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

Tue Feb 19, 2013 4:02pm EST

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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:                                                                                                            
 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            


Analog Devices, Inc.
Mr. Ali Husain, 781-461-3282
Director of Investor Relations
Fax: 781-461-3491
investor.relations@analog.com

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