Analog Devices Reports Fourth Quarter and Fiscal Year 2012 Results
Analog Devices Reports Fourth Quarter and Fiscal Year 2012 Results
Business Wire
NORWOOD, Mass. -- November 27, 2012
Analog Devices, Inc. (NASDAQ: ADI), a global leader in high-performance
semiconductors for signal processing applications, today announced financial
results for its fiscal fourth quarter and fiscal year ended November 3, 2012.
“ADI delivered solid results for the fourth quarter, with revenue increasing
by 2% and diluted EPS increasing by 4% compared to the prior quarter,” said
Jerald G. Fishman, CEO. “For the year, revenue decreased 9.8% to about $2.7
billion, reflecting difficult economic conditions and prevailing global
uncertainty. We nevertheless generated 65% gross margins, 31% operating
margins and over $800 million, or 30% of revenue, in cash from operations for
the year.”
Mr. Fishman continued, “Overall orders decreased during the quarter as
customers became more cautious and continued to reduce inventories, in many
cases to historically low levels. As a result, we began reducing our
production levels in the fourth quarter and will reduce them further in the
first quarter of fiscal 2013 to keep our inventory at appropriate levels.
While this will reduce gross margins in the short term, we believe this should
provide significant operating leverage when growth resumes.”
ADI also announced that the Board of Directors has declared a cash dividend of
$0.30 per outstanding share of common stock. The dividend will be paid on
December 18, 2012 to all shareholders of record at the close of business on
December 7, 2012.
Results for the Fourth Quarter of Fiscal 2012
* Revenue totaled $695 million
* Gross margin was 63.8% of revenue
* Operating margin was 31% of revenue
* Diluted EPS was $0.58
* Cash flow from operations was $236 million, or 34% of revenue
Results for Fiscal Year 2012
* Revenue totaled $2.7 billion
* Gross margin was 64.5% of revenue
* Operating margin was 30.5% of revenue
* Diluted EPS was $2.13
* Cash flow from operations was $815 million, or 30% of revenue
* Repurchases of common stock and dividend payments to shareholders totaled
$505 million
Please refer to the schedules provided for a summary of revenue and earnings,
selected balance sheet information, and the cash flow statement for the fourth
quarter and fiscal year ended 2012, as well as the immediately prior and
year-ago quarters. Additional information on revenue by end market and revenue
by product type is provided on Schedules D and E. A more complete table
covering prior periods is available at investor.analog.com.
Outlook for the First 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 decrease in the range of -6% to -12%
* Gross margin estimated to be approximately 62%
* Operating expenses estimated to be approximately $223 million
* Tax rate estimated to be approximately 18%
* Diluted EPS estimated at $0.40 to $0.48
Conference Call Scheduled for 5:00 pm ET
ADI will host a conference call to discuss the fourth quarter results and
short-term outlook today, beginning at 5:00 pm ET. Investors may join via
webcast, accessible at investor.analog.com, or by telephone (call 706-634-7193
ten minutes before the call begins and provide the password "ADI.")
A replay will be available almost immediately after the call. The replay may
be accessed for up to two weeks by dialing 855-859-2056 (replay only) and
providing the conference ID:68650785, 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 Items. In the first quarter of fiscal year 2011, the Company
recorded a $13 million tax benefit related to taxes that are one-time in
nature. These one-time tax items included the reinstatement of the R&D tax
credit in December 2010, retroactive to January 1, 2010; a reduction in a
state tax credit valuation reserve we had recorded in prior years; and a
benefit from the increase to the Irish deferred tax asset as a result of the
increase in the Irish manufacturing tax rate from 10% to 12.5%. In the second
quarter of fiscal 2011, the Company recorded a one-time $10.8 million tax
benefit for a settlement with the Internal Revenue Service related to certain
tax matters for the fiscal 2004 through fiscal 2007 tax years. 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.
In the third quarter of fiscal 2012, the Company recorded a one-time $3.4
million tax benefit related to the release of a tax reserve for an expired tax
year. We excluded this tax-related item from our non-GAAP measures because it
is not associated with the tax expense on our current operating results.
