Analog Devices Reports Results for the Fourth Quarter and Fiscal Year 2003.Business Editors/High-Tech Writers NORWOOD, Mass.--(BUSINESS WIRE)--Nov. 18, 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. , Inc. (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 $558 million for the fourth quarter of fiscal 2003, an increase of 22% compared to the same quarter one year ago and 7% above the immediately prior quarter. 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). ) was $0.23 for the fourth quarter, up from $0.09 for the same period one year ago and $0.21 for the third quarter of fiscal 2003. The fourth quarter results include a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $9.2 million ($0.02 per share) related to the decision to exit a small manufacturing business in Europe that was supplying foundry substrate The base layer of a structure such as a chip, multichip module (MCM), printed circuit board or disk platter. Silicon is the most widely used substrate for chips. Fiberglass (FR4) is mostly used for printed circuit boards, and ceramic is used for MCMs. services for optical applications. Excluding this charge, the 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 would have been $0.25 for the fourth quarter. Revenues for the fiscal year 2003, which ended November 1, 2003, were $2.05 billion, up 20% year-over-year. Fiscal 2003 diluted EPS increased to $0.78, up from the fiscal 2002 EPS of $0.28. "The fourth quarter wrapped up what turned out to be a great year for ADI," said Mr. 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. . "Continuing strong orders led to fourth-quarter revenues coming in higher than we had anticipated at the beginning of the quarter, with substantial contributions from both analog and 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. "In the fourth quarter, orders for shipment in the next 13 weeks grew by approximately 30% from the prior quarter. Orders grew in every region of the world and in both the distributor and 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 channels. Order growth continued to be the strongest in Asia as the digital consumer, wireless terminal and PC markets all posted strong results. We also saw strong demand from our broad base of customers serving all other end markets. "Gross margins for the fourth quarter of fiscal 2003 increased to 55.8% of sales, up from 55.1% of sales in the prior quarter. Days cost of sales in inventory fell to 106 days in the fourth quarter compared to 116 days in the previous quarter." Commenting on the balance sheet Mr. Fishman said, "The balance sheet continued to strengthen during the fourth quarter. Cash from operations was $105 million and capital expenditures were limited to $18 million, resulting in 'free cash flow' of $87 million. During the quarter we redeemed our $1.2 billion of convertible debt and ended the quarter with $2.1 billion of cash and short-term investment balances and no debt." Regarding the near-term outlook, Mr. Fishman said, "We are planning for the recovery that began seven quarters ago for ADI to continue in the first quarter of fiscal 2004. Demand accelerated during the fourth quarter and we are entering the first quarter with the highest level of backlog we have seen over the last two years. As a result, we are planning for revenues to grow approximately 5% sequentially and for EPS to be in the range of $0.27 to $0.28 in the first quarter of fiscal 2004." In a separate press release issued today, the company announced that the Board of Directors of ADI declared a cash dividend of $0.04 per outstanding share of common stock. The dividend will be paid on December 17, 2003 to all stockholders of record at the close of business on November 28, 2003. Mr. Fishman will discuss the fourth quarter's results and the near-term outlook via webcast, accessible from www.analog.com, today beginning at 4:30 pm EST EST electroshock therapy. EST abbr. electroshock therapy . Investors who prefer to join by telephone may call 706-634-7544 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: 3205589 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 Data The Company has presented diluted earnings per share net of the restructuring charge discussed above. The Company believes that this data reflects results for the Company's normal 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 and facilitates comparisons to prior periods. 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 8,400 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 press release contains 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. , including our statements regarding planned revenues, earnings and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , 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, currency exchange rate fluctuations, 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, 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 ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , 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 August 2, 2003, as filed with the Securities and Exchange Commission.
