Maxim Integrated Reports Results For The Fourth Quarter Of Fiscal 2020

SAN JOSE, Calif., July 28, 2020 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported net revenue of $545 million for its fourth quarter of fiscal 2020 ended June 27, 2020, a 3% decrease from the $562 million revenue recorded in the prior quarter, and a 2% decrease from the same quarter of last year.

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

"Strong performance by our manufacturing operations, including our test facilities in the Philippines, resulted in better-than-expected June quarter revenue and earnings per share. I'm very proud of the resilience of our company, as shown by our ability to navigate these unprecedented times. We remain highly profitable due to our diversified business model and outstanding product portfolio," said Tunc Doluca, President and Chief Executive Officer.

Fiscal Year 2020 Fourth Quarter Results

Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was $0.77, which benefitted from a net tax reserve release of $45 million. The results were affected by $9 million in pre-tax special items which primarily consisted of charges related to acquisitions and expenses related to COVID-19 response programs. GAAP earnings per share, excluding special items was $0.58. 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 2020, total cash, cash equivalents and short-term investments were $1.6 billion, down $72 million from the prior quarter.

Notable items included:

  • Cash flow from operations: $212 million
  • Capital expenditures: $16 million
  • Dividends paid: $128 million ($0.48 per share)
  • Stock repurchases: $82 million

Trailing twelve months free cash flow was $734 million. Free cash flow is a non-GAAP measure and is defined by cash flow from operations less capital expenditures.

Dividend and Stock Repurchase

A cash dividend of $0.48 per share will be paid on September 11, 2020, to stockholders of record on August 27, 2020.  We will not declare or pay a dividend in any of the next succeeding four fiscal quarters and have suspended our open market stock repurchase program as the Merger Agreement between the Company and Analog Devices restricts our ability to declare dividends and repurchase shares of our common stock.

Due to the pending transaction with Analog Devices, Maxim Integrated will not be hosting a quarterly earnings conference call and has suspended the practice of providing forward-looking guidance. Investors are requested to review our Investor Relations website for the quarterly financial highlights and SEC filings for the latest updates on the pending transaction. 

 














CONSOLIDATED STATEMENTS OF INCOME


(Unaudited)















Three Months Ended


Year Ended




June 27, 2020


March 28, 2020


June 29, 2019


June 27, 2020


June 29, 2019




(in thousands, except per share data)



Net revenues

$              545,369


$              561,916


$               556,545


$            2,191,395


$            2,314,329



Cost of goods sold

183,001


195,479


200,154


758,743


813,823



Gross margin

362,368


366,437


356,391


1,432,652


1,500,506



Operating expenses:












Research and development

110,173


109,091


105,136


440,166


435,222



Selling, general and administrative

72,893


71,643


75,130


296,722


308,617



Intangible asset amortization

810


756


756


3,078


3,041



Impairment of long-lived assets

-


-


-


-


753



Severance and restructuring expenses

678


523


1,715


5,363


5,632



Other operating expenses (income), net

(173)


1,077


83


929


143



Total operating expenses

184,381


183,090


182,820


746,258


753,408



Operating income

177,987


183,347


173,571


686,394


747,098



Interest and other income (expense), net

(8,488)


(1,622)


4,079


(8,298)


7,323



Income before taxes

169,499


181,725


177,650


678,096


754,421



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

(37,799)


20,535


(189,908)


23,402


(73,065)



Net income

$              207,298


$              161,190


$               367,558


$               654,694


$               827,486















Earnings per share:












Basic

$                     0.78


$                     0.60


$                      1.35


$                      2.43


$                      3.01



Diluted

$                     0.77


$                     0.59


$                      1.33


$                      2.41


$                      2.97















Shares used in the calculation of earnings per share:












Basic

266,639


269,003


272,382


269,341


274,966



Diluted

268,777


271,579


275,834


272,028


278,777















Dividends paid per share

$                     0.48


$                     0.48


$                      0.46


$                      1.92


$                      1.84



























SCHEDULE OF SPECIAL ITEMS



(Unaudited)















Three Months Ended


Year Ended




June 27, 2020


March 28, 2020


June 29, 2019


June 27, 2020


June 29, 2019




(in thousands)



Cost of goods sold:












Intangible asset amortization

$                   3,528


$                   3,111


$                   4,038


$                 12,860


$                 22,829



Cost of COVID-19 response programs

1,591


2,025


-


3,616


-



 Total 

$                   5,119


$                   5,136


$                 11,759


$                 16,476


$                 22,829















 Operating expenses: 












Intangible asset amortization

$                      810


$                      756


$                       756


$                   3,078


$                   3,041



Impairment of long-lived assets

-


-


-


-


753



Severance and restructuring

678


523


1,715


5,363


5,632



Other operating expenses (income), net

(173)


1,077

(3)

83


928


143



 Total 

$                   1,315


$                   2,356


$                   2,554


$                   9,369


$                   9,569















Interest and other expense (income), net

$                   1,484


$                    (587)


$                 (2,980)


$                     (541)


$                 (4,565)



 Total 

$                   1,484


$                    (587)


$                 (2,980)


$                     (541)


$                 (4,565)















Provision for (benefit from) for income taxes:












Impact of U.S. tax legislation (1)

$                   6,486


$                         -


$                 47,703


$                   6,486


$                 68,729



Impact of income tax audit settlements (2)

(51,197)


-


(251,599)


(51,197)


(251,599)



 Total 

$               (44,711)


$                         -


$             (203,896)


$               (44,711)


$             (182,870)















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



(2) Includes effect of income tax audit settlements.



