What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-11-22 compared with 2021-12-03 · 264 added, 366 removed, 1176 unchanged (35% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

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

Years ended October 29, 2022, October 30, 2021 and October 31, 2020

(thousands, except per share amounts) 2022 2021

18 unchanged sentences

Income before income taxes 3,098,749 1,328,714 1,311,617

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

Provision for (benefit from) income taxes 350,188 ( 61,708 ) 90,856

Net income $ 2,748,561 $ 1,390,422 $ 1,220,761

6 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Years ended October 29, 2022, October 30, 2021 and October 31, 2020

(thousands) 2022 2021 2020

1 unchanged sentence

Foreign currency translation adjustment ( 46,341 ) 1,057 3,224

Change in fair value of available-for-sale securities — — 10

Change in unrecognized gains/losses on derivative instruments designated as cash flow hedges:

1 unchanged sentence

( 30,331 ) 41,817 ( 51,437 )

Adjustment for realized gain/loss reclassified into earnings (net of tax of $ 189 in 2021, $ 158 in 2020 and $ 1,518 in 2019)

Adjustment for realized loss/(gain) reclassified into earnings (net of tax of $ 5,054 in 2022, $ 189 in 2021 and $ 158 in 2020)

34,472 7,099 ( 839 )

1 unchanged sentence

Changes in accumulated other comprehensive loss — pension plans:

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

Change in actuarial gain/(loss) (net of tax of $ 7,756 in 2022, $ 637 in 2021 and $ 5,167 in 2020)

30,613 12,923 ( 10,231 )

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

Other comprehensive (loss) income ( 11,587 ) 62,896 ( 59,283 )

Comprehensive income $ 2,736,974 $ 1,453,318 $ 1,161,478

11 unchanged sentences

Total current assets 4,937,992 5,378,317

Property, Plant and Equipment, at Cost

Land and buildings 1,392,364 974,604

Machinery and equipment 3,210,879 2,667,846

Office equipment 164,431 85,291

Leasehold improvements 167,623 157,915

4,935,297 3,885,656

Less accumulated depreciation and amortization 2,956,246 2,765,095

Net property, plant and equipment 2,401,304 1,979,051

32 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

Years ended October 29, 2022, October 30, 2021 and October 31, 2020

Capital in Accumulated

7 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

BALANCE, OCTOBER 31, 2020

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

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

Net Income — 2021

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 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 Acquisition 194,890

Other comprehensive income 62,896

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

5 unchanged sentences

Issuance of stock under stock plans and other 2,701 449 33,438

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

Stock-based compensation expense 323,487

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

Other comprehensive income 62,896

Other comprehensive loss ( 11,587 )

Common stock repurchased ( 18,736 ) ( 3,123 ) ( 3,073,892 )

1 unchanged sentence

509,296 $ 84,880 $ 27,857,270 $ 8,721,325 $ ( 198,152 )

_______________________________________

(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 CASH FLOWS

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

Years ended October 29, 2022, October 30, 2021 and October 31, 2020

(thousands) 2022 2021 2020

6 unchanged sentences

Stock-based compensation expense 323,487 243,611 149,518

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

Non-cash impairment charge 91,953 — —

Non-cash operating lease costs ( 44,087 ) 19,232 ( 257,607 )

Other ( 2,987 ) ( 24,086 ) 5,418

4 unchanged sentences

Prepaid expenses and other current assets ( 79,439 ) ( 53,326 ) ( 3,666 )

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

Prepaid income tax 14,855 ( 5,791 ) —

Accounts payable and accrued liabilities 171,772 208,444 103,104

Deferred compensation plan liability 17,638 3,853 7,308

Income taxes payable, current ( 91,852 ) ( 6,797 ) 29,441

Other assets ( 14,441 ) ( 21,690 ) —

Other liabilities ( 69,927 ) ( 49,277 ) 124,409

1 unchanged sentence

Net cash provided by operating activities 4,475,402 2,735,069 2,008,487

Cash flows from investing:

Proceeds from other investments 30,125 — —

Cash flows from investing activities:

Additions to property, plant and equipment, net ( 699,308 ) ( 343,676 ) ( 165,692 )

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

Other 41,940 36,651 ( 14,831 )

Net cash (used for) provided by investing activities ( 657,368 ) 2,143,525 ( 180,523 )

Cash flows from financing activities:

4 unchanged sentences

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

Payment on derivative instruments ( 153,161 ) — —

Payment on derivative instrument — ( 153,161 ) —

Prepayment for stock repurchases — ( 500,000 ) —

2 unchanged sentences

Proceeds from employee stock plans 33,887 63,105 68,403

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

Other 19,946 ( 2,778 ) ( 4,015 )

Net cash used for financing activities ( 4,290,720 ) ( 3,959,664 ) ( 1,420,608 )

Effect of exchange rate changes on cash ( 34,706 ) 3,174 182

Net increase (decrease) in cash and cash equivalents 922,104 407,538 ( 168,269 )

Net (decrease) increase in cash and cash equivalents ( 507,392 ) 922,104 407,538

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

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Years ended October 29, 2022, October 30, 2021 and October 31, 2020

(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 semiconductor company dedicated to solving its customers' most complex engineering challenges.

