What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-11-21 compared with 2022-11-22 · 245 added, 206 removed, 1234 unchanged (27% of the section changed)

13 unchanged sentences

Special charges, net 160,710 274,509 84,456

Total operating expenses

4,054,106 4,253,774 2,832,811

6 unchanged sentences

Other, net ( 8,245 ) ( 13,551 ) ( 35,268 )

Total nonoperating expense (income)

215,109 179,951 363,487

16 unchanged sentences

7,948 ( 30,331 ) 41,817

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

Adjustment for realized loss reclassified into earnings (net of tax of $ 3,311 in 2023, $ 5,054 in 2022 and $ 189 in 2021)

9,622 34,472 7,099

1 unchanged sentence

Changes in accumulated other comprehensive loss — pension plans:

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

Change in actuarial (loss)/gain (net of tax of $ 312 in 2023, $ 7,756 in 2022 and $ 637 in 2021)

( 7,312 ) 30,613 12,923

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

Other comprehensive income (loss)

9,850 ( 11,587 ) 62,896

Comprehensive income $ 3,324,429 $ 2,736,974 $ 1,453,318

12 unchanged sentences

Net property, plant and equipment 3,219,157 2,401,304

Other investments 122,285 127,856

Goodwill 26,913,134 26,913,134

2 unchanged sentences

Other assets 742,936 519,626

Total other assets 45,364,358 46,943,754

Total non-current assets

44,410,456 45,364,358

$ 48,794,478 $ 50,302,350

LIABILITIES AND SHAREHOLDERS’ EQUITY

3 unchanged sentences

Debt, current

Commercial paper notes

Accrued liabilities 1,352,608 1,594,650

15 unchanged sentences

Total shareholders’ equity 35,565,122 36,465,323

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$ 48,794,478 $ 50,302,350

6 unchanged sentences

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

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

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 Acquisition 169,233 28,204 27,725,957

Stock-based compensation expense 323,487

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

Other comprehensive income 62,896

Other comprehensive loss

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

6 unchanged sentences

Stock-based compensation expense 299,823

Other comprehensive loss ( 11,587 )

Other comprehensive income

Common stock repurchased ( 16,474 ) ( 2,742 ) ( 2,961,213 )

13 unchanged sentences

Stock-based compensation expense 299,823 323,487 243,611

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

Loss on extinguishment of debt — — 215,150

Non-cash impairment charge — 91,953 —

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

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

Deferred income taxes ( 452,946 ) ( 326,755 ) ( 406,922 )

Other 8,665 ( 47,074 ) ( 4,854 )

Change in operating assets and liabilities:

2 unchanged sentences

Prepaid expenses and other current assets 4,543 ( 64,584 ) ( 59,117 )

Prepaid income tax 14,855 ( 5,791 ) —

Accounts payable and accrued liabilities ( 499,316 ) 171,772 208,444

12 unchanged sentences

Early termination of debt ( 65,688 ) ( 519,116 ) ( 3,591,982 )

Debt repayments — — ( 750,000 )

Payments on revolver — ( 400,000 ) ( 400,000 )

Proceeds from revolver — 400,000 400,000

Proceeds from commercial paper notes 5,287,124 — —

Payments of commercial paper notes ( 4,739,900 ) — —

Payment on derivative instrument — — ( 153,161 )

16 unchanged sentences

Analog Devices, Inc.

(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.

(Analog Devices or the Company) is a global semiconductor leader 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 worlds by providing the building blocks to sense, measure, interpret, connect and power.

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

17 unchanged sentences

Cash and cash equivalents are highly liquid investments with insignificant interest rate risk and maturities of ninety days or less at the time of acquisition.

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.

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.

3 unchanged sentences

The Company’s other readily marketable cash equivalents are classified as available-for-sale.

Available-for-sale securities are carried at fair value with unrealized gains and losses, net of related tax, reported in accumulated other comprehensive (loss) income (AOCI).

Available-for-sale securities are carried at fair value with any material unrealized gains and losses, net of related tax, reported in accumulated other comprehensive (loss) income (AOCI).

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 periodically evaluates its investments for impairment.

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

The Company reviews available-for-sale securities for impairment whenever the fair value of the security is less than its amortized cost.

There were no impairments of investments in any of the fiscal years presented.

ANALOG DEVICES, INC.

