Maxim Reports Results for the Second Quarter of Fiscal 2012

-- Revenue: $591 million

(PRNewswire) — Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $591 million for its fiscal 2012 second quarter ended December 31, 2011, a 7% decrease from the record $636 million revenue recorded in the prior quarter.

Tunc Doluca, President and Chief Executive Officer, commented, "Our customers maintained a cautious outlook during the December quarter and continued to reduce inventory, particularly in the distribution channel. We are encouraged however by an increase in bookings beginning in December. As a result, we forecast our revenue to return to normal trends in the March quarter."

Fiscal Year 2012 Second Quarter Results

Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the December quarter was $0.29. The results were affected by certain pre-tax expenses which primarily consisted of:

  • $14.2 million for acquisition related items
  • $6.0 million for restructuring and severance

GAAP earnings per share excluding special expense items was $0.34.

Cash Flow Items

At the end of our fiscal 2012 second quarter total cash, cash equivalents and short term investments was $817 million, an increase of $56 million from the prior quarter. Notable items include:

  • Cash flow from operations: $249 million (42% of revenue)
  • Capital expenditures: $67 million
  • Dividends: $64 million ($0.22 per share)
  • Stock repurchases: $72 million

Business Outlook

The Company's 90 day backlog at the beginning of the third fiscal quarter was $365 million. Based on our beginning backlog and expected turns, results for the March 2012 quarter are expected to be:

  • Revenue: $555 million to $585 million
  • Gross Margin: 55% to 58% GAAP (57% to 60% excluding special expense items)
  • EPS: $0.22 to $0.26 GAAP ($0.25 to $0.29 excluding special expense items)

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 March 7, 2012, to stockholders of record on February 22, 2012.

Conference Call

Maxim has scheduled a conference call on January 26, 2012, at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter of fiscal year 2012 and its business outlook. To listen via telephone, dial (866) 219-5268 (toll free) or (703) 639-1120.  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



December 31,

September 24,

December, 25



2011


2011


2010



(in thousands, except per share data)

Net revenues


$    591,359


$       636,002


$    612,936

Cost of goods sold (1, 2, 3)


243,399


240,529


232,661

       Gross profit


347,960


395,473


380,275

Operating expenses:







   Research and development (1)


142,084


140,213


130,001

   Selling, general and administrative (1)


80,826


82,456


72,240

   Intangible asset amortization (2)


4,338


4,321


4,447

   Severance and restructuring


6,047


492


488

   Other operating expenses (income), net (4)


155


(4,389)


21,100

      Total operating expenses


233,450


223,093


228,276

         Operating income


114,510


172,380


151,999

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


2,374


(4,100)


(4,100)

Income before provision for income taxes


116,884


168,280


147,899

Provision for income taxes (6)


28,754


34,834


38,309

     Net income


$       88,130


$       133,446


$    109,590








Earnings per share:







   Basic


$           0.30


$              0.45


$           0.37

   Diluted


$           0.29


$              0.44


$           0.36








Shares used in the calculation of earnings per share:







   Basic


291,824


294,475


296,550

   Diluted


299,290


301,076


303,260








Dividends paid per share


$           0.22


$              0.22


$           0.21








SCHEDULE OF STOCK BASED COMPENSATION EXPENSES

(Unaudited)



Three Months Ended



December 31,

September 24,

December,25



2011


2011


2010



(in thousands)



   Cost of goods sold


$             3,692


$               3,257


$             3,748

   Research and development


12,909


13,261


13,916

   Selling, general and administrative


6,873


6,947


6,858

Total  


$           23,474


$             23,465


$           24,522








SCHEDULE OF SPECIAL EXPENSE ITEMS

(Unaudited)



Three Months Ended



December 31,

September 24,

December,25



2011


2011


2010



(in thousands)



Cost of goods sold:







     Intangible asset amortization (2)


$             8,080


$               9,434


$             7,919

     Acquisition related inventory write up (3)


