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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 21, 2007
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:
|_| 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 21, 2007, Analog Devices, Inc. (the "Registrant")
announced its financial results for its fiscal first quarter ended February 3,
2007. 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
- ---------- -----------
99.1 Press release dated February 21, 2007
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 21, 2007 ANALOG DEVICES, INC.
By: /s/ Joseph E. McDonough
-------------------------------------
Joseph E. McDonough
Vice President, Finance and Chief
Financial Officer
EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
99.1 Press release dated February 21, 2007
Exhibit 99.1
Analog Devices Announces Financial
Results for the First Quarter of Fiscal Year 2007
-- Q1 Revenue: $692 million, including $35 million technology
license fee
-- Q1 Diluted EPS: $0.44 GAAP; $0.40 non-GAAP
-- Board of Directors declares quarterly dividend of $0.18 per
share
-- Financial results for the first quarter and guidance for the
second quarter of fiscal 2007 will be discussed via conference
call today at 5:00 pm
Business Editors
NORWOOD, Mass.--(BUSINESS WIRE)--Feb. 21, 2007--Analog Devices,
Inc. (NYSE: ADI), a global leader in high-performance semiconductors
for signal processing applications, today announced financial results
for the first quarter of fiscal 2007, which ended February 3, 2007.
The first quarter of fiscal year 2007 was a 14-week quarter, as
compared to the typical 13-week quarter, because ADI follows a 52-week
(or 364-day) fiscal calendar which results in an additional week
approximately every seventh year.
Total revenue for the first quarter of fiscal 2007 was $692
million, which included $657 million of product revenue and $35
million of revenue from a one-time technology license. Product revenue
for the first quarter of fiscal year 2007 increased approximately 6%
compared to the same period one year ago and increased approximately
2% compared to the immediately prior quarter.
Net income for the first quarter of fiscal 2007, under generally
accepted accounting principles (GAAP), was $153 million, or 22% of
total revenue, compared to $121 million for the same period one year
ago and $138 million for the immediately prior quarter.
The operating results for the first quarter of fiscal 2007 include
the following items:
-- $35 million of revenue from a one-time technology license fee
-- $8 million of non-operating income from the sale of an
investment
-- $20 million of non-cash stock option expenses
-- $5.2 million of expenses related to restructuring actions
-- $3.1 million of expenses related to previously-announced
acquisitions
-- An adjustment to the provision for taxes to reflect the tax
effect of these items
-- $10 million of tax savings associated with the reinstatement
of the federal research and development (R&D) tax credit
Together these items increased diluted EPS by $0.04. A
reconciliation between the non-GAAP financial measures presented in
this release to their most directly comparable GAAP measures is
provided in a table below.
Diluted earnings per share (EPS) for the first quarter of fiscal
2007, on a GAAP basis, was $0.44, compared to $0.32 for the same
period one year ago and $0.39 for the immediately prior quarter.
Non-GAAP diluted EPS for the first quarter of fiscal 2007 was $0.40,
compared to $0.37 for the same period one year ago and $0.39 for the
immediately prior quarter.
The Board of Directors declared a cash dividend for the first
quarter of fiscal 2007 of $0.18 per outstanding share of common stock,
an increase of $0.02 from the dividend paid on December 13, 2006. The
dividend will be paid on March 28, 2007 to all shareholders of record
at the close of business on March 9, 2007.
Gross margin for the first quarter of fiscal 2007, on a GAAP
basis, was $417 million. Non-GAAP gross margin was $387 million, or
59.0% of product revenue, for the first quarter of fiscal 2007,
compared to 59.2% of product revenue in the same period one year ago
and 59.4% of product revenue in the immediately prior quarter.
Non-GAAP gross margin declined slightly compared to the immediately
prior quarter primarily as a result of higher sales of products for
consumer electronics and cellular handset applications, which carry
relatively lower gross margin. Non-GAAP gross margin was also
constrained by continued low utilization rates in ADI factories.
Operating profit for the first quarter of fiscal 2007, on a GAAP
basis, totaled $163 million. Non-GAAP operating profit was $156
million, or 23.8% of product revenue, for the first quarter of fiscal
2007, compared to 25.7% of product revenue in the same period one year
ago and 24.7% of product revenue in the immediately prior quarter.
Non-GAAP operating profit declined compared to the immediately prior
quarter primarily as a result of higher operating expenses associated
with an additional week of expenses in the 14-week first quarter of
fiscal 2007 as compared to the 13-week fourth quarter of fiscal 2006.
