| Contact: | Paul Coghlan | 5:00 EDT | |
| | Vice President, Finance, Chief Financial Officer | Tuesday, April 19, 2011 | |
| | (408) 432-1900 | NATIONAL DISTRIBUTION | |
LINEAR TECHNOLOGY REPORTS AN INCREASE IN YEAR OVER YEAR QUARTERLY REVENUES AND NET INCOME, ALTHOUGH EACH DECREASED FROM THE PRIOR QUARTER.
Milpitas, California, April 19, 2011, Linear Technology Corporation (NASDAQ-LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the quarter ended April 3, 2011. Quarterly revenues of $353.2 million for the third quarter of fiscal year 2011 decreased $30.4 million or 8% from the previous quarter’s revenue of $383.6 million and increased $41.9 million or 13% over $311.3 million reported in the third quarter of fiscal year 2010. Net income of $141.6 million decreased $2.2 million or 2% from the second quarter of fiscal year 2011 and increased $40.9 million or 41% over the third quarter of fiscal year 2010. Net income for the third quarter of fiscal year 2011 benefited from a lower tax rate of 17% compared to the second quarter of fiscal year 2011 rate of 24% and the third quarter of fiscal year 2010 rate of 27%. The Company’s tax rate in its fiscal third quarter just ended includes a quarterly tax benefit from a settlement with the IRS related to export tax benefits taken in previous years.
Diluted EPS of $0.61 per share in the third quarter of fiscal year 2011 decreased $0.01 per share or 2% from the second quarter of fiscal year 2011 and increased $0.17 per share or 39% over the third quarter of fiscal year 2010.
During the third quarter the Company’s cash, cash equivalents and marketable securities increased by $62.3 million to $810.5 million. A cash dividend of $0.24 will be paid on June 1, 2011 to stockholders of record on May 20, 2011.
According to Lothar Maier, CEO, “The quarter unfolded largely as expected with revenues declining 8%, which was the mid point of our guidance. This decline was largely attributable to a forecasted reduction in our computer business. Revenues from our core analog markets decreased slightly as increases in our industrial and automotive core markets were modestly offset by decreases in the communications end market. As expected, our book-to-bill ratio, although improved from last quarter, was still less than one as in the early part of the quarter customers continued to rebalance their inventories in response to our lower lead times that are now at our historical 4 to 6 weeks level.
As we move into the June fourth quarter, we believe that the impact from the rebalance of inventory by our customers is behind us, and we continue to see recovery among certain of our customers in our core analog markets. However, we do have at least near term uncertainty pertaining to the impact on our business from the tragedies caused by the earthquake and tsunami in Japan. Geographically, the Japan market represents approximately 15% of our business and we do expect some negative impact in shipments to Japan, particularly in the automotive market that appears to be most impacted from the tragedy. Japan is also a source of raw materials to ourselves and our competitors. We have alternate sources for silicon wafers and most other critical materials and therefore, do not expect a supply issue for us in the near term. However, uncertainties of supply are causing concerns at some customers. Our low lead times and ability to supply to demand may help us in this uncertain environment. These Japan related issues lead to uncertainties that make financial forecasting difficult. In our case, since all of these Japanese issues could potentially offset each other, for the June quarter we are currently forecasting modest sequential revenue growth in the range of flat to up 3%.”
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 and country specific conditions in the world economy and financial markets and other factors described in our 10-K for the fiscal year ended June 27, 2010.
Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, April 20, 2011 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 325-2217, or toll free (877) 455-2263 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 April 20, 2011 through April 26, 2011.
You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #9636735. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of April 20, 2011 until the third quarter earnings release next year.
