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