Net cash provided by operating activities in the first quarter of
fiscal 2007 totaled $208 million, or 30.1% of total revenue, compared
to $175 million, or 28.2% of total revenue, in the same period one
year ago and compared to $167 million, or 25.9% of total revenue, in
the immediately prior quarter.
-- Capital expenditures for the first quarter of fiscal year 2007
totaled $38 million.
-- Cash dividends paid during the first quarter of fiscal 2007
totaled $54.7 million.
-- Share repurchases during the first quarter of fiscal 2007 of
approximately 10.1 million shares of ADI common stock
(approximately 3% of total shares outstanding) totaled $333
million.
-- The share repurchase program authorized by the Board of
Directors had approximately $979 million remaining at the end
of the first quarter of 2007.
Balance Sheet
-- Cash and short-term investments at the end of the first
quarter of fiscal 2007 totaled approximately $1.95 billion.
-- Inventory at the end of the first quarter of fiscal 2007
increased 2% compared to the immediately prior quarter,
consistent with the increase in product revenue over the same
period.
-- Accounts receivable at the end of the first quarter of fiscal
2007 increased 5% compared to accounts receivable at the end
of the immediately prior quarter. A high rate of shipments in
the last month of the first quarter was the primary reason for
the increase.
Revenue Analysis By End Market and By Product Category
Revenue analysis is based on product revenue of $657 million in
the first quarter of fiscal 2007, which excludes the one-time $35
million technology license fee.
Revenue Analysis By End Market
-- Revenue from customers in the industrial market represented
approximately 44% of product revenue in the first quarter of
fiscal 2007. Revenue from the industrial market, which
includes factory automation, medical and scientific
instrumentation, automotive, security, and defense
applications, increased by 3% compared to the immediately
prior quarter and increased by 14% compared to the same period
one year ago. Comparing the first quarter of fiscal 2007 to
the immediately prior quarter, revenue from automotive and
defense applications increased, while other areas of the
industrial market were approximately flat.
-- Revenue from customers in the communications market
represented approximately 26% of product revenue in the first
quarter of fiscal 2007. Revenue from the communications market
increased by 7% compared to the immediately prior quarter and
declined by 9% compared to the same period one year ago.
Comparing the first quarter of fiscal 2007 to the immediately
prior quarter, revenue from base station and wireless handset
applications increased, while revenue from other areas of the
communications market was approximately flat or decreased.
-- Revenue from customers in the consumer market represented
approximately 20% of product revenue in the first quarter of
fiscal 2007. Revenue from the consumer market increased by 3%
compared to the immediately prior quarter and increased by 35%
compared to the same period one year ago primarily as a result
of increased sales to manufacturers of digital home
applications, including flat screen televisions and new video
game controllers.
-- Revenue from customers in the computer market represented
approximately 10% of product revenue in the first quarter of
fiscal 2007. Revenue from the computer market declined by 14%
compared to the immediately prior quarter and declined by 20%
compared to the same period one year ago primarily as a result
of ADI's strategy to refocus power management products on
portable applications and also due to a generally weak
computer market in the first quarter of fiscal 2007.
Revenue Analysis By Product Category
Revenue from analog products totaled approximately $547 million,
or 83% of product revenue, an increase of 1% compared to the
immediately prior quarter and an increase of 13% compared to the same
period one year ago.
-- During the first quarter of fiscal 2007, revenue from
converter and amplifier products represented approximately 61%
of product revenue and, compared to the immediately prior
quarter, revenue from converter and amplifier products
declined slightly. Compared to the same period one year ago,
revenue from converter and amplifier products increased by 13%
and 14%, respectively.
-- Revenue from other analog products such as micro-electro
mechanical systems (MEMS) products and radio frequency (RF)
integrated circuits increased significantly in the first
quarter of fiscal 2007 compared to both the immediately prior
quarter and the same period one year ago.
Revenue from digital signal processing (DSP) products totaled
approximately $110 million, or 17% of product revenue, an increase of
9% compared to the immediately prior quarter and a decrease of 20%
compared to the same period one year ago. A significant portion of the
year-to-year decline was due to the divestiture of the DSP-based
digital subscriber line (DSL) application-specific integrated circuit
(ASIC) and network processor product line.
