Maxim Reports Record Revenue for the Fourth Quarter of Fiscal 2010; Increases Quarterly Dividend to $0.21 Per Share


  • Revenue: $566.0 million including $5.7 million Teridian revenue
     
  • Gross Margin: 60.2% GAAP (61.8% GAAP excluding special expense items)
     
  • EPS: $0.19 GAAP ($0.33 GAAP excluding special expense items)
       
  • Cash flow from operations: $157 million
     
  • Cash, cash equivalents, and short term investments: $827 million
     
  • Fiscal first quarter revenue outlook: $600 to $630 million

SUNNYVALE, Calif., July 29, 2010 (GLOBE NEWSWIRE) -- Maxim Integrated Products, Inc. (Nasdaq:MXIM) reported net revenue of $566.0 million for its fiscal 2010 fourth quarter ended June 26, 2010, an 11% increase over the $508.9 million revenue recorded in the prior quarter. 

Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share was $0.19. The results were reduced by certain pre-tax and tax related special expense items which primarily consist of:

  • $33.2 million additional tax provision for international restructuring
     
  • $13.6 million pre-tax expense for acquisition related items
     
  • $5.5 million pre-tax expense for stock option litigation

GAAP earnings per share excluding special expense items was $0.33.

Cash Flow Items

Cash flow from operations was $157.0 million. Total cash, cash equivalents and short term investments was $826.5 million as of June 26, 2010, a decrease of $32.3 million during the fourth quarter. Key cash outflows include:

  • $312.8 million for the acquisition of Teridian
     
  • $77.3 million of share repurchases
     
  • $60.4 million of dividends
     
  • $43.7 million in payments for property and equipment

The above items were offset by $298.6 million received from the issuance of bonds.

Business Outlook

The Company's 90 day backlog increased by 28% to $614 million. Results for the September quarter, including Teridian , are expected to be:

  • Revenue: $600 to $630 million
       
  • Gross Margin: 58.5% to 61.5% GAAP (60% to 63% GAAP excluding special expense items)
      
  • Earnings per share: $0.32 to $0.36 GAAP ($0.36 to $0.40 GAAP excluding special expense items)

Tunc Doluca, President and Chief Executive Officer, commented, "We are pleased with our results in the June quarter. We achieved record revenues as a result of the improved economy and our innovative products winning significant designs this past year. To support this growing demand, we are on plan to increase flexible wafer fab capacity."

Dividend

A cash dividend for the fourth quarter of fiscal 2010 of $0.21 per share will be paid on September 3, 2010, to stockholders of record on August 20, 2010.

Conference Call

Maxim has scheduled a conference call on July 29, 2010, at 2:00 p.m. Pacific Time to discuss its financial results for the fourth quarter of fiscal year 2010 and its business outlook. To listen via telephone, dial (866) 837-9779 (toll free) or (703) 639-1417. This call will be webcast by Shareholder.com and can be accessed at Maxim's website at www.maxim-ic.com/Investor.

 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
  Three Months Ended
  June 26,
2010
March 27,
2010
June 27,
2009
  (in thousands, except per share data)
Net revenues  $ 565,962  $ 508,880  $ 394,471
Cost of goods sold (1, 2, 3, 4)  225,014  200,177  203,934
Gross profit 340,948 308,703 190,537
Operating expenses:      
Research and development (1) 123,542 116,750  117,106
Selling, general and administrative (1) 67,347 61,494  48,540
Intangible asset amortization (3)  4,983 1,799  2,453
Severance and restructuring (576) (625)  (535)
Other operating expenses, net (5) 4,569 177,546  1,386
Total operating expenses  199,865 356,964 168,950
Operating income (loss)  141,083  (48,261)  21,587
Interest income and other income, net  1,838  644  983
Income (loss) before provision for (benefit from) income taxes  142,921  (47,617)  22,570
Provision for (benefit from) income taxes (6)  84,466  (13,714)  14,472
Net income (loss)  $ 58,455  $ (33,903)  $ 8,098
       
