LINEAR TECHNOLOGY REPORTS INCREASES IN REVENUE AND NET INCOME OVER THE COMPARABLE

News Release

Contact:

Paul Coghlan

5:00 EST

Vice President, Finance, Chief Financial Officer

January 13, 2015

(408) 432-1900

NATIONAL DISTRIBUTION

LINEAR TECHNOLOGY REPORTS INCREASES IN REVENUE AND NET INCOME OVER THE COMPARABLE PRIOR YEAR PERIOD BUT REVENUE AND NET INCOME DECREASED 5% SEQUENTIALLY. THE COMPANY INCREASES THE QUARTERLY DIVIDEND $0.03 TO $0.30 PER SHARE.
Milpitas, California, January 13, 2015, Linear Technology Corporation (NASDAQ:LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the fiscal quarter ended December
28, 2014. Quarterly revenues of $352.6 million for the second quarter of fiscal year 2015 increased $18.0 million or 5.4% over
$334.6 million reported in the second quarter of fiscal year 2014 but decreased $18.5 million or 5.0% from the previous quarter's revenue of $371.1 million. Net income of $123.6 million increased $18.9 million or 18.0% over the second quarter of fiscal year
2014 but decreased $5.9 million from the first quarter of fiscal year 2015. Second quarter net income and earnings per share were positively impacted by a lower effective income tax rate of 22%. In addition, the Company had no interest expense compared with $12.3 million of interest expense in the second quarter of the prior fiscal year as a result of the extinguishment of the Convertible Senior Notes at the end of fiscal 2014. Diluted earnings per share of $0.51 per share in the second quarter of fiscal year 2015 increased $0.07 per share or 16% over the second quarter of fiscal year 2014 but decreased $.02 per share or 4% compared to the first quarter of fiscal year 2015.
Our cash, cash equivalents and marketable securities increased by $45.2 million over the first quarter of fiscal year 2015 to $1,073 million. The Company's Board of Directors approved an increase in the Company's quarterly dividend from $0.27 per share to $0.30 per share. This marked the 23rd consecutive year the Company has increased its dividend. A cash dividend of
$0.30 per share will be paid on February 25, 2015 to stockholders of record on February 13, 2015. During the second quarter the Company generated positive cash flows from operations of $148.0 million or 42% of total revenues. The Company has historically generated strong cash flows from its operations. During the second quarter of fiscal year 2015 the Company returned
$100.5 million to shareholders in the form of dividends of $65.8 million, representing $0.27 per share, and stock purchases of
$34.7 million.
According to Lothar Maier, CEO, "Revenues declined 5% sequentially from our first quarter and were up 5% year over year, which was within our guidance. We had expected this sequential decline as the second quarter has historically been seasonally weak for us. Bookings declined slightly although improved as the quarter progressed. The industrial end-market showed the most strength. As is typical, we expect our major end-markets to improve during the second half of our fiscal year. Compared to the first quarter, gross margin and operating margin of 75.4% and 44.9% were also down modestly on lower revenue but remain industry leading. Looking ahead, though there remains some weaker pockets of the global economy, our book-to- bill ratio was slightly positive in the December quarter and we typically see strong bookings momentum in the automotive and industrial markets in the March quarter. Accordingly, we are currently forecasting revenues to grow sequentially by 4% to 7% in our fiscal third quarter. In addition, now that we no longer have debt to repay, we have increased our cash return to shareholders in the form of larger dividends and share buybacks. We increased our quarterly dividend by 11%."

LINEAR TECHNOLOGY CORPORATION 1630 McCarthy Blvd., Milpitas, CA 95035-7417 (408) 432-1900 FAX: (408) 434-6441

www.linear.com
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 trends in 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 and country specific conditions in the world economy and financial markets and other factors described in our 10-K for the year ended June 29, 2014.
Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, January
14, 2015 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call 785-830-7979, or toll free 800-344-6698 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.comor www.streetevents.com. A replay of the conference call will be available from January 14, 2015 through January 21, 2015. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation
#8692259. An archive of the webcast will also be available at www.linear.comand www.streetevents.comas of January 21,
2015 until the second quarter earnings release next year.
Linear Technology Corporation, a member of the S&P 500, has been designing, manufacturing and marketing a broad line of high performance analog integrated circuits for major companies worldwide for over three decades. The Company's products provide an essential bridge between our analog world and the digital electronics in communications, networking, industrial, automotive, computer, medical, instrumentation, consumer, and military and aerospace systems. Linear Technology produces power management, data conversion, signal conditioning, RF and interface ICs, µModule® subsystems, and wireless sensor network products. 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)
U.S. GAAP (unaudited)

