Linear Technology Corporation : Q2 FY2012

Contact:	Paul Coghlan	5:00 EST
	Vice Pres ident, Finance, Chief Financial Officer	January 17, 2012
	[phone]	NATIONAL DISTRIBUTION

LINEAR TECHNOLOGY REPORTS QUARTERLY AND YEAR OVER YEAR DECREASES IN REVENUES AND NET INCOME, BUT GUIDES TO GROWTH IN THE MARCH QUARTER AND RAISES ITS QUARTERLY DIVIDEND 4% TO

$0.25 PER SHARE.

Milpitas , California, January 17, 2012, Linear Technology Corporation (NASDAQ-LLTC), a leading, independent manufacturer of high performance linear integrated circuits , today reported financial res ults for the quarter ended January 1,

2012. Quarterly revenues of $294.3 million for the second quarter of fis cal year 2012 decreased $35.6 million or 11% from th e

previous quarter's revenue of $329.9 million and decreas ed $89.3 million or 23% from $383.6 million reported in the s econd quarter of fiscal year 2011. Net income of $87.9 million decreased $20.5 million or 19% from the first quarter of fiscal year

2012 and decreased $55.9 million or 39% from the second quarter of fis cal year 2011. Diluted earnings per share of $0.38 per

share in the second quarter of fis cal year 2012 decreas ed $0.09 per s hare or 19% from the firs t quarter of fiscal year 2012 a nd declined $0.24 per share or 39% from the second quarter of fis cal year 2011.

During the s econd quarter the Company's cash, cash equivalents and marketable securities increas ed by $69.8 million to $1.038 billion, net of spending $24.8 million to acquire Dus t Networks . Acquis ition costs in the second quarter pertaining to Dus t Networks were $3.2 million or $0.01 per s hare. In addition, the Company announced an increase in its quarterly dividend from $0.24 per share to $0.25 per share. This marks the 20th cons ecutive year the Company has increased its dividend. At the current s tock price the Company's dividend yield is approximately 3%. The cash dividend of $0.25 per share will be paid on February 29, 2012 to stockholders of record on February 17, 2012.
According to Lothar Maier, CEO, "This was an encouraging quarter in a difficult global economic environment. We met the mid point of our guidance and we believe that we are at an inflection point in our bus iness . Bookings , which started s lowly, strengthened in December and continued s trengthening in January. In these challenging times we maintained strong profitability, reporting operating margins at 45% of s ales . Given the improvement in our bookings and our current outlook for the March quarter, we are estimating that we will grow quarterly revenues sequentially in the 4% to 8% range for our fis cal third quarter. As we announced earlier, we have acquired Dust Networks , a leading provider of wireless s ensor networks . Although Dus t will initially have minimal impact on our quarterly financial results , we are optimis tic about growth prospects for Dus t in its emerging markets and the synergies between Dust and Linear in bringing rugged, low power, wireless solutions to the industrial and other end -markets ."
Except for his torical information contained herein, the matters set forth in this press releas e are forward -looking statements . In particular, the statements regarding the demand for our products , our customers ' ordering patterns and the anticipated trends in our s ales and profits are forward -looking s tatements . The forward-looking statements are dependent on certain ris ks and uncertainties , including such factors , among others , as the timing, volume and pricing of new orders receiv ed and s hipped, 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 fiscal year ended July 3, 2011.
Company officials will be discuss ing these res ults in greater detail in a conference call tomorrow, Wednesday, J anuary
18, 2012 at 8:30 a.m. Pacific Coas t Time. Those inves tors wishing to lis ten in may call [phone], or toll free (800) 390-
5311 before 8:15 a.m. to be included in the audience. There will be a live webcast of this conference call that can be a ccessed
through www.linear.comor www.streetevents .com. A replay of the conference call will be available from January 18, 2012 through January 24, 2012. You may access the archive by calling [phone] or toll free [phone] and entering reservation #8746812. An archive of the webcas t will als o be available at www.linear.comand www.streetevents .comas of January 18, 2012 until the s econd quarter earnings releas e next year.
Linear Technology Corporation, a member of the S&P 500, has been des ig ning, manufacturing and marketing a broad line of high performance analog integrated circuits for major companies worldwide for three decades . The Company's products provide an essential bridge between our analog world and the digital electronics in commun ications , networking, industrial, automotive, computer, medical, ins trumentation, cons umer, and military and aerospace systems . Linear Technology produces power management, data convers ion, s ignal conditioning, RF and interface ICs , and µModule s ubsystems . For more information, vis it www.linear.com.
For further information contact Paul Coghlan at Linear Technology Corporation, 1630 McCarthy Blvd., Milpitas , California 95035-7417, [phone].
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, 2012	October 2, 2011	January 2, 2011		January 1, 2012		January 2, 2011
Revenues	$ 294,333	$ 329,920	$ 383,621		$ 624,253		772,213
Cos t of s ales (1)	73,821	79,793	82,603		153,614		166,334
Gross profit 220,512 250,127 301,018 470,639 605,879
Expenses :
Research & development (1)	52,519	54,889	59,001		107,408		115,203
Selling, general & administrative (1)	34,922	37,672	40,958		72,594		85,040
	87,441	92,561	99,959		180,002		200,243
Operating income	133,071	157,566	201,059		290,637		405,636
Interest expens e	(6,925 )	(6,941 )	(8,135 )		(13,866 )		(18,552 )
Amortization of debt discount(2)	(4,931 )	(4,862 )	(5,390 )		(9,793 )		(12,156 )
Acquis ition related cos ts (3,195 ) - - (3,195 ) -
Interest and other income	1,146	1,221	1,602		2,367		3,518
Income before income taxes	119,166	146,984	189,136		266,150		378,446
Provis ion for income taxes	31,281	38,583	45,393		69,864		97,453
Net income	$ 87,885	$ 108,401	$ 143,743		$ 196,286		280,993
Earnings per share:
Bas ic	$ 0.38	$ 0.47	$ 0.62		$ 0.85		$ 1.22
Diluted	$ 0.38	$ 0.47	$ 0.62		$ 0.84		$ 1.21

