Analog Devices Reports Third Quarter Fiscal Year 2012 Results
"ADI delivered solid results for the third quarter, with revenue increasing by 1% and diluted EPS increasing by 6% compared to the prior quarter. Profitability and cash flow remained strong," said Jerald G. Fishman, President and CEO. "Given the economic headwinds and uncertainty in most regions, we were encouraged by consistent order patterns among customers and distributors and by the resilience of our large and broad-based industrial business, as well as the communications, automotive, and consumer end markets."
ADI also announced that the Board of Directors has declared a cash
dividend of
Results for the Third Quarter of Fiscal 2012
-
Revenue totaled
$683 million - Gross margin was 65.6% of revenue
- Operating margin was 32% of revenue, excluding restructuring-related expenses
-
Diluted EPS was
$0.56 -
Cash flow from operations was
$138 million , or 20% of revenue
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 2012, as well as the immediately prior and year-ago quarters. Additional information on revenue by end market and revenue by product type is provided on Schedules D and E. A more complete table covering prior periods is available at investor.analog.com.
Outlook for the Fourth Quarter of Fiscal 2012
The following statements are based on current expectations. 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
-
Revenue estimated at
$685 million to $715 million - Gross margin estimated to be approximately 65%
-
Operating expenses estimated to be approximately
$231 million -
Diluted EPS estimated at
$0.54 to $0.60
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 almost immediately after the call. The replay may be accessed for up to one week by dialing 855-859-2056 (replay only) and providing the conference ID:17192535, 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 F of this press release provides the reconciliation of the Company's non-GAAP measures to its GAAP measures.
Manner in Which Management Uses the Non-GAAP Financial Measures
Management uses non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margins, and non-GAAP diluted earnings per share 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 understanding and evaluating the Company's operating results and trends in the Company's business.
Economic Substance Behind Management's Decision to Use Non-GAAP Financial Measures
The items excluded from the non-GAAP measures were excluded because they are of a non-recurring or non-cash nature.
The following item is excluded from our non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, and non-GAAP diluted earnings per share:
Restructuring-Related Expenses. These expenses are incurred in connection with facility closures, consolidation of manufacturing facilities, and other cost reduction efforts. Apart from ongoing expense savings as a result of such items, these expenses and the related tax effects have no direct correlation to the operation of our business in the future.
The following item is excluded from our non-GAAP diluted earnings per share:
Tax-Related Item. In the third quarter of fiscal 2012, the
Company recorded a one-time
Why Management Believes the Non-GAAP Financial Measures Provide Useful Information to Investors
Management believes that the presentation of non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margins, and non-GAAP diluted EPS is useful to investors because it provides investors with the operating results that management uses to manage the Company.
Material Limitations Associated with Use of the Non-GAAP Financial Measures
Management's Compensation for Limitations of Non-GAAP Financial Measures
Management compensates for these material limitations in non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margins, and non-GAAP diluted EPS by also evaluating our GAAP results and the reconciliations of our non-GAAP measures to the most directly comparable GAAP measures. Investors should consider our non-GAAP financial measures in conjunction with the corresponding GAAP measures.
