Analog Devices Announces Financial Results for the First Quarter of Fiscal 2010

February 18, 2010 by Jeff Shepard

Analog Devices, Inc. announced financial results for its fiscal first quarter 2010, which ended January 30, 2010. Revenue was $603 million, an increase of 5.5% from the immediately prior quarter and an increase of 26.5% from the same period one year ago.

Gross margin was 61.1% of revenue, compared to 56.3% of revenue in the immediately prior quarter, and 56.4% of revenue in the year-ago period. Gross margin improvements were primarily due to lower manufacturing costs, increased factory utilization, and strong sales of products sold to industrial and communications infrastructure customers.

Operating expenses were $219 million, which included approximately $16.5 million of restructuring charges related to actions taken in the first quarter to further reduce infrastructure costs and continue to focus product development in areas that enable differentiation for customers. The remaining increase in operating expenses was due to higher variable compensation expense which was primarily related to the significant increase in operating margins. All other operating expenses remained flat compared to the previous quarter. Operating income from continuing operations was $149 million, or 24.7% of revenue, which included approximately $16.5 million in restructuring charges. Excluding this amount, operating income was $166 million, or 27.5% of revenue.

Diluted earnings per share (EPS) from continuing operations was $0.39, compared to $0.36 in the immediately prior quarter, and $0.08 in the same period a year ago. Excluding restructuring charges, diluted EPS was $0.43 in the first quarter of fiscal 2010 and $0.18 in the same period a year ago.

The Board of Directors declared a cash dividend of $0.20 per outstanding share of common stock, which will be paid on March 24, 2010 to all shareholders of record at the close of business on March 5, 2010. Net cash provided by operating activities was $214 million, or 35% of revenue. Capital expenditures were $17 million, and cash dividends of $59 million were paid during the first quarter of fiscal 2010. Cash and short-term investments at the end of the first quarter of fiscal 2010 totaled approximately $2.2 billion.

Accounts receivable in the first quarter of fiscal 2010, as measured by days sales outstanding, was 47 days, compared to 48 days at the end of the immediately prior quarter. Inventory at the end of the first quarter of fiscal 2010 decreased by approximately $10 million, or 4%, compared to the immediately prior quarter.

"The first quarter of fiscal year 2010 was another very strong quarter for ADI and the beginning of what we hope will be a strong year. Revenue increased by 26.5% year-over-year and 5.5% sequentially to $603 million as orders continued to strengthen throughout the quarter," said Jerald G. Fishman, President and CEO. "Gross margins exceeded our plan and increased significantly from the previous quarter. Operating margins reached 24.7% of revenue, or 27.5% of revenue excluding restructuring charges, and operating cash flow was 35% of revenue."