Maxim Integrated Reports Results For The Second Quarter Of

Maxim Integrated Reports Results For The Second Quarter Of Fiscal 2014

- Revenue: $620 million

(PRNewswire) — Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $620 million for its second quarter of fiscal 2014 ended December 28, 2013, a 6% increase from the $585 million revenue recorded in the prior quarter. Reported revenue included $35 million from Volterra. Excluding Volterra, revenue was flat compared to the prior quarter.

Tunc Doluca, President and Chief Executive Officer, commented, "We achieved good revenue performance in a soft quarter for our industry." Mr. Doluca continued, "We are pleased with our diversification efforts, with strength in both communication and industrial businesses, the addition of Volterra and broadening of our mobility business."

Fiscal Year 2014 Second Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the December quarter was $0.17. The results were negatively affected by the following pre-tax charges:

$40 million for Volterra acquisition-related items
$13 million for items related to prior acquisitions
$5 million for impairment of long-lived assets
$18 million for warranty expense

GAAP earnings per share, excluding special items was $0.36, after a $0.05 reduction due to the warranty expense. In addition, the warranty expense caused our GAAP gross margin, excluding special items to be 2.9 percentage points lower for the quarter. An analysis of GAAP versus GAAP excluding special items is provided in the last table of this press release. Warranty expense is not considered a special item and is not included in the analysis.

Cash Flow Items
At the end of the second quarter of fiscal 2014, total cash, cash equivalents and short term investments was $1.15 billion, an increase of $115 million from the prior quarter. Notable items included:

Cash flow from operations: $234 million
Net capital expenditures: $46 million
Dividends: $73 million ($0.26 per share)
Stock repurchases: $59 million
Volterra acquisition: $454 million
Proceeds from debt issuance: $494 million

Business Outlook
The Company's 90-day backlog at the beginning of the third fiscal quarter of 2014 was $366 million. Based on the beginning backlog and expected turns, results for the March 2014 quarter are expected to be as follows:

Revenue: $590 million to $620 million
Gross Margin: 56% to 58% GAAP (60% to 62% excluding special items)
EPS: $0.28 to $0.32 GAAP ($0.37 to $0.41 excluding special items)

Maxim Integrated's business outlook does not include the potential impact of any restructuring activity or mergers, acquisitions, or other business combinations that may be completed during the quarter.

Dividend
A cash dividend of $0.26 per share will be paid on March 6, 2014, to stockholders of record on February 20, 2014.

Conference Call
Maxim Integrated has scheduled a conference call on January 23, 2014, at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter of fiscal 2014 and its business outlook. To listen via telephone, dial (866) 802-4305 (toll free) or (703) 639-1317. This call will be webcast by Shareholder.com and can be accessed at the Company's website at www.maximintegrated.com/company/investor.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	Three Months Ended
	December 28,	September 28,	December 29,
	2013	2013	2012
	(in thousands, except per share data)
Net revenues	$ 620,274	$ 585,241	$ 605,306
Cost of goods sold	291,602	238,045	241,931
Gross margin	328,672	347,196	363,375
Operating expenses:
Research and development	142,971	129,902	135,742
Selling, general and administrative	83,471	77,430	80,058
Intangible asset amortization	4,968	3,436	3,903
Impairment of long-lived assets (1)	5,197	-	22,222
Severance and restructuring expenses (2)	10,227	5,547	2,236
Acquisition-related costs	4,137	2,934	-
Other operating expenses (income), net (3)	1,306	(662)	1,666
Total operating expenses	252,277	218,587	245,827
Operating income	76,395	128,609	117,548
Interest and other income (expense), net	(5,833)	(3,463)	(2,798)
Income before provision for income taxes	70,562	125,146	114,750
Provision for income taxes	21,240	22,026	38,128
Net income	$ 49,322	$ 103,120	$ 76,622

Earnings per share:
Basic	$ 0.17	$ 0.36	$ 0.26
Diluted	$ 0.17	$ 0.36	$ 0.26

Shares used in the calculation of earnings per share:
Basic	282,664	284,654	292,075
Diluted	288,565	290,260	298,759

Dividends paid per share	$ 0.26	$ 0.26	$ 0.24

SCHEDULE OF SPECIAL EXPENSE ITEMS
(Unaudited)
	Three Months Ended
	December 28,	September 28,	December 29,
	2013	2013	2012
	(in thousands)
Cost of goods sold:
Intangible asset amortization	$ 19,098	$ 8,092	$ 8,986
Acquisition-related inventory write-up	13,066	-	-
Total	$ 32,164	$ 8,092	$ 8,986

Operating expenses:
Intangible asset amortization	$ 4,968	$ 3,436	$ 3,903
Impairment of long-lived assets (1)	5,197	-	22,222
Severance and restructuring (2)	10,227	5,547	2,236
Acquisition-related costs	4,137	2,934	-
Other operating expenses (income), net (3)	1,306	(662)	1,666
Total	$ 25,835	$ 11,255	$ 30,027

Provision for income taxes:
International restructuring implementation	$ -	$ -	$ 18,726
Total	$ -	$ -	$ 18,726

(1) Includes impairment charges relating to fab tools, land and buildings held-for-sale, and end of line manufacturing equipment.
(2) Includes severance & retention charges and lease abandonment charges related to the Volterra acquisition, and severance charges related to the reorganization of various business units and manufacturing operations.
(3) Other operating expenses (income), net are primarily for contingent consideration adjustments related to certain acquisitions and certain payroll taxes.

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