ANALOG DEVICES INC - 10-Q Quarterly Report

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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 August 3, 2002

[ ] 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 incorporation or organization)		(I.R.S. Employer 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 ü NO

The number of shares outstanding of each of the issuer’s classes of Common Stock as of August 31, 2002 was 365,697,886 shares of Common Stock.

TABLE OF CONTENTS


PART I FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	CONDENSED CONSOLIDATED BALANCE SHEETS
	CONDENSED CONSOLIDATED BALANCE SHEETS
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED AUGUST 3, 2002
	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
	ITEM 4. Controls and Procedures
PART II — OTHER INFORMATION
	ITEM 6. Exhibits and reports on Form 8-K
SIGNATURES

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(thousands except per share amounts)


		Three Months Ended

		August 3, 2002			August 4, 2001

Net sales		$	445,448		$	479,886

Cost of sales			208,182			226,008

Gross margin			237,266			253,878

Operating expenses:
	Research and development		107,040			112,101
	Selling, marketing, general and administrative		67,138			66,583
	Amortization of intangibles		14,327			14,006
	Special charges		12,839			26,157

			201,344			218,847

Operating income			35,922			35,031

Nonoperating (income) expenses:
	Interest expense		10,847			15,716
	Interest income		(14,566	)		(30,158	)
	Other, net		(21	)		(212	)

			(3,740	)		(14,654	)

Income before income taxes			39,662			49,685

Provision for income taxes			8,249			10,382

Net income		$	31,413		$	39,303

Shares used to compute earnings per share – basic			365,065			359,535

Shares used to compute earnings per share – diluted			380,770			381,903

Earnings per share – basic		$	0.09		$	0.11

Earnings per share – diluted		$	0.08		$	0.10

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(thousands except per share amounts)


		Nine Months Ended

		August 3, 2002			August 4, 2001

Net sales		$	1,251,790		$	1,853,602

Cost of sales			589,896			804,663


Gross margin			661,894			1,048,939

Operating expenses:
	Research and development		314,570			358,632
	Selling, marketing, general and administrative		187,850			229,699
	Amortization of intangibles		42,666			38,308
	Purchased in-process research and development		—			9,500
	Special charges		40,089			26,157

			585,175			662,296

Operating income			76,719			386,643

Nonoperating (income) expenses:
	Interest expense		34,172			48,830
	Interest income		(50,283	)		(107,223	)
	Other, net		(1,160	)		(29,501	)

			(17,271	)		(87,894	)


Income before income taxes			93,990			474,537

Provision for income taxes			23,461			142,361

Net income		$	70,529		$	332,176

Shares used to compute earnings per share – basic			364,253			358,448

Shares used to compute earnings per share – diluted			382,565			382,024

Earnings per share – basic		$	0.19		$	0.93

Earnings per share – diluted		$	0.18		$	0.87

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(thousands)


		August 3, 2002		November 3, 2001		August 4, 2001

Assets
Cash and cash equivalents		$	1,186,015	$	1,364,949	$	1,550,254
Short-term investments			1,767,840		1,428,278		1,121,256
Accounts receivable, net			223,308		218,151		270,403
Inventories:
	Raw materials		15,279		18,221		21,619
	Work in process		200,934		159,463		179,357
	Finished goods		67,831		69,168		77,501

			284,044		246,852		278,477
Deferred tax assets			155,000		139,418		105,000
Prepaid expenses and other current assets			37,492		37,271		33,257

	Total current assets		3,653,699		3,434,919		3,358,647

Property, plant and equipment, at cost:
	Land and buildings		294,074		294,598		288,956
	Machinery and equipment		1,384,694		1,447,639		1,449,090
	Office equipment		95,357		92,792		96,903
	Leasehold improvements		130,280		130,528		131,671

			1,904,405		1,965,557		1,966,620
Less accumulated depreciation and amortization			1,090,071		1,057,615		1,024,049

	Net property, plant and equipment		814,334		907,942		942,571

Investments			274,333		246,505		233,223
Intangible assets, net			188,848		229,330		242,177
Other assets			92,492		66,167		52,336

	Total other assets		555,673		542,002		527,736

		$	5,023,706	$	4,884,863	$	4,828,954

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(thousands, except share amounts)


		August 3, 2002		November 3, 2001			August 4, 2001

Liabilities and Stockholders’ Equity
Short-term borrowings and current portion of obligations under capital leases		$	4,355	$	6,432		$	6,999
Accounts payable			113,602		79,784			102,683
Deferred income on shipments to distributors			112,433		142,011			151,591
Income taxes payable			113,816		121,844			167,374
Accrued liabilities			156,474		177,877			186,313

	Total current liabilities		500,680		527,948			614,960

Long-term debt and obligations under capital leases			1,231,954		1,206,038			1,207,494
Deferred income taxes			40,000		51,345			55,076
Other non-current liabilities			290,372		256,506			243,787

	Total non-current liabilities		1,562,326		1,513,889			1,506,357

Commitments and Contingencies
Stockholders’ equity:
Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding			—		—			—
Common stock, $0.16 2/3 par value, 600,000,000 shares authorized, 366,564,819 shares issued (363,353,954 in November 2001 and 361,406,617 in August 2001)			61,095		60,560			60,236
Capital in excess of par value			753,833		713,427			600,105
Retained earnings			2,144,849		2,074,320			2,050,119
Accumulated other comprehensive income			3,775		(204	)		2,177

			2,963,552		2,848,103			2,712,637
Less 72,778 shares in treasury, at cost (103,630 in November 2001 and 99,577 in August 2001)			2,852		5,077			5,000

	Total stockholders’ equity		2,960,700		2,843,026			2,707,637

		$	5,023,706	$	4,884,863		$	4,828,954

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(thousands)


			Nine Months Ended

			August 3, 2002			August 4, 2001

Cash flows from operating activities:
	Net income		$	70,529		$	332,176
	Adjustments to reconcile net income to net cash provided by operations:
		Depreciation		132,593			116,669
		Amortization of intangibles		42,666			38,308
		Gain on sale of investment		—			(28,084	)
		Non-cash portion of special charge		12,892			12,364
		Write-off of purchased research and development		—			9,500
		Deferred income taxes		(27,005	)		7,413
		Other non-cash expense		9,248			4,949
		Changes in operating assets and liabilities		(59,658	)		203,992

	Total adjustments			110,736			365,111

Net cash provided by operating activities				181,265			697,287

Cash flows from investing activities:
	Purchase of short-term available-for-sale investments			(2,742,102	)		(2,203,987	)
	Maturities of short-term available-for-sale investments			2,402,540			1,581,575
	Payments for acquisitions, net of cash acquired			(5,245	)		(37,480	)
	Proceeds from sale of investment			—			60,936
	Additions to property, plant and equipment, net			(41,482	)		(278,637	)
	Decrease (increase) in other assets			277			(1,379	)

Net cash used for investing activities				(386,012	)		(878,972	)

Cash flows from financing activities:
	Proceeds from employee stock plans			31,503			27,656
	Repurchase of common stock			—			(21,831	)
	Payments on capital lease obligations			(6,310	)		(8,755	)
	Net decrease in variable rate borrowings			(437	)		(5,442	)

Net cash provided by (used for) financing activities				24,756			(8,372	)

Effect of exchange rate changes on cash				1,057			3,890

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(Mark One)

[X]			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934