Contact: Paul Coghlan 5:00 EDT
Vice President, Finance Tuesday, October 18, 2005
(408) 432-1900 US1
LINEAR TECHNOLOGY REPORTS INCREASED SALES AND PRO FORMA PROFITS OVER THE SIMILAR
QUARTER IN THE PRIOR YEAR
Milpitas, California, October 18, 2005, Linear Technology Corporation
(NASDAQ-LLTC), a leading, independent manufacturer of high performance linear
integrated circuits, today announced that net sales for its first quarter ended
October 2, 2005, were $256,013,000, an increase of 1% over net sales of
$253,028,000 for the first quarter of the previous year. The Company also
reported net income for the quarter of $99,181,000 or $0.31 diluted earnings per
share, ($108,451,000 or $0.35 pro forma excluding stock based compensation as
noted below) as compared to $103,476,000 or $0.33 diluted earnings per share
reported for the first quarter of last year. During the quarter, the Company
implemented Financial Accounting Standard 123R (FAS123R), "Share-based
Payments", which requires companies to estimate the cost of all forms of stock
based compensation, including stock options, restricted stock and employee stock
purchase plans, and record a commensurate expense in their income statement.
Since the Company began its fiscal year this quarter, it is one of the first
companies required to implement FAS123R. For Linear Technology, the total amount
of stock based compensation during this quarter was $13,338,000. Under FAS123R
calculations, there was also an increase in estimated diluted shares
outstanding. Consequently, pro forma earnings per share, excluding stock based
compensation accounting estimates, would have been $0.35 for the quarter ended
October 2, 2005 versus $0.33 on a similar basis for the prior year's quarter.
The Company's cash and short-term investments increased by $43.6 million, net of
spending $64.5 million to purchase 1,656,165 shares of common stock. A cash
dividend of $0.10 per share will be paid on November 16, 2005 to stockholders of
record on October 28, 2005.
According to Lothar Maier, CEO, "Sequentially sales were similar to the
June quarter, however, demand increased resulting in a positive book to bill
ratio. We continue to be strongly cash flow positive and our return on sales was
39% or 42% on a pro forma basis prior to the impact of stock based compensation
accounting.
Looking ahead to the December quarter, our bookings have improved,
particularly in consumer related products, and consequently we expect sales to
increase, roughly in the 3% to 4% range."
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 growth of 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 July
3, 2005.
Company officials will be discussing these results in greater detail in a
conference call tomorrow, Wednesday, October 19, 2005 at 8:30 a.m. Pacific Coast
Time. Those investors wishing to listen in may call (719) 234-0008 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
October 19 through October 25, 2005. You may access this post view by calling
(719) 457-0820 and entering reservation #4138095. An archive of the webcast will
also be available at www.linear.com and www.streetevents.com as of October 19,
2005 until the first 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, data
converters, communications interface circuits, RF signal conditioning circuits,
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)
October 2, September 26,
2005 2004
-------- --------
Net Sales $256,013 $253,028
Cost of sales (1) 55,999 54,839
-------- --------
Gross profit 200,014 198,189
-------- --------
Expenses:
Research & development (1) 37,779 30,634
Selling, general & administrative (1) 31,150 23,058
-------- --------
68,929 53,692
-------- --------
Operating income 131,085 144,497
Interest income,net 11,622 5,468
-------- --------
Income before income taxes 142,707 149,965
Provision for income taxes 43,526 46,489
-------- --------
Net income $ 99,181 $103,476
======== ========
Earnings per share:
Basic $ 0.32 $ 0.34
======== ========
Diluted $ 0.31 $ 0.33
======== ========
Shares used in the calculation of
earnings per share:
Basic 306,336 308,201
======== ========
Diluted 315,940 316,918
======== ========
Pro forma earnings per share excluding
the effects of stock based compensation:
Basic $ 0.35 $ 0.34
======== ========
Diluted $ 0.35 $ 0.33
======== ========
Pro forma shares used in the calculation of pro forma
earnings per share:
Basic 306,336 308,201
======== ========
Diluted 313,429 316,918
======== ========
<FN>
(1) Includes stock-based compensation charges as follows:
</FN>
Cost of sales (net of $1,200 in inventory) 1,207 520
Research and development 5,923 1,430
Sales, general and administrative 6,208 1,299
-------- --------
Total stock-based compensation 13,338 3,249
======== ========
LINEAR TECHNOLOGY CORPORATION
RECONCILIATION OF NET INCOME TO PRO FORMA NET INCOME
(In thousands, except per share amounts)
NON-GAAP (unaudited)
October 2, September 26,
2005 2004
--------- ---------
Net income $ 99,181 $ 103,476
Adjustments to reconcile net income to
pro forma net income:
Stock-based compensation 13,338 3,249
Tax effect (4,068) (1,007)
--------- ---------
Pro forma net income $ 108,451 $ 105,718
========= =========
Pro forma earnings per share:
Basic $ 0.35 $ 0.34
========= =========
Diluted $ 0.35 $ 0.33
========= =========
Shares used in the calculation of
pro-forma earnings per share:
Basic 306,336 308,201
========= =========
Diluted 313,429 (1) 316,918
========= =========
(1) Excludes 2,511 shares to conform diluted outstanding shares calculated
under FAS123R to diluted shares calculated under prior accounting
standards.
FAS123R - Stock Based Compensation became effective and was adopted by the
Company during the quarter ended October 2, 2005. FAS123R requires the Company
to estimate the cost of all forms of stock based compensation, including
employee stock options, and to record a commensurate expense in the income
statement. To supplement our consolidated financial statements presented in
accordance with GAAP, we have shown above a non-GAAP (pro forma) presentation of
the Company's earnings per share, which is adjusted to reflect the GAAP results
to exclude all stock based compensation. This non-GAAP presentation of earnings
per share is provided to enhance the user's overall understanding of the
Company's historical financial performance and comparability between periods. We
believe the non-GAAP results provide useful information to investors by
excluding stock based compensation particularly during this transitional period
when most companies have not yet adopted the provisions of FAS123R.
LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
October 2, July 3,
2005 2005
(unaudited) (audited)
----------- -----------
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $ 1,834,519 $ 1,790,912
Accounts receivable, net of
allowance for doubtful
accounts of $1,713 ($1,713
at July 3, 2005) 120,829 125,864
Inventories 37,181 34,328
Deferred tax assets and other
current assets 62,186 56,205
----------- -----------
Total current assets 2,054,715 2,007,309
----------- -----------
Property, plant & equipment, net 226,532 221,028
Other non current assets 52,075 57,897
----------- -----------
Total assets $ 2,333,322 $ 2,286,234
=========== ===========
LIABILITIES & STOCKHOLDERS ' EQUITY
Current liabilities:
Accounts payable $ 16,606 $ 11,800
Accrued income taxes, payroll &
other accrued liabilities 164,533 152,231
Deferred income on shipments
to distributors 42,896 43,708
----------- -----------
Total current liabilities 224,035 207,739
----------- -----------
Deferred tax and other long-term liabilities 70,405 71,461
Stockholders' equity:
Common stock 950,994 926,763
Retained earnings 1,092,010 1,083,110
Accumulated other comprehensive income (4,122) (2,839)
----------- -----------
Total stockholders' equity 2,038,882 2,007,034
----------- -----------
$ 2,333,322 $ 2,286,234
=========== ===========