What is the primary reason for the announced facility consolidations?

The consolidations are part of Analog Devices' continuous efforts to improve operational and investment efficiencies, particularly following the acquisition of Linear Technology Corporation, and to realize cost synergies.

What is the financial impact of these restructuring plans in the near term?

Analog Devices expects to incur a special charge of $55 to $65 million in the first quarter of fiscal 2018, primarily for employee severance costs. This charge will reduce GAAP earnings per share guidance for the quarter but is not expected to impact non-GAAP earnings per share guidance.

When will these facility closures be completed, and what is the long-term financial benefit?

The closures of the Hillview fab and Singapore test facility are planned to occur over the next three to five years. These actions are expected to contribute to the company's goal of achieving $150 million in cost synergies by the end of fiscal 2018, with further benefits anticipated from ongoing integration.

Will customer supply be affected by these operational changes?

Analog Devices intends to ensure continuity of supply for its customers by transferring production and testing operations to its other internal facilities and to external foundries and partners. Employees at the affected sites are expected to be retained through the transition period.

ADI 8-K: Regulation FD — Jan 30, 2018

Summary

Analog Devices Inc. (ADI) announced a restructuring plan to consolidate wafer fabrication and test operations, primarily related to the integration of its acquisition of Linear Technology Corporation. This plan involves closing its Hillview wafer fab in Milpitas, California, and its Singapore test facility over the next three to five years. Production from the Hillview fab will be moved to ADI's existing facilities in Washington, Massachusetts, and Ireland, as well as external foundries. Testing operations from Singapore will be relocated to facilities in Malaysia and the Philippines, alongside outsourced partners. This consolidation is expected to result in a special charge of $55 to $65 million in the first quarter of fiscal 2018, mainly for employee severance costs. While this charge will negatively impact GAAP earnings per share guidance for Q1 2018, it is anticipated to have no effect on non-GAAP EPS guidance. These actions are a continuation of ADI's efforts to improve operational efficiency and are expected to contribute to previously announced cost synergies, reinforcing the company's progress towards its target of $150 million in synergies by the end of fiscal 2018.

Key Highlights

1ADI is consolidating wafer fabrication and test operations as part of post-acquisition integration with Linear Technology Corporation.
2The Hillview wafer fab in Milpitas, CA, and the Singapore test facility are slated for closure over the next 3-5 years.
3Production and testing activities will be relocated to existing ADI facilities in the US, Ireland, Malaysia, and the Philippines, and to external partners.
4A special charge of $55-$65 million is expected in Q1 fiscal 2018, primarily for severance costs.
5The special charge will negatively impact GAAP EPS guidance for Q1 fiscal 2018 but is not expected to affect non-GAAP EPS guidance.
6These consolidation efforts are projected to contribute to achieving the company's previously announced cost synergy targets.
7ADI remains on track to achieve its overall $150 million synergy target by the end of fiscal 2018.

ANALOG DEVICES INC 8-K Report, Regulation FD Disclosure (Jan 30, 2018)

Summary

Key Highlights

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