About
Innovation, performance, and excellence are the cultural pillars on
which
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, operating
expenses, gross margin, and other financial results, expected product
development and product cycle strength, 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
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Schedule A |
||||||||||||||
Revenue and Earnings Summary (GAAP) | ||||||||||||||
(In thousands, except per-share amounts) | ||||||||||||||
Three Months Ended | ||||||||||||||
3Q 12 |
2Q 12 | 3Q 11 | ||||||||||||
Aug. 4, |
May 5, |
July 30, |
||||||||||||
Revenue | $ | 683,026 | $ | 675,094 | $ | 757,902 | ||||||||
Year-to-year change | -10 | % | -15 | % | 5 | % | ||||||||
Quarter-to-quarter change | 1 | % | 4 | % | -4 | % | ||||||||
Cost of sales (1) | 235,152 | 234,639 | 248,262 | |||||||||||
Gross margin | 447,874 | 440,455 | 509,640 | |||||||||||
Gross margin percentage | 65.6 | % | 65.2 | % | 67.2 | % | ||||||||
Year-to-year change (basis points) | -160 | -240 | 50 | |||||||||||
Quarter-to-quarter change(basis points) | 40 | 200 | -40 | |||||||||||
Operating expenses: | ||||||||||||||
R&D (1) | 129,694 | 127,537 | 128,476 | |||||||||||
Selling, marketing and G&A (1) | 99,873 | 99,992 | 102,323 | |||||||||||
Special charges | 5,836 | - | - | |||||||||||
Total operating expenses | 235,403 | 227,529 | 230,799 | |||||||||||
Total operating expenses percentage | 34.5 | % | 33.7 | % | 30.5 | % | ||||||||
Year-to-year change (basis points) | 400 | 390 | -130 | |||||||||||
Quarter-to-quarter change (basis points) | 80 | -120 | 70 | |||||||||||
Operating income | 212,471 | 212,926 | 278,841 | |||||||||||
Operating income percentage | 31.1 | % | 31.5 | % | 36.8 | % | ||||||||
Year-to-year change (basis points) | -570 | -620 | 190 | |||||||||||
Quarter-to-quarter change (basis points) | -40 | 320 | -90 | |||||||||||
Other expense | 3,002 | 1,472 | 3,970 | |||||||||||
Income before income tax | 209,469 | 211,454 | 274,871 | |||||||||||
Provision for income taxes | 39,701 | 48,555 | 54,936 | |||||||||||
Tax rate percentage | 19.0 | % | 23.0 | % | 20.0 | % | ||||||||
Net income | 169,768 | 162,899 | 219,935 | |||||||||||
Shares used for EPS - basic | 298,445 | 298,130 | 299,616 | |||||||||||
Shares used for EPS - diluted | 305,359 | 305,921 | 308,744 | |||||||||||
Earnings per share - basic | $ | 0.57 | $ | 0.55 | $ | 0.73 | ||||||||
Earnings per share - diluted | $ | 0.56 | $ | 0.53 | $ | 0.71 | ||||||||
Dividends paid per share | $ | 0.30 | $ | 0.30 | $ | 0.25 | ||||||||
(1) Includes stock-based compensation expense as follows: | ||||||||||||||
Cost of sales | $ | 1,871 | $ | 1,671 | $ | 1,811 | ||||||||
R&D | $ | 5,999 | $ | 5,162 | $ | 5,877 | ||||||||
Selling, marketing and G&A | $ | 5,921 | $ | 5,267 | $ | 5,622 | ||||||||
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Schedule B |
||||||||||||
Selected Balance Sheet Information (GAAP) | ||||||||||||
(In thousands) | ||||||||||||
3Q 12 | 2Q 12 | 3Q 11 | ||||||||||
Aug. 4, |
May 5, |
July 30, |
||||||||||
Cash & short-term investments | $ | 3,765,045 | $ | 3,752,625 | $ | 3,514,538 | ||||||
Accounts receivable, net | 345,795 | 330,282 | 375,011 | |||||||||
Inventories (1) | 312,079 | 303,742 | 299,332 | |||||||||
Other current assets | 138,366 | 135,880 | 150,250 | |||||||||
Total current assets | 4,561,285 | 4,522,529 | 4,339,131 | |||||||||
PP&E, net | 490,581 | 478,959 | 481,596 | |||||||||
Investments | 29,615 | 30,209 | 30,249 | |||||||||
Goodwill and intangible assets | 308,190 | 309,092 | 293,343 | |||||||||
Other | 66,951 | 71,701 | 107,062 | |||||||||
Total assets | $ | 5,456,622 | $ | 5,412,490 | $ | 5,251,381 | ||||||
Deferred income on shipments to distributors, net | $ | 246,674 | $ | 244,150 | $ | 277,528 | ||||||
Other current liabilities | 261,868 | 314,424 | 278,759 | |||||||||
Long-term debt, non-current | 842,540 | 847,983 | 875,766 | |||||||||
Non-current liabilities | 76,934 | 80,793 | 103,611 | |||||||||
Shareholders' equity | 4,028,606 | 3,925,140 | 3,715,717 | |||||||||
Total liabilities & equity | $ | 5,456,622 | $ | 5,412,490 | $ | 5,251,381 | ||||||
(1) Includes |
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Schedule C |
|||||||||||||||
Cash Flow Statement (GAAP) | |||||||||||||||
(In thousands) | |||||||||||||||
Three Months Ended | |||||||||||||||
3Q 12 | 2Q 12 | 3Q 11 | |||||||||||||
Aug. 4, |
May 5, |
July 30, |
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Cash flows from operating activities: | |||||||||||||||
Net Income | $ | 169,768 | $ | 162,899 | $ | 219,935 | |||||||||
Adjustments to reconcile net income | |||||||||||||||
to net cash provided by operations: | |||||||||||||||
Depreciation | 27,107 | 26,871 | 29,133 | ||||||||||||
Amortization of intangibles | 56 | 18 | 347 | ||||||||||||
Stock-based compensation expense | 13,791 | 12,100 | 13,310 | ||||||||||||
Gain on sale of investments | - | (1,231 | ) | - | |||||||||||
Excess tax benefit - stock options | (5,054 | ) | (2,602 | ) | (1,282 | ) | |||||||||
Noncash portion of special charges | 219 | - | - | ||||||||||||
Other non-cash activity | (1,380 | ) | (981 | ) | 485 | ||||||||||
Deferred income taxes | 34 | (7,762 | ) | 4,650 | |||||||||||
Changes in operating assets and liabilities | (66,835 | ) | 36,657 | (9,598 | ) | ||||||||||
Total adjustments | (32,062 | ) | 63,070 | 37,045 | |||||||||||
Net cash provided by operating activities | 137,706 | 225,969 | 256,980 | ||||||||||||
Percent of total revenue | 20.2 | % | 33.5 | % | 33.9 | % | |||||||||
Cash flows from investing activities: | |||||||||||||||
Additions to property, plant and equipment | (39,239 | ) | (30,137 | ) | (36,977 | ) | |||||||||
Proceeds related to sale of investments | - | 1,506 | - | ||||||||||||
Payments for acquisitions, net of cash acquired | - | (24,158 | ) | (13,988 | ) | ||||||||||
Purchases of short-term available-for-sale investments | (1,854,249 | ) | (2,235,601 | ) | (1,473,867 | ) | |||||||||
Maturities of short-term available-for-sale investments | 1,534,235 | 1,635,795 | 853,624 | ||||||||||||
Sales of short-term available-for-sale investments | 76,330 | 109,734 | - | ||||||||||||
Decrease (Increase) in other assets | 408 | (1,650 | ) | 836 | |||||||||||
Net cash used for investing activities | (282,515 | ) | (544,511 | ) | (670,372 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||
Term loan repayments | (3,625 | ) | (3,625 | ) | (21,142 | ) | |||||||||
Early termination of swap agreements | - | 18,520 | - | ||||||||||||
Dividend payments to shareholders | (89,511 | ) | (89,402 | ) | (74,993 | ) | |||||||||
Repurchase of common stock | (17,344 | ) | (44,017 | ) | (66,283 | ) | |||||||||
Net proceeds from employee stock plans | 23,329 | 38,752 | 41,160 | ||||||||||||
Decrease in other financing activities | (4,755 | ) | (7,155 | ) | (2,410 | ) | |||||||||
Excess tax benefit - stock options | 5,054 | 2,602 | 1,282 | ||||||||||||
Net cash (used for) financing activities | (86,852 | ) | (84,325 | ) | (122,386 | ) | |||||||||
Effect of exchange rate changes on cash | (1,256 | ) | 491 | (1,162 | ) | ||||||||||
Net decrease in cash and cash equivalents | (232,917 | ) | (402,376 | ) | (536,940 | ) | |||||||||
Cash and cash equivalents at beginning of period | 695,066 | 1,097,442 | 1,894,761 | ||||||||||||
Cash and cash equivalents at end of period | $ | 462,149 | $ | 695,066 | $ | 1,357,821 | |||||||||
Schedule D
Revenue
Trends by End Market
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.
