<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 29, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM_______________ TO ________________
COMMISSION FILE NO. 1-7819
ANALOG DEVICES, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2348234
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE TECHNOLOGY WAY, NORWOOD, MA 02062-9106
(Address of principal executive offices) (Zip Code)
(781) 329-4700
(Registrant's telephone number, including area code)
----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO
The number of shares outstanding of each of the issuer's classes of Common
Stock as of February 28, 2000 was 176,908,583 shares of Common Stock.
================================================================================
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
------------------
January 29, 2000 January 30, 1999
---------------- ----------------
<S> <C> <C>
Net sales $ 490,277 $ 300,500
Cost of sales 225,087 162,805
----------- -----------
Gross margin 265,190 137,695
Operating expenses:
Research and development 83,012 52,584
Selling, marketing, general and
administrative 64,524 46,181
----------- -----------
Operating income 117,654 38,930
Equity in loss of WaferTech -- 1,149
Nonoperating (income) expense, net (9,411) 420
----------- -----------
Income before income taxes 127,065 37,361
Provision for income taxes 34,058 7,467
----------- -----------
Net income $ 93,007 $ 29,894
=========== ===========
Shares used to compute earnings per share - basic 174,676 159,572
=========== ===========
Shares used to compute earnings per share - diluted 187,229 176,857
=========== ===========
Earnings per share - basic $0.53 $0.19
=========== ===========
Earnings per share - diluted $0.50 $0.18
=========== ===========
</TABLE>
See accompanying notes.
2
<PAGE> 3
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(thousands)
<TABLE>
<CAPTION>
Assets January 29, 2000 October 30, 1999 January 30, 1999
---------------- ---------------- ----------------
<S> <C> <C> <C>
Cash and cash equivalents $ 409,516 $ 355,891 $ 332,403
Short-term investments 485,706 406,553 129,670
Accounts receivable, net 301,972 267,127 213,727
Inventories:
Raw materials 13,176 13,735 24,964
Work in process 157,655 150,427 148,897
Finished goods 79,353 84,774 96,475
------------ ------------ ------------
250,184 248,936 270,336
Deferred tax assets 99,300 89,780 98,000
Prepaid expenses 12,283 10,823 14,638
------------ ------------ ------------
Total current assets 1,558,961 1,379,110 1,058,774
------------ ------------ ------------
Property, plant and equipment, at cost:
Land and buildings 171,977 166,130 159,617
Machinery and equipment 1,116,344 1,088,939 1,043,087
Office equipment 76,355 74,530 71,033
Leasehold improvements 110,953 108,530 103,989
------------ ------------ ------------
1,475,629 1,438,129 1,377,726
Less accumulated depreciation and amortization 826,844 795,323 696,475
------------ ------------ ------------
Net property, plant and equipment 648,785 642,806 681,251
------------ ------------ ------------
Investments 199,070 119,301 88,511
Intangible assets, net 35,337 30,563 15,115
Other assets 47,180 46,574 50,902
------------ ------------ ------------
Total other assets 281,587 196,438 154,528
------------ ------------ ------------
$ 2,489,333 $ 2,218,354 $ 1,894,553
============ ============ ============
</TABLE>
See accompanying notes.
3
<PAGE> 4
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(thousands)
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity January 29, 2000 October 30, 1999 January 30, 1999
---------------- ---------------- ----------------
<S> <C> <C> <C>
Short-term borrowings and current
portion of long-term debt $ 84,810 $ 82,344 $ 2,333
Obligations under capital leases 14,089 14,717 14,386
Accounts payable 125,027 103,368 58,000
Deferred income on shipments to distributors 113,523 100,788 101,797
Income taxes payable 106,319 66,761 57,373
Accrued liabilities 121,864 111,285 79,369
------------ ------------ ------------
Total current liabilities 565,632 479,263 313,258
------------ ------------ ------------
Long-term debt - - 309,871
Non-current obligations under capital leases 13,218 16,214 27,150
Deferred income taxes 62,600 40,002 33,000
Other non-current liabilities 101,538 66,844 45,119
------------ ------------ ------------
Total non-current liabilities 177,356 123,060 415,140
------------ ------------ ------------
Commitments and Contingencies
Stockholders' equity:
Preferred stock, $1.00 par value, 471,934 shares authorized,
none outstanding -- -- --
Common stock, $.16 2/3 par value, 600,000,000 shares
authorized, 179,361,743 shares issued
(178,049,189 in October 1999 and 164,684,927
in January 1999) 29,893 29,675 27,448
Capital in excess of par value 538,274 523,106 254,788
Retained earnings 1,203,818 1,110,811 944,265
Accumulated other comprehensive income 38,488 12,209 7,397
------------ ------------ ------------
1,810,473 1,675,801 1,233,898
Less 3,213,403 shares in treasury, at cost (3,161,774
in October 1999 and 3,763,903 in January 1999) 64,128 59,770 67,743
------------ ------------ ------------
Total stockholders' equity 1,746,345 1,616,031 1,166,155
------------ ------------ ------------
$ 2,489,333 $ 2,218,354 $ 1,894,553
============ ============ ============
</TABLE>
See accompanying notes.