-- Compared to the immediately prior quarter, DSP wireless
chipset revenue increased in the first quarter of fiscal 2007
after declining in the prior quarter when customers' inventory
corrections negatively impacted DSP product revenue. DSP
wireless chipset revenue comprised 7% of product revenue in
the first quarter of fiscal 2007.
-- During the first quarter of fiscal 2007, revenue from
general-purpose DSP products represented 9% of product
revenue, was approximately flat compared to the immediately
prior quarter and increased by 18% compared to the same period
one year ago.
Outlook for the Second Quarter of Fiscal 2007
The following statements are based on current expectations. These
statements are forward looking and actual results may differ
materially. These statements supersede all prior statements regarding
business outlook set forth in prior ADI news releases.
"Orders from customers and distributors began strengthening in
January and have continued to be strong, which we believe is a
positive sign of improving industry conditions," said Jerald G.
Fishman, ADI's president and chief executive officer. "Therefore, we
are planning for good growth in our second fiscal quarter."
-- Revenue for the second quarter of fiscal 2007 is planned to be
approximately $640 to $670 million.
-- Non-GAAP gross margins for the second quarter of fiscal 2007
are planned to be approximately 58.5% to 59% of revenue.
-- Operating expenses are planned to increase slightly in the
second quarter of fiscal 2007 as a result of annual salary
increases that take effect in the second quarter of fiscal
year 2007 and increased R&D spending on new analog products.
-- Diluted EPS for the second quarter of fiscal 2007, on a GAAP
basis, is planned to be in the range of $0.31 to $0.36.
Diluted EPS for the second quarter of fiscal 2007 is expected
to include approximately $0.06 of various net expenses
detailed in the Summary of Estimated Stock-based Compensation,
Restructuring- and Acquisition-Related Expenses for the Second
Quarter Ending May 5, 2007 table provided with this release.
Non-GAAP diluted EPS is planned to be $0.37 to $0.42.
Non-GAAP Financial Information
This release includes non-GAAP financial measures which exclude
the effects of charges related to non-recurring revenue associated
with the license of certain intellectual property rights to a third
party, gain on the sale of an investment, stock-based compensation,
restructuring-related expenses, acquisition-related expenses, and an
adjustment to the provision for taxes to reflect the tax effect of
these items. These non-GAAP measures also exclude the income tax
savings associated with the reinstatement of the federal R&D tax
credit and the tax savings associated with an IRS tax settlement.
These non-GAAP measures are not in accordance with, or an alternative
for, 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.
Management uses these non-GAAP measures to evaluate the Company's
operating performance. The items excluded from the non-GAAP measures
were excluded because they are of a non-recurring or non-cash nature.
The Company believes that the exclusion of these items provides an
enhanced understanding to investors of the underlying baseline
operating results and trends of the Company's business. Tables
reconciling our non-GAAP measures to GAAP are provided in this
release.
As described above, Analog Devices excludes the following items
from our non-GAAP measures:
Non-Recurring Revenue Associated with the License of Certain
Intellectual Property Rights to a Third Party. On November 9, 2006, we
received a one-time, non-recurring payment of $35 million in exchange
for granting a license of certain intellectual property rights to a
third party. This payment increased revenue in the first quarter of
fiscal 2007 by $35 million. We exclude this item and the related tax
effects from our non-GAAP results because it is a one-time item not
associated with the ongoing operations of our business.
Gain on Sale of Investment. We realized a gain of $8 million in
the first quarter of fiscal 2007 from the sale of a minority
shareholding in a company. We excluded this amount and the related tax
effects because it is a one-time item not associated with our ongoing
operating results.
Stock-based Compensation Related to Employee Stock Options. These
expenses consist of expenses for employee stock options under FAS123R.
We exclude these stock-based compensation expenses and the related tax
effects from our non-GAAP measures primarily because they are non-cash
expenses which we do not consider when evaluating and managing our
business operations.
Restructuring-Related Expense. These expenses are incurred in
connection with facility closures and other reorganization 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.
Acquisition-Related Expense. We incur in-process research and
development expenses when technological feasibility for acquired
technology has not been established and no future alternative use for
such technology exists. We also incur amortization of purchased
intangible assets in connection with acquisitions. We exclude these
items and the related tax effects because these expenses are not
reflective of ongoing operating results in the period incurred.
