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%.”

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.com or 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.com and www.streetevents.com as 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,
2014 		September 28,
2014 		December 29,
2013 		December 28,
2014 		December 29,
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) 65,101 65,600 62,008 130,701 123,520
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 charges:
(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)

 
December 28, 2014 June 29, 2014
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities $ 1,072,866 $ 1,012,787

Accounts receivable, net of allowance for doubtful accounts of $1,651 ($1,653 at June 29, 2014)

148,584 173,340
Inventories 100,141 91,310
Deferred tax assets and other current assets   99,743     87,276  
Total current assets   1,421,334     1,364,713  
 
Property, plant & equipment, net 294,529 277,080
Other noncurrent assets   12,685     13,785  
Total assets $ 1,728,548   $ 1,655,578  
 
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 20,017 $ 28,221
Accrued income taxes, payroll & other accrued liabilities 102,690 141,275
Deferred income on shipments to distributors   47,083     45,619  
Total current liabilities   169,790     215,115  
 
Deferred tax and other noncurrent liabilities 120,266 109,094
 
Stockholders’ equity:
Common stock 1,989,563 1,948,006
Accumulated deficit (550,813 ) (616,992 )
Accumulated other comprehensive loss   (258 )   355  
Total stockholders’ equity   1,438,492     1,331,369  
$ 1,728,548   $ 1,655,578  
         

LINEAR TECHNOLOGY CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 
Three Months Ended Six Months Ended
December 28,
2014 		September 28,
2014 		December 29,
2013 		December 28,
2014 		December 29,
2013
Cash flow from operating activities:
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