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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): May 22, 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 May 22, 2007, Analog Devices, Inc. (the "Registrant") announced
its financial results for its fiscal second quarter ended May 5, 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 May 22, 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: May 22, 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 May 22, 2007
Exhibit 99.1
Analog Devices Announces Financial Results for the Second Quarter of
Fiscal Year 2007
-- Q2 Revenue: $669 million
-- Q2 Diluted EPS: $0.37 GAAP; $0.40 non-GAAP
-- Board of Directors declares quarterly dividend of $0.18 per
share
-- Financial results for the second quarter and guidance for the
third quarter of fiscal 2007 will be discussed via conference
call today at 5:00 pm
NORWOOD, Mass.--(BUSINESS WIRE)--May 22, 2007--Analog Devices,
Inc. (NYSE: ADI), a global leader in high-performance semiconductors
for signal processing applications, today announced financial results
for the second quarter of fiscal 2007, which ended May 5, 2007.
Revenue for the second quarter of fiscal 2007 increased to $669
million, an increase of approximately 4% compared to the same period
one year ago. Compared to the immediately prior quarter's product
revenue of $657 million, revenue in the second quarter of fiscal year
2007 increased approximately 2%.
"ADI had a very good second quarter as the strong demand we began
to see in January continued through the quarter," said Jerald G.
Fishman, President and CEO. "Our results were particularly strong
considering that the second quarter of fiscal 2007 had one less week
than the immediately prior quarter. On a normalized 13-week basis,
order rates from end customers and revenue both grew sequentially by
10%." (ADI follows a 52-week, or 364-day, fiscal calendar which
results in a 14-week quarter approximately every seventh year, as
occurred in the immediately prior quarter.)
Net income for the second quarter of fiscal 2007, under generally
accepted accounting principles (GAAP), was $125 million, or 19% of
revenue, compared to $146 million for the same period one year ago and
$153 million for the immediately prior quarter.
The results for the second quarter of fiscal 2007 include the
following items:
-- $17.4 million of non-cash stock-based compensation expenses
related to employee stock options, or $0.037 on a diluted
earnings per share (EPS) basis.
-- $10.1 million of expenses related to restructuring actions, or
$0.019 on a diluted EPS basis. Approximately $6.7 million of
this amount related to the final shutdown of the Company's
wafer fabrication facility in California.
-- $2.9 million of expenses related to previously announced
acquisitions, or $0.006 on a diluted EPS basis.
-- $19 million received in the settlement of litigation against
Maxim Integrated Products regarding misappropriation of ADI's
intellectual property rights, or $0.036 on a diluted EPS
basis. Of this amount, $8.5 million was for the reimbursement
of legal expenses included in general and administrative
expenses and the remaining $10.5 million of the settlement was
included in non-operating income. None of these amounts were
included in revenue.
-- The provision for taxes includes the tax effect of these
items.
Together these items represented the $0.03 difference between GAAP
diluted EPS of $0.37 and non-GAAP diluted EPS of $0.40. The
reconciliation of 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 second quarter of fiscal
2007, on a GAAP basis, was $0.37, compared to $0.39 for the same
period one year ago and $0.44 for the immediately prior quarter.
Non-GAAP diluted EPS for the second quarter of fiscal 2007 was $0.40,
compared to $0.41 for the same period one year ago and $0.40 for the
immediately prior quarter.
The Board of Directors declared a cash dividend for the second
quarter of fiscal 2007 of $0.18 per outstanding share of common stock.
The dividend will be paid on June 20, 2007 to all shareholders of
record at the close of business on June 1, 2007.
Gross margin for the second quarter of fiscal 2007, on a GAAP
basis, was $382 million or 57% of sales. In the second quarter of
fiscal 2007, gross margin was reduced by $4.8 million, or 0.8% of
sales, as a result of stock-based compensation expense and
acquisition-related expense. Gross margin declined compared to the
immediately prior quarter primarily as a result of higher sales of
products used in consumer electronics and cellular handsets, which
generally carry slightly lower gross margins than the Company average.
Gross margin was also adversely impacted by the Company's decision to
continue constraining utilization levels within internal manufacturing
facilities to better balance production, demand, and inventory levels.
As a result, inventory declined 1% in the second quarter of fiscal
2007 compared to the immediately prior quarter.
Operating profit for the second quarter of fiscal 2007, on a GAAP
basis, totaled $132 million, or 19.7% of sales. In the second quarter
of fiscal 2007, operating profit was reduced by $21.9 million, or 3.3%
of sales, as a result of stock-based compensation expense,
restructuring and acquisition-related expenses, partially offset by
the reimbursement of legal expenses from the litigation settlement
described above.
Net cash provided by operating activities in the second quarter of
fiscal 2007 totaled $239 million, or 35.7% of revenue, compared to
$205 million, or 31.9% of revenue, in the same period one year ago and
compared to $208 million, or 30.1% of total revenue, in the
immediately prior quarter.
-- Capital expenditures for the second quarter of fiscal year
2007 totaled $39.7 million.
-- Cash dividends paid during the second quarter of fiscal 2007
totaled $59.6 million.
-- Share repurchases during the second quarter of fiscal 2007 of
approximately 10.3 million shares of ADI common stock
(approximately 3% of total shares outstanding) totaled $365
million.
-- As of the end of the second quarter of fiscal 2007, the total
shares repurchased under the program authorized by the Board
of Directors totaled approximately $2.4 billion and
represented approximately 19% of the shares outstanding as of
the beginning of fiscal year 2004.
-- The share repurchase program had approximately $615 million
remaining at the end of the second quarter of 2007.
Balance Sheet
-- Cash and short-term investments at the end of the second
quarter of fiscal 2007 totaled approximately $1.8 billion.
-- Inventory at the end of the second quarter of fiscal 2007
decreased 1% compared to the immediately prior quarter. Days
cost of sales in inventory was 121 days at the end of the
second quarter of fiscal 2007.
-- Accounts receivable at the end of the second quarter of fiscal
2007 decreased 4% compared to accounts receivable at the end
of the immediately prior quarter. Days sales in accounts
receivable was 45 days in the second quarter of fiscal 2007.
The tables, "Revenue Trends By End Market" and "Revenue Trends By
Product," provided below, summarize revenue by end market and by
product for the second quarter, immediately prior quarter and year-ago
quarter.
Outlook for the Third 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.
-- Revenue for the third quarter of fiscal 2007 is planned to be
in the range of $655 to $685 million.
-- Gross margin for the third quarter of fiscal 2007 is planned
to be approximately the same as the second quarter, primarily
as a result of the plan to continue constraining manufacturing
utilization levels within ADI factories. Manufacturing
utilization is planned to begin increasing in the fourth
quarter of fiscal 2007.
-- Operating expenses are planned to be flat to slightly higher
in the third quarter of fiscal 2007 compared to the
immediately prior quarter based on the Company's plan to
continue increasing R&D spending on new analog products while
reducing spending in other areas.
-- Diluted EPS for the third quarter of fiscal 2007, on a GAAP
basis, is planned to be in the range of $0.33 to $0.37.
Diluted EPS for the third quarter of fiscal 2007 is expected
to include approximately $0.04 of various net expenses
detailed in the Assumptions Used to Estimate Results for the
Third Quarter Ending August 4, 2007 table provided with this
release. Non-GAAP diluted EPS is planned to be $0.37 to $0.41.
Conference Call Scheduled for 5:00
Mr. Fishman will discuss the second 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: 8037164 or by visiting
the Investor Relations page on ADI's web site.
Non-GAAP Financial Information
This release includes non-GAAP financial measures that 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.
Manner in Which Management Uses the Non-GAAP Financial Measures
Management uses non-GAAP gross margin, non-GAAP operating
expenses, non-GAAP operating income and non-GAAP diluted earnings per
share to evaluate the Company's operating performance against past
periods and to budget and allocate resources in future periods. These
non-GAAP measures also assist management in understanding and
evaluating the underlying baseline operating results and trends in the
Company's business. Our budgets are determined excluding the items
listed below and management's performance is assessed using these
non-GAAP operating metrics. Management has also established employee
and executive profit sharing bonus plans that use non-GAAP operating
income as the metric to determine any bonus payout.
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. Tables
reconciling our non-GAAP measures to GAAP measures are provided in
this release.
The following items are excluded from our Non-GAAP gross margin:
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.
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 primarily because they are non-cash
expenses which we do not consider when evaluating and managing our
business operations.
The following items are excluded from our Non-GAAP operating
expenses:
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 primarily because they are non-cash
expenses which we do not consider when evaluating and managing our
business operations.
Proceeds from the one-time settlement of litigation. In the second
quarter of fiscal 2007, we settled a lawsuit against Maxim Integrated
Products and received a one-time non-recurring payment of $19 million.
A portion of this payment ($8.5 million) was to compensate us for the
legal expenses we incurred during the years 2001 through 2007 in
connection with this lawsuit. As the original legal expenses were
recorded as general and administrative expenses in the income
statement, we recorded the recovery of these legal expenses in the
same line item in our operating expenses. The remaining $10.5 million
was recorded as non-operating income because it is not associated with
the normal operations of our business. We exclude this payment 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.
The following items are excluded from our Non-GAAP operating
income:
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.
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 primarily because they are non-cash
expenses which we do not consider when evaluating and managing our
business operations.
Proceeds from the one-time settlement of litigation. In the second
quarter of fiscal 2007, we settled a lawsuit against Maxim Integrated
Products and received a one-time non-recurring payment of $19 million.
A portion of this payment ($8.5 million) was to compensate us for the
legal expenses we incurred during the years 2001 through 2007 in
connection with this lawsuit. As the original legal expenses were
recorded as general and administrative expenses in the income
statement, we recorded the recovery of these legal expenses in the
same line item in our operating expenses. The remaining $10.5 million
was recorded as non-operating income because it is not associated with
the normal operations of our business. We exclude this payment 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.
The following items are excluded from our Non-GAAP diluted
earnings per share:
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.
Gain on Sale of a Product Line. We realized a gain of $13 million
in the second quarter of fiscal 2006 from the sale of the DSP-based
DSL ASIC and network processor product line. 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 primarily because they are non-cash
expenses which we do not consider when evaluating and managing our
business operations.
Proceeds from the one-time settlement of litigation. In the second
quarter of fiscal 2007, we settled a lawsuit against Maxim Integrated
Products and received a one-time non-recurring payment of $19 million.
A portion of this payment ($8.5 million) was to compensate us for the
legal expenses we incurred during the years 2001 through 2007 in
connection with this lawsuit. As the original legal expenses were
recorded as general and administrative expenses in the income
statement, we recorded the recovery of these legal expenses in the
same line item in our operating expenses. The remaining $10.5 million
was recorded as non-operating income because it is not associated with
the normal operations of our business. We exclude this payment 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.
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.
Why Management Believes the Non-GAAP Financial Measures Provide
Useful Information to Investors
Management believes that the presentation of non-GAAP gross
margin, non-GAAP operating expenses, non-GAAP operating income, 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
Analog Devices believes that non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP operating income, and non-GAAP diluted
EPS have material 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. In addition, our non-GAAP measures may
not be comparable to the non-GAAP measures reported by other
companies. The Company's use of non-GAAP measures, and the underlying
methodology in excluding certain items, 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, record such items in
future periods.
Management's Compensation for Limitations of Non-GAAP Financial
Measures
Management compensates for these material limitations in non-GAAP
gross margin, non-GAAP operating expenses, non-GAAP operating income
and non-GAAP diluted earnings per share by also evaluating our GAAP
results and the reconciliations of our non-GAAP measures to the most
directly comparable GAAP measure. Investors should consider our
non-GAAP financial measures in conjunction with the corresponding GAAP
measures.
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 expenses, gross
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 changes in customer demand for our products and for end
products that incorporate our products, competitive pricing pressures,
unavailability of raw materials or wafer fabrication, assembly and
test capacity, any delay or cancellation of significant customer
orders, any inability to manage inventory to meet customer demand,
changes in geographic, product or customer mix, adverse changes in
economic conditions in the United States and international markets,
adverse results in litigation matters, 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, as 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, Second Quarter, Fiscal 2007
Sales/Earnings Summary (GAAP)
(In thousands, except per-share amounts)
--------- --------- ---------
Three Months Ended
-----------------------------
2Q 07 1Q 07 2Q 06
May 5, Feb. 3, April 29,
2007 2007 2006
(14
weeks)*
- ---------------------------------------- --------- --------- ---------
Product Revenue $669,132 $656,614 $643,872
Year-to-year Growth 4% 6% 7%
Quarter-to-quarter Growth 2% 2% 4%
Revenue from one-time licensing of IP - 35,000 -
- ---------------------------------------- --------- --------- ---------
Total Revenue $669,132 $691,614 $643,872
Cost of Sales (1) 287,494 274,594 263,201
- ---------------------------------------- --------- --------- ---------
Gross Margin 381,638 417,020 380,671
- ---------------------------------------- --------- --------- ---------
Operating Expenses:
R&D (1) 146,686 143,894 131,848
Selling, Marketing and G&A (1) 93,045 104,681 97,432
Special Charges 10,116 5,196 -
- ---------------------------------------- --------- --------- ---------
Operating Income 131,791 163,249 151,391
Other Income (31,092) (32,302) (39,225)
- ---------------------------------------- --------- --------- ---------
Income Before Tax 162,883 195,551 190,616
Provision for Taxes 37,527 42,543 44,795
Minority Interest - 219 -
- ---------------------------------------- --------- --------- ---------
Net Income $125,356 $153,227 $145,821
- ---------------------------------------- --------- --------- ---------
Shares used for EPS - Basic 329,988 338,698 364,225
Shares used for EPS - Diluted 338,840 349,208 376,811
Earnings per Share - Basic $0.38 $0.45 $0.40
Earnings per Share - Diluted $0.37 $0.44 $0.39
Dividends paid per share $0.18 $0.16 $0.12
- ---------------------------------------- --------- --------- ---------
(1) Includes stock-based compensation expense as
follows:
Cost of sales $2,672 $2,936 $990
R&D $8,359 $8,906 $8,543
Selling, Marketing and G&A $6,593 $8,215 $7,684
* ADI follows a 52-week, or 364-day, fiscal calendar which results in
an additional week approximately every seventh year.
Analog Devices, Second Quarter, Fiscal 2007
Selected Balance Sheet Information (GAAP)
(In thousands)
2Q 07 1Q 07 2Q 06
----------- ----------- -----------
May 5, Feb. 3, April 29,
2007 2007 2006
- ---------------------------------- ----------- ----------- -----------
Cash & Short-term Investments $1,794,672 $1,953,821 $2,692,796
Accounts Receivable, Net 332,116 344,783 357,880
Inventories (1) 382,177 385,766 359,420
Other Current Assets 180,755 152,821 147,380
- ---------------------------------- ----------- ----------- -----------
Total Current Assets 2,689,720 2,837,191 3,557,476
PP&E, Net 569,318 564,971 561,538
Investments 33,636 32,569 30,532
Goodwill and Intangible Assets 310,230 302,860 166,795
Other 83,772 86,226 87,006
- ---------------------------------- ----------- ----------- -----------
Total Assets $3,686,676 $3,823,817 $4,403,347
- ---------------------------------- ----------- ----------- -----------
Deferred Income-Shipments to
Distributors $154,322 $160,422 $152,864
Other Current Liabilities 393,803 328,083 542,820
Non-Current Liabilities 74,238 74,105 64,732
Stockholders' Equity 3,064,313 3,261,207 3,642,931
- ---------------------------------- ----------- ----------- -----------
Total Liabilities & Equity $3,686,676 $3,823,817 $4,403,347
- ---------------------------------- ----------- ----------- -----------
(1) includes $3,738, $3,398 and $3,947 related to stock-based
compensation in 2Q07, 1Q07, and 2Q06 respectively.
Analog Devices, Second Quarter, Fiscal 2007
Cash Flow Statement (GAAP)
(In thousands)
--------- --------- ---------
Three Months Ended
-----------------------------
2Q 07 1Q 07 2Q 06
--------- --------- ---------
May 5, Feb. 3, April 29,
2007 2007 2006
--------- --------- ---------
Cash flows from operating activities:
Net Income $125,356 $153,227 $145,821
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation 35,715 35,613 42,687
Amortization of intangibles 3,259 3,610 404
Stock-based compensation 17,624 20,057 17,217
Gain on sale of a product line - - (13,027)
Excess tax benefit - stock
options (15,027) (6,467) (14,736)
Other non-cash expense 144 134 23
Gain on sale of investment - (7,919) -
Minority interest - (219) -
Deferred income taxes (7,751) 2,433 (4,776)
Changes in operating assets and
liabilities 79,313 7,684 31,526
- ---------------------------------------- --------- --------- ---------
Total adjustments 113,277 54,926 59,318
- ---------------------------------------- --------- --------- ---------
Net cash provided by operating
activities 238,633 208,153 205,139
- ---------------------------------------- --------- --------- ---------
Percent of Total Revenue 35.7% 30.1% 31.9%
- ---------------------------------------- --------- --------- ---------
Cash flows from investing activities:
Additions to property, plant and
equipment, net (39,661) (37,726) (28,822)
Purchases of short-term available-for-
sale investments (559,933) (646,407) (421,103)
Maturities of short-term available-
for-sale investments 681,645 878,619 441,630
Proceeds from sale of investment - 8,003 -
Proceeds from sale of a product line - - 23,070
Payments for acquisitions, net of cash
acquired (6,000) - -
(Decrease) increase in other assets (333) 153 330
- ---------------------------------------- --------- --------- ---------
Net cash provided by investing
activities 75,718 202,642 15,105
- ---------------------------------------- --------- --------- ---------
Cash flows from financing activities:
Dividend payments to shareholders (59,562) (54,737) (44,191)
Repurchase of common stock (364,590) (333,223) (237,709)
Net proceeds from employee stock plans 53,762 24,497 20,994
Excess tax benefit - stock options 15,027 6,467 14,736
- ---------------------------------------- --------- --------- ---------
Net cash used for financing activities (355,363) (356,996) (246,170)
- ---------------------------------------- --------- --------- ---------
Effect of exchange rate changes on cash 1,053 803 562
- ---------------------------------------- --------- --------- ---------
Net (decrease) increase in cash and cash
equivalents (39,959) 54,602 (25,364)
Cash and cash equivalents at beginning
of period 398,549 343,947 427,855
- ---------------------------------------- --------- --------- ---------
Cash and cash equivalents at end of
period $358,590 $398,549 $402,491
- ---------------------------------------- --------- --------- ---------
Analog Devices, Second 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.
--------------------- --------- ---------
Three Three
Months Months
Three Months Ended Ended Ended
May 5, 2007 February April 29,
3, 2007 2006
(14
weeks)*
-----------------------------------------
Revenue Y/Y Q/Q Revenue Revenue
% % %*
------------------------------- ---------
Industrial $288,955 43% 6% -1% $290,975 $273,065
Communications 188,505 28% -1% 10% 171,685 190,782
Consumer 136,478 21% 26% 4% 130,626 108,414
Computer 55,194 8%-23%-13% 63,328 71,611
--------------------- --------- ---------
Total Product Revenue $669,132 100% 4% 2% $656,614 $643,872
--------------------- --------- ---------
One-time payment assoc.
with the licensing of IP - 35,000 -
--------- --------- ---------
Total Revenue $669,132 $691,614 $643,872
========= ========= =========
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.
Three Three
Months Months
Three Months Ended Ended Ended
May 5, 2007 February April 29,
3, 2007 2006
(14
weeks)*
-----------------------------------------
Revenue Y/Y Q/Q Revenue Revenue
% % %*
------------------------------- ---------
Converters $274,673 41% 7% 4% $263,648 $256,471
Amplifiers 137,187 21% 4% 0% 137,728 131,449
Power management & reference 47,072 7%-14% -8% 51,187 54,993
Other analog 98,196 14% 37% 5% 93,778 71,592
--------------------- --------- ---------
Total analog products $557,128 83% 8% 2% $546,341 $514,505
--------------------- --------- ---------
General purpose DSP 49,447 7% -1%-11% 55,700 50,014
Wireless Chipsets 55,339 8%-18% 18% 46,968 67,742
Other DSP 7,218 2%-38% -5% 7,605 11,611
--------------------- --------- ---------
Total DSP products $112,004 17%-13% 2% $110,273 $129,367
--------------------- --------- ---------
Total Product Revenue $669,132 100% $656,614 $643,872
--------------------- --------- ---------
One-time payment assoc.
with the licensing of IP - 35,000 -
--------- --------- ---------
Total Revenue $669,132 $691,614 $643,872
========= ========= =========
* ADI follows a 52-week, or 364-day, fiscal calendar which results in
an additional week approximately every seventh year.
Analog Devices, Second 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. See "Non-GAAP Financial Information" in this
press release for a description of the items excluded from our non-
GAAP measures.
For the Three Months Ended
-----------------------------
May 5, Feb. 3, April 29,
2007 2007 2006
(14
weeks)*
--------- -------------------
GAAP Gross Margin $381,638 $417,020 $380,671
Revenue from One-time Licensing of
IP - (35,000) -
Stock-Based Compensation Expense 2,672 2,936 990
Restructuring-Related Expense - - 5,877
Acquisition-Related Expense 2,153 2,389 -
--------- --------- ---------
Non-GAAP Gross Margin $386,463 $387,345 $387,538
========= ========= =========
Percent of Product Revenue 57.8% 59.0% 60.2%
GAAP Operating Expenses $249,847 $253,771 $229,280
Stock-Based Compensation Expense (14,720) (16,967) (15,966)
Restructuring-Related Expense (10,116) (5,196) -
Acquisition-Related Expense (729) (729) -
Litigation Settlement 8,500 - -
--------- --------- ---------
Non-GAAP Operating Expenses $232,782 $230,879 $213,314
========= ========= =========
Percent of Product Revenue 34.8% 35.2% 33.1%
GAAP Operating Income $131,791 $163,249 $151,391
Revenue from One-time Licensing of
IP - (35,000) -
Stock-Based Compensation Expense 17,391 19,903 16,956
Restructuring-Related Expense 10,116 5,196 5,877
Acquisition-Related Expense 2,882 3,118 -
Litigation Settlement (8,500) - -
--------- --------- ---------
Non-GAAP Operating Income $153,680 $156,466 $174,224
========= ========= =========
Percent of Product Revenue 23.0% 23.8% 27.1%
GAAP Diluted Earnings Per Share $0.37 $0.44 $0.39
Revenue from One-time Licensing of
IP - (0.065) -
Stock-Based Compensation Expense 0.037 0.040 0.032
Restructuring-Related Expense 0.019 0.010 0.010
Acquisition-Related Expense 0.006 0.023 -
Gain on Sale of Investment - (0.015) -
Gain on Sale of a Product Line - - (0.022)
Impact of the Reinstatement of the
R&D Tax Credit - (0.028) -
Litigation Settlement (0.036) -
--------- --------- ---------
Non-GAAP Diluted Earnings Per Share $0.40 $0.40 $0.41
========= ========= =========
* ADI follows a 52-week, or 364-day, fiscal calendar which results in
an additional week approximately every seventh year.
Assumptions Used to Estimate Results for the Third Quarter Ending
August 4, 2007
(In millions, except per-share amounts)
The following amounts are based on current expectations. These amounts
are forward looking and actual results may differ materially. These
amounts supersede all prior amounts regarding business outlook set
forth in prior ADI news releases.
Estimated Range for Three
Months Ending August 4,
2007
--------------------------
Low to High
--------------------------
Product Revenue $655M to $685M
GAAP Gross Margin as a % of Product Revenue Approximately the same as
Q207
Stock-Based Compensation Expense $2.8M
Acquisition-Related Expense $2.0M
Non-GAAP Gross Margin as a % of Product Approximately the same as
Revenue Q207
GAAP Operating Expenses Approximately the same as
Q207 to up slightly
Stock-Based Compensation Expense $15.4M
Acquisition-Related Expense $0.7M
Non-GAAP Operating Expenses Approximately the same as
Q207 to up slightly
Estimated tax rate 22% to 24%
Non-operating income Approximately $20M
GAAP Diluted Earnings Per Share $0.33 to $0.37
Stock-Based Compensation Expense 0.038
Acquisition-Related Expense 0.006
--------------------------
Non-GAAP Diluted Earnings Per Share $0.37 to $0.41
==========================
CONTACT: Analog Devices, Inc.
Maria Tagliaferro, 781-461-3282
Director of Corporate Communications
781-461-3491 (fax)
investor.relations@analog.com