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Press release from Business Wire

Linear Technology Reports an Increase in Year over Year Quarterly Revenues and Net Income, Although Each Decreased from the Prior Quarter

Tuesday, April 19, 2011

Linear Technology Reports an Increase in Year over Year Quarterly Revenues and Net Income, Although Each Decreased from the Prior Quarter17:00 EDT Tuesday, April 19, 2011 MILPITAS, Calif. (Business Wire) -- Linear Technology Corporation (NASDAQ:LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the quarter ended April 3, 2011. Quarterly revenues of $353.2 million for the third quarter of fiscal year 2011 decreased $30.4 million or 8% from the previous quarter's revenue of $383.6 million and increased $41.9 million or 13% over $311.3 million reported in the third quarter of fiscal year 2010. Net income of $141.6 million decreased $2.2 million or 2% from the second quarter of fiscal year 2011 and increased $40.9 million or 41% over the third quarter of fiscal year 2010. Net income for the third quarter of fiscal year 2011 benefited from a lower tax rate of 17% compared to the second quarter of fiscal year 2011 rate of 24% and the third quarter of fiscal year 2010 rate of 27%. The Company's tax rate in its fiscal third quarter just ended includes a quarterly tax benefit from a settlement with the IRS related to export tax benefits taken in previous years. Diluted EPS of $0.61 per share in the third quarter of fiscal year 2011 decreased $0.01 per share or 2% from the second quarter of fiscal year 2011 and increased $0.17 per share or 39% over the third quarter of fiscal year 2010. During the third quarter the Company's cash, cash equivalents and marketable securities increased by $62.3 million to $810.5 million. A cash dividend of $0.24 will be paid on June 1, 2011 to stockholders of record on May 20, 2011. According to Lothar Maier, CEO, “The quarter unfolded largely as expected with revenues declining 8%, which was the mid point of our guidance. This decline was largely attributable to a forecasted reduction in our computer business. Revenues from our core analog markets decreased slightly as increases in our industrial and automotive core markets were modestly offset by decreases in the communications end market. As expected, our book-to-bill ratio, although improved from last quarter, was still less than one as in the early part of the quarter customers continued to rebalance their inventories in response to our lower lead times that are now at our historical 4 to 6 weeks level. “As we move into the June fourth quarter, we believe that the impact from the rebalance of inventory by our customers is behind us, and we continue to see recovery among certain of our customers in our core analog markets. However, we do have at least near term uncertainty pertaining to the impact on our business from the tragedies caused by the earthquake and tsunami in Japan. Geographically, the Japan market represents approximately 15% of our business and we do expect some negative impact in shipments to Japan, particularly in the automotive market that appears to be most impacted from the tragedy. Japan is also a source of raw materials to ourselves and our competitors. We have alternate sources for silicon wafers and most other critical materials and therefore, do not expect a supply issue for us in the near term. However, uncertainties of supply are causing concerns at some customers. Our low lead times and ability to supply to demand may help us in this uncertain environment. These Japan related issues lead to uncertainties that make financial forecasting difficult. In our case, since all of these Japanese issues could potentially offset each other, for the June quarter we are currently forecasting modest sequential revenue growth in the range of flat to up 3%.” 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 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 and country specific conditions in the world economy and financial markets and other factors described in our 10-K for the fiscal year ended June 27, 2010. Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, April 20, 2011 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 325-2217, or toll free (877) 455-2263 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 April 20, 2011 through April 26, 2011. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #9636735. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of April 20, 2011 until the third quarter earnings release next year. 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 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, and µModule® subsystems. 