Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2014

    Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2014  - Revenue: $606 million  - Gross Margin: 56.1% GAAP (60.1% excluding special items)  - EPS: $0.42 GAAP ($0.43 excluding special items)  - Cash, cash equivalents, and short term investments: $1.23 billion  - Fiscal fourth quarter revenue outlook: $635 million to $665 million  PR Newswire  SAN JOSE, Calif., April 24, 2014  SAN JOSE, Calif., April 24, 2014 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $606 million for its third quarter of fiscal 2014 ended March 29, 2014, a 2% decrease from the $620 million revenue recorded in the prior quarter.  Logo for Maxim Integrated Products Inc.  Tunc Doluca, President and Chief Executive Officer, commented, "We achieved better-than-seasonal results for our mix of businesses, driven by growth in automotive, industrial and communications, as market requirements converge on the need for lower power, higher functionality, and more integrated designs. " Mr. Doluca continued, "Looking forward, we expect continued growth in these businesses, accompanied by strength in mobility."  Fiscal Year 2014 Third Quarter Results  Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was $0.42. Earnings per share included an intellectual property licensing income amount of $17 million, included in Interest and Other Income.  The results were affected by special items which primarily consisted of a $35 million pre-tax charge for items related to acquisitions and a $35 million benefit for income taxes. GAAP earnings per share, excluding special items was $0.43. An analysis of GAAP versus GAAP excluding special items is provided in the last table of this press release.  Cash Flow Items  At the end of the third quarter of fiscal 2014, total cash, cash equivalents and short term investments was $1.23 billion, an increase of $81 million from the prior quarter. Notable items included:    oCash flow from operations: $212 million   oNet capital expenditures: $26 million   oDividends: $73 million ($0.26 per share)   oStock repurchases: $51 million  Business Outlook  The Company's 90-day backlog at the beginning of the fourth fiscal quarter of 2014 was $413 million. Based on the beginning backlog and expected turns, results for the June 2014 quarter are expected to be as follows:    oRevenue: $635 million to $665 million   oGross Margin: 58% to 60% GAAP (61% to 63% excluding special items)   oEPS: $0.38 to $0.42 GAAP ($0.45 to $0.49 excluding special items)  Maxim Integrated's business outlook does not include the potential impact of any restructuring activity or mergers, acquisitions, or other business combinations that may be completed during the quarter.  Dividend  A cash dividend of $0.26 per share will be paid on June 5, 2014, to stockholders of record on May 22, 2014.  Conference Call  Maxim Integrated has scheduled a conference call on April 24, 2014, at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal 2014 and its business outlook. To listen via telephone, dial (866) 804-3547 (toll free) or (703) 639-1328. This call will be webcast by Shareholder.com and can be accessed at the Company's website at www.maximintegrated.com/company/investor.   CONSOLIDATED STATEMENTS OF INCOME  (Unaudited)                                  Three Months Ended                                  March 29,       December 28,    March 30,                                  2014            2013            2013                                  (in thousands, except per share data)  Net revenues                    $ 605,681      $            $ 604,884                                                  620,274  Cost of goods sold              265,744         291,602         228,782   Gross margin            339,937         328,672         376,102  Operating expenses:   Research and development    141,493         142,971         134,138   Selling, general and        80,680          83,471          81,954  administrative   Intangible asset            4,863           4,968           3,903  amortization   Impairment of long-lived    -               5,197           -  assets   Severance and               3,338           10,227          151  restructuring expenses (1)   Acquisition-related         (88)            4,137           -  costs   Other operating expenses    2,913           7,307           1,678  (income), net (2)   Total operating          233,199         258,278         221,824  expenses   Operating income      106,738         70,394          154,278  Interest and other income       5,174           (5,833)         (2,669)  (expense), net (3)  Income before provision for     111,912         64,561          151,609  income taxes  Provision (benefit) for         (10,632)        20,208          22,824  income taxes (4)   Income from continuing      122,544         44,353          128,785  operations   Income from discontinued    -               -               2,603  operations, net of tax   Net income                  $ 122,544      $           $ 131,388                                                  44,353  Earnings per share: Basic   From continuing             $    0.43   $         $     operations                                      0.16            0.44   From discontinued           -               -               0.01  operations, net of tax   Basic                       $    0.43   $         $                                                     0.16            0.45  Earnings per share: Diluted   From continuing             $    0.42   $         $     operations                                      0.15            0.43   From discontinued           -               -               0.01  operations, net of tax   Diluted                     $    0.42   $         $                                                     0.15            0.44  Shares used in the  calculation of earnings per  share:   Basic                       282,627         282,664         292,888   Diluted                    288,575         288,565         300,082  Dividends paid per share       $    0.26   $         $                                                     0.26            0.24  (1) Includes severance, retention and lease abandonment charges related to  acquisitions, and severance charges related to the reorganization of  various business units and manufacturing operations.  (2) Other operating expenses (income), net are primarily for legal  settlement, in-process research and development abandoned, contingent  consideration adjustments related to certain acquisitions and legal  expenses related to Volterra acquisition.  (3) Includes impairment of investments in privately-held companies.  (4) Includes one-time fixed asset tax basis adjustments relating to prior  year depreciation expense.       SCHEDULE OF SPECIAL EXPENSE ITEMS  (Unaudited)                                  Three Months Ended                                  March 29,       December 28,     March 30,                                  2014            2013             2013                                  (in thousands)  Cost of goods sold:   Intangible asset          $  18,542     $            $    amortization                                    19,098           7,777   Acquisition-related       5,518           13,066           -  inventory write-up  Total                         $  24,060     $            $                                                    32,164           7,777  Operating expenses:   Intangible asset             $   4,863    $           $    amortization                                    4,968            3,903   Impairment of long-lived     -               5,197            -  assets   Severance and                3,338           10,227           151  restructuring (1)   Acquisition-related         (88)            4,137            -  costs   Other operating expenses     2,913           7,307            1,678  (income), net (2)  Total                         $  11,026     $            $                                                    31,836           5,732   Interest and other         $   3,723    $          $      expense (income), net (3)                         -            -  Total                         $   3,723    $          $                                                         -            -  Provision (benefit) for  income taxes:   Fixed assets tax basis     $  (34,562)    $          $      adjustment (4)                                    -           -   Research & development     -               -                (3,899)  tax credits  Total                         $  (34,562)    $          $                                                       -         (3,899)  Discontinued operations:   Income from                $         $          $    discontinued operations, net    -                 -         (2,603)  of tax  Total                         $         $          $                                    -                 -         (2,603)  (1) Includes severance, retention and lease abandonment charges related to  acquisitions, and severance charges related to the reorganization of  various business units and manufacturing operations.  (2) Other operating expenses (income), net are primarily for legal  settlement, in-process research and development abandoned, contingent  consideration adjustments related to certain acquisitions and legal  expenses related to Volterra acquisition.  (3) Includes impairment of investments in privately-held companies.  (4) Includes one-time fixed asset tax basis adjustments relating to prior  year depreciation expense.     STOCK-BASED COMPENSATION BY TYPE OF AWARD (in thousands)  (Unaudited)  Three Months Ended March   Stock       Restricted    Employee  29, 2014                  Options      Stock Units    Stock           Total                                                        Purchase Plan  Cost of goods sold       $       $        $        $                                 451      2,108        594     3,153  Research and development  2,124        7,917          1,623          11,664  expense  Selling, general and      1,391        5,186          663            7,240  administrative expense   Total              $       $        $        $                              3,966      15,211        2,880      22,057  Three Months Ended  December 28, 2013  Cost of goods sold       $       $        $        $                                 438      2,395        533     3,366  Research and development  2,616        8,728          1,153          12,497  expense  Selling, general and      1,476        4,996          534            7,006  administrative expense   Total              $       $        $        $                              4,530      16,119        2,220      22,869  Three Months Ended March  30, 2013  Cost of goods sold       $       $        $        $                                 337      2,120        598     3,055  Research and development  1,440        7,116          1,480          10,036  expense  Selling, general and      1,157        4,764          601            