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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 9, 2006
Analog Devices, Inc.
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(Exact name of registrant as specified in its charter)
Massachusetts 1-7819 04-2348234
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(State or other juris- (Commission (IRS Employer
diction of incorporation File Number) Identification No.)
One Technology Way, Norwood, MA 02062
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 329-4700
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On February 9, 2006, Analog Devices, Inc. announced its financial results
for the quarter ended January 28, 2006. The full text of the press release
issued in connection with the announcement is attached as Exhibit 99.1 to this
Current Report on Form 8-K.
The information in this Form 8-K and the exhibit attached hereto shall not
be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934 (the "Exchange Act") or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any filing under
the Securities Act of 1933 or the Exchange Act, except as expressly set forth by
specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
The following exhibit relating to Item 2.02 shall be deemed to be
furnished, and not filed:
99.1 Press release dated February 9, 2006 issued by Analog Devices, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 9, 2006 ANALOG DEVICES, INC.
By: /s/ Joseph E. McDonough
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Joseph E. McDonough
Vice President-Finance and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release dated February 9, 2006 issued by Analog
Devices, Inc.
Exhibit 99.1
Analog Devices Reports Results for the
First Quarter of Fiscal Year 2006
NORWOOD, Mass.--(BUSINESS WIRE)--Feb. 9, 2006--Analog Devices,
Inc. (NYSE: ADI):
-- Board of Directors declares dividend of $0.12 per share for
the quarter.
-- Financial results for the first quarter and guidance for the
second quarter to be discussed on conference call today at
4:30 pm.
Analog Devices, Inc. (NYSE: ADI), a global leader in
high-performance semiconductors for signal processing applications,
today announced revenue of $621.3 million for the first quarter of
fiscal 2006, an increase of 7% compared to the same period one year
ago and approximately even with the immediately prior quarter's $622.1
million in revenue.
Net income under generally accepted accounting principles (GAAP)
was $120.6 million for the first quarter, compared to $107.4 million
in the same period one year ago and $68.3 million in the immediately
prior quarter. Diluted earnings per share (EPS) was $0.32 for the
first quarter, compared to $0.28 for the same period one year ago and
$0.18 for the fourth quarter of fiscal 2005. The results for the first
quarter of fiscal 2006 include expenses of $6.9 million associated
with the previously announced restructuring actions and $20.6 million
of stock option expense which together impacted diluted EPS by $0.05.
The Board of Directors declared a cash dividend for the first
quarter of fiscal 2006 of $0.12 per outstanding share of common stock.
The dividend will be paid on March 15, 2006 to all shareholders of
record at the close of business on February 24, 2006.
Gross margins for the first quarter of fiscal 2006 were $360.8
million or 58.1% of sales. In the first quarter of fiscal 2006, gross
margins were reduced by $6.9 million, or 1.1% of sales, related to
stock option expense and previously announced manufacturing
restructuring-related expense.
Operating profits for the first quarter totaled $132.2 million, or
approximately 21.3% of sales, which includes $27.5 million, or 4.4% of
sales, for stock option expense and previously announced
restructuring-related expense.
Cash flow from operations totaled $175.3 million, or approximately
28.2% of sales for the first quarter. Capital expenditures totaled
$20.4 million. The company repurchased approximately 3.3 million
shares of ADI common stock for $125.1 million and paid $44.1 million
in cash dividends.
In the first quarter, inventory increased sequentially by
approximately $12 million, $2 million of which was related to stock
option expense. The remaining increase in inventory was primarily due
to the purchase of wafers from external foundries. During the quarter,
ADI's factory utilization levels were approximately the same as the
prior quarter. Days cost of sales in inventory was 118 days for the
first quarter of fiscal 2006, compared to 132 days for the same period
one year ago and 115 days for the immediately prior quarter.
Accounts receivable balances remained low, consistent with prior
quarters. Days sales in accounts receivable were 47 days for the first
quarter, compared to 51 days for the same period one year ago and 47
days for the immediately prior quarter.
