What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-12-03 compared with 2020-11-24 · 497 added, 515 removed, 1045 unchanged (49% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

Years ended October 31, 2020, November 2, 2019 and November 3, 2018

Years ended October 30, 2021, October 31, 2020 and November 2, 2019

(thousands, except per share amounts) 2021 2020

7 unchanged sentences

Amortization of intangibles 536,811 429,455 429,041

Special charges 52,337 95,659 61,318

Special charges, net 84,456 52,337 95,659

2,832,811 2,192,234 2,303,142

3 unchanged sentences

Interest expense 184,825 193,305 229,075

Loss on extinguishment of debt 215,150 — —

Interest income ( 1,220 ) ( 4,305 ) ( 10,229 )

2 unchanged sentences

Income before income taxes 1,328,714 1,311,617 1,485,728

Provision for income taxes 90,856 122,717 148,334

(Benefit from) provision for income taxes ( 61,708 ) 90,856 122,717

Net income $ 1,390,422 $ 1,220,761 $ 1,363,011

3 unchanged sentences

Diluted earnings per common share $ 3.46 $ 3.28 $ 3.65

_______________________________________

(1) Balances have been restated to reflect the adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09).

See Note 2a, Principles of Consolidation , of the Notes to Consolidated Financial Statements.

See accompanying Notes.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended October 31, 2020, November 2, 2019 and November 3, 2018

Years ended October 30, 2021, October 31, 2020 and November 2, 2019

(thousands) 2021 2020 2019

9 unchanged sentences

Changes in accumulated other comprehensive loss — pension plans:

Change in transition asset — — 10

Change in actuarial loss/gain (net of tax of $ 637 in 2021, $ 5,167 in 2020 and $ 5,734 in 2019)

12,923 ( 10,231 ) ( 24,344 )

Change in prior service cost/income — — 1

Total change in accumulated other comprehensive loss — pension plans, net of tax ( 10,231 ) ( 24,344 ) 12,627

Other comprehensive (loss) income ( 59,283 ) ( 129,359 ) 2,919

Other comprehensive income (loss) 62,896 ( 59,283 ) ( 129,359 )

Comprehensive income $ 1,453,318 $ 1,161,478 $ 1,233,652

_______________________________________

(1) Balances have been restated to reflect the adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09).

See Note 2a, Principles of Consolidation , of the Notes to Consolidated Financial Statements.

See accompanying Notes.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

October 31, 2020 and November 2, 2019

October 30, 2021 and October 31, 2020

(thousands, except per share amounts) 2021 2020

37 unchanged sentences

Preferred stock, $ 1.00 par value, 471,934 shares authorized, none outstanding

Common stock, $ 0.16 2/3 par value, 1,200,000,000 shares authorized, 369,484,899 shares outstanding ( 368,302,369 on November 2, 2019)

Common stock, $ 0.16 2/3 par value, 1,200,000,000 shares authorized, 525,330,672 shares outstanding ( 369,484,899 on October 31, 2020)

87,554 61,582

7 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Years ended October 31, 2020, November 2, 2019 and November 3, 2018

Years ended October 30, 2021, October 31, 2020 and November 2, 2019

Capital in Accumulated

1 unchanged sentence

(thousands) Shares Amount Par Value Earnings (Loss) Income

BALANCE, OCTOBER 28, 2017 (1)

BALANCE, NOVEMBER 3, 2018 (1)

370,160 $ 61,694 $ 5,282,222 $ 5,982,697 $ ( 58,440 )

Effect of Accounting Standards Update 2016-16 331,026

Net Income — 2019

1 unchanged sentence

Issuance of stock under stock plans and other 4,271 712 115,811

Tax benefit — equity based awards 7,741

Stock-based compensation expense 150,300

Other comprehensive income 2,919

Other comprehensive loss ( 129,359 )

Common stock repurchased ( 6,129 ) ( 1,021 ) ( 611,984 )

5 unchanged sentences

Issuance of stock under stock plans and other 3,110 518 67,885

Issuance of stock as charitable contribution 336 56 39,944

Stock-based compensation expense 149,518

1 unchanged sentence

Common stock repurchased ( 2,263 ) ( 377 ) ( 244,110 )

BALANCE, NOVEMBER 2, 2019

368,302 61,385 4,936,349 6,899,253 ( 187,799 )

Effect of Accounting Standards Update 2018-02

BALANCE, OCTOBER 31, 2020

369,485 61,582 4,949,586 7,236,238 ( 249,461 )

1 unchanged sentence

Dividends declared and paid - $ 2.69 per share

( 1,109,344 )

Issuance of stock under stock plans and other 2,738 355 62,750

Issuance of stock as charitable contribution 336 56 39,944

Issuance of stock in connection with the Acquisition 169,233 28,204 27,725,957

Stock-based compensation expense 243,611

Other comprehensive loss ( 59,283 )

Replacement share-based awards issued in connection with the Acquisition 194,890

Other comprehensive income 62,896

Common stock repurchased ( 16,125 ) ( 2,587 ) ( 2,602,557 )

7 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended October 31, 2020, November 2, 2019 and November 3, 2018

Years ended October 30, 2021, October 31, 2020 and November 2, 2019

(thousands) 2021 2020 2019

4 unchanged sentences

Amortization of intangibles 843,359 577,148 570,574

Cost of goods sold for inventory acquired 331,083 — —

Stock-based compensation expense 243,611 149,518 150,300

Non-cash impairment included in special charges — 14,167 —

Other non-cash activity 5,418 40,907 36,569

Gain on sale of property, plant and equipment ( 13,557 ) — —

Non-cash contribution to charitable foundation — 40,000 —

Loss on extinguishment of debt 215,150 — —

Non-cash portion of special charges 2,538 — 14,167

Other ( 15,524 ) 5,418 40,907

Deferred income taxes ( 406,922 ) ( 113,948 ) ( 91,253 )

4 unchanged sentences

Deferred compensation plan investments ( 17,639 ) ( 3,853 ) ( 7,301 )

Prepaid income tax ( 5,791 ) — —

Accounts payable and accrued liabilities 208,444 103,104 ( 6,371 )

5 unchanged sentences

Cash flows from investing:

Proceeds from other investments 30,125 — —

Additions to property, plant and equipment, net ( 343,676 ) ( 165,692 ) ( 275,372 )

Cash received from acquisition of Maxim, net of cash paid 2,450,550 — —

Proceeds from sale of property, plant and equipment 35,714 — —

Payments for acquisitions, net of cash acquired ( 24,950 ) ( 14,196 ) ( 11,170 )

Change in other assets ( 4,238 ) ( 635 ) ( 6,644 )

Net cash used for investing activities ( 180,523 ) ( 293,186 ) ( 313,998 )

Net cash provided by (used for) investing activities 2,143,525 ( 180,523 ) ( 293,186 )

Cash flows from financing activities:

4 unchanged sentences

Proceeds from revolver 400,000 350,000 75,000

Payment on derivative instruments ( 153,161 ) — —

Prepayment for stock repurchases ( 500,000 ) — —

Dividend payments to shareholders ( 1,109,344 ) ( 886,155 ) ( 777,481 )

1 unchanged sentence

Proceeds from employee stock plans 63,105 68,403 116,523

Change in other financing activities ( 4,015 ) ( 2,831 ) 3,437

Other financing activities ( 2,778 ) ( 4,015 ) ( 2,831 )

Net cash used for financing activities ( 3,959,664 ) ( 1,420,608 ) ( 2,126,794 )

3 unchanged sentences

Cash and cash equivalents at end of year $ 1,977,964 $ 1,055,860 $ 648,322

_______________________________________

(1) Balances have been restated to reflect the adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09).

See Note 2a, Principles of Consolidation , of the Notes to Consolidated Financial Statements.

See accompanying Notes.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended October 31, 2020, November 2, 2019 and November 3, 2018

Years ended October 30, 2021, October 31, 2020 and November 2, 2019

(all tabular amounts in thousands except per share amounts)

1 unchanged sentence

Analog Devices, Inc.

(Analog Devices or the Company) is a leading global high-performance analog technology company dedicated to solving its customers' most complex engineering challenges.

(Analog Devices or the Company) is a leading global high-performance semiconductor company dedicated to solving its customers' most complex engineering challenges.

Since its inception in 1965, the Company has played a critical role at the intersection of the physical and digital world by providing the building blocks to sense, measure, interpret, connect and power.

The Company designs, manufactures, tests and markets a broad portfolio of solutions, including integrated circuits (ICs), software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing technologies.

The Company's comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend across high-performance precision and high-speed mixed-signal, power management and processing technologies – including data converters, amplifiers, power management, radio frequency ICs, digital signal processors and other sensors.

The Company's focus is largely on the business-to-business end markets of Industrial, Automotive and Communications and related applications, as well as Consumer applications, with the goal of driving sustainable and profitable growth over the long term.

4 unchanged sentences

Certain amounts reported in previous years have been reclassified to conform to the presentation for the fiscal year ended October 30, 2021 (fiscal 2021).

Such reclassified amounts are immaterial.

The Company’s fiscal year is the 52 -week or 53 -week period ending on the Saturday closest to the last day in October.

Fiscal 2020 and fiscal 2019 were 52 -week fiscal periods, while fiscal 2018 was a 53 -week period.

The additional week in fiscal 2018 was included in the first quarter ended February 3, 2018.

Therefore, fiscal 2018 included an additional week of operations as compared to fiscal 2020 and fiscal 2019.

On July 12, 2020, the Company entered into a definitive agreement (the Merger Agreement) to acquire Maxim Integrated Products, Inc.

Fiscal 2021, fiscal 2020 and fiscal 2019 were 52 -week fiscal periods.

On August 26, 2021 (Acquisition Date), the Company completed the acquisition of Maxim Integrated Products, Inc.

(Maxim), an independent manufacturer of innovative analog and mixed-signal products and technologies.

Pursuant to the Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date for total consideration of approximately $ 28.0 billion of the Company's common stock.

The acquisition of Maxim is referred to as the Acquisition.

The consolidated financial statements included in this Annual Report on Form 10-K include the financial results of Maxim prospectively from the Acquisition Date.

See Note 6, Acquisitions , of the Notes to Consolidated Financial Statements for additional information.

As further discussed in Note 2n, Revenue Recognition , of the Notes to Consolidated Financial Statements, the Company adopted the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09), in the first quarter of fiscal 2019.

The Company adopted the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09), in the first quarter of fiscal 2019.

See Note 2n, Revenue Recognition , of the Notes to Consolidated Financial Statements for the details of the Company’s revenue recognition policies.

As shown in the table below, pursuant to the guidance in ASU 2014-09, the Company restated its historical financial results to be consistent with the standard.

Accordingly, the amounts for fiscal 2020, fiscal 2019 and fiscal 2018 periods presented in this Form 10-K reflect the impact of ASU 2014-09.

In addition, the Company adopted ASU 2017-07, Compensation - Retirement Benefits (Topic 715):

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost in the first quarter of fiscal 2019.

Under this ASU, the service cost component of net periodic benefit cost is recorded in Cost of sales, Research and development, and Selling, marketing, general and administrative expenses, while the remaining components are recorded to Other, net within the Company's Consolidated Statements of Income.

As such, the prior year amounts have been reclassified to provide comparable presentation in line with the guidance in ASU 2017-07 based on amounts previously disclosed for the various components of net periodic benefit cost.

See Note 11, Retirement Plans , of the Notes to Consolidated Financial Statements for more information on the adoption of ASU 2017-07.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The tables below reconcile the impact of ASU 2014-09 and ASU 2017-07 on the Consolidated Statement of Income for the year ended November 3, 2018:

Consolidated Statement of Income As Reported Impact of Adoption of ASU 2014-09 Impact of Adoption of ASU 2017-07 As Adjusted

Revenue $ 6,200,942 $ 23,747 $ — $ 6,224,689

Cost of sales 1,967,640 6,950 ( 297 ) 1,974,293

Gross margin 4,233,302 16,797 297 4,250,396

Operating expenses:

Research and development 1,165,410 — ( 363 ) 1,165,047

Selling, marketing, general and administrative 695,937 — ( 397 ) 695,540

Amortization of intangibles 428,902 — — 428,902

Special charges 61,318 — — 61,318

2,351,567 — ( 760 ) 2,350,807

Operating income 1,881,735 16,797 1,057 1,899,589

Nonoperating expense (income):

Interest expense 253,589 — — 253,589

Interest income ( 9,383 ) — — ( 9,383 )

Other, net ( 988 ) — 1,057 69

243,218 — 1,057 244,275

Income before income taxes 1,638,517 16,797 — 1,655,314

Provision for income taxes 143,085 5,249 — 148,334

Net income $ 1,495,432 $ 11,548 $ — $ 1,506,980

Shares used to compute earnings per common share – basic 370,430 — — 370,430

Shares used to compute earnings per common share – diluted 374,938 — — 374,938

Basic earnings per common share $ 4.02 $ 0.03 $ — $ 4.05

Diluted earnings per common share $ 3.97 $ 0.03 $ — $ 4.00

The impact on the Company's previously reported consolidated balance sheet line items is as follows:

The impact on the Company's previously reported Consolidated Statement of Shareholders' Equity line item is as follows:

November 3, 2018

As Reported Impact of Adoption of ASU 2014-09 As Adjusted

Deferred tax assets $ 21,078 $ ( 11,413 ) $ 9,665

Deferred income on shipments to distributors, net $ 487,417 $ ( 487,417 ) $ —

Accrued liabilities $ 497,080 $ 133,027 $ 630,107

Deferred income taxes $ 927,065 $ 63,344 $ 990,409

Retained earnings $ 5,703,064 $ 279,633 $ 5,982,697

In addition, in the first quarter of fiscal 2019, the Company adopted ASU 2016-16, Income Taxes (Topic 740) (ASU 2016-16) using the modified retrospective method with a cumulative-effect adjustment directly to retained earnings.

ASU 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs.

The adoption of ASU 2016-16 resulted in the following cumulative-effect increase in the Company's deferred tax assets, deferred tax liabilities and retained earnings:

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

November 4, 2018

Beginning Balance November 3, 2018 as Adjusted Impact of Adoption of ASU 2016-16 Balance November 4, 2018

Deferred tax assets $ 9,665 $ 1,655,129 $ 1,664,794

Deferred income taxes $ 990,409 $ 1,324,103 $ 2,314,512

Retained earnings $ 5,982,697 $ 331,026 $ 6,313,723

See Note 12, Income Taxes , of the Notes to Consolidated Financial Statements for more information on the adoption of ASU 2016-16.

Cash and Cash Equivalents

1 unchanged sentence

Cash and cash equivalents consist primarily of government and institutional money market funds, corporate obligations such as commercial paper and floating rate notes, bonds, demand deposit accounts and bank time deposits.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company classifies its investments in readily marketable debt and equity securities as “held-to-maturity,” “available-for-sale” or “trading” at the time of purchase.

11 unchanged sentences

There were no material net realized gains or losses from the sales of available-for-sale investments during any of the fiscal periods presented.

