Linear Technology (LLTC) Earnings Report: Q2 2015 Conference Call...

CompanyName:LinearTechnologyCorpCompanyTicker:LLTCSector:Technology

Industry:Elect ronicsEventDescription:Q22015EarningsCall

LinearTechnology(LLTC)EarningsReport:Q22015ConferenceCallTranscriptThefollowingLinearTechnologyconferencecalltookplaceonJanuary14,2015,11:30AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

PaulCoghlan;LinearTechnology;VP,Finance,CFOLotharMaier;LinearTechnology;CEOBobSwanson;LinearTechnology;ExecutiveChairman

OtherPart icipants

CraigHettenbach;MorganStanley;AnalystWilliamStein;SunTrustRobinsonHumphrey;AnalystToreSvanberg;StifelNicolaus;AnalystDavidWong;WellsFargoSecurities;AnalystWillsMiller;CreditSuisse;AnalystJimCavallo;CorVelCorporation;AnalystAmitShah;NomuraSecurities;AnalystRossSeymore;DeutscheBank;AnalystJoAnneFeeney;ABRInvestmentStrategy;AnalystChrisCaso;SusquehannaFinancialGroup;AnalystChrisStanley;Unidentified;AnalystAmbrishSrivastava;BMOBankofMontreal;AnalystSteveSmigie;RaymondJames;AnalystCJMuse;ISIGroup;AnalystCraigEllis;B.Riley;AnalystVivekArya;BankofAmericaMerrillLynch;AnalystDeeponNag;MacquarieCapitalPartners;AnalystDougFreedman;RBCCapitalMarkets;AnalystGilbertAlexander;Unidentified;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator:

Gooddayandwelcometothe2015fiscalsecond-quarterearningscall.Today'sconferenceisbeingrecorded.Atthistime,IwouldliketoturnthecallovertoMr.PaulCoghlan.Pleasegoahead.

PaulCoghlan(VP,Finance,CFO):

Goodmorning.WelcometotheLinearTechnologyconferencecall.I' llbejoinedthismorningbyBobSwanson,ourExecutiveChairman,andLotharMaier,ourCEO.Iwillgiveyouabriefoverviewofourrecentlycompletedsecondfiscalquarterandthenaddressthecurrentbusinessclimate.WewillthenopenupaconferencecalltoquestionstobedirectedatBob,Lothar,andmyself.

Itrustyouallhaveseencopiesofourpressrelease,whichwaspublishedyesterday.First,however,I'dliketoremindyouthat,exceptforhistoricalinformation,themattersthatwewillbedescribingthismorningwillbe

forward-lookingstatementsthataredependentoncertainrisksanduncertainties,includingsuchfactors,amongothers,asnewordersreceivedandshippedduringthequarter,thetimelyintroductionofnewprocessesandproducts,andgeneralconditionsintheworldeconomyandfinancialmarkets.

Inadditiontotheserisks,whichwedescribedinourpressreleaseissuedyesterday,wereferyoutotheriskfactorslistedintheCompany'sForm10-QforthequarterendedSeptember28,2014,particularlyManagement'sdiscussionandanalysisoffinancialconditionandresultsofoperations.Secondly,SECRegulationFDregardingselectivedisclosureinfluencesourinteractionswithinvestors.

We'veopenedupthisconferencecalltoenableallinterestedinvestorstolistenin.Thepressreleaseandthisconferencecallwillbeourforumtorespondtoquestionsregardingourestimatedfinancialperformancegoingforward.Consequently,shouldyouhaveanyquestionsregardingourestimatesofsalesandprofits,[or]otherfinancialmattersfortheupcomingquarter,aswellashowtheymightimpactourincomestatementmodelandourbalancesheet,thisisthetimewearefreetorespondtothesequestions.

Asyoucantellfromourpressrelease,thejust-completedDecemberquartergenerallymetourexpectations,withsalesdownthe5%sequentially,whichapproximatedthemidpointofourguidance.EnteringtheDecemberquarter,wehadcommentedthattheDecemberquarterhistoricallyhasbeenseasonallyslowforus,particularlyautomotiveandindustrialcustomerswhotemporarilytightentheirdemandtominimizecalendaryearandinventorylevelsandtocompensateforannualshutdownsthatcoincidewithDecemberyear-endholidays.

WehadnotedthattheDecemberquarterhasaveragedbeingdown6%overthelastfouryears,sothisyear'sdown5%resultsapproximatedthehistoricalaverageandwasmorereflectiveofseasonalitythananystructuraldemandissues.Althoughquarterlysalesdeclined5%sequentially,theygrew5%year-over-year.

Grossmarginandoperatingmarginwereimpactedbythereductioninsales,althoughtheywereatthemidpointoftherangewehadforecast.Netincomewasdown5%,asaresultofthe5%reductioninsales,partiallyoffsetbyalowertaxrate.TheUSCongressreinstatedtheResearchandDevelopmenttaxcredit,for2014.Thispositivelyimpactedourquarterlytaxrate,reducingitfromanestimated26%toanactual22%.

Bookingsweredownmodestlyfromthepriorquarter;however,wedidhaveaslightlypositivebook-to-billratio.Asoccurredlastyear,thebookingsrateincreasedinthesecondhalfofthequarter.Onceagain,cancellationsinthequarterwereminor.Wecontinuetobelievethatinventoriesworldwideatcustomerswererelativelyleanexitingthequarter.Withregardtoourmajorendmarkets,industrialhadthelargestincrease,andcommunicationshadthelargestdecrease,justtheoppositeoflastquarter,althoughnoneofthesechangeswereparticularlysignificant.

Withregardtothedetailofourfinancialresults,salesdecreasedby5%fromthepriorquarter.Thegrossmarginpercentage,at75.4%,wasimpactedbythereductioninsales,andconsequently,wasdownfrom76%lastquarter.Averagesellingpriceat$1.88increasedfrom$1.87lastquarter.

Operatingexpenseswereunchanged,havingbenefitedfromaone-weekshutdownattheendofDecember.Operatingincomeandpre-taxincomeof44.9%ofsalesweredownfrom47%inthepriorquarterduetothereductioninsales.TheCompany'seffectivetaxratedecreasedto22%from26%lastquarter.

Finally,netincomeof$123.6milliondecreasedfrom$129.5millionreportedlastquarter,aslowersaleswerepartiallyoffsetbyalowertaxrate.Ourreturnonsalesof35.1%wassimilartolastquarter's34.9%.Forthesecondquarterinarow,ourdilutedsharesoutstandingwereslightlylower,aswepurchasedsharesinthequartertooffsetanypotentialdilutionfromemployeestockoptions.Worldwideheadcountincreased1%,mostofwhichwasinouroverseasfactories.

Insummary,theeffectoftheitemsIjustlistedonthepublishedquarterlyresultswasthatrevenuewas$352.6

millionforthesecondquarterofFY15,comparedtothepreviousquarter'srevenueof$371.1million,and$334.6millionreportedinthesecondquarterofthepreviousfiscalyear.GAAPdilutedearningspershareof$0.51,whiledown$0.02fromthepreviousquarter'searningspershareof$0.53,were$0.07betterthanreportedinthatsecondquarterofFY14,whichhadlowersalesandhigherinterestexpensecomparedwiththisquarter.

TheCompanynolongerhasinterestexpensecomparedwith$12millionofinterestexpenseinthesecondquarterofthepriorfiscalyear,asaresultoftheextinguishmentofitsconvertibleseniornotesattheendofFY14.Earningspersharethisquarterwouldbe$0.56withouttheimpactofstockoptionaccounting.

Duringthesecondquarter,theCompany'scash,cashequivalents,andmarketablesecuritiesincreasedby$45.2million,to$1.073billion,netofspending,$65.8milliononcashdividends,and$34.7milliononstockpurchases.TheCompanyalsoannouncedthatitwouldraiseitsquarterlydividendby11%,from$0.27pershareto$0.30pershare.Atthecurrentstockprice,theCompany'sdividendyieldis2.7%.ThecashdividendwillbepaidonFebruary25tostockholdersofrecordonFebruary13.

Lookingforward,theMarchquarterishistoricallyagrowthquarterforus.Althoughtherearesomeweakerregionsintheglobaleconomy,theUSAisstrong.Ourbook-to-billratiowasslightlypositiveintheDecemberquarterandwetypicallyseestrongbookingsmomentumintheautomotiveandindustrialmarketsintheMarchquarter.

Accordingly,wearecurrentlyforecastingrevenuestogrowsequentiallyby4%to7%inourfiscalthirdquarter.Overall,wecontinuetobeoptimisticabouttheincreasedelectroniccontentinourendmarkets,especiallyautomotiveandindustrial.

NowIwouldliketoaddressthequarter'sresultsonaline-by-linebasis,startingwithbookings.Bookingsdecreasedthisquarteroverthepreviousquarter,althoughwehadamodestpositivebook-to-billratioandbookingsincreasedeverymonthwithinthequarter.Geographically,bookingswereupintheUSAanddowninternationally.Withininternational,bookingsweredowninAsiaandEuropeandflatinJapan.

Byendmarkets,industrialwasupthemost,andcommunicationsdownthemost.Atthistimeeveryquarter,wegiveyouabreakdownofourbookingspercentagesbyendmarketstogiveyouinsightintothosemarketsthatdriveourbusiness.Industrialcontinuestobeourlargestarea.Industrialwas44%ofourbookings,upfrom43%thepreviousquarter.

Withinindustrial,USAandJapanwereup,andEuropewasdown.ThisincreaseinindustrialpositionsuswellfortheMarchquarter.Ourindustrialbusinessisverybroad-based,bothgeographicallyandbyendproducts.Thecommunicationsarea,at19%,wasdownfrom20%lastquarter.Europewasflat,whereasChinaandtheUSAnetworkingandinfrastructurecompaniesweredown,whichistheoppositeoflastquarter.

