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Linear Technology Reports Sequential Quarterly Declines, but Modest Year Over Year Quarterly Increases in Revenues and Net Income and Guides for Sequential Quarterly Improvement.

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 30, 2012. Quarterly revenues of $305.3 million for the second quarter of fiscal year 2013 decreased $29.9 million or 8.9% from the previous quarter's revenue of $335.1 million and increased $10.9 million or 3.7% over $294.3 million reported in the second quarter of fiscal year 2012. Net income of $88.8 million decreased $16.3 million or 15.5% from the first quarter of fiscal year 2013 and increased $0.9 million or 1% over the second quarter of fiscal year 2012. Diluted earnings per share of $0.38 per share in the second quarter of fiscal year 2013 decreased $0.07 per share or 16% from the first quarter of fiscal year 2013 and was flat compared to the second quarter of fiscal year 2012.

During the second quarter the Company's cash, cash equivalents and marketable securities decreased by $20.6 million to $1.299 billion from the first quarter of fiscal year 2013. The Company's cash, cash equivalents and marketable securities balance decreased primarily due to the Company accelerating the payment of its March quarterly dividend payment into the December quarter to benefit shareholders due to fiscal cliff tax rate uncertainties. Concurrent with the December payout, the Company's Board of Directors approved an increase in the Company's quarterly dividend from $0.25 per share to $0.26 per share. This marked the 21st consecutive year the Company has increased its dividend. At the current stock price the Company's dividend yield is approximately 3%.

According to Lothar Maier, CEO, “As we reported at this time last quarter, we expected a difficult second fiscal quarter given the tough economic climate existing domestically and globally. Revenue declined 9% compared to the preceding quarter. This was within our guidance, though at the low end, as bookings continued to be weak throughout the first two months of the quarter. Though we were disappointed in the revenue decline, we are encouraged that we saw stronger bookings momentum exiting the quarter and this improvement has continued through the early stage of the current quarter. Innovation is prevalent in our end markets and our product positioning is strong. Based upon our current bookings rate, and assuming business confidence improves, we expect to resume moderate revenue growth. We currently estimate that fiscal third quarter revenues will grow in the range of 1% to 4% over the second 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-Q for the quarterly period ended September 30, 2012.

Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, January 16, 2013 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call 719-325-4833, or toll free 877-741-4249 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 16, 2013 through January 22, 2013. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #1296943. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of January 16, 2013 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 30,
2012

 

September 30,
2012

 

January 1,
2012

December 30,
2012

 

January 1,
2012

Revenues $ 305,281 $ 335,148 $ 294,333 $ 640,429 $ 624,253
Cost of sales (1) 78,185   83,758   73,821   161,943   153,614  
Gross profit 227,096   251,390   220,512   478,486   470,639  
Expenses:
Research & development (1) 57,304 58,803 52,519 116,107 107,408
Selling, general & administrative (1) 37,090   37,504   34,922   74,594   72,594  
94,394   96,307   87,441   190,701   180,002  
Operating income 132,702 155,083 133,071 287,785 290,637
Interest expense (6,835 ) (6,855 ) (6,925 ) (13,690 ) (13,866 )

Amortization of debt discount (2)

(5,219 ) (5,146 ) (4,931 ) (10,365 ) (9,793 )
Acquisition related costs (3,195 ) (3,195 )
Interest and other income 1,043   1,003   1,146   2,046   2,367  
Income before income taxes 121,691 144,085 119,166 265,776 266,150
Provision for income taxes 32,857   38,903   31,281   71,760   69,864  
Net income $ 88,834   $ 105,182   $ 87,885   $ 194,016   $ 196,286  
 
Earnings per share:
Basic $ 0.38   $ 0.45   $ 0.38   $ 0.82   $ 0.85  
Diluted $ 0.38   $ 0.45   $ 0.38   $ 0.82   $ 0.84  
 
Shares used in determining earnings per share:
Basic 235,852   234,990   232,209   235,613   232,051  
Diluted 236,850   236,010   233,565   236,636   233,347  
 
Includes the following non-cash charges:
(1) Stock-based compensation

 Cost of sales

$ 1,984 $ 1,970 $ 1,844 $ 3,954 $ 3,748

 Research & development

9,255 9,196 8,609 18,451 17,496

 Selling, general & administrative

4,778 4,745 4,442 9,523 9,028

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

5,219 5,146 4,931 10,365 9,793
 
   

LINEAR TECHNOLOGY CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

U.S. GAAP (unaudited)

 

December 30,
2012

July 1,
2012

ASSETS:
Current assets:
Cash, cash equivalents and marketable securities $ 1,299,402 $ 1,203,059

Accounts receivable, net of allowance for doubtful accounts of $1,891 ($2,035 at July 1, 2012)

145,174 153,090
Inventories 85,166 79,664
Deferred tax assets and other current assets 69,334   69,597  
Total current assets 1,599,076   1,505,410  
 
Property, plant & equipment, net 303,520 320,222
Other noncurrent assets 20,558   25,436  
Total assets $ 1,923,154   $ 1,851,068  
 
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 11,857 $ 11,459
Accrued income taxes, payroll & other accrued liabilities 108,785 117,789
Deferred income on shipments to distributors 42,291   41,333  
Total current liabilities 162,933   170,581  
 
Convertible senior notes 815,965 805,599
Deferred tax and other noncurrent liabilities 151,749 138,380
 
Stockholders’ equity:
Common stock 1,641,590 1,588,045
Accumulated deficit (849,490 ) (851,702 )
Accumulated other comprehensive income 407   165  
Total stockholders’ equity 792,507   736,508  
$ 1,923,154   $ 1,851,068  
 
   

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 30,
2012

 

September 30,
2012

 

January 1,
2012

December 30,
2012

 

January 1,
2012

Reported net income
(GAAP basis) $ 88,834 $ 105,182 $ 87,885 $ 194,016 $ 196,286
 
Stock-based compensation 16,017 15,911 14,895 31,928 30,272

Amortization of debt discount(1)

5,219 5,146 4,931 10,365 9,793
Acquisition related costs 3,195 3,195
Income tax effect of non-GAAP adjustments (5,734 ) (5,685 ) (6,043 ) (11,419 ) (11,356 )
 
Non-GAAP net income $ 104,336   $ 120,554   $ 104,863   $ 224,890   $ 228,190  
 
Non-GAAP earnings per share
Basic $ 0.44   $ 0.51   $ 0.45   $ 0.95   $ 0.98  
Diluted $ 0.44   $ 0.51   $ 0.45   $ 0.95   $ 0.98  

(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. 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.

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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