Investor Relations

Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2016

April 21, 2016

- Revenue: $555 million
- Gross Margin: 57.4% GAAP (61.4% excluding special items)
- EPS: $0.48 GAAP profit ($0.41 profit excluding special items)
- Cash, cash equivalents, and short term investments: $1.86 billion
- Fiscal fourth quarter revenue outlook: $555 million to $595 million

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.

 Logo for Maxim Integrated Products Inc.

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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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/maxim-integrated-reports-results-for-the-third-quarter-of-fiscal-2016-300255555.html

SOURCE Maxim Integrated Investor Relations

Contact Investor Relations

Kathy Ta Vice President, Investor Relations 408-601-5697 Kathy.Ta@maximintegrated.com
Mike Chu Director, Investor Relations 408-601-3370 Michael.Chu@maximintegrated.com

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