1,801


-


1,320

Total


$             9,881


$               9,434


$             9,239








Operating expenses:







    Intangible asset amortization (2)


$             4,338


$               4,321


$             4,447

    Severance and restructuring


6,047


492


488

    Other operating expenses (income), net (4)


155


(4,389)


21,100

Total


$           10,540


$                   424


$           26,035








    Interest and other (income), net (5)


$           (1,776)


$                      -


$                   -

Total


$           (1,776)


$                      -


$                   -








Provision for income taxes:







    International restructuring (6)


$                   -


$             (2,655)


$                   -

Total


$                   -


$             (2,655)


$                   -















(1) Includes stock-based compensation charges as shown in the Schedule of Stock Based Compensation Expenses.

(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) Other operating expenses, net are primarily for stock option related litigation, certain payroll taxes, interest and penalties and loss on sale of land and buildings.

(5) Includes gain on sale of equity investment.







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













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


(Unaudited)











Three Months Ended December 31, 2011

 Stock
Options


 Restricted
Stock
Units


 Employee Stock
Purchase Plan


 Total


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 September 24, 2011









Cost of goods sold

$              517


$    2,307


$                  433


$  3,257


Research and development expense

2,055


9,958


1,248


13,261


Selling, general and administrative expense

1,428


5,125


394


6,947


      Total

$           4,000


$  17,390


$               2,075


$23,465











Three Months Ended December 25, 2010









Cost of goods sold

$              729


$    2,637


$                  382


$  3,748


Research and development expense

2,710


9,914


1,292


13,916


Selling, general and administrative expense

1,659


4,847


352


6,858


      Total

$           5,098


$  17,398


$               2,026


$24,522













CONSOLIDATED  BALANCE SHEETS


(Unaudited)



December 31,


June 25,



2011


2011



(in thousands)


ASSETS


Current assets:





   Cash and cash equivalents

$    741,160


$   962,541


   Short-term investments

75,375


50,346


       Total cash, cash equivalents and short-term investments

816,535


1,012,887


   Accounts receivable, net

246,229


297,632


   Inventories

233,404


237,928


   Income tax refund receivable

1,236


483


   Deferred tax assets

87,636


113,427


   Other current assets

80,160


65,495


       Total current assets

1,465,200


1,727,852


Property, plant and equipment, net

1,365,815


1,308,850


Intangible assets, net

237,776


204,263


Goodwill

432,809


265,125


Other assets

19,055


21,653


             TOTAL ASSETS

$ 3,520,655


$3,527,743







LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:





   Accounts payable

$    118,427


$   110,153


   Income taxes payable

7,866


3,912


   Accrued salary and related expenses

159,651


215,627


   Accrued expenses

62,579


47,767


   Deferred income on shipments to distributors

31,136


36,881


       Total current liabilities

379,659


414,340


Long term debt

308,700


300,000


Income taxes payable

108,462


96,099


Deferred tax liabilities

197,839


183,715


Other liabilities

21,529


22,771


       Total liabilities

1,016,189


1,016,925







Stockholders' equity:





   Common stock

292


296


   Retained earnings

2,517,166


2,524,790


   Accumulated other comprehensive loss

(12,992)


(14,268)


       Total stockholders' equity

2,504,466


2,510,818


             TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$ 3,520,655


$3,527,743














CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)



Three Months Ended



December 31,


September 24,


December 25,



2011


2011


2010



(in thousands)


Cash flows from operating activities:







Net income

$      88,130


$      133,446


$   109,590


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







     Stock-based compensation

23,474


23,465


24,522


     Depreciation and amortization

51,995


52,071


52,228


     Deferred taxes

(368)


39,845


11,232


     Loss from sale of property, plant and equipment

124


127


14,257


     Gain from sale of equity investments

(1,811)


-


-


     Tax (shortfall) benefit related to stock-based compensation

(2,581)


1,428


(1,425)


     Excess tax benefit related to stock-based compensation

(4,242)


