Linear Technology reports revenue and net income similar to the second quarter of the previous fiscal year, but down sequentially from the September quarter

MILPITAS, Calif., Jan. 16 /PRNewswire-FirstCall/ -- Linear Technology Corporation (NASDAQ: LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today announced that revenue for its quarterly period ended December 31, 2006, was $267.9 million, an increase of 1% over revenue of $265.1 million for the second quarter of the previous fiscal year. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the second quarter of fiscal year 2007 was $105.0 million, or $0.34 diluted earnings per share, and was similar to GAAP net income of $103.3 million or $0.33 diluted earnings per share reported in the second quarter of the previous fiscal year. On a pro forma basis excluding the effects of all forms of stock-based compensation, net income was $117.8 million, or $0.39 diluted earnings per share, an increase of $5.0 million over pro forma net income of $112.8 million, or $0.36 per share reported in the second quarter of the previous fiscal year. Sequentially, compared with the September quarter, sales were down 8%. GAAP income before tax was down 10%. The effective tax rate improved from 31% to 28%, primarily due to the reinstatement of the R&D tax credit, and consequently net income decreased by 7%. During the most recent quarter the Company's cash and short- term investments balance decreased $30.3 million net of spending $91.7 million to purchase 3.0 million shares of its common stock.

The Company also declared a 20% increase in its dividend from $0.15 per share to $0.18 per share for the quarter. This cash dividend will be paid on February 14, 2007 to stockholders of record on January 26, 2007.

According to Lothar Maier, CEO, "We are seeing an overall reduction in our inventories at our end customers, which coupled with some general market weakness, has resulted in a decrease in bookings, sales and profits for the December quarter. The upcoming March quarter is a challenge to accurately forecast. Visibility continues to be low and customers remain guarded in their forecasting and inventory management. The March quarter has historically been strong for Linear due to seasonal strength in industrial markets. However, with inventory reductions expected to continue and low market visibility, this year we expect will be an exception. It is likely that improvements in Europe and the USA may be offset by slowness in Asia, particularly in consumer related markets. Consequently, we currently expect revenue to be down 4% to 7% with profits slightly more impacted primarily due to an increase in the tax rate. However, any increase in confidence in the overall business environment would positively impact this outlook."

Except for historical information contained herein, the matters set forth in this press release are forward-looking statements. In particular, the statements regarding the demand for our products, our customers' ordering patterns and the anticipated trends in our sales and profits are forward- looking statements. The forward-looking statements are dependent on certain risks and uncertainties, including such factors, among others, as the timing, volume and pricing of new orders received and shipped, the timely introduction of new processes and products, general conditions in the world economy and financial markets and other factors described in our 10-K for the fiscal year ended July 2, 2006.

Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, January 17, 2007 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 955-1566 before 8:15 a.m. to be included in the audience. There will be a live webcast of this conference call that can be accessed through www.linear.com or www.streetevents.com. A replay of the conference call will be available from January 17 through January 23, 2007. You may access this post view by calling (719) 457-0820 and entering reservation #6574365. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of January 17, 2007 until the second quarter earnings release next year.

Linear Technology Corporation was founded in 1981 as a manufacturer of high performance linear integrated circuits. Linear Technology products include high performance amplifiers, comparators, voltage references, monolithic filters, linear regulators, DC-DC converters, battery chargers, data converters, communications interface circuits, RF signal conditioning circuits, and many other analog functions. Applications for Linear Technology's high performance circuits include telecommunications, cellular telephones, networking products such as optical switches, notebook and desktop computers, computer peripherals, video/multimedia, industrial instrumentation, security monitoring devices, high-end consumer products such as digital cameras and MP3 players, complex medical devices, automotive electronics, factory automation, process control, and military and space systems.

    For further information contact Paul Coghlan at Linear Technology
Corporation, 1630 McCarthy Blvd., Milpitas, California 95035-7417,
408-432-1900.


