-----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, M68DvYXBe86ZL1chTqYDlgpBI2iJKIw6ld7TlBIspsoDs+hTcJs4etOriqM95Brw BPFaJvAXbF1k6IPM7aUv5Q== 0000950149-97-000329.txt : 19970222 0000950149-97-000329.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950149-97-000329 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 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: 1934 Act SEC FILE NUMBER: 000-16538 FILM NUMBER: 97532296 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 12/31/96 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 31, 1996 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, 94086 SUNNYVALE, CA (Zip Code) (Address of Principal Executive Offices) 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 FEBRUARY 10, 1997 $.001 PAR VALUE 63,756,551 SHARES 2 MAXIM INTEGRATED PRODUCTS, INC. INDEX
PART I. FINANCIAL INFORMATION PAGE ---- ITEM 1. Financial Statements Consolidated Balance Sheets 3 As of June 30, 1996 and December 31, 1996 Consolidated Statements of Income 4 for the three and six months ended December 31, 1995 and 1996 Consolidated Statements of Cash Flows 5 for the six months ended December 31, 1995 and 1996 Notes to Consolidated Financial Statements 6-7 ITEM 2. Management's Discussion and Analysis of Financial 8-10 Condition and Results of Operations PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders 11 ITEM 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12
2 3 CONSOLIDATED BALANCE SHEETS MAXIM INTEGRATED PRODUCTS, INC.
- ---------------------------------------------------------------------------------------------- June 30, December 31, (Amounts in thousands) 1996 1996 ============================================================================================== ASSETS (Audited) (Unaudited) - ---------------------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 60,283 $ 35,869 Short-term investments 68,970 142,903 - -------------------------------------------------------------------------------------------- Total cash, cash equivalents and short-term investments 129,253 178,772 Accounts receivable, net 80,664 81,556 Inventories 30,471 37,470 Prepaid taxes and other current assets 24,163 23,753 - -------------------------------------------------------------------------------------------- Total current assets 264,551 321,551 - -------------------------------------------------------------------------------------------- Property, plant and equipment, at cost, less accumulated depreciation 147,068 162,015 Other assets 6,175 6,438 - -------------------------------------------------------------------------------------------- $ 417,794 $ 490,004 ============================================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------------------- Current liabilities: Accounts payable $ 29,738 $ 19,068 Income taxes payable 19,323 7,174 Accrued salaries 12,897 11,838 Accrued expenses 11,880 14,679 Deferred income on shipments to distributors 14,531 15,930 - -------------------------------------------------------------------------------------------- Total current liabilities 88,369 68,689 - -------------------------------------------------------------------------------------------- Other liabilities 4,000 4,000 Commitments and Contingencies - -------------------------------------------------------------------------------------------- Stockholders' equity: Common stock 62 64 Additional paid-in capital 89,939 115,839 Retained earnings 236,796 301,502 Translation adjustment (1,372) (90) - -------------------------------------------------------------------------------------------- Total stockholders' equity 325,425 417,315 - -------------------------------------------------------------------------------------------- $ 417,794 $ 490,004 ============================================================================================
See accompanying notes. 3 4 CONSOLIDATED STATEMENTS OF INCOME MAXIM INTEGRATED PRODUCTS, INC.
- -------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended (Amounts in thousands, except per share data) December 31, December 31, ---------------------------------------------- (Unaudited) 1995 1996 1995 1996 ================================================================================================== Net revenues $ 106,182 $ 104,686 $ 202,625 $ 205,686 Cost of goods sold 36,330 35,530 74,927 68,557 - -------------------------------------------------------------------------------------------------- Gross margin 69,852 69,156 127,698 137,129 - -------------------------------------------------------------------------------------------------- Operating expenses: Research and development 12,302 11,471 24,502 23,367 Selling, general and administrative 9,661 9,039 20,530 18,987 - -------------------------------------------------------------------------------------------------- 21,963 20,510 45,032 42,354 - -------------------------------------------------------------------------------------------------- Operating income 47,889 48,646 82,666 94,775 Interest income, net 1,148 1,830 2,220 3,264 - -------------------------------------------------------------------------------------------------- Income before provision for income taxes 49,037 50,476 84,886 98,039 Provision for income taxes 17,163 17,162 30,427 33,333 - -------------------------------------------------------------------------------------------------- Net income $ 31,874 $ 33,314 $ 54,459 $ 64,706 - -------------------------------------------------------------------------------------------------- Income per share $ 0.45 $ 0.46 $ 0.77 $ 0.91 - -------------------------------------------------------------------------------------------------- Common and common equivalent shares 70,827 72,422 70,689 71,403 ==================================================================================================
See accompanying notes. 4 5 CONSOLIDATED STATEMENTS OF CASH FLOWS MAXIM INTEGRATED PRODUCTS, INC.
