Analog Devices Reports Record Revenue and Earnings for the Second Quarter Fiscal 2021

Tax Related Items: Income tax effect of the non-GAAP items discussed above. We excluded the income tax benefit/provision effect of these tax related items from our non-GAAP measures because they are not associated with the tax expense on our ongoing operating results.

About Analog Devices

Analog Devices (Nasdaq: ADI) is a leading global semiconductor company dedicated to solving the toughest engineering challenges. We enable our customers to interpret the world around us by intelligently bridging the physical and digital with unmatched technologies that sense, measure, power, connect and interpret. Visit http://www.analog.com.

Forward-Looking Statements

This press release contains forward-looking statements, which address a variety of subjects including, for example, our statements regarding our proposed acquisition of Maxim Integrated Products, Inc. (“Maxim”); the impact of the COVID-19 pandemic on our business, financial condition and results of operations; expected revenue, operating margin, tax rate, earnings per share, and other financial results; expected market trends, market share gains, operating leverage, production and inventory levels; expected customer demand and order rates for our products and expected product offerings; product development; and marketing position. Statements that are not historical facts, including statements about our beliefs, plans and expectations, are forward-looking statements. Such statements are based on our current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: the uncertainty as to the extent of the duration, scope and impacts of the COVID-19 pandemic; political and economic uncertainty, including 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; changes in export classifications, import and export regulations or duties and tariffs; changes in our or Maxim’s estimates of our respective expected tax rates based on current tax law; our ability to successfully integrate Maxim’s businesses and technologies; the risk that the expected benefits and synergies of the proposed transaction and growth prospects of the combined company may not be fully achieved in a timely manner, or at all; adverse results in litigation matters, including the potential for litigation related to the proposed transaction; the risk that we or Maxim will be unable to retain and hire key personnel; the risk associated with the timing of the closing of the proposed transaction, including the risk that the conditions to the transaction are not satisfied on a timely basis or at all or the failure of the transaction to close for any other reason or to close on the anticipated terms, including the anticipated tax treatment; the risk that any regulatory approval, consent or authorization that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated; unanticipated difficulties or expenditures relating to the transaction, the response of business partners and retention as a result of the announcement and pendency of the transaction; uncertainty as to the long-term value of our common stock; the diversion of management time on transaction-related matters; our ability to successfully integrate acquired businesses and technologies; and the risk that expected benefits, synergies and growth prospects of acquisitions may not be fully achieved in a timely manner, or at all. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our filings with the Securities and Exchange Commission (“SEC”), including the risk factors contained in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Forward-looking statements represent management’s current expectations and are inherently uncertain. Except as required by law, we do not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.

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, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

 

 

Three Months Ended

 

Six Months Ended

 

May 1, 2021

 

May 2, 2020

 

May 1, 2021

 

May 2, 2020

Revenue

$

1,661,407

 

 

$

1,317,060

 

 

$

3,219,865

 

 

$

2,620,625

 

Cost of sales

524,770

 

 

470,386

 

 

1,037,857

 

 

925,809

 

Gross margin

1,136,637

 

 

846,674

 

 

2,182,008

 

 

1,694,816

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

302,238

 

 

252,413

 

 

590,388

 

 

509,486

 

Selling, marketing, general and administrative

206,612

 

 

141,775

 

 

391,887

 

 

341,055

 

Amortization of intangibles

107,786

 

 

107,146

 

 

215,434

 

 

214,371

 

Special charges

311

 

 

1,320

 

 

749

 

 

12,456

 

Total operating expenses

616,947

 

 

502,654

 

 

1,198,458

 

 

1,077,368

 

Operating income

519,690

 

 

344,020

 

 

983,550

 

 

617,448

 

Nonoperating expense (income):

 

 

 

 

 

 

 

Interest expense

43,066

 

 

49,985

 

 

85,545

 

 

98,798

 

Interest income

(290

)

 

(1,334

)

 

(499

)

 

(3,274

)

Other, net

929

 

 

308

 

 

(14,099

)

 

646

 

 

43,705

 

 

48,959

 

 

70,947

 

 

96,170

 

Income before income taxes

475,985

 

 

295,061

 

 

912,603

 

 

521,278

 

Provision for income taxes

53,080

 

 

27,365

 

 

101,179

 

 

49,708

 

Net income

$

422,905

 

 

$

267,696

 

 

$

811,424

 

 

$

471,570

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per common share - basic

368,823

 

 

368,217

 

 

369,013

 

 

368,229

 

Shares used to compute earnings per common share - diluted

372,418

 

 

371,305

 

 

372,762

 

 

371,784

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

1.15

 

 

$

0.73

 

 

$

2.20

 

 

$

1.28

 

Diluted earnings per common share

$

1.14

 

 

$

0.72

 

 

$

2.18

 

 

$

1.27

 

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

May 1, 2021

 

Oct. 31, 2020

Cash & cash equivalents

$

1,305,216

 

 

$

1,055,860

 

Accounts receivable

814,135

 

 

737,536

 

Inventories

641,202

 

 

608,260

 

Other current assets

142,247

 

 

116,032

 

Total current assets

2,902,800

 

 

2,517,688

 

Net property, plant and equipment

1,160,586

 

 

1,120,561

 

Other investments

94,033

 

 

86,729

 

Goodwill

12,282,465

 

 

12,278,425

 

Intangible assets, net

3,393,546

 

 

3,650,280

 

Deferred tax assets

1,448,018

 

 

1,503,064

 

Other assets

306,769

 

 

311,856

 

Total assets

$

21,588,217

 

 

$

21,468,603

 

 

 

 

 

Other current liabilities

$

1,452,378

 

 

$

1,364,986

 

Debt, current

1,324,451

 

 

 

Long-term debt

3,823,595

 

 

5,145,102

 

Deferred income taxes

1,833,520

 

 

1,919,595

 

Other non-current liabilities

987,169

 

 

1,040,975

 

Shareholders' equity

12,167,104

 

 

11,997,945

 

Total liabilities & equity

$

21,588,217

 

 

$

21,468,603

 

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

May 1, 2021

 

May 2, 2020

 

May 1, 2021

 

May 2, 2020

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

422,905

 

 

$

267,696

 

 

$

811,424

 

 

$

471,570

 

Adjustments to reconcile net income to net cash provided by operations:

 

 

 

 

 

 

 

Depreciation

52,466

 

 

59,261

 

 

108,775

 

 

119,124

 

Amortization of intangibles

145,701

 

 

144,051

 

 

290,745

 

 

288,120

 

Stock-based compensation expense

40,358

 

 

35,900

 

 

76,996

 

 

73,401

 

Deferred income taxes

(21,017

)

 

(21,408

)

 

(48,292

)

 

(35,390

)

Non-cash contribution to charitable foundation

 

 

 

 

 

 

40,000

 

Other non-cash activity

2,431

 

 

1,469

 

 

(12,122

)

 

3,801

 

Changes in operating assets and liabilities

93,517

 

 

(57,928

)

 

(63,223

)

 

(181,937

)

Total adjustments

313,456

 

 

161,345

 

 

352,879

 

 

307,119

 

Net cash provided by operating activities

736,361

 

 

429,041

 

 

1,164,303

 

 

778,689

 

Percent of revenue

44

%

 

33

%

 

36

%

 

30

%

Cash flows from investing activities:

 

 

 

 

 

 

 

Proceeds from other investments

 

 

 

 

18,566

 

 

 

Additions to property, plant and equipment

(59,170

)

 

(60,161

)

 

(126,558

)

 

(115,000

)

Cash paid for asset acquisition

 

 

 

 

(22,522

)

 

 

Payments for acquisitions, net of cash acquired

 

 

 

 

(2,428

)

 

 

Changes in other assets

(1,526

)

 

(1,391

)

 

(2,826

)

 

(1,284

)

Net cash used for investing activities

(60,696

)

 

(61,552

)

 

(135,768

)

 

(116,284

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from debt

 

 

395,646

 

 

 

 

395,646

 

Payments on revolver

 

 

(350,000

)

 

 

 

(350,000

)

Proceeds from revolver

 

 

350,000

 

 

 

 

350,000

 

Debt repayments

 

 

(300,000

)

 

 

 

(300,000

)

Dividend payments to shareholders

(254,429

)

 

(228,600

)

 

(483,608

)

 

(427,760

)

Repurchase of common stock

(188,814

)

 

(113,584

)

 

(345,871

)

 

(219,614

)

Proceeds from employee stock plans

23,752

 

 

14,784

 

 

43,672

 

 

30,897

 

Changes in other financing activities

(94

)

 

(3,956

)

 

2,399

 

 

(4,451

)

Net cash used for financing activities

(419,585

)

 

(235,710

)

 

(783,408

)

 

(525,282

)

Effect of exchange rate changes on cash

1,073

 

 

(1,250

)

 

4,229

 

 

(508

)

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

257,153

 

 

130,529

 

 

249,356

 

 

136,615

 

Cash and cash equivalents at beginning of period

1,048,063

 

 

654,408

 

 

1,055,860

 

 

648,322

 

Cash and cash equivalents at end of period

$

1,305,216

 

 

$

784,937

 

 

$

1,305,216

 

 

$

784,937

 

ANALOG DEVICES, INC.

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