DocumentExhibit 99.1
Analog Devices Reports Third Quarter Fiscal 2020 Results with Revenue and EPS Above the Midpoint of Guidance
•Revenue of $1.46 billion increased 11% sequentially, led by growth in the communications and industrial markets
•Operating cash flow of $2.0 billion and free cash flow of $1.8 billion on a trailing twelve months basis
•Announced agreement to acquire Maxim Integrated Products Inc. in the quarter, further strengthening ADI’s analog semiconductor leadership position
NORWOOD, Mass.--(BUSINESS WIRE)--August 19, 2020--Analog Devices, Inc. (Nasdaq: ADI), a leading global high-performance analog technology company, today announced financial results for its third quarter of fiscal 2020, which ended August 1, 2020.
“We executed exceptionally well in this uncertain environment. Our quarterly results came in above the midpoint of our revised outlook, which is a testament to the dedication of our talented global team and the resilience of our diversified business. Revenue growth was led by strength across our industrial and communications markets, and both gross and operating margins returned within the range of our financial model,” said Vincent Roche, President and CEO of Analog Devices.
Roche continued, “Our recently announced acquisition of Maxim will further expand our technology capabilities, grow our cadre of talented engineers, and deliver significant benefits for our stakeholders. Together, we will continue to push the limits of innovation and create more complete solutions for our customers, staying ahead of what’s possible for decades to come.”
Performance for the Third Quarter of Fiscal 2020
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Results Summary(1) | | | | | |
| (in millions, except per-share amounts and percentages) | | | | | |
| | | | | |
| Three Months Ended | | | | |
| Aug. 1, 2020 | | Aug. 3, 2019 | | Change |
| Revenue | $ | 1,456 | | | $ | 1,480 | | | (2) | % |
| | | | | |
| | | | | |
| | | | | |
| Gross margin | $ | 973 | | | $ | 998 | | | (3) | % |
| Gross margin percentage | 66.8 | % | | 67.4 | % | | (60 bps) |
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| Operating income | $ | 419 | | | $ | 447 | | | (6) | % |
| Operating margin | 28.8 | % | | 30.2 | % | | (140 bps) |
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| Diluted earnings per share | $ | 0.97 | | | $ | 0.97 | | | — | % |
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| Adjusted Results | | | | | |
| Adjusted gross margin | $ | 1,018 | | | $ | 1,042 | | | (2) | % |
| Adjusted gross margin percentage | 69.9 | % | | 70.4 | % | | (50 bps) |
| Adjusted operating income | $ | 616 | | | $ | 604 | | | 2 | % |
| Adjusted operating margin | 42.3 | % | | 40.8 | % | | 150 bps |
| Adjusted diluted earnings per share | $ | 1.36 | | | $ | 1.26 | | | 8 | % |
| | | | | |
| | | Three Months Ended | | Trailing Twelve Months |
| Cash Generation | | | Aug. 1, 2020 | | Aug. 1, 2020 |
| Net cash provided by operating activities | | | $ | 557 | | | $ | 1,994 | |
| % of revenue | | | 38 | % | | 36 | % |
| Capital expenditures | | | $ | (21) | | | $ | (187) | |
| Free cash flow | | | $ | 536 | | | $ | 1,807 | |
| % of revenue | | | 37 | % | | 33 | % |
| | | | | |
| | | Three Months Ended | | Trailing Twelve Months |
| Cash Return | | | Aug. 1, 2020 | | Aug. 1, 2020 |
| Dividend paid | | | $ | (229) | | | $ | (857) | |
| Stock repurchases | | | (18) | | | (410) | |
| Total cash returned | | | $ | (247) | | | $ | (1,266) | |
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| (1) The sum and/or computation of the individual amounts may not equal the total due to rounding. | | | | | |
Outlook for the Fourth Quarter of Fiscal Year 2020
For the fourth quarter of fiscal 2020, we are forecasting revenue of $1.44 billion, +/- $70 million. At the midpoint of this revenue outlook, we expect reported operating margins of approximately 31.0%, +/-140 bps, and adjusted operating margins of approximately 42.0%, +/-100 bps. We are planning for reported EPS to be $0.95, +/-$0.10, and adjusted EPS to be $1.32, +/-$0.10.