"The first quarter results were in line with our plan for the
quarter, although gross margins were somewhat stronger than planned,"
said Jerald G. Fishman, president and CEO of Analog Devices, Inc. "Our
highest sequential growth came from sales to communications and
industrial customers. In line with normal seasonal trends, sales to
consumer and computer customers were down sequentially.
"Revenue from industrial customers grew 16% in the first quarter
of fiscal 2006 compared to the same period last year. These customers
represent a diverse collection of instrumentation, medical, factory
process control, test equipment, automotive, and defense applications.
We believe that this growth reflects generally good worldwide economic
conditions which are stimulating higher capital spending at industrial
companies with strong cash flow. In the aggregate, sales to this broad
group of industrial customers represented 41% of sales in the first
quarter of fiscal 2006.
"Revenue from consumer customers represented 15% of sales during
the first quarter and grew 18% year-over-year, fueled by a broad array
of audio and video products sold to leading consumer customers around
the world. ADI is well positioned in digital cameras, flat screen
televisions and monitors, as well as a range of stereo and home
theatre sound systems.
"In the first quarter of 2006, revenue from computer customers
represented 13% of sales and declined year-over-year. The computer
market has lagged for ADI as we continue to address the market for
portable products but still have an installed base of slower growing
desktop products. Clearly computer products and the power management
products, in particular, which account for a high percentage of our
sales to computer customers, represent growth opportunities for ADI
going forward.
"Overall, revenue from communications customers, which represented
31% of sales, grew slightly compared to the first quarter one year
ago. Growth in sales of products used in infrastructure equipment for
wireless, broadband, and optical networking was partially offset by a
decline in sales to wireless handset customers.
"In the first quarter, analog product revenue was 11% above the
same period one year ago, 2% above the immediately prior quarter, and
represented 82% of total sales. Revenue from general-purpose DSP
products, which represented approximately 7% of ADI's total revenue,
grew 19% year-over-year. In aggregate, DSP product revenue represented
18% of first quarter sales, declined 9% compared to the same period
one year ago and declined 8% from the immediately prior quarter."
Regarding the near-term outlook, Mr. Fishman said, "Orders were
strong in the first quarter, particularly for our analog products. As
a result, we are planning for 5% to 6% sequential sales growth in our
analog products, driven by good seasonal strength from industrial,
consumer, and communications customers. This will be somewhat offset
by a sequential decline in sales of DSP products, primarily as a
result of our divestiture of the DSP-based DSL (digital subscriber
line) ASIC and network processor products, which represented
approximately $12 million of revenue in the first quarter of fiscal
2006. As a result, we are planning for second quarter revenue in the
range of $635 to $650 million.
"We are also planning for gross margins to continue to improve
during the second quarter. Our plan is for operating margins to
improve sequentially and for diluted EPS to be $0.34-$0.36, which
includes approximately $0.05 of previously announced
restructuring-related expense and stock option expense.
"We are also expecting the previously announced sale of the
DSP-based DSL ASIC and network processor products to close in the near
future, and are anticipating the recognition of a small gain on the
sale during the second quarter. This gain is not included in the
diluted EPS estimate mentioned above."
ADI began expensing stock-based compensation in the first quarter
of 2006. The company has provided a table of supplemental information
with this release at www.analog.com by clicking on "Investor
Relations" which includes estimates of the impact of stock option
expense and the impact of previously announced restructuring-related
expenses on the company's 2006 quarterly financial statements.
Mr. Fishman will discuss the first quarter's results and the
near-term outlook via webcast, accessible from www.analog.com, today
beginning at 4:30 pm EST. Investors who prefer to join by telephone
may call 706-634-7193 ten minutes before the call begins and provide
the password "ADI."
A replay will be available almost immediately after the call. The
replay may be accessed for up to one week by dialing 800-642-1687
(replay only) and providing the conference ID: 4297505 or by visiting
the Investor Relations page on ADI's web site.
