NORWOOD, Mass.—(BUSINESS WIRE)—May 11, 2006— Analog Devices, Inc. (NYSE: ADI)
-- Board of Directors increases quarterly dividend to $0.16 from
$0.12 per share;
-- Financial results for the second quarter and guidance for the
third quarter of fiscal 2006 will be discussed via conference
call today at 4:30 pm.
Analog Devices, Inc. (NYSE:
ADI), a global leader in
high-performance semiconductors for signal processing applications,
today announced revenue of $643.9 million for the second quarter of
fiscal 2006, an increase of 7% compared to the same period one year
ago and an increase of 4% compared to the immediately prior quarter.
Net income under generally accepted accounting principles (GAAP)
was $145.8 million for the second quarter. Diluted earnings per share
(EPS) was $0.39 for the second quarter.
The GAAP results for the second quarter of fiscal 2006 include the
following items: a gain of $13 million related to the
previously-announced sale of the digital signal processing (DSP)-based
digital subscriber line (DSL) application-specific integrated circuit
(ASIC) and network processor product line; expenses of $6 million
included in cost of sales and related to previously-announced
restructuring actions; and $17 million of non-cash stock option
expense. These items reduced diluted EPS by $0.02 in the second
The cash dividend was increased to $0.16 per outstanding share of
common stock. The dividend will be paid on June 14, 2006 to all
shareholders of record at the close of business on May 26, 2006. This
is an increase from the $0.12 dividend paid in March of 2006.
"The second quarter was a good quarter for ADI, led by strong
growth in sales to our industrial instrumentation, consumer
electronics, and wireless infrastructure customers," said Jerald G.
Fishman, ADI's president and chief executive officer. "Data converter,
amplifier, and general-purpose DSP products were the fastest-growing
product categories compared to the immediately prior quarter."
Gross margin for the second quarter of fiscal 2006 was $380.7
million, or 59.1% of sales. In the second quarter of fiscal 2006,
gross margin was reduced by $6.9 million, or 1.1% of sales, as a
result of stock option expense and previously announced manufacturing
Operating profits for the second quarter of fiscal 2006 totaled
$151.4 million, or approximately 23.5% of sales. In the second quarter
of fiscal 2006, operating profits were reduced by $22.8 million, as a
result of stock option expense and previously announced
Cash Flow and Balance Sheet
Cash flow from operations totaled $205.1 million, or approximately
32% of sales, for the second quarter. Capital expenditures totaled
$28.8 million. The company repurchased approximately 6.2 million
shares of ADI common stock for $237.7 million and paid $44.2 million
in cash dividends. Cash and short term investments totaled
approximately $2.7 billion at the end of the second quarter.
In the second quarter, inventory increased by approximately $21.6
million compared to the immediately prior quarter. Days cost of sales
in inventory was 125 days at the end of the second quarter of fiscal
2006, compared to 124 days one year ago and 118 days at the end of the
immediately prior quarter. The company increased inventory in
preparation for the planned to shutdown of its California wafer
fabrication facility and to fulfill planned sales growth for the third
Days sales in accounts receivable were 51 days at the end of the
second quarter, compared to 49 days one year ago and 47 days at the
end of the immediately prior quarter. The increase was primarily due
to a disproportionate amount of shipments in the last month of the
quarter as supply issues earlier in the quarter were resolved.
Revenue Analysis By Product
During the second quarter of fiscal year 2006, analog products
totaled 84% of sales and DSP products totaled 16% of sales.
Revenue from analog products grew 11% compared to the same period
one year ago and 5% compared to the immediately prior quarter. Data
converter product sales grew 8%, amplifier sales grew 9%, and other
analog product sales declined 3% compared to the immediately prior
quarter. Revenue from each of these analog product categories
increased on a year-over-year basis.
Revenue from DSP products declined 10% compared to the same period
one year ago and 4% compared to the immediately prior quarter due
primarily to the previously announced sale of the DSP-based DSL ASIC
and network processor product line. General-purpose DSP product sales
grew 6% compared to the immediately prior quarter.
Revenue Analysis By End Market
Revenue from both the industrial and consumer end markets grew
sequentially and year-over-year.
Revenue from the industrial end market, which includes factory
automation, scientific and medical instrumentation, semiconductor
automatic test equipment (ATE), defense electronics, and automotive
applications, totaled approximately 42% of sales in the second
Revenue from the consumer end market totaled approximately 17% of
sales in the second quarter.
Within the communications end market, revenue from wireless
infrastructure customers grew significantly compared to the
immediately prior quarter. Revenue from wireless handset customers
also grew while revenue from networking customers declined, as
expected, due to the previously announced sale of the DSP-based DSL
ASIC and network processor product line.
Overall, revenue from the communications end markets totaled
approximately 29% of sales in the second quarter of fiscal year 2006.
In line with the broader computer industry trends, revenue from
customers in the computer end market declined during the quarter and
was approximately 12% of sales.
Outlook for the Third Quarter of Fiscal 2006
Regarding the near term outlook, Mr. Fishman said, "Orders and
backlog increased significantly during the second quarter. Our OEM
customers and our distributors are signaling significant increases in
demand for our analog and DSP products. In aggregate, we are planning
for revenue in the range of $675 million to $685 million."
ADI is planning for gross margin in the third quarter to be
approximately the same as the second quarter of fiscal 2006.
Operating expenses are planned to increase a few percent compared
to the second quarter, primarily due to increased profit sharing and
commissions as sales and operating margin expand.
Diluted EPS is planned to be in the range of $0.38 to $0.39 for
the third quarter of fiscal 2006, which includes approximately $0.06
for stock option expenses, previously-announced restructuring
expenses, and expenses associated with a previously-announced
The plan for third quarter is for days sales in accounts
receivable to decline to approximately 48 days.
Days cost of sales in inventory is planned to decline in the third
quarter compared to the second quarter.
In order to help investors compare current results to ADI's
history and thereby better understand the underlying trends in the
company's business, ADI has provided a table of supplemental
information with this release, and on its website, which includes
estimates of the impact of stock option expense, the impact of
previously announced restructuring-related expenses, the impact of the
gain from the sale of the DSP-based DSL ASIC and network processor
product line, and the impact of expenses associated with a previously
announced acquisition on the company's 2006 quarterly financial
Conference Call Scheduled for 4:30
Mr. Fishman will discuss the second quarter's results and the
near-term outlook via webcast, accessible from
beginning at 4:30 pm EST. Investors who prefer to join by telephone
may call 706-634-7193 ten minutes before the call begins and provide
the password "ADI."
A replay will be available almost immediately after the call. The
replay may be accessed for up to one week by dialing 800-642-1687
(replay only) and providing the conference ID: 8553665 or by visiting
the Investor Relations page on ADI's web site.
About Analog Devices
Innovation, performance, and excellence are the cultural pillars
on which Analog Devices has built one of the longest standing, highest
growth companies within the technology sector. Acknowledged
industry-wide as the world leader in data conversion and signal
conditioning technology, Analog Devices serves over 60,000 customers,
representing virtually all types of electronic equipment. Celebrating
40 years as a leading global manufacturer of high-performance
integrated circuits used in analog and digital signal processing
applications, Analog Devices is headquartered in Norwood,
Massachusetts, with design and manufacturing facilities throughout the
world. Analog Devices' common stock is listed on the New York Stock
Exchange under the ticker "ADI" and is included in the S&P 500 Index.