MILPITAS, Calif. — (BUSINESS WIRE) — January 17, 2017 — Linear Technology Corporation (NASDAQ: LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the fiscal quarter ended January 1, 2017. Quarterly revenues of $375.8 million for the second quarter of fiscal year 2017 increased $1.9 million or 0.5% over the previous quarter’s revenue of $373.9 million and increased $28.7 million or 8.3% over the $347.1 million reported in the second quarter of fiscal year 2016.
On a GAAP basis, net income of $124.0 million increased $8.9 million or 7.7% over the previous quarter’s net income of $115.1 million and increased $2.5 million or 2.0% over the second quarter of fiscal year 2016. Diluted earnings per share of $0.50 per share in the second quarter of fiscal year 2017 increased $0.03 per share or 6% over the previous quarter and was unchanged from the second quarter of fiscal year 2016.
According to Lothar Maier, CEO, “Revenue for our second fiscal quarter of $375.8 million was slightly higher than we guided and is up 8.3% over the second quarter of fiscal year 2016. This is a good result in what historically has been a weaker seasonal quarter for us. On a non-GAAP basis excluding merger-related charges totaling $10.8 million, non-GAAP gross margin, operating margin and earnings per share were 76.3%, 45.5% and $0.54, respectively, all increases over the prior quarter. The increase in revenue was aided by an increase in our Communication and Industrial markets while gross margin was up slightly primarily due to a richer product mix.
Due to the pending merger with Analog Devices, Inc., we expect that this will be our final earnings release as an independent company. We would like to thank our long-term investors who trusted our long-term market and operational strategies. Finally, we would like to thank the employees of Linear Technology who together over the course of 35 years helped to create a truly special company.”
The following table summarizes the key GAAP and non-GAAP financial results:
| Non-GAAP | GAAP | |||||||||||||||||||
| (In thousands, | Q2 | Q1 | Q2 | Q1 | Q2 | |||||||||||||||
| except per share amounts) | FY2017 | FY2017 | FY2017 | FY2017 | FY2016 | |||||||||||||||
| Revenues | $ | 375,817 | $ | 373,895 | $ | 375,817 | $ | 373,895 | $ | 347,128 | ||||||||||
| Gross profit | $ | 286,827 | $ | 284,069 | $ | 284,827 | $ | 282,069 | $ | 262,744 | ||||||||||
| Gross margin | 76.3 | % | 76.0 | % | 75.8 | % | 75.4 | % | 75.7 | % | ||||||||||
| Operating income | $ | 171,073 | $ | 169,095 | $ | 160,245 | $ | 149,301 | $ | 149,457 | ||||||||||
| Operating margin | 45.5 | % | 45.2 | % | 42.6 | % | 39.9 | % | 43.1 | % | ||||||||||
| Net income | $ | 132,242 | $ | 130,165 | $ | 123,986 | $ | 115,122 | $ | 121,532 | ||||||||||
| Earnings per share - Diluted | $ | 0.54 | $ | 0.53 | $ | 0.50 | $ | 0.47 | $ | 0.50 | ||||||||||
Cash, cash equivalents and marketable securities increased by $88.7 million over the first quarter of fiscal year 2017 to $1.61 billion. The Company's Board of Directors approved an increase in the Company's quarterly dividend from $0.32 per share to $0.33 per share. This marked the 25th consecutive year the Company has increased its dividend. A cash dividend of $0.33 per share will be paid on March 7, 2017 to stockholders of record on February 24, 2017. During the second quarter the Company generated positive cash flows from operations of $179.5 million or 48% of total revenues. During the second quarter of fiscal year 2017 the Company paid $78.7 million to shareholders in the form of dividends, representing $0.32 per share. There were no open market stock repurchases as the Analog Merger Agreement restricts the ability of the Company to repurchase shares of its common stock.
As a result of the pending transaction with Analog Devices, the Company will not hold a quarterly earnings conference call.
In lieu of a conference call, additional supplemental financial information regarding operational performance and earnings for the fiscal second quarter of 2017, in addition to bookings by end market and revenue by geography, has been made available under the Investor Relations section of the Company’s website that can be accessed through www.linear.com
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 revenue 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 year ended July 3, 2016.
