Item 1. Financial Statements
ITEM 1. Financial Statements
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
February 1, 2025 February 3, 2024
Revenue $ 2,423,174 $ 2,512,704
Cost of sales 992,871 1,038,763
Gross margin 1,430,303 1,473,941
Operating expenses:
Research and development 402,892 391,427
Selling, marketing, general and administrative 284,796 290,078
Amortization of intangibles 187,415 190,332
Special charges, net 63,887 16,140
Total operating expenses 938,990 887,977
Operating income: 491,313 585,964
Nonoperating expense (income):
Interest expense 75,264 77,141
Interest income ( 23,487 ) ( 9,169 )
Other, net 3,960 4,574
Total nonoperating expense (income) 55,737 72,546
Income before income taxes 435,576 513,418
Provision for income taxes 44,260 50,691
Net income $ 391,316 $ 462,727
Shares used to compute earnings per common share – basic 496,116 495,765
Shares used to compute earnings per common share – diluted 498,668 498,741
Basic earnings per common share $ 0.79 $ 0.93
Diluted earnings per common share $ 0.78 $ 0.93
See accompanying notes.
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ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands)
Three Months Ended
February 1, 2025 February 3, 2024
Net income $ 391,316 $ 462,727
Foreign currency translation adjustments ( 159 ) 385
Change in fair value of derivative instruments designated as cash flow hedges, net ( 77 ) 8,020
Changes in pension plans, net 523 ( 1,388 )
Other comprehensive income 287 7,017
Comprehensive income $ 391,603 $ 469,744
See accompanying notes.
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ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
February 1, 2025 November 2, 2024
ASSETS
Current Assets
Cash and cash equivalents $ 2,349,994 $ 1,991,342
Short-term investments 371,460 371,822
Accounts receivable 1,192,442 1,336,331
Inventories 1,474,656 1,447,687
Prepaid expenses and other current assets 344,524 337,472
Total current assets 5,733,076 5,484,654
Non-current Assets
Net property, plant and equipment 3,355,240 3,415,550
Goodwill 26,945,180 26,909,775
Intangible assets, net 9,183,038 9,585,464
Deferred tax assets 2,032,676 2,083,752
Other assets 718,336 749,082
Total non-current assets 42,234,470 42,743,623
TOTAL ASSETS $ 47,967,546 $ 48,228,277
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable $ 368,939 $ 487,457
Income taxes payable 487,456 447,379
Debt, current 399,855 399,636
Commercial paper notes 548,403 547,738
Accrued liabilities 1,166,343 1,106,070
Total current liabilities 2,970,996 2,988,280
Non-current Liabilities
Long-term debt 6,618,556 6,634,313
Deferred income taxes 2,514,866 2,624,392
Income taxes payable 261,564 260,486
Other non-current liabilities 531,029 544,489
Total non-current liabilities 9,926,015 10,063,680
Shareholders’ Equity
Preferred stock, $ 1.00 par value, 471,934 shares authorized, none outstanding
— —
Common stock, $ 0.16 2/3 par value, 1,200,000,000 shares authorized, 495,976,483 shares outstanding ( 496,296,854 on November 2, 2024)
82,664 82,718
Capital in excess of par value 25,041,250 25,082,243
Retained earnings 10,131,590 10,196,612
Accumulated other comprehensive loss ( 184,969 ) ( 185,256 )
Total shareholders’ equity 35,070,535 35,176,317
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 47,967,546 $ 48,228,277
See accompanying notes.
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ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(in thousands)
Three Months Ended February 1, 2025
Capital in Accumulated
Other
Common Stock Excess of Retained Comprehensive
Shares Amount Par Value Earnings Loss
BALANCE, NOVEMBER 2, 2024
496,297 $ 82,718 $ 25,082,243 $ 10,196,612 $ ( 185,256 )
Net income 391,316
Dividends declared and paid - $ 0.92 per share
( 456,338 )
Issuance of stock under stock plans and other 411 68 41,679
Stock-based compensation expense 77,574
Other comprehensive income 287
Common stock repurchased ( 732 ) ( 122 ) ( 160,246 )
BALANCE, FEBRUARY 1, 2025
495,976 $ 82,664 $ 25,041,250 $ 10,131,590 $ ( 184,969 )
Three Months Ended February 3, 2024
Capital in Accumulated
Other
Common Stock Excess of Retained Comprehensive
Shares Amount Par Value Earnings Loss
BALANCE, OCTOBER 28, 2023 496,262 $ 82,712 $ 25,313,914 $ 10,356,798 $ ( 188,302 )
Net income 462,727
Dividends declared and paid - $ 0.86 per share
( 426,076 )
Issuance of stock under stock plans and other 676 113 49,706
Stock-based compensation expense 69,815
Other comprehensive income 7,017
Common stock repurchased ( 1,030 ) ( 172 ) ( 180,179 )
BALANCE, FEBRUARY 3, 2024
495,908 $ 82,653 $ 25,253,256 $ 10,393,449 $ ( 181,285 )
See accompanying notes.
