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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 21, 2007
Analog Devices, Inc.
- -------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 1-7819 04-2348234
- ----------------------- ---------------------- ----------------------
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation
One Technology Way, Norwood, MA 02062
- ------------------------------------ -----------------------------------
(Address of principal executive (Zip Code)
offices)
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 August 21, 2007, Analog Devices, Inc. (the "Registrant") announced
its financial results for its fiscal third quarter ended August 4, 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
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99.1 Press release dated August 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: August 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 August 21, 2007
Exhibit 99.1
Analog Devices Announces Financial Results for the Third Quarter of
Fiscal Year 2007
-- Q3 Revenue: $680 million, 3% annual growth, 2% sequential
growth
-- Q3 Diluted EPS: $0.37 GAAP; $0.41 non-GAAP
-- Company repurchased $632 million of ADI common stock during Q3
-- Board of Directors declares quarterly dividend of $0.18 per
share
-- Financial results for the third quarter and guidance for the
fourth quarter of fiscal 2007 will be discussed via conference
call today at 5:00 pm
NORWOOD, Mass.--(BUSINESS WIRE)--Aug. 21, 2007--Analog Devices,
Inc. (NYSE: ADI), a global leader in high-performance semiconductors
for signal processing applications, today announced financial results
for the third quarter of fiscal 2007, which ended August 4, 2007.
Revenue for the third quarter of fiscal 2007 increased to $680
million, an increase of approximately 3% compared to the same period
one year ago and 2% compared to the immediately prior quarter.
"The third quarter was another solid quarter for ADI, turning out
largely as we had planned in terms of our revenue growth, product
sales mix, and operating expenses," said Jerald G. Fishman, President
and CEO. "Order rates remained strong during the third quarter in both
the OEM and distribution channels."
Net income for the third quarter of fiscal 2007, under generally
accepted accounting principles (GAAP), was $120 million, or 18% of
sales, compared to $145 million for the same period one year ago and
$125 million for the immediately prior quarter.
Diluted earnings per share (EPS) for the third quarter of fiscal
2007, on a GAAP basis, was $0.37, compared to $0.39 for the same
period one year ago and $0.37 for the immediately prior quarter.
The results for the third quarter of fiscal 2007 include the
following items:
-- $17.2 million of non-cash stock-based compensation expenses
related to employee stock options, or $0.037 on a diluted
earnings per share (EPS) basis.
-- $2.8 million of expenses related to previously announced
acquisitions, or $0.006 on a diluted EPS basis.
-- The provision for taxes includes the tax effect of these
items.
Together these items represented the $0.04 difference between GAAP
diluted EPS of $0.37 and non-GAAP diluted EPS of $0.41. 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.
Gross margin for the third quarter of fiscal 2007, on a GAAP
basis, was $389 million, or 57.1% of sales. In the third quarter of
fiscal 2007, gross margin was reduced by $4.5 million, or 0.7% of
sales, as a result of stock-based compensation expense and
acquisition-related expense. Gross margin as a percentage of sales was
approximately equal to the immediately prior quarter as planned.
Inventory declined $10.4 million in the third quarter of fiscal 2007
compared to the immediately prior quarter.
Operating profit for the third quarter of fiscal 2007, on a GAAP
basis, totaled $138 million, or 20.2% of sales. In the third quarter
of fiscal 2007, operating profit was reduced by $20 million, or 3.0%
of sales, as a result of stock-based compensation expense and
acquisition-related expenses.
Net cash provided by operating activities in the third quarter of
fiscal 2007 totaled $191 million, or 28% of sales. Capital
expenditures for the third quarter of fiscal year 2007 totaled $31
million.
Cash dividends paid during the third quarter of fiscal 2007
totaled $59 million. The Board of Directors declared a cash dividend
of $0.18 per outstanding share of common stock which will be paid on
September 19, 2007 to all shareholders of record at the close of
business on August 31, 2007.
