Linear Technology Reports Increases in Revenue and Net Income Over the Comparable Prior Year Period but Expects Lower Sequential Revenue in the First Fiscal Quarter

MILPITAS, Calif.--(BUSINESS WIRE)--

Linear Technology Corporation LLTC, a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the fiscal quarter ended June 28, 2015. Quarterly revenues of $379.5 million for the fourth quarter of fiscal year 2015 increased $14.1 million or 3.8% over $365.4 million reported in the fourth quarter of fiscal year 2014 and increased $7.5 million or 2.0% over the previous quarter's revenue of $372.0 million. Net income of $132.7 million increased $3.0 million or 2.3% over the fourth quarter of fiscal year 2014 but decreased $2.5 million or 1.8% from the third quarter of fiscal year 2015. Diluted earnings per share of $0.54 per share in the fourth quarter of fiscal year 2015 increased $0.01 per share or 2% over the fourth quarter of fiscal year 2014 but decreased $0.01 per share or 2% from the third quarter of fiscal year 2015. Net income and diluted earnings per share decreased on a sequential basis primarily due to a higher effective tax rate of 25.25% compared to 22.50% in the third quarter of fiscal 2015.

Revenue for fiscal year 2015 was $1,475.1 million, an increase of 6.2% or $86.7 million over revenue of $1,388.4 million in the prior fiscal year. Net income of $521.0 million for fiscal year 2015 increased $61.0 million or 13.3% over $460.0 million reported in the previous fiscal year. Net income grew at a greater percentage than revenue primarily due to the extinguishment of the Convertible Senior Notes at the end of fiscal 2014. Accordingly, fiscal year 2015 had no related interest expense.

Cash, cash equivalents and marketable securities increased by $67.4 million over the third quarter of fiscal year 2015 to $1.20 billion. A cash dividend of $0.30 per share will be paid on August 26, 2015 to stockholders of record on August 14, 2015. During the fourth quarter the Company generated positive cash flows from operations of $161.4 million or 43% of total revenues. The Company has historically generated strong cash flows from its operations. During the fourth quarter of fiscal year 2015 the Company returned $105.6 million to shareholders in the form of dividends of $73.4 million, representing $0.30 per share and stock purchases of $32.2 million.

According to Lothar Maier, CEO, "We met the low end of our revenue guidance with growth of 2% sequentially over the March quarter. Our industry leading gross margin and operating margin percentages remained relatively steady at 76.1% and 46.5% while earnings per share declined $0.01 to $0.54 due to a higher tax rate. For the fiscal year, we grew revenue 6.2% to $1.47 billion, while earnings per share increased 11.6% to $2.12. As we indicated last quarter, the June quarter is typically a strong quarter for us, though we had some concern with global macroeconomic conditions that tempered our expectations. As the quarter progressed, these conditions appeared to worsen and bookings slowed considerably. The bookings decline was broad based across all major markets and regions. Our largest market, Industrial, suffered the largest decline followed by the Computer market which appears to be weak for the entire industry. In the early weeks of the current quarter, bookings have improved. However, due to the decline in bookings received in the June quarter, coupled with a sluggish global economic environment, we are preparing for a difficult first fiscal quarter. We are forecasting our revenue to decline sequentially in the 7% - 12% range. We are optimistic that this will be a short cycle and that this is temporary weakness experienced while our customers react to global uncertainties and adjust their inventories to match their cautiousness and end customer demand. Design activity remains robust and we see many opportunities where new, innovative products require our innovative analog solutions."

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 revenue and our expectations regarding the duration of the weak cycle 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 year ended June 29, 2014.

Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, July 22, 2015 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 457-2734, or toll free (888) 500-6973 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 22, 2015 through July 29, 2015. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #5827668. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of July 29, 2015 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 Don Zerio 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										Twelve Months Ended
			June 28,			March 29,			June 29,				June 28,			June 29,
			2015			2015			2014			2015			2014
Revenues		$	379,483		$	372,021		$	365,428			$	1,475,139		$	1,388,386
Cost of sales(1)			90,847			89,147			87,579				355,727			338,580
Gross profit			288,636			282,874			277,849				1,119,412			1,049,806
Expenses:
Research and development (1)			68,960			67,100			64,785				266,761			250,434
Selling, general and administrative(1)			43,105			42,221			41,419				169,952			159,642
Total operating expenses			112,065			109,321			106,204				436,713			410,076
Operating income			176,571			173,553			171,645				682,699			639,730
Interest expense			—			—			(2,271	)			—			(22,710	)
Amortization of debt discount(2)			—			—			(1,885	)			—			(18,458	)
Interest income and other income			975			881			452				2,690			2,706
Income before income taxes			177,546			174,434			167,941				685,389			601,268
Provision for income taxes			44,831			39,247			38,206				164,426			141,307
Net income		$	132,715		$	135,187		$	129,735			$	520,963		$	459,961
Earnings per share:
Basic		$	0.54		$	0.55		$	0.53			$	2.13		$	1.91
Diluted		$	0.54		$	0.55		$	0.53			$	2.12		$	1.90
Shares used in determining earnings per share:
Basic			244,928			244,286			243,279				244,408			240,498
Diluted			245,477			245,084			244,935				245,218			242,551
Includes the following non-cash charges:
(1) Stock-based compensation
Cost of sales		$	2,403		$	2,240		$	2,043			$	8,966		$	8,074
Research and development			10,996			10,447			9,513				41,584			37,624
Selling, general and administrative			5,785			5,394			4,913				21,581			19,430
(2) Amortization of debt discount
(non-cash interest expense)			—			—			1,885				—			18,458

LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) U.S. GAAP (unaudited)
			June 28, 2015				June 29, 2014
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities		$	1,202,722			$	1,012,787
Accounts receivable, net of allowance for doubtful accounts of $1,651 ($1,653 at June 29, 2014)			179,264				173,340
Inventories			99,861				91,310
Deferred tax assets and other current assets			102,905				87,276
Total current assets			1,584,752				1,364,713
Property, plant & equipment, net			287,742				277,080
Other noncurrent assets			11,585				13,785
Total assets		$	1,884,079			$	1,655,578
LIABILITIES & STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable		$	17,608			$	28,221
Accrued income taxes, payroll & other accrued liabilities			118,450				141,275
Deferred income on shipments to distributors			46,860				45,619
Total current liabilities			182,918				215,115
Deferred tax and other noncurrent liabilities			123,234				109,094
Stockholders' equity:
Common stock			2,052,490				1,948,006
Accumulated deficit			(475,124	)			(616,992	)
Accumulated other comprehensive income			561				355
Total stockholders' equity			1,577,927				1,331,369
		$	1,884,079			$	1,655,578

LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (unaudited)
			Three Months Ended												Twelve Months Ended
			June 28,				March 29,				June 29,				June 28,				June 29,
		2015					2015				2014				2015				2014
Cash flow from operating activities:
Net income		$	132,715			$	135,187			$	129,735			$	520,963			$	459,961
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			13,737				13,592				12,851				54,098				51,255
Stock-based compensation			19,184				18,081				16,469				72,131				65,128
Amortization of convertible senior notes discount			—				—				1,885				—				18,458
Excess tax benefit from stock-based compensation			(6,217	)			(4,223	)			(4,101	)			(15,190	)			(11,038	)
Change in operating assets and liabilities:			1,945				(9,416	)			46,903				(33,084	)			12,663
Cash provided by operating activities			161,364				153,221				203,742				598,918				596,427
Cash flow from investing activities:
Net (purchases) proceeds from sale and maturities of available-for-sale securities			(78,193	)			8,990				101,618				(151,261	)			542,564
Purchase of property, plant and equipment			(8,396	)			(11,046	)			(21,033	)			(62,560	)			(37,669	)
Cash (used in) provided by investing activities			(86,589	)			(2,056	)			80,585				(213,821	)			504,895
Cash flow from financing activities:
Extinguishment of convertible senior notes			—				—				(845,087	)			—				(845,087	)
Excess tax benefit from stock-based compensation			6,217				4,223				4,101				15,190				11,038
Issuance of common stock under employee stock plans			14,299				10,998				9,910				40,712				100,491
Purchase of common stock			(32,242	)			(23,202	)			(36,202	)			(124,239	)			(81,786	)
Payment of cash dividends			(73,437	)			(73,406	)			(66,095	)			(278,404	)			(255,305	)
Cash used in financing activities			(85,163	)			(81,387	)			(933,373	)			(346,741	)			(1,070,649	)
(Decrease) increase in cash and cash equivalents			(10,388	)			69,778				(649,046	)			38,356				30,673
Cash and cash equivalents, beginning of period			206,067				136,289				806,369				157,323				126,650
Cash and cash equivalents, end of period		$	195,679			$	206,067			$	157,323			$	195,679			$	157,323

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