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Maxim Integrated Reports Results For The Fourth Quarter Of Fiscal 2019, Increases Dividend By 4%

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SAN JOSE, Calif., July 30, 2019 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $557 million for its fourth quarter of fiscal 2019 ended June 29, 2019, a 3% increase from the $542 million revenue recorded in the prior quarter, and a 12% decrease from the same quarter of last year.

Logo for Maxim Integrated Products Inc. (PRNewsfoto/Maxim Integrated)

"Our June quarter results met our expectations, while we lowered both internal and distribution channel inventory.  Given the soft business environment, we will continue to tightly manage inventory and spending in the September quarter," said Tunc Doluca, President and Chief Executive Officer. "Today, we are announcing a 4% increase in our dividend, reflecting our commitment to return cash to shareholders and confidence in our long-term outlook."

Fiscal Year 2019 Fourth Quarter Results
Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was $1.33, which benefitted from a $204 million tax reserve release. GAAP earnings per share, excluding special items was $0.57. An analysis of GAAP versus GAAP excluding special items is provided in this press release.

Cash Flow Items
At the end of the fourth quarter of fiscal 2019, total cash, cash equivalents and short-term investments were $1.9 billion, flat from the prior quarter.

Notable items included:

  • Cash flow from operations: $237 million
  • Capital expenditures: $31 million
  • Dividends paid: $125 million ($0.46 per share)
  • Stock repurchases: $102 million

Trailing twelve months free cash flow was $793 million. Free cash flow is a non-GAAP measure and is defined by cash flow from operations less capital expenditures.

Business Outlook
The Company's 90-day backlog at the beginning of the September 2019 quarter was $391 million. Based on the beginning backlog and expected turns, our results for the September 2019 quarter are forecasted to be as follows:

  • Revenue: $510 to $550 million
  • Gross Margin: 62% to 64% GAAP (63% to 65% excluding special items)
  • EPS: $0.45 to $0.51 GAAP ($0.46 to $0.52 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
Our Board of Directors approved a 4% increase in the quarterly dividend. A cash dividend of $0.48 per share will be paid on September 13, 2019, to stockholders of record on August 29, 2019. 

Conference Call
Maxim Integrated has scheduled a conference call on July 30 at 2:00 p.m. Pacific Time to discuss its financial results for the fourth quarter of fiscal 2019 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 29,


March 30, 


June 30,


June 29,


June 30,




2019


2019


2018


2019


2018




(in thousands, except per share data)



Net revenues

$  556,545


$    542,383


$ 633,154


$ 2,314,329


$ 2,480,066



Cost of goods sold 

200,154


201,552


214,486


813,823


853,945



Gross margin

356,391


340,831


418,668


1,500,506


1,626,121



Operating expenses:












Research and development

105,136


107,075


112,056


435,222


450,943



Selling, general and administrative

75,130


74,116


82,611


308,617


322,918



Intangible asset amortization

756


756


844


3,041


4,467



Impairment of long-lived assets 

-


-


-


753


892



Severance and restructuring expenses

1,715


1,744


833


5,632


15,060



Other operating expenses (income), net 

83


-


(71)


143


(1,607)



Total operating expenses (income), net

182,820


183,691


196,273


753,408


792,673



Operating income (loss)

173,571


157,140


222,395


747,098


833,448



Interest and other income (expense), net 

4,079


3,318


1,305


7,323


(8,563)



Income before taxes

177,650


160,458


223,700


754,421


824,885



Provision (benefit) for income taxes (1) (2)

(189,908)


29,845


29,528


(73,065)


357,567



Net income

$  367,558


$    130,613


$ 194,172


$    827,486


$    467,318



























Earnings per share:












Basic

$        1.35


$          0.48


$       0.70


$          3.01


$          1.66



Diluted

$        1.33


$          0.47


$       0.68


$          2.97


$          1.64















Shares used in the calculation of earnings per share:












Basic

272,382


273,221


279,304


274,966


280,979



Diluted

275,835


276,610


283,934


278,777


285,674















Dividends paid per share

$0.46


$0.46


$0.42


$1.84


$1.56



























SCHEDULE OF SPECIAL ITEMS



(Unaudited)















Three Months Ended


Year Ended




June 29,


March 30, 


June 30,


June 29,


June 30,




2019


2019


2018


2019


2018




(in thousands)



Cost of goods sold:












Intangible asset amortization

$      4,038


$        5,008


$   11,759


$      22,829


$      46,064



 Total 

$      4,038


$        5,008


$   11,759


$      22,829


$      46,064















 Operating expenses: 












Intangible asset amortization

$         756


$           756


$        844


$        3,041


$        4,467



Impairment of long-lived assets 

-


-


-


753


892



Severance and restructuring

1,715


1,744


833


5,632


15,060



Other operating expenses (income), net 

83


-


(71)


143


(1,607)



 Total 

$      2,554


$        2,500


$     1,606


$        9,569


$      18,812















Interest and other expense (income), net 

$     (2,980)


$         (857)


$      (941)


$      (4,565)


$      (1,243)



 Total 

$     (2,980)


$         (857)


$      (941)


$      (4,565)


$      (1,243)















Provision (benefit) for income taxes 












Impact of U.S. tax legislation (1)

$    47,703


$      (1,056)


$           -


$      68,729


$    243,550



Impact of income tax audit settlements (2)

(251,599)


-


-


(251,599)


-



 Total 

$ (203,896)


$      (1,056)


$           -


$  (182,870)


$    243,550















(1) Includes effect of U.S. tax legislation enacted on December 22, 2017.



