ADI
$71.00
Analog Devices Cmn
$.40
.57%
Earnings Details
4th Quarter October 2016
Tuesday, November 22, 2016 8:00:02 AM
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Summary

Analog Devices Cmn Beats

Analog Devices Cmn (ADI) reported 4th Quarter October 2016 earnings of $1.05 per share on revenue of $1.0 billion. The consensus earnings estimate was $0.90 per share on revenue of $942.4 million. The Earnings Whisper number was $0.91 per share. Revenue grew 2.5% on a year-over-year basis.

The company said it expects first quarter earnings of $0.68 to $0.78 per share on revenue of $840.0 million to $900.0 million. The current consensus earnings estimate is $0.73 per share on revenue of $841.1 million for the quarter ending January 31, 2017.

Analog Devices Inc is engaged in the design, manufacture and marketing of a portfolio of high-performance analog, mixed-signal and digital signal processing integrated circuits used in all types of electronic equipment.

Results
Reported Earnings
$1.05
Earnings Whisper
$0.91
Consensus Estimate
$0.90
Reported Revenue
$1.00 Bil
Revenue Estimate
$942.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Analog Devices Reports Fourth Quarter and Fiscal Year 2016 Results

Record quarterly operating cash flow margin of 49%, record quarterly free cash flow margin of 44%

--Revenue and earnings per share exceed high end of guidance range

Analog Devices, Inc. (ADI), today announced financial results for its fourth quarter and fiscal year 2016, which ended October 29, 2016.

"ADI had another excellent quarter, with both revenue and earnings per share exceeding the high end of our guidance range," said Vincent Roche, President and CEO. "Revenue increased to a record $1 billion on broad strength across all of our markets, and our focus on sustainable and differentiated innovation, combined with strong operational execution, helped drive profitability and cash flow generation to record levels."

"In addition, we are pleased with the progress we are making to close the acquisition of Linear Technology, a combination that, we believe, will create an analog industry powerhouse, capable of creating significant value for our customers, employees, and shareholders."

"Looking ahead, order rates are stable entering the seasonally slower first quarter. As a result, we are planning for revenue to decrease sequentially, but to increase 9% to 17% over the prior year, which would represent the third consecutive quarter of year-over-year revenue growth for ADI."

ADI also announced that the Board of Directors has declared a cash dividend of $0.42 per outstanding share of common stock. The dividend will be paid on December 13, 2016 to all shareholders of record at the close of business on December 2, 2016.

Results for the Fourth Quarter of Fiscal Year 2016

Revenue totaled $1.0 billion, up 15% sequentially, and up 3% year-over-year

Revenue in ADI’s B2B markets of industrial, automotive, and communications infrastructure totaled $710 million, up 4% sequentially, and up 7% year-over-year

GAAP gross margin of 66.4% of revenue; Non-GAAP gross margin of 66.6% of revenue

GAAP operating margin of 35.6% of revenue; Non-GAAP operating margin of 38.1% of revenue

-- GAAP diluted EPS of $0.95; Non-GAAP diluted EPS of $1.05

Operating Cash Flow of $487 million, or 48.5% of revenue; Free Cash Flow of $446 million, or 44.4% of revenue

Results for Fiscal Year 2016

-- Revenue totaled $3.4 billion, stable year-over-year

GAAP gross margin of 65.1% of revenue; Non-GAAP gross margin of 65.3% of revenue

GAAP operating margin of 30.0% of revenue; Non-GAAP operating margin of 33.1% of revenue

GAAP diluted EPS of $2.76 per share; Non-GAAP diluted EPS of $3.07 per share

Operating Cash Flow of $1.3 billion, or 37.4% of revenue; Free Cash Flow of $1.2 billion, or 33.7% of revenue

Share repurchases and dividend payments to shareholders totaled $883 million

Please refer to the schedules provided for a summary of revenue and earnings, selected balance sheet information, and the cash flow statement for the fourth quarter and fiscal year 2016, as well as the immediately prior and year-ago quarters. Additional information on revenue by end market is provided on Schedule D.

