Maxim Integrated Reports Results For The Fourth Quarter Of Fiscal 2017, Increases Dividend By 9%
SAN JOSE, Calif., July 20, 2017 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $602 million for its fourth quarter of fiscal 2017 ended June 24, 2017, a 4% increase from the $581 million revenue recorded in the prior quarter, and a 6% increase from the same quarter of last year.
Tunc Doluca, President and Chief Executive Officer, commented, "The June quarter marked the third consecutive quarter in our return to year-over-year growth, led by double-digit increases in Industrial and Automotive. Through solid execution in our manufacturing strategy, we exceeded our profitability targets and demonstrated strong earnings power and cash flow growth." Mr. Doluca continued, "Today, we are announcing a 9% increase in our dividend, reflecting our continued commitment to return cash to shareholders and confidence in our long-term outlook."
Fiscal Year 2017 Fourth Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was $0.57. The results were affected by pre-tax special items which primarily consisted of $13 million in charges related to acquisitions and $3 million in charges related to restructuring activities. GAAP earnings per share, excluding special items was $0.63. An analysis of GAAP versus GAAP excluding special items is provided in the last table of this press release.
Cash Flow Items
At the end of the fourth quarter of fiscal 2017, total cash, cash equivalents and short term investments were $2.74 billion, an increase of $589 million from the prior quarter.
Notable items included:
-- Cash flow from operations: $237 million -- Gross capital expenditures: $13 million -- Bond offering: $496 million -- Dividends: $93 million ($0.33 per share) -- Stock repurchases: $76 million
Business Outlook
The Company's 90-day backlog at the beginning of the September 2017 quarter was $389 million. Based on the beginning backlog and expected turns, our results for the September 2017 quarter are forecasted to be as follows:
-- Revenue: $555 to $595 million -- Gross Margin: 63% to 66% GAAP (65% to 68% excluding special items) -- EPS: $0.48 to $0.54 GAAP ($0.52 to $0.58 excluding special items)
Maxim Integrated's business outlook does not include the potential impact of any special items related to restructuring activity, acquisitions, or other business combinations that may be completed during the quarter.
Dividend and Share Repurchase
Our Board of Directors approved a 9% increase in the quarterly dividend and a new share repurchase authorization of $1 billion. A cash dividend of $0.36 per share will be paid on September 14, 2017, to stockholders of record on August 31, 2017.
Conference Call
Maxim Integrated has scheduled a conference call on July 20 at 2:00 p.m. Pacific Time to discuss its financial results for the fourth quarter of fiscal 2017 and its business outlook. This call will be webcast by Shareholder.com and can be accessed at the Company's website at investor.maximintegrated.com.
A presentation summarizing financial information to be discussed on the conference call is posted at investor.maximintegrated.com.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Year Ended ------------------ ---------- June 24, March 25, June 25, June 24, June 25, 2017 2017 2016 2017 2016 ---- ---- ---- ---- ---- (in thousands, except per share data) Net revenues $602,005 $581,216 $566,126 $2,295,615 $2,194,719 Cost of goods sold (1) (2) 208,339 214,312 219,099 849,135 950,331 Gross margin 393,666 366,904 347,027 1,446,480 1,244,388 ------- ------- ------- --------- --------- Operating expenses: Research and development 114,011 113,163 113,491 453,977 467,161 Selling, general and administrative 75,129 73,987 71,483 291,511 288,899 Intangible asset amortization 2,050 2,348 2,538 9,189 12,205 Impairment of long-lived assets (3) - 1,000 429 7,517 160,582 Impairment of goodwill and intangible assets - - 27,602 - 27,602 Severance and restructuring expenses 1,175 450 4,149 12,453 24,479 Other operating expenses (income), net (4) 1,923 1,704 4,962 (22,944) (50,389) Total operating expenses (income), net 194,288 192,652 224,654 751,703 930,539 ------- ------- ------- ------- ------- Operating income (loss) 199,378 174,252 122,373 694,777 313,849 Interest and other income (expense), net (5) (3,798) (3,884) (6,427) (15,188) (28,795) ------ ------ ------ ------- ------- Income (loss) before provision for income taxes 195,580 170,368 115,946 679,589 285,054 Income tax provision (benefit) 32,271 30,155 23,607 107,976 57,579 Net income (loss) $163,309 $140,213 $92,339 $571,613 $227,475 ======== ======== ======= ======== ======== Earnings (loss) per share: Basic $0.58 $0.50 $0.32 $2.02 $0.80 ===== ===== ===== ===== ===== Diluted $0.57 $0.49 $0.32 $1.98 $0.79 ===== ===== ===== ===== ===== Shares used in the calculation of earnings (loss) per share: Basic 282,747 282,903 285,354 283,147 285,081 ======= ======= ======= ======= ======= Diluted 287,494 287,882 288,544 287,974 289,479 ======= ======= ======= ======= ======= Dividends paid per share $0.33 $0.33 $0.30 $1.32 $1.20 ===== ===== ===== ===== ===== SCHEDULE OF SPECIAL ITEMS (Unaudited) Three Months Ended Year Ended ------------------ ---------- June 24, March 25, June 25, June 24, June 25, 2017 2017 2016 2017 2016 ---- ---- ---- ---- ---- (in thousands) Cost of goods sold: Intangible asset amortization $11,064 $11,064 $11,829 $46,485 $55,030 Accelerated depreciation (1) - 1,103 4,098 3,459 53,827 Other cost of goods sold (2) - - - - 6,123 Total $11,064 $12,167 $15,927 $49,944 $114,980 ======= ======= ======= ======= ======== Operating expenses: Intangible asset amortization $2,050 $2,348 $2,538 $9,189 $12,205 Impairment of long-lived assets (3) - 1,000 429 7,517 160,582 Impairment of goodwill and intangible assets - - 27,602 - 27,602 Severance and restructuring 1,175 450 4,149 12,453 24,479 Other operating expenses (income), net (4) 1,923 1,704 4,962 (22,944) (50,389) Total $5,148 $5,502 $39,680 $6,215 $174,479 ====== ====== ======= ====== ======== Interest and other expense (income), net (5) $(90) $(48) $(247) $(5,661) $194 Total $(90) $(48) $(247) $(5,661) $194 ==== ==== ===== ======= ==== Income tax provision (benefit) Fiscal year 2015 & 2014 research & development tax credits - - - - (2,475) Total $ - $ - $ - $ - $(2,475) ================= ================= ================ =================== ======= (1) Includes building and equipment accelerated depreciation related to the San Jose and Dallas manufacturing facilities. (2) Includes expense related to a patent license settlement. (3) Includes impairment of investments in privately-held companies and other equipment impairment charges relating to the San Antonio wafer manufacturing facility. (4) Includes gain on sale of micro-electromechanical systems (MEMS) business line during the first quarter of fiscal year 2017, gain on sale of energy metering business during the third quarter of fiscal year 2016, loss (gain) relating to sale of assets, and expected loss on lease abandonment. (5) Includes gain on sale of shares received for the sale of the wafer manufacturing facility in San Antonio, Texas.
CONSOLIDATED BALANCE SHEETS (Unaudited) June 24, March 25, June 25, 2017 2017 2016 ---- ---- ---- (in thousands) ASSETS Current assets: Cash and cash equivalents $2,246,121 $1,656,727 $2,105,229 Short-term investments 498,718 499,154 125,439 ------- ------- ------- Total cash, cash equivalents and short-term investments 2,744,839 2,155,881 2,230,668 Accounts receivable, net 256,454 257,592 256,531 Inventories 247,242 241,439 227,929 Other current assets 57,059 60,195 91,920 ------ ------ ------ Total current assets 3,305,594 2,715,107 2,807,048 Property, plant and equipment, net 606,581 636,835 692,551 Intangible assets, net 90,867 103,981 146,540 Goodwill 491,015 491,015 490,648 Other assets 72,974 69,689 84,100 Assets held for sale 3,202 1,156 13,729 TOTAL ASSETS $4,570,233 $4,017,783 $4,234,616 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $77,373 $82,938 $82,535 Income taxes payable 3,688 4,538 21,153 Accrued salary and related expenses 145,299 135,702 166,698 Accrued expenses 37,663 35,208 50,521 Deferred revenue on shipments to distributors 14,974 35,724 38,779 Short term debt - - 249,717 --- --- ------- Total current