4
<PAGE> 5
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(thousands)
<TABLE>
<CAPTION>
Three Months Ended
------------------
January 29, 2000 January 30, 1999
---------------- ----------------
OPERATIONS
Cash flows from operations:
<S> <C> <C>
Net income $ 93,007 $ 29,894
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 35,872 35,156
Equity in loss of WaferTech, net of dividends -- 1,149
Deferred income taxes (10,011) 1,335
Other non-cash expense 440 1,165
Changes in operating assets and liabilities 45,199 (10,342)
----------- -----------
Total adjustments 71,500 28,463
----------- -----------
Net cash provided by operations 164,507 58,357
----------- -----------
INVESTMENTS
Cash flows from investments:
Purchase of short-term investments
available for sale (207,486) (110,659)
Maturities of short-term investments
available for sale 128,333 22,564
Payments for acquisitions, net of cash acquired (1,176) --
Change in long-term investments 348 105,601
Additions to property, plant and equipment, net (40,677) (12,293)
(Increase) decrease in other assets (1,713) 2,403
----------- -----------
Net cash (used for) provided by investments (122,371) 7,616
----------- -----------
FINANCING ACTIVITIES
Cash flows from financing activities:
Proceeds from employee stock plans 9,981 4,820
Payments on capital lease obligations (3,622) (3,503)
Net increase in variable rate borrowings 2,488 2,030
----------- -----------
Net cash provided by financing activities 8,847 3,347
----------- -----------
Effect of exchange rate changes on cash 2,642 (248)
----------- -----------
Net increase in cash and cash equivalents 53,625 69,072
Cash and cash equivalents at beginning of period 355,891 263,331
----------- -----------
Cash and cash equivalents at end of period $ 409,516 $ 332,403
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE> 6
Analog Devices, Inc.
Notes to Condensed Consolidated Financial Statements
For the three months ended January 29, 2000
(all tabular amounts in thousands except per share amounts)
Note 1 - In the opinion of management, the information furnished in the
accompanying condensed consolidated financial statements reflects all normal
recurring adjustments that are necessary to fairly state the results for this
interim period and should be read in conjunction with the Company's Annual
Report to Stockholders on Form 10-K for the fiscal year ended October 30, 1999
(1999 Annual Report).
Note 2 - Certain amounts reported in the previous year have been reclassified to
conform to the 2000 presentation.
Note 3 - Additional Cash Flow Statement Information
During the first quarter of fiscal 2000, the Company's non-cash investing
activities consisted of approximately $46 million of unrealized gains on
available-for-sale securities.
Note 4 - Comprehensive Income
Total comprehensive income, i.e., net income plus available-for-sale securities
valuation adjustments and currency translation adjustments to stockholders'
equity, for the first quarters of fiscal 2000 and fiscal 1999 was $119 million
and $31 million, respectively.
Note 5 - Earnings Per Share
Basic earnings per share is computed based only on the weighted average number
of common shares outstanding during the period. Diluted earnings per share is
computed using the weighted average number of common shares outstanding during
the period, plus the dilutive effect of future issues of common stock relating
to stock option programs and convertible debt financing. In calculating diluted
earnings per share, the dilutive effect of stock options is computed using the
average market price for the period. The following table sets forth the
computation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
Three Months Ended
------------------
January 29, 2000 January 30, 1999
---------------- ----------------
Basic:
<S> <C> <C>
Net income $ 93,007 $ 29,894
========== ==========
Weighted shares outstanding 174,676 159,572
========== ==========
Earnings per share $0.53 $0.19
========== ==========
Diluted:
Net income $ 93,007 $ 29,894
Interest related to convertible subordinated notes, net of tax -- 1,425
---------- ----------
Earnings available for common stock $ 93,007 $ 31,319
========== ==========
Weighted shares outstanding 174,676 159,572
Assumed exercise of common stock equivalents 12,553 6,307
Assumed conversion of subordinated notes -- 10,978
---------- ----------
Weighted average common and common equivalent shares 187,229 176,857
========== ==========
Earnings per share $0.50 $0.18
========== ==========
</TABLE>
6
<PAGE> 7
Note 6 - Investments
During the first quarter of fiscal 1999 Analog Devices Inc., (the Company),
completed the sale of approximately 78% of its equity ownership in WaferTech,
LLC, its joint venture with Taiwan Semiconductor Manufacturing Company and other
investors. As a result of this sale, the Company's equity ownership in WaferTech
was reduced from 18% to 4%. The Company sold 78% of its investment to other
WaferTech partners and received $105 million in cash, which was equal to the
carrying value of the 14% equity ownership at October 31, 1998.
Note 7 - Convertible Debt
As of March 11, 1999 the Company had converted $229,967,000 of the $230 million
principal amount of its 3 1/2% Convertible Subordinated Notes (Notes) due 2000
into an aggregate of 10,983,163 shares of the Company's common stock, and the
remaining Notes were redeemed by a cash payment of $33,000. This conversion did
not have an impact on diluted earnings per share.
Note 8 - Acquisitions
During the second quarter of fiscal 1999, the Company acquired two DSP tools
companies, White Mountain DSP, Inc. of Nashua, New Hampshire and Edinburgh
Portable Compilers Limited, of Edinburgh, Scotland. The total cost of these
acquisitions was approximately $21 million in cash and $2 million in common
stock of the Company, with additional contingent cash consideration up to a
maximum of $10 million (to be accounted for as additional goodwill) payable if
the acquired companies achieve certain revenue and operational objectives. As of
January 29, 2000, approximately $3 million of contingent consideration had been
paid. These acquisitions were accounted for as purchases. The excess of the
purchase price over the fair value of assets acquired was allocated to existing
technology, workforce in place, and tradenames, which are being amortized over
periods ranging from six to ten years and goodwill which is being amortized on
the straight-line basis over ten years. In connection with these acquisitions,
the Company recorded a charge of $5.1 million for the write-off of in-process
research and development.
Note 9 - Segment Information
The Company operates in two segments: the design, manufacture and marketing of a
broad range of integrated circuits, which comprises approximately 97% of the
Company's revenue, and the design, manufacture and marketing of a range of
assembled products, which accounts for the remaining 3% of the Company's
revenue. Effectively, the Company operates in one reportable segment.
Note 10 - New Accounting Standard
Effective October 31, 1999, the Company adopted Statement of Position 98-1, (SOP
98-1), "Accounting for the Cost of Computer Software Developed for or Obtained
for Internal Use." The adoption of SOP 98-1 did not have a material impact on
the results of operations or financial position.
Note 11 - Subsequent Event
On February 15, 2000, the Company's Board of Directors approved a 2-for-1 split
of the Company's common stock. Stockholders will receive one additional share
for every share held on the record date of February 28, 2000. The split will
take effect on March 15, 2000, and accordingly has not been reflected in the
accompanying condensed consolidated financial statements.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This information should be read in conjunction with the unaudited condensed
consolidated financial statements and the notes thereto included in Item 1 of
this Quarterly Report and the audited consolidated financial statements and
notes thereto and Management Analysis for the fiscal year ended October 30,
1999, contained in the Company's 1999 Annual Report.
The following discussion and analysis may contain forward-looking statements.
Such statements are subject to certain risks and uncertainties, including those
discussed below or in the Company's 1999 Annual Report, which could cause actual
results to differ materially from the Company's expectations. Readers are
cautioned not to place undue reliance on any forward-looking statements, as they
reflect management's analysis only as of the date hereof. The Company undertakes
no obligation to release the results of any revision to these forward-looking
statements that may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Results of Operations
Net sales for the first quarter of fiscal 2000 were $490 million, an increase of
$190 million, or 63%, over the first quarter of fiscal 1999. Analog IC product
sales grew by 58% and DSP IC product sales grew by 87% over the same quarter
last year. Sales to OEM customers increased 72% over the first quarter of fiscal
1999. Sales into the distribution channel increased 50% over the same quarter
last year. Sales increased in all end-markets with particularly strong growth in
communications and computing markets. Sales increases in these markets were
driven by growth in demand for high-speed access to the Internet and wireless
communications as well as increased demand for the Company's power management
and imaging products.
