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Press Release

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Kathy Ta

Vice President, Investor Relations

(408) 601-5697

MAXIM INTEGRATED REPORTS RESULTS FOR THE FOURTH QUARTER OF FISCAL 2021

•Revenue: $720 million

•Gross Margin: 67.2% GAAP (67.7% excluding special items)

•EPS: $0.93 GAAP ($0.91 excluding special items)

SAN JOSE, CA – July 27, 2021 – Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported net revenue of $720 million for its fourth quarter of fiscal 2021 ended June 26, 2021, an 8% increase from the $665 million revenue recorded in the prior quarter, and a 32% increase from the same quarter of last year.

“Maxim delivered record revenue in the June quarter, with sequential growth in all end markets, led by Industrial, Automotive, and Comms & Data Center. On the merger front, we are seeking final regulatory clearance for our combination with Analog Devices,” said Tunc Doluca, President and Chief Executive Officer.

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Fiscal Year 2021 Fourth Quarter Results

Based on Generally Accepted Accounting Principles (GAAP), diluted earnings per share in the June quarter was $0.93, which benefited from a $13 million tax reserve release. The results were affected by $6 million in pre-tax special items which primarily consisted of $4 million of expenses related to prior acquisitions and $2 million in charges related to our upcoming combination with Analog Devices. GAAP earnings per share, excluding special items was $0.91. An analysis of GAAP versus GAAP excluding special items is provided in this press release.

Cash Flow Items

At the end of the fourth quarter of fiscal 2021, total cash, cash equivalents and short-term investments were $2.3 billion, up $257 million from the prior quarter.

Notable items included:

•Cash flow from operations: $280 million

•Capital expenditures: $20 million

Trailing twelve months free cash flow was $859 million. Free cash flow is a non-GAAP measure and is defined by cash flow from operations less capital expenditures.

Dividend and Stock Repurchase

Per the terms of the Merger Agreement between the Company and Analog Devices, we will not declare a dividend that would have been paid in September 2021 and our stock repurchase program remains suspended.

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Due to the pending merger with Analog Devices, Maxim Integrated will not be hosting a quarterly earnings conference call and has suspended the practice of providing forward-looking guidance. Investors are requested to review our Investor Relations website for the quarterly financial highlights and SEC filings for the latest updates on the pending transaction with Analog Devices.

