You are on page 1of 25

Exhibit 2

June Fiscal Year

Selected Linear Financial Data in Millions of Dollars (Except Share Data), 199220
1992

1993

1994

1995

1996

Income Statement
Sales

119.4

150.9

200.5

265

377.8

-Cost of Goods Sold

49.5

57

67.6

83.3

106.8

-Research and Development Expense

12.3

14.8

18.4

23.9

31.1

-Other Expenses

19.1

23.3

28

29.4

36

Income Before Taxes

38.5

55.7

86.5

128.5

203.9

-GAAP Income Taxes

13.5

19.3

29.7

43.8

69.9

25

36.4

56.8

84.7

134

Common Shares Outstanding

280.2

285.4

290.5

294.3

298.6

Earnings Per Share

$0.09

$0.13

$0.20

$0.29

$0.45

Dividends Paid Preferred

0.0

0.0

0.0

0.0

0.0

Dividends Paid - Common

0.0

5.3

8.3

9.8

11.9

$2.36

$3.61

$5.50

$8.25

$7.50

Payout Ratio

0.00%

14.59%

14.56%

11.61%

8.85%

Dividends Per Share

$0.00

$0.02

$0.03

$0.03

$0.04

Net Inocme Margin ratio (as % of sales)

21%

24%

28%

32%

35%

Operating Cash Flow Ratio (as % of Sales)

16%

23%

23%

31%

25%

8.2%

5.0%

8.1%

8.3%

18.6%

Net Income

25

36.4

56.8

84.7

134

+Depreciation and Amortization

4.5

5.8

6.3

8.6

10.3

-Capital Expenditure

9.8

7.6

16.2

22.1

70.4

-Working Capital Investments

7.2

2.6

6.8

-4.5

-9.1

+Tax Adjustmentb

6.4

2.8

6.1

6.2

11.3

Operating Cash Flow

19

34.8

46.3

81.8

94.3

+Stock Issuance

11.7

9.1

13.7

7.6

12.7

-Stock Purchases

0.7

1.2

1.3

6.1

22.9

-Dividends Paid

5.3

8.3

9.8

11.9

-Other Itemsc

4.7

1.5

30

32.6

48.9

73.4

72.3

95.3

127.9

176.8

250.2

322.5

Net Income

Share Price, Fiscal Year Close


DIVIDEND POLICY

Profitability

Investment
CAPEX ( as % of sales)
Cash Flow Statement

Net Cash Flow


Cash and Short-Term Investments

First thee quarters of FY2003.

The difference between the exercise price and the market value of LLTC stock could be expensed for tax purposes, leading to large tax adjustments on the cash

Other Items includes long-term investments and acquisitions (other than capital expenditure), extraordinary items, and other adjustments to net income.

