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Maxim Reports Results for the Third Quarter of Fiscal 2012

- Revenue: $571 million

(PRNewswire) — �Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $571 million for its fiscal 2012 third quarter ended March 31, 2012, a 3% decrease from $591 million revenue recorded in the prior quarter.

Tunc Doluca, President and Chief Executive Officer, commented, "Bookings recovered in all of our major markets, reaffirming our belief that the March quarter marked a cyclical bottom for our revenue. Channel inventories are lean, bookings have strengthened, and we see healthy demand for our mobility products."

Fiscal Year 2012 Third Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was $0.18. The results were affected by certain items which primarily consisted of:

GAAP earnings per share excluding special expense items was $0.33. 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 our fiscal 2012 third quarter total cash, cash equivalents and short term investments was $936 million, an increase of $119 million from the prior quarter. Notable items include:

Business Outlook
The Company's 90 day backlog at the beginning of the fourth fiscal quarter was $388 million. Based on our beginning backlog and expected turns, results for the June 2012 quarter are expected to be:

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 June 6, 2012, to stockholders of record on May 21, 2012.

Conference Call
Maxim has scheduled a conference call on April 26, 2012, at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal year 2012 and its business outlook. To listen via telephone, dial (866) 227-1582 (toll free) or (703) 639-1129.  This call will be webcast by Shareholder.com and can be accessed at Maxim's website at www.maxim-ic.com/Investor.  

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



Three Months Ended



March 31,


December 31,


March 26,



2012


2011


2011



(in thousands, except per share data)

Net revenues


$       571,212


$          591,359


$       606,775

Cost of goods sold (1, 2, 3)


235,782


243,399


234,125

        Gross profit


335,430


347,960


372,650

Operating expenses:







    Research and development (1)


136,075


142,084


130,955

    Selling, general and administrative (1)


78,011


80,826


73,617

    Intangible asset amortization (2)


4,029


4,338


4,092

    Impairment of long-lived assets (4)


7,712


-


-

    Severance and restructuring


228


6,047


16

    Other operating (income) expenses, net (5)


(2,511)


155


(25)

       Total operating expenses 


223,544


233,450


208,655

          Operating income


111,886


114,510


163,995

Interest and other (expense) income, net (6)


(230)


2,374


(1,570)

Income before provision for income taxes


111,656


116,884


162,425

Provision for income taxes (7,8)


88,948


28,754


26,149

    Income from continuing operations


22,708


88,130


136,276

    Income from discontinued operations, net of tax (9)


31,809


-


-

      Net income


$         54,517


$            88,130


$       136,276








Earnings per share: basic







    From continuing operations


$             0.08


$                0.30


$             0.46

    From discontinued operations, net of tax (9)


0.11


-


-

    Basic 


$             0.19


$                0.30


$             0.46








Earnings per share: diluted







    From continuing operations


$             0.07


$                0.29


$             0.45

    From discontinued operations, net of tax (9)


0.11


-


-

    Diluted 


$             0.18


$                0.29


$             0.45








Shares used in the calculation of earnings per share: 







    Basic


292,276


291,824


296,511

    Diluted 


300,221


299,290


304,515








Dividends paid per share 


$             0.22


$                0.22


$             0.21















SCHEDULE OF SPECIAL EXPENSE ITEMS

(Unaudited)




Three Months Ended



March 31,


December 31,


March 26,



2012


2011


2011



(in thousands)

Cost of goods sold:







      Intangible asset amortization (2)


$               9,787


$                  8,080


$               7,919

      Acquisition related inventory write up (3)


-


1,801


-

 Total 


$               9,787


$                  9,881


$               7,919








 Operating expenses: 







     Intangible asset amortization (2)


$               4,029


$                  4,338


$               4,092

     Impairment of long-lived assets (4)


7,712


-


-

     Severance and restructuring 


228


6,047


16

     Other operating (income) expenses, net (5)


(2,511)


155


(25)

 Total 


$               9,458


$                10,540


$               4,083








     Interest and other (income), net (6) 


$                      -


$                (1,776)


$                      -

 Total 


$                      -


$                (1,776)


$                      -








Provision for income taxes:







     Reversal of tax reserves (7) 


$             (2,272)


$                       -


$           (37,324)

     International restructuring (8) 


$             65,293


$                       -


$             15,010

 Total 


$             63,021


$                       -


$           (22,314)








Discontinued operations:







     Income from discontinued operations, net of tax (9)


$           (31,809)


$                       -


$                     -

 Total 


$           (31,809)


$                       -


$                     -








(1) Includes stock-based compensation charges.







(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) Includes impairment charges relating to wafer fab and end of line manufacturing equipment.

(5) Other operating (income) expenses, net are primarily for gain on sale of land and buildings, stock option related litigation, certain payroll taxes, interest and penalties and in-process research and development written off.

(6) Includes gain on sale of equity investment.

(7) Reversal of tax reserves related to audit completion and expiration of statute of limitations.

(8) Includes impact due to implementation of international restructuring.

(9) Includes gain on sale, net of tax relating to certain businesses divested.


 










STOCK-BASED COMPENSATION BY TYPE OF AWARD (in thousands)

(Unaudited)










Three Months Ended March 31, 2012

Stock Options


Restricted Stock

 Units


Employee Stock

 Purchase Plan


Total


Cost of goods sold 

$                  470


$               2,217


$                  412


$               3,099


Research and development expense

1,742


8,203


1,602


11,547


Selling, general and administrative expense

1,836


5,072


484


7,392


       Total

$               4,048


$             15,492


$               2,498


$             22,038











Three Months Ended December 31, 2011









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 March 26, 2011









Cost of goods sold 

$                  626


$               2,308


$                  402


$               3,336


Research and development expense

2,050


8,326


1,367


11,743


Selling, general and administrative expense

1,347


4,396


406


6,149


       Total

$               4,023


$             15,030


$               2,175


$             21,228




















 

CONSOLIDATED  BALANCE SHEETS


(Unaudited)





March 31,


December 31,


March 26,



2012


2011


2011



(in thousands) 


ASSETS


Current assets:







    Cash and cash equivalents

$           860,551


$           741,160


$           868,923


    Short-term investments

75,405


75,375


49,924


        Total cash, cash equivalents and short-term investments

935,956


816,535


918,847


    Accounts receivable, net

296,255


246,229


304,591


    Inventories

220,153


233,404


234,933


    Deferred tax assets

105,298


87,636


128,371


    Other current assets

79,584


81,396


89,851


        Total current assets

1,637,246


1,465,200


1,676,593


Property, plant and equipment, net

1,361,300


1,365,815


1,286,061


Intangible assets, net

222,354


237,776


216,439


Goodwill

423,073


432,809


247,526


Other assets

26,264


19,055


25,798


              TOTAL ASSETS

$        3,670,237


$        3,520,655


$        3,452,417









LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:







    Accounts payable 

$           132,906


$           118,427


$           107,444


    Income taxes payable

21,807


7,866


5,363


    Accrued salary and related expenses

181,943


159,651


201,791


    Accrued expenses 

72,242


62,579


40,984


    Deferred income on shipments to distributors

28,729


31,136


35,571


        Total current liabilities

437,627


379,659


391,153


Long term debt

308,700


308,700


300,000


Income taxes payable

192,842


108,462


92,110


Deferred tax liabilities

205,727


197,839


180,442


Other liabilities

22,143


21,529


23,672


        Total liabilities 

1,167,039


1,016,189


987,377









Stockholders' equity:







    Common stock

9,125


292


5,865


    Retained earnings 

2,507,298


2,517,166


2,473,271


    Accumulated other comprehensive loss

(13,225)


(12,992)


(14,096)


        Total stockholders' equity

2,503,198


2,504,466


2,465,040


              TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 

$        3,670,237


$        3,520,655


$        3,452,417
















 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Three Months Ended


March 31,


December 31,


March 26,


2012


2011


2011


(in thousands)

Cash flows from operating activities: 






Net income

$       54,517


$        88,130


$      136,276

Adjustments to reconcile net income to net cash provided by operating activities: 






      Stock-based compensation 

22,038


23,474


21,228

      Depreciation and amortization 

53,476


51,995


50,684

      Deferred taxes 

(9,942)


(368)


15,733

      In-process research and development

1,600


-


-

      (Gain) Loss from sale of property, plant and equipment

(6,487)


124


(51)

      Gain from discontinued operations

(45,372)


-


-

      Gain from sale of equity investments

-


(1,811)


-

      Tax shortfall (benefit) related to stock-based compensation plans

2,957


(2,581)


33,411

      Impairment of long-lived assets

7,712


-


-

      Excess tax benefit related to stock-based compensation 

(5,172)


(4,242)


(4,229)

      Changes in assets and liabilities: 






          Accounts receivable 

(50,026)


82,760


(11,327)

          Inventories 

12,412


19,045


(17,673)

          Other current assets 

2,332


(1,615)


44,654

          Accounts payable 

27,228


(18,397)


10,952

          Income taxes payable 

98,321


12,619


(70,201)

          Deferred income on shipments to distributors 

(2,407)


(3,444)


1,306

          All other accrued liabilities 

33,312


3,631


45,934

Net cash provided by operating activities 

196,499


249,320


256,697







Cash flows from investing activities: 






          Payments for property, plant and equipment

(70,053)


(68,361)


(29,593)

          Proceeds from sales of property, plant and equipment

13,774


1,709


80

          Acquisitions

-


(12,018)


-

          Discontinued operations

56,607


-


-

          Purchases of equity investments

(1,980)


-


(49,787)

          Purchases of available-for-sale securities

-


(25,108)


-

          Proceeds from sales of equity securities

-


3,225


-

Net cash used in investing activities 

(1,652)


(100,553)


(79,300)







Cash flows from financing activities: 






         Dividends paid

(64,384)


(64,158)


(62,323)

         Repayment of notes payable

-


(4,189)


-

         Repurchase of common stock

(28,970)


(72,486)


(46,689)

         Issuance of ESPP

-


14,906


-

         Proceeds from stock options exercised

20,395


12,013


6,197

         Other

(2,497)


(3,734)


(4,003)

Net cash used in financing activities 

(75,456)


(117,648)


(106,818)







Net increase in cash and cash equivalents 

119,391


31,119


70,579

Cash and cash equivalents: 






          Beginning of period

741,160


710,041


798,344

          End of period

$     860,551


$      741,160


$      868,923







Total cash, cash equivalents, and short-term investments

$     935,956


$      816,535


$      918,847













 

ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL EXPENSE ITEMS DISCLOSURES

(Unaudited)




Three Months Ended



March 31,


December 31,


March 26,



2012


2011


2011



(in thousands, except per share data)

Reconciliation of GAAP gross profit to GAAP gross profit excluding special expense items:







GAAP gross profit


$           335,430


$              347,960


$           372,650

GAAP gross profit %


58.7%


58.8%


61.4%








Special expense items:







      Intangible asset amortization (1)


9,787


8,080


7,919

      Acquisition related inventory write up (2)


-


1,801


-

 Total special expense items 


9,787


9,881


7,919

 GAAP gross profit excluding special expense items 


$           345,217


$              357,841


$           380,569

 GAAP gross profit % excluding special expense items 


60.4%


60.5%


62.7%








Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special expense items:







GAAP operating expenses


$           223,544


$              233,450


$           208,655








Special expense (income) items:







      Intangible asset amortization (1)


4,029


4,338


4,092

      Impairment of long-lived assets (3)


7,712


-


-

     Severance and restructuring 


228


6,047


16

     Other operating (income) expenses, net (4) 


(2,511)


155


(25)

 Total special expense items 


9,458


10,540


4,083

 GAAP operating expenses excluding special expense items 


$           214,086


$              222,910


$           204,572








Reconciliation of GAAP net income to GAAP net income excluding special expense items:







GAAP net income


$             54,517


$                88,130


$           136,276








Special expense (income) items:







      Intangible asset amortization (1)


13,816


12,418


12,011

     Acquisition related inventory write up (2)


-


1,801


-

      Impairment of long-lived assets (3)


7,712


-


-

     Severance and restructuring 


228


6,047


16

     Other operating expenses (income), net (4) 


(2,511)


155


(25)

     Interest and other (income), net (5) 


-


(1,776)


-

                     Pre-tax total special expense items 


19,245


18,645


12,002

     Tax effect of special items 


(5,445)


(6,102)


(4,233)

     Reversal of tax reserves (6) 


(2,272)


-


(37,324)

     International restructuring (7) 


65,293


-


15,010

    Discontinued operations, net of tax (8)


(31,809)


-


-

 GAAP net income excluding special expense items 


$             99,529


$              100,673


$           121,731








 GAAP net income per share excluding special expense items: 







    Basic 


$                 0.34


$                    0.34


$                 0.41

    Diluted 


$                 0.33


$                    0.34


$                 0.40








Shares used in the calculation of earnings per share excluding special expense items: 






    Basic


292,276


291,824


296,511

    Diluted 


300,221


299,290


304,515








(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) Includes impairment charges relating to wafer fab and end of line manufacturing equipment.

(4) Other operating (income) expenses, net are primarily for gain on sale of land and buildings, stock option related litigation, certain payroll taxes, interest and penalties and in-process research and development written off.

(5) Includes gain on sale of equity investment.

(6) Reversal of tax reserves related to audit completion and expiration of statute of limitations.

(7) Includes impact due to implementation of international restructuring.

(8) Includes gain on sale, net of tax relating to certain businesses divested.


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; impairment charges related to manufacturing equipment; severance and restructuring; stock option related litigation; certain payroll taxes, interest and penalties; in-process research and development written off; gain on the sale of land and buildings; gain on sale of equity investment;  reversal of tax reserves related to audit completion and expiration of statute of limitations; the tax provision impacts due to implementation of international restructuring; and gain on sale, net of tax relating to certain businesses divested. 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; impairment charges related to manufacturing equipment; severance and restructuring; stock option related litigation; certain payroll taxes, interest and penalties; in-process research and development written off; and gain 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; impairment charges related to manufacturing equipment; severance and restructuring; stock option related litigation; certain payroll taxes, interest and penalties; in-process research and development written off; gain on the sale of land and buildings; gain on sale of equity investment;  reversal of tax reserves related to audit completion and expiration of statute of limitations; the tax provision impacts due to implementation of international restructuring; and gain on sale, net of tax relating to certain businesses divested. 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 fourth quarter of fiscal 2012 ending in June 2012, which includes revenue, gross margin and earnings per share, as well as the Company's belief  that the March quarter marked a cyclical bottom for its revenue given lean channel inventories, strengthening of bookings and healthy demand for the Company's mobility products. 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
Venk Nathamuni
Managing Director, Investor Relations
(408) 470-5715

SOURCE Maxim Integrated Products, Inc.

Contact:
Maxim Integrated Products, Inc.
Web: http://www.maxim-ic.com