The components of the Company’s cash and cash equivalents as of October 31, 2020 and November 2, 2019 were as follows:

The components of the Company’s cash and cash equivalents as of October 30, 2021 and October 31, 2020 were as follows:

Cash $ 1,314,967 $ 239,607

Available-for-sale 816,253 416,890

Held-to-maturity — 79,000

Available-for-sale securities 662,997 816,253

Total cash and cash equivalents $ 1,977,964 $ 1,055,860

5 unchanged sentences

Interest $ 197,841 $ 185,854 $ 216,143

Noncash issuance of common stock for the Acquisition $ 27,754,161 $ — $ —

Fair value of partially vested equity replacement awards issued for the Acquisition

$ 194,890 $ — $ —

Inventories are valued at the lower of cost (first-in, first-out method) or market.

1 unchanged sentence

The Company employs a variety of methodologies to determine the net realizable value of its inventory.

While a portion of the calculation to record

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

inventory at its net realizable value is based on the age of the inventory and lower of cost or market calculations, a key factor in estimating obsolete or excess inventory requires the Company to estimate the future demand for its products.

While a portion of the calculation to record inventory at its net realizable value is based on the age of the inventory and lower of cost or market calculations, a key factor in estimating obsolete or excess inventory requires the Company to estimate the future demand for its products.

If actual demand is less than the Company’s estimates, impairment charges, which are recorded to cost of sales, may need to be recorded in future periods.

Inventory in excess of saleable amounts is not valued, and the remaining inventory is valued at the lower of cost or market.

Inventories at October 31, 2020 and November 2, 2019 were as follows:

Inventories at October 30, 2021 and October 31, 2020 were as follows:

Raw materials $ 71,639 $ 33,806

2 unchanged sentences

Total inventories $ 1,200,610 $ 608,260

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property, Plant and Equipment

12 unchanged sentences

If such assets are not impaired, but their useful lives have decreased, the remaining net book value is depreciated over the revised useful life.

The Company has not recorded any material impairment charges related to its PP&E in fiscal 2020, fiscal 2019 or fiscal 2018.

PP&E is identified as held for sale when it meets the held for sale criteria of Accounting Standards Codification Topic 360, Property, Plant, and Equipment (ASC 360).

2 unchanged sentences

If the assets held for sale were carried at fair value, it would be considered a Level 3 fair value measurement, and determined based on the use of appraisals and input from market participants.

As further discussed in Note 5, Special Charges , of the Notes to Consolidated Financial Statements, the Company is planning to transition testing operations currently handled in its Singapore facility to its facilities in Penang, Malaysia and the Philippines and also to its outsourced assembly and test partners.

Accordingly, management has entered into an agreement to sell the facility and transfer the related land lease in Singapore in May 2021 and has determined that this facility and certain equipment therein have met the held for sale criteria as specified in ASC 360.

No write-down to fair value was required upon this designation, as the fair value of the asset group, less costs to sell, was greater than its carrying value.

As shown below, this carrying value was reclassified from PP&E to Prepaid expenses and other current assets as of October 31, 2020:

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

October 31, 2020

During fiscal 2021, the Company ceased production at its Hillview wafer fabrication facility located in Milpitas, California and determined that this facility met the held for sale criteria specified in ASC 360.

As of October 30, 2021, Prepaid expenses and other current assets includes the following assets held for sale recorded at the fair value of the asset group, less costs to sell:

Land and buildings $ 40,070

Machinery and equipment 1,468

Office equipment 197

Leasehold improvements 5,744

Less accumulated depreciation and amortization ( 13,634 )

2 unchanged sentences

The Company evaluates goodwill for impairment annually, as well as whenever events or changes in circumstances suggest that the carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method.

The Company tests goodwill for impairment at the reporting unit level, which the Company has determined is consistent with its eight identified operating segments, on an annual basis on the first day of the fourth quarter (on or about August 2) or more frequently if indicators of impairment exist or the Company reorganizes its operating segments or reporting units.

The Company tests goodwill for impairment at the reporting unit level, which the Company has determined is consistent with its identified operating segments, on an annual basis on the first day of the fourth quarter (on or about August 1) or more frequently if indicators of impairment exist or the Company reorganizes its operating segments or reporting units.

The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its net book value.

4 unchanged sentences

– public information from competitors and other industry information to determine if there were any significant adverse trends in the Company's competitors' businesses;

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

– changes in the value of major U.S.

11 unchanged sentences

In order to assess the reasonableness of the calculated values, the aggregate fair values of the reporting units are reconciled to the Company's total market capitalization, allowing for a reasonable control premium.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In fiscal 2019, management elected to use the qualitative method of assessing goodwill for seven of its eight reporting units and the quantitative method for one reporting unit.

During the second quarter of fiscal 2020, the Company performed a quantitative assessment of one of its reporting units due to the macroeconomic climate at the time.

In the latest annual impairment evaluation that occurred as of August 2, 2020, the Company used the quantitative method of assessing goodwill for all eight of its reporting units.

During fiscal 2021 and fiscal 2020, the Company elected to use the quantitative method of assessing goodwill for all of its reporting units.

In all periods presented, management concluded the reporting units' fair values exceeded their carrying amounts as of the assessment dates and no risk of impairment existed.

2 unchanged sentences

Balance at beginning of year $ 12,278,425 $ 12,256,880

Acquisition of Maxim (Note 6) 14,645,076 —

Goodwill related to other acquisitions (1) — 17,839

Foreign currency translation adjustment 3,706 ( 2,426 )

Foreign currency translation adjustment and other adjustments ( 5,031 ) 3,706

Balance at end of year $ 26,918,470 $ 12,278,425

7 unchanged sentences

Upon completion of the projects, the IPR&D assets are reclassified to technology-based intangible assets and amortized over their estimated useful lives.

During fiscal 2019, the company recorded $ 14.2 million of special charges related to the write-off of acquired intellectual property, classified as IPR&D, due to the Company's decision to discontinue certain product development strategies.

As of October 31, 2020 and November 2, 2019, the Company’s intangible assets consisted of the following:

October 31, 2020 November 2, 2019

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of October 30, 2021 and October 31, 2020, the Company’s intangible assets consisted of the following:

October 30, 2021 October 31, 2020

Gross Carrying

5 unchanged sentences

Trade-name 72,200 47,803 72,200 37,489

Backlog 361,200 32,746 — —

Assembled workforce 1,800 750 — —

IPR&D 28,222 — — —

Total (1) (2)

2 unchanged sentences

(1) Foreign intangible asset carrying amounts are affected by foreign currency translation.

(2) Intangible assets, along with the related accumulated amortization, are removed from the table above at the end of the fiscal year they become fully amortized.

(2) Increases in intangible assets primarily related to the Acquisition.

See Note 6, Acquisitions , of the Notes to the Consolidated Financial Statements for further information.

Amortization expense related to intangible assets was $ 843.4 million, $ 577.1 million and $ 570.6 million in fiscal 2021, 2020 and 2019, respectively, and is recorded in Cost of sales and Amortization of intangibles on the Consolidated Statements of Income.

The remaining amortization expense will be recognized over a weighted average life of approximately 3.2 years.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The remaining amortization expense will be recognized over the remaining weighted average life of approximately 4.9 years.

The Company expects annual amortization expense for intangible assets as follows:

20 unchanged sentences

dollar, primarily the Euro;

other significant exposures include the British Pound, Philippine Peso and the Japanese Yen.

other significant exposures include the British Pound, Philippine Peso, Thai Baht, South Korean Won and the Japanese Yen.

Derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified.

3 unchanged sentences

They are qualitatively evaluated for effectiveness on a quarterly basis.

The gain or loss on the derivatives are reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same line item on the Consolidated Statements of Income as the impact of the hedged transaction in the same period during which the hedged transaction affects earnings.

The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash flow hedges denominated in Euros, British Pounds, Philippine Pesos and Japanese Yen as of October 31, 2020 and November 2, 2019 was $ 202.7 million and $ 191.1 million, respectively.

The fair values of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Consolidated Balance Sheets as of October 31, 2020 and November 2, 2019 were as follows:

The gain or loss on the derivatives are reported as a component

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of AOCI in shareholders’ equity and reclassified into earnings in the same line item on the Consolidated Statements of Income as the impact of the hedged transaction in the same period during which the hedged transaction affects earnings.

The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash flow hedges as of October 30, 2021 and October 31, 2020 was $ 343.6 million and $ 202.7 million, respectively.

The fair values of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Consolidated Balance Sheets as of October 30, 2021 and October 31, 2020 were as follows:

Fair Value At

Balance Sheet Location October 31, 2020 November 2, 2019

Balance Sheet Location October 30, 2021 October 31, 2020

Forward foreign currency exchange contracts Prepaid expenses and other current assets $ — $ 5,550

Forward foreign currency exchange contracts Accrued liabilities $ 7,113 $ —

Additionally, the Company enters into forward foreign currency contracts that economically hedge the gains and losses generated by the re-measurement of certain recorded assets and liabilities in a non-functional currency.

Changes in the fair value of these undesignated hedges are recognized in other (income) expense immediately as an offset to the changes in the fair value of the asset or liability being hedged.

As of October 31, 2020 and November 2, 2019, the total notional amount of these undesignated hedges was $ 62.7 million and $ 55.3 million, respectively.

As of October 30, 2021 and October 31, 2020, the total notional amount of these undesignated hedges was $ 120.0 million and $ 62.7 million, respectively.

The Company estimates that $ 10.0 million, net of tax, of settlements of forward foreign currency derivative instruments included in OCI will be reclassified into earnings within the next 12 months.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparties to net settle amounts owed to each other.

Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's Consolidated Balance Sheets on a net basis.

As of October 31, 2020 and November 2, 2019, none of the netting arrangements involved collateral.

The following table presents the gross amounts of the Company's forward foreign currency exchange contracts and the net amounts recorded in the Company's Consolidated Balance Sheets as of October 31, 2020 and November 2, 2019:

October 31, 2020 November 2, 2019

As of October 30, 2021 and October 31, 2020, none of the netting arrangements involved collateral.

October 30, 2021 October 31, 2020

Gross amount of recognized assets $ 319 $ 6,114

Gross amounts of recognized liabilities offset in the Consolidated Balance Sheets ( 8,404 ) ( 687 )

Net assets presented in the Consolidated Balance Sheets $ 5,427 $ —

Net (liabilities) assets presented in the Consolidated Balance Sheets $ ( 8,085 ) $ 5,427

Interest Rate Exposure Management — The Company's current and future debt may be subject to interest rate risk.

2 unchanged sentences

The interest rate swap was designated and qualified as a cash flow hedge.

The fair value of this hedge was $ 214.6 million and $ 138.8 million as of October 31, 2020 and November 2, 2019, respectively, and is included within accrued liabilities in the Company's Consolidated Balance Sheets.

During fiscal 2021, the Company issued $ 1 billion of 2.100 % Senior Notes due October 2031, and the swap was cash terminated in the amount of $ 153.2 million.

The accumulated loss recorded in AOCI will be reclassified to interest expense on a straight-line basis over the 10-year term of such Senior Notes.

The market risk associated with the Company’s derivative instruments results from currency exchange rate or interest rate movements that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged.

The counterparties to the agreements relating to the Company’s derivative instruments consist of a number of major international financial institutions with high credit ratings.

Based on the credit ratings of the Company’s counterparties as of October 31, 2020 and November 2, 2019, nonperformance is not perceived to be a material risk.

Based on the credit ratings of the Company’s counterparties as of October 30, 2021 and October 31, 2020, nonperformance is not perceived to be a material risk.

Furthermore, none of the Company’s derivatives are subject to collateral or other security arrangements and none contain provisions that are dependent on the Company’s credit ratings from any credit rating agency.

3 unchanged sentences

The Company records the fair value of its derivative financial instruments in its Consolidated Financial Statements in other current assets, other assets, accrued liabilities and other non-current liabilities, depending on their net position, regardless of the purpose or intent for holding the derivative contract.

Changes in the fair value of the derivative financial instruments are either recognized periodically in earnings or in shareholders’ equity as a component of OCI.

Changes in the fair value of the derivative financial instruments are

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

either recognized periodically in earnings or in shareholders’ equity as a component of OCI.

Changes in the fair value of cash flow hedges are recorded in OCI and reclassified into earnings in the same line item on the Consolidated Statements of Income as the impact of the hedged transaction when the underlying contract matures.

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If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The tables below, set forth by level, presents the Company’s financial assets and liabilities, excluding accrued interest components, that were accounted for at fair value on a recurring basis as of October 31, 2020 and November 2, 2019.

The tables exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value.

As of October 31, 2020 and November 2, 2019, the Company held $ 239.6 million and $ 231.4 million, respectively, of cash and held-to-maturity investments that were excluded from the tables below.

As of October 30, 2021 and October 31, 2020, the Company held $ 1,315.0 million and $ 239.6 million, respectively, of cash and held-to-maturity investments that were excluded from the tables below.

October 30, 2021

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Other assets:

Forward foreign currency exchange contracts (1) — 5,427 5,427

Deferred compensation investments 71,301 — 71,301

Total assets measured at fair value $ 734,298 $ — $ 734,298

Interest rate derivatives — 214,586 214,586

Forward foreign currency exchange contracts (1) $ — $ 8,085 $ 8,085

Total liabilities measured at fair value $ — $ 8,085 $ 8,085

(1) The Company has master netting arrangements by counterparty with respect to derivative contracts.

See Note 2i, Derivative Instruments and Hedging Agreements , of the Notes to Consolidated Financial Statements for more information related to the Company's master netting arrangements.

See Note 2i, Derivative Instruments and Hedging Agreements , of the Notes to Consolidated Financial Statements for more information related to the

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

November 2, 2019

Company's master netting arrangements.

October 31, 2020

Fair Value measurement at

6 unchanged sentences

Other assets:

Forward foreign currency exchange contracts (1) 5,427 5,427

Deferred compensation investments 52,956 — 52,956

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Total liabilities measured at fair value $ — $ 214,586 $ 214,586

(1) The Company has master netting arrangements by counterparty with respect to derivative contracts.

See Note 2i, Derivative Instruments and Hedging Agreements , of the Notes to Consolidated Financial Statements for more information related to the Company's master netting arrangements.

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

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Financial Instruments Not Recorded at Fair Value on a Recurring Basis

Held for sale assets — The Company has classified the assets held for sale at carrying value.

However, if it were to be carried at fair value, it would be considered a Level 3 fair value measurement and would be determined based on the use of appraisals and input from market participants.

Held for sale assets — The Company has classified the assets held for sale at fair value, which is determined based on the use of appraisals and input from market participants, and as such, is considered a Level 3 fair value measurement.