(2) Includes effect of income tax audit settlements.














 










CONSOLIDATED  BALANCE SHEETS



(Unaudited)




June 29,


March 30, 


June 30,




2019


2019


2018




(in thousands) 



ASSETS



Current assets:








Cash and cash equivalents

$    1,757,342


$    1,654,563


$    1,543,484



Short-term investments

140,990


243,864


1,082,915



Total cash, cash equivalents and short-term investments

1,898,332


1,898,427


2,626,399



Accounts receivable, net

360,016


381,152


280,072



Inventories

246,512


272,832


282,390



Other current assets

34,640


24,358


21,548



Total current assets

2,539,500


2,576,769


3,210,409



Property, plant and equipment, net

577,722


571,955


579,364



Intangible assets, net

56,242


61,036


78,246



Goodwill

532,251


532,251


532,251



Other assets

38,267


61,843


51,291



     TOTAL ASSETS

$    3,743,982


$    3,803,854


$    4,451,561











LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:








Accounts payable

$         84,335


$         86,798


$         92,572



Price adjustment and other revenue reserves

100,490


106,011


-



Income taxes payable

33,765


44,179


17,961



Accrued salary and related expenses

118,704


128,365


151,682



Accrued expenses

33,873


33,644


35,774



Current portion of long-term debt

-


-


499,406



Total current liabilities

371,167


398,997


797,395



Long-term debt

992,584


992,225


991,147



Income taxes payable

469,418


688,780


661,336



Other liabilities

65,537


61,105


70,743



Total liabilities

1,898,706


2,141,107


2,520,621











Stockholders' equity:








Common stock and capital in excess of par value

272


279


279



Retained earnings

1,856,358


1,672,938


1,945,646



Accumulated other comprehensive loss

(11,354)


(10,470)


(14,985)



Total stockholders' equity

1,845,276


1,662,747


1,930,940



TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$3,743,982


$3,803,854


$4,451,561










 


CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




Three Months Ended


Year Ended




June 29,


March 30, 


June 30,


June 29,


June 30,




2019


2019


2018


2019


2018




(in thousands)



Cash flows from operating activities:












Net income

$   367,558


$   130,613


$   194,172


$   827,486


$   467,318



Adjustments to reconcile net income to net cash provided by operating activities:











Stock-based compensation

22,004


22,820


19,753


86,977


78,685



Depreciation and amortization

25,569


27,182


36,083


110,745


144,974



Deferred taxes

26,118


(3,955)


21,458


13,957


27,715



Loss on sale of property, plant and equipment

643


428


423


3,967


995



Impairment of long-lived assets

-


-


-


-


42



Impairment of investment in privately-held companies

(268)


(371)


-


(3)


850



Changes in assets and liabilities:












Accounts receivable

15,615


(14,323)


40,480


21,090


(19,714)



Inventories

26,383


6,123


(9,450)


36,003


(32,776)



Other current assets

(11,875)


3,561


(212)


(14,901)


32,368



Accounts payable

699


(13,372)


6,131


(10,272)


9,560



Income taxes payable

(229,776)


20,401


(163,010)


(176,114)


117,654



Deferred margin on shipments to distributors

-


-


-


-


(14,974)



All other accrued liabilities

(5,203)


27,831


831


(23,095)


6,767



Net cash provided by operating activities

237,467


206,938


146,659


875,840


819,464



Cash flows from investing activities:












Purchases of property, plant and equipment

(30,653)


(21,257)


(12,118)


(82,823)


(65,782)



Proceeds from sales of property, plant and equipment

306


32


62


340


5,823



Proceeds from sales of available-for-sale securities

-


2,939


7,287


30,192


107,291



Proceeds from maturity of available-for-sale securities

103,431


308,529


330,749


1,130,514


753,249



Payment in connection with business acquisition, net of cash acquired

-


-


-


(2,949)


(57,773)



Purchases of available-for-sale securities

-


-


(325,063)


(214,587)


(1,447,354)



Purchases of privately-held companies' securities

(1,500)


(770)


(2,164)


(3,176)


(5,520)



Other investing activities

(60)


(540)


-


(600)


-



Net cash provided by (used in) investing activities

71,524


288,933


(1,247)


856,911


(710,066)



Cash flows from financing activities:












Contingent consideration paid

-


(1,052)


-


(9,052)


-



Net issuance of restricted stock units

(6,663)


(9,582)


(9,148)


(29,689)


(30,310)



Repayment of notes payable

-


-


-


(500,000)


-



Proceeds from stock options exercised

5,414


5,143


1,626


24,400


28,009



Issuance of common stock under employee stock purchase program

22,486


-


21,346


40,175


36,321



Repurchase of common stock

(102,104)


