Analog Devices Announces Results for Second Quarter of Fiscal Year 2006


Safe harbor statement under the Private Securities Litigation Reform Act of 1995:

This press release contains forward-looking statements, including our statements regarding expected sales growth, revenue, earnings, operating margins, and other financial results, expected increases in customer demand for our products, and expected cash dividends, that are based on our current expectations, beliefs, assumptions, estimates, forecasts, and projections about the industry and markets in which Analog Devices operates. The statements contained in this release are not guarantees of future performance, are inherently uncertain, and involve certain risks, uncertainties, and assumptions that are difficult to predict. 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 the effects of adverse changes in overall economic conditions, currency exchange rate fluctuations, the timing and duration of market upturns and downturns, the growth or contraction of the markets we serve, demand for semiconductors generally and for our products in particular, the risk that our backlog could decline significantly, adverse results in various litigation matters, our ability to hire engineers, salespeople and other qualified employees needed to meet the expected demands of our customers, reversals or slowdowns in the markets or customers served by our products, the adverse effects of building inventories to meet planned growth that fails to materialize, the occurrence and frequency of inventory and lead-time reduction cycles, raw material availability, availability of both internal and external manufacturing capacity, technological and product development risks, competitors' actions and technological innovations, and other risk factors described in our most recent Form 10-Q for the fiscal quarter ended January 28, 2006, as filed with the Securities and Exchange Commission.
         Analog Devices, Second Quarter, Fiscal 2006

                Sales/Earnings Summary (GAAP)
           (In thousands, except per-share amounts)

                                           2Q 06     1Q 06     2Q 05
------------------------------------------------ --------- ---------
  Three Months Ended                   April 29,  January  April 30,
                                            2006  28, 2006      2005
------------------------------------------------ --------- ---------
Net Sales                              $643,872  $621,302  $603,726
   Y/Y Growth                                 7%        7%      -11%
   Q/Q Growth                                 4%        0%        4%
Cost of Sales                           263,201   260,515   257,327
Gross Margin                            380,671   360,787   346,399
   Percent of Sales                        59.1%     58.1%     57.4%
------------------------------------------------ --------- ---------
Operating Expenses:
   R&D                                  131,848   131,288   126,642
   Selling, Marketing and G&A            97,432    96,281    85,813
   Special Charges                            -     1,013         -
------------------------------------------------ --------- ---------
Operating Income                        151,391   132,205   133,944
   Percent of Sales                        23.5%     21.3%     22.2%
------------------------------------------------ --------- ---------
Other Income                            (39,225)  (20,592)  (16,768)
------------------------------------------------ --------- ---------
Income Before Tax                       190,616   152,797   150,712
Provision for Taxes                      44,795    32,240    33,113
   Tax Rate                                23.5%     21.1%       22%
------------------------------------------------ --------- ---------
Net Income                             $145,821  $120,557  $117,599
   Percent of Sales                        22.6%     19.4%     19.5%
------------------------------------------------ --------- ---------

Shares used for EPS - Basic             364,225   366,135   370,674
Shares used for EPS - Diluted           376,811   380,337   382,337

Earnings per Share - Basic                $0.40     $0.33     $0.32
Earnings per Share - Diluted              $0.39     $0.32     $0.31

Dividends paid per share                  $0.12     $0.12     $0.06
------------------------------------------------ --------- ---------




                   Supplemental Information

    Our GAAP Financial Statements Include the Following Amounts of
      Stock-based Compensation Expense Related to the Adoption of
    FAS123R, Restructuring Related Expense, Tax Expense Associated
     with the Repatriation of Foreign Earnings, Gain on Sale of a
              Product Line and Acquisition Related Costs

               (in thousands, except per-share amounts)

                         4Q 05     1Q 06    2Q 06     3Q 06     4Q 06
                        Actual    Actual   Actual  Estimate  Estimate
COST OF SALES
  Stock-based
   compensation
   expense                          $-            $954          $990        $2,848        $2,944
    Restructuring
      related  expenses                  -          5,903        5,877          5,877          5,877
------------------------------  ---------  --------  ---------  ---------
GROSS  MARGIN                                -        (6,857)    (6,867)      (8,725)      (8,821)
            %  Sales                          0.0%          -1.1%        -1.1%
------------------------------  ---------  --------  ---------  ---------
OPERATING  EXPENSE
    Engineering  -
      stock-based
      compensation
      expense                                    -          9,562        8,282          7,409          6,778
    Selling,  Marketing,
      G&A  -  stock-based
      compensation
      expense                                    -        10,090        7,684          7,258          6,730
    Acquisition  related
      costs                                        -                  -                -          5,000                  -
    Special  charges            31,480          1,013                -                  -          7,407
------------------------------  ---------  --------  ---------  ---------
TOTAL  OPERATING
  EXPENSE                              31,480        20,665      15,966        19,667        20,915
            %  Sales                          5.1%            3.3%          2.5%
------------------------------  ---------  --------  ---------  ---------
OPERATING  PROFIT
  (LOSS)  BEFORE  TAX        (31,480)    (27,522)  (22,833)    (28,392)    (29,736)
            %  Sales                        -5.1%          -4.4%        -3.5%
------------------------------  ---------  --------  ---------  ---------
Non-operating  expense
  (income)                                      -                  -    (13,027)                -                  -
            %  Sales                          0.0%            0.0%        -2.0%
------------------------------  ---------  --------  ---------  ---------
Tax  benefit  of  above
  items                                (10,118)      (8,344)    (2,279)      (7,761)      (9,486)
Tax  expense
  associated  with  the
  repatriation  of
  foreign  earnings            48,768                  -                -                  -                  -
------------------------------  ---------  --------  ---------  ---------
NET  INCOME  (LOSS)        $(70,130)  $(19,178)  $(7,527)  $(20,631)  $(20,250)
            %  Sales                      -11.3%          -3.1%        -1.2%
------------------------------  ---------  --------  ---------  ---------
EARNINGS  (LOSS)  PER
  SHARE
Repatriation  of
  foreign  earnings          $(0.128)              $-              $-                $-                $-
Gain  on  sale  of  a
  product  line                              -                  -        0.022                  -                  -
Stock-based
  compensation                              -        (0.039)    (0.032)      (0.033)      (0.031)
Restructuring  related
  expenses                            (0.054)      (0.012)    (0.010)      (0.010)      (0.023)
Acquisition  related
  costs                                            -                  -                -        (0.012)                -
------------------------------  ---------  --------  ---------  ---------
EARNINGS  (LOSS)  PER
  SHARE                                $(0.182)    $(0.051)  $(0.020)    $(0.055)    $(0.054)
------------------------------  ---------  --------  ---------  ---------



                  Analog  Devices,  Second  Quarter,  Fiscal  2006

                    Selected  Balance  Sheet  Information  (GAAP)
                                                (In  thousands)

                                                                        2Q  06              1Q  06              2Q  05
-----------------------------  -----------  -----------  -----------
                                                              April  29,    January  28,    April  30,
                                                                          2006                2006                2005
-----------------------------  -----------  -----------  -----------
Cash  &  Short-term  Investments  $2,692,796    $2,735,114    $2,617,259
Accounts  Receivable,  Net                  357,880          317,730          320,972
Inventories  (1)                                    359,420          337,835          350,896
Other  Current  Assets                          147,380          151,302          126,865
-----------------------------  -----------  -----------  -----------
    Total  Current  Assets                  3,557,476      3,541,981      3,415,992
PP&E,  Net                                                561,538          576,798          636,249
Investments                                              30,532            29,249          300,303
Intangible  Assets                                166,795          167,186          168,063
Other                                                          87,006            58,964            67,719
-----------------------------  -----------  -----------  -----------
Total  Assets                                    $4,403,347    $4,374,178    $4,588,326
-----------------------------  -----------  -----------  -----------

Deferred  Income-Shipments  to
  Distributors                                      $152,864        $132,332        $128,957
Other  Current  Liabilities                542,820          471,851          413,969
Non-Current  Liabilities                      64,732            60,366          329,532
Stockholders'  Equity                      3,642,931      3,709,629      3,715,868
-----------------------------  -----------  -----------  -----------
Total  Liabilities  &  Equity        $4,403,347    $4,374,178    $4,588,326
-----------------------------  -----------  -----------  -----------
Days  Sales  Outstanding                                51                    47                    49
Days  Cost  of  Sales  in
  Inventory                                                      125                  118                  124

(1)  includes  $3,947  and  $1,937  related  to  stock-based  compensation
        expense  in  2Q06  and  1Q06,  respectively.


                                    Cash  Flow  Statement  (GAAP)
                                                (In  thousands)

                                                                                2Q  06          1Q  06          2Q  05
-----------------------------------  ---------  ---------  ---------
Three  Months  Ended                                    April  29,    January    April  30,
                                                                                  2006    28,  2006            2005
-----------------------------------  ---------  ---------  ---------
Cash  flows  from  operating
  activities:
    Net  Income                                                $145,821    $120,557    $117,599
    Adjustments  to  reconcile  net
      income  to  net  cash  provided  by
      operations:
              Depreciation                                      42,687        43,079        39,013
              Amortization  of  intangibles              404              404              685
              Stock-based  compensation              17,217        21,307              786
              Gain  on  sale  of  a  product
                line                                                  (13,027)                -                  -
              Non-cash  portion  of  special
                charge                                                          -              459                  -
              Other  non-cash  expense                          23              557                33
              Tax  benefit  -  stock  option
                exercises                                        (14,736)                -                  -
              Deferred  income  taxes                    (4,776)    (15,625)        6,423
              Changes  in  operating  assets
                and  liabilities                              31,526          4,517        10,662
-----------------------------------  ---------  ---------  ---------
      Total  adjustments                                    59,318        54,698        57,602
-----------------------------------  ---------  ---------  ---------
Net  cash  provided  by  operating
  activities                                                    205,139      175,255      175,201
-----------------------------------  ---------  ---------  ---------
  Percent  of  Sales                                              31.9%          28.2%          29.0%
-----------------------------------  ---------  ---------  ---------

Cash  flows  from  investing
  activities:
    Additions  to  property,  plant  and
      equipment,  net                                        (28,822)    (20,360)    (21,632)
    Purchases  of  short-term
      available-for-sale  investments      (421,103)  (954,871)  (942,687)
    Maturities  of  short-term
      available-for-sale  investments        441,630      726,807      824,864
    Proceeds  from  sale  of  a  product
      line                                                              23,070                  -                  -
    Decrease  (increase)  in  other
      assets                                                                330          3,526              (96)
-----------------------------------  ---------  ---------  ---------
Net  cash  provided  (used)  by
  investing  activities                                  15,105    (244,898)  (139,551)
-----------------------------------  ---------  ---------  ---------

Cash  flows  from  financing
  activities:
    Dividend  payments  to  shareholders    (44,191)    (44,094)    (22,257)
    Repurchase  of  common  stock                (237,709)  (125,098)  (123,493)
    Net  proceeds  from  employee  stock
      plans                                                            20,994        38,685        14,818
    Tax  benefit  -  stock  option
      exercises                                                    14,736                  -                  -
-----------------------------------  ---------  ---------  ---------
Net  cash  used  for  financing
  activities                                                  (246,170)  (130,507)  (130,932)
-----------------------------------  ---------  ---------  ---------
Effect  of  exchange  rate  changes  on
  cash                                                                        562              414              314
-----------------------------------  ---------  ---------  ---------

Net  decrease  in  cash  and  cash
  equivalents                                                  (25,364)  (199,736)    (94,968)
Cash  and  cash  equivalents  at
  beginning  of  period                                  427,855      627,591      409,336
-----------------------------------  ---------  ---------  ---------
Cash  and  cash  equivalents  at  end  of
  period                                                          $402,491    $427,855    $314,368
-----------------------------------  ---------  ---------  ---------
 





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