(Analog Devices or the Company) is a leading 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.

9 unchanged sentences

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

Fiscal 2022, the fiscal year ended October 30, 2021 (fiscal 2021) and the fiscal year ended October 31, 2020 (fiscal 2020) were 52 -week fiscal periods.

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

4 unchanged sentences

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

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.

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

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

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.

5 unchanged sentences

Adjustments to the fair value of investments classified as available-for-sale are recorded as an increase or decrease in AOCI, unless the adjustment is considered an other-than-temporary impairment, in which case the adjustment is recorded as a charge in the Consolidated Statements of Income.

The Company’s deferred compensation plan investments are classified as trading.

See Note 2j, Fair Value and Note 11, Retirement Plans , of the Notes to Consolidated Financial Statements for additional information on these investments.

The Company periodically evaluates its investments for impairment.

There were no other-than-temporary impairments of investments in any of the fiscal years presented.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Realized gains or losses on investments are determined based on the specific identification basis and are recognized in nonoperating (income) expense.

13 unchanged sentences

$ — $ 194,890 $ —

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

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

The valuation of inventory requires the Company to estimate obsolete or excess inventory as well as inventory that is not of saleable quality.

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

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.

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 net realizable value 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.

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

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

3 unchanged sentences

Total inventories $ 1,399,914 $ 1,200,610

Property, Plant and Equipment

The following table presents details of the Company's property, plant and equipment (PP&E), net of accumulated depreciation:

Land and buildings $ 1,459,981 $ 1,392,364

Machinery and equipment 3,817,812 3,210,879

Office equipment 152,858 164,431

Leasehold improvements 118,856 167,623

5,549,507 4,935,297

Less accumulated depreciation and amortization 3,148,203 2,956,246

Net property, plant and equipment $ 2,401,304 $ 1,979,051

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property, Plant and Equipment

Property, plant and equipment (PP&E) is recorded at cost, less allowances for depreciation.

PP&E is recorded at cost, less allowances for depreciation.

The straight-line method of depreciation is used for all classes of assets for financial statement purposes while both straight-line and accelerated methods are used for income tax purposes.

14 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.

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

Less accumulated depreciation and amortization ( 13,634 )

Net property, plant and equipment reclassified to Prepaid expenses and other current assets $ 26,436

Goodwill and Intangible Assets

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 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 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 July 31) 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.

4 unchanged sentences

The quantitative goodwill impairment test requires an entity to compare the fair value of a reporting unit with its carrying amount.

If fair value is determined to be less than carrying value, an impairment loss is recognized for the amount of the carrying value that exceeds the amount of the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

fair value is determined to be less than carrying value, an impairment loss is recognized for the amount of the carrying value that exceeds the amount of the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Additionally, the Company considers income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

4 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.

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

In fiscal 2022, the Company used a combination of the qualitative and quantitative methods of assessing goodwill for the Company's reporting units.

In fiscal 2021, the Company used the quantitative method of assessing goodwill for the Company's 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.

3 unchanged sentences

Acquisition of Maxim (Note 6) 15,267 14,645,076

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

Foreign currency translation adjustment and other adjustments ( 20,603 ) ( 5,031 )

Balance at end of year $ 26,913,134 $ 26,918,470

_______________________________________

(1) Represents goodwill related to other acquisitions that were not material to the Company on either an individual or aggregate basis.

Intangible Assets

4 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.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of October 29, 2022 and October 30, 2021, the Company’s intangible assets consisted of the following:

10 unchanged sentences

IPR&D 28,222 — 28,222 —

Total (1) (2)

$ 18,355,033 $ 5,089,627 $ 18,359,402 $ 3,092,232

1 unchanged sentence

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

(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.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Amortization expense related to intangible assets was $ 2,014.2 million, $ 843.4 million and $ 577.1 million in fiscal 2022, 2021 and 2020, respectively, and is recorded in Cost of sales and Amortization of intangibles on the Consolidated Statements of Income.

8 unchanged sentences

Grant Accounting

Certain of the Company’s foreign subsidiaries have received grants from governmental agencies.

Certain of the Company’s subsidiaries have received grants from governmental agencies.

These grants include capital, employment and research and development grants.

11 unchanged sentences

dollar, primarily the Euro;

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

other significant exposures include the British Pound, Philippine Peso, Thai Baht, Malaysian Ringgit 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

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 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 as of October 29, 2022 and October 30, 2021 was $ 307.1 million and $ 343.6 million, respectively.

2 unchanged sentences

Balance Sheet Location October 29, 2022 October 30, 2021

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

Forward foreign currency exchange contracts Accrued liabilities $ 18,050 $ 7,113

2 unchanged sentences

As of October 29, 2022 and October 30, 2021, the total notional amount of these undesignated hedges was $ 246.4 million and $ 120.0 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)

The Company estimates that $ 12.9 million, net of tax, of losses of forward foreign currency derivative instruments included in AOCI will be reclassified into earnings within the next 12 months.

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.

3 unchanged sentences

October 29, 2022 October 30, 2021

Gross amount of recognized assets $ 319 $ 6,114

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

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

Gross amount of recognized liabilities $ ( 19,846 ) $ ( 8,404 )

Gross amounts of recognized assets 2,862 319

Net liabilities offset and presented in the Consolidated Balance Sheets $ ( 16,984 ) $ ( 8,085 )

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

12 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

ANALOG DEVICES, INC.

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.

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

Changes in the fair value of cash flow hedges are recorded in AOCI 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.

Changes in the fair values of derivatives not qualifying for hedge accounting are reported in earnings as they occur.

4 unchanged sentences

Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

3 unchanged sentences

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 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.

As of October 29, 2022 and October 30, 2021, the Company held $ 1,016.0 million and $ 1,315.0 million, respectively, of cash that was excluded from the tables below.

October 29, 2022

12 unchanged sentences

(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

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.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company's master netting arrangements.

October 30, 2021

7 unchanged sentences

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

4 unchanged sentences

Deferred compensation plan investments — The fair value of these mutual fund, money market fund and equity investments are based on quoted market prices.

Interest rate derivatives — The fair value of interest rate derivatives is estimated using a discounted cash flow analysis based on the contractual terms of the derivatives.

Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow hedges, is based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking into consideration current interest rates as well as the creditworthiness of the counterparty for assets and the Company’s creditworthiness for liabilities.

The fair value of these instruments is based upon valuation models using current market information such as strike price, spot rate, maturity date and volatility.

Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow hedges, is based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking into consideration current exchange rates as well as the creditworthiness of the counterparty for assets and the Company’s creditworthiness for liabilities.

The fair value of these instruments is based upon valuation models using current market information such as strike price, spot rate, forward points, and maturity date.

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 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.

Santa Clara, California leased property asset group - As a result of a sublease transaction involving a leased property in Santa Clara, California during the third quarter of 2022, the Company estimated the fair value of the sublease assets using discounted cash flows from the estimated net sublease rental income discounted at a market rate and recorded an impairment charge which represented the excess carrying value of the asset group associated with the Santa Clara, California leased property over its estimated fair value.

These assets are considered a Level 2 fair value measurement.

See Note 5, Special Charges, Net , of the Notes to Consolidated Financial Statements for additional information.

Debt — The table below presents the estimated fair value of certain financial instruments not recorded at fair value on a recurring basis.

The carrying amounts of the term loan approximates fair value.

The term loan is classified as Level 2 measurements according to the fair value hierarchy.

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.

4 unchanged sentences

Principal Amount Outstanding Fair Value Principal Amount Outstanding Fair Value

3 -Year term loan, due March 2022

— $ — 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 500,000 491,982 500,000 500,482

1 unchanged sentence

2026 Notes, due December 2026 900,000 851,479 900,000 986,243

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

Maxim 2027 Notes, due June 2027 59,788 54,771 500,000 542,942

2027 Notes, due June 2027 440,212 410,091 — —

2028 Notes, due October 2028 750,000 621,093 750,000 743,109

2031 Notes, due October 2031 1,000,000 786,772 1,000,000 996,702

2032 Notes, due October 2032 300,000 278,359 — —

2036 Notes, due December 2036 144,278 126,274 144,278 176,960

28 unchanged sentences

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

The semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns.

The Company’s financial results are affected by a wide variety of factors, including general economic conditions worldwide, economic conditions specific to the semiconductor industry, the timely implementation of new manufacturing technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and reliance on assembly and test subcontractors, third-party wafer fabricators and independent distributors.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

manufacturing technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and reliance on assembly and test subcontractors, third-party wafer fabricators and independent distributors.

In addition, the semiconductor market has historically been cyclical and subject to significant economic downturns at various times.

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 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, more than half 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.

31 unchanged sentences

Variable consideration includes sales in which the amount of consideration that the Company will receive is unknown as of the end of a reporting period.

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

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.

The vast majority of such consideration are credits issued to the distributor due to price protection, but also include 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.

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

A liability for distributor credits covering variable consideration is made based on the Company's estimate of historical experience rates as well as considering economic conditions and contractual terms.

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

To date, actual distributor claims activity has been materially

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

consistent with the provisions the Company has made based on its historical estimates.

For fiscal 2022 and fiscal 2021, sales to distributors were approximately $ 7.5 billion and $ 4.6 billion, respectively, net of variable consideration for which the liability balances as of October 29, 2022 and October 30, 2021 were $ 749.4 million and $ 664.2 million, respectively, and were recorded in Accrued liabilities on the Consolidated Balance Sheets.

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Accumulated Other Comprehensive (Loss) Income

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

AOCI includes certain transactions that have generally been reported in the Consolidated Statement of Shareholders’ Equity.

The changes in components of AOCI at October 29, 2022 and October 30, 2021 consisted of the following:

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October 29, 2022 $ ( 72,136 ) $ ( 119,613 ) $ ( 6,403 ) $ ( 198,152 )

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:

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( 5,054 ) ( 189 ) Tax

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

$ 34,472 $ 7,099 Net of tax

1 unchanged sentence

Actuarial losses 2,334 2,979 (1)

( 361 ) 339 Tax

$ 1,973 $ 3,318 Net of tax

3 unchanged sentences

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 (benefit from) provision for income taxes line of the Consolidated Statements of Income.

Management classifies interest and penalties related to uncertain tax positions within the provision for (benefit from) 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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Net income (1) $ 2,748,561 $ 1,390,422 $ 1,220,761

income allocated to participating securities (1) — — 3,229

Net income allocated to common shareholders $ 1,390,422 $ 1,220,761 $ 1,359,782

Basic shares:

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_______________________________________

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

(1) For all fiscal years presented, income allocated to participating securities is not material.

Stock-Based Compensation

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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

ANALOG DEVICES, INC.

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.

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.

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

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The Company uses the Black-Scholes valuation model to calculate the grant-date fair value of stock option awards.

The grant-date fair value of restricted stock units with a service condition and restricted stock units with both service and performance conditions are calculated using the value of the Company's common stock on the date of grant, reduced by the present value of dividends expected to be paid on the Company's common stock prior to vesting.

The grant-date fair value of restricted stock units with a service condition and restricted stock units with both service and performance conditions is calculated using the value of the Company's common stock on the date of grant, reduced by the present value of dividends expected to be paid on the Company's common stock prior to vesting.

For restricted stock units with both service and performance conditions, this grant-date fair value is also impacted by the number of units that are expected to vest during the performance period and is adjusted through the related stock-based compensation expense at each reporting period based on the probability of achievement of that performance condition.

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 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.

The grant date fair value of restricted stock units and 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.

The fair value of shares to be issued under the Company's employee stock purchase plan (ESPP) is computed using the Black-Scholes model at the commencement of an offering period in June and December of each year.

Stock-based compensation for the ESPP is expensed using an accelerated amortization model.

Additionally, the Company estimates forfeitures at least annually based on historical experience and revises the estimates of forfeiture in subsequent periods if actual forfeitures differ from those estimates.

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

New Accounting Pronouncements

Standards Implemented During Current Fiscal Year

Financial Instruments

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 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 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.

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):

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.

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

New Accounting Pronouncements

Standards Implemented During Fiscal 2022

Reference Rate Reform

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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.

The Company adopted this standard in the first quarter of fiscal 2022 with no material impact on the Company's financial position and results of operations.

Standards to Be Implemented

Acquired Contract Assets and Contract Liabilities

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The Company grants, or has granted, stock options and other stock and stock-based awards under the Company's 2020 Equity Incentive Plan (2020 Plan), which was approved by shareholders in March 2020.

The 2020 Plan provides for the grant of up to 21.2 million shares of the Company’s common stock, which includes shares under the Company’s previous equity compensation plans, including the Amended and Restated 2006 Stock Incentive Plan, the Linear Technology Corporation Amended and Restated 2005 Equity Incentive Plan and the Amended and Restated 2010 Equity Incentive Plan.

The 2020 Plan provides for the grant of up to 21.2 million shares of the Company’s common stock, which includes shares under the Company’s previous equity compensation plans, including the Amended and Restated 2006 Stock Incentive Plan and the Amended and Restated 2010 Equity Incentive Plan.

The 2020 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.

1 unchanged sentence

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 legacy Analog Devices' and Linear Technology Corporation's equity compensation plans.

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

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Grant-Date Fair Value of Stock Options

Information pertaining to the Company’s stock option awards and the related estimated weighted-average assumptions to calculate the fair value of stock options using the Black-Scholes valuation model granted in fiscal 2021, fiscal 2020 and fiscal 2019 is as follows:

2021 2020 2019

The Company did no t grant stock option awards in fiscal 2022.

Options granted (in thousands) 644 359

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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Employee Stock Purchase Plan (ESPP)

Beginning in fiscal 2022, the Company offers an ESPP to eligible employees, providing the opportunity to purchase shares of the Company's common stock at a discount through payroll deductions.

Offering periods begin in June and December each year.

employees are allowed to purchase the Company's common stock at the lesser of 85 % of the fair market value of the common stock at either the beginning or end of the offering period.

Eligible employees outside of the U.S.

are allowed to purchase the Company's common stock at the lesser of 80 % of the fair market value of the common stock at either the beginning or end of the offering period.

Stock-Based Compensation Expense

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Ultimately, the actual expense recognized over the vesting period will only be for those awards that vest.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total stock-based compensation expense recognized is as follows:

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Selling, marketing, general and administrative 133,900 80,099 56,838

Special charges 54,664 1,630 2,538

Special charges, net 31,516 54,664 1,630

Total stock-based compensation expense $ 323,487 $ 243,611 $ 149,518

8 unchanged sentences

3,746 $ 85.22

Options granted 644 $ 145.04

Options exercised ( 545 ) $ 62.16

Options forfeited ( 7 ) $ 97.94

Options expired ( 6 ) $ 40.69

Options outstanding at October 29, 2022

8 unchanged sentences

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 2022, fiscal 2021 and fiscal 2020 was $ 56.2 million, $ 93.2 million and $ 76.3 million, respectively.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of the Company’s restricted stock unit and award activity as of October 29, 2022 and changes during the fiscal year then ended is presented below:

13 unchanged sentences

The total grant-date fair value of awards that vested during fiscal 2022, fiscal 2021 and fiscal 2020 was approximately $ 283.0 million, $ 207.0 million and $ 174.1 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.