Cellphonecontinuestobeaverysmallpartofourbusinessandroundstolessthan1%ofourbusiness.Computerremainedat9%ofourbusinessagain,whiledownmodestlyinabsolutedollars.Withincomputer,weserviceopportunitiesinnotebooks,desktops,tablets,servers,storagedevices,andprintingandimagingendproducts.

Automotivecontinuestobeafocusedareaforusandremainedat19%ofourbookings,whiledownmodestlyinabsolutedollars.Inthelast10years,aswehaveemphasizedthismarket,ithasquadrupledasapercentofourbookings.TheexpansionofexistingLinearpartsintonewcarmodelsandalsonewpartsfornewprogramscontinuetohelpus.

Ourbatterymonitoringproductsforhybridandelectricvehiclesareachievingexpandingmarketacceptance.Inaddition,wecontinuetodistinguishLinearasahigh-qualitysupplierinimportantinternationalautomotivemanufacturers.

Consumer,whichhasbeenoursmallestendmarket,remainedat3%ofourbusiness,whiledowninabsolutedollars.Finally,themilitary,space,andharshenvironmentproductsremainedat6%,althoughupinabsolutedollars.TheUSAandEuropearethepredominantgeographicareasforthisbusiness.

Insummary,thisisagooddistributionofbusinessbyendmarketsforus,withourlargestareascontinuingtoshowthemostoverallanalogmarketshare.Whereasfiveyearsago,14%ofourbusinesswasincellphoneandhighinconsumer-relatedmarkets,nowonly3%ofourbusinessisinthesegenerallycommodityandvolatileanalogareas.

Ontheotherhand,automotive,whichwas8%ofourbusinessfiveyearsago,isnow19%ofourbusiness,andindustrialhasgrownfrom35%to44%ofourbusiness.Withregardtowhereourbookingsareactuallycreated,59%arecreatedinternationally,and41%intheUSA.Internationallyovertime,wehavebeenhelpedbythestrengthofourJapaneseandEuropeanautomotivecustomers.

Movingfrombookingstosales,netsalesdecreased5%fromthepriorquarter,whileimproving5%fromthesimilarquarterintheprioryear.Salesdecreasedsimilarly,bothinternationallyandintheUSA.Withininternational,salesdecreasedthemostinEuropeandtheleastinJapan.

Insummary,theUSAis27%ofsales,similartolastquarter.Europe,at19%,wasdownfrom20%lastquarter,whichisnotunusualforEuropeintheDecemberquarter.Japan,at16%,wasupfrom15%lastquarter.AsiaPacific,at38%ofsales,wassimilartolastquarter.

Grossmargin,at75.4%ofsales,wasdownfrom76%lastquarter.SlightlyhigherASPwasmorethanoffsetbylowerfactoryefficiencies,largelyduetoabsorbingfixedcostsoveralowersalesbase.ASPat$1.88increasedfrom$1.87lastquarter.TheCompanydidshutdownfortheDecemberholidayweekthisquarter,asitusuallyhas.

R&D.R&Dat$65.1milliondecreased$500,000fromlastquarter,whileincreasingasapercentofsalesfrom17.7%lastquarterto18.5%thisquarterduetothedecreaseinsales.Savingsandlaborrelatedcosts,duetolowerprofit-sharingandtheholidayweekshutdown,werepartiallyoffsetbyR&D-relatedsuppliesandotherexpenses.

SG&A,selling,general,andadministrativeexpense,at$42.5millionincreased$448,000fromthepreviousquarter's$42.1million,andincreased,asapercentofsales,from11.3%to12.1%,duelargelytothedecreaseinsales.AsinR&D,laborcostswerelower,duetolowerprofit-sharingandtheholidayshutdown.Thesesavingswereoffsetbyhighernon-laborrelatedcommunicationscostandotherexpenses.

Operatingincome.Asaresultoftheabove,operatingincomedecreasedby$16.2million,andasapercentofsales,declinedfrom47%to44.9%,primarilyduetothedecreaseinsales.44.9%operatingprofitisstillstrongprofitabilityandclearlyputsusaheadofourpeersinthisfinancialperformancemeasure.

Interestincomewasminor.Consequently,pre-taxprofitsapproximatedoperatingincome.TheCompany'spre-taxprofitswere$158.5million,downfrom$174.9millionlastquarter.Pre-taxprofitsarenow44.9%ofsalesversus47.1%lastquarter,again,withthedecreaseduetolowersalesvolume.

Ourquarterlyeffectivetaxrateof22%decreasedfrom26%lastquarter.TheUSCongressreinstatedtheR&Dcreditfor2014.ThisresultedinabenefittotheCompany'seffectivetaxrate,whichwasreducedthisquarterby4percentagepoints,3ofwhichrelatedtopriorquarters.Weexpectnextquarter'staxratetobe25.5%beforediscreteitems,ifany.

Theresultingnetincomeof$123.6millionwasdown5%fromthe$129.5millionreportedinthepreviousquarter,largelyduetothedecreaseinsales,partiallyoffsetbylowertaxes.Theresultingreturnonsalesof35.1%wassimilartothe34.9%reportedinthepreviousquarter.

Theaveragesharesoutstandingusedinthecalculationofearningspersharedecreasedby210,000shares.Shareincreasesrelatingtostockoptionexercisesandemployeerestrictedstockgrantswereoffsetbystockpurchasesintheopenmarket.GAAPearningpersharewas$0.51,downfrom$0.53thepriorquarter,againduetolowersales.Withouttheimpactofstock-basedcompensationof$17.9million,thedilutedearningspersharewouldhavebeen$0.56pershare.

Movingtothebalancesheet,cashandshort-terminvestmentsincreasedby$45.2million.Forthe115thconsecutivequarter,theCompanyhadpositivecashflowfromoperations.TheCompanyprovided$148millionincashflowfromoperations,ofwhich$65.8millionwasemployedtopaycashdividends,$34.7milliontopurchasecommonstock,and$16.2milliontopurchasefixedassets.Ourcashandshort-terminvestmentbalanceisnow$1.0729billionandrepresents62%oftotalassets.

Accountsreceivableof$148.6milliondecreasedby$26.9million,ascollectionsfromahighersalesquarterarereplacedwithreceivablesfromalowersalesquarter.Consequently,ourdaysalesandaccountsreceivablewere38days,lowerthanthe43daysreportedinthelastquarter.

Inventory,at$100.1millionincreased$2.5millionfromlastquarter.ThisincreasewasinfinishedgoodstobuildupshippableinventorypriortoChineseNewYearwhenourAsianfactorieswillbeclosedforaweek.Rawmaterialsandwork-in-processinventorywereflat.Ourquarterlyaverageinventoryturnsis3.5times,downslightlyfrom3.8timesinthepriorquarter.

Deferredtaxesandothercurrentassetsof$99.7millionincreased$12.8millionfromthepriorquarter.Thiswaslargelyinprepaidtaxes,partiallytorecognizethebenefitfromthereinstatementoftheR&Dcredit.Property,plant,andequipmentincreasedby$3.2million.Wehadadditionsof$16.201millionanddepreciationof$13.005million.Mostoftheadditionswereformanufacturingequipmentinfabricationandtestandassemblyworldwide.

Wehaveincreasedourcapitalexpendituresthisyearinresponsetoproductionrequirementsweanticipateincalendar2015.Weexpectadditionstoberoughly$80millionanddepreciationroughly$50millionforFY15.Identifiedintangiblesdecreasedby$550,000asinpastquarters,duetoquarterlyamortization.Goodwillremainedunchanged.Finally,ontheassetsideofthebalancesheet,ourreturnonassetswas28.9%,similartolastquarter's30.9%,slightlyimpactedbythereductioninsales.

Movingtotheliabilitysideofthebalancesheet,accountspayabledecreasedby$7million,largelyduetotimingdifferencesonrecurringpayableitems.Accruedincometaxes,payroll,andotheraccruedliabilitiesdecreasedby$22.7million.Anincreaseinourprofitsharingaccrual,whichispaidoutsemi-annually,wasoffsetbyadecreaseinourincometaxaccrual.

Deferredincomeonshipmentsintodistributionincreasedmodestlyby$378,000,asourshipmentstoourUSdistributorsweremarginallygreaterthanwhattheyshippedouttotheirendcustomers.Ouraccountingisconservativeaswedonotrecordasaleonourbooksuntildistributionhasmadeasaletotheirendcustomer.

Worldwide,wecontinuetobelieveourinventorylevelsarelean.Wecontinuetocloselycontrolourinventoryatdistributorstoproperlypositiontheinventoryrelativetopotentialdemand.Intotal,currentliabilitiesarerelativelysmall,andtherefore,wehaveastrongcurrentratio.Ourcurrentratiowas8.4to1versuslastquarter's7to1.

Deferredtaxandotherlong-termliabilitiesof$120.3millionincreasedby$10.4million,largelyduetoincreasesinlong-termtaxesonvarioustaxtimingdifferences.Changesinthestockholderequityaccountswereprimarilytheresultoftheusualquarterlytransactionsfornetincome,dividendspaid,andemployeestockactivity.

Asstatedearlier,theCompanyannounceditwillpayaquarterlydividendof$0.30pershare.TheCompany

believesthatpayingadividendisanimportantwaytoreturnvaluetoitsshareholders.TheCompanybeganpayingadividendin1992,andhasincreasediteveryyearsince,andcurrentlypaysapproximatelya2.7%yield.

Lookingforward,wearecomingintothesecondhalfofourfiscalyear,whichisnormallyourstrongesthalf.TheMarchquarterishistoricallyastrongquarterfortwoofourlargestendmarkets,industrialandautomotive.Thefollowingfactorsimpactourguidance.

