Analog Devices Reports Results for the Fourth Quarter and Fiscal Year 2005; Board of Directors increases dividend to $0.12 per share for the quarter.NORWOOD Norwood. 1 Town (1990 pop. 28,700), Norfolk co., E Mass.; settled 1678, set off from Dedham and Walpole and inc. 1872. Chiefly residential, its industries include printing and publishing and the manufacture of plastics, apparel, computer software, and , 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), a global leader in high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" semiconductors for signal processing See DSP. applications, today announced revenue of $622 million for the fourth quarter of fiscal 2005, 7% above the immediately prior quarter and a decrease of 2% compared to the same quarter one year ago. 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 $0.18 for the fourth quarter, compared to $0.34 for the same period one year ago and $0.32 for the third quarter of fiscal 2005. The fourth quarter results were reduced by $0.18 associated with the previously announced restructuring charges 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. and the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of foreign earnings. The restructuring charge of $31.5 million impacted EPS by $0.05 and the additional tax expense of $49 million impacted EPS by $0.13. The Board of Directors declared a cash dividend for the fourth quarter of fiscal 2005 of $0.12 per outstanding share of common stock, compared to $0.10 declared in the previous quarter. The dividend will be paid on December December: see month. 14, 2005 to all shareholders of record at the close of business on November 25, 2005. Revenue for fiscal year 2005, which ended October 29, 2005, totaled $2.39 billion, a decline of 9% compared to fiscal year 2004. Compared to fiscal 2004 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 of $1.45, fiscal 2005 diluted EPS was $1.08, which was reduced by $0.18 due to the restructuring charges and the additional tax expense recorded in the fourth quarter of fiscal 2005. "The fourth quarter of fiscal 2005 turned out to be a very strong quarter for ADI, with revenue growing 7% sequentially, well above the level planned for the quarter," 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. of Analog Devices, Inc. "Our strongest sequential revenue growth came from the communications market, and in particular, from cellular telephones and from networking applications. In the fourth quarter, communications applications grew approximately 18% compared to the immediately prior quarter and represented 30% of sales. "We also enjoyed continuing strength from sales to consumer customers in applications areas such as digital cameras and advanced televisions, both areas where we are well-positioned with the market share leaders. In the fourth quarter, 16% of sales were to consumer customers and revenue from this end market grew 10% compared to the third quarter of fiscal 2005. "Revenue from computer customers increased by 3% in the fourth quarter compared to the immediately prior quarter. Computer customers represented approximately 15% of sales in the fourth quarter. "Revenue from our broad base of industrial customers, representing factory automation, medical instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. , defense and security systems, as well as automotive electronics, was approximately flat for the fourth quarter compared to the immediately prior quarter and totaled approximately 39% of sales." In the fourth quarter, analog product revenue increased 3% from the immediately prior quarter, increased 1% compared to the same period one year ago, and represented 81% of total sales. For the fiscal year 2005, revenue from analog products declined 7% year-over-year, after growing 31% in fiscal year 2004 and 16% in fiscal year 2003. 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. products, ADI's largest analog product category, represented 44% of total ADI sales in the fourth quarter as revenue increased 4% compared to the immediately prior quarter and 9% compared to the same period one year ago. For the fiscal year 2005, revenue from converter products was slightly lower than the previous year, after growing 31% in fiscal year 2004 and 25% in fiscal year 2003. 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 for the fourth quarter increased 26% from the immediately prior quarter, declined 11% compared to the same period one year ago, and represented 19% of sales. Revenue from general-purpose DSP products, which are included in DSP product revenue, represented approximately 7% of total ADI sales in the fourth quarter. General-purpose DSP product revenue, which is derived from a broad base of customers across many diverse applications, grew 2% in the fourth quarter compared to the immediately prior quarter and 13% compared to the same period one year ago. For fiscal year 2005, revenue from all DSP products declined 18% year-over-year, after growing 21% in fiscal year 2004 and 35% in fiscal year 2003. Gross margins for the fourth quarter were 58.3%, compared to 58.1% in the immediately prior quarter. Operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the fourth quarter totaled $123 million or approximately 20% of sales, after including $31.5 million of restructuring-related expense, which is equivalent to approximately 5% of sales. "Cash flow was very strong in the fourth quarter, with cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses totaling $200 million or approximately 32% of sales," said Mr. Fishman. "During the quarter, we spent $21 million on capital expenditures and we returned $278 million to shareholders by repurchasing approximately 6.7 million shares of ADI common stock for $241 million and by paying $37 million in cash dividends." In the fourth quarter, inventory declined sequentially by approximately $20 million, resulting in days cost of sales in inventory declining to 115 days. 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 balances remained under good control. Days sales in accounts receivable were 47 days for the fourth quarter. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Mr. Fishman, "Orders were strong in the fourth quarter in every region of the world with the exception of Europe where orders declined sequentially. Turns orders (orders booked and shipped during the quarter) remained high and comprised approximately 50% of sales for the fourth quarter. Inventory levels declined in distribution. This is all consistent with our continuing short lead times and the high turns environment in which we are still operating." Regarding the near-term outlook, Mr. Fishman said, "As we enter 2006, we are planning for a good year. Our 13-week backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at the beginning of the first quarter is 4% higher than last quarter. Due to the normal seasonality in the consumer and industrial markets, we are planning for first quarter revenue to be approximately equal to fourth quarter levels and for first quarter EPS to be approximately $0.31, which is reduced by approximately $0.05 of previously announced restructuring-related expense and stock-based compensation expense. The planned $7.7 million of restructuring-related expense is estimated to impact EPS by $0.01 and the estimated $20 million of stock-based compensation expense is expected to impact EPS by $0.04." ADI will begin expensing stock-based compensation in the first quarter of 2006. The company has provided a table at http://phx.corporate-ir.net/phoenix.zhtml?c=95455&p=irol-irHome which includes estimates of the impact of stock-based compensation and the impact of previously announced restructuring-related expenses on the company's 2006 quarterly financial statements. Regarding the balance of fiscal year 2006, Mr. Fishman said, "We are planning for sequential revenue growth to resume in the second quarter and for gross margins to continue to improve throughout the year as we increase the utilization of our internal 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. fabs. We intend to keep expenses tightly constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. , with most increases tied directly to improving financial performance. In aggregate, we are planning to hold the rate of expense growth well below the rate of sales growth and thereby continue to increase operating profits by a high percentage of the planned sales growth. We believe that throughout 2006 the breadth of our high performance analog and DSP technology and the diversity of applications where this technology helps differentiate our customers' end systems will continue to produce excellent results for our shareholders." 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 706-634-7193 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: 1856227 or by visiting the Investor Relations Investor relations The process by which the corporation communicates with its investors. page on ADI's web site. About Analog Devices Innovation, performance, and excellence are the cultural pillars on which Analog Devices has built one of the longest standing, highest growth companies within the technology sector. Acknowledged industry-wide as the world leader in data conversion and signal conditioning 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 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 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 revenue, 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 contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction 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 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 most recent Form 10-Q Form 10-Q See 10-Q. for the fiscal quarter ended July 30, 2005, as filed with the Securities and Exchange Commission.
Analog Devices Supplemental Information, Fourth Quarter, Fiscal 2005
Sales/Earnings Summary
(In thousands, except per-share amounts)
4Q 05 3Q 05 4Q 04
--------------------------------------------------------------------
Three Months Ended October 29, July 30, October 30,
2005 2005 2004
---------------------------------------------------------------------
Net Sales $ 622,130 $ 582,416 $ 632,124
Y/Y Growth -2% -19% 13%
Q/Q Growth 7% -4% -12%
Cost of Sales 259,455 244,178 255,832
Gross Margin 362,675 338,238 376,292
Percent of Sales 58.3% 58.1% 59.5%
----------------------------------------------------------------------
Operating Expenses:
R&D 123,704 119,217 131,798
Selling, Marketing and G&A 84,715 84,407 86,354
Special charges 31,480 - -
----------------------------------------------------------------------
Operating Income 122,776 134,614 158,140
Percent of Sales 19.7% 23.1% 25.0%
----------------------------------------------------------------------
Other (Income) Expense (21,890) (19,062) (13,077)
----------------------------------------------------------------------
Income Before Tax 144,666 153,676 171,217
Provision for Taxes 76,325 32,272 38,951
Tax Rate 53% 21% 23%
----------------------------------------------------------------------
Net Income $ 68,341 $ 121,404 $ 132,266
Percent of Sales 11% 21% 21%
----------------------------------------------------------------------
Shares used for EPS - Basic 369,945 370,985 376,064
Shares used for EPS - Diluted 380,607 382,830 389,257
Earnings per Share - Basic $ 0.18 $ 0.33 $ 0.35
Earnings per Share - Diluted $ 0.18 $ 0.32 $ 0.34
Dividends declared per share $ 0.10 $ 0.10 $ 0.06
----------------------------------------------------------------------
---------------------------------------------------------
Twelve Months Ended October 29, October 30,
2005 2004
---------------------------------------------------------
Net Sales $2,388,808 $2,633,800
Y/Y Growth -9% 29%
Cost of Sales 1,005,968 1,079,999
Gross Margin 1,382,840 1,553,801
Percent of Sales 57.9% 59.0%
---------------------------------------------------------
Operating Expenses:
R&D 497,097 514,442
Selling, Marketing and G&A 338,276 340,036
Special charges 31,480 -
---------------------------------------------------------
Operating Income 515,987 699,323
Percent of Sales 21.6% 26.6%
---------------------------------------------------------
Other (Income) Expense (71,703) (33,413)
---------------------------------------------------------
Income Before Tax 587,690 732,736
Provision for Taxes 172,903 161,998
Tax Rate 29% 22%
---------------------------------------------------------
Net Income $ 414,787 $ 570,738
Percent of Sales 17% 22%
---------------------------------------------------------
Shares used for EPS - Basic 371,791 375,031
Shares used for EPS - Diluted 383,474 392,854
Earnings per Share - Basic $ 1.12 $ 1.52
Earnings per Share - Diluted $ 1.08 $ 1.45
Dividends declared per share $ 0.32 $ 0.20
---------------------------------------------------------
Analog Devices Supplemental Information, Fourth Quarter, Fiscal 2005
Selected Balance Sheet Information
(In thousands)
4Q 05 3Q 05 4Q 04
--------------------------------------------------------------------
October 29, July 30, October 30,
2005 2005 2004
--------------------------------------------------------------------
Cash & Short-term Investments $2,705,942 $2,783,886 $2,684,970
Accounts Receivable, Net 320,523 302,375 330,183
Inventories 325,605 345,949 348,407
Other Current Assets 380,386 135,564 132,385
--------------------------------------------------------------------
Total Current Assets 3,732,456 3,567,774 3,495,945
PP&E, Net 599,906 617,038 667,779
Investments 45,365 280,110 317,017
Intangible Assets 167,576 167,404 169,382
Other 37,908 67,735 73,148
--------------------------------------------------------------------
Total Assets $4,583,211 $4,700,061 $4,723,271
--------------------------------------------------------------------
Deferred Income-Shipments to
Distributors $ 121,802 $ 131,031 $ 157,951
Other Current Liabilities 700,624 423,361 417,627
Non-Current Liabilities 69,284 310,950 348,121
Stockholders' Equity 3,691,501 3,834,719 3,799,572
--------------------------------------------------------------------
Total Liabilities & Equity $4,583,211 $4,700,061 $4,723,271
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Capital Expenditures, Depreciation & Amortization
(In thousands)
4Q 05 3Q 05 4Q 04
Three Months Ended October 29, July 30, October 30,
2005 2005 2004
---------------------------------------------------------------------
Capital Expenditures $ 21,029 $ 18,912 $ 38,296
Depreciation $ 38,054 $ 37,801 $ 37,757
Amortization of Intangibles $ 342 $ 672 $ 677
Twelve Months Ended October 29, October 30,
2005 2004
---------------------------------------------------------
Capital Expenditures $ 85,457 $ 146,245
Depreciation $ 153,181 $ 149,920
Amortization of Intangibles $ 2,383 $ 2,710
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