EX-99.1 2 mi912371ex991.htm

Exhibit 99.1

Press Information

FOR IMMEDIATE RELEASE

NASDAQ SYMBOL MXIM

Contact:

John F. Gifford, Chairman,

 

President and Chief Executive Officer

 

(408) 737-7600

MAXIM REPORTS 19% INCREASE

IN EARNINGS PER SHARE AND 32% INCREASE IN FREE

CASH FLOW PER SHARE FOR ITS

THIRD QUARTER OF FISCAL YEAR 2005

          SUNNYVALE, CA–May 3, 2005–Maxim Integrated Products, Inc., (MXIM) reported net revenues of $400.2 million for its fiscal third quarter ending March 26, 2005, an 8.2% increase over the $370.0 million reported for the third quarter of fiscal year 2004 and an 8.2% decrease over the $436.1 million reported for the second quarter of fiscal 2005.  Net income for the quarter was $125.5 million, a 15.0% increase over the $109.2 million reported last year and a 13.2% decrease from the $144.6 million reported for the second quarter.  Diluted earnings per share were $0.37 for the third quarter, a 19.4% increase over the $0.31 reported for the same period a year ago and an 11.9% decrease from the $0.42 reported for the second quarter of fiscal 2005.  The Company’s free cash flow was $156 million, or $0.45 per diluted share for the third quarter, compared to $120 million, or $0.34 per diluted share, for the third quarter of fiscal year 2004.  This is a 32.4% increase in free cash flow per diluted share from the prior year’s comparable quarter.  For the nine months ended March 26, 2005 free cash flow per diluted share increased 20.8% relative to the comparable period last year.  Free cash flow is defined as cash from operating activities (after tax), less additions to property, plant and equipment as reported in the Company’s statements of cash flows.

– more –


          During the quarter, cash and short-term investments increased $116.5 million after the Company repurchased approximately 598,000 shares of its common stock for $24.5 million, paid dividends of $32.7 million, and acquired $13.8 million in capital equipment. At quarter end, cash and cash equivalents totaled $1.4 billion. Accounts receivable increased $12.7 million to $192.4 million, and inventories increased $12.9 million to $159.5 million in the third quarter.

          Gross margin for the third quarter was 72.0%, down from the 72.6% reported for the second quarter of fiscal year 2005. Research and development expense was $83.1 million or 20.8% of net revenues in the third quarter, compared to $81.0 million or 18.6% of net revenues in the second quarter of fiscal year 2005. Selling, general and administrative expenses decreased slightly from $25.3 million or 5.8% of net revenue in the second quarter to $24.7 million in the third quarter, or 6.2% of net revenue. 

          In the third quarter, the Company recorded a $5.0 million discretionary employee bonus to be paid out at the end of calendar 2005, which increased cost of goods sold by $1.6 million, increased research and development expense by $2.7 million, and increased selling, general and administrative expenses by $0.7 million.  The effect of this bonus reduced earnings by $0.01 per share.

          Also, during the quarter, Maxim reached an agreement with Linear Technology, Inc. regarding a patent in the battery management area.  The settlement agreement did not require the restatement of prior reported income as Maxim had accrued funds covering this license cost.  Going forward for the next 8 years, the license charge will be immaterial and partially offset by other new license fees received in the fourth quarter from other licensees.

          Third quarter bookings were approximately $373 million, a 6% increase from the second quarter’s level of $353 million. Turns orders received in the quarter were approximately $156 million or 42% of net bookings, a 28% increase over the $122 million or 35% of net bookings received in the prior quarter (turns orders are customer orders that are for delivery within the same quarter and may result in

– more –


 revenue within the same quarter if the Company has available inventory that matches those orders). Bookings increased in 15 out of the Company’s 20 end equipment segments and in all geographic locations except Europe.  Third quarter ending backlog shippable within the next 12 months was approximately $328 million, including approximately $284 million requested for shipment in the fourth quarter of fiscal year 2005. The Company’s second quarter ending backlog shippable within the next 12 months was approximately $370 million, including approximately $300 million that was requested for shipment in the third quarter of fiscal year 2005.

          The following reconciles free cash flow to net income, and it depicts the Company’s free cash flow for the three and nine months ended March 26, 2005 and March 27, 2004, respectively.

