EX-99.1 CHARTER 2 ex99-1.htm TEXT OF PRESS RELEASE Text of press release
 
Exhibit 99.1
Contact: Paul Coghlan 
            Vice President, Finance 
            (408) 432-1900 
 

LINEAR TECHNOLOGY REPORTS RECORD ANNUAL AND QUARTERLY REVENUES, GROWING 4% AND 15%, RESPECTIVELY, OVER THE SIMILAR PRIOR YEAR PERIODS.


Milpitas, California, July 25, 2006, Linear Technology Corporation (NASDAQ-LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today announced that revenue for its fiscal year ended July 2, 2006, was $1.093 billion, an increase of 4% over revenue of $1.050 billion for the previous fiscal year. The prior fiscal year included a one-time royalty settlement totaling $40.0 million. Fiscal 2006 results include a full year effect of all forms of stock-based compensation required by Statement of Financial Accounting Standards 123R (“SFAS 123R”), which was adopted by the Company in fiscal 2006. The Company reported net income for the year of $428.7 million or $1.37 diluted earnings per share, a decrease of $5.3 million or 1% from $434.0 million or $1.38 diluted earnings per share reported for fiscal 2005. On a pro forma basis, excluding all forms of stock-based compensation, net income for fiscal 2006 was $466.9 million or $1.50 diluted earnings per share, an increase of 4% over pro forma net income of $448.5 million or $1.42 diluted earnings per share for the prior year.
 
Revenue for the fourth quarter ended July 2, 2006 was $292.9 million, a 15% increase over revenue of $255.8 million for the fourth quarter of the previous fiscal year. Net income for the fourth quarter of fiscal 2006 was $115.7 million or $0.37 diluted earnings per share, ($125.9 million or $0.41 per share pro forma) compared with $106.0 million or $0.34 diluted earnings per share, ($110.0 million or $0.35 per share pro forma) an increase of 9% (14% pro forma) from the fourth quarter of the previous year. Return on sales was 39% for the fourth quarter ended July 2, 2006, including the effects of stock-based compensation.
 
During the fourth quarter of fiscal 2006 the Company spent a record $202.1 million to purchase 5.7 million shares of its common stock, which contributed to the $96.2 million decrease in cash and short-term investments. During fiscal 2006 the Company generated an additional $28.7 million in cash and short-term investments, net of spending $342.8 million to purchase 9.5 million shares of its common stock. A cash dividend of $0.15 per share will be paid on August 23, 2006 to stockholders of record on August 4, 2006. Total cash dividends paid during the year were $153.9 million, an increase of $42.9 million or 39% over the prior fiscal year.
 
The Board of Directors authorized the Company to purchase up to an additional 20 million shares of its outstanding common stock in the open market over the next two years.
 
According to Lothar Maier, CEO, "Fiscal 2006 was a good year for us with strong product sales growth in the last three quarters of the year. The Company generated an impressive 39% return on sales including the effects of stock option accounting. Without stock-based compensation the Company generated an even more impressive 43% return on sales.
 
The September quarter that we are entering is difficult to confidently forecast. It is typically a slow quarter for industrial and communication businesses, yet should show growing strength in consumer oriented businesses, as the build period for year-end holiday sales approaches. Further, while we expect our bookings to increase over the prior quarter, most of the consumer related bookings increase will not ship until the December quarter. Consequently, we currently expect sales and profits in the September quarter to be roughly similar to the 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 3, 2005.
 
Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, July 26, 2006 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 955-1567 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 July 26 through August 4, 2006. You may access this post view by calling (719) 457-0820 and entering reservation #5348436. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of July 26, 2006 until the fourth quarter earnings release next year.
 
Linear Technology Corporation was founded in 1981 as a manufacturer of high performance linear integrated circuits. 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 and MP3 players, complex medical devices, automotive electronics, factory automation, process control, and military and space systems.
 
For further information contact Paul Coghlan at Linear Technology Corporation, 1630 McCarthy Blvd., Milpitas, California 95035-7417, (408) 432-1900.

Exhibit 99.1
 
LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)


   
Three Months Ended
(unaudited)
  
Twelve Months Ended
(audited)
  
   
July 2,
  
July 3,
  
July 2,
  
July 3,
  
   
2006
  
2005
  
2006
  
2005
  
Net sales
 
$
292,930
  
$
255,811
  
$
1,092,977
  
$
1,049,694
  
Cost of sales (1)
    
63,615
    
53,859
    
238,400
    
219,188
  
Gross profit
    
229,315
    
201,952
    
854,577
    
830,506
  
                           
Expenses:
                          
                           
Research & development (1)
    
44,048
    
32,380
    
160,849
    
131,429
  
Selling, general & administrative (1)
    
34,045
    
27,897
    
129,778
    
109,448
  
     
78,093
    
60,277
    
290,627
    
240,877
  
Operating income
    
151,222
    
141,675
    
563,950
    
589,629
  
Interest income, net
    
15,225
    
9,821
    
52,858
    
30,335
  
                           
Income before income taxes
    
166,447
    
151,496
    
616,808
    
619,964
  
Provision for income taxes
    
50,767
    
45,449
    
188,128
    
185,990
  
                           
Net income
  
$
115,680
  
$
106,047
  
$
428,680
  
$
433,974
  
                           
Earnings per share:
                          
Basic
  
$
0.38
  
$
0.35
  
$
1.40
  
$
1.41
  
Diluted
  
$
0.37
  
$
0.34
  
$
1.37
  
$
1.38
  
                           
Shares used in the calculation of
                         
earnings per share:
                          