Three Months Ended Six Months Ended
December 28, September 28, December 29, December 28, December 29,

2014 2014 2013 2014 2013
Revenues $ 352,575 $ 371,060 $ 334,595 $ 723,635 $ 674,952
Cost of sales(1) 86,726 89,007 82,521 175,733 166,522 Gross profit 265,849 282,053 252,074 547,902 508,430
Expenses:
Research and development (1)
Selling, general and administrative(1) 42,537 42,089 38,852 84,626 77,530 Total operating expenses 107,638 107,689 100,860 215,327 201,050 Operating income 158,211 174,364 151,214 332,575 307,380
Interest expense - - (6,813) - (13,626) Amortization of debt discount(2) - - (5,524) - (10,970) Interest income and other income 253 581 791 834 1,673 Income before income taxes 158,464 174,945 139,668 333,409 284,457

Provision for income taxes 34,862 45,486 34,917 80,348 71,838 Net income $ 123,602 $ 129,459 $ 104,751 $ 253,061 $ 212,619
Earnings per share:

Basic $ 0.51 $ 0.53 $ 0.44 $ 1.04 $ 0.89

Diluted $ 0.51 $ 0.53 $ 0.44 $ 1.03 $ 0.89
Shares used in determining earnings per share:

Basic 244,033 244,145 239,206 244,067 238,857

Diluted 244,591 244,801 240,670 244,674 240,000
Includes the following non-cash

(1) Stock-based compensation

Cost of sales $ 2,223 $ 2,100 $ 2,106 $ 4,323 $ 4,070
Research and development 10,350 9,791 9,816 20,141 18,978
Selling, general and administrative 5,346 5,056 5,069 10,402 9,799

(2) Amortization of debt discount

(non-cash interest expense) - - 5,524 - 10,970
LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)
U.S. GAAP (unaudited)
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities
Accounts receivable, net of allowance for doubtful accounts of $1,651 ($1,653 at June 29, 2014)
Inventories
Deferred tax assets and other current assets
Total current assets

December 28, 2014 June 29, 2014
Property, plant & equipment, net
Other noncurrent assets
Total assets

LIABILITIES & STOCKHOLDERS' EQUITY: Current liabilities:
Accounts payable
Accrued income taxes, payroll & other accrued liabilities
Deferred income on shipments to distributors
Total current liabilities
Deferred tax and other noncurrent liabilities 120,266 109,094
Stockholders' equity: Common stock Accumulated deficit
Accumulated other comprehensive loss

Total stockholders' equity

LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Cash flow from operating activities:
Three Months Ended Six Months Ended

December 28, September 28, December 29, December 28, December 29,

2014 2014 2013 2014 2013
Net income $ 123,602 $ 129,459 $ 104,751 $ 253,061 $ 212,619
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 13,555 13,214 12,792 26,769 25,627
Stock-based compensation 17,919 16,947 16,991 34,866 32,847
Amortization of convertible senior
notes discount - - 5,524 - 10,970
Excess tax benefit from stock-based
compensation (2,548) (2,202) (300) (4,750) (1,829) Change in operating assets and
liabilities: (4,571) (21,042) 28,986 (25,613) 10,708
Cash provided by operating activities 147,957 136,376 168,744 284,333 290,942
Cash flow from investing activities:
Net (purchases) and proceeds from sale and maturities of available-for-sale
securities (55,632) (26,426) 9,466 (82,058) 93,018
Purchase of property, plant and
equipment (16,201) (26,917) (4,009) (43,118) (7,897)
Cash (used in) provided by investing
activities (71,833) (53,343) 5,457 (125,176) 85,121
Cash flow from financing activities:

Excess tax benefit from stock-based compensation

2,548

2,202

300

4,750

1,829

Issuance of common stock under employee stock plans

12,092

3,323

37,861

15,415

59,516

Purchase of common stock

(34,709)

(34,086)

(12,182)

(68,795)

(26,853)

Payment of cash dividends (65,822) (65,739) (62,023) (131,561) (124,082)
Cash used in financing activities (85,891) (94,300) (36,044) (180,191) (89,590)
(Decrease) increase in cash and cash
equivalents (9,767) (11,267) 138,157 (21,034) 286,473
Cash and cash equivalents, beginning of

period 146,056 157,323 274,966 157,323 126,650 Cash and cash equivalents, end of period $ 136,289 $ 146,056 $ 413,123 $ 136,289 $ 413,123

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