Analog Devices Reports Third Quarter Fiscal Year 2015 Results
Revenue increases to a record
"We had a very strong third quarter, with revenue growing to a record
"Looking ahead, stable order rates and a positive book to bill ratio
lead us to plan for sequential growth in the fourth quarter, and for
revenue to be in the range of
ADI also announced that the Board of Directors has declared a cash
dividend of
For additional information please visit investor.analog.com.
Results for the Third Quarter of Fiscal Year 2015
-
Revenue totaled
$863 million , up 5% sequentially, and up 19% year-over-year - GAAP gross margin of 65.9% of revenue; Non-GAAP gross margin of 66.1% of revenue
- GAAP operating margin of 30.7% of revenue; Non-GAAP operating margin of 34.2% of revenue
-
GAAP diluted EPS of
$0.68 ; Non-GAAP diluted EPS of$0.77
Please refer to the schedules provided for a summary of revenue and earnings, selected balance sheet information, and the cash flow statement for the third quarter of fiscal year 2015, as well as the immediately prior and year-ago quarters. Additional information on revenue by end market is provided on Schedule D. A more complete table covering prior periods is available at investor.analog.com.
Outlook for the Fourth Quarter of Fiscal Year 2015
The following statements are based on current expectations, and as indicated, are presented on a GAAP and non-GAAP basis. These statements are forward-looking and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this release. These statements supersede all prior statements regarding our business outlook set forth in prior ADI news releases, and ADI disclaims any obligation to update these forward-looking statements.
GAAP |
Non-GAAP |
Non-GAAP | |||||||
Revenue |
|
- |
|
||||||
Gross Margin | approx. 65.5% |
|
approx. 65.5% | ||||||
Operating Expenses | up 70% to 72% |
|
up 1% to 3% | ||||||
Interest & Other Expense |
|
- |
|
||||||
Tax Rate | approx. 57% to 82% | - | approx. 15% | ||||||
Earnings per Share |
|
|
|
- Reflects estimated adjustments for amortization of purchased intangible assets and depreciation of step up value on purchased fixed assets.
-
Reflects estimated charge of approximately
$220 million associated with the conversion of the Company's Irish defined benefits pension plan as more fully described in the Form 8-K filed by the Company today,$18.5 million for amortization of purchased intangible assets, and$0.2 million of depreciation of step up value on purchased fixed assets. - Represents estimated impact of expenses associated with the non-GAAP adjustments on a per share basis.
Conference Call Scheduled for
ADI will host a conference call to discuss the third quarter results and
short-term outlook today, beginning at
A replay will be available two hours after the completion of the call. The replay may be accessed for up to two weeks by dialing 855-859-2056 (replay only) and providing the conference ID: 61306923, or by visiting investor.analog.com.
Non-GAAP Financial Information
This release includes non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.
Schedule E of this press release provides the reconciliation of the Company's historical non-GAAP measures to its GAAP measures.
Management uses non-GAAP measures to evaluate the Company's operating performance from continuing operations against past periods and to budget and allocate resources in future periods. These non-GAAP measures also assist management in evaluating the Company's core business and trends across different reporting periods on a consistent basis. Management also believes that the presentation of these non-GAAP items is useful to investors because it provides investors with the operating results that management uses to manage the Company and enables investors and analysts to evaluate the Company's core business.
The following item is excluded from our non-GAAP revenue:
Hittite Operations: The results of operation of Hittite from
The following items are excluded from our non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, and non-GAAP diluted earnings per share:
Hittite Operations: The results of operation of Hittite from
Acquisition-Related Expenses: Expenses incurred in the second and third quarters of fiscal 2015 and the third quarter of fiscal 2014 as a result of the Hittite acquisition primarily include: severance payments, expense associated with the fair value adjustments to inventory and property, plant and equipment; and amortization of acquisition related intangibles, which include acquired intangibles such as purchased technology and customer relationships. We excluded these costs from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.
