Linear Technology Reports Increased Sales and Pro Forma Profits Over The Similar Quarter In The Prior Year

MILPITAS, Calif., Oct. 18 /PRNewswire-FirstCall/ -- Linear Technology Corporation (NASDAQ: LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today announced that net sales for its first quarter ended October 2, 2005, were $256,013,000, an increase of 1% over net sales of $253,028,000 for the first quarter of the previous year. The Company also reported net income for the quarter of $99,181,000 or $0.31 diluted earnings per share, ($108,451,000 or $0.35 pro forma excluding stock based compensation as noted below) as compared to $103,476,000 or $0.33 diluted earnings per share reported for the first quarter of last year. During the quarter, the Company implemented Financial Accounting Standard 123R (FAS123R), "Share-based Payments," which requires companies to estimate the cost of all forms of stock based compensation, including stock options, restricted stock and employee stock purchase plans, and record a commensurate expense in their income statement. Since the Company began its fiscal year this quarter, it is one of the first companies required to implement FAS123R. For Linear Technology, the total amount of stock based compensation during this quarter was $13,338,000. Under FAS123R calculations, there was also an increase in estimated diluted shares outstanding. Consequently, pro forma earnings per share, excluding stock based compensation accounting estimates, would have been $0.35 for the quarter ended October 2, 2005 versus $0.33 on a similar basis for the prior year's quarter. The Company's cash and short-term investments increased by $43.6 million, net of spending $64.5 million to purchase 1,656,165 shares of common stock. A cash dividend of $0.10 per share will be paid on November 16, 2005 to stockholders of record on October 28, 2005.

According to Lothar Maier, CEO, "Sequentially sales were similar to the June quarter, however, demand increased resulting in a positive book to bill ratio. We continue to be strongly cash flow positive and our return on sales was 39%, or 42% on a pro forma basis prior to the impact of stock based compensation accounting.

Looking ahead to the December quarter, our bookings have improved, particularly in consumer related products, and consequently we expect sales to increase, roughly in the 3% to 4% range."

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 growth of 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 3, 2005.

Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, October 19, 2005 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 234-0008 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 October 19 through October 25, 2005. You may access this post view by calling (719) 457-0820 and entering reservation #4138095. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of October 19, 2005 until the first quarter earnings release next year.

Linear Technology Corporation, a manufacturer of high performance linear integrated circuits, was founded in 1981, became a public company in 1986 and joined the S&P 500 index of major public companies in 2000. 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 more information, visit www.linear.com.

    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)

                                                   October 2,   September 26,
                                                      2005           2004

    Net Sales                                       $256,013       $253,028
    Cost of sales (1)                                 55,999         54,839
      Gross profit                                   200,014        198,189

    Expenses:

      Research & development (1)                      37,779         30,634
      Selling, general & administrative (1)           31,150         23,058
                                                      68,929         53,692

    Operating income                                 131,085        144,497
    Interest income, net                              11,622          5,468

    Income before income taxes                       142,707        149,965
    Provision for income taxes                        43,526                 46,489

        Net  income                                                                              $99,181              $103,476

        Earnings  per  share:
            Basic                                                                                        $0.32                    $0.34
            Diluted                                                                                    $0.31                    $0.33

        Shares  used  in  the  calculation  of
          earnings  per  share:
            Basic                                                                                    306,336                308,201
            Diluted                                                                                315,940                316,918

        Pro  forma  earnings  per  share  excluding  the
          effects  of  stock  based  compensation:
            Basic                                                                                        $0.35                    $0.34
            Diluted                                                                                    $0.35                    $0.33

        Pro  forma  shares  used  in  the  calculation  of
          pro  forma  earnings  per  share:
            Basic                                                                                    306,336                308,201
            Diluted                                                                                313,429                316,918

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

        Cost  of  sales  (net  of  $1,200  in  inventory)                  1,207                        520
        Research  and  development                                                      5,923                    1,430
        Sales,  general  and  administrative                                    6,208                    1,299
        Total  stock-based  compensation                                        13,338                    3,249


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

                                                                                                      October  2,    September  26,
                                                                                                            2005                      2004

        Net  income                                                                              $99,181              $103,476

        Adjustments  to  reconcile  net  income  to
          pro  forma  net  income:
            Stock-based  compensation                                                13,338                    3,249
            Tax  effect                                                                            (4,068)                (1,007)

        Pro  forma  net  income                                                        $108,451              $105,718

        Pro  forma  earnings  per  share:

            Basic                                                                                        $0.35                    $0.34
            Diluted                                                                                    $0.35                    $0.33

        Shares  used  in  the  calculation  of
          pro-forma  earnings  per  share:

            Basic                                                                                    306,336                308,201
            Diluted                                                                                313,429(1)          316,918

        (1)  Excludes  2,511  shares  to  conform  diluted  outstanding  shares
                calculated  under  FAS123R  to  diluted  shares  calculated  under  prior
                accounting  standards.

                FAS123R  -  Stock  Based  Compensation  became  effective  and  was  adopted  by
        the  Company  during  the  quarter  ended  October  2,  2005.    FAS123R  requires
        the  Company  to  estimate  the  cost  of  all  forms  of  stock  based  compensation,
        including  employee  stock  options,  and  to  record  a  commensurate  expense  in
        the  income  statement.    To  supplement  our  consolidated  financial  statements
        presented  in  accordance  with  GAAP,  we  have  shown  above  a  non-GAAP  (pro
        forma)  presentation  of  the  Company's  earnings  per  share,  which  is  adjusted
        to  reflect  the  GAAP  results  to  exclude  all  stock  based  compensation.    This
        non-GAAP  presentation  of  earnings  per  share  is  provided  to  enhance  the
        user's  overall  understanding  of  the  Company's  historical  financial
        performance  and  comparability  between  periods.    We  believe  the  non-GAAP
        results  provide  useful  information  to  investors  by  excluding  stock  based
        compensation  particularly  during  this  transitional  period  when  most
        companies  have  not  yet  adopted  the  provisions  of  FAS123R.


                                                LINEAR  TECHNOLOGY  CORPORATION
                                        CONSOLIDATED  CONDENSED  BALANCE  SHEETS
                                                        (Dollars  in  thousands)



                                                                                                    October  2,                July  3,
                                                                                                          2005                        2005
                                                                                                  (unaudited)            (audited)

        ASSETS

        Current  assets:
            Cash,  cash  equivalents  and  short-term
              investments                                                                $1,834,519          $1,790,912


            Accounts  receivable,  net  of  allowance
              for  doubtful  accounts  of  $1,713
              ($1,713  at  July  3,  2005)                                            120,829                125,864

            Inventories                                                                          37,181                  34,328

            Deferred  tax  assets  and  other
              current  assets                                                                  62,186                  56,205

            Total  current  assets                                                  2,054,715            2,007,309

        Property,  plant  &  equipment,  net                                  226,532                221,028
        Other  non  current  assets                                                    52,075                  57,897

        Total  assets                                                                    $2,333,322          $2,286,234


                                                                                                      October  2,              July  3,
                                                                                                            2005                      2005
                                                                                                    (unaudited)            (audited)


        LIABILITIES  &  STOCKHOLDERS  '  EQUITY

        Current  liabilities:
            Accounts  payable                                                              $16,606                $11,800

            Accrued  income  taxes,  payroll  &  other
              accrued  liabilities                                                      164,533                152,231

            Deferred  income  on  shipments  to  distributors        42,896                  43,708

                Total  current  liabilities                                        224,035                207,739

        Deferred  tax  and  other  long-term  liabilities            70,405                  71,461

        Stockholders'  equity:

            Common  stock                                                                      950,994                926,763
            Retained  earnings                                                        1,092,010            1,083,110
            Accumulated  other  comprehensive  income                    (4,122)                (2,839)
                Total  stockholders'  equity                                  2,038,882            2,007,034
                                                                                                    $2,333,322          $2,286,234
 


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