Analog Devices Announces Financial Results for the Fourth Quarter and for Fiscal Year 2007.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) - Q4 Revenue: $699 million, less $50 million for discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , totaled $649 million 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 , up 6% year-to-year, up 2% sequentially - Q4 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 (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. : $0.31 GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , or $0.39 non-GAAP, which excluded $0.08 of one-time items - Q4 Gross Margin of 58.4% of revenue from continuing operations on a GAAP and on a non-GAAP basis - Q4 Operating Profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. from continuing operations: 18.7% of revenue GAAP, or 22.6% non-GAAP - Planned divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of 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 & radio business benefited gross margin by 140 basis points and operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by 160 basis points in Q4; Income after tax for this discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: business was $1.5 million in Q4; Diluted EPS was unchanged - Q4 Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). Totaled $25 Million: ADI plans transfer of wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. production in Ireland from 6" to 8" capacity & other operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. reductions - Q4 Shares Outstanding Decreased 11% Compared to Year-Ago Quarter: Stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. totaled $318 million during Q4 - Board of Directors declares quarterly dividend of $0.18 per share - Financial results for Q4 and guidance for the first quarter of fiscal 2008 will be discussed via conference call today at 5:00 pm Except where noted, all financial results are from continuing operations. The wireless handset 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). & 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 was accounted for in the fourth quarter as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Thus, the Company's fourth quarter revenue excluded $50 million from this business. Please refer to the section below titled "Divestitures" for more information. ADI has excluded only one-time or non-recurring items from non-GAAP measures. Commencing in the fourth quarter, we are no longer excluding stock-based compensation expense and amortization of acquisition-related expense from our non-GAAP measures. The Company has provided a reconciliation of the non-GAAP financial measures presented in this release to their most directly comparable GAAP measures in a table below. Analog Devices, Inc. (NYSE: ADI), a global leader in high-performance semiconductors for signal processing See DSP. applications, today announced financial results for the fourth quarter of fiscal 2007, which ended November 3, 2007. Results for the entire fiscal year are included under the heading, Summary for the Fiscal Year 2007. Revenue Revenue from continuing operations in the fourth quarter of fiscal 2007 increased to $648.5 million, an increase of approximately 6% compared to the same period one year ago and an increase of approximately 2% compared to the immediately prior quarter. Revenue in the fourth quarter excluded $50.3 million from discontinued operations. "The fourth quarter was a solid quarter for ADI," 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. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Revenue and earnings were in line with our expectations for the quarter. We are entering 2008 with a better balanced product portfolio, capable of good growth and strong profit leverage." Diluted EPS of $0.31 Included $0.08 for Restructuring Expense & Tax Adjustments 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) for the fourth quarter of fiscal 2007, on a non-GAAP basis for continuing operations, was $0.39, compared to $0.35 for the same period one year ago and $0.38 for the immediately prior quarter. The results for the fourth quarter of fiscal 2007 include the following items: * $25 million charge, or $0.064 on a diluted EPS basis, related to planned operating expense reductions and the decision to transfer wafer production capacity at ADI's Limerick Limerick, city, Republic of Ireland Limerick, city (1991 pop. 56,083), seat of Co. Limerick, SW Republic of Ireland, at the head of the Shannon estuary. The city has a port with two docks. , Ireland manufacturing facility from 6" to 8" technology * $4.4 million charge, or $0.014 on a diluted EPS basis, which is a one-time tax adjustment related to the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. examination of fiscal years 2004 and 2005 Together these items represented the $0.08 difference between GAAP diluted EPS of $0.31 and non-GAAP diluted EPS of $0.39. Fourth Quarter Revenue Summary The tables, "Revenue Trends By End Market" and "Revenue Trends By Product," provided below, summarize sum·ma·rize intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es To make a summary or make a summary of. sum revenue by end market and by product for the fourth quarter, the immediately prior quarter and the year-ago quarter, as well as for fiscal years 2006 and 2007. Revenue growth during the fourth quarter was highest for consumer products, which grew by 17% compared to the same period one year ago and grew sequentially by 11%. Sequential growth was driven by very