What is the primary driver of the significant revenue growth in this quarter?

The primary driver of the significant revenue growth was a broad increase in demand across all key end markets: Industrial, Consumer, Automotive, and Communications. Specific strengths were noted in instrumentation and automation within the Industrial sector, increased demand for portable consumer applications, and growth in optical networking products for Communications.

What factors contributed to the improvement in gross margin percentage?

The gross margin percentage increased by 390 basis points year-over-year primarily due to increased utilization in Analog Devices' manufacturing facilities and lower inventory reserves. These positive factors were partially offset by a decrease in margins due to product mix.

What is the company's outlook on research and development (R&D) investments?

Analog Devices views R&D as critical to its future growth and expects to continue making significant R&D investments to maintain product leadership and offer innovative new products. R&D expenses increased year-over-year, driven by variable compensation linked to profitability and revenue growth, and R&D employee expenses. R&D as a percentage of revenue is expected to fluctuate based on revenue and new product development success.

ADI 10-Q Quarterly Report Q1 FY2017 — Revenue, Net Income, EPS

Q: How is the proposed acquisition of Linear Technology Corporation being financed?

The proposed acquisition of Linear Technology Corporation is being financed through a combination of equity (issuance of approximately 58.0 million new shares of Analog Devices' common stock), debt facilities (approximately $9.0 billion from bridge and term loan facilities), and proceeds from the issuance of senior unsecured notes totaling $2.1 billion.

Summary

Analog Devices Inc. (ADI) reported strong financial results for the third quarter of fiscal year 2017, driven by robust revenue growth and improved gross margins. Revenue increased by 28% year-over-year to $984.4 million, reflecting broad-based demand across key end markets including industrial, consumer, automotive, and communications. Net income saw a significant surge of 32% to $217.1 million, translating to diluted earnings per share of $0.69, up from $0.52 in the prior year period. The company is progressing with its proposed acquisition of Linear Technology Corporation, a significant transaction expected to close by the end of the second quarter of fiscal year 2017. This acquisition is being funded through a combination of equity, debt facilities, and newly issued notes. Despite the strategic focus on integration, ADI demonstrated strong operational performance, highlighting increased manufacturing facility utilization and reduced inventory reserves contributing to a 390 basis point improvement in gross margin percentage.

Financial Highlights

57 data points

Beta

Revenue

$984.45M

0.7% Gross Margin

Net Income

$217.13M

0.2% Net Margin

EPS (Diluted)

$0.69

Total Assets

$10.20B

Cash & Equivalents

$4.99B

Free Cash Flow

$294.26M

Financial Statements

Beta

Revenue	$984.45M
Cost of Revenue	$335.94M
Gross Profit	$648.50M
R&D Expenses	$183.95M
SG&A Expenses	$130.66M
Operating Expenses	$382.24M
Operating Income	$266.27M
Interest Expense	$42.61M
Net Income	$217.13M
EPS (Basic)	$0.70
EPS (Diluted)	$0.69
Shares Outstanding (Basic)	308.79M
Shares Outstanding (Diluted)	313.08M

Key Highlights

1Revenue surged 28% year-over-year to $984.4 million, driven by strong demand across industrial, consumer, automotive, and communications sectors.
2Net income increased by 32% to $217.1 million, with diluted EPS rising to $0.69 from $0.52 in the prior year.
3Gross margin improved significantly to 65.9% from 62.0% in the prior year period, attributed to better manufacturing utilization and lower inventory reserves.
4The company is actively pursuing the acquisition of Linear Technology Corporation, with expected completion by the end of Q2 fiscal 2017, funded by a substantial debt and equity package.
5Operating income increased by 37% to $266.3 million, reflecting strong revenue growth and improved gross margins.
6Cash flow from operations was robust at $314.5 million, up from $219.7 million in the prior year.
7The company temporarily suspended its share repurchase program due to the pending Linear Technology acquisition.

ANALOG DEVICES INC Quarterly Report for Q1 Ended Jan 28, 2017

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions