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Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2015

- Revenue: $577 million

(PRNewswire) — Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $577 million for its third quarter of fiscal 2015 ended March 28, 2015, a 2% increase from the $567 million revenue recorded in the prior quarter, and a 5% decrease from the same quarter of last year.

Logo for Maxim Integrated Products Inc.

Tunc Doluca, President and Chief Executive Officer, commented, "Our March quarter revenue performance was stronger than seasonal levels, but slightly below the midpoint of our expectations.  During the quarter, we diversified our revenue base in Consumer and continued to strongly grow our Automotive business." Mr. Doluca continued, "We are exceeding our cost-saving goals,  improving profitability while investing in growth areas for the future."

Fiscal Year 2015 Third Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was $0.28. The results were affected by pre-tax special items which primarily consisted of $23 million in charges related to acquisitions and $17 million in charges related to restructuring activities.  GAAP earnings per share, excluding special items was $0.40. 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 2015, total cash, cash equivalents and short term investments were $1.47 billion, an increase of $86 million from the prior quarter. Notable items included:

Business Outlook
The Company's 90-day backlog at the beginning of the fourth fiscal quarter of 2015 was $387 million. Based on the beginning backlog and expected turns, results for the June 2015 quarter are expected to be as follows:

Maxim Integrated's business outlook does not include the potential impact of any restructuring activity, acquisitions, or other business combinations that may be completed during the quarter.

Dividend
A cash dividend of $0.28 per share will be paid on June 4, 2015, to stockholders of record on May 21, 2015.   

Conference Call
Maxim Integrated has scheduled a conference call on April 23, 2015, at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal 2015 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.  

A presentation summarizing financial information to be discussed on the conference call is posted at www.maximintegrated.com/company/investor.

   












CONSOLIDATED STATEMENTS OF INCOME




(Unaudited)






Three Months Ended






March 28,


December 27,


March 29,






2015


2014


2014






(in thousands, except per share data)




Net revenues


$ 577,263


$       566,809


$ 605,681




Cost of goods sold (1)


261,995


252,732


265,744




        Gross margin


315,268


314,077


339,937




Operating expenses:










    Research and development 


123,913


135,945


141,493




    Selling, general and administrative 


75,766


79,778


80,680




    Intangible asset amortization 


3,977


4,155


4,863




    Impairment of long-lived assets (2)


5,522


50,745


-




    Impairment of goodwill and intangible assets (3)


-


93,010


2,580




    Severance and restructuring expenses (4)


2,824


13,635


3,338




Acquisition-related costs


-


-


(88)




    Other operating expenses (income), net  


(2,184)


885


333




       Total operating expenses 


209,818


378,153


233,199




          Operating income (loss)


105,450


(64,076)


106,738




Interest and other income (expense), net (5)


(5,534)


(7,599)


5,174




Income (loss) before provision for income taxes


99,916


(71,675)


111,912




Provision (benefit) for income taxes (6)


20,483


359


(10,632)




       Net Income (loss)


$   79,433


$       (72,034)


$ 122,544














Earnings (loss) per share:










    Basic


$       0.28


$           (0.25)


$       0.43




    Diluted


$       0.28


$           (0.25)


$       0.42














Shares used in the calculation of earnings (loss) per share: 










    Basic


283,418


282,992


282,627




    Diluted 


288,840


282,992


288,575














Dividends paid per share 


$       0.28


$             0.28


$       0.26
























SCHEDULE OF SPECIAL ITEMS




(Unaudited)






Three Months Ended






March 28,


December 27,


March 29,






2015


2014


2014






(in thousands)




Cost of goods sold:










      Intangible asset amortization 


$   18,750


$         18,750


$   18,542




      Accelerated depreciation (1)


9,834


8,895


-




      Acquisition-related inventory write-up


-


-


5,518




 Total 


$   28,584


$         27,645


$   24,060














 Operating expenses: 










      Intangible asset amortization


$     3,977


$           4,155


$     4,863




      Impairment of long-lived assets (2)


5,522


50,745


-




      Impairment of goodwill and intangible assets (3)


-


93,010


2,580




      Severance and restructuring (4) 


2,824


13,635


3,338




     Acquisition-related costs 


-


-


(88)




      Other operating expenses (income), net


(2,184)


885


333




 Total 


$   10,139


$       162,430


$   11,026














      Interest and other expense (income), net (5) 


$           -


$            (217)


$     3,723




 Total 


$           -


$            (217)


$     3,723














Provision (benefit) for income taxes: 










 Fixed Asset Tax Basis Adjustment (6) 


$           -


$                -


$ (34,562)




 Fiscal year 2014 research & development tax credits 


-


(2,863)


-




 Total 


$           -


$         (2,863)


$ (34,562)














(1) Accelerated depreciation related to San Jose wafer manufacturing building and equipment.




(2) Includes impairment charges related to MEMS and non-MEMS wafer manufacturing equipment and end of line test equipment.




(3) Includes impairment of goodwill and write-off of in-process research and development related to MEMS and other business units.




