| Contact: | Paul Coghlan | 5:00 EDT | |
| | Vice President, Finance, Chief Financial Officer | Tuesday, January 12, 2010 | |
| | (408) 432-1900 | NATIONAL DISTRIBUTION | |
LINEAR TECHNOLOGY REPORTS QUARTERLY AND YEAR OVER YEAR INCREASES IN REVENUES AND OPERATING PROFITS WITH REVENUES GROWING 9% SEQUENTIALLY FROM THE PRIOR QUARTER. THE COMPANY IS ALSO RAISING ITS QUARTERLY DIVIDEND AND GUIDING FOR CONTINUED STRONG SALES GROWTH IN THE THIRD QUARTER.
Milpitas, California, January 12, 2010, Linear Technology Corporation (NASDAQ-LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the quarter ended December 27, 2009. Revenue of $256.4 million for the second quarter of fiscal year 2010 increased $20.2 million or 9% compared to the previous quarter’s revenue of $236.1 million and increased $7.2 million or 3% over $249.2 million reported in the second quarter of fiscal year 2009. Net income of $75.5 million increased $14.8 million or 24% over the first quarter of fiscal year 2010 and decreased $10.7 million or 12% from the second quarter of fiscal year 2009 which had a gain on the early retirement debt of $14.6 million and a lower tax rate of 20.7% compared to 24.5% this quarter.
Diluted earnings per share (“EPS”) of $0.33 increased $0.06 cents per share over the first quarter of fiscal year 2010 and decreased $0.05 cents per share from the second quarter of fiscal year 2009. Diluted EPS was calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and included $7.3 million ($0.02 per share) of non-cash interest expense related to the amortization of the debt discount on the Company’s Convertible Senior Notes in accordance with Financial Accounting Standards Board (“FASB”) Staff Position No. APB 14-1 (“FSP APB 14-1”), which the Company adopted during the first quarter of fiscal year 2010. All adjustments were made retrospectively as of the April 24, 2007 issuance of the Convertible Senior Notes and, therefore, all prior quarters and years have been adjusted accordingly.
During the December quarter the Company’s cash, cash equivalents and marketable securities balance increased by $33.0 million to $942.5 million. The Company is increasing its quarterly dividend from $0.22 per share to $0.23 per share. This marks the 18th consecutive year the Company has increased its dividend. The cash dividend of $0.23 per share will be paid on February 24, 2010 to stockholders of record on February 12, 2010.
According to Lothar Maier, CEO, “The Company began to recover from the global recession in the first quarter, but we continued to be relatively cautious as we entered the second quarter given the economic climate and level of uncertainty among our customers. However, the recovery continued throughout the second quarter and we experienced stronger than expected bookings with particular strength in the industrial, communication and computer end-markets. This allowed us to beat the high end of our second quarter revenue guidance as we grew revenues $20.2 million or 9% sequentially. In addition, higher gross margins and tight operating expense controls resulted in a 16% increase in our operating income, thereby increasing our operating margin to 45.1% of sales, up from 42.2% last quarter.
Our factories continue to execute well, enabling us to maintain low lead times which allows our customers to place orders on us close to their demand requirements. Strong second quarter bookings and a related postive book-to-bill ratio that was higher than we have experienced in the past several quarters, leads us to be optimistic as we enter our third quarter. As a result, we are forecasting revenue growth for our third fiscal quarter in the range of 7% to 10% over our second fiscal quarter.”
Except for historical information contained herein, the matters set forth in this press release are forward-looking statements. In particular, the statements regarding the demand for our products, our customers’ ordering patterns and the anticipated trends in our sales and profits are forward-looking statements. The forward-looking statements are dependent on certain risks and uncertainties, including such factors, among others, as the timing, volume and pricing of new orders received and shipped, the timely introduction of new processes and products, general conditions in the world economy and financial markets and other factors described in our 10-K for the fiscal year ended June 28, 2009.
Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, January 13, 2010 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 325-4865, or toll free (877) 340-7912 before 8:15 a.m. to be included in the audience. There will be a live webcast of this conference call that can be accessed through www.linear.com or www.streetevents.com. A replay of the conference call will be available from January 13, 2010 through January 19, 2010.
You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #6316441. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of January 13, 2010 until the second quarter earnings release next year.
Linear Technology Corporation, a manufacturer of high performance linear integrated circuits, was founded in 1981, became a public company in 1986 and joined the S&P 500 index of major public companies in 2000. Linear Technology products include high performance amplifiers, comparators, voltage references, monolithic filters, linear regulators, DC-DC converters, battery chargers and battery management systems, data converters, communications interface circuits, RF signal conditioning circuits, uModuleÒ products, and many other analog functions. Applications for Linear Technology’s high performance circuits include telecommunications, cellular telephones, networking products such as optical switches, notebook and desktop computers, computer peripherals, video/multimedia, industrial instrumentation, security monitoring devices, high-end consumer products such as digital cameras and MP3 players, complex medical devices, automotive electronics, factory automation, process control, and military and space systems. For more information, visit www.linear.com.
