<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, 1997
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 Executives 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 May 9, 1997
$.001 par value 64,514,447 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, 1996 and March 31, 1997
Consolidated Statements of Income 4
for the three and nine months ended
March 31, 1996 and 1997
Consolidated Statements of Cash Flows 5
for the nine months ended March 31,
1996 and 1997
Notes to Consolidated Financial
Statements 6-7
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8-10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 11-12
SIGNATURES 13
</TABLE>
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
MAXIM INTEGRATED PRODUCTS, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------- -------------
June 30, March 31,
1996 1997
(Amounts in thousands) (Audited) (Unaudited) (Unaudited)
===================================================================
ASSETS
- -------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 60,283 $ 11,536
Short-term investments 68,970 191,274
- -------------------------------------------------------------------
Total cash, cash equivalents and short-
term investments 129,253 202,810
- -------------------------------------------------------------------
Accounts receivable, net 80,664 83,301
Inventories 30,471 36,463
Prepaid taxes and other current assets 24,163 28,274
- -------------------------------------------------------------------
Total current assets 264,551 350,848
- -------------------------------------------------------------------
Property, plant and equipment, at cost,
less accumulated depreciation 147,068 166,965
Other assets 6,175 6,493
- -------------------------------------------------------------------
TOTAL ASSETS $ 417,794 $ 524,306
===================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,738 $ 22,087
Income taxes payable 19,323 10,727
Accrued salaries 12,897 14,757
Accrued expenses 11,880 14,040
Deferred income on shipments to distributors 14,531 14,830
- -------------------------------------------------------------------
Total current liabilities 88,369 76,441
- -------------------------------------------------------------------
Other liabilities 4,000 4,000
Commitments and contingencies
- -------------------------------------------------------------------
Stockholders' equity:
Common stock 62 64
Additional paid-in capital 89,939 108,235
Retained earnings 236,796 336,905
Translation adjustment (1,372) (1,339)
- -------------------------------------------------------------------
Total stockholders' equity 325,425 443,865
- -------------------------------------------------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 417,794 $ 524,306
===================================================================
</TABLE>
See accompanying notes.
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
MAXIM INTEGRATED PRODUCTS, INC.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
(Amounts in thousands, except Three Months Ended Nine Months Ended
per share data) March 31, March 31,
- -----------------------------------------------------------------------------
(Unaudited) 1996 1997 1996 1997
=============================================================================
<S> <C> <C> <C> <C>
Net revenues $ 109,001 $ 111,005 $ 311,626 $ 316,691
Cost of goods sold 35,356 37,437 110,283 105,994
- -----------------------------------------------------------------------------
Gross margin 73,645 73,568 201,343 210,697
- -----------------------------------------------------------------------------
Operating expenses:
Research and development 11,233 13,092 35,735 36,459
Selling, general and
administrative 10,971 9,298 31,501 28,285
- -----------------------------------------------------------------------------
22,204 22,390 67,236 64,744
- -----------------------------------------------------------------------------
Operating income 51,441 51,178 134,107 145,953
Interest income, net 1,147 2,462 3,367 5,726
- -----------------------------------------------------------------------------
Income before provision
for income taxes 52,588 53,640 137,474 151,679
Provision for income taxes 18,406 18,237 48,833 51,570
- -----------------------------------------------------------------------------
Net income $ 34,182 $ 35,403 $ 88,641 $ 100,109
- -----------------------------------------------------------------------------
Income per share $ 0.48 $ 0.48 $ 1.25 $ 1.38
- -----------------------------------------------------------------------------
Common and common equivalent
shares 71,212 74,375 70,863 72,394
=============================================================================
</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) 1996 1997
=============================================================================
<S> <C> <C>
Cash flows provided by operating activities:
Net income $ 88,641 $ 100,109
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and translation
adjustment 9,725 12,702
Reduction of equipment value 1,344 0
Changes in assets and liabilities:
Accounts receivable (51,411) (2,637)
Inventories (9,306) (5,992)
Prepaid taxes and other current assets (2,674) (4,111)
Accounts payable 25,206 (7,651)
Income taxes payable 28,044 30,635
Deferred income taxes (4,450) 0
Deferred income on shipments to distributors 5,831 299
All other accrued liabilities (6,205) 4,020
- -----------------------------------------------------------------------------
Net cash provided by operating activities 84,745 127,374
- -----------------------------------------------------------------------------
Cash flows provided by investing activities:
Additions to property, plant and equipment (55,664) (32,566)
Deposits and other non-current assets 4,255 (318)
Purchases of held-to-maturity securities (91,701) (24,313)
Purchases of available-for-sale securities - (168,547)
Proceeds from maturities of held-to-maturity
securities 80,193 58,688
Proceeds from sales/maturities of available-
for-sale securities - 11,868
- -----------------------------------------------------------------------------
Net cash used in investing activities (62,917) (155,188)
- -----------------------------------------------------------------------------
Cash flows provided by financing activities:
Issuance of common stock 14,227 25,202
Repurchase of common stock (27,371) (46,135)
- -----------------------------------------------------------------------------
Net cash used in financing activities (13,144) (20,933)
- -----------------------------------------------------------------------------
Net increase (decrease) in cash and cash 8,684 (48,747)
equivalents
Cash and cash equivalents:
Beginning of year 54,966 60,283
- -----------------------------------------------------------------------------
End of period $ 63,650 $ 11,536
=============================================================================
</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 three months ended
March 31, 1997 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, 1996.
