DEFM14A 1 d260049ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

 

 

Filed by the Registrant  x                              Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

¨   Preliminary Proxy Statement
¨   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x   Definitive Proxy Statement
¨   Definitive Additional Materials
¨   Soliciting Material under §240.14a-12

LINEAR TECHNOLOGY CORPORATION

(Name of Registrant as Specified In Its Charter)

n/a

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x   No fee required.
¨   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

¨   Fee paid previously with preliminary materials.
¨   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount previously paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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LOGO

 

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Linear Technology Corporation Stockholder:

On July 26, 2016, Linear Technology Corporation (referred to as Linear Technology), Analog Devices, Inc. (referred to as Analog Devices) and Tahoe Acquisition Corp., a wholly owned subsidiary of Analog Devices (referred to as Merger Sub), entered into an Agreement and Plan of Merger that provides for the acquisition of Linear Technology by Analog Devices (such agreement, as it may be amended from time to time, is referred to as the merger agreement). Upon the terms and subject to the conditions of the merger agreement, Merger Sub will merge with and into Linear Technology (referred to as the merger), with Linear Technology surviving the merger as a wholly owned subsidiary of Analog Devices. If the merger is completed, you will be entitled to receive, for each share of Linear Technology common stock that you own immediately prior to the merger, $46.00 in cash, without interest, plus 0.2321 shares of Analog Devices common stock, less any applicable withholding taxes. This proportion of cash and shares is subject to adjustment in certain limited circumstances. You will receive cash in lieu of any fractional shares of Analog Devices common stock that you would otherwise be entitled to receive.

Based on the closing stock price of Analog Devices common stock on July 25, 2016, the last full trading day before the publication of press reports that Analog Devices and Linear Technology were in advanced negotiations regarding a potential business combination transaction, the per share value of Linear Technology common stock implied by the per share merger consideration is $60.05. Based on the closing stock price of Analog Devices common stock on September 12, 2016, the most recent practicable date prior to the date of the accompanying proxy statement/prospectus, the per share value implied by the per share merger consideration is $60.07, which represents a premium of approximately 24% over Linear Technology’s closing stock price on July 25, 2016. The implied value of the per share merger consideration will fluctuate as the market price of Analog Devices common stock fluctuates because a portion of the per share merger consideration is payable in a fixed number of shares of Analog Devices common stock. As a result, the value of the per share merger consideration that Linear Technology stockholders will receive upon completion of the merger could be greater than, less than or the same as the value of the merger consideration on the date of the accompanying proxy statement/prospectus or at the time of the Linear Technology annual meeting described in the accompanying proxy statement/prospectus (referred to as the annual meeting). Accordingly, you should obtain current stock price quotations for Analog Devices common stock and Linear Technology common stock before deciding how to vote with respect to the approval of the merger proposal. Analog Devices common stock and Linear Technology common stock trade on The Nasdaq Global Select Market under the symbols “ADI” and “LLTC,” respectively.

Based on the number of shares of Analog Devices common stock and Linear Technology common stock outstanding on September 12, 2016, upon completion of the merger, former Linear Technology stockholders will own approximately 15.6% of the outstanding shares of Analog Devices common stock and Analog Devices stockholders immediately prior to the merger will own approximately 84.4% of the outstanding shares of Analog Devices common stock.

The Linear Technology board of directors unanimously determined that the merger, the merger agreement and the other transactions contemplated by the merger agreement are advisable, fair to and in the best interests of Linear Technology and its stockholders and approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement.

At the annual meeting, you will be asked to approve the merger proposal, to vote on the director election proposal and to vote on other merger-related and annual meeting matters. The Linear Technology board of directors unanimously recommends that Linear Technology stockholders vote “FOR” the merger proposal, “FOR” the seven director nominees listed in the director election proposal and “FOR” each of the other proposals described in the accompanying proxy statement/prospectus.

Your vote is very important. Analog Devices and Linear Technology cannot complete the merger without the approval of the merger proposal by Linear Technology stockholders holding at least a majority of the shares of Linear Technology common stock outstanding at the close of business on September 7, 2016, the record date for the annual meeting. The failure of any stockholder to vote will have the same effect as a vote against the approval of the merger proposal. It is important that your shares of Linear Technology common stock be represented and voted regardless of the size of your holdings. Whether or not you plan to attend the annual meeting, Linear Technology urges you to submit a proxy in advance of the annual meeting to have your shares voted by using one of the methods described in the accompanying proxy statement/prospectus.

More information about Analog Devices, Linear Technology, the annual meeting, the merger and the other proposals for consideration at the annual meeting is contained in the accompanying proxy statement/prospectus. Please carefully read the entire proxy statement/prospectus, including the section titled “Risk Factors” beginning on page 23, for a discussion of the risks relating to the proposed merger, and the annexes and documents incorporated by reference.

On behalf of the Linear Technology board of directors, thank you for your continued support.

Sincerely,

 

LOGO

Lothar Maier

Chief Executive Officer

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER OR OTHER TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS OR THE SECURITIES TO BE ISSUED PURSUANT TO THE MERGER UNDER THE ACCOMPANYING PROXY STATEMENT/ PROSPECTUS NOR HAVE THEY DETERMINED IF THE ACCOMPANYING PROXY STATEMENT/ PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The accompanying proxy statement/prospectus is dated September 16, 2016 and is first being mailed to Linear Technology stockholders on or about September 19, 2016.


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LOGO

 

LINEAR TECHNOLOGY CORPORATION

1630 McCarthy Boulevard

Milpitas, California 95035

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 18, 2016

This is a notice that the annual meeting of stockholders of Linear Technology Corporation (referred to as Linear Technology) will be held on October 18, 2016, beginning at 3:00 p.m., local time, at Linear Technology’s principal executive offices at the above address, unless postponed to a later date. The annual meeting will be held for the following purposes:

 

  1. to adopt the Agreement and Plan of Merger, dated as of July 26, 2016 (such agreement, as it may be amended from time to time, is referred to as the merger agreement), by and among Linear Technology, Analog Devices, Inc. (referred to as Analog Devices) and Tahoe Acquisition Corp., a wholly owned subsidiary of Analog Devices (referred to as Merger Sub), pursuant to which, upon the terms and subject to the conditions of the merger agreement, Merger Sub will merge with and into Linear Technology (referred to as the merger), with Linear Technology surviving the merger as a wholly owned subsidiary of Analog Devices (referred to as the merger proposal);

 

  2. to approve on an advisory (non-binding) basis the compensation that may be paid or become payable to Linear Technology’s named executive officers that is based on or otherwise relates to the merger (referred to as the merger-related compensation proposal);

 

  3. to elect seven director nominees to serve until the next annual meeting of stockholders of Linear Technology and until their successors are elected (referred to as the director election proposal);

 

  4. to approve on an advisory (non-binding) basis the compensation (other than compensation that is based on or otherwise relates to the merger) of Linear Technology’s named executive officers (referred to as the executive compensation proposal);

 

  5. to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of Linear Technology for the fiscal year ending July 2, 2017 (referred to as the accountant ratification proposal);

 

  6. to approve the adjournment of the annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the merger proposal (referred to as the adjournment proposal); and

 

  7. to transact any other business that may properly come before the annual meeting and any adjournment or postponement thereof.

The accompanying proxy statement/prospectus describes the proposals listed above in more detail. Please refer to the accompanying proxy statement/prospectus, including the merger agreement and the other annexes and documents included in, or incorporated by reference into, the accompanying proxy statement/prospectus for further information with respect to the business to be transacted at the annual meeting. You are encouraged to read the entire proxy statement/prospectus carefully before voting. In particular, see the section titled “Risk Factors” beginning on page 23.

The Linear Technology board of directors unanimously determined that the merger, the merger agreement and the other transactions contemplated by the merger agreement are advisable, fair to and in the best interests of Linear Technology and its stockholders and approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement. The


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Linear Technology board of directors recommends that Linear Technology stockholders vote “FOR” the merger proposal, “FOR” the seven director nominees listed in the director election proposal and “FOR” each of the other proposals listed above and described in more detail in the accompanying proxy statement/prospectus.

The Linear Technology board of directors has fixed the close of business on September 7, 2016 as the record date for determination of Linear Technology stockholders entitled to receive notice of, and to vote at, the annual meeting or any adjournments or postponements thereof. Only holders of record of Linear Technology common stock as of the close of business on the record date are entitled to receive notice of, and to vote at, the annual meeting.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES THAT YOU OWN.

The merger cannot be completed unless the merger proposal is adopted by the affirmative vote, in person or by proxy, of holders of a majority of the outstanding shares of Linear Technology common stock entitled to vote thereon.

The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy at the annual meeting and entitled to vote thereon is required to approve the merger-related compensation proposal, the executive compensation proposal, the accountant ratification proposal and the adjournment proposal.

Each of the seven director nominees receiving the highest number of “FOR” votes will be elected as a director, provided that such nominee does not receive “AGAINST” votes from stockholders holding a majority of the outstanding shares entitled to vote for the election of directors.

Whether or not you expect to attend the annual meeting in person, Linear Technology urges you to submit a proxy to have your shares voted as promptly as possible by either: (1) logging onto the website shown on your proxy card and following the instructions to submit a proxy online; (2) dialing the toll-free number shown on your proxy card and following the instructions to submit a proxy by phone; or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the annual meeting. If your shares are held in the name of a bank, brokerage firm or other nominee, please follow the instructions on the voting instruction card furnished by such bank, brokerage firm or other nominee. Any stockholder of record attending the annual meeting may vote in person even if such stockholder has returned a proxy card.

If you have any questions about the annual meeting, the merger, the other proposals or the accompanying proxy statement/prospectus, would like additional copies of the proxy statement/prospectus, need to obtain proxy cards or other information related to this proxy solicitation or need help submitting a proxy or voting your shares of Linear Technology common stock, please contact Linear Technology’s proxy solicitor:

Morrow Sodali

470 West Ave.

Stamford, Connecticut 06902

Stockholders may call toll-free: 800-662-5200

Banks and brokers may call collect: 203-658-9400

By order of the board of directors

 

LOGO

Donald P. Zerio

Secretary

Dated: September 16, 2016

Milpitas, California


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ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Analog Devices and Linear Technology from other documents that Analog Devices and Linear Technology have filed with the U.S. Securities and Exchange Commission (referred to in this proxy statement/prospectus as the SEC) and that are contained in or incorporated by reference into this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see the section titled “Where You Can Find More Information” beginning on page 199. This information is available for you to review at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, DC 20549, and through the SEC’s website at www.sec.gov.

You can obtain copies of this proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus free of charge by requesting them in writing or by telephone at the following addresses and telephone numbers:

 

For Information Regarding Analog Devices:   For Information Regarding Linear Technology:

Analog Devices, Inc.

One Technology Way

Norwood, Massachusetts 02062-9106

(781) 329-4700

Attention: Investor Relations

 

Linear Technology Corporation

1630 McCarthy Boulevard

Milpitas, California 95035

(408) 432-1900

Attention: Investor Relations

In addition, if you have questions about the annual meeting, the merger, the proposals or this proxy statement/prospectus, would like additional copies of the proxy statement/prospectus, need to obtain proxy cards or other information related to the proxy solicitation or need help submitting a proxy or voting your shares of Linear Technology common stock, you may contact Morrow Sodali, Linear Technology’s proxy solicitor, at the address and telephone number listed below. You will not be charged for any of these documents that you request.

 

Morrow Sodali

470 West Ave.

Stamford, Connecticut 06902

Stockholders may call toll-free: 800-662-5200

Banks and brokers may call collect: 203-658-9400

If you would like to request any documents, please do so by October 11, 2016, which is the date that is five business days prior to the date of the annual meeting, in order to receive them before the annual meeting.

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 (Registration No. 333-213454) filed with the SEC by Analog Devices, constitutes a prospectus of Analog Devices under the Securities Act of 1933, as amended (referred to in this proxy statement/prospectus as the Securities Act), with respect to the Analog Devices common stock to be issued to Linear Technology stockholders pursuant to the merger. This proxy statement/prospectus also constitutes a proxy statement for Linear Technology under the Securities Exchange Act of 1934, as amended (referred to in this proxy statement/prospectus as the Exchange Act), and a notice of meeting with respect to the annual meeting of Linear Technology stockholders.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated September 16, 2016, and you should assume that the information contained in this proxy statement/prospectus is accurate only as of such date. You should also assume that the information incorporated by reference into this proxy statement/prospectus is accurate only as of the date of such information.


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This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this proxy statement/prospectus regarding Analog Devices has been provided by Analog Devices, and information contained in this proxy statement/prospectus regarding Linear Technology has been provided by Linear Technology.


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS

     v  

SUMMARY

     1  

The Parties

     1  

Linear Technology Corporation

     1  

Analog Devices, Inc.

     1   

Tahoe Acquisition Corp.

     2   

The Merger and the Merger Agreement

     2   

Per Share Merger Consideration

     2   

Linear Technology Annual Meeting

     3   

How Proxies are Counted; Failure to Vote; Abstentions and Broker Non-Votes

     4   

Linear Technology’s Reasons for the Merger; Recommendation of the Linear Technology Board of Directors

     5   

Opinion of Linear Technology’s Financial Advisor

     5   

Interests of Linear Technology’s Directors and Executive Officers in the Merger

     6   

Material U.S. Federal Income Tax Consequences of the Merger

     6   

Accounting Treatment of the Merger

     6   

Regulatory Approvals Required to Complete the Merger

     7   

Expected Timing of Merger

     7   

Treatment of Linear Technology Equity Awards

     7   

Financing of the Merger

     8   

Listing of Analog Devices Common Stock; Delisting of Linear Technology Common Stock

     9   

Appraisal Rights

     9   

No Solicitation of Company Takeover Proposals

     10   

Changes in Board Recommendation

     10   

Conditions to Completion of the Merger

     11   

Termination of the Merger Agreement

     12   

Expenses and Termination Fees Relating to the Merger

     12   

Comparison of Rights of Common Stockholders of Analog Devices and Linear Technology

     12   

Risk Factors

     12   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

     13   

Selected Historical Consolidated Financial Data of Analog Devices

     13   

Selected Historical Consolidated Financial Data of Linear Technology

     14   

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     16   

UNAUDITED COMPARATIVE PER SHARE INFORMATION

     18   

COMPARATIVE STOCK PRICE DATA AND DIVIDENDS

     19   

Stock Prices

     19   

Dividends

     20   

 

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     Page  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     21   

RISK FACTORS

     23   

Risks Relating to the Merger

     23   

Other Risk Factors of Analog Devices and Linear Technology

     31   

INFORMATION ABOUT LINEAR TECHNOLOGY

     32   

Linear Technology Corporation

     32   

INFORMATION ABOUT ANALOG DEVICES

     33   

Analog Devices, Inc.

     33   

Tahoe Acquisition Corp.

     33   

INFORMATION ABOUT THE LINEAR TECHNOLOGY ANNUAL MEETING

     34   

General

     34   

Date, Time and Place of the Annual Meeting

     34   

Purposes of the Annual Meeting

     34   

Attendance at the Annual Meeting

     34   

Record Date

     35   

Outstanding Shares as of Record Date

     35   

Shares and Voting of Linear Technology’s Directors and Executive Officers

     35   

Quorum and Broker Non-Votes

     36   

Required Vote

     36   

How To Vote or Have Your Shares Voted

     37   

Revocation of Proxies

     38   

Inspector of Election

     39   

Solicitation of Proxies

     39   

Adjournments

     39   

Questions and Additional Information

     39   

PROPOSAL 1: THE MERGER PROPOSAL

     40   

PROPOSAL 2: THE MERGER-RELATED COMPENSATION PROPOSAL

     41   

PROPOSAL 3: THE DIRECTOR ELECTION

     42   

Board Meetings and Committees

     44   

Audit Committee

     44   

Compensation Committee

     44   

Nominating and Corporate Governance Committee

     45   

Corporate Governance Matters

     45   

Vote Required and Recommendation of Linear Technology Board of Directors

     48   

PROPOSAL 4: THE EXECUTIVE COMPENSATION PROPOSAL

     49   

PROPOSAL 5: THE ACCOUNTANT RATIFICATION PROPOSAL

     52   

BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN OTHER BENEFICIAL OWNERS

     53   

DIRECTOR COMPENSATION

     55   

 

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     Page  

COMPENSATION DISCUSSION AND ANALYSIS

     56   

COMPENSATION COMMITTEE REPORT

     73   

SUMMARY COMPENSATION TABLE

     74   

GRANTS OF PLAN-BASED AWARDS

     75   

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

     76   

OPTION EXERCISES AND STOCK VESTED

     77   

EQUITY COMPENSATION PLAN SUMMARY

     78   

SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     91   

AUDIT COMMITTEE REPORT

     92   

PROPOSAL 6: THE ADJOURNMENT PROPOSAL

     93   

THE MERGER

     94   

Per Share Merger Consideration

     94   

Background of the Merger

     95   

Linear Technology’s Reasons for the Merger; Recommendation of the Linear Technology Board of Directors

     105   

Certain Financial Projections Utilized by the Linear Technology Board of Directors and Linear Technology’s Financial Advisor

     110   

Opinion of Linear Technology’s Financial Advisor

     113   

Interests of Linear Technology’s Directors and Executive Officers in the Merger

     119   

Accounting Treatment of the Merger

     126   

Material U.S. Federal Income Tax Consequences

     127   

Financing of the Merger

     130   

Regulatory Approvals

     132   

Exchange of Shares

     134   

Treatment of Linear Technology Equity Awards

     136   

Dividend Policy

     136   

Listing of Analog Devices Common Stock; Delisting of Linear Technology Common Stock

     136   

THE MERGER AGREEMENT

     137   

Closing; Effective Time

     137   

Effect of the Merger on Capital Stock

     138   

Exchange and Payment Procedures

     139   

Treatment of Linear Technology Equity Awards

     141   

Representations and Warranties

     142   

Conduct of Businesses of Linear Technology and Analog Devices Prior to Completion of the Merger

     144   

No Solicitation of Company Takeover Proposals

     147   

No Change in Recommendation or Termination For a Company Superior Proposal

     148   

Linear Technology Stockholder Meeting

     150   

Financing

     150   

 

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     Page  

Access to Information

     151   

Employee Matters

     151   

Indemnification and Insurance

     152   

Certain Additional Covenants

     153   

Conditions to Completion of the Merger

     153   

Regulatory Approvals

     154   

Termination of the Merger Agreement

     155   

Amendment and Assignment

     157   

Jurisdiction; Specific Enforcement

     157   

OTHER MATTERS

     159   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     160   

DESCRIPTION OF ANALOG DEVICES CAPITAL STOCK

     173   

Common Stock

     173   

Certain Effects of Authorized but Unissued Stock

     174   

Provisions of Analog Devices Charter, Analog Devices Bylaws and Massachusetts Law That May Have Anti-Takeover Effects

     174   

COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF ANALOG DEVICES AND LINEAR TECHNOLOGY

     176   

APPRAISAL RIGHTS OF LINEAR TECHNOLOGY STOCKHOLDERS

     191   

LEGAL MATTERS

     195   

EXPERTS

     196   

Analog Devices

     196   

Linear Technology

     196   

LINEAR TECHNOLOGY 2017 STOCKHOLDER PROPOSALS

     197   

HOUSEHOLDING OF PROXY STATEMENT/PROSPECTUS

     198   

WHERE YOU CAN FIND MORE INFORMATION

     199   

Annex A

  Agreement and Plan of Merger, dated as of July 26, 2016, by and among Linear Technology Corporation, Analog Devices, Inc., and Tahoe Acquisition Corp.

Annex B

  Opinion of Qatalyst Partners LP

Annex C

  General Corporation Law of the State of Delaware, Section 262

 

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QUESTIONS AND ANSWERS

The following questions and answers are intended to briefly address some commonly asked questions regarding the merger, the merger agreement and the annual meeting. These questions and answers may not address all questions that may be important to you as a Linear Technology stockholder. Please refer to the section titled “Summary” beginning on page 1 and the more detailed information contained elsewhere in this proxy statement/prospectus, the annexes to this proxy statement/prospectus and the documents referred to in this proxy statement/prospectus, which you should read carefully and in their entirety. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions under the section titled “Where You Can Find More Information” beginning on page 199.

 

Q: Why am I receiving this proxy statement/prospectus?

 

A: Linear Technology Corporation (referred to in this proxy statement/prospectus as Linear Technology) is sending these materials to Linear Technology stockholders to help them decide how to vote their shares of Linear Technology common stock with respect to the adoption of the Agreement and Plan of Merger, dated July 26, 2016, by and among Linear Technology, Analog Devices, Inc. (referred to in this proxy statement/prospectus as Analog Devices) and Tahoe Acquisition Corp., a wholly owned subsidiary of Analog Devices (referred to in this proxy statement/prospectus as Merger Sub), which agreement provides for the acquisition of Linear Technology by Analog Devices (such agreement, as it may be amended from time to time, is referred to in this proxy statement/prospectus as the merger agreement) and with respect to the other proposals to be considered at the 2016 annual meeting of Linear Technology stockholders (referred to as the annual meeting).

This document constitutes both a proxy statement of Linear Technology and a prospectus of Analog Devices. It is a proxy statement because Linear Technology is soliciting proxies from its stockholders. It is a prospectus because Analog Devices will issue shares of its common stock in exchange for shares of Linear Technology common stock in the merger if the merger is completed.

 

Q: What is the merger?

 

A: Linear Technology has agreed to be acquired by Analog Devices under the terms of the merger agreement, which is further described in this proxy statement/prospectus. If the merger agreement is adopted by Linear Technology stockholders and the other conditions to closing under the merger agreement are satisfied or waived, Merger Sub will merge with and into Linear Technology (referred to in this proxy statement/prospectus as the merger), with Linear Technology surviving the merger as a wholly owned subsidiary of Analog Devices. Linear Technology is sometimes referred to in this proxy statement/prospectus as the surviving company.

The merger cannot be completed unless the merger proposal is approved by the affirmative vote, in person or by proxy, of holders of a majority of the outstanding shares of Linear Technology common stock entitled to vote thereon. Your failing to submit a proxy or vote in person at the annual meeting, or your abstaining from voting or your failing to provide your bank, brokerage firm or other nominee with instructions on how to vote your shares, as applicable, will have the same effect as a vote “AGAINST” the merger proposal. The Linear Technology board of directors unanimously recommends that stockholders vote “FOR” the merger proposal. This proxy statement/prospectus includes important information about the merger and the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. Linear Technology stockholders should read this information carefully and in its entirety.

 

Q: Are there any risks that I should consider in deciding whether to vote for the approval of the merger proposal?

 

A: Yes. You should read and carefully consider the risk factors set forth in the section titled “Risk Factors” beginning on page 23. You also should read and carefully consider the risk factors of Analog Devices and Linear Technology contained in the documents that are incorporated by reference into this proxy statement/prospectus.

 

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Q: What will Linear Technology stockholders receive for their shares if the merger is completed?

 

A: If the merger is completed, you will be entitled to receive, for each share of Linear Technology common stock that you hold, merger consideration equal to $46.00 in cash, without interest, plus 0.2321 shares of Analog Devices common stock, less any applicable withholding taxes. This proportion of cash and shares is subject to adjustment in certain limited circumstances. You will receive cash in lieu of any fractional shares of Analog Devices common stock that you would otherwise be entitled to receive.

Based on the closing stock price of Analog Devices common stock on July 25, 2016, the last full trading day before the publication of press reports that Analog Devices and Linear Technology were in advanced negotiations regarding a potential business combination transaction, the per share value of Linear Technology common stock implied by the per share merger consideration is $60.05. Based on the closing stock price of Analog Devices common stock on September 12, 2016, the most recent practicable date prior to the date of this proxy statement/prospectus, the per share value of Linear Technology common stock implied by the per share merger consideration is $60.07. The implied value of the per share merger consideration will fluctuate as the market price of Analog Devices common stock fluctuates because a portion of the per share merger consideration is payable in a fixed number of shares of Analog Devices common stock. As a result, the value of the per share merger consideration that Linear Technology stockholders will receive upon completion of the merger could be greater than, less than or the same as the value of the merger consideration on the date of this proxy statement/prospectus or at the time of the Linear Technology annual meeting. Accordingly, you should obtain current stock price quotations for Analog Devices common stock and Linear Technology common stock before deciding how to vote with respect to approval of the merger proposal. Analog Devices common stock and Linear Technology common stock trade on The Nasdaq Global Select Market under the symbols “ADI” and “LLTC,” respectively.

For additional information regarding the consideration to be received in the merger, see the section titled “The Merger—Per Share Merger Consideration” beginning on page 94.

 

Q: What happens if I am eligible to receive a fraction of a share of Analog Devices common stock as part of the per share merger consideration?

 

A: If the aggregate number of shares of Analog Devices common stock that you are entitled to receive as part of the per share merger consideration otherwise would include a fraction of a share of Analog Devices common stock, you will receive cash in lieu of that fractional share. See the section titled “The Merger—Exchange of Shares” beginning on page 134.

 

Q: What will holders of Linear Technology equity awards receive in the merger?

 

A: At the effective time of the merger (referred to in this proxy statement/prospectus as the effective time), each Linear Technology restricted stock award and restricted stock unit award that is outstanding immediately prior to the effective time that is held by a non-employee director, or that vests at the effective time pursuant to a contract between the holder and Linear Technology, will become vested and will be cancelled and converted automatically into the right to receive the merger consideration in respect of each share of Linear Technology common stock underlying such award, less applicable tax withholding.

At the effective time, each Linear Technology restricted stock award and restricted stock unit award that is outstanding immediately prior to the effective time, was granted on or prior to July 22, 2016 and does not become vested at the effective time will be converted into two adjusted awards with the same terms and conditions (including vesting) as were applicable to the corresponding Linear Technology award immediately prior to the effective time, which adjusted awards will be in the form of (i) the right to receive an amount in cash equal to the product of (a) the number of shares of Linear Technology common stock subject to such Linear Technology restricted stock or restricted stock unit award immediately prior the effective time and (b) $46.00, and (ii) an Analog Devices restricted stock award or restricted stock unit award, as applicable, relating to the number of shares of Analog Devices common stock equal to the product

 

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(rounded to the nearest whole number of shares) of (a) the number of shares of Linear Technology common stock subject to the Linear Technology restricted stock award or restricted stock unit award immediately prior to the effective time and (b) the exchange ratio of 0.2321.

At the effective time, each Linear Technology restricted stock award and restricted stock unit award that is outstanding immediately prior to the effective time, was granted after July 22, 2016 and does not become vested at the effective time will be converted into an adjusted Analog Devices restricted stock award or restricted stock unit award, as applicable, relating to the number of shares of Analog Devices common stock equal to the product (rounded to the nearest whole number of shares) of (i) the number of shares of Linear Technology common stock subject to such Linear Technology restricted stock award or restricted stock unit award immediately prior to the effective time and (ii) 0.9947.

See “The Merger Agreement—Treatment of Linear Technology Equity Awards” beginning on page 141.

 

Q: How will I receive the merger consideration to which I am entitled?

 

A: After receiving the proper documentation from you, following completion of the merger, the exchange agent for the merger will forward to you the Analog Devices common stock and cash to which you are entitled. More information on the documentation you are required to deliver to the exchange agent may be found in the section titled “The Merger Agreement—Exchange and Payment Procedures” beginning on page 139.

 

Q: What will happen to Linear Technology as a result of the merger?

 

A: If the merger is completed, Merger Sub will be merged with and into Linear Technology, with Linear Technology continuing as the surviving company and a wholly owned subsidiary of Analog Devices. As a result of the merger, Linear Technology will no longer be a publicly held company. Following the merger, Linear Technology common stock will be delisted from The Nasdaq Global Select Market and deregistered under the Exchange Act.

 

Q: Will the Analog Devices common stock received at the time of completion of the merger be traded on an exchange?

 

A: It is a condition to the consummation of the merger that the shares of Analog Devices common stock to be issued to Linear Technology stockholders in the merger be approved for listing on The Nasdaq Global Select Market, subject to official notice of issuance.

 

Q: When is the merger expected to be completed?

 

A: Analog Devices and Linear Technology currently expect the merger to be completed during the first half of calendar year 2017, subject to receipt of required approval from Linear Technology stockholders and regulatory approvals in various jurisdictions and subject to the satisfaction or waiver of the other conditions contained in the merger agreement. However, Analog Devices and Linear Technology cannot predict the actual date on which the merger will be completed because completion is subject to conditions beyond their control and it is possible that such conditions could result in the merger being completed earlier, later or not at all. See the sections titled “The Merger—Regulatory Approvals” beginning on page 132 and “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 153.

 

Q: What am I being asked to vote on?

 

A: Linear Technology stockholders are being asked to vote upon the following proposals:

 

  1. Proposal 1—The Merger Proposal: the proposal to adopt the merger agreement, which is further described in the sections titled “The Merger” beginning on page 94 and “The Merger Agreement” beginning on page 137 and a copy of which is attached to this proxy statement/prospectus as Annex A;

 

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  2. Proposal 2—The Merger-Related Compensation Proposal: the proposal to approve on an advisory (non-binding) basis the compensation that may be paid or become payable to Linear Technology’s named executive officers that is based on or otherwise relates to the merger;

 

  3. Proposal 3—The Director Election Proposal: the proposal to elect seven director nominees to serve until the next annual meeting of stockholders of Linear Technology and until their successors are elected;

 

  4. Proposal 4—The Executive Compensation Proposal: the proposal to approve on an advisory (non-binding) basis the compensation (other than compensation that is based on or otherwise relates to the merger) of Linear Technology’s named executive officers;

 

  5. Proposal 5—The Accountant Ratification Proposal: the proposal to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of Linear Technology for the fiscal year ending July 2, 2017;

 

  6. Proposal 6—The Adjournment Proposal: the proposal to approve the adjournment of the annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the merger proposal; and

 

  7. To transact any other business that may properly come before the annual meeting and any adjournment or postponement thereof.

 

Q: Are there any other matters to be addressed at the annual meeting?

 

A: At this time, Linear Technology does not know of any other matters to be brought before the annual meeting, but if other matters are properly brought before such meeting or at any adjournment or postponement of such meeting, the persons whom the Linear Technology board of directors has appointed to vote proxies will vote on such matters in their discretion.

 

Q: How does the Linear Technology board of directors recommend that I vote at the annual meeting?

 

A: The Linear Technology board of directors unanimously recommends that Linear Technology stockholders vote “FOR” the merger proposal, “FOR” the seven director nominees listed in the director election proposal and “FOR” each of the other proposals described in this proxy statement/prospectus.

 

Q: What do I need to do now?

 

A: After carefully reading and considering the information contained in this proxy statement/prospectus, please submit your proxy as soon as possible so that your shares of Linear Technology common stock will be represented and voted at the annual meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by the record holder if your shares are held in “street name” by your bank, brokerage firm or other nominee.

 

Q: Should I send in my Linear Technology stock certificates now?

 

A: No. Please DO NOT send your Linear Technology stock certificates with your proxy card. If the merger is completed, you will receive shortly after the time the merger is completed written instructions for exchanging your stock certificates for merger consideration.

 

Q: When and where is the annual meeting of the Linear Technology stockholders?

 

A: The annual meeting will be held on October 18, 2016, beginning at 3:00 p.m., local time, at Linear Technology’s principal executive offices at 1630 McCarthy Boulevard, Milpitas, California 95035, unless postponed to a later date.

 

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Q: Who can vote at the annual meeting?

 

A: Only Linear Technology stockholders who held shares of record as of the close of business on September 7, 2016, the record date for the annual meeting, are entitled to receive notice of and to vote at the annual meeting. Linear Technology’s official stock ownership records will conclusively determine whether a stockholder is a “holder of record” as of the record date.

 

Q: How many votes do I have?

 

A: Each Linear Technology stockholder is entitled to one vote on each matter properly brought before the annual meeting for each share of Linear Technology common stock held of record as of the close of business on the record date. As of the close of business on the record date, there were 245,650,435 shares of Linear Technology common stock outstanding and owned by stockholders (i.e., excluding shares of Linear Technology common stock held in treasury by Linear Technology), held by 1,660 holders of record.

With respect to the director election proposal, each stockholder voting for the election of directors may cumulate such stockholder’s votes and give one candidate a number of votes equal to the number of directors to be elected (which number is currently set at seven) multiplied by the number of shares held by such stockholder, or may distribute such stockholder’s votes on the same principle among as many candidates as the stockholder may select. However, no stockholder will be entitled to cumulate votes unless at least one stockholder has, prior to the voting, given notice at the meeting of the stockholder’s intention to cumulate votes. If any stockholder gives such notice, all stockholders may cumulate their votes for the election of directors. Stockholders may not, however, cumulate votes against a nominee. In the event that cumulative voting is invoked, the proxy holders will have the discretionary authority to vote all proxies received by them in such a manner as to ensure the election of as many of the nominees as possible.

 

Q: What constitutes a quorum for the annual meeting?

 

A: The holders of a majority of the outstanding shares of Linear Technology common stock, present in person or represented by proxy, and entitled to vote at the meeting constitutes a quorum for the purposes of the annual meeting. The Inspector of Elections at the annual meeting will determine whether or not a quorum is present. Abstentions are considered present for purposes of establishing a quorum, but will not be counted as votes cast “FOR” any matter. When a bank, brokerage firm or other nominee does not receive instructions from a holder holding shares in “street name” through a bank, brokerage firm or other nominee (such holder is referred to in this proxy statement/prospectus as a non-record owner) on how to vote shares with respect to a “non-routine” matter, a broker “non-vote” occurs. Broker “non-votes” will be treated as present for purposes of determining whether a quorum is present, but will not be counted as votes cast “FOR” or “AGAINST” any matter.

 

Q: What vote is required to approve each proposal to be considered at the Linear Technology annual meeting?

 

A: The votes required for each proposal are as follows:

 

  1. The Merger Proposal: The affirmative vote, in person or by proxy, of holders of a majority of the outstanding shares of Linear Technology common stock entitled to vote on the merger proposal is required to approve the merger proposal.

 

  2. The Merger-Related Compensation Proposal: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the merger-related compensation proposal is required to approve, on an advisory (non-binding) basis, the merger-related compensation proposal.

 

  3. The Director Election Proposal: Each of the seven nominees receiving the highest number of “FOR” votes will be elected as a director, provided that such nominee does not receive “AGAINST” votes from stockholders holding a majority of the outstanding shares entitled to vote for the election of directors.

 

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  4. The Executive Compensation Proposal: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the executive compensation proposal is required to approve, on an advisory (non-binding) basis, the executive compensation proposal.

 

  5. The Accountant Ratification Proposal: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the accountant ratification proposal is required to approve the accountant ratification proposal.

 

  6. The Adjournment Proposal: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the adjournment proposal is required to approve the adjournment proposal.

 

  7. Other Proposals: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on such proposal is required to approve any other proposal to be voted upon at the annual meeting.

As of the record date, Linear Technology directors and executive officers, as a group, owned and were entitled to vote 2,638,180 shares of Linear Technology common stock, or approximately 1.1% of the outstanding shares of Linear Technology common stock. Linear Technology currently expects that these directors and executive officers will vote their shares in favor of the merger proposal and each of the other proposals described in this proxy statement/prospectus, although none of them has entered into any agreement obligating them to do so.

 

Q: How are proxies counted and what results from a failure to vote, abstention or broker non-vote?

 

A: The Merger Proposal: If you are a Linear Technology stockholder and take any action other than voting (or causing your shares to be voted) “FOR” the merger proposal, it will have the same effect as a vote “AGAINST” the merger proposal.

The Merger-Related Compensation Proposal: If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the merger-related compensation proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the merger-related compensation proposal (assuming a quorum is present).

The Director Election Proposal: If you are a Linear Technology stockholder and attend the Linear Technology annual meeting in person but fail to vote, or you mark your proxy or voting instructions to abstain, it will have no effect on the director election proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the director election proposal (assuming a quorum is present).

The Executive Compensation Proposal: If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the executive compensation proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the executive compensation proposal (assuming a quorum is present).

The Accountant Ratification Proposal: If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the accountant ratification proposal. If you are a Linear Technology stockholder of record and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, it will have no effect on the accountant

 

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ratification proposal (assuming a quorum is present). Banks, brokerage firms and other nominees have discretionary authority to vote on the accountant ratification proposal. As a result, if you are a non-record owner and fail to instruct your bank, brokerage firm or other nominee to vote, we expect the bank, brokerage firm or nominee to vote “FOR” the accountant ratification proposal.

The Adjournment Proposal: If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the adjournment proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the adjournment proposal (assuming a quorum is present).

 

Q: How do I vote or have my shares voted?

 

A: Linear Technology stockholders of record may vote their shares of Linear Technology common stock or submit a proxy to have their shares of Linear Technology common stock voted at the annual meeting in one of the following ways:

 

    Internet: Linear Technology stockholders may submit their proxy by using the Internet at www.proxyvote.com. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m., Eastern Time, on October 17, 2016, the day before the annual meeting.

 

    Telephone: Linear Technology stockholders may submit their proxy by using a touch-tone telephone at 800-690-6903. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m., Eastern Time, on October 17, 2016, the day before the annual meeting.

 

    Mail: Linear Technology stockholders may submit their proxy by properly completing, signing, dating and mailing their proxy card in the postage-paid envelope (if mailed in the United States) included with this proxy statement/prospectus. Linear Technology stockholders who vote this way should mail the proxy card early enough so that it is received before the date of the annual meeting.

 

    In Person: Linear Technology stockholders may vote in person at the annual meeting or by sending a representative with an acceptable proxy that has been signed and dated. Attendance at the annual meeting will not, however, in and of itself constitute a vote.

If you are a non-record owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. Please note that if you are a non-record owner and wish to vote in person at the annual meeting, you must obtain a legal proxy from your bank, brokerage firm or other nominee.

 

Q: How will my proxy be voted?

 

A: If you are a holder of record and submit your proxy via the Internet, by telephone or by completing, signing, dating and returning the enclosed proxy card, your shares will be voted in accordance with your instructions contained in the proxy. If you are a holder of record and submit your proxy without specifying how your shares should be voted in one or more matters, your shares will be voted on those matters as the Linear Technology board of directors recommends.

If you are a non-record owner, please refer to the instructions provided by your bank, brokerage firm or other nominee as to how to vote your shares.

 

Q: What must I bring to attend the annual meeting?

 

A: Only stockholders of record as of the record date, non-record owners as of the record date, holders of valid proxies for the annual meeting and invited guests of Linear Technology may attend the annual meeting. All attendees should be prepared to present picture identification for admittance. The additional items, if any, that attendees must bring depend on whether they are stockholders of record, non-record owners or proxy holders.

 

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Additional information on attending the annual meeting can be found under the section titled “Information About the Linear Technology Annual Meeting” beginning on page 34. Whether or not you plan to attend the annual meeting, Linear Technology urges you to submit your proxy by completing and returning the proxy card as promptly as possible, or by submitting your proxy by telephone or via the Internet, prior to the annual meeting to ensure that your shares of Linear Technology common stock will be represented and voted at the annual meeting if you are unable to attend. If you are a non-record owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. Please note that if you are a non-record owner and wish to vote in person at the annual meeting, you must obtain a legal proxy from your bank, brokerage firm or other nominee.

 

Q: If my shares are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee vote my shares for me?

 

A: No, except with respect to the accountant ratification proposal. If your shares are held in “street name” by your bank, brokerage firm or other nominee, you must direct your bank, brokerage firm or other nominee on how to vote and you will receive instructions from your bank, brokerage firm or other nominee describing how to vote your shares of Linear Technology common stock. The availability of Internet or telephonic voting will depend on the nominee’s voting process. Please check with your bank, brokerage firm or other nominee and follow the voting procedures your bank, brokerage firm or other nominee provides.

If you are a non-record owner and do not provide your bank, brokerage firm or other nominee instructions on how to vote your shares of Linear Technology common stock with respect to a “non-routine” matter, a broker “non-vote” occurs with respect to those matters. Under applicable stock exchange rules, the organization that holds your shares of Linear Technology common stock (i.e., your bank, brokerage firm or other nominee) may generally vote on routine matters at its discretion but cannot vote on “non-routine” matters. If you are a non-record owner and the organization that holds your shares of Linear Technology common stock does not receive instructions from you on how to vote your shares of Linear Technology common stock on a non-routine matter, the organization that holds your shares of Linear Technology common stock will inform the inspector of elections that it does not have the authority to vote your shares on such matters. The accountant ratification proposal is a matter Linear Technology believes will be designated “routine.” The merger proposal, the merger-related compensation proposal, the director election proposal, the executive compensation proposal and the adjournment proposal will be considered “non-routine.” Accordingly, if you are a non-record owner and do not provide your bank, brokerage firm or other nominee instructions on how to vote your shares of Linear Technology common stock, your bank, brokerage firm or other nominee generally will not be permitted to vote your shares on any of the proposals other than the accountant ratification proposal. If you are a non-record owner, Linear Technology strongly encourages you to provide voting instructions to your bank, brokerage firm or other nominee so that your vote will be counted on all matters.

