What changed in this filing

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Item 1. Financial Statements

2022-05-18 compared with 2022-02-16 · 127 added, 57 removed, 381 unchanged (33% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended

January 29, 2022 January 30, 2021

Three Months Ended Six Months Ended

April 30, 2022 May 1, 2021 April 30, 2022 May 1, 2021

Revenue $ 2,972,064 $ 1,661,407 $ 5,656,357 $ 3,219,865

25 unchanged sentences

(in thousands)

Three Months Ended

January 29, 2022 January 30, 2021

Three Months Ended Six Months Ended

April 30, 2022 May 1, 2021 April 30, 2022 May 1, 2021

Net income $ 783,273 $ 422,905 $ 1,063,350 $ 811,424

1 unchanged sentence

Change in fair value of derivative instruments designated as cash flow hedges (net of taxes of $ 258 , $ 10,448 , $ 248 and $ 17,109 , respectively)

( 3,757 ) 35,428 ( 2,710 ) 59,893

Changes in pension plans, net actuarial loss and foreign currency translation adjustments (net of taxes of $ 91 , $ 86 , $ 187 and $ 172 , respectively)

6 unchanged sentences

(in thousands, except share and per share amounts)

January 29, 2022 October 30, 2021

April 30, 2022 October 30, 2021

Current Assets

38 unchanged sentences

(in thousands)

Three Months Ended January 29, 2022

Three Months Ended April 30, 2022

Capital in Accumulated

1 unchanged sentence

Shares Amount Par Value Earnings Loss

BALANCE, JANUARY 29, 2022

523,315 $ 87,221 $ 30,093,961 $ 7,434,748 $ ( 188,618 )

Net income 783,273

Dividends declared and paid - $ 0.76 per share

Issuance of stock under stock plans and other 1,404 234 11,348

Stock-based compensation expense 70,996

Other comprehensive loss ( 18,997 )

Common stock repurchased ( 4,913 ) ( 819 ) ( 776,021 )

BALANCE, APRIL 30, 2022

519,806 $ 86,636 $ 29,400,284 $ 7,820,477 $ ( 207,615 )

Six Months Ended April 30, 2022

Capital in Accumulated

Common Stock Excess of Retained Comprehensive

Shares Amount Par Value Earnings Loss

BALANCE, OCTOBER 30, 2021

6 unchanged sentences

Common stock repurchased ( 7,508 ) ( 1,250 ) ( 1,351,610 )

BALANCE, APRIL 30, 2022

519,806 $ 86,636 $ 29,400,284 $ 7,820,477 $ ( 207,615 )

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)

Three Months Ended May 1, 2021

Capital in Accumulated

Common Stock Excess of Retained Comprehensive

Shares Amount Par Value Earnings Loss

BALANCE, JANUARY 30, 2021 368,894 $ 61,484 $ 4,849,185 $ 7,395,578 $ ( 218,501 )

Net income 422,905

Dividends declared and paid - $ 0.69 per share

Issuance of stock under stock plans and other 1,155 192 23,560

Stock-based compensation expense 40,358

Other comprehensive income 35,586

Common stock repurchased ( 1,222 ) ( 204 ) ( 188,610 )

BALANCE, MAY 1, 2021

368,827 $ 61,472 $ 4,724,493 $ 7,564,054 $ ( 182,915 )

Three Months Ended January 30, 2021

Six Months Ended May 1, 2021

Capital in Accumulated

8 unchanged sentences

Common stock repurchased ( 2,302 ) ( 384 ) ( 345,487 )

BALANCE, JANUARY 30, 2021

BALANCE, MAY 1, 2021

368,827 $ 61,472 $ 4,724,493 $ 7,564,054 $ ( 182,915 )

3 unchanged sentences

(in thousands)

Three Months Ended

January 29, 2022 January 30, 2021

Six Months Ended

April 30, 2022 May 1, 2021

Cash flows from operating activities:

6 unchanged sentences

Deferred income taxes ( 122,992 ) ( 48,292 )

Non-cash operating lease costs ( 27,697 ) 8,040

Other ( 10,225 ) ( 12,122 )

14 unchanged sentences

Effect of exchange rate changes on cash ( 16,095 ) 4,229

Net decrease in cash and cash equivalents ( 187,565 ) ( 7,797 )

Net (decrease) increase in cash and cash equivalents ( 240,231 ) 249,356

Cash and cash equivalents at beginning of period 1,977,964 1,055,860

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JANUARY 29, 2022 (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2022 (UNAUDITED)

(all tabular amounts in thousands except per share amounts and percentages)

14 unchanged sentences

In total, the Company repurchased 14.4 million shares under the ASR at an average price per share of $ 173.77 .

As of January 29, 2022, the Company had repurchased a total of approximately 174.0 million shares of its common stock for approximately $ 9.3 billion under the Company's share repurchase program.

As of January 29, 2022, an additional $ 7.3 billion remains available for repurchase of shares under the current authorized program.

As of April 30, 2022, the Company had repurchased a total of approximately 178.5 million shares of its common stock for approximately $ 10.0 billion under the Company's share repurchase program.

As of April 30, 2022, an additional $ 6.6 billion remains available for repurchase of shares under the current authorized program.

The Company also repurchases shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options.

1 unchanged sentence

Note 3 – Accumulated Other Comprehensive (Loss) Income

The following table provides the changes in accumulated other comprehensive (loss) income (AOCI) by component and the related tax effects during the first three months of fiscal 2022.

The following table provides the changes in accumulated other comprehensive (loss) income (AOCI) by component and the related tax effects during the first six months of fiscal 2022.

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

4 unchanged sentences

Other comprehensive (loss) income ( 22,472 ) ( 2,710 ) 4,132 ( 21,050 )

January 29, 2022 $ ( 30,398 ) $ ( 122,708 ) $ ( 35,512 ) $ ( 188,618 )

April 30, 2022 $ ( 48,267 ) $ ( 126,464 ) $ ( 32,884 ) $ ( 207,615 )

The amounts reclassified out of AOCI into the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Shareholders' Equity with presentation location during each period were as follows:

Three Months Ended

Comprehensive Income Component January 29, 2022 January 30, 2021 Location

Three Months Ended Six Months Ended

Comprehensive Income Component April 30, 2022 May 1, 2021 April 30, 2022 May 1, 2021 Location

Unrealized holding (gains) losses on derivatives

13 unchanged sentences

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

Three Months Ended

January 29, 2022 January 30, 2021

Three Months Ended Six Months Ended

April 30, 2022 May 1, 2021 April 30, 2022 May 1, 2021

Net Income $ 783,273 $ 422,905 $ 1,063,350 $ 811,424

22 unchanged sentences

Balance at January 29, 2022 $ 21,833 $ 39,646

Employee severance and benefit costs — 39,610

Facility closure costs 4,287 —

Severance and benefit payments ( 14,026 ) ( 25,608 )

Facility closure cost payments ( 4,287 ) —

Effect of foreign currency on accrual — ( 156 )

Balance at April 30, 2022 $ 7,807 $ 53,492

Closure of Manufacturing Facilities

The Company recorded net special charges of $ 62.6 million on a cumulative basis through January 29, 2022 as a result of its decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear Technology Corporation.

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

The Company recorded net special charges of $ 66.9 million on a cumulative basis through April 30, 2022 as a result of its decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear Technology Corporation.

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

4 unchanged sentences

Global Repositioning Actions

The Company recorded net special charges of $ 274.1 million on a cumulative basis through January 29, 2022, as a result of organizational initiatives to better align its global workforce with the Company's long-term strategic plan.

Special charges of $ 53.1 million recognized in the first quarter of fiscal 2022 primarily consisted of $ 61.4 million of severance and benefit costs as well as charges recorded from the acceleration of equity awards in connection with the termination of a limited number of employees as part of the integration of the Acquisition.

The Company recorded net special charges of $ 316.4 million on a cumulative basis through April 30, 2022, as part of the integration of the Acquisition and continued organizational initiatives to better align its global workforce with the Company's long-term strategic plan.

Special charges of $ 95.5 million recognized in the first six months of fiscal 2022 primarily consisted of $ 103.8 million of severance and benefit costs as well as charges recorded from the acceleration of equity awards in connection with the termination of certain employees in manufacturing, engineering and SMG&A roles at sites assumed related to the Acquisition and various locations throughout the world.

These charges were partially offset by a gain of $ 8.3 million recognized upon the sale of a business.

1 unchanged sentence

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 January 29, 2022, 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:

As of April 30, 2022, 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

9 unchanged sentences

Three Months Ended

January 29, 2022 January 30, 2021

April 30, 2022 May 1, 2021

Revenue % of Revenue* Y/Y% Revenue % of Revenue*

4 unchanged sentences

Total revenue $ 2,972,064 100 % 79 % $ 1,661,407 100 %

Six Months Ended

April 30, 2022 May 1, 2021

Revenue % of Revenue* Y/Y% Revenue % of Revenue*

Industrial $ 2,847,838 50 % 55 % $ 1,833,198 57 %

Automotive 1,184,927 21 % 134 % 505,748 16 %

Communications 885,450 16 % 58 % 560,904 17 %

Consumer 738,142 13 % 131 % 320,015 10 %

Total revenue $ 5,656,357 100 % 76 % $ 3,219,865 100 %

* The sum of the individual percentages may not equal the total due to rounding.

5 unchanged sentences

Other customers include the U.S.

government, government prime contractors and certain commercial customers for which revenue is recorded over time.

government, government prime contractors and certain commercial

customers for which revenue is recorded over time.

Three Months Ended

January 29, 2022 January 30, 2021

April 30, 2022 May 1, 2021

Channel Revenue % of Revenue* Revenue % of Revenue*

3 unchanged sentences

Total revenue $ 2,972,064 100 % $ 1,661,407 100 %

Six Months Ended

April 30, 2022 May 1, 2021

Channel Revenue % of Revenue* Revenue % of Revenue*

Distributors $ 3,503,042 62 % $ 2,039,314 63 %

Direct customers 2,094,891 37 % 1,136,011 35 %

Other 58,424 1 % 44,540 1 %

Total revenue $ 5,656,357 100 % $ 3,219,865 100 %

* The sum of the individual percentages may not equal the total due to rounding.

7 unchanged sentences

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 January 29, 2022 and October 30, 2021.

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 January 29, 2022 and October 30, 2021, the Company held $ 1,053.5 million and $ 1,315.0 million, respectively, of cash that was excluded from the tables below.

January 29, 2022

As of April 30, 2022 and October 30, 2021, the Company held $ 1,030.1 million and $ 1,315.0 million, respectively, of cash that was

excluded from the tables below.

April 30, 2022

Fair Value measurement at

11 unchanged sentences

Total liabilities measured at fair value $ — $ 22,524 $ 22,524

(1) The amortized cost of the Company’s investments classified as available-for-sale as of January 29, 2022 was $ 130.0 million.

(1) The amortized cost of the Company’s investments classified as available-for-sale as of April 30, 2022 was $ 130.0 million.

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

25 unchanged sentences

The fair values of the senior unsecured notes are obtained from broker prices and are classified as Level 1 measurements according to the fair value hierarchy.

January 29, 2022 October 30, 2021

April 30, 2022 October 30, 2021

Principal Amount Outstanding Fair Value Principal Amount Outstanding Fair Value

22 unchanged sentences

The gain or loss on the derivative is recorded as a component of AOCI in shareholders’ equity and is 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, Thai Baht, South Korean Won and Japanese Yen as of January 29, 2022 and October 30, 2021 were $ 304.9 million and $ 343.6 million, respectively.

The fair values of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Condensed Consolidated Balance Sheets as of January 29, 2022 and October 30, 2021 were as follows:

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, Thai Baht, South Korean Won and Japanese Yen as of April 30, 2022 and October 30, 2021 were $ 289.3 million and $ 343.6 million, respectively.

The fair values of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Condensed Consolidated Balance Sheets

as of April 30, 2022 and October 30, 2021 were as follows:

Fair Value At

Balance Sheet Location January 29, 2022 October 30, 2021

Balance Sheet Location April 30, 2022 October 30, 2021

Forward foreign currency exchange contracts Accrued liabilities $ 19,214 $ 7,113

As of January 29, 2022 and October 30, 2021, the total notional amounts of undesignated hedges related to forward foreign currency exchange contracts were $ 206.2 million and $ 120.0 million, respectively.

The fair values of these hedging instruments in the Company’s Condensed Consolidated Balance Sheets were immaterial as of January 29, 2022 and October 30, 2021.

As of April 30, 2022 and October 30, 2021, the total notional amounts of undesignated hedges related to forward foreign currency exchange contracts were $ 249.4 million and $ 120.0 million, respectively.

The fair values of these hedging instruments in the Company’s Condensed Consolidated Balance Sheets were immaterial as of April 30, 2022 and October 30, 2021.

The Company estimates $ 14.0 million, net of tax, of settlements on forward foreign currency derivative instruments included in AOCI will be reclassified into earnings within the next twelve months.

1 unchanged sentence

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

As of January 29, 2022 and October 30, 2021, none of the netting arrangements involved collateral.

As of April 30, 2022 and October 30, 2021, none of the netting arrangements involved collateral.

The following table presents the gross amounts of the Company's forward foreign currency exchange contract derivative assets and liabilities and the net amounts recorded in the Company's Condensed Consolidated Balance Sheets:

January 29, 2022 October 30, 2021

Gross amount of recognized assets $ 544 $ 319

April 30, 2022 October 30, 2021

Gross amounts of recognized liabilities $ ( 24,924 ) $ ( 8,404 )

Gross amount of recognized assets 2,400 319

Net liabilities offset and presented in the Condensed Consolidated Balance Sheets $ ( 22,524 ) $ ( 8,085 )

1 unchanged sentence

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 January 29, 2022 and October 30, 2021, nonperformance is not perceived to be a material risk.

Based on the credit ratings of the Company’s counterparties as of April 30, 2022 and October 30, 2021, 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.

4 unchanged sentences

Note 10 – Inventories

Inventories at January 29, 2022 and October 30, 2021 were as follows:

January 29, 2022 October 30, 2021

Inventories at April 30, 2022 and October 30, 2021 were as follows:

April 30, 2022 October 30, 2021

Raw materials $ 85,122 $ 71,639

6 unchanged sentences

Note 12 – Income Taxes

The Company’s effective tax rates for the three-month periods ended January 29, 2022 and January 30, 2021 were below the U.S.

The Company’s effective tax rates for the three- and six-month periods ended April 30, 2022 and May 1, 2021 were below the U.S.

statutory tax rate of 21.0 %, due to lower statutory tax rates applicable to the Company's operations in the foreign jurisdictions in which it earns income.

In the first quarter of fiscal 2022, the Company increased acquisition related tax reserves by $ 25.3 million consisting of $ 21.8 million in tax and $ 3.5 million in accrued interest primarily relating to tax audits.

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

During the first six-months of fiscal 2022, the Company increased acquisition related tax reserves by $ 15.6 million consisting of $ 12.3 million in tax and $ 3.3 million in accrued interest primarily relating to tax audits.

