-----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, KLzhLRDh3q4ho5O9N2Y/UWV9YodcBSC68WL5CZwAnTT/WXro0XhFNNY53cP7wnp+ 2lp5C62K43VCzPmUiVc/wg== 0000891618-98-002264.txt : 19980513 0000891618-98-002264.hdr.sgml : 19980513 ACCESSION NUMBER: 0000891618-98-002264 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980328 FILED AS OF DATE: 19980512 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: 98616026 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 MARCH 28, 1998 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 MARCH 28, 1998 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 MARCH 28, 1998 $.001 PAR VALUE 131,153,788 SHARES 2 MAXIM INTEGRATED PRODUCTS, INC. INDEX
PART I. FINANCIAL INFORMATION PAGE ---- ITEM 1. Financial Statements Consolidated Balance Sheets 3 as of March 28, 1998 and June 30, 1997 Consolidated Statements of Income 4 for the three and nine months ended March 28, 1998 and March 31, 1997 Consolidated Statements of Cash Flows 5 for the nine months ended March 28, 1998 and March 31, 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 6. Reports on Form 8-K 11 SIGNATURE 12
2 3 CONSOLIDATED BALANCE SHEETS MAXIM INTEGRATED PRODUCTS, INC.
- --------------------------------------------------------------------------------------------- March 28, June 30, 1998 1997 (Amounts in thousands) (Unaudited) ============================================================================================= ASSETS - --------------------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 35,033 $ 18,562 Short-term investments 249,167 205,391 - --------------------------------------------------------------------------------------------- Total cash, cash equivalents and short-term investments 284,200 223,953 - --------------------------------------------------------------------------------------------- Accounts receivable, net 107,128 91,642 Inventories 40,948 36,833 Prepaid taxes and other current assets 29,951 24,579 - --------------------------------------------------------------------------------------------- Total current assets 462,227 377,007 - --------------------------------------------------------------------------------------------- Property, plant and equipment, at cost, less accumulated depreciation 239,735 174,508 Other assets 6,681 4,871 - --------------------------------------------------------------------------------------------- TOTAL ASSETS $708,643 $556,386 ============================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 33,697 $ 25,249 Income taxes payable 0 10,916 Accrued salaries 21,363 16,408 Accrued expenses 17,375 16,312 Deferred income on shipments to distributors 21,204 16,336 - --------------------------------------------------------------------------------------------- Total current liabilities 93,639 85,221 - --------------------------------------------------------------------------------------------- Deferred income taxes 1,600 1,600 Other liabilities 4,000 4,000 - --------------------------------------------------------------------------------------------- Stockholders' equity: Common stock 131 128 Additional paid-in capital 108,774 92,773 Retained earnings 502,713 373,770 Translation adjustment (2,214) (1,106) - --------------------------------------------------------------------------------------------- Total stockholders' equity 609,404 465,565 - --------------------------------------------------------------------------------------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $708,643 $556,386 =============================================================================================
See accompanying notes. 3 4 CONSOLIDATED STATEMENTS OF INCOME MAXIM INTEGRATED PRODUCTS, INC.
- ----------------------------------------------------------------------------------------------------- (Amounts in thousands, except per share data) Three months ended Nine months ended - ----------------------------------------------------------------------------------------------------- March 28, March 31, March 28, March 31, (Unaudited) 1998 1997 1998 1997 ===================================================================================================== Net revenues $145,039 $111,005 $405,039 $316,691 Cost of goods sold 47,250 37,437 133,300 105,994 - ----------------------------------------------------------------------------------------------------- Gross margin 97,789 73,568 271,739 210,697 - ----------------------------------------------------------------------------------------------------- Operating expenses: Research and development 18,710 13,092 51,203 36,459 Selling, general and administrative 12,837 9,298 35,582 28,285 - ----------------------------------------------------------------------------------------------------- Total operating expenses 31,547 22,390 86,785 64,744 - ----------------------------------------------------------------------------------------------------- Operating income 66,242 51,178 184,954 145,953 Interest income, net 3,682 2,462 10,414 5,726 - ----------------------------------------------------------------------------------------------------- Income before provision for income taxes 69,924 53,640 195,368 151,679 Provision for income taxes 23,774 18,237 66,425 51,570 - ----------------------------------------------------------------------------------------------------- Net income $ 46,150 $ 35,403 $128,943 $100,109 - ----------------------------------------------------------------------------------------------------- Basic income per share $ 0.35 $ 0.28 $ 1.00 $ 0.80 - ----------------------------------------------------------------------------------------------------- Shares used in the calculation of basic income per share 130,510 127,474 129,269 124,725 - ----------------------------------------------------------------------------------------------------- Diluted income per share $ 0.31 $ 0.24 $ 0.86 $ 0.69 - ----------------------------------------------------------------------------------------------------- Shares used in the calculation of diluted income per share 151,223 148,750 150,594 144,788 =====================================================================================================
See accompanying notes. 4 5 CONSOLIDATED STATEMENTS OF CASH FLOWS MAXIM INTEGRATED PRODUCTS, INC.
- ---------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents For the nine months ended March 28, March 31, (Amounts in thousands)(unaudited) 1998 1997 ==================================================================================================== Cash flows from operating activities: Net income $ 128,943 $ 100,109 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and translation adjustment 11,158 12,702 Reduction of equipment value 10,842 0 Changes in assets and liabilities: Accounts receivable, net (15,486) (2,637) Inventories (4,115) (5,992) Prepaid taxes and other current assets (5,372) (4,111) Accounts payable 8,448 (7,651) Income taxes payable 55,747 30,635 Deferred income on shipments to distributors 4,868 299 All other accrued liabilities 6,018 4,020 - ---------------------------------------------------------------------------------------------------- Net cash provided by operating activities 201,051 127,374 - ---------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (88,335) (32,566) Other assets (1,810) (318) Purchases of held-to-maturity securities 0 (24,313) Purchases of available-for-sale securities (276,433) (168,547) Proceeds from maturities of held-to-maturity securities 5,800 58,688 Proceeds from sales/maturities of available-for-sale securities 226,857 11,868 - ---------------------------------------------------------------------------------------------------- Net cash used in investing activities (133,921) (155,188) - ---------------------------------------------------------------------------------------------------- Cash flows from financing activities: Issuance of common stock 30,860 25,202 Repurchase of common stock (81,519) (46,135) - ---------------------------------------------------------------------------------------------------- Net cash used in financing activities (50,659) (20,933) - ---------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 16,471 (48,747) Cash and cash equivalents: Beginning of year 18,562 60,283 - ---------------------------------------------------------------------------------------------------- End of period $ 35,033 $ 11,536 ====================================================================================================
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 nine months ended March 28, 1998 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):
March 28, June 30, --------- -------- 1998 1997 ---- ---- (unaudited) Raw materials $ 4,803 $ 5,058 Work in process 25,007 22,349 Finished goods 11,138 9,426 ------- ------- $40,948 $36,833 ======= =======
NOTE 3: SHORT-TERM INVESTMENTS All short-term investments owned at March 28, 1998 are classified as available-for-sale. At March 28, 1998, all short-term investments consist of U.S. Treasury and Federal Agency debt securities maturing within one year. 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 March 28, 1998. The cost of securities sold is based on the specific identification method. Interest earned on securities is included in interest income, net on the consolidated statements of income. 6 7 MAXIM INTEGRATED PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) NOTE 4: INCOME PER SHARE Beginning in the second quarter of fiscal 1998, the Company was 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 dilutive 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 the Company previously reported as income per share. The following table sets forth the computation of basic and diluted earnings per share:
Three months ended Nine months ended March 28, March 31, March 28, March 31, 1998 1997 1998 1997 -------- -------- -------- ----------- Numerator for basic income per share and diluted income per share: Net income $ 46,150 $ 35,403 $128,943 $ 100,109 ======== ======== ======== =========== Denominator: Denominator for basic income per share 130,510 127,474 129,269 124,725 Effect of dilutive securities: Stock options and warrants 20,713 21,276 21,325 20,063 -------- -------- -------- ----------- Denominator for diluted income per share 151,223 148,750 150,594 144,788 ======== ======== ======== =========== Basic income per share $ 0.35 $ 0.28 $ 1.00 $ 0.80 ======== ======== ======== =========== Diluted income per share $ 0.31 $ 0.24 $ 0.86 $ 0.69 ======== ======== ======== ===========
