-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SX8BRDOAmkNCz47h3XGgOsuD6bQLStyCQK1l75TO+XpUlxdyBq3i4AyKAlBb+dGy vG+kN/Cbs1sBTYtvoo1UmA== 0000891618-98-000418.txt : 19980206 0000891618-98-000418.hdr.sgml : 19980206 ACCESSION NUMBER: 0000891618-98-000418 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971227 FILED AS OF DATE: 19980205 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAXIM INTEGRATED PRODUCTS INC CENTRAL INDEX KEY: 0000743316 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 942896096 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16538 FILM NUMBER: 98522745 BUSINESS ADDRESS: STREET 1: 120 SAN GABRIEL DR CITY: SUNNYVALE STATE: CA ZIP: 94086 BUSINESS PHONE: 4087377600 MAIL ADDRESS: STREET 1: 120 SAN GABRIEL DR CITY: SUNNYVALE STATE: CA ZIP: 94086 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED DECEMBER 27, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 27, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________ COMMISSION FILE NO. 0-16538 MAXIM INTEGRATED PRODUCTS, INC. (Exact name of registrant as specified in its charter) DELAWARE 94-2896096 (State or Other Jurisdiction of (I.R.S. Employer I.D. No.) Incorporation or Organization) 120 SAN GABRIEL DRIVE, SUNNYVALE, CA 94086 (Address of Principal Executives Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (408) 737-7600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days: YES [X] NO[ ] CLASS:COMMON STOCK, OUTSTANDING AT JANUARY 30, 1997 $.001 PAR VALUE 130,943,860 SHARES 2 MAXIM INTEGRATED PRODUCTS, INC. INDEX
PART I. FINANCIAL INFORMATION PAGE ---- ITEM 1. Financial Statements Consolidated Balance Sheets 3 As of June 30, 1997 and December 27, 1997 Consolidated Statements of Income 4 for the three and six months ended December 31, 1996 and December 27, 1997 Consolidated Statements of Cash Flows 5 for the six months ended December 31, 1996 and December 27, 1997 Notes to Consolidated Financial Statements 6-7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders 11 ITEM 6. Reports on Form 8-K 11 SIGNATURE 12
2 3 CONSOLIDATED BALANCE SHEETS MAXIM INTEGRATED PRODUCTS, INC.
- -------------------------------------------------------------------------------- June 30, December 27, 1997 1997 (Amounts in thousands, except per share data) (Unaudited) ================================================================================ ASSETS - -------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 18,562 $ 12,679 Short-term investments 205,391 214,118 - -------------------------------------------------------------------------------- Total cash, cash equivalents and short-term investments 223,953 226,797 - -------------------------------------------------------------------------------- Accounts receivable, net 91,642 100,435 Inventories 36,833 38,534 Prepaid taxes and other current assets 24,579 27,344 - -------------------------------------------------------------------------------- Total current assets 377,007 393,110 - -------------------------------------------------------------------------------- Property, plant and equipment, at cost, less accumulated depreciation 174,508 233,625 Other assets 4,871 6,542 - -------------------------------------------------------------------------------- TOTAL ASSETS $ 556,386 $ 633,277 ================================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,249 $ 31,133 Income taxes payable 10,916 12,365 Accrued salaries 16,408 17,113 Accrued expenses 16,312 19,114 Deferred income on shipments to distributors 16,336 14,965 - -------------------------------------------------------------------------------- Total current liabilities 85,221 94,690 - -------------------------------------------------------------------------------- Deferred income taxes 1,600 1,600 Other liabilities 4,000 4,000 Commitments - -------------------------------------------------------------------------------- Stockholders' equity: Common stock 128 131 Additional paid-in capital 92,773 78,341 Retained earnings 373,770 456,563 Translation adjustment (1,106) (2,048) - -------------------------------------------------------------------------------- Total stockholders' equity 465,565 532,987 - -------------------------------------------------------------------------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 556,386 $ 633,277 ================================================================================
See accompanying notes 3 4 CONSOLIDATED STATEMENTS OF INCOME MAXIM INTEGRATED PRODUCTS, INC.
