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 Maxim Integrated Reports Results For The Third Quarter Of Fiscal 2017
   Thursday, April 20, 2017 4:05:00 PM ET

Maxim Integrated Products, Inc. (MXIM ) reported net revenue of $581 million for its third quarter of fiscal 2017 ended March 25, 2017, a 5% increase from the $551 million revenue recorded in the prior quarter, and a 5% increase from the same quarter of last year.

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Tunc Doluca, President and Chief Executive Officer, commented, "Our strong growth in the March quarter enabled us to exceed our revenue and profitability targets. This momentum was led by Automotive and Industrial growth relative to the March quarter of last year." Mr. Doluca continued, "Our return to growth and strong profitability confirms that our R&D investment strategy and manufacturing transformation are on track and delivering great results."

Fiscal Year 2017 Third Quarter Results Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the March quarter was $0.49. The results were affected by pre-tax special items which primarily consisted of $13 million in charges related to acquisitions and $3 million in charges related to restructuring activities. GAAP earnings per share, excluding special items was $0.56. 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 third quarter of fiscal 2017, total cash, cash equivalents and short term investments were $2.16 billion, an increase of $69 million from the prior quarter.

Notable items included:

-- Cash flow from operations: $221 million

-- Gross capital expenditures: $8 million

-- Dividends: $93 million ($0.33 per share)

-- Stock repurchases: $57 million

Business Outlook The Company’s 90-day backlog at the beginning of the June 2017 quarter was $382 million. Based on the beginning backlog, expected turns, and the start of the transition to sell-in revenue accounting for distribution, our results for the June 2017 quarter are expected to be as follows:

-- Revenue: $590 to $630 million (including $15 to $20 million for sell-in transition)

-- Gross Margin: 63% to 65% GAAP (65% to 67% excluding special items)

-- EPS: $0.54 to $0.60 GAAP ($0.59 to $0.65 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 June 15, 2017, to stockholders of record on June 1, 2017.

Conference Call Maxim Integrated has scheduled a conference call on April 20 at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal 2017 and its business outlook. 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
                                                              March 25,            December 24,               March 26,
                                                              2017                 2016                       2016
                                                              (in thousands, except per share data)
 Net revenues                                                 $      581,216       $              550,998     $      555,252
 Cost of goods sold (1) (2)                                   214,312              210,820                    236,411
 Gross margin                                                 366,904              340,178                    318,841
 Operating expenses:
 Research and development                                     113,163              114,057                    119,178
 Selling, general and administrative                          73,987               71,543                     71,778
 Intangible asset amortization                                2,348                2,348                      2,538
 Impairment of long-lived assets (3)                          1,000                383                        506
 Severance and restructuring expenses                         450                  864                        2,552
 Other operating expenses (income), net                       1,704                1,909                      (55,419)
 Total operating expenses (income), net                       192,652              191,104                    141,133
 Operating income (loss)                                      174,252              149,074                    177,708
 Interest and other income (expense), net (4)                 (3,884)              (636)                      (6,373)
 Income (loss) before provision for income taxes              170,368              148,438                    171,335
 Income tax provision (benefit)                               30,155               17,961                     31,525
 Net income (loss)                                            $      140,213       $              130,477     $      139,810
 Earnings (loss) per share:
 Basic                                                        $            0.50    $                    0.46  $            0.49
 Diluted                                                      $            0.49    $                    0.45  $            0.48
 Shares used in the calculation of earnings (loss) per share:
 Basic                                                        282,903              283,294                    285,854
 Diluted                                                      287,882              288,106                    289,783
 Dividends paid per share                                     $            0.33    $                    0.33  $            0.30
 SCHEDULE OF SPECIAL ITEMS
 (Unaudited)
                                                              Three Months Ended
                                                              March 25,            December 24,               March 26,
                                                              2017                 2016                       2016
                                                              (in thousands)
 Cost of goods sold:
 Intangible asset amortization                                $        11,064      $11,755                    $        11,829
 Accelerated depreciation (1)                                 1,103                1,178                      4,066
 Other cost of goods sold (2)                                                                                 6,123
 Total                                                        $        12,167      $                12,933    $        22,018
 Operating expenses:
 Intangible asset amortization                                $2,348               $2,348                     $2,538
 Impairment of long-lived assets (3)                          1,000                383                        506
 Severance and restructuring                                  450                  864                        2,552
 Other operating expenses (income), net                       1,704                1,909                      (55,419)
 Total                                                        $          5,502     $                  5,504   $      (49,823)
 Interest and other expense (income), net (4)                 $             (48)   $                 (5,052)  $             (45)
 Total                                                        $             (48)   $                 (5,052)  $             (45)
 (1) Includes building and equipment accelerated depreciation related to the Dallas manufacturing facility.
 (2) Includes expense related to patent license settlement.
 (3) Includes impairment of investments in privately-held companies and other equipment impairment charges.
 (4) Includes gain on sale of shares received for the sale of the wafer manufacturing facility in San Antonio, Texas.
 CONSOLIDATED  BALANCE SHEETS
 (Unaudited)
                                                         March 25,         December 24,        March 26,
                                                         2017              2016                2016
                                                         (in thousands)
 ASSETS
 Current assets:
 Cash and cash equivalents                               $    1,656,727    $      1,687,435    $    1,710,340
 Short-term investments                                  499,154           399,461             150,076
 Total cash, cash equivalents and short-term investments 2,155,881         2,086,896           1,860,416
 Accounts receivable, net                                257,592           224,342             278,502
 Inventories                                             241,439           236,040             234,603
 Other current assets                                    60,195            75,284              88,389
 Total current assets                                    2,715,107         2,622,562           2,461,910
 Property, plant and equipment, net                      636,835           660,660             748,781
 Intangible assets, net                                  103,981           117,393             188,510
 Goodwill                                                491,015           491,015             490,648
 Other assets                                            69,689            55,188              77,886
 Assets held for sale                                    1,156             1,156               13,733
 TOTAL ASSETS                                            $    4,017,783    $      3,947,974    $    3,981,468
 LIABILITIES AND STOCKHOLDERS’ EQUITY
 Current liabilities:
 Accounts payable                                        $         82,938  $           70,505  $         82,696
 Income taxes payable                                    4,538             3,138               30,907
 Accrued salary and related expenses                     135,702           109,475             151,411
 Accrued expenses                                        35,208            41,418              42,562
 Deferred revenue on shipments to distributors           35,724            36,137              34,457
 Total current liabilities                               294,110           260,673             342,033
 Long-term debt                                          991,877           991,281             1,000,000
 Income taxes payable                                    534,028           514,498             451,099
 Other liabilities                                       37,459            37,331              49,573
 Total liabilities                                       1,857,474         1,803,783           1,842,705
 Stockholders’ equity:
 Common stock and capital in excess of par value         284               284                 280
 Retained earnings                                       2,169,760         2,155,698           2,154,767
 Accumulated other comprehensive loss                    (9,735)           (11,791)            (16,284)
 Total stockholders’ equity                              2,160,309         2,144,191           2,138,763
 TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY                $    4,017,783    $      3,947,974    $    3,981,468
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
                                                                                          Three Months Ended
                                                                                          March 25,        December 24,       March 26,
                                                                                          2017             2016               2016
                                                                                          (in thousands)
 Cash flows from operating activities:
 Net income (loss)                                                                        $       140,213  $         130,477  $       139,810
 Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 Stock-based compensation                                                                 18,300           18,073             17,875
 Depreciation and amortization                                                            40,473           42,140             47,088
 Deferred taxes                                                                           (16,967)         (7,520)            (333)
 Loss (gain) from sale of property, plant and equipment                                   4,809            3,898              3,098
 Loss (gain) on sale of business                                                          --               --                 (58,944)
 Tax benefit (shortfall) related to stock-based compensation                              --               --                 545
 Impairment of long-lived assets                                                          --               383                506
 Impairment of investments in privately-held companies                                    1,000            --                 --
 Excess tax benefit from stock-based compensation                                         --               --                 (1,491)
 Changes in assets and liabilities:
 Accounts receivable                                                                      (33,249)         29,176             (47,322)
 Inventories                                                                              (5,505)          (12,512)           22,785
 Other current assets                                                                     16,862           (7,583)            (8,947)
 Accounts payable                                                                         11,887           (11,999)           8,683
 Income taxes payable                                                                     20,931           17,138             29,597
 Deferred revenue on shipments to distributors                                            (412)            383                2,390
 Accrued salary and related expenses                                                      26,227           (1,651)            22,078
 All other accrued liabilities                                                            (3,872)          (7,773)            (9,432)
 Net cash provided by (used in) operating activities                                      220,697          192,630            167,986
 Cash flows from investing activities:
 Purchase of property, plant and equipment                                                (8,286)          (15,775)           (17,530)
 Proceeds from sales of property, plant and equipment                                     787              2,224              136
 Proceeds from sale of available-for-sale securities                                      --               26,454             --
 Proceeds from sale of business                                                           --               --                 105,000
 Purchases of available-for-sale securities                                               (99,398)         (225,622)          (24,861)
 Purchases of privately-held companies’ securities                                        (162)            (326)              (1,921)
 Net cash provided by (used in) investing activities                                      (107,059)        (213,045)          60,824
 Cash flows from financing activities:
 Excess tax benefit from stock-based compensation                                         --               --                 1,491
 Repayment of notes payable                                                               --               (250,000)          --
 Net issuance of restricted stock units                                                   (8,268)          (4,239)            (8,853)
 Proceeds from stock options exercised                                                    17,502           7,155              9,889
 Issuance of common stock under employee stock purchase program                           (3,194)          17,658             --
 Repurchase of common stock                                                               (56,999)         (61,235)           (83,801)
 Dividends paid                                                                           (93,387)         (93,562)           (85,714)
 Net cash provided by (used in) financing activities                                      (144,346)        (384,223)          (166,988)
 Net increase (decrease) in cash and cash equivalents                                     (30,708)         (404,638)          61,822
 Cash and cash equivalents:
 Beginning of period                                                                      1,687,435        2,092,073          1,648,518
 End of period                                                                            $    1,656,727   $      1,687,435   $    1,710,340
 Total cash, cash equivalents, and short-term investments                                 $    2,155,881   $      2,086,896   $    1,860,416
 ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
 (Unaudited)
                                                                                                Three Months Ended
                                                                                                March 25,            December 24,              March 26,
                                                                                                2017                 2016                      2016
                                                                                                (in thousands, except per share data)
 Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:
 GAAP gross profit                                                                              $      366,904       $             340,178     $      318,841
 GAAP gross profit %                                                                            63.1%                61.7%                     57.4%
 Special items:
 Intangible asset amortization                                                                  11,064               11,755                    11,829
 Accelerated depreciation (1)                                                                   1,103                1,178                     4,066
 Other cost of goods sold (2)                                                                   --                   --                        6,123
 Total special items                                                                            12,167               12,933                    22,018
 GAAP gross profit excluding special items                                                      $      379,071       $             353,111     $      340,859
 GAAP gross profit % excluding special items                                                    65.2%                64.1%                     61.4%
 Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:
 GAAP operating expenses                                                                        $      192,652       $             191,104     $      141,133
 Special items:
 Intangible asset amortization                                                                  2,348                2,348                     2,538
 Impairment of long-lived assets (3)                                                            1,000                383                       506
 Severance and restructuring                                                                    450                  864                       2,552
 Other operating expenses (income), net                                                         1,704                1,909                     (55,419)
 Total special items                                                                            5,502                5,504                     (49,823)
 GAAP operating expenses excluding special items                                                $      187,150       $             185,600     $      190,956
 Reconciliation of GAAP net income (loss) to GAAP net income excluding special items:
 GAAP net income (loss)                                                                         $      140,213       $             130,477     $      139,810
 Special items:
 Intangible asset amortization                                                                  13,412               14,103                    14,367
 Accelerated depreciation (1)                                                                   1,103                1,178                     4,066
 Other cost of goods sold (2)                                                                   --                   --                        6,123
 Impairment of long-lived assets (3)                                                            1,000                383                       506
 Severance and restructuring                                                                    450                  864                       2,552
 Other operating expenses (income), net                                                         1,704                1,909                     (55,419)
 Interest and other expense (income), net (4)                                                   (48)                 (5,052)                   (45)
 Pre-tax total special items                                                                    17,621               13,385                    (27,850)
 Other income tax effects and adjustments (5)                                                   1,957                (11,167)                  5,698
 GAAP net income excluding special items                                                        $      159,791       $             132,695     $      117,658
 GAAP net income per share excluding special items:
 Basic                                                                                          $            0.56    $                   0.47  $            0.41
 Diluted                                                                                        $            0.56    $                   0.46  $            0.41
 Shares used in the calculation of earnings per share excluding special items:
 Basic                                                                                          282,903              283,294                   285,854
 Diluted                                                                                        287,882              288,106                   289,783
 (1) Includes building and equipment accelerated depreciation related to the Dallas manufacturing facility.
 (2) Includes expense related to patent license settlement.
 (3) Includes impairment of investments in privately-held companies and other equipment impairment charges.
 (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; other costs of goods sold; 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. 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, accelerated depreciation, and other costs of goods sold. 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 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 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; other costs of goods sold; 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. 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-third-quarter-of-fiscal-2017-300442959.html

SOURCE Maxim Integrated Investor Relations

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