The following items are excluded from our non-GAAP other expense and non-GAAP diluted earnings per share:
Acquisition-Related Debt Costs: The Company incurred debt financing costs and interest expense during the third and fourth quarters of fiscal 2014 on its 90-day term loan facility used to finance the Hittite acquisition. We excluded these costs from our non-GAAP measures because they are not reflective of our ongoing financial performance.
The following item is excluded from our non-GAAP diluted earnings per share:
Tax-Related Items: Tax adjustments in fiscal 2015 and fiscal 2014 associated with the Hittite acquisition-related expenses and transaction costs. In addition, in the fourth quarter of 2015, the Company recorded a $13.0 million tax benefit as a result of the reversal of prior period tax liabilities. Also, in the first quarter of 2015, the Company recorded a $7.0 million tax benefit related to the reinstatement of the R&D tax credit in December 2014, retroactive to January 1, 2014. We excluded these tax-related items from our non-GAAP measures because they are not associated with the tax expense on our current operating results.
Schedule F of this press release provides the reconciliation of the Company’s historical adjusted cash flow measures to its cash flow measures.
Management uses adjusted free cash flow to measure the liquidity of its continuing operations and evaluate the Company’s operating cash performance against past periods. Free cash flow is defined as cash provided by (used in) operating activities less capital expenditures. Adjusted free cash flow is defined by the Company as free cash flow adjusted for payments (refunds) that are not reflective of our ongoing operating cash performance. Management believes that the presentation of this adjusted financial measure is useful to investors this quarter because it provides investors with the operating cash flow results that management uses to manage the Company and enables investors and analysts to evaluate the Company’s liquidity from continuing operations.
The following item is excluded from our fourth quarter and fiscal 2015 adjusted free cash flow and adjusted free cash flow margin:
Pension Conversion Payments: Costs incurred as a result of the conversion of the benefits provided to participants in the Company’s Irish defined benefit pension plan to benefits provided under the Company’s Irish defined contribution plan including settlement charges, legal, accounting, tax and other professional fees. We excluded these costs from our adjusted financial measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.
Analog Devices believes that these non-GAAP measures have material limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. In addition, our non-GAAP measures may not be comparable to the non-GAAP measures reported by other companies. The Company’s use of non-GAAP measures, and the underlying methodology when excluding certain items, is not necessarily an indication of the results of operations that may be expected in the future, or that the Company will not, in fact, record such items in future periods.
Investors should consider our non-GAAP financial measures in conjunction with the corresponding GAAP measures.
About Analog Devices
Analog Devices designs and manufactures
semiconductor products and solutions. We enable our customers to
interpret the world around us by intelligently bridging the physical and
digital with unmatched technologies that sense, measure and connect.
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http://www.analog.com
This release may be deemed to contain forward-looking statements
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the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, among other things, our statements
regarding expected revenue, earnings per share, gross margin, operating
expenses, interest and other expense, tax rate, and other financial
results, expected operating leverage, production and inventory levels,
expected market trends, and expected customer demand and order rates
for our products, that are based on our current expectations,
beliefs, assumptions, estimates, forecasts, and projections about our
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The statements contained in this release are not guarantees of future
performance, are inherently uncertain, involve certain risks,
uncertainties, and assumptions that are difficult to predict, and do not
give effect to the potential impact of any mergers, acquisitions,
divestitures, or business combinations that may be announced or closed
after the date hereof. Therefore, actual outcomes and results may differ
materially from what is expressed in such forward-looking statements,
and such statements should not be relied upon as representing Analog
Devices’ expectations or beliefs as of any date subsequent to the date
of this press release. We do not undertake any obligation to update
forward-looking statements made by us. Important factors that may affect
future operating results include: any faltering in global economic
conditions or the stability of credit and financial markets, erosion of
consumer confidence and declines in customer spending, unavailability of
raw materials, services, supplies or manufacturing capacity, changes in
geographic, product or customer mix, our ability to successfully
integrate acquired businesses and technologies, adverse results in
litigation matters, and other risk factors described in our most recent
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of operations for the periods presented in this release are not
necessarily indicative of our operating results for any future periods.
Any projections in this release are based on limited information
currently available to Analog Devices, which is subject to change.
Although any such projections and the factors influencing them will
likely change, we will not necessarily update the information, as we
will only provide guidance at certain points during the year. Such
information speaks only as of the original issuance date of this release.
