Analog Devices
Annual Report 2022

Plain-text annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 29, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-7819 Analog Devices, Inc. (Exact name of registrant as specified in its charter) Massachusetts (State or other jurisdiction of incorporation or organization) One Analog Way, Wilmington, MA (Address of principal executive offices) 04-2348234 (I.R.S. Employer Identification No.) 01887 (Zip Code) (781) 935-5565 (Registrant’s telephone number, including area code) ______________________________ Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock $0.16 2/3 par value per share Trading Symbol(s) ADI Name of each exchange on which registered Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer ☑ ☐ Accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $62,631,000,000 based on the last reported sale of the Common Stock on The Nasdaq Global Select Market on April 30, 2022. Shares of $62,631,000,000 based on the last reported sale of the Common Stock on The Nasdaq Global Select Market on April 30, 2022. Shares of voting and non-voting stock beneficially owned by executive officers, directors and holders of more than 5% of the outstanding stock have voting and non-voting stock beneficially owned by executive officers, directors and holders of more than 5% of the outstanding stock have been excluded from this calculation because such persons or institutions may be deemed affiliates. This determination of affiliate status is not been excluded from this calculation because such persons or institutions may be deemed affiliates. This determination of affiliate status is not a conclusive determination for other purposes. a conclusive determination for other purposes. As of October 29, 2022, there were 509,295,941 shares of Common Stock, $0.16 2/3 par value per share, outstanding. As of October 29, 2022, there were 509,295,941 shares of Common Stock, $0.16 2/3 par value per share, outstanding. Documents Incorporated by Reference Documents Incorporated by Reference TABLE OF CONTENTS TABLE OF CONTENTS Note about Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Note about Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Document Description Document Description Form 10-K Part Form 10-K Part Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held March 8, 2023 Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held March 8, 2023 III III Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 6. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 6. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 2 2 2 2 11 11 24 24 25 25 26 26 26 26 27 27 27 27 28 28 29 29 41 41 43 43 45 45 45 45 46 46 47 47 48 48 49 49 50 50 85 85 85 85 87 87 87 87 88 88 88 88 88 88 88 88 88 88 88 88 89 89 89 89 96 96 97 97 98 98 The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $62,631,000,000 based on the last reported sale of the Common Stock on The Nasdaq Global Select Market on April 30, 2022. Shares of $62,631,000,000 based on the last reported sale of the Common Stock on The Nasdaq Global Select Market on April 30, 2022. Shares of voting and non-voting stock beneficially owned by executive officers, directors and holders of more than 5% of the outstanding stock have voting and non-voting stock beneficially owned by executive officers, directors and holders of more than 5% of the outstanding stock have been excluded from this calculation because such persons or institutions may be deemed affiliates. This determination of affiliate status is not been excluded from this calculation because such persons or institutions may be deemed affiliates. This determination of affiliate status is not a conclusive determination for other purposes. a conclusive determination for other purposes. As of October 29, 2022, there were 509,295,941 shares of Common Stock, $0.16 2/3 par value per share, outstanding. As of October 29, 2022, there were 509,295,941 shares of Common Stock, $0.16 2/3 par value per share, outstanding. Documents Incorporated by Reference Documents Incorporated by Reference Document Description Document Description Form 10-K Part Form 10-K Part Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held March 8, 2023 Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held March 8, 2023 III III TABLE OF CONTENTS TABLE OF CONTENTS Note about Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Note about Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 6. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 6. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 2 2 2 2 11 11 24 24 25 25 26 26 26 26 27 27 27 27 28 28 29 29 41 41 43 43 45 45 45 45 46 46 47 47 48 48 49 49 50 50 85 85 85 85 87 87 87 87 88 88 88 88 88 88 88 88 88 88 88 88 89 89 89 89 96 96 97 97 98 98 Note About Forward-Looking Statements Note About Forward-Looking Statements This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results that are subject to the Results of Operations,” contains forward-looking statements regarding future events and our future results that are subject to the safe harbor created under the Private Securities Litigation Reform Act of 1995 and other safe harbors under the Securities Act safe harbor created under the Private Securities Litigation Reform Act of 1995 and other safe harbors under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “could” and “will,” and variations of such words and similar expressions are intended to identify such forward-looking “could” and “will,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections regarding our future financial performance; our anticipated statements. In addition, any statements that refer to projections regarding our future financial performance; our anticipated growth and trends in our businesses; new or improved innovative solutions, products, and technologies; the effects of business, growth and trends in our businesses; new or improved innovative solutions, products, and technologies; the effects of business, economic, political, legal, and regulatory impacts or conflicts upon our global operations; changes in demand for economic, political, legal, and regulatory impacts or conflicts upon our global operations; changes in demand for semiconductors and the related changes in demand and supply for our products; manufacturing, delays, product availability, and semiconductors and the related changes in demand and supply for our products; manufacturing, delays, product availability, and supply chain disruptions; our ability to recruit or retain our key personnel; our future liquidity, capital needs and capital supply chain disruptions; our ability to recruit or retain our key personnel; our future liquidity, capital needs and capital expenditures; our development of technologies and research and development investments; the impact of the COVID-19 expenditures; our development of technologies and research and development investments; the impact of the COVID-19 pandemic on our business, financial condition and results of operations; our future market position and expected competitive pandemic on our business, financial condition and results of operations; our future market position and expected competitive changes in the marketplace for our products; our plans to pay dividends or repurchase stock; servicing our outstanding debt; our changes in the marketplace for our products; our plans to pay dividends or repurchase stock; servicing our outstanding debt; our expected tax rate; the effect of changes in or the application of new or revised tax laws; expected cost savings; the effect of new expected tax rate; the effect of changes in or the application of new or revised tax laws; expected cost savings; the effect of new accounting pronouncements; plans to integrate or realize the benefits or synergies expected of acquired businesses and accounting pronouncements; plans to integrate or realize the benefits or synergies expected of acquired businesses and technologies, including the acquired business, operations and employees of Maxim Integrated Products, Inc.; our continued technologies, including the acquired business, operations and employees of Maxim Integrated Products, Inc.; our continued initiatives to consolidate our footprint related to our business units including our manufacturing, engineering, sales, marketing initiatives to consolidate our footprint related to our business units including our manufacturing, engineering, sales, marketing and administrative offices; implementation of environment, health and safety standards; environment, social and governance and administrative offices; implementation of environment, health and safety standards; environment, social and governance related goals; and other characterizations of future events or circumstances are forward-looking statements. Readers are related goals; and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified in Part I, Item 1A. "Risk Factors" and elsewhere in this Annual Report on are difficult to predict, including those identified in Part I, Item 1A. "Risk Factors" and elsewhere in this Annual Report on Form 10-K. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking Form 10-K. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements, including to reflect events or statements. We undertake no obligation to revise or update any forward-looking statements, including to reflect events or circumstances occurring after the date of the filing of this report, except to the extent required by law. circumstances occurring after the date of the filing of this report, except to the extent required by law. PART I PART I ITEM 1. BUSINESS ITEM 1. BUSINESS Company Overview, Strategy and Mission Company Overview, Strategy and Mission Analog Devices, Inc. (we, Analog Devices or the Company) is a leading semiconductor company dedicated to solving Analog Devices, Inc. (we, Analog Devices or the Company) is a leading semiconductor company dedicated to solving our customers' most complex engineering challenges. We deliver innovations that connect technology to human breakthroughs our customers' most complex engineering challenges. We deliver innovations that connect technology to human breakthroughs and play a critical role at the intersection of the physical and digital world by providing the building blocks to sense, measure, and play a critical role at the intersection of the physical and digital world by providing the building blocks to sense, measure, interpret, connect and power. We design, manufacture, test and market a broad portfolio of solutions, including integrated interpret, connect and power. We design, manufacture, test and market a broad portfolio of solutions, including integrated circuits (ICs), software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing circuits (ICs), software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing technologies. Our comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend technologies. Our comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend across high-performance precision and high-speed mixed-signal, power management and processing technologies – including across high-performance precision and high-speed mixed-signal, power management and processing technologies – including data converters, amplifiers, power management, radio frequency (RF) ICs, edge processors and other sensors. data converters, amplifiers, power management, radio frequency (RF) ICs, edge processors and other sensors. The Third Wave of Information and Communications Technology, as we refer to it at Analog Devices, is characterized The Third Wave of Information and Communications Technology, as we refer to it at Analog Devices, is characterized by ubiquitous sensing, hyper-scale and edge computing and pervasive connectivity. These technological trends are driving a by ubiquitous sensing, hyper-scale and edge computing and pervasive connectivity. These technological trends are driving a continuous evolution of new generations of applications that are increasing the demand for Analog Devices’ high-performance continuous evolution of new generations of applications that are increasing the demand for Analog Devices’ high-performance analog, mixed-signal, power and RF ICs. We have positioned our business to capitalize on the secular growth opportunities analog, mixed-signal, power and RF ICs. We have positioned our business to capitalize on the secular growth opportunities across our markets and to deliver innovative solutions. Central to our strategy is our focus on challenges that our customers across our markets and to deliver innovative solutions. Central to our strategy is our focus on challenges that our customers have across the most impactful application areas. That is built around the following three key priorities, which will continue to have across the most impactful application areas. That is built around the following three key priorities, which will continue to drive our long-term success: drive our long-term success: • • Efficient use of capital. Research and development (R&D) is critical to continue our cycle of innovation-driven Efficient use of capital. Research and development (R&D) is critical to continue our cycle of innovation-driven success. We target the most attractive opportunities, particularly across our business-to-business (B2B) markets success. We target the most attractive opportunities, particularly across our business-to-business (B2B) markets including Industrial, Automotive and Communications. We are also deeply committed to extracting value from our including Industrial, Automotive and Communications. We are also deeply committed to extracting value from our recent acquisitions to complement our R&D and drive long-term value creation. Through the development of cutting- recent acquisitions to complement our R&D and drive long-term value creation. Through the development of cutting- edge innovations and our ability to solve difficult problems across a broad array of applications, we generate edge innovations and our ability to solve difficult problems across a broad array of applications, we generate significant cash flow and are deeply committed to delivering strong shareholder returns. significant cash flow and are deeply committed to delivering strong shareholder returns. • • Deepening customer-centricity. Close customer relationships influence aspects of our business: from our broad range Deepening customer-centricity. Close customer relationships influence aspects of our business: from our broad range of product portfolios and applications expertise to manufacturing capabilities in high-performance power management of product portfolios and applications expertise to manufacturing capabilities in high-performance power management and precision and high-speed signal processing technologies. At the same time, our engineering talent continues to be and precision and high-speed signal processing technologies. At the same time, our engineering talent continues to be an important competitive differentiator in the semiconductor space. We strive to be the destination for the world's best an important competitive differentiator in the semiconductor space. We strive to be the destination for the world's best engineering talent with a team of more than 11,400 engineers. Together, our products and our engineering talent engineering talent with a team of more than 11,400 engineers. Together, our products and our engineering talent enable us to partner with our customers, leveraging our analog domain expertise and receiving the full benefit of our enable us to partner with our customers, leveraging our analog domain expertise and receiving the full benefit of our technology capabilities to develop complete and innovative solutions. technology capabilities to develop complete and innovative solutions. • • Capitalizing on secular trends. We are positioned to capitalize on important secular growth trends, including the Capitalizing on secular trends. We are positioned to capitalize on important secular growth trends, including the Intelligent Edge, industrial automation, ubiquitous connectivity, electric vehicles, in-cabin experience, digital Intelligent Edge, industrial automation, ubiquitous connectivity, electric vehicles, in-cabin experience, digital healthcare and space, as we are well-aligned with the key B2B markets driving this increase in data and we will healthcare and space, as we are well-aligned with the key B2B markets driving this increase in data and we will continue to be a critical partner in the collection, creation and communication of our customers’ edge data. continue to be a critical partner in the collection, creation and communication of our customers’ edge data. In addition to driving organic growth, our strategy involves expansion through the acquisition of businesses, assets or In addition to driving organic growth, our strategy involves expansion through the acquisition of businesses, assets or technologies that allow us to complement our existing product offerings, expand our market coverage, increase our engineering technologies that allow us to complement our existing product offerings, expand our market coverage, increase our engineering talent or enhance our technological capabilities. For example, we have executed on this strategy through: talent or enhance our technological capabilities. For example, we have executed on this strategy through: • • • • • • the acquisition of Hittite Microwave Corporation in the fiscal year ended November 1, 2014, which strengthened our the acquisition of Hittite Microwave Corporation in the fiscal year ended November 1, 2014, which strengthened our market leadership in high-performance RF and broadened our portfolio across the entire frequency spectrum from DC market leadership in high-performance RF and broadened our portfolio across the entire frequency spectrum from DC to 100 gigahertz; to 100 gigahertz; the acquisition of Linear Technology Corporation (Linear) in the fiscal year ended October 28, 2017, which added the acquisition of Linear Technology Corporation (Linear) in the fiscal year ended October 28, 2017, which added high-performance power management and additional precision signal processing to our portfolio, expanding and high-performance power management and additional precision signal processing to our portfolio, expanding and diversifying our offerings to deliver more complete solutions; and diversifying our offerings to deliver more complete solutions; and the acquisition of Maxim Integrated Products, Inc. (Maxim) in the fiscal year ended October 30, 2021 (fiscal 2021), the acquisition of Maxim Integrated Products, Inc. (Maxim) in the fiscal year ended October 30, 2021 (fiscal 2021), which strengthens our position as a high-performance analog semiconductor company. which strengthens our position as a high-performance analog semiconductor company. We were incorporated in Massachusetts in 1965 with our corporate headquarters near Boston in Wilmington, We were incorporated in Massachusetts in 1965 with our corporate headquarters near Boston in Wilmington, Massachusetts. We have manufacturing facilities primarily in the United States, Ireland and Southeast Asia. Our common Massachusetts. We have manufacturing facilities primarily in the United States, Ireland and Southeast Asia. Our common stock is listed on the Nasdaq Global Select Market under the symbol ADI and is included in the Standard & Poor’s 500 Index. stock is listed on the Nasdaq Global Select Market under the symbol ADI and is included in the Standard & Poor’s 500 Index. 1 1 2 2 Note About Forward-Looking Statements Note About Forward-Looking Statements This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results that are subject to the Results of Operations,” contains forward-looking statements regarding future events and our future results that are subject to the safe harbor created under the Private Securities Litigation Reform Act of 1995 and other safe harbors under the Securities Act safe harbor created under the Private Securities Litigation Reform Act of 1995 and other safe harbors under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “could” and “will,” and variations of such words and similar expressions are intended to identify such forward-looking “could” and “will,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections regarding our future financial performance; our anticipated statements. In addition, any statements that refer to projections regarding our future financial performance; our anticipated growth and trends in our businesses; new or improved innovative solutions, products, and technologies; the effects of business, growth and trends in our businesses; new or improved innovative solutions, products, and technologies; the effects of business, economic, political, legal, and regulatory impacts or conflicts upon our global operations; changes in demand for economic, political, legal, and regulatory impacts or conflicts upon our global operations; changes in demand for semiconductors and the related changes in demand and supply for our products; manufacturing, delays, product availability, and semiconductors and the related changes in demand and supply for our products; manufacturing, delays, product availability, and supply chain disruptions; our ability to recruit or retain our key personnel; our future liquidity, capital needs and capital supply chain disruptions; our ability to recruit or retain our key personnel; our future liquidity, capital needs and capital expenditures; our development of technologies and research and development investments; the impact of the COVID-19 expenditures; our development of technologies and research and development investments; the impact of the COVID-19 pandemic on our business, financial condition and results of operations; our future market position and expected competitive pandemic on our business, financial condition and results of operations; our future market position and expected competitive changes in the marketplace for our products; our plans to pay dividends or repurchase stock; servicing our outstanding debt; our changes in the marketplace for our products; our plans to pay dividends or repurchase stock; servicing our outstanding debt; our expected tax rate; the effect of changes in or the application of new or revised tax laws; expected cost savings; the effect of new expected tax rate; the effect of changes in or the application of new or revised tax laws; expected cost savings; the effect of new accounting pronouncements; plans to integrate or realize the benefits or synergies expected of acquired businesses and accounting pronouncements; plans to integrate or realize the benefits or synergies expected of acquired businesses and technologies, including the acquired business, operations and employees of Maxim Integrated Products, Inc.; our continued technologies, including the acquired business, operations and employees of Maxim Integrated Products, Inc.; our continued initiatives to consolidate our footprint related to our business units including our manufacturing, engineering, sales, marketing initiatives to consolidate our footprint related to our business units including our manufacturing, engineering, sales, marketing and administrative offices; implementation of environment, health and safety standards; environment, social and governance and administrative offices; implementation of environment, health and safety standards; environment, social and governance related goals; and other characterizations of future events or circumstances are forward-looking statements. Readers are related goals; and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified in Part I, Item 1A. "Risk Factors" and elsewhere in this Annual Report on are difficult to predict, including those identified in Part I, Item 1A. "Risk Factors" and elsewhere in this Annual Report on Form 10-K. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking Form 10-K. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements, including to reflect events or statements. We undertake no obligation to revise or update any forward-looking statements, including to reflect events or circumstances occurring after the date of the filing of this report, except to the extent required by law. circumstances occurring after the date of the filing of this report, except to the extent required by law. PART I PART I ITEM 1. BUSINESS ITEM 1. BUSINESS Company Overview, Strategy and Mission Company Overview, Strategy and Mission Analog Devices, Inc. (we, Analog Devices or the Company) is a leading semiconductor company dedicated to solving Analog Devices, Inc. (we, Analog Devices or the Company) is a leading semiconductor company dedicated to solving our customers' most complex engineering challenges. We deliver innovations that connect technology to human breakthroughs our customers' most complex engineering challenges. We deliver innovations that connect technology to human breakthroughs and play a critical role at the intersection of the physical and digital world by providing the building blocks to sense, measure, and play a critical role at the intersection of the physical and digital world by providing the building blocks to sense, measure, interpret, connect and power. We design, manufacture, test and market a broad portfolio of solutions, including integrated interpret, connect and power. We design, manufacture, test and market a broad portfolio of solutions, including integrated circuits (ICs), software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing circuits (ICs), software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing technologies. Our comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend technologies. Our comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend across high-performance precision and high-speed mixed-signal, power management and processing technologies – including across high-performance precision and high-speed mixed-signal, power management and processing technologies – including data converters, amplifiers, power management, radio frequency (RF) ICs, edge processors and other sensors. data converters, amplifiers, power management, radio frequency (RF) ICs, edge processors and other sensors. The Third Wave of Information and Communications Technology, as we refer to it at Analog Devices, is characterized The Third Wave of Information and Communications Technology, as we refer to it at Analog Devices, is characterized by ubiquitous sensing, hyper-scale and edge computing and pervasive connectivity. These technological trends are driving a by ubiquitous sensing, hyper-scale and edge computing and pervasive connectivity. These technological trends are driving a continuous evolution of new generations of applications that are increasing the demand for Analog Devices’ high-performance continuous evolution of new generations of applications that are increasing the demand for Analog Devices’ high-performance analog, mixed-signal, power and RF ICs. We have positioned our business to capitalize on the secular growth opportunities analog, mixed-signal, power and RF ICs. We have positioned our business to capitalize on the secular growth opportunities across our markets and to deliver innovative solutions. Central to our strategy is our focus on challenges that our customers across our markets and to deliver innovative solutions. Central to our strategy is our focus on challenges that our customers have across the most impactful application areas. That is built around the following three key priorities, which will continue to have across the most impactful application areas. That is built around the following three key priorities, which will continue to drive our long-term success: drive our long-term success: • • • • • • Efficient use of capital. Research and development (R&D) is critical to continue our cycle of innovation-driven Efficient use of capital. Research and development (R&D) is critical to continue our cycle of innovation-driven success. We target the most attractive opportunities, particularly across our business-to-business (B2B) markets success. We target the most attractive opportunities, particularly across our business-to-business (B2B) markets including Industrial, Automotive and Communications. We are also deeply committed to extracting value from our including Industrial, Automotive and Communications. We are also deeply committed to extracting value from our recent acquisitions to complement our R&D and drive long-term value creation. Through the development of cutting- recent acquisitions to complement our R&D and drive long-term value creation. Through the development of cutting- edge innovations and our ability to solve difficult problems across a broad array of applications, we generate edge innovations and our ability to solve difficult problems across a broad array of applications, we generate significant cash flow and are deeply committed to delivering strong shareholder returns. significant cash flow and are deeply committed to delivering strong shareholder returns. Deepening customer-centricity. Close customer relationships influence aspects of our business: from our broad range Deepening customer-centricity. Close customer relationships influence aspects of our business: from our broad range of product portfolios and applications expertise to manufacturing capabilities in high-performance power management of product portfolios and applications expertise to manufacturing capabilities in high-performance power management and precision and high-speed signal processing technologies. At the same time, our engineering talent continues to be and precision and high-speed signal processing technologies. At the same time, our engineering talent continues to be an important competitive differentiator in the semiconductor space. We strive to be the destination for the world's best an important competitive differentiator in the semiconductor space. We strive to be the destination for the world's best engineering talent with a team of more than 11,400 engineers. Together, our products and our engineering talent engineering talent with a team of more than 11,400 engineers. Together, our products and our engineering talent enable us to partner with our customers, leveraging our analog domain expertise and receiving the full benefit of our enable us to partner with our customers, leveraging our analog domain expertise and receiving the full benefit of our technology capabilities to develop complete and innovative solutions. technology capabilities to develop complete and innovative solutions. Capitalizing on secular trends. We are positioned to capitalize on important secular growth trends, including the Capitalizing on secular trends. We are positioned to capitalize on important secular growth trends, including the Intelligent Edge, industrial automation, ubiquitous connectivity, electric vehicles, in-cabin experience, digital Intelligent Edge, industrial automation, ubiquitous connectivity, electric vehicles, in-cabin experience, digital healthcare and space, as we are well-aligned with the key B2B markets driving this increase in data and we will healthcare and space, as we are well-aligned with the key B2B markets driving this increase in data and we will continue to be a critical partner in the collection, creation and communication of our customers’ edge data. continue to be a critical partner in the collection, creation and communication of our customers’ edge data. In addition to driving organic growth, our strategy involves expansion through the acquisition of businesses, assets or In addition to driving organic growth, our strategy involves expansion through the acquisition of businesses, assets or technologies that allow us to complement our existing product offerings, expand our market coverage, increase our engineering technologies that allow us to complement our existing product offerings, expand our market coverage, increase our engineering talent or enhance our technological capabilities. For example, we have executed on this strategy through: talent or enhance our technological capabilities. For example, we have executed on this strategy through: • • • • • • the acquisition of Hittite Microwave Corporation in the fiscal year ended November 1, 2014, which strengthened our the acquisition of Hittite Microwave Corporation in the fiscal year ended November 1, 2014, which strengthened our market leadership in high-performance RF and broadened our portfolio across the entire frequency spectrum from DC market leadership in high-performance RF and broadened our portfolio across the entire frequency spectrum from DC to 100 gigahertz; to 100 gigahertz; the acquisition of Linear Technology Corporation (Linear) in the fiscal year ended October 28, 2017, which added the acquisition of Linear Technology Corporation (Linear) in the fiscal year ended October 28, 2017, which added high-performance power management and additional precision signal processing to our portfolio, expanding and high-performance power management and additional precision signal processing to our portfolio, expanding and diversifying our offerings to deliver more complete solutions; and diversifying our offerings to deliver more complete solutions; and the acquisition of Maxim Integrated Products, Inc. (Maxim) in the fiscal year ended October 30, 2021 (fiscal 2021), the acquisition of Maxim Integrated Products, Inc. (Maxim) in the fiscal year ended October 30, 2021 (fiscal 2021), which strengthens our position as a high-performance analog semiconductor company. which strengthens our position as a high-performance analog semiconductor company. We were incorporated in Massachusetts in 1965 with our corporate headquarters near Boston in Wilmington, We were incorporated in Massachusetts in 1965 with our corporate headquarters near Boston in Wilmington, Massachusetts. We have manufacturing facilities primarily in the United States, Ireland and Southeast Asia. Our common Massachusetts. We have manufacturing facilities primarily in the United States, Ireland and Southeast Asia. Our common stock is listed on the Nasdaq Global Select Market under the symbol ADI and is included in the Standard & Poor’s 500 Index. stock is listed on the Nasdaq Global Select Market under the symbol ADI and is included in the Standard & Poor’s 500 Index. 1 1 2 2 Acquisition of Maxim Integrated Products, Inc. Acquisition of Maxim Integrated Products, Inc. On August 26, 2021 (Acquisition Date), we completed the acquisition of Maxim, an independent manufacturer of On August 26, 2021 (Acquisition Date), we completed the acquisition of Maxim, an independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and Plan of Merger, dated as of July innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date, for total consideration of approximately $28.0 billion of of a share of the Company’s common stock as of the Acquisition Date, for total consideration of approximately $28.0 billion of our common stock. The acquisition of Maxim is referred to as the Acquisition. our common stock. The acquisition of Maxim is referred to as the Acquisition. Available Information Available Information We maintain a website with the address www.analog.com. We are not including the information contained on our website We maintain a website with the address www.analog.com. We are not including the information contained on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available free of charge through as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (including our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (including exhibits), and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or exhibits), and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (SEC). We also make available on our website our by-laws, furnish such material to, the Securities and Exchange Commission (SEC). We also make available on our website our by-laws, corporate governance guidelines, the charters for our audit committee, compensation committee, and nominating and corporate corporate governance guidelines, the charters for our audit committee, compensation committee, and nominating and corporate governance committee, our equity award granting policies, our code of business conduct and ethics which applies to our governance committee, our equity award granting policies, our code of business conduct and ethics which applies to our directors, officers and employees, and our related person transaction policy, and such information is available in print and free directors, officers and employees, and our related person transaction policy, and such information is available in print and free of charge to any shareholder of Analog Devices who requests it. In addition, we intend to disclose on our website any of charge to any shareholder of Analog Devices who requests it. In addition, we intend to disclose on our website any amendments to, or waivers from, our code of business conduct and ethics that are required to be publicly disclosed pursuant to amendments to, or waivers from, our code of business conduct and ethics that are required to be publicly disclosed pursuant to rules of the SEC or Nasdaq. rules of the SEC or Nasdaq. Products Products Semiconductor components are the building blocks used in electronic systems and equipment. These components are Semiconductor components are the building blocks used in electronic systems and equipment. These components are classified as either discrete devices, such as individual transistors, or as ICs, in which a number of transistors and other classified as either discrete devices, such as individual transistors, or as ICs, in which a number of transistors and other elements are combined to form a more complicated electronic circuit. elements are combined to form a more complicated electronic circuit. Our ICs are designed to address a wide range of real-world signal processing applications. We sell our ICs to customers Our ICs are designed to address a wide range of real-world signal processing applications. We sell our ICs to customers worldwide, many of whom use products spanning our core technologies in a wide range of applications. Our IC product worldwide, many of whom use products spanning our core technologies in a wide range of applications. Our IC product portfolio includes both general-purpose products used by a broad range of customers and applications, as well as application- portfolio includes both general-purpose products used by a broad range of customers and applications, as well as application- specific products designed for specific target markets. By using readily available, high-performance, general-purpose products specific products designed for specific target markets. By using readily available, high-performance, general-purpose products in their systems, our customers can reduce the time they need to bring new products to market. Given the high cost of in their systems, our customers can reduce the time they need to bring new products to market. Given the high cost of developing more customized ICs, our standard products often provide a cost-effective solution for many low to medium volume developing more customized ICs, our standard products often provide a cost-effective solution for many low to medium volume applications. More specifically, our analog ICs monitor, condition, amplify or transform continuous analog signals associated applications. More specifically, our analog ICs monitor, condition, amplify or transform continuous analog signals associated with physical properties, such as temperature, pressure, weight, light, sound or motion, and play an important role in bridging with physical properties, such as temperature, pressure, weight, light, sound or motion, and play an important role in bridging real world phenomena to a variety of electronic systems. Our analog ICs also provide voltage regulation and power control to real world phenomena to a variety of electronic systems. Our analog ICs also provide voltage regulation and power control to electronic systems. electronic systems. We also focus on working with leading customers to design application-specific solutions. We begin with our existing We also focus on working with leading customers to design application-specific solutions. We begin with our existing core technologies, which leverage our analog and mixed signal, power management, RF and microwave, edge processors and core technologies, which leverage our analog and mixed signal, power management, RF and microwave, edge processors and other sensors, and devise solutions that more closely meet the needs of a specific customer or group of customers. Because we other sensors, and devise solutions that more closely meet the needs of a specific customer or group of customers. Because we have already developed the core technology platform for our general-purpose products, we can create application-specific have already developed the core technology platform for our general-purpose products, we can create application-specific solutions quickly and efficiently. solutions quickly and efficiently. Our analog and mixed-signal IC technology has been the foundation of our business for over five decades, and we are one Our analog and mixed-signal IC technology has been the foundation of our business for over five decades, and we are one of the world’s largest suppliers of high-performance analog ICs. Our analog signal processing ICs are primarily high- of the world’s largest suppliers of high-performance analog ICs. Our analog signal processing ICs are primarily high- performance devices, offering higher dynamic range, greater bandwidth, and other enhanced features. We believe that the performance devices, offering higher dynamic range, greater bandwidth, and other enhanced features. We believe that the principal advantages these products have as compared to competitors’ products include higher accuracy, higher speed, lower principal advantages these products have as compared to competitors’ products include higher accuracy, higher speed, lower cost per function, smaller size, lower power consumption and fewer components, resulting in improved performance and cost per function, smaller size, lower power consumption and fewer components, resulting in improved performance and reliability. Our product portfolio includes several thousand analog ICs, many of which can have several hundred end customers. reliability. Our product portfolio includes several thousand analog ICs, many of which can have several hundred end customers. Our analog ICs typically have long product life cycles. Our customers include original equipment manufacturers (OEMs) and Our analog ICs typically have long product life cycles. Our customers include original equipment manufacturers (OEMs) and customers who build electronic subsystems for integration into larger systems. customers who build electronic subsystems for integration into larger systems. Our product offerings include more than 75,000 stock keeping units (SKUs) that can be aggregated into the following Our product offerings include more than 75,000 stock keeping units (SKUs) that can be aggregated into the following general categories: general categories: • • Analog and Mixed Signal—We are a leading supplier of data converter products. Data converters translate real-world Analog and Mixed Signal—We are a leading supplier of data converter products. Data converters translate real-world analog signals into digital data and also translate digital data into analog signals. Data converters remain our largest analog signals into digital data and also translate digital data into analog signals. Data converters remain our largest and most diverse product family and an area where we are continuously innovating to enable our customers to redefine and most diverse product family and an area where we are continuously innovating to enable our customers to redefine and differentiate their products. Our converter products combine sampling rates and accuracy with the low noise, and differentiate their products. Our converter products combine sampling rates and accuracy with the low noise, power, price and small package size required by industrial, automotive, consumer, and communications electronics. power, price and small package size required by industrial, automotive, consumer, and communications electronics. • • Power Management & Reference—Power management and reference products, which include functions such as power Power Management & Reference—Power management and reference products, which include functions such as power conversion, driver monitoring, sequencing and energy management, provide efficient solutions for power management conversion, driver monitoring, sequencing and energy management, provide efficient solutions for power management and conversion applications in the automotive, communications, industrial and high-end consumer markets. Our high- and conversion applications in the automotive, communications, industrial and high-end consumer markets. Our high- performance power ICs include powerful performance, integration and software design simulation tools to provide fast performance power ICs include powerful performance, integration and software design simulation tools to provide fast and accurate power supply designs. and accurate power supply designs. • • Amplifiers/RF and Microwave—We are also a leading supplier of high-performance amplifiers which are used to Amplifiers/RF and Microwave—We are also a leading supplier of high-performance amplifiers which are used to condition analog signals. High performance amplifiers emphasize the performance dimensions of speed and precision. condition analog signals. High performance amplifiers emphasize the performance dimensions of speed and precision. Within this product portfolio we provide precision, instrumentation, high speed, intermediate frequency/RF/ Within this product portfolio we provide precision, instrumentation, high speed, intermediate frequency/RF/ microwave, broadband, and other amplifiers. Our analog product line also includes a broad portfolio of high- microwave, broadband, and other amplifiers. Our analog product line also includes a broad portfolio of high- performance RF and microwave ICs covering the entire RF signal chain. Our high-performance RF and microwave performance RF and microwave ICs covering the entire RF signal chain. Our high-performance RF and microwave ICs support the high-performance requirements of cellular infrastructure and a broad range of applications in our target ICs support the high-performance requirements of cellular infrastructure and a broad range of applications in our target markets, including instrumentation, aerospace and automotive. markets, including instrumentation, aerospace and automotive. • • Sensors & Actuators—Our analog technology portfolio is comprised of sensor and actuator products, including Sensors & Actuators—Our analog technology portfolio is comprised of sensor and actuator products, including products based on micro-electro-mechanical systems (MEMS) technology. MEMS technology enables us to build products based on micro-electro-mechanical systems (MEMS) technology. MEMS technology enables us to build extremely small sensors that incorporate an electromechanical structure and the supporting analog circuitry for extremely small sensors that incorporate an electromechanical structure and the supporting analog circuitry for conditioning signals obtained from the sensing element. Our MEMS product portfolio includes accelerometers used to conditioning signals obtained from the sensing element. Our MEMS product portfolio includes accelerometers used to sense acceleration, gyroscopes used to sense rotation, inertial measurement units used to sense multiple degrees of sense acceleration, gyroscopes used to sense rotation, inertial measurement units used to sense multiple degrees of freedom combining multiple sensing types along multiple axes, and broadband switches suitable for radio and freedom combining multiple sensing types along multiple axes, and broadband switches suitable for radio and instrument systems. We offer other high-performance sensors, from temperature to magnetic fields, that are deployed instrument systems. We offer other high-performance sensors, from temperature to magnetic fields, that are deployed in a variety of systems. In addition to sensor products, our other analog product category includes isolators that enable in a variety of systems. In addition to sensor products, our other analog product category includes isolators that enable designers to implement isolation in designs without the cost, size, power, performance, and reliability constraints designers to implement isolation in designs without the cost, size, power, performance, and reliability constraints found with optocouplers. found with optocouplers. • • Digital Signal Processing and System Products (DSPs)—DSPs are optimized for high-speed numeric calculations, Digital Signal Processing and System Products (DSPs)—DSPs are optimized for high-speed numeric calculations, which are essential for instantaneous, or real-time, processing of digital data generated, in most cases, from analog to which are essential for instantaneous, or real-time, processing of digital data generated, in most cases, from analog to digital signal conversion. Our DSPs are designed to be fully programmable and to efficiently execute specialized digital signal conversion. Our DSPs are designed to be fully programmable and to efficiently execute specialized software programs, or algorithms, associated with processing digitized real-time, real-world data. Programmable DSPs software programs, or algorithms, associated with processing digitized real-time, real-world data. Programmable DSPs are designed to provide the flexibility to modify the device’s function quickly and inexpensively using software. Our are designed to provide the flexibility to modify the device’s function quickly and inexpensively using software. Our general-purpose DSP IC customers typically write their own algorithms using software development tools provided by general-purpose DSP IC customers typically write their own algorithms using software development tools provided by us and third-party suppliers. Our DSPs are designed in families of products that share common architectures and us and third-party suppliers. Our DSPs are designed in families of products that share common architectures and therefore can execute the same software across a range of products. therefore can execute the same software across a range of products. Sales Channel Sales Channel We sell our products globally through a direct sales force, third-party distributors, independent sales representatives and We sell our products globally through a direct sales force, third-party distributors, independent sales representatives and via our website. We have direct sales offices, sales representatives and/or distributors in over 50 countries. We support our via our website. We have direct sales offices, sales representatives and/or distributors in over 50 countries. We support our worldwide sales efforts through our website and with extensive promotional programs that include editorial coverage and paid worldwide sales efforts through our website and with extensive promotional programs that include editorial coverage and paid advertising in online and printed trade publications, webinars, social media and communities, promotional and training videos, advertising in online and printed trade publications, webinars, social media and communities, promotional and training videos, direct mail programs, technical seminars and participation in trade shows. We publish, share and distribute technical content direct mail programs, technical seminars and participation in trade shows. We publish, share and distribute technical content such as data sheets, application guides and catalogs. We maintain a staff of field application engineers who aid customers in such as data sheets, application guides and catalogs. We maintain a staff of field application engineers who aid customers in incorporating our products into their products. In addition, we offer a variety of web-based tools that ease product selection and incorporating our products into their products. In addition, we offer a variety of web-based tools that ease product selection and aid in the design process for our customers. aid in the design process for our customers. We believe distributors provide a cost-effective means of reaching a broad range of customers while providing efficient We believe distributors provide a cost-effective means of reaching a broad range of customers while providing efficient logistics services. From time to time, we may add or terminate distributors in specific geographies, or move customers to a logistics services. From time to time, we may add or terminate distributors in specific geographies, or move customers to a direct support or fulfillment model as we deem appropriate given our strategies, the level of distributor business activity and direct support or fulfillment model as we deem appropriate given our strategies, the level of distributor business activity and distributor performance and financial condition. distributor performance and financial condition. These distributors typically maintain an inventory of our products. Some of them also sell products that compete with our These distributors typically maintain an inventory of our products. Some of them also sell products that compete with our products, including those for which we are an alternate source. We make sales to distributors under agreements that allow products, including those for which we are an alternate source. We make sales to distributors under agreements that allow certain distributors to receive price adjustment credits and to return qualifying products for credit, as determined by us, in order certain distributors to receive price adjustment credits and to return qualifying products for credit, as determined by us, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such returns to a certain percentage of our shipments to that distributor during the prior quarter. In addition, certain distributors are returns to a certain percentage of our shipments to that distributor during the prior quarter. In addition, certain distributors are allowed to return unsold products if we terminate the relationship with the distributor. Additional information relating to our allowed to return unsold products if we terminate the relationship with the distributor. Additional information relating to our revenue and customer concentration is set forth in Note 2l, Concentrations of Risk; Note 2n, Revenue Recognition; and Note 4, revenue and customer concentration is set forth in Note 2l, Concentrations of Risk; Note 2n, Revenue Recognition; and Note 4, Industry, Segment and Geographic Information, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 Industry, Segment and Geographic Information, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. of this Annual Report on Form 10-K. We typically do not have long-term sales contracts with our customers. In some of our markets where end-user demand We typically do not have long-term sales contracts with our customers. In some of our markets where end-user demand may be particularly volatile and difficult to predict, some customers place orders that require us to manufacture product and may be particularly volatile and difficult to predict, some customers place orders that require us to manufacture product and 3 3 4 4 Acquisition of Maxim Integrated Products, Inc. Acquisition of Maxim Integrated Products, Inc. On August 26, 2021 (Acquisition Date), we completed the acquisition of Maxim, an independent manufacturer of On August 26, 2021 (Acquisition Date), we completed the acquisition of Maxim, an independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and Plan of Merger, dated as of July innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date, for total consideration of approximately $28.0 billion of of a share of the Company’s common stock as of the Acquisition Date, for total consideration of approximately $28.0 billion of our common stock. The acquisition of Maxim is referred to as the Acquisition. our common stock. The acquisition of Maxim is referred to as the Acquisition. Available Information Available Information We maintain a website with the address www.analog.com. We are not including the information contained on our website We maintain a website with the address www.analog.com. We are not including the information contained on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available free of charge through as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (including our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (including exhibits), and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or exhibits), and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (SEC). We also make available on our website our by-laws, furnish such material to, the Securities and Exchange Commission (SEC). We also make available on our website our by-laws, corporate governance guidelines, the charters for our audit committee, compensation committee, and nominating and corporate corporate governance guidelines, the charters for our audit committee, compensation committee, and nominating and corporate governance committee, our equity award granting policies, our code of business conduct and ethics which applies to our governance committee, our equity award granting policies, our code of business conduct and ethics which applies to our directors, officers and employees, and our related person transaction policy, and such information is available in print and free directors, officers and employees, and our related person transaction policy, and such information is available in print and free of charge to any shareholder of Analog Devices who requests it. In addition, we intend to disclose on our website any of charge to any shareholder of Analog Devices who requests it. In addition, we intend to disclose on our website any amendments to, or waivers from, our code of business conduct and ethics that are required to be publicly disclosed pursuant to amendments to, or waivers from, our code of business conduct and ethics that are required to be publicly disclosed pursuant to rules of the SEC or Nasdaq. rules of the SEC or Nasdaq. Products Products Semiconductor components are the building blocks used in electronic systems and equipment. These components are Semiconductor components are the building blocks used in electronic systems and equipment. These components are classified as either discrete devices, such as individual transistors, or as ICs, in which a number of transistors and other classified as either discrete devices, such as individual transistors, or as ICs, in which a number of transistors and other elements are combined to form a more complicated electronic circuit. elements are combined to form a more complicated electronic circuit. Our ICs are designed to address a wide range of real-world signal processing applications. We sell our ICs to customers Our ICs are designed to address a wide range of real-world signal processing applications. We sell our ICs to customers worldwide, many of whom use products spanning our core technologies in a wide range of applications. Our IC product worldwide, many of whom use products spanning our core technologies in a wide range of applications. Our IC product portfolio includes both general-purpose products used by a broad range of customers and applications, as well as application- portfolio includes both general-purpose products used by a broad range of customers and applications, as well as application- specific products designed for specific target markets. By using readily available, high-performance, general-purpose products specific products designed for specific target markets. By using readily available, high-performance, general-purpose products in their systems, our customers can reduce the time they need to bring new products to market. Given the high cost of in their systems, our customers can reduce the time they need to bring new products to market. Given the high cost of developing more customized ICs, our standard products often provide a cost-effective solution for many low to medium volume developing more customized ICs, our standard products often provide a cost-effective solution for many low to medium volume applications. More specifically, our analog ICs monitor, condition, amplify or transform continuous analog signals associated applications. More specifically, our analog ICs monitor, condition, amplify or transform continuous analog signals associated with physical properties, such as temperature, pressure, weight, light, sound or motion, and play an important role in bridging with physical properties, such as temperature, pressure, weight, light, sound or motion, and play an important role in bridging real world phenomena to a variety of electronic systems. Our analog ICs also provide voltage regulation and power control to real world phenomena to a variety of electronic systems. Our analog ICs also provide voltage regulation and power control to electronic systems. electronic systems. We also focus on working with leading customers to design application-specific solutions. We begin with our existing We also focus on working with leading customers to design application-specific solutions. We begin with our existing core technologies, which leverage our analog and mixed signal, power management, RF and microwave, edge processors and core technologies, which leverage our analog and mixed signal, power management, RF and microwave, edge processors and other sensors, and devise solutions that more closely meet the needs of a specific customer or group of customers. Because we other sensors, and devise solutions that more closely meet the needs of a specific customer or group of customers. Because we have already developed the core technology platform for our general-purpose products, we can create application-specific have already developed the core technology platform for our general-purpose products, we can create application-specific solutions quickly and efficiently. solutions quickly and efficiently. Our analog and mixed-signal IC technology has been the foundation of our business for over five decades, and we are one Our analog and mixed-signal IC technology has been the foundation of our business for over five decades, and we are one of the world’s largest suppliers of high-performance analog ICs. Our analog signal processing ICs are primarily high- of the world’s largest suppliers of high-performance analog ICs. Our analog signal processing ICs are primarily high- performance devices, offering higher dynamic range, greater bandwidth, and other enhanced features. We believe that the performance devices, offering higher dynamic range, greater bandwidth, and other enhanced features. We believe that the principal advantages these products have as compared to competitors’ products include higher accuracy, higher speed, lower principal advantages these products have as compared to competitors’ products include higher accuracy, higher speed, lower cost per function, smaller size, lower power consumption and fewer components, resulting in improved performance and cost per function, smaller size, lower power consumption and fewer components, resulting in improved performance and reliability. Our product portfolio includes several thousand analog ICs, many of which can have several hundred end customers. reliability. Our product portfolio includes several thousand analog ICs, many of which can have several hundred end customers. Our analog ICs typically have long product life cycles. Our customers include original equipment manufacturers (OEMs) and Our analog ICs typically have long product life cycles. Our customers include original equipment manufacturers (OEMs) and customers who build electronic subsystems for integration into larger systems. customers who build electronic subsystems for integration into larger systems. Our product offerings include more than 75,000 stock keeping units (SKUs) that can be aggregated into the following Our product offerings include more than 75,000 stock keeping units (SKUs) that can be aggregated into the following general categories: general categories: • • Analog and Mixed Signal—We are a leading supplier of data converter products. Data converters translate real-world Analog and Mixed Signal—We are a leading supplier of data converter products. Data converters translate real-world analog signals into digital data and also translate digital data into analog signals. Data converters remain our largest analog signals into digital data and also translate digital data into analog signals. Data converters remain our largest and most diverse product family and an area where we are continuously innovating to enable our customers to redefine and most diverse product family and an area where we are continuously innovating to enable our customers to redefine and differentiate their products. Our converter products combine sampling rates and accuracy with the low noise, and differentiate their products. Our converter products combine sampling rates and accuracy with the low noise, power, price and small package size required by industrial, automotive, consumer, and communications electronics. power, price and small package size required by industrial, automotive, consumer, and communications electronics. • • • • • • • • Power Management & Reference—Power management and reference products, which include functions such as power Power Management & Reference—Power management and reference products, which include functions such as power conversion, driver monitoring, sequencing and energy management, provide efficient solutions for power management conversion, driver monitoring, sequencing and energy management, provide efficient solutions for power management and conversion applications in the automotive, communications, industrial and high-end consumer markets. Our high- and conversion applications in the automotive, communications, industrial and high-end consumer markets. Our high- performance power ICs include powerful performance, integration and software design simulation tools to provide fast performance power ICs include powerful performance, integration and software design simulation tools to provide fast and accurate power supply designs. and accurate power supply designs. Amplifiers/RF and Microwave—We are also a leading supplier of high-performance amplifiers which are used to Amplifiers/RF and Microwave—We are also a leading supplier of high-performance amplifiers which are used to condition analog signals. High performance amplifiers emphasize the performance dimensions of speed and precision. condition analog signals. High performance amplifiers emphasize the performance dimensions of speed and precision. Within this product portfolio we provide precision, instrumentation, high speed, intermediate frequency/RF/ Within this product portfolio we provide precision, instrumentation, high speed, intermediate frequency/RF/ microwave, broadband, and other amplifiers. Our analog product line also includes a broad portfolio of high- microwave, broadband, and other amplifiers. Our analog product line also includes a broad portfolio of high- performance RF and microwave ICs covering the entire RF signal chain. Our high-performance RF and microwave performance RF and microwave ICs covering the entire RF signal chain. Our high-performance RF and microwave ICs support the high-performance requirements of cellular infrastructure and a broad range of applications in our target ICs support the high-performance requirements of cellular infrastructure and a broad range of applications in our target markets, including instrumentation, aerospace and automotive. markets, including instrumentation, aerospace and automotive. Sensors & Actuators—Our analog technology portfolio is comprised of sensor and actuator products, including Sensors & Actuators—Our analog technology portfolio is comprised of sensor and actuator products, including products based on micro-electro-mechanical systems (MEMS) technology. MEMS technology enables us to build products based on micro-electro-mechanical systems (MEMS) technology. MEMS technology enables us to build extremely small sensors that incorporate an electromechanical structure and the supporting analog circuitry for extremely small sensors that incorporate an electromechanical structure and the supporting analog circuitry for conditioning signals obtained from the sensing element. Our MEMS product portfolio includes accelerometers used to conditioning signals obtained from the sensing element. Our MEMS product portfolio includes accelerometers used to sense acceleration, gyroscopes used to sense rotation, inertial measurement units used to sense multiple degrees of sense acceleration, gyroscopes used to sense rotation, inertial measurement units used to sense multiple degrees of freedom combining multiple sensing types along multiple axes, and broadband switches suitable for radio and freedom combining multiple sensing types along multiple axes, and broadband switches suitable for radio and instrument systems. We offer other high-performance sensors, from temperature to magnetic fields, that are deployed instrument systems. We offer other high-performance sensors, from temperature to magnetic fields, that are deployed in a variety of systems. In addition to sensor products, our other analog product category includes isolators that enable in a variety of systems. In addition to sensor products, our other analog product category includes isolators that enable designers to implement isolation in designs without the cost, size, power, performance, and reliability constraints designers to implement isolation in designs without the cost, size, power, performance, and reliability constraints found with optocouplers. found with optocouplers. Digital Signal Processing and System Products (DSPs)—DSPs are optimized for high-speed numeric calculations, Digital Signal Processing and System Products (DSPs)—DSPs are optimized for high-speed numeric calculations, which are essential for instantaneous, or real-time, processing of digital data generated, in most cases, from analog to which are essential for instantaneous, or real-time, processing of digital data generated, in most cases, from analog to digital signal conversion. Our DSPs are designed to be fully programmable and to efficiently execute specialized digital signal conversion. Our DSPs are designed to be fully programmable and to efficiently execute specialized software programs, or algorithms, associated with processing digitized real-time, real-world data. Programmable DSPs software programs, or algorithms, associated with processing digitized real-time, real-world data. Programmable DSPs are designed to provide the flexibility to modify the device’s function quickly and inexpensively using software. Our are designed to provide the flexibility to modify the device’s function quickly and inexpensively using software. Our general-purpose DSP IC customers typically write their own algorithms using software development tools provided by general-purpose DSP IC customers typically write their own algorithms using software development tools provided by us and third-party suppliers. Our DSPs are designed in families of products that share common architectures and us and third-party suppliers. Our DSPs are designed in families of products that share common architectures and therefore can execute the same software across a range of products. therefore can execute the same software across a range of products. Sales Channel Sales Channel We sell our products globally through a direct sales force, third-party distributors, independent sales representatives and We sell our products globally through a direct sales force, third-party distributors, independent sales representatives and via our website. We have direct sales offices, sales representatives and/or distributors in over 50 countries. We support our via our website. We have direct sales offices, sales representatives and/or distributors in over 50 countries. We support our worldwide sales efforts through our website and with extensive promotional programs that include editorial coverage and paid worldwide sales efforts through our website and with extensive promotional programs that include editorial coverage and paid advertising in online and printed trade publications, webinars, social media and communities, promotional and training videos, advertising in online and printed trade publications, webinars, social media and communities, promotional and training videos, direct mail programs, technical seminars and participation in trade shows. We publish, share and distribute technical content direct mail programs, technical seminars and participation in trade shows. We publish, share and distribute technical content such as data sheets, application guides and catalogs. We maintain a staff of field application engineers who aid customers in such as data sheets, application guides and catalogs. We maintain a staff of field application engineers who aid customers in incorporating our products into their products. In addition, we offer a variety of web-based tools that ease product selection and incorporating our products into their products. In addition, we offer a variety of web-based tools that ease product selection and aid in the design process for our customers. aid in the design process for our customers. We believe distributors provide a cost-effective means of reaching a broad range of customers while providing efficient We believe distributors provide a cost-effective means of reaching a broad range of customers while providing efficient logistics services. From time to time, we may add or terminate distributors in specific geographies, or move customers to a logistics services. From time to time, we may add or terminate distributors in specific geographies, or move customers to a direct support or fulfillment model as we deem appropriate given our strategies, the level of distributor business activity and direct support or fulfillment model as we deem appropriate given our strategies, the level of distributor business activity and distributor performance and financial condition. distributor performance and financial condition. These distributors typically maintain an inventory of our products. Some of them also sell products that compete with our These distributors typically maintain an inventory of our products. Some of them also sell products that compete with our products, including those for which we are an alternate source. We make sales to distributors under agreements that allow products, including those for which we are an alternate source. We make sales to distributors under agreements that allow certain distributors to receive price adjustment credits and to return qualifying products for credit, as determined by us, in order certain distributors to receive price adjustment credits and to return qualifying products for credit, as determined by us, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such returns to a certain percentage of our shipments to that distributor during the prior quarter. In addition, certain distributors are returns to a certain percentage of our shipments to that distributor during the prior quarter. In addition, certain distributors are allowed to return unsold products if we terminate the relationship with the distributor. Additional information relating to our allowed to return unsold products if we terminate the relationship with the distributor. Additional information relating to our revenue and customer concentration is set forth in Note 2l, Concentrations of Risk; Note 2n, Revenue Recognition; and Note 4, revenue and customer concentration is set forth in Note 2l, Concentrations of Risk; Note 2n, Revenue Recognition; and Note 4, Industry, Segment and Geographic Information, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 Industry, Segment and Geographic Information, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. of this Annual Report on Form 10-K. We typically do not have long-term sales contracts with our customers. In some of our markets where end-user demand We typically do not have long-term sales contracts with our customers. In some of our markets where end-user demand may be particularly volatile and difficult to predict, some customers place orders that require us to manufacture product and may be particularly volatile and difficult to predict, some customers place orders that require us to manufacture product and 3 3 4 4 have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even any, of the product. In other instances, we manufacture product based on forecasts of customer demand. As a result, we may any, of the product. In other instances, we manufacture product based on forecasts of customer demand. As a result, we may incur inventory and manufacturing costs in advance of anticipated sales and are subject to the risk of cancellation of orders incur inventory and manufacturing costs in advance of anticipated sales and are subject to the risk of cancellation of orders leading to a sharp reduction of sales and backlog. Further, those orders or forecasts may be for products that meet the leading to a sharp reduction of sales and backlog. Further, those orders or forecasts may be for products that meet the customer’s unique requirements so that those canceled orders would, in addition, result in an inventory of unsaleable products, customer’s unique requirements so that those canceled orders would, in addition, result in an inventory of unsaleable products, resulting in potential inventory write-offs. As a result of lengthy manufacturing cycles for some of our products that are subject resulting in potential inventory write-offs. As a result of lengthy manufacturing cycles for some of our products that are subject to these uncertainties, the amount of unsaleable product could be substantial. to these uncertainties, the amount of unsaleable product could be substantial. Markets Markets The breakdown of our annual revenue by end market is set out in the table below: The breakdown of our annual revenue by end market is set out in the table below: End Market* End Market* Industrial Industrial Automotive Automotive Communications Communications Consumer Consumer Percent of Fiscal Percent of Fiscal 2022 Revenue 2022 Revenue Percent of Fiscal Percent of Fiscal 2021 Revenue 2021 Revenue Percent of Fiscal Percent of Fiscal 2020 Revenue 2020 Revenue 51% 51% 21% 21% 16% 16% 13% 13% 55% 55% 17% 17% 16% 16% 11% 11% 54% 54% 14% 14% 21% 21% 11% 11% *The sum of the individual percentages may not equal 100% due to rounding. *The sum of the individual percentages may not equal 100% due to rounding. The following describes some of the characteristics of, and customer products within, our major end markets of The following describes some of the characteristics of, and customer products within, our major end markets of Industrial, Automotive, Communications and Consumer: Industrial, Automotive, Communications and Consumer: Industrial — Our industrial market includes the following sectors: Industrial — Our industrial market includes the following sectors: Industrial Automation — We are a leader in industrial automation because we deliver robust, high performance solutions Industrial Automation — We are a leader in industrial automation because we deliver robust, high performance solutions from our deep motion and process control expertise and precision sensing measurement and interpretation to expansive from our deep motion and process control expertise and precision sensing measurement and interpretation to expansive connectivity and power capabilities. We take real-world phenomena in the most complex environments on the factory floor and connectivity and power capabilities. We take real-world phenomena in the most complex environments on the factory floor and translate it into valuable insights and outcomes. We co-create with customers to architect robotics systems and solutions that translate it into valuable insights and outcomes. We co-create with customers to architect robotics systems and solutions that improve dynamic behavior and precision while enhancing worker safety, machine health, and manufacturing flexibility. Our improve dynamic behavior and precision while enhancing worker safety, machine health, and manufacturing flexibility. Our industrial automation market includes applications such as: industrial automation market includes applications such as: • Condition-based monitoring (CbM) • Condition-based monitoring (CbM) • Industrial robotics • Industrial robotics • Factory and process control • Factory and process control • Industrial power supplies • Industrial power supplies • Industrial motion control • Industrial motion control Instrumentation & Measurement — Trusted measurement is at the forefront of innovation. With the rapid pace of global Instrumentation & Measurement — Trusted measurement is at the forefront of innovation. With the rapid pace of global transformation, from ubiquitous connectivity, to electrification, to artificial intelligence, to human health and environmental transformation, from ubiquitous connectivity, to electrification, to artificial intelligence, to human health and environmental sustainability — all these trends require reliable and efficient test solutions from R&D to manufacturing to field deployment. sustainability — all these trends require reliable and efficient test solutions from R&D to manufacturing to field deployment. We enable high performance measurement through our components and system solutions. Our RF, high-speed and power We enable high performance measurement through our components and system solutions. Our RF, high-speed and power management products are designed to enable solutions for complying with evolving communications standards. Our high- management products are designed to enable solutions for complying with evolving communications standards. Our high- voltage, isolation and precision products are a key part of the systems that are designed for safety, longevity and efficiency in voltage, isolation and precision products are a key part of the systems that are designed for safety, longevity and efficiency in electric vehicles and renewable energy. Beyond electrical testing, our precision and power technology enable analytical electric vehicles and renewable energy. Beyond electrical testing, our precision and power technology enable analytical instruments for drug or vaccine R&D and manufacturing, food safety and quality, and environmental monitoring. Our instruments for drug or vaccine R&D and manufacturing, food safety and quality, and environmental monitoring. Our instrumentation and measurement market includes applications such as: instrumentation and measurement market includes applications such as: • Automated test equipment • Automated test equipment • Electronic test and measurement • Electronic test and measurement • Environmental and process analysis • Environmental and process analysis • Automotive and energy test • Automotive and energy test • Life sciences and drug discovery • Life sciences and drug discovery Aerospace/Defense — The defense, commercial avionics and space markets all require high-performance ICs that meet Aerospace/Defense — The defense, commercial avionics and space markets all require high-performance ICs that meet rigorous environmental and reliability specifications. Many of our ICs can be supplied in versions that meet these standards. In rigorous environmental and reliability specifications. Many of our ICs can be supplied in versions that meet these standards. In addition, many products can be supplied to meet the standards required for broadcast satellites and other commercial space addition, many products can be supplied to meet the standards required for broadcast satellites and other commercial space applications. Most of our products sold in this market are specially tested versions of products derived from our standard applications. Most of our products sold in this market are specially tested versions of products derived from our standard product offering. As end systems are becoming more complex, many of our customers in this market also look for us to provide product offering. As end systems are becoming more complex, many of our customers in this market also look for us to provide higher levels of integration in order to minimize size, weight and power and to improve ease-of-use. As such, we also sell higher levels of integration in order to minimize size, weight and power and to improve ease-of-use. As such, we also sell products in the form of SiPs (system in package), printed circuit board assemblies, modules, and subsystems. Customer products in the form of SiPs (system in package), printed circuit board assemblies, modules, and subsystems. Customer products include applications such as: products include applications such as: • Navigation systems • Navigation systems • Space and satellite communications • Space and satellite communications • Communication systems • Communication systems • Radar systems • Radar systems • Security devices • Security devices • Electronic surveillance and countermeasures • Electronic surveillance and countermeasures Healthcare — The healthcare market is evolving in response to the need for increased access to better and more Healthcare — The healthcare market is evolving in response to the need for increased access to better and more affordable care, as well as a growing focus on preventative healthcare and the need to better manage chronic conditions. To affordable care, as well as a growing focus on preventative healthcare and the need to better manage chronic conditions. To help achieve this, we are collaborating with customers and partners on innovative solutions that are designed to achieve better help achieve this, we are collaborating with customers and partners on innovative solutions that are designed to achieve better outcomes for patients and physicians at reduced costs for all. Our offerings include both standard and application-specific outcomes for patients and physicians at reduced costs for all. Our offerings include both standard and application-specific products and are used in applications such as: products and are used in applications such as: • Ultrasound systems • Ultrasound systems • X-Ray equipment (CT and DR) • X-Ray equipment (CT and DR) • Image guided therapy • Image guided therapy • Multi-parameter vital signs monitors • Multi-parameter vital signs monitors • Remote patient monitoring • Remote patient monitoring • Anesthesia equipment • Anesthesia equipment • Lab diagnostic equipment • Lab diagnostic equipment • Surgical tools and instruments • Surgical tools and instruments • Blood analyzers • Blood analyzers • Point-of-care diagnostics • Point-of-care diagnostics Energy Management — The global drive towards improved energy efficiency, conservation, reliability and cleanliness is Energy Management — The global drive towards improved energy efficiency, conservation, reliability and cleanliness is driving investments in electrification across many different application areas, including electric vehicle charging infrastructure, driving investments in electrification across many different application areas, including electric vehicle charging infrastructure, renewable energy, power transmission and distribution systems, electric meters and other innovative areas. The common renewable energy, power transmission and distribution systems, electric meters and other innovative areas. The common characteristic behind these efforts is the addition of sensing, measurement and communication technologies to electrical characteristic behind these efforts is the addition of sensing, measurement and communication technologies to electrical infrastructure. Our offerings include both standard and application-specific products and are used in applications such as: infrastructure. Our offerings include both standard and application-specific products and are used in applications such as: • Utility meters • Utility meters • Electric vehicle charging infrastructure • Electric vehicle charging infrastructure • Wind turbines • Wind turbines • Solar inverters • Solar inverters • Substation relays and automation equipment • Substation relays and automation equipment • Building energy automation/control • Building energy automation/control Automotive — We develop differentiated high-performance signal processing solutions, which enable sophisticated Automotive — We develop differentiated high-performance signal processing solutions, which enable sophisticated transportation systems that span infotainment, electrification and autonomous applications. Through collaboration with transportation systems that span infotainment, electrification and autonomous applications. Through collaboration with manufacturers worldwide, we have developed a broad portfolio of analog, digital, power and sensor ICs that address the manufacturers worldwide, we have developed a broad portfolio of analog, digital, power and sensor ICs that address the emerging needs of this evolving industry. Our focus is on audio/video applications that lead to an enriched in-cabin experience, emerging needs of this evolving industry. Our focus is on audio/video applications that lead to an enriched in-cabin experience, electrification applications that improve vehicle range and reduce emissions, and mission-critical perception and navigation electrification applications that improve vehicle range and reduce emissions, and mission-critical perception and navigation applications that enable vehicles to more clearly sense the external environment. Specifically, we have developed products used applications that enable vehicles to more clearly sense the external environment. Specifically, we have developed products used in applications such as: in applications such as: • Video processing and connectivity • Video processing and connectivity • Car audio, voice processing and connectivity • Car audio, voice processing and connectivity • Battery monitoring and management systems • Battery monitoring and management systems Communications — The development of broadband, wireless and internet infrastructures around the world has created Communications — The development of broadband, wireless and internet infrastructures around the world has created an important market for our communications products. Communications technology involves the processing of signals that are an important market for our communications products. Communications technology involves the processing of signals that are converted from analog to digital and digital to analog form during the process of transmitting and receiving data. The need for converted from analog to digital and digital to analog form during the process of transmitting and receiving data. The need for higher speed and reduced power consumption, coupled with more reliable, bandwidth-efficient communications, creates higher speed and reduced power consumption, coupled with more reliable, bandwidth-efficient communications, creates demand for our products, which are used in the full spectrum of signal processing for data, video, voice and machine-to- demand for our products, which are used in the full spectrum of signal processing for data, video, voice and machine-to- machine communications. In wireless and wireline communication applications, our products are incorporated into: machine communications. In wireless and wireline communication applications, our products are incorporated into: • Cellular base station equipment • Cellular base station equipment • Microwave backhaul systems • Microwave backhaul systems • Data centers and data storage • Data centers and data storage • Satellite and terrestrial broadband access equipment • Satellite and terrestrial broadband access equipment • Optical and cable networking equipment for data center • Optical and cable networking equipment for data center and carrier providers and carrier providers Consumer — To address the market demand for state of the art personal and professional entertainment systems and the Consumer — To address the market demand for state of the art personal and professional entertainment systems and the consumer demand for high quality user interfaces, music, movies and photographs, we have developed analog, digital and consumer demand for high quality user interfaces, music, movies and photographs, we have developed analog, digital and mixed-signal and power solutions that meet the rigorous cost and time-to-market requirements of the consumer electronics mixed-signal and power solutions that meet the rigorous cost and time-to-market requirements of the consumer electronics market. The emergence of high-performance, feature-rich consumer products has created a market for our high-performance market. The emergence of high-performance, feature-rich consumer products has created a market for our high-performance ICs with a high level of specific functionality that enables best in class user experience and battery management. These ICs with a high level of specific functionality that enables best in class user experience and battery management. These products include: products include: • Portable devices (smart phones, tablets and wearable • Portable devices (smart phones, tablets and wearable devices) for media and vital signs monitoring applications devices) for media and vital signs monitoring applications • Prosumer audio/video equipment • Prosumer audio/video equipment 5 5 6 6 have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even any, of the product. In other instances, we manufacture product based on forecasts of customer demand. As a result, we may any, of the product. In other instances, we manufacture product based on forecasts of customer demand. As a result, we may incur inventory and manufacturing costs in advance of anticipated sales and are subject to the risk of cancellation of orders incur inventory and manufacturing costs in advance of anticipated sales and are subject to the risk of cancellation of orders leading to a sharp reduction of sales and backlog. Further, those orders or forecasts may be for products that meet the leading to a sharp reduction of sales and backlog. Further, those orders or forecasts may be for products that meet the customer’s unique requirements so that those canceled orders would, in addition, result in an inventory of unsaleable products, customer’s unique requirements so that those canceled orders would, in addition, result in an inventory of unsaleable products, resulting in potential inventory write-offs. As a result of lengthy manufacturing cycles for some of our products that are subject resulting in potential inventory write-offs. As a result of lengthy manufacturing cycles for some of our products that are subject to these uncertainties, the amount of unsaleable product could be substantial. to these uncertainties, the amount of unsaleable product could be substantial. The breakdown of our annual revenue by end market is set out in the table below: The breakdown of our annual revenue by end market is set out in the table below: products include applications such as: products include applications such as: • Navigation systems • Navigation systems • Space and satellite communications • Space and satellite communications • Communication systems • Communication systems • Radar systems • Radar systems • Security devices • Security devices • Electronic surveillance and countermeasures • Electronic surveillance and countermeasures Healthcare — The healthcare market is evolving in response to the need for increased access to better and more Healthcare — The healthcare market is evolving in response to the need for increased access to better and more affordable care, as well as a growing focus on preventative healthcare and the need to better manage chronic conditions. To affordable care, as well as a growing focus on preventative healthcare and the need to better manage chronic conditions. To help achieve this, we are collaborating with customers and partners on innovative solutions that are designed to achieve better help achieve this, we are collaborating with customers and partners on innovative solutions that are designed to achieve better outcomes for patients and physicians at reduced costs for all. Our offerings include both standard and application-specific outcomes for patients and physicians at reduced costs for all. Our offerings include both standard and application-specific products and are used in applications such as: products and are used in applications such as: Percent of Fiscal Percent of Fiscal 2022 Revenue 2022 Revenue Percent of Fiscal Percent of Fiscal 2021 Revenue 2021 Revenue Percent of Fiscal Percent of Fiscal 2020 Revenue 2020 Revenue 51% 51% 21% 21% 16% 16% 13% 13% 55% 55% 17% 17% 16% 16% 11% 11% 54% 54% 14% 14% 21% 21% 11% 11% • Ultrasound systems • Ultrasound systems • X-Ray equipment (CT and DR) • X-Ray equipment (CT and DR) • Image guided therapy • Image guided therapy • Multi-parameter vital signs monitors • Multi-parameter vital signs monitors • Remote patient monitoring • Remote patient monitoring • Anesthesia equipment • Anesthesia equipment • Lab diagnostic equipment • Lab diagnostic equipment • Surgical tools and instruments • Surgical tools and instruments • Blood analyzers • Blood analyzers • Point-of-care diagnostics • Point-of-care diagnostics Markets Markets End Market* End Market* Industrial Industrial Automotive Automotive Communications Communications Consumer Consumer *The sum of the individual percentages may not equal 100% due to rounding. *The sum of the individual percentages may not equal 100% due to rounding. The following describes some of the characteristics of, and customer products within, our major end markets of The following describes some of the characteristics of, and customer products within, our major end markets of Industrial, Automotive, Communications and Consumer: Industrial, Automotive, Communications and Consumer: Industrial — Our industrial market includes the following sectors: Industrial — Our industrial market includes the following sectors: Industrial Automation — We are a leader in industrial automation because we deliver robust, high performance solutions Industrial Automation — We are a leader in industrial automation because we deliver robust, high performance solutions from our deep motion and process control expertise and precision sensing measurement and interpretation to expansive from our deep motion and process control expertise and precision sensing measurement and interpretation to expansive connectivity and power capabilities. We take real-world phenomena in the most complex environments on the factory floor and connectivity and power capabilities. We take real-world phenomena in the most complex environments on the factory floor and translate it into valuable insights and outcomes. We co-create with customers to architect robotics systems and solutions that translate it into valuable insights and outcomes. We co-create with customers to architect robotics systems and solutions that improve dynamic behavior and precision while enhancing worker safety, machine health, and manufacturing flexibility. Our improve dynamic behavior and precision while enhancing worker safety, machine health, and manufacturing flexibility. Our industrial automation market includes applications such as: industrial automation market includes applications such as: • Condition-based monitoring (CbM) • Condition-based monitoring (CbM) • Industrial robotics • Industrial robotics • Factory and process control • Factory and process control • Industrial power supplies • Industrial power supplies • Industrial motion control • Industrial motion control Instrumentation & Measurement — Trusted measurement is at the forefront of innovation. With the rapid pace of global Instrumentation & Measurement — Trusted measurement is at the forefront of innovation. With the rapid pace of global transformation, from ubiquitous connectivity, to electrification, to artificial intelligence, to human health and environmental transformation, from ubiquitous connectivity, to electrification, to artificial intelligence, to human health and environmental sustainability — all these trends require reliable and efficient test solutions from R&D to manufacturing to field deployment. sustainability — all these trends require reliable and efficient test solutions from R&D to manufacturing to field deployment. We enable high performance measurement through our components and system solutions. Our RF, high-speed and power We enable high performance measurement through our components and system solutions. Our RF, high-speed and power management products are designed to enable solutions for complying with evolving communications standards. Our high- management products are designed to enable solutions for complying with evolving communications standards. Our high- voltage, isolation and precision products are a key part of the systems that are designed for safety, longevity and efficiency in voltage, isolation and precision products are a key part of the systems that are designed for safety, longevity and efficiency in electric vehicles and renewable energy. Beyond electrical testing, our precision and power technology enable analytical electric vehicles and renewable energy. Beyond electrical testing, our precision and power technology enable analytical instruments for drug or vaccine R&D and manufacturing, food safety and quality, and environmental monitoring. Our instruments for drug or vaccine R&D and manufacturing, food safety and quality, and environmental monitoring. Our instrumentation and measurement market includes applications such as: instrumentation and measurement market includes applications such as: • Automated test equipment • Automated test equipment • Electronic test and measurement • Electronic test and measurement • Environmental and process analysis • Environmental and process analysis • Automotive and energy test • Automotive and energy test • Life sciences and drug discovery • Life sciences and drug discovery Aerospace/Defense — The defense, commercial avionics and space markets all require high-performance ICs that meet Aerospace/Defense — The defense, commercial avionics and space markets all require high-performance ICs that meet rigorous environmental and reliability specifications. Many of our ICs can be supplied in versions that meet these standards. In rigorous environmental and reliability specifications. Many of our ICs can be supplied in versions that meet these standards. In addition, many products can be supplied to meet the standards required for broadcast satellites and other commercial space addition, many products can be supplied to meet the standards required for broadcast satellites and other commercial space applications. Most of our products sold in this market are specially tested versions of products derived from our standard applications. Most of our products sold in this market are specially tested versions of products derived from our standard product offering. As end systems are becoming more complex, many of our customers in this market also look for us to provide product offering. As end systems are becoming more complex, many of our customers in this market also look for us to provide higher levels of integration in order to minimize size, weight and power and to improve ease-of-use. As such, we also sell higher levels of integration in order to minimize size, weight and power and to improve ease-of-use. As such, we also sell products in the form of SiPs (system in package), printed circuit board assemblies, modules, and subsystems. Customer products in the form of SiPs (system in package), printed circuit board assemblies, modules, and subsystems. Customer Energy Management — The global drive towards improved energy efficiency, conservation, reliability and cleanliness is Energy Management — The global drive towards improved energy efficiency, conservation, reliability and cleanliness is driving investments in electrification across many different application areas, including electric vehicle charging infrastructure, driving investments in electrification across many different application areas, including electric vehicle charging infrastructure, renewable energy, power transmission and distribution systems, electric meters and other innovative areas. The common renewable energy, power transmission and distribution systems, electric meters and other innovative areas. The common characteristic behind these efforts is the addition of sensing, measurement and communication technologies to electrical characteristic behind these efforts is the addition of sensing, measurement and communication technologies to electrical infrastructure. Our offerings include both standard and application-specific products and are used in applications such as: infrastructure. Our offerings include both standard and application-specific products and are used in applications such as: • Utility meters • Utility meters • Electric vehicle charging infrastructure • Electric vehicle charging infrastructure • Substation relays and automation equipment • Substation relays and automation equipment • Wind turbines • Wind turbines • Solar inverters • Solar inverters • Building energy automation/control • Building energy automation/control Automotive — We develop differentiated high-performance signal processing solutions, which enable sophisticated Automotive — We develop differentiated high-performance signal processing solutions, which enable sophisticated transportation systems that span infotainment, electrification and autonomous applications. Through collaboration with transportation systems that span infotainment, electrification and autonomous applications. Through collaboration with manufacturers worldwide, we have developed a broad portfolio of analog, digital, power and sensor ICs that address the manufacturers worldwide, we have developed a broad portfolio of analog, digital, power and sensor ICs that address the emerging needs of this evolving industry. Our focus is on audio/video applications that lead to an enriched in-cabin experience, emerging needs of this evolving industry. Our focus is on audio/video applications that lead to an enriched in-cabin experience, electrification applications that improve vehicle range and reduce emissions, and mission-critical perception and navigation electrification applications that improve vehicle range and reduce emissions, and mission-critical perception and navigation applications that enable vehicles to more clearly sense the external environment. Specifically, we have developed products used applications that enable vehicles to more clearly sense the external environment. Specifically, we have developed products used in applications such as: in applications such as: • Car audio, voice processing and connectivity • Car audio, voice processing and connectivity • Video processing and connectivity • Video processing and connectivity • Battery monitoring and management systems • Battery monitoring and management systems Communications — The development of broadband, wireless and internet infrastructures around the world has created Communications — The development of broadband, wireless and internet infrastructures around the world has created an important market for our communications products. Communications technology involves the processing of signals that are an important market for our communications products. Communications technology involves the processing of signals that are converted from analog to digital and digital to analog form during the process of transmitting and receiving data. The need for converted from analog to digital and digital to analog form during the process of transmitting and receiving data. The need for higher speed and reduced power consumption, coupled with more reliable, bandwidth-efficient communications, creates higher speed and reduced power consumption, coupled with more reliable, bandwidth-efficient communications, creates demand for our products, which are used in the full spectrum of signal processing for data, video, voice and machine-to- demand for our products, which are used in the full spectrum of signal processing for data, video, voice and machine-to- machine communications. In wireless and wireline communication applications, our products are incorporated into: machine communications. In wireless and wireline communication applications, our products are incorporated into: • Cellular base station equipment • Cellular base station equipment • Microwave backhaul systems • Microwave backhaul systems • Data centers and data storage • Data centers and data storage • Satellite and terrestrial broadband access equipment • Satellite and terrestrial broadband access equipment • Optical and cable networking equipment for data center • Optical and cable networking equipment for data center and carrier providers and carrier providers Consumer — To address the market demand for state of the art personal and professional entertainment systems and the Consumer — To address the market demand for state of the art personal and professional entertainment systems and the consumer demand for high quality user interfaces, music, movies and photographs, we have developed analog, digital and consumer demand for high quality user interfaces, music, movies and photographs, we have developed analog, digital and mixed-signal and power solutions that meet the rigorous cost and time-to-market requirements of the consumer electronics mixed-signal and power solutions that meet the rigorous cost and time-to-market requirements of the consumer electronics market. The emergence of high-performance, feature-rich consumer products has created a market for our high-performance market. The emergence of high-performance, feature-rich consumer products has created a market for our high-performance ICs with a high level of specific functionality that enables best in class user experience and battery management. These ICs with a high level of specific functionality that enables best in class user experience and battery management. These products include: products include: • Portable devices (smart phones, tablets and wearable • Portable devices (smart phones, tablets and wearable devices) for media and vital signs monitoring applications devices) for media and vital signs monitoring applications • Prosumer audio/video equipment • Prosumer audio/video equipment 5 5 6 6 See Note 4, Industry, Segment and Geographic Information, of the Notes to Consolidated Financial Statements contained See Note 4, Industry, Segment and Geographic Information, of the Notes to Consolidated Financial Statements contained product development and shipment of product to our customers. Although we have experienced shortages of components, product development and shipment of product to our customers. Although we have experienced shortages of components, in Part II, Item 8 of this Annual Report on Form 10-K for further information about our products by end market. in Part II, Item 8 of this Annual Report on Form 10-K for further information about our products by end market. materials and external foundry services from time to time, we are working to balance these constraints as we shift our global materials and external foundry services from time to time, we are working to balance these constraints as we shift our global Competition Competition We believe that competitive performance in the marketplace for signal processing products depends upon multiple We believe that competitive performance in the marketplace for signal processing products depends upon multiple factors, including technological innovation, strength of brand, diversity of product portfolio, product performance, technical factors, including technological innovation, strength of brand, diversity of product portfolio, product performance, technical support, delivery capabilities, customer service quality, reliability and price, with the relative importance of these factors support, delivery capabilities, customer service quality, reliability and price, with the relative importance of these factors varying among products, markets, and customers. We compete with a number of semiconductor companies in markets that are varying among products, markets, and customers. We compete with a number of semiconductor companies in markets that are highly competitive. Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to highly competitive. Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to develop and market products that compete with our products. Some of our competitors may have more advantageous supply or develop and market products that compete with our products. Some of our competitors may have more advantageous supply or development relationships with our current and potential customers or suppliers. Our competitors also include both emerging development relationships with our current and potential customers or suppliers. Our competitors also include both emerging companies selling specialized products in markets we serve and companies outside of the U.S., including entities associated companies selling specialized products in markets we serve and companies outside of the U.S., including entities associated with well-funded efforts by foreign governments to create indigenous semiconductor industries. with well-funded efforts by foreign governments to create indigenous semiconductor industries. We believe that our technical innovation emphasizing product performance and reliability, supported by our commitment We believe that our technical innovation emphasizing product performance and reliability, supported by our commitment to strong customer service and technical support, enables us to make a fundamental difference to our customers’ to strong customer service and technical support, enables us to make a fundamental difference to our customers’ competitiveness in our chosen markets. competitiveness in our chosen markets. Seasonality Seasonality Our sales are subject to a varying degree of seasonality. Historically, sales to customers during our first fiscal quarter Our sales are subject to a varying degree of seasonality. Historically, sales to customers during our first fiscal quarter may be lower than other quarters due to plant shutdowns at some of our customers during the holiday season. In general, the may be lower than other quarters due to plant shutdowns at some of our customers during the holiday season. In general, the seasonality for any specific period of time has not had a material impact on our results of operations. In addition, as explained seasonality for any specific period of time has not had a material impact on our results of operations. In addition, as explained in our risk factors contained in Item 1A of this Annual Report on Form 10-K, our revenue is more likely to be influenced on a in our risk factors contained in Item 1A of this Annual Report on Form 10-K, our revenue is more likely to be influenced on a quarter to quarter basis by cyclicality in the semiconductor industry. quarter to quarter basis by cyclicality in the semiconductor industry. We believe that a number of factors should be used to assess future customer demand, including backlog, macroeconomic We believe that a number of factors should be used to assess future customer demand, including backlog, macroeconomic trends, customer insights and current customer bookings as compared to billings (book-to-bill) ratio. We define backlog to trends, customer insights and current customer bookings as compared to billings (book-to-bill) ratio. We define backlog to mean firm orders from a customer or distributor with a requested delivery date within thirteen weeks. However, backlog may be mean firm orders from a customer or distributor with a requested delivery date within thirteen weeks. However, backlog may be impacted by the tendency of customers to rely on shorter lead times available from suppliers, including us, in periods of impacted by the tendency of customers to rely on shorter lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog and, in some instances, we may not have manufacturing capacity sufficient to fulfill all orders. We have increasing backlog and, in some instances, we may not have manufacturing capacity sufficient to fulfill all orders. We have experienced increased demand over the past two years leading to a constrained supply environment. In response, we have added experienced increased demand over the past two years leading to a constrained supply environment. In response, we have added manufacturing capacity to address some of the increased demand. As is customary in the semiconductor industry, we allow manufacturing capacity to address some of the increased demand. As is customary in the semiconductor industry, we allow most orders to be canceled within a reasonable notification period or deliveries to be delayed by customers without significant most orders to be canceled within a reasonable notification period or deliveries to be delayed by customers without significant penalty, while also allowing certain distributors to receive price adjustment credits and to return qualifying products for credit, penalty, while also allowing certain distributors to receive price adjustment credits and to return qualifying products for credit, as determined by us, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. as determined by us, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. Production Resources Production Resources Monolithic IC components are manufactured in a sequence of semiconductor production steps that include wafer Monolithic IC components are manufactured in a sequence of semiconductor production steps that include wafer fabrication, wafer testing, dicing the wafer into individual “chips,” or dice, assembly of the dice into packages and electrical fabrication, wafer testing, dicing the wafer into individual “chips,” or dice, assembly of the dice into packages and electrical testing of the devices in final packaged form. The raw materials used to manufacture these devices include silicon wafers, testing of the devices in final packaged form. The raw materials used to manufacture these devices include silicon wafers, processing chemicals (including liquefied gases), precious metals laminates, ceramic and plastic used for packaging. We processing chemicals (including liquefied gases), precious metals laminates, ceramic and plastic used for packaging. We utilize, develop and employ a wide variety of manufacturing processes, primarily based on bipolar and complementary metal- utilize, develop and employ a wide variety of manufacturing processes, primarily based on bipolar and complementary metal- oxide semiconductor (CMOS) transistors, which are specifically tailored for use in fabricating high-performance analog, DSP oxide semiconductor (CMOS) transistors, which are specifically tailored for use in fabricating high-performance analog, DSP and mixed-signal ICs. Devices such as MEMS, iCoupler® isolators and various sensors are fabricated using specialized and mixed-signal ICs. Devices such as MEMS, iCoupler® isolators and various sensors are fabricated using specialized processes, which typically use substantially similar equipment as bipolar and CMOS processes. processes, which typically use substantially similar equipment as bipolar and CMOS processes. Our IC products are fabricated on proprietary processes at our internal production facilities in Wilmington, Our IC products are fabricated on proprietary processes at our internal production facilities in Wilmington, Massachusetts; Camas, Washington; Beaverton, Oregon; and Limerick, Ireland and also on a mix of proprietary and non- Massachusetts; Camas, Washington; Beaverton, Oregon; and Limerick, Ireland and also on a mix of proprietary and non- proprietary processes at third-party wafer fabricators. We currently source more than half of our wafer requirements annually proprietary processes at third-party wafer fabricators. We currently source more than half of our wafer requirements annually from third-party wafer fabrication foundries, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others, and from third-party wafer fabrication foundries, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others, and the remainder is sourced internally. In addition, we operate an assembly, wafer sort and testing facility in Penang, Malaysia, the remainder is sourced internally. In addition, we operate an assembly, wafer sort and testing facility in Penang, Malaysia, and test facilities in the Philippines and Thailand. We also make extensive use of third-party subcontractors for the assembly and test facilities in the Philippines and Thailand. We also make extensive use of third-party subcontractors for the assembly and testing of our products. and testing of our products. Our products require a wide variety of components, raw materials and external foundry services, most of which we Our products require a wide variety of components, raw materials and external foundry services, most of which we purchase from third-party suppliers. We have multiple sources for many of the components and materials that we purchase and purchase from third-party suppliers. We have multiple sources for many of the components and materials that we purchase and incorporate into our products. If any of our key suppliers are unable or unwilling to manufacture and deliver sufficient incorporate into our products. If any of our key suppliers are unable or unwilling to manufacture and deliver sufficient quantities of components to us on the time schedule and of the quality that we require, we may be forced to seek to engage quantities of components to us on the time schedule and of the quality that we require, we may be forced to seek to engage additional or replacement suppliers, which could result in significant expenses and disruptions or delays in manufacturing, additional or replacement suppliers, which could result in significant expenses and disruptions or delays in manufacturing, resources and change capacity where appropriate. resources and change capacity where appropriate. Patents and Intellectual Property Rights Patents and Intellectual Property Rights We seek to establish and maintain our proprietary rights in our technology and products through the use of patents, We seek to establish and maintain our proprietary rights in our technology and products through the use of patents, copyrights, mask works, trademarks and trade secrets. We have a program to file applications for and obtain patents, copyrights, mask works, trademarks and trade secrets. We have a program to file applications for and obtain patents, copyrights, mask works and trademarks in the United States and in selected foreign countries where we believe filing for such copyrights, mask works and trademarks in the United States and in selected foreign countries where we believe filing for such protection is appropriate. We also seek to maintain our trade secrets and confidential information by nondisclosure policies and protection is appropriate. We also seek to maintain our trade secrets and confidential information by nondisclosure policies and through the use of appropriate confidentiality agreements. We have obtained a substantial number of patents and trademarks in through the use of appropriate confidentiality agreements. We have obtained a substantial number of patents and trademarks in the United States and in other countries. As of October 29, 2022, we held approximately 4,800 U.S. patents and approximately the United States and in other countries. As of October 29, 2022, we held approximately 4,800 U.S. patents and approximately 440 published pending U.S. patent applications. There can be no assurance, however, that the rights obtained can be 440 published pending U.S. patent applications. There can be no assurance, however, that the rights obtained can be successfully enforced against infringing products in every jurisdiction. While our patents, copyrights, mask works, trademarks successfully enforced against infringing products in every jurisdiction. While our patents, copyrights, mask works, trademarks and trade secrets provide some advantage and protection, we believe our competitive position and future success is largely and trade secrets provide some advantage and protection, we believe our competitive position and future success is largely determined by such factors as the system and application knowledge, innovative skills, technological expertise and management determined by such factors as the system and application knowledge, innovative skills, technological expertise and management ability and experience of our personnel; the range and success of new products being developed by us; our market brand ability and experience of our personnel; the range and success of new products being developed by us; our market brand recognition and ongoing marketing efforts; and customer service and technical support. It is generally our policy to seek patent recognition and ongoing marketing efforts; and customer service and technical support. It is generally our policy to seek patent protection for significant inventions that may be patented, though we may elect, in certain cases, not to seek patent protection protection for significant inventions that may be patented, though we may elect, in certain cases, not to seek patent protection even for significant inventions, if we determine other protection, such as maintaining the invention as a trade secret, to be more even for significant inventions, if we determine other protection, such as maintaining the invention as a trade secret, to be more advantageous. We also have trademarks that are used in the conduct of our business to distinguish genuine Analog Devices advantageous. We also have trademarks that are used in the conduct of our business to distinguish genuine Analog Devices products, and we maintain cooperative advertising programs to promote our brands and identify products containing genuine products, and we maintain cooperative advertising programs to promote our brands and identify products containing genuine Analog Devices components. Analog Devices components. Environment, Health and Safety Compliance Environment, Health and Safety Compliance We are committed to protecting the environment and the health and safety of our employees, customers and the public. We are committed to protecting the environment and the health and safety of our employees, customers and the public. We endeavor to adhere to applicable environment, health and safety (EHS) regulatory and industry standards across all of our We endeavor to adhere to applicable environment, health and safety (EHS) regulatory and industry standards across all of our facilities, and to encourage pollution prevention, reduce our water and energy consumption, manage waste streams to divert facilities, and to encourage pollution prevention, reduce our water and energy consumption, manage waste streams to divert from landfills, and strive towards continual improvement. We strive to achieve excellence in EHS management practices as an from landfills, and strive towards continual improvement. We strive to achieve excellence in EHS management practices as an integral part of our total quality management system. integral part of our total quality management system. Our EHS management systems in all of our manufacturing facilities are certified to ISO 14001:2015 for environmental Our EHS management systems in all of our manufacturing facilities are certified to ISO 14001:2015 for environmental management. In addition, our legacy Analog Devices facilities are certified to ISO 45001 for occupational health and safety, management. In addition, our legacy Analog Devices facilities are certified to ISO 45001 for occupational health and safety, and as part of our integration efforts, we are developing a path to certification for our legacy Maxim sites as well. Our industrial and as part of our integration efforts, we are developing a path to certification for our legacy Maxim sites as well. Our industrial hygiene surveillance program minimizes and prevents exposures in the workplace. We use two industry standard metrics to hygiene surveillance program minimizes and prevents exposures in the workplace. We use two industry standard metrics to assess injury performance and trends worldwide. In fiscal 2021 and the fiscal year ended October 29, 2022 (fiscal 2022), our assess injury performance and trends worldwide. In fiscal 2021 and the fiscal year ended October 29, 2022 (fiscal 2022), our global injury rates were lower than the U.S. semiconductor industry benchmark. global injury rates were lower than the U.S. semiconductor industry benchmark. Our manufacturing facilities are subject to numerous and increasingly strict federal, state, local and foreign EHS laws and Our manufacturing facilities are subject to numerous and increasingly strict federal, state, local and foreign EHS laws and regulations, particularly with respect to the transportation, storage, handling, use, emission, discharge and disposal of certain regulations, particularly with respect to the transportation, storage, handling, use, emission, discharge and disposal of certain chemicals used or produced in the semiconductor manufacturing process. Our products are subject to increasingly stringent chemicals used or produced in the semiconductor manufacturing process. Our products are subject to increasingly stringent regulations regarding substance content in jurisdictions where we sell products. Contracts with many of our customers reflect regulations regarding substance content in jurisdictions where we sell products. Contracts with many of our customers reflect these and additional EHS compliance standards. Substance content of our products includes materials that are subject to conflict these and additional EHS compliance standards. Substance content of our products includes materials that are subject to conflict mineral reporting requirements. Compliance with these laws and regulations has not had a material impact on our capital mineral reporting requirements. Compliance with these laws and regulations has not had a material impact on our capital expenditures, earnings, financial condition or competitive position. There can be no assurance, however, that current or future expenditures, earnings, financial condition or competitive position. There can be no assurance, however, that current or future environmental laws and regulations will not impose costly requirements upon us. Any failure by us to comply with applicable environmental laws and regulations will not impose costly requirements upon us. Any failure by us to comply with applicable environmental laws, regulations and contractual obligations could result in fines, suspension of production, the need to alter environmental laws, regulations and contractual obligations could result in fines, suspension of production, the need to alter manufacturing processes and legal liability. manufacturing processes and legal liability. We are a member of the Responsible Business Alliance, which was formerly known as the Electronic Industry We are a member of the Responsible Business Alliance, which was formerly known as the Electronic Industry Citizenship Coalition, as well as a signatory to the United Nations Global Compact and the Business Ambition for 1.5°C Citizenship Coalition, as well as a signatory to the United Nations Global Compact and the Business Ambition for 1.5°C campaign. Our 2021 Environment, Social and Governance (ESG) Report states our goals to be carbon neutral by calendar year campaign. Our 2021 Environment, Social and Governance (ESG) Report states our goals to be carbon neutral by calendar year 2030, to achieve net zero emissions by calendar year 2050 or sooner, to achieve a water recycling rate of at least 50% in 2030, to achieve net zero emissions by calendar year 2050 or sooner, to achieve a water recycling rate of at least 50% in manufacturing facilities by 2025, to comply with our code of business conduct and ethics and to apply fair labor standards. The manufacturing facilities by 2025, to comply with our code of business conduct and ethics and to apply fair labor standards. The ESG Report is available on our website at www.analog.com/sustainability. The contents of our website and the information ESG Report is available on our website at www.analog.com/sustainability. The contents of our website and the information contained in our ESG Report are not incorporated by reference into this Annual Report on Form 10-K. contained in our ESG Report are not incorporated by reference into this Annual Report on Form 10-K. To support our commitment to ESG, we have implemented an oversight structure which includes a quarterly reporting To support our commitment to ESG, we have implemented an oversight structure which includes a quarterly reporting cadence both to senior management and the Nominating and Corporate Governance Committee of the Board of Directors. cadence both to senior management and the Nominating and Corporate Governance Committee of the Board of Directors. These quarterly reports include updates on progress against goals, assessment of regulatory preparedness, stakeholder These quarterly reports include updates on progress against goals, assessment of regulatory preparedness, stakeholder engagement feedback, and programmatic progress and challenges. engagement feedback, and programmatic progress and challenges. 7 7 8 8 See Note 4, Industry, Segment and Geographic Information, of the Notes to Consolidated Financial Statements contained See Note 4, Industry, Segment and Geographic Information, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K for further information about our products by end market. in Part II, Item 8 of this Annual Report on Form 10-K for further information about our products by end market. Competition Competition We believe that competitive performance in the marketplace for signal processing products depends upon multiple We believe that competitive performance in the marketplace for signal processing products depends upon multiple factors, including technological innovation, strength of brand, diversity of product portfolio, product performance, technical factors, including technological innovation, strength of brand, diversity of product portfolio, product performance, technical support, delivery capabilities, customer service quality, reliability and price, with the relative importance of these factors support, delivery capabilities, customer service quality, reliability and price, with the relative importance of these factors varying among products, markets, and customers. We compete with a number of semiconductor companies in markets that are varying among products, markets, and customers. We compete with a number of semiconductor companies in markets that are highly competitive. Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to highly competitive. Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to develop and market products that compete with our products. Some of our competitors may have more advantageous supply or develop and market products that compete with our products. Some of our competitors may have more advantageous supply or development relationships with our current and potential customers or suppliers. Our competitors also include both emerging development relationships with our current and potential customers or suppliers. Our competitors also include both emerging companies selling specialized products in markets we serve and companies outside of the U.S., including entities associated companies selling specialized products in markets we serve and companies outside of the U.S., including entities associated with well-funded efforts by foreign governments to create indigenous semiconductor industries. with well-funded efforts by foreign governments to create indigenous semiconductor industries. We believe that our technical innovation emphasizing product performance and reliability, supported by our commitment We believe that our technical innovation emphasizing product performance and reliability, supported by our commitment to strong customer service and technical support, enables us to make a fundamental difference to our customers’ to strong customer service and technical support, enables us to make a fundamental difference to our customers’ competitiveness in our chosen markets. competitiveness in our chosen markets. Seasonality Seasonality Our sales are subject to a varying degree of seasonality. Historically, sales to customers during our first fiscal quarter Our sales are subject to a varying degree of seasonality. Historically, sales to customers during our first fiscal quarter may be lower than other quarters due to plant shutdowns at some of our customers during the holiday season. In general, the may be lower than other quarters due to plant shutdowns at some of our customers during the holiday season. In general, the seasonality for any specific period of time has not had a material impact on our results of operations. In addition, as explained seasonality for any specific period of time has not had a material impact on our results of operations. In addition, as explained in our risk factors contained in Item 1A of this Annual Report on Form 10-K, our revenue is more likely to be influenced on a in our risk factors contained in Item 1A of this Annual Report on Form 10-K, our revenue is more likely to be influenced on a quarter to quarter basis by cyclicality in the semiconductor industry. quarter to quarter basis by cyclicality in the semiconductor industry. We believe that a number of factors should be used to assess future customer demand, including backlog, macroeconomic We believe that a number of factors should be used to assess future customer demand, including backlog, macroeconomic trends, customer insights and current customer bookings as compared to billings (book-to-bill) ratio. We define backlog to trends, customer insights and current customer bookings as compared to billings (book-to-bill) ratio. We define backlog to mean firm orders from a customer or distributor with a requested delivery date within thirteen weeks. However, backlog may be mean firm orders from a customer or distributor with a requested delivery date within thirteen weeks. However, backlog may be impacted by the tendency of customers to rely on shorter lead times available from suppliers, including us, in periods of impacted by the tendency of customers to rely on shorter lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog and, in some instances, we may not have manufacturing capacity sufficient to fulfill all orders. We have increasing backlog and, in some instances, we may not have manufacturing capacity sufficient to fulfill all orders. We have experienced increased demand over the past two years leading to a constrained supply environment. In response, we have added experienced increased demand over the past two years leading to a constrained supply environment. In response, we have added manufacturing capacity to address some of the increased demand. As is customary in the semiconductor industry, we allow manufacturing capacity to address some of the increased demand. As is customary in the semiconductor industry, we allow most orders to be canceled within a reasonable notification period or deliveries to be delayed by customers without significant most orders to be canceled within a reasonable notification period or deliveries to be delayed by customers without significant penalty, while also allowing certain distributors to receive price adjustment credits and to return qualifying products for credit, penalty, while also allowing certain distributors to receive price adjustment credits and to return qualifying products for credit, as determined by us, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. as determined by us, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. Production Resources Production Resources Monolithic IC components are manufactured in a sequence of semiconductor production steps that include wafer Monolithic IC components are manufactured in a sequence of semiconductor production steps that include wafer fabrication, wafer testing, dicing the wafer into individual “chips,” or dice, assembly of the dice into packages and electrical fabrication, wafer testing, dicing the wafer into individual “chips,” or dice, assembly of the dice into packages and electrical testing of the devices in final packaged form. The raw materials used to manufacture these devices include silicon wafers, testing of the devices in final packaged form. The raw materials used to manufacture these devices include silicon wafers, processing chemicals (including liquefied gases), precious metals laminates, ceramic and plastic used for packaging. We processing chemicals (including liquefied gases), precious metals laminates, ceramic and plastic used for packaging. We utilize, develop and employ a wide variety of manufacturing processes, primarily based on bipolar and complementary metal- utilize, develop and employ a wide variety of manufacturing processes, primarily based on bipolar and complementary metal- oxide semiconductor (CMOS) transistors, which are specifically tailored for use in fabricating high-performance analog, DSP oxide semiconductor (CMOS) transistors, which are specifically tailored for use in fabricating high-performance analog, DSP and mixed-signal ICs. Devices such as MEMS, iCoupler® isolators and various sensors are fabricated using specialized and mixed-signal ICs. Devices such as MEMS, iCoupler® isolators and various sensors are fabricated using specialized processes, which typically use substantially similar equipment as bipolar and CMOS processes. processes, which typically use substantially similar equipment as bipolar and CMOS processes. Our IC products are fabricated on proprietary processes at our internal production facilities in Wilmington, Our IC products are fabricated on proprietary processes at our internal production facilities in Wilmington, Massachusetts; Camas, Washington; Beaverton, Oregon; and Limerick, Ireland and also on a mix of proprietary and non- Massachusetts; Camas, Washington; Beaverton, Oregon; and Limerick, Ireland and also on a mix of proprietary and non- proprietary processes at third-party wafer fabricators. We currently source more than half of our wafer requirements annually proprietary processes at third-party wafer fabricators. We currently source more than half of our wafer requirements annually from third-party wafer fabrication foundries, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others, and from third-party wafer fabrication foundries, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others, and the remainder is sourced internally. In addition, we operate an assembly, wafer sort and testing facility in Penang, Malaysia, the remainder is sourced internally. In addition, we operate an assembly, wafer sort and testing facility in Penang, Malaysia, and test facilities in the Philippines and Thailand. We also make extensive use of third-party subcontractors for the assembly and test facilities in the Philippines and Thailand. We also make extensive use of third-party subcontractors for the assembly and testing of our products. and testing of our products. Our products require a wide variety of components, raw materials and external foundry services, most of which we Our products require a wide variety of components, raw materials and external foundry services, most of which we purchase from third-party suppliers. We have multiple sources for many of the components and materials that we purchase and purchase from third-party suppliers. We have multiple sources for many of the components and materials that we purchase and incorporate into our products. If any of our key suppliers are unable or unwilling to manufacture and deliver sufficient incorporate into our products. If any of our key suppliers are unable or unwilling to manufacture and deliver sufficient quantities of components to us on the time schedule and of the quality that we require, we may be forced to seek to engage quantities of components to us on the time schedule and of the quality that we require, we may be forced to seek to engage additional or replacement suppliers, which could result in significant expenses and disruptions or delays in manufacturing, additional or replacement suppliers, which could result in significant expenses and disruptions or delays in manufacturing, product development and shipment of product to our customers. Although we have experienced shortages of components, product development and shipment of product to our customers. Although we have experienced shortages of components, materials and external foundry services from time to time, we are working to balance these constraints as we shift our global materials and external foundry services from time to time, we are working to balance these constraints as we shift our global resources and change capacity where appropriate. resources and change capacity where appropriate. Patents and Intellectual Property Rights Patents and Intellectual Property Rights We seek to establish and maintain our proprietary rights in our technology and products through the use of patents, We seek to establish and maintain our proprietary rights in our technology and products through the use of patents, copyrights, mask works, trademarks and trade secrets. We have a program to file applications for and obtain patents, copyrights, mask works, trademarks and trade secrets. We have a program to file applications for and obtain patents, copyrights, mask works and trademarks in the United States and in selected foreign countries where we believe filing for such copyrights, mask works and trademarks in the United States and in selected foreign countries where we believe filing for such protection is appropriate. We also seek to maintain our trade secrets and confidential information by nondisclosure policies and protection is appropriate. We also seek to maintain our trade secrets and confidential information by nondisclosure policies and through the use of appropriate confidentiality agreements. We have obtained a substantial number of patents and trademarks in through the use of appropriate confidentiality agreements. We have obtained a substantial number of patents and trademarks in the United States and in other countries. As of October 29, 2022, we held approximately 4,800 U.S. patents and approximately the United States and in other countries. As of October 29, 2022, we held approximately 4,800 U.S. patents and approximately 440 published pending U.S. patent applications. There can be no assurance, however, that the rights obtained can be 440 published pending U.S. patent applications. There can be no assurance, however, that the rights obtained can be successfully enforced against infringing products in every jurisdiction. While our patents, copyrights, mask works, trademarks successfully enforced against infringing products in every jurisdiction. While our patents, copyrights, mask works, trademarks and trade secrets provide some advantage and protection, we believe our competitive position and future success is largely and trade secrets provide some advantage and protection, we believe our competitive position and future success is largely determined by such factors as the system and application knowledge, innovative skills, technological expertise and management determined by such factors as the system and application knowledge, innovative skills, technological expertise and management ability and experience of our personnel; the range and success of new products being developed by us; our market brand ability and experience of our personnel; the range and success of new products being developed by us; our market brand recognition and ongoing marketing efforts; and customer service and technical support. It is generally our policy to seek patent recognition and ongoing marketing efforts; and customer service and technical support. It is generally our policy to seek patent protection for significant inventions that may be patented, though we may elect, in certain cases, not to seek patent protection protection for significant inventions that may be patented, though we may elect, in certain cases, not to seek patent protection even for significant inventions, if we determine other protection, such as maintaining the invention as a trade secret, to be more even for significant inventions, if we determine other protection, such as maintaining the invention as a trade secret, to be more advantageous. We also have trademarks that are used in the conduct of our business to distinguish genuine Analog Devices advantageous. We also have trademarks that are used in the conduct of our business to distinguish genuine Analog Devices products, and we maintain cooperative advertising programs to promote our brands and identify products containing genuine products, and we maintain cooperative advertising programs to promote our brands and identify products containing genuine Analog Devices components. Analog Devices components. Environment, Health and Safety Compliance Environment, Health and Safety Compliance We are committed to protecting the environment and the health and safety of our employees, customers and the public. We are committed to protecting the environment and the health and safety of our employees, customers and the public. We endeavor to adhere to applicable environment, health and safety (EHS) regulatory and industry standards across all of our We endeavor to adhere to applicable environment, health and safety (EHS) regulatory and industry standards across all of our facilities, and to encourage pollution prevention, reduce our water and energy consumption, manage waste streams to divert facilities, and to encourage pollution prevention, reduce our water and energy consumption, manage waste streams to divert from landfills, and strive towards continual improvement. We strive to achieve excellence in EHS management practices as an from landfills, and strive towards continual improvement. We strive to achieve excellence in EHS management practices as an integral part of our total quality management system. integral part of our total quality management system. Our EHS management systems in all of our manufacturing facilities are certified to ISO 14001:2015 for environmental Our EHS management systems in all of our manufacturing facilities are certified to ISO 14001:2015 for environmental management. In addition, our legacy Analog Devices facilities are certified to ISO 45001 for occupational health and safety, management. In addition, our legacy Analog Devices facilities are certified to ISO 45001 for occupational health and safety, and as part of our integration efforts, we are developing a path to certification for our legacy Maxim sites as well. Our industrial and as part of our integration efforts, we are developing a path to certification for our legacy Maxim sites as well. Our industrial hygiene surveillance program minimizes and prevents exposures in the workplace. We use two industry standard metrics to hygiene surveillance program minimizes and prevents exposures in the workplace. We use two industry standard metrics to assess injury performance and trends worldwide. In fiscal 2021 and the fiscal year ended October 29, 2022 (fiscal 2022), our assess injury performance and trends worldwide. In fiscal 2021 and the fiscal year ended October 29, 2022 (fiscal 2022), our global injury rates were lower than the U.S. semiconductor industry benchmark. global injury rates were lower than the U.S. semiconductor industry benchmark. Our manufacturing facilities are subject to numerous and increasingly strict federal, state, local and foreign EHS laws and Our manufacturing facilities are subject to numerous and increasingly strict federal, state, local and foreign EHS laws and regulations, particularly with respect to the transportation, storage, handling, use, emission, discharge and disposal of certain regulations, particularly with respect to the transportation, storage, handling, use, emission, discharge and disposal of certain chemicals used or produced in the semiconductor manufacturing process. Our products are subject to increasingly stringent chemicals used or produced in the semiconductor manufacturing process. Our products are subject to increasingly stringent regulations regarding substance content in jurisdictions where we sell products. Contracts with many of our customers reflect regulations regarding substance content in jurisdictions where we sell products. Contracts with many of our customers reflect these and additional EHS compliance standards. Substance content of our products includes materials that are subject to conflict these and additional EHS compliance standards. Substance content of our products includes materials that are subject to conflict mineral reporting requirements. Compliance with these laws and regulations has not had a material impact on our capital mineral reporting requirements. Compliance with these laws and regulations has not had a material impact on our capital expenditures, earnings, financial condition or competitive position. There can be no assurance, however, that current or future expenditures, earnings, financial condition or competitive position. There can be no assurance, however, that current or future environmental laws and regulations will not impose costly requirements upon us. Any failure by us to comply with applicable environmental laws and regulations will not impose costly requirements upon us. Any failure by us to comply with applicable environmental laws, regulations and contractual obligations could result in fines, suspension of production, the need to alter environmental laws, regulations and contractual obligations could result in fines, suspension of production, the need to alter manufacturing processes and legal liability. manufacturing processes and legal liability. We are a member of the Responsible Business Alliance, which was formerly known as the Electronic Industry We are a member of the Responsible Business Alliance, which was formerly known as the Electronic Industry Citizenship Coalition, as well as a signatory to the United Nations Global Compact and the Business Ambition for 1.5°C Citizenship Coalition, as well as a signatory to the United Nations Global Compact and the Business Ambition for 1.5°C campaign. Our 2021 Environment, Social and Governance (ESG) Report states our goals to be carbon neutral by calendar year campaign. Our 2021 Environment, Social and Governance (ESG) Report states our goals to be carbon neutral by calendar year 2030, to achieve net zero emissions by calendar year 2050 or sooner, to achieve a water recycling rate of at least 50% in 2030, to achieve net zero emissions by calendar year 2050 or sooner, to achieve a water recycling rate of at least 50% in manufacturing facilities by 2025, to comply with our code of business conduct and ethics and to apply fair labor standards. The manufacturing facilities by 2025, to comply with our code of business conduct and ethics and to apply fair labor standards. The ESG Report is available on our website at www.analog.com/sustainability. The contents of our website and the information ESG Report is available on our website at www.analog.com/sustainability. The contents of our website and the information contained in our ESG Report are not incorporated by reference into this Annual Report on Form 10-K. contained in our ESG Report are not incorporated by reference into this Annual Report on Form 10-K. To support our commitment to ESG, we have implemented an oversight structure which includes a quarterly reporting To support our commitment to ESG, we have implemented an oversight structure which includes a quarterly reporting cadence both to senior management and the Nominating and Corporate Governance Committee of the Board of Directors. cadence both to senior management and the Nominating and Corporate Governance Committee of the Board of Directors. These quarterly reports include updates on progress against goals, assessment of regulatory preparedness, stakeholder These quarterly reports include updates on progress against goals, assessment of regulatory preparedness, stakeholder engagement feedback, and programmatic progress and challenges. engagement feedback, and programmatic progress and challenges. 7 7 8 8 assistance; backup child and adult care; adoption support; and family college planning. For further information concerning our assistance; backup child and adult care; adoption support; and family college planning. For further information concerning our equity incentive plans, see Note 3, Stock-based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial equity incentive plans, see Note 3, Stock-based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. In order to ensure that we are meeting our human capital objectives we frequently utilize employee surveys to understand In order to ensure that we are meeting our human capital objectives we frequently utilize employee surveys to understand the effectiveness of our employee and compensation programs and where we can improve across the company. Our latest the effectiveness of our employee and compensation programs and where we can improve across the company. Our latest survey, which was completed in fiscal 2021 prior to the Acquisition, had a participation rate of over 83% of legacy employees survey, which was completed in fiscal 2021 prior to the Acquisition, had a participation rate of over 83% of legacy employees of Analog Devices. The survey results indicated that we excel in areas including purpose, respectful treatment, commitment to of Analog Devices. The survey results indicated that we excel in areas including purpose, respectful treatment, commitment to diversity/inclusion and accountability. Our dual focus of being a great place to work and providing industry-leading benefits diversity/inclusion and accountability. Our dual focus of being a great place to work and providing industry-leading benefits and work culture has led to strong employee satisfaction and pride that has been recognized across the globe, as evidenced with and work culture has led to strong employee satisfaction and pride that has been recognized across the globe, as evidenced with the following awards: Forbes World's Top Female Friendly Companies (2022, 2021), Forbes World’s Best Employer List the following awards: Forbes World's Top Female Friendly Companies (2022, 2021), Forbes World’s Best Employer List (2020) and The Boston Globe’s Top Places to Work (2021, 2020). (2020) and The Boston Globe’s Top Places to Work (2021, 2020). Cybersecurity and Information Security Risk Oversight Cybersecurity and Information Security Risk Oversight We regularly perform risk assessments relating to cybersecurity and technology risks. Our enterprise security program We regularly perform risk assessments relating to cybersecurity and technology risks. Our enterprise security program has been developed based on industry standards, including those published by the International Organization for has been developed based on industry standards, including those published by the International Organization for Standardization (ISO) and the National Institute of Standards and Technology. Highlights of the program include: Standardization (ISO) and the National Institute of Standards and Technology. Highlights of the program include: • A comprehensive set of enterprise security policies and procedures that guide our protection strategy. • A comprehensive set of enterprise security policies and procedures that guide our protection strategy. • Protecting against threats through use of the following measures: identifying critical assets and high-risk threats; • Protecting against threats through use of the following measures: identifying critical assets and high-risk threats; implementing cybersecurity detection, controls and remediation practices; implementing a third-party risk implementing cybersecurity detection, controls and remediation practices; implementing a third-party risk management program to evaluate our critical partners’ cyber posture; and evaluating our program effectiveness by management program to evaluate our critical partners’ cyber posture; and evaluating our program effectiveness by performing internal and external audits. performing internal and external audits. Risks identified by our cybersecurity program are analyzed to determine the potential impact on us and the likelihood of Risks identified by our cybersecurity program are analyzed to determine the potential impact on us and the likelihood of occurrence. Such risks are continuously monitored to ensure that the circumstances and severity of such risks have not changed. occurrence. Such risks are continuously monitored to ensure that the circumstances and severity of such risks have not changed. Senior leadership and our internal audit team regularly provide the Audit Committee of the Board of Directors with updates on Senior leadership and our internal audit team regularly provide the Audit Committee of the Board of Directors with updates on the performance of our program. At least annually, the Chief Information Officer updates the full Board of Directors on the performance of our program. At least annually, the Chief Information Officer updates the full Board of Directors on information security matters and risk, including cybersecurity. information security matters and risk, including cybersecurity. We conduct regular workforce training to instruct employees to identify cybersecurity concerns and take the appropriate We conduct regular workforce training to instruct employees to identify cybersecurity concerns and take the appropriate action. We install and regularly update antivirus software on all company managed systems and workstations to detect and action. We install and regularly update antivirus software on all company managed systems and workstations to detect and prevent malicious code from impacting our systems. In addition, we have a product security team focused on integrating risk prevent malicious code from impacting our systems. In addition, we have a product security team focused on integrating risk and security best practices into our product development life cycle. Periodically, we are audited by an independent information and security best practices into our product development life cycle. Periodically, we are audited by an independent information systems expert to determine both the adequacy of, and compliance with, controls and standards. systems expert to determine both the adequacy of, and compliance with, controls and standards. We have determined that an information security risk insurance policy would not be effective, and that we should We have determined that an information security risk insurance policy would not be effective, and that we should continue to self-insure for cybersecurity risks. We have not experienced a material security breach in the last three years, and as continue to self-insure for cybersecurity risks. We have not experienced a material security breach in the last three years, and as a result, we have not incurred any net expenses from such a breach. Furthermore, we have not been penalized or paid any a result, we have not incurred any net expenses from such a breach. Furthermore, we have not been penalized or paid any amount under an information security breach settlement over the last three years. amount under an information security breach settlement over the last three years. Human Capital and Empowerment Human Capital and Empowerment Our company was founded on the principle that people are our greatest asset. Our future success depends in large part on Our company was founded on the principle that people are our greatest asset. Our future success depends in large part on the continued service of our key technical and senior management personnel, and on our ability to continue to attract, retain and the continued service of our key technical and senior management personnel, and on our ability to continue to attract, retain and motivate qualified employees, particularly highly-skilled engineers involved in the design, development, support and motivate qualified employees, particularly highly-skilled engineers involved in the design, development, support and manufacture of new and existing products and processes. In order for us to attract the best talent, we aim to offer challenging manufacture of new and existing products and processes. In order for us to attract the best talent, we aim to offer challenging work in an environment that enables our employees to learn, grow and reach their full potential. work in an environment that enables our employees to learn, grow and reach their full potential. Core to our empowerment strategy is embracing diversity and building a culture of inclusion across the organization. We Core to our empowerment strategy is embracing diversity and building a culture of inclusion across the organization. We are working to achieve this by expanding the diversity of our workforce, creating growth and development opportunities for our are working to achieve this by expanding the diversity of our workforce, creating growth and development opportunities for our employees, embracing different perspectives and fostering an inclusive work environment for all. In addition, we encourage employees, embracing different perspectives and fostering an inclusive work environment for all. In addition, we encourage employees to organize and develop different employment networks, which contribute to our broader diversity and inclusion employees to organize and develop different employment networks, which contribute to our broader diversity and inclusion initiatives. Our current employee networks include the Analog Veterans Network, Neurodiversity Network, People of Color and initiatives. Our current employee networks include the Analog Veterans Network, Neurodiversity Network, People of Color and Allies Network, Pride Network, Women’s Leadership Network, Young Professionals Network, the Green Team and the Allies Network, Pride Network, Women’s Leadership Network, Young Professionals Network, the Green Team and the Communities Activities Board. As noted in "Environment, Health and Safety Compliance" above, we published our 2021 ESG Communities Activities Board. As noted in "Environment, Health and Safety Compliance" above, we published our 2021 ESG report which details our sustainability efforts, operations efficiency, employee engagement, and governance, and also provides a report which details our sustainability efforts, operations efficiency, employee engagement, and governance, and also provides a look at the state of our organization and an overview of some of the initiatives we have launched to drive continuous look at the state of our organization and an overview of some of the initiatives we have launched to drive continuous improvements across diversity and inclusion. improvements across diversity and inclusion. As of October 29, 2022, we had approximately 24,450 employees, of whom approximately 11,400 are in engineering As of October 29, 2022, we had approximately 24,450 employees, of whom approximately 11,400 are in engineering roles. Approximately 59% of our workforce is male and 41% female. Our senior leadership team is 73% male and 27% female, roles. Approximately 59% of our workforce is male and 41% female. Our senior leadership team is 73% male and 27% female, while manager roles are approximately 75% male and 25% female. 30% of the members of our Board of Directors are female. while manager roles are approximately 75% male and 25% female. 30% of the members of our Board of Directors are female. For fiscal 2022, our voluntary employee turnover rate was approximately 11.2%. For fiscal 2022, our voluntary employee turnover rate was approximately 11.2%. Our human capital resource objectives include identifying, recruiting, retaining, incentivizing and integrating our existing Our human capital resource objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and future employees. We strive to attract and retain the most talented employees in the industry and across the globe by and future employees. We strive to attract and retain the most talented employees in the industry and across the globe by offering competitive compensation and benefits that support their health, financial and emotional well-being. Our compensation offering competitive compensation and benefits that support their health, financial and emotional well-being. Our compensation philosophy is based on rewarding each employee’s individual contributions and striving to achieve equal pay for equal work philosophy is based on rewarding each employee’s individual contributions and striving to achieve equal pay for equal work regardless of gender, race or ethnicity. We use a combination of fixed and variable pay including base salary, bonuses, regardless of gender, race or ethnicity. We use a combination of fixed and variable pay including base salary, bonuses, performance awards and equity compensation. The principal purposes of our equity incentive plans are to attract, retain and performance awards and equity compensation. The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees and directors through the granting of stock-based compensation awards. We offer employees motivate selected employees and directors through the granting of stock-based compensation awards. We offer employees benefits that vary by country and are designed to meet or exceed local laws and to be competitive in the marketplace. Examples benefits that vary by country and are designed to meet or exceed local laws and to be competitive in the marketplace. Examples of benefits offered in the U.S. include a 401(k) plan with employer contributions; health benefits; life, business travel and of benefits offered in the U.S. include a 401(k) plan with employer contributions; health benefits; life, business travel and disability insurance; additional voluntary insurance; paid time off and parental leave; education assistance; paid counseling disability insurance; additional voluntary insurance; paid time off and parental leave; education assistance; paid counseling 9 9 10 10 assistance; backup child and adult care; adoption support; and family college planning. For further information concerning our assistance; backup child and adult care; adoption support; and family college planning. For further information concerning our equity incentive plans, see Note 3, Stock-based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial equity incentive plans, see Note 3, Stock-based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. In order to ensure that we are meeting our human capital objectives we frequently utilize employee surveys to understand In order to ensure that we are meeting our human capital objectives we frequently utilize employee surveys to understand the effectiveness of our employee and compensation programs and where we can improve across the company. Our latest the effectiveness of our employee and compensation programs and where we can improve across the company. Our latest survey, which was completed in fiscal 2021 prior to the Acquisition, had a participation rate of over 83% of legacy employees survey, which was completed in fiscal 2021 prior to the Acquisition, had a participation rate of over 83% of legacy employees of Analog Devices. The survey results indicated that we excel in areas including purpose, respectful treatment, commitment to of Analog Devices. The survey results indicated that we excel in areas including purpose, respectful treatment, commitment to diversity/inclusion and accountability. Our dual focus of being a great place to work and providing industry-leading benefits diversity/inclusion and accountability. Our dual focus of being a great place to work and providing industry-leading benefits and work culture has led to strong employee satisfaction and pride that has been recognized across the globe, as evidenced with and work culture has led to strong employee satisfaction and pride that has been recognized across the globe, as evidenced with the following awards: Forbes World's Top Female Friendly Companies (2022, 2021), Forbes World’s Best Employer List the following awards: Forbes World's Top Female Friendly Companies (2022, 2021), Forbes World’s Best Employer List (2020) and The Boston Globe’s Top Places to Work (2021, 2020). (2020) and The Boston Globe’s Top Places to Work (2021, 2020). Cybersecurity and Information Security Risk Oversight Cybersecurity and Information Security Risk Oversight We regularly perform risk assessments relating to cybersecurity and technology risks. Our enterprise security program We regularly perform risk assessments relating to cybersecurity and technology risks. Our enterprise security program has been developed based on industry standards, including those published by the International Organization for has been developed based on industry standards, including those published by the International Organization for Standardization (ISO) and the National Institute of Standards and Technology. Highlights of the program include: Standardization (ISO) and the National Institute of Standards and Technology. Highlights of the program include: • A comprehensive set of enterprise security policies and procedures that guide our protection strategy. • A comprehensive set of enterprise security policies and procedures that guide our protection strategy. • Protecting against threats through use of the following measures: identifying critical assets and high-risk threats; • Protecting against threats through use of the following measures: identifying critical assets and high-risk threats; implementing cybersecurity detection, controls and remediation practices; implementing a third-party risk implementing cybersecurity detection, controls and remediation practices; implementing a third-party risk management program to evaluate our critical partners’ cyber posture; and evaluating our program effectiveness by management program to evaluate our critical partners’ cyber posture; and evaluating our program effectiveness by performing internal and external audits. performing internal and external audits. Risks identified by our cybersecurity program are analyzed to determine the potential impact on us and the likelihood of Risks identified by our cybersecurity program are analyzed to determine the potential impact on us and the likelihood of occurrence. Such risks are continuously monitored to ensure that the circumstances and severity of such risks have not changed. occurrence. Such risks are continuously monitored to ensure that the circumstances and severity of such risks have not changed. Senior leadership and our internal audit team regularly provide the Audit Committee of the Board of Directors with updates on Senior leadership and our internal audit team regularly provide the Audit Committee of the Board of Directors with updates on the performance of our program. At least annually, the Chief Information Officer updates the full Board of Directors on the performance of our program. At least annually, the Chief Information Officer updates the full Board of Directors on information security matters and risk, including cybersecurity. information security matters and risk, including cybersecurity. We conduct regular workforce training to instruct employees to identify cybersecurity concerns and take the appropriate We conduct regular workforce training to instruct employees to identify cybersecurity concerns and take the appropriate action. We install and regularly update antivirus software on all company managed systems and workstations to detect and action. We install and regularly update antivirus software on all company managed systems and workstations to detect and prevent malicious code from impacting our systems. In addition, we have a product security team focused on integrating risk prevent malicious code from impacting our systems. In addition, we have a product security team focused on integrating risk and security best practices into our product development life cycle. Periodically, we are audited by an independent information and security best practices into our product development life cycle. Periodically, we are audited by an independent information systems expert to determine both the adequacy of, and compliance with, controls and standards. systems expert to determine both the adequacy of, and compliance with, controls and standards. We have determined that an information security risk insurance policy would not be effective, and that we should We have determined that an information security risk insurance policy would not be effective, and that we should continue to self-insure for cybersecurity risks. We have not experienced a material security breach in the last three years, and as continue to self-insure for cybersecurity risks. We have not experienced a material security breach in the last three years, and as a result, we have not incurred any net expenses from such a breach. Furthermore, we have not been penalized or paid any a result, we have not incurred any net expenses from such a breach. Furthermore, we have not been penalized or paid any amount under an information security breach settlement over the last three years. amount under an information security breach settlement over the last three years. Human Capital and Empowerment Human Capital and Empowerment Our company was founded on the principle that people are our greatest asset. Our future success depends in large part on Our company was founded on the principle that people are our greatest asset. Our future success depends in large part on the continued service of our key technical and senior management personnel, and on our ability to continue to attract, retain and the continued service of our key technical and senior management personnel, and on our ability to continue to attract, retain and motivate qualified employees, particularly highly-skilled engineers involved in the design, development, support and motivate qualified employees, particularly highly-skilled engineers involved in the design, development, support and manufacture of new and existing products and processes. In order for us to attract the best talent, we aim to offer challenging manufacture of new and existing products and processes. In order for us to attract the best talent, we aim to offer challenging work in an environment that enables our employees to learn, grow and reach their full potential. work in an environment that enables our employees to learn, grow and reach their full potential. Core to our empowerment strategy is embracing diversity and building a culture of inclusion across the organization. We Core to our empowerment strategy is embracing diversity and building a culture of inclusion across the organization. We are working to achieve this by expanding the diversity of our workforce, creating growth and development opportunities for our are working to achieve this by expanding the diversity of our workforce, creating growth and development opportunities for our employees, embracing different perspectives and fostering an inclusive work environment for all. In addition, we encourage employees, embracing different perspectives and fostering an inclusive work environment for all. In addition, we encourage employees to organize and develop different employment networks, which contribute to our broader diversity and inclusion employees to organize and develop different employment networks, which contribute to our broader diversity and inclusion initiatives. Our current employee networks include the Analog Veterans Network, Neurodiversity Network, People of Color and initiatives. Our current employee networks include the Analog Veterans Network, Neurodiversity Network, People of Color and Allies Network, Pride Network, Women’s Leadership Network, Young Professionals Network, the Green Team and the Allies Network, Pride Network, Women’s Leadership Network, Young Professionals Network, the Green Team and the Communities Activities Board. As noted in "Environment, Health and Safety Compliance" above, we published our 2021 ESG Communities Activities Board. As noted in "Environment, Health and Safety Compliance" above, we published our 2021 ESG report which details our sustainability efforts, operations efficiency, employee engagement, and governance, and also provides a report which details our sustainability efforts, operations efficiency, employee engagement, and governance, and also provides a look at the state of our organization and an overview of some of the initiatives we have launched to drive continuous look at the state of our organization and an overview of some of the initiatives we have launched to drive continuous improvements across diversity and inclusion. improvements across diversity and inclusion. As of October 29, 2022, we had approximately 24,450 employees, of whom approximately 11,400 are in engineering As of October 29, 2022, we had approximately 24,450 employees, of whom approximately 11,400 are in engineering roles. Approximately 59% of our workforce is male and 41% female. Our senior leadership team is 73% male and 27% female, roles. Approximately 59% of our workforce is male and 41% female. Our senior leadership team is 73% male and 27% female, while manager roles are approximately 75% male and 25% female. 30% of the members of our Board of Directors are female. while manager roles are approximately 75% male and 25% female. 30% of the members of our Board of Directors are female. For fiscal 2022, our voluntary employee turnover rate was approximately 11.2%. For fiscal 2022, our voluntary employee turnover rate was approximately 11.2%. Our human capital resource objectives include identifying, recruiting, retaining, incentivizing and integrating our existing Our human capital resource objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and future employees. We strive to attract and retain the most talented employees in the industry and across the globe by and future employees. We strive to attract and retain the most talented employees in the industry and across the globe by offering competitive compensation and benefits that support their health, financial and emotional well-being. Our compensation offering competitive compensation and benefits that support their health, financial and emotional well-being. Our compensation philosophy is based on rewarding each employee’s individual contributions and striving to achieve equal pay for equal work philosophy is based on rewarding each employee’s individual contributions and striving to achieve equal pay for equal work regardless of gender, race or ethnicity. We use a combination of fixed and variable pay including base salary, bonuses, regardless of gender, race or ethnicity. We use a combination of fixed and variable pay including base salary, bonuses, performance awards and equity compensation. The principal purposes of our equity incentive plans are to attract, retain and performance awards and equity compensation. The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees and directors through the granting of stock-based compensation awards. We offer employees motivate selected employees and directors through the granting of stock-based compensation awards. We offer employees benefits that vary by country and are designed to meet or exceed local laws and to be competitive in the marketplace. Examples benefits that vary by country and are designed to meet or exceed local laws and to be competitive in the marketplace. Examples of benefits offered in the U.S. include a 401(k) plan with employer contributions; health benefits; life, business travel and of benefits offered in the U.S. include a 401(k) plan with employer contributions; health benefits; life, business travel and disability insurance; additional voluntary insurance; paid time off and parental leave; education assistance; paid counseling disability insurance; additional voluntary insurance; paid time off and parental leave; education assistance; paid counseling 9 9 10 10 ITEM 1A. RISK FACTORS ITEM 1A. RISK FACTORS Set forth below and elsewhere in this report and in other documents we file with the Securities and Exchange Set forth below and elsewhere in this report and in other documents we file with the Securities and Exchange Commission (SEC) are descriptions of certain risks and uncertainties that could cause our actual results to differ materially Commission (SEC) are descriptions of certain risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report. Additional risks and uncertainties not presently from the results contemplated by the forward-looking statements in this report. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also adversely affect our business. known to us or that we presently deem less significant may also adversely affect our business. Risks Related to our Business, Operations, Industry and Partners Risks Related to our Business, Operations, Industry and Partners Global political and economic uncertainty and adverse conditions related to our international operations could materially and Global political and economic uncertainty and adverse conditions related to our international operations could materially and adversely affect our business, financial condition and results of operations. adversely affect our business, financial condition and results of operations. We have significant operations and manufacturing facilities outside the United States, including in Ireland, the We have significant operations and manufacturing facilities outside the United States, including in Ireland, the Philippines, Thailand, and Malaysia. A significant portion of our revenue is derived from customers in international markets, Philippines, Thailand, and Malaysia. A significant portion of our revenue is derived from customers in international markets, and we expect that international sales will continue to account for a significant portion of our revenue in the future. As a result and we expect that international sales will continue to account for a significant portion of our revenue in the future. As a result of our international operations, our business, financial condition and results of operations could be negatively impacted by the of our international operations, our business, financial condition and results of operations could be negatively impacted by the following: following: • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • political, legal and economic changes, crises or instability and civil unrest in markets in which we do business, such as political, legal and economic changes, crises or instability and civil unrest in markets in which we do business, such as potential macroeconomic weakness related to trade and political disputes between the United States and China, potential macroeconomic weakness related to trade and political disputes between the United States and China, changes in China-Taiwan relations that may adversely affect our operations in Taiwan, our customers, and the changes in China-Taiwan relations that may adversely affect our operations in Taiwan, our customers, and the technology industry supply chain, the United Kingdom's withdrawal from the European Union, the implementation of technology industry supply chain, the United Kingdom's withdrawal from the European Union, the implementation of the United States-Mexico-Canada Agreement and the ongoing conflict between Russia and Ukraine; the United States-Mexico-Canada Agreement and the ongoing conflict between Russia and Ukraine; compliance requirements of U.S. customs and export regulations, including the Export Administration Regulations and compliance requirements of U.S. customs and export regulations, including the Export Administration Regulations and the International Traffic and Arms Regulations; the International Traffic and Arms Regulations; currency conversion risks and exchange rate and interest rate fluctuations, including the potential impact of the currency conversion risks and exchange rate and interest rate fluctuations, including the potential impact of the transition from LIBOR and the current increasing interest rate environment; transition from LIBOR and the current increasing interest rate environment; instability of global credit and financial markets due to adverse macroeconomic conditions such as rising inflation, instability of global credit and financial markets due to adverse macroeconomic conditions such as rising inflation, increasing interest rates and slower economic growth or recession that could, among other impacts, affect our ability to increasing interest rates and slower economic growth or recession that could, among other impacts, affect our ability to access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges, among others; suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges, among others; trade policy, commercial, travel, export or taxation disputes or restrictions, import or export tariffs, changes to export trade policy, commercial, travel, export or taxation disputes or restrictions, import or export tariffs, changes to export classifications or other restrictions imposed by the U.S. government or by the governments of the countries in which classifications or other restrictions imposed by the U.S. government or by the governments of the countries in which we do business, particularly in China; we do business, particularly in China; sanctions imposed by governments in countries in which we do business, including those imposed on Russia by, sanctions imposed by governments in countries in which we do business, including those imposed on Russia by, among others, the European Union, the U.S. and the United Kingdom in response to the ongoing conflict between among others, the European Union, the U.S. and the United Kingdom in response to the ongoing conflict between Russia and Ukraine, which sanctions restrict a wide range of trade and financial dealings with Russian and Russian Russia and Ukraine, which sanctions restrict a wide range of trade and financial dealings with Russian and Russian persons, as well as certain regions in Ukraine; persons, as well as certain regions in Ukraine; complex, varying and changing government regulations and legal standards and requirements, particularly with respect complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax regulations, price protection, competition practices, export control regulations and restrictions, customs and tax to tax regulations, price protection, competition practices, export control regulations and restrictions, customs and tax requirements, immigration, anti-boycott regulations, data privacy, cyber security, sustainability and climate-related requirements, immigration, anti-boycott regulations, data privacy, cyber security, sustainability and climate-related regulations, intellectual property, anti-corruption and environmental compliance, including the Foreign Corrupt regulations, intellectual property, anti-corruption and environmental compliance, including the Foreign Corrupt Practices Act; Practices Act; economic disruption from terrorism and threats of terrorism and the response to them by the U.S. and its allies; economic disruption from terrorism and threats of terrorism and the response to them by the U.S. and its allies; increased managerial complexities, including different employment practices and labor issues; increased managerial complexities, including different employment practices and labor issues; changes in immigration laws, regulations and procedures and enforcement practices of various government agencies; changes in immigration laws, regulations and procedures and enforcement practices of various government agencies; greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; natural disasters or public health emergencies, such as the current COVID-19 pandemic; natural disasters or public health emergencies, such as the current COVID-19 pandemic; transportation disruptions and delays and increases in labor and transportation costs; transportation disruptions and delays and increases in labor and transportation costs; changes to foreign taxes, tariffs and freight rates; changes to foreign taxes, tariffs and freight rates; fluctuations in raw material costs and energy costs due to general market factors and conditions such as inflation and fluctuations in raw material costs and energy costs due to general market factors and conditions such as inflation and supply chain constraints; supply chain constraints; greater difficulty in accounts receivable collections and longer collection periods; and greater difficulty in accounts receivable collections and longer collection periods; and increased costs associated with our foreign defined benefit pension plans. increased costs associated with our foreign defined benefit pension plans. Many of these factors and risks are present within our business operations in China. For example, changes in U.S.-China Many of these factors and risks are present within our business operations in China. For example, changes in U.S.-China relations, the political environment or international trade policies and relations could result in further revisions to laws or relations, the political environment or international trade policies and relations could result in further revisions to laws or regulations or their interpretation and enforcement, increased taxation, trade sanctions, the imposition of import or export duties regulations or their interpretation and enforcement, increased taxation, trade sanctions, the imposition of import or export duties and tariffs, restrictions on imports or exports, currency revaluations, or retaliatory actions, which have had and may continue to and tariffs, restrictions on imports or exports, currency revaluations, or retaliatory actions, which have had and may continue to have an adverse effect on our business plans and operating results. In addition, expanded export restrictions limit our ability to have an adverse effect on our business plans and operating results. In addition, expanded export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies. These restrictions have created and sell to certain Chinese companies and to third parties that do business with those companies. These restrictions have created and may continue to create uncertainty and caution with our current or prospective customers and may cause them to amass large may continue to create uncertainty and caution with our current or prospective customers and may cause them to amass large inventories of our products, replace our products with products from another supplier that is not subject to the export inventories of our products, replace our products with products from another supplier that is not subject to the export restrictions, or focus on building indigenous semiconductor capacity to reduce reliance on U.S. suppliers. Furthermore, if these restrictions, or focus on building indigenous semiconductor capacity to reduce reliance on U.S. suppliers. Furthermore, if these export restrictions cause our current or potential customers to view U.S. companies as unreliable, we could suffer reputational export restrictions cause our current or potential customers to view U.S. companies as unreliable, we could suffer reputational damage or lose business to foreign competitors who are not subject to such export restrictions, and our business could be damage or lose business to foreign competitors who are not subject to such export restrictions, and our business could be materially harmed. We are continuing to evaluate the impact of these restrictions on our business, but these actions may have materially harmed. We are continuing to evaluate the impact of these restrictions on our business, but these actions may have direct and indirect adverse impacts on our revenues and results of operations in China and elsewhere. In addition, our success in direct and indirect adverse impacts on our revenues and results of operations in China and elsewhere. In addition, our success in the Chinese markets may be adversely affected by China’s continuously evolving policies, laws and regulations, including those the Chinese markets may be adversely affected by China’s continuously evolving policies, laws and regulations, including those relating to antitrust, cybersecurity, data protection and data privacy, the environment, indigenous innovation and the promotion relating to antitrust, cybersecurity, data protection and data privacy, the environment, indigenous innovation and the promotion of a domestic semiconductor industry, and intellectual property rights and enforcement and protection of those rights. of a domestic semiconductor industry, and intellectual property rights and enforcement and protection of those rights. We rely on third parties for supply of raw materials and parts, semiconductor wafer foundry services, assembly and test We rely on third parties for supply of raw materials and parts, semiconductor wafer foundry services, assembly and test services, and transportation, among other things, and we generally cannot control their availability or conditions of supply or services, and transportation, among other things, and we generally cannot control their availability or conditions of supply or services. services. We rely, and plan to continue to rely, on third-party suppliers and service providers, including raw material and We rely, and plan to continue to rely, on third-party suppliers and service providers, including raw material and components suppliers, semiconductor wafer foundries, assembly and test contractors, and freight carriers (collectively, vendors) components suppliers, semiconductor wafer foundries, assembly and test contractors, and freight carriers (collectively, vendors) in manufacturing our products. This reliance involves several risks, including reduced control over availability, capacity in manufacturing our products. This reliance involves several risks, including reduced control over availability, capacity utilization, delivery schedules, manufacturing yields, costs, and supply chain allocations. We currently source more than half of utilization, delivery schedules, manufacturing yields, costs, and supply chain allocations. We currently source more than half of our wafer requirements annually from third-party wafer foundries, including Taiwan Semiconductor Manufacturing Company our wafer requirements annually from third-party wafer foundries, including Taiwan Semiconductor Manufacturing Company (TSMC) and others. These foundries often provide wafer foundry services to our competitors and therefore periods of increased (TSMC) and others. These foundries often provide wafer foundry services to our competitors and therefore periods of increased industry demand may result in capacity constraints. With respect to TSMC in particular, geopolitical changes in China-Taiwan industry demand may result in capacity constraints. With respect to TSMC in particular, geopolitical changes in China-Taiwan relations could disrupt TSMC’s operations, which would adversely affect our ability to manufacture certain products and as a relations could disrupt TSMC’s operations, which would adversely affect our ability to manufacture certain products and as a result, could adversely affect our business and results of operations. result, could adversely affect our business and results of operations. Our manufacturing processes require availability of certain raw materials and supplies. Limited or delayed access to Our manufacturing processes require availability of certain raw materials and supplies. Limited or delayed access to these items could adversely affect our results of operations. In certain instances, one of our vendors may be the sole source of these items could adversely affect our results of operations. In certain instances, one of our vendors may be the sole source of highly specialized processing services or materials. If such vendor is unable or unwilling to manufacture and deliver highly specialized processing services or materials. If such vendor is unable or unwilling to manufacture and deliver components to us on the time schedule and of the quality or quantity that we require, we may be forced to seek to engage an components to us on the time schedule and of the quality or quantity that we require, we may be forced to seek to engage an additional or replacement vendor, which could result in additional expenses and delays in product development or shipment of additional or replacement vendor, which could result in additional expenses and delays in product development or shipment of product to our customers. If additional or replacement vendors are not available, we may also experience delays in product product to our customers. If additional or replacement vendors are not available, we may also experience delays in product development or shipment which could, in turn, result in the temporary or permanent loss of customers and as a result could development or shipment which could, in turn, result in the temporary or permanent loss of customers and as a result could adversely affect our business and results of operations. adversely affect our business and results of operations. The markets for semiconductor products are cyclical, and increased production may lead to overcapacity and lower prices, and The markets for semiconductor products are cyclical, and increased production may lead to overcapacity and lower prices, and conversely, we may not be able to satisfy unexpected demand for our products. conversely, we may not be able to satisfy unexpected demand for our products. The cyclical nature of the semiconductor industry has resulted in periods when demand for our products has increased or The cyclical nature of the semiconductor industry has resulted in periods when demand for our products has increased or decreased rapidly. The demand for our products is subject to the strength of our four major end markets of Industrial, decreased rapidly. The demand for our products is subject to the strength of our four major end markets of Industrial, Automotive, Communications, and Consumer. If we expand our operations and workforce too rapidly or procure excessive Automotive, Communications, and Consumer. If we expand our operations and workforce too rapidly or procure excessive resources in anticipation of increased demand for our products, and that demand does not materialize at the pace at which we resources in anticipation of increased demand for our products, and that demand does not materialize at the pace at which we expect, or declines, or if we overbuild inventory in a period of decreased demand, our operating results may be adversely expect, or declines, or if we overbuild inventory in a period of decreased demand, our operating results may be adversely affected as a result of increased operating expenses, reduced margins, underutilization of capacity or asset impairment charges. affected as a result of increased operating expenses, reduced margins, underutilization of capacity or asset impairment charges. These capacity expansions by us and other semiconductor manufacturers could also lead to overcapacity in our target markets These capacity expansions by us and other semiconductor manufacturers could also lead to overcapacity in our target markets which could lead to price erosion that could adversely impact our operating results. Conversely, during periods of rapid which could lead to price erosion that could adversely impact our operating results. Conversely, during periods of rapid increases in demand, our available capacity may not be sufficient to satisfy the demand. In addition, we may not be able to increases in demand, our available capacity may not be sufficient to satisfy the demand. In addition, we may not be able to expand our workforce and operations in a sufficiently timely manner, procure adequate resources and raw materials, locate expand our workforce and operations in a sufficiently timely manner, procure adequate resources and raw materials, locate suitable third-party suppliers, or respond effectively to changes in demand for our existing products or to demand for new suitable third-party suppliers, or respond effectively to changes in demand for our existing products or to demand for new products requested by our customers, and our current or future business could be materially and adversely affected. products requested by our customers, and our current or future business could be materially and adversely affected. 11 11 12 12 ITEM 1A. RISK FACTORS ITEM 1A. RISK FACTORS Set forth below and elsewhere in this report and in other documents we file with the Securities and Exchange Set forth below and elsewhere in this report and in other documents we file with the Securities and Exchange Commission (SEC) are descriptions of certain risks and uncertainties that could cause our actual results to differ materially Commission (SEC) are descriptions of certain risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report. Additional risks and uncertainties not presently from the results contemplated by the forward-looking statements in this report. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also adversely affect our business. known to us or that we presently deem less significant may also adversely affect our business. Risks Related to our Business, Operations, Industry and Partners Risks Related to our Business, Operations, Industry and Partners Global political and economic uncertainty and adverse conditions related to our international operations could materially and Global political and economic uncertainty and adverse conditions related to our international operations could materially and adversely affect our business, financial condition and results of operations. adversely affect our business, financial condition and results of operations. We have significant operations and manufacturing facilities outside the United States, including in Ireland, the We have significant operations and manufacturing facilities outside the United States, including in Ireland, the Philippines, Thailand, and Malaysia. A significant portion of our revenue is derived from customers in international markets, Philippines, Thailand, and Malaysia. A significant portion of our revenue is derived from customers in international markets, and we expect that international sales will continue to account for a significant portion of our revenue in the future. As a result and we expect that international sales will continue to account for a significant portion of our revenue in the future. As a result of our international operations, our business, financial condition and results of operations could be negatively impacted by the of our international operations, our business, financial condition and results of operations could be negatively impacted by the following: following: • • political, legal and economic changes, crises or instability and civil unrest in markets in which we do business, such as political, legal and economic changes, crises or instability and civil unrest in markets in which we do business, such as potential macroeconomic weakness related to trade and political disputes between the United States and China, potential macroeconomic weakness related to trade and political disputes between the United States and China, changes in China-Taiwan relations that may adversely affect our operations in Taiwan, our customers, and the changes in China-Taiwan relations that may adversely affect our operations in Taiwan, our customers, and the technology industry supply chain, the United Kingdom's withdrawal from the European Union, the implementation of technology industry supply chain, the United Kingdom's withdrawal from the European Union, the implementation of the United States-Mexico-Canada Agreement and the ongoing conflict between Russia and Ukraine; the United States-Mexico-Canada Agreement and the ongoing conflict between Russia and Ukraine; compliance requirements of U.S. customs and export regulations, including the Export Administration Regulations and compliance requirements of U.S. customs and export regulations, including the Export Administration Regulations and the International Traffic and Arms Regulations; the International Traffic and Arms Regulations; currency conversion risks and exchange rate and interest rate fluctuations, including the potential impact of the currency conversion risks and exchange rate and interest rate fluctuations, including the potential impact of the transition from LIBOR and the current increasing interest rate environment; transition from LIBOR and the current increasing interest rate environment; instability of global credit and financial markets due to adverse macroeconomic conditions such as rising inflation, instability of global credit and financial markets due to adverse macroeconomic conditions such as rising inflation, increasing interest rates and slower economic growth or recession that could, among other impacts, affect our ability to increasing interest rates and slower economic growth or recession that could, among other impacts, affect our ability to access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges, among others; suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges, among others; trade policy, commercial, travel, export or taxation disputes or restrictions, import or export tariffs, changes to export trade policy, commercial, travel, export or taxation disputes or restrictions, import or export tariffs, changes to export classifications or other restrictions imposed by the U.S. government or by the governments of the countries in which classifications or other restrictions imposed by the U.S. government or by the governments of the countries in which we do business, particularly in China; we do business, particularly in China; sanctions imposed by governments in countries in which we do business, including those imposed on Russia by, sanctions imposed by governments in countries in which we do business, including those imposed on Russia by, among others, the European Union, the U.S. and the United Kingdom in response to the ongoing conflict between among others, the European Union, the U.S. and the United Kingdom in response to the ongoing conflict between Russia and Ukraine, which sanctions restrict a wide range of trade and financial dealings with Russian and Russian Russia and Ukraine, which sanctions restrict a wide range of trade and financial dealings with Russian and Russian persons, as well as certain regions in Ukraine; persons, as well as certain regions in Ukraine; • • complex, varying and changing government regulations and legal standards and requirements, particularly with respect complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax regulations, price protection, competition practices, export control regulations and restrictions, customs and tax to tax regulations, price protection, competition practices, export control regulations and restrictions, customs and tax requirements, immigration, anti-boycott regulations, data privacy, cyber security, sustainability and climate-related requirements, immigration, anti-boycott regulations, data privacy, cyber security, sustainability and climate-related regulations, intellectual property, anti-corruption and environmental compliance, including the Foreign Corrupt regulations, intellectual property, anti-corruption and environmental compliance, including the Foreign Corrupt Practices Act; Practices Act; economic disruption from terrorism and threats of terrorism and the response to them by the U.S. and its allies; economic disruption from terrorism and threats of terrorism and the response to them by the U.S. and its allies; increased managerial complexities, including different employment practices and labor issues; increased managerial complexities, including different employment practices and labor issues; changes in immigration laws, regulations and procedures and enforcement practices of various government agencies; changes in immigration laws, regulations and procedures and enforcement practices of various government agencies; greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; natural disasters or public health emergencies, such as the current COVID-19 pandemic; natural disasters or public health emergencies, such as the current COVID-19 pandemic; transportation disruptions and delays and increases in labor and transportation costs; transportation disruptions and delays and increases in labor and transportation costs; changes to foreign taxes, tariffs and freight rates; changes to foreign taxes, tariffs and freight rates; fluctuations in raw material costs and energy costs due to general market factors and conditions such as inflation and fluctuations in raw material costs and energy costs due to general market factors and conditions such as inflation and supply chain constraints; supply chain constraints; greater difficulty in accounts receivable collections and longer collection periods; and greater difficulty in accounts receivable collections and longer collection periods; and increased costs associated with our foreign defined benefit pension plans. increased costs associated with our foreign defined benefit pension plans. • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Many of these factors and risks are present within our business operations in China. For example, changes in U.S.-China Many of these factors and risks are present within our business operations in China. For example, changes in U.S.-China relations, the political environment or international trade policies and relations could result in further revisions to laws or relations, the political environment or international trade policies and relations could result in further revisions to laws or regulations or their interpretation and enforcement, increased taxation, trade sanctions, the imposition of import or export duties regulations or their interpretation and enforcement, increased taxation, trade sanctions, the imposition of import or export duties and tariffs, restrictions on imports or exports, currency revaluations, or retaliatory actions, which have had and may continue to and tariffs, restrictions on imports or exports, currency revaluations, or retaliatory actions, which have had and may continue to have an adverse effect on our business plans and operating results. In addition, expanded export restrictions limit our ability to have an adverse effect on our business plans and operating results. In addition, expanded export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies. These restrictions have created and sell to certain Chinese companies and to third parties that do business with those companies. These restrictions have created and may continue to create uncertainty and caution with our current or prospective customers and may cause them to amass large may continue to create uncertainty and caution with our current or prospective customers and may cause them to amass large inventories of our products, replace our products with products from another supplier that is not subject to the export inventories of our products, replace our products with products from another supplier that is not subject to the export restrictions, or focus on building indigenous semiconductor capacity to reduce reliance on U.S. suppliers. Furthermore, if these restrictions, or focus on building indigenous semiconductor capacity to reduce reliance on U.S. suppliers. Furthermore, if these export restrictions cause our current or potential customers to view U.S. companies as unreliable, we could suffer reputational export restrictions cause our current or potential customers to view U.S. companies as unreliable, we could suffer reputational damage or lose business to foreign competitors who are not subject to such export restrictions, and our business could be damage or lose business to foreign competitors who are not subject to such export restrictions, and our business could be materially harmed. We are continuing to evaluate the impact of these restrictions on our business, but these actions may have materially harmed. We are continuing to evaluate the impact of these restrictions on our business, but these actions may have direct and indirect adverse impacts on our revenues and results of operations in China and elsewhere. In addition, our success in direct and indirect adverse impacts on our revenues and results of operations in China and elsewhere. In addition, our success in the Chinese markets may be adversely affected by China’s continuously evolving policies, laws and regulations, including those the Chinese markets may be adversely affected by China’s continuously evolving policies, laws and regulations, including those relating to antitrust, cybersecurity, data protection and data privacy, the environment, indigenous innovation and the promotion relating to antitrust, cybersecurity, data protection and data privacy, the environment, indigenous innovation and the promotion of a domestic semiconductor industry, and intellectual property rights and enforcement and protection of those rights. of a domestic semiconductor industry, and intellectual property rights and enforcement and protection of those rights. We rely on third parties for supply of raw materials and parts, semiconductor wafer foundry services, assembly and test We rely on third parties for supply of raw materials and parts, semiconductor wafer foundry services, assembly and test services, and transportation, among other things, and we generally cannot control their availability or conditions of supply or services, and transportation, among other things, and we generally cannot control their availability or conditions of supply or services. services. We rely, and plan to continue to rely, on third-party suppliers and service providers, including raw material and We rely, and plan to continue to rely, on third-party suppliers and service providers, including raw material and components suppliers, semiconductor wafer foundries, assembly and test contractors, and freight carriers (collectively, vendors) components suppliers, semiconductor wafer foundries, assembly and test contractors, and freight carriers (collectively, vendors) in manufacturing our products. This reliance involves several risks, including reduced control over availability, capacity in manufacturing our products. This reliance involves several risks, including reduced control over availability, capacity utilization, delivery schedules, manufacturing yields, costs, and supply chain allocations. We currently source more than half of utilization, delivery schedules, manufacturing yields, costs, and supply chain allocations. We currently source more than half of our wafer requirements annually from third-party wafer foundries, including Taiwan Semiconductor Manufacturing Company our wafer requirements annually from third-party wafer foundries, including Taiwan Semiconductor Manufacturing Company (TSMC) and others. These foundries often provide wafer foundry services to our competitors and therefore periods of increased (TSMC) and others. These foundries often provide wafer foundry services to our competitors and therefore periods of increased industry demand may result in capacity constraints. With respect to TSMC in particular, geopolitical changes in China-Taiwan industry demand may result in capacity constraints. With respect to TSMC in particular, geopolitical changes in China-Taiwan relations could disrupt TSMC’s operations, which would adversely affect our ability to manufacture certain products and as a relations could disrupt TSMC’s operations, which would adversely affect our ability to manufacture certain products and as a result, could adversely affect our business and results of operations. result, could adversely affect our business and results of operations. Our manufacturing processes require availability of certain raw materials and supplies. Limited or delayed access to Our manufacturing processes require availability of certain raw materials and supplies. Limited or delayed access to these items could adversely affect our results of operations. In certain instances, one of our vendors may be the sole source of these items could adversely affect our results of operations. In certain instances, one of our vendors may be the sole source of highly specialized processing services or materials. If such vendor is unable or unwilling to manufacture and deliver highly specialized processing services or materials. If such vendor is unable or unwilling to manufacture and deliver components to us on the time schedule and of the quality or quantity that we require, we may be forced to seek to engage an components to us on the time schedule and of the quality or quantity that we require, we may be forced to seek to engage an additional or replacement vendor, which could result in additional expenses and delays in product development or shipment of additional or replacement vendor, which could result in additional expenses and delays in product development or shipment of product to our customers. If additional or replacement vendors are not available, we may also experience delays in product product to our customers. If additional or replacement vendors are not available, we may also experience delays in product development or shipment which could, in turn, result in the temporary or permanent loss of customers and as a result could development or shipment which could, in turn, result in the temporary or permanent loss of customers and as a result could adversely affect our business and results of operations. adversely affect our business and results of operations. The markets for semiconductor products are cyclical, and increased production may lead to overcapacity and lower prices, and The markets for semiconductor products are cyclical, and increased production may lead to overcapacity and lower prices, and conversely, we may not be able to satisfy unexpected demand for our products. conversely, we may not be able to satisfy unexpected demand for our products. The cyclical nature of the semiconductor industry has resulted in periods when demand for our products has increased or The cyclical nature of the semiconductor industry has resulted in periods when demand for our products has increased or decreased rapidly. The demand for our products is subject to the strength of our four major end markets of Industrial, decreased rapidly. The demand for our products is subject to the strength of our four major end markets of Industrial, Automotive, Communications, and Consumer. If we expand our operations and workforce too rapidly or procure excessive Automotive, Communications, and Consumer. If we expand our operations and workforce too rapidly or procure excessive resources in anticipation of increased demand for our products, and that demand does not materialize at the pace at which we resources in anticipation of increased demand for our products, and that demand does not materialize at the pace at which we expect, or declines, or if we overbuild inventory in a period of decreased demand, our operating results may be adversely expect, or declines, or if we overbuild inventory in a period of decreased demand, our operating results may be adversely affected as a result of increased operating expenses, reduced margins, underutilization of capacity or asset impairment charges. affected as a result of increased operating expenses, reduced margins, underutilization of capacity or asset impairment charges. These capacity expansions by us and other semiconductor manufacturers could also lead to overcapacity in our target markets These capacity expansions by us and other semiconductor manufacturers could also lead to overcapacity in our target markets which could lead to price erosion that could adversely impact our operating results. Conversely, during periods of rapid which could lead to price erosion that could adversely impact our operating results. Conversely, during periods of rapid increases in demand, our available capacity may not be sufficient to satisfy the demand. In addition, we may not be able to increases in demand, our available capacity may not be sufficient to satisfy the demand. In addition, we may not be able to expand our workforce and operations in a sufficiently timely manner, procure adequate resources and raw materials, locate expand our workforce and operations in a sufficiently timely manner, procure adequate resources and raw materials, locate suitable third-party suppliers, or respond effectively to changes in demand for our existing products or to demand for new suitable third-party suppliers, or respond effectively to changes in demand for our existing products or to demand for new products requested by our customers, and our current or future business could be materially and adversely affected. products requested by our customers, and our current or future business could be materially and adversely affected. 11 11 12 12 A prolonged disruption of our internal manufacturing operations could have a material adverse effect on our business, A prolonged disruption of our internal manufacturing operations could have a material adverse effect on our business, financial condition and results of operations. financial condition and results of operations. In addition to leveraging an outsourcing model for manufacturing operations, we also rely on our internal manufacturing In addition to leveraging an outsourcing model for manufacturing operations, we also rely on our internal manufacturing operations located in the United States, Ireland, the Philippines, Thailand and Malaysia. A prolonged disruption at, or inability operations located in the United States, Ireland, the Philippines, Thailand and Malaysia. A prolonged disruption at, or inability to utilize, one or more of our manufacturing facilities, loss of raw materials or damage to our manufacturing equipment for any to utilize, one or more of our manufacturing facilities, loss of raw materials or damage to our manufacturing equipment for any reason, including due to the COVID-19 pandemic, natural or man-made disasters, civil unrest or other events outside of our reason, including due to the COVID-19 pandemic, natural or man-made disasters, civil unrest or other events outside of our control, such as widespread outbreaks of illness, or the failure to maintain our labor force at one or more of these facilities, may control, such as widespread outbreaks of illness, or the failure to maintain our labor force at one or more of these facilities, may disrupt our operations, delay production, shipments and revenue and result in us being unable to timely satisfy customer disrupt our operations, delay production, shipments and revenue and result in us being unable to timely satisfy customer demand. As a result, we could forgo revenue opportunities, potentially lose market share and damage our customer demand. As a result, we could forgo revenue opportunities, potentially lose market share and damage our customer relationships, all of which could materially and adversely affect our business, financial condition and results of operations. relationships, all of which could materially and adversely affect our business, financial condition and results of operations. Our future success depends upon our ability to execute our business strategy, continue to innovate, improve our existing Our future success depends upon our ability to execute our business strategy, continue to innovate, improve our existing products, design, develop, produce and market new products, and identify and enter new markets. products, design, develop, produce and market new products, and identify and enter new markets. Our future success significantly depends on our ability to execute our business strategy, continue to innovate, improve Our future success significantly depends on our ability to execute our business strategy, continue to innovate, improve our existing products, and design, develop, produce and market innovative new products and system-level solutions. Product our existing products, and design, develop, produce and market innovative new products and system-level solutions. Product design, development, innovation and enhancement is often a complex, time-consuming and costly process involving significant design, development, innovation and enhancement is often a complex, time-consuming and costly process involving significant investment in research and development with no assurance of return on investment. There can be no assurance that we will be investment in research and development with no assurance of return on investment. There can be no assurance that we will be able to develop and introduce new and improved products in a timely or efficient manner or that new and improved products, if able to develop and introduce new and improved products in a timely or efficient manner or that new and improved products, if developed, will achieve market acceptance. Our products generally must conform to various evolving and sometimes competing developed, will achieve market acceptance. Our products generally must conform to various evolving and sometimes competing industry standards, which may adversely affect our ability to compete in certain markets or require us to incur significant costs. industry standards, which may adversely affect our ability to compete in certain markets or require us to incur significant costs. In addition, our customers generally impose very high quality and reliability standards on our products, which often change and In addition, our customers generally impose very high quality and reliability standards on our products, which often change and may be difficult or costly to satisfy. Any inability to satisfy customer quality and reliability standards or comply with industry may be difficult or costly to satisfy. Any inability to satisfy customer quality and reliability standards or comply with industry standards and technical requirements may adversely affect demand for our products and our results of operations. standards and technical requirements may adversely affect demand for our products and our results of operations. Our growth is also dependent on our ability to identify and penetrate new markets where we have limited experience yet Our growth is also dependent on our ability to identify and penetrate new markets where we have limited experience yet require significant investments, resources and technological advancements in order to compete effectively, and there can be no require significant investments, resources and technological advancements in order to compete effectively, and there can be no assurance that we will achieve success in these markets. There can be no assurance that the markets we serve and/or target assurance that we will achieve success in these markets. There can be no assurance that the markets we serve and/or target based on our business strategy will grow in the future, that our existing and new products will meet the requirements of these based on our business strategy will grow in the future, that our existing and new products will meet the requirements of these markets, that our products, or the end-products in which our products are used, will achieve customer acceptance in these markets, that our products, or the end-products in which our products are used, will achieve customer acceptance in these markets, that competitors will not force price reductions or take market share from us, or that we can achieve or maintain markets, that competitors will not force price reductions or take market share from us, or that we can achieve or maintain adequate gross margins or profits in these markets. adequate gross margins or profits in these markets. Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may materially fluctuate. materially fluctuate. Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may be materially affected by a number of factors, including: be materially affected by a number of factors, including: • • • • • • • • • • • • • • • • • • • • • • • • the effects of adverse economic conditions in the markets in which we sell our products, including inflationary the effects of adverse economic conditions in the markets in which we sell our products, including inflationary pressures, which has resulted, and may continue to result, in increased interest rates, fuel prices, wages, and other pressures, which has resulted, and may continue to result, in increased interest rates, fuel prices, wages, and other costs; costs; changes in customer demand or order patterns for our products and/or for end products that incorporate our products; changes in customer demand or order patterns for our products and/or for end products that incorporate our products; the timing, delay, reduction or cancellation of significant customer orders and our ability to manage inventory; the timing, delay, reduction or cancellation of significant customer orders and our ability to manage inventory; our ability to accurately forecast distributor demand for our products; our ability to accurately forecast distributor demand for our products; future distributor pricing credits and/or stock rotation rights; future distributor pricing credits and/or stock rotation rights; our ability to effectively manage our cost structure in both the short term and over a longer duration; our ability to effectively manage our cost structure in both the short term and over a longer duration; changes in geographic, product or customer mix; changes in geographic, product or customer mix; the extent of the impact and the duration of the COVID-19 pandemic; the extent of the impact and the duration of the COVID-19 pandemic; changes in our effective tax rates or new or revised tax legislation in the United States, Ireland or worldwide; changes in our effective tax rates or new or revised tax legislation in the United States, Ireland or worldwide; the effects of issued, threatened or retaliatory government sanctions, trade barriers or economic restrictions; changes in the effects of issued, threatened or retaliatory government sanctions, trade barriers or economic restrictions; changes in law, regulations or other restrictions, including executive orders; and changes in import and export regulations, law, regulations or other restrictions, including executive orders; and changes in import and export regulations, including restrictions on exports to certain companies or to third parties that do business with such companies, export including restrictions on exports to certain companies or to third parties that do business with such companies, export classifications, or duties and tariffs, particularly with respect to China; classifications, or duties and tariffs, particularly with respect to China; the timing of new product announcements or introductions by us, our customers or our competitors and the market the timing of new product announcements or introductions by us, our customers or our competitors and the market acceptance of such products; acceptance of such products; pricing decisions and competitive pricing pressures; pricing decisions and competitive pricing pressures; • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • fluctuations in manufacturing yields, adequate availability of wafers and other raw materials, and manufacturing, fluctuations in manufacturing yields, adequate availability of wafers and other raw materials, and manufacturing, assembly and test capacity; assembly and test capacity; materials, products and/or components; materials, products and/or components; the ability of our third-party suppliers, subcontractors and manufacturers to supply us with sufficient quantities of raw the ability of our third-party suppliers, subcontractors and manufacturers to supply us with sufficient quantities of raw a decline in infrastructure spending by foreign governments, including China; a decline in infrastructure spending by foreign governments, including China; a decline in the U.S. government defense budget, changes in spending or budgetary priorities, a prolonged U.S. a decline in the U.S. government defense budget, changes in spending or budgetary priorities, a prolonged U.S. government shutdown or delays in contract awards; government shutdown or delays in contract awards; a decline in our backlog; a decline in our backlog; our ability to recruit, hire, retain and motivate adequate numbers of engineers and other qualified employees to meet our ability to recruit, hire, retain and motivate adequate numbers of engineers and other qualified employees to meet the demands of our customers; the demands of our customers; our ability to generate new design opportunities and win competitive bid selection processes; our ability to generate new design opportunities and win competitive bid selection processes; the increasing costs of providing employee benefits worldwide, including health insurance, retirement plan and the increasing costs of providing employee benefits worldwide, including health insurance, retirement plan and pension plan contributions and retirement benefits; pension plan contributions and retirement benefits; our ability to utilize our manufacturing facilities at efficient levels; our ability to utilize our manufacturing facilities at efficient levels; fluctuations in foreign currency exchange rates; fluctuations in foreign currency exchange rates; potential litigation-related costs or product liability, warranty and/or indemnity claims, including those not covered by potential litigation-related costs or product liability, warranty and/or indemnity claims, including those not covered by our suppliers or insurers; our suppliers or insurers; the difficulties inherent in forecasting future operating expense levels, including with respect to costs associated with the difficulties inherent in forecasting future operating expense levels, including with respect to costs associated with labor, utilities, transportation and raw materials; labor, utilities, transportation and raw materials; the costs related to compliance with increasing worldwide government, environmental and social responsibility the costs related to compliance with increasing worldwide government, environmental and social responsibility standards; standards; new accounting pronouncements or changes in existing accounting standards and practices; and new accounting pronouncements or changes in existing accounting standards and practices; and the effects of public health emergencies, civil unrest, natural disasters, widespread travel disruptions, security risks, the effects of public health emergencies, civil unrest, natural disasters, widespread travel disruptions, security risks, terrorist activities, international conflicts and other events beyond our control. terrorist activities, international conflicts and other events beyond our control. In addition, the semiconductor market has historically been cyclical and subject to significant economic upturns and In addition, the semiconductor market has historically been cyclical and subject to significant economic upturns and downturns. Our business and certain of the end markets we serve are also subject to rapid technological changes and material downturns. Our business and certain of the end markets we serve are also subject to rapid technological changes and material fluctuations in demand based on end-user preferences. There can be no assurance (i) that products stocked in our inventory will fluctuations in demand based on end-user preferences. There can be no assurance (i) that products stocked in our inventory will not be rendered obsolete before we ship them, or (ii) that we will be able to design, develop and produce products in a timely not be rendered obsolete before we ship them, or (ii) that we will be able to design, develop and produce products in a timely fashion to accommodate changing customer demand. fashion to accommodate changing customer demand. As a result of these and other factors, we may experience material fluctuations in future revenue, gross margins, As a result of these and other factors, we may experience material fluctuations in future revenue, gross margins, operating results, net income and earnings per share on a quarterly or annual basis. Our historical financial performance and operating results, net income and earnings per share on a quarterly or annual basis. Our historical financial performance and results of operations should not be relied upon as indicators of future performance or results. In addition, if our revenue, gross results of operations should not be relied upon as indicators of future performance or results. In addition, if our revenue, gross margins, operating results, net income and earnings per share results or expectations do not meet the expectations of securities margins, operating results, net income and earnings per share results or expectations do not meet the expectations of securities analysts or investors, the market price of our common stock may decline. analysts or investors, the market price of our common stock may decline. We may not be able to compete successfully in markets within the semiconductor industry in the future. We may not be able to compete successfully in markets within the semiconductor industry in the future. We face intense competition in the semiconductor industry, and we expect this competition to increase in the future, We face intense competition in the semiconductor industry, and we expect this competition to increase in the future, including from companies located outside of the United States. Competition is generally based on innovation, design, quality including from companies located outside of the United States. Competition is generally based on innovation, design, quality and reliability of products, product performance, features and functionality, product pricing, availability and capacity, and reliability of products, product performance, features and functionality, product pricing, availability and capacity, technological service and support, and the availability of integrated system solutions, with the relative importance of these technological service and support, and the availability of integrated system solutions, with the relative importance of these factors varying among products, markets and customers. Many companies have sufficient financial, manufacturing, technical, factors varying among products, markets and customers. Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to develop and market products that compete with our products. Some of our competitors may sales and marketing resources to develop and market products that compete with our products. Some of our competitors may have more advantageous supply or development relationships with our current and potential customers or suppliers. Our have more advantageous supply or development relationships with our current and potential customers or suppliers. Our competitors also include both emerging companies selling specialized products in markets we serve and companies outside of competitors also include both emerging companies selling specialized products in markets we serve and companies outside of the U.S., including entities associated with well-funded efforts by foreign governments to create indigenous semiconductor the U.S., including entities associated with well-funded efforts by foreign governments to create indigenous semiconductor industries. Existing or new competitors may develop products or technologies that more effectively address the demands of our industries. Existing or new competitors may develop products or technologies that more effectively address the demands of our customers and markets with enhanced performance, features and functionality, lower power requirements, greater levels of customers and markets with enhanced performance, features and functionality, lower power requirements, greater levels of integration or lower cost. In addition, as we seek to expand our business, including the design and production of products and integration or lower cost. In addition, as we seek to expand our business, including the design and production of products and services for developing and emerging markets, we may encounter increased competition from our current competitors and/or services for developing and emerging markets, we may encounter increased competition from our current competitors and/or new competitors. Increased competition in certain markets has resulted in and may continue to result in declining average new competitors. Increased competition in certain markets has resulted in and may continue to result in declining average selling prices, reduced gross margins and loss of market share in those markets. There can be no assurance that we will be able selling prices, reduced gross margins and loss of market share in those markets. There can be no assurance that we will be able to compete successfully in the future against existing or new competitors, or that our operating results will not be adversely to compete successfully in the future against existing or new competitors, or that our operating results will not be adversely affected by increased competition. In addition, the semiconductor industry has experienced significant consolidation over the affected by increased competition. In addition, the semiconductor industry has experienced significant consolidation over the 13 13 14 14 A prolonged disruption of our internal manufacturing operations could have a material adverse effect on our business, A prolonged disruption of our internal manufacturing operations could have a material adverse effect on our business, financial condition and results of operations. financial condition and results of operations. In addition to leveraging an outsourcing model for manufacturing operations, we also rely on our internal manufacturing In addition to leveraging an outsourcing model for manufacturing operations, we also rely on our internal manufacturing operations located in the United States, Ireland, the Philippines, Thailand and Malaysia. A prolonged disruption at, or inability operations located in the United States, Ireland, the Philippines, Thailand and Malaysia. A prolonged disruption at, or inability to utilize, one or more of our manufacturing facilities, loss of raw materials or damage to our manufacturing equipment for any to utilize, one or more of our manufacturing facilities, loss of raw materials or damage to our manufacturing equipment for any reason, including due to the COVID-19 pandemic, natural or man-made disasters, civil unrest or other events outside of our reason, including due to the COVID-19 pandemic, natural or man-made disasters, civil unrest or other events outside of our control, such as widespread outbreaks of illness, or the failure to maintain our labor force at one or more of these facilities, may control, such as widespread outbreaks of illness, or the failure to maintain our labor force at one or more of these facilities, may disrupt our operations, delay production, shipments and revenue and result in us being unable to timely satisfy customer disrupt our operations, delay production, shipments and revenue and result in us being unable to timely satisfy customer demand. As a result, we could forgo revenue opportunities, potentially lose market share and damage our customer demand. As a result, we could forgo revenue opportunities, potentially lose market share and damage our customer relationships, all of which could materially and adversely affect our business, financial condition and results of operations. relationships, all of which could materially and adversely affect our business, financial condition and results of operations. Our future success depends upon our ability to execute our business strategy, continue to innovate, improve our existing Our future success depends upon our ability to execute our business strategy, continue to innovate, improve our existing products, design, develop, produce and market new products, and identify and enter new markets. products, design, develop, produce and market new products, and identify and enter new markets. Our future success significantly depends on our ability to execute our business strategy, continue to innovate, improve Our future success significantly depends on our ability to execute our business strategy, continue to innovate, improve our existing products, and design, develop, produce and market innovative new products and system-level solutions. Product our existing products, and design, develop, produce and market innovative new products and system-level solutions. Product design, development, innovation and enhancement is often a complex, time-consuming and costly process involving significant design, development, innovation and enhancement is often a complex, time-consuming and costly process involving significant investment in research and development with no assurance of return on investment. There can be no assurance that we will be investment in research and development with no assurance of return on investment. There can be no assurance that we will be able to develop and introduce new and improved products in a timely or efficient manner or that new and improved products, if able to develop and introduce new and improved products in a timely or efficient manner or that new and improved products, if developed, will achieve market acceptance. Our products generally must conform to various evolving and sometimes competing developed, will achieve market acceptance. Our products generally must conform to various evolving and sometimes competing industry standards, which may adversely affect our ability to compete in certain markets or require us to incur significant costs. industry standards, which may adversely affect our ability to compete in certain markets or require us to incur significant costs. In addition, our customers generally impose very high quality and reliability standards on our products, which often change and In addition, our customers generally impose very high quality and reliability standards on our products, which often change and may be difficult or costly to satisfy. Any inability to satisfy customer quality and reliability standards or comply with industry may be difficult or costly to satisfy. Any inability to satisfy customer quality and reliability standards or comply with industry standards and technical requirements may adversely affect demand for our products and our results of operations. standards and technical requirements may adversely affect demand for our products and our results of operations. Our growth is also dependent on our ability to identify and penetrate new markets where we have limited experience yet Our growth is also dependent on our ability to identify and penetrate new markets where we have limited experience yet require significant investments, resources and technological advancements in order to compete effectively, and there can be no require significant investments, resources and technological advancements in order to compete effectively, and there can be no assurance that we will achieve success in these markets. There can be no assurance that the markets we serve and/or target assurance that we will achieve success in these markets. There can be no assurance that the markets we serve and/or target based on our business strategy will grow in the future, that our existing and new products will meet the requirements of these based on our business strategy will grow in the future, that our existing and new products will meet the requirements of these markets, that our products, or the end-products in which our products are used, will achieve customer acceptance in these markets, that our products, or the end-products in which our products are used, will achieve customer acceptance in these markets, that competitors will not force price reductions or take market share from us, or that we can achieve or maintain markets, that competitors will not force price reductions or take market share from us, or that we can achieve or maintain adequate gross margins or profits in these markets. adequate gross margins or profits in these markets. Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may materially fluctuate. materially fluctuate. Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may be materially affected by a number of factors, including: be materially affected by a number of factors, including: the effects of adverse economic conditions in the markets in which we sell our products, including inflationary the effects of adverse economic conditions in the markets in which we sell our products, including inflationary pressures, which has resulted, and may continue to result, in increased interest rates, fuel prices, wages, and other pressures, which has resulted, and may continue to result, in increased interest rates, fuel prices, wages, and other costs; costs; changes in customer demand or order patterns for our products and/or for end products that incorporate our products; changes in customer demand or order patterns for our products and/or for end products that incorporate our products; the timing, delay, reduction or cancellation of significant customer orders and our ability to manage inventory; the timing, delay, reduction or cancellation of significant customer orders and our ability to manage inventory; our ability to accurately forecast distributor demand for our products; our ability to accurately forecast distributor demand for our products; future distributor pricing credits and/or stock rotation rights; future distributor pricing credits and/or stock rotation rights; our ability to effectively manage our cost structure in both the short term and over a longer duration; our ability to effectively manage our cost structure in both the short term and over a longer duration; changes in geographic, product or customer mix; changes in geographic, product or customer mix; the extent of the impact and the duration of the COVID-19 pandemic; the extent of the impact and the duration of the COVID-19 pandemic; changes in our effective tax rates or new or revised tax legislation in the United States, Ireland or worldwide; changes in our effective tax rates or new or revised tax legislation in the United States, Ireland or worldwide; the effects of issued, threatened or retaliatory government sanctions, trade barriers or economic restrictions; changes in the effects of issued, threatened or retaliatory government sanctions, trade barriers or economic restrictions; changes in law, regulations or other restrictions, including executive orders; and changes in import and export regulations, law, regulations or other restrictions, including executive orders; and changes in import and export regulations, including restrictions on exports to certain companies or to third parties that do business with such companies, export including restrictions on exports to certain companies or to third parties that do business with such companies, export classifications, or duties and tariffs, particularly with respect to China; classifications, or duties and tariffs, particularly with respect to China; the timing of new product announcements or introductions by us, our customers or our competitors and the market the timing of new product announcements or introductions by us, our customers or our competitors and the market acceptance of such products; acceptance of such products; pricing decisions and competitive pricing pressures; pricing decisions and competitive pricing pressures; • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • fluctuations in manufacturing yields, adequate availability of wafers and other raw materials, and manufacturing, fluctuations in manufacturing yields, adequate availability of wafers and other raw materials, and manufacturing, assembly and test capacity; assembly and test capacity; the ability of our third-party suppliers, subcontractors and manufacturers to supply us with sufficient quantities of raw the ability of our third-party suppliers, subcontractors and manufacturers to supply us with sufficient quantities of raw materials, products and/or components; materials, products and/or components; a decline in infrastructure spending by foreign governments, including China; a decline in infrastructure spending by foreign governments, including China; a decline in the U.S. government defense budget, changes in spending or budgetary priorities, a prolonged U.S. a decline in the U.S. government defense budget, changes in spending or budgetary priorities, a prolonged U.S. government shutdown or delays in contract awards; government shutdown or delays in contract awards; a decline in our backlog; a decline in our backlog; our ability to recruit, hire, retain and motivate adequate numbers of engineers and other qualified employees to meet our ability to recruit, hire, retain and motivate adequate numbers of engineers and other qualified employees to meet the demands of our customers; the demands of our customers; our ability to generate new design opportunities and win competitive bid selection processes; our ability to generate new design opportunities and win competitive bid selection processes; the increasing costs of providing employee benefits worldwide, including health insurance, retirement plan and the increasing costs of providing employee benefits worldwide, including health insurance, retirement plan and pension plan contributions and retirement benefits; pension plan contributions and retirement benefits; our ability to utilize our manufacturing facilities at efficient levels; our ability to utilize our manufacturing facilities at efficient levels; fluctuations in foreign currency exchange rates; fluctuations in foreign currency exchange rates; potential litigation-related costs or product liability, warranty and/or indemnity claims, including those not covered by potential litigation-related costs or product liability, warranty and/or indemnity claims, including those not covered by our suppliers or insurers; our suppliers or insurers; the difficulties inherent in forecasting future operating expense levels, including with respect to costs associated with the difficulties inherent in forecasting future operating expense levels, including with respect to costs associated with labor, utilities, transportation and raw materials; labor, utilities, transportation and raw materials; the costs related to compliance with increasing worldwide government, environmental and social responsibility the costs related to compliance with increasing worldwide government, environmental and social responsibility standards; standards; new accounting pronouncements or changes in existing accounting standards and practices; and new accounting pronouncements or changes in existing accounting standards and practices; and the effects of public health emergencies, civil unrest, natural disasters, widespread travel disruptions, security risks, the effects of public health emergencies, civil unrest, natural disasters, widespread travel disruptions, security risks, terrorist activities, international conflicts and other events beyond our control. terrorist activities, international conflicts and other events beyond our control. In addition, the semiconductor market has historically been cyclical and subject to significant economic upturns and In addition, the semiconductor market has historically been cyclical and subject to significant economic upturns and downturns. Our business and certain of the end markets we serve are also subject to rapid technological changes and material downturns. Our business and certain of the end markets we serve are also subject to rapid technological changes and material fluctuations in demand based on end-user preferences. There can be no assurance (i) that products stocked in our inventory will fluctuations in demand based on end-user preferences. There can be no assurance (i) that products stocked in our inventory will not be rendered obsolete before we ship them, or (ii) that we will be able to design, develop and produce products in a timely not be rendered obsolete before we ship them, or (ii) that we will be able to design, develop and produce products in a timely fashion to accommodate changing customer demand. fashion to accommodate changing customer demand. As a result of these and other factors, we may experience material fluctuations in future revenue, gross margins, As a result of these and other factors, we may experience material fluctuations in future revenue, gross margins, operating results, net income and earnings per share on a quarterly or annual basis. Our historical financial performance and operating results, net income and earnings per share on a quarterly or annual basis. Our historical financial performance and results of operations should not be relied upon as indicators of future performance or results. In addition, if our revenue, gross results of operations should not be relied upon as indicators of future performance or results. In addition, if our revenue, gross margins, operating results, net income and earnings per share results or expectations do not meet the expectations of securities margins, operating results, net income and earnings per share results or expectations do not meet the expectations of securities analysts or investors, the market price of our common stock may decline. analysts or investors, the market price of our common stock may decline. We may not be able to compete successfully in markets within the semiconductor industry in the future. We may not be able to compete successfully in markets within the semiconductor industry in the future. We face intense competition in the semiconductor industry, and we expect this competition to increase in the future, We face intense competition in the semiconductor industry, and we expect this competition to increase in the future, including from companies located outside of the United States. Competition is generally based on innovation, design, quality including from companies located outside of the United States. Competition is generally based on innovation, design, quality and reliability of products, product performance, features and functionality, product pricing, availability and capacity, and reliability of products, product performance, features and functionality, product pricing, availability and capacity, technological service and support, and the availability of integrated system solutions, with the relative importance of these technological service and support, and the availability of integrated system solutions, with the relative importance of these factors varying among products, markets and customers. Many companies have sufficient financial, manufacturing, technical, factors varying among products, markets and customers. Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to develop and market products that compete with our products. Some of our competitors may sales and marketing resources to develop and market products that compete with our products. Some of our competitors may have more advantageous supply or development relationships with our current and potential customers or suppliers. Our have more advantageous supply or development relationships with our current and potential customers or suppliers. Our competitors also include both emerging companies selling specialized products in markets we serve and companies outside of competitors also include both emerging companies selling specialized products in markets we serve and companies outside of the U.S., including entities associated with well-funded efforts by foreign governments to create indigenous semiconductor the U.S., including entities associated with well-funded efforts by foreign governments to create indigenous semiconductor industries. Existing or new competitors may develop products or technologies that more effectively address the demands of our industries. Existing or new competitors may develop products or technologies that more effectively address the demands of our customers and markets with enhanced performance, features and functionality, lower power requirements, greater levels of customers and markets with enhanced performance, features and functionality, lower power requirements, greater levels of integration or lower cost. In addition, as we seek to expand our business, including the design and production of products and integration or lower cost. In addition, as we seek to expand our business, including the design and production of products and services for developing and emerging markets, we may encounter increased competition from our current competitors and/or services for developing and emerging markets, we may encounter increased competition from our current competitors and/or new competitors. Increased competition in certain markets has resulted in and may continue to result in declining average new competitors. Increased competition in certain markets has resulted in and may continue to result in declining average selling prices, reduced gross margins and loss of market share in those markets. There can be no assurance that we will be able selling prices, reduced gross margins and loss of market share in those markets. There can be no assurance that we will be able to compete successfully in the future against existing or new competitors, or that our operating results will not be adversely to compete successfully in the future against existing or new competitors, or that our operating results will not be adversely affected by increased competition. In addition, the semiconductor industry has experienced significant consolidation over the affected by increased competition. In addition, the semiconductor industry has experienced significant consolidation over the 13 13 14 14 past several years. Consolidation among our competitors could lead to a changing competitive landscape, which could past several years. Consolidation among our competitors could lead to a changing competitive landscape, which could negatively impact our competitive position and market share and harm our results of operations. negatively impact our competitive position and market share and harm our results of operations. could result in damage to property or persons. Further, sales through unauthorized channels could result in our products being could result in damage to property or persons. Further, sales through unauthorized channels could result in our products being sold at prices that are not our established prices and could result in lost revenue. These situations could have a material adverse sold at prices that are not our established prices and could result in lost revenue. These situations could have a material adverse If we are unable to recruit or retain our key personnel, our ability to execute our business strategy will be adversely affected. If we are unable to recruit or retain our key personnel, our ability to execute our business strategy will be adversely affected. Our continued success depends to a significant extent upon the recruitment, retention and effective succession of our key Our continued success depends to a significant extent upon the recruitment, retention and effective succession of our key personnel, including our leadership team, management and technical personnel, particularly our experienced engineers. The personnel, including our leadership team, management and technical personnel, particularly our experienced engineers. The competition for these employees is intense and the labor market is tight. Further, we have recently experienced an increase in competition for these employees is intense and the labor market is tight. Further, we have recently experienced an increase in undesired attrition. The loss of key personnel or the inability to attract, timely hire and retain key employees with critical undesired attrition. The loss of key personnel or the inability to attract, timely hire and retain key employees with critical technical skills to achieve our strategy, including as a result of changes to immigration policies, could cause business technical skills to achieve our strategy, including as a result of changes to immigration policies, could cause business disruptions, increased expenses to address any disruptions, and could have a material adverse effect on our business. disruptions, increased expenses to address any disruptions, and could have a material adverse effect on our business. We believe that a critical contributor to our success to date has been our corporate culture, which we have built to foster We believe that a critical contributor to our success to date has been our corporate culture, which we have built to foster innovation, teamwork and employee satisfaction. As we grow, including from the integration of employees and businesses innovation, teamwork and employee satisfaction. As we grow, including from the integration of employees and businesses acquired in connection with previous or future acquisitions, we may find it difficult to maintain important aspects of our acquired in connection with previous or future acquisitions, we may find it difficult to maintain important aspects of our corporate culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future corporate culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future success. success. We do not maintain any key person life insurance policy on any of our officers or other employees. The loss of one or We do not maintain any key person life insurance policy on any of our officers or other employees. The loss of one or more of our key employees, and any failure to have in place and execute an effective succession plan for key executives, could more of our key employees, and any failure to have in place and execute an effective succession plan for key executives, could seriously harm our business. seriously harm our business. Our customers typically do not make long-term product purchase commitments, and incorrect forecasts or reductions, Our customers typically do not make long-term product purchase commitments, and incorrect forecasts or reductions, cancellations or delays in orders for our products could adversely affect our operating results. cancellations or delays in orders for our products could adversely affect our operating results. We typically do not have sales contracts with our customers that include long-term product purchase commitments. In We typically do not have sales contracts with our customers that include long-term product purchase commitments. In certain markets where end-user demand may be particularly volatile and difficult to predict, some customers place orders that certain markets where end-user demand may be particularly volatile and difficult to predict, some customers place orders that require us to manufacture product and have it available for shipment, even though the customer is unwilling to make a binding require us to manufacture product and have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even any, of the product. In other instances, we manufacture product based on non-binding commitment to purchase all, or even any, of the product. In other instances, we manufacture product based on non-binding forecasts of customer demands, which may fluctuate significantly on a quarterly or annual basis and at times may prove to be forecasts of customer demands, which may fluctuate significantly on a quarterly or annual basis and at times may prove to be inaccurate. Additionally, our U.S. government contracts and subcontracts may be funded in increments over a number of inaccurate. Additionally, our U.S. government contracts and subcontracts may be funded in increments over a number of government budget periods and typically can be terminated by the government for its convenience. As a result, we may incur government budget periods and typically can be terminated by the government for its convenience. As a result, we may incur inventory and manufacturing costs in advance of anticipated sales, and we are subject to the risk of lower than expected orders inventory and manufacturing costs in advance of anticipated sales, and we are subject to the risk of lower than expected orders or cancellations of orders, leading to a sharp reduction of sales and backlog. Further, if orders or forecasts for products that or cancellations of orders, leading to a sharp reduction of sales and backlog. Further, if orders or forecasts for products that meet a customer’s unique requirements are canceled or unrealized we may be left with an inventory of unsaleable products, meet a customer’s unique requirements are canceled or unrealized we may be left with an inventory of unsaleable products, causing potential inventory write-offs, and hindering our ability to recover our costs. As a result of lengthy manufacturing causing potential inventory write-offs, and hindering our ability to recover our costs. As a result of lengthy manufacturing cycles for certain of the products that are subject to these uncertainties, the amount of unsaleable product could be substantial. cycles for certain of the products that are subject to these uncertainties, the amount of unsaleable product could be substantial. Incorrect forecasts, or reductions, cancellations or delays in orders for our products could adversely affect our operating results. Incorrect forecasts, or reductions, cancellations or delays in orders for our products could adversely affect our operating results. Our operating results are dependent on the performance of independent distributors. Our operating results are dependent on the performance of independent distributors. A significant portion of our sales are through independent global and regional distributors that are not under our control. A significant portion of our sales are through independent global and regional distributors that are not under our control. These independent distributors generally represent product lines offered by several companies and thus could reduce their sales These independent distributors generally represent product lines offered by several companies and thus could reduce their sales efforts for our products or they could terminate their representation of us. We generally do not require letters of credit from our efforts for our products or they could terminate their representation of us. We generally do not require letters of credit from our distributors, including our largest distributor, and are not protected against accounts receivable default or declarations of distributors, including our largest distributor, and are not protected against accounts receivable default or declarations of bankruptcy by these distributors. Our inability to collect open accounts receivable could adversely affect our operating results. bankruptcy by these distributors. Our inability to collect open accounts receivable could adversely affect our operating results. Termination of a significant distributor or a group of distributors, whether at our initiative or the distributor’s initiative or Termination of a significant distributor or a group of distributors, whether at our initiative or the distributor’s initiative or through consolidation in the distribution industry, could disrupt our current business, and if we are unable to find suitable through consolidation in the distribution industry, could disrupt our current business, and if we are unable to find suitable replacements with the appropriate scale and resources, our operating results could be adversely affected. replacements with the appropriate scale and resources, our operating results could be adversely affected. We are required to estimate the effects of returns and allowances provided to distributors and record revenue at the time We are required to estimate the effects of returns and allowances provided to distributors and record revenue at the time of sale to the distributor. If our estimates of such credits and rights are materially understated, it could cause subsequent of sale to the distributor. If our estimates of such credits and rights are materially understated, it could cause subsequent adjustments that negatively impact our revenues and gross profits in a future period. adjustments that negatively impact our revenues and gross profits in a future period. Our industry faces challenges associated with products diverted from authorized distribution channels, which could result in Our industry faces challenges associated with products diverted from authorized distribution channels, which could result in reputational harm and have a material adverse effect our business and results of operations. reputational harm and have a material adverse effect our business and results of operations. We market and sell our products directly and through third-party distributors. There is a risk that our products may be We market and sell our products directly and through third-party distributors. There is a risk that our products may be diverted from our authorized distribution channels and sold on the “gray market” in ways that are not in accordance with our diverted from our authorized distribution channels and sold on the “gray market” in ways that are not in accordance with our established agreements, policies and procedures or at our established prices. Customers purchasing our products on the gray established agreements, policies and procedures or at our established prices. Customers purchasing our products on the gray market or through other unauthorized channels may use our products for purposes for which they were not intended or that may market or through other unauthorized channels may use our products for purposes for which they were not intended or that may be contrary to our ethical, legal and regulatory obligations. Customers may also purchase counterfeit or substandard products, be contrary to our ethical, legal and regulatory obligations. Customers may also purchase counterfeit or substandard products, including products that have been altered, mishandled or damaged, or purchase used products presented as new, each of which including products that have been altered, mishandled or damaged, or purchase used products presented as new, each of which effect on our business and operating results. effect on our business and operating results. The extent to which the novel strain of the coronavirus (COVID-19) pandemic will adversely affect our business, financial The extent to which the novel strain of the coronavirus (COVID-19) pandemic will adversely affect our business, financial condition and results of operations is uncertain. condition and results of operations is uncertain. The COVID-19 pandemic has created significant worldwide uncertainty, volatility and economic disruption and has The COVID-19 pandemic has created significant worldwide uncertainty, volatility and economic disruption and has impacted our workforce and operations, the operations of our customers, those of our respective vendors and suppliers and the impacted our workforce and operations, the operations of our customers, those of our respective vendors and suppliers and the global capital markets. During the course of the pandemic, many of the countries in which we operate took and continue to take global capital markets. During the course of the pandemic, many of the countries in which we operate took and continue to take measures to address the pandemic, which at times has resulted in disruptions at some of our manufacturing operations and measures to address the pandemic, which at times has resulted in disruptions at some of our manufacturing operations and facilities, including restrictions on our access to facilities. We may also continue to take actions as may be required by facilities, including restrictions on our access to facilities. We may also continue to take actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers, government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers, which may cause disruption to our business. The continued COVID-19 pandemic could also cause further disruption in our which may cause disruption to our business. The continued COVID-19 pandemic could also cause further disruption in our supply chain and customer demand, and could adversely affect the ability of our customers to perform, including in making supply chain and customer demand, and could adversely affect the ability of our customers to perform, including in making timely payments to us, which could further impact our business, financial condition and results of operations. The ultimate timely payments to us, which could further impact our business, financial condition and results of operations. The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows continues to be impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows continues to be largely dependent on future developments, including the duration, scope and severity of the pandemic, any additional largely dependent on future developments, including the duration, scope and severity of the pandemic, any additional resurgences, variants and severity of variants and the ability to effectively and widely manufacture and distribute vaccines, resurgences, variants and severity of variants and the ability to effectively and widely manufacture and distribute vaccines, which are not within our control and cannot be accurately predicted and are uncertain. These events could adversely impact our which are not within our control and cannot be accurately predicted and are uncertain. These events could adversely impact our business, results of operations, financial condition and cash flows. To the extent the COVID-19 pandemic adversely affects our business, results of operations, financial condition and cash flows. To the extent the COVID-19 pandemic adversely affects our business, results of operations, financial condition and cash flows, it may also heighten many of the other risks described in this business, results of operations, financial condition and cash flows, it may also heighten many of the other risks described in this “Risk Factors” section. “Risk Factors” section. Our semiconductor products are complex and we may be subject to warranty, indemnity and/or product liability claims, which Our semiconductor products are complex and we may be subject to warranty, indemnity and/or product liability claims, which could result in significant costs and damage to our reputation and adversely affect customer relationships, the market could result in significant costs and damage to our reputation and adversely affect customer relationships, the market acceptance of our products and our operating results. acceptance of our products and our operating results. Semiconductor products are highly complex and may contain defects that affect their quality or performance. Failures in Semiconductor products are highly complex and may contain defects that affect their quality or performance. Failures in our products and services or in the products of our customers could result in damage to our reputation for reliability and our products and services or in the products of our customers could result in damage to our reputation for reliability and increase our legal or financial exposure to third parties. Certain of our products and services could also contain security increase our legal or financial exposure to third parties. Certain of our products and services could also contain security vulnerabilities, defects, bugs and errors, which could also result in significant data losses, security breaches and theft of vulnerabilities, defects, bugs and errors, which could also result in significant data losses, security breaches and theft of intellectual property. We generally warrant that our products will meet their published specifications, and that we will repair or intellectual property. We generally warrant that our products will meet their published specifications, and that we will repair or replace defective products, for one year from the date title passes from us to the customer. We invest significant resources in the replace defective products, for one year from the date title passes from us to the customer. We invest significant resources in the testing of our products; however, if any of our products contain defects, we may be required to incur additional development testing of our products; however, if any of our products contain defects, we may be required to incur additional development and remediation costs pursuant to warranty and indemnification provisions in our customer contracts and purchase orders. and remediation costs pursuant to warranty and indemnification provisions in our customer contracts and purchase orders. These problems may divert our technical and other resources from other product development efforts and could result in claims These problems may divert our technical and other resources from other product development efforts and could result in claims against us by our customers or others, including liability for costs and expenses associated with product defects, including against us by our customers or others, including liability for costs and expenses associated with product defects, including recalls, which may adversely impact our operating results. We may also be subject to customer intellectual property indemnity recalls, which may adversely impact our operating results. We may also be subject to customer intellectual property indemnity claims. Our customers have on occasion been sued, and may be sued in the future, by third parties alleging infringement of claims. Our customers have on occasion been sued, and may be sued in the future, by third parties alleging infringement of intellectual property rights, or damages resulting from use of our products. Those customers may seek indemnification from us intellectual property rights, or damages resulting from use of our products. Those customers may seek indemnification from us under the terms and conditions of our sales contracts with them. In certain cases, our potential indemnification liability may be under the terms and conditions of our sales contracts with them. In certain cases, our potential indemnification liability may be significant. significant. Further, we sell to customers in industries such as automotive (including autonomous vehicles), aerospace, defense, and Further, we sell to customers in industries such as automotive (including autonomous vehicles), aerospace, defense, and healthcare, where failure of the systems in which our products are integrated could cause damage to property or persons. We healthcare, where failure of the systems in which our products are integrated could cause damage to property or persons. We may be subject to product liability claims if our products, or the integration of our products, cause system failures. Any product may be subject to product liability claims if our products, or the integration of our products, cause system failures. Any product liability claim, whether or not determined in our favor, could result in significant expense, divert the efforts of our technical and liability claim, whether or not determined in our favor, could result in significant expense, divert the efforts of our technical and management personnel, and harm our business. In addition, if any of our products contain defects, or have reliability, quality or management personnel, and harm our business. In addition, if any of our products contain defects, or have reliability, quality or compatibility problems not capable of being resolved, our reputation may be damaged, which could make it more difficult for compatibility problems not capable of being resolved, our reputation may be damaged, which could make it more difficult for us to sell our products to customers and which could also adversely affect our operating results. us to sell our products to customers and which could also adversely affect our operating results. The fabrication of integrated circuits is highly complex and precise, and our manufacturing processes utilize a substantial The fabrication of integrated circuits is highly complex and precise, and our manufacturing processes utilize a substantial amount of technology. Minute impurities, contaminants in the manufacturing environment, difficulties in the fabrication amount of technology. Minute impurities, contaminants in the manufacturing environment, difficulties in the fabrication process, defects in the masks used in the wafer manufacturing process, manufacturing equipment failures, wafer breakage or process, defects in the masks used in the wafer manufacturing process, manufacturing equipment failures, wafer breakage or other factors can cause a substantial percentage of wafers to be rejected or numerous dice on each wafer to be nonfunctional. other factors can cause a substantial percentage of wafers to be rejected or numerous dice on each wafer to be nonfunctional. While we have significant expertise in semiconductor manufacturing, it is possible that some processes could become unstable. While we have significant expertise in semiconductor manufacturing, it is possible that some processes could become unstable. This instability could result in manufacturing delays and product shortages, which could have a material adverse effect on our This instability could result in manufacturing delays and product shortages, which could have a material adverse effect on our operating results. operating results. 15 15 16 16 past several years. Consolidation among our competitors could lead to a changing competitive landscape, which could past several years. Consolidation among our competitors could lead to a changing competitive landscape, which could negatively impact our competitive position and market share and harm our results of operations. negatively impact our competitive position and market share and harm our results of operations. If we are unable to recruit or retain our key personnel, our ability to execute our business strategy will be adversely affected. If we are unable to recruit or retain our key personnel, our ability to execute our business strategy will be adversely affected. Our continued success depends to a significant extent upon the recruitment, retention and effective succession of our key Our continued success depends to a significant extent upon the recruitment, retention and effective succession of our key personnel, including our leadership team, management and technical personnel, particularly our experienced engineers. The personnel, including our leadership team, management and technical personnel, particularly our experienced engineers. The competition for these employees is intense and the labor market is tight. Further, we have recently experienced an increase in competition for these employees is intense and the labor market is tight. Further, we have recently experienced an increase in undesired attrition. The loss of key personnel or the inability to attract, timely hire and retain key employees with critical undesired attrition. The loss of key personnel or the inability to attract, timely hire and retain key employees with critical technical skills to achieve our strategy, including as a result of changes to immigration policies, could cause business technical skills to achieve our strategy, including as a result of changes to immigration policies, could cause business disruptions, increased expenses to address any disruptions, and could have a material adverse effect on our business. disruptions, increased expenses to address any disruptions, and could have a material adverse effect on our business. We believe that a critical contributor to our success to date has been our corporate culture, which we have built to foster We believe that a critical contributor to our success to date has been our corporate culture, which we have built to foster innovation, teamwork and employee satisfaction. As we grow, including from the integration of employees and businesses innovation, teamwork and employee satisfaction. As we grow, including from the integration of employees and businesses acquired in connection with previous or future acquisitions, we may find it difficult to maintain important aspects of our acquired in connection with previous or future acquisitions, we may find it difficult to maintain important aspects of our corporate culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future corporate culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future success. success. seriously harm our business. seriously harm our business. We do not maintain any key person life insurance policy on any of our officers or other employees. The loss of one or We do not maintain any key person life insurance policy on any of our officers or other employees. The loss of one or more of our key employees, and any failure to have in place and execute an effective succession plan for key executives, could more of our key employees, and any failure to have in place and execute an effective succession plan for key executives, could Our customers typically do not make long-term product purchase commitments, and incorrect forecasts or reductions, Our customers typically do not make long-term product purchase commitments, and incorrect forecasts or reductions, cancellations or delays in orders for our products could adversely affect our operating results. cancellations or delays in orders for our products could adversely affect our operating results. We typically do not have sales contracts with our customers that include long-term product purchase commitments. In We typically do not have sales contracts with our customers that include long-term product purchase commitments. In certain markets where end-user demand may be particularly volatile and difficult to predict, some customers place orders that certain markets where end-user demand may be particularly volatile and difficult to predict, some customers place orders that require us to manufacture product and have it available for shipment, even though the customer is unwilling to make a binding require us to manufacture product and have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even any, of the product. In other instances, we manufacture product based on non-binding commitment to purchase all, or even any, of the product. In other instances, we manufacture product based on non-binding forecasts of customer demands, which may fluctuate significantly on a quarterly or annual basis and at times may prove to be forecasts of customer demands, which may fluctuate significantly on a quarterly or annual basis and at times may prove to be inaccurate. Additionally, our U.S. government contracts and subcontracts may be funded in increments over a number of inaccurate. Additionally, our U.S. government contracts and subcontracts may be funded in increments over a number of government budget periods and typically can be terminated by the government for its convenience. As a result, we may incur government budget periods and typically can be terminated by the government for its convenience. As a result, we may incur inventory and manufacturing costs in advance of anticipated sales, and we are subject to the risk of lower than expected orders inventory and manufacturing costs in advance of anticipated sales, and we are subject to the risk of lower than expected orders or cancellations of orders, leading to a sharp reduction of sales and backlog. Further, if orders or forecasts for products that or cancellations of orders, leading to a sharp reduction of sales and backlog. Further, if orders or forecasts for products that meet a customer’s unique requirements are canceled or unrealized we may be left with an inventory of unsaleable products, meet a customer’s unique requirements are canceled or unrealized we may be left with an inventory of unsaleable products, causing potential inventory write-offs, and hindering our ability to recover our costs. As a result of lengthy manufacturing causing potential inventory write-offs, and hindering our ability to recover our costs. As a result of lengthy manufacturing cycles for certain of the products that are subject to these uncertainties, the amount of unsaleable product could be substantial. cycles for certain of the products that are subject to these uncertainties, the amount of unsaleable product could be substantial. Incorrect forecasts, or reductions, cancellations or delays in orders for our products could adversely affect our operating results. Incorrect forecasts, or reductions, cancellations or delays in orders for our products could adversely affect our operating results. Our operating results are dependent on the performance of independent distributors. Our operating results are dependent on the performance of independent distributors. A significant portion of our sales are through independent global and regional distributors that are not under our control. A significant portion of our sales are through independent global and regional distributors that are not under our control. These independent distributors generally represent product lines offered by several companies and thus could reduce their sales These independent distributors generally represent product lines offered by several companies and thus could reduce their sales efforts for our products or they could terminate their representation of us. We generally do not require letters of credit from our efforts for our products or they could terminate their representation of us. We generally do not require letters of credit from our distributors, including our largest distributor, and are not protected against accounts receivable default or declarations of distributors, including our largest distributor, and are not protected against accounts receivable default or declarations of bankruptcy by these distributors. Our inability to collect open accounts receivable could adversely affect our operating results. bankruptcy by these distributors. Our inability to collect open accounts receivable could adversely affect our operating results. Termination of a significant distributor or a group of distributors, whether at our initiative or the distributor’s initiative or Termination of a significant distributor or a group of distributors, whether at our initiative or the distributor’s initiative or through consolidation in the distribution industry, could disrupt our current business, and if we are unable to find suitable through consolidation in the distribution industry, could disrupt our current business, and if we are unable to find suitable replacements with the appropriate scale and resources, our operating results could be adversely affected. replacements with the appropriate scale and resources, our operating results could be adversely affected. We are required to estimate the effects of returns and allowances provided to distributors and record revenue at the time We are required to estimate the effects of returns and allowances provided to distributors and record revenue at the time of sale to the distributor. If our estimates of such credits and rights are materially understated, it could cause subsequent of sale to the distributor. If our estimates of such credits and rights are materially understated, it could cause subsequent adjustments that negatively impact our revenues and gross profits in a future period. adjustments that negatively impact our revenues and gross profits in a future period. Our industry faces challenges associated with products diverted from authorized distribution channels, which could result in Our industry faces challenges associated with products diverted from authorized distribution channels, which could result in reputational harm and have a material adverse effect our business and results of operations. reputational harm and have a material adverse effect our business and results of operations. We market and sell our products directly and through third-party distributors. There is a risk that our products may be We market and sell our products directly and through third-party distributors. There is a risk that our products may be diverted from our authorized distribution channels and sold on the “gray market” in ways that are not in accordance with our diverted from our authorized distribution channels and sold on the “gray market” in ways that are not in accordance with our established agreements, policies and procedures or at our established prices. Customers purchasing our products on the gray established agreements, policies and procedures or at our established prices. Customers purchasing our products on the gray market or through other unauthorized channels may use our products for purposes for which they were not intended or that may market or through other unauthorized channels may use our products for purposes for which they were not intended or that may be contrary to our ethical, legal and regulatory obligations. Customers may also purchase counterfeit or substandard products, be contrary to our ethical, legal and regulatory obligations. Customers may also purchase counterfeit or substandard products, including products that have been altered, mishandled or damaged, or purchase used products presented as new, each of which including products that have been altered, mishandled or damaged, or purchase used products presented as new, each of which could result in damage to property or persons. Further, sales through unauthorized channels could result in our products being could result in damage to property or persons. Further, sales through unauthorized channels could result in our products being sold at prices that are not our established prices and could result in lost revenue. These situations could have a material adverse sold at prices that are not our established prices and could result in lost revenue. These situations could have a material adverse effect on our business and operating results. effect on our business and operating results. The extent to which the novel strain of the coronavirus (COVID-19) pandemic will adversely affect our business, financial The extent to which the novel strain of the coronavirus (COVID-19) pandemic will adversely affect our business, financial condition and results of operations is uncertain. condition and results of operations is uncertain. The COVID-19 pandemic has created significant worldwide uncertainty, volatility and economic disruption and has The COVID-19 pandemic has created significant worldwide uncertainty, volatility and economic disruption and has impacted our workforce and operations, the operations of our customers, those of our respective vendors and suppliers and the impacted our workforce and operations, the operations of our customers, those of our respective vendors and suppliers and the global capital markets. During the course of the pandemic, many of the countries in which we operate took and continue to take global capital markets. During the course of the pandemic, many of the countries in which we operate took and continue to take measures to address the pandemic, which at times has resulted in disruptions at some of our manufacturing operations and measures to address the pandemic, which at times has resulted in disruptions at some of our manufacturing operations and facilities, including restrictions on our access to facilities. We may also continue to take actions as may be required by facilities, including restrictions on our access to facilities. We may also continue to take actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers, government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers, which may cause disruption to our business. The continued COVID-19 pandemic could also cause further disruption in our which may cause disruption to our business. The continued COVID-19 pandemic could also cause further disruption in our supply chain and customer demand, and could adversely affect the ability of our customers to perform, including in making supply chain and customer demand, and could adversely affect the ability of our customers to perform, including in making timely payments to us, which could further impact our business, financial condition and results of operations. The ultimate timely payments to us, which could further impact our business, financial condition and results of operations. The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows continues to be impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows continues to be largely dependent on future developments, including the duration, scope and severity of the pandemic, any additional largely dependent on future developments, including the duration, scope and severity of the pandemic, any additional resurgences, variants and severity of variants and the ability to effectively and widely manufacture and distribute vaccines, resurgences, variants and severity of variants and the ability to effectively and widely manufacture and distribute vaccines, which are not within our control and cannot be accurately predicted and are uncertain. These events could adversely impact our which are not within our control and cannot be accurately predicted and are uncertain. These events could adversely impact our business, results of operations, financial condition and cash flows. To the extent the COVID-19 pandemic adversely affects our business, results of operations, financial condition and cash flows. To the extent the COVID-19 pandemic adversely affects our business, results of operations, financial condition and cash flows, it may also heighten many of the other risks described in this business, results of operations, financial condition and cash flows, it may also heighten many of the other risks described in this “Risk Factors” section. “Risk Factors” section. Our semiconductor products are complex and we may be subject to warranty, indemnity and/or product liability claims, which Our semiconductor products are complex and we may be subject to warranty, indemnity and/or product liability claims, which could result in significant costs and damage to our reputation and adversely affect customer relationships, the market could result in significant costs and damage to our reputation and adversely affect customer relationships, the market acceptance of our products and our operating results. acceptance of our products and our operating results. Semiconductor products are highly complex and may contain defects that affect their quality or performance. Failures in Semiconductor products are highly complex and may contain defects that affect their quality or performance. Failures in our products and services or in the products of our customers could result in damage to our reputation for reliability and our products and services or in the products of our customers could result in damage to our reputation for reliability and increase our legal or financial exposure to third parties. Certain of our products and services could also contain security increase our legal or financial exposure to third parties. Certain of our products and services could also contain security vulnerabilities, defects, bugs and errors, which could also result in significant data losses, security breaches and theft of vulnerabilities, defects, bugs and errors, which could also result in significant data losses, security breaches and theft of intellectual property. We generally warrant that our products will meet their published specifications, and that we will repair or intellectual property. We generally warrant that our products will meet their published specifications, and that we will repair or replace defective products, for one year from the date title passes from us to the customer. We invest significant resources in the replace defective products, for one year from the date title passes from us to the customer. We invest significant resources in the testing of our products; however, if any of our products contain defects, we may be required to incur additional development testing of our products; however, if any of our products contain defects, we may be required to incur additional development and remediation costs pursuant to warranty and indemnification provisions in our customer contracts and purchase orders. and remediation costs pursuant to warranty and indemnification provisions in our customer contracts and purchase orders. These problems may divert our technical and other resources from other product development efforts and could result in claims These problems may divert our technical and other resources from other product development efforts and could result in claims against us by our customers or others, including liability for costs and expenses associated with product defects, including against us by our customers or others, including liability for costs and expenses associated with product defects, including recalls, which may adversely impact our operating results. We may also be subject to customer intellectual property indemnity recalls, which may adversely impact our operating results. We may also be subject to customer intellectual property indemnity claims. Our customers have on occasion been sued, and may be sued in the future, by third parties alleging infringement of claims. Our customers have on occasion been sued, and may be sued in the future, by third parties alleging infringement of intellectual property rights, or damages resulting from use of our products. Those customers may seek indemnification from us intellectual property rights, or damages resulting from use of our products. Those customers may seek indemnification from us under the terms and conditions of our sales contracts with them. In certain cases, our potential indemnification liability may be under the terms and conditions of our sales contracts with them. In certain cases, our potential indemnification liability may be significant. significant. Further, we sell to customers in industries such as automotive (including autonomous vehicles), aerospace, defense, and Further, we sell to customers in industries such as automotive (including autonomous vehicles), aerospace, defense, and healthcare, where failure of the systems in which our products are integrated could cause damage to property or persons. We healthcare, where failure of the systems in which our products are integrated could cause damage to property or persons. We may be subject to product liability claims if our products, or the integration of our products, cause system failures. Any product may be subject to product liability claims if our products, or the integration of our products, cause system failures. Any product liability claim, whether or not determined in our favor, could result in significant expense, divert the efforts of our technical and liability claim, whether or not determined in our favor, could result in significant expense, divert the efforts of our technical and management personnel, and harm our business. In addition, if any of our products contain defects, or have reliability, quality or management personnel, and harm our business. In addition, if any of our products contain defects, or have reliability, quality or compatibility problems not capable of being resolved, our reputation may be damaged, which could make it more difficult for compatibility problems not capable of being resolved, our reputation may be damaged, which could make it more difficult for us to sell our products to customers and which could also adversely affect our operating results. us to sell our products to customers and which could also adversely affect our operating results. The fabrication of integrated circuits is highly complex and precise, and our manufacturing processes utilize a substantial The fabrication of integrated circuits is highly complex and precise, and our manufacturing processes utilize a substantial amount of technology. Minute impurities, contaminants in the manufacturing environment, difficulties in the fabrication amount of technology. Minute impurities, contaminants in the manufacturing environment, difficulties in the fabrication process, defects in the masks used in the wafer manufacturing process, manufacturing equipment failures, wafer breakage or process, defects in the masks used in the wafer manufacturing process, manufacturing equipment failures, wafer breakage or other factors can cause a substantial percentage of wafers to be rejected or numerous dice on each wafer to be nonfunctional. other factors can cause a substantial percentage of wafers to be rejected or numerous dice on each wafer to be nonfunctional. While we have significant expertise in semiconductor manufacturing, it is possible that some processes could become unstable. While we have significant expertise in semiconductor manufacturing, it is possible that some processes could become unstable. This instability could result in manufacturing delays and product shortages, which could have a material adverse effect on our This instability could result in manufacturing delays and product shortages, which could have a material adverse effect on our operating results. operating results. 