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Analog Devices Annual Report, Year Ended Nov 1, 1997

Filing Date
Filed January 28, 1998
Period End
November 1, 1997
Security
ADI
In the record · 2016–202610-K1010-Q338-K146

ADI filed 10 annual reports (10-K), 33 quarterly reports (10-Q) and 146 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jul ’17Jul ’17
  2. Material agreement8-K · Jul ’19Jul ’19
  3. Material agreement8-K · Oct ’21Oct ’21
  4. FY2025 annual report10-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed January 28, 1998. Cited figures are marked; the original filing is the authoritative source.

Analog Devices (NYSE: ADI) closed fiscal 1997 (ended November 1, 1997) with net sales of $1,243.5 milliona, up 4% from $1,193.8 million, after a sluggish first half caused by end-customer inventory excess built up during the prior year's capacity-constrained lead times.

Demand recovered in the second half, and quarterly sales rose from $292 million in Q1 to $332 millionb in Q4. Net income rose 4% to $178.2 million, and diluted EPS was $1.04 versus $1.03 in fiscal 1996. Gross margin slipped slightly to 50.0% from 50.3%, while operating margin edged down to 18.8% from 19.0%, as R&D spending climbed about 10% to $196 million (15.8% of sales) and SMG&A fell to $192 million.

Growth was driven by standard linear ICs (SLICs), which rose to 61% of sales, while system-level ICs declined to 35% and assembled products shrank to 4%. The balance sheet strengthened over the year. Cash and short-term investments reached $341 millionc, operating cash flow was $297 million (24% of sales), and stockholders' equity grew to $1.09 billion.

Total debt remained at $310 milliond in convertible and fixed-rate notes, with a debt-to-equity ratio of 33%. Capital spending was $179 million, down from the prior year's peak, but management plans roughly $300 million in fiscal 1998, with depreciation expected to rise to about $144 million. The company is also building capacity through an 18% stake in the WaferTech foundry joint venture in Camas, Washington, which is expected to become operational in late 1998.

Key risks include the cyclical nature of the semiconductor industry, dependence on third-party foundries and Southeast Asian suppliers (with take-or-pay obligations), intensifying competition, a 54% share of revenue from international markets, and patent litigation, including an adverse French ruling involving Sextant Avionique over the accelerometer product line. The company has never paid a cash dividend, and its credit agreement limits dividend payments to a defined amount.

02—Key points

Key Highlights

  1. Fiscal 1997 net sales rose 4% to $1.243 billion, with a weak first half followed by a demand recovery in the second half and a Q4 record of $332 million.
  2. Net income increased 4% to $178.2 million, and diluted EPS reached $1.04 compared with $1.03 in fiscal 1996.
  3. Gross margin was 50.0% (down from 50.3%), and operating margin was 18.8% (down from 19.0%), reflecting product mix and new fab costs.
  4. R&D rose about 10% to $196 million (15.8% of sales), while SMG&A declined to 15.4% of sales from 16.4%.
  5. Operating cash flow of $297 million and $341 million in cash and short-term investments provide ample liquidity, with debt-to-equity at 33%.
  6. Capital expenditures are planned to rise to about $300 million in fiscal 1998, with depreciation expected to increase to roughly $144 million.
  7. Product mix is shifting toward SLICs (61% of sales), while system-level ICs fell to 35% and assembled products fell to 4%.

03—Questions

Frequently Asked Questions

  1. What drove Analog Devices' revenue growth in fiscal 1997?

    Revenue grew 4% to $1.243 billion. Growth came mainly from standard linear ICs, especially data converters and amplifiers, which rose to 61% of sales. The first half was weak because of excess end-customer inventory accumulated during the prior year's capacity shortages, but demand improved in the second half, and sales increased in every quarter from Q1 to Q4.

  2. Is Analog Devices profitable and how is its margin trending?

    Yes. Net income was $178.2 million, or $1.04 per share, up slightly from $1.03 in fiscal 1996. Gross margin fell modestly to 50.0% from 50.3%, and operating margin eased to 18.8% from 19.0%. The decline reflects product mix and higher costs from new manufacturing facilities. Management is holding operating expenses flat as a percentage of sales to protect operating leverage.

  3. How strong is the company's balance sheet and liquidity position?

    The company had $341 million in cash and short-term investments and generated $297 million in operating cash flow in fiscal 1997. Total debt was $310 million, mainly a 3.5% convertible note due 2000 and a 6 5/8% note due 2000, with a debt-to-equity ratio of 33%. Its credit facilities were largely unused at year end, and management believes liquidity is sufficient for the foreseeable future.

  4. What are the main risks and capital investment plans for investors to watch?

    Key risks include cyclical semiconductor demand, reliance on third-party foundries and Southeast Asian suppliers under take-or-pay commitments, intense competition from larger rivals, and patent disputes. A French court found the company infringed Sextant Avionique patents for its accelerometer, though management does not expect a material impact. Capital spending is planned at about $300 million in fiscal 1998, which will raise depreciation and could pressure margins if revenue does not keep pace.

04—Continue

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