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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): August 10, 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 jurisdiction (Commission (IRS Employer
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 August 10, 2006, Analog Devices, Inc. (the "Registrant")
announced its financial results for its fiscal third quarter ended July 29,
2006. The full text of the press release issued by the Registrant concerning the
foregoing results is furnished herewith as Exhibit 99.1.
The information contained herein and in the accompanying exhibit
shall not be incorporated by reference into any filing of the Registrant,
whether made before or after the date hereof, regardless of any general
incorporation language in such filing, unless expressly incorporated by specific
reference to such filing. The information in this report, including the exhibit
hereto, shall not be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of
1933, as amended.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
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99.1 Press release dated August 10, 2006
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: August 10, 2006 ANALOG DEVICES, INC.
By: /s/ Joseph E. McDonough
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Joseph E. McDonough
Vice President, Finance and Chief
Financial Officer
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release dated August 10, 2006
Exhibit 99.1
Analog Devices Announces Results for Third Quarter of Fiscal Year 2006
NORWOOD, Mass.--(BUSINESS WIRE)--Aug. 10, 2006--Analog Devices, Inc. (NYSE:
ADI):
-- Board of Directors declares quarterly dividend of $0.16 per share;
-- Financial results for the third quarter and guidance for the fourth
quarter of fiscal 2006 will be discussed via 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
$663.7 million for the third quarter of fiscal 2006, an increase of
approximately 14% compared to the same period one year ago and an increase of
approximately 3% compared to the immediately prior quarter.
Net income under generally accepted accounting principles (GAAP) was $144.7
million for the third quarter. Diluted earnings per share (EPS) was $0.39 for
the third quarter.
The GAAP results for the third quarter of fiscal 2006 include the following
items: expenses of $5.7 million included in cost of sales related to
previously-announced restructuring actions; expenses of $6.2 million included in
operating expenses related to previously-announced acquisitions; $19 million of
non-cash stock option expenses; and $16.8 million of tax benefits. In total,
these items reduced diluted EPS by $0.04 in the third quarter. Excluding these
items, diluted EPS was $0.43 in the third quarter.
The Board of Directors declared a cash dividend for the third quarter of
fiscal 2006 of $0.16 per outstanding share of common stock. The dividend will be
paid on September 13, 2006 to all shareholders of record at the close of
business on August 25, 2006.
"Revenue from our broad base of industrial customers continued to be strong
in the third quarter, increasing 16% year-over-year and 3% sequentially," said
Jerald G. Fishman, ADI's president and chief executive officer. "Revenue from
communications customers increased 26% year-over-year and 6% sequentially.
Within communications, revenue from wireless base station customers was
particularly strong, while revenue from wireless handset customers was
approximately equal to the immediately prior quarter. In the third quarter,
revenue from consumer customers increased 14% year-over-year and 3% sequentially
while revenue from computer customers declined compared to the immediately prior
quarter."
Profit Margins
Gross margin for the third quarter of fiscal 2006 was $390.1 million, or
58.8% of sales. In the third quarter of fiscal 2006, gross margin was reduced by
$8.7 million, or 1.3% of sales, as a result of stock option expense and
previously announced manufacturing restructuring-related expense. Excluding
these items, gross margin for the third quarter was 60.1% of sales.
Operating profit for the third quarter of fiscal 2006 totaled $148.9
million, or approximately 22.4% of sales. In the third quarter of fiscal 2006,
operating profit was reduced by $30.9 million, or 4.7% of sales, as a result of
stock option expense and previously announced restructuring- and
acquisition-related expense. Excluding these items, operating profit for the
third quarter was 27.1% of sales.
Uses of Cash
Capital expenditures totaled $38.4 million in the third quarter of fiscal
year 2006. The company repurchased approximately 9.3 million shares of ADI
common stock for $305.2 million and paid $57.5 million in cash dividends.
Balance Sheet
Cash and short term investments totaled approximately $2.5 billion at the
end of the third quarter.
In the third quarter, inventory increased by approximately $18 million
compared to the immediately prior quarter. Approximately $9 million of the
inventory increase was planned as part of the closure of the company's wafer
manufacturing facility in Sunnyvale, California, which is on schedule to be
shutdown in October of 2006. Days cost of sales in inventory was 126 days at the
end of the third quarter of fiscal 2006, compared to 129 days one year ago and
125 days at the end of the immediately prior quarter.
Days sales in accounts receivable were 49 days at the end of the third
quarter, compared to 47 days one year ago and 51 days at the end of the
immediately prior quarter.
Revenue Analysis by Product
During the third quarter of fiscal year 2006, analog products totaled 84%
of sales and digital signal processing (DSP) products totaled 16% of sales.
Revenue from analog products grew 15% compared to the same period one year
ago and 4% compared to the immediately prior quarter. Compared to the same
period one year ago, data converter product sales grew 12%, amplifier product
sales grew 20%, and other analog product sales grew 16%. Compared to the
immediately prior quarter, data converter product sales grew 4%, amplifier sales
grew 5%, and other analog product sales grew 2%.
Revenue from DSP products grew 11% compared to the same period one year ago
and was flat compared to the immediately prior quarter. General-purpose DSP
product sales grew 15% compared to the same period one year ago and 11% compared
to the immediately prior quarter. Revenue from other DSP products grew 7%
compared to the same period one year ago and declined 8% compared to the
immediately prior quarter.
Outlook for the Fourth Quarter of Fiscal 2006
Guidance for the fourth quarter of fiscal 2006 is based on GAAP and is only
current as of today, Thursday, August 10, 2006. The company undertakes no
obligation to update its estimates. ADI has provided a table of supplemental
information with this release, and on its website, which includes estimates of
the impact of stock option expense and previously announced acquisition- and
restructuring-related expense on the company's 2006 fourth quarter financial
statements.
Revenue in the fourth quarter is planned to be approximately equal to the
third quarter of fiscal 2006.
Gross margin in the fourth quarter is expected to be approximately equal to
the third quarter of fiscal 2006.
Operating expenses are planned to increase by approximately $21.9 million
compared to the third quarter, primarily due to the previously announced
restructuring and acquisition related expenses.
Diluted EPS is planned to be $0.33 to $0.34 for the fourth quarter of
fiscal 2006, which includes approximately $0.04 for stock option expenses, $0.02
for previously announced restructuring expenses, and $0.03 for previously
announced acquisition related expenses.
Supplemental Information
In order to help investors compare current results to ADI's historical
results and thereby better understand the underlying trends in the company's
business and ongoing operating results, ADI has provided a table of supplemental
information with this release, and on its website, which includes estimates of
the impact of stock option expense, the impact of previously announced
restructuring-related expenses, the impact of the gain from the sale of the
DSP-based DSL ASIC and network processor product line, the impact of expenses
associated with previously announced acquisitions, and the impact of tax
benefits on the company's 2006 quarterly financial statements.
Conference Call Scheduled for 4:30
Mr. Fishman will discuss the third 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: 377542 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 expected sales growth, revenue, earnings, operating
margins, and other financial results, expected increases in customer demand for
our products, and expected cash dividends, 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, are
inherently uncertain, 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. We do not undertake any obligation to update forward-looking statements
made by us. 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, adverse results in various litigation matters, 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-Q for the fiscal quarter ended April 29, 2006, as filed with the
Securities and Exchange Commission.
