Analog Devices Announces Financial Results for the First Quarter of Fiscal Year 2008.NORWOOD, Mass. -- Analog Devices Analog Devices (NYSE: ADI) is an American multinational producer of semiconductor devices. Analog specializes in ADC, DAC, MEMS, and DSP chips for consumer and industrial goods. Analog is presently designing circuits in the 65 nanometer to 3 µm process feature sizes range. , Inc. (NYSE NYSE See: New York Stock Exchange : ADI): [TABLE OMITTED] Except where noted, all financial results contained in this release are from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . The sales of two businesses, the wireless handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. baseband chipset A group of chips designed to work as a unit to perform a function. For example, a modem chipset contains all the primary circuits for transmitting and receiving. A PC chipset provides the electronic interfaces between all subsystems (see PC chipset for illustration). and radio transceiver (TRANSmitter reCEIVER) An electronic device or circuit that transmits and receives analog or digital signals. It comes in many forms; for example, a transponder on a satellite, a network adapter in the computer or the circuits in a cellphone. business and the CPU CPU in full central processing unit Principal component of a digital computer, composed of a control unit, an instruction-decoding unit, and an arithmetic-logic unit. voltage regulation Voltage regulation The change in voltage magnitude that occurs when the load (at a specified power factor) is reduced from the rated or nominal value to zero, with no intentional manual readjustment of any voltage control, expressed in percent of nominal and PC thermal monitoring business, were completed as planned during the first quarter of fiscal 2008. These two businesses are reported as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Analog Devices, Inc. (NYSE: ADI), a global leader in high-performance semiconductors for signal processing See DSP. applications, today announced financial results for the first quarter of fiscal 2008, which ended February 2, 2008. Product revenue was $614 million for the first quarter of fiscal 2008. Product revenue decreased by 1.5% in the first quarter of fiscal 2008 compared to the immediately prior quarter and increased approximately 4% compared to the first quarter of fiscal 2007, which was a 14-week quarter. ADI follows a 52-week, or 364-day, fiscal calendar which results in a 14-week quarter approximately every seventh year, as occurred in the first quarter of last year. On an equivalent 13-week basis, product revenue increased 12% year-over-year. Gross margin for the first quarter of fiscal 2008 was $376 million, or 61.2% of revenue, compared to $374 million, or 60.0% of revenue, in the immediately prior quarter. Gross margin improved primarily as a result of increased sales to the industrial and communications end markets, which carry relatively higher gross margins than the consumer and computer end markets. Gross margin for the same period one year ago, excluding $35 million of revenue from a one-time intellectual property (IP) licensing agreement, was 61.7% of revenue. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from continuing operations for the first quarter of fiscal 2008 totaled $146 million, or 23.8% of product revenue. After excluding one-time items from the prior periods, operating income from continuing operations for the first quarter of fiscal 2008 increased both sequentially and on a year-over-year basis. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) from continuing operations for the first quarter of fiscal 2008 was $0.40. On a comparable basis, the non-GAAP diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS from continuing operations was $0.37 for the same period one year ago and $0.38 for the immediately prior quarter. Tables reconciling our non-GAAP diluted EPS to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). diluted EPS are provided in this release on Schedule F. Diluted EPS from discontinued operations for the first quarter of fiscal 2008 was $0.82, which included $0.01 from discontinued operations and $0.81 from the gain on the sales of two businesses. The Board of Directors declared a cash dividend for the first quarter of fiscal 2008 of $0.18 per outstanding share of common stock. The dividend will be paid on March 26, 2008 to all shareholders of record at the close of business on March 7, 2008. Net cash provided by operating activities in the first quarter of fiscal 2008 totaled $177 million, or 28.9% of total revenue, compared to $183 million, or 29.3% of total revenue, in the immediately prior quarter and $208 million, or 33.2% of total revenue, in the same period one year ago. * Capital expenditures for the first quarter of fiscal 2008 totaled $40 million. * Cash dividends paid during the first quarter of fiscal 2008 totaled $54 million. * Share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. during the first quarter of fiscal 2008 of approximately 12 million shares of ADI common stock (approximately 4% of total shares outstanding) totaled $359 million. * The share repurchase program authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: by the Board of Directors had approximately $306 million remaining at the end of the first quarter of fiscal 2008. Balance Sheet * Cash and short-term investments at the end of the first quarter of fiscal 2008 totaled approximately $1.3 billion. * Inventory at the end of the first quarter of fiscal 2008 increased by approximately $6 million compared to the immediately prior quarter. Days cost of sales in inventory was 127 days at the end of the first quarter of fiscal 2008, compared to 119 days in the immediately prior quarter. * Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying at the end of the first quarter of fiscal 2008 increased 5% compared to accounts receivable at the end of the immediately prior quarter. A high rate of shipments in the last month of the first quarter was the primary reason for the increase. Sequential Revenue Analysis for the First Quarter of Fiscal 2008 * Industrial Market: 49% of product revenue Revenue from the industrial market, which includes factory automation, medical and scientific instrumentation, automotive, security, and defense applications, increased by 1% compared to the immediately prior quarter. Within this end market, revenue from automotive and semiconductor automatic test equipment (ATE) applications decreased, while revenue from other instrumentation and defense applications increased. * Communications Market: 23% of product