Onthemacroeconomic[front],theUSeconomyisstrongandisprojectingstrongergrowththanreportedinrecentyears.Ontheotherhand,Europe,China,andJapanareexperiencingreductionsingrowth.Thedollarisstrong,whichhasplusesandminuses.Similarly,oilpricesarelow,whichalsohaspositiveandnegativeeconomiceffects.

FromaLinear-specificstandpoint,wehaveapositivebook-to-billratiogoingintotheMarchquarter.WehadgoodbookingsmomentumattheendofDecemberandsofarbookingshavebeenofftoagoodstartinJanuary.ChineseNewYearisthisquarter.Ourforeignfactorieswillbeclosedforaweek.It'salwaysinterestingtomonitorAsiamomentumposttheNewYearholiday.Finally,wecontinuetobelieveinventoryatcustomersarelean,basedonourcontinuingminorcancellationactivity.

Summarizingthesevariousdatapointshasgivenusapositivebiasintheshort-term.Consequently,wearecurrentlyforecastingrevenuesfortheMarchquartertogrowsequentiallyinthe4%to7%range.Dependingonsales,operatingmarginasapercentofsalesshouldimprovemodestly.Ourongoingeffectivetaxrateshouldberoughly25.5%priortodiscreteitems,ifany,thatmayarise.

Insummary,lookingbeyondthesenear-termmarketevents,themajormarketopportunitiesthatdriveourbusinessdemonstratecontinuinggrowth,particularlyintheindustrialandautomotiveendmarkets.Increasedanaloginnovationsinourotherendmarketswillalsobenefitus.

Webelieveweareintherightmarketsattherighttimewiththerightinnovativeproductstoexecuteourstrategyandexploitourgrowthopportunities.Wearestrongintheareaswewanttobe--industrial,communicationsinfrastructureandnetworking,andautomotive--andbelievethatweareinaninnovation-drivenenvironment.

Ourstrategyisdifferentiatedfromourotheranalogcompetitors.Wedominateindifferentendmarkets,weareamorereliablesupplierwithconsistentlylowerleadtimesandbettersupport,andourtechnologyandsupportisvalued,asisevidencedbyourhigheroperatingmargins.

Finally,atthistimeofyear,wereviewourdividend.Wehaveincreasedthedividendeveryyear,althoughmodestlyinthelastseveralyears,aswehaveaccumulatedcashtopaydownourdebt.InMay2014,weextinguishedthedebt.Consequently,goingforward,weareabletoreturnmorecurrentcashtoshareholders.Therefore,wehaveannouncedincreasingourquarterlycashdividendby11%,from$0.27ashareto$0.30ashare.

Sinceextinguishingthedebt,wehavealsoincreasedourquarterlysharebuybacks.Thisquarter,weboughtback725,000shares,andforthesecondquarterinarow,wehavenothadanincreaseinouroutstandingshares.Increasingourdividendandoursharebuybackswillhaveusdistributingroughlythequarterlycashthatwegenerateonshore.

IwouldnowliketoopenuptheconferencecalltoquestionsbeaddressedeithertoBobLotharormyself.

QUESTIONS&ANSWERS

Operator:

(OperatorInstructions)

CraigHettenbach,MorganStanley.

CraigHet tenbach(Analyst-MorganStanley):

Great.Thankyou.QuestionsforLothar.Althoughthenear-termenvironmentwasdescribedasyouhavesome--apositivebiashere,themacrohasbeenabitchoppybyregion,sojustwantedtogetasenseoftheimplicationsof,foryourcustomers,intermsofdesignwinsyouhaveandhowtheyseebusinessandrampingthosewins?Hasthathadanyimplications?

LotharMaier(CEO):

Designwinsandintodesignsales,thatisalongmulti-yearperiod,solookingatthatquarter-to-quarterisalittlebithardtodo.Iwouldprobablystepbackalittlebitandsayjustlookatthemarketsthatwearefocusedon--theautomotiveandindustrialmarketsandthecommunicationsmarkets.

Thosemarketsarereallythegrowthdriversfortheanalogbusinessandwearehighlyconcentratedinthosemarkets.Soabetterthingtolookatitisratherthanwhatdesignswinswe'vegotinthisquarterisjustlookingathowwearepositioned,theCompanyrelativetothemarkets,andwhatmarketsaredoingwell.WeareaboutasgoodalignedasIwouldsaywe'veeverbeen.

Gotit.Thanksforthat.Andasafollow-up,canyoutalkaboutthewirelesssensornetworksbusiness.Iknowit'searlystages,butjustwhatthecustomer'sappetiteisforthoseproductsandanykeyapplicationsasthatbusinessemergesthatyouwouldcallout?

LotharMaier(CEO):

Yes.WedidtheDustacquisitionnowalmostexactlythreeyearsagoandwe'veseengrowthinsalesofthoseinitialproductseverysingleyear,butgrantedit'sonamodestbase.About1.5yearsago,wereallyintroducedthefirstnewproductsposttheacquisition.Thesearethesingle-chip5800seriesDustproducts.

Thoseproductshavebeenverywell-receivedinthemarket.There'salotofinterestinit.We'vemeasureditintermsofhowmanydemonstrationkitsthatwegiveoutandhowmanydemoswedo.Butintermsofitbecomingasignificantpartofourbusiness,wearestilllookingatafewyearsforthattohappen,butIcantellyoutheinterestisveryhigh,theproductsareverygood,andtheyarereallydesignedspecificallytowardsmoreindustrialapplications,notconsumerapplications.

Gotit.Thanksforthat.

Operator:

WilliamStein,SunTrustRobinsonHumphrey

WilliamStein(Analyst-SunTrustRobinsonHumphrey):

Great.Thankyoufortakingmyquestion.I'mhopingtodiginthemarginsalittlebit.TheycameinslightlybelowconsensusandIunderstandyou'readdingabitofcapacity.Inthepast,youtalkedabout$400millionperquarterasthe[as-tooled]capacityandthenwecandosomematharounddrop-throughonrevenuegrowthas--wherewe'dexpectmarginstoramp.Canyourecalibrateusonthatmetric?What'syouras-tooledcapacitytodayandwheredoyouanticipatemarginsgoinglonger-term?

LotharMaier(CEO):

Yougotitprettymuchrighton.Wearetooleduptodoaround$400million.Wecangrowbeyondthatwithouthavingtodoanybrick-and-mortartypeofexpansion,soitwouldjustbecapitalequipmentandpeoplethatwouldbeaddedsothecostwillbegradualaswegrowbeyondit.Themargins,asweapproachofthatnumber,wewillcontinuetoimprove.

Ifyoulookbackatthesimilarseasonalityquartersin2011and2012whenoursaleswerereducedbyamountssimilartolastquarter,theimpactthegrossmarginwassimilar,about6/10ofapoint,soIdonotthinktherewasanythingunusualingrossmarginthathappenedinthequarterthatjustended.

That'shelpful.Thanks,Paul.MaybeIcanjustfollowupwithoneonyouroutlookforcommunicationsequipmentandwirelessbasestations,inparticular.Younoteditwas--itcertainlydidn'tfalloffacliffbutitwasslightlyweakerinthequarter.I'mwonderingifyouhaveanyoutlookforthefullyearandifyouhaveanycolorbyregionthatwouldbehelpful?Thankyou.

I'mimpressedyou'veaskedusthatquestionbecauseourhistoricalaccuracyinpredictingwhat'sgoingtohappenincommunicationsinfrastructureisnottobeproudof,althoughcomparatively,withtherestoftheindustry,maybewe'reequallyaspoor.Soforus,it'sreallyhardtotell.China,asyouknow,tendstobesporadicontheirimplementationoftheinfrastructurebuild-out.

MyguessisthenegativesyouhearoutofChinaarethatdemandisweakeningabit,althoughstillstrongcomparativelywithotherregions.AlthoughIwouldthinkloweroilpricesareprobablygoingtohelpChinainthenear-termandmaybespursomeavailablespendingforthem,andwhoknows,maybethatwillplayintothatmarket.

Thanksforthatoutlookandcongratsonthegoodoutlook.

Thankyou.

Operator:

ToreSvanberg,StifelNicolaus

ToreSvanberg(Analyst-StifelNicolaus):

Yes.Thankyou.Thefirstquestion,ifIlookatthecalendaryear2014,yoursaleswereup9%year-over-year.Asyoulookattheputsandtakesoftheeconomythisyear,Iknowit's--andIrecognizeit'searlyonandyoudon'tgiveannualguidance,butisthereanythingouttherethatwouldsuggestwhyyouwouldn'tbeabletoatleastrepeatthatagainherethisyear?

We'regoingintothestrongesthalfofouryear,whichisthefirsthalfofthecalendaryear,sotheguidancewe'vegivenyou--themidpointofthatguidancewouldhaveusgrowing7%year-over-year,upfrom5%thepreviousquarter.Ourhopeis--long-term,ourgoalistocontinuetogrowroughly10%.

Wegrewlastcalendaryear9%.Itisstillearlytolookat2015.WethinktheMarchquarterwillbeoff,forus,toareasonablestart,aswehaveguided.Soforus,rightnow,wedon'tforecastfortheyear,asyousaid,butwewouldhopewewoulddosomethingsimilaratthisstagetolastyear.

Verygood,andPaul,basedonyourcommentsaboutoperatingmarginbeupmodestlyintheMarchquarter,shouldweinferthatOpExwillbeflatsequentiallyorwilltheimprovementcomeprimarilyfromsalesandgrossmargin?