 

Q: What is the difference between holding shares as a stockholder of record and in “street name”?

 

A: If your shares of Linear Technology common stock are registered directly in your name with the transfer agent of Linear Technology, Computershare Trust Company, N.A., you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to vote or to grant a proxy for your vote directly to Linear Technology or to a third party to vote at the annual meeting.

If your shares are held by a bank, brokerage firm or other nominee, you are considered the beneficial owner of shares held in “street name,” and, for the purposes of this proxy statement/prospectus, a non-record owner, and your bank, brokerage firm or other nominee is considered the stockholder of record with respect to those shares. If you are a non-record owner, you have a right to direct your bank, brokerage firm or other nominee on how to vote the shares held in your account. The availability of Internet or telephonic voting will depend on the nominee’s voting process. Please check with your bank, brokerage firm or other nominee and follow the voting procedures your bank, brokerage firm or other nominee provides. You are invited to

 

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attend the annual meeting; however, you may not vote your shares in person at the annual meeting unless you obtain a “legal proxy” from your bank, brokerage firm or other nominee that holds your shares, giving you the right to vote the shares at the annual meeting.

 

Q: What should I do if I receive more than one set of voting materials for the annual meeting?

 

A: You may receive more than one set of voting materials for the annual meeting, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your Linear Technology common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please submit each separate proxy or voting instruction card that you receive by following the instructions set forth in each separate proxy or voting instruction card.

 

Q: What do I do if I am a Linear Technology stockholder and I want to revoke my proxy?

 

A: Linear Technology stockholders of record may revoke their proxies at any time prior to the voting at the annual meeting in any of the following ways:

 

    mailing a request to Linear Technology’s Corporate Secretary at Linear Technology’s corporate headquarters, at 1630 McCarthy Boulevard, Milpitas, California 95035, so that it is received no later than 4:00 p.m., Pacific Time, on October 17, 2016;

 

    properly submitting a later-dated, new proxy card prior to the voting at the annual meeting (in which case only the later-dated proxy is counted and the earlier proxy is revoked);

 

    submitting a proxy via Internet or by telephone at a later date but before the voting at the annual meeting (in which case only the later-dated proxy is counted and the earlier proxy is revoked); or

 

    attending the annual meeting and voting in person. Attendance at the annual meeting will not, however, in and of itself, constitute a vote or revocation of a prior proxy.

Linear Technology non-record owners may change their voting instructions only by following the directions received from their bank, brokerage firm or other nominee for changing their voting instructions.

 

Q: What happens if I sell my shares of Linear Technology common stock before the annual meeting?

 

A: The record date is earlier than both the date of the annual meeting and the closing of the merger. If you transfer your shares of Linear Technology common stock after the record date but before the annual meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the annual meeting but will transfer the right to receive the per share merger consideration to the person to whom you transfer your shares. In order to receive the per share merger consideration, you must hold your shares upon completion of the merger.

 

Q: Do Linear Technology stockholders have appraisal rights?

 

A: Yes. Linear Technology stockholders are entitled to appraisal rights under Section 262 of the General Corporation Law of the State of Delaware (referred to in this proxy statement/prospectus as the DGCL), provided they follow the procedures and satisfy the conditions set forth in Section 262 of the DGCL. For more information regarding appraisal rights, see the section titled “Appraisal Rights of Linear Technology Stockholders” beginning on page 191. In addition, a copy of Section 262 of the DGCL is attached as Annex C to this proxy statement/prospectus. Failure to strictly comply with Section 262 of the DGCL may result in your waiver of, or inability to, exercise appraisal rights.

 

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Q: Who will solicit and pay the cost of soliciting proxies?

 

A: Linear Technology will pay for the proxy solicitation costs related to the annual meeting. Linear Technology has engaged Morrow Sodali to assist in the solicitation of proxies for the annual meeting. Linear Technology estimates that it will pay Morrow Sodali a fee of approximately $25,000, plus reasonable out-of-pocket expenses. Linear Technology will also reimburse banks, brokerage firms, custodians, trustees, nominees and fiduciaries who hold shares for the benefit of another party for their expenses incurred in sending proxies and proxy materials to non-record owners of Linear Technology common stock. Linear Technology’s directors, officers and employees also may solicit proxies in person by telephone or over the Internet. They will not be paid any additional amounts for soliciting proxies.

 

Q: How can I find more information about Analog Devices and Linear Technology?

 

A: You can find more information about Analog Devices and Linear Technology from various sources described in the section titled “Where You Can Find More Information” beginning on page 199.

 

Q: Who can answer any questions I may have about the annual meeting or the proxy materials?

 

A: If you have any questions about the annual meeting, the merger, the proposals or this proxy statement/prospectus, would like additional copies of the proxy statement/prospectus, need to obtain proxy cards or other information related to this proxy solicitation or need help submitting a proxy or voting your shares of Linear Technology common stock, you should contact:

Linear Technology Corporation

1630 McCarthy Boulevard

Milpitas, California 95035

(408) 432-1900

Attention: Investor Relations

or

Morrow Sodali

470 West Ave.

Stamford, Connecticut 06902

Stockholders may call toll-free: 800-662-5200

Banks and brokers may call collect: 203-658-9400

 

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SUMMARY

The following summary highlights selected information described in more detail elsewhere in this proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus and may not contain all the information that may be important to you. To understand the merger and the matters being voted on by Linear Technology stockholders at the annual meeting more fully, and to obtain a more complete description of the legal terms of the merger agreement, you should carefully read this entire proxy statement/prospectus, including the annexes, and the documents to which Analog Devices and Linear Technology refer you. Each item in this summary includes a page reference directing you to a more complete description of that topic. See “Where You Can Find More Information” beginning on page 199.

The Parties

(see pages 32 and 33)

Linear Technology Corporation

Linear Technology Corporation, a member of the Standard & Poor’s 500 Index and referred to in this proxy statement/prospectus as Linear Technology, has been designing, manufacturing and marketing a broad line of high performance analog integrated circuits for major companies worldwide for over three decades. Linear Technology’s products provide an essential bridge between the analog world and the digital electronics in communications, networking, industrial, transportation, computer, medical, instrumentation, consumer, and military and aerospace systems. Linear Technology produces power management, data conversion, signal conditioning, RF and interface ICs, µModule® subsystems, and wireless sensor network products. Linear Technology is a Delaware corporation; it was originally organized and incorporated in California in 1981. Linear Technology competes primarily on the basis of performance, functional value, quality, reliability and service. Linear Technology common stock trades on The NASDAQ Global Select Market under the symbol “LLTC”. The principal executive offices of Linear Technology are located at 720 Sycamore Dr., Milpitas CA, and its telephone number is (408) 432-1900.

Analog Devices, Inc.

Analog Devices, Inc., a Massachusetts corporation and referred to in this proxy statement/prospectus as Analog Devices, is a world leader in the design, manufacture and marketing of a broad portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing technology, including integrated circuits (ICs), algorithms, software, and subsystems. Since its inception in 1965, Analog Devices has focused on solving the engineering challenges associated with signal processing in virtually all types of electronic equipment. Analog Devices’ signal processing products play a fundamental role in converting, conditioning, and processing real-world phenomena such as temperature, pressure, sound, light, speed and motion into electrical signals to be used in a wide array of electronic devices. As new generations of applications, such as the Internet of Things, evolve, new needs for high-performance analog signal processing and digital signal processing (DSP) technology are generated. Analog Devices focuses on sensing, measurement, and connectivity challenges that apply to a diverse set of customers and markets. Analog Devices combines data converters, amplifiers and linear products, radio frequency (RF) ICs, power management products, sensors based on micro-electro mechanical systems (MEMS) technology and other sensors, and processing products, including DSP, micro controllers and other processors, into technology platforms that Analog Devices adapts to specific customer and market needs, leveraging Analog Devices’ engineering investment across a broad base of customers. Analog Devices was incorporated in Massachusetts in 1965. Its headquarters are near Boston, in Norwood, Massachusetts. In addition, Analog Devices has manufacturing facilities in Massachusetts, Ireland, and the Philippines, and has more than thirty design facilities worldwide. Analog Devices common stock trades on The NASDAQ Global Select Market under the symbol “ADI” and is included in the Standard & Poor’s 500 Index. The principal executive offices of Analog Devices are located at One Technology Way, Norwood, Massachusetts 02062, and its telephone number is (781) 329-4700.

 



 

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Tahoe Acquisition Corp.

Tahoe Acquisition Corp., a Delaware corporation and referred to in this proxy statement/prospectus as Merger Sub, is a wholly owned subsidiary of Analog Devices. Merger Sub was formed by Analog Devices solely in contemplation of the merger, has not conducted any business and has no assets, liabilities or obligations of any nature other than as set forth in the merger agreement. The principal executive offices of Merger Sub are located at c/o Analog Devices, Inc., One Technology Way, Norwood, Massachusetts 02062, and its telephone number is (781) 329-4700.

The Merger and the Merger Agreement

(see pages 94 and 137)

The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. Linear Technology encourages you to read the merger agreement carefully and in its entirety, as it is the legal document that governs the merger.

The merger agreement provides that, subject to the terms and conditions of the merger agreement, Merger Sub will be merged with and into Linear Technology, with Linear Technology surviving the merger as a wholly owned subsidiary of Analog Devices.

Per Share Merger Consideration

(see page 94)

Upon completion of the merger, each issued and outstanding share of Linear Technology common stock (other than shares (i) held in treasury by Linear Technology or owned by Analog Devices or Merger Sub (which will be cancelled), (ii) owned by any direct or indirect wholly owned subsidiary of Linear Technology or Analog Devices (other than Merger Sub) (which will be converted into shares of the surviving company), (iii) owned by stockholders that have validly made a demand for appraisal and not validly withdrawn such demand or otherwise lost their rights of appraisal with respect to such shares pursuant to Section 262 of the DGCL, or (iv) underlying Linear Technology restricted stock awards) will be converted into the right to receive $46.00 in cash, without interest, plus 0.2321 shares of Analog Devices common stock, less any applicable withholding taxes. However, if the aggregate number of shares of Analog Devices common stock to be issued to holders of Linear Technology common stock under the merger agreement would exceed 19.9% of the issued and outstanding shares of Analog Devices common stock as of the closing of the merger, then the number of shares of Analog Devices common stock to be issued will be reduced to the minimum extent necessary such that the number of shares of Analog Devices common stock issuable pursuant to the merger agreement equals 19.9% of the issued and outstanding shares of Analog Devices common stock, and, in such event, each holder of a share of Linear Technology common stock will be entitled to receive an additional cash payment in an amount equal to the amount by which the exchange ratio is reduced multiplied by $60.3215 (rounded down to the nearest one-hundredth of a cent).

Based on the closing stock price of Analog Devices common stock on July 25, 2016, the last full trading day before the publication of press reports that Analog Devices and Linear Technology were in advanced negotiations regarding a potential business combination transaction, the per share value of Linear Technology common stock implied by the per share merger consideration is $60.05. Based on the closing stock price of Analog Devices common stock on September 12, 2016, the most recent practicable date prior to the date of this proxy statement/prospectus, the per share value of Linear Technology common stock implied by the per share merger consideration is $60.07. The implied value of the per share merger consideration will fluctuate as the market price of Analog Devices common stock fluctuates because a portion of the per share merger consideration is payable in a fixed number of shares of Analog Devices common stock. As a result, the value of the per share merger consideration that Linear Technology stockholders will receive upon completion of the merger could be

 



 

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greater than, less than or the same as the value of the merger consideration on the date of this proxy statement/prospectus or at the time of the Linear Technology annual meeting. Accordingly, Analog Devices and Linear Technology encourage you to obtain current stock price quotations for Analog Devices common stock and Linear Technology common stock before deciding how to vote with respect to approval of the merger proposal. Analog Devices common stock and Linear Technology common stock trade on The Nasdaq Global Select Market under the symbols “ADI” and “LLTC,” respectively.

Linear Technology Annual Meeting

(see page 34)

Purposes of the Annual Meeting

At the annual meeting, Linear Technology stockholders will be asked to vote upon the following proposals:

 

    the merger proposal;

 

    the merger-related compensation proposal;

 

    the director election proposal;

 

    the executive compensation proposal;

 

    the accountant ratification proposal;

 

    the adjournment proposal; and

 

    to transact any other business that may properly come before the annual meeting and any adjournment or postponement thereof.

Record Date

The record date for the determination of stockholders entitled to notice of and to vote at the annual meeting is September 7, 2016. Only Linear Technology stockholders who held shares of record as of the close of business on September 7, 2016 are entitled to receive notice of and vote at the annual meeting and any adjournment or postponement of the annual meeting, as long as such shares remain outstanding on the date of the annual meeting.

Required Vote

 

    The Merger Proposal: The affirmative vote, in person or by proxy, of holders of a majority of the outstanding shares of Linear Technology common stock entitled to vote on the merger proposal is required to approve the merger proposal.

 

    The Merger-Related Compensation Proposal: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the merger-related compensation proposal is required to approve, on an advisory (non-binding) basis, the merger-related compensation proposal.

 

    The Director Election Proposal: Each of the seven nominees receiving the highest number of “FOR” votes will be elected as a director, provided that such nominee does not receive “AGAINST” votes from stockholders holding a majority of the outstanding shares entitled to vote for the election of directors.

 

    The Executive Compensation Proposal: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the executive compensation proposal is required to approve, on an advisory (non-binding) basis, the executive compensation proposal.

 



 

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    The Accountant Ratification Proposal: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the accountant ratification proposal is required to approve the accountant ratification proposal.

 

    The Adjournment Proposal: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the adjournment proposal is required to approve the adjournment proposal.

 

    Other Proposals: The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on such proposal is required to approve any other proposal to be voted upon at the annual meeting.

As of the record date, Linear Technology directors and executive officers, as a group, owned and were entitled to vote 2,638,180 shares of Linear Technology common stock, or approximately 1.1% of the outstanding shares of Linear Technology common stock. Linear Technology currently expects that these directors and executive officers will vote their shares in favor of approving the merger proposal and each of the other proposals described in this proxy statement/prospectus, although none of them has entered into any agreement obligating them to do so.

How Proxies are Counted; Failure to Vote; Abstentions and Broker Non-Votes

The Merger Proposal: If you are a Linear Technology stockholder and take any action other than voting (or causing your shares to be voted) “FOR” the merger proposal, it will have the same effect as a vote “AGAINST” the merger proposal.

The Merger-Related Compensation Proposal: If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the merger-related compensation proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the merger-related compensation proposal (assuming a quorum is present).

The Director-Election Proposal: If you are a Linear Technology stockholder and attend the Linear Technology annual meeting in person but fail to vote, or you mark your proxy or voting instructions to abstain, it will have no effect on the director election proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the director election proposal (assuming a quorum is present).

The Executive Compensation Proposal. If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the executive compensation proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the executive compensation proposal (assuming a quorum is present).

The Accountant Ratification Proposal. If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the accountant ratification proposal. If you are a Linear Technology stockholder of record and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, it will have no effect on the accountant ratification proposal (assuming a quorum is present). Banks, brokerage firms and other nominees have discretionary authority to vote

 



 

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on the accountant ratification proposal. As a result, if you are a non-record owner and fail to instruct your broker, bank or other nominee to vote, we expect the bank, brokerage firm or nominee to vote “FOR” the accountant ratification proposal.

The Adjournment Proposal: If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the adjournment proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the adjournment proposal (assuming a quorum is present).

Linear Technology’s Reasons for the Merger; Recommendation of the Linear Technology Board of Directors

(see page 105)

After careful evaluation of the merger agreement and the transactions contemplated thereby, the Linear Technology board of directors unanimously determined that the merger, the merger agreement and the other transactions contemplated by the merger agreement are advisable, fair to, and in the best interests of, Linear Technology and its stockholders and approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement.

The Linear Technology board of directors unanimously recommends that Linear Technology stockholders vote “FOR” the merger proposal, “FOR” the seven director nominees listed in the director election proposal and “FOR” each of the other proposals described in this proxy statement/prospectus.

In the course of reaching its recommendation, the Linear Technology board of directors consulted with Linear Technology’s senior management and financial advisor, Qatalyst Partners LP (referred to in this proxy statement/prospectus as Qatalyst Partners) and outside legal counsel and considered a number of factors. See “The Merger—Linear Technology’s Reasons for the Merger; Recommendation of the Linear Technology Board of Directors” beginning on page 105.

Opinion of Linear Technology’s Financial Advisor

(see page 113)

In connection with the merger, Qatalyst Partners rendered to the Linear Technology board of directors its oral opinion on July 26, 2016, subsequently confirmed in writing, that as of such date, and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in its written opinion, the consideration of $46.00 in cash and 0.2321 shares of Analog Devices common stock per share of Linear Technology common stock (which is subject to certain adjustment procedures set forth in the merger agreement, as to which Qatalyst Partners expressed no opinion) to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of Linear Technology common stock, other than Analog Devices or any affiliates of Analog Devices, was fair, from a financial point of view, to such holders.

The full text of Qatalyst Partners’ written opinion, dated July 26, 2016, is attached as Annex B to this proxy statement/prospectus and is incorporated into this proxy statement/prospectus by reference. The written opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering the opinion. You should read the opinion carefully in its entirety.

Qatalyst Partners’ opinion was provided to the Linear Technology board of directors and addresses only, as of the date of the opinion, the fairness, from a financial point of view, of the consideration of

 



 

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$46.00 in cash and 0.2321 shares of Analog Devices common stock per share of Linear Technology common stock to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of Linear Technology common stock, other than Analog Devices or any affiliates of Analog Devices, and it does not address any other aspect of the merger. It does not constitute a recommendation as to how any holder of Linear Technology common stock should vote with respect to the merger proposal or act on any other matter and does not in any manner address the price at which the shares of Linear Technology common stock or shares of Analog Devices common stock will trade at any time.

Interests of Linear Technology’s Directors and Executive Officers in the Merger

(see page 119)

When considering the recommendation of the Linear Technology board of directors with respect to the merger, you should be aware that Linear Technology’s executive officers and directors may have interests in the merger that are different from, or in addition to, those of Linear Technology’s stockholders more generally. The Linear Technology board of directors was aware of these interests during its deliberations on the merits of the merger and in deciding to recommend that Linear Technology stockholders vote in favor of the merger proposal. These interests generally include, among others, the rights to accelerated vesting of equity awards and certain payments and benefits in connection with the merger and/or a qualifying termination of employment following the merger, as described in more detail in the section titled “The Merger—Interests of Linear Technology, Directors and Executive Officers in the Merger” beginning on page 119.

Material U.S. Federal Income Tax Consequences of the Merger

(see page 127)

The receipt of cash and shares of Analog Devices common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. For U.S. federal income tax purposes, a U.S. holder (as defined below in the section titled “The Merger—Material U.S. Federal Income Tax Consequences” beginning on page 127), will generally recognize gain or loss equal to the difference, if any, between (i) the sum of the cash and the fair market value (as of the effective time) of the Analog Devices common stock received in the merger and (ii) the U.S. holder’s adjusted tax basis in the Linear Technology common stock surrendered in exchange therefor. Non-U.S. holders (as defined below in the section titled “The Merger—Material U.S. Federal Income Tax Consequences” beginning on page 127), that receive the per share merger consideration pursuant to the merger may be subject to U.S. withholding tax with respect to any cash received.

Each holder of Linear Technology common stock should read the discussion under “The Merger—Material U.S. Federal Income Tax Consequences” beginning on page 127 for a more complete discussion of the U.S. federal income tax consequences of the merger. Tax matters can be complicated, and the tax consequences of the merger to a particular holder of Linear Technology common stock will depend on such holder’s particular facts and circumstances. Holders of Linear Technology common stock should consult their own tax advisors to determine the specific consequences to them of exchanging their shares of Linear Technology common stock for cash and shares of Analog Devices common stock pursuant to the merger.

Accounting Treatment of the Merger

(see page 126)

Analog Devices prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (referred to in this proxy statement/prospectus as GAAP). The merger will be accounted for using the acquisition method of accounting. Analog Devices will be treated as the acquiror for accounting purposes.

 



 

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Regulatory Approvals Required to Complete the Merger

(see pages 132 and 154)

Analog Devices, Linear Technology and Merger Sub have each agreed to use their respective reasonable best efforts to take, or cause to be taken, all reasonable actions, and to do, or cause to be done, all reasonable things necessary, proper or advisable under any applicable laws to consummate the merger and obtain (and to cooperate with each other in obtaining) the required regulatory approvals, subject to certain limits described in the section titled “The Merger—Regulatory Approvals” beginning on page 132.

The obligations of Analog Devices and Linear Technology to consummate the merger are subject to, among other matters, termination or expiration of any waiting period (and any extension thereof) applicable to the transactions contemplated by the merger agreement under the HSR Act, and receipt of the approvals and clearances required in connection with the transactions contemplated by the merger agreement under the antitrust and competition laws of China, Israel, Japan, Korea, the European Union (to the extent it has jurisdiction as a result of a European Union specified merger control action), Romania (to the extent required by applicable law, unless a European Union specified merger control action occurs), Germany (unless a European Union specified merger control action occurs) and the United Kingdom (unless a European Union specified merger control action occurs, and to the extent there is a publication by the United Kingdom Competition & Markets Authority of an Invitation to Comment in relation to the transaction, on its website and/or on the Regulatory News Service of the London Stock Exchange).

On September 15, 2016, Analog Devices voluntarily withdrew its initial Notification and Report Form filed under the HSR Act with the Antitrust Division of the U.S. Department of Justice (referred to in this proxy statement/prospectus as the Antitrust Division) and the Federal Trade Commission (referred to in this proxy statement/prospectus as the FTC) in order to provide the FTC with additional time to review the proposed transaction. Analog Devices expects to resubmit its Notification and Report Form on September 19, 2016. Analog Devices and Linear Technology are in the process of filing notices and applications to satisfy the filing requirements and to obtain the necessary regulatory clearances in the other relevant jurisdictions.

Expected Timing of Merger

Analog Devices and Linear Technology currently expect the merger to be completed during the first half of calendar year 2017, subject to receipt of required approval from Linear Technology stockholders and regulatory approvals in various jurisdictions and subject to the satisfaction or waiver of the other conditions contained in the merger agreement. However, Analog Devices and Linear Technology cannot predict the actual date on which the merger will be completed because completion is subject to conditions beyond their control and it is possible that such conditions could result in the merger being completed earlier, later or not at all, as described in more detail in the section titled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 153.

Treatment of Linear Technology Equity Awards

(see pages 136 and 141)

At the effective time, each Linear Technology restricted stock award and restricted stock unit award that is outstanding immediately prior to the effective time that is held by a non-employee director, or that vests at the effective time pursuant to a contract between the holder and Linear Technology, will become vested and will be cancelled and converted automatically into the right to receive the merger consideration in respect of each share of Linear Technology common stock underlying such award, less applicable tax withholding.

At the effective time, each Linear Technology restricted stock award and restricted stock unit award that is outstanding immediately prior to the effective time, was granted on or prior to July 22, 2016 and does not become vested at the effective time will be converted into two adjusted awards with the same terms and

 



 

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conditions (including vesting) as were applicable to the corresponding Linear Technology award immediately prior to the effective time, which adjusted awards will be in the form of (i) the right to receive an amount in cash equal to the product of (a) the number of shares of Linear Technology common stock subject to such Linear Technology restricted stock or restricted stock unit award immediately prior the effective time and (b) $46.00, and (ii) an Analog Devices restricted stock award or restricted stock unit award, as applicable, relating to the number of shares of Analog Devices common stock equal to the product (rounded to the nearest whole number of shares) of (a) the number of shares of Linear Technology common stock subject to the Linear Technology restricted stock award or restricted stock unit award immediately prior to the effective time and (b) the exchange ratio of 0.2321.

At the effective time, each Linear Technology restricted stock award and restricted stock unit award that is outstanding immediately prior to the effective time, was granted after July 22, 2016 and does not become vested at the effective time will be converted into an adjusted Analog Devices restricted stock award or restricted stock unit award, as applicable, relating to the number of shares of Analog Devices common stock equal to the product (rounded to the nearest whole number of shares) of (i) the number of shares of Linear Technology common stock subject to such Linear Technology restricted stock award or restricted stock unit award immediately prior to the effective time and (ii) 0.9947.

Financing of the Merger

(see pages 130 and 150)

Consummation of the merger is not subject to Analog Devices’ ability to obtain financing. However, Analog Devices expects to finance the cash consideration for the merger with a combination of cash on hand and the incurrence of new debt, including a term loan facility and senior unsecured notes.

On July 26, 2016, Analog Devices entered into a commitment letter (referred to in this proxy statement/prospectus as the bridge commitment letter) with JPMorgan Chase Bank, N.A. (referred to in this proxy statement/prospectus as JPMorgan), Bank of America, N.A. (referred to in this proxy statement/prospectus as BofA), Merrill Lynch, Pierce, Fenner & Smith Incorporated (referred to in this proxy statement/prospectus as MLPFS), Credit Suisse AG (referred to in this proxy statement/prospectus as CS) and Credit Suisse Securities (USA) LLC (referred to in this proxy statement/prospectus as CSUSA), which commitment letter was subsequently joined on August 10, 2016 by The Bank of Tokyo-Mitsubishi UFJ, Ltd. (referred to in this proxy statement/prospectus as MUFG and together with JPMorgan, BofA and CS, the initial lenders, and together with JPMorgan, BofA, MLPFS, CS and CSUSA, the commitment parties) pursuant to which the initial lenders committed to provide, subject to the terms and conditions set forth in the bridge commitment letter, a 364-day $7.5 billion senior unsecured bridge facility (referred to in this proxy statement/prospectus as the 364-day bridge facility, and the provision of such funds as set forth in the bridge commitment letter, the 364-day bridge financing) and a 90-day $4.1 billion senior unsecured bridge facility (referred to in this proxy statement/prospectus as the 90-day bridge facility, and the provision of such funds as set forth in the bridge commitment letter, the 90-day bridge financing; the 364-day bridge facility and the 90-day bridge facility are collectively referred to in this proxy statement/prospectus as the bridge facilities and the 364-day bridge financing and the 90-day bridge financing are collectively referred to in this proxy statement/prospectus as the bridge financing). The bridge facilities are available to finance the cash consideration for the merger and to pay fees and expenses related thereto to the extent that Analog Devices does not finance such consideration and fees and expenses through available cash on hand and the incurrence of new debt as further described herein. The commitment parties’ commitment to provide the bridge financing is subject to certain customary closing conditions, including completion of the merger, the non-occurrence of a material adverse effect with respect to Linear Technology, the accuracy of certain representations and warranties related to both Analog Devices and Linear Technology and the delivery of certain financial statements of both Analog Devices and Linear Technology.

 



 

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Analog Devices’ financing in connection with the merger could take any of several forms or any combination of them, including but not limited to the following: (i) Analog Devices may enter into, and draw funds under, the bridge facilities pursuant to the terms of the bridge commitment letter; (ii) Analog Devices may issue senior unsecured notes; (iii) Analog Devices may borrow under term loan facilities (including the term facility defined below) and (iv) Analog Devices may use cash on hand. Upon Analog Devices’ entry into any term loan credit facility or when any senior unsecured notes are issued, the commitments under the 364-day bridge facility will automatically be reduced in an amount equal to the aggregate principal amount of such term loan facility or senior unsecured notes.

In connection with the contemplated debt financing, Analog Devices also entered into an amended and restated commitment letter (referred to in this proxy statement/prospectus as the term loan commitment letter) with the commitment parties, dated as of August 10, 2016, pursuant to which the commitment parties have, subject to the terms and conditions set forth in the term loan commitment letter, (i) agreed to use commercially reasonable efforts to arrange a syndicate of banks, financial institutions and other institutional lenders that will participate in a three-year senior unsecured term loan facility in an aggregate principal amount of $2.5 billion (referred to in this proxy statement/prospectus as the three-year facility) and a five-year senior unsecured term loan facility in an aggregate principal amount of $2.5 billion (referred to in this proxy statement/prospectus as the five-year facility and together with the three-year facility, the term facility, and the provision of such funds as set forth in the term loan commitment letter, the term financing) and (ii) committed to provide up to $1.2 billion of the three-year facility and up to $1.2 billion of the five-year facility. The term facility is available to finance a portion of the cash consideration for the merger and to pay fees and expenses related to the transactions.

Analog Devices also intends to seek an amendment and restatement of its existing revolving credit agreement pursuant to which, if successful, the revolving lenders would agree to increase their aggregate commitments under the revolving credit agreement to $1.0 billion.

There can be no assurance that any replacement or supplemental financing in lieu of the bridge facilities will be available to Analog Devices on acceptable terms or at all. Analog Devices’ ability to obtain additional debt financing, including financing to replace or supplement the bridge facilities, will be subject to various factors, including market conditions, operating performance and credit ratings.

Listing of Analog Devices Common Stock; Delisting of Linear Technology Common Stock

(see page 136)

It is a condition to the consummation of the merger that the shares of Analog Devices common stock to be issued to Linear Technology stockholders in the merger be approved for listing on The Nasdaq Global Select Market, subject to official notice of issuance. As a result of the merger, shares of Linear Technology common stock will cease to be listed on The Nasdaq Global Select Market.

Appraisal Rights

(see page 191)

Linear Technology stockholders who do not vote in favor of approval of the merger proposal, who continuously hold their shares of Linear Technology common stock through the effective time and who otherwise comply precisely with the applicable provisions of Section 262 of the DGCL will be entitled to seek appraisal of the fair value of their shares of Linear Technology common stock, as determined by the Delaware Court of Chancery, if the merger is completed. The “fair value” of your shares of Linear Technology common stock as determined by the Delaware Court of Chancery could be greater than, the same as, or less than the value of the merger consideration that you would otherwise be entitled to receive under the terms of the merger agreement.

 



 

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Linear Technology stockholders who wish to exercise the right to seek an appraisal of their shares must so advise Linear Technology by submitting a written demand for appraisal in the form described in this proxy statement/prospectus prior to the vote to approve the merger proposal, and must otherwise follow the procedures prescribed by Section 262 of the DGCL. A person having a beneficial interest in shares of Linear Technology common stock held of record in the name of another person, such as a nominee or intermediary, must act promptly to cause the record holder to follow the steps summarized in this proxy statement/prospectus and in a timely manner to perfect appraisal rights.

The text of Section 262 of the DGCL is attached as Annex C to this proxy statement/prospectus. You are encouraged to read these provisions carefully and in their entirety. Due to the complexity of the procedures for exercising appraisal rights, Linear Technology stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel and their financial advisors. Failure to strictly comply with these provisions may result in the loss of appraisal rights.

No Solicitation of Company Takeover Proposals

(see page 147)

As more fully described in this proxy statement/prospectus and in the merger agreement, and subject to the exceptions summarized below, Linear Technology has agreed that it will not (1) solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a company takeover proposal (as defined on page 147), (2) engage in, continue or otherwise participate in any discussions or negotiations regarding any company takeover proposal, or (3) approve, recommend, or enter into, or propose to approve, recommend, or enter into, any agreement with respect to a company takeover proposal.

Notwithstanding these restrictions, if at any time prior to obtaining the approval by Linear Technology stockholders of the merger proposal, Linear Technology receives a written, bona fide, unsolicited company takeover proposal that did not result from a breach of the merger agreement and that the Linear Technology board of directors determines in good faith (after consultation with its advisors) constitutes or would reasonably be expected to lead to a company superior proposal (as defined on page 148), Linear Technology may (1) furnish information with respect to Linear Technology to the party making the company takeover proposal (subject to certain conditions and obligations in the merger agreement) and (2) engage in discussions or negotiations with the party making the company takeover proposal.

Linear Technology has agreed to notify Analog Devices within 48 hours of the receipt of any company takeover proposal or any request for information that is reasonably likely to lead to a company takeover proposal, or of any determination by the Linear Technology board of directors that a company takeover proposal constitutes or would be reasonably expected to lead to a company superior proposal. Linear Technology has also agreed to keep Analog Devices reasonably informed, on a reasonably current basis, as to the status of any company takeover proposal, and to promptly provide Analog Devices with any draft agreements relating to a company takeover proposal.

Changes in Board Recommendation

(see page 148)

The merger agreement provides that, subject to certain exceptions, the Linear Technology board of directors will not (1) change, qualify, withhold, withdraw or modify, or publicly propose to change, qualify, withhold, withdraw or modify (in each case in a manner adverse to Analog Devices) its recommendation in favor of the merger proposal, or (2) adopt, approve or recommend to Linear Technology stockholders, or publicly propose or announce its intention to adopt, approve or recommend to Linear Technology stockholders, any company

 



 

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takeover proposal or agreement relating to a company takeover proposal (other than a confidentiality agreement otherwise permitted by the merger agreement). Notwithstanding these restrictions, at any time prior to obtaining the approval by Linear Technology stockholders of the merger proposal, the Linear Technology board of directors may, if it determines in good faith (after consultation with its advisors) that a company takeover proposal is a company superior proposal (and subject to compliance with certain obligations set forth in the merger agreement, including providing Analog Devices with prior notice and the right under certain circumstances to negotiate to match the terms of any company superior proposal), make an adverse recommendation change or terminate the merger agreement in order to enter into a binding agreement with respect to the company superior proposal.

In addition, the Linear Technology board of directors is permitted under certain circumstances, prior to obtaining the approval by Linear Technology stockholders of the merger proposal and subject to compliance with certain obligations set forth in the merger agreement (including providing Analog Devices with prior notice and the right under certain circumstances to negotiate to amend the terms of the merger agreement) to make an adverse recommendation change in response to an intervening event (as defined on page 149) if the Linear Technology board of directors determines in good faith (after consultation with its advisors) that the failure to do so would be inconsistent with its fiduciary duties.

Conditions to Completion of the Merger

(see page 153)

The obligations of each of Linear Technology and Analog Devices to effect the merger are subject to the satisfaction or waiver of the following conditions:

 

    the approval by Linear Technology stockholders of the merger proposal;

 

    the SEC having declared effective the registration statement of which this proxy statement/prospectus forms a part;

 

    the absence of any order, law or legal restraint by a court or other governmental entity of competent jurisdiction that prohibits, enjoins or makes illegal the closing of the merger;

 

    the termination or expiration of any applicable waiting period under the HSR Act and the receipt of the other specified regulatory clearances and approvals;

 

    the approval for listing by the Nasdaq Global Select Market of the shares of Analog Devices common stock to be issued to Linear Technology stockholders in the merger;

 

    the accuracy of the representations and warranties of the other party set forth in the merger agreement, subject to the materiality standards set forth in the merger agreement; and

 

    the other party having performed, in all material respects, all obligations required to be performed by it under the merger agreement.

In addition, Analog Devices’ obligations to effect the merger are subject to the accuracy of certain representations of Linear Technology and compliance with certain covenants of Linear Technology relating to Linear Technology’s capitalization, subject to the materiality standards set forth in the merger agreement.

Neither Analog Devices nor Linear Technology can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

 



 

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Termination of the Merger Agreement

(see page 155)

Analog Devices and Linear Technology may mutually agree to terminate the merger agreement before completing the merger, whether before or after the receipt of Linear Technology stockholder approval of the merger proposal.

Either Analog Devices or Linear Technology may terminate the merger agreement, whether before or after the receipt of Linear Technology stockholder approval of the merger proposal:

 

    if the merger has not been consummated by April 26, 2017 (which deadline may be extended, under certain circumstances, to October 26, 2017);

 

    if Linear Technology stockholders fail to approve the merger proposal;

 

    if a court or other governmental entity issues a final, nonappealable order or adopts or enacts a law that in either case permanently restrains, enjoins or makes illegal the consummation of the merger; or

 

    if the other party breaches the merger agreement in a way that would entitle the party seeking to terminate the merger agreement not to consummate the merger, subject to the rights of the breaching party to cure the breach.

Linear Technology may also terminate the merger agreement, prior to the receipt of Linear Technology stockholder approval of the merger proposal, in order to enter into an agreement for a company superior proposal, provided that Linear Technology has complied with its non-solicitation obligations under the merger agreement.

Analog Devices may also terminate the merger agreement, prior to the receipt of Linear Technology stockholder approval of the merger proposal, if Linear Technology has made an adverse recommendation change or if Linear Technology is in material and willful breach of its non-solicitation obligations.

Expenses and Termination Fees Relating to the Merger

(see page 156)

Linear Technology must pay Analog Devices a termination fee of $490 million if the merger agreement is terminated in certain circumstances involving a company takeover proposal, an adverse recommendation change or a breach of Linear Technology’s non-solicitation obligations under the merger agreement.

Analog Devices must pay Linear Technology a termination fee of $700 million if the merger agreement is terminated in certain circumstances involving the failure to obtain required regulatory approvals.

All other expenses relating to the merger will generally be paid by the party incurring the expense.

Comparison of Rights of Common Stockholders of Analog Devices and Linear Technology

(see page 176)

Linear Technology stockholders receiving shares of Analog Devices common stock in the merger will have different rights once they become stockholders of Analog Devices due to differences between the governing corporate documents and corporate state laws applicable to Linear Technology and Analog Devices.

Risk Factors

(see page 23)

You should consider all the information contained in or incorporated by reference into this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus.

 



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

Selected Historical Consolidated Financial Data of Analog Devices

The following selected historical consolidated financial data of Analog Devices for each of the fiscal years during the three-year period ended October 31, 2015 and the selected historical consolidated balance sheet data as of October 31, 2015 and November 1, 2014 have been derived from Analog Devices’ audited consolidated financial statements as of and for the fiscal year ended October 31, 2015 contained in Analog Devices’ Annual Report on Form 10-K for the fiscal year ended October 31, 2015, which is incorporated by reference into this proxy statement/prospectus. The selected historical consolidated financial data for each of the fiscal years ended November 3, 2012 and October 29, 2011 and the selected balance sheet data as of November 2, 2013, November 3, 2012 and October 29, 2011 have been derived from Analog Devices’ audited consolidated financial statements as of and for such years contained in Analog Devices’ other reports filed with the SEC, which are not incorporated by reference into this proxy statement/prospectus.

The unaudited selected financial data for Analog Devices as of July 30, 2016, and for the nine months ended July 30, 2016 and August 1, 2015, are derived from Analog Devices’ unaudited condensed consolidated financial statements and accompanying notes, which are contained in Analog Devices’ Quarterly Report on Form 10-Q for the quarter ended July 30, 2016, which is incorporated by reference into this proxy statement/prospectus. The selected financial data as of August 1, 2015 is derived from Analog Devices’ unaudited condensed consolidated financial statements for the quarter ended August 1, 2015, which have previously been filed with the SEC but which are not incorporated by reference into this proxy statement/prospectus. The unaudited financial data presented have been prepared on a basis consistent with Analog Devices’ audited consolidated financial statements. In the opinion of Analog Devices’ management, such unaudited financial data reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the results for those periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year or any future period.

The information set forth below is only a summary and is not necessarily indicative of the results of future operations of Analog Devices, including following completion of the merger, and you should read the following information together with Analog Devices’ consolidated financial statements, the related notes and the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Analog Devices’ Annual Report on Form 10-K for the fiscal year ended October 31, 2015 and in its Quarterly Report on Form 10-Q for the quarter ended July 30, 2016, which are incorporated by reference into this proxy statement/prospectus, and in Analog Devices’ other reports filed with the SEC. For more information, see the section titled “Where You Can Find More Information” beginning on page 199.

