equity 2,504,466 2,510,818
------- -------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $3,520,655 $3,527,743
========== ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
------------------
September December
December 31, 24, 25,
2011 2011 2010
---- ---- ----
(in thousands)
Cash flows from operating activities:
Net income $88,130 $133,446 $109,590
Adjustments to reconcile net income to
net cash provided by operating
activities:
Stock-based compensation 23,474 23,465 24,522
Depreciation and amortization 51,995 52,071 52,228
Deferred taxes (368) 39,845 11,232
Loss from sale of property, plant and
equipment 124 127 14,257
Gain from sale of equity investments (1,811) - -
Tax (shortfall) benefit related to
stock-based compensation (2,581) 1,428 (1,425)
Excess tax benefit related to stock-
based compensation (4,242) (2,821) (2,810)
Changes in assets and liabilities:
Accounts receivable 82,760 (30,790) 38,083
Inventories 19,045 (9,799) (13,605)
Other current assets (1,615) (11,840) (40,912)
Accounts payable (18,397) 4,882 (18,667)
Income taxes payable 12,619 3,698 22,181
Deferred income on shipments to
distributors (3,444) (2,301) 1,979
All other accrued liabilities 3,631 (80,602) 3,331
--- ------- ---
Net cash provided by operating
activities 249,320 120,809 199,984
------- ------- -------
Cash flows from investing activities:
Payments for property, plant and
equipment (68,361) (49,324) (59,068)
Acquisitions (12,018) (154,269) -
Proceeds from sales of property, plant
and equipment 1,709 - 24,714
Purchases of available-for-sale
securities (25,108) - -
Proceeds from sales of equity
securities 3,225 - -
Net cash used in investing activities (100,553) (203,593) (34,354)
-------- -------- -------
Cash flows from financing activities:
Dividends paid (64,158) (64,781) (62,278)
Repayment of notes payable (4,189) (16,217) -
Repurchase of common stock (72,486) (88,674) (40,832)
Issuance of common stock 18,898 (2,879) 14,555
Other 4,287 2,835 2,989
--- --- ---
Net cash used in financing activities (117,648) (169,716) (85,566)
-------- -------- -------
Net increase (decrease) in cash and
cash equivalents 31,119 (252,500) 80,064
Cash and cash equivalents:
Beginning of period 710,041 962,541 718,280
----- ----- -----
End of period $741,160 $710,041 $798,344
======== ======== ========
Total cash, cash equivalents, and
short-term investments $816,535 $760,340 $798,344
======== ======== ========
ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL EXPENSE ITEMS DISCLOSURES
(Unaudited)
Three Months Ended
------------------
December September December
31, 24, 25,
2011 2011 2010
---- ---- ----
(in thousands, except per share
data)
Reconciliation of GAAP gross profit to GAAP
gross profit excluding special expense items:
----------------------------------------------
GAAP gross profit $347,960 $395,473 $380,275
GAAP gross profit % 58.8% 62.2% 62.0%
Special expense items:
Intangible asset amortization (1) 8,080 9,434 7,919
Acquisition related inventory write up (2) 1,801 - 1,320
Total special expense items 9,881 9,434 9,239
----- ----- -----
GAAP gross profit excluding special expense
items $357,841 $404,907 $389,514
GAAP gross profit % excluding special expense
items 60.5% 63.7% 63.5%
Reconciliation of GAAP operating expenses to
GAAP operating expenses excluding special
expense items:
--------------------------------------------
GAAP operating expenses $233,450 $223,093 $228,276
Special expense (income) items:
Intangible asset amortization (1) 4,338 4,321 4,447
Severance and restructuring 6,047 492 488
Other operating (income) expenses, net (3) 155 (4,389) 21,100
Total special expense items 10,540 424 26,035
------ --- ------
GAAP operating expenses excluding special
expense items $222,910 $222,669 $202,241
======== ======== ========
Reconciliation of GAAP net income to GAAP net
income excluding special expense items:
---------------------------------------------
GAAP net income $88,130 $133,446 $109,590
Special expense (income) items:
Intangible asset amortization (1) 12,418 13,755 12,366
Acquisition related inventory write up (2) 1,801 - 1,320
Severance and restructuring 6,047 492 488
Other operating expenses (income), net (3) 155 (4,389) 21,100
Interest and other (income), net (4) (1,776) - -
------ --- ---
Pre-tax total special expense items 18,645 9,858 35,274
Tax effect of special items (6,102) (3,474) (12,480)
International restructuring (5) - (2,655) -
GAAP net income excluding special expense
items $100,673 $137,175 $132,384
======== ======== ========
GAAP net income per share excluding special
expense items:
Basic $0.34 $0.47 $0.45
===== ===== =====
Diluted $0.34 $0.46 $0.44
===== ===== =====
Shares used in the calculation of earnings per
share excluding special expense items:
Basic 291,824 294,475 296,550
===== ===== =====
Diluted 299,290 301,076 303,260
===== ===== =====
(1) Includes intangible asset amortization related to acquisitions.
