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Press release from Business Wire

Linear Technology Reports Quarterly Modest Increases in Revenues and Net Income

Tuesday, October 16, 2012

Linear Technology Reports Quarterly Modest Increases in Revenues and Net Income17:00 EDT Tuesday, October 16, 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 September 30, 2012. Quarterly revenues of $335.1 million for the first quarter of fiscal year 2013 increased $5.1 million or 1.6% over the previous quarter's revenue of $330.0 million and increased $5.2 million or 1.6% over $329.9 million reported in the first quarter of fiscal year 2012. Net income of $105.2 million increased $1.9 million or 2% over the fourth quarter of fiscal year 2012 and decreased $3.2 million or 3% from the first quarter of fiscal year 2012. Diluted earnings per share of $0.45 per share in the first quarter of fiscal year 2013 increased $0.01 per share or 2% over the fourth quarter of fiscal year 2012 and declined $0.02 per share or 4% from the first quarter of fiscal year 2012. During the first quarter the Company's cash, cash equivalents and marketable securities increased by $116.9 million to $1.3 billion. A cash dividend of $0.25 per share will be paid on November 28, 2012 to stockholders of record on November 16, 2012. The Board of Directors authorized the Company to purchase, depending on market conditions, up to 10 million shares of its outstanding common stock in the open market over the next two years. According to Lothar Maier, CEO, “We met the midpoint of our revenue guidance for our first fiscal quarter of 2013, as sales grew 1.6% compared to the preceding fourth quarter of fiscal 2012. In addition, net income improved and operating income as a percent of sales improved to 46.3%. Though we are pleased with these results, external global market conditions have continued to weaken. While the automotive market continues to show strength on higher bookings, this increase was offset by lower bookings in our other major markets, particularly the industrial and computer markets. Forecasting continues to be difficult in the current environment. Though customer inventory levels appear to be at reasonable levels, demand continues to be sluggish and orders have not shown signs of improvement as we begin the second quarter. Given this weakness, we expect that this will be a difficult quarter as we remain cautious about the economy and the global market. As a result, we currently are forecasting our revenues to decline sequentially in the 5% - 10% range in our second fiscal quarter of 2013.” 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 1, 2012. Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, October 17, 2012 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (913) 312-1443, or toll free (888) 737-3705 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 October 17, 2012 through October 23, 2012. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #4942174. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of October 17, 2012 until the first 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) U.S. GAAP (unaudited)   Three Months Ended   September 30, 2012     July 1, 2012     October 2, 2011 Revenues $ 335,148 $ 330,011 $ 329,920 Cost of sales (1) 83,758   81,263   79,793   Gross profit 251,390   248,748   250,127   Expenses: Research & development (1) 58,803 59,479 54,889 Selling, general & administrative (1) 37,504   37,803   37,672   96,307   97,282   92,561   Operating income 155,083 151,466 157,566 Interest expense (6,855 ) (6,881 ) (6,941 ) Amortization of debt discount(2) (5,146 ) (5,073 ) (4,862 ) Interest and other income 1,003   1,067   1,221   Income before income taxes 144,085 140,579 146,984 Provision for income taxes 38,903   37,253   38,583   Net income $ 105,182   $ 103,326   $ 108,401     Earnings per share: Basic $ 0.45   $ 0.44   $ 0.47   Diluted $ 0.45   $ 0.44   $ 0.47     Shares used in determining earnings per share: Basic 234,990   234,290   231,863   Diluted 236,010   235,297   232,985     Includes the following non-cash charges:   (1) Stock-based compensation Cost of sales $ 1,970 $ 1,929 $ 1,904 Research & development 9,196 9,017 8,887 Selling, general & administrative 4,745 4,649 4,586   (2) Amortization of debt discount (non-cash interest expense) 5,146 5,073 4,862             LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) U.S. GAAP (unaudited)   September 30,2012 July 1,2012 ASSETS: Current assets: Cash, cash equivalents and marketable securities $ 1,319,961 $ 1,203,059 Accounts receivable, net of allowance for doubtful accounts of $2,035 ($2,035 at July 1, 2012) 152,423 153,090 Inventories 81,700 79,664 Deferred tax assets and other current assets 69,898   69,597   Total current assets 1,623,982   1,505,410     Property, plant & equipment, net 311,221 320,222 Other noncurrent assets 22,997   25,436   Total assets $ 1,958,200   $ 1,851,068     LIABILITIES & STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 10,929 $ 11,459 Accrued income taxes, payroll & other accrued liabilities 147,043 117,789 Deferred income on shipments to distributors 42,407   41,333   Total current liabilities 200,379   170,581     Convertible senior notes 810,746 805,599 Deferred tax and other noncurrent liabilities 143,381 138,380   Stockholders' equity: Common stock 1,612,585 1,588,045 Accumulated deficit (809,363 ) (851,702 ) Accumulated other comprehensive income 472   165   Total stockholders' equity 803,694   736,508   $ 1,958,200   $ 1,851,068     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   September 30, 2012     July 1, 2012     October 2, 2011 Reported net income (GAAP basis) $ 105,182 $ 103,326   $ 108,401   Stock-based compensation 15,911 15,595 15,377 Amortization of debt discount(1) 5,146 5,073 4,862 Income tax effect of non-GAAP adjustments (5,685 ) (5,477 ) (5,313 )   Non-GAAP net income $ 120,554   $ 118,517   $ 123,327     Non-GAAP earnings per share Basic $ 0.51   $ 0.51   $ 0.53   Diluted $ 0.51   $ 0.50   $ 0.53   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