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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, 1994
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 Executive 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 January 31, 1995
$.001 par value 29,563,474 shares
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MAXIM INTEGRATED PRODUCTS, INC.
INDEX
Part I. Financial Information Page
Item 1. Financial Statements
Consolidated Balance Sheets 3
As of June 30, 1994 and December 31, 1994
Consolidated Statements of Income 4
for the three and six months ended December 31, 1993 and 1994
Consolidated Statements of Cash Flows 5
for the six months ended December 31, 1993 and 1994
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-k 9
Signatures 10
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CONSOLIDATED BALANCE SHEETS
MAXIM INTEGRATED PRODUCTS, INC.
(In thousands)
JUNE 30, DECEMBER 31,
1994 1994
-------- ------------
(Audited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 28,033 $ 37,280
Short-term investments 20,397 32,596
-------- --------
Total cash, cash equivalents and short-term investments 48,430 69,876
Accounts receivable, net 17,950 18,969
Inventories 18,330 15,987
Prepaid taxes and other current assets 14,770 15,018
-------- --------
Total current assets 99,480 119,850
-------- --------
Property, plant and equipment, at cost,
less accumulated depreciation and amortization 77,696 76,212
Deposits and other assets 1,347 3,168
-------- --------
$178,523 $199,230
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligations $ 134 $ 107
Accounts payable 10,695 10,805
Income taxes payable 5,175 694
Accrued salaries 6,203 6,528
Accrued expenses 14,182 19,515
Deferred income on shipments to distributors 7,046 8,968
-------- --------
Total current liabilities 43,435 46,617
-------- --------
Capital lease obligations, less current portion 40 1
Deferred income taxes 4,856 4,856
-------- --------
Stockholders' equity:
Common stock 28 30
Additional paid-in capital 55,578 55,714
Retained earnings 74,545 91,779
Translation adjustment 41 233
-------- --------
Total stockholders' equity 130,192 147,756
-------- --------
$178,523 $199,230
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See accompanying notes.
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CONSOLIDATED STATEMENTS OF INCOME
MAXIM INTEGRATED PRODUCTS, INC.
(Amounts in thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------- --------------------
1993 1994 1993 1994
------- ------- ------- --------
Net revenues $36,143 $56,184 $69,237 $108,188
Cost of goods sold 14,977 23,316 29,007 44,949
------- ------- ------- --------
Gross margin 21,166 32,868 40,230 63,239
------- ------- ------- --------
Operating expenses:
Research and development 5,210 9,602 10,011 17,913
Selling, general and administrative 7,654 10,080 14,300 19,803
------- ------- ------- --------
12,864 19,682 24,311 37,716
------- ------- ------- --------
Operating income 8,302 13,186 15,919 25,523
Interest income, net 582 552 1,251 990
------- ------- ------- --------
Income before provision for income taxes 8,884 13,738 17,170 26,513
Provision for income taxes 3,198 4,808 6,181 9,279
------- ------- ------- --------
Net income $ 5,686 $ 8,930 $10,989 $ 17,234
------- ------- ------- --------
Income per share $ 0.18 $ 0.27 $ 0.35 $ 0.53
------- ------- ------- --------
Common and common equivalent shares 31,616 33,058 31,409 32,801
------- ------- ------- --------
See accompanying notes.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
MAXIM INTEGRATED PRODUCTS, INC.
(Amounts in thousands)
(Unaudited)
FOR THE SIX MONTHS
ENDED
DECEMBER 31,
-------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1993 1994
- ----------------------------------------------------------------------- ------- -------
Cash flows from operating activities:
Net income $10,989 $17,234
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,638 5,582
Reduction in carrying value of equipment -- 5,633
Changes in assets and liabilities:
Accounts receivable 3,185 (1,019)
Inventories, prepaid taxes and other current assets (331) 2,095
Accounts payable 495 110
Income taxes payable 613 (1,901)
Deferred income on shipments to distributors 1,964 1,922
All other accrued liabilities 1,915 5,658
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Net cash from operating activities 22,468 35,314
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Cash flows from investing activities:
Additions to property, plant and equipment (14,341) (9,438)
Deposits and other non-current assets (34) (1,922)
Short-term investments (1,919) (12,199)
------- -------
Net cash used in investing activities (16,294) (23,559)
------- -------
Cash flows from financing activities:
Issuance of common stock 2,644 3,367
Principal payments on capital lease obligations (345) (66)
Repurchase of Common Stock (2,783) (5,809)
------- -------
Net cash used in financing activities (484) (2,508)
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Net increase in cash and cash equivalents 5,690 9,247
Cash and cash equivalents:
Beginning of year 28,566 28,033
------- -------
End of period $34,256 $37,280
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See accompanying notes.
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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 six months ended December 31, 1994
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, 1994.
NOTE 2: INVENTORIES
JUNE 30, DECEMBER 31,
1994 1994
-------- ------------
Inventories consist of: (audited) (unaudited)
(In thousands)
Raw Materials $ 1,293 $ 1,319
Work in Process 8,236 6,354
Finished Goods 8,801 8,314
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$18,330 $15,987
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NOTE 3: INCOME PER SHARE
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.
On December 7, 1994, 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.
NOTE 4: INVESTMENT SECURITIES
On July 1, 1994, the Company adopted Statement of Financial Accounting
Standard No. 115 (FAS 115) "Accounting for Certain Investments in Debt and
Equity Securities." There was no cumulative effect of adopting FAS 115.
FAS 115 requires that all investment securities be classified into one of
three categories: held-to-maturity, available-for-sale, or trading. Management
determines the appropriate classification of debt securities at the time of
purchase and reevaluates such designation as of each balance sheet date. Debt
securities are classified as held-to-maturity when the Company has the positive
intent and ability to hold the securities to maturity.
At December 31, 1994, all debt securities which consist of U.S. Treasury
securities and various municipal bonds all maturing within one year are
designated as held-to-maturity and 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. The cost of securities sold is
based on the specific identification method. Interest on securities classified
as held-to-maturity is included in investment income.
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MAXIM INTEGRATED PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following is a summary of held-to-maturity securities at December 31,
1994:
(Amounts in thousands) COST
--------------------------------------------------------- -------
U.S. Treasury securities $ 4,570
Municipal bonds 34,032
-------
$38,602
=======
Amounts included in short-term investments $32,596
Amounts included in cash and cash equivalents 6,006
-------
$38,602
=======
There were no gross realized gains or losses for the three months ended
December 31, 1994.
NOTE 5: PROPERTY, PLANT, AND EQUIPMENT
In the three months ended December 31, 1994, the Company recorded
approximately $5.6 million charge to operating income relating to the Company's
program to update its CMOS wafer manufacturing facilities from 4" to 6" wafers
and to replace outdated test equipment, handlers and other equipment. The charge
relates primarily to the write-off of equipment that will no longer be
productively used by the Company, and it was allocated primarily to cost of
sales and to a lesser extent to operating expenses based on the nature of the
equipment involved.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues increased 55.4% and 56.3% in the three and six months ended
December 31, 1994 compared to the same periods a year ago. The increase was the
result of continued introduction of new proprietary products and increased
market acceptance of the Company's proprietary and second source products. In
addition, revenues were also positively impacted in fiscal 1995 by the inclusion
of the revenues associated with Integrated Circuit Operations acquired from
Tektronix on May 27, 1994.
Gross margin decreased to 58.5% in the three months ended December 31, 1994
compared to 58.6% for the three months ended December 31, 1993 and increased to
58.5% in the six months ended December 31, 1994 compared to 58.1% for the six
months ended December 31, 1993. During the three and six month period, the
Company experienced continued improvement in production yields, economies of
scale and also experienced a higher percentage of proprietary products in the
mix of products sold, which generally yield a somewhat higher gross margin than
a second source products. These factors were offset by the charge discussed
below.
Research and development expenses were 17.1% and 16.6% of net revenues in
the three and six months ended December 31, 1994, compared to 14.4% and 14.5% in
the three and six months ended December 31, 1993. The research and development
expenses as a percentage of net revenue increased primarily because of the
charges discussed below. Spending on research and development in absolute
dollars reflect the Company's continuing commitment to new product development.
Selling, general and administrative expenses decreased as a percentage of
net revenues to 17.9% and 18.3% in the three and six months ended December 31,
1994, compared to 21.2% and 20.7% for the three and six months ended December
31, 1993, primarily as a consequence of the growth in net revenues. In absolute
dollars, selling, general and administrative expenses increased primarily due to
the charge discussed below.
In the three months ended December 31, 1994, the Company recorded
approximately $5.6 million charge to operating income relating to the Company's
program to update its wafer manufacturing facilities from 4" to 6" wafers and to
replace outdated test equipment, handlers and other equipment. The charge
relates primarily to the write-off of equipment that will no longer be
productively used by the Company, and it was allocated primarily to cost of
sales and to a lesser extent to operating expenses based on the nature of the
equipment involved.
The Company's operating income increased to 23.5% of net revenues in the
three months ended December 31, 1994, compared to 23.0% for the three months
ended December 31, 1993 and increased to 23.6% of net revenues in the six months
ended December 31, 1994, compared to 23.0% for the six months ended December 31,
1993, as a result of the factors cited above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds for the first six months of fiscal
year 1995 have been the net cash generated from operating activities of
$35,314,000 and the issuance of common stock of $3,367,000. The principal uses
of funds have been purchases of $9,438,000 of property, plant and equipment, an
increase in short-term investments of $12,199,000 and the repurchase of
$5,809,000 of common stock. The Company expects that its program to convert from
4" to 6" wafer fabrication and to update test equipment will be funded by cash
generated from operations and its current cash and short term investments.
The Company believes it possesses sufficient liquidity and capital
resources to fund its operations.
STOCK SPLIT
On December 7, 1994, 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.
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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 10, 1994.
The Stockholders elected the Board's nominees as directors by the votes
indicated:
NOMINEE VOTES IN FAVOR VOTES AGAINST ABSTENTIONS NON-VOTES
- ----------------------------------------- -------------- ------------- ----------- ---------
James R. Bergman 12,679,680 34,010 0 0
John F. Gifford 12,678,863 34,827 0 0
Robert F. Graham 12,679,680 34,010 0 0
A.R. Frank Wazzan 12,678,908 34,782 0 0
The increase in number of authorized shares of common stock to 60,000,000
shares was approved with 9,981,627 votes in favor, 2,728,646 against, 3,417
abstentions, and no non-votes.
The Company's Incentive Stock Option Plan, 1987 Supplemental Stock Option
Plan and 1987 Employee Stock Participation Plan, under which an additional
3,600,000 shares of common stock are reserved for issuance, each as amended,
were approved with 8,658,800 votes in favor, 3,319,352 against, 4,832
abstentions and 730,706 non-votes.
The selection of Ernst & Young LLP as the Company's independent auditors
for fiscal 1995 was ratified with 12,635,140 votes in favor, 65,750 votes
against, 12,800 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, 1994
Items 1, 2, 3, and 5 have been omitted as they are not applicable.
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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 13, 1995 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
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Richard E. Slater
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
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