Why Management Believes the Non-GAAP Financial Measures Provide Useful
Information to Investors
Management believes that the presentation of non-GAAP operating expenses,
non-GAAP operating income, non-GAAP operating margins, and non-GAAP diluted
EPS is useful to investors because it provides investors with the operating
results that management uses to manage the Company.
Material Limitations Associated with Use of the Non-GAAP Financial Measures
Analog Devices believes that non-GAAP operating expenses, non-GAAP operating
income, non-GAAP operating margins, and non-GAAP diluted EPS have material
limitations in that they do not reflect all of the amounts associated with our
results of operations as determined in accordance with GAAP and that these
measures should only be used to evaluate our results of operations in
conjunction with the corresponding GAAP measures. In addition, our non-GAAP
measures may not be comparable to the non-GAAP measures reported by other
companies. The Company’s use of non-GAAP measures, and the underlying
methodology when excluding certain items, is not necessarily an indication of
the results of operations that may be expected in the future, or that the
Company will not, in fact, record such items in future periods.
Management’s Compensation for Limitations of Non-GAAP Financial Measures
Management compensates for these material limitations in non-GAAP operating
expenses, non-GAAP operating income, non-GAAP operating margins, and non-GAAP
diluted EPS by also evaluating our GAAP results and the reconciliations of our
non-GAAP measures to the most directly comparable GAAP measures. Investors
should consider our non-GAAP financial measures in conjunction with the
corresponding GAAP measures.
About Analog Devices
Innovation, performance, and excellence are the cultural pillars on which
Analog Devices has built one of the longest standing, highest growth companies
within the technology sector. Acknowledged industry-wide as the world leader
in data conversion and signal conditioning technology, Analog Devices serves
over 60,000 customers, representing virtually all types of electronic
equipment. Analog Devices is headquartered in Norwood, Massachusetts, with
design and manufacturing facilities throughout the world. Analog Devices'
common stock is included in the S&P 500 Index.
This release may be deemed to contain forward-looking statements intended to
qualify for the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
include, among other things, our statements regarding expected revenue,
earnings per share, operating expenses, gross margin, 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, Fourth Quarter, Fiscal 2012
Schedule A
Revenue and Earnings Summary (GAAP)
(In thousands, except per-share amounts)
Three Months Ended Twelve Months Ended
4Q 12 3Q 12 4Q 11 FY 12 FY 11
Nov. 3, Aug. 4, Oct. 29, Nov. 3, Oct. 29,
2012 2012 2011 2012 2011
Revenue $ 694,964 $ 683,026 $ 716,134 $ 2,701,142 $ 2,993,320
Year-to-year -3 % -10 % -7 % -10 % 8 %
change
Quarter-to-quarter 2 % 1 % -6 %
change
Cost of sales (1) 251,682 235,152 255,620 960,141 1,006,779
Gross margin 443,282 447,874 460,514 1,741,001 1,986,541
Gross margin 63.8 % 65.6 % 64.3 % 64.5 % 66.4 %
percentage
Year-to-year
change (basis -50 -160 -270 -190 120
points)
Quarter-to-quarter
