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Analog Devices Reports Fourth Quarter and Fiscal Year 2017 Results

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Analog
Devices, Inc.
(Nasdaq: ADI),
today announced financial results for its fourth quarter and fiscal year
2017, which ended October 28, 2017.

"The fourth quarter of 2017 drove a strong finish to the fiscal year,
with high-quality revenue growth and operational execution that expanded
gross and operating margins, and delivered stellar earnings per share
growth," said Vincent Roche, President and CEO.

"Looking ahead to the seasonally-slower first quarter of fiscal 2018, we
are planning for revenue to be in the range of $1.44 billion to $1.54
billion, which includes the benefit of a 14th week in the
quarter. At the mid-point of this guidance range, we expect revenue to
increase year-over-year, led by the highly diverse industrial market."

ADI also announced that the Board of Directors has declared a quarterly
cash dividend of $0.45 per outstanding share of common stock,
representing an annual dividend per share of $1.80. The dividend will be
paid on December 12, 2017 to all shareholders of record at the close of
business on December 1, 2017.

Supplemental schedules relating to our fourth quarter fiscal 2017
financial results are also available on our investor site at investor.analog.com.

Results for the Fourth Quarter of Fiscal Year
2017

  • Revenue totaled $1.54 billion, up 8% sequentially and up 54%
    year-over-year on a GAAP basis and up 6% sequentially on a non-GAAP
    basis
  • GAAP gross margin of 65.3% of revenue; Non-GAAP gross margin of 70.9%
    of revenue
  • GAAP operating margin of 29.1% of revenue; Non-GAAP operating margin
    of 42.6% of revenue
  • GAAP diluted EPS of $0.93; Non-GAAP diluted EPS of $1.45

Results for the Fiscal Year 2017

  • GAAP Revenue totaled $5.1 billion, up 49% year-over-year, and non-GAAP
    revenue totaled $5.2 billion, up 52% year-over-year
  • GAAP gross margin of 59.9% of revenue; Non-GAAP gross margin of 69.5%
    of revenue
  • GAAP operating margin of 20.7% of revenue; Non-GAAP operating margin
    of 39.5% of revenue
  • GAAP diluted EPS of $2.07; Non-GAAP diluted EPS of $4.72

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 full year of fiscal 2017, as well
as the immediately prior and year-ago quarters and year. Additional
information on revenue by end market is provided on Schedule D.

Outlook for the 14-week First Quarter of Fiscal
Year 2018

The following statements are based on
current expectations, and as indicated, are presented on a GAAP and
non-GAAP basis. 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.

                         
        GAAP      

Non-GAAP
Adjustments

      Non-GAAP
Revenue       $1.44B to $1.54B       -       $1.44B to $1.54B
Gross Margin       67.5% to 68%       $44 million (1)       70.5% to 71.0%
Operating Expenses       $565 million to $575 million       $125 million (2)       $440 million to $450 million
Operating Margin       Approx. 28% to 31%       $169 million (1), (2)       Approx. 40% to 42%
Interest & Other Expense       Approx. $65 million       -       Approx. $65 million
Tax Rate       Approx. 13%       $16 million to $17 million (3)       Approx. 12%
Earnings per Share*       $0.79 to $0.95       $0.41 (4)       $1.20 to $1.36

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

(1) Non-GAAP gross margin excludes $44 million of costs comprised of the
following:

  • $35 million of recurring amortization of purchased intangible assets
  • $8 million of recurring depreciation of step up value on purchased
    fixed assets
  • $1 million of recurring fair value adjustment associated with the
    replacement of share-based awards in ADI's acquisition of Linear
    Technology

(2) Non-GAAP operating expenses exclude $125 million of costs comprised
of the following:

  • $107 million of recurring amortization of purchased intangible assets
  • $8 million of recurring fair value adjustment associated with the
    replacement of share-based awards in ADI's acquisition of Linear
    Technology
  • $10 million of transaction and integration related costs associated
    with ADI's acquisition of Linear Technology

(3) Non-GAAP tax rate excludes the tax effects of the reconciling
adjustments noted in the two footnotes above.

