Maxim Integrated Reports Results For The First Quarter Of Fiscal 2014

SAN JOSE, Calif., Oct. 24, 2013 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $585 million for its first quarter of fiscal 2014 ended September 28, 2013, a 4% decrease from the $608 million revenue recorded in the prior quarter. Fiscal first quarter results exclude Volterra Semiconductor.

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Tunc Doluca, President and Chief Executive Officer, commented, "We are pleased that our first quarter results came in as expectedas our diversified business model continues to serve us well. We also completed the acquisition of Volterra Semiconductor earlier this month and are excited to have the team on board."

Fiscal Year 2014 First Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the September quarter was $0.36. The results were affected by special items which primarily consisted of:

• $12 million pre-tax charge for acquisition related items
• $3 million pre-tax charge for expenses related to the Volterra acquisition
• $6 million pre-tax charge for restructuring and severance

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 our first quarter of fiscal 2014, total cash, cash equivalents and short term investments was $1.03 billion, a decrease of $165 million from the prior quarter. Notable items include:

• Cash flow from operations: $96 million
• Net capital expenditures: $33 million
• Dividends: $74 million ($0.26 per share)
• Stock repurchases: $154 million

Business Outlook
The Company's 90 day backlog at the beginning of the second fiscal quarter of 2014 was $417 million including $27 million of Volterra backlog. Based on our beginning backlog and expected turns, results for the December 2013 quarter including Volterra are expected to be:

• Revenue: $605 million to $635 million (including $35 million to $37 million from Volterra)
• Gross Margin: 58% to 61% GAAP (59% to 62% excluding special items)
• EPS: $0.34 to $0.38 GAAP ($0.37 to $0.41 excluding special items)

Maxim Integrated's business outlook does not include the impact of special items related to the Volterra acquisition or the potential impact of any restructuring activity or mergers, acquisitions, or other business combinations that may be completed during the quarter.

Dividend
A cash dividend of $0.26 per share will be paid on December 5, 2013, to stockholders of record on November 21, 2013.

Conference Call
Maxim Integrated has scheduled a conference call on October 24, 2013, at 2:00 p.m. Pacific Time to discuss its financial results for the first quarter of fiscal 2014 and its business outlook. To listen via telephone, dial [phone] (toll free) or [phone]. This call will be webcast by Shareholder.com and can be accessed at the Company's website at www.maximintegrated.com/company/investor.

	CONSOLIDATED STATEMENTS OF INCOME
	(Unaudited)
			Three Months Ended
			September 28,		June 29,		September 29,
			2013		2013		2012
			(in thousands, except per share data)
	Net revenues		$ 585,241		$ 608,194		$ 623,075
	Cost of goods sold		238,045		236,795		237,384
	Gross margin		347,196		371,399		385,691
	Operating expenses:
	Research and development		129,902		132,009		132,930
	Selling, general and administrative		77,430		82,083		80,187
	Intangible asset amortization		3,436		3,670		4,049
	Impairment of long-lived assets		-		-		2,707
	Severance and restructuring expenses (1)		5,547		442		-
	Other operating expenses (income), net (2)		2,272		2,105		415
	Total operating expenses		218,587		220,309		220,288
	Operating income		128,609		151,090		165,403
	Interest and other income (expense), net (3)		(3,463)		(6,830)		(5,742)
	Income before provision for income taxes		125,146		144,260		159,661
	Provision for income taxes		22,026		25,246		31,773
	Net income		$ 103,120		$ 119,014		$ 127,888
	Earnings per share:
	Basic		$ 0.36		$ 0.41		$ 0.44
	Diluted		$ 0.36		$ 0.40		$ 0.43
	Shares used in the calculation of earnings per share:
	Basic		284,654		290,146		292,213
	Diluted		290,260		296,756		298,782
	Dividends paid per share		$ 0.26		$ 0.24		$ 0.24
	SCHEDULE OF SPECIAL EXPENSE ITEMS
	(Unaudited)
			Three Months Ended
			September 28,		June 29,		September 29,
			2013		2013		2012
			(in thousands)
	Cost of goods sold:
	Intangible asset amortization		$ 8,092		$ 7,777		$ 9,454
	Total		$ 8,092		$ 7,777		$ 9,454
	Operating expenses:
	Intangible asset amortization		$ 3,436		$ 3,670		$ 4,049
	Impairment of long-lived assets		-		-		2,707
	Severance and restructuring (1)		5,547		442		-
	Other operating expenses (income), net (2)		2,272		2,105		415
	Total		$ 11,255		$ 6,217		$ 7,171
	Interest and other expense (income), net (3)		$ -		$ 700		$ -
	Total		$ -		$ 700		$ -
	(1) Includes severance charges associated with the reorganization of various business units and manufacturing operations.
	(2) Other operating expenses (income), net are primarily for certain payroll taxes, contingent consideration adjustments related to certain acquisitions, loss (gain) relating to sale of land and buildings, acquisition related expenses and loss on lease abandonment.
	(3) Includes impairment of investment in a privately held company.