In fiscal 2021, the Company entered into accelerated share repurchase agreements (ASR) with third party financial institutions, 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.

As of October 30, 2021, the Company recorded the remaining 20 %, or $ 500.0 million, within Prepaid expenses and other current assets on the Consolidated Balance Sheet, which was utilized during the first quarter of fiscal 2022.

During the first quarter of fiscal 2022, the ASR was completed and an additional 2.1 million shares of common stock were received as final settlement of the ASR.

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

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

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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.

As of October 29, 2022, the Company had repurchased a total of approximately 189.6 million shares of its common stock for approximately $ 11.7 billion under this program.

An additional $ 4.9 billion remains available for repurchase of shares under the current authorized program.

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

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

The Chief Executive Officer has been identified as the Company's Chief Operating Decision Maker.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Executive Officer has been identified as the Company's Chief Operating Decision Maker.

The Company has determined that all of the Company's operating segments share the following similar economic characteristics, and therefore meet the criteria established for operating segments to be aggregated into one reportable segment, namely:

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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

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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2022 2021 2020

7 unchanged sentences

(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

24 unchanged sentences

_______________________________________

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

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

Special Charges, Net

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

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)

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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Special Charges Closure of Manufacturing Facilities Global Repositioning Actions

Balance at November 2, 2019

$ 50,401 $ 58,895

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

Balance at October 31, 2020

$ 45,176 $ 20,774

Employee severance and benefit costs 200 28,731

4 unchanged sentences

Balance at October 30, 2021

$ 25,774 $ 21,065

Employee severance and benefit costs 75 149,853

4 unchanged sentences

Balance at October 29, 2022

$ 2,629 $ 52,070

Closure of Manufacturing Facilities

The Company recorded special charges of $ 63.8 million on a cumulative basis through October 29, 2022 as a result of its decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 employees and other exit costs.

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 the third quarter of fiscal 2022, the Company completed the sale of its Hillview wafer fabrication facility and certain equipment located in Milpitas, California, which were previously classified as held for sale, for proceeds of approximately $ 31.8 million, which resulted in a gain of $ 4.4 million.

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.

Global Repositioning Actions

The Company recorded net special charges of $ 487.6 million on a cumulative basis through October 29, 2022, as part of the integration of the Acquisition and continued organizational initiatives to consolidate its global footprint related to certain manufacturing, engineering, sales, marketing and administrative offices and to better align its global workforce with the Company's long-term strategic plan.

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.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In connection with the Company’s decision during the third quarter of fiscal 2022 to transition its engineering, sales, marketing and administrative activities from its leased property in Santa Clara, California to its owned property in San Jose, California, the Company entered into a sublease agreement for a portion of the leased property and intends to sublease the remainder of this property.

As a result of the sublease transaction, the Company recorded an impairment charge of $ 91.9 million in net special charges which represented the excess carrying value of the associated asset group over its estimated fair value.

The Company estimated fair value using cash flows from the estimated net sublease rental income discounted at a market rate.

The Company allocated $ 60.6 million, $ 28.1 million and $ 3.2 million of the impairment charge to right of use assets, leasehold improvements and office equipment, respectively.

The Company also recorded special charges of $ 174.8 million in fiscal 2022 primarily consisting of $ 180.4 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 selling, marketing, general and administrative roles at sites assumed related to the Acquisition and various locations throughout the world, partially offset by a gain of $ 8.3 million recognized upon the sale of a business.

Maxim Integrated Products, Inc.

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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.

During fiscal 2022, the Company completed the acquisition accounting for the Acquisition.

The following is a summary of the amounts recognized in accounting for the Acquisition:

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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$ 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.

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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.

In aggregate, the Company recognized $ 166.9 million of transaction-related costs, including legal, accounting and other related fees that were expensed in fiscal 2022, fiscal 2021 and fiscal 2020.

These costs are included in the Consolidated Statements of Income in operating expenses within Selling, marketing, general and administrative expenses (SMG&A).

The following unaudited pro forma consolidated financial information for the twelve months ended October 30, 2021 combines the results of the Company for fiscal 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.

2 unchanged sentences

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.

Additionally, $ 309.0 million of pre-tax transaction costs, together with the consequential tax effects, that were incurred

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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Investments are accounted for using the equity method of accounting or cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

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.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For equity method investments, realized gains and losses are reflected in Other, net based upon the Company's ownership share of the investee's financial results.

Accrued Liabilities

2 unchanged sentences

Accrued compensation and benefits 465,536 381,678

Interest rate swap — 214,586

Accrued professional fees 152,689 2,077

Accrued interest 29,361 56,083

Accrued special charges 54,699 46,839

Lease liabilities 53,628 52,576

Accrued interest 33,298 29,361

Accrued withholdings related to ESPP 28,131 —

Accrued taxes 22,815 29,321

Accrued professional fees 7,955 152,689

Other 179,186 120,868

Total accrued liabilities $ 1,594,650 $ 1,477,530

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

The Company enters into operating leases which primarily relate to certain facilities and, to a lesser extent, finance leases.

Finance leases were not a material component of the Company's lease portfolio in the periods presented.

The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement.

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Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property.

The Company has agreements with lease and non-lease components, which are accounted for as a single lease component.

The Company has agreements with lease and non-lease

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

components, which are accounted for as a single lease component.

Non-lease components may include real estate taxes, insurance, maintenance, parking and other operating costs.

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-four 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-three 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.

1 unchanged sentence

For leases with terms of twelve months or less the Company recognizes the related lease payments as expense either on a straight-line basis over the lease term or as incurred depending on whether the lease payments are fixed or variable.

The Company subleases certain properties that are not used in its core business operations (See Note 5, Special Charges, Net , of the Notes to Consolidated Financial Statements).

Sublease income was not significant for the periods presented.

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

1 unchanged sentence

Operating lease right-of-use assets in Other assets $ 262,997 $ 279,542

$ 279,542 $ 256,625

Operating lease liabilities in Accrued liabilities $ 53,628 $ 52,576

$ 52,576 $ 39,923

Operating lease liabilities in Other non-current liabilities $ 337,279 $ 295,782

$ 295,782 $ 288,492

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

October 30, 2021 October 31, 2020

October 29, 2022

October 30, 2021

Lease expense $ 60,660 $ 50,799

5 unchanged sentences

The following table presents the maturities of the Company's operating lease liabilities as of October 29, 2022:

Fiscal year Operating Leases

2022 $ 61,855

Thereafter 178,663

2 unchanged sentences

Present value of operating lease liabilities $ 390,907

The following table presents the future minimum cash receipts as a result of subleases as of October 29, 2022:

Thereafter 42,734

Total future minimum cash receipts $ 100,115

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Commitments and Contingencies

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As to such claims and litigation, the Company can give no assurance that it will prevail.

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.

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.

The Company has a supplier commitment of approximately $ 428.4 million for the purchase of materials and supplies in advance or with minimum purchase quantities through 2031.

Retirement Plans

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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.

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 $ 65.2 million in fiscal 2022, $ 52.1 million in fiscal 2021 and $ 48.7 million in fiscal 2020.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Non-Qualified Deferred Compensation Plan

18 unchanged sentences

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.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Components of Net Periodic Benefit Cost

4 unchanged sentences

Expected return on plan assets ( 4,540 ) ( 3,759 ) ( 5,296 )

Amortization of prior service cost — — 3

Recognized actuarial loss 2,299 2,973 2,583

4 unchanged sentences

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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Benefit Obligations and Plan Assets

4 unchanged sentences

Interest cost 6,148 4,071

Curtailment — ( 705 )

Settlement ( 885 ) —

Acquisition of Maxim benefit obligation — 49,807

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

Settlement ( 1,052 ) ( 885 )

Actuarial gain ( 68,806 ) ( 4,005 )

Benefits paid ( 3,596 ) ( 3,983 )

116 unchanged sentences

Acquisition and integration costs — 11,367 1,714

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

effects of international operations ( 47,665 ) ( 24,624 ) 11,903

2 unchanged sentences

Other, net 5,292 22,816 ( 3,688 )

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

Total income tax provision (benefit) $ 350,188 $ ( 61,708 ) $ 90,856

Income before income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 includes the following components:

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The components of the provision for (benefit from) income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 are as follows:

2022 2021 2020

7 unchanged sentences

Total deferred $ ( 326,755 ) $ ( 406,922 ) $ ( 113,948 )

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

Provision for (benefit from) income tax $ 350,188 $ ( 61,708 ) $ 90,856

tax legislation subjects a U.S.

6 unchanged sentences

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, 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.

deferred tax liability related to GILTI.

Adoption of the standard resulted in an increase in long-term deferred tax assets of $ 1.7 billion and an increase in long-term deferred tax liabilities of $ 1.3 billion.

ANALOG DEVICES, INC.

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Net operating losses 43,696 62,876

Intra-entity transfer of intangible assets 2,002,041 1,479,944

Intangible assets 1,975,096 2,002,041

Lease liability 76,709 60,954

8 unchanged sentences

Right of use asset ( 55,858 ) ( 53,686 )

Acquisition-related intangible ( 892,212 ) ( 971,327 )

Acquisition-related intangibles ( 816,177 ) ( 892,212 )

Total gross deferred tax liabilities ( 3,793,027 ) ( 4,116,233 )

Net deferred tax liabilities $ ( 1,357,650 ) $ ( 1,671,561 )

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 valuation allowances of $ 339.1 million and $ 315.4 million as of October 29, 2022 and October 30, 2021, respectively, are primarily for the Company’s state R&D credit carryforwards, foreign net operating loss and international 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.