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 30.7% and 27.9% for the three and nine months ended March 28, 1998 compared to the three and nine months ended March 31, 1997. 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 third quarter of fiscal 1998, 57% 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 67.4% and 67.1% in the three and nine months ended March 28, 1998, compared to 66.3% and 66.5% for the three and nine months ended March 31, 1997. The increase in gross margin for the three and nine months ended March 28, 1998 was principally due to production efficiencies obtained through economies of scale partially offset by the charges related to equipment writedowns discussed below. Research and development expenses were 12.9% and 12.6% of net revenues in the three and nine months ended March 28, 1998, compared to 11.8% and 11.5% in the three and nine months ended March 31, 1997. The increase was primarily attributable to continued investments in product development efforts and the charges related to equipment writedowns as discussed below. Selling, general and administrative expenses were 8.9% and 8.8% of net revenues in the three and nine months ended March 28, 1998, compared to 8.4% and 8.9% for the three and nine months ended March 31, 1997. Selling, general and administrative expenses increased in absolute dollars as a result of increased headcount and related expenses primarily associated with the Company's direct sales efforts. During the three and nine months ended March 28, 1998, the Company recorded charges of $6.0 million and $10.8 million to reduce the carrying value of certain pieces of capital equipment. For the third quarter, $3.9 million was charged to cost of goods sold, and $2.1 million was charged to research and development expenses. For the year-to-date period, $6.7 million was charged to cost of goods sold, $3.1 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 45.7% for both the three and nine months ended March 28, 1998, compared to 46.1% for both the three and nine months ended March 31, 1997 for the reasons noted above. Net interest income increased to $3.7 million in the three months and $10.4 million in the nine months ended March 28, 1998 compared to $2.5 million and $5.7 million for the three and nine months ended March 31, 1997, as a result of higher invested cash and short-term investments 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 nine months ended March 28, 1998 and March 31, 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 the third quarter of fiscal 1998, backlog shippable within the next 12 months increased to $216 million from the $208 million reported at the end of the second quarter of fiscal 1998. Seventy-three percent of the ending third quarter of fiscal 1998 backlog consists of orders that were requested for shipment in the fourth quarter of fiscal 1998 or earlier. Net bookings in the third quarter of fiscal 1998 were below the record level for the second quarter of fiscal 1998 but consistent with the Company's estimates of customer consumption of its products. Total cancellations for the quarter were $21 million, up from $19 million in the second quarter of fiscal 1998. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of cash for the first nine months of fiscal 1998 have been from net cash generated from operating activities of $201.1 million and the issuance of common stock of $30.9 million associated with the Company's stock option programs. The principal uses of cash have been the purchase of $88.3 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 cash also included repurchase of $81.5 million of common stock, and net purchases of $43.8 million in short-term investments. During the nine month period ended March 28, 1998, the Company's accounts receivable, inventories and accounts payable increased as a result of higher revenue levels and purchases of capital equipment. The Company anticipates that it will spend approximately $100 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 10-K. 10 11 PART II: OTHER INFORMATION ITEM 6: REPORTS ON FORM 8-K (a) No Reports on Form 8-K were filed during the quarter ended March 28, 1998. ITEMS 1,2,3,4 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. MAY 11, 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 INDEX TO EXHIBITS Exhibit Number Description - ------ ----------- 27.1 Financial Data Schedule EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS JUN-30-1998 JUL-01-1997 MAR-28-1998 284,200 0 109,033 (1,905) 40,948 462,227 318,629 (78,894) 708,643 93,639 0 0 0 131 609,273 708,643 405,039 405,039 133,300 133,300 86,785 0 105 195,368 66,425 128,943 0 0 0 128,943 1.00 0.86 For Purposes of This Exhibit, Primary means Basic.
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