15 15 16 16 Risk Related to Acquisitions and Strategic Transactions Risk Related to Acquisitions and Strategic Transactions Risks Related to Cyber, IP, Legal and Regulatory Risks Related to Cyber, IP, Legal and Regulatory Our acquisition of Maxim involves a number of risks that could adversely affect our business, financial condition and operating Our acquisition of Maxim involves a number of risks that could adversely affect our business, financial condition and operating results, and we may not realize the financial and strategic goals we anticipate. results, and we may not realize the financial and strategic goals we anticipate. Our computer systems and networks may be subject to attempted security breaches and other cybersecurity incidents and a Our computer systems and networks may be subject to attempted security breaches and other cybersecurity incidents and a significant disruption in, or breach in security of, our information technology systems or certain of our products could significant disruption in, or breach in security of, our information technology systems or certain of our products could In August 2021, we completed our acquisition of Maxim, which we refer to as the acquisition or the merger. The ultimate In August 2021, we completed our acquisition of Maxim, which we refer to as the acquisition or the merger. The ultimate success of the merger will depend on, among other things, the ability to continue to combine the two businesses in a manner success of the merger will depend on, among other things, the ability to continue to combine the two businesses in a manner that facilitates growth opportunities. Further, there are a large number of processes, policies, procedures, operations, that facilitates growth opportunities. Further, there are a large number of processes, policies, procedures, operations, technologies and systems that must continue to be integrated in connection with the ongoing integration of Maxim’s business. technologies and systems that must continue to be integrated in connection with the ongoing integration of Maxim’s business. The combined company has and may continue to incur ongoing restructuring, integration, and other costs associated with The combined company has and may continue to incur ongoing restructuring, integration, and other costs associated with combining the operations of the two companies in connection with the merger. It is possible that the ongoing integration combining the operations of the two companies in connection with the merger. It is possible that the ongoing integration process could result in the loss of customers, the disruption of ongoing businesses, inconsistencies in standards, controls, process could result in the loss of customers, the disruption of ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall integration process procedures and policies, unexpected integration issues, higher than expected integration costs and an overall integration process that takes longer than originally anticipated and actual growth, if achieved, may be lower than what we expect and may take that takes longer than originally anticipated and actual growth, if achieved, may be lower than what we expect and may take longer to achieve than anticipated. There can be no assurances that the two businesses can be integrated successfully in a way longer to achieve than anticipated. There can be no assurances that the two businesses can be integrated successfully in a way that maximizes the combined business to the fullest extent. If we are not able to successfully achieve our objectives, the benefits that maximizes the combined business to the fullest extent. If we are not able to successfully achieve our objectives, the benefits of the merger may not be fully realized or may take longer to achieve than expected. of the merger may not be fully realized or may take longer to achieve than expected. To remain competitive, we may need to invest in or acquire other companies, purchase or license technology from third parties, To remain competitive, we may need to invest in or acquire other companies, purchase or license technology from third parties, or enter into other strategic transactions in order to introduce new products or enhance our existing products. or enter into other strategic transactions in order to introduce new products or enhance our existing products. An element of our business strategy involves expansion through the acquisitions of businesses, assets, products or An element of our business strategy involves expansion through the acquisitions of businesses, assets, products or technologies that allow us to complement our existing product offerings, diversify our product portfolio, expand our market technologies that allow us to complement our existing product offerings, diversify our product portfolio, expand our market coverage, increase our engineering workforce, expand our technical skill sets or enhance our technological capabilities. We may coverage, increase our engineering workforce, expand our technical skill sets or enhance our technological capabilities. We may not be able to find businesses that have the technology or resources we need and, if we find such businesses, we may not be not be able to find businesses that have the technology or resources we need and, if we find such businesses, we may not be able to invest in, purchase or license the technology or resources on commercially favorable terms or at all. Acquisitions, able to invest in, purchase or license the technology or resources on commercially favorable terms or at all. Acquisitions, investments and technology licenses are challenging to complete for a number of reasons, including difficulties in identifying investments and technology licenses are challenging to complete for a number of reasons, including difficulties in identifying potential targets, the cost of potential transactions, competition among prospective buyers and licensees, the need for regulatory potential targets, the cost of potential transactions, competition among prospective buyers and licensees, the need for regulatory approvals, and difficulties related to integration efforts. In addition, investments in companies are subject to a risk of a partial or approvals, and difficulties related to integration efforts. In addition, investments in companies are subject to a risk of a partial or total loss of our investment. Both in the U.S. and abroad, governmental regulation of acquisitions, including antitrust and other total loss of our investment. Both in the U.S. and abroad, governmental regulation of acquisitions, including antitrust and other regulatory reviews and approvals, has become more complex, increasing the costs and risks of undertaking and consummating regulatory reviews and approvals, has become more complex, increasing the costs and risks of undertaking and consummating significant acquisitions. In order to finance a potential transaction, we may need to raise additional funds by issuing securities significant acquisitions. In order to finance a potential transaction, we may need to raise additional funds by issuing securities or borrowing money. We may not be able to obtain financing on favorable terms, and the sale of our stock may result in the or borrowing money. We may not be able to obtain financing on favorable terms, and the sale of our stock may result in the dilution of our existing shareholders or the issuance of securities with rights that are superior to the rights of our common dilution of our existing shareholders or the issuance of securities with rights that are superior to the rights of our common shareholders. shareholders. Acquisitions also involve a number of challenges and risks, including: Acquisitions also involve a number of challenges and risks, including: diversion of management’s attention in connection with both negotiating the transaction and integrating the acquired diversion of management’s attention in connection with both negotiating the transaction and integrating the acquired assets and businesses; assets and businesses; difficulty or delay integrating acquired technologies, operations, systems and infrastructure, and personnel with our difficulty or delay integrating acquired technologies, operations, systems and infrastructure, and personnel with our existing businesses; existing businesses; strain on managerial and operational resources as management tries to oversee larger or more complex operations; strain on managerial and operational resources as management tries to oversee larger or more complex operations; the future funding requirements for acquired companies, including research and development costs, employee the future funding requirements for acquired companies, including research and development costs, employee compensation and benefits, and operating expenses, which may be significant; compensation and benefits, and operating expenses, which may be significant; servicing significant debt that may be incurred in connection with acquisitions; servicing significant debt that may be incurred in connection with acquisitions; potential loss of key employees; potential loss of key employees; exposure to unforeseen liabilities or regulatory compliance issues of acquired companies; exposure to unforeseen liabilities or regulatory compliance issues of acquired companies; higher than expected or unexpected costs relating to or associated with an acquisition and related integration of assets higher than expected or unexpected costs relating to or associated with an acquisition and related integration of assets and businesses; and businesses; difficulty realizing expected cost savings, operating synergies and growth prospects of an acquisition in a timely difficulty realizing expected cost savings, operating synergies and growth prospects of an acquisition in a timely manner or at all; and manner or at all; and increased risk of costly and time-consuming legal proceedings. increased risk of costly and time-consuming legal proceedings. • • • • • • • • • • • • • • • • • • • • If we are unable to successfully address these risks, we may not realize some or all of the expected benefits of our acquisitions, If we are unable to successfully address these risks, we may not realize some or all of the expected benefits of our acquisitions, which may have an adverse effect on our business strategy, plans and operating results. which may have an adverse effect on our business strategy, plans and operating results. materially and adversely affect our business or reputation. materially and adversely affect our business or reputation. We rely on information technology systems throughout our company to keep financial records and customer data, We rely on information technology systems throughout our company to keep financial records and customer data, process orders, manage inventory, coordinate shipments to customers, maintain confidential and proprietary information, assist process orders, manage inventory, coordinate shipments to customers, maintain confidential and proprietary information, assist in semiconductor engineering and other technical activities and operate other critical functions such as Internet connectivity, in semiconductor engineering and other technical activities and operate other critical functions such as Internet connectivity, network communications and email. Our information technology systems may be susceptible to damage, disruptions or network communications and email. Our information technology systems may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures, employee malfeasance, user errors, shutdowns due to power outages, hardware failures, telecommunication failures, employee malfeasance, user errors, catastrophes or other unforeseen events. Since the beginning of the COVID-19 pandemic, some of our employees have been catastrophes or other unforeseen events. Since the beginning of the COVID-19 pandemic, some of our employees have been working remotely, which may pose additional data security risks. We also rely upon external cloud providers for certain working remotely, which may pose additional data security risks. We also rely upon external cloud providers for certain infrastructure activities. If we were to experience a prolonged disruption in the information technology systems that involve our infrastructure activities. If we were to experience a prolonged disruption in the information technology systems that involve our internal communications or our interactions with customers or suppliers, it could result in the loss of sales and customers and internal communications or our interactions with customers or suppliers, it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business. significant incremental costs, which could adversely affect our business. We may also be subject to security breaches of our information technology systems and certain of our products caused We may also be subject to security breaches of our information technology systems and certain of our products caused by viruses, illegal break-ins or hacking, sabotage, other cyber attacks, or acts of vandalism by third parties or our employees or by viruses, illegal break-ins or hacking, sabotage, other cyber attacks, or acts of vandalism by third parties or our employees or contractors. Further, geopolitical tensions or conflicts, such as the ongoing conflict between Russia and Ukraine, may create a contractors. Further, geopolitical tensions or conflicts, such as the ongoing conflict between Russia and Ukraine, may create a heightened risk of cyber attacks, which could result in significant losses and damage and, could damage our reputation with heightened risk of cyber attacks, which could result in significant losses and damage and, could damage our reputation with customers and suppliers if the confidential information of our customers, suppliers, employees or contractors is compromised. customers and suppliers if the confidential information of our customers, suppliers, employees or contractors is compromised. Our security measures or those of our third-party service providers may not detect or prevent security breaches, cyber attacks, Our security measures or those of our third-party service providers may not detect or prevent security breaches, cyber attacks, defects, bugs or errors. defects, bugs or errors. In addition, we provide our confidential and proprietary information to our strategic partners in certain cases where doing In addition, we provide our confidential and proprietary information to our strategic partners in certain cases where doing so is necessary to conduct our business. Those third parties may be subject to security breaches or otherwise compromise the so is necessary to conduct our business. Those third parties may be subject to security breaches or otherwise compromise the protection of such information. Security breaches of our information technology systems or those of our partners could result in protection of such information. Security breaches of our information technology systems or those of our partners could result in the misappropriation, loss or unauthorized disclosure of confidential and proprietary information belonging to us or to our the misappropriation, loss or unauthorized disclosure of confidential and proprietary information belonging to us or to our employees, contractors, partners, customers, suppliers, or other third parties, system disruptions or denial of service, which employees, contractors, partners, customers, suppliers, or other third parties, system disruptions or denial of service, which could result in our suffering significant financial or reputational damage. could result in our suffering significant financial or reputational damage. In the event of such breaches, we could be exposed to potential liability, litigation, and regulatory action, as well as the In the event of such breaches, we could be exposed to potential liability, litigation, and regulatory action, as well as the loss of existing or potential customers, damage to our reputation, and other financial loss. In addition, the cost and operational loss of existing or potential customers, damage to our reputation, and other financial loss. In addition, the cost and operational consequences of responding to breaches and implementing remediation measures could be significant. consequences of responding to breaches and implementing remediation measures could be significant. We may be unable to adequately protect our proprietary intellectual property rights, which may limit our ability to compete We may be unable to adequately protect our proprietary intellectual property rights, which may limit our ability to compete effectively. effectively. Our future success depends, in part, on our ability to protect our intellectual property. We primarily rely on patent, mask Our future success depends, in part, on our ability to protect our intellectual property. We primarily rely on patent, mask work, copyright, trademark and trade secret laws, as well as nondisclosure agreements, information security practices, and other work, copyright, trademark and trade secret laws, as well as nondisclosure agreements, information security practices, and other methods, to protect our proprietary information, technologies and processes. Despite our efforts to protect our intellectual methods, to protect our proprietary information, technologies and processes. Despite our efforts to protect our intellectual property, it is possible that competitors or other unauthorized third parties may obtain or disclose our confidential information, property, it is possible that competitors or other unauthorized third parties may obtain or disclose our confidential information, reverse engineer or copy our technologies, products or processes, make unlicensed copies or engage in unapproved distributions reverse engineer or copy our technologies, products or processes, make unlicensed copies or engage in unapproved distributions of our technology for unauthorized uses, or otherwise misappropriate our intellectual property. Moreover, the laws of foreign of our technology for unauthorized uses, or otherwise misappropriate our intellectual property. Moreover, the laws of foreign countries in which we design, manufacture, market and sell our products may afford little or no effective protection of our countries in which we design, manufacture, market and sell our products may afford little or no effective protection of our intellectual property. intellectual property. There can be no assurance that the claims allowed in our issued patents will be sufficiently broad to protect our There can be no assurance that the claims allowed in our issued patents will be sufficiently broad to protect our technology. In addition, any of our existing or future patents may be challenged, invalidated or circumvented. As such, any technology. In addition, any of our existing or future patents may be challenged, invalidated or circumvented. As such, any rights granted under these patents may not prevent others from exploiting our proprietary technology. We may not be able to rights granted under these patents may not prevent others from exploiting our proprietary technology. We may not be able to obtain foreign patents or pending applications corresponding to our U.S. patents and applications. Even if patents are granted, obtain foreign patents or pending applications corresponding to our U.S. patents and applications. Even if patents are granted, we may not be able to effectively enforce our rights. If our patents and mask works do not adequately protect our technology, or we may not be able to effectively enforce our rights. If our patents and mask works do not adequately protect our technology, or if our registrations expire prior to end of life of our products, our competitors may be able to offer products similar to ours. Our if our registrations expire prior to end of life of our products, our competitors may be able to offer products similar to ours. Our competitors may also be able to develop similar technology independently or design around our patents. competitors may also be able to develop similar technology independently or design around our patents. We generally enter into confidentiality agreements with our employees, consultants and strategic partners. We also try to We generally enter into confidentiality agreements with our employees, consultants and strategic partners. We also try to control access to and distribution of our technologies, documentation and other proprietary information. Despite these efforts, control access to and distribution of our technologies, documentation and other proprietary information. Despite these efforts, internal or external parties may attempt to copy, disclose, obtain or use our products or technology without our authorization. internal or external parties may attempt to copy, disclose, obtain or use our products or technology without our authorization. Also, former employees may seek employment with our business partners, customers or competitors, and may improperly use Also, former employees may seek employment with our business partners, customers or competitors, and may improperly use our proprietary information at their employer. our proprietary information at their employer. 17 17 18 18 Risk Related to Acquisitions and Strategic Transactions Risk Related to Acquisitions and Strategic Transactions Risks Related to Cyber, IP, Legal and Regulatory Risks Related to Cyber, IP, Legal and Regulatory Our acquisition of Maxim involves a number of risks that could adversely affect our business, financial condition and operating Our acquisition of Maxim involves a number of risks that could adversely affect our business, financial condition and operating results, and we may not realize the financial and strategic goals we anticipate. results, and we may not realize the financial and strategic goals we anticipate. In August 2021, we completed our acquisition of Maxim, which we refer to as the acquisition or the merger. The ultimate In August 2021, we completed our acquisition of Maxim, which we refer to as the acquisition or the merger. The ultimate success of the merger will depend on, among other things, the ability to continue to combine the two businesses in a manner success of the merger will depend on, among other things, the ability to continue to combine the two businesses in a manner that facilitates growth opportunities. Further, there are a large number of processes, policies, procedures, operations, that facilitates growth opportunities. Further, there are a large number of processes, policies, procedures, operations, technologies and systems that must continue to be integrated in connection with the ongoing integration of Maxim’s business. technologies and systems that must continue to be integrated in connection with the ongoing integration of Maxim’s business. The combined company has and may continue to incur ongoing restructuring, integration, and other costs associated with The combined company has and may continue to incur ongoing restructuring, integration, and other costs associated with combining the operations of the two companies in connection with the merger. It is possible that the ongoing integration combining the operations of the two companies in connection with the merger. It is possible that the ongoing integration process could result in the loss of customers, the disruption of ongoing businesses, inconsistencies in standards, controls, process could result in the loss of customers, the disruption of ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall integration process procedures and policies, unexpected integration issues, higher than expected integration costs and an overall integration process that takes longer than originally anticipated and actual growth, if achieved, may be lower than what we expect and may take that takes longer than originally anticipated and actual growth, if achieved, may be lower than what we expect and may take longer to achieve than anticipated. There can be no assurances that the two businesses can be integrated successfully in a way longer to achieve than anticipated. There can be no assurances that the two businesses can be integrated successfully in a way that maximizes the combined business to the fullest extent. If we are not able to successfully achieve our objectives, the benefits that maximizes the combined business to the fullest extent. If we are not able to successfully achieve our objectives, the benefits of the merger may not be fully realized or may take longer to achieve than expected. of the merger may not be fully realized or may take longer to achieve than expected. To remain competitive, we may need to invest in or acquire other companies, purchase or license technology from third parties, To remain competitive, we may need to invest in or acquire other companies, purchase or license technology from third parties, or enter into other strategic transactions in order to introduce new products or enhance our existing products. or enter into other strategic transactions in order to introduce new products or enhance our existing products. An element of our business strategy involves expansion through the acquisitions of businesses, assets, products or An element of our business strategy involves expansion through the acquisitions of businesses, assets, products or technologies that allow us to complement our existing product offerings, diversify our product portfolio, expand our market technologies that allow us to complement our existing product offerings, diversify our product portfolio, expand our market coverage, increase our engineering workforce, expand our technical skill sets or enhance our technological capabilities. We may coverage, increase our engineering workforce, expand our technical skill sets or enhance our technological capabilities. We may not be able to find businesses that have the technology or resources we need and, if we find such businesses, we may not be not be able to find businesses that have the technology or resources we need and, if we find such businesses, we may not be able to invest in, purchase or license the technology or resources on commercially favorable terms or at all. Acquisitions, able to invest in, purchase or license the technology or resources on commercially favorable terms or at all. Acquisitions, investments and technology licenses are challenging to complete for a number of reasons, including difficulties in identifying investments and technology licenses are challenging to complete for a number of reasons, including difficulties in identifying potential targets, the cost of potential transactions, competition among prospective buyers and licensees, the need for regulatory potential targets, the cost of potential transactions, competition among prospective buyers and licensees, the need for regulatory approvals, and difficulties related to integration efforts. In addition, investments in companies are subject to a risk of a partial or approvals, and difficulties related to integration efforts. In addition, investments in companies are subject to a risk of a partial or total loss of our investment. Both in the U.S. and abroad, governmental regulation of acquisitions, including antitrust and other total loss of our investment. Both in the U.S. and abroad, governmental regulation of acquisitions, including antitrust and other regulatory reviews and approvals, has become more complex, increasing the costs and risks of undertaking and consummating regulatory reviews and approvals, has become more complex, increasing the costs and risks of undertaking and consummating significant acquisitions. In order to finance a potential transaction, we may need to raise additional funds by issuing securities significant acquisitions. In order to finance a potential transaction, we may need to raise additional funds by issuing securities or borrowing money. We may not be able to obtain financing on favorable terms, and the sale of our stock may result in the or borrowing money. We may not be able to obtain financing on favorable terms, and the sale of our stock may result in the dilution of our existing shareholders or the issuance of securities with rights that are superior to the rights of our common dilution of our existing shareholders or the issuance of securities with rights that are superior to the rights of our common shareholders. shareholders. Acquisitions also involve a number of challenges and risks, including: Acquisitions also involve a number of challenges and risks, including: diversion of management’s attention in connection with both negotiating the transaction and integrating the acquired diversion of management’s attention in connection with both negotiating the transaction and integrating the acquired assets and businesses; assets and businesses; existing businesses; existing businesses; difficulty or delay integrating acquired technologies, operations, systems and infrastructure, and personnel with our difficulty or delay integrating acquired technologies, operations, systems and infrastructure, and personnel with our strain on managerial and operational resources as management tries to oversee larger or more complex operations; strain on managerial and operational resources as management tries to oversee larger or more complex operations; the future funding requirements for acquired companies, including research and development costs, employee the future funding requirements for acquired companies, including research and development costs, employee compensation and benefits, and operating expenses, which may be significant; compensation and benefits, and operating expenses, which may be significant; servicing significant debt that may be incurred in connection with acquisitions; servicing significant debt that may be incurred in connection with acquisitions; potential loss of key employees; potential loss of key employees; exposure to unforeseen liabilities or regulatory compliance issues of acquired companies; exposure to unforeseen liabilities or regulatory compliance issues of acquired companies; higher than expected or unexpected costs relating to or associated with an acquisition and related integration of assets higher than expected or unexpected costs relating to or associated with an acquisition and related integration of assets and businesses; and businesses; manner or at all; and manner or at all; and difficulty realizing expected cost savings, operating synergies and growth prospects of an acquisition in a timely difficulty realizing expected cost savings, operating synergies and growth prospects of an acquisition in a timely increased risk of costly and time-consuming legal proceedings. increased risk of costly and time-consuming legal proceedings. If we are unable to successfully address these risks, we may not realize some or all of the expected benefits of our acquisitions, If we are unable to successfully address these risks, we may not realize some or all of the expected benefits of our acquisitions, which may have an adverse effect on our business strategy, plans and operating results. which may have an adverse effect on our business strategy, plans and operating results. • • • • • • • • • • • • • • • • • • • • Our computer systems and networks may be subject to attempted security breaches and other cybersecurity incidents and a Our computer systems and networks may be subject to attempted security breaches and other cybersecurity incidents and a significant disruption in, or breach in security of, our information technology systems or certain of our products could significant disruption in, or breach in security of, our information technology systems or certain of our products could materially and adversely affect our business or reputation. materially and adversely affect our business or reputation. We rely on information technology systems throughout our company to keep financial records and customer data, We rely on information technology systems throughout our company to keep financial records and customer data, process orders, manage inventory, coordinate shipments to customers, maintain confidential and proprietary information, assist process orders, manage inventory, coordinate shipments to customers, maintain confidential and proprietary information, assist in semiconductor engineering and other technical activities and operate other critical functions such as Internet connectivity, in semiconductor engineering and other technical activities and operate other critical functions such as Internet connectivity, network communications and email. Our information technology systems may be susceptible to damage, disruptions or network communications and email. Our information technology systems may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures, employee malfeasance, user errors, shutdowns due to power outages, hardware failures, telecommunication failures, employee malfeasance, user errors, catastrophes or other unforeseen events. Since the beginning of the COVID-19 pandemic, some of our employees have been catastrophes or other unforeseen events. Since the beginning of the COVID-19 pandemic, some of our employees have been working remotely, which may pose additional data security risks. We also rely upon external cloud providers for certain working remotely, which may pose additional data security risks. We also rely upon external cloud providers for certain infrastructure activities. If we were to experience a prolonged disruption in the information technology systems that involve our infrastructure activities. If we were to experience a prolonged disruption in the information technology systems that involve our internal communications or our interactions with customers or suppliers, it could result in the loss of sales and customers and internal communications or our interactions with customers or suppliers, it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business. significant incremental costs, which could adversely affect our business. We may also be subject to security breaches of our information technology systems and certain of our products caused We may also be subject to security breaches of our information technology systems and certain of our products caused by viruses, illegal break-ins or hacking, sabotage, other cyber attacks, or acts of vandalism by third parties or our employees or by viruses, illegal break-ins or hacking, sabotage, other cyber attacks, or acts of vandalism by third parties or our employees or contractors. Further, geopolitical tensions or conflicts, such as the ongoing conflict between Russia and Ukraine, may create a contractors. Further, geopolitical tensions or conflicts, such as the ongoing conflict between Russia and Ukraine, may create a heightened risk of cyber attacks, which could result in significant losses and damage and, could damage our reputation with heightened risk of cyber attacks, which could result in significant losses and damage and, could damage our reputation with customers and suppliers if the confidential information of our customers, suppliers, employees or contractors is compromised. customers and suppliers if the confidential information of our customers, suppliers, employees or contractors is compromised. Our security measures or those of our third-party service providers may not detect or prevent security breaches, cyber attacks, Our security measures or those of our third-party service providers may not detect or prevent security breaches, cyber attacks, defects, bugs or errors. defects, bugs or errors. In addition, we provide our confidential and proprietary information to our strategic partners in certain cases where doing In addition, we provide our confidential and proprietary information to our strategic partners in certain cases where doing so is necessary to conduct our business. Those third parties may be subject to security breaches or otherwise compromise the so is necessary to conduct our business. Those third parties may be subject to security breaches or otherwise compromise the protection of such information. Security breaches of our information technology systems or those of our partners could result in protection of such information. Security breaches of our information technology systems or those of our partners could result in the misappropriation, loss or unauthorized disclosure of confidential and proprietary information belonging to us or to our the misappropriation, loss or unauthorized disclosure of confidential and proprietary information belonging to us or to our employees, contractors, partners, customers, suppliers, or other third parties, system disruptions or denial of service, which employees, contractors, partners, customers, suppliers, or other third parties, system disruptions or denial of service, which could result in our suffering significant financial or reputational damage. could result in our suffering significant financial or reputational damage. In the event of such breaches, we could be exposed to potential liability, litigation, and regulatory action, as well as the In the event of such breaches, we could be exposed to potential liability, litigation, and regulatory action, as well as the loss of existing or potential customers, damage to our reputation, and other financial loss. In addition, the cost and operational loss of existing or potential customers, damage to our reputation, and other financial loss. In addition, the cost and operational consequences of responding to breaches and implementing remediation measures could be significant. consequences of responding to breaches and implementing remediation measures could be significant. We may be unable to adequately protect our proprietary intellectual property rights, which may limit our ability to compete We may be unable to adequately protect our proprietary intellectual property rights, which may limit our ability to compete effectively. effectively. Our future success depends, in part, on our ability to protect our intellectual property. We primarily rely on patent, mask Our future success depends, in part, on our ability to protect our intellectual property. We primarily rely on patent, mask work, copyright, trademark and trade secret laws, as well as nondisclosure agreements, information security practices, and other work, copyright, trademark and trade secret laws, as well as nondisclosure agreements, information security practices, and other methods, to protect our proprietary information, technologies and processes. Despite our efforts to protect our intellectual methods, to protect our proprietary information, technologies and processes. Despite our efforts to protect our intellectual property, it is possible that competitors or other unauthorized third parties may obtain or disclose our confidential information, property, it is possible that competitors or other unauthorized third parties may obtain or disclose our confidential information, reverse engineer or copy our technologies, products or processes, make unlicensed copies or engage in unapproved distributions reverse engineer or copy our technologies, products or processes, make unlicensed copies or engage in unapproved distributions of our technology for unauthorized uses, or otherwise misappropriate our intellectual property. Moreover, the laws of foreign of our technology for unauthorized uses, or otherwise misappropriate our intellectual property. Moreover, the laws of foreign countries in which we design, manufacture, market and sell our products may afford little or no effective protection of our countries in which we design, manufacture, market and sell our products may afford little or no effective protection of our intellectual property. intellectual property. There can be no assurance that the claims allowed in our issued patents will be sufficiently broad to protect our There can be no assurance that the claims allowed in our issued patents will be sufficiently broad to protect our technology. In addition, any of our existing or future patents may be challenged, invalidated or circumvented. As such, any technology. In addition, any of our existing or future patents may be challenged, invalidated or circumvented. As such, any rights granted under these patents may not prevent others from exploiting our proprietary technology. We may not be able to rights granted under these patents may not prevent others from exploiting our proprietary technology. We may not be able to obtain foreign patents or pending applications corresponding to our U.S. patents and applications. Even if patents are granted, obtain foreign patents or pending applications corresponding to our U.S. patents and applications. Even if patents are granted, we may not be able to effectively enforce our rights. If our patents and mask works do not adequately protect our technology, or we may not be able to effectively enforce our rights. If our patents and mask works do not adequately protect our technology, or if our registrations expire prior to end of life of our products, our competitors may be able to offer products similar to ours. Our if our registrations expire prior to end of life of our products, our competitors may be able to offer products similar to ours. Our competitors may also be able to develop similar technology independently or design around our patents. competitors may also be able to develop similar technology independently or design around our patents. We generally enter into confidentiality agreements with our employees, consultants and strategic partners. We also try to We generally enter into confidentiality agreements with our employees, consultants and strategic partners. We also try to control access to and distribution of our technologies, documentation and other proprietary information. Despite these efforts, control access to and distribution of our technologies, documentation and other proprietary information. Despite these efforts, internal or external parties may attempt to copy, disclose, obtain or use our products or technology without our authorization. internal or external parties may attempt to copy, disclose, obtain or use our products or technology without our authorization. Also, former employees may seek employment with our business partners, customers or competitors, and may improperly use Also, former employees may seek employment with our business partners, customers or competitors, and may improperly use our proprietary information at their employer. our proprietary information at their employer. 17 17 18 18 If we fail to comply with U.S. and foreign laws related to privacy, data security, and data protection, it could adversely affect If we fail to comply with U.S. and foreign laws related to privacy, data security, and data protection, it could adversely affect our operating results and financial condition. our operating results and financial condition. We are or may become subject to a variety of laws and regulations such as the European Union’s General Data We are or may become subject to a variety of laws and regulations such as the European Union’s General Data Protection Regulation (the “GDPR”), China’s Personal Information Protection Law (the “PIPL”), or California’s Consumer Protection Regulation (the “GDPR”), China’s Personal Information Protection Law (the “PIPL”), or California’s Consumer Privacy Act (the “CCPA”) regarding privacy, data protection, and data security. These laws and regulations are continuously Privacy Act (the “CCPA”) regarding privacy, data protection, and data security. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. may be conflicting, particularly with respect to foreign laws. In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal data. Such laws and regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions. For example, the GDPR includes operational requirements for companies that receive or process personal data of jurisdictions. For example, the GDPR includes operational requirements for companies that receive or process personal data of residents of the European Union that are broader and more stringent than those in many other jurisdictions around the world. residents of the European Union that are broader and more stringent than those in many other jurisdictions around the world. The GDPR includes significant penalties for non-compliance, and China’s PIPL imposes additional operational requirements The GDPR includes significant penalties for non-compliance, and China’s PIPL imposes additional operational requirements relating to processing personal information and provides compressive penalty and enforcement mechanisms. Most notably, in relating to processing personal information and provides compressive penalty and enforcement mechanisms. Most notably, in the United States, California enacted the CCPA that requires covered companies to provide additional disclosures and data the United States, California enacted the CCPA that requires covered companies to provide additional disclosures and data rights to data subjects. The CCPA went into effect on January 1, 2020. The California Privacy Rights Act (“CPRA”) passed by rights to data subjects. The CCPA went into effect on January 1, 2020. The California Privacy Rights Act (“CPRA”) passed by voters in November 2020 will expand the CCPA when the regulations become fully operative on January 1, 2023. The CPRA voters in November 2020 will expand the CCPA when the regulations become fully operative on January 1, 2023. The CPRA establishes the California Privacy Protection Agency to enforce Californians’ privacy rights under the CCPA. Since the CCPA establishes the California Privacy Protection Agency to enforce Californians’ privacy rights under the CCPA. Since the CCPA was enacted, other states, including Virginia and Colorado, have enacted comprehensive privacy schemes. was enacted, other states, including Virginia and Colorado, have enacted comprehensive privacy schemes. The costs of compliance with, and other burdens imposed by, the GDPR, CCPA, and similar laws may limit the use and The costs of compliance with, and other burdens imposed by, the GDPR, CCPA, and similar laws may limit the use and adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse impact on our business. Further, our product offerings in the digital healthcare solutions space which include the collection and impact on our business. Further, our product offerings in the digital healthcare solutions space which include the collection and processing of sensitive personal information subject us to heightened requirements under data privacy laws. processing of sensitive personal information subject us to heightened requirements under data privacy laws. Given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be in Given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be in transportation, emission, discharge, storage and disposal of certain substances and materials used or produced in the transportation, emission, discharge, storage and disposal of certain substances and materials used or produced in the conflict across jurisdictions, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent conflict across jurisdictions, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us or from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us or third party service providers to comply with our privacy or security policies or privacy-related legal obligations, or any third party service providers to comply with our privacy or security policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personal data, may result in governmental compromise of security that results in the unauthorized release or transfer of personal data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our operating results and financial enforcement actions, litigation, or negative publicity, and could have an adverse effect on our operating results and financial condition. condition. We are occasionally involved in litigation, administrative proceedings, and regulatory proceedings, which could be costly to We are occasionally involved in litigation, administrative proceedings, and regulatory proceedings, which could be costly to resolve and could require us to redesign products, pay significant royalties or fines, or refrain from engaging in specific resolve and could require us to redesign products, pay significant royalties or fines, or refrain from engaging in specific conduct. conduct. From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and investigations relating to our business, including inquiries from and discussions with government entities regarding the investigations relating to our business, including inquiries from and discussions with government entities regarding the compliance of our contracting and sales practices with laws and regulations which may result in claims with respect to compliance of our contracting and sales practices with laws and regulations which may result in claims with respect to commercial, product liability, intellectual property, cybersecurity, privacy, data protection, antitrust, breach of contract, commercial, product liability, intellectual property, cybersecurity, privacy, data protection, antitrust, breach of contract, employment, class action, whistleblower, mergers and acquisitions and other matters. We could also be subject to litigation or employment, class action, whistleblower, mergers and acquisitions and other matters. We could also be subject to litigation or arbitration disputes arising under our contractual obligations, customer indemnity, warranty or product liability claims, or other arbitration disputes arising under our contractual obligations, customer indemnity, warranty or product liability claims, or other matters that could lead to significant costs and expenses as we defend those claims or pay damage awards. For example, in matters that could lead to significant costs and expenses as we defend those claims or pay damage awards. For example, in March 2022, a putative class action was filed in the Court of Chancery of the State of Delaware against us and the former March 2022, a putative class action was filed in the Court of Chancery of the State of Delaware against us and the former directors of Maxim as described in Part I, Item 3, “Legal Proceedings.” directors of Maxim as described in Part I, Item 3, “Legal Proceedings.” Further, the semiconductor industry is characterized by frequent claims and litigation involving patent and other Further, the semiconductor industry is characterized by frequent claims and litigation involving patent and other intellectual property rights. Other companies or individuals have obtained patents covering a variety of semiconductor designs intellectual property rights. Other companies or individuals have obtained patents covering a variety of semiconductor designs and processes, and we might be required to obtain licenses under some of these patents or be precluded from making and selling and processes, and we might be required to obtain licenses under some of these patents or be precluded from making and selling infringing products, if those patents are found to be valid and infringed by us. In the event a third party makes a valid infringing products, if those patents are found to be valid and infringed by us. In the event a third party makes a valid intellectual property claim against us and a license is not available to us on commercially reasonable terms, or at all, we could intellectual property claim against us and a license is not available to us on commercially reasonable terms, or at all, we could be forced either to redesign or to stop production of products incorporating that intellectual property, and our operating results be forced either to redesign or to stop production of products incorporating that intellectual property, and our operating results could be materially and adversely affected. Litigation may be necessary to enforce our patents or other of our intellectual could be materially and adversely affected. Litigation may be necessary to enforce our patents or other of our intellectual property rights or to defend us against claims of infringement. property rights or to defend us against claims of infringement. These matters can be time-consuming, divert management’s attention and resources and cause us to incur significant These matters can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses. Allegations made in the course of regulatory or legal proceedings may also harm our reputation, regardless of expenses. Allegations made in the course of regulatory or legal proceedings may also harm our reputation, regardless of whether there is merit to such claims. Because litigation and the outcome of regulatory proceedings are inherently whether there is merit to such claims. Because litigation and the outcome of regulatory proceedings are inherently unpredictable, our business, financial condition or operating results could be materially affected by an unfavorable resolution of unpredictable, our business, financial condition or operating results could be materially affected by an unfavorable resolution of 19 19 20 20 one or more of these proceedings, claims, demands or investigations. There can be no assurance that we are adequately insured one or more of these proceedings, claims, demands or investigations. There can be no assurance that we are adequately insured to protect against all claims and potential liabilities, and we may elect to self-insure with respect to certain matters. An adverse to protect against all claims and potential liabilities, and we may elect to self-insure with respect to certain matters. An adverse outcome in litigation or arbitration could have a material adverse effect on our financial position or on our operating results or outcome in litigation or arbitration could have a material adverse effect on our financial position or on our operating results or cash flows in the period in which the dispute is resolved. cash flows in the period in which the dispute is resolved. Environmental, social and governance (ESG) matters may have an adverse effect on our business, financial condition and Environmental, social and governance (ESG) matters may have an adverse effect on our business, financial condition and results of operations, and damage our brand and reputation. results of operations, and damage our brand and reputation. There is an increasing focus from investors, customers, employees and potential talent, as well as other stakeholders There is an increasing focus from investors, customers, employees and potential talent, as well as other stakeholders concerning ESG matters, including climate change and sustainability, human rights, support for local communities, Board of concerning ESG matters, including climate change and sustainability, human rights, support for local communities, Board of Directors and employee diversity, human capital management, employee health and safety practices, product quality, supply Directors and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, and corporate governance and transparency. Current and prospective investors are increasingly utilizing chain management, and corporate governance and transparency. Current and prospective investors are increasingly utilizing ESG data to inform their decisions, including investment and voting, using a multitude of evolving score and rating ESG data to inform their decisions, including investment and voting, using a multitude of evolving score and rating frameworks. Further, customers are also utilizing ESG data to inform their purchasing decisions. Additionally, public interest frameworks. Further, customers are also utilizing ESG data to inform their purchasing decisions. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow. If our ESG practices fail to meet the and legislative pressure related to public companies’ ESG practices continue to grow. If our ESG practices fail to meet the expectations of investors, customers, employees or other stakeholders’ evolving standards, our reputation, brand and employee expectations of investors, customers, employees or other stakeholders’ evolving standards, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us. retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us. Additionally, there is increasing legislation globally which will require us to align programs to their expectations and disclose Additionally, there is increasing legislation globally which will require us to align programs to their expectations and disclose an increasing amount of information and data to illustrate our position and progress. If we do not adapt our strategy or an increasing amount of information and data to illustrate our position and progress. If we do not adapt our strategy or execution quickly enough to meet the evolving expectations of our investors, customers, and regulators, or if our ESG data execution quickly enough to meet the evolving expectations of our investors, customers, and regulators, or if our ESG data input, processing and reporting are incomplete or inaccurate, our business, financial condition, results of operations, brand and input, processing and reporting are incomplete or inaccurate, our business, financial condition, results of operations, brand and reputation could be adversely affected. reputation could be adversely affected. We are subject to environment, health and safety (EHS) standards and hazards which have the potential to adversely affect our We are subject to environment, health and safety (EHS) standards and hazards which have the potential to adversely affect our business, increase our expenses, and adversely affect our reputation. business, increase our expenses, and adversely affect our reputation. Our industry is subject to EHS requirements and laws, particularly those that control and restrict the sourcing, use, Our industry is subject to EHS requirements and laws, particularly those that control and restrict the sourcing, use, semiconductor manufacturing process and which help ensure the health and safety of our employees. We are also required to semiconductor manufacturing process and which help ensure the health and safety of our employees. We are also required to obtain environmental permits from governmental authorities for certain of our operations. Public attention to environmental obtain environmental permits from governmental authorities for certain of our operations. Public attention to environmental sustainability and social responsibility concerns continues to increase, and our customers routinely include stringent sustainability and social responsibility concerns continues to increase, and our customers routinely include stringent environmental and other standards in their contracts with us. Changes in EHS laws or regulations may require us to invest in environmental and other standards in their contracts with us. Changes in EHS laws or regulations may require us to invest in costly equipment or make manufacturing process changes and may adversely affect the sourcing, supply and pricing of costly equipment or make manufacturing process changes and may adversely affect the sourcing, supply and pricing of materials used in our products. In particular, climate change concerns and the potential resulting environmental impact may materials used in our products. In particular, climate change concerns and the potential resulting environmental impact may result in new or more stringent EHS laws and regulations that may affect us, our suppliers, and our customers. Such laws or result in new or more stringent EHS laws and regulations that may affect us, our suppliers, and our customers. Such laws or regulations could cause us to incur additional direct costs for compliance or costs to control or reduce our environmental impact regulations could cause us to incur additional direct costs for compliance or costs to control or reduce our environmental impact through, for example, carbon offsets, as well as increased indirect costs resulting from our customers, suppliers, or both through, for example, carbon offsets, as well as increased indirect costs resulting from our customers, suppliers, or both incurring additional compliance costs that are passed on to us. These costs may adversely impact our results of operations and incurring additional compliance costs that are passed on to us. These costs may adversely impact our results of operations and financial condition. In addition, we use hazardous and other regulated materials that subject us to risks of strict liability for financial condition. In addition, we use hazardous and other regulated materials that subject us to risks of strict liability for damages caused by potential or actual releases of such materials. Any failure to control such materials adequately or to comply damages caused by potential or actual releases of such materials. Any failure to control such materials adequately or to comply with existing or future EHS statutory or regulatory standards, requirements or contractual obligations could result in any of the with existing or future EHS statutory or regulatory standards, requirements or contractual obligations could result in any of the following, each of which could have a material adverse effect on our business and operating results: following, each of which could have a material adverse effect on our business and operating results: liability for damages and remediation; liability for damages and remediation; the imposition of regulatory penalties and civil and criminal fines; the imposition of regulatory penalties and civil and criminal fines; the suspension or termination of the development, manufacture, sale, or use of certain of our products; the suspension or termination of the development, manufacture, sale, or use of certain of our products; changes to our manufacturing processes or a need to substitute materials that may cost more or be less available; changes to our manufacturing processes or a need to substitute materials that may cost more or be less available; damage to our reputation; and/or damage to our reputation; and/or increased expenses associated with compliance. increased expenses associated with compliance. • • • • • • • • • • • • If we fail to comply with government contracting regulations, we could suffer a loss of revenue or incur price adjustments or If we fail to comply with government contracting regulations, we could suffer a loss of revenue or incur price adjustments or other penalties. other penalties. Some of our revenue is derived from contracts with agencies of the United States government and subcontracts with its Some of our revenue is derived from contracts with agencies of the United States government and subcontracts with its prime contractors. As a United States government contractor or subcontractor, we are subject to federal contracting regulations, prime contractors. As a United States government contractor or subcontractor, we are subject to federal contracting regulations, including the Federal Acquisition Regulations, which govern the allowability of costs incurred by us in the performance of including the Federal Acquisition Regulations, which govern the allowability of costs incurred by us in the performance of United States government contracts. Certain contract pricing is based on estimated direct and indirect costs, which are subject to United States government contracts. Certain contract pricing is based on estimated direct and indirect costs, which are subject to change. Additionally, the United States government is entitled after final payment on certain negotiated contracts to examine all change. Additionally, the United States government is entitled after final payment on certain negotiated contracts to examine all of our cost records with respect to such contracts and to seek a downward adjustment to the price of the contract if it determines of our cost records with respect to such contracts and to seek a downward adjustment to the price of the contract if it determines If we fail to comply with U.S. and foreign laws related to privacy, data security, and data protection, it could adversely affect If we fail to comply with U.S. and foreign laws related to privacy, data security, and data protection, it could adversely affect our operating results and financial condition. our operating results and financial condition. We are or may become subject to a variety of laws and regulations such as the European Union’s General Data We are or may become subject to a variety of laws and regulations such as the European Union’s General Data Protection Regulation (the “GDPR”), China’s Personal Information Protection Law (the “PIPL”), or California’s Consumer Protection Regulation (the “GDPR”), China’s Personal Information Protection Law (the “PIPL”), or California’s Consumer Privacy Act (the “CCPA”) regarding privacy, data protection, and data security. These laws and regulations are continuously Privacy Act (the “CCPA”) regarding privacy, data protection, and data security. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. may be conflicting, particularly with respect to foreign laws. In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal data. Such laws and regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions. For example, the GDPR includes operational requirements for companies that receive or process personal data of jurisdictions. For example, the GDPR includes operational requirements for companies that receive or process personal data of residents of the European Union that are broader and more stringent than those in many other jurisdictions around the world. residents of the European Union that are broader and more stringent than those in many other jurisdictions around the world. The GDPR includes significant penalties for non-compliance, and China’s PIPL imposes additional operational requirements The GDPR includes significant penalties for non-compliance, and China’s PIPL imposes additional operational requirements relating to processing personal information and provides compressive penalty and enforcement mechanisms. Most notably, in relating to processing personal information and provides compressive penalty and enforcement mechanisms. Most notably, in the United States, California enacted the CCPA that requires covered companies to provide additional disclosures and data the United States, California enacted the CCPA that requires covered companies to provide additional disclosures and data rights to data subjects. The CCPA went into effect on January 1, 2020. The California Privacy Rights Act (“CPRA”) passed by rights to data subjects. The CCPA went into effect on January 1, 2020. The California Privacy Rights Act (“CPRA”) passed by voters in November 2020 will expand the CCPA when the regulations become fully operative on January 1, 2023. The CPRA voters in November 2020 will expand the CCPA when the regulations become fully operative on January 1, 2023. The CPRA establishes the California Privacy Protection Agency to enforce Californians’ privacy rights under the CCPA. Since the CCPA establishes the California Privacy Protection Agency to enforce Californians’ privacy rights under the CCPA. Since the CCPA was enacted, other states, including Virginia and Colorado, have enacted comprehensive privacy schemes. was enacted, other states, including Virginia and Colorado, have enacted comprehensive privacy schemes. The costs of compliance with, and other burdens imposed by, the GDPR, CCPA, and similar laws may limit the use and The costs of compliance with, and other burdens imposed by, the GDPR, CCPA, and similar laws may limit the use and adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse impact on our business. Further, our product offerings in the digital healthcare solutions space which include the collection and impact on our business. Further, our product offerings in the digital healthcare solutions space which include the collection and processing of sensitive personal information subject us to heightened requirements under data privacy laws. processing of sensitive personal information subject us to heightened requirements under data privacy laws. Given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be in Given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be in conflict across jurisdictions, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent conflict across jurisdictions, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us or from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us or third party service providers to comply with our privacy or security policies or privacy-related legal obligations, or any third party service providers to comply with our privacy or security policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personal data, may result in governmental compromise of security that results in the unauthorized release or transfer of personal data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our operating results and financial enforcement actions, litigation, or negative publicity, and could have an adverse effect on our operating results and financial We are occasionally involved in litigation, administrative proceedings, and regulatory proceedings, which could be costly to We are occasionally involved in litigation, administrative proceedings, and regulatory proceedings, which could be costly to resolve and could require us to redesign products, pay significant royalties or fines, or refrain from engaging in specific resolve and could require us to redesign products, pay significant royalties or fines, or refrain from engaging in specific condition. condition. conduct. conduct. From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and investigations relating to our business, including inquiries from and discussions with government entities regarding the investigations relating to our business, including inquiries from and discussions with government entities regarding the compliance of our contracting and sales practices with laws and regulations which may result in claims with respect to compliance of our contracting and sales practices with laws and regulations which may result in claims with respect to commercial, product liability, intellectual property, cybersecurity, privacy, data protection, antitrust, breach of contract, commercial, product liability, intellectual property, cybersecurity, privacy, data protection, antitrust, breach of contract, employment, class action, whistleblower, mergers and acquisitions and other matters. We could also be subject to litigation or employment, class action, whistleblower, mergers and acquisitions and other matters. We could also be subject to litigation or arbitration disputes arising under our contractual obligations, customer indemnity, warranty or product liability claims, or other arbitration disputes arising under our contractual obligations, customer indemnity, warranty or product liability claims, or other matters that could lead to significant costs and expenses as we defend those claims or pay damage awards. For example, in matters that could lead to significant costs and expenses as we defend those claims or pay damage awards. For example, in March 2022, a putative class action was filed in the Court of Chancery of the State of Delaware against us and the former March 2022, a putative class action was filed in the Court of Chancery of the State of Delaware against us and the former directors of Maxim as described in Part I, Item 3, “Legal Proceedings.” directors of Maxim as described in Part I, Item 3, “Legal Proceedings.” Further, the semiconductor industry is characterized by frequent claims and litigation involving patent and other Further, the semiconductor industry is characterized by frequent claims and litigation involving patent and other intellectual property rights. Other companies or individuals have obtained patents covering a variety of semiconductor designs intellectual property rights. Other companies or individuals have obtained patents covering a variety of semiconductor designs and processes, and we might be required to obtain licenses under some of these patents or be precluded from making and selling and processes, and we might be required to obtain licenses under some of these patents or be precluded from making and selling infringing products, if those patents are found to be valid and infringed by us. In the event a third party makes a valid infringing products, if those patents are found to be valid and infringed by us. In the event a third party makes a valid intellectual property claim against us and a license is not available to us on commercially reasonable terms, or at all, we could intellectual property claim against us and a license is not available to us on commercially reasonable terms, or at all, we could be forced either to redesign or to stop production of products incorporating that intellectual property, and our operating results be forced either to redesign or to stop production of products incorporating that intellectual property, and our operating results could be materially and adversely affected. Litigation may be necessary to enforce our patents or other of our intellectual could be materially and adversely affected. Litigation may be necessary to enforce our patents or other of our intellectual property rights or to defend us against claims of infringement. property rights or to defend us against claims of infringement. These matters can be time-consuming, divert management’s attention and resources and cause us to incur significant These matters can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses. Allegations made in the course of regulatory or legal proceedings may also harm our reputation, regardless of expenses. Allegations made in the course of regulatory or legal proceedings may also harm our reputation, regardless of whether there is merit to such claims. Because litigation and the outcome of regulatory proceedings are inherently whether there is merit to such claims. Because litigation and the outcome of regulatory proceedings are inherently unpredictable, our business, financial condition or operating results could be materially affected by an unfavorable resolution of unpredictable, our business, financial condition or operating results could be materially affected by an unfavorable resolution of one or more of these proceedings, claims, demands or investigations. There can be no assurance that we are adequately insured one or more of these proceedings, claims, demands or investigations. There can be no assurance that we are adequately insured to protect against all claims and potential liabilities, and we may elect to self-insure with respect to certain matters. An adverse to protect against all claims and potential liabilities, and we may elect to self-insure with respect to certain matters. An adverse outcome in litigation or arbitration could have a material adverse effect on our financial position or on our operating results or outcome in litigation or arbitration could have a material adverse effect on our financial position or on our operating results or cash flows in the period in which the dispute is resolved. cash flows in the period in which the dispute is resolved. Environmental, social and governance (ESG) matters may have an adverse effect on our business, financial condition and Environmental, social and governance (ESG) matters may have an adverse effect on our business, financial condition and results of operations, and damage our brand and reputation. results of operations, and damage our brand and reputation. There is an increasing focus from investors, customers, employees and potential talent, as well as other stakeholders There is an increasing focus from investors, customers, employees and potential talent, as well as other stakeholders concerning ESG matters, including climate change and sustainability, human rights, support for local communities, Board of concerning ESG matters, including climate change and sustainability, human rights, support for local communities, Board of Directors and employee diversity, human capital management, employee health and safety practices, product quality, supply Directors and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, and corporate governance and transparency. Current and prospective investors are increasingly utilizing chain management, and corporate governance and transparency. Current and prospective investors are increasingly utilizing ESG data to inform their decisions, including investment and voting, using a multitude of evolving score and rating ESG data to inform their decisions, including investment and voting, using a multitude of evolving score and rating frameworks. Further, customers are also utilizing ESG data to inform their purchasing decisions. Additionally, public interest frameworks. Further, customers are also utilizing ESG data to inform their purchasing decisions. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow. If our ESG practices fail to meet the and legislative pressure related to public companies’ ESG practices continue to grow. If our ESG practices fail to meet the expectations of investors, customers, employees or other stakeholders’ evolving standards, our reputation, brand and employee expectations of investors, customers, employees or other stakeholders’ evolving standards, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us. retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us. Additionally, there is increasing legislation globally which will require us to align programs to their expectations and disclose Additionally, there is increasing legislation globally which will require us to align programs to their expectations and disclose an increasing amount of information and data to illustrate our position and progress. If we do not adapt our strategy or an increasing amount of information and data to illustrate our position and progress. If we do not adapt our strategy or execution quickly enough to meet the evolving expectations of our investors, customers, and regulators, or if our ESG data execution quickly enough to meet the evolving expectations of our investors, customers, and regulators, or if our ESG data input, processing and reporting are incomplete or inaccurate, our business, financial condition, results of operations, brand and input, processing and reporting are incomplete or inaccurate, our business, financial condition, results of operations, brand and reputation could be adversely affected. reputation could be adversely affected. We are subject to environment, health and safety (EHS) standards and hazards which have the potential to adversely affect our We are subject to environment, health and safety (EHS) standards and hazards which have the potential to adversely affect our business, increase our expenses, and adversely affect our reputation. business, increase our expenses, and adversely affect our reputation. Our industry is subject to EHS requirements and laws, particularly those that control and restrict the sourcing, use, Our industry is subject to EHS requirements and laws, particularly those that control and restrict the sourcing, use, transportation, emission, discharge, storage and disposal of certain substances and materials used or produced in the transportation, emission, discharge, storage and disposal of certain substances and materials used or produced in the semiconductor manufacturing process and which help ensure the health and safety of our employees. We are also required to semiconductor manufacturing process and which help ensure the health and safety of our employees. We are also required to obtain environmental permits from governmental authorities for certain of our operations. Public attention to environmental obtain environmental permits from governmental authorities for certain of our operations. Public attention to environmental sustainability and social responsibility concerns continues to increase, and our customers routinely include stringent sustainability and social responsibility concerns continues to increase, and our customers routinely include stringent environmental and other standards in their contracts with us. Changes in EHS laws or regulations may require us to invest in environmental and other standards in their contracts with us. Changes in EHS laws or regulations may require us to invest in costly equipment or make manufacturing process changes and may adversely affect the sourcing, supply and pricing of costly equipment or make manufacturing process changes and may adversely affect the sourcing, supply and pricing of materials used in our products. In particular, climate change concerns and the potential resulting environmental impact may materials used in our products. In particular, climate change concerns and the potential resulting environmental impact may result in new or more stringent EHS laws and regulations that may affect us, our suppliers, and our customers. Such laws or result in new or more stringent EHS laws and regulations that may affect us, our suppliers, and our customers. Such laws or regulations could cause us to incur additional direct costs for compliance or costs to control or reduce our environmental impact regulations could cause us to incur additional direct costs for compliance or costs to control or reduce our environmental impact through, for example, carbon offsets, as well as increased indirect costs resulting from our customers, suppliers, or both through, for example, carbon offsets, as well as increased indirect costs resulting from our customers, suppliers, or both incurring additional compliance costs that are passed on to us. These costs may adversely impact our results of operations and incurring additional compliance costs that are passed on to us. These costs may adversely impact our results of operations and financial condition. In addition, we use hazardous and other regulated materials that subject us to risks of strict liability for financial condition. In addition, we use hazardous and other regulated materials that subject us to risks of strict liability for damages caused by potential or actual releases of such materials. Any failure to control such materials adequately or to comply damages caused by potential or actual releases of such materials. Any failure to control such materials adequately or to comply with existing or future EHS statutory or regulatory standards, requirements or contractual obligations could result in any of the with existing or future EHS statutory or regulatory standards, requirements or contractual obligations could result in any of the following, each of which could have a material adverse effect on our business and operating results: following, each of which could have a material adverse effect on our business and operating results: • • • • • • • • • • • • liability for damages and remediation; liability for damages and remediation; the imposition of regulatory penalties and civil and criminal fines; the imposition of regulatory penalties and civil and criminal fines; the suspension or termination of the development, manufacture, sale, or use of certain of our products; the suspension or termination of the development, manufacture, sale, or use of certain of our products; changes to our manufacturing processes or a need to substitute materials that may cost more or be less available; changes to our manufacturing processes or a need to substitute materials that may cost more or be less available; damage to our reputation; and/or damage to our reputation; and/or increased expenses associated with compliance. increased expenses associated with compliance. If we fail to comply with government contracting regulations, we could suffer a loss of revenue or incur price adjustments or If we fail to comply with government contracting regulations, we could suffer a loss of revenue or incur price adjustments or other penalties. other penalties. Some of our revenue is derived from contracts with agencies of the United States government and subcontracts with its Some of our revenue is derived from contracts with agencies of the United States government and subcontracts with its prime contractors. As a United States government contractor or subcontractor, we are subject to federal contracting regulations, prime contractors. As a United States government contractor or subcontractor, we are subject to federal contracting regulations, including the Federal Acquisition Regulations, which govern the allowability of costs incurred by us in the performance of including the Federal Acquisition Regulations, which govern the allowability of costs incurred by us in the performance of United States government contracts. Certain contract pricing is based on estimated direct and indirect costs, which are subject to United States government contracts. Certain contract pricing is based on estimated direct and indirect costs, which are subject to change. Additionally, the United States government is entitled after final payment on certain negotiated contracts to examine all change. Additionally, the United States government is entitled after final payment on certain negotiated contracts to examine all of our cost records with respect to such contracts and to seek a downward adjustment to the price of the contract if it determines of our cost records with respect to such contracts and to seek a downward adjustment to the price of the contract if it determines 19 19 20 20 that we failed to furnish complete, accurate and current cost or pricing data in connection with the negotiation of the price of the that we failed to furnish complete, accurate and current cost or pricing data in connection with the negotiation of the price of the contract. contract. Cooperation and Development's Base Erosion and Profit Shifting Actions Plans, could impact the jurisdictions where we are Cooperation and Development's Base Erosion and Profit Shifting Actions Plans, could impact the jurisdictions where we are deemed to earn income, which could in turn adversely affect our tax liability and results of operations. deemed to earn income, which could in turn adversely affect our tax liability and results of operations. In connection with our United States government business, we are subject to evolving procurement rules and In connection with our United States government business, we are subject to evolving procurement rules and Risks Related to Financial Markets, Indebtedness and Capital Return Risks Related to Financial Markets, Indebtedness and Capital Return regulations, as well as government audits and to review and approval of our policies, procedures, and internal controls for regulations, as well as government audits and to review and approval of our policies, procedures, and internal controls for compliance with procurement regulations and applicable laws, such as the Cybersecurity Maturity Model Certification. In compliance with procurement regulations and applicable laws, such as the Cybersecurity Maturity Model Certification. In certain circumstances, if we do not comply with the terms of a government contract or with regulations or statutes, we could be certain circumstances, if we do not comply with the terms of a government contract or with regulations or statutes, we could be subject to downward contract price adjustments or refund obligations or could in extreme circumstances be assessed civil and subject to downward contract price adjustments or refund obligations or could in extreme circumstances be assessed civil and criminal penalties or be debarred or suspended from obtaining future contracts for a specified period of time. Any such criminal penalties or be debarred or suspended from obtaining future contracts for a specified period of time. Any such suspension or debarment or other sanction could have an adverse effect on our business. suspension or debarment or other sanction could have an adverse effect on our business. Under some of our government subcontracts, we are required to maintain secure facilities and to obtain security Under some of our government subcontracts, we are required to maintain secure facilities and to obtain security clearances for personnel involved in performance of the contract, in compliance with applicable federal standards. If we were clearances for personnel involved in performance of the contract, in compliance with applicable federal standards. If we were unable to comply with these requirements, or if personnel critical to our performance of these contracts were unable to obtain or unable to comply with these requirements, or if personnel critical to our performance of these contracts were unable to obtain or maintain their security clearances, we might be unable to perform these contracts or compete for other projects of this nature, maintain their security clearances, we might be unable to perform these contracts or compete for other projects of this nature, which could adversely affect our revenue. which could adversely affect our revenue. Damage to our reputation can damage our business. Damage to our reputation can damage our business. Our reputation is a critical factor in our relationships with customers, employees, governments, suppliers, and other Our reputation is a critical factor in our relationships with customers, employees, governments, suppliers, and other our business operations or returned to shareholders, repatriate earnings as dividends from foreign locations with potential our business operations or returned to shareholders, repatriate earnings as dividends from foreign locations with potential stakeholders. Our failure to address, or the appearance of our failure to address, issues that give rise to reputational risk, stakeholders. Our failure to address, or the appearance of our failure to address, issues that give rise to reputational risk, including those described in this Risk Factors section, could significantly harm our reputation and our brands. We may be including those described in this Risk Factors section, could significantly harm our reputation and our brands. We may be subject to reputational risks and our brand loyalty may decline if others adopt the same or confusingly similar marks in an effort subject to reputational risks and our brand loyalty may decline if others adopt the same or confusingly similar marks in an effort to misappropriate and profit on our brand name and do not provide the same level of quality as is delivered by our solutions and to misappropriate and profit on our brand name and do not provide the same level of quality as is delivered by our solutions and services. It may also limit our ability to be seen as an employer of choice when competing for highly skilled employees and services. It may also limit our ability to be seen as an employer of choice when competing for highly skilled employees and repairing our reputation and brands may be difficult, time-consuming, and expensive. To the extent we fail to respond quickly repairing our reputation and brands may be difficult, time-consuming, and expensive. To the extent we fail to respond quickly and effectively to address corporate and brand crises, the ensuing negative public reaction could significantly harm our and effectively to address corporate and brand crises, the ensuing negative public reaction could significantly harm our reputation and our brands, which could lead to increases in litigation claims and asserted damages or subject us to regulatory reputation and our brands, which could lead to increases in litigation claims and asserted damages or subject us to regulatory actions or restrictions. If we fail to police, maintain, enhance and protect our brands, if we incur excessive expenses in this actions or restrictions. If we fail to police, maintain, enhance and protect our brands, if we incur excessive expenses in this effort or if customers or potential customers are confused by others’ trademarks, our business, operating results, and financial effort or if customers or potential customers are confused by others’ trademarks, our business, operating results, and financial condition may be materially and adversely affected. condition may be materially and adversely affected. Increases in our effective tax rate, exposure to additional tax liabilities, or substantial changes in domestic or international Increases in our effective tax rate, exposure to additional tax liabilities, or substantial changes in domestic or international corporate tax policies, regulations or guidance may adversely impact our results of operations. corporate tax policies, regulations or guidance may adversely impact our results of operations. Our effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world where our Our effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world where our income is earned. Our effective tax rate for the fiscal year ended October 29, 2022 was below the U.S. federal statutory rate of income is earned. Our effective tax rate for the fiscal year ended October 29, 2022 was below the U.S. federal statutory rate of 21%. This is primarily due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn 21%. This is primarily due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income. income. A number of factors may increase our future effective tax rate, including: new or revised tax laws or legislation or the A number of factors may increase our future effective tax rate, including: new or revised tax laws or legislation or the interpretation of such laws or legislation by governmental authorities; increases in tax rates in various jurisdictions; variation in interpretation of such laws or legislation by governmental authorities; increases in tax rates in various jurisdictions; variation in the mix of jurisdictions in which our profits are earned and taxed; deferred taxes arising from basis differences in investments in the mix of jurisdictions in which our profits are earned and taxed; deferred taxes arising from basis differences in investments in foreign subsidiaries; any adverse resolution of ongoing tax audits or adverse rulings from taxing authorities worldwide; changes foreign subsidiaries; any adverse resolution of ongoing tax audits or adverse rulings from taxing authorities worldwide; changes in the valuation of our deferred tax assets and liabilities; adjustments to income taxes upon finalization of various tax returns; in the valuation of our deferred tax assets and liabilities; adjustments to income taxes upon finalization of various tax returns; increases in expenses not deductible for tax purposes, including executive compensation subject to the limitations of Section increases in expenses not deductible for tax purposes, including executive compensation subject to the limitations of Section 162(m) of the Internal Revenue Code and amortization of assets acquired in connection with strategic transactions; decreased 162(m) of the Internal Revenue Code and amortization of assets acquired in connection with strategic transactions; decreased availability of tax deductions for stock-based compensation awards worldwide; and changes in available tax credits. Any availability of tax deductions for stock-based compensation awards worldwide; and changes in available tax credits. Any significant increase in our future effective tax rate could adversely impact our net income during future periods. significant increase in our future effective tax rate could adversely impact our net income during future periods. Compliance with tax legislation may require the collection of information not regularly produced by us, and therefore Compliance with tax legislation may require the collection of information not regularly produced by us, and therefore necessitate the use of estimates in our Consolidated Financial Statements and the exercise of significant judgment in accounting necessitate the use of estimates in our Consolidated Financial Statements and the exercise of significant judgment in accounting for its provisions. As regulations and guidance evolve with respect to tax legislation, and as more information is gathered and for its provisions. As regulations and guidance evolve with respect to tax legislation, and as more information is gathered and analyzed, our results may differ from previous estimates and may materially affect our Consolidated Financial Statements. analyzed, our results may differ from previous estimates and may materially affect our Consolidated Financial Statements. We are also subject to laws and regulations in various jurisdictions that determine how much profit has been earned and We are also subject to laws and regulations in various jurisdictions that determine how much profit has been earned and when it is subject to taxation in that jurisdiction. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act when it is subject to taxation in that jurisdiction. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (IRA) which imposes a 15% book minimum tax on corporations with three-year average annual adjusted financial statement (IRA) which imposes a 15% book minimum tax on corporations with three-year average annual adjusted financial statement income exceeding $1 billion. We are in the process of assessing whether the book minimum tax would impact our effective tax income exceeding $1 billion. We are in the process of assessing whether the book minimum tax would impact our effective tax rate. Corporate tax reform, anti-base-erosion rules and tax transparency continue to be high priorities in many jurisdictions. rate. Corporate tax reform, anti-base-erosion rules and tax transparency continue to be high priorities in many jurisdictions. Changes in these laws and regulations, including those that align to or are associated with the Organization for Economic Changes in these laws and regulations, including those that align to or are associated with the Organization for Economic 21 21 22 22 We have substantial existing indebtedness and the ability to incur significant additional indebtedness, which could limit our We have substantial existing indebtedness and the ability to incur significant additional indebtedness, which could limit our operations and our use of our cash flow and negatively impact our credit ratings. operations and our use of our cash flow and negatively impact our credit ratings. As of October 29, 2022, we had approximately $6.5 billion in outstanding indebtedness. In addition, we had $2.5 billion As of October 29, 2022, we had approximately $6.5 billion in outstanding indebtedness. In addition, we had $2.5 billion of availability under our unsecured revolving credit facility. Our leverage could have negative consequences, including of availability under our unsecured revolving credit facility. Our leverage could have negative consequences, including increasing our vulnerability to adverse economic and industry conditions, limiting our ability to obtain additional financing and increasing our vulnerability to adverse economic and industry conditions, limiting our ability to obtain additional financing and limiting our ability to acquire new products and technologies through strategic acquisitions. Further, on October 5, 2021, we limiting our ability to acquire new products and technologies through strategic acquisitions. Further, on October 5, 2021, we issued $500 million aggregate principal amount of floating rate senior notes (the “Floating Rate Notes”). Our Floating Rate issued $500 million aggregate principal amount of floating rate senior notes (the “Floating Rate Notes”). Our Floating Rate Notes and our net interest expense is exposed to changes in market interest rates and will increase as market interest rates rise. Notes and our net interest expense is exposed to changes in market interest rates and will increase as market interest rates rise. We may also incur additional debt, including debt with variable interest rates, in the future, which would increase these risks. We may also incur additional debt, including debt with variable interest rates, in the future, which would increase these risks. Our ability to make payments of principal and interest on our indebtedness when due depends upon our future operating Our ability to make payments of principal and interest on our indebtedness when due depends upon our future operating performance, which may be impacted by general economic conditions, industry cycles and other factors beyond our control. If performance, which may be impacted by general economic conditions, industry cycles and other factors beyond our control. If we are unable to service or refinance our debt, we may be required to divert funds that would otherwise be invested in growing we are unable to service or refinance our debt, we may be required to divert funds that would otherwise be invested in growing negative tax consequences, or sell selected assets. Such measures might not be sufficient to enable us to service our debt, which negative tax consequences, or sell selected assets. Such measures might not be sufficient to enable us to service our debt, which could negatively impact our financial results. In addition, we may not be able to obtain any such financing, refinancing or could negatively impact our financial results. In addition, we may not be able to obtain any such financing, refinancing or complete a sale of assets on economically favorable terms. In the case of financing or refinancing, favorable interest rates will complete a sale of assets on economically favorable terms. In the case of financing or refinancing, favorable interest rates will depend on conditions in the debt capital markets. In addition, if our credit ratings are downgraded or put on watch for a depend on conditions in the debt capital markets. In addition, if our credit ratings are downgraded or put on watch for a potential downgrade, the applicable interest rate on borrowings under our current revolving credit facility may rise and our potential downgrade, the applicable interest rate on borrowings under our current revolving credit facility may rise and our ability to obtain additional financing or refinance our existing debt may be negatively affected. ability to obtain additional financing or refinance our existing debt may be negatively affected. Restrictions in our revolving credit facility and outstanding debt instruments may limit our activities. Restrictions in our revolving credit facility and outstanding debt instruments may limit our activities. Our current revolving credit facility and outstanding debt instruments impose, and future debt instruments to which we Our current revolving credit facility and outstanding debt instruments impose, and future debt instruments to which we may become subject may impose, restrictions that limit our ability to engage in activities that could otherwise benefit us, may become subject may impose, restrictions that limit our ability to engage in activities that could otherwise benefit us, including to undertake certain transactions, to create certain liens on our assets and to incur certain subsidiary indebtedness. Our including to undertake certain transactions, to create certain liens on our assets and to incur certain subsidiary indebtedness. Our ability to comply with these financial restrictions and covenants is dependent on our future performance, which is subject to ability to comply with these financial restrictions and covenants is dependent on our future performance, which is subject to prevailing economic conditions and other factors, including factors that are beyond our control such as changes in technology, prevailing economic conditions and other factors, including factors that are beyond our control such as changes in technology, government regulations and the level of competition in our markets. In addition, our revolving credit facility requires us to government regulations and the level of competition in our markets. In addition, our revolving credit facility requires us to maintain compliance with specified financial ratios. If we breach any of the covenants under our revolving credit facility, the maintain compliance with specified financial ratios. If we breach any of the covenants under our revolving credit facility, the indentures governing our outstanding senior unsecured notes, or any future debt instruments to which we may become subject indentures governing our outstanding senior unsecured notes, or any future debt instruments to which we may become subject and do not obtain appropriate waivers, then, subject to applicable cure periods, our outstanding indebtedness thereunder could and do not obtain appropriate waivers, then, subject to applicable cure periods, our outstanding indebtedness thereunder could be declared immediately due and payable and/or we may be restricted from further borrowing under our revolving credit be declared immediately due and payable and/or we may be restricted from further borrowing under our revolving credit facility. facility. reputation and business. reputation and business. We may not meet expectations or targets in connection with our “green” financing arrangements, which could harm our We may not meet expectations or targets in connection with our “green” financing arrangements, which could harm our From time to time, we may enter into “green” financing arrangements that require us to use proceeds for From time to time, we may enter into “green” financing arrangements that require us to use proceeds for environmental sustainability purposes or have targets related to environmental sustainability. For example, we entered into a environmental sustainability purposes or have targets related to environmental sustainability. For example, we entered into a revolving credit agreement on June 23, 2021 (the “Revolving Credit Agreement”) that contains a sustainability-linked pricing revolving credit agreement on June 23, 2021 (the “Revolving Credit Agreement”) that contains a sustainability-linked pricing component, which provides for interest rate and facility fee reductions or increases based on meeting or missing targets related component, which provides for interest rate and facility fee reductions or increases based on meeting or missing targets related to environmental sustainability, specifically greenhouse gas emissions and renewable energy usage. For calendar year 2021, we to environmental sustainability, specifically greenhouse gas emissions and renewable energy usage. For calendar year 2021, we did not achieve the greenhouse gas emissions reduction threshold goal related to this sustainability-linked pricing component did not achieve the greenhouse gas emissions reduction threshold goal related to this sustainability-linked pricing component due in part to increased demand for product, which did not have a material impact on our business, net income, or financing due in part to increased demand for product, which did not have a material impact on our business, net income, or financing costs. On October 5, 2021, we issued $750 million sustainability-linked senior notes (the “Sustainability-Linked Senior costs. On October 5, 2021, we issued $750 million sustainability-linked senior notes (the “Sustainability-Linked Senior Notes”). Our Sustainability-Linked Senior Notes initially bear interest at a rate of 1.7% per annum and are subject to an Notes”). Our Sustainability-Linked Senior Notes initially bear interest at a rate of 1.7% per annum and are subject to an increase of an additional 30 basis points per annum from April 1, 2026 to the maturity date unless the Sustainability increase of an additional 30 basis points per annum from April 1, 2026 to the maturity date unless the Sustainability Performance Target (as defined in the Sustainability-Linked Senior Notes) has been satisfied. Failing to use the net proceeds Performance Target (as defined in the Sustainability-Linked Senior Notes) has been satisfied. Failing to use the net proceeds under green financing arrangements that satisfies investor criteria and expectations regarding environmental impact or achieve under green financing arrangements that satisfies investor criteria and expectations regarding environmental impact or achieve targets related to environmental sustainability under such financing arrangements could result in reputational harm and our targets related to environmental sustainability under such financing arrangements could result in reputational harm and our business and operating results could be negatively impacted. business and operating results could be negatively impacted. If we are not able to meet our U.S. cash requirements, it may be necessary for us to consider repatriation of foreign earnings, If we are not able to meet our U.S. cash requirements, it may be necessary for us to consider repatriation of foreign earnings, which could have a material adverse effect on our results of operations and financial condition. which could have a material adverse effect on our results of operations and financial condition. that we failed to furnish complete, accurate and current cost or pricing data in connection with the negotiation of the price of the that we failed to furnish complete, accurate and current cost or pricing data in connection with the negotiation of the price of the contract. contract. Cooperation and Development's Base Erosion and Profit Shifting Actions Plans, could impact the jurisdictions where we are Cooperation and Development's Base Erosion and Profit Shifting Actions Plans, could impact the jurisdictions where we are deemed to earn income, which could in turn adversely affect our tax liability and results of operations. deemed to earn income, which could in turn adversely affect our tax liability and results of operations. In connection with our United States government business, we are subject to evolving procurement rules and In connection with our United States government business, we are subject to evolving procurement rules and Risks Related to Financial Markets, Indebtedness and Capital Return Risks Related to Financial Markets, Indebtedness and Capital Return regulations, as well as government audits and to review and approval of our policies, procedures, and internal controls for regulations, as well as government audits and to review and approval of our policies, procedures, and internal controls for compliance with procurement regulations and applicable laws, such as the Cybersecurity Maturity Model Certification. In compliance with procurement regulations and applicable laws, such as the Cybersecurity Maturity Model Certification. In certain circumstances, if we do not comply with the terms of a government contract or with regulations or statutes, we could be certain circumstances, if we do not comply with the terms of a government contract or with regulations or statutes, we could be subject to downward contract price adjustments or refund obligations or could in extreme circumstances be assessed civil and subject to downward contract price adjustments or refund obligations or could in extreme circumstances be assessed civil and criminal penalties or be debarred or suspended from obtaining future contracts for a specified period of time. Any such criminal penalties or be debarred or suspended from obtaining future contracts for a specified period of time. Any such suspension or debarment or other sanction could have an adverse effect on our business. suspension or debarment or other sanction could have an adverse effect on our business. Under some of our government subcontracts, we are required to maintain secure facilities and to obtain security Under some of our government subcontracts, we are required to maintain secure facilities and to obtain security clearances for personnel involved in performance of the contract, in compliance with applicable federal standards. If we were clearances for personnel involved in performance of the contract, in compliance with applicable federal standards. If we were unable to comply with these requirements, or if personnel critical to our performance of these contracts were unable to obtain or unable to comply with these requirements, or if personnel critical to our performance of these contracts were unable to obtain or maintain their security clearances, we might be unable to perform these contracts or compete for other projects of this nature, maintain their security clearances, we might be unable to perform these contracts or compete for other projects of this nature, which could adversely affect our revenue. which could adversely affect our revenue. Damage to our reputation can damage our business. Damage to our reputation can damage our business. Our reputation is a critical factor in our relationships with customers, employees, governments, suppliers, and other Our reputation is a critical factor in our relationships with customers, employees, governments, suppliers, and other stakeholders. Our failure to address, or the appearance of our failure to address, issues that give rise to reputational risk, stakeholders. Our failure to address, or the appearance of our failure to address, issues that give rise to reputational risk, including those described in this Risk Factors section, could significantly harm our reputation and our brands. We may be including those described in this Risk Factors section, could significantly harm our reputation and our brands. We may be subject to reputational risks and our brand loyalty may decline if others adopt the same or confusingly similar marks in an effort subject to reputational risks and our brand loyalty may decline if others adopt the same or confusingly similar marks in an effort to misappropriate and profit on our brand name and do not provide the same level of quality as is delivered by our solutions and to misappropriate and profit on our brand name and do not provide the same level of quality as is delivered by our solutions and services. It may also limit our ability to be seen as an employer of choice when competing for highly skilled employees and services. It may also limit our ability to be seen as an employer of choice when competing for highly skilled employees and repairing our reputation and brands may be difficult, time-consuming, and expensive. To the extent we fail to respond quickly repairing our reputation and brands may be difficult, time-consuming, and expensive. To the extent we fail to respond quickly and effectively to address corporate and brand crises, the ensuing negative public reaction could significantly harm our and effectively to address corporate and brand crises, the ensuing negative public reaction could significantly harm our reputation and our brands, which could lead to increases in litigation claims and asserted damages or subject us to regulatory reputation and our brands, which could lead to increases in litigation claims and asserted damages or subject us to regulatory actions or restrictions. If we fail to police, maintain, enhance and protect our brands, if we incur excessive expenses in this actions or restrictions. If we fail to police, maintain, enhance and protect our brands, if we incur excessive expenses in this effort or if customers or potential customers are confused by others’ trademarks, our business, operating results, and financial effort or if customers or potential customers are confused by others’ trademarks, our business, operating results, and financial condition may be materially and adversely affected. condition may be materially and adversely affected. Increases in our effective tax rate, exposure to additional tax liabilities, or substantial changes in domestic or international Increases in our effective tax rate, exposure to additional tax liabilities, or substantial changes in domestic or international corporate tax policies, regulations or guidance may adversely impact our results of operations. corporate tax policies, regulations or guidance may adversely impact our results of operations. Our effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world where our Our effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world where our income is earned. Our effective tax rate for the fiscal year ended October 29, 2022 was below the U.S. federal statutory rate of income is earned. Our effective tax rate for the fiscal year ended October 29, 2022 was below the U.S. federal statutory rate of 21%. This is primarily due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn 21%. This is primarily due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income. income. A number of factors may increase our future effective tax rate, including: new or revised tax laws or legislation or the A number of factors may increase our future effective tax rate, including: new or revised tax laws or legislation or the interpretation of such laws or legislation by governmental authorities; increases in tax rates in various jurisdictions; variation in interpretation of such laws or legislation by governmental authorities; increases in tax rates in various jurisdictions; variation in the mix of jurisdictions in which our profits are earned and taxed; deferred taxes arising from basis differences in investments in the mix of jurisdictions in which our profits are earned and taxed; deferred taxes arising from basis differences in investments in foreign subsidiaries; any adverse resolution of ongoing tax audits or adverse rulings from taxing authorities worldwide; changes foreign subsidiaries; any adverse resolution of ongoing tax audits or adverse rulings from taxing authorities worldwide; changes in the valuation of our deferred tax assets and liabilities; adjustments to income taxes upon finalization of various tax returns; in the valuation of our deferred tax assets and liabilities; adjustments to income taxes upon finalization of various tax returns; increases in expenses not deductible for tax purposes, including executive compensation subject to the limitations of Section increases in expenses not deductible for tax purposes, including executive compensation subject to the limitations of Section 162(m) of the Internal Revenue Code and amortization of assets acquired in connection with strategic transactions; decreased 162(m) of the Internal Revenue Code and amortization of assets acquired in connection with strategic transactions; decreased availability of tax deductions for stock-based compensation awards worldwide; and changes in available tax credits. Any availability of tax deductions for stock-based compensation awards worldwide; and changes in available tax credits. Any significant increase in our future effective tax rate could adversely impact our net income during future periods. significant increase in our future effective tax rate could adversely impact our net income during future periods. Compliance with tax legislation may require the collection of information not regularly produced by us, and therefore Compliance with tax legislation may require the collection of information not regularly produced by us, and therefore necessitate the use of estimates in our Consolidated Financial Statements and the exercise of significant judgment in accounting necessitate the use of estimates in our Consolidated Financial Statements and the exercise of significant judgment in accounting for its provisions. As regulations and guidance evolve with respect to tax legislation, and as more information is gathered and for its provisions. As regulations and guidance evolve with respect to tax legislation, and as more information is gathered and analyzed, our results may differ from previous estimates and may materially affect our Consolidated Financial Statements. analyzed, our results may differ from previous estimates and may materially affect our Consolidated Financial Statements. We are also subject to laws and regulations in various jurisdictions that determine how much profit has been earned and We are also subject to laws and regulations in various jurisdictions that determine how much profit has been earned and when it is subject to taxation in that jurisdiction. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act when it is subject to taxation in that jurisdiction. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (IRA) which imposes a 15% book minimum tax on corporations with three-year average annual adjusted financial statement (IRA) which imposes a 15% book minimum tax on corporations with three-year average annual adjusted financial statement income exceeding $1 billion. We are in the process of assessing whether the book minimum tax would impact our effective tax income exceeding $1 billion. We are in the process of assessing whether the book minimum tax would impact our effective tax rate. Corporate tax reform, anti-base-erosion rules and tax transparency continue to be high priorities in many jurisdictions. rate. Corporate tax reform, anti-base-erosion rules and tax transparency continue to be high priorities in many jurisdictions. Changes in these laws and regulations, including those that align to or are associated with the Organization for Economic Changes in these laws and regulations, including those that align to or are associated with the Organization for Economic We have substantial existing indebtedness and the ability to incur significant additional indebtedness, which could limit our We have substantial existing indebtedness and the ability to incur significant additional indebtedness, which could limit our operations and our use of our cash flow and negatively impact our credit ratings. operations and our use of our cash flow and negatively impact our credit ratings. As of October 29, 2022, we had approximately $6.5 billion in outstanding indebtedness. In addition, we had $2.5 billion As of October 29, 2022, we had approximately $6.5 billion in outstanding indebtedness. In addition, we had $2.5 billion of availability under our unsecured revolving credit facility. Our leverage could have negative consequences, including of availability under our unsecured revolving credit facility. Our leverage could have negative consequences, including increasing our vulnerability to adverse economic and industry conditions, limiting our ability to obtain additional financing and increasing our vulnerability to adverse economic and industry conditions, limiting our ability to obtain additional financing and limiting our ability to acquire new products and technologies through strategic acquisitions. Further, on October 5, 2021, we limiting our ability to acquire new products and technologies through strategic acquisitions. Further, on October 5, 2021, we issued $500 million aggregate principal amount of floating rate senior notes (the “Floating Rate Notes”). Our Floating Rate issued $500 million aggregate principal amount of floating rate senior notes (the “Floating Rate Notes”). Our Floating Rate Notes and our net interest expense is exposed to changes in market interest rates and will increase as market interest rates rise. Notes and our net interest expense is exposed to changes in market interest rates and will increase as market interest rates rise. We may also incur additional debt, including debt with variable interest rates, in the future, which would increase these risks. We may also incur additional debt, including debt with variable interest rates, in the future, which would increase these risks. Our ability to make payments of principal and interest on our indebtedness when due depends upon our future operating Our ability to make payments of principal and interest on our indebtedness when due depends upon our future operating performance, which may be impacted by general economic conditions, industry cycles and other factors beyond our control. If performance, which may be impacted by general economic conditions, industry cycles and other factors beyond our control. If we are unable to service or refinance our debt, we may be required to divert funds that would otherwise be invested in growing we are unable to service or refinance our debt, we may be required to divert funds that would otherwise be invested in growing our business operations or returned to shareholders, repatriate earnings as dividends from foreign locations with potential our business operations or returned to shareholders, repatriate earnings as dividends from foreign locations with potential negative tax consequences, or sell selected assets. Such measures might not be sufficient to enable us to service our debt, which negative tax consequences, or sell selected assets. Such measures might not be sufficient to enable us to service our debt, which could negatively impact our financial results. In addition, we may not be able to obtain any such financing, refinancing or could negatively impact our financial results. In addition, we may not be able to obtain any such financing, refinancing or complete a sale of assets on economically favorable terms. In the case of financing or refinancing, favorable interest rates will complete a sale of assets on economically favorable terms. In the case of financing or refinancing, favorable interest rates will depend on conditions in the debt capital markets. In addition, if our credit ratings are downgraded or put on watch for a depend on conditions in the debt capital markets. In addition, if our credit ratings are downgraded or put on watch for a potential downgrade, the applicable interest rate on borrowings under our current revolving credit facility may rise and our potential downgrade, the applicable interest rate on borrowings under our current revolving credit facility may rise and our ability to obtain additional financing or refinance our existing debt may be negatively affected. ability to obtain additional financing or refinance our existing debt may be negatively affected. Restrictions in our revolving credit facility and outstanding debt instruments may limit our activities. Restrictions in our revolving credit facility and outstanding debt instruments may limit our activities. Our current revolving credit facility and outstanding debt instruments impose, and future debt instruments to which we Our current revolving credit facility and outstanding debt instruments impose, and future debt instruments to which we may become subject may impose, restrictions that limit our ability to engage in activities that could otherwise benefit us, may become subject may impose, restrictions that limit our ability to engage in activities that could otherwise benefit us, including to undertake certain transactions, to create certain liens on our assets and to incur certain subsidiary indebtedness. Our including to undertake certain transactions, to create certain liens on our assets and to incur certain subsidiary indebtedness. Our ability to comply with these financial restrictions and covenants is dependent on our future performance, which is subject to ability to comply with these financial restrictions and covenants is dependent on our future performance, which is subject to prevailing economic conditions and other factors, including factors that are beyond our control such as changes in technology, prevailing economic conditions and other factors, including factors that are beyond our control such as changes in technology, government regulations and the level of competition in our markets. In addition, our revolving credit facility requires us to government regulations and the level of competition in our markets. In addition, our revolving credit facility requires us to maintain compliance with specified financial ratios. If we breach any of the covenants under our revolving credit facility, the maintain compliance with specified financial ratios. If we breach any of the covenants under our revolving credit facility, the indentures governing our outstanding senior unsecured notes, or any future debt instruments to which we may become subject indentures governing our outstanding senior unsecured notes, or any future debt instruments to which we may become subject and do not obtain appropriate waivers, then, subject to applicable cure periods, our outstanding indebtedness thereunder could and do not obtain appropriate waivers, then, subject to applicable cure periods, our outstanding indebtedness thereunder could be declared immediately due and payable and/or we may be restricted from further borrowing under our revolving credit be declared immediately due and payable and/or we may be restricted from further borrowing under our revolving credit facility. facility. We may not meet expectations or targets in connection with our “green” financing arrangements, which could harm our We may not meet expectations or targets in connection with our “green” financing arrangements, which could harm our reputation and business. reputation and business. From time to time, we may enter into “green” financing arrangements that require us to use proceeds for From time to time, we may enter into “green” financing arrangements that require us to use proceeds for environmental sustainability purposes or have targets related to environmental sustainability. For example, we entered into a environmental sustainability purposes or have targets related to environmental sustainability. For example, we entered into a revolving credit agreement on June 23, 2021 (the “Revolving Credit Agreement”) that contains a sustainability-linked pricing revolving credit agreement on June 23, 2021 (the “Revolving Credit Agreement”) that contains a sustainability-linked pricing component, which provides for interest rate and facility fee reductions or increases based on meeting or missing targets related component, which provides for interest rate and facility fee reductions or increases based on meeting or missing targets related to environmental sustainability, specifically greenhouse gas emissions and renewable energy usage. For calendar year 2021, we to environmental sustainability, specifically greenhouse gas emissions and renewable energy usage. For calendar year 2021, we did not achieve the greenhouse gas emissions reduction threshold goal related to this sustainability-linked pricing component did not achieve the greenhouse gas emissions reduction threshold goal related to this sustainability-linked pricing component due in part to increased demand for product, which did not have a material impact on our business, net income, or financing due in part to increased demand for product, which did not have a material impact on our business, net income, or financing costs. On October 5, 2021, we issued $750 million sustainability-linked senior notes (the “Sustainability-Linked Senior costs. On October 5, 2021, we issued $750 million sustainability-linked senior notes (the “Sustainability-Linked Senior Notes”). Our Sustainability-Linked Senior Notes initially bear interest at a rate of 1.7% per annum and are subject to an Notes”). Our Sustainability-Linked Senior Notes initially bear interest at a rate of 1.7% per annum and are subject to an increase of an additional 30 basis points per annum from April 1, 2026 to the maturity date unless the Sustainability increase of an additional 30 basis points per annum from April 1, 2026 to the maturity date unless the Sustainability Performance Target (as defined in the Sustainability-Linked Senior Notes) has been satisfied. Failing to use the net proceeds Performance Target (as defined in the Sustainability-Linked Senior Notes) has been satisfied. Failing to use the net proceeds under green financing arrangements that satisfies investor criteria and expectations regarding environmental impact or achieve under green financing arrangements that satisfies investor criteria and expectations regarding environmental impact or achieve targets related to environmental sustainability under such financing arrangements could result in reputational harm and our targets related to environmental sustainability under such financing arrangements could result in reputational harm and our business and operating results could be negatively impacted. business and operating results could be negatively impacted. If we are not able to meet our U.S. cash requirements, it may be necessary for us to consider repatriation of foreign earnings, If we are not able to meet our U.S. cash requirements, it may be necessary for us to consider repatriation of foreign earnings, which could have a material adverse effect on our results of operations and financial condition. which could have a material adverse effect on our results of operations and financial condition. 21 21 22 22 We carry outside basis differences in certain of our subsidiaries, primarily arising from acquisition accounting adjustments We carry outside basis differences in certain of our subsidiaries, primarily arising from acquisition accounting adjustments ITEM 1B. ITEM 1B. UNRESOLVED STAFF COMMENTS UNRESOLVED STAFF COMMENTS None. None. and certain undistributed earnings that are considered indefinitely reinvested. We intend to reinvest these funds in our and certain undistributed earnings that are considered indefinitely reinvested. We intend to reinvest these funds in our international operations, and our current plans do not demonstrate a need to repatriate these earnings to fund our U.S. cash international operations, and our current plans do not demonstrate a need to repatriate these earnings to fund our U.S. cash requirements. We require a substantial amount of cash in the United States for operating requirements, stock repurchases, cash requirements. We require a substantial amount of cash in the United States for operating requirements, stock repurchases, cash dividends and acquisitions. If we are not able to meet our U.S. cash requirements through operations, borrowings under our dividends and acquisitions. If we are not able to meet our U.S. cash requirements through operations, borrowings under our current revolving credit facility, future debt or equity offerings or other sources of cash obtained at an acceptable cost, it may be current revolving credit facility, future debt or equity offerings or other sources of cash obtained at an acceptable cost, it may be necessary for us to consider repatriation of earnings that are indefinitely reinvested, and we may be required to pay additional necessary for us to consider repatriation of earnings that are indefinitely reinvested, and we may be required to pay additional taxes under current tax laws, which could have a material adverse effect on our results of operations and financial condition. taxes under current tax laws, which could have a material adverse effect on our results of operations and financial condition. General Risk Factors General Risk Factors Our results of operations could be affected by natural disasters in the locations in which we operate. Our results of operations could be affected by natural disasters in the locations in which we operate. We, like many companies in the semiconductor industry, rely on supplies, services, internal manufacturing capacity, We, like many companies in the semiconductor industry, rely on supplies, services, internal manufacturing capacity, wafer fabrication foundries and other subcontractors in locations around the world that are susceptible to natural disasters and wafer fabrication foundries and other subcontractors in locations around the world that are susceptible to natural disasters and other significant disruptions. Earthquakes, fires, tsunamis, flooding or other natural disasters may disrupt local semiconductor- other significant disruptions. Earthquakes, fires, tsunamis, flooding or other natural disasters may disrupt local semiconductor- related businesses and adversely affect manufacturing capacity, availability and cost of key raw materials, utilities and related businesses and adversely affect manufacturing capacity, availability and cost of key raw materials, utilities and equipment, and availability of key services, including transport of our products worldwide. Our insurance may not adequately equipment, and availability of key services, including transport of our products worldwide. Our insurance may not adequately cover losses resulting from such disruptions. Any prolonged inability to utilize one of our manufacturing facilities, or those of cover losses resulting from such disruptions. Any prolonged inability to utilize one of our manufacturing facilities, or those of our subcontractors or third-party wafer fabrication foundries, as a result of fire, flood, natural disaster, unavailability of utilities our subcontractors or third-party wafer fabrication foundries, as a result of fire, flood, natural disaster, unavailability of utilities or otherwise, could result in a temporary or permanent loss of customers for affected products, which could have a material or otherwise, could result in a temporary or permanent loss of customers for affected products, which could have a material adverse effect on our results of operations and financial condition. In addition, global climate change may result in certain adverse effect on our results of operations and financial condition. In addition, global climate change may result in certain natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, and natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, and flooding, and could disrupt the availability of water necessary for the operation of our fabrication facilities located in semi-arid flooding, and could disrupt the availability of water necessary for the operation of our fabrication facilities located in semi-arid regions. The long-term effects of climate change on the global economy and the semiconductor industry in particular are regions. The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear, but could be severe. unclear, but could be severe. Our stock price may be volatile. Our stock price may be volatile. The market price of our common stock may be volatile, as it may be significantly affected by factors including: The market price of our common stock may be volatile, as it may be significantly affected by factors including: • • • • • • • • • • • • • • • • • • • • • • • • • • global economic conditions generally; global economic conditions generally; crises in global credit, debt and financial markets; crises in global credit, debt and financial markets; actual or anticipated fluctuations in our revenue and operating results; actual or anticipated fluctuations in our revenue and operating results; changes in financial estimates or other statements made by securities analysts or others in analyst reports or other changes in financial estimates or other statements made by securities analysts or others in analyst reports or other publications, or our failure to perform in line with those estimates or statements or our published guidance; publications, or our failure to perform in line with those estimates or statements or our published guidance; financial results and prospects of our customers; financial results and prospects of our customers; U.S. and foreign government actions, including with respect to trade, travel, export and taxation; U.S. and foreign government actions, including with respect to trade, travel, export and taxation; the extent of the impact and the duration of the COVID-19 pandemic; the extent of the impact and the duration of the COVID-19 pandemic; changes in market valuations of other semiconductor companies; changes in market valuations of other semiconductor companies; rumors and speculation in the press, investment community or on social media about us, our customers or other rumors and speculation in the press, investment community or on social media about us, our customers or other companies in our industry; companies in our industry; announcements by us, our customers or our competitors of significant new products, technical innovations, material announcements by us, our customers or our competitors of significant new products, technical innovations, material transactions, acquisitions or dispositions, litigation, capital commitments, including share repurchases and dividend transactions, acquisitions or dispositions, litigation, capital commitments, including share repurchases and dividend policies, or revised earnings estimates; policies, or revised earnings estimates; departures of key personnel; departures of key personnel; alleged noncompliance with laws, regulations or ethics standards by us or any of our employees, officers or directors; alleged noncompliance with laws, regulations or ethics standards by us or any of our employees, officers or directors; and and negative media publicity targeting us or our suppliers, customers or competitors. negative media publicity targeting us or our suppliers, customers or competitors. The stock market has historically experienced volatility, especially within the semiconductor industry, that often has The stock market has historically experienced volatility, especially within the semiconductor industry, that often has been unrelated to the performance of particular companies, such as the response to rising inflation and increasing interest rates. been unrelated to the performance of particular companies, such as the response to rising inflation and increasing interest rates. These market fluctuations may cause our stock price to fall regardless of our operating results. These market fluctuations may cause our stock price to fall regardless of our operating results. Our directors and executive officers periodically buy or sell shares of our common stock in the market, including Our directors and executive officers periodically buy or sell shares of our common stock in the market, including pursuant to Rule 10b5-1 trading plans. Regardless of the individual's reasons for such purchases or sales, securities analysts and pursuant to Rule 10b5-1 trading plans. Regardless of the individual's reasons for such purchases or sales, securities analysts and investors could view such transactions as positive or negative indicators and our stock price could be adversely affected as a investors could view such transactions as positive or negative indicators and our stock price could be adversely affected as a result. result. 23 23 24 24 We carry outside basis differences in certain of our subsidiaries, primarily arising from acquisition accounting adjustments We carry outside basis differences in certain of our subsidiaries, primarily arising from acquisition accounting adjustments ITEM 1B. ITEM 1B. UNRESOLVED STAFF COMMENTS UNRESOLVED STAFF COMMENTS None. None. and certain undistributed earnings that are considered indefinitely reinvested. We intend to reinvest these funds in our and certain undistributed earnings that are considered indefinitely reinvested. We intend to reinvest these funds in our international operations, and our current plans do not demonstrate a need to repatriate these earnings to fund our U.S. cash international operations, and our current plans do not demonstrate a need to repatriate these earnings to fund our U.S. cash requirements. We require a substantial amount of cash in the United States for operating requirements, stock repurchases, cash requirements. We require a substantial amount of cash in the United States for operating requirements, stock repurchases, cash dividends and acquisitions. If we are not able to meet our U.S. cash requirements through operations, borrowings under our dividends and acquisitions. If we are not able to meet our U.S. cash requirements through operations, borrowings under our current revolving credit facility, future debt or equity offerings or other sources of cash obtained at an acceptable cost, it may be current revolving credit facility, future debt or equity offerings or other sources of cash obtained at an acceptable cost, it may be necessary for us to consider repatriation of earnings that are indefinitely reinvested, and we may be required to pay additional necessary for us to consider repatriation of earnings that are indefinitely reinvested, and we may be required to pay additional taxes under current tax laws, which could have a material adverse effect on our results of operations and financial condition. taxes under current tax laws, which could have a material adverse effect on our results of operations and financial condition. General Risk Factors General Risk Factors Our results of operations could be affected by natural disasters in the locations in which we operate. Our results of operations could be affected by natural disasters in the locations in which we operate. We, like many companies in the semiconductor industry, rely on supplies, services, internal manufacturing capacity, We, like many companies in the semiconductor industry, rely on supplies, services, internal manufacturing capacity, wafer fabrication foundries and other subcontractors in locations around the world that are susceptible to natural disasters and wafer fabrication foundries and other subcontractors in locations around the world that are susceptible to natural disasters and other significant disruptions. Earthquakes, fires, tsunamis, flooding or other natural disasters may disrupt local semiconductor- other significant disruptions. Earthquakes, fires, tsunamis, flooding or other natural disasters may disrupt local semiconductor- related businesses and adversely affect manufacturing capacity, availability and cost of key raw materials, utilities and related businesses and adversely affect manufacturing capacity, availability and cost of key raw materials, utilities and equipment, and availability of key services, including transport of our products worldwide. Our insurance may not adequately equipment, and availability of key services, including transport of our products worldwide. Our insurance may not adequately cover losses resulting from such disruptions. Any prolonged inability to utilize one of our manufacturing facilities, or those of cover losses resulting from such disruptions. Any prolonged inability to utilize one of our manufacturing facilities, or those of our subcontractors or third-party wafer fabrication foundries, as a result of fire, flood, natural disaster, unavailability of utilities our subcontractors or third-party wafer fabrication foundries, as a result of fire, flood, natural disaster, unavailability of utilities or otherwise, could result in a temporary or permanent loss of customers for affected products, which could have a material or otherwise, could result in a temporary or permanent loss of customers for affected products, which could have a material adverse effect on our results of operations and financial condition. In addition, global climate change may result in certain adverse effect on our results of operations and financial condition. In addition, global climate change may result in certain natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, and natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, and flooding, and could disrupt the availability of water necessary for the operation of our fabrication facilities located in semi-arid flooding, and could disrupt the availability of water necessary for the operation of our fabrication facilities located in semi-arid regions. The long-term effects of climate change on the global economy and the semiconductor industry in particular are regions. The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear, but could be severe. unclear, but could be severe. Our stock price may be volatile. Our stock price may be volatile. • • • • • • • • • • • • • • • • • • • • • • • • • • The market price of our common stock may be volatile, as it may be significantly affected by factors including: The market price of our common stock may be volatile, as it may be significantly affected by factors including: global economic conditions generally; global economic conditions generally; crises in global credit, debt and financial markets; crises in global credit, debt and financial markets; actual or anticipated fluctuations in our revenue and operating results; actual or anticipated fluctuations in our revenue and operating results; changes in financial estimates or other statements made by securities analysts or others in analyst reports or other changes in financial estimates or other statements made by securities analysts or others in analyst reports or other publications, or our failure to perform in line with those estimates or statements or our published guidance; publications, or our failure to perform in line with those estimates or statements or our published guidance; financial results and prospects of our customers; financial results and prospects of our customers; U.S. and foreign government actions, including with respect to trade, travel, export and taxation; U.S. and foreign government actions, including with respect to trade, travel, export and taxation; the extent of the impact and the duration of the COVID-19 pandemic; the extent of the impact and the duration of the COVID-19 pandemic; changes in market valuations of other semiconductor companies; changes in market valuations of other semiconductor companies; rumors and speculation in the press, investment community or on social media about us, our customers or other rumors and speculation in the press, investment community or on social media about us, our customers or other companies in our industry; companies in our industry; announcements by us, our customers or our competitors of significant new products, technical innovations, material announcements by us, our customers or our competitors of significant new products, technical innovations, material transactions, acquisitions or dispositions, litigation, capital commitments, including share repurchases and dividend transactions, acquisitions or dispositions, litigation, capital commitments, including share repurchases and dividend policies, or revised earnings estimates; policies, or revised earnings estimates; departures of key personnel; departures of key personnel; and and alleged noncompliance with laws, regulations or ethics standards by us or any of our employees, officers or directors; alleged noncompliance with laws, regulations or ethics standards by us or any of our employees, officers or directors; negative media publicity targeting us or our suppliers, customers or competitors. negative media publicity targeting us or our suppliers, customers or competitors. The stock market has historically experienced volatility, especially within the semiconductor industry, that often has The stock market has historically experienced volatility, especially within the semiconductor industry, that often has been unrelated to the performance of particular companies, such as the response to rising inflation and increasing interest rates. been unrelated to the performance of particular companies, such as the response to rising inflation and increasing interest rates. These market fluctuations may cause our stock price to fall regardless of our operating results. These market fluctuations may cause our stock price to fall regardless of our operating results. Our directors and executive officers periodically buy or sell shares of our common stock in the market, including Our directors and executive officers periodically buy or sell shares of our common stock in the market, including pursuant to Rule 10b5-1 trading plans. Regardless of the individual's reasons for such purchases or sales, securities analysts and pursuant to Rule 10b5-1 trading plans. Regardless of the individual's reasons for such purchases or sales, securities analysts and investors could view such transactions as positive or negative indicators and our stock price could be adversely affected as a investors could view such transactions as positive or negative indicators and our stock price could be adversely affected as a result. result. 23 23 24 24 From time to time in the ordinary course of our business, various claims, charges and litigation are asserted or From time to time in the ordinary course of our business, various claims, charges and litigation are asserted or commenced against us arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, commenced against us arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employee benefits. As to such claims and environmental matters, product liability, insurance coverage, employment or employee benefits. As to such claims and litigation, we can give no assurance that we will prevail. We do not believe that any current legal matters will have a material litigation, we can give no assurance that we will prevail. We do not believe that any current legal matters will have a material adverse effect on our financial position, results of operations or cash flows. For information regarding material pending legal adverse effect on our financial position, results of operations or cash flows. For information regarding material pending legal proceedings in which we are involved, see Note 10, Commitments and Contingencies of the Notes to Consolidated Financial proceedings in which we are involved, see Note 10, Commitments and Contingencies of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. Not Applicable. ITEM 2. ITEM 2. PROPERTIES PROPERTIES ITEM 3. LEGAL PROCEEDINGS ITEM 3. LEGAL PROCEEDINGS Manufacturing and other operations are conducted in several locations worldwide. The following tables provide certain Manufacturing and other operations are conducted in several locations worldwide. The following tables provide certain information about our significant general offices and manufacturing facilities: information about our significant general offices and manufacturing facilities: Properties Properties Owned: Owned: Use Use Cavite, Philippines Cavite, Philippines Wafer probe and testing, warehouse, engineering and administrative offices Wafer probe and testing, warehouse, engineering and administrative offices Wilmington, MA Wilmington, MA Limerick, Ireland Limerick, Ireland San Jose, CA San Jose, CA Corporate headquarters, wafer fabrication, testing, engineering, sales, marketing Corporate headquarters, wafer fabrication, testing, engineering, sales, marketing and administrative offices and administrative offices Wafer fabrication, wafer probe and testing, warehouse and distribution, Wafer fabrication, wafer probe and testing, warehouse and distribution, engineering and administrative offices engineering and administrative offices Engineering, sales, marketing and administrative offices Engineering, sales, marketing and administrative offices Wafer fabrication, engineering and administrative offices Wafer fabrication, engineering and administrative offices Beaverton, OR Beaverton, OR Penang, Malaysia (1) Wafer probe and testing, assembly and engineering offices Penang, Malaysia (1) Wafer probe and testing, assembly and engineering offices Chonburi Province, Chonburi Province, Thailand Thailand Chelmsford, MA Chelmsford, MA Wafer probe and testing, warehouse, engineering and administrative offices Wafer probe and testing, warehouse, engineering and administrative offices Final assembly of certain module and subsystem-level products, testing, Final assembly of certain module and subsystem-level products, testing, engineering and administrative offices engineering and administrative offices Wafer fabrication Wafer fabrication Camas, WA Camas, WA Properties Properties Leased: Leased: Use Use Approximate Approximate Total Sq. Ft. Total Sq. Ft. Lease Lease Termination Termination (fiscal year) (fiscal year) Bangalore, India Bangalore, India Engineering and administrative offices Engineering and administrative offices 175,000 sq. ft. 175,000 sq. ft. 2027 2027 San Jose, CA San Jose, CA Manufacturing, marketing, and administrative Manufacturing, marketing, and administrative offices offices 103,000 sq. ft. 103,000 sq. ft. 2035 2035 (1) Leases on the land used for this facility expire in 2054 through 2057. (1) Leases on the land used for this facility expire in 2054 through 2057. Approximate Approximate Total Sq. Ft. Total Sq. Ft. 1,518,000 sq. ft. 1,518,000 sq. ft. 826,000 sq. ft. 826,000 sq. ft. 646,000 sq. ft. 646,000 sq. ft. 435,000 sq. ft. 435,000 sq. ft. 432,000 sq. ft. 432,000 sq. ft. 364,000 sq. ft. 364,000 sq. ft. 194,000 sq. ft. 194,000 sq. ft. 174,000 sq. ft. 174,000 sq. ft. 105,000 sq. ft. 105,000 sq. ft. Renewals Renewals 1, five-yr. 1, five-yr. period period 1, five-yr. 1, five-yr. period period In addition to the properties listed in the above tables, we also own or lease a number of other facilities in various In addition to the properties listed in the above tables, we also own or lease a number of other facilities in various locations in the United States and internationally that are used for manufacturing, engineering, sales and marketing and locations in the United States and internationally that are used for manufacturing, engineering, sales and marketing and administration activities. Leases for these leased facilities expire at various dates through the year 2039. We do not anticipate administration activities. Leases for these leased facilities expire at various dates through the year 2039. We do not anticipate experiencing significant difficulty in retaining occupancy of any of our facilities through lease renewals prior to expiration or experiencing significant difficulty in retaining occupancy of any of our facilities through lease renewals prior to expiration or through month-to-month occupancy, or in replacing them with equivalent facilities. For information concerning our obligations through month-to-month occupancy, or in replacing them with equivalent facilities. For information concerning our obligations under all operating leases, see Note 9, Leases, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of under all operating leases, see Note 9, Leases, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. this Annual Report on Form 10-K. 25 25 26 26 ITEM 2. ITEM 2. PROPERTIES PROPERTIES ITEM 3. LEGAL PROCEEDINGS ITEM 3. LEGAL PROCEEDINGS From time to time in the ordinary course of our business, various claims, charges and litigation are asserted or From time to time in the ordinary course of our business, various claims, charges and litigation are asserted or commenced against us arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, commenced against us arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employee benefits. As to such claims and environmental matters, product liability, insurance coverage, employment or employee benefits. As to such claims and litigation, we can give no assurance that we will prevail. We do not believe that any current legal matters will have a material litigation, we can give no assurance that we will prevail. We do not believe that any current legal matters will have a material adverse effect on our financial position, results of operations or cash flows. For information regarding material pending legal adverse effect on our financial position, results of operations or cash flows. For information regarding material pending legal proceedings in which we are involved, see Note 10, Commitments and Contingencies of the Notes to Consolidated Financial proceedings in which we are involved, see Note 10, Commitments and Contingencies of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. Not Applicable. Manufacturing and other operations are conducted in several locations worldwide. The following tables provide certain Manufacturing and other operations are conducted in several locations worldwide. The following tables provide certain information about our significant general offices and manufacturing facilities: information about our significant general offices and manufacturing facilities: Properties Properties Owned: Owned: Use Use Approximate Approximate Total Sq. Ft. Total Sq. Ft. Cavite, Philippines Cavite, Philippines Wafer probe and testing, warehouse, engineering and administrative offices Wafer probe and testing, warehouse, engineering and administrative offices 1,518,000 sq. ft. 1,518,000 sq. ft. Wilmington, MA Wilmington, MA Corporate headquarters, wafer fabrication, testing, engineering, sales, marketing Corporate headquarters, wafer fabrication, testing, engineering, sales, marketing 826,000 sq. ft. 826,000 sq. ft. Limerick, Ireland Limerick, Ireland Wafer fabrication, wafer probe and testing, warehouse and distribution, Wafer fabrication, wafer probe and testing, warehouse and distribution, 646,000 sq. ft. 646,000 sq. ft. and administrative offices and administrative offices engineering and administrative offices engineering and administrative offices San Jose, CA San Jose, CA Beaverton, OR Beaverton, OR Engineering, sales, marketing and administrative offices Engineering, sales, marketing and administrative offices Wafer fabrication, engineering and administrative offices Wafer fabrication, engineering and administrative offices Penang, Malaysia (1) Wafer probe and testing, assembly and engineering offices Penang, Malaysia (1) Wafer probe and testing, assembly and engineering offices Chonburi Province, Chonburi Province, Wafer probe and testing, warehouse, engineering and administrative offices Wafer probe and testing, warehouse, engineering and administrative offices Thailand Thailand Chelmsford, MA Chelmsford, MA Final assembly of certain module and subsystem-level products, testing, Final assembly of certain module and subsystem-level products, testing, 174,000 sq. ft. 174,000 sq. ft. Camas, WA Camas, WA Wafer fabrication Wafer fabrication engineering and administrative offices engineering and administrative offices Properties Properties Leased: Leased: Use Use Approximate Approximate Total Sq. Ft. Total Sq. Ft. Lease Lease Termination Termination (fiscal year) (fiscal year) Bangalore, India Bangalore, India Engineering and administrative offices Engineering and administrative offices 175,000 sq. ft. 175,000 sq. ft. 2027 2027 San Jose, CA San Jose, CA Manufacturing, marketing, and administrative Manufacturing, marketing, and administrative 103,000 sq. ft. 103,000 sq. ft. 2035 2035 offices offices (1) Leases on the land used for this facility expire in 2054 through 2057. (1) Leases on the land used for this facility expire in 2054 through 2057. 435,000 sq. ft. 435,000 sq. ft. 432,000 sq. ft. 432,000 sq. ft. 364,000 sq. ft. 364,000 sq. ft. 194,000 sq. ft. 194,000 sq. ft. 105,000 sq. ft. 105,000 sq. ft. Renewals Renewals 1, five-yr. 1, five-yr. period period 1, five-yr. 1, five-yr. period period In addition to the properties listed in the above tables, we also own or lease a number of other facilities in various In addition to the properties listed in the above tables, we also own or lease a number of other facilities in various locations in the United States and internationally that are used for manufacturing, engineering, sales and marketing and locations in the United States and internationally that are used for manufacturing, engineering, sales and marketing and administration activities. Leases for these leased facilities expire at various dates through the year 2039. We do not anticipate administration activities. Leases for these leased facilities expire at various dates through the year 2039. We do not anticipate experiencing significant difficulty in retaining occupancy of any of our facilities through lease renewals prior to expiration or experiencing significant difficulty in retaining occupancy of any of our facilities through lease renewals prior to expiration or through month-to-month occupancy, or in replacing them with equivalent facilities. For information concerning our obligations through month-to-month occupancy, or in replacing them with equivalent facilities. For information concerning our obligations under all operating leases, see Note 9, Leases, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of under all operating leases, see Note 9, Leases, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. this Annual Report on Form 10-K. 25 25 26 26 The following graph compares cumulative total shareholder return on our common stock since October 28, 2017 with the The following graph compares cumulative total shareholder return on our common stock since October 28, 2017 with the cumulative total return of the Standard & Poor’s (S&P) 500 Index and the S&P Semiconductors Index. This graph assumes the cumulative total return of the Standard & Poor’s (S&P) 500 Index and the S&P Semiconductors Index. This graph assumes the investment of $100 on October 28, 2017 in our common stock, the S&P 500 Index and the S&P Semiconductors Index and investment of $100 on October 28, 2017 in our common stock, the S&P 500 Index and the S&P Semiconductors Index and assumes all dividends are reinvested. Measurement points are the last trading day for each respective fiscal year. assumes all dividends are reinvested. Measurement points are the last trading day for each respective fiscal year. PART II PART II Comparative Stock Performance Graph Comparative Stock Performance Graph ITEM 5. ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on The Nasdaq Global Select Market under the symbol ADI. The number of holders of record Our common stock is listed on The Nasdaq Global Select Market under the symbol ADI. The number of holders of record of our common stock at November 18, 2022 was 2,382. This number does not include shareholders for whom shares are held in of our common stock at November 18, 2022 was 2,382. This number does not include shareholders for whom shares are held in a “nominee” or “street” name. On October 28, 2022, the last reported sales price of our common stock on The Nasdaq Global a “nominee” or “street” name. On October 28, 2022, the last reported sales price of our common stock on The Nasdaq Global Select Market was $144.88 per share. Select Market was $144.88 per share. On November 21, 2022, our Board of Directors declared a cash dividend of $0.76 per outstanding share of common On November 21, 2022, our Board of Directors declared a cash dividend of $0.76 per outstanding share of common stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, 2022 and is expected to total approximately $387.1 million. We currently expect quarterly dividends to continue in future 2022 and is expected to total approximately $387.1 million. We currently expect quarterly dividends to continue in future periods, although they remain subject to determination and declaration by our Board of Directors. The payment of future periods, although they remain subject to determination and declaration by our Board of Directors. The payment of future dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. Information regarding our equity compensation plans and the securities authorized for issuance thereunder is set forth in Information regarding our equity compensation plans and the securities authorized for issuance thereunder is set forth in Item 12 of this Annual Report on Form 10-K. Item 12 of this Annual Report on Form 10-K. Issuer Purchases of Equity Securities Issuer Purchases of Equity Securities The table below summarizes the activity related to stock repurchases for the three months ended October 29, 2022. We The table below summarizes the activity related to stock repurchases for the three months ended October 29, 2022. We have an ongoing authorization, originally approved by our Board of Directors in 2004, and subsequently amended, to have an ongoing authorization, originally approved by our Board of Directors in 2004, and subsequently amended, to repurchase shares of our common stock in open market or negotiated transactions. In March 2020, we temporarily suspended repurchase shares of our common stock in open market or negotiated transactions. In March 2020, we temporarily suspended our share repurchase program as a result of the global macroeconomic environment. That suspension continued through the our share repurchase program as a result of the global macroeconomic environment. That suspension continued through the fourth quarter of fiscal 2020 given the planned acquisition of Maxim Integrated Products, Inc. We reinstated the common stock fourth quarter of fiscal 2020 given the planned acquisition of Maxim Integrated Products, Inc. We reinstated the common stock repurchase program effective November 2020. As of October 29, 2022, the Company had repurchased a total of approximately repurchase program effective November 2020. As of October 29, 2022, the Company had repurchased a total of approximately 189.6 million shares of its common stock for approximately $11.7 billion under our share repurchase program. An additional 189.6 million shares of its common stock for approximately $11.7 billion under our share repurchase program. An additional $4.9 billion remains available for repurchase of shares under the current authorized program. Future repurchases of common $4.9 billion remains available for repurchase of shares under the current authorized program. Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity, and other factors we deem stock will be dependent upon our financial position, results of operations, outlook, liquidity, and other factors we deem relevant. relevant. Period Period July 31, 2022 through August 27, 2022 July 31, 2022 through August 27, 2022 August 28, 2022 through September 24, 2022 August 28, 2022 through September 24, 2022 September 25, 2022 through October 29, 2022 September 25, 2022 through October 29, 2022 _______________________________________ _______________________________________ Total Total Total Number Total Number of of Shares Shares Purchased (1) Purchased (1) Average Average Price Paid Price Paid Per Share (2) Per Share (2) Total Number of Shares Total Number of Shares Purchased as Part of Purchased as Part of Publicly Announced Publicly Announced Plans or Programs (3) Plans or Programs (3) Approximate Dollar Approximate Dollar Value of Shares that Value of Shares that May Yet Be Purchased May Yet Be Purchased Under the Plans or Under the Plans or Programs Programs 1,572,964 $ 172.62 1,572,964 $ 172.62 1,058,260 $ 148.76 1,058,260 $ 148.76 2,718,976 $ 143.15 2,718,976 $ 143.15 5,350,200 $ 152.93 5,350,200 $ 152.93 1,515,606 $ 1,515,606 $ 1,041,800 $ 1,041,800 $ 2,705,200 $ 2,705,200 $ 5,262,606 $ 5,262,606 $ 5,471,910,519 5,471,910,519 5,316,957,211 5,316,957,211 4,929,659,276 4,929,659,276 4,929,659,276 4,929,659,276 (1) (1) (2) (2) (3) (3) Includes 87,594 shares withheld by us from employees to satisfy employee tax obligations upon vesting of restricted stock units/ Includes 87,594 shares withheld by us from employees to satisfy employee tax obligations upon vesting of restricted stock units/ awards granted to our employees under our equity compensation plans. awards granted to our employees under our equity compensation plans. The average price paid for shares in connection with vesting of restricted stock units/awards are averages of the closing stock price at The average price paid for shares in connection with vesting of restricted stock units/awards are averages of the closing stock price at the vesting date which is used to calculate the number of shares to be withheld. the vesting date which is used to calculate the number of shares to be withheld. Shares repurchased pursuant to the stock repurchase program publicly announced on August 12, 2004. On August 25, 2021, the Board Shares repurchased pursuant to the stock repurchase program publicly announced on August 12, 2004. On August 25, 2021, the Board of Directors approved an increase to the current authorization for the stock repurchase program by an additional $8.5 billion to $16.7 of Directors approved an increase to the current authorization for the stock repurchase program by an additional $8.5 billion to $16.7 billion in the aggregate. Under the repurchase program, we may repurchase outstanding shares of our common stock from time to time billion in the aggregate. Under the repurchase program, we may repurchase outstanding shares of our common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the repurchase program. repurchase program will expire when we have repurchased all shares authorized for repurchase under the repurchase program. ITEM 6. RESERVED ITEM 6. RESERVED 27 27 28 28 PART II PART II Comparative Stock Performance Graph Comparative Stock Performance Graph ITEM 5. ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on The Nasdaq Global Select Market under the symbol ADI. The number of holders of record Our common stock is listed on The Nasdaq Global Select Market under the symbol ADI. The number of holders of record of our common stock at November 18, 2022 was 2,382. This number does not include shareholders for whom shares are held in of our common stock at November 18, 2022 was 2,382. This number does not include shareholders for whom shares are held in a “nominee” or “street” name. On October 28, 2022, the last reported sales price of our common stock on The Nasdaq Global a “nominee” or “street” name. On October 28, 2022, the last reported sales price of our common stock on The Nasdaq Global Select Market was $144.88 per share. Select Market was $144.88 per share. On November 21, 2022, our Board of Directors declared a cash dividend of $0.76 per outstanding share of common On November 21, 2022, our Board of Directors declared a cash dividend of $0.76 per outstanding share of common stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, 2022 and is expected to total approximately $387.1 million. We currently expect quarterly dividends to continue in future 2022 and is expected to total approximately $387.1 million. We currently expect quarterly dividends to continue in future periods, although they remain subject to determination and declaration by our Board of Directors. The payment of future periods, although they remain subject to determination and declaration by our Board of Directors. The payment of future dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. Information regarding our equity compensation plans and the securities authorized for issuance thereunder is set forth in Information regarding our equity compensation plans and the securities authorized for issuance thereunder is set forth in Item 12 of this Annual Report on Form 10-K. Item 12 of this Annual Report on Form 10-K. Issuer Purchases of Equity Securities Issuer Purchases of Equity Securities The table below summarizes the activity related to stock repurchases for the three months ended October 29, 2022. We The table below summarizes the activity related to stock repurchases for the three months ended October 29, 2022. We have an ongoing authorization, originally approved by our Board of Directors in 2004, and subsequently amended, to have an ongoing authorization, originally approved by our Board of Directors in 2004, and subsequently amended, to repurchase shares of our common stock in open market or negotiated transactions. In March 2020, we temporarily suspended repurchase shares of our common stock in open market or negotiated transactions. In March 2020, we temporarily suspended our share repurchase program as a result of the global macroeconomic environment. That suspension continued through the our share repurchase program as a result of the global macroeconomic environment. That suspension continued through the fourth quarter of fiscal 2020 given the planned acquisition of Maxim Integrated Products, Inc. We reinstated the common stock fourth quarter of fiscal 2020 given the planned acquisition of Maxim Integrated Products, Inc. We reinstated the common stock repurchase program effective November 2020. As of October 29, 2022, the Company had repurchased a total of approximately repurchase program effective November 2020. As of October 29, 2022, the Company had repurchased a total of approximately 189.6 million shares of its common stock for approximately $11.7 billion under our share repurchase program. An additional 189.6 million shares of its common stock for approximately $11.7 billion under our share repurchase program. An additional $4.9 billion remains available for repurchase of shares under the current authorized program. Future repurchases of common $4.9 billion remains available for repurchase of shares under the current authorized program. Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity, and other factors we deem stock will be dependent upon our financial position, results of operations, outlook, liquidity, and other factors we deem relevant. relevant. Period Period Total Number Total Number of of Shares Shares Average Average Price Paid Price Paid Purchased (1) Purchased (1) Per Share (2) Per Share (2) Total Number of Shares Total Number of Shares Purchased as Part of Purchased as Part of Publicly Announced Publicly Announced Plans or Programs (3) Plans or Programs (3) Approximate Dollar Approximate Dollar Value of Shares that Value of Shares that May Yet Be Purchased May Yet Be Purchased Under the Plans or Under the Plans or Programs Programs July 31, 2022 through August 27, 2022 July 31, 2022 through August 27, 2022 1,572,964 $ 172.62 1,572,964 $ 172.62 1,515,606 $ 1,515,606 $ 5,471,910,519 5,471,910,519 August 28, 2022 through September 24, 2022 August 28, 2022 through September 24, 2022 1,058,260 $ 148.76 1,058,260 $ 148.76 1,041,800 $ 1,041,800 $ 5,316,957,211 5,316,957,211 September 25, 2022 through October 29, 2022 September 25, 2022 through October 29, 2022 2,718,976 $ 143.15 2,718,976 $ 143.15 2,705,200 $ 2,705,200 $ 4,929,659,276 4,929,659,276 Total Total 5,350,200 $ 152.93 5,350,200 $ 152.93 5,262,606 $ 5,262,606 $ 4,929,659,276 4,929,659,276 _______________________________________ _______________________________________ (1) (1) Includes 87,594 shares withheld by us from employees to satisfy employee tax obligations upon vesting of restricted stock units/ Includes 87,594 shares withheld by us from employees to satisfy employee tax obligations upon vesting of restricted stock units/ awards granted to our employees under our equity compensation plans. awards granted to our employees under our equity compensation plans. (2) (2) The average price paid for shares in connection with vesting of restricted stock units/awards are averages of the closing stock price at The average price paid for shares in connection with vesting of restricted stock units/awards are averages of the closing stock price at the vesting date which is used to calculate the number of shares to be withheld. the vesting date which is used to calculate the number of shares to be withheld. (3) (3) Shares repurchased pursuant to the stock repurchase program publicly announced on August 12, 2004. On August 25, 2021, the Board Shares repurchased pursuant to the stock repurchase program publicly announced on August 12, 2004. On August 25, 2021, the Board of Directors approved an increase to the current authorization for the stock repurchase program by an additional $8.5 billion to $16.7 of Directors approved an increase to the current authorization for the stock repurchase program by an additional $8.5 billion to $16.7 billion in the aggregate. Under the repurchase program, we may repurchase outstanding shares of our common stock from time to time billion in the aggregate. Under the repurchase program, we may repurchase outstanding shares of our common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the repurchase program. repurchase program will expire when we have repurchased all shares authorized for repurchase under the repurchase program. The following graph compares cumulative total shareholder return on our common stock since October 28, 2017 with the The following graph compares cumulative total shareholder return on our common stock since October 28, 2017 with the cumulative total return of the Standard & Poor’s (S&P) 500 Index and the S&P Semiconductors Index. This graph assumes the cumulative total return of the Standard & Poor’s (S&P) 500 Index and the S&P Semiconductors Index. This graph assumes the investment of $100 on October 28, 2017 in our common stock, the S&P 500 Index and the S&P Semiconductors Index and investment of $100 on October 28, 2017 in our common stock, the S&P 500 Index and the S&P Semiconductors Index and assumes all dividends are reinvested. Measurement points are the last trading day for each respective fiscal year. assumes all dividends are reinvested. Measurement points are the last trading day for each respective fiscal year. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Analog Devices, Inc., the S&P 500 Index and the S&P Semiconductors Index $300 $250 $200 $150 $100 $50 100.00 107.35 100.99 97.51 170.40 124.89 124.42 122.72 138.26 134.64 258.15 205.88 192.42 176.06 175.05 164.31 $0 10/28/17 11/3/18 11/2/19 10/31/20 10/30/21 10/29/22 Analog Devices, Inc. S&P 500 S&P Semiconductors ITEM 6. RESERVED ITEM 6. RESERVED 27 27 28 28 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS Revenue Trends by End Market Revenue Trends by End Market OF OPERATIONS (all tabular amounts in thousands except per share amounts) OF OPERATIONS (all tabular amounts in thousands except per share amounts) The following discussion includes results of operations and financial condition for the fiscal year ended October 29, 2022 The following discussion includes results of operations and financial condition for the fiscal year ended October 29, 2022 (fiscal 2022) and the fiscal year ended October 30, 2021 (fiscal 2021) and year-over-year comparisons between fiscal 2022 and (fiscal 2022) and the fiscal year ended October 30, 2021 (fiscal 2021) and year-over-year comparisons between fiscal 2022 and fiscal 2021. For discussion on results of operations and financial condition for fiscal 2021 and the fiscal year ended October 31, fiscal 2021. For discussion on results of operations and financial condition for fiscal 2021 and the fiscal year ended October 31, 2020 (fiscal 2020) and year-over-year comparisons between fiscal 2021 and fiscal 2020, please refer to Management’s 2020 (fiscal 2020) and year-over-year comparisons between fiscal 2021 and fiscal 2020, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10- Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10- K for fiscal 2021 filed with the Securities and Exchange Commission on December 3, 2021. Our fiscal year is the 52-week or K for fiscal 2021 filed with the Securities and Exchange Commission on December 3, 2021. Our fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October. Fiscal 2022 and fiscal 2021 were 52-week fiscal 53-week period ending on the Saturday closest to the last day in October. Fiscal 2022 and fiscal 2021 were 52-week fiscal periods. periods. Impact of COVID-19 on our Business Impact of COVID-19 on our Business The pandemic caused by the novel strain of the coronavirus (COVID-19) and the numerous measures implemented by The pandemic caused by the novel strain of the coronavirus (COVID-19) and the numerous measures implemented by government authorities in response, have impacted and may continue to impact our workforce and operations, the operations of government authorities in response, have impacted and may continue to impact our workforce and operations, the operations of our customers and those of our respective vendors and suppliers. We have significant operations worldwide, including in the our customers and those of our respective vendors and suppliers. We have significant operations worldwide, including in the United States, the Philippines, Ireland, Malaysia, Thailand and India. Each of these countries has been affected by the United States, the Philippines, Ireland, Malaysia, Thailand and India. Each of these countries has been affected by the pandemic and taken measures to try to contain it, resulting in disruptions at some of our manufacturing operations and facilities, pandemic and taken measures to try to contain it, resulting in disruptions at some of our manufacturing operations and facilities, including restrictions on our access to facilities. including restrictions on our access to facilities. The spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, The spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, modifying employee work locations and cancelling physical participation in meetings, events and conferences) and we may modifying employee work locations and cancelling physical participation in meetings, events and conferences) and we may take further actions as may be required by government authorities or that we determine are in the best interests of our take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, suppliers and shareholders. employees, customers, partners, suppliers and shareholders. While we are confident that our strategy and long-term contingency planning have positioned us well to weather the While we are confident that our strategy and long-term contingency planning have positioned us well to weather the current uncertainty, we cannot at this time fully quantify or forecast the impact of COVID-19 on our business. The ultimate current uncertainty, we cannot at this time fully quantify or forecast the impact of COVID-19 on our business. The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows continues to impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows continues to largely depend on future developments, including the duration, scope and severity of the pandemic, any additional resurgences, largely depend on future developments, including the duration, scope and severity of the pandemic, any additional resurgences, variants and severity of variants and the ability to effectively and widely manufacture and distribute vaccines, which are not variants and severity of variants and the ability to effectively and widely manufacture and distribute vaccines, which are not within our control and cannot be accurately predicted and are uncertain. within our control and cannot be accurately predicted and are uncertain. Acquisition of Maxim Integrated Products, Inc. Acquisition of Maxim Integrated Products, Inc. On August 26, 2021 (Acquisition Date), we completed the acquisition of Maxim Integrated Products, Inc. (Maxim), an On August 26, 2021 (Acquisition Date), we completed the acquisition of Maxim Integrated Products, Inc. (Maxim), an independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date, for total consideration of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date, for total consideration of approximately $28.0 billion of our common stock. The acquisition of Maxim is referred to as the Acquisition. The approximately $28.0 billion of our common stock. The acquisition of Maxim is referred to as the Acquisition. The consolidated financial statements included in this Annual Report on Form 10-K include the financial results of Maxim consolidated financial statements included in this Annual Report on Form 10-K include the financial results of Maxim prospectively from the Acquisition Date. See Note 6, Acquisitions, of the Notes to the Consolidated Financial Statements prospectively from the Acquisition Date. See Note 6, Acquisitions, of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K for further information. contained in Part II, Item 8 of this Annual Report on Form 10-K for further information. Results of Operations Results of Operations Overview Overview Revenue Revenue Gross margin % Gross margin % Net income Net income Net income as a % of revenue Net income as a % of revenue Diluted EPS Diluted EPS Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 12,013,953 $ 12,013,953 $ 7,318,286 $ 7,318,286 $ $ 4,695,667 4,695,667 62.7 % 62.7 % 61.8 % 61.8 % $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 $ $ 1,358,139 1,358,139 22.9 % 22.9 % 19.0 % 19.0 % $ $ 5.25 5.25 $ $ 3.46 3.46 $ $ 1.79 1.79 64 % 64 % 98 % 98 % 52 % 52 % The following table summarizes revenue by end market. The categorization of revenue by end market is determined using The following table summarizes revenue by end market. The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" customer information and the end customer product or application into which our product will be incorporated. As data systems customer information and the end customer product or application into which our product will be incorporated. As data systems for capturing and tracking this data and our methodology evolves and improves, the categorization of products by end market for capturing and tracking this data and our methodology evolves and improves, the categorization of products by end market can vary over time. When this occurs, we reclassify revenue by end market for prior periods. Such reclassifications typically do can vary over time. When this occurs, we reclassify revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market. not materially change the sizing of, or the underlying trends of results within, each end market. Fiscal 2021 Fiscal 2021 Fiscal 2022 Fiscal 2022 % of % of Total Total Revenue Revenue Revenue (1) Revenue (1) Y/Y% Y/Y% Revenue Revenue Revenue (1) Revenue (1) $ 6,069,332 $ 6,069,332 2,515,513 2,515,513 1,880,697 1,880,697 1,548,411 1,548,411 51 % 51 % 21 % 21 % 16 % 16 % 13 % 13 % 51 % $ 4,026,909 51 % $ 4,026,909 102 % 102 % 1,248,169 1,248,169 56 % 56 % 1,206,867 1,206,867 85 % 85 % 836,341 836,341 $ 12,013,953 $ 12,013,953 100 % 100 % 64 % $ 7,318,286 64 % $ 7,318,286 100 % 100 % % of % of Total Total 55 % 55 % 17 % 17 % 16 % 16 % 11 % 11 % Industrial Industrial Automotive Automotive Communications Communications Consumer Consumer Total Revenue Total Revenue Distributors Distributors Direct customers Direct customers Other Other Total Revenue Total Revenue _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. Revenue increased across all end markets in fiscal 2022 as compared to fiscal 2021 primarily as a result of the Revenue increased across all end markets in fiscal 2022 as compared to fiscal 2021 primarily as a result of the Acquisition, which contributed approximately 65% of the increase in total revenue year over year, a broad-based increase in Acquisition, which contributed approximately 65% of the increase in total revenue year over year, a broad-based increase in demand for our products across all end markets as well as inflationary price increases. demand for our products across all end markets as well as inflationary price increases. Revenue by Sales Channel Revenue by Sales Channel The following table summarizes revenue by sales channel. We sell our products globally through a direct sales force, The following table summarizes revenue by sales channel. We sell our products globally through a direct sales force, third party distributors, independent sales representatives and via our website. Distributors are customers that buy products with third party distributors, independent sales representatives and via our website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers (OEMs). Other customers include the U.S. government, government prime contractors and certain commercial manufacturers (OEMs). Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time. customers for which revenue is recorded over time. Fiscal 2022 Fiscal 2022 Fiscal 2021 Fiscal 2021 % of % of Total Total Revenue Revenue Revenue (1) Revenue (1) Revenue Revenue Revenue (1) Revenue (1) $ $ 7,458,478 7,458,478 4,423,883 4,423,883 131,592 131,592 62 % $ 62 % $ 37 % 37 % 1 % 1 % 4,589,944 4,589,944 2,600,353 2,600,353 127,989 127,989 $ $ 12,013,953 12,013,953 100 % $ 100 % $ 7,318,286 7,318,286 % of % of Total Total 63 % 63 % 36 % 36 % 2 % 2 % 100 % 100 % _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. As indicated in the table above, the percentage of total revenue sold via each channel has remained relatively consistent in As indicated in the table above, the percentage of total revenue sold via each channel has remained relatively consistent in the periods presented, but can fluctuate from time to time based on end customer demand. the periods presented, but can fluctuate from time to time based on end customer demand. 29 29 30 30 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS Revenue Trends by End Market Revenue Trends by End Market OF OPERATIONS (all tabular amounts in thousands except per share amounts) OF OPERATIONS (all tabular amounts in thousands except per share amounts) The following discussion includes results of operations and financial condition for the fiscal year ended October 29, 2022 The following discussion includes results of operations and financial condition for the fiscal year ended October 29, 2022 (fiscal 2022) and the fiscal year ended October 30, 2021 (fiscal 2021) and year-over-year comparisons between fiscal 2022 and (fiscal 2022) and the fiscal year ended October 30, 2021 (fiscal 2021) and year-over-year comparisons between fiscal 2022 and fiscal 2021. For discussion on results of operations and financial condition for fiscal 2021 and the fiscal year ended October 31, fiscal 2021. For discussion on results of operations and financial condition for fiscal 2021 and the fiscal year ended October 31, 2020 (fiscal 2020) and year-over-year comparisons between fiscal 2021 and fiscal 2020, please refer to Management’s 2020 (fiscal 2020) and year-over-year comparisons between fiscal 2021 and fiscal 2020, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10- Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10- K for fiscal 2021 filed with the Securities and Exchange Commission on December 3, 2021. Our fiscal year is the 52-week or K for fiscal 2021 filed with the Securities and Exchange Commission on December 3, 2021. Our fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October. Fiscal 2022 and fiscal 2021 were 52-week fiscal 53-week period ending on the Saturday closest to the last day in October. Fiscal 2022 and fiscal 2021 were 52-week fiscal periods. periods. Impact of COVID-19 on our Business Impact of COVID-19 on our Business The pandemic caused by the novel strain of the coronavirus (COVID-19) and the numerous measures implemented by The pandemic caused by the novel strain of the coronavirus (COVID-19) and the numerous measures implemented by government authorities in response, have impacted and may continue to impact our workforce and operations, the operations of government authorities in response, have impacted and may continue to impact our workforce and operations, the operations of our customers and those of our respective vendors and suppliers. We have significant operations worldwide, including in the our customers and those of our respective vendors and suppliers. We have significant operations worldwide, including in the United States, the Philippines, Ireland, Malaysia, Thailand and India. Each of these countries has been affected by the United States, the Philippines, Ireland, Malaysia, Thailand and India. Each of these countries has been affected by the pandemic and taken measures to try to contain it, resulting in disruptions at some of our manufacturing operations and facilities, pandemic and taken measures to try to contain it, resulting in disruptions at some of our manufacturing operations and facilities, including restrictions on our access to facilities. including restrictions on our access to facilities. The spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, The spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, modifying employee work locations and cancelling physical participation in meetings, events and conferences) and we may modifying employee work locations and cancelling physical participation in meetings, events and conferences) and we may take further actions as may be required by government authorities or that we determine are in the best interests of our take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, suppliers and shareholders. employees, customers, partners, suppliers and shareholders. While we are confident that our strategy and long-term contingency planning have positioned us well to weather the While we are confident that our strategy and long-term contingency planning have positioned us well to weather the current uncertainty, we cannot at this time fully quantify or forecast the impact of COVID-19 on our business. The ultimate current uncertainty, we cannot at this time fully quantify or forecast the impact of COVID-19 on our business. The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows continues to impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows continues to largely depend on future developments, including the duration, scope and severity of the pandemic, any additional resurgences, largely depend on future developments, including the duration, scope and severity of the pandemic, any additional resurgences, variants and severity of variants and the ability to effectively and widely manufacture and distribute vaccines, which are not variants and severity of variants and the ability to effectively and widely manufacture and distribute vaccines, which are not within our control and cannot be accurately predicted and are uncertain. within our control and cannot be accurately predicted and are uncertain. Acquisition of Maxim Integrated Products, Inc. Acquisition of Maxim Integrated Products, Inc. On August 26, 2021 (Acquisition Date), we completed the acquisition of Maxim Integrated Products, Inc. (Maxim), an On August 26, 2021 (Acquisition Date), we completed the acquisition of Maxim Integrated Products, Inc. (Maxim), an independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date, for total consideration of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date, for total consideration of approximately $28.0 billion of our common stock. The acquisition of Maxim is referred to as the Acquisition. The approximately $28.0 billion of our common stock. The acquisition of Maxim is referred to as the Acquisition. The consolidated financial statements included in this Annual Report on Form 10-K include the financial results of Maxim consolidated financial statements included in this Annual Report on Form 10-K include the financial results of Maxim prospectively from the Acquisition Date. See Note 6, Acquisitions, of the Notes to the Consolidated Financial Statements prospectively from the Acquisition Date. See Note 6, Acquisitions, of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K for further information. contained in Part II, Item 8 of this Annual Report on Form 10-K for further information. Results of Operations Results of Operations Overview Overview Revenue Revenue Gross margin % Gross margin % Net income Net income Net income as a % of revenue Net income as a % of revenue Diluted EPS Diluted EPS Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 12,013,953 $ 12,013,953 $ 7,318,286 $ 7,318,286 $ $ 4,695,667 4,695,667 $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 $ $ 1,358,139 1,358,139 62.7 % 62.7 % 61.8 % 61.8 % 22.9 % 22.9 % 19.0 % 19.0 % $ $ 5.25 5.25 $ $ 3.46 3.46 $ $ 1.79 1.79 64 % 64 % 98 % 98 % 52 % 52 % The following table summarizes revenue by end market. The categorization of revenue by end market is determined using The following table summarizes revenue by end market. The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" customer information and the end customer product or application into which our product will be incorporated. As data systems customer information and the end customer product or application into which our product will be incorporated. As data systems for capturing and tracking this data and our methodology evolves and improves, the categorization of products by end market for capturing and tracking this data and our methodology evolves and improves, the categorization of products by end market can vary over time. When this occurs, we reclassify revenue by end market for prior periods. Such reclassifications typically do can vary over time. When this occurs, we reclassify revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market. not materially change the sizing of, or the underlying trends of results within, each end market. Industrial Industrial Automotive Automotive Communications Communications Consumer Consumer Total Revenue Total Revenue Fiscal 2022 Fiscal 2022 Fiscal 2021 Fiscal 2021 Revenue Revenue $ 6,069,332 $ 6,069,332 2,515,513 2,515,513 1,880,697 1,880,697 1,548,411 1,548,411 % of % of Total Total Revenue (1) Revenue (1) 51 % 51 % 21 % 21 % 16 % 16 % 13 % 13 % Y/Y% Y/Y% Revenue Revenue 51 % $ 4,026,909 51 % $ 4,026,909 102 % 102 % 1,248,169 1,248,169 56 % 56 % 1,206,867 1,206,867 85 % 85 % 836,341 836,341 % of % of Total Total Revenue (1) Revenue (1) 55 % 55 % 17 % 17 % 16 % 16 % 11 % 11 % $ 12,013,953 $ 12,013,953 100 % 100 % 64 % $ 7,318,286 64 % $ 7,318,286 100 % 100 % _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. Revenue increased across all end markets in fiscal 2022 as compared to fiscal 2021 primarily as a result of the Revenue increased across all end markets in fiscal 2022 as compared to fiscal 2021 primarily as a result of the Acquisition, which contributed approximately 65% of the increase in total revenue year over year, a broad-based increase in Acquisition, which contributed approximately 65% of the increase in total revenue year over year, a broad-based increase in demand for our products across all end markets as well as inflationary price increases. demand for our products across all end markets as well as inflationary price increases. Revenue by Sales Channel Revenue by Sales Channel The following table summarizes revenue by sales channel. We sell our products globally through a direct sales force, The following table summarizes revenue by sales channel. We sell our products globally through a direct sales force, third party distributors, independent sales representatives and via our website. Distributors are customers that buy products with third party distributors, independent sales representatives and via our website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers (OEMs). Other customers include the U.S. government, government prime contractors and certain commercial manufacturers (OEMs). Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time. customers for which revenue is recorded over time. Distributors Distributors Direct customers Direct customers Other Other Total Revenue Total Revenue Fiscal 2022 Fiscal 2022 Fiscal 2021 Fiscal 2021 Revenue Revenue 7,458,478 7,458,478 4,423,883 4,423,883 131,592 131,592 12,013,953 12,013,953 $ $ $ $ % of % of Total Total Revenue (1) Revenue (1) 62 % $ 62 % $ 37 % 37 % 1 % 1 % 100 % $ 100 % $ Revenue Revenue 4,589,944 4,589,944 2,600,353 2,600,353 127,989 127,989 7,318,286 7,318,286 % of % of Total Total Revenue (1) Revenue (1) 63 % 63 % 36 % 36 % 2 % 2 % 100 % 100 % _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. As indicated in the table above, the percentage of total revenue sold via each channel has remained relatively consistent in As indicated in the table above, the percentage of total revenue sold via each channel has remained relatively consistent in the periods presented, but can fluctuate from time to time based on end customer demand. the periods presented, but can fluctuate from time to time based on end customer demand. 29 29 30 30 Revenue Trends by Geographic Region Revenue Trends by Geographic Region Revenue by geographic region, based upon the geographic location of the distributors or OEMs who purchased the Revenue by geographic region, based upon the geographic location of the distributors or OEMs who purchased the Company's products, for fiscal 2022 and fiscal 2021 was as follows: Company's products, for fiscal 2022 and fiscal 2021 was as follows: United States United States Rest of North and South America Rest of North and South America Europe Europe Japan Japan China China Rest of Asia Rest of Asia Total Revenue Total Revenue Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change (1) % Change (1) $ $ 4,025,398 $ 4,025,398 $ 2,389,439 $ 2,389,439 $ 1,635,959 1,635,959 72,497 72,497 2,534,423 2,534,423 1,221,549 1,221,549 2,563,536 2,563,536 1,596,550 1,596,550 42,830 42,830 1,592,989 1,592,989 787,966 787,966 1,614,396 1,614,396 890,666 890,666 29,667 29,667 941,434 941,434 433,583 433,583 949,140 949,140 705,884 705,884 $ $ 12,013,953 $ 12,013,953 $ 7,318,286 $ 7,318,286 $ 4,695,667 4,695,667 68 % 68 % 69 % 69 % 59 % 59 % 55 % 55 % 59 % 59 % 79 % 79 % 64 % 64 % _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. In all periods presented, the predominant countries comprising “Rest of North and South America” are Canada and In all periods presented, the predominant countries comprising “Rest of North and South America” are Canada and Mexico; the predominant countries comprising “Europe” are Germany, Sweden, and the Netherlands; and the predominant Mexico; the predominant countries comprising “Europe” are Germany, Sweden, and the Netherlands; and the predominant countries comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore. countries comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore. Total revenue increased in fiscal 2022 as compared to fiscal 2021 due to the incremental impact of revenue from the Total revenue increased in fiscal 2022 as compared to fiscal 2021 due to the incremental impact of revenue from the Acquisition, broad-based, global demand in the semiconductor industry as well as inflationary price increases. Acquisition, broad-based, global demand in the semiconductor industry as well as inflationary price increases. Gross Margin Gross Margin Gross margin Gross margin Gross margin % Gross margin % Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 7,532,474 $ 7,532,474 $ 4,525,012 $ 4,525,012 $ $ 3,007,462 3,007,462 66 % 66 % 62.7 % 62.7 % 61.8 % 61.8 % Gross margin percentage in fiscal 2022 increased by 90 basis points compared to fiscal 2021 primarily as a result of Gross margin percentage in fiscal 2022 increased by 90 basis points compared to fiscal 2021 primarily as a result of favorable product mix, synergies related to the Acquisition and higher utilization of our factories due to increased customer favorable product mix, synergies related to the Acquisition and higher utilization of our factories due to increased customer demand, partially offset by additional cost of goods sold related to the Acquisition. This additional cost of goods sold related to demand, partially offset by additional cost of goods sold related to the Acquisition. This additional cost of goods sold related to the Acquisition consisted of amortization expense of intangible assets of $857.1 million in fiscal 2022 compared to $155.4 the Acquisition consisted of amortization expense of intangible assets of $857.1 million in fiscal 2022 compared to $155.4 million in fiscal 2021, and nonrecurring fair value adjustments recorded to inventory of $271.4 million in fiscal 2022 compared million in fiscal 2021, and nonrecurring fair value adjustments recorded to inventory of $271.4 million in fiscal 2022 compared to $331.1 million in fiscal 2021. In addition, gross margin percentage in fiscal 2022 included price increases in revenue to to $331.1 million in fiscal 2021. In addition, gross margin percentage in fiscal 2022 included price increases in revenue to offset inflationary cost increases. offset inflationary cost increases. Research and Development (R&D) Research and Development (R&D) Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change R&D expenses R&D expenses $ 1,700,518 $ 1,700,518 $ 1,296,126 $ 1,296,126 $ $ 404,392 404,392 31 % 31 % R&D expenses as a % of revenue R&D expenses as a % of revenue 14 % 14 % 18 % 18 % Nonoperating (Income) Expense Nonoperating (Income) Expense R&D expenses increased in fiscal 2022 as compared to fiscal 2021 primarily as a result of the Acquisition. R&D expenses increased in fiscal 2022 as compared to fiscal 2021 primarily as a result of the Acquisition. R&D expenses as a percentage of revenue will fluctuate from year-to-year depending on the amount of revenue and the R&D expenses as a percentage of revenue will fluctuate from year-to-year depending on the amount of revenue and the success of new product development efforts, which we view as critical to our future growth. We expect to continue the success of new product development efforts, which we view as critical to our future growth. We expect to continue the development of innovative technologies and processes for new products. We believe that a continued commitment to R&D is development of innovative technologies and processes for new products. We believe that a continued commitment to R&D is essential to maintain product leadership with our existing products as well as to provide innovative new product offerings. essential to maintain product leadership with our existing products as well as to provide innovative new product offerings. Selling, Marketing, General and Administrative (SMG&A) Selling, Marketing, General and Administrative (SMG&A) SMG&A expenses SMG&A expenses SMG&A expenses as a % of revenue SMG&A expenses as a % of revenue Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 1,266,175 $ 1,266,175 $ $ 915,418 915,418 $ $ 350,757 350,757 38 % 38 % 11 % 11 % 13 % 13 % 31 31 32 32 SMG&A expenses increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of the Acquisition as well as SMG&A expenses increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of the Acquisition as well as higher salary and benefit expenses and higher variable compensation expenses, partially offset by lower acquisition-related higher salary and benefit expenses and higher variable compensation expenses, partially offset by lower acquisition-related transaction costs. transaction costs. Amortization of Intangibles Amortization of Intangibles Amortization expenses Amortization expenses $ 1,012,572 $ 1,012,572 $ $ 536,811 536,811 $ $ 475,761 475,761 89 % 89 % Amortization expenses as a % of revenue Amortization expenses as a % of revenue 8 % 8 % 7 % 7 % Amortization expenses increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of amortization expense Amortization expenses increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of amortization expense Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change of intangible assets recorded as part of the Acquisition. of intangible assets recorded as part of the Acquisition. Special Charges, Net Special Charges, Net Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change Special charges, net Special charges, net $ $ 274,509 274,509 $ $ 84,456 84,456 $ $ 190,053 190,053 225 % 225 % Special charges, net as a % of revenue Special charges, net as a % of revenue 2 % 2 % 1 % 1 % Special charges, net increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of charges recorded as part Special charges, net increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of charges recorded as part of the integration of Maxim and continued organizational initiatives to better align our global workforce with our long-term of the integration of Maxim and continued organizational initiatives to better align our global workforce with our long-term strategic plan. During the third quarter of fiscal 2022, we transitioned our engineering, sales, marketing and administrative strategic plan. During the third quarter of fiscal 2022, we transitioned our engineering, sales, marketing and administrative activities from a leased property in Santa Clara, California to an owned property in San Jose, California. As a result, we entered activities from a leased property in Santa Clara, California to an owned property in San Jose, California. As a result, we entered into a sublease agreement for a portion of the leased property and recorded an impairment charge of $91.9 million in the third into a sublease agreement for a portion of the leased property and recorded an impairment charge of $91.9 million in the third quarter of fiscal 2022 related to the associated asset group. The remaining charges were for severance and benefit costs as well quarter of fiscal 2022 related to the associated asset group. The remaining charges were for severance and benefit costs as well as charges recorded from the acceleration of equity awards in connection with the termination of certain employees in as charges recorded from the acceleration of equity awards in connection with the termination of certain employees in manufacturing, engineering and SMG&A roles at sites assumed in connection with the Acquisition and various other locations manufacturing, engineering and SMG&A roles at sites assumed in connection with the Acquisition and various other locations throughout the world. throughout the world. Operating Income Operating Income Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change Operating income Operating income $ 3,278,700 $ 3,278,700 $ 1,692,201 $ 1,692,201 $ $ 1,586,499 1,586,499 94 % 94 % Operating income as a % of revenue Operating income as a % of revenue 27.3 % 27.3 % 23.1 % 23.1 % The increase in operating income in fiscal 2022 as compared to fiscal 2021 was primarily the result of a $3,007.5 million The increase in operating income in fiscal 2022 as compared to fiscal 2021 was primarily the result of a $3,007.5 million increase in gross margin, partially offset by a $475.8 million increase in amortization expenses, a $404.4 million increase in increase in gross margin, partially offset by a $475.8 million increase in amortization expenses, a $404.4 million increase in R&D expenses, a $350.8 million increase in SMG&A expenses and a $190.1 million increase in special charges, net as more R&D expenses, a $350.8 million increase in SMG&A expenses and a $190.1 million increase in special charges, net as more fully described above under the headings Gross Margin, Amortization of Intangibles, Research and Development (R&D), fully described above under the headings Gross Margin, Amortization of Intangibles, Research and Development (R&D), Selling, Marketing, General and Administrative (SMG&A) and Special Charges, Net. Selling, Marketing, General and Administrative (SMG&A) and Special Charges, Net. Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change Total Nonoperating expense Total Nonoperating expense $ $ 179,951 $ 179,951 $ 363,487 $ 363,487 $ (183,536) (183,536) (50) % (50) % The year-over-year decrease in nonoperating expense in fiscal 2022 as compared to fiscal 2021 was primarily the result of The year-over-year decrease in nonoperating expense in fiscal 2022 as compared to fiscal 2021 was primarily the result of a loss on the extinguishment of debt of $215.2 million related to debt transactions in the fourth quarter of fiscal 2021, partially a loss on the extinguishment of debt of $215.2 million related to debt transactions in the fourth quarter of fiscal 2021, partially offset by higher interest expense in fiscal 2022 related to our debt obligations and fewer gains on investments in fiscal 2022. offset by higher interest expense in fiscal 2022 related to our debt obligations and fewer gains on investments in fiscal 2022. Revenue Trends by Geographic Region Revenue Trends by Geographic Region Revenue by geographic region, based upon the geographic location of the distributors or OEMs who purchased the Revenue by geographic region, based upon the geographic location of the distributors or OEMs who purchased the Company's products, for fiscal 2022 and fiscal 2021 was as follows: Company's products, for fiscal 2022 and fiscal 2021 was as follows: SMG&A expenses increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of the Acquisition as well as SMG&A expenses increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of the Acquisition as well as higher salary and benefit expenses and higher variable compensation expenses, partially offset by lower acquisition-related higher salary and benefit expenses and higher variable compensation expenses, partially offset by lower acquisition-related transaction costs. transaction costs. Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change (1) % Change (1) $ $ 4,025,398 $ 4,025,398 $ 2,389,439 $ 2,389,439 $ 1,635,959 1,635,959 Amortization of Intangibles Amortization of Intangibles Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change Amortization expenses Amortization expenses $ 1,012,572 $ 1,012,572 $ $ 536,811 536,811 $ $ 475,761 475,761 89 % 89 % Amortization expenses as a % of revenue Amortization expenses as a % of revenue 8 % 8 % 7 % 7 % Amortization expenses increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of amortization expense Amortization expenses increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of amortization expense of intangible assets recorded as part of the Acquisition. of intangible assets recorded as part of the Acquisition. Special Charges, Net Special Charges, Net Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change Special charges, net Special charges, net $ $ 274,509 274,509 $ $ 84,456 84,456 $ $ 190,053 190,053 225 % 225 % Special charges, net as a % of revenue Special charges, net as a % of revenue 2 % 2 % 1 % 1 % Special charges, net increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of charges recorded as part Special charges, net increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of charges recorded as part of the integration of Maxim and continued organizational initiatives to better align our global workforce with our long-term of the integration of Maxim and continued organizational initiatives to better align our global workforce with our long-term strategic plan. During the third quarter of fiscal 2022, we transitioned our engineering, sales, marketing and administrative strategic plan. During the third quarter of fiscal 2022, we transitioned our engineering, sales, marketing and administrative activities from a leased property in Santa Clara, California to an owned property in San Jose, California. As a result, we entered activities from a leased property in Santa Clara, California to an owned property in San Jose, California. As a result, we entered into a sublease agreement for a portion of the leased property and recorded an impairment charge of $91.9 million in the third into a sublease agreement for a portion of the leased property and recorded an impairment charge of $91.9 million in the third quarter of fiscal 2022 related to the associated asset group. The remaining charges were for severance and benefit costs as well quarter of fiscal 2022 related to the associated asset group. The remaining charges were for severance and benefit costs as well as charges recorded from the acceleration of equity awards in connection with the termination of certain employees in as charges recorded from the acceleration of equity awards in connection with the termination of certain employees in manufacturing, engineering and SMG&A roles at sites assumed in connection with the Acquisition and various other locations manufacturing, engineering and SMG&A roles at sites assumed in connection with the Acquisition and various other locations throughout the world. throughout the world. Operating Income Operating Income Operating income Operating income Operating income as a % of revenue Operating income as a % of revenue Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 3,278,700 $ 3,278,700 $ 1,692,201 $ 1,692,201 $ $ 1,586,499 1,586,499 94 % 94 % 27.3 % 27.3 % 23.1 % 23.1 % The increase in operating income in fiscal 2022 as compared to fiscal 2021 was primarily the result of a $3,007.5 million The increase in operating income in fiscal 2022 as compared to fiscal 2021 was primarily the result of a $3,007.5 million increase in gross margin, partially offset by a $475.8 million increase in amortization expenses, a $404.4 million increase in increase in gross margin, partially offset by a $475.8 million increase in amortization expenses, a $404.4 million increase in R&D expenses, a $350.8 million increase in SMG&A expenses and a $190.1 million increase in special charges, net as more R&D expenses, a $350.8 million increase in SMG&A expenses and a $190.1 million increase in special charges, net as more fully described above under the headings Gross Margin, Amortization of Intangibles, Research and Development (R&D), fully described above under the headings Gross Margin, Amortization of Intangibles, Research and Development (R&D), Selling, Marketing, General and Administrative (SMG&A) and Special Charges, Net. Selling, Marketing, General and Administrative (SMG&A) and Special Charges, Net. R&D expenses R&D expenses $ 1,700,518 $ 1,700,518 $ 1,296,126 $ 1,296,126 $ $ 404,392 404,392 31 % 31 % R&D expenses as a % of revenue R&D expenses as a % of revenue 14 % 14 % 18 % 18 % Nonoperating (Income) Expense Nonoperating (Income) Expense Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change Total Nonoperating expense Total Nonoperating expense $ $ 179,951 $ 179,951 $ 363,487 $ 363,487 $ (183,536) (183,536) (50) % (50) % The year-over-year decrease in nonoperating expense in fiscal 2022 as compared to fiscal 2021 was primarily the result of The year-over-year decrease in nonoperating expense in fiscal 2022 as compared to fiscal 2021 was primarily the result of a loss on the extinguishment of debt of $215.2 million related to debt transactions in the fourth quarter of fiscal 2021, partially a loss on the extinguishment of debt of $215.2 million related to debt transactions in the fourth quarter of fiscal 2021, partially offset by higher interest expense in fiscal 2022 related to our debt obligations and fewer gains on investments in fiscal 2022. offset by higher interest expense in fiscal 2022 related to our debt obligations and fewer gains on investments in fiscal 2022. 31 31 32 32 United States United States Rest of North and South America Rest of North and South America Europe Europe Japan Japan China China Rest of Asia Rest of Asia Total Revenue Total Revenue 72,497 72,497 2,534,423 2,534,423 1,221,549 1,221,549 2,563,536 2,563,536 1,596,550 1,596,550 42,830 42,830 1,592,989 1,592,989 787,966 787,966 1,614,396 1,614,396 890,666 890,666 29,667 29,667 941,434 941,434 433,583 433,583 949,140 949,140 705,884 705,884 $ $ 12,013,953 $ 12,013,953 $ 7,318,286 $ 7,318,286 $ 4,695,667 4,695,667 68 % 68 % 69 % 69 % 59 % 59 % 55 % 55 % 59 % 59 % 79 % 79 % 64 % 64 % _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. In all periods presented, the predominant countries comprising “Rest of North and South America” are Canada and In all periods presented, the predominant countries comprising “Rest of North and South America” are Canada and Mexico; the predominant countries comprising “Europe” are Germany, Sweden, and the Netherlands; and the predominant Mexico; the predominant countries comprising “Europe” are Germany, Sweden, and the Netherlands; and the predominant countries comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore. countries comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore. Total revenue increased in fiscal 2022 as compared to fiscal 2021 due to the incremental impact of revenue from the Total revenue increased in fiscal 2022 as compared to fiscal 2021 due to the incremental impact of revenue from the Acquisition, broad-based, global demand in the semiconductor industry as well as inflationary price increases. Acquisition, broad-based, global demand in the semiconductor industry as well as inflationary price increases. Gross Margin Gross Margin Gross margin Gross margin Gross margin % Gross margin % Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 7,532,474 $ 7,532,474 $ 4,525,012 $ 4,525,012 $ $ 3,007,462 3,007,462 66 % 66 % 62.7 % 62.7 % 61.8 % 61.8 % Gross margin percentage in fiscal 2022 increased by 90 basis points compared to fiscal 2021 primarily as a result of Gross margin percentage in fiscal 2022 increased by 90 basis points compared to fiscal 2021 primarily as a result of favorable product mix, synergies related to the Acquisition and higher utilization of our factories due to increased customer favorable product mix, synergies related to the Acquisition and higher utilization of our factories due to increased customer demand, partially offset by additional cost of goods sold related to the Acquisition. This additional cost of goods sold related to demand, partially offset by additional cost of goods sold related to the Acquisition. This additional cost of goods sold related to the Acquisition consisted of amortization expense of intangible assets of $857.1 million in fiscal 2022 compared to $155.4 the Acquisition consisted of amortization expense of intangible assets of $857.1 million in fiscal 2022 compared to $155.4 million in fiscal 2021, and nonrecurring fair value adjustments recorded to inventory of $271.4 million in fiscal 2022 compared million in fiscal 2021, and nonrecurring fair value adjustments recorded to inventory of $271.4 million in fiscal 2022 compared to $331.1 million in fiscal 2021. In addition, gross margin percentage in fiscal 2022 included price increases in revenue to to $331.1 million in fiscal 2021. In addition, gross margin percentage in fiscal 2022 included price increases in revenue to offset inflationary cost increases. offset inflationary cost increases. Research and Development (R&D) Research and Development (R&D) Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change R&D expenses increased in fiscal 2022 as compared to fiscal 2021 primarily as a result of the Acquisition. R&D expenses increased in fiscal 2022 as compared to fiscal 2021 primarily as a result of the Acquisition. R&D expenses as a percentage of revenue will fluctuate from year-to-year depending on the amount of revenue and the R&D expenses as a percentage of revenue will fluctuate from year-to-year depending on the amount of revenue and the success of new product development efforts, which we view as critical to our future growth. We expect to continue the success of new product development efforts, which we view as critical to our future growth. We expect to continue the development of innovative technologies and processes for new products. We believe that a continued commitment to R&D is development of innovative technologies and processes for new products. We believe that a continued commitment to R&D is essential to maintain product leadership with our existing products as well as to provide innovative new product offerings. essential to maintain product leadership with our existing products as well as to provide innovative new product offerings. Selling, Marketing, General and Administrative (SMG&A) Selling, Marketing, General and Administrative (SMG&A) SMG&A expenses SMG&A expenses $ 1,266,175 $ 1,266,175 $ $ 915,418 915,418 $ $ 350,757 350,757 38 % 38 % SMG&A expenses as a % of revenue SMG&A expenses as a % of revenue 11 % 11 % 13 % 13 % Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change Provision for (Benefit From) Income Taxes Provision for (Benefit From) Income Taxes Investing Activities Investing Activities Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change Provision for (benefit from) income taxes Provision for (benefit from) income taxes $ $ 350,188 350,188 $ $ (61,708) (61,708) $ $ 411,896 411,896 n/a n/a Effective income tax rate Effective income tax rate 11.3 % 11.3 % (4.6) % (4.6) % Our effective tax rates for fiscal 2022 and fiscal 2021 were below the U.S. statutory rate of 21% due to lower statutory tax Our effective tax rates for fiscal 2022 and fiscal 2021 were below the U.S. statutory rate of 21% due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income. In fiscal 2021, we recorded a net rates applicable to our operations in the foreign jurisdictions in which we earn income. In fiscal 2021, we recorded a net deferred tax benefit of $188.8 million from deferred tax assets related to an intra-entity transfer of intangible assets. Also, our deferred tax benefit of $188.8 million from deferred tax assets related to an intra-entity transfer of intangible assets. Also, our provision for income taxes increased in fiscal 2022 as a result of higher income before taxes primarily related to the provision for income taxes increased in fiscal 2022 as a result of higher income before taxes primarily related to the Acquisition. For fiscal 2022 and fiscal 2021 our pretax income was primarily generated in Ireland at a tax rate of 12.5%. Acquisition. For fiscal 2022 and fiscal 2021 our pretax income was primarily generated in Ireland at a tax rate of 12.5%. Investing cash flows generally consist of capital expenditures, cash used for acquisitions and proceeds from or purchases Investing cash flows generally consist of capital expenditures, cash used for acquisitions and proceeds from or purchases of investments. The change in cash (used for) provided by investing activities during fiscal 2022 as compared to fiscal 2021 of investments. The change in cash (used for) provided by investing activities during fiscal 2022 as compared to fiscal 2021 was primarily the result of cash received from the Acquisition during fiscal 2021, partially offset by an increase in cash used for was primarily the result of cash received from the Acquisition during fiscal 2021, partially offset by an increase in cash used for capital expenditures during fiscal 2022. capital expenditures during fiscal 2022. Financing Activities Financing Activities Financing cash flows consist primarily of payments of dividends to stockholders, repurchases of common stock, issuance Financing cash flows consist primarily of payments of dividends to stockholders, repurchases of common stock, issuance and repayment of debt, and proceeds from the sale of shares of common stock pursuant to employee equity incentive plans. and repayment of debt, and proceeds from the sale of shares of common stock pursuant to employee equity incentive plans. The change in cash used for financing activities during fiscal 2022 as compared to fiscal 2021 was primarily the result of a net The change in cash used for financing activities during fiscal 2022 as compared to fiscal 2021 was primarily the result of a net decrease in debt in fiscal 2022 as compared to a net increase in debt in fiscal 2021, as well as higher dividend payments, decrease in debt in fiscal 2022 as compared to a net increase in debt in fiscal 2021, as well as higher dividend payments, See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report partially offset by lower common stock repurchases. partially offset by lower common stock repurchases. on Form 10-K for further discussion. on Form 10-K for further discussion. Net Income Net Income Net income Net income Net income, as a % of revenue Net income, as a % of revenue Diluted EPS Diluted EPS Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 22.9 % 22.9 % 5.25 5.25 $ $ 19.0 % 19.0 % 3.46 3.46 $ $ $ $ $ $ 1,358,139 1,358,139 1.79 1.79 98 % 98 % 52 % 52 % The increase in net income in fiscal 2022 as compared to fiscal 2021 was a result of a $1,586.5 million increase in The increase in net income in fiscal 2022 as compared to fiscal 2021 was a result of a $1,586.5 million increase in operating income and a $183.5 million decrease in nonoperating expense, partially offset by a $411.9 million increase in operating income and a $183.5 million decrease in nonoperating expense, partially offset by a $411.9 million increase in provision for income taxes, as more fully described above under the headings Operating Income, Nonoperating (Income) provision for income taxes, as more fully described above under the headings Operating Income, Nonoperating (Income) Expense, and Provision for (Benefit From) Income Taxes. Expense, and Provision for (Benefit From) Income Taxes. Liquidity and Capital Resources Liquidity and Capital Resources At October 29, 2022, our principal source of liquidity was $1,470.6 million of cash and cash equivalents, of which At October 29, 2022, our principal source of liquidity was $1,470.6 million of cash and cash equivalents, of which approximately $307.4 million was held in the United States and the balance of our cash and cash equivalents was held outside approximately $307.4 million was held in the United States and the balance of our cash and cash equivalents was held outside the United States in various foreign subsidiaries. We manage our worldwide cash requirements by, among other things, the United States in various foreign subsidiaries. We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States. We do not expect current regulatory restrictions or taxes on repatriation to have a material adverse effect on the United States. We do not expect current regulatory restrictions or taxes on repatriation to have a material adverse effect on our overall liquidity, financial condition or results of operations. Our cash and cash equivalents consist of highly liquid our overall liquidity, financial condition or results of operations. Our cash and cash equivalents consist of highly liquid investments with maturities of three months or less, including money market funds. We maintain these balances with high investments with maturities of three months or less, including money market funds. We maintain these balances with high credit quality counterparties, continually monitor the amount of credit exposure to any one issuer and diversify our investments credit quality counterparties, continually monitor the amount of credit exposure to any one issuer and diversify our investments in order to minimize our credit risk. in order to minimize our credit risk. We believe that our existing sources of liquidity and cash expected to be generated from future operations, together with We believe that our existing sources of liquidity and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing, will be sufficient to fund operations, capital expenditures, existing and anticipated available short- and long-term financing, will be sufficient to fund operations, capital expenditures, research and development efforts and dividend payments (if any) in the immediate future and for at least the next twelve research and development efforts and dividend payments (if any) in the immediate future and for at least the next twelve months. months. Net cash provided by operating activities Net cash provided by operating activities Net cash provided by operating activities as a % of revenue Net cash provided by operating activities as a % of revenue Net cash (used for) provided by investing activities Net cash (used for) provided by investing activities Net cash used for financing activities Net cash used for financing activities Fiscal Year Fiscal Year 2022 2022 4,475,402 4,475,402 37 % 37 % (657,368) (657,368) (4,290,720) (4,290,720) $ $ $ $ $ $ 2021 2021 2,735,069 2,735,069 37 % 37 % 2,143,525 2,143,525 (3,959,664) (3,959,664) $ $ $ $ $ $ The following changes contributed to the net change in cash and cash equivalents from fiscal 2021 to fiscal 2022. The following changes contributed to the net change in cash and cash equivalents from fiscal 2021 to fiscal 2022. Operating Activities Operating Activities Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities. The increase in cash provided by operating activities during fiscal 2022 as compared to fiscal 2021 was primarily a liabilities. The increase in cash provided by operating activities during fiscal 2022 as compared to fiscal 2021 was primarily a result of higher net income adjusted for noncash items offset by changes in working capital. result of higher net income adjusted for noncash items offset by changes in working capital. Working Capital Working Capital Accounts receivable, net Accounts receivable, net Days sales outstanding (1) Days sales outstanding (1) Inventory Inventory Days cost of sales in inventory (1) Days cost of sales in inventory (1) _______________________________________ _______________________________________ Fiscal Year Fiscal Year 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 1,800,462 $ 1,459,056 $ 341,406 $ 1,800,462 $ 1,459,056 $ 341,406 23 % 23 % $ 1,399,914 $ 1,200,610 $ 199,304 $ 1,399,914 $ 1,200,610 $ 199,304 17 % 17 % 50 50 52 52 106 106 118 118 (1) We use the average of the current year and prior year ending net accounts receivable and ending inventory balance in our calculation of (1) We use the average of the current year and prior year ending net accounts receivable and ending inventory balance in our calculation of days sales outstanding and days cost of sales in inventory, respectively. Cost of sales amounts used in the calculation of days cost of days sales outstanding and days cost of sales in inventory, respectively. Cost of sales amounts used in the calculation of days cost of sales in inventory include Acquisition accounting adjustments related to the sale of acquired inventory written up to fair value, sales in inventory include Acquisition accounting adjustments related to the sale of acquired inventory written up to fair value, amortization of developed technology intangible assets acquired and depreciation related to the write-up of fixed assets to fair value. amortization of developed technology intangible assets acquired and depreciation related to the write-up of fixed assets to fair value. The calculations above include the financial results of Maxim prospectively from the Acquisition Date. The calculations above include the financial results of Maxim prospectively from the Acquisition Date. The increase in accounts receivable for fiscal 2022 compared to fiscal 2021 was primarily the result of variations in the The increase in accounts receivable for fiscal 2022 compared to fiscal 2021 was primarily the result of variations in the timing of collections and billings and increased revenue levels. timing of collections and billings and increased revenue levels. Inventory increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of our efforts to balance Inventory increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of our efforts to balance manufacturing production, demand and inventory levels. Our inventory levels are impacted by our need to support forecasted manufacturing production, demand and inventory levels. Our inventory levels are impacted by our need to support forecasted sales demand and variations between those forecasts and actual demand. As of October 30, 2021, our inventory balance also sales demand and variations between those forecasts and actual demand. As of October 30, 2021, our inventory balance also included additional costs related to the Acquisition as a result of accounting for acquired inventory at fair-value. included additional costs related to the Acquisition as a result of accounting for acquired inventory at fair-value. Current liabilities decreased to $2,442.7 million at October 29, 2022 from $2,770.3 million recorded at the end of fiscal Current liabilities decreased to $2,442.7 million at October 29, 2022 from $2,770.3 million recorded at the end of fiscal 2021, primarily due to early termination of debt, partially offset by higher accounts payable and accruals. 2021, primarily due to early termination of debt, partially offset by higher accounts payable and accruals. Revolving Credit Facility Revolving Credit Facility Our Third Amended and Restated Revolving Credit Agreement, dated as of June 23, 2021, with Bank of America N.A. as Our Third Amended and Restated Revolving Credit Agreement, dated as of June 23, 2021, with Bank of America N.A. as administrative agent and the other banks identified therein as lenders (Revolving Credit Agreement) amended and restated our administrative agent and the other banks identified therein as lenders (Revolving Credit Agreement) amended and restated our Second Amended and Restated Credit Agreement dated as of June 28, 2019 and provides for a five year unsecured revolving Second Amended and Restated Credit Agreement dated as of June 28, 2019 and provides for a five year unsecured revolving credit facility in an aggregate principal amount not to exceed $2.5 billion (subject to certain terms and conditions). credit facility in an aggregate principal amount not to exceed $2.5 billion (subject to certain terms and conditions). We may borrow under this revolving credit facility in the future and use the proceeds for repayment of existing We may borrow under this revolving credit facility in the future and use the proceeds for repayment of existing indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes. The indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes. The terms of the Revolving Credit Agreement impose restrictions on our ability to undertake certain transactions, to create certain terms of the Revolving Credit Agreement impose restrictions on our ability to undertake certain transactions, to create certain liens on assets and to incur certain subsidiary indebtedness. In addition, the Revolving Credit Agreement contains a liens on assets and to incur certain subsidiary indebtedness. In addition, the Revolving Credit Agreement contains a consolidated leverage ratio covenant of total consolidated funded debt to consolidated earnings before interest, taxes, consolidated leverage ratio covenant of total consolidated funded debt to consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) of not greater than 3.5 to 1.0. As of October 29, 2022, we were in compliance with depreciation, and amortization (EBITDA) of not greater than 3.5 to 1.0. As of October 29, 2022, we were in compliance with these covenants. See Note 13, Revolving Credit Facility, of the Notes to Consolidated Financial Statements contained in Item 8 these covenants. See Note 13, Revolving Credit Facility, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further information on our revolving credit facility. of this Annual Report on Form 10-K for further information on our revolving credit facility. 33 33 34 34 Provision for (Benefit From) Income Taxes Provision for (Benefit From) Income Taxes Investing Activities Investing Activities Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change Provision for (benefit from) income taxes Provision for (benefit from) income taxes $ $ 350,188 350,188 $ $ (61,708) (61,708) $ $ 411,896 411,896 n/a n/a Effective income tax rate Effective income tax rate 11.3 % 11.3 % (4.6) % (4.6) % Our effective tax rates for fiscal 2022 and fiscal 2021 were below the U.S. statutory rate of 21% due to lower statutory tax Our effective tax rates for fiscal 2022 and fiscal 2021 were below the U.S. statutory rate of 21% due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income. In fiscal 2021, we recorded a net rates applicable to our operations in the foreign jurisdictions in which we earn income. In fiscal 2021, we recorded a net deferred tax benefit of $188.8 million from deferred tax assets related to an intra-entity transfer of intangible assets. Also, our deferred tax benefit of $188.8 million from deferred tax assets related to an intra-entity transfer of intangible assets. Also, our provision for income taxes increased in fiscal 2022 as a result of higher income before taxes primarily related to the provision for income taxes increased in fiscal 2022 as a result of higher income before taxes primarily related to the Acquisition. For fiscal 2022 and fiscal 2021 our pretax income was primarily generated in Ireland at a tax rate of 12.5%. Acquisition. For fiscal 2022 and fiscal 2021 our pretax income was primarily generated in Ireland at a tax rate of 12.5%. See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report Investing cash flows generally consist of capital expenditures, cash used for acquisitions and proceeds from or purchases Investing cash flows generally consist of capital expenditures, cash used for acquisitions and proceeds from or purchases of investments. The change in cash (used for) provided by investing activities during fiscal 2022 as compared to fiscal 2021 of investments. The change in cash (used for) provided by investing activities during fiscal 2022 as compared to fiscal 2021 was primarily the result of cash received from the Acquisition during fiscal 2021, partially offset by an increase in cash used for was primarily the result of cash received from the Acquisition during fiscal 2021, partially offset by an increase in cash used for capital expenditures during fiscal 2022. capital expenditures during fiscal 2022. Financing Activities Financing Activities Financing cash flows consist primarily of payments of dividends to stockholders, repurchases of common stock, issuance Financing cash flows consist primarily of payments of dividends to stockholders, repurchases of common stock, issuance and repayment of debt, and proceeds from the sale of shares of common stock pursuant to employee equity incentive plans. and repayment of debt, and proceeds from the sale of shares of common stock pursuant to employee equity incentive plans. The change in cash used for financing activities during fiscal 2022 as compared to fiscal 2021 was primarily the result of a net The change in cash used for financing activities during fiscal 2022 as compared to fiscal 2021 was primarily the result of a net decrease in debt in fiscal 2022 as compared to a net increase in debt in fiscal 2021, as well as higher dividend payments, decrease in debt in fiscal 2022 as compared to a net increase in debt in fiscal 2021, as well as higher dividend payments, partially offset by lower common stock repurchases. partially offset by lower common stock repurchases. on Form 10-K for further discussion. on Form 10-K for further discussion. Net Income Net Income Net income Net income Diluted EPS Diluted EPS Net income, as a % of revenue Net income, as a % of revenue Fiscal Year Fiscal Year 2022 over 2021 2022 over 2021 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 1,358,139 1,358,139 $ $ $ $ 19.0 % 19.0 % 3.46 3.46 1.79 1.79 98 % 98 % 52 % 52 % 22.9 % 22.9 % $ $ 5.25 5.25 $ $ The increase in net income in fiscal 2022 as compared to fiscal 2021 was a result of a $1,586.5 million increase in The increase in net income in fiscal 2022 as compared to fiscal 2021 was a result of a $1,586.5 million increase in operating income and a $183.5 million decrease in nonoperating expense, partially offset by a $411.9 million increase in operating income and a $183.5 million decrease in nonoperating expense, partially offset by a $411.9 million increase in provision for income taxes, as more fully described above under the headings Operating Income, Nonoperating (Income) provision for income taxes, as more fully described above under the headings Operating Income, Nonoperating (Income) Expense, and Provision for (Benefit From) Income Taxes. Expense, and Provision for (Benefit From) Income Taxes. Liquidity and Capital Resources Liquidity and Capital Resources At October 29, 2022, our principal source of liquidity was $1,470.6 million of cash and cash equivalents, of which At October 29, 2022, our principal source of liquidity was $1,470.6 million of cash and cash equivalents, of which approximately $307.4 million was held in the United States and the balance of our cash and cash equivalents was held outside approximately $307.4 million was held in the United States and the balance of our cash and cash equivalents was held outside the United States in various foreign subsidiaries. We manage our worldwide cash requirements by, among other things, the United States in various foreign subsidiaries. We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States. We do not expect current regulatory restrictions or taxes on repatriation to have a material adverse effect on the United States. We do not expect current regulatory restrictions or taxes on repatriation to have a material adverse effect on our overall liquidity, financial condition or results of operations. Our cash and cash equivalents consist of highly liquid our overall liquidity, financial condition or results of operations. Our cash and cash equivalents consist of highly liquid investments with maturities of three months or less, including money market funds. We maintain these balances with high investments with maturities of three months or less, including money market funds. We maintain these balances with high credit quality counterparties, continually monitor the amount of credit exposure to any one issuer and diversify our investments credit quality counterparties, continually monitor the amount of credit exposure to any one issuer and diversify our investments in order to minimize our credit risk. in order to minimize our credit risk. We believe that our existing sources of liquidity and cash expected to be generated from future operations, together with We believe that our existing sources of liquidity and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing, will be sufficient to fund operations, capital expenditures, existing and anticipated available short- and long-term financing, will be sufficient to fund operations, capital expenditures, research and development efforts and dividend payments (if any) in the immediate future and for at least the next twelve research and development efforts and dividend payments (if any) in the immediate future and for at least the next twelve months. months. Net cash provided by operating activities Net cash provided by operating activities Net cash provided by operating activities as a % of revenue Net cash provided by operating activities as a % of revenue Net cash (used for) provided by investing activities Net cash (used for) provided by investing activities Net cash used for financing activities Net cash used for financing activities Fiscal Year Fiscal Year 2022 2022 4,475,402 4,475,402 37 % 37 % (657,368) (657,368) (4,290,720) (4,290,720) $ $ $ $ $ $ 2021 2021 2,735,069 2,735,069 37 % 37 % 2,143,525 2,143,525 (3,959,664) (3,959,664) $ $ $ $ $ $ The following changes contributed to the net change in cash and cash equivalents from fiscal 2021 to fiscal 2022. The following changes contributed to the net change in cash and cash equivalents from fiscal 2021 to fiscal 2022. Operating Activities Operating Activities Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities. The increase in cash provided by operating activities during fiscal 2022 as compared to fiscal 2021 was primarily a liabilities. The increase in cash provided by operating activities during fiscal 2022 as compared to fiscal 2021 was primarily a result of higher net income adjusted for noncash items offset by changes in working capital. result of higher net income adjusted for noncash items offset by changes in working capital. Working Capital Working Capital Accounts receivable, net Accounts receivable, net Days sales outstanding (1) Days sales outstanding (1) Inventory Inventory Days cost of sales in inventory (1) Days cost of sales in inventory (1) Fiscal Year Fiscal Year 2022 2022 2021 2021 $ Change $ Change % Change % Change $ 1,800,462 $ 1,459,056 $ 341,406 $ 1,800,462 $ 1,459,056 $ 341,406 23 % 23 % 50 50 52 52 $ 1,399,914 $ 1,200,610 $ 199,304 $ 1,399,914 $ 1,200,610 $ 199,304 17 % 17 % 106 106 118 118 _______________________________________ _______________________________________ (1) We use the average of the current year and prior year ending net accounts receivable and ending inventory balance in our calculation of (1) We use the average of the current year and prior year ending net accounts receivable and ending inventory balance in our calculation of days sales outstanding and days cost of sales in inventory, respectively. Cost of sales amounts used in the calculation of days cost of days sales outstanding and days cost of sales in inventory, respectively. Cost of sales amounts used in the calculation of days cost of sales in inventory include Acquisition accounting adjustments related to the sale of acquired inventory written up to fair value, sales in inventory include Acquisition accounting adjustments related to the sale of acquired inventory written up to fair value, amortization of developed technology intangible assets acquired and depreciation related to the write-up of fixed assets to fair value. amortization of developed technology intangible assets acquired and depreciation related to the write-up of fixed assets to fair value. The calculations above include the financial results of Maxim prospectively from the Acquisition Date. The calculations above include the financial results of Maxim prospectively from the Acquisition Date. The increase in accounts receivable for fiscal 2022 compared to fiscal 2021 was primarily the result of variations in the The increase in accounts receivable for fiscal 2022 compared to fiscal 2021 was primarily the result of variations in the timing of collections and billings and increased revenue levels. timing of collections and billings and increased revenue levels. Inventory increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of our efforts to balance Inventory increased in fiscal 2022 as compared to fiscal 2021, primarily as a result of our efforts to balance manufacturing production, demand and inventory levels. Our inventory levels are impacted by our need to support forecasted manufacturing production, demand and inventory levels. Our inventory levels are impacted by our need to support forecasted sales demand and variations between those forecasts and actual demand. As of October 30, 2021, our inventory balance also sales demand and variations between those forecasts and actual demand. As of October 30, 2021, our inventory balance also included additional costs related to the Acquisition as a result of accounting for acquired inventory at fair-value. included additional costs related to the Acquisition as a result of accounting for acquired inventory at fair-value. Current liabilities decreased to $2,442.7 million at October 29, 2022 from $2,770.3 million recorded at the end of fiscal Current liabilities decreased to $2,442.7 million at October 29, 2022 from $2,770.3 million recorded at the end of fiscal 2021, primarily due to early termination of debt, partially offset by higher accounts payable and accruals. 2021, primarily due to early termination of debt, partially offset by higher accounts payable and accruals. Revolving Credit Facility Revolving Credit Facility Our Third Amended and Restated Revolving Credit Agreement, dated as of June 23, 2021, with Bank of America N.A. as Our Third Amended and Restated Revolving Credit Agreement, dated as of June 23, 2021, with Bank of America N.A. as administrative agent and the other banks identified therein as lenders (Revolving Credit Agreement) amended and restated our administrative agent and the other banks identified therein as lenders (Revolving Credit Agreement) amended and restated our Second Amended and Restated Credit Agreement dated as of June 28, 2019 and provides for a five year unsecured revolving Second Amended and Restated Credit Agreement dated as of June 28, 2019 and provides for a five year unsecured revolving credit facility in an aggregate principal amount not to exceed $2.5 billion (subject to certain terms and conditions). credit facility in an aggregate principal amount not to exceed $2.5 billion (subject to certain terms and conditions). We may borrow under this revolving credit facility in the future and use the proceeds for repayment of existing We may borrow under this revolving credit facility in the future and use the proceeds for repayment of existing indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes. The indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes. The terms of the Revolving Credit Agreement impose restrictions on our ability to undertake certain transactions, to create certain terms of the Revolving Credit Agreement impose restrictions on our ability to undertake certain transactions, to create certain liens on assets and to incur certain subsidiary indebtedness. In addition, the Revolving Credit Agreement contains a liens on assets and to incur certain subsidiary indebtedness. In addition, the Revolving Credit Agreement contains a consolidated leverage ratio covenant of total consolidated funded debt to consolidated earnings before interest, taxes, consolidated leverage ratio covenant of total consolidated funded debt to consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) of not greater than 3.5 to 1.0. As of October 29, 2022, we were in compliance with depreciation, and amortization (EBITDA) of not greater than 3.5 to 1.0. As of October 29, 2022, we were in compliance with these covenants. See Note 13, Revolving Credit Facility, of the Notes to Consolidated Financial Statements contained in Item 8 these covenants. See Note 13, Revolving Credit Facility, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further information on our revolving credit facility. of this Annual Report on Form 10-K for further information on our revolving credit facility. 33 33 34 34 Debt Debt As of October 29, 2022, we had approximately $6.5 billion of carrying value outstanding on our debt. The difference in As of October 29, 2022, we had approximately $6.5 billion of carrying value outstanding on our debt. The difference in the carrying value of the debt and the principal is due to the unamortized discount and issuance fees and other adjustments on the carrying value of the debt and the principal is due to the unamortized discount and issuance fees and other adjustments on these instruments. The indentures governing certain of our debt instruments contain covenants that may limit our ability to: these instruments. The indentures governing certain of our debt instruments contain covenants that may limit our ability to: incur, create, assume or guarantee any debt or borrowed money secured by a lien upon a principal property; enter into sale and incur, create, assume or guarantee any debt or borrowed money secured by a lien upon a principal property; enter into sale and lease-back transactions with respect to a principal property; and consolidate with or merge into, or transfer or lease all or lease-back transactions with respect to a principal property; and consolidate with or merge into, or transfer or lease all or substantially all of our assets to, any other party. As of October 29, 2022, we were compliant with these covenants. See Note substantially all of our assets to, any other party. As of October 29, 2022, we were compliant with these covenants. See Note 14, Debt of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further 14, Debt of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further information on our outstanding debt. information on our outstanding debt. Stock Repurchase Program Stock Repurchase Program Our common stock repurchase program has been in place since August 2004. Since inception, our Board of Directors has Our common stock repurchase program has been in place since August 2004. Since inception, our Board of Directors has authorized us to repurchase $16.7 billion of our common stock under the program, which includes the $8.5 billion authorization authorized us to repurchase $16.7 billion of our common stock under the program, which includes the $8.5 billion authorization approved by the Board of Directors on August 25, 2021. Under the program, we may repurchase outstanding shares of our approved by the Board of Directors on August 25, 2021. Under the program, we may repurchase outstanding shares of our common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized under resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized under the program. the program. As of October 29, 2022, $4.9 billion remained available for repurchase under the current authorized program. The As of October 29, 2022, $4.9 billion remained available for repurchase under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. We also repurchase shares in settlement of repurchased shares are held as authorized but unissued shares of common stock. We also repurchase shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options. employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options. Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity, and Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity, and other factors we deem relevant. other factors we deem relevant. Capital Expenditures Capital Expenditures Net additions to property, plant and equipment were $699.3 million in fiscal 2022 and were funded with a combination of Net additions to property, plant and equipment were $699.3 million in fiscal 2022 and were funded with a combination of cash on hand and cash generated from operations. We expect capital expenditures for fiscal 2023 to be between 6% and 8% of cash on hand and cash generated from operations. We expect capital expenditures for fiscal 2023 to be between 6% and 8% of revenue, which is above our historical levels primarily due to our plans to continue to expand internal manufacturing capacity. revenue, which is above our historical levels primarily due to our plans to continue to expand internal manufacturing capacity. These capital expenditures will be funded with a combination of cash on hand and cash expected to be generated from future These capital expenditures will be funded with a combination of cash on hand and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing. operations, together with existing and anticipated available short- and long-term financing. Dividends Dividends On November 21, 2022, our Board of Directors declared a cash dividend of $0.76 per outstanding share of common On November 21, 2022, our Board of Directors declared a cash dividend of $0.76 per outstanding share of common stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, 2022 and is expected to total approximately $387.1 million. We currently expect quarterly dividends to continue in future 2022 and is expected to total approximately $387.1 million. We currently expect quarterly dividends to continue in future periods, although they remain subject to determination and declaration by our Board of Directors. The payment of future periods, although they remain subject to determination and declaration by our Board of Directors. The payment of future dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. Contractual Obligations Contractual Obligations The table below summarizes our material contractual obligations in specified periods as of October 29, 2022: The table below summarizes our material contractual obligations in specified periods as of October 29, 2022: (thousands) (thousands) Debt obligations (1) Debt obligations (1) Payment due by period Payment due by period Less than Less than More than More than Total Total 1 Year 1 Year 1-3 Years 1-3 Years 3-5 Years 3-5 Years 5 Years 5 Years $ 6,576,865 $ $ 6,576,865 $ — $ 900,000 $ 1,400,000 $ 4,276,865 — $ 900,000 $ 1,400,000 $ 4,276,865 Interest payments associated with debt obligations Interest payments associated with debt obligations 2,446,434 2,446,434 198,459 198,459 Transition tax (2) Transition tax (2) Operating leases (3) Operating leases (3) Inventory-related purchase commitments (4) Inventory-related purchase commitments (4) 656,070 656,070 454,543 454,543 127,008 127,008 31,199 31,199 428,352 428,352 130,069 130,069 373,706 373,706 529,062 529,062 131,498 131,498 168,817 168,817 323,989 323,989 1,550,280 1,550,280 — — 113,183 113,183 64,364 64,364 — — 178,663 178,663 65,102 65,102 Total Total $ 10,562,264 $ 486,735 $ 2,103,083 $ 1,901,536 $ 6,070,910 $ 10,562,264 $ 486,735 $ 2,103,083 $ 1,901,536 $ 6,070,910 _______________________________________ _______________________________________ (1) Debt obligations are assumed to be held to maturity. (1) Debt obligations are assumed to be held to maturity. (2) Tax obligation relates to the one-time tax on deemed repatriated earnings under the Tax Cuts and Jobs Act of 2017 enacted in fiscal (2) Tax obligation relates to the one-time tax on deemed repatriated earnings under the Tax Cuts and Jobs Act of 2017 enacted in fiscal 2018. 2018. (3) Certain of our operating lease obligations include escalation clauses. These escalating payment requirements are reflected in the table. (3) Certain of our operating lease obligations include escalation clauses. These escalating payment requirements are reflected in the table. (4) We have supplier commitments for the purchase of materials and supplies in advance or with minimum purchase quantities. (4) We have supplier commitments for the purchase of materials and supplies in advance or with minimum purchase quantities. As of October 29, 2022, our total liabilities associated with uncertain tax positions was $194.4 million, which are As of October 29, 2022, our total liabilities associated with uncertain tax positions was $194.4 million, which are included in non-current income taxes payable in our Consolidated Balance Sheets contained in Item 8 of this Annual Report on included in non-current income taxes payable in our Consolidated Balance Sheets contained in Item 8 of this Annual Report on Form 10-K. Due to the complexity associated with our tax uncertainties, we cannot make a reasonably reliable estimate of the Form 10-K. Due to the complexity associated with our tax uncertainties, we cannot make a reasonably reliable estimate of the period in which we expect to settle the non-current liabilities associated with these uncertain tax positions. Therefore, we have period in which we expect to settle the non-current liabilities associated with these uncertain tax positions. Therefore, we have not included these uncertain tax positions in the above contractual obligations table. not included these uncertain tax positions in the above contractual obligations table. New Accounting Pronouncements New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) and From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) and are adopted by us as of the specified effective date. Unless otherwise discussed, management believes that the impact of are adopted by us as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards will not have a material impact on our future financial condition and results of operations. See Note recently issued standards will not have a material impact on our future financial condition and results of operations. See Note 2s, New Accounting Pronouncements, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual 2s, New Accounting Pronouncements, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for a description of recently issued and adopted accounting pronouncements, including the dates of Report on Form 10-K for a description of recently issued and adopted accounting pronouncements, including the dates of adoption and impact on our historical financial condition and results of operations. adoption and impact on our historical financial condition and results of operations. Critical Accounting Policies and Estimates Critical Accounting Policies and Estimates Management’s discussion and analysis of the financial condition and results of operations is based upon the Consolidated Management’s discussion and analysis of the financial condition and results of operations is based upon the Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future based on available information. We consider the following of current conditions and beliefs of what could occur in the future based on available information. We consider the following accounting policies to be both those most important to the portrayal of our financial condition and those that require the most accounting policies to be both those most important to the portrayal of our financial condition and those that require the most subjective judgment. If actual results differ significantly from management’s estimates and projections, there could be a subjective judgment. If actual results differ significantly from management’s estimates and projections, there could be a material effect on our financial statements. We also have other policies that we consider key accounting policies; however, the material effect on our financial statements. We also have other policies that we consider key accounting policies; however, the application of these policies does not require us to make significant estimates or judgments that are difficult or subjective. application of these policies does not require us to make significant estimates or judgments that are difficult or subjective. Revenue Recognition Revenue Recognition Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services. We recognize the consideration to which the providing entity expects to be entitled in exchange for those goods or services. We recognize revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration that revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration that we expect to receive in exchange for those products or services. We recognize revenue when all of the following criteria are we expect to receive in exchange for those products or services. We recognize revenue when all of the following criteria are met: (1) we have entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction met: (1) we have entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied. The majority of our shipping terms permit us to recognize contract, and (5) the performance obligations have been satisfied. The majority of our shipping terms permit us to recognize revenue at point of shipment or delivery. Certain shipping terms require the goods to be through customs or be received by the revenue at point of shipment or delivery. Certain shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, we defer the revenue recognized until title has passed. Shipping costs are customer before title passes. In those instances, we defer the revenue recognized until title has passed. Shipping costs are charged to selling, marketing, general and administrative expense as incurred. Sales taxes are excluded from revenue. charged to selling, marketing, general and administrative expense as incurred. Sales taxes are excluded from revenue. Revenue from contracts with the United States government, government prime contractors and certain commercial Revenue from contracts with the United States government, government prime contractors and certain commercial customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward completion. These measures are used to measure results directly and is generally the best measure of progress toward completion. These measures are used to measure results directly and is generally the best measure of progress toward completion in circumstances in which a reliable measure of output can be established. Estimated revenue in excess of amounts completion in circumstances in which a reliable measure of output can be established. Estimated revenue in excess of amounts billed is reported as unbilled receivables. Contract accounting requires judgment in estimating costs and assumptions related to billed is reported as unbilled receivables. Contract accounting requires judgment in estimating costs and assumptions related to technical issues and delivery schedule. Contract costs include material, subcontract costs, labor and an allocation of indirect technical issues and delivery schedule. Contract costs include material, subcontract costs, labor and an allocation of indirect costs. The estimation of costs at completion of a contract is subject to numerous variables involving contract costs and estimates costs. The estimation of costs at completion of a contract is subject to numerous variables involving contract costs and estimates as to the length of time to complete the contract. Changes in contract performance, estimated gross margin, including the impact as to the length of time to complete the contract. Changes in contract performance, estimated gross margin, including the impact of final contract settlements, and estimated losses are recognized in the period in which the changes or losses are determined. of final contract settlements, and estimated losses are recognized in the period in which the changes or losses are determined. Performance Obligations: Substantially all of our contracts with customers contain a single performance obligation, the Performance Obligations: Substantially all of our contracts with customers contain a single performance obligation, the sale of mixed-signal integrated circuit (IC) products. Such sales represent a single performance obligation because the sale is sale of mixed-signal integrated circuit (IC) products. Such sales represent a single performance obligation because the sale is one type of good or includes multiple goods that are neither capable of being distinct nor separable from the other promises in one type of good or includes multiple goods that are neither capable of being distinct nor separable from the other promises in the contract. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs the contract. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs upon shipment or delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery upon shipment or delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates and with an original expected duration of one year or less. We generally warrant that our products will meet their dates and with an original expected duration of one year or less. We generally warrant that our products will meet their published specifications, and that we will repair or replace defective products, for one year from the date title passes from us to published specifications, and that we will repair or replace defective products, for one year from the date title passes from us to the customer. Specific accruals are recorded for known product warranty issues. the customer. Specific accruals are recorded for known product warranty issues. Transaction Price: The transaction price reflects our expectations about the consideration we will be entitled to receive Transaction Price: The transaction price reflects our expectations about the consideration we will be entitled to receive from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to direct customers from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to direct customers and sales to distributors in which both the sale to the distributor and the sale to the end customer occur within the same and sales to distributors in which both the sale to the distributor and the sale to the end customer occur within the same reporting period. Variable consideration includes sales in which the amount of consideration that we will receive is unknown as reporting period. Variable consideration includes sales in which the amount of consideration that we will receive is unknown as 35 35 36 36 Debt Debt As of October 29, 2022, we had approximately $6.5 billion of carrying value outstanding on our debt. The difference in As of October 29, 2022, we had approximately $6.5 billion of carrying value outstanding on our debt. The difference in the carrying value of the debt and the principal is due to the unamortized discount and issuance fees and other adjustments on the carrying value of the debt and the principal is due to the unamortized discount and issuance fees and other adjustments on these instruments. The indentures governing certain of our debt instruments contain covenants that may limit our ability to: these instruments. The indentures governing certain of our debt instruments contain covenants that may limit our ability to: incur, create, assume or guarantee any debt or borrowed money secured by a lien upon a principal property; enter into sale and incur, create, assume or guarantee any debt or borrowed money secured by a lien upon a principal property; enter into sale and lease-back transactions with respect to a principal property; and consolidate with or merge into, or transfer or lease all or lease-back transactions with respect to a principal property; and consolidate with or merge into, or transfer or lease all or substantially all of our assets to, any other party. As of October 29, 2022, we were compliant with these covenants. See Note substantially all of our assets to, any other party. As of October 29, 2022, we were compliant with these covenants. See Note 14, Debt of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further 14, Debt of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further information on our outstanding debt. information on our outstanding debt. Stock Repurchase Program Stock Repurchase Program Our common stock repurchase program has been in place since August 2004. Since inception, our Board of Directors has Our common stock repurchase program has been in place since August 2004. Since inception, our Board of Directors has authorized us to repurchase $16.7 billion of our common stock under the program, which includes the $8.5 billion authorization authorized us to repurchase $16.7 billion of our common stock under the program, which includes the $8.5 billion authorization approved by the Board of Directors on August 25, 2021. Under the program, we may repurchase outstanding shares of our approved by the Board of Directors on August 25, 2021. Under the program, we may repurchase outstanding shares of our common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized under resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized under the program. the program. As of October 29, 2022, $4.9 billion remained available for repurchase under the current authorized program. The As of October 29, 2022, $4.9 billion remained available for repurchase under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. We also repurchase shares in settlement of repurchased shares are held as authorized but unissued shares of common stock. We also repurchase shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options. employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options. Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity, and Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity, and other factors we deem relevant. other factors we deem relevant. Capital Expenditures Capital Expenditures Net additions to property, plant and equipment were $699.3 million in fiscal 2022 and were funded with a combination of Net additions to property, plant and equipment were $699.3 million in fiscal 2022 and were funded with a combination of cash on hand and cash generated from operations. We expect capital expenditures for fiscal 2023 to be between 6% and 8% of cash on hand and cash generated from operations. We expect capital expenditures for fiscal 2023 to be between 6% and 8% of revenue, which is above our historical levels primarily due to our plans to continue to expand internal manufacturing capacity. revenue, which is above our historical levels primarily due to our plans to continue to expand internal manufacturing capacity. These capital expenditures will be funded with a combination of cash on hand and cash expected to be generated from future These capital expenditures will be funded with a combination of cash on hand and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing. operations, together with existing and anticipated available short- and long-term financing. On November 21, 2022, our Board of Directors declared a cash dividend of $0.76 per outstanding share of common On November 21, 2022, our Board of Directors declared a cash dividend of $0.76 per outstanding share of common stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, 2022 and is expected to total approximately $387.1 million. We currently expect quarterly dividends to continue in future 2022 and is expected to total approximately $387.1 million. We currently expect quarterly dividends to continue in future periods, although they remain subject to determination and declaration by our Board of Directors. The payment of future periods, although they remain subject to determination and declaration by our Board of Directors. The payment of future dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. The table below summarizes our material contractual obligations in specified periods as of October 29, 2022: The table below summarizes our material contractual obligations in specified periods as of October 29, 2022: Interest payments associated with debt obligations Interest payments associated with debt obligations 2,446,434 2,446,434 198,459 198,459 Payment due by period Payment due by period Less than Less than More than More than Total Total 1 Year 1 Year 1-3 Years 1-3 Years 3-5 Years 3-5 Years 5 Years 5 Years $ 6,576,865 $ $ 6,576,865 $ — $ 900,000 $ 1,400,000 $ 4,276,865 — $ 900,000 $ 1,400,000 $ 4,276,865 656,070 656,070 127,008 127,008 454,543 454,543 31,199 31,199 428,352 428,352 130,069 130,069 373,706 373,706 529,062 529,062 131,498 131,498 168,817 168,817 323,989 323,989 1,550,280 1,550,280 — — — — 113,183 113,183 178,663 178,663 64,364 64,364 65,102 65,102 $ 10,562,264 $ 486,735 $ 2,103,083 $ 1,901,536 $ 6,070,910 $ 10,562,264 $ 486,735 $ 2,103,083 $ 1,901,536 $ 6,070,910 Inventory-related purchase commitments (4) Inventory-related purchase commitments (4) _______________________________________ _______________________________________ (1) Debt obligations are assumed to be held to maturity. (1) Debt obligations are assumed to be held to maturity. (2) Tax obligation relates to the one-time tax on deemed repatriated earnings under the Tax Cuts and Jobs Act of 2017 enacted in fiscal (2) Tax obligation relates to the one-time tax on deemed repatriated earnings under the Tax Cuts and Jobs Act of 2017 enacted in fiscal (3) Certain of our operating lease obligations include escalation clauses. These escalating payment requirements are reflected in the table. (3) Certain of our operating lease obligations include escalation clauses. These escalating payment requirements are reflected in the table. (4) We have supplier commitments for the purchase of materials and supplies in advance or with minimum purchase quantities. (4) We have supplier commitments for the purchase of materials and supplies in advance or with minimum purchase quantities. As of October 29, 2022, our total liabilities associated with uncertain tax positions was $194.4 million, which are As of October 29, 2022, our total liabilities associated with uncertain tax positions was $194.4 million, which are Dividends Dividends Contractual Obligations Contractual Obligations (thousands) (thousands) Debt obligations (1) Debt obligations (1) Transition tax (2) Transition tax (2) Operating leases (3) Operating leases (3) Total Total 2018. 2018. included in non-current income taxes payable in our Consolidated Balance Sheets contained in Item 8 of this Annual Report on included in non-current income taxes payable in our Consolidated Balance Sheets contained in Item 8 of this Annual Report on Form 10-K. Due to the complexity associated with our tax uncertainties, we cannot make a reasonably reliable estimate of the Form 10-K. Due to the complexity associated with our tax uncertainties, we cannot make a reasonably reliable estimate of the period in which we expect to settle the non-current liabilities associated with these uncertain tax positions. Therefore, we have period in which we expect to settle the non-current liabilities associated with these uncertain tax positions. Therefore, we have not included these uncertain tax positions in the above contractual obligations table. not included these uncertain tax positions in the above contractual obligations table. New Accounting Pronouncements New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) and From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) and are adopted by us as of the specified effective date. Unless otherwise discussed, management believes that the impact of are adopted by us as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards will not have a material impact on our future financial condition and results of operations. See Note recently issued standards will not have a material impact on our future financial condition and results of operations. See Note 2s, New Accounting Pronouncements, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual 2s, New Accounting Pronouncements, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for a description of recently issued and adopted accounting pronouncements, including the dates of Report on Form 10-K for a description of recently issued and adopted accounting pronouncements, including the dates of adoption and impact on our historical financial condition and results of operations. adoption and impact on our historical financial condition and results of operations. Critical Accounting Policies and Estimates Critical Accounting Policies and Estimates Management’s discussion and analysis of the financial condition and results of operations is based upon the Consolidated Management’s discussion and analysis of the financial condition and results of operations is based upon the Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future based on available information. We consider the following of current conditions and beliefs of what could occur in the future based on available information. We consider the following accounting policies to be both those most important to the portrayal of our financial condition and those that require the most accounting policies to be both those most important to the portrayal of our financial condition and those that require the most subjective judgment. If actual results differ significantly from management’s estimates and projections, there could be a subjective judgment. If actual results differ significantly from management’s estimates and projections, there could be a material effect on our financial statements. We also have other policies that we consider key accounting policies; however, the material effect on our financial statements. We also have other policies that we consider key accounting policies; however, the application of these policies does not require us to make significant estimates or judgments that are difficult or subjective. application of these policies does not require us to make significant estimates or judgments that are difficult or subjective. Revenue Recognition Revenue Recognition Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services. We recognize the consideration to which the providing entity expects to be entitled in exchange for those goods or services. We recognize revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration that revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration that we expect to receive in exchange for those products or services. We recognize revenue when all of the following criteria are we expect to receive in exchange for those products or services. We recognize revenue when all of the following criteria are met: (1) we have entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction met: (1) we have entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied. The majority of our shipping terms permit us to recognize contract, and (5) the performance obligations have been satisfied. The majority of our shipping terms permit us to recognize revenue at point of shipment or delivery. Certain shipping terms require the goods to be through customs or be received by the revenue at point of shipment or delivery. Certain shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, we defer the revenue recognized until title has passed. Shipping costs are customer before title passes. In those instances, we defer the revenue recognized until title has passed. Shipping costs are charged to selling, marketing, general and administrative expense as incurred. Sales taxes are excluded from revenue. charged to selling, marketing, general and administrative expense as incurred. Sales taxes are excluded from revenue. Revenue from contracts with the United States government, government prime contractors and certain commercial Revenue from contracts with the United States government, government prime contractors and certain commercial customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward completion. These measures are used to measure results directly and is generally the best measure of progress toward completion. These measures are used to measure results directly and is generally the best measure of progress toward completion in circumstances in which a reliable measure of output can be established. Estimated revenue in excess of amounts completion in circumstances in which a reliable measure of output can be established. Estimated revenue in excess of amounts billed is reported as unbilled receivables. Contract accounting requires judgment in estimating costs and assumptions related to billed is reported as unbilled receivables. Contract accounting requires judgment in estimating costs and assumptions related to technical issues and delivery schedule. Contract costs include material, subcontract costs, labor and an allocation of indirect technical issues and delivery schedule. Contract costs include material, subcontract costs, labor and an allocation of indirect costs. The estimation of costs at completion of a contract is subject to numerous variables involving contract costs and estimates costs. The estimation of costs at completion of a contract is subject to numerous variables involving contract costs and estimates as to the length of time to complete the contract. Changes in contract performance, estimated gross margin, including the impact as to the length of time to complete the contract. Changes in contract performance, estimated gross margin, including the impact of final contract settlements, and estimated losses are recognized in the period in which the changes or losses are determined. of final contract settlements, and estimated losses are recognized in the period in which the changes or losses are determined. Performance Obligations: Substantially all of our contracts with customers contain a single performance obligation, the Performance Obligations: Substantially all of our contracts with customers contain a single performance obligation, the sale of mixed-signal integrated circuit (IC) products. Such sales represent a single performance obligation because the sale is sale of mixed-signal integrated circuit (IC) products. Such sales represent a single performance obligation because the sale is one type of good or includes multiple goods that are neither capable of being distinct nor separable from the other promises in one type of good or includes multiple goods that are neither capable of being distinct nor separable from the other promises in the contract. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs the contract. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs upon shipment or delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery upon shipment or delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates and with an original expected duration of one year or less. We generally warrant that our products will meet their dates and with an original expected duration of one year or less. We generally warrant that our products will meet their published specifications, and that we will repair or replace defective products, for one year from the date title passes from us to published specifications, and that we will repair or replace defective products, for one year from the date title passes from us to the customer. Specific accruals are recorded for known product warranty issues. the customer. Specific accruals are recorded for known product warranty issues. Transaction Price: The transaction price reflects our expectations about the consideration we will be entitled to receive Transaction Price: The transaction price reflects our expectations about the consideration we will be entitled to receive from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to direct customers from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to direct customers and sales to distributors in which both the sale to the distributor and the sale to the end customer occur within the same and sales to distributors in which both the sale to the distributor and the sale to the end customer occur within the same reporting period. Variable consideration includes sales in which the amount of consideration that we will receive is unknown as reporting period. Variable consideration includes sales in which the amount of consideration that we will receive is unknown as 35 35 36 36 of the end of a reporting period. The vast majority of such consideration are credits issued to the distributor due to price of the end of a reporting period. The vast majority of such consideration are credits issued to the distributor due to price protection, but also include sales made to distributors under agreements that allow certain rights of return, referred to as stock protection, but also include sales made to distributors under agreements that allow certain rights of return, referred to as stock rotation. Price protection represents price discounts granted to certain distributors to allow the distributor to earn an appropriate rotation. Price protection represents price discounts granted to certain distributors to allow the distributor to earn an appropriate margin on sales negotiated with certain customers and in the event of a price decrease subsequent to the date the product was margin on sales negotiated with certain customers and in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor. Stock rotation allows distributors limited levels of returns in order to reduce the amounts shipped and billed to the distributor. Stock rotation allows distributors limited levels of returns in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. A liability for distributor credits covering variable of slow-moving, discontinued or obsolete product from their inventory. A liability for distributor credits covering variable consideration is made based on management's estimate of historical experience rates as well as considering economic consideration is made based on management's estimate of historical experience rates as well as considering economic conditions and contractual terms. To date, actual distributor claims activity has been materially consistent with the provisions conditions and contractual terms. To date, actual distributor claims activity has been materially consistent with the provisions we have made based on our historical estimates. we have made based on our historical estimates. Contract Balances: Accounts receivable represents our unconditional right to receive consideration from our customers. Contract Balances: Accounts receivable represents our unconditional right to receive consideration from our customers. than carrying value, an impairment loss is recognized for the amount of the carrying value that exceeds the amount of the than carrying value, an impairment loss is recognized for the amount of the carrying value that exceeds the amount of the Payments are typically due within 30 to 45 days of invoicing and do not include a significant financing component. To date, Payments are typically due within 30 to 45 days of invoicing and do not include a significant financing component. To date, there have been no material impairment losses on accounts receivable. There were no material contract assets or contract there have been no material impairment losses on accounts receivable. There were no material contract assets or contract liabilities recorded on the Consolidated Balance Sheets in any of the periods presented. liabilities recorded on the Consolidated Balance Sheets in any of the periods presented. Inventory Valuation Inventory Valuation We value inventories at the lower of cost (first-in, first-out method) or net realizable value. Because of the cyclical nature We value inventories at the lower of cost (first-in, first-out method) or net realizable value. Because of the cyclical nature of the semiconductor industry, changes in inventory levels, obsolescence of technology, and product life cycles, we write down of the semiconductor industry, changes in inventory levels, obsolescence of technology, and product life cycles, we write down inventories to net realizable value. We employ a variety of methodologies to determine the net realizable value of inventory. inventories to net realizable value. We employ a variety of methodologies to determine the net realizable value of inventory. While a portion of the calculation is determined via reference to the age of inventory and lower of cost or net realizable value While a portion of the calculation is determined via reference to the age of inventory and lower of cost or net realizable value calculations, an element of the calculation is subject to significant judgments made by us about future demand for our calculations, an element of the calculation is subject to significant judgments made by us about future demand for our inventory. If actual demand for our products is less than our estimates, additional adjustments to existing inventories may need inventory. If actual demand for our products is less than our estimates, additional adjustments to existing inventories may need to be recorded in future periods. To date, our actual results have not been materially different than our estimates. to be recorded in future periods. To date, our actual results have not been materially different than our estimates. Long-Lived Assets Long-Lived Assets We review property, plant, and equipment and intangible assets for impairment whenever events or changes in We review property, plant, and equipment and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is determined by circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is determined by comparison of their carrying value to the estimated future undiscounted cash flows that the assets are expected to generate over comparison of their carrying value to the estimated future undiscounted cash flows that the assets are expected to generate over their remaining estimated lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals their remaining estimated lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. Material impairment adjustments related to our property, or a value determined by utilizing a discounted cash flow technique. Material impairment adjustments related to our property, plant, and equipment are reflected in our financial statements for the periods presented. Any deterioration in our business in the plant, and equipment are reflected in our financial statements for the periods presented. Any deterioration in our business in the future could lead to such impairment adjustments in future periods. future could lead to such impairment adjustments in future periods. Evaluation of impairment of long-lived assets requires estimates of future operating results that are used in the Evaluation of impairment of long-lived assets requires estimates of future operating results that are used in the preparation of the expected future undiscounted cash flows. Actual future operating results and the remaining economic lives of preparation of the expected future undiscounted cash flows. Actual future operating results and the remaining economic lives of our long-lived assets could differ from the estimates used in assessing the recoverability of these assets. These differences could our long-lived assets could differ from the estimates used in assessing the recoverability of these assets. These differences could result in impairment charges, which could have a material adverse impact on our results of operations. In addition, in certain result in impairment charges, which could have a material adverse impact on our results of operations. In addition, in certain instances, assets may not be impaired but their estimated useful lives may have decreased. In these situations, we amortize the instances, assets may not be impaired but their estimated useful lives may have decreased. In these situations, we amortize the remaining net book values over the revised useful lives. remaining net book values over the revised useful lives. Goodwill Goodwill Goodwill is subject to impairment tests annually or more frequently if events or changes in circumstances suggest that the Goodwill is subject to impairment tests annually or more frequently if events or changes in circumstances suggest that the carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method. We test goodwill for carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method. We test goodwill for impairment at the reporting unit level, which we determined is consistent with our identified operating segments, on an annual impairment at the reporting unit level, which we determined is consistent with our identified operating segments, on an annual basis on the first day of the fourth quarter (on or about July 31) or more frequently if we believe indicators of impairment exist basis on the first day of the fourth quarter (on or about July 31) or more frequently if we believe indicators of impairment exist or we reorganize our operating segments or reporting units. or we reorganize our operating segments or reporting units. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its net book value. When using the qualitative method, we consider several factors, including the reporting unit is less than its net book value. When using the qualitative method, we consider several factors, including the following: following: – – – – – – – – the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which these reporting units operate in order for there to be potential impairment; the markets in which these reporting units operate in order for there to be potential impairment; the carrying values of these reporting units as of the assessment date compared to their previously calculated fair the carrying values of these reporting units as of the assessment date compared to their previously calculated fair values as of the date of the most recent quantitative impairment analysis; values as of the date of the most recent quantitative impairment analysis; the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; public information from competitors and other industry information to determine if there were any significant adverse public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses; trends in our competitors' businesses; 37 37 38 38 – – – – changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting units; impact the valuation of our reporting units; changes in our market capitalization and overall enterprise valuation to determine if there were any significant changes in our market capitalization and overall enterprise valuation to determine if there were any significant decreases that could be an indication that the valuation of our reporting units had significantly decreased; and decreases that could be an indication that the valuation of our reporting units had significantly decreased; and – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach. which could materially lower our prior valuation conclusions under a discounted cash flow approach. If we elect not to use this option, or we determine that it is more likely than not that the fair value of a reporting unit is If we elect not to use this option, or we determine that it is more likely than not that the fair value of a reporting unit is less than its net book value, then we perform the quantitative goodwill impairment test. The quantitative goodwill impairment less than its net book value, then we perform the quantitative goodwill impairment test. The quantitative goodwill impairment test requires an entity to compare the fair value of a reporting unit with its carrying amount. If fair value is determined to be less test requires an entity to compare the fair value of a reporting unit with its carrying amount. If fair value is determined to be less reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Additionally, we consider reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Additionally, we consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. We determine the fair value of our reporting units using a weighting of the income and market impairment loss, if applicable. We determine the fair value of our reporting units using a weighting of the income and market approaches. Under the income approach, we use a discounted cash flow methodology which requires management to make approaches. Under the income approach, we use a discounted cash flow methodology which requires management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others. For the market approach, we use capital cash flow, perpetual growth rates, and long-term discount rates, among others. For the market approach, we use the guideline public company method. Under this method we utilize information from comparable publicly traded companies the guideline public company method. Under this method we utilize information from comparable publicly traded companies with similar operating and investment characteristics as the reporting units, to create valuation multiples that are applied to the with similar operating and investment characteristics as the reporting units, to create valuation multiples that are applied to the operating performance of the reporting unit being tested, in order to obtain their respective fair values. In order to assess the operating performance of the reporting unit being tested, in order to obtain their respective fair values. In order to assess the reasonableness of the calculated reporting unit fair values, we reconcile the aggregate fair values of our reporting units reasonableness of the calculated reporting unit fair values, we reconcile the aggregate fair values of our reporting units determined, as described above, to our total company market capitalization, allowing for a reasonable control premium. determined, as described above, to our total company market capitalization, allowing for a reasonable control premium. In fiscal 2022, we used a combination of the qualitative and quantitative methods of assessing goodwill for our reporting In fiscal 2022, we used a combination of the qualitative and quantitative methods of assessing goodwill for our reporting units. In fiscal 2021, we used the quantitative method of assessing goodwill for all reporting units. In all periods presented, we units. In fiscal 2021, we used the quantitative method of assessing goodwill for all reporting units. In all periods presented, we concluded the reporting units' fair values exceeded their carrying amounts as of the assessment dates and no risk of impairment concluded the reporting units' fair values exceeded their carrying amounts as of the assessment dates and no risk of impairment existed. existed. Business Combinations Business Combinations Under the acquisition method of accounting, we recognize tangible and identifiable intangible assets acquired and Under the acquisition method of accounting, we recognize tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. We record the excess of the fair value of the purchase consideration liabilities assumed based on their estimated fair values. We record the excess of the fair value of the purchase consideration over the value of the net assets acquired as goodwill. The accounting for business combinations requires us to make significant over the value of the net assets acquired as goodwill. The accounting for business combinations requires us to make significant estimates and assumptions, especially with respect to intangible assets and the fair value of contingent payment obligations. estimates and assumptions, especially with respect to intangible assets and the fair value of contingent payment obligations. Critical estimates in valuing purchased technology, customer lists and other identifiable intangible assets include future cash Critical estimates in valuing purchased technology, customer lists and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could underlying business activity change compared with the assumptions and projections used to develop these values, we could experience impairment charges which could be material. In addition, we have estimated the economic lives of certain acquired experience impairment charges which could be material. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed. change, depreciation or amortization expenses could be accelerated or slowed. We record contingent consideration resulting from a business combination at its fair value on the acquisition date. We We record contingent consideration resulting from a business combination at its fair value on the acquisition date. We generally determine the fair value of the contingent consideration using the income approach methodology of valuation. Each generally determine the fair value of the contingent consideration using the income approach methodology of valuation. Each reporting period thereafter, we revalue these obligations and record increases or decreases in their fair value as an adjustment to reporting period thereafter, we revalue these obligations and record increases or decreases in their fair value as an adjustment to operating expenses within the Consolidated Statements of Income. Changes in the fair value of the contingent consideration can operating expenses within the Consolidated Statements of Income. Changes in the fair value of the contingent consideration can result from changes in assumed discount periods and rates, and from changes pertaining to the achievement of the defined result from changes in assumed discount periods and rates, and from changes pertaining to the achievement of the defined milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the amount of contingent consideration expense we record in any given assumptions described above, can materially impact the amount of contingent consideration expense we record in any given period. period. of the end of a reporting period. The vast majority of such consideration are credits issued to the distributor due to price of the end of a reporting period. The vast majority of such consideration are credits issued to the distributor due to price protection, but also include sales made to distributors under agreements that allow certain rights of return, referred to as stock protection, but also include sales made to distributors under agreements that allow certain rights of return, referred to as stock rotation. Price protection represents price discounts granted to certain distributors to allow the distributor to earn an appropriate rotation. Price protection represents price discounts granted to certain distributors to allow the distributor to earn an appropriate margin on sales negotiated with certain customers and in the event of a price decrease subsequent to the date the product was margin on sales negotiated with certain customers and in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor. Stock rotation allows distributors limited levels of returns in order to reduce the amounts shipped and billed to the distributor. Stock rotation allows distributors limited levels of returns in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. A liability for distributor credits covering variable of slow-moving, discontinued or obsolete product from their inventory. A liability for distributor credits covering variable consideration is made based on management's estimate of historical experience rates as well as considering economic consideration is made based on management's estimate of historical experience rates as well as considering economic conditions and contractual terms. To date, actual distributor claims activity has been materially consistent with the provisions conditions and contractual terms. To date, actual distributor claims activity has been materially consistent with the provisions we have made based on our historical estimates. we have made based on our historical estimates. Contract Balances: Accounts receivable represents our unconditional right to receive consideration from our customers. Contract Balances: Accounts receivable represents our unconditional right to receive consideration from our customers. Payments are typically due within 30 to 45 days of invoicing and do not include a significant financing component. To date, Payments are typically due within 30 to 45 days of invoicing and do not include a significant financing component. To date, there have been no material impairment losses on accounts receivable. There were no material contract assets or contract there have been no material impairment losses on accounts receivable. There were no material contract assets or contract liabilities recorded on the Consolidated Balance Sheets in any of the periods presented. liabilities recorded on the Consolidated Balance Sheets in any of the periods presented. We value inventories at the lower of cost (first-in, first-out method) or net realizable value. Because of the cyclical nature We value inventories at the lower of cost (first-in, first-out method) or net realizable value. Because of the cyclical nature of the semiconductor industry, changes in inventory levels, obsolescence of technology, and product life cycles, we write down of the semiconductor industry, changes in inventory levels, obsolescence of technology, and product life cycles, we write down inventories to net realizable value. We employ a variety of methodologies to determine the net realizable value of inventory. inventories to net realizable value. We employ a variety of methodologies to determine the net realizable value of inventory. While a portion of the calculation is determined via reference to the age of inventory and lower of cost or net realizable value While a portion of the calculation is determined via reference to the age of inventory and lower of cost or net realizable value calculations, an element of the calculation is subject to significant judgments made by us about future demand for our calculations, an element of the calculation is subject to significant judgments made by us about future demand for our inventory. If actual demand for our products is less than our estimates, additional adjustments to existing inventories may need inventory. If actual demand for our products is less than our estimates, additional adjustments to existing inventories may need to be recorded in future periods. To date, our actual results have not been materially different than our estimates. to be recorded in future periods. To date, our actual results have not been materially different than our estimates. Inventory Valuation Inventory Valuation Long-Lived Assets Long-Lived Assets We review property, plant, and equipment and intangible assets for impairment whenever events or changes in We review property, plant, and equipment and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is determined by circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is determined by comparison of their carrying value to the estimated future undiscounted cash flows that the assets are expected to generate over comparison of their carrying value to the estimated future undiscounted cash flows that the assets are expected to generate over their remaining estimated lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals their remaining estimated lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. Material impairment adjustments related to our property, or a value determined by utilizing a discounted cash flow technique. Material impairment adjustments related to our property, plant, and equipment are reflected in our financial statements for the periods presented. Any deterioration in our business in the plant, and equipment are reflected in our financial statements for the periods presented. Any deterioration in our business in the future could lead to such impairment adjustments in future periods. future could lead to such impairment adjustments in future periods. Evaluation of impairment of long-lived assets requires estimates of future operating results that are used in the Evaluation of impairment of long-lived assets requires estimates of future operating results that are used in the preparation of the expected future undiscounted cash flows. Actual future operating results and the remaining economic lives of preparation of the expected future undiscounted cash flows. Actual future operating results and the remaining economic lives of our long-lived assets could differ from the estimates used in assessing the recoverability of these assets. These differences could our long-lived assets could differ from the estimates used in assessing the recoverability of these assets. These differences could result in impairment charges, which could have a material adverse impact on our results of operations. In addition, in certain result in impairment charges, which could have a material adverse impact on our results of operations. In addition, in certain instances, assets may not be impaired but their estimated useful lives may have decreased. In these situations, we amortize the instances, assets may not be impaired but their estimated useful lives may have decreased. In these situations, we amortize the remaining net book values over the revised useful lives. remaining net book values over the revised useful lives. Goodwill Goodwill Goodwill is subject to impairment tests annually or more frequently if events or changes in circumstances suggest that the Goodwill is subject to impairment tests annually or more frequently if events or changes in circumstances suggest that the carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method. We test goodwill for carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method. We test goodwill for impairment at the reporting unit level, which we determined is consistent with our identified operating segments, on an annual impairment at the reporting unit level, which we determined is consistent with our identified operating segments, on an annual basis on the first day of the fourth quarter (on or about July 31) or more frequently if we believe indicators of impairment exist basis on the first day of the fourth quarter (on or about July 31) or more frequently if we believe indicators of impairment exist or we reorganize our operating segments or reporting units. or we reorganize our operating segments or reporting units. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its net book value. When using the qualitative method, we consider several factors, including the reporting unit is less than its net book value. When using the qualitative method, we consider several factors, including the following: following: – – – – – – – – the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which these reporting units operate in order for there to be potential impairment; the markets in which these reporting units operate in order for there to be potential impairment; the carrying values of these reporting units as of the assessment date compared to their previously calculated fair the carrying values of these reporting units as of the assessment date compared to their previously calculated fair values as of the date of the most recent quantitative impairment analysis; values as of the date of the most recent quantitative impairment analysis; the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; public information from competitors and other industry information to determine if there were any significant adverse public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses; trends in our competitors' businesses; – – – – changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting units; impact the valuation of our reporting units; changes in our market capitalization and overall enterprise valuation to determine if there were any significant changes in our market capitalization and overall enterprise valuation to determine if there were any significant decreases that could be an indication that the valuation of our reporting units had significantly decreased; and decreases that could be an indication that the valuation of our reporting units had significantly decreased; and – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach. which could materially lower our prior valuation conclusions under a discounted cash flow approach. If we elect not to use this option, or we determine that it is more likely than not that the fair value of a reporting unit is If we elect not to use this option, or we determine that it is more likely than not that the fair value of a reporting unit is less than its net book value, then we perform the quantitative goodwill impairment test. The quantitative goodwill impairment less than its net book value, then we perform the quantitative goodwill impairment test. The quantitative goodwill impairment test requires an entity to compare the fair value of a reporting unit with its carrying amount. If fair value is determined to be less test requires an entity to compare the fair value of a reporting unit with its carrying amount. If fair value is determined to be less than carrying value, an impairment loss is recognized for the amount of the carrying value that exceeds the amount of the than carrying value, an impairment loss is recognized for the amount of the carrying value that exceeds the amount of the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Additionally, we consider reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Additionally, we consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. We determine the fair value of our reporting units using a weighting of the income and market impairment loss, if applicable. We determine the fair value of our reporting units using a weighting of the income and market approaches. Under the income approach, we use a discounted cash flow methodology which requires management to make approaches. Under the income approach, we use a discounted cash flow methodology which requires management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others. For the market approach, we use capital cash flow, perpetual growth rates, and long-term discount rates, among others. For the market approach, we use the guideline public company method. Under this method we utilize information from comparable publicly traded companies the guideline public company method. Under this method we utilize information from comparable publicly traded companies with similar operating and investment characteristics as the reporting units, to create valuation multiples that are applied to the with similar operating and investment characteristics as the reporting units, to create valuation multiples that are applied to the operating performance of the reporting unit being tested, in order to obtain their respective fair values. In order to assess the operating performance of the reporting unit being tested, in order to obtain their respective fair values. In order to assess the reasonableness of the calculated reporting unit fair values, we reconcile the aggregate fair values of our reporting units reasonableness of the calculated reporting unit fair values, we reconcile the aggregate fair values of our reporting units determined, as described above, to our total company market capitalization, allowing for a reasonable control premium. determined, as described above, to our total company market capitalization, allowing for a reasonable control premium. In fiscal 2022, we used a combination of the qualitative and quantitative methods of assessing goodwill for our reporting In fiscal 2022, we used a combination of the qualitative and quantitative methods of assessing goodwill for our reporting units. In fiscal 2021, we used the quantitative method of assessing goodwill for all reporting units. In all periods presented, we units. In fiscal 2021, we used the quantitative method of assessing goodwill for all reporting units. In all periods presented, we concluded the reporting units' fair values exceeded their carrying amounts as of the assessment dates and no risk of impairment concluded the reporting units' fair values exceeded their carrying amounts as of the assessment dates and no risk of impairment existed. existed. Business Combinations Business Combinations Under the acquisition method of accounting, we recognize tangible and identifiable intangible assets acquired and Under the acquisition method of accounting, we recognize tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. We record the excess of the fair value of the purchase consideration liabilities assumed based on their estimated fair values. We record the excess of the fair value of the purchase consideration over the value of the net assets acquired as goodwill. The accounting for business combinations requires us to make significant over the value of the net assets acquired as goodwill. The accounting for business combinations requires us to make significant estimates and assumptions, especially with respect to intangible assets and the fair value of contingent payment obligations. estimates and assumptions, especially with respect to intangible assets and the fair value of contingent payment obligations. Critical estimates in valuing purchased technology, customer lists and other identifiable intangible assets include future cash Critical estimates in valuing purchased technology, customer lists and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could underlying business activity change compared with the assumptions and projections used to develop these values, we could experience impairment charges which could be material. In addition, we have estimated the economic lives of certain acquired experience impairment charges which could be material. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed. change, depreciation or amortization expenses could be accelerated or slowed. We record contingent consideration resulting from a business combination at its fair value on the acquisition date. We We record contingent consideration resulting from a business combination at its fair value on the acquisition date. We generally determine the fair value of the contingent consideration using the income approach methodology of valuation. Each generally determine the fair value of the contingent consideration using the income approach methodology of valuation. Each reporting period thereafter, we revalue these obligations and record increases or decreases in their fair value as an adjustment to reporting period thereafter, we revalue these obligations and record increases or decreases in their fair value as an adjustment to operating expenses within the Consolidated Statements of Income. Changes in the fair value of the contingent consideration can operating expenses within the Consolidated Statements of Income. Changes in the fair value of the contingent consideration can result from changes in assumed discount periods and rates, and from changes pertaining to the achievement of the defined result from changes in assumed discount periods and rates, and from changes pertaining to the achievement of the defined milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the amount of contingent consideration expense we record in any given assumptions described above, can materially impact the amount of contingent consideration expense we record in any given period. period. 37 37 38 38 Accounting for Income Taxes Accounting for Income Taxes Contingencies Contingencies We make certain estimates and judgments in determining income tax expense for financial statement purposes. These We make certain estimates and judgments in determining income tax expense for financial statement purposes. These From time to time, in the ordinary course of business, various claims, charges and litigation are asserted or commenced From time to time, in the ordinary course of business, various claims, charges and litigation are asserted or commenced against us arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, against us arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employment benefits. We periodically assess each environmental matters, product liability, insurance coverage, employment or employment benefits. We periodically assess each matter to determine if a contingent liability should be recorded. In making this determination, we may, depending on the nature matter to determine if a contingent liability should be recorded. In making this determination, we may, depending on the nature of the matter, consult with internal and external legal counsel and technical experts. Based on the information we obtain, of the matter, consult with internal and external legal counsel and technical experts. Based on the information we obtain, combined with our judgment regarding all the facts and circumstances of each matter, we determine whether it is probable that combined with our judgment regarding all the facts and circumstances of each matter, we determine whether it is probable that a contingent loss may be incurred and whether the amount of such loss can be reasonably estimated. If a loss is probable and a contingent loss may be incurred and whether the amount of such loss can be reasonably estimated. If a loss is probable and reasonably estimable, we record a contingent loss. In determining the amount of a contingent loss, we consider advice received reasonably estimable, we record a contingent loss. In determining the amount of a contingent loss, we consider advice received from experts in the specific matter, current status of legal proceedings, settlement negotiations that may be ongoing, prior case from experts in the specific matter, current status of legal proceedings, settlement negotiations that may be ongoing, prior case history and other factors. If the judgments and estimates made by us are incorrect, we may need to record additional contingent history and other factors. If the judgments and estimates made by us are incorrect, we may need to record additional contingent losses that could materially adversely impact our results of operations. losses that could materially adversely impact our results of operations. estimates and judgments occur in the calculation of income tax credits, benefits, and deductions, and in the calculation of estimates and judgments occur in the calculation of income tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses for tax and certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses for tax and financial statement purposes. We assess the likelihood of the realization of deferred tax assets and record a corresponding financial statement purposes. We assess the likelihood of the realization of deferred tax assets and record a corresponding valuation allowance as necessary if we determine those deferred tax assets may not be realized due to the uncertainty of the valuation allowance as necessary if we determine those deferred tax assets may not be realized due to the uncertainty of the timing and amount to be realized of certain state and international tax credit carryovers. In reaching our conclusion, we timing and amount to be realized of certain state and international tax credit carryovers. In reaching our conclusion, we evaluate certain relevant criteria including the existence of deferred tax liabilities that can be used to realize deferred tax assets, evaluate certain relevant criteria including the existence of deferred tax liabilities that can be used to realize deferred tax assets, the taxable income in prior carryback years in the impacted state and international jurisdictions that can be used to absorb net the taxable income in prior carryback years in the impacted state and international jurisdictions that can be used to absorb net operating losses and taxable income in future years. Our judgments regarding future profitability may change due to future operating losses and taxable income in future years. Our judgments regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require material market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to these deferred tax assets, which may result in an increase or decrease to our income tax provision in future adjustments to these deferred tax assets, which may result in an increase or decrease to our income tax provision in future periods. periods. We account for uncertain tax positions by first determining if it is “more likely than not” that a tax position will be We account for uncertain tax positions by first determining if it is “more likely than not” that a tax position will be sustained by the appropriate taxing authorities prior to recording any benefit in the financial statements. An uncertain income sustained by the appropriate taxing authorities prior to recording any benefit in the financial statements. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. For those tax positions where it is more tax position is not recognized if it has less than a 50% likelihood of being sustained. For those tax positions where it is more likely than not that a tax position will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likely than not that a tax position will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. We classify interest and penalties related to uncertain tax positions within the provision recognized in the financial statements. We classify interest and penalties related to uncertain tax positions within the provision for (benefit from) income taxes line of the Consolidated Statements of Income. We reevaluate these uncertain tax positions on for (benefit from) income taxes line of the Consolidated Statements of Income. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in known facts or circumstances, a quarterly basis. This evaluation is based on factors including, but not limited to, changes in known facts or circumstances, changes in tax law, effectively settled issues under audit, and new guidance on legislative interpretations. A change in these changes in tax law, effectively settled issues under audit, and new guidance on legislative interpretations. A change in these factors could result in the recognition of an increase or decrease to our income tax provision, which could materially impact our factors could result in the recognition of an increase or decrease to our income tax provision, which could materially impact our consolidated financial position and results of operations. consolidated financial position and results of operations. In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of cost reimbursement and royalty arrangements among related uncertain. Some of these uncertainties arise as a consequence of cost reimbursement and royalty arrangements among related entities. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome of these matters entities. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in our historical income tax provisions and income tax liabilities. In the event will not be different than that which is reflected in our historical income tax provisions and income tax liabilities. In the event our assumptions are incorrect, the differences could have a material impact on our income tax provision and operating results in our assumptions are incorrect, the differences could have a material impact on our income tax provision and operating results in the period in which such determination is made. In addition to the factors described above, our current and expected effective the period in which such determination is made. In addition to the factors described above, our current and expected effective tax rate is based on then-current tax law. Significant changes during the year in enacted tax law could affect these estimates. tax rate is based on then-current tax law. Significant changes during the year in enacted tax law could affect these estimates. See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further discussion. on Form 10-K for further discussion. Stock-Based Compensation Stock-Based Compensation Stock-based compensation expense associated with stock options and related awards is recognized in the Consolidated Stock-based compensation expense associated with stock options and related awards is recognized in the Consolidated Statements of Income. Determining the amount of stock-based compensation to be recorded requires us to develop estimates to Statements of Income. Determining the amount of stock-based compensation to be recorded requires us to develop estimates to be used in calculating the grant-date fair value of stock options, restricted stock units and market-based and/or performance- be used in calculating the grant-date fair value of stock options, restricted stock units and market-based and/or performance- based restricted stock units. We calculate the grant-date fair values of stock options using the Black-Scholes valuation model. based restricted stock units. We calculate the grant-date fair values of stock options using the Black-Scholes valuation model. The grant-date fair value of restricted stock units with a service condition and restricted stock units with both service and The grant-date fair value of restricted stock units with a service condition and restricted stock units with both service and performance conditions is calculated using the value of our common stock on the date of grant, reduced by the present value of performance conditions is calculated using the value of our common stock on the date of grant, reduced by the present value of dividends expected to be paid on our common stock prior to vesting. For restricted stock units with both service and dividends expected to be paid on our common stock prior to vesting. For restricted stock units with both service and performance conditions, this grant-date fair value is also impacted by the number of units that are expected to vest during the performance conditions, this grant-date fair value is also impacted by the number of units that are expected to vest during the performance period and is adjusted through the related stock-based compensation expense at each reporting period based on the performance period and is adjusted through the related stock-based compensation expense at each reporting period based on the probability of achievement of that performance condition. If we determine that an award is unlikely to vest, any previously probability of achievement of that performance condition. If we determine that an award is unlikely to vest, any previously recorded stock-based compensation expense is reversed in the period of that determination. The grant date fair value of recorded stock-based compensation expense is reversed in the period of that determination. The grant date fair value of restricted stock units and performance-based stock options with both service and market conditions are calculated using the restricted stock units and performance-based stock options with both service and market conditions are calculated using the Monte Carlo simulation model to estimate the probability of satisfying the performance condition stipulated in the award grant, Monte Carlo simulation model to estimate the probability of satisfying the performance condition stipulated in the award grant, including the possibility that the market condition may not be satisfied. including the possibility that the market condition may not be satisfied. The use of valuation models requires us to make estimates of key assumptions such as expected volatility, expected term, The use of valuation models requires us to make estimates of key assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield, forfeiture rate and others. The estimate of these key assumptions is based on risk-free interest rate, expected dividend yield, forfeiture rate and others. The estimate of these key assumptions is based on historical information and judgment regarding market factors and trends. We recognize the expense related to equity awards on historical information and judgment regarding market factors and trends. We recognize the expense related to equity awards on a straight-line basis over the vesting period. See Note 2r, Stock-based Compensation, and Note 3, Stock-Based Compensation a straight-line basis over the vesting period. See Note 2r, Stock-based Compensation, and Note 3, Stock-Based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on and Shareholders' Equity, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for more information related to stock-based compensation. Form 10-K for more information related to stock-based compensation. 39 39 40 40 Accounting for Income Taxes Accounting for Income Taxes Contingencies Contingencies From time to time, in the ordinary course of business, various claims, charges and litigation are asserted or commenced From time to time, in the ordinary course of business, various claims, charges and litigation are asserted or commenced against us arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, against us arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employment benefits. We periodically assess each environmental matters, product liability, insurance coverage, employment or employment benefits. We periodically assess each matter to determine if a contingent liability should be recorded. In making this determination, we may, depending on the nature matter to determine if a contingent liability should be recorded. In making this determination, we may, depending on the nature of the matter, consult with internal and external legal counsel and technical experts. Based on the information we obtain, of the matter, consult with internal and external legal counsel and technical experts. Based on the information we obtain, combined with our judgment regarding all the facts and circumstances of each matter, we determine whether it is probable that combined with our judgment regarding all the facts and circumstances of each matter, we determine whether it is probable that a contingent loss may be incurred and whether the amount of such loss can be reasonably estimated. If a loss is probable and a contingent loss may be incurred and whether the amount of such loss can be reasonably estimated. If a loss is probable and reasonably estimable, we record a contingent loss. In determining the amount of a contingent loss, we consider advice received reasonably estimable, we record a contingent loss. In determining the amount of a contingent loss, we consider advice received from experts in the specific matter, current status of legal proceedings, settlement negotiations that may be ongoing, prior case from experts in the specific matter, current status of legal proceedings, settlement negotiations that may be ongoing, prior case history and other factors. If the judgments and estimates made by us are incorrect, we may need to record additional contingent history and other factors. If the judgments and estimates made by us are incorrect, we may need to record additional contingent losses that could materially adversely impact our results of operations. losses that could materially adversely impact our results of operations. We make certain estimates and judgments in determining income tax expense for financial statement purposes. These We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of income tax credits, benefits, and deductions, and in the calculation of estimates and judgments occur in the calculation of income tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses for tax and certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses for tax and financial statement purposes. We assess the likelihood of the realization of deferred tax assets and record a corresponding financial statement purposes. We assess the likelihood of the realization of deferred tax assets and record a corresponding valuation allowance as necessary if we determine those deferred tax assets may not be realized due to the uncertainty of the valuation allowance as necessary if we determine those deferred tax assets may not be realized due to the uncertainty of the timing and amount to be realized of certain state and international tax credit carryovers. In reaching our conclusion, we timing and amount to be realized of certain state and international tax credit carryovers. In reaching our conclusion, we evaluate certain relevant criteria including the existence of deferred tax liabilities that can be used to realize deferred tax assets, evaluate certain relevant criteria including the existence of deferred tax liabilities that can be used to realize deferred tax assets, the taxable income in prior carryback years in the impacted state and international jurisdictions that can be used to absorb net the taxable income in prior carryback years in the impacted state and international jurisdictions that can be used to absorb net operating losses and taxable income in future years. Our judgments regarding future profitability may change due to future operating losses and taxable income in future years. Our judgments regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require material market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to these deferred tax assets, which may result in an increase or decrease to our income tax provision in future adjustments to these deferred tax assets, which may result in an increase or decrease to our income tax provision in future periods. periods. We account for uncertain tax positions by first determining if it is “more likely than not” that a tax position will be We account for uncertain tax positions by first determining if it is “more likely than not” that a tax position will be sustained by the appropriate taxing authorities prior to recording any benefit in the financial statements. An uncertain income sustained by the appropriate taxing authorities prior to recording any benefit in the financial statements. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. For those tax positions where it is more tax position is not recognized if it has less than a 50% likelihood of being sustained. For those tax positions where it is more likely than not that a tax position will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likely than not that a tax position will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. We classify interest and penalties related to uncertain tax positions within the provision recognized in the financial statements. We classify interest and penalties related to uncertain tax positions within the provision for (benefit from) income taxes line of the Consolidated Statements of Income. We reevaluate these uncertain tax positions on for (benefit from) income taxes line of the Consolidated Statements of Income. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in known facts or circumstances, a quarterly basis. This evaluation is based on factors including, but not limited to, changes in known facts or circumstances, changes in tax law, effectively settled issues under audit, and new guidance on legislative interpretations. A change in these changes in tax law, effectively settled issues under audit, and new guidance on legislative interpretations. A change in these factors could result in the recognition of an increase or decrease to our income tax provision, which could materially impact our factors could result in the recognition of an increase or decrease to our income tax provision, which could materially impact our consolidated financial position and results of operations. consolidated financial position and results of operations. In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of cost reimbursement and royalty arrangements among related uncertain. Some of these uncertainties arise as a consequence of cost reimbursement and royalty arrangements among related entities. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome of these matters entities. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in our historical income tax provisions and income tax liabilities. In the event will not be different than that which is reflected in our historical income tax provisions and income tax liabilities. In the event our assumptions are incorrect, the differences could have a material impact on our income tax provision and operating results in our assumptions are incorrect, the differences could have a material impact on our income tax provision and operating results in the period in which such determination is made. In addition to the factors described above, our current and expected effective the period in which such determination is made. In addition to the factors described above, our current and expected effective tax rate is based on then-current tax law. Significant changes during the year in enacted tax law could affect these estimates. tax rate is based on then-current tax law. Significant changes during the year in enacted tax law could affect these estimates. See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further discussion. on Form 10-K for further discussion. Stock-Based Compensation Stock-Based Compensation Stock-based compensation expense associated with stock options and related awards is recognized in the Consolidated Stock-based compensation expense associated with stock options and related awards is recognized in the Consolidated Statements of Income. Determining the amount of stock-based compensation to be recorded requires us to develop estimates to Statements of Income. Determining the amount of stock-based compensation to be recorded requires us to develop estimates to be used in calculating the grant-date fair value of stock options, restricted stock units and market-based and/or performance- be used in calculating the grant-date fair value of stock options, restricted stock units and market-based and/or performance- based restricted stock units. We calculate the grant-date fair values of stock options using the Black-Scholes valuation model. based restricted stock units. We calculate the grant-date fair values of stock options using the Black-Scholes valuation model. The grant-date fair value of restricted stock units with a service condition and restricted stock units with both service and The grant-date fair value of restricted stock units with a service condition and restricted stock units with both service and performance conditions is calculated using the value of our common stock on the date of grant, reduced by the present value of performance conditions is calculated using the value of our common stock on the date of grant, reduced by the present value of dividends expected to be paid on our common stock prior to vesting. For restricted stock units with both service and dividends expected to be paid on our common stock prior to vesting. For restricted stock units with both service and performance conditions, this grant-date fair value is also impacted by the number of units that are expected to vest during the performance conditions, this grant-date fair value is also impacted by the number of units that are expected to vest during the performance period and is adjusted through the related stock-based compensation expense at each reporting period based on the performance period and is adjusted through the related stock-based compensation expense at each reporting period based on the probability of achievement of that performance condition. If we determine that an award is unlikely to vest, any previously probability of achievement of that performance condition. If we determine that an award is unlikely to vest, any previously recorded stock-based compensation expense is reversed in the period of that determination. The grant date fair value of recorded stock-based compensation expense is reversed in the period of that determination. The grant date fair value of restricted stock units and performance-based stock options with both service and market conditions are calculated using the restricted stock units and performance-based stock options with both service and market conditions are calculated using the Monte Carlo simulation model to estimate the probability of satisfying the performance condition stipulated in the award grant, Monte Carlo simulation model to estimate the probability of satisfying the performance condition stipulated in the award grant, including the possibility that the market condition may not be satisfied. including the possibility that the market condition may not be satisfied. The use of valuation models requires us to make estimates of key assumptions such as expected volatility, expected term, The use of valuation models requires us to make estimates of key assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield, forfeiture rate and others. The estimate of these key assumptions is based on risk-free interest rate, expected dividend yield, forfeiture rate and others. The estimate of these key assumptions is based on historical information and judgment regarding market factors and trends. We recognize the expense related to equity awards on historical information and judgment regarding market factors and trends. We recognize the expense related to equity awards on a straight-line basis over the vesting period. See Note 2r, Stock-based Compensation, and Note 3, Stock-Based Compensation a straight-line basis over the vesting period. See Note 2r, Stock-based Compensation, and Note 3, Stock-Based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on and Shareholders' Equity, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for more information related to stock-based compensation. Form 10-K for more information related to stock-based compensation. 39 39 40 40  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Exposure Interest Rate Exposure Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in interest rates affect the interest earned or paid on our marketable securities and debt, as well as the fair value of our investments interest rates affect the interest earned or paid on our marketable securities and debt, as well as the fair value of our investments and debt. and debt. Based on the $500.0 million of our floating rate debt outstanding as of October 29, 2022, our annual interest expense Based on the $500.0 million of our floating rate debt outstanding as of October 29, 2022, our annual interest expense would change by approximately $5.0 million for each 100 basis point increase in interest rates. would change by approximately $5.0 million for each 100 basis point increase in interest rates. counterparties. counterparties. The market risk associated with our derivative instruments results from currency exchange rates that are expected to The market risk associated with our derivative instruments results from currency exchange rates that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. The counterparties to the agreements offset the market risk of the underlying transactions, assets and liabilities being hedged. The counterparties to the agreements relating to our foreign exchange instruments consist of a number of major international financial institutions with high credit relating to our foreign exchange instruments consist of a number of major international financial institutions with high credit ratings. Based on the credit ratings of our counterparties as of October 29, 2022, we do not believe that there is significant risk ratings. Based on the credit ratings of our counterparties as of October 29, 2022, we do not believe that there is significant risk of nonperformance by them. While the contract or notional amounts of derivative financial instruments provide one measure of of nonperformance by them. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of our exposure to credit risk. The amounts potentially the volume of these transactions, they do not represent the amount of our exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed our obligations to the limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed our obligations to the Based on our cash and marketable securities outstanding as of October 29, 2022 and October 30, 2021, our annual interest Based on our cash and marketable securities outstanding as of October 29, 2022 and October 30, 2021, our annual interest income would change by approximately $14.7 million and $19.7 million, respectively, for each 100 basis point increase in income would change by approximately $14.7 million and $19.7 million, respectively, for each 100 basis point increase in interest rates. interest rates. The following table illustrates the effect that an immediate 10% unfavorable or favorable movement in foreign currency The following table illustrates the effect that an immediate 10% unfavorable or favorable movement in foreign currency exchange rates, relative to the U.S. dollar, would have on the fair value of our forward exchange contracts as of October 29, exchange rates, relative to the U.S. dollar, would have on the fair value of our forward exchange contracts as of October 29, 2022 and October 30, 2021: 2022 and October 30, 2021: To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of our investment portfolio sensitivity analysis to determine the impact a change in interest rates would have on the value of our investment portfolio assuming an immediate 100 basis point parallel shift in the yield curve. Based on investment positions as of October 29, 2022 assuming an immediate 100 basis point parallel shift in the yield curve. Based on investment positions as of October 29, 2022 and October 30, 2021, a hypothetical 100 basis point increase in interest rates across all maturities would not materially impact and October 30, 2021, a hypothetical 100 basis point increase in interest rates across all maturities would not materially impact the fair market value of the portfolio in either period. If significant, such losses would only be realized if we sold the the fair market value of the portfolio in either period. If significant, such losses would only be realized if we sold the investments prior to maturity. investments prior to maturity. As of October 29, 2022, we had $6.6 billion in principal amount of senior unsecured notes outstanding, with a fair value As of October 29, 2022, we had $6.6 billion in principal amount of senior unsecured notes outstanding, with a fair value of $5.5 billion. The fair value of our notes is subject to interest rate risk, market risk, and other factors. Generally, the fair value of $5.5 billion. The fair value of our notes is subject to interest rate risk, market risk, and other factors. Generally, the fair value of our notes will increase as interest rates fall and decrease as interest rates rise. The fair values of our notes as of October 29, of our notes will increase as interest rates fall and decrease as interest rates rise. The fair values of our notes as of October 29, 2022 and October 30, 2021, assuming a hypothetical 100 basis point increase in market interest rates, are as follows: 2022 and October 30, 2021, assuming a hypothetical 100 basis point increase in market interest rates, are as follows: Fair value of forward exchange contracts Fair value of forward exchange contracts Fair value of forward exchange contracts after a 10% unfavorable movement in foreign Fair value of forward exchange contracts after a 10% unfavorable movement in foreign currency exchange rates asset currency exchange rates asset currency exchange rates liability currency exchange rates liability Fair value of forward exchange contracts after a 10% favorable movement in foreign Fair value of forward exchange contracts after a 10% favorable movement in foreign October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 (16,984) $ (16,984) $ (8,085) (8,085) 21,193 $ 21,193 $ 26,673 26,673 (51,604) $ (51,604) $ (41,034) (41,034) $ $ $ $ $ $ The calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In The calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effects of changes in exchange rates, such changes typically affect the volume of sales or the foreign addition to the direct effects of changes in exchange rates, such changes typically affect the volume of sales or the foreign currency sales price as competitors’ products become more or less attractive. Our sensitivity analysis of the effects of changes currency sales price as competitors’ products become more or less attractive. Our sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency selling prices. in foreign currency exchange rates does not factor in a potential change in sales levels or local currency selling prices. October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Principal Principal Amount Amount Outstanding Outstanding Fair Value Fair Value Fair Value Fair Value given an given an increase in increase in interest rates interest rates of 100 basis of 100 basis points points Principal Principal Amount Amount Outstanding Outstanding Fair Value Fair Value Fair Value Fair Value given an given an increase in increase in interest rates interest rates of 100 basis of 100 basis points points $ $ — $ — $ — $ — $ — $ — $ 491,982 491,982 383,378 383,378 851,479 851,479 54,771 54,771 410,091 410,091 621,093 621,093 786,772 786,772 278,359 278,359 126,274 126,274 513,709 513,709 313,931 313,931 640,766 640,766 500,000 $ 500,000 $ 500,000 500,000 400,000 400,000 900,000 900,000 500,000 500,000 — — 750,000 750,000 1,000,000 1,000,000 — — 144,278 144,278 750,000 750,000 332,587 332,587 520,236 $ 520,236 $ 500,482 500,482 423,265 423,265 986,243 986,243 542,942 542,942 — — 743,109 743,109 996,702 996,702 — — 176,960 176,960 758,246 758,246 469,592 469,592 483,035 483,035 374,686 374,686 820,203 820,203 52,534 52,534 393,294 393,294 588,044 588,044 727,579 727,579 257,337 257,337 114,389 114,389 450,337 450,337 276,820 276,820 545,958 545,958 1,000,000 1,000,000 1,029,830 1,029,830 513,273 513,273 486,201 486,201 409,725 409,725 941,160 941,160 515,866 515,866 — — 696,554 696,554 912,196 912,196 — — 158,110 158,110 652,754 652,754 404,287 404,287 848,513 848,513 (thousands) (thousands) Maxim 2023 Notes, due March Maxim 2023 Notes, due March 2023 2023 2024 Notes, due October 2024 2024 Notes, due October 2024 2025 Notes, due April 2025 2025 Notes, due April 2025 2026 Notes, due December 2026 2026 Notes, due December 2026 Maxim 2027 Notes, due June 2027 Maxim 2027 Notes, due June 2027 2027 Notes, due June 2027 2027 Notes, due June 2027 2028 Notes, due October 2028 2028 Notes, due October 2028 2031 Notes, due October 2031 2031 Notes, due October 2031 2032 Notes, due October 2032 2032 Notes, due October 2032 2036 Notes, due December 2036 2036 Notes, due December 2036 2041 Notes, due October 2041 2041 Notes, due October 2041 2045 Notes, due December 2045 2045 Notes, due December 2045 500,000 500,000 400,000 400,000 900,000 900,000 59,788 59,788 440,212 440,212 750,000 750,000 1,000,000 1,000,000 300,000 300,000 144,278 144,278 750,000 750,000 332,587 332,587 2051 Notes, due October 2051 2051 Notes, due October 2051 1,000,000 1,000,000 Foreign Currency Exposure Foreign Currency Exposure As more fully described in Note 2i, Derivative and Hedging Agreements, of the Notes to Consolidated Financial As more fully described in Note 2i, Derivative and Hedging Agreements, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K, we regularly hedge our non-U.S. dollar-based exposures Statements contained in Item 8 of this Annual Report on Form 10-K, we regularly hedge our non-U.S. dollar-based exposures by entering into forward foreign currency exchange contracts. The terms of these contracts are for periods matching the by entering into forward foreign currency exchange contracts. The terms of these contracts are for periods matching the duration of the underlying exposure and generally range from one to twelve months. Currently, our largest foreign currency duration of the underlying exposure and generally range from one to twelve months. Currently, our largest foreign currency exposure is the Euro, primarily because our European operations have the highest proportion of our local currency denominated exposure is the Euro, primarily because our European operations have the highest proportion of our local currency denominated expenses. Relative to the net unhedged foreign currency exposures existing at October 29, 2022 and October 30, 2021, an expenses. Relative to the net unhedged foreign currency exposures existing at October 29, 2022 and October 30, 2021, an immediate 10% unfavorable movement in foreign currency exchange rates would result in approximately $69.5 million of immediate 10% unfavorable movement in foreign currency exchange rates would result in approximately $69.5 million of losses and $39.5 million of losses, respectively, in changes in earnings or cash flows over the course of the year. losses and $39.5 million of losses, respectively, in changes in earnings or cash flows over the course of the year. 41 41 42 42  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Exposure Interest Rate Exposure Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in interest rates affect the interest earned or paid on our marketable securities and debt, as well as the fair value of our investments interest rates affect the interest earned or paid on our marketable securities and debt, as well as the fair value of our investments Based on the $500.0 million of our floating rate debt outstanding as of October 29, 2022, our annual interest expense Based on the $500.0 million of our floating rate debt outstanding as of October 29, 2022, our annual interest expense would change by approximately $5.0 million for each 100 basis point increase in interest rates. would change by approximately $5.0 million for each 100 basis point increase in interest rates. Based on our cash and marketable securities outstanding as of October 29, 2022 and October 30, 2021, our annual interest Based on our cash and marketable securities outstanding as of October 29, 2022 and October 30, 2021, our annual interest income would change by approximately $14.7 million and $19.7 million, respectively, for each 100 basis point increase in income would change by approximately $14.7 million and $19.7 million, respectively, for each 100 basis point increase in and debt. and debt. interest rates. interest rates. To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of our investment portfolio sensitivity analysis to determine the impact a change in interest rates would have on the value of our investment portfolio assuming an immediate 100 basis point parallel shift in the yield curve. Based on investment positions as of October 29, 2022 assuming an immediate 100 basis point parallel shift in the yield curve. Based on investment positions as of October 29, 2022 and October 30, 2021, a hypothetical 100 basis point increase in interest rates across all maturities would not materially impact and October 30, 2021, a hypothetical 100 basis point increase in interest rates across all maturities would not materially impact the fair market value of the portfolio in either period. If significant, such losses would only be realized if we sold the the fair market value of the portfolio in either period. If significant, such losses would only be realized if we sold the investments prior to maturity. investments prior to maturity. The market risk associated with our derivative instruments results from currency exchange rates that are expected to The market risk associated with our derivative instruments results from currency exchange rates that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. The counterparties to the agreements offset the market risk of the underlying transactions, assets and liabilities being hedged. The counterparties to the agreements relating to our foreign exchange instruments consist of a number of major international financial institutions with high credit relating to our foreign exchange instruments consist of a number of major international financial institutions with high credit ratings. Based on the credit ratings of our counterparties as of October 29, 2022, we do not believe that there is significant risk ratings. Based on the credit ratings of our counterparties as of October 29, 2022, we do not believe that there is significant risk of nonperformance by them. While the contract or notional amounts of derivative financial instruments provide one measure of of nonperformance by them. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of our exposure to credit risk. The amounts potentially the volume of these transactions, they do not represent the amount of our exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed our obligations to the limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed our obligations to the counterparties. counterparties. The following table illustrates the effect that an immediate 10% unfavorable or favorable movement in foreign currency The following table illustrates the effect that an immediate 10% unfavorable or favorable movement in foreign currency exchange rates, relative to the U.S. dollar, would have on the fair value of our forward exchange contracts as of October 29, exchange rates, relative to the U.S. dollar, would have on the fair value of our forward exchange contracts as of October 29, 2022 and October 30, 2021: 2022 and October 30, 2021: Fair value of forward exchange contracts Fair value of forward exchange contracts Fair value of forward exchange contracts after a 10% unfavorable movement in foreign Fair value of forward exchange contracts after a 10% unfavorable movement in foreign currency exchange rates asset currency exchange rates asset Fair value of forward exchange contracts after a 10% favorable movement in foreign Fair value of forward exchange contracts after a 10% favorable movement in foreign currency exchange rates liability currency exchange rates liability $ $ $ $ $ $ (16,984) $ (16,984) $ (8,085) (8,085) 21,193 $ 21,193 $ 26,673 26,673 (51,604) $ (51,604) $ (41,034) (41,034) October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 As of October 29, 2022, we had $6.6 billion in principal amount of senior unsecured notes outstanding, with a fair value As of October 29, 2022, we had $6.6 billion in principal amount of senior unsecured notes outstanding, with a fair value of $5.5 billion. The fair value of our notes is subject to interest rate risk, market risk, and other factors. Generally, the fair value of $5.5 billion. The fair value of our notes is subject to interest rate risk, market risk, and other factors. Generally, the fair value of our notes will increase as interest rates fall and decrease as interest rates rise. The fair values of our notes as of October 29, of our notes will increase as interest rates fall and decrease as interest rates rise. The fair values of our notes as of October 29, 2022 and October 30, 2021, assuming a hypothetical 100 basis point increase in market interest rates, are as follows: 2022 and October 30, 2021, assuming a hypothetical 100 basis point increase in market interest rates, are as follows: The calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In The calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effects of changes in exchange rates, such changes typically affect the volume of sales or the foreign addition to the direct effects of changes in exchange rates, such changes typically affect the volume of sales or the foreign currency sales price as competitors’ products become more or less attractive. Our sensitivity analysis of the effects of changes currency sales price as competitors’ products become more or less attractive. Our sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency selling prices. in foreign currency exchange rates does not factor in a potential change in sales levels or local currency selling prices. 2031 Notes, due October 2031 2031 Notes, due October 2031 1,000,000 1,000,000 727,579 727,579 1,000,000 1,000,000 October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Principal Principal Amount Amount Outstanding Outstanding Fair Value Fair Value Principal Principal Amount Amount Outstanding Outstanding Fair Value Fair Value $ $ — $ — $ — $ — $ — $ — $ 500,000 $ 500,000 $ 520,236 $ 520,236 $ 513,273 513,273 Fair Value Fair Value given an given an increase in increase in interest rates interest rates of 100 basis of 100 basis points points 483,035 483,035 374,686 374,686 820,203 820,203 52,534 52,534 393,294 393,294 588,044 588,044 257,337 257,337 114,389 114,389 450,337 450,337 276,820 276,820 500,000 500,000 400,000 400,000 900,000 900,000 59,788 59,788 440,212 440,212 750,000 750,000 300,000 300,000 144,278 144,278 750,000 750,000 332,587 332,587 491,982 491,982 383,378 383,378 851,479 851,479 54,771 54,771 410,091 410,091 621,093 621,093 786,772 786,772 278,359 278,359 126,274 126,274 513,709 513,709 313,931 313,931 640,766 640,766 Fair Value Fair Value given an given an increase in increase in interest rates interest rates of 100 basis of 100 basis points points 486,201 486,201 409,725 409,725 941,160 941,160 515,866 515,866 — — 696,554 696,554 912,196 912,196 — — 158,110 158,110 652,754 652,754 404,287 404,287 848,513 848,513 500,000 500,000 400,000 400,000 900,000 900,000 500,000 500,000 — — 750,000 750,000 — — 144,278 144,278 750,000 750,000 332,587 332,587 500,482 500,482 423,265 423,265 986,243 986,243 542,942 542,942 — — 743,109 743,109 996,702 996,702 — — 176,960 176,960 758,246 758,246 469,592 469,592 (thousands) (thousands) 2023 2023 Maxim 2023 Notes, due March Maxim 2023 Notes, due March 2024 Notes, due October 2024 2024 Notes, due October 2024 2025 Notes, due April 2025 2025 Notes, due April 2025 2026 Notes, due December 2026 2026 Notes, due December 2026 Maxim 2027 Notes, due June 2027 Maxim 2027 Notes, due June 2027 2027 Notes, due June 2027 2027 Notes, due June 2027 2028 Notes, due October 2028 2028 Notes, due October 2028 2032 Notes, due October 2032 2032 Notes, due October 2032 2036 Notes, due December 2036 2036 Notes, due December 2036 2041 Notes, due October 2041 2041 Notes, due October 2041 2045 Notes, due December 2045 2045 Notes, due December 2045 Foreign Currency Exposure Foreign Currency Exposure 2051 Notes, due October 2051 2051 Notes, due October 2051 1,000,000 1,000,000 545,958 545,958 1,000,000 1,000,000 1,029,830 1,029,830 As more fully described in Note 2i, Derivative and Hedging Agreements, of the Notes to Consolidated Financial As more fully described in Note 2i, Derivative and Hedging Agreements, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K, we regularly hedge our non-U.S. dollar-based exposures Statements contained in Item 8 of this Annual Report on Form 10-K, we regularly hedge our non-U.S. dollar-based exposures by entering into forward foreign currency exchange contracts. The terms of these contracts are for periods matching the by entering into forward foreign currency exchange contracts. The terms of these contracts are for periods matching the duration of the underlying exposure and generally range from one to twelve months. Currently, our largest foreign currency duration of the underlying exposure and generally range from one to twelve months. Currently, our largest foreign currency exposure is the Euro, primarily because our European operations have the highest proportion of our local currency denominated exposure is the Euro, primarily because our European operations have the highest proportion of our local currency denominated expenses. Relative to the net unhedged foreign currency exposures existing at October 29, 2022 and October 30, 2021, an expenses. Relative to the net unhedged foreign currency exposures existing at October 29, 2022 and October 30, 2021, an immediate 10% unfavorable movement in foreign currency exchange rates would result in approximately $69.5 million of immediate 10% unfavorable movement in foreign currency exchange rates would result in approximately $69.5 million of losses and $39.5 million of losses, respectively, in changes in earnings or cash flows over the course of the year. losses and $39.5 million of losses, respectively, in changes in earnings or cash flows over the course of the year. 41 41 42 42 How We How We Addressed the Addressed the Matter in Our Matter in Our Audit Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process to calculate the price protection credits. For example, we tested controls over the the Company's process to calculate the price protection credits. For example, we tested controls over the appropriateness of assumptions management used as well as controls over the completeness and accuracy of appropriateness of assumptions management used as well as controls over the completeness and accuracy of the data underlying estimates of expected price protection credits. the data underlying estimates of expected price protection credits. Our audit procedures included, among others, inspecting contractual terms in distributor agreements and Our audit procedures included, among others, inspecting contractual terms in distributor agreements and testing the underlying data used in management’s calculation for completeness and accuracy as well as testing the underlying data used in management’s calculation for completeness and accuracy as well as evaluating the significant assumptions used in the estimation of the price protection credits. We evaluated evaluating the significant assumptions used in the estimation of the price protection credits. We evaluated the Company’s methods and assumptions used in the estimates, which included comparing the assumptions the Company’s methods and assumptions used in the estimates, which included comparing the assumptions to historical trends. We inspected and tested the results of the Company's retrospective review analysis of to historical trends. We inspected and tested the results of the Company's retrospective review analysis of actual price protection credits claimed by distributors, evaluated the estimates made based on historical actual price protection credits claimed by distributors, evaluated the estimates made based on historical experience and performed sensitivity analyses of the Company’s significant assumptions to assess the experience and performed sensitivity analyses of the Company’s significant assumptions to assess the impact on the price protection credits. We also evaluated whether the Company appropriately considered impact on the price protection credits. We also evaluated whether the Company appropriately considered new information that could significantly change the estimated future price protection credits. new information that could significantly change the estimated future price protection credits. We have served as the Company’s auditor since 1967. We have served as the Company’s auditor since 1967. /s/ Ernst & Young LLP /s/ Ernst & Young LLP Boston, Massachusetts Boston, Massachusetts November 22, 2022 November 22, 2022 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Analog Devices, Inc. To the Shareholders and the Board of Directors of Analog Devices, Inc. Opinion on the Financial Statements Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Analog Devices, Inc. (the Company) as of October 29, 2022 We have audited the accompanying consolidated balance sheets of Analog Devices, Inc. (the Company) as of October 29, 2022 and October 30, 2021, the related consolidated statements of income, comprehensive income, shareholders' equity and cash and October 30, 2021, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended October 29, 2022, and the related notes and financial statement schedule flows for each of the three years in the period ended October 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 29, consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 29, 2022 and October 30, 2021, and the results of its operations and its cash flows for each of the three years in the period ended 2022 and October 30, 2021, and the results of its operations and its cash flows for each of the three years in the period ended October 29, 2022, in conformity with U.S. generally accepted accounting principles. October 29, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 29, 2022, based on criteria established in (PCAOB), the Company's internal control over financial reporting as of October 29, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 22, 2022 expressed an unqualified opinion thereon. (2013 framework), and our report dated November 22, 2022 expressed an unqualified opinion thereon. Basis for Opinion Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. matter or on the account or disclosure to which it relates. Revenue Recognition – Measuring Price Protection Credits Revenue Recognition – Measuring Price Protection Credits Description of Description of the Matter the Matter As described in Note 2n to the consolidated financial statements, the Company's sales contracts provide As described in Note 2n to the consolidated financial statements, the Company's sales contracts provide certain distributors with credits for price protection and rights of return, which results in variable certain distributors with credits for price protection and rights of return, which results in variable consideration. During 2022, sales to distributors were $7.5 billion net of expected price protection credits consideration. During 2022, sales to distributors were $7.5 billion net of expected price protection credits and rights of return for which the liability balance as of October 29, 2022 was $749.4 million, of which the and rights of return for which the liability balance as of October 29, 2022 was $749.4 million, of which the vast majority relates to the price protection credits. vast majority relates to the price protection credits. Auditing the Company's measurement for price protection credits under distributor contracts involved Auditing the Company's measurement for price protection credits under distributor contracts involved especially challenging judgment because the calculation involves subjective management assumptions about especially challenging judgment because the calculation involves subjective management assumptions about estimates of expected price protection credits. For example, estimated price protection credits included in the estimates of expected price protection credits. For example, estimated price protection credits included in the transaction price reflects management's evaluation of contractual terms, historical experience and transaction price reflects management's evaluation of contractual terms, historical experience and assumptions about future economic conditions. Changes in those assumptions can have a material effect on assumptions about future economic conditions. Changes in those assumptions can have a material effect on the amount recognized for price protection credits. the amount recognized for price protection credits. 43 43 44 44 How We How We Addressed the Addressed the Matter in Our Matter in Our Audit Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process to calculate the price protection credits. For example, we tested controls over the the Company's process to calculate the price protection credits. For example, we tested controls over the appropriateness of assumptions management used as well as controls over the completeness and accuracy of appropriateness of assumptions management used as well as controls over the completeness and accuracy of the data underlying estimates of expected price protection credits. the data underlying estimates of expected price protection credits. Our audit procedures included, among others, inspecting contractual terms in distributor agreements and Our audit procedures included, among others, inspecting contractual terms in distributor agreements and testing the underlying data used in management’s calculation for completeness and accuracy as well as testing the underlying data used in management’s calculation for completeness and accuracy as well as evaluating the significant assumptions used in the estimation of the price protection credits. We evaluated evaluating the significant assumptions used in the estimation of the price protection credits. We evaluated the Company’s methods and assumptions used in the estimates, which included comparing the assumptions the Company’s methods and assumptions used in the estimates, which included comparing the assumptions to historical trends. We inspected and tested the results of the Company's retrospective review analysis of to historical trends. We inspected and tested the results of the Company's retrospective review analysis of actual price protection credits claimed by distributors, evaluated the estimates made based on historical actual price protection credits claimed by distributors, evaluated the estimates made based on historical experience and performed sensitivity analyses of the Company’s significant assumptions to assess the experience and performed sensitivity analyses of the Company’s significant assumptions to assess the impact on the price protection credits. We also evaluated whether the Company appropriately considered impact on the price protection credits. We also evaluated whether the Company appropriately considered new information that could significantly change the estimated future price protection credits. new information that could significantly change the estimated future price protection credits. /s/ Ernst & Young LLP /s/ Ernst & Young LLP We have served as the Company’s auditor since 1967. We have served as the Company’s auditor since 1967. Boston, Massachusetts Boston, Massachusetts November 22, 2022 November 22, 2022 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Analog Devices, Inc. To the Shareholders and the Board of Directors of Analog Devices, Inc. Opinion on the Financial Statements Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Analog Devices, Inc. (the Company) as of October 29, 2022 We have audited the accompanying consolidated balance sheets of Analog Devices, Inc. (the Company) as of October 29, 2022 and October 30, 2021, the related consolidated statements of income, comprehensive income, shareholders' equity and cash and October 30, 2021, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended October 29, 2022, and the related notes and financial statement schedule flows for each of the three years in the period ended October 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 29, consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 29, 2022 and October 30, 2021, and the results of its operations and its cash flows for each of the three years in the period ended 2022 and October 30, 2021, and the results of its operations and its cash flows for each of the three years in the period ended October 29, 2022, in conformity with U.S. generally accepted accounting principles. October 29, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 29, 2022, based on criteria established in (PCAOB), the Company's internal control over financial reporting as of October 29, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 22, 2022 expressed an unqualified opinion thereon. (2013 framework), and our report dated November 22, 2022 expressed an unqualified opinion thereon. Basis for Opinion Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. matter or on the account or disclosure to which it relates. Revenue Recognition – Measuring Price Protection Credits Revenue Recognition – Measuring Price Protection Credits Description of Description of the Matter the Matter As described in Note 2n to the consolidated financial statements, the Company's sales contracts provide As described in Note 2n to the consolidated financial statements, the Company's sales contracts provide certain distributors with credits for price protection and rights of return, which results in variable certain distributors with credits for price protection and rights of return, which results in variable consideration. During 2022, sales to distributors were $7.5 billion net of expected price protection credits consideration. During 2022, sales to distributors were $7.5 billion net of expected price protection credits and rights of return for which the liability balance as of October 29, 2022 was $749.4 million, of which the and rights of return for which the liability balance as of October 29, 2022 was $749.4 million, of which the vast majority relates to the price protection credits. vast majority relates to the price protection credits. Auditing the Company's measurement for price protection credits under distributor contracts involved Auditing the Company's measurement for price protection credits under distributor contracts involved especially challenging judgment because the calculation involves subjective management assumptions about especially challenging judgment because the calculation involves subjective management assumptions about estimates of expected price protection credits. For example, estimated price protection credits included in the estimates of expected price protection credits. For example, estimated price protection credits included in the transaction price reflects management's evaluation of contractual terms, historical experience and transaction price reflects management's evaluation of contractual terms, historical experience and assumptions about future economic conditions. Changes in those assumptions can have a material effect on assumptions about future economic conditions. Changes in those assumptions can have a material effect on the amount recognized for price protection credits. the amount recognized for price protection credits. 43 43 44 44 ITEM 8. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF INCOME Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (thousands, except per share amounts) (thousands, except per share amounts) 2022 2022 2021 2021 2020 2020 Change in unrecognized gains/losses on derivative instruments designated as cash Change in unrecognized gains/losses on derivative instruments designated as cash Revenue Revenue Revenue Revenue Costs and Expenses Costs and Expenses Cost of sales Cost of sales Gross margin Gross margin Operating expenses: Operating expenses: Research and development Research and development Selling, marketing, general and administrative Selling, marketing, general and administrative Amortization of intangibles Amortization of intangibles Special charges, net Special charges, net Operating income: Operating income: Nonoperating expense (income): Nonoperating expense (income): Interest expense Interest expense Loss on extinguishment of debt Loss on extinguishment of debt Interest income Interest income Other, net Other, net Earnings Earnings Income before income taxes Income before income taxes Provision for (benefit from) income taxes Provision for (benefit from) income taxes Net income Net income $ $ 12,013,953 $ 12,013,953 $ 7,318,286 $ 7,318,286 $ 5,603,056 5,603,056 4,481,479 4,481,479 7,532,474 7,532,474 2,793,274 2,793,274 4,525,012 4,525,012 1,912,578 1,912,578 3,690,478 3,690,478 Changes in fair value of derivatives (net of tax of $2,902 in 2022, $14,217 in 2021 Changes in fair value of derivatives (net of tax of $2,902 in 2022, $14,217 in 2021 and $17,468 in 2020) and $17,468 in 2020) Adjustment for realized loss/(gain) reclassified into earnings (net of tax of $5,054 Adjustment for realized loss/(gain) reclassified into earnings (net of tax of $5,054 in 2022, $189 in 2021 and $158 in 2020) in 2022, $189 in 2021 and $158 in 2020) Total change in derivative instruments designated as cash flow hedges, net of tax Total change in derivative instruments designated as cash flow hedges, net of tax Changes in accumulated other comprehensive loss — pension plans: Changes in accumulated other comprehensive loss — pension plans: 1,700,518 1,700,518 1,266,175 1,266,175 1,012,572 1,012,572 274,509 274,509 4,253,774 4,253,774 3,278,700 3,278,700 200,408 200,408 — — (6,906) (6,906) (13,551) (13,551) 179,951 179,951 1,296,126 1,296,126 1,050,519 1,050,519 Change in actuarial gain/(loss) (net of tax of $7,756 in 2022, $637 in 2021 and Change in actuarial gain/(loss) (net of tax of $7,756 in 2022, $637 in 2021 and 915,418 915,418 536,811 536,811 84,456 84,456 2,832,811 2,832,811 1,692,201 1,692,201 184,825 184,825 215,150 215,150 (1,220) (1,220) (35,268) (35,268) 363,487 363,487 659,923 659,923 429,455 429,455 52,337 52,337 2,192,234 2,192,234 1,498,244 1,498,244 193,305 193,305 — — (4,305) (4,305) (2,373) (2,373) 186,627 186,627 3,098,749 3,098,749 350,188 350,188 1,328,714 1,328,714 1,311,617 1,311,617 (61,708) (61,708) 90,856 90,856 $ $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 $ 1,220,761 1,220,761 ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (thousands) (thousands) Net income Net income flow hedges: flow hedges: Foreign currency translation adjustment Foreign currency translation adjustment $5,167 in 2020) $5,167 in 2020) Other comprehensive (loss) income Other comprehensive (loss) income Comprehensive income Comprehensive income 2022 2022 2021 2021 2020 2020 $ $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 $ 1,220,761 1,220,761 (46,341) (46,341) 1,057 1,057 3,224 3,224 (30,331) (30,331) 41,817 41,817 (51,437) (51,437) 34,472 34,472 4,141 4,141 30,613 30,613 (11,587) (11,587) 7,099 7,099 48,916 48,916 12,923 12,923 62,896 62,896 (839) (839) (52,276) (52,276) (10,231) (10,231) (59,283) (59,283) $ $ 2,736,974 $ 2,736,974 $ 1,453,318 $ 1,453,318 $ 1,161,478 1,161,478 See accompanying Notes. See accompanying Notes. Shares used to compute earnings per common share — basic Shares used to compute earnings per common share — basic Shares used to compute earnings per common share — diluted Shares used to compute earnings per common share — diluted 519,226 519,226 523,178 523,178 397,462 397,462 401,288 401,288 368,633 368,633 371,973 371,973 Basic earnings per common share Basic earnings per common share Diluted earnings per common share Diluted earnings per common share $ $ $ $ 5.29 $ 5.29 $ 5.25 $ 5.25 $ 3.50 $ 3.50 $ 3.46 $ 3.46 $ 3.31 3.31 3.28 3.28 See accompanying Notes. See accompanying Notes. 45 45 46 46 ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (thousands) (thousands) Net income Net income Foreign currency translation adjustment Foreign currency translation adjustment 2022 2022 2021 2021 2020 2020 $ $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 $ 1,220,761 1,220,761 (46,341) (46,341) 1,057 1,057 3,224 3,224 Change in unrecognized gains/losses on derivative instruments designated as cash Change in unrecognized gains/losses on derivative instruments designated as cash flow hedges: flow hedges: Changes in fair value of derivatives (net of tax of $2,902 in 2022, $14,217 in 2021 Changes in fair value of derivatives (net of tax of $2,902 in 2022, $14,217 in 2021 and $17,468 in 2020) and $17,468 in 2020) Adjustment for realized loss/(gain) reclassified into earnings (net of tax of $5,054 Adjustment for realized loss/(gain) reclassified into earnings (net of tax of $5,054 in 2022, $189 in 2021 and $158 in 2020) in 2022, $189 in 2021 and $158 in 2020) Total change in derivative instruments designated as cash flow hedges, net of tax Total change in derivative instruments designated as cash flow hedges, net of tax Changes in accumulated other comprehensive loss — pension plans: Changes in accumulated other comprehensive loss — pension plans: Change in actuarial gain/(loss) (net of tax of $7,756 in 2022, $637 in 2021 and Change in actuarial gain/(loss) (net of tax of $7,756 in 2022, $637 in 2021 and $5,167 in 2020) $5,167 in 2020) Other comprehensive (loss) income Other comprehensive (loss) income Comprehensive income Comprehensive income (30,331) (30,331) 41,817 41,817 (51,437) (51,437) 34,472 34,472 4,141 4,141 30,613 30,613 (11,587) (11,587) 7,099 7,099 48,916 48,916 12,923 12,923 62,896 62,896 (839) (839) (52,276) (52,276) (10,231) (10,231) (59,283) (59,283) $ $ 2,736,974 $ 2,736,974 $ 1,453,318 $ 1,453,318 $ 1,161,478 1,161,478 See accompanying Notes. See accompanying Notes. ITEM 8. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF INCOME Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (thousands, except per share amounts) (thousands, except per share amounts) 2022 2022 2021 2021 2020 2020 Revenue Revenue Revenue Revenue Costs and Expenses Costs and Expenses Cost of sales Cost of sales Gross margin Gross margin Operating expenses: Operating expenses: Research and development Research and development Selling, marketing, general and administrative Selling, marketing, general and administrative Amortization of intangibles Amortization of intangibles Special charges, net Special charges, net Operating income: Operating income: Nonoperating expense (income): Nonoperating expense (income): Interest expense Interest expense Loss on extinguishment of debt Loss on extinguishment of debt Interest income Interest income Other, net Other, net Earnings Earnings Income before income taxes Income before income taxes Provision for (benefit from) income taxes Provision for (benefit from) income taxes Net income Net income $ $ 12,013,953 $ 12,013,953 $ 7,318,286 $ 7,318,286 $ 5,603,056 5,603,056 4,481,479 4,481,479 7,532,474 7,532,474 2,793,274 2,793,274 4,525,012 4,525,012 1,912,578 1,912,578 3,690,478 3,690,478 1,296,126 1,296,126 1,050,519 1,050,519 1,700,518 1,700,518 1,266,175 1,266,175 1,012,572 1,012,572 274,509 274,509 4,253,774 4,253,774 3,278,700 3,278,700 200,408 200,408 — — (6,906) (6,906) (13,551) (13,551) 179,951 179,951 915,418 915,418 536,811 536,811 84,456 84,456 2,832,811 2,832,811 1,692,201 1,692,201 184,825 184,825 215,150 215,150 (1,220) (1,220) (35,268) (35,268) 363,487 363,487 659,923 659,923 429,455 429,455 52,337 52,337 2,192,234 2,192,234 1,498,244 1,498,244 193,305 193,305 — — (4,305) (4,305) (2,373) (2,373) 186,627 186,627 3,098,749 3,098,749 350,188 350,188 1,328,714 1,328,714 1,311,617 1,311,617 (61,708) (61,708) 90,856 90,856 $ $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 $ 1,220,761 1,220,761 Shares used to compute earnings per common share — basic Shares used to compute earnings per common share — basic Shares used to compute earnings per common share — diluted Shares used to compute earnings per common share — diluted 519,226 519,226 523,178 523,178 397,462 397,462 401,288 401,288 368,633 368,633 371,973 371,973 Basic earnings per common share Basic earnings per common share Diluted earnings per common share Diluted earnings per common share $ $ $ $ 5.29 $ 5.29 $ 5.25 $ 5.25 $ 3.50 $ 3.50 $ 3.46 $ 3.46 $ 3.31 3.31 3.28 3.28 See accompanying Notes. See accompanying Notes. 45 45 46 46 ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS October 29, 2022 and October 30, 2021 October 29, 2022 and October 30, 2021 ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (thousands, except per share amounts) (thousands, except per share amounts) ASSETS ASSETS Current Assets Current Assets Cash and cash equivalents Cash and cash equivalents Accounts receivable less allowances of $4,571 ($2,658 in 2021) Accounts receivable less allowances of $4,571 ($2,658 in 2021) Inventories Inventories Prepaid expenses and other current assets Prepaid expenses and other current assets Total current assets Total current assets Other Assets Other Assets Net property, plant and equipment Net property, plant and equipment Other investments Other investments Goodwill Goodwill Intangible assets, net Intangible assets, net Deferred tax assets Deferred tax assets Other assets Other assets Total other assets Total other assets LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Current Liabilities Accounts payable Accounts payable Income taxes payable Income taxes payable Debt, current Debt, current Accrued liabilities Accrued liabilities Total current liabilities Total current liabilities Non-current Liabilities Non-current Liabilities Long-term debt Long-term debt Deferred income taxes Deferred income taxes Income taxes payable Income taxes payable Other non-current liabilities Other non-current liabilities Total non-current liabilities Total non-current liabilities Commitments and contingencies (Note 10) Commitments and contingencies (Note 10) Shareholders’ Equity Shareholders’ Equity 2022 2022 2021 2021 $ $ 1,470,572 $ 1,470,572 $ 1,800,462 1,800,462 1,399,914 1,399,914 267,044 267,044 4,937,992 4,937,992 2,401,304 2,401,304 122,285 122,285 26,913,134 26,913,134 13,265,406 13,265,406 2,264,888 2,264,888 397,341 397,341 45,364,358 45,364,358 50,302,350 $ 50,302,350 $ 582,160 $ 582,160 $ $ $ $ $ 265,845 265,845 — — 1,594,650 1,594,650 2,442,655 2,442,655 6,548,625 6,548,625 3,622,538 3,622,538 707,846 707,846 515,363 515,363 11,394,372 11,394,372 1,977,964 1,977,964 1,459,056 1,459,056 1,200,610 1,200,610 740,687 740,687 5,378,317 5,378,317 1,979,051 1,979,051 127,856 127,856 26,918,470 26,918,470 15,267,170 15,267,170 2,267,269 2,267,269 383,938 383,938 46,943,754 46,943,754 52,322,071 52,322,071 443,434 443,434 332,685 332,685 516,663 516,663 1,477,530 1,477,530 2,770,312 2,770,312 6,253,212 6,253,212 3,938,830 3,938,830 811,337 811,337 555,838 555,838 11,559,217 11,559,217 Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding — — — — Stock-based compensation expense Stock-based compensation expense Common stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 509,295,941 shares outstanding Common stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 509,295,941 shares outstanding (525,330,672 on October 30, 2021) (525,330,672 on October 30, 2021) Capital in excess of par value Capital in excess of par value Retained earnings Retained earnings Accumulated other comprehensive loss Accumulated other comprehensive loss Total shareholders’ equity Total shareholders’ equity 84,880 84,880 27,857,270 27,857,270 8,721,325 8,721,325 (198,152) (198,152) 36,465,323 36,465,323 87,554 87,554 30,574,237 30,574,237 7,517,316 7,517,316 (186,565) (186,565) 37,992,542 37,992,542 $ $ 50,302,350 $ 50,302,350 $ 52,322,071 52,322,071 See accompanying Notes. See accompanying Notes. BALANCE, NOVEMBER 2, 2019 BALANCE, NOVEMBER 2, 2019 368,302 $ 368,302 $ 61,385 $ 4,936,349 $ 6,899,253 $ 61,385 $ 4,936,349 $ 6,899,253 $ (187,799) (187,799) Common Stock Common Stock Shares Shares Amount Amount Capital in Capital in Excess of Excess of Par Value Par Value Accumulated Accumulated Other Other Retained Retained Earnings Earnings Comprehensive Comprehensive (Loss) Income (Loss) Income (2,379) (2,379) 2,379 2,379 1,220,761 1,220,761 (886,155) (886,155) 3,110 3,110 336 336 518 518 56 56 67,885 67,885 39,944 39,944 149,518 149,518 (2,263) (2,263) (377) (377) (244,110) (244,110) (thousands) (thousands) Effect of Accounting Standards Update 2018-02 Effect of Accounting Standards Update 2018-02 Net Income — 2020 Net Income — 2020 Dividends declared and paid - $2.40 per share Dividends declared and paid - $2.40 per share Issuance of stock under stock plans and other Issuance of stock under stock plans and other Issuance of stock as charitable contribution Issuance of stock as charitable contribution Stock-based compensation expense Stock-based compensation expense Other comprehensive loss Other comprehensive loss Common stock repurchased Common stock repurchased Net Income — 2021 Net Income — 2021 Dividends declared and paid - $2.69 per share Dividends declared and paid - $2.69 per share BALANCE, OCTOBER 31, 2020 BALANCE, OCTOBER 31, 2020 369,485 369,485 61,582 61,582 4,949,586 4,949,586 7,236,238 7,236,238 (249,461) (249,461) Issuance of stock under stock plans and other Issuance of stock under stock plans and other 2,738 2,738 355 355 62,750 62,750 Issuance of stock in connection with Acquisition Issuance of stock in connection with Acquisition 169,233 169,233 28,204 28,204 27,725,957 27,725,957 Stock-based compensation expense Stock-based compensation expense Replacement share-based awards issued in connection with Replacement share-based awards issued in connection with Acquisition Acquisition Other comprehensive income Other comprehensive income Common stock repurchased Common stock repurchased BALANCE, OCTOBER 30, 2021 BALANCE, OCTOBER 30, 2021 525,331 525,331 87,554 87,554 30,574,237 30,574,237 7,517,316 7,517,316 (186,565) (186,565) (16,125) (16,125) (2,587) (2,587) (2,602,557) (2,602,557) Net Income — 2022 Net Income — 2022 Dividends declared and paid - $2.97 per share Dividends declared and paid - $2.97 per share Issuance of stock under stock plans and other Issuance of stock under stock plans and other 2,701 2,701 449 449 Other comprehensive loss Other comprehensive loss Common stock repurchased Common stock repurchased (18,736) (18,736) (3,123) (3,123) (3,073,892) (3,073,892) BALANCE, OCTOBER 29, 2022 BALANCE, OCTOBER 29, 2022 509,296 $ 509,296 $ 84,880 $ 27,857,270 $ 8,721,325 $ 84,880 $ 27,857,270 $ 8,721,325 $ (198,152) (198,152) 1,390,422 1,390,422 (1,109,344) (1,109,344) 2,748,561 2,748,561 (1,544,552) (1,544,552) 243,611 243,611 194,890 194,890 33,438 33,438 323,487 323,487 (59,283) (59,283) 62,896 62,896 (11,587) (11,587) See accompanying Notes. See accompanying Notes. 47 47 48 48 ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS October 29, 2022 and October 30, 2021 October 29, 2022 and October 30, 2021 Accounts receivable less allowances of $4,571 ($2,658 in 2021) Accounts receivable less allowances of $4,571 ($2,658 in 2021) (thousands) (thousands) ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Common Stock Common Stock Shares Shares Amount Amount Capital in Capital in Excess of Excess of Par Value Par Value Retained Retained Earnings Earnings Accumulated Accumulated Other Other Comprehensive Comprehensive (Loss) Income (Loss) Income BALANCE, NOVEMBER 2, 2019 BALANCE, NOVEMBER 2, 2019 368,302 $ 368,302 $ 61,385 $ 4,936,349 $ 6,899,253 $ 61,385 $ 4,936,349 $ 6,899,253 $ (187,799) (187,799) Effect of Accounting Standards Update 2018-02 Effect of Accounting Standards Update 2018-02 Net Income — 2020 Net Income — 2020 Dividends declared and paid - $2.40 per share Dividends declared and paid - $2.40 per share Issuance of stock under stock plans and other Issuance of stock under stock plans and other Issuance of stock as charitable contribution Issuance of stock as charitable contribution Stock-based compensation expense Stock-based compensation expense Other comprehensive loss Other comprehensive loss Common stock repurchased Common stock repurchased (2,379) (2,379) 2,379 2,379 1,220,761 1,220,761 (886,155) (886,155) (59,283) (59,283) 3,110 3,110 336 336 518 518 56 56 67,885 67,885 39,944 39,944 149,518 149,518 (2,263) (2,263) (377) (377) (244,110) (244,110) $ $ 50,302,350 $ 50,302,350 $ 52,322,071 52,322,071 BALANCE, OCTOBER 31, 2020 BALANCE, OCTOBER 31, 2020 369,485 369,485 61,582 61,582 4,949,586 4,949,586 7,236,238 7,236,238 (249,461) (249,461) Net Income — 2021 Net Income — 2021 Dividends declared and paid - $2.69 per share Dividends declared and paid - $2.69 per share 1,390,422 1,390,422 (1,109,344) (1,109,344) Issuance of stock under stock plans and other Issuance of stock under stock plans and other 2,738 2,738 355 355 62,750 62,750 Issuance of stock in connection with Acquisition Issuance of stock in connection with Acquisition 169,233 169,233 28,204 28,204 27,725,957 27,725,957 Stock-based compensation expense Stock-based compensation expense Replacement share-based awards issued in connection with Replacement share-based awards issued in connection with Acquisition Acquisition Other comprehensive income Other comprehensive income Common stock repurchased Common stock repurchased 243,611 243,611 194,890 194,890 (16,125) (16,125) (2,587) (2,587) (2,602,557) (2,602,557) 62,896 62,896 BALANCE, OCTOBER 30, 2021 BALANCE, OCTOBER 30, 2021 525,331 525,331 87,554 87,554 30,574,237 30,574,237 7,517,316 7,517,316 (186,565) (186,565) Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding — — — — Stock-based compensation expense Stock-based compensation expense 11,394,372 11,394,372 11,559,217 11,559,217 Net Income — 2022 Net Income — 2022 Dividends declared and paid - $2.97 per share Dividends declared and paid - $2.97 per share Issuance of stock under stock plans and other Issuance of stock under stock plans and other 2,701 2,701 449 449 2,748,561 2,748,561 (1,544,552) (1,544,552) 33,438 33,438 323,487 323,487 Common stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 509,295,941 shares outstanding Common stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 509,295,941 shares outstanding See accompanying Notes. See accompanying Notes. Other comprehensive loss Other comprehensive loss Common stock repurchased Common stock repurchased (18,736) (18,736) (3,123) (3,123) (3,073,892) (3,073,892) (11,587) (11,587) BALANCE, OCTOBER 29, 2022 BALANCE, OCTOBER 29, 2022 509,296 $ 509,296 $ 84,880 $ 27,857,270 $ 8,721,325 $ 84,880 $ 27,857,270 $ 8,721,325 $ (198,152) (198,152) See accompanying Notes. See accompanying Notes. LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES AND SHAREHOLDERS’ EQUITY (thousands, except per share amounts) (thousands, except per share amounts) ASSETS ASSETS Current Assets Current Assets Cash and cash equivalents Cash and cash equivalents Inventories Inventories Prepaid expenses and other current assets Prepaid expenses and other current assets Total current assets Total current assets Other Assets Other Assets Net property, plant and equipment Net property, plant and equipment Other investments Other investments Goodwill Goodwill Intangible assets, net Intangible assets, net Deferred tax assets Deferred tax assets Other assets Other assets Total other assets Total other assets Current Liabilities Current Liabilities Accounts payable Accounts payable Income taxes payable Income taxes payable Debt, current Debt, current Accrued liabilities Accrued liabilities Total current liabilities Total current liabilities Non-current Liabilities Non-current Liabilities Long-term debt Long-term debt Deferred income taxes Deferred income taxes Income taxes payable Income taxes payable Other non-current liabilities Other non-current liabilities Total non-current liabilities Total non-current liabilities Commitments and contingencies (Note 10) Commitments and contingencies (Note 10) Shareholders’ Equity Shareholders’ Equity (525,330,672 on October 30, 2021) (525,330,672 on October 30, 2021) Capital in excess of par value Capital in excess of par value Retained earnings Retained earnings Accumulated other comprehensive loss Accumulated other comprehensive loss Total shareholders’ equity Total shareholders’ equity 2022 2022 2021 2021 $ $ 1,470,572 $ 1,470,572 $ 1,800,462 1,800,462 1,399,914 1,399,914 267,044 267,044 4,937,992 4,937,992 2,401,304 2,401,304 122,285 122,285 26,913,134 26,913,134 13,265,406 13,265,406 2,264,888 2,264,888 397,341 397,341 45,364,358 45,364,358 265,845 265,845 — — 1,594,650 1,594,650 2,442,655 2,442,655 6,548,625 6,548,625 3,622,538 3,622,538 707,846 707,846 515,363 515,363 1,977,964 1,977,964 1,459,056 1,459,056 1,200,610 1,200,610 740,687 740,687 5,378,317 5,378,317 1,979,051 1,979,051 127,856 127,856 26,918,470 26,918,470 15,267,170 15,267,170 2,267,269 2,267,269 383,938 383,938 46,943,754 46,943,754 443,434 443,434 332,685 332,685 516,663 516,663 1,477,530 1,477,530 2,770,312 2,770,312 6,253,212 6,253,212 3,938,830 3,938,830 811,337 811,337 555,838 555,838 $ $ 582,160 $ 582,160 $ 84,880 84,880 27,857,270 27,857,270 8,721,325 8,721,325 (198,152) (198,152) 36,465,323 36,465,323 87,554 87,554 30,574,237 30,574,237 7,517,316 7,517,316 (186,565) (186,565) 37,992,542 37,992,542 $ $ 50,302,350 $ 50,302,350 $ 52,322,071 52,322,071 47 47 48 48 ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (thousands) (thousands) Cash flows from operating activities: Cash flows from operating activities: Net income Net income Adjustments to reconcile net income to net cash provided by operations: Adjustments to reconcile net income to net cash provided by operations: 2022 2022 2021 2021 2020 2020 $ 2,748,561 $ 1,390,422 $ 1,220,761 $ 2,748,561 $ 1,390,422 $ 1,220,761 1. Description of Business 1. Description of Business ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (all tabular amounts in thousands except per share amounts) (all tabular amounts in thousands except per share amounts) Depreciation Depreciation Amortization of intangibles Amortization of intangibles Cost of goods sold for inventory acquired Cost of goods sold for inventory acquired Stock-based compensation expense Stock-based compensation expense Non-cash contribution to charitable foundation Non-cash contribution to charitable foundation Loss on extinguishment of debt Loss on extinguishment of debt Non-cash impairment charge Non-cash impairment charge Non-cash operating lease costs Non-cash operating lease costs Other Other Deferred income taxes Deferred income taxes Change in operating assets and liabilities: Change in operating assets and liabilities: Accounts receivable Accounts receivable Inventories Inventories Prepaid expenses and other current assets Prepaid expenses and other current assets Prepaid income tax Prepaid income tax Accounts payable and accrued liabilities Accounts payable and accrued liabilities Income taxes payable, current Income taxes payable, current Other assets Other assets Other liabilities Other liabilities Total adjustments Total adjustments Net cash provided by operating activities Net cash provided by operating activities Cash flows from investing activities: Cash flows from investing activities: Additions to property, plant and equipment, net Additions to property, plant and equipment, net Cash received from acquisition of Maxim, net of cash paid Cash received from acquisition of Maxim, net of cash paid Other Other Net cash (used for) provided by investing activities Net cash (used for) provided by investing activities Cash flows from financing activities: Cash flows from financing activities: Proceeds from debt Proceeds from debt Early termination of debt Early termination of debt Debt repayments Debt repayments Payments on revolver Payments on revolver Proceeds from revolver Proceeds from revolver Payment on derivative instrument Payment on derivative instrument Prepayment for stock repurchases Prepayment for stock repurchases Dividend payments to shareholders Dividend payments to shareholders Repurchase of common stock Repurchase of common stock Proceeds from employee stock plans Proceeds from employee stock plans Other Other Net cash used for financing activities Net cash used for financing activities Effect of exchange rate changes on cash Effect of exchange rate changes on cash Net (decrease) increase in cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Cash and cash equivalents at end of year See accompanying Notes. See accompanying Notes. 283,338 283,338 2,014,161 2,014,161 271,396 271,396 323,487 323,487 — — — — 91,953 91,953 (44,087) (44,087) (2,987) (2,987) (326,755) (326,755) (343,908) (343,908) (470,725) (470,725) (79,439) (79,439) 14,855 14,855 171,772 171,772 (91,852) (91,852) (14,441) (14,441) (69,927) (69,927) 1,726,841 1,726,841 4,475,402 4,475,402 231,275 231,275 843,359 843,359 331,083 331,083 243,611 243,611 — — 215,150 215,150 — — 19,232 19,232 (24,086) (24,086) (406,922) (406,922) (114,504) (114,504) (65,114) (65,114) (53,326) (53,326) (5,791) (5,791) 208,444 208,444 (6,797) (6,797) (21,690) (21,690) (49,277) (49,277) 1,344,647 1,344,647 2,735,069 2,735,069 233,775 233,775 577,148 577,148 — — 149,518 149,518 40,000 40,000 — — — — (257,607) (257,607) 5,418 5,418 (113,948) (113,948) (101,626) (101,626) 1,760 1,760 (3,666) (3,666) — — 103,104 103,104 29,441 29,441 — — 124,409 124,409 787,726 787,726 2,008,487 2,008,487 (699,308) (699,308) — — 41,940 41,940 (657,368) (657,368) (343,676) (343,676) 2,450,550 2,450,550 36,651 36,651 2,143,525 2,143,525 (165,692) (165,692) — — (14,831) (14,831) (180,523) (180,523) 296,130 296,130 (519,116) (519,116) — — (400,000) (400,000) 400,000 400,000 — — — — (1,544,552) (1,544,552) (2,577,015) (2,577,015) 33,887 33,887 19,946 19,946 (4,290,720) (4,290,720) (34,706) (34,706) (507,392) (507,392) 1,977,964 1,977,964 395,646 395,646 — — (750,000) (750,000) (350,000) (350,000) 350,000 350,000 — — — — (886,155) (886,155) (244,487) (244,487) 68,403 68,403 (4,015) (4,015) (1,420,608) (1,420,608) 182 182 407,538 407,538 648,322 648,322 $ 1,470,572 $ 1,977,964 $ 1,055,860 $ 1,470,572 $ 1,977,964 $ 1,055,860 3,939,640 3,939,640 (3,591,982) (3,591,982) — — (400,000) (400,000) 400,000 400,000 (153,161) (153,161) (500,000) (500,000) (1,109,344) (1,109,344) (2,605,144) (2,605,144) 63,105 63,105 (2,778) (2,778) (3,959,664) (3,959,664) 3,174 3,174 922,104 922,104 1,055,860 1,055,860 Analog Devices, Inc. (Analog Devices or the Company) is a leading semiconductor company dedicated to solving its Analog Devices, Inc. (Analog Devices or the Company) is a leading semiconductor company dedicated to solving its customers' most complex engineering challenges. Since its inception in 1965, the Company has played a critical role at the customers' most complex engineering challenges. Since its inception in 1965, the Company has played a critical role at the intersection of the physical and digital world by providing the building blocks to sense, measure, interpret, connect and power. intersection of the physical and digital world by providing the building blocks to sense, measure, interpret, connect and power. The Company designs, manufactures, tests and markets a broad portfolio of solutions, including integrated circuits (ICs), The Company designs, manufactures, tests and markets a broad portfolio of solutions, including integrated circuits (ICs), software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing technologies. The software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing technologies. The Company's comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend across Company's comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend across high-performance precision and high-speed mixed-signal, power management and processing technologies – including data high-performance precision and high-speed mixed-signal, power management and processing technologies – including data converters, amplifiers, power management, radio frequency ICs, edge processors and other sensors. The Company's focus is converters, amplifiers, power management, radio frequency ICs, edge processors and other sensors. The Company's focus is largely on the business-to-business end markets of Industrial, Automotive and Communications and related applications, as largely on the business-to-business end markets of Industrial, Automotive and Communications and related applications, as well as Consumer applications, with the goal of driving sustainable and profitable growth over the long term. well as Consumer applications, with the goal of driving sustainable and profitable growth over the long term. 2. Summary of Significant Accounting Policies 2. Summary of Significant Accounting Policies a. Principles of Consolidation a. Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and all of its subsidiaries. Upon The Consolidated Financial Statements include the accounts of the Company and all of its subsidiaries. Upon consolidation, all intercompany accounts and transactions are eliminated. Certain amounts reported in previous years have been consolidation, all intercompany accounts and transactions are eliminated. Certain amounts reported in previous years have been reclassified to conform to the presentation for the fiscal year ended October 29, 2022 (fiscal 2022). Such reclassified amounts reclassified to conform to the presentation for the fiscal year ended October 29, 2022 (fiscal 2022). Such reclassified amounts The Company’s fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October. The Company’s fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October. Fiscal 2022, the fiscal year ended October 30, 2021 (fiscal 2021) and the fiscal year ended October 31, 2020 (fiscal 2020) were Fiscal 2022, the fiscal year ended October 30, 2021 (fiscal 2021) and the fiscal year ended October 31, 2020 (fiscal 2020) were are immaterial. are immaterial. 52-week fiscal periods. 52-week fiscal periods. On August 26, 2021 (Acquisition Date), the Company completed the acquisition of Maxim Integrated Products, Inc. On August 26, 2021 (Acquisition Date), the Company completed the acquisition of Maxim Integrated Products, Inc. (Maxim), an independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the (Maxim), an independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date for outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date for total consideration of approximately $28.0 billion of the Company's common stock. The acquisition of Maxim is referred to as total consideration of approximately $28.0 billion of the Company's common stock. The acquisition of Maxim is referred to as the Acquisition. The consolidated financial statements included in this Annual Report on Form 10-K include the financial the Acquisition. The consolidated financial statements included in this Annual Report on Form 10-K include the financial results of Maxim prospectively from the Acquisition Date. See Note 6, Acquisitions, of the Notes to Consolidated Financial results of Maxim prospectively from the Acquisition Date. See Note 6, Acquisitions, of the Notes to Consolidated Financial Statements for additional information. Statements for additional information. b. Cash and Cash Equivalents b. Cash and Cash Equivalents Cash and cash equivalents are highly liquid investments with insignificant interest rate risk and maturities of ninety days Cash and cash equivalents are highly liquid investments with insignificant interest rate risk and maturities of ninety days or less at the time of acquisition. Cash and cash equivalents consist primarily of government and institutional money market or less at the time of acquisition. Cash and cash equivalents consist primarily of government and institutional money market funds, corporate obligations such as commercial paper and floating rate notes, bonds, demand deposit accounts and bank time funds, corporate obligations such as commercial paper and floating rate notes, bonds, demand deposit accounts and bank time deposits. deposits. The Company classifies its investments in readily marketable debt and equity securities as “held-to-maturity,” “available- The Company classifies its investments in readily marketable debt and equity securities as “held-to-maturity,” “available- for-sale” or “trading” at the time of purchase. There were no transfers between investment classifications in any of the fiscal for-sale” or “trading” at the time of purchase. There were no transfers between investment classifications in any of the fiscal years presented. Held-to-maturity securities, which are carried at amortized cost, include only those securities the Company has years presented. Held-to-maturity securities, which are carried at amortized cost, include only those securities the Company has the positive intent and ability to hold to maturity. Securities such as bank time deposits, which by their nature are typically held the positive intent and ability to hold to maturity. Securities such as bank time deposits, which by their nature are typically held to maturity, are classified as such. The Company’s other readily marketable cash equivalents are classified as available-for-sale. to maturity, are classified as such. The Company’s other readily marketable cash equivalents are classified as available-for-sale. Available-for-sale securities are carried at fair value with unrealized gains and losses, net of related tax, reported in Available-for-sale securities are carried at fair value with unrealized gains and losses, net of related tax, reported in accumulated other comprehensive (loss) income (AOCI). Adjustments to the fair value of investments classified as available- accumulated other comprehensive (loss) income (AOCI). Adjustments to the fair value of investments classified as available- for-sale are recorded as an increase or decrease in AOCI, unless the adjustment is considered an other-than-temporary for-sale are recorded as an increase or decrease in AOCI, unless the adjustment is considered an other-than-temporary impairment, in which case the adjustment is recorded as a charge in the Consolidated Statements of Income. impairment, in which case the adjustment is recorded as a charge in the Consolidated Statements of Income. The Company periodically evaluates its investments for impairment. There were no other-than-temporary impairments of The Company periodically evaluates its investments for impairment. There were no other-than-temporary impairments of investments in any of the fiscal years presented. investments in any of the fiscal years presented. 49 49 50 50 Cash flows from operating activities: Cash flows from operating activities: (thousands) (thousands) Net income Net income Depreciation Depreciation Amortization of intangibles Amortization of intangibles Cost of goods sold for inventory acquired Cost of goods sold for inventory acquired Stock-based compensation expense Stock-based compensation expense Non-cash contribution to charitable foundation Non-cash contribution to charitable foundation Loss on extinguishment of debt Loss on extinguishment of debt Non-cash impairment charge Non-cash impairment charge Non-cash operating lease costs Non-cash operating lease costs Other Other Deferred income taxes Deferred income taxes Change in operating assets and liabilities: Change in operating assets and liabilities: Accounts receivable Accounts receivable Inventories Inventories Prepaid expenses and other current assets Prepaid expenses and other current assets Prepaid income tax Prepaid income tax Accounts payable and accrued liabilities Accounts payable and accrued liabilities Income taxes payable, current Income taxes payable, current Other assets Other assets Other liabilities Other liabilities Total adjustments Total adjustments Net cash provided by operating activities Net cash provided by operating activities Cash flows from investing activities: Cash flows from investing activities: Additions to property, plant and equipment, net Additions to property, plant and equipment, net Cash received from acquisition of Maxim, net of cash paid Cash received from acquisition of Maxim, net of cash paid Other Other Net cash (used for) provided by investing activities Net cash (used for) provided by investing activities Cash flows from financing activities: Cash flows from financing activities: Proceeds from debt Proceeds from debt Early termination of debt Early termination of debt Debt repayments Debt repayments Payments on revolver Payments on revolver Proceeds from revolver Proceeds from revolver Payment on derivative instrument Payment on derivative instrument Prepayment for stock repurchases Prepayment for stock repurchases Dividend payments to shareholders Dividend payments to shareholders Repurchase of common stock Repurchase of common stock Proceeds from employee stock plans Proceeds from employee stock plans Other Other Net cash used for financing activities Net cash used for financing activities Effect of exchange rate changes on cash Effect of exchange rate changes on cash Net (decrease) increase in cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Cash and cash equivalents at end of year See accompanying Notes. See accompanying Notes. 2022 2022 2021 2021 2020 2020 $ 2,748,561 $ 1,390,422 $ 1,220,761 $ 2,748,561 $ 1,390,422 $ 1,220,761 283,338 283,338 2,014,161 2,014,161 271,396 271,396 323,487 323,487 — — — — 91,953 91,953 (44,087) (44,087) (2,987) (2,987) (343,908) (343,908) (470,725) (470,725) (79,439) (79,439) 14,855 14,855 171,772 171,772 (91,852) (91,852) (14,441) (14,441) (69,927) (69,927) 231,275 231,275 843,359 843,359 331,083 331,083 243,611 243,611 215,150 215,150 — — — — 19,232 19,232 (24,086) (24,086) (65,114) (65,114) (53,326) (53,326) (5,791) (5,791) 208,444 208,444 (6,797) (6,797) (21,690) (21,690) (49,277) (49,277) (326,755) (326,755) (406,922) (406,922) (113,948) (113,948) 1,726,841 1,726,841 4,475,402 4,475,402 1,344,647 1,344,647 2,735,069 2,735,069 (699,308) (699,308) — — 41,940 41,940 (343,676) (343,676) 2,450,550 2,450,550 36,651 36,651 (657,368) (657,368) 2,143,525 2,143,525 (165,692) (165,692) — — (14,831) (14,831) (180,523) (180,523) 296,130 296,130 3,939,640 3,939,640 395,646 395,646 (519,116) (519,116) (3,591,982) (3,591,982) (400,000) (400,000) 400,000 400,000 — — — — — — — — (400,000) (400,000) 400,000 400,000 (153,161) (153,161) (500,000) (500,000) (1,544,552) (1,544,552) (2,577,015) (2,577,015) (1,109,344) (1,109,344) (2,605,144) (2,605,144) 33,887 33,887 19,946 19,946 63,105 63,105 (2,778) (2,778) (34,706) (34,706) (507,392) (507,392) 1,977,964 1,977,964 3,174 3,174 922,104 922,104 1,055,860 1,055,860 (4,290,720) (4,290,720) (3,959,664) (3,959,664) (1,420,608) (1,420,608) $ 1,470,572 $ 1,977,964 $ 1,055,860 $ 1,470,572 $ 1,977,964 $ 1,055,860 233,775 233,775 577,148 577,148 — — 149,518 149,518 40,000 40,000 — — — — (257,607) (257,607) 5,418 5,418 1,760 1,760 (3,666) (3,666) — — 103,104 103,104 29,441 29,441 — — 124,409 124,409 787,726 787,726 2,008,487 2,008,487 — — (750,000) (750,000) (350,000) (350,000) 350,000 350,000 — — — — (886,155) (886,155) (244,487) (244,487) 68,403 68,403 (4,015) (4,015) 182 182 407,538 407,538 648,322 648,322 ANALOG DEVICES, INC. ANALOG DEVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (all tabular amounts in thousands except per share amounts) (all tabular amounts in thousands except per share amounts) Adjustments to reconcile net income to net cash provided by operations: Adjustments to reconcile net income to net cash provided by operations: 1. Description of Business 1. Description of Business Analog Devices, Inc. (Analog Devices or the Company) is a leading semiconductor company dedicated to solving its Analog Devices, Inc. (Analog Devices or the Company) is a leading semiconductor company dedicated to solving its customers' most complex engineering challenges. Since its inception in 1965, the Company has played a critical role at the customers' most complex engineering challenges. Since its inception in 1965, the Company has played a critical role at the intersection of the physical and digital world by providing the building blocks to sense, measure, interpret, connect and power. intersection of the physical and digital world by providing the building blocks to sense, measure, interpret, connect and power. The Company designs, manufactures, tests and markets a broad portfolio of solutions, including integrated circuits (ICs), The Company designs, manufactures, tests and markets a broad portfolio of solutions, including integrated circuits (ICs), software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing technologies. The software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing technologies. The Company's comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend across Company's comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend across high-performance precision and high-speed mixed-signal, power management and processing technologies – including data high-performance precision and high-speed mixed-signal, power management and processing technologies – including data converters, amplifiers, power management, radio frequency ICs, edge processors and other sensors. The Company's focus is converters, amplifiers, power management, radio frequency ICs, edge processors and other sensors. The Company's focus is largely on the business-to-business end markets of Industrial, Automotive and Communications and related applications, as largely on the business-to-business end markets of Industrial, Automotive and Communications and related applications, as well as Consumer applications, with the goal of driving sustainable and profitable growth over the long term. well as Consumer applications, with the goal of driving sustainable and profitable growth over the long term. (114,504) (114,504) (101,626) (101,626) 2. Summary of Significant Accounting Policies 2. Summary of Significant Accounting Policies a. Principles of Consolidation a. Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and all of its subsidiaries. Upon The Consolidated Financial Statements include the accounts of the Company and all of its subsidiaries. Upon consolidation, all intercompany accounts and transactions are eliminated. Certain amounts reported in previous years have been consolidation, all intercompany accounts and transactions are eliminated. Certain amounts reported in previous years have been reclassified to conform to the presentation for the fiscal year ended October 29, 2022 (fiscal 2022). Such reclassified amounts reclassified to conform to the presentation for the fiscal year ended October 29, 2022 (fiscal 2022). Such reclassified amounts are immaterial. are immaterial. The Company’s fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October. The Company’s fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October. Fiscal 2022, the fiscal year ended October 30, 2021 (fiscal 2021) and the fiscal year ended October 31, 2020 (fiscal 2020) were Fiscal 2022, the fiscal year ended October 30, 2021 (fiscal 2021) and the fiscal year ended October 31, 2020 (fiscal 2020) were 52-week fiscal periods. 52-week fiscal periods. On August 26, 2021 (Acquisition Date), the Company completed the acquisition of Maxim Integrated Products, Inc. On August 26, 2021 (Acquisition Date), the Company completed the acquisition of Maxim Integrated Products, Inc. (Maxim), an independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the (Maxim), an independent manufacturer of innovative analog and mixed-signal products and technologies. Pursuant to the Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date for outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date for total consideration of approximately $28.0 billion of the Company's common stock. The acquisition of Maxim is referred to as total consideration of approximately $28.0 billion of the Company's common stock. The acquisition of Maxim is referred to as the Acquisition. The consolidated financial statements included in this Annual Report on Form 10-K include the financial the Acquisition. The consolidated financial statements included in this Annual Report on Form 10-K include the financial results of Maxim prospectively from the Acquisition Date. See Note 6, Acquisitions, of the Notes to Consolidated Financial results of Maxim prospectively from the Acquisition Date. See Note 6, Acquisitions, of the Notes to Consolidated Financial Statements for additional information. Statements for additional information. b. Cash and Cash Equivalents b. Cash and Cash Equivalents Cash and cash equivalents are highly liquid investments with insignificant interest rate risk and maturities of ninety days Cash and cash equivalents are highly liquid investments with insignificant interest rate risk and maturities of ninety days or less at the time of acquisition. Cash and cash equivalents consist primarily of government and institutional money market or less at the time of acquisition. Cash and cash equivalents consist primarily of government and institutional money market funds, corporate obligations such as commercial paper and floating rate notes, bonds, demand deposit accounts and bank time funds, corporate obligations such as commercial paper and floating rate notes, bonds, demand deposit accounts and bank time deposits. deposits. The Company classifies its investments in readily marketable debt and equity securities as “held-to-maturity,” “available- The Company classifies its investments in readily marketable debt and equity securities as “held-to-maturity,” “available- for-sale” or “trading” at the time of purchase. There were no transfers between investment classifications in any of the fiscal for-sale” or “trading” at the time of purchase. There were no transfers between investment classifications in any of the fiscal years presented. Held-to-maturity securities, which are carried at amortized cost, include only those securities the Company has years presented. Held-to-maturity securities, which are carried at amortized cost, include only those securities the Company has the positive intent and ability to hold to maturity. Securities such as bank time deposits, which by their nature are typically held the positive intent and ability to hold to maturity. Securities such as bank time deposits, which by their nature are typically held to maturity, are classified as such. The Company’s other readily marketable cash equivalents are classified as available-for-sale. to maturity, are classified as such. The Company’s other readily marketable cash equivalents are classified as available-for-sale. Available-for-sale securities are carried at fair value with unrealized gains and losses, net of related tax, reported in Available-for-sale securities are carried at fair value with unrealized gains and losses, net of related tax, reported in accumulated other comprehensive (loss) income (AOCI). Adjustments to the fair value of investments classified as available- accumulated other comprehensive (loss) income (AOCI). Adjustments to the fair value of investments classified as available- for-sale are recorded as an increase or decrease in AOCI, unless the adjustment is considered an other-than-temporary for-sale are recorded as an increase or decrease in AOCI, unless the adjustment is considered an other-than-temporary impairment, in which case the adjustment is recorded as a charge in the Consolidated Statements of Income. impairment, in which case the adjustment is recorded as a charge in the Consolidated Statements of Income. The Company periodically evaluates its investments for impairment. There were no other-than-temporary impairments of The Company periodically evaluates its investments for impairment. There were no other-than-temporary impairments of investments in any of the fiscal years presented. investments in any of the fiscal years presented. 49 49 50 50 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Realized gains or losses on investments are determined based on the specific identification basis and are recognized in Realized gains or losses on investments are determined based on the specific identification basis and are recognized in PP&E is recorded at cost, less allowances for depreciation. The straight-line method of depreciation is used for all classes PP&E is recorded at cost, less allowances for depreciation. The straight-line method of depreciation is used for all classes nonoperating (income) expense. There were no material net realized gains or losses from the sales of available-for-sale nonoperating (income) expense. There were no material net realized gains or losses from the sales of available-for-sale investments during any of the fiscal periods presented. investments during any of the fiscal periods presented. The components of the Company’s cash and cash equivalents as of October 29, 2022 and October 30, 2021 were as The components of the Company’s cash and cash equivalents as of October 29, 2022 and October 30, 2021 were as of assets for financial statement purposes while both straight-line and accelerated methods are used for income tax purposes. of assets for financial statement purposes while both straight-line and accelerated methods are used for income tax purposes. Leasehold improvements are depreciated over the lesser of the term of the lease or the useful life of the asset. Repairs and Leasehold improvements are depreciated over the lesser of the term of the lease or the useful life of the asset. Repairs and maintenance charges are expensed as incurred. Depreciation is based on the following ranges of estimated useful lives: maintenance charges are expensed as incurred. Depreciation is based on the following ranges of estimated useful lives: follows: follows: Cash Cash Available-for-sale securities Available-for-sale securities Total cash and cash equivalents Total cash and cash equivalents 2022 2022 1,016,027 $ 1,016,027 $ 454,545 454,545 1,470,572 $ 1,470,572 $ 2021 2021 1,314,967 1,314,967 662,997 662,997 1,977,964 1,977,964 $ $ $ $ See Note 2j, Fair Value, of the Notes to Consolidated Financial Statements for additional information on the Company’s See Note 2j, Fair Value, of the Notes to Consolidated Financial Statements for additional information on the Company’s cash equivalents. cash equivalents. c. Supplemental Cash Flow Statement Information c. Supplemental Cash Flow Statement Information Cash paid during the fiscal year for: Cash paid during the fiscal year for: Income taxes Income taxes Interest Interest Noncash issuance of common stock for the Acquisition Noncash issuance of common stock for the Acquisition Fair value of partially vested equity replacement awards issued for the Fair value of partially vested equity replacement awards issued for the Acquisition Acquisition d. d. Inventories Inventories $ $ $ $ $ $ $ $ 2022 2022 2021 2021 2020 2020 value is depreciated over the revised useful life. value is depreciated over the revised useful life. 821,683 $ 821,683 $ 172,957 $ 172,957 $ 388,115 $ 388,115 $ 197,841 $ 197,841 $ — $ 27,754,161 $ — $ 27,754,161 $ 237,691 237,691 185,854 185,854 — — PP&E is identified as held for sale when it meets the held for sale criteria of Accounting Standards Codification Topic PP&E is identified as held for sale when it meets the held for sale criteria of Accounting Standards Codification Topic 360, Property, Plant, and Equipment (ASC 360). Depreciation is not recorded for assets that are classified as held for sale. 360, Property, Plant, and Equipment (ASC 360). Depreciation is not recorded for assets that are classified as held for sale. When an asset meets the held for sale criteria, the lower of its carrying value or fair value less costs to sell is reclassified from When an asset meets the held for sale criteria, the lower of its carrying value or fair value less costs to sell is reclassified from the relevant PP&E line items and into current assets on the balance sheet, where it remains until it is either sold or it no longer the relevant PP&E line items and into current assets on the balance sheet, where it remains until it is either sold or it no longer meets the held for sale criteria. If the assets held for sale were carried at fair value, it would be considered a Level 3 fair value meets the held for sale criteria. If the assets held for sale were carried at fair value, it would be considered a Level 3 fair value — $ — $ 194,890 $ 194,890 $ — — measurement, and determined based on the use of appraisals and input from market participants. measurement, and determined based on the use of appraisals and input from market participants. Inventories are valued at the lower of cost (first-in, first-out method) or net realizable value. The valuation of inventory Inventories are valued at the lower of cost (first-in, first-out method) or net realizable value. The valuation of inventory requires the Company to estimate obsolete or excess inventory as well as inventory that is not of saleable quality. The Company requires the Company to estimate obsolete or excess inventory as well as inventory that is not of saleable quality. The Company employs a variety of methodologies to determine the net realizable value of its inventory. While a portion of the calculation to employs a variety of methodologies to determine the net realizable value of its inventory. While a portion of the calculation to record inventory at its net realizable value is based on the age of the inventory and lower of cost or net realizable value record inventory at its net realizable value is based on the age of the inventory and lower of cost or net realizable value calculations, a key factor in estimating obsolete or excess inventory requires the Company to estimate the future demand for its calculations, a key factor in estimating obsolete or excess inventory requires the Company to estimate the future demand for its products. If actual demand is less than the Company’s estimates, impairment charges, which are recorded to cost of sales, may products. If actual demand is less than the Company’s estimates, impairment charges, which are recorded to cost of sales, may need to be recorded in future periods. Inventory in excess of saleable amounts is not valued, and the remaining inventory is need to be recorded in future periods. Inventory in excess of saleable amounts is not valued, and the remaining inventory is valued at the lower of cost or net realizable value. valued at the lower of cost or net realizable value. Inventories at October 29, 2022 and October 30, 2021 were as follows: Inventories at October 29, 2022 and October 30, 2021 were as follows: Raw materials Raw materials Work in process Work in process Finished goods Finished goods Total inventories Total inventories e. Property, Plant and Equipment e. Property, Plant and Equipment $ $ 2022 2022 2021 2021 110,908 $ 110,908 $ 904,648 904,648 384,358 384,358 71,639 71,639 858,627 858,627 270,344 270,344 $ $ 1,399,914 $ 1,399,914 $ 1,200,610 1,200,610 The following table presents details of the Company's property, plant and equipment (PP&E), net of accumulated The following table presents details of the Company's property, plant and equipment (PP&E), net of accumulated depreciation: depreciation: Land and buildings Land and buildings Machinery and equipment Machinery and equipment Office equipment Office equipment Leasehold improvements Leasehold improvements Less accumulated depreciation and amortization Less accumulated depreciation and amortization Net property, plant and equipment Net property, plant and equipment 2022 2022 1,459,981 $ 1,459,981 $ 3,817,812 3,817,812 152,858 152,858 118,856 118,856 5,549,507 5,549,507 3,148,203 3,148,203 2,401,304 $ 2,401,304 $ 2021 2021 1,392,364 1,392,364 3,210,879 3,210,879 164,431 164,431 167,623 167,623 4,935,297 4,935,297 2,956,246 2,956,246 1,979,051 1,979,051 $ $ $ $ 51 51 52 52 Buildings Buildings Machinery & equipment Machinery & equipment Office equipment Office equipment Leasehold improvements Leasehold improvements Up to 30 years Up to 30 years 3-10 years 3-10 years 3-10 years 3-10 years 7-20 years 7-20 years The Company reviews PP&E for impairment whenever events or changes in circumstances indicate that the carrying The Company reviews PP&E for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Recoverability of these assets is determined by comparison of their carrying amount amount of assets may not be recoverable. Recoverability of these assets is determined by comparison of their carrying amount to the future undiscounted cash flows the assets are expected to generate over their remaining economic lives. If such assets are to the future undiscounted cash flows the assets are expected to generate over their remaining economic lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. If such assets are not impaired, but their useful lives have decreased, the remaining net book discounted cash flow technique. If such assets are not impaired, but their useful lives have decreased, the remaining net book f. Goodwill and Intangible Assets f. Goodwill and Intangible Assets Goodwill Goodwill The Company evaluates goodwill for impairment annually, as well as whenever events or changes in circumstances The Company evaluates goodwill for impairment annually, as well as whenever events or changes in circumstances suggest that the carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method. The suggest that the carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method. The Company tests goodwill for impairment at the reporting unit level, which the Company has determined is consistent with its Company tests goodwill for impairment at the reporting unit level, which the Company has determined is consistent with its identified operating segments, on an annual basis on the first day of the fourth quarter (on or about July 31) or more frequently identified operating segments, on an annual basis on the first day of the fourth quarter (on or about July 31) or more frequently if indicators of impairment exist or the Company reorganizes its operating segments or reporting units. if indicators of impairment exist or the Company reorganizes its operating segments or reporting units. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its net book value. When using the qualitative method, the Company considers several value of a reporting unit is less than its net book value. When using the qualitative method, the Company considers several factors, including the following: factors, including the following: the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which these reporting units operate in order for there to be potential impairment; the markets in which these reporting units operate in order for there to be potential impairment; the carrying values of these reporting units as of the assessment date compared to the previously calculated fair values the carrying values of these reporting units as of the assessment date compared to the previously calculated fair values as of the date of the most recent quantitative impairment analysis; as of the date of the most recent quantitative impairment analysis; the Company's current forecasts as compared to the forecasts included in the most recent quantitative impairment the Company's current forecasts as compared to the forecasts included in the most recent quantitative impairment public information from competitors and other industry information to determine if there were any significant adverse public information from competitors and other industry information to determine if there were any significant adverse trends in the Company's competitors' businesses; trends in the Company's competitors' businesses; changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of the Company's reporting units; impact the valuation of the Company's reporting units; changes in the Company's market capitalization and overall enterprise valuation to determine if there were any changes in the Company's market capitalization and overall enterprise valuation to determine if there were any significant decreases that could be an indication that the valuation of its reporting units had significantly decreased; significant decreases that could be an indication that the valuation of its reporting units had significantly decreased; – – – – – – – – – – – – analysis; analysis; and and – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, which could materially lower the Company's prior valuation conclusions under a discounted cash flow approach. which could materially lower the Company's prior valuation conclusions under a discounted cash flow approach. If the Company elects not to use this option, or it determines that it is more likely than not that the fair value of a If the Company elects not to use this option, or it determines that it is more likely than not that the fair value of a reporting unit is less than its net book value, then the Company performs the quantitative goodwill impairment test. The reporting unit is less than its net book value, then the Company performs the quantitative goodwill impairment test. The quantitative goodwill impairment test requires an entity to compare the fair value of a reporting unit with its carrying amount. If quantitative goodwill impairment test requires an entity to compare the fair value of a reporting unit with its carrying amount. If ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Realized gains or losses on investments are determined based on the specific identification basis and are recognized in Realized gains or losses on investments are determined based on the specific identification basis and are recognized in PP&E is recorded at cost, less allowances for depreciation. The straight-line method of depreciation is used for all classes PP&E is recorded at cost, less allowances for depreciation. The straight-line method of depreciation is used for all classes nonoperating (income) expense. There were no material net realized gains or losses from the sales of available-for-sale nonoperating (income) expense. There were no material net realized gains or losses from the sales of available-for-sale investments during any of the fiscal periods presented. investments during any of the fiscal periods presented. The components of the Company’s cash and cash equivalents as of October 29, 2022 and October 30, 2021 were as The components of the Company’s cash and cash equivalents as of October 29, 2022 and October 30, 2021 were as follows: follows: Cash Cash Available-for-sale securities Available-for-sale securities Total cash and cash equivalents Total cash and cash equivalents cash equivalents. cash equivalents. Cash paid during the fiscal year for: Cash paid during the fiscal year for: Income taxes Income taxes Interest Interest Acquisition Acquisition d. d. Inventories Inventories 2022 2022 2021 2021 $ $ $ $ 1,016,027 $ 1,016,027 $ 1,314,967 1,314,967 454,545 454,545 662,997 662,997 1,470,572 $ 1,470,572 $ 1,977,964 1,977,964 2022 2022 2021 2021 2020 2020 821,683 $ 821,683 $ 388,115 $ 388,115 $ 172,957 $ 172,957 $ 197,841 $ 197,841 $ 237,691 237,691 185,854 185,854 — $ — $ 194,890 $ 194,890 $ — — — — $ $ $ $ $ $ $ $ See Note 2j, Fair Value, of the Notes to Consolidated Financial Statements for additional information on the Company’s See Note 2j, Fair Value, of the Notes to Consolidated Financial Statements for additional information on the Company’s c. Supplemental Cash Flow Statement Information c. Supplemental Cash Flow Statement Information Noncash issuance of common stock for the Acquisition Noncash issuance of common stock for the Acquisition — $ 27,754,161 $ — $ 27,754,161 $ Fair value of partially vested equity replacement awards issued for the Fair value of partially vested equity replacement awards issued for the Inventories are valued at the lower of cost (first-in, first-out method) or net realizable value. The valuation of inventory Inventories are valued at the lower of cost (first-in, first-out method) or net realizable value. The valuation of inventory requires the Company to estimate obsolete or excess inventory as well as inventory that is not of saleable quality. The Company requires the Company to estimate obsolete or excess inventory as well as inventory that is not of saleable quality. The Company employs a variety of methodologies to determine the net realizable value of its inventory. While a portion of the calculation to employs a variety of methodologies to determine the net realizable value of its inventory. While a portion of the calculation to record inventory at its net realizable value is based on the age of the inventory and lower of cost or net realizable value record inventory at its net realizable value is based on the age of the inventory and lower of cost or net realizable value calculations, a key factor in estimating obsolete or excess inventory requires the Company to estimate the future demand for its calculations, a key factor in estimating obsolete or excess inventory requires the Company to estimate the future demand for its products. If actual demand is less than the Company’s estimates, impairment charges, which are recorded to cost of sales, may products. If actual demand is less than the Company’s estimates, impairment charges, which are recorded to cost of sales, may need to be recorded in future periods. Inventory in excess of saleable amounts is not valued, and the remaining inventory is need to be recorded in future periods. Inventory in excess of saleable amounts is not valued, and the remaining inventory is valued at the lower of cost or net realizable value. valued at the lower of cost or net realizable value. Inventories at October 29, 2022 and October 30, 2021 were as follows: Inventories at October 29, 2022 and October 30, 2021 were as follows: e. Property, Plant and Equipment e. Property, Plant and Equipment The following table presents details of the Company's property, plant and equipment (PP&E), net of accumulated The following table presents details of the Company's property, plant and equipment (PP&E), net of accumulated Raw materials Raw materials Work in process Work in process Finished goods Finished goods Total inventories Total inventories depreciation: depreciation: Land and buildings Land and buildings Machinery and equipment Machinery and equipment Office equipment Office equipment Leasehold improvements Leasehold improvements Less accumulated depreciation and amortization Less accumulated depreciation and amortization Net property, plant and equipment Net property, plant and equipment 2022 2022 2021 2021 $ $ 110,908 $ 110,908 $ 904,648 904,648 384,358 384,358 71,639 71,639 858,627 858,627 270,344 270,344 $ $ 1,399,914 $ 1,399,914 $ 1,200,610 1,200,610 2022 2022 2021 2021 $ $ 1,459,981 $ 1,459,981 $ 1,392,364 1,392,364 3,817,812 3,817,812 3,210,879 3,210,879 152,858 152,858 118,856 118,856 5,549,507 5,549,507 3,148,203 3,148,203 164,431 164,431 167,623 167,623 4,935,297 4,935,297 2,956,246 2,956,246 $ $ 2,401,304 $ 2,401,304 $ 1,979,051 1,979,051 of assets for financial statement purposes while both straight-line and accelerated methods are used for income tax purposes. of assets for financial statement purposes while both straight-line and accelerated methods are used for income tax purposes. Leasehold improvements are depreciated over the lesser of the term of the lease or the useful life of the asset. Repairs and Leasehold improvements are depreciated over the lesser of the term of the lease or the useful life of the asset. Repairs and maintenance charges are expensed as incurred. Depreciation is based on the following ranges of estimated useful lives: maintenance charges are expensed as incurred. Depreciation is based on the following ranges of estimated useful lives: Buildings Buildings Machinery & equipment Machinery & equipment Office equipment Office equipment Leasehold improvements Leasehold improvements Up to 30 years Up to 30 years 3-10 years 3-10 years 3-10 years 3-10 years 7-20 years 7-20 years The Company reviews PP&E for impairment whenever events or changes in circumstances indicate that the carrying The Company reviews PP&E for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Recoverability of these assets is determined by comparison of their carrying amount amount of assets may not be recoverable. Recoverability of these assets is determined by comparison of their carrying amount to the future undiscounted cash flows the assets are expected to generate over their remaining economic lives. If such assets are to the future undiscounted cash flows the assets are expected to generate over their remaining economic lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. If such assets are not impaired, but their useful lives have decreased, the remaining net book discounted cash flow technique. If such assets are not impaired, but their useful lives have decreased, the remaining net book value is depreciated over the revised useful life. value is depreciated over the revised useful life. PP&E is identified as held for sale when it meets the held for sale criteria of Accounting Standards Codification Topic PP&E is identified as held for sale when it meets the held for sale criteria of Accounting Standards Codification Topic 360, Property, Plant, and Equipment (ASC 360). Depreciation is not recorded for assets that are classified as held for sale. 360, Property, Plant, and Equipment (ASC 360). Depreciation is not recorded for assets that are classified as held for sale. When an asset meets the held for sale criteria, the lower of its carrying value or fair value less costs to sell is reclassified from When an asset meets the held for sale criteria, the lower of its carrying value or fair value less costs to sell is reclassified from the relevant PP&E line items and into current assets on the balance sheet, where it remains until it is either sold or it no longer the relevant PP&E line items and into current assets on the balance sheet, where it remains until it is either sold or it no longer meets the held for sale criteria. If the assets held for sale were carried at fair value, it would be considered a Level 3 fair value meets the held for sale criteria. If the assets held for sale were carried at fair value, it would be considered a Level 3 fair value measurement, and determined based on the use of appraisals and input from market participants. measurement, and determined based on the use of appraisals and input from market participants. f. Goodwill and Intangible Assets f. Goodwill and Intangible Assets Goodwill Goodwill The Company evaluates goodwill for impairment annually, as well as whenever events or changes in circumstances The Company evaluates goodwill for impairment annually, as well as whenever events or changes in circumstances suggest that the carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method. The suggest that the carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method. The Company tests goodwill for impairment at the reporting unit level, which the Company has determined is consistent with its Company tests goodwill for impairment at the reporting unit level, which the Company has determined is consistent with its identified operating segments, on an annual basis on the first day of the fourth quarter (on or about July 31) or more frequently identified operating segments, on an annual basis on the first day of the fourth quarter (on or about July 31) or more frequently if indicators of impairment exist or the Company reorganizes its operating segments or reporting units. if indicators of impairment exist or the Company reorganizes its operating segments or reporting units. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its net book value. When using the qualitative method, the Company considers several value of a reporting unit is less than its net book value. When using the qualitative method, the Company considers several factors, including the following: factors, including the following: – – – – – – – – – – – – the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which these reporting units operate in order for there to be potential impairment; the markets in which these reporting units operate in order for there to be potential impairment; the carrying values of these reporting units as of the assessment date compared to the previously calculated fair values the carrying values of these reporting units as of the assessment date compared to the previously calculated fair values as of the date of the most recent quantitative impairment analysis; as of the date of the most recent quantitative impairment analysis; the Company's current forecasts as compared to the forecasts included in the most recent quantitative impairment the Company's current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; analysis; public information from competitors and other industry information to determine if there were any significant adverse public information from competitors and other industry information to determine if there were any significant adverse trends in the Company's competitors' businesses; trends in the Company's competitors' businesses; changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of the Company's reporting units; impact the valuation of the Company's reporting units; changes in the Company's market capitalization and overall enterprise valuation to determine if there were any changes in the Company's market capitalization and overall enterprise valuation to determine if there were any significant decreases that could be an indication that the valuation of its reporting units had significantly decreased; significant decreases that could be an indication that the valuation of its reporting units had significantly decreased; and and – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, which could materially lower the Company's prior valuation conclusions under a discounted cash flow approach. which could materially lower the Company's prior valuation conclusions under a discounted cash flow approach. If the Company elects not to use this option, or it determines that it is more likely than not that the fair value of a If the Company elects not to use this option, or it determines that it is more likely than not that the fair value of a reporting unit is less than its net book value, then the Company performs the quantitative goodwill impairment test. The reporting unit is less than its net book value, then the Company performs the quantitative goodwill impairment test. The quantitative goodwill impairment test requires an entity to compare the fair value of a reporting unit with its carrying amount. If quantitative goodwill impairment test requires an entity to compare the fair value of a reporting unit with its carrying amount. If 51 51 52 52 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) fair value is determined to be less than carrying value, an impairment loss is recognized for the amount of the carrying value fair value is determined to be less than carrying value, an impairment loss is recognized for the amount of the carrying value that exceeds the amount of the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting that exceeds the amount of the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Additionally, the Company considers income tax effects from any tax deductible goodwill on the carrying amount of the unit. Additionally, the Company considers income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. Management determines the fair values of the reporting unit when measuring the goodwill impairment loss, if applicable. Management determines the fair values of the reporting units using a weighting of the income and market approaches. Under the income approach, it uses a discounted cash reporting units using a weighting of the income and market approaches. Under the income approach, it uses a discounted cash flow methodology, which requires management to make significant estimates and assumptions related to forecasted revenues, flow methodology, which requires management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates and long-term discount rates, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates and long-term discount rates, among others. For the market approach, it uses the guideline public company method. Under this method management utilizes among others. For the market approach, it uses the guideline public company method. Under this method management utilizes information from comparable publicly traded companies with similar operating and investment characteristics as the reporting information from comparable publicly traded companies with similar operating and investment characteristics as the reporting units, to create valuation multiples that are applied to the operating performance of the reporting unit being tested, in order to units, to create valuation multiples that are applied to the operating performance of the reporting unit being tested, in order to obtain its respective fair value. In order to assess the reasonableness of the calculated values, the aggregate fair values of the obtain its respective fair value. In order to assess the reasonableness of the calculated values, the aggregate fair values of the reporting units are reconciled to the Company's total market capitalization, allowing for a reasonable control premium. reporting units are reconciled to the Company's total market capitalization, allowing for a reasonable control premium. In fiscal 2022, the Company used a combination of the qualitative and quantitative methods of assessing goodwill for the In fiscal 2022, the Company used a combination of the qualitative and quantitative methods of assessing goodwill for the Company's reporting units. In fiscal 2021, the Company used the quantitative method of assessing goodwill for the Company's Company's reporting units. In fiscal 2021, the Company used the quantitative method of assessing goodwill for the Company's reporting units. In all periods presented, management concluded the reporting units' fair values exceeded their carrying amounts reporting units. In all periods presented, management concluded the reporting units' fair values exceeded their carrying amounts as of the assessment dates and no risk of impairment existed. as of the assessment dates and no risk of impairment existed. The Company’s next annual impairment assessment will be performed as of the first day of the fourth quarter of the fiscal The Company’s next annual impairment assessment will be performed as of the first day of the fourth quarter of the fiscal year ending October 28, 2023 (fiscal 2023) unless indicators arise that would require the Company to reevaluate at an earlier year ending October 28, 2023 (fiscal 2023) unless indicators arise that would require the Company to reevaluate at an earlier date. date. Fiscal Year Fiscal Year years. years. 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 The following table presents the changes in goodwill during fiscal 2022 and fiscal 2021: The following table presents the changes in goodwill during fiscal 2022 and fiscal 2021: h. Translation of Foreign Currencies h. Translation of Foreign Currencies Balance at beginning of year Balance at beginning of year Acquisition of Maxim (Note 6) Acquisition of Maxim (Note 6) Foreign currency translation adjustment and other adjustments Foreign currency translation adjustment and other adjustments Balance at end of year Balance at end of year Intangible Assets Intangible Assets 2022 2022 26,918,470 $ 26,918,470 $ 15,267 15,267 (20,603) (20,603) 26,913,134 $ 26,913,134 $ 2021 2021 12,278,425 12,278,425 14,645,076 14,645,076 (5,031) (5,031) 26,918,470 26,918,470 $ $ $ $ The Company reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate The Company reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. If required, recoverability of these assets is determined by comparison that the carrying value of assets may not be recoverable. If required, recoverability of these assets is determined by comparison of their carrying value to the estimated future undiscounted cash flows the assets are expected to generate over their remaining of their carrying value to the estimated future undiscounted cash flows the assets are expected to generate over their remaining estimated useful lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the estimated useful lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their estimated fair value determined by either a quoted market price, amount by which the carrying value of the assets exceeds their estimated fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. if any, or a value determined by utilizing a discounted cash flow technique. In-process research and development (IPR&D) assets are considered indefinite-lived intangible assets until completion or In-process research and development (IPR&D) assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development (R&D) efforts. Upon completion of the projects, the IPR&D assets abandonment of the associated research and development (R&D) efforts. Upon completion of the projects, the IPR&D assets are reclassified to technology-based intangible assets and amortized over their estimated useful lives. are reclassified to technology-based intangible assets and amortized over their estimated useful lives. As of October 29, 2022 and October 30, 2021, the Company’s intangible assets consisted of the following: As of October 29, 2022 and October 30, 2021, the Company’s intangible assets consisted of the following: October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Gross Carrying Gross Carrying Amount Amount Accumulated Accumulated Amortization Amortization Gross Carrying Gross Carrying Amount Amount Accumulated Accumulated Amortization Amortization Customer relationships Customer relationships Technology-based Technology-based Trade-name Trade-name Backlog Backlog Assembled workforce Assembled workforce IPR&D IPR&D Total (1) Total (1) $ $ 10,335,903 $ 10,335,903 $ 3,011,889 $ 3,011,889 $ 10,336,477 $ 10,336,477 $ 2,191,729 2,191,729 Sheets as of October 29, 2022 and October 30, 2021 were as follows: Sheets as of October 29, 2022 and October 30, 2021 were as follows: 7,555,708 7,555,708 72,200 72,200 361,200 361,200 1,800 1,800 28,222 28,222 18,355,033 $ 18,355,033 $ 1,804,596 1,804,596 58,117 58,117 213,346 213,346 1,679 1,679 — — 5,089,627 $ 5,089,627 $ 7,559,503 7,559,503 72,200 72,200 361,200 361,200 1,800 1,800 28,222 28,222 18,359,402 $ 18,359,402 $ 819,204 819,204 47,803 47,803 32,746 32,746 750 750 — — 3,092,232 3,092,232 $ $ _______________________________________ _______________________________________ (1) Foreign intangible asset carrying amounts are affected by foreign currency translation. (1) Foreign intangible asset carrying amounts are affected by foreign currency translation. 53 53 54 54 Amortization expense related to intangible assets was $2,014.2 million, $843.4 million and $577.1 million in fiscal 2022, Amortization expense related to intangible assets was $2,014.2 million, $843.4 million and $577.1 million in fiscal 2022, 2021 and 2020, respectively, and is recorded in Cost of sales and Amortization of intangibles on the Consolidated Statements of 2021 and 2020, respectively, and is recorded in Cost of sales and Amortization of intangibles on the Consolidated Statements of Income. The remaining amortization expense will be recognized over the remaining weighted average life of approximately 4.5 Income. The remaining amortization expense will be recognized over the remaining weighted average life of approximately 4.5 The Company expects annual amortization expense for intangible assets as follows: The Company expects annual amortization expense for intangible assets as follows: Amortization Expense Amortization Expense $ $ $ $ $ $ $ $ $ $ 1,955,394 1,955,394 1,732,867 1,732,867 1,572,000 1,572,000 1,522,480 1,522,480 1,520,586 1,520,586 g. Grant Accounting g. Grant Accounting Certain of the Company’s subsidiaries have received grants from governmental agencies. These grants include capital, Certain of the Company’s subsidiaries have received grants from governmental agencies. These grants include capital, employment and research and development grants. Capital grants for the acquisition of property, plant and equipment are netted employment and research and development grants. Capital grants for the acquisition of property, plant and equipment are netted against the related capital expenditures and amortized as a credit to depreciation expense over the estimated useful life of the against the related capital expenditures and amortized as a credit to depreciation expense over the estimated useful life of the related asset. Employment grants, which relate to employee hiring and training, and research and development grants are related asset. Employment grants, which relate to employee hiring and training, and research and development grants are recognized in earnings in the period in which the related expenditures are incurred by the Company. recognized in earnings in the period in which the related expenditures are incurred by the Company. The functional currency for certain of the Company’s foreign operations is the applicable local currency. Gains and losses The functional currency for certain of the Company’s foreign operations is the applicable local currency. Gains and losses resulting from translation of these foreign currencies into U.S. dollars are recorded in AOCI. Transaction gains and losses and resulting from translation of these foreign currencies into U.S. dollars are recorded in AOCI. Transaction gains and losses and re-measurement of foreign currency denominated assets and liabilities are included in income currently, including those at the re-measurement of foreign currency denominated assets and liabilities are included in income currently, including those at the Company’s principal foreign manufacturing operations where the functional currency is the U.S. dollar. Foreign currency Company’s principal foreign manufacturing operations where the functional currency is the U.S. dollar. Foreign currency transaction gains or losses are included in Other, net in the Consolidated Statements of Income. transaction gains or losses are included in Other, net in the Consolidated Statements of Income. i. Derivative Instruments and Hedging Agreements i. Derivative Instruments and Hedging Agreements Foreign Exchange Exposure Management — The Company enters into forward foreign currency exchange contracts to Foreign Exchange Exposure Management — The Company enters into forward foreign currency exchange contracts to offset certain operational and balance sheet exposures from the impact of changes in foreign currency exchange rates. Such offset certain operational and balance sheet exposures from the impact of changes in foreign currency exchange rates. Such exposures result from the portion of the Company’s operations, assets and liabilities that are denominated in currencies other exposures result from the portion of the Company’s operations, assets and liabilities that are denominated in currencies other than the U.S. dollar, primarily the Euro; other significant exposures include the British Pound, Philippine Peso, Thai Baht, than the U.S. dollar, primarily the Euro; other significant exposures include the British Pound, Philippine Peso, Thai Baht, Malaysian Ringgit and the Japanese Yen. Derivative instruments are employed to eliminate or minimize certain foreign Malaysian Ringgit and the Japanese Yen. Derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified. These foreign currency exchange contracts are entered into currency exposures that can be confidently identified and quantified. These foreign currency exchange contracts are entered into to support transactions made in the normal course of business, and accordingly, are not speculative in nature. The contracts are to support transactions made in the normal course of business, and accordingly, are not speculative in nature. The contracts are for periods consistent with the terms of the underlying transactions, generally one year or less. Hedges related to anticipated for periods consistent with the terms of the underlying transactions, generally one year or less. Hedges related to anticipated transactions are matched with the underlying exposures at inception and designated and documented as cash flow hedges. They transactions are matched with the underlying exposures at inception and designated and documented as cash flow hedges. They are qualitatively evaluated for effectiveness on a quarterly basis. The gain or loss on the derivatives are reported as a component are qualitatively evaluated for effectiveness on a quarterly basis. The gain or loss on the derivatives are reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same line item on the Consolidated Statements of Income of AOCI in shareholders’ equity and reclassified into earnings in the same line item on the Consolidated Statements of Income as the impact of the hedged transaction in the same period during which the hedged transaction affects earnings. as the impact of the hedged transaction in the same period during which the hedged transaction affects earnings. The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash flow hedges as of October 29, 2022 and October 30, 2021 was $307.1 million and $343.6 million, respectively. The fair values flow hedges as of October 29, 2022 and October 30, 2021 was $307.1 million and $343.6 million, respectively. The fair values of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Consolidated Balance of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Consolidated Balance Balance Sheet Location Balance Sheet Location October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Fair Value At Fair Value At Forward foreign currency exchange contracts Accrued liabilities Forward foreign currency exchange contracts Accrued liabilities $ $ 18,050 $ 18,050 $ 7,113 7,113 Additionally, the Company enters into forward foreign currency contracts that economically hedge the gains and losses Additionally, the Company enters into forward foreign currency contracts that economically hedge the gains and losses generated by the re-measurement of certain recorded assets and liabilities in a non-functional currency. Changes in the fair generated by the re-measurement of certain recorded assets and liabilities in a non-functional currency. Changes in the fair value of these undesignated hedges are recognized in other (income) expense immediately as an offset to the changes in the fair value of these undesignated hedges are recognized in other (income) expense immediately as an offset to the changes in the fair value of the asset or liability being hedged. As of October 29, 2022 and October 30, 2021, the total notional amount of these value of the asset or liability being hedged. As of October 29, 2022 and October 30, 2021, the total notional amount of these undesignated hedges was $246.4 million and $120.0 million, respectively. undesignated hedges was $246.4 million and $120.0 million, respectively. fair value is determined to be less than carrying value, an impairment loss is recognized for the amount of the carrying value fair value is determined to be less than carrying value, an impairment loss is recognized for the amount of the carrying value that exceeds the amount of the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting that exceeds the amount of the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Additionally, the Company considers income tax effects from any tax deductible goodwill on the carrying amount of the unit. Additionally, the Company considers income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. Management determines the fair values of the reporting unit when measuring the goodwill impairment loss, if applicable. Management determines the fair values of the reporting units using a weighting of the income and market approaches. Under the income approach, it uses a discounted cash reporting units using a weighting of the income and market approaches. Under the income approach, it uses a discounted cash flow methodology, which requires management to make significant estimates and assumptions related to forecasted revenues, flow methodology, which requires management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates and long-term discount rates, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates and long-term discount rates, among others. For the market approach, it uses the guideline public company method. Under this method management utilizes among others. For the market approach, it uses the guideline public company method. Under this method management utilizes information from comparable publicly traded companies with similar operating and investment characteristics as the reporting information from comparable publicly traded companies with similar operating and investment characteristics as the reporting units, to create valuation multiples that are applied to the operating performance of the reporting unit being tested, in order to units, to create valuation multiples that are applied to the operating performance of the reporting unit being tested, in order to obtain its respective fair value. In order to assess the reasonableness of the calculated values, the aggregate fair values of the obtain its respective fair value. In order to assess the reasonableness of the calculated values, the aggregate fair values of the reporting units are reconciled to the Company's total market capitalization, allowing for a reasonable control premium. reporting units are reconciled to the Company's total market capitalization, allowing for a reasonable control premium. In fiscal 2022, the Company used a combination of the qualitative and quantitative methods of assessing goodwill for the In fiscal 2022, the Company used a combination of the qualitative and quantitative methods of assessing goodwill for the Company's reporting units. In fiscal 2021, the Company used the quantitative method of assessing goodwill for the Company's Company's reporting units. In fiscal 2021, the Company used the quantitative method of assessing goodwill for the Company's reporting units. In all periods presented, management concluded the reporting units' fair values exceeded their carrying amounts reporting units. In all periods presented, management concluded the reporting units' fair values exceeded their carrying amounts as of the assessment dates and no risk of impairment existed. as of the assessment dates and no risk of impairment existed. The Company’s next annual impairment assessment will be performed as of the first day of the fourth quarter of the fiscal The Company’s next annual impairment assessment will be performed as of the first day of the fourth quarter of the fiscal year ending October 28, 2023 (fiscal 2023) unless indicators arise that would require the Company to reevaluate at an earlier year ending October 28, 2023 (fiscal 2023) unless indicators arise that would require the Company to reevaluate at an earlier date. date. Foreign currency translation adjustment and other adjustments Foreign currency translation adjustment and other adjustments Balance at beginning of year Balance at beginning of year Acquisition of Maxim (Note 6) Acquisition of Maxim (Note 6) Balance at end of year Balance at end of year Intangible Assets Intangible Assets 2022 2022 2021 2021 $ $ 26,918,470 $ 26,918,470 $ 12,278,425 12,278,425 15,267 15,267 14,645,076 14,645,076 (20,603) (20,603) (5,031) (5,031) $ $ 26,913,134 $ 26,913,134 $ 26,918,470 26,918,470 The Company reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate The Company reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. If required, recoverability of these assets is determined by comparison that the carrying value of assets may not be recoverable. If required, recoverability of these assets is determined by comparison of their carrying value to the estimated future undiscounted cash flows the assets are expected to generate over their remaining of their carrying value to the estimated future undiscounted cash flows the assets are expected to generate over their remaining estimated useful lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the estimated useful lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their estimated fair value determined by either a quoted market price, amount by which the carrying value of the assets exceeds their estimated fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. if any, or a value determined by utilizing a discounted cash flow technique. In-process research and development (IPR&D) assets are considered indefinite-lived intangible assets until completion or In-process research and development (IPR&D) assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development (R&D) efforts. Upon completion of the projects, the IPR&D assets abandonment of the associated research and development (R&D) efforts. Upon completion of the projects, the IPR&D assets are reclassified to technology-based intangible assets and amortized over their estimated useful lives. are reclassified to technology-based intangible assets and amortized over their estimated useful lives. As of October 29, 2022 and October 30, 2021, the Company’s intangible assets consisted of the following: As of October 29, 2022 and October 30, 2021, the Company’s intangible assets consisted of the following: Customer relationships Customer relationships Technology-based Technology-based Trade-name Trade-name Backlog Backlog IPR&D IPR&D Total (1) Total (1) Assembled workforce Assembled workforce October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Gross Carrying Gross Carrying Amount Amount Accumulated Accumulated Amortization Amortization Gross Carrying Gross Carrying Amount Amount Accumulated Accumulated Amortization Amortization $ $ 10,335,903 $ 10,335,903 $ 3,011,889 $ 3,011,889 $ 10,336,477 $ 10,336,477 $ 2,191,729 2,191,729 7,555,708 7,555,708 72,200 72,200 361,200 361,200 1,800 1,800 28,222 28,222 1,804,596 1,804,596 58,117 58,117 213,346 213,346 1,679 1,679 — — 7,559,503 7,559,503 72,200 72,200 361,200 361,200 1,800 1,800 28,222 28,222 819,204 819,204 47,803 47,803 32,746 32,746 750 750 — — $ $ 18,355,033 $ 18,355,033 $ 5,089,627 $ 5,089,627 $ 18,359,402 $ 18,359,402 $ 3,092,232 3,092,232 _______________________________________ _______________________________________ (1) Foreign intangible asset carrying amounts are affected by foreign currency translation. (1) Foreign intangible asset carrying amounts are affected by foreign currency translation. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Amortization expense related to intangible assets was $2,014.2 million, $843.4 million and $577.1 million in fiscal 2022, Amortization expense related to intangible assets was $2,014.2 million, $843.4 million and $577.1 million in fiscal 2022, 2021 and 2020, respectively, and is recorded in Cost of sales and Amortization of intangibles on the Consolidated Statements of 2021 and 2020, respectively, and is recorded in Cost of sales and Amortization of intangibles on the Consolidated Statements of Income. The remaining amortization expense will be recognized over the remaining weighted average life of approximately 4.5 Income. The remaining amortization expense will be recognized over the remaining weighted average life of approximately 4.5 years. years. The Company expects annual amortization expense for intangible assets as follows: The Company expects annual amortization expense for intangible assets as follows: Fiscal Year Fiscal Year 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 g. Grant Accounting g. Grant Accounting Amortization Expense Amortization Expense 1,955,394 $ 1,955,394 $ 1,732,867 $ 1,732,867 $ 1,572,000 $ 1,572,000 $ 1,522,480 $ 1,522,480 $ 1,520,586 $ 1,520,586 $ Certain of the Company’s subsidiaries have received grants from governmental agencies. These grants include capital, Certain of the Company’s subsidiaries have received grants from governmental agencies. These grants include capital, employment and research and development grants. Capital grants for the acquisition of property, plant and equipment are netted employment and research and development grants. Capital grants for the acquisition of property, plant and equipment are netted against the related capital expenditures and amortized as a credit to depreciation expense over the estimated useful life of the against the related capital expenditures and amortized as a credit to depreciation expense over the estimated useful life of the related asset. Employment grants, which relate to employee hiring and training, and research and development grants are related asset. Employment grants, which relate to employee hiring and training, and research and development grants are recognized in earnings in the period in which the related expenditures are incurred by the Company. recognized in earnings in the period in which the related expenditures are incurred by the Company. The following table presents the changes in goodwill during fiscal 2022 and fiscal 2021: The following table presents the changes in goodwill during fiscal 2022 and fiscal 2021: h. Translation of Foreign Currencies h. Translation of Foreign Currencies The functional currency for certain of the Company’s foreign operations is the applicable local currency. Gains and losses The functional currency for certain of the Company’s foreign operations is the applicable local currency. Gains and losses resulting from translation of these foreign currencies into U.S. dollars are recorded in AOCI. Transaction gains and losses and resulting from translation of these foreign currencies into U.S. dollars are recorded in AOCI. Transaction gains and losses and re-measurement of foreign currency denominated assets and liabilities are included in income currently, including those at the re-measurement of foreign currency denominated assets and liabilities are included in income currently, including those at the Company’s principal foreign manufacturing operations where the functional currency is the U.S. dollar. Foreign currency Company’s principal foreign manufacturing operations where the functional currency is the U.S. dollar. Foreign currency transaction gains or losses are included in Other, net in the Consolidated Statements of Income. transaction gains or losses are included in Other, net in the Consolidated Statements of Income. i. Derivative Instruments and Hedging Agreements i. Derivative Instruments and Hedging Agreements Foreign Exchange Exposure Management — The Company enters into forward foreign currency exchange contracts to Foreign Exchange Exposure Management — The Company enters into forward foreign currency exchange contracts to offset certain operational and balance sheet exposures from the impact of changes in foreign currency exchange rates. Such offset certain operational and balance sheet exposures from the impact of changes in foreign currency exchange rates. Such exposures result from the portion of the Company’s operations, assets and liabilities that are denominated in currencies other exposures result from the portion of the Company’s operations, assets and liabilities that are denominated in currencies other than the U.S. dollar, primarily the Euro; other significant exposures include the British Pound, Philippine Peso, Thai Baht, than the U.S. dollar, primarily the Euro; other significant exposures include the British Pound, Philippine Peso, Thai Baht, Malaysian Ringgit and the Japanese Yen. Derivative instruments are employed to eliminate or minimize certain foreign Malaysian Ringgit and the Japanese Yen. Derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified. These foreign currency exchange contracts are entered into currency exposures that can be confidently identified and quantified. These foreign currency exchange contracts are entered into to support transactions made in the normal course of business, and accordingly, are not speculative in nature. The contracts are to support transactions made in the normal course of business, and accordingly, are not speculative in nature. The contracts are for periods consistent with the terms of the underlying transactions, generally one year or less. Hedges related to anticipated for periods consistent with the terms of the underlying transactions, generally one year or less. Hedges related to anticipated transactions are matched with the underlying exposures at inception and designated and documented as cash flow hedges. They transactions are matched with the underlying exposures at inception and designated and documented as cash flow hedges. They are qualitatively evaluated for effectiveness on a quarterly basis. The gain or loss on the derivatives are reported as a component are qualitatively evaluated for effectiveness on a quarterly basis. The gain or loss on the derivatives are reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same line item on the Consolidated Statements of Income of AOCI in shareholders’ equity and reclassified into earnings in the same line item on the Consolidated Statements of Income as the impact of the hedged transaction in the same period during which the hedged transaction affects earnings. as the impact of the hedged transaction in the same period during which the hedged transaction affects earnings. The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash flow hedges as of October 29, 2022 and October 30, 2021 was $307.1 million and $343.6 million, respectively. The fair values flow hedges as of October 29, 2022 and October 30, 2021 was $307.1 million and $343.6 million, respectively. The fair values of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Consolidated Balance of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021 were as follows: Sheets as of October 29, 2022 and October 30, 2021 were as follows: Balance Sheet Location Balance Sheet Location October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Fair Value At Fair Value At Forward foreign currency exchange contracts Accrued liabilities Forward foreign currency exchange contracts Accrued liabilities $ $ 18,050 $ 18,050 $ 7,113 7,113 Additionally, the Company enters into forward foreign currency contracts that economically hedge the gains and losses Additionally, the Company enters into forward foreign currency contracts that economically hedge the gains and losses generated by the re-measurement of certain recorded assets and liabilities in a non-functional currency. Changes in the fair generated by the re-measurement of certain recorded assets and liabilities in a non-functional currency. Changes in the fair value of these undesignated hedges are recognized in other (income) expense immediately as an offset to the changes in the fair value of these undesignated hedges are recognized in other (income) expense immediately as an offset to the changes in the fair value of the asset or liability being hedged. As of October 29, 2022 and October 30, 2021, the total notional amount of these value of the asset or liability being hedged. As of October 29, 2022 and October 30, 2021, the total notional amount of these undesignated hedges was $246.4 million and $120.0 million, respectively. undesignated hedges was $246.4 million and $120.0 million, respectively. 53 53 54 54 observable for substantially the full term of the asset or liability. observable for substantially the full term of the asset or liability. Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. for the asset or liability at the measurement date. The tables below, set forth by level, presents the Company’s financial assets and liabilities, excluding accrued interest The tables below, set forth by level, presents the Company’s financial assets and liabilities, excluding accrued interest exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of October 29, 2022 and October 30, 2021, the Company held $1,016.0 million and $1,315.0 million, respectively, of cash that October 29, 2022 and October 30, 2021, the Company held $1,016.0 million and $1,315.0 million, respectively, of cash that was excluded from the tables below. was excluded from the tables below. Government and institutional money market funds Government and institutional money market funds $ $ 454,545 $ 454,545 $ — $ — $ 454,545 454,545 Assets Assets Cash equivalents: Cash equivalents: Available-for-sale: Available-for-sale: Other assets: Other assets: Deferred compensation investments Deferred compensation investments Total assets measured at fair value Total assets measured at fair value Liabilities Liabilities Forward foreign currency exchange contracts (1) Forward foreign currency exchange contracts (1) Total liabilities measured at fair value Total liabilities measured at fair value October 29, 2022 October 29, 2022 Fair Value measurement at Fair Value measurement at Reporting Date using: Reporting Date using: Quoted Quoted Prices in Prices in Active Active Markets Markets for for Identical Identical Assets Assets (Level 1) (Level 1) Significant Significant Other Other Observable Observable Inputs Inputs (Level 2) (Level 2) Total Total 63,211 63,211 517,756 $ 517,756 $ — — 63,211 63,211 — $ — $ 517,756 517,756 — $ — $ — $ — $ 16,984 $ 16,984 $ 16,984 $ 16,984 $ 16,984 16,984 16,984 16,984 $ $ $ $ $ $ (1) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 2i, Derivative (1) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 2i, Derivative Instruments and Hedging Agreements, of the Notes to Consolidated Financial Statements for more information related to the Instruments and Hedging Agreements, of the Notes to Consolidated Financial Statements for more information related to the Company's master netting arrangements. Company's master netting arrangements. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company estimates that $12.9 million, net of tax, of losses of forward foreign currency derivative instruments The Company estimates that $12.9 million, net of tax, of losses of forward foreign currency derivative instruments Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or included in AOCI will be reclassified into earnings within the next 12 months. included in AOCI will be reclassified into earnings within the next 12 months. liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparties to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these its counterparties to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's Consolidated Balance Sheets on a net basis. As of October 29, 2022 and arrangements have been presented in the Company's Consolidated Balance Sheets on a net basis. As of October 29, 2022 and October 30, 2021, none of the netting arrangements involved collateral. October 30, 2021, none of the netting arrangements involved collateral. The following table presents the gross amounts of the Company's forward foreign currency exchange contracts and the net The following table presents the gross amounts of the Company's forward foreign currency exchange contracts and the net components, that were accounted for at fair value on a recurring basis as of October 29, 2022 and October 30, 2021. The tables components, that were accounted for at fair value on a recurring basis as of October 29, 2022 and October 30, 2021. The tables amounts recorded in the Company's Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021: amounts recorded in the Company's Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021: Gross amount of recognized liabilities Gross amount of recognized liabilities Gross amounts of recognized assets Gross amounts of recognized assets Net liabilities offset and presented in the Consolidated Balance Sheets Net liabilities offset and presented in the Consolidated Balance Sheets October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 $ $ $ $ (19,846) $ (19,846) $ 2,862 2,862 (16,984) $ (16,984) $ (8,404) (8,404) 319 319 (8,085) (8,085) Interest Rate Exposure Management — The Company's current and future debt may be subject to interest rate risk. The Interest Rate Exposure Management — The Company's current and future debt may be subject to interest rate risk. The Company utilizes interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of the changes in Company utilizes interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of the changes in interest rates. During fiscal 2019, the Company entered into an interest rate swap agreement which locked in the interest rate interest rates. During fiscal 2019, the Company entered into an interest rate swap agreement which locked in the interest rate for up to $1 billion in future debt issuances. The interest rate swap was designated and qualified as a cash flow hedge. During for up to $1 billion in future debt issuances. The interest rate swap was designated and qualified as a cash flow hedge. During fiscal 2021, the Company issued $1 billion of 2.100% Senior Notes due October 2031, and the swap was cash terminated in the fiscal 2021, the Company issued $1 billion of 2.100% Senior Notes due October 2031, and the swap was cash terminated in the amount of $153.2 million. The accumulated loss recorded in AOCI will be reclassified to interest expense on a straight-line amount of $153.2 million. The accumulated loss recorded in AOCI will be reclassified to interest expense on a straight-line basis over the 10-year term of such Senior Notes. basis over the 10-year term of such Senior Notes. The market risk associated with the Company’s derivative instruments results from currency exchange rate or interest rate The market risk associated with the Company’s derivative instruments results from currency exchange rate or interest rate movements that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. The movements that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. The counterparties to the agreements relating to the Company’s derivative instruments consist of a number of major international counterparties to the agreements relating to the Company’s derivative instruments consist of a number of major international financial institutions with high credit ratings. Based on the credit ratings of the Company’s counterparties as of October 29, financial institutions with high credit ratings. Based on the credit ratings of the Company’s counterparties as of October 29, 2022 and October 30, 2021, nonperformance is not perceived to be a material risk. Furthermore, none of the Company’s 2022 and October 30, 2021, nonperformance is not perceived to be a material risk. Furthermore, none of the Company’s derivatives are subject to collateral or other security arrangements and none contain provisions that are dependent on the derivatives are subject to collateral or other security arrangements and none contain provisions that are dependent on the Company’s credit ratings from any credit rating agency. While the contract or notional amounts of derivative financial Company’s credit ratings from any credit rating agency. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Company’s instruments provide one measure of the volume of these transactions, they do not represent the amount of the Company’s exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the obligations of the Company to the counterparties. As a result of the above considerations, the Company contracts exceed the obligations of the Company to the counterparties. As a result of the above considerations, the Company does not consider the risk of counterparty default to be significant. does not consider the risk of counterparty default to be significant. The Company records the fair value of its derivative financial instruments in its Consolidated Financial Statements in The Company records the fair value of its derivative financial instruments in its Consolidated Financial Statements in other current assets, other assets, accrued liabilities and other non-current liabilities, depending on their net position, regardless other current assets, other assets, accrued liabilities and other non-current liabilities, depending on their net position, regardless of the purpose or intent for holding the derivative contract. Changes in the fair value of the derivative financial instruments are of the purpose or intent for holding the derivative contract. Changes in the fair value of the derivative financial instruments are either recognized periodically in earnings or in shareholders’ equity as a component of AOCI. Changes in the fair value of cash either recognized periodically in earnings or in shareholders’ equity as a component of AOCI. Changes in the fair value of cash flow hedges are recorded in AOCI and reclassified into earnings in the same line item on the Consolidated Statements of flow hedges are recorded in AOCI and reclassified into earnings in the same line item on the Consolidated Statements of Income as the impact of the hedged transaction when the underlying contract matures. Changes in the fair values of derivatives Income as the impact of the hedged transaction when the underlying contract matures. Changes in the fair values of derivatives not qualifying for hedge accounting are reported in earnings as they occur. not qualifying for hedge accounting are reported in earnings as they occur. For information on the unrealized holding gains (losses) on derivatives included in and reclassified out of AOCI into the For information on the unrealized holding gains (losses) on derivatives included in and reclassified out of AOCI into the Consolidated Statements of Income related to forward foreign currency exchange contracts, see Note 2o, Accumulated Other Consolidated Statements of Income related to forward foreign currency exchange contracts, see Note 2o, Accumulated Other Comprehensive (Loss) Income, of the Notes to Consolidated Financial Statements. Comprehensive (Loss) Income, of the Notes to Consolidated Financial Statements. j. Fair Value j. Fair Value The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). lowest priority to unobservable inputs (Level 3 measurements). Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. reporting entity has the ability to access at the measurement date. 55 55 56 56 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company estimates that $12.9 million, net of tax, of losses of forward foreign currency derivative instruments The Company estimates that $12.9 million, net of tax, of losses of forward foreign currency derivative instruments Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. observable for substantially the full term of the asset or liability. Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. for the asset or liability at the measurement date. The tables below, set forth by level, presents the Company’s financial assets and liabilities, excluding accrued interest The tables below, set forth by level, presents the Company’s financial assets and liabilities, excluding accrued interest components, that were accounted for at fair value on a recurring basis as of October 29, 2022 and October 30, 2021. The tables components, that were accounted for at fair value on a recurring basis as of October 29, 2022 and October 30, 2021. The tables exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of October 29, 2022 and October 30, 2021, the Company held $1,016.0 million and $1,315.0 million, respectively, of cash that October 29, 2022 and October 30, 2021, the Company held $1,016.0 million and $1,315.0 million, respectively, of cash that was excluded from the tables below. was excluded from the tables below. October 29, 2022 October 29, 2022 Fair Value measurement at Fair Value measurement at Reporting Date using: Reporting Date using: Quoted Quoted Prices in Prices in Active Active Markets Markets for for Identical Identical Assets Assets (Level 1) (Level 1) Significant Significant Other Other Observable Observable Inputs Inputs (Level 2) (Level 2) Total Total Assets Assets Cash equivalents: Cash equivalents: Available-for-sale: Available-for-sale: Government and institutional money market funds Government and institutional money market funds $ $ 454,545 $ 454,545 $ — $ — $ 454,545 454,545 Other assets: Other assets: Deferred compensation investments Deferred compensation investments Total assets measured at fair value Total assets measured at fair value Liabilities Liabilities Forward foreign currency exchange contracts (1) Forward foreign currency exchange contracts (1) Total liabilities measured at fair value Total liabilities measured at fair value 63,211 63,211 517,756 $ 517,756 $ — — — $ — $ 63,211 63,211 517,756 517,756 — $ — $ — $ — $ 16,984 $ 16,984 $ 16,984 $ 16,984 $ 16,984 16,984 16,984 16,984 $ $ $ $ $ $ (1) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 2i, Derivative (1) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 2i, Derivative Instruments and Hedging Agreements, of the Notes to Consolidated Financial Statements for more information related to the Instruments and Hedging Agreements, of the Notes to Consolidated Financial Statements for more information related to the Company's master netting arrangements. Company's master netting arrangements. included in AOCI will be reclassified into earnings within the next 12 months. included in AOCI will be reclassified into earnings within the next 12 months. All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparties to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these its counterparties to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's Consolidated Balance Sheets on a net basis. As of October 29, 2022 and arrangements have been presented in the Company's Consolidated Balance Sheets on a net basis. As of October 29, 2022 and October 30, 2021, none of the netting arrangements involved collateral. October 30, 2021, none of the netting arrangements involved collateral. The following table presents the gross amounts of the Company's forward foreign currency exchange contracts and the net The following table presents the gross amounts of the Company's forward foreign currency exchange contracts and the net amounts recorded in the Company's Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021: amounts recorded in the Company's Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021: Gross amount of recognized liabilities Gross amount of recognized liabilities Gross amounts of recognized assets Gross amounts of recognized assets Net liabilities offset and presented in the Consolidated Balance Sheets Net liabilities offset and presented in the Consolidated Balance Sheets October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 $ $ $ $ (19,846) $ (19,846) $ 2,862 2,862 (16,984) $ (16,984) $ (8,404) (8,404) 319 319 (8,085) (8,085) Interest Rate Exposure Management — The Company's current and future debt may be subject to interest rate risk. The Interest Rate Exposure Management — The Company's current and future debt may be subject to interest rate risk. The Company utilizes interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of the changes in Company utilizes interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of the changes in interest rates. During fiscal 2019, the Company entered into an interest rate swap agreement which locked in the interest rate interest rates. During fiscal 2019, the Company entered into an interest rate swap agreement which locked in the interest rate for up to $1 billion in future debt issuances. The interest rate swap was designated and qualified as a cash flow hedge. During for up to $1 billion in future debt issuances. The interest rate swap was designated and qualified as a cash flow hedge. During fiscal 2021, the Company issued $1 billion of 2.100% Senior Notes due October 2031, and the swap was cash terminated in the fiscal 2021, the Company issued $1 billion of 2.100% Senior Notes due October 2031, and the swap was cash terminated in the amount of $153.2 million. The accumulated loss recorded in AOCI will be reclassified to interest expense on a straight-line amount of $153.2 million. The accumulated loss recorded in AOCI will be reclassified to interest expense on a straight-line basis over the 10-year term of such Senior Notes. basis over the 10-year term of such Senior Notes. The market risk associated with the Company’s derivative instruments results from currency exchange rate or interest rate The market risk associated with the Company’s derivative instruments results from currency exchange rate or interest rate movements that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. The movements that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. The counterparties to the agreements relating to the Company’s derivative instruments consist of a number of major international counterparties to the agreements relating to the Company’s derivative instruments consist of a number of major international financial institutions with high credit ratings. Based on the credit ratings of the Company’s counterparties as of October 29, financial institutions with high credit ratings. Based on the credit ratings of the Company’s counterparties as of October 29, 2022 and October 30, 2021, nonperformance is not perceived to be a material risk. Furthermore, none of the Company’s 2022 and October 30, 2021, nonperformance is not perceived to be a material risk. Furthermore, none of the Company’s derivatives are subject to collateral or other security arrangements and none contain provisions that are dependent on the derivatives are subject to collateral or other security arrangements and none contain provisions that are dependent on the Company’s credit ratings from any credit rating agency. While the contract or notional amounts of derivative financial Company’s credit ratings from any credit rating agency. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Company’s instruments provide one measure of the volume of these transactions, they do not represent the amount of the Company’s exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the obligations of the Company to the counterparties. As a result of the above considerations, the Company contracts exceed the obligations of the Company to the counterparties. As a result of the above considerations, the Company does not consider the risk of counterparty default to be significant. does not consider the risk of counterparty default to be significant. The Company records the fair value of its derivative financial instruments in its Consolidated Financial Statements in The Company records the fair value of its derivative financial instruments in its Consolidated Financial Statements in other current assets, other assets, accrued liabilities and other non-current liabilities, depending on their net position, regardless other current assets, other assets, accrued liabilities and other non-current liabilities, depending on their net position, regardless of the purpose or intent for holding the derivative contract. Changes in the fair value of the derivative financial instruments are of the purpose or intent for holding the derivative contract. Changes in the fair value of the derivative financial instruments are either recognized periodically in earnings or in shareholders’ equity as a component of AOCI. Changes in the fair value of cash either recognized periodically in earnings or in shareholders’ equity as a component of AOCI. Changes in the fair value of cash flow hedges are recorded in AOCI and reclassified into earnings in the same line item on the Consolidated Statements of flow hedges are recorded in AOCI and reclassified into earnings in the same line item on the Consolidated Statements of Income as the impact of the hedged transaction when the underlying contract matures. Changes in the fair values of derivatives Income as the impact of the hedged transaction when the underlying contract matures. Changes in the fair values of derivatives not qualifying for hedge accounting are reported in earnings as they occur. not qualifying for hedge accounting are reported in earnings as they occur. For information on the unrealized holding gains (losses) on derivatives included in and reclassified out of AOCI into the For information on the unrealized holding gains (losses) on derivatives included in and reclassified out of AOCI into the Consolidated Statements of Income related to forward foreign currency exchange contracts, see Note 2o, Accumulated Other Consolidated Statements of Income related to forward foreign currency exchange contracts, see Note 2o, Accumulated Other Comprehensive (Loss) Income, of the Notes to Consolidated Financial Statements. Comprehensive (Loss) Income, of the Notes to Consolidated Financial Statements. j. Fair Value j. Fair Value The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). lowest priority to unobservable inputs (Level 3 measurements). Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. reporting entity has the ability to access at the measurement date. 55 55 56 56 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) October 30, 2021 October 30, 2021 Fair Value measurement at Fair Value measurement at Reporting Date using: Reporting Date using: Quoted Quoted Prices in Prices in Active Active Markets Markets for for Identical Identical Assets Assets (Level 1) (Level 1) Significant Significant Other Other Observable Observable Inputs Inputs (Level 2) (Level 2) Total Total Assets Assets Cash equivalents: Cash equivalents: Available-for-sale: Available-for-sale: Government and institutional money market funds Government and institutional money market funds $ $ 662,997 $ 662,997 $ — $ — $ 662,997 662,997 Other assets: Other assets: Deferred compensation investments Deferred compensation investments Total assets measured at fair value Total assets measured at fair value Liabilities Liabilities Forward foreign currency exchange contracts (1) Forward foreign currency exchange contracts (1) Total liabilities measured at fair value Total liabilities measured at fair value 71,301 71,301 734,298 $ 734,298 $ — — 71,301 71,301 — $ — $ 734,298 734,298 — $ — $ — $ — $ 8,085 $ 8,085 $ 8,085 $ 8,085 $ 8,085 8,085 8,085 8,085 $ $ $ $ $ $ (1) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 2i, Derivative (1) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 2i, Derivative Instruments and Hedging Agreements, of the Notes to Consolidated Financial Statements for more information related to the Instruments and Hedging Agreements, of the Notes to Consolidated Financial Statements for more information related to the Company's master netting arrangements. Company's master netting arrangements. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure instruments: instruments: Cash equivalents — These investments are adjusted to fair value based on quoted market prices or are determined using Cash equivalents — These investments are adjusted to fair value based on quoted market prices or are determined using a yield curve model based on current market rates. a yield curve model based on current market rates. Deferred compensation plan investments — The fair value of these mutual fund, money market fund and equity Deferred compensation plan investments — The fair value of these mutual fund, money market fund and equity investments are based on quoted market prices. investments are based on quoted market prices. Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow hedges, is based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking hedges, is based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking into consideration current exchange rates as well as the creditworthiness of the counterparty for assets and the Company’s into consideration current exchange rates as well as the creditworthiness of the counterparty for assets and the Company’s creditworthiness for liabilities. The fair value of these instruments is based upon valuation models using current market creditworthiness for liabilities. The fair value of these instruments is based upon valuation models using current market information such as strike price, spot rate, forward points, and maturity date. information such as strike price, spot rate, forward points, and maturity date. Financial Instruments Not Recorded at Fair Value on a Recurring Basis Financial Instruments Not Recorded at Fair Value on a Recurring Basis Santa Clara, California leased property asset group - As a result of a sublease transaction involving a leased property in Santa Clara, California leased property asset group - As a result of a sublease transaction involving a leased property in Santa Clara, California during the third quarter of 2022, the Company estimated the fair value of the sublease assets using Santa Clara, California during the third quarter of 2022, the Company estimated the fair value of the sublease assets using discounted cash flows from the estimated net sublease rental income discounted at a market rate and recorded an impairment discounted cash flows from the estimated net sublease rental income discounted at a market rate and recorded an impairment charge which represented the excess carrying value of the asset group associated with the Santa Clara, California leased charge which represented the excess carrying value of the asset group associated with the Santa Clara, California leased property over its estimated fair value. These assets are considered a Level 2 fair value measurement. See Note 5, Special property over its estimated fair value. These assets are considered a Level 2 fair value measurement. See Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements for additional information. Charges, Net, of the Notes to Consolidated Financial Statements for additional information. Debt — The table below presents the estimated fair value of certain financial instruments not recorded at fair value on a Debt — The table below presents the estimated fair value of certain financial instruments not recorded at fair value on a recurring basis. The fair values of the senior unsecured notes are obtained from broker prices and are classified as Level 1 recurring basis. The fair values of the senior unsecured notes are obtained from broker prices and are classified as Level 1 measurements according to the fair value hierarchy. See Note 14, Debt, of the Notes to Consolidated Financial Statements for measurements according to the fair value hierarchy. See Note 14, Debt, of the Notes to Consolidated Financial Statements for further discussion related to outstanding debt. further discussion related to outstanding debt. 57 57 58 58 Maxim 2023 Notes, due March 2023 Maxim 2023 Notes, due March 2023 $ $ — $ — $ — $ — $ 500,000 $ 500,000 $ 520,236 520,236 October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Principal Principal Amount Amount Outstanding Outstanding Fair Value Fair Value Fair Value Fair Value Principal Principal Amount Amount Outstanding Outstanding 500,000 500,000 400,000 400,000 900,000 900,000 59,788 59,788 440,212 440,212 750,000 750,000 1,000,000 1,000,000 300,000 300,000 144,278 144,278 750,000 750,000 332,587 332,587 1,000,000 1,000,000 491,982 491,982 383,378 383,378 851,479 851,479 54,771 54,771 410,091 410,091 621,093 621,093 786,772 786,772 278,359 278,359 126,274 126,274 513,709 513,709 313,931 313,931 640,766 640,766 500,000 500,000 400,000 400,000 900,000 900,000 500,000 500,000 — — 750,000 750,000 1,000,000 1,000,000 — — 144,278 144,278 750,000 750,000 332,587 332,587 500,482 500,482 423,265 423,265 986,243 986,243 542,942 542,942 — — 743,109 743,109 996,702 996,702 — — 176,960 176,960 758,246 758,246 469,592 469,592 $ 6,576,865 $ 5,472,605 $ 6,776,865 $ 7,147,607 $ 6,576,865 $ 5,472,605 $ 6,776,865 $ 7,147,607 1,000,000 1,000,000 1,029,830 1,029,830 2024 Notes, due October 2024 2024 Notes, due October 2024 2025 Notes, due April 2025 2025 Notes, due April 2025 2026 Notes, due December 2026 2026 Notes, due December 2026 Maxim 2027 Notes, due June 2027 Maxim 2027 Notes, due June 2027 2027 Notes, due June 2027 2027 Notes, due June 2027 2028 Notes, due October 2028 2028 Notes, due October 2028 2031 Notes, due October 2031 2031 Notes, due October 2031 2032 Notes, due October 2032 2032 Notes, due October 2032 2036 Notes, due December 2036 2036 Notes, due December 2036 2041 Notes, due October 2041 2041 Notes, due October 2041 2045 Notes, due December 2045 2045 Notes, due December 2045 2051 Notes, due October 2051 2051 Notes, due October 2051 Total Debt Total Debt k. Use of Estimates k. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States The preparation of financial statements in conformity with accounting principles generally accepted in the United States of contingencies at the date of the financial statements and the reported amounts of revenue and expenses during the reporting of contingencies at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates relate to the useful lives of fixed assets and identified intangible assets; allowances for doubtful accounts period. Such estimates relate to the useful lives of fixed assets and identified intangible assets; allowances for doubtful accounts and customer returns; the net realizable value of inventory; potential reserves relating to litigation matters; accrued liabilities, and customer returns; the net realizable value of inventory; potential reserves relating to litigation matters; accrued liabilities, including estimates of variable consideration related to distributor sales; accrued taxes; uncertain tax positions; deferred tax including estimates of variable consideration related to distributor sales; accrued taxes; uncertain tax positions; deferred tax valuation allowances; assumptions pertaining to stock-based compensation payments and defined benefit plans; and fair value valuation allowances; assumptions pertaining to stock-based compensation payments and defined benefit plans; and fair value of acquired assets and liabilities, including inventory, property, plant and equipment, goodwill, and acquired intangibles; and of acquired assets and liabilities, including inventory, property, plant and equipment, goodwill, and acquired intangibles; and other reserves. Actual results could differ from those estimates and such differences may be material to the financial statements. other reserves. Actual results could differ from those estimates and such differences may be material to the financial statements. l. Concentrations of Risk l. Concentrations of Risk investments and trade accounts receivable. investments and trade accounts receivable. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of The Company maintains cash and cash equivalents with high credit quality counterparties, continuously monitors the The Company maintains cash and cash equivalents with high credit quality counterparties, continuously monitors the amount of credit exposure to any one issuer and diversifies its investments in order to minimize its credit risk. amount of credit exposure to any one issuer and diversifies its investments in order to minimize its credit risk. The Company sells its products to distributors and original equipment manufacturers (OEMs) involved in a variety of The Company sells its products to distributors and original equipment manufacturers (OEMs) involved in a variety of industries including industrial, communications, automotive and consumer end markets. The Company has adopted credit industries including industrial, communications, automotive and consumer end markets. The Company has adopted credit policies and standards to accommodate growth in these markets. The Company performs continuing credit evaluations of its policies and standards to accommodate growth in these markets. The Company performs continuing credit evaluations of its customers’ financial condition and although the Company generally does not require collateral, the Company may require customers’ financial condition and although the Company generally does not require collateral, the Company may require letters of credit from customers in certain circumstances. The Company provides reserves for estimated amounts of accounts letters of credit from customers in certain circumstances. The Company provides reserves for estimated amounts of accounts receivable that may not be collected. receivable that may not be collected. The Company's largest customer, which is a distributor rather than an end customer, accounted for approximately 22%, The Company's largest customer, which is a distributor rather than an end customer, accounted for approximately 22%, 26%, and 29% of net revenues in fiscal 2022, fiscal 2021 and fiscal 2020, respectively. The Company's next largest customer, 26%, and 29% of net revenues in fiscal 2022, fiscal 2021 and fiscal 2020, respectively. The Company's next largest customer, which is also a distributor, accounted for approximately 10% and 11% of net revenues in fiscal 2022 and fiscal 2021, which is also a distributor, accounted for approximately 10% and 11% of net revenues in fiscal 2022 and fiscal 2021, respectively. This next largest customer accounted for less than 10% of net revenues in fiscal 2020. No other customer respectively. This next largest customer accounted for less than 10% of net revenues in fiscal 2020. No other customer accounted for greater than 10% of revenue in any period presented. accounted for greater than 10% of revenue in any period presented. m. Concentration of Other Risks m. Concentration of Other Risks The semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical The semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns. The Company’s financial results are affected by a wide variety of factors, including general economic market patterns. The Company’s financial results are affected by a wide variety of factors, including general economic conditions worldwide, economic conditions specific to the semiconductor industry, the timely implementation of new conditions worldwide, economic conditions specific to the semiconductor industry, the timely implementation of new Government and institutional money market funds Government and institutional money market funds $ $ 662,997 $ 662,997 $ — $ — $ 662,997 662,997 Assets Assets Cash equivalents: Cash equivalents: Available-for-sale: Available-for-sale: Other assets: Other assets: Deferred compensation investments Deferred compensation investments Total assets measured at fair value Total assets measured at fair value Liabilities Liabilities Forward foreign currency exchange contracts (1) Forward foreign currency exchange contracts (1) Total liabilities measured at fair value Total liabilities measured at fair value October 30, 2021 October 30, 2021 Fair Value measurement at Fair Value measurement at Reporting Date using: Reporting Date using: Quoted Quoted Prices in Prices in Active Active Markets Markets for for Identical Identical Assets Assets (Level 1) (Level 1) Significant Significant Other Other Observable Observable Inputs Inputs (Level 2) (Level 2) Total Total 71,301 71,301 734,298 $ 734,298 $ — — 71,301 71,301 — $ — $ 734,298 734,298 — $ — $ — $ — $ 8,085 $ 8,085 $ 8,085 $ 8,085 $ 8,085 8,085 8,085 8,085 $ $ $ $ $ $ (1) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 2i, Derivative (1) The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 2i, Derivative Instruments and Hedging Agreements, of the Notes to Consolidated Financial Statements for more information related to the Instruments and Hedging Agreements, of the Notes to Consolidated Financial Statements for more information related to the Company's master netting arrangements. Company's master netting arrangements. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: instruments: Cash equivalents — These investments are adjusted to fair value based on quoted market prices or are determined using Cash equivalents — These investments are adjusted to fair value based on quoted market prices or are determined using a yield curve model based on current market rates. a yield curve model based on current market rates. Deferred compensation plan investments — The fair value of these mutual fund, money market fund and equity Deferred compensation plan investments — The fair value of these mutual fund, money market fund and equity investments are based on quoted market prices. investments are based on quoted market prices. Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow hedges, is based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking hedges, is based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking into consideration current exchange rates as well as the creditworthiness of the counterparty for assets and the Company’s into consideration current exchange rates as well as the creditworthiness of the counterparty for assets and the Company’s creditworthiness for liabilities. The fair value of these instruments is based upon valuation models using current market creditworthiness for liabilities. The fair value of these instruments is based upon valuation models using current market information such as strike price, spot rate, forward points, and maturity date. information such as strike price, spot rate, forward points, and maturity date. Financial Instruments Not Recorded at Fair Value on a Recurring Basis Financial Instruments Not Recorded at Fair Value on a Recurring Basis Santa Clara, California leased property asset group - As a result of a sublease transaction involving a leased property in Santa Clara, California leased property asset group - As a result of a sublease transaction involving a leased property in Santa Clara, California during the third quarter of 2022, the Company estimated the fair value of the sublease assets using Santa Clara, California during the third quarter of 2022, the Company estimated the fair value of the sublease assets using discounted cash flows from