change(basis -180 40 -290
points)
Operating
expenses:
R&D (1) 130,394 129,694 123,889 512,003 505,570
Selling, marketing 97,609 99,873 99,094 396,519 406,707
and G&A (1)
Special charges - 5,836 2,239 8,431 2,239
Total operating 228,003 235,403 225,222 916,953 914,516
expenses
Total operating
expenses 32.8 % 34.5 % 31.4 % 33.9 % 30.6 %
percentage
Year-to-year
change (basis 140 400 150 330 -200
points)
Quarter-to-quarter
change (basis -170 80 90
points)
Operating income 215,279 212,471 235,292 824,048 1,072,025
Operating income 31.0 % 31.1 % 32.9 % 30.5 % 35.8 %
percentage
Year-to-year
change (basis -190 -570 -420 -530 320
points)
Quarter-to-quarter
change (basis -10 -40 -390
points)
Other expense 2,755 3,002 4,292 10,515 10,578
Income before 212,524 209,469 231,000 813,533 1,061,447
income tax
Provision for 33,337 39,701 47,473 162,297 200,553
income taxes
Tax rate 15.7 % 19.0 % 20.6 % 19.9 % 18.9 %
percentage
Income from
continuing 179,187 169,768 183,527 651,236 860,894
operations, net of
tax
Income from
discontinued - - - - 6,500
operations, net of
tax
Net income $ 179,187 $ 169,768 $ 183,527 $ 651,236 $ 867,394
Shares used for 300,679 298,445 298,910 298,761 299,417
EPS - basic
Shares used for 307,954 305,359 305,734 306,191 308,236
EPS - diluted
Earnings per share
from continuing $ 0.60 $ 0.57 $ 0.61 $ 2.18 $ 2.88
operations - basic
Earnings per share
from continuing $ 0.58 $ 0.56 $ 0.60 $ 2.13 $ 2.79
operations-
diluted
Earnings per share $ 0.60 $ 0.57 $ 0.61 $ 2.18 $ 2.90
- basic
Earnings per share $ 0.58 $ 0.56 $ 0.60 $ 2.13 $ 2.81
- diluted
Dividends paid per $ 0.30 $ 0.30 $ 0.25 $ 1.15 $ 0.94
share
(1) Includes
stock-based
compensation
expense as
follows:
Cost of sales $ 1,905 $ 1,871 $ 1,835 $ 7,254 $ 7,294
R&D $ 6,124 $ 5,999 $ 6,033 $ 23,169 $ 23,289
Selling, marketing $ 6,248 $ 5,921 $ 5,684 $ 23,077 $ 21,775
and G&A
Analog Devices, Fourth Quarter, Fiscal 2012
Schedule B
Selected Balance Sheet Information (GAAP)
(In thousands)
4Q 12 3Q 12 4Q 11
Nov. 3, Aug. 4, Oct. 29,
2012 2012 2011
Cash & short-term investments $ 3,900,378 $ 3,765,045 $ 3,592,462
Accounts receivable, net 339,881 345,795 348,416
Inventories (1) 313,723 312,079 295,081
Other current assets 142,203 138,366 150,389
Total current assets 4,696,185 4,561,285 4,386,348
PP&E, net 500,867 490,581 478,839
Investments 30,242 29,615 29,361
Goodwill and intangible assets 312,605 308,190 287,287
Other 80,448 66,951 95,800
Total assets $ 5,620,347 $ 5,456,622 $ 5,277,635
Deferred income on shipments $ 238,541 $ 246,674 $ 233,249
to distributors, net
Other current liabilities 286,538 261,868 291,756
Long-term debt, non-current 807,098 842,540 871,876
Non-current liabilities 122,811 76,934 85,341
Shareholders' equity 4,165,359 4,028,606 3,795,413
Total liabilities & equity $ 5,620,347 $ 5,456,622 $ 5,277,635
(1) Includes $2,517, $2,361 and $2,431 related to stock-based compensation in
4Q12, 3Q12 and 4Q11, respectively.
Analog Devices, Fourth Quarter, Fiscal 2012
Schedule C
Cash Flow Statement (GAAP)
(In thousands)
Three Months Ended Twelve Months Ended
4Q 12 3Q 12 4Q 11 FY 12 FY 11
Nov. 3, Aug. 4, Oct. 29, Nov. 3, Oct. 29,
2012 2012 2011 2012 2011
Cash flows from
operating
activities:
Net Income $ 179,187 $ 169,768 $ 183,527 $ 651,236 $ 867,394
Adjustments to
reconcile net
income
to net cash
provided by