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			CONSOLIDATED STATEMENTS OF INCOME
			(Unaudited)
						Three Months Ended																		Year Ended
						June 26, 2021						March 27, 2021						June 27, 2020						June 26, 2021						June 27, 2020
						(in thousands, except per share data)
			Net revenues			$	719,855					$	665,029					$	545,369					$	2,632,529					$	2,191,395
			Cost of goods sold			235,830						222,144						183,001						872,183						758,743
			Gross margin			484,025						442,885						362,368						1,760,346						1,432,652
			Operating expenses:
			Research and development			114,834						109,228						110,173						454,330						440,166
			Selling, general and administrative			81,071						76,544						72,893						320,722						296,722
			Intangible asset amortization			846						846						810						3,554						3,078
			Severance and restructuring expenses			1,139						155						678						13,434						5,363
			Other operating expenses (income), net			2,798						8,848						(173)						22,606						929
			Total operating expenses			200,688						195,621						184,381						814,646						746,258
			Operating income			283,337						247,264						177,987						945,700						686,394
			Interest and other income (expense), net			(5,723)						(2)						(8,488)						(15,964)						(8,298)
			Income before taxes			277,614						247,262						169,499						929,736						678,096
			Provision for (benefit from) income taxes (1)(2)			23,875						27,199						(37,799)						102,475						23,402
			Net income			$	253,739					$	220,063					$	207,298					$	827,261					$	654,694
			Earnings per share:
			Basic			$	0.95					$	0.82					$	0.78					$	3.09					$	2.43
			Diluted			$	0.93					$	0.81					$	0.77					$	3.05					$	2.41
			Shares used in the calculation of earnings per share:
			Basic			268,160						267,892						266,639						267,546						269,341
			Diluted			271,445						271,396						268,777						270,872						272,028
			Dividends paid per share			$	—					$	—					$	0.48					$	0.48					$	1.92
			SCHEDULE OF SPECIAL ITEMS
			(Unaudited)
						Three Months Ended																		Year Ended
						June 26, 2021						March 27, 2021						June 27, 2020						June 26, 2021						June 27, 2020
						(in thousands)
			Cost of goods sold:
			Intangible asset amortization			$	3,047					$	4,430					$	3,528					$	17,408					$	12,860
			Merger-related expenses(3)			—						—												2,394						—
			Cost of COVID-19 response programs			609						638						1,591						2,750						3,616
			Total			$	3,656					$	5,068					$	5,119					$	22,552					$	16,476
			Operating expenses:
			Merger-related expenses(3)			$	2,058					$	2,546					$	—					26,617						$	—
			Intangible asset amortization			846						846						810						3,553						3,078
			Severance and restructuring			1,139						155						678						13,434						5,363
			Other operating expenses (income), net			831						6,302			(3)			(173)						7,436						928
			Total			$	4,874					$	9,849					$	1,315					$	51,040					$	9,369
			Interest and other expense (income), net			$	(2,878)					$	(7,359)					$	1,484					$	(15,903)					$	(541)
			Total			$	(2,878)					$	(7,359)					$	1,484					$	(15,903)					$	(541)
			Provision for (benefit from) for income taxes:
			Impact of U.S. tax legislation (1)			$	—					$	—					$	6,486					$	—					$	6,486
			Impact of income tax audit settlements (2)			—						—						(51,197)						—						(51,197)
			Total			$	—					$	—					$	(44,711)					$	—					$	(44,711)
			(1) Includes effect of U.S. tax legislation enacted on December 22, 2017.
			(2) Includes effect of income tax audit settlements.
			(3) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs, and other legal and professional services.

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			CONSOLIDATED BALANCE SHEETS
			(Unaudited)
						June 26, 2021						March 27, 2021						June 27, 2020
						(in thousands)
			ASSETS
			Current assets:
			Cash and cash equivalents			$	2,291,399					$	2,033,973					$	1,578,670
			Short-term investments			—						—						35,536
			Total cash, cash equivalents and short-term investments			2,291,399						2,033,973						1,614,206
			Accounts receivable, net			658,829						571,042						404,778
			Inventories			237,414						242,343						259,626
			Other current assets			30,643						27,440						39,219
			Total current assets			3,218,285						2,874,798						2,317,829
			Property, plant and equipment, net			554,339						543,848						550,406
			Intangible assets, net			66,998						70,891						87,959
			Goodwill			562,540						562,541						562,540
			Other assets			120,937						120,149						110,569
			TOTAL ASSETS			$	4,523,099					$	4,172,227					$	3,629,303
			LIABILITIES AND STOCKHOLDERS' EQUITY
			Current liabilities:
			Accounts payable			$	129,710					$	102,263					$	91,982
			Price adjustment and other revenue reserves			259,411						214,366						148,916
			Income taxes payable			49,568						53,694						43,457
			Accrued salary and related expenses			150,656						128,553						126,751
			Accrued expenses			47,967						35,627						42,228
			Total current liabilities			637,312						534,503						453,334
			Long-term debt			995,460						995,100						994,022
			Income taxes payable			343,964						351,738						385,072
			Other liabilities			130,423						141,721						139,418
			Total liabilities			2,107,159						2,023,062						1,971,846
			Stockholders' equity:
			Common stock and capital in excess of par value			269						268						266
			Additional paid-in capital			58,055						47,801						—
			Retained earnings			2,370,900						2,117,161						1,671,786
			Accumulated other comprehensive loss			(13,284)						(16,065)						(14,595)
			Total stockholders' equity			2,415,940						2,149,165						1,657,457
			TOTAL LIABILITIES & STOCKHOLDERS' EQUITY			$	4,523,099					$	4,172,227					$	3,629,303

