(1) Non-GAAP revenue adds back $30 million of deferred revenues related to shipments of Linear Technology products by distributors to end customers that were received by the distributors prior to ADI’s acquisition of Linear Technology
(2) Non-GAAP gross margin excludes $252 million of costs comprised of the following:
- $187 million of amortization of step up through cost of sales
- $35 million amortization of purchased intangible assets
- $21 million deferred revenues, net of related costs, for shipments of Linear Technology products by distributors to end customer that were received by distributors prior to ADI’s acquisition of Linear Technology
- $8 million depreciation of step up value on purchased fixed assets
- $1 million fair value adjustment associated with the replacement of share-based awards in ADI’s acquisition of Linear Technology
(3) Non-GAAP operating expenses exclude $128 million of costs comprised of the following:
- $112 million amortization of purchased intangible assets
- $11 million 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 the Company’s acquisition of Linear Technology
(4) Non-GAAP tax rate excludes the tax effects of the reconciling adjustments noted in the three footnotes above and $51 million of discrete items in the quarter
(5) Non-GAAP earnings per share includes $1.04, which represents the net impact of the non-GAAP adjustments noted above on a per share basis consisting of:
- the deferred revenues, net of related costs, for shipments of Linear Technology products by distributors to end customers that were received by distributors prior to ADI’s acquisition of Linear Technology ($0.06)
- 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 ($0.94)
- acquisition-related transaction costs ($0.01)
- the effect on income tax of the prior items ($0.10)
- and the impact of discrete tax items ($0.14).
Conference Call Scheduled for Today, Wednesday, May 31, 2017 at 10:00
am ET
ADI will host a conference call to discuss second quarter
fiscal 2017 results and short-term outlook today, beginning at 10:00 am
ET. Investors may join via webcast, accessible at
investor.analog.com,
or by telephone (call 706-634-7193 ten minutes before the call begins
and provide the password "ADI").
A replay will be available two hours after the completion of the call. The replay may be accessed for up to two weeks by dialing 855-859-2056 (replay only) and providing the conference ID: 99084395, or by visiting investor.analog.com.
Non-GAAP Financial Information
This
release includes non-GAAP financial measures that are 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, these non-GAAP measures are not based on any comprehensive set
of accounting rules or principles.
Schedules E and F of this press release provides the reconciliation of the Company’s historical non-GAAP measures to their most comparable GAAP measures.
Management uses non-GAAP measures internally to evaluate the Company’s
operating performance from continuing operations against past periods
and to budget and allocate resources in future periods. These non-GAAP
measures also assist management in evaluating the Company’s core
business and trends across different reporting periods on a consistent
basis. Management also uses these non-GAAP measures as the primary
performance measurement when communicating with analysts and investors
regarding the Company’s earnings results and outlook and believes that
the presentation of these non-GAAP measures is useful to investors
because it provides investors with the operating results that management
uses to manage the Company and enables investors and analysts to
evaluate the Company’s core business. Management also believes that the
non-GAAP liquidity measure free cash flow is useful both internally and
to investors because it provides information about the amount of cash
generated after capital expenditures that is then available to repay
debt obligations, make investments and fund acquisitions, and for
certain other activities.