Our fourth quarter fiscal 2020 outlook is based on current expectations and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this release. These statements supersede all prior statements regarding our business outlook set forth in prior ADI news releases, and ADI disclaims any obligation to update these forward-looking statements.
The adjusted results and adjusted anticipated results above are financial measures presented on a non-GAAP basis. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are provided in the financial tables included in this press release. See also “Non-GAAP Financial Information” section for additional information.
Dividend Payment
The ADI Board of Directors has declared a quarterly cash dividend of $0.62 per outstanding share of common stock. The dividend will be paid on September 9, 2020 to all shareholders of record at the close of business on August 28, 2020.
Conference Call Scheduled for Today, Wednesday, August 19, 2020 at 10:00 am ET
ADI will host a conference call to discuss our third quarter fiscal 2020 results and short-term outlook today, beginning at 10:00 am ET. Investors may join via webcast, accessible at investor.analog.com, or by telephone (call 800-859-9560, or 706-634-7193 for international calls, ten minutes before the call begins and provide the password "ADI").
A replay will be available two hours after the completion of the call. The replay may be accessed for up to two weeks by dialing 855-859-2056 (replay only) and providing the conference ID: 4911219, or by visiting investor.analog.com.
Non-GAAP Financial Information
This release includes non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. These non-GAAP measures have material limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and should not be considered in isolation from, or as a substitute for, the Company’s financial results presented in accordance with GAAP. The Company’s use of non-GAAP measures, and the underlying methodology when including or 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. You are cautioned not to place undue reliance on these non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.
Management uses non-GAAP measures internally to evaluate the Company’s operating performance from continuing operations against past periods and to budget and allocate resources in future periods. These non-GAAP measures also assist management in evaluating the Company’s core business and trends across different reporting periods on a consistent basis. Management also uses these non-GAAP measures as the primary performance measurement when communicating with analysts and investors regarding the Company’s earnings results and outlook and believes that the presentation of these non-GAAP measures is useful to investors because it provides investors with the operating results that management uses to manage the Company and enables investors and analysts to evaluate the Company’s core business. Management also believes that the non-GAAP liquidity measure free cash flow is useful both internally and to investors because it provides information about the amount of cash generated after capital expenditures that is then available to repay debt obligations, make investments and fund acquisitions, and for certain other activities.
The non-GAAP financial measures referenced by ADI in this release include: adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted operating expenses percentage, adjusted operating income, adjusted operating margin, adjusted income before income taxes, adjusted provision for income taxes, adjusted tax rate, adjusted diluted earnings per share (EPS), free cash flow, and free cash flow margin percentage.
Adjusted gross margin is defined as gross margin, determined in accordance with GAAP, excluding certain acquisition related expenses1 which are described further below. Adjusted gross margin percentage represents adjusted gross margin divided by revenue.
Adjusted operating expenses is defined as operating expenses, determined in accordance with GAAP, excluding: certain acquisition related expenses1; acquisition related transaction costs2; restructuring related expense3; and charitable foundation contribution4 which are described further below. Adjusted operating expenses percentage represents adjusted operating expenses divided by revenue.
Adjusted operating income is defined as operating income, determined in accordance with GAAP, excluding: acquisition related expenses1; acquisition related transaction costs2; restructuring related expense3; and charitable foundation contribution4 which are described further below. Adjusted operating margin represents adjusted operating income divided by revenue.
Adjusted income before income taxes is defined as income before income taxes, determined in accordance with GAAP, excluding: acquisition related expenses1; acquisition related transaction costs2; restructuring related expense3; and charitable foundation contribution4 which are described further below.
Adjusted provision for income taxes is defined as provision for income taxes, determined in accordance with GAAP, excluding tax related items5 which are described further below. Adjusted tax rate represents adjusted provision for income taxes divided by adjusted income before income taxes.
Adjusted diluted EPS is defined as diluted EPS, determined in accordance with GAAP, excluding: acquisition related expenses1; acquisition related transaction costs2; restructuring related expense3; charitable foundation contribution4; and tax related items5 which are described further below.
Free cash flow is defined as net cash provided by operating activities, determined in accordance with GAAP, less additions to property, plant and equipment, net. Free cash flow margin percentage represents free cash flow divided by revenue.
1Acquisition Related Expenses: Expenses incurred as a result of current and prior period acquisitions and primarily include expenses associated with the fair value adjustments to inventory, property, plant and equipment and amortization of acquisition related intangibles, which include acquired intangibles such as purchased technology and customer relationships. Expenses also include severance payments, equity award accelerations, and the fair value adjustment associated with the replacement of share-based awards related to the Linear Technology
acquisition. We excluded these costs from our non-GAAP measures because they relate to specific transactions and are not reflective of our ongoing financial performance.
2Acquisition Related Transaction Costs: Costs directly related to the proposed Maxim Integrated Products, Inc. acquisition, including legal, accounting and other professional fees. We excluded these costs from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.
3Restructuring Related Expense: Expenses incurred in connection with facility closures, consolidation of manufacturing facilities, severance, other accelerated stock-based compensation expense and other cost reduction efforts or reorganizational initiatives. We excluded these expenses from our non-GAAP measures because apart from ongoing expense savings as a result of such items, these expenses have no direct correlation to the operation of our business in the future.
4Charitable Foundation Contribution: Expenses incurred in connection with a one time contribution of registered shares of common stock to the Analog Devices Foundation. We excluded this expense from our non-GAAP measures because this expense has no direct correlation to the operation of our business in the future.
5Tax Related Items: Income tax effect of the non-GAAP items discussed above and income tax from certain discrete tax items related to the resolution of the IRS audit of Linear’s pre-acquisition federal income tax returns for fiscal year 2015 through fiscal year 2017 and other discrete income tax benefits upon filing of our fiscal 2019 federal income tax return, the impact of the Tax Cuts and Jobs Act of 2017 and other deferred tax recalibration adjustments, income tax from certain uncertain tax positions, the impact of a voluntary accounting policy change and income tax from prior period tax credits. We excluded these tax related items from our non-GAAP measures because they are not associated with the tax expense on our current operating results.
About Analog Devices
Analog Devices (Nasdaq: ADI) is a leading global high-performance analog technology company dedicated to solving the toughest engineering challenges. We enable our customers to interpret the world around us by intelligently bridging the physical and digital with unmatched technologies that sense, measure, power, connect and interpret. Visit http://www.analog.com.
Forward Looking Statements
This press release contains forward-looking statements, which address a variety of subjects including, for example, our statements regarding our proposed acquisition of Maxim Integrated Products, Inc. (“Maxim”); the impact of the COVID-19 pandemic on our business, financial condition and results of operations; expected revenue, operating margin, tax rate, earnings per share, and other financial results; expected market trends, market share gains, operating leverage, production and inventory levels; expected customer demand and order rates for our products and expected product offerings; product development; and marketing position. Statements that are not historical facts, including statements about our beliefs, plans and expectations, are forward-looking statements. Such statements are based on our current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: the uncertainty as to the extent of the duration, scope and impacts of the COVID-19 pandemic; political and economic uncertainty, including any faltering in global economic conditions or the stability of credit and financial markets; erosion of consumer confidence and declines in customer spending; unavailability of raw materials, services, supplies or
manufacturing capacity; changes in geographic, product or customer mix; changes in export classifications, import and export regulations or duties and tariffs; changes in our or Maxim’s estimates of our respective expected tax rates based on current tax law; our ability to successfully integrate Maxim’s businesses and technologies; the risk that the expected benefits and synergies of the proposed transaction and growth prospects of the combined company may not be fully achieved in a timely manner, or at all; adverse results in litigation matters, including the potential for litigation related to the proposed transaction; the risk that we or Maxim will be unable to retain and hire key personnel; the risk associated with our and Maxim’s ability to obtain the approvals of our respective shareholders required to consummate the proposed transaction and the timing of the closing of the proposed transaction, including the risk that the conditions to the transaction are not satisfied on a timely basis or at all or the failure of the transaction to close for any other reason or to close on the anticipated terms, including the anticipated tax treatment; the risk that any regulatory approval, consent or authorization that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated; unanticipated difficulties or expenditures relating to the transaction, the response of business partners and retention as a result of the announcement and pendency of the transaction; uncertainty as to the long-term value of our common stock; the diversion of management time on transaction-related matters;
our ability to successfully integrate acquired businesses and technologies; and the risk that expected benefits, synergies and growth prospects of acquisitions may not be fully achieved in a timely manner, or at all. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our filings with the Securities and Exchange Commission (“SEC”), including the risk factors contained in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Forward-looking statements represent management’s current expectations and are inherently uncertain. Except as required by law, we do not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.
