Maxim Reports Record Revenues and Earnings for the Second Quarter of Fiscal 2000 - Maxim Integrated Products - Company Financial Information

Edge: Work-Group Computing Report, Jan 31, 2000

Maxim Integrated Products, Inc., (MXIM) reported record net revenues of $201.7 million for the second quarter of fiscal 2000 ending December 25, 1999, compared to $145.0 million for the same quarter in fiscal 1999. Net income increased to a record $64.6 million in Q200, compared to $46.5 million for the second quarter of fiscal 1999. Diluted earnings per share were $0.20 for Q200, compared to $0.16 for the same period a year ago.

During the quarter, the Company repurchased approximately 2.1 million shares of its common stock for $68.7 million and paid a total of $28.0 million for capital equipment. Accounts receivable increased by $10.3 million in Q200 to $103.4 million due to the increase in net revenues, while inventories declined by $0.5 million to $44.4 million during the quarter.

Gross margin for the second quarter increased slightly to 69.8%, compared to 69.7% in Q100. Research and development expense was $32.3 million (16.0% of net revenues) in Q200, compared to $28.3 million (15.7% of net revenues) in Q100. During the quarter, the Company recorded a writedown of equipment of $3.9 million, primarily to cost of goods sold, and recorded a charge to selling, general and administrative expenses of $3.0 million related to technology licensing matters.

Bookings on the Company were approximately $283 million in Q200, a 17% increase over the Q100 level of $242 million. Turns orders received in Q200 were $93 million (turns orders are customer orders that are for delivery within the same quarter and may result in revenue within the same quarter if the Company has available inventory that matches those orders).

End-market bookings increased 11% over Q100 levels (end-market bookings are end-user customer bookings received by both Maxim and the Company's distributors during the quarter). This increase was fueled by growth in all geographic areas and all product market areas.

Second quarter ending backlog shippable within the next 12 months was approximately $300 million, including $242 million requested for shipment in the third quarter of fiscal 2000. Last quarter, the Company reported first quarter ending backlog shippable within the next 12 months of approximately $225 million, including $192 million that was requested for shipment in Q200. Order cancellations remained low during Q200 at approximately $13 million, compared to $11 million in Q100.

Jack Gifford, Chairman, President, and Chief Executive Officer, commented on the quarter: "We were very pleased to have another record-breaking quarter. Over the past two quarters, we have booked $525 million, a higher level than we had forecasted for the first half of the year. During Q200, 55% of our bookings were from markets outside the U.S. We consider this international balance to be a positive factor that tends to support a more stable growth pattern over the long term. Our bookings have continued to grow as a result of increased demand for our customers' products and design wins by Maxim in new equipment and applications, which were beyond our product planning assumptions and projections. Both of these factors are good news for our future. Although general market conditions remain favorable, we continue to anticipate that bookings and bookings growth rates for the second half of our fiscal year will moderate from the levels we experienced during the first 6 months. We continue to feel comfortable with our longer term projections and plan."

Gifford continued: "The reduction in turns orders is not a surprise and turns levels should, in the next 6 months, be more reflective of historic percentages of total bookings. While lead times have increased industry wide, we believe that Maxim is doing a good job of meeting our commitments to our customers.

"Our fiber and wireless revenue levels remain relatively small as a percentage of our total revenues, but we are comfortable that our 3- to 4-year projections for these businesses will be realized.

"At the beginning of January 2000, Maxim sold its interest in its 50%-owned high-frequency packaging and assembly subsidiary back to Tektronix for cash. This subsidiary was set up to be jointly controlled by Maxim and Tektronix as a result of the 1994 acquisition by Maxim of IC technology and foundries from Tektronix."

Fortune Magazine recently measured and highlighted Maxim as having achieved the 11th largest stock appreciation of the decade, with an 8,735% increase from 1990 through 1999.

Maxim Integrated Products is a leading international supplier of quality analog products for applications that require real world signal processing.

Consolidated Balance Sheets
(In thousands)                           12/25/99        6/26/99
                                       (unaudited)      (audited)

Assets
Current assets:
 Cash and cash equivalents              $   28,161     $   34,126
 Short-term investments                    544,912        480,580

 Total cash, cash equivalents
   and short-term investments              573,073        514,706

 Accounts receivable, net                  103,406         79,330
 Inventories                                44,391         45,283
 Deferred income taxes
  and other current assets                  78,341         89,555

   Total current assets                    799,211        728,874

 Property, plant and equipment,
  at cost                                  458,459        390,376
 Less accumulated depreciation            (115,339)      (100,243)

 Net property, plant and equipment         343,120        290,133
 Other assets                                8,117          3,307

   Total assets                         $1,150,448     $1,022,314

Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable                       $   46,069     $   40,257
 Accrued expenses                           72,098         61,841
 Deferred income on
  shipments to distributors                 15,619         16,316
 Income taxes payable                        4,403          2,484

   Total current liabilities               138,189        120,898

Deferred income taxes                       18,200         18,200
Other liabilities                            4,000          4,000

   Total liabilities                       160,389        143,098

Stockholders' equity:
 Common stock                              120,508        132,650
 Retained earnings                         871,021        748,036
 Accumulated other
  comprehensive income                      (1,470)        (1,470)

  Total stockholders' equity               990,059        879,216

  Total liabilities and
   stockholders' equity                 $1,150,448     $1,022,314

Consolidated Statements of Income
(In thousands,
 except per share data)

                      Three Months Ending      Six Months Ending
                     12/25/99    12/26/98    12/25/99    12/26/98
                    (unaudited) (unaudited) (unaudited) (unaudited)

Net revenues          $201,728    $145,012    $381,774    $300,293
Cost of goods sold      60,912      45,409     115,394      95,862
 Gross margin          140,816      99,603     266,380     204,431
                         69.8%       68.7%       69.8%       68.1%
Operating expenses:
 Research and
  development           32,250      21,385      60,559      42,436
 Selling, general and
  administrative        17,268      12,643      32,563      26,130

Operating income        91,298      65,575     173,258     135,865
                         45.3%       45.2%       45.4%       45.2%
Interest income, net     6,628       4,867      13,083       9,418

 Income before provision
  for income taxes      97,926      70,442     186,341     145,283
Provision for income
 taxes                  33,295      23,950      63,356      49,396

  Net income          $ 64,631    $ 46,492    $122,985    $ 95,887

Basic income per share$   0.23    $   0.18    $   0.45    $   0.37

Shares used in the
 calculation of basic
income per share       275,528     262,618     274,557     261,890

Diluted income per
 share                $   0.20    $   0.16    $   0.39   $    0.32

Shares used in the
 calculation of diluted
 income per share      315,711     299,944     314,799     298,632