Analog Devices Supplemental Information, Fourth Quarter, Fiscal 2003
Sales/Earnings Summary
(In thousands of dollars, except per-share amounts)
4Q 03 3Q 03 4Q 02
Three Months Ended Nov 1, 2003 Aug 2, 2003 Nov 2, 2002
Net Sales $557,517 $520,445 $455,718
Y/Y Growth 22% 17% 8%
Q/Q Growth 7% 4% 2%
Cost of Sales 246,605 233,846 213,084
Gross Margin 310,912 286,599 242,634
Percent of Sales 55.8% 55.1% 53.2%
Operating Expenses:
R&D 112,418 111,668 107,104
Selling, Marketing and G&A 75,007 72,178 69,204
Acquisition-related expenses(a) 2,664 2,660 16,402
Restructuring Costs 9,193 341 6,315
Investment Impairment - - 2,090
Operating Income 111,630 99,752 41,519
Other (Income) Expense (649) (1,474) (4,841)
Income Before Tax 112,279 101,226 46,360
Provision for Taxes 24,252 22,270 11,590
Tax Rate 22% 22% 25%
Net Income $88,027 $78,956 $34,770
Shares used for EPS - Basic 368,511 366,025 364,019
Shares used for EPS - Diluted 387,381 384,166 377,285
Earnings per Share - Basic $0.24 $0.22 $0.10
Earnings per Share - Diluted $0.23 $0.21 $0.09
Twelve Months Ended Nov 1, 2003 Nov 2, 2002
Net Sales $2,047,268 $1,707,508
Y/Y Growth 20% -25%
Cost of Sales 923,160 802,980
Gross Margin 1,124,108 904,528
Percent of Sales 54.9% 53.0%
Operating Expenses:
R&D 442,025 410,116
Selling, Marketing and G&A 288,009 257,054
Acquisition-related expenses(a) 10,831 70,626
Restructuring Costs 9,534 37,399
Investment Impairment - 7,669
Goodwill Impairment - 3,426
Operating Income 373,709 118,238
Other (Income) Expense (8,127) (22,112)
Income Before Tax 381,836 140,350
Provision for Taxes 83,555 35,051
Tax Rate 22% 25%
Net Income $298,281 $105,299
Shares used for EPS - Basic 365,485 364,194
Shares used for EPS - Diluted 382,227 381,245
Earnings per Share - Basic $0.82 $0.29
Earnings per Share - Diluted $0.78 $0.28
(a) Acquisition-related goodwill is no longer amortized effective
November 3, 2002, in accordance with FAS 142.
Analog Devices Supplemental Information, Fourth Quarter, Fiscal 2003
Selected Balance Sheet Information
(In thousands of dollars)
4Q 03 3Q 03 4Q 02
Nov 1, 2003 Aug 2, 2003 Nov 2, 2002
Cash & Short-term Investments $2,116,743 $3,229,365 $2,898,023
Accounts Receivable, Net 294,781 259,134 228,338
Inventories 287,502 296,940 306,391
Other Current Assets 186,690 198,554 191,473
Total Current Assets 2,885,716 3,983,993 3,624,225
PP&E, Net 671,140 697,841 780,904
Investments 341,573 297,533 279,605
Intangible Assets 172,019 172,673 174,637
Other 22,429 96,028 120,820
Total Assets $4,092,877 $5,248,068 $4,980,191
Current Liabilities $342,132 $373,446 $373,364
Deferred income-shipments to
distributors 121,345 112,607 110,271
Long-term Debt - 1,263,266 1,274,020
Non-Current Lease Obligations - 191 467
Non-Current Liabilities 341,326 334,888 322,053
Stockholders' Equity 3,288,074 3,163,670 2,900,016
Total Liabilities & Equity $4,092,877 $5,248,068 $4,980,191
Capital Expenditures, Depreciation & Amortization
(In thousands of dollars)
4Q 03 3Q 03 4Q 02
Three Months Ended Nov 1, 2003 Aug 2, 2003 Nov 2, 2002
Capital Expenditures $18,358 $20,076 $15,930
Depreciation $39,320 $42,297 $48,567
Amortization of Goodwill &
Intangibles(a) $660 $656 $14,207
Twelve Months Ended Nov 1, 2003 Nov 2, 2002
Capital Expenditures $67,735 $57,412
Depreciation $165,659 $181,129
Amortization of Goodwill &
Intangibles(a) $2,624 $56,873
(a) Acquisition-related goodwill is no longer amortized effective
November 3, 2002, in accordance with FAS 142.
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