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.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
Additional Information about the Merger and Where to Find It
In connection with the proposed transaction, on August 18, 2020, Analog Devices, Inc. (“ADI”) filed with the SEC a registration statement on Form S-4 that includes a preliminary joint proxy statement of ADI and Maxim and that also constitutes a preliminary prospectus of ADI (the “preliminary joint proxy statement/prospectus”). If and when the registration statement becomes effective and the preliminary joint proxy statement/prospectus is in definitive form (the “definitive joint proxy statement/prospectus”), the definitive joint proxy statement/prospectus will be mailed to shareholders of ADI and stockholders of Maxim. Each of ADI and Maxim may also file other relevant documents with the SEC regarding the proposed transaction. This document is not a substitute for the registration statement, the preliminary joint
proxy statement/prospectus, the definitive joint proxy statement/prospectus, or any other document that ADI or Maxim have or may file with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS, DEFINITIVE JOINT PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT HAVE BEEN OR MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the registration statement and definitive joint proxy statement/prospectus (if and when available) and other documents containing important information about ADI, Maxim and the proposed transaction, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by ADI will be available free of charge on ADI’s website at http://www.analog.com or by contacting ADI’s Investor Relations Department by email at investor.relations@analog.com or by phone at 781-461-3282. Copies of the documents filed with the SEC by Maxim will be available free of charge on Maxim’s website at investor.maximintegrated.com or by contacting Maxim’s Investor Relations department by phone at 408-601-5697.
Participants in the Solicitation
ADI, Maxim and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of ADI, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in ADI’s proxy statement for its 2020 annual meeting of shareholders, which was filed with the SEC on January 24, 2020, and ADI’s Annual Report on Form 10-K for the fiscal year ended November 2, 2019, which was filed with the SEC on November 26, 2019. Information about the directors and executive officers of Maxim, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in Maxim’s proxy statement for its 2019 annual meeting of shareholders, which was filed with the SEC on September 27, 2019, and Maxim’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019, which was filed with the SEC on August 21, 2019. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the preliminary joint proxy statement/prospectus and will be contained in the definitive joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction when such materials become available. Investors should carefully read the preliminary joint proxy statement/prospectus and the definitive joint proxy statement/prospectus when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from ADI or Maxim using the sources indicated above.
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | Nine Months Ended | | |
| Aug. 1, 2020 | | | | Aug. 3, 2019 | | Aug. 1, 2020 | | Aug. 3, 2019 |
| Revenue | $ | 1,456,136 | | | | | $ | 1,480,143 | | | $ | 4,076,761 | | | $ | 4,547,846 | |
| | | | | | | | | |
| | | | | | | | | |
