Analog Devices, Inc. (NASDAQ: ADI), a global leader in
high-performance semiconductors for signal processing applications,
today announced financial results for its first quarter of fiscal
year 2013, which ended February 2, 2013.
Results for the First Quarter of Fiscal
2013
- Revenue totaled $622.1 million
- Gross margin was 62.7% of revenue
- Operating margin was 26.9% of revenue,
excluding special items, and was 24.7% on a GAAP basis
- Diluted EPS was $0.44, excluding
special items, and was $0.42 on a GAAP basis
- Cash flow from operations was $158
million, or 25.4% of revenue
“Results for the first quarter were within the range we
communicated and represented a generally weak macroeconomic
environment exacerbated by year-end inventory reductions at many
customers. Nevertheless, our operating performance remained strong,
as we carefully managed our business to balance the long term
opportunities for ADI with the realities of current market
conditions,” said Jerald G. Fishman, CEO. “In January, order rates
began to improve across most markets and geographies and have
remained strong so far this quarter. As a result, we are planning
for solid revenue growth in our second quarter, in the range of
4-8% sequentially with significant operating leverage.”
ADI also announced that its Board of Directors has approved a 13
percent increase in its regular quarterly dividend, from $0.30 to
$0.34 per outstanding share of common stock. The dividend will be
paid on March 12, 2013 to all shareholders of record at the close
of business on March 1, 2013.
Please refer to the schedules provided for a summary of revenue
and earnings, selected balance sheet information, and the cash flow
statement for the first quarter of fiscal year 2013, as well as the
immediately prior and year-ago quarters. The first quarter of
fiscal year 2012 was a 14-week period. 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 Second Quarter of
Fiscal 2013
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, and ADI disclaims any obligation
to update these forward-looking statements.
- Revenue estimated to increase in the
range of 4% to 8% sequentially
- Gross margin estimated to be
approximately 64%
- Operating expenses estimated to be
approximately $224 million
- Tax rate estimated to be approximately
17%
- Diluted EPS estimated at $0.49 to
$0.55
Conference Call Scheduled for 5:00 pm ET
ADI will host a conference call to discuss the first 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 two hours after the completion of the
call. The replay may be accessed for up to two weeks by dialing
855-859-2056 (replay only) and providing the conference ID:
92068413, 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 first quarter of fiscal year 2013, the
Company recorded a $6.3 million tax benefit related to the
reinstatement of the R&D tax credit in January 2013,
retroactive to January 1, 2012. 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, tax rate, and other financial
results, expected production and inventory levels, 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, First Quarter, Fiscal
2013
Schedule
A
Revenue and Earnings Summary (GAAP) (In thousands, except
per-share amounts)
Three Months Ended 1Q 13 4Q 12
1Q 12 Feb. 2, 2013 Nov. 3,
2012 Feb. 4, 2012 Revenue $ 622,134 $ 694,964 $
648,058 Year-to-year change -4 % -3 % -11 % Quarter-to-quarter