 



 

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ANALOG DEVICES, INC. AND SUBSIDIARIES

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

(Dollar Amounts in Thousands, Except Per Share Data)

 

    At or for the
Nine Months Ended
    At or for the Fiscal Year Ended  
    July 30,
2016
    August 1,
2015
    October 31,
2015
    November 1,
2014
    November 2,
2013
    November 3
2012
    October 29,
2011
 

Statement of Operations data:

             

Total revenue from continuing operations

  $ 2,417,786      $ 2,456,370      $ 3,435,092      $ 2,864,773      $ 2,633,689      $ 2,701,142      $ 2,993,320   

Income from continuing operations, net of tax

    565,507        600,573        696,878        629,320        673,487        651,236        860,894   

Total income from discontinued operations, net of tax

    —          —          —          —          —          —          6,500   

Net income

    565,507        600,573        696,878        629,320        673,487        651,236        867,394   

Income per share from continuing operations, net of tax:

   

Basic

    1.83        1.92        2.23        2.01        2.19        2.18        2.88   

Diluted

    1.81        1.89        2.20        1.98        2.14        2.13        2.79   

Net income per share

   

Basic

    1.83        1.92        2.23        2.01        2.19        2.18        2.90   

Diluted

    1.81        1.89        2.20        1.98        2.14        2.13        2.81   

Cash dividends declared per common share

    1.24        1.17        1.57        1.45        1.32        1.15        0.94   

Balance Sheet data:

   

Total assets (1)

  $ 7,685,053      $ 7,131,161      $ 7,058,777      $ 6,855,331      $ 6,376,433      $ 5,617,299      $ 5,273,284   

Debt (1)

  $ 1,731,758      $ 869,560      $ 869,936      $ 868,430      $ 866,924      $ 818,550      $ 882,025   

 

(1) Amounts have been restated as a result of Analog Devices’ election to change its method of accounting for debt issuance costs in accordance with the Financial Accounting Standard Board’s Accounting Standards Update No. 2015-03 Interest—Imputation of Interest Simplifying the presentation of debt issuance costs during the first quarter of fiscal 2016 retrospectively to October 29, 2011. As a result of the adoption of this standard, the debt issuance costs related to Analog Devices’ outstanding notes have been reclassified as a deduction to the face amount of the notes and are no longer shown as a deferred asset within Other Assets on the consolidated balance sheet.

Selected Historical Consolidated Financial Data of Linear Technology

The following selected historical consolidated financial data of Linear Technology for the fiscal years ended July 3, 2016, June 28, 2015 and June 29, 2014 and the selected historical consolidated balance sheet data as of July 3, 2016 and June 28, 2015 have been derived from Linear Technology’s audited consolidated financial statements contained in Linear Technology’s Annual Report on Form 10-K for the fiscal year ended July 3, 2016, which is incorporated by reference into this proxy statement/prospectus. The selected historical consolidated financial data for the fiscal years ended June 30, 2013 and July 1, 2012 and the selected balance sheet data as of June 29, 2014, June 30, 2013 and July 1, 2012 have been derived from Linear Technology’s audited consolidated financial statements as of and for such years, which statements are not incorporated by reference into this proxy statement/prospectus.

The information set forth below is only a summary and is not necessarily indicative of the results of future operations of Linear Technology, and you should read the following information together with Linear Technology’s consolidated financial statements, the related notes and the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Linear Technology’s

 



 

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Annual Report on Form 10-K for the fiscal year ended July 3, 2016, which is incorporated by reference into this proxy statement/prospectus, and in Linear Technology’s other reports filed with the SEC. For more information, see the section titled “Where You Can Find More Information” beginning on page 199.

LINEAR TECHNOLOGY CORPORATION

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

(Dollar Amounts in Thousands, Except Per Share Data)

 

    July 3,
2016
    June 28,
2015
    June 29,
2014
    June 30,
2013
    July 1,
2012
 

Statements of Income data:

         

Revenues

  $ 1,423,936      $ 1,475,139      $ 1,388,386      $ 1,282,236      $ 1,266,621   

Net income

    494,346        520,963        459,961        406,925        398,111   

Earnings per share:

         

Basic

    2.02        2.13        1.91        1.72        1.71   

Diluted

    2.02        2.12        1.90        1.71        1.70   

Cash dividends per share

    1.24        1.14        1.06        1.02        0.98   

Balance Sheet data:

         

Total assets

  $ 2,049,981      $ 1,884,079      $ 1,655,578      $ 2,098,341      $ 1,851,068   

Convertible Senior Notes

  $ —        $ —        $ —        $ 826,629      $ 805,599   

 



 

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following tables present unaudited pro forma condensed combined financial information about Analog Devices’ consolidated balance sheet and statements of income after giving effect to the merger with Linear Technology. The information under “Unaudited Pro Forma Condensed Combined Statement of Income” in the table below gives effect to the merger as if it had taken place on November 2, 2014, the beginning of the earliest period presented. The information under “Unaudited Pro Forma Condensed Combined Balance Sheet Data” in the table below assumes the merger had taken place on July 30, 2016. This unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting where Analog Devices is considered the acquirer of Linear Technology for accounting purposes. See the section titled “Accounting Treatment for the Merger” beginning on page 126.

In addition, the unaudited pro forma condensed combined financial information includes adjustments which are preliminary and may be revised. There can be no assurance that such revisions will not result in material changes. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of results that actually would have occurred or that may occur in the future had the merger been completed on the dates indicated, nor is it necessarily indicative of the future operating results or financial position of Analog Devices after the merger. Future results may vary significantly from the results reflected due to various factors, including those discussed in the section titled “Risk Factors” beginning on page 23.

The information presented below should be read in conjunction with the historical consolidated financial statements of Analog Devices and Linear Technology, including the related notes filed by each of them with the SEC in addition to the pro forma condensed combined financial information of Analog Devices and Linear Technology, including the related notes appearing elsewhere in this proxy statement/prospectus. See the sections titled “Where You Can Find More Information” and “Unaudited Pro Forma Condensed Combined Financial Information” beginning on pages 199 and 160, respectively.

ANALOG DEVICES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF JULY 30, 2016

(In thousands)

 

    Historical                          
    Analog Devices
as of July 30,
2016
    Linear Technology
as of July 3, 2016
    Pro Forma
Adjustments for
Reclassifications
    Pro Forma
Adjustments for
Acquisition
    Pro Forma
Adjustments for
Financing
    Pro Forma
Condensed
Combined
 

Total assets

  $ 7,685,053      $ 2,049,981      $ —        $ 3,365,707      $ 11,523,343      $ 24,624,084   

Total debt

    1,731,758        —          —          —          11,530,505        13,262,263   

Total liabilities

    2,701,720        290,806        —          1,692,363        11,523,343        16,208,232   

Total shareholders’ equity

  $ 4,983,333      $ 1,759,175      $ —        $ 1,673,344      $ —        $ 8,415,852   

 



 

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ANALOG DEVICES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED OCTOBER 31, 2015

(In thousands)

 

    Historical                          
    Analog Devices
Year Ended
October 31,
2015
    Linear
Technology
Twelve Months

Ended
September 27,
2015
    Pro Forma
Adjustments for
Reclassifications
    Pro Forma
Adjustments for
Acquisition
    Pro Forma
Adjustments for
Financing
    Pro Forma
Condensed
Combined
 

Revenue

  $ 3,435,092      $ 1,445,996      $ —        $ —        $ —        $ 4,881,088   

Operating income

  $ 830,841      $ 658,252      $ —        $ (529,324   $ —        $ 959,769   

Net income

  $ 696,878      $ 503,551      $ —        $ (352,726   $ (160,378   $ 687,325   

Basic earnings per share

  $ 2.23      $ 2.06      $ —        $ —        $ —        $ 1.86   

Diluted earnings per share

  $ 2.20      $ 2.05      $ —        $ —        $ —        $ 1.84   

 

ANALOG DEVICES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE NINE MONTHS ENDED JULY 30, 2016

(In thousands)

 

    Historical                          
    Analog Devices
Nine Months
Ended July 30,
2016
    Linear
Technology
Nine Months
Ended
July 3,

2016
    Pro Forma
Adjustments for

Reclassifications
    Pro Forma
Adjustments for

Acquisition
    Pro Forma
Adjustments for
Financing
    Pro Forma
Condensed
Combined
 

Revenue

  $ 2,417,786      $ 1,082,019      $ —        $ —        $ —        $ 3,499,805   

Operating income

  $ 671,131      $ 483,636      $ —        $ (365,189   $ —        $ 789,578   

Net income

  $ 565,507      $ 382,299      $ —        $ (244,825   $ (115,733   $ 587,248   

Basic earnings per share

  $ 1.83        1.56      $ —        $ —        $ —        $ 1.61   

Diluted earnings per share

  $ 1.81        1.56      $ —        $ —        $ —        $ 1.59   

 



 

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UNAUDITED COMPARATIVE PER SHARE INFORMATION

The following tables summarize unaudited per share data for (i) Analog Devices on a historical basis for the fiscal year ended October 31, 2015 and the nine months ended July 30, 2016; (ii) Analog Devices on a pro forma condensed combined basis, assuming that the merger occurred on the dates indicated; (iii) Linear Technology on a historical basis for the twelve months ended September 27, 2015 and the nine months ended July 3, 2016 and (iv) Linear Technology on a pro forma equivalent basis, which was calculated by multiplying the corresponding pro forma condensed combined data by the exchange ratio of 0.2321 shares of Analog Devices common stock to 1.0 share of Linear Technology common stock. It has been assumed for purposes of the pro forma condensed combined financial information provided below that the pro forma events occurred on November 2, 2014 for earnings per share purposes and on July 30, 2016 for book value per share purposes.

The historical earnings per share information should be read in conjunction with the historical consolidated financial statements and notes thereto of Analog Devices and Linear Technology incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” on page 199. The unaudited pro forma condensed combined earnings per share information is derived from, and should be read in conjunction with, the section titled “Unaudited Pro Forma Condensed Combined Financial Information” and related notes included in this proxy statement/prospectus beginning on page 160. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position of Analog Devices following the merger.

 

    Analog Devices Twelve Months
Ended October 31, 2015
    Linear Technology Twelve Months
Ended September 27, 2015
 
    Historical     Pro Forma
Condensed
Combined
    Historical     Pro Forma
Equivalent(1)
 

Basic earnings per share

  $   2.23      $ 1.86      $ 2.06      $ 0.43   

Diluted earnings per share

    2.20        1.84        2.05        0.43   

Cash dividends per share (2)

    1.57        1.57        1.17        0.36   

Book value per share (3)

    16.26        N/A        6.63        N/A   
    Analog Devices Nine Months
Ended July 30, 2016
    Linear Technology Nine Months
Ended July 3, 2016
 
    Historical     Pro Forma
Condensed
Combined
    Historical     Pro Forma
Equivalent(1)
 

Basic earnings per share

  $   1.83      $   1.61      $ 1.56      $ 0.37   

Diluted earnings per share

    1.81        1.59        1.56        0.37   

Cash dividends per share (2)

    1.24        1.24        0.94        0.29   

Book value per share (3)

    16.21        23.15        7.34        5.37   

 

(1) The pro forma equivalent share amounts were calculated by multiplying the pro forma condensed combined per share amounts by the exchange ratio of 0.2321 shares of Analog Devices common stock per share of Linear Technology common stock. This information shows how each share of Linear Technology common stock would have participated in the combined company’s net income and book value if the pro forma events had occurred on the relevant dates.
(2) For the twelve months ended October 31, 2015 and the nine months ended July 30, 2016, Analog Devices paid a cash dividends of $1.57 and $1.24 per share, respectively, to its stockholders. The pro forma dividends per share are based solely on Analog’s historical dividends.
(3) Amount is calculated by dividing shareholders’ equity by common shares outstanding at the end of the period.

 



 

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COMPARATIVE STOCK PRICE DATA AND DIVIDENDS

Stock Prices

Analog Devices common stock trades on The Nasdaq Global Select Market under the symbol “ADI.” Linear Technology’s common stock trades on The Nasdaq Global Select Market under the symbol “LLTC.”

The following table sets forth the closing sales prices per share of Analog Devices common stock and Linear Technology common stock on The Nasdaq Global Select Market, and the implied value per share of one share of Linear Technology common stock, on the following dates:

 

    July 25, 2016, the last full trading day before the publication of press reports that Analog Devices and Linear Technology were in advanced negotiations regarding a potential business combination transaction, and

 

    September 12, 2016, the last full trading day for which this information could be calculated before the date of this proxy statement/prospectus.

 

    

Analog
Devices

Common
Stock

    

Linear
Technology

Common
Stock

    

Implied
Value

Per Share
(1)

 

July 25, 2016

   $ 60.53       $ 48.47       $ 60.05   

September 12, 2016

   $ 60.62       $ 58.37       $ 60.07   

 

  (1) The implied value per share, as of each date, is equal to (i) $46.00, the cash portion of the merger consideration, plus (ii) 0.2321, the exchange ratio for the merger, multiplied by the closing market price of one share of Analog Devices common stock on such date.  

The following table sets forth, for the periods indicated, the high and low sales prices per share of Analog Devices common stock and of Linear Technology common stock as reported on The Nasdaq Global Select Market.

Analog Devices Common Stock

 

     Price Range         
     High      Low      Cash
Dividends
 

Fiscal Year ending October 29, 2016

        

Fourth Quarter (through September 12, 2016)

   $ 65.49       $ 59.01       $ 0.42   

Third Quarter

   $ 66.91       $ 52.17       $ 0.42   

Second Quarter

   $ 59.87       $ 48.17       $ 0.42   

First Quarter

   $ 62.40       $ 47.24       $ 0.40   

Fiscal Year ended October 31, 2015

        

Fourth Quarter

   $ 64.16       $ 50.56       $ 0.40   

Third Quarter

   $ 68.97       $ 57.16       $ 0.40   

Second Quarter

   $ 64.94       $ 51.29       $ 0.40   

First Quarter

   $ 57.99       $ 49.18       $ 0.37   

Fiscal Year ended November 1, 2014

        

Fourth Quarter

   $ 52.95       $ 42.57       $ 0.37   

Third Quarter

   $ 56.18       $ 49.47       $ 0.37   

Second Quarter

   $ 54.40       $ 47.14       $ 0.37   

First Quarter

   $ 51.20       $ 46.12       $ 0.34   

 



 

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Linear Technology Common Stock

 

     Price Range         
     High      Low      Cash
Dividends
 

Fiscal Year ending July 2, 2017

        

First Quarter (through September 12, 2016)

   $ 64.42       $ 44.85       $ 0.32   

Fiscal Year ended July 3, 2016

        

Fourth Quarter

   $ 47.89       $ 43.36       $ 0.32   

Third Quarter

   $ 45.05       $ 37.33       $ 0.32   

Second Quarter

   $ 46.30       $ 38.06       $ 0.30   

First Quarter

   $ 45.39       $ 36.41       $ 0.30   

Fiscal Year ended June 28, 2015

        

Fourth Quarter

   $ 48.29       $ 45.18       $ 0.30   

Third Quarter

   $ 49.57       $ 43.57       $ 0.30   

Second Quarter

   $ 47.13       $ 37.56       $ 0.27   

First Quarter

   $ 48.09       $ 43.42       $ 0.27   

As of September 12, 2016, the last date before the date of this proxy statement/prospectus for which it was practicable to obtain this information, there were 307,813,457 shares of Analog Devices common stock outstanding and approximately 1,980 holders of record of Analog Devices common stock, and 245,646,235 shares of Linear Technology common stock outstanding and approximately 1,658 holders of record of Linear Technology common stock.

Because the number of shares of Analog Devices common stock issuable for each share of Linear Technology Common Stock in the merger will not be adjusted for changes in the market price of either Analog Devices common stock or Linear Technology common stock, the market value of the shares of Analog Devices common stock that holders of Linear Technology common stock will have the right to receive on the date the merger is completed may vary significantly from the market value of the shares of Analog Devices common stock that holders of Linear Technology common stock would receive if the merger were completed on the date of this proxy statement/prospectus.

As a result, you should obtain recent market prices of Analog Devices common stock and Linear Technology common stock prior to voting your shares. See “Risk Factors—Risks Relating to the Merger” beginning on page 23.

Dividends

Analog Devices currently pays regular quarterly cash dividends on its common stock. Analog Devices most recently paid a cash dividend on September 7, 2016, of $0.42 per share. Analog Devices currently expects to continue to pay quarterly cash dividends, although they remain subject to determination and declaration by the Analog Devices board of directors. The payment of future dividends, if any, will be based on several factors, including Analog Devices’ financial performance, outlook and liquidity.

Linear Technology currently pays regular quarterly cash dividends on its common stock. Linear Technology most recently paid a cash dividend on August 24, 2016, of $0.32 per share. The payment of future dividends will be based on Linear Technology’s financial performance.

Under the terms of the merger agreement, during the period before the closing of the merger, Analog Devices is not permitted to pay any dividends or make any distributions on its capital stock other than regular quarterly cash dividends not exceeding $0.42 per share for the two quarters following entry into the merger agreement, and not exceeding $0.45 per share thereafter, and Linear Technology is not permitted to pay any dividends or make any distributions on its capital stock other than regular quarterly cash dividends not exceeding $0.32 per share for the two quarters following entry into the merger agreement, and not exceeding $0.33 per share thereafter.

 



 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts but reflect Analog Devices’ and Linear Technology’s current beliefs, expectations or intentions regarding future events. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “pursue,” “will,” “should,” “target,” and other similar words, phrases or expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, Analog Devices’ and Linear Technology’s expectations with respect to the synergies, costs and other anticipated financial impacts of the merger; future financial and operating results of the combined company; the combined company’s plans, objectives, expectations and intentions with respect to future operations and services; required adoption of the merger agreement by Linear Technology stockholders; required approvals of the merger by governmental regulatory authorities; the satisfaction of the closing conditions to the merger; and the timing of the completion of the merger.

All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, many of which are generally outside the control of Analog Devices and Linear Technology and difficult to predict. These risks and uncertainties include, among others, those set forth under “Risk Factors” beginning on page 23, as well as risks and uncertainties relating to:

 

    the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement or the failure to satisfy the closing conditions;

 

    the risk that the financing required to complete the merger is not obtained or is obtained on terms other than those currently anticipated, including financing less favorable to Analog Devices than its current commitments, due to the absence of a financing condition in connection with the merger;

 

    the possibility that the consummation of the merger is delayed or does not occur, including due to the failure of Linear Technology stockholders to approve the merger proposal;

 

    the ability to obtain the regulatory approvals required to complete the merger, and the timing and conditions for such approvals, including conditions that could reduce the expected synergies and other benefits of the merger, result in a material delay or the abandonment of the merger or otherwise have an adverse effect on Analog Devices;

 

    the taking of governmental action (including the passage of legislation) to block the merger or otherwise adversely affecting Analog Devices and Linear Technology;

 

    the outcome of any legal proceedings that have been or may be instituted against Analog Devices, Linear Technology or others following announcement of the merger;

 

    the possibility that the expected synergies from the merger will not be realized or will take longer to realize than expected;

 

    the ability of Analog Devices to successfully integrate the business of Linear Technology;

 

    unexpected costs or unexpected liabilities that may arise from the merger, whether or not consummated;

 

    the uncertainty of the value of the merger consideration that Linear Technology stockholders will receive in the merger due to a fixed exchange ratio and a potential fluctuation in the market price of Analog Devices common stock;

 

    Linear Technology’s directors and executive officers having interests in the merger that are different from, or in addition to, the interests of Linear Technology stockholders more generally;

 

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    the possibility of changes in circumstances between the date of the signing of the merger agreement and the closing of the merger that are not reflected in the fairness opinion obtained by the Linear Technology board of directors;

 

    the effect of restrictions placed on Analog Devices’, Linear Technology’s or their respective subsidiaries’ business activities and the limitations put on Linear Technology’s ability to pursue alternatives to the merger pursuant to the merger agreement;

 

    the disruption from the merger making it more difficult for Analog Devices and Linear Technology to maintain relationships with their respective customers, employees or suppliers;

 

    the response of activist stockholders to the merger;

 

    the inability of Analog Devices and Linear Technology to retain key personnel;

 

    the effect of the substantial additional indebtedness that Analog Devices will incur in connection with the merger;

 

    the possibility of actual results of operations, cash flows and financial position after the merger materially differing from the unaudited pro forma condensed combined financial information contained in this proxy statement/prospectus; and

 

    the impact of global economic conditions, fluctuations in exchange rates, labor relations, competitive actions taken by other semiconductor businesses or other competitors, terrorist attacks or natural disasters.

Analog Devices and Linear Technology caution that the foregoing list of factors is not exhaustive. Additional information concerning these and other risk factors is contained in Analog Devices’ and Linear Technology’s most recently filed Annual Reports on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other SEC filings, as such filings may be amended from time to time. All of the forward-looking statements made by Analog Devices or Linear Technology contained or incorporated by reference in this proxy statement/prospectus and all subsequent written and oral forward-looking statements concerning Analog Devices, Linear Technology, the merger or other matters attributable to Analog Devices or Linear Technology or any person acting on either of their behalf are expressly qualified in their entirety by the cautionary statement above.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date such statements were made. Neither Analog Devices nor Linear Technology undertakes any obligation to update or revise any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof, even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by applicable law. Neither Analog Devices nor Linear Technology intends to make any update or other revision to these forward-looking statements publicly available, except as may be required by applicable law.

 

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RISK FACTORS

In addition to the other information included in and incorporated by reference into this proxy statement/prospectus, including the matters addressed in the section titled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 21, you should carefully consider the following risk factors before deciding whether to vote for the merger proposal and the other proposals described in this proxy statement/prospectus. In addition, you should read and consider the risk factors associated with each of the businesses of Analog Devices and Linear Technology because these risk factors will relate to the combined company following the completion of the merger. These risk factors may be found in Analog Devices’ Annual Report on Form 10-K for the fiscal year ended October 31, 2015 and Linear Technology’s Annual Report on Form 10-K for the fiscal year ended July 3, 2016 and, in each case, any amendments thereto, as such risk factors may be updated or supplemented in each company’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, which are incorporated by reference into this proxy statement/prospectus. You should also consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. See the section titled “Where You Can Find More Information” beginning on page 199.

Risks Relating to the Merger

Because the exchange ratio is fixed and the market price of Analog Devices common stock has fluctuated and will continue to fluctuate, you cannot be sure of the value of the merger consideration you will receive.

Upon completion of the merger, each issued and outstanding share of Linear Technology common stock (other than shares (i) held in treasury by Linear Technology or owned by Analog Devices or Merger Sub (which will be cancelled), (ii) owned by any direct or indirect wholly owned subsidiary of Linear Technology or Analog Devices (other than Merger Sub) (which will be converted into shares of the surviving company), (iii) owned by stockholders that have validly made a demand for appraisal and not validly withdrawn such demand or otherwise lost their rights of appraisal with respect to such shares pursuant to Section 262 of the DGCL, or (iv) underlying Linear Technology restricted stock awards) will be converted into the right to receive $46.00 in cash, without interest, plus 0.2321 shares of Analog Devices common stock, less any applicable withholding taxes. Based on the closing stock price of Analog Devices common stock on July 25, 2016, the last full trading day before the publication of press reports that Analog Devices and Linear Technology were in advanced negotiations regarding a potential business combination transaction, the per share value of Linear Technology common stock implied by the per share merger consideration is $60.05. Based on the closing stock price of Analog Devices common stock on September 12, 2016, the most recent practicable date prior to the date of this proxy statement/prospectus, the per share value of Linear Technology common stock implied by the per share merger consideration is $60.07. The implied value of the per share merger consideration will fluctuate as the market price of Analog Devices common stock fluctuates because a portion of the per share merger consideration is payable in a fixed number of shares of Analog Devices common stock (subject to adjustment if the number of shares of Analog Devices common stock issuable in the merger would otherwise exceed 19.9% of the outstanding Analog Devices common stock prior to the merger). The value of the stock portion of the merger consideration has fluctuated since the date of the announcement of the merger agreement and will continue to fluctuate from the date of this proxy statement/prospectus to the date of the annual meeting and the date the merger is completed and thereafter. Accordingly, at the time of the annual meeting, Linear Technology stockholders will not know or be able to determine the market value of the merger consideration they would receive upon completion of the merger. Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Analog Devices’ and Linear Technology’s respective businesses, operations and prospects, market assessments of the likelihood that the merger will be completed, the timing of the merger, regulatory considerations and other risk factors set forth or incorporated by reference in this proxy statement/prospectus. Many of these factors are beyond Analog Devices’ and Linear Technology’s control. You are urged to obtain current market quotations for Analog Devices common stock before deciding whether to vote for the merger proposal.

 

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The market price of Analog Devices common stock after the merger will continue to fluctuate and may be affected by factors different from those affecting shares of Linear Technology common stock currently.

Upon completion of the merger, holders of Linear Technology common stock will become holders of Analog Devices common stock. The market price of Analog Devices common stock may fluctuate significantly following completion of the merger and holders of Linear Technology common stock could lose the value of their investment in Analog Devices common stock. In addition, any significant price and volume fluctuations of the stock markets could have a material adverse effect on the market for, or liquidity of, the Analog Devices common stock, regardless of Analog Devices’ actual operating performance. In addition, Analog Devices’ business differs in important respects from that of Linear Technology, and accordingly, the results of operations of the combined company and the market price of Analog Devices common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Analog Devices and Linear Technology. For a discussion of the businesses of Analog Devices and Linear Technology and of some important factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 199.

Sales of shares of Analog Devices common stock after the completion of the merger may cause the market price of Analog Devices common stock to fall.

Based on the number of outstanding shares of Linear Technology common stock as of September 12, 2016, Analog Devices would issue approximately 57 million shares of Analog Devices common stock in the merger. Many Linear Technology stockholders may decide not to hold the shares of Analog Devices common stock they will receive in the merger. Other Linear Technology stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of Analog Devices common stock that they receive in the merger. Such sales of Analog Devices common stock could have the effect of depressing the market price for Analog Devices common stock and may take place promptly following the merger.

Completion of the merger is subject to the conditions contained in the merger agreement and if these conditions are not satisfied or waived, the merger will not be completed.

The obligations of Analog Devices and Linear Technology to complete the merger are subject to the satisfaction or waiver of a number of conditions, including the approval of the merger proposal by Linear Technology stockholders, the expiration or termination of the applicable waiting period under the HSR Act and the receipt of all other required regulatory approvals. For a more complete summary of the required regulatory approvals and the conditions to the closing of the merger, see the sections titled “The Merger—Regulatory Approvals” and “The Merger Agreement—Conditions to Completion of the Merger.”

Many of the conditions to the closing of the merger are not within Analog Devices’ or Linear Technology’s control, and neither company can predict when or if these conditions will be satisfied. If any of these conditions are not satisfied or waived prior to April 26, 2017, which deadline may be extended to October 26, 2017 under certain circumstances, it is possible that the merger agreement will be terminated. Although Analog Devices and Linear Technology have agreed in the merger agreement to use their reasonable best efforts, subject to certain limitations, to complete the merger as soon as practicable, these and other conditions to the completion of the merger may not be satisfied. The failure to satisfy all of the required conditions could delay the completion of the merger for a significant period of time or prevent it from occurring. Any delay in completing the merger could cause Analog Devices not to realize some or all of the benefits that Analog Devices expects to achieve if the merger is successfully completed within its expected timeframe. There can be no assurance that the conditions to the closing of the merger will be satisfied or waived or that the merger will be completed. See the risk factor titled “—Failure to complete the merger could negatively affect the stock price and the future business and financial results of Linear Technology,” below.

 

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The merger is subject to the expiration of applicable waiting periods and the receipt of approvals, consents or clearances from domestic and foreign regulatory authorities that may impose conditions that could have an adverse effect on Analog Devices, Linear Technology or the combined company or, if not obtained, could prevent completion of the merger.

Before the merger may be completed, any waiting period (or extension thereof) applicable to the merger must have expired or been terminated, and any approvals, consents or clearances required in connection with the merger must have been obtained, in each case, under the HSR Act and under the antitrust and competition laws of China, Israel, Japan, Korea, the European Union (to the extent it has jurisdiction as a result of a European Union specified merger control action), Romania (to the extent required by applicable law, unless a European Union specified merger control action occurs), Germany (unless a European Union specified merger control action occurs) and the United Kingdom (unless a European Union specified merger control action occurs, and to the extent there is a publication by the United Kingdom Competition & Markets Authority of an Invitation to Comment in relation to the transaction, on its website and/or on the Regulatory News Service of the London Stock Exchange). In addition, the merger may be reviewed under antitrust statutes of other governmental authorities, including U.S. state laws. In deciding whether to grant the required regulatory approval, consent or clearance, the relevant governmental entities will consider the effect of the merger on competition within their relevant jurisdiction. The terms and conditions of the approvals, consents and clearances that are granted may impose requirements, limitations or costs or place restrictions on the conduct of the combined company’s business. Under the merger agreement, Analog Devices and Linear Technology have agreed to use their reasonable best efforts to obtain such approvals, consents and clearances and therefore may be required to comply with conditions or limitations imposed by governmental authorities. However, Analog Devices will not be required to do any of the following in order to obtain any regulatory approval or otherwise to consummate the merger, and any requirement to do any of the following in order to obtain a required regulatory approval would result in the conditions to the consummation of the merger not being satisfied, unless waived by Analog Devices: (i) sell, divest, exclusively license, hold separate, or otherwise dispose of, or (ii) grant any non-exclusive license, accept any operational restrictions or take or commit to take any actions which restrictions or actions would limit Analog Devices’ or any of its affiliates’ freedom of action, in each case with respect to assets, licenses, product lines, operations or businesses of Analog Devices, Linear Technology or any of their respective subsidiaries that individually or in the aggregate generated total collective revenues in excess of $125 million in Analog Devices or Linear Technology’s fiscal year 2016, referred to in this proxy statement/prospectus as the revenue cap. For purposes of clause (ii), the revenues of the asset, license, product line, operation or business impacted by such non-exclusive license, operational restriction or action will be considered in determining whether the revenue cap is met only if such restrictions would limit Analog Devices’ or its affiliates’ freedom of action with respect to the impacted asset, product line, operation or business after the effective time in a manner that is material to such impacted asset, product line, operation or business or, in the case of a non-exclusive license, the adverse effect of such license is non-de minimis with respect to the impacted asset, product line, operation or business. Analog Devices will also not be required to agree to or accept any obligation to permit any third party to invest (directly or indirectly, including through a joint venture or similar arrangement) in Analog Devices, Linear Technology, or any of their subsidiaries or affiliates. There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying completion of the merger or imposing additional material costs on or materially limiting the revenues of the combined company following the completion of the merger. In addition, neither Analog Devices nor Linear Technology can provide assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the merger. See the sections titled “The Merger—Regulatory Approvals” and “The Merger Agreement—Conditions to Completion of the Merger” beginning on pages 132 and 153, respectively, of this proxy statement/prospectus.

Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized.

Linear Technology and Analog Devices have operated and, until the completion of the merger, will continue to operate, independently. The success of the merger, including anticipated benefits and cost savings, will

 

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depend, in part, on Analog Devices’ ability to successfully combine and integrate the businesses of Analog Devices and Linear Technology. It is possible that the pendency of the merger and/or the integration process could result in the loss of key employees, higher than expected costs, diversion of management attention of both Linear Technology and Analog Devices, the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits and cost savings of the merger. As part of the integration process, Analog Devices may also attempt to divest certain assets of the combined company, which may not be possible on favorable terms, or at all, or if successful, may change the profile of the combined company. If Analog Devices experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. Analog Devices’ management continues to refine its integration plan. These integration matters could have an adverse effect on (i) each of Analog Devices and Linear Technology during this transition period and (ii) the combined company for an undetermined period after completion of the merger. In addition, the actual cost savings of the merger could be less than anticipated.

Linear Technology’s directors and executive officers have interests in the merger that may be different from, or in addition to, your interests as a stockholder of Linear Technology more generally.

When considering the recommendation of the Linear Technology board of directors that Linear Technology stockholders approve the merger proposal, Linear Technology stockholders should be aware that directors and executive officers of Linear Technology have certain interests in the merger that may be different from, or in addition to, the interests of Linear Technology stockholders more generally. These interests generally include, among others, rights to accelerated vesting of equity awards and certain payments and benefits in connection with the merger and/or a qualifying termination of employment following the merger. See the section titled “The Merger—Interests of Linear Technology’s Directors and Executive Officers in the Merger” beginning on page 119 for a more detailed description of these interests. As a result of these interests, these directors and executive officers of Linear Technology might be more likely to support and to vote in favor of the merger proposal than if they did not have these interests.

The merger agreement limits Linear Technology’s ability to pursue alternatives to the merger and may discourage other companies from trying to acquire Linear Technology.

The merger agreement contains provisions that make it more difficult for Linear Technology to sell its business to a party other than Analog Devices. These provisions include a general prohibition on Linear Technology soliciting any company takeover proposal or offer for a competing transaction. Further, there are only limited exceptions to (i) Linear Technology’s agreement that the Linear Technology board of directors will not withdraw or modify in a manner adverse to Analog Devices the recommendation of the Linear Technology board of directors that Linear Technology stockholders vote in favor of the merger proposal and (ii) Linear Technology’s agreement not to enter into an agreement with respect to a competing company takeover proposal. In addition, upon termination of the merger agreement, Linear Technology is required to pay Analog Devices a termination fee of $490 million if the merger agreement is terminated in certain circumstances involving a company takeover proposal, an adverse recommendation change or a breach of Linear Technology’s non-solicitation obligations under the merger agreement.

These provisions could discourage a third party that might have an interest in acquiring all or a significant part of Linear Technology from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher per share value than the value proposed to be received or realized in the merger. These provisions might also result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

 

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The merger agreement subjects Linear Technology to restrictions on its business activities.

The merger agreement subjects Linear Technology to restrictions on its business activities and obligates Linear Technology to generally operate its businesses in all material respects in the ordinary course. These restrictions could have an adverse effect on Linear Technology’s results of operations, cash flows and financial position.

The business relationships of Analog Devices and Linear Technology and their respective subsidiaries may be subject to disruption due to uncertainty associated with the merger, which could have an adverse effect on the results of operations, cash flows and financial position of Analog Devices, Linear Technology and, following the completion of the merger, the combined company.

Parties with which Analog Devices and Linear Technology, or their respective subsidiaries, do business may be uncertain as to the effects on them of the merger and related transactions, including with respect to current or future business relationships with Analog Devices, Linear Technology, their respective subsidiaries or the combined company. These relationships may be subject to disruption as customers, suppliers and other persons with whom Analog Devices and Linear Technology have a business relationship may delay or defer certain business decisions or might decide to terminate, change or renegotiate their relationships with Analog Devices or Linear Technology, as applicable, or consider entering into business relationships with parties other than Analog Devices, Linear Technology, their respective subsidiaries or the combined company. These disruptions could have an adverse effect on the results of operations, cash flows and financial position of Linear Technology, Analog Devices or the combined company following the completion of the merger, including an adverse effect on Analog Devices’ ability to realize the expected synergies and other benefits of the merger. The risk, and adverse effect, of any disruption could be exacerbated by a delay in completion of the merger or termination of the merger agreement.

Failure to complete the merger could negatively affect the stock price and the future business and financial results of Linear Technology.

If the merger is not completed for any reason, including as a result of Linear Technology stockholders failing to approve the merger proposal, the ongoing business of Linear Technology may be adversely affected and, without realizing any of the benefits of having completed the merger, Linear Technology could be subject to a number of negative consequences, including the following:

 

    Linear Technology may experience negative reactions from the financial markets, including negative impacts on its stock price;

 

    Linear Technology may experience negative reactions from its customers and suppliers;

 

    Linear Technology may experience negative reactions from its employees and may not be able to retain key management personnel and other key employees;

 

    Linear Technology will have incurred, and will continue to incur, significant non-recurring costs in connection with the merger that it may be unable to recover;

 

    the merger agreement places certain restrictions on the conduct of Linear Technology’s business prior to completion of the merger, the waiver of which is subject to the consent of Analog Devices (not to be unreasonably withheld, conditioned or delayed in certain circumstances), which may prevent Linear Technology from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the merger that may be beneficial to Linear Technology (see the section titled “The Merger Agreement—Conduct of Businesses of Linear Technology and Analog Devices Prior to Completion of the Merger” beginning on page 144 for a description of the restrictive covenants applicable to Linear Technology); and

 

    matters relating to the merger (including integration planning) will require substantial commitments of time and resources by Linear Technology management, which could otherwise be devoted to day-to-day operations and other opportunities that may be beneficial to Linear Technology as an independent company.

 

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In addition, upon termination of the merger agreement, Linear Technology is required to pay Analog Devices a termination fee of $490 million if the merger agreement is terminated in certain circumstances involving a company takeover proposal, an adverse recommendation change or a breach of Linear Technology’s non-solicitation obligations under the merger agreement. Finally, Linear Technology could be subject to litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against Linear Technology to perform its obligations under the merger agreement. If the merger is not completed, any of these risks may materialize and may adversely affect Linear Technology’s businesses, financial condition, financial results and stock price.

The shares of Analog Devices common stock to be received by Linear Technology stockholders as a result of the merger will have rights different from the shares of Linear Technology common stock.

Upon completion of the merger, Linear Technology stockholders will no longer be stockholders of Linear Technology but will instead become Analog Devices stockholders, and their rights as stockholders will be governed by the terms of the Analog Devices charter and bylaws and by the Massachusetts Business Corporation Act. See the section titled “Comparison of Rights of Common Stockholders of Analog Devices and Linear Technology” beginning on page 176 for a discussion of the different rights associated with Analog Devices common stock.

After the merger, Linear Technology stockholders will have a significantly lower ownership and voting interest in Analog Devices than they currently have in Linear Technology and will exercise less influence over management.

Based on the number of shares of Linear Technology common stock outstanding as of September 12, 2016, and the number of shares of Analog Devices common stock outstanding as of September 12, 2016, it is expected that, immediately after completion of the merger, former Linear Technology stockholders will own approximately 15.6% of the outstanding shares of Analog Devices common stock. Consequently, former Linear Technology stockholders will have less influence over the management and policies of Analog Devices than they currently have over the management and policies of Linear Technology.

In connection with the merger, Analog Devices will incur significant indebtedness, which could adversely affect Analog Devices, including by decreasing Analog Devices’ business flexibility, and will increase its interest expense.

Analog Devices’ consolidated indebtedness as of July 30, 2016 was approximately $1.7 billion. Analog Devices’ pro forma indebtedness as of July 30, 2016, after giving effect to the merger and the anticipated incurrence and extinguishment of indebtedness in connection therewith, will be as much as $13.2 billion. Analog Devices will have substantially increased indebtedness following completion of the merger in comparison to Analog Devices’ indebtedness on a recent historical basis. In particular, in order to consummate the merger, Analog Devices expects to incur up to $11.5 billion of new debt.

This indebtedness could have the effect, among other things, of reducing Analog Devices’ flexibility to respond to changing business and economic conditions and increasing Analog Devices’ interest expense. The amount of cash required to pay interest on Analog Devices’ increased indebtedness levels following completion of the merger, and thus the demands on Analog Devices’ cash resources, will be greater than the amount of cash flows required to service the indebtedness of Analog Devices prior to the transaction. The cash resources required to service the increased levels of indebtedness following completion of the merger could also reduce funds available for working capital, capital expenditures, acquisitions and other general corporate purposes and may create competitive disadvantages for Analog Devices relative to other companies with lower debt levels. If Analog Devices does not achieve the expected benefits and cost savings from the merger, or if the financial performance of the combined company does not meet current expectations, then Analog Devices’ ability to service its indebtedness may be adversely impacted.

 

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Certain of the indebtedness to be incurred in connection with the merger may bear interest at variable interest rates. If interest rates increase, variable rate debt will create higher debt service requirements, which could adversely affect Analog Devices’ cash flows.

The agreements that will govern the debt financing expected to be incurred by Analog Devices to finance the merger are also expected to include several restrictive covenants and contain certain events of default. Any acceleration of indebtedness that arises from an event of default under the debt financing could have a material adverse effect on Analog Devices’ business following completion of the merger.

In addition, Analog Devices’ credit ratings affect the cost and availability of future borrowings and, accordingly, Analog Devices’ cost of capital. Analog Devices’ ratings reflect each rating organization’s opinion of Analog Devices’ financial strength, operating performance and ability to meet Analog Devices’ debt obligations. In connection with the debt financing, it is anticipated that Analog Devices will seek ratings of its indebtedness from one or more nationally recognized statistical rating organizations. There can be no assurance that Analog Devices will achieve a particular rating or maintain a particular rating in the future.

Moreover, Analog Devices may be required to raise substantial additional financing to fund working capital, capital expenditures, acquisitions or other general corporate requirements. Analog Devices’ ability to arrange additional financing or refinancing will depend on, among other factors, Analog Devices’ financial position and performance, as well as prevailing market conditions and other factors beyond Analog Devices’ control. Analog Devices cannot assure you that it will be able to obtain additional financing or refinancing on terms acceptable to Analog Devices or at all.

The agreements that will govern the indebtedness to be incurred in connection with the merger will contain various covenants that impose restrictions on Analog Devices and certain of its subsidiaries that may affect their ability to operate their businesses.

The agreements that will govern the debt financing to be incurred in connection with the merger will contain various affirmative and negative covenants that may, subject to certain significant exceptions, restrict the ability of Analog Devices and certain of its subsidiaries to, among other things, have liens on their property, incur subsidiary debt, merge or consolidate with any other person, and/or sell or convey certain of their assets to any one person. In addition, some of the agreements that govern the debt financing will contain financial covenants that will require Analog Devices to maintain certain financial ratios in certain circumstances. The ability of Analog Devices and its subsidiaries to comply with these provisions may be affected by events beyond their control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate Analog Devices’ repayment obligations.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the merger may differ materially from them.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Analog Devices’ actual financial condition or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma condensed combined financial information reflects adjustments, which are based upon assumptions, preliminary estimates and accounting reclassifications, to record the Linear Technology identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this proxy statement/prospectus is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Linear Technology as of the date of the completion of the merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this proxy statement/prospectus. For more information, see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 160.

 

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The fairness opinion obtained by the Linear Technology board of directors from Qatalyst Partners does not reflect changes, circumstances, developments or events that may have occurred or may occur after the date of the opinion.

At the meeting of the Linear Technology board of directors on July 26, 2016, Qatalyst Partners rendered its oral opinion, subsequently confirmed in writing, that as of such date, and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in its written opinion, the consideration of $46.00 in cash and 0.2321 shares of Analog Devices common stock per share of Linear Technology common stock (which is subject to certain adjustment procedures set forth in the merger agreement, as to which Qatalyst Partners expressed no opinion) to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of Linear Technology common stock, other than Analog Devices or any affiliates of Analog Devices, was fair, from a financial point of view, to such holders.

The Linear Technology board of directors has not obtained an updated fairness opinion as of the date of this proxy statement/prospectus from Qatalyst Partners, and the Linear Technology board of directors does not expect to receive an updated fairness opinion prior to the closing of the merger.

Qatalyst Partners’ opinion does not reflect changes, circumstances, developments or events that may have occurred or may occur after the date of its opinion, including changes in the operations and prospects of Linear Technology and Analog Devices or their respective operating companies, regulatory or legal changes, general market and economic conditions and other factors that may be beyond the control of Linear Technology and Analog Devices, and on which Qatalyst Partners’ opinion was based, and that may alter the value of Linear Technology or Analog Devices or the prices of shares of Linear Technology or Analog Devices common stock by the time the merger is completed. The value of the stock portion of the merger consideration has fluctuated since, and could be materially different from its value as of, the date of Qatalyst Partners’ opinion, and Qatalyst Partners’ opinion does not address the prices at which shares of Linear Technology common stock or Analog Devices common stock may have traded or trade since the date of its opinion. Qatalyst Partners’ opinion does not speak as of the time the merger will be completed or as of any date other than the date of its opinion. Linear Technology does not anticipate asking Qatalyst Partners to update its opinion, and Qatalyst Partners does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events that may have occurred or may occur after the date of its opinion. Qatalyst Partners’ opinion is attached as Annex B to this proxy statement/prospectus. For a summary of Qatalyst Partners’ opinion, see “The Merger—Opinion of Linear Technology’s Financial Advisor” beginning on page 113.

The merger will be dilutive to Analog Devices’ earnings per share, measured on a GAAP basis.

Because shares of Analog Devices common stock will be issued in the merger, the merger will be dilutive to Analog Devices earnings per share, measured on a GAAP basis. Future events and conditions could increase the dilution that is currently projected, including adverse changes in market conditions, additional transaction and integration-related costs and other factors such as the failure to realize some or all of the benefits anticipated in the merger. Any dilution of, or delay of any accretion to, Analog Devices’ earnings per share could cause the price of shares of Analog Devices common stock to decline or grow at a reduced rate.

The merger will involve substantial costs.

Linear Technology and Analog Devices have incurred, and expect to continue to incur, a number of non-recurring costs associated with the merger and combining the operations of the two companies. The substantial majority of non-recurring expenses will be comprised of transaction and regulatory costs related to the merger.

Analog Devices also will incur transaction fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs. Analog Devices continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the merger and the integration of the two companies’ businesses. Although Analog Devices expects that the

 

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elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow Analog Devices to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. See the risk factor titled “—Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized” above.

Lawsuits may in the future be filed against Linear Technology, its directors, Analog Devices and Merger Sub challenging the merger, and an adverse ruling in any such lawsuit may prevent the merger from becoming effective or from becoming effective within the expected timeframe.

Transactions like the merger are frequently the subject to litigation or other legal proceedings, including actions alleging that the board of directors of either Linear Technology or Analog Devices breached their respective fiduciary duties to their stockholders by entering into the merger agreement, by failing to obtain a greater value in the transaction for their stockholders or otherwise. Both Linear Technology and Analog Devices believe that any such litigation or proceedings would be without merit, but there can be no assurance that they will not be brought. If litigation or other legal proceedings are in fact brought against either Linear Technology or Analog Devices or against the board of directors of either company, they will defend against it, but they might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on the business, results of operation or financial position of Linear Technology, Analog Devices or the combined company, including through the possible diversion of either company’s resources or distraction of key personnel.

Further, one of the conditions to the completion of the merger is that no injunction by any court or other tribunal of competent jurisdiction will be in effect that temporarily or permanently prohibits, enjoins or makes illegal the consummation of the merger. As such, if any of the plaintiffs are successful in obtaining an injunction prohibiting the consummation of the merger, that injunction may prevent the merger from becoming effective or from becoming effective within the expected timeframe.

Uncertainties associated with the merger may cause a loss of management personnel and other key employees of Linear Technology or Analog Devices, which could adversely affect the future business and operations of the combined company following the merger.

Linear Technology and Analog Devices are dependent on the experience and industry knowledge of their officers and other key employees to execute their business plans. The combined company’s success after the merger will depend in part upon its ability to retain key management personnel and other key employees of Linear Technology and Analog Devices. Current and prospective employees of Linear Technology and Analog Devices may experience uncertainty about their future roles with the combined company following the merger, which may materially adversely affect the ability of each of Linear Technology and Analog Devices to attract and retain key personnel during the pendency of the merger. Accordingly, no assurance can be given that the combined company will be able to retain key management personnel and other key employees of Linear Technology and Analog Devices.

Other Risk Factors of Analog Devices and Linear Technology

Analog Devices’ and Linear Technology’s businesses are and will be subject to the risks described above. In addition, Analog Devices and Linear Technology are, and will continue to be subject to the risks described in Analog Devices’ Annual Report for the fiscal year ended October 31, 2015 and Linear Technology’s Annual Report on Form 10-K for the fiscal year ended July 3, 2016, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. The risks described above and in those filings represent all known material risks with respect to Analog Devices’ and Linear Technology’s businesses. See “Where You Can Find More Information” beginning on page 199 for the location of information incorporated by reference into this proxy statement/prospectus.

 

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INFORMATION ABOUT LINEAR TECHNOLOGY

Linear Technology Corporation

Linear Technology Corporation, a member of the Standard & Poor’s 500 Index and referred to in this proxy statement/prospectus as Linear Technology, has been designing, manufacturing and marketing a broad line of high performance analog integrated circuits for major companies worldwide for over three decades. Linear Technology’s products provide an essential bridge between the analog world and the digital electronics in communications, networking, industrial, transportation, computer, medical, instrumentation, consumer, and military and aerospace systems. Linear Technology produces power management, data conversion, signal conditioning, RF and interface ICs, µModule® subsystems, and wireless sensor network products. Linear Technology is a Delaware corporation; it was originally organized and incorporated in California in 1981. Linear Technology competes primarily on the basis of performance, functional value, quality, reliability and service. Linear Technology common stock trades on The NASDAQ Global Select Market under the symbol “LLTC”. The principal executive offices of Linear Technology are located at 720 Sycamore Dr., Milpitas CA, and its telephone number is (408) 432-1900.

 

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INFORMATION ABOUT ANALOG DEVICES

Analog Devices, Inc.

Analog Devices, Inc., a Massachusetts corporation and referred to in this proxy statement/prospectus as Analog Devices, is a world leader in the design, manufacture and marketing of a broad portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing technology, including integrated circuits (ICs), algorithms, software, and subsystems. Since its inception in 1965, Analog Devices has focused on solving the engineering challenges associated with signal processing in virtually all types of electronic equipment. Analog Devices’ signal processing products play a fundamental role in converting, conditioning, and processing real-world phenomena such as temperature, pressure, sound, light, speed and motion into electrical signals to be used in a wide array of electronic devices. As new generations of applications, such as the Internet of Things, evolve, new needs for high-performance analog signal processing and digital signal processing (DSP) technology are generated. Analog Devices focuses on sensing, measurement, and connectivity challenges that apply to a diverse set of customers and markets. Analog Devices combines data converters, amplifiers and linear products, radio frequency (RF) ICs, power management products, sensors based on micro-electro mechanical systems (MEMS) technology and other sensors, and processing products, including DSP, micro controllers and other processors, into technology platforms that Analog Devices adapts to specific customer and market needs, leveraging Analog Devices’ engineering investment across a broad base of customers. Analog Devices was incorporated in Massachusetts in 1965. Its headquarters are near Boston, in Norwood, Massachusetts. In addition, Analog Devices has manufacturing facilities in Massachusetts, Ireland, and the Philippines, and has more than thirty design facilities worldwide. Analog Devices common stock trades on The NASDAQ Global Select Market under the symbol “ADI” and is included in the Standard & Poor’s 500 Index. The principal executive offices of Analog Devices are located at One Technology Way, Norwood, Massachusetts 02062, and its telephone number is (781) 329-4700.

Tahoe Acquisition Corp.

Tahoe Acquisition Corp., a Delaware corporation and referred to in this proxy statement/prospectus as Merger Sub, is a wholly owned subsidiary of Analog Devices. Merger Sub was formed by Analog Devices solely in contemplation of the merger, has not conducted any business and has no assets, liabilities or obligations of any nature other than as set forth in the merger agreement. The principal executive offices of Merger Sub are located at c/o Analog Devices, Inc., One Technology Way, Norwood, Massachusetts 02062, and its telephone number is (781) 329-4700.

 

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INFORMATION ABOUT THE LINEAR TECHNOLOGY ANNUAL MEETING

General

This proxy statement/prospectus is being provided to Linear Technology stockholders as part of a solicitation of proxies by the board of directors of Linear Technology for use at the annual meeting of Linear Technology stockholders and at any adjournments or postponements of such annual meeting. This proxy statement/prospectus provides Linear Technology stockholders with information about the annual meeting and should be read carefully in its entirety.

Date, Time and Place of the Annual Meeting

The annual meeting will be held on October 18, 2016, beginning at 3:00 p.m., local time, at Linear Technology’s principal executive offices at 1630 McCarthy Boulevard, Milpitas, California 95035, unless postponed to a later date.

Purposes of the Annual Meeting

At the annual meeting, Linear Technology stockholders will be asked to vote upon the following proposals:

 

    Proposal 1—The Merger Proposal: the proposal to adopt the merger agreement, which is further described in the sections titled “The Merger” beginning on page 94 and “The Merger Agreement” beginning on page 137 and a copy of which is attached to this proxy statement/prospectus as Annex A;

 

    Proposal 2—The Merger-Related Compensation Proposal: the proposal to approve on an advisory (non-binding) basis the compensation that may be paid or become payable to Linear Technology’s named executive officers that is based on or otherwise relates to the merger;

 

    Proposal 3—The Director Election Proposal: the proposal to elect seven director nominees to serve until the next annual meeting of stockholders of Linear Technology and until their successors are elected;

 

    Proposal 4—The Executive Compensation Proposal: the proposal to approve on an advisory (non-binding) basis the compensation (other than compensation that is based on or otherwise relates to the merger) of Linear Technology’s named executive officers;

 

    Proposal 5—The Accountant Ratification Proposal: the proposal to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of Linear Technology for the fiscal year ending July 2, 2017;

 

    Proposal 6—The Adjournment Proposal: the proposal to approve the adjournment of the annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the merger proposal; and

 

    To transact any other business that may properly come before the annual meeting and any adjournment or postponement thereof.

Only the approval of the merger proposal is required for completion of the merger.

Attendance at the Annual Meeting

Only Linear Technology stockholders of record as of the record date, non-record owners as of the record date, holders of valid proxies for the annual meeting and invited guests of Linear Technology may attend the annual meeting.

All attendees should be prepared to present picture identification for admittance. The additional items, if any, that attendees must bring depend on whether they are stockholders of record, non-record owners or proxy holders.

 

   

A Linear Technology stockholder who holds shares directly registered in such stockholder’s name with Linear Technology’s transfer agent, Computershare Trust Company, N.A. (referred to in this proxy

 

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statement/prospectus as a stockholder of record), who wishes to attend the annual meeting in person should bring picture identification.

 

    A person who holds shares in “street name” through a bank, brokerage firm or other nominee (referred to in this proxy statement/prospectus as a non-record owner) who wishes to attend the annual meeting in person should bring:

 

    picture identification; and

 

    a letter from such person’s bank, brokerage firm or other nominee, or a current brokerage statement, to indicate that such bank, brokerage firm or other nominee is holding shares of Linear Technology common stock for such person’s benefit.

 

    A person who holds a validly executed proxy entitling such person to vote on behalf of a stockholder of record of Linear Technology shares (referred to in this proxy statement/prospectus as a proxy holder) who wishes to attend the annual meeting in person should bring:

 

    picture identification;

 

    the validly executed proxy naming such person as the proxy holder, signed by the Linear Technology stockholder of record; and

 

    proof of the signing stockholder’s record ownership as of the record date.

Cameras, recording devices and other electronic devices, signs and placards will not be permitted at the annual meeting. Failure to provide the requested documents at the door or failure to comply with the procedures for the annual meeting may prevent stockholders of record, non-record owners or proxy holders from being admitted to the annual meeting. Linear Technology reserves the right to request any person to leave the annual meeting who is disruptive, refuses to follow the rules established for the annual meeting or for any other reason.

Record Date

The record date for the determination of stockholders entitled to notice of and to vote at the annual meeting is September 7, 2016. Only Linear Technology stockholders who held shares of record as of the close of business on September 7, 2016 are entitled to receive notice of and vote at the annual meeting and any adjournment or postponement of the annual meeting, as long as such shares remain outstanding on the date of the annual meeting. Linear Technology’s official stock ownership records will conclusively determine whether a stockholder is a “holder of record” as of the record date.

Outstanding Shares as of Record Date

As of September 7, 2016, the record date for the annual meeting, there were 245,650,435 shares of Linear Technology common stock outstanding and owned by stockholders (i.e., excluding shares of Linear Technology common stock held in treasury by Linear Technology), held by 1,660 holders of record. Each share of Linear Technology common stock is entitled to one vote on each matter considered at the annual meeting.

A list of Linear Technology stockholders entitled to vote at the annual meeting will be available at the annual meeting and for ten days prior to the annual meeting between the hours of 9:00 a.m. and 5:00 p.m., local time, at Linear Technology’s corporate headquarters at 1630 McCarthy Boulevard, Milpitas, California 95035.

Shares and Voting of Linear Technology’s Directors and Executive Officers

As of the record date, Linear Technology directors and executive officers, as a group, owned and were entitled to vote 2,638,180 shares of Linear Technology common stock, or approximately 1.1% of the outstanding shares of Linear Technology common stock. Linear Technology currently expects that these directors and executive officers will vote their shares in favor of the merger proposal and each of the other proposals described in this proxy statement/prospectus, although none of them has entered into any agreement obligating them to do so.

 

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Quorum and Broker Non-Votes

In order for Linear Technology to transact business at the annual meeting, the holders of a majority of the outstanding shares of Linear Technology common stock entitled to vote at the meeting must be present in person or represented by proxy. Stockholders choosing to abstain from voting will be treated as present for purposes of determining whether a quorum is present, but will not be counted as votes cast “FOR” any matter.

Banks, brokerage firms and other nominees who hold shares for the accounts of their clients may vote such shares either as directed by their clients or in their own discretion on “routine” matters. When a broker does not receive instructions from a non-record owner on how to vote shares with respect to a “non-routine” matter, a broker “non-vote” occurs. Broker “non-votes” will be treated as present for purposes of determining whether a quorum is present, but will not be counted as votes cast “FOR” or “AGAINST” any matter.

Required Vote

The votes required for each proposal are as follows:

The Merger Proposal. The affirmative vote, in person or by proxy, of holders of a majority of the outstanding shares of Linear Technology common stock entitled to vote on the merger proposal is required to approve the merger proposal. If you are a Linear Technology stockholder and take any action other than voting (or causing your shares to be voted) “FOR” the merger proposal, it will have the same effect as a vote “AGAINST” the merger proposal.

The Merger-Related Compensation Proposal. The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the merger-related compensation proposal is required to approve, on an advisory (non-binding) basis, the merger-related compensation proposal. If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the merger-related compensation proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the merger-related compensation proposal (assuming a quorum is present).

The Director Election Proposal. Each of the seven director nominees receiving the highest number of “FOR” votes will be elected as a director, provided that such nominee does not receive “AGAINST” votes from stockholders holding a majority of the outstanding shares entitled to vote for the election of directors. If you are a Linear Technology stockholder and attend the Linear Technology annual meeting in person but fail to vote, or you mark your proxy or voting instructions to abstain, it will have no effect on the director election proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the director election proposal (assuming a quorum is present).

The Executive Compensation Proposal. The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the executive compensation proposal is required to approve, on an advisory (non-binding) basis, the executive compensation proposal. If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the executive compensation proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your broker, bank or other nominee to vote, it will have no effect on the executive compensation proposal (assuming a quorum is present).

The Accountant Ratification Proposal. The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the accountant

 

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ratification proposal is required to approve the accountant ratification proposal. If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the accountant ratification proposal. If you are a Linear Technology stockholder of record and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, it will have no effect on the accountant ratification proposal (assuming a quorum is present). Banks, brokerage firms and other nominees have discretionary authority to vote on the accountant ratification proposal. As a result, if you are a non-record owner and fail to instruct your bank, brokerage firm or other nominee to vote, we expect the bank, brokerage firm or other nominee to vote “FOR” the accountant ratification proposal.

The Adjournment Proposal. The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the adjournment proposal is required to approve the adjournment proposal. If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” the adjournment proposal. If you are a Linear Technology stockholder and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, or you fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on the adjournment proposal (assuming a quorum is present).

Other Proposals. The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on such proposal is required to approve any other proposal to be voted upon at the annual meeting. If you are a Linear Technology stockholder of record and attend the Linear Technology annual meeting in person but fail to vote, or you are a stockholder and mark your proxy or voting instructions to abstain, it will have the same effect as a vote “AGAINST” any other proposal. If you are a Linear Technology stockholder of record and fail to vote by not attending the Linear Technology annual meeting, in person or by proxy, it will have no effect on any other proposal (assuming a quorum is present). If you are a non-record owner and fail to instruct your bank, brokerage firm or other nominee to vote, it will have no effect on any other proposal that is a non-routine matter (assuming a quorum is present). Banks, brokerage firms and other nominees have discretionary authority to vote on any other proposal that is a routine matter. As a result, if you are a non-record owner and fail to instruct your bank, brokerage firm or other nominee to vote on a proposal that is a routine matter, we expect the bank, brokerage firm or nominee to vote “FOR” such proposal.

How To Vote or Have Your Shares Voted

Linear Technology stockholders of record may vote their shares of Linear Technology common stock or submit a proxy to have their shares of Linear Technology common stock voted at the annual meeting in one of the following ways:

 

    Internet: Linear Technology stockholders may submit their proxy by using the Internet at www.proxyvote.com. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m., Eastern Time, on October 17, 2016, the day before the annual meeting.

 

    Telephone: Linear Technology stockholders may submit their proxy by using a touch-tone telephone at 800-690-6903. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m., Eastern Time, on October 17, 2016, the day before the annual meeting.

 

    Mail: Linear Technology stockholders may submit their proxy by properly completing, signing, dating and mailing their proxy card in the postage-paid envelope (if mailed in the United States) included with this proxy statement/prospectus. Linear Technology stockholders who vote this way should mail the proxy card early enough so that it is received before the date of the annual meeting.

 

   

In Person: Linear Technology stockholders may vote in person at the annual meeting or by sending a representative with an acceptable proxy that has been signed and dated. Attendance at the annual meeting will not, however, in and of itself constitute a vote.

 

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Whether or not you plan to attend the annual meeting, Linear Technology urges you to submit your proxy by completing and returning the proxy card as promptly as possible, or by submitting your proxy by telephone or via the Internet, prior to the annual meeting to ensure that your shares of Linear Technology common stock will be represented and voted at the annual meeting if you are unable to attend.

The Linear Technology board of directors has appointed certain persons as proxy holders to vote proxies in accordance with the instructions of Linear Technology stockholders. If you are a stockholder of record and you authorize these proxy holders to vote your shares of Linear Technology common stock with respect to any matter to be acted upon, your shares will be voted in accordance with your instructions in your proxy. If you are a stockholder of record and you authorize these proxy holders to vote your shares but do not specify how your shares should be voted in one or more matters, these proxy holders will vote your shares on those matters as the Linear Technology board of directors recommends, except if you indicate that you wish to vote against the merger proposal, in which case your shares of Linear Technology common stock will only be voted in favor of the merger-related compensation proposal, the director election proposal and the adjournment proposal if you indicate that you wish to vote in favor of such proposals. If any other matter properly comes before the annual meeting, these proxy holders will vote on that matter in their discretion.

If you are a non-record owner, you must direct your bank, brokerage firm or other nominee on how to vote the shares of Linear Technology common stock held in your account and you will receive instructions from your bank, brokerage firm or other nominee describing how to vote your shares of Linear Technology common stock. The availability of Internet or telephonic voting will depend on the nominee’s voting process. Please check with your bank, brokerage firm or other nominee and follow the voting procedures your bank, brokerage firm or other nominee provides.

If you are a non-record owner and do not provide your bank, brokerage firm or other nominee instructions on how to vote your shares of Linear Technology common stock with respect to “non-routine” matters, a broker “non-vote” occurs with respect to those matters. Under applicable stock exchange rules, the organization that holds your shares of Linear Technology common stock (i.e., your bank, brokerage firm or other nominee) may generally vote on routine matters at its discretion but cannot vote on “non-routine” matters. If you are a non-record owner and the organization that holds your shares of Linear Technology common stock does not receive instructions from you on how to vote your shares of Linear Technology common stock on a non-routine matter, the organization that holds your shares of Linear Technology common stock will inform the inspector of elections that it does not have the authority to vote your shares on such matters. The accountant ratification proposal is a matter Linear Technology believes will be designated “routine.” The merger proposal, the merger-related compensation proposal, the director election proposal, the executive compensation proposal and the adjournment proposal will be considered “non-routine.” Accordingly, if you are a non-record owner and do not provide your bank, brokerage firm or other nominee instructions on how to vote your shares of Linear Technology common stock, your bank, brokerage firm or other nominee generally will not be permitted to vote your shares on any of the proposals other than the accountant ratification proposal. If you are a non-record holder, Linear Technology strongly encourages you to provide voting instructions to your bank, brokerage firm or other nominee so that your vote will be counted on all matters.

If you are a non-record owner, you are invited to attend the annual meeting; however, you may not vote your shares in person at the annual meeting unless you obtain a legal proxy from your bank, brokerage firm or other nominee that holds your shares, giving you the right to vote the shares at the annual meeting.

Revocation of Proxies

Linear Technology stockholders of record may revoke their proxies at any time prior to the voting at the annual meeting in any of the following ways:

 

    mailing a request to Linear Technology’s Corporate Secretary at Linear Technology’s corporate headquarters, at 1630 McCarthy Boulevard, Milpitas, California 95035, so that it is received no later than 4:00 p.m., Pacific Time, on October 17, 2016;

 

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    properly submitting a new, later-dated proxy card (in which case only the later-dated proxy is counted and the earlier proxy is revoked);

 

    submitting a proxy via Internet or by telephone at a later date (in which case only the later-dated proxy is counted and the earlier proxy is revoked); or

 

    attending the annual meeting and voting in person. Attendance at the annual meeting will not, however, in and of itself, constitute a vote or revocation of a prior proxy.

Linear Technology non-record owners may change their voting instruction only by following the directions received from their bank, brokerage firm or other nominee for changing their voting instructions.

Inspector of Election

The board of directors of Linear Technology expects to appoint a representative of Broadridge Financial Solutions, Inc. to act as the inspector of election at the annual meeting.

Solicitation of Proxies

Linear Technology will pay for the proxy solicitation costs related to the annual meeting. In addition to sending and making available these materials, some of Linear Technology’s directors, officers and employees may solicit proxies in person by contacting Linear Technology stockholders by telephone or over the Internet. Linear Technology stockholders may also be solicited by press releases issued by Linear Technology, postings on Linear Technology’s websites and advertisements in periodicals. None of Linear Technology’s directors, officers or employees will receive additional compensation for their solicitation services. Linear Technology has engaged Morrow Sodali to assist in the solicitation of proxies for the annual meeting. Linear Technology estimates that it will pay Morrow Sodali a fee of approximately $25,000, plus reasonable out-of-pocket expenses. Certain banking institutions, brokerage firms, custodians, trustees, nominees and fiduciaries who hold shares for the benefit of another party may solicit proxies for Linear Technology. If so, they will mail proxy information to, or otherwise communicate with, the non-record owners of shares of Linear Technology common stock held by them. Linear Technology will also reimburse banks, brokerage firms, custodians, trustees, nominees and fiduciaries for their expenses incurred in sending proxies and proxy materials to non-record owners of Linear Technology common stock.

Adjournments

The annual meeting may be adjourned in the absence of a quorum by the affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the adjournment.

Even if a quorum is present, the annual meeting may also be adjourned in order to provide more time to solicit additional proxies in favor of approval of the merger proposal if sufficient votes are cast in favor of the adjournment proposal.

If the adjournment is for more than 30 days or if after the adjournment a new record date is set for the adjourned meeting, a notice of the adjourned meeting must be given to each stockholder of record entitled to vote at the annual meeting.

Questions and Additional Information

Linear Technology stockholders may contact Linear Technology’s proxy solicitor, Morrow Sodali, 470 West Ave., Stamford, CT 06902, with any questions about the annual meeting, the merger, the other proposals or this proxy statement/prospectus, if you would like additional copies of the proxy statement/prospectus, if you need to obtain proxy cards or other information related to the proxy solicitation or if you need help submitting a proxy or voting your shares of Linear Technology common stock. Stockholders may call toll-free at 800-662-5200, and banks and brokers may call collect at 203-658-9400.

 

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PROPOSAL 1: THE MERGER PROPOSAL

As discussed throughout this proxy statement/prospectus, Linear Technology is asking its stockholders to approve the merger proposal. Pursuant to the merger agreement, Analog Devices will acquire Linear Technology in the merger. Merger Sub will merge with and into Linear Technology, with Linear Technology as the surviving corporation in the merger. If the merger is completed, Linear Technology will be a wholly owned subsidiary of Analog Devices and the Linear Technology common stock will be delisted from The NASDAQ Global Select Market, deregistered under the Exchange Act and cease to be publicly traded.

As described in further detail in the sections titled “Questions and Answers” beginning on page v, “Summary” beginning on page 1, “The Merger” beginning on page 94 and “The Merger Agreement” beginning on page 137, the Linear Technology board of directors has unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. For a discussion of certain factors considered by the Linear Technology board of directors in determining to approve the merger agreement and recommend that Linear Technology stockholders vote for the merger proposal, see “The Merger—Linear Technology’s Reasons for the Merger; Recommendation of the Linear Technology Board of Directors” beginning on page 105. A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus. You are urged to read the merger agreement carefully and in its entirety.

The merger is subject to the satisfaction of the conditions set forth in the merger agreement, including approval of the merger proposal by the stockholders of Linear Technology at the annual meeting. Accordingly, the approval of the merger proposal by Linear Technology stockholders is a condition to the obligations of Analog Devices and Linear Technology to complete the merger.

The affirmative vote, in person or by proxy, of the holders of a majority of the outstanding shares of Linear Technology common stock entitled to vote on the merger proposal is required to approve the merger proposal.

THE LINEAR TECHNOLOGY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT LINEAR TECHNOLOGY STOCKHOLDERS VOTE “FOR” THE MERGER PROPOSAL.

 

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PROPOSAL 2: THE MERGER-RELATED COMPENSATION PROPOSAL

Linear Technology is providing its stockholders with the opportunity to cast a vote, on an advisory (non-binding) basis, to approve the compensation payments that may be paid by Linear Technology to its named executive officers, as determined in accordance with Item 402(t) of Regulation S-K, in connection with the merger as disclosed in the section titled “Quantification of Potential Payments and Benefits to Linear Technology’s Named Executive Officers in Connection with the Merger,” including the table titled “Golden Parachute Compensation” and the accompanying footnotes, under “The Merger—Interests of Linear Technology’s Directors and Executive Officers in the Merger” beginning on page 119 (referred to in this section of the proxy statement/prospectus as the “golden parachute” compensation), as required by Section 14A of the Exchange Act.

Through this proposal, Linear Technology is asking its stockholders to indicate their approval, on an advisory (non-binding) basis, of the various change of control, equity acceleration and other payments that Linear Technology’s named executive officers will or may be eligible to receive in connection with the merger as described in the section “Quantification of Potential Payments and Benefits to Linear Technology’s Named Executive Officers in Connection with the Merger” referred to above.

You should carefully review the “golden parachute” compensation information disclosed in the sections of this proxy statement/prospectus referred to above. The Linear Technology board of directors unanimously recommends that Linear Technology stockholders approve the following resolution:

“RESOLVED, that the stockholders of Linear Technology approve, solely on an advisory, non-binding basis, the ‘golden parachute’ compensation that will or may be paid to Linear Technology’s named executive officers in connection with the merger, as disclosed pursuant to Item 402(t) of Regulation S-K in the section titled “Quantification of Potential Payments and Benefits to Linear Technology’s Named Executive Officers in Connection with the Merger,” including the table titled “Golden Parachute Compensation” and the accompanying footnotes, under “The Merger—Interests of Linear Technology’s Directors and Executive Officers in the Merger” beginning on page 119.”

The vote on the merger-related compensation proposal is a vote separate and apart from the vote on the merger proposal. Accordingly, you may vote to approve the merger proposal and vote not to approve the merger-related compensation proposal and vice versa. Because the vote on the merger-related compensation proposal is advisory only, it will not be binding on either Linear Technology or Analog Devices. Accordingly, if the merger proposal is approved and the merger is completed, the compensation payments that are contractually required to be paid by Linear Technology to its named executive officers will or may be paid, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of Linear Technology stockholders on the merger-related compensation proposal.

The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the merger-related compensation proposal at the annual meeting is required to approve, on an advisory (non-binding) basis, the merger-related compensation proposal.

THE LINEAR TECHNOLOGY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT LINEAR TECHNOLOGY STOCKHOLDERS VOTE “FOR” THE MERGER-RELATED COMPENSATION PROPOSAL.

 

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PROPOSAL 3: THE DIRECTOR ELECTION

Linear Technology stockholders are being asked to vote for a proposal to elect seven director nominees named below to the Linear Technology board of directors. The term of office of each person elected as a director will continue until the next annual meeting of stockholders of Linear Technology and until their successors are elected.

Each of the seven nominees receiving the highest number of “FOR” votes will be elected as a director, provided that such nominee does not receive “AGAINST” votes from stockholders holding a majority of the outstanding shares entitled to vote for the election of directors.

 

Name of Nominee

   Age     

Principal Occupation

   Director Since  

Robert Swanson

     78       Executive Chairman and Former Chief Executive Officer of Linear Technology      1981   

Lothar Maier

     61       Chief Executive Officer of Linear Technology      2005   

Arthur C. Agnos

     78       Former Mayor of San Francisco, CA      2010   

John J. Gordon

     70       Former Senior Investment Officer of State Farm Mutual Automobile Insurance      2010   

David S. Lee

     79       Chairman, Cortelco, Inc.      1988   

Richard M. Moley

     77       Former Chairman, President and Chief Executive Officer, StrataCom, Inc.      1994   

Thomas S. Volpe

     65       Former Chief Executive Officer, Dubai Group LLC      1984   

There are no family relationships among Linear Technology’s directors and executive officers.

Mr. Swanson, a founder of Linear Technology, has served as Executive Chairman of the Linear Technology board of directors since January 2005. Prior to that time he served as Chairman and Chief Executive Officer of Linear Technology since April 1999, and prior to that time as President, Chief Executive Officer and a director of Linear Technology since its incorporation in September 1981. From August 1968 to July 1981, he was employed in various positions at National Semiconductor Corporation, a manufacturer of integrated circuits, including Vice President and General Manager of the Linear Integrated Circuit Operation and Managing Director in Europe. Mr. Swanson has a B.S. degree in Industrial Engineering from Northeastern University. Mr. Swanson’s qualifications to sit on the Linear Technology board of directors result from his more than four decades of experience in the semiconductor industry, including his role as Linear Technology’s founder and his 25 years of experience as Linear Technology’s Chief Executive Officer.

Mr. Maier was named Chief Executive Officer of Linear Technology in January 2005. Prior to that, Mr. Maier served as Linear Technology’s Chief Operating Officer from April 1999 to January 2005. Before joining Linear Technology, Mr. Maier held various management positions at Cypress Semiconductor Corp. from July 1983 to March 1999, most recently as Senior Vice President and Executive Vice President of Worldwide Operations. He holds a B.S. degree in Chemical Engineering from the University of California at Berkeley. Mr. Maier serves on the board of directors of FormFactor, Inc. Mr. Maier’s qualifications to sit on the Linear Technology board of directors result from his three decades of experience in the semiconductor industry, including ten years as Linear Technology’s Chief Executive Officer.

Mr. Agnos serves on the board of directors of Global Food Technologies and he formerly served as a Director of Countrywide Treasury Bank until July 2008. From February 2001 to September 2005, Mr. Agnos served as a consultant for E.J. De La Rosa & Co., Inc., an investment banking firm. Mr. Agnos has extensive experience in executive roles and decision-making at the federal, state and local government levels as Mayor of San Francisco, as an elected member of the California State Legislature and as a senior Presidential appointee in the U.S. Department of Housing and Urban Development. Mr. Agnos began his elective career in the California legislature, where he served as Chair of the Joint Legislative Audit Committee. He has served as the Chair of the

 

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Assembly Ways and Means Health and Welfare Subcommittee of the California legislature. From June 1993 to January 2002, he was the Regional Director of the U.S. Department of Housing and Urban Development in the Pacific-Hawaii region. Mr. Agnos received a B.A. from Bates College and a Master in Social Work from Florida State University. Mr. Agnos’ qualifications to sit on the Linear Technology board of directors result from his experiences in various leadership positions within federal and state governments.

Mr. Gordon was employed by State Farm Mutual Automobile Insurance Company from October 1976 until his retirement in March 2012, in its investment department, as an investment analyst and since 1999 as Senior Investment Officer. From 1981 to March 2012, Mr. Gordon was involved in the analysis and selection of equity investments, specifically in the areas of technology and telecommunications and participated in the management of investment portfolios for the State Farm Companies and its Associates’ Mutual Funds. Mr. Gordon serves on the board of directors of Westminster Village, Inc. and Liberty Reach, Inc. Mr. Gordon received a B.A. in Economics from the University of Michigan in 1971 and an M.B.A. from Illinois State University in 1981. Mr. Gordon is a Chartered Financial Analyst. Mr. Gordon’s qualifications to sit on the Linear Technology board of directors result from his 35 years of experience as a financial analyst, which we believe enables him to provide valuable perspectives on Linear Technology’s corporate planning, budgeting, and financial reporting.

Mr. Lee is Chairman of the board of directors of Cortelco, Inc., a member of the board of directors of Vizio Inc., Daily Wellness Co., Future Dial, Huatek, and a Regent Emeritus of the University of California. He also serves as a member of the Silver Lake Council, a private equity firm. Mr. Lee originally co-founded Qume Corporation in 1973 and served as Executive Vice President until it was acquired by ITT Corporation in 1978. After the acquisition, Mr. Lee held the positions of Executive Vice President of ITT Qume until 1981, and President through 1983. From 1983 to 1985, he served as a Vice President of ITT and as Group Executive and Chairman of its Business Information Systems Group. In 1985, he became President and Chairman of Data Technology Corp. (“DTC”), and in 1988, DTC acquired and merged with Qume. Mr. Lee served as a member of the President’s Council on the 21st Century Workforce, appointed by President George Bush. Mr. Lee also served as an advisor to Presidents George Bush and Bill Clinton on the Advisory Committee on Trade Policy and Negotiation (Office of the U.S. Trade Representative/Executive Officer of the President) and to Governor Pete Wilson on the California Economic Development Corporation (CalEDC) and the Council on California Competitiveness. Mr. Lee is a past Commissioner of the California Postsecondary Education Commission, and founded and served as Chairman of the Chinese Institute of Engineers, the Asian American Manufacturers’ Association and the Monte Jade Science and Technology Association. Mr. Lee is also a founder and member of the board of directors of the Tech Museum of Innovation. Mr. Lee received an M.S. from North Dakota State University and a B.S. and an honorary doctorate from Montana State University. Mr. Lee’s qualifications to sit on the Linear Technology board of directors result from his years of executive experience in the high technology industry, augmented by his knowledge and exposure to international matters particularly in the Asia-Pacific region.

Mr. Moley served as Chairman, President and Chief Executive Officer of StrataCom, Inc., a network systems company, from June 1986 until its acquisition by Cisco Systems, Inc., a provider of computer internetworking solutions, in July 1996. Mr. Moley served as Senior Vice President and board member of Cisco Systems until November 1997, when he became a consultant and private investor. Mr. Moley served in various executive positions at ROLM Corporation, a telecommunications company, from 1973 to 1986. Prior to joining ROLM, he held management positions in software development and marketing at Hewlett-Packard Company. Mr. Moley serves as a director of Calient Networks. Mr. Moley received a B.S. degree in Electrical Engineering from Manchester University, an M.S. degree in Electrical Engineering from Stanford University and an M.B.A. degree from Santa Clara University. Mr. Moley’s qualifications to sit on the Linear Technology board of directors result from his years of executive experience in the high technology industry.

Mr. Volpe served as Chief Executive Officer of Dubai Group LLC from February 2007 until March 2010, and as Managing Member of Volpe Investments LLC, a risk capital firm, since July 2001. From December 1999 to June 2001, Mr. Volpe served as Chairman of Prudential Volpe Technology Group. Mr. Volpe served as Chief

 

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Executive Officer of Volpe Brown Whelan & Company, LLC (formerly Volpe, Welty & Company), a private investment banking and risk capital firm, from its founding in April 1986 until its acquisition by Prudential Securities in December 1999. Until April 1986, he was President and Chief Executive Officer and member of the board of directors of Hambrecht & Quist Incorporated, an investment banking firm with which he had been affiliated since 1981. Mr. Volpe is a member of the board of directors of 7th Inning Stretch, LLC, EFG-Hermes Holding Company and Minor League Baseball. Mr. Volpe received an A.B. in Economics from Harvard University, a M.Sc. in Economics from the London School of Economics and an M.B.A. from the Harvard Business School. Mr. Volpe’s qualifications to sit on the Linear Technology board of directors result from his extensive experience with global companies, his financial expertise and his years of experience providing strategic advisory services to complex organizations.

Board Meetings and Committees

The Linear Technology board of directors held a total of twenty-two meetings during fiscal year 2016. No director attended fewer than 75% of the meetings of the Linear Technology board of directors and the board committees upon which he was then serving. All directors attended Linear Technology’s 2015 Annual Stockholders’ Meeting.

Audit Committee

The Audit Committee currently consists of directors Gordon, Lee, Moley and Volpe, and held a total of nine meetings during fiscal year 2016. Mr. Volpe is Chairman of the Audit Committee.

The responsibilities of Linear Technology’s audit committee include:

 

    approving the appointment, including all audit and non-audit services to be provided by, and compensation of Linear Technology’s independent registered public accounting firm;

 

    evaluating the qualifications, independence and performance of Linear Technology’s independent registered public accounting firm;

 

    reviewing the general scope of Linear Technology’s accounting activities, financial reporting, quarterly reports, annual audit, matters relating to internal control systems, and the results of the annual audit; and

 

    providing oversight with respect to related party transactions. No such transactions were proposed or approved during fiscal 2016.

The Audit Committee is governed by a written charter, which can be found on Linear Technology’s website at www.linear.com.

