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Linear Technology Reports Quarterly Increases in Revenues and Net Income and Guides for Growth in the June Quarter

Linear Technology Corporation (NASDAQ:LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today reported financial results for the quarter ended April 1, 2012. Quarterly revenues of $312.4 million for the third quarter of fiscal year 2012 increased $18.0 million or 6.1% over the previous quarter's revenue of $294.3 million and decreased $40.8 million or 11.6% from $353.2 million reported in the third quarter of fiscal year 2011. Net income of $98.5 million increased $10.6 million or 12% over the second quarter of fiscal year 2012 and decreased $43.1 million or 30% from the third quarter of fiscal year 2011 which benefited from a lower tax rate. Diluted earnings per share of $0.42 per share in the third quarter of fiscal year 2012 increased $0.04 per share or 11% over the second quarter of fiscal year 2012 and declined $0.19 per share or 31% from the third quarter of fiscal year 2011.

During the third quarter the Company's cash, cash equivalents and marketable securities increased by $74.3 million to $1.1 billion. A cash dividend of $0.25 per share will be paid on May 30, 2012 to stockholders of record on May 18, 2012.

According to Lothar Maier, CEO, “This was a transitional quarter for us as we returned to growth in revenue and profit. Our bookings, which began to improve at the end of last quarter, continued strong throughout the March quarter and we had a positive book to bill ratio. Consequently, we grew revenues by 6% in-line with the mid-point of our guidance. We experienced improvements in each of our major end-markets led by industrial and automotive. Our operating margin of 45% was similar to last quarter. Our third quarter results include Dust Networks, which we acquired in late December 2011. While revenues from Dust in the quarter were not significant, Dust's operating expenses included in our consolidated results had a minor negative impact on operating margins and net income.

Given the improvement in our bookings and the broad distribution of this strength across all our major end-markets, we are estimating that we will again grow quarterly revenues sequentially in the 4% to 8% range in our fourth fiscal quarter. We also expect operating income and operating margin to improve.”

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 sales and profits 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 fiscal year ended July 3, 2011.

Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, April 18, 2012 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (913) 312-0958, or toll free (888) 778-8904 before 8:15 a.m. to be included in the audience. There will be a live webcast of this conference call that can be accessed through www.linear.com or www.streetevents.com. A replay of the conference call will be available from April 18, 2012 through April 24, 2012. You may access the archive by calling (719) 457-0820 or toll free (888) 203-1112 and entering reservation #2487627. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of April 18, 2012 until the third quarter earnings release next year.

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 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, µModule® subsystems, and wireless sensor network products. For more information, visit www.linear.com.

For further information contact Paul Coghlan 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 Nine Months Ended

April 1,

2012

 

January 1,

2012

 

April 3,

2011

April 1,

2012

 

April 3,

2011

Revenues $ 312,357 $ 294,333 $ 353,192 $ 936,610 $ 1,125,405
Cost of sales (1) 77,662   73,821   79,100   231,276   245,434  
Gross profit 234,695   220,512   274,092   705,334   879,971  
Expenses:
Research & development (1) 57,580 52,519 55,363 164,988 170,566
Selling, general & administrative (1) 37,182   34,922   39,693   109,776   124,733  
94,762   87,441   95,056   274,764   295,299  
Operating income 139,933 133,071 179,036 430,570 584,672
Interest expense (6,902 ) (6,925 ) (6,981 ) (20,768 ) (25,533 )
Amortization of debt discount(2) (5,002 ) (4,931 ) (4,726 ) (14,795 ) (16,882 )
Acquisition related costs (3,195 ) (3,195 )
Interest and other income 1,152   1,146   3,221   3,519   6,739  
Income before income taxes 129,181 119,166 170,550 395,331 548,996
Provision for income taxes 30,682   31,281   28,993   100,546   126,446  
Net income $ 98,499   $ 87,885   $ 141,557   $ 294,785   $ 422,550  
 
Earnings per share:
Basic $ 0.42   $ 0.38   $ 0.61   $ 1.27   $ 1.83  
Diluted $ 0.42   $ 0.38   $ 0.61   $ 1.26   $ 1.82  
 
