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Press release from Business Wire

Linear Technology Reports Quarterly and Year over Year Decreases in Revenues and Net Income, but Guides to Growth in the March Quarter and Raises Its Quarterly Dividend 4% to $0.25 Per Share

Tuesday, January 17, 2012

Linear Technology Reports Quarterly and Year over Year Decreases in Revenues and Net Income, but Guides to Growth in the March Quarter and Raises Its Quarterly Dividend 4% to $0.25 Per Share17:00 EST Tuesday, January 17, 2012 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 January 1, 2012. Quarterly revenues of $294.3 million for the second quarter of fiscal year 2012 decreased $35.6 million or 11% from the previous quarter's revenue of $329.9 million and decreased $89.3 million or 23% from $383.6 million reported in the second quarter of fiscal year 2011. Net income of $87.9 million decreased $20.5 million or 19% from the first quarter of fiscal year 2012 and decreased $55.9 million or 39% from the second quarter of fiscal year 2011. Diluted earnings per share of $0.38 per share in the second quarter of fiscal year 2012 decreased $0.09 per share or 19% from the first quarter of fiscal year 2012 and declined $0.24 per share or 39% from the second quarter of fiscal year 2011. During the second quarter the Company's cash, cash equivalents and marketable securities increased by $69.8 million to $1.038 billion, net of spending $24.8 million to acquire Dust Networks. Acquisition costs in the second quarter pertaining to Dust Networks were $3.2 million or $0.01 per share. In addition, the Company announced an increase in its quarterly dividend from $0.24 per share to $0.25 per share. This marks the 20th consecutive year the Company has increased its dividend. At the current stock price the Company's dividend yield is approximately 3%. The cash dividend of $0.25 per share will be paid on February 29, 2012 to stockholders of record on February 17, 2012. According to Lothar Maier, CEO, “This was an encouraging quarter in a difficult global economic environment. We met the mid point of our guidance and we believe that we are at an inflection point in our business. Bookings, which started slowly, strengthened in December and continued strengthening in January. In these challenging times we maintained strong profitability, reporting operating margins at 45% of sales. Given the improvement in our bookings and our current outlook for the March quarter, we are estimating that we will grow quarterly revenues sequentially in the 4% to 8% range for our fiscal third quarter. As we announced earlier, we have acquired Dust Networks, a leading provider of wireless sensor networks. Although Dust will initially have minimal impact on our quarterly financial results, we are optimistic about growth prospects for Dust in its emerging markets and the synergies between Dust and Linear in bringing rugged, low power, wireless solutions to the industrial and other end-markets.” 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 July 3, 2011. Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, January 18, 2012 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 325-2458, or toll free (800) 390-5311 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 January 18, 2012 through January 24, 2012. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #8746812. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of January 18, 2012 until the second 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 µModulesubsystems. 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) U.S. GAAP (unaudited)     Three Months Ended Six Months Ended January 1,   October 2,   January 2, January 1,   January 2, 2012 2011 2011 2012 2011 Revenues $ 294,333 $ 329,920 $ 383,621 $ 624,253 772,213 Cost of sales (1) 73,821   79,793   82,603   153,614   166,334   Gross profit 220,512   250,127   301,018   470,639   605,879   Expenses: Research & development (1) 52,519 54,889 59,001 107,408 115,203 Selling, general & administrative (1) 34,922   37,672   40,958   72,594   85,040   87,441   92,561   99,959   180,002   200,243   Operating income 133,071 157,566 201,059 290,637 405,636 Interest expense (6,925 ) (6,941 ) (8,135 ) (13,866 ) (18,552 ) Amortization of debt discount(2) (4,931 ) (4,862 ) (5,390 ) (9,793 ) (12,156 ) Acquisition related costs (3,195 ) — — (3,195 ) — Interest and other income 1,146   1,221   1,602   2,367   3,518   Income before income taxes 119,166 146,984 189,136 266,150 378,446 Provision for income taxes 31,281   38,583   45,393   69,864   97,453   Net income $ 87,885   $ 108,401   $ 143,743   $ 196,286   280,993     Earnings per share: Basic $ 0.38   $ 0.47   $ 0.62   $ 0.85   $ 1.22   Diluted $ 0.38   $ 0.47   $ 0.62   $ 0.84   $ 1.21     Shares used in determining earnings per share: Basic 232,209   231,863   230,284   232,051   230,006   Diluted 233,565   232,985   232,202   233,347   231,843     Includes the following non-cash charges: (1) Stock-based compensation Cost of sales $ 1,844 $ 1,904 $ 2,338 $ 3,748 $ 4,521 Research & development 8,609 8,887 10,531 17,496 20,298 Selling, general & administrative 4,442 4,586 5,614 9,028 10,855 (2) Amortization of debt discount (non- cash interest expense) 4,931 4,862 5,390 9,793 12,156   LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) U.S. GAAP (unaudited)     January 1, July 3, 2012 2011 ASSETS: Current assets: Cash, cash equivalents and marketable securities $ 1,037,503 $ 922,537 Accounts receivable, net of allowance for doubtful accounts of $2,041 ($2,043 at July 3, 2011) 139,279 169,637 Inventories 78,689 72,195 Deferred tax assets and other current assets 64,881   81,921   Total current assets 1,320,352   1,246,290     Property, plant & equipment, net 335,759 332,969 Other noncurrent assets 69,743   51,907   Total assets $ 1,725,854   $ 1,631,166     LIABILITIES & STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 11,227 $ 11,606 Accrued income taxes, payroll & other accrued liabilities 110,165 123,613 Deferred income on shipments to distributors 41,797   47,587   Total current liabilities 163,189   182,806     Convertible senior notes 795,524 785,732 Deferred tax and other noncurrent liabilities 162,386 157,017   Stockholders' equity: Common stock 1,508,165 1,466,098 Accumulated deficit (903,665 ) (961,617 ) Accumulated other comprehensive income 255   1,130   Total stockholders' equity 604,755   505,611   $ 1,725,854   $ 1,631,166     LINEAR TECHNOLOGY CORPORATION RECONCILIATION OF U.S. GAAP NET INCOME TO NON-GAAP NET INCOME (In thousands, except per share amounts) (unaudited)     Three Months Ended Six Months Ended January 1,   October 2,   January 2, January 1,   January 2, 2012 2011 2011 2012 2011 Reported net income (GAAP basis) $ 87,885 $ 108,401 $ 143,743 $ 196,286 $ 280,993   Stock-based compensation 14,895 15,377 18,483 30,272 35,674 Amortization of debt discount(1) 4,931 4,862 5,390 9,793 12,156 Acquisition related costs 3,195 — — 3,195 — Income tax effect of non-GAAP adjustments (6,043 ) (5,313 ) (5,730 ) (11,356 ) (12,317 )   Non-GAAP net income $ 104,863   $ 123,327   $ 161,886   $ 228,190   $ 316,506     Non-GAAP earnings per share Basic $ 0.45   $ 0.53   $ 0.70   $ 0.98   $ 1.38   Diluted $ 0.45   $ 0.53   $ 0.70   $ 0.98   $ 1.37     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. In addition, the Company's non-GAAP measures exclude the special expense items related to the acquisition. The Company's management uses non-GAAP net income and non-GAAP earnings per 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, non-cash interest expenses, acquisition related costs and the related tax effects primarily because they are significant special 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