EX-99.1 EXHIBIT 2 exhibit99-1.htm EXHIBIT 99.1 FINANCIAL STATEMENTS EXHIBIT 99.1 FINANCIAL STATEMENTS
 
Contact:
Paul Coghlan
5:00 EDT
  
 
Vice President, Finance
Tuesday, January 16, 2007
 
 
(408) 432-1900
US1
 




LINEAR TECHNOLOGY REPORTS REVENUE AND NET INCOME SIMILAR TO THE SECOND QUARTER OF THE PREVIOUS FISCAL YEAR, BUT DOWN SEQUENTIALLY FROM THE SEPTEMBER QUARTER. THE COMPANY IS INCREASING ITS QUARTERLY CASH DIVIDEND FROM $0.15 TO $0.18 PER SHARE.


Milpitas, California, January 16, 2007, Linear Technology Corporation (NASDAQ-LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today announced that revenue for its quarterly period ended December 31, 2006, was $267.9 million, an increase of 1% over revenue of $265.1 million for the second quarter of the previous fiscal year. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the second quarter of fiscal year 2007 was $105.0 million, or $0.34 diluted earnings per share, and was similar to GAAP net income of $103.3 million or $0.33 diluted earnings per share reported in the second quarter of the previous fiscal year. On a pro forma basis excluding the effects of all forms of stock-based compensation, net income was $117.8 million, or $0.39 diluted earnings per share, an increase of $5.0 million over pro forma net income of $112.8 million, or $0.36 per share reported in the second quarter of the previous fiscal year. Sequentially, compared with the September quarter, sales were down 8%. GAAP income before tax was down 10%. The effective tax rate improved from 31% to 28%, primarily due to the reinstatement of the R&D tax credit, and consequently net income decreased by 7%. During the most recent quarter the Company’s cash and short-term investments balance decreased $30.3 million net of spending $91.7 million to purchase 3.0 million shares of its common stock.
 
The Company also declared a 20% increase in its dividend from $0.15 per share to $0.18 per share for the quarter. This cash dividend will be paid on February 14, 2007 to stockholders of record on January 26, 2007.
 
According to Lothar Maier, CEO, "We are seeing an overall reduction in our inventories at our end customers, which coupled with some general market weakness, has resulted in a decrease in bookings, sales and profits for the December quarter. The upcoming March quarter is a challenge to accurately forecast. Visibility continues to be low and customers remain guarded in their forecasting and inventory management. The March quarter has historically been strong for Linear due to seasonal strength in industrial markets. However, with inventory reductions expected to continue and low market visibility, this year we expect will be an exception. It is likely that improvements in Europe and the USA may be offset by slowness in Asia, particularly in consumer related markets. Consequently, we currently expect revenue to be down 4% to 7% with profits slightly more impacted primarily due to an increase in the tax rate. However, any increase in confidence in the overall business environment would positively impact this outlook.”
 
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 2, 2006.
 
Company officials will be discussing these results in greater detail in a conference call tomorrow, Wednesday, January 17, 2007 at 8:30 a.m. Pacific Coast Time. Those investors wishing to listen in may call (719) 955-1566 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 January 17 through January 23, 2007. You may access this post view by calling (719) 457-0820 and entering reservation #6574365. An archive of the webcast will also be available at www.linear.com and www.streetevents.com as of January 17, 2007 until the second 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.

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

   
Three Months Ended
  
Six Months Ended
  
   
December 31,
  
January 1,
  
December 31,
  
January 1,
  
   
2006
  
2006
  
2006
  
2006
  
Net sales
 
$
267,854
  
$
265,146
  
$
559,970
  
$
521,159
  
Cost of sales (1)
    
59,313
    
58,765
    
123,640
    
114,764
  
Gross profit
    
208,541
    
206,381
    
436,330
    
406,395
  
                           
Expenses:
                          
Research & development (1)
    
44,961
    
38,040
    
91,480
    
75,819
  
Selling, general & administrative (1)
    
33,597
    
32,331
    
68,022
    
63,481
  
     
78,558
    
70,371
    
159,502
    
139,300
  
Operating income
    
129,983
    
136,010
    
276,828
    
267,095
  
Interest income, net
    
15,867
    
12,572
    
31,904
    
24,194
  
                           
Income before income taxes
    
145,850
    
148,582
    
308,732
    
291,289
  
Provision for income taxes
    
40,838
    
45,318
    
91,331
    
88,844
  
                           
Net income
  
$
105,012
  
$
103,264
  
$
217,401
  
$
202,445
  
                           
Earnings per share:
                          