Share repurchases during the third quarter of fiscal 2007 of
approximately 16.9 million shares of ADI common stock totaled $632
million and represented approximately 5.2% of the shares outstanding
as of the beginning of the third quarter.
-- As of the end of the third quarter of fiscal 2007, the total
shares repurchased under the program authorized by the Board
of Directors totaled approximately $3 billion and represented
approximately 22.8% of the shares outstanding as of the
beginning of the fourth quarter of fiscal year 2004, the start
of this repurchase program.
-- The share repurchase program had approximately $983 million
remaining at the end of the third quarter of 2007.
Balance Sheet
-- Inventory at the end of the third quarter of fiscal 2007
decreased approximately 3% compared to the immediately prior
quarter. Days cost of sales in inventory was 116 days at the
end of the third quarter of fiscal 2007, compared to 121 days
at the end of last quarter and 126 days a year ago.
-- Days sales in accounts receivable was 47 days in the third
quarter of fiscal 2007, compared to 45 days in the immediately
prior quarter.
The tables, "Revenue Trends By End Market" and "Revenue Trends By
Product," provided below, summarize revenue by end market and by
product for the third quarter, the immediately prior quarter and the
year-ago quarter. Highlights:
-- Analog product revenue, which comprised 84% of total revenue
in the third quarter, increased 3% compared to the immediately
prior quarter. The sequential revenue growth was driven by the
data converter, amplifier, power management, and radio
frequency product categories.
-- General-purpose digital signal processing (DSP) product
revenue, which comprised 8% of total revenue in the third
quarter, increased 7% compared to the immediately prior
quarter.
-- Revenue from the broad based industrial end market comprised
43% of total sales in the third quarter. Revenue from
industrial instrumentation and test equipment customers
increased compared to the immediately prior quarter, while
revenue from other industrial applications declined. Overall,
revenue from industrial customers was flat in the third
quarter compared to the immediately prior quarter.
-- Revenue from communications infrastructure customers increased
in the third quarter compared to the immediately prior quarter
driven by 13% growth in revenue from basestation and
networking equipment customers.
-- Revenue from consumer and computer customers increased 3% and
9%, respectively, in the third quarter compared to the
immediately prior quarter.
Outlook for the Fourth 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 fourth quarter of fiscal 2007 is planned to be
in the range of $680 to $710 million.
-- Gross margin for the fourth quarter of fiscal 2007 is planned
to be approximately the same as the third quarter. Typically,
in the fourth quarter ADI derives a higher percentage of
revenue from products used in consumer applications which have
relatively lower gross margin than most of the other end
markets ADI serves.
-- Operating expenses are planned to be flat to slightly higher
in the fourth quarter of fiscal 2007 compared to the
immediately prior quarter.
-- Diluted EPS for the fourth quarter of fiscal 2007, on a GAAP
basis, is planned to be in the range of $0.36 to $0.40.
Diluted EPS for the fourth quarter of fiscal 2007 is expected
to include approximately $0.05 of various net expenses
detailed in the Assumptions Used to Estimate Results for the
Fourth Quarter Ending November 3, 2007 table provided with
this release. Non-GAAP diluted EPS is planned to be $0.41 to
$0.45.
Conference Call Scheduled for 5:00
Mr. Fishman will discuss the third 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: 10972510 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, nor an alternative to, generally accepted accounting
principles and may be different from non-GAAP measures used by other
companies. In addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or principles.
