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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