Linear Technology Corporation, a member of the S&P 500, has been designing, manufacturing and marketing a broad line of high performance analog integrated circuits for major companies worldwide for three decades. The Company’s products provide an essential bridge between our analog world and the digital electronics in communications, networking, industrial, automotive, computer, medical, instrumentation, consumer, and military and aerospace systems. Linear Technology produces power management, data conversion, signal conditioning, RF and interface ICs, and µModuleÒ subsystems. 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 | | Nine Months Ended |
| | | April 3, | | Jan. 2, | | Mar. 28, | �� | April 3, | | Mar. 28, |
| | | 2011 | | 2011 | | 2010 | | 2011 | | 2010 |
| Revenues | | $ 353,192 | | $ 383,621 | | $ 311,324 | | $ 1,125,405 | | $ 803,823 |
Cost of sales (1) | | 79,100 | | 82,603 | | 68,801 | | 245,434 | | 190,005 |
Gross profit | | 274,092 | | 301,018 | | 242,523 | | 879,971 | | 613,818 |
| | | | | | | | | | | |
| Expenses: | | | | | | | | | | |
Research & development (1) | | 55,363 | | 59,001 | | 51,885 | | 170,566 | | 143,907 |
Selling, general & administrative (1) | | 39,693 | | 40,958 | | 36,710 | | 124,733 | | 100,828 |
| | | 95,056 | | 99,959 | | 88,595 | | 295,299 | | 244,735 |
| Operating income | | 179,036 | | 201,059 | | 153,928 | | 584,672 | | 369,083 |
| Interest expense | | (6,981) | | (8,135) | | (11,701) | | (25,533) | | (35,210) |
Amortization of debt discount(2) | | (4,726) | | (5,390) | | (7,399) | | (16,882) | | (21,924) |
Interest and other income(3) | | 3,221 | | 1,602 | | 2,996 | | 6,739 | | 10,210 |
| | | | | | | | | | | |
| Income before income taxes | | 170,550 | | 189,136 | | 137,824 | | 548,996 | | 322,159 |
| Provision for income taxes | | 28,993 | | 45,393 | | 37,212 | | 126,446 | | 85,324 |
| | | | | | | | | | | |
| Net income | | $ 141,557 | | $ 143,743 | | $ 100,612 | | $ 422,550 | | $ 236,835 |
| | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | |
Basic | | $ 0.61 | | $ 0.62 | | $ 0.44 | | $ 1.83 | | $ 1.04 |
Diluted | | $ 0.61 | | $ 0.62 | | $ 0.44 | | $ 1.82 | | $ 1.04 |
| | | | | | | | | | | |
| Shares used in the calculation of earnings per share: | | | | | | |
Basic | | 231,225 | | 230,284 | | 227,764 | | 230,455 | | 227,363 |
Diluted | | 233,277 | | 232,202 | | 229,024 | | 232,439 | | 228,449 |
| | | | | | | | | | | |
| Includes the following non-cash charges: | | | | | | |
(1) Stock-based compensation | | | | | | | | | | |
Cost of sales | | $ 2,202 | | $ 2,338 | | $ 2,292 | | $ 6,723 | | $ 6,807 |
Research & development | | 9,869 | | 10,531 | | 9,871 | | 30,167 | | 29,111 |
Sales, general & administrative | | 5,282 | | 5,614 | | 5,479 | | 16,137 | | 16,255 |
(2) Amortization of debt discount (non- | | | | | | | | | | |
cash interest expense) | | 4,726 | | 5,390 | | 7,399 | | 16,882 | | 21,924 |
| | | | | | | | | | | |
| Includes the following: | | | | | | | | | | |
(3) Gain on legal settlement | | 1,700 | | - | | - | | 1,700 | | - |
| | | | | | | | | | | |
| LINEAR TECHNOLOGY CORPORATION | |
| CONSOLIDATED CONDENSED BALANCE SHEETS | |
| (in thousands) | |
| (Unaudited) | |
| | | | | | | |
| | | April 3, | | | June 27, | |
| | | 2011 | | | 2010 | |
| ASSETS: | | | | | | |
| Current assets: | | | | | | |
Cash, cash equivalents and | | | | | | |
marketable securities | | $ | 810,501 | | | $ | 958,069 | |
Accounts receivable, net of | | | | | | | | |
allowance for doubtful | | | | | | | | |
accounts of $2,043 ($2,043 | | | | | | | | |
at June 27, 2010) | | | 162,422 | | | | 176,874 | |
| | | | | | | | | |
Inventories | | | 70,415 | | | | 54,044 | |
