<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 DECEMBER 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,
SUNNYVALE, CA 94086
(Address of Principal Executive Offices) (Zip Code)
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 JANUARY 29, 1996
$.001 PAR VALUE 60,335,197 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, 1995 and December 31, 1995
Consolidated Statements of Income 4
for the three and six months ended
December 31, 1994 and 1995
Consolidated Statements of Cash Flows 5
for the six months ended December 31, 1994
and 1995
Notes to Consolidated Financial Statements 6-7
ITEM 2. Management's Discussion and Analysis of Financial 8-9
Condition and Results of Operations
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 10
ITEM 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
</TABLE>
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
MAXIM INTEGRATED PRODUCTS, INC.
<TABLE>
<CAPTION>
June 30, December 31,
(Amounts in thousands) 1995 1995
- ---------------------- -------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 54,966 $ 61,511
Short-term investments 37,329 46,508
--------- ---------
Total cash, cash equivalents and short-term investments 92,295 108,019
Accounts receivable, net 27,714 65,373
Inventories 19,105 19,833
Prepaid taxes and other current assets 22,708 26,124
--------- ---------
Total current assets 161,822 219,349
--------- ---------
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 87,925 109,278
Deposits and other assets 6,386 3,157
--------- ---------
$256,133 $331,784
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 24,785 43,516
Income taxes payable 1,805 12,174
Accrued salaries 9,795 8,441
Accrued expenses 16,398 15,342
Payable related to building acquisitions 5,550 2,737
Deferred income on shipments to distributors 7,511 15,133
--------- ---------
Total current liabilities 65,844 97,343
--------- ---------
Other liabilities 6,000 6,000
Deferred income taxes 5,579 1,129
Commitments and Contingencies --------- ---------
Stockholders' equity:
Common stock 60 60
Additional paid-in capital 64,896 59,891
Retained earnings 113,451 167,910
Translation adjustment 303 (549)
--------- ---------
Total stockholders' equity 178,710 227,312
--------- ---------
$256,133 $ 331,784
========= =========
</TABLE>
See accompanying notes.
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
MAXIM INTEGRATED PRODUCTS, INC.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(Amounts in thousands, except per share data) December 31, December 31,
------------------- -------------------
(Unaudited) 1994 1995 1994 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues $ 56,184 $106,182 $108,188 $202,625
Cost of goods sold 23,316 36,330 44,949 74,927
-------- -------- -------- --------
Gross margin 32,868 69,852 63,239 127,698
-------- -------- -------- --------
Operating expenses:
Research and development 9,602 12,302 17,913 24,502
Selling, general and administrative 10,080 9,661 19,803 20,530
-------- -------- -------- --------
19,682 21,963 37,716 45,032
-------- -------- -------- --------
Operating income 13,186 47,889 25,523 82,666
Interest income, net 552 1,148 990 2,220
-------- -------- -------- --------
Income before provision for income taxes 13,738 49,037 26,513 84,886
Provision for income taxes 4,808 17,163 9,279 30,427
-------- -------- -------- --------
Net income $ 8,930 $ 31,874 $ 17,234 $ 54,459
-------- -------- -------- --------
Income per share $ 0.14 $ 0.45 $ 0.26 $ 0.77
-------- -------- -------- --------
Common and common equivalent shares 66,116 70,827 65,603 70,689
======== ======== ======== ========
</TABLE>
See accompanying notes.
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
MAXIM INTEGRATED PRODUCTS, INC.
<TABLE>
<CAPTION>
For the six months ended December 31,
Increase (decrease) in cash and cash equivalents
(Amounts in thousands) (Unaudited) 1994 1995
------- -------
<S> <C> <C>
Cash flows provided by operating activities:
Net income $17,234 $54,459
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 5,154 6,419
Reduction in carrying value of equipment 6,061 1,344
Changes in assets and liabilities:
Accounts receivable (1,019) (37,659)
Inventories, prepaid taxes and other current assets 2,095 (4,144)
Accounts payable 110 18,731
Income taxes payable (1,901) 24,969
Deferred income taxes - - - (4,450)
Deferred income on shipments to distributors 1,922 7,622
All other accrued liabilities 5,592 (5,223)
------- -------
Net cash provided by operating activities 35,248 62,068
------- -------
Cash flows provided by investing activities:
Additions to property, plant and equipment (9,438) (29,968)
Deposits and other non-current assets (1,922) 3,229
Held-to-maturity securities (12,199) (9,179)
------- -------
Net cash used in investing activities (23,559) (35,918)
------- -------
Cash flows provided by financing activities:
Issuance of common stock 3,367 7,766
Repurchase of Common Stock (5,809) (27,371)
------- -------
Net cash used in financing activities (2,442) (19,605)
------- -------
Net increase in cash and cash equivalents 9,247 6,545
Cash and cash equivalents:
Beginning of year 28,033 54,966
------- -------
End of period $37,280 $61,511
======= =======
</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 six months ended December 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, 1995.