(4) Include severance charges associated with the reorganization of various business units and manufacturing operations.




(5) Includes impairment of investments in privately-held companies.




(6) Includes one-time fixed asset tax basis adjustments relating to prior year depreciation expense.

















 











CONSOLIDATED  BALANCE SHEETS




(Unaudited)





March 28,


December 27,


March 29,





2015


2014


2014





(in thousands) 




ASSETS




Current assets:









    Cash and cash equivalents

$        1,392,197


$        1,305,870


$        1,231,248




    Short-term investments

75,142


75,012


-




        Total cash, cash equivalents and short-term investments

1,467,339


1,380,882


1,231,248




    Accounts receivable, net 

278,427


258,506


304,128




    Inventories

297,270


306,564


290,518




    Deferred tax assets

71,354


59,794


74,038




    Other current assets

66,298


67,244


79,346




        Total current assets

2,180,688


2,072,990


1,979,278




Property, plant and equipment, net

1,155,589


1,195,323


1,355,268




Intangible assets, net

283,385


306,111


384,167




Goodwill

511,824


511,838


597,676




Other assets

36,231


38,265


38,176




       TOTAL ASSETS

$        4,167,717


$        4,124,527


$        4,354,565













LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:









    Accounts payable 

$             85,361


$             82,526


$             94,315




    Income taxes payable

20,102


20,102


20,720




    Accrued salary and related expenses

163,354


150,405


168,336




    Accrued expenses 

55,967


54,103


83,758




    Deferred revenue on shipments to distributors

30,550


27,103


24,259




        Total current liabilities

355,334


334,239


391,388




Long-term debt

1,000,000


1,000,000


1,000,871




Income taxes payable

385,838


363,251


352,294




Deferred tax liabilities

116,284


120,308


171,431




Other liabilities

56,412


64,988


37,977




        Total liabilities 

1,913,868


1,882,786


1,953,961













Stockholders' equity:









    Common stock and capital in excess of par value

12,359


283


283




    Retained earnings 

2,260,011


2,259,997


2,412,627




    Accumulated other comprehensive loss

(18,521)


(18,539)


(12,306)




        Total stockholders' equity

2,253,849


2,241,741


2,400,604




        TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 

$        4,167,717


$        4,124,527


$        4,354,565





















    


CONSOLIDATED STATEMENTS OF CASH FLOWS




(Unaudited)





Three Months Ended





March 28,


December 27,


March 29,





2015


2014


2014





(in thousands)




Cash flows from operating activities: 









Net income (loss)

$     79,433


$    (72,034)


$   122,544




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









      Stock-based compensation 

18,586


20,776


22,057




      Depreciation and amortization 

71,439


71,625


64,665




      Deferred taxes 

(15,658)


(30,849)


(36,482)




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

(441)


1,844


818




      Tax benefit (shortfall) related to stock-based compensation 

7,635


(229)


3,204




      Impairment of long-lived assets

5,522


50,745


-




      Impairment of goodwill and intangible assets

-


93,010


2,580




      Impairment of investments in privately-held companies

-


-


3,723




      Excess tax benefit from stock-based compensation

(5,997)


(1,931)


(5,139)




      Changes in assets and liabilities: 









          Accounts receivable 

(19,921)


23,426


(15,566)




          Inventories 

9,194


(1,486)


7,717




          Other current assets 

(156)


1,009


7,194




          Accounts payable 

477


(12,007)


(4,044)




          Income taxes payable 

22,587


12,835


14,244




          Deferred revenue on shipments to distributors 

3,447


282


(1,283)




          All other accrued liabilities 

5,917


15,839


25,466




Net cash provided by (used in) operating activities 

182,064


172,855


211,698













Cash flows from investing activities: 









          Purchase of property, plant and equipment

(10,185)


(18,585)


(26,407)




          Proceeds from sales of property, plant and equipment

1,615


24,467


618




          Payments in connection with business acquisition, net of cash acquired

-


-


(5,750)




          Purchases of investments in privately-held companies securities

(200)


-


-




          Proceeds from maturity of debt investment in privately-held companies

500


-


-




Net cash provided by (used in) investing activities 

(8,270)


5,882


(31,539)













Cash flows from financing activities: 









         Excess tax benefit from stock-based compensation

5,997


1,931


5,139




    Contingent consideration paid

-


-


(104)




         Repayment of notes payable

-


-


(439)




         Net issuance of restricted stock units

(8,369)


(6,822)


(8,390)




         Proceeds from stock options exercised

31,098


8,323


29,538




         Issuance of ESPP shares under employee stock purchase program

-


18,653


-




         Repurchase of common stock

(36,774)


(59,666)


(51,083)




         Dividends paid

(79,419)


(79,169)


(73,481)




Net cash provided by (used in) financing activities 

(87,467)


(116,750)


(98,820)




Net increase (decrease) in cash and cash equivalents 

86,327


61,987


81,339




Cash and cash equivalents: 









