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Linear Technology Reports Year Over Year Quarterly Increases in Revenues and Net Income, but Sequential Quarterly Declines. The Company Increases the Quarterly Dividend.

Linear Technology Corporation (NASDAQ:LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the fiscal quarter ended December 29, 2013. Quarterly revenues of $334.6 million for the second quarter of fiscal year 2014 decreased $5.8 million or 1.7% from the previous quarter's revenue of $340.4 million and increased $29.3 million or 9.6% over $305.3 million reported in the second quarter of fiscal year 2013. Net income of $104.8 million decreased $3.1 million or 2.9% from the first quarter of fiscal year 2014 and increased $15.9 million or 17.9% over the second quarter of fiscal year 2013. Diluted earnings per share of $0.44 per share in the second quarter of fiscal year 2014 decreased $0.01 per share or 2.2% from the first quarter of fiscal year 2014 and increased $0.06 per share or 15.8% over the second quarter of fiscal year 2013.

During the second quarter the Company's cash, cash equivalents and marketable securities increased by $128.1 million over the first quarter of fiscal year 2014 to $1,718 million net of spending $6.5 million to purchase 163,000 shares of its common stock in the open market. The Company's Board of Directors approved an increase in the Company's quarterly dividend from $0.26 per share to $0.27 per share. This marked the 22nd consecutive year the Company has increased its dividend. A cash dividend of $0.27 per share will be paid on February 26, 2014 to stockholders of record on February 14, 2014.

According to Lothar Maier, CEO, “As we noted last quarter, our December quarter is generally a slower quarter for us as the automotive and industrial markets tend to be weaker. Though automotive continued to grow modestly, the industrial market was down for us and we ended the quarter with total revenues down sequentially 1.7%, in line with the midpoint of our guidance as the quarter generally went as expected. We are encouraged that this decline was modest compared to recent years and that we grew revenues year-over-year by 9.6% over the second quarter of fiscal 2013. In addition, we were able to hold gross margin flat at 75.3% and we managed expenses accordingly to minimize the impact on earnings, which were down 2.9% or one cent per share. Looking ahead, our book-to-bill ratio was slightly positive in the December quarter and we typically see improved bookings momentum in the automotive and industrial markets in the March quarter. Accordingly, we are currently forecasting revenues to grow sequentially by 3% to 6% in our fiscal third 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-K for the year ended June 30, 2013.

Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, January 15, 2014 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call 719-325-4764, or toll free 800-967-7144 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 January 15, 2014 through January 22, 2014. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #1599786. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of January 22, 2014 until the second 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, µModule subsystems, 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 Six Months Ended

December 29,
2013

 

September 29,
2013

 

December 30,
2012

December 29,
2013

 

December 30,
2012

Revenues $ 334,595 $ 340,357 $ 305,281 $ 674,952 $ 640,429
Cost of sales (1) 82,521   84,001   78,185   166,522   161,943  
Gross profit 252,074   256,356   227,096   508,430   478,486  
Expenses:
Research & development (1) 62,008 61,512 57,304 123,520 116,107
Selling, general & administrative (1) 38,852   38,678   37,090   77,530   74,594  
100,860   100,190   94,394   201,050   190,701  
Operating income 151,214 156,166 132,702 307,380 287,785
Interest expense (6,813 ) (6,813 ) (6,835 ) (13,626 ) (13,690 )
Amortization of debt discount(2) (5,524 ) (5,446 ) (5,219 ) (10,970 ) (10,365 )
Interest and other income 791   882   1,043   1,673   2,046  

Income before income taxes

139,668 144,789 121,691 284,457 265,776
Provision for income taxes 34,917   36,921   32,857   71,838   71,760  
Net income $ 104,751   $ 107,868   $ 88,834   $ 212,619   $ 194,016  
 
Earnings per share:
Basic $ 0.44   $ 0.45   $ 0.38   $ 0.89   $ 0.82  
Diluted $ 0.44   $ 0.45   $ 0.38   $ 0.89   $ 0.82  
 
Shares used in determining earnings per share:
Basic 239,206   238,146   235,852   238,857   235,613  
Diluted 240,670   239,328   236,850   240,000   236,636  
 
Includes the following non-cash charges:
(1) Stock-based compensation
Cost of sales $ 2,106 $ 1,964 $ 1,984 $ 4,070 $ 3,954
Research & development 9,816 9,162 9,255 18,978 18,451
Selling, general & administrative 5,069 4,730 4,778 9,799 9,523

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

5,524 5,446 5,219 10,970 10,365

 

LINEAR TECHNOLOGY CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

U.S. GAAP (unaudited)

   
December 29, 2013 June 30, 2013
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities $ 1,717,590 $ 1,524,741

Accounts receivable, net of allowance for doubtful accounts of $1,870 ($1,891 at June 30, 2013)

138,526 145,274
Inventories 87,795 87,229
Deferred tax assets and other current assets 40,866   36,646  
Total current assets 1,984,777   1,793,890  
 
Property, plant & equipment, net 271,836 288,466
Other noncurrent assets 14,885   15,985  
Total assets $ 2,271,498   $ 2,098,341  
 
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 13,533 $ 10,258
Accrued income taxes, payroll & other accrued liabilities 99,043 109,426
Deferred income on shipments to distributors 42,452 44,088
Convertible senior notes 837,599 826,629
Deferred tax liabilities- current portion 37,237   35,479  
Total current liabilities 1,029,864   1,025,880  
 
Deferred tax and other noncurrent liabilities 103,576 90,553
 
Stockholders’ equity:
Common stock 1,825,839 1,736,729
Accumulated deficit (687,789 ) (754,555 )
Accumulated other comprehensive income 8   (266 )
Total stockholders’ equity 1,138,058   981,908  
$ 2,271,498   $ 2,098,341  

 

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 Six Months Ended

December 29,
2013

 

September 29,
2013

 

December 30,
2012

December 29,
2013
  December 30,
2012
Reported net income
(GAAP basis) $ 104,751 $ 107,868 $ 88,834 $ 212,619 $ 194,016
 
Stock-based compensation 16,991 15,856 16,017 32,847 31,928
Amortization of debt
discount(1) 5,524 5,446 5,219 10,970 10,365
Income tax effect of non-GAAP adjustments (5,629 ) (5,432 ) (5,734 ) (11,066 ) (11,419 )
 
Non-GAAP net income $ 121,637   $ 123,738   $ 104,336   $ 245,370   $ 224,890  
 
Non-GAAP earnings per share
Basic $ 0.51   $ 0.52   $ 0.44   $ 1.03   $ 0.95  
Diluted $ 0.51   $ 0.52   $ 0.44   $ 1.02   $ 0.95  

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. 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 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.

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