Linear Technology Reports A Sequential Quarterly Increase In Revenues And Completes Its Fiscal Year With Increases In Revenues And Net Income Over The Prior Fiscal Year

Linear Technology Corporation (NASDAQ:LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the quarter and fiscal year ended June 30, 2013. Quarterly revenues of $327.3 million for the fourth quarter of fiscal year 2013 increased $12.7 million or 4.0% over the previous quarter's revenue of $314.5 million and decreased $2.7 million or 0.8% from $330.0 million reported in the fourth quarter of fiscal year 2012. Net income of $101.9 million decreased $9.0 million or 8.1% from the third quarter of fiscal year 2013 and decreased $1.4 million or 1.3% from the fourth quarter of fiscal year 2012. Net income in the third quarter of fiscal year 2013 benefited from a lower tax rate of 12.75% whereas the fourth quarter of fiscal year 2013 had a more normalized rate of 25.0%. The Company's tax rate in the third quarter of fiscal year 2013 was lower primarily due to cumulative benefits from the reinstatement of the federal R&D tax credit and secondarily due to the release of estimated tax liabilities for fiscal years that are no longer subject to audit. Diluted earnings per share of $0.43 per share in the fourth quarter of fiscal year 2013 decreased $0.03 per share or 6.5% from the third quarter of fiscal year 2013 due to the change in the tax rate and decreased $0.01 per share from the fourth quarter of fiscal year 2012.

Revenue for fiscal year 2013 was $1,282 million, an increase of 1.2% or $15.6 million over revenue of $1,267 million in the prior fiscal year. Net income of $406.9 million for fiscal year 2013 increased $8.8 million or 2.2% over $398.1 million reported in the previous fiscal year. The results for fiscal year 2013 benefited from a lower tax rate of 23.1% compared to 25.7% in fiscal year 2012. Diluted earnings per share for fiscal year 2013 was $1.71, an increase of $0.01 per share over the prior fiscal year.

During the fourth quarter the Company's cash, cash equivalents and marketable securities increased by $70.2 million to $1.525 billion net of spending $34.0 million to purchase 944 thousand shares in the open market. A cash dividend of $0.26 will be paid on August 28, 2013 to stockholders of record on August 16, 2013.

According to Lothar Maier, CEO, “We completed our fourth fiscal quarter with revenues at the high end of our guidance, up 4% sequentially, led by higher sales into the automotive and industrial markets. In addition, we improved both gross margin and operating margin which continue at industry leading levels. The June quarter was also our fiscal year end, and though fiscal 2013 suffered from a difficult macro economic environment, we managed to grow revenues slightly over the prior fiscal year, up 1.2%, and increase net income and earnings per share. Heading into the new fiscal year, we are optimistic about our future growth prospects. We ended the fiscal year with a good bookings quarter and a book-to-bill ratio greater than one. Historically, the first fiscal quarter is a seasonally weak period for us, but given our current bookings level we are currently forecasting that revenues for our first quarter of fiscal 2014 will be up 2% to 5%.”

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-Q for the quarter ended March 31, 2013.

Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, July 24, 2013 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 325-4936, or toll free (800) 818-6592 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 July 24, 2013 through July 30, 2013.

You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #7655285. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of July 24, 2013 until the fourth 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 over 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)

GAAP (unaudited)
   
Three Months Ended Twelve Months Ended

June 30,2013
 

March 31,2013
 

July 1,2012

June 30,2013
 

July 1,2012
Revenues $ 327,265 $ 314,542 $ 330,011 $ 1,282,236 $ 1,266,621
Cost of sales (1) 81,314   79,259   81,263   322,516   312,539  
Gross profit 245,951   235,283   248,748   959,720   954,082  
Expenses:
Research & development (1) 60,560 58,517 59,479 235,184 224,467
Selling, general & administrative (1) 38,308   38,480   37,803   151,382   147,579  
98,868   96,997   97,282   386,566   372,046  
Operating income 147,083 138,286 151,466 573,154 582,036
Interest expense (6,812 ) (6,812 ) (6,881 ) (27,314 ) (27,649 )
Amortization of debt discount(2) (5,370 ) (5,294 ) (5,073 ) (21,029 ) (19,868 )
Acquisition related costs (3,195 )
Interest and other income 1,020   1,004   1,067   4,070   4,586  
Income before income taxes 135,921 127,184 140,579 528,881 535,910
Provision for income taxes 33,980   16,216   37,253   121,956   137,799  
Net income $ 101,941   $ 110,968   $ 103,326   $ 406,925   $ 398,111  
 
Earnings per share:
Basic $ 0.43   $ 0.47   $ 0.44   $ 1.72   $ 1.71  
Diluted $ 0.43   $ 0.46   $ 0.44   $ 1.71   $ 1.70  
 
Shares used in determining earnings per share:
Basic 237,947   237,296   234,290   236,703   233,013  
Diluted 238,925   238,641   235,297   237,753   234,298  
 
Includes the following non-cash charges:
(1) Stock-based compensation
Cost of sales $ 1,960 $ 1,998 $ 1,929 $ 7,912 $ 7,579
Research & development 9,129 9,324 9,017 36,904 35,389
Selling, general & administrative 4,714 4,812 4,649 19,049 18,257

(2) Amortization of debt discount (non- cash interest expense)
5,370 5,294 5,073 21,029 19,868
 

LINEAR TECHNOLOGY CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

(Unaudited)
 
  June 30,2013   July 1,2012
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities $ 1,524,741 $ 1,203,059

Accounts receivable, net of allowance for doubtful accounts of $1,891 ($2,035 at July 1, 2012)
145,274 153,090
Inventories 87,229 79,664
Deferred tax assets and other current assets 36,646   69,597  
Total current assets 1,793,890   1,505,410  
 
Property, plant & equipment, net 288,466 320,222
Other noncurrent assets 15,985   25,436  
Total assets $ 2,098,341   $ 1,851,068  
 
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 10,258 $ 11,459
Accrued income taxes, payroll & other accrued liabilities 109,426 117,789
Deferred income on shipments to distributors 44,088 41,333
Convertible senior notes- current portion 826,629
Deferred tax liabilities- current portion 35,479    
Total current liabilities 1,025,880   170,581  
 
Convertible senior notes 805,599
Deferred tax and other noncurrent liabilities 90,553 138,380
 
Stockholders’ equity:
Common stock 1,736,729 1,588,045
Accumulated deficit (754,555 ) (851,702 )
Accumulated other comprehensive income (266 ) 165  
Total stockholders’ equity 981,908   736,508  
$ 2,098,341   $ 1,851,068  
 

LINEAR TECHNOLOGY CORPORATION

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

(In thousands, except per share amounts)
   
Three Months Ended Twelve Months Ended

June 30,2013
 

March 31,2013
 

July 1,2012

June 30,2013
 

July 1,2012
Reported net income
(GAAP basis) $ 101,941 $ 110,968 $ 103,326 $ 406,925 $ 398,111
 
Stock-based compensation 15,803 16,134 15,595 63,865 61,225

Amortization of debt discount(1)
5,370 5,294 5,073 21,029 19,868
Acquisition related costs 3,195

Income tax effect of non-GAAP adjustments
(5,293 ) (2,732 ) (5,477 ) (19,576 ) (21,673 )
 
Non-GAAP net income $ 117,821   $ 129,664   $ 118,517   $ 472,243   $ 460,726  
 
Non-GAAP earnings per share
Basic $ 0.50   $ 0.55   $ 0.51   $ 2.00   $ 1.98  
Diluted $ 0.49   $ 0.54   $ 0.50   $ 1.99   $ 1.97  

(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 acquisition related costs. 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.

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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