MAXIM INTEGRATED PRODUCTS, INC. SAN JOSE, Calif., Oct. 23, 2014 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $580 million for its first quarter of fiscal 2015 ended September 27, 2014, a 10% decrease from the $642 million revenue recorded in the prior quarter, and a 1% decrease year over year.
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Tunc Doluca, President and Chief Executive Officer, commented, "Our September quarter revenue performance was at the low end of our expectations, driven by weakness in smartphone revenue. This continued weakness was the catalyst for our decision to lower operating spending and reduce our manufacturing cost structure. These actions will enable us to improve Maxim's profitability and focus our investment in opportunities with higher returns." Mr. Doluca continued, "I am confident in our strategy in mixed-signal and analog integration, which is bearing fruit, as evidenced by the strong year-over-year revenue growth performance of every one of our segments outside of Consumer."
Fiscal Year 2015 First Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the September quarter was $0.35. The results were affected by special items which primarily consisted of $24 million in pre-tax charges related to acquisitions, $13 million in pre-tax charges related to impairment of long-lived assets and other items, and a $22 million benefit for income taxes. GAAP earnings per share, excluding special items was $0.38. 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 first quarter of fiscal 2015, total cash, cash equivalents and short term investments was $1.32 billion, a decrease of $53 million from the prior quarter. Notable items included:
-- Cash flow from operations: $117 million
-- Net capital expenditures: $31 million
-- Dividends: $80 million ($0.28 per share)
-- Stock repurchases: $63 million
Business Outlook
The Company's 90-day backlog at the beginning of the second fiscal quarter of 2015 was $379 million. Based on the beginning backlog and expected turns, results for the December 2014 quarter are expected to be as follows:
-- Revenue: $540 million to $580 million
-- Gross Margin: 55% to 59% GAAP (58% to 62% excluding special items)
-- EPS: $0.19 to $0.25 GAAP ($0.26 to $0.32 excluding special items)
Maxim Integrated's business outlook does not include the potential impact of any restructuring activity, acquisitions, or other business combinations that may be completed during the quarter.
Dividend
A cash dividend of $0.28 per share will be paid on December 4, 2014, to stockholders of record on November 20, 2014.
Conference Call
Maxim Integrated has scheduled a conference call on October 23, 2014, at 2:00 p.m. Pacific Time to discuss its financial results for the first quarter of fiscal 2015 and its business outlook. To listen via telephone, dial (866) 804-3547 (toll free) or (703) 639-1328. This call will be webcast by Shareholder.com and can be accessed at the Company's website at www.maximintegrated.com/company/investor.
A presentation summarizing financial information to be discussed on the conference call is posted at www.maximintegrated.com/company/investor.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
------------------
September 27, June 28, September 28,
2014 2014 2013
---- ---- ----
(in thousands, except per share data)
Net revenues $580,275 $642,467 $585,241
Cost of goods sold 241,454 273,507 238,045
Gross margin 338,821 368,960 347,196
------- ------- -------
Operating expenses:
Research and development 140,362 143,802 129,902
Selling, general and
administrative 79,989 83,153 77,430
Intangible asset amortization 4,327 4,423 3,436
Impairment of long-lived assets
(1) 10,226 6,447 -
Severance and restructuring
expenses (2) 1,385 5,790 5,547
Other operating expenses (income),
net (3) 1,574 8,795 2,272
Total operating expenses 237,863 252,410 218,587
------- ------- -------
Operating income 100,958 116,550 128,609
Interest and other income
(expense), net (4) (6,477) (8,943) (3,463)
------ ------ ------
Income before provision for income
taxes 94,481 107,607 125,146
Provision (benefit) for income
taxes (5,6) (5,499) 22,814 22,026
------ ------ ------
Net Income $99,980 $84,793 $103,120
Earnings per share:
Basic $0.35 $0.30 $0.36
===== ===== =====
Diluted $0.35 $0.29 $0.36
===== ===== =====
Shares used in the calculation of
earnings per share:
Basic 284,086 283,431 284,654
======= ======= =======
Diluted 289,430 289,487 290,260
======= ======= =======
Dividends paid per share $0.28 $0.26 $0.26
===== ===== =====
SCHEDULE OF SPECIAL ITEMS
(Unaudited)
Three Months Ended
------------------
September 27, June 28, September 28,
2014 2014 2013
---- ---- ----
(in thousands)
Cost of goods sold:
Intangible asset amortization $18,750 $18,750 $8,092
Acquisition-related inventory
write-up - 371 -
Total $18,750 $19,121 $8,092
======= ======= ======
Operating expenses:
Intangible asset amortization $4,327 $4,423 $3,436
Impairment of long-lived assets
(1) 10,226 6,447 -
Severance and restructuring (2) 1,385 5,790 5,547
Other operating expenses (income),
net (3) 1,574 8,795 2,272
Total $17,512 $25,455 $11,255
======= ======= =======
Interest and other expense
(income), net (4) $ - $2,432 $ -
Total $ - $2,432 $ -
============= ====== =============
Provision (benefit) for income
taxes:
Fixed assets tax basis adjustment
(5) $ - $(1,041) $ -
Reversal of tax reserves (6) (21,747) - -
Total $(21,747) $(1,041) $ -
======== ======= =============
(1) Includes impairment charges relating to EDA software,
wafer fab tools, land and buildings held-for-sale, and
end of line manufacturing equipment.
(2) include severance charges associated with the
reorganizaton of various business units and manufacturing
operations.
(3) Other operating expenses (income), net are primarily
for loss (gain) relating to sale of land and buildings,
reserve for uncollectible note related to a divestiture,
expected loss on rent expense, and contingent
consideration adjustments related to certain acquisitions.
(4) Includes impairment of investment in a privately-held
company.
(5) Includes one-time fixed asset tax basis adjustments
relating to prior year depreciation expense.
(6) Reversal of tax reserves related to the favorable
settlement of a foreign tax issue.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 27, June 28, September 28,
2014 2014 2013
---- ---- ----
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $1,243,883 $1,322,472 $1,009,547
Short-term investments 75,094 49,953 25,036
------ ------ ------
Total cash, cash equivalents and short-
term investments 1,318,977 1,372,425 1,034,583
Accounts receivable, net 281,932 295,828 297,888
Inventories 305,108 289,292 278,218
Deferred tax assets 54,379 74,597 54,854
Other current assets 67,383 54,560 116,225
------ ------ -------
Total current assets 2,027,779 2,086,702 1,781,768
Property, plant and equipment, net 1,303,861 1,331,519 1,374,544
Intangible assets, net 337,917 360,994 145,618
Goodwill 595,441 596,637 422,004
Other assets 40,127 29,766 40,063
TOTAL ASSETS $4,305,125 $4,405,618 $3,763,997
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $96,347 $102,076 $101,060
Income taxes payable 20,122 20,065 21,799
Accrued salary and related expenses 126,624 186,732 124,954
Accrued expenses 65,216 63,656 55,561
Current portion of long-term debt - 372 4,804
Deferred income on shipments to
distributors 26,821 25,734 27,179
------ ------ ------
Total current liabilities 335,130 398,635 335,357
Long-term debt 1,001,026 1,001,026 500,955
Income taxes payable 350,396 362,802 294,728
Deferred tax liabilities 145,597 159,879 205,221
Other liabilities 61,572 53,365 29,300
Total liabilities 1,893,721 1,975,707 1,365,561
--------- --------- ---------
Stockholders' equity:
Common stock par value 284 285 283
Additional paid-in capital - 23,005 -
Retained earnings 2,430,194 2,423,794 2,412,262
Accumulated other comprehensive loss (19,074) (17,173) (14,109)
Total stockholders' equity 2,411,404 2,429,911 2,398,436
--------- --------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $4,305,125 $4,405,618 $3,763,997
========== ========== ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 27, June 28, September 28,
2014 2014 2013
---- ---- ----
(in thousands)
Cash flows from operating
activities:
Net income $99,980 $84,793 $103,120
Adjustments to reconcile net
income to net cash provided by
operating activities:
Stock-based compensation 22,420 21,786 18,740
Depreciation and amortization 63,693 64,391 51,133
Deferred taxes 6,207 (9,501) 25,529
Loss (gain) from sale of property,
plant and equipment 244 1,068 36
Tax benefit (shortfall) related to
stock-based compensation 1,610 942 (3,488)
Impairment of long-lived assets 10,226 6,447 -
Excess tax benefit from stock-
based compensation (2,249) (4,897) (1,697)
Impairment of investments in
privately-held companies - 6,537 -
Changes in assets and liabilities:
Accounts receivable 13,896 8,300 (12,450)
Inventories (15,650) 1,226 (2,301)
Other current assets (24,974) 26,579 (18,546)
Accounts payable 4,455 5,203 (9,162)
Income taxes payable (12,289) 9,853 11,393
Deferred revenue on shipments to
distributors 1,087 1,475 622
All other accrued liabilities (51,659) 9,882 (67,035)
Net cash provided by (used in)
operating activities 116,997 234,084 95,894
------- ------- ------
Cash flows from investing
activities:
Purchase of property, plant and
equipment (31,686) (23,654) (36,329)
Proceeds from sales of property,
plant and equipment 212 1,627 3,048
Purchases of available-for-sale
securities (25,142) (49,953) -
Net cash provided by (used in)
investing activities (56,616) (71,980) (33,281)
------- ------- -------
Cash flows from financing
activities:
Excess tax benefit from stock-
based compensation 2,249 4,897 1,697
Repayment of notes payable (437) (2,430) -
Issuance of debt - - 100
Net issuance of restricted stock
units (8,038) (8,922) (6,966)
Proceeds from stock options
exercised 9,704 26,232 5,247
Repurchase of common stock (62,685) (40,744) (154,386)
Issuance of ESPP shares under
employee stock purchase program - 23,713 -
Dividends paid (79,763) (73,626) (73,744)
Net cash provided by (used in)
financing activities (138,970) (70,880) (228,052)
-------- ------- --------
Net increase (decrease) in cash
and cash equivalents (78,589) 91,224 (165,439)
Cash and cash equivalents:
Beginning of period 1,322,472 1,231,248 1,174,986
---------
End of period $1,243,883 $1,322,472 $1,009,547
========== ========== ==========
Total cash, cash equivalents and
short-term investments $1,318,977 $1,372,425 $1,034,583
========== ========== ==========
ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
(Unaudited)
Three Months Ended
------------------
September 27, June 28, September 28,
2014 2014 2013
---- ---- ----
(in thousands, except per share data)
Reconciliation of GAAP gross profit
to GAAP gross profit excluding
special items:
------------------------------------
GAAP gross profit $338,821 $368,960 $347,196
GAAP gross profit % 58.4% 57.4% 59.3%
