Analog Devices, Inc. (NASDAQ: ADI), a global leader in
high-performance semiconductors for signal processing applications,
today announced financial results for its third quarter of fiscal
year 2012, which ended August 4, 2012.
“ADI delivered solid results for the third quarter, with revenue
increasing by 1% and diluted EPS increasing by 6% compared to the
prior quarter. Profitability and cash flow remained strong,” said
Jerald G. Fishman, President and CEO. “Given the economic headwinds
and uncertainty in most regions, we were encouraged by consistent
order patterns among customers and distributors and by the
resilience of our large and broad-based industrial business, as
well as the communications, automotive, and consumer end
markets.”
Mr. Fishman continued, “As a result of higher opening backlog
and stable order patterns, we are planning for sequential revenue
growth in the fourth quarter. We expect that revenue from the
industrial, communications, and automotive end markets will be
similar to third quarter levels, in line with typical seasonal
patterns. We are expecting sequential revenue growth from our
consumer customers as is typical in the fourth quarter and also as
a result of a strong new product cycle. In aggregate, we are
planning for revenue in the range of $685 million to $715 million
for the fourth quarter.”
ADI also announced that the Board of Directors has declared a
cash dividend of $0.30 per outstanding share of common stock. The
dividend will be paid on September 12, 2012 to all shareholders of
record at the close of business on August 31, 2012.
Results for the Third Quarter of Fiscal
2012
- Revenue totaled $683 million
- Gross margin was 65.6% of revenue
- Operating margin was 32% of revenue,
excluding restructuring-related expenses
- Diluted EPS was $0.56
- Cash flow from operations was $138
million, or 20% of revenue
Please refer to the schedules provided for a summary of revenue
and earnings, selected balance sheet information, and the cash flow
statement for the third quarter of fiscal year 2012, as well as the
immediately prior and year-ago quarters. Additional information on
revenue by end market and revenue by product type is provided on
Schedules D and E. A more complete table covering prior periods is
available at investor.analog.com.
Outlook for the Fourth Quarter of
Fiscal 2012
The following statements are based on current expectations.
These statements are forward- looking and actual results may differ
materially, as a result of, among other things, the important
factors discussed at the end of this release. These statements
supersede all prior statements regarding our business outlook set
forth in prior ADI news releases
- Revenue estimated at $685 million to
$715 million
- Gross margin estimated to be
approximately 65%
- Operating expenses estimated to be
approximately $231 million
- Diluted EPS estimated at $0.54 to
$0.60
Conference Call Scheduled for 5:00 pm ET
ADI will host a conference call to discuss the third quarter
results and short-term outlook today, beginning at 5:00 pm ET.
Investors may join via webcast, accessible at investor.analog.com,
or by telephone (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
855-859-2056 (replay only) and providing the conference
ID:17192535, or by visiting investor.analog.com.
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.
Schedule F of this press release provides the reconciliation of
the Company’s non-GAAP measures to its GAAP measures.
Manner in Which Management Uses the
Non-GAAP Financial Measures
Management uses non-GAAP operating expenses, non-GAAP operating
income, non-GAAP operating margins, and non-GAAP diluted earnings
per share to evaluate the Company’s operating performance from
continuing operations against past periods and to budget and
allocate resources in future periods. These non-GAAP measures also
assist management in understanding and evaluating the Company’s
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.
The following item is excluded from our non-GAAP operating
expenses, non-GAAP operating income, non-GAAP operating margin, and
non-GAAP diluted earnings per share:
Restructuring-Related Expenses. These expenses are incurred in
connection with facility closures, consolidation of manufacturing
facilities, and other cost reduction 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 item is excluded from our non-GAAP diluted
earnings per share:
Tax-Related Item. In the third quarter of fiscal 2012, the
Company recorded a one-time $3.4 million tax benefit related to the
release of a tax reserve for an expired tax year. We excluded this
tax-related item from our non-GAAP measures because it is not
associated with the 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 operating
expenses, non-GAAP operating income, non-GAAP operating margins,
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 operating expenses,
non-GAAP operating income, non-GAAP operating margins, 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 when 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 operating expenses, non-GAAP operating income, non-GAAP
operating margins, and non-GAAP diluted EPS by also evaluating our
GAAP results and the reconciliations of our non-GAAP measures to
the most directly comparable GAAP measures. Investors should
consider our non-GAAP financial measures in conjunction with the
corresponding GAAP measures.