Source: Adapted from Compustat

Dollars (Except Share Data), 19922003


1997

1998

1999

2000

2001

2002

2003a

379.3

484.8

506.7

705.9

972.6

512.3

440.8

109.8

137.8

139.8

179

231.1

144.7

114.6

35.4

46.2

54.7

78.3

102.5

79.8

67

29.6

29.6

26.5

31.4

28.4

9.4

18.9

204.5

271.3

285.7

417.3

610.7

278.4

240.3

70.2

90.4

91.4

129.4

183.2

80.7

69.7

134.4

180.9

194.3

287.9

427.5

197.6

170.6

303.8

307.3

307.5

315.2

318.9

316.2

312.4

$0.44

$0.59

$0.63

$0.91

$1.34

$0.63

$0.55

$ 0.01 change

227.5 <-- Annualized Net Income =


312.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

15.0

18.3

22.1

28.0

41.2

54.0

47.0

$12.94

$15.08

$33.63

$63.94

$44.22

$31.43

$30.87

11.13%

10.12%

11.37%

9.71%

9.63%

27.33%

27.56%

32.96%

$0.05

$0.06

$0.07

$0.09

$0.13

$0.17

$0.15

$0.24

35%

37%

38%

41%

44%

39%

39%

34%

50%

48%

51%

44%

47%

41%

5.8%

5.0%

7.7%

11.4%

13.2%

3.5%

2.2%

134.4

180.9

194.3

287.9

427.5

197.6

170.6

12.4

20.1

22

25

35.8

46.3

33.5

21.9

24.4

39.1

80.3

127.9

17.9

9.8

21.2

-7.4

-9.6

-26.6

19.2

42

14.9

25.3

58.6

54.6

102.9

115.5

55.2

0.7

129.1

242.6

241.3

362

431.7

239.3

180.1

18.5

26.6

38.3

54.8

52.7

39.3

27.4

11.6

56.5

108.7

69.8

221.6

165.7

15

18.3

22.1

28

41.2

54

47

-18.4

121

194.5

148.8

388.9

373.4

13.2

443.4

637.9

786.7

1,175.60

1,549.00

1,552.00

1,565.20

s, leading to large tax adjustments on the cash flow statement.

75.0

<-- an increase in dividend of

ms, and other adjustments to net income.

<-- Annualized Net Income = 4/3 x 17.6

<-- an increase in dividend of 0.01 per share = 0.06x4

Exhibit 3

Linear Payout Policy, 1992-2003


Market Reaction

Fiscal
Quarter

Stock RePurchase
($M)

Dividends
Per Sharea
($)

Q1 93

0.00000

Q2 93

0.00625

Q3 93

1.2

Stock Splits Share Pricea


(Date)
($)
Sharesa (M)

2:1 (11/3)

Dividendb
13-Oct

Earningsb

2.70

281.3

3.19

283.1

12-Jan

14-Oct

0.00625

3.16

283.4

13-Apr

Q4 93

0.00625

3.61

285.4

20-Jul

Q1 94

0.00625

4.28

294.1

Q2 94

0.00750

4.84

287.7

19-Jan
19-Apr

12-Oct

12-Oct

Q3 94

0.5

0.00750

5.28

289.6

Q4 94

0.8

0.00750

5.50

290.5

Q1 95

6.1

0.00750

5.54

290.0

Q2 95

0.00875

6.19

290.5

Q3 95

0.00875

7.00

293.2

Q4 95

0.00875

8.25

294.3

Q1 96

0.01000

10.38

295.2

17-Oct

2:1(8/11)

17-Oct

17-Oct
18-Jan
18-Apr

25-Jul

27-Jul

Q2 96

3.5

0.01000

9.81

296.3

17-Jan

Q3 96

5.0

0.01000

10.44

299.3

16-Apr

Q4 96

14.4

0.01000

7.50

298.6

Q1 97

11.6

0.01250

9.22

297.5

16-Oct

Q2 97

0.01250

10.97

299.5

15-Jan

Q3 97

0.01250

11.06

301.6

Q4 97

0.01250

12.94

303.8

Q1 98

23-Jul

23-Jul

16-Apr
23-Jul

22-Jul

0.01500

17.19

306.0

14-Oct

Q2 98

50.5

0.01500

14.41

303.0

13-Jan

Q3 98

5.9

0.01500

17.25

306.0

0.01500

15.08

307.3

Q4 98

14-Apr
21-Jul

21-Jul

Q1 99

100.0

0.01750

12.50

300.7

13-Oct

Q2 99

8.8

0.01750

22.39

301.3

12-Jan

Q3 99

0.01750

25.63

306.1

Q4 99

0.02000

2:1(1/29)

33.63

307.5

13-Apr

13-Apr
20-Jul

Q1 00

0.02000

29.39

308.5

12-Oct

Q2 00

0.02000

Q3 00

0.02000

Q4 00
Q1 01

35.78

311.1

55.00

313.1

0.03000

63.94

315.2

25-Jul

0.03000

64.75

316.6

17-Oct

2:1(3/6)

