ANALOG DEVICES INC

Previous wording

The following important factors and uncertainties, among others, could cause results to differ materially from those described in the forward-looking statements: economic, political, legal and regulatory uncertainty or conflicts; changes in demand for semiconductor products; manufacturing delays, product and raw materials availability and supply chain disruptions; products that may be diverted from our authorized distribution channels; changes in export classifications, import and export regulations or duties and tariffs; our development of technologies and research and development investments; our future liquidity, capital needs and capital expenditures; our ability to compete successfully in the markets in which we operate; our ability to recruit and retain key personnel; risks related to acquisitions or other strategic transactions; security breaches or other cyber incidents; adverse results in litigation matters; reputational damage; changes in our estimates of our expected tax rates based on current tax law; risks related to our indebtedness; unanticipated difficulties or expenditures relating to integrating Maxim; the discretion of our board of directors to declare dividends and our ability to pay dividends in the future; factors impacting our ability to repurchase shares; and uncertainty as to the long-term value of our common stock. Additional factors that could cause actual results to differ materially from those in these forward-looking statements include the risk factors included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for fiscal 2023. We undertake no obligation to revise or update any forward-looking statements, including to reflect events or circumstances occurring after the date of the filing of this report, except to the extent required by law.

Current wording

The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in the forward-looking statements: economic, political, legal and regulatory uncertainty or conflicts; changes in demand for semiconductor products; manufacturing delays, product and raw materials availability and supply chain disruptions; products that may be diverted from our authorized distribution channels; changes in export classifications, import and export regulations or duties and tariffs; our development of technologies and research and development investments; our future liquidity, capital needs and capital expenditures; our ability to compete successfully in the markets in which we operate; our ability to recruit and retain key personnel; risks related to acquisitions or other strategic transactions; security breaches or other cyber incidents; adverse results in litigation matters; reputational damage; changes in our estimates of our expected tax rates based on current tax law; risks related to our indebtedness; unanticipated difficulties or expenditures relating to integrating Maxim; the discretion of our board of directors to declare dividends and our ability to pay dividends in the future; factors impacting our ability to repurchase shares; and uncertainty as to the long-term value of our common stock. Additional factors that could cause actual results to differ materially from those described in these forward-looking statements include the risk factors included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for fiscal 2023. We undertake no obligation to revise or update any forward-looking statements, including to reflect events or circumstances occurring after the date of the filing of this report, except to the extent required by law.

Previous wording

The following table summarizes revenue by end market. 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 and our methodology evolves and improves, 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.

Current wording

The following tables summarize revenue by end market. 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 and our methodology evolves and improves, 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.

Previous wording

Revenue decreased 23% in the three-month period ended February 3, 2024 as compared to the same period of the prior fiscal year, primarily as a result of broad-based decline in demand for our products, partially offset by increased demand in the Automotive end market, namely in cabin electronics, as well as an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.

Current wording

Revenue decreased 34% and 28% in the three- and six-month periods ended May 4, 2024, respectively, as compared to the same periods of the prior fiscal year, primarily as a result of broad-based decline in demand for our products. The decrease in the six-month period was partially offset by an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.

Previous wording

The following table summarizes revenue by sales channel. We sell our products globally through a direct sales force, third party distributors, independent sales representatives and via our website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers. Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time.

Current wording

The following tables summarize revenue by sales channel. We sell our products globally through a direct sales force, third party distributors, independent sales representatives and via our website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers. Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time.

Previous wording

Gross margin percentage decreased by 670 basis points in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, primarily due to lower utilization of our factories due to decreased customer demand and unfavorable product mix.

Current wording

Gross margin percentage decreased by 1,100 and 870 basis points in the three- and six-month periods ended May 4, 2024, respectively, as compared to the same periods of the prior fiscal year, primarily due to lower utilization of our factories due to decreased customer demand, and unfavorable product mix.

Previous wording

R&D expenses decreased in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year. The decrease was primarily as a result of lower R&D employee-related variable compensation expenses, partially offset by higher salary and benefit expenses, as well as an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.

Current wording

R&D expenses decreased in the three- and six-month periods ended May 4, 2024, as compared to the same periods of the prior fiscal year, primarily as a result of lower R&D employee-related variable compensation expenses, partially offset by higher salary and benefit expenses. The decrease in the six-month period was partially offset by an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.

Previous wording

SMG&A expenses decreased in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, primarily as a result of lower SMG&A employee-related variable compensation expenses and discretionary spending, partially offset by higher salary and benefit expenses, as well as an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.

Current wording

SMG&A expenses decreased in the three- and six-month periods ended May 4, 2024, as compared to the same periods of the prior fiscal year, primarily as a result of lower SMG&A employee-related variable compensation expenses and discretionary spending. The decrease in the six-month period was partially offset by an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.

Previous wording

Amortization expenses decreased in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year as a result of a portion of our acquired intangible assets becoming fully amortized during fiscal 2023.

Current wording

Amortization expenses decreased in the three- and six-month periods ended May 4, 2024, as compared to the same periods of the prior fiscal year primarily as a result of a portion of our acquired intangible assets becoming fully amortized during fiscal 2023.