- ----------------------------------------------------------------------------------------------- For the six months ended December 31, Increase (decrease) in cash and cash equivalents (Amount in thousands)(unaudited) 1995 1996 - ----------------------------------------------------------------------------------------------- Cash flows provided by operating activities: Net income $54,459 $64,706 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,419 9,874 Reduction of equipment value 1,344 0 Changes in assets and liabilities: Accounts receivable (37,659) (892) Inventories (728) (6,999) Prepaid taxes and other current assets (3,416) 410 Accounts payable 18,731 (10,670) Income taxes payable 24,969 14,255 Deferred income taxes (4,450) 0 Deferred income on shipments to distributors 7,622 1,399 All other accrued liabilities (5,223) 1,740 - ----------------------------------------------------------------------------------------------- Net cash provided by operating activities 62,068 73,823 - ----------------------------------------------------------------------------------------------- Cash flows provided by investing activities: Additions to property, plant and equipment (29,968) (23,539) Deposits and other non-current assets 3,229 (263) Purchases of held-to-maturity securities (59,396) (24,313) Purchases of available-for-sale securities 0 (81,469) Proceeds from maturities of held-to-maturity securities 50,217 31,849 - ----------------------------------------------------------------------------------------------- Net cash used in investing activities (35,918) (97,735) - ----------------------------------------------------------------------------------------------- Cash flows provided by financing activities: Issuance of common stock 7,766 16,586 Repurchase of Common Stock (27,371) (17,088) - ----------------------------------------------------------------------------------------------- Net cash used in financing activities (19,605) (502) - ----------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 6,545 (24,414) Cash and cash equivalents: Beginning of year 54,966 60,283 - ----------------------------------------------------------------------------------------------- End of period $61,511 $35,869 - -----------------------------------------------------------------------------------------------
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 months ended December 31, 1996 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, 1996. NOTE 2: INVENTORIES
Inventories consist of (in thousands): June 30, December 31, 1996 1996 ---- ---- (audited) (unaudited) Raw materials $ 3,720 $ 5,826 Work in process 16,908 20,947 Finished goods 9,843 10,697 -------- -------- $ 30,471 $ 37,470 ======== ========
NOTE 3: INCOME PER SHARE Net 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. Fully diluted income per share is substantially the same as reported income per share. 6 7 MAXIM INTEGRATED PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd) NOTE 4: INVESTMENT SECURITIES At December 31, 1996, all debt securities consist of U.S. Treasury securities maturing within one year. Securities designated as held-to- maturity are carried at amortized cost which approximates market value. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other-than-temporary on held-to-maturity securities are included in investment income. 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 31, 1996. The cost of securities sold is based on the specific identification method. Interest earned on securities is included in investment income. All securities are included in short-term investments at December 31, 1996. There were no gross realized gains or losses for the six months ended December 31, 1996. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net revenues decreased by 1.4% for the three months ended December 31, 1996 compared to the same period a year ago, and increased by 1.5% for the six months ended December 31, 1996 compared to the same period a year ago. Net revenues for the three and six months period ended December 31, 1996 were essentially flat with the comparable periods a year ago. The Company believes this was primarily a result of an inventory accumulation by the Company's customers during fiscal 1996 which reduced their requirement for Maxim's products over the last six months. During the quarter 56% 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 contracts to mitigate its risks on its backlog 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 increased to 66.1% and 66.7% in the three and six months ended December 31, 1996, compared to 65.8% and 63.0% for the three and six months ended December 31, 1995. The improvement as compared to the