| | | | | | | | | |
Deferred tax assets and | | | | | | | | |
| other current assets | | | 84,385 | | | | 75,314 | |
Total current assets | | | 1,127,723 | | | | 1,264,301 | |
| | | | | | | | | |
| Property, plant & equipment, net | | | 324,687 | | | | 257,035 | |
| | | | | | | | | |
| Other noncurrent assets | | | 60,680 | | | | 69,382 | |
| Total assets | | $ | 1,513,090 | | | $ | 1,590,718 | |
| | | | | | | | | |
| LIABILITIES & STOCKHOLDERS’ | | | | | | | | |
| EQUITY: | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 19,679 | | | $ | 21,235 | |
| | | | | | | | | |
Accrued income taxes, payroll & other accrued liabilities | | | 97,348 | | | | 134,649 | |
| | | | | | | | | |
Deferred income on shipments | | | | | | | | |
to distributors | | | 38,629 | | | | 33,700 | |
| | | | | | | | | |
Convertible senior notes- current portion (1) | | | - | | | | 392,926 | |
Total current liabilities | | | 155,656 | | | | 582,510 | |
| | | | | | | | | |
Convertible senior notes (1) | | | 780,939 | | | | 766,960 | |
| | | | | | | | | |
Deferred tax and other noncurrent | | | | | | | | |
liabilities | | | 182,210 | | | | 201,463 | |
| | | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Common stock | | | 1,437,539 | | | | 1,331,888 | |
| | | | | | | | | |
Accumulated deficit | | | (1,044,355 | ) | | | (1,294,077 | ) |
| | | | | | | | | |
Accumulated other | | | | | | | | |
comprehensive income | | | 1,101 | | | | 1,974 | |
Total stockholders’ equity | | | 394,285 | | | | 39,785 | |
| | | $ | 1,513,090 | | | $ | 1,590,718 | |
| | (1) Principal owed on Convertible Senior Notes at April 3, 2011 and June 27, 2010 is $845.1 million and $1,241 million, respectively. The above amounts include non-cash adjustments of $64.2 million at April 3, 2011 and $81 million at June 27, 2010. |
LINEAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(In thousands, except per share amounts)
| | | Three Months Ended | | | Nine Months Ended | |
| | | April 3, | | | Jan. 2, | | | Mar. 28, | | | April 3, | | | Mar. 28, | |
| | | 2011 | | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| | | | | | | | | | | | | | | | |
| Reported net income | | | | | | | | | | | | | | | |
| (GAAP basis) | | $ | 141,557 | | | $ | 143,743 | | | $ | 100,612 | | | $ | 422,550 | | | $ | 236,835 | |
| | | | | | | | | | | | | | | | | | | | | |
Stock-based compensation | | | 17,353 | | | | 18,483 | | | | 17,642 | | | | 53,027 | | | | 52,173 | |
Amortization of debt | | | | | | | | | | | | | | | | | | | | |
discount(1) | | | 4,726 | | | | 5,390 | | | | 7,399 | | | | 16,882 | | | | 21,924 | |
Income tax effect of | | | | | | | | | | | | | | | | | | | | |
non-GAAP adjustments | | | (3,753 | ) | | | (5,730 | ) | | | (6,761 | ) | | | (16,102 | ) | | | (19,625 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Non-GAAP net income | | $ | 159,883 | | | $ | 161,886 | | | $ | 118,892 | | | $ | 476,357 | | | $ | 291,307 | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.69 | | | $ | 0.70 | | | $ | 0.52 | | | $ | 2.07 | | | $ | 1.28 | |
| Diluted | | $ | 0.69 | | | $ | 0.70 | | | $ | 0.52 | | | $ | 2.05 | | | $ | 1.28 | |
| | | | | | | | | | | | | | | | | | | | | |
| 1) | Amortization of debt discount is non-cash interest expense related to the Company’s Convertible Senior Notes. |
The Company’s non-GAAP measures set forth above exclude charges related to stock-based compensation, the amortization of the Company’s debt discount which is a non-cash interest expense and the non-cash charge on early retirement of convertible senior notes. 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 its 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.