operations:
Depreciation 27,484 27,107 28,781 109,705 116,873
Amortization of 54 56 267 128 1,346
intangibles
Stock-based
compensation 14,277 13,791 13,552 53,500 52,358
expense
Gain on sale of - - - - (6,500 )
business
Gain on sale of - - - (1,231 ) -
investments
Excess tax benefit (2,678 ) (5,054 ) (7,640 ) (12,230 ) (44,936 )
- stock options
Noncash portion of - 219 - 219 -
special charges
Other non-cash (1,417 ) (1,380 ) (352 ) (3,187 ) 833
activity
Deferred income (5,696 ) 34 8,693 (9,801 ) 1,704
taxes
Changes in
operating assets 24,836 (66,835 ) 3,332 26,203 (88,543 )
and liabilities
Total adjustments 56,860 (32,062 ) 46,633 163,306 33,135
Net cash provided
by operating 236,047 137,706 230,160 814,542 900,529
activities
Percent of total 34.0 % 20.2 % 32.1 % 30.2 % 30.1 %
revenue
Cash flows from
investing
activities:
Additions to
property, plant (37,511 ) (39,239 ) (26,331 ) (132,176 ) (122,996 )
and equipment, net
Net proceeds
related to sale of - - - - 10,000
businesses
Proceeds related
to sale of - - - 1,506 -
investments
Payments for
acquisitions, net - - - (24,158 ) (13,988 )
of cash acquired
Purchases of
short-term (1,882,319 ) (1,854,249 ) (1,156,671 ) (8,165,043 ) (4,289,304 )
available-for-sale
investments
Maturities of
short-term 1,713,973 1,534,235 1,101,973 6,543,795 3,436,284
available-for-sale
investments
Sales of
short-term 99,843 76,330 23,476 437,748 282,861
available-for-sale
investments
(Increase)
Decrease in other (447 ) 408 88 (1,362 ) (6,595 )
assets
Net cash used for
investing (106,461 ) (282,515 ) (57,465 ) (1,339,690 ) (703,738 )
activities
Cash flows from
financing
activities:
Proceeds from - - - - 515,507
long-term debt
Term loan (33,625 ) (3,625 ) (3,625 ) (56,500 ) (28,392 )
repayments
Early termination - - - 18,520 -
of swap agreements
Dividend payments (91,372 ) (89,511 ) (74,824 ) (344,701 ) (281,626 )
to shareholders
Repurchase of (20,795 ) (17,344 ) (82,816 ) (160,536 ) (330,256 )
common stock
Net proceeds from
employee stock 80,492 23,329 27,925 191,220 217,164
plans
Contingent
Consideration - - - (1,991 ) -
Payment
(Decrease)
increase in other (1,125 ) (4,755 ) 914 (7,869 ) 1,279
financing
activities
Excess tax benefit 2,678 5,054 7,640 12,230 44,936
- stock options
Net cash (used
for) provided by (63,747 ) (86,852 ) (124,786 ) (349,627 ) 138,612
financing
activities
Effect of exchange
rate changes on 845 (1,256 ) (630 ) (1,492 ) (303 )
cash
Net increase
(decrease) in cash 66,684 (232,917 ) 47,279 (876,267 ) 335,100
and cash
equivalents
Cash and cash
equivalents at 462,149 695,066 1,357,821 1,405,100 1,070,000
beginning of
period
Cash and cash
equivalents at end $ 528,833 $ 462,149 $ 1,405,100 $ 528,833 $ 1,405,100
of period
Analog Devices, Fourth Quarter, Fiscal 2012
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
Nov. 3, 2012 Aug. 4, Oct. 29,
2012 2011
Revenue % Q/Q % Y/Y Revenue Revenue
%
Industrial $ 304,693 44 % -5 % -3 % $ 322,092 $ 315,716
Automotive 110,227 16 % -4 % -3 % 114,730 113,528
Consumer 137,620 20 % 28 % -6 % 107,848 146,221
Communications 142,424 20 % 3 % 1 % 138,356 140,669
Total Revenue $ 694,964 100 % 2 % -3 % $ 683,026 $ 716,134
Twelve Months Ended
Oct. 29,
Nov. 3, 2012
2011
Revenue % Y/Y % Revenue
Industrial $ 1,240,344 46 % -12 % $ 1,411,386
Automotive 463,577 17 % 11 % 417,929