revenue Revenue from the communications market increased by 6% compared to the immediately prior quarter. Wireless infrastructure applications, as well as analog products used in mobile devices, drove the sequential increase in revenue. * Consumer Market: 22% of product revenue Revenue from consumer customers decreased sequentially by 12% in the first quarter of fiscal 2008 after an 11% sequential increase in the fourth quarter of fiscal 2007, which was consistent with normal seasonal trends. * Computer Market: 6% of product revenue Revenue from the computer market declined by 4% compared to the immediately prior quarter after strong sequential gains in the fourth quarter of fiscal 2007 in preparation for the holiday season. "With the divestitures of two businesses completed, we have improved our product portfolio by focusing on areas where innovative signal processing technologies can give our customers a competitive edge and our shareholders strong returns," said Jerald G. Fishman Jerald G. Fishman has served as Chief Executive Officer and President of Analog Devices since November 1996. He is a 35 year veteran of Analog Devices and also serves on the Board of Directors of Cognex Corporation and Xilinx Inc. , ADI's president and chief executive officer. "These strategic initiatives led to increased margins in the first quarter and are expected to continue to drive further improvements in our long-term financial performance." Outlook for the Second Quarter of Fiscal 2008 The following statements are based on current expectations. These statements are forward looking and actual results may differ materially. These statements supersede To obliterate, replace, make void, or useless. Supersede means to take the place of, as by reason of superior worth or right. A recently enacted statute that repeals an older law is said to supersede the prior legislation. all prior statements regarding business outlook set forth in prior ADI news releases. Regarding the outlook for the second quarter of fiscal 2008, Mr. Fishman said, "Order rates improved and the backlog increased in the first quarter compared to the prior quarter, providing us with a positive outlook for second quarter demand. At the same time, we are mindful mind·ful adj. Attentive; heedful: always mindful of family responsibilities. See Synonyms at careful. mind of ongoing concerns about the general economy." * Revenue for the second quarter of fiscal 2008 is planned to be in the range of $615 to $640 million, or approximately flat to up 4% on a sequential basis. * Gross margin for the second quarter of fiscal 2008 is planned to be approximately equal to the first quarter of fiscal 2008. * Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are planned to increase in the second quarter of fiscal 2008 primarily as a result of annual salary increases which took effect at the beginning of the quarter. * Diluted EPS from continuing operations for the second quarter of fiscal 2008 is planned to be in the range of $0.39 to $0.42. Diluted EPS from discontinued operations for the second quarter of fiscal 2008 is planned to be $0.01. Conference Call Scheduled for 5:00 Mr. Fishman will discuss the first quarter's results and the near-term outlook via webcast, accessible from www.analog.com, today beginning at 5:00 pm ET. Investors who prefer to join by telephone may 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 one week by dialing 800-642-1687 (replay only) and providing the conference ID: 34214341 or by visiting the Investor Relations Investor relations The process by which the corporation communicates with its investors. page on ADI's web site. Non-GAAP Financial Information This release includes non-GAAP financial measures for prior periods that are not in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with, nor an alternative to, generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting 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. Manner in Which Management Uses the Non-GAAP Financial Measures Management uses non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP diluted earnings per share to evaluate the Company's operating performance against past periods and to budget and allocate resources in future periods. These non-GAAP measures also assist management in understanding and evaluating the underlying baseline 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. Tables reconciling our non-GAAP measures to GAAP measures are provided in this release. The following items are excluded from our Non-GAAP gross margin: Non-Recurring Revenue Associated with the License of Certain Intellectual Property Rights to a Third Party. On November 9, 2006, we received a one-time, non-recurring payment of $35 million in exchange for granting a license of certain intellectual property rights to a third party. This payment increased revenue in the first quarter of fiscal 2007 by $35 million. We exclude this item and the related tax effects from our non-GAAP results because it is a one-time item not associated with the ongoing operations of our business. The following items are excluded from our Non-GAAP operating expenses: Restructuring-Related Expense. These expenses are incurred in connection with facility closures and other reorganization efforts. Apart from ongoing expense savings as a result of such items, these expenses and the related tax effects have no direct correlation Noun 1. direct correlation - a correlation in which large values of one variable are associated with large values of the other and small with small; the correlation coefficient is between 0 and +1 positive correlation to the operation of our business in the future. The following items are excluded from our Non-GAAP operating income: Non-Recurring Revenue Associated with the License of Certain Intellectual Property Rights to a Third Party. On November 9, 2006, we received a one-time, non-recurring payment of $35 million in exchange for granting a license of certain intellectual property rights to a third party. This payment increased revenue in the first quarter of fiscal 2007 by $35 million. We exclude this item and the related tax effects from our non-GAAP results because it is a one-time item not associated with the ongoing operations of our business. Restructuring-Related Expense. These expenses are incurred in connection with facility closures and other reorganization 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 items are excluded from our Non-GAAP diluted earnings per share: Non-Recurring Revenue Associated with the License of Certain Intellectual Property Rights to a Third Party. On November 9, 2006, we