| Cost of sales | 483,558 | | | | | 482,332 | | | 1,409,367 | | | 1,476,287 | |
| Gross margin | 972,578 | | | | | 997,811 | | | 2,667,394 | | | 3,071,559 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | | |
| Research & development | 260,794 | | | | | 280,102 | | | 770,280 | | | 853,330 | |
| Selling, marketing, general and administrative | 153,753 | | | | | 162,825 | | | 494,808 | | | 493,295 | |
| Amortization of intangibles | 107,077 | | | | | 107,231 | | | 321,448 | | | 321,816 | |
| Special charges | 31,830 | | | | | 927 | | | 44,286 | | | 30,871 | |
| | | | | | | | | |
| Total operating expenses | 553,454 | | | | | 551,085 | | | 1,630,822 | | | 1,699,312 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Operating income | 419,124 | | | | | 446,726 | | | 1,036,572 | | | 1,372,247 | |
| | | | | | | | | |
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| | | | | | | | | |
| Nonoperating expense (income): | | | | | | | | | |
| Interest expense | 45,914 | | | | | 59,871 | | | 144,712 | | | 178,300 | |
| Interest income | (504) | | | | | (2,625) | | | (3,778) | | | (8,241) | |
| Other, net | 685 | | | | | (78) | | | 1,331 | | | 4,287 | |
| 46,095 | | | | | 57,168 | | | 142,265 | | | 174,346 | |
| Income before income tax | 373,029 | | | | | 389,558 | | | 894,307 | | | 1,197,901 | |
| Provision for income taxes | 10,364 | | | | | 27,184 | | | 60,072 | | | 112,584 | |
| | | | | | | | | |
| Net income | $ | 362,665 | | | | | $ | 362,374 | | | $ | 834,235 | | | $ | 1,085,317 | |
| | | | | | | | | |
| Shares used to compute earnings per common share - basic | 368,791 | | | | | 369,533 | | | 368,417 | | | 369,160 | |
| Shares used to compute earnings per common share - diluted | 372,003 | | | | | 373,077 | | | 371,857 | | | 372,967 | |
| | | | | | | | | |
| Basic earnings per common share | $ | 0.98 | | | | | $ | 0.98 | | | $ | 2.26 | | | $ | 2.93 | |
| Diluted earnings per common share | $ | 0.97 | | | | | $ | 0.97 | | | $ | 2.24 | | | $ | 2.90 | |
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ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
| | | | | | | | | | | | | |
| Aug. 1, 2020 | | Nov. 2, 2019 | | |
| Cash & cash equivalents | $ | 1,090,264 | | | $ | 648,322 | | | |
| Accounts receivable | 681,728 | | | 635,136 | | | |
| Inventories | 612,646 | | | 609,886 | | | |
| | | | | |
| Other current assets | 100,599 | | | 91,782 | | | |
| Total current assets | 2,485,237 | | | 1,985,126 | | | |
| Net property, plant and equipment | 1,134,236 | | | 1,219,989 | | | |
| Other investments | 82,953 | | | 77,324 | | | |
| Goodwill | 12,273,799 | | | 12,256,880 | | | |
| Intangible assets, net | 3,796,932 | | | 4,217,224 | | | |
| Deferred tax assets | 1,522,772 | | | 1,582,382 | | | |
| Other assets | 303,639 | | | 53,716 | | | |
| Total assets | $ | 21,599,568 | | | $ | 21,392,641 | | | |
| | | | | |
| Other current liabilities | $ | 1,238,452 | | | $ | 1,208,965 | | | |
| Debt, current | 449,324 | | | 299,667 | | | |
| Long-term debt | 5,143,653 | | | 5,192,252 | | | |
| Deferred income taxes | 1,961,009 | | | 2,088,212 | | | |
| Other non-current liabilities | 1,029,570 | | | 894,357 | | | |
| Shareholders' equity | 11,777,560 | | | 11,709,188 | | | |
| Total liabilities & equity | $ | 21,599,568 | | | $ | 21,392,641 | | | |
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | Nine Months Ended | | | | |
| Aug. 1, 2020 | | Aug. 3, 2019 | | Aug. 1, 2020 | | | | Aug. 3, 2019 |
| | | | | | | | | |
| Cash flows from operating activities: | | | | | | | | | |