Tax Savings Associated with Reinstatement of the Federal R&D Tax
Credit. The IRS reinstated the R&D tax credit in December 2006,
retroactive to January 1, 2006. This retroactive reinstatement
resulted in a $10 million income tax savings to the Company in the
first quarter of fiscal 2007. We excluded this income tax savings from
our non-GAAP measures because it is not associated with the income tax
expense on our current operating results.
Tax Savings Associated with IRS Tax Settlement. The United States
Internal Revenue Service (the IRS) has completed its examination of
fiscal years 2001, 2002 and 2003 and issued their report. The Company
has agreed to accept this report and has filed its 2005 tax return and
an amended return for 2004 to conform to the methodologies agreed to
during the 2001-2003 examination. The completion of this examination
and the filing of refund claims in other jurisdictions associated with
the completion of the IRS audit have resulted in an income tax
savings. We excluded these income tax savings from our non-GAAP
measures because they are not associated with the income tax expense
on our current operating results.
Analog Devices believes that the presentation of non-GAAP
financial measures, when shown in conjunction with the corresponding
GAAP measures, provides useful information to investors regarding
financial and business trends relating to its financial condition and
results of operations, and provides our investors with some of the
financial measures we use to manage our business. The Company's usage
of non-GAAP measures, and the underlying methodology in excluding
certain charges, is not necessarily an indication of the results of
operations that may be expected in the future, or that the Company
will not, in fact, incur such charges in future periods.
Analog Devices believes that non-GAAP measures have limitations in
that they do not reflect all of the amounts associated with our
results of operations as determined in accordance with GAAP and that
these measures should only be used to evaluate our results of
operations in conjunction with the corresponding GAAP measures.
Conference Call Scheduled for 5:00
Mr. Fishman will discuss the first quarter's results and the
near-term outlook via webcast, accessible from www.analog.com, today
beginning at 5:00 pm ET. 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: 8406837 or by visiting
the Investor Relations page on ADI's web site.
About Analog Devices, Inc.
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
over 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 release may be deemed to contain forward-looking statements,
which are subject to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include, among other things, our statements regarding
expected sales growth, revenue, earnings, operating margins, and other
financial results, and expected increases in customer demand for our
products 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, involve certain risks, uncertainties, and
assumptions that are difficult to predict, and do not give effect to
the potential impact of any mergers, acquisitions, divestitures, or
business combinations that may be announced or closed after the date
hereof. 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, as filed with the Securities
and Exchange Commission. Our results of operations for the periods
presented in this release are not necessarily indicative of our
operating results for any future periods. Any projections in this
release are based on limited information currently available to Analog
Devices, which is subject to change. Although any such projections and
the factors influencing them will likely change, we will not
necessarily update the information, since we will only provide
guidance at certain points during the year. Such information speaks
only as of the original issuance date of this release.
Analog Devices and the Analog Devices logo are registered
trademarks or trademarks of Analog Devices, Inc. All other trademarks
mentioned in this document are the property of their respective
owners. The use of the word partner does not imply a partnership
relationship between Analog Devices and any other company.
Analog Devices, First Quarter, Fiscal 2007
Sales/Earnings Summary (GAAP)
(In thousands, except per-share amounts)
-----------------------------
Three Months Ended
-----------------------------
1Q 07 4Q 06 1Q 06
Feb. 3, Oct 28, Jan 28,
2007 2006 2006
- --------------------------------------- -----------------------------
Product Revenue $656,614 $644,342 $621,302
Year-to-year Growth 6% 4% 7%
Quarter-to-quarter Growth 2% (3)% 0%
Revenue from one-time licensing of IP 35,000 - -
- --------------------------------------- --------- --------- ---------
Total Revenue $691,614 $644,342 $621,302
Cost of Sales (1) 274,594 269,770 260,515
- --------------------------------------- --------- --------- ---------
Gross Margin 417,020 374,572 360,787
- --------------------------------------- --------- --------- ---------
Operating Expenses:
R&D (1) 143,894 137,550 131,288
Selling, Marketing and G&A (1) 104,681 100,710 96,281
Purchased In-Process Research and
Development - 16,211 -
Special Charges 5,196 777 1,013
- --------------------------------------- --------- --------- ---------
Operating Income 163,249 119,324 132,205
Other Income (32,302) (24,495) (20,592)
- --------------------------------------- --------- --------- ---------