Consumer 467,626 17 % -16 % 559,142
Communications 529,595 20 % -12 % 604,863
Total Revenue $ 2,701,142 100 % -10 % $ 2,993,320
Analog Devices, Fourth Quarter, Fiscal 2012
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
Nov. 3, 2012 Aug. 4, Oct. 29,
2012 2011
Revenue % Q/Q % Y/Y % Revenue Revenue
Converters $ 307,252 44 % 3 % -5 % $ 299,634 $ 323,291
Amplifiers
/ Radio 174,521 25 % -4 % -4 % 180,899 182,708
Frequency
Other 112,083 16 % 14 % 11 % 98,269 101,176
analog
Subtotal
Analog 593,856 85 % 3 % -2 % 578,802 607,175
Signal
Processing
Power
management 45,808 7 % 1 % -14 % 45,401 53,173
&
reference
Total
Analog $ 639,664 92 % 2 % -3 % $ 624,203 $ 660,348
Products
Digital
Signal 55,300 8 % -6 % -1 % 58,823 55,786
Processing
Total $ 694,964 100 % 2 % -3 % $ 683,026 $ 716,134
Revenue
Twelve Months Ended
Oct. 29,
Nov. 3, 2012
2011
Revenue %* Y/Y % Revenue
Converters $ 1,192,064 44 % -11 % $ 1,343,487
Amplifiers
/ Radio 697,687 26 % -11 % 788,299
Frequency
Other 397,376 15 % -3 % 410,323
analog
Subtotal
Analog 2,287,127 85 % -10 % 2,542,109
Signal
Processing
Power
management $ 182,134 7 % -16 % $ 217,615
&
reference
Total
Analog 2,469,261 91 % -11 % 2,759,724
Products
Digital
Signal 231,881 9 % -1 % 233,596
Processing
Total $ 2,701,142 100 % -10 % $ 2,993,320
Revenue
* The sum of the individual percentages does not equal the total due to rounding
Analog Devices, Fourth Quarter, Fiscal 2012
Schedule F
Reconciliation from Non-GAAP to GAAP Data (In thousands, except per-share amounts)
See "Non-GAAP Financial Information" in this press release for a description of the items excluded from
our non-GAAP measures.
Three Months Ended Twelve Months Ended
4Q 12 3Q 12 4Q 11 FY 12 FY 11
Nov. 3, Aug. 4, Oct. 29, Nov. 3, Oct. 29,
2012 2012 2011 2012 2011
GAAP Operating $ 228,003 $ 235,403 $ 225,222 $ 916,953 $ 914,516
Expenses
Percent of Revenue 32.8 % 34.5 % 31.4 % 33.9 % 30.6 %
Restructuring-Related (5,836 ) - (5,836 ) -
Expense
Non-GAAP Operating $ 228,003 $ 229,567 $ 225,222 $ 911,117 $ 914,516
Expenses
Percent of Revenue 32.8 % 33.6 % 31.4 % 33.7 % 30.6 %
GAAP Operating
Income/Margin From $ 215,279 $ 212,471 $ 235,292 $ 824,048 $ 1,072,025
Continuing Operations
Percent of Revenue 31.0 % 31.1 % 32.9 % 30.5 % 35.8 %
Restructuring-Related - 5,836 - 5,836 -
Expense
Non-GAAP Operating
Income/Margin From $ 215,279 $ 218,307 $ 235,292 $ 829,884 $ 1,072,025
Continuing Operations
Percent of Revenue 31.0 % 32.0 % 32.9 % 30.7 % 35.8 %
GAAP Diluted EPS
Including $ 0.58 $ 0.56 $ 0.60 $ 2.13 $ 2.81
Discontinued
Operations
Diluted Loss Per
Share from - - - - 0.02
Discontinued
Operations
GAAP Diluted EPS From $ 0.58 $ 0.56 $ 0.60 $ 2.13 $ 2.79
Continuing Operations
IRS Tax Settlement - - - - (0.04 )
Impact of the
Reinstatement of the - - - - (0.02 )
R&D Tax Credit
Impact of State Tax - - - - (0.02 )
Valuation
Impact of Increase in - - - - (0.00 )
Irish Tax Rate
Restructuring-Related - 0.01 - 0.01 -
Expense
Impact of Expired Tax - (0.01 ) - (0.01 ) -
Statute
Non-GAAP Diluted EPS
From Continuing $ 0.58 $ 0.56 $ 0.60 $ 2.13 $ 2.72
Operations (1)
(1) The sum of the individual per share amounts may not equal the total due to rounding.
Contact:
Analog Devices, Inc.
Mr. Ali Husain, 781-461-3282
781-461-3491 (fax)
investor.relations@analog.com
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