<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
--------- ---------
COMMISSION FILE NO. 0-16538
MAXIM INTEGRATED PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2896096
- -------- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
Incorporation or Organization)
120 SAN GABRIEL DRIVE, 94086
SUNNYVALE, CA (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (408) 737-7600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days:
YES X NO
-------- --------
CLASS: COMMON STOCK, OUTSTANDING AT MAY 1, 1995
$.001 PAR VALUE 29,861,718 SHARES
<PAGE> 2
MAXIM INTEGRATED PRODUCTS, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
<S> <C>
ITEM 1. Financial Statements
Consolidated Balance Sheets 3
As of June 30, 1994 and March 31, 1995
Consolidated Statements of Income 4
for the three and nine months ended
March 31, 1994 and 1995
Consolidated Statements of Cash Flows 5
for the nine months ended March 31, 1994
and 1995
Notes to Consolidated Financial Statements 6-8
ITEM 2. Management's Discussion and Analysis of Financial 9-10
Condition and Results of Operations
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 11
ITEM 6. Exhibits and Reports on Form 8-k 11
SIGNATURES 12
</TABLE>
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
MAXIM INTEGRATED PRODUCTS, INC.
<TABLE>
<CAPTION>
June 30, March 31,
(In thousands) 1994 1995
=====================================================================================
(Audited) (Unaudited)
<S> <C> <C>
ASSETS
- -------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 28,033 $ 33,692
Short-term investments 20,397 44,571
- -------------------------------------------------------------------------------------
Total cash, cash equivalents and short-term investments 48,430 78,263
Accounts receivable, net 17,950 24,344
Inventories 18,330 17,544
Prepaid taxes and other current assets 14,770 22,728
- -------------------------------------------------------------------------------------
Total current assets 99,480 142,879
- -------------------------------------------------------------------------------------
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 77,696 74,933
Deposits and other assets 1,347 6,960
- -------------------------------------------------------------------------------------
$178,523 $224,772
=====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------
Current liabilities:
Current portion of capital lease obligations $ 134 $ 74
Accounts payable 10,695 14,765
Income taxes payable 5,175 10,243
Accrued salaries 6,203 8,340
Accrued expenses 14,182 21,197
Deferred income on shipments to distributors 7,046 7,808
- -------------------------------------------------------------------------------------
Total current liabilities 43,435 62,427
- -------------------------------------------------------------------------------------
Capital lease obligations, less current portion 40 - - -
Deferred income taxes 4,856 1,650
- -------------------------------------------------------------------------------------
Stockholders' equity:
Common stock 28 30
Additional paid-in capital 55,578 58,300
Retained earnings 74,545 101,903
Translation adjustment 41 462
- -------------------------------------------------------------------------------------
Total stockholders' equity 130,192 160,695
- -------------------------------------------------------------------------------------
$178,523 $224,772
=====================================================================================
</TABLE>
See accompanying notes.
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
MAXIM INTEGRATED PRODUCTS, INC.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(Amounts in thousands, except per share data) March 31, March 31,
------------------- --------------------
(Unaudited) 1994 1995 1994 1995
=========================================================================================================
<S> <C> <C> <C> <C>
Net revenues $40,572 $66,628 $109,809 $174,816
Cost of goods sold 16,885 27,651 45,892 72,600
- ---------------------------------------------------------------------------------------------------------
Gross margin 23,687 38,977 63,917 102,216
- ---------------------------------------------------------------------------------------------------------
Operating expenses:
Research and development 5,735 13,129 15,746 31,042
Selling, general and administrative 8,478 10,958 22,778 30,761
- ---------------------------------------------------------------------------------------------------------
14,213 24,087 38,524 61,803
- ---------------------------------------------------------------------------------------------------------
Operating income 9,474 14,890 25,393 40,413
Interest income, net 398 686 1,649 1,676
- ---------------------------------------------------------------------------------------------------------
Income before provision for income taxes 9,872 15,576 27,042 42,089
Provision for income taxes 3,554 5,452 9,735 14,731
- ---------------------------------------------------------------------------------------------------------
Net income $ 6,318 $10,124 $ 17,307 $ 27,358
- ---------------------------------------------------------------------------------------------------------
Income per share $ 0.20 $ 0.30 $ 0.55 $ 0.83
- ---------------------------------------------------------------------------------------------------------
Common and common equivalent shares 32,154 33,251 31,657 32,951
=========================================================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
MAXIM INTEGRATED PRODUCTS, INC.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
For the nine months ended March 31,
Increase (decrease) in cash and cash equivalents
(Amounts in thousands) (Unaudited) 1994 1995
=========================================================================================
<S> <C> <C>
Cash flows from operating activities:
Net income $ 17,307 $ 27,358
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,429 8,141
Reduction in carrying value of equipment - - - 16,573
Changes in assets and liabilities:
Accounts receivable 4,487 (6,394)
Inventories, prepaid taxes and other current assets (2,605) (7,172)
Accounts payable (529) 4,070
Income taxes payable 1,794 10,428
Deferred income tax payable - - - (3,206)
Deferred income on shipments to distributors 1,372 762
All other accrued liabilities 5,536 9,152
- -----------------------------------------------------------------------------------------
Net cash provided by operating activities 32,791 59,712
- -----------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (18,998) (21,379)
Deposits and other non-current assets (259) (5,764)
Short-term investments 2,402 (24,174)
- -----------------------------------------------------------------------------------------
Net cash used in investing activities (16,855) (51,317)
- -----------------------------------------------------------------------------------------
Cash flows from financing activities:
Issuance of common stock 5,142 6,389
Principal payments on capital lease obligations (439) (100)
Repurchase of Common Stock (3,570) (9,025)
- -----------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 1,133 (2,736)
- -----------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 17,069 5,659
Cash and cash equivalents:
Beginning of year 28,566 28,033
- -----------------------------------------------------------------------------------------
End of period $ 45,635 $ 33,692
=========================================================================================
</TABLE>
See accompanying notes.
5
<PAGE> 6
MAXIM INTEGRATED PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The unaudited consolidated financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments (consisting of normal
recurring items) considered necessary for a fair presentation have been
included. The results of operations for the nine months ended March 31, 1995 are
not necessarily indicative of the results to be expected for the entire year.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the Annual
Report on Form 10-K for the year ended June 30, 1994.
NOTE 2: INVENTORIES
<TABLE>
<CAPTION>
Inventories consist of: June 30, March 31,
-------- ---------
1994 1995
---- ----
(audited) (unaudited)
(In thousands)
<S> <C> <C>
Raw Materials $ 1,293 $ 1,732
Work in Process 8,236 7,841
Finished Goods 8,801 7,971
------- -------
$18,330 $17,544
======= =======
</TABLE>
NOTE 3: INCOME PER SHARE
Income per share is calculated based on the weighted average number of common
and dilutive common equivalent shares outstanding during each respective period.
The number of common equivalent shares which became issuable pursuant to the
grant of stock options has been calculated using the treasury stock method.
Fully diluted income per share is substantially the same as reported income per
share.
On December 7, 1994, the Company effected a two-for-one stock split in the form
of a stock dividend, thereby doubling the number of outstanding shares of common
stock. All share and per share amounts for the prior periods have been adjusted
to reflect the split.
6
<PAGE> 7
MAXIM INTEGRATED PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 4: INVESTMENT SECURITIES
On July 1, 1994, the Company adopted Statement of Financial Accounting Standard
No. 115 (FAS 115) "Accounting for Certain Investments in Debt and Equity
Securities." There was no cumulative effect of adopting FAS 115.
FAS 115 requires that all investment securities be classified into one of three
categories: held-to-maturity, available-for-sale, or trading. Management
determines the appropriate classification of debt securities at the time of
purchase and reevaluates such designation as of each balance sheet date. Debt
securities are classified as held-to-maturity when the Company has the positive
intent and ability to hold the securities to maturity.
At March 31, 1995, all debt securities which, consist of U.S. Treasury
securities and various municipal bonds all maturing within one year, are
designated as held-to-maturity and carried at amortized cost which approximates
market value. The amortized cost of debt securities in this category is adjusted
for amortization of premiums and accretion of discounts to maturity. Such
amortization is included in investment income. Realized gains and losses and
declines in value judged to be other-than-temporary on held-to-maturity
securities are included in investment income. The cost of securities sold is
based on the specific identification method. Interest on securities classified
as held-to-maturity is included in investment income.
The following is a summary of held-to-maturity securities at March 31, 1995:
<TABLE>
<CAPTION>
(Amounts in thousands) Cost
---------------------- ----
<S> <C>
U.S. Treasury securities $ 6,754
Municipal bonds 40,117
-------
$46,871
=======
Amounts included in
short-term investments $44,571
Amounts included in
cash and cash equivalents 2,300
-------
$46,871
=======
</TABLE>
7
<PAGE> 8
MAXIM INTEGRATED PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 5: PROPERTY, PLANT AND EQUIPMENT
In the three months and the nine months ended March 31, 1995, the Company
recorded a $10.9 million and $16.6 million charge to operating income,
respectively, relating to the Company's program announced in the fiscal quarter
ended December 31, 1995 to modernize its current equipment and manufacturing
facilities. The charge relates to a cumulative adjustment for depreciation as a
result of changing estimates of useful lives associated with equipment that
management estimates will be replaced or substantially upgraded over the next
three years. In the three months ended March 31, 1995, approximately $6.9
million and $4.0 million of the charge was allocated to cost of goods sold and
research and development, respectively, based on the nature of the equipment
affected.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues increased 64.2% and 59.2% in the three and nine months ended March
31, 1995 compared to the same periods a year ago. The increase was the result of
continued introduction of new proprietary products and increased market
acceptance of the Company's proprietary and second source products. In addition,
revenues were also positively impacted in fiscal 1995 by the inclusion of the
revenues associated with Integrated Circuit Operations acquired from Tektronix
on May 27, 1994.
