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Maxim Integrated Reports Results For The Fourth Quarter Of Fiscal 2015; Increases Dividend By 7%

- Revenue: $583 million

(PRNewswire) — Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $583 million for its fourth quarter of fiscal 2015 ended June 27, 2015, a 1% increase from the $577 million revenue recorded in the prior quarter, and a 9% decrease from the same quarter of last year.

Logo for Maxim Integrated Products Inc.

Tunc Doluca, President and Chief Executive Officer, commented, "In our June quarter, although revenue was slightly below our expectations, we exceeded our EPS guidance due to strong execution on our cost initiatives." Mr. Doluca continued, "This is a pivotal time for Maxim. We are transforming our manufacturing footprint to improve flexibility and profitability, and optimizing R&D and Sales to drive growth. Based on these initiatives, we now expect to achieve $180 million in annual, long-term savings compared to our fiscal fourth quarter 2015 run rate."

Fiscal Year 2015 Fourth Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was $0.34. The results were affected by pre-tax special items which primarily consisted of $46 million in charges related to restructuring activities, $22 million in charges related to acquisitions and $36 million in other income related to the gain on a divestiture. 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 fourth quarter of fiscal 2015, total cash, cash equivalents and short term investments were $1.63 billion, an increase of $159 million from the prior quarter. Notable items included:

Business Outlook

The Company's 90-day backlog at the beginning of the first fiscal quarter of 2016 was $366 million. Based on the beginning backlog and expected turns, results for the September 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 $0.30 per share will be paid on September 3, 2015, to stockholders of record on August 20, 2015. This represents a 7% increase in the dividend compared to the prior quarter.

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


Year Ended





June 27,


March 28,


June 28,


June 27,


June 28,





2015


2015


2014


2015


2014





(in thousands, except per share data)



Net revenues


$       582,517


$       577,263


$       642,467


$       2,306,864


$       2,453,663



Cost of goods sold (1)


278,816


261,995


273,507


1,034,997


1,068,898



        Gross margin


303,701


315,268


368,960


1,271,867


1,384,765



Operating expenses:













    Research and development 


121,552


123,913


143,802


521,772


558,168



    Selling, general and administrative 


72,532


75,766


83,153


308,065


324,734



    Intangible asset amortization 


3,618


3,977


4,423


16,077


17,690



    Impairment of long-lived assets (2)


549


5,522


6,447


67,042


11,644



    Impairment of goodwill and intangible assets (3)


-


-


-


93,010


2,580



    Severance and restructuring expenses (4)


12,798


2,824


5,790


30,642


24,902



    Acquisition-related costs


-


-


-


-


6,983



    Other operating expenses (income), net (5)


(2,296)


(2,184)


8,795


(2,021)


15,773



       Total operating expenses 


208,753


209,818


252,410


1,034,587


962,474



         Operating income


94,948


105,450


116,550


237,280


422,291



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


28,500


(5,534)


(8,943)


8,890


(13,065)



Income before provision for income taxes


123,448


99,916


107,607


246,170


409,226



Provision (benefit) for income taxes


24,789


20,483


22,814


40,132


54,416



      Net income


$         98,659


$         79,433


$         84,793


$          206,038


$          354,810
















Earnings per share:













    Basic


$             0.35


$             0.28


$             0.30


$                0.73


$                1.25



    Diluted


$             0.34


$             0.28


$             0.29


$                0.71


$                1.23
















Shares used in the calculation of earnings per share: 













    Basic


284,202


283,418


283,431


283,675


283,344



    Diluted 


289,346


288,840


289,487


288,949


289,108
















Dividends paid per share 


$             0.28


$             0.28


$             0.26


$                1.12


$                1.04





























SCHEDULE OF SPECIAL ITEMS



(Unaudited)





Three Months Ended


Year Ended





June 27,


March 28,


June 28,


June 27,


June 28,





2015


2015


2014


2015


2014





(in thousands)



Cost of goods sold:













      Intangible asset amortization 


$         18,116


$         18,750


$         18,750


$            74,366


$            64,483



      Accelerated Depreciation (1)


32,765


9,834


-


51,494


-



      Acquisition-related inventory write-up 


-


-


371


-


18,955



 Total 


$         50,881


$         28,584


$         19,121


$          125,860


$            83,438
















 Operating expenses: 













