PR Newswire | Jul 27, 2021 04:03PM EDT

07/27 15:03 CDT

Maxim Integrated Reports Results For The Fourth Quarter Of Fiscal 2021- Revenue: $720 million- Gross Margin: 67.2% GAAP (67.7% excluding special items)- EPS: $0.93 GAAP ($0.91 excluding special items) SAN JOSE, Calif., July 27, 2021

SAN JOSE, Calif., July 27, 2021 /PRNewswire/ -- Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $720 million for its fourth quarter of fiscal 2021 ended June 26, 2021, an 8% increase from the $665 million revenue recorded in the prior quarter, and a 32% increase from the same quarter of last year.

"Maxim delivered record revenue in the June quarter, with sequential growth in all end markets, led by Industrial, Automotive, and Comms & Data Center. On the merger front, we are seeking final regulatory clearance for our combination with Analog Devices," said Tunc Doluca, President and Chief Executive Officer.

Fiscal Year 2021 Fourth Quarter ResultsBased on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was $0.93, which benefited from a $13 million tax reserve release. The results were affected by $6 million in pre-tax special items which primarily consisted of $4 million of expenses related to prior acquisitions and $2 million in charges related to our upcoming combination with Analog Devices. GAAP earnings per share, excluding special items was $0.91. An analysis of GAAP versus GAAP excluding special items is provided in this press release.

Cash Flow ItemsAt the end of the fourth quarter of fiscal 2021, total cash, cash equivalents and short-term investments were $2.3 billion, up $257 million from the prior quarter.

Notable items included:

* Cash flow from operations: $280 million * Capital expenditures: $20 million

Trailing twelve months free cash flow was $859 million. Free cash flow is a non-GAAP measure and is defined by cash flow from operations less capital expenditures.

Dividend and Stock RepurchasePer the terms of the Merger Agreement between the Company and Analog Devices, we will not declare a dividend that would have been paid in September 2021 and our stock repurchase program remains suspended.

Due to the pending merger 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 with Analog Devices.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended Year Ended

June 26, 2021 March 27, 2021 June 27, 2020 June 26, 2021 June 27, 2020

(in thousands, except per share data)

Net revenues $ 719,855 $ 665,029 $ 545,369 $ 2,632,529 $ 2,191,395

Cost of goods 235,830 222,144 183,001 872,183 758,743 sold

Gross margin 484,025 442,885 362,368 1,760,346 1,432,652

Operating expenses:

Research and 114,834 109,228 110,173 454,330 440,166 development

Selling, general and 81,071 76,544 72,893 320,722 296,722 administrative

Intangible asset 846 846 810 3,554 3,078 amortization

Severance and restructuring 1,139 155 678 13,434 5,363 expenses

Other operating 2,798 8,848 (173) 22,606 929 expenses (income), net

Total operating 200,688 195,621 184,381 814,646 746,258 expenses

Operating 283,337 247,264 177,987 945,700 686,394 income

Interest and other income (5,723) (2) (8,488) (15,964) (8,298) (expense), net

Income before 277,614 247,262 169,499 929,736 678,096 taxes

Provision for (benefit from) 23,875 27,199 (37,799) 102,475 23,402 income taxes ^ (1)(2)

Net income $ 253,739 $ 220,063 $ 207,298 $ 827,261 $ 654,694

Earnings per share:

Basic $ 0.95 $ 0.82 $ 0.78 $ 3.09 $ 2.43

Diluted $ 0.93 $ 0.81 $ 0.77 $ 3.05 $ 2.41

Shares used in the calculation of earnings per share:

Basic 268,160 267,892 266,639 267,546 269,341

Diluted 271,445 271,396 268,777 270,872 272,028

Dividends paid $ - $ - $ 0.48 $ 0.48 $ 1.92 per share

SCHEDULE OF SPECIAL ITEMS

(Unaudited)

Three Months Ended Year Ended

June 26, 2021 March 27, 2021 June 27, 2020 June 26, 2021 June 27, 2020

(in thousands)

Cost of goods sold:

Intangible asset $ 3,047 $ 4,430 $ 3,528 $ 17,408 $ 12,860 amortization

Merger-related - - - 2,394 - expenses^(3)

Cost of COVID-19 609 638 1,591 2,750 3,616 response programs

Total $ 3,656 $ 5,068 $ 5,119 $ 22,552 $ 16,476

Operating expenses:

Merger-related $ 2,058 $ 2,546 $ - $ 26,617 $ - expenses^(3)

Intangible asset 846 846 810 3,553 3,078 amortization

Severance and 1,139 155 678 13,434 5,363 restructuring

Other operating 831 6,302 (173) 7,436 928 expenses (income), net

Total $ 4,874 $ 9,849 $ 1,315 $ 51,040 $ 9,369

Interest and other expense $ (2,878) $ (7,359) $ 1,484 $ (15,903) $ (541) (income), net

Total $ (2,878) $ (7,359) $ 1,484 $ (15,903) $ (541)

Provision for (benefit from) for income taxes:

Impact of U.S. tax $ - $ - $ 6,486 $ - $ 6,486 legislation ^ (1)

Impact of income tax audit - - (51,197) - (51,197) settlements ^ (2)

Total $ - $ - $ (44,711) $ - $ (44,711)

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

(2) Includes effect of income tax audit settlements.

