In April 2007, the Company entered into a $3.0 billion accelerated share repurchase ("ASR") transaction funded by $1.3 billion of the Company's own cash and $1.7 billion of convertible debt. As a result, the Company's first quarter results had both a decrease in interest income and an increase in interest expense when compared to both last quarter and the first quarter of the prior fiscal year. The first quarter of fiscal year 2008 had higher interest expense than the fourth quarter of fiscal 2007 due to the fourth quarter having two months of accrued interest versus three months in the first quarter of fiscal year 2008. Shares used in the calculation of diluted EPS decreased by 37.2 million shares or 14% from the fourth quarter of fiscal year 2007. Consequently, the ASR transaction has been accretive to EPS as the impact of the reduced shares was greater than the increase in interest expense and lower interest income.
A cash dividend of $0.18 per share will be paid on November 28, 2007 to stockholders of record on November 16, 2007.
Non-GAAP diluted EPS for the first quarter of fiscal year 2008 was $0.45, a $0.03 per share increase over $0.42 per share in the fourth quarter and $0.04 per share increase over the first quarter of fiscal year 2007. First quarter non-GAAP net income of $101.4 million decreased $8.5 million from $109.9 million in the fourth quarter and decreased $22.8 million from the first quarter of fiscal year 2007. The Company's non-GAAP measures set forth above exclude charges related to stock-based compensation. The Company's management uses non-GAAP net income and non-GAAP net income per diluted share to evaluate the Company's current operating results and financial results and to compare them against historical financial results. Reconciliations of reported net income and reported net income per diluted share to non-GAAP net income and non-GAAP net income per diluted share, respectively, are included at the end of this press release.
According to Lothar Maier, CEO, "This was a good September quarter for us. Revenue, EPS and cash generated from operations all increased and we had a positive book to bill ratio for the quarter. We are pleased with the results of the ASR which was partially responsible for the 11% increase in diluted EPS over the prior quarter which follows on a 12.5% sequential increase in diluted EPS in the quarter before that.
Looking ahead to the December quarter, growth will be impacted by the usual seasonal slowdown in our businesses. Consequently, we expect revenues and diluted EPS to increase in the 1% to 4% range from the September quarter just completed."
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 conditions in the world economy and financial markets and other factors described in our 10-K for the fiscal year ended July 1, 2007.
Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, October 17, 2007 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (877) 681-3377 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 http://www.linear.com or http://www.streetevents.com. A replay of the conference call will be available from October 17 through October 23, 2007. You may access the archive by calling (719) 457-0820 and entering reservation #6421148. An archive of the webcast will also be available at http://www.linear.com and http://www.streetevents.com as of October 17, 2007 until the first quarter earnings release next year.
Linear Technology Corporation, a manufacturer of high performance linear integrated circuits, was founded in 1981, became a public company in 1986 and joined the S&P 500 index of major public companies in 2000. Linear Technology products include high performance amplifiers, comparators, voltage references, monolithic filters, linear regulators, DC-DC converters, battery chargers, data converters, communications interface circuits, RF signal conditioning circuits, and many other analog functions. Applications for Linear Technology's high performance circuits include telecommunications, cellular telephones, networking products such as optical switches, notebook and desktop computers, computer peripherals, video/multimedia, industrial instrumentation, security monitoring devices, high-end consumer products such as digital cameras, global positioning systems and MP3 players, complex medical devices, automotive electronics, factory automation, process control, and military and space systems. For more information, visit http://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) GAAP (unaudited) Three Months Ended September 30, July 1, October 1, 2007 2007 2006 Revenues $281,488 $268,116 $292,116 Cost of sales (1) 64,061 61,338 64,327 Gross profit 217,427 206,778 227,789 Expenses: Research & development (1) 47,780 46,713 46,519 Selling, general & administrative (1) 32,781 32,861 34,425 80,561 79,574 80,944 Operating income 136,866 127,204 146,845 Interest expense (14,462) (10,795) (443) Interest income 6,434 7,908 16,480 Income before income taxes 128,838 124,317 162,882 Provision for income taxes 37,363 28,593 50,493 Net income $91,475 $95,724 $112,389 Earnings per share: Basic $0.41 $0.37 $0.327 Diluted $0.40 $0.36 $0.317 Shares used in the calculation of earnings per share: Basic 224,093 260,664 302,104 Diluted 229,230 266,474 307,740 (1) Includes stock-based compensation charges as follows: Cost of sales $1,897 $2,946 $2,762 Research and development 7,747 9,595 8,902 Sales, general and administrative 4,300 5,885 5,422 LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) September 30, July 1, 2007 2007 (unaudited) (audited) ASSETS: Current assets: Cash, cash equivalents and short-term investments $752,167 $633,307 Accounts receivable, net of allowance for doubtful accounts of $1,770 ($1,775 at July 1, 2007) 134,032 130,546 Inventories 51,413 51,075 Deferred tax assets and other current assets 42,084 46,176 Total current assets 979,696 861,104 Property, plant & equipment, net 261,171 266,600 Other noncurrent assets 93,604 91,153 Total assets $1,334,471 $1,218,857 LIABILITIES & STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $11,324 $11,161 Accrued income taxes, payroll & other accrued liabilities 101,818 128,762 Deferred income on shipments to distributors 39,186 39,946 Total current liabilities 152,328 179,869 Convertible senior notes 1,700,000 1,700,000 Deferred tax and other long-term liabilities 118,072 46,953 Stockholders' equity: Common stock 932,624 902,135 Accumulated Deficit (1,569,304) (1,609,453) Accumulated other comprehensive income 751 (647) Total stockholders' deficit (635,929) (707,965) $1,334,471 $1,218,857 LINEAR TECHNOLOGY CORPORATION RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME (In thousands, except per share amounts) Three Months Ended September 30, July 1, October 1, 2007 2007 2006 Reported net income (GAAP basis) $ 91,475 $95,724 $112,389 Stock-based compensation (1) 13,944 18,426 17,086 Income tax effect of non-GAAP adjustments (4,044) (4,238) (5,297) Non-GAAP net income $101,375 $109,912 $124,178 Non-GAAP earnings per share excluding the effects of stock based compensation: Basic $ 0.45 $ 0.42 $ 0.41 Diluted $ 0.45 $ 0.42 $ 0.41 Shares used in the calculation of Non-GAAP earnings per share: Basic 224,093 260,664 302,104 Diluted 227,591 (2) 264,842 (2) 305,826 (2) 1) Linear began expensing stock options in the first quarter of fiscal year 2006. 2) Excludes 1,639, 1,632 and 1,914 shares for the three months ended September 30, 2007, July 1, 2007 and October 1, 2006, respectively, to conform diluted outstanding shares calculated under FAS123R to diluted shares calculated under prior accounting standards.