Outlook for the First Quarter of Fiscal Year 2017 The following statements are based on current expectations, and as indicated, and further explained below, are presented on a non-GAAP basis where the Company is unable without unreasonable efforts to forecast items that will be included in reported GAAP results. These statements are forward-looking and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this release. These statements supersede all prior statements regarding our business outlook set forth in prior ADI news releases, and ADI disclaims any obligation to update these forward-looking statements.

-- Revenue estimated to be in the range of $840 million to $900 million

-- Non-GAAP gross margin expected to be between 65.5% and 66.0%

-- Non-GAAP operating expenses expected to be slightly up sequentially

Non-GAAP interest and other expense expected to be between $20 million and $25 million

-- Non-GAAP tax rate expected to be approximately 11%

-- Non-GAAP diluted EPS estimated to be $0.68 to $0.78 per share

With respect to the forward-looking information presented on a non-GAAP basis, the Company is unable to provide a quantitative reconciliation to GAAP because the items that would be included or excluded, other than those described below, are difficult to predict and estimate and are primarily dependent on future events, including costs relating to the consummation and planned integration of the Company’s pending acquisition of Linear Technology Corporation, which is expected to close by the end of the Company’s second fiscal 2017 quarter. Known reconciling items are:

Non-GAAP gross margin excludes $2.5 million of amortization of purchased intangible assets and depreciation of step up value on purchased fixed assets;

Non-GAAP operating expenses exclude $17.5 million of amortization of purchased intangible assets and depreciation of step up value on purchased fixed assets;

Non-GAAP tax rate excludes $1.0 million provision for income taxes which represents the tax effects of the reconciling items noted in the two bullets above; and

Non-GAAP earnings per share excludes $0.06, which represents the estimated impact of the amortization of purchased intangible assets and depreciation of step up value on purchased fixed assets, net of tax, associated with the non-GAAP adjustments noted above on a per share basis.

Conference Call Scheduled for Today, Tuesday, November 22, 2016 at 10:00 am ET

ADI will host a conference call to discuss fourth quarter and fiscal 2016 results and short-term outlook today, beginning at 10:00 am ET. Investors may join via webcast, accessible at investor.analog.com, or by telephone (call 706-634-7193, or toll free at 800-859-9560, ten minutes before the call begins and provide the password "ADI").

A replay will be available two hours after the completion of the call. The replay may be accessed for up to two weeks by dialing 855-859-2056 (replay only) and providing the conference ID: 69737833, or by visiting investor.analog.com.

Non-GAAP Financial Information This release includes non-GAAP financial measures 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.

Schedules E and F of this press release provides the reconciliation of the Company’s historical non-GAAP measures to their most comparable GAAP measures.

Management uses non-GAAP measures internally to evaluate the Company’s operating performance from continuing operations against past periods and to budget and allocate resources in future periods. These non-GAAP measures also assist management in evaluating the Company’s core business and trends across different reporting periods on a consistent basis. Management also uses these non-GAAP measures as the primary performance measurement when communicating with analysts and investors regarding the Company’s earnings results and outlook and believes that the presentation of these non-GAAP measures is useful to investors because it provides investors with the operating results that management uses to manage the Company and enables investors and analysts to evaluate the Company’s core business. Management also believes that the non-GAAP liquidity measure free cash flow is useful both internally and to investors because it provides information about the amount of cash generated after capital expenditures that is then available to repay debt obligations, make investments and fund acquisitions, and for certain other activities.

The following items are excluded from our non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, and non-GAAP diluted earnings per share:

Acquisition-Related Expenses: Expenses incurred as a result of prior period acquisitions primarily include expenses associated with the fair value adjustments to property, plant and equipment and amortization of acquisition related intangibles, which include acquired intangibles such as purchased technology and customer relationships. We excluded these costs from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.

Stock-Based Compensation Expense: In fiscal 2015, the Company recorded $3.0 million of stock-based compensation expense for one of its former executive officers due to the accelerated vesting of restricted stock units and a reduction in the requisite service period for stock options in accordance with the terms of the applicable agreements. In addition, in fiscal 2015, the Company recorded $1.3 million of stock-based compensation expense due to the accelerated vesting of restricted stock units and stock options in conjunction with the restructuring charge recorded in the fourth quarter of fiscal 2014.

The following items are excluded from our non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, and non-GAAP diluted earnings per share:

Other Operating Expense: Costs incurred in the fourth quarter of fiscal 2015 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 and other professional fees. We excluded these costs from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.

