1
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 30, 2000
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 Executives 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 29, 2001
$.001 PAR VALUE 283,147,553 SHARES
2
MAXIM INTEGRATED PRODUCTS, INC.
INDEX
- -----
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Financial Statements
Consolidated Balance Sheets 3
As of December 30, 2000 and June 24, 2000
Consolidated Statements of Income 4
for the three and six months ended
December 30, 2000 and December 25, 1999
Consolidated Statements of Cash Flows 5
for the six months ended December 30,
2000 and December 25, 1999
Notes to Consolidated Financial Statements 6-9
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-14
ITEM 3. Quantitative and Qualitative Disclosures About 14
Market Risk
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security 14
Holders
ITEM 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
3
CONSOLIDATED BALANCE SHEETS
MAXIM INTEGRATED PRODUCTS, INC.
- ------------------------------------------------------------------------------------------------
December 30, June 24,
2000 2000
(Amounts in thousands) (unaudited)
================================================================================================
ASSETS
Current assets:
Cash and cash equivalents $ 59,702 $ 53,057
Short-term investments 697,569 587,889
- ------------------------------------------------------------------------------------------------
Total cash, cash equivalents and short-term
investments 757,271 640,946
- ------------------------------------------------------------------------------------------------
Accounts receivable, net 127,420 147,184
Inventories 63,451 58,593
Deferred tax assets 51,393 67,500
Income tax refund receivable 6,500 5,186
Other current assets 5,231 12,010
- ------------------------------------------------------------------------------------------------
Total current assets 1,011,266 931,419
- ------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost, less
accumulated depreciation 486,534 411,342
Other assets 6,214 7,022
- ------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,504,014 $ 1,349,783
================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 81,197 $ 54,318
Income taxes payable 8,555 9,503
Accrued salaries 42,719 41,450
Accrued expenses 73,195 86,256
Deferred income on shipments to distributors 24,904 16,924
- ------------------------------------------------------------------------------------------------
Total current liabilities 230,570 208,451
- ------------------------------------------------------------------------------------------------
Other liabilities 4,000 4,000
Deferred tax liabilities 19,500 19,500
- ------------------------------------------------------------------------------------------------
Total liabilities 254,070 231,951
- ------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock 286 283
Additional paid-in capital 30,103 90,364
Retained earnings 1,221,025 1,028,655
Accumulated other comprehensive income (1,470) (1,470)
- ------------------------------------------------------------------------------------------------
Total stockholders' equity 1,249,944 1,117,832
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,504,014 $ 1,349,783
================================================================================================
See accompanying Notes to Consolidated Financial Statements.
3
4
CONSOLIDATED STATEMENTS OF INCOME
MAXIM INTEGRATED PRODUCTS, INC.
- ------------------------------------------------------------------------------------------------------------------------
(Amounts in thousands, except per
share data) Three months ended Six months ended
- ------------------------------------------------------------------------------------------------------------------------
(Unaudited) December 30, 2000 December 25, 1999 December 30, 2000 December 25, 1999
========================================================================================================================
Net revenues $ 305,104 $ 201,728 $ 590,199 $ 381,774
Cost of goods sold 89,768 60,912 173,789 115,394
- ------------------------------------------------------------------------------------------------------------------------
Gross margin 215,336 140,816 416,410 266,380
- ------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Research and development 51,341 32,250 97,997 60,559
Selling, general and
administrative 24,816 17,268 47,867 32,563
- ------------------------------------------------------------------------------------------------------------------------
Total operating expenses 76,157 49,518 145,864 93,122
- ------------------------------------------------------------------------------------------------------------------------
Operating income 139,179 91,298 270,546 173,258
Interest income and other, net 10,968 6,628 20,924 13,083
- ------------------------------------------------------------------------------------------------------------------------
Income before provision for
income taxes 150,147 97,926 291,470 186,341
Provision for income taxes 51,050 33,295 99,100 63,356
- ------------------------------------------------------------------------------------------------------------------------
Net income $99,097 $64,631 $192,370 $122,985
========================================================================================================================
Earnings per share:
Basic $ 0.35 $ 0.23 $ 0.68 $ 0.45
Diluted $ 0.31 $ 0.20 $ 0.60 $ 0.39
========================================================================================================================
Shares used in the calculation
of earnings per share:
Basic 284,947 275,528 284,274 274,557
Diluted 319,920 315,711 321,298 314,799
========================================================================================================================
See accompanying Notes to Consolidated Financial Statements.
4
5
CONSOLIDATED STATEMENTS OF CASH FLOWS
MAXIM INTEGRATED PRODUCTS, INC.
==============================================================================================
For the six months ended
(Amounts in thousands)(Unaudited) December 30, December 25,
Increase (decrease) in cash and cash equivalents 2000 1999
==============================================================================================
Cash flows from operating activities:
Net income $ 192,370 $ 122,985
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and other 16,409 9,606
Reduction of equipment value 31,865 6,400
Changes in assets and liabilities:
Accounts receivable 19,764 (24,076)
Inventories (4,858) 892
Deferred taxes 16,107 - -
Income tax refund receivable (1,314) 12,483
Other current assets 6,779 (1,269)
Accounts payable 26,879 5,812
Income taxes payable 92,577 59,173
Deferred income on shipments to distributors 7,980 (697)
All other accrued liabilities (11,792) 10,257
- ----------------------------------------------------------------------------------------------
Net cash provided by operating activities 392,766 201,566
- ----------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (123,466) (68,993)
Other assets 808 (4,810)
Purchases of available-for-sale securities (313,929) (145,534)
Proceeds from sales/maturities of available-for-sale
securities 204,249 81,202
- ----------------------------------------------------------------------------------------------
Net cash used in investing activities (232,338) (138,135)
- ----------------------------------------------------------------------------------------------
Cash flows from financing activities:
Issuance of common stock 44,760 35,495
Repurchase of common stock (198,543) (104,891)
- ----------------------------------------------------------------------------------------------
Net cash used in financing activities (153,783) (69,396)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 6,645 (5,965)
Cash and cash equivalents:
Beginning of year 53,057 34,126
- ----------------------------------------------------------------------------------------------
End of period $ 59,702 $ 28,161
==============================================================================================
See accompanying Notes to Consolidated Financial Statements.
5
6
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 three and six months ended December
30, 2000 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 24, 2000, and
the Form 8K and Forms 425 filed in connection with the transaction discussed in
Note 8 in these Notes to Consolidated Financial Statements.
The Company has a 52-to-53-week fiscal year that ends on the last Saturday in
June. Accordingly, every sixth or seventh fiscal year will be a 53-week fiscal
year. Fiscal year 2001 is a 53-week fiscal year. The three months ended December
30, 2000 consisted of 14 weeks. The impact of the extra week on the Company's
operating results for the three months ended December 30, 2000 consisted
primarily of additional salary related expenses. These additional expenses were
not material.
NOTE 2: INVENTORIES
Inventories consist of (in thousands):
December 30, June 24,
------------ --------
2000 2000
---- ----
(unaudited)
Raw materials $ 7,429 $ 5,246
Work-in-process 25,089 24,980
Finished goods 30,933 28,367
-------- --------
$ 63,451 $ 58,593
======== ========
6
7
MAXIM INTEGRATED PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 3: EARNINGS PER SHARE
Basic earnings per share are computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share
incorporates the incremental shares issuable upon the assumed exercise of stock
options and other potentially dilutive securities. The number of incremental
shares from the assumed issuance of stock options and other potentially dilutive
securities is calculated applying the treasury stock method. The following table
sets forth the computation of basic and diluted earnings per share.
