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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): November 27, 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 (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation
One Technology Way, Norwood, MA 02062
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(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 November 27, 2007, Analog Devices, Inc. (the "Registrant") announced
its financial results for its fiscal fourth quarter and fiscal year ended
November 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
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99.1 Press release dated November 27, 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: November 27, 2007 ANALOG DEVICES, INC.
By: /s/ Joseph E. McDonough
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Joseph E. McDonough
Vice President, Finance
and Chief Financial
Officer
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release dated November 27, 2007
Exhibit 99.1
Analog Devices Announces Financial Results for the
Fourth Quarter and for Fiscal Year 2007
NORWOOD, Mass.--(BUSINESS WIRE)--Nov. 27, 2007--Analog Devices, Inc. (NYSE:
ADI)
- Q4 Revenue: $699 million, less $50 million for discontinued operations,
totaled $649 million from continuing operations, up 6% year-to-year, up 2%
sequentially
- Q4 Diluted EPS: $0.31 GAAP, or $0.39 non-GAAP, which excluded $0.08 of
one-time items
- Q4 Gross Margin of 58.4% of revenue from continuing operations on a GAAP
and on a non-GAAP basis
- Q4 Operating Profit from continuing operations: 18.7% of revenue GAAP, or
22.6% non-GAAP
- Planned divestiture of wireless handset baseband & radio business
benefited gross margin by 140 basis points and operating margin by 160 basis
points in Q4; Income after tax for this discontinued business was $1.5 million
in Q4; Diluted EPS was unchanged
- Q4 Restructuring Totaled $25 Million: ADI plans transfer of wafer
production in Ireland from 6" to 8" capacity & other operating expense
reductions
- Q4 Shares Outstanding Decreased 11% Compared to Year-Ago Quarter: Stock
repurchases totaled $318 million during Q4
- Board of Directors declares quarterly dividend of $0.18 per share
- Financial results for Q4 and guidance for the first quarter of fiscal
2008 will be discussed via conference call today at 5:00 pm
Except where noted, all financial results are from continuing operations.
The wireless handset baseband chipset & radio transceiver business was accounted
for in the fourth quarter as a discontinued operation. Thus, the Company's
fourth quarter revenue excluded $50 million from this business. Please refer to
the section below titled "Divestitures" for more information.
ADI has excluded only one-time or non-recurring items from non-GAAP
measures. Commencing in the fourth quarter, we are no longer excluding
stock-based compensation expense and amortization of acquisition-related expense
from our non-GAAP measures. The Company has provided a reconciliation of the
non-GAAP financial measures presented in this release to their most directly
comparable GAAP measures in a table below.
Analog Devices, Inc. (NYSE: ADI), a global leader in high-performance
semiconductors for signal processing applications, today announced financial
results for the fourth quarter of fiscal 2007, which ended November 3, 2007.
Results for the entire fiscal year are included under the heading, Summary for
the Fiscal Year 2007.
Revenue
Revenue from continuing operations in the fourth quarter of fiscal 2007
increased to $648.5 million, an increase of approximately 6% compared to the
same period one year ago and an increase of approximately 2% compared to the
immediately prior quarter. Revenue in the fourth quarter excluded $50.3 million
from discontinued operations.
"The fourth quarter was a solid quarter for ADI," said Jerald G. Fishman,
President and CEO. "Revenue and earnings were in line with our expectations for
the quarter. We are entering 2008 with a better balanced product portfolio,
capable of good growth and strong profit leverage."
Diluted EPS of $0.31 Included $0.08 for Restructuring Expense & Tax
Adjustments
Diluted earnings per share (EPS) for the fourth quarter of fiscal 2007, on
a non-GAAP basis for continuing operations, was $0.39, compared to $0.35 for the
same period one year ago and $0.38 for the immediately prior quarter. The
results for the fourth quarter of fiscal 2007 include the following items:
-- $25 million charge, or $0.064 on a diluted EPS basis, related to
planned operating expense reductions and the decision to transfer
wafer production capacity at ADI's Limerick, Ireland manufacturing
facility from 6" to 8" technology
-- $4.4 million charge, or $0.014 on a diluted EPS basis, which is a
one-time tax adjustment related to the IRS examination of fiscal years
2004 and 2005
Together these items represented the $0.08 difference between GAAP diluted
EPS of $0.31 and non-GAAP diluted EPS of $0.39.
Fourth Quarter Revenue Summary
The tables, "Revenue Trends By End Market" and "Revenue Trends By Product,"
provided below, summarize revenue by end market and by product for the fourth
quarter, the immediately prior quarter and the year-ago quarter, as well as for
fiscal years 2006 and 2007.
Revenue growth during the fourth quarter was highest for consumer products,
which grew by 17% compared to the same period one year ago and grew sequentially
by 11%. Sequential growth was driven by very strong sales growth from products
used in digital cameras and digital TVs. Revenue from consumer products
represented 23% of revenue in the fourth quarter.
Industrial customer revenue represented 46% of revenue in the fourth
quarter, increased 4% compared to the same period one year ago, and was
approximately equal to the immediately prior quarter. On a sequential basis,
revenue within the industrial category increased for the automotive and the
defense end markets, decreased for semiconductor automatic test equipment (ATE),
and was unchanged for the broad base of industrial customers.