For further information contact Paul Coghlan at Linear Technology Corporation, 1630 McCarthy Blvd., Milpitas, California 95035-7417, (408) 432-1900.
LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
GAAP (unaudited)
| | | Three Months Ended | | Six Months Ended |
| | | Dec. 27, | | Sep. 27, | | Dec. 28, | | Dec. 27, | | Dec. 28, |
| | | 2009 | | 2009 | | 2008* | | 2009 | | 2008* |
| Revenues | | $ 256,364 | | $ 236,135 | | $ 249,196 | | $ 492,499 | | $ 559,547 |
Cost of sales (1) | | 61,621 | | 59,583 | | 60,278 | | 121,204 | | 131,750 |
Gross profit | | 194,743 | | 176,552 | | 188,918 | | 371,295 | | 427,797 |
| | | | | | | | | | | |
| Expenses: | | | | | | | | | | |
Research & development (1) | | 46,682 | | 45,340 | | 45,793 | | 92,022 | | 96,653 |
Selling, general & administrative (1) | | 32,459 | | 31,659 | | 32,573 | | 64,118 | | 69,680 |
Restructuring | | - | | - | | 1,564 | | - | | 1,564 |
| | | 79,141 | | 76,999 | | 79,930 | | 156,140 | | 167,897 |
| Operating income | | 115,602 | | 99,553 | | 108,988 | | 215,155 | | 259,900 |
| Interest expense | | (11,617) | | (11,892) | | (13,246) | | (23,509) | | (27,653) |
Amortization of debt discount(1) | | (7,296) | | (7,229) | | (7,753) | | (14,525) | | (16,058) |
| Interest income | | 3,358 | | 3,856 | | 6,113 | | 7,214 | | 13,087 |
| Gain on early retirement of convertible | | | | | | | | | | |
senior notes | | - | | - | | 14,644 | | - | | 14,644 |
| | | | | | | | | | | |
| Income before income taxes | | 100,047 | | 84,288 | | 108,746 | | 184,335 | | 243,920 |
| Provision for income taxes | | 24,511 | | 23,601 | | 22,506 | | 48,112 | | 55,373 |
| | | | | | | | | | | |
| Net income | | $ 75,536 | | $ 60,687 | , | $ 86,240 | | $ 136,223 | | $ 188,547 |
| | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | |
Basic | | $ 0.33 | | $ 0.27 | | $ 0.38 | | $ 0.60 | | $ 0.83 |
Diluted | | $ 0.33 | | $ 0.27 | | $ 0.38 | | $ 0.60 | | $ 0.83 |
| | | | | | | | | | | |
| Shares used in the calculation of earnings per share: | | | | | | |
Basic | | 227,265 | | 226,909 | | 225,904 | | 227,093 | | 225,892 |
| | 228,366 | | 227,852 | | 225,936 | | 228,160 | | 226,981 |
| | | | | | | | | | | |
(1) Includes the following non-cash charges: | | | | | | |
| Stock-based compensation | | | | | | | | | | |
Cost of sales | | $ 2,220 | | $ 2,295 | | $ 1,933 | | $ 4,515 | | $ 3,819 |
Research & development | | 9,521 | | 9,719 | | 8,236 | | 19,240 | | 16,222 |
Sales, general & administrative | | 5,301 | | 5,475 | | 4,595 | | 10,776 | | 9,097 |
| Amortization of debt discount (non- | | | | | | | | | | |
cash interest expense) | | 7,296 | | 7,229 | | 7,753 | | 14,525 | | 16,058 |
| | * As adjusted for the adoption of FSP APB14-1 and EITF 03-6-1. |
| LINEAR TECHNOLOGY CORPORATION | |
| CONSOLIDATED CONDENSED BALANCE SHEETS | |
| (in thousands) | |
| | | December 27, | | | June 28, | |
| | | 2009 | | | | 2009 | * |
| | | | | | | |
| ASSETS: | | | | | | | |
| Current assets: | | | | | | | |
Cash, cash equivalents and | | | | | | | |
marketable securities | | $ | 942,470 | | | $ | 868,711 | |
| | | | | | | | | |
Accounts receivable, net of | | | | | | | | |
allowance for doubtful | | | | | | | | |
accounts of $2,052 ($1,790 | | | | | | | | |
at June 28, 2009) | | | 124,156 | | | | 95,434 | |
| | | | | | | | | |
Inventories | | | 52,191 | | | | 52,531 | |
| | | | | | | | | |
Deferred tax assets and | | | | | | | | |
| other current assets | | | 77,026 | | | | 72,575 | |
Total current assets | | | 1,195,843 | | | | 1,089,251 | |
| | | | | | | | | |
| Property, plant & equipment, net | | | 245,889 | | | | 258,425 | |
| | | | | | | | | |
| Other noncurrent assets | | | 71,096 | | | | 73,853 | |
| Total assets | | $ | 1,512,828 | | | $ | 1,421,529 | |
| | | | | | | | | |
| LIABILITIES & STOCKHOLDERS’ | | | | | | | | |
| EQUITY: | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 13,400 | | | $ | 10,531 | |
| | | | | | | | | |
Accrued income taxes, payroll & other accrued liabilities | | | 91,811 | | | | 86,313 | |
| | | | | | | | | |
Deferred income on shipments | | | | | | | | |