(3) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs, and other legal and professional services.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 26, 2021 March 27, 2021 June 27, 2020

(in thousands)

ASSETS

Current assets:

Cash and cash $ 2,291,399 $ 2,033,973 $ 1,578,670 equivalents

Short-term - - 35,536 investments

Total cash, cash equivalents and 2,291,399 2,033,973 1,614,206 short-term investments

Accounts 658,829 571,042 404,778 receivable, net

Inventories 237,414 242,343 259,626

Other current 30,643 27,440 39,219 assets

Total current 3,218,285 2,874,798 2,317,829 assets

Property, plant and equipment, 554,339 543,848 550,406 net

Intangible 66,998 70,891 87,959 assets, net

Goodwill 562,540 562,541 562,540

Other assets 120,937 120,149 110,569

TOTAL ASSETS $ 4,523,099 $ 4,172,227 $ 3,629,303

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 129,710 $ 102,263 $ 91,982

Price adjustment and other 259,411 214,366 148,916 revenue reserves

Income taxes 49,568 53,694 43,457 payable

Accrued salary and related 150,656 128,553 126,751 expenses

Accrued expenses 47,967 35,627 42,228

Total current 637,312 534,503 453,334 liabilities

Long-term debt 995,460 995,100 994,022

Income taxes 343,964 351,738 385,072 payable

Other 130,423 141,721 139,418 liabilities

Total 2,107,159 2,023,062 1,971,846 liabilities

Stockholders' equity:

Common stock and capital in 269 268 266 excess of par value

Additional 58,055 47,801 - paid-in capital

Retained 2,370,900 2,117,161 1,671,786 earnings

Accumulated other (13,284) (16,065) (14,595) comprehensive loss

Total stockholders' 2,415,940 2,149,165 1,657,457 equity

TOTAL LIABILITIES & $ 4,523,099 $ 4,172,227 $ 3,629,303 STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended Year Ended

June 26, 2021 March 27, 2021 June 27, 2020 June 26, 2021 June 27, 2020

(in thousands, except per share data)

Cash flows from operating activities:

Net income $ 253,739 $ 220,063 $ 207,298 $ 827,261 $ 654,694

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

Stock-based 20,176 20,878 23,290 107,993 95,431 compensation

Depreciation and 23,564 24,552 36,384 96,456 108,533 amortization

Deferred taxes (4,047) 1,601 14,386 (5,331) 8,994

In Process Research and - - - 1,220 - Development written-off

Loss from sale or disposal of (611) 124 557 (260) 1,191 property, plant and equipment

Fair value contingent - 5,835 - 5,835 - consideration

Other adjustments (95) 2,413 2,127 1,745 11,353

Changes in assets and liabilities:

Accounts (87,794) (85,236) (24,078) (254,229) (42,335) receivable

Inventories 4,890 18,950 (34,562) 21,896 (8,671)

Other assets (6,759) (4,875) (25,769) (17,343) (86,299)

Accounts payable 17,384 (719) 5,405 22,187 7,594

Price adjustment and other revenue 45,052 34,118 37,681 110,673 48,426 reserves

Income taxes (11,900) 8,021 (45,855) (34,997) (74,814) payable

All other accrued 26,211 25,715 15,465 41,154 76,758 liabilities

Net cash provided by operating 279,810 271,440 212,329 924,260 800,855 activities

Cash flows from investing activities:

Purchases of property, plant (19,500) (16,229) (15,680) (64,942) (67,049) and equipment

Proceeds from sales of property, 11 16 124 94 392 plant and equipment

Proceeds from sales of - - 1,290 1,500 1,290 available-for-sale securities

Proceeds from maturity of - 8,876 10,734 33,901 104,286 available-for-sale securities

Payment in connection with business - - (69,270) - (69,270) acquisition, net of cash acquired

Purchases of investments in - (1,235) (1,840) (1,345) (1,960) privately-held companies

Proceeds from sale of investments in 242 - 205 281 378 privately-held companies

Other investing - - 2 - (116) activities

Net cash provided by (used in) (19,247) (8,572) (74,435) (30,511) (32,049) investing activities

Cash flows from financing activities:

Contingent - (10,000) - (10,000) (8,000) consideration paid

Net issuance of restricted stock (9,964) (15,932) (6,741) (61,880) (35,877) units

Proceeds from stock options 82 76 2,240 2,965 18,870 exercised

Issuance of common stock under - - 23,725 18,498 42,260 employee stock purchase program

Repurchase of - - (82,299) (9,201) (440,811) common stock

Dividends paid - - (128,058) (128,147) (517,162)

Net cash used in financing (9,882) (25,856) (191,133) (187,765) (940,720) activities