RECONCILIATION OF FREE CASH FLOW TO NET INCOME

(in millions, except per share data)

 

For the three
months ended
3/26/05

 

For the three
months ended
3/27/04

 

For the nine
months ended
3/26/05

 

For the nine
months ended
3/27/04

 

 

 

 

 

 

Net income, as reported

 

$

126

 

$

109

 

$

415

 

$

295

 

Add adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization, and other

 

 

19

 

 

14

 

 

57

 

 

44

 

Tax benefit related to stock plans

 

 

29

 

 

37

 

 

87

 

 

113

 

Accounts receivable

 

 

(13

)

 

(29

)

 

5

 

 

(36

)

Inventories

 

 

(13

)

 

5

 

 

(42

)

 

18

 

Accounts payable

 

 

(11

)

 

28

 

 

(44

)

 

43

 

Income taxes payable and deferred taxes

 

 

19

 

 

16

 

 

32

 

 

20

 

Other assets and liabilities

 

 

14

 

 

10

 

 

22

 

 

21

 

 

 

 

 

 

 

Total of adjustments

 

 

44

 

 

81

 

 

117

 

 

223

 

 

 

 

 

 

 

Cash generated by operating activities, as reported

 

 

170

 

 

190

 

 

532

 

 

518

 

Deduct:

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(14

)

 

(70

)

 

(112

)

 

(163

)

 

 

 

 

 

 

Free cash flow

 

$

156

 

$

120

 

$

420

 

$

355

 

 

 

 

 

 

 

Fully diluted shares, as reported

 

 

343

 

 

354

 

 

344

 

 

352

 

Free cash flow per fully diluted share

 

$

0.45

 

$

0.34

 

$

1.22

 

$

1.01

 

Fully diluted earnings per share, as reported

 

$

0.37

 

$

0.31

 

$

1.21

 

$

0.84

 

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          Free cash flow should not be construed as a substitute for net income or as a better measure of liquidity than cash flow from operating activities, both of which are determined in accordance with GAAP. Free cash flow excludes components that are significant in understanding and assessing the Company’s results of operations and cash flows. In addition, free cash flow is not a term defined by GAAP and as a result the Company’s measure of free cash flow might not be comparable to similarly titled measures used by other companies.

          Free cash flow is used by management to evaluate, assess, and benchmark the Company’s operating results, and the Company believes that free cash flow is relevant and useful information that is often widely used by analysts, investors, and other interested parties in the semiconductor industry. Accordingly, the Company is disclosing this information to permit a more comprehensive and objective analysis of the Company’s operating performance, to provide an additional measure of performance and liquidity, and to provide additional information with respect to the Company’s ability to meet future share repurchases, dividend payments, and working capital requirements.

          Jack Gifford, Chairman, President, and Chief Executive Officer, commented:  “As expected, third quarter bookings improved over the previous quarter.  It is a positive sign that a significant majority of our business units participated in this bookings increase.  Turns orders accelerated in the quarter as compared to the previous quarter leading us to believe that inventory levels have come further in line with consumption levels.” 

          Mr. Gifford continued: “Design-in activity of Maxim’s proprietary products remains strong which we believe positions us to gain market share over the next few years.  During the third quarter, the Company introduced 738 engineering man-months of new products, a Company record and a 31% increase over the second quarter.”

          Mr. Gifford continued: “The Company expects fiscal 2005 to contribute significant profit and cash flow to the Company over fiscal 2004.  Our employees need and deserve some expression of profit sharing reward for this result.  Since stock price appreciation during the last 4 years has not recognized our Company’s performance, we expect to accrue $0.01 per share for each quarter through the balance of the calendar year.  Officers, vice presidents and other senior executives will not receive this bonus.”

          Mr. Gifford concluded: “The Company’s Board of Directors has declared a quarterly cash dividend of $0.10 per share. Payment will be made on June 1, 2005 to stockholders of record on May 16, 2005.”

****


          Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risk and uncertainty. They include statements regarding the Company’s profitability and business outlook, the Company’s belief that inventory levels have further come in line with consumption levels, and the Company’s belief that the Company’s proprietary products will continue to be well accepted in the marketplace. Actual results could differ materially from those forecasted based upon, among other things, general market conditions and market developments that could adversely affect the growth of the mixed-signal analog market, including, without limitation, declines in customer forecasts or greater than expected cyclical downturns within the mixed-signal analog segment of the semiconductor market; the inability of the Company’s customers to consume their inventory of Maxim products in the next one or two quarters; an unexpected decrease in revenue or increase in expenses; and the Company’s success in the markets its products are introduced in and the Company’s ability to effectively and successfully manage manufacturing operations, as well as other risks described in the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 26, 2004.