28 unchanged sentences

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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 2022 (1)

Land and buildings $ 1,715,572 $ 1,459,981

5 unchanged sentences

Net property, plant and equipment $ 3,219,157 $ 2,401,304

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

_________________________________

(1) Certain amounts previously reported between machinery and equipment and office equipment have been reclassified to conform to the presentation for fiscal 2023.

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

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 2023, the Company ceased usage of its campus facility located in Milpitas, California and determined that the facility met the held for sale criteria specified in Accounting Standards Codification (ASC) 360.

No write-downs to fair value were required upon this determination as the fair value of the asset group, less costs to sell, was greater than the carrying value.

As of October 28, 2023, prepaid expenses and other current assets includes the following assets held for sale:

Land and buildings $ 61,724

Less accumulated depreciation and amortization ( 20,604 )

Net property, plant and equipment reclassified to Prepaid expenses and other current assets $ 41,120

Goodwill and Intangible Assets

1 unchanged sentence

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 30) or more frequently if indicators of impairment exist or the Company reorganizes its operating segments or reporting units.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

10 unchanged sentences

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

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.

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.

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.

In fiscal 2023, the Company used the qualitative method of assessing goodwill for the Company's 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.

The Company’s next annual impairment assessment will be performed as of the first day of the fourth quarter of the fiscal year ending October 28, 2023 (fiscal 2023) unless indicators arise that would require the Company to reevaluate at an earlier date.

The Company’s next annual impairment assessment will be performed as of the first day of the fourth quarter of the fiscal year ending November 2, 2024 (fiscal 2024) unless indicators arise that would require the Company to reevaluate at an earlier date.

The following table presents the changes in goodwill during fiscal 2023 and fiscal 2022:

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

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

Acquisition of Maxim (1)

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

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

_______________________

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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Intangible Assets

18 unchanged sentences

_______________________________________

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

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.

(1) In fiscal 2022 foreign intangible asset carrying amounts were affected by foreign currency translation.

Amortization expense related to intangible assets was $ 2.0 billion, $ 2.0 billion and $ 843.4 million in fiscal 2023, 2022 and 2021, respectively, and is recorded in cost of sales and amortization of intangibles on the Consolidated Statements of Income.

The remaining amortization expense will be recognized over the remaining weighted average life of approximately 4.2 years.

11 unchanged sentences

Employment grants, which relate to employee hiring and training, and research and development grants are recognized in earnings in the period in which the related expenditures are incurred by the Company.

In August 2022, the U.S.

government enacted the CHIPS and Science Act of 2022 (CHIPS Act), which provides funding for manufacturing grants and research investments and establishes a 25% investment tax credit for certain investments in U.S.

semiconductor manufacturing.

As of October 28, 2023 and October 29, 2022, the Company recognized $ 174.3 million and $ 16.6 million, respectively, in other assets with a corresponding reduction to the carrying amounts of the qualifying manufacturing assets on the Consolidated Balance Sheets.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Translation of Foreign Currencies

The functional currency for certain of the Company’s foreign operations is the applicable local currency.

Gains and losses resulting from translation of these foreign currencies into U.S.

Generally, the functional currency of the Company’s foreign operations is the U.S.

In certain entities where that is not the case, gains and losses resulting from translation of the foreign currencies into U.S.

dollars are recorded in AOCI.

19 unchanged sentences

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

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

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.

As of October 28, 2023 and October 29, 2022, the total notional amounts of undesignated hedges related to forward foreign currency exchange contracts were $ 334.7 million and $ 246.4 million, respectively.

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

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

As of October 28, 2023 and October 29, 2022, none of the netting arrangements involved collateral.

The following table presents the gross amounts of the Company's forward foreign currency exchange contracts and the net amounts recorded in the Company's Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021:

October 29, 2022 October 30, 2021

As of October 28, 2023, none of the Company's forward foreign currency exchange contracts were netted in the Consolidated Balance Sheet.

October 29, 2022

Gross amount of recognized liabilities $ ( 19,846 )

2 unchanged sentences

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

The Company utilizes interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of the changes in interest rates.

The Company utilizes interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of changes in interest rates.

During fiscal 2019, the Company entered into an interest rate swap agreement which locked in the interest rate for up to $ 1 billion in future debt issuances.

1 unchanged sentence

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

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

During fiscal 2023, the Company entered into interest rate swap transactions related to its outstanding $ 1,000.0 million aggregate principal amount of 2.1 % senior unsecured notes (the 2031 Notes) where the Company swapped the notional amount of its $ 1,000.0 million of fixed rate debt at 2.1 % into floating interest rate debt through April 1,

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value of the swaps at inception was zero and subsequent changes in the fair value of the interest rate swaps were reflected in the carrying value of the interest rate swaps on the balance sheet.

The carrying value of the debt on the balance sheet was adjusted by an equal and offsetting amount.

The interest rate swaps were designated and qualified as fair value hedges.

The Company does not consider the risk of counterparty default to be significant.

The gain or loss on the hedged item attributable to the hedged benchmark interest rate risk and the offsetting gain or loss on the related interest rate swaps were recorded as follows:

October 28, 2023

Balance Sheet Location Loss on Swaps Gain on Note

Accrued liabilities $ 81,602 $ —

Long-term debt

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

5 unchanged sentences

As a result of the above considerations, the Company does not consider the risk of counterparty default to be significant.

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

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

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

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 value of designated fair value hedges are recorded on the Consolidated Balance Sheet as a swap asset or an accrued liability with an offsetting increment/decrement to the long-term debt balance, which is the underlying item being hedged.

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 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.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

October 28, 2023 and October 29, 2022, the Company held $ 642.1 million and $ 1,016.0 million, respectively, of cash that was excluded from the tables below.

October 28, 2023

7 unchanged sentences

Other assets:

Forward foreign currency exchange contracts (1)

— 1,940 1,940

Deferred compensation investments 78,246 — 78,246

1 unchanged sentence

Forward foreign currency exchange contracts (1)

$ — $ 13,515 $ 13,515

Interest rate derivatives (2)

— 81,602 81,602

Total liabilities measured at fair value $ — $ 95,117 $ 95,117

1 unchanged sentence

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)

(2) The carrying value of the related debt was adjusted by an equal and offsetting amount.

See Note 2i, Derivative Instruments and Hedging Agreements, of the Notes to Consolidated Financial Statements.

October 29, 2022

13 unchanged sentences

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)

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

3 unchanged sentences

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.

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

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

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.

Santa Clara, California leased property asset group — As a result of a sublease transaction involving a leased property in Santa Clara, California during fiscal 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.

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

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

Commercial paper notes — The fair values of commercial paper notes are obtained from indicative market prices and are classified as Level 2 measurements according to the fair value hierarchy.

As of October 28, 2023, the fair value of the commercial paper notes was $ 547.2 million.

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

As commercial paper issuances are at then current rates and with very short maturities, the carrying value will approximate fair value.

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

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

Commercial paper notes

$ 547,224 $ 547,185 $ — $ —

2024 Notes, due October 2024 500,000 499,473 500,000 491,982

33 unchanged sentences

The Company's largest customer, which is a distributor rather than an end customer, accounted for approximately 25 %, 22 %, and 26 % of net revenues in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

The Company's next largest customer, which is also a distributor, accounted for approximately 10 % and 11 % of net revenues in fiscal 2022 and fiscal 2021, respectively.

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

The Company's next largest customer, which is also a distributor, accounted for approximately 10 %, 10 % and 11 % of net revenues in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

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

1 unchanged sentence

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

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.

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.

2 unchanged sentences

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.

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

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

Revenue Recognition

5 unchanged sentences

Certain shipping terms require the goods to be through customs or be received by the customer before title passes.

In those instances, the Company defers the revenue recognized until title has passed.

In those instances, the Company defers the revenue recognized until title and control of the promised goods have passed to the customer.

Shipping costs are charged to selling, marketing, general and administrative expense as incurred.

24 unchanged sentences

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

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

For fiscal 2023 and fiscal 2022, sales to distributors were approximately $ 7.5 billion and $ 7.5 billion, respectively, net of variable consideration for which the liability

ANALOG DEVICES, INC.

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.

balances as of October 28, 2023 and October 29, 2022 were $ 525.4 million and $ 749.4 million, respectively, and were recorded in accrued liabilities on the Consolidated Balance Sheets.

Contract Balances :

24 unchanged sentences

Amortization of pension components included in the computation of net periodic benefit cost

Actuarial losses 2,334 2,979 (1)

( 361 ) 339 Tax

$ 1,973 $ 3,318 Net of tax

Actuarial losses $ 1,513 $ 1,973 Net of tax

Total amounts reclassified out of AOCI, net of tax $ 11,135 $ 36,445

37 unchanged sentences

These unvested stock-based compensation awards are considered participating securities and the two-class method is used for purposes of calculating earnings per share.