Basic
    
304,296
    
306,964
    
305,156
    
307,426
  
Diluted
    
311,221
    
314,080
    
313,285
    
315,067
  
                           
Pro forma earnings per share excluding
                          
   the effects of stock based compensation:
                          
Basic
  
$
0.41
  
$
0.36
  
$
1.53
  
$
1.46
  
Diluted
  
$
0.41
  
$
0.35
  
$
1.50
  
$
1.42
  
                           
Pro forma shares used in the calculation
   of pro forma earnings per share:
                          
Basic
    
304,296
    
306,964
    
305,156
    
307,426
  
Diluted
    
309,196
    
314,080
    
311,356
    
315,067
  
                           
(1) Includes stock-based compensation charges as follows:
                          
                           
Cost of sales
  
$
2,471
  
$
619
  
$
8,307
  
$
2,635
  
Research and development
   
7,533
    
1,893
    
24,864
    
7,111
  
Sales, general and administrative
    
4,764
    
3,131
    
21,884
    
11,036
  
   Total stock-based compensation
  
$
14,768
  
$
5,643
  
$
55,055
  
$
20,782
  
                           

Exhibit 99.1


LINEAR TECHNOLOGY CORPORATION
RECONCILIATION OF NET INCOME TO PRO FORMA NET INCOME
(In thousands, except per share amounts)

   
Three Months Ended
(unaudited)
  
Twelve Months Ended
(audited)
  
   
July 2,
  
July 3,
  
July 2,
  
July 3,
  
   
2006
  
2005
  
2006
  
2005
  
                   
Net income
  
$
115,680
  
$
106,047
  
$
428,680
  
$
433,974
  
                           
Adjustments to reconcile net income to pro
   forma net income:
                          
Stock-based compensation
    
14,768
    
5,643
    
55,055
    
20,782
  
Tax effect
    
(4,504
)
  
(1,693
)
  
(16,792
)
  
(6,235
)
Pro forma net income
  
$
125,944
  
$
109,997
  
$
466,943
  
$
448,521
  
                           
Pro forma earnings per share excluding
                          
   the effects of stock based compensation:
                          
Basic
  
$
0.41
  
$
0.36
  
$
1.53
  
$
1.46
  
Diluted
  
$
0.41
  
$
0.35
  
$
1.50
  
$
1.42
  
                           
Shares used in the calculation of pro
   forma earnings per share:
                          
Basic
    
304,296
    
306,964
    
305,156
    
307,426
  
Diluted
    
309,196(1)
 
  
314,080
    
311,356(1)
    
315,067
  

(1) Excludes 2,025 and 1,929 shares for the three and twelve months ended July 2, 2006, respectively, to conform diluted outstanding shares calculated under FAS123R to diluted shares calculated under prior accounting standards

FAS123R - Share-Based Payment became effective and was adopted by the Company during the quarter ended October 2, 2005. FAS123R requires the Company to estimate the cost of all forms of stock based compensation, including employee stock options, and to record a commensurate expense in the income statement. To supplement our consolidated financial statements presented in accordance with GAAP, we have shown above a non-GAAP (pro forma) presentation of the Company¡¦s earnings per share, which is adjusted to reflect the GAAP results to exclude all stock based compensation. This non-GAAP presentation of earnings per share is provided to enhance the user¡¦s overall understanding of the Company¡¦s historical financial performance and comparability between periods. We believe the non-GAAP results provide useful information to investors by excluding stock based compensation particularly during this transitional period when many companies have not yet adopted the provisions of FAS123R.

Exhibit 99.1



LINEAR TECHNOLOGY CORPORATION
  
CONSOLIDATED CONDENSED BALANCE SHEETS
  
(Dollars in thousands)
  
           
   
July 2,
  
July 3,
  
   
2006
  
2005
  
   
(audited)
  
(audited)
  
           
ASSETS
          
           
Current assets:
          
Cash, cash equivalents and
         
short-term investments
  
$
1,819,587
  
$
1,790,912
  
               
Accounts receivable, net of
             
allowance for doubtful
              
accounts of $1,808 ($1,713
             
                at July 3, 2005)
    
154,297
    
125,864
  
               
Inventories
    
39,031
    
34,328
  
Deferred tax assets and
             
other current assets
    
64,221
    
56,205
  
               
Total current assets
    
2,077,136
    
2,007,309
  
               
Property, plant & equipment, net
    
247,969
    
221,028
  
Other noncurrent assets
    
65,790
    
57,897
  
               
Total assets
  
$
2,390,895
  
$
2,286,234
  
               
LIABILITIES & STOCKHOLDERS’
             
EQUITY:
              
               
Current liabilities:
              
Accounts payable
  
$
14,574
  
$
11,800
  
               
Accrued income taxes, payroll &
other accrued liabilities
    
174,239
    
152,231
  
               
Deferred income on shipments
              
to distributors
    
48,013
    
43,708
  
               
Total current liabilities
    
236,826
    
207,739
  
               
Deferred tax and other long-term
liabilities
    
49,571
    
71,461
  
               
Stockholders’ equity:
              
               
Common stock
    
1,063,446
    
926,763
  
Retained earnings
    
1,046,137
    
1,083,110
  
Accumulated other comprehensive
              
income
    
(5,085
)
  
(2,839
)
Total stockholders’ equity
    
2,104,498
    
2,007,034
  
   
$
2,390,895
  
$
2,286,234