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Linear Technology Reports Quarterly And Year Over Year Decreases In Revenues And Net Income

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 3, 2011.

Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, October 19, 2011 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 325-2440, or toll free (888) 359-3612 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 19, 2011 through October 25, 2011.

You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #6224890. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of October 19, 2011 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, and µModule subsystems. 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
October 2,2011   July 3,2011   September 26,2010
Revenues $ 329,920 $ 358,557 $ 388,592
Cost of sales (1) 79,793   79,011   83,731  
Gross profit 250,127   279,546   304,861  
Expenses:
Research & development (1) 54,889 55,950 56,202
Selling, general & administrative (1) 37,672   40,958   44,082  
92,561   96,908   100,284  
Operating income 157,566 182,638 204,577
Interest expense (6,941 ) (6,968 ) (10,417 )
Amortization of debt discount (2) (4,862 ) (4,793 ) (6,766 )
Interest and other income (3) 1,221   3,965   1,916  
Income before income taxes 146,984 174,842 189,310
Provision for income taxes 38,583   16,610   52,060  
Net income $ 108,401   $ 158,232   $ 137,250  
 
Earnings per share:
Basic $ 0.47   $ 0.68   $ 0.60  
Diluted $ 0.47   $ 0.68   $ 0.59  
 
Shares used in determining earnings per share:
Basic 231,863   231,771   229,367  
Diluted 232,985   233,598   231,073  
 
Includes the following non-cash charges:
(1) Stock-based compensation
Cost of sales $ 1,904 $ 2,062 $ 2,183
Research & development 8,887 9,192 9,767
Selling, general & administrative 4,586 4,940 5,241

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

4,862 4,793 6,766
 
Includes the following:
(3) Gain on legal settlement 2,500
 
LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
U.S. GAAP (unaudited)
 
  October 2,2011   July 3,2011
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities

$

967,672

$

922,537

Accounts receivable, net of allowance for doubtful
accounts of $2,041 ($2,043 at July 3, 2011) 161,920 169,637
Inventories 74,601 72,195
Deferred tax assets and other current assets   64,220     81,921  
Total current assets   1,268,413     1,246,290  
 
Property, plant & equipment, net 340,416 332,969
Other noncurrent assets   50,512     51,907  
Total assets $ 1,659,341   $ 1,631,166  
 
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 8,429 $ 11,606
Accrued income taxes, payroll & other accrued liabilities 118,406 123,613
Deferred income on shipments to distributors 42,171 47,587
Total current liabilities   169,006     182,806  
 
Convertible senior notes 790,593 785,732
Deferred tax and other noncurrent liabilities 156,543 157,017
 
Stockholders’ equity:
Common stock 1,475,218 1,466,098
Accumulated deficit (932,530 ) (961,617 )
Accumulated other comprehensive income   511     1,130  
Total stockholders’ equity   543,199     505,611  
$ 1,659,341   $ 1,631,166  
 
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
October 2,2011   July 3,2011   September 26,2010
Reported net income
(GAAP basis) $ 108,401 $ 158,232 $ 137,250
 
Stock-based compensation 15,377 16,194 17,191
Amortization of debt
discount(1) 4,862 4,793 6,766
Income tax effect of
non-GAAP adjustments (5,313 ) (1,994 ) (6,588 )
 
Non-GAAP net income $ 123,327   $ 177,225   $ 154,619  
 
Non-GAAP earnings per share
Basic $ 0.53   $ 0.76   $ 0.67  
Diluted $ 0.53   $ 0.76   $ 0.67  

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. 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 and non-cash interest expenses and the related tax effects primarily because they are significant non-cash 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.

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