(116,991)


(128,024)


(539,151)


(407,968)



Dividends paid

(125,345)


(125,566)


(117,321)


(505,576)


(438,087)



Net cash provided by (used in) financing activities

(206,212)


(248,048)


(231,521)


(1,518,893)


(812,035)



Net increase (decrease) in cash and cash equivalents

102,779


247,823


(86,109)


213,858


(702,637)



Cash and cash equivalents:












Beginning of period

$ 1,654,563


$ 1,406,740


$ 1,629,593


$ 1,543,484


$ 2,246,121



End of period

$ 1,757,342


$ 1,654,563


$ 1,543,484


$ 1,757,342


$ 1,543,484















Total cash, cash equivalents, and short-term investments

$ 1,898,332


$ 1,898,427


$ 2,626,399


$ 1,898,332


$ 2,626,399














 














ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES



(Unaudited)




Three Months Ended


Year Ended




June 29,


March 30, 


June 30,


June 29,


June 30,




2019


2019


2018


2019


2018




(in thousands, except per share data)



Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:












GAAP gross profit

$ 356,391


$ 340,831


$ 418,668


$ 1,500,506


$ 1,626,121



GAAP gross profit %

64.0%


62.8%


66.1%


64.8%


65.6%















Special items:












Intangible asset amortization 

4,038


5,008


11,759


22,829


46,064



 Total special items 

4,038


5,008


11,759


22,829


46,064



  GAAP gross profit excluding special items 

$ 360,429


$ 345,839


$ 430,427


$ 1,523,335


$ 1,672,185



  GAAP gross profit % excluding special items 

64.8%


63.8%


68.0%


65.8%


67.4%















Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:












GAAP operating expenses

$ 182,820


$ 183,691


$ 196,273


$    753,408


$    792,674















Special items:












Intangible asset amortization

756


756


844


3,041


4,467



Impairment of long-lived assets 

-


-


-


753


892



Severance and restructuring

1,715


1,744


833


5,632


15,060



Other operating expenses (income), net

83


-


(71)


143


(1,607)



 Total special items 

2,554


2,500


1,605


9,569


18,812



 GAAP operating expenses excluding special items 

$ 180,266


$ 181,191


$ 194,667


$    743,839


$    773,862















Reconciliation of GAAP net income to GAAP net income excluding special items:












GAAP net income

$ 367,558


$ 130,613


$ 194,172


$    827,486


$    467,318















Special items:












Intangible asset amortization

4,794


5,764


12,603


25,870


50,531



Impairment of long-lived assets 

-


-


-


753


892



Severance and restructuring

1,715


1,744


833


5,632


15,060



Other operating expenses (income), net

83


-


(71)


143


(1,607)



Interest and other expense (income), net 

(2,980)


(857)


(941)


(4,565)


(1,243)



 Pre-tax total special items 

3,612


6,651


12,424


27,833


63,633



Other income tax effects and adjustments (1)

(11,271)


7,506


1,194


4,747


(898)



Impact of U.S. tax legislation (2)

47,703


(1,056)


-


68,729


243,550



Impact of income tax audit settlements (3)

(251,599)


-


-


(251,599)


-



 GAAP net income excluding special items 

$ 156,003


$ 143,714


$ 207,790


$    677,196


$    773,603















 GAAP net income per share excluding special items: 












Basic

$       0.57


$       0.53


$       0.74


$          2.46


$          2.75



Diluted

$       0.57


$       0.52


$       0.73


$          2.43


$          2.71















Shares used in the calculation of earnings per share excluding special items:









Basic

272,382


273,221


279,304


274,966


280,979



Diluted

275,834


276,610


283,934


278,777


285,674















(1) Includes tax effect of pre-tax special items and miscellaneous tax adjustments.



(2) Includes effect of U.S. tax legislation enacted on December 22, 2017.



(3) Includes effect of income tax audit settlements.









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; impairment of long-lived assets; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net; and other income tax effects and adjustments. We defined free cash flow as net cash provided from operations less gross capital expenditures. 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. 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; 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.  Special items include the tax impact of pre-tax special items, significant tax audit settlements, significant prior year tax reserve adjustments, and significant non-recurring and period specific tax items, which vary in size and frequency, including certain tax charges resulting from U.S. tax legislation that was enacted on December 22, 2017.   We used a long-term average tax rate to compute the GAAP tax provision excluding special items for the first and second quarters of fiscal year 2018; that long-term average tax rate was the weighted average of our normalized fiscal year GAAP tax rate, excluding special items over a four-year period, that included fiscal year 2018 and the three prior fiscal years.  A long-term average tax rate was not used for the third and fourth quarters of fiscal year 2018 or for fiscal year 2019 because, due to the impacts of tax reform, a long-term average tax rate was no longer appropriate.

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; impairment of long-lived assets; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net; 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 2020 ending September 2019, which includes revenue, gross margin and earnings per share, as well as the Company's plan to continue to tightly manage inventory and spending in the September quarter given the soft business environment.  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 30, 2018 (the "Form 10-K"). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331618000031/maxim10-kfy2018.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
Vice President, Investor Relations
(408) 601-5697

 

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