Income Before Tax 195,551 143,819 152,797
Provision for Taxes 42,543 6,148 32,240
Minority Interest 219 748 -
- --------------------------------------- --------- --------- ---------
Net Income $153,227 $138,419 $120,557
- --------------------------------------- --------- --------- ---------
Shares used for EPS - Basic 338,698 346,803 366,135
Shares used for EPS - Diluted 349,208 357,164 380,337
Earnings per Share - Basic $0.45 $0.40 $0.33
Earnings per Share - Diluted $0.44 $0.39 $0.32
Dividends paid per share $0.16 $0.16 $0.12
- --------------------------------------- --------- --------- ---------
(1) Includes stock-based compensation
expense as follows:
Cost of sales $2,936 $2,821 $954
R&D $8,906 $7,415 $10,263
Selling, Marketing and G&A $8,215 $7,363 $10,090
Analog Devices, First Quarter, Fiscal 2007
Selected Balance Sheet Information (GAAP)
(In thousands)
1Q 07 4Q 06 1Q 06
-----------------------------------
Feb. 3, Oct. 28, Jan. 28,
2007 2006 2006
- ---------------------------------------------------------------------
Cash & Short-term Investments $1,953,821 $2,128,334 $2,735,114
Accounts Receivable, Net 344,783 329,393 317,730
Inventories (1) 385,766 378,651 337,835
Other Current Assets 152,821 174,924 151,302
- ---------------------------------------------------------------------
Total Current Assets 2,837,191 3,011,302 3,541,981
PP&E, Net 564,971 562,625 576,798
Investments 32,569 31,429 29,249
Intangible Assets 302,860 299,017 167,186
Other 86,226 82,478 58,964
- ---------------------------------------------------------------------
Total Assets $3,823,817 $3,986,851 $4,374,178
- --------------------------------- ----------- ----------- -----------
Deferred Income-Shipments to
Distributors $160,422 $149,543 $132,332
Other Current Liabilities 328,083 341,400 471,851
Non-Current Liabilities 74,105 60,115 60,366
Stockholders' Equity 3,261,207 3,435,793 3,709,629
- ---------------------------------------------------------------------
Total Liabilities & Equity $3,823,817 $3,986,851 $4,374,178
- ---------------------------------------------------------------------
(1) includes $3,398, $3,703 and $1,937 related to stock-based
compensation in 1Q07, 4Q06, and 1Q06 respectively.
Analog Devices, First Quarter, Fiscal 2007
Cash Flow Statement (GAAP)
(In thousands)
-----------------------------
Three Months Ended
-----------------------------
1Q 07 4Q 06 1Q 06
-----------------------------
Feb. 3, Oct. 28, Jan. 28,
2007 2006 2006
------------------------------
Cash flows from operating activities:
Net Income $153,227 $138,419 $120,557
Adjustments to reconcile net income
to net cash provided by
operations:
Depreciation 35,613 38,904 43,079
Amortization of intangibles 3,610 3,359 404
Stock-based compensation 20,057 17,599 21,307
Excess tax benefit - stock
options (6,467) (25,222) -
Non-cash portion of special
charge - - 459
Other non-cash expense 134 120 557
Gain on sale of investment (7,919) - -
Purchased in-process research
and development - 16,211 -
Minority interest (219) (748) -
Deferred income taxes 2,433 3,932 (15,625)
Changes in operating assets and
liabilities 7,684 (25,839) 4,517
- ---------------------------------------------------------------------
Total adjustments 54,926 28,316 54,698
- ---------------------------------------------------------------------
Net cash provided by operating
activities 208,153 166,735 175,255
- ---------------------------------------------------------------------
Percent of Total Revenue 30.1% 25.9% 28.2%
- ---------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and
equipment, net (37,726) (41,755) (20,360)
Purchases of short-term available-
for-sale investments (646,407) (418,019) (954,871)
Maturities of short-term available-
for-sale investments 878,619 630,642 726,807
Proceeds from sale of investment 8,003 - -
Proceeds from sale of fixed assets - 1,735 -
Payments for acquisitions, net of
cash acquired - (142,104) -
Increase (decrease) in other assets 153 (3,402) 3,526
- ---------------------------------------------------------------------
Net cash provided (used) by investing
activities 202,642 27,097 (244,898)
- ---------------------------------------------------------------------
Cash flows from financing activities:
Dividend payments to shareholders (54,737) (55,642) (44,094)
Repurchase of common stock (333,223) (357,012) (125,098)
Net proceeds from employee stock
plans 24,497 14,540 38,685
Excess tax benefit - stock options 6,467 25,222 -
- ---------------------------------------------------------------------
Net cash used for financing activities (356,996) (372,892) (130,507)
- ---------------------------------------------------------------------
Effect of exchange rate changes on cash 803 (118) 414
- ---------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 54,602 (179,178) (199,736)
Cash and cash equivalents at beginning
of period 343,947 523,125 627,591
- ---------------------------------------------------------------------
Cash and cash equivalents at end of
period $398,549 $343,947 $427,855
- ---------------------------------------------------------------------
Analog Devices, First Quarter, Fiscal 2007
Reconciliation from GAAP to Non-GAAP Data (In thousands, except per-
share amounts)
Management believes that non-GAAP financial information enhances an
investor's understanding of the Company's financial and business
trends relating to its financial condition and results of operations.
Management uses these non-GAAP measures to evaluate the Company's
operating performance. Non-GAAP financial information excludes the
effects of: stock-based compensation expense related to the adoption
of FAS123R, restructuring-related expense, acquisition-related
expense, a one-time payment associated with the licensing of
intellectual property, gain on sale of an investment, the impact of
the reinstatement of the R&D tax credit and the tax savings
associated with an IRS tax settlement. The provision for taxes has
been adjusted, as appropriate, to reflect the tax effect of these
items.
For the Three Months Ended
-----------------------------
Feb. 3, Oct. 28, Jan. 28,
2007 2006 2006
-----------------------------
GAAP Gross Margin $417,020 $374,572 $360,787
Revenue from One-time Licensing of
IP (35,000) - -
Stock-Based Compensation Expense 2,936 2,821 954
Restructuring-Related Expense - 2,804 5,903
Acquisition-Related Expense 2,389 2,271 -
--------- --------- ---------
Non-GAAP Gross Margin $387,345 $382,468 $367,644
========= ========= =========
Percent of Product Revenue 59.0% 59.4% 59.2%
GAAP Operating Expenses $253,771 $255,248 $228,582
Stock-Based Compensation Expense 16,967 14,512 19,652
Restructuring-Related Expense 5,196 777 1,013
Acquisition-Related Expense 729 16,861 -
--------- --------- ---------
Non-GAAP Operating Expenses $230,879 $223,098 $207,917
========= ========= =========
Percent of Product Revenue 35.2% 34.6% 33.5%
GAAP Operating Income $163,249 $119,324 $132,205
Revenue from One-time Licensing of
IP (35,000) - -
Stock-Based Compensation Expense 19,903 17,333 20,606
Restructuring-Related Expense 5,196 3,581 6,916
Acquisition-Related Expense 3,118 19,132 -
--------- --------- ---------
Non-GAAP Operating Income $156,466 $159,370 $159,727
========= ========= =========
Percent of Product Revenue 23.8% 24.7% 25.7%
GAAP Diluted Earnings Per Share $0.44 $0.39 $0.32
Revenue from One-time Licensing of
IP (0.065) - -
Stock-Based Compensation Expense 0.040 0.034 0.039
Restructuring-Related Expense 0.010 0.007 0.012
Acquisition-Related Expense 0.023 0.037 -
Gain on Sale of Investment (0.015) - -
Impact of the Reinstatement of the
R&D Tax Credit (0.028) - -
Tax Savings Associated with IRS Tax
Settlement - (0.075) -
--------- --------- ---------
Non-GAAP Diluted Earnings Per Share $0.40 $0.39 $0.37
========= ========= =========
Summary of Estimated Stock-based Compensation, Restructuring- and
Acquisition-Related Expenses for the Second Quarter Ending May 5,
2007
(In thousands, except per-share amounts)
Our GAAP results for the second quarter of fiscal 2007 are expected to
include the following estimated amounts of stock-based compensation
expense related to the adoption of FAS123R, restructuring-related
expense and acquisition-related expense. The provision for taxes has
been adjusted, as appropriate, to reflect the estimated tax effect of
these items.
