Analog Devices Reports Increased Revenue and Profits for Second Quarter of Fiscal Year 2003.Business Editors/High-Tech Writers NORWOOD, Mass.--(BUSINESS WIRE)--May 14, 2003 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. (NYSE NYSE See: New York Stock Exchange : ADI), a global leader in high-performance semiconductors for signal processing See DSP. applications, today announced revenues of $502 million and net income of $71.3 million for the second quarter of fiscal 2003, which ended May 3. Revenues increased 21% from the second quarter of fiscal 2002. Revenues increased 7% and net income increased 19% from the first quarter of fiscal 2003. The quarter's 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. ) under 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 (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) increased to $0.19, up from $0.04 in the same period a year ago and $0.16 in the first quarter of fiscal 2003. 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. increased sequentially to 17.6% of sales in the second quarter of fiscal 2003, up from 15.8% in the previous quarter. Gross margins increased sequentially to 54.5% of sales, while inventories declined sequentially and days cost in inventory declined to 117 days from 125 days last 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 days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). declined to 44 days from 45 days last quarter. In the second quarter of fiscal 2003, cash balances increased by $102 million after spending $14 million on capital equipment. Cash and short-term investment balances at the end of the second quarter of fiscal 2003 totaled $3.1 billion. "Both revenue and earnings were above the high end of estimates we provided on February 13, 2003, primarily as a result of stronger sales of analog products and continued strength in sales of 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 products," 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. . "Analog product revenues grew 7% sequentially and accounted for approximately 78% of revenues, and DSP products grew 8% sequentially and accounted for approximately 22% of revenues." "Growth this quarter was broad based with sales increasing across virtually all applications, across OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and and distributor channel customers and across all geographic regions," continued Mr. Fishman. "In the second quarter, orders for shipment in the next 13 weeks grew by approximately 16% from first quarter fiscal 2003 levels. Orders from both OEM customers and distributors grew sequentially and the book to bill ratio was well above one for the second quarter. Orders end customers placed with our distributors also grew sequentially and our distributors' book to bill ratio was above one." Regarding the near-term outlook, Mr. Fishman said, "We are planning for revenues to grow 3-5% sequentially during the third quarter. In addition, we are planning for gross margin to increase slightly. 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. will increase slightly due to salary increases for a portion of the employee population. As a result, GAAP diluted EPS are estimated at $0.20 to $0.21 for the third quarter of fiscal 2003." Mr. Fishman will discuss the second quarter's results and the near-term outlook via webcast, accessible from www.analog.com, today beginning at 4:30pm EST EST electroshock therapy. EST abbr. electroshock therapy . 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: 8963774 or by visiting the Investor Relations Investor relations The process by which the corporation communicates with its investors. page on ADI's web site. Analog Devices, Inc. is a leading manufacturer of precision 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. ADI 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. , and employs approximately 8,600 people worldwide. It has manufacturing facilities in Massachusetts, California, North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. , Ireland, the Philippines and the United Kingdom. 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. and ADI 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 contains forward-looking statements, including our statements regarding planned revenues, earnings and operating margins, 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 and involve certain risks, uncertainties and assumptions that are difficult to predict. 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. Important factors that may affect future operating results include the effects of adverse changes in overall economic conditions, the timing and duration of market upturns and downturns, the growth or contraction of the markets we serve, demand for semiconductors generally and for our products in particular, the risk that our backlog could decline significantly, the impact of severe acute respiratory syndrome Severe Acute Respiratory Syndrome (SARS) Definition Severe acute respiratory syndrome (SARS) is the first emergent and highly transmissible viral disease to appear during the twenty-first century. , or SARS, on our operations and markets, our ability to hire engineers and other qualified employees needed to meet the expected demands of our largest customers, reversals or slowdowns in the markets or customers served by our products, the adverse effects of building inventories to meet planned growth that fails to materialize, the occurrence and frequency of inventory and lead-time reduction cycles, raw material availability, availability of both internal and external manufacturing capacity, technological and product development risks, competitors' actions and technological innovations and other risk factors described in our Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the fiscal quarter ended February 1, 2003, as filed with the Securities and Exchange Commission.