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			CONSOLIDATED STATEMENTS OF CASH FLOWS
			(Unaudited)
						Three months ended																		Year Ended
						June 26, 2021						March 27, 2021						June 27, 2020						June 26, 2021						June 27, 2020
						(in thousands, except per share data)
			Cash flows from operating activities:
			Net income			$	253,739					$	220,063					$	207,298					$	827,261					$	654,694
			Adjustments to reconcile net income to net cash provided by operating activities:
			Stock-based compensation			20,176						20,878						23,290						107,993						95,431
			Depreciation and amortization			23,564						24,552						36,384						96,456						108,533
			Deferred taxes			(4,047)						1,601						14,386						(5,331)						8,994
			In Process Research and Development written-off			—						—						—						1,220						—
			Loss from sale of property, plant and equipment			(611)						124						557						(260)						1,191
			Fair value contingent consideration			—						5,835						—						5,835						—
			Other Adjustments			(95)						2,413						2,127						1,745						11,353
			Changes in assets and liabilities:
			Accounts receivable			(87,794)						(85,236)						(24,078)						(254,229)						(42,335)
			Inventories			4,890						18,950						(34,562)						21,896						(8,671)
			Other assets			(6,759)						(4,875)						(25,769)						(17,343)						(86,299)
			Accounts payable			17,384						(719)						5,405						22,187						7,594
			Price adjustment and other revenue reserves			45,052						34,118						37,681						110,673						48,426
			Income taxes payable			(11,900)						8,021						(45,855)						(34,997)						(74,814)
			All other accrued liabilities			26,211						25,715						15,465						41,154						76,758
			Net cash provided by operating activities			279,810						271,440						212,329						924,260						800,855
			Cash flows from investing activities:
			Purchases of property, plant and equipment			(19,500)						(16,229)						(15,680)						(64,942)						(67,049)
			Proceeds from sales of property, plant and equipment			11						16						124						94						392
			Proceeds from sales of available-for-sale securities			—						—						1,290						1,500						1,290
			Proceeds from maturity of available-for-sale securities			—						8,876						10,734						33,901						104,286
			Payment in connection with business acquisition, net of cash acquired			—						—						(69,270)						—						(69,270)
			Purchases of investments in privately-held companies			—						(1,235)						(1,840)						(1,345)						(1,960)
			Proceeds from sale of investments in privately-held companies			242						—						205						281						378
			Other investing activities			—						—						2						—						(116)
			Net cash provided by (used in) investing activities			(19,247)						(8,572)						(74,435)						(30,511)						(32,049)
			Cash flows from financing activities:
			Contingent consideration paid			—						(10,000)						—						(10,000)						(8,000)
			Net issuance of restricted stock units			(9,964)						(15,932)						(6,741)						(61,880)						(35,877)
			Proceeds from stock options exercised			82						76						2,240						2,965						18,870
			Issuance of common stock under employee stock purchase program			—						—						23,725						18,498						42,260
			Repurchase of common stock			—						—						(82,299)						(9,201)						(440,811)
			Dividends paid			—						—						(128,058)						(128,147)						(517,162)
			Net cash used in financing activities			(9,882)						(25,856)						(191,133)						(187,765)						(940,720)
			Net increase (decrease) in cash, cash equivalents and restricted cash			250,681						237,012						(53,239)						705,984						(171,914)
			Cash, cash equivalents and restricted cash
			Beginning of period			$	2,040,731					$	1,803,719					$	1,638,667					$	1,585,428					$	1,757,342
			End of period			$	2,291,412					$	2,040,731					$	1,585,428					$	2,291,412					1,585,428
			Total cash, cash equivalents, and short-term investments			$	2,291,399					$	2,033,973					$	1,614,206					2,291,399						1,614,206
			Cash, cash equivalents and restricted cash:
			Cash and cash equivalents			$	2,291,399					$	2,033,973					$	1,578,670					2,291,399						1,578,670
			Restricted cash in Other assets			13						6,758						6,758						13						6,758
			Total cash, cash equivalents and restricted cash			$	2,291,412					$	2,040,731					$	1,585,428					$	2,291,412					$	1,585,428