Theimprovementwouldcomeprimarilyfromsalesandgrossmargin.Operatingexpensewillbeupabit.WewillnothaveashutdownintheMarchquarter.WedidhaveashutdownintheDecemberquarter.ThefirstweekoftheMarchquarterwastheweekbetweenChristmasandNewYear's,sothereweresomeextravacationthere.That' llsoftenalittlebittheshutdownimpactgoingintotheMarchquarter,buttheprimarygamewillbethepercentagefollow-throughfromtheincreaseinsales.

Okay.I'mjustgoingtosneakinonelastfollow-up.Yourinventorydaysarenowat105.Theywere100dayslastquarter.ThatisalittlebithigherthanwhatitisusuallyforLinear.YoumentionedsomeinventorybuildorbufferbecauseofshutdownsrelatedtotheChineseNewYear,butisthereanythingelsestructurallygoingoninthemarketthatiscausingyoutomaybeholdalittlebitmoreinventorythanhistorically?

Idon'tknowifit'sstructurally.Thereareafewthingsidiosyncratictous.Ifyougobackto,Idon'tknowwhathistoricbaseyou'resaying,butifyougobackafewyears,ouraveragesellingpriceishighernow,sothatifwemaintainasimilarnumberofunits,ourinventoryvaluewouldbehigher.

Wehavelessconcentrationofsalesinthecomputermarketthanwehadseveralyearsago,sowehaveabroaderdisbursementofoursales.Thenthemixofourproductsismovingmoretowardsnewerproductsandthenewerproductsaremorecomplexthantheolderproducts,carryabithigherASP--

Unident if iedCompanyRepresentat ive :

Longercycletimes.

Andalittlelongercycletimestobuild.Thenifyouaddtothatthemodulebusiness,whichwehave,thathasrawmaterialpartsthatourchipsalesdonothave,sothatrawmaterialwouldhavebeenimpactedbymodulesales,andthemodulesaleshavebeenquitestrongforus.Sooverall,ifyouaddallthosepiecestogether,youwouldgettothereasonwhytheinventoryoverallhasincreased.

That'sveryhelpful.Thankyouverymuch.

Operator:

DavidWong,WellsFargoSecurities.

DavidWong(Analyst-WellsFargoSecurities):

Thanksverymuch.Canyougiveussomeideaofwhereincarsyourproductsareused,andinparticular,whatapplicationsegmentsinautomotivehavedrivenautomotivegrowingasapercentageofyourtotalsales?

LotharMaier(CEO):

Ifyoulookbackafewyears,themajorityofourautomotivesalesreallycameinthenavigationandinfotainmentpartofthevehicle.Ifyouprobablylookinthelastfiveyears,we'veheldthatbusiness,thenavigationportion,prettysteady,andthegrowthwe'veseeniseverythingotherthannavigation,soit'sinthedrivetrain,it'sinsensors,it'sineverythingelsearoundthecar,theBMSproductshavebeenagoodgrowthforus.

Basically,we'reprobablyaboutone-halfinnavigationtypeofapplicationsandtherestisaroundthecar.Certainly,thepartthat'sgrowingthefastestisthenon-navigationandifyouwant,betterfuelefficiency,youwillwantbetter--loweremissions,thosetypesofenhancementsareallgoingtocomefromthenon-navigation,inaninterestingthoughthathavecomeupdon'tstartedtocomeupinthelastfewyearsisthatthenewcarsfortheleading-edgecarsarejustjammedfullofsensors.Andthisiscameras,itisradarsystems,itislasersystems,itisimagedetectionsystems.

Andalotofthat--there'salotofthatelectronicsactuallygoesbackthroughthenavigationsystemconsolethat'stheirandsothere'sgoodgrowthwethinkitgoingforwardandpeopletalkalotaboutthisautonomousdriving.that'salongwaysawaybuttheastepinthatdirectionisallofthesesensingapplicationsandthat'sanareathatweseealotofinterestintheautomotivecustomers.

Great.Thanks.Andjusttopushonanearlierquestionifyourwererunningatwhatyou'dconsidertobeoptimalutilizationwhatgrossmarginrangewouldyoubeinandinthelongrangewhatwouldoperatingmargindothinkyoucouldgetto?

LotharMaier(CEO):

Wellthere'ssomanyvariablesinthatotherthanjustgettingto400+millionbutwewouldthinkwecouldgetourgrossmarginstowardsthehigh70percentagenumbers.We'vedonethatinthepastsoweprobablycomeclosetobutmaybenotexactlyhitourprevioushighpeaksandthenoperatingmarginsisoursalesweretogrowwellonaquarterlybasis,sothatwegettothe400andbeyondquickerratherthanslowly,thenoperatingmarginscouldprobablygetbackinthe50%range.

Great.Thanksverymuch.

Operator:

JohnPitzer,CreditSuisse

WillsMiller(Analyst-CreditSuisse):

Hello.ThisisWillsMillercallinginforJohnPitzer.Congratsontheresultsandthankyouforlettingmeaskaquestion.Thelasttimeyourquarterlyrevenuewashoveringjustbelow$400millionwascalendaryear2010atwhichpointgrossmarginwasabout78%andoperatingmarginswereinthelowtoMidshipman50%range.

IfIgrowrevenueseasonallyoverthenextcouplequartersIgetrevenuebackinthatrange.WhatmarginsshouldweexpectthoselevelsifIassumeabout80%incrementalgrossmarginandIgetabout76%grossmarginisthisreasonableandintherightballpark?

Sothemathyoujustexplainedtomequicklysaidthatifwegrowto$40millionagainIdon'tknowhowfastyougotustherebutyouarehavinggrossmarginat76%.Yousaid.

Correct.

Whichiswhatgrossmarginwehadlastquarterwhenwewereat$370million.Somyguessiswecoulddoalittlebetter,we'dhavetoseehowitplaysoutandwhatfactoryefficienciesweareabletoachieve.Butmyguessisyouare76%mightbealittleconservativebutnotdramaticallyfaroff.

Okay.Thanks.

Allhighnumberstobeginwith.

Thankyou.ThatwashelpfulandthenfromagainmarketperspectiveIwaswonderingifyoucouldbreakyourendmarketsintermsoftheexpectationsforyouryear-to-yeargrowthfor2015.

Well,,theonewethinkthere'sthemostgrowthprobablypotentialwouldbeautomotive,industrial,touswouldbesecond,butthere'sgoodinnovationgoingoninothermarketsaswell.WehavePOEproductsthatarequiteattractiveandotherproductsthatarequiteattractiveit--RFproductsetceterainthecommunicationsmarketssothosearethethreethatconstitutethelionsshareofourendmarketsforsure,roughly90%andweseegrowthopportunitiesinallofthembutprobablyautomotivewouldbethefastest-growing.

Thankyou.

Operator:

JimCavallo,CorVelCorporation.

Jim,yourlineisopen.

Resultsweresogood,Jim,you'rejustspeechless.

Operator:

Checkthemutefunctiononyourphone,Jim.

JimCavallo (Analyst-CorVelCorporation):

Canyouhearmenow,guys?Sorryaboutthat.

Yes.Jim,Icanjust.

Okay.Sorryaboutthat.IapologizesoPaulyouguyshavebeengrowingareallynicepercentyear-over-yearclipforahandfulofquarters,leftcouplequartersclosertoverifypercentor7%range.Youcommentedthatyouthinkyourgoalis10%growth.

Theendmarkets,allofyourendmarketscollectivelydon'tgrow10%sothatwouldimplyyourabilitytogainshare--whichmarketsdothinkyou'dbeabletomostgainshareinandwheredothinkthatsharewouldcomefrom?

Ifnotfromspecificcustomercompetitors--whatproductsdothinkyoucouldgainshareintomakeupthedifferencebetweenyour10%growthtargetsandtheendmarketswhichcollectivelydon'tgrowatthat?

LotharMaier(CEO):

Yes.MaybeIcantakeastabatthat.Ifyoulookattheoverallanalogmarket,it'smaybea$44billionmarket.Andifyoulookatwhatsegmentsaregrowinginthatmarket,it'sreallylong-term,theindustrialmarkethassteadilygrown,10yearsago7%oftheanalogmarket.Today'sover20%ofthemarket.

Asimilarstoryisintheautomotivemarketwhereafewyearsago--itwasnotabigpartofthebusiness,nowit'sover20%andsotheindustrialandautomotivemarketsfortotalanalogaremaybe43%ofthemarketandtheirgrowingroughly2%or3%marketshareeveryyear.Soinafewyears,automotiveindustrialisgoingtobethelionsshareoftheanalogmarketandthat'swhereweasacompanyareveryfocusedon.

Sonotonlyareweinthemarketsthataregrowingthefastest,it'sbecomingabiggerandbiggerportionofourbusinessaswell.

Sograntedmaybetheoverallanalogmarketisgrowingslower,howwelookatitiswe'reinthesegmentthat'sgrowingfastestandwedon'tevennecessarilyhavetotakemarketshare.Wejusthavetoridealongwiththegrowthoftheautomotiveandindustrialmarketsandthentoalesserextent,justhangontothebusinesswehaveinthecommunicationsandthatwillallowustodothis10%growth.

BobSwanson(ExecutiveChairman):

Yes.Ifyoulookatthenumbers,iftheoverallmarketgrowsby5%,that'sa$2billionincreaseincrementally.Ifwecanget$150millionofthe$2billionwe'vejustgrownby10%soit'snotlikewehave80%marketshareoreven20%.Wehaveasmallmarketshare.

SoifIcouldspecificallyonthefollow-upfocusontheautomotivebusiness,Ithinkthatautomotivehasbeenaterrificmarketforthewholeindustryanditcertainlyforlinearinparticular.Foralittlewhilenow.AndifIthinkabout2%to3%long-termglobalautounitgrowthandabout5%contentperboxthatwouldmakethatmaybea7%or8%coremarketinanaverageyear.