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:
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 amortization expense related
to purchased intangible assets in connection with acquisitions. We
exclude this and the related tax effects primarily because it is a
non-cash expense, 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 expense related to
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 in the second quarter of
fiscal 2007. The remaining $10.5 million was recorded as non-operating
income in the second quarter of fiscal 2007 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:
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 expense related to
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 in the second quarter of
fiscal 2007. The remaining $10.5 million was recorded as non-operating
income in the second quarter of fiscal 2007 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:
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 expense related to
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 in the second quarter of
fiscal 2007. The remaining $10.5 million was recorded as non-operating
income in the second quarter of fiscal 2007 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 IRS Tax Settlement. During the third
quarter of fiscal 2006 the United States Internal Revenue Service (the
IRS) completed its examination of fiscal years 2001, 2002 and 2003 and
issued their report. The Company agreed to accept their report and
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
resulted in an income tax benefit. We excluded these income tax
benefits from our non-GAAP results because they were 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 and order rates 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, Third Quarter, Fiscal 2007
Sales/Earnings Summary (GAAP)
(In thousands, except per-share amounts)
--------- --------- ---------
Three Months Ended
-----------------------------
3Q 07 2Q 07 3Q 06
August May 5, July 29,
4, 2007 2007 2006
- -------------------------------------------------- --------- ---------
Total Revenue $680,312 $669,132 $663,660
Year-to-year Growth 3% 4% 14%
Quarter-to-quarter Growth 2% 2% 3%
Cost of Sales (1) 291,727 287,494 273,550
- -------------------------------------------------- --------- ---------
Gross Margin 388,585 381,638 390,110
- -------------------------------------------------- --------- ---------
Operating Expenses:
R&D (1) 148,562 146,686 136,061
Selling, Marketing and G&A (1) 102,379 93,045 99,663
Purchased In-Process Research and
Development - - 5,500
Special Charges - 10,116 -
- -------------------------------------------------- --------- ---------
Operating Income 137,644 131,791 148,886
Other Income (16,449) (31,092) (26,277)
- -------------------------------------------------- --------- ---------
Income Before Tax 154,093 162,883 175,163
Provision for Taxes 33,658 37,527 30,478
- -------------------------------------------------- --------- ---------
Net Income $120,435 $125,356 $144,685
- -------------------------------------------------- --------- ---------
Shares Used for EPS - Basic 318,465 329,988 357,887
Shares Used for EPS - Diluted 327,331 338,840 369,542
Earnings per Share - Basic $ 0.38 $ 0.38 $ 0.40
Earnings per Share - Diluted $ 0.37 $ 0.37 $ 0.39
Dividends Paid per Share $ 0.18 $ 0.18 $ 0.16
- -------------------------------------------------- --------- ---------
(1) Includes stock-based compensation
expense as follows:
Cost of sales $ 2,477 $ 2,672 $ 2,949
R&D $ 8,172 $ 8,359 $ 8,302
Selling, Marketing and G&A $ 6,816 $ 6,593 $ 8,055
Analog Devices, Third Quarter, Fiscal 2007
Selected Balance Sheet Information (GAAP)
(In thousands)
3Q 07 2Q 07 3Q 06
---------- ---------- ----------
August 4, May 5, July 29,
2007 2007 2006
- ------------------------------------------------ ---------- ----------
Cash & Short-term Investments $1,283,590 $1,794,672 $2,516,061
Accounts Receivable, Net 350,868 332,116 359,774
Inventories (1) 371,773 382,177 377,434
Other Current Assets 166,183 180,755 179,659
- ------------------------------------------------ ---------- ----------
Total Current Assets 2,172,414 2,689,720 3,432,928
PP&E, Net 564,960 569,318 558,054
Investments 34,623 33,636 30,317
Goodwill and Intangible Assets 310,865 310,230 180,933
Other 83,505 83,772 90,015
- ------------------------------------------------ ---------- ----------
Total Assets $3,166,367 $3,686,676 $4,292,247
- ------------------------------------------------ ---------- ----------
Deferred Income-Shipments to
Distributors $ 149,283 $ 154,322 $ 165,850
Other Current Liabilities 410,572 393,803 419,314
Non-Current Liabilities 69,906 74,238 59,649
Stockholders' Equity 2,536,606 3,064,313 3,647,434
- ------------------------------------------------ ---------- ----------
Total Liabilities & Equity $3,166,367 $3,686,676 $4,292,247
- ------------------------------------------------ ---------- ----------
(1) includes $3,432, $3,738 and $4,066 related to stock-based
compensation in 3Q07, 2Q07, and 3Q06 respectively.
Analog Devices, Third Quarter, Fiscal 2007
Cash Flow Statement (GAAP)
(In thousands)
------------------------------
Three Months Ended
------------------------------
3Q 07 2Q 07 3Q 06
------------------------------
August 4, May 5, July 29,
2007 2007 2006
------------------------------
Cash flows from operating activities:
Net Income $ 120,435 $ 125,356 $ 144,685
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation 35,741 35,715 42,181
Amortization of intangibles 3,168 3,259 1,145
Stock-based compensation 17,465 17,624 19,306
Purchased in-process research and
development - - 5,500
Excess tax benefit - stock
options (3,559) (15,027) (141,220)
Other non-cash expense 37 144 84
Deferred income taxes (5,256) (7,751) (11,985)
Changes in operating assets and
liabilities 22,698 79,313 14,277
- ----------------------------------------------------------------------
Total adjustments 70,294 113,277 (70,712)
- ----------------------------------------------------------------------
Net cash provided by operating
activities 190,729 238,633 73,973
- ----------------------------------------------------------------------
Percent of Total Revenue 28.0% 35.7% 11.1%
- ----------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and
equipment, net (31,246) (39,661) (38,360)
Purchases of short-term available-for-
sale investments (289,565) (559,933) (689,130)
Maturities of short-term available-
for-sale investments 837,412 681,645 989,638
Payments for acquisitions (3,160) (6,000) (14,913)
Increase (decrease) in other assets 162 (333) 269
- ----------------------------------------------------------------------
Net cash provided by investing
activities 513,603 75,718 247,504
- ----------------------------------------------------------------------
Cash flows from financing activities:
Dividend payments to shareholders (58,545) (59,562) (57,524)
Repurchase of common stock (631,708) (364,590) (305,163)
Net proceeds from employee stock plans 17,937 53,762 20,173
Excess tax benefit - stock options 3,559 15,027 141,220
- ----------------------------------------------------------------------
Net cash used for financing activities (668,757) (355,363) (201,294)
- ----------------------------------------------------------------------
Effect of exchange rate changes on cash (267) 1,053 451
- ----------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 35,308 (39,959) 120,634
Cash and cash equivalents at beginning
of period 358,590 398,549 402,491
- ----------------------------------------------------------------------
Cash and cash equivalents at end of
period $ 393,898 $ 358,590 $ 523,125
- ----------------------------------------------------------------------
Analog Devices, Third 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 of, or the underlying
trends of results within, each end market.
For the Three Months Ended
-------------------------------------------
August 4, 2007 May 5, July 29,
2007 2006
------------------- ----- -----------------
Revenue Y/Y Q/Q Revenue Revenue
% % %
-------- ---- ----- ----- -------- --------
Industrial $293,557 43% 3% 0% $292,554 $285,334
Communications 191,082 28% (4%) 1% 189,522 198,414
Consumer 136,577 20% 24% 3% 132,874 110,270
Computer 59,096 9% (15%) 9% 54,182 69,642
-------- ---- -------- --------
Total Revenue $680,312 100% 3% 2% $669,132 $663,660
-------- ---- -------- --------
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 of, or the underlying trends of results within, each
product category.