Communications customer revenue represented 21% of revenue in the fourth
quarter, increased 9% from the same quarter last year, and declined sequentially
by 7%. After strong growth last quarter, revenue from base station and
networking customers declined sequentially.
Computer customer revenue was 10% of revenue in the fourth quarter and
declined 8% from the same quarter last year. Revenue from computer customers
grew 13% sequentially, in-line with industry trends.
By geographic region, revenue for the fourth quarter increased sequentially
in Europe by 9%, in North America by 4%, and in Japan by 5%. Revenue decreased
in China by 14%, following very strong sequential growth in the prior quarter,
and was relatively unchanged in the rest of Asia Pacific.
Gross Margin
Gross margin from continuing operations in the fourth quarter of fiscal
2007 was $379 million, or 58.4% of revenue. Gross margin declined sequentially
by 50 basis points due to strong sequential revenue growth from products used in
consumer and computer applications, which in aggregate have gross margin below
the Company average, and sequential revenue declines from products used in
semiconductor automatic test equipment (ATE) and communications base station and
networking applications, which have gross margin above the Company average.
Operating Profit
Operating profit from continuing operations for the fourth quarter of
fiscal 2007 totaled $121 million, or 18.7% of revenue. Operating profit was
reduced by $25 million, or 3.9% of revenue, as a result of restructuring-related
expenses. Non-GAAP operating profit was 22.6% of revenue, which was equal to the
prior quarter.
Net Cash
Net cash provided by operating activities in the fourth quarter of fiscal
2007 totaled $183 million, or 28.2% of revenue. Capital expenditures for the
fourth quarter of fiscal year 2007 totaled $33 million, or 5% of revenue.
Cash Dividend
Cash dividends paid during the fourth quarter of fiscal 2007 totaled $55
million. On November 26, 2007, the Board of Directors declared a cash dividend
of $0.18 per outstanding share of common stock which will be paid on December
26, 2007 to all shareholders of record at the close of business on December 7,
2007.
Shares Outstanding Decreased 11% Compared to Year-Ago Quarter
Share repurchases during the fourth quarter of fiscal 2007 of approximately
8.6 million shares of ADI common stock totaled $318 million and represented
approximately 2.8% of the shares outstanding as of the beginning of the fourth
quarter.
-- $3.3 billion in share repurchases, representing approximately 95
million shares, or 25.1% of the shares outstanding, have been
repurchased since the beginning of the fourth quarter of fiscal year
2004.
-- The share repurchase program had approximately $665 million in
authorization remaining at the end of the fourth quarter of 2007.
Balance Sheet
Inventory at the end of the fourth quarter of fiscal 2007 decreased $11
million, or approximately 3%, compared to the immediately prior quarter. Days
cost of revenue in inventory was 118 days at the end of the fourth quarter of
fiscal 2007, compared to 133 days a year ago and 125 days at the end of the
immediately prior quarter.
Days sales in accounts receivable was 47 days, unchanged from the
immediately prior quarter. Days sales in accounts receivable was 46 days at the
end of fiscal year 2006.
Summary for the Fiscal Year 2007
2007 Product Highlights:
-- Product revenue grew 7% in fiscal year 2007 and totaled $2.5 billion.
Product revenue excludes the one-time payment of $35 million received
in the first quarter of fiscal 2007 in exchange for granting a license
of certain intellectual property rights to a third party.
-- Analog product revenue represented 90% of product revenue for ADI and
increased 9% in fiscal 2007.
-- Converter product revenue represented 44% of product revenue and
increased 8% for the year.
-- Amplifier product revenue represented 22% of product revenue and
increased 5% for the year.
-- Power management and reference revenue represented 8% of product
revenue and declined 6% for the year. Excluding the CPU voltage
regulation and PC thermal monitoring product line, which is planned to
be divested, revenue declined 2% for the year.
-- Revenue from other analog products, such as Micro-Electro Mechanical
Systems (MEMS) and Radio Frequency (RF) products, represented 16% of
product revenue and increased 27% for the year.
-- General-purpose digital signal processing (DSP) product revenue
represented 9% of product revenue and increased 4% for the year.
2007 End Market Highlights:
-- More than $1 billion in revenue, or 47% of product revenue, came from
the broad based industrial end market in fiscal year 2007, a 7%
increase year-to-year. Medical, security, automotive, defense, and
instrumentation applications all contributed to growth during the
year.
-- Revenue from consumer applications was 22% of product revenue and grew
significantly during 2007, increasing 23%, with digital TVs, digital
cameras, home theatre and video games as the primary drivers.
-- Revenue from communications applications was 22% of product revenue
and increased 7% during 2007.
-- Revenue from computer applications was 9% of product revenue and
declined 17% year-to-year, primarily as a result of the Company's
decision to deemphasize power management products used in desktop and
laptop computers.
Net cash provided by operating activities totaled $820 million, or 32.2% of
total revenue in fiscal year 2007, compared to $621 million, or 26.5% of total
revenue, in the prior year.
Gross margin totaled $1.5 billion, or 59.7% of revenue, for the fiscal year
2007. In the prior year, gross margin totaled $1.4 billion, or 59.9% of revenue,
and included approximately $20 million, or 0.9% of revenue, in restructuring
related expenses. Excluding non-recurring items, non-GAAP gross margin was 59.1%
of revenue in fiscal year 2007 compared to 60.8% in the prior year. Gross margin
as a percentage of product revenue declined compared to the prior year primarily
as a result of strong growth in revenue from products used in consumer
applications where gross margin as a percentage of revenue is generally below
the Company average.