Doyouthinkthoseestimatesarewrong?Oragain,doyoujustthinkthesharegainthatyoucanhavewithinautomotivecanmakeupthegapbetweenthat?Andthat'smaybe40--orgoingforward50%ofyourbusiness,buttheother50%stillwouldn'tgrowat10%.I'mjusttryingtobridgethegapbetweenthe10%targetsandevenatthebestendmarketlookinglikelong-termthat'sprobably7%or8%growth.

LotharMaier(CEO):

Yes.it'sprobablynotaccuratetotrytolookatourgrowthinautomotiverelativetohowmanycarsgetsoldeveryyear.Andevenjusttakinginaveragenumberofincreaseinelectronics,wearefocusedontheleadingedgeofproductsincarsandtheamountofelectronicsthat'sgoinginthesehigh-endcarsandthat'sreallywherealotofourbusinessis--isgrowing--Idon'thavethenumberbutI'msureisgrowingalotquickerthanthe7%thatyouquoted.

Andso,we'renotintherun-of-the-milltypeofelectronicsinthecar.Weare--carsaregettingvisionsystems.They'regettingstopstartsystems.They'vegotEV'sandATVsandsothat'sthebusinessthatwearetargetingatandmysenseisthat'sprobablygoingtogrowsubstantiallymorethanthe7%youquoted.

Veryhelpful.

Jim,inthepaperlastweekouthere,theysaidthattherewasabroadsurveydonebyautotrader.comandthey--andtheresultsofwhichwerethattheconsumersinthatsurveysaidtheywouldspendupto$1500extraformoreelectronicsintheircar.

Sothatit'snot--theotheradvantageweallmayhaveinautomotiveisthepurchaserofcarsiswillingtospendmoreforhisnextcar.Soit'snotjustthepurereplacement.SoIdon'tknowifthatmightimpactyour7%somewhatifthatholdstobetrue.

Well,andthatreportalsotalkedaboutintheiropinionwewerejustatthebeginningofthiselectronicsimplementationinautomobiles.Andtheotherthingitsaidissomethingthatwespeculatedonthatthreetimesasmanypeoplemakeadecisiononbuyingacarbasedonelectronicsinitthathorsepower.Whichisprettyinteresting.

Sure.That'sallincrediblyhelpful.Iappreciateallthatverymuch.

Thanks,Jim.Haveaniceday.

Operator:

AmitShah,NomuraSecurities

Amit Shah(Analyst-NomuraSecurities):

Yes.Thanksalot.Iwaslookingatthefive-yearand10yearmediangrowthratesfortheMarchquarter,whichisabout4%.Andonethingthatpeoplearestrugglingtoreconciletodayishowyoucanbeguidingforbetterthannormalgrowthgiventhemacrobackdropwhich,Paul,youarticulatedismixed.

YoumentionedstrengthinNorthAmericabutasapercentageofyourbusiness,that'sonly25%,whereastheotherregions--Europe,Japan,andtherestofworldwhichyouindicatedourdecelerating,compromise--orcomprisedtheremaining75%.

Well,firstofall,youarecorrectinsayingthat27%ofoursaleswereintotheUS,butIalsomentionedinmy

openingcommentsthat41%ofthedemandwecreatedwascreatedintheUS.Sothat--someoftheactualmanufacturingandsellingofthathavebeendoneoffshorebutthedemandwascreatedintheUS.

Secondly,andI'mnoeconomistbuthistoricallyiftheUSeconomy'sbeenstrong,that'sthebestofhavingstrengthinanyoftheothereconomies.SotheUSeconomytendstohavemoreofaworldwideimpactifit'sstrongthenifEurope'salittleweak,orJapan'salittleweak,orChinaisalittleweak.AndChina,beingalittleweak,it'sstillgrowing7%sothat'saprettysolidnumber.

Andthen,whenwelookatoilprices,,peopleIknowWallStreeteverydayforthepastcoupleweekshasletusallknowthatloweroilpricesisbadforthestockmarketbutforconsumerdemand,forpeoplethatmaywanttobuyacar,orbyaproductwhoseoilpricesdropped50%,Idon'tknowifwefullyanticipatedeconomicallywhatthatimpactwillbeinthenextyearortwoorso.

Soyousaidourmidpointalittlehigherthanthe4%andyoualludedtobutnotdramaticallyhigherthanthat.Sowefeelwecandowhatwe'veestimated.

Andthispointonoilprices,Paul,isaninterestingone,andyoumentionedthatithaspotentialpositivesandnegativesforlinear.I'mcuriouswhatyouthinkitmeansforyourindustrialbusiness.Myimpressionwouldbethatthiswouldnegativelyimpactyourindustrialbusiness,butbasedonyouroutlook,itsoundslikethingsareprettygood.

Idon'tknowwhyoffhandyouwouldthinkitwouldbenegative.Oneofthesignificantcoststoanindustrialcompanyisgenerallythecostofenergy,heat,light,andpower.Andtotheextentthatcostisless,thatwouldgivethemoneythattheycouldfindprojectslikesomeoneearlieraskedusabouthowourwirelessbusinessisgoing.

Andthoseareprojectsthatindustrialcompanieshavetodecidetofundandtheydon'tliketoabort.Soiftheyhavealittlemorelowerexpenses,thatcangivethemmorecashtohelpfundtheprojectslikethat.Whatparticularlydidyouhaveinmindastowhyloweroilpriceswouldharmindustrialcompanies?

Well,myunderstandingofthatmanyofthesecompanieshave20%toasmuchas50%oftheirexposure--revenueexposuretotheoilandgasmarketsandgiventhedeclineinthecommodity,thatmightaffecttheirCapExinvestmentsandthereforespendingonprojectsthatlinearmaybetiedto.

Well,--again,Ihaven'theardthatpercentagebutIwouldpersonallythinkthatindustrialcompanieshavemuchgreaterexposuretotheautomotiveendmarketthantheywouldtothedownholeexplorationendmarket.SothatcertainlyinEuropealotofindustrialcompaniesfeedintotheautomotivemarket.Andtheyare,ifyouhavelowerfuelcosts,youmayhavepeoplewillingtobuyanewcarsooner.

LotharMaier(CEO):

AndmaybeifIcouldadd,isfromanindustrialcustomer,thebenefitoflowoilpricesisnotjustintheirelectricalbillsbutalotofrawmaterialshavetheiroriginsinpetroleumaswell.Andso,you'llseeabroaderimpactaswellwherejustthecostofrawmaterialsthathavetheirsourcewithpetroleumarealsogoingtogodownwhichIcanonlyseebeinggoodforourindustrialcustomers.

Yes.Isawanotherstatisticthatsaidthatwhatthis$50barrelpricemeansittoconsumersintheUSalone.Itisanextra$400millionadayofextramoneytheyhavetospend.They'regoingtobuythingsthatdriveallkindsofmarkets.

Yes.I--yourlogicmakessense.Youwouldn'tknowitthoughlookingatthewayindustrialstocksaretradingtodaybutIappreciatethefeedback.Thankyou.

Ittakesawhile.

ThankyouAmit.

Operator:

RossSeymore,DeutscheBank.

RossSeymore (Analyst-DeutscheBank):

HelloguysbutIwantedtoswitchtheconversationoverontothecashusageperspective.Youraisethedividendwhichisgreat.Congratulationsonthat.Canyoujusttalkaboutwhatyourgoalinreturningcashtoshareholdersis?

AndspecificallyIwantedtogetintothepercentageofyourongoingcashflowandeventhecashthat'sonyourbalancesheetthatdomesticallyheld.Itseemslikeeverydollarofyourdomesticallyheldcashflowisgoingbacktoshareholdersbutthevastmajorityofthatisgoingtobeinthedividend.Soanycoloraroundyourframeworktherewouldbehelpful.

Well,our--thepercentageofourdomesticcashthatoriginates--letmerestartagain.Thepercentageofourcashthatoriginatesdomesticallyisprobablysomewhereinthe70%to75%.Theamountof--the70%to75%needstofundthecorporateexpendituressowecan'tuseouroffshorecashtopaythedividendwecan'tuseouroffercashtobuybackstock.Wehavetouseourdomesticcashtodothat.

Ifyouweretolookatourbalancesheetyouwouldnotgetthesameproportion70%ofthecashbeingonshoreand30%offshorebecausejustafewmonthsagowepaidoffabigpieceofdebt.Weextinguishedthatdebt.Soonourbalancesheet,maybeaslittleas10%or15%ofourcashisonshorewhereasthecashthatgetsgeneratedisdramaticallyhigherpercentage.

Sowhenwelookatthecashwehave,welookat--wedon'tneedtoaccumulatemorecashtopayoffdebtaswehadbeendoingforseveralquarters.AndI' llremindyouthatwas--andforseveralyears.Thatwastopayoffdebtthatwasincurredtobuyback27%ofthesharesoutstanding.

Sowhenwelookat--wenolongerhavethatneedforcashandwelookatthedividendandtherepurchaseofsharesourtoppriorityistocontinuetohaveastrongdividendandtoincreasediteveryyear.Andconcurrent,withsomewhatsecondaryprioritywouldbetobuybackstock.

Great.Thankyou.Shiftinggearsalittlebittoadifferenttopic,theCOMsbusinessyouansweredearlierthequestionaboutwhatwasgoingonintheCOM'sinfrastructureoratleasttakeyourbestshotofasyoujoked

about.Outofthat19%or20%ofsalescanyougiveusaroughestimateonhowthatsplitsbetweenwirelessinfrastructureandWirelinewouldbetheothercategory?

