On Feb. 21, mixed-signal semiconductor designer Analog Devices (NYSE:ADI) released first-quarter 2007 earnings for the period ending Feb. 3, 2007.

  • There's nothing mixed about these signals -- ADI clearly produced a superior quarter. Management's seemingly optimistic revenue guidance turned out to be fairly conservative, as earnings topped the pre-announced range.

  • Pro forma numbers are always meant to inflate the company's results, right? Wrong. ADI management provided adjustments that made this quarter seem worse, while the year-ago period looked better. On that basis, earnings improved 8.1% to $0.40 per share, compared to the 2006 period's $0.37. It's a refreshing to see a company use pro forma figures to clarify its ongoing results, rather than just pumping them up.

  • Analog Devices has its generous share repurchase program rolling on at full speed. Since the company is cash-rich, debt-free, and awash in delicious cash flow, this shareholder-friendly practice makes plenty of sense.

(Figures in millions, except per-share data)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$691.6

$621.3

11.3%

Net Profit

$153.2

$120.6

27.1%

EPS

$0.44

$0.32

37.5%

Diluted Shares

349.2

380.3

(8.2%)


Get back to basics with a look at the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

60.3%

58.1%

2.2

Operating Margin

23.6%

21.3%

2.3

Net Margin

22.2%

19.4%

2.8
*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Management Effectiveness

Q1 2007

Q1 2006

Change*

Return On Assets

15.7%

10.8%

4.9

Return On Equity

18.3%

13.0%

5.3
*Expressed in percentage points.

See how management puts its financial tools to work.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$1,953.8

$2,735.1

(28.6%)

Accounts Rec.

$344.8

$317.7

8.5%

Inventory

$385.8

$337.8

14.2%


Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$160.4

$132.3

21.2%

Long-Term Debt

$0.0

$0.0

N/A


Learn the ways of the balance sheet.

Cash Flow Highlights

Q1 2007

Q1 2006

Change

Cash From Ops.

$208.2

$175.3

18.8%

Capital Expenditures

$37.7

$20.4

85.3%

Free Cash Flow

$170.4

$154.9

10.0%

Owner Earnings

$129.9

$171.2

(24.1%)


Find out why Fools always follow the money.

Cash Conversion Checkup

Q1 2007

Q1 2006

Change

Days in Inventory

125.3

114.6

10.7

Days in Receivables

43.9

46.2

(2.4)

Days Payables Outstanding

46.7

45.0

1.7

Cash Conversion Cycle

122.4

115.8

6.6


Read up on cash conversion metrics.

Related Companies:

  • Marvell Technology (NASDAQ:MRVL)
  • Silicon Laboratories (NASDAQ:SLAB)
  • NVE (NASDAQ:NVEC)
  • Conexant Systems (NASDAQ:CNXT)
  • Sigmatel (NASDAQ:SGTL)
  • Sigma Designs (NASDAQ:SIGM)

Related Foolishness:

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At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here.