It is reasonably possible that the balance of gross unrecognized tax benefits, including accrued interest and penalties, could decrease by as much as $ 146.0 million within the next twelve months due to the completion of tax audits, including any administrative appeals.

8 unchanged sentences

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board (FASB) issued ASU No.

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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.

18 unchanged sentences

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 Condensed Consolidated Statement of Income, Condensed Consolidated

Balance Sheet, Condensed Consolidated Statement of Cash Flows and Condensed Consolidated Statement of Shareholders’ Equity for the three-month period ended January 29, 2022.

During the first quarter of 2022, the Company recorded acquisition accounting adjustments of $ 24.9 million to goodwill comprised of $ 19.0 million to income tax payable, $ 7.8 million to other non-current liabilities and $ 1.6 million to accrued liabilities offset by $ 3.5 million to deferred income taxes.

The Acquisition accounting is not complete and additional information relating to conditions that existed at the Acquisition Date may become known to the Company during the remainder of the measurement period.

The results of operations of Maxim from the Acquisition Date are included in the Company’s Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statement of Shareholders’ Equity for the three- and six-month periods ended April 30, 2022.

During the first half of fiscal 2022, the Company recorded acquisition accounting adjustments of $ 15.3 million to goodwill comprised of $ 19.0 million to income tax payable and $ 1.6 million to accrued liabilities offset by decreases of $ 3.5 million to deferred income taxes and $ 1.8 million to other non-current liabilities.

The Acquisition accounting is not complete and additional information relating to conditions 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 Quarterly Report on Form 10-Q, the Company is still in the process of valuing Maxim's assets, including fixed assets, intangible assets, and liabilities, including related income tax accounting.

The following unaudited pro forma consolidated financial information for the three-month period ended January 30, 2021 combines the results of the Company for the three-month period ended January 30, 2021 and the unaudited results of Maxim for the corresponding period.

The following unaudited pro forma consolidated financial information for the three- and six-month periods ended May 1, 2021 combines the results of the Company for the three- and six-month periods ended May 1, 2021 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).

2 unchanged sentences

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 Three Months Ended

January 30, 2021

Three Months Ended

Six Months Ended

May 1, 2021 May 1, 2021

$ 2,320,711 $ 4,498,698

$ 352,949 $ 625,506

Basic net income per common share

$ 0.66 $ 1.16

Diluted net income per common share

$ 0.65 $ 1.15

Note 15 - Commitments and Contingencies

On March 17, 2022, Walter E.

Ryan and Ryan Asset Management, LLC, purported stockholders of Maxim, filed a putative class action in the Court of Chancery of the State of Delaware (C.A.

2022—0255) against the Company and the former directors of Maxim.

The complaint alleges breach of fiduciary duties by the individual defendants in connection with Maxim’s agreement, as part of the merger negotiations with the Company, to suspend Maxim dividends for up to four quarters prior to the closing of the Acquisition.

The complaint further alleges that the Company aided and abetted that alleged breach of fiduciary duties.

The plaintiffs seek damages in an amount to be determined at trial, plaintiffs’ costs and disbursements, including reasonable attorneys’ and experts’ fees, costs and other expenses.

The Company believes that it and the other defendants have meritorious defenses to these allegations;

however, the Company is currently unable to determine the ultimate outcome of this matter or determine an estimate, or a range of estimates, of potential losses, if any.

Note 16 – Subsequent Events

On February 15, 2022, the Board of Directors of the Company declared a cash dividend of $ 0.76 per outstanding share of common stock.

The dividend will be paid on March 8, 2022 to all shareholders of record at the close of business on February 25, 2022 and is expected to total approximately $ 397.7 million.

On May 17, 2022, the Board of Directors of the Company declared a cash dividend of $ 0.76 per outstanding share of common stock.

The dividend will be paid on June 9, 2022 to all shareholders of record at the close of business on May 31, 2022 and is expected to total approximately $ 395.1 million.

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-Q

Item 1. Financial Statements