strong sales growth from products used in digital cameras and digital TVs. Revenue from consumer products represented 23% of revenue in the fourth quarter. Industrial customer revenue represented 46% of revenue in the fourth quarter, increased 4% compared to the same period one year ago, and was approximately equal to the immediately prior quarter. On a sequential basis, revenue within the industrial category increased for the automotive and the defense end markets, decreased for semiconductor automatic test equipment (ATE), and was unchanged for the broad base of industrial customers. Communications customer revenue represented 21% of revenue in the fourth quarter, increased 9% from the same quarter last year, and declined sequentially by 7%. After strong growth last quarter, revenue from base station and networking customers declined sequentially. Computer customer revenue was 10% of revenue in the fourth quarter and declined 8% from the same quarter last year. Revenue from computer customers grew 13% sequentially, in-line with industry trends. By geographic region, revenue for the fourth quarter increased sequentially in Europe by 9%, in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. by 4%, and in Japan by 5%. Revenue decreased in China by 14%, following very strong sequential growth in the prior quarter, and was relatively unchanged in the rest of Asia Pacific. Gross Margin Gross margin from continuing operations in the fourth quarter of fiscal 2007 was $379 million, or 58.4% of revenue. Gross margin declined sequentially by 50 basis points due to strong sequential revenue growth from products used in consumer and computer applications, which in aggregate have gross margin below the Company average, and sequential revenue declines from products used in semiconductor automatic test equipment (ATE) and communications base station and networking applications, which have gross margin above the Company average. Operating Profit Operating profit from continuing operations for the fourth quarter of fiscal 2007 totaled $121 million, or 18.7% of revenue. Operating profit was reduced by $25 million, or 3.9% of revenue, as a result of restructuring-related expenses. Non-GAAP operating profit was 22.6% of revenue, which was equal to the prior quarter. Net Cash Net cash provided by operating activities in the fourth quarter of fiscal 2007 totaled $183 million, or 28.2% of revenue. Capital expenditures for the fourth quarter of fiscal year 2007 totaled $33 million, or 5% of revenue. Cash Dividend Cash dividends paid during the fourth quarter of fiscal 2007 totaled $55 million. On November 26, 2007, the Board of Directors declared a cash dividend of $0.18 per outstanding share of common stock which will be paid on December 26, 2007 to all shareholders of record at the close of business on December 7, 2007. Shares Outstanding Decreased 11% Compared to Year-Ago Quarter 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 fourth quarter of fiscal 2007 of approximately 8.6 million shares of ADI common stock totaled $318 million and represented approximately 2.8% of the shares outstanding as of the beginning of the fourth quarter. * $3.3 billion in share repurchases, representing approximately 95 million shares, or 25.1% of the shares outstanding, have been repurchased since the beginning of the fourth quarter of fiscal year 2004. * The share repurchase program had approximately $665 million in authorization The right or permission to use a system resource; the process of granting access. See access control. remaining at the end of the fourth quarter of 2007. Balance Sheet Inventory at the end of the fourth quarter of fiscal 2007 decreased $11 million, or approximately 3%, compared to the immediately prior quarter. Days cost of revenue in inventory was 118 days at the end of the fourth quarter of fiscal 2007, compared to 133 days a year ago and 125 days at the end of the immediately prior quarter. Days sales in 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 was 47 days, unchanged from the immediately prior quarter. Days sales in accounts receivable was 46 days at the end of fiscal year 2006. Summary for the Fiscal Year 2007 2007 Product Highlights: * Product revenue grew 7% in fiscal year 2007 and totaled $2.5 billion. Product revenue excludes the one-time payment of $35 million received in the first quarter of fiscal 2007 in exchange for granting a license of certain intellectual property rights to a third party. * Analog product revenue represented 90% of product revenue for ADI and increased 9% in fiscal 2007. * Converter (1) A device that changes one set of codes, modes, sequences or frequencies to a different set. See A/D converter. (2) A device that changes current from 60Hz to 50Hz and vice versa. product revenue represented 44% of product revenue and increased 8% for the year. * Amplifier product revenue represented 22% of product revenue and increased 5% for the year. * Power management and reference revenue represented 8% of product revenue and declined 6% for the year. Excluding 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 product line, which is planned to be divested, revenue declined 2% for the year. * Revenue from other analog products, such as Micro-Electro Mechanical Systems (MEMS (MicroElectroMechanical Systems) Tiny mechanical devices that are built onto semiconductor chips and are measured in micrometers. In the research labs since the 1980s, MEMS devices began to materialize as commercial products in the mid-1990s. ) and Radio Frequency (RF) products, represented 16% of product revenue and increased 27% for the year. * General-purpose 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). (DSP (1) (Digital Signal Processor) A special-purpose CPU used for digital signal processing applications (see definition #2 below). It provides ultra-fast instruction sequences, such as shift and add, and multiply and add, which are commonly used in math-intensive ) product revenue represented 9% of product revenue and increased 4% for the year. 2007 End Market Highlights: * More than $1 billion in revenue, or 47% of product revenue, came from the broad based industrial end market in fiscal year 2007, a 7% increase year-to-year. Medical, security, automotive, defense, and instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. applications all contributed to growth during the year. * Revenue from consumer applications was 22% of product revenue and grew significantly during 2007, increasing 23%, with digital TVs, digital cameras, home theatre and video games See video game console. as the primary drivers. * Revenue from communications applications was 22% of product revenue and increased 7% during 2007. * Revenue from computer applications was 9% of product revenue and declined 17% year-to-year, primarily as a result of the Company's decision to deemphasize power management products used in desktop and laptop computers A portable computer that has a flat LCD screen and usually weighs less than eight pounds. Often called just a "laptop," it uses batteries for mobile use and AC power for charging the batteries and desktop use. Today's high-end laptops provide all the capabilities of most desktop computers. . Net cash provided by operating activities totaled $820 million, or 32.2% of total revenue in fiscal year 2007, compared to $621 million, or 26.5% of total revenue, in the prior year. Gross margin totaled $1.5 billion, or 59.7% of revenue, for the fiscal year 2007. In the prior year, gross margin totaled $1.4 billion, or 59.9% of revenue, and included approximately $20 million, or 0.9% of revenue, in restructuring related expenses. Excluding non-recurring items, non-GAAP gross margin was 59.1% of revenue in fiscal year 2007 compared to 60.8% in the prior year. Gross margin as a percentage of product revenue declined compared to the prior year primarily as a result of strong growth in revenue from products used in consumer applications where gross margin as a percentage of revenue is generally below the Company average. 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. totaled $953 million in fiscal year 2007 compared to $881 million in the prior year. In fiscal year 2007, ADI increased spending in R&D by approximately $50 million, primarily to support strategic analog product development programs. In addition, in fiscal year 2007, the Company recorded $40 million in special charges. Operating margin totaled $566 million, or 22.2% of revenue, for the fiscal year 2007. Excluding non-recurring or one time items, non-GAAP operating margin as a percentage of product revenue was 22.4% in fiscal 2007 versus 24.2% in the prior year. This decline was primarily due to the decline in gross margin. Diluted EPS from continuing operations was $1.51 for the fiscal year 2007, compared to $1.39 for the prior year. Excluding non-recurring or one time items, non-GAAP diluted EPS from continuing operations was $1.48 in fiscal year 2007 as compared to $1.35 in the prior year. The increase was primarily the result of the share repurchases which reduced the diluted shares 10.4%. Divestitures During the fourth quarter, on September 9, 2007, ADI signed a definitive agreement to sell its wireless handset baseband chipset and radio transceiver operation. This business represented $50.3 million of revenue in the fourth quarter of fiscal year 2007. The previously announced divestiture of this business is expected to close in the first quarter of fiscal 2008. ADI has accounted for the divested operation as a discontinued operation. Assets and liabilities related to this business, including inventory, accounts receivable, and property plant and equipment have been reclassified as such. After accounting for assets included in the sale and other costs, the sale is expected to result in a pre-tax gain of approximately $280 to $290 million and an after tax gain of approximately $150 to $160 million. After accounting for the wireless handset baseband and radio business as a discontinued operation in the fourth quarter of fiscal 2007, gross margin as a percentage of revenue increased 140 basis points and non-GAAP operating margin as a percentage of revenue increased 160 basis points. Diluted EPS was unchanged. "The financial rationale for divesting this business is important, but equally important is the improved strategic clarity this brings to our ongoing investment decisions," explained Mr. Fishman. "We plan to continue to develop other products for the wireless handset market, but we will focus our investments in products where we offer technology that is differentiated and provides sustainable value Sustainable Value Sustainable Value is an approach to measure and manage sustainability performance. The concept was developed by researchers who are working today for Queen's University Belfast to leading handset manufacturers -- products that improve energy efficiency, music and voice quality, picture quality, and the overall user experience." On November 8, 2007, during the first quarter of fiscal 2008, ADI signed a definitive agreement to sell its CPU