About Analog Devices
Innovation, performance, and excellence are the cultural pillars
on which Analog Devices has built one of the longest standing, highest
growth companies within the technology sector. Acknowledged
industry-wide as the world leader in data conversion and signal
conditioning technology, Analog Devices serves over 60,000 customers,
representing virtually all types of electronic equipment. Celebrating
40 years as a leading global manufacturer of high-performance
integrated circuits used in analog and digital signal processing
applications, Analog Devices is headquartered in Norwood,
Massachusetts, with design and manufacturing facilities throughout the
world. Analog Devices' common stock is listed on the New York Stock
Exchange under the ticker "ADI" and is included in the S&P 500 Index.
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995: This press release contains forward-looking
statements, including our statements regarding planned revenue,
earnings, and operating margins, that are based on our current
expectations, beliefs, assumptions, estimates, forecasts, and
projections about the industry and markets in which Analog Devices
operates. The statements contained in this release are not guarantees
of future performance and involve certain risks, uncertainties, and
assumptions that are difficult to predict. Therefore, actual outcomes
and results may differ materially from what is expressed in such
forward-looking statements, and such statements should not be relied
upon as representing Analog Devices' expectations or beliefs as of any
date subsequent to the date of this press release. Important factors
that may affect future operating results include the effects of
adverse changes in overall economic conditions, currency exchange rate
fluctuations, the timing and duration of market upturns and downturns,
the growth or contraction of the markets we serve, demand for
semiconductors generally and for our products in particular, the risk
that our backlog could decline significantly, our ability to hire
engineers, salespeople and other qualified employees needed to meet
the expected demands of our customers, reversals or slowdowns in the
markets or customers served by our products, the adverse effects of
building inventories to meet planned growth that fails to materialize,
the occurrence and frequency of inventory and lead-time reduction
cycles, raw material availability, availability of both internal and
external manufacturing capacity, technological and product development
risks, competitors' actions and technological innovations, and other
risk factors described in our most recent Form 10-K for the fiscal
year ended October 29, 2005, as filed with the Securities and Exchange
Commission.
Analog Devices, First Quarter, Fiscal 2006
Sales/Earnings Summary (GAAP)
(In thousands, except per-share amounts)
1Q 06 4Q 05 1Q 05
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Three Months Ended January 28, October 29, January 29,
2006 2005 2005
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Net Sales $ 621,302 $ 622,130 $ 580,536
Y/Y Growth 7% -2% -4%
Q/Q Growth 0% 7% -8%
Cost of Sales 260,515 259,455 245,008
Gross Margin 360,787 362,675 335,528
Percent of Sales 58.1% 58.3% 57.8%
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Operating Expenses:
R&D 131,288 123,704 127,534
Selling, Marketing and G&A 96,281 84,715 83,341
Special Charges 1,013 31,480 -
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Operating Income 132,205 122,776 124,653
Percent of Sales 21.3% 19.7% 21.5%
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Other Income (20,592) (21,890) (13,983)
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Income Before Tax 152,797 144,666 138,636
Provision for Taxes 32,240 76,325 31,193
Tax Rate 21.1% 52.8% 22.5%
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Net Income $ 120,557 $ 68,341 $ 107,443
Percent of Sales 19.4% 11.0% 18.5%
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Shares used for EPS - Basic 366,135 369,945 375,561
Shares used for EPS - Diluted 380,337 380,607 388,107
Earnings per Share - Basic $ 0.33 $ 0.18 $ 0.29
Earnings per Share - Diluted $ 0.32 $ 0.18 $ 0.28
Dividends paid per share $ 0.12 $ 0.10 $ 0.06
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Supplemental Information
Impact of Stock-based Compensation Expense Related to the Adoption of
FAS123R, Restructuring Related Expense and Tax Expense Associated with
the Repatriation of Foreign Earnings
(in thousands, except per-share amounts)
1Q 06 4Q 05 1Q 05
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Three Months Ended January 28, October 29, January 29,
2006 2005 2005
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Cost of Sales
Stock-based compensation
expense $ 954 $ - $ -
Restructuring related expenses 5,903 - -
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Impact on Gross Margin (6,857) - -
Percent of Sales -1.1% - -