NOTE 2: INVENTORIES
Inventories consist of (in thousands):
<TABLE>
<CAPTION>
June 30, March 31,
1996 1997
---- ----
(audited) (unaudited)
<S> <C> <C>
Raw materials $ 3,720 $ 5,414
Work in process 16,908 20,026
Finished goods 9,843 11,023
-------- --------
$ 30,471 $ 36,463
======== ========
</TABLE>
NOTE 3: INCOME PER SHARE
Net 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.
6
<PAGE> 7
MAXIM INTEGRATED PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
NOTE 4: INVESTMENT SECURITIES
At March 31, 1997, all debt securities consist of U.S. Treasury
securities maturing within one year. Securities designated as
held-to-maturity are 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. Securities
identified as available-for-sale are carried at fair market
value. Unrealized gains and losses, net of tax, on securities in
this category are reportable as a separate component of
stockholders' equity. Because of the short term to maturity and
relative price insensitivity to changes in market interest rates,
amortized cost approximates fair market value and no unrealized
gains or losses have been recorded at March 31, 1997. The cost
of securities sold is based on the specific identification
method. Interest earned on securities is included in investment
income.
All securities are included in short-term investments at March
31, 1997. There were no gross realized gains or losses for the
nine months ended March 31, 1997.
NOTE 5: RECENT PRONOUNCEMENT
In February 1997, Financial Accounting Standard No. 128 (FAS 128)
Earnings Per Share was issued. The Company will be required to
adopt this new pronouncement in the quarter ended December 31,
1997. Under the new pronouncement the Company is required to
present on the face of the income statement both the net income
per common share outstanding and net income per common and common
equivalent shares outstanding. All prior periods will be
restated to reflect this change. Had the Company applied this
change to the period ending March 31, 1997 the pro forma amounts
would be as follows.
<TABLE>
<CAPTION>
Three Months Nine Months
ended March 31, ended March 31,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Pro forma earnings per share:
Net income per common share
outstanding .57 .56 1.48 1.61
==== ==== ==== ====
Net income per common and
common equivalent share
outstanding .48 .48 1.25 1.38
==== ==== ==== ====
</TABLE>
Prior to this pronouncement the Company was required to present
only the net income per common and common equivalent shares
outstanding (see note 3).
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues for the three months and the nine months ended March
31, 1997 were essentially unchanged compared to the same periods
a year ago. The Company believes that the most significant
single factor constraining revenue growth in fiscal 1997 to date
was a buildup in Maxim's customers' inventories that occurred in
the latter half of fiscal 1996.
During the quarter, 55% 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 does place
foreign currency forward contracts to mitigate its risks on its
backlog and assets denominated in foreign currencies, and as a
result, the net impact associated with changes in foreign
currency on the Company's operating results for the quarter was
minimal.
Gross margin was 66.3% and 66.5% in the three and nine months
ended March 31, 1997, compared to 67.6% and 64.6% for the three
and nine months ended March 31, 1996. The increase in gross
margin for the nine months period ended March 31, 1997 was due to
increased manufacturing efficiencies in the later half of 1996
continuing through all of fiscal 1997.
Research and development expenses were 11.8% and 11.5% of net
revenues in the three and nine months ended March 31, 1997,
compared to 10.3% and 11.5% in the three and nine months ended
March 31, 1996. Research and development in absolute dollars
increased $1,859 and $724 for the three and nine months in period
ended March 31, 1997 over the same period a year ago,
respectively. The increase is attributable to continued
investments in product development efforts.
Selling, general and administrative expenses were 8.4% and 8.9%
of net revenues in the three and nine months ended March 31,
1997, compared to 10.1% for both the three and nine months ended
March 31, 1996. This decline was a result of the Company's cost
control measures and savings realized through the establishment
of a direct sales force in the United States during the latter
half of fiscal 1996.
The Company's operating income decreased slightly to 46.1% of net
revenues in the three months ended March 31, 1997, compared to
47.2% in the three months ended March 31, 1996 and increased to
46.1% of net revenues in the nine months ended March 31, 1997,
compared to 43.0% for the nine months ended March 31, 1996, as a
result of all the factors cited above.