Special items:
Intangible asset amortization 18,750 18,750 8,092
Acquisition-related inventory write-
up - - 371 -
Total special items 18,750 19,121 8,092
------ ------ -----
GAAP gross profit excluding special
items $357,571 $388,081 $355,288
GAAP gross profit % excluding special
items 61.6% 60.4% 60.7%
Reconciliation of GAAP operating
expenses to GAAP operating expenses
excluding special items:
------------------------------------
GAAP operating expenses $237,863 $252,410 $218,587
Special items:
Intangible asset amortization 4,327 4,423 3,436
Impairment of long-lived assets (1) 10,226 6,447 -
Severance and restructuring (2) 1,385 5,790 5,547
Other operating expenses (income),
net (3) 1,574 8,795 2,272
Total special items 17,512 25,455 11,255
------ ------ ------
GAAP operating expenses excluding
special items $220,351 $226,955 $207,332
======== ======== ========
Reconciliation of GAAP net income to
GAAP net income excluding special
items:
-------------------------------------
GAAP net income $99,980 $84,793 $103,120
Special items:
Intangible asset amortization 23,077 23,173 11,528
Acquisition-related inventory write-
up - 371 -
Impairment of long-lived assets (1) 10,226 6,447 -
Severance and restructuring (2) 1,385 5,790 5,547
Other operating expenses (income),
net (3) 1,574 8,795 2,272
Interest and other expense, net (4) - 2,432 -
--- ----- ---
Pre-tax total special items 36,262 47,008 19,347
Tax effect of special items (5,873) (6,850) (2,981)
Fixed asset tax basis adjustment (5) - (1,041) -
Reversal of tax reserves (6) (21,747) - -
GAAP net income excluding special
items $108,622 $123,910 $119,486
======== ======== ========
GAAP net income per share excluding
special items:
Basic $0.38 $0.44 $0.42
===== ===== =====
Diluted $0.38 $0.43 $0.41
===== ===== =====
Shares used in the calculation of
earnings per share excluding special
items:
Basic 284,086 283,431 284,654
======= ======= =======
Diluted 289,430 289,487 290,260
======= ======= =======
(1) Includes impairment charges relating to EDA software, wafer
fab tools, land and buildings held-for-sale, and end of line
manufacturing equipment.
(2) include severance charges associated with the reorganizaton
of various business units and manufacturing operations.
(3) Other operating expenses (income), net are primarily for
loss (gain) relating to sale of land and buildings, reserve for
uncollectible note related to a divestiture, expected loss on
rent expense, and contingent consideration adjustments related
to certain acquisitions.
(4) Includes impairment of investment in a privately-held
company.
(5) Includes one-time fixed asset tax basis adjustments
relating to prior year depreciation expense.
(6) Reversal of tax reserves related to the favorable settlement
of a foreign tax issue.
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; acquisition-related inventory write-up; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; expected loss on rent expense; reserve for uncollectible note related to a divestiture; loss (gain) relating to sale of land and buildings; impairment of investments in privately-held companies; tax provision impacts due to fixed asset tax basis adjustments; and reversal of tax reserves related to a favorable settlement of a foreign tax issue. 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 and acquisition-related inventory write-up. 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; acquisition-related inventory write-up; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; expected loss on rent expense; reserve for uncollectible note related to a divestiture; loss (gain) relating to sale of land and buildings and impairment of investments in privately-held companies. 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 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; acquisition-related inventory write-up; impairment of long-lived assets; severance and restructuring; contingent consideration adjustments relating to certain acquisitions; expected loss on rent expense; reserve for uncollectible note related to a divestiture; loss (gain) relating to sale of land and buildings; impairment of investments in privately-held companies; tax provision impacts due to fixed asset tax basis adjustments; and reversal of tax reserves related to a favorable settlement of a foreign tax issue. 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 second quarter of fiscal 2015 ending in December 2014, which includes revenue, gross margin and earnings per share, as well as the Company's belief that, its decisions to lower operating spending R&D spending and reduce its manufacturing cost structure, will enable it to improve Maxim's profitability and enable focused investment in opportunities with higher returns. 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, the loss of all or a substantial portion of our sales to one 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 28, 2014 (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 Integrated
Maxim is the leader in analog integration. From mobile to industrial solutions, we're making analog smaller, smarter, and more energy efficient. Learn more at www.maximintegrated.com.
Contact
Kathy Ta
Managing Director, Investor Relations
(408) 601-5697
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SOURCE Maxim Integrated Products, Inc.