Acquisition-Related Transaction Costs: Costs incurred as a result of the Hittite acquisition and the proposed Linear Technology acquisition, including legal, accounting and other professional fees directly related to these acquisitions. We excluded these costs from our non-GAAP measures because they relate to specific transactions and are not reflective of our ongoing financial performance.

Restructuring-Related Expenses: These expenses are incurred in connection with facility closures, consolidation of manufacturing facilities, severance, and other cost reduction efforts. We excluded these expenses from our non-GAAP measures because 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.

The following items are excluded from our non-GAAP other expense and non-GAAP diluted earnings per share:

Loss on Extinguishment of Debt: In fiscal 2016, the Company redeemed its outstanding 3.0% senior unsecured notes due April 15, 2016. The Company recognized a net loss on debt extinguishment of approximately $3.3 million, which was comprised of a make-whole premium and the write off of unamortized debt issuance and discount costs. We excluded these costs from our non-GAAP measures because they are not reflective of our ongoing financial performance.

Amortization of Deferred Financing Costs: In the third quarter of fiscal 2016, in connection with the proposed Linear Technology acquisition, the Company obtained bridge financing commitments and incurred financing fees which will be amortized into interest expense over the term of the bridge financing commitments. In the fourth quarter of fiscal 2016, the Company replaced a portion of the bridge financing commitments with a 3-year and 5-year unsecured term loan facility. As a result, the Company accelerated $13.7 million of the unamortized bridge financing commitment fees into interest expense. We excluded these costs from our non-GAAP measures because they are not reflective of our ongoing financial performance.

The following items are excluded from our non-GAAP diluted earnings per share:

Tax-Related Items: Tax adjustments associated with the non-GAAP items discussed above. In addition, in the fourth quarter of 2015, the Company recorded a $13.0 million tax benefit as a result of the reversal of prior period tax liabilities. Also, in the first quarter of 2015, the Company recorded a $7.0 million tax benefit related to the reinstatement of the R&D tax credit in December 2014, retroactive to January 1, 2014. We excluded these tax-related items from our non-GAAP measures because they are not associated with the tax expense on our current operating results.

The following items are excluded from our calculation of Non-GAAP free cash flow:

Pension Conversion Payments: In the fourth quarter of fiscal 2015, the Company made payments 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 and other professional fees. We excluded these payments from our non-GAAP free cash flow measure 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.

Forward Looking Statements This press release contains forward-looking statements, which address a variety of subjects including, for example, 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, the proposed acquisition of Linear Technology Corporation ("Linear Technology"), the expected timing to close the transaction, expected benefits and synergies of the transaction, expected growth rates of the combined companies, Analog Devices’ expected product offerings, product development, marketing position and technical advances resulting from the transaction. 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: 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, the ability to satisfy the conditions to closing of the proposed transaction with Linear Technology, on the expected timing or at all; the ability to obtain required regulatory approvals for the proposed transaction, on the expected timing or at all, including the potential for regulatory authorities to require divestitures in connection with the proposed transaction; the occurrence of any event that could give rise to the termination of the merger agreement with Linear Technology; the risk of stockholder litigation relating to the proposed transaction, including resulting expense or delay; higher than expected or unexpected costs associated with or relating to the transaction; the risk that expected benefits, synergies and growth prospects of the transaction may not be achieved in a timely manner, or at all; the risk that Linear Technology’s business may not be successfully integrated with Analog Devices’ following the closing; the risk that Analog Devices and Linear Technology will be unable to retain and hire key personnel; and the risk that disruption from the transaction may adversely affect Linear Technology’s or Analog Devices’ business and relationships with their customers, suppliers or employees. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to both Analog Devices’ and Linear Technology’s filings with the Securities and Exchange Commission ("SEC"), including the risk factors contained in each of Analog Devices’ and Linear Technology’s most recent Quarterly Reports 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.