- --------------------------------------------------------------------------------------------------------------------------
(Amounts in thousands, except per
share data) Three months ended Six months ended
- --------------------------------------------------------------------------------------------------------------------------
(Unaudited) December 30, 2000 December 25, 1999 December 30,2000 December 25, 1999
===========================================================================================================================
Numerator for basic earnings per
share and diluted earnings per
share
Net income $99,097 $64,631 $192,370 $122,985
===================================================================================
Denominator for basic earnings per 284,947 275,528 284,274 274,557
share
Effect of dilutive securities:
stock options and warrants 34,973 40,183 37,024 40,242
------------------------------------------------------------------------------------
Denominator for diluted earnings 319,920 315,711 321,298 314,799
per share
===================================================================================
Earnings per share:
Basic $ 0.35 $ 0.23 $ 0.68 $ 0.45
Diluted $ 0.31 $ 0.20 $ 0.60 $ 0.39
===================================================================================
7
8
MAXIM INTEGRATED PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 4: SHORT-TERM INVESTMENTS
All short-term investments at December 30, 2000 are classified as
available-for-sale and consist of U.S. Treasury and Federal Agency debt
securities maturing within one year. Unrealized gains and losses, net of tax, on
securities in this category are reportable as a separate component of
stockholders' equity. Because of the short term to maturity and relative price
insensitivity to changes in market interest rates, amortized cost approximates
fair market value and no unrealized gains or losses have been recorded at
December 30, 2000. The cost of securities sold is based on the specific
identification method. Interest earned on securities is included in interest
income and other, net in the consolidated statements of income.
NOTE 5: SEGMENT INFORMATION
The Company operates and tracks its results in one operating segment. The
Company designs, develops, manufactures and markets a broad range of linear and
mixed-signal integrated circuits. The Chief Executive Officer has been
identified as the Chief Operating Decision Maker as defined by Statement of
Financial Accounting Standard No. 131 (SFAS131), "Disclosures about Segments of
an Enterprise and Related Information."
Enterprise-wide information is provided in accordance with SFAS 131.
Geographical revenue information is based on the customer's ship-to location.
Long-lived assets consist of property, plant and equipment. Property, plant and
equipment information is based on the physical location of the assets at the end
of each fiscal period.
Net revenues from unaffiliated customers by geographic region were as follows:
Three months ended Six months ended
- ----------------------------------------------------------------------------------------------------------
(Amounts in thousands) December 30, 2000 December 25, 1999 December 30, 2000 December 25, 1999
==========================================================================================================
United States $121,027 $86,767 $241,674 $166,905
Europe 77,882 42,935 148,167 83,317
Pacific Rim 99,771 68,252 188,827 125,294
Rest of World 6,424 3,774 11,531 6,258
- ----------------------------------------------------------------------------------------------------------
$305,104 $201,728 $590,199 $381,774
==========================================================================================================
Net long-lived assets by geographic region were as follows:
(Amounts in thousands) December 30, 2000 June 24, 2000
- -------------------------------------------------------------------
United States $449,358 $376,819
Rest of World 37,176 34,523
- -------------------------------------------------------------------
$486,534 $411,342
===================================================================
8
9
NOTE 6: STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 133 (SFAS 133),
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES"
At the beginning of fiscal year 2001, the Company adopted SFAS 133. This
standard requires the Company to recognize all derivatives on the balance sheet
at fair value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of the derivative will either offset against
the change in fair value of the hedged assets, liabilities, or firm commitments
through earnings, or be recognized in other comprehensive income until the
hedged item is recognized in earnings. The change in a derivative's fair value
related to the ineffective portion of a hedge, if any, will be immediately
recognized in earnings. The Company uses foreign currency exchange contracts to
offset the effect of foreign currency exchange fluctuations from its foreign
currency revenue and does not speculate in derivatives or leveraged financial
products. The effect of adopting SFAS 133 did not have and is not expected to
have a material effect on the Company's financial position or results of
operations.