Sales increased in all geographic regions with the largest increases occurring
in North America and Europe. International sales for the first quarter of fiscal
2000 were 56% of sales compared with 53% of sales in the same period of fiscal
1999.
The gross margin for the first quarter of fiscal 2000 was 54.1%, an improvement
of 830 basis points from the 45.8% gross margin realized in the first quarter of
fiscal 1999. The improvement in gross margin was primarily due to the favorable
effect of fixed costs allocated across a higher sales base and improved
manufacturing efficiencies at the Company's fabrication, assembly and test
facilities.
Research and development (R&D) expenses were $83 million for the three months
ended January 29, 2000 compared to $53 million for the corresponding period of
fiscal 1999. As a percentage of sales, R&D spending decreased during the first
quarter of fiscal 2000 to 16.9%, down from 17.5% in the first quarter of fiscal
1999. The percentage decline came about despite increases in absolute dollar
terms of investments in communications products to respond to opportunities in
expanding markets. The Company believes that a continued commitment to research
and development is essential in order to further exploit existing product
offerings and to provide innovative new product offerings. As a result, the
Company expects to continue to make significant R&D investments in the future.
Selling, marketing, general and administrative (SMG&A) expenses for the first
quarter of fiscal 2000 were $65 million, an increase of $19 million from the $46
million reported for the first quarter of fiscal 1999. As a percentage of sales,
SMG&A decreased from 15.4% for the first quarter of fiscal 1999 to 13.2% for the
first quarter of fiscal 2000 as a result of continued spending constraints
partially offset by provisions for increased bonus payments due to improved
operating results.
The combination of higher sales, higher gross margins and a reduction in
operating expense ratios provided strong operating leverage which improved the
operating margin to 24% of sales, compared to 13% in the first quarter of fiscal
1999.
The effective income tax rate increased to 27% for the first quarter of fiscal
2000 from 20% for the first quarter of fiscal 1999 primarily due to a shift in
the mix of worldwide profits.
Liquidity and Capital Resources
At January 29, 2000, cash, cash equivalents and short-term investments totaled
$895 million, an increase of $133 million from the fourth quarter of 1999 and
$433 million from the first quarter of fiscal 1999. The increase in cash, cash
equivalents and short-term investments was primarily due to operating cash
inflows of $165 million, partially offset by increased capital expenditures.
8
<PAGE> 9
Accounts receivable totaled $302 million at the end of the first quarter of
fiscal 2000, an increase of $35 million from the fourth quarter of fiscal 1999
and $88 million from the first quarter of fiscal 1999 due to higher sales
levels. The Company's days sales outstanding improved from 65 days at January
30, 1999 to 56 days at January 29, 2000.
Inventories of $250 million at January 29, 2000 were relatively flat compared to
the fourth quarter of fiscal 1999 and $20 million lower than the end of the
first quarter of fiscal 1999. The decrease in year over year inventory levels is
due to increased levels of demand in the first quarter of fiscal 2000.
During the first quarter of fiscal 1999 the Company completed the sale of
approximately 78% of its equity ownership in WaferTech, LLC, its joint venture
with Taiwan Semiconductor Manufacturing Company (TSMC) and other investors. As a
result of this sale, the Company's equity ownership in WaferTech was reduced
from 18% to 4%. The Company sold 78% of its investment to other WaferTech
partners and received $105 million in cash, which was equal to the carrying
value of the 14% equity ownership at October 31, 1998.
Net additions to property, plant and equipment of $41 million for the first
quarter of fiscal 2000 were funded with a combination of cash on hand and cash
generated from operations. Capital spending in the first quarter of fiscal 2000
increased significantly over the $12 million spent in the first quarter of
fiscal 1999, and was primarily attributable to the expansion of manufacturing
capability to meet current sales growth. The Company currently expects that
total capital expenditures for fiscal 2000 will be between $250 million and $275
million.
At January 29, 2000, the Company's principal sources of liquidity were $895
million of cash and cash equivalents and short-term investments. In addition,
the Company has various lines of credit both in the U.S. and overseas, including
a $60 million credit facility in the U.S., which expires in October 2000, all of
which were substantially unused at January 29, 2000.
The Company believes that its existing sources of liquidity and cash expected to
be generated from future operations, together with current and anticipated
available long-term financing, will be sufficient to fund operations, capital
expenditures and research and development efforts for the foreseeable future.
Factors That May Affect Future Results
The Company's future operating results are difficult to predict and may be
affected by a number of factors including the timing of new product
announcements or introductions by the Company and its competitors, competitive
pricing pressures, fluctuations in manufacturing yields, adequate availability
of wafers and manufacturing capacity, changes in product mix and economic
conditions in the United States and international markets. In addition, the
semiconductor market has historically been cyclical and subject to significant
economic downturns at various times. The Company's business is subject to rapid
technological changes and there can be no assurance, depending on the mix of
future business, that products stocked in inventory will not be rendered
obsolete before they are shipped by the Company. As a result of these and other
factors, there can be no assurance that the Company will not experience material
fluctuations in future operating results on a quarterly or annual basis.
The Company's success depends in part on its continued ability to develop and
market new products. There can be no assurance that the Company will be able to
develop and introduce new products in a timely manner or that such products, if
developed, will achieve market acceptance. In addition, the Company's growth is
dependent on its continued ability to penetrate new markets where the Company
has limited experience and competition is intense. There can be no assurance
that the markets being served by the Company will grow in the future; that the
Company's existing and new products will meet the requirements of such markets;
that the Company's products will achieve customer acceptance in such markets;
that competitors will not force prices to an unacceptably low level or take
market share from the Company; or that the Company can achieve or maintain
profits in these markets. Also, some of the Company's customers in these markets
are less well established which could subject the Company to increased credit
risk.
9
<PAGE> 10
The semiconductor industry is intensely competitive. Certain of the Company's
competitors have greater technical, marketing, manufacturing and financial
resources than the Company. The Company's competitors also include emerging
companies attempting to sell products to specialized markets such as those
served by the Company. Competitors of the Company have, in some cases, developed
and marketed products having similar design and functionality as the Company's
products. There can be no assurance that the Company will be able to compete
successfully in the future against existing or new competitors or that the
Company's operating results will not be adversely affected by increased price
competition.
The cyclical nature of the industry has resulted in sustained or short-term
periods when demand for the Company's products has increased or decreased
rapidly. The semiconductor industry and the Company have experienced a period of
rapid increases in demand during fiscal 1999 and the first quarter of fiscal
2000. The Company has increased its manufacturing capacity over the past three
years through both expansion of its production facilities and increased access
to third-party foundries. However, the Company cannot be sure that it will not
encounter unanticipated production problems at either its own facilities or at
third-party foundries, or that the increased capacity will be sufficient to
satisfy demand for its products. The Company relies, and plans to continue to
rely, on assembly and test subcontractors and on third-party wafer fabricators
to supply most of its wafers that can be manufactured using industry-standard
digital processes. Such reliance involves several risks, including reduced
control over delivery schedules, manufacturing yields and costs. In addition,
the Company's capacity additions resulted in a significant increase in operating
expenses. If revenue levels are not sufficient to offset these additional
expense levels, the Company's future operating results could be adversely
affected. In addition, asset values could be impaired if the additional capacity
is underutilized for an extended period of time. Also, noncompliance with "take
or pay" covenants in certain of its supply agreements could adversely impact
operating results. The Company believes that other semiconductor manufacturers
have expanded their production capacity over the past several years, and there
can be no assurance that the expansion by the Company and its competitors will
not lead to overcapacity in the Company's target markets, which could lead to
price erosion that would adversely affect the Company's operating results. In
addition, the Company and many companies in the semiconductor industry, rely on
internal manufacturing capacity located in California and Taiwan as well as
wafer fabrication foundries in Taiwan and other subcontractors in geologically
unstable locations around the world. Such reliance involves risks associated
with the impact of earthquakes on the Company and the semiconductor industry
including temporary loss of capacity, availability and cost of key raw materials
and equipment, and availability of key services including transport.
In the first quarter of fiscal 2000, 56% of the Company's revenues were derived
from customers in international markets. The Company has manufacturing
facilities outside the U.S. in Ireland, the Philippines and Taiwan. The Company
also has a supply agreement that includes "take or pay" covenants with a
supplier located in Southeast Asia (SEA) and as part of this arrangement, the
Company has $18 million on deposit as well as a $73 million investment in the
common stock of the supplier. In addition to being exposed to the ongoing
economic cycles in the semiconductor industry, the Company is also subject to
the economic and political risks inherent in international operations, including
the risks associated with the ongoing uncertainties in many developing economies
around the world. These risks include air transportation disruptions,
expropriation, currency controls and changes in currency exchange rates, tax and
tariff rates and freight rates. Although the Company engages in certain hedging
transactions to reduce its exposure to currency exchange rate fluctuations,
there can be no assurance that the Company's competitive position will not be
adversely affected by changes in the exchange rate of the U.S. dollar against
other currencies.