          Beginning of period

1,305,870


1,243,883


1,149,909




          End of period

$1,392,197


$1,305,870


$1,231,248













Total cash, cash equivalents and short-term investments

$1,467,339


$1,380,882


$1,231,248
































ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES




(Unaudited)






Three Months Ended






March 28,


December 27,


March 29,






2015


2014


2014






(in thousands, except per share data)




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










GAAP gross profit


$ 315,268


$       314,077


$ 339,937




GAAP gross profit %


54.6%


55.4%


56.1%














Special items:










      Intangible asset amortization


18,750


18,750


18,542




      Accelerated depreciation (1)


9,834


8,895


-




      Acquisition-related inventory write-up


-


-


5,518




 Total special items 


28,584


27,645


24,060




 GAAP gross profit excluding special items 


$ 343,852


$       341,722


$ 363,997




 GAAP gross profit % excluding special items 


59.6%


60.3%


60.1%














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










GAAP operating expenses


$ 209,818


$       378,153


$ 233,199














Special items:










      Intangible asset amortization 


3,977


4,155


4,863




      Impairment of long-lived assets (2)


5,522


50,745


-




      Impairment of goodwill and intangible assets (3)


-


93,010


2,580




      Severance and restructuring (4) 


2,824


13,635


3,338




     Acquisition-related costs 


-


-


(88)




      Other operating expenses (income), net  


(2,184)


885


333




 Total special items 


10,139


162,430


11,026




 GAAP operating expenses excluding special items 


$ 199,679


$       215,723


$ 222,173














Reconciliation of GAAP net income (loss) to GAAP net income excluding special items:










GAAP net income (loss)


$   79,433


$       (72,034)


$ 122,544














Special items:










      Intangible asset amortization 


22,727


22,905


23,405




      Accelerated depreciation (1)


9,834


8,895


-




    Acquisition-related inventory write-up


-


-


5,518




      Impairment of long-lived assets (2)


5,522


50,745


-




      Impairment of goodwill and intangible assets (3)


-


93,010


2,580




      Severance and restructuring (4) 


2,824


13,635


3,338




     Acquisition-related costs 


-


-


(88)




      Other operating expenses (income), net 


(2,184)


885


333




      Interest and other expense (income), net (5) 


-


(217)


3,723




              Pre-tax total special items 


38,723


189,858


38,809




     Tax effect of special items  


(3,910)


(21,283)


(3,658)




     Fixed Asset Tax Basis Adjustment (6) 


-


-


(34,562)




    Fiscal year 2014 research & development tax credits 


-


(2,863)


-




 GAAP net income excluding special items 


$ 114,246


$         93,678


$ 123,133














 GAAP net income per share excluding special items: 










    Basic 


$   0.40


$         0.33


$   0.44




    Diluted 


$   0.40


$         0.33


$   0.43














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










    Basic


283,418


282,992


282,627




    Diluted 


288,840


287,954


288,575














(1) Accelerated depreciation related to San Jose wafer manufacturing building and equipment.




(2) Includes impairment charges related to MEMS and non-MEMS wafer manufacturing equipment and end of line test equipment.




(3) Includes impairment of goodwill and write-off of in-process research and development related to MEMS and other business units.




(4) Include severance charges associated with the reorganization of various business units and manufacturing operations.




(5) Includes impairment of investments in privately-held companies.










(6) 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; accelerated depreciation; acquisition-related inventory write-up; impairment of long-lived assets; impairment of goodwill and intangible assets; severance and restructuring; acquisition-related costs; contingent consideration adjustments relating to certain acquisitions; expected loss on rent expense for vacated office space;  loss related to sale of land and buildings; impairment of investments in privately-held companies; tax provision impacts due to fixed asset tax basis adjustment relating to prior year depreciation expense. 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, accelerated depreciation 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; impairment of goodwill and intangible assets; severance and restructuring; acquisition-related inventory write-up; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; expected loss on rent expense for vacated office space; loss related to 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 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; accelerated depreciation; acquisition-related inventory write-up; impairment of long-lived assets; impairment of goodwill and intangible assets; severance and restructuring; acquisition-related costs; contingent consideration adjustments relating to certain acquisitions; expected loss on rent expense for vacated office space; loss related to sale of land and buildings; impairment of investments in privately-held companies and tax provision impacts due to fixed asset tax basis adjustment relating to prior year depreciation expense. 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 2015 ending in June 2015, which includes revenue, gross margin and earnings per share, as well as the  belief that the Company is exceeding its cost-saving goals,  improving profitability while investing in growth areas for the future. These statements involve risk and uncertainty. Actual results could differ materially from those forecasted, based upon, among other things, general market and economic conditions, 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 28, 2014 (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
Maxim is the leader in analog integration. From mobile to industrial solutions, we're making analog smaller, smarter and more energy efficient. Learn more at www.maximintegrated.com.  

Contact
Kathy Ta
Managing Director, Investor Relations
(408) 601-5697

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SOURCE Maxim Integrated Products, Inc.

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