NOTE 7: RECENT ACCOUNTING DEVELOPMENTS
The Securities and Exchange Commission (SEC) issued in December 1999 SEC Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 addresses the SEC's views and provides guidance in applying
generally accepted accounting principles to revenue recognition in financial
statements and must be adopted by the Company in the fourth quarter of fiscal
2001. The effect of adopting SAB 101 is not expected to have a material effect
on the Company's financial position or results of operations.
NOTE 8: SUBSEQUENT EVENT
On January 29, 2001, the Company and Dallas Semiconductor Corporation (Dallas
Semiconductor) announced an agreement under which the Company would acquire all
of the outstanding common stock and stock options of Dallas Semiconductor, a
leading provider of specialty semiconductors. The transaction is intended to be
accounted for as a pooling-of-interests and qualify as a tax-free
reorganization. The exchange ratio will be determined by dividing a number of
Maxim share equivalents by the number of outstanding Dallas Semiconductor share
equivalents at closing (calculated using the treasury method). The number of
Maxim share equivalents will range linearly from 40 million share equivalents
(if Maxim's average closing price during a 10-day trading period ending two days
prior to closing is $61 per share or more) to 42 million share equivalents (if
Maxim's average closing price during the relevant trading period is $52 or
less). Based on the Company's common stock closing price on Friday, January 26,
2001 and the exchange ratio as defined in the merger agreement, each outstanding
share of common stock of Dallas Semiconductor would be exchanged for 0.6163 of a
share of the Company's common stock. Based on the exchange ratio noted above,
all of the outstanding common stock and stock options of Dallas Semiconductor
would be exchanged for Company common stock and stock options representing
between 40-42 million shares of the Company's common stock calculated using the
treasury stock method and an implied tax rate of 35%. The exact number of shares
of the Company's common stock to be issued upon consummation of the transaction
as well as the actual exchange ratio are subject to fluctuation and will be
determined based on the merger agreement. The merger agreement has been filed
with the SEC on Form 8K.
The acquisition is anticipated to be consummated during the Company's fourth
quarter of fiscal 2001 and is subject to approval by Dallas Semiconductor's
stockholders and must be in compliance with the regulatory requirements. In
connection with this transaction, the Company will file a Registration Statement
with the SEC on Form S-4 during the third quarter of fiscal 2001.
9
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
NET REVENUES
Net revenues were $305.1 million and $201.7 million for the three months ended
December 30, 2000 and December 25, 1999, respectively, an increase of 51.2%. Net
revenues were $590.2 million and $381.8 million for the six months ended
December 30, 2000 and December 25, 1999, respectively, an increase of 54.6%. The
increases in net revenues are primarily attributable to higher unit shipments
resulting from continued introduction of new proprietary products, increased
market acceptance of the Company's proprietary and second-source products, and
an increase in market demand for analog semiconductor products in general.
During the three and six months ended December 30, 2000, approximately 60% and
59%, respectively, of net revenues were derived from customers outside of the
United States. While the majority of these sales are denominated in US dollars,
the Company enters into foreign currency forward contracts to mitigate its risks
on firm commitments and net monetary assets denominated in foreign currencies.
The impact of changes in foreign exchange rates on revenue and the Company's
results of operations for the three and six months ended December 30, 2000 was
immaterial.
GROSS MARGIN
Gross margin was 70.6% and 69.8% for the three months ended December 30, 2000
and December 25, 1999, respectively. The increase in gross margin for the three
months ended December 30, 2000 is primarily attributable to production
efficiencies obtained through economies of scale and cost reductions. The
increase in gross margin in the three months ended December 30, 2000 was
partially offset by an increase in inventory reserves of $14.3 million and $11.6
million recorded to write down the carrying value of certain manufacturing
equipment to net realizable value. During the three months ended December 25,
1999, the Company recorded $3.8 million to write down the carrying value of
certain manufacturing equipment to net realizable value.