- ----------------------------------------------------------------------------------------- (Amounts in thousands, except per share data) Three months ended Six months ended - ----------------------------------------------------------------------------------------- December 31, December 27, December 31, December 27, (Unaudited) 1996 1997 1996 1997 ========================================================================================= Net revenues $104,686 $135,000 $205,686 $260,000 Cost of goods sold 35,530 44,550 68,557 86,050 - ----------------------------------------------------------------------------------------- Gross margin 69,156 90,450 137,129 173,950 - ----------------------------------------------------------------------------------------- Operating expenses: Research and development 11,471 17,013 23,367 32,493 Selling, general and administrative 9,039 11,811 18,987 22,745 - ----------------------------------------------------------------------------------------- Total operating expenses 20,510 28,824 42,354 55,238 - ----------------------------------------------------------------------------------------- Operating income 48,646 61,626 94,775 118,712 Interest income, net 1,830 3,266 3,264 6,732 - ----------------------------------------------------------------------------------------- Income before provision for income taxes 50,476 64,892 98,039 125,444 Provision for income taxes 17,162 22,063 33,333 42,651 - ----------------------------------------------------------------------------------------- Net income $ 33,314 $ 42,829 $ 64,706 $ 82,793 - ----------------------------------------------------------------------------------------- Basic income per share $ 0.27 $ 0.33 $ 0.52 $ 0.64 - ----------------------------------------------------------------------------------------- Shares used in the calculation of basic income per share 124,551 128,733 123,351 128,648 - ----------------------------------------------------------------------------------------- Diluted income per share $ 0.23 $ 0.29 $ 0.45 $ 0.55 - ----------------------------------------------------------------------------------------- Shares used in the calculation of diluted income per share 144,844 149,749 142,807 150,279 =========================================================================================
See accompanying notes 4 5 CONSOLIDATED STATEMENTS OF CASH FLOWS MAXIM INTEGRATED PRODUCTS, INC.
- ----------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents For the six months ended December 31, December 27, (Amounts in thousands)(unaudited) 1996 1997 ========================================================================================= Cash flows from operating activities: Net income $ 64,706 $ 82,793 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and translation adjustment 9,874 7,050 Reduction of equipment value 0 4,842 Changes in assets and liabilities: Accounts receivable (892) (8,793) Inventories (6,999) (1,701) Prepaid taxes and other current assets 410 (2,765) Accounts payable (10,670) 5,884 Income taxes payable 14,255 35,880 Deferred income taxes 0 0 Deferred income on shipments to distributors 1,399 (1,371) All other accrued liabilities 1,740 3,507 - ----------------------------------------------------------------------------------------- Net cash provided by operating activities 73,823 125,326 - ----------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (23,539) (71,951) Deposits and other non-current assets (263) (1,671) Purchases of held-to-maturity securities (24,313) 0 Purchases of available-for-sale securities (81,469) (95,329) Proceeds from maturities of held-to-maturity securities 31,849 0 Proceeds from sales/maturities of available-for-sale securities 0 86,602 - ----------------------------------------------------------------------------------------- Net cash used in investing activities (97,735) (82,349) - ----------------------------------------------------------------------------------------- Cash flows from financing activities: Issuance of common stock 16,586 16,779 Repurchase of common stock (17,088) (65,639) - ----------------------------------------------------------------------------------------- Net cash used in financing activities (502) (48,860) - ----------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (24,414) (5,883) Cash and cash equivalents: Beginning of year 60,283 18,562 - ----------------------------------------------------------------------------------------- End of period $ 35,869 $ 12,679 =========================================================================================