Operating expenses totaled $953 million in fiscal year 2007 compared to
$881 million in the prior year. In fiscal year 2007, ADI increased spending in
R&D by approximately $50 million, primarily to support strategic analog product
development programs. In addition, in fiscal year 2007, the Company recorded $40
million in special charges.
Operating margin totaled $566 million, or 22.2% of revenue, for the fiscal
year 2007. Excluding non-recurring or one time items, non-GAAP operating margin
as a percentage of product revenue was 22.4% in fiscal 2007 versus 24.2% in the
prior year. This decline was primarily due to the decline in gross margin.
Diluted EPS from continuing operations was $1.51 for the fiscal year 2007,
compared to $1.39 for the prior year. Excluding non-recurring or one time items,
non-GAAP diluted EPS from continuing operations was $1.48 in fiscal year 2007 as
compared to $1.35 in the prior year. The increase was primarily the result of
the share repurchases which reduced the diluted shares 10.4%.
Divestitures
During the fourth quarter, on September 9, 2007, ADI signed a definitive
agreement to sell its wireless handset baseband chipset and radio transceiver
operation. This business represented $50.3 million of revenue in the fourth
quarter of fiscal year 2007. The previously announced divestiture of this
business is expected to close in the first quarter of fiscal 2008.
ADI has accounted for the divested operation as a discontinued operation.
Assets and liabilities related to this business, including inventory, accounts
receivable, and property plant and equipment have been reclassified as such.
After accounting for assets included in the sale and other costs, the sale
is expected to result in a pre-tax gain of approximately $280 to $290 million
and an after tax gain of approximately $150 to $160 million.
After accounting for the wireless handset baseband and radio business as a
discontinued operation in the fourth quarter of fiscal 2007, gross margin as a
percentage of revenue increased 140 basis points and non-GAAP operating margin
as a percentage of revenue increased 160 basis points. Diluted EPS was
unchanged.
"The financial rationale for divesting this business is important, but
equally important is the improved strategic clarity this brings to our ongoing
investment decisions," explained Mr. Fishman. "We plan to continue to develop
other products for the wireless handset market, but we will focus our
investments in products where we offer technology that is differentiated and
provides sustainable value to leading handset manufacturers -- products that
improve energy efficiency, music and voice quality, picture quality, and the
overall user experience."
On November 8, 2007, during the first quarter of fiscal 2008, ADI signed a
definitive agreement to sell its CPU voltage regulation and PC thermal
monitoring operation. This business represented approximately $25 million of
revenue during the fourth quarter. The previously announced divestiture of this
business is expected to close in the first quarter of fiscal 2008. This business
is reported with continuing operations in the fourth quarter of fiscal 2007 and
will be included in discontinued operations beginning in the first quarter of
fiscal 2008.
To facilitate an orderly transfer of the business to the buyer, at closing
ADI expects to enter into a pre-paid one-year manufacturing supply arrangement
whereby ADI will continue to manufacture the products at its wafer fabrication
facility in Limerick, Ireland.
After accounting for assets included in the sale, other costs and the
prepaid manufacturing supply agreement, the sale is expected to result in a
pre-tax gain of approximately $85 to $92 million and an after tax gain of
approximately $52 to $60 million.
Outlook for the First Quarter of Fiscal 2008
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. Beginning in the first quarter of fiscal 2008, the
CPU Voltage Regulation and PC Thermal Monitoring business will be accounted for
as a discontinued operation. Please refer to the table, "Assumptions Used to
Estimate Results for the First Quarter Ending February 2, 2008," or Schedule H,
for details.
-- Revenue from continuing operations for the first quarter of fiscal
2008 is planned to be in the range of +2% to -2% from the fourth
quarter of fiscal 2007.
-- Gross margin from continuing operations for the first quarter of
fiscal 2008 is planned to be slightly above 60% of revenue.
-- Operating expenses from continuing operations are planned to decrease
slightly in the first quarter of fiscal 2008 compared to the
immediately prior quarter, excluding the restructuring expense
recorded in the fourth quarter and accounting for the CPU Voltage
Regulation and PC Thermal Monitoring business as a discontinued
operation.
-- The tax rate for the first quarter is estimated at 23% to 25%.
-- Non-operating income for the first quarter is estimated at $15
million.
-- Shares used for the diluted EPS calculation are estimated at 311
million.
-- Excluding the gains from the sales of the divested businesses, diluted
EPS from continuing operations for the first quarter of fiscal 2008 is
planned to be in the range of $0.38 to $0.42.
Conference Call Scheduled for 5:00
Mr. Fishman will discuss the fourth 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: 24289706 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.
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.
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.
The following items are excluded from our Non-GAAP operating expenses:
Purchased In-Process R&D. 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 exclude
these items because these expenses are not reflective of ongoing operating
results in the period incurred.
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.
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:
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.
Purchased In-Process R&D. 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 exclude
these items because these expenses are not reflective of ongoing operating
results in the period incurred.
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.
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:
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.
Purchased In-Process R&D. 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 exclude
these items because these expenses are not reflective of ongoing operating
results in the period incurred.
Acquisition-Related Expense. During the first quarter of fiscal 2007, we
recorded a tax adjustment when we finalized the accounting associated with our
fourth quarter of fiscal 2006 acquisition. We excluded this income tax expense
from our non-GAAP results because it was not associated with the income tax
expense on our current operating results.
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.
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 fourth 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.
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 the Sale of a Product Line. We realized a gain on the sale of our
DSP-based DSL ASIC and network processor product line that we sold in the second
quarter of fiscal 2006. This amount arose from prior activities and has no
direct correlation to the ongoing business operations.
Tax Adjustment Associated with IRS Examination. During the fourth quarter
of fiscal year 2007, the IRS completed its field examination of fiscal years
2004 and 2005. Although the IRS has not issued its final report for fiscal 2004
and 2005, they have issued proposed adjustments related to these two fiscal
years. We have provided $4.4 million for taxes and penalties related to certain
of these proposed adjustments. We exclude this income tax expense from our
non-GAAP results because it is not associated with the income tax expense on our
current operating results.
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 profit leverage, customer demand and order rates for our products,
and ADI's future investment and product development strategies that are based on
our current expectations, beliefs, assumptions, estimates, forecasts, and
projections about the industry and markets in which Analog Devices operates.
This press release also contains forward-looking statements regarding the
divestiture of the Company's wireless handset baseband chipset and radio
transceiver business, and its CPU voltage regulation and PC thermal monitoring
business, the expected closing of those transactions, and the expected benefits
of those transactions to ADI. 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: with respect to the
divestitures described above, the closing of each of those transactions is
subject to the receipt of regulatory approvals and other material closing
conditions, any failure of which to satisfy may delay or prevent the closing of
the relevant transaction; either or both transactions may involve unexpected
costs, thereby reducing the net proceeds to ADI; the expected benefits of either
or both transactions may not be achieved in a timely manner, or at all; and with
respect to ADI's business generally, other 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, Fourth Quarter, Fiscal 2007
Schedule A
- ----------------------------------------------------------------------
Sales/Earnings Summary (GAAP)
(In thousands, except per-share amounts)
--------------------------- ----------------------
Three Months Ended Twelve Months Ended
--------------------------- ----------------------
4Q 07 3Q 07 4Q 06 FY07 FY06
Nov. 3, Aug. 4, Oct. 28, Nov. 3, Oct. 28,
2007 2007 2006 2007 2006
- ------------------- --------------------------------------------------
Product revenue $648,478 $637,011 $609,724 $2,511,117 $2,342,919
Year-to-year
growth 6% 6% 11% 7% 10%
Quarter-to-
quarter growth 2% 4% 2%
Revenue from one-
time licensing of
IP - - - 35,000 -
- ------------------- --------------------------- ----------------------
Total revenue $648,478 $637,011 $609,724 $2,546,117 $2,342,919
Cost of sales (1) 269,610 261,689 249,427 1,026,900 939,753
- ------------------- --------------------------- ----------------------
Gross margin 378,868 375,322 360,297 1,519,217 1,403,166
- ------------------- --------------------------- ----------------------
Operating expenses:
R&D (1) 134,124 130,340 121,001 519,315 469,396
Selling,
marketing and
G&A (1) 98,186 100,810 99,111 393,221 387,874
Purchased in-
process
research and
development - - 16,211 - 21,711
Special charges 25,183 - 777 40,495 1,790
- ------------------- --------------------------- ----------------------
Operating income
from continuing
operations 121,375 144,172 123,197 566,186 522,395
Other income (12,891) (16,449) (24,495) (92,734) (110,589)
- ------------------- --------------------------- ----------------------
Income from
continuing
operations before
income tax 134,266 160,621 147,692 658,920 632,984
Provision for
income taxes 37,862 36,202 8,423 158,444 117,418
Minority interest - - 748 219 748