Gross margin increased to 58.5% in the three months ended March 31, 1995
compared to 58.4% for the three months ended March 31, 1994. For the nine month
period ended March 31, 1995, gross margins increased to 58.5%, compared to 58.2%
for the nine months ended March 31, 1994. During the three and nine month
periods, the Company experienced continued improvement in production yields,
economies of scale and also experienced a higher percentage of proprietary
products in the mix of products sold, which generally yield a somewhat higher
gross margin than a second source products. These factors were partially offset
by the changes discussed below.
Research and development expenses were 19.7% and 17.8% of net revenues in the
three and nine months ended March 31, 1995, compared to 14.1% and 14.3% in the
three and nine months ended March 31, 1994. Spending on research and development
in absolute dollars reflect the Company's continuing commitment to new product
development and the changes discussed below.
Selling, general and administrative expenses were 16.4% and 17.6% of net
revenues in the three and nine months ended March 31, 1995, compared to 20.9%
and 20.7% in the three and nine months ended March 31, 1994, although such
expenses increased in absolute dollars, the decrease in percentages resulted
from the growth in net revenues.
In the three and nine months ended March 31, 1995, the Company recorded a $10.9
million and $16.6 million charge to operating income, respectively, relating to
the Company's program announced in the fiscal quarter ended December 31, 1995 to
modernize its current equipment and manufacturing facilities. The charge relates
to a cumulative adjustment for depreciation as a result of changing estimates of
useful lives associated with equipment that management estimates will be
replaced or substantially upgraded over the next three years. In the three
months ended March 31, 1995, approximately $6.9 million and $4.0 million of the
charge was allocated to cost of goods sold and research and development,
respectively, based on the nature of the equipment affected.
The Company's operating income was 22.3% of net revenues in the three months
ended March 31, 1995 and 23.1% of net revenues in the nine months ended March
31, 1995.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds for the first nine months of fiscal year
1995 have been the net cash generated from operating activities of $59,712,000
and the issuance of common stock of $6,389,000. The principal uses of funds have
been purchases of $21,379,000 in property, plant and equipment and repurchase of
$9,025,000 in common stock.
The Company believes it possesses sufficient liquidity and capital resources to
fund its operations.
STOCK SPLIT
On December 7, 1994, the Company effected a two-for-one stock split in the form
of a stock dividend, thereby doubling the number of outstanding shares of common
stock. All share and per share amounts for the prior periods have been adjusted
to reflect the split.
10
<PAGE> 11
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
See the Form 10Q of the Company for the fiscal quarter ended September
30, 1994 for a discussion of material developments in the Analog
Devices, Inc. and A2M matters.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit has been filed with this report:
11.1 Computation of Income per Share
(b) No reports on Form 8-k were filed during the quarter ended March
31, 1995.
ITEMS 2, 3, 4 AND 5 HAVE BEEN OMITTED AS THEY ARE NOT APPLICABLE.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAY 12, 1995 MAXIM INTEGRATED PRODUCTS, INC.
(Date) (Registrant)
/s/ Michael J. Byrd
--------------------------------------------
Michael J. Byrd
Vice President and Chief Financial
Officer (For the Registrant and as Principal
Financial Officer)
/s/ Richard E. Slater
--------------------------------------------
Richard E. Slater
Vice President and Chief Accounting
Officer (Principal Accounting Officer)
12
<PAGE> 1
Exhibit 11.1
Maxim Integrated Products, Inc.
Computation of income per share
(amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, March 31,
------------------------ ------------------------
1994 1995 1994 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Weighted average shares outstanding 28,431 28,939 28,177 28,818
Add weighted average shares from assumed exercise
of options and warrants when treasury shares are
reacquired at average stock market price 5,693 6,542 5,318 6,282
Less weighted average shares assumed repurchased
from tax benefit from the assumed exercise
of non-qualified stock options (1,970) (2,230) (1,838) (2,149)
-------- -------- -------- --------
Common and common equivalent shares used
in computing income per share 32,154 33,251 31,657 32,951
======== ======== ======== ========
Net income applicable to computation of
income per share $ 6,318 $ 10,124 $ 17,307 $ 27,358
======== ======== ======== ========
Income per share $ 0.20 $ 0.30 $ 0.55 $ 0.83
======== ======== ======== ========
</TABLE>
Note: All shares are adjusted to reflect the two for one stock split effective
on December 7, 1994.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 78,263
<SECURITIES> 0
<RECEIVABLES> 25,528
<ALLOWANCES> (1,184)
<INVENTORY> 17,544
<CURRENT-ASSETS> 142,879
<PP&E> 116,236
<DEPRECIATION> (41,303)
<TOTAL-ASSETS> 224,772
<CURRENT-LIABILITIES> 62,427
<BONDS> 0
<COMMON> 58,300
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 224,772
<SALES> 0
<TOTAL-REVENUES> 174,816
<CGS> 0
<TOTAL-COSTS> 72,600
<OTHER-EXPENSES> 61,803
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (22)
<INCOME-PRETAX> 42,089
<INCOME-TAX> 14,731
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,358
<EPS-PRIMARY> .83
<EPS-DILUTED> .83
</TABLE>