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 over 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, µModule® subsystems, and wireless sensor network products. For more information, visit www.linear.com
For further information contact Donald P. Zerio 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) | |||||||||||||||
| U.S. GAAP (unaudited) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| January 1, | October 2, | January 3, | January 1, | January 3, | |||||||||||
| 2017 | 2016 | 2016 | 2017 | 2016 | |||||||||||
| Revenues | $ | 375,817 | $ | 373,895 | $ | 347,128 | $ | 749,712 | $ | 689,045 | |||||
| Cost of sales (1)(2) | 90,990 | 91,826 | 84,384 | 182,816 | 169,589 | ||||||||||
| Gross profit | 284,827 | 282,069 | 262,744 | 566,896 | 519,456 | ||||||||||
| Expenses: | |||||||||||||||
| Research and development (1)(2) | 77,030 | 76,359 | 69,884 | 153,389 | 136,486 | ||||||||||
| Selling, general and administrative (1)(2) | 47,552 | 56,409 | 43,403 | 103,961 | 83,596 | ||||||||||
| Total operating expenses | 124,582 | 132,768 | 113,287 | 257,350 | 220,082 | ||||||||||
| Operating income | 160,245 | 149,301 | 149,457 | 309,546 | 299,374 | ||||||||||
| Interest income and other income | 2,361 | 2,173 | 1,521 | 4,534 | 2,508 | ||||||||||
| Income before income taxes | 162,606 | 151,474 | 150,978 | 314,080 | 301,882 | ||||||||||
| Provision for income taxes | 38,620 | 36,352 | 29,446 | 74,972 | 68,303 | ||||||||||
| Net income | $ | 123,986 | $ | 115,122 | $ | 121,532 | $ | 239,108 | $ | 233,579 | |||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.50 | $ | 0.47 | $ | 0.50 | $ | 0.97 | $ | 0.95 | |||||
| Diluted | $ | 0.50 | $ | 0.47 | $ | 0.50 | $ | 0.97 | $ | 0.95 | |||||
| Shares used in determining earnings per share: | |||||||||||||||
| Basic | 245,804 | 245,271 | 244,591 | 245,561 | 244,831 | ||||||||||
| Diluted | 246,280 | 245,709 | 244,880 | 246,026 | 245,178 | ||||||||||
| Includes the following non-cash charges: | |||||||||||||||
| (1) Stock-based compensation | |||||||||||||||
| Cost of sales | $ | 2,496 | $ | 2,547 | $ | 2,557 | $ | 5,043 | $ | 4,899 | |||||
| Research and development | 13,572 | 11,868 | 11,731 | 25,440 | 22,653 | ||||||||||
| Selling, general and administrative | 6,990 | 6,129 | 5,968 | 13,119 | 11,606 | ||||||||||
| Includes the following pre-tax impact of items: | |||||||||||||||
| (2) Merger-related charges | |||||||||||||||
| Cost of sales | $ | 2,000 | $ | 2,000 | $ | — | $ | 4,000 | $ | — | |||||
| Research and development | 5,000 | 5,000 | — | 10,000 | — | ||||||||||
| Selling, general and administrative | 3,828 | 12,794 | — | 16,622 | — | ||||||||||
| LINEAR TECHNOLOGY CORPORATION | ||||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||||
| (in thousands) | ||||||||
| U.S. GAAP (unaudited) | ||||||||
| January 1, | July 3, | |||||||
| As of | 2017 | 2016 | ||||||
| Assets | ||||||||
| Cash, cash equivalents and marketable securities | $ | 1,609,825 | $ | 1,448,275 | ||||
| Accounts receivable, net of allowances ($1,649 as of January 1, 2017) and ($1,649 as of July 3, 2016) | 145,135 | 157,460 | ||||||
| Inventories | 98,548 | 97,251 | ||||||
| Prepaid expenses and other current assets | 48,539 | 51,744 | ||||||
| Total current assets | 1,902,047 | 1,754,730 | ||||||
| Property, plant & equipment, net | 281,149 | 285,866 | ||||||
| Other noncurrent assets | 8,285 | 9,385 | ||||||
| Total assets | $ | 2,191,481 | $ | 2,049,981 | ||||
| Liabilities | ||||||||
| Accounts payable | $ | 17,197 | $ | 17,465 | ||||
| Accrued income taxes, payroll & other accrued liabilities | 132,931 | 113,800 | ||||||
| Deferred income on shipments to distributors | 49,489 | 48,701 | ||||||
| Total current liabilities | 199,617 | 179,966 | ||||||
| Deferred tax and other noncurrent liabilities | 114,052 | 110,840 | ||||||
| Stockholders’ equity | ||||||||
| Common stock and additional paid-in capital | 2,192,469 | 2,137,150 | ||||||
| Accumulated deficit | (314,459 | ) | (379,210 | ) | ||||
| Accumulated other comprehensive (loss) income, net of tax | (198 | ) | 1,235 | |||||
| Total stockholders’ equity | 1,877,812 | 1,759,175 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,191,481 | $ | 2,049,981 | ||||
| LINEAR TECHNOLOGY CORPORATION | ||||||||||||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
|
Three Months Ended |
Six Months Ended | |||||||||||||||||||
| January 1, | October 2, | January 3, | January 1, | January 3, | ||||||||||||||||
| 2017 | 2016 | 2016 | 2017 | 2016 | ||||||||||||||||
| Cash flow from operating activities: | ||||||||||||||||||||
| Net income | $ | 123,986 | $ | 115,122 | $ | 121,532 | $ | 239,108 | $ | 233,579 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization | 13,076 | 13,176 | 12,779 | 26,252 | 26,027 | |||||||||||||||
| Stock-based compensation | 23,058 | 20,544 | 20,256 | 43,602 | 39,158 | |||||||||||||||
| Excess tax benefit from stock-based compensation | (3,131 | ) | (3,783 | ) | (3,053 | ) | (6,914 | ) | (4,680 | ) | ||||||||||