For the Three Months Ended
-------------------------------------------
August 4, 2007 May 5, July 29,
2007 2006
------------------- ----- -----------------
Revenue Y/Y Q/Q Revenue Revenue
% % %
-------- ---- ----- ----- -------- --------
Converters $281,530 41% 5% 2% $274,675 $268,949
Amplifiers 144,103 21% 4% 5% 137,185 138,634
Power management &
reference 50,019 7% (8%) 6% 47,072 54,661
Other analog 98,020 15% 34% 0% 98,196 73,102
-------- ---- -------- --------
Total analog products $573,672 84% 7% 3% $557,128 $535,346
-------- ---- -------- --------
General purpose DSP 52,891 8% (1%) 7% 49,447 53,187
Wireless Chipsets 45,030 7% (33%) (19%) 55,339 66,975
Other DSP 8,719 1% 7% 21% 7,218 8,152
-------- ---- -------- --------
Total DSP products $106,640 16% (17%) (5%) $112,004 $128,314
-------- ---- -------- --------
Total Revenue $680,312 100% 3% 2% $669,132 $663,660
-------- ---- -------- --------
Analog Devices, Third 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
-----------------------------
August May 5, July 29,
4, 2007 2007 2006
--------- --------- ---------
GAAP Gross Margin $388,585 $381,638 $390,110
Stock-Based Compensation Expense 2,477 2,672 2,949
Acquisition-Related Expense 2,040 2,153 -
Restructuring-Related Expense - - 5,736
--------- --------- ---------
Non-GAAP Gross Margin $393,102 $386,463 $398,795
========= ========= =========
Percent of Total Revenue 57.8% 57.8% 60.1%
GAAP Operating Expenses $250,941 $249,847 $241,224
Stock-Based Compensation Expense (14,718) (14,720) (16,026)
Acquisition-Related Expense (721) (729) (6,233)
Restructuring-Related Expense - (10,116) -
Litigation Settlement - 8,500 -
--------- --------- ---------
Non-GAAP Operating Expenses $235,502 $232,782 $218,965
========= ========= =========
Percent of Total Revenue 34.6% 34.8% 33.0%
GAAP Operating Income $137,644 $131,791 $148,886
Stock-Based Compensation Expense 17,195 17,392 18,975
Acquisition-Related Expense 2,761 2,882 6,233
Restructuring-Related Expense - 10,116 5,736
Litigation Settlement - (8,500) -
--------- --------- ---------
Non-GAAP Operating Income $157,600 $153,681 $179,830
========= ========= =========
Percent of Total Revenue 23.2% 23.0% 27.1%
GAAP Diluted Earnings Per Share $ 0.37 $ 0.37 $ 0.39
Stock-Based Compensation Expense 0.037 0.037 0.036
Acquisition-Related Expense 0.006 0.006 0.015
Restructuring-Related Expense - 0.019 0.010
Litigation Settlement - (0.036) -
Tax Benefit Associated with IRS Tax
Settlement - - (0.023)
--------- --------- ---------
Non-GAAP Diluted Earnings Per Share $ 0.41 $ 0.40 $ 0.43
========= ========= =========
Assumptions Used to Estimate Results for the Fourth Quarter Ending
November 3, 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
November 3, 2007
----------------------
Low to High
----------------------
Product Revenue $680M to $710M
GAAP Gross Margin as a % of Total Revenue Approximately the same
as Q307
Stock-Based Compensation Expense $2.7M
Acquisition-Related Expense $1.9M
Non-GAAP Gross Margin as a % of Total Revenue Approximately the same
as Q307
GAAP Operating Expenses Approximately the same
as Q307 to up
slightly
Stock-Based Compensation Expense $15.3M
Acquisition-Related Expense $0.7M
Non-GAAP Operating Expenses Approximately the same
as Q307 to up
slightly
Estimated tax rate 21% to 23%
Non-operating income Approximately $13M
GAAP Diluted Earnings Per Share $0.36 to $0.40
Stock-Based Compensation Expense 0.040
Acquisition-Related Expense 0.006
----------------------
Non-GAAP Diluted Earnings Per Share $0.41 to $0.45
======================
CONTACT: Analog Devices, Inc.
Maria Tagliaferro, 781-461-3282
Director of Corporate Communications
investor.relations@analog.com
781-461-3491 (fax)