received a one-time, non-recurring payment of $35 million in exchange for granting a license of certain intellectual property rights to a third party. This payment increased revenue in the first quarter of fiscal 2007 by $35 million. We exclude this item and the related tax effects from our non-GAAP results because it is a one-time item not associated with the ongoing operations of our business. Acquisition-Related Expense. During the first quarter of fiscal 2007, we recorded a tax adjustment when we finalized See finalization. the accounting associated with an acquisition which occurred in the fourth quarter of fiscal 2006. We excluded this income tax expense from our non-GAAP results because it was not associated with the income tax expense on our current operating results. Restructuring-Related Expense. These expenses are incurred in connection with facility closures and other reorganization 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. Gain on Sale of Investment. We realized a gain of $8 million in the first quarter of fiscal 2007 from the sale of a minority shareholding in a company. We excluded this amount and the related tax effects because it is a one-time item not associated with our ongoing operating results. Tax Adjustment Associated with IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. Examination. During the fourth quarter of fiscal year 2007, the IRS completed its field examination of fiscal years 2004 and 2005. They have issued proposed adjustments related to these two fiscal years. We have provided $4.4 million for taxes and penalties related to certain of these proposed adjustments. We exclude this income tax expense from our non-GAAP results because it is not associated with the income tax expense on our current operating results. Tax Savings Associated with Reinstatement Reinstatement The restoration of an insurance policy after it has lapsed for nonpayment of premiums. of the Federal R&D Tax Credit. The R&D tax credit was reinstated in December 2006, retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a to January 1, 2006. This retroactive reinstatement resulted in a $10 million income tax savings to the Company in the first quarter of fiscal 2007. We excluded this income tax savings from our non-GAAP measures because it is not associated with the income 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 gross margin, non-GAAP operating expenses, non-GAAP operating income, 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 gross margin, non-GAAP operating expenses, non-GAAP operating income, 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 in 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 gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP diluted earnings per share by also evaluating our GAAP results and the reconciliations of our non-GAAP measures to the most directly comparable GAAP measure. Investors should consider our non-GAAP financial measures in conjunction with the corresponding GAAP measures. About Analog Devices, Inc. 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 Imagine feeding the output of a temperature sensor, which is in millivolts, to an Analog-to-digital converter to be processed. Is it possible for the Analog-to-Digital converter to process such a minute voltage amplitude? The answer is probably no. technology, Analog Devices serves over 60,000 customers, representing virtually all types of electronic equipment. Celebrating over 40 years as a leading global manufacturer of high-performance integrated circuits Integrated circuits Miniature electronic circuits produced within and upon a single semiconductor crystal, usually silicon. Integrated circuits range in complexity from simple logic circuits and amplifiers, about 1/20 in. (1. used in analog and digital signal processing See DSP. Digital Signal Processing - (DSP) Computer manipulation of analog signals (commonly sound or image) which have been converted to digital form (sampled). applications, Analog Devices is headquartered in Norwood, Massachusetts Norwood is a town and census-designated place in Norfolk County, Massachusetts, USA. As of the 2000 census, the population was 28,587. The community was named after Norwood, England. , with design and manufacturing facilities throughout the world. Analog Devices' common stock is listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the ticker ticker An automated quotation system on which security transactions are reported after they occur on an exchange floor. Even though the newer systems are electronic and no longer actually tick, the name of the old mechanical device has stuck. "ADI" and is included in the S&P 500 Index. Safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 This release may be deemed to contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, our statements regarding expected sales growth, revenue, earnings, operating expenses, gross margins, and other financial results, and expected increases in profit leverage, customer demand and order rates for our products, and ADI's future R&D investment and product development strategies that are based on our current expectations, beliefs, assumptions, estimates, forecasts, and projections about 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 here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . 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: the effects of changes in customer demand for our products and for end products that incorporate our products, competitive pricing pressures, unavailability of raw materials or wafer fabrication Wafer Fabrication is a procedure composed of many repeated sequential processes to produce complete electrical or photonic circuits. Examples include production of radio frequency (RF) amplifiers, LEDs, optical computer components, and CPUs for computers. , assembly and test capacity, any delay or cancellation of significant customer orders, any inability to manage inventory to meet customer demand, changes in geographic, product or customer mix, adverse changes in economic conditions in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and international markets, adverse results in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. matters, our recent divestitures may involve unexpected costs, thereby reducing the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to ADI; 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. The use of the word partner does not imply a partnership relationship between Analog Devices and any other company. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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