(3) Includes approximately $0.5 million of acquisition-related costs and $0.5 million of cost related to COVID-19 response programs.


 

 










CONSOLIDATED  BALANCE SHEETS



(Unaudited)




June 27, 2020


March 28, 2020


June 29, 2019




(in thousands)



ASSETS



Current assets:








Cash and cash equivalents

$        1,578,670


$        1,638,667


$        1,757,342



Short-term investments

35,536


47,109


140,990



Total cash, cash equivalents and short-term investments

1,614,206


1,685,776


1,898,332



Accounts receivable, net

404,778


378,273


360,016



Inventories

259,626


220,686


246,512



Other current assets

39,219


25,288


34,640



Total current assets

2,317,829


2,310,023


2,539,500



Property, plant and equipment, net

550,406


564,636


577,722



Intangible assets, net

87,959


44,642


56,242



Goodwill

562,540


532,251


532,251



Other assets

110,569


97,383


38,267



TOTAL ASSETS

$        3,629,303


$        3,548,935


$        3,743,982











LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:








Accounts payable

$             91,982


$             83,519


$              84,335



Price adjustment and other revenue reserves

148,916


111,235


100,490



Income taxes payable

43,457


39,809


33,765



Accrued salary and related expenses

126,751


122,220


118,704



Accrued expenses

42,228


31,143


33,873



Total current liabilities

453,334


387,926


371,167



Long-term debt

994,022


993,663


992,584



Income taxes payable

385,072


434,415


469,418



Other liabilities

139,418


112,988


65,537



Total liabilities

1,971,846


1,928,992


1,898,706











Stockholders' equity:








Common stock and capital in excess of par value

266


267


272



Retained earnings

1,671,786


1,632,325


1,856,358



Accumulated other comprehensive loss

(14,595)


(12,649)


(11,354)



Total stockholders' equity

1,657,457


1,619,943


1,845,276



TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$        3,629,303


$        3,548,935


$        3,743,982










 

 


CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




Three Months Ended


Year Ended




June 27, 2020


March 28, 2020


June 29, 2019


June 27, 2020


June 29, 2019




(in thousands, except per share data)



Cash flows from operating activities:












Net income

$          207,298


$            161,190


$          367,558


$          654,694


$          827,486



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












Stock-based compensation

23,290


23,403


22,004


95,431


86,977



Depreciation and amortization

36,384


24,141


25,569


108,533


110,745



Deferred taxes

14,386


(3,161)


26,118


8,994


13,957



Loss from sale or disposal of property, plant and equipment

557


145


643


1,191


3,967



Other adjustments

2,127


3,265


(268)


11,353


(3)



Changes in assets and liabilities:












Accounts receivable, price adjustment and other revenue reserves

13,603


(23,933)


15,615


6,091


21,090



Inventories

(34,562)


3,308


26,383


(8,671)


36,003



Other assets

(25,769)


(4,710)


(11,875)


(86,299)


(14,901)



Accounts payable

5,405


(2,655)


699


7,594


(10,272)



Income taxes payable

(45,855)


2,174


(229,776)


(74,814)


(176,114)



All other accrued liabilities

15,465


26,624


(5,203)


76,758


(23,095)



Net cash provided by operating activities

212,329


209,791


237,467


800,855


875,840



Cash flows from investing activities:












Purchases of property, plant and equipment

(15,680)


(17,068)


(30,653)


(67,049)


(82,823)



Proceeds from sales of property, plant and equipment

124


97


306


392


340



Proceeds from sales of available-for-sale securities

1,290


-


-


1,290


30,192



Proceeds from maturity of available-for-sale securities

10,734


15,485


103,431


104,286


1,130,514



Payment in connection with business acquisition, net of cash acquired

(69,270)


-


-


(69,270)


(2,949)



Purchases of available-for-sale securities

-


-


-


-


(214,587)



Purchases of investments in privately-held companies

(1,840)


(120)


(1,500)


(1,960)


(3,176)



Proceeds from sale of investments in privately-held companies

205


173


-


378


-



Other investing activities

2


(50)


(60)


(116)


(600)



Net cash provided by (used in) investing activities

(74,435)


(1,483)


71,524


(32,049)


856,911



Cash flows from financing activities:












Contingent consideration paid

-


-


-


(8,000)


(9,052)



Net issuance of restricted stock units

(6,741)


(11,570)


(6,663)


(35,877)


(29,689)



Repayment of notes payable

-


-


-


-


(500,000)



Proceeds from stock options exercised

2,240


7,810


5,414


18,870


24,400



Issuance of common stock under employee stock purchase program

23,725


-


22,486


42,260


40,175



Repurchase of common stock

(82,299)


(157,003)


(102,104)


(440,811)


(539,151)



Dividends paid

(128,058)


(129,072)


(125,345)


(517,162)


(505,576)



Net cash used in financing activities

(191,133)


(289,835)


(206,212)


(940,720)


(1,518,893)



Net increase (decrease) in cash, cash equivalents and restricted cash 

(53,239)


(81,527)


102,779


(171,914)


213,858



Cash, cash equivalents and restricted cash 












Beginning of period

$       1,638,667


$        1,720,194


$       1,654,563


$       1,757,342


$       1,543,484



End of period

$       1,585,428


$        1,638,667


$       1,757,342


$       1,585,428


$       1,757,342















Total cash, cash equivalents, and short-term investments

$       1,614,206


$        1,685,776


$       1,898,332


$       1,614,206


$       1,898,332















Cash, cash equivalents and restricted cash:












Cash and cash equivalents

$       1,578,670


$        1,638,667


$       1,757,342


$       1,578,670


$       1,757,342



Restricted cash in Other assets

6,758


-


-


6,758


-



Total cash, cash equivalents and restricted cash

$       1,585,428


$        1,638,667


$       1,757,342


$       1,585,428


$       1,757,342














 

 















ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES



(Unaudited)





Three Months Ended


Year Ended





June 27, 2020


March 28, 2020


June 29, 2019


June 27, 2020


June 29, 2019





(in thousands, except per share data)



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













GAAP gross profit


$                 362,368


$                 366,437


$                 356,391


$             1,432,652


$             1,500,506



GAAP gross profit %


66.4%


65.2%


64.0%


65.4%


64.8%



Special items:













Intangible asset amortization


3,528


3,111


4,038


12,860


22,829



Cost of COVID-19 response programs


1,591


2,025


-


3,616


-



 Total special items 


5,119


5,136


4,038


16,476


22,829



 GAAP gross profit excluding special items 


$                 367,487


$                 371,573


$                 360,429


$             1,449,128


$             1,523,335



 GAAP gross profit % excluding special items 


67.4%


66.1%


64.8%


66.1%


65.8%
















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













GAAP operating expenses


$                 184,381


$                 183,090


$                 182,820


$                 746,258


$                 753,408



Special items:













Intangible asset amortization


810


756


756


3,078


3,041



Impairment of long-lived assets


-


-


-


-


753



Severance and restructuring


678


523


1,715


5,363


5,632



Other operating expenses (income), net


(173)


1,077

(1)

83


928


143



 Total special items 


1,315


2,356


2,554


9,369


9,569



 GAAP operating expenses excluding special items 


$                 183,066


$                 180,734


$                 180,266


$                 736,889


$                 743,839
















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













GAAP net income


$                 207,298


$                 161,190


$                 367,558


$                 654,694


$                 827,486
















Special items:













Intangible asset amortization


4,338


3,867


4,794


15,938


25,870



Cost of COVID-19 response programs


1,591


2,025


-


3,616


-



Impairment of long-lived assets


-


-


-


-


753



Severance and restructuring


678


523


1,715


5,363


5,632



Other operating expenses (income), net


(173)


1,077

(1)

83


928


143



Interest and other expense (income), net


1,484


(587)


(2,980)


(541)


(4,565)



 Pre-tax total special items 


7,918


6,905


3,612


25,304


27,833



Other income tax effects and adjustments (2)


(14,378)


(2,101)


(11,271)


(19,668)


4,747



Impact of U.S. tax legislation (3)


6,486


-


47,703


6,486


68,729



Impact of income tax audit settlements (4)


(51,197)


-


(251,599)


(51,197)


(251,599)



 GAAP net income excluding special items 


$                 156,127


$                 165,994


$                 156,003


$                 615,619


$                 677,196
















 GAAP net income per share excluding special items: 













Basic


$                       0.59


$                       0.62


$                       0.57


$                       2.29


$                       2.46



Diluted


$                       0.58


$                       0.61


$                       0.57


$                       2.26


$                       2.43
















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













Basic


266,639


269,003


272,382


269,341


274,966



Diluted


268,777


271,579


275,834


272,028


278,777
















(1) Includes approximately $0.5 million of acquisition-related costs and $0.5 million of cost related to COVID-19 response programs.



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



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



(4) 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 the cost of COVID-19 response programs; intangible asset amortization; 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 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 and cost of COVID-19 response programs. 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; 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, significant tax legislation, and significant non-recurring and period specific tax items, which vary in size and frequency.

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; cost of COVID-19 response programs; 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

Except for historical information, this press release may contain 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 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 29, 2019 (the "Form 10-K"). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331619000024/0000743316-19-000024-index.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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SOURCE Maxim Integrated Investor Relations

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