0000006281--10-312020Q1FALSEP1YP1Y00000062812019-11-032020-02-01xbrli:shares00000062812020-02-01iso4217:USD00000062812018-11-042019-02-02iso4217:USDxbrli:shares00000062812019-11-020000006281us-gaap:CommonStockMember2019-11-020000006281us-gaap:AdditionalPaidInCapitalMember2019-11-020000006281us-gaap:RetainedEarningsMember2019-11-020000006281us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-11-020000006281us-gaap:AccountingStandardsUpdate201802Memberus-gaap:RetainedEarningsMember2019-11-030000006281us-gaap:AccountingStandardsUpdate201802Memberus-gaap:AccumulatedOtherComprehensiveIncomeMember2019-11-030000006281us-gaap:RetainedEarningsMember2019-11-032020-02-010000006281us-gaap:CommonStockMember2019-11-032020-02-010000006281us-gaap:AdditionalPaidInCapitalMember2019-11-032020-02-010000006281us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-11-032020-02-010000006281us-gaap:CommonStockMember2020-02-010000006281us-gaap:AdditionalPaidInCapitalMember2020-02-010000006281us-gaap:RetainedEarningsMember2020-02-010000006281us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-02-010000006281us-gaap:CommonStockMember2018-11-030000006281us-gaap:AdditionalPaidInCapitalMember2018-11-030000006281us-gaap:RetainedEarningsMember2018-11-030000006281us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-11-030000006281us-gaap:AccountingStandardsUpdate201616Memberus-gaap:RetainedEarningsMember2018-11-040000006281us-gaap:RetainedEarningsMember2018-11-042019-02-020000006281us-gaap:CommonStockMember2018-11-042019-02-020000006281us-gaap:AdditionalPaidInCapitalMember2018-11-042019-02-020000006281us-gaap:CommonStockMember2019-02-020000006281us-gaap:AdditionalPaidInCapitalMember2019-02-020000006281us-gaap:RetainedEarningsMember2019-02-020000006281us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-02-0200000062812018-11-0300000062812019-02-020000006281srt:MinimumMember2020-02-010000006281srt:MaximumMember2020-02-01xbrli:pure0000006281us-gaap:EmployeeStockOptionMember2019-11-020000006281us-gaap:EmployeeStockOptionMember2019-11-032020-02-010000006281us-gaap:EmployeeStockOptionMember2020-02-010000006281us-gaap:RestrictedStockUnitsRSUMember2019-11-020000006281us-gaap:RestrictedStockUnitsRSUMember2019-11-032020-02-010000006281us-gaap:RestrictedStockUnitsRSUMember2020-02-010000006281us-gaap:CostOfSalesMember2019-11-032020-02-010000006281us-gaap:CostOfSalesMember2018-11-042019-02-020000006281us-gaap:ResearchAndDevelopmentExpenseMember2019-11-032020-02-010000006281us-gaap:ResearchAndDevelopmentExpenseMember2018-11-042019-02-020000006281adi:SellingMarketingGeneralAndAdministrativeExpenseMember2019-11-032020-02-010000006281adi:SellingMarketingGeneralAndAdministrativeExpenseMember2018-11-042019-02-020000006281us-gaap:AccumulatedTranslationAdjustmentMember2019-11-020000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-11-020000006281us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-11-020000006281us-gaap:AccumulatedTranslationAdjustmentMember2019-11-032020-02-010000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-11-032020-02-010000006281us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-11-032020-02-010000006281us-gaap:AccountingStandardsUpdate201802Memberus-gaap:AccumulatedTranslationAdjustmentMember2019-11-030000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:AccountingStandardsUpdate201802Member2019-11-030000006281us-gaap:AccountingStandardsUpdate201802Memberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-11-030000006281us-gaap:AccountingStandardsUpdate201802Member2019-11-030000006281us-gaap:AccumulatedTranslationAdjustmentMember2020-02-010000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-02-010000006281us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-02-010000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:ForeignExchangeContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2019-11-032020-02-010000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:ForeignExchangeContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2018-11-042019-02-020000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:InterestRateContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2019-11-032020-02-010000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:InterestRateContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2018-11-042019-02-020000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2019-11-032020-02-010000006281us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2018-11-042019-02-020000006281us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2019-11-032020-02-010000006281us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2018-11-042019-02-020000006281us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-11-032020-02-010000006281us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2018-11-042019-02-020000006281us-gaap:FacilityClosingMember2019-11-020000006281us-gaap:OtherRestructuringMember2019-11-020000006281us-gaap:SpecialTerminationBenefitsMember2019-11-020000006281adi:RepositionActionMember2019-11-020000006281us-gaap:FacilityClosingMember2019-11-032020-02-010000006281us-gaap:OtherRestructuringMember2019-11-032020-02-010000006281us-gaap:SpecialTerminationBenefitsMember2019-11-032020-02-010000006281adi:RepositionActionMember2019-11-032020-02-010000006281us-gaap:FacilityClosingMember2020-02-010000006281us-gaap:OtherRestructuringMember2020-02-010000006281us-gaap:SpecialTerminationBenefitsMember2020-02-010000006281adi:RepositionActionMember2020-02-010000006281us-gaap:FacilityClosingMemberadi:AccruedLiabilitiesCurrentMember2020-02-010000006281adi:AccruedLiabilitiesCurrentMemberus-gaap:OtherRestructuringMember2020-02-010000006281us-gaap:SpecialTerminationBenefitsMemberadi:AccruedLiabilitiesCurrentMember2020-02-010000006281adi:RepositionActionMemberadi:AccruedLiabilitiesCurrentMember2020-02-010000006281us-gaap:FacilityClosingMemberadi:AccruedLiabilitiesOtherNoncurrentMember2020-02-010000006281adi:AccruedLiabilitiesOtherNoncurrentMemberus-gaap:OtherRestructuringMember2020-02-010000006281us-gaap:SpecialTerminationBenefitsMemberadi:AccruedLiabilitiesOtherNoncurrentMember2020-02-010000006281adi:RepositionActionMemberadi:AccruedLiabilitiesOtherNoncurrentMember2020-02-010000006281us-gaap:EmployeeSeveranceMember2020-02-01adi:employee0000006281us-gaap:IntellectualPropertyMemberadi:RepositionActionMember2019-11-032020-02-010000006281adi:WorkforceReductionPlan2018Memberus-gaap:FacilityClosingMember2020-02-010000006281srt:MinimumMemberadi:WorkforceReductionPlan2018Memberus-gaap:FacilityClosingMember2019-11-032020-02-010000006281adi:WorkforceReductionPlan2018Membersrt:MaximumMemberus-gaap:FacilityClosingMember2019-11-032020-02-010000006281adi:WorkforceReductionPlan2018Memberus-gaap:FacilityClosingMember2019-11-032020-02-01adi:segment0000006281adi:IndustrialMemberus-gaap:OperatingSegmentsMember2019-11-032020-02-010000006281adi:IndustrialMemberus-gaap:OperatingSegmentsMember2018-11-042019-02-020000006281adi:CommunicationsMemberus-gaap:OperatingSegmentsMember2019-11-032020-02-010000006281adi:CommunicationsMemberus-gaap:OperatingSegmentsMember2018-11-042019-02-020000006281adi:AutomotiveMemberus-gaap:OperatingSegmentsMember2019-11-032020-02-010000006281adi:AutomotiveMemberus-gaap:OperatingSegmentsMember2018-11-042019-02-020000006281adi:ConsumerMemberus-gaap:OperatingSegmentsMember2019-11-032020-02-010000006281adi:ConsumerMemberus-gaap:OperatingSegmentsMember2018-11-042019-02-020000006281us-gaap:SalesChannelThroughIntermediaryMember2019-11-032020-02-010000006281us-gaap:SalesChannelThroughIntermediaryMember2018-11-042019-02-020000006281us-gaap:SalesChannelDirectlyToConsumerMember2019-11-032020-02-010000006281us-gaap:SalesChannelDirectlyToConsumerMember2018-11-042019-02-020000006281adi:SalesChannelOtherMember2019-11-032020-02-010000006281adi:SalesChannelOtherMember2018-11-042019-02-020000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2020-02-010000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2020-02-010000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2020-02-010000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-02-010000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-02-010000006281us-gaap:FairValueMeasurementsRecurringMember2020-02-010000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2019-11-020000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2019-11-020000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2019-11-020000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-11-020000006281us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-11-020000006281us-gaap:FairValueMeasurementsRecurringMember2019-11-020000006281us-gaap:LongTermDebtMemberadi:UnsecuredTermLoanThreeYearDueMarch2022Memberus-gaap:UnsecuredDebtMember2019-11-032020-02-010000006281us-gaap:LongTermDebtMemberadi:UnsecuredTermLoanThreeYearDueMarch2022Memberus-gaap:UnsecuredDebtMember2020-02-010000006281us-gaap:LongTermDebtMemberadi:UnsecuredTermLoanThreeYearDueMarch2022Memberus-gaap:UnsecuredDebtMember2019-11-020000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior2.85UnsecuredNotesDueMarch2020Member2020-02-010000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior2.85UnsecuredNotesDueMarch2020Member2019-11-020000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior2.95UnsecuredNotesDueJanuary2021Member2020-02-010000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior2.95UnsecuredNotesDueJanuary2021Member2019-11-020000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior2.50UnsecuredNotesDueDecember2021Member2020-02-010000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior2.50UnsecuredNotesDueDecember2021Member2019-11-020000006281adi:Senior2.875UnsecuredNotesDueJune2023Memberus-gaap:LongTermDebtMemberus-gaap:SeniorNotesMember2020-02-010000006281adi:Senior2.875UnsecuredNotesDueJune2023Memberus-gaap:LongTermDebtMemberus-gaap:SeniorNotesMember2019-11-020000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior3.125UnsecuredNotesDueDecember2023Member2020-02-010000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior3.125UnsecuredNotesDueDecember2023Member2019-11-020000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior3.90UnsecuredNoteDueDecember2025Member2020-02-010000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior3.90UnsecuredNoteDueDecember2025Member2019-11-020000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior3.50UnsecuredNotesDueDecember2026Member2020-02-010000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior3.50UnsecuredNotesDueDecember2026Member2019-11-020000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior4.50UnsecuredNotesDuesDecember2036Member2020-02-010000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior4.50UnsecuredNotesDuesDecember2036Member2019-11-020000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior5.30UnsecuredNotesDuesDecember2045Member2020-02-010000006281us-gaap:LongTermDebtMemberus-gaap:SeniorNotesMemberadi:Senior5.30UnsecuredNotesDuesDecember2045Member2019-11-020000006281us-gaap:LongTermDebtMember2020-02-010000006281us-gaap:LongTermDebtMember2019-11-020000006281us-gaap:ForwardContractsMember2020-02-010000006281us-gaap:ForwardContractsMember2019-11-020000006281us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMember2020-02-010000006281us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMember2019-11-020000006281us-gaap:ForeignExchangeContractMemberus-gaap:AccruedLiabilitiesMember2020-02-010000006281us-gaap:ForeignExchangeContractMemberus-gaap:AccruedLiabilitiesMember2019-11-020000006281us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:AccruedLiabilitiesMember2020-02-010000006281us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:AccruedLiabilitiesMember2019-11-0200000062812017-10-292018-11-03iso4217:EUR0000006281us-gaap:RevenueCommissionersIrelandMember2018-08-052018-11-030000006281us-gaap:RevenueCommissionersIrelandMember2019-11-032020-02-010000006281us-gaap:AccountingStandardsUpdate201802Memberus-gaap:RetainedEarningsMember2020-02-010000006281us-gaap:AccountingStandardsUpdate201801Member2019-11-030000006281us-gaap:CommonStockMemberus-gaap:SubsequentEventMember2020-02-180000006281us-gaap:CommonStockMemberus-gaap:SubsequentEventMember2020-02-182020-02-18


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 1, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File No. 1-7819
Analog Devices, Inc.
(Exact name of registrant as specified in its charter) 

Massachusetts 04-2348234
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
One Technology Way,Norwood,MA 02062-9106
(Address of principal executive offices) (Zip Code)
(781) 329-4700
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock $0.16 2/3 par value per shareADINasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  
As of February 1, 2020 there were 368,220,091 shares of common stock of the registrant, $0.16 2/3 par value per share, outstanding.




PART I - FINANCIAL INFORMATION
 

ITEM 1.Financial Statements


ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)

 Three Months Ended
 February 1, 2020February 2, 2019
Revenue$1,303,565  $1,541,101  
Cost of sales455,423  501,445  
Gross margin848,142  1,039,656  
Operating expenses:
Research and development257,073  287,382  
Selling, marketing, general and administrative199,280  167,342  
Amortization of intangibles107,225  107,324  
Special charges11,136  21,782  
574,714  583,830  
Operating income273,428  455,826  
Nonoperating expense (income):
Interest expense48,813  58,728  
Interest income(1,940) (2,688) 
Other, net338  (160) 
47,211  55,880  
Income before income taxes226,217  399,946  
Provision for income taxes22,343  44,940  
Net income$203,874  $355,006  
Shares used to compute earnings per common share – basic368,241  368,703  
Shares used to compute earnings per common share – diluted372,264  372,506  
Basic earnings per common share$0.55  $0.96  
Diluted earnings per common share$0.55  $0.95  

See accompanying notes.

1



ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands)

Three Months Ended
February 1, 2020February 2, 2019
Net income$203,874  $355,006  
Foreign currency translation adjustments(195) 3,315  
Change in fair value of available-for-sale securities  11  
Change in fair value of derivative instruments designated as cash flow hedges (net of taxes of $5,459 and $6,381, respectively)
(12,028) (22,938) 
Changes in pension plans including transition obligation, net actuarial loss and foreign currency translation adjustments (net of taxes of $160 and $63, respectively)
254  31  
Other comprehensive loss(11,969) (19,581) 
Comprehensive income$191,905  $335,425  


See accompanying notes.


2


ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)

February 1, 2020November 2, 2019
ASSETS  
Current Assets
Cash and cash equivalents$654,408  $648,322  
Accounts receivable584,366  635,136  
Inventories588,503  609,886  
Prepaid expenses and other current assets83,902  91,782  
Total current assets1,911,179  1,985,126  
Property, Plant and Equipment, at Cost
Land and buildings981,131  956,099  
Machinery and equipment2,619,785  2,609,493  
Office equipment81,818  85,490  
Leasehold improvements159,908  160,175  
 3,842,642  3,811,257  
Less accumulated depreciation and amortization2,635,873  2,591,268  
Net property, plant and equipment1,206,769  1,219,989  
Other Assets
Deferred compensation plan investments47,996  47,154  
Other investments30,232  30,170  
Goodwill12,257,064  12,256,880  
Intangible assets, net4,073,078  4,217,224  
Deferred tax assets1,567,521  1,582,382  
Other assets282,988  53,716  
Total other assets18,258,879  18,187,526  
 $21,376,827  $21,392,641  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable$211,670  $225,270  
Income taxes payable118,406  187,879  
Debt, current748,460  299,667  
Accrued liabilities692,006  795,816  
Total current liabilities1,770,542  1,508,632  
Non-current liabilities
Long-term debt4,745,302  5,192,252  
Deferred income taxes2,055,100  2,088,212  
Deferred compensation plan liability47,996  47,154  
Income taxes payable656,103  654,420  
Other non-current liabilities412,267  192,783  
Total non-current liabilities7,916,768  8,174,821  
Commitments and contingencies    
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, 368,220,091 shares outstanding (368,302,369 on November 2, 2019)
61,371  61,385  
Capital in excess of par value4,923,947  4,936,349  
Retained earnings6,906,346  6,899,253  
Accumulated other comprehensive loss(202,147) (187,799) 
Total shareholders’ equity11,689,517  11,709,188  
 $21,376,827  $21,392,641  
See accompanying notes.
3


ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(in thousands)

Three Months Ended February 1, 2020
Capital inAccumulated
Other
 Common StockExcess ofRetainedComprehensive
SharesAmountPar ValueEarningsLoss
BALANCE, NOVEMBER 2, 2019
368,302  $61,385  $4,936,349  $6,899,253  $(187,799) 
Effect of Accounting Standards Update 2018-022,379  (2,379) 
Net income203,874  
Dividends declared and paid - $0.54 per share
(199,160) 
Issuance of stock as charitable contribution336  56  39,944  
Issuance of stock under stock plans and other491  82  16,031  
Stock-based compensation expense37,501  
Other comprehensive loss(11,969) 
Common stock repurchased(909) (152) (105,878) 
BALANCE, FEBRUARY 1, 2020
368,220  $61,371  $4,923,947  $6,906,346  $(202,147) 



Three Months Ended February 2, 2019
Capital inAccumulated
Other
Common StockExcess ofRetainedComprehensive
SharesAmountPar ValueEarningsLoss
BALANCE, NOVEMBER 3, 2018 (1)
370,160  $61,694  $5,282,222  $5,982,697  $(58,440) 
Effect of Accounting Standards Update 2016-16331,026  
Net income355,006  
Dividends declared and paid - $0.48 per share
(177,716) 
Issuance of stock under stock plans and other771  129  19,100  
Stock-based compensation expense36,393  
Other comprehensive loss(19,581) 
Common stock repurchased(2,617) (436) (226,657) 
BALANCE, FEBRUARY 2, 2019
368,314  $61,387  $5,111,058  $6,491,013  $(78,021) 
(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update ASU 2014-09, Revenue from Contracts with Customers, adopted by the Company in fiscal 2019.


See accompanying notes.

4


ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

  
Three Months Ended
 February 1, 2020February 2, 2019
Cash flows from operating activities:
Net income$203,874  $355,006  
Adjustments to reconcile net income to net cash provided by operations:
Depreciation59,863  58,293  
Amortization of intangibles144,069  142,292  
Stock-based compensation expense37,501  36,393  
Non-cash portion of special charge  4,367  
Deferred income taxes(13,982) 15,652  
Non-cash contribution to charitable foundation40,000    
Other non-cash activity2,332  6,693  
Changes in operating assets and liabilities(124,009) (246,929) 
Total adjustments145,774  16,761  
Net cash provided by operating activities349,648  371,767  
Cash flows from investing activities:
Additions to property, plant and equipment(54,839) (90,993) 
Changes in other assets107  (5,222) 
Net cash used for investing activities(54,732) (96,215) 
Cash flows from financing activities:
Proceeds from revolver  75,000  
Payments on revolver  (75,000) 
Debt repayments  (100,000) 
Dividend payments to shareholders(199,160) (177,716) 
Repurchase of common stock(106,030) (227,093) 
Proceeds from employee stock plans16,113  19,229  
Changes in other financing activities(495) (569) 
Net cash used for financing activities(289,572) (486,149) 
Effect of exchange rate changes on cash742  (130) 
Net increase (decrease) in cash and cash equivalents6,086  (210,727) 
Cash and cash equivalents at beginning of period648,322  816,591  
Cash and cash equivalents at end of period$654,408  $605,864  

See accompanying notes.
5


ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 1, 2020
(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, 2019 (fiscal 2019) 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 October 31, 2020 (fiscal 2020) 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. Certain amounts reported in previous periods have been reclassified to conform to the fiscal 2020 presentation.
Note 2 – Leases
In the first quarter of fiscal 2020, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) (ASU 2016-02) using the modified retrospective approach. Results for the first quarter of fiscal 2020 are presented under ASU 2016-02, while prior period consolidated financial statements have not been adjusted and continue to be presented under the accounting standard in effect at that time. See Note 12, New Accounting Pronouncements of these Notes to Condensed Consolidated Financial Statements for further detail on the adoption of this standard, including the initial adoption values.
The Company enters into operating leases which primarily relate to certain facilities. The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. Lease assets represent the Company's right to use underlying assets for the lease term, and lease liabilities represent the obligation to make lease payments over the lease term. At lease commencement, leases are evaluated for classification, and assets and liabilities are recognized based on the present value of lease payments over the lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property. The Company has agreements with lease and non-lease components, which are accounted for as a single lease component. 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 ten 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. Lease costs are recognized on a straight-line basis as lease expense over the lease term. For leases with terms of twelve months or less the Company recognizes the related lease payments as expense either straight-line over the lease term or as incurred depending on whether the lease payments are fixed or variable.
The following table presents supplemental balance sheet information related to our operating leases:
February 1, 2020
Assets
Operating lease right-of-use assets in Other assets
$229,279  
Liabilities
Operating lease liabilities in Accrued liabilities
$34,433  
Operating lease liabilities in Other non-current liabilities
$265,995  

6

ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Details of the Company's operating leases are as follows:
Three Months Ended
February 1, 2020
Lease expense$10,692  
Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows from operating leases$11,399  
Lease assets obtained in exchange for new lease liabilities$4,835  
Weighted average remaining lease term9.4 years
Weighted average discount rate3.3 %
The following table presents the maturities of our operating lease liabilities as of February 1, 2020:
Fiscal yearOperating Leases
Remainder of 2020$33,054  
202140,485  
202235,525  
202332,728  
202432,364  
202531,103  
Thereafter146,645  
Total future minimum operating lease payments351,904  
Less: imputed interest(51,476) 
Present value of operating lease liabilities$300,428  
As of February 1, 2020, we have additional leases for office space and equipment, which have not yet commenced, of approximately $16.6 million. These leases will commence during fiscal year 2020, with lease terms of 10 to 25 years.

Note 3 – Stock-Based Compensation and Shareholders' Equity
A summary of the Company’s stock option activity as of February 1, 2020 and changes during the three-month period then ended is presented below:
Options
Outstanding
(in thousands)
Weighted-
Average Exercise
Price Per Share
Weighted-
Average
Remaining
Contractual
Term in Years
Aggregate
Intrinsic
Value
Options outstanding at November 2, 20195,183  $65.97  
Options exercised(309) $52.19  
Options forfeited(50) $82.44  
Options outstanding at February 1, 20204,824  $66.65  5.7$207,946  
Options exercisable at February 1, 20202,647  $55.65  4.6$143,200  
Options vested or expected to vest at February 1, 2020 (1)4,719  $66.18  5.8$205,625  
(1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. The number of options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options.
During the three-month periods ended February 1, 2020 and February 2, 2019, 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) was $20.3 million and $27.1 million, respectively.
7

ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
A summary of the Company’s restricted stock unit/award activity as of February 1, 2020 and changes during the three-month period then ended is presented below: 
Restricted
Stock Units/Awards
Outstanding
(in thousands)
Weighted-
Average Grant-
Date Fair Value
Per Share
Restricted stock units/awards outstanding at November 2, 20194,396  $87.18  
Units/Awards granted28  $111.25  
Restrictions lapsed(179) $82.45  
Forfeited(117) $87.20  
Restricted stock units/awards outstanding at February 1, 20204,128  $89.44  
As of February 1, 2020, there was $265.3 million of total unrecognized compensation cost related to unvested stock-based awards comprised of stock options and restricted stock units/awards. That cost is expected to be recognized over a weighted-average period of 1.4 years. The total grant-date fair values of shares that vested during the three-month periods ended February 1, 2020 and February 2, 2019 were approximately $14.8 million and $19.6 million, respectively.

Total stock-based compensation expense recognized was as follows:
Three Months Ended
February 1, 2020February 2, 2019
Cost of sales$4,564  $5,084  
Research and development17,605  18,925  
Selling, marketing, general and administrative15,332  12,384  
Total stock-based compensation expense$37,501  $36,393  

As of February 1, 2020 and November 2, 2019, the Company capitalized $6.3 million and $6.8 million, respectively, of stock-based compensation in Inventories on the Condensed Consolidated Balance Sheets.
Common Stock Repurchases
As of February 1, 2020, the Company had repurchased a total of approximately 155.3 million shares of its common stock for approximately $6.2 billion under the Company's share repurchase program. As of February 1, 2020, an additional $2.0 billion remains available for repurchase of shares under the current authorized program.
Analog Devices Foundation
During the first three months of fiscal 2020, the Company contributed 335,654 shares of its common stock to the newly formed 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 Condensed Consolidated Statement of Income.
8

ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 4 – 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 2020.
Foreign currency translation adjustment
Unrealized holding gains (losses) on derivatives
Pension plans
Total
November 2, 2019$(30,076) $(118,015) $(39,708) $(187,799) 
Other comprehensive loss before reclassifications(195) (18,781)(234) (19,210) 
Amounts reclassified out of other comprehensive income (loss)  1,294  648  1,942  
Tax effects  5,459  (160) 5,299  
Other comprehensive (loss) income(195) (12,028) 254  (11,969) 
Effect of Accounting Standards Update 2018-02  (2,379)   (2,379) 
February 1, 2020$(30,271) $(132,422) $(39,454) $(202,147) 
The amounts reclassified out of AOCI into the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Shareholders' Equity with presentation location during each period were as follows:

Three Months Ended
Comprehensive Income ComponentFebruary 1, 2020February 2, 2019Location
Unrealized holding losses (gains) on derivatives
Currency forwards $(80) $719  Cost of sales
378  848  Research and development
532  915  Selling, marketing, general and administrative
Interest rate derivatives464  46  Interest expense
1,294  2,528  Total before tax
(370) (508) Tax
Effect of Accounting Standards Update 2018-02(2,379) —  Retained earnings
$(1,455) $2,020  Net of tax
Amortization of pension components included in the computation of net periodic pension cost
     Actuarial losses648  257  
(160) (63) Tax
$488  $194  Net of tax
Total amounts reclassified out of AOCI, net of tax$(967) $2,214  

The Company estimates that settlements of forward foreign currency derivative instruments included in AOCI that will be reclassified into earnings will be immaterial within the next twelve months.
Realized gains or losses on investments are determined based on the specific identification basis and are recognized in nonoperating expense (income). There were no material net realized gains or losses from the sales of available-for-sale investments during any of the fiscal periods presented.
9

ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 5 – Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
 Three Months Ended
 February 1, 2020February 2, 2019
Net Income$203,874  $355,006  
Basic shares:
Weighted-average shares outstanding368,241  368,703  
Earnings per common share basic:$0.55  $0.96  
Diluted shares:
Weighted-average shares outstanding368,241  368,703  
Assumed exercise of common stock equivalents4,023  3,803  
Weighted-average common and common equivalent shares372,264  372,506  
Earnings per common share diluted:$0.55  $0.95  
Anti-dilutive shares related to:
Outstanding stock-based awards397  2,011  

Note 6 – Special Charges
The Company monitors global macroeconomic conditions on an ongoing basis and continues to assess opportunities for improved operational effectiveness and efficiency, as well as a better alignment of expenses with revenues. As a result of these assessments, the Company has undertaken various restructuring actions over the past several years. These actions are described below.
The following table is a quarterly roll-forward from November 2, 2019 to February 1, 2020 of the employee separation and exit cost accruals established related to these actions:
Accrued RestructuringClosure of Manufacturing Facilities Reduction of Operating Costs ActionEarly Retirement ActionRepositioning Action
Balance at November 2, 2019$50,401  $940  $4,583  $58,895  
First quarter fiscal 2020 special charges1,982      9,154  
Severance and other payments(908) (282) (189) (29,597) 
Effect of foreign currency on accrual(30)     (21) 
Balance at February 1, 2020$51,445  $658  $4,394  $38,431  
Current - accrued liabilities$  $658  $4,394  $38,431  
Other non-current liabilities$51,445  $  $  $  
Repositioning Action
The Company recorded special charges of $97.2 million on a cumulative basis through February 1, 2020, as a result of organizational initiatives to reposition the Company's global workforce skill set to align with the Company's long-term strategic plan. Approximately $83.0 million of the total charges was for severance and fringe benefit costs in accordance with either the Company's ongoing benefit plan or statutory requirements for 504 engineering and selling, marketing, general and administrative (SMG&A) employees. As of February 1, 2020, the Company still employed 109 of the 504 employees included in this action. These employees must continue to be employed by the Company until their employment is involuntarily terminated in order to receive the severance benefits. The remaining $14.2 million of the charges were recorded in fiscal 2019 and related to the write-off of acquired intellectual property due to the Company's decision to discontinue certain product development strategies.
10

ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Closure of Manufacturing Facilities
The Company recorded special charges of $54.0 million on a cumulative basis through February 1, 2020 as a result of its decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear Technology Corporation. Over the next one to three years, the Company plans to close its Hillview wafer fabrication facility located in Milpitas, California and its Singapore test facility. The Company intends to transfer Hillview wafer fabrication production to its other internal facilities and to external foundries. In addition, the Company is planning to transition testing operations currently handled in its Singapore facility to its facilities in Penang, Malaysia and the Philippines, in addition to its outsourced assembly and test partners. The special charges include severance and fringe benefit costs, in accordance with the Company's ongoing benefit plan or statutory requirements at foreign locations, and one-time termination benefits for 1,100 manufacturing, engineering and SMG&A employees. These one-time termination benefits are being recognized over the future service period required for employees to earn these benefits. Employees included in this action must continue to be employed by the Company until their employment is terminated by the Company in order to receive the severance benefits.
Note 7 – Segment Information
The Company designs, develops, manufactures and markets a broad range of integrated circuits. The Company operates and tracks its results in one reportable segment based on the aggregation of eight operating segments. The Chief Executive Officer has been identified as the Company's Chief Operating Decision Maker.
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 evolve and improve, 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, 2020February 2, 2019
 Revenue% of Revenue*Y/Y%Revenue% of Revenue*
Industrial$684,862  53 %(7)%$733,432  48 %
Communications239,928  18 %(31)%347,016  23 %
Automotive205,330  16 %(16)%244,062  16 %
Consumer173,445  13 %(20)%216,591  14 %
Total revenue$1,303,565  100 %(15)%$1,541,101  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 (OEMs). Other customers include the U.S. government, government prime contractors and some commercial customers.
Three Months Ended
February 1, 2020February 2, 2019
ChannelRevenue% of Revenue*Revenue% of Revenue*
   Distributors$747,561  57 %$829,243  54 %
   Direct customers529,731  41 %695,489  45 %
   Other26,273  2 %16,369  1 %
Total revenue$1,303,565  100 %$1,541,101  100 %
* The sum of the individual percentages may not equal the total due to rounding.

11

ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 8 – Fair Value
The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
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.
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. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.
The tables below, set forth by level, presents the Company’s financial assets and liabilities, excluding accrued interest components that were accounted for at fair value on a recurring basis as of February 1, 2020 and November 2, 2019. The tables exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of February 1, 2020 and November 2, 2019, the Company held $256.1 million and $231.4 million, respectively, of cash and held-to-maturity investments that were excluded from the tables below.
 February 1, 2020
 
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$398,285  $  $398,285  
Other assets:
Deferred compensation investments