Linear Technology Reports Sequential Increases in Revenue, Net

Linear Technology Reports Sequential Increases in Revenue, Net Income, and Earnings Per Share. The Company Increases the Quarterly Dividend $0.01 to $0.33 Per Share

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Cash, cash equivalents and marketable securities increased by $88.7 million over the first quarter of fiscal year 2017 to $1.61 billion. The Company's Board of Directors approved an increase in the Company's quarterly dividend from $0.32 per share to $0.33 per share. This marked the 25th consecutive year the Company has increased its dividend. A cash dividend of $0.33 per share will be paid on March 7, 2017 to stockholders of record on February 24, 2017. During the second quarter the Company generated positive cash flows from operations of $179.5 million or 48% of total revenues. During the second quarter of fiscal year 2017 the Company paid $78.7 million to shareholders in the form of dividends, representing $0.32 per share. There were no open market stock repurchases as the Analog Merger Agreement restricts the ability of the Company to repurchase shares of its common stock.

As a result of the pending transaction with Analog Devices, the Company will not hold a quarterly earnings conference call.

In lieu of a conference call, additional supplemental financial information regarding operational performance and earnings for the fiscal second quarter of 2017, in addition to bookings by end market and revenue by geography, has been made available under the Investor Relations section of the Company’s website that can be accessed through www.linear.com

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 revenue 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 and country specific conditions in the world economy and financial markets and other factors described in our 10-K for the year ended July 3, 2016.

Linear Technology Corporation, a member of the S&P 500, has been designing, manufacturing and marketing a broad line of high performance analog integrated circuits for major companies worldwide for over three decades. The Company’s products provide an essential bridge between our analog world and the digital electronics in communications, networking, industrial, automotive, computer, medical, instrumentation, consumer, and military and aerospace systems. Linear Technology produces power management, data conversion, signal conditioning, RF and interface ICs, µModule^® subsystems, and wireless sensor network products. For more information, visit www.linear.com

For further information contact Donald P. Zerio 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)
U.S. GAAP (unaudited)

	Three Months Ended						Six Months Ended
	January 1,		October 2,		January 3,		January 1,		January 3,
	2017		2016		2016		2017		2016

Revenues	$	375,817	$	373,895	$	347,128	$	749,712	$	689,045
Cost of sales ⁽¹⁾⁽²⁾		90,990		91,826		84,384		182,816		169,589
Gross profit		284,827		282,069		262,744		566,896		519,456
Expenses:
Research and development ⁽¹⁾⁽²⁾		77,030		76,359		69,884		153,389		136,486
Selling, general and administrative ⁽¹⁾⁽²⁾		47,552		56,409		43,403		103,961		83,596
Total operating expenses		124,582		132,768		113,287		257,350		220,082
Operating income		160,245		149,301		149,457		309,546		299,374
Interest income and other income		2,361		2,173		1,521		4,534		2,508
Income before income taxes		162,606		151,474		150,978		314,080		301,882
Provision for income taxes		38,620		36,352		29,446		74,972		68,303
Net income	$	123,986	$	115,122	$	121,532	$	239,108	$	233,579

Earnings per share:
Basic	$	0.50	$	0.47	$	0.50	$	0.97	$	0.95
Diluted	$	0.50	$	0.47	$	0.50	$	0.97	$	0.95

Shares used in determining earnings per share:
Basic		245,804		245,271		244,591		245,561		244,831
Diluted		246,280		245,709		244,880		246,026		245,178

Includes the following non-cash charges:
⁽¹⁾ Stock-based compensation
Cost of sales	$	2,496	$	2,547	$	2,557	$	5,043	$	4,899
Research and development		13,572		11,868		11,731		25,440		22,653
Selling, general and administrative		6,990		6,129		5,968		13,119		11,606
Includes the following pre-tax impact of items:
⁽²⁾ Merger-related charges
Cost of sales	$	2,000	$	2,000	$	—	$	4,000	$	—
Research and development		5,000		5,000		—		10,000		—
Selling, general and administrative		3,828		12,794		—		16,622		—


LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
U.S. GAAP (unaudited)