6,522  administrative expense   Total              $       $        $        $                              2,934      14,000        2,679      19,613     CONSOLIDATED BALANCE SHEETS  (Unaudited)                             March 29,        December 28,      March 30,                             2014             2013              2013                             (in thousands)  ASSETS  Current assets:   Cash and cash          $  1,231,248    $  1,149,909    $  1,547,980  equivalents   Short-term investments -                -                 25,095   Total cash, cash  equivalents and short-term 1,231,248        1,149,909         1,573,075  investments   Accounts receivable,   304,128          288,285           300,046  net   Inventories            290,518          297,234           268,018   Deferred tax assets    74,038           69,154            81,809   Other current assets   79,346           85,554            113,010   Total current      1,979,278        1,890,136         2,335,958  assets  Property, plant and        1,355,268        1,372,393         1,368,905  equipment, net  Intangible assets, net     384,167          404,652           165,591  Goodwill                   597,676          596,898           422,004  Other assets               38,176           42,803            41,660   TOTAL ASSETS $  4,354,565    $  4,306,882    $  4,334,118  LIABILITIES AND STOCKHOLDERS' EQUITY  Current liabilities:   Accounts payable      $    94,315  $     99,009  $   114,629   Income taxes payable   20,720           21,717            20,200   Accrued salary and     168,336          140,738           182,894  related expenses   Accrued expenses      81,232           91,145            59,075   Current portion of     2,526            2,965             304,314  long-term debt   Deferred income on     24,259           25,542            25,851  shipments to distributors   Total current      391,388          381,116           706,963  liabilities  Long-term debt             1,000,871        1,000,871         503,573  Income taxes payable       352,294          337,053           271,815  Deferred tax liabilities   171,431          202,435           213,138  Other liabilities          37,977           29,343            26,063   Total liabilities 1,953,961        1,950,818         1,721,552  Stockholders' equity:   Common stock and  capital in excess of par   283              283               292  value   Retained earnings     2,412,627        2,368,350         2,629,895   Accumulated other      (12,306)         (12,569)          (17,621)  comprehensive loss   Total              2,400,604        2,356,064         2,612,566  stockholders' equity   TOTAL  LIABILITIES &              $  4,354,565    $  4,306,882    $  4,334,118  STOCKHOLDERS' EQUITY     CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)                                  Three Months Ended                                  March 29,      December 28,    March 30,                                  2014           2013            2013                                  (in thousands)  Cash flows from operating  activities:   Net income                  $        $           $                                    122,544        44,353          131,388   Adjustments to reconcile  net income to net cash provided  by operating activities:   Stock-based             22,057         22,869          19,613  compensation   Depreciation and        64,665         64,404          50,391  amortization   Deferred taxes         (36,482)       (11,705)        18,392   In-process research and 2,580          -               2,800  development written-off   Loss (gain) from sale  of property, plant and          818            265             (2,397)  equipment   Tax benefit (shortfall)  related to stock-based          3,204          (726)           1,317  compensation   Impairment of           -              5,197           -  long-lived assets   Impairment of  investments in privately-held   3,723          -               -  companies   Excess tax benefit from (5,139)        (2,459)         (4,297)  stock-based compensation   Loss (gain) on sale of  -              -               (3,285)  discontinued operations   Changes in assets and  liabilities:   Accounts            (15,566)       33,056          (35,501)  receivable   Inventories        7,717          14,030          (12,143)   Other current       7,194          30,330          (14,653)  assets   Accounts payable   (4,044)        (3,252)         10,453   Income taxes        14,244         19,002          9,100  payable   Deferred revenue on (1,283)        (1,637)         489  shipments to distributors   All other accrued   25,466         20,704          40,026  liabilities  Net cash provided by (used in)  211,698        234,431         211,693  operating activities  Cash flows from investing  activities:   Purchase of property,   (26,407)       (46,133)        (54,945)  plant and equipment   Proceeds from sales of  618            -               10,199  property, plant and equipment   Payments in connection  with business acquisition, net  (5,750)        (453,506)       -  of cash acquired   Proceeds from maturity  of available-for-sale           -              27,000          50,000  securities  Net cash provided by (used in)  (31,539)       (472,639)       5,254  investing activities  Cash flows from financing  activities:   Excess tax benefit from 5,139          2,459           4,297  stock-based compensation   Contingent              (104)          (4,601)         -  