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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 1, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM_______________ TO ________________
COMMISSION FILE NO. 1-7819
ANALOG DEVICES, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2348234
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE TECHNOLOGY WAY, NORWOOD, MA 02062-9106
(Address of principal executive offices) (Zip Code)
(781) 329-4700
(Registrant's telephone number, including area code)
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SECURITIES REGISTERED PURSUANT TO SECTION 12 (B) OF THE ACT:
COMMON STOCK $.16 2/3 PAR VALUE NEW YORK STOCK EXCHANGE
Title of Each Class Name of Each Exchange on Which Registered
SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT:
NONE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $4,395,116,408 based on the closing price of
the Common Stock on the New York Stock Exchange Composite Tape reporting system
on December 31, 1997.
As of December 31, 1997, there were 162,201,029 shares of $.16 2/3 par
value Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT DESCRIPTION 10-K PART
-------------------- ---------
Portions of Annual Report to
Shareholders for the fiscal year
ended November 1, 1997 I and II
Portions of the Registrant's Proxy
Statement for the Annual Meeting
of Stockholders to be held March 10, 1998 III
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PART I
ITEM 1. BUSINESS
COMPANY OVERVIEW
Analog Devices, Inc. ("Analog" or the "Company") designs, manufactures and
markets a broad line of high-performance linear, mixed-signal and digital
integrated circuits ("ICs") that address a wide range of real-world signal
processing applications. The Company's principal products include
general-purpose, standard-function linear and mixed-signal ICs ("SLICs") and
system-level ICs. The latter group includes general-purpose digital signal
processing ICs ("DSPs") and application-specific devices that typically
incorporate analog and mixed-signal circuitry and a DSP core.
Nearly all of Analog's products are components, which are typically incorporated
by original equipment manufacturers ("OEMs") in a wide range of equipment and
systems for use in communications, computer, industrial, instrumentation,
military/aerospace, automotive and high-performance consumer electronics
applications.
The Company sells its products worldwide through a direct sales force,
third-party industrial distributors and independent sales representatives.
Approximately 46% of fiscal 1997 revenue was derived from customers in North
America, while most of the balance was derived from customers in Western Europe
and the Far East.
Analog is headquartered near Boston in Norwood, Massachusetts, and has
manufacturing facilities in Massachusetts, California, North Carolina, Ireland,
the Philippines and Taiwan. Founded in 1965, Analog employs approximately 7,500
persons worldwide.
INDUSTRY BACKGROUND
Real-world phenomena, such as temperature, pressure, sound, images, speed,
acceleration, position and rotation angle, are inherently analog in nature,
consisting of continuously varying information. This information can be detected
and measured using analog sensors, which represent real-world phenomena by
generating continuously varying voltages and currents. The signals from these
sensors are initially processed using analog methods, such as amplification,
filtering and shaping. They are then usually converted to digital form for input
to a microprocessor, which is used to manipulate, store or display the
information. In many cases the signals are further processed after conversion to
digital form using a technology called "digital signal processing," or DSP. In
addition, digital signals are frequently converted to analog form to provide
signals for analog display, sound, or control functions. These manipulations and
transformations are known collectively as "real-world signal processing."
Significant advances in semiconductor technology over the past 10 to 15 years
have led to substantial increases in the performance and functionality of ICs
used in signal processing applications. These advances include the ability to
create VLSI (Very Large Scale Integration) mixed-signal ICs that contain both
high-performance analog circuitry and large amounts of high-density digital
circuitry. The analog circuitry portion of the IC is used for manipulating
real-world signals while still in analog form and for converting analog signals
into digital form (or vice versa), and the digital portion is used for further
processing analog signals subsequent to their conversion to digital form. The
ICs resulting from these advances are used as components in equipment and
systems to achieve higher performance and more efficient signal processing.
PRINCIPAL PRODUCTS
The Company operates predominantly in one industry segment: the design,
manufacture and marketing of a broad line of high-performance linear,
mixed-signal and digital integrated circuits that address a wide range of
real-world signal processing applications. Analog's products can be divided into
three classifications: Standard Linear ICs, system-level ICs and assembled
products.
A substantial portion of the Company's products are proprietary, while
equivalents to most of its other products are available from a limited number of
other suppliers.
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SLICS
SLIC products have been the foundation of the Company's business for more than
20 years, and Analog believes it is one of the world's largest SLIC suppliers.
During 1997, 1996 and 1995, SLIC sales represented 61%, 57% and 64%,
respectively, of the Company's total sales. The Company's SLICs are primarily
high-performance, single-function devices. The majority of the Company's SLIC
product revenue is attributable to sales of data converters (analog-to-digital
and digital-to-analog) and amplifiers. Other SLIC products offered by the
Company include analog signal-processing devices (such as analog multipliers),
voltage references and comparators. Over the past few years the Company has been
expanding its SLIC product offerings into product areas where its focus was
previously limited, principally interface circuits and power management ICs. It
is also expanding its SLIC product line to include a much larger number of
products designed to operate from single-supply 3 or 5 volt power sources to
better meet the needs of customers designing portable, battery-operated
equipment.
Analog's SLIC products tend to be general purpose in nature, which allows
customers to incorporate them in a wide variety of equipment and systems.
Analog's product portfolio includes several hundred SLICs, any one of which can
have as many as several hundred customers. SLICs typically have long product
life cycles. The Company's SLIC customers include both OEMs and customers who
build equipment for their own use. Historically, most SLICs have been purchased
by OEMs which serve the instrumentation, industrial and military/aerospace
markets, but they are now also being used for applications in communications,
computers, camcorders, scanners, automatic test equipment, imaging and other
consumer applications requiring high-performance real-world signal processing.
By using standard, high-performance, readily available, off-the-shelf components
in their designs, Analog's customers can reduce the time required to develop and
bring new products to market. Given the high cost of developing customized ICs,
SLICs usually provide the most cost-effective solutions for low to medium volume
applications. In addition, combinations of SLICs connected together on a printed
circuit board can provide functionality not currently achievable using a single
IC.
SYSTEM-LEVEL ICS
Analog's system-level ICs include general-purpose DSP ICs and multi-function
devices that feature high levels of functional integration on a single chip.
During 1997, 1996 and 1995, sales of these products represented 35%, 38% and
28%, respectively, of the Company's total sales.
The Company's general-purpose DSP ICs are designed to efficiently execute
specialized programs (algorithms) associated with processing digitized
real-time, real-world data. General-purpose DSP IC customers typically write
their own algorithms using software tools provided by the Company and software
tools obtained from third-party suppliers. All of these devices share a common
architecture and code compatibility, which allows system designers to address
cost, performance and time-to-market constraints. Analog supports these products
with specialized applications and easy-to-use, low-cost design tools, which
reduce product development costs and time to market.
Most of Analog's system-level ICs, other than its general-purpose DSPs, are
mixed-signal devices some of which include a DSP core. The balance are
linear-only devices. These devices are nearly always designed to meet the
requirements of a specific application, and the design process often includes
significant input from one or more potential key customers. Market demand for
these types of devices is driven by the benefits that result from combining a
number of functions on a single circuit, as opposed to a combination of SLICs
and other ICs. These benefits include higher performance, lower cost per
function, smaller size, lower weight, fewer parts and decreased power
consumption. These products allow Analog's customers to design smaller, lighter,
higher performance, more power-efficient and lower cost end products. The
Company believes that these benefits are becoming more important to the
Company's OEM customers as they increase their focus on high-performance, small,
lightweight products, many of which are battery powered.
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ASSEMBLED PRODUCTS
The Company's assembled products include multi-chip modules ("MCMs"), hybrids
and printed-board modules. A MCM is a device made up of several IC chips
assembled in an automated fashion in a multilayer package that provides high
interconnect density at low cost. A hybrid consists of several chips and
discrete components mounted and wired together on a substrate, which is then
enclosed in a package. A printed-board module consists of surface-mount
components assembled on a small printed board that is then encapsulated in a
small plastic case.
Revenues from this product group have been declining for several years,
primarily because hybrids have been replaced in many new designs with smaller,
lower-cost monolithic ICs that offer higher levels of performance and
integration at lower cost. During 1997, 1996 and 1995, sales of these products
represented 4%, 5% and 8%, respectively, of the Company's total sales.
MARKETS AND APPLICATIONS
The Company's products are sold primarily to OEMs for incorporation into
equipment, instruments and systems sold to end users for a wide variety of
applications, including engineering; medical and scientific instruments;
industrial equipment; communications equipment; computers and computer
peripherals; military/aerospace equipment; high-end consumer electronics
products and automotive products. The Company's growth has been aided both by
the expansion of these markets and the increasing need for high-performance
real-time signal processing.
Listed below are some of the characteristics of each of the Company's major
markets:
INSTRUMENTATION--includes engineering, medical and scientific instruments. These
products are usually designed using the highest performance SLICs available,
where production volumes generally do not warrant custom or application-specific
ICs.
INDUSTRIAL--includes data acquisition systems, automatic process control
systems, robotics, environmental control systems and automatic test equipment
("ATE"). These products generally require ICs that offer performance greater
than that available from commodity-level ICs, but generally do not have
production volumes that warrant custom or application-specific ICs. Combinations
of SLICs are therefore usually employed to achieve the necessary functionality,
except in ATE applications where the high level of electronic circuitry required
per tester has created opportunities for the design of system-level ICs for this
application.
COMMUNICATIONS--includes data and fax modems, digital cellular telephones and
portable, wireless communication base station equipment and broadband wired
applications. The need for ever higher speed, coupled with more reliable, more
bandwidth-efficient communications is creating increasing demand for systems
that include both digital and analog signal processing capability. Demand for
signal processing ICs for this market is also being driven by the equipment
manufacturers' need for components that enable them to develop cost-effective
products that feature high performance, small size, low weight and minimal power
consumption.
COMPUTERS AND COMPUTER PERIPHERALS--includes high-performance personal
computers, workstations and peripheral devices such as hard disk drives and
scanners. The Company currently supplies a variety of ICs used in this market
for functions such as graphic displays; interfaces between PCs and peripherals
such as modems and printers; power and battery management; and enhanced sound
input and output capability for business and entertainment applications.
MILITARY/AEROSPACE--includes military, commercial avionics and space markets,
all of which require high-performance ICs that meet rigorous environmental and
reliability specifications. Nearly all of the Company's SLICs can be supplied in
versions that meet appropriate military standards. In addition, many products
can be supplied to meet the standards required for broadcast satellites and
other commercial space applications. Most of the Company's products sold in this
market are derived from standard commercial grade ICs, although the Company
sometimes develops products expressly for military/aerospace applications.
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CONSUMER ELECTRONICS--The emergence of high-performance consumer products, such
as compact disc players, DVD players and digital camcorders, has led to the need
for high-performance system-level ICs with a high level of functionality.
Although the Company's revenue from this market has not been significant, the
Company has begun supplying ICs for sophisticated products used by consumers for
computing, communications and entertainment applications, and believes that many
of these applications will involve digital signal processing.
AUTOMOTIVE--Although the automotive market has historically been served with
low-cost, low-performance ICs, demand has emerged for higher performance devices
for a wide range of applications. In response, Analog is developing products
specifically for the automotive market. The Company is supplying a micromachined
IC used as a crash sensor in airbag systems, which serves as an alternative to
an electromechanical sensor. The Company anticipates that other micromachined
devices derived from this product may be suitable for other automotive
applications, such as anti-lock brakes and "smart" suspension systems.
RESEARCH AND DEVELOPMENT
The markets served by Analog are characterized by rapid technological changes
and advances. Accordingly, the Company makes substantial investments in the
design and development of new products and processes, and for significant
improvement of existing products and processes. Analog spent $196 million during
fiscal 1997 on the design, development and improvement of new and existing
products and processes, compared to $178 million during fiscal 1996 and $134
million during fiscal 1995.
In support of its research and development activities, the Company employs
several hundred engineers involved in product and process development at several
design centers and manufacturing sites located throughout the world.
As of November 1, 1997, the Company owned 486 U.S. patents and had 168 patent
applications on file with the United States patent office. The Company believes
that while its patents may provide some advantage, its competitive position is
largely determined by such factors as the knowledge, ability and experience of
the Company's personnel, new product development, market recognition and ongoing
marketing efforts, customer service and technical support.
SALES CHANNELS
Analog sells its products in both North America and internationally through a
direct sales force, third-party distributors and independent sales
representatives. Approximately 46% of fiscal 1997 revenue was derived from
customers in North America. As of December 1, 1997, the Company had 13 sales
offices in the United States, and its third-party distribution channel consisted
of eight national and regional third-party distributors and several independent
sales representatives at numerous locations throughout the U.S. and Canada.
Approximately 29% of the Company's fiscal 1997 revenue was derived from sales to
customers in Europe; 13% to customers in Japan; and 12% to customers in other
international markets. As of December 1, 1997, the Company had direct sales
offices in Australia, Austria, Denmark, France, Germany, Hong Kong, India,
Israel, Italy, Japan, Korea, The Netherlands, Singapore, Sweden, Taiwan and the
United Kingdom. The Company also had sales representatives and/or distributors
in approximately 36 countries outside North America, including countries where
the Company also has direct sales offices. For further detail regarding
geographic information, see Note 3 in the Notes to the Company's Consolidated
Financial Statements incorporated herein by reference to the 1997 Annual Report
to Shareholders and filed herewith as part of Exhibit 13.2.
Approximately 42% of Analog's fiscal 1997 revenue was derived from sales made
through distributors. The Company's distributors typically maintain an inventory
of Analog products. Some of these distributors also sell products competitive
with the Company's products, including those for which the Company is an
alternate source. Sales to certain distributors are made under agreements which
provide protection to the distributors for their inventory of Company products
against price reductions and products that are slow-moving or have been
discontinued by the Company.
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The Company's worldwide sales efforts are supported by an extensive promotional
program that includes editorial coverage and paid advertising in trade
publications; direct mail programs; promotional brochures; technical seminars;
and participation in trade shows. The Company publishes and distributes
full-length databooks, short-form catalogs, applications guides, technical
handbooks and detailed data sheets for individual products. The Company also
provides products and application information via its worldwide web site on the
Internet. The Company also maintains a staff of application engineers who aid
customers in incorporating Analog's products into their products during their
product development cycles.
For fiscal 1997, Analog's 20 largest customers accounted for approximately 29%
of the Company's net sales. The largest single customer represented less than 4%
of net sales.
PRODUCTION AND RAW MATERIALS
Monolithic integrated circuit components are manufactured in a sequence of
production steps that include wafer fabrication, wafer testing, cutting the
wafer into individual "chips" (or dice), assembly of the dice into packages and
electrical testing of the devices in final packaged form. The raw materials used
to manufacture these devices include silicon wafers, processing chemicals
(including liquefied gases), precious metals, ceramic packages and plastic used
for plastic packaging.
In addition to using industry-standard bipolar and CMOS wafer fabrication
processes, Analog employs a wide variety of Company-developed proprietary
processes specifically tailored for use in fabricating high-performance linear
and mixed-signal SLICs and system-level ICs.
Analog's IC products are fabricated both at the Company's production facilities
and by third-party wafer fabricators. The Company relies primarily on its own
facilities for fabricating wafers that require linear and mixed-signal
processes. The Company operates wafer fabrication facilities in Wilmington and
Cambridge, Massachusetts; Santa Clara and Sunnyvale, California; and Limerick,
Ireland for production of linear and mixed-signal devices. The Company also
operates assembly and test facilities located in the United States, Ireland, the
Philippines and Taiwan and also uses third-party subcontractors. The Company
uses two principal foundries, Taiwan Semiconductor Manufacturing Company
("TSMC") and Chartered Semiconductor Manufacturing Pte., Ltd. ("CSM") for the
production of digital and VLSI mixed-signal devices. To provide access to
advanced process technology at competitive costs, the Company has entered into a
joint venture agreement (WaferTech, LLC) with TSMC, Altera, Integrated Silicon
Solutions and several individual investors to build an eight-inch wafer
fabrication facility in Camas, Washington. Analog is an 18% equity partner in
the joint venture, which is expected to become operational late in 1998, and has
rights to purchase up to 27% of the output from this facility.
Hybrid products are manufactured by mounting and connecting together several
integrated circuit chips in a single package. Some of the chips used in the
Company's hybrids are manufactured by the Company and some are purchased from
outside suppliers. The production process for modular components, subsystems and
systems consists primarily of assembly, packaging and testing. Some of the
Company's assembled products are assembled and tested within the Company's U.S.
manufacturing facilities, while others are assembled and tested at Company-owned
facilities outside the United States or by subcontractors, principally in the
Far East.
To respond to production capacity shortages which existed during 1995, the
Company significantly expanded its manufacturing capacity during 1996 and 1997.
Major wafer fabrication expansions have been completed in Wilmington,
Massachusetts; Cambridge, Massachusetts; Sunnyvale, California and Limerick,
Ireland. In addition, the Company has completed construction of an additional
assembly and test facility in Cavite, Philippines.
BACKLOG
Backlog at the end of fiscal 1997 was approximately $280 million; it was
approximately $291 million at the end of fiscal 1996. The Company may allow
customers to revise the quantities or delivery schedules of products ordered to
reflect changes in their needs. Accordingly, the Company believes that its
backlog at any time should not be used as a measure of future revenues.