Previous wording

The year-over-year decrease in operating income in the three-month period ended February 3, 2024 was primarily the result of a decrease in revenue, which contributed to a decrease in gross margin of $650.4 million, and an increase of $16.1 million in special charges, net, partially offset by decreases of $62.8 million in amortization expenses, $36.2 million in SMG&A expenses and $22.7 million in R&D expenses.

Current wording

The year-over-year decrease in operating income in the three-month period ended May 4, 2024 was primarily the result of a decrease in revenue, which contributed to a decrease in gross margin of $964.5 million, partially offset by a decrease of $222.3 million in net operating expenses.

Previous wording

The year-over-year increase in nonoperating expense (income) in the three-month period ended February 3, 2024 as compared to the same period of the prior fiscal year was primarily the result of higher interest expense related to our commercial paper obligations and higher interest rates on certain of our existing debt obligations.

Current wording

The year-over-year increases in nonoperating expense (income) in the three- and six-month periods ended May 4, 2024, as compared to the same periods of the prior fiscal year, were primarily the result of higher interest expense related to our commercial paper obligations and higher interest rates on certain of our existing debt obligations.

Previous wording

The effective tax rates for the three-month periods ended February 3, 2024 and January 28, 2023 were below the U.S. statutory tax rate of 21% due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income. Our pretax income for the three-month periods ended February 3, 2024 and January 28, 2023 was primarily generated in Ireland at a tax rate of 12.5%.

Current wording

The effective tax rates for the three- and six-month periods ended May 4, 2024 and April 29, 2023 were below the U.S. statutory tax rate of 21% due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income. Our pretax income for the three- and six-month periods ended May 4, 2024 and April 29, 2023 was primarily generated in Ireland at a tax rate of 12.5%.

Previous wording

Net income decreased in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year as the result of a $544.9 million decrease in operating income and a $15.2 million increase in nonoperating expense (income), partially offset by a $61.3 million decrease in provision for income taxes.

Current wording

Net income decreased in the three-month period ended May 4, 2024, as compared to the same period of the prior fiscal year, as the result of a $742.3 million decrease in operating income and a $21.1 million increase in nonoperating expense (income), partially offset by a $87.9 million decrease in provision for income taxes.

Previous wording

At February 3, 2024, our principal source of liquidity was $1.3 billion of cash and cash equivalents, of which approximately $597.8 million was held in the United States, and the balance of our cash and cash equivalents was held outside the United States in various foreign subsidiaries. We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States. We do not expect current regulatory restrictions or taxes on repatriation to have a material adverse effect on our overall liquidity, financial condition or results of operations. Our cash and cash equivalents consist of highly liquid investments with maturities of three months or less, including money market funds. We maintain these balances with counterparties with high credit ratings, and continually monitor the amount of credit exposure to any one issuer and diversify our investments in order to minimize our credit risk.

Current wording

At May 4, 2024, our principal source of liquidity was $2.4 billion of cash, cash equivalents and short-term investments, of which approximately $1.5 billion was held in the United States, and the balance of our cash, cash equivalents and short-term investments was held outside the United States in various foreign subsidiaries. We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States. We do not expect current regulatory restrictions or taxes on repatriation to have a material adverse effect on our overall liquidity, financial condition or results of operations. Our cash, cash equivalents and short-term investments consist of highly liquid investments, including money market funds and corporate obligations. We maintain these balances with counterparties with high credit ratings, and continually monitor the amount of credit exposure to any one issuer and diversify our investments in order to minimize our credit risk.

Previous wording

The following changes contributed to the net change in cash and cash equivalents in the three-month period ended February 3, 2024 as compared to the same period in fiscal 2023.

Current wording

The following changes contributed to the net change in cash and cash equivalents in the six-month period ended May 4, 2024 as compared to the same period in fiscal 2023.

Previous wording

Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities. The decrease in cash provided by operating activities during the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, was mainly the result of lower net income adjusted for noncash items offset by changes in working capital.

Current wording

Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities. The decrease in cash provided by operating activities during the six-month period ended May 4, 2024, as compared to the same period of the prior fiscal year, was mainly the result of lower net income adjusted for noncash items offset by changes in working capital.

Previous wording

Investing cash flows generally consist of capital expenditures and cash used for acquisitions. The increase in cash used for investing activities during the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, was primarily the result of an increase in cash used for capital expenditures.

Current wording

Investing cash flows generally consist of capital expenditures and cash used for acquisitions. The increase in cash used for investing activities during the six-month period ended May 4, 2024, as compared to the same period of the prior fiscal year, was primarily the result of the purchase of short-term available-for-sale investments, partially offset by a decrease in cash used for capital expenditures.

Previous wording

Financing cash flows generally consist of payments of dividends to stockholders, repurchases of common stock, issuance and repayment of debt and proceeds from the sale of shares of common stock pursuant to employee equity incentive plans. The decrease in cash used for financing activities during the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, was primarily the result of lower common stock repurchases, partially offset by higher dividend payments.

Current wording

Financing cash flows generally consist of payments of dividends to stockholders, repurchases of common stock, issuance and repayment of debt and proceeds from the sale of shares of common stock pursuant to employee equity incentive plans. The change in cash used for financing activities during the six-month period ended May 4, 2024, as compared to the same period of the prior fiscal year, was primarily the result of lower common stock repurchases and net proceeds from the issuance of debt during fiscal 2024. For additional information, see Note 11, Debt, in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

*We use the average of the current quarter and prior quarter ending net accounts receivable and ending inventory balance in our calculation of days sales outstanding and days cost of sales in inventory, respectively. The first quarter of fiscal 2024 included an additional week of operations as compared to the first quarter of 2023.

Current wording

*We use the average of the current quarter and prior quarter ending net accounts receivable and ending inventory balance in our calculation of days sales outstanding and days cost of sales in inventory, respectively.

Previous wording

The decrease in accounts receivable in dollars was primarily the result of variations in the timing of collections and billings and decreased revenue levels in the first quarter of fiscal 2024 as compared to the fourth quarter of fiscal 2023.

Current wording

The decrease in accounts receivable in dollars was primarily the result of variations in the timing of collections and billings and decreased revenue levels in the second quarter of fiscal 2024 as compared to the fourth quarter of fiscal 2023.

Previous wording

Current liabilities decreased to $2,923.4 million at February 3, 2024 as compared to $3,201.0 million at the end of fiscal 2023 due to lower accrued liabilities and accounts payable, partially offset by higher income taxes payable.

Current wording

Current liabilities increased to $3,297.3 million at May 4, 2024 as compared to $3,201.0 million at the end of fiscal 2023 due to higher current debt, partially offset by lower accrued liabilities.

Previous wording

Under our commercial paper program, we may issue short-term, unsecured commercial paper notes in amounts up to a maximum aggregate face amount of $2.5 billion outstanding at any time, with maturities of up to 397 days from the date of issuance. As of February 3, 2024, we had $544.4 million of outstanding borrowings under the commercial paper program recorded in the Condensed Consolidated Balance Sheet. We use the net proceeds of the commercial paper program for general corporate purposes, including without limitation, repayment of indebtedness, stock repurchases, acquisitions, capital expenditures and working capital.

Current wording

Under our commercial paper program, we may issue short-term, unsecured commercial paper notes in amounts up to a maximum aggregate face amount of $2.5 billion outstanding at any time, with maturities of up to 397 days from the date of issuance. As of May 4, 2024, we had $548.2 million of outstanding borrowings under the commercial paper program recorded in the Condensed Consolidated Balance Sheet. We use the net proceeds of the commercial paper program for general corporate purposes, including without limitation, repayment of indebtedness, stock repurchases, acquisitions, capital expenditures and working capital.

Previous wording

In the aggregate, our Board of Directors has authorized us to repurchase $16.7 billion of our common stock under our common stock repurchase program. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized under the program. As of February 3, 2024, an additional $2.0 billion remains available for repurchase under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. We also repurchase shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options as well as for our employee stock purchase plan. Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity and other factors we deem relevant.

Current wording

In the aggregate, our Board of Directors has authorized us to repurchase $16.7 billion of our common stock under our common stock repurchase program. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized under the program. As of May 4, 2024, an additional $1.8 billion remains available for repurchase under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. We also repurchase shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options as well as for our employee stock purchase plan. Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity and other factors we deem relevant.

Previous wording

Net additions to property, plant and equipment were $223.0 million in the first three months of fiscal 2024. We expect capital expenditures for fiscal 2024 to be between approximately $600 million and $800 million. These capital expenditures will be funded with a combination of cash on hand and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing.

Current wording

Net additions to property, plant and equipment were $411.2 million in the first six months of fiscal 2024. We expect capital expenditures for fiscal 2024 to be between approximately $600 million and $800 million. These capital expenditures will be funded with a combination of cash on hand and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing.

Previous wording

On February 20, 2024, our Board of Directors declared a cash dividend of $0.92 per outstanding share of common stock. The dividend will be paid on March 15, 2024 to all shareholders of record at the close of business on March 5, 2024 and is expected to total approximately $456.2 million. We currently expect quarterly dividends to continue in future periods. The payment of any future quarterly dividends, or a future increase in the quarterly dividend amount, will be at the discretion of the Board and will be dependent upon our financial position, results of operations, outlook, liquidity and other factors deemed relevant by the Board.

Current wording

On May 21, 2024, our Board of Directors declared a cash dividend of $0.92 per outstanding share of common stock. The dividend will be paid on June 17, 2024 to all shareholders of record at the close of business on June 4, 2024 and is expected to total approximately $456.5 million. We currently expect quarterly dividends to continue in future periods. The payment of any future quarterly dividends, or a future increase in the quarterly dividend amount, will be at the discretion of the Board of Directors and will be dependent upon our financial position, results of operations, outlook, liquidity and other factors deemed relevant by the Board of Directors.