to distributors | | | 28,499 | | | | 28,497 | |
Total current liabilities | | | 133,710 | | | | 125,341 | |
| | | | | | | | | |
Convertible senior notes (1) | | | 1,285,574 | | | | 1,280,617 | |
| | | | | | | | | |
Deferred tax and other long-term | | | | | | | | |
liabilities | | | 207,869 | | | | 201,908 | |
| | | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Common stock | | | 1,290,257 | | | | 1,247,092 | |
| | | | | | | | | |
Accumulated deficit | | | (1,408,077 | ) | | | (1,438,524 | ) |
| | | | | | | | | |
Accumulated other | | | | | | | | |
comprehensive income | | | 3,495 | | | | 5,095 | |
Total stockholders’ deficit | | | (114,325 | ) | | | (186,337 | ) |
| | | $ | 1,512,828 | | | $ | 1,421,529 | |
* As adjusted for the adoption of FSP APB14-1.
| | (1) Principal owed on Convertible Senior Notes at December 27, 2009 and June 28, 2009 is $1,396 million and $1,406 million, respectively, due to the above amounts including non-cash adjustments of $110 million and $125 million, respectively, as a result of the implementation of FSP APB14-1. |
LINEAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(In thousands, except per share amounts)
| | | Three Months Ended | | Six Months Ended | |
| | | Dec. 27, | | Sep. 27, | | Dec. 28, | | Dec. 27, | | Dec. 28, | |
| | | 2009 | | 2009 | | 2008* | | 2009 | | 2008* | |
| | | | | | | | | | | | |
| Reported net income | | | | | | | | | | | |
| (GAAP basis) | | $ 75,536 | | $ 60,687 | | $ 86,240 | | $ 136,223 | | $ 188,547 | |
| | | | | | | | | | | | |
Stock-based compensation (1) | | 17,042 | | 17,489 | | 14,764 | | 34,531 | | 29,138 | |
Amortization of debt | | | | | | | | | | | |
discount(2) | | 7,296 | | 7,229 | | 7,753 | | 14,525 | | 16,058 | |
Income tax effect of | | | | | | | | | | | |
non-GAAP adjustments | | (5,963) | | (6,921) | | (4,660) | | (12,804) | | (10,260) | |
| | | | | | | | | | | | |
| Non-GAAP net income | | $ 93,911 | | $ 78,484 | | $ 104,097 | | $ 172,475 | | $ 223,483 | |
| | | | | | | | | | | | |
| Basic | | $ 0.41 | | $ 0.35 | | $ 0.46 | | $ 0.76 | | $ 0.99 | |
| Diluted | | $ 0.41 | | $ 0.34 | | $ 0.46 | | $ 0.76 | | $ 0.98 | |
| | | | | | | | | | | | |
| 1) | Linear began expensing stock options in the first quarter of fiscal year 2006. |
| 2) | Amortization of debt discount is a non-cash interest expense related to the adoption of FSP APB 14-1. The Company adopted FSP APB 14-1 during the first quarter of fiscal year 2010. All adjustments were made retrospectively as of the date of issuance of the Convertible Senior Notes and, therefore, all prior quarters and years have been adjusted accordingly. |
The Company’s non-GAAP measures set forth above exclude charges related to stock-based compensation and the amortization of the Company’s debt discount which is a non-cash interest expense. The Company’s management uses non-GAAP net income and non-GAAP net income per diluted share to evaluate the Company’s current operating results and financial results and to compare them against historical financial results. The Company excludes stock-based compensation and non-cash interest expenses and the related tax effects primarily because they are significant non-cash expense estimates, which management separates for consideration when evaluating and managing business operations. In addition management believes it is useful to investors because it is frequently used by securities analysts, investors and other interested parties in evaluating the Company and provides further clarity on it’s profitability.
In addition, the Company believes that providing investors with these non-GAAP measurements enhances their ability to compare the Company’s business against that of its many competitors who employ and disclose similar non-GAAP measures. This financial measure may be different from non-GAAP methods of accounting and reporting used by the Company’s competitors to the extent their non-GAAP measures include other items. The presentation of this additional information should not be considered a substitute for net income or net income per diluted share prepared in accordance with GAAP.