Stock-Based Restructuring- Acquisition- Total
Compensation Related Related Estimated
Expense Expense Expense Impact on
GAAP
Income
Statement
- --------------- ------------- --------------- ------------ ----------
Cost of Sales $(2,855) $(2,103) $(4,958)
- --------------- ------------- --------------- ------------ ----------
Gross Margin 2,855 - 2,103 4,958
- --------------- ------------- --------------- ------------ ----------
Operating
Expenses:
R&D (8,451) - - (8,451)
Selling,
Marketing
and G&A (7,427) - (700) (8,127)
Special
Charges - (7,000) - (7,000)
- --------------- ------------- --------------- ------------ ----------
Operating
Income 18,733 7,000 2,803 28,536
- --------------- ------------- --------------- ------------ ----------
Income Before
Tax 18,733 7,000 2,803 28,536
Provision for
Taxes 5,503 2,450 682 8,635
- --------------- ------------- --------------- ------------ ----------
Net Income $13,230 $4,550 $2,121 $19,901
=============== ============= =============== ============ ==========
Earnings per
Share -
Diluted
Decrease $0.039 $0.013 $0.006 $0.058
Reconciliation of Non-GAAP Financial Measures to Their Most Directly
Comparable GAAP Financial Measure
Estimated Range for
Three Months Ending
May 5, 2007
--------------------
Low / High
--------------------
Product Revenue $640,000 / $670,000
GAAP Gross Margin as a % of Product Revenue 57.7% / 58.3%
Stock-Based Compensation Expense $2,855
Acquisition-Related Expense $2,103
Non-GAAP Gross Margin as a % of Product Revenue 58.5% / 59.0%
GAAP Diluted Earnings Per Share $0.31 / $0.36
Stock-Based Compensation Expense 0.04
Restructuring-Related Expense 0.01
Acquisition-Related Expense 0.01
--------------------
Non-GAAP Diluted Earnings Per Share $0.37 / $0.42
====================
Analog Devices, First Quarter, Fiscal 2007
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, or the underlying
trends of results within each end market.
For the Three Months Ended
-----------------------------
Feb. 3, Oct. 28, Jan. 28,
2007 2006 2006
-----------------------------
Industrial $285,996 $277,735 $251,957
% of Product Revenue 44% 43% 41%
Communications 174,017 163,180 192,135
% of Product Revenue 26% 26% 31%
Consumer 134,217 130,698 99,693
% of Product Revenue 20% 20% 16%
Computer 62,384 72,729 77,517
% of Product Revenue 10% 11% 12%
--------- --------- ---------
Total Product Revenue $656,614 $644,342 $621,302
--------- --------- ---------
One-time payment associated with the
licensing of
intellectual property 35,000 - -
--------- --------- ---------
Total Revenue $691,614 $644,342 $621,302
========= ========= =========
Revenue Trends by Product
- ----------------------------------------------------------------------
The following table summarizes revenue by product categories. 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 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, or the underlying trends of results within each product
category.
For the Three Months Ended
-----------------------------
Feb. 3, Oct. 28, Jan. 28,
2007 2006 2006
-----------------------------
Converters $263,648 $265,063 $233,009
% of Product Revenue 40% 41% 38%
Amplifiers 137,728 141,063 120,909
% of Product Revenue 21% 22% 19%
Power management & reference 51,187 55,694 54,302
% of Product Revenue 8% 8% 9%
Other analog 93,778 81,703 75,237
% of Product Revenue 14% 13% 12%
--------- --------- ---------
Total analog products $546,341 $543,523 $483,457
% of Product Revenue 83% 84% 78%
--------- --------- ---------
General purpose DSP 55,700 54,972 47,310
% of Product Revenue 9% 9% 7%
DSP-based DSL ASIC and Network Processor
Product Line(a) - - 11,315
% of Product Revenue 0% 0% 2%
Wireless Chipsets 46,968 36,804 67,178
% of Product Revenue 7% 6% 11%
Other DSP 7,605 9,036 12,042
% of Product Revenue 1% 1% 2%
--------- --------- ---------
Total DSP products $110,273 $100,812 $137,845
% of Product Revenue 17% 16% 22%
--------- --------- ---------
Total Product Revenue $656,614 $644,335 $621,302
--------- --------- ---------
One-time payment associated with the
licensing ofintellectual property 35,000 - -
--------- --------- ---------
Total Revenue $691,614 $644,335 $621,302
========= ========= =========
(a)We sold our DSP-based DSL ASIC and network processor product line
in the second quarter of fiscal 2006.
CONTACT: Analog Devices, Inc.
Maria Tagliaferro
Director of Corporate Communications
781-461-3282 (phone)
781-461-3491 (fax)
investor.relations@analog.com (email)