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ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
February 1, 2025 February 3, 2024
Cash flows from operating activities:
Net income $ 391,316 $ 462,727
Adjustments to reconcile net income to net cash provided by operations:
Depreciation 98,447 84,348
Amortization of intangibles 417,156 440,903
Stock-based compensation expense 77,574 69,815
Deferred income taxes ( 59,454 ) ( 102,149 )
Other ( 799 ) 4,684
Changes in operating assets and liabilities 202,569 178,504
Total adjustments 735,493 676,105
Net cash provided by operating activities 1,126,809 1,138,832
Cash flows from investing activities:
Additions to property, plant and equipment ( 148,978 ) ( 222,978 )
Payments for acquisitions, net of cash acquired ( 45,652 ) —
Other 329 3,877
Net cash used for investing activities ( 194,301 ) ( 219,101 )
Cash flows from financing activities:
Proceeds from commercial paper notes 1,969,276 2,779,494
Payments of commercial paper notes ( 1,968,611 ) ( 2,782,274 )
Repurchase of common stock ( 160,368 ) ( 180,351 )
Dividend payments to shareholders ( 456,338 ) ( 426,076 )
Proceeds from employee stock plans 41,747 49,819
Other 438 ( 14,844 )
Net cash used for financing activities ( 573,856 ) ( 574,232 )
Net increase in cash and cash equivalents 358,652 345,499
Cash and cash equivalents at beginning of period 1,991,342 958,061
Cash and cash equivalents at end of period $ 2,349,994 $ 1,303,560
See accompanying notes.
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ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 1, 2025 (UNAUDITED)
(all tabular amounts in thousands except per share amounts and percentages)
Note 1 – Basis of Presentation
In the opinion of management, the information furnished in the accompanying condensed consolidated financial statements reflects all normal recurring adjustments that are necessary to fairly state the results for these interim periods and should be read in conjunction with Analog Devices, Inc.’s (the Company) Annual Report on Form 10-K for the fiscal year ended November 2, 2024 (fiscal 2024) and related notes. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending November 1, 2025 (fiscal 2025) or any future period.
The Company has a 52 - 53 week fiscal year that ends on the Saturday closest to the last day in October. Fiscal 2025 is a 52 -week fiscal year and fiscal 2024 was a 53 -week fiscal year. The additional week in fiscal 2024 was included in the first quarter ended February 3, 2024. Therefore, the first three months of fiscal 2025 included one less week of operations as compared to the first three months of fiscal 2024.
Note 2 – Shareholders’ Equity
As of February 1, 2025, the Company had repurchased a total of approximately 208.4 million shares of its common stock for approximately $ 15.2 billion under the Company’s share repurchase program. As of February 1, 2025, an additional $ 1.5 billion remains available for repurchase of shares under the current authorized program.
Note 3 – Accumulated Other Comprehensive (Loss) Income
The following table provides the changes in accumulated other comprehensive (loss) income (AOCI) by component and the related tax effects during the first three months of fiscal 2025.
Foreign currency translation adjustment Unrealized holding gains/losses on derivatives
Pension plans Total
November 2, 2024 $ ( 71,511 ) $ ( 85,202 ) $ ( 28,543 ) $ ( 185,256 )
Other comprehensive income before reclassifications ( 159 ) 1,067 — 908
Amounts reclassified out of other comprehensive income — ( 779 ) 523 ( 256 )
Tax effects — ( 365 ) — ( 365 )
Other comprehensive income ( 159 ) ( 77 ) 523 287
February 1, 2025 $ ( 71,670 ) $ ( 85,279 ) $ ( 28,020 ) $ ( 184,969 )
The amounts reclassified out of AOCI into the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Shareholders’ Equity with presentation location during each period were as follows:
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Three Months Ended
Comprehensive (Loss) Income Component February 1, 2025 February 3, 2024 Location
Unrealized holding gains/losses on derivatives:
Currency forwards $ ( 1,579 ) $ ( 71 ) Cost of sales
( 847 ) ( 69 ) Research and development
( 2,084 ) ( 891 ) Selling, marketing, general and administrative
Interest rate derivatives 3,731 3,730 Interest expense
( 779 ) 2,699 Total before tax
( 158 ) ( 848 ) Tax
$ ( 937 ) $ 1,851 Net of tax
Amortization of pension components included in the computation of net periodic pension cost:
Actuarial losses $ 523 $ 516 Net of tax
Total amounts reclassified out of AOCI, net of tax $ ( 414 ) $ 2,367
Note 4 – Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended
February 1, 2025 February 3, 2024
Net income $ 391,316 $ 462,727
Basic shares:
Weighted-average shares outstanding 496,116 495,765
Earnings per common share basic: $ 0.79 $ 0.93
Diluted shares:
Weighted-average shares outstanding 496,116 495,765
Assumed exercise of common stock equivalents 2,552 2,976
Weighted-average common and common equivalent shares 498,668 498,741
Earnings per common share diluted: $ 0.78 $ 0.93
Anti-dilutive shares related to:
Outstanding stock-based awards 190 214
Note 5 – Special Charges, Net
Liabilities related to special charges, net are included in Accrued liabilities in the Condensed Consolidated Balance Sheets. The activity is detailed below:
Accrued Special Charges Global Repositioning Actions
Balance at November 2, 2024 $ 13,855
Employee severance costs, net
56,334
Severance payments
( 2,887 )
Balance at February 1, 2025 $ 67,302
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The Company recorded net special charges of $ 63.9 million as part of its Global Repositioning Actions in the three months ended February 1, 2025. The Global Repositioning Actions were part of a transformation initiative aimed at aligning the Company’s enterprise strategy, organizational design and streamlining its operations to achieve its long-term strategic plan. The special charges include severance costs, in accordance with the Company’s ongoing benefit plan or statutory requirements at foreign locations, related to the termination of certain employees in manufacturing, engineering and selling, marketing, general and administrative roles.
Note 6 – Revenue
Revenue Trends by End Market
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. As data systems for capturing and tracking this data and the Company’s methodology evolves and improves, the categorization of products by end market can vary over time. When this occurs, the Company reclassifies revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.
Three Months Ended
February 1, 2025 February 3, 2024
Revenue % of Revenue* Y/Y% Revenue % of Revenue*
Industrial $ 1,077,900 44 % ( 10 ) % $ 1,191,713 47 %
Automotive 732,513 30 % ( 2 ) % 748,781 30 %
Consumer 322,900 13 % 19 % 270,211 11 %
Communications 289,861 12 % ( 4 ) % 301,999 12 %
Total revenue $ 2,423,174 100 % ( 4 ) % $ 2,512,704 100 %
* The sum of the individual percentages may not equal the total due to rounding.
Revenue by Sales Channel
The following table summarizes revenue by channel. The Company sells its products globally through a direct sales force, third-party distributors, independent sales representatives and via its website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers. Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time.
Three Months Ended
February 1, 2025 February 3, 2024
Channel Revenue % of Revenue* Revenue % of Revenue*
Distributors $ 1,375,464 57 % $ 1,535,210 61 %
Direct customers 1,019,872 42 % 939,975 37 %
Other 27,838 1 % 37,519 1 %
Total revenue $ 2,423,174 100 % $ 2,512,704 100 %
* The sum of the individual percentages may not equal the total due to rounding.
Note 7 – Fair Value
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The tables below, set forth by level, present the Company’s financial assets and liabilities, excluding accrued interest components that were accounted for at fair value on a recurring basis as of February 1, 2025 and November 2, 2024. 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 February 1, 2025 and November 2, 2024, the Company held $ 1.5 billion and $ 1.4 billion, respectively, of cash that is excluded
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from the tables below.
February 1, 2025
Fair Value Measurement at
Reporting Date Using:
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds $ 636,075 $ — $ 636,075
Corporate obligations (1) — 199,308 199,308
Short-term investments:
Available-for-sale:
Securities with one year or less to maturity:
Corporate obligations (1) — 71,178 71,178
Bank obligations (1) — 300,282 300,282
Other assets:
Forward foreign currency exchange contracts (2) — 3,277 3,277
Deferred compensation plan investments 99,750 — 99,750
Total assets measured at fair value $ 735,825 $ 574,045 $ 1,309,870
Liabilities
Forward foreign currency exchange contracts (2) $ — $ 10,140 $ 10,140
Interest rate derivatives (3) — 52,152 52,152
Total liabilities measured at fair value $ — $ 62,292 $ 62,292
(1) The amortized cost of the Company’s investments classified as available-for-sale as of February 1, 2025 was $ 576.0 million.
(2) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 8, Derivatives, in these Notes to Condensed Consolidated Financial Statements for more information related to the Company’s master netting arrangements.
(3) The carrying value of the related debt was adjusted by an equal and offsetting amount. The fair value of interest rate derivatives is estimated using a discounted cash flow analysis based on the contractual terms of the derivatives. See Note 8, Derivatives, in these Notes to Condensed Consolidated Financial Statements.
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November 2, 2024
Fair Value Measurement at
Reporting Date Using:
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds $ 592,560 $ — $ 592,560
Short-term investments:
Available-for-sale:
Securities with one year or less to maturity:
Corporate obligations (1) — 71,246 71,246
Bank obligations (1) — 300,576 300,576
Other assets:
Forward foreign currency exchange contracts (2) — 7,318 7,318
Deferred compensation plan investments 92,698 — 92,698
Total assets measured at fair value $ 685,258 $ 379,140 $ 1,064,398
Liabilities
Forward foreign currency exchange contracts (2) $ — $ 16,279 $ 16,279
Interest rate derivatives (3) — 36,855 36,855
Total liabilities measured at fair value $ — $ 53,134 $ 53,134
(1) The amortized cost of the Company’s investments classified as available-for-sale as of November 2, 2024 was $ 382.9 million.
(2) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 8, Derivatives, in these Notes to Condensed Consolidated Financial Statements for more information related to the Company’s master netting arrangements.
(3) The carrying value of the related debt was adjusted by an equal and offsetting amount. The fair value of interest rate derivatives is estimated using a discounted cash flow analysis based on the contractual terms of the derivatives. See Note 8, Derivatives, in these Notes to Condensed Consolidated Financial Statements.
Assets and Liabilities Not Recorded at Fair Value on a Recurring Basis
The table below presents the estimated fair values of certain financial instruments not recorded at fair value on a recurring basis. Given the short tenure of the Company’s commercial paper notes, the carrying value of the outstanding commercial paper notes approximates the fair values, and therefore, are excluded from the table below ($ 548.4 million and $ 547.7 million as of February 1, 2025 and November 2, 2024, respectively). 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.