Net interest income increased to $2.5 million in the three months
and $5.7 million in the nine months ended March 31, 1997 compared
to $1.1 million and $3.4 million in the same periods a year ago, as
a result of higher invested cash balances at higher average
interest rates.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
The decrease in the effective tax rate to 34% in the three months
and the nine months ended March 31, 1997, was primarily
attributable to the restoration of the Federal research and
development tax credit.
OUTLOOK
At the end of Q397, backlog shipable within the next twelve
months was $124 million as compared to $103 million reported at
the end of Q297. Orders requested for delivery in Q497 remained
high, representing 76% of the beginning Q497 backlog.
Turns orders received in Q397 increased by more than 17% over
those received in Q297 to a record $45.4 million. (Turns orders
are customer orders that are for delivery within the same quarter
and may result in revenue within the quarter if the Company has
inventory available that matches those orders.)
Net bookings were up 30% from Q297 levels. The Company
experienced sequential quarter over quarter growth in net
bookings across all geographic regions and across all of Maxim's
business units. Customer cancellations were $12.5 million,
continuing the decline experienced over the last three
quarters.
If these positive trends continue, the Company anticipates that
it should be able to record modest sequential revenue growth in
the current quarter and increase its quarter-ending backlog.
9
<PAGE> 10
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds for the first nine months
of fiscal year 1997 have been the net cash generated from
operating activities of $127,374,000 and the issuance of common
stock of $25,202,000 associated with the Company's stock option
programs. The principal uses of funds have been the repurchase of
$46,135,000 of common stock, net purchases of $122,304,000 in
short-term investments, and the purchase of $32,566,000 in
property, plant and equipment.
The Company anticipates that it will spend up to $50 million for
capital equipment in fiscal 1997 and believes that it possesses
sufficient liquidity and capital resources to fund these
purchases and its operations for the foreseeable future.
FORWARD LOOKING INFORMATION
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995: Certain statements in this management's
discussion and analysis section are, explicitly or implicitly,
forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. In particular, the Outlook section
includes forward-looking statements regarding backlog, turns
orders, bookings, customer cancellations and revenue growth.
These statements and all other forward-looking statements are
made based on information available to the Company as of the date
hereof, and the Company assumes no duty to update any forward-
looking statements. Forward-looking statements in this document
involve risk and uncertainty. Important factors, including the
fact that the Company's backlog of orders is generally not based
on legally binding customer contracts and further including
overall economic conditions, demand for electronic products and
semiconductors generally, demand for the Company's products in
particular, availability of raw material, equipment, supplies and
services, unanticipated manufacturing problems, technological and
product development risks, competitors' actions and other risk
factors described in the Company's filings with the Securities
and Exchange Commission, could cause actual results to differ
materially from those stated in the forward-looking statements.
10
<PAGE> 11
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, 1997
ITEMS 1, 2, 3, 4 AND 5 HAVE BEEN OMITTED AS THEY ARE NOT
APPLICABLE.
11
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT 11.1
Three Months Nine Months
Ended March 31, Ended March 31,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weight average common shares outstanding 60,276 63,737 59,775 62,363
Add weighted average shares from asssumed
excersise of options and warrants when
treasury shares are reacquired at
average stock market price 16,708 16,075 17,186 15,260
Less weighted average shares assumed
repurchased from tax benefit from
the assumed exercise of non-qualified
stock options (5,772) (5,437) (6,098) (5,229)
------- ------- ------- --------
Common and common equivalent shares
used in computing net income per share 71,212 74,375 70,863 72,394
====== ====== ====== =======
Net income applicable to computation
of income per share $34,182 $35,403 $88,641 $100,109
======= ======= ======= ========
</TABLE>
12
<PAGE> 13
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, 1997 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)
13
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 202,810
<SECURITIES> 0
<RECEIVABLES> 84,637
<ALLOWANCES> (1,337)
<INVENTORY> 36,463
<CURRENT-ASSETS> 350,848
<PP&E> 229,988
<DEPRECIATION> (63,023)
<TOTAL-ASSETS> 524,306
<CURRENT-LIABILITIES> 76,441
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 445,140
<TOTAL-LIABILITY-AND-EQUITY> 524,306
<SALES> 316,691
<TOTAL-REVENUES> 316,691
<CGS> 105,994
<TOTAL-COSTS> 105,994
<OTHER-EXPENSES> 64,744
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17
<INCOME-PRETAX> 151,679
<INCOME-TAX> 51,570
<INCOME-CONTINUING> 100,109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 100,109
<EPS-PRIMARY> 1.38
<EPS-DILUTED> 1.38
</TABLE>