18-Jan
18-Apr

18-Apr

Q2 01

52.3

0.03000

46.25

316.0

Q3 01

11.0

0.03000

41.06

317.8

16-Jan

Q4 01

6.5

0.04000

44.22

318.9

24-Jul

Q1 02

114.8

0.04000

32.80

316.3

16-Oct

Q2 02

3.0

0.04000

39.04

317.2

Q3 02

37.3

0.04000

44.22

317.1

Q4 02

66.5

0.05000

31.43

316.2

23-Jul

Q1 03

125.0

0.05000

20.72

311.8

15-Oct

Q2 03

1.5

0.05000

25.72

313.4

14-Jan

Q3 03

39.2

0.05000

30.87

312.4

17-Apr

17-Apr

15-Jan
16-Apr

17-Apr

0.06
Adjusted for splits.

Announcement date. The quarterly earnings announcement date for Q4 1994 is not available from Compustat.

Return on the day before, the day of, and the day after the earnings announcement. The SOX index begins in October 1994.

Source: Adapted from Compustat, the Center for Research on Security Prices, Datastream

Market Reaction

LLTC
Returnc(%)

SOX
Returnc(%)

-1.6
-1
11
-1.2
11.7
0.6
-4.1
2.2
4.7

0.5

1.8

-5

11.7

0.2

14.3

7.3

10.6

3.6

-14.3

4.6

-1.4

-5.8

-11

-1.3

11.4

2.3

-2.3

-0.7

8.3

3.9

5.4

-4

6.6

6.4

13.3

6.8

-15.5

-5

11.9

7.9

3.1

0.3

-6.2

-10.7

-6.4

-3.5

-1.4

6.1

-0.5

15.2

13.5

-2

-4.5

-18.3

-14.6

8.8

8.5

7.2

-11.3

-3.6

-10.1

-9.5

-1.1

-6.5

4.9

3.7

0.5

-2.9

4.3

-0.3

-2.4

-4.2

Exhibit 4

Institution
Janus Capital Management
Capital Research and Management Company
State Farm Mutual Automobile Insurance
Fidelity Management & Research (FMR)
Barclays Bank
Oak Associates
State Street
Northern Trust
AXA Financial
Massachusetts Financial Services
Source: Adapted from Thomson Financial Spectrum Database

Top 10 Institutional Shareholders, 2003

Shares
34,151,384
23,807,150
14,599,700
10,902,153
10,561,160
9,754,731
9,468,226
7,473,564
7,429,952
7,309,046

utional Shareholders, 2003


Percent of Shares
Outstanding
10.91
7.61
4.66
3.48
3.37
3.12
3.03
2.39
2.37
2.34

Exhibit 5

Dividend Policy for the S&P 500, Annual Data from 1993-2002

Dividend Yield

Earnings Yield

Return on Book
Equity

Utilities
Telecommunications Services
Materials
Energy
Financials
Industrials
Consumer Staples
Consumer Discretionary
Health Care
Information Technology

4.80%
2.30%
2.20%
1.80%
2.30%
1.80%
1.80%
1.40%
0.90%
0.30%

7.10%
5.20%
5.40%
5.20%
7.00%
5.60%
4.60%
5.40%
3.90%
3.60%

11.40%
14.40%
12.20%
9.80%
16.50%
15.20%
21.10%
15.50%
16.90%
14.90%

Weighted Average

1.80%

5.40%

15.10%

Sector

The sample includes S&P 500 firms in 2002. Not all firms have data back to 1993.

Source: Adapted from Goldman Sachs Portfolio Strategy (July 1, 2003 Research Report)

Exhibit 6

Company
Linear
Technology

Cumulative Executive Compensation, 1993-2002

Name (CEO
Year)
Robert
Swanson

John
Chambers
Cisco Systems (1995)

Salary ($M)

Stock
Options
Bonus ($M) Grantsa (000)

Value
Realized
from
Exercise
($M)

Stock
Options
Exercisea,b
(000)

Options
Ownedc
(000)

2.6

12.6

3,000

1,297

29.1

1,003

2.3

3.3

45,840

43,090

344.9

35,400

Intel

Craig Barrett
(1998)

4.3

17.8

5,005

10,752

196.6

5,005

Maxim

John Gifford

2.7

12

10,913

10,522

206.3

4,946

Microsoft

Steven A.
Ballmer (2000)

3.5

Adjusted for splits.

Includes the exercise of options granted prior to 1993.

As reported in the proxy statement in 2002. In 2002, Robert Swanson and John Chambers forfeited 700,000 options and 2 million options, respectively.

Source: Adapted from Execucomp, Yahoo Finance

Shares
Ownedc
(000)

Common
Shares (M)

530

316

2,047

7,303

2,732

6,575

2,047

320

410,968

5,359

2 million options, respectively.

Exhibit 8

Year

Municipal and corporate bond yields


Bloomberg 1-year
AAA Corporate
Debt

Bloomberg 1-year
AAA Muni Debt

Annual Average Month-End Yield (%):


1995
1996
1997
1998
1999
2000
2001
2002

Source: Adapted from Bloomberg

6.25
5.89
5.94
5.44
5.73
6.71
3.87
2.37

effective personal tax rate


4.17
3.81
3.92
3.68
3.64
4.49
2.94
1.87

0.6672
0.646859
0.659933
0.676471
0.635253
0.669151
0.75969
0.78903

33.28%
35.31%
34.01%
32.35%
36.47% <--max
33.08%
24.03%
21.10%

personal tax rate

Data on Companies in the Semiconductor Index (SOX) in Millions of Dollars (Except Sha

Exhibit 11

Company

Advanced Micro Devices


Altera
Applied Materials
Broadcom
Intel
Kla-Tencor
Linear Technology
Lsi Logic
Maxim Integrated Products
Micron Technology
Motorola
National Semiconductor
Novellus Systems
STMicroelectronicsf
Taiwan Semiconductorg
Teradyne
Texas Instruments
Xilinx

Ticker

Share Pricea

AMD
ALTR
AMAT
BRCM
INTC
KLAC
LLTC
LSI
MXIM
MU
MOT
NSM
NVLS
STM
TSM
TER
TXN
XLNX

6.18
13.54
12.58
12.35
16.28
35.94
30.87
4.52
36.12
8.14
8.26
17.04
27.27
18.90
6.84
11.64
16.37
23.41

Share price on March 31, 2003.

Compustat operating cash flow (Item 308) less capital expenditures (Item 128).

Cash and short-term investments.

Special (non-recurring) dividend.

Micron discontinued its dividend in 1996.

STMicroelectronics is an American Depository Receipt (ADR), based in France.

Taiwan Semiconductor is an ADR, based in Taiwan.

Source: Adapted from Compustat, Center for Research on Security Prices

Shares (M)

344.5
383.5
1648.0
277.8
6575.0
189.8
316.2
375.1
320.1
602.9
2315.3
183.8
149.1
887.5
3703.2
183.2
1730.6
339.0

Net Income

-1303.0
91.3
269.0
-2236.6
3117.0
216.2
197.6
-292.4
259.2
-907.0
-2485.0
-33.3
22.9
429.0
413.8
-718.5
-344.0
125.7

Cash Flowb

-794.1
237.8
75.1
-144.4
4426.0
215.4
239.3
115.1
313.4
-181.8
732.0
49.8
188.1
718.0
951.3
-80.6
1190.0
299.0

in Millions of Dollars (Except Share Data), 2002

Cashc

1037.7
942.7
4929.5
502.7
12587.0
673.3
1552.0
990.0
765.5
985.7
6566.0
915.4
1019.7
2564.0
1113.0
325.4
3012.0
675.6

Long-Term
Debt

1779.8
0.0
573.9
1.2
929.0
0.0
0.0
1241.2
0.0
360.8
7674.0
19.9
0.0
2797.0
1701.7
450.6
833.0
0.0

Dividends

0.0
0.0
0.0
0.0
533.0
0.0
54.0
0.0
0.0
0.0
364.0
0.0
0.0
36.0
0.0
0.0
147.0
0.0

Stock Repurchases

0.0
139.5
125.0
0.0
4014.0
123.2
221.6
0.0
864.0
0.0
0.0
0.0
78.2
115.0
0.0
0.0
370.0
60.8

Dividend
Initiation
Date

Apr-95d

Sep-92
Oct-92
2-Oct
Sep-91e
Nov-46

May-99

26-Apr

Exhibit 12

Selected Financial Data in Millions of Dollars (Except Share Data), 19982002


1998

1999

2000

2001

2002

Sales

8,458.8

12,154.0

18,928.0

22,293.0

18,915.0

Income Before Taxes

2,302.5

3,316.0

4,343.0

-874.0

2,710.0

-GAAP Income Taxes

952.4

1,220.0

1,675.0

140.0

817.0

1,350.1

2,096.0

2,668.0

-1,014.0

1,893.0

+Depreciation and Amortization

327.3

486.0

863.0

2,236.0

1,957.0

-Capital Expenditure

414.8

584.0

1,086.0

2,271.0

2,641.0

-688.7

-937.0

-1,262.0

-5,078.0

-2,829.0

514.4

919.0

1,348.0

92.0

-92.0

2,465.7

3,854.0

5,055.0

4,121.0

3,946.0

488.5

740.0

1,564.0

1,262.0

655.0

0.0

0.0

0.0

0.0

1,854.0

CISCO (July Fiscal Year)

Net Income

-Working Capital Investments


+Tax Adjustment
Operating Cash Flow
+Stock Issuance
-Stock Purchases
-Dividends Paid

0.0

0.0

0.0

0.0

0.0

2,538.3

4,269.5

3,110.0

4,001.0

-3,002.0

415.9

324.5

3,509.0

1,382.0

5,749.0

Cash and Short-Term Investments

1,691.5

2,016.0

5,525.0

6,907.0

12,656.0

Common Shares Outstanding

1,041.7

3,271.0

7,138.0

7,324.0

7,303.0

Share Price, Fiscal Year Close

$95.75

$62.13

$65.44

$19.22

$13.19

-Other Itemsa
Net Cash Flow

INTEL (December Fiscal Year)


Sales

26,273.0

29,389.0

33,726.0

26,539.0

26,764.0

Income Before Taxes

9,137.0

11,228.0

15,141.0

2,183.0

4,204.0

-GAAP Income Taxes

3,069.0

3,914.0

4,606.0

892.0

1,087.0

Net Income

6,068.0

7,314.0

10,535.0

1,291.0

3,117.0

+Depreciation and Amortization

2,807.0

3,186.0

4,807.0

6,052.0

5,042.0

-Capital Expenditure

3,557.0

3,403.0

6,674.0

7,309.0

4,703.0

-31.0

180.0

2,912.0

-1,627.0

-358.0

-Working Capital Investments


+Tax Adjustment

285.0

1,015.0

397.0

-316.0

612.0

Operating Cash Flow

5,634.0

7,932.0

6,153.0

1,345.0

4,426.0

+Stock Issuance

2,127.0

543.0

797.0

762.0

681.0

-Stock Purchases

6,785.0

4,612.0

4,007.0

4,008.0

4,014.0

168.0

366.0

470.0

538.0

533.0

-Dividends Paid

3,109.0

-665.0

438.0

-166.0

-477.0

-2,301.0

4,162.0

2,035.0

-2,273.0

1,037.0

Cash and Short-Term Investments

7,626.0

11,788.0

13,823.0

11,550.0

12,587.0

Common Shares Outstanding

1,658.0

3,334.0

6,721.0

6,690.0

6,575.0

Share Price, Fiscal Year Close

$118.56

$82.31

$30.06

$31.45

$15.57

-Other Items

Net Cash Flow

MAXIM (June Fiscal Year)