	January 1,			July 3,
As of	2017			2016
Assets
Cash, cash equivalents and marketable securities	$	1,609,825		$	1,448,275
Accounts receivable, net of allowances ($1,649 as of January 1, 2017) and ($1,649 as of July 3, 2016)		145,135			157,460
Inventories		98,548			97,251
Prepaid expenses and other current assets		48,539			51,744
Total current assets		1,902,047			1,754,730

Property, plant & equipment, net		281,149			285,866
Other noncurrent assets		8,285			9,385
Total assets	$	2,191,481		$	2,049,981

Liabilities
Accounts payable	$	17,197		$	17,465
Accrued income taxes, payroll & other accrued liabilities		132,931			113,800
Deferred income on shipments to distributors		49,489			48,701
Total current liabilities		199,617			179,966

Deferred tax and other noncurrent liabilities		114,052			110,840

Stockholders’ equity
Common stock and additional paid-in capital		2,192,469			2,137,150
Accumulated deficit		(314,459	)		(379,210	)
Accumulated other comprehensive (loss) income, net of tax		(198	)		1,235
Total stockholders’ equity		1,877,812			1,759,175
Total liabilities and stockholders’ equity	$	2,191,481		$	2,049,981


LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

	Three Months Ended									Six Months Ended
	January 1,			October 2,			January 3,			January 1,			January 3,
	2017			2016			2016			2017			2016
Cash flow from operating activities:
Net income	$	123,986		$	115,122		$	121,532		$	239,108		$	233,579
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,076			13,176			12,779			26,252			26,027
Stock-based compensation		23,058			20,544			20,256			43,602			39,158
Excess tax benefit from stock-based compensation		(3,131	)		(3,783	)		(3,053	)		(6,914	)		(4,680	)
Change in operating assets and liabilities		22,471			22,718			5,486			45,189			38,658
Cash provided by operating activities		179,460			167,777			157,000			347,237			332,742

Cash flow from investing activities:
Net proceeds from sales and maturities and (purchases) of available-for-sale securities		22,928			(120,367	)		(104,339	)		(97,439	)		(124,143	)
Purchase of property, plant and equipment		(12,104	)		(8,332	)		(10,952	)		(20,436	)		(21,112	)

Cash provided by (used in) investing activities		10,824			(128,699	)		(115,291	)		(117,875	)		(145,255	)

Cash flow from financing activities:
Excess tax benefit from stock-based compensation		3,131			3,783			3,053			6,914			4,680
Issuance of common stock under employee stock plans		7,400			—			11,976			7,400			16,229
Purchase of common stock		(9,237	)		(10,800	)		(22,598	)		(20,037	)		(79,155	)

Payment of cash dividends		(78,707	)		(78,608	)		(73,498	)		(157,315	)		(146,810	)

Cash used in financing activities		(77,413	)		(85,625	)		(81,067	)		(163,038	)		(205,056	)

Increase (decrease) in cash and cash equivalents		112,871			(46,547	)		(39,358	)		66,324			(17,569	)
Cash and cash equivalents, beginning of period		217,135			263,682			217,468			263,682			195,679
Cash and cash equivalents, end of period	$	330,006		$	217,135		$	178,110		$	330,006		$	178,110


LINEAR TECHNOLOGY CORPORATION
CONSOLIDATED SUPPLEMENTAL INFORMATION
(In thousands, except per share amounts)
Non-GAAP (unaudited)

	Three Months Ended
	January 1,			October 2,			January 3,
	2017			2016			2016

GAAP gross profit	$	284,827		$	282,069		$	262,744
Adjustments to reconcile GAAP gross profit to non-GAAP gross profit
Add: Merger-related charges		2,000			2,000			—
Non-GAAP gross profit		286,827			284,069			262,744

GAAP operating income		160,245			149,301			149,457
Adjustments to reconcile GAAP operating income to non-GAAP operating income
Add: Merger-related charges		10,828			19,794			—
Non-GAAP operating income		171,073			169,095			149,457

GAAP net income		123,986			115,122			121,532
Adjustments to reconcile GAAP net income to non-GAAP net income
Add: Merger-related charges		10,828			19,794			—
Less: Income tax effect of non-GAAP adjustments		(2,572	)		(4,751	)		—
Non-GAAP net income	$	132,242		$	130,165		$	121,532
GAAP net income per diluted share	$	0.50		$	0.47		$	0.50
Non-GAAP net income per diluted share	$	0.54		$	0.53		$	0.50

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