The Audit Committee has reviewed and the Linear Technology board of directors has determined that Mr. Volpe, the Chairman of the Audit Committee, is an “Audit Committee Financial Expert,” as defined in applicable SEC rules, and that each member of the Audit Committee qualifies as financially sophisticated under applicable Nasdaq listing standards.

Compensation Committee

The Compensation Committee of the Linear Technology board of directors currently consists of directors Agnos, Gordon, Moley and Volpe, and held a total of twelve meetings during fiscal year 2016. Mr. Moley is Chairman of the Compensation Committee.

The responsibilities of the Compensation Committee include:

 

    reviewing and approving executive compensation policies relating to the salaries and bonus plans for and payments to Linear Technology’s executive officers;

 

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    reviewing and recommending to the Linear Technology board of directors changes with respect to the compensation of Linear Technology’s directors; and

 

    overseeing Linear Technology’s equity compensation plans, including the adoption, amendment and termination of such plans.

The Compensation Committee is governed by written charter, which can be found on Linear Technology’s website at www.linear.com.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee currently consists of directors Agnos, Gordon and Lee, and held two meetings during fiscal year 2016. Mr. Lee is Chairman of the Nominating and Corporate Governance Committee.

The responsibilities of the Nominating and Corporate Governance Committee include:

 

    proposing nominees for election as directors by Linear Technology’s stockholders at the Annual Meeting;

 

    reviewing the size and composition of the Linear Technology board of directors as well as determining the criteria for membership;

 

    identifying, evaluating and recommending candidates for membership on the Linear Technology board of directors, including nominations by stockholders of candidates for election to the Linear Technology board of directors;

 

    making recommendations to the Linear Technology board of directors regarding the membership of the committees of the Linear Technology board of directors; and

 

    reviewing and recommending to the Linear Technology board of directors changes with respect to corporate governance practices and policies.

The Nominating and Corporate Governance Committee is governed by a written charter, which can be found on Linear Technology’s website at www.linear.com.

Corporate Governance Matters

Policy for Director Recommendations and Nominations

The Nominating and Corporate Governance Committee considers candidates for board membership proposed by the Linear Technology board of directors, Linear Technology management and Linear Technology’s stockholders. It is the policy of the Nominating and Corporate Governance Committee to consider recommendations for candidates to the Board from stockholders holding at least 5% of the total outstanding shares of Linear Technology. These stockholders must have held their shares continuously for at least twelve months prior to the date of the submission of the recommendation. The Nominating and Corporate Governance Committee will consider a nominee recommended by Linear Technology’s stockholders in the same manner as a nominee recommended by members of the Linear Technology board of directors or management.

A stockholder who desires to recommend a candidate for election to the Linear Technology board of directors should direct the recommendation in writing to Linear Technology, attention of:

Nominating and Corporate Governance Committee

c/o Linear Technology Corporation

720 Sycamore Drive

Milpitas, CA 95035

 

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The notice must include:

 

    the candidate’s name, and home and business contact information;

 

    detailed biographical data and relevant qualifications of the candidate;

 

    a signed letter from the candidate confirming his or her willingness to serve;

 

    information regarding any relationships between the candidate and Linear Technology within the last three years; and

 

    evidence of the required ownership of common stock by the recommending stockholder.

In addition, a stockholder may nominate a person for election to the Linear Technology board of directors directly at the Annual Meeting of Stockholders, provided the stockholder has met the advance notice and other requirements set forth in Linear Technology’s Bylaws and the rules and regulations of the SEC related to stockholder nominees and proposals. The process for properly submitting a stockholder proposal, including a proposal to nominate a person for election to the Linear Technology board of directors at an Annual Meeting, is described above in the section entitled “Deadline for Receipt of Stockholder Proposals.”

Where the Nominating and Corporate Governance Committee either identifies a prospective nominee or determines that an additional or replacement director is required, the Nominating and Corporate Governance Committee may take such measures as it considers appropriate in connection with evaluating the director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information, or reliance on the knowledge of the members of the Nominating and Corporate Governance Committee, the Linear Technology board of directors or management. In its evaluation of director candidates, including the members of the Linear Technology board of directors eligible for re-election, the Nominating and Corporate Governance Committee considers a number of factors, as set forth in the Nominating and Corporate Governance Committee charter. Such factors include:

 

    The current size and composition of the Linear Technology board of directors and the needs of the board and of the respective board committees.

 

    Such factors as judgment, independence, character and integrity, area of expertise, diversity of experience (including age, gender, international background, race and professional experience), length of service and potential conflicts of interest.

 

    Such other factors as the committee may consider appropriate.

As noted above, diversity is one of the numerous criteria the Nominating and Corporate Governance Committee reviews and considers before recommending a candidate.

The Nominating and Corporate Governance Committee has also specified the following minimum qualifications that it believes must be met by a nominee for a position on the Linear Technology board of directors:

 

    The highest personal and professional ethics and integrity.

 

    Proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment.

 

    Skills that are complementary to those of the existing board members.

 

    The ability to assist and support management and make significant contributions to Linear Technology’s success.

 

    An understanding of the fiduciary responsibilities that are required of a member of the board, and the commitment of time and energy necessary to diligently carry out those responsibilities.

 

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In connection with its evaluation, the Nominating and Corporate Governance Committee determines whether it will interview potential nominees. After completing the evaluation and interview, the Committee makes a recommendation to the full Linear Technology board of directors as to the persons who should be nominated for election to the board, and the Linear Technology board of directors determines the actual nominees after considering the recommendation and report of the Committee.

Stockholder Communications to Directors

Stockholders may communicate directly with the members of the Linear Technology board of directors by sending a written communication to the Linear Technology board of directors (or any individual director) at the following address: c/o Chief Financial Officer, Linear Technology Corporation, 720 Sycamore Drive, Milpitas, California 95035. All communications will be compiled by Linear Technology’s Chief Financial Officer and submitted to the Linear Technology board of directors or an individual director, as appropriate, on a periodic basis.

Linear Technology strongly recommends and expects all incumbent directors and nominees for election to attend the Annual Meeting, absent extenuating circumstances.

Independence of Directors

In July 2016, the Linear Technology board of directors undertook a review of the independence of its directors and considered whether any of them had a material relationship with Linear Technology or its management that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, the Linear Technology board of directors affirmatively determined that all of the directors of Linear Technology, with the exception of Mr. Swanson, Linear Technology’s Executive Chairman and former Chief Executive Officer, and Mr. Maier, Linear Technology’s current Chief Executive Officer, are independent of Linear Technology and its management under applicable SEC and Nasdaq corporate governance standards. In addition, the board determined that each of the members of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee satisfies the definition of independent director as established by applicable SEC, Nasdaq and Internal Revenue Code standards.

As part of each regularly scheduled meeting of the Linear Technology board of directors, the independent directors meet separately from management and any non-independent directors.

Code of Business Conduct and Ethics

The Linear Technology board of directors has adopted a Code of Business Conduct and Ethics that is applicable to all employees, executive officers and directors of Linear Technology, including Linear Technology’s senior financial and executive officers. This Code is intended to deter wrongdoing and promote ethical conduct among Linear Technology’s directors, executive officers and employees. The Code of Business Conduct and Ethics is available on Linear Technology’s website at www.linear.com. Linear Technology also intends to post any amendments to or waivers from the Code of Business Conduct and Ethics on its website.

Board Leadership Structure

Linear Technology currently has no specific policy regarding the separation of the roles of Executive Chairman and CEO. Any decision regarding such separation is made by the board based on the best interests of Linear Technology and its stockholders under the circumstances existing at the time. Currently, the roles of CEO and Executive Chairman are held by two different individuals. The CEO is responsible for setting the strategic direction for Linear Technology, the day-to-day operations, leadership and directing performance of Linear Technology. The Executive Chairman of the Linear Technology board of directors also is involved in setting the

 

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strategic direction of Linear Technology and additionally provides guidance to the CEO, sets the agenda for board meetings and presides over meetings of the full Linear Technology board of directors. Mr. Swanson, Linear Technology’s Executive Chairman, is an employee of Linear Technology and is therefore not “independent.” The Linear Technology board of directors believes that this leadership structure provides an appropriate allocation of roles and responsibilities at this time.

The Board’s Oversight of Risk

The Linear Technology board of directors is responsible for overseeing the major risks facing Linear Technology, while management is responsible for the assessing and mitigating Linear Technology’s risks on a day-to-day basis. In addition, the Linear Technology board of directors has delegated oversight of certain categories of risk to the Audit and Compensation Committees. The Audit Committee reviews and discusses with management significant financial and nonfinancial risk exposures and the steps management has taken to monitor, control and report such exposures. The Compensation Committee oversees management of risks relating to Linear Technology’s compensation plans and programs. In performing their oversight responsibilities, the Linear Technology board of directors, Compensation Committee and Audit Committee periodically discuss with management Linear Technology’s policies with respect to risk assessment and risk management. The Audit and Compensation Committees report to the Linear Technology board of directors as appropriate on matters that involve specific risk that each Committee oversees.

Vote Required and Recommendation of Linear Technology Board of Directors

Each of the seven nominees receiving the highest number of “FOR” votes will be elected as a director of Linear Technology, provided that such nominee does not receive “AGAINST” votes from Linear Technology stockholders holding a majority of the outstanding shares entitled to vote for the election of directors. As discussed above, each nominee has already submitted a letter of resignation that will become effective only if the nominee does receive “AGAINST” votes from stockholders holding a majority of the outstanding shares, which resignation may be accepted or rejected by the Linear Technology board of directors. “ABSTAIN” votes will be counted for purposes of determining the presence or absence of a quorum for the transaction of business at the meeting, but have no other legal effect upon the election of Linear Technology directors under Delaware law.

THE LINEAR TECHNOLOGY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT LINEAR TECHNOLOGY STOCKHOLDERS VOTE “FOR” THE SEVEN DIRECTOR NOMINEES LISTED ABOVE.

 

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PROPOSAL 4: THE EXECUTIVE COMPENSATION PROPOSAL

General

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires publicly traded companies to periodically hold non-binding advisory stockholder votes on the compensation policies and practices set forth in their proxy statements relating to those of their officers designated as “Named Executive Officers.” The requirement, commonly known as a “say-on-pay” vote, enables stockholders to express their views regarding the compensation of their companies’ top executive officers and thus provides the board of directors and compensation committees of these companies information regarding stockholder views on executive compensation.

Accordingly, Linear Technology’s stockholders are being asked at the Annual Meeting to vote on a proposal regarding the compensation philosophy, policies and practices of Linear Technology as a whole for Linear Technology’s Named Executive Officers as a group, as described in detail in the “Compensation Discussion and Analysis” section of this proxy statement/prospectus beginning on page 56. This vote addresses the overall compensation of all of Linear Technology’s Named Executive Officers and the entire package of compensation philosophy, policies and practices described in this proxy statement/prospectus. This vote is not intended to address any specific item of compensation or any specific Named Executive Officer.

The Linear Technology board of directors believes strongly that Linear Technology’s current compensation programs are right for Linear Technology and Linear Technology’s stockholders at the current time. Linear Technology’s current compensation programs are described in detail in the section of this proxy statement/prospectus entitled “Compensation Discussion and Analysis” beginning on page 56. Linear Technology’s executive compensation programs are designed to attract, retain, and motivate talented individuals who possess the executive experience and the leadership skills needed by Linear Technology in order to maintain and increase stockholder value. Linear Technology seeks to provide executive compensation that is competitive with that provided by companies in its peer group of analog semiconductor manufacturers, along with other companies with which it competes for talent. Linear Technology also seeks to provide both near-term and long-term financial incentives to Linear Technology’s executives that reward them for good performance and achieving financial results and strategic objectives that are expected to contribute to increased long-term stockholder value.

Underlying these incentives is a strong philosophy of “pay for performance” that forms the foundation of decisions regarding the compensation of Linear Technology’s executive officers. This compensation philosophy, which has been consistent over many years, is designed to align the interests of Linear Technology’s executive officers with the interests of Linear Technology’s stockholders and is central to Linear Technology’s ability to attract, retain and motivate executive leaders to guide Linear Technology though market challenges over the long-term. For example, Linear Technology’s semi-annual cash bonus plan for officers and key employees is specifically designed to provide executives with higher bonuses when Linear Technology’s financial results are strong and reduced bonuses when results lag. Similarly, executives, as well as other employees, participate in Linear Technology’s profit-sharing program with payout amounts varying by their very nature with variations in Linear Technology’s operating profit. In addition, the performance metrics used to determine maximum tax deductible bonus amounts payable to Named Executive Officers under Linear Technology’s Executive Bonus Plan are based on annual revenue growth and annual operating profit margin, thus directly tying such amounts to Linear Technology’s financial performance. The result is that, bonus amounts generally represent a constant percentage of profits, but fluctuate up and down in actual dollars based on Linear Technology’s financial performance. See the “Compensation Discussion and Analysis” section beginning on page 56 for more information.

Linear Technology has demonstrated consistently strong financial performance both in the short-term, e.g. the last fiscal year, and in the long-term over the last 26 years. Linear Technology has consistently maintained high profit margins and generated strong cash flows from operations. Linear Technology believes that its Named

 

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Executive Officers have contributed significantly to these achievements. Their tenure with Linear Technology ranges from 12 years to 35 years, with an average of 23 years of experience with Linear Technology, thus both validating the retention aspects of Linear Technology’s compensation approach and, more importantly, providing Linear Technology with consistent, steady and experienced leadership that has been able to guide Linear Technology to consistently strong financial performance over multi-year periods.

The Linear Technology board of directors strongly believes in the effectiveness and appropriateness for Linear Technology of its compensation programs. However, at the 2015 annual meeting, only 56% Linear Technology’s stockholders voted in favor of Linear Technology’s then current executive compensation program, compared with a favorable vote of 89% of its stockholders on the similar proposal presented at Linear Technology’s 2014 annual meeting.

Linear Technology believes that the decrease in affirmative votes in 2015 resulted from the recommendation of Institutional Shareholder Services, Inc. (“ISS”) that stockholders vote against Linear Technology’s say-on-pay proposal in 2015. The ISS recommendation was not based on any misalignment of pay and performance, for which ISS gave Linear Technology its best possible rating of “low concern.” Rather, the recommendation was primarily because Linear Technology amended its employment agreement with Mr. Swanson in April 2015 to increase his death and disability benefits, but in doing so did not remove certain legacy provisions in his agreement that ISS deemed to be problematic, but based on which ISS had not previously recommended a negative vote for the previous 15 years.

While a majority of stockholders still supported the executive compensation program in 2015, Linear Technology nonetheless undertook a review of the issues identified by ISS in response to the decreased stockholder support in favor of Linear Technology’s executive compensation program in order to determine appropriate action in the best interests of Linear Technology and its stockholders. Linear Technology reached out to several of its larger stockholders to obtain feedback on Linear Technology’s executive compensation program and the types of modifications that would foster a favorable vote at this Annual Meeting. In addition, the Compensation Committee retained Compensia, Inc. (“Compensia”) as an independent compensation consultant to advise Linear Technology with respect to its executive compensation program and best practices by similarly situated companies in the same industry. The Compensation Committee has since begun the process of revising its executive compensation program in response to the concerns of certain stockholders and the recommendations of Compensia, particularly with respect to change of control provisions in agreements with its executive officers and the development of a long-term performance-based equity incentive program for executive officers commencing in the 2017 fiscal year. However, in light of the pending acquisition of Linear Technology by Analog Devices, the Linear Technology board of directors has determined it to be in the best interests of Linear Technology and its stockholders to defer the implementation of changes to Linear Technology’s executive compensation program for the time being and instead has directed its efforts towards the consummation of the merger and maximizing value for Linear Technology’s stockholders. The Compensation Committee intends to resume the process of modifying its executive compensation program in the event that the acquisition of Linear Technology by Analog Devices is not consummated and Linear Technology continues to operate as a stand-alone entity.

Accordingly, aside from the entry into change of control severance agreements with certain of its executive officers who did not previously have employment agreements with Linear Technology (and an amendment to Mr. Dobkin’s existing employment agreement), which for Linear Technology’s Named Executive Officers are described in detail under “Employment Agreements” beginning on page 82, Linear Technology’s compensation practices have again not changed from fiscal 2015 to fiscal 2016, and the Linear Technology board of directors hopes that the stockholders will continue to believe in the effectiveness and appropriateness of Linear Technology’s executive compensation program, and will express that belief through a favorable vote on this proposal at this Annual Meeting.

This say-on-pay vote is advisory, and although its results are not binding on Linear Technology, the Linear Technology board of directors and its Compensation Committee look forward to the stockholders’ input as it

 

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provides an indication of stockholder sentiment about Linear Technology’s executive compensation philosophy, policies and practices. The Linear Technology board of directors and the Compensation Committee value the opinions of Linear Technology’s stockholders and they will include that vote among the variety of factors that they consider when setting future compensation for executive officers.

Text of Resolution

“RESOLVED, that Linear Technology’s stockholders approve the compensation of Linear Technology’s Named Executive Officers, as disclosed in Linear Technology’s Proxy Statement for the Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the other related disclosure.”

Vote Required and Recommendation of the Board of Directors

The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the executive compensation proposal at the annual meeting is required to approve, on an advisory (non-binding) basis, the executive compensation proposal.

THE LINEAR TECHNOLOGY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING “FOR” THE EXECUTIVE COMPENSATION PROPOSAL.

 

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PROPOSAL 5: THE ACCOUNTANT RATIFICATION PROPOSAL

The Linear Technology board of directors has selected Ernst & Young LLP, independent registered public accounting firm, to audit the financial statements of Linear Technology for the year ending July 2, 2017, and recommends that the stockholders vote for ratification of such appointment. Although action by the stockholders is not required by law, the Linear Technology board of directors believes that it is desirable to request approval of this selection by the stockholders. In the event of a negative vote on such ratification, the Linear Technology board of directors will reconsider its selection. Ernst & Young LLP has audited Linear Technology’s financial statements since the fiscal year ended June 30, 1982. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement, and are expected to be available to respond to appropriate questions from stockholders.

Fees Paid to Ernst & Young LLP

The following table represents aggregate fees billed by Ernst & Young LLP:

 

     July 3,
2016
     June 28,
2015
 

Audit Fees (1)

   $ 980,000       $ 962,000   

Audit-Related Fees (2)

     5,000         5,000   

Tax Fees (3)

     59,000         68,200   
  

 

 

    

 

 

 

Total

   $ 1,044,000       $ 1,035,200   
  

 

 

    

 

 

 

 

(1) Audit Fees consist of fees billed for professional services rendered for the audit of Linear Technology’s annual consolidated financial statements and review of the interim consolidated financial statements included in Linear Technology’s public reports and any other services that Ernst & Young LLP normally provides to clients in connection with statutory and regulatory filings and accounting consultations in connection with the annual audit of consolidated financial statements.
(2) Audit-Related Fees consist of assurance and related services provided by Ernst & Young LLP that are reasonably related to the performance of the audit or review of Linear Technology’s consolidated financial statements but that are not reported under “Audit Fees.” The services for the fees disclosed under this category are for procedures performed related to Linear Technology’s filing to comply with California environmental regulations.
(3) Tax Fees consist of fees billed for professional services rendered for tax compliance, advice and planning.

Pre-Approval Process for Auditor Services

All services that have been rendered by Ernst & Young LLP are permissible under applicable laws and regulations. The Audit Committee pre-approves all audit and non-audit services. The Audit Committee pre-approved all audit and non-audit services for which the fees identified in the above table were incurred.

Vote Required and Recommendation of Board of Directors

The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the accountant ratification proposal at the annual meeting is required to approve the accountant ratification proposal.

LINEAR TECHNOLOGY’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ACCOUNTANT RATIFICATION PROPOSAL.

 

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BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN OTHER BENEFICIAL OWNERS

The following table sets forth certain information known to Linear Technology regarding the beneficial ownership of Linear Technology’s common stock, as of August 31, 2016, by (a) each beneficial owner of more than 5% of Linear Technology’s common stock, (b) Linear Technology’s Chief Executive Officer, Chief Financial Officer and three other executive officers of Linear Technology who, based on their total compensation, were the most highly compensated in fiscal 2016 (collectively, the “Named Executive Officers”), (c) each director of Linear Technology, and (d) all directors and executive officers of Linear Technology as a group. Except as otherwise indicated, each person has sole voting and investment power with respect to all shares shown as beneficially owned, subject to community property laws where applicable.

 

Name and Address of Beneficial Owner (1)

   Shares
Beneficially
Owned (2)
     Shares
Acquirable (3)
     Total
Beneficial
Ownership
     Percent of
Common
Stock
Beneficially
Owned (2)
 

Vanguard Group Inc (4)

     23,779,840         —           23,779,840         9.7

PO Box 2600

           

Valley Forge, Pennsylvania 19482-2600

           

State Farm Insurance Companies (5)

     17,490,900         —           17,490,900         7.1

One State Farm Plaza

           

Bloomington, IL 61710

           

First Eagle Investment Management, LLC (6)

     13,850,539         —           13,850,539         5.6

1345 Avenue of the Americas

           

New York, NY 10105-4300

           

SSGA Funds Management Inc. (7)

     13,080,726         —           13,080,726         5.3

1 Lincoln Street

           

Boston, MA 02111

           

Generation Investment Management LLP (8)

     12,308,462         —           12,308,462         5.0

20 Air Street

           

London, X0 W1B 5AN

           

Robert H. Swanson, Jr. (9)

     312,442         152,000         464,442         *   

Lothar Maier

     274,642         224,000         498,642         *   

Robert C. Dobkin (10)

     407,104         84,000         491,104         *   

Donald E. Paulus

     41,098         84,000         125,098         *   

Donald P. Zerio

     25,684         53,700         79,384         *   

Arthur C. Agnos

     18,000         3,000         21,000         *   

John J. Gordon

     16,594         3,000         19,594         *   

David S. Lee

     24,000         3,000         27,000         *   

Richard M. Moley (11)

     24,000         3,000         27,000         *   

Thomas S. Volpe (12)

     128,000         3,000         131,000         *   

All directors and executive officers as a group (17 persons) (13)

     1,577,980         1,060,200         2,638,180         1.1

 

* Less than one percent of the outstanding common stock.
(1) Unless otherwise indicated, the address of each beneficial owner listed is Linear Technology, 720 Sycamore Drive, Milpitas, California 95035.
(2)

This table is based upon information supplied by officers, directors, principal stockholders and Schedules 13F-HR filed with the SEC prior to August 31, 2016. Unless otherwise indicated in the footnotes to this table, each of the stockholders named in this table has sole voting and investment power with respect

 

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  to the shares indicated as beneficially owned. Applicable percentages are based on the shares outstanding on August 31, 2016, adjusted as required by rules promulgated by the SEC.
(3) The number of shares of common stock beneficially owned by each person is determined under applicable SEC rules. Under these rules, a person is deemed to have “beneficial ownership” of any shares over which that person has or unvested shares with voting rights. Unless otherwise indicated, for each person named in the table, the number in the “Shares Acquirable” column consists of all unvested restricted stock awards.
(4) Based solely on a Form 13F-HR filed by Vanguard Group Inc. on August 10, 2016 reporting stock ownership as of June 30, 2016.
(5) Based solely on a Form 13F-HR filed by State Farm Mutual Automobile Insurance Co. on August 11, 2016 reporting stock ownership as of June 30, 2016.
(6) Based solely on a Form 13F-HR filed by First Eagle Investment Management, LLC on August 9, 2016 reporting stock ownership as of June 30, 2016.
(7) Based solely on a Form 13F-HR filed by State Street Corp, which included the institutional investment manager SSGA Funds Management Inc., on August 12, 2016 reporting stock ownership as of June 30, 2016.
(8) Based solely on a Form 13G filed by Generation Investment Management LLP on August 15, 2016 reporting stock ownership as of June 30, 2016.
(9) Includes 299,052 shares issued in the name of Robert H. Swanson, Jr. and Sheila L. Swanson TR UA 07/27/1976 Robert H. Swanson Jr and Sheila L. Swanson TR.
(10) Includes 308,818 shares issued in the name of Robert C. Dobkin and Kathleen C. Dobkin TR UA 01/27/2011 The Dobkin 2011 Living Trust and 86,300 shares issued in the name of Robert C. Dobkin TR UA 01/27/2011 The Dobkin 2011 Living Trust as his sole and separate property.
(11) Includes 12,000 shares issued in the name of Richard Michael Moley and Elizabeth Moley TR UA 09/29/1989 Richard Michael Moley 1989 Rev Trust.
(12) Includes 122,000 shares issued in the name of Thomas S Volpe and Elizabeth D Volpe TR UA 03/03/2003 Volpe Revocable Trust.
(13) Includes 1,060,200 shares subject to Linear Technology rights of reacquisition pursuant to restricted stock agreements.

 

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DIRECTOR COMPENSATION

Compensation of Non-Employee Directors

The following table sets forth the annual compensation paid or accrued by Linear Technology to or on behalf of the directors of Linear Technology other than the Executive Chairman and the Chief Executive Officer for the fiscal year ended July 3, 2016. Neither the Executive Chairman nor the Chief Executive Officer receive compensation for his service as a director beyond what he received as an employee and officer of Linear Technology.

 

Name

   Fees Earned or
Paid in Cash (1)
     Restricted
Stock
Awards (2)
     Total  

Arthur C. Agnos

   $ 82,837       $ 122,940       $ 205,777   

John J. Gordon

     83,374         122,940         206,314   

David S. Lee

     88,549         122,940         211,489   

Richard M. Moley

     93,201         122,940         216,141   

Thomas S. Volpe

     95,091         122,940         218,031   

 

  (1) Includes annual retainer fees, committee chairmanship fees, meeting fees and dividends paid on unvested restricted stock awards.  
  (2) Represents the grant date fair value determined in accordance with FASB ASC Topic 718 of shares issued to the directors during the fiscal year. Amounts vary depending on the date of issuance.  

Linear Technology currently pays each non-employee director an annual retainer of $60,000, a fee of $1,500 for each meeting of the Linear Technology board of directors or its committees attended and $1,000 for each teleconference meeting of the Linear Technology board of directors or its committees attended. Directors are generally eligible to receive restricted stock, stock options and other awards under Linear Technology’s equity incentive plans. During the fiscal year ended July 3, 2016, Messrs. Agnos, Gordon, Lee, Moley and Volpe each received 3,000 shares of restricted stock. These restricted stock grants vest as to 100% of the shares one year from the date of grant. In addition to their annual director retainer of $60,000, Mr. Volpe currently receives an annual retainer of $20,000 as Chairman of the Audit Committee; Mr. Moley currently receives an annual retainer of $10,000 as Chairman of the Compensation Committee; and Mr. Lee currently receives an annual retainer of $5,000 as Chairman of the Nominating and Governance Committee.

The Linear Technology board of directors has established a policy that directors hold at least 50% of the shares granted as restricted stock, calculated after deducting the shares used to pay the required taxes, for five years, unless the director ceases to be a director prior to that time.

Linear Technology has agreed to indemnify each of its directors and officers against certain claims and expenses for which the individuals might be held liable in connection with past or future services to Linear Technology and its subsidiaries. Linear Technology maintains insurance policies insuring its officers and directors against such liabilities.

 

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes the compensation program for Named Executive Officers, consisting of Linear Technology’s principal executive officer, Linear Technology’s principal financial officer, and the next three most highly-compensated executive officers of Linear Technology during fiscal 2016. During fiscal 2016, these individuals were:

 

    Robert H. Swanson, Jr., Linear Technology’s Executive Chairman;

 

    Lothar Maier, Linear Technology’s Chief Executive Officer (or Linear Technology’s “CEO”);

 

    Donald P. Zerio, Linear Technology’s Vice President, Finance and Chief Financial Officer (or Linear Technology’s “CFO”);

 

    Robert C. Dobkin, Linear Technology’s Vice President, Engineering and Chief Technology Officer (or Linear Technology’s “CTO”); and

 

    Donald E. Paulus, Linear Technology’s Vice President and General Manager of Power Products.

This Compensation Discussion and Analysis describes the material elements of Linear Technology’s executive compensation program during fiscal 2016. It also provides an overview of Linear Technology’s executive compensation philosophy and objectives. Finally, it analyzes how and why the Compensation Committee of Linear Technology’s board of directors (the “Compensation Committee”) arrived at the specific compensation decisions for Linear Technology’s executive officers, including the Named Executive Officers, for fiscal 2016, including the key factors that the Compensation Committee considered in determining their compensation.

Executive Summary

Linear Technology’s Compensation Philosophy

Linear Technology strongly believes that the compensation of Linear Technology’s employees, especially that of Linear Technology’s executive officers, should not only reflect Linear Technology’s consistently strong financial performance, but should also vary with the inevitable fluctuation of that performance. The Compensation Committee applies a compensation philosophy that emphasizes “pay-for-performance,” whereby when Linear Technology’s financial performance improves, executive compensation is higher, and when Linear Technology’s performance worsens, executive compensation is lower. The Compensation Committee strongly believes that this philosophy is the key way to align the interests of Linear Technology’s executive officers with those of Linear Technology’s stockholders.

Linear Technology has consistently maintained high profit margins and positive net income and generated strong cash flows from operations over many years, which has enabled us to avoid raising funds in the equity market since Linear Technology’s initial public offering in 1986. This performance has also enabled us to initiate a dividend in 1992 and to raise it in every subsequent year. Since 2002, Linear Technology has paid approximately $2.8 billion in dividends to Linear Technology’s stockholders.

As demonstrated in the following chart, since the year 2000 Linear Technology has maintained leading operating margins compared to Linear Technology’s peers despite significant disruptions in the general economy, such as the technology crash that began in 2001 and the worldwide credit crisis in 2008.

 

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Historical Peer Operating Margin Analysis

 

LOGO

Our Executive Compensation Program

Linear Technology’s compensation policies and practices, which are guided by Linear Technology’s compensation philosophy, are designed so that above-average performance by Linear Technology and the individual should result in above-average total compensation, and that below-average performance by Linear Technology and the individual should result in below-average total compensation. As noted above, Linear Technology strongly believes that these policies and practices are aligned with the best interests of Linear Technology’s stockholders.

The compensation of Linear Technology’s executive officers, including the Named Executive Officers, is comprised of three primary elements:

 

    Base salary—which is fixed at the beginning of each fiscal year and generally does not vary with Linear Technology’s performance;

 

    Cash profit-sharing and cash bonuses—which are fully “variable” based on Linear Technology’s annual profitability and revenue growth, so as to reward short-term to medium-term performance; and

 

    Long-term incentive compensation in the form of equity awards—which over the past five years have been in the form of restricted stock awards that do not have a purchase price. Linear Technology considers these awards a “semi-variable” element of compensation since the awards have value at grant, but the degree of value depends on the market price of Linear Technology’s common stock on the date the award vests. If the market price of Linear Technology’s common stock increases over the market price on the grant date, the award is worth more, and if the market price of Linear Technology’s common stock decreases from the market price on the grant date, the award, in turn, is worth less.

Recent Stockholder Advisory Vote on Executive Compensation

At Linear Technology’s last Annual Meeting of Stockholders in November 2015, Linear Technology conducted a stockholder advisory vote on the compensation of Linear Technology’s Named Executive Officers. This proposal received the support of approximately 56% of the total votes cast, which was substantially lower

 

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than the 89%, 83% and 75% received at the three preceding Annual Meetings. Linear Technology’s board of directors was disappointed in this recent result, and thereafter initiated the first of multiple steps to review and consider possible revisions to Linear Technology’s executive compensation programs.

To commence this process, members of Linear Technology’s management team and Linear Technology’s board of directors sought input and received direct feedback from a number of Linear Technology’s major stockholders on executive compensation and other topics. Subsequently, Linear Technology’s board of directors initiated an overall review of Linear Technology’s existing executive compensation program, requesting that the Compensation Committee consider these matters in detail and report back to the Board with recommendations. The Compensation Committee thereafter retained Compensia, a leading national compensation consulting firm, to review and advise upon Linear Technology’s executive compensation programs and related individual executive employment arrangements.

As a result of its consideration, the Compensation Committee recommended to Linear Technology’s board of directors that changes should in fact be made to Linear Technology’s executive compensation programs. These changes included:

 

    Granting equity awards whose vesting is based upon the achievement of long-term performance objectives as part of Linear Technology’s executive equity grant awards; and

 

    Entering into executive contracts with those of Linear Technology’s executive officers, and certain other key employees, who do not currently have such agreements.

The Linear Technology board of directors accepted these recommendations and began to implement them in June 2016, when it approved and directed the entering into of “Change of Control Severance Agreements” with those of Linear Technology’s Named Executive Officers, as well as other executive officers and key employees, who did not then have such agreements. The Board also decided to implement the recommendation regarding granting equity awards with vesting based upon long-term performance achievement as part of the executive equity awards in July 2016 as part of its normal annual compensation review process at the end of the fiscal year 2016. In addition, the Linear Technology board of directors determined to consider and possibly make additional changes to Linear Technology’s executive compensation program that may be recommended by the compensation consultant and approved by the Compensation Committee. This process was suspended, however, once it became likely that Linear Technology would enter into the pending transaction with Analog Devices. If the Analog Devices transaction is not completed, the Board intends to follow the recommendations of the Compensation Committee concerning possible additional changes to Linear Technology’s executive compensation program.

Design of Executive Compensation Program

Consistent with Linear Technology’s compensation philosophy, the Compensation Committee and Linear Technology’s board of directors take the following factors into consideration in designing Linear Technology’s executive compensation program and determining the target total direct compensation opportunities of Linear Technology’s executive officers, including the Named Executive Officers.

Financial Measures

In measuring Linear Technology’s financial performance, including for purposes of Linear Technology’s “variable” incentive compensation arrangements, Linear Technology focuses on the following performance metrics:

 

    Operating income as a percentage of revenue (as depicted in the foregoing chart); and

 

    Revenue growth.

 

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Linear Technology measures Linear Technology’s success primarily through Linear Technology’s achievement of high operating margins. One of Linear Technology’s financial goals is to continue to be the most profitable company as a percentage of revenue among major participants in the analog semiconductor market. To date, Linear Technology has successfully achieved consistent high operating margins despite varying economic conditions.

Linear Technology also measures Linear Technology’s success in terms of Linear Technology’s revenue growth. At a minimum, it is Linear Technology’s goal to grow revenues at a rate commensurate with the growth of the overall analog semiconductor market and the rates of Linear Technology’s direct peers in that market while having a higher operating income as a percentage of revenue, which Linear Technology has largely been able to do.

Management Tenure

Most of the members of Linear Technology’s management team have been with Linear Technology for many years, and the tenure of Linear Technology’s Named Executive Officers with Linear Technology ranges from 12 years to the entire 35 years of Linear Technology’s existence, with an average tenure of 23 years of experience. Linear Technology’s management and the Compensation Committee both believe that the long tenure of a talented executive management team has been an important element in Linear Technology’s ability to consistently achieve Linear Technology’s financial goals. In addition, long tenure has enabled us to avoid the costs of turnover. Linear Technology’s executive offices and headquarters are located in Silicon Valley, California, an area with a high density of competent and mobile executive talent, where the costs of turnover can be among the highest in the world.

Tenure is an important factor in Linear Technology’s successful execution in the areas of product development, manufacturing, sales and marketing, and financial administration. For example, most of Linear Technology’s products are the result of several years of development and are based on management decisions made many years prior to market acceptance of these products. Thus, realizing significant revenue results from such products may take many years. The Compensation Committee believes that most product decisions made by Linear Technology’s management team to date have been successful. At the same time, manufacturing expertise, particularly in the analog market, may also take many years to develop and considerable effort to maintain. The Compensation Committee believes that Linear Technology’s management team has been successful here too, as measured by outstanding quality and delivery metrics. Successful marketing and selling of analog products requires in-depth knowledge of many different products, and the experience of marketing and sales personnel is often a differentiating attribute. Finally, the financial and administrative experience of Linear Technology’s management team has helped bolster investor confidence in the durability and consistency of Linear Technology’s performance. Even though Linear Technology’s Chief Financial Officer has served in that position only since the beginning of fiscal year 2016, Mr. Zerio was Linear Technology’s Controller for 11 years before that, and has been an employee for a total of 12 years. Linear Technology’s historic compensation policies, which continue through the present, are designed to promote and maintain this long tenure, which Linear Technology believes benefits the interests of Linear Technology’s stockholders.

Stock Ownership

Linear Technology believe that ownership of Linear Technology’s common stock by the members of Linear Technology’s management team is an effective means to reinforce the alignment of Linear Technology’s executive officers’ interests with those of Linear Technology’s stockholders. The Compensation Committee facilitates ownership by Linear Technology’s management team through the grant of restricted stock awards.

Linear Technology has not adopted any formal stock ownership guidelines for Linear Technology’s executive officers, as it has been Linear Technology’s experience that most of Linear Technology’s executive officers voluntarily choose to hold significant equity stakes in Linear Technology even without such policies. For

 

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example, Linear Technology’s peer companies have stock ownership guidelines that target share ownership levels at a multiple of two to four times annual base salary for their CEOs and, where applicable, a multiple of one times annual base salary for their other executive officers. As a group, the Named Executive Officers vested stock holdings at August 31, 2016, summarized in the following table, significantly exceed Linear Technology’s peers’ stock ownership guidelines.

 

Name

   Shares
Owned
     Market Value      Market
Value
as a Multiple
of Base
Salary
 

Robert H. Swanson

     312,442       $ 14,441,069         30.4   

Lothar Maier

     274,642         12,693,953         21.1   

Robert C. Dobkin

     407,104         18,816,347         41.3   

Donald E. Paulus

     41,098         1,899,550         5.5   

Donald P. Zerio

     25,684         1,187,114         3.9   

Distribution of Operational Free Cash Flow to Stockholders

The capital efficiency of Linear Technology’s business and Linear Technology’s emphasis on high operating margins has resulted in significant free cash flow from operations. Linear Technology’s management team has returned a substantial majority of this free cash flow to Linear Technology’s stockholders in the form of dividends, stock repurchases, and the retirement of debt raised for stock repurchases. The following chart sets forth the portion of operational cash flow returned to stockholders in each of the past five fiscal years.

 

In thousands    2016     2015     2014     2013     2012  

Dividends Paid

   $ 303,358      $ 278,404      $ 255,305      $ 241,329      $ 228,483   

Stock Repurchases

     119,787        124,240        81,786        85,699        76,066   

Retirement of Debt Raised for Stock Repurchases

     —          —          845,087        —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 423,145      $ 402,644      $ 1,182,178      $ 327,028      $ 304,549   

Cashflow from Operations

   $ 685,057      $ 598,919      $ 596,427      $ 563,934      $ 565,219   

% of Operational Cashflow Returned to Stockholders

     62     67     198     58     54

Compensation-Setting Process

Role of the Compensation Committee

Linear Technology’s executive compensation program is overseen by Linear Technology’s board of directors’ Compensation Committee. Currently, the Compensation Committee consists of Messrs. Agnos, Gordon, Moley, and Volpe. Each member of the Compensation Committee is a “non-employee director” within the meaning of Exchange Act Rule 16b-3; an “outside director” within the meaning of Section 162(m) of the Code; and satisfies the independence requirements imposed by the Nasdaq listing standards.

Among the Compensation Committee’s responsibilities is to ensure that the total compensation paid to Linear Technology’s executive officers is fair, reasonable, and competitive. The Compensation Committee operates under a written charter adopted by Linear Technology’s board of directors. A copy of the Compensation Committee charter can be found on Linear Technology’s corporate website at www.linear.com. Generally, the form and type of compensation provided to the Named Executive Officers are similar to that provided to both Linear Technology’s other executive officers and also to Linear Technology’s key employee’s generally.

The Compensation Committee meets on a regular quarterly basis and is responsible for discharging the responsibilities of Linear Technology’s board of directors with respect to the compensation of Linear

 

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Technology’s executive officers. The Compensation Committee reviews and approves each element of compensation for Linear Technology’s executive officers and assesses the effectiveness of Linear Technology’s compensation programs. The Compensation Committee either itself approves equity awards or recommends approval to Linear Technology’s board of directors, which also meets on a regular quarterly basis.

As described below, Linear Technology’s management team provides recommendations to the Compensation Committee regarding most compensation matters, including the compensation of Linear Technology’s executive officers. While it considers these recommendations, the Compensation Committee (or board of directors) has the ultimate authority to make decisions with respect to the compensation of Linear Technology’s executive officers.

In addition, the Compensation Committee has the authority to engage its own independent advisors to assist in carrying out its responsibilities, and to determine whether any work completed by a compensation consultant raises any conflict of interest after taking into account the six independence-related factors required under the Dodd-Frank Act concerning compensation consultant independence. During fiscal 2016, the Compensation Committee retained Compensia, a leading national compensation consulting firm, to review and advise upon Linear Technology’s executive compensation programs and related individual executive employment arrangements.

Role of Executive Officers

The Compensation Committee reviews and approves the compensation of Linear Technology’s executive officers. Each year, Linear Technology’s management team reviews the compensation practices of other analog peer companies in the U.S. semiconductor industry, including base salaries, annual bonuses, and long-term incentive compensation in the form of equity awards. Based on this analysis, Linear Technology’s Executive Chairman and CEO prepare and submit to the Compensation Committee recommendations for the compensation of Linear Technology’s executive officers for its review and approval.

The Compensation Committee considers, but is not bound by, these recommendations with respect to the compensation of Linear Technology’s executive officers. Members of Linear Technology’s management team may attend portions of the Compensation Committee’s meetings, but the Compensation Committee also meets without any members of Linear Technology’s management team present. Specifically, the Compensation Committee discusses Linear Technology’s Executive Chairman’s and CEO’s compensation with each of them, but makes its ultimate decisions with respect to their compensation without either of them present.

Competitive Positioning

Each year, the Compensation Committee reviews the compensation of Linear Technology’s executive officers to determine whether their compensation is reasonable and competitive. Generally, the Compensation Committee seeks to ensure that compensation is not significantly above or below the compensation levels of the competitive market unless warranted by Linear Technology’s financial performance. The Compensation Committee does not “benchmark” its compensation levels against other companies in a formal sense, but does review and evaluate competitive market data as part of its assessment of the reasonableness of the compensation of Linear Technology’s executive officers.

For this purpose, the Compensation Committee has designated an Analog Comparator Group (“ACG”). During fiscal 2016, the ACG was comprised of the following companies:

 

    Analog Devices, Inc. (“Analog Devices”)

 

    Maxim Integrated Products, Inc. (“Maxim”)

 

    Intersil Corporation (“Intersil”)

 

    Texas Instruments, Inc. (“Texas Instruments”)

 

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The Compensation Committee has selected these companies because they are analog semiconductor companies with product offerings similar to Linear Technology’s. In addition, these are companies with which Linear Technology competes for business as well as talent. Two of the four companies are in the same geographical location as Linear Technology’s headquarters. The Compensation Committee believes these companies are appropriate peers for comparability purposes because they are the leading participants in the analog semiconductor market. Linear Technology views itself as an analog semiconductor specialist. The analog market represents roughly 16% of the overall semiconductor market. Within the analog sector, Linear Technology concentrates on the high-performance niche of the analog market, which Linear Technology estimates to be approximately 30% of the entire analog market.

Given Linear Technology’s specialization, the Compensation Committee believes it is most appropriate to review and compare Linear Technology’s compensation programs and practices only with those of other publicly-traded analog companies. The Compensation Committee recognizes that some other semiconductor companies and some shareholder vote advisory services may create peer groups that included companies across the entire semiconductor industry or even non-semiconductor companies. The Compensation Committee, however, does not believe it is appropriate to compare business and compensation levels to those of digital or other non-analog semiconductor companies or semiconductor equipment manufacturers solely on the basis of similar revenue or market capitalization. Companies that participate in the analog semiconductor market, especially those primarily in the analog market, generally differ too greatly from digital semiconductor companies and even more from equipment manufacturing companies. The most important of these differences between analog and digital semiconductor companies include:

 

    Importance of Individual Design Contributions. The contributions of a relatively small number of individual design engineers are generally of far greater importance to the design of analog semiconductors than are the costly, powerful, and sophisticated computer-aided engineering and automated design tools that are common in and, in fact, required for the design of digital semiconductors.

 

    Greater Capital Efficiency. The processes and equipment for manufacturing analog semiconductors generally require smaller initial capital expenditures, and less frequent upgrading or outright replacement because of technological obsolescence than those for manufacturing digital semiconductors.

 

    Market Diversity and Pricing Stability. Analog semiconductor companies are often much less dependent upon particular products or customers than digital semiconductor companies. Analog semiconductor markets are generally more fragmented, and competition within these markets tends to be less concentrated than in the markets for other types of semiconductors. These factors, as well as generally longer product lives, also produce greater pricing stability than in many digital semiconductor markets.

 

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Fiscal 2016 Named Executive Officer Compensation

Chief Executive Officer

The following table sets forth the compensation of Linear Technology’s CEO in each of the past five fiscal years and demonstrates that a substantial percentage of his target total direct compensation is comprised of variable and semi-variable compensation elements:

 

     2016     2015     2014     2013     2012  

Base Salary

   $ 601,106      $ 578,815      $ 550,962      $ 524,039      $ 499,135   

Bonus and Profit Sharing

     1,852,682        1,984,125        1,912,140        1,757,313        1,805,021   

Equity Compensation (1)

     —          3,731,200        3,703,200        2,528,000        2,369,600   

Other

     244,151        233,562        220,470        219,638        225,690   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 2,697,939      $ 6,527,703      $ 6,386,772      $ 5,028,990      $ 4,899,446   

% of Variable and Semi Variable Compensation to Total Compensation

     69     88     88     85     85

 

  (1) It is Linear Technology’s policy to grant equity awards to Linear Technology’s key employees, including Linear Technology’s executive officers, on a five-quarter rotation, rather than every year as most of Linear Technology’s peers do. Accordingly, no equity award is generally granted to an executive officer in every fifth year. This was the case with Linear Technology’s CEO in fiscal 2016. As a result, Linear Technology’s CEO’s equity compensation was zero in fiscal 2016 compared to $3.7 million in fiscal 2015. For purposes of comparison with other companies, Linear Technology believes that Linear Technology’s CEO’s equity compensation should not be looked at on a year-by-year basis, but rather should be normalized over five years to appropriately account for the five-quarter award schedule.  

 

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The following chart sets forth the change in Linear Technology’s CEO’s variable compensation in each of the past five fiscal years, demonstrating the direct correlation between the change in variable compensation (profit-sharing and cash bonus) and the change in Linear Technology’s operating profits. The chart demonstrates that the changes in Linear Technology’s CEO’s variable compensation are in line with Linear Technology’s compensation philosophy, whereby when Linear Technology’s financial performance is strong, executive compensation is higher, and when Linear Technology’s financial performance is lower, executive compensation is lower. In particular, in fiscal 2012, 2013, and 2016 Mr. Maier’s profit-sharing and cash bonuses decreased in concert with a decrease in Linear Technology’s operating income.

 

LOGO

CEO Compensation—Peer CEO Comparison

The following table sets forth for us and each of the companies in the ACG information regarding their financial performance and related information regarding the compensation of their chief executive officer:

 

In thousands    Market
Capitalization (1)
     Fiscal Year
Revenue (2)
     Fiscal Year
Operating
Income (2)
     Fiscal Year
Operating
Margin
    Total CEO
Compensation (3)
 

Linear Technology

   $ 11,076,808       $ 1,423,936       $ 633,553         44   $ 2,698   

Texas Instruments

     55,098,176         13,000,000         4,274,000         33     14,926   

Analog Devices

     18,761,088         3,435,092         830,841         24     7,814   

Maxim

     11,005,908         2,194,719         313,849         14     5,891   

Intersil

     1,694,101         521,616         (14,242      -3     5,191   

 

  (1) Market capitalization was calculated by using the outstanding shares as reported in each company’s most recently filed Annual Report on Form 10-K multiplied by the closing market price of Linear Technology’s common stock on the last trading day of its fiscal year.  
  (2) Fiscal year financial information has been taken from each company’s most recently filed Annual Report on Form 10-K as follows: Linear Technology (7/3/2016); Texas Instruments (12/31/2015); Analog Devices (10/31/2015); Maxim (6/25/2016); and Intersil (1/1/2016).  

 

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(3) Compensation information as reported in each company’s most recently filed definitive proxy statement as follows: Linear Technology (9/2/2016); Texas Instruments (3/9/2016); Analog Devices (1/28/2016); Maxim (9/30/2015); and Intersil (3/4/2016).

Based on this comparative analysis, the Compensation Committee believes that Linear Technology’s CEO’s fiscal 2016 compensation was in line with that of the chief executive officers of the companies in the ACG. Linear Technology’s CEO’s base salary was at the lower end of the ACG range, and his cash bonus was towards the higher end of the range. He did not receive an equity award in fiscal 2016. Most of the companies in the ACG grant equity awards on an annual basis whereas Linear Technology grants equity awards to Linear Technology’s executive officers every five fiscal quarters.

NEOs Compensation—Peer Comparison

The following table sets forth for us and each of the companies in the ACG information regarding their financial performance and related information regarding the compensation of their five Named Executive Officers:

 

In thousands    Market
Capitalization (1)
     Fiscal Year
Revenue (2)
     Fiscal Year
Operating
Income (2)
     Fiscal Year
Operating
Margin
    Total
Compensation of
Named Executive
Officers (3)
 

Linear Technology

   $ 11,076,808       $ 1,423,936       $ 633,553         44   $ 12,010   

Texas Instruments

     55,098,176         13,000,000         4,274,000         33     41,729   

Analog Devices

     18,761,088         3,435,092         830,841         24     19,214   

Maxim

     11,005,908         2,194,719         313,849         14     18,645   

Intersil

     1,694,101         521,616         (14,242      -3     11,355   

 

  (1) Market capitalization was calculated by using the outstanding shares as reported in each company’s most recently filed Annual Report on Form 10-K multiplied by the closing market price of Linear Technology’s common stock on the last trading day of its fiscal year.  
  (2) Fiscal year financial information has been taken from each company’s most recently filed Annual Report on Form 10-K as follows: Linear Technology (8/25/2016); Texas Instruments (12/31/2015); Analog Devices (10/31/2015); Maxim (6/25/2016); and Intersil (1/1/2016).  
  (3) Compensation information as reported in each company’s most recently filed definitive proxy statement as follows: Linear Technology (9/2/2016); Texas Instruments (3/9/2016); Analog Devices (1/28/2016); Maxim (9/30/2015); and Intersil (3/4/2016).  

The Compensation Committee does not “benchmark” its compensation levels against other companies in a formal sense, but rather reviews and evaluates competitive market data about these peer companies as part of its assessment of the reasonableness of the compensation of Linear Technology’s own executive officers, as well as to obtain an overall perspective on comparative compensation levels. The Compensation Committee tailors its compensation decisions to reward adherence to Linear Technology’s corporate strategies and long-term objectives, specifically growth of revenues and high operating and net income margins. Consistent strong profitability is also an important objective; therefore, annual variable cash compensation tied to Linear Technology’s profitability in an absolute sense is a meaningful component of overall compensation.

Based on this comparative analysis, Linear Technology notes that the base salaries of Linear Technology’s Named Executive Officers were at or below median of the ACG range, and cash bonuses were at or above median of the range. Only two Named Executive Officers received equity awards in fiscal 2016. Specifically, Linear Technology’s executive chair received a refresh grant and Linear Technology’s CFO received a promotional grant. Neither of these grants were comparable to the annual refresh awards granted to the other Named Executive Officers of the ACG

 

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As for Linear Technology’s CEO above, the following chart sets forth the change in Linear Technology’s Named Executive Officers’ variable compensation in each of the past five fiscal years, again demonstrating the direct correlation between the change in variable compensation (profit-sharing and cash bonus) and the change in Linear Technology’s operating profits. The chart demonstrates the changes in Linear Technology’s Named Executive Officers’ variable compensation are in line with Linear Technology’s compensation philosophy, whereby when Linear Technology’s financial performance is strong, executive compensation is higher, and when Linear Technology’s financial performance is lower, executive compensation is lower. In particular, in fiscal 2012, 2013, and 2016, the Named Executive Officers’ profit-sharing and cash bonuses decreased in concert with a decrease in Linear Technology’s operating income.

 

LOGO

Compensation Elements

Linear Technology maintains a comprehensive executive compensation program that is intended to attract, retain, motivate, and reward Linear Technology’s executive officers for managing both Linear Technology’s short-term and long-term success. The executive compensation program consists of seven principal elements:

 

    Base salary;

 

    Profit-sharing;

 

    Cash bonuses;

 

    Long-term incentive compensation in the form of equity awards;

 

    Change in control benefits;

 

    Health and welfare benefits; and

 

    Perquisites and other personal benefits.

The Compensation Committee believes each of these elements is necessary and appropriate to meet one or more of the principal objectives of Linear Technology’s compensation philosophy. For example, base salary is set with the goals of attracting talented and qualified individuals to serve as Linear Technology’s executive

 

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officers and of adequately compensating and rewarding them on a day-to-day basis for the time they spend, the services they perform, and the skills and experience they bring to us. Profit-sharing and cash bonuses, on the other hand, are designed to provide incentives and reward for the achievement of medium-term business objectives, particularly revenue growth and increased operating and net income margins. Finally, long-term incentive compensation is designed to assist in retaining key talent and, even more importantly, to create incentivize for increasing long-term stockholder value, thus enhancing the alignment of the interests of Linear Technology’s executive officers with those of Linear Technology’s stockholders. In setting compensation levels for a particular executive officer, the Compensation Committee takes into consideration each element of the individual’s proposed compensation package, as well as the executive officer’s past and expected future contributions to Linear Technology.

Linear Technology believes that the above elements of compensation, when taken as a whole, are effective, and will continue to be effective, tools for achieving the objectives of Linear Technology’s compensation philosophy. Nonetheless, Linear Technology also strongly believes in engaging and retaining the best talent in critical functions. Achieving these latter goals may from time to time entail negotiations with individuals who have significant compensation packages with current or other potential employers. In order to enable Linear Technology to hire and retain talented executive officers, the Compensation Committee may therefore in such instances determine that it is in the best interests of Linear Technology to negotiate packages that may deviate from the standard practices discussed here, to the extent such deviation is required by competitive or other market forces.

Base Salary

Linear Technology seeks to offer each of Linear Technology’s executive officers a competitive base salary to recognize the skills and experience that individual brings to us and the day-to-day performance contributions he or she makes. Base salary is predicated on subjective performance judgments as to the past and expected future contribution by the individual executive officer. The Compensation Committee also is mindful of the base salaries of executives at the companies in Linear Technology’s compensation peer group in setting base salaries. In general, however, base salary increases are made based on cost of living increases and, if appropriate, promotions and/or changes in responsibilities.

In July 2015, the Compensation Committee determined the fiscal 2016 base salaries of Linear Technology’s executive officers, including the Named Executive Officers. These base salaries of the Named Executive Officers were maintained at their fiscal 2015 levels and were as follows:

 

Name

   Base Salary  

Robert H. Swanson

   $ 506,000   

Lothar Maier

     580,000   

Robert C. Dobkin

     438,521   

Donald E. Paulus

     334,112   

Donald P. Zerio

     300,456   

Profit-Sharing

Consistent strong profitability is one of Linear Technology’s major corporate objectives. All employees can affect Linear Technology’s success in meeting this objective. To reinforce achieving this success, Linear Technology funds a profit-sharing plan for all eligible employees. Each employee (including employees of Linear Technology’s subsidiaries) who has been employed by us for more than six months is eligible to participate in the profit-sharing plan, with payments being made semi-annually. Typically, the amounts paid under the profit-sharing plan are a meaningful portion of each eligible employee’s total compensation.

The amount of each semi-annual profit-sharing pool is largely determined by the magnitudes of revenue growth and operating margin for the six-month period just completed. The pool amount is then divided by the

 

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aggregate base salaries of all eligible employees (including Linear Technology’s executive officers) for the period to arrive at a ratio that represents the percentage that each participant’s profit-sharing payment bears to his or her base salary. For all eligible U.S. employees, a portion of this profit-sharing amount is paid directly into the participants account under Linear Technology’s Section 401(k) retirement plan.

Profit-sharing payments for Linear Technology’s executive officers are calculated in the same manner as for the rest of Linear Technology’s employees, and the percentage of base salary that the payment to each executive officer represents is the same as for all employees generally. In fiscal 2016, Linear Technology’s executive officers and U.S. employees received profit-sharing distributions equal to approximately 27.0% of their base salaries, as compared to 29.8% in fiscal 2015. The decrease is primarily due to a 7% decrease in operating income.

Cash Bonuses

Linear Technology believes that employees with significant leadership roles or who are technically accomplished have a greater impact on attaining Linear Technology’s revenue growth and profitability objectives. Generally, each year these employees participate in a discretionary key employee incentive pool, pursuant to which Linear Technology’s executive officers and key employees receive semi-annual cash bonuses. These bonuses are earned based on Linear Technology’s actual revenue growth and operating income for the six month period compared with the previous six month period.

For the Named Executive Officers specifically, Linear Technology has adopted the Senior Executive Bonus Plan, which was approved by Linear Technology’s stockholders at the 2014 Annual Meeting of Stockholders. The purpose of the Senior Executive Bonus Plan is to motivate the Named Executive Officers to perform to the best of their abilities and to achieve Linear Technology’s short-term business objectives of revenue growth and operating profitability, as well as to facilitate, under Section 162(m) of the Code, the federal income tax deductibility of compensation paid to Linear Technology’s most highly-compensated executive officers.

Under the Senior Executive Bonus Plan, maximum individual cash bonus amounts are determined for Linear Technology’s Named Executive Officers each year based on Linear Technology’s actual performance, as measured against pre-established target levels for revenue growth and operating income as a percentage of revenue. At the beginning of each fiscal year, the Compensation Committee establishes a matrix of maximum bonus award opportunities for the Named Executive Officers, expressed as a percentage of base salary, corresponding to various levels of achievement of Linear Technology’s revenue growth and operating profitability. Actual bonus determinations are made for each of the two six-month periods in each fiscal year (July through December and January through June) based upon Linear Technology’s actual performance during those periods. For each such period, the Compensation Committee reviews Linear Technology’s performance against the matrix and determines the maximum amount that may be paid to each Named Executive Officer under the Plan. (In the case of the first six-month period, annual revenue is evaluated on a trend basis compared to the annual revenue target for the entire fiscal year, while operating profitability is evaluated on an actual basis for that first six-month period.) The Compensation Committee then determines the actual bonus amount to be paid to each Named Executive Officer. The Committee has the discretion to, and generally does, authorize actual bonuses that are less than the maximum bonus amounts calculated under the Plan, based upon various factors including the individual’s personal performance. Because bonus amounts are largely dependent on corporate performance, they can vary significantly from year to year. Regardless, the maximum bonus amount payable to any individual Named Executive Officer pursuant to the Senior Executive Bonus Plan in any one year is $5 million.

With respect to fiscal 2016 specifically, at the beginning of the fiscal year in July 2015, the Compensation Committee established a matrix of maximum bonus award opportunities under the Senior Executive Bonus Plan for Linear Technology’s Named Executive Officers for various levels of achievement of Linear Technology’s revenue growth and operating profitability in fiscal 2016. The targeted level of revenue for fiscal year 2016 was

 

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$1.4 billion, and the target level for operating income as a percentage of revenue was 45%, although the matrix included percentages for achievements both above and below these levels. At the mid-point and again after the end of fiscal 2016, the Compensation Committee reviewed Linear Technology’s actual performance against the matrix and determined the maximum amount payable to each Named Executive Officer under the Plan. As actual revenue for fiscal 2016 decreased by 3.5% from fiscal 2015, and operating income as a percentage of revenue was 44.5% (compared to 46.3% in fiscal 2015), the maximum target bonus opportunity for fiscal 2016 was less than fiscal 2015. The Compensation Committee then exercised its discretion to decrease fiscal 2016 bonuses for the Named Executive Officers further. As a result, bonuses actually paid to Linear Technology’s Named Executive Officers in fiscal 2016 were approximately 5% lower than in fiscal 2015, which compared to a 7% decrease in operating income from fiscal 2015.

The bonuses paid to the Named Executive Officers for each of the last three fiscal years were as follows:

 

Name

   Fiscal 2016
Bonus
     Fiscal 2015
Bonus
     Fiscal 2014
Bonus
 

Robert H. Swanson

   $ 1,144,000       $ 1,226,000       $ 1,186,000   

Lothar Maier

     1,711,000         1,829,000         1,770,000   

Robert C. Dobkin

     755,000         805,000         780,000   

Donald E. Paulus

     700,000         671,000         625,000   

Donald P. Zerio (1)

     450,000         N/A         N/A   

 

  (1) Mr. Zerio was appointed CFO at the beginning of fiscal year 2016, and was not a Named Executive Officer during fiscal years 2015 and 2014.  

Long-Term Incentive Compensation

Linear Technology views long-term incentive compensation opportunities in the form of equity awards as essential in hiring and retaining professional talent and in directing the efforts of key employees to maximize long-term total return to stockholders. In granting equity awards, the Compensation Committee seeks to design the awards to attract and retain Linear Technology’s executive officers and other key employees, while being cognizant of the effects such awards have on Linear Technology’s income statement and dilution to Linear Technology’s stockholders.

Depending on both the performance of Linear Technology’s common stock and the hiring environment in Linear Technology’s industry, the Compensation Committee may grant options to purchase shares of Linear Technology’s common stock, restricted stock, restricted stock unit awards that may be settled for shares of Linear Technology’s common stock, stock appreciation rights, or other awards, as deemed appropriate to meet Linear Technology’s employment and financial performance objectives. The size of each equity award depends on the position, experience and performance of the recipient, as well as the size of any outstanding equity awards already held by such recipient. Whereas profit-sharing and bonuses are intended to reward the successful execution of Linear Technology’s annual operating plan and other short-term corporate goals, equity awards are designed to reward longer-term financial, operational, and strategic objectives, such as the overall effectiveness of basic corporate strategy.

In recent years, the Compensation Committee has granted only restricted stock awards to Linear Technology’s executive officers. Generally, the Compensation Committee grants equity awards four times during the fiscal year at the quarterly meetings of Linear Technology’s board of directors. The pricing of these awards is based on the closing market price of Linear Technology’s common stock as reported on the Nasdaq Global Market on the Thursday following the meeting of the board of directors, which is typically on a Tuesday. In addition, equity awards are generally granted to Linear Technology’s executive officers on a five-quarter rotation, so that an executive officer with an extended tenure will have an outstanding equity awards vest during each quarter of a given fiscal year.

 

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On July 23, 2015, the Compensation Committee granted a restricted stock award of 10,000 shares to Linear Technology’s new CFO in connection with his appointment as CFO at the beginning of fiscal 2016. The restricted stock award had a grant date fair value of approximately $409,800. On October 15, 2015, the Compensation Committee granted a restricted stock award of 70,000 shares to Linear Technology’s Executive Chairman, pursuant to Linear Technology’s five-quarter rotation practice. The restricted stock award had a grant date fair value of approximately $3.1 million. These restricted stock awards are subject to a right of reacquisition in favor of Linear Technology that lapses annually at the rate of 20% of the shares subject to the award over a five-year period from approximately the date of grant, subject to the recipient continuing to be a service provider as of each vesting date and subject further to any acceleration of vesting under other agreements between the individuals and Linear Technology. See “Employment Arrangements with Linear Technology’s Named Executive Officers.”

Health and Welfare Benefits

Linear Technology’s executive officers are eligible for the same health benefit programs that are available to Linear Technology’s other employees and receive the same employer contribution toward their benefits premium as provided to other employees. Linear Technology maintains for Linear Technology’s U.S.-based employees a tax-qualified Section 401(k) retirement plan, which provides for broad-based employee participation. Linear Technology intends for the plan to qualify under Section 401(a) of the Code, so that contributions by employees to the plan, and income earned on plan contributions, are not taxable to employees until withdrawn from the plan. As part of Linear Technology’s profit-sharing plan discussed above, a portion of each participant’s semi-annual profit-sharing distribution is paid directly into the Section 401(k) plan.

Perquisites and Other Personal benefits

While Linear Technology offers a level of perquisites sufficient to recruit and retain key executive talent, in general Linear Technology does not view perquisites or other personal benefits as a significant component of Linear Technology’s executive compensation program. Linear Technology believes that setting appropriate levels of base salary and incentive compensation are of greater importance to motivating key talent and increasing stockholder return than any package of non-cash perquisites.

Linear Technology maintains a fractional ownership in two airplanes operated by NetJets, Inc. So long as Mr. Swanson is Executive Chairman of Linear Technology’s board of directors, he is entitled to use these airplanes for personal use for up to 35% of the available flight time in any year. To the extent use of the airplanes results in imputed taxable income to him, Linear Technology makes additional payments to him, so that the net effect is the same as if no income were imputed to him. The aggregate incremental cost to us of Mr. Swanson’s personal use of these aircraft is included in the “All Other Compensation” column of the Fiscal 2016 Summary Compensation Table.

There were no other significant perquisites or other personal benefits provided to any of the Named Executive Officers in fiscal 2016.

Employment Arrangements with Linear Technology’s Named Executive Officers

Executive Employment Agreements

Linear Technology has entered into written employment agreements with Messrs. Swanson, Maier and Dobkin, Linear Technology’s Executive Chairman, CEO and CTO, respectively. Each of these agreements was approved on Linear Technology’s behalf by the Compensation Committee or, in certain instances, by Linear Technology’s board of directors.

Each of these employment agreements provides for “at will” employment and sets forth the initial compensation arrangements for the executive officer at the time the agreement was entered into, including an

 

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initial base salary, an annual cash bonus opportunity, and an equity recommendation. These agreements also provide the executive officer with certain post-employment payments and benefits in the event of certain terminations of employment (including following a change of control of Linear Technology), as described below. Information on the specific terms and conditions of these employment agreements, and the applicable payments and benefits under them, is provided under “Employment Agreements” in this proxy statement/prospectus.

Mr. Swanson’s and Mr. Dobkin’s agreements were entered into more than 15 years ago, and Mr. Maier’s more than 7 years ago. As such, the Board has viewed them as legacy compensation arrangements and in general has not sought to renegotiate or revise them in the years since, except as necessary to comply with changes in tax law or to fix errors in drafting. In July 2016, however, Linear Technology did amend Mr. Dobkin’s agreement to revise the provisions applicable following a change of control of Linear Technology to provide him with similar benefits to those granted to other executive officers under the Change of Control Severance Agreements described below. In exchange, Mr. Dobkin agreed to forgo the modified “tax gross-up” provision with respect to change of control benefits, which had previously been in his agreement.

Post-Employment Compensation Arrangements

Linear Technology’s employment agreements with Messrs. Swanson, Maier, and Dobkin contain post-employment compensation arrangements in the event of a change of control of Linear Technology. In addition, as part of its review of Linear Technology’s executive compensation programs prompted by the results of the advisory vote on executive compensation at the 2015 Annual Meeting of Stockholders, the Compensation Committee determined that Linear Technology was unusual among its peers in that Linear Technology did not have in place reasonable post-employment compensation arrangements for any of Linear Technology’s executive officers other than Linear Technology’s Executive Chairman, CEO and CTO. Upon further consideration and consultation with its independent compensation consultant, the Committee determined that such arrangements were likely to be important tools in attracting and retaining highly-qualified executive officers, in light of the uncertainty, disruption and distraction that a change of control or merely the potential for one could cause for these key employees. As a result, in June 2016, the Compensation Committee recommended to Linear Technology’s board of directors that Linear Technology should enter into executive contracts with those of Linear Technology’s executive officers, and certain other key employees, who do not currently have such agreements. The Board accepted these recommendations and approved and directed the entering into of Change of Control Severance Agreements with such individuals, including Messrs. Zerio and Paulus, who were the Named Executive Officers who did not already have such agreements. In addition, in July 2016, Linear Technology amended Mr. Dobkin’s employment agreement to revise the provisions applicable following a change of control of Linear Technology to provide him with similar benefits to those granted to other executive officers under their Change of Control Severance Agreements.

All of Linear Technology’s post-employment compensation arrangements, whether part of the legacy employment agreements or the recently entered into Change of Control Severance Agreements, are designed to provide reasonable compensation to executive officers and other key employees who leave us under certain circumstances to facilitate their transition to new employment, especially in the aftermath of a change of control. More generally, Linear Technology believes that these arrangements align the interests of Linear Technology’s management team with those of Linear Technology’s stockholders when considering the long-term future for Linear Technology. The primary purpose of these arrangements is to promote stability and continuity and to ensure the continued focus, dedication and objectivity of Linear Technology’s senior executive officers and other key employees on the strategic business and operations of Linear Technology, notwithstanding any uncertainty about their continued employment that the potential for a change of control might otherwise create. Further, these arrangements are designed to motivate these individuals to maximize Linear Technology’s value upon a change of control of Linear Technology for the benefit of all of Linear Technology’s stockholders and to ensure that Linear Technology would be able to continue its business and operations as a standalone entity without significant harm should an actual transaction not occur. Reasonable post-acquisition payments and benefits should serve the interests of both the executive and Linear Technology’s stockholders.

 

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In August 2015, the Compensation Committee of the Board adopted a policy against future grants of “tax gross-up” rights in respect of golden parachute payments to any of Linear Technology’s senior executive officers. A copy of the policy is posted on Linear Technology’s website at www.linear.com.

For information on the post-employment compensation arrangements for the Named Executive Officers, as well as an estimate of the potential payments and benefits payable under these arrangements as of the end of fiscal 2016, see the tables provided for each Named Executive Officer under “Employment Agreements” in this proxy statement/prospectus.

Tax and Accounting Implications

Deductibility of Executive Compensation

The Compensation Committee reviews and considers the deductibility of the compensation of certain of Linear Technology’s executive officers under Section 162(m) of the Code, which disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to their chief executive officer and each of the three other most highly-compensated executive officers whose compensation is required to be disclosed to Linear Technology’s stockholders under the Exchange Act in any taxable year (other than the chief executive officer and chief financial officer). Generally, the Compensation Committee seeks to structure the compensation paid to Linear Technology’s executive officers under Linear Technology’s incentive compensation plans to be fully deductible for federal income tax purposes, except for base salary and restricted stock awards that do not qualify as “performance-based compensation” for purposes of Section 162(m), because they contain only time-based vesting requirements.

To maintain flexibility in compensating Linear Technology’s Named Executive Officers in a manner designed to promote varying corporate goals, however, the Compensation Committee has not adopted a policy that all compensation payable to the Named Executive Officers that is subject to Section 162(m) must be deductible for federal income tax purposes. From time to time, the Compensation Committee may, in its judgment, approve compensation for the Named Executive Officers that does not comply with an exemption from the deductibility limit when it believes that such compensation is in the best interests of Linear Technology and Linear Technology’s stockholders.

Accounting for Stock-Based Compensation

Linear Technology follows the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) for Linear Technology’s stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to Linear Technology’s employees and members of Linear Technology’s board of directors, including options to purchase shares of Linear Technology’s common stock and other stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.

 

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management.

Based on the Compensation Committee’s review and discussion noted above, the Compensation Committee recommended to the Linear Technology board of directors that the Compensation Discussion and Analysis be included in this proxy statement/prospectus on Schedule 14A.

 

THE COMPENSATION COMMITTEE
Richard M. Moley, Chairman
Thomas S. Volpe
Arthur C. Agnos
John J. Gordon

 

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SUMMARY COMPENSATION TABLE

The following table summarizes the compensation information for the Named Executive Officers that Linear Technology paid or was earned during the fiscal year ended July 3, 2016.

 

Name and Principal Position

   Fiscal
Year
     Salary      Non-Equity
Incentive Plan
Compensation (1)
     Stock
Awards (2)
     All Other
Compensation
    Total  

Robert H. Swanson Jr.

     2016       $ 474,862       $ 1,257,871       $ 3,100,300       $ 537,435 (3)    $ 5,370,468   

Executive Chairman

     2015         473,447         1,345,099         3,114,300         522,892        5,455,739   
     2014         482,256         1,309,144         —           471,369        2,262,769   

Lothar Maier

     2016         601,106         1,852,682         —           244,151 (4)      2,697,939   

Chief Executive Officer

     2015         578,815         1,984,125         3,731,200         233,562        6,527,703   
     2014         550,962         1,912,140         3,703,200         220,470        6,386,772   

Robert C. Dobkin

     2016         455,388         861,962         —           104,433 (4)      1,421,783   

Vice President, Engineering

     2015         437,808         920,514         1,399,200         97,069        2,854,591   

and Chief Technology Officer

     2014         421,032         889,718         1,388,700         86,371        2,785,821   

Donald E. Paulus

     2016         346,963         775,635         —           99,355 (4)      1,221,953   

Vice President and General

     2015         333,569         753,994         1,399,200         92,440        2,579,203   

Manager of Power Products

     2014         320,786         701,266         1,388,700         82,244        2,492,996   

Donald P. Zerio (5)

     2016         305,327         515,851         409,800         67,302 (4)      1,298,280   

Vice President, Finance and

     2015         N/A         N/A         N/A         N/A        —     

Chief Financial Officer

     2014         N/A         N/A         N/A         N/A        —     

 

(1) Includes cash profit sharing and performance bonuses earned for the fiscal year, whether accrued or paid. Fiscal year 2016, 2015, and 2014 performance bonuses were earned pursuant to the terms of the Executive Bonus Plan.
(2) Amounts shown in this column reflect the aggregate grant date fair value of awards granted during the year computed in accordance with FASB ASC 718. See the “Grants of Plan-Based Awards” table below for more information on awards made in fiscal year 2016. For additional information with respect to grants made prior to fiscal 2016, refer to Note 2 of the financial statements in Linear Technology’s Form 10-K for the year ended July 3, 2016, as filed with the SEC.
(3) Includes (a) $14,575 in 401(k) profit sharing distributions earned during the fiscal year; (b) an imputed value of $137,795 for the personal use by Mr. Swanson during the applicable fiscal year of the airplanes in which Linear Technology owns fractional interests, plus related tax reimbursements of $170,127; (c) dividend distributions on unvested restricted stock of $208,520; and (d) $6,418 for taxes paid by Linear Technology for group term life insurance.
(4) Includes (a) 401(k) profit sharing distributions earned during the fiscal year as follows: Lothar Maier for $14,575, Robert C. Dobkin for $14,575, Donald E. Paulus for $14,575, and Donald P. Zerio for $14,575; (b) dividend distributions on unvested restricted stock during the fiscal year as follows: Lothar Maier for $227,520, Robert C. Dobkin for $83,440, Donald E. Paulus for $83,440, and Donald P. Zerio for $51,387 and (c) taxes paid by Linear Technology for group term life insurance during the fiscal year as follows: Lothar Maier for $2,056, Robert C. Dobkin for $6,418, Donald E. Paulus for $1,340, and Donald P. Zerio for $1,340.
(5) Mr. Zerio was appointed CFO at the beginning of fiscal year 2016, and was not a Named Executive Officer during fiscal years 2015 and 2014.

 

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GRANTS OF PLAN-BASED AWARDS

The following table shows for the fiscal year ended July 3, 2016 certain information regarding stock awards granted to the Named Executive Officers.

 

Name

   Grant Date      All Other Stock
Awards:
Number of Shares of
Stock or Units (1)
     Grant Date Fair
Value of
Stock Awards (2)
 

Robert H. Swanson Jr.

     10/15/2015         70,000       $ 3,100,300   

Lothar Maier

     —           —           —     

Robert C. Dobkin

     —           —           —     

Donald E. Paulus

     —           —           —     

Donald P. Zerio

     07/23/2015         10,000         409,800   

 

  (1) Awards shown in this column are shares of restricted stock.  
  (2) The grant date fair value of stock awards is based on the fair market value of Linear Technology’s common stock on the grant date as determined pursuant to FASB ASC 718. For additional information with respect to how these stock award grants are valued, refer to Note 2 of the financial statements in Linear Technology’s Form 10-K for the year ended July 3, 2016, as filed with the SEC.  

 

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth certain information concerning outstanding equity awards held by the Named Executive Officers at the end of the fiscal year ended July 3, 2016.

 

     Option Awards (1)      Stock Awards (2)  

Name

   Number of
Securities
Underlying
Unexercised
Options
Exercisable
     Number of
Securities
Underlying
Unexercised
Options
Unexercisable
     Option
Exercise
Price ($)
     Option
Expiration
Date
     Number of
Shares or
Units of Stock
That Have
Not Vested
     Market Value
of Shares or
Units of Stock
That Have
Not Vested (3)
 

Robert H. Swanson, Jr.

     —           —           —           —           166,000       $ 7,672,520   

Lothar Maier

     —           —           —           —           160,000         7,395,200   

Robert C. Dobkin

     —           —           —           —           58,000         2,680,760   

Donald E. Paulus

     —           —           —           —           58,000         2,680,760   

Donald P. Zerio

     —           —           —           —           37,200         1,719,384   

 

(1) Stock options vest at the rate of 10% of the total number of shares subject to the option every 6 months. As of July 3, 2016, there are no unexercised options.
(2) The following table shows the vest dates and corresponding number of shares of the stock awards in the outstanding equity awards table, subject to continued employment through the vest date.

 

     Number of Shares Vesting  

Vest Date

   Robert H.
Swanson
     Lothar Maier      Robert C. Dobkin      Donald E. Paulus      Donald P. Zerio  

7/29/2016

     —           —           —           —           2,000   

7/30/2016

     14,000         —           —           —           —     

8/3/2016

     —           16,000         4,000         4,000         2,000   

10/21/2016

     14,000         —           —           —           —     

10/24/2016

     —           16,000         4,000         4,000         2,000   

1/22/2017

     —           16,000         6,000         6,000         2,400   

1/23/2017

     —           —           2,000         2,000         —     

1/25/2017

     12,000         —           —           —           —     

4/22/2017

     —           16,000         6,000         6,000         3,500   

4/24/2017

     14,000         —           —           —           —     

7/29/2017

     —           —           —           —           2,000   

7/30/2017

     14,000         —           —           —           —     

10/21/2017

     14,000         —           —           —           —     

10/24/2017

     —           16,000         4,000         4,000         2,000   

1/22/2018

     —           16,000         6,000         6,000         2,400   

1/23/2018

     —           —           2,000         2,000         —     

4/22/2018

     —           16,000         6,000         6,000         3,500   

4/24/2018

     14,000         —           —           —           —     

7/29/2018

     —           —           —           —           2,000   

7/30/2018

     14,000         —           —           —           —     

10/21/2018

     14,000         —           —           —           —     

1/22/2019

     —           16,000         6,000         6,000         2,400   

4/22/2019

     —           16,000         6,000         6,000         3,500   

7/29/2019

     —           —           —           —           2,000   

7/30/2019

     14,000         —           —           —           —     

10/21/2019

     14,000         —           —           —           —     

4/22/2020

     —           16,000         6,000         6,000         3,500   

7/29/2020

     —           —           —           —           2,000   

10/21/2020

     14,000         —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     166,000         160,000         58,000         58,000         37,200   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(3) The market value is the number of shares multiplied by $46.22, which is the closing price on July 1, 2016.

 

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OPTION EXERCISES AND STOCK VESTED

The following table shows for the fiscal year ended July 3, 2016 certain information regarding options exercised by and stock awards vesting with respect to, the Named Executive Officers.

 

     Option Awards      Stock Awards  

Name of Executive Officer

   Number of Shares
Acquired on Exercise
     Value Realized on
Exercise (1)
     Number of Shares
Acquired on Vesting
     Value Realized on
Vesting (2)
 

Robert H. Swanson

     —         $ —           52,000       $ 2,246,600   

Lothar Maier

     —           —           64,000         2,805,760   

Robert C. Dobkin

     10,000         181,201         22,000         961,580   

Donald E. Paulus

     —           —           22,000         961,580   

Donald P. Zerio

     15,000         294,181         9,900         437,019   

 

  (1) Value Realized on Exercise for Option Awards equals the difference between the option exercise price and the fair market value of Linear Technology’s common stock on the date of exercise, multiplied by the number of shares for which the option was exercised.  
  (2) Value Realized on Vesting for Stock Awards equals the fair market value of Linear Technology’s common stock on the vesting date, multiplied by the number of shares that vested on that date.  

 

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EQUITY COMPENSATION PLAN SUMMARY

The following table provides information as of July 3, 2016 about shares of Linear Technology’s common stock that may be issued upon exercise of outstanding options, rights or restricted stock units under all of Linear Technology’s existing equity compensation plans, including the 2001 Non-Statutory Stock Option Plan, the 2005 and 2010 Equity Incentive Plans and the 2005 Employee Stock Purchase Plan, and the number of shares of common stock that remain available for future issuance under these plans.

 

Plan

   Number of
Securities to be
Issued upon Exercise
of Outstanding
Options and
Restricted Stock
     Weighted Average
Exercise Price of
Outstanding Options
and Restricted Stock
     Number of
Securities Available
for Future Issuance
under Equity
Compensation Plans
 

Equity compensation plans approved by stockholders:

        

2005 Equity Incentive Plan (1)

     —         $ —           —     

2010 Equity Incentive Plan

     —           —           14,881,222   

2005 Employee Stock Purchase Plan

     —           —           2,192,118   

Equity compensation plans not approved by stockholders:

        

2001 Non-Statutory Stock Option Plan

     —           —           —     
  

 

 

       

 

 

 

Total

                 —         $ —           17,073,340   
  

 

 

       

 

 

 

 

(1) The 2005 Equity Incentive Plan expired in July 2015. No future awards may be granted from that plan, although awards previously granted remain outstanding in accordance with their terms.

2010 Equity Incentive Plan

Linear Technology’s 2010 Equity Incentive Plan was adopted by the Linear Technology board of directors in July 2010 and was approved by Linear Technology’s stockholders in November 2010. The 2010 Equity Incentive Plan provides for the following types of incentive awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, and (v) performance shares and performance units. Each of these is referred to individually as an “Award.” Employees, executive officers, directors and consultants who provide services to Linear Technology or its subsidiaries are eligible to participate in the 2010 Equity Incentive Plan. Shares reserved for issuance under the 2010 Equity Incentive Plan include shares that remained available for grant under Linear Technology’s 2001 Non-Statutory Stock Option Plan which, at the time the stockholders approved the 2010 Equity Incentive Plan at the 2010 Annual Meeting of Stockholders, were transferred into the 2010 Equity Incentive Plan. In addition, any shares since that time or in the future that would otherwise return to the 2001 Non-Statutory Stock Option Plan upon termination or expiration of options granted under that earlier plan are added to the shares available under the 2010 Equity Incentive Plan.

Section 162(m) of the Code, places limits on the deductibility for federal income tax purposes of compensation paid to certain executive officers of Linear Technology. In order to preserve Linear Technology’s ability to deduct the compensation income associated with Awards granted to such persons, the 2010 Equity Incentive Plan sets limits on the size of Awards that may be granted to employees, officers, directors and consultants in any fiscal year of Linear Technology or in connection with initial employment with Linear Technology, as described below.

Options. The 2010 Equity Incentive Plan authorizes the granting to employees, including officers, of incentive stock options within the meaning of Section 422 of the Code, and the granting to employees, officers, directors and consultants of nonqualified stock options. Incentive stock options may be granted only to employees, including employee directors and officers. The 2010 Equity Incentive Plan provides that a participant may not receive options for more than 5,000,000 shares in one fiscal year, except in connection with his or her initial service as an employee, in which case he or she may be granted options for up to an additional 5,000,000 shares.

 

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The exercise price of an option is determined at the time the option is granted. In the case of an incentive stock option, the exercise price must be at least equal to the fair market value of Linear Technology’s common stock on the date of grant, except that the exercise price of an incentive stock option granted to any person who owns more than 10% of the total voting power of all classes of Linear Technology’s outstanding stock must be at least 110% of the fair market value of the common stock on the grant date. The exercise price of nonqualified stock options under the 2010 Equity Incentive Plan must also be at least equal to the fair market value of Linear Technology’s common stock on the grant date. The 2010 Equity Incentive Plan permits options to be exercised with cash, check, other shares of Linear Technology’s stock, consideration received by Linear Technology under a “cashless exercise” program, by a net exercise, by a reduction in any Linear Technology liability to the recipient, by any combination of the foregoing, or by such other consideration and method of payment for the issuance of shares to the extent permitted by applicable laws.

Options granted under the 2010 Equity Incentive Plan generally vest at a rate of 1/10th of the shares subject to the option after each six-month period of continued service to Linear Technology; however, the vesting schedule can vary on a grant-by-grant basis. The 2010 Equity Incentive Plan provides that vested options may be exercised for 3 months after any termination of employment and for up to 6 months after termination of employment as a result of death or disability. Linear Technology may select alternative periods of time for exercise upon termination of service. The term of an option may not exceed ten years, except that, with respect to any person who owns more than 10% of the voting power of all classes of Linear Technology’s outstanding capital stock, the term of an incentive stock option may not exceed five years. Currently, Linear Technology generally grants options that have terms of seven years.

Stock Appreciation Rights. Stock appreciation rights may be granted under the 2010 Equity Incentive Plan. Stock appreciation rights are rights to receive the appreciation in fair market value of Linear Technology’s common stock between the exercise date and the date of grant. Linear Technology can pay the appreciation in either cash or shares of common stock. No participant may be granted stock appreciation rights covering more than 5,000,000 shares during any fiscal year, except that a participant may be granted stock appreciation rights covering up to an additional 5,000,000 shares in connection with his or her initial employment.

Restricted Stock. Restricted stock awards may be granted under the 2010 Equity Incentive Plan. Awards of restricted stock are rights to acquire or purchase shares of Linear Technology’s common stock that are subject to repurchase or reacquisition by Linear Technology upon the termination of the participant’s service with Linear Technology for any reason (including death or disability). Linear Technology’s right to reacquire the shares lapses in accordance with terms and conditions established by the plan administrator in its sole discretion, including, for example, based on the lapse of time or the achievement of specific performance goals. Currently, the vesting terms of restricted stock granted by Linear Technology generally provide for annual vesting over a term of five years. With respect to any award intended to qualify as performance-based compensation under Section 162(m), no participant may be granted more than 1,500,000 shares of restricted stock during any fiscal year, except that a participant may be granted up to an additional 1,500,000 shares in connection with his or her initial employment.

Restricted Stock Units. Restricted stock units may be granted under the 2010 Equity Incentive Plan. Restricted stock units are the dollar value equivalent of shares and vest based upon the lapse of time or in accordance with specific performance goals or other terms and conditions. Vested restricted stock units may be paid in cash, shares or a combination of cash and shares. Shares that underlie restricted stock units that become settled in cash are again available for future grants under the 2010 Equity Incentive Plan. If all restricted stock units have not vested by the expiration date set forth in the Award agreement, the unearned restricted stock units are forfeited to Linear Technology. With respect to any award intended to qualify as performance-based compensation under Section 162(m), no participant may be granted more than 1,500,000 restricted stock units during any fiscal year, except that a participant may be granted up to an additional 1,500,000 restricted stock units in connection with his or her initial employment.

Performance Units and Performance Shares. Performance units and performance shares may be granted under the 2010 Equity Incentive Plan. Performance units and performance shares are Awards that result in a payment to

 

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a participant only if the performance goals or other vesting criteria established by the plan administrator are achieved. Performance units and performance shares have initial values equal to the fair market value of one share of Linear Technology’s common stock on the grant date, and are payable in cash, shares or a combination of cash and shares. With respect to any award intended to qualify as performance-based compensation under Section 162(m), no participant may receive more than 1,500,000 performance shares or performance units during any fiscal year, except that a participant may be granted performance shares or performance units covering up to an additional 1,500,000 shares in connection with his or her initial employment.

Change of Control. In the event of a “change of control,” as defined in the 2010 Equity Incentive Plan, each outstanding Award will be treated as the committee overseeing the plan determines in its sole discretion, including, without limitation, having the successor to Linear Technology assume the Awards or provide substitute awards. In the absence of other action by the committee, all options and stock appreciation rights will become fully vested and exercisable as to all of the shares subject to such Awards, all restrictions and Linear Technology reacquisition rights with respect to restricted stock will lapse, all performance goals or other vesting criteria for restricted stock units, performance shares and performance units will be deemed to have been achieved in full, and all other vesting terms and conditions of all Awards will be deemed to have been met. In such event, the committee will notify all participants as to the changes in their Awards, and, to the extent applicable, such Awards may be exercised for such period of time as the committee may determine from the date of the notice. All unexercised Awards will terminate upon expiration of that period.

With respect to Awards granted to non-employee directors that are assumed or substituted for, if the director is subsequently terminated as a director (other than voluntary resignation), then all his or her options and stock appreciation rights will become fully vested and exercisable as to all of the shares subject to such Awards, all restrictions and Linear Technology reacquisition rights with respect to restricted stock will lapse, all performance goals or other vesting criteria for restricted stock units, performance shares and performance units will be deemed achieved at target levels, and all other vesting terms and conditions of all Awards will be deemed to have been met.

2005 Equity Incentive Plan

Linear Technology’s 2005 Equity Incentive Plan was adopted by the Linear Technology board of directors in July 2005, was approved by Linear Technology’s stockholders in November 2005, and expired in July 2015. No new Awards may be granted under the 2005 Equity Incentive Plan provides, although Awards previously granted remain outstanding in accordance with their terms.

Prior to its expiration, the 2005 Equity Incentive Plan provided for the following types of incentive Awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, and (v) performance shares and performance units. Employees, executive officers, directors and consultants who provided services to Linear Technology or its subsidiaries were eligible to participate in the 2005 Equity Incentive Plan.

The terms and conditions of the 2005 Equity Incentive Plan and the Awards granted thereunder were substantially similar to the terms and conditions of the 2010 Equity Incentive Plan.

2005 Employee Stock Purchase Plan

The 2005 Employee Stock Purchase Plan (the “2005 Purchase Plan”) was adopted by the Linear Technology board of directors in July 2005 and was approved by Linear Technology’s stockholders in November 2005. The purpose of the 2005 Purchase Plan is to provide employees with an opportunity to purchase Linear Technology’s common stock through regular payroll deductions. A total of 3,000,000 shares of common stock have been reserved for issuance under the 2005 Purchase Plan, without giving effect to the proposed 2,000,000 share increase discussed in Proposal 2 of this proxy statement/prospectus.

 

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Each employee of Linear Technology or its designated subsidiaries who is a common law employee and whose customary employment with Linear Technology or subsidiary is at least twenty hours per week and more than five months in a calendar year is eligible to participate in the 2005 Purchase Plan. None of Linear Technology’s executive officers or directors participates in the 2005 Purchase Plan. No employee, however, may participate in the 2005 Purchase Plan (i) to the extent that, at the commencement of an offering period, the employee owns 5% or more of the total combined voting power of all classes of Linear Technology’s capital stock, or (ii) to the extent that his or her rights to purchase stock under all of Linear Technology’s employee stock purchase plans would accrue at a rate which exceeds $25,000 worth of stock (determined at the fair market value of the shares at the beginning of the applicable offering period) in any calendar year. The 2005 Purchase Plan is implemented by offering periods of approximately six months each, running from approximately May 1 to October 31 and November 1 to April 30. The committee overseeing the 2005 Purchase Plan has the power at any time to change the length of the offering periods, to subdivide each offering period into multiple purchase periods, and to have multiple offering periods running at one time. As the 2005 Purchase Plan is currently governed, deductions must be either 5% or 10% of an employee’s eligible compensation for any given offering period.

As currently governed, the 2005 Purchase Plan enables participants to purchase shares of Linear Technology’s common stock at a purchase price of 85% of the fair market value of Linear Technology’s common stock on the last day of each offering period. The fair market value of Linear Technology’s common stock on any relevant date is the closing price per share as reported on the Nasdaq Global Market, or the mean of the closing bid and ask prices if no sales were reported, as quoted on such exchange or reported in The Wall Street Journal. The maximum number of shares a participant may purchase under the 2005 Purchase Plan is 300 shares per offering period.

A participant may discontinue his or her participation in the 2005 Purchase Plan at any time during an offering period, and participation ends automatically on termination of employment with Linear Technology.

In the event of any merger or “Change of Control,” as defined in the 2005 Purchase Plan, the successor corporation, or a parent or subsidiary of the successor corporation, may assume or substitute participation rights for each pending offering period under the 2005 Purchase Plan. In the event the successor corporation refuses to assume or substitute such offering periods, the committee overseeing the plan will shorten all offering periods then in progress by setting a new ending date, and all offering periods will end on the new ending date. The new ending date must be prior to the effective date of the merger or change of control. If the committee shortens any offering period then in progress, the committee will notify each participant prior to the new ending date that the ending date has been changed to the new date and that purchases under the 2005 Purchase Plan will occur automatically on that new date, unless the participant withdraws from the offering period.

2001 Non-Statutory Stock Option Plan

Linear Technology’s 2001 Non-Statutory Stock Option Plan (the “2001 Plan”) was adopted by the Linear Technology board of directors in fiscal 2001. The 2001 Plan provided for the granting of non-qualified stock options to employees and consultants. Linear Technology was not permitted to grant options under the 2001 Plan to directors or executive officers of Linear Technology.

The 2001 Plan permitted Linear Technology to grant non-qualified stock options in generally the same manner, and with generally the same terms as options under the 2010 Equity Incentive Plan.

The 2001 Plan also permitted Linear Technology to grant non-qualified stock options that were immediately exercisable by the participant at a nominal exercise price. The shares of common stock received upon exercise of these options were subject to reacquisition by Linear Technology upon the termination of the participant’s service with Linear Technology for any reason (including death or disability), which right lapsed in annual increments over a period of either three or five years, thus approximating restricted stock.

 

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In the event that Linear Technology merges with or into another corporation, or sells substantially all of Linear Technology’s assets, the 2001 Plan provides that each outstanding option will be assumed or substituted for by the successor corporation. If such substitution or assumption does not occur, each option will fully vest and become exercisable.

At the 2010 Annual Meeting, Linear Technology’s stockholders approved the 2010 Equity Incentive Plan to replace the 2001 Plan. As part of the adoption of the 2010 Equity Incentive Plan, all shares remaining available for future grant under the 2001 Plan at that time were transferred to the 2010 Equity Incentive Plan. No further options or rights have been or will be granted under the 2001 Plan.

Employment Agreements

In January 2002, Linear Technology entered into employment agreements with Mr. Swanson, Linear Technology’s current Executive Chairman and then Linear Technology’s Chief Executive Officer, and Mr. Dobkin, Linear Technology’s Chief Technical Officer. Amendments to the employment agreements were made in 2008 primarily to comply with Section 409A of the Code, which generally affect the timing, but not the amount, of compensation that could be received, the definition of certain payment triggers and other technical changes. On August 11, 2009, Linear Technology entered into an employment agreement with Linear Technology’s current Chief Executive Officer, Lothar Maier. On June 23, 2016, Linear Technology entered into Change of Control Severance Agreements with each of Mr. Zerio, Linear Technology’s current Chief Financial Officer, and Mr. Paulus, Linear Technology’s Vice President and General Manager of D Power Products. On July 25, 2016, Linear Technology and Mr. Dobkin amended Mr. Dobkin’s employment agreement to conform certain of the terms to those in the other executive officers’ Change of Control Severance Agreements in exchange for Mr. Dobkin agreeing to forfeit his right to receive a tax gross-up for excise taxes that may be imposed under Section 4999 of the Code as a result of receiving certain excess parachute payments within the meaning of Section 280G of the Code.

Employment Agreement with the Executive Chairman and Former Chief Executive Officer

Mr. Swanson’s employment agreement provided for an annual base salary of $345,000 at the time his agreement was entered into. Mr. Swanson’s annual base salary is subject to annual adjustments by the Compensation Committee, and has been subsequently increased to $506,000. Mr. Swanson’s base salary is prorated for each full day of service he performs as Executive Chairman of the Board. Mr. Swanson’s employment agreement also entitles him to bonuses pursuant to his participation in Linear Technology’s Executive Bonus Plan, or any successor bonus plan to such plan.

In January 2005, Mr. Swanson voluntarily resigned as Chief Executive Officer, but agreed, at the request of the Linear Technology board of directors, to remain as Executive Chairman of the Board with duties originally envisioned as requiring one to two days per week of Mr. Swanson’s time. Mr. Swanson’s duties have actually resulted in his spending approximately three to four days per week on Linear Technology matters. Pursuant to his employment agreement Mr. Swanson continues to receive his existing salary and bonus prorated based on the number of full days Mr. Swanson actually performs services as Executive Chairman during each fiscal year, although his bonus may not exceed 50% of the bonus he would have received for the relevant period if he were still the Chief Executive Officer.

If, prior to a Change of Control (as defined in his employment agreement), Mr. Swanson is terminated as Executive Chairman of the Board for any reason other than cause (as defined in his employment agreement) or if he resigns for Good Reason (as defined in his employment agreement), then all his unvested stock options and restricted stock will immediately vest, and he will receive continued payment of one year’s base salary and an annual target bonus payment (payable in equal installments over twelve months), determined without giving effect to the proration mentioned above. Instead, Mr. Swanson’s base salary and target bonus will be calculated as if Mr. Swanson had performed services on a full-time basis. Mr. Swanson’s target bonus will be calculated as

 

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the average of his previous four semi-annual bonus payments multiplied by two. In addition, Linear Technology will reimburse Mr. Swanson for premiums paid for continuing group health and dental plan continuation coverage until the earlier of eighteen months from his termination and such time as Mr. Swanson and his dependents are covered by similar plans of a new employer.

If there is a Change of Control of Linear Technology, and regardless of whether Mr. Swanson’s service is terminated, Mr. Swanson will receive payments and benefits similar to those he is entitled to receive if he is terminated other than for Cause or is terminated due to a voluntary termination for Good Reason. Upon a Change of Control, Mr. Swanson will receive immediate vesting in full of all his options and restricted stock and payment of one year’s salary and target bonuses but payable in a lump sum within five days after the Change of Control. In addition, upon any subsequent termination of his service, he will receive reimbursement for continued health coverage for up to eighteen months following such termination.

In the event that Mr. Swanson voluntarily terminates his employment for any reason, then Mr. Swanson will receive the same benefits as if such termination was a voluntary termination for Good Reason.

In April 2015, Linear Technology entered into an amendment to Mr. Swanson’s employment agreement to provide that if Mr. Swanson were to die or become disabled while still an employee of Linear Technology, he or his heirs would receive the same benefits that he is entitled to receive if he voluntarily terminates his employment prior to either such event occurring. The Linear Technology board of directors was concerned that Mr. Swanson’s employment agreement as previously written may have inadvertently provided him with an incentive to resign from Linear Technology earlier than he might otherwise. As the Board believes that Mr. Swanson possesses unique skills, talents, knowledge and experience that benefit Linear Technology, the Board determined that amending his agreement to remove this possible adverse incentive was in the best interests of Linear Technology and its stockholders. In connection with the amendment, Mr. Swanson informed Linear Technology that it was his intention to remain Executive Chairman and an employee of Linear Technology for the foreseeable future.

Linear Technology has a fractional ownership in two airplanes operated by NetJets, Inc. So long as Mr. Swanson is Executive Chairman of the Board, he is entitled to use Linear Technology’s airplanes for personal use for up to 35% of the available flight time in any year. To the extent use of the airplanes results in imputed taxable income to Mr. Swanson, Linear Technology will make additional payments to him, so that the net effect is the same as if no income were imputed to him.

If payments to Mr. Swanson under his employment agreement (together with any other payments or benefits Mr. Swanson receives) would trigger the excise tax provisions of Sections 280G and 4999 of the Code upon change of control of Linear Technology, Mr. Swanson will be paid an additional amount, so that he receives, net of the excise taxes, the amount he would otherwise have been entitled to receive in their absence. In August 2015, the Compensation Committee of the Board adopted a policy against future grants of “tax gross-up” rights in respect of golden parachute payments to any of Linear Technology’s senior executive officers. A copy of the policy is posted on Linear Technology’s website at www.linear.com.

 

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The following table describes the payments and/or benefits would owed by Linear Technology to Mr. Swanson upon termination of employment in the following situations as well as separately on a Change of Control. The table below does not include the potential tax gross-up that may be due upon a Change of Control.

 

Compensation and Benefits

   Voluntary
Resignation
     Termination
Without
Cause/Voluntary
Resignation for
Good Reason
     Change of Control
(no termination)
     Due to Death  

Base Salary

   $ 506,000       $ 506,000       $ 506,000       $ 506,000   

Annual Incentive

     2,370,000         2,370,000         2,370,000         2,370,000   

Equity Awards

           

•    Stock Options

     —           —           —           —     

•    Restricted Stock (1)

     7,672,520         7,672,520         7,672,520         7,672,520   

Health Care Benefits

     9,270         9,270         9,270         9,270   

 

  (1) The value of accelerated awards is based on a share price of $46.22 per share as of July 1, 2016 multiplied by the number of awards unvested as of July 3, 2016.  

Employment Agreement with the Chief Executive Officer

In August, 2009, Linear Technology entered into an Employment Agreement with its Chief Executive Officer, Lothar Maier. While employed by Linear Technology, Mr. Maier will receive a base salary at an annual rate of $405,000. The base salary will be reviewed annually by the Compensation Committee for possible adjustment and has been subsequently increased to $580,000.

If, at any time prior to a Change of Control (as defined in his employment agreement), Mr. Maier’s employment with Linear Technology terminates due to a voluntary termination for Good Reason (as defined in his employment agreement) or an involuntary termination by Linear Technology other than for Cause (as defined in his employment agreement), then, subject to Mr. Maier signing and not revoking a mutual release of claims with Linear Technology, and subject to Mr. Maier’s compliance with the provisions of the employment agreement (including continued compliance with the terms of the Confidential Information and Invention Assignment Agreement and a twelve-month non-solicit provision): (i) all of Mr. Maier’s Linear Technology stock options, restricted stock and other equity awards will immediately vest as to 75% of the then unvested amount of such awards, (ii) Mr. Maier will receive continued payment of severance pay for twelve months at a rate equal to his base salary as in effect on the date of termination, plus 100% of the average bonus paid to Mr. Maier for the two twelve-month bonus periods prior to the date of such termination (collectively, the “Severance Payment”), and (iii) if Mr. Maier elects continuation coverage pursuant to COBRA for himself and his covered dependents, Linear Technology will reimburse Mr. Maier for the COBRA premiums for such coverage for the lesser of (A) eighteen months, or (B) the date upon which Mr. Maier and his covered dependents are covered by similar plans of Mr. Maier’s new employer.

If Mr. Maier’s employment terminates and such termination is due to a voluntary termination (other than for Good Reason), for Cause, or due to Mr. Maier’s Disability (as defined in his employment agreement), then (i) all payments of compensation to Mr. Maier will terminate (except as to amounts already earned), and (ii) all vesting of Mr. Maier’s Linear Technology stock options, restricted stock and other equity awards will terminate immediately. If Mr. Maier’s employment terminates due to his death, then (i) all payments of compensation to Mr. Maier will terminate (except as to amounts already earned), and (ii) all vesting of Mr. Maier’s Linear Technology stock options, restricted stock and other equity awards will immediately accelerate as to 50% of the then unvested portion of such awards, and all subsequent vesting of Mr. Maier’s stock options, restricted stock and other equity awards will terminate immediately.

In the event of a Change of Control, and regardless of whether Mr. Maier’s employment is terminated, Mr. Maier will receive the same payment and benefits as if Mr. Maier were terminated due to a voluntary termination for Good Reason or an involuntary termination by Linear Technology other than for Cause described above, except

 

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that the Severance Payment will be paid in a lump-sum within five days following the Change of Control and the COBRA coverage will be extended to Mr. Maier upon any subsequent termination of his employment, regardless if such termination is for Cause or for Good Reason. If Mr. Maier’s tenure as Linear Technology’s Chief Executive Officer terminates following a Change of Control, Mr. Maier will not be entitled to any additional compensation (except as to amounts already earned and the benefits due).

The following table describes the payments and/or benefits would owed by Linear Technology to Mr. Maier upon termination of employment in the following situations as well as separately upon a Change of Control.

 

Compensation and Benefits

   Voluntary
Resignation
     Termination
Without Cause /
Voluntary
Resignation for
Good Reason
     Change of Control
(no termination)
     Due to Death  

Base Salary

     —         $ 580,000       $ 580,000       $ —     

Annual Incentive

     —           1,770,000         1,770,000         —     

Equity Awards

           

•    Stock Options

     —           —           —           —     

•    Restricted Stock (1)

     —           5,546,400         5,546,400         3,697,600   

Health Care Benefits

     —           9,270         9,270         —     

 

  (1) The value of accelerated awards is based on a share price of $46.22 per share as of July 1, 2016 multiplied by the number of awards unvested as of July 3, 2016.  

Employment Agreement with Chief Technical Officer

The employment agreement with Mr. Dobkin, Linear Technology’s Vice President of Engineering and Chief Technical Officer, originally provided for an annual base salary of $280,000 at the time the agreement was entered into. Mr. Dobkin’s annual base salary is subject to annual adjustment by the Compensation Committee, and has been subsequently increased to $438,521. He is also entitled to bonuses pursuant to Linear Technology’s Executive Bonus Plan. On July 25, 2016, Linear Technology entered into an amendment to Mr. Dobkin’s employment agreement to conform certain of the terms to those in the other executive officers’ Change of Control Severance Agreements in exchange for Mr. Dobkin agreeing to forfeit his right to receive a tax gross-up for excise taxes imposed under Section 4999 of the Code as a result of receiving certain excess parachute payments within the meaning of Section 280G of the Code.

If, at any time prior to a Change of Control (as defined in his employment agreement), Mr. Dobkin’s employment is involuntarily terminated by Linear Technology other than for Cause (as defined in his employment agreement), or Mr. Dobkin voluntarily terminates his employment for Good Reason (as defined in his employment agreement), then, subject to Mr. Dobkin signing and not revoking a mutual release of claims with Linear Technology, and subject to Mr. Dobkin’s compliance with the provisions of the employment agreement (including continued compliance with the six-month non-compete and non-solicit provisions): (i) Mr. Dobkin will receive continued payments of six month’s base salary plus 50% of his Bonus Amount (as defined in his employment agreement, and generally meaning the greater of (A) the average Performance Bonus (as defined in his employment agreement) earned by Mr. Dobkin for the bonus periods ending during the 24-month period ending on the last day of the last bonus period completed on or prior to the date of such termination and (B) Mr. Dobkin’s annualized target Performance Bonus opportunity for the bonus period in effect at the time of Mr. Dobkin’s termination), (ii) Mr. Dobkin’s Linear Technology stock options, restricted stock and other equity awards will immediately vest and become exercisable (if applicable) to the extent they would have vested under the terms of his award agreements had he remained employed by Linear Technology for an additional six months, and, in the case of equity awards with performance-based vesting, all performance goals and other vesting criteria will be treated as set forth in the agreement governing the applicable equity award, and (iii) if Mr. Dobkin elects continuation coverage pursuant to COBRA for himself and his covered dependents, Linear Technology will reimburse Mr. Dobkin for the COBRA premiums for such coverage until the earlier of (A) six

 

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months from his termination, (B) such time as he and his dependents are covered by similar plans of a new employer or (C) the date Mr. Dobkin is no longer eligible for COBRA. If Linear Technology determines that it cannot pay Mr. Dobkin’s COBRA premiums without potentially violating applicable law, Linear Technology will in lieu thereof provide to Mr. Dobkin a taxable lump-sum payment in an amount equal to the premium for the first month of COBRA coverage multiplied by six).

If, on or after a Change of Control and during the 24 months following a Change of Control, Mr. Dobkin’s employment is involuntarily terminated by Linear Technology other than for Cause, or Mr. Dobkin voluntarily terminates his employment for Good Reason, then, subject to Mr. Dobkin signing and not revoking a mutual release of claims with Linear Technology, and subject to Mr. Dobkin’s compliance with the provisions of the employment agreement (including continued compliance with the twelve-month non-compete and non-solicit provisions): (i) Mr. Dobkin will receive continued payments of twelve month’s base salary plus 100% of his Bonus Amount (as defined in his employment agreement, and generally meaning the greatest of (A) the average Performance Bonus earned by Mr. Dobkin for the bonus periods ending during the 24-month period ending on the last day of the last bonus period completed on or prior to the date of such termination, (B) the average Performance Bonus earned by Mr. Dobkin for the bonus periods ending during the 24-month period ending on the last day of the last bonus period completed on or prior to the Change of Control, and (C) Mr. Dobkin’s annualized target Performance Bonus opportunity for the bonus period in effect at the time of Mr. Dobkin’s termination, (ii) Mr. Dobkin’s Linear Technology stock options, restricted stock and other equity awards will immediately vest and become exercisable (if applicable) as to 75% of the then unvested amount of such awards, and, in the case of equity awards with performance-based vesting, all performance goals and other vesting criteria will be treated as set forth in the agreement governing the applicable equity award, and (iii) if Mr. Dobkin elects continuation coverage pursuant to COBRA for himself and his covered dependents, Linear Technology will reimburse Mr. Dobkin for the COBRA premiums for such coverage until the earlier of (A) twelve months from his termination, (B) such time as he and his dependents are covered by similar plans of a new employer or (C) the date Mr. Dobkin is no longer eligible for COBRA. If Linear Technology determines that it cannot pay Mr. Dobkin’s COBRA premiums without potentially violating applicable law, Linear Technology will in lieu thereof provide to Mr. Dobkin a taxable lump-sum payment in an amount equal to the premium for the first month of COBRA coverage multiplied by twelve).

If, on or after a Change of Control and following the 24-month period following a Change of Control, Mr. Dobkin’s employment is involuntarily terminated for any reason other than Cause, or Mr. Dobkin voluntarily terminates his employment for Good Reason, then, subject to Mr. Dobkin signing and not revoking a mutual release of claims with Linear Technology, and subject to Mr. Dobkin’s compliance with the provisions of the employment agreement (including continued compliance with the twelve-month non-compete and non-solicit provisions): (i) Mr. Dobkin will receive continued payments of twelve month’s base salary plus 50% of his Bonus Amount (as defined in his employment agreement, and generally meaning the greatest of (A) the average Performance Bonus earned by Mr. Dobkin for the bonus periods ending during the 24-month period ending on the last day of the last bonus period completed on or prior to the date of such termination, (B) the average Performance Bonus earned by Mr. Dobkin for the bonus periods ending during the 24-month period ending on the last day of the last bonus period completed on or prior to the Change of Control, and (C) Mr. Dobkin’s annualized target Performance Bonus opportunity for the bonus period in effect at the time of Mr. Dobkin’s termination, (ii) Mr. Dobkin’s Linear Technology stock options, restricted stock and other equity awards will immediately vest and become exercisable (if applicable) as to 50% of the then unvested amount of such awards, and, in the case of equity awards with performance-based vesting, all performance goals and other vesting criteria will be treated as set forth in the agreement governing the applicable equity award, and (iii) if Mr. Dobkin elects continuation coverage pursuant to COBRA for himself and his covered dependents, Linear Technology will reimburse Mr. Dobkin for the COBRA premiums for such coverage until the earlier of (A) twelve months from his termination, (B) such time as he and his dependents are covered by similar plans of a new employer or (C) the date Mr. Dobkin is no longer eligible for COBRA. If Linear Technology determines that it cannot pay the Mr. Dobkin’s COBRA premiums without potentially violating applicable law, Linear Technology will in lieu thereof provide to Mr. Dobkin a taxable lump-sum payment in an amount equal to the premium for the first month of COBRA coverage multiplied by twelve).

 

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If Mr. Dobkin should die while employed by Linear Technology, 50% of his then unvested restricted stock, options and other equity awards will vest immediately.

In the event any of the amounts provided for under Mr. Dobkin’s employment agreement or otherwise payable to Mr. Dobkin would constitute “parachute payments” within the meaning of Section 280G of the Code and would be subject to the related excise tax, Mr. Dobkin would be entitled to receive either full payment of benefits under his employment agreement or such lesser amount that would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to Mr. Dobkin. As amended, the employment agreement does not require Linear Technology to provide any tax gross-up payments.

The following table describes the payments and/or benefits would be owed by Linear Technology to Mr. Dobkin upon termination of employment in the following situations and for the following reasons.

 

Compensation and Benefits

   Voluntary
Resignation
     Termination
Without
Cause/Voluntary
Resignation for
Good Reason
     Termination
During the
24 Months
Following a
Change
of Control
     Termination
After the 24
Months
Following a
Change
of Control
     Due to Death  

Base Salary

     —         $ 219,261       $ 438,522       $ 438,522       $ —     

Annual Incentive

     —           390,000         780,000         390,000         —     

Equity Awards

              

•      Stock Options

     —           —           —           —           —     

•      Restricted Stock (1)

     —           369,760         2,010,570         1,340,380         1,340,380   

Health Care Benefits

     —           3,090         6,180         6,180         —     

 

(1) The value of accelerated awards is based on a share price of $46.22 per share as of July 1, 2016 multiplied by the number of awards unvested as of July 3, 2016.

Change of Control Severance Agreement with Chief Financial Officer

On June 23, 2016, Linear Technology entered into a Change of Control Severance Agreement with .Mr. Zerio, Linear Technology’s Vice President, Finance and Chief Financial Officer. The Change of Control Severance Agreement has a three-year term and any obligations of Linear Technology will lapse upon the completion of the term.

If, within 24 months following a Change of Control (as defined in his Change of Control Severance Agreement), Linear Technology terminates Mr. Zerio’s employment with Linear Technology without Cause (as defined in his Change of Control Severance Agreement) and not by reason of Mr. Zerio’s death or Disability (as defined in his Change of Control Severance Agreement), or Mr. Zerio voluntarily terminates his employment for Good Reason (as defined in his Change of Control Severance Agreement), then, subject to Mr. Zerio signing and not revoking a release of claims with Linear Technology, and subject to Mr. Zerio’s compliance with the provisions of the Change of Control Severance Agreement (including continued compliance with the terms of the Confidential Information and Invention Assignment Agreement): (i) Mr. Zerio will receive a lump-sum payment equal to 100% of his annual base salary, plus 100% of the his Bonus Amount (as defined in his Change of Control Severance Agreement, and generally meaning the greatest of (A) the average Performance Bonus (as defined the Change of Control Severance Agreement) earned by Mr. Zerio for the bonus periods ending during the 24-month period ending on the last day of the last bonus period completed on or prior to the date of such termination, (B) the average Performance Bonus earned by Mr. Zerio for the bonus periods ending during the 24-month period ending on the last day of the last bonus period completed on or prior to the Change of Control, and (C) Mr. Zerio’s annualized target Performance Bonus opportunity for the bonus period in effect at the time of Mr. Zerio’s termination, (ii) Mr. Zerio’s Linear Technology stock options, restricted stock and other equity awards will immediately vest and become exercisable (if applicable) as to 75% of the then unvested amount of such awards, and, in the case of equity awards with performance-based vesting, all performance goals and other

 

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vesting criteria will be treated as set forth in the agreement governing the applicable equity award, and (iii) if Mr. Zerio elects continuation coverage pursuant to COBRA for himself and his covered dependents, Linear Technology will reimburse Mr. Zerio for the COBRA premiums for such coverage until the earlier of (A) twelve months from his termination, (B) such time as he and his dependents are covered by similar plans of a new employer or (C) the date Mr. Zerio is no longer eligible for COBRA. If Linear Technology determines that it cannot pay Mr. Zerio’s COBRA premiums without potentially violating applicable law, Linear Technology will in lieu thereof provide to Mr. Zerio a taxable lump-sum payment in an amount equal to the premium for the first month of COBRA coverage multiplied by twelve).

In the event any of the amounts provided for under Mr. Zerio’s Change of Control Severance Agreement or otherwise payable to Mr. Zerio would constitute “parachute payments” within the meaning of Section 280G of the Code and would be subject to the related excise tax, Mr. Zerio would be entitled to receive either full payment of benefits under his Change of Control Severance Agreement or such lesser amount that would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to Mr. Zerio. Mr. Zerio’s Change of Control Severance Agreement does not require Linear Technology to provide any tax gross-up payments.

The following table describes the payments and/or benefits would be owed by Linear Technology to Mr. Zerio upon termination of employment in the following situations and for the following reasons.

 

Compensation and Benefits

   Voluntary
Resignation
     Termination
Without
Cause/Voluntary
Resignation for
Good Reason
     Change of Control      Due to Death  

Base Salary

     —         $ 300,456       $ 300,456       $ —     

Annual Incentive

     —           450,000         450,000         —     

Equity Awards

           

•    Stock Options

     —           —           —           —     

•    Restricted Stock (1)

     —           1,289,538         1,289,538         —     

Health Care Benefits

     —           1,290         1,290         —     

 

  (1) The value of accelerated awards is based on a share price of $46.22 per share as of July 1, 2016 multiplied by the number of awards unvested as of July 3, 2016.  

Change of Control Severance Agreement with Vice President and General Manager of D Power Products

On June 23, 2016, Linear Technology entered into a Change of Control Severance Agreement with .Mr. Paulus, Linear Technology’s Vice President and General Manager of D Power Products. The Change of Control Severance Agreement has a three-year term and any obligations of Linear Technology will lapse upon the completion of the term.

If, within 24 months following a Change of Control (as defined in his Change of Control Severance Agreement), Linear Technology terminates Mr. Paulus’s employment with Linear Technology without Cause (as defined in his Change of Control Severance Agreement) and not by reason of Mr. Paulus’s death or Disability (as defined in his Change of Control Severance Agreement), or Mr. Paulus voluntarily terminates his employment for Good Reason (as defined in his Change of Control Severance Agreement), then, subject to Mr. Paulus signing and not revoking a release of claims with Linear Technology, and subject to Mr. Paulus’s compliance with the provisions of the Change of Control Severance Agreement (including continued compliance with the terms of the Confidential Information and Invention Assignment Agreement): (i) Mr. Paulus will receive a lump-sum payment equal to 100% of his annual base salary, plus 100% of the his Bonus Amount (as defined in his Change of Control Severance Agreement, and generally meaning the greatest of (A) the average Performance Bonus (as defined the Change of Control Severance Agreement) earned by Mr. Paulus for the bonus periods ending during the 24-month period ending on the last day of the last bonus period completed on or prior to the date of such

 

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termination, (B) the average Performance Bonus earned by Mr. Paulus for the bonus periods ending during the 24-month period ending on the last day of the last bonus period completed on or prior to the Change of Control, and (C) Mr. Paulus’s annualized target Performance Bonus opportunity for the bonus period in effect at the time of Mr. Paulus’s termination, (ii) Mr. Paulus’s Linear Technology stock options, restricted stock and other equity awards will immediately vest and become exercisable (if applicable) as to 75% of the then unvested amount of such awards, and, in the case of equity awards with performance-based vesting, all performance goals and other vesting criteria will be treated as set forth in the agreement governing the applicable equity award, and (iii) if Mr. Paulus elects continuation coverage pursuant to COBRA for himself and his covered dependents, Linear Technology will reimburse Mr. Paulus for the COBRA premiums for such coverage until the earlier of (A) twelve months from his termination, (B) such time as he and his dependents are covered by similar plans of a new employer or (C) the date Mr. Paulus is no longer eligible for COBRA. If Linear Technology determines that it cannot pay Mr. Paulus’s COBRA premiums without potentially violating applicable law, Linear Technology will in lieu thereof provide to Mr. Paulus a taxable lump-sum payment in an amount equal to the premium for the first month of COBRA coverage multiplied by twelve).

In the event any of the amounts provided for under Mr. Paulus’s Change of Control Severance Agreement or otherwise payable to Mr. Paulus would constitute “parachute payments” within the meaning of Section 280G of the Code and would be subject to the related excise tax, Mr. Paulus would be entitled to receive either full payment of benefits under his Change of Control Severance Agreement or such lesser amount that would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to Mr. Paulus. Mr. Paulus’s Change of Control Severance Agreement does not require Linear Technology to provide any tax gross-up payments.

The following table describes the payments and/or benefits would be owed by Linear Technology to Mr. Paulus upon termination of employment in the following situations and for the following reasons.

 

Compensation and Benefits

   Voluntary
Resignation
     Termination
Without
Cause/Voluntary
Resignation for
Good Reason
     Change of Control      Due to Death  

Base Salary

     —         $ 334,112       $ 334,112       $ —     

Annual Incentive

     —           685,500         685,500         —     

Equity Awards

           

•    Stock Options

     —           —           —           —     

•    Restricted Stock (1)

     —           2,010,570         2,010,570         —     

Health Care Benefits

     —           1,290         1,290         —     

 

  (1) The value of accelerated awards is based on a share price of $46.22 per share as of July 1, 2016 multiplied by the number of awards unvested as of July 3, 2016.  

Compensation Committee Interlocks and Insider Participation

No executive officer of Linear Technology served on the compensation committee of another entity or on any other committee of the Linear Technology board of directors of another entity performing similar functions during the last fiscal year.

TRANSACTIONS WITH RELATED PERSONS

In accordance with the Code of Business Conduct and Ethics and the charter for the Audit Committee of the Linear Technology board of directors, the Audit Committee reviews and approves in advance in writing any proposed related person transactions. Significant related person transactions, as determined by the Audit Committee, must be reviewed and approved in writing in advance by Linear Technology’s board of directors.

 

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Any such related person transaction will be disclosed in the applicable SEC filing to the extent required by the rules of the SEC. For purposes of these procedures, “related person” and “transaction” have the meanings contained in Item 404 of Regulation S-K.

Linear Technology has entered into change of control agreements with four of its Named Executive Officers. These are discussed in the section titled “Executive Compensation—Employment Agreements” beginning on page 82.

Linear Technology has entered into agreements to indemnify its directors and officers, in addition to the indemnification provided for in Linear Technology’s certificate of incorporation and Bylaws. These agreements, among other things, provide for indemnification of Linear Technology’s directors and executive officers and reimbursement of many expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by such persons in any action or proceeding, including any action by or in the right of Linear Technology, arising out of such person’s services as a director or officer of Linear Technology, any subsidiary of Linear Technology or any other company or enterprise to which the person provided services at Linear Technology’s request.

 

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SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Linear Technology’s officers and directors, and persons who own more than ten percent of Linear Technology’s common stock, to file reports of ownership on Form 3 and of changes in ownership on Forms 4 or 5 with the SEC and the Financial Industry Regulatory Authority (“FINRA”). Executive officers, directors and ten percent stockholders are also required by SEC rules to furnish Linear Technology with copies of all Section 16(a) forms they file.

Linear Technology reviews copies of any such forms it receives, as well as written representations from reporting persons that no Forms 5 were required for such persons. Based solely upon this review, Linear Technology believes that its executive officers, directors and ten percent stockholders complied with all applicable Section 16(a) filing requirements during the fiscal year ended July 3, 2016.

 

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AUDIT COMMITTEE REPORT

The following is the Audit Committee’s report submitted to the Linear Technology board of directors for the fiscal year ended July 3, 2016:

The Audit Committee of the Linear Technology board of directors has:

 

    reviewed and discussed Linear Technology’s audited financial statements for the fiscal year ended July 3, 2016 with Linear Technology’s management;

 

    reviewed and discussed with Ernst & Young LLP, Linear Technology’s independent registered public accounting firm, the materials required to be discussed by Statement of Auditing Standard 114, “The Auditor’s Communication With Those Charged With Governance.”; and

 

    reviewed the written disclosures and the letter from Ernst & Young LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence and discussed with Ernst & Young LLP its independence.

Based on the Audit Committee’s review of the matters noted above and its discussions with Linear Technology’s independent registered public accounting firm and Linear Technology’s management, the Audit Committee has recommended to the Linear Technology board of directors that Linear Technology’s financial statements for the fiscal year ended July 3, 2016 be included in Linear Technology’s 2016 Annual Report on Form 10-K.

The Audit Committee and the Board also have recommended, subject to stockholder ratification, the selection of Ernst & Young LLP as Linear Technology’s independent registered public accounting firm for the fiscal year ending July 2, 2017.

Respectfully submitted by:

THE AUDIT COMMITTEE

Thomas S. Volpe, Chairman

David S. Lee

Richard M. Moley

John J. Gordon

 

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PROPOSAL 6: THE ADJOURNMENT PROPOSAL

Linear Technology stockholders are being asked to approve the adjournment of the annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the merger proposal at the time of the annual meeting.

If this proposal is approved, under the merger agreement the annual meeting may be adjourned (i) to any date that is within 20 business days of the date on which the Linear Technology annual meeting was originally scheduled (or any later date to which such date may be extended pursuant to the provisions in the merger agreement described under “The Merger Agreement—Termination of the Merger Agreement” beginning on page 155) or (ii) with the prior written consent of Analog Devices, to any other date.

If the annual meeting is so adjourned, Linear Technology stockholders, who have already submitted their proxies, will be able to revoke them at any time prior to their use. If you sign and return a proxy and do not indicate how you wish to vote on any proposal, or if you indicate that you wish to vote in favor of the merger proposal but do not indicate a choice on the adjournment proposal, your shares of Linear Technology common stock will be voted in favor of the adjournment proposal. If you indicate, however, that you wish to vote against the merger proposal, your shares of Linear Technology common stock will only be voted in favor of the adjournment proposal if you indicate that you wish to vote in favor of that proposal.

The affirmative vote of holders of a majority of the shares of Linear Technology common stock present in person or represented by proxy and entitled to vote on the adjournment proposal at the annual meeting is required to approve the adjournment proposal.

THE LINEAR TECHNOLOGY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT LINEAR TECHNOLOGY STOCKHOLDERS VOTE “FOR” THE ADJOURNMENT PROPOSAL.

 

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THE MERGER

This section of the proxy statement/prospectus describes the material aspects of the proposed merger. This section may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus, including the full text of the merger agreement, a copy of which is attached to this proxy statement/prospectus as Annex A, for a more complete understanding of the proposed merger. In addition, important business and financial information about each of Analog Devices and Linear Technology is included in or incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 199.

Per Share Merger Consideration

The merger agreement provides that, subject to the terms and conditions of the merger agreement, Merger Sub will be merged with and into Linear Technology, with Linear Technology surviving the merger as a wholly owned subsidiary of Analog Devices. Upon completion of the merger, each issued and outstanding share of Linear Technology common stock (other than shares (i) held in treasury by Linear Technology or owned by Analog Devices or Merger Sub (which will be cancelled), (ii) owned by any direct or indirect wholly owned subsidiary of Linear Technology or Analog Devices (other than Merger Sub) (which will be converted into shares of the surviving company), (iii) owned by stockholders that have validly made a demand for appraisal and not validly withdrawn such demand or otherwise lost their rights of appraisal with respect to such shares pursuant to Section 262 of the DGCL, or (iv) underlying Linear Technology restricted stock awards) will be converted into the right to receive $46.00 in cash, without interest, plus 0.2321 shares of Analog Devices common stock, less any applicable withholding taxes. If the aggregate number of shares of Analog Devices common stock to be issued to holders of Linear Technology common stock under the merger agreement would exceed 19.9% of the issued and outstanding shares of Analog Devices common stock as of the closing of the merger, then the number of shares of Analog Devices common stock to be issued will be reduced to the minimum extent necessary such that the number of shares of Analog Devices common stock issuable pursuant to the merger agreement equals 19.9% of the issued and outstanding shares of Analog Devices common stock, and, in such event, each holder of a share of Linear Technology common stock will be entitled to receive an additional cash payment in an amount equal to the amount by which the exchange ratio is reduced multiplied by $60.3215 (rounded down to the nearest one-hundredth of a cent).

Based on the number of shares of Linear Technology common stock outstanding as of September 12, 2016, Analog Devices would issue approximately 57 million shares of Analog Devices common stock to Linear Technology stockholders pursuant to the merger. The actual number of shares of Analog Devices common stock to be issued pursuant to the merger will be determined at completion of the merger based on the exchange ratio and the number of shares of Linear Technology common stock outstanding at such time. Based on the number of shares of Linear Technology common stock outstanding as of September 12, 2016, and the number of shares of Analog Devices common stock outstanding as of September 12, 2016, immediately after completion of the merger, former Linear Technology stockholders would own approximately 15.6% of the outstanding shares of Analog Devices common stock.

Based on the closing stock price of Analog Devices common stock on September 12, 2016, the most recent practicable date prior to the date of this proxy statement/prospectus, the per share value of Linear Technology common stock implied by the per share merger consideration is $60.07. The implied value of the per share merger consideration will fluctuate, however, as the market price of Analog Devices common stock fluctuates because a portion of the per share merger consideration is payable in a fixed number of shares of Analog Devices common stock. As a result, the value of the per share merger consideration that Linear Technology stockholders will receive upon completion of the merger could be greater than, less than or the same as the value of the merger consideration on the date of this proxy statement/prospectus or at the time of the Linear Technology annual meeting. Accordingly, Linear Technology and Analog Devices encourage you to obtain current stock price

 

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quotations for Analog Devices common stock and Linear Technology common stock before deciding how to vote with respect to approval of the merger proposal.

Background of the Merger

The Linear Technology board of directors regularly reviews and assesses Linear Technology’s performance, risks, opportunities and strategy. Additionally, the Linear Technology board of directors and management periodically review and evaluate industry developments and strategic opportunities and alternatives available to Linear Technology as part of Linear Technology’s efforts to strengthen its business and enhance value for its stockholders. Opportunities and alternatives considered at times by the Linear Technology board of directors and management included, among other things, potential acquisitions of other companies, share repurchases (including a $3.0 billion repurchase of common stock pursuant to an accelerated stock repurchase transaction in 2007 and stock repurchase programs authorized in October 2012 and October 2014), and other strategic transactions.

In July 2015, Mr. Vincent Roche (Analog Devices’ Chief Executive Officer) and Mr. Robert Swanson (Linear Technology’s Executive Chairman and founder) spoke by telephone at the request of Mr. Roche. In their conversation, Mr. Roche raised the topic of a potential combination of Linear Technology and Analog Devices and outlined his thoughts for Mr. Swanson regarding the potential benefits of such a combination.

On August 13, 2015, Mr. Roche followed up with Mr. Swanson, indicating that he and the Analog Devices board of directors remained enthusiastic about combining the two companies. Mr. Roche indicated that he intended to send Mr. Swanson a confidential proposal outlining a potential transaction but that if Mr. Swanson and the rest of the Linear Technology board of directors were not in favor of the concept, Analog Devices would not pursue the matter further. Mr. Roche also stated that the proposal would be confidential and that Analog Devices had no intention to disclose publicly its desire to discuss a strategic transaction with Linear Technology. Mr. Swanson responded to Mr. Roche the same day, informing Mr. Roche that he would need to discuss the matter with the Linear Technology board of directors, and that he would start doing so the next day.

On August 14, 2015, Mr. Roche sent to Mr. Swanson the unsolicited proposal he had referred to in his previous communication, which presented Analog Devices’ non-binding indication of interest in acquiring Linear Technology (referred to in this proxy statement/prospectus as the August 14 Analog Proposal). The August 14 Analog Proposal stated that Analog Devices would pay a premium of approximately 25% to the then-current market price for each outstanding share of Linear Technology common stock. The August 14 Analog Proposal provided that the consideration for the acquisition would comprise Analog Devices common stock representing approximately 75% of the total consideration and cash representing approximately 25% of the total consideration. The August 14 Analog Proposal valued Linear Technology at approximately $51.50 per share of Linear Technology common stock based on the $59.00 per share closing trading price of Analog Devices common stock on August 13, 2015. Mr. Swanson consulted with Wilson Sonsini Goodrich & Rosati, Linear Technology’s regular outside legal counsel (referred to in this proxy statement/prospectus as WSGR) and forwarded the August 14 Analog Proposal to the entire Linear Technology board of directors. A meeting of the Linear Technology board of directors was scheduled for August 18, 2015 to discuss the August 14 Analog Proposal.

On August 18, 2015, the Linear Technology board of directors met to consider the August 14 Analog Proposal. Linear Technology management and representatives of WSGR reviewed the terms of the August 14 Analog Proposal, and the WSGR representatives reviewed with the Linear Technology board of directors its fiduciary duties in considering the August 14 Analog Proposal. The Linear Technology board of directors determined to obtain further information about the August 14 Analog Proposal, including Linear Technology’s prospects if it remained a stand-alone independent company and the potential benefits and challenges associated with a strategic combination with Analog Devices in which a significant majority of the merger consideration

 

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Linear Technology stockholders would receive would be in the form of Analog Devices common stock. The Linear Technology board of directors instructed management to prepare this information for presentation at a future meeting.

On August 31, 2015, the Linear Technology board of directors held a meeting to further discuss the August 14 Analog Proposal. At the meeting, representatives of WSGR again reviewed with the Linear Technology directors their fiduciary duties in considering and responding to the August 14 Analog Proposal. Linear Technology’s management presented to the Linear Technology board of directors an overview of Linear Technology’s potential financial prospects and an assessment of the potential benefits and risks associated with a transaction with Analog Devices. The Linear Technology board of directors weighed the information and outlook presented by management with respect to the proposed transaction, the consolidation trends in the analog semiconductor industry, the possible challenges associated with completing the proposed transaction and various potential options available in order to maximize value for Linear Technology stockholders. The Linear Technology board of directors then determined to further consider the August 14 Analog Proposal at a future meeting.

On September 4, 2015, the Linear Technology board of directors held a meeting to further discuss the August 14 Analog Proposal. At the conclusion of the meeting, the Linear Technology board of directors determined, based on their collective experience and judgment, that Analog Devices’ offer substantially undervalued Linear Technology, that the ratio of the consideration between shares of Analog Devices common stock and cash was not desirable and that completion of a possible transaction was subject to significant operational risks and uncertainty, including that it would require the approval of Analog Devices’ stockholders, and was therefore not in the best interests of Linear Technology’s stockholders at such time. The Linear Technology board of directors further determined that the execution of Linear Technology’s then-current strategic plan could deliver greater long-term value to Linear Technology’s stockholders than the transaction contemplated by the August 14 Analog Proposal. The Linear Technology board of directors directed Mr. Swanson to communicate the decision of the Linear Technology board of directors to Analog Devices.

On September 14, 2015, Mr. Swanson sent Mr. Roche an acknowledgement that Linear Technology had received the August 14 Analog Proposal, stating that, after careful review of the proposal and consultation with Linear Technology’s legal advisors, the Linear Technology board of directors had unanimously concluded that it was not in the best interests of Linear Technology’s stockholders to pursue Analog Devices’ proposal at that time.

Following the September 14, 2015 communication from Mr. Swanson and until March 2016, Analog Devices did not make any additional proposals to acquire Linear Technology, and there was no contact between the companies regarding a potential combination.

On March 23, 2016, Mr. Roche communicated to Mr. Swanson that he was continuing to review strategic alternatives for Analog Devices with the Analog Devices board of directors, and as part of that ongoing review, representatives of Analog Devices would like to schedule a meeting to discuss a possible combination of Analog Devices with Linear Technology. The two executives exchanged further communications over the next 10 days regarding a possible meeting, but without substantive discussions.

On April 5, 2016, Analog Devices submitted to the Linear Technology board of directors a non-binding indication of interest in acquiring Linear Technology for $58.00 per share payable in a combination of cash and shares of Analog Devices common stock (referred to in this proxy statement/prospectus as the April 5 Analog Proposal). The April 5 Analog Proposal indicated that it represented a 37% premium to Linear Technology’s year-to-date average stock price and stated Analog Devices’ belief that it would deliver greater value to Linear Technology’s stockholders than Linear Technology could deliver if it remained an independent company. The April 5 Analog Proposal indicated that the consideration for the acquisition would comprise approximately 75% cash and 25% Analog Devices common stock, and that the total number of shares of Analog Devices stock to be

 

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issued in connection with the proposed acquisition would not exceed 19.9% of Analog Devices outstanding shares of common stock, the threshold above which Analog Devices would be required to obtain stockholder approval as a condition to its ability to complete the transaction.

On April 13, 2016, members of the Linear Technology board of directors met, together with representatives of Qatalyst Partners, which representatives were known to members of the Linear Technology board of directors, because of Qatalyst Partners’ reputation as an independent financial advisor and as a financial advisor to companies in the semiconductor industry, to review the process for evaluating the April 5 Analog Proposal. At that same meeting, the Linear Technology board of directors also decided to engage Qatalyst Partners as Linear Technology’s financial advisor based on Qatalyst Partners’ experience and reputation, subject to negotiation of a mutually acceptable engagement letter.

On April 18, 2016, Linear Technology engaged Jones Day as its outside legal counsel in connection with the strategic review process. Later that same day, the Linear Technology board of directors held a regularly scheduled meeting at which it discussed and evaluated the April 5 Analog Proposal. Representatives from Jones Day reviewed with the Linear Technology board of directors its fiduciary duties in connection with evaluating and responding to the April 5 Analog Proposal, including determining whether to contact other companies that might be interested in a strategic transaction with Linear Technology. Representatives of Qatalyst Partners discussed with the Linear Technology board of directors the financial terms of the April 5 Analog Proposal and a proposed timeline for reviewing the April 5 Analog Proposal, including a plan for management to prepare a financial forecast to be reviewed and approved by the board at a future meeting. Representatives of Qatalyst Partners also discussed with the Linear Technology board of directors certain other parties that could potentially be interested in pursuing a possible strategic transaction with Linear Technology. After considering the increase in overall value contained in the April 5 Proposal compared to the August 14 Proposal, that a majority of the consideration would be paid in cash rather than shares of Analog Devices common stock, and that the transaction contemplated by the April 5 Analog Proposal would not require the approval of Analog Devices’ stockholders, the Linear Technology board of directors instructed representatives of Qatalyst Partners to contact Analog Devices to obtain additional information regarding the April 5 Analog Proposal. The Linear Technology board of directors discussed with representatives of Qatalyst Partners other companies in Linear Technology’s industry that could have an interest and sufficient financial resources to acquire Linear Technologies. The Linear Technology board of directors evaluated, with input from representatives of Qatalyst Partners, various companies that would potentially be interested in, and possessed the ability to enter into, a possible strategic transaction with Linear Technology and determined that a certain company that competes in Linear Technology’s industry (referred to in this proxy statement/prospectus as Company A) would be the most likely candidate given that it had the best combination of potential interest in acquiring Linear Technology and financial ability to do so. The Linear Technology board of directors then instructed representatives of Qatalyst Partners to contact Company A to determine whether Company A had any interest in pursuing a possible strategic transaction with Linear Technology.

On April 19, 2016, the Linear Technology board of directors reconvened its regularly scheduled meeting. At this meeting, the Linear Technology board of directors continued its discussion of the April 5 Analog Proposal, including the potentially disruptive or destabilizing effects that investigating or pursuing such a proposal could have on key employees of Linear Technology who would become aware of the proposal because their assistance would be required in order to reach a definitive agreement. The Linear Technology board of directors further discussed possible actions that might be taken to incentivize these key employees to continue their service with Linear Technology.

Later in the day, representatives of Qatalyst Partners contacted Company A and spoke with Company A’s chief financial officer, who indicated that representatives of Company A would be interested in speaking with Mr. Swanson.

On April 25, 2016, the Linear Technology board of directors held a special meeting. At the meeting, Mr. Don Zerio (Linear Technology’s Chief Financial Officer) presented to the Linear Technology board of

 

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directors a forward-looking financial operating plan for Linear Technology that representatives of Linear Technology’s management had prepared. Representatives of Qatalyst Partners then discussed the potential values of Linear Technology that might be implied by the financial operating plan, together with a sensitivity analysis regarding some of the assumptions made in the financial operating plan. At the conclusion of these discussions, the Linear Technology board of directors determined that it would like more time to review the operating plan provided by management and asked that certain additional assumptions be reflected in the financial operating plan. The Linear Technology board of directors also formally approved Linear Technology’s engagement of Qatalyst Partners as its financial advisor in connection with the strategic review process.

On April 27, 2016, the Linear Technology board of directors held a special meeting to review and consider the revised forward-looking financial operating plan for Linear Technology presented by Linear Technology’s management, which financial operating plan reflected certain non-material adjustments to the financial operating plan presented at the April 25, 2016 board meeting based on the additional assumptions included in the financial operating plan at the request of the Linear Technology board of directors. The Linear Technology board of directors approved the financial operating plan for the purpose of internally analyzing proposals from potential acquirors of Linear Technology but determined to reassess the financial operating plan following the development of Linear Technology’s 2017 fiscal year operating plan. Representatives of Qatalyst Partners updated their presentation regarding potential values of Linear Technology that might be implied by the financial operating plan and Mr. Swanson informed the Linear Technology board of directors that he was scheduled to speak with Company A’s chief executive officer the next day. At the conclusion of this discussion, the Linear Technology board of directors instructed representatives of Qatalyst Partners to inform Analog Devices’ financial advisor, Credit Suisse, that the price indicated in the April 5 Analog Proposal undervalued the company and to ask Analog Devices to meaningfully increase its proposed offer price. The Linear Technology board of directors also discussed whether to have representatives of Qatalyst Partners contact other potential companies in Linear Technology’s industry that might be interested in a strategic transaction. The Linear Technology board of directors determined that it was unlikely that companies other than Analog Devices and Company A would have both the interest and financial ability to acquire Linear Technology at that time, but determined to reassess its analysis at a future meeting.

On April 28, 2016, Mr. Swanson had a telephone conversation with Company A’s chief executive officer regarding a potential transaction, during which Mr. Swanson indicated that Linear Technology had received a credible offer to acquire the company and that, while the Linear Technology board of directors had not yet determined to pursue a sale of the company, if it were to choose to do so, it would seek the greatest value for Linear Technology’s stockholders. On that basis, Mr. Swanson indicated that Linear Technology was interested in determining if Company A might be interested in pursuing an acquisition of Linear Technology. The chief executive officer of Company A indicated that he would consider and respond to Mr. Swanson’s inquiry.

Also on April 28, 2016, representatives of Qatalyst Partners contacted Credit Suisse regarding the parameters for a potential transaction requested by the Linear Technology board of directors. After speaking with representatives of Analog Devices, representatives of Credit Suisse informed representatives of Qatalyst Partners that Analog Devices had little room to increase its offer, and that Analog Devices was unwilling to increase its offer price prior to engaging in some due diligence discussions with Linear Technology, and that the parties were likely too far apart to continue negotiations.

On May 4, 2016, the Linear Technology board of directors met to discuss developments related to discussions with Analog Devices and Company A. While that meeting was occurring, Company A’s chief financial officer contacted representatives of Qatalyst Partners to indicate Company A’s interest in pursuing a transaction, its desire to schedule face-to-face meetings between the parties’ respective management teams and its willingness to enter into a non-disclosure agreement with a standstill provision. The Linear Technology board of directors decided to proceed with discussions with Company A. The Linear Technology board of directors further discussed whether to contact other potential buyers of Linear Technology in light of the responses received from Analog Devices and Company A and identified Company B and Company C as the two next most

 

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likely companies to have both an interest and the financial ability to acquire Linear Technology. The Linear Technology board of directors then instructed representatives of Qatalyst Partners to contact Company B and Company C to determine whether they would be interested in pursuing an acquisition of Linear Technology.

On May 5, 2016, representatives of Qatalyst Partners contacted representatives of Company B and representatives of Company C to gauge the possible interest of each in acquiring Linear Technology.

On May 10, 2016, at the direction of the Linear Technology board of directors, representatives of Qatalyst Partners spoke with representatives of Credit Suisse to discuss Analog Devices’ interest in acquiring Linear Technology and informed them that Linear Technology had been in contact with other potential acquirors. Representatives of Credit Suisse responded that Analog Devices would consider whether or not they would submit a new proposal. Later that same day, representatives of Company B informed representatives of Qatalyst Partners that Company B was not interested in pursuing a transaction with Linear Technology. Also on May 10, 2016, Linear Technology and Company A entered into a bilateral confidentiality agreement to facilitate each company providing information to the other regarding their respective businesses. At Linear Technology’s request, the confidentiality agreement contained a standstill pursuant to which Company A agreed to refrain from making offers to buy or influence management of Linear Technology without the consent of the Linear Technology board of directors. The terms of the standstill provided that it would no longer apply in the event Linear Technology entered into a definitive agreement relating to a change in control transaction.

On May 11, 2016, Mr. Swanson, Mr. Maier and Mr. Zerio met with senior executives of Company A in person to discuss Linear Technology’s business, corporate culture and the potential synergies that a combined company could generate.

Also on May 11, 2016, representatives of Company C informed representatives of Qatalyst Partners that it was not interested in pursuing a transaction with Linear Technology.

On May 13, 2016, the Linear Technology board of directors met to discuss developments relating to the meeting with Company A and responses from Company B and Company C. At this meeting, representatives of Qatalyst Partners stated that Company A’s financial advisor had contacted representatives of Qatalyst Partners earlier that day and had indicated that Company A would respond formally within the next week and would likely be submitting a proposal to acquire Linear Technology. Following that discussion, the Linear Technology board of directors determined that it would not be appropriate to contact additional potential acquirors of Linear Technology given the low likelihood that other parties would be interested in making an offer for Linear Technology and the risk of potential leaks that could result from expanding the number of companies contacted.

On May 17, 2016, Company A’s chief executive officer called Mr. Swanson to notify Mr. Swanson that Company A would be submitting a written offer shortly. Also on that date, representatives of Qatalyst Partners spoke with representatives of Credit Suisse to get an update on Analog Devices’ interest in acquiring Linear Technology following the discussion on May 10, 2016. Representatives from Credit Suisse indicated that Analog Devices would consider increasing its offer and requested that a meeting be scheduled between management of Linear Technology and Analog Devices prior to Analog Devices submitting a new proposal.

On May 18, 2016, the Linear Technology board of directors held a special meeting. At the meeting, the Linear Technology board of directors reviewed and approved an update to the financial operating plan that recently had been prepared by Linear Technology management to reflect the results of Linear Technology’s 2017 fiscal year operating plan. The Linear Technology board of directors also approved entering into a nondisclosure agreement with Analog Devices in anticipation of the management meetings that were being scheduled with Analog Devices. At this meeting, representatives of Jones Day discussed with the Linear Technology board of directors potential regulatory implications of a transaction with Analog Devices and with Company A.

Also on May 18, 2016, Company A submitted a proposal to acquire Linear Technology for a purchase price of $54.00 per share in cash (referred to in this proxy statement/prospectus as the Company A Proposal).

 

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On May 19, 2016, representatives of Qatalyst Partners contacted representatives of Company A’s financial advisor to clarify the Company A Proposal. On that same day, as discussed at the May 18, 2016 Linear Technology board of directors meeting, representatives of Qatalyst Partners contacted Credit Suisse to discuss the April 5 Analog Proposal and to arrange a meeting between members of the Linear Technology and Analog Devices management teams.

On May 20, 2016, the Linear Technology board of directors met with representatives of Jones Day and of Qatalyst Partners, respectively, to discuss the Company A Proposal. At the conclusion of this discussion, the Linear Technology board of directors instructed representatives of Qatalyst Partners to try to arrange for a follow-up meeting with Company A and to ascertain what additional information Company A was seeking from Linear Technology.

On May 24, 2016, Linear Technology and Analog Devices entered into a bilateral nondisclosure agreement. Although Linear Technology requested that the bilateral nondisclosure agreement contain a standstill, Analog Devices indicated it would not be prepared to execute a standstill agreement until it had received certain diligence information about Linear Technology.

On May 27, 2016, Linear Technology’s management met in person with Analog Devices’ management. At the meeting, the respective management teams discussed the companies’ businesses and prospects and potential synergies that may be achieved by combining the businesses and Linear Technology shared with Analog Devices portions of the financial operating plan reviewed and approved by the Linear Technology board of directors on May 18, 2016.

On June 1, 2016, the Linear Technology board of directors met with Linear Technology’s management, representatives of Qatalyst Partners and representatives of Jones Day to discuss the status of discussions and diligence efforts with Analog Devices and Company A. The Linear Technology board of directors determined to provide additional diligence materials to both Analog Devices and Company A, have Linear Technology management meet further with both companies and ask each company to provide updated valuation proposals following those respective meetings.

On June 7, 2016, Linear Technology’s management, together with certain representatives of Qatalyst Partners, met in person with Analog Devices’ management, and certain representatives of Credit Suisse, to discuss additional due diligence matters and provide additional information about Linear Technology’s business.

In early June, Linear Technology and Company A agreed to have an in person meeting of their respective management teams on June 17, 2016 to discuss additional due diligence matters and provide additional information about Linear Technology’s business. In connection with scheduling this meeting, Linear Technology provided an outline of the information that it was prepared to share with Company A at the meeting, which was the same information as Linear Technology had provided to Analog Devices on May 27, 2016 and was the maximum amount of information that the Linear Technology board of directors was willing to provide at this juncture after considering the risks of providing additional information to Company A, given that it was a competitor of Linear Technology, and that the information already provided was sufficient for Company A to provide its best and final offer. At the request of Linear Technology’s management, representatives of Qatalyst Partners also provided an outline of this information to Company A’s financial advisor.

On June 9, 2016, the Linear Technology board of directors met with Linear Technology’s management, representatives of Qatalyst Partners and representatives of Jones Day to discuss the status of discussions and diligence efforts with Analog Devices and Company A. Linear Technology’s management shared with the Linear Technology board of directors the topics discussed with Analog Devices’ management and their overall impression of the meeting. The Linear Technology board of directors determined that Analog Devices and Company A should be asked to submit their best and final offer no later than June 22, 2016 and directed representatives of Qatalyst Partners to solicit such offers on behalf of Linear Technology.

 

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During the period between June 10 and June 20, 2016, Linear Technology’s management and advisors met with Analog Devices’ management and advisors to discuss Analog Devices’ due diligence of Linear Technology. The information provided to Analog Devices in connection with its due diligence of Linear Technology during this period was consistent with the scope of information that the Linear Technology board of directors had previously determined to provide to Analog Devices and Company A and was made available to Company A.

On June 14, 2016, representatives of Qatalyst Partners notified both Analog Devices and Company A in writing that Linear Technology was requesting that they submit their best and final offer no later than June 22, 2016.

On June 15, 2016, Linear Technology and Analog Devices amended and restated their nondisclosure agreement to include a standstill provision to facilitate Linear Technology providing Analog Devices with additional information about Linear Technology’s business should Linear Technology determine to do so after reviewing Analog Devices’ best and final offer.

On June 16, 2016, Company A’s chief executive officer called Mr. Swanson to cancel the June 17, 2016 meeting between the companies’ respective management teams until Linear Technology provided more expansive information about its business than what Linear Technology had indicated it planned to provide at such meeting. Company A’s chief executive officer reiterated to Mr. Swanson that the Company A Proposal remained open if Linear Technology was interested in it, but that Company A could not increase its offer without information more expansive than what Linear Technology had determined to provide to bidders prior to their submission of their best and final offers. That same day, representatives of Qatalyst Partners communicated to Company A’s financial advisor the fact that Company A was being provided the same access to information about Linear Technology’s business as all other potential bidders.

On June 22, 2016, Analog Devices submitted a revised proposal increasing its offer price to $60 per share (referred to in this proxy statement/prospectus as the June 22 Analog Proposal), which proposal indicated that such offer reflected Analog Devices’ best and final price. The June 22 Analog Proposal represented an aggregate increase in potential acquisition consideration of approximately $500 million from the April 5 Analog Proposal and contemplated that the total acquisition consideration would comprise approximately 77% cash and 23% shares of Analog Devices’ common stock. Analog Devices indicated that it would fund the cash component of the acquisition consideration from its available cash and fully committed debt financing. Analog Devices also submitted a draft merger agreement and diligence request list and requested that Linear Technology enter into an agreement pursuant to which Linear Technology would exclusively negotiate a change in control transaction with Analog Devices until July 12, 2016.

On June 23, 2016, the Linear Technology board of directors met with Linear Technology’s management and representatives of Jones Day and Qatalyst Partners, respectively, to discuss the June 22 Analog Proposal and the Company A Proposal. Representatives of Qatalyst Partners and Jones Day provided the Linear Technology board of directors with an overview of the key financial and legal terms, respectively, of the June 22 Analog Proposal and draft merger agreement. Representatives of Qatalyst Partners also provided the Linear Technology board of directors with a presentation comparing the June 22 Analog Proposal to the valuation that might be implied by the Linear Technology financial operating plan that had been previously approved by the Linear Technology board of directors on May 18, 2016 and to recent comparable transactions. The Linear Technology board of directors discussed the efforts that Analog Devices had proposed it would undertake to obtain the regulatory approvals required to complete the transaction and the potential implications of those efforts on transactional certainty. Following these discussions, the Linear Technology board of directors authorized management and representatives of Qatalyst Partners to continue discussions regarding a potential transaction with Analog Devices, to convey Linear Technology’s desire for Analog Devices to commit to a greater level of effort with respect to the obtaining of regulatory approvals, and to provide further due diligence information to Analog Devices to facilitate those discussions.

 

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On June 24, 2016, at the direction of the Linear Technology board of directors, representatives of Qatalyst Partners called representatives of Credit Suisse to inform them that the efforts Analog Devices had proposed to undertake to obtain the regulatory approvals necessary to complete the transaction did not provide sufficient deal certainty to Linear Technology. Representatives of Jones Day also called representatives of Analog Devices’ legal counsel, Wachtell, Lipton, Rosen & Katz (referred to in this proxy statement/prospectus as Wachtell Lipton), to discuss these matters.

On June 28, 2016, the Linear Technology board of directors met informally with members of Linear Technology management to discuss management’s projections and operating plan to assess the potential long-term benefits and risks to stockholders if Linear Technology were to remain a stand-alone company, compared to the risks and benefits of pursuing a potential sale of the company on the terms reflected in the June 22 Analog Proposal. Following this meeting, the Linear Technology board of directors met with Linear Technology’s management and representatives of Qatalyst Partners and Jones Day, respectively, to further discuss the June 22 Analog Proposal. Representatives of Jones Day reviewed the fiduciary duties of the Linear Technology board of directors in determining whether to remain a stand-alone company or to continue discussions with Analog Devices regarding a potential transaction and provided a more detailed review of the terms of the draft merger agreement proposed by Analog Devices. The Linear Technology board of directors determined to continue discussing a potential transaction with Analog Devices and provided instructions to representatives of Qatalyst Partners and Jones Day, respectively, as to various terms in the June 22 Analog Proposal that should be improved by Analog Devices.

On June 29, 2016, at the direction of the Linear Technology board of directors, representatives of Qatalyst Partners discussed with Credit Suisse the outstanding matters that Linear Technology would need to have resolved before it would enter into an exclusivity agreement with Analog Devices and Jones Day conveyed the same information to Wachtell Lipton.

Also on June 29, 2016, representatives of Company A’s financial advisor contacted representatives of Qatalyst Partners to inquire about the transaction process. Representatives of Qatalyst Partners informed representatives of Company A’s financial advisor that the process was still ongoing and, in response, the representatives of Company A’s financial advisor indicated that Company A would not be submitting a new bid at that time, but that the Company A Proposal was still valid. Following that call, Company A did not have further contact with Linear Technology or its advisors regarding a potential strategic transaction.

On July 6, 2016, representatives of Credit Suisse conveyed to representatives of Qatalyst Partners Analog Devices’ proposed revisions to the regulatory covenants contained in the draft merger agreement submitted with the June 22 Analog Proposal. These proposals included enhanced efforts that Analog Devices would undertake to obtain the requisite regulatory approvals for a transaction and the payment by Analog Devices to Linear Technology of a termination fee if regulatory approvals could not be obtained.

On July 8, 2016, the Linear Technology board of directors held a meeting at which members of Linear Technology’s management, representatives of Qatalyst Partners and representatives of Jones Day were present. Representatives of Jones Day discussed with the Linear Technology board of directors the regulatory approvals associated with a potential transaction with Analog Devices and the ability of Linear Technology to operate its business between signing a definitive agreement with Analog Devices and the completion of such a transaction. The Linear Technology board of directors instructed Qatalyst Partners and Jones Day to request that Analog Devices improve on these proposed terms.

During the month of July, representatives of Linear Technology and Analog Devices, along with their respective outside legal counsels, held numerous on site and telephonic meetings and discussions relating to each party’s due diligence review of the other party’s operations.

On July 11, 2016, representatives of Jones Day sent a revised draft of the merger agreement to representatives of Wachtell Lipton, and Linear Technology made available to Analog Devices and its advisors an

 

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electronic dataroom to assist Analog Devices in completing confirmatory due diligence on Linear Technology given the improved financial terms of the June 22 Analog Proposal and the likelihood of signing a transaction based on the June 22 Analog Proposal. Also on July 11, 2016, representatives of Qatalyst Partners sent a due diligence request list to representatives of Credit Suisse to facilitate Linear Technology’s diligence on Analog Devices. During the period from July 11 through July 21, 2016, representatives of Linear Technology conducted due diligence on Analog Devices. In connection with such due diligence, Analog Devices made available to Linear Technology management and representatives of Qatalyst Partners for reference purposes certain strategic, financial and operational information concerning Analog Devices, including limited financial projections, and certain information concerning the benefits anticipated from the proposed merger. This information was not utilized by Qatalyst Partners in connection with its financial analyses described in the section titled “—Opinion of Linear Technology’s Financial Advisor.”

On July 12, 2016, Mr. Swanson and Mr. Roche had a conversation to discuss their respective businesses and the scheduling of meetings between their respective management teams.

On July 13, 2016, the Linear Technology board of directors held a meeting at which members of Linear Technology’s management, representatives of Qatalyst Partners and representatives of Jones Day were present. The Linear Technology board of directors reviewed the status of discussions with Analog Devices and separately approved the entry into an exclusivity agreement with Analog Devices providing Analog Devices with an exclusive negotiating period until July 26, 2016. The Linear Technology board of directors also approved an updated financial operating plan reflecting non-material revisions to the financial operating plan approved on May 18, 2016 to reflect normal course fiscal year end inputs (referred to in this proxy statement/prospectus as the unaudited financial projections and as described in more detail below in the section titled “Certain Financial Projections Utilized by the Linear Technology Board of Directors and Linear Technology’s Financial Advisor” on page 110).

On July 13, 2016, representatives of Qatalyst Partners and representatives of Credit Suisse discussed Linear Technology employee retention matters.

On July 14, 2016, Mr. Maier and Mr. Roche discussed Linear Technology employee retention matters and, at the direction of the Linear Technology board of directors, representatives of Qatalyst Partners shared with Credit Suisse a subset of the unaudited financial projections for Linear Technology approved by the Linear Technology board of directors on July 13, 2016.

On July 15, 2016, Wachtell Lipton sent a revised draft of the merger agreement to Jones Day, which included a revised proposal with respect to covenants on Linear Technology’s operations between signing and closing, closing conditions, employee benefit matters and regulatory efforts as well as other matters.

On July 20, 2016, Jones Day sent a revised draft of the merger agreement to Wachtell Lipton, which included a revised proposal with respect to covenants on Linear Technology’s operations between signing and closing, closing conditions, employee benefit matters and regulatory efforts as well as other matters.

During the period between July 20, 2016 and July 26, 2016, Jones Day and Wachtell Lipton negotiated the unresolved terms of the merger agreement.

On July 20, 2016 and July 21, 2016, management of Linear Technology met with management of Analog Devices to discuss potential synergies and integration as well as potential timing for signing a definitive merger agreement.

On July 21, 2016, the Linear Technology board of directors held a meeting at which members of Linear Technology’s management, representatives of Qatalyst Partners and representatives of Jones Day were present. The Linear Technology board of directors reviewed the status of discussions with Analog Devices and Mr. Zerio provided the Linear Technology board of directors with a summary of financial and tax diligence discussions with Analog Devices.

 

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On July 22, 2016, using the allocation of cash and stock consideration set forth in the June 22 Analog Proposal, representatives of Credit Suisse delivered to representatives of Qatalyst Partners a calculation of the merger consideration ratio of $46.00 in cash and 0.2321 shares of Analog Devices’ common stock for each share of Linear Technology common stock, having a total implied value of approximately $60.00 per Linear Technology share of common stock, based on a volume-weighted price of Analog Devices’ stock price for the period between July 15, 2016 and July 21, 2016 of $60.32.

On July 23, 2016, the Linear Technology board of directors held a meeting at which members of Linear Technology’s management, representatives of Qatalyst Partners and representatives of Jones Day were present. During the course of the meeting, representatives of Linear Technology management and each of Qatalyst Partners and Jones Day contributed to a presentation providing an overview to the Linear Technology board of directors of the results of the financial, accounting and legal due diligence of Analog Devices that had been conducted by and on behalf of Linear Technology.

On July 25, 2016, the Linear Technology board of directors met to review the terms and conditions of the proposed transaction with Analog Devices. At that meeting, representatives of Jones Day reviewed the fiduciary duties of the Linear Technology board of directors in determining whether to remain as a stand-alone company or to continue discussions with Analog Devices regarding a potential transaction. Additionally, representatives of Qatalyst Partners reviewed the financial terms of Analog Devices’ offer, which consisted of a combination of $46.00 in cash and 0.2321 shares of Analog Devices’ common stock for each share of Linear Technology common stock. As of July 25, 2016, the Analog Devices’ offer had an implied value equal to $60.05 per Linear Technology share of common stock, based on the closing price of Analog Devices’ common stock on NASDAQ on July 25, 2016, and represented an approximate 15.7% equity interest for Linear Technology stockholders in the combined entity based on the reported number of shares of Analog Devices common stock outstanding and the number of shares of Analog Devices common stock to be issued in the merger. Representatives of Jones Day also reviewed the terms and conditions of the debt commitment letter of Analog Devices’ financing source.

On July 26, 2016, during the course of the trading day, rumors of a potential transaction between Linear Technology an