(4) Non-GAAP earnings per share includes $0.41, which represents the net
impact of the non-GAAP adjustments noted above on a per share basis
consisting of:

  • acquisition-related expenses including amortization of purchased
    intangible assets, depreciation of step up value on purchased fixed
    assets, and the fair value adjustment associated with the replacement
    of share-based awards in ADI's acquisition of Linear Technology ($0.43)
  • acquisition-related transaction costs ($0.03)
  • the effect on income tax of the prior items (-$0.05)

Conference Call Scheduled for Today, Tuesday, November 21, 2017 at
10:00 am ET

ADI will host a conference call to discuss fourth
quarter and fiscal 2017 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 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: 83006584, 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 included in our Non-GAAP revenue, non-GAAP
gross margin, non-GAAP operating income, non-GAAP operating margin, and
non-GAAP diluted earnings per share:

Acquisition-Related Deferred Revenue: Deferred revenue related to
shipments of Linear Technology products by distributors to end customers
that were received by the distributors prior to the Company's
acquisition of Linear Technology. Business combination accounting
principles require the write down of deferred revenue in conjunction
with the acquisition. We included these revenues in our non-GAAP
measures because they relate to a specific transaction and are
reflective of our ongoing financial performance.

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
current and prior period acquisitions and primarily include expenses
associated with the fair value adjustments to inventory, property, plant
and equipment and amortization of acquisition related intangibles, which
include acquired intangibles such as purchased technology and customer
relationships. Expenses also include severance payments, equity award
accelerations and the fair value adjustment associated with the
replacement of share-based awards related to the Linear Technology
acquisition. We excluded these costs from our non-GAAP measures because
they relate to specific transactions and are not reflective of our
ongoing financial performance.

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:

Acquisition-Related Transaction Costs: Costs directly related to
the Linear Technology acquisition, including legal, accounting and other
professional fees, as well as integration-related costs. 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.

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 the first quarter of 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 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 first quarter of fiscal 2017, the
Company replaced a portion of the bridge financing commitments with
proceeds from the issuance of $2.1 billion of senior unsecured notes. As
a result, the Company accelerated $7.2 million of the unamortized bridge
financing commitment fees into interest expense. In the fourth quarter
of 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 the fourth quarter of 2017, the Company
recorded a $10 million tax expense associated with a prior period tax
liability. In addition, in the third quarter of fiscal 2017, the Company
released $50 million of reserves associated with a favorable ruling on
its petition with the U.S. Tax Court regarding the beneficial treatment
of dividends paid from foreign owned companies under The American Jobs
Creation Act. Also, in the third quarter of fiscal 2017, the Company
recorded $98 million of tax expense associated with the remittance of
cash held outside of the United States related to the post-acquisition
integration of Linear Technology. In the second quarter of 2017, the
Company also recorded a discrete tax item related to the release of a
state tax credit valuation allowance resulting from the Company's
acquisition of Linear Technology. Finally, in the first quarter of 2016,
the Company recorded a $7.5 million tax benefit related to the
reinstatement of the R&D tax credit in December 2015, retroactive to
January 1, 2015. 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:

Federal Income Tax Payments: In the third quarter of fiscal 2017,
the Company paid $750 million in income taxes associated with the
acquisition of Linear. These payments were principally related to
pre-acquisition liabilities but also included $98 million associated
with the remittance of cash held outside of the United States related to
the post-acquisition integration of Linear Technology. 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.

These non-GAAP measures have material limitations in that they do not
reflect all of the amounts associated with the Company's results of
operations as determined in accordance with GAAP and should not be
considered in isolation from, or as a substitute for, the Company's
financial results presented in accordance with GAAP. In addition, the
Company's 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 including or 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.

About Analog Devices
Analog Devices (NASDAQ:ADI) is the
leading global high-performance analog technology 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 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 and
expected benefits and synergies of the acquisition of Linear Technology
Corporation ("Linear Technology"), including expected growth rates of
the combined companies, 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, higher than expected or unexpected costs
associated with or relating to the acquisition of Linear Technology and
the integration of the businesses; the risk that expected benefits,
synergies and growth prospects of the acquisition may not be fully
achieved in a timely manner, or at all; the risk that Linear
Technology's business may not be successfully integrated with Analog
Devices'; the risk that we will be unable to retain and hire key
personnel; and the risk that disruption resulting from the acquisition
may adversely affect our
business and relationships with our
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 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.

(ADI-WEB)

           

Analog Devices, Fourth Quarter, Fiscal 2017

 

Schedule A

Revenue and Earnings Summary (Unaudited)

(In thousands, except per-share amounts)

   
Three Months Ended Twelve Months Ended
4Q 17       3Q 17       4Q 16 FY 17       FY 16
        Oct. 28,
2017
      July 29,
2017
      Oct. 29,
2016
Oct. 28,
2017
      Oct. 29,
2016
Revenue $ 1,541,170 $ 1,433,902 $ 1,003,623 $ 5,107,503 $ 3,421,409
Year-to-year change 53.6 % 64.9 % 3.0 % 49.3 % %
Quarter-to-quarter change 7.5 % 24.9 % 15.0 %
Cost of sales (1)       535,145         667,278         336,926   2,045,907         1,194,236  
Gross margin 1,006,025 766,624 666,687 3,061,596 2,227,173
Gross margin percentage 65.3 % 53.5 % 66.4 % 59.9 % 65.1 %
Year-to-year change (basis points) (110 ) (1,230 ) 80 (520 ) (70 )
Quarter-to-quarter change (basis points)       1,180         (230 )       60            
Operating expenses:
R&D (1) 273,746 275,670 172,926 968,602 653,816
Selling, marketing and G&A (1) 185,721 183,980 118,881 691,046 461,438
Amortization of intangibles 98,348 112,153 17,899 297,351 70,123
Special charges                         49,463         13,684  
Total operating expenses 557,815 571,803 309,706 2,006,462 1,199,061
Total operating expenses percentage 36.2 % 39.9 % 30.9 % 39.3 % 35.0 %
Year-to-year change (basis points) 530 500 (2,360 ) 430 (660 )
Quarter-to-quarter change (basis points)       (370 )       (320 )       (400 )          
Operating income 448,210 194,821 356,981 1,055,134 1,028,112
Operating income percentage 29.1 % 13.6 % 35.6 % 20.7 % 30.0 %
Year-to-year change (basis points) (650 ) (1,730 ) 2,450 (930 ) 580
Quarter-to-quarter change (basis points)       1,550         90         470            
Other expense       66,546         68,023         33,547   226,649         71,191  
Income before income tax 381,664 126,798 323,434 828,485 956,921
Provision for income taxes 34,014 57,882 27,277 101,226 95,257
Tax rate percentage       8.9 %       45.6 %       8.4 % 12.2 %       10.0 %
Net income (2)       $ 347,650         $ 68,916         $ 296,157   $ 727,259         $ 861,664  
Shares used for EPS - basic 368,043 367,315 307,854 346,371 308,736
Shares used for EPS - diluted 372,053 371,159 311,633 350,484 312,308
 
Earnings per common share - basic $ 0.94 $ 0.18 $ 0.96 $ 2.09 $ 2.79
Earnings per common share - diluted $ 0.93 $ 0.18 $ 0.95 $ 2.07 $ 2.76
 
Dividends paid per share       $ 0.45         $ 0.45         $ 0.42   $ 1.77         $ 1.66  
(1) Includes stock-based compensation expense as follows:
Cost of sales $ 3,684 $ 4,375 $ 1,886 $ 12,569 $ 7,808
R&D $ 16,546 $ 15,781 $ 7,007 $ 51,258 $ 27,039
Selling, marketing and G&A $ 12,119 $ 12,668 $ 6,341 $ 40,361 $ 28,574

(2) Under the two-class method, earnings per share is calculated using
net earnings allocable to common shares, which is derived by reducing
net income by the income allocable to participating securities. Net
income allocable to common shares used in the basic and diluted earnings
per share calculation was $346,982 and $67,935 for the three months
ended October 28, 2017 and July 29, 2017 and was $725,429 for the twelve
months ended October 28, 2017. There was no net income allocated to
participating securities in the three months or twelve months ended
October 29, 2016.

                 

Analog Devices, Fourth Quarter, Fiscal 2017

 

Schedule B

Selected Balance Sheet Information (Unaudited)

(In thousands)

 
4Q 17 3Q 17 4Q 16
        Oct. 28,
2017
      July 29,
2017
      Oct. 29,
2016
Cash & short-term investments $ 1,047,838 $ 908,569 $ 4,055,793
Accounts receivable, net 688,953 692,552 477,609
Inventories (1) 550,816 519,695 376,555
Other current assets       63,731         67,827         64,906
Total current assets 2,351,338 2,188,643 4,974,863
PP&E, net 1,107,304 1,098,848 636,116
Investments 57,410 60,464 48,089
Goodwill 12,217,455 12,241,815 1,679,116
Intangible assets, net 5,319,425 5,440,692 549,368
Other       88,362         84,533         82,726
Total assets       $ 21,141,294         $ 21,114,995         $ 7,970,278
 
Deferred income on shipments to distributors, net $ 473,972 $ 449,663 $ 351,538
Other current liabilities 822,360 651,414 431,396
Debt, current 300,000
Long-term debt 7,551,084 8,199,230 1,732,177
Deferred income taxes 1,674,683 1,730,253 109,931
Non-current liabilities 157,655 161,535 179,618
Shareholders' equity       10,161,540         9,922,900         5,165,618
Total liabilities & equity       $ 21,141,294         $ 21,114,995         $ 7,970,278

(1) Includes $5,373, $4,628, and $2,486 related to stock-based
compensation in 4Q17, 3Q17, and 4Q16, respectively.

           

Analog Devices, Fourth Quarter, Fiscal 2017

 

Schedule C

Cash Flow Statement (Unaudited)

(In thousands)

   
Three Months Ended Twelve Months Ended
4Q 17       3Q 17       4Q 16 FY 17       FY 16
Oct. 28,
2017
      July 29,
2017
      Oct. 29,
2016
Oct. 28,
2017
      Oct. 29,
2016
Cash flows from operating activities:
Net Income $ 347,650 $ 68,916 $ 296,157 $ 727,259 $ 861,664
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation 56,298 55,217 34,116 194,666 134,540
Amortization of intangibles 133,438 147,238 19,547 389,393 75,250
Stock-based compensation expense 32,349 32,824 15,234 104,188 63,421
Loss on extinguishment of debt 3,290
Cost of goods sold for inventory acquired 42,040 195,565 358,718
Other non-cash activity 7,748 (42,762 ) 22,199 (10,865 ) 24,570
Excess tax benefit - equity based awards (11,538 ) (4,282 ) (3,273 ) (41,773 ) (10,453 )
Deferred income taxes (62,344 )

(676,490

)

(12,941 )

(825,869

) 8,124
Changes in operating assets and liabilities       150,173        

(140,509

)       115,945  

216,875

 

      120,489  
Total adjustments       348,164         (433,199 )       190,827   385,333         419,231  
Net cash provided by operating activities       695,814         (364,283 )       486,984   1,112,592         1,280,895  
Percent of revenue       45.1 %       (25.4 )%       48.5 % 21.8 %       37.4 %
 
Cash flows from investing activities:
Purchases of short-term available-for-sale investments (37 ) (1,841,330 ) (705,485 ) (7,697,260 )
Maturities of short-term available-for-sale investments 1 270,918 1,364,419 3,362,792 6,375,361
Sales of short-term available-for-sale investments 219,799 42,645 577,187 332,716
Additions to property, plant and equipment (65,215 ) (63,617 ) (41,224 ) (204,098 ) (127,397 )
Payments for acquisitions, net of cash acquired 70 (80,967 ) (9,632,568 ) (83,170 )
Change in other assets       (2,717 )       (1,062 )       (472 ) (15,842 )       (18,520 )
Net cash (used for) provided by investing activities       (67,931 )       426,071         (556,929 ) (6,618,014 )       (1,218,270 )
 
Cash flows from financing activities:
Early Termination of debt (378,156 )
Debt repayment (350,000 ) (4,700,000 ) (5,050,000 )
Proceeds from (payments of) derivative instruments 3,904 (33,430 )
Proceeds from debt 11,156,164 1,235,331
Payments of deferred financing fees (4,375 ) (5,625 ) (26,583 )
Dividend payments to shareholders (166,857 ) (166,265 ) (129,643 ) (602,119 ) (513,180 )
Repurchase of common stock (10,598 ) (8,955 ) (1,412 ) (46,533 ) (370,061 )
Proceeds from employee stock plans 28,058 17,971 22,154 133,302 61,496
Excess tax benefit - equity based awards 11,538 4,282 3,273 41,773 10,453
Contingent consideration payment (1,764 ) (1,409 ) (1,764 ) (1,409 )
Change in other financing activities       (517 )       9         45   (524 )       (7,378 )
Net cash (used for) provided by financing activities       (490,140 )       (4,852,958 )       (111,367 ) 5,628,578         (22,917 )
Effect of exchange rate changes on cash       1,526         1,996         (1,226 ) 3,550         (2,929 )
 
Net (decrease) increase in cash and cash equivalents 139,269 (4,789,174 ) (182,538 ) 126,706 36,779
Cash and cash equivalents at beginning of period       908,569         5,697,743         1,103,670   921,132         884,353  
Cash and cash equivalents at end of period       $ 1,047,838         $ 908,569         $ 921,132   $ 1,047,838         $ 921,132  
 

Analog Devices, Fourth Quarter, Fiscal 2017

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. 28,
2017
      July 29,
2017
      Oct. 29,
2016
Revenue       %         Q/Q %       Y/Y % Revenue Revenue
Industrial $ 720,258       47 %       3 %       82 % $ 698,442 $ 395,433
Automotive 235,190 15 % 3 % 66 % 227,526 141,756
Consumer 313,374 20 % 24 % 6 % 252,646 294,373
Communications 272,348         18 % 7 % 58 % 255,288   172,061
Total Revenue $ 1,541,170         100 % 7 % 54 % $ 1,433,902   $ 1,003,623
       
Twelve Months Ended
Oct. 28,
2017
          Oct. 29,
2016
Revenue       %       Y/Y % Revenue
Industrial $ 2,361,549       46%       58% $ 1,497,070
Automotive 782,961 15% 45% 541,774
Consumer 1,047,606 21% 52% 687,697
Communications 915,387         18% 32% 694,868
Total Revenue $ 5,107,503         100% 49% $ 3,421,409
 

           

Analog Devices, Fourth Quarter, Fiscal 2017

 

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 17       3Q 17       4Q 16 FY 17       FY 16
Oct. 28,
2017
      July 29,
2017
      Oct. 29,
2016
Oct. 28,
2017
      Oct. 29,
2016
GAAP Revenue $ 1,541,170 $ 1,433,902 $ 1,003,623 $ 5,107,503 $ 3,421,409
Y/Y Revenue growth % 53.6 % 64.9 %

3.0

% 49.3 % %
Q/Q Revenue growth % 7.5 % 24.9 % 15.0 %
Acquisition-Related Deferred Revenues         24,576                 85,334          
Non-GAAP Revenue $ 1,541,170         $ 1,458,478         $ 1,003,623         $ 5,192,837         $ 3,421,409  
Y/Y Revenue growth % 53.6 % 67.7 % 3.0 % 51.8 % %
Q/Q Revenue growth % 5.7 % 20.7 % 15.0 %
 
GAAP Gross Margin $ 1,006,025 $ 766,624 $ 666,687 $ 3,061,596 $ 2,227,173
Gross Margin Percentage 65.3 % 53.5 % 66.4 % 59.9 % 65.1 %
Acquisition-Related Deferred Revenues 19,782 66,261
Acquisition-Related Expenses 85,974         241,554         2,040   480,438         6,849  
Non-GAAP Gross Margin $ 1,091,999         $ 1,027,960         $ 668,727   $ 3,608,295         $ 2,234,022  
Gross Margin Percentage 70.9 % 70.5 % 66.6 % 69.5 % 65.3 %
 
