SAN JOSE, Calif., April 20, 2017 /PRNewswire/ — Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $581 million for its third quarter of fiscal 2017 ended March 25, 2017, a 5% increase from the $551 million revenue recorded in the prior quarter, and a 5% increase from the same quarter of last year.

Tunc Doluca, President and Chief Executive Officer, commented, «Our strong growth in the March quarter enabled us to exceed our revenue and profitability targets.  This momentum was led by Automotive and Industrial growth relative to the March quarter of last year.» Mr. Doluca continued, «Our return to growth and strong profitability confirms that our R&D investment strategy and manufacturing transformation are on track and delivering great results.»

Fiscal Year 2017 Third Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was $0.49. The results were affected by pre-tax special items which primarily consisted of $13 million in charges related to acquisitions and $3 million in charges related to restructuring activities. GAAP earnings per share, excluding special items was $0.56. An analysis of GAAP versus GAAP excluding special items is provided in the last table of this press release.

Cash Flow Items
At the end of the third quarter of fiscal 2017, total cash, cash equivalents and short term investments were $2.16 billion, an increase of $69 million from the prior quarter.

Notable items included:

  • Cash flow from operations: $221 million
  • Gross capital expenditures: $8 million
  • Dividends: $93 million ($0.33 per share)
  • Stock repurchases: $57 million

Business Outlook
The Company’s 90-day backlog at the beginning of the June 2017 quarter was $382 million. Based on the beginning backlog, expected turns, and the start of the transition to sell-in revenue accounting for distribution, our results for the June 2017 quarter are expected to be as follows:

  • Revenue: $590 to $630 million (including $15 to $20 million for sell-in transition)
  • Gross Margin: 63% to 65% GAAP (65% to 67% excluding special items)
  • EPS: $0.54 to $0.60 GAAP ($0.59 to $0.65 excluding special items)

Maxim Integrated’s business outlook does not include the potential impact of any special items related to restructuring activity, acquisitions, or other business combinations that may be completed during the quarter.

Dividend
A cash dividend of $0.33 per share will be paid on June 15, 2017, to stockholders of record on June 1, 2017.

Conference Call
Maxim Integrated has scheduled a conference call on April 20 at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal 2017 and its business outlook. This call will be webcast by Shareholder.com and can be accessed at the Company’s website at investor.maximintegrated.com.

A presentation summarizing financial information to be discussed on the conference call is posted at investor.maximintegrated.com.

Contact
Kathy Ta
Managing Director, Investor Relations
(408) 601-5697

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended

March 25, 

December 24, 

March 26, 

2017

2016

2016

(in thousands, except per share data)

Net revenues

$      581,216

$              550,998

$      555,252

Cost of goods sold (1) (2)

214,312

210,820

236,411

Gross margin

366,904

340,178

318,841

Operating expenses:

Research and development

113,163

114,057

119,178

Selling, general and administrative

73,987

71,543

71,778

Intangible asset amortization

2,348

2,348

2,538

Impairment of long-lived assets (3)

1,000

383

506

Severance and restructuring expenses 

450

864

2,552

Other operating expenses (income), net 

1,704

1,909

(55,419)

Total operating expenses (income), net

192,652

191,104

141,133

Operating income (loss)

174,252

149,074

177,708

Interest and other income (expense), net (4)

(3,884)

(636)

(6,373)

Income (loss) before provision for income taxes 

170,368

148,438

171,335

Income tax provision (benefit)

30,155

17,961

31,525

Net income (loss)

$      140,213

$              130,477

$      139,810

Earnings (loss) per share:

Basic

$            0.50

$                    0.46

$            0.49

Diluted

$            0.49

$                    0.45

$            0.48

Shares used in the calculation of earnings (loss) per share:

Basic

282,903

283,294

285,854

Diluted

287,882

288,106

289,783

Dividends paid per share

$            0.33

$                    0.33

$            0.30

SCHEDULE OF SPECIAL ITEMS

(Unaudited)

Three Months Ended

March 25, 

December 24, 

March 26, 

2017

2016

2016

(in thousands)

Cost of goods sold:

Intangible asset amortization 

$        11,064

$11,755

$        11,829

Accelerated depreciation (1)

1,103

1,178

4,066

Other cost of goods sold (2)

6,123

  Total 

$        12,167

$                12,933

$        22,018

 Operating expenses: 

Intangible asset amortization

$2,348

$2,348

$2,538

Impairment of long-lived assets (3)

1,000

383

506

Severance and restructuring

450

864

2,552

Other operating expenses (income), net 

1,704

1,909

(55,419)

  Total 

$          5,502

$                  5,504

$      (49,823)

Interest and other expense (income), net (4)

$             (48)

$                 (5,052)

$             (45)

 Total 

$             (48)

$                 (5,052)

$             (45)

(1) Includes building and equipment accelerated depreciation related to the Dallas manufacturing facility.

(2) Includes expense related to patent license settlement.

(3) Includes impairment of investments in privately-held companies and other equipment impairment charges.

(4) Includes gain on sale of shares received for the sale of the wafer manufacturing facility in San Antonio, Texas.

 

CONSOLIDATED  BALANCE SHEETS

(Unaudited)

March 25, 

December 24, 

March 26, 

2017

2016

2016

(in thousands) 

ASSETS

Current assets:

Cash and cash equivalents

$    1,656,727

$      1,687,435

$    1,710,340

Short-term investments

499,154

399,461

150,076

Total cash, cash equivalents and short-term investments

2,155,881

2,086,896

1,860,416

Accounts receivable, net

257,592

224,342

278,502

Inventories

241,439

236,040

234,603

Other current assets

60,195

75,284

88,389

Total current assets

2,715,107

2,622,562

2,461,910

Property, plant and equipment, net

636,835

660,660

748,781

Intangible assets, net

103,981

117,393

188,510

Goodwill

491,015

491,015

490,648

Other assets

69,689

55,188

77,886

Assets held for sale

1,156

1,156

13,733

TOTAL ASSETS

$    4,017,783

$      3,947,974

$    3,981,468

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$         82,938

$           70,505

$         82,696

Income taxes payable

4,538

3,138

30,907

Accrued salary and related expenses

135,702

109,475

151,411

Accrued expenses

35,208

41,418

42,562

Deferred revenue on shipments to distributors

35,724

36,137

34,457

Total current liabilities

294,110

260,673

342,033

Long-term debt

991,877

991,281

1,000,000

Income taxes payable

534,028

514,498

451,099

Other liabilities

37,459

37,331

49,573

Total liabilities

1,857,474

1,803,783

1,842,705

Stockholders’ equity:

Common stock and capital in excess of par value

284

284

280

Retained earnings

2,169,760

2,155,698

2,154,767

Accumulated other comprehensive loss

(9,735)

(11,791)

(16,284)

Total stockholders’ equity

2,160,309

2,144,191

2,138,763

        TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY 

$    4,017,783

$      3,947,974

$    3,981,468

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

March 25, 

December 24, 

March 26, 

2017

2016

2016

(in thousands)

Cash flows from operating activities:

Net income (loss)

$       140,213

$         130,477

$       139,810

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Stock-based compensation

18,300

18,073

17,875

Depreciation and amortization

40,473

42,140

47,088

Deferred taxes

(16,967)

(7,520)

(333)

Loss (gain) from sale of property, plant and equipment

4,809

3,898

3,098

Loss (gain) on sale of business

(58,944)

Tax benefit (shortfall) related to stock-based compensation 

545

Impairment of long-lived assets

383

506

Impairment of investments in privately-held companies

1,000

Excess tax benefit from stock-based compensation

(1,491)

Changes in assets and liabilities:

Accounts receivable

(33,249)

