LLTC
$64.54
Linear Technology
$.01
.02%
Earnings Details
2nd Quarter December 2016
Tuesday, January 17, 2017 5:00:01 PM
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Summary

Linear Technology (LLTC) Recent Earnings

Linear Technology (LLTC) reported 2nd Quarter December 2016 earnings of $0.54 per share on revenue of $375.8 million. The consensus earnings estimate was $0.53 per share on revenue of $373.9 million. Revenue grew 8.3% on a year-over-year basis.

Linear Technology Corp is engaged in designing, manufacturing and marketing line of high performance analog integrated circuits for companies in diversified industries.

Results
Reported Earnings
$0.54
Earnings Whisper
-
Consensus Estimate
$0.53
Reported Revenue
$375.8 Mil
Revenue Estimate
$373.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Linear Technology Reports Sequential Increases in Revenue, Net Income, and Earnings Per Share. The Company Increases the Quarterly Dividend $0.01 to $0.33 Per Share

Linear Technology Corporation (LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the fiscal quarter ended January 1, 2017. Quarterly revenues of $375.8 million for the second quarter of fiscal year 2017 increased $1.9 million or 0.5% over the previous quarter’s revenue of $373.9 million and increased $28.7 million or 8.3% over the $347.1 million reported in the second quarter of fiscal year 2016.

On a GAAP basis, net income of $124.0 million increased $8.9 million or 7.7% over the previous quarter’s net income of $115.1 million and increased $2.5 million or 2.0% over the second quarter of fiscal year 2016. Diluted earnings per share of $0.50 per share in the second quarter of fiscal year 2017 increased $0.03 per share or 6% over the previous quarter and was unchanged from the second quarter of fiscal year 2016.

According to Lothar Maier, CEO, "Revenue for our second fiscal quarter of $375.8 million was slightly higher than we guided and is up 8.3% over the second quarter of fiscal year 2016. This is a good result in what historically has been a weaker seasonal quarter for us. On a non-GAAP basis excluding merger-related charges totaling $10.8 million, non-GAAP gross margin, operating margin and earnings per share were 76.3%, 45.5% and $0.54, respectively, all increases over the prior quarter. The increase in revenue was aided by an increase in our Communication and Industrial markets while gross margin was up slightly primarily due to a richer product mix.

Due to the pending merger with Analog Devices, Inc., we expect that this will be our final earnings release as an independent company. We would like to thank our long-term investors who trusted our long-term market and operational strategies. Finally, we would like to thank the employees of Linear Technology who together over the course of 35 years helped to create a truly special company."

The following table summarizes the key GAAP and non-GAAP financial results:

Non-GAAP
GAAP
(In thousands,
Q2
Q1
Q2
Q1
Q2
except per share amounts)
FY2017
FY2017
FY2017
FY2017
FY2016
Revenues
$ 375,817
$ 373,895
$ 375,817
$ 373,895
$ 347,128
Gross profit
$ 286,827
$ 284,069
$ 284,827
$ 282,069
$ 262,744
Gross margin
76.3 %
76.0 %
75.8 %
75.4 %
75.7 %
Operating income
$ 171,073
$ 169,095
$ 160,245
$ 149,301
$ 149,457
Operating margin
45.5 %
45.2 %
42.6 %
39.9 %
43.1 %
Net income
$ 132,242
$ 130,165
$ 123,986
$ 115,122
$ 121,532
Earnings per share - Diluted
$
0.54
$
0.53
$
0.50
$
0.47
$
0.50

Cash, cash equivalents and marketable securities increased by $88.7 million over the first quarter of fiscal year 2017 to $1.61 billion. The Company’s Board of Directors approved an increase in the Company’s quarterly dividend from $0.32 per share to $0.33 per share. This marked the 25th consecutive year the Company has increased its dividend. A cash dividend of $0.33 per share will be paid on March 7, 2017 to stockholders of record on February 24, 2017. During the second quarter the Company generated positive cash flows from operations of $179.5 million or 48% of total revenues. During the second quarter of fiscal year 2017 the Company paid $78.7 million to shareholders in the form of dividends, representing $0.32 per share. There were no open market stock repurchases as the Analog Merger Agreement restricts the ability of the Company to repurchase shares of its common stock.