          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.

          Maxim Integrated Products is a leading international supplier of quality analog and mixed-signal products for applications that require real world signal processing.

#  #  #


Consolidated Balance Sheets

(In thousands)

 

3/26/05

 

6/26/04

 

 

 

 

 

 

(unaudited)

 

(audited)

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

142,482

 

$

147,734

 

Short-term investments

 

 

1,260,744

 

 

948,879

 

 

 

 

 

Total cash, cash equivalents and short-term investments

 

 

1,403,226

 

 

1,096,613

 

 

 

 

 

Accounts receivable, net

 

 

192,380

 

 

197,158

 

Inventories

 

 

159,463

 

 

117,785

 

Deferred tax assets and other current assets

 

 

157,605

 

 

166,558

 

 

 

 

 

Total current assets

 

 

1,912,674

 

 

1,578,114

 

 

 

 

 

Property, plant and equipment, at cost, less accumulated depreciation

 

 

999,403

 

 

942,186

 

Other assets

 

 

27,624

 

 

29,162

 

 

 

 

 

Total assets

 

$

2,939,701

 

$

2,549,462

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

50,157

 

$

93,856

 

Accrued expenses

 

 

205,332

 

 

182,692

 

Deferred income on shipments to distributors

 

 

20,095

 

 

22,858

 

Income taxes payable

 

 

16,145

 

 

19,339

 

 

 

 

 

Total current liabilities

 

 

291,729

 

 

318,745

 

 

 

 

 

Deferred tax liabilities

 

 

140,107

 

 

114,399

 

Other liabilities

 

 

4,000

 

 

4,000

 

 

 

 

 

Total liabilities

 

 

435,836

 

 

437,144

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock

 

 

153,153

 

 

80,462

 

Retained earnings

 

 

2,362,317

 

 

2,038,820

 

Accumulated other comprehensive loss

 

 

(11,605

)

 

(6,964

)

 

 

 

 

Total stockholders’ equity

 

 

2,503,865

 

 

2,112,318

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

2,939,701

 

$

2,549,462

 

 

 

 

 

Consolidated Statements of Income

 

 

Three Months Ending

 

Nine Months Ending

 

 

 

 

 

(In thousands except per share data)

 

3/26/05

 

3/27/04

 

3/26/05

 

3/27/04

 

 

 

 

 

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Net revenues

 

$

400,188

 

$

370,023

 

$

1,271,316

 

$

1,018,300

 

Cost of goods sold

 

 

111,896

 

 

111,761

 

 

351,585

 

 

307,818

 

 

 

 

 

 

 

Gross margin

 

 

288,292

 

 

258,262

 

 

919,731

 

 

710,482

 

 

 

 

72.0

%

 

69.8

%

 

72.3

%

 

69.8

%

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

83,141

 

 

77,255

 

 

243,273

 

 

218,562

 

Selling, general and administrative

 

 

24,713

 

 

23,546

 

 

75,099

 

 

67,128

 

 

 

 

 

 

 

Operating income

 

 

180,438

 

 

157,461

 

 

601,359

 

 

424,792

 

 

 

 

45.1

%

 

42.6

%

 

47.3

%

 

41.7

%

Interest income, net

 

 

7,492

 

 

5,469

 

 

19,446

 

 

15,589

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

187,930

 

 

162,930

 

 

620,805

 

 

440,381

 

Provision for income taxes

 

 

62,393

 

 

53,767

 

 

206,108

 

 

145,326

 

 

 

 

 

 

 

Net income

 

$

125,537

 

$

109,163

 

$

414,697

 

$

295,055

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.38

 

$

0.33

 

$

1.27

 

$

0.90

 

 

 

 

 

 

 

Shares used in the calculation of basic earnings per share

 

 

326,945

 

 

328,247

 

 

325,758

 

 

327,894

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.37

 

$

0.31

 

$

1.21

 

$

0.84

 

 

 

 

 

 

 

Shares used in the calculation of diluted earnings per share

 

 

342,720

 

 

354,183

 

 

343,607

 

 

351,801

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.10

 

$

0.08

 

$

0.28

 

$

0.24

 

 

 

 

 

 

 

