Revenue and Income Up Year-to-Year and Down Sequentially at Linear

Linear Technology Corporation (Linear) reported financial results for the fiscal quarter ended December 28, 2014. Quarterly revenues of $352.6 million for the second quarter of fiscal year 2015 increased $18.0 million or 5.4% over $334.6 million reported in the second quarter of fiscal year 2014 but decreased $18.5 million or 5.0% from the previous quarter's revenue of $371.1 million. Net income of $123.6 million increased $18.9 million or 18.0% over the second quarter of fiscal year 2014 but decreased $5.9 million from the first quarter of fiscal year 2015. Second quarter net income and earnings per share were positively impacted by a lower effective income tax rate of 22%.

In addition, Linear had no interest expense compared with $12.3 million of interest expense in the second quarter of the prior fiscal year as a result of the extinguishment of the Convertible Senior Notes at the end of fiscal 2014. Diluted earnings per share of $0.51 per share in the second quarter of fiscal year 2015 increased $0.07 per share or 16% over the second quarter of fiscal year 2014 but decreased $.02 per share or 4% compared to the first quarter of fiscal year 2015.

Cash, cash equivalents and marketable securities increased by $45.2 million over the first quarter of fiscal year 2015 to $1,073 million. Linear's Board of Directors approved an increase in the Company's quarterly dividend from $0.27 per share to $0.30 per share. This marked the 23rd consecutive year Linear has increased its dividend. A cash dividend of $0.30 per share will be paid on February 25, 2015 to stockholders of record on February 13, 2015. During the second quarter the Company generated positive cash flows from operations of $148.0 million or 42% of total revenues. The Company has historically generated strong cash flows from its operations. During the second quarter of fiscal year 2015 Linear returned $100.5 million to shareholders in the form of dividends of $65.8 million, representing $0.27 per share, and stock purchases of $34.7 million.

According to Lothar Maier, CEO, “Revenues declined 5% sequentially from our first quarter and were up 5% year over year, which was within our guidance. We had expected this sequential decline as the second quarter has historically been seasonally weak for us. Bookings declined slightly although improved as the quarter progressed. The industrial end-market showed the most strength. As is typical, we expect our major end-markets to improve during the second half of our fiscal year. Compared to the first quarter, gross margin and operating margin of 75.4% and 44.9% were also down modestly on lower revenue but remain industry leading. Looking ahead, though there remains some weaker pockets of the global economy, our book-to-bill ratio was slightly positive in the December quarter and we typically see strong bookings momentum in the automotive and industrial markets in the March quarter. Accordingly, we are currently forecasting revenues to grow sequentially by 4% to 7% in our fiscal third quarter. In addition, now that we no longer have debt to repay, we have increased our cash return to shareholders in the form of larger dividends and share buybacks. We increased our quarterly dividend by 11%.”