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)     Three Months Ended Nine Months Ended   April 3,       Jan. 2       Mar. 28,     April 3,       Mar. 28,     2011     2011     2010     2011     2010   Revenues $ 353,192 $ 383,621 $ 311,324 $ 1,125,405 $ 803,823 Cost of sales (1)   79,100     82,603     68,801     245,434     190,005   Gross profit   274,092     301,018     242,523     879,971     613,818     Expenses: Research & development (1) 55,363 59,001 51,885 170,566 143,907 Selling, general & administrative (1)   39,693     40,958     36,710     124,733     100,828     95,056     99,959     88,595     295,299     244,735   Operating income 179,036 201,059 153,928 584,672 369,083 Interest expense (6,981 ) (8,135 ) (11,701 ) (25,533 ) (35,210 ) Amortization of debt discount(2) (4,726 ) (5,390 ) (7,399 ) (16,882 ) (21,924 ) Interest and other income(3)   3,221     1,602     2,996     6,739     10,210     Income before income taxes 170,550 189,136 137,824 548,996 322,159 Provision for income taxes   28,993     45,393     37,212     126,446     85,324     Net income $ 141,557   $ 143,743   $ 100,612   $ 422,550   $ 236,835     Earnings per share: Basic $ 0.61   $ 0.62   $ 0.44   $ 1.83   $ 1.04   Diluted $ 0.61   $ 0.62   $ 0.44   $ 1.82   $ 1.04     Shares used in the calculation of earnings per share: Basic   231,225     230,284     227,764     230,455     227,363   Diluted   233,277     232,202     229,024     232,439     228,449     Includes the following non-cash charges: (1) Stock-based compensation Cost of sales $ 2,202 $ 2,338 $ 2,292 $ 6,723 $ 6,807 Research & development 9,869 10,531 9,871 30,167 29,111 Sales, general & administrative 5,282 5,614 5,479 16,137 16,255 (2) Amortization of debt discount (non-cash interest expense) 4,726 5,390 7,399 16,882 21,924   Includes the following: (3) Gain on legal settlement 1,700 - - 1,700 -   LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) (Unaudited)     April 3, June 27,   2011     2010   ASSETS: Current assets: Cash, cash equivalents and marketable securities $ 810,501 $ 958,069 Accounts receivable, net of allowance for doubtful accounts of $2,043 ($2,043 at June 27, 2010) 162,422 176,874   Inventories 70,415 54,044   Deferred tax assets and other current assets   84,385     75,314   Total current assets   1,127,723     1,264,301     Property, plant & equipment, net 324,687 257,035   Other noncurrent assets   60,680     69,382   Total assets $ 1,513,090   $ 1,590,718     LIABILITIES & STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 19,679 $ 21,235   Accrued income taxes, payroll & other accrued liabilities 97,348 134,649   Deferred income on shipments to distributors 38,629 33,700   Convertible senior notes- current portion (1)   -     392,926   Total current liabilities   155,656     582,510     Convertible senior notes (1) 780,939 766,960   Deferred tax and other noncurrent liabilities 182,210 201,463   Stockholders' equity: Common stock 1,437,539 1,331,888   Accumulated deficit (1,044,355 ) (1,294,077 )   Accumulated other comprehensive income   1,101     1,974   Total stockholders' equity   394,285     39,785   $ 1,513,090   $ 1,590,718   (1) Principal owed on Convertible Senior Notes at April 3, 2011 and June 27, 2010 is $845.1 million and $1,241 million, respectively. The above amounts include non-cash adjustments of $68.9 million at April 3, 2011 and $81 million at June 27, 2010.   LINEAR TECHNOLOGY CORPORATION RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME (In thousands, except per share amounts)     Three Months Ended   Nine Months Ended   April 3,       Jan. 2,       Mar. 28,     April 3,       Mar. 28,     2011     2011     2010     2011     2010     Reported net income (GAAP basis) $ 141,557 $ 143,743 $ 100,612 $ 422,550 $ 236,835   Stock-based compensation 17,353 18,483 17,642 53,027 52,173 Amortization of debt discount(1) 4,726 5,390 7,399 16,882 21,924 Income tax effect of non-GAAP adjustments   (3,753 )   (5,730 )   (6,761 )   (16,102 )   (19,625 )   Non-GAAP net income $ 159,883   $ 161,886   $ 118,892   $ 476,357   $ 291,307     Basic $ 0.69   $ 0.70   $ 0.52   $ 2.07   $ 1.28   Diluted $ 0.69   $ 0.70   $ 0.52   $ 2.05   $ 1.28   1) Amortization of debt discount is non-cash interest expense related to the Company's Convertible Senior Notes. The Company's non-GAAP measures set forth above exclude charges related to stock-based compensation, the amortization of the Company's debt discount which is a non-cash interest expense and the non-cash charge on early retirement of convertible senior notes. The Company's management uses non-GAAP net income and non-GAAP net income per diluted share to evaluate the Company's current operating results and financial results and to compare them against historical financial results. The Company excludes stock-based compensation and non-cash interest expenses and the related tax effects primarily because they are significant non-cash expense estimates, which management separates for consideration when evaluating and managing business operations. In addition management believes it is useful to investors because it is frequently used by securities analysts, investors and other interested parties in evaluating the Company and provides further clarity on its profitability. In addition, the Company believes that providing investors with these non-GAAP measurements enhances their ability to compare the Company's business against that of its many competitors who employ and disclose similar non-GAAP measures. This financial measure may be different from non-GAAP methods of accounting and reporting used by the Company's competitors to the extent their non-GAAP measures include other items. The presentation of this additional information should not be considered a substitute for net income or net income per diluted share prepared in accordance with GAAP. Linear Technology CorporationPaul Coghlan, 408-432-1900Vice President, Finance, Chief Financial Officer