consideration paid   Dividends paid          (73,481)       (73,324)        (70,421)   Repayment of notes      (439)          (1,839)         (903)  payable   Issuance of debt        -              497,795         491,145   Debt issuance cost      -              (3,431)         -   Repurchase of common    (51,083)       (59,101)        (66,330)  stock   Issuance of ESPP shares  under employee stock purchase   -              19,096          -  program   Net issuance of         (8,390)        (7,106)         (7,941)  restricted stock units   Proceeds from stock     29,538         8,622           26,079  options exercised  Net cash provided by (used in)  (98,820)       378,570         375,926  financing activities  Net increase (decrease) in cash 81,339         140,362         592,873  and cash equivalents  Cash and cash equivalents:   Beginning of period   1,149,909      1,009,547       955,107   End of period         $          $  1,149,909  $  1,547,980                                  1,231,248  Total cash, cash equivalents,   $          $  1,149,909  $  1,573,075  and short-term investments      1,231,248     ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES  (Unaudited)                                    Three Months Ended                                    March 29,        December 28,   March 30,                                    2014             2013           2013                                    (in thousands, except per share data)  Reconciliation of GAAP gross  profit to GAAP gross profit  excluding special items:  GAAP gross profit                 $   339,937    $           $                                                       328,672        376,102  GAAP gross profit %               56.1%            53.0%          62.2%  Special items:   Intangible asset            18,542           19,098         7,777  amortization   Acquisition-related         5,518            13,066         -  inventory write-up  Total special items             24,060           32,164         7,777  GAAP gross profit excluding      $   363,997    $           $    special items                                     360,836        383,879  GAAP gross profit % excluding    60.1%            58.2%          63.5%  special items  Reconciliation of GAAP  operating expenses to GAAP  operating expenses excluding  special items:  GAAP operating expenses           $   233,199    $           $                                                       258,278        221,824  Special items:  Intangible asset              4,863            4,968          3,903  amortization   Impairment of long-lived      -                5,197          -  assets   Severance and                 3,338            10,227         151  restructuring (1)   Acquisition-related costs    (88)             4,137          -   Other operating expenses       2,913            7,307          1,678  (income), net (2)  Total special items             11,026           31,836         5,732  GAAP operating expenses          $   222,173    $           $    excluding special items                           226,442        216,092  Reconciliation of GAAP net  income to GAAP net income  excluding special items:  GAAP net income                   $   122,544    $          $                                                       44,353         131,388  Special items:   Intangible asset            23,405           24,066         11,680  amortization   Acquisition-related         5,518            13,066         -  inventory write-up   Impairment of long-lived    -                5,197          -  assets   Severance and                3,338            10,227         151  restructuring (1)   Acquisition-related costs    (88)             4,137          -   Other operating expenses     2,913            7,307          1,678  (income), net (2)   Interest and other           3,723            -              -  expense, net (3)   Pre-tax      38,809           64,000         13,509  total special items   Tax effect of special        (3,658)          (5,894)        (3,806)  items   Fixed asset tax basis        (34,562)         -              -  adjustment (4)   Research & development       -                -              (3,899)  tax credits   Discontinued operations,     -                -              (2,603)  net of tax  GAAP net income excluding        $   123,133    $           $    special items                                     102,459        134,589  GAAP net income per share  excluding special items:   Basic                        $           $         $                                        0.44              0.36          0.46   Diluted                      $           $         $                                        0.43              0.36          0.45  Shares used in the calculation  of earnings per share  excluding special items:   Basic                         282,627          282,664        292,888   Diluted                      288,575          288,565        300,082  (1) Includes severance, retention and lease abandonment charges related to  acquisitions, and severance charges related to the reorganization of various  business units and manufacturing operations.  (2) Other operating expenses (income), net are primarily for legal  settlement, in-process research and development abandoned, contingent  consideration adjustments related to certain acquisitions and legal expenses  related to Volterra acquisition.  (3) Includes impairment of investments in privately-held companies.  (4) Includes one-time fixed asset tax basis adjustments relating to prior  year depreciation expense.  Non-GAAP Measures  To supplement the consolidated financial results prepared under GAAP, Maxim Integrated uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude special items related to intangible asset amortization; acquisition-related inventory write-up; impairment of long-lived assets; severance and restructuring; acquisition-related costs; contingent consideration adjustments relating to certain acquisitions; legal settlement; in-process research and development abandoned; legal expenses related to Volterra; impairment of investments in privately-held companies; tax provision impacts due to fixed asset tax basis adjustments; research and development tax credits; and discontinued operations, net of tax. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim Integrated's current performance. Many analysts covering Maxim Integrated use the non-GAAP measures as well. Given management's use of these non-GAAP measures, Maxim Integrated believes these measures are important to investors in understanding Maxim Integrated's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in Maxim Integrated's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative to GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized it may not be possible to compare these financial measures with other companies' non-GAAP financial measures, even if they have similar names. The non-GAAP measures displayed in the table above include the following:  GAAP Gross Profit Excluding Special Items  The use of GAAP gross profit excluding special items allows management to evaluate the gross margin of the Company's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization and acquisition-related inventory write-up. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP gross profit excluding special items to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of Maxim Integrated's core businesses.  GAAP Operating Expenses Excluding Special Items  The use of GAAP operating expenses excluding special items allows management to evaluate the operating expenses of the Company's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; impairment of long-lived assets; severance and restructuring; acquisition-related costs; contingent consideration adjustments relating to certain acquisitions; in-process research and development abandoned; legal settlement; and legal expenses related to Volterra. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP operating expenses excluding special items to enable investors and analysts to evaluate our core business and its direct operating expenses.  GAAP Net Income and GAAP Net Income per Share Excluding Special Items  The use of GAAP net income and GAAP net income per share excluding special items allow management to evaluate the operating results of Maxim Integrated's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; acquisition-related inventory write-up; impairment of long-lived assets; severance and restructuring; acquisition-related costs; contingent consideration adjustments relating to certain acquisitions; legal settlement; in-process research and development abandoned; legal expenses related to Volterra; impairment of investments in privately-held companies; research and development tax credits; discontinued operations, net of tax; and the tax provision impacts due to fixed asset tax basis adjustments. In addition, they are important components of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP net income and GAAP net income per share excluding special items to enable investors and analysts to understand the results of operations of Maxim Integrated's core businesses and to compare our results of operations on a more consistent basis against that of other companies in our industry.  "Safe Harbor" Statement  This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include the Company's business outlook and financial projections for its fourth quarter of fiscal 2014 ending in June 2014, which includes revenue, gross margin and earnings per share, as well as looking forward, the Company's expects continued growth in its automotive, industrial and communications businesses, accompanied by strength in mobility." These statements involve risk and uncertainty. Actual results could differ materially from those forecasted based upon, among other things, general market and economic conditions and market developments that could adversely affect the growth of the mixed-signal analog market, product mix shifts, the loss of all or a substantial portion of our sales to one of our large customers, customer cancellations and price competition, as well as other risks described in the Company's Annual Report on Form 10-K for the fiscal year ended June 29, 2013 (the "10-K") and Quarterly Reports on Form 10-Q filed after the 10-K.  All forward-looking statements included in this news release are made as of the date hereof, based on the information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement except as required by law.  About Maxim Integrated  At Maxim Integrated, we put analog together in a way that sets our customers apart. In Fiscal 2013, we reported revenues of $2.4 billion. For more information, go to www.maximintegrated.com.  Contact  Kathy Ta Managing Director, Investor Relations (408) 601-5697  Photo - http://photos.prnewswire.com/prnh/20120912/SF71654LOGO  SOURCE Maxim Integrated Products, Inc.  Website: http://www.maxim-ic.com  
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