Analog Devices Announces Financial Results for the Second Quarter of Fiscal Year 2008

Revenue by product type for the second quarter of fiscal 2008:

  • Revenue increased across ADIs product portfolio with the highest sequential and year-over-year growth rates in converter, amplifier, and general purpose DSP revenue.
  • Analog product revenue increased 6% sequentially and 8% year-over-year, and represented 90% of total revenue in the second quarter. Converter revenue grew 6% sequentially and 9% year-over-year. Converters remain ADIs largest and most diverse product family, contributing 46% of total revenue in the second quarter. Amplifiers represented 23% of total revenue in the second quarter, growing 10% both sequentially and year-over-year.
  • General purpose DSP revenue grew 6% sequentially and 18% year-over-year, and represented 9% of total revenue in the second quarter.
  • Schedule F of this document provides additional details about revenue by product type for the second quarter, immediately prior quarter, and year-ago quarter. A more complete table covering prior periods is available on the Analog Devices Investor Relations web site at:

Outlook for the Third Quarter of Fiscal 2008

The following statements are based on current expectations. These statements are forward looking and actual results may differ materially. These statements supersede all prior statements regarding business outlook set forth in prior ADI news releases.

Regarding the outlook for the third quarter of fiscal 2008, Mr. Fishman said, Orders remained strong in the second quarter, and increased in comparison to the immediately prior quarter. Our operating plan for the third quarter is for revenue to be in the range of $650 to $665 million, or flat to up 3% sequentially, gross margin to be approximately 61%, and operating expenses to increase slightly. However, our plan does not factor in potential effects of ongoing financial market uncertainty which could translate into a more cautious stance from our customers. If the operating plan is achieved, diluted EPS from continuing operations is expected to be approximately $0.43 to $0.45 and diluted EPS from discontinued operations is expected to be approximately $0.02 to $0.03.

Conference Call Scheduled for 5:00

Mr. Fishman will discuss the second quarter's results and the near-term outlook via webcast, accessible at today beginning at 5:00 pm ET. 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: 46692986 or by visiting the Analog Devices Investor Relations web site.

Non-GAAP Financial Information

This release includes non-GAAP financial measures for prior periods that are not in accordance with, nor an alternative to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

Manner in Which Management Uses the Non-GAAP Financial Measures

Management uses non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP diluted earnings per share to evaluate the Companys operating performance against past periods and to budget and allocate resources in future periods. These non-GAAP measures also assist management in understanding and evaluating the underlying baseline operating results and trends in the Companys business.

Economic Substance Behind Managements Decision to Use Non-GAAP Financial Measures

The items excluded from the non-GAAP measures were excluded because they are of a non-recurring or non-cash nature. Tables reconciling our non-GAAP measures to GAAP measures are provided in this release.

The following items are excluded from our Non-GAAP operating expenses:

Restructuring-Related Expense. These expenses are incurred in connection with facility closures and other reorganization efforts. Apart from ongoing expense savings as a result of such items, these expenses and the related tax effects have no direct correlation to the operation of our business in the future.

Proceeds from the one-time settlement of litigation. In the second quarter of fiscal 2007, we settled a lawsuit against Maxim Integrated Products and received a one-time non-recurring payment of $19 million. A portion of this payment ($8.5 million) was to compensate us for the legal expenses we incurred during the years 2001 through 2007 in connection with this lawsuit. As the original legal expenses were recorded as general and administrative expenses in the income statement, we recorded the recovery of these legal expenses in the same line item in our operating expenses. The remaining $10.5 million was recorded as non-operating income because it is not associated with the normal operations of our business. We exclude this payment and the related tax effects from our non-GAAP results because it is a one-time item not associated with the ongoing operations of our business.

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