Maxim Reports 32% Year over Year Earnings Per Share Growth for Fiscal 2005

For the 2005 fiscal year, Maxim reported net revenues of $1.672billion compared to $1.439 billion for last year, a 16.2% increase.Net income for the 2005 fiscal year was $540.8 million compared to$419.8 million reported for fiscal 2004, a 28.8% increase. Dilutedearnings per share grew 31.7% from $1.20 per share reported in fiscal2004 to $1.58 per share in fiscal 2005

The Company's free cash flow was $145 million, or $0.43 perdiluted share, for the fourth quarter of fiscal 2005, compared to $111million, or $0.32 per diluted share, for the fourth quarter of fiscalyear 2004. Excluding a one time payment of $40 million for thesettlement of a license matter, free cash flow for the fourth quarterof fiscal 2005 would have been $185 million or $0.54 per dilutedshare.

Free cash flow is defined as cash from operating activities (aftertax) less additions to property, plant and equipment as reported inthe Company's statements of cash flows.

During the quarter, cash and short-term investments increased$71.5 million after the Company repurchased 1.8 million shares of itscommon stock for $71.7 million, paid dividends of $32.7 million, andacquired $20.9 million in capital equipment. At year end, cash andshort-term investments totaled $1.475 billion. Accounts receivableremained unchanged during the quarter at $192.3 million, andinventories increased $8.3 million to $167.8 million in the fourthquarter.

Gross margin for the fourth quarter was 72.0%, consistent with thegross margin reported for the third quarter of fiscal year 2005.Research and development expense was $84.9 million or 21.2% of netrevenues in the fourth quarter, compared to $83.1 million or 20.8% ofnet revenues in the third quarter of fiscal year 2005. The increase inresearch and development expense in the fourth quarter was primarilydue to hiring additional engineers to support new product development.Selling, general and administrative expenses decreased slightly from$24.7 million in the third quarter or 6.2% of net revenues to $23.4million or 5.8% of net revenues in the fourth quarter. The decrease inselling, general and administrative expenses was primarily due tolower litigation costs in the fourth quarter. Below-the-line spendingwas 27.0% of net revenues for both the third and fourth quarters offiscal 2005.

Fourth quarter bookings were approximately $398 million, a 7%increase from the third quarter's level of $373 million. Maximbookings were up 11% while Dallas bookings were down 7%. Turns ordersreceived in the quarter were approximately $171 million or 43% of netbookings, a 10% increase over the $156 million or 42% of net bookingsreceived in the prior quarter (turns orders are customer orders thatare for delivery within the same quarter and may result in revenuewithin the same quarter if the Company has available inventory thatmatches those orders). Bookings increased in all geographic locationsexcept the United States. Fourth quarter ending backlog shippablewithin the next 12 months was approximately $313 million, includingapproximately $273 million requested for shipment in the first quarterof fiscal year 2006.

The following reconciles free cash flow to net income, and itdepicts the Company's free cash flow for the three and twelve monthsended June 25, 2005 and June 26, 2004, respectively.

RECONCILIATION OF FREE CASH FLOW TO NET INCOME

(in millions, except per share For the For the For the For the
data) three three twelve twelve
months months months months
ended ended ended ended
6/25/05 6/26/04 6/25/05 6/26/04
-------- -------- -------- --------

Net income, as reported $126 $125 $541 $420
Add adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation, amortization,
and other 20 18 77 62
Tax benefit related to stock
plans 30 40 117 152
Accounts receivable - (35) 5 (70)
Inventories (8) (14) (50) 3
Accounts payable 6 8 (38) 52
Income taxes payable and
deferred taxes 27 12 59 32
Payment of royalty settlement (40) - (40) -
Other assets and liabilities 5 26 28 47
-------- -------- -------- --------
Total of adjustments 40 55 158 278
-------- -------- -------- --------
Cash generated by operating
activities, as reported 166 180 699 698
Deduct:
Capital expenditures (21) (69) (132) (232)
-------- -------- -------- --------
Free cash flow $145 $111 $567 $466

Fully diluted shares, as reported 341 347 343 351
-------- -------- -------- --------
Free cash flow per fully diluted
share $0.43 $0.32 $1.65 $1.33
======== ======== ======== ========
Fully diluted earnings per share,
as reported $0.37 $0.36 $1.58 $1.20
======== ======== ======== ========

Free cash flow should not be construed as a substitute for netincome or as a better measure of liquidity than cash flow fromoperating activities, both of which are determined in accordance withGAAP. Free cash flow excludes components that are significant inunderstanding and assessing the Company's results of operations andcash flows. In addition, free cash flow is not a term defined by GAAPand as a result the Company's measure of free cash flow might not becomparable to similarly titled measures used by other companies.

Free cash flow is used by management to evaluate, assess, andbenchmark the Company's operating results, and the Company believesthat free cash flow is relevant and useful information that is widelyused by analysts, investors, and other interested parties in thesemiconductor industry. Accordingly, the Company is disclosing thisinformation to permit a more comprehensive and objective analysis ofthe Company's operating performance, to provide an additional measureof performance and liquidity, and to provide additional informationwith respect to the Company's ability to meet future sharerepurchases, dividend payments, and working capital requirements.

Jack Gifford, Chairman, President, and Chief Executive Officer,commented: "Even though our industry experienced a significantinventory correction in FY 2005, we were able to achieve significantgrowth in net income and diluted earnings per share. For the year, netincome grew by about 29% while diluted earnings per share was upalmost 32%."