voltage regulation and PC thermal monitoring operation. This business represented approximately $25 million of revenue during the fourth quarter. The previously announced divestiture of this business is expected to close in the first quarter of fiscal 2008. This business is reported with continuing operations in the fourth quarter of fiscal 2007 and will be included in discontinued operations beginning in the first quarter of fiscal 2008. To facilitate an orderly orderly /or·der·ly/ (or´der-le) an attendant in a hospital who works under the direction of a nurse. or·der·ly n. An attendant in a hospital. transfer of the business to the buyer, at closing ADI expects to enter into a pre-paid one-year manufacturing supply arrangement whereby ADI will continue to manufacture the products at its 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. facility in Limerick, Ireland. After accounting for assets included in the sale, other costs and the prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. manufacturing supply agreement, the sale is expected to
result in a pre-tax gain of approximately $85 to $92 million and an
after tax gain of approximately $52 to $60 million.
Outlook for the First 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. Beginning in the first quarter of fiscal 2008, the CPU Voltage Regulation and PC Thermal Monitoring business will be accounted for as a discontinued operation. Please refer to the table, "Assumptions Used to Estimate Results for the First Quarter Ending February 2, 2008," or Schedule H, for details. * Revenue from continuing operations for the first quarter of fiscal 2008 is planned to be in the range of +2% to -2% from the fourth quarter of fiscal 2007. * Gross margin from continuing operations for the first quarter of fiscal 2008 is planned to be slightly above 60% of revenue. * Operating expenses from continuing operations are planned to decrease slightly in the first quarter of fiscal 2008 compared to the immediately prior quarter, excluding the restructuring expense recorded in the fourth quarter and accounting for the CPU Voltage Regulation and PC Thermal Monitoring business as a discontinued operation. * The tax rate for the first quarter is estimated at 23% to 25%. * Non-operating income for the first quarter is estimated at $15 million. * Shares used for the diluted EPS calculation are estimated at 311 million. * Excluding the gains from the sales of the divested businesses, diluted EPS from continuing operations for the first quarter of fiscal 2008 is planned to be in the range of $0.38 to $0.42. Conference Call Scheduled for 5:00 Mr. Fishman will discuss the fourth 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: 24289706 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 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 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. 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. 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 expenses: Purchased In-Process R&D. We incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. in-process research and development expenses when technological feasibility for acquired technology has not been established and no future alternative use for such technology exists. We exclude these items because these expenses are not reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of ongoing operating results in the period incurred. 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. Proceeds from the one-time settlement of 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. . In the second quarter of fiscal 2007, we settled a lawsuit against Maxim Maxim (măk`sĭm), name of a family of inventors and munition makers. Sir Hiram Stevens Maxim, 1840–1916, was born near Sangerville, Maine. Integrated Products and received a one-time non-recurring payment of $19 million. A portion of this payment ($8.5 million) was to compensate us for the legal expenses we incurred during the years 2001 through 2007 in connection with this lawsuit. As the original legal expenses were recorded as general and administrative expenses in the income statement, we recorded the recovery of these legal expenses in the same line item in our operating expenses in the second quarter of fiscal 2007. The remaining $10.5 million was recorded as non-operating income in the second quarter of fiscal 2007 because it is not associated with the normal operations Generally and collectively, the broad functions that a combatant commander undertakes when assigned responsibility for a given geographic or functional area. Except as otherwise qualified in certain unified command plan paragraphs that relate to particular commands, "normal operations" of of our business. We exclude this payment 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 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. Purchased In-Process R&D. We incur in-process research and development expenses when technological feasibility for acquired technology has not been established and no future alternative use for such technology exists. We exclude these items because these expenses are not reflective of ongoing operating results in the period incurred. 