Analog Devices, Third Quarter, Fiscal 2006
Sales/Earnings Summary (GAAP)
(In thousands, except per-share amounts)
3Q 06 2Q 06 3Q 05
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Three Months Ended July 29, April 29, July 30,
2006 2006 2005
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Net Sales $ 663,660 $ 643,872 $ 582,416
Y/Y Growth 14% 7% -19%
Q/Q Growth 3% 4% -4%
Cost of Sales 273,550 263,201 244,178
Gross Margin 390,110 380,671 338,238
Percent of Sales 58.8% 59.1% 58.1%
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Operating Expenses:
R&D 136,061 131,848 119,217
Selling, Marketing and G&A 99,663 97,432 84,407
Purchased In-Process Research and
Development 5,500 - -
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Operating Income 148,886 151,391 134,614
Percent of Sales 22.4% 23.5% 23.1%
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Other Income (26,277) (39,225) (19,062)
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Income Before Tax 175,163 190,616 153,676
Provision for Taxes 30,478 44,795 32,272
Tax Rate 17.4% 23.5% 21%
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Net Income $ 144,685 $ 145,821 $ 121,404
Percent of Sales 21.8% 22.6% 20.8%
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Shares used for EPS - Basic 357,887 364,225 370,985
Shares used for EPS - Diluted 369,542 376,811 382,830
Earnings per Share - Basic $ 0.40 $ 0.40 $ 0.33
Earnings per Share - Diluted $ 0.39 $ 0.39 $ 0.32
Dividends paid per share $ 0.16 $ 0.12 $ 0.10
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Supplemental Information
Our GAAP Financial Statements Include the Following Amounts of Stock-
based Compensation Expense Related to the Adoption of FAS123R,
Restructuring Related Expense, Tax Expense Associated with the
Repatriation of Foreign Earnings, Gain on Sale of a Product Line,
Tax Benefit Associated with IRS Settlement and
Acquisition Related Costs
(in thousands, except per-share amounts)
4Q 05 1Q 06 2Q 06 3Q 06 4Q 06
Actual Actual Actual Actual Estimate
COST OF SALES
Stock-based
compensation expense $ - $ 954 $ 990 $ 2,949 $ 2,841
Restructuring related
expenses - 5,903 5,877 5,736 6,096
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GROSS MARGIN - (6,857) (6,867) (8,685) (8,937)
% Sales 0.0% -1.1% -1.1% -1.3%
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OPERATING EXPENSE
R&D - stock-based
compensation expense - 9,562 8,282 7,971 7,422
Selling, Marketing, G&A
- stock-based
compensation expense - 10,090 7,684 8,055 7,414
R&D - acquisition
related costs - - - 733 3,300
Acquisition related
costs - - - 5,500 12,000
Special charges -
restructuring related 31,480 1,013 - - 7,407
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TOTAL OPERATING EXPENSE 31,480 20,665 15,966 22,259 37,543
% Sales 5.1% 3.3% 2.5% 3.4%
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OPERATING PROFIT (LOSS)
BEFORE TAX (31,480) (27,522) (22,833) (30,944) (46,480)
% Sales -5.1% -4.4% -3.5% -4.7%
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Non-operating gain on
sale of product line - - (13,027) - -
% Sales 0.0% 0.0% -2.0% 0.0%
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Tax benefit of above
items (10,118) (8,344) (2,279) (8,315) (14,531)
Tax benefit associated
with IRS Settlement - - - (8,494) -
Tax expense associated
with the repatriation of
foreign earnings 48,768 - - - -
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NET INCOME (LOSS) $(70,130)$(19,178)$ (7,527)$(14,135)$(31,949)
% Sales -11.3% -3.1% -1.2% -2.1%
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EARNINGS (LOSS) PER SHARE
Repatriation of foreign
earnings $ (0.128)$ - $ - $ - $ -
Gain on sale of a product
line - - 0.022 - -
Stock-based compensation - (0.039) (0.032) (0.036) (0.035)
Restructuring related
expenses (0.054) (0.012) (0.010) (0.010) (0.024)
Tax benefit associated
with IRS Settlement - - - 0.023 -
Acquisition related costs - - - (0.015) (0.030)
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EARNINGS (LOSS)
PER SHARE $ (0.182)$ (0.051)$ (0.020)$ (0.038)$ (0.089)
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Analog Devices, Third Quarter, Fiscal 2006
