Schedule F of this press release provides the reconciliation of the Company’s historical adjusted cash flow measures to its cash flow measures.
Management uses adjusted free cash flow to measure the liquidity of its continuing operations and evaluate the Company’s operating cash performance against past periods. Free cash flow is defined as cash provided by (used in) operating activities less capital expenditures. Adjusted free cash flow is defined by the Company as free cash flow adjusted for payments (refunds) that are not reflective of our ongoing operating cash performance. Management believes that the presentation of this adjusted financial measure is useful to investors because it provides investors with the operating cash flow results that management uses to manage the Company and enables investors and analysts to evaluate the Company’s liquidity from continuing operations.
The following item is excluded from our fourth quarter fiscal 2015 adjusted free cash flow and adjusted free cash flow margin:
Pension Conversion Payments: Costs incurred as a result of the conversion of the benefits provided to participants in the Company’s Irish defined benefit pension plan to benefits provided under the Company’s Irish defined contribution plan including settlement charges, legal, accounting, tax and other professional fees. We excluded these costs from our adjusted financial measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.
Analog Devices believes that these non-GAAP measures have material limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. In addition, our non-GAAP measures may not be comparable to the non-GAAP measures reported by other companies. The Company’s use of non-GAAP measures, and the underlying methodology when excluding certain items, is not necessarily an indication of the results of operations that may be expected in the future, or that the Company will not, in fact, record such items in future periods.
Investors should consider our non-GAAP financial measures in conjunction with the corresponding GAAP measures.
About Analog Devices
Analog Devices designs and manufactures semiconductor products and solutions. We enable our customers to interpret the world around us by intelligently bridging the physical and digital with unmatched technologies that sense, measure and connect. Visit http://www.analog.com.
This release may be deemed to contain forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, our statements regarding expected revenue, earnings per share, gross margin, operating expenses, interest and other expense, tax rate, and other financial results, expected operating leverage, production and inventory levels, expected market trends, and expected customer demand and order rates for our products, that are based on our current expectations, beliefs, assumptions, estimates, forecasts, and projections about our business and the industry and markets in which Analog Devices operates. The statements contained in this release are not guarantees of future performance, are inherently uncertain, involve certain risks, uncertainties, and assumptions that are difficult to predict, and do not give effect to the potential impact of any mergers, acquisitions, divestitures, or business combinations that may be announced or closed after the date hereof. Therefore, actual outcomes and results may differ materially from what is expressed in such forward-looking statements, and such statements should not be relied upon as representing Analog Devices’ expectations or beliefs as of any date subsequent to the date of this press release. We do not undertake any obligation to update forward-looking statements made by us. Important factors that may affect future operating results include: any faltering in global economic conditions or the stability of credit and financial markets, erosion of consumer confidence and declines in customer spending, unavailability of raw materials, services, supplies or manufacturing capacity, changes in geographic, product or customer mix, our ability to successfully integrate acquired businesses and technologies, adverse results in litigation matters, and other risk factors described in our most recent filings with the Securities and Exchange Commission. Our results of operations for the periods presented in this release are not necessarily indicative of our operating results for any future periods. Any projections in this release are based on limited information currently available to Analog Devices, which is subject to change. Although any such projections and the factors influencing them will likely change, we will not necessarily update the information, as we will only provide guidance at certain points during the year. Such information speaks only as of the original issuance date of this release.
Analog Devices and the Analog Devices logo are registered trademarks or trademarks of Analog Devices, Inc. All other trademarks mentioned in this document are the property of their respective owners.
|Analog Devices, First Quarter, Fiscal 2016|
|Revenue and Earnings Summary (Unaudited)|
|(In thousands, except per-share amounts)|
|Three Months Ended|
|1Q 16||4Q 15||1Q 15|
|Cost of sales (1)||292,136||336,926||268,379|
|Gross margin percentage||62.0||%||65.6||%||65.2||%|
|Year-to-year change (basis points)||(320||)||590||10|
|Quarter-to-quarter change (basis points)||(360||)||(30||)||550|
|Selling, marketing and G&A (1)||107,462||121,400||120,171|
|Amortization of intangibles||17,358||17,358||23,796|
|Other operating expense||—||223,672||—|
|Total operating expenses||282,248||533,166||295,673|
|Total operating expenses percentage||36.7||%||54.5||%||38.3||%|
|Year-to-year change (basis points)||(160||)||1,320||180|
|Quarter-to-quarter change (basis points)||(1,780||)||1,930||(300||)|
|Operating income percentage||25.3||%||11.1||%||26.9||%|
|Year-to-year change (basis points)||(160||)||(730||)||(170||)|
|Quarter-to-quarter change (basis points)||1,420||(1,960||)||850|
|Income before income tax||182,177||104,677||200,770|
|Provision for income taxes||17,673||8,372||22,013|
|Tax rate percentage||9.7||%||8.0||%||11.0||%|
|Shares used for EPS - basic||311,166||312,829||311,274|
|Shares used for EPS - diluted||314,793||316,571||315,684|
|Earnings per share - basic||$||0.53||$||0.31||$||0.57|
|Earnings per share - diluted||$||0.52||$||0.30||$||0.57|
|Dividends paid per share||$||0.40||$||0.40||$||0.37|
|(1) Includes stock-based compensation expense as follows:|
|Cost of sales||$||2,092||$||2,188||$||2,392|
|Selling, marketing and G&A||$||6,813||$||7,408||$||11,105|