Analog Devices Supplemental Information, Second Quarter, Fiscal 2003
Sales/Earnings Summary
(In thousands of dollars, except per-share amounts)
2Q 03 1Q 03 2Q 02
Three Months Ended May 3, February 1, May 4,
2003 2003 2002
Net Sales $501,883 $467,423 $413,368
Y/Y Growth 21% 19% -31%
Q/Q Growth 7% 3% 5%
Cost of Sales 228,423 214,286 192,537
Gross Margin 273,460 253,137 220,831
Percent of Sales 54.5% 54.2% 53.4%
Operating Expenses:
R&D 110,827 107,112 99,763
Selling, Marketing and G&A 71,509 69,315 62,354
Acquisition-related expenses(1) 2,658 2,849 17,292
Restructuring Costs - - 25,450
Investment Impairment - - 1,800
Operating Income 88,466 73,861 14,172
Other (Income) Expense (2,952) (3,052) (5,864)
Income Before Tax 91,418 76,913 20,036
Provision for Taxes 20,112 16,921 5,610
Tax Rate 22% 22% 28%
Net Income $71,306 $59,992 $14,426
Shares used for EPS - Basic 364,267 363,138 364,545
Shares used for EPS - Diluted 379,163 378,197 383,455
Earnings per Share - Basic $0.20 $0.17 $0.04
Earnings per Share - Diluted $0.19 $0.16 $0.04
Six Months Ended May 3, May 4,
2003 2002
Net Sales $969,306 $806,342
Y/Y Growth 20% -41%
Cost of Sales 442,709 381,714
Gross Margin 526,597 424,628
Percent of Sales 54.3% 52.7%
Operating Expenses:
R&D 217,939 198,213
Selling, Marketing and G&A 140,824 120,712
Acquisition-related expenses(1) 5,507 37,656
Restructuring Costs - 25,450
Investment Impairment - 1,800
Operating Income 162,327 40,797
Other (Income) Expense (6,004) (13,531)
Income Before Tax 168,331 54,328
Provision for Taxes 37,033 15,212
Tax Rate 22% 28%
Net Income $131,298 $39,116
Shares used for EPS - Basic 363,703 363,846
Shares used for EPS - Diluted 378,680 383,463
Earnings per Share - Basic $0.36 $0.11
Earnings per Share - Diluted $0.35 $0.10
(1) Acquisition-related goodwill is no longer amortized effective
November 3, 2002, in accordance with FAS 142.
Analog Devices Supplemental Information, Second Quarter, Fiscal 2003
Selected Balance Sheet Information
(In thousands of dollars)
2Q 03 1Q 03 2Q 02
May 3, February 1, May 4,
2003 2003 2002
Cash & Short-term Investments $3,101,483 $2,999,732 $2,908,964
Accounts Receivable, Net 242,767 231,422 221,524
Inventories 293,487 294,478 253,151
Other Current Assets 194,150 185,433 182,596
Total Current Assets 3,831,887 3,711,065 3,566,235
PP&E, Net 726,533 754,571 845,683
Investments 286,119 276,595 275,516
Intangible Assets 173,328 173,985 203,455
Other 117,446 116,086 61,877
Total Assets $5,135,313 $5,032,302 $4,952,766
Current Liabilities $367,492 $360,611 $418,046
Deferred income-shipments to
distributors 108,980 106,686 105,614
Long-term Debt 1,279,027 1,275,269 1,191,199
Non-Current Lease Obligations 237 247 2,592
Non-Current Liabilities 323,692 316,424 326,367
Stockholders' Equity 3,055,885 2,973,065 2,908,948
Total Liabilities & Equity $5,135,313 $5,032,302 $4,952,766
Capital Expenditures, Depreciation & Amortization
(In thousands of dollars)
2Q 03 1Q 03 2Q 02
Three Months Ended May 3, February 1, May 4,
2003 2003 2002
Capital Expenditures $14,348 $14,953 $15,679
Depreciation $42,503 $41,539 $44,718
Amortization of Goodwill &
Intangibles(2) $656 $652 $14,234
Six Months Ended May 3, May 4,
2003 2002
Capital Expenditures $29,301 $27,198
Depreciation $84,042 $87,215
Amortization of Goodwill &
Intangibles(2) $1,308 $28,339
(2) Acquisition-related goodwill is no longer amortized effective
November 3, 2002, in accordance with FAS 142.
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