change -10 % 2 % -10 % Cost of sales (1) 231,850
251,682 238,668
Gross margin 390,284 443,282 409,390 Gross margin percentage 62.7 %
63.8 % 63.2 % Year-to-year change (basis points) -50 -50 -300
Quarter-to-quarter change(basis points) -110
-180 -110 Operating
expenses: R&D (1) 125,164 130,394 124,378 Selling, marketing
and G&A (1) 97,560 97,609 99,045 Special charges
14,071 - 2,595
Total operating expenses 236,795 228,003 226,018 Total operating
expenses percentage 38.1 % 32.8 % 34.9 % Year-to-year change (basis
points) 320 140 430 Quarter-to-quarter change (basis points)
530 -170 350
Operating income 153,489 215,279 183,372 Operating income
percentage 24.7 % 31.0 % 28.3 % Year-to-year change (basis points)
-360 -190 -730 Quarter-to-quarter change (basis points)
-630 -10 -460
Other expense 3,380 2,755
3,286 Income before income tax 150,109
212,524 180,086 Provision for income taxes 18,887 33,337 40,704 Tax
rate percentage 12.6 % 15.7 %
22.6 % Net income $ 131,222 $ 179,187
$ 139,382 Shares used for EPS - basic
303,484 300,679 297,788 Shares used for EPS - diluted 310,275
307,954 305,531 Earnings per share - basic $ 0.43 $ 0.60 $
0.47 Earnings per share - diluted $ 0.42 $ 0.58 $ 0.46
Dividends paid per share $ 0.30 $ 0.30
$ 0.25 (1) Includes stock-based compensation
expense as follows: Cost of sales $ 1,667 $ 1,905 $ 1,807 R&D $
5,600 $ 6,124 $ 5,885 Selling, marketing and G&A $ 5,794 $
6,248 $ 5,640
Analog Devices, First Quarter, Fiscal
2013
Schedule
B
Selected Balance Sheet Information (GAAP) (In
thousands) 1Q 13 4Q 12 1Q
12 Feb. 2, 2013 Nov. 3, 2012
Feb. 4, 2012 Cash & short-term investments $
3,986,979 $ 3,900,378 $ 3,667,398 Accounts receivable, net 329,578
339,881 301,999 Inventories (1) 307,263 313,723 297,160 Other
current assets 190,115 142,203
128,611 Total current assets 4,813,935 4,696,185 4,395,168
PP&E, net 491,431 500,867 475,689 Investments 32,720 30,242
30,954 Goodwill and intangible assets 313,084 312,605 286,339 Other
65,638 80,448 89,684
Total assets $ 5,716,808 $ 5,620,347 $
5,277,834 Deferred income on shipments to distributors, net
$ 243,396 $ 238,541 $ 227,261 Other current liabilities 265,139
286,538 270,794 Long-term debt, non-current 759,672 807,098 855,662
Non-current liabilities 124,804 122,811 81,682 Shareholders' equity
4,323,797 4,165,359
3,842,435 Total liabilities & equity $ 5,716,808
$ 5,620,347 $ 5,277,834
(1) Includes $2,381, $2,517, and $2,428
related to stock-based compensation in 1Q13, 4Q12, and 1Q12,
respectively.
Analog Devices, First Quarter, Fiscal 2013
Schedule
C
Cash Flow Statement (GAAP) (In thousands)
Three Months
Ended 1Q 13 4Q 12 1Q 12 Feb. 2,
2013 Nov. 3, 2012 Feb. 4, 2012 Cash
flows from operating activities: Net Income $ 131,222 $ 179,187 $
139,382 Adjustments to reconcile net income to net cash provided by
operations: Depreciation 27,755 27,484 28,243 Amortization of
intangibles 55 54 - Stock-based compensation expense 13,061 14,277
13,332 Excess tax benefit - stock options (5,975 ) (2,678 ) (1,896
) Other non-cash activity (1,362 ) (1,417 ) 591 Deferred income
taxes (9,635 ) (5,696 ) 3,623 Changes in operating assets and
liabilities 2,848 24,836
31,545 Total adjustments 26,747
56,860 75,438 Net
cash provided by operating activities 157,969
236,047 214,820 Percent
of total revenue 25.4 % 34.0 %
33.1 % Cash flows from investing activities:
Additions to property, plant and equipment (18,269 ) (37,511 )