The following items are excluded from our non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, and non-GAAP diluted earnings per share:
Acquisition-Related Transaction Costs: Costs incurred as a result of the Hittite acquisition in the second and third quarters of fiscal 2015 and the third quarter of fiscal 2014 include professional fees and settlement costs directly related to the Hittite acquisition. We excluded these costs from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.
The following items are excluded from our non-GAAP other expense and non-GAAP diluted earnings per share:
Acquisition-Related Debt Costs: The Company incurred debt financing costs and interest expense during the third quarter of fiscal 2014 on its 90-day term loan facility used to finance the Hittite acquisition. We excluded these costs from our non-GAAP measures because they are not reflective of our ongoing financial performance.
The following item is excluded from our non-GAAP diluted earnings per share:
Tax-Related Items: In the third quarter of fiscal 2015, the
Company recorded
Investors should consider our non-GAAP financial measures in conjunction with the corresponding GAAP measures.
About
This release may be deemed to contain forward-looking statements
intended to qualify for the safe harbor from liability established by
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, among other things, our statements
regarding expected revenue, earnings per share, gross margin, operating
expenses, interest and other expense, tax rate, and other financial
results, expected operating leverage, production and inventory levels,
expected market trends, and expected customer demand and order rates
for our products, that are based on our current expectations,
beliefs, assumptions, estimates, forecasts, and projections about our
business and the industry and markets in which
|
|||||||||
Schedule A |
|||||||||
Revenue and Earnings Summary (Unaudited) | |||||||||
(In thousands, except per-share amounts) | |||||||||
Three Months Ended | |||||||||
3Q 15 | 2Q 15 | 3Q 14 | |||||||
2015 |
2015 |
2014 |
|||||||
Revenue | $ | 863,365 | $ | 821,019 | $ | 727,752 | |||
Year-to-year change | 19% | 18% | 8% | ||||||
Quarter-to-quarter change | 5% | 6% | 5% | ||||||
Cost of sales (1) | 294,328 | 276,197 | 251,462 | ||||||
Gross margin | 569,037 | 544,822 | 476,290 | ||||||
Gross margin percentage | 65.9% | 66.4% | 65.4% | ||||||
Year-to-year change (basis points) | 50 | 30 | 90 | ||||||
Quarter-to-quarter change (basis points) | -50 | 120 | -70 | ||||||
Operating expenses: | |||||||||
R&D (1) | 160,784 | 154,233 | 140,095 | ||||||
Selling, marketing and G&A (1) | 120,030 | 117,371 | 132,989 | ||||||
Amortization of intangibles | 22,954 | 24,210 | 660 | ||||||
Total operating expenses | 303,768 | 295,814 | 273,744 | ||||||
Total operating expenses percentage | 35.2% | 36.0% | 37.6% | ||||||
Year-to-year change (basis points) | -240 | 170 | 400 | ||||||
Quarter-to-quarter change (basis points) | -80 | -230 | 330 | ||||||
Operating income | 265,269 | 249,008 | 202,546 | ||||||
Operating income percentage | 30.7% | 30.3% | 27.8% | ||||||
Year-to-year change (basis points) | 290 | -140 | -310 | ||||||
Quarter-to-quarter change (basis points) | 40 | 340 | -390 | ||||||
Other expense | 5,791 | 3,819 | 5,158 | ||||||
Income before income tax | 259,478 | 245,189 | 197,388 | ||||||
Provision for income taxes | 43,000 | 39,851 | 16,782 | ||||||
Tax rate percentage | 16.6% | 16.3% | 8.5% | ||||||
Net income | $ | 216,478 | $ | 205,338 | $ | 180,606 | |||
Shares used for EPS - basic | 313,877 | 312,660 | 314,190 | ||||||
Shares used for EPS - diluted | 318,187 | 317,047 | 318,876 | ||||||
Earnings per share - basic | $ | 0.69 | $ | 0.66 | $ | 0.57 | |||
Earnings per share - diluted | $ | 0.68 | $ | 0.65 | $ | 0.57 | |||
Dividends paid per share | $ | 0.40 | $ | 0.40 | $ | 0.37 | |||
(1) Includes stock-based compensation expense as follows: | |||||||||
Cost of sales | $ | 2,196 | $ | 2,207 | $ | 1,724 | |||
R&D | $ | 6,839 | $ | 6,416 | $ | 5,415 | |||
Selling, marketing and G&A | $ | 7,329 | $ | 7,478 | $ | 6,331 | |||
|
|||||||||
Schedule B |
|||||||||
Selected Balance Sheet Information (Unaudited) | |||||||||
(In thousands) | |||||||||
3Q 15 | 2Q 15 | 3Q 14 | |||||||
2015 |
2015 |
2014 |
|||||||
Cash & short-term investments | $ | 3,099,961 | $ | 3,074,778 | $ | 4,932,259 | |||
Accounts receivable, net | 451,511 | 408,510 | 394,762 | ||||||
Inventories (1) | 424,475 | 394,494 | 415,098 | ||||||
Other current assets | 173,945 | 167,979 | 181,765 | ||||||
Total current assets | 4,149,892 | 4,045,761 | 5,923,884 | ||||||
PP&E, net | 631,269 | 629,665 | 609,937 | ||||||
Investments | 40,324 | 39,687 | 32,022 | ||||||
Goodwill | 1,640,381 | 1,643,614 | 1,631,890 | ||||||
Intangible assets, net | 601,882 | 621,277 | 695,832 | ||||||
Other | 70,953 | 68,471 | 79,900 | ||||||
Total assets | $ | 7,134,701 | $ | 7,048,475 | $ | 8,973,465 | |||
Deferred income on shipments to distributors, net | $ | 307,265 | $ | 295,428 | $ | 285,832 | |||
Other current liabilities | 375,753 | 398,127 | 341,296 | ||||||
Long-term debt, current | 374,752 | 374,664 | 1,995,398 | ||||||
Long-term debt, non-current | 498,448 | 498,399 | 872,652 | ||||||
Non-current liabilities | 513,322 | 517,649 | 471,090 | ||||||
Shareholders' equity | 5,065,161 | 4,964,208 | 5,007,197 | ||||||
Total liabilities & equity | $ | 7,134,701 | $ | 7,048,475 | $ | 8,973,465 | |||
(1) Includes
|
||||||||||||
Schedule C |
||||||||||||
Cash Flow Statement (Unaudited) | ||||||||||||
(In thousands) | ||||||||||||
Three Months Ended | ||||||||||||
3Q 15 | 2Q 15 | 3Q 14 | ||||||||||
2015 |
2015 |
2014 |
||||||||||
Cash flows from operating activities: | ||||||||||||
Net Income | $ | 216,478 | $ | 205,338 | $ | 180,606 | ||||||
Adjustments to reconcile net income to net cash provided by operations: |
||||||||||||
Depreciation | 33,650 | 32,036 | 28,353 | |||||||||
Amortization of intangibles | 23,898 | 25,154 | 1,610 | |||||||||
Stock-based compensation expense | 16,364 | 16,101 | 13,470 | |||||||||
Other non-cash activity | 3,827 | 1,832 | 1,006 | |||||||||
Excess tax benefit - stock options | (6,373 | ) | (11,142 | ) | (9,322 | ) | ||||||
Deferred income taxes | (17,168 | ) | (6,481 | ) | (6,380 | ) | ||||||
Changes in operating assets and liabilities | (73,537 | ) | 81,193 | 4,099 | ||||||||
Total adjustments | (19,339 | ) | 138,693 | 32,836 | ||||||||
Net cash provided by operating activities | 197,139 | 344,031 | 213,442 | |||||||||
Percent of total revenue | 22.8 | % | 41.9 | % | 29.3 | % | ||||||
Cash flows from investing activities: | ||||||||||||
Purchases of short-term available-for-sale investments | (1,403,600 | ) | (1,661,176 | ) | (1,028,781 | ) | ||||||
Maturities of short-term available-for-sale investments | 1,083,474 | 1,154,412 | 1,815,862 | |||||||||
Sales of short-term available-for-sale investments | 215,998 | 291,900 | 1,298,044 | |||||||||
Additions to property, plant and equipment | (35,164 | ) | (49,229 | ) | (42,315 | ) | ||||||
Payments for acquisitions, net of cash acquired | (6,947 | ) | - | (1,943,704 | ) | |||||||
Change in other assets | (1,180 | ) | (4,468 | ) | (340 | ) | ||||||
Net cash (used for) provided by investing activities | (147,419 | ) | (268,561 | ) | 98,766 | |||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from debt | - | - | 1,995,398 | |||||||||
Dividend payments to shareholders | (125,511 | ) | (124,882 | ) | (116,098 | ) | ||||||
Repurchase of common stock | (31,340 | ) | (24,275 | ) | (57,394 | ) | ||||||
Proceeds from employee stock plans | 19,988 | 52,090 | 36,045 | |||||||||
Excess tax benefit - stock options | 6,373 | 11,142 | 9,322 | |||||||||
Contingent consideration payment | (1,767 | ) | - | (1,803 | ) | |||||||
Change in other financing activities | 4,327 | (3,563 | ) | 5,406 | ||||||||
Net cash (used for) provided by financing activities | (127,930 | ) | (89,488 | ) | 1,870,876 | |||||||
Effect of exchange rate changes on cash | (509 | ) | 32 | (433 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | (78,719 | ) | (13,986 | ) | 2,182,651 | |||||||
Cash and cash equivalents at beginning of period | 636,216 | 650,202 | 402,790 | |||||||||
Cash and cash equivalents at end of period | $ | 557,497 | $ | 636,216 | $ | 2,585,441 | ||||||
|
||||||||||||||||
Schedule D |
||||||||||||||||
Revenue Trends by End Market (Unaudited) |
||||||||||||||||
The categorization of revenue by end market is determined using a
variety of data points including the technical characteristics of
the product, the "sold to" customer information, the "ship to"
customer information and the end customer product or application
into which our product will be incorporated. As data systems for
capturing and tracking this data evolve and improve, the
categorization of products by end market can vary over time. When
this occurs we reclassify revenue by end market for prior periods.
Such reclassifications typically do not materially change the sizing
of, or the underlying trends of results within, each end market. The
results below are inclusive of the Hittite acquisition from the
acquisition date, |
||||||||||||||||
Three Months Ended | ||||||||||||||||
2015 |
2015 |
2014 |
||||||||||||||
Revenue | % * | Q/Q % | Y/Y % | Revenue | Revenue | |||||||||||
Industrial | $ | 384,187 | 44% | -2% | 10% | $ | 390,082 | $ | 350,683 | |||||||
Automotive | 130,109 | 15% | -7% | 0% | 139,725 | 130,269 | ||||||||||
Consumer | 206,778 | 24% | 89% | 155% | 109,243 | 80,948 | ||||||||||
Communications | 142,291 | 16% | -22% | -14% | 181,969 | 165,852 | ||||||||||
Total Revenue | $ | 863,365 | 100% | 5% | 19% | $ | 821,019 | $ | 727,752 | |||||||
* The sum of the individual percentages does not equal the total due to rounding. | ||||||||||||||||
|
||||||||||||
Schedule E |
||||||||||||
Reconciliation from GAAP to Non-GAAP Data (In thousands, except per-share amounts) (Unaudited) | ||||||||||||
See "Non-GAAP Financial Information" in this press release for a description of the items excluded from our non-GAAP measures. | ||||||||||||
Three Months Ended | ||||||||||||
3Q 15 | 2Q 15 | 3Q 14 | ||||||||||
2015 |
2015 |
2014 |
||||||||||
GAAP Revenue | $ | 863,365 | $ | 821,019 | $ | 727,752 | ||||||
Q/Q Revenue growth % | 5 | % | 6 | % | 5 | % | ||||||
Hittite Operations | - | - | (5,392 | ) | ||||||||
Non-GAAP Revenue | $ | 863,365 | $ | 821,019 | $ | 722,360 | ||||||
Q/Q Revenue growth % | 5 | % | 6 | % | 4 | % | ||||||
GAAP Gross Margin | $ | 569,037 | $ | 544,822 | $ | 476,290 | ||||||
Gross Margin Percentage | 65.9 | % | 66.4 | % | 65.4 | % | ||||||
Hittite Operations | - | - | (3,015 | ) | ||||||||
Acquisition-Related Expenses | 1,307 | 1,520 | 6,837 | |||||||||
Non-GAAP Gross Margin | $ | 570,344 | $ | 546,342 | $ | 480,112 | ||||||
Gross Margin Percentage | 66.1 | % | 66.5 | % | 66.5 | % | ||||||
GAAP Operating Expenses | $ | 303,768 | $ | 295,814 | $ | 273,744 | ||||||
Percent of Revenue | 35.2 | % | 36.0 | % | 37.6 | % | ||||||
Hittite Operations | - | - | (2,033 | ) | ||||||||
Acquisition-Related Expenses | (23,490 | ) | (24,435 | ) | (5,284 | ) | ||||||
Acquisition-Related Transaction Costs | (5,139 | ) | (1,820 | ) | (21,123 | ) | ||||||
Non-GAAP Operating Expenses | $ | 275,139 | $ | 269,559 | $ | 245,304 | ||||||
Percent of Revenue | 31.9 | % | 32.8 | % | 34.0 | % | ||||||
GAAP Operating Income/Margin | $ | 265,269 | $ | 249,008 | $ | 202,546 | ||||||
Percent of Revenue | 30.7 | % | 30.3 | % | 27.8 | % | ||||||
Hittite Operations | - | - | (982 | ) | ||||||||
Acquisition-Related Expenses | 24,797 | 25,955 | 12,121 | |||||||||
Acquisition-Related Transaction Costs | 5,139 | 1,820 | 21,123 | |||||||||
Non-GAAP Operating Income/Margin | $ | 295,205 | $ | 276,783 | $ | 234,808 | ||||||
Percent of Revenue | 34.2 | % | 33.7 | % | 32.5 | % | ||||||
GAAP Other Expense | $ | 5,791 | $ | 3,819 | $ | 5,158 | ||||||
Percent of Revenue | 0.7 | % | 0.5 | % | 0.7 | % | ||||||
Acquisition-Related Debt Costs |
- | - | (1,513 | ) | ||||||||
Non-GAAP Other Expense | $ | 5,791 | $ | 3,819 | $ | 3,645 | ||||||
Percent of Revenue | 0.7 | % | 0.5 | % | 0.5 | % | ||||||
GAAP Diluted EPS | $ | 0.68 | $ | 0.65 | $ | 0.57 | ||||||
Hittite Operations | - | - | - | |||||||||
Acquisition-Related Expenses | 0.08 | 0.08 | 0.02 | |||||||||
Acquisition-Related Transaction Costs | 0.02 | 0.01 | 0.04 | |||||||||
Acquisition-Related Debt Costs |
- | - | - | |||||||||
Acquisition-Related Tax Impact | (0.00 | ) | (0.01 | ) | - | |||||||
Non-GAAP Diluted EPS (1) | $ | 0.77 | $ | 0.73 | $ | 0.63 | ||||||
(1) The sum of the individual per share amounts may not equal the total due to rounding
View source version on businesswire.com: http://www.businesswire.com/news/home/20150818006404/en/
Mr.
Director
of Investor Relations
781-461-3491 (fax)
investor.relations@analog.com
Source:
News Provided by Acquire Media