	STOCK-BASED COMPENSATION BY TYPE OF AWARD (in thousands)
	(Unaudited)
	Three Months Ended September 28, 2013	Stock Options		Restricted Stock Units		Employee Stock Purchase Plan		Total
	Cost of goods sold	$ 349		$ 1,918		$ 475		$ 2,742
	Research and development expense	1,836		6,440		1,322		$ 9,598
	Selling, general and administrative expense	1,264		4,527		609		$ 6,400
	Total	$ 3,449		$ 12,885		$ 2,406		$ 18,740
	Three Months Ended June 29, 2013
	Cost of goods sold	$ 320		$ 1,999		$ 559		$ 2,878
	Research and development expense	1,673		6,748		1,226		9,647
	Selling, general and administrative expense	1,333		4,488		507		6,328
	Total	$ 3,326		$ 13,235		$ 2,292		$ 18,853
	Three Months Ended September 29, 2012
	Cost of goods sold	$ 398		$ 2,171		$ 419		$ 2,988
	Research and development expense	1,829		9,210		1,284		12,323
	Selling, general and administrative expense	1,555		5,119		512		7,186
	Total	$ 3,782		$ 16,500		$ 2,215		$ 22,497

	CONSOLIDATED BALANCE SHEETS
	(Unaudited)
		September 28,		June 29,		September 29,
		2013		2013		2012
		(in thousands)
	ASSETS
	Current assets:
	Cash and cash equivalents	$ 1,009,547		$ 1,174,986		$ 849,850
	Short-term investments	25,036		25,060		75,283
	Total cash, cash equivalents and short-term investments	1,034,583		1,200,046		925,133
	Accounts receivable, net	297,888		285,438		316,538
	Inventories	278,218		275,640		258,689
	Deferred tax assets	54,854		82,173		71,561
	Other current assets	116,225		96,609		94,875
	Total current assets	1,781,768		1,939,906		1,666,796
	Property, plant and equipment, net	1,374,544		1,373,124		1,359,882
	Intangible assets, net	145,618		157,146		195,410
	Goodwill	422,004		422,004		422,083
	Other assets	40,063		43,730		60,403
	TOTAL ASSETS	$ 3,763,997		$ 3,935,910		$ 3,704,574
	LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
	Accounts payable	$ 101,060		$ 105,322		$ 127,306
	Income taxes payable	21,799		22,437		19,437
	Accrued salary and related expenses	124,954		187,970		132,847
	Accrued expenses	55,561		60,592		72,510
	Current portion of long term debt	4,804		2,015		303,272
	Deferred income on shipments to distributors	27,179		26,557		27,025
	Total current liabilities	335,357		404,893		682,397
	Long term debt	500,955		503,573		5,592
	Income taxes payable	294,728		282,697		226,001
	Deferred tax liabilities	205,221		206,855		195,893
	Other liabilities	29,300		29,894		26,254
	Total liabilities	1,365,561		1,427,912		1,136,137
	Stockholders' equity:
	Common stock	283		288		292
	Retained earnings	2,412,262		2,523,457		2,583,060
	Accumulated other comprehensive loss	(14,109)		(15,747)		(14,915)
	Total stockholders' equity	2,398,436		2,507,998		2,568,437
	TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$ 3,763,997		$ 3,935,910		$ 3,704,574

	CONSOLIDATED STATEMENTS OF CASH FLOWS
	(Unaudited)
		Three Months Ended
		September 28,		June 29,		September 29,
		2013		2013		2012
		(in thousands)
	Cash flows from operating activities:
	Net income	$ 103,120		$ 119,014		$ 127,888
	Adjustments to reconcile net income to net cash provided by operating activities:
	Stock-based compensation	18,740		18,853		22,497
	Depreciation and amortization	51,133		51,191		53,674
	Deferred taxes	25,529		(2,813)		22,772
	Loss (gain) from sale of property, plant and equipment	36		1,380		(51)
	Tax benefit (shortfall) related to stock-based compensation	(3,488)		358		1,335
	Impairment of long-lived assets	-		-		2,707
	Excess tax benefit from stock-based compensation	(1,697)		(2,792)		(5,219)
	Changes in assets and liabilities:
	Accounts receivable	(12,450)		14,608		923
	Inventories	(2,301)		(7,657)		(16,015)
	Other current assets	(18,546)		(2,132)		(7,839)
	Accounts payable	(9,162)		(6,961)		(26,466)
	Income taxes payable	11,393		13,118		10,461
	Deferred revenue on shipments to distributors	622		706		745
	All other accrued liabilities	(67,035)		17,527		(50,667)
	Net cash provided by (used in) operating activities	95,894		214,400		136,745
	Cash flows from investing activities:
	Payments for property, plant and equipment	(36,329)		(48,922)		(50,703)
	Proceeds from sales of property, plant and equipment	3,048		4,538		344
	Proceeds from sales of property, plant and equipment through note receivable	-		10,786		-
	Acquisitions	-		(2,767)		-
	Purchases of privately-held companies securities	-		(500)		-
	Proceeds from sales of investments of privately-held companies	-		585		-
	Net cash provided by (used in) investing activities	(33,281)		(36,280)		(50,359)
	Cash flows from financing activities:
	Excess tax benefit from stock-based compensation	1,697		2,792		5,219
	Contingent consideration paid	-		(6,305)		-
	Dividends paid	(73,744)		(69,532)		(70,199)
	Repayment of notes payable	-		(302,299)		(224)
	Issuance of debt	100		-		-
	Debt issuance cost	-		(671)		-
	Repurchase of common stock	(154,386)		(193,221)		(65,149)
	Issuance of ESPP	-		19,529		-
	Net issuance of restricted stock units	(6,966)		(7,456)		(7,107)
	Proceeds from stock options exercised	5,247		6,049		19,864
	Net cash provided by (used in) financing activities	(228,052)		(551,114)		(117,596)
	Net increase (decrease) in cash and cash equivalents	(165,439)		(372,994)		(31,210)
	Cash and cash equivalents:
	Beginning of period	1,174,986		1,547,980		881,060
	End of period	$ 1,009,547		$ 1,174,986		$ 849,850
	Total cash, cash equivalents, and short-term investments	$ 1,034,583		$ 1,200,046		$ 925,133

	ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL EXPENSE ITEMS DISCLOSURES
	(Unaudited)
			Three Months Ended
			September 28,		June 29,		September 29,
			2013		2013		2012
			(in thousands, except per share data)
	Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:
	GAAP gross profit		$ 347,196		$ 371,399		$ 385,691
	GAAP gross profit %		59.3%		61.1%		61.9%
	Special expense items:
	Intangible asset amortization		8,092		7,777		9,454
	Total special expense items		8,092		7,777		9,454
	GAAP gross profit excluding special expense items		$ 355,288		$ 379,176		$ 395,145
	GAAP gross profit % excluding special expense items		60.7%		62.3%		63.4%
	Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:
	GAAP operating expenses		$ 218,587		$ 220,309		$ 220,288
	Special expense (income) items:
	Intangible asset amortization		3,436		3,670		4,049
	Impairment of long-lived assets		-		-		2,707
	Severance and restructuring (1)		5,547		442		-
	Other operating expenses (income), net (2)		2,272		2,105		415
	Total special expense items		11,255		6,217		7,171
	GAAP operating expenses excluding special expense items		$ 207,332		$ 214,092		$ 213,117
	Reconciliation of GAAP net income to GAAP net income excluding special items:
	GAAP net income		$ 103,120		$ 119,014		$ 127,888
	Special expense (income) items:
	Intangible asset amortization		11,528		11,447		13,503
	Impairment of long-lived assets		-		-		2,707
	Severance and restructuring (1)		5,547		442		-
	Other operating expenses (income) , net (2)		2,272		2,105		415
	Interest and other expense, net (3)		-		700		-
	Pre-tax total special expense items		19,347		14,694		16,625
	Tax effect of special items		(2,981)		(4,231)		(5,371)
	GAAP net income excluding special expense items		$ 119,486		$ 129,477		$ 139,142
	GAAP net income per share excluding special expense items:
	Basic		$ 0.42		$ 0.45		$ 0.48
	Diluted		$ 0.41		$ 0.44		$ 0.47
	Shares used in the calculation of earnings per share excluding special expense items:
	Basic		284,654		290,146		292,213
	Diluted		290,260		296,756		298,782
	(1) Includes severance charges associated with the reorganization of various business units and manufacturing operations.
	(2) Other operating expenses (income), net are primarily for certain payroll taxes, contingent consideration adjustments related to certain acquisitions, loss (gain) relating to sale of land and buildings, acquisition related expenses and loss on lease abandonment.
	(3) Includes impairment of investment in a privately held company.

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; impairment of long-lived assets; severance and restructuring; in-process research and development; contingent consideration adjustments relating to certain acquisitions; loss (gain) relating to sale of land and buildings; certain payroll taxes; loss on lease abandonment; acquisition related expenses; and an impairment of investment in a privately held company. 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. 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; in-process research and development; contingent consideration adjustments relating to certain acquisitions; loss (gain) relating to sale of land and buildings; certain payroll taxes; loss on lease abandonment; and acquisition related expenses. 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; impairment of long-lived assets; severance and restructuring; in-process research and development; contingent consideration adjustments relating to certain acquisitions; loss (gain) relating to sale of land and buildings; certain payroll taxes; loss on lease abandonment; acquisition related expenses; and an impairment of investment in a privately held company. 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 2014 ending in December 2013, which includes revenue, gross margin and earnings per share. 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, 2013 (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
At Maxim Integrated, we put analog together in a way that sets our customers apart. In Fiscal 2013, we reported revenues of $2.4 billion. For more information, go to www.maximintegrated.com.

Contact
Venk Nathamuni
Managing Director, Investor Relations
[phone]

SOURCE Maxim Integrated Products, Inc.