Earnings (loss) per share:      
Basic   $ 0.19  $ (0.11)  $ 0.03
Diluted   $ 0.19  $ (0.11)  $ 0.03
       
Shares used in the calculation of earnings (loss) per share:       
Basic 302,188 304,518 305,347
Diluted  306,803 304,518 308,442
       
Dividends paid per share   $ 0.20  $ 0.20  $ 0.20
 
SCHEDULE OF STOCK BASED COMPENSATION EXPENSES
(Unaudited)
  Three Months Ended
  June 26, 2010 March 27, 2010 June 27, 2009
  (in thousands)
Cost of goods sold  $ 3,423  $ 1,071  $ 6,772
Research and development  13,983  8,691  22,783
Selling, general and administrative  7,442  5,517  5,442
 Total   $ 24,848  $ 15,279  $ 34,997
 
SCHEDULE OF SPECIAL EXPENSE ITEMS
(Unaudited)
  Three Months Ended
   June 26, 2010 March 27, 2010  June 27, 2009
  (in thousands)
Cost of goods sold:      
 Accelerated depreciation (2)   $ --   $ --   $ 18,932
Intangible asset amortization (3)  3,995  2,352  2,321
Acquisition related inventory write up (4)  4,583  --   835
 Total   $ 8,578  $ 2,352  $ 22,088
       
 Operating expenses:       
Intangible asset amortization (3)  $ 4,983  $ 1,799  $ 2,453
 Severance and restructuring   (576)  (625)  (535)
 Other operating expenses, net (5)   4,569  177,546  1,386
 Total   $ 8,976  $ 178,720  $ 3,304
       
Provision for income taxes:      
 International restructuring (6)   $ 33,162  $ 3,171  $ 15,500
       
(1) Includes stock-based compensation charges as shown in the Schedule of Stock Based Compensation Expenses.
(2) Includes accelerated depreciation primarily related to long-lived assets resulting from the closure of the Dallas fab facility.
(3) Includes intangible asset amortization related to acquisitions.
(4) Expense related to fair value write up of inventory acquired as part of acquisitions. 
(5) Expenses primarily for stock option related settlement & litigation, class action settlement, and certain payroll taxes, interest and penalties.
(6) Tax provision impact due to international restructuring.
STOCK-BASED COMPENSATION BY TYPE OF AWARD (in thousands)  
(Unaudited)        
Three Months Ended June 26, 2010  
Stock Options
 Restricted Stock
Units
Employee Stock
Purchase Plan
 
Total
Cost of goods sold   $ 682  $ 2,431  $ 310  $ 3,423
Research and development expense 3,609 9,180 1,194 13,983
Selling, general and administrative expense 2,608 4,537 297 7,442
 Total  $ 6,899  $ 16,148  $ 1,801  $ 24,848
         
Three Months Ended March 26, 2010        
Cost of goods sold   $ 232  $ 586  $ 253  $ 1,071
Research and development expense 1,318 6,038 1,335 8,691
Selling, general and administrative expense 1,194 3,993 330 5,517
 Total  $ 2,744  $ 10,617  $ 1,918  $ 15,279
         
Three Months Ended June 27, 2009        
Cost of goods sold   $ 1,218  $ 5,281  $ 273  $ 6,772
Research and development expense 7,455 14,332  996 22,783
Selling, general and administrative expense 2,099 3,256  87 5,442
 Total  $ 10,772  $ 22,869  $ 1,356  $ 34,997
         
CONSOLIDATED BALANCE SHEETS
(Unaudited)
  June 26,
2010
June 27,
2009
  (in thousands) 
ASSETS
Current assets:    
Cash and cash equivalents  $ 826,512  $ 709,348
Short-term investments  --   204,055
Total cash, cash equivalents and short-term investments  826,512  913,403
     
Accounts receivable, net  339,322  207,807
Inventories  206,040  217,847
Income tax refund receivable  83,813  13,072
Deferred tax assets  217,017  211,879
Other current assets  33,909  20,943
Total current assets  1,706,613  1,584,951
Property, plant and equipment, net  1,324,436  1,366,052
Other assets  451,276  130,772
TOTAL ASSETS  $ 3,482,325  $ 3,081,775
     