About Analog Devices
Innovation, performance, and excellence are the cultural pillars
on which Analog Devices has built one of the longest standing,
highest growth companies within the technology sector. Acknowledged
industry-wide as the world leader in data conversion and signal
conditioning technology, Analog Devices serves over 60,000
customers, representing virtually all types of electronic
equipment. Analog Devices is headquartered in Norwood,
Massachusetts, with design and manufacturing facilities throughout
the world. Analog Devices' common stock is included in the S&P
500 Index.
This release may be deemed to contain forward-looking statements
intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, among other things, our
statements regarding expected revenue, earnings per share,
operating expenses, gross margin, and other financial results,
expected product development and product cycle strength, expected
market trends, and expected customer demand and order rates for our
products, that are based on our current expectations, beliefs,
assumptions, estimates, forecasts, and projections about our
business and 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: sovereign debt issues
globally, any faltering in global economic conditions or the
stability of credit and financial markets, erosion of consumer
confidence and declines in customer spending, unavailability of raw
materials, services, supplies or manufacturing capacity, changes in
geographic, product or customer mix, adverse results in litigation
matters, and other risk factors described in our most recent
filings 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.
Analog Devices, Third Quarter, Fiscal 2012
Schedule
A
Revenue and Earnings Summary (GAAP) (In thousands, except
per-share amounts)
Three Months Ended
3Q 12
2Q 12 3Q 11
Aug. 4,2012
May 5,2012
July 30,2011
Revenue $ 683,026 $ 675,094 $ 757,902 Year-to-year change -10 % -15
% 5 % Quarter-to-quarter change 1 % 4 % -4 % Cost of sales (1)
235,152 234,639
248,262 Gross margin 447,874 440,455
509,640 Gross margin percentage 65.6 % 65.2 % 67.2 % Year-to-year
change (basis points) -160 -240 50 Quarter-to-quarter change(basis
points) 40 200
-40 Operating expenses: R&D (1)
129,694 127,537 128,476 Selling, marketing and G&A (1) 99,873
99,992 102,323 Special charges 5,836
- - Total
operating expenses 235,403 227,529 230,799 Total operating expenses
percentage 34.5 % 33.7 % 30.5 % Year-to-year change (basis points)
400 390 -130 Quarter-to-quarter change (basis points)
80 -120 70
Operating income 212,471 212,926 278,841 Operating income
percentage 31.1 % 31.5 % 36.8 % Year-to-year change (basis points)
-570 -620 190 Quarter-to-quarter change (basis points)
-40 320
-90 Other expense 3,002
1,472 3,970 Income
before income tax 209,469 211,454 274,871 Provision for income
taxes 39,701 48,555 54,936 Tax rate percentage
19.0 % 23.0 % 20.0 % Net income
169,768 162,899
219,935 Shares used for EPS -
basic 298,445 298,130 299,616 Shares used for EPS - diluted 305,359
305,921 308,744 Earnings per share - basic $ 0.57 $ 0.55 $
0.73 Earnings per share - diluted $ 0.56 $ 0.53 $ 0.71
Dividends paid per share $ 0.30
$ 0.30 $ 0.25 (1) Includes stock-based
compensation expense as follows: Cost of sales $ 1,871 $ 1,671 $
1,811 R&D $ 5,999 $ 5,162 $ 5,877 Selling, marketing and
G&A $ 5,921 $ 5,267 $ 5,622
Analog Devices,
Third Quarter, Fiscal 2012
Schedule
B
Selected Balance Sheet Information (GAAP) (In
thousands) 3Q 12 2Q 12 3Q 11
Aug. 4,2012
May 5,2012
July 30,2011
Cash & short-term investments $ 3,765,045 $ 3,752,625 $
3,514,538 Accounts receivable, net 345,795 330,282 375,011
Inventories (1) 312,079 303,742 299,332 Other current assets
138,366 135,880
150,250 Total current assets 4,561,285 4,522,529 4,339,131
PP&E, net 490,581 478,959 481,596 Investments 29,615 30,209
30,249 Goodwill and intangible assets 308,190 309,092 293,343 Other
66,951 71,701
107,062 Total assets $
5,456,622 $ 5,412,490 $ 5,251,381 Deferred
income on shipments to distributors, net $ 246,674 $ 244,150 $
277,528 Other current liabilities 261,868 314,424 278,759 Long-term
debt, non-current 842,540 847,983 875,766 Non-current liabilities
76,934 80,793 103,611 Shareholders' equity
4,028,606 3,925,140
3,715,717 Total liabilities & equity
$ 5,456,622 $ 5,412,490 $ 5,251,381
(1) Includes $2,361, $2,318 and $2,474
related to stock-based compensation in 3Q12, 2Q12 and 3Q11,
respectively.