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GOVERNMENT CONTRACTS
The Company estimates that approximately 12% of its fiscal 1997 total worldwide
revenue was attributable to sales to the U.S. government and government
contractors and subcontractors. Analog's government contract related business is
predominantly in the form of negotiated, firm fixed-price subcontracts. All such
contracts and subcontracts contain standard provisions relating to termination
at the election of the United States government.
COMPETITION
Analog competes with a large number of semiconductor companies in markets that
are highly competitive. The Company believes it is one of the largest suppliers
of high-performance linear and mixed-signal signal-processing components. These
types of products fall into both the SLIC and system-level IC product
categories. Competitors for the Company's linear and mixed-signal products
include Burr-Brown Corp., Cirrus Logic Inc., Exar Corp., Harris Corp., Linear
Technology Corp., Maxim Integrated Products, Inc., National Semiconductor Corp.,
Rockwell International Corp., Sierra Semiconductor Corp., Siliconix Inc., Texas
Instruments, Inc. and others.
Sales of DSPs represent a growing percentage of the Company's total sales.
Analog's competitors in the DSP IC market include Lucent Technologies Inc.,
Motorola Semiconductor Products and Texas Instruments, Inc.
Many other companies offer components that compete with Analog's products; some
also offer other electronic products, and some have financial resources
substantially larger than Analog's. Also, some formerly independent competitors
have been purchased by larger companies. However, to the Company's knowledge, no
manufacturer competes with Analog across all of the product types offered by the
Company in its signal-processing components product line.
Analog believes that competitive performance in the marketplace for real-world
signal-processing components depends upon several factors, including product
price, technical innovation, product quality and reliability, range of products,
customer service and technical support. Analog believes its aggressive technical
innovation emphasizing product performance and reliability, supported by its
commitment to strong customer service and technical support, enables the Company
to continue to compete successfully in its chosen markets against both foreign
and domestic semiconductor manufacturers.
ENVIRONMENT
Analog's manufacturing facilities are subject to numerous environmental laws and
regulations, particularly with respect to industrial waste and emissions.
Compliance with these laws and regulations has not had a material impact on the
Company's capital expenditures, earnings or competitive position.
EMPLOYEES
As of November 1, 1997, the Company employed approximately 7,500 persons. The
Company's future success depends in large part on the continued service of its
key technical and senior management personnel, and on its ability to continue to
attract, retain and motivate qualified employees, particularly those highly
skilled design, process and test engineers involved in the manufacture of
existing products and the development of new products and processes. The
competition for such personnel is intense, and the loss of key employees could
have a material adverse effect on the Company. The Company believes that
relations with its employees are good.
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ITEM 2. PROPERTIES
The Company's corporate headquarters is located in Norwood, Massachusetts.
Manufacturing and other operations are carried on in several locations
worldwide. The following tables provide certain information as to the Company's
principal general offices and manufacturing facilities:
PLANT LOCATION
OWNED: USE FLOOR SPACE
------ --- -----------
Wilmington, Wafer fabrication, components assembly and testing, engineering and 265,200 sq. ft.
Massachusetts administrative offices
Wilmington, Engineering, marketing and administrative offices 108,000 sq. ft.
Massachusetts
Wilmington, Components engineering, marketing and administrative offices 67,200 sq. ft.
Massachusetts
Westwood, Components and subsystems assembly and testing, engineering and 100,500 sq. ft.
Massachusetts administrative offices
Limerick, Wafer fabrication, wafer probe and testing, engineering and 311,400 sq. ft.
Ireland administrative offices
Greensboro, Components and board assembly and testing, engineering and 100,000 sq. ft.
North Carolina administrative offices
Cavite, Philippines Components assembly and testing, engineering and administrative 166,000 sq. ft.
offices
Manila, Philippines Components assembly and testing, engineering and administrative 85,000 sq. ft.
offices
PRINCIPAL LEASE
PROPERTIES USE FLOOR SPACE EXPIRATION RENEWALS
LEASED --- ----------- (FISCAL YEAR) --------
------ -------------
Norwood, Corporate headquarters, engineering, components 135,000 sq. ft. 2007 3, five-yr.
Massachusetts testing, sales and marketing offices periods
Cambridge, Wafer fabrication, components testing and 116,000 sq. ft. 2001 2, five-yr.
Massachusetts assembly engineering, marketing and periods
administrative offices
Santa Clara, Wafer fabrication, components assembly and 72,800 sq. ft. 2000 2, five-yr.
California testing, engineering and administrative offices periods
Santa Clara, Administrative offices and engineering 43,500 sq. ft. 2000 2, five-yr.
California periods
Sunnyvale, Wafer fabrication 40,000 sq. ft. 2000 3, five-yr.
California periods
Taipei, Components testing, engineering and 53,400 sq. ft. 2001 1, five to
Taiwan administrative offices seven yr.
period
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ITEM 2. PROPERTIES -- (CONTINUED)
In addition to the principal leased properties listed in the previous table, the
Company also leases sales offices and other premises at 29 locations in the
United States and 28 locations overseas under operating lease agreements. These
leases expire at various dates through the year 2010. The Company anticipates no
difficulty in retaining occupancy of any of its manufacturing, office or sales
facilities through lease renewals prior to expiration or through month-to-month
occupancy, or in replacing them with equivalent facilities. For information
concerning the Company's obligations under all operating and capital leases see
Note 7 in the Notes to the Company's Consolidated Financial Statements
incorporated herein by reference to the 1997 Annual Report to Shareholders and
filed herewith as part of Exhibit 13.2.
ITEM 3. LEGAL PROCEEDINGS
The information required by this item is set forth in Note 8 in the Notes to the
Company's Consolidated Financial Statements incorporated herein by reference to
the 1997 Annual Report to Shareholders and filed herewith as part of Exhibit
13.2.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during the
last quarter of the fiscal year ended November 1, 1997.
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EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth (i) the name and age of each present executive
officer of the Company; (ii) the position(s) presently held by each person
named; and (iii) the principal occupations held by each person named for at
least the past five years.
EXECUTIVE OFFICER AGE POSITION BUSINESS EXPERIENCE
----------------- --- -------- -------------------
Ray Stata..................63 Chairman of the Board and Chairman of the Board since 1973; Acting
Acting General Manager, General Manager, Micromachined Products Division since
Micromachined Products Division September 1996; Chief Executive Officer from 1973 to
November 1996; President from 1971 to November 1991.
Jerald G. Fishman..........52 President, Chief Executive Chief Executive Officer since November 1996;
Officer and Director President and Director since November 1991;
Executive Vice President from 1988 to
November 1991; Group Vice President-Components
from 1982 to 1988.
Ross Brown.................53 Vice President, Human Resources Vice President, Human Resources since May
1993; U.S. Personnel Manager for Digital
Equipment Corp. from 1990 to 1993; Senior
Group Personnel Manager at Digital from 1986
to 1990.
David D. French............41 Vice President and General Vice President and General Manager, Computer
Manager, Computer Products Products Division since May 1994; Vice
Division President and General Manager of Systems IC
Products Division from November 1991 to May
1994; Division General Manager from February
1988 to November 1991.
Russell K. Johnsen.........43 Vice President and General Vice President and General Manager,
Manager, Communications Division Communications Division since May 1994; Vice
President and General Manager, Analog Devices
Semiconductor Division from November 1993 to
May 1994; General Manager of the Wide Area
Networks Division of National Semiconductor
Corp. from 1992 to 1993.
Robert R. Marshall.........43 Vice President, Worldwide Vice President, Worldwide Manufacturing since
Manufacturing February 1994; Vice President, Manufacturing,
Limerick Site, Analog Devices, B.V. -
Limerick, Ireland from November 1991 to
February 1994; Plant Manager, Analog Devices,
B.V. - Limerick, Ireland from January 1991 to
November 1991.
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EXECUTIVE OFFICER AGE POSITION BUSINESS EXPERIENCE
----------------- --- -------- -------------------
William A. Martin..........38 Treasurer Treasurer since March 1993; Assistant
Treasurer from October 1991 to March 1993;
Manager of Treasury Finance from March 1987 to
October 1991; Manager of International
Treasury from October 1985 to March 1987.
Robert McAdam..............47 Vice President and General Vice President and General Manager, Standard
Manager, Standard Linear Linear Products Division since February 1994;
Products Division Vice President and General Manager, Analog
Devices, B.V. - Limerick, Ireland from
January 1991 to February 1994; Product Line
Manager, Analog Devices, B.V. - Limerick,
Ireland from October 1988 to January 1991.
Brian P. McAloon...........47 Vice President, Sales Vice President, Sales since May 1992; Vice
President, Sales and Marketing - Europe and
Southeast Asia from 1990 to 1992; General
Manager, Analog Devices, B.V. - Limerick,
Ireland from 1987 to 1990.
Joseph E. McDonough........50 Vice President, Finance and Vice President, Finance and Chief Financial
Chief Financial Officer Officer since November 1991; Vice President
since 1988 and Treasurer from 1985 to March
1993; Director of Taxes from 1983 to 1985.
H. Goodloe Suttler.........46 Vice President, Marketing, Vice President, Marketing, Quality and
Quality and Planning Planning since October 1993; Vice President
and General Manager, Analog Devices
Semiconductor Division from November 1991 to
October 1993; General Manager of Analog
Devices Semiconductor Division from August
1988 to November 1991.
Franklin Weigold...........58 Vice President and General Vice President and General Manager,
Manager, Transportation and Transportation and Industrial Products
Industrial Products Division Division since March 1992; President and
Chief Operating Officer of Unitrode from June
1990 to March 1992.
There is no family relationship among the named officers.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on the New York Stock Exchange ("NYSE")
under the symbol ADI. The table below sets forth the NYSE high and low sale
prices of the Common Stock during the two most recent fiscal years.
FISCAL 1997 FISCAL 1996
----------------------- ------------------------
PERIOD HIGH LOW HIGH LOW
------ ---- --- ---- ---
First Quarter $ 29.25 $ 19.63 $ 19.38 $ 13.13
Second Quarter $ 29.25 $ 21.00 $ 22.63 $ 16.13
Third Quarter $ 33.75 $ 23.88 $ 22.38 $ 12.75
Fourth Quarter $ 36.69 $ 26.00 $ 22.25 $ 14.63
The Company's $60,000,000 credit agreement restricts the aggregate of all cash
dividend payments declared or made subsequent to November 2, 1996 to an amount
not exceeding $150,000,000 plus 50% of the consolidated net income of the
Company for the period from November 3, 1996 through the end of the Company's
then most recent fiscal quarter. At November 1, 1997 this amount was equal to
$239,110,000. The Company has never paid any cash dividends on its Common Stock
and has no current intentions to do so.
The approximate number of holders of record of the Company's Common Stock at
December 31, 1997 was 5,132. This number does not include shareholders for whom
shares are held in a "nominee" or "street" name.
ITEM 6. SELECTED FINANCIAL DATA
(thousands except per share amounts) 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------
Statement of Operations data:
Net sales.................. $1,243,494 $ 1,193,786 $ 941,546 $ 773,474 $ 666,319
Net income................. 178,219 171,901 119,270 74,496 44,457
Net income per
share.................... 1.04 1.03 .75 .48 .29
Balance Sheet data:
Total assets............... $1,763,853 $ 1,508,272 $ 993,349 $ 813,088 $ 676,179
Long-term debt and non-
current obligations under
capital leases........... 348,852 353,666 80,000 80,061 100,297
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is incorporated herein by reference to the
"Management Analysis" set forth on pages 1 through 7 of the 1997 Annual Report
to Shareholders and is filed herewith as part of Exhibit 13.1.
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by reference to the
"Management Analysis" set forth on pages 1 through 7 of the 1997 Annual Report
to Shareholders and is filed herewith as part of Exhibit 13.1.
11
13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to the
Company's 1997 Annual Report to Shareholders under the headings "Financial
Section - Consolidated Statements of Income, - Consolidated Balance Sheets, -
Consolidated Statements of Stockholders' Equity, - Consolidated Statements of
Cash Flows, - Notes to Consolidated Financial Statements, - Report of Ernst &
Young LLP, Independent Auditors and - Supplementary Financial Information," and
is filed herewith as Exhibit 13.2.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The response to this item is contained in part under the caption "EXECUTIVE
OFFICERS OF THE COMPANY" in Part I hereof, and the remainder is contained in the
Company's Proxy Statement for the Annual Meeting of Stockholders to be held on
March 10, 1998 (the "1998 Proxy Statement") under the caption "Election of
Directors" and is incorporated herein by reference. Information relating to a
delinquent filing of a Form 4 by an Executive Officer of the Company is
contained in the Company's 1998 Proxy Statement under the caption "Beneficial
Ownership Reporting Compliance."
ITEM 11. EXECUTIVE COMPENSATION
The response to this item is contained in the Company's 1998 Proxy Statement
under the captions "Directors' Compensation," "Executive Compensation," and
"Severance and Other Agreements," and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The response to this item is contained in the Company's 1998 Proxy Statement
under the caption "Security Ownership of Certain Beneficial Owners and
Management" and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The response to this item is contained in the Company's 1998 Proxy Statement
under the caption "Transactions with Directors," and is incorporated herein by
reference.
12
14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following consolidated financial statements are included in the
Company's 1997 Annual Report and are incorporated herein by reference
pursuant to Item 8:
- Consolidated Statements of Income for the years ended November 1,
1997, November 2, 1996 and October 28, 1995
- Consolidated Balance Sheets as of November 1, 1997, November 2, 1996
and October 28, 1995
- Consolidated Statements of Stockholders' Equity for the years ended
November 1, 1997, November 2, 1996 and October 28, 1995
- Consolidated Statements of Cash Flows for the years ended November 1,
1997, November 2, 1996 and October 28, 1995
(a) 2. FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statement schedule is included in
Item 14(d):
Schedule II - Valuation and Qualifying Accounts
All other schedules have been omitted since the required information is
not present, or not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the
consolidated financial statements or the notes thereto.
(a) 3. LISTING OF EXHIBITS
EXHIBIT
NO. DESCRIPTION
--- -----------
3.1 Restated Articles of Organization of Analog Devices, Inc., as
amended, filed as an exhibit to the Company's Form S-8 filed on
May 30, 1996 and incorporated herein by reference.
+ 3.2 By-laws of Analog Devices, Inc. as amended.
4.1 Rights Agreement, as amended, between Analog Devices, Inc. and
The First National Bank of Boston, as Rights Agent, filed as an
exhibit to a Form 8 filed on June 27, 1989 amending the
Registration Statement on Form 8-A relating to Common Stock
Purchase Rights, and incorporated herein by reference.
4.2 Indenture dated as of March 1, 1993 between Analog Devices, Inc.
and The First National Bank of Boston, filed as an exhibit to
the Company's Form 10-K for the fiscal year ended October 29,
1994 and incorporated herein by reference.
4.3 Indenture dated as of December 18, 1995 between Analog Devices,
Inc. and State Street Bank and Trust Company, as Trustee, filed
as an exhibit to the Company's Form 10-K for the fiscal year
ended October 28, 1995 and incorporated herein by reference.
* 4.4 Analog Devices, Inc. Deferred Compensation Plan, filed as an
exhibit to a Form S-8 filed on December 8, 1995 and incorporated
herein by reference, as amended by Amendment No. 1 and Amendment
No. 2, filed as Exhibits to Post-Effective Amendment No. 1 to
Form S-8 filed on April 5, 1997, and Amendment No. 3, filed as
an Exhibit to Post-Effective Amendment No. 2 to form S-8 filed
on November 12, 1997.
* + 10.1 Bonus Plan of Analog Devices, Inc.
* 10.2 1991 Restricted Stock Plan of Analog Devices, Inc., filed
as an exhibit to the Company's Form 10-K for the fiscal year
ended November 2, 1996 and incorporated herein by reference
13
15
EXHIBIT
NO. DESCRIPTION
--- -----------
* 10.3 1980 Stock Option Plan of Analog Devices, Inc., as amended,
filed as an exhibit to the Company's Form 10-K for the fiscal
year ended November 2, 1996 and incorporated herein by
reference.
* 10.4 Restated 1988 Stock Option Plan of Analog Devices, Inc.,
filed as an exhibit to the Company's Form 10-Q for the fiscal
quarter ended May 3, 1997 and incorporated herein by reference.
* 10.5 1989 Director Stock Option Plan of Analog Devices, Inc., as
amended, filed as an exhibit to the Company's Form 10-K for the
fiscal year ended November 2, 1996 and incorporated herein by
reference.
* + 10.6 1992 Director Option Plan of Analog Devices, Inc.
* 10.7 1994 Director Option Plan of Analog Devices, Inc., as amended,
filed as an exhibit to the Company's Form 10-Q for the fiscal
quarter ended February 1, 1997 and incorporated herein by
reference.
+ 10.8 Amended and restated lease agreement dated May 1, 1992
between Analog Devices, Inc. and the trustees of Everett Street
Trust relating to the premises at 3 Technology Way, Norwood,
Massachusetts.
10.9 Guaranty dated as of May 1, 1994 between Analog Devices, Inc.
and Metropolitan Life Insurance Company relating to the premises
at 3 Technology Way, Norwood, Massachusetts, filed as an exhibit
to the Company's Form 10-Q for the fiscal quarter ended April
30, 1994 and incorporated herein by reference.
10.10 Letter Agreement dated as of May 18, 1994 between Analog
Devices, Inc. and Metropolitan Life Insurance Company relating
to the premises at 3 Technology Way, Norwood, Massachusetts,
filed as an exhibit to the Company's Form 10-Q for the fiscal
quarter ended April 30, 1994 and incorporated herein by
reference.
+ 10.11 Reimbursement Agreement dated May 18, 1992 between Analog
Devices, Inc. and the trustees of Everett Street Trust.
10.12 Lease agreement dated August 8, 1990 between Precision
Monolithics, Inc. and Bourns, Inc. relating to the premises at
1525 Comstock Road, Santa Clara, California, filed as an exhibit
to the Company's Form 10-K for the fiscal year ended November 2,
1996 and incorporated herein by reference.
10.13 Lease amendment dated May 1, 1996 to the Lease Agreement dated
August 8, 1990 between Analog Devices, Inc. and Bourns, Inc.,
relating to premises located at 1525 Comstock Road, Santa Clara,
California, filed as an exhibit to the Company's Form 10-Q for
the fiscal quarter ended May 4, 1996 and incorporated herein by
reference.
10.14 Lease agreement dated August 8, 1990, as amended, between
Precision Monolithics, Inc. and Bourns, Inc. relating to the
premises at 1500 Space Park Drive, Santa Clara, California,
filed as an exhibit to the Company's Form 10-K for the fiscal
year ended November 2, 1996 and incorporated herein by
reference.
10.15 Lease amendment dated May 1, 1996 to the Lease Agreement dated
August 8, 1990 between Analog Devices, Inc. and Bourns, Inc.,
relating to premises located at 1500 Space Park Drive, Santa
Clara, California, filed as an exhibit to the Company's Form
10-Q for the fiscal quarter ended May 4, 1996 and incorporated
herein by reference.
14
16
EXHIBIT
NO. DESCRIPTION
--- -----------
10.16 Credit Agreement dated as of March 12, 1993 among Analog
Devices, Inc. and Morgan Guaranty Trust Company of New York,
Bank of America National Trust and Savings Association,
Continental Bank, N.A., The First National Bank of Boston and
Morgan Guaranty Trust Company of New York, as Agent, filed as an
exhibit to the Company's Form 10-Q for the fiscal quarter ended
May 1, 1993 and incorporated herein by reference.
10.17 Amendment No. 1 dated as of May 18, 1993 to the Company's Credit
Agreement dated March 12, 1993, filed as an exhibit to the
Company's Form 10-Q for the fiscal quarter ended July 31, 1993
and incorporated herein by reference.
10.18 Amendment No. 2 dated as of September 8, 1994 to the Company's
Credit Agreement dated March 12, 1993, filed as an exhibit to
the Company's Form 10-K for the fiscal year ended October 29,
1994 and incorporated herein by reference.
10.19 Amendment No. 3 dated as of October 25, 1996 to the Company's
Credit Agreement dated March 12, 1993, filed as an exhibit to
the Company's Form 10-K for the fiscal year ended November 2,
1996 and incorporated herein by reference.
* + 10.20 Form of Employee Retention Agreement, as amended.
* 10.21 Employee Change in Control Severance Policy of Analog
Devices, Inc., as amended, filed as an exhibit to the Company's
10-K for the fiscal year ended October 30, 1993 and incorporated
herein by reference.
* 10.22 Senior Management Change in Control Severance Policy of
Analog Devices, Inc., as amended, filed as an exhibit to the
Company's 10-K for the fiscal year ended October 30, 1993 and
incorporated herein by reference.
* 10.23 Description of Consulting Arrangement between Analog Devices,
Inc. and John L. Doyle, filed as an exhibit to the Company's
Form 10-K for the fiscal year ended November 2, 1996 and
incorporated herein by reference.
* 10.24 Letter agreement between Analog Devices, Inc. and Jerald
G. Fishman dated December 15, 1994 relating to acceleration of
stock options and restricted stock awards upon termination of
employment, filed as an exhibit to the Company's Form 10-K for
the fiscal year ended October 29, 1994 and incorporated herein
by reference.
** 10.25 Option Agreement dated as of May 16, 1995 between Analog
Devices B.V. and Taiwan Semiconductor Manufacturing Company,
Ltd., filed as an exhibit to the Company's Form 10-Q for the
fiscal quarter ended July 29, 1995 and incorporated herein by
reference.
** 10.26 Wafer Production Agreement dated as of May 16, 1995
between Taiwan Semiconductor Manufacturing Company, Ltd. and
Analog Devices B.V., filed as an exhibit to the Company's Form
10-Q for the fiscal quarter ended July 29, 1995 and incorporated
herein by reference.
10.27 Lease Agreement dated June 16, 1995 between Analog Devices, Inc.
and Ferrari Brothers, relating to the premises at 610 Weddell
Drive, Sunnyvale, California, filed as an exhibit to the
Company's Form 10-K for the fiscal year ended November 2, 1996
and incorporated herein by reference.
10.28 Lease amendment dated March 1, 1996 to the Lease Agreement dated
June 16, 1995 between Analog Devices, Inc. and Ferrari Brothers,
relating to premises located at 610 Weddell Drive, Sunnyvale,
California, filed as an exhibit to the Company's Form 10-Q for
the fiscal quarter ended May 4, 1996 and incorporated herein by
reference.
15
17
EXHIBIT
NO. DESCRIPTION
--- -----------
** 10.29 Manufacturing Agreement dated as of March 17, 1995 between
Chartered Semiconductor Manufacturing Pte. Ltd. and Analog
Devices B.V., filed as an exhibit to the Company's Form 10-Q for
the fiscal quarter ended February 3, 1996 and incorporated
herein by reference.
** 10.30 Deposit Agreement dated January 30, 1996 between Chartered
Semiconductor Manufacturing Pte. Ltd. and Analog Devices B.V.,
filed as an exhibit to the Company's Form 10-Q for the fiscal
quarter ended February 3, 1996 and incorporated herein by
reference.
10.31 Lease Agreement dated February 8, 1996 between Analog Devices,
Inc. and Massachusetts Institute of Technology, relating to
premises located at 21 Osborn Street, Cambridge, Massachusetts,
filed as an exhibit to the Company's Form 10-Q for the fiscal
quarter ended February 3, 1996 and incorporated herein by
reference.
** 10.32 Amended and Restated Limited Liability Company Agreement
of WaferTech, LLC, a Delaware limited liability company, dated
as of August 9, 1996. Filed as Exhibit 10.47 to the Form 10-Q of
Altera Corporation (File No. 0-16617) for the fiscal quarter
ended June 30, 1996, and incorporated herein by reference.
** 10.33 Purchase Agreement by and between Taiwan Semiconductor
Manufacturing Co., Ltd., as seller and Analog Devices, Inc.,
Altera Corporation and Integrated Silicon Solutions, Inc., as
buyers dated as of June 25, 1996. Filed as Exhibit 10.48 to the
Form 10-Q of Altera Corporation (File No. 0-16617) for the
fiscal quarter ended June 30, 1996, and incorporated herein by
reference.
* 10.34 Trust Agreement for Deferred Compensation Plan, filed as
an exhibit to the Company's Post Effective Amendment No. 2 to
Form S-3 filed November 12, 1997 and incorporated herein by
reference.
+ 10.35 Lease agreement dated September 19, 1996 between Ren Min
Company Limited and Analog Devices Taiwan, Limited relating to
the premises at Five-Kung-Five Road, Taipei, Taiwan.
+ 11.1 Computation of Earnings Per Share.
+ 13.1 Management Analysis incorporated by reference to pages 1 through
7 of the 1997 Annual Report to Shareholders.
+ 13.2 Financial Statements and Notes thereto, Report of Ernst & Young
LLP, Independent Auditors and Supplementary Financial
Information, incorporated by reference to pages 8 through 33 of
the 1997 Annual Report to Shareholders.
+ 21 Subsidiaries of the Company.
+ 23 Consent of Ernst & Young LLP.
27 Financial Data Schedule.
- ---------------
* Management contracts and compensatory plan or arrangements required to
be filed as an Exhibit pursuant to Item 14(c) of Form 10-K.
** Confidential treatment has been granted as to certain portions of these
Exhibits.
+ Filed herewith.
(b) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K with the Securities and
Exchange Commission during the fiscal quarter ended November 1, 1997.
16
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ANALOG DEVICES, INC.
(Registrant)
By: /s/ Jerald G. Fishman By: /s/ Joseph E. McDonough
------------------------------------ ----------------------------
Jerald G. Fishman Joseph E. McDonough
President Vice President-Finance
Chief Executive Officer and Chief Financial Officer
and Director (Principal Financial and
(Principal Executive Officer) Accounting Officer)
Date: JANUARY 28, 1998 Date: JANUARY 28, 1998
------------------------------------ ----------------------------
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ Ray Stata Chairman of the Board JANUARY 28, 1998
- ------------------------------- ----------------
Ray Stata
/s/ Jerald G. Fishman President, JANUARY 28, 1998
- ------------------------------- Chief Executive Officer ----------------
Jerald G. Fishman and Director
/s/ John L. Doyle Director JANUARY 28, 1998
- ------------------------------- ----------------
John L. Doyle
/s/ Samuel H. Fuller Director JANUARY 28, 1998
- ------------------------------- ----------------
Samuel H. Fuller
/s/ Charles O. Holliday Director JANUARY 28, 1998
- ------------------------------- ----------------
Charles O. Holliday
/s/ Gordon C. McKeague Director JANUARY 28, 1998
- ------------------------------- ----------------
Gordon C. McKeague
/s/ Joel Moses Director JANUARY 28, 1998
- ------------------------------- ----------------
Joel Moses
/s/ F. Grant Saviers * Director JANUARY 28, 1998
- ------------------------------- ----------------
F. Grant Saviers
/s/ Lester C. Thurow Director JANUARY 28, 1998
- ------------------------------- ----------------
Lester C. Thurow
* Became a member of the Board of Directors on December 10, 1997 and,
accordingly, did not serve as a Director during fiscal 1997.
17
19
ANALOG DEVICES, INC.
ANNUAL REPORT ON FORM 10-K
YEAR ENDED NOVEMBER 1, 1997
ITEM 14(d)
FINANCIAL STATEMENT SCHEDULE
18
20
ANALOG DEVICES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED NOVEMBER 1, 1997, NOVEMBER 2, 1996 AND OCTOBER 28, 1995
(THOUSANDS)
BALANCE AT ADDITION BALANCE AT
BEGINNING OF CHARGED TO END OF
DESCRIPTION PERIOD EXPENSE DEDUCTIONS PERIOD
- ----------- ------ ------- ---------- ------
ACCOUNTS RECEIVABLE RESERVES AND ALLOWANCES:
Year ended October 28, 1995* $ 9,185 $ 5,952 $ 2,399 $ 12,738
========= ========= ========= =========
Year ended November 2, 1996* $ 12,738 $ 2,611 $ 564 $ 14,785
========= ========= ========= =========
Year ended November 1, 1997 $ 14,785 $ 25,456 $ 234 $ 40,007
========= ========= ========= =========
* Amounts have been restated to reflect reclassification of certain reserves
from Accrued liabilities to Accounts receivable.
19