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Linear Technology Reports Quarterly And Year Over Year Decreases In Revenues And Net Income, But Guides To Growth In The March Quarter And Raises Its Quarterly Dividend 4% To $0.25 Per Share

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, January 18, 2012 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 325-2458, or toll free (800) 390-5311 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 18, 2012 through January 24, 2012. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #8746812. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of January 18, 2012 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, 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 Six Months Ended
January 1,   October 2,   January 2, January 1,   January 2,
2012 2011 2011 2012 2011
Revenues $ 294,333 $ 329,920 $ 383,621 $ 624,253 772,213
Cost of sales (1) 73,821   79,793   82,603   153,614   166,334  
Gross profit 220,512   250,127   301,018   470,639   605,879  
Expenses:
Research & development (1) 52,519 54,889 59,001 107,408 115,203
Selling, general & administrative (1) 34,922   37,672   40,958   72,594   85,040  
87,441   92,561   99,959   180,002   200,243  
Operating income 133,071 157,566 201,059 290,637 405,636
Interest expense (6,925 ) (6,941 ) (8,135 ) (13,866 ) (18,552 )
Amortization of debt discount (2) (4,931 ) (4,862 ) (5,390 ) (9,793 ) (12,156 )
Acquisition related costs (3,195 ) (3,195 )
Interest and other income 1,146   1,221   1,602   2,367   3,518  
Income before income taxes 119,166 146,984 189,136 266,150 378,446
Provision for income taxes 31,281   38,583   45,393   69,864   97,453  
Net income $ 87,885   $ 108,401   $ 143,743   $ 196,286   280,993  
 
Earnings per share:
Basic $ 0.38   $ 0.47   $ 0.62   $ 0.85   $ 1.22  
Diluted $ 0.38   $ 0.47   $ 0.62   $ 0.84   $ 1.21  
 
Shares used in determining earnings per share:
Basic 232,209   231,863   230,284   232,051   230,006  
Diluted 233,565   232,985   232,202   233,347   231,843  
 
Includes the following non-cash charges:
(1) Stock-based compensation
Cost of sales $ 1,844 $ 1,904 $ 2,338 $ 3,748 $ 4,521
Research & development 8,609 8,887 10,531 17,496 20,298
Selling, general & administrative 4,442 4,586 5,614 9,028 10,855

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

4,931 4,862 5,390 9,793 12,156
 
LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
U.S. GAAP (unaudited)
   
January 1, July 3,
2012 2011
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities $ 1,037,503 $ 922,537

Accounts receivable, net of allowance for doubtful accounts of $2,041 ($2,043 at July 3, 2011)

139,279 169,637
Inventories 78,689 72,195
Deferred tax assets and other current assets 64,881   81,921  
Total current assets 1,320,352   1,246,290  
 
Property, plant & equipment, net 335,759 332,969
Other noncurrent assets 69,743   51,907  
Total assets $ 1,725,854   $ 1,631,166  
 
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 11,227 $ 11,606
Accrued income taxes, payroll & other accrued liabilities 110,165 123,613
Deferred income on shipments to distributors 41,797   47,587  
Total current liabilities 163,189   182,806  
 
Convertible senior notes 795,524 785,732
Deferred tax and other noncurrent liabilities 162,386 157,017
 
Stockholders’ equity:
Common stock 1,508,165 1,466,098
Accumulated deficit (903,665 ) (961,617 )
Accumulated other comprehensive income 255   1,130  
Total stockholders’ equity 604,755   505,611  
$ 1,725,854   $ 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 Six Months Ended
January 1,   October 2,   January 2, January 1,   January 2,
2012 2011 2011 2012 2011
Reported net income
(GAAP basis) $ 87,885 $ 108,401 $ 143,743 $ 196,286 $ 280,993
 
Stock-based compensation 14,895 15,377 18,483 30,272 35,674

Amortization of debt discount (1)

4,931 4,862 5,390 9,793 12,156
Acquisition related costs 3,195 3,195

Income tax effect of non-GAAP adjustments

(6,043 ) (5,313 ) (5,730 ) (11,356 ) (12,317 )
 
Non-GAAP net income $ 104,863   $ 123,327   $ 161,886   $ 228,190   $ 316,506  
 
Non-GAAP earnings per share
Basic $ 0.45   $ 0.53   $ 0.70   $ 0.98   $ 1.38  
Diluted $ 0.45   $ 0.53   $ 0.70   $ 0.98   $ 1.37  
 

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. 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.

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