Basic
  
$
0.35
  
$
0.34
  
$
0.72
  
$
0.66
  
Diluted
  
$
0.34
  
$
0.33
  
$
0.71
  
$
0.64
  
                           
Shares used in the calculation of earnings per share:
                          
Basic
    
299,724
    
305,534
    
300,385
    
305,690
  
Diluted
    
304,959
    
313,792
    
305,774
    
314,490
  
                           
Pro forma earnings per share excluding
                          
the effects of stock-based compensation:
                          
Basic
  
$
0.39
  
$
0.37
  
$
0.81
  
$
0.72
  
Diluted
  
$
0.39
  
$
0.36
  
$
0.80
  
$
0.71
  
                           
Pro forma shares used in the calculation of pro forma earnings per share:
                          
Basic
    
299,724
    
305,534
    
300,385
    
305,690
  
Diluted
    
303,005
    
311,782
    
303,845
    
312,561
  
                           
(1) Includes stock-based compensation charges as follows:
                  
                           
Cost of sales
  
$
2,840
  
$
2,306
  
$
5,602
  
$
3,513
  
Research and development
   
9,281
    
5,530
    
18,183
    
11,453
  
Sales, general and administrative
    
5,640
    
5,895
    
11,062
    
12,103
  
Total stock-based compensation
  
$
17,761
  
$
13,731
  
$
34,847
  
$
27,069
  


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

   
Three Months Ended
  
Six Months Ended
  
   
December 31,
  
January 1,
  
December 31,
  
January 1,
  
   
2006
  
2006
  
2006
  
2006
  
                   
Net income
  
$ 105,012
  
$ 103,264
  
$ 217,401
  
$ 202,445
  
                   
                   
Adjustments to reconcile net
                 
Income to pro forma net income stock-based
  
17,761
  
13,731
  
34,847
  
27,069
  
compensation tax effect
  
(4,973)
  
(4,188)
  
(10,308)
  
(8,256)
  
Pro forma net income
  
$ 117,800
  
$ 112,807
  
$ 241,940
  
$ 221,258
  
                   
Pro forma earnings per share
                 
excluding the effects of stock-based compensation
                  
Basic
  
$ 0.39
  
$ 0.37
  
$ 0.81
  
$ 0.72
  
Diluted
  
$ 0.39
  
$ 0.36
  
$ 0.80
  
$ 0.71
  
                   
Shares used in the calculation of
                 
pro forma earnings per share:
                  
Basic
  
299,724
  
305,534
  
300,385
  
305,690
  
Diluted
  
303,005
(1)
311,782
(1)
303,845
(2)
312,561
(2)
                   

(1)  
Excludes 1,954 and 2,010 shares for the three months ended December 31, 2006 and January 1, 2006, respectively, to conform diluted outstanding shares calculated under FAS123R to diluted shares calculated under prior accounting standards.

(2)  
Excludes 1,929 and 1,929 shares for the six months ended December 31, 2006 and January 1, 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.



LINEAR TECHNOLOGY CORPORATION
  
CONSOLIDATED CONDENSED BALANCE SHEETS
  
(Dollars in thousands)
  
           
   
December 31,
  
July 2,
  
   
2006
  
2006
  
   
(unaudited)
  
(audited)
  
ASSETS
          
Current assets:
          
  Cash, cash equivalents and short-term investments
   $ 1,783,558   $ 1,819,587  
               
Accounts receivable, net of allowance for doubtful
              
accounts of $1,797 ($1,808 at July 2, 2006)
    
151,093
    
154,297
  
               
Inventories
    
45,365
    
39,031
  
Deferred tax assets and Other current assets
    
68,659
    
64,221
  
Total current assets
    
2,048,675
    
2,077,136
  
               
Property, plant & equipment, net
    
260,800
    
247,969
  
Other noncurrent assets
    
65,891
    
65,790
  
Total assets
  
$
2,375,366
  
$
2,390,895
  
               
LIABILITIES & STOCKHOLDERS’
             
EQUITY:
              
Current liabilities:
              
Accounts payable
  
$
15,216
  
$
14,574
  
Accrued income taxes, payroll & other accrued liabilities
    
157,159
    
174,239
  
Deferred income on shipments to distributors
    
41,864
    
48,013
  
Total current liabilities
    
214,239
    
236,826
  
               
Deferred tax and other long-term liabilities
    
46,913
    
49,571
  
               
Stockholders’ equity:
              
Common stock
    
1,107,567
    
1,063,446
  
Retained earnings
    
1,008,200
    
1,046,137
  
Accumulated other comprehensive income
    
(1,553
)
  
(5,085
)
Total stockholders’ equity
    
2,114,214
    
2,104,498
  
   
$
2,375,366
  
$
2,390,895