Analog Devices Reports Positive Results from Linear Technology Acquisition

Analog Devices, Inc. today announced financial results for its third quarter of fiscal year 2017, which ended July 29, 2017, including

“The third quarter of 2017 was another excellent quarter for ADI, with strong revenue and earnings performance that exceeded the high end of our guidance,” said Vincent Roche, President and CEO. “Revenue increased to $1.43 billion on a GAAP basis, and $1.46 billion on a non-GAAP basis, with broad-based year-over-year growth led by the highly diverse and profitable industrial market.”

“The third quarter also represented our first full quarter with contributions from Linear Technology, and we are pleased with the early returns. Customers are engaged and excited by the value creation possibilities enabled by the combination, and we are making excellent progress on realizing our cost synergy targets.”

“Looking ahead to the October quarter, we continue to see signs of positive business conditions and are planning for revenue in the fourth quarter to be in the range of $1.45 billion to $1.55 billion, with strong profitability.”

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 September 19, 2017 to all shareholders of record at the close of business on September 8, 2017.

Results for the Third Quarter of Fiscal Year 2017:

• GAAP revenue totaled $1.43 billion; Non-GAAP revenue totaled $1.46 billion
• GAAP gross margin of 53.5% of revenue; Non-GAAP gross margin of 70.5% of revenue
• GAAP operating margin of 13.6% of revenue; Non-GAAP operating margin of 40.5% of revenue
• GAAP diluted EPS of $0.18; Non-GAAP diluted EPS of $1.26

Outlook for the Fourth Quarter of Fiscal Year 2017:

⁽¹⁾ Non-GAAP gross margin excludes $71 million of costs comprised of the following:

• $27 million related to the final amortization of step up through cost of sales
• $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:

• $112 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
• $5 million of transaction related costs associated with ADI’s acquisition of Linear Technology

⁽³⁾ Non-GAAP operating margin excludes the reconciling adjustments noted in the two footnotes above

⁽⁴⁾ Non-GAAP tax rate excludes the tax effects of the reconciling adjustments noted in the three footnotes above

⁽⁵⁾ Non-GAAP earnings per share includes $0.45, 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 step up value of inventory and 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 ($0.51)
• acquisition-related transaction costs ($0.01)
• the effect on income tax of the prior items ($0.07)