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Press release from Business Wire

Linear Technology Closes out Fiscal Year 2012 with Sequential Quarterly Increases in Revenues and Net Income, Whereas Fiscal Year 2012 Revenues and Net Income Decreased from the Prior Year

Tuesday, July 24, 2012

Linear Technology Closes out Fiscal Year 2012 with Sequential Quarterly Increases in Revenues and Net Income, Whereas Fiscal Year 2012 Revenues and Net Income Decreased from the Prior Year17:00 EDT Tuesday, July 24, 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 and fiscal year ended July 1, 2012. Quarterly revenues of $330.0 million for the fourth quarter of fiscal year 2012 increased $17.7 million or 5.7% over the previous quarter's revenue of $312.4 million and decreased $28.5 million or 8.0% from $358.6 million reported in the fourth quarter of fiscal year 2011. Net income of $103.3 million increased $4.8 million or 4.9% over the third quarter of fiscal year 2012 and decreased $54.9 million or 34.7% from the fourth quarter of fiscal year 2011. Net income for the fourth quarter of fiscal year 2011 benefited from a lower tax rate of 9.5% compared to the fourth quarter of fiscal year 2012 rate of 26.5%. The Company's tax rate in the prior year quarter included a quarterly tax benefit from a settlement with the IRS related to its audit of prior fiscal years. Diluted earnings per share of $0.44 per share in the fourth quarter of fiscal year 2012 increased $0.02 per share or 5% over the third quarter of fiscal year 2012 and decreased $0.24 per share or 35% from the fourth quarter of fiscal year 2011. Revenue for fiscal year 2012 was $1.27 billion, a decrease of 14.6% or $217.3 million from revenue of $1.48 billion for the previous fiscal year. Net income of $398.1 million for fiscal year 2012 decreased $182.7 million or 31.5% from $580.8 million reported in the previous fiscal year. Fiscal year 2012 results were impacted by a $3.2 million charge related to acquisition costs for Dust Networks while the previous fiscal year benefited from a $4.2 million gain related to various legal settlements and from a lower tax rate of 19.8% compared to 25.7% in fiscal 2012. Diluted earnings per share for fiscal year 2012 was $1.70, a decrease of 32% or $0.80 per share from the prior fiscal year. During the fourth quarter the Company's cash, cash equivalents and marketable securities increased by $91.2 million to $1.2 billion. A cash dividend of $0.25 will be paid on August 29, 2012 to stockholders of record on August 17, 2012. According to Lothar Maier, CEO, “Our fourth quarter financial results were in the mid-range of our guidance as sales grew 6% compared to the preceding third quarter and both gross margin and operating margin improved as a percent of sales. This was also our fiscal year-end. In a challenging global economic environment we improved as the year progressed growing sequentially 6% in each of the last two quarters. Automotive was our best performing end-market, growing bookings 24% year over year. Our largest end-market is industrial, which was 40% of our business. Over the last three years industrial and automotive have been the fastest growing analog end-markets and we have grown these end-markets at a faster rate than the industry overall. As we turn our focus to fiscal 2013, general economic sluggishness remains in the U.S. and we are particularly cautious about the European market and its sovereign debt issues. Historically, the first fiscal quarter is a seasonally weak period in that region and this could be exacerbated by the continuing debt crisis. We are hopeful that the strength we are seeing in Japan and Asia will continue to offset weakness in Europe and flatness in the USA. Given the current environment and the level of bookings we have received over the past quarter, we are currently forecasting our revenues to be flat to up 3% over our just completed fourth fiscal quarter, generally in line with our historical seasonality for summer quarters.” 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-Q for the quarter ended April 1, 2012. Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, July 25, 2012 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (913) 312-1483, or toll free (888) 670-2254 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 July 25, 2012 through July 31, 2012. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #3353704. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of July 25, 2012 until the fourth 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, µModulesubsystems, and wireless sensor network products. 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 Twelve Months Ended July 1, 2012   April 1, 2012   July 3, 2011 July 1, 2012   July 3, 2011 Revenues $ 330,011 $ 312,357 $ 358,557 $ 1,266,621 $ 1,483,962 Cost of sales (1) 81,263   77,662   79,011   312,539   324,445   Gross profit 248,748   234,695   279,546   954,082   1,159,517   Expenses: Research & development (1) 59,479 57,580 55,950 224,467 226,516 Selling, general & administrative (1) 37,803   37,182   40,958   147,579   165,691   97,282   94,762   96,908   372,046   392,207   Operating income 151,466 139,933 182,638 582,036 767,310 Interest expense (6,881 ) (6,902 ) (6,968 ) (27,649 ) (32,501 ) Amortization of debt discount(2) (5,073 ) (5,002 ) (4,793 ) (19,868 ) (21,675 ) Acquisition related costs — — — (3,195 ) — Interest and other income(3) 1,067   1,152   3,965   4,586   10,704   Income before income taxes 140,579 129,181 174,842 535,910 723,838 Provision for income taxes 37,253   30,682   16,610   137,799   143,056   Net income $ 103,326   $ 98,499   $ 158,232   $ 398,111   $ 580,782     Earnings per share: Basic $ 0.44   $ 0.42   $ 0.68   $ 1.71   $ 2.52   Diluted $ 0.44   $ 0.42   $ 0.68   $ 1.70   $ 2.50     Shares used in determining earnings per share: Basic 234,290   233,346   231,771   233,013   230,806   Diluted 235,297   234,822   233,598   234,298   232,772     Includes the following non-cash charges: (1) Stock-based compensation Cost of sales $ 1,929 $ 1,902 $ 2,062 $ 7,579 $ 8,785 Research & development 9,017 8,876 9,192 35,389 39,359 Selling, general & administrative 4,649 4,580 4,940 18,257 21,077 (2) Amortization of debt discount (non- cash interest expense) 5,073 5,002 4,793 19,868 21,675   Includes the following: (3) Gain on legal settlement — — 2,500 — 4,200     LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) (Unaudited)   July 1,2012 July 3,2011 ASSETS: Current assets: Cash, cash equivalents and marketable securities $ 1,203,059 $ 922,537 Accounts receivable, net of allowance for doubtful accounts of $2,035 ($2,043 at July 3, 2011) 153,090 169,637 Inventories 79,664 72,195 Deferred tax assets and other current assets 69,597   81,921   Total current assets 1,505,410   1,246,290     Property, plant & equipment, net 320,222 332,969 Other noncurrent assets 25,436   14,807   Total assets $ 1,851,068   $ 1,594,066     LIABILITIES & STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 11,459 $ 11,606 Accrued income taxes, payroll & other accrued liabilities 117,789 123,613 Deferred income on shipments to distributors 41,333   47,587   Total current liabilities 170,581   182,806     Convertible senior notes 805,599 785,732 Deferred tax and other noncurrent liabilities 138,380 119,917   Stockholders' equity: Common stock 1,588,045 1,466,098 Accumulated deficit (851,702 ) (961,617 ) Accumulated other comprehensive income 165   1,130   Total stockholders' equity 736,508   505,611   $ 1,851,068   $ 1,594,066       LINEAR TECHNOLOGY CORPORATION RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME (In thousands, except per share amounts)   Three Months Ended Twelve Months Ended July 1, 2012   April 1, 2012   July 3, 2011 July 1, 2012   July 3, 2011 Reported net income (GAAP basis) $ 103,326 $ 98,499 $ 158,232 $ 398,111 $ 580,782   Stock-based compensation 15,595 15,358 16,194 61,225 69,221 Amortization of debt discount(1) 5,073 5,002 4,793 19,868 21,675 Acquisition related costs — — — 3,195 — Income tax effect of non-GAAP adjustments (5,477 ) (4,836 ) (1,994 ) (21,673 ) (17,964 )   Non-GAAP net income $ 118,517   $ 114,023   $ 177,225   $ 460,726   $ 653,714     Non-GAAP earnings per share Basic $ 0.51   $ 0.49   $ 0.76   $ 1.98   $ 2.83   Diluted $ 0.50   $ 0.49   $ 0.76   $ 1.97   $ 2.81   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 acquisition related costs. 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 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