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:    
Accounts payable   $ 107,797  $ 70,087
Income taxes payable  13,053  2,140
Accrued salary and related expenses  175,858  141,334
Accrued expenses   37,030  38,455
Deferred income on shipments to distributors  25,779  16,760
Accrual for litigation settlement  173,000  -- 
Total current liabilities  532,517  268,776
Other liabilities  27,926  26,398
Income taxes payable  132,400  124,863
Deferred tax liabilities  136,524  67,273
Long term debt  300,000  -- 
Total liabilities   1,129,367  487,310
     
Stockholders' equity:    
Common stock  301  21,511
Retained earnings   2,364,598  2,580,610
Accumulated other comprehensive loss  (11,941)  (7,656)
Total stockholders' equity  2,352,958  2,594,465
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY   $ 3,482,325  $ 3,081,775
     
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Three Months Ended
  June 26,
2010
March 27,
2010
June 27,
2009
  (in thousands)
Cash flows from operating activities:       
Net income (loss)  $ 58,455  $ (33,903)  $ 8,098
Adjustments to reconcile net income (loss) to net
cash provided by operating activities: 
   
Stock-based compensation   24,848  15,279  34,997
Depreciation and amortization   50,386  40,810  56,513
Deferred taxes   56,618  (53,931)  (7,277)
Tax detriment related to stock-based compensation  (3,565)  (2,040)  (12,493)
Other  (1,860)  (2,067)  194
Changes in assets and liabilities:       
Accounts receivable   (34,686)  (16,257)  (11,463)
Inventories   (1,531)  5,208  21,624
Other current assets   (78,749)  (9,465)  28,728
Accounts payable   26,447  15,388  2,042
Income taxes payable   44,184  (725)  11,872
Deferred income on shipments to distributors   4,674  2,878  (1,250)
Accrued liabilities - goodwill and tender offer payments above fair value  (164)  (171)  (2,346)
Litigation settlement  --  173,000  --
All other accrued liabilities   11,943  30,473  (18,888)
Net cash provided by operating activities   157,000  164,477  110,351
       
Cash flows from investing activities:       
Payments for property, plant and equipment  (43,667)  (25,482)  (31,897)
Acquisition  (312,784)  --   -- 
Proceeds from sales/maturities of available-for-sale securities   100,000  --   1,313
Other  (2,113)  (1,485)  (1,392)
Net cash used in investing activities   (258,564)  (26,967)  (31,976)
       
Cash flows from financing activities:       
Dividends paid  (60,412)  (60,949)  (61,126)
Repurchase of common stock  (77,289)  (49,146)  -- 
Issuance of ESPP  14,069  --   -- 
Issuance of debt  298,578  --   -- 
Issuance of common stock  (6,642)  (7,860)  (637)
 Other   1,336  1,359  (89)
Net cash provided by (used in) financing activities   169,640  (116,596)  (61,852)
       
Net increase in cash and cash equivalents   68,076  20,914  16,523
Cash and cash equivalents:       
Beginning of period  758,436  737,522  692,825
End of period  $ 826,512  $ 758,436  $ 709,348
       
Total cash, cash equivalents, and short-term investments  $ 826,512  $ 858,861  $ 913,403
 
 
ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL EXPENSE ITEMS DISCLOSURES
(Unaudited)
  Three Months Ended
  June 26,
2010
March 27,
2010
June 27,
2009
  (in thousands, except per share data)
Reconciliation of GAAP gross profit to GAAP gross profit excluding special
expense items:
     
GAAP gross profit  $ 340,948  $ 308,703  $ 190,537
GAAP Gross profit % 60.2% 60.7% 48.3%
       