- ------------------- --------------------------- ----------------------
Net income from
continuing
operations 96,404 124,419 140,017 500,695 516,314
- ------------------- --------------------------- ----------------------
Net Income (loss)
from discontinued
operations 1,485 (3,984) (1,598) (3,788) 33,168
- ------------------- --------------------------- ----------------------
Net income $ 97,889 $120,435 $138,419 $ 496,907 $ 549,482
- ------------------- --------------------------- ----------------------
Shares used for EPS
- basic 305,867 318,465 346,803 323,255 358,762
Shares used for EPS
- diluted 313,825 327,331 357,164 332,301 370,964
Earnings per share
from continuing
operations - basic $ 0.32 $ 0.39 $ 0.40 $ 1.55 $ 1.44
Earnings per share
from continuing
operations -
diluted $ 0.31 $ 0.38 $ 0.39 $ 1.51 $ 1.39
Earnings per share
- basic $ 0.32 $ 0.38 $ 0.40 $ 1.54 $ 1.53
Earnings per share
- diluted $ 0.31 $ 0.37 $ 0.39 $ 1.50 $ 1.48
Dividends paid per
share $ 0.18 $ 0.18 $ 0.16 $ 0.70 $ 0.56
- ------------------- --------------------------- ----------------------
(1) Includes stock-
based compensation
expense as
follows:
Cost of
sales $ 2,579 $ 2,454 $ 2,801 $ 10,591 $ 7,630
R&D $ 7,446 $ 7,210 $ 6,603 $ 29,893 $ 31,119
Selling,
marketing
and G&A $ 6,396 $ 6,668 $ 7,224 $ 27,544 $ 32,604
Analog Devices, Fourth Quarter, Fiscal 2007
Schedule B
- ----------------------------------------------------------------------
Results of Discontinued Operations
(In thousands, except per-share amounts)
The following table reflects the amounts reclassified from our
continuing operations into discontinued operations:
------------------------ ------------------
Three Months Ended Twelve Months
Ended
------------------------ ------------------
4Q 07 3Q 07 4Q 06 FY07 FY06
Nov. 3, Aug. 4, Oct. 28, Nov. 3, Oct. 28,
2007 2007 2006 2007 2006
- ----------------------------------------------------------------------
Product revenue $50,291 $43,301 $34,618 $193,710 $230,257
Cost of sales 30,985 30,038 20,343 127,510 127,283
- --------------------------------------------------- ------------------
Gross Margin 19,306 13,263 14,275 66,200 102,974
- --------------------------------------------------- ------------------
Operating expenses:
R&D 17,264 18,222 16,549 71,215 67,351
Selling, marketing and
G&A 1,853 1,569 1,599 6,923 6,212
- --------------------------------------------------- ------------------
Net Income (loss) before
income taxes $ 189 $(6,528)$(3,873) $(11,938)$ 29,411
- --------------------------------------------------- ------------------
Benefit from income taxes $(1,296)$(2,544)$(2,275) $ (8,150)$ (3,757)
- --------------------------------------------------- ------------------
Net Income (loss) from
discontinued operations $ 1,485 $(3,984)$(1,598) $ (3,788)$ 33,168
=================================================== ==================
Earnings per share from
discontinued operations -
basic $ 0.00 $ (0.01)$ (0.00) $ (0.01)$ 0.09
Earnings per share from
discontinued operations -
diluted $ 0.00 $ (0.01)$ (0.00) $ (0.01)$ 0.09
Analog Devices, Fourth Quarter, Fiscal 2007
Schedule C
- ----------------------------------------------------------------------
Selected Balance Sheet Information (GAAP)
(In thousands)
4Q 07 3Q 07 4Q 06
--------------------------------
Nov. 3, Aug. 4, Oct. 28,
2007 2007 2006
- ----------------------------------------------------------------------
Cash & short-term investments $1,081,207 $1,283,590 $2,128,334
Accounts receivable, net 336,381 328,094 305,761
Inventories (1) 347,519 358,251 362,945
Current assets of discontinued
operations 50,843 51,346 39,338
Other current assets 163,045 166,182 174,924
- ----------------------------------------------------------------------
Total current assets 1,978,995 2,187,463 3,011,302
PP&E, net 556,939 558,124 554,941
Investments 36,902 34,623 31,429
Goodwill and intangible assets 303,622 302,652 287,650
Other 95,491 83,505 82,478
Non-current assets of discontinued
operations - - 19,051
- ----------------------------------------------------------------------
Total assets $2,971,949 $3,166,367 $3,986,851
- ----------------------------------------------------------------------
Deferred income on shipments to
distributors $ 151,730 $ 147,404 $ 146,723
Current liabilities of discontinued
operations 19,769 17,069 13,316
Other current liabilities 376,552 395,382 330,904
Noncurrent liabilities 85,757 69,906 60,115
Stockholders' equity 2,338,141 2,536,606 3,435,793
- ----------------------------------------------------------------------
Total liabilities & equity $2,971,949 $3,166,367 $3,986,851
- ----------------------------------------------------------------------
(1) includes $3,371, $3,432 and $3,703 related to stock-based
compensation in 4Q07, 3Q07, and 4Q06 respectively.
Analog Devices, Fourth Quarter, Fiscal 2007
Schedule D
- ----------------------------------------------------------------------
Cash Flow Statement (GAAP)
(In thousands)
------------------------------
Three Months Ended
------------------------------
4Q 07 3Q 07 4Q 06
------------------------------
Nov. 3, Aug. 4, Oct. 28,
2007 2007 2006
------------------------------
Cash flows from operating activities:
Net Income $ 97,889 $ 120,435 $ 138,419
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation 35,104 35,741 38,904
Amortization of intangibles 2,573 3,168 3,359
Stock-based compensation expense 17,506 17,465 17,599
Purchased in-process research and
development - - 16,211
Minority interest - - (748)
Excess tax benefit - stock
options (15,818) (3,559) (25,222)
Gain on sale of a product line - - -
Gain on sale of an investment - - -
Non-cash portion of special
charge 438 - -
Other non-cash expense 538 37 120
Deferred income taxes 7,724 (5,256) 3,932
Changes in operating assets and
liabilities 36,896 22,698 (25,839)
- ----------------------------------------------------------------------
Total adjustments 84,961 70,294 28,316
- ----------------------------------------------------------------------
Net cash provided by operating
activities 182,850 190,729 166,735
- ----------------------------------------------------------------------
Percent of Total Revenue 28.2% 29.9% 27.3%
- ----------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and
equipment, net (33,177) (31,246) (41,755)
Purchases of short-term available-for-
sale investments (311,571) (289,565) (418,019)
Maturities of short-term available-
for-sale investments 545,792 837,412 630,642
Proceeds from sale of a product line - - -
Proceeds from sale of investment - - -
Proceeds from sale of fixed assets - - 1,735
Payments for acquisitions - (3,160) (142,104)
(Increase) decrease in other assets (8,420) 162 (3,402)
- ----------------------------------------------------------------------
Net cash provided by investing
activities 192,624 513,603 27,097
- ----------------------------------------------------------------------
Cash flows from financing activities:
Dividend payments to shareholders (55,437) (58,545) (55,642)
Repurchase of common stock (317,691) (631,708) (357,012)
Net proceeds from employee stock plans 12,953 17,937 14,540
Excess tax benefit - stock options 15,818 3,559 25,222
- ----------------------------------------------------------------------
Net cash used for financing activities (344,357) (668,757) (372,892)
- ----------------------------------------------------------------------
Effect of exchange rate changes on cash (43) (267) (118)
- ----------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 31,074 35,308 (179,178)
Cash and cash equivalents at beginning
of period 393,898 358,590 523,125
- ----------------------------------------------------------------------
Cash and cash equivalents at end of
period $ 424,972 $ 393,898 $ 343,947
- ----------------------------------------------------------------------
------------------------
Twelve Months Ended
------------------------
FY07 FY06
------------------------
Nov. 3, Oct. 28,
2007 2006
-------------------------
Cash flows from operating activities:
Net Income $ 496,907 $ 549,482
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation 142,173 166,851
Amortization of intangibles 12,610 5,312
Stock-based compensation expense 72,652 75,429
Purchased in-process research and
development - 21,711
Minority interest (219) (748)
Excess tax benefit - stock options (40,871) (181,178)
Gain on sale of a product line - (13,027)
Gain on sale of an investment (7,919) -
Non-cash portion of special charge 438 459
Other non-cash expense 853 784
Deferred income taxes (2,850) (28,454)
Changes in operating assets and
liabilities 146,591 24,481
- --------------------------------------------- ------------------------
Total adjustments 323,458 71,620
- --------------------------------------------- ------------------------
Net cash provided by operating activities 820,365 621,102
- --------------------------------------------- ------------------------
Percent of Total Revenue 32.2% 26.5%
- --------------------------------------------- ------------------------
Cash flows from investing activities:
Additions to property, plant and equipment,
net (141,810) (129,297)
Purchases of short-term available-for-sale
investments (1,807,476) (2,483,123)
Maturities of short-term available-for-sale
investments 2,943,468 2,788,717
Proceeds from sale of a product line - 23,070
Proceeds from sale of investment 8,003 -
Proceeds from sale of fixed assets - 1,735
Payments for acquisitions (9,160) (157,017)
(Increase) decrease in other assets (8,438) 723
- --------------------------------------------- ------------------------
Net cash provided by investing activities 984,587 44,808
- --------------------------------------------- ------------------------
Cash flows from financing activities:
Dividend payments to shareholders (228,281) (201,451)
Repurchase of common stock (1,647,212) (1,024,982)
Net proceeds from employee stock plans 109,149 94,392
Excess tax benefit - stock options 40,871 181,178
- --------------------------------------------- ------------------------
Net cash used for financing activities (1,725,473) (950,863)
- --------------------------------------------- ------------------------
Effect of exchange rate changes on cash 1,546 1,309
- --------------------------------------------- ------------------------
Net increase (decrease) in cash and cash
equivalents 81,025 (283,644)
Cash and cash equivalents at beginning of
period 343,947 627,591
- --------------------------------------------- ------------------------
Cash and cash equivalents at end of period $ 424,972 $ 343,947
- --------------------------------------------- ------------------------
Analog Devices, Fourth Quarter, Fiscal 2007
Schedule E
- ----------------------------------------------------------------------
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.
Three Months Ended
------------------------------------
Nov. 3, Aug. 4, Oct. 28,
2007 2007 2006
------------------ -----------------
Revenue Y/YQ/Q Revenue Revenue
% % %
------------------ -------- --------
Industrial $295,192 46% 4% 0% $296,032 $284,156
Communications 137,429 21% 9%-7% 147,451 125,681
Consumer 150,916 23%17%11% 136,129 128,991
Computer 64,941 10%-8%13% 57,399 70,896
------------ -------- --------
Total Product Revenue $648,478100% 6% 2% $637,011 $609,724
------------ -------- --------
One-time payment associated with
the
licensing of intellectual
property - - - -
------------ -------- --------
Total Revenue $648,478 $637,011 $609,724
============ ======== ========
Twelve Months Ended
------------------------------
Nov. 3, Oct. 28,
2007 2006
------------------ ----------
Revenue Y/Y Revenue
% %
------------------ ----------
Industrial $1,184,891 47% 7% $1,105,261
Communications 545,792 22% 7% 510,137
Consumer 544,415 22% 23% 441,871
Computer 236,019 9%-17% 285,650
-------------- ----------
Total Product Revenue $2,511,117100% 7% $2,342,919
-------------- ----------
One-time payment associated with the
licensing of intellectual property 35,000 -
---------- ----------
Total Revenue $2,546,117 $2,342,919
========== ==========
Analog Devices, Fourth Quarter, Fiscal 2007
Schedule F
- ----------------------------------------------------------------------
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.
Three Months Ended
------------------------------------
Nov. 3, Aug. 4, Oct. 28
2007 2007 2006
------------------ -----------------
Revenue Y/YQ/Q Revenue Revenue
% % %
------------------ -------- --------
Converters $286,761 44% 8% 2% $281,530 $265,061
Amplifiers 138,497 22%-2%-4% 144,103 141,064
Power management &
reference 57,220 9% 3%14% 50,019 55,694
Other analog 99,811 15%19% 0% 99,750 83,889
------------ -------- --------
Total analog products $582,289 90% 7% 1% $575,402 $545,708
------------ -------- --------
General purpose DSP 55,962 8% 2% 6% 52,891 54,975
Other DSP 10,227 2%13%17% 8,718 9,041
------------ -------- --------
Total DSP products $ 66,189 10% 3% 7% $ 61,609 $ 64,016
------------ -------- --------
Total Product Revenue $648,478100% 6% 2% $637,011 $609,724
------------ -------- --------
One-time payment associated with
the licensing of intellectual
property - - -
-------- -------- --------
Total Revenue $648,478 $637,011 $609,724
======== ======== ========
Twelve Months Ended
------------------------------
Nov. 3, Oct. 28,
2007 2006
------------------ ----------
Revenue Y/Y Revenue
% %
------------------ ----------
Converters $1,106,615 44% 8% $1,023,499
Amplifiers 557,515 22% 5% 532,046
Power management &
reference 205,497 8% -6% 219,651
Other analog 393,724 16% 27% 310,075
-------------- ----------
Total analog products $2,263,351 90% 9% $2,085,271
-------------- ----------
General purpose DSP 214,000 9% 4% 205,483
Other DSP 33,766 1%-35% 52,165
-------------- ----------
Total DSP products $ 247,766 10% -4% $ 257,648
-------------- ----------
Total Product Revenue $2,511,117100% 7% $2,342,919
-------------- ----------
One-time payment associated with the
licensing of intellectual property 35,000 -
---------- ----------
Total Revenue $2,546,117 $2,342,919
========== ==========
Analog Devices, Fourth Quarter, Fiscal 2007
Schedule G
- ----------------------------------------------------------------------
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.
Three Months Ended
-----------------------------
4Q 07 3Q 07 4Q 06
Nov. 3, Aug. 4, Oct. 28,
2007 2007 2006
-----------------------------
GAAP Gross Margin $378,868 $375,322 $360,297
Percent of Total Revenue 58.4% 58.9% 59.1%
Revenue from One-time Licensing of
IP - - -
Restructuring-Related Expense - - 2,804
--------- --------- ---------
Non-GAAP Gross Margin $378,868 $375,322 $363,101
========= ========= =========
Percent of Product Revenue 58.4% 58.9% 59.6%
GAAP Operating Expenses $257,493 $231,150 $237,100
Percent of Total Revenue 39.7% 36.3% 38.9%
Purchased In-Process Research and
Development - - (16,211)
Restructuring-Related Expense (25,183) - (777)
Litigation Settlement - - -
--------- --------- ---------
Non-GAAP Operating Expenses $232,310 $231,150 $220,112
========= ========= =========
Percent of Product Revenue 35.8% 36.3% 36.1%
GAAP Operating Income From Continuing
Operations $121,375 $144,172 $123,197
Percent of Total Revenue 18.7% 22.6% 20.2%
Revenue from One-time Licensing of
IP - - -
Purchased In-Process Research and
Development - - 16,211
Restructuring-Related Expense 25,183 - 3,581
Litigation Settlement - - -
--------- --------- ---------
Non-GAAP Operating Income From Continuing
Operations $146,558 $144,172 $142,989
========= ========= =========
Percent of Product Revenue 22.6% 22.6% 23.5%
GAAP Diluted EPS Including Discontinued
Operations $ 0.31 $ 0.37 $ 0.39
Diluted Loss (Earnings) Per Share from
Discontinued Operations $ - $ 0.01 $ -
--------- --------- ---------
GAAP Diluted EPS - Continuing Operations $ 0.31 $ 0.38 $ 0.39
Revenue from One-time Licensing of
IP - - -
Purchased In-Process Research and
Development - - 0.030
Acquisition-Related Expense - - -
Restructuring-Related Expense 0.064 - 0.007
Litigation Settlement - - -
Tax Benefit Associated with IRS Tax
Settlement - - (0.075)
Gain on Sale of Investment - - -
Gain on Sale of Product Line - - -
One Time Tax Adjustment Related to
the IRS
Examination of Fiscal Years 2004 and 2005 0.014 - -
Impact of the Reinstatement of the
R&D Tax Credit - - -
--------- --------- ---------
Non-GAAP Diluted EPS - Continuing
Operations $ 0.39 $ 0.38 $ 0.35
========= ========= =========
Twelve Months Ended
-----------------------
FY07 FY06
----------- -----------
Nov. 3, Oct. 28,
2007 2006
------------ -----------
GAAP Gross Margin $1,519,217 $1,403,166
Percent of Total Revenue 59.7% 59.9%
Revenue from One-time Licensing of IP (35,000) -
Restructuring-Related Expense - 20,320
----------- -----------
Non-GAAP Gross Margin $1,484,217 $1,423,486
=========== ===========
Percent of Product Revenue 59.1% 60.8%
GAAP Operating Expenses $ 953,031 $ 880,771
Percent of Total Revenue 37.4% 37.6%
Purchased In-Process Research and
Development - (21,711)
Restructuring-Related Expense (40,495) (1,790)
Litigation Settlement 8,500 -
----------- -----------
Non-GAAP Operating Expenses $ 921,036 $ 857,270
=========== ===========
Percent of Product Revenue 36.7% 36.6%
GAAP Operating Income From Continuing
Operations $ 566,186 $ 522,395
Percent of Total Revenue 22.2% 22.3%
Revenue from One-time Licensing of IP (35,000) -
Purchased In-Process Research and
Development - 21,711
Restructuring-Related Expense 40,495 22,110
Litigation Settlement (8,500) -
----------- -----------
Non-GAAP Operating Income From Continuing
Operations $ 563,181 $ 566,216
=========== ===========
Percent of Product Revenue 22.4% 24.2%
GAAP Diluted EPS Including Discontinued
Operations $ 1.50 $ 1.48
Diluted Loss (Earnings) Per Share from
Discontinued Operations $ 0.01 $ (0.09)
----------- -----------
GAAP Diluted EPS - Continuing Operations $ 1.51 $ 1.39
Revenue from One-time Licensing of IP (0.068) -
Purchased In-Process Research and
Development - 0.042
Acquisition-Related Expense 0.017 -
Restructuring-Related Expense 0.090 0.039
Litigation Settlement (0.037) -
Tax Benefit Associated with IRS Tax
Settlement - (0.095)
Gain on Sale of Investment (0.015) -
Gain on Sale of Product Line - (0.023)
One Time Tax Adjustment Related to the
IRS
Examination of Fiscal Years 2004 and 2005 0.013 -
Impact of the Reinstatement of the R&D
Tax Credit (0.030) -
----------- -----------
Non-GAAP Diluted EPS - Continuing Operations $ 1.48 $ 1.35
=========== ===========
Schedule H
- ----------------------------------------------------------------------
Assumptions Used to Estimate Results for the First Quarter Ending
February 2, 2008
(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.
Revenue ($)
4Q07 Revenue from Continuing Operations $648 million
Less: 4Q07 Revenue from Divested CPU voltage ($25 million)
regulation and PC thermal monitoring
business(a)
-----------------------
Basis for 1Q08 Revenue Estimate: $623 million
=======================
Estimated 1Q08 Revenue Range from 1Q08 $610 - $635 million; or
Continuing Operations -2% to +2%
Gross Margin (% of revenue)
4Q07 Gross Margin from Continuing Operations 58.4%
Plus: 4Q07 Gross Margin Benefit from
Divested CPU Voltage Regulation and PC
Thermal Monitoring Business(a) 1.6%
Basis for 1Q08 Gross Margin Estimate: 60.0%
Estimated 1Q08 Gross Margin for Continuing Slightly above 60%
Operations
Operating Expenses ($)
4Q07 Operating Expenses from Continuing $257 million
Operations
Less: 4Q Restructuring Expenses ($25 million)
Less: 4Q07 Expenses from Divested CPU ($4 million)
voltage regulation and PC thermal
monitoring business(a)
Basis for 1Q08 Operating Expense Estimate $228 million
Estimated 1Q08 Operating Expenses from Down Slightly
Continuing Operations
Tax Rate Approximately 23% to
25%
Non-operating income Approximately $15
million
Shares Used for Diluted EPS Approximately 311
million shares
Diluted EPS ($)
1Q08 Diluted EPS from Continuing Operations $0.38 to $0.42
1Q08 Diluted EPS from Discontinued CPU Approximately Breakeven
Voltage Regulation and PC Thermal
Monitoring Operations
Dividend per Share $0.18
- ----------------------------------------------------------------------
(a)Beginning in 1Q08, ADI will account for the CPU voltage regulation
and PC thermal monitoring business as discontinued operations.
The estimated gain on the sale of certain baseband chipset business as
well as certain cellular handset baseband support operations and the
estimated gain on the sale of our CPU voltage regulation and PC
thermal monitoring business are not reflected in the estimates above,
but are expected to result in the following gains in our first
quarter of fiscal 2008 results:
Gain on the sale of certain baseband chipset Approximately $280 to
business as well as certain cellular $290 million (pre-tax)
handset baseband support operations
Approximately $150 to
$160 million (after-
tax)
Approximately $0.48 -
$0.51 Diluted EPS
Gain on the sale of our CPU voltage Approximately $85 to
regulation and PC thermal monitoring $92 million (pre-tax)
business
Approximately $52 to
$60 million (after
tax)
Approximately $0.16 -
$0.18 Diluted EPS
- ----------------------------------------------------------------------
Our first quarter of fiscal year 2008 results are expected to include
the following amounts of stock-based compensation and acquisition
related expenses in our continuing operations:
Stock-Based Compensation Expense $14.2 million
Acquisition-Related Expense $2.0 million
CONTACT: Analog Devices, Inc.
Maria Tagliaferro, 781-461-3282
Director of Corporate Communications
781-461-3491 (fax)
investor.relations@analog.com (email)