Thisisaguessbecauseweaccumulatethedatabycustomers.Soasyoumightimagine,somecustomersyoucanpickalargeChinesecustomerandthatcustomerwouldbebothinnetworkingandwirelessinfrastructureforexample.Butwitharoughcut,myguessiswirelessinfrastructuremaybe40%ofourCOM'sbusinessandnetworkingandthecloudandallofthosegoodopportunitiesforusatroughly60%.

Perfect.Thankyou.

60%ofourbusinessincommunications.

Gotit.Thanksagain.

You'rewelcome.

Operator:

JoAnneFeeney,ABRInvestmentStrategy.

JoAnneFeeney(Analyst-ABRInvestmentStrategy):

Yes.Thanksandcongratsonthatniceguidance.FirstaspecificquestiononinventoriesI'mwonderingifyoucanshedalittlebitoflightonthesituationatyourdistributorsbothUSandinternationallyandintermsofsellinversussellthroughoverthelastquarterandwhathastranspiredsofarinJanuary.

Well,ourUSdistributor's,asIsaid,Ericdeferredincomeatdistributorshardlychangedsowhatweshippedintodistributorslastquartervery,verycloselyapproximatedwhattheyshippedoutandIdon'tthinkit's--andit'sprobablyquitesimilarornotprobablydoesitisquitesimilarforourinternationaldistributor.SoIdon'tthinkwe'vebuiltanyinventorydisturbancelastquarter.

Thanks.That'shelpfulandthenalonger-termquestion.Maybetheissueoflong-termgrowthprospectscameupearlierinacoupleofquestionsanditwasreallyhelpfulclearforcashinontheautoside.

I'mwonderingthoughlonger-term,ifyouaretryingtotarget10%doyouthinkthatthiswayofdoingitrelyingontheelectronicscontentincreasesinautoandindustrialwouldbesufficienttogeneratealong-termprospectof10%orsogrowth?Ordoyouneedtoseeaturntowardsagreateraggressivenessinacquisitionsandwhatmetricswouldyoubehappywithtodofurtheracquisitions?

LotharMaier(CEO):

Wecandoourgrowthplansreallywithouttheneedofacquisitions.Ithinkthathistoryhaveproventhatout.

Andaswetalkedaboutearlierwe'reconfidentthattheautomotiveandindustrialmarketsaregoingtocontinuetogrowbothindollarsandinmarketshareoftheoverallanalogmarket.

Andsowe'vegotallofourdesignefforts--ornotallbutmostofourdesignefforts,oursaleseffortsandmanagementfocusonthosemarkets.Soasautomotiveandindustrialgrowthandifweholdourownintomedicationstheoddsareprettygoodthatwe'llachievethese10%peryeargrowthtargetsthatwehavebarringnochangesinthemacroenvironment.

Butasmentionedearlier,fromaproductstandpoint,fromamarketstandpoint,fromamarketpenetrationstandpoint,we'reaboutaswellpositionedaswe'veeverbeen.

Andagain,with3.5%ofthe40+billion-dollaropportunity,sobesidestheopportunityhasneverbeen--neverreallybeentheissueforlinear.

Okay.That'shelpful.Andthenjustonequickquestionbacktothisquarter'sguidance,itisassomeoneuploadedabitaheadofseasonalpatternsofthelastfewifyoupostrecoveryfromtherecessionsoI'mwonderingifyoucangiveusasplitofthebreakdownoftheguidancethatcomingfromelectroniccontentinversuscomingfromapickupinthosestrongendmarkets.

Areyouabletoseparatethosetwoatall?

Notbyquarter.No.Wewouldn'tbeabletodothat.That's--wecouldn'ttellyouthatbynextquarter.

Okay.Thanks.

You'rewelcome.

Operator:

ChrisCaso,SusquehannaFinancialGroup.

ChrisCaso (Analyst-SusquehannaFinancialGroup):

Yes.Thankyou.Iguessjustsummingupsomeofyourearliercomments,woulditbesafetosaythatwhatyouareseeinginyourOutlookissomedegreeofstrengtheninginthebusinessandyoumentionedwhereyouwereversusnormalseasonalityandtheguidanceisalittleaheadofwhereitwaslastyear.Butwe'rehoveringclosetonormalseasonalitysoI'mjustinterestedinthetonefromcustomersifvisitisindeedsomethingtoseeimprovingconditions.

Well,Ithinkourguidancelastyearwas--ita3%to6%andnowit's4%to7%sothey'revery,verysimilar.AndlastyearareDecemberquarterwasdownonepercentagepointor1.2percentagepointsandthisyearit'sdown5sowhenyoulookatoverall,wethink--businessisifwelookvis-à-visthepastcoupleofyears,wethinkthemacrooutlookparticularlyintheUnitedStatesisabitstronger.Wethink--wesensewe'refeelingthatalittlebitfromtheUScustomers.

WhenIwasdrivinghomelastnight,theysaidthesurveythattheydooftheconfidencelevelofanAmericanbusinessmanwasatthehighestit'sbeensince2008,thiscommentaryIheardonthenewsdrivinghome.Sooverall,intheUS,,peoplehaveseenseveralgoodquartersinarowonthemacrosidesotheUSwehopeshouldbeagoodmarketforus.

Andjustasafollow-on,Ibelieveinyourpreparedremarks,youtalkedaboutthebookingsupinthesecondhalfofthequarter,couldyoucharacterizeisthatnormalseasonalbehaviorforyourbusiness?

Yes.Ifyoulookatitourleadtimesarefor--4to6weeks.SosomebodyorderingearlyintheDecemberquarterwouldbeorderingforshipmenttotakeplaceinthemonthofDecember.AndinthemonthofDecember,wetoldyouparticularlyinEurope,yougotalotofvacations.Andalsoindustrialandautomotiveplants,someofthemintheUSandEuropehaveshutdownsattheendofDecember.

Soifyoukindoflookatthatrelativetoleadtimesandthenyousay,willthen,probablyonceyougettowardsoftheendofNovemberpeoplearelookingatshipmentcominginthenewyearinJanuaryandthattheyprobablywouldpickuptheirorderpatterngreaterthanthewhattheywantedshippedinDecember.SoIthinkit'sjuststraightforwardasthat,Chris.

Okay.Thatmakessense.Thankyou.

You'rewelcome.

Operator:

ChrisStanley.

ChrisStanley(Analyst-Unidentified):

Hello.Thanksguys.Justaquickoneandthenaclarification.Soitsoundslikeyouarebusinessoverallmaybegottenalittlebitbetterbutroughlyintheseasonalrangeoverthelastwhatever3,6,12months.Doyouthinkyourvisibilityasimprovedatallorhaseverythingmoreorlessthesameasitwasthreemonths,sixmonths,12monthsago?

Ithinkit'spre-similar.Imean,ifthecustomerdoesn'thavealotofinventory,thenityourvisibilityisaboutthesameasit'sbeenforthelast12months.Youknow?Wehavelittlecancellations.Sometimesyougeta911call,somebodyinahurrytogetproductssoweprobablyhavemoreofthatthanwewouldhaveiftherewasalotofinventoryoutatthecustomers.SoIthinkthevisibility'sbeensimilar.

Okay.Thanks,Paul,andthenjusttwoquickhousekeepingwaswhatshouldweassumeforthetaxrategoingforward?Andthenyoutalkedalittlebitaboutthestrongerdollar,ifthedollarcontinuestoappreciatewhatwouldbetheimpactonyourbusinessoryourPNLifany?

Okay.Atthefirstwhat--theongoingtaxratewillbe25.5%,probablythroughtotheendofJuneandthenonceyougetintothesecondhalfofthecalendaryear,orournewfiscalyear,ifthearethecredithasn'tbeenapproved,thatwouldprobablyhavea.75%oronepointimpactontheeffectivetaxrate.SoIguessforthenextsixmonthstheonewehaveprovided--wedon'thavediscreteitemsshouldbegoodafterthatitmightgetalittlehigherdependingontheR&Dcredit.

Thedollar--itthat'salwaysatoughquestionbecausehistorically--formeanyway,whenIlookatitasafinancialguyinaclosedroomIthinkifthedollargetstronger,thatwillhurtyouinternationally.Yetmyexperiencehasbeenastrongerdollarreallyhasn'thurtinternationally.Itchangesdramaticallyquicklyandthenkeepsgoingupanddown,thenitimpactsyou.Butifitstrengthensbitbybitandstatekindofstableinthatpattern,asoddasitmaysoundIthinkhistoricallythathasn'thurtourbusiness.

Okay.Thanks,ithasn'thappenedinsolongIforgotwhatitwaslike.

Yes.Wedoaswell.Yes.

TimetogoshoppinginEurope.

Thereyougo.Haveanicevacation,Chris,takethefamilythissummer.

Operator:

AmbrishSrivastava,BMOBankofMontreal.

AmbrishSrivastava (Analyst-BMOBankofMontreal):

Thankyou.Ijusthadaquickoneontheindustrialsideguys,youhaveputtogetheraprettylongandimpressivestreakofcloseto10%growthontheyear-over-yearbasisandI'mjustlookingatthebookings.Couldyoujusthelpusunderstandkindofwhatarethe--andIknowit'saverydiversebusinessbutwhataresomeofthespecificdriversforyourbusiness?

Andthenjustlookingforward,doyouseeanychangestothatintermsofanyapplicationsthatshouldbecontinuingmacro?Ordoyouexpectkindofthesamegoingforward?Thankyou.

Well,Ithinktheareasthat--asyoucorrectlystated,andthankyouforthat,isavery,verydiversebusiness--theindustrialbusiness.Butifyouaskedmetopickmaybethetop3or4ofours,probablymedical,andyoucanseethere'smoreautomationgoingoninthemedicalworldwhenyouandIvisitourGP,he'sgotmoreequipmentinhisofficeandhospitalsarebuyingmoreequipmentthatformandfitandfunctionofequipmentisgettingsmallersotoupgradeequipmentandthereisalower--asmallerfootprintforhospitals.Ithinkmedicalequipmenthasbeenprettygood.