(25,289 ) Purchases of short-term available-for-sale investments
(1,653,593 ) (1,882,319 ) (2,192,874 ) Maturities of short-term
available-for-sale investments 1,551,147 1,713,973 1,659,792 Sales
of short-term available-for-sale investments 283,164 99,843 151,841
(Increase) decrease in other assets (2,048 )
(447 ) 327 Net cash provided by (used
for) investing activities 160,401
(106,461 ) (406,203 ) Cash flows from
financing activities: Term loan repayments (60,108 ) (33,625 )
(15,625 ) Dividend payments to shareholders (90,679 ) (91,372 )
(74,416 ) Repurchase of common stock (17,001 ) (20,830 ) (78,591 )
Proceeds from employee stock plans 113,770 80,527 48,858 Contingent
consideration payment (3,752 ) - (1,991 ) (Decrease) increase in
other financing activities (1,027 ) (1,125 ) 5,166 Excess tax
benefit - stock options 5,975
2,678 1,896 Net cash used for financing
activities (52,822 ) (63,747 )
(114,703 ) Effect of exchange rate changes on cash
1,416 845 (1,572 )
Net increase (decrease) in cash and cash equivalents 266,964
66,684 (307,658 ) Cash and cash equivalents at beginning of period
528,833 462,149
1,405,100 Cash and cash equivalents at end of period
$ 795,797 $ 528,833 $ 1,097,442
Analog Devices, First Quarter, Fiscal
2013
Schedule
D
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
Feb. 2, 2013
Nov. 3, 2012
Feb. 4, 2012 Revenue %*
Q/Q % Y/Y % Revenue Revenue
Industrial $ 282,654 45 % -8 % -3 % $ 306,042
$ 290,660 Automotive 107,581 17 % -3 % -11 % 110,401 120,588
Consumer 106,929 17 % -22 % -6 % 136,379 114,261 Communications
124,970 20 % -12 % 2 % 142,142 122,549
Total Revenue $ 622,134 100 %
-10 % -4 % $ 694,964
$ 648,058 * The sum of the individual
percentages does not equal the total due to rounding
Analog Devices, First Quarter, Fiscal 2013
Schedule
E
Revenue 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 Feb. 2, 2013 Nov.
3, 2012 Feb. 4, 2012 Revenue
%* Q/Q % Y/Y % Revenue
Revenue Converters $ 277,637 45 % -10 %
-3 % $ 307,252 $ 285,135 Amplifiers / Radio Frequency 157,853 25 %
-10 % -4 % 174,521 164,454 Other analog 95,693 15 % -15 % -1
% 112,083 96,238 Subtotal Analog Signal Processing
531,183 85 % -11 % -3 % 593,856 545,827 Power
management & reference 39,460 6 % -14 % -12 %
45,808 44,865
Total Analog Products $
570,643 92 % -11 % -3
% $ 639,664 $ 590,692 Digital
Signal Processing 51,491 8 % -7 % -10 % 55,300
57,366
Total Revenue $ 622,134 100
% -10 % -4 % $
694,964 $ 648,058 * The sum of the
individual percentages does not equal the total due to rounding
Analog Devices, First Quarter, Fiscal 2013
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 1Q 13 4Q
12 1Q 12 Feb. 2, 2013 Nov. 3, 2012
Feb. 4, 2012 GAAP Operating Expenses
$ 236,795 $ 228,003 $
226,018 Percent of Revenue 38.1 %
32.8 % 34.9 % Restructuring-Related
Expense (14,071 ) - -
Non-GAAP Operating Expenses $ 222,724
$ 228,003 $
226,018 Percent of Revenue 35.8
% 32.8 % 34.9 % GAAP
Operating Income/Margin $ 153,489 $
215,279 $ 183,372 Percent of Revenue
24.7 % 31.0 % 28.3 %
Restructuring-Related Expense 14,071 -
-
Non-GAAP Operating
Income/Margin $ 167,560 $
215,279 $ 183,372
Percent of Revenue 26.9 % 31.0 %
28.3 % GAAP Diluted EPS $
0.42 $ 0.58 $ 0.46 Impact of the
Reinstatement of the R&D Tax Credit (0.02 ) - -
Restructuring-Related Expense 0.04 -
-
Non-GAAP Diluted EPS $
0.44 $ 0.58
$ 0.46
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