Maxim Integrated Products, Incorporated
Company Profile

NASDAQ Symbol: MXIM

•

Founded 1983

•

Public since: February 29, 1988

OPERATIONS

Corporate Offices:

120 San Gabriel Drive, Sunnyvale, California 94086

U.S. Sales Offices:

Sunnyvale and Costa Mesa, CA; Wheeling, IL; Roswell, GA; Chelmsford, MA; Austin and Dallas, TX; Beaverton, OR; Horsham, PA

Foreign Offices:

Munich, Germany; Tokyo, Japan; London, UK; Paris, France; Taipei, Taiwan; Seoul, South Korea; Hong Kong; Singapore; Milan, Italy; Beijing, China; Stockholm, Sweden; Zurich, Switzerland; Viborg, Denmark; Helsinki, Finland

PRODUCTS
Maxim designs, develops, manufactures and markets a broad range of linear and mixed-signal integrated circuits for use in a variety of electronic products. Maxim circuits “connect” the real world and the digital world by detecting, measuring, amplifying, and converting real world and communication signals, such as temperature, pressure, sound, voice, or light into the digital signals necessary for computer and DSP processing.

Message

 

•

Maxim serves approximately 35,000 customers worldwide.

 

 

•

Maxim believes it has developed more products than any other analog company in the past 21 years.

 

 

•

Maxim is recognized as the leader in CMOS analog and bipolar high-frequency technologies.

 

 

•

72% international sales for Q3 FY05.


FINANCIAL HIGHLIGHTS (In thousands, except EPS)

 

 

FY2001

 

FY2002

 

FY2003

 

FY2004

 

Q3 FY2005

 

 

 

 

 

 

 

 

Net Revenues

 

$

1,576,613

 

$

1,025,104

 

$

1,153,219

 

$

1,439,263

 

$

400,188

 

Net Income

 

$

334,939

 

$

259,183

 

$

309,601

 

$

419,752

 

$

125,537

 

Shares

 

 

361,620

 

 

355,821

 

 

341,253

 

 

350,575

 

 

342,720

 

Diluted EPS

 

$

0.93

 

$

0.73

 

$

0.91

 

$

1.20

 

$

0.37

 

Cash and Short-Term Investments

 

$

1,220,352

 

$

765,501

 

$

1,164,007

 

$

1,096,613

 

$

1,403,226

 

Total Assets

 

$

2,430,531

 

$

2,010,812

 

$

2,367,962

 

$

2,549,462

 

$

2,939,701

 

Stockholders’ Equity

 

$

2,101,154

 

$

1,741,151

 

$

2,070,412

 

$

2,112,318

 

$

2,503,865

 

ROE

 

 

17.5

%

 

13.5

%

 

16.2

%

 

20.1

%

 

21.8

%

Market Cap

 

$

14,535,766

 

$

13,391,992

 

$

11,870,840

 

$

18,240,400

 

$

14,092,654

 

RESEARCH COVERAGE

 

A.G. Edwards, Brett Miller (314) 955-2620

Lehman Brothers, Romit Shah (212) 526-7865

Amtech Research, Doug Freedman (415) 490-3921

Merrill Lynch, Joseph Osha (415) 676-3510

C.E. Unterberg, Towbin, Ramesh Misra (415) 659-2289

Morgan Stanley, Louis Gerhardy (415) 576-2391

CIBC, Richard Schafer (720) 554-1119

Pacific Crest Securities, Michael McConnell (503) 790-7788

Credit Suisse First Boston, Michael Masdea (415) 836-7779

Pacific Growth Equities, Jim Liang (415) 274-6889

Deutsche Bank, Ross Seymore (415) 617-3268

RBC Capital, Apjit Walia (212) 428-6406

FBR, Christopher Caso (212) 381-9217

SG Cowen, Jack Romaine (212) 278-4230

Global Crown Capital, David Wu (415) 402-0518

Sanford C. Bernstein, Adam Parker (212) 756-4658

Goldman Sachs, Simona Jankowski (415) 249-7437

Smith Barney, Craig Ellis (415) 951-1887

Investec, Bobby Burleson, (212) 898-7716

U.S. Bancorp Piper Jaffray, Tore Svanberg (650) 838-1411

JMP Securities, Krishna Shankar (415) 835-8971

UBS, Tom Thornhill (415) 352-5667

JP Morgan, William Lewis (415) 315-6780

William Blair & Company LLC, Jeff Rosenberg (312) 364-8342

Message