| Net income | $ | 362,665 | | | $ | 362,374 | | | $ | 834,235 | | | | | $ | 1,085,317 | |
Adjustments to reconcile net income to net cash provided by operations: | | | | | | | | | |
| Depreciation | 57,598 | | | 61,606 | | | 176,722 | | | | | 179,041 | |
| Amortization of intangibles | 143,865 | | | 142,521 | | | 431,985 | | | | | 427,046 | |
| Stock-based compensation expense | 39,560 | | | 36,098 | | | 112,961 | | | | | 112,720 | |
| Non-cash portion of special charge | — | | | — | | | — | | | | | 4,367 | |
| Deferred income taxes | (7,412) | | | (33,601) | | | (42,802) | | | | | (55,444) | |
| Non-cash contribution to charitable foundation | — | | | — | | | 40,000 | | | | | — | |
| Other non-cash activity | 1,874 | | | 8,272 | | | 5,675 | | | | | 26,701 | |
| Changes in operating assets and liabilities | (40,950) | | | (24,724) | | | (222,887) | | | | | (184,552) | |
| Total adjustments | 194,535 | | | 190,172 | | | 501,654 | | | | | 509,879 | |
| Net cash provided by operating activities | 557,200 | | | 552,546 | | | 1,335,889 | | | | | 1,595,196 | |
| | | | | | | | | |
| Percent of revenue | 38.3 | % | | 37.3 | % | | 32.8 | % | | | | 35.1 | % |
| Cash flows from investing activities: | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Additions to property, plant and equipment | (20,804) | | | (58,094) | | | (135,804) | | | | | (224,297) | |
| Payments for acquisitions, net of cash acquired | (12,763) | | | — | | | (12,763) | | | | | — | |
| Changes in other assets | 70 | | | (547) | | | (1,214) | | | | | (5,132) | |
| Net cash used for investing activities | (33,497) | | | (58,641) | | | (149,781) | | | | | (229,429) | |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Proceeds from debt | — | | | 1,250,000 | | | 395,646 | | | | | 1,250,000 | |
| Early termination of debt | — | | | (1,250,000) | | | — | | | | | (1,250,000) | |
| Payments on revolver | — | | | — | | | (350,000) | | | | | (75,000) | |
| Proceeds from revolver | — | | | — | | | 350,000 | | | | | 75,000 | |
| Debt repayments | — | | | (300,000) | | | (300,000) | | | | | (650,000) | |
| Dividend payments to shareholders | (228,798) | | | (200,068) | | | (656,558) | | | | | (577,285) | |
| Repurchase of common stock | (17,651) | | | (112,001) | | | (237,265) | | | | | (440,616) | |
| Proceeds from employee stock plans | 26,853 | | | 19,228 | | | 57,750 | | | | | 106,135 | |
| | | | | | | | | |
| Changes in other financing activities | 436 | | | (1,774) | | | (4,015) | | | | | (7,918) | |
| Net cash used for financing activities | (219,160) | | | (594,615) | | | (744,442) | | | | | (1,569,684) | |
| Effect of exchange rate changes on cash | 784 | | | (727) | | | 276 | | | | | (510) | |
| | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | 305,327 | | | (101,437) | | | 441,942 | | | | | (204,427) | |
| Cash and cash equivalents at beginning of period | 784,937 | | | 713,601 | | | 648,322 | | | | | 816,591 | |
| Cash and cash equivalents at end of period | $ | 1,090,264 | | | $ | 612,164 | | | $ | 1,090,264 | | | | | $ | 612,164 | |
ANALOG DEVICES, INC.
REVENUE TRENDS BY END MARKET
(Unaudited)
(In thousands)
The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" customer information and the end customer product or application into which our product will be incorporated. As data systems for capturing and tracking this data and our methodology evolve and improve, the categorization of products by end market can vary over time. When this occurs, we reclassify revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.
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| Three Months Ended | | | | | | | | |
| Aug. 1, 2020 | | | | | | Aug. 3, 2019 | | |
| Revenue | | % of revenue* | | Y/Y % | | Revenue | | % of revenue* |
| Industrial | $ | 774,353 | | | 53% | | 3% | | $ | 753,118 | | | 51% |
| Communications | 363,613 | | | 25% | | 14% | | 319,250 | | | 22% |
| Automotive | 162,480 | | | 11% | | (29)% | | 228,235 | | | 15% |
| Consumer | 155,690 | | | 11% | | (13)% | | 179,540 | | | 12% |
| Total revenue | $ | 1,456,136 | | | 100% | | (2)% | | $ | 1,480,143 | | | 100% |
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| Nine Months Ended | | | | | | | | |
| Aug. 1, 2020 | | | | | | Aug. 3, 2019 | | |
| Revenue | | % of revenue* | | Y/Y % | | Revenue | | % of revenue* |
| Industrial | $ | 2,174,183 | | | 53% | | (4)% | | $ | 2,262,597 | | | 50% |
| Communications | 880,921 | | | 22% | | (14)% | | 1,030,283 | | | 23% |
| Automotive | 551,395 | | | 14% | | (22)% | | 708,711 | | | 16% |
| Consumer | 470,262 | | | 12% | | (14)% | | 546,255 | | | 12% |
| Total revenue | $ | 4,076,761 | | | 100% | | (10)% | | $ | 4,547,846 | | | 100% |
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| *The sum of the individual percentages may not equal the total due to rounding. | | | | | | | | | |
ANALOG DEVICES, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(Unaudited)
(In thousands, except per share amounts)
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| Three Months Ended | | | | Nine Months Ended | | |
| Aug. 1, 2020 | | Aug. 3, 2019 | | Aug. 1, 2020 | | Aug. 3, 2019 |
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| Gross margin | $ | 972,578 | | | $ | 997,811 | | | $ | 2,667,394 | | | $ | 3,071,559 | |
| Gross margin percentage | 66.8 | % | | 67.4 | % | | 65.4 | % | | 67.5 | % |
| Acquisition related expenses | 45,222 | | | 43,694 | | | 134,633 | | | 130,444 | |
| Adjusted gross margin | $ | 1,017,800 | | | $ | 1,041,505 | | | $ | 2,802,027 | | | $ | 3,202,003 | |
| Adjusted gross margin percentage | 69.9 | % | | 70.4 | % | | 68.7 | % | | 70.4 | % |
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| Operating expenses | $ | 553,454 | | | $ | 551,085 | | | $ | 1,630,822 | | | $ | 1,699,312 | |
| Percent of revenue | 38.0 | % | | 37.2 | % | | 40.0 | % | | 37.4 | % |
| Acquisition related expenses | (110,460) | | | (112,636) | | | (333,298) | | | (339,293) | |
| Acquisition related transaction costs | (9,121) | | | — | | | (9,121) | | | — | |
| Charitable foundation contribution | — | | | — | | | (40,000) | | | — | |
| Restructuring related expense | (31,830) | | | (927) | | | (44,287) | | | (30,871) | |
| Adjusted operating expenses | $ | 402,043 | | | $ | 437,522 | | | $ | 1,204,116 | | | $ | 1,329,148 | |
| Adjusted operating expenses percentage | 27.6 | % | | 29.6 | % | | 29.5 | % | | 29.2 | % |
| | | | | | | |
| Operating income | $ | 419,124 | | | $ | 446,726 | | | $ | 1,036,572 | | | $ | 1,372,247 | |
| Operating margin | 28.8 | % | | 30.2 | % | | 25.4 | % | | 30.2 | % |
| Acquisition related expenses | 155,682 | | | 156,330 | | | 467,931 | | | 469,737 | |
| Acquisition related transaction costs | 9,121 | | | — | | | 9,121 | | | — | |
| Charitable foundation contribution | — | | | — | | | 40,000 | | | — | |
| Restructuring related expense | 31,830 | | | 927 | | | 44,287 | | | 30,871 | |
| Adjusted operating income | $ | 615,757 | | | $ | 603,983 | | | $ | 1,597,911 | | | $ | 1,872,855 | |
| Adjusted operating margin | 42.3 | % | | 40.8 | % | | 39.2 | % | | 41.2 | % |
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| Provision for income taxes | $ | 10,364 | | | $ | 27,184 | | | $ | 60,072 | | | $ | 112,584 | |
| Income tax effect of adjustments above | 29,266 | | | 20,927 | | | 79,413 | | | 68,567 | |
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| Income tax from certain discrete tax items | 25,951 | | | 28,365 | | | 25,951 | | | 40,925 | |