Sales

560.2

607.0

864.9

1,576.6

1,025.1

Income Before Taxes

269.9

297.2

425.2

505.0

386.8

-GAAP Income Taxes


Net Income
+Depreciation and Amortization

91.8

101.0

144.6

170.0

127.7

178.1

196.1

280.6

334.9

259.2

15.1

17.6

19.7

90.9

56.3

-Capital Expenditure

109.4

54.3

176.1

336.5

90.4

-Working Capital Investments

-18.8

-34.8

-26.2

-235.6

48.4

83.5

57.7

157.3

148.3

136.8

186.1

251.9

307.7

473.1

313.4

+Tax Adjustment
Operating Cash Flow
+Stock Issuance

37.2

51.1

79.3

114.3

109.3

-Stock Purchases

123.1

113.9

257.0

250.7

864.0

-Dividends Paid

0.0

0.0

0.0

6.0

0.0

-Other Itemsa

1.2

-2.7

3.7

-248.7

13.5

99.0

191.8

126.2

579.4

-454.9

Cash and Short-Term Investments

322.9

514.7

640.9

1,220.4

765.5

Common Shares Outstandingb

130.8

135.8

282.8

330.2

320.1

Share Price, Fiscal Year Close

$31.69

$66.50

$67.94

$44.21

$38.33

14,484.0

19,747.0

22,956.0

25,296.0

28,365.0

Income Before Taxes

7,117.0

11,891.0

14,275.0

11,525.0

11,513.0

-GAAP Income Taxes

2,627.0

4,106.0

4,854.0

3,804.0

3,684.0

Net Income

4,490.0

7,785.0

9,421.0

7,721.0

7,829.0

+Depreciation and Amortization

528.0

483.0

668.0

1,536.0

1,014.0

-Capital Expenditure

656.0

583.0

879.0

1,103.0

770.0
-3,882.0

Net Cash Flow

MICROSOFT (June Fiscal Year)


Sales

-Working Capital Investments

-335.0

1,470.0

182.0

-1,661.0

+Tax Adjustment

1,527.0

3,232.0

4,054.0

2,504.0

1,784.0

Operating Cash Flow

6,224.0

9,447.0

13,082.0

12,319.0

13,739.0

+Stock Issuance

2,512.0

4,457.0

2,245.0

1,620.0

1,497.0

-Stock Purchases

2,468.0

2,950.0

4,896.0

6,074.0

6,069.0

28.0

28.0

13.0

0.0

0.0

-Other Itemsa

1,279.0

7,617.0

3,856.0

63.0

2,115.0

Net Cash Flow

4,961.0

3,309.0

6,562.0

7,802.0

7,052.0

13,927.0

17,236.0

23,798.0

31,600.0

38,652.0

Common Shares Outstanding

2,470.0

5,109.0

5,283.0

5,383.0

5,359.0

Share Price, Fiscal Year Close

$108.38

$90.19

$80.00

$73.00

$54.70

-Dividends Paid

Cash and Short-Term Investments

Other Items includes long-term investments and acquisitions, extraordinary items, and other adjustments to net income.

On April 11, 2001, Maxim acquired Dallas Semiconductor Corporation with 41 million shares of stock.

Source: Adapted from Compustat

hare Data), 19982002

Walter Model

Current
New

r
k
E
D
P
D
P

Growth Firm Normal Firm


20%
15%
15%
15%
4
4
4
4
26.667
26.667
2
2
31.11
26.67

Declining Firm
10%
15%
4
4
26.667
2
22.22

Current
New

Gordon Model

r
k
E
b
P
b
P

Growth Firm
20%
15%
4
0.25
30.0
0.5
40.0

Normal Firm
15%
15%
4
0.25
26.7
0.5
26.7

Declining Firm
10%
15%
4
0.25
24.0
0.5
20.0

You might also like