Under the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of earnings per share allocated to common stock, as shown in the table below.

Under the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of earnings per share allocated to common stock.

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

15 unchanged sentences

_______________________________________

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

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

Stock-Based Compensation

10 unchanged sentences

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.

2 unchanged sentences

New Accounting Pronouncements

Standards Implemented During Fiscal 2022

Reference Rate Reform

In March 2020, the FASB issued ASU No.

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

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

The Company 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

6 unchanged sentences

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

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

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

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

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

The Company will adopt this standard in the first quarter of fiscal 2024 and apply to any future business combinations.

Stock-Based Compensation and Shareholders’ Equity

13 unchanged sentences

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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Modification of Awards

1 unchanged sentence

The modifications made to the Company’s equity awards in fiscal 2023, fiscal 2022 and fiscal 2021 did not result in significant incremental compensation costs, either individually or in the aggregate.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Grant-Date Fair Value of Stock Options

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 and fiscal 2020 is below.

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

The Company did no t grant stock option awards in fiscal 2023 or fiscal 2022.

Options granted (in thousands) 644

21 unchanged sentences

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.

Employee Stock Purchase Plan

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.

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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.

As of October 28, 2023, a total of 4.5 million shares of the Company's common stock were available for future grant under the ESPP.

Stock-Based Compensation Expense

5 unchanged sentences

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:

26 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 2023, fiscal 2022 and fiscal 2021 was $ 95.0 million, $ 56.2 million and $ 93.2 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 28, 2023 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 2023, fiscal 2022 and fiscal 2021 was approximately $ 298.2 million, $ 283.0 million and $ 207.0 million, respectively.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Common Stock Repurchases

14 unchanged sentences

Any future common stock repurchases will be dependent upon several factors, including the Company's financial performance, outlook, liquidity and the amount of cash the Company has available in the United States.

Analog Devices Foundation

During the first quarter of fiscal 2020, the Company contributed 335,654 shares of its common stock to the Analog Devices Foundation.

As of the date of the charitable contribution, the shares had a fair value of approximately $ 40.0 million.

This expense was recorded in Selling, marketing, general and administrative expense in the Consolidated Statement of Income.

Preferred Stock

4 unchanged sentences

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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The Chief 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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The following table summarizes revenue by end market.

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

The categorization of revenue by end market is determined using

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 2022 2021

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Geographic Information

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This may differ from the geographic location of the end customers.

In all periods presented, the predominant countries comprising “Rest of North and South America” are Canada and Mexico;

the predominant countries comprising “Europe” are Germany, Sweden, and the Netherlands;

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

In all periods presented, the predominant regions comprising “Rest of North and South America” are Canada and Mexico;

the predominant regions comprising “Europe” are Germany, Sweden and the Netherlands;

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

2023 2022 2021

5 unchanged sentences

Rest of Asia 1,423,043 1,596,550 890,666

Subtotal all foreign countries 7,988,555 4,928,847 3,715,613

Subtotal all foreign regions

8,140,243 7,988,555 4,928,847

Total revenue $ 12,305,539 $ 12,013,953 $ 7,318,286

4 unchanged sentences

Thailand 209,660 143,558 126,040

Singapore (1) — — 18,518

Malaysia 123,574 119,670 84,971

All other countries 68,470 80,935 42,234

Subtotal all foreign countries 1,283,900 1,022,427 540,806

Total property, plant and equipment $ 2,401,304 $ 1,979,051 $ 1,120,561

All other regions

113,872 68,470 80,935

(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.

Subtotal all foreign regions

1,641,243 1,283,900 1,022,427

Total property, plant and equipment $ 3,219,157 $ 2,401,304 $ 1,979,051

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.

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

The activity is detailed below:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Special Charges Closure of Manufacturing Facilities Global Repositioning Actions

Balance at November 2, 2019

Liabilities related to special charges, net are presented in accrued liabilities and other non-current liabilities on the Consolidated Balance Sheets.

The activity is detailed below:

Accrued Special Charges Closure of Manufacturing Facilities Global Repositioning Actions Q4 2023 Plan

Balance at October 31, 2020

$ 45,176 $ 20,774 $ —

14 unchanged sentences

Employee severance and benefit costs — 45,064 113,995

Facility closure costs 12,076 —

Severance and benefit payments ( 2,629 ) ( 60,153 ) ( 3,549 )

Facility closure cost payments ( 12,491 ) —

Effect of foreign currency on accrual — ( 281 )

Balance at October 28, 2023

$ — $ 36,981 $ 110,446

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.

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.

Accrued liabilities $ — $ 13,845 $ 110,446

Other non-current liabilities $ — $ 23,136 $ —

In the fourth quarter of fiscal 2023, the Company committed to a plan to reorganize its business (the Q4 2023 Plan).

The Q4 2023 Plan, consisting of voluntary and involuntary reductions-in-force and other cost-savings initiatives, was commenced to adjust the Company’s cost structure and business activities to better align with weaker market demand and continued economic uncertainty in its end markets, as well as to make certain strategic shifts in its workforce necessary to achieve its long-term vision.

The reductions-in-force, which are subject to the laws and regulations of the countries in which the actions are planned, are expected to impact positions in manufacturing, engineering and selling, marketing, general and administrative functions.

The Company recorded net special charges of $ 114.0 million during the fourth quarter of fiscal 2023 related to the Q4 2023 Plan.

In connection with the Q4 2023 Plan, the Company expects to incur special charges, net of between $ 120.0 million and $ 140.0 million, primarily related to reductions-in-force.

The Company expects that the majority of the actions under the Q4 2023 Plan will be completed by the second quarter of fiscal 2024 ending May 4, 2024.

The Company expects to settle these charges with cash on hand, together with existing and anticipated available short-term financing.

Global Repositioning Actions

1 unchanged sentence

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.

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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.

In connection with the Company’s decision during 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.

1 unchanged sentence

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Closure of Manufacturing Facilities

The Company recorded net special charges of $ 63.8 million on a cumulative basis through October 28, 2023 as a result of its decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear.

The net special charges included cumulative gains of $ 18.0 million related to net proceeds received of approximately $ 67.5 million for the sale of its Hillview wafer fabrication facility and certain equipment located in Milpitas, California as well as the sale of its facility and certain equipment in Singapore.

Maxim Integrated Products, Inc.

49 unchanged sentences

In aggregate, the Company recognized $ 174.0 million of transaction-related costs, including legal, accounting and other related fees that were expensed in fiscal 2023, fiscal 2022 and fiscal 2021.

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

These costs are included in the Consolidated Statements of Income in operating expenses within selling, marketing, general and administrative expenses.

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.

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

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

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

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

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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.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pro Forma Twelve Months Ended

October 30, 2021

October 31, 2020

$ 9,541,488 $ 7,897,855

Net income (loss)

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

Basic net income (loss) per common share

$ 2.94 $ ( 0.27 )

Diluted net income (loss) per common share

$ 2.91 $ ( 0.27 )

Other Acquisitions

The Company has not provided pro forma results of operations for any other acquisitions completed in fiscal 2022, fiscal 2021 or fiscal 2020 herein as they were not material to the Company on either an individual or an aggregate basis.

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

Basic net income per common share

Diluted net income per common share

Other Investments

7 unchanged sentences

Accrued special charges 124,291 54,699

Interest rate swap 81,602 —

Lease liabilities 64,745 53,628

Accrued interest 40,412 33,298

Accrued withholdings related to ESPP 28,131 —

Accrued taxes 36,649 22,815

Accrued professional fees 7,955 152,689

Accrued withholdings related to ESPP 32,441 28,131

Other 139,062 187,141

8 unchanged sentences

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The Company has agreements with lease and non-lease 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-three 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-two years , some of which may include options to extend the initial term of the lease.

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

2 unchanged sentences

The 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.

Sublease income for fiscal 2023 was $ 12.9 million.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

8 unchanged sentences

Cash paid for amounts included in the measurement of operating lease liabilities

Operating cash flows from operating leases $ 61,915 $ 53,724

Cash flows from operating leases

$ 68,759 $ 61,915

Lease assets obtained in exchange for new lease liabilities $ 66,760 $ 107,631

Weighted average remaining lease term 7.6 years 7.9 years

Weighted average remaining lease term 7.1 years

Weighted average discount rate 3.6 % 3.3 %

7 unchanged sentences

Total future minimum cash receipts $ 106,354

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Commitments and Contingencies

2 unchanged sentences

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.