Special expense items:      
Accelerated depreciation (1)   --   --   18,932
Intangible asset amortization (2)  3,995  2,352  2,321
Acquisition related inventory write up (3)  4,583  --   835
 Total Special items   8,578  2,352  22,088
 GAAP Gross profit excluding special expense items   $ 349,526  $ 311,055  $ 212,625
 GAAP Gross profit % excluding special expense items  61.8% 61.1% 53.9%
       
Reconciliation of GAAP operating expenses to GAAP operating expenses
excluding special expense items:
     
GAAP operating expenses  $ 199,865  $ 356,964  $ 168,950
       
Special expense (income) items:      
Intangible asset amortization (2)  4,983  1,799  2,453
 Severance and restructuring   (576)  (625)  (535)
 Other operating expenses, net (4)   4,569  177,546  1,386
 Total special expense items   8,976  178,720  3,304
 GAAP Operating expenses excluding special expense items   $ 190,889  $ 178,244  $ 165,646
       
Reconciliation of GAAP net income (loss) to GAAP net income excluding special expense items:      
GAAP net income (loss)  $ 58,455  $ (33,903)  $ 8,098
       
Special expense (income) items:      
 Accelerated depreciation (1)   --   --   18,932
Intangible asset amortization (2)  8,978  4,151  4,774
Acquisition related inventory write up (3)  4,583  --  835
 Severance and restructuring   (576)  (625)  (535)
 Other operating expenses, net (4)   4,569  177,546  1,386
 Pre-tax total special expense items   17,554  181,072  25,392
 Tax effect of special expense items   6,873  65,291  8,811
 International restructuring (5)   33,162  3,171  15,500
 GAAP net income excluding special expense items   $ 102,298  $ 85,049  $ 40,179
       
 GAAP net income per share excluding special expense items:       
 Basic   $ 0.34  $ 0.28  $ 0.13
 Diluted   $ 0.33  $ 0.27  $ 0.13
       
Shares used in the calculation of earnings per share excluding special expense items:     
Basic 302,188 304,518 305,347
Diluted (6) 306,803 309,445 308,442
       
(1) Includes accelerated depreciation primarily related to long-lived assets resulting from the closure of the Dallas fab facility.
(2) Includes intangible asset amortization related to acquisitions.
(3) Expense related to fair value write up of inventory acquired as part of acquisitions. 
(4) Expenses primarily for stock option related settlement & litigation, class action settlement, and certain payroll taxes, interest and penalties.
(5) Tax provision impact due to international restructuring.
(6) Diluted shares for the three months ending March 27, 2010 have been adjusted due to net income for GAAP net income excluding special expense items versus a net loss on a GAAP basis.

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 accelerated depreciation, intangible asset amortization, acquisition related inventory write up to fair value, severance and restructuring, stock option related litigation and associated settlement, and the tax provision impacts due to international restructuring. Management does not consider these special expenses in evaluating the core operational activities of Maxim. 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 accelerated depreciation, 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, and stock option related litigation and associated settlement.   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 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 expense items

The use of GAAP net income and GAAP net income per share excluding special expense 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 expense items including accelerated depreciation, intangible asset amortization, acquisition related inventory write up to fair value, severance and restructuring, stock option related litigation and associated settlement, and the tax provision impacts due to international restructuring. 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 expense 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 first quarter of fiscal 2011 ending in September 2010, which includes revenue, gross margin and earnings per share, as well as the Company's belief that it is on plan to increase flexible wafer fab capacity to support future revenue growth.  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 27, 2009 (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.

About Maxim

Maxim Integrated Products is a publicly traded company that designs, manufactures, and sells high-performance semiconductor products. The Company was founded over 25 years ago with the mission to deliver innovative analog and mixed-signal engineering solutions that add value to its customers' products. To date, it has developed over 6,300 products serving the industrial, communications, consumer, and computing markets.

Maxim reported revenue of approximately $2.0 billion for fiscal 2010. A Fortune 1000 company, Maxim is included in the Nasdaq 100, the Russell 1000, and the MSCI USA indices. For more information, go to www.maxim-ic.com.

The Maxim Integrated Products, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5753



            

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