Selected Balance Sheet Information (GAAP)
(In thousands)
3Q 06 2Q 06 3Q 05
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July 29, April 29, July 30,
2006 2006 2005
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Cash & Short-term Investments $ 2,516,061 $ 2,692,796 $ 2,783,886
Accounts Receivable, Net 359,774 357,880 302,375
Inventories (1) 377,434 359,420 345,949
Other Current Assets 179,659 147,380 135,564
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Total Current Assets 3,432,928 3,557,476 3,567,774
PP&E, Net 558,054 561,538 617,038
Investments 30,317 30,532 280,110
Intangible Assets 180,933 166,795 167,404
Other 90,015 87,006 67,735
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Total Assets $ 4,292,247 $ 4,403,347 $ 4,700,061
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Deferred Income-Shipments to
Distributors $ 165,850 $ 152,864 $ 131,031
Other Current Liabilities 419,314 542,820 423,361
Non-Current Liabilities 59,649 64,732 310,950
Stockholders' Equity 3,647,434 3,642,931 3,834,719
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Total Liabilities & Equity $ 4,292,247 $ 4,403,347 $ 4,700,061
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Days Sales Outstanding 49 51 47
Days Cost of Sales in Inventory 126 125 129
(1) includes $4,066 and $3,947 related to stock-based compensation
expense in 3Q06 and 2Q06, respectively.
Cash Flow Statement (GAAP)
(In thousands)
3Q 06 2Q 06 3Q 05
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Three Months Ended July 29, April 29, July 30,
2006 2006 2005
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Cash flows from operating
activities:
Net Income $ 144,685 $ 145,821 $ 121,404
Adjustments to reconcile net
income
to net cash provided by
operations:
Depreciation 42,181 42,687 37,801
Amortization of intangibles 1,145 404 672
Stock-based compensation 19,306 17,217 -
Gain on sale of a product
line - (13,027) -
Purchased in-process
research and development 5,500 - -
Other non-cash expense 84 23 1,340
Non-cash tax benefit - FAS
123R (141,220) (14,736) -
Deferred income taxes (11,985) (4,776) 1,736
Changes in operating assets
and liabilities 14,277 31,526 17,357
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Total adjustments (70,712) 59,318 58,906
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Net cash provided by operating
activities 73,973 205,139 180,310
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Percent of Sales 11.1% 31.9% 31.0%
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Cash flows from investing
activities:
Additions to property, plant and
equipment, net (38,360) (28,822) (18,912)
Purchases of short-term
available-for-sale investments (689,130) (421,103) (841,486)
Maturities of short-term
available-for-sale investments 989,638 441,630 606,305
Proceeds from sale of a product
line - 23,070 -
Payments for acquisitions, net of
cash acquired (14,913) - -
Decrease in other assets 269 330 205
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Net cash provided (used) by
investing activities 247,504 15,105 (253,888)
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Cash flows from financing
activities:
Dividend payments to shareholders (57,524) (44,191) (37,034)
Repurchase of common stock (305,163) (237,709) -
Net proceeds from employee stock
plans 20,173 20,994 43,969
Non-cash tax benefit - FAS 123R 141,220 14,736 -
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Net cash (used for) provided by
financing activities (201,294) (246,170) 6,935
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Effect of exchange rate changes on
cash 451 562 328
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Net increase (decrease) in cash and
cash equivalents 120,634 (25,364) (66,315)
Cash and cash equivalents at
beginning of period 402,491 427,855 314,368
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Cash and cash equivalents at end of
period $ 523,125 $ 402,491 $ 248,053
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CONTACT: Analog Devices, Inc.
Maria Tagliaferro, 781-461-3282
Director of Corporate Communications
Fax: 781-461-3491
investor.relations@analog.com