      Intangible asset amortization


$           3,618


$           3,977


$           4,423


$            16,077


$            17,690



      Impairment of long-lived assets (2)


549


5,522


6,447


67,042


11,644



      Impairment of goodwill and intangible assets (3)


-


-


-


93,010


2,580



     Severance and restructuring (4) 


12,798


2,824


5,790


30,642


24,902



     Acquisition-related costs 


-


-


-


-


6,983



     Other operating expenses (income), net (5)


(2,296)


(2,184)


8,795


(2,021)


15,773



 Total 


$         14,669


$         10,139


$         25,455


$          204,750


$            79,572
















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


$       (35,849)


$                  -


$           2,432


$          (36,066)


$              6,155



 Total 


$       (35,849)


$                  -


$           2,432


$          (36,066)


$              6,155
















Provision (benefit) for income taxes: 













     Fixed assets tax basis adjustment (7) 


$                  -


$                  -


$         (1,041)


$                      -


$          (35,603)



     Reversal of tax reserves (8) 


-


-


-


(21,747)


-



     Fiscal year 2014 research & development tax credits 


-


-


-


(2,863)


-



 Total 


$                  -


$                  -


$         (1,041)


$          (24,610)


$          (35,603)





























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



(2) Includes impairment charges relating to wafer manufacturing equipment, end of line test equipment, and software.



(3) Impairment of goodwill and write-off of in-process research and development primarily related to MEMS business.



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



(5) Other operating expenses (income), net are primarily for legal settlements, loss (gain) relating to sale of assets, and expected loss on lease abandonment.



(6) Includes sale of a business and impairment of investment in privately-held companies.



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



(8) Reversal of tax reserves related to the favorable settlement of a foreign tax issue.





 










CONSOLIDATED  BALANCE SHEETS



(Unaudited)




June 27,


March 28,


June 28,




2015


2015


2014




(in thousands) 



ASSETS



Current assets:








    Cash and cash equivalents

$1,550,965


$1,392,197


$1,322,472



    Short-term investments

75,154


75,142


49,953



        Total cash, cash equivalents and short-term investments

1,626,119


1,467,339


1,372,425



    Accounts receivable, net 

278,844


278,427


295,828



    Inventories

288,474


297,270


289,292



    Deferred tax assets

77,306


71,354


74,597



    Other current assets

49,838


66,298


54,560



        Total current assets

2,320,581


2,180,688


2,086,702



Property, plant and equipment, net

1,090,739


1,155,589


1,331,519



Intangible assets, net

261,652


283,385


360,994



Goodwill

511,647


511,824


596,637



Other assets

43,765


36,231


29,766



       TOTAL ASSETS

$4,228,384


$4,167,717


$4,405,618











LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:








    Accounts payable 

$     88,322


$     85,361


$   102,076



    Income taxes payable

34,779


20,102


20,065



    Accrued salary and related expenses

181,360


163,354


186,732



    Accrued expenses 

48,389


55,967


64,028



    Deferred income on shipments to distributors

30,327


30,550


25,734



        Total current liabilities

383,177


355,334


398,635



Long-term debt

1,000,000


1,000,000


1,001,026



Income taxes payable

410,378


385,838


362,802



Deferred tax liabilities

90,588


116,284


159,879



Other liabilities

54,221


56,412


53,365



        Total liabilities 

1,938,364


1,913,868


1,975,707











Stockholders' equity:








    Common stock par value

283


12,359


285



   Additional paid-in capital 

27,859


-


23,005



    Retained earnings 

2,279,112


2,260,011


2,423,794



    Accumulated other comprehensive loss

(17,234)


(18,521)


(17,173)



        Total stockholders' equity

2,290,020


2,253,849


2,429,911



        TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 

$4,228,384


$4,167,717


$4,405,618










 


CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




Three Months Ended


Year Ended




June 27,


March 28,


June 28,


June 27,


June 28,




2015


2015


2014


2015


2014




(in thousands)



Cash flows from operating activities: 












Net income

$           98,659


$           79,433


$           84,793


$         206,038


$         354,810



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












      Stock-based compensation 

17,709


18,586


21,786


79,491


85,452



      Depreciation and amortization 

92,639


71,439


64,391


299,396


244,593



      Deferred taxes 

(32,207)


(15,658)


(9,501)


(72,507)


(32,159)



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

(1,228)


(441)


1,068


419


2,187



      Tax benefit (shortfall) related to stock-based compensation 

(861)