Gross margin was 70.6% and 69.8% for the six months ended December 30, 2000 and
December 25, 1999, respectively. The increase in gross margin for the six months
ended December 30, 2000 is primarily attributable to production efficiencies
obtained through economies of scale and cost reductions. The increase in gross
margin for the six months ended December 30, 2000 was partially offset by $26.5
million recorded to write down the carrying value of certain manufacturing
equipment to net realizable value and an increase of inventory reserves by $16.9
million. During the six months ended December 25, 1999, the Company recorded
$6.3 million to write down the carrying value of certain manufacturing equipment
to net realizable value and increased inventory reserves by $1.8 million.
10
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT'D)
RESEARCH AND DEVELOPMENT
Research and development expenses were $51.3 million and $32.3 million for the
three months ended December 30, 2000, and December 25, 1999, respectively, which
represented 16.8% and 16.0% of net revenues, respectively.
Research and development expenses were $98.0 million and $60.6 million for the
six months ended December 30, 2000, and December 25, 1999, respectively, which
represented 16.6% and 15.9% of net revenues, respectively.
The increases in research and development expenses for both the three months and
six months ended December 30, 2000 as compared to the same periods in the prior
year are due primarily to increased headcount and related employee expenses to
continue development of new products to support revenue growth, and increased
wafer and mask expenses to support new product development. During the three and
six month periods ended December 30, 2000, the Company recorded $3.6 million and
$7.1 million, respectively, to write down certain equipment to net realizable
value.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses were $24.8 million and $17.3
million for the three months ended December 30, 2000, and December 25, 1999,
respectively, which represented 8.1% and 8.6% of net revenues, respectively. The
increase in selling, general, and administrative expenses of $7.5 million is
primarily due to increased headcount and related employee expenses to support
the Company's higher revenues and a $4.0 million charge recorded primarily for
technology licensing. During the three month ended December 25, 1999, the
Company recorded a charge of $3.0 million for technology licensing.
Selling, general and administrative expenses were $47.9 million and $32.6
million for the six months ended December 30, 2000, and December 25, 1999,
respectively, which represented 8.1% and 8.5% of net revenues, respectively. The
increase in selling, general, and administrative expenses of $15.3 million is
primarily due to increased headcount and related employee expenses to support
the Company's higher revenues and charges of $7.0 million recorded primarily for
technology licensing. During the six months ended December 25, 1999, the Company
recorded charges of $4.5 million for technology licensing.
INTEREST INCOME AND OTHER, NET
Interest income and other, net was $11.0 million and $20.9 million in the three
and six months ended December 30, 2000, respectively, compared to $6.6 million
and $13.1 million in the three and six months ended December 25, 1999,
respectively. The increase in interest income and other, net for both the three
and six months ended December 30, 2000 is a result of higher levels of invested
cash, cash equivalents and short-term investments and increased interest rates
on invested amounts.
INCOME TAXES
The effective income tax rate for both the three months ended December 30, 2000
and December 25, 1999 was 34%. This rate differs from the federal statutory rate
primarily due to state income taxes and tax exempt earnings of the Company's
Foreign Sales Corporation.
11
12
OUTLOOK
End market bookings in the second quarter of fiscal 2001 were $332 million, down
slightly (5%) from the first quarter end market bookings of $348 million. U.S.
distributor bookings on the Company were 28% below bookings received from their
customers. This was in part due to the Company encouraging the distributors to
manage inventory of the Company's products at their locations. As a result,
second quarter fiscal 2001 bookings on the Company were $308 million, compared
to $339 million for the first quarter of the fiscal year. The Company believes
that end market consumption remains in line with its projection for the fiscal
year.
Turns orders received in the second quarter of fiscal 2001 were $58 million,
compared to $98 million received in the prior quarter. Turns orders are customer
orders that are for delivery within the same quarter and may result in revenue
within the same quarter if the Company has available inventory that matches
those orders. End market bookings decreased in the U.S. and Pacific Rim, but
increased in both Europe and Japan. Bookings were lower in the notebook and cell
phone end markets, where there appears to be an inventory correction underway.
