Analog Devices, Inc. (NASDAQ: ADI), a global leader in
high-performance semiconductors for signal processing applications,
today announced financial results for its second quarter of fiscal
year 2013, which ended May 4, 2013.
“We had a solid second quarter led by strong sequential revenue
growth from industrial and automotive applications,” said Vincent
Roche, President and CEO. “Excluding special items, operating
margins expanded 300 basis points compared to the prior quarter and
diluted earnings per share grew three times faster than revenue
over the same period, demonstrating the strength of our operating
model.”
“Orders were higher in the second quarter compared to the prior
quarter, but customers remain cautious given the uncertain
macroeconomic environment. As a result, our outlook for the third
quarter is for revenue to be approximately flat to up 4%,”
continued Mr. Roche. “We are planning for margins to expand as
factory utilization improves and for expenses to remain under tight
control, which we believe will generate good earnings leverage and
strong free cash flow.”
ADI also announced that its Board of Directors has declared a
cash dividend of $0.34 per outstanding share of common stock. The
dividend will be paid on June 11, 2013 to all shareholders of
record at the close of business on May 31, 2013.
Results for the Second Quarter of
Fiscal 2013
- Revenue totaled $659 million
- Gross margin was 64% of revenue
- Operating margin was 30% of revenue,
excluding special items, and was 29% on a GAAP basis
- Diluted EPS was $0.52
- Cash flow from operations was $252
million, or 38% 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 second quarter of fiscal year 2013, 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 Third 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 be in the range of
$655 to $685 million
- Gross margin estimated to be
approximately 64.5%
- Operating expenses estimated to be
approximately $226 million
- Tax rate estimated to be approximately
16.5%
- Diluted EPS estimated at $0.51 to
$0.56
Conference Call Scheduled for 5:00 pm ET
ADI will host a conference call to discuss the second 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:
50465143, 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 items are 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.
Stock-based Compensation Expense. In the second quarter of
fiscal 2013, following the death of the Company’s CEO, the Company
recorded $6.3 million of stock-based compensation expense due to
the accelerated vesting of restricted stock units in accordance
with the terms of his restricted stock unit agreement. This
stock-based compensation expense and the related tax effect have no
direct correlation to the operation of our business in the
future.
The following items are excluded from our non-GAAP diluted
earnings per share:
Tax-Related Items. 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. In the second quarter of fiscal
2013, the Company recorded a $6.6 million tax benefit as a result
of the reversal of prior period tax liabilities. We excluded these
tax-related items from our non-GAAP measures because they are 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, Second Quarter, Fiscal
2013Schedule ARevenue
and Earnings Summary (GAAP)(In thousands, except per-share
amounts)
Three Months Ended
2Q 13May 4, 2013
1Q 13Feb. 2, 2013
2Q 12May 5, 2012
Revenue $ 659,250 $ 622,134 $ 675,094 Year-to-year change -2 % -4 %
-15 % Quarter-to-quarter change 6 % -10 % 4 % Cost of sales (1)
237,055 231,850
234,639 Gross margin 422,195
390,284 440,455 Gross margin percentage 64.0 % 62.7 % 65.2 %
Year-to-year change (basis points) -120 -50 -240 Quarter-to-quarter
change (basis points) 130
-110 200 Operating
expenses: R&D (1) 128,110 125,164 127,537 Selling, marketing
and G&A (1) 102,703 97,560 99,992 Special charges
- 14,071
- Total operating expenses 230,813 236,795 227,529
Total operating expenses percentage 35.0 % 38.1 % 33.7 %
Year-to-year change (basis points) 130 320 390 Quarter-to-quarter
change (basis points) -310
530 -120 Operating
income 191,382 153,489 212,926 Operating income percentage 29.0 %
24.7 % 31.5 % Year-to-year change (basis points) -250 -360 -620
Quarter-to-quarter change (basis points) 430
-630 320
Other expense 3,721
3,380 1,472 Income
before income tax 187,661 150,109 211,454 Provision for income
taxes 23,189 18,887 48,555 Tax rate percentage
12.4 % 12.6 % 23.0 % Net
income $ 164,472 $ 131,222
$ 162,899 Shares used for EPS -
basic 307,444 303,484 298,130 Shares used for EPS - diluted 313,368
310,275 305,921 Earnings per share - basic $ 0.53 $ 0.43 $
0.55 Earnings per share - diluted $ 0.52 $ 0.42 $ 0.53
Dividends paid per share $ 0.34
$ 0.30 $ 0.30 (1) Includes
stock-based compensation expense as follows: Cost of sales $ 1,517
$ 1,667 $ 1,671 R&D $ 5,044 $ 5,600 $ 5,162 Selling, marketing
and G&A $ 11,395 $ 5,794 $ 5,267
Analog Devices, Second Quarter, Fiscal
2013Schedule BSelected
Balance Sheet Information (GAAP)(In thousands)
2Q 13May 4, 2013
1Q 13Feb. 2, 2013
2Q 12May 5, 2012
Cash & short-term investments $ 4,172,141 $ 3,986,979 $
3,752,625 Accounts receivable, net 333,924 329,578 330,282
Inventories (1) 298,967 307,263 303,742 Other current assets
158,180 190,115
135,880 Total current assets 4,963,212 4,813,935 4,522,529
PP&E, net 490,047 491,431 478,959 Investments 18,678 32,720
30,209 Goodwill and intangible assets 311,587 313,084 309,092 Other
57,512 65,638
71,701 Total assets $ 5,841,036
$ 5,716,808 $ 5,412,490 Deferred income
on shipments to distributors, net $ 244,202 $ 243,396 $ 244,150
Other current liabilities 264,960 265,139 314,424 Long-term debt,
non-current 757,855 759,672 847,983 Non-current liabilities 113,429
124,804 80,793 Shareholders' equity 4,460,590
4,323,797 3,925,140 Total
liabilities & equity $ 5,841,036 $
5,716,808 $ 5,412,490
(1) Includes $2,123, $2,381, and $2,318
related to stock-based compensation in 2Q13, 1Q13, and 2Q12,
respectively.
Analog Devices, Second Quarter, Fiscal
2013Schedule CCash Flow
Statement (GAAP)(In thousands)
Three
Months Ended
2Q 13May 4, 2013
1Q 13Feb. 2, 2013
2Q 12May 5, 2012
Cash flows from operating activities: Net Income $ 164,472 $
131,222 $ 162,899 Adjustments to reconcile net income to net cash
provided by operations: Depreciation 27,478 27,755 26,871
Amortization of intangibles 55 55 18 Stock-based compensation
expense 17,956 13,061 12,100 Gain on sale of investments - - (1,231
) Excess tax benefit - stock options (2,833 ) (5,975 ) (2,602 )
Deferred income taxes (767 ) (9,635 ) (7,762 ) Other non-cash
activity (20 ) (1,362 ) (981 ) Changes in operating assets and
liabilities 45,845
2,848 36,657 Total adjustments
87,714 26,747
63,070 Net cash provided by
operating activities 252,186
157,969 225,969
Percent of total revenue 38.3 %
25.4 % 33.5 % Cash flows from
investing activities: Purchases of short-term available-for-sale
investments (2,203,316 ) (1,653,593 ) (2,235,601 ) Maturities of
short-term available-for-sale investments 1,726,488 1,551,147