See Note 2e, Property, Plant and Equipment , of the Notes to Consolidated Financial Statements for further discussion related to held for sale assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

October 31, 2020 November 2, 2019

October 30, 2021 October 31, 2020

Principal Amount Outstanding Fair Value Principal Amount Outstanding Fair Value

3 -Year term loan, due March 2022

2020 Notes, due March 2020 — — 300,000 300,872

2021 Notes, due January 2021 — — 450,000 454,634

— $ — 925,000 $ 925,000

2021 Notes, due December 2021 — — 400,000 408,565

Maxim 2023 Notes, due March 2023 500,000 520,236 — —

2023 Notes, due June 2023 — — 500,000 526,855

2023 Notes, due December 2023 — — 550,000 590,177

2024 Notes, due October 2024 500,000 500,482 — —

2025 Notes, due April 2025 400,000 423,265 400,000 434,919

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2026 Notes, due December 2026 900,000 986,243 900,000 1,017,505

Maxim 2027 Notes, due June 2027 500,000 542,942 — —

2028 Notes, due October 2028 750,000 743,109 — —

2031 Notes, due October 2031 1,000,000 996,702 — —

2036 Notes, due December 2036 144,278 176,960 250,000 298,153

2041 Notes, due October 2041 750,000 758,246 — —

2045 Notes, due December 2045 332,587 469,592 400,000 538,788

2051 Notes, due October 2051 1,000,000 1,029,830 — —

Total Debt $ 6,776,865 $ 7,147,607 $ 5,175,000 $ 5,708,995

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The Company's largest customer, which is a distributor rather than an end customer, accounted for approximately 26 %, 29 %, and 30 % of net revenues in fiscal 2021, fiscal 2020 and fiscal 2019, respectively.

The Company's next largest customer, which is also a distributor, accounted for approximately 10 % of net revenues in fiscal 2019.

This next largest customer accounted for less than 10% of net revenues in fiscal 2020 and fiscal 2018.

The Company's next largest customer, which is also a distributor, accounted for approximately 11 % and 10 % of net revenues in fiscal 2021 and fiscal 2019, respectively.

This next largest customer accounted for less than 10% of net revenues in fiscal 2020.

No other customer accounted for greater than 10% of revenue in any period presented.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Concentration of Other Risks

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The Company is exposed to the risk of obsolescence of its inventory depending on the mix of future business.

Additionally, a large portion of the

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company’s purchases of external wafer and foundry services are from a limited number of suppliers, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others.

Additionally, a large portion of the Company’s purchases of external wafer and foundry services are from a limited number of suppliers, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others.

If these suppliers or any of the Company’s other key suppliers are unable or unwilling to manufacture and deliver sufficient quantities of components, on the time schedule and of the quality that the Company requires, the Company may be forced to engage additional or replacement suppliers, which could result in significant expenses and disruptions or delays in manufacturing, product development and shipment of product to the Company’s customers.

Although the Company has experienced shortages of components, materials and external foundry services from time to time, these items have generally been available to the Company as needed.

Given the current demand environment in the semiconductor industry, the Company expects to face a constrained supply environment in the near term.

Management is working to balance these constraints as it shifts the Company's global resources and adds capacity where appropriate.

Revenue Recognition

Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services.

As a result of the adoption of new revenue accounting rules in the first quarter of fiscal 2019, the Company revised its revenue recognition policy.

The Company now recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.

Under this rule, the Company recognizes revenue when all of the following criteria are met:

The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.

The Company recognizes revenue when all of the following criteria are met:

(1) the Company has entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied.

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Unsatisfied performance obligations primarily represent contracts for products with future delivery dates and with an original expected duration of one year or less.

As allowed under ASU 2014-09, the Company has opted to not disclose the amount of unsatisfied performance obligations as these contracts have original expected durations of less than one year.

The Company generally offers a twelve-month warranty for its products.

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Such consideration primarily includes credits issued to the distributor due to price protection and sales made to distributors under agreements that allow certain rights of return, referred to as stock rotation.

Price protection represents price discounts granted to certain distributors to allow the distributor to earn an appropriate margin on sales negotiated with certain customers and in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor.

Price protection represents price discounts granted to certain distributors to allow the distributor to earn an appropriate

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

margin on sales negotiated with certain customers and in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor.

Stock rotation allows distributors limited levels of returns in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory.

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To date, actual distributor claims activity has been materially consistent with the provisions the Company has made based on its historical estimates.

For fiscal 2020 and fiscal 2019, sales to distributors were approximately $ 3.2 billion and $ 3.4 billion, respectively, net of variable consideration for which the liability balances as of

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

October 31, 2020 and November 2, 2019 were $ 229.8 million and $ 227.0 million, respectively, and were recorded in Accrued liabilities on the Consolidated Balance Sheets.

For fiscal 2021 and fiscal 2020, sales to distributors were approximately $ 4.6 billion and $ 3.2 billion, respectively, net of variable consideration for which the liability balances as of October 30, 2021 and October 31, 2020 were $ 664.2 million and $ 229.8 million, respectively, and were recorded in Accrued liabilities on the Consolidated Balance Sheets.

Contract Balances :

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Accumulated other comprehensive (loss) income (AOCI) includes certain transactions that have generally been reported in the Consolidated Statement of Shareholders’ Equity.

The components of AOCI at October 31, 2020 and November 2, 2019 consisted of the following:

The changes in components of AOCI at October 30, 2021 and October 31, 2020 consisted of the following:

Foreign currency translation adjustment Unrealized holding gains/losses on derivatives Pension plans Total

November 2, 2019 $ ( 30,076 ) $ ( 118,015 ) $ ( 39,708 ) $ ( 187,799 )

Other comprehensive (loss) income before reclassifications 3,224 ( 68,905 ) ( 7,681 ) ( 73,362 )

October 31, 2020 $ ( 26,852 ) $ ( 172,670 ) $ ( 49,939 ) $ ( 249,461 )

Other comprehensive income before reclassifications 1,057 56,034 9,307 66,398

Amounts reclassified out of other comprehensive loss — 7,288 2,979 10,267

Tax — ( 14,406 ) 637 ( 13,769 )

Other comprehensive (loss) income 3,224 ( 52,276 ) ( 10,231 ) ( 59,283 )

Effect of Accounting Standards Update 2018-02

— ( 2,379 ) — ( 2,379 )

Other comprehensive income 1,057 48,916 12,923 62,896

October 30, 2021 $ ( 25,795 ) $ ( 123,754 ) $ ( 37,016 ) $ ( 186,565 )

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The amounts reclassified out of AOCI into the Consolidated Statements of Income, with presentation location during each period were as follows:

Comprehensive Income Component 2021 2020 Location

Unrealized holding gains (losses) on derivatives

Changes in unrealized holding gains/losses on derivatives

Currency forwards $ ( 2,682 ) $ ( 2,522 ) Cost of sales

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( 189 ) ( 158 ) Tax

Effect of Accounting Standards Update 2018-02

( 2,379 ) — Retained earnings

Effect of Accounting Standards Update 2018-02 — ( 2,379 ) Retained earnings

$ 7,099 $ ( 3,218 ) Net of tax

1 unchanged sentence

Actuarial losses 2,979 2,617 (1)

651 ( 248 ) Tax

$ 3,318 $ 3,268 Net of tax

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See Note 11, Retirement Plans, of the Notes to Consolidated Financial Statements for further information .

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes.

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For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.

Management classifies interest and penalties related to uncertain tax positions within the provision for income taxes line of the Consolidated Statements of Income.

Management classifies interest and penalties related to uncertain tax positions within the (benefit from) provision for income taxes line of the Consolidated Statements of Income.

Management reevaluates these uncertain tax positions on a quarterly basis.

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Although the Company believes its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in the historical income tax provisions and income tax liabilities.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the event management's assumptions are incorrect, the differences could have a material impact on its income tax provision and operating results in the period in which such determination is made.

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The difference between the income allocated to participating securities under the basic and diluted two-class methods is not material.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the computation of basic and diluted earnings per share:

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_______________________________________

(1) Balances have been restated to reflect the adoption of ASU 2014-09.

See Note 2a, Principles of Consolidation , of the Notes to Consolidated Financial Statements.

(2) For the year ended October 31, 2020, the amount is not material.

(1) For fiscal 2021 and fiscal 2020, the amount is not material.

Stock-Based Compensation

Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards ultimately expected to vest and is recognized as an expense on a straight-line basis over the vesting period, which is generally four years for stock options and restricted stock units, or in annual installments of 25 % on each of the first, second, third and fourth anniversaries of the date of grant.

Restricted stock units with service and performance or market conditions generally vest over a three -year performance period.

For grants issued prior to fiscal 2018, the vesting period was generally five years for stock options, or in annual installments of 20 % on each of the first, second, third, fourth and fifth anniversaries of the date of grant and in one installment on the third anniversary of the date of grant for restricted stock units/awards.

Restricted stock units with service and performance or market conditions generally vest in one installment on the third anniversary of the date of grant.

For grants issued prior to fiscal 2018, the vesting period was generally five years for stock options, or in annual installments of 20 % on each of the first, second, third, fourth and fifth

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

anniversaries of the date of grant and in one installment on the third anniversary of the date of grant for restricted stock units/awards.

The maximum contractual term of all stock options is ten years .

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If the Company determines that an award is unlikely to vest, any previously recorded stock-based compensation expense is reversed in the period of that determination.

The grant date fair value of restricted stock units with both service and market conditions is calculated using the Monte Carlo simulation model to estimate the probability of satisfying the performance condition stipulated in the award grant, including the possibility that the market condition may not be satisfied.

The grant date fair value of restricted stock units or performance-based stock options with both service and market conditions is calculated using the Monte Carlo simulation model to estimate the probability of satisfying the performance condition stipulated in the award grant, including the possibility that the market condition may not be satisfied.

See Note 3, Stock-Based Compensation and Shareholders' Equity , of the Notes to Consolidated Financial Statements for additional information relating to stock-based compensation.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

New Accounting Pronouncements

Standards Implemented During Current Fiscal Year

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02).

ASU 2016-02 requires a lessee to recognize most leases on the balance sheet but recognize expenses on the income statement in a manner similar to historical practice.

The update states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying assets for the lease term.

Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease.

In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842):

Land Easement Practical Expedient for Transition to Topic 842 (ASU 2018-01).

ASU 2018-01 permits an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements (Topic 842) (ASU 2018-11), which provides for an additional transition method that allows companies to apply the new lease standard at the adoption date, eliminating the requirement to apply the standard to the earliest period presented in the financial statements.

ASU 2016-02, ASU 2018-01 and ASU 2018-11 are effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

The Company adopted the standard in the first quarter of fiscal 2020 under the modified retrospective approach.

As allowed by the new standard, the Company elected the package of transition practical expedients but elected to not apply the hindsight practical expedient to its leases at transition.

As a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases and (iii) the treatment of initial direct costs for any existing leases.

The Company also elected not to separate lease and non-lease components for its leases.

Instead, for all applicable classes of underlying assets, the Company accounts for each separate lease component and the non-lease components associated with that lease component, as a single lease component.

Additionally, the Company has elected the short-term lease exception for all classes of assets, does not apply the recognition requirements for leases of twelve months or less, and recognizes lease payments for short-term leases as expense either straight-line over the lease term or as incurred depending on whether the lease payments are fixed or variable.

These elections are applied consistently for all leases.

Upon adoption on November 3, 2019, the Company recorded operating lease liabilities of $ 301.4 million and operating lease assets for its leases of $ 233.2 million.

The operating lease assets are net of liabilities of $ 68.2 million for deferred rent and unamortized landlord construction allowances that were previously recorded in Accrued liabilities and Other non-current liabilities in the Consolidated Balance Sheets.

Operating lease right-of-use assets are presented within Other assets and corresponding liabilities are presented within Accrued liabilities and Other non-current liabilities in the Consolidated Balance Sheets.

There was no material impact to the Consolidated Statements of Income or Consolidated Statements of Cash Flows.

Please refer to Note 9 , Leases , of the Notes to Consolidated Financial Statements for information regarding the Company's lease portfolio as of October 31, 2020.

Comprehensive Income

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02).

ASU 2018-02 allows stranded tax effects resulting from changes to tax legislation to be reclassified from AOCI to retained earnings.

The Company adopted this ASU during the first quarter of fiscal 2020 and therefore applied the ASU in the period of adoption using the specific identification approach.

As a result, the Company reclassified approximately $ 2.4 million from AOCI into retained earnings.

The Company does not expect to record any additional reclassification adjustments in subsequent periods barring further regulatory changes.

Please refer to Note 12, Income Taxes, of the Notes to Consolidated Financial Statements for additional information regarding the Company's accounting policy for releasing stranded income tax effects from AOCI.

The following standards were adopted during the first quarter of fiscal 2020 and did not have an impact on the Company's financial position and results of operations:

• ASU 2017-11, Earnings Per Share (Topic 860), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815):

Accounting for Certain Financial Instruments with Down Round Features II.

Replacement of the Indefinite Deferral Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception;

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• ASU 2018-07, Compensation - Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting.

Standards to Be Implemented

Retirement Benefits

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Topic 715-20):

Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14), which modifies the disclosure requirements for defined benefit pension plans and other post-retirement plans.

ASU 2018-14 is effective for fiscal years ending after December 15, 2020, with early adoption permitted.

ASU 2018-14 is effective for the Company in the first quarter of fiscal 2021.

The adoption of ASU 2018-14 will modify the Company's disclosures for defined benefit plans and other post-retirement plans but is not expected to impact its financial position or results of operations.

Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (ASU 2016-13).

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (ASU 2016-13).

ASU 2016-13 requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses (Topic 326):

Targeted Transition Relief (ASU 2019-05).

In 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses (Topic 326):

Targeted Transition Relief (ASU 2019-05) and ASU 2019-11, Codification Improvements to Topic 326 (ASU 2019-11).

ASU 2019-05 allows an entity to irrevocably elect the fair value option for certain financial instruments.

Once elected, an entity would recognize the difference between the carrying amount and the fair value of the financial instrument as part of the cumulative effect adjustments associated with the adoption of ASU 2016-13.

ASU 2016-13 and ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years.

ASU 2016-13 and ASU 2019-05 are effective for the Company in the first quarter of fiscal 2021.

The Company does not expect this update to have a material impact on its financial position and results of operations.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes .

ASU 2019-11 allows entities to exclude the accrued interest component of amortized cost from various disclosures required by ASC 326.

The Company is exposed to credit losses through sales of its products and certain financial instruments.

The Company determines if there is an expected loss on its accounts receivables using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables.

The Company adopted these standards effective November 1, 2020 using the modified retrospective approach, which did not have a material impact on the Company's financial position and results of operations.

See Note 8, Fair Value, of the Notes to Consolidated Financial Statements for more information related to how the Company assesses credit losses on its available-for-sale debt securities.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (ASU-2019-12).

ASU 2019-12 eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

It also clarifies and simplifies other aspects of the accounting for income taxes.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The Company adopted ASU 2019-12 in the first quarter of fiscal 2021.

Upon adoption, ASU 2019-12 did not have a material impact on the Company's financial position and results of operations.

Retirement Benefits

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Topic 715-20):

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2018-14 is effective for fiscal years ending after December 15, 2020, with early adoption permitted.

The Company adopted ASU 2018-14 in the first quarter of fiscal 2021.

Upon adoption, ASU 2018-14 did not have a material impact on the Company's financial position and results of operations.

Standards to Be Implemented

Reference Rate Reform

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional guidance for accounting for contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met.

The provisions of this standard are available for election through December 31, 2022.

The Company does not expect ASU 2020-04 to have a material impact on the Company's financial position and results of operations.

Acquired Contract Assets and Contract Liabilities

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Acquired Contract Assets and Contract Liabilities.

Under the new guidance (ASC 805-20-30-28), the acquirer should determine what contract assets and/or contract liabilities it would have recorded under ASC 606 (the revenue guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree.

The recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recorded on its books under ASC 606 as of the acquisition date.

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

ASU 2021-08 is effective for the Company in the first quarter of fiscal 2024.

The Company does not expect this update to have a material impact on its financial position and results of operations.

Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued.

However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted.

The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, adoption will have on its financial position and results of operations.

Stock-Based Compensation and Shareholders’ Equity

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No award may be made under the 2020 Plan after March 11, 2030, but awards previously granted may extend beyond that date.

The Company does not intend to grant further equity awards under any previous equity compensation plans.

As of October 31, 2020, a total of 19.6 million common shares were available for future grant under the 2020 Plan.

The Company does not intend to grant further equity awards under any previous legacy Analog Devices' and Linear Technology Corporation's equity compensation plans.

In connection with the Acquisition, the Company assumed the Maxim 1996 Stock Incentive Plan (1996 Plan) and may grant stock options and other stock and stock-based awards under the 1996 Plan.

As of October 30, 2021, a total of 18.2 million common shares were available for future grant under the 2020 Plan and 9.0 million common shares were available for future grant under the 1996 Plan.

Maxim Replacement Awards

In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock awards and restricted stock units (replacement awards), to certain Maxim employees in replacement of Maxim equity awards.

The replacement awards consist of restricted stock and restricted stock unit awards for approximately 3.7 million shares of the Company's common stock with a weighted average grant date fair value of $ 161.63 .

The terms and intrinsic value of these replacement awards are substantially the same as the converted Maxim awards.

The fair value of the replacement awards associated with services rendered through the Acquisition Date was recognized as a component of the total acquisition consideration, and the remaining fair value of the replacement awards associated with post-Acquisition services will be recognized as an expense on a straight-line basis over the remaining vesting period.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Modification of Awards

1 unchanged sentence

The modifications made to the Company’s equity awards in fiscal 2021, fiscal 2020 and fiscal 2019 did not result in significant incremental compensation costs, either individually or in the aggregate.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Grant-Date Fair Value of Stock Options

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Until such time as the Company’s Board of Directors declares a cash dividend for an amount that is different from the current quarter’s cash dividend, the current dividend will be used in deriving this assumption.

Cash dividends are not paid on options, restricted stock or restricted stock units.

In connection with the acquisition of Linear in fiscal 2017, the Company granted restricted stock awards to replace outstanding restricted stock awards of Linear employees.

These restricted stock awards entitle recipients to voting and nonforfeitable dividend rights from the date of grant.

Cash dividends are not paid on options, restricted stock, replacement awards or restricted stock units.

In connection with the acquisition of Linear, the Company granted restricted stock awards to replace outstanding restricted stock awards of Linear employees.

These restricted stock awards specific to legacy Linear awards entitle recipients to voting and nonforfeitable dividend rights from the date of grant.

Stock-Based Compensation Expense

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Total stock-based compensation expense $ 243,611 $ 149,518 $ 150,300

As of October 31, 2020 and November 2, 2019, the Company capitalized $ 5.8 million and $ 6.8 million, respectively, of stock-based compensation in inventory.

As of October 30, 2021 and October 31, 2020, the Company capitalized $ 8.7 million and $ 5.8 million, respectively, of stock-based compensation in inventory.

Stock-Based Compensation Activity

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Term in Years Aggregate

Options outstanding at November 2, 2019

Options outstanding at October 31, 2020

4,192 $ 70.73

2 unchanged sentences

Options forfeited ( 81 ) $ 91.39

Options expired ( 6 ) $ 40.69

Options outstanding at October 30, 2021

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The total intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid by the employee to exercise the options) during fiscal 2021, fiscal 2020 and fiscal 2019 was $ 93.2 million, $ 76.3 million and $ 132.3 million, respectively.

A summary of the Company’s restricted stock unit award activity as of October 31, 2020 and changes during the fiscal year then ended is presented below:

A summary of the Company’s restricted stock unit and award activity as of October 30, 2021 and changes during the fiscal year then ended is presented below:

Stock Units/Awards

2 unchanged sentences

Date Fair Value

Restricted stock units/awards outstanding at November 2, 2019

Restricted stock units/awards outstanding at October 31, 2020

3,637 $ 91.54

4 unchanged sentences

5,924 $ 132.59

As of October 31, 2020, there was $ 280.9 million of total unrecognized compensation cost related to unvested stock-based awards comprised of stock options and restricted stock units.

As of October 30, 2021, there was $ 560.6 million of total unrecognized compensation cost related to unvested stock-based awards comprised of stock options, restricted stock awards and restricted stock unit awards.

That cost is expected to be recognized over a weighted-average period of 1.4 years.

The total grant-date fair value of awards that vested during fiscal 2021, fiscal 2020 and fiscal 2019 was approximately $ 207.0 million, $ 174.1 million and $ 150.6 million, respectively.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Common Stock Repurchases

In September 2021, the Company entered into accelerated share repurchase agreements (ASR) with third party financial institutions to repurchase $ 2.5 billion of the Company's common stock.

The Company paid $ 2.5 billion and received an initial delivery of 12.3 million shares of common stock, which represented approximately 80 % of the notional amount of the ASR.

The Company recorded the remaining 20 %, or $ 500.0 million, within Prepaid expenses and other current assets on the Consolidated Balance Sheet.

The average price paid for all of the shares delivered under the ASR through October 30, 2021 was $ 163.27 per share.

The final settlement of the transaction under the ASR is expected to occur in the first half of fiscal 2022.

The Company’s share repurchase program has been in place since August 2004.

1 unchanged sentence

The Company may repurchase outstanding shares of its common stock from time to time in the open market and through privately negotiated transactions.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

terminated earlier by resolution of the Company’s Board of Directors, the repurchase program will expire when the Company has repurchased all shares authorized under the program.

As of October 31, 2020, the Company had repurchased a total of approximately 156.1 million shares of its common stock for approximately $ 6.3 billion under this program.

An additional $ 1.9 billion remains available for repurchase of shares under the current authorized program.

Unless terminated earlier by resolution of the Company’s Board of Directors, the repurchase program will expire when the Company has repurchased all shares authorized under the program.

As of October 30, 2021, the Company had repurchased a total of approximately 171.6 million shares of its common stock for approximately $ 8.8 billion under this program, excluding the $ 500.0 million within Prepaid expenses and other current assets noted above.

$ 7.4 billion remains available for repurchase of shares under the current authorized program in addition to the $ 500.0 million advance payment under the ASR.

The repurchased shares are held as authorized but unissued shares of common stock.

In March 2020, the Company temporarily suspended the share repurchase program as a result of the global macroeconomic environment.

That suspension continued through the fourth quarter of fiscal 2020 given the planned acquisition of Maxim (see Note 6, Acquisitions, of the Notes to Consolidated Financial Statements).

The Company reinstated the common stock repurchase program effective November 2020 (fiscal 2021).

Future repurchases of common stock will be dependent upon the Company's financial position, results of operations, outlook, liquidity, and other factors deemed relevant by the Company.

10 unchanged sentences

Industry, Segment and Geographic Information

The Company operates and tracks its results in one reportable segment based on the aggregation of eight operating segments.

The Company operates and tracks its results in one reportable segment based on the aggregation of its operating segments.

The Company designs, develops, manufactures and markets a broad range of integrated circuits (ICs).

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Many of these customers use products spanning all operating segments in a wide range of applications.

• The ICs marketed by each of the Company's operating segments are sold globally through a direct sales force, third-party distributors, independent sales representatives and via our website to the same types of customers.

All of the Company's operating segments share a similar long-term financial model as they have similar economic characteristics.

The causes for variation in operating and financial performance are the same among the Company's operating segments and include factors such as (i) life cycle and price and cost fluctuations, (ii) number of competitors, (iii) product differentiation and (iv) size of market opportunity.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

differentiation and (iv) size of market opportunity.

Additionally, each operating segment is subject to the overall cyclical nature of the semiconductor industry.

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The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" customer information and the end customer product or application into which the Company’s product will be incorporated.

As data systems for capturing and tracking this data and the Company's methodology evolves and improves, the categorization of

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

products by end market can vary over time.

As data systems for capturing and tracking this data and the Company's methodology evolves and improves, the categorization of products by end market can vary over time.

When this occurs, the Company reclassifies revenue by end market for prior periods.

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Industrial $ 4,011,485 55 % $ 2,998,259 54 % $ 3,014,890 50 %

Communications 1,195,946 21 % 1,294,960 22 % 1,155,826 19 %

Automotive 1,248,635 17 % 778,297 14 % 929,671 16 %

Communications 1,198,461 16 % 1,191,169 21 % 1,294,233 22 %

Consumer 859,705 12 % 635,331 11 % 752,271 13 %

1 unchanged sentence

_______________________________________

(1) Balances have been restated to reflect the adoption of ASU 2014-09.

See Note 2a, Principles of Consolidation , of the Notes to Consolidated Financial Statements.

(1) The sum of the individual percentages may not equal the total due to rounding.

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_______________________________________

(1) Balances have been restated to reflect the adoption of ASU 2014-09.

See Note 2a, Principles of Consolidation , of the Notes to Consolidated Financial Statements.

(1) The sum of the individual percentages may not equal the total due to rounding.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Geographic Information

4 unchanged sentences

and the predominant countries comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2021 2020 2019

11 unchanged sentences

Philippines 524,128 256,470 247,823

Thailand 126,040 — —

Singapore (1) — 18,518 88,385

4 unchanged sentences

_______________________________________

(1) Balances have been restated to reflect the adoption of ASU 2014-09.

See Note 2a, Principles of Consolidation , of the Notes to Consolidated Financial Statements.

(2) As further discussed in Note 5, Special Charges , of the Notes to Consolidated Financial Statements the Company is planning to transition testing operations currently handled in its Singapore facility to its facilities in Penang, Malaysia and the Philippines and also to its outsourced assembly and test partners.

As discussed in Note 2e, Property, Plant and Equipment , of the Notes to Consolidated Financial Statements, management has entered into an agreement to sell the facility and transfer the related land lease in Singapore in May 2021 and has classified $ 22.2 million as assets held for sale as of October 31, 2020.

Special Charges

(1) As further discussed in Note 5, Special Charges , of the Notes to Consolidated Financial Statements, the Company sold this facility in fiscal 2021.

Special Charges, net

The Company monitors global macroeconomic conditions on an ongoing basis and continues to assess opportunities for improved operational effectiveness and efficiency, as well as a better alignment of expenses with revenues.

As a result of these assessments, the Company has undertaken various actions resulting in special charges over the past several years.

The following table displays a roll-forward from October 28, 2017 to October 31, 2020 of the employee separation and exit cost accruals established related to these actions along with related commentary.

The following table summarizes activity included in special charges, net in the Company's Consolidated Statements of Income:

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Special Charges Closure of Manufacturing Facilities Repositioning Action Other Actions

Balance at October 28, 2017 $ — $ — $ 37,348

Fiscal 2018 special charges, net 44,452 — 16,866

Severance and other payments — — ( 39,099 )

Effect of foreign currency on accrual ( 1,478 ) — 37

Closure of Manufacturing Facilities Repositioning Action Other Special Charges, Net

Employee severance and benefit costs $ 7,556 $ 71,397 $ — $ 78,953

Employee equity acceleration charge — 2,538 — 2,538

Impairment charges — 14,168 — 14,168

Total special charges, net $ 7,556 $ 88,103 $ — $ 95,659

Employee severance and benefit costs $ — $ 47,326 $ — $ 47,326

Employee equity acceleration charge — 2,093 — 2,093

Facility closure costs 2,918 — — 2,918

Total special charges, net $ 2,918 $ 49,419 $ — $ 52,337

Employee severance and benefit costs $ 200 $ — $ 28,731 $ 28,931

Employee equity acceleration charge — — 54,664 54,664

Facility closure costs 11,880 — — 11,880

Fair value write-down of assets held for sale 2,538 — — 2,538

(Gain) on sale of facility ( 13,557 ) — — ( 13,557 )

Total special charges, net $ 1,061 $ — $ 83,395 $ 84,456

Liabilities related to special charges, net are presented in Accrued Liabilities in the Consolidated Balance Sheets.

The activity is detailed below:

Accrued Special Charges Closure of Manufacturing Facilities Repositioning Action Other

Balance at November 3, 2018 $ 42,974 $ — $ —

Fiscal 2019 special charges, net 7,556 88,103 —

Severance and other payments — ( 12,487 ) ( 9,634 )

Non-cash impairment charge — ( 14,167 ) —

Non-cash accelerated stock based compensation charges — ( 2,538 ) —

Employee severance and benefit costs 7,556 71,397 —

Severance and benefit payments — ( 12,487 ) —

Effect of foreign currency on accrual ( 129 ) ( 15 ) —

Balance at November 2, 2019 $ 50,401 $ 58,895 $ —

Fiscal 2020 special charges, net 2,918 49,419 —

Severance and other payments ( 8,113 ) ( 85,957 ) ( 2,034 )

Non-cash impairment charge — — —

Non-cash accelerated stock based compensation charges — ( 1,630 ) —

Employee severance and benefit costs — 47,326 —

Facility closure costs 2,918 — —

Severance and benefit payments ( 5,098 ) ( 85,301 ) —

Facility closure cost payments ( 2,969 ) —

Effect of foreign currency on accrual ( 76 ) ( 146 ) —

Balance at October 31, 2020 $ 45,176 $ 20,774 $ —

Accrued liabilities $ 45,176 $ 20,774 $ 3,489

Employee severance and benefit costs 200 — 28,731

Facility closure costs 11,880 — —

Severance and benefit payments ( 19,602 ) ( 13,551 ) ( 15,053 )

Facility closure cost payments ( 11,880 ) — —

Effect of foreign currency on accrual — 164 —

Balance at October 30, 2021 $ 25,774 $ 7,387 $ 13,678

Closure of Manufacturing Facilities

The Company recorded special charges of $ 55.9 million on a cumulative basis through October 30, 2021 as a result of its decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear.

The Company plans to close its Hillview wafer fabrication facility located in Milpitas, California and its Singapore test facility in fiscal 2021.

The Company intends to transfer Hillview wafer fabrication production to its other internal facilities and to external foundries.

In addition, the Company is planning to transition testing operations currently handled in its Singapore facility to its facilities in Penang, Malaysia and the Philippines, and also to its outsourced assembly and test partners.

The special charges include severance and fringe benefit costs, in accordance with the Company's ongoing benefit plan or statutory requirements at foreign locations and one-time termination benefits for the impacted manufacturing, engineering and selling, marketing, general and administrative (SMG&A) employees and other exit costs.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

These one-time termination benefits are being recognized over the future service period required for employees to earn these benefits.

See Note 2e, Property, Plant and Equipment for amounts reclassified.

During fiscal 2021, the Company completed the sale of its facility and certain equipment in Singapore, which were previously classified as held for sale, for approximately $ 35.7 million, which resulted in a gain of $ 13.6 million.

Concurrent with the sale, the Company entered into a short-term lease agreement to leaseback a portion of the facility while it completes its transition of related operations to its facilities in Penang, Malaysia and the Philippines, as well as to its outsourced assembly and test partners, which is expected to be competed in the fiscal 2022.

Repositioning Actions

The Company recorded special charges of $ 137.5 million on a cumulative basis through October 30, 2021 as a result of organizational initiatives to better align its global workforce with its long-term strategic plan.

Approximately $ 123.3 million of the total charges was for severance and fringe benefit costs in accordance with either the Company's ongoing benefit plan or statutory requirements for the impacted manufacturing, engineering and SMG&A employees.

The remaining $ 14.2 million of the charges were recorded in fiscal 2019 and related to the write-off of acquired intellectual property due to the Company's decision to discontinue certain product development strategies.

Other Actions

During fiscal 2018, the Company recorded special charges of approximately $ 16.9 million for severance and fringe benefit costs in accordance with the Company's ongoing benefit plan or statutory requirements at foreign locations as part of an action to reduce certain operating costs.

Linear Technology Corporation

On March 10, 2017 (Acquisition Date), the Company completed its acquisition of all of the voting interests of Linear, an independent manufacturer of high performance analog integrated circuits.

Under the terms of the agreement pursuant to which the Company acquired Linear, Linear stockholders received, for each outstanding share of Linear common stock, $ 46.00 in

The special charges include severance and fringe benefit costs, in accordance with the Company's ongoing benefit plan or statutory requirements at foreign locations, and the write-off of acquired intellectual property due to the Company's decision to discontinue certain product development strategies.

The other special charges of $ 83.4 million recognized during fiscal 2021 included severance and benefit costs as well as charges recorded from acceleration of equity awards in connection with the termination of a limited number of employees as part of the integration of the Acquisition.

Maxim Integrated Products, Inc.

On the Acquisition Date, the Company completed its acquisition of all of the voting interests of Maxim, an independent manufacturer of innovative analog and mixed-signal products and technologies.

Under the terms of the agreement pursuant to which the Company acquired Maxim (Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company's common stock at the closing.

The Company believes the combination creates an expanded suite of top-performing mixed-signal and power management technology offerings and complements the Company's legacy offerings.

The results of operations of Maxim from the Acquisition Date are included in the Company’s Consolidated Statement of Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows and Consolidated Statement of Shareholders’ Equity for fiscal 2021.

The amount of revenue attributable to Maxim included in the Company's Consolidated Statement of Income for fiscal 2021 was $ 558.8 million.

The amount of Maxim's earnings included in the Consolidated Statement of Income for fiscal 2021 is impracticable to calculate.

The Acquisition Date fair value of the consideration transferred in the Acquisition consisted of the following:

Cash consideration (a)

Issuance of common stock (b)

Fair value of partially vested restricted stock and restricted stock unit replacement awards (c)

Total purchase consideration

____________________

(a) This reflects the cash paid for fractional shares of the Company’s common stock in respect of shares of Maxim common stock outstanding.

(b) The fair value is based on the issuance of approximately 169.2 million shares of the Company's common stock with a per share value of $ 164.00 on the Acquisition Date.

(c) In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock and restricted stock units, to certain Maxim employees in replacement of Maxim equity awards that were cancelled at closing.

This amount represents the portion of the fair value of the replacement equity awards associated with services rendered through the Acquisition Date and has been included as a component of the total purchase consideration.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

cash and 0.2321 of a share of the Company's common stock at the closing.

The results of operations of Linear from the Acquisition Date are included in the Company’s Consolidated Financial Statements for fiscal 2017.

The Company completed the acquisition accounting for Linear in fiscal 2018.

Proposed Acquisition of Maxim Integrated Products, Inc.

On July 12, 2020, the Company entered into the Merger Agreement to acquire Maxim, an independent manufacturer of innovative analog and mixed-signal products and technologies.

Under the terms of the Merger Agreement, Maxim stockholders will receive, for each outstanding share of Maxim common stock, 0.630 of a share of the Company’s common stock at the closing.

The estimated merger consideration is approximately $ 23.0 billion based on the closing price of the Company's common stock on November 20, 2020.

The value of the merger consideration will fluctuate based upon changes in the price of the Company's common stock and the number of shares of Maxim common stock, restricted stock awards and restricted stock unit awards outstanding on the closing date.

The transaction is subject to customary closing conditions, including receipt of certain non-U.S.

regulatory approvals.

The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired.

The Merger Agreement includes termination rights for both the Company and Maxim.

The Company may be required to pay Maxim a regulatory termination fee of $ 830.0 million in cash if the Merger Agreement is terminated in certain circumstances involving the failure to obtain the required regulatory approvals.

On October 8, 2020, the required shareholder approvals relating to the Merger Agreement were obtained from both the Company’s shareholders and Maxim’s stockholders.

In fiscal 2020, the Company incurred $ 20.1 million of transaction-related costs related to the anticipated acquisition of Maxim recorded within Selling, marketing, general and administrative expenses in the Company's Consolidated Statements of Income.

The preliminary fair values of assets acquired and liabilities assumed as of the Acquisition Date are set forth in the table below.

The excess of the purchase consideration over the aggregate Acquisition Date value of identifiable net assets acquired was recorded as goodwill.

Substantially all of the goodwill is not expected to be deductible for tax purposes.

These preliminary Acquisition Date values were generally determined through established and generally accepted valuation techniques and are subject to change during the measurement period as valuations are finalized.

As a result, the Acquisition accounting is not complete and additional information that existed at the Acquisition Date may become known to the Company during the remainder of the measurement period.

As of the filing date of this Annual Report on Form 10-K, the Company is still in the process of valuing Maxim's assets, including inventory, fixed assets, intangible assets, and liabilities, including related income tax accounting.

Cash and cash equivalents $ 2,450,597

Accounts receivable 609,245

Inventories 858,300

Prepaid expenses and other current assets 59,310

Property, plant and equipment 759,544

Intangible assets (Note 2f) 12,429,100

Goodwill (Note 2f) 14,645,076

Other long-term assets 80,373

Total assets $ 31,891,545

Accounts payable 112,828

Income taxes payable 137,590

Accrued liabilities 590,855

Long-term debt 1,072,150

Deferred income taxes 1,665,356

Other non-current liabilities 363,668

Total liabilities $ 3,942,447

Total purchase consideration $ 27,949,098

The acquired intangible assets consisted of the following, which are being amortized on a straight-line basis over their estimated useful lives or on an accelerated method of amortization that is expected to reflect the estimated pattern of economic use.

(in thousands)

Weighted Average Useful Life

Customer relationships

$ 5,642,100 14

Developed technology

Total amortizable intangible assets

$ 12,429,100 10

The fair value of the intangible assets was determined through discounted cash flow models.

The significant assumptions used to estimate the value of the intangible assets included annual revenue growth rates, developed technology obsolescence rates, customer attrition rates and discount rates.

The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future technologies that have yet to be determined and Maxim’s assembled workforce.

Future technologies do not meet the criteria for recognition separately from goodwill because they are part of future development and growth of the business.

There were no significant contingencies assumed as part of the Acquisition.

The Company recognized $ 132.9 million of transaction-related costs, including legal, accounting and other related fees that were expensed in fiscal 2021 and fiscal 2020.

These costs are included in the Consolidated Statements of Income in

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

operating expenses within Selling, marketing, general and administrative expenses (SMG&A).

The Company may incur additional transaction-related costs in the future related to the Acquisition that will be expensed as incurred.

The following unaudited pro forma consolidated financial information for the twelve months ended October 30, 2021 combines the results of the Company for the year ended October 30, 2021 and the unaudited results of Maxim for the corresponding period through the Acquisition Date.

The following unaudited pro forma consolidated financial information for the twelve months ended October 31, 2020 combines the results of the Company for fiscal 2020 and the unaudited results of Maxim for the corresponding period.

The unaudited pro forma consolidated financial information assumes that the Acquisition, which closed on August 26, 2021, was completed on November 3, 2019 (the first day of fiscal 2020).

The pro forma consolidated financial information has been calculated after applying the Company’s accounting policies and includes adjustments for amortization expense of acquired intangible assets, fair value adjustments for acquired inventory, property, plant and equipment and long-term debt and compensation expense for ongoing share-based compensation arrangements that were replaced in conjunction with the Acquisition, together with the consequential tax effects.

For fiscal 2020, non-recurring pro forma adjustments directly attributable to the Acquisition included pre-tax amounts of $ 602.5 million related to the acquisition accounting effect of inventories acquired and $ 54.2 million of accelerated stock-based compensation expense, together with the consequential tax effects.

Additionally, $ 309.0 million of pre-tax transaction costs, together with the consequential tax effects, that were incurred related to the Acquisition are reflected in the pro forma results for fiscal 2020.

These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the Acquisition actually taken place on November 3, 2019.

In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after the Acquisition, including but not limited to revenue enhancements, cost savings or operating synergies that the combined Company may achieve as a result of the Acquisition.

Pro Forma Twelve Months Ended

October 30, 2021

October 31, 2020

$ 9,580,488 $ 7,896,855

Net income (loss)

$ 1,578,274 $ ( 144,198 )

Basic net income (loss) per common share

$ 2.94 $ ( 0.27 )

Diluted net income (loss) per common share

$ 2.91 $ ( 0.27 )

Other Acquisitions

The Company has not provided pro forma results of operations for any acquisitions completed in fiscal 2020, fiscal 2019 or fiscal 2018 herein as they were not material to the Company on either an individual or an aggregate basis.

The Company has not provided pro forma results of operations for any other acquisitions completed in fiscal 2021, fiscal 2020 or fiscal 2019 herein as they were not material to the Company on either an individual or an aggregate basis.

The Company included the results of operations of each acquisition in its Consolidated Statements of Income from the closing date of each acquisition.

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For equity method investments, realized gains and losses are reflected in nonoperating (income) expense based upon the Company's ownership share of the investee's financial results.

The Company recognized other-than-temporary impairments of $ 0.5 million and $ 6.6 million in fiscal 2020 and fiscal 2019, respectively.

These charges were recorded in the Consolidated Statements of Income in Other, net, within Non-operating (income) expense.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Liabilities

Accrued liabilities at October 31, 2020 and November 2, 2019 consisted of the following:

Accrued liabilities at October 30, 2021 and October 31, 2020 consisted of the following:

Distributor price adjustments and other revenue reserves $ 664,198 $ 257,343

1 unchanged sentence

Interest rate swap — 214,586

Accrued professional fees 152,689 2,077

Accrued interest 29,361 56,083

Accrued special charges 46,839 65,950

Lease liabilities 52,576 39,923

Other 150,189 115,996

Total accrued liabilities $ 1,477,530 $ 955,633

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the first quarter of fiscal 2020, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) (ASU 2016-02) using the modified retrospective approach.

Results for fiscal 2020 are presented under ASU 2016-02, while prior period Consolidated Financial Statements have not been adjusted and continue to be presented under the accounting standard in effect at that time.

See Note 2s, New Accounting Pronouncements, of the Notes to Consolidated Financial Statements for further detail on the adoption of this standard, including the initial adoption values.

The Company enters into operating leases which primarily relate to certain facilities.

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If these costs are variable costs they are not included in the measurement of the right-of-use assets and lease liabilities, but are expensed when the event determining the amount of variable consideration to be paid occurs.

The Company’s leases have remaining lease terms of less than one year to approximately twenty-five years , some of which may include options to extend the initial term of the lease.

The Company’s leases have remaining lease terms of less than one year to approximately twenty-four years , some of which may include options to extend the initial term of the lease.

These options are included in determining the initial lease term at lease commencement only if the Company is reasonably certain to exercise the option.

2 unchanged sentences

The following table presents supplemental balance sheet information related to the Company's operating leases:

October 31, 2020

October 30, 2021 October 31, 2020

Operating lease right-of-use assets in Other assets

$ 279,542 $ 256,625

Operating lease liabilities in Accrued liabilities

$ 52,576 $ 39,923

Operating lease liabilities in Other non-current liabilities

Details of the Company's operating leases are as follows:

$ 295,782 $ 288,492

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

October 31, 2020

Details of the Company's operating leases are as follows:

October 30, 2021 October 31, 2020

Lease expense $ 50,799 $ 45,892

2 unchanged sentences

Lease assets obtained in exchange for new lease liabilities $ 25,946 $ 54,392

Weighted average remaining lease term 9.2 years

Weighted average remaining lease term 7.9 years 9.2 years

Weighted average discount rate 2.9 % 3.1 %

10 unchanged sentences

The Company does not believe that any current legal matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

In connection with the Acquisition, the Company acquired a supplier commitment of approximately $ 291.2 million for the purchase of materials and supplies in advance or with minimum purchase quantities through 2031.

Retirement Plans

4 unchanged sentences

In addition, the Company contributes an amount equal to each participant’s pre-tax contribution, if any, up to a maximum of 3 % of each participant’s total eligible compensation.

The total expense related to the defined contribution plans for U.S.

For former Maxim employees, the Company contributes an amount equal to each participant's pre-tax contribution, if any, up to a maximum of 3 % of each participant's eligible compensation and an additional 50 % match for the next 2 % of each participant's eligible compensation.

The total expense related to the defined contribution plans for all eligible U.S.

employees was $ 52.1 million in fiscal 2021, $ 48.7 million in fiscal 2020 and $ 47.7 million in fiscal 2019.

11 unchanged sentences

The Company’s liability under the DCP is an unsecured general obligation of the Company.

Defined Benefit Pension Plans

Defined Benefit Pension and Post Retirement Benefit Plans

The Company also has various defined benefit pension and other retirement plans for certain non-U.S.

5 unchanged sentences

equity securities, bonds, property and cash.

The Company has elected to measure defined benefit plan assets and obligations as of October 31, which is the month-end that is closest to its fiscal year-ends, which were October 31, 2020 for fiscal 2020 and November 2, 2019 for fiscal 2019.

The Company has elected to measure defined benefit plan assets and obligations as of October 31, which is the month-end that is closest to its fiscal year-ends, which were October 30, 2021 for fiscal 2021 and October 31, 2020 for fiscal 2020.

As a result of the Acquisition, the Company acquired a postretirement plan that provides postretirement medical expenses to certain former employees of a Maxim acquired company and certain former Maxim executives in the U.S.

Components of Net Periodic Benefit Cost

Net annual periodic benefit cost of non-U.S.

plans for fiscal 2020, fiscal 2019 and fiscal 2018 is presented in the following table:

Net annual periodic benefit cost of the Company’s pension and postretirement benefit plans for fiscal 2021, fiscal 2020 and fiscal 2019 is presented in the following table:

2021 2020 2019

3 unchanged sentences

Amortization of prior service cost — — 3

Amortization of transition obligation — — 10

Recognized actuarial loss 2,973 2,583 1,000

1 unchanged sentence

Curtailment impact — ( 203 ) —

Settlement impact $ ( 6 ) $ — $ —

Net periodic benefit cost $ 12,486 $ 9,588 $ 5,381

3 unchanged sentences

Benefit Obligations and Plan Assets

Obligation and asset data of the Company’s non-U.S.

plans at October 31, 2020 and November 2, 2019 is presented in the following table:

Obligation and asset data of the Company’s pension and postretirement benefit plans at October 30, 2021 and October 31, 2020 is presented in the following table:

Change in Benefit Obligation

3 unchanged sentences

Curtailment — ( 705 )

Actuarial loss 2,916 38,210

Settlement ( 885 ) —

Acquisition of Maxim benefit obligation 49,807 —

Actuarial (gain) loss ( 4,005 ) 2,916

Benefits paid ( 3,983 ) ( 2,661 )

5 unchanged sentences

Employer contributions 11,035 6,943

Settlements ( 885 ) —

Benefits paid ( 3,983 ) ( 2,661 )

Acquisitions 1,728 —

Exchange rate adjustment 2,246 1,918

3 unchanged sentences

Amounts Recognized in the Balance Sheet

Non-current assets $ 1,709 $ —

Current liabilities $ ( 2,730 ) $ ( 973 )

1 unchanged sentence

Net amount recognized $ ( 114,310 ) $ ( 79,230 )

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reconciliation of Amounts Recognized in the Statement of Financial Position

6 unchanged sentences

Changes in plan assets and benefit obligations recognized in other comprehensive income (loss)

Net loss arising during the year $ 6,342 $ 31,100

Net gain/loss arising during the year $ ( 10,884 ) $ 6,342

Effect of exchange rates on amounts included in AOCI 1,565 1,305

1 unchanged sentence

Amortization or settlement recognition of net loss ( 2,967 ) ( 2,583 )

Total recognized in other comprehensive loss $ 5,064 $ 30,078

Total recognized in other comprehensive gain/loss $ ( 12,286 ) $ 5,064

Total recognized in net periodic cost and other comprehensive loss $ 200 $ 14,652

1 unchanged sentence

Net loss $ ( 2,413 ) $ ( 2,845 )

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The accumulated benefit obligation for non-U.S.

pension plans was $ 155.5 million and $ 138.1 million at October 31, 2020 and November 2, 2019, respectively.

Information relating to the Company’s non-U.S.

plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets at October 31, 2020 and November 2, 2019 is presented in the following table:

The accumulated benefit obligation for the Company’s pension and postretirement benefit plans was $ 178.2 million and $ 155.5 million at October 30, 2021 and October 31, 2020, respectively.

Information relating to the Company’s pension and postretirement benefit plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets at October 30, 2021 and October 31, 2020 is presented in the following table:

Plans with projected benefit obligations in excess of plan assets:

5 unchanged sentences

Fair value of plan assets $ 3,544 $ 69,250

The range of assumptions used for the non-U.S.

defined benefit plans reflects the different economic environments within the various countries as well as the differences in the attributes of the participants.

The range of assumptions used for the Company’s pension and postretirement benefit plans reflects the different economic environments within the various countries as well as the differences in the attributes of the participants.

The projected benefit obligation was determined using the following weighted-average assumptions:

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Rate of increase in compensation levels 3.19 % 3.38 %

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The expected long-term rate of return on assets is a weighted-average of the long-term rates of return selected for the various countries where the Company has funded pension plans.

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The Company’s investment strategy is based on an expectation that equity securities will outperform debt securities over the long term.

Accordingly, in order to maximize the return on assets, a majority of assets in fiscal 2020 were invested in equities.

Investments within each asset class are diversified to reduce the impact of losses in single investments.

The use of derivative instruments is permitted where appropriate and necessary to achieve overall investment policy objectives and asset class targets.

During fiscal 2020, one of the Company's plans began to implement a revised investment strategy that utilizes a greater range of asset classes to reduce risk associated with changes in long-term interest rates and inflation expectations.

The investment portfolio will make use of two key types of investments:

a) a range of instruments that provide a broad match to changes in liability values and provides protection against changes in interest rates and inflation;

and b) a diversified portfolio of return-seeking assets including equities, real assets, secure income assets and credit securities.

The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for each significant asset class to obtain a prudent balance between return and risk.

The interaction between plan assets and benefit obligations is periodically studied by the Company and its actuaries to assist in the establishment of strategic asset allocation targets.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair value of plan assets

The following table presents plan assets measured at fair value on a recurring basis by investment categories as of October 31, 2020 and November 2, 2019 using the same three-level hierarchy described in Note 2j, Fair Value , of the Notes to Consolidated Financial Statements:

October 31, 2020 November 2, 2019

The following table presents plan assets measured at fair value on a recurring basis by investment categories as of October 30, 2021 and October 31, 2020 using the same three-level hierarchy described in Note 2j, Fair Value , of the Notes to Consolidated Financial Statements:

October 30, 2021 October 31, 2020

Fair Value Measurement at Reporting Date Using:

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The investment funds are valued at the closing price reported if traded on an active market or at yields currently available on comparable securities of issuers with similar credit ratings.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Estimated future cash flows

1 unchanged sentence

Expected Company Contributions

2022 $ 12,108

Expected Benefit Payments

2028 through 2032 $ 48,160

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Tax Cuts and Jobs Act of 2017 (Tax Legislation), enacted on December 22, 2017, contained significant changes to U.S.

tax law, including lowering the U.S.

corporate income tax rate to 21.0%, implementing a territorial tax system, and imposing a one-time tax on deemed repatriated earnings of foreign subsidiaries.

As a result, the Tax Legislation reduced the U.S.

statutory tax rate from 35.0% to 21.0%, effective January 1, 2018, which resulted in a blended statutory income tax rate for the Company of 23.4 % for fiscal 2018.

The Company's effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world where the Company's income is earned.

11 unchanged sentences

Amortization of purchased intangibles 146,094 101,906 111,547

Acquisition and integration costs 11,367 1,714 —

Taxes attributable to the Tax Cuts and Jobs Act of 2017 — — ( 7,500 )

1 unchanged sentence

Windfalls (under ASU 2016-09) ( 26,365 ) ( 16,240 ) ( 28,677 )

Intra-entity transfer of intangible assets ( 188,804 ) — —

Other, net 22,816 ( 3,688 ) ( 813 )

Total income tax provision $ 90,856 $ 122,717 $ 148,334

_______________________________________

(1) Balances have been restated to reflect the adoption of ASU 2014-09.

See Note 2a, Principles of Consolidation, of the Notes to Consolidated Financial Statements.

Total income tax (benefit) provision $ ( 61,708 ) $ 90,856 $ 122,717

Income before income taxes for fiscal 2021, fiscal 2020 and fiscal 2019 includes the following components:

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(1) Income before income taxes reflects deemed intercompany royalties in all periods presented.

(2) B alances have been restated to reflect the adoption of ASU 2014-09.

See Note 2a, Principles of Consolidation , of the Notes to Consolidated Financial Statements

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of the provision for income taxes for fiscal 2020, fiscal 2019 and fiscal 2018 are as follows:

The components of the (benefit from) provision for income taxes for fiscal 2021, fiscal 2020 and fiscal 2019 are as follows:

2021 2020 2019

7 unchanged sentences

Total deferred $ ( 406,922 ) $ ( 113,948 ) $ ( 91,253 )

Provision for income tax $ 90,856 $ 122,717 $ 148,334

_______________________________________

(1) Balances have been restated to reflect the adoption of ASU 2014-09.

See Note 2a, Principles of Consolidation , of the Notes to Consolidated Financial Statements.

In fiscal 2018, the Company recorded a $ 637.0 million tax benefit for the re-measurement of deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21.0 %.

In addition, in fiscal 2018, the Company recorded a provisional tax expense amount for the one-time transition tax of $ 691.0 million, which is comprised of the $ 755.0 million transition tax liability less a deferred tax liability of $ 64.0 million that was recorded in prior years.

In the first quarter of fiscal 2019, the Company completed its accounting for the income tax effects of the Tax Legislation, in accordance with the U.S.

Securities and Exchange Commission Staff Accounting Bulletin No.

118 and adjusted its provisional net charge by recording an additional tax benefit of $ 7.5 million for a change to its estimate for the transition tax due to the finalization of the aggregate foreign cash positions.

Additionally, the Tax Legislation subjects a U.S.

(Benefit from) provision for income tax $ ( 61,708 ) $ 90,856 $ 122,717

Tax Legislation subjects a U.S.

shareholder to tax on global intangible low-taxed income (GILTI).

1 unchanged sentence

The Company elected the deferral method and recorded the corresponding GILTI deferred tax assets and liabilities on its Consolidated Balance Sheets.

The Company carries other outside basis differences in its subsidiaries, primarily arising from purchase accounting adjustments and undistributed earnings that are considered indefinitely reinvested.

The Company carries other outside basis differences in its subsidiaries, primarily arising from acquisition accounting adjustments and certain undistributed earnings that are considered indefinitely reinvested.

As of October 30, 2021, the Company has not recognized deferred income tax on $ 33.6 billion of outside basis differences because of its intent and ability to indefinitely reinvest these basis differences.

1 unchanged sentence

Determination of the amount of unrecognized deferred income tax liability related to these outside basis differences is not practicable.

The Company adopted ASU 2016-16 in the first quarter of fiscal 2019 using the modified retrospective method with a cumulative-effect adjustment directly to retained earnings.

The Company adopted ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16) in the first quarter of fiscal 2019 using the modified retrospective method with a cumulative-effect adjustment directly to retained earnings.

The adoption of ASU 2016-16 resulted in a net cumulative-effect adjustment that resulted in an increase in retained earnings of $ 331.0 million, by recording new deferred tax assets from intra-entity transfers involving assets other than inventory, partially offset by a U.S.

17 unchanged sentences

Deferred tax liabilities:

Inventory reserves ( 18,570 ) —

Depreciation ( 91,846 ) ( 7,409 )

4 unchanged sentences

Net deferred tax liabilities $ ( 1,671,561 ) $ ( 416,531 )

The valuation allowances of $ 154.1 million and $ 116.3 million at October 31, 2020 and November 2, 2019, respectively, are valuation allowances primarily for the Company’s state and international credit carryforwards.

The valuation allowances of $ 315.4 million and $ 154.1 million as of October 30, 2021 and October 31, 2020, respectively, are valuation allowances primarily for the Company’s foreign net operating loss and international credit carryforwards with additional amounts from the Acquisition for federal, state and international net operating losses and R&D credit carryforwards.

The Company believes that it is more-likely-than-not that these credit carryovers will not be realized and as a result has recorded a partial valuation allowance.

The state credit carryover of $ 151.7 million will begin to expire in 2021 while the foreign investment tax credit carryover of $ 11.8 million will begin to expire in fiscal 2025.

As of October 31, 2020 and November 2, 2019, the Company had gross unrealized tax benefits of $ 21.3 million and $ 34.3 million, respectively, which if settled in the Company's favor, would lower the Company's effective tax rate in the period recorded.

The federal and state net operating losses of $ 137.5 million will begin to expire in fiscal 2022 while foreign net operating loss carryovers of $ 165.0 million have no expiration date.

There are also $ 276.2 million of state credit carryovers and $ 14.2 million of foreign investment tax credit carryovers that begin to expire in the fiscal year ending November 1, 2025.

As of October 30, 2021 and October 31, 2020, the Company had gross unrealized tax benefits of $ 132.5 million and $ 21.3 million, respectively, which if settled in the Company's favor, would lower the Company's effective tax rate in the period recorded.

Liabilities for uncertain tax benefits are classified as non-current because the Company believes that the ultimate payment or settlement of these liabilities may not occur within the next twelve months.

As of October 31, 2020 and November 2, 2019, the Company had a liability of approximately $ 3.4 million and $ 4.7 million, respectively, for interest and penalties, which is included within the provision for taxes in the Consolidated Statements of Income.

The Consolidated Statements of Income for fiscal year 2020, fiscal 2019 and fiscal 2018 include $ 1.0 million, $ 1.5 million and $ 7.3 million, respectively, of interest and penalties related to these uncertain tax positions.

As of October 30, 2021 and October 31, 2020, the Company had a liability of approximately $ 38.0 million and $ 3.4 million, respectively, for interest and penalties, which is included within the (benefit from) provision for taxes in the Consolidated Statements of Income.

ANALOG DEVICES, INC.

2 unchanged sentences

Unrealized Tax Benefits

Balance, October 28, 2017 $ 37,857

Additions for tax positions related to current year 1,334

Reductions for tax positions related to prior years ( 295 )

Reductions due to lapse of applicable statute of limitations ( 25,640 )

Balance, November 3, 2018 $ 13,256

7 unchanged sentences

Balance, October 31, 2020 $ 21,291

In fiscal 2018, the Company released reserves of $ 18.1 million relating to certain international transfer pricing matters, $ 4.2 million relating to worthless stock deductions and $ 3.3 million relating to other releases in fiscal year 2013 due to the lapse of the statute of limitations.

With accrued interest of $ 9.9 million, the released reserves totaled $ 35.5 million.

In fiscal 2019, the Company has reflected an unrealized tax benefit related to a refund claim of $ 11.4 million on a recently filed amended tax return that was previously under review by the Joint Committee on Taxation.

Additions for tax positions related to current year 4,713

Additions for tax positions related to the Acquisition 91,179

Additions for tax positions related to prior years 19,790

Reductions due to lapse of applicable statute of limitations ( 4,452 )

Balance, October 30, 2021 $ 132,521

In fiscal 2019, the Company reflected an unrealized tax benefit related to a refund claim of $ 11.4 million on a recently filed amended tax return that was previously under review by the Joint Committee on Taxation.

In fiscal 2020, the Company released reserves of $ 18.6 million, which included accrued interest as a result of the resolution of the amended tax return that was previously under review by the Joint Committee on Taxation, combined with other tax positions resolved by the closing of the Internal Revenue Service audit of Linear’s pre-acquisition federal income tax returns for fiscal 2015 through fiscal 2017.

In fiscal 2021, the Company acquired $ 125.5 million in reserves as part of the Acquisition consisting of $ 91.2 million in tax and $ 34.3 million in accrued interest.

The Company engages in continuous discussions and negotiations with tax authorities regarding tax matters in various jurisdictions.

It is reasonably possible that the balance of gross unrecognized tax benefits, including accrued interest and penalties, could decrease up to $ 125.9 million within the next twelve months due to the completion of federal tax audits, including any administrative appeals.

The $ 125.9 million primarily relates to matters involving federal taxation of international income and cross-border transactions.

The Company has numerous audits ongoing at any time throughout the world including:

an IRS income tax audit for fiscal 2019 and fiscal 2018, various U.S.

state and local tax audits and international audits, including the transfer pricing audit in Ireland discussed below.

an IRS income tax audit for fiscal 2019 and fiscal 2018, a pre-acquisition IRS income tax audit related to Maxim for Maxim's fiscal years ended June 27, 2015 through June 24, 2017, various U.S.

state and local tax audits and international audits.

The Company’s U.S.

federal tax returns prior to fiscal 2017 are no longer subject to examination.

The Company’s Ireland tax returns prior to fiscal year ended November 2, 2013 are no longer subject to examination.

During the fourth quarter of fiscal 2018, the Company’s Irish tax resident subsidiary received an assessment for fiscal 2013 of approximately € 43.0 million, or $ 50.2 million (as of October 31, 2020), from the Irish Revenue Commissioners (Irish Revenue).

This assessment excludes any penalties and interest.

The assessment claims that the Company’s Irish entity failed to conform to 2010 OECD Transfer Pricing Guidelines.

The Company strongly disagrees with the assessment and maintains that its transfer pricing is appropriate.

Therefore, the Company has not recorded any additional tax liability related to fiscal 2013 or any other periods.

The Company intends to vigorously defend its originally filed tax return position and is currently preparing for an appeal with the Irish Tax Appeals Commission, which is the normal process for the resolution of differences between Irish Revenue and taxpayers.

If Irish Revenue were ultimately to prevail with respect to its assessment for fiscal 2013, such assessment and any potential impact related to years subsequent to 2013 could have a material unfavorable impact on the Company's income tax expense and net earnings in future periods.

During the first quarter of fiscal 2019, Irish Revenue commenced transfer pricing audits of the fiscal years ended November 1, 2014 (fiscal 2014);

the fiscal year ended October 31, 2015 (fiscal 2015);

the fiscal year ended October 29, 2016 (fiscal 2016);

and fiscal 2017.

During fiscal 2019, the Company received confirmation from Irish Revenue that the audit relating to fiscal 2014 was complete with no further tax amount due in respect of that period.

During fiscal 2020, the Company settled the audit relating to fiscal 2015 for an additional tax payment that was not material.

The audits relating to fiscal 2016 and fiscal 2017 are on-going.

federal tax returns prior to fiscal 2018 are no longer subject to examination, except for the Maxim pre-Acquisition fiscal years 2015 to 2017 noted above.

During the fourth quarter of fiscal 2018, the Company’s Irish tax resident subsidiary received an assessment, excluding any penalties and interest, for the fiscal year ended November 2, 2013 (fiscal 2013) of approximately € 43.0 million, or approximately $ 51.0 million (as of October 30, 2021), from the Irish Revenue Commissioners (Irish Revenue).

The assessment claimed that the Company’s Irish entity failed to conform to 2010 OECD Transfer Pricing Guidelines.

During fiscal 2021, the Company settled the fiscal 2013 audit with Irish Revenue for an amount that was not material to the Company.

During fiscal 2019, Irish Revenue commenced transfer pricing audits of fiscal years ended November 1, 2014 (fiscal 2014) through the fiscal year ended November 3, 2017 (fiscal 2017).

The Company settled the audits relating to fiscal 2014 through fiscal 2017 with either no assessment or for additional tax payments that were not material to the Company.

The Company's Ireland tax returns prior to fiscal 2017 are no longer subject to examination.

The Company has a partial tax holiday in Malaysia whereby the local statutory rate is significantly reduced, if certain conditions are met.

The tax holiday for Malaysia is effective through July 2025.

A partial tax holiday in Singapore was terminated in September 2018 through negotiations with the Economic Development Board.

The impact of the Singapore and Malaysia tax holidays increased net income by approximately $ 4.6 million, $ 14.9 million and $ 27.7 million in fiscal 2020, fiscal 2019 and fiscal 2018, respectively, resulting in increases in basic and diluted net income per common share by $ 0.01 , $ 0.04 and $ 0.07 in fiscal 2020, fiscal 2019 and fiscal 2018, respectively.

The impact of the Malaysia tax holiday increased net income by approximately $ 5.3 million, $ 4.6 million and $ 14.9 million in fiscal 2021, fiscal 2020 and fiscal 2019, respectively, resulting in increases in basic and diluted net income per common share by $ 0.01 , $ 0.01 and $ 0.04 in fiscal 2021, fiscal 2020 and fiscal 2019, respectively.

ANALOG DEVICES, INC.

1 unchanged sentence

Revolving Credit Facility

On June 28, 2019, the Company entered into a second amended and restated revolving credit agreement with certain institutional lenders that expires on June 28, 2024.

The agreement for such revolving credit facility (Revolving Credit Agreement), which further amended and restated the Company's amended and restated revolving credit agreement dated as of September 23, 2016, provides for a five year unsecured revolving credit facility in an aggregate principal amount of up to $ 1.25 billion.

In March 2020, the Company borrowed $ 350.0 million under this revolving credit facility and utilized the proceeds for the repayment of existing indebtedness and working capital requirements.

The Company repaid the $ 350.0 million plus interest of $ 0.6 million in April 2020.

On June 23, 2021, the Company entered into a Third Amended and Restated Credit Agreement (Revolving Credit Agreement) with Bank of America, N.A.

as administrative agent and the other banks identified therein as lenders, which amended and restated its Second Amended and Restated Credit Agreement dated as of June 28, 2019.

The Revolving Credit Agreement provides for a five year unsecured revolving credit facility in an aggregate principal amount not to exceed $ 2.5 billion (subject to certain terms and conditions).

Prior to the Acquisition, the aggregate principal amount which was available under the Revolving Credit Agreement was $ 1.25 billion.

In September 2021, the Company borrowed $ 400.0 million under this revolving credit facility and utilized the proceeds for the repayment of existing indebtedness and working capital requirements.

The Company repaid the $ 400.0 million plus interest in October 2021.

As of October 30, 2021, the Company had no outstanding borrowings under this revolving credit facility but may borrow in the future and use the proceeds for repayment of existing indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes.

Loans under the Revolving Credit Agreement can be Eurocurrency Rate Loans or Base Rate Loans at the Company's option.

Each Eurocurrency Loan will bear interest at a rate per annum equal to the Eurocurrency Rate plus a margin based on the Company's debt ratings from time to time of between 0.690 % and 1.375 %.

Revolving loans under the Revolving Credit Agreement can be Eurocurrency Rate Loans or Base Rate Loans (each as defined in the Revolving Credit Agreement) at the Company's option.

Each Eurocurrency Rate Loan will bear interest at a rate per annum equal to the applicable Eurocurrency Rate plus a margin based on the Company's Debt Ratings (as defined in the Revolving Credit Agreement) from time to time of between 0.690 % and 1.175 %.

Each Base Rate Loan will bear interest at a rate per annum equal to the Base Rate plus a margin based on the Company's debt ratings from time to time of between 0.00 % and 0.175 %.

The Revolving Credit Agreement imposes restrictions on the Company’s ability to undertake certain transactions, to create certain liens on assets and to incur certain subsidiary indebtedness.

In addition, the Revolving Credit Agreement requires the Company to maintain a consolidated leverage ratio of total consolidated funded debt to consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) for a trailing twelve-month period of not greater than 3.5 to 1.0, assuming the Company does not undertake any significant acquisitions, mergers, and other fundamental changes.

Should such a change occur, it may be authorized to increase the covenant to 4.0 to 1.0.

As of October 31, 2020, the Company was compliant with these covenants .

On June 3, 2013, the Company issued $ 500.0 million aggregate principal amount of 2.875 % senior unsecured notes due June 1, 2023 (the 2023 Notes) with semi-annual fixed interest payments due on June 1 and December 1 of each year, commencing December 1, 2013 .

Prior to issuing the 2023 Notes, on April 24, 2013, the Company entered into a treasury rate lock agreement with Bank of America.

This agreement allowed the Company to lock a 10-year US Treasury rate of 1.7845 % through June 14, 2013 for its anticipated issuance of the 2023 Notes.

The net proceeds of the offering were $ 493.9 million, after discount and issuance costs.

Debt discount and issuance costs will be amortized through interest expense over the term of the 2023 Notes.

The indenture governing the 2023 Notes contains covenants that may limit the Company's ability to:

incur, create, assume or guarantee any debt for borrowed money secured by a lien upon a principal property;

enter into sale and lease-back transactions with respect to a principal property;

and consolidate with or merge into, or transfer or lease all or substantially all of its assets to, any other party.

As of October 31, 2020, the Company was compliant with these covenants .

The notes are subordinated to any future secured debt and to the other liabilities of the Company's subsidiaries.

In addition, the Company has agreed to pay a facility fee based on the Company's Debt Ratings from time to time of between 0.060 % and 0.200 % multiplied by the actual daily amount of the Commitments (as defined in the Revolving Credit Agreement) in effect.

The Revolving Credit Agreement also contains a sustainability-linked pricing component which provides for interest rate and facility fee reductions or increases based on the Company meeting or missing targets related to environmental sustainability, specifically greenhouse gas emissions and renewable energy usage.

The Revolving Credit Agreement includes a multicurrency borrowing feature for certain specified foreign currencies.

The Company will guarantee the obligations of each subsidiary that is named a Designated Borrower under the Revolving Credit Agreement.

The Revolving Credit Agreement contains customary representations and warranties, and affirmative and negative covenants and events of default applicable to the Company and its subsidiaries.

As of October 30, 2021, the Company was in compliance with these covenants.

On June 3, 2013, the Company issued $ 500.0 million aggregate principal amount of 2.875 % senior unsecured notes due June 1, 2023 (the June 2023 Notes) with semi-annual fixed interest payments due on June 1 and December 1 of each year, commencing December 1, 2013.

Prior to issuing the June 2023 Notes, on April 24, 2013, the Company entered into a treasury rate lock agreement with Bank of America.

This agreement allowed the Company to lock a 10-year US Treasury rate of 1.7845 % through June 14, 2013 for its anticipated issuance of the June 2023 Notes.

The net proceeds of the offering were $ 493.9 million, after discounts and issuance costs.

Debt discounts and issuance costs were amortized through interest expense over the term of the June 2023 Notes.

On October 5, 2021 and October 7, 2021, $ 133.7 million, or 26.73 %, of the $ 500.0 million aggregate principal amount of the June 2023 Notes at a price of $1,041.39 for each $1,000 principal amount of June 2023 Notes were tendered for redemption.

On October 20, 2021, the remaining June 2023 Notes were redeemed for cash at a redemption price equal to $1,038.82 for each $1,000 principal amount of June 2023 Notes.

In connection with the tender and subsequent redemption of the June 2023 Notes, the Company recognized a loss on extinguishment of $ 19.8 million.

On December 14, 2015, the Company issued $ 850.0 million aggregate principal amount of 3.9 % senior unsecured notes due December 15, 2025 (the 2025 Notes) and $ 400.0 million aggregate principal amount of 5.3 % senior unsecured notes due December 15, 2045 (the 2045 Notes) with semi-annual fixed interest payments due on June 15 and December 15 of each year, commencing June 15, 2016.

The net proceeds of the offering were $ 1.2 billion, after discount and issuance costs.

Debt discount and issuance costs will be amortized through interest expense over the term of the 2025 Notes and 2045 Notes.

The net proceeds of the offering were $ 1.2 billion, after discounts and issuance costs.

Debt discounts and issuance costs will be amortized through interest expense over the term of the 2025 Notes and 2045 Notes.

The indenture governing the 2025 Notes and 2045 Notes contains covenants that may limit the Company's ability to:

4 unchanged sentences

The 2025 Notes and 2045 Notes are subordinated to any future secured debt and to the other liabilities of the Company's subsidiaries.

On December 5, 2016, the Company issued $ 400.0 million aggregate principal amount of 2.5 % senior unsecured notes due December 5, 2021 (the 2021 Notes), $ 550.0 million aggregate principal amount of 3.125 % senior unsecured notes due December 5, 2023 (the December 2023 Notes), $ 900.0 million aggregate principal amount of 3.5 % senior unsecured notes due December 5, 2026 (the 2026 Notes) and $ 250.0 million aggregate principal amount of 4.5 % senior unsecured notes due December 5, 2036 (the 2036 Notes, and together with the 2021 Notes, the December 2023 Notes and the 2026 Notes, the Notes) with semi-annual fixed interest payments due on June 5 and December 5 of each year, commencing June 5, 2017 .

The net proceeds of the offering were $ 2.1 billion, after discount and issuance costs.

Debt discount and issuance costs will be amortized through interest expense over the term of the Notes.

The Notes were issued pursuant to an indenture, as supplemented by a supplemental indenture, and the indenture and supplemental indenture contain certain covenants, events of default and other customary provisions.

As of October 31, 2020, the Company was compliant with these covenants.

On October 5, 2021 and October 7, 2021, $ 325.5 million, or 38.3 %, of the $ 850.0 million aggregate principal amount of the 2025 Notes at a price of $1,112.13 for each $1,000 principal amount of 2025 Notes, and $ 67.4 million, or 16.85 %, of the $ 400.0 million aggregate principal amount of the 2045 Notes at a price of $1,400.67 for each $1,000 principal amount of 2045 Notes, were tendered for redemption.

On October 20, 2021, the remaining 2025 Notes were redeemed for cash at a redemption price equal

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

rank without preference or priority among themselves and equally in right of payment with all other existing and future senior unsecured debt and senior in right of payment to all of the Company's future subordinated debt.

On March 12, 2018, in an underwritten public offering , the Company issued $ 300.0 million aggregate principal amount of 2.850 % senior unsecured notes due March 12, 2020 (the 2020 Notes) and $ 450.0 million aggregate principal amount of 2.950 % senior unsecured notes due January 12, 2021 (the January 2021 Notes and, together with the 2020 Notes, the 2018 Note Offerings).

Interest on the 2020 Notes was payable on March 12 and September 12 of each year, beginning on September 12, 2018.

Interest on the January 2021 Notes was payable on January 12 and July 12 of each year, beginning on July 12, 2018.

The net proceeds of the offering were $ 743.8 million, after discount and issuance costs, which were used to repay a portion of the Company’s outstanding 5 -year term loan.

Debt discount and issuance costs will be amortized through interest expense over the term of the 2018 Note Offerings.

The 2018 Note Offerings were unsecured and ranked equally in right of payment with all of the Company’s other unsecured senior indebtedness.

The 2018 Note Offerings were issued pursuant to an indenture, as supplemented by a supplemental indenture, and the indenture and supplemental indenture contain certain covenants, events of default and other customary provisions.

In fiscal 2020, the Company repaid $ 300.0 million of principal on the 2020 Notes and $ 450.0 million of principal on the January 2021 Notes.

These obligations have been paid in full and are no longer outstanding as of October 31, 2020.

to $1,103.81 for each $1,000 principal of 2025 Notes.

In connection with the tender of the 2025 Notes and 2045 Notes and the subsequent redemption of the 2025 Notes, the Company recognized a loss on extinguishment of $ 136.6 million.

On December 5, 2016, the Company issued $ 400.0 million aggregate principal amount of 2.5 % senior unsecured notes due December 5, 2021 (the 2021 Notes), $ 550.0 million aggregate principal amount of 3.125 % senior unsecured notes due December 5, 2023 (the December 2023 Notes), $ 900.0 million aggregate principal amount of 3.5 % senior unsecured notes due December 5, 2026 (the 2026 Notes) and $ 250.0 million aggregate principal amount of 4.5 % senior unsecured notes due December 5, 2036 (the 2036 Notes) with semi-annual fixed interest payments due on June 5 and December 5 of each year, commencing June 5, 2017.

