Maxim Integrated Reports Results For The Second Quarter Of Fiscal 2014

- Revenue: $620 million

(PRNewswire) — Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $620 million for its second quarter of fiscal 2014 ended December 28, 2013, a 6% increase from the $585 million revenue recorded in the prior quarter. Reported revenue included $35 million from Volterra. Excluding Volterra, revenue was flat compared to the prior quarter.

Tunc Doluca, President and Chief Executive Officer, commented, "We achieved good revenue performance in a soft quarter for our industry." Mr. Doluca continued, "We are pleased with our diversification efforts, with strength in both communication and industrial businesses, the addition of Volterra and broadening of our mobility business."

Fiscal Year 2014 Second Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the December quarter was $0.17. The results were negatively affected by the following pre-tax charges:

  • $40 million for Volterra acquisition-related items
  • $13 million for items related to prior acquisitions
  • $5 million for impairment of long-lived assets
  • $18 million for warranty expense

GAAP earnings per share, excluding special items was $0.36, after a $0.05 reduction due to the warranty expense. In addition, the warranty expense caused our GAAP gross margin, excluding special items to be 2.9 percentage points lower for the quarter. An analysis of GAAP versus GAAP excluding special items is provided in the last table of this press release. Warranty expense is not considered a special item and is not included in the analysis.   

Cash Flow Items
At the end of the second quarter of fiscal 2014, total cash, cash equivalents and short term investments was $1.15 billion, an increase of $115 million from the prior quarter. Notable items included:

  • Cash flow from operations: $234 million
  • Net capital expenditures: $46 million
  • Dividends: $73 million ($0.26 per share)
  • Stock repurchases: $59 million
  • Volterra acquisition: $454 million
  • Proceeds from debt issuance: $494 million

Business Outlook
The Company's 90-day backlog at the beginning of the third fiscal quarter of 2014 was $366 million. Based on the beginning backlog and expected turns, results for the March 2014 quarter are expected to be as follows:

  • Revenue: $590 million to $620 million
  • Gross Margin: 56% to 58% GAAP (60% to 62% excluding special items)
  • EPS: $0.28 to $0.32 GAAP ($0.37 to $0.41 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 March 6, 2014, to stockholders of record on February 20, 2014.

Conference Call
Maxim Integrated has scheduled a conference call on January 23, 2014, at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter of fiscal 2014 and its business outlook. To listen via telephone, dial (866) 802-4305 (toll free) or (703) 639-1317.  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





December 28,


September 28,


December 29,





2013


2013


2012





(in thousands, except per share data)



Net revenues


$   620,274


$    585,241


$   605,306



Cost of goods sold


291,602


238,045


241,931



        Gross margin


328,672


347,196


363,375



Operating expenses:









    Research and development


142,971


129,902


135,742



    Selling, general and administrative


83,471


77,430


80,058



    Intangible asset amortization


4,968


3,436


3,903



    Impairment of long-lived assets (1)


5,197


-


22,222



    Severance and restructuring expenses (2)


10,227


5,547


2,236



    Acquisition-related costs


4,137


2,934


-



    Other operating expenses (income), net (3)


1,306


(662)


1,666



       Total operating expenses 


252,277


218,587


245,827



          Operating income


76,395


128,609


117,548



Interest and other income (expense), net


(5,833)


(3,463)


(2,798)



Income before provision for income taxes


70,562


125,146


114,750



Provision for income taxes 


21,240


22,026


38,128



   Net income


$     49,322


$    103,120


$     76,622












Earnings per share:









    Basic 


$         0.17


$          0.36


$         0.26



    Diluted 


$         0.17


$          0.36


$         0.26












Shares used in the calculation of earnings per share: 









    Basic


282,664


284,654


292,075



    Diluted 


288,565


290,260


298,759












Dividends paid per share 


$         0.26


$          0.26


$         0.24












SCHEDULE OF SPECIAL EXPENSE ITEMS



(Unaudited)





Three Months Ended





December 28,


September 28,


December 29,





2013


2013


2012





(in thousands)



Cost of goods sold:









      Intangible asset amortization


$         19,098


$            8,092


$           8,986



      Acquisition-related inventory write-up


13,066


-


-



 Total 


$         32,164


$            8,092


$           8,986












 Operating expenses: 









    Intangible asset amortization


$           4,968


$            3,436


$           3,903



    Impairment of long-lived assets (1)


5,197


-


22,222



    Severance and restructuring (2)


10,227


5,547


2,236



     Acquisition-related costs


4,137


2,934


-



    Other operating expenses (income), net (3)


1,306


(662)


1,666



 Total 


$         25,835


$          11,255


$         30,027












Provision for income taxes:









     International restructuring implementation  


$                -


$                  -


$         18,726



 Total 


$                -


$                  -


$         18,726












(1) Includes impairment charges relating to fab tools, land and buildings held-for-sale, and end of line manufacturing equipment.



(2) Includes severance & retention charges and lease abandonment charges related to the Volterra acquisition, and severance charges related to the reorganization of various business units and manufacturing operations.



(3) Other operating expenses (income), net are primarily for contingent consideration adjustments related to certain acquisitions and certain payroll taxes.












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