As a result of the pending transaction with Analog Devices, the Company will not hold a quarterly earnings conference call.

In lieu of a conference call, additional supplemental financial information regarding operational performance and earnings for the fiscal second quarter of 2017, in addition to bookings by end market and revenue by geography, has been made available under the Investor Relations section of the Company’s website that can be accessed through www.linear.com

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 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 July 3, 2016.

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, uModule(R) subsystems, and wireless sensor network products. For more information, visit www.linear.com

For further information contact Donald P. 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
Six Months Ended
January 1,
October 2,
January 3,
January 1,
January 3,
2017
2016
2016
2017
2016
Revenues
$ 375,817
$ 373,895
$
347,128
$ 749,712
$
689,045
Cost of sales (1)(2)
90,990
91,826
84,384
182,816
169,589
Gross profit
284,827
282,069
262,744
566,896
519,456
Expenses:
Research and development (1)(2)
77,030
76,359
69,884
153,389
136,486
Selling, general and administrative (1)(2)
47,552
56,409
43,403
103,961
83,596
Total operating expenses
124,582
132,768
113,287
257,350
220,082
Operating income
160,245
149,301
149,457
309,546
299,374
Interest income and other income
2,361
2,173
1,521
4,534
2,508
Income before income taxes
162,606
151,474
150,978
314,080
301,882
Provision for income taxes
38,620
36,352
29,446
74,972
68,303
Net income
$ 123,986
$ 115,122
$
121,532
$ 239,108
$
233,579
Earnings per share:
Basic
$
0.50
$
0.47
$
0.50
$
0.97
$
0.95
Diluted
$
0.50
$
0.47
$
0.50
$
0.97
$
0.95
Shares used in determining earnings per share:
Basic
245,804
245,271
244,591
245,561
244,831
Diluted
246,280
245,709
244,880
246,026
245,178
Includes the following non-cash charges:
(1) Stock-based compensation
Cost of sales
$
2,496
$
2,547
$
2,557
$
5,043
$
4,899
Research and development
13,572
11,868
11,731
25,440
22,653
Selling, general and administrative
6,990
6,129
5,968
13,119
11,606
Includes the following pre-tax impact of items:
(2) Merger-related charges
Cost of sales
$
2,000
$
2,000
$ --
$
4,000
$
--
Research and development
5,000
5,000
--
10,000
--
Selling, general and administrative
3,828
12,794
--
16,622
--
LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
U.S. GAAP (unaudited)
January 1,
July 3,
As of
2017
2016
Assets
Cash, cash equivalents and marketable securities
$ 1,609,825
$
1,448,275
Accounts receivable, net of allowances ($1,649 as of January 1,
145,135
157,460
2017) and ($1,649 as of July 3, 2016)
Inventories
98,548
97,251
Prepaid expenses and other current assets
48,539
51,744
Total current assets
1,902,047
1,754,730
Property, plant & equipment, net
281,149
285,866
Other noncurrent assets
8,285
9,385
Total assets
$ 2,191,481
$
2,049,981
Liabilities
Accounts payable
$
17,197
$
17,465
Accrued income taxes, payroll & other accrued liabilities
132,931
113,800
Deferred income on shipments to distributors
49,489
48,701
Total current liabilities
199,617
179,966
Deferred tax and other noncurrent liabilities
114,052
110,840
Stockholders’ equity
Common stock and additional paid-in capital
2,192,469
2,137,150
Accumulated deficit
(314,459 )
(379,210 )
Accumulated other comprehensive (loss) income, net of tax
(198 )
1,235
Total stockholders’ equity
1,877,812
1,759,175
Total liabilities and stockholders’ equity
$ 2,191,481
$
2,049,981
LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended
Six Months Ended
January 1,
October 2,
January 3,
January 1,
January 3,
2017
2016
2016
2017
2016
Cash flow from operating activities:
Net income
$ 123,986
$
115,122
$
121,532
$
239,108
$
233,579
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
13,076
13,176
12,779
26,252
26,027
Stock-based compensation
23,058
20,544
20,256
43,602
39,158
Excess tax benefit from stock-based compensation
(3,131 )
(3,783 )
(3,053 )
(6,914 )
(4,680 )
Change in operating assets and liabilities
22,471
22,718
5,486
45,189
38,658
Cash provided by operating activities
179,460
167,777
157,000
347,237
332,742
Cash flow from investing activities:
Net proceeds from sales and maturities and (purchases) of
22,928
(120,367 )
(104,339 )
(97,439 )
(124,143 )
available-for-sale securities
Purchase of property, plant and equipment
(12,104 )
(8,332 )
(10,952 )
(20,436 )
(21,112 )
Cash provided by (used in) investing activities
10,824
(128,699 )
(115,291 )
(117,875 )
(145,255 )
Cash flow from financing activities:
Excess tax benefit from stock-based compensation
3,131
3,783
3,053
6,914
4,680
Issuance of common stock under employee stock plans
7,400
--
11,976
7,400
16,229
Purchase of common stock
(9,237 )
(10,800 )
(22,598 )
(20,037 )
(79,155 )
Payment of cash dividends
(78,707 )
(78,608 )
(73,498 )
(157,315 )
(146,810 )
Cash used in financing activities
(77,413 )
(85,625 )
(81,067 )
(163,038 )
(205,056 )
Increase (decrease) in cash and cash equivalents
112,871
(46,547 )
(39,358 )
66,324
(17,569 )
Cash and cash equivalents, beginning of period
217,135
263,682
217,468
263,682
195,679
Cash and cash equivalents, end of period
$ 330,006
$
217,135
$
178,110
$
330,006
$
178,110
LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED SUPPLEMENTAL INFORMATION
(In thousands, except per share amounts)
Non-GAAP (unaudited)
Three Months Ended
January 1,
October 2,
January 3,
2017
2016
2016
GAAP gross profit
$ 284,827
$ 282,069
$
262,744
Adjustments to reconcile GAAP gross profit
to non-GAAP gross profit
Add: Merger-related charges
2,000
2,000
--
Non-GAAP gross profit
286,827
284,069
262,744
GAAP operating income
160,245
149,301
149,457
Adjustments to reconcile GAAP operating
income to non-GAAP operating income
Add: Merger-related charges
10,828
19,794
--
Non-GAAP operating income
171,073
169,095
149,457
GAAP net income
123,986
115,122
121,532
Adjustments to reconcile GAAP net income to
non-GAAP net income
Add: Merger-related charges
10,828
19,794
--
Less: Income tax effect of non-GAAP adjustments
(2,572 )
(4,751 )
--
Non-GAAP net income
$ 132,242
$ 130,165
$
121,532
GAAP net income per diluted share
$
0.50
$
0.47
$
0.50
Non-GAAP net income per diluted share
$
0.54
$
0.53
$
0.50

