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Maxim Integrated Products, Inc$52.00($.09)(.17%)

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 Maxim Integrated Reports Results For The Second Quarter Of Fiscal 2017
   Thursday, January 26, 2017 4:05:00 PM ET

Maxim Integrated Products, Inc. (MXIM ) reported net revenue of $551 million for its second quarter of fiscal 2017 ended December 24, 2016, a 2% decrease from the $561 million revenue recorded in the prior quarter, and an 8% increase from the same quarter of last year.

https://mma.prnewswire.com/media/149839/maxim_integrated_products__inc__logo.jpg

Tunc Doluca, President and Chief Executive Officer, commented, "Our December quarter marked the beginning of our return to revenue growth, as Automotive, Core Industrial and diversification in Consumer all contributed gains from the same quarter last year." Mr. Doluca continued, "In the March quarter, we expect to build upon our growth momentum in our Automotive and Industrial businesses."

Fiscal Year 2017 Second Quarter Results Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the December quarter was $0.45. The results were affected by pre-tax special items which primarily consisted of $14 million in charges related to acquisitions, a $5 million gain on the sale of available-for-sale securities, and $4 million in charges related to restructuring activities. GAAP earnings per share, excluding special items was $0.46. An analysis of GAAP versus GAAP excluding special items is provided in the last table of this press release.

Cash Flow Items At the end of the second quarter of fiscal 2017, total cash, cash equivalents and short term investments were $2.09 billion, a decrease of $181 million from the prior quarter.

Notable items included:

-- Cash flow from operations: $193 million

-- Proceeds related to the sale of a manufacturing facility: $26.5 million

-- Repayment of short-term loan: $250 million

-- Gross capital expenditures: $16 million

-- Dividends: $94 million ($0.33 per share)

-- Stock repurchases: $61 million

Business Outlook The Company’s 90-day backlog at the beginning of the March 2017 quarter was $388 million. Based on the beginning backlog and expected turns, results for the March 2017 quarter are expected to be as follows:

-- Revenue: $555 million to $595 million

-- Gross Margin: 61% to 63% GAAP (63% to 65% excluding special items)

-- EPS: $0.43 to $0.49 GAAP ($0.49 to $0.55 excluding special items)

Maxim Integrated’s business outlook does not include the potential impact of any special items related to restructuring activity, acquisitions, or other business combinations that may be completed during the quarter.

Dividend A cash dividend of $0.33 per share will be paid on March 16, 2017, to stockholders of record on March 2, 2017.

Conference Call Maxim Integrated has scheduled a conference call on January 26 at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter of fiscal 2017 and its business outlook. To listen via telephone, dial (844) 512-3769 (toll free) or (478) 219-0890. This call will be webcast by Shareholder.com and can be accessed at the Company’s website at investor.maximintegrated.com.

A presentation summarizing financial information to be discussed on the conference call is posted at investor.maximintegrated.com.

