MAXIM INTEGRATED PRODUCTS, INC. SAN JOSE, Calif., April 21, 2016 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $555 million for its third quarter of fiscal 2016 ended March 26, 2016, a 9% increase from the $511 million revenue recorded in the prior quarter, and a 4% decrease from the same quarter of last year.
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Tunc Doluca, President and Chief Executive Officer, commented, "Our third quarter financial performance was in line with our expectations, and we achieved additional milestones in our $180 million cost reduction plan." Mr. Doluca continued, "In our June quarter, we expect seasonal growth in Automotive and core Industrial, and a modest increase in Communications and Data Center. We are pleased with our design win momentum in high-performance power management and differentiated analog products, benefitting from our focused product portfolio."
Fiscal Year 2016 Third Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was a $0.48 profit. The results were affected by pre-tax special items which primarily consisted of a $59 million gain on sale of a business, $14 million in charges related to acquisitions, and $10 million in charges related to restructuring activities. GAAP earnings per share, excluding special items was $0.41. 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 2016, total cash, cash equivalents and short term investments were $1.86 billion, an increase of $87 million from the prior quarter. Notable items included:
-- Cash flow from operations: $168 million
-- Net capital expenditures: $17 million
-- Proceeds from sale of business: $105 million
-- Dividends: $86 million ($0.30 per share)
-- Stock repurchases: $84 million
Business Outlook
The Company's 90-day backlog at the beginning of the June quarter of 2016 was $370 million. Based on the beginning backlog and expected turns, results for the June 2016 quarter are expected to be as follows:
-- Revenue: $555 million to $595 million
-- Gross Margin: 59% to 61% GAAP (62% to 64% excluding special items)
-- EPS: $0.40 to $0.46 GAAP ($0.45 to $0.51 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 $0.30 per share will be paid on June 2, 2016, to stockholders of record on May 19, 2016.
Conference Call
Maxim Integrated has scheduled a conference call on April 21 at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal 2016 and its business outlook. To listen via telephone, dial (866) 802-4305 (toll free) or (703) 639-1317. 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.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
------------------
March 26, December 26, March 28,
2016 2015 2015
---- ---- ----
(in thousands, except per share data)
Net revenues $555,252 $510,831 $577,263
Cost of goods sold (1) (2) 236,411 218,662 261,995
Gross margin 318,841 292,169 315,268
Operating expenses:
Research and development 119,178 113,100 123,913
Selling, general and administrative 71,778 73,643 75,766
Intangible asset amortization 2,538 3,538 3,977
Impairment of long-lived assets 506 1,950 5,522
Severance and restructuring expenses 2,552 10,652 2,824
Other operating expenses (income), net
(3) (55,419) (247) (2,184)
Total operating expenses (income), net 141,133 202,636 209,818
Operating income (loss) 177,708 89,533 105,450
Interest and other income (expense), net (6,373) (9,593) (5,534)
Income (loss) before provision for
income taxes 171,335 79,940 99,916
Income tax provision (benefit) 31,525 12,471 20,483
Net income (loss) $139,810 $67,469 $79,433
Earnings (loss) per share:
Basic $0.49 $0.24 $0.28
Diluted $0.48 $0.23 $0.28
Shares used in the calculation of
earnings (loss) per share:
Basic 285,854 285,526 283,418
Diluted 289,783 290,521 288,840
Dividends paid per share $0.30 $0.30 $0.28
SCHEDULE OF SPECIAL ITEMS
(Unaudited)
Three Months Ended
------------------
March 26, December 26, March 28,
2016 2015 2015
---- ---- ----
(in thousands)
Cost of goods sold:
Intangible asset amortization $11,829 $14,734 $18,750
Accelerated depreciation (1) 4,066 2,032 9,834
Other cost of goods sold (2) 6,123 - -
Total $22,018 $16,766 $28,584
Operating expenses:
Intangible asset amortization $2,538 $3,538 $3,977
Impairment of long-lived assets 506 1,950 5,522
Severance and restructuring 2,552 10,652 2,824
Other operating expenses (income), net
(3) (55,419) (247) (2,184)
Total $(49,823) $15,893 $10,139
Interest and other expense (income), net $(45) $595 $ -
Total $(45) $595 $ -
Income tax provision (benefit) :
Fiscal year 2015 research & development
tax credits $ - $(2,475) $ -
Total $ - $(2,475) $ -
(1) Includes building and equipment accelerated depreciation related to
San Jose and Dallas manufacturing facilities.
(2) Includes expense related to patent license settlement.
(3) Includes gain on sale of energy metering business during the third
quarter of fiscal year 2016.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 26, December 26, March 28,
2016 2015 2015
---- ---- ----
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $1,710,340 $1,648,518 $1,392,197
Short-term investments 150,076 124,955 75,142
------- ------- ------
Total cash, cash equivalents and short-term
investments 1,860,416 1,773,473 1,467,339
Accounts receivable, net 278,502 231,180 278,427
Inventories 234,603 274,741 297,270
Deferred tax assets - - 71,354
Other current assets 88,389 47,235 66,298
------ ------ ------
Total current assets 2,461,910 2,326,629 2,180,688
Property, plant and equipment, net 748,781 770,548 1,155,589
Intangible assets, net 188,510 202,877 283,385
Goodwill 490,648 490,648 511,824
Other assets 77,886 64,105 36,231
Assets held for sale 13,733 82,674 -
TOTAL ASSETS $3,981,468 $3,937,481 $4,167,717
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $82,696 $74,145 $85,361
Income taxes payable 30,907 32,528 20,102
Accrued salary and related expenses 151,411 129,208 163,354
Accrued expenses 42,562 47,303 55,967
Deferred revenue on shipments to distributors 34,457 32,067 30,550
------ ------ ------
Total current liabilities 342,033 315,251 355,334
Long-term debt 1,000,000 1,000,000 1,000,000
Income taxes payable 451,099 419,881 385,838
Deferred tax liabilities 643 651 116,284
Other liabilities 48,930 52,874 56,412
Total liabilities 1,842,705 1,788,657 1,913,868
--------- --------- ---------
Stockholders' equity:
Common stock and capital in excess of par value 280 63,014 12,359
Retained earnings 2,154,767 2,103,339 2,260,011
Accumulated other comprehensive loss (16,284) (17,529) (18,521)
Total stockholders' equity 2,138,763 2,148,824 2,253,849
--------- --------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $3,981,468 $3,937,481 $4,167,717
========== ========== ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 26, December 26, March 28,
2016 2015 2015
---- ---- ----
(in thousands)
Cash flows from operating activities:
Net income (loss) $139,810 $67,469 $79,433
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Stock-based compensation 17,875 18,419 18,586
Depreciation and amortization 47,088 49,082 71,439
Deferred taxes (333) 18,816 (15,658)
Loss (gain) from sale of property, plant and
equipment 3,098 (4,517) (441)
Loss (gain) on sale of business (58,944) - -
Tax benefit (shortfall) related to stock-based
compensation 545 1,980 7,635
Impairment of long-lived assets 506 1,950 5,522
Excess tax benefit from stock-based
compensation (1,491) (3,920) (5,997)
Changes in assets and liabilities:
Accounts receivable (47,322) 51,291 (19,921)
Inventories 22,785 15,811 9,194
Other current assets (8,947) (918) (156)
Accounts payable 8,683 (7,659) 477
Income taxes payable 29,597 (26,875) 22,587
Deferred revenue on shipments to distributors 2,390 (3,024) 3,447
All other accrued liabilities 12,646 4,584 5,917
Net cash provided by (used in) operating
activities 167,986 182,489 182,064
------- ------- -------
Cash flows from investing activities:
Payments for property, plant and equipment (17,530) (13,530) (10,185)
Proceeds from sales of property, plant and
equipment 136 49,709 1,615
Proceeds from sales of business 105,000 - -
Purchases of available-for-sale securities (24,861) (25,032) -
Purchases of privately-held companies'
securities (1,921) (6,008) (200)
Other investing activities - 2,380 -
Proceeds from maturity of debt investment in
privately-held companies - - 500
Net cash provided by (used in) investing
activities 60,824 7,519 (8,270)
------ ----- ------
Cash flows from financing activities:
Excess tax benefit from stock-based
compensation 1,491 3,920 5,997
Net issuance of restricted stock units (8,853) (7,722) (8,369)
Proceeds from stock options exercised 9,889 48,477 31,098
Issuance of common stock under employee stock
purchase program - 14,350 -
Repurchase of common stock (83,801) (23,150) (36,774)
Dividends paid (85,714) (85,712) (79,419)
Net cash provided by (used in) financing
activities (166,988) (49,837) (87,467)
-------- ------- -------
Net increase (decrease) in cash and cash
equivalents 61,822 140,171 86,327
Cash and cash equivalents:
Beginning of period 1,648,518 1,508,347 1,305,870
End of period $1,710,340 $1,648,518 $1,392,197
========== ========== ==========
Total cash, cash equivalents, and short-term
investments $1,860,416 $1,773,473 $1,467,339