1,635,795 Sales of short-term available-for-sale investments 91,351
283,164 109,734 Proceeds related to sale of investments - - 1,506
Additions to property, plant and equipment (26,179 ) (18,269 )
(30,137 ) Payments for acquisitions, net of cash acquired - -
(24,158 ) Increase in other assets (478 )
(2,048 ) (1,650 ) Net
cash (used for) provided by investing activities
(412,134 ) 160,401
(544,511 ) Cash flows from financing activities:
Early termination of swap agreements - - 18,520 Term loan
repayments - (60,108 ) (3,625 ) Dividend payments to shareholders
(104,415 ) (90,679 ) (89,402 ) Repurchase of common stock (4,519 )
(17,001 ) (44,143 ) Proceeds from employee stock plans 62,255
113,770 38,878 Contingent consideration payment - (3,752 ) -
Increase (decrease) in other financing activities 4,184 (1,027 )
(7,155 ) Excess tax benefit - stock options
2,833 5,975
2,602 Net cash used for financing activities
(39,662 ) (52,822 )
(84,325 ) Effect of exchange rate changes on cash
(556 ) 1,416
491 Net (decrease) increase in cash and
cash equivalents (200,166 ) 266,964 (402,376 ) Cash and cash
equivalents at beginning of period 795,797
528,833
1,097,442 Cash and cash equivalents at end of period
$ 595,631 $ 795,797
$ 695,066
Analog Devices, Second
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 May 4,
2013
Feb. 2, 2013
May 5, 2012
Revenue % Q/Q
% Y/Y % Revenue Revenue
Industrial $ 312,071 47 % 11 % -4 % $ 281,516 $ 324,728 Automotive
122,229 19 % 14 % 3 % 107,647 118,210 Consumer 101,049 15 % -6 % -5
% 106,949 106,086 Communications 123,901 19 %
-2 % -2 % 126,022 126,070
Total
Revenue $ 659,250 100
% 6 % -2 % $
622,134 $ 675,094
Analog Devices, Second 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 May 4,
2013
Feb. 2, 2013
May 5, 2012 Revenue %*
Q/Q % Y/Y % Revenue
Revenue Converters $ 301,887 46 % 9 % 1 % $ 277,637 $
300,338 Amplifiers / Radio Frequency 164,793 25 % 4 % -7 % 157,853
177,872 Other analog 91,906 14 % -4 % 2 %
95,693 90,442 Subtotal Analog Signal
Processing 558,586 85 % 5 % -2 %
531,183 568,652 Power management &
reference 43,623 7 % 11 % -5 % 39,460
46,051
Total Analog Products $
602,209 91 % 6 %
-2 % $ 570,643 $
614,703 Digital Signal Processing 57,041
9 % 11 % -6 % 51,491 60,391
Total Revenue $ 659,250
100 % 6 % -2 % $
622,134 $ 675,094 * The
sum of the individual percentages does not equal the total due to
rounding
Analog Devices, Second Quarter, Fiscal
2013Schedule
FReconciliation 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
2Q 13May 4, 2013
1Q 13Feb. 2, 2013
2Q 12May 5, 2012
GAAP Operating Expenses $ 230,813 $
236,795 $ 227,529 Percent of Revenue 35.0%
38.1% 33.7% Restructuring-Related Expense - (14,071)
- Stock-Based Compensation Expense (6,273) -
-
Non-GAAP Operating Expenses $ 224,540
$ 222,724 $ 227,529 Percent
of Revenue 34.1% 35.8% 33.7%
GAAP Operating Income/Margin $ 191,382 $
153,489 $ 212,926 Percent of Revenue 29.0%
24.7% 31.5% Restructuring-Related Expense - 14,071 -
Stock-Based Compensation Expense 6,273 -
-
Non-GAAP Operating Income/Margin $ 197,655
$ 167,560 $ 212,926
Percent of Revenue 30.0% 26.9% 31.5%
GAAP Diluted EPS $ 0.52 $ 0.42 $
0.53 Impact of the Reinstatement of the R&D Tax Credit -
(0.02) - Restructuring-Related Expense - 0.04 - Impact of the
Reversal of Prior Period Tax Liabilities (0.02) - - Stock-Based
Compensation Expense 0.01 - -
Non-GAAP Diluted EPS (1) $ 0.52 $
0.44 $ 0.53 (1) The sum of the
individual per share amounts may not equal the total due to
rounding
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