FactoryautomationhasbeenverygoodoverrecentyearsandIthinkifyouthinkofthechangesintheautomotiveindustry,alotofthoseiftheautomotiveindustry'sgrowingfactoryautomationwithroboticsandstufflikethatwouldprobablygrowconcurrentlywithit.

Andthenanotherstrongareaforusistestandmeasurementsothatasthere'smoreelectronicsshowingup

inanypartofyourlife,beitinsideacar,beitinsideyourhouse,allofthatelectronicsneedstobetestedandmeasured.SoIthinkmoresortoftestequipmentcouldbehelpful.

SoIthinkthosearesomeofthedrivers.Sensorbusiness,Lothareludedtoearlier,that'sabigpartofmanufacturing.Alternatesourcesofenergy,solarpower,greentech,thosedidn'texistyearsago.They'renotasstrongasthefirstonesImentionedbutthey'rethere.

Andevensomethinglikebroadcastwhichwasn'tbigyearsagowiththemovetoHDTVandbetterandbetterclarityandcamerasandthedatabeingsentoverthelines,allhasanimpactontheindustrialworld.

Andthe(AST's)arehigherhereversusautomotiveisthatafairassumption?

Generally,that'safairassumption.

Okay.Thankyou.

Operator:

SteveSmigie,RaymondJames.

SteveSmigie (Analyst-RaymondJames):

Great.Thanksalot.JustwantedtotouchonAsiaalittlebitmore.ThegovernmentthereseemstobereallytryingtopushmoreinvestmentsinsemiconductorsatanationallevelinChina.Andalsothere'sbeensomemovementIguessinChinatouselessAmericantechnologymaybeforsecurityreasonsetcetera.SoI'mwonderingifthathasimpactedyourbusinessatallorifyouthinkthatevenwill?

LotharMaier(CEO):

I'vehearditbothofthose.Ican'tsaythatIcanputmyfingeronanyinstancewherethathashadanyimpactonussomaybelong-termitcouldbebutpresentlywehaven'tseenanyimpact.

Okay.Agreat.AndthenjustonEurope,asyoumentioned,thingsalittlebitsofterthere.Doesthatever--haveyouseenthattobeanysortofmeaningfulcolororisitjustyouhavesomanycustomersthatit'smoreofthegeneraltonekindofnervousaboutitdoesn'treallyoverallimpactdemand.AndultimatelysomeofEuropeancustomersseemtobemoreultimatelyshippingproductselsewheresomaybebackintheUSorevenintoChineseautocustomersor--SoisthesoftnessinEuropesomethingthatwoulddramaticallyimpactyou?

LotharMaier(CEO):

IknowwesaidsoftnessinEuropebutwereallymeanttoimplythatthatsoftnesswasseasonalityandwherefactoriesareslowingdowndoingshutdownsintheDecemberquarter.Wedidn'twanttofivethatwethoughttherewassomesoftnessintheEuropeanbusiness.

Andagain,somuchofEuropeanproductionisforexportsoreally,evenifthereissomesoftnessintheEuropeaneconomy,itwouldprobablybecushionedabitbecausethateconomyisprettymuch--atleasttheproductsweareinareveryhighlyexportdriven.

Okay.Great.Lastquickwhenjusttofollowuponthequestionaboutthestrongerdollar.SoIthinkyouguysandmanyofthesemiguyspriceindollars,soasyouseeforexamplethedropinothercurrencies,andjusttryingtoclarify,soyourpointwaseventhoughyouseenthedropsintheseothercurrenciesithasn'treallyseemedtohavemuchofanimpactonyourdemandfromathoseguysthatmighthaveEuropeancurrencytobuywithisthatwhatyouaresayingthere?

Well,certainlyyourcustomer--firstofall,rememberwesellgenerallyhighperformanceproductssowearesellingproductswherethere'snotalotofsocketforsocketcompetitionforus.Sooncewewinthedesign,we'reprettymuchintheir.

Sothenifthedollarstrengthens,thenourcustomer--theendcustomerifhe'sinEuropeorJapan,wouldhavetopaymore.Nowifit'sadistributor,let'ssay,hemaycometousandsaycanwehelphimoutalittlebit?Andwemayormaynotdothat.Anddependingonthecircumstance.

SoIthinkwhatwe'resayingisifweweresellingalotofcommodityproducts,withsourcesfromdifferentpartsoftheworld,forthesameproducts,astrengtheningdollarwouldhavemoreofanegativeimpactthanacompanylikelinearwhichdoesn'tsellcommodityproductsanddoesn'thaveasmuchcompetitionfrommanyotheranalogsourcesaroundtheworld.

Okay.Thankyou.

Operator:

CJMuse,ISIGroup.

Unident if iedPart icipant :

Heyguys.Thisis(Ida)callinginforCJ.Thankyoufortakingmycall.Couldyoumaybeprovidesomeadditionalcoloronsomeofyoursmallersegmentsincomputerconsumermilitaryanyareasofstrengththatyouareseeingtheir?

ThemilitaryItoldyouwasalittlestronger.Sothat--butImeanit'sonly6%ofourbusiness.Consumerremainedat3%sotherereallyisn'tmuchtotellyouthere.Computerisa--it'sa9%ofourbusiness.Wehavesomeveryvaluedcustomersandthatspace.

Idon'tthinkthere'sbeenanykindofdramaticshiftsthere.Therehasn'tbeenanythingthatwould--Iwouldcautionyouthatcoulditleadthatnumbertosignificantlygouporsignificantlygodown.Ithinkwe'reprettywell-establishedwhereweareandhaveabroadgateofcustomersinthatbutit'sonly9%ofourbusiness.

Great.Thankyou.AndthentherebeenalotofquestionsaroundEurope.DoestheuncertaintyandinstabilityinRussiadoanythingforyouguysorisyourexposuretheyareprettyminimal?

WellourdirectexposuretoRussiaisveryminimal.

However,iftheRussiansituationweretogetbadenoughthatitconcernedEurope,WesternEurope,well,thenthatcouldimpactWesternEuropespendingpatternspotentially.OrlikeifRussiadidn'tsupplythemanynaturalgasorfuelforthewinter,Imean,thatcouldimpactsomecompaniesbutwedon'tseethathappening.

ButIthinkoverall,ifyouhavetalkedtoaEuropeanbusinessman,probablyfeelsthere'snothingdramaticwhentheyimpactthembutayearagohewasn'teventhinkingaboutRussiaandnowheisthecanaboutthepoliticalsituation.

Great.Thankyousomuch.

You'rewelcome.

Operator:

CraigEllis,B.Riley.

CraigEllis (Analyst-B.Riley):

Thanksfortakingthequestionsandthereallyjustacoupleclarifications.Paul,firstoninventory,withthepointthattheonhandincreaseinthefiscalsecond-quarterbeingduetoplannedfacilityshutdownsaroundChinesenewyear.Wasthatmeanttoimplythatweshouldexpecttheinventorybasetogobackdownby5orsoexitingthisquarterorwerewherethepointsonthechangeinthecompositionofinventoryreallymeanttoimplythatwillprobablystayatthesecurrentlevelsaswelookahead?

We,atthemomentwethinkthatinventorywillgodownattheendoftheMarchquarterbutagainwehavetoseehowthatplaysoutbutnotgodowndramaticallybutwethinkitwillgodown.

Okay.Andthentheotherfollow-upwasjustonsomeofthecommentsaroundthestrengthofthatyou'dexpecttoseeintheUS.Asyoulookinsidetheordersthatyouseeninthebusinessrecently,whetheritbeonanapplicationbasisforthoseordersthataredrivenintheUSorbycustomertype,smalltomedium-sizedbusinessversusverylargeindustrialorautoOEMs,areyouseeingachangeinsomeofthoseareasrelativetowhatyouwereseeinglastyearatthistimethatleadfortheconfidencetotheOutlook4%to5%toplinegrowth?

That'shard.Imean,wetoldyouthatourindustrialbusinessoverallgrew.Thebookingsinagroup.Andthat'swhereyou'dhavemoreofthesesmallercustomersasopposedtodoingsomethinglikecomputerorcommunications.

So--andwhenwelookatourexpectationsofoursmallercustomerbase,wethinkthey'llbeusing--weweredesigninginmoreproducttheresoIthinkit's--overallIthinkit'sprobablyearlytomakeanywowcallthat'sallpickedupbutonthemarginit'sprobablypickedupabitandwe'llseeastheyeargoesonifitpicksupevenmoretohelpusobtainthegoalswesaidearlierforannualyear-over-yeargrowth.

That'sit.Thanksguys.

You'rewelcome.

Operator:

VivekArya,BankofAmericaMerrillLynch

VivekArya (Analyst-BankofAmericaMerrillLynch):

Thanksfortakingmyquestion.I'mwondering,Ibelieveyouhadmodelinyouroverseasmarketswhereeveryoneisseeingalotofvolatility.Doyouthinkthatimpactsyourvisibilityinanyway--onjustcurious--whatyouhaveonyourdashboardtomonitoroverseasdemandtrendsbeyondjustthereportsfromthedistributionchannel?

Well,alotofthis--someofmyoverseassalesalthoughtheygodowntodistribution,it'soursalesforcethatisdealingwiththecustomeranddesigningintheproduct.

Soforexample,inJapan,almostallofoursalesgothroughdistributorsbutyetwehaveaverysignificantsalesforceandalotoftheactualsellingactivitytakesplacewiththemsowe'vegotdirectknowledgefromoursalesforce.Thanin--andtheninplaceslikeEurope,whatwasyourquestionthereagain?

Know,justingeneral,Paul,becauseyouareinthatsellinmodelinoverseasmarketsandthat'swhereweareseeingthemostflexbecauseofoilpricesandothermacrofactors,I'mjusttryingtoreconcilethatwithseasonalfactorsthatyouarenoticingandI'mwonderingifthevisibilityisimpairedinanywaybecauseyouaremoreofasellinmodeloverseasversusthroughhereintheUS.

LotharMaier(CEO):

Justapointofclarificationeventhoughweareselling,wealsoknowwhattheysellthrough.Sowehavevisibilityintowhattheyselloutandintowhatcustomerstheysellinto.Soit'sjustnotablackbox.Wedon'tshipinandthenforgetaboutit.Weknowitsellsthrough.

Gotit.Understand.Andthenthesecondquestionisonthe--Ibelievequestionswereaskedaboutyourcashbalancedomesticcashbalance.I'mwonderingwhatyourplansareforyouroverseascashbalancewhichIthinkisover80%ofthecashandIbelieve20%,25%ofongoingcashgenerationwhatyouthinkisthemostreductiveuseofthatcash?

Well,presently,ifwewereto--firstofall,wherewecanemployitoverseas,anyplantexpendituresorthingslikethatthatwehave,weemployitforthosepurposes.IfittoemployeeitweneedtobringitbacktotheUnitedStates,eitherforcorporatepurposesorforsomeUSfixedassetinaddition.Thenwe'dhavetopaytaxonit.

AndcurrentlywiththeUSgovernmenttalkingalotabouttaxreform,wethinkitwouldn'tbewisetopay35%taxonsomethingthatthewholetaxsituationmaychange.Sothatpresently,weareleadingthecashwhereitisandnothavinganyplanstorepatriate.

Allright.OnelastoneifImay,Ithinkyoumentionedautoasakeygrowththedriverandthealsomentionedthatchannelsarelean.Butdoyouseeanyconcernwiththebuilt-infinishedcarinventoriesbecausemanypeoplehavementionedthatinChinaforexample,thebuildcarinventoriesareatmultiyearhighs--isthataconcernatallforyou?

Well,China,wehaveaverysmallautomotivebusinessthereinChina.Wealreadytoldyouwesellalotofhighend--it'sahighendcarsintoEuropeandJapan.I'mnotsure--areyousayingthere'shighinventoryinthose?

No.Imessing,doyoumonitorfinishedcarinventoriesalso--orwhenyousayyourchannelsareleanyou'reonlylookingatyourspecificchannels?Oryour--

Weonlylookatourchannels.Welookatdesigninginproducttogetagreatercontentofourproductincars.Thataregoingtobeproducedthreeyearsfromnow.

Understand.Thankyou.

You'rewelcome.

Operator:

DeeponNag,MacquarieCapitalPartners

DeeponNag(Analyst-MacquarieCapitalPartners):

Thanksalotfortakingthequestion,guys.YouspokealotabouttopunitgrowthopportunitiesinautoisapossibletogiveusanideaofyourexposurebyapplicationontheCOMssideandwhetheryouthinkofopportunitiesinnewtechnologieswhetheritbesmallcellsonthewirelesssideof25or100gigonthewirelessside?

LotharMaier(CEO):

I'mnotsurewehadthatclosevisibilityinthatmarketbutIwouldsaythe--onthesortofinfrastructureside,weseegoodopportunitiesprobablymoreinthesortofthesmallerTECOfemtotypeofbasestationapplicationsratherthanthesortofthebigironones.

SoIthinkthat's--whichisprobablytheyselltwoorthreetimesasmanyofthesmallonesastheydothebigonessothat'sanareaprobablyifIhadalittlecover--colortoitbutmoredetailthanthatIdon'thaveany.

Andisthatbasicallyjustradioexposureandexposureonthebackcallaswell?

LotharMaier(CEO):

Wehaveonthebackcall--wehaveontheRF.Wehaveonthepowerthatpowersthesebasestations.Wehavemixedsignalproducts.E2aconverters.Inthoseapplicationsaswell.Wekindofsell--acrossthe

portfolio--there's--inalotofthesesmallbasestation,theywanttomovepowerdataoverthesameethernetcablessowe'reseeingopportunitiesforourPOEproductswheretheyprovideboththepowerandthedatatrafficforthesesmallbasestationssoI--wouldsaythere'sprobablygoodopportunitiesforusinthesesmallerstations.

Great.That'sveryhelpfulandonefinalonejustahousekeepingthing.TheactualturnsUsamaDiscoverquarterandrequiredturnsyourexpectingintheMarchquarter.

Wedon'tsaywiththeactualturnsultimately--weneverhavesoIdon'thavethatnumberinfrontofmewhattheywereinDecember.ButweanticipatetermsintheMarchquarterbeinginthemid-50%range.

Great.Okay.Thanksalot.Appreciateit,guys.

Operator:

(OperatorInstructions)WilliamStein,SunTrust.

Thanksfortakingmyfollowup.Paul,maybeIwillaskyoutoopineagainonadifferentandmarketIknowit'smuchsmallerpartofyoursalesbutthemilitary,space,harshpartofyourbusiness,we'veheardsomeviewsaboutthatmarketimprovingandI'dliketohearyourthoughtsbeyonditjustthecurrentquartermaybeforthefullyear.

Ithinkourbiasthereiswe'vealsoseensomeimprovementinthatbusiness.It'sasmallpieceofourbusinessat6%.SoIdon'thavealotmorecolorthanthatwhenItalkedtothemilitarypeople,theyaretalkingaboutmoreactivitythanwasayearagoandtheyaretalkingaboutapickupinthat.

Andisthatmorestrictwillstufforcommercialair?

Ithinkit--Idon'tknow.Yougotmethere.Ithinkit'samixofboth.Ithinksomeofthe--someofitnowmightbeasyoumoveintothestartoftheyear,budgetsopenup.Anditcouldbesomethingthatyouprobablymightneedtopulseforawholeyeartoseeifit'sabigtrendorifitisn'tjustseasonal.AndIdon'thaveinfrontofmethebreakdownbetweencommercialandmilitary.Mostofourbusinessiscommercial.SoIwouldhavetosayitleansmoretowardsthatbutIdon'thaveagoodanswer.

Okay.Thankyou.

You'rewelcome.

Operator:

(OperatorInstructions)DougFreedman,RBCCapitalMarkets.

DougFreedman(Analyst-RBCCapitalMarkets):

Higuys.Thankssomuchfortakingmyquestion.IfIcouldaskwhatalittlebitonthestrategicfront.YouwereaskedbrieflyaboutiftherewasanimpactfromChinaandyourinterestininvestinginthesemiconductorindustry.IsthatthereawayforlineartotakeadvantageoftheinterestoftheChinesetoinvestintheindustry?

We'reseeingtheminvestinthingssuchasassemblyandtestaswellassubsidizingwafersandRoadprojectsoverthere.Isthereanythingthatyou'vedonetotakealookatanywayinwhichyoucouldbenefitfromtheirinterestininvestingintheindustry?

Well,I' lltakeafirstcrackatit.For--particularlyacoupleofyearsago,therewas--invoketomoveyourassemblyortesttoChina.Wedidn'tdoitandthenandthentherewasalotofemployeeturnoverinChinasothatthe--andalsothewagerateswerestartingtopickupinChina.

Sothatmajor--themajordifferencebetweenChinaandsayplaceslikePenangforexamplewhereweare.Thosedifferencesarestartingtonarrowandthengiventhisstablenessoftheworkforcekeptussayingwewouldrather--butisn'tthatwhatyoumeant?WillwebemorelikelytoopenupassemblyortestinChina?

Justfindawaytotapintothecapitaliftheyarebasicallymakingavailablefortheindustryinaneffortto--semiconductorcontent.

ProbablythatwouldbetheonlythingwhereweareverycapitalintensiveifsomeofthehealthybutIdon'tknowifwegothereforanotherfat.Notatthistime.

Great.Thanks.

No.LinearTechnologystrengthisitsengineeringIPandsothat'swhatseparatesusfromeverybodyandmyguessisthat'swhatthey'dliketorequireandthatwouldbethelastthingthatwewouldgiveaway.

Allright.Great.Thankssomuch.

You'rewelcome.

Operator:

GilbertAlexander.

Gilbert Alexander(Analyst-Unidentified):

Thanks.Fortakingmyquestions.Iassumeallyouroverseassalesareindollars?Indollars?

Thankyou.Andcouldyoujustforhousekeepinggiveusyourcapitalexpendituresindepreciationforthisyear?

Weestimateforthisfiscalyearit' llbe$80millionforechoand$50millionfordepreciation.

Thankyou.

You'rewelcome.

MayIjustaskonethingandmaybethisgoesback15years?AndI'mbasicallyaconsumeranalysts.AndIdon'thavemuchgrowthinthefoodindustry.Whydoyouhavetodosequentialsalesinearningswhenyoucouldjustdothequarterlastyeartothequarterthisyear?

Iknowtheindustrylikesitbutisitnecessary?

We--you'veopenaquestionwemightarguethatanyquarterlydatatospendsomuchtimeon,givenofthelong-termnatureofourbusiness,isasnotasnecessaryastheattentionitgetsbutit'sjust--theonlywayIcanansweritforyouisit'sbeenthatwayhistorically.Peopleinourindustry--theelectronicsinvestorslookmoreatquartertoquarter.

Thankyouverymuch.

You'rewelcome.

Andcongratulations.

Thankyou.

Operator:

Itappearswehavenofurtherquestionsatthistime.

Okay.Well,thankyouverymuchforyourattention.Wewishyouallahappyandsuccessfulyounewyearandhaveagoodday.Goodbye.

Operator:

Thisdoesconcludetoday'sconference.Haveagreatday.

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