ANALOG DEVICES INC Quarterly Report for Q3 Ended Jul 30, 2016

Summary

Analog Devices, Inc. (ADI) reported revenues of $869.6 million for the third quarter of fiscal 2016, a slight increase of 1% year-over-year, driven by strong growth in the communications segment. Net income for the quarter rose 6% to $230.4 million, with diluted EPS increasing to $0.74 from $0.68 in the prior year period. For the first nine months of fiscal 2016, revenue decreased by 2% to $2.42 billion, and net income declined by 6% to $565.5 million, reflecting a slight decrease in gross margin and higher R&D expenses. Significantly, Analog Devices announced on July 26, 2016, a definitive agreement to acquire Linear Technology Corporation for approximately $14.8 billion. This transformative acquisition, expected to be funded through a combination of stock and debt, positions ADI as a leader in high-performance analog and mixed-signal integrated circuits. The company has temporarily suspended its share repurchase program due to this pending acquisition.

Key Highlights

• 1Q3 FY16 revenue grew 1% year-over-year to $869.6 million, with Communications segment showing strong 23% growth.
• 2Net income increased 6% to $230.4 million for Q3 FY16, and diluted EPS rose to $0.74 from $0.68.
• 3Announced a definitive agreement to acquire Linear Technology Corporation for approximately $14.8 billion, a significant strategic move.
• 4The proposed Linear Technology acquisition is expected to be funded by approximately $11.6 billion in new debt and the issuance of new ADI shares.
• 5Company temporarily suspended its share repurchase program due to the pending acquisition.
• 6Gross margin for the quarter was 65.8%, slightly down from 65.9% in the prior year, with a larger decrease for the nine-month period.
• 7Total debt increased significantly in Q1 FY16 with the issuance of $1.25 billion in new senior unsecured notes.

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