Contact Kathy Ta Managing Director, Investor Relations (408) 601-5697

 CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
                                                              Three Months Ended
                                                              December 24,               September 24,                December 26,
                                                              2016                       2016                         2015
                                                              (in thousands, except per share data)
 Net revenues                                                 $              550,998     $               561,396      $              510,831
 Cost of goods sold (1)                                       210,820                    215,664                      218,662
 Gross margin                                                 340,178                    345,732                      292,169
 Operating expenses:
 Research and development                                     114,057                    112,746                      113,100
 Selling, general and administrative                          71,543                     70,852                       73,643
 Intangible asset amortization                                2,348                      2,443                        3,538
 Impairment of long-lived assets (2)                          383                        6,134                        1,950
 Severance and restructuring expenses                         864                        9,965                        10,652
 Other operating expenses (income), net (3)                   1,909                      (28,481)                     (247)
 Total operating expenses (income), net                       191,104                    173,659                      202,636
 Operating income (loss)                                      149,074                    172,073                      89,533
 Interest and other income (expense), net (4)                 (636)                      (6,870)                      (9,593)
 Income (loss) before provision for income taxes              148,438                    165,203                      79,940
 Income tax provision (benefit)                               17,961                     27,589                       12,471
 Net income (loss)                                            $              130,477     $               137,614      $                67,469
 Earnings (loss) per share:
 Basic                                                        $                    0.46  $                     0.49   $                    0.24
 Diluted                                                      $                    0.45  $                     0.48   $                    0.23
 Shares used in the calculation of earnings (loss) per share:
 Basic                                                        283,294                    283,633                      285,526
 Diluted                                                      288,106                    288,574                      290,521
 Dividends paid per share                                     $                    0.33  $                     0.33   $                    0.30
 SCHEDULE OF SPECIAL ITEMS
 (Unaudited)
                                                              Three Months Ended
                                                              December 24,               September 24,                December 26,
                                                              2016                       2016                         2015
                                                              (in thousands)
 Cost of goods sold:
 Intangible asset amortization                                $                11,755    $                 12,602     $                14,734
 Accelerated depreciation (1)                                 1,178                      1,178                        2,032
 Total                                                        $                12,933    $                 13,780     $                16,766
 Operating expenses:
 Intangible asset amortization                                $2,348                     $2,443                       $3,538
 Impairment of long-lived assets (2)                          383                        6,134                        1,950
 Severance and restructuring                                  864                        9,965                        10,652
 Other operating expenses (income), net (3)                   1,909                      (28,481)                     (247)
 Total                                                        $                  5,504   $                  (9,939)   $                15,893
 Interest and other expense (income), net (4)                 $                 (5,052)  $                     (471)  $                     595
 Total                                                        $                 (5,052)  $                     (471)  $                     595
 (1) Includes building and equipment accelerated depreciation related to the Dallas manufacturing facility.
 (2) Includes impairment of investments in privately-held companies and other equipment impairment charges.
 (3) Includes gain on sale of micro-electromechanical systems (MEMS) business line during the first quarter of fiscal year 2017.
 (4) Includes gain on sale of shares received for the sale of the wafer manufacturing facility in San Antonio, Texas.
 CONSOLIDATED  BALANCE SHEETS
 (Unaudited)
                                                         December 24,   September 24,   December 26,
                                                         2016           2016            2015
                                                         (in thousands)
 ASSETS
 Current assets:
 Cash and cash equivalents                               $ 1,687,435    $  2,092,073    $ 1,648,518
 Short-term investments                                  399,461        175,441         124,955
 Total cash, cash equivalents and short-term investments 2,086,896      2,267,514       1,773,473
 Accounts receivable, net                                224,342        253,518         231,180
 Inventories                                             236,040        223,484         274,741
 Other current assets                                    75,284         89,398          47,235
 Total current assets                                    2,622,562      2,833,914       2,326,629
 Property, plant and equipment, net                      660,660        678,447         770,548
 Intangible assets, net                                  117,393        131,496         202,877
 Goodwill                                                491,015        491,015         490,648
 Other assets                                            55,188         54,890          64,105
 Assets held for sale                                    1,156          2,854           82,674
 TOTAL ASSETS                                            $ 3,947,974    $  4,192,616    $ 3,937,481
 LIABILITIES AND STOCKHOLDERS’ EQUITY
 Current liabilities:
 Accounts payable                                        $      70,505  $       83,589  $      74,145
 Income taxes payable                                    3,138          3,138           32,528
 Accrued salary and related expenses                     109,475        111,126         129,208
 Accrued expenses                                        41,418         48,572          47,303
 Deferred revenue on shipments to distributors           36,137         35,754          32,067
 Current portion of debt                                 --             249,788         --
 Total current liabilities                               260,673        531,967         315,251
 Long-term debt                                          991,281        990,685         1,000,000
 Income taxes payable                                    514,498        497,360         419,881
 Other liabilities                                       37,331         37,368          53,525
 Total liabilities                                       1,803,783      2,057,380       1,788,657
 Stockholders’ equity:
 Common stock and capital in excess of par value         284            284             63,014
 Retained earnings                                       2,155,698      2,141,326       2,103,339
 Accumulated other comprehensive loss                    (11,791)       (6,374)         (17,529)
 Total stockholders’ equity                              2,144,191      2,135,236       2,148,824
 TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY                $ 3,947,974    $  4,192,616    $ 3,937,481
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
                                                                                          Three Months Ended
                                                                                          December 24,  September 24,  December 26,
                                                                                          2016          2016           2015
                                                                                          (in thousands)
 Cash flows from operating activities:
 Net income (loss)                                                                        $    130,477  $     137,614  $      67,469
 Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 Stock-based compensation                                                                 18,073        17,120         18,419
 Depreciation and amortization                                                            42,140        43,485         49,082
 Deferred taxes                                                                           (7,520)       14,895         18,816
 Loss (gain) from sale of property, plant and equipment                                   3,898         652            (4,517)
 Loss (gain) on sale of business                                                          --            (26,620)       --
