Analog Devices Reports Fourth Quarter Results Above the High-End of Outlook

5Tax Related Items: Income tax effect of the non-GAAP items discussed above and income tax from certain discrete tax items primarily related to the resolution of prior period tax audits, income tax from certain uncertain tax positions, income tax from state valuation allowance adjustments, income tax on certain inventory intra-entity transfers, the impact of a voluntary accounting policy change and other income tax adjustments related to prior periods. We excluded the income tax benefit / provision effect of these tax related items from our non-GAAP measures because they are not associated with the tax expense on our ongoing 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 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.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

 

 

Three Months Ended

 

Twelve Months Ended

 

Oct 31, 2020

 

Nov 2, 2019

 

Oct 31, 2020

 

Nov 2, 2019

Revenue

$

1,526,295

 

 

$

1,443,219

 

 

$

5,603,056

 

 

$

5,991,065

 

Cost of sales

503,211

 

 

501,028

 

 

1,912,578

 

 

1,977,315

 

Gross margin

1,023,084

 

 

942,191

 

 

3,690,478

 

 

4,013,750

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

280,239

 

 

277,018

 

 

1,050,519

 

 

1,130,348

 

Selling, marketing, general and administrative

165,115

 

 

154,799

 

 

659,923

 

 

648,094

 

Amortization of intangibles

108,007

 

 

107,225

 

 

429,455

 

 

429,041

 

Special charges

8,051

 

 

64,788

 

 

52,337

 

 

95,659

 

Total operating expenses

561,412

 

 

603,830

 

 

2,192,234

 

 

2,303,142

 

Operating income

461,672

 

 

338,361

 

 

1,498,244

 

 

1,710,608

 

Nonoperating expense (income):

 

 

 

 

 

 

 

Interest expense

48,593

 

 

50,775

 

 

193,305

 

 

229,075

 

Interest income

(527)

 

 

(1,988)

 

 

(4,305)

 

 

(10,229)

 

Other, net

(3,704)

 

 

1,747

 

 

(2,373)

 

 

6,034

 

 

44,362

 

 

50,534

 

 

186,627

 

 

224,880

 

Income before income taxes

417,310

 

 

287,827

 

 

1,311,617

 

 

1,485,728

 

Provision for income taxes

30,784

 

 

10,133

 

 

90,856

 

 

122,717

 

Net income

$

386,526

 

 

$

277,694

 

 

$

1,220,761

 

 

$

1,363,011

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per share - basic

369,284

 

 

369,051

 

 

368,633

 

 

369,133

 

Shares used to compute earnings per share - diluted

372,322

 

 

372,584

 

 

371,973

 

 

372,871

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

1.05

 

 

$

0.75

 

 

$

3.31

 

 

$

3.68

 

Diluted earnings per common share

$

1.04

 

 

$

0.74

 

 

$

3.28

 

 

$

3.65

 

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

October 31, 2020

 

November 2, 2019

Cash & cash equivalents

$

1,055,860

 

 

$

648,322

 

Accounts receivable

737,536

 

 

635,136

 

Inventories

608,260

 

 

609,886

 

Other current assets

116,032

 

 

91,782

 

Total current assets

2,517,688

 

 

1,985,126

 

Net property, plant and equipment

1,120,561

 

 

1,219,989

 

Other investments

86,729

 

 

77,324

 

Goodwill

12,278,425

 

 

12,256,880

 

Intangible assets, net

3,650,280

 

 

4,217,224

 

Deferred tax assets

1,503,064

 

 

1,582,382

 

Other assets

311,856

 

 

53,716

 

Total assets

$

21,468,603

 

 

$

21,392,641

 

 

 

 

 

Other current liabilities

$

1,364,986

 

 

$

1,208,965

 

Debt, current

 

 

299,667

 

Long-term debt

5,145,102

 

 

5,192,252

 

Deferred income taxes

1,919,595

 

 

2,088,212

 

Other non-current liabilities

1,040,975

 

 

894,357

 

Shareholders' equity

11,997,945

 

 

11,709,188

 

Total liabilities & equity

$

21,468,603

 

 

$

21,392,641

 

 

 

 

 

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

Twelve Months Ended

 

Oct 31, 2020

 

Nov 2, 2019

 

Oct 31, 2020

 

Nov 2, 2019

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

386,526

 

 

$

277,694

 

 

$

1,220,761

 

 

$

1,363,011

 

Adjustments to reconcile net income to net cash provided by operations:

 

 

 

 

 

 

 

Depreciation

57,053

 

 

61,636

 

 

233,775

 

 

240,677

 

Amortization of intangibles

145,163

 

 

143,528

 

 

577,148

 

 

570,574

 

Stock-based compensation expense

36,557

 

 

37,580

 

 

149,518

 

 

150,300

 

Non-cash impairment included in special charges

 

 

9,800

 

 

 

 

14,167

 

Deferred income taxes

(71,146)

 

 

(35,809)

 

 

(113,948)

 

 

(91,253)

 

Non-cash contribution to charitable foundation

 

 

 

 

40,000

 

 

 

Other non-cash activity

(257)

 

 

14,206

 

 

5,418

 

 

40,907

 

Changes in operating assets and liabilities

118,702

 

 

149,270

 

 

(104,185)

 

 

(35,283)

 

Total adjustments

286,072

 

 

380,211

 

 

787,726

 

 

890,089

 

Net cash provided by operating activities

672,598

 

 

657,905

 

 

2,008,487

 

 

2,253,100

 

Percent of revenue

44.1

%

 

45.6

%

 

35.8

%

 

37.6

%

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Additions to property, plant and equipment

(29,888)

 

 

(51,076)

 

 

(165,692)

 

 

(275,372)

 

Payments for acquisitions, net of cash acquired

(1,433)

 

 

(11,170)

 

 

(14,196)

 

 

(11,170)

 

Change in other assets

579

 

 

(1,512)

 

 

(635)

 

 

(6,644)

 

Net cash used for investing activities

(30,742)

 

 

(63,758)

 

 

(180,523)

 

 

(293,186)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from debt

 

 

 

 

395,646

 

 

1,250,000

 

Early termination of debt

 

 

 

 

 

 

(1,250,000)

 

Proceeds from revolver

 

 

 

 

350,000

 

 

75,000

 

Payments on revolver

 

 

 

 

(350,000)

 

 

(75,000)

 

Debt repayments

(450,000)

 

 

(200,000)

 

 

(750,000)

 

 

(850,000)

 

Dividend payments to shareholders

(229,597)

 

 

(200,196)

 

 

(886,155)

 

 

(777,481)

 

Repurchase of common stock

(7,222)

 

 

(172,389)

 

 

(244,487)

 

 

(613,005)

 

Proceeds from employee stock plans

10,653

 

 

10,388

 

 

68,403

 

 

116,523

 

Change in other financing activities

 

 

5,087

 

 

(4,015)

 

 

(2,831)

 

Net cash used for financing activities

(676,166)

 

 

(557,110)

 

 

(1,420,608)

 

 

(2,126,794)

 

Effect of exchange rate changes on cash

(94)

 

 

(879)

 

 

182

 

 

(1,389)

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

(34,404)

 

 

36,158

 

 

407,538

 

 

(168,269)

 

Cash and cash equivalents at beginning of period

1,090,264

 

 

612,164

 

 

648,322

 

 

816,591

 

Cash and cash equivalents at end of period

$

1,055,860

 

 

$

648,322

 

 

$

1,055,860

 

 

$

648,322

 

 

 

 

 

 

 

 

 

ANALOG DEVICES, INC.

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