comparable periods a year ago was principally due to increases in manufacturing productivity. Research and development expenses were 11.0% and 11.4% of net revenues in the three and six months ended December 31, 1996, compared to 11.6% and 12.1% in the three and six months ended December 31, 1995. The decline reflects the absence of certain non-recurring expenses recorded in the comparable periods of 1996 offset by slightly higher spending in 1997. Selling, general and administrative expenses were 8.6% and 9.2% of net revenues in the three and six months ended December 31, 1996, compared to 9.1% and 10.1% in the three and six months ended December 31, 1995. This decline was a result of the Company's cost control measures and savings realized through the establishment of a direct sales force in the United States during the latter half of fiscal 1996. The Company's operating income increased to 46.5% of net revenues in the three months ended December 31, 1996, compared to 45.1% in the three months ended December 31, 1995 and increased to 46.1% of net revenues in the six months ended December 31, 1996, compared to 40.8% for the six months ended December 31, 1995, as a result of all the factors cited above. Net interest income increased to $1.8 million in the three months and $3.3 million in the six months ended December 31, 1996 compared to $1.1 million and $2.2 million the same periods a year ago, primarily as a result of higher invested cash balances and to a lesser extent higher average interest rates. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd) The decrease in the effective tax rate to 34% in the three months and the six months ended December 31, 1996, was primarily attributable to the restoration of the Federal research and development tax credit. OUTLOOK Gross margins for the second quarter were 66.1% compared to 65.8% in Q296 and 67.3% in Q197. The decrease in gross margins from Q197 reflects the Company's strategy to selectively trade gross margin for incremental sales growth. The Company anticipates that to the extent revenue growth resumes, gross margin will trend lower over time as the Company continues to take advantage of business opportunities to increase total profitability. Backlog shippable in the next 12 months remained flat at Q197 levels of $103 million. Orders requested for delivery in the next three months increased to 77% of the backlog at December 31, 1996, compared to 72% at the end of Q197 and 59% at the end of Q496. Turns orders received in Q297 increased significantly over those received in Q197. (Turns orders are customer orders that are for delivery within the same quarter and may result in revenue within the quarter if the company has inventory available that matches those orders.) The Company believes that the higher level of turns orders experienced in Q1 and Q2 of fiscal 1997 reflects the relatively short lead times (8-10 weeks) for integrated circuits and customers' belief that shortages will not reappear in the near future. The Company now believes that Q496 represented an inflection point in the inventory correction that began in the second half of FY96. Booking levels in the United States, Europe and Japan were higher in Q297 than the previous two quarters and the Pacific Rim continued to show strong sequential quarter-over-quarter growth. Customer cancellations were $17 million in Q297 and, while still higher than normal, were lower than the previous six quarters. Booking levels, when analyzed by product line, were higher than the previous two quarters in all product lines except the Company's high-frequency business unit, where bookings have been flat for the past two quarters. Growth in the high-frequency product lines has been hampered by an inventory-based slowdown in the wireless and fiber optic markets and a demand-based slowdown in the automatic test equipment market. Maxim's ability to achieve satisfactory yields and production levels on its state-of-the-art high-speed bipolar processes also has affected Q297 shipments. The Company believes it has made significant progress on improving the manufacturability of these processes, which should result in increased high-frequency shipments in Q397. While the Company is encouraged by the higher business levels experienced in Q297, continued revenue growth in Q3 and Q4 of fiscal 1997 is dependent upon booking rates increasing over the Q297 levels and continued high levels of turns orders that match available supply. 