 Tax benefit (shortfall) related to stock-based compensation                              --            --             1,980
 Impairment of long-lived assets                                                          383           414            1,950
 Impairment of investements in privately-held companies                                   --            5,720          --
 Excess tax benefit from stock-based compensation                                         --            --             (3,920)
 Changes in assets and liabilities:
 Accounts receivable                                                                      29,176        3,013          51,291
 Inventories                                                                              (12,512)      2,517          15,811
 Other current assets                                                                     (7,583)       (12,099)       (918)
 Accounts payable                                                                         (11,999)      (858)          (7,659)
 Income taxes payable                                                                     17,138        110            (26,875)
 Deferred revenue on shipments to distributors                                            383           (3,025)        (3,024)
 Accrued salary and related expenses                                                      (1,651)       (55,572)       8,566
 All other accrued liabilities                                                            (7,773)       (3,964)        (3,982)
 Net cash provided by (used in) operating activities                                      192,630       123,402        182,489
 Cash flows from investing activities:
 Purchase of property, plant and equipment                                                (15,775)      (14,310)       (13,530)
 Proceeds from sales of property, plant and equipment                                     2,224         205            49,709
 Proceeds from sale of available-for-sale securities                                      26,454        24,540         --
 Proceeds from maturity of available-for-sale securities                                  --            25,000         --
 Proceeds from sale of business                                                           --            42,199         --
 Purchases of available-for-sale securities                                               (225,622)     (75,224)       (25,032)
 Purchases of privately-held companies’ securities                                        (326)         (2,337)        (6,008)
 Other investing activities                                                               --            --             2,380
 Net cash provided by (used in) investing activities                                      (213,045)     73             7,519
 Cash flows from financing activities:
 Excess tax benefit from stock-based compensation                                         --            --             3,920
 Repayment of notes payable                                                               (250,000)     --             --
 Net issuance of restricted stock units                                                   (4,239)       (5,206)        (7,722)
 Proceeds from stock options exercised                                                    7,155         19,911         48,477
 Issuance of common stock under employee stock purchase program                           17,658        --             14,350
 Repurchase of common stock                                                               (61,235)      (57,709)       (23,150)
 Dividends paid                                                                           (93,562)      (93,627)       (85,712)
 Net cash provided by (used in) financing activities                                      (384,223)     (136,631)      (49,837)
 Net increase (decrease) in cash and cash equivalents                                     (404,638)     (13,156)       140,171
 Cash and cash equivalents:
 Beginning of period                                                                      2,092,073     2,105,229      1,550,965
 End of period                                                                            $ 1,687,435   $  2,092,073   $ 1,648,518
 Total cash, cash equivalents, and short-term investments                                 $ 2,086,896   $  2,267,514   $ 1,773,473
 ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
 (Unaudited)
                                                                                                Three Months Ended
                                                                                                December 24,         September 24,         December 26,
                                                                                                2016                 2016                  2015
                                                                                                (in thousands, except per share data)
 Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:
 GAAP gross profit                                                                              $        340,178     $         345,732     $        292,169
 GAAP gross profit %                                                                            61.7%                61.6%                 57.2%
 Special items:
 Intangible asset amortization                                                                  11,755               12,602                14,734
 Accelerated depreciation (1)                                                                   1,178                1,178                 2,032
 Total special items                                                                            12,933               13,780                16,766
 GAAP gross profit excluding special items                                                      $        353,111     $         359,512     $        308,935
 GAAP gross profit % excluding special items                                                    64.1%                64.0%                 60.5%
 Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:
 GAAP operating expenses                                                                        $        191,104     $         173,659     $        202,636
 Special items:
 Intangible asset amortization                                                                  2,348                2,443                 3,538
 Impairment of long-lived assets (2)                                                            383                  6,134                 1,950
 Severance and restructuring                                                                    864                  9,965                 10,652
 Other operating expenses (income), net  (3)                                                    1,909                (28,481)              (247)
 Total special items                                                                            5,504                (9,939)               15,893
 GAAP operating expenses excluding special items                                                $        185,600     $         183,598     $        186,743
 Reconciliation of GAAP net income (loss) to GAAP net income excluding special items:
 GAAP net income (loss)                                                                         $        130,477     $         137,614     $          67,469
 Special items:
 Intangible asset amortization                                                                  14,103               15,045                18,272
 Accelerated depreciation (1)                                                                   1,178                1,178                 2,032
 Impairment of long-lived assets (2)                                                            383                  6,134                 1,950
 Severance and restructuring                                                                    864                  9,965                 10,652
 Other operating expenses (income), net (3)                                                     1,909                (28,481)              (247)
 Interest and other expense (income), net (4)                                                   (5,052)              (471)                 595
 Pre-tax total special items                                                                    13,385               3,370                 33,254
 Other income tax effects and adjustments (5)                                                   (11,167)             (2,754)               (7,903)
 GAAP net income excluding special items                                                        $        132,695     $         138,230     $          92,820
 GAAP net income per share excluding special items:
 Basic                                                                                          $              0.47  $               0.49  $              0.33
 Diluted                                                                                        $              0.46  $               0.48  $              0.32
 Shares used in the calculation of earnings per share excluding special items:
 Basic                                                                                          283,294              283,633               285,526
 Diluted                                                                                        288,106              288,574               290,521
 (1) Includes building and equipment accelerated depreciation related to the Dallas manufacturing facility.
 (2) Includes impairment of investments in privately-held companies and other equipment impairment charges.
 (3) Includes gain on sale of micro-electromechanical systems (MEMS) business line during the first quarter of fiscal year 2017.
 (4) Includes gain on sale of shares received for the sale of the wafer manufacturing facility in San Antonio, Texas.
 (5) Includes tax effect of pre-tax special items and miscellaneous tax adjustments.