Net increase (decrease) in cash, cash 250,681 237,012 (53,239) 705,984 (171,914) equivalents and restricted cash

Cash, cash equivalents and restricted cash

Beginning of $ 2,040,731 $ 1,803,719 $ 1,638,667 $ 1,585,428 $ 1,757,342 period

End of period $ 2,291,412 $ 2,040,731 $ 1,585,428 $ 2,291,412 $ 1,585,428

Total cash, cash equivalents, and $ 2,291,399 $ 2,033,973 $ 1,614,206 $ 2,291,399 $ 1,614,206 short-term investments

Cash, cash equivalents and restricted cash:

Cash and cash $ 2,291,399 $ 2,033,973 $ 1,578,670 $ 2,291,399 $ 1,578,670 equivalents

Restricted cash in 13 6,758 6,758 13 6,758 Other assets

Total cash, cash equivalents and $ 2,291,412 $ 2,040,731 $ 1,585,428 $ 2,291,412 $ 1,585,428 restricted cash

ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES

(Unaudited)

Three Months Ended Year Ended

June 26, 2021 March 27, 2021 June 27, 2020 June 26, 2021 June 27, 2020

(in thousands, except per share data)

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

GAAP gross $ 484,025 $ 442,885 $ 362,368 $ 1,760,346 $ 1,432,652 profit

GAAP gross 67.2% 66.6% 66.4% 66.9% 65.4% profit %

Special items:

Intangible asset 3,047 4,430 3,528 17,408 12,860 amortization

Merger-related - - - 2,381 - expenses^(1)

Cost of COVID-19 609 638 1,591 2,750 3,616 response programs

Severance and - - - 13 - restructuring

Total special 3,656 5,068 5,119 22,552 16,476 items

GAAP gross profit $ 487,681 $ 447,953 $ 367,487 $ 1,782,898 $ 1,449,128 excluding special items

GAAP gross profit % 67.7% 67.4% 67.4% 67.7% 66.1% excluding special items

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

GAAP operating $ 200,688 $ 195,621 $ 184,381 $ 814,646 $ 746,258 expenses

Special items:

Merger-related 2,058 2,546 - 26,617 - expenses^(1)

Intangible asset 846 846 810 3,553 3,078 amortization

Severance and 1,139 155 678 13,434 5,363 restructuring

Other operating 831 6,302 (173) 7,436 928 expenses (income), net

Total special 4,874 9,849 1,315 51,040 9,369 items

GAAP operating expenses $ 195,814 $ 185,772 $ 183,066 $ 763,606 $ 736,889 excluding special items

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

GAAP net $ 253,739 $ 220,063 $ 207,298 $ 827,261 $ 654,694 income

Special items:

Intangible asset 3,893 5,276 4,338 20,961 15,938 amortization

Merger-related 2,058 2,546 - 29,011 - expenses^(1)

Cost of COVID-19 609 638 1,591 2,750 3,616 response programs

Severance and 1,139 155 678 13,434 5,363 restructuring

Other operating 831 6,302 (173) 7,436 928 expenses (income), net

Interest and other expense (2,878) (7,359) 1,484 (15,903) (541) (income), net

Pre-tax total 5,652 7,558 7,918 57,689 25,304 special items

Other income tax effects and (12,950) (5,928) (14,378) (24,765) (19,668) adjustments ^ (2)

Impact of U.S. tax - - 6,486 - 6,486 legislation ^ (3)

Impact of income tax audit - - (51,197) - (51,197) settlements ^ (4)

GAAP net income $ 246,441 $ 221,693 $ 156,127 $ 860,185 $ 615,619 excluding special items

GAAP net income per share excluding special items:

Basic $ 0.92 $ 0.83 $ 0.59 $ 3.22 $ 2.29

Diluted $ 0.91 $ 0.82 $ 0.58 $ 3.18 $ 2.26

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

Basic 268,160 267,892 266,639 267,546 269,341

Diluted 271,445 271,396 268,777 270,872 272,028

(1) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs, and other legal and professional services.

(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 MeasuresTo 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; ADI merger-related expenses; 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 ItemsThe 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, ADI merger-related expenses 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 ItemsThe 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; ADI merger-related expenses 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 ItemsThe 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 ItemsThe 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; ADI merger-related expenses; 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" StatementExcept 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, regulatory approvals, supply constraints, 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 27, 2020 (the "Form 10-K"). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331620000025/0000743316-20-000025-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 IntegratedMaxim Integrated, an engineer's engineering company, exists to solve the designer's toughest problems in order to empower design innovation. Our broad portfolio of high-performance semiconductors, combined with world-class tools and support, delivers essential analog solutions including efficient power, precision measurement, reliable connectivity and robust protection along with intelligent processing. Designers in application areas such as automotive, communications, consumer, data center, healthcare, industrial and IoT trust Maxim to help them quickly develop smaller, smarter and more secure designs. Learn more at https://www.maximintegrated.com.

ContactKathy TaVice President, Investor Relations (408) 601-5697

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SOURCE Maxim Integrated Investor Relations