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			ANALYSIS OF GAAP VERSUS GAAP EXCLUDING SPECIAL ITEMS DISCLOSURES
			(Unaudited)
									Three Months Ended																		Year Ended
									June 26, 2021						March 27, 2021						June 27, 2020						June 26, 2021						June 27, 2020
									(in thousands, except per share data)
			Reconciliation of GAAP gross profit to GAAP gross profit excluding special items:
			GAAP gross profit						$	484,025					442,885						362,368						$	1,760,346					1,432,652
			GAAP gross profit %						67.2		%				66.6		%				66.4		%				66.9		%				65.4		%
			Special items:
			Intangible asset amortization						3,047						4,430						3,528						17,408						12,860
			Merger-related expenses(1)						—						—						—						2,394						—
			Cost of COVID-19 response programs						609						638						1,591						2,750						3,616
			Severance and restructuring						—						—						—						—						—
			Total special items						3,656						5,068						5,119						22,552						16,476
			GAAP gross profit excluding special items						$	487,681					$	447,953					$	367,487					$	1,782,898					$	1,449,128
			GAAP gross profit % excluding special items						67.7		%				67.4		%				67.4		%				67.7		%				66.1		%
			Reconciliation of GAAP operating expenses to GAAP operating expenses excluding special items:
			GAAP operating expenses						$	200,688					195,621						184,381						$	814,646					746,258
			Special items:
			Merger-related expenses(1)						2,058						2,546						—						26,617						—
			Intangible asset amortization						846						846						810						3,553						3,078
			Severance and restructuring						1,139						155						678						13,434						5,363
			Other operating expenses (income), net						831						6,302						(173)						7,436						928
			Total special items						4,874						9,849						1,315						51,040						9,369
			GAAP operating expenses excluding special items						$	195,814					$	185,772					$	183,066					$	763,606					$	736,889
			Reconciliation of GAAP net income to GAAP net income excluding special items:
			GAAP net income						$	253,739					$	220,063					$	207,298					$	827,261					$	654,694
			Special items:
			Intangible asset amortization						3,893						5,276						4,338						20,961						15,938
			Merger-related expenses(1)						2,058						2,546						—						29,011						—
			Cost of COVID-19 response programs						609						638						1,591						2,750						3,616
			Severance and restructuring						1,139						155						678						13,434						5,363
			Other operating expenses (income), net						831						6,302						(173)						7,436						928
			Interest and other expense (income), net						(2,878)						(7,359)						1,484						(15,903)						(541)
			Pre-tax total special items						5,652						7,558						7,918						57,689						25,304
			Other income tax effects and adjustments (2)						(12,950)						(5,928)						(14,378)						(24,765)						(19,668)
			Impact of U.S. tax legislation (3)						—						—						6,486						—						6,486
			Impact of income tax audit settlements (4)						—						—						(51,197)						—						(51,197)
			GAAP net income excluding special items						$	246,441					$	221,693					$	156,127					$	860,185					$	615,619
			GAAP net income per share excluding special items:
			Basic						$	0.92					$	0.83					$	0.59					$	3.22					$	2.29
			Diluted						$	0.91					$	0.82					$	0.58					$	3.18					$	2.26
			Shares used in the calculation of earnings per share excluding special items:
			Basic						268,160						267,892						266,639						267,546						269,341
			Diluted						271,445						271,396						268,777						270,872						272,028
			(1) Includes ADI merger related expenses such as accelerated stock-based compensation expense resulting from the acceleration of certain RSAs and RSUs, and other legal professional services.
			(2) Includes tax effect of pre-tax special items and miscellaneous tax adjustments.
			(3) Includes effect of U.S. tax legislation enacted on December 22, 2017.
			(4) Includes effect of income tax audit settlements.

