ANALOG DEVICES ANNOUNCES FINANCIAL RESULTS FOR THE THIRD QUARTER OF FISCAL YEAR 2008

Norwood, MA (08/19/2008) -

  • Revenue was $659 million, an increase of 1.5% sequentially and 7% year-over-year
  • Diluted EPS totaled $0.47 which included:
    • $0.44 from continuing operations
    • $0.03 from discontinued operations
  • Gross margin was 61% of revenue
  • Operating margin from continuing operations was 24.5% of revenue
  • Cash flow from operations was $196 million, or 30% of revenue
  • Board of Directors declared quarterly dividend of $0.20 per share
  • Financial results will be discussed via conference call today at 5:00 pm
Except where noted, all financial results contained in this release are from continuing operations. The sales of two businesses, the wireless handset baseband chipset and radio transceiver business and the CPU voltage regulation and PC thermal monitoring business, were completed during the first quarter of fiscal 2008. These two businesses are reported as discontinued operations.

Historical quarterly and annual financial information for continuing operations, including revenue by end market and by product type, is available on the Analog Devices Investor Relations web site at: http://investor.analog.com

Analog Devices, Inc. (NYSE: ADI), a global leader in high-performance semiconductors for signal processing applications, today announced financial results for the third quarter of fiscal 2008, which ended August 2, 2008.

Revenue for the third quarter of fiscal 2008
was $659 million, an increase of 1.5% from the immediately prior quarter and 7% from the same period one year ago.

Gross margin for the third quarter of fiscal 2008
was $402 million, or 61.0% of revenue, compared to $396 million, or 61.0% of revenue, in the immediately prior quarter, and $373 million, or 60.5% of revenue, for the same period one year ago.

Operating income from continuing operations for the third quarter of fiscal 2008
was $161 million, or 24.5% of revenue, compared to $157 million, or 24.2% of revenue, in the immediately prior quarter, and $145 million, or 23.6% of revenue, in the year ago period.

Diluted earnings per share (EPS) from continuing operations for the third quarter of fiscal 2008
was $0.44, consistent with $0.44 in the immediately prior quarter, and a 16% increase from $0.38 in the same period a year ago.

Diluted EPS from discontinued operations for the third quarter of fiscal 2008
was $0.03.

The Board of Directors declared a cash dividend for the third quarter of fiscal 2008 of $0.20 per outstanding share of common stock which will be paid on Sept. 17, 2008 to all shareholders of record at the close of business on August 29, 2008.

Net cash provided by operating activities in the third quarter of fiscal 2008
was $196 million, or 30% of revenue.

  • Capital expenditures for the third quarter of fiscal year 2008 totaled $39 million, or 6% of revenue.
  • Cash dividends paid during the third quarter of fiscal 2008 totaled $58 million.
  • Share repurchases of ADI common stock during the third quarter of fiscal 2008 totaled $28 million.

Balance Sheet

  • Cash and short-term investments at the end of the third quarter of fiscal 2008 totaled approximately $1.3 billion.
  • Inventory at the end of the third quarter of fiscal 2008 decreased by 3% compared to the immediately prior quarter. Days cost of sales in inventory was 110 days at the end of the third quarter of fiscal 2008, compared to 115 days at the end of the immediately prior quarter.
  • Accounts receivable at the end of the third quarter of fiscal 2008 decreased by 2% compared to the immediately prior quarter, with days sales outstanding declining from 47 days to 45 days.

“The third quarter was another solid quarter for ADI. As planned, we delivered growth while sustaining our target gross margin, and continued to expand our operating margin in line with our long-term model,” said Jerald G. Fishman, President and CEO. “The strength of our business, particularly given general economic conditions, reflects the importance of our broad diversification and leading position in markets where customers highly value innovation that helps differentiate their products.”

Revenue by end market in the third quarter of fiscal 2008:

  • Revenue from industrial customers, which represented 50% of total revenue, declined 1% from the immediately prior quarter and increased 10% from the same quarter a year ago. On a sequential basis, revenue from most industrial applications increased while revenue from semiconductor automatic test equipment applications decreased.
  • Revenue from communications customers, 25% of total revenue, increased 1% from the immediately prior quarter and increased 11% on a year-over-year basis. Revenue from handset, optical and networking customers increased from the immediately prior quarter offsetting a decrease in revenue from basestation customers.
  • Revenue from consumer customers, 20% of total revenue, increased 5% on a sequential basis, principally due to growth in revenue from advanced TV, digital camera, and home entertainment system customers. Consumer revenue decreased by 1% from the same quarter a year ago.
  • Revenue from computer customers, 5% of total revenue, increased 12% sequentially in line with an overall strong PC market worldwide and declined 5% on a year-over-year basis.
  • Schedule E of this document provides additional details about revenue by end market for the third quarter, immediately prior quarter, and year-ago quarter. A more complete table covering prior periods is available on the Analog Devices Investor Relations web site at: http://investor.analog.com

Revenue by product type for the third quarter of fiscal 2008:

  • Analog product revenue increased 1% sequentially and 6% year-over-year, contributing 90% of total revenue in the third quarter.
  • Revenue from ADI’s market-leading converters and amplifiers totaled $454 million, representing 69% of total revenue in the third quarter. Converter revenue, 46% of total revenue, grew 2% sequentially and 8% year-over-year. Amplifier revenue, 23% of total revenue, was approximately the same as in the immediately prior quarter and increased 5% year-over-year.
  • General purpose DSP revenue grew 4% sequentially and 14% year-over-year, and represented 9% of total revenue in the third quarter.
  • Schedule F of this document provides additional details about revenue by product type for the third quarter, immediately prior quarter, and year-ago quarter. A more complete table covering prior periods is available on the Analog Devices Investor Relations web site at: http://investor.analog.com

Outlook for the fourth quarter of fiscal 2008
The following statements are based on current expectations. These statements are forward looking and actual results may differ materially,including as a result of the important factors discussed at the end of this release.These statements supersede all prior statements regarding business outlook set forth in prior ADI news releases.

Regarding the outlook for the fourth quarter of fiscal 2008, Mr. Fishman said, “Our operating plan for the fourth quarter is for revenue to grow in the range of 0% to 3% sequentially. On a year-over-year basis, this range represents a revenue increase of 6% to 9% for the fourth quarter. Our plan is for gross margin for the fourth quarter to be approximately 61%, with results dependent on the actual mix of business we achieve, and for operating expenses to remain relatively flat on a sequential basis. For the fourth quarter, our operating plan calls for diluted EPS from continuing operations of approximately $0.44 to $0.46. Diluted EPS from discontinued operations is expected to be approximately $0.02.”

Conference Call Scheduled for 5:00
Mr. Fishman will discuss the third quarter's results and the near-term outlook via webcast, accessible at http://investor.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: 59090227 or by visiting the Analog Devices Investor Relations web site.

3Q'08 Financials

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 technology, Analog Devices serves over 60,000 customers, representing virtually all types of electronic equipment. Analog Devices is headquartered in Norwood, Massachusetts, with design and manufacturing facilities throughout the world. Analog Devices is included in the S&P 500 Index.

This release may be deemed to contain forward-looking statements which include, among other things, our statements regarding expected revenue, earnings, operating expenses, gross margins, and other financial results, and expected increases in customer demand for our products, 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, 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. 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: 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 including as a result of ongoing financial market uncertainty, adverse results in litigation matters, and other risk factors described in our most recent filings 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.

Editor's Contact Information:

Mindy Kohl
781-461-3282

investor.relations@analog.com

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