See accompanying notes 5 6 MAXIM INTEGRATED PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION The unaudited consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. The results of operations for the three and six months ended December 27, 1997 are not necessarily indicative of the results to be expected for the entire year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended June 30, 1997. Effective July 1, 1997, the Company adopted a 52-53 week fiscal year that will end on the last Saturday in June, and in which each accounting quarter will end on the last Saturday of the quarter. NOTE 2: INVENTORIES Inventories consist of (in thousands):
June 30, December 27, 1997 1997 ------- ------------ (unaudited) Raw materials $ 5,058 $ 3,124 Work in process 22,349 22,685 Finished goods 9,426 12,725 ------- ------- $36,833 $38,534 ======= =======
NOTE 3: INVESTMENT SECURITIES All investment securities owned at December 27, 1997 are classified as available-for-sale and are included in short-term investments. At December 27, 1997, all investment securities consist of U.S. Treasury and Federal Agency debt securities maturing within one year. Securities identified as available-for-sale are carried at fair market value. Unrealized gains and losses, net of tax, on securities in this category are reportable as a separate component of stockholders' equity. Because of the short term to maturity and relative price insensitivity to changes in market interest rates, amortized cost approximates fair market value and no unrealized gains or losses have been recorded at December 27, 1997. The cost of securities sold is based on the specific identification method. Interest earned on securities is included in investment income. 6 7 MAXIM INTEGRATED PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) NOTE 4: INCOME PER SHARE Beginning in Q298, the Company is required to report two separate income per share numbers: basic and diluted in compliance with the Financial Accounting Standard No. 128 (FAS 128) Earnings Per Share which was issued in February 1997. Basic income per share is calculated based only on weighted average common shares outstanding. Diluted income per share is calculated based on the weighted average number of common and dilutive common equivalent shares outstanding during each respective period. The number of common equivalent shares which became issuable pursuant to the grant of stock options has been calculated using the treasury stock method. Diluted income per share is the same number Maxim previously reported as income per share. The following table sets forth the computation of basic and diluted earnings per share:
Three months ended Six months ended ---------------------- ------------------------- December December December December 31, 1996 27, 1997 31, 1996 27, 1997 -------- -------- -------- ----------- Numerator for basic income per share and diluted income per share: Net income $ 33,314 $ 42,829 $ 64,706 $ 82,793 Denominator: Denominator for basic income per share 124,551 128,733 123,351 128,648 -------- -------- -------- ----------- Effect of dilutive securities: Stock options and warrants 20,293 21,016 19,456 21,631 -------- -------- -------- ----------- Denominator for diluted income per share 144,844 149,749 142,807 150,279 ======== ======== ======== =========== Basic income per share $ 0.27 $ 0.33 $ 0.52 $ 0.64 ======== ======== ======== =========== Diluted income per share $ 0.23 $ 0.29 $ 0.45 $ 0.55 ======== ======== ======== ===========
On December 5, 1997, the Company effected a two-for-one stock split in the form of a stock dividend, thereby doubling the number of outstanding shares of common stock. All share and per share amounts for the prior periods have been adjusted to reflect the split. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net revenues increased by 29.0% and 26.4% for the three and six months ended December 27, 1997 compared to the three and six months ended December 31, 1996. The increase is attributable primarily to higher unit shipments resulting from continued introduction of new proprietary products and increased market acceptance of the Company's proprietary and second source products. During the quarter, 55% of net revenues were derived from customers outside of the United States. While the majority of these sales are denominated in US dollars, the Company does place foreign currency forward contracts to mitigate its risks on its firm sales commitments and assets denominated in foreign currencies, and as a result, the net impact associated with changes in foreign currency on the Company's operating results for the quarter was minimal. Gross margin was 67.0% and 66.9% in the three and six months ended December 27, 1997, compared to 66.1% and 66.7% for the three and six months ended December 31, 1996. The increase in gross margin for the three and six months ended December 27, 1997 was principally due to production efficiencies obtained