Important Additional Information Will Be Filed With The SEC In connection with the proposed transaction, Analog Devices and Linear Technology have filed and will file relevant information with the SEC, including a registration statement of Analog Devices on Form S-4 (the "registration statement") that includes a prospectus of Analog Devices and a proxy statement of Linear Technology (the "proxy statement/prospectus"). INVESTORS AND SECURITY HOLDERS OF LINEAR TECHNOLOGY ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT ANALOG DEVICES, LINEAR TECHNOLOGY AND THE PROPOSED TRANSACTION. A definitive proxy statement/prospectus has been sent to Linear Technology’s shareholders. The registration statement, proxy statement/prospectus and other documents filed by Analog Devices with the SEC may be obtained free of charge at Analog Devices’ website at www.analog.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Analog Devices by requesting them by mail at Analog Devices, Inc., One Technology Way, P.O. Box 9106, Norwood, MA 02062-9106, Attention: Investor Relations, or by telephone at (781) 461-3282. The documents filed by Linear Technology with the SEC may be obtained free of charge at Linear Technology’s website at www.linear.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Linear Technology by requesting them by mail at Linear Technology Corporation, 1630 McCarthy Blvd., Milpitas, CA, 95035-7417, Attention: Investor Relations, or by telephone at (408) 432-2407.

Non-Solicitation This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

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, Fourth Quarter, Fiscal 2016
Schedule A
Revenue and Earnings Summary (Unaudited)
(In thousands, except per-share amounts)
Three Months Ended
Twelve Months Ended
4Q 16
3Q 16
4Q 15
FY 16
FY 15
Oct. 29,
July 30,
Oct. 31,
Oct. 29,
Oct. 31,
2016
2016
2015
2016
2015
Revenue
$ 1,003,623
$ 869,591
$ 978,722
$ 3,421,409
$ 3,435,092
Year-to-year change
3
%
1
%
20
%
--
%
20
%
Quarter-to-quarter change
15
%
12
%
13
%
Cost of sales (1)
336,936
297,301
336,926
1,194,236
1,175,830
Gross margin
666,687
572,290
641,796
2,227,173
2,259,262
Gross margin percentage
66.4
%
65.8
%
65.6
%
65.1
%
65.8
%
Year-to-year change (basis points)
80
(10 )
590
(70 )
190
Quarter-to-quarter change (basis points)
60
20
(30 )
Operating expenses:
R&D (1)
172,926
163,227
170,736
653,816
637,459
Selling, marketing and G&A (1)
118,881
122,909
121,400
461,438
478,972
Amortization of intangibles
17,899
17,447
17,358
70,123
88,318
Special charges
--
--
--
13,684
--
Other operating expense
--
--
223,672
--
223,672
Total operating expenses
309,706
303,583
533,166
1,199,061
1,428,421
Total operating expenses percentage
30.9
%
34.9
%
54.5
%
35.0
%
41.6
%
Year-to-year change (basis points)
(2,360 )
(30 )
1,320
(660 )
400
Quarter-to-quarter change (basis points)
(400 )
(410 )
1,930
Operating income
356,981
268,707
108,630
1,028,112
830,841
Operating income percentage
35.6
%
30.9
%
11.1
%
30.0
%
24.2
%
Year-to-year change (basis points)
2,450
20
(730 )
580
(210 )
Quarter-to-quarter change (basis points)
470
430
(1,960 )
Other expense
33,547
12,307
3,953
71,191
20,727
Income before income tax
323,434
256,400
104,677
956,921
810,114
Provision for income taxes
27,277
25,970
8,372
95,257
113,236
Tax rate percentage
8.4
%
10.1
%
8.0
%
10.0
%
14.0
%
Net income
$
296,157
$ 230,430
$
96,305
$
861,664
$
696,878
Shares used for EPS - basic
307,854
307,135
312,829
308,736
312,660
Shares used for EPS - diluted
311,633
310,558
316,571
312,308
316,872
Earnings per share - basic
$
0.96
$
0.75
$
0.31
$
2.79
$
2.23
Earnings per share - diluted
$
0.95
$
0.74
$
0.30
$
2.76
$
2.20
Dividends paid per share
$
0.42
$
0.42
$
0.40
$
1.66
$
1.57
(1) Includes stock-based compensation expense as follows:
Cost of sales
$
1,886
$
1,844
$
2,188
$
7,808
$
8,983
R&D
$
7,007
$
6,682
$
6,487
$
27,039
$
26,617
Selling, marketing and G&A
$
6,341
$
8,093
$
7,408
$
28,574
$
33,319
Analog Devices, Fourth Quarter, Fiscal 2016
Schedule B
Selected Balance Sheet Information (Unaudited)
(In thousands)
4Q 16
3Q 16
4Q 15
Oct. 29,
July 30,
Oct. 31,
2016
2016
2015
Cash & short-term investments
$ 4,055,793
$ 3,803,434
$
3,028,928
Accounts receivable, net
477,609
452,944
466,527
Inventories (1)
376,555
392,303
412,314
Other current assets
64,906
79,207
171,779
Total current assets
4,974,863
4,727,888
4,079,548
PP&E, net
636,116
629,094
644,110
Investments
48,089
54,077
41,235
Goodwill
1,679,116
1,639,033
1,636,526
Intangible assets, net
549,368
529,035
583,517
Other
82,726
105,926
73,841
Total assets
$ 7,970,278
$ 7,685,053
$
7,058,777
Deferred income on shipments to distributors, net
$
351,538
$
327,444
$
300,087
Other current liabilities
431,396
351,249
438,904
Debt, current
--
--
374,594
Long-term debt
1,732,177
1,731,758
495,341
Non-current liabilities
289,549
291,269
376,892
Shareholders’ equity
5,165,618
4,983,333
5,072,959
Total liabilities & equity
$ 7,970,278
$ 7,685,053
$
7,058,777

(1) Includes $2,486, $2,554, and $2,923 related to stock-based compensation in 4Q16, 3Q16, and 4Q15, respectively.

Analog Devices, Fourth Quarter, Fiscal 2016
Schedule C
Cash Flow Statement (Unaudited)
(In thousands)
Three Months Ended
Twelve Months Ended
4Q 16
3Q 16
4Q 15
FY 16
FY 15
Oct. 29,
July 30,
Oct. 31,
Oct. 29,
Oct. 31,
2016
2016
2015
2016
2015
Cash flows from operating activities:
Net Income
$ 296,157
$
230,430
$
96,305
$ 861,664
$ 696,878
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation
34,116
33,732
32,688
134,540
130,147
Amortization of intangibles
19,547
18,916
18,302
75,250
92,093
Stock-based compensation expense
15,234
16,619
16,083
63,421
68,919
Loss on extinguishment of debt
--
--
--
3,290
--
Other non-cash activity
22,199
1,127
(2,428 )
24,570
6,974
Excess tax benefit - equity based awards
(3,273 )
(2,982 )
(2,895 )
(10,453 )
(25,045 )
Deferred income taxes
(12,941 )
12,250
(25,650 )
8,124
(52,214 )
Changes in operating assets and liabilities
115,945
(56,089 )
65,570
120,489
(9,954 )
Total adjustments
190,827
23,573
101,670
419,231
210,920
Net cash provided by operating activities
486,984
254,003
197,975
1,280,895
907,798
Percent of revenue
48.5
%
29.2
%
20.2
%
37.4
%
26.4
%
Cash flows from investing activities:
Purchases of short-term available-for-sale investments
(1,841,330 )
(2,284,166 )
(1,808,202 )
(7,697,260 )
(6,083,999 )
Maturities of short-term available-for-sale investments
1,364,419
2,078,716
2,045,945
6,375,361
4,984,980
Sales of short-term available-for-sale investments
42,645
139,805
159,546
332,716
1,251,194
Additions to property, plant and equipment
(41,224 )
(37,528 )
(45,807 )
(127,397 )
(153,960 )
Payments for acquisitions, net of cash acquired
(80,967 )
--
--
(83,170 )
(7,065 )
Change in other assets
(472 )
(8,591 )
1,102
(18,520 )
(8,275 )
Net cash (used for) provided by investing activities
(556,929 )
(111,764 )
352,584
(1,218,270 )
(17,125 )
Cash flows from financing activities:
Early Termination of debt
--
--
--
(378,156 )
--
Payments of derivative instruments
--
--
--
(33,430 )
--
Proceeds from debt
--
--
--
1,235,331
--
Payments of deferred financing fees
(4,375 )
(22,208 )
--
(26,583 )
--
Dividend payments to shareholders
(129,643 )
(128,954 )
(125,582 )
(513,180 )
(491,059 )
Repurchase of common stock
(1,412 )
(23,022 )
(111,702 )
(370,061 )
(226,953 )
Proceeds from employee stock plans
22,154
16,633
7,760
61,496
122,631
Excess tax benefit - equity based awards
3,273
2,982
2,895
10,453
25,045
Contingent consideration payment
(1,409 )
--
--
(1,409 )
(1,767 )
Change in other financing activities
45
(2,093 )
3,724
(7,378 )
500
Net cash used for financing activities
(111,367 )
(156,662 )
(222,905 )
(22,917 )
(571,603 )
Effect of exchange rate changes on cash
(1,226 )
(1,569 )
(798 )
(2,929 )
(3,950 )
Net (decrease) increase in cash and cash equivalents
(182,538 )
(15,992 )
326,856
36,779
315,120
Cash and cash equivalents at beginning of period
1,103,670
1,119,662
557,497
884,353
569,233
Cash and cash equivalents at end of period
$ 921,132
$ 1,103,670
$ 884,353
$ 921,132
$ 884,353

Analog Devices, Fourth Quarter, Fiscal 2016

Schedule D Revenue Trends by End Market (Unaudited) (In thousands)

The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the "sold to" customer information, the "ship to" customer information and the end customer product or application into which our product will be incorporated. As data systems for capturing and tracking this data evolve and improve, the categorization of products by end market can vary over time. When this occurs we reclassify revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.

Three Months Ended
Oct. 29,
July 30,
Oct. 31,
2016
2016
2015
Revenue
% *
Q/Q %
Y/Y %
Revenue
Revenue
Industrial
$
396,351
39 %
6 %
8 %
$ 373,717
$
367,412
Automotive
141,535
14 %
5 %
7 %
134,605
132,250
Consumer
294,040
29 %
58 %
(7 )%
186,575
317,690
Communications
171,697
17 %
(2 )%
6 %
174,694
161,370
Total Revenue
$ 1,003,623
100 %
15 %
3 %
$ 869,591
$
978,722
* The sum of the individual percentages does not equal the total
due to rounding.
Twelve Months Ended
Oct. 29,
Oct. 31,
2016
2015
Revenue
%
Y/Y %
Revenue
Industrial
$ 1,502,019
44 %
-- %
$
1,494,898
Automotive
540,940
16 %
3 %
525,893
Consumer
688,289
20 %
(6 )%
729,860
Communications
690,161
20 %
1 %
684,441
Total Revenue
$ 3,421,409
100 %
-- %
$
3,435,092
Analog Devices, Fourth Quarter, Fiscal 2016
Schedule E
Reconciliation
from GAAP to Non-GAAP Revenue and Earnings Measures (In thousands,
except per-share amounts)
(Unaudited)
See
"Non-GAAP Financial Information" in this press release for a
description of the items excluded from our non-GAAP measures.
Three Months Ended
Twelve Months Ended
4Q 16
3Q 16
4Q 15
FY 16
FY 15
Oct. 29,
July 30,
Oct. 31,
Oct. 29,
Oct. 31,
2016
2016
2015
2016
2015
GAAP Gross Margin
$
666,687
$
572,290
$
641,796
$
2,227,173
$
2,259,262
Gross Margin Percentage
66.4 %
65.8 %
65.6 %
65.1 %
65.8 %
Acquisition-Related Expenses
2,040
1,888
1,399
6,849
7,199
Stock-Based Compensation Expense
--
--
--
--
113
Non-GAAP Gross Margin
$
668,727
$
574,178
$
643,195
$
2,234,022
$
2,266,574
Gross Margin Percentage
66.6 %
66.0 %
65.7 %
65.3 %
66.0 %
GAAP Operating Expenses
$
309,706
$
303,583
$
533,166
$
1,199,061
$
1,428,421
Percent of Revenue
30.9 %
34.9 %
54.5 %
35.0 %
41.6 %
Other Operating Expense
--
--
(223,672 )
--
(223,672 )
Acquisition-Related Expenses
(17,999 )
(17,582 )
(17,682 )
(70,555 )
(89,738 )
Acquisition-Related Transaction Costs
(5,210 )
(8,310 )
--
(13,519 )
(10,016 )
Restructuring-Related Expense
--
--
--
(13,684 )
--
Stock-Based Compensation Expense
--
--
--
--
(4,164 )
Non-GAAP Operating Expenses
$
286,497
$
277,691
$
291,812
$
1,101,303
$
1,100,831
Percent of Revenue
28.5 %
31.9 %
29.8 %
32.2 %
32.0 %
GAAP Operating Income/Margin
$
356,981
$
268,707
$
108,630
$
1,028,112
$
830,841
Percent of Revenue
35.6 %
30.9 %
11.1 %
30.0 %
24.2 %
Other Operating Expense
--
--
223,672
--
223,672
Acquisition-Related Expenses
20,039
19,470
19,081
77,404
96,937
Acquisition-Related Transaction Costs
5,210
8,310
--
13,519
10,016
Restructuring-Related Expense
--
--
--
13,684
--
Stock-Based Compensation Expense
--
--
--
--
4,277
Non-GAAP Operating Income/Margin
$
382,230
$
296,487
$
351,383
$
1,132,719
$
1,165,743
Percent of Revenue
38.1 %
34.1 %
35.9 %
33.1 %
33.9 %
GAAP Other Expense
$
33,547
$
12,307
$
3,953
$
71,191
$
20,727
Percent of Revenue
3.3 %
1.4 %
0.4 %
2.1 %
0.6 %
Loss on Extinguishment of Debt
--
--
--
(3,290 )
--
Amortization of Deferred Financing Costs
(13,665 )
--
--
(13,665 )
--
Non-GAAP Other Expense
$
19,882
$
12,307
$
3,953
$
54,236
$
20,727
2.0 %
1.4 %
0.4 %
1.6 %
0.6 %
Percent of Revenue
GAAP Diluted EPS
$
0.95
$
0.74
$
0.30
$
2.76
$
2.20
Impact of Loss on Extinguishment of Debt
--
--
--
0.01
--
Other Operating Expense
--
--
0.71
--
0.71
Acquisition-Related Expenses
0.06
0.06
0.06
0.25
0.31
Acquisition-Related Transaction Costs
0.02
0.03
--
0.04
0.03
Amortization of Deferred Financing Costs
0.04
--
--
0.04
--
Restructuring-Related Expense
--
--
--
0.04
--
Stock-Based Compensation Expense
--
--
--
--
0.01
Income Tax Effect of Above Items
(0.02 )
(0.01 )
--
(0.06 )
(0.02 )
Acquisition-Related Tax Impact
--
--
--
--
(0.01 )
Impact of Reversal of Prior Period Tax Liabilities
--
--
(0.04 )
--
(0.04 )
Impact of the Reinstatement of the R&D Tax Credit
--
--
--
(0.02 )
(0.02 )
Non-GAAP Diluted EPS (1)
$
1.05
$
0.82
$
1.03
$
3.07
$
3.17