| | | | | | | |
| Adjusted provision for income taxes | $ | 65,581 | | | $ | 76,476 | | | $ | 165,436 | | | $ | 222,076 | |
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| Income before income taxes | 373,029 | | | 389,558 | | | 894,307 | | | 1,197,901 | |
| Effective tax rate | 2.8 | % | | 7.0 | % | | 6.7 | % | | 9.4 | % |
| Acquisition related expenses | 155,682 | | | 156,330 | | | 467,931 | | | 469,737 | |
| Acquisition related transaction costs | 9,121 | | | — | | | 9,121 | | | — | |
| Charitable foundation contribution | — | | | — | | | 40,000 | | | — | |
| Restructuring related expense | 31,830 | | | 927 | | | 44,287 | | | 30,871 | |
| Adjusted income before income taxes | $ | 569,662 | | | $ | 546,815 | | | $ | 1,455,646 | | | $ | 1,698,509 | |
| Adjusted tax rate | 11.5 | % | | 14.0 | % | | 11.4 | % | | 13.1 | % |
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| Diluted EPS | $ | 0.97 | | | $ | 0.97 | | | $ | 2.24 | | | $ | 2.90 | |
| Acquisition related expenses | 0.42 | | | 0.42 | | | 1.26 | | | 1.26 | |
| Acquisition related transaction costs | 0.02 | | | — | | | 0.02 | | | — | |
| Charitable foundation contribution | — | | | — | | | 0.11 | | | — | |
| Restructuring related expense | 0.09 | | | — | | | 0.12 | | | 0.08 | |
| Income tax effect of adjustments above | (0.08) | | | (0.06) | | | (0.21) | | | (0.18) | |
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| Income tax from certain discrete tax items | (0.07) | | | (0.08) | | | (0.07) | | | (0.11) | |
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| Adjusted diluted EPS (1) | $ | 1.36 | | | $ | 1.26 | | | $ | 3.47 | | | $ | 3.96 | |
(1) The sum of the individual per share amounts may not equal the total due to rounding.
ANALOG DEVICES, INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(Unaudited)
(In thousands)
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| Trailing Twelve Months | | Three Months Ended | | | | | | |
| Aug. 1, 2020 | | Aug. 1, 2020 | | May 2, 2020 | | Feb. 1, 2020 | | Nov. 2, 2019 |
| Revenue | $ | 5,519,980 | | | $ | 1,456,136 | | | $ | 1,317,060 | | | $ | 1,303,565 | | | $ | 1,443,219 | |
| Net cash provided by operating activities | $ | 1,993,794 | | | $ | 557,200 | | | $ | 429,041 | | | $ | 349,648 | | | $ | 657,905 | |
| % of Revenue | 36 | % | | 38 | % | | 33 | % | | 27 | % | | 46 | % |
| Capital expenditures | $ | (186,880) | | | $ | (20,804) | | | $ | (60,161) | | | $ | (54,839) | | | $ | (51,076) | |
| Free cash flow | $ | 1,806,914 | | | $ | 536,396 | | | $ | 368,880 | | | $ | 294,809 | | | $ | 606,829 | |
| % of Revenue | 33 | % | | 37 | % | | 28 | % | | 23 | % | | 42 | % |
ANALOG DEVICES, INC.
RECONCILIATION OF PROJECTED GAAP TO NON-GAAP RESULTS
(Unaudited)
| | | | | | | | | | | |
| Three Months Ending October 31, 2020 | | |
| Reported | | Adjusted |
| Revenue | $1.44 Billion | | $1.44 Billion |
| (+/- $70 Million) | | (+/- $70 Million) |
| Operating margin | 31.0% | | 42.0% (1) |
| (+/-140 bps) | | (+/-100 bps) |
| Nonoperating expense | ~ $46 Million | | ~ $46 Million |
| Tax rate | 12% to 13% | | 12% to 13% (2) |
| Earnings per share | $0.95 | | $1.32 (3) |
| (+/- $0.10) | | (+/- $0.10) |
(1) Includes $157 million of adjustments related to acquisition related expenses as previously defined in the Non-GAAP Financial Information section of this press release.
(2) Includes $22 million of tax effects associated with the adjustment for acquisition related expenses above.
(3) Includes $0.36 of adjustments related to the net impact of $0.42 of acquisition related expenses and $0.06 of tax effects on those acquisition related expenses.
(ADI-WEB)
For more information, please contact:
Investor Contact:
Analog Devices, Inc.
Mr. Michael Lucarelli
Sr. Director of Investor Relations
781-461-3282
investor.relations@analog.com
Media Contacts:
Teneo
Ms. Andrea Calise
917-826-3804
andrea.calise@teneo.com
Teneo
Ms. Megan Fenton
917-860-0356
megan.fenton@teneo.com