To supplement the condensed consolidated financial statements presented in accordance with GAAP, certain non-GAAP financial information is provided, which is adjusted from results based on GAAP to exclude certain costs and expenses, and adjusted for their tax effects. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics (e.g., determining which costs and expenses to exclude when calculating such a metric) are inherently subject to judgement. The non-GAAP and supplemental information is provided to enhance the user’s overall understanding of operating performance and prospects in the future. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP. The following charges are presented as a non-GAAP financial metric as they are considered to be non-recurring by nature, and therefore are not indicative of core operating results, as they represent costs incurred as a result of the pending merger between Linear Technology and Analog Devices as announced on July 26, 2016:

Merger-related charges that are directly related to the pending merger between Linear Technology and Analog Devices. Charges primarily include costs for advisory services, appraisals, legal services, employee-related expense and auditing services. Management believes that it is appropriate to exclude these items as they are not indicative of ongoing operating results and therefore limit comparability and excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.

Income tax effect of non-GAAP adjustments. Includes the income tax effects of the excluded item noted above. Management believes that it is appropriate to exclude the tax effects of the items noted above in order to present a more meaningful measure of non-GAAP net income.

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SOURCE: Linear Technology Corporation

Linear Technology Corporation
Donald P. Zerio, 408-432-1900
Vice President, Finance, Chief Financial Officer