Shares used in determining earnings per share:

Bas ic 232,209 231,863 230,284 232,051 230,006

Diluted 233,565 232,985 232,202 233,347 231,843

Includes the following non-cash charges :

(1) Stock-based compens ation

Cost of sales $ 1,844 $ 1,904 $ 2,338 $ 3,748 $ 4,521

Research & development 8,609 8,887 10,531 17,496 20,298

Selling, general & adminis trative 4,442 4,586 5,614 9,028 10,855

(2) Amortization of debt dis count (non -

cash interest expens e) 4,931 4,862 5,390 9,793 12,156
LINEAR TECHNOLOGY CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thous ands )
U.S. GAAP (unaudited)
January 1,
July 3,
ASSETS:
Current assets :

2012 2011

Cash, cash equivalents and marketable s ecurities $ 1,037,503 $ 922,537

Accounts receivable, net of allowance for doubtful

accounts of $2,041 ($2,043 at July 3, 2011) 139,279 169,637

Inventories 78,689 72,195

Deferred tax ass ets and other current ass ets 64,881 81,921 Total current assets 1,320,352 1,246,290

Property, plant & equipment, net 335,759 332,969

Other noncurrent ass ets 69,743 51,907 Total assets $ 1,725,854 $ 1,631,166

LIABILITIES & STOCKHOLDERS' EQUIT Y:

Current liabilities :

Accounts payable $ 11,227 $ 11,606

Accrued income taxes , payroll & other accrued liabilities 110,165 123,613

Deferred income on shipments to dis tributors 41,797 47,587
Total current liabilities 163,189 182,806
Convertible s enior notes 795,524 785,732

Deferred tax and other noncurrent liabilities 162,386 157,017

Stockholders ' equity:

Common stock 1,508,165 1,466,098

Accumulated deficit (903,665 ) (961,617 ) Accumulated other comprehens ive income 255 1,130

Total s tockholders ' equity 604,755 505,611
$ 1,725,854 $ 1,631,166
LINEAR TECHNOLOGY CORPORATION RECONCILIATION OF U.S. GAAP NET INCOME TO NON-GAAP NET INCOME

(In thousands , except per share amounts )

(unaudited)
Three Months Ended Six Months Ended

January 1,

October 2,

January 2,

January 1,

January 2,

Reported net income

2012 2011 2011 2012 2011

(GAAP bas is ) $ 87,885 $ 108,401 $ 143,743 $ 196,286 $ 280,993

Stock-bas ed compensation 14,895 15,377 18,483 30,272 35,674

Amortization of debt

dis count(1) 4,931 4,862 5,390 9,793 12,156
Acquis ition related cos ts 3,195 - - 3,195 -

Income tax effect of

non-GAAP adjustments (6,043 ) (5,313 ) (5,730) (11,356 ) (12,317 )

Non-GAAP net income $ 104,863 $ 123,327 $ 161,886 $ 228,190 $ 316,506

Non-GAAP earnings per s hare
Bas ic $ 0.45 $ 0.53 $ 0.70 $ 0.98 $ 1.38
Diluted $ 0.45 $ 0.53 $ 0.70 $ 0.98 $ 1.37

1) Amort izat ion of debt discount is non -cash int erest expense relat ed t o t he Company's Convert ible Senior Not es.

The Company's non -GAAP measures set forth above exclude charges related to stock-based compens ation, the amortization of the Company's debt dis count which is a non -cash interest expense and the non -cash charge on early retirement of convertible s enior notes . In addition, the Company's non -GAAP measures exclude the special expense items related to the acquis ition. The Company's management uses non -GAAP net income and non -GAAP earnings per share to evaluate the Company's current operating results and financial results and to compare them agains t historical financial res ults . The Company excludes stock-bas ed compensation, non-cash interest expenses , acquis ition related costs and the related tax effects primarily because they are s ignificant special expens e estimates , which management separates for cons ideration when evaluating and managing bus iness operations . In addition management believes it is useful to inves tors because it is frequently us ed by s ecurities analys ts , investors and other interes ted parties in evaluating the Company and provides further clarity on its profitability.

In addition, the Company believes that providing investors with these non -GAAP measurements enhances their ability to compare the Company's bus iness agains t that of its many competitors who employ and disclos e s imilar non -GAAP measures . This financial measure may be different from non-GAAP methods of accounting and reporting us ed by the Company's competitors to the extent their non -GAAP measures include other items . The presentation of this additional information should not be cons idered a substitute for net income or net income per diluted share prepared in accordance with GAAP.