The net proceeds of the offering were $ 2.1 billion, after discounts and issuance costs.

Debt discounts and issuance costs will be amortized through interest expense over the term of the respective notes.

The 2021 Notes, December 2023 Notes, 2026 Notes and 2036 Notes were issued pursuant to an indenture, as supplemented by a supplemental indenture, and the indenture and supplemental indenture contain certain covenants, events of default and other customary provisions.

As of October 30, 2021, the Company was compliant with these covenants.

The 2021 Notes, December 2023 Notes, 2026 Notes and 2036 Notes rank without preference or priority among themselves and equally in right of payment with all other existing and future senior unsecured debt and senior in right of payment to all of the Company's future subordinated debt.

On October 5, 2021, (i) $ 71.2 million, or 17.80 %, of the $ 400.0 million aggregate principal amount of the 2021 Notes at a price of $1,001.77 for each $1,000 principal amount of 2021 Notes, (ii) $ 282.7 million, or 51.41 %, of the $ 550.0 million aggregate principal amount of the December 2023 Notes at a price of $1,053.78 for each $1,000 principal amount of December 2023 Notes and (iii) $ 105.7 million, or 42.29 %, of the $ 250.0 million aggregate principal amount of the 2036 Notes at a price of $1,239.96 for each $1,000 principal amount of 2036 Notes were tendered for redemption.

On October 20, 2021, the remaining 2021 Notes and December 2023 Notes were redeemed for cash at a redemption price equal to $1,000.98 for each $1,000 principal amount of 2021 Notes and $1,050.17 for each $1,000 principal amount of December 2023 Notes.

In connection with the tender of the 2021 Notes, December 2023 Notes and 2036 Notes and the subsequent redemption of the 2021 Notes and December 2023 Notes, the Company recognized a loss on extinguishment of $ 58.5 million.

On June 28, 2019, the Company entered into a term loan credit agreement (Term Loan Agreement) with the Company as the borrower and JPMorgan Chase Bank, N.A.

as administrative agent and the other banks identified therein as lenders, under which the Company borrowed unsecured term loans in the aggregate principal amount of $ 1.25 billion, maturing on March 10, 2022.

Loans under the Term Loan Agreement bear interest, at the Company’s option, at either a rate equal to (a) the Adjusted LIBO Rate (as defined in the Term Loan Agreement) plus a margin based on the Company’s debt rating or (b) the Base Rate (defined as the highest of (i) the prime rate, (ii) the NYFRB Rate (as defined in the Term Loan Agreement) plus 0.50 %, and (iii) one month Adjusted LIBO Rate plus 1.00 %) plus a margin based on the Company’s debt rating.

The Term Loan Agreement contains customary representations and warranties, affirmative and negative covenants and events of default applicable to the Company and its subsidiaries.

The events of default include, among others, nonpayment of principal, interest, fees or other amounts, failure to perform certain covenants, cross-defaults to certain other indebtedness, insolvency or bankruptcy, customary ERISA defaults or the occurrence of a change of control.

The negative covenants include limitations on liens, indebtedness of non-guarantor subsidiaries and mergers and other fundamental changes, among others.

The Term Loan Agreement also requires the Company to maintain a consolidated leverage ratio of total consolidated funded debt to consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) for a trailing twelve-month period of not greater than 3.5 to 1.0, assuming the Company does not undertake any significant acquisitions, mergers, and other fundamental changes.

Should such a change occur, the Company may be authorized to increase the covenant to 4.0 to 1.0.

As of October 31, 2020, the Company was compliant with these covenants.

In fiscal 2019, the Company made principal payments on the term loans in the amount of $ 325.0 million.

These amounts were not contractually due under the terms of the term loan credit agreement.

The Company made principal payments on the term loan of $ 925.0 million and $ 325.0 million in fiscal 2021 and fiscal 2019, respectively.

These amounts were not contractually due under the terms of the Term Loan Agreement.

As of October 30, 2021, the term loan has been repaid in full and is no longer outstanding.

In connection with the repayment, the Company recognized a loss on extinguishment of $ 0.2 million.

On April 8, 2020, in an underwritten public offering, the Company issued its first green bond consisting of $ 400.0 million aggregate principal amount of 2.95 % senior unsecured notes due April 1, 2025 (the April 2025 Notes).

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s debt consisted of the following as of October 31, 2020 and November 2, 2019:

October 31, 2020 November 2, 2019

Principal Unamortized discount and debt issuance costs Principal Unamortized discount and debt issuance costs

In conjunction with the Acquisition, the Company recognized $ 500.0 million aggregate principal amount of Maxim’s 3.375 % senior unsecured and unsubordinated notes due March 15, 2023 (the Maxim March 2023 Notes) and $ 500.0 million aggregate principal amount of Maxim’s 3.45 % senior unsecured and unsubordinated notes due June 15, 2027 (the Maxim June 2027 Notes), which were recognized at fair value as of the Acquisition Date.

The difference between the fair value at the Acquisition Date and the principal outstanding for the Maxim March 2023 Notes and Maxim June 2027 Notes will be amortized through interest expense over the term of the underlying debt.

The amortization of the fair value adjustment reduced interest expense by $ 3.8 million for the year ended October 30, 2021.

Semi-annual fixed interest payments on the Maxim March 2023 Notes are due on March 15 and September 15 of each year.

Semi-annual fixed interest payments on the Maxim June 2027 Notes are due on June 15 and December 15 of each year, beginning on December 15, 2017.

The Maxim March 2023 Notes and Maxim June 2027 Notes were issued pursuant to an indenture, and the indenture contains certain covenants, events of default and other customary provisions.

As of October 30, 2021, Maxim was in compliance with these covenants.

On October 5, 2021, Maxim gave notice that it would redeem the Maxim March 2023 Notes, and, subsequent to October 30, 2021, the Maxim March 2023 Notes were redeemed for cash.

Accordingly, the Company classified the Maxim March 2023 Notes as a current liability as of October 30, 2021.

See Note 15, Subsequent events, of these Notes to Consolidated Financial Statements for additional information on the redemption of the Maxim March 2023 Notes.

On September 28, 2021, in an underwritten public offering, the Company issued $ 500.0 million aggregate principal amount of floating rate senior notes due October 1, 2024 (the Floating Rate Notes), $ 750.0 million aggregate principal amount of 1.7 % sustainability-linked senior notes due October 1, 2028 (the Sustainability-Linked Senior Notes), $ 1.0 billion aggregate principal amount of 2.1 % senior notes due October 1, 2031 (the 2031 Notes), $ 750.0 million aggregate principal amount of 2.8 % senior notes due October 1, 2041 (the 2041 Notes), and $ 1.0 billion aggregate principal amount of 2.95 % senior notes due October 1, 2051 (the 2051 Notes, and, together with the Floating Rate Notes, the Sustainability-Linked Senior Notes, the 2031 Notes and the 2041 Notes, the Notes).

The Floating Rate Notes bear interest at a floating annual rate equal to a benchmark rate, which initially is Compounded SOFR (as defined in the Supplemental Indenture) plus 25 basis points.

As of October 30, 2021, the interest rate on the Floating Rate Notes was 0.3 % per annum.

Interest payments on the Floating Rate Notes are due on January 1, April 1, July 1 and October 1 of each year, beginning on January 1, 2022.

The Sustainability-Linked Senior Notes initially bear interest at a rate of 1.7 % per annum and are subject to an increase of an additional 30 basis points from April 1, 2026 to the maturity date unless the Sustainability Performance Target (as defined in the Note) has been satisfied.

Semi-annual fixed interest payments on the Sustainability-Linked Senior Notes, the 2031 Notes, the 2041 Notes and the 2051 Notes are due on April 1 and October 1 of each year, beginning on April 1, 2022.

At any time prior to August 1, 2028 in the case of the Sustainability-Linked Senior Notes, July 1, 2031 in the case of the 2031 Notes, April 1, 2041 in the case of the 2041 Notes and April 1, 2051 in the case of the 2051 Notes (each, a Par Call Date), the Company may, at its option, redeem some or all of the applicable series of Notes at a redemption price equal to the greater of (i) 100 % of the principal amount of such series of Notes being redeemed and (ii) the make-whole redemption price (as described in the Supplemental Indenture).

On and after the applicable Par Call Date, the Company may, at its option, redeem some or all of the applicable series of Notes at a redemption price equal to 100 % of the principal amount of the Notes being redeemed.

In each case, the Company will also pay the accrued and unpaid interest on the Notes being redeemed to, but excluding, the date of redemption.

The Company may not redeem the Floating Rate Notes prior to their maturity.

The Notes are unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior indebtedness.

The net proceeds of the offering were $ 3.9 billion, after discounts and issuance costs, and a portion of the proceeds were used to pay the tender and redemption prices for, and accrued and unpaid interest on, the tender offers and redemptions described above.

Debt discounts and issuance costs will be amortized through interest expense over the term of the respective Notes.

As of October 30, 2021, the Company was in compliance with these covenants.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s debt consisted of the following as of October 30, 2021 and October 31, 2020:

October 30, 2021 October 31, 2020

Principal Unamortized discounts, debt issuance costs and fair value adjustments Principal Unamortized discount and debt issuance costs

3 -Year term loan, due March 2022

2021 Notes, due January 2021 — — 450,000 1,819

$ — $ — $ 925,000 $ —

2021 Notes, due December 2021 — — 400,000 1,009

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2023 Notes, due December 2023 — — 550,000 2,741

2024 Notes, due October 2024 500,000 3,091 — —

2025 Notes, due April 2025 400,000 3,029 400,000 3,916

1 unchanged sentence

2026 Notes, due December 2026 900,000 6,534 900,000 7,813

Maxim 2027 Notes, due June 2027 500,000 ( 51,646 ) — —

2028 Notes, due October 2028 750,000 10,419 — —

2031 Notes, due October 2031 1,000,000 13,956 — —

2036 Notes, due December 2036 144,278 1,814 250,000 3,375

2041 Notes, due October 2041 750,000 13,690 — —

2045 Notes, due December 2045 332,587 3,952 400,000 4,951

2051 Notes, due October 2051 1,000,000 18,814 — —

Total Long-Term Debt $ 6,276,865 $ 23,653 $ 5,175,000 $ 29,898

2020 Notes, due March 2020 — — 300,000 333

Maxim 2023 Notes, due March 2023 500,000 ( 16,663 ) — —

Total Current Debt $ 500,000 $ ( 16,663 ) $ — $ —

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Subsequent Events

As discussed in Note 14, Debt, of the Notes to Consolidated Financial Statements, on October 5, 2021, Maxim gave notice that it would redeem the Maxim March 2023 Notes in the aggregate principal amount of $ 500.0 million.

Subsequently, on November 4, 2021, the Maxim March 2023 Notes were redeemed for cash and are no longer outstanding.

On November 22, 2021, the Board of Directors of the Company declared a cash dividend of $ 0.69 per outstanding share of common stock.

The dividend will be paid on December 14, 2021 to all shareholders of record at the close of business on December 3, 2021 and is expected to total $ 362.5 million.

The Company reinstated its common stock repurchase program effective November 2020 (fiscal 2021).

For additional information about the common stock repurchase program, see Note 3, Stock-Based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial Statements.

ANALOG DEVICES, INC.

SUPPLEMENTARY FINANCIAL INFORMATION

(Unaudited) (thousands, except per share amounts)

The Company’s fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October.

Fiscal 2020 and fiscal 2019 were 52-week fiscal years.

The Company's interim periods operate on a 4-4-5 fiscal calendar, where each fiscal quarter is comprised of two 4-week periods and one 5-week period, with each week ending on a Saturday.

4Q20 3Q20 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19

Revenue $ 1,526,295 $ 1,456,136 $ 1,317,060 $ 1,303,565 $ 1,443,219 $ 1,480,143 $ 1,526,602 $ 1,541,101

Cost of sales 503,211 483,558 470,386 455,423 501,028 482,332 492,510 501,445

Gross margin 1,023,084 972,578 846,674 848,142 942,191 997,811 1,034,092 1,039,656

% of Revenue 67 % 67 % 64 % 65 % 65 % 67 % 68 % 67 %

Research and development 280,239 260,794 252,413 257,073 277,018 280,102 285,846 287,382

Selling, marketing, general and administrative 165,115 153,753 141,775 199,280 154,799 162,825 163,128 167,342

Special charges (1) 8,051 31,830 1,320 11,136 64,788 927 8,162 21,782

Amortization of intangibles 108,007 107,077 107,146 107,225 107,225 107,231 107,261 107,324

Total operating expenses 561,412 553,454 502,654 574,714 603,830 551,085 564,397 583,830

Operating income 461,672 419,124 344,020 273,428 338,361 446,726 469,695 455,826

% of Revenue 30 % 29 % 26 % 21 % 23 % 30 % 31 % 30 %

Nonoperating (income) expenses:

Interest expense 48,593 45,914 49,985 48,813 50,775 59,871 59,701 58,728

Interest income (527) (504) (1,334) (1,940) (1,988) (2,625) (2,928) (2,688)

Other, net (3,704) 685 308 338 1,747 (78) 4,525 (160)

Total nonoperating (income) expense 44,362 46,095 48,959 47,211 50,534 57,168 61,298 55,880

Income before income taxes 417,310 373,029 295,061 226,217 287,827 389,558 408,397 399,946

% of Revenue 27 % 26 % 22 % 17 % 20 % 26 % 27 % 26 %

Provision for income taxes (2) 30,784 10,364 27,365 22,343 10,133 27,184 40,460 44,940

Net income $ 386,526 $ 362,665 $ 267,696 $ 203,874 $ 277,694 $ 362,374 $ 367,937 $ 355,006

% of Revenue 25 % 25 % 20 % 16 % 19 % 24 % 24 % 23 %

Net income allocated to common shares (3) $ 386,526 $ 362,665 $ 267,696 $ 203,874 $ 277,182 $ 361,562 $ 367,029 $ 353,969

Basic earnings per common share $ 1.05 $ 0.98 $ 0.73 $ 0.55 $ 0.75 $ 0.98 $ 0.99 $ 0.96

Diluted earnings per common share $ 1.04 $ 0.97 $ 0.72 $ 0.55 $ 0.74 $ 0.97 $ 0.98 $ 0.95

Shares used to compute earnings per share (in thousands):

Basic 369,284 368,791 368,217 368,241 369,051 369,533 369,246 368,703

Diluted 372,322 372,003 371,305 372,264 372,584 373,077 373,342 372,506

Dividends declared per share $ 0.62 $ 0.62 $ 0.62 $ 0.54 $ 0.54 $ 0.54 $ 0.54 $ 0.48

_______________________________________

(1) See Note 5, Special Charges , of the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K for additional information.

(2) See Note 12, Income Taxes , of the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K for additional information.

(3) See Note 2q, Earnings per Share of Common Stock , of the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K for additional information.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data