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Press release from Business Wire

Linear Technology Reports Sequential and Year Over Year Quarterly Increases in Revenues and Net Income

Tuesday, April 16, 2013

Linear Technology Reports Sequential and Year Over Year Quarterly Increases in Revenues and Net Income

17:00 EDT Tuesday, April 16, 2013

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 fiscal quarter ended March 31, 2013. Quarterly revenues of $314.5 million for the third quarter of fiscal year 2013 increased $9.3 million or 3% over the previous quarter's revenue of $305.3 million and increased $2.2 million or 1% over $312.4 million reported in the third quarter of fiscal year 2012. Net income of $111.0 million increased $22.1 million or 25% over the second quarter of fiscal year 2013 and increased $12.5 million or 13% over the third quarter of fiscal year 2012. The current year fiscal quarter benefited from a lower tax rate of 12.75% as compared to 27% in the previous period and 23.75% in the prior year quarter. The Company's tax rate is lower primarily due to the reinstatement of the federal R&D tax credit and secondarily due to the release of estimated tax liabilities for fiscal years that are no longer subject to audit. Diluted earnings per share of $0.46 per share in the third quarter of fiscal year 2013 increased $0.08 per share or 18% over the second quarter of fiscal year 2013 and increased $0.04 per share or 10% over the third quarter of fiscal year 2012.

During the third quarter the Company's cash, cash equivalents and marketable securities increased by $155.1 million over the second quarter of fiscal year 2013 to $1.455 billion net of spending $24.2 million to purchase approximately 640,000 shares of its common stock in the open market. A cash dividend of $0.26 per share will be paid on May 29, 2013 to stockholders of record on May 17, 2013.

According to Lothar Maier, CEO, “We are pleased to report a solid quarter with sequential growth at the higher end of our guidance. We grew quarterly revenues 3% sequentially, had a positive book-to-bill ratio and improved our gross margin and operating margin as we continue to control spending where practical. The two end-markets most favorably impacted by the improved bookings were the automotive and industrial end-markets. Looking forward, customers generally acknowledge growth, but continue to order cautiously to the low-end of published lead times. As a result, we are currently estimating revenue growth in the same range we guided last quarter, 1% to 4% for our fiscal fourth quarter.”

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 quarterly period ended December 30, 2012.

Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, April 17, 2013 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call 719-325-4856, or toll free 888-487-0360 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 17, 2013 through April 23, 2013. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #1042498. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of April 17, 2013 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, 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 Nine Months Ended
March 31,     December 30,     April 1, March 31,     April 1,
2013 2012 2012 2013 2012
Revenues $ 314,542 $ 305,281 $ 312,357 $ 954,971 $ 936,610
Cost of sales (1) 79,259   78,185   77,662   241,202   231,276  
Gross profit 235,283   227,096   234,695   713,769   705,334  
Expenses:
Research & development (1) 58,517 57,304 57,580 174,624 164,988
Selling, general & administrative (1) 38,480   37,090   37,182   113,074   109,776  
96,997   94,394   94,762   287,698   274,764  
Operating income 138,286 132,702 139,933 426,071 430,570
Interest expense (6,812 ) (6,835 ) (6,902 ) (20,502 ) (20,768 )
Amortization of debt discount(2) (5,294 ) (5,219 ) (5,002 ) (15,659 ) (14,795 )
Acquisition related costs (3,195 )
Interest and other income 1,004   1,043   1,152   3,050   3,519  
Income before income taxes 127,184 121,691 129,181 392,960 395,331
Provision for income taxes 16,216   32,857   30,682   87,976   100,546  
Net income $ 110,968   $ 88,834   $ 98,499   $ 304,984   $ 294,785  
 
Earnings per share:
Basic $ 0.47   $ 0.38   $ 0.42   $ 1.29   $ 1.27  
Diluted $ 0.46   $ 0.38   $ 0.42   $ 1.28   $ 1.26  
 
Shares used in determining earnings per share:
Basic 237,296   235,852   233,346   236,323   232,568  
Diluted 238,641   236,850   234,822   237,388   233,887  
 
Includes the following non-cash charges:
(1) Stock-based compensation
Cost of sales $ 1,998 $ 1,984 $ 1,902 $ 5,952 $ 5,650
Research & development 9,324 9,255 8,876 27,775 26,372
Selling, general & administrative 4,812 4,778 4,580 14,335 13,608

(2) Amortization of debt discount (non-cash interest expense)

5,294 5,219 5,002 15,659 14,795
 

LINEAR TECHNOLOGY CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

U.S. GAAP (unaudited)

     
March 31, July 1,
2013 2012
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities $ 1,454,508 $ 1,203,059

Accounts receivable, net of allowance for doubtful accounts of $1,891 ($2,035 at July 1, 2012)

143,047 153,090
Inventories 86,559 79,664
Deferred tax assets and other current assets 75,712   69,597  
Total current assets 1,759,826   1,505,410  
 
Property, plant & equipment, net 295,315 320,222
Other noncurrent assets 18,590   25,436  
Total assets $ 2,073,731   $ 1,851,068  
 
LIABILITIES & STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 12,069 $ 11,459
Accrued income taxes, payroll & other accrued liabilities 82,570 117,789
Deferred income on shipments to distributors 41,797   41,333  
Total current liabilities 136,436   170,581  
 
Convertible senior notes 821,259 805,599
Deferred tax and other noncurrent liabilities 165,567 138,380
 

Stockholders' equity:

Common stock 1,713,597 1,588,045
Accumulated deficit (762,997 ) (851,702 )
Accumulated other comprehensive income (131 ) 165  
Total stockholders' equity 950,469   736,508  
$ 2,073,731   $ 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 Nine Months Ended
March 31,     December 30,     April 1, March 31,     April 1,
2013 2012 2012 2013 2012
Reported net income
(GAAP basis) $ 110,968 $ 88,834 $ 98,499 $ 304,984 $ 294,785
 
Stock-based compensation 16,134 16,017 15,358 48,062 45,630
Amortization of debt
discount(1) 5,294 5,219 5,002 15,659 14,795
Acquisition related costs 3,195
Income tax effect of non-GAAP adjustments (2,732 ) (5,734 ) (4,836 ) (14,266 ) (16,181 )
 
Non-GAAP net income $ 129,664   $ 104,336   $ 114,023   $ 354,439   $ 342,224  
 
Non-GAAP earnings per share
Basic $ 0.55   $ 0.44   $ 0.49   $ 1.50   $ 1.47  
Diluted $ 0.54   $ 0.44   $ 0.49   $ 1.49   $ 1.46  
 

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 and the amortization of the Company's debt discount which is a non-cash interest expense. 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 Corporation
Paul Coghlan, 408-432-1900
Vice President, Finance, Chief Financial Officer

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