                        LINEAR TECHNOLOGY CORPORATION
                      CONSOLIDATED STATEMENTS OF INCOME
                   (In thousands, except per share amounts)
                               GAAP (unaudited)


                             Three Months Ended         Six Months Ended
                          December 31,  January 1,  December 31,  January 1,
                             2006         2006         2006         2006
    Net sales             $267,854     $265,146     $559,970     $521,159
    Cost of sales (1)       59,313       58,765      123,640      114,764
      Gross profit         208,541      206,381      436,330      406,395

    Expenses:
      Research
       & development (1)    44,961       38,040       91,480       75,819
      Selling, general &
       administrative (1)   33,597       32,331       68,022       63,481
                            78,558       70,371      159,502      139,300
    Operating income       129,983      136,010      276,828      267,095
    Interest income, net    15,867       12,572       31,904       24,194

    Income before
     income taxes          145,850      148,582      308,732      291,289
    Provision for
     income taxes           40,838       45,318       91,331       88,844

    Net income            $105,012     $103,264          $217,401          $202,445

        Earnings  per  share:
            Basic                                  $  0.35              $  0.34              $  0.72              $  0.66
            Diluted                              $  0.34              $  0.33              $  0.71              $  0.64

        Shares  used  in  the
          calculation  of
          earnings  per  share:
            Basic                                299,724            305,534            300,385            305,690
            Diluted                            304,959            313,792            305,774            314,490

        Pro  forma  earnings
          per  share  excluding
          the  effects  of
          stock-based
          compensation:
            Basic                                  $  0.39              $  0.37              $  0.81              $  0.72
            Diluted                              $  0.39              $  0.36              $  0.80              $  0.71

        Pro  forma  shares
          used  in  the
          calculation  of  pro
          forma  earnings  per
          share:
            Basic                                299,724            305,534            300,385            305,690
            Diluted                            303,005            311,782            303,845            312,561

        (1)  Includes  stock-based  compensation  charges  as  follows:

        Cost  of  sales                      $2,840              $2,306              $5,602              $3,513
        Research  and
          development                          9,281                5,530              18,183              11,453
        Sales,  general
          and  administrative            5,640                5,895              11,062              12,103

        Total  stock-based
          compensation                    $17,761            $13,731            $34,847            $27,069


                                                LINEAR  TECHNOLOGY  CORPORATION
                          RECONCILIATION  OF  NET  INCOME  TO  PRO  FORMA  NET  INCOME
                                      (In  thousands,  except  per  share  amounts)
                                                              NON-GAAP  (unaudited)


                                                        Three  Months  Ended                  Six  Months  Ended
                                                    December  31,    January  1,      December  31,    January  1,
                                                          2006                2006                    2006                  2006

        Net  income                        $105,012          $103,264          $217,401          $202,445


        Adjustments  to
            reconcile  net
          Income  to  pro
            forma  net  income
              Stock-based
                compensation                17,761              13,731              34,847              27,069
              Tax  effect                    (4,973)            (4,188)          (10,308)            (8,256)
        Pro  forma  net  income    $117,800          $112,807          $241,940          $221,258

        Pro  forma  earnings
          per  share  excluding
          the  effects  of
          stock-based
          compensation:
            Basic                                  $  0.39              $  0.37              $  0.81              $  0.72
            Diluted                              $  0.39              $  0.36              $  0.80              $  0.71

        Shares  used  in  the
          calculation  of
          pro  forma  earnings
          per  share:
            Basic                                299,724(1)      305,534(1)      300,385(2)      305,690(2)
            Diluted                            303,005            311,782            303,845            312,561

        (1)  Excludes  1,954  and  2,010  shares  for  the  three  months  ended
                December  31,  2006  and  January  1,  2006,  respectively,  to  conform
                diluted  outstanding  shares  calculated  under  FAS123R  to  diluted  shares
                calculated  under  prior  accounting  standards.
        (2)  Excludes  1,929  and  1,929  shares  for  the  six  months  ended  December  31,
                2006  and  January  1,  2006,  respectively,  to  conform  diluted  outstanding
                shares  calculated  under  FAS123R  to  diluted  shares  calculated  under
                prior  accounting  standards.
 


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