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. Proceeds from the one-time settlement of litigation. In the second quarter of fiscal 2007, we settled a lawsuit against Maxim Integrated Products and received a one-time non-recurring payment of $19 million. A portion of this payment ($8.5 million) was to compensate us for the legal expenses we incurred during the years 2001 through 2007 in connection with this lawsuit. As the original legal expenses were recorded as general and administrative expenses in the income statement, we recorded the recovery of these legal expenses in the same line item in our operating expenses in the second quarter of fiscal 2007. The remaining $10.5 million was recorded as non-operating income in the second quarter of fiscal 2007 because it is not associated with the normal operations of our business. We exclude this payment 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 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. Purchased In-Process R&D. We incur in-process research and development expenses when technological feasibility for acquired technology has not been established and no future alternative use for such technology exists. We exclude these items because these expenses are not reflective of ongoing operating results in the period incurred. Acquisition-Related Expense. During the first quarter of fiscal 2007, we recorded a tax adjustment when we finalized See finalization. the accounting associated with our fourth quarter of fiscal 2006 acquisition. 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. Proceeds from the One-Time Settlement of Litigation. In the second quarter of fiscal 2007, we settled a lawsuit against Maxim Integrated Products and received a one-time non-recurring payment of $19 million. A portion of this payment ($8.5 million) was to compensate us for the legal expenses we incurred during the years 2001 through 2007 in connection with this lawsuit. As the original legal expenses were recorded as general and administrative expenses in the income statement, we recorded the recovery of these legal expenses in the same line item in our operating expenses in the second quarter of fiscal 2007. The remaining $10.5 million was recorded as non-operating income in the second quarter of fiscal 2007 because it is not associated with the normal operations of our business. We exclude this payment 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. Tax Savings Associated with IRS Tax Settlement. During the fourth quarter of fiscal 2006 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. Internal Revenue Service (the IRS) completed its examination of fiscal years 2001, 2002 and 2003 and issued their report. The Company agreed to accept their report and filed its 2005 tax return and an amended return Amended Return A return filed in order to make corrections to a tax return from a previous year. It can be used to correct errors and claim a more advantageous filing. Notes: An amended return is filed using Form 1040X. for 2004 to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the methodologies agreed to during the 2001-2003 examination. The completion of this examination and the filing of refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies claims in other jurisdictions associated with the completion of the IRS audit resulted in an income tax benefit. We excluded these income tax benefits from our non-GAAP results because they were not associated with the income tax expense on our current operating results. 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. Gain on the Sale of a Product Line. We realized a gain on the sale of our DSP-based DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary ASIC (Application Specific Integrated Circuit) Pronounced "a-sick." A chip that is custom designed for a specific application rather than a general-purpose chip such as a microprocessor. and network processor product line that we sold in the second quarter of fiscal 2006. This amount arose from prior activities and has no direct correlation to the ongoing business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Tax Adjustment Associated with IRS Examination. During the fourth quarter of fiscal year 2007, the IRS completed its field examination of fiscal years 2004 and 2005. Although the IRS has not issued its final report for fiscal 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 IRS reinstated the R&D tax credit 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 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 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. This press release also contains forward-looking statements regarding the divestiture of the Company's wireless handset baseband chipset and radio transceiver business, and its CPU voltage regulation and PC thermal monitoring business, the expected closing of those transactions, and the expected benefits of those transactions to ADI. 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: with respect to the divestitures described above, the closing of each of those transactions is subject to the receipt of regulatory approvals and other material closing conditions, any failure of which to satisfy may delay or prevent the closing of the relevant transaction; either or both transactions 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; the expected benefits of either or both transactions may not be achieved in a timely manner, or at all; and with respect to ADI's business generally, other 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, 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 and international markets, adverse results in litigation matters, and other risk factors described in our most recent Form 10-Q Form 10-Q See 10-Q. , as filed 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] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion