Analog Devices, Inc. · NASDAQ:ADI
Analog Devices — Debt Investor Presentation (May 2013)
30 slides from Analog Devices's debt investor presentation, May 22, 2013
Slide 1: Analog Devices, Inc. $500 million Senior Notes Offering
Exhibit 99.1 Analog Devices, Inc. $500 million Senior Notes Offering May 2013 Today’s Presenters David Zinsner, VP, Finance & CFO Bill Martin, Treasurer and Director of M&A
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation may be deemed to contain forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, our statements regardi
Slide 3: Offering Summary
Offering Summary Issuer: Analog Devices, Inc. Securities: Senior Unsecured Notes Size: $500 million “will not grow” Form of Offering: SEC Registered Maturity: 10 years Ratings: Moody’s: A3 (Stable) S&P: A- (Stable) Covenants: Standard Investment Grade Covenants including Change of Control Put Use of
Slide 4: About Analog Devices
About Analog Devices Analog Devices Overview FY2012 revenue of $2,701 million and FCF(1) of $682 million A global leader in analog products with #1 market share position in converters and high performance amplifiers Over 60,000 customers worldwide Broad IP portfolio with over 2,700 U.S. patents and
Slide 5: Key Investment Highlights
Key Investment Highlights Highly diversified business model with broad exposure to multiple products, customers, end markets and geographies Leading market position with attractive growth prospects Highly-proprietary products with long product life cycles and high margin profile Efficient cost struc
Slide 6: What Does Analog Devices Do?
What Does Analog Devices Do? 5
Slide 7: General-Purpose Analog Product Category Attractiveness
General-Purpose Analog Product Category Attractiveness Worldwide General-Purpose Analog IC Long product life cycles Revenue Forecast by Market Segment from 2010 to 2018E ($ billion) Proprietary products ADI has 14% share #2 overall position 2012 to 2018E Large customer base $25.2 CAGR: 8% $23.8 $22.
Slide 8: ADI has a Diversified Product Portfolio
ADI has a Diversified Product Portfolio Product Diversification FY 2012 Revenue by Product Type ($2.7 billion) DSP Power Management 9% and References Converters 7% Greater than 60% of product revenue is proprietary Other Analog Signal 44% 15% No one product currently accounts for Processing more tha
Slide 9: ADI’s Products have a Long Lifecycle
ADI’s Products have a Long Lifecycle Source: Companydata 8
Slide 10: Worldwide Leader in Converters
Worldwide Leader in Converters 2012 Converter Market Share ADI leads in market share, brand awareness and brand preference Greatest breadth and depth of product portfolio 2,000+ products $1.2 billion sales in FY12 Growing market Converter Market Share: 2002-2012 Proliferation of digital systems that
Slide 11: Worldwide Leader in High Performance Amplifier Market
Worldwide Leader in High Performance Amplifier Market ADI leads the high performance amplifier market segment, a $1.2 billion market High-speed amplifiers High-precision amplifiers Instrumentation amplifiers Circuit design, manufacturing process innovation, and applications expertise drive different
Slide 12: Fab-Lite Manufacturing Strategy
Fab-Lite Manufacturing Strategy Diversified manufacturing strategy utilizing internal and external capabilities Internal capacity where process technology matters and product life cycles are long; external capacity for everything else Analog chip manufacturing does not require leading edge factories
Slide 13: ADI’s Financial Model
ADI’s Financial Model Stable, consistent revenue growth High margins Low capital spending High cash flow conversion Strong operating leverage Positioned effectively for recovery or continued recessionary environment Emphasis on organic growth and a conservative acquisition strategy 12
Slide 14: Solid Long Term History of Revenue Growth
Solid Long Term History of Revenue Growth Revenue ($ millions) 3,200 FY97 to FY12 Revenue CAGR: 5% 2,800 2,400 2,000 1,600 1,200 800 400 0 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Source: Company data 13 Note: FY05 – FY11 metrics reflect revenue from continuing
Slide 15: Strong Margin Profile
Strong Margin Profile (%) 70 Gross Margin Improvement Drivers Fab consolidations 60 Lower capital spending 50 Improving mix 40 Increasing utilization 30 Pricing for value 20 Operating Expenses Improvement Drivers 10 Product portfolio management 0 Increased focus on ROI FY97 FY00 FY03 FY06 FY09 FY12
