Maxim Integrated Reports Results For The Second Quarter Of Fiscal 2014

    Maxim Integrated Reports Results For The Second Quarter Of Fiscal 2014

- Revenue: $620 million

- Gross Margin: 53.0% GAAP (58.2% excluding special items, after a 2.9
percentage point reduction due to warranty expense)

- EPS: $0.17 GAAP ($0.36 excluding special items, after a $0.05 reduction due
to warranty expense)

- Cash, cash equivalents, and short term investments: $1.15 billion

- Fiscal third quarter revenue outlook: $590 million to $620 million

PR Newswire

SAN JOSE, Calif., Jan. 23, 2014

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.

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

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:

  o$40 million for Volterra acquisition-related items
  o$13 million for items related to prior acquisitions
  o$5 million for impairment of long-lived assets
  o$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:

  oCash flow from operations: $234 million
  oNet capital expenditures: $46 million
  oDividends: $73 million ($0.26 per share)
  oStock repurchases: $59 million
  oVolterra acquisition: $454 million
  oProceeds 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:

  oRevenue: $590 million to $620 million
  oGross Margin: 56% to 58% GAAP (60% to 62% excluding special items)
  oEPS: $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         83,471          77,430          80,058
 administrative
  Intangible asset             4,968           3,436           3,903
 amortization
  Impairment of long-lived     5,197           -               22,222
 assets (1)
  Severance and                10,227          5,547           2,236
 restructuring expenses (2)
  Acquisition-related costs    4,137           2,934           -
  Other operating expenses     1,306           (662)           1,666
 (income), net (3)
  Total operating           252,277         218,587         245,827
 expenses
  Operating income       76,395          128,609         117,548
 Interest and other income        (5,833)         (3,463)         (2,798)
 (expense), net
 Income before provision for      70,562          125,146         114,750
 income taxes
 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        13,066          -               -
 inventory write-up
 Total                          $           $          $     
                                  32,164          8,092          8,986
 Operating expenses:
  Intangible asset             $          $          $     
 amortization                     4,968           3,436          3,903
  Impairment of long-lived     5,197           -               22,222
 assets (1)
  Severance and                10,227          5,547           2,236
 restructuring (2)
  Acquisition-related costs   4,137           2,934           -
  Other operating expenses     1,306           (662)           1,666
 (income), net (3)
 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       Stock       Restricted    Employee
 December 28, 2013       Options      Stock Units    Stock Purchase   Total
                                                     Plan
 Cost of goods sold     $       $        $         $ 3,366
                          438        2,395          533
 Research and            2,616        8,728          1,153           12,497
 development expense
 Selling, general and    1,476        4,996          534             7,006
 administrative expense
  Total            $        $         $         $22,869
                         4,530       16,119        2,220
 Three Months Ended
 September 28, 2013
 Cost of goods sold     $       $        $         $ 2,742
                          349        1,918          475
 Research and            1,836        6,440          1,322           9,598
 development expense
 Selling, general and    1,264        4,527          609             6,400
 administrative expense
  Total            $        $         $         $18,740
                         3,449       12,885        2,406
 Three Months Ended
 December 29, 2012
 Cost of goods sold     $       $        $         $ 3,683
                          477        2,572          634
 Research and            2,288        8,401          1,451           12,140
 development expense
 Selling, general and    1,286        5,152          584             7,022
 administrative expense
  Total            $        $         $         $22,845
                         4,051       16,125        2,669



 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         1,149,909     1,034,583      1,030,299
 investments
  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     140,738       124,954        152,122
 expenses
  Accrued expenses              85,145        55,561         58,900
  Current portion of long-term   2,965         4,804          304,794
 debt
  Deferred income on shipments   25,542        27,179         25,362
 to distributors
  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              (12,569)      (14,109)       (15,447)
 comprehensive loss
  Total stockholders' equity 2,361,032     2,398,436      2,581,212
  TOTAL LIABILITIES &  $4,305,850    $ 3,763,997    $3,738,553
 STOCKHOLDERS' EQUITY





 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 reconcile net
 income to net cash provided by
 operating activities:
  Stock-based compensation    22,869        18,740         22,845
  Depreciation and             64,404        51,133         51,880
 amortization
  Deferred taxes              (11,705)      25,529         (12,979)
  Loss (gain) from sale of     265           36             (88)
 property, plant and equipment
  Tax benefit (shortfall)
 related to stock-based             (726)         (3,488)        5,187
 compensation
  Impairment of long-lived     5,197         -              22,222
 assets
  Excess tax benefit from      (2,459)       (1,697)        (6,615)
 stock-based compensation
  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      (1,637)       622            (1,663)
 shipments to distributors
  All other accrued        14,704        (67,035)       13,091
 liabilities
 Net cash provided by (used in)     234,432       95,894         255,097
 operating activities
 Cash flows from investing
 activities:
  Purchase of property,    (46,133)      (36,329)       (62,102)
 plant and equipment
  Proceeds from sales of   -             3,048          4,115
 property, plant and equipment
  Payments in connection
 with business acquisition, net of  (453,506)     -              -
 cash acquired
  Proceeds from maturity   27,000        -              -
 of available-for-sale securities
 Net cash provided by (used in)     (472,639)     (33,281)       (57,987)
 investing activities
 Cash flows from financing
 activities:
  Excess tax benefit from   2,459         1,697          6,615
 stock-based compensation
  Contingent consideration  (4,601)       -              (7,476)
 paid
  Dividends paid            (73,325)      (73,744)       (70,063)
  Repayment of notes        (1,839)       -              (74)
 payable
  Issuance of debt          497,795       100            -
  Debt issuance cost        (3,431)       -              -
  Repurchase of common      (59,101)      (154,386)      (50,435)
 stock
  Issuance of ESPP shares
 under employee stock purchase      19,096        -              16,768
 program
  Net issuance of           (7,106)       (6,966)        (6,538)
 restricted stock units
  Proceeds from stock       8,622         5,247          19,350
 options exercised
 Net cash provided by (used in)     378,569       (228,052)      (91,853)
 financing activities
 Net increase (decrease) in cash    140,362       (165,439)      105,257
 and cash equivalents
 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  $1,149,909    $ 1,034,583    $1,030,299
 short-term investments





ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
(Unaudited)
                                    Three Months Ended
                                    December 28,      September    December
                                                      28,          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              19,098            8,092        8,986
amortization
 Acquisition-related           13,066            -            -
inventory write-up
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      58.2%             60.7%        61.5%
special items
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                 4,968             3,436        3,903
amortization
 Impairment of long-lived         5,197             -            22,222
assets (1)
 Severance and restructuring      10,227            5,547        2,236
(2)
 Acquisition-related costs      4,137             2,934        -
 Other operating expenses         1,306             (662)        1,666
(income), net (3)
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              24,066            11,528       12,889
amortization
 Acquisition-related           13,066            -            -
inventory write-up
 Impairment of long-lived      5,197             -            22,222
assets (1)
 Severance and restructuring    10,227            5,547        2,236
(2)
 Acquisition-related costs      4,137             2,934        -
 Other operating expenses       1,306             (662)        1,666
(income) , net (3)
 Pre-tax        57,999            19,347       39,013
total special items
 Tax effect of special          (4,862)           (2,981)      (9,555)
items
 International restructuring    -                 -            18,726
implementation
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.

Website: http://www.maxim-ic.com
 
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