| Change in operating assets and liabilities | 22,471 | 22,718 | 5,486 | 45,189 | 38,658 | |||||||||||||||
| Cash provided by operating activities | 179,460 | 167,777 | 157,000 | 347,237 | 332,742 | |||||||||||||||
| Cash flow from investing activities: | ||||||||||||||||||||
| Net proceeds from sales and maturities and (purchases) of available-for-sale securities | 22,928 | (120,367 | ) | (104,339 | ) | (97,439 | ) | (124,143 | ) | |||||||||||
| Purchase of property, plant and equipment | (12,104 | ) | (8,332 | ) | (10,952 | ) | (20,436 | ) | (21,112 | ) | ||||||||||
| Cash provided by (used in) investing activities | 10,824 | (128,699 | ) | (115,291 | ) | (117,875 | ) | (145,255 | ) | |||||||||||
| Cash flow from financing activities: | ||||||||||||||||||||
| Excess tax benefit from stock-based compensation | 3,131 | 3,783 | 3,053 | 6,914 | 4,680 | |||||||||||||||
| Issuance of common stock under employee stock plans | 7,400 | — | 11,976 | 7,400 | 16,229 | |||||||||||||||
| Purchase of common stock | (9,237 | ) | (10,800 | ) | (22,598 | ) | (20,037 | ) | (79,155 | ) | ||||||||||
| Payment of cash dividends | (78,707 | ) | (78,608 | ) | (73,498 | ) | (157,315 | ) | (146,810 | ) | ||||||||||
| Cash used in financing activities | (77,413 | ) | (85,625 | ) | (81,067 | ) | (163,038 | ) | (205,056 | ) | ||||||||||
| Increase (decrease) in cash and cash equivalents | 112,871 | (46,547 | ) | (39,358 | ) | 66,324 | (17,569 | ) | ||||||||||||
| Cash and cash equivalents, beginning of period | 217,135 | 263,682 | 217,468 | 263,682 | 195,679 | |||||||||||||||
| Cash and cash equivalents, end of period | $ | 330,006 | $ | 217,135 | $ | 178,110 | $ | 330,006 | $ | 178,110 | ||||||||||
| LINEAR TECHNOLOGY CORPORATION | |||||||||||
| CONSOLIDATED SUPPLEMENTAL INFORMATION | |||||||||||
| (In thousands, except per share amounts) | |||||||||||
| Non-GAAP (unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| January 1, | October 2, | January 3, | |||||||||
| 2017 | 2016 | 2016 | |||||||||
| GAAP gross profit | $ | 284,827 | $ | 282,069 | $ | 262,744 | |||||
|
Adjustments to reconcile GAAP gross profit to non-GAAP gross profit |
|||||||||||
| Add: Merger-related charges | 2,000 | 2,000 | — | ||||||||
| Non-GAAP gross profit | 286,827 | 284,069 | 262,744 | ||||||||
| GAAP operating income | 160,245 | 149,301 | 149,457 | ||||||||
|
Adjustments to reconcile GAAP operating income to non-GAAP operating income |
|||||||||||
| Add: Merger-related charges | 10,828 | 19,794 | — | ||||||||
| Non-GAAP operating income | 171,073 | 169,095 | 149,457 | ||||||||
| GAAP net income | 123,986 | 115,122 | 121,532 | ||||||||
|
Adjustments to reconcile GAAP net income to non-GAAP net income |
|||||||||||
| Add: Merger-related charges | 10,828 | 19,794 | — | ||||||||
| Less: Income tax effect of non-GAAP adjustments | (2,572 | ) | (4,751 | ) | — | ||||||
| Non-GAAP net income | $ | 132,242 | $ | 130,165 | $ | 121,532 | |||||
| GAAP net income per diluted share | $ | 0.50 | $ | 0.47 | $ | 0.50 | |||||
| Non-GAAP net income per diluted share | $ | 0.54 | $ | 0.53 | $ | 0.50 | |||||
To supplement the condensed consolidated financial statements presented in accordance with GAAP, certain non-GAAP financial information is provided, which is adjusted from results based on GAAP to exclude certain costs and expenses, and adjusted for their tax effects. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics (e.g., determining which costs and expenses to exclude when calculating such a metric) are inherently subject to judgement. The non-GAAP and supplemental information is provided to enhance the user’s overall understanding of operating performance and prospects in the future. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP. The following charges are presented as a non-GAAP financial metric as they are considered to be non-recurring by nature, and therefore are not indicative of core operating results, as they represent costs incurred as a result of the pending merger between Linear Technology and Analog Devices as announced on July 26, 2016:
Merger-related charges that are directly related to the pending merger between Linear Technology and Analog Devices. Charges primarily include costs for advisory services, appraisals, legal services, employee-related expense and auditing services. Management believes that it is appropriate to exclude these items as they are not indicative of ongoing operating results and therefore limit comparability and excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.
Income tax effect of non-GAAP adjustments. Includes the income tax effects of the excluded item noted above. Management believes that it is appropriate to exclude the tax effects of the items noted above in order to present a more meaningful measure of non-GAAP net income.
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Contact:
Linear Technology Corporation
Donald P. Zerio, 408-432-1900
Vice
President, Finance, Chief Financial Officer