Linear Tech Reports Quarterly and Year over Year Increases in Revenues and Operating Profits

January 12, 2010 by Jeff Shepard

Linear Technology Corp. reported financial results for the quarter ended December 27, 2009. Revenue of $256.4 million for the second quarter of fiscal year 2010 increased $20.2 million or 9% compared to the previous quarter’s revenue of $236.1 million and increased $7.2 million or 3% over $249.2 million reported in the second quarter of fiscal year 2009. Net income of $75.5 million increased $14.8 million or 24% over the first quarter of fiscal year 2010 and decreased $10.7 million or 12% from the second quarter of fiscal year 2009, which had a gain on the early retirement debt of $14.6 million and a lower tax rate of 20.7% compared to 24.5% this quarter.

Diluted earnings per share ("EPS") of $0.33 increased $0.06 cents per share over the first quarter of fiscal year 2010 and decreased $0.05 cents per share from the second quarter of fiscal year 2009. Diluted EPS was calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") and included $7.3 million ($0.02 per share) of non-cash interest expense related to the amortization of the debt discount on the company’s Convertible Senior Notes in accordance with Financial Accounting Standards Board ("FASB") Staff Position No. APB 14-1 ("FSP APB 14-1"), which the company adopted during the first quarter of fiscal year 2010. All adjustments were made retrospectively as of the April 24, 2007 issuance of the Convertible Senior Notes and, therefore, all prior quarters and years have been adjusted accordingly.

During the December quarter the company’s cash, cash equivalents and marketable securities balance increased by $33.0 million to $942.5 million. The company is increasing its quarterly dividend from $0.22 per share to $0.23 per share. This marks the 18th consecutive year the company has increased its dividend. The cash dividend of $0.23 per share will be paid on February 24, 2010 to stockholders of record on February 12, 2010.

According to Lothar Maier, CEO, "The company began to recover from the global recession in the first quarter, but we continued to be relatively cautious as we entered the second quarter given the economic climate and level of uncertainty among our customers. However, the recovery continued throughout the second quarter and we experienced stronger than expected bookings with particular strength in the industrial, communications and computer end-markets. This allowed us to beat the high end of our second quarter revenue guidance as we grew revenues $20.2 million or 9% sequentially. In addition, higher gross margins and tight operating expense controls resulted in a 16% increase in our operating income, thereby increasing our operating margin to 45.1% of sales, up from 42.2% last quarter.

"Our factories continue to execute well, enabling us to maintain low lead times which allows our customers to place orders on us close to their demand requirements. Strong second quarter bookings and a related positive book-to-bill ratio that was higher than we have experienced in the past several quarters, leads us to be optimistic as we enter our third quarter. As a result, we are forecasting revenue growth for our third fiscal quarter in the range of 7 to 10% over our second fiscal quarter."