(2,821)


(2,810)


     Changes in assets and liabilities:







         Accounts receivable

82,760


(30,790)


38,083


         Inventories

19,045


(9,799)


(13,605)


         Other current assets

(1,615)


(11,840)


(40,912)


         Accounts payable

(18,397)


4,882


(18,667)


         Income taxes payable

12,619


3,698


22,181


         Deferred income on shipments to distributors

(3,444)


(2,301)


1,979


         All other accrued liabilities

3,631


(80,602)


3,331


Net cash provided by operating activities

249,320


120,809


199,984









Cash flows from investing activities:







         Payments for property, plant and equipment

(68,361)


(49,324)


(59,068)


         Acquisitions

(12,018)


(154,269)


-


         Proceeds from sales of property, plant and equipment

1,709


-


24,714


         Purchases of available-for-sale securities

(25,108)


-


-


         Proceeds from sales of equity securities

3,225


-


-


Net cash used in investing activities

(100,553)


(203,593)


(34,354)









Cash flows from financing activities:







        Dividends paid

(64,158)


(64,781)


(62,278)


        Repayment of notes payable

(4,189)


(16,217)


-


        Repurchase of common stock

(72,486)


(88,674)


(40,832)


        Issuance of common stock

18,898


(2,879)


14,555


        Other

4,287


2,835


2,989


Net cash used in financing activities

(117,648)


(169,716)


(85,566)









Net increase (decrease) in cash and cash equivalents

31,119


(252,500)


80,064


Cash and cash equivalents:







         Beginning of period

710,041


962,541


718,280


         End of period

$    741,160


$      710,041


$   798,344









Total cash, cash equivalents, and short-term investments

$    816,535


$      760,340


$   798,344











ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL EXPENSE ITEMS DISCLOSURES


(Unaudited)




Three Months Ended




December 31,


September 24,


December 25,




2011


2011


2010




(in thousands, except per share data)


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








GAAP gross profit


$        347,960


$          395,473


$       380,275


GAAP gross profit %


58.8%


62.2%


62.0%










Special expense items:








     Intangible asset amortization (1)


8,080


9,434


7,919


     Acquisition related inventory write up (2)


1,801


-


1,320


Total special expense items


9,881


9,434


9,239


GAAP gross profit excluding special expense items


$        357,841


$          404,907


$       389,514


GAAP gross profit % excluding special expense items


60.5%


63.7%


63.5%










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








GAAP operating expenses


$        233,450


$          223,093


$       228,276










Special expense (income) items:








     Intangible asset amortization (1)


4,338


4,321


4,447


    Severance and restructuring


6,047


492


488


    Other operating (income) expenses, net (3)


155


(4,389)


21,100


Total special expense items


10,540


424


26,035


GAAP operating expenses excluding special expense items


$        222,910


$          222,669


$       202,241










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








GAAP net income


$          88,130


$          133,446


$       109,590










Special expense (income) items:








     Intangible asset amortization (1)


12,418


13,755


12,366


    Acquisition related inventory write up (2)


1,801


-


1,320


    Severance and restructuring


6,047


492


488


    Other operating expenses (income), net (3)


155


(4,389)


21,100


    Interest and other (income), net (4)


(1,776)


-


-


Pre-tax total special expense items


18,645


9,858


35,274


          Tax effect of special items


(6,102)


(3,474)


(12,480)


    International restructuring (5)


-


(2,655)


-


GAAP net income excluding special expense items


$        100,673


$          137,175


$       132,384










GAAP net income per share excluding special expense items:








     Basic


$              0.34


$                0.47


$             0.45


     Diluted


$              0.34


$                0.46


$             0.44










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








   Basic


291,824


294,475


296,550


   Diluted


299,290


301,076


303,260


 (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) Other operating expenses, net are primarily for stock option related litigation, certain payroll taxes, interest and penalties and loss on sale of land and buildings.  

 (4) Includes gain on sale of equity investment.  

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




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