Analog Devices, Third Quarter, Fiscal 2012
Schedule
C
Cash Flow Statement (GAAP) (In thousands)
Three Months Ended 3Q
12 2Q 12 3Q 11
Aug. 4,2012
May 5,2012
July 30,2011
Cash flows from operating activities: Net Income $ 169,768 $
162,899 $ 219,935 Adjustments to reconcile net income to net cash
provided by operations: Depreciation 27,107 26,871 29,133
Amortization of intangibles 56 18 347 Stock-based compensation
expense 13,791 12,100 13,310 Gain on sale of investments - (1,231 )
- Excess tax benefit - stock options (5,054 ) (2,602 ) (1,282 )
Noncash portion of special charges 219 - - Other non-cash activity
(1,380 ) (981 ) 485 Deferred income taxes 34 (7,762 ) 4,650 Changes
in operating assets and liabilities
(66,835 ) 36,657 (9,598 )
Total adjustments (32,062 )
63,070 37,045 Net cash
provided by operating activities
137,706 225,969 256,980
Percent of total revenue
20.2 % 33.5 % 33.9 % Cash flows
from investing activities: Additions to property, plant and
equipment (39,239 ) (30,137 ) (36,977 ) Proceeds related to sale of
investments - 1,506 - Payments for acquisitions, net of cash
acquired - (24,158 ) (13,988 ) Purchases of short-term
available-for-sale investments (1,854,249 ) (2,235,601 ) (1,473,867
) Maturities of short-term available-for-sale investments 1,534,235
1,635,795 853,624 Sales of short-term available-for-sale
investments 76,330 109,734 - Decrease (Increase) in other assets
408 (1,650
) 836 Net cash used for investing activities
(282,515 )
(544,511 ) (670,372 ) Cash flows from
financing activities: Term loan repayments (3,625 ) (3,625 )
(21,142 ) Early termination of swap agreements - 18,520 - Dividend
payments to shareholders (89,511 ) (89,402 ) (74,993 ) Repurchase
of common stock (17,344 ) (44,017 ) (66,283 ) Net proceeds from
employee stock plans 23,329 38,752 41,160 Decrease in other
financing activities (4,755 ) (7,155 ) (2,410 ) Excess tax benefit
- stock options 5,054
2,602 1,282 Net cash
(used for) financing activities
(86,852 ) (84,325 ) (122,386 ) Effect
of exchange rate changes on cash
(1,256 ) 491 (1,162 ) Net
decrease in cash and cash equivalents (232,917 ) (402,376 )
(536,940 ) Cash and cash equivalents at beginning of period
695,066 1,097,442
1,894,761 Cash and cash equivalents at
end of period $ 462,149 $
695,066 $ 1,357,821
Analog Devices, Third Quarter, Fiscal
2012
Schedule
DRevenue 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
Aug. 4,2012
May 5,2012
July 30,2011
Revenue % Q/Q % Y/Y
% Revenue Revenue Industrial $ 322,295 47%
0% -12% $ 323,701 $ 367,511 Automotive 114,655 17%
-3% 12% 118,066 102,160 Consumer 108,905 16% 1% -19% 107,562
134,771 Communications 137,171 20% 9% -11%
125,765 153,460
Total Revenue $ 683,026
100% 1% -10% $ 675,094
$ 757,902
Analog Devices, Third Quarter, Fiscal
2012
Schedule
ERevenue Trends by Product
Type
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 into categories 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
Aug. 4,2012
May 5,2012
July 30,2011
Revenue* % Q/Q % Y/Y
% Revenue Revenue Converters $ 299,594
44% 0% -11% $ 300,044 $ 337,239 Amplifiers /
Radio Frequency 180,939 26% 2% -8% 177,813 197,447 Other analog
98,269 14% 8% -8% 90,786 106,702
Subtotal Analog Signal Processing 578,802 85% 2% -10%
568,643 641,388 Power management & reference
45,401 7% -1% -17% 46,060 54,957
Total Analog Products $ 624,203
91% 2% -10% $ 614,703 $
696,345 Digital Signal Processing 58,823 9%
-3% -4% 60,391 61,557
Total Revenue $
683,026 100% 1% -10% $
675,094 $ 757,902 * The sum of the
individual percentages does not equal the total due to rounding
Analog Devices, Third Quarter,
Fiscal 2012
Schedule
F
Reconciliation from Non-GAAP to GAAP Data (In thousands, except
per-share amounts) See "Non-GAAP Financial
Information" in this press release for a description of the items
excluded from our non-GAAP measures.
Three Months Ended 3Q 12
2Q 12 3Q 11
Aug. 4,2012
May 5,2012
July 30,2011
GAAP Operating Expenses $ 235,403
$ 227,529 $ 230,799 Percent of
Revenue 34.5 % 33.7 % 30.5
% Restructuring-Related Expense $ (5,836 ) $ -
$ -
Non-GAAP Operating Expenses
$ 229,567 $
227,529 $ 230,799
Percent of Revenue 33.6 % 33.7 %
30.5 % GAAP Operating Income/Margin From
Continuing Operations $ 212,471 $
212,926 $ 278,841 Percent of Revenue
31.1 % 31.5 % 36.8 %
Restructuring-Related Expense $ 5,836 $ -
$ -
Non-GAAP Operating Income/Margin
From Continuing Operations $ 218,307
$ 212,926 $
278,841 Percent of Revenue 32.0
% 31.5 % 36.8 % GAAP
Diluted EPS $ 0.56 $ 0.53 $
0.71 Restructuring-Related Expense $ 0.01 $ - $ - Impact of
Expired Tax Statute $ (0.01 ) $ -
$ -
Non-GAAP Diluted EPS $ 0.56
$ 0.53
$ 0.71
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