Shares used in determining earnings per share:  
Basic 233,346   232,209   231,225   232,568   230,455  
Diluted 234,822   233,565   233,277   233,887   232,439  
 
Includes the following non-cash charges:
(1) Stock-based compensation
Cost of sales $ 1,902 $ 1,844 $ 2,202 $ 5,650 $ 6,723
Research & development 8,876 8,609 9,869 26,372 30,167
Selling, general & administrative 4,580 4,442 5,282 13,608 16,137

 

(2) Amortization of debt discount (non- cash interest expense)

5,002 4,931 4,726 14,795 16,882
 

 

LINEAR TECHNOLOGY CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

U.S. GAAP (unaudited)

   
April 1,

2012
July 3,

2011
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities $ 1,111,845 $ 922,537

Accounts receivable, net of allowance for doubtful accounts of $2,035 ($2,043 at July 3, 2011)

145,096 169,637
Inventories 79,856 72,195
Deferred tax assets and other current assets 67,658   81,921  
Total current assets 1,404,455   1,246,290  
 
Property, plant & equipment, net 328,817 332,969
Other noncurrent assets 66,073   51,907  
Total assets $ 1,799,345   $ 1,631,166  
 
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 10,349 $ 11,606
Accrued income taxes, payroll & other accrued liabilities 100,570 123,613
Deferred income on shipments to distributors 42,099   47,587  
Total current liabilities 153,018   182,806  
 
Convertible senior notes 800,526 785,732
Deferred tax and other noncurrent liabilities 165,685 157,017
 
Stockholders’ equity:
Common stock 1,546,827 1,466,098
Accumulated deficit (867,291 ) (961,617 )
Accumulated other comprehensive income 580   1,130  
Total stockholders’ equity 680,116   505,611  
$ 1,799,345   $ 1,631,166  
 

         LINEAR TECHNOLOGY CORPORATION

RECONCILIATION OF U.S. GAAP NET INCOME TO NON-GAAP NET INCOME

(In thousands, except per share amounts)

(unaudited)

   
Three Months Ended Nine Months Ended

April 1,

2012

 

January 1,

2012

 

April 3,

2011

April 1,

2012

 

April 3,

2011

Reported net income
(GAAP basis) $ 98,499 $ 87,885 $ 141,557 $ 294,785 $ 422,550
 
Stock-based compensation 15,358 14,895 17,353 45,630 53,027

Amortization of debt discount(1)

5,002 4,931 4,726 14,795 16,882
Acquisition related costs 3,195 3,195

Income tax effect of non-GAAP adjustments

(4,836 ) (6,043 ) (3,753 ) (16,181 ) (16,102 )
 
Non-GAAP net income $ 114,023   $ 104,863   $ 159,883   $ 342,224   $ 476,357  
 
Non-GAAP earnings per share
Basic $ 0.49   $ 0.45   $ 0.69   $ 1.47   $ 2.07  
Diluted $ 0.49   $ 0.45   $ 0.69   $ 1.46   $ 2.05  
 

1) Amortization of debt discount is non-cash interest expense related to the Company’s Convertible Senior Notes.

The Company’s non-GAAP measures set forth above exclude charges related to stock-based compensation, the amortization of the Company’s debt discount which is a non-cash interest expense and the non-cash charge on early retirement of convertible senior notes. In addition, the Company's non-GAAP measures exclude the special expense items related to the acquisition. The Company’s management uses non-GAAP net income and non-GAAP earnings per share to evaluate the Company’s current operating results and financial results and to compare them against historical financial results. The Company excludes stock-based compensation, non-cash interest expenses, acquisition related costs and the related tax effects primarily because they are significant special expense estimates, which management separates for consideration when evaluating and managing business operations. In addition management believes it is useful to investors because it is frequently used by securities analysts, investors and other interested parties in evaluating the Company and provides further clarity on its profitability.

In addition, the Company believes that providing investors with these non-GAAP measurements enhances their ability to compare the Company’s business against that of its many competitors who employ and disclose similar non-GAAP measures. This financial measure may be different from non-GAAP methods of accounting and reporting used by the Company’s competitors to the extent their non-GAAP measures include other items. The presentation of this additional information should not be considered a substitute for net income or net income per diluted share prepared in accordance with GAAP.

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