liabilities 278,997 294,110 609,403 Long-term debt 1,487,678 991,877 990,090 Income taxes payable 557,498 534,028 480,645 Other liabilities 43,366 37,459 46,664 Total liabilities 2,367,539 1,857,474 2,126,802 --------- --------- --------- Stockholders' equity: Common stock and capital in excess of par value 283 284 284 Retained earnings 2,212,301 2,169,760 2,121,749 Accumulated other comprehensive loss (9,890) (9,735) (14,219) Total stockholders' equity 2,202,694 2,160,309 2,107,814 --------- --------- --------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $4,570,233 $4,017,783 $4,234,616 ========== ========== ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended Year Ended ------------------ ---------- June 24, March 25, June 25, June 24, June 25, 2017 2017 2016 2017 2016 ---- ---- ---- ---- ---- (in thousands) Cash flows from operating activities: Net income (loss) $163,309 $140,213 $92,339 $571,613 $227,475 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Stock-based compensation 17,624 18,300 16,444 71,117 69,701 Depreciation and amortization 38,194 40,473 46,414 164,292 244,637 Deferred taxes 1,697 (16,967) (13,510) (7,895) (48,138) In Process Research & Development written-off - - 27,602 - 27,602 Loss (gain) from sale of property, plant and equipment 7,006 4,809 5,048 16,365 2,283 Loss (gain) on sale of business - - - (26,620) (58,944) Tax benefit (shortfall) related to stock-based compensation - - 3,657 - 7,375 Impairment of long-lived assets 665 - - 1,462 160,153 Impairment of investments in privately-held companies - 1,000 - 6,720 - Excess tax benefit from stock-based compensation - - (1,890) - (9,550) Changes in assets and liabilities: Accounts receivable 1,138 (33,249) 21,971 78 22,313 Inventories (5,715) (5,505) 7,657 (21,215) 44,086 Other current assets (727) 16,862 8,012 (3,547) 2,943 Accounts payable (5,235) 11,887 5,076 (6,205) (3,676) Income taxes payable 22,619 20,931 19,792 60,798 56,641 Deferred revenue on shipments to distributors (20,751) (412) 4,322 (23,805) 8,452 Accrued salary and related expenses 9,597 26,227 - (21,399) - All other accrued liabilities 7,507 (3,872) 11,137 (8,102) (31,468) Net cash provided by (used in) operating activities 236,928 220,697 254,071 773,657 721,885 ------- ------- ------- ------- ------- Cash flows from investing activities: Purchase of property, plant and equipment (13,050) (8,286) (22,488) (51,421) (69,369) Proceeds from sales of property, plant and equipment 7,576 787 34,691 10,792 85,142 Proceeds from sale of available-for-sale securities - - - 50,994 - Proceeds from maturity of available-for-sale securities 50,000 - 50,000 75,000 50,000 Proceeds from sale of business - - - 42,199 105,000 Purchases of available-for-sale securities (49,891) (99,398) (25,000) (450,135) (99,948) Purchases of privately-held companies' securities - (162) (1,554) (2,825) (10,483) Proceeds from other investing activities - - - - 2,380 Net cash provided by (used in) investing activities (5,365) (107,059) 35,649 (325,396) 62,722 ------ -------- ------ -------- ------ Cash flows from financing activities: Excess tax benefit from stock-based compensation - - 1,890 - 9,550 Repayment of notes payable - - - (250,000) - Issuance of debt 500,000 - 250,000 500,000 250,000 Debt issuance cost (3,688) - (283) (3,688) (283) Net issuance of restricted stock units (7,471) (8,268) (2,687) (25,183) (24,084) Proceeds from stock options exercised 18,434 17,502 12,272 63,003 79,608 Issuance of common stock under employee stock purchase program 19,805 (3,194) 19,625 34,269 33,975 Repurchase of common stock (75,853) (56,999) (90,438) (251,799) (237,086) Dividends paid (93,396) (93,387) (85,210) (373,971) (342,023) Net cash provided by (used in) financing activities 357,831 (144,346) 105,169 (307,369) (230,343) ------- -------- ------- -------- -------- Net increase (decrease) in cash and cash equivalents 589,394 (30,708) 394,889 140,892 554,264 Cash and cash equivalents: Beginning of period 1,656,727 1,687,435 1,710,340 2,105,229 1,550,965 End of period $2,246,121 $1,656,727 $2,105,229 $2,246,121 $2,105,229 ========== ========== ========== ========== ========== Total cash, cash equivalents, and short-term investments $2,744,839 $2,155,881 $2,230,668 $2,744,839 $2,230,668 ========== ========== ========== ========== ==========
ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES (Unaudited) Three Months Ended Year Ended ------------------ June 24, March 25, June 25, June 24, June 25, 2017 2017 2016 2017 2016 ---- ---- ---- ---- ---- (in thousands, except per share data) Reconciliation of GAAP gross profit to GAAP gross profit excluding special items: ------------------------------------------- GAAP gross profit $393,666 $366,904 $347,027 $1,446,480 $1,244,388 GAAP gross profit % 65.4% 63.1% 61.3% 63.0% 56.7% Special items: Intangible asset amortization 11,064 11,064 11,829 46,485 55,030 Accelerated depreciation (1) - 1,103 4,098 3,459 53,827 Other cost of goods sold (2) - - - - 6,123 Total special items 11,064 12,167 15,927 49,944 114,980 ------ ------ ------ ------ ------- GAAP gross profit excluding special items $404,730 $379,071 $362,954 $1,496,424 $1,359,368 GAAP gross profit % excluding special items 67.2% 65.2% 64.1% 65.2% 61.9% Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items: ------------------------------------------ GAAP operating expenses $194,288 $192,652 $224,654 $751,703 $930,539 Special items: Intangible asset amortization 2,050 2,348 2,538 9,189 12,205 Impairment of long-lived assets (3) - 1,000 429 7,517 160,582 Impairment of goodwill and intangible assets - - 27,602 - 27,602 Severance and restructuring 1,175 450 4,149 12,453 24,479 Other operating expenses (income), net (4) 1,923 1,704 4,962 (22,944) (50,389) Total special items 5,148 5,502 39,680 6,215 174,479 ----- ----- ------ ----- ------- GAAP operating expenses excluding special items $189,140 $187,150 $184,974 $745,488 $756,060 ======== ======== ======== ======== ======== Reconciliation of GAAP net income (loss) to GAAP net income excluding special items: ------------------------------------------- GAAP net income (loss) $163,309 $140,213 $92,339 $571,613 $227,475 Special items: Intangible asset amortization 13,114 13,412 14,367 55,674 67,235 Accelerated depreciation (1) - 1,103 4,098 3,459 53,827 Other cost of goods sold (2) - - - - 6,123 Impairment of long-lived assets (3) - 1,000 429 7,517 160,582 Impairment of goodwill and intangible assets - - 27,602 - 27,602 Severance and restructuring 1,175 450 4,149 12,453 24,479 Other operating expenses (income), net (4) 1,923 1,704 4,962 (22,944) (50,389) Interest and other expense (income), net (5) (90) (48) (247) (5,661) 194 Pre-tax total special items 16,122 17,621 55,360 50,498 289,653 Fiscal year 2015 & 2014 research & development tax credits - - - - (2,475) Other income tax effects and adjustments (6) 499 1,957 (7,228) (11,465) (43,392) GAAP net income excluding special items $179,930 $159,791 $140,471 $610,646 $471,261 ======== ======== ======== ======== ======== GAAP net income per share excluding special items: Basic $0.64 $0.56 $0.49 $2.16 $1.65 ===== ===== ===== ===== ===== Diluted $0.63 $0.56 $0.49 $2.12 $1.63 ===== ===== ===== ===== ===== Shares used in the calculation of earnings per share excluding special items: Basic 282,747 282,903 285,354 283,147 285,081 ======= ======= ======= ======= ======= Diluted 287,494 287,882 288,544 287,974 289,479 ======= ======= ======= ======= ======= (1) Includes building and equipment accelerated depreciation related to the San Jose and Dallas manufacturing facilities. (2) Includes expense related to a patent license settlement. (3) Includes impairment of investments in privately-held companies and other equipment impairment charges relating to the San Antonio wafer manufacturing facility. (4) Includes gain on sale of micro-electromechanical systems (MEMS) business line during the first quarter of fiscal year 2017, gain on sale of energy metering business during the third quarter of fiscal year 2016, loss (gain) relating to sale of assets, and expected loss on lease abandonment. (5) Includes gain on sale of shares received for the sale of the wafer manufacturing facility in San Antonio, Texas. (6) Includes tax effect of pre-tax special items and miscellaneous tax adjustments.