(2) Includes expense related to fair value write up of inventory acquired as part
of acquisitions.
(3) Other operating expenses, net are primarily for stock option related
litigation, certain payroll taxes, interest and penalties and loss on sale of land
and buildings.
(4) Includes gain on sale of equity investment.
(5) Includes impact due to implementation of international restructuring.
-------------------------------------------------------------------------
Non-GAAP Measures
To supplement the consolidated financial results prepared under GAAP, Maxim uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude special expense items related to intangible asset amortization; acquisition related inventory write up to fair value; severance and restructuring; stock option related litigation; certain payroll taxes, interest and penalties; loss on the sale of land and buildings; the tax provision impacts due to implementation of international restructuring; and gain on sale of equity investment. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim's current performance. Many analysts covering Maxim use the non-GAAP measures as well. Given management's use of these non-GAAP measures, Maxim believes these measures are important to investors in understanding Maxim'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's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative to GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized it may not be possible to compare these financial measures with other companies' non-GAAP financial measures, even if they have similar names. The non-GAAP measures displayed in the table above include the following:
GAAP gross profit excluding special expense items
The use of GAAP gross profit excluding special expense items allows management to evaluate the gross margin of the company's core businesses and trends across different reporting periods on a consistent basis, independent of special expense items including intangible asset amortization and acquisition related inventory write up to fair value. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP gross profit excluding special expense items to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of Maxim's core businesses.
GAAP operating expenses excluding special expense items
The use of GAAP operating expenses excluding special expense items allows management to evaluate the operating expenses of the company's core businesses and trends across different reporting periods on a consistent basis, independent of special expense items including intangible asset amortization; severance and restructuring; stock option related litigation; certain payroll taxes, interest and penalties; and loss on the sale of land and buildings. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP operating expenses excluding special expense items to enable investors and analysts to evaluate our core business and its direct operating expenses.
GAAP net income and GAAP net income per share excluding special items
The use of GAAP net income and GAAP net income per share excluding special items allow management to evaluate the operating results of Maxim's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; acquisition related inventory write up to fair value; severance and restructuring; stock option related litigation; certain payroll taxes, interest and penalties; loss on the sale of land and buildings; the tax provision impacts due to implementation of international restructuring; and gain on the sale of equity investment. 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'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 financial projections for its third quarter of fiscal 2012 ending in March 2012, which includes revenue, gross margin and earnings per share, as well as the Company's forecast that its revenue will return to normal trends in the March quarter. 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, 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 25, 2011 (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
Maxim makes highly integrated analog and mixed-signal semiconductors. Maxim reported revenue of approximately $2.5 billion for fiscal 2011. For more information, go to www.Maxim-ic.com.
Contact
Paresh Maniar
Executive Director, Investor Relations
(408) 470-5348
SOURCE Maxim Integrated Products, Inc.