Second quarter ending backlog shippable within the next 12 months was
approximately $431 million, including approximately $330 million requested for
shipment in the third quarter of fiscal 2001. The Company's first quarter ending
backlog shippable within the next 12 months was approximately $443 million,
including approximately $353 million that was requested for shipment in the
second quarter of fiscal 2001. All backlog numbers have been adjusted to be net
of cancellations and estimated future U.S. distribution ship and debit pricing
adjustments.
The Company believes bookings for the second quarter of fiscal 2001 continued to
moderate as customers and distributors, primarily in the U.S. and Pacific Rim,
adjusted their ordering patterns. The Company believes that this trend may
continue through the third quarter of fiscal 2001; however, management believes
that end market consumption for the Company's products will continue to support
the revenue and earnings outlook for the fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds for the six months ended December 30,
2000 were net cash generated from operating activities of $392.8 million, and
proceeds from the issuance of common stock of $44.8 million associated with the
Company's stock option programs.
The principal uses of funds were the repurchase of $198.5 million of common
stock, the purchase of $123.5 million in property, plant and equipment and
$109.7 million of net investment activities. The Company believes that it
possesses sufficient liquidity and capital resources to fund its property, plant
and equipment purchases and operations for the next twelve months.
It has been the Company's policy to reduce the dilution effect from stock
options by repurchasing its common stock from time to time in amounts based on
estimates of proceeds from stock option exercises and of tax benefits related to
such exercises. Due to the intended accounting treatment of the Company's
acquisition of all of the outstanding common stock and stock options of Dallas
Semiconductor (see Note 8 of Notes to Consolidated Financial Statements), the
Company will be required to rescind its existing common stock repurchase program
prior to consummation of the transaction.
12
13
FORWARD-LOOKING INFORMATION AND RISK FACTORS
This Report on Form 10-Q contains forward-looking statements, including
statements regarding or implicating the Company's expectations, intentions,
plans, goals and hopes regarding the future. Forward-looking statements in this
report, including this Management's Discussion and Analysis section, involve
risk and uncertainty. Such statements include, among others, the Company's
expectations regarding the trend of bookings, estimates of end-market and
customer consumption of the Company's products; expectations for future revenue
and earnings growth; and statements regarding capital spending, the sufficiency
of capital resources and liquidity, the Company's stock repurchase policy and
the pending Dallas Semiconductor transaction.
There are numerous factors that could cause the Company's actual results to
differ materially from results predicted or implied in this report. Such factors
include the Company incorrectly assessing customer and end-user demand;
technical difficulties in bringing new products and processes to market in a
timely manner; market developments that could adversely affect the growth of the
mixed-signal analog market such as declines in customer forecasts or earlier
than expected cyclical downturns within the mixed-signal analog segment of the
semiconductor market or possible effects of capacity constraints affecting other
suppliers to equipment manufacturers; significant interruptions or shortages of
electric power; and the Company being unable to sustain its successes in the
markets into which its products are introduced. Additional factors include
whether, and the extent to which, demand for the Company's products increases
and reflects real end-user demand; whether customer cancellations and delays of
outstanding orders increase; whether the Company is able to manufacture in a
correct mix to respond to orders on hand and new orders received in the future;
whether the Company is able to achieve its new product development and
introduction goals, including, without limitation, goals for recruiting,
retaining, training, and motivating engineers, particularly design engineers,
and goals for conceiving and introducing timely new products that are well
received in the marketplace; whether the Company is able to effectively and
successfully expand manufacturing operations to meet increased demand for the
Company's products; and whether the Company is able to successfully
commercialize its new technologies, such as its next-generation high-frequency
technologies, that it has been investing in by designing and introducing new
products based on these new technologies.
In addition to the above, there are certain risks and uncertainties related to
the Company's acquisition of Dallas Semiconductor (see Note 8 of Notes to
Consolidated Financial Statements), including risks associated with acquisition,
such as the risk that the closing conditions will not be satisfied, including
the inability to obtain the approval of Dallas Semiconductor's stockholders,
matters arising in connection with the parties' efforts to comply with
applicable regulatory requirements relating to the transaction and the risk that
the merger will not be consummated.
