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If we use words like anticipate, believe, project, forecast, plan, estimate or variations of these words and similar expressions relating to the future, they are intended to identify forward-looking statements. It’s important to note that the company’s actual results could differ materially from those projected in the forward-looking statements. During the quarter, Maxim’s corporate representatives may reiterate the business outlook during private meetings with investors, investment analysts, the media and others.Additional information about risks and uncertainties associated with the company’s business are contained in the company’s SEC filing on Form 10-K for the year ended June 25, 2011. Copies can be obtained from the company or the SEC. Second, in keeping with the SEC’s fair disclosure requirements, we made time available for a question-and-answer period at the end of today’s call. This will be your opportunity to ask questions of management concerning the quarterly results and expectations for the next quarter. An operator will provide instructions at that time. We again request that participants limit themselves to one question and one follow-up question during the Q&A session. I will now pass the call over to Bruce. Bruce Kiddoo Thanks, Paresh. I will review our first quarter financial results. Revenue for the first quarter was $636 million, up 1.5% from the fourth quarter. Consumer market revenue increased significantly offset by a decline in the other market. Our revenue mix by major market in Q1 was approximately 41% for consumer, 26% industrial, 17% communications and 16% computing. Our consumer market grew strongly due to continued momentum in cell phones. Our industrial, communication and computing market were down due to overall industry weakness. Gross margin excluding special items was 63.7% flat with the prior quarter. Special items in Q1 gross margin were intangible asset amortization. Operating expenses excluding special items were $223 compared to $211 in Q4. The increase was primarily due to acquisitions, our annual marry increase and mass expenses. Special items in Q1 operating expenses were primarily intangible amortization from acquisitions partially offset by a tax related benefit.
Q1 GAAP operating income excluding special items was a $182 million or 29% of revenue. The Q1 GAAP tax rate excluding special items was 23% compared to 26% in the prior quarter. The decline is primarily due to increased benefits of our international structure and discrete one-time benefits. GAAP earnings per share excluding special items was $0.46 up from $0.45 in Q4 due to increased revenue and a lower tax rate.Turning to the balance sheet and cash flow, during the quarter cash flow from operations was a $121 million. Q1 cash flow was reduced by our fiscal year ‘11 employee bonus payout. Inventory increased to 100 days driven by early wafer receipts due to improved cycle times that are foundry partners. Inventory in the channel excluding catalog distributors was flat at 67 days. In dollar terms channel inventory declined by 5%. Net capital expenditures totaled $53 million in Q1 as we invested in a long term manufacturing capacity and new facilities. As a result free cash flow was $71 million. We made payments of $154 million for acquisitions primarily for SensorDynamics. Share repurchases totaled $89 million in Q1 as we bought back 3.8 million shares. Finally, in Q1 we paid $65 million in dividends to our shareholders. Overall total cash, cash equivalent and short-term investments declined by $253 million in the first quarter to $760 million. Moving onto guidance. Our second fiscal quarter will be a 14 week quarter, which occurs every 5 to 6 years. Given the 14th week is between Christmas and New Year’s, typically a shut down week for Maxim and many of our customers, we do not expect a material revenue benefit. However, operating expenses will be impacted by an extra week of salary expenses. Our beginning Q2 backlog is $403 million, which is consistent with historical levels as a percent of projected revenue. Based on this beginning backlog and expected turns, we forecast Q2 revenue of $580 million to $620 million or down 6% at the midpoint from Q1. Q2 gross margin excluding special items is estimated at 60% to 63% down slightly from our normal guidance due to lower projected revenue and associated lower utilization. Other variables that may influence Q2 gross margin include product mix and inventory reserves. Read the rest of this transcript for free on seekingalpha.com