29,176

(47,322)

Inventories

(5,505)

(12,512)

22,785

Other current assets

16,862

(7,583)

(8,947)

Accounts payable

11,887

(11,999)

8,683

Income taxes payable

20,931

17,138

29,597

Deferred revenue on shipments to distributors

(412)

383

2,390

Accrued salary and related expenses

26,227

(1,651)

22,078

All other accrued liabilities

(3,872)

(7,773)

(9,432)

Net cash provided by (used in) operating activities

220,697

192,630

167,986

Cash flows from investing activities:

Purchase of property, plant and equipment

(8,286)

(15,775)

(17,530)

Proceeds from sales of property, plant and equipment

787

2,224

136

Proceeds from sale of available-for-sale securities

26,454

Proceeds from sale of business

105,000

Purchases of available-for-sale securities

(99,398)

(225,622)

(24,861)

Purchases of privately-held companies’ securities

(162)

(326)

(1,921)

Net cash provided by (used in) investing activities

(107,059)

(213,045)

60,824

Cash flows from financing activities:

Excess tax benefit from stock-based compensation 

1,491

Repayment of notes payable

(250,000)

Net issuance of restricted stock units

(8,268)

(4,239)

(8,853)

Proceeds from stock options exercised

17,502

7,155

9,889

Issuance of common stock under employee stock purchase program

(3,194)

17,658

Repurchase of common stock

(56,999)

(61,235)

(83,801)

Dividends paid

(93,387)

(93,562)

(85,714)

Net cash provided by (used in) financing activities

(144,346)

(384,223)

(166,988)

Net increase (decrease) in cash and cash equivalents

(30,708)

(404,638)

61,822

Cash and cash equivalents:

Beginning of period

1,687,435

2,092,073

1,648,518

End of period

$    1,656,727

$      1,687,435

$    1,710,340

Total cash, cash equivalents, and short-term investments

$    2,155,881

$      2,086,896

$    1,860,416

 

ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended

March 25, 

December 24, 

March 26, 

2017

2016

2016

(in thousands, except per share data)

Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:

GAAP gross profit

$      366,904

$             340,178

$      318,841

GAAP gross profit %

63.1%

61.7%

57.4%

Special items:

Intangible asset amortization 

11,064

11,755

11,829

Accelerated depreciation (1)

1,103

1,178

4,066

Other cost of goods sold (2)

6,123

 Total special items 

12,167

12,933

22,018

  GAAP gross profit excluding special items 

$      379,071

$             353,111

$      340,859

  GAAP gross profit % excluding special items 

65.2%

64.1%

61.4%

Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:

GAAP operating expenses

$      192,652

$             191,104

$      141,133

Special items:

Intangible asset amortization

2,348

2,348

2,538

Impairment of long-lived assets (3)

1,000

383

506

Severance and restructuring 

450

864

2,552

Other operating expenses (income), net 

1,704

1,909

(55,419)

  Total special items 

5,502

5,504

(49,823)

  GAAP operating expenses excluding special items 

$      187,150

$             185,600

$      190,956

Reconciliation of GAAP net income (loss) to GAAP net income excluding special items:

GAAP net income (loss)

$      140,213

$             130,477

$      139,810

Special items:

Intangible asset amortization 

13,412

14,103

14,367

Accelerated depreciation (1)

1,103

1,178

4,066

Other cost of goods sold (2)

6,123

Impairment of long-lived assets (3)

1,000

383

506

Severance and restructuring 

450

864

2,552

Other operating expenses (income), net 

1,704

1,909

(55,419)

Interest and other expense (income), net (4)

(48)

(5,052)

(45)

  Pre-tax total special items 

17,621

13,385

(27,850)

Other income tax effects and adjustments (5)

1,957

(11,167)

5,698

 GAAP net income excluding special items 

$      159,791

$             132,695

$      117,658

 GAAP net income per share excluding special items: 

Basic

$            0.56

$                   0.47

$            0.41

Diluted

$            0.56

$                   0.46

$            0.41

Shares used in the calculation of earnings per share excluding special items: 

Basic

282,903

283,294

285,854

Diluted

287,882

288,106

289,783

(1) Includes building and equipment accelerated depreciation related to the Dallas manufacturing facility.

(2) Includes expense related to patent license settlement.

(3) Includes impairment of investments in privately-held companies and other equipment impairment charges.

(4) Includes gain on sale of shares received for the sale of the wafer manufacturing facility in San Antonio, Texas.

(5) Includes tax effect of pre-tax special items and miscellaneous tax adjustments.

Non-GAAP Measures
To supplement the consolidated financial results prepared under GAAP, Maxim Integrated uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude special items related to intangible asset amortization; accelerated depreciation; other costs of goods sold; impairment of long-lived assets; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net, and other income tax effects and adjustments. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim Integrated’s current performance. Many analysts covering Maxim Integrated use the non-GAAP measures as well. Given management’s use of these non-GAAP measures, Maxim Integrated believes these measures are important to investors in understanding Maxim Integrated’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 Integrated’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 Items
The use of GAAP gross profit excluding special 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 items including intangible asset amortization, accelerated depreciation, and other costs of goods sold. 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 items to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of Maxim Integrated’s core businesses.

GAAP Operating Expenses Excluding Special Items
The use of GAAP operating expenses excluding special 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 items including intangible asset amortization, impairment of long-lived assets; severance and restructuring, and other operating expenses (income), net. 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 items to enable investors and analysts to evaluate our core business and its direct operating expenses.

GAAP Provision for Income Taxes Excluding Special Items
The use of a GAAP provision for income taxes excluding special items allows management to evaluate the provision for income taxes across different reporting periods on a consistent basis, independent of special items including the tax provision impact of pre-tax special items. In fiscal year 2016, we began using a long-term tax rate to compute the GAAP provision for income taxes excluding special items. This long-term tax rate considers the income tax impact of pre-tax special items and eliminates the effects of significant non-recurring and period specific tax items which vary in size and frequency. In the first and second quarter of fiscal year 2017, we used a long-term tax rate of 18%, which was our forecast of the weighted average of our normalized fiscal year GAAP tax rate excluding special items over a four-year period, that includes the past three fiscal years plus the current fiscal year projection at the beginning of fiscal year 2017. We review the long-term tax rate on an annual basis and more frequently whenever events occur that may materially affect the long-term tax rate such as tax law changes; significant changes in our geographic earnings mix; or changes in our corporate structure. Starting in the third quarter of fiscal year 2017, we transitioned to a long-term tax rate of 15%, which reflects the impact of changes in our manufacturing structure and focused research and development expenditures, resulting in improved projections for fiscal year 2017 and future periods.

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 Integrated’s core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; accelerated depreciation; other costs of goods sold; impairment of long-lived assets; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net, and other income tax effects and adjustments. 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 Integrated’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 business outlook and financial projections for its third quarter of fiscal 2017 ending in March 2017, which includes revenue, gross margin and earnings per share.  These statements involve risk and uncertainty. Actual results could differ materially from those forecasted, based upon, among other things, general market and economic conditions, market developments that could adversely affect the growth of the mixed-signal analog market, product mix shifts, the loss of all or a substantial portion of our sales to one or more of our large customers, 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, 2016 (the «Form 10-K»). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331616000081/maxim10-kfy2016.htm.

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

About Maxim Integrated
Maxim Integrated develops innovative analog and mixed-signal products and technologies to make systems smaller and smarter, with enhanced security and increased energy efficiency. We are empowering design innovation for our automotive, industrial, healthcare, mobile consumer, and cloud data center customers to deliver industry-leading solutions that help change the world. Learn more at http://www.maximintegrated.com.

 

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SOURCE Maxim Integrated Investor Relations