Analog Devices Reports Third Quarter Fiscal Year 2013 Results

  Analog Devices Reports Third Quarter Fiscal Year 2013 Results

                - Board declares $0.34 per share cash dividend

Business Wire

NORWOOD, Mass. -- August 20, 2013

Analog Devices, Inc. (NASDAQ: ADI), a global leader in high-performance
semiconductors for signal processing applications, today announced financial
results for its third quarter of fiscal year 2013, which ended August 3, 2013.

“ADI delivered solid results for the third quarter. Compared to the prior
quarter, revenue increased by 2% and our operating model produced excellent
leverage, driving diluted EPS growth of 10%, excluding special items,” said
Vincent Roche, President and CEO. “Profitability and cash flow were very
strong, and we returned $105 million to our shareholders through cash
dividends.”

By end market, industrial applications totaled 47% of revenue, communications
infrastructure was 21% of revenue, and automotive and consumer applications
were 18% and 15% of revenue, respectively.

“Order rates improved across all of our end markets during the third quarter,
and we saw the strongest sequential revenue growth from products used in
communications infrastructure applications. It appears that customer order
rates were in-line with consumption, keeping inventories low,” continued Mr.
Roche.

“There are signs that a gradual recovery in the macroeconomic environment is
underway and we are in a strong position to benefit from the return of capital
investments in communications and industrial infrastructure programs. As a
result our outlook for the fourth quarter is for our sales to grow in the
range of $675 million to $700 million, up from $674 million in the third
quarter,” said Mr. Roche.

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
September 11, 2013 to all shareholders of record at the close of business on
August 30, 2013.

Results for the Third Quarter of Fiscal 2013

  *Revenue totaled $674 million
  *Gross margin was 64.5% of revenue
  *Operating margin was 30.9% of revenue
  *Diluted EPS was $0.57, excluding special items
  *Cash flow from operations was $220 million, or 32.6% 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 third
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 Fourth 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 $675 to $700 million
  *Gross margin estimated to be approximately 65%
  *Operating expenses estimated to increase by approximately 1%
  *Tax rate estimated to be between 14% and 15%
  *Diluted EPS estimated at $0.55 to $0.61

Conference Call Scheduled for 5:00 pm ET

ADI will host a conference call to discuss the third 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: 18639688, 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, non-GAAP other expense, 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 item is excluded from our non-GAAP other expense and non-GAAP
diluted earnings per share:

Debt Extinguishment Costs: In the third quarter of fiscal 2013, the Company
redeemed its outstanding 5.0% senior unsecured notes due July1, 2014. The
Company recognized a net loss on debt extinguishment of approximately $10.2
million, which was comprised of a make-whole premium, the recognition of
unamortized proceeds received on an interest rate swap associated with the
debt and the write off of unamortized debt issuance and discount costs. We
excluded these costs from our non-GAAP measures because they are one time in
nature and 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 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. 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. In the third quarter of fiscal 2013, the Company
recorded a one-time $1.7 million tax benefit related to the release of a tax
reserve for an expired tax year. 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, non-GAAP other expense,
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, non-GAAP other expense, 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, non-GAAP
other expense, 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, Third Quarter, Fiscal 2013

Schedule A
Revenue and Earnings Summary (GAAP)
(In thousands, except per-share amounts)
                                                          
                                                            
                                 Three Months Ended
                                 3Q 13            2Q 13           3Q 12
                             Aug. 3, 2013   May 4, 2013   Aug. 4, 2012
Revenue                          $  674,172       $ 659,250       $  683,026
Year-to-year change                 -1      %       -2      %        -10     %
Quarter-to-quarter change           2       %       6       %        1       %
Cost of sales (1)               239,110     237,055      235,152 
Gross margin                        435,062         422,195          447,874
Gross margin percentage             64.5    %       64.0    %        65.6    %
Year-to-year change (basis          -110            -120             -160
points)
Quarter-to-quarter change       50          130          40      
(basis points)
Operating expenses:
R&D (1)                             128,947         128,110          129,694
Selling, marketing and G&A          97,773          102,703          99,873
(1)
Special charges                 -           -            5,836   
Total operating expenses            226,720         230,813          235,403
Total operating expenses            33.6    %       35.0    %        34.5    %
percentage
Year-to-year change (basis          -90             130              400
points)
Quarter-to-quarter change       -140        -310         80      
(basis points)
Operating income                    208,342         191,382          212,471
Operating income                    30.9    %       29.0    %        31.1    %
percentage
Year-to-year change (basis          -20             -250             -570
points)
Quarter-to-quarter change       190         430          -40     
(basis points)
Other expense                   13,301      3,721        3,002   
Income before income tax            195,041         187,661          209,469
Provision for income taxes          18,802          23,189           39,701
Tax rate percentage             9.6     %    12.4    %     19.0    %
Net income                    $  176,239    $ 164,472    $  169,768 
                                                                  
Shares used for EPS -               309,117         307,444          298,445
basic
Shares used for EPS -               315,307         313,368          305,359
diluted
                                                                  
Earnings per share - basic       $  0.57          $ 0.53          $  0.57
Earnings per share -             $  0.56          $ 0.52          $  0.56
diluted
                                                                  
Dividends paid per share      $  0.34       $ 0.34       $  0.30    
                                                                  
(1) Includes stock-based
compensation expense as
follows:
Cost of sales                    $  1,672         $ 1,517         $  1,871
R&D                              $  5,536         $ 5,044         $  5,999
Selling, marketing and G&A       $  5,539         $ 11,395        $  5,921
                                                                             

                                                          
Analog Devices, Third Quarter, Fiscal 2013

Schedule B
Selected Balance Sheet Information (GAAP)
(In thousands)
                                                                  
                                 3Q 13            2Q 13           3Q 12
                             Aug. 3, 2013   May 4, 2013   Aug. 4, 2012
Cash & short-term                $  4,450,293     $ 4,172,141     $  3,765,045
investments
Accounts receivable, net            345,437         333,924          345,795
Inventories (1)                     284,342         298,967          312,079
Other current assets            164,418      158,180       138,366
Total current assets                5,244,490       4,963,212        4,561,285
PP&E, net                           492,421         490,047          490,581
Investments                         20,056          18,678           29,615
Goodwill and intangible             309,198         311,587          308,190
assets
Other                           72,461       57,512        66,951
Total assets                  $  6,138,626   $ 5,841,036   $  5,456,622
                                                                  
Deferred income on
shipments to distributors,       $  259,003       $ 244,202       $  246,674
net
Other current liabilities           232,806         264,960          261,868
Long-term debt,                     872,104         757,855          842,540
non-current
Non-current liabilities             131,477         113,429          76,934
Shareholders' equity            4,643,236    4,460,590     4,028,606
Total liabilities & equity    $  6,138,626   $ 5,841,036   $  5,456,622
                                                                  
(1) Includes $2,126, $2,123, and $2,361 related to
stock-based compensation in

3Q13, 2Q13, and 3Q12, respectively.
                                                                  


Analog Devices, Third Quarter, Fiscal 2013



Schedule C

Cash Flow Statement (GAAP)
(In thousands)
                                                        
                                                          
                          Three Months Ended
                          3Q 13              2Q 13              3Q 12
                          Aug. 3, 2013     May 4, 2013      Aug. 4, 2012
Cash flows from
operating
activities:
Net Income                $ 176,239          $ 164,472          $ 169,768
Adjustments to
reconcile net
income
to net cash
provided by
operations:
Depreciation                27,448             27,478             27,107
Amortization of             55                 55                 56
intangibles
Stock-based
compensation                12,747             17,956             13,791
expense
Loss on
extinguishment of           10,205             -                  -
debt
Excess tax benefit          (6,265     )       (2,833     )       (5,054     )
- stock options
Deferred income             (739       )       (767       )       34
taxes
Noncash portion of          -                  -                  219
special charges
Other non-cash              310                (20        )       (1,380     )
activity
Changes in
operating assets        25             45,845         (66,835    )
and liabilities
Total adjustments       43,786         87,714         (32,062    )
Net cash provided
by operating            220,025        252,186        137,706    
activities
Percent of total        32.6       %    38.3       %    20.2       %
revenue
                                                                
Cash flows from
investing
activities:
Purchases of
short-term                  (2,123,826 )       (2,203,316 )       (1,854,249 )
available-for-sale
investments
Maturities of
short-term                  1,493,806          1,726,488          1,534,235
available-for-sale
investments
Sales of short-term
available-for-sale          216,312            91,351             76,330
investments
Additions to
property, plant and         (30,068    )       (26,179    )       (39,239    )
equipment
Payments for
acquisitions, net           (2,475     )       -                  -
of cash acquired
(Increase) decrease     (1,540     )    (478       )    408        
in other assets
Net cash used for
investing               (447,791   )    (412,134   )    (282,515   )
activities
                                                                
Cash flows from
financing
activities:
Payment of senior           (392,790   )       -                  -
unsecured notes
Proceeds from               493,880            -                  -
long-term debt
Proceeds from
derivative                  10,952             -                  -
instruments
Term loan                   -                  -                  (3,625     )
repayments
Dividend payments           (104,923   )       (104,415   )       (89,511    )
to shareholders
Repurchase of               -                  (4,519     )       (17,480    )
common stock
Proceeds from
employee stock              89,653             62,255             23,465
plans
Excess tax benefit          6,265              2,833              5,054
- stock options
(Decrease) increase
in other financing      (10,643    )    4,184          (4,755     )
activities
Net cash provided
by (used for)           92,394         (39,662    )    (86,852    )
financing
activities
Effect of exchange
rate changes on         (191       )    (556       )    (1,256     )
cash
                                                                
Net decrease in
cash and cash               (135,563   )       (200,166   )       (232,917   )
equivalents
Cash and cash
equivalents at          595,631        795,797        695,066    
beginning of period
Cash and cash
equivalents at end     $ 460,068       $ 595,631       $ 462,149    
of period
                                                                             


Analog Devices, Third 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
                     Aug. 3,                                   May 4,        Aug. 4,
                                                             2013        2012
                     2013
                     Revenue     %*      Q/Q    Y/Y      Revenue       Revenue
                                             %        %
Industrial           $ 314,196   47  %   1  %   -3 %     $ 311,502     $ 323,621
Automotive             120,386     18  %     -2 %     5  %       122,437       114,876
Consumer               100,163     15  %     -1 %     -6 %       101,259       106,940
Communications        139,427   21  %     12 %     1  %      124,052      137,589
Total Revenue        $ 674,172   100 %     2  %     -1 %     $ 659,250     $ 683,026
                                                                             
* The sum of the individual percentages does not equal the total due to rounding



Analog Devices, Third 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
                 Aug. 3,                                  May 4,        Aug. 4,
                                                        2013        2012
                 2013
                 Revenue     %*      Q/Q   Y/Y      Revenue       Revenue
                                         %       %
Converters       $ 306,347   45  %   1 %   2  %     $ 301,887     $ 299,736
Amplifiers
/ Radio            171,588     25  %     4 %     -5 %       164,793       180,989
Frequency
Other             92,278    14  %     0 %     -6 %      91,906       98,075
analog
Subtotal
Analog            570,213   85  %     2 %     -1 %      558,586      578,800
Signal
Processing
Power
management        45,611    7   %     5 %     0  %      43,623       45,403
&
reference
Total
Analog           $ 615,824   91  %     2 %     -1 %     $ 602,209     $ 624,203
Products
Digital
Signal            58,348    9   %     2 %     -1 %      57,041       58,823
Processing
Total            $ 674,172   100 %     2 %     -1 %     $ 659,250     $ 683,026
Revenue
                                                                        
* The sum of the individual percentages does not equal the total due to rounding


Analog Devices, Third 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
                                3Q 13            2Q 13         3Q 12
                                Aug. 3, 2013     May 4, 2013   Aug. 4,
                                                                   2012
                                                                   
GAAP Operating                  $  226,720         $ 230,813       $ 235,403
Expenses
Percent of Revenue                 33.6     %        35.0    %       34.5    %
Restructuring-Related              -                 -               (5,836  )
Expense
Stock-Based                       -             (6,273  )    -       
Compensation Expense
Non-GAAP Operating              $  226,720      $ 224,540    $ 229,567 
Expenses
Percent of Revenue                 33.6     %        34.1    %       33.6    %
                                   -
GAAP Operating                  $  208,342         $ 191,382       $ 212,471
Income/Margin
Percent of Revenue                 30.9     %        29.0    %       31.1    %
Restructuring-Related              -                 -               5,836
Expense
Stock-Based                       -             6,273       -       
Compensation Expense
Non-GAAP Operating              $  208,342      $ 197,655    $ 218,307 
Income/Margin
Percent of Revenue                 30.9     %        30.0    %       32.0    %
                                                                   
GAAP Other Expense              $  13,301          $ 3,721         $ 3,002
Percent of Revenue                 2.0      %        0.6     %       0.4     %
Loss on Extinguishment            (10,205  )     -           -       
of Debt
Non-GAAP Other Expense          $  3,096        $ 3,721      $ 3,002   
Percent of Revenue                 0.5      %        0.6     %       0.4     %
                                                                   
GAAP Diluted EPS                $  0.56            $ 0.52          $ 0.56
Impact of Loss on                  0.02
Extinguishment of Debt
Restructuring-Related              -                 -               0.01
Expense
Impact of the Reversal
of Prior Period Tax                -                 (0.02   )       -
Liabilities
Stock-Based                        -                 0.01            -
Compensation Expense
Impact of Expired Tax             (0.01    )     -           (0.01   )
Statute
Non-GAAP Diluted EPS            $  0.57         $ 0.52       $ 0.56    
(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
Director of Investor Relations
Fax: 781-461-3491
investor.relations@analog.com