(1) The sum of the individual per share amounts may not equal the total due to rounding.

Analog Devices, Fourth Quarter, Fiscal 2016
Schedule F
Reconciliation of Net Cash Flows Provided by Operating
Activities to Free Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
Twelve Months Ended
4Q 16
3Q 16
4Q 15
FY 16
FY 15
Oct. 29,
July 30,
Oct. 31,
Oct. 29,
Oct. 31,
2016
2016
2015
2016
2015
Net cash provided by operating activities
$ 486,984
$ 254,003
$ 197,975
$ 1,280,895
$
907,798
% of revenue
48.5
%
29.2
%
20.2
%
37.4
%
26.4
%
Non-GAAP adjustments:
Pension conversion payments
--
--
223,672
--
223,672
Adjusted cash flows from operations
$ 486,984
$ 254,003
$ 421,647
$ 1,280,895
$ 1,131,470
Capital expenditures
(41,224 )
(37,528 )
(45,807 )
(127,397 )
(153,960 )
Adjusted free cash flow
$ 445,760
$ 216,475
$ 375,840
$ 1,153,498
$
977,510
% of revenue
44.4
%
24.9
%
38.4
%
33.7
%
28.5
%

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SOURCE: Analog Devices, Inc.

Analog Devices, Inc.
Mr. Ali Husain, 781-461-3282
781-461-3491 (fax)
Treasurer and Director of Investor Relations
investor.relations@analog.com