Analog Devices Reports First Quarter Fiscal Year 2013 Results; Increases Dividend by $0.04 to $0.34

Analog Devices Reports First Quarter Fiscal Year 2013 Results; Increases Dividend by $0.04 to $0.34 Per Share

NORWOOD, Mass.--(BUSINESS WIRE)-- 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: