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EX-99.1 - PRESS RELEASE - MAXIM INTEGRATED PRODUCTS INCex-991012612.pdf
8-K - FORM 8-K - MAXIM INTEGRATED PRODUCTS INCmaximq212form8-k.htm
Press Release


Contact
Paresh Maniar
Executive Director, Investor Relations
(408) 470-5348



MAXIM REPORTS RESULTS FOR THE SECOND QUARTER OF FISCAL 2012

Revenue: $591 million
Gross Margin: 58.8% GAAP (60.5% excluding special expense items)
EPS: $0.29 GAAP ($0.34 excluding special items)
Cash, cash equivalents, and short term investments: $817 million
Fiscal third quarter revenue outlook: $555 million to $585 million

SUNNYVALE, CA - January 26, 2012 - 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.”







1



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.
- more -

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CONSOLIDATED STATEMENTS OF INCOME
 
 
(Unaudited)
 
 
 
Three Months Ended
 
 
 
December 31,
2011
 
September 24,
2011
 
December 25,
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,
2011
 
September 24,
2011
 
December 25,
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,
2011
 
September 24,
2011
 
December 25,
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.
 
 
 
 
 
 
 
 
 
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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

 
 
 
 
 
 
 
 
 
 

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CONSOLIDATED BALANCE SHEETS
 
 
(Unaudited)
 
 
 
December 31,
2011
 
June 25,
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

 
 
 
 
 
 
 

- more -


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CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
(Unaudited)
 
 
 
Three Months Ended
 
 
 
December 31,
2011
 
September 24,
2011
 
December 25,
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

 
 
 
 
 
 
 
 
 

- more -

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ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL EXPENSE ITEMS DISCLOSURES
 
 
(Unaudited)
 
 
 
 
Three Months Ended
 
 
 
 
December 31,
2011
 
September 24,
2011
 
December 25,
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 expenses (income), 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 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 items
 
$
100,673

 
$
137,175

 
$
132,384

 
 
 
 
 
 
 
 
 
 
 
 GAAP net income per share excluding special 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 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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Non-GAAP Measures
To supplement the consolidated financial results prepared under GAAP, Maxim uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude special expense items related to intangible asset amortization; acquisition related inventory write up to fair value; severance and restructuring; stock option related litigation; certain payroll taxes, interest and penalties; loss on the sale of land and buildings; the tax provision impacts due to implementation of international restructuring; and gain on sale of equity investment. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim's current performance. Many analysts covering Maxim use the non-GAAP measures as well. Given management's use of these non-GAAP measures, Maxim believes these measures are important to investors in understanding Maxim's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in Maxim's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative to GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized it may not be possible to compare these financial measures with other companies' non-GAAP financial measures, even if they have similar names. The non-GAAP measures displayed in the table above include the following:

GAAP gross profit excluding special expense items
The use of GAAP gross profit excluding special expense items allows management to evaluate the gross margin of the company's core businesses and trends across different reporting periods on a consistent basis, independent of special expense items including intangible asset amortization and acquisition related inventory write up to fair value. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP gross profit excluding special expense items to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of Maxim's core businesses.

GAAP operating expenses excluding special expense items
The use of GAAP operating expenses excluding special expense items allows management to evaluate the operating expenses of the company's core businesses and trends across different reporting periods on a consistent basis, independent of special expense items including intangible asset amortization; severance and restructuring; stock option related litigation; certain payroll taxes, interest and penalties; and loss on the sale of land and buildings. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of

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the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP operating expenses excluding special expense items to enable investors and analysts to evaluate our core business and its direct operating expenses.

GAAP net income and GAAP net income per share excluding special items
The use of GAAP net income and GAAP net income per share excluding special items allow management to evaluate the operating results of Maxim's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; acquisition related inventory write up to fair value; severance and restructuring; stock option related litigation; certain payroll taxes, interest and penalties; loss on the sale of land and buildings; the tax provision impacts due to implementation of international restructuring, and gain on the sale of equity investment. In addition, they are important components of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP net income and GAAP net income per share excluding special items to enable investors and analysts to understand the results of operations of Maxim's core businesses and to compare our results of operations on a more consistent basis against that of other companies in our industry.

“Safe Harbor” Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include the Company's financial projections for its third quarter of fiscal 2012 ending in March 2012, which includes revenue, gross margin and earnings per share, as well as the Company's forecast that its revenue will return to normal trends in the March quarter. These statements involve risk and uncertainty. Actual results could differ materially from those forecasted based upon, among other things, general market and economic conditions and market developments that could adversely affect the growth of the mixed-signal analog market, product mix shifts, customer cancellations and price competition, as well as other risks described in the Company's Annual Report on Form 10-K for the fiscal year ended June 25, 2011 (the “10-K”) and Quarterly Reports on Form 10-Q filed after the 10-K.

All forward-looking statements included in this news release are made as of the date hereof, based on the information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement except as required by law.



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About Maxim
Maxim makes highly integrated analog and mixed-signal semiconductors. Maxim reported revenue of approximately $2.5 billion for fiscal 2011. For more information, go to www.Maxim-ic.com.



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