NOTE 2: INVENTORIES
<TABLE>
<CAPTION>
Inventories consist of: June 30, December 31,
-------- ------------
1995 1995
---- ----
(Amounts in thousands) (unaudited)
<S> <C> <C>
Raw Materials $ 1,925 $ 4,376
Work in Process 9,444 12,287
Finished Goods 7,736 3,170
------- -------
$19,105 $19,833
======= =======
</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 13, 1995, 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
At December 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 held-to-maturity securities at December 31, 1995 is as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) Cost
---------------------- ----
<S> <C>
U.S. Treasury securities $37,905
Municipal bonds 29,177
-------
$67,082
=======
Amounts included in
short-term investments $46,508
Amounts included in
cash and cash equivalents 20,574
-------
$67,082
=======
</TABLE>
There were no gross realized gains or losses for the three months ended December
31, 1995.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues increased 89.0% and 87.3% in the three and six months ended
December 31, 1995 compared to the same periods a year ago. The increase related
primarily to higher unit shipments as a result of continued introduction of new
proprietary products and increased market acceptance of the Company's
proprietary and second source products. The production and revenue increase in
the three and six month periods were constrained by manufacturing inefficiencies
resulting largely from longer than planned training requirements for newly hired
technicians at the Company's Beaverton, Oregon fabrication facility. The Company
anticipates that it could be several quarters before these newly hired
technicians at the Company's Beaverton facility are fully trained. During the
six months ended December 31, 1995 54% of net revenues were derived from
customers outside of the United States. While the majority of these sales are
denominated in US dollars, the Company purchases foreign currency forward
contracts to mitigate its risks on the backlog denominated in foreign
currencies, and as a result, the impact on revenue due to changes in foreign
currency on the Company's operating results for the three and the six month
periods was minimal.
Gross margin increased to 65.8% in the three months ended December 31, 1995
compared to 58.5% for the three months ended December 31, 1994 and increased to
63.0% in the six months ended December 31, 1995 compared to 58.5% for the six
months ended December 31, 1994. The improvement was principally due to continued
economies of scale resulting from higher volumes and improved yields.
Research and development expenses were 11.6% and 12.1% of net revenues in the
three and six months ended December 31, 1995, compared to 17.1% and 16.6% in the
three and six months ended December 31, 1994. Spending increases in the three
and six month periods primarily resulted from head count increases associated
with the Company's increased new product development efforts.
Selling, general and administrative expenses decreased as a percentage of net
revenues to 9.1% and 10.1% in the three and six months ended December 31, 1995,
compared to 17.9% and 18.3% for the three and six months ended December 31,
1994. In absolute dollars, selling, general and administrative expenses were
essentially flat for the three and six month periods.
The Company's operating income increased to 45.1% of net
revenues in the three months ended December 31, 1995, compared to 23.5% for the
three months ended December 31, 1994 and increased to 40.8% of net revenues in
the six months ended December 31, 1995, compared to 23.6% for the six months
ended December 31, 1994, as a result of the factors cited above.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT'D)
The effective tax rate of 35% and 36% for the three and six months ended
December 31, 1995, increased slightly over the effective tax rate of 35%
reported in the comparable periods of 1994 primarily because of the expiration
of the Federal Research and Development tax credit on June 30, 1995. Should the
Federal Research and Development tax credit be extended retroactively, the
Company anticipates the effective tax rate will drop into a range consistent
with the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds for the first six months of fiscal year
1996 have been the net cash generated from operating activities of $62,068,000
and the issuance of common stock of $7,766,000. The principal uses of funds have
been purchases of $29,968,000 of property, plant and equipment and the
repurchase of $27,371,000 of common stock.
