10-QPeriod: Q1 FY2013

ANALOG DEVICES INC Quarterly Report for Q1 Ended Feb 2, 2013

Filed February 19, 2013For Securities:ADI

Summary

Analog Devices Inc. (ADI) reported its financial results for the quarter ended February 2, 2013, showing a slight decrease in revenue compared to the same period last year. Revenue for the quarter was $622.1 million, down 4% from $648.1 million in the prior year's quarter. This decline was attributed to a macroeconomic environment characterized by weak demand and the fact that the prior year's quarter included an extra week of operations. Net income also saw a decrease, falling to $131.2 million from $139.4 million in the prior year, resulting in diluted earnings per share (EPS) of $0.42, down from $0.46. Despite the revenue and net income dip, the company demonstrated a strong cash flow from operations of $158.0 million. ADI also strengthened its balance sheet with a significant increase in cash and cash equivalents, reaching $795.8 million. The company also highlighted its ongoing commitment to returning capital to shareholders through dividends, with a declared dividend of $0.34 per share, and continued strategic investments in research and development, though at a slightly increased percentage of revenue. Management provided an outlook for the next quarter expecting revenue to increase sequentially and a stable gross margin.

Financial Highlights

54 data points
Beta

Revenue

$622.13M

62.7% Gross Margin

Net Income

$131.22M

21.1% Net Margin

EPS (Diluted)

$0.42

Total Assets

$5.72B

Cash & Equivalents

$795.80M

Free Cash Flow

$139.70M

Financial Statements
Beta
Revenue$622.13M
Cost of Revenue$231.85M
Gross Profit$390.28M
R&D Expenses$125.11M
SG&A Expenses$97.56M
Operating Expenses$236.79M
Operating Income$153.49M
Interest Expense$6.41M
Net Income$131.22M
EPS (Basic)$0.43
EPS (Diluted)$0.42
Shares Outstanding (Basic)303.48M
Shares Outstanding (Diluted)310.27M

Key Highlights

  • 1Revenue decreased by 4% to $622.1 million for the three months ended February 2, 2013, compared to $648.1 million for the same period in the prior year.
  • 2Net income decreased by 6% to $131.2 million, resulting in diluted EPS of $0.42, down from $0.46 in the prior year.
  • 3Cash flow from operating activities was robust at $158.0 million.
  • 4The company ended the quarter with a strong cash position of $795.8 million, an increase from $528.8 million at the end of the prior fiscal year.
  • 5A special charge of $14.1 million was recorded in the current quarter related to workforce reductions.
  • 6The effective income tax rate decreased significantly to 12.6% from 22.6% in the prior year, benefiting from an international tax restructuring and the reinstatement of the R&D tax credit.
  • 7The company declared a cash dividend of $0.34 per share, an increase from the $0.30 per share paid in the prior year's quarter.

Frequently Asked Questions

The primary drivers for the revenue decrease were the ongoing weak global demand due to economic uncertainty and the fact that the current quarter had one less week of operations compared to the same quarter in the prior fiscal year. Customer inventory reduction efforts also contributed.

Despite lower revenue and net income, Analog Devices Inc. improved its cash position significantly, with cash and cash equivalents rising to $795.8 million from $528.8 million. This was supported by strong operating cash flows and net maturities of short-term investments, while also managing debt levels by repaying a term loan.

The company anticipates revenue to increase by approximately 4% to 8% in the second quarter of fiscal 2013 compared to the first quarter. Gross margin is projected to be around 64%, with operating expenses estimated at $224 million. Diluted EPS is expected to be in the range of $0.49 to $0.55.

A special charge of $14.1 million related to workforce reductions was recorded in the first quarter of fiscal 2013. This charge contributed to the decrease in operating income and net income compared to the prior year.