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February 1, 2025 November 2, 2024
Principal Amount Outstanding Fair Value Principal Amount Outstanding Fair Value
2025 Notes, due April 2025 $ 400,000 $ 398,932 400,000 397,027
2026 Notes, due December 2026 900,000 885,154 900,000 882,795
2027 Notes, due June 2027 440,212 422,252 440,212 421,077
2028 Notes, due October 2028 750,000 676,441 750,000 673,316
2031 Notes, due October 2031 1,000,000 843,581 1,000,000 843,766
2032 Notes, due October 2032 300,000 285,964 300,000 287,172
2034 Notes, due April 2034 550,000 549,282 550,000 553,375
2036 Notes, due December 2036 144,278 136,865 144,278 136,718
2041 Notes, due October 2041 750,000 533,268 750,000 534,435
2045 Notes, due December 2045 332,587 320,610 332,587 322,942
2051 Notes, due October 2051 1,000,000 636,853 1,000,000 655,668
2054 Notes, due April 2054 550,000 527,518 550,000 541,912
Total senior unsecured notes
$ 7,117,077 $ 6,216,720 $ 7,117,077 $ 6,250,203
Note 8 – Derivatives
Foreign Exchange Exposure Management — The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash flow hedges as of February 1, 2025 and November 2, 2024 were $ 261.6 million and $ 257.0 million, respectively, and the fair values of these instruments in the Company’s Condensed Consolidated Balance Sheets were as follows:
Fair Value At
Balance Sheet Location February 1, 2025 November 2, 2024
Forward foreign currency exchange contracts Prepaid expenses and other current assets $ 534 $ 780
Forward foreign currency exchange contracts Accrued liabilities $ 8,125 $ 4,235
As of February 1, 2025 and November 2, 2024, the total notional amounts of undesignated hedges related to forward foreign currency exchange contracts were $ 174.8 million and $ 176.8 million, respectively, and the fair values of undesignated hedges in the Company’s Condensed Consolidated Balance Sheets were as follows:
Fair Value At
Balance Sheet Location February 1, 2025 November 2, 2024
Undesignated hedges related to forward foreign currency exchange contracts
Prepaid expenses and other current assets $ 2,743 $ 6,538
Undesignated hedges related to forward foreign currency exchange contracts
Accrued liabilities $ 2,015 $ 12,044
Interest Rate Exposure Management — The Company does not consider the risk of counterparty default to be significant. The gain or loss on the Company’s interest rate swap transactions attributable to the hedged benchmark interest rate risk and the offsetting gain or loss on the related interest rate swaps were recorded as follows:
February 1, 2025
Balance Sheet Location Loss on Swaps Gain on Note
Accrued liabilities $ 52,152 $ —
Long-term debt
$ — $ 52,152
For information on the unrealized holding gains (losses) on derivatives included in and reclassified out of AOCI into the Condensed Consolidated Statements of Income related to forward foreign currency exchange contracts, see Note 3, Accumulated Other Comprehensive (Loss) Income, in these Notes to Condensed Consolidated Financial Statements for further information.
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Note 9 – Inventories
Inventories at February 1, 2025 and November 2, 2024 were as follows:
February 1, 2025 November 2, 2024
Raw materials $ 81,485 $ 93,608
Work in process 1,107,325 1,047,022
Finished goods 285,846 307,057
Total inventories $ 1,474,656 $ 1,447,687
Note 10 – Income Taxes
The Company’s effective tax rates for the three-month periods ended February 1, 2025 and February 3, 2024 were below the U.S. statutory tax rate of 21.0 %, due to lower statutory tax rates applicable to the Company’s operations in the foreign jurisdictions in which it earns income.
The Company has numerous audits ongoing throughout the world including: an IRS income tax audit for the fiscal years ended October 30, 2021, November 2, 2019 and November 3, 2018; a pre-acquisition IRS income tax audit for Maxim Integrated Products, Inc.’s (Maxim) fiscal years ended June 27, 2015 through August 26, 2021; and various U.S. state and local audits and international audits, including an Irish corporate tax audit for the fiscal year ended November 2, 2019. The Company’s U.S. federal income tax returns prior to the fiscal year ended November 3, 2018 are no longer subject to examination, except for the applicable Maxim pre-acquisition fiscal years noted above.
Note 11 – New Accounting Pronouncements
Standards to Be Implemented
Segment Reporting
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which enhances the disclosure requirements for reportable segments. ASU 2023-07 requires segment disclosure to include significant segment expense categories and amounts, and qualitative detail of other segment items. Disclosure of multiple measures of segment profit and loss may also be reported. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its financial statement disclosures.
Income Taxes
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . ASU 2023-09 requires the disaggregation of information in existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its financial statement disclosures.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , requiring public companies to disaggregate key expense categories such as inventory purchases, employee compensation and depreciation in their financial statements. This aims to improve investor insights into company performance. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its financial statement disclosures.
Note 12 – Subsequent Events
On February 18, 2025, the Board of Directors of the Company declared a cash dividend of $ 0.99 per outstanding share of common stock. The dividend will be paid on March 17, 2025 to all shareholders of record at the close of business on March 4, 2025 and is expected to total approximately $ 491.0 million.
Also on February 18, 2025, the Company’s Board of Directors authorized the Company to repurchase an additional $ 10.0 billion of its common stock, bringing the total remaining share repurchase authorization to approximately $ 11.5 billion. Under the share repurchase program, the Company may repurchase outstanding shares of its common stock from time to time on the open market or through privately negotiated transactions.
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