========== ========== ==========
ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
(Unaudited)
Three Months Ended
------------------
March 26, December 26, March 28,
2016 2015 2015
---- ---- ----
(in thousands, except per share data)
Reconciliation of GAAP gross profit to
GAAP gross profit excluding special
items:
---------------------------------------
GAAP gross profit $318,841 $292,169 $315,268
GAAP gross profit % 57.4% 57.2% 54.6%
Special items:
Intangible asset amortization 11,829 14,734 18,750
Accelerated depreciation (1) 4,066 2,032 9,834
Other cost of goods sold (2) 6,123 - -
Total special items 22,018 16,766 28,584
------ ------ ------
GAAP gross profit excluding special
items $340,859 $308,935 $343,852
GAAP gross profit % excluding special
items 61.4% 60.5% 59.6%
Reconciliation of GAAP operating
expenses to GAAP operating expenses
excluding special items:
------------------------------------
GAAP operating expenses $141,133 $202,636 $209,818
Special items:
Intangible asset amortization 2,538 3,538 3,977
Impairment of long-lived assets 506 1,950 5,522
Severance and restructuring 2,552 10,652 2,824
Other operating expenses (income), net
(3) (55,419) (247) (2,184)
Total special items (49,823) 15,893 10,139
------- ------ ------
GAAP operating expenses excluding
special items $190,956 $186,743 $199,679
======== ======== ========
Reconciliation of GAAP net income
(loss) to GAAP net income excluding
special items:
------------------------------------
GAAP net income (loss) $139,810 $67,469 $79,433
Special items:
Intangible asset amortization 14,367 18,272 22,727
Accelerated depreciation (1) 4,066 2,032 9,834
Other cost of goods sold (2) 6,123 - -
Impairment of long-lived assets 506 1,950 5,522
Severance and restructuring 2,552 10,652 2,824
Other operating expenses (income), net
(3) (55,419) (247) (2,184)
Interest and other expense (income),
net (45) 595 -
Pre-tax total special items (27,850) 33,254 38,723
Fiscal year 2015 research & development
tax credits - (2,475) -
Other income tax effects and
adjustments (4) 5,698 (5,428) (3,910)
GAAP net income excluding special items $117,658 $92,820 $114,246
======== ======= ========
GAAP net income per share excluding
special items:
Basic $0.41 $0.33 $0.40
===== ===== =====
Diluted $0.41 $0.32 $0.40
===== ===== =====
Shares used in the calculation of
earnings per share excluding special
items:
Basic 285,854 285,526 283,418
======= ======= =======
Diluted 289,783 290,521 288,840
======= ======= =======
(1) Includes building and equipment accelerated depreciation related to
San Jose and Dallas manufacturing facilities.
(2) Includes expense related to patent license settlement.
(3) Includes gain on sale of energy metering business during the third
quarter of fiscal year 2016.
(4) 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; and other operating expenses (income), net; fiscal year 2015 research & development tax credit, 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; assumes the Federal research tax credit remains in effect throughout the entire year, and eliminates the effects of significant non-recurring and period specific tax items which vary in size and frequency. We are using a long-term tax rate of 18%, which is 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. We will review the long-term tax rate on an annual basis and 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.
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; and other operating expenses (income), net; fiscal year 2015 research & development tax credit; 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 fourth quarter of fiscal 2016 ending in June 2016, which includes revenue, gross margin and earnings per share, as well as the Company's expectation of seasonal growth in Automotive and core Industrial, and a modest increase in Communications and Data Center in the June 2016 quarter. 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 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 27, 2015 (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 bringing new levels of analog integration to automotive, cloud data center, mobile consumer, and industrial applications. We're making technology smaller, smarter, and more energy efficient, so that our customers can meet the demands of an integrated world. Learn more at http://www.maximintegrated.com.
Contact
Kathy Ta
Managing Director, Investor Relations
(408) 601-5697
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