The Company believes it possesses sufficient liquidity and capital resources to
fund its operations.
STOCK SPLIT
On December 13, 1995, 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.
9
<PAGE> 10
PART II: OTHER INFORMATION
ITEM 4 : SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held an Annual Meeting of Stockholders on November 16, 1995.
The Stockholders elected the Board's nominees as directors by the votes
indicated:
<TABLE>
<CAPTION>
Nominee Votes in Favor Votes Withheld
- ------- -------------- --------------
<S> <C> <C>
James R. Bergman 27,555,403 72,294
John F. Gifford 27,554,008 73,689
Robert F. Graham 27,549,203 78,494
A.R. Frank Wazzan 27,550,087 77,610
</TABLE>
The increase in number of authorized shares of common stock to 120,000,000
shares was approved with 26,447,273 votes in favor, 993,143 against, 156,695
abstentions, and 30,586 non-votes.
The Company's Incentive Stock Option Plan, 1987 Supplemental Stock Option Plan
and 1987 Employee Stock Participation Plan, under which an additional 1,700,000
shares of common stock are reserved for issuance, each as amended, were approved
with 18,505,465 votes in favor, 7,161,455 against, 157,776 abstentions and
1,803,001 non-votes.
The selection of Ernst & Young LLP as the Company's independent auditors for
fiscal 1996 was ratified with 27,456,550 votes in favor, 20,201 votes against,
150,946 abstentions and no non-votes.
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
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1995
ITEMS 1, 2, 3, AND 5 HAVE BEEN OMITTED AS THEY ARE NOT APPLICABLE.
10
<PAGE> 11
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.
FEBRUARY 13, 1996 MAXIM INTEGRATED PRODUCTS, INC.
- ----------------- -------------------------------
(Date) (Registrant)
/s/ Michael J. Byrd
--------------------------
Michael J. Byrd
Vice President and Chief Financial
Officer (For the Registrant and Principal
Financial Officer)
/s/ Richard E. Slater
--------------------------
Richard E. Slater
Vice President and Chief Accounting
Officer(Principal Accounting Officer)
11
<PAGE> 12
EXHIBIT INDEX
11.1 Computation of Income per share
27 Financial Data Schedule
<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 Six Months
Ended Ended
December 31, December 31,
------------ ------------
1994 1995 1994 1995
------ -------- -------- --------
<S> <C> <C> <C> <C>
Weighted average shares outstanding 57,589 59,627 57,515 59,524
Add weighted average shares from assumed exercise
of options and warrants when treasury shares are
reacquired at average stock market price 12,908 17,355 12,304 17,425
Less weighted average shares assumed repurchased
from tax benefit from the assumed exercise
of non-qualified stock options (4,381) (6,155) (4,217) (6,260)
--------- -------- -------- --------
Common and common equivalent shares used
in computing income per share 66,116 70,827 65,602 70,689
========= ======== ======== ========
Net income applicable to computation of
income per share $ 8,930 $ 31,874 $ 17,234 $ 54,459
========= ======== ======== ========
Income per share $ 0.14 $ 0.45 $ 0.26 $ 0.77
========= ======== ======== ========
</TABLE>
Note: All shares are adjusted to reflect the two for one stock split effective
on December 13, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 108019
<SECURITIES> 0
<RECEIVABLES> 66514
<ALLOWANCES> (1141)
<INVENTORY> 19833
<CURRENT-ASSETS> 219349
<PP&E> 156590
<DEPRECIATION> (47312)
<TOTAL-ASSETS> 331784
<CURRENT-LIABILITIES> 97343
<BONDS> 0
0
0
<COMMON> 60
<OTHER-SE> 227801
<TOTAL-LIABILITY-AND-EQUITY> 331784
<SALES> 202625
<TOTAL-REVENUES> 202625
<CGS> 74927
<TOTAL-COSTS> 74927
<OTHER-EXPENSES> 45032
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> 84886
<INCOME-TAX> 30427
<INCOME-CONTINUING> 54459
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54459
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
</TABLE>