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Operating Expense
Engineering - stock-based
compensation expense 9,562 - -
Selling, Marketing, G&A -
stock-based compensation
expense 10,090 - -
Special Charges - restructuring 1,013 31,480 -
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Impact on Total Operating Expense 20,665 31,480 -
Percent of Sales 3.3% 5.1% -
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Impact on Operating Income (27,522) (31,480) -
Percent of Sales -4.4% -5.1% -
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Tax benefit of above items (8,344) (10,118) -
Tax expense associated with
repatriation of foreign earnings - 48,768 -
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Impact on Net Income $ (19,178)$ (70,130)$ -
Percent of Sales -3.1% -11.3% -
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Impact on Earnings per Share -
Diluted
Repatriation of foreign earnings $ - $ 0.13 $ -
Stock-based compensation 0.04 - -
Restructuring-related expense 0.01 0.05 -
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Impact on Earnings per Share -
Diluted $ (0.05)$ (0.18)$ -
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Analog Devices, First Quarter, Fiscal 2006
Selected Balance Sheet Information (GAAP)
(In thousands)
1Q 06 4Q 05 1Q 05
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January 28, October 29, January 29,
2006 2005 2005
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Cash & Short-term Investments $ 2,735,114 $ 2,705,942 $ 2,598,372
Accounts Receivable, Net 317,730 320,523 326,723
Inventories (1) 337,835 325,605 355,195
Other Current Assets 151,302 380,386 127,739
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Total Current Assets 3,541,981 3,732,456 3,408,029
PP&E, Net 576,798 599,906 653,608
Investments 29,249 45,365 315,556
Intangible Assets 167,186 167,576 168,723
Other 58,964 37,908 70,813
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Total Assets $ 4,374,178 $ 4,583,211 $ 4,616,729
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Deferred Income-Shipments to
Distributors $ 132,332 $ 121,802 $ 152,112
Other Current Liabilities 471,851 697,121 388,869
Non-Current Liabilities 60,366 72,787 341,318
Stockholders' Equity 3,709,629 3,691,501 3,734,430
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Total Liabilities & Equity $ 4,374,178 $ 4,583,211 $ 4,616,729
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(1) includes $1,937 related to stock-based compensation expense in
1Q06
Cash Flow Statement (GAAP)
(In thousands)
1Q 06 4Q 05 1Q 05
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Three Months Ended January 28, October 29, January 29,
2006 2005 2005
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Cash flows from operating
activities:
Net Income $ 120,557 $ 68,341 $ 107,443
Adjustments to reconcile net
income
to net cash provided by
operations:
Depreciation 43,079 38,054 38,313
Amortization of intangibles 404 342 684
Stock-based compensation 21,307 983 1,798
Non-cash portion of special
charge 459 - -
Other non-cash expense 557 762 718
Tax benefit - stock option
exercises - 50,374 -
Deferred income taxes (15,625) 5,667 778
Changes in operating assets
and liabilities 4,517 35,796 (32,860)
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Total adjustments 54,698 131,978 9,431
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Net cash provided by operating
activities 175,255 200,319 116,874
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Cash flows from investing
activities:
Additions to property, plant and
equipment, net (20,360) (21,029) (23,884)
Purchases of short-term
available-for-sale investments (954,871) (875,189) (797,655)
Maturities of short-term
available-for-sale investments 726,807 1,331,742 763,960
Decrease in other assets 3,526 3,976 1,559
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Net cash (used) provided by
investing activities (244,898) 439,500 (56,020)
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Cash flows from financing
activities:
Dividend payments to
shareholders (44,094) (37,128) (22,579)
Repurchase of common stock (125,098) (240,796) (161,204)
Net proceeds from employee stock
plans 38,685 17,004 13,611
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Net cash used for financing
activities (130,507) (260,920) (170,172)
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Effect of exchange rate changes on
cash 414 639 (286)
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Net (decrease) increase in cash
and cash equivalents (199,736) 379,538 (109,604)
Cash and cash equivalents at
beginning of period 627,591 248,053 518,940
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Cash and cash equivalents at end
of period $ 427,855 $ 627,591 $ 409,336
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CONTACT: Analog Devices, Inc.
Maria Tagliaferro,781-461-3282
Director of Corporate Communications,
781-461-3491 (fax)
investor.relations@analog.com