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There are also $ 312.7 million of state credit carryovers and $ 15.0 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 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.

As of October 29, 2022 and October 30, 2021, the Company had unrealized tax benefits, net of indirect tax benefits, of $ 165.3 million and $ 132.5 million, respectively, which if settled in the Company's favor, would lower the Company's effective tax rate in the period recorded.

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

As of October 29, 2022 and October 30, 2021, the Company had liabilities of approximately $ 45.5 million and $ 38.0 million, respectively, for interest and penalties, which is included within the provision for (benefit from) income taxes in the Consolidated Statements of Income.

ANALOG DEVICES, INC.

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Additions for tax positions related to current year 3,270

Additions for tax positions related to prior years 18,613

Reductions due to lapse of applicable statute of limitations ( 924 )

Balance, November 2, 2019 $ 34,343

Additions for tax positions related to current year 3,270

Reductions for tax positions related to prior years ( 16,152 )

2 unchanged sentences

Additions for tax positions related to current year 4,713

Additions for tax positions related to prior years 19,790

Additions for tax positions related to the Acquisition 91,179

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

Balance, October 30, 2021

Additions for tax positions related to the Acquisition 15,267

Additions for tax positions related to current year 11,800

Additions for tax positions related to prior years 9,704

1 unchanged sentence

Balance, October 29, 2022

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.

In fiscal 2022, the Company continued to engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions.

It is reasonably possible that the balance of unrealized tax benefits, including accrued interest and penalties, could decrease by up to $ 127.0 million within the next twelve months due to the completion of federal tax audits, including any administrative appeals.

The $ 127.0 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, 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.

an IRS income tax audit for fiscal 2019 and fiscal 2018, a pre-Acquisition IRS income tax audit for Maxim's fiscal years ended June 27, 2015 through August 26, 2021, and various U.S.

state and local tax audits and international audits.

The Company’s U.S.

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.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Revolving Credit Facility

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.

as administrative agent and the other banks identified therein as lenders.

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.

In June 2022, 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 July 2022.

As of October 29, 2022, 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.

2 unchanged sentences

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 %.

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.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

For calendar year 2021, the Company did not achieve its greenhouse gas emissions reduction threshold goal related to this sustainability-linked pricing component due in part to increased demand for product, which did not have a material impact on the Company's business, net income or financing costs.

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

2 unchanged sentences

As of October 29, 2022, 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.

On December 14, 2015, the Company issued $ 850.0 million aggregate principal amount of 3.9 % senior unsecured notes due December 15, 2025 (the December 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 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:

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

On October 5, 2021 and October 7, 2021, $ 325.5 million, or 38.3 %, of the $ 850.0 million aggregate principal amount of the December 2025 Notes at a price of $1,112.13 for each $1,000 principal amount of December 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 repurchase and canceled.

On October 20, 2021, the remaining December 2025 Notes were redeemed for cash at a redemption price equal to $1,103.81 for each $1,000 principal amount of the December 2025 Notes.

Debt discounts and issuance costs will be amortized through interest expense over the term of the 2045 Notes.

The 2045 Notes are subordinated to any future secured debt and to the other liabilities of the Company's subsidiaries.

The 2045 Notes were issued pursuant to a base indenture (the ADI Base Indenture) between the Company and The Bank of New York Mellon Trust Company as trustee, as supplemented by a supplemental indenture, which contain certain covenants, events of default and other customary provisions.

The covenants applicable to the 2045 Notes limit the Company's ability to incur, create, assume or guarantee any debt 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 30, 2021, the Company was compliant with these covenants.

The 2025 Notes and 2045 Notes are subordinated to any future secured debt and to the other liabilities of the Company's subsidiaries.

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)

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.

As of October 29, 2022, the Company was in compliance with these covenants.

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.

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).

Interest on the April 2025 Notes is payable on April 1 and October 1 of each year, beginning on October 1, 2020.

The Company intends to use the net proceeds of $ 395.6 million from the green bond offering to finance or refinance, in whole or in part, one or more new or existing eligible projects involving renewable energy, energy efficiency, green buildings, sustainable water and wastewater management, pollution prevention and control, clean transportation or eco-efficient and/or circular economy adapted products, production technologies and processes.

Debt discount and underwriting fees will be amortized over the life of the debt.

At any time prior to March 1, 2025, the Company may, at its option, redeem some or all of the April 2025 Notes at a redemption price equal to the greater of 100 % of the principal amount of the April 2025 Notes being redeemed and the make-whole premium, plus accrued and unpaid interest on the April 2025 Notes being redeemed, if any, to but excluding the date of redemption.

The April 2025 Notes are unsecured and rank equally in right of payment with all of the Company's other existing and future unsecured senior indebtedness.

The April 2025 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.

Debt discounts and issuance costs will be amortized through interest expense over the term of the respective notes.

The 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.

The 2026 Notes and 2036 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions.

As of October 29, 2022, the Company was in compliance with these covenants.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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).