Non-GAAP Measures
To supplement the consolidated financial results prepared under GAAP, Maxim Integrated uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude special items related to intangible asset amortization; accelerated depreciation; other costs of goods sold; impairment of long-lived assets; impairment of goodwill and other intangible assets; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net; fiscal year 2016 research and development tax credits, and other income tax effects and adjustments. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim Integrated's current performance. Many analysts covering Maxim Integrated use the non-GAAP measures as well. Given management's use of these non-GAAP measures, Maxim Integrated believes these measures are important to investors in understanding Maxim Integrated's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in Maxim Integrated's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative to GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized it may not be possible to compare these financial measures with other companies' non-GAAP financial measures, even if they have similar names. The non-GAAP measures displayed in the table above include the following:
GAAP Gross Profit Excluding Special Items
The use of GAAP gross profit excluding special items allows management to evaluate the gross margin of the Company's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization, accelerated depreciation, and other costs of goods sold. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP gross profit excluding special items to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of Maxim Integrated's core businesses.
GAAP Operating Expenses Excluding Special Items
The use of GAAP operating expenses excluding special items allows management to evaluate the operating expenses of the Company's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; impairment of long-lived assets; impairment of goodwill and other intangible assets; severance and restructuring, and other operating expenses (income), net. In addition, it is an important component of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP operating expenses excluding special items to enable investors and analysts to evaluate our core business and its direct operating expenses.
GAAP Provision for Income Taxes Excluding Special Items
The use of a GAAP provision for income taxes excluding special items allows management to evaluate the provision for income taxes across different reporting periods on a consistent basis, independent of special items including the tax provision impact of pre-tax special items. In fiscal year 2016, we began using a long-term tax rate to compute the GAAP provision for income taxes excluding special items. This long-term tax rate considers the income tax impact of pre-tax special items and eliminates the effects of significant non-recurring and period specific tax items which vary in size and frequency. In the first and second quarter of fiscal year 2017, we used a long-term tax rate of 18%, which was our forecast of the weighted average of our normalized fiscal year GAAP tax rate excluding special items over a four-year period, that includes the past three fiscal years plus the current fiscal year projection at the beginning of fiscal year 2017. We review the long-term tax rate on an annual basis and more frequently whenever events occur that may materially affect the long-term tax rate such as tax law changes; significant changes in our geographic earnings mix; or changes in our corporate structure. Starting in the third quarter of fiscal year 2017, we transitioned to a long-term tax rate of 15%, which reflects the impact of changes in our manufacturing structure and focused research and development expenditures, resulting in improved projections for fiscal year 2017 and future periods.
GAAP Net Income and GAAP Net Income per Share Excluding Special Items
The use of GAAP net income and GAAP net income per share excluding special items allow management to evaluate the operating results of Maxim Integrated's core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; accelerated depreciation; other costs of goods sold; impairment of long-lived assets; impairment of goodwill and other intangible assets; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net; fiscal year 2016 research and development tax credits, and other income tax effects and adjustments. In addition, they are important components of management's internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP net income and GAAP net income per share excluding special items to enable investors and analysts to understand the results of operations of Maxim Integrated's core businesses and to compare our results of operations on a more consistent basis against that of other companies in our industry.
"Safe Harbor" Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include the Company's business outlook and financial projections for its first quarter of fiscal 2018 ending in September 2017, which includes revenue, gross margin and earnings per share. These statements involve risk and uncertainty. Actual results could differ materially from those forecasted, based upon, among other things, general market and economic conditions, market developments that could adversely affect the growth of the mixed-signal analog market, product mix shifts, the loss of all or a substantial portion of our sales to one or more of our large customers, customer cancellations and price competition, as well as other risks described in the Company's Annual Report on Form 10-K for the fiscal year ended June 25, 2016 (the "Form 10-K"). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331616000081/maxim10-kfy2016.htm.
All forward-looking statements included in this news release are made as of the date hereof and based on the information available to the Company as of the date hereof. The Company assumes no obligation to update any forward-looking statement except as required by law.
About Maxim Integrated
Maxim Integrated develops innovative analog and mixed-signal products and technologies to make systems smaller and smarter, with enhanced security and increased energy efficiency. We are empowering design innovation for our automotive, industrial, healthcare, mobile consumer, and cloud data center customers to deliver industry-leading solutions that help change the world. Learn more at http://www.maximintegrated.com.
Contact
Kathy Ta
Managing Director, Investor Relations
(408) 601-5697
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