through economies of scale offset somewhat by the charge related to equipment writedowns discussed below. Research and development expenses were 12.6% and 12.5% of net revenues in the three and six months ended December 27, 1997, compared to 11.0% and 11.4% in the three and six months ended December 31, 1996. The increase was primarily attributable to continued investments in product development efforts. Selling, general and administrative expenses were 8.7% of net revenues for both the three and six months ended December 27, 1997, compared to 8.6% and 9.2% for the three and six months ended December 31, 1996. Selling, general and administrative expenses increased in absolute dollars primarily as a result of increased headcount associated with the Company's direct sales efforts. During the quarter ended December 27, 1997, the Company recorded a charge of $4.8 million to reduce the carrying value of certain pieces of capital equipment. Of this amount, $2.8 million was charged to cost of goods sold, $1.0 million was charged to research and development expenses, and $1.0 million was charged to selling, general and administrative expenses. The Company's operating income decreased slightly to 45.6% and 45.7% of net revenues in the three and six months ended December 27, 1997, compared to 46.5% and 46.1% in the three and six months ended December 31, 1996. Net interest income increased to $3.3 million in the three months and $6.7 million in the six months ended December 27, 1997 compared to $1.8 million and $3.3 million for the three and six months ended December 31, 1996, as a result of higher invested cash balances at higher average interest rates. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D) The effective income tax rate for both the three and six months ended December 27, 1997 was 34%. This rate differs from the federal statutory rate primarily due to state income taxes and the federal research and development tax credit. OUTLOOK During Q298, backlog shippable within the next 12 months increased to $208 million from the $182 million reported at the end of Q198. Eighty percent of the ending Q298 backlog consists of orders that were requested for shipment in Q398 or earlier. Customer inventories of Maxim products remained at low levels worldwide. Net bookings in Q298 exceeded the record booking levels set in Q198. Although net bookings in the Pacific Rim were down slightly from Q198, they remained up from the levels recorded in Q3 and Q4 of fiscal 1997. Net bookings in Japan were lower in Q298 than in the previous four quarters. Net bookings in Europe and the United States were strong and exceeded Q198 levels. Net bookings across the majority of the Company's product areas continued to be strong; however, the Company has seen significant weakness in orders from automatic test equipment customers, including several who primarily serve the Pacific Rim markets. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of funds for the first six months of fiscal year 1998 have been the net cash generated from operating activities of $125.3 million and the issuance of common stock of $16.8 million associated with the Company's stock option programs. The principal uses of funds have been the purchase of $72 million in property, plant and equipment, of which $42 million was for a sub-micron wafer fabrication facility located in San Jose, California. The uses of funds also included repurchase of $65.6 million of common stock, and net purchases of $8.7 million in short-term investments. During the six month period ended December 31, 1997, the Company's accounts receivable, inventories and accounts payable increased as a result of higher revenue levels recorded in Q298 and related purchases of capital equipment. Days of sales outstanding related to accounts receivable and number of days in inventory on hand declined from the Q497 levels. The Company anticipates that it will spend up to $95 million for capital equipment in fiscal 1998 and believes that it possesses sufficient liquidity and capital resources to fund these purchases and its operations for the foreseeable future. In addition, the Company intends to continue to repurchase its common stock from time to time consistent with its policy and practice of using the proceeds from the exercise of stock options and the resulting tax benefit to repurchase its common stock. 9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D) STOCK SPLIT On December 5, 1997, the Company effected a two-for-one stock split in the form of a stock dividend, thereby doubling the number of outstanding shares of common stock. All share and per share amounts for the prior periods have been adjusted to reflect the split. YEAR 2000 ISSUE The Company has recently commenced a Year 2000 date conversion project to assess possible impact of Year 2000 Issues on its business. The Company is looking at (a) its internal information and operating systems, (b) possible effects on the Company of third parties' failure to fix their own Year 2000 Issues, and (c) whether any material contingencies may exist related to products sold by the Company. The Company expects that these assessments will enable it to develop plans for any required changes, testing and implementation; to make estimates of likely time involved, and costs of any required changes; and to determine whether Year 2000 Issues are likely to have a material impact on future financial results or financial condition. FORWARD LOOKING INFORMATION Forward-looking statements in this report, including this Management's Discussion and Analysis section, involve risk and uncertainty. There are numerous factors that could cause the Company's actual results to differ materially from results predicted or implied. In this report the Outlook section includes forward looking statements regarding backlog, orders, and bookings that might imply anticipated revenue and revenue growth, and the Liquidity and Capital Resources section includes forward looking statements regarding future capital expenditures and sufficiency of the Company's liquidity. Important factors affecting whether the Company will achieve future revenue and revenue growth include whether demand for the Company's products continues to increase and reflects real end user demand; whether customer cancellations and delays of outstanding orders increase (note that the Company's backlog of orders is generally not based on legally binding customer contracts); and whether the Company is able to manufacture in a correct mix to respond to orders on hand and new orders received in the future. All forward-looking statements included in this document 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. Other important factors that could cause actual results to differ materially from those predicted include overall economic conditions, such as the currency of and other economic issues affecting Asian countries, demand for electronic products and semiconductors generally; demand for the end-user products for which the Company's semiconductors are suited; timely availability of raw materials, equipment, supplies and services; unanticipated manufacturing problems; technological and product development risks; competitors' actions; and other risk factors described in the Company's filings with the Securities and Exchange Commission and in particular its recent report on Form 10K. 10 11 PART II: OTHER INFORMATION ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held an Annual Meeting of Stockholders on November 13, 1997. The Stockholders elected the Board's nominees as directors by the votes indicated:
Nominee Votes in Favor Votes Withheld - ------- -------------- -------------- James R. Bergman 58,722,368 123,817 John F. Gifford 58,722,448 123,817 Robert F. Graham 58,710,423 123,817 B. Kipling Hagopian 58,720,996 123,817 A.R. Frank Wazzan 58,722,454 123,817
The increase of 3,750,000 shares of common stock under the Company's 1996 Stock Incentive Plan was ratified and approved with 35,209,145 votes in favor, 19,697,287 against, 47,117 abstentions and 3,890,006 non-votes. The increase in number of authorized shares of common stock to 240,000,000 shares was approved with 57,038,270 votes in favor, 1,676,262 against, 46,806 abstentions, and 82,217 non-votes. The Bonus Plan for the Company's Executive Officers was approved with 57,413,736 votes in favor, 801,028 against, 179,620 abstentions and 449,171 non votes. The selection of Ernst & Young LLP as the Company's independent auditors for fiscal 1998 was ratified with 58,777,241 votes in favor, 14,816 votes against, 51,498 abstentions and no non-votes. ITEM 6: REPORTS ON FORM 8-K (a) No Reports on Form 8-K were filed during the quarter ended December 27, 1997 ITEMS 1, 2, 3, AND 5 HAVE BEEN OMITTED AS THEY ARE NOT APPLICABLE. 11 12 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FEBRUARY 4, 1998 MAXIM INTEGRATED PRODUCTS,INC. (Date) (Registrant) /s/ Michael J. Byrd ------------------------------------------ MICHAEL J. BYRD Vice President and Chief Financial Officer (Authorized on behalf of the Registrant and as Principal Financial Officer) 12 13 EXHIBIT INDEX Exhibit No. Description - ------- ----------- 27.1 Financial Data Schedule 13 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS JUN-30-1998 JUL-01-1997 DEC-27-1997 226,797 0 102,340 (1,905) 38,534 393,110 308,546 (74,921) 633,277 94,690 0 0 0 131 534,904 633,277 260,000 260,000 86,050 86,050 55,238 0 87 125,444 42,651 82,793 0 0 0 82,793 0 0.55
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