The semiconductor industry is characterized by frequent claims and litigation
involving patent and other intellectual property rights. The Company has from
time to time received, and may in the future receive, claims from third parties
asserting that the Company's products or processes infringe their patents or
other intellectual property rights. In the event a third party makes a valid
intellectual property claim and a license is not available on commercially
reasonable terms, the Company's operating results could be materially and
adversely affected. Litigation may be necessary to enforce patents or other
intellectual property rights of the Company or to defend the Company against
claims of infringement, and such litigation can be costly and divert the
attention of key personnel. See the Company's 1999 Annual Report for information
concerning certain pending litigation involving the Company. An adverse outcome
in such litigation may, in certain cases, have a material adverse effect on the
Company's consolidated financial position or on its consolidated results of
operations or cash flows in the period in which the litigation is resolved.
10
<PAGE> 11
Because of these and other factors, past financial performance should not be
considered an indicator of future performance. Investors should not use
historical trends to anticipate future results and should be aware that the
trading price of the Company's common stock may be subject to wide fluctuations
in response to quarter-to-quarter variations in operating results, general
conditions in the semiconductor industry, changes in earnings estimates and
recommendations by analysts or other events.
Year 2000
Over the past several years the Company made significant investments in new
manufacturing, financial and operating hardware and software. These investments
were made to support the growth of its operations; however, the by-product of
this effort was that the Company had Year 2000 compliant hardware and software
running on many of its major platforms. The Company established a task force to
evaluate the remaining systems and equipment and upgrade or replace systems that
were not Year 2000 compliant. The cost of this effort, which commenced at the
beginning of fiscal 1998 and continued through fiscal 1999, was approximately
$10 million.
The Company's computer systems and equipment did not experience any significant
disruptions as a result of the advent of the Year 2000. However, there may be
latent problems that surface at key dates or events in the future. The Company
has not experienced, and does not anticipate, any significant problems related
to the transition to the Year 2000. Furthermore, the Company does not anticipate
any significant expenditure in the future related to Year 2000 compliance.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is incorporated herein by reference to the
"Management Analysis" set forth on pages 1 through 7 of the 1999 Annual Report
to Shareholders.
11
<PAGE> 12
PART II - OTHER INFORMATION
ANALOG DEVICES, INC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index.
(b) Report on Form 8-K
Form 8-K/A, dated November 19, 1999, reporting Amendment No. 1 to a
Rights Agreement between the Company and BankBoston, N.A., as Rights
Agent.
Items 1, 2, 3, 4 and 5 of PART II are not applicable and have been
omitted.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANALOG DEVICES, INC.
--------------------
(Registrant)
Date: March 13, 2000 By: /s/ Jerald G. Fishman
---------------------------------
Jerald G. Fishman
President and
Chief Executive Officer
(Principal Executive Officer)
Date: March 13, 2000 By: /s/ Joseph E. McDonough
---------------------------------
Joseph E. McDonough
Vice President-Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
13
<PAGE> 14
EXHIBIT INDEX
ANALOG DEVICES, INC.
Item
27 Financial Data Schedule
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-28-2000
<PERIOD-START> OCT-31-1999
<PERIOD-END> JAN-29-2000
<EXCHANGE-RATE> 1
<CASH> 409,516
<SECURITIES> 485,706
<RECEIVABLES> 301,972<F1>
<ALLOWANCES> 0
<INVENTORY> 250,184
<CURRENT-ASSETS> 1,558,961
<PP&E> 1,475,629
<DEPRECIATION> 826,844
<TOTAL-ASSETS> 2,489,333
<CURRENT-LIABILITIES> 565,632
<BONDS> 0
0
0
<COMMON> 29,893
<OTHER-SE> 1,716,452
<TOTAL-LIABILITY-AND-EQUITY> 2,489,333
<SALES> 490,277
<TOTAL-REVENUES> 490,277
<CGS> 225,087
<TOTAL-COSTS> 225,087
<OTHER-EXPENSES> 147,536
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,030
<INCOME-PRETAX> 127,065
<INCOME-TAX> 34,058
<INCOME-CONTINUING> 93,007
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,007
<EPS-BASIC> .53
<EPS-DILUTED> .50
<FN>
<F1>ASSET VALUE REPRESENTS NET AMOUNT.
</FN>
</TABLE>