Three Months Ended | ||||||||||||||||||||
Aug. 4, |
May 5, |
July 30, |
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Revenue | % | Q/Q % | Y/Y % | Revenue | Revenue | |||||||||||||||
Industrial | $ | 322,295 | 47% | 0% | -12% | $ | 323,701 | $ | 367,511 | |||||||||||
Automotive | 114,655 | 17% | -3% | 12% | 118,066 | 102,160 | ||||||||||||||
Consumer | 108,905 | 16% | 1% | -19% | 107,562 | 134,771 | ||||||||||||||
Communications | 137,171 | 20% | 9% | -11% | 125,765 | 153,460 | ||||||||||||||
Total Revenue | $ | 683,026 | 100% | 1% | -10% | $ | 675,094 | $ | 757,902 | |||||||||||
Schedule E
Revenue
Trends by Product Type
The categorization of our products into broad categories is based on the characteristics of the individual products, the specification of the products and in some cases the specific uses that certain products have within applications. The categorization of products into categories is therefore subject to judgment in some cases and can vary over time. In instances where products move between product categories we reclassify the amounts in the product categories for all prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each product category.
Three Months Ended | |||||||||||||||||||||
Aug. 4, |
May 5, |
July 30, |
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Revenue* | % | Q/Q % | Y/Y % | Revenue | Revenue | ||||||||||||||||
Converters | $ | 299,594 | 44% | 0% | -11% | $ | 300,044 | $ | 337,239 | ||||||||||||
Amplifiers / Radio Frequency | 180,939 | 26% | 2% | -8% | 177,813 | 197,447 | |||||||||||||||
Other analog | 98,269 | 14% | 8% | -8% | 90,786 | 106,702 | |||||||||||||||
Subtotal Analog Signal Processing | 578,802 | 85% | 2% | -10% | 568,643 | 641,388 | |||||||||||||||
Power management & reference | 45,401 | 7% | -1% | -17% | 46,060 | 54,957 | |||||||||||||||
Total Analog Products | $ | 624,203 | 91% | 2% | -10% | $ | 614,703 | $ | 696,345 | ||||||||||||
Digital Signal Processing | 58,823 | 9% | -3% | -4% | 60,391 | 61,557 | |||||||||||||||
Total Revenue | $ | 683,026 | 100% | 1% | -10% | $ | 675,094 | $ | 757,902 | ||||||||||||
* The sum of the individual percentages does not equal the total due to rounding | |||||||||||||||||||||
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Schedule F |
|||||||||||||||||
Reconciliation from Non-GAAP to GAAP Data (In thousands, except per-share amounts) | |||||||||||||||||
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 12 | 2Q 12 | 3Q 11 | |||||||||||||||
Aug. 4, |
May 5, |
July 30, |
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GAAP Operating Expenses | $ | 235,403 | $ | 227,529 | $ | 230,799 | |||||||||||
Percent of Revenue | 34.5 | % | 33.7 | % | 30.5 | % | |||||||||||
Restructuring-Related Expense | $ | (5,836 | ) | $ | - | $ | - | ||||||||||
Non-GAAP Operating Expenses | $ | 229,567 | $ | 227,529 | $ | 230,799 | |||||||||||
Percent of Revenue | 33.6 | % | 33.7 | % | 30.5 | % | |||||||||||
GAAP Operating Income/Margin From Continuing Operations | $ | 212,471 | $ | 212,926 | $ | 278,841 | |||||||||||
Percent of Revenue | 31.1 | % | 31.5 | % | 36.8 | % | |||||||||||
Restructuring-Related Expense | $ | 5,836 | $ | - | $ | - | |||||||||||
Non-GAAP Operating Income/Margin From Continuing Operations | $ | 218,307 | $ | 212,926 | $ | 278,841 | |||||||||||
Percent of Revenue | 32.0 | % | 31.5 | % | 36.8 | % | |||||||||||
GAAP Diluted EPS | $ | 0.56 | $ | 0.53 | $ | 0.71 | |||||||||||
Restructuring-Related Expense | $ | 0.01 | $ | - | $ | - | |||||||||||
Impact of Expired Tax Statute | $ | (0.01 | ) | $ | - | $ | - | ||||||||||
Non-GAAP Diluted EPS | $ | 0.56 | $ | 0.53 | $ | 0.71 |
Mr.
781-461-3491
(fax)
investor.relations@analog.com
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