Slide 16: Operating Ratio Comparisons
Operating Ratio Comparisons ADI vs. SOX and S&P Index Averages Gross Margin Operating Margin (excl special items) (%) (%) 80.0 35.0 30.4 70.0 30.0 64.4 60.0 25.0 49 50.0 19.6 20.0 40.0 31.1 15.0 12.9 30.0 10.0 20.0 10.0 5.0 0.0 0.0 CY 2012 CY 2012 ADI SOX S&P 500 ADI SOX S&P 500 Source: ADI 10Q’s an
Slide 17: Low Capital Spending Requirements…
Low Capital Spending Requirements… ($ millions) (%) 300 30 250 25 200 20 150 15 100 10 50 5 0 0 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 CAPEX $’s CAPEX as a % of Revenue ADI's capital expenditures have moderated since the completion of the consolidation of its
Slide 18: …Leads to Significant Free Cash Flow Generation
…Leads to Significant Free Cash Flow Generation Free Cash Flow ($ millions) (% of Sales) 900 35 800 30 700 25 600 20 500 15 400 10 300 5 200 0 100 -5 0 -10 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Free Cash Flow (1)(2) Free Cash Flow as a % of Revenues (1)(3) S
Slide 19: … and High Cash Flow Conversion
… and High Cash Flow Conversion (%) 40 30 20 10 0 (10) FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Net Income as a % of Revenue Free Cash Flow as a % of Revenue (1) Source: Company data Note: FY05-FY11 free cash flow & net income metrics include results from disco
Slide 20: ADI Free Cash Flow Trend vs. Other “A” Rated Semi’s
ADI Free Cash Flow Trend vs. Other “A” Rated Semi’s % of Sales (%) 50 40 30 20 10 CY 2008 CY 2009 CY 2010 CY2011 CY2012 ADI Intel Texas Instruments Applied Materials Broadcom Altera Source: Companydata and SEC filings 19
Slide 21: Q2 2013 Highlights
Q2 2013 Highlights Revenue of $659 million up 6% q-o-q • Industrial growth driven by a rebound in sales in all geographies • Automotive growth driven by broad strength in NA & China markets, growth in worldwide luxury vehicles, and a reversal in end of year inventory reductions • Consumer decline pr
Slide 22: Conservative Capital Structure
Conservative Capital Structure Debt Maintain a conservative balance sheet with a strong investment grade credit profile Cash balance Fund operations (e.g. R&D) through potential industry downturns Maintain strong balance for opportunistic M&A Dividend Maintain prudent/affordable increases in-line wi
Slide 23: Appendix
Appendix 22
Slide 24: Historical Income Statement
Historical Income Statement ($ millions) FY08 (1) FY09 (1) FY10 (1) FY11 (1) FY12 Revenue (Continuing Operations) 2,583 2,015 2,761 2,993 2,701 COGS 1,006 896 962 1,007 960 Gross Profit 1,577 1,119 1,799 1,986 1,741 Sales (%) 61 56 65 66 64 R&D 533 447 492 505 512 Sales (%) 21 22 18 17 19 SMG&A 416
Slide 25: Historical Balance Sheet
Historical Balance Sheet ($ millions) FY08 (1) FY09 (1) FY10 FY11 FY12 Cash and ST Investments 1,310 1,816 2,688 3,593 3,900 Trade Receivables 315 301 387 348 340 Inventory 315 253 277 295 314 Net PP&E 567 477 473 479 501 Goodwill and intangibles 247 257 257 287 313 Other assets 327 265 247 276 252
Slide 26: Historical Cash Flow
Historical Cash Flow ($ millions) FY08 FY09 FY10 FY11 FY12 Net Income 786 248 712 867 651 Depreciation and Amortization 153 140 121 118 110 Stock-based Comp Net of Tax Benefit 32 49 51 7 41 Working Capital and Other (Inc.) / dec (54) (5) 108 (84) 16 (G) / L on Sale of Business & other non-cash (248)
Slide 27: Pro forma Capitalization
Pro forma Capitalization Actual Adjustments Pro forma (%) of ($ millions) 2Q 13A For Note Offering 2Q 13A Capitalization Cash, Cash Equivalents and Short-term Investments (1) (2) 4,172 497 4,669 Senior Unsecured Notes at Par Value (2) 750 500 1,250 Total Debt (2) (3) ($) 750 1,250 22 Shareholders Eq
Slide 28: Non-GAAP Financial Information
Non-GAAP Financial Information This presentation includes a non-GAAP financial measure for prior periods that is not in accordance with, nor an alternative to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, this non-GAAP mea
Slide 29: Reconciliation of Non-GAAP Financial Information
Reconciliation of Non-GAAP Financial Information Table of Reconciliation of GAAP LTM Net Income to Non-GAAP LTM EBITDA ADI Financial Results LTM Quarter Ended ($ millions) (unaudited) 2Q12 3Q12 4Q12 1Q13 2Q13 GAAP LTM Net Income 705.7 655.6 651.3 643.1 644.7 Plus: LTM Taxes 191.7 176.5 162.3 140.5 1
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