9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd) LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of funds for the first six months of fiscal year 1997 have been the net cash generated from operating activities of $73,823,000 and the issuance of common stock of $16,586,000 associated with the Company's stock option programs. The principal uses of funds have been the repurchase of $17,088,000 of common stock, net purchases of $73,933,000 in short-term investments, and the purchase of $23,539,000 in property, plant and equipment. The Company anticipates that it will spend up to $40 million for capital equipment in fiscal 1997 and believes that it possesses sufficient liquidity and capital resources to fund these purchases and its operations for the foreseeable future. FORWARD LOOKING INFORMATION Safe harbor statement under the Private Securities Litigation Reform Act of 1995: The statements in this Outlook section are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking statements are made based on information available to the Company as of the date hereof, and the Company assumes no duty to update any forward-looking statements. Forward-looking statements in this document involve risk and uncertainty. Important factors, including overall economic conditions, demand for electronic products and semiconductors generally, demand for the Company's products in particular, availability of raw material, 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 could cause actual results to differ materially from those stated in the forward-looking statements. 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 14, 1996. The Stockholders elected the Board's nominees as directors by the votes indicated:
Nominee Votes in Favor Votes Withheld - ------- -------------- -------------- James R. Bergman 54,725,179 76,620 John F. Gifford 54,717,439 75,420 Robert F. Graham 54,707,945 75,420 A.R. Wazzan 54,721,959 76,620
The Company's 1996 Stock Incentive Plan, 1987 Employee Stock Participation Plan, under which an additional 3,500,000 shares of common stock are reserved for issuance, each as amended, were approved with 39,099,609 votes in favor, 11,853,799 against, 23,146 absentions and 4,508,174 non-votes. The Company's 1988 Nonemployee Director Stock Option Plan under which an additional 15,000 shares of common stock are reserved for issuance, each as amended, were approved with 40,084,889 votes in favor, 10,862,387 against, 132,210 absentions and 4,405,242 non-votes. The selection of Ernst & Young LLP as the Company's independent auditors for fiscal 1997 was ratified with 55,462,213 votes in favor, 9,167 votes against, 13,348 abstentions and no non-votes. ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibit has been filed with this report: 11.1 Computation of Income per Share (b) No Reports on Form 8-K were filed during the quarter ended December 31, 1996 Items 1, 2, 3, and 5 have been omitted as they are not applicable. 11 12 SIGNATURES 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 10, 1997 MAXIM INTEGRATED PRODUCTS, INC. - ----------------- ----------------------------------- (Date) (Registrant) /s/ MICHAEL J. BYRD ----------------------------------- Michael J. Byrd Vice President and Chief Financial Officer (For the Registrant and Principal Financial Officer) /s/ RICHARD E. SLATER ----------------------------------- Richard E. Slater Vice President and Chief Accounting Officer (Principal Accounting Officer) 12 EX-11.1 2 COMPUTATION OF INCOME PER SHARE 1 Maxim Integrated Products, Inc. Exhibit 11.1 Computation of income per share (amounts in thousands, except per share amounts)
Three Months Six Months Ended Ended December 31, December 31, ------- ------- ------- ------- 1995 1996 1995 1996 ------- ------- ------- ------- Weighted average shares outstanding . . . . . . . . . . . 59,627 62,276 59,524 61,675 Add weighted average shares from assumed exercise of options and warrants when treasury shares are reacquired at average stock market price . . . . . . . 17,355 15,492 17,425 14,853 Less weighted average shares assumed repurchased from tax benefit from the assumed exercise of non-qualified stock options . . . . . . . . . . . . (6,155) (5,346) (6,260) (5,125) ------- ------- ------- ------- Common and common equivalent shares used in computing net income per share . . . . . . . . . . 70,827 72,422 70,689 71,403 ======= ======= ======= ======= Net income applicable to computation of income per share $31,874 $33,314 $54,459 $64,706 ======= ======= ======= ======= Income per share $0.45 $0.46 $0.77 $0.91 ======= ======= ======= =======
EX-27.1 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS JUN-30-1997 JUL-01-1996 DEC-31-1996 178,772 0 82,898 (1,342) 37,470 321,551 220,962 (58,947) 490,004 68,689 0 0 0 64 417,341 490,004 205,686 205,686 68,557 68,557 42,354 0 26 98,039 33,333 64,706 0 0 0 64,706 0.91 0.91
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