Ryan and Ryan Asset Management, LLC, purported stockholders of Maxim Integrated Products, Inc.

(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 complaint alleges breaches 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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and abetted those alleged breaches 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;

On May 2, 2023, the Court of Chancery entered an order dismissing the action in its entirety and with prejudice.

On May 9, 2023, the plaintiffs filed a Motion for Reargument, which the Court denied on May 30, 2023.

On June 21, 2023, the plaintiffs filed a Notice of Appeal to the Delaware Supreme Court.

The appeal is fully briefed and remains pending.

The Company believes that it and the other defendants have meritorious arguments in response to the appeal and defenses to the underlying 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.

The Company has supplier commitments of approximately $ 705.6 million for the purchase of materials and supplies in advance or with minimum purchase quantities through 2031.

Retirement Plans

26 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Components of Net Periodic Benefit Cost

Net annual periodic benefit cost of the Company’s pension and postretirement benefit plans for fiscal 2023, fiscal 2022 and fiscal 2021 is presented in the following table:

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 2022 2021

4 unchanged sentences

Subtotal $ 12,433 $ 14,821 $ 12,492

Curtailment impact — — ( 203 )

Settlement impact 173 ( 35 ) ( 6 )

19 unchanged sentences

Benefits paid ( 6,352 ) ( 3,596 )

Acquisitions — 1,728

Exchange rate adjustment 3,836 ( 16,719 )

89 unchanged sentences

Expected Company Contributions

2023 $ 10,579

Expected Benefit Payments

14 unchanged sentences

Acquisition and integration costs — — 11,367

Taxes attributable to the Tax Cuts and Jobs Act of 2017 ( 81,695 ) — —

effects of international operations ( 98,286 ) ( 47,665 ) ( 24,624 )

23 unchanged sentences

Provision for (benefit from) income tax $ 293,424 $ 350,188 $ ( 61,708 )

The Company’s effective tax rate for fiscal 2023 was impacted by a discrete income tax benefit recorded of $ 81.7 million resulting from the approval granted by the Joint Committee on Taxation of its federal corporate income tax relief claim which reduced the amount of transition tax owed under the Tax Cuts and Jobs Act.

tax legislation subjects a U.S.

17 unchanged sentences

Lease liability 82,305 76,709

Capitalization of R&D expenses (1)

421,485 155,099

Other 88,164 93,697

3 unchanged sentences

Deferred tax liabilities:

Inventory reserves — ( 18,570 )

Depreciation ( 122,125 ) ( 96,660 )

4 unchanged sentences

Net deferred tax liabilities $ ( 904,580 ) $ ( 1,357,650 )

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.

_______________________________________________

(1) As of October 28, 2023, the Company included the effects of the mandatory capitalization and amortization of research and development expenses which began in fiscal 2023 under the Tax Cuts and Jobs Act.

The valuation allowances of $ 332.5 million and $ 339.1 million as of October 28, 2023 and October 29, 2022, respectively, are primarily for the Company’s state R&D credit carryforwards, foreign net operating losses 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.

The federal and state net operating losses of $ 89.9 million will begin to expire in fiscal 2035 while foreign net operating loss carryovers of $ 145.2 million have no expiration date.

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.

There are also $ 299.7 million of federal and state credit carryovers and $ 14.2 million of foreign investment tax credit carryovers that begin to expire in the fiscal year ending November 1, 2025.

As of October 28, 2023 and October 29, 2022, the Company had unrealized tax benefits, net of indirect tax benefits, of $ 187.4 million and $ 165.3 million, respectively, which if settled in the Company's favor, would lower the Company's effective tax rate in the period recorded.

5 unchanged sentences

Unrealized Tax Benefits

Balance, November 2, 2019

Additions for tax positions related to current year 3,270

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

Reductions due to lapse of applicable statute of limitations ( 170 )

Balance, October 31, 2020

9 unchanged sentences

Balance, October 29, 2022

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.

Additions for tax positions related to current year 5,895

Additions for tax positions related to prior years 17,096

Reductions due to lapse of applicable statute of limitations ( 903 )

Balance, October 28, 2023

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.

3 unchanged sentences

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 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.

an IRS income tax audit for fiscal year ended November 2, 2019 (fiscal 2019) and fiscal year ended November 3, 2018 (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, including an Irish corporate tax audit for fiscal 2019.

The Company’s U.S.

1 unchanged sentence

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.

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

as administrative agent and the other banks identified therein as lenders, which was subsequently amended on December 20, 2022 and July 24, 2023 (as amended, the Revolving Credit Agreement).

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).

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.

In the first quarter of fiscal 2023, the Company amended the Revolving Credit Agreement, replacing the LIBOR interest rate provisions with interest rate provisions based on a forward-looking term rate based on the Secured Overnight Financing Rate (SOFR) plus a 10 basis point credit spread adjustment.

After the amendment, revolving loans under the Revolving Credit Agreement can be Term SOFR Loans or Base Rate Loans (each as defined in the Revolving Credit Agreement) at the Company's option.

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

As of October 28, 2023, 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.

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

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

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

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

The Revolving Credit Agreement also contains a sustainability-linked pricing component which provides

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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.

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 2022, the Company was within its target threshold range for greenhouse gas emission which resulted in no pricing adjustment.

The Company exceeded the target threshold for renewable energy usage, which resulted in a modest pricing benefit on its commitment fee and any future borrowings.

This adjustment 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.

21 unchanged sentences

As of October 28, 2023, the Company was in compliance with these covenants.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

1 unchanged sentence

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

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.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

3 unchanged sentences

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).

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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

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 excluding, the date of redemption.

The Company may not redeem the Floating Rate Notes prior to their maturity.

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As of October 28, 2023, the Company was in compliance with these covenants.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 to be issued by the Company (the Unregistered 2027 Notes) and cash.

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

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

On April 26,2023, the Company redeemed for cash all of the outstanding $ 59.8 million aggregate principal amount of Maxim 2027 Notes in accordance with the terms of the indenture governing the Maxim 2027 Notes.

The Maxim 2027 Notes were redeemed for cash at a redemption price equal to $1,012.55 for each $1,000 principal of the Maxim 2027 Notes and included accrued interest.

As of April 27, 2023, there were no Maxim 2027 Notes outstanding.

On September 19, 2023, the Company completed an offer to exchange in which the Company exchanged Unregistered 2027 Notes for a like principal amount of new notes that are identical in all material respects to the terms of the Unregistered 2027 Notes, except that the new notes have been registered under the Securities Act and the transfer restrictions, registration rights and additional interest provisions relating to the Unregistered 2027 Notes do not apply to the new notes (the 2027 Notes).

As of October 28, 2023, the Company was in compliance with the covenants contained in the indenture and supplemental indenture governing the 2027 Notes.

On April 14, 2023, the Company established a commercial paper program under which the Company may issue short-term, unsecured commercial paper notes (CP Notes) in amounts up to a maximum aggregate face amount of $ 2.5 billion outstanding at any time, with maturities up to 397 days from the date of issuance.

The CP Notes will be sold under customary market terms in the U.S.

commercial paper market at a discount from par or at par and bear interest at rates determined at the time of issuance.

The Company intends to use the net proceeds of the CP Notes for general corporate purposes, including without limitation, repayment of indebtedness, stock repurchases, acquisitions, capital expenditures and working capital.

As of October 28, 2023, the Company had $ 547.2 million of outstanding borrowings under the commercial paper program recorded in the Consolidated Balance Sheet.

The carrying value of the outstanding CP Notes approximated fair value at October 28, 2023.

ANALOG DEVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s debt consisted of the following as of October 28, 2023 and October 29, 2022:

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Maxim Notes, due June 2027

— — 59,788 ( 5,311 )

2027 Notes, due June 2027 440,212 ( 28,750 ) 440,212 ( 37,182 )

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2031 Notes, due October 2031 (1)

1,000,000 92,599 1,000,000 12,381

2032 Notes, due October 2032 300,000 3,438 300,000 3,822

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Total Long-Term Debt 6,017,077 114,620 6,576,865 28,240

Maxim 2023 Notes, due March 2023 — — 500,000 ( 16,663 )

2024 Notes, due October 2024 500,000 948 — —

Commercial paper notes

547,224 — — —

Total Current Debt

1,047,224 948 — —

Total Debt $ 7,064,301 $ 115,568 $ 6,576,865 $ 28,240

_________________________________

(1) Includes fair value adjustment related to interest rate swap related to outstanding debt.

See Note 2i, Derivative Instruments and Hedge Agreements, for more information.

Subsequent Events

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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