GAAP Operating Expenses $ 557,815 $ 571,803 $ 309,706 $ 2,006,462 $ 1,199,061
Percent of Revenue 36.2 % 39.9 % 30.9 % 39.3 % 35.0 %
Acquisition-Related Expenses (107,736 ) (126,732 ) (17,999 ) (328,059 ) (70,555 )
Acquisition-Related Transaction Costs (15,108 ) (8,017 ) (5,210 ) (70,401 ) (13,519 )
Restructuring-Related Expense                   (49,463 )       (13,684 )
Non-GAAP Operating Expenses $ 434,971         $ 437,054         $ 286,497   $ 1,558,539         $ 1,101,303  
Percent of Revenue 28.2 % 30.0 % 28.5 % 30.0 % 32.2 %
 
GAAP Operating Income/Margin $ 448,210 $ 194,821 $ 356,981 $ 1,055,134 $ 1,028,112
Percent of Revenue 29.1 % 13.6 % 35.6 % 20.7 % 30.0 %
Acquisition-Related Deferred Revenues 19,782 66,261
Acquisition-Related Expenses 193,710 368,286 20,039 808,497 77,404
Acquisition-Related Transaction Costs 15,108 8,017 5,210 70,401 13,519
Restructuring-Related Expense                   49,463         13,684  
Non-GAAP Operating Income/Margin $ 657,028         $ 590,906         $ 382,230   $ 2,049,756         $ 1,132,719  
Percent of Revenue 42.6 % 40.5 % 38.1 % 39.5 % 33.1 %
 
GAAP Other Expense $ 66,546 $ 68,023 $ 33,547 $ 226,649 $ 71,191
Percent of Revenue 4.3 % 4.7 % 3.3 % 4.4 % 2.1 %
Loss on Extinguishment of Debt (3,290 )
Amortization of Deferred Financing Costs                 (13,655 ) (7,214 )       (13,665 )
Non-GAAP Other Expense $ 66,546         $ 68,023         $ 19,982         $ 219,435         $ 54,236  
Percent of Revenue 4.3 % 4.7 % 2.0 % 4.2 % 1.6 %
GAAP Diluted EPS       $ 0.93       $ 0.18       $ 0.95       $ 2.07       $ 2.76
Impact of Loss on Extinguishment of Debt 0.01
Acquisition-Related Deferred Revenue 0.05 0.19
Acquisition-Related Expenses 0.52 0.99 0.06 2.31 0.25
Acquisition-Related Transaction Costs 0.04 0.02 0.02 0.20 0.04
Amortization of Deferred Financing Costs 0.04 0.02 0.04
Restructuring-Related Expense 0.14 0.04
Income Tax Effect of Above Items (0.08 ) (0.10 ) (0.02 ) (0.33 ) (0.06 )
Impact of State Tax Valuation Release (0.04 )
Impact of Adjustments to Prior Period Tax Liabilities 0.03 (0.14 ) (0.11 )
Impact of the Reinstatement of the R&D Tax Credit (0.02 )
Impact of Tax Remittance for Linear Integration         0.26           0.28          
Non-GAAP Diluted EPS (1) $ 1.45         $ 1.26         $ 1.05   $ 4.72         $ 3.07  

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

           

Analog Devices, Fourth Quarter, Fiscal 2017

 

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 17       3Q 17       4Q 16 FY 17       FY 16
Oct. 28,
2017
      July 29,
2017
      Oct. 29,
2016
Oct. 28,
2017
      Oct. 29,
2016
Net cash provided by operating activities $ 695,814 $ (364,283 ) $ 486,984 $ 1,112,592 $ 1,280,895
% of revenue 45.1 % (25.4 )% 48.5 % 21.8 % 37.4 %
Non-GAAP adjustments:
Federal income tax payments         750,000                 750,000          
Adjusted cash flows from operations $ 695,814 $ 385,717 $ 486,984 $ 1,862,592 $ 1,280,895
Capital expenditures (65,215 )       (63,617 )       (41,224 ) (204,098 )       (127,397 )
Adjusted free cash flow $ 630,599         $ 322,100         $ 445,760   $ 1,658,494         $ 1,153,498  
% of non-GAAP revenue 40.9 % 22.1 % 44.4 % 31.9 % 33.7 %
 

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