On April 8, 2020, in an underwritten public offering of green bonds, the Company issued $ 400.0 million aggregate principal amount of 2.95 % senior unsecured notes due April 1, 2025 (the April 2025 Notes), with semi-annual fixed interest payments due on April 1 and October 1 of each year, commencing on October 1, 2020.

The Company used the net proceeds of $ 395.6 million from the green bond offering to finance or refinance new and existing eligible projects involving renewable energy, green buildings, and eco-efficient products, production technologies and processes.

Debt discounts and underwriting fees will be amortized through interest expense over the term of the April 2025 Notes.

The April 2025 Notes are unsecured and rank equally in right of payment with all of the Company's other existing and future unsecured senior indebtedness.

The April 2025 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions.

As of October 29, 2022, the Company was in compliance with these covenants.

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 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 2027 Notes), which were recognized at fair value as of the Acquisition Date.

On October 5, 2021, Maxim gave notice that it would redeem the Maxim 2023 Notes, and in November 2021 (fiscal 2022), the Maxim 2023 Notes were redeemed for cash.

On October 7, 2022, the Company completed an offer to exchange any and all outstanding Maxim 2027 Notes, for new 3.450 % Senior Notes due June 15, 2027 (the ADI 2027 Notes) to be issued by the Company and cash.

Pursuant to the exchange offer, $ 440.2 million aggregate principal amount of the Maxim 2027 Notes were tendered and subsequently accepted for exchange, and the Company retired and canceled all Maxim 2027 Notes accepted for exchange.

In exchange for the tendered Maxim 2027 Notes, the Company issued approximately $ 440.2 million aggregate principal amount of ADI 2027 Notes pursuant to a private exchange offer exempt from, or not subject to, registration under the Securities Act of 1933, as amended and $ 0.5 million in cash.

The ADI 2027 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain certain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions.

The ADI 2027 Notes bear interest at a rate of 3.450 % per annum, with semi-annual fixed interest payments due on June 15 and December 15 of each year, commencing on December 15, 2022 and will mature on June 15, 2027.

As of October 29, 2022, the Company was in compliance with the covenants in the ADI 2027 Notes and the outstanding Maxim 2027 Notes.

The indenture and supplemental indentures with respect to the outstanding Maxim 2027 Notes have been modified to, among other things, eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events of default (other than for the failure to pay principal, premium or interest), (iii) the obligation to offer to repurchase the Maxim 2027 Notes upon certain change of control transactions and (iv) any restrictions on consolidating with or merging into any other person or conveying, transferring or leasing all or any of its properties and assets to any person.

Following settlement of the exchange offer, $ 59.8 million aggregate principal amount of the Maxim 2027 Notes remain outstanding.

On October 5, 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.

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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.

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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.

In each case, the Company will also pay the accrued and unpaid interest on the Notes being redeemed to, but

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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As of October 29, 2022, the Company was in compliance with these covenants.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On September 15, 2022, in an underwritten public offering, the Company issued $ 300.0 million aggregate principal amount of 4.250 % senior notes due October 1, 2032 (the 2032 Notes) with semi-annual fixed interest payments due on April 1 and October 1 of each year, commencing April 1, 2023.

The net proceeds of the offering were $ 296.1 million, after discounts and issuance costs.

Prior to July 1, 2032 (three months prior to the maturity date), the Company may, at its option, redeem the 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of:

(1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the notes matured on July 1, 2032) on a semi-annual basis at the Treasury Rate plus 20 basis points less (b) interest accrued to the date of redemption, and (2) 100 % of the principal amount of the notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to the redemption date.

On or after July 1, 2032, the Company may, at its option, redeem the 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100 % of the principal amount of the 2032 Notes being redeemed plus accrued and unpaid interest thereon to the redemption date.

The 2032 Notes are unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior indebtedness.

The 2032 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions.

As of October 29, 2022, the Company was in compliance with these covenants.

The Company’s debt consisted of the following as of October 29, 2022 and October 30, 2021:

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Principal Unamortized discounts, debt issuance costs and fair value adjustments Principal Unamortized discount and debt issuance costs

3 -Year term loan, due March 2022

$ — $ — $ 925,000 $ —

2021 Notes, due December 2021 — — 400,000 1,009

2023 Notes, due June 2023 — — 500,000 1,589

2023 Notes, due December 2023 — — 550,000 2,741

2024 Notes, due October 2024 $ 500,000 $ 1,973 $ 500,000 $ 3,091

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2026 Notes, due December 2026 900,000 5,258 900,000 6,534

2026 Notes, due December 2026 900,000 6,534 900,000 7,813

Maxim 2027 Notes, due June 2027 59,788 ( 5,311 ) 500,000 ( 51,646 )

2027 Notes, due June 2027 440,212 ( 37,182 ) — —

2028 Notes, due October 2028 750,000 8,795 750,000 10,419

2031 Notes, due October 2031 1,000,000 12,381 1,000,000 13,956

2032 Notes, due October 2032 300,000 3,822 — —

2036 Notes, due December 2036 144,278 1,696 144,278 1,814

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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 21, 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 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 dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, 2022 and is expected to total approximately $ 387.1 million.

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