7,635


942


8,155


(68)



      Impairment of long-lived assets

517


5,522


6,447


67,010


11,644



      Impairment of investments in privately-held companies

94


-


6,537


94


10,260



      In-process research and development written-off

-


-


-


8,900


2,580



      Loss (gain) on sale of business

(35,849)


-


-


(35,849)


-



      Impairment of goodwill

-


-


-


84,110


-



      Excess tax benefit from stock-based compensation

(2,372)


(5,997)


(4,897)


(12,549)


(14,192)



      Changes in assets and liabilities: 












          Accounts receivable 

(417)


(19,921)


8,300


16,984


13,340



          Inventories 

10,105


9,194


1,226


2,163


20,672



          Other current assets 

15,338


(156)


26,579


(8,783)


45,557



          Accounts payable 

2,874


477


5,203


(4,201)


(11,255)



          Income taxes payable 

39,217


22,587


9,853


62,350


54,492



          Deferred revenue on shipments to distributors 

(223)


3,447


1,475


4,593


(823)



          All other accrued liabilities 

17,793


5,917


9,882


(12,110)


(10,983)



Net cash provided by (used in) operating activities 

221,788


182,064


234,084


693,704


776,107















Cash flows from investing activities: 












          Purchase of property, plant and equipment

(15,360)


(10,185)


(23,654)


(75,816)


(132,523)



          Proceeds from sales of property, plant and equipment

2,741


1,615


1,627


29,035


5,293



          Proceeds from sale of business

35,550


-


-


35,550


-



          Proceeds from maturity of available-for-sale securities

-


-


-


-


27,000



          Purchases of available-for-sale securities

-


-


(49,953)


(25,142)


(49,953)



          Purchases of privately-held companies securities

-


(200)


-


(200)


-



          Payments in connection to acquisitions

-


-


-


-


(459,256)



          Proceeds from sale of investments in privately-held companies

-


500


-


500


-



Net cash provided by (used in) investing activities 

22,931


(8,270)


(71,980)


(36,073)


(609,439)















Cash flows from financing activities: 












         Excess tax benefit from stock-based compensation

2,372


5,997


4,897


12,549


14,192



         Contingent consideration paid

-


-


-


-


(4,705)



         Dividends paid

(79,558)


(79,419)


(73,626)


(317,909)


(294,175)



         Repayment of notes payable

-


-


(2,430)


(437)


(4,708)



         Issuance of debt

-


-


-


-


497,895



         Debt issuance cost

-


-


-


-


(3,431)



         Repurchase of common stock

(35,963)


(36,774)


(40,744)


(195,088)


(305,314)



         Issuance of ESPP shares under employee stock purchase program

22,298


-


23,713


40,951


42,809



         Net issuance of restricted stock units

(7,428)


(8,369)


(8,922)


(30,657)


(31,384)



         Proceeds from stock options exercised

12,328


31,098


26,232


61,453


69,639



Net cash provided by (used in) financing activities 

(85,951)


(87,467)


(70,880)


(429,138)


(19,182)















Net increase (decrease) in cash and cash equivalents 

158,768


86,327


91,224


228,493


147,486



Cash and cash equivalents: 












          Beginning of period

1,392,197


1,305,870


1,231,248


1,322,472


1,174,986



          End of period

$      1,550,965


$      1,392,197


$      1,322,472


$      1,550,965


$      1,322,472















Total cash, cash equivalents and short-term investments

$      1,626,119


$      1,467,339


$      1,372,425


$      1,626,119


$      1,372,425


























 















ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES



(Unaudited)





Three Months Ended


Year Ended





June 27,


March 28,


June 28,


June 27,


June 28,





2015


2015


2014


2015


2014





(in thousands, except per share data)



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













GAAP gross profit


$           303,701


$              315,268


$           368,960


$     1,271,867


$     1,384,765



GAAP gross profit %


52.1%


54.6%


57.4%


55.1%


56.4%
















Special items:













      Intangible asset amortization


18,116


18,750


18,750


74,366


64,483



      Accelerated depreciation (1)


32,765


9,834


-


51,494


-



      Acquisition-related inventory write-up


-


-


371


-


18,955



 Total special items 


50,881


28,584


19,121


125,860


83,438



 GAAP gross profit excluding special items 


$           354,582


$              343,852


$           388,081


$     1,397,727


$     1,468,203



 GAAP gross profit % excluding special items 


60.9%


59.6%


60.4%


60.6%


59.8%
















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













GAAP operating expenses


$           208,753


$              209,818


$           252,410


$     1,034,587


$        962,474
















Special items:













      Intangible asset amortization 


3,618


3,977


4,423


16,077


17,690



      Impairment of long-lived assets (2)


549


5,522


6,447


67,042


11,644



      Impairment of goodwill and intangible assets (3)


-


-


-


93,010


2,580



      Severance and restructuring (4) 


12,798


2,824


5,790


30,642


24,902



      Acquisition-related costs 


-


-


-


-


6,983



      Other operating expenses (income), net (5) 


(2,296)


(2,184)


8,795


(2,021)


15,773



 Total special items 


14,669


10,139


25,455


204,750


79,572



 GAAP operating expenses excluding special items 


$           194,084


$              199,679


$           226,955


$        829,837


$        882,902
















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













GAAP net income


$             98,659


$                79,433


$             84,793


$        206,038


$        354,810
















Special items:













      Intangible asset amortization 


21,734


22,727


23,173


90,443


82,173



      Accelerated depreciation (1)


32,765


9,834


-


51,494


-



      Acquisition-related inventory write-up 


-


-


371


-


18,955



      Impairment of long-lived assets (2)


549


5,522


6,447


67,042


11,644



      Impairment of goodwill and intangible assets (3)


-


-


-


93,010


2,580



      Severance and restructuring (4) 


12,798


2,824


5,790


30,642


24,902



      Acquisition-related costs 


-


-


-


-


6,983



      Other operating expenses (income), net (5) 


(2,296)


(2,184)


8,795


(2,021)


15,773



      Interest and other expense, net (6) 


(35,849)


-


2,432


(36,066)


6,155



              Pre-tax total special items 


29,701


38,723


47,008


294,544


169,165



      Tax effect of special items 


(4,267)


(3,910)


(6,850)


(35,333)


(19,383)



      Fixed asset tax basis adjustment (7) 


-


-


(1,041)


-


(35,603)



      Reversal of tax reserves (8) 


-


-


-


(21,747)


-



      Fiscal year 2014 research & development tax credits 


-


-


-


(2,863)


-



 GAAP net income excluding special items 


$           124,093


$              114,246


$           123,910


$        440,639


$        468,989
















 GAAP net income per share excluding special items: 













    Basic 


$                 0.44


$                    0.40


$                0.44


$             1.55


$             1.66



    Diluted 


$                 0.43


$                    0.40


$                0.43


$             1.52


$             1.62
















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













    Basic


284,202


283,418


283,431


283,675


283,344



    Diluted 


289,346


288,840


289,487


288,949


289,108
















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



(2) Includes impairment charges relating to wafer manufacturing equipment, end of line test equipment, and software.



(3) Impairment of goodwill and write-off of in-process research and development primarily related to MEMS business.



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



(5) Other operating expenses (income), net are primarily for legal settlements, loss (gain) relating to sale of assets, and expected loss on lease abandonment.



(6) Includes sale of a business and impairment of investment in privately-held companies.



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



(8) Reversal of tax reserves related to the favorable settlement of a foreign tax issue.





 

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; legal settlements, loss (gain) relating to sale of assets, and expected loss on lease abandonment; sale of a business and impairment of investments in privately-held companies; tax provision impacts due to fixed asset tax basis adjustment relating to prior year depreciation expense; reversal of tax reserves related to favorable settlement of a foreign tax issue. 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 costs; legal settlements, loss (gain) relating to sale of assets, and expected loss on lease abandonment. 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; legal settlements, loss (gain) relating to sale of assets, and expected loss on lease abandonment; sale of a business and impairment of investments in privately-held companies; tax provision impacts due to fixed asset tax basis adjustment relating to prior year depreciation expense; reversal of tax reserves related to favorable settlement of a foreign tax issue.  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 first quarter of fiscal 2016 ending in September 2015, which includes revenue, gross margin and earnings per share, as well as the belief that the Company expects to achieve $180 million in annual, long-term savings compared to its fiscal fourth quarter 2015 run rate as the Company transforms its manufacturing footprint to improve flexibility and profitability, and optimizing R&D and Sales to drive growth. 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.

Contact:
Maxim Integrated Products, Inc.
Web: http://www.maximintegrated.com