Mr. Gifford continued: "We continue to be one of the most prolificinventors of innovative devices in the analog mixed signal space. Butit is not a matter of numbers alone. We are proud to note that two ofour new products received Product of the Year Awards. ElectronicProducts magazine gave this award to our digital video equalizerproduct. Our low cost, high accuracy analog output temperature sensordevice won a similar accolade from AnalogZONE. These two productsdemonstrate the breadth of Maxim's analog expertise."

Mr. Gifford concluded: "The Company's Board of Directors hasdeclared a quarterly cash dividend of $0.10 per share. Payment will bemade on August 30, 2005 to stockholders of record on August 15, 2005."

Certain statements in this press release are forward-lookingstatements within the meaning of the Private Securities LitigationReform Act of 1995. These statements involve risk and uncertainty.They include statements regarding the Company's profitability andbusiness outlook, the Company's belief that it will continue to be oneof the most prolific inventors of innovative devices in the analogspace and the Company's belief that the Company's proprietary productswill continue to be well accepted in the marketplace. Actual resultscould differ materially from those forecasted based upon, among otherthings, general market conditions and market developments that couldadversely affect the growth of the mixed-signal analog market,including, without limitation, declines in customer forecasts orgreater than expected cyclical downturns within the mixed-signalanalog segment of the semiconductor market; the Company's ability toconvert backlog and design wins into revenue; the Company's ability tomeet demand for turns orders; an unexpected decrease in revenue orincrease in expenses; the Company's success in the markets in whichits products are introduced and the Company's ability to effectivelyand successfully manage manufacturing operations, as well as otherrisks described in the Company's Annual Report on Form 10K filed withthe SEC for the fiscal year ended June 26, 2004 and the Company'sQuarterly Reports on Form 10-Q filed subsequently to such report.

All forward-looking statements included in this news release aremade as of the date hereof, based on the information available to theCompany as of the date hereof, and the Company assumes no obligationto update any forward-looking statement.

Maxim Integrated Products is a leading international supplier ofquality analog and mixed-signal products for applications that requirereal world signal processing.

Consolidated Balance Sheets

(In thousands) 6/25/05 6/26/04
(unaudited) (audited)
---------- ----------
Assets Current assets:
Cash and cash equivalents $ 185,551 $ 147,734
Short-term investments 1,289,141 948,879
---------- ----------
Total cash, cash equivalents
and short-term investments 1,474,692 1,096,613
---------- ----------
Accounts receivable, net 192,345 197,158
Inventories 167,779 117,785
Deferred tax assets
and other current assets 138,950 166,558
---------- ----------
Total current assets 1,973,766 1,578,114
---------- ----------
Property, plant and equipment,
at cost, less accumulated
depreciation 1,001,465 942,186
Other assets 28,840 29,162
---------- ----------
Total assets $3,004,071 $2,549,462
---------- ----------
Liabilities Current liabilities:
and Accounts payable $ 56,266 $ 93,856
Stockholders' Accrued expenses 175,539 182,692
Equity Deferred income on shipments
to distributors 20,225 22,858
Income taxes payable 33,173 19,339
---------- ----------
Total current liabilities 285,203 318,745
---------- ----------
Deferred tax liabilities 134,686 114,399
Other liabilities - 4,000
---------- ----------
Total liabilities 419,889 437,144
---------- ----------
Stockholders' equity:
Common stock 134,998 80,462
Retained earnings 2,455,714 2,038,820
Accumulated other
comprehensive loss (6,530) (6,964)
---------- ----------
Total stockholders' equity 2,584,182 2,112,318
---------- ----------
Total liabilities and
stockholders' equity $3,004,071 $2,549,462
---------- ----------


Consolidated Statements of Income

(In thousands Three Months Ending Twelve Months Ending
except per share data) 6/25/05 6/26/04 6/25/05 6/26/04
(unaudited)(unaudited)(unaudited) (audited)
--------- -------- ---------- ----------
Net revenues $400,397 $420,963 $1,671,713 $1,439,263
Cost of goods sold 112,079 125,540 463,664 433,358
--------- -------- ---------- ----------
Gross margin 288,318 295,423 1,208,049 1,005,905
72.0% 70.2% 72.3% 69.9%
--------- -------- ---------- ----------
Operating expenses:
Research and
development 84,891 87,758 328,164 306,320
Selling, general and
administrative 23,414 26,422 98,513 93,550
--------- -------- ---------- ----------
Operating income 180,013 181,243 781,372 606,035
45.0% 43.1% 46.7% 42.1%
Interest income, net 8,819 4,872 28,265 20,461
--------- -------- ---------- ----------
Income before
provision for
income taxes 188,832 186,115 809,637 626,496
Provision for income
taxes 62,692 61,418 268,800 206,744
--------- -------- ---------- ----------
Net income $126,140 $124,697 $540,837 $419,752
--------- -------- ---------- ----------
Basic earnings per share $ 0.38 $ 0.39 $ 1.66 $ 1.28
--------- -------- ---------- ----------
Shares used in the
calculation of basic
earnings per share 327,682 323,240 326,239 326,731
--------- -------- ---------- ----------
Diluted earnings per
share $0.37 $0.36 $1.58 $1.20
--------- -------- ---------- ----------
Shares used in the
calculation of
diluted earnings per
share 340,552 346,894 342,843 350,575
--------- -------- ---------- ----------
Dividends declared per
share $0.10 $0.08 $0.38 $0.32
--------- -------- ---------- ----------