Non-GAAP MeasuresTo supplement the consolidated financial results prepared under GAAP, Maxim Integrated uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude special items related to intangible asset amortization; accelerated depreciation; impairment of long-lived assets; severance and restructuring; and other operating expenses (income), net; interest and other expense (income), net, and other income tax effects and adjustments. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim Integrated’s current performance. Many analysts covering Maxim Integrated use the non-GAAP measures as well. Given management’s use of these non-GAAP measures, Maxim Integrated believes these measures are important to investors in understanding Maxim Integrated’s current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in Maxim Integrated’s core business across different time periods. These non-GAAP measures are not in accordance with or an alternative to GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names. The non-GAAP measures displayed in the table above include the following:

GAAP Gross Profit Excluding Special ItemsThe use of GAAP gross profit excluding special items allows management to evaluate the gross margin of the Company’s core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization and accelerated depreciation. In addition, it is an important component of management’s internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP gross profit excluding special items to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of Maxim Integrated’s core businesses.

GAAP Operating Expenses Excluding Special ItemsThe use of GAAP operating expenses excluding special items allows management to evaluate the operating expenses of the Company’s core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; impairment of long-lived assets; severance and restructuring, and other operating expenses (income), net. In addition, it is an important component of management’s internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP operating expenses excluding special items to enable investors and analysts to evaluate our core business and its direct operating expenses.

GAAP Provision for Income Taxes Excluding Special ItemsThe use of a GAAP provision for income taxes excluding special items allows management to evaluate the provision for income taxes across different reporting periods on a consistent basis, independent of special items including the tax provision impact of pre-tax special items. In fiscal year 2016, we began using a long-term tax rate to compute the GAAP provision for income taxes excluding special items. This long-term tax rate considers the income tax impact of pre-tax special items, assumes the Federal research tax credit remains in effect throughout the entire year, and eliminates the effects of significant non-recurring and period specific tax items which vary in size and frequency. In the first and second quarter of fiscal year 2017, we used a long-term tax rate of 18%, which was our forecast of the weighted average of our normalized fiscal year GAAP tax rate excluding special items over a four-year period, that includes the past three fiscal years plus the current fiscal year projection at the beginning of fiscal year 2017. We review the long-term tax rate on an annual basis and more frequently whenever events occur that may materially affect the long-term tax rate such as tax law changes; significant changes in our geographic earnings mix; or changes in our corporate structure. Starting in the third quarter of fiscal year 2017, we transitioned to a long-term tax rate of 15%, which reflects the impact of changes in our manufacturing structure and focused research and development expenditures, resulting in improved projections for fiscal year 2017 and in future periods.

GAAP Net Income and GAAP Net Income per Share Excluding Special ItemsThe use of GAAP net income and GAAP net income per share excluding special items allow management to evaluate the operating results of Maxim Integrated’s core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; accelerated depreciation; impairment of long-lived assets; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net, and other income tax effects and adjustments. In addition, they are important components of management’s internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP net income and GAAP net income per share excluding special items to enable investors and analysts to understand the results of operations of Maxim Integrated’s core businesses and to compare our results of operations on a more consistent basis against that of other companies in our industry.

"Safe Harbor" StatementThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include the Company’s business outlook and financial projections for its third quarter of fiscal 2017 ending in March 2017, which includes revenue, gross margin and earnings per share, as well as the Company’s expectation to build upon its growth momentum in its Automotive and Industrial businesses. These statements involve risk and uncertainty. Actual results could differ materially from those forecasted, based upon, among other things, general market and economic conditions, market developments that could adversely affect the growth of the mixed-signal analog market, product mix shifts, the loss of all or a substantial portion of our sales to one or more of our large customers, customer cancellations and price competition, as well as other risks described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 25, 2016 (the "Form 10-K"). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331616000081/maxim10-kfy2016.htm.

All forward-looking statements included in this news release are made as of the date hereof and based on the information available to the Company as of the date hereof. The Company assumes no obligation to update any forward-looking statement except as required by law.

About Maxim IntegratedMaxim Integrated develops innovative analog and mixed-signal products and technologies to make systems smaller and smarter, with enhanced security and increased energy efficiency. We are empowering design innovation for our automotive, industrial, healthcare, mobile consumer, and cloud data center customers to deliver industry-leading solutions that help change the world. Learn more at http://www.maximintegrated.com .

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/maxim-integrated-reports-results-for-the-second-quarter-of-fiscal-2017-300397622.html

SOURCE Maxim Integrated Products, Inc.

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