Other important factors that could cause actual results to differ materially
from those predicted or implied in this report include overall worldwide
economic conditions; demand for electronic products and semiconductors
generally; demand for the end-user products for which the Company's
semiconductors are suited; timely availability of raw materials, equipment,
supplies and services; unanticipated manufacturing problems; technological and
product development risks; competitors that may outperform the Company; merger
related costs associated with the Company's proposed acquisition of Dallas
Semiconductor being greater than anticipated; and other risk factors described
in the Company's filings with the Securities and Exchange Commission and in
particular its report on Form 10-K for the year ended June 24, 2000.
All forward-looking statements included in this document are made as of the date
hereof, based on the information available to the Company as of the date
13
14
hereof, and the Company assumes no obligation to update any forward-looking
statement, whether as a result of new information relating to existing
conditions, future events or otherwise.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk has not changed significantly from the risks disclosed
in Item 7A of the Company's Annual Report on Form 10-K for the year ended June
24, 2000.
PART II. OTHER INFORMATION
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on November 16, 2000. The
following proposals were voted on by the Company Stockholders' and results
obtained thereon:
PROPOSAL 1: ELECTION OF DIRECTORS
The following directors were elected as directors by the votes indicated:
Nominee Votes in Favor Votes Withheld
James R. Bergman 258,260,577 955,481
John F. Gifford 258,253,716 962,342
B. Kipling Hagopian 258,259,834 956,224
A.R. Frank Wazzan 258,248,980 967,078
Eric C. Karros 257,418,975 1,797,083
PROPOSAL 2: RATIFICATION AND APPROVAL OF AMENDMENTS TO INCREASE THE NUMBER OF
SHARES AVAILABLE FOR ISSUANCE UNDER THE COMPANY'S 1996 STOCK INCENTIVE PLAN, AS
AMENDED, AND 1987 EMPLOYEE STOCK PARTICIPATION PLAN, AS AMENDED
The increase in the number of shares of common stock under the above stock plans
was ratified and approved with 182,637,342 votes in favor, 75,900,723 against,
677,993 abstentions.
PROPOSAL 3: AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO AUTHORIZE 480
MILLION ADDITIONAL SHARES OF COMMON STOCK
The amendment of restated certificate of incorporation as noted above was
ratified and approved with 243,466,148 votes in favor, 15,098,867 against and
651,043 abstentions.
PROPOSAL 4: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Ernst & Young LLP was ratified as the Company's independent auditors for fiscal
2001 with 258,363,885 votes in favor, 224,380 votes against, and 627,793
abstentions.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.3 Amendment to Restated Certificate of Incorporation of the
Company as filed with the Delaware Secretary of State on
November 15, 2000.
10.14 Amended 1987 Employee Stock Participation Plan
10.16 Amended 1996 Stock Incentive Plan
(b) No Reports on Form 8-K were filed during the quarter ended December
30, 2000.
ITEMS 1, 2, 3 AND 5 HAVE BEEN OMITTED AS THEY ARE NOT APPLICABLE.
14
15
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 9, 2001 MAXIM INTEGRATED PRODUCTS, INC.
- ----------------- -------------------------------
(Date) (Registrant)
/s/ Carl W. Jasper
-------------------------------
CARL W. JASPER
Vice President and Chief
Financial Officer (For the
Registrant and as Principal
Financial Officer)
/s/ Sharon E. Smith-Lenox
-------------------------------
SHARON E. SMITH-LENOX
Corporate Controller (Principal
Accounting Officer)
15
16
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.3 Amendment to Restated Certificate of Incorporation of the
Company as filed with the Delaware Secretary of State on
November 15, 2000.
10.14 Amended 1987 Employee Stock Participation Plan
10.16 Amended 1996 Stock Incentive Plan