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Non-GAAP Measures

To supplement the consolidated financial results prepared under GAAP, Maxim Integrated uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude special items related to the cost of COVID-19 response programs; ADI merger-related expenses; intangible asset amortization; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net; and other income tax effects and adjustments. We defined free cash flow as net cash provided from operations less gross capital expenditures. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate Maxim Integrated’s current performance. Many analysts covering Maxim Integrated use non-GAAP measures as well. Given management’s use of these non-GAAP measures, Maxim Integrated believes these measures are important to investors in understanding Maxim Integrated’s current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in Maxim Integrated’s core business across different time periods. These non-GAAP measures are not in accordance with or an alternative to GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names. The non-GAAP measures displayed in the table above include the following:

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GAAP Gross Profit Excluding Special Items

The use of GAAP gross profit excluding special items allows management to evaluate the gross margin of the Company’s core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization, ADI merger-related expenses and cost of COVID-19 response programs. In addition, it is an important component of management’s internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP gross profit excluding special items to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of Maxim Integrated’s core businesses.

GAAP Operating Expenses Excluding Special Items

The use of GAAP operating expenses excluding special items allows management to evaluate the operating expenses of the Company’s core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; ADI merger-related expenses severance and restructuring, and other operating expenses (income), net. In addition, it is an important component of management’s internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP operating expenses excluding special items to enable investors and analysts to evaluate our core business and its direct operating expenses.

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GAAP Provision for Income Taxes Excluding Special Items

The use of a GAAP provision for income taxes excluding special items allows management to evaluate the provision for income taxes across different reporting periods on a consistent basis, independent of special items. Special items include the tax impact of pre-tax special items, significant tax audit settlements, significant prior year tax reserve adjustments, significant tax legislation, and significant non-recurring and period specific tax items, which vary in size and frequency.

GAAP Net Income and GAAP Net Income per Share Excluding Special Items

The use of GAAP net income and GAAP net income per share excluding special items allow management to evaluate the operating results of Maxim Integrated’s core businesses and trends across different reporting periods on a consistent basis, independent of special items including intangible asset amortization; ADI merger-related expenses; cost of COVID-19 response programs; severance and restructuring; other operating expenses (income), net; interest and other expense (income), net; and other income tax effects and adjustments. In addition, they are important components of management’s internal performance measurement and reward process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents GAAP net income and GAAP net income per share excluding special items to enable investors and analysts to understand the results of operations of Maxim Integrated’s core businesses and to compare our results of operations on a more consistent basis against that of other companies in our industry.

“Safe Harbor” Statement

Except for historical information, this press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve risk and uncertainty. Actual results could

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differ materially from those forecasted, based upon, among other things, general market and economic conditions, regulatory approvals, supply constraints, market developments that could adversely affect the growth of the mixed-signal analog market, product mix shifts, the loss of all or a substantial portion of our sales to one or more of our large customers, customer cancellations and price competition, as well as other risks described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2020 (the “Form 10-K”). The Form 10-K may be found at https://www.sec.gov/Archives/edgar/data/743316/000074331620000025/0000743316-20-000025-index.htm.

All forward-looking statements included in this news release are made as of the date hereof and based on the information available to the Company as of the date hereof. The Company assumes no obligation to update any forward-looking statement except as required by law.

About Maxim Integrated

Maxim Integrated, an engineer’s engineering company, exists to solve the designer’s toughest problems in order to empower design innovation. Our broad portfolio of high-performance semiconductors, combined with world-class tools and support, delivers essential analog solutions including efficient power, precision measurement, reliable connectivity and robust protection along with intelligent processing. Designers in application areas such as automotive, communications, consumer, data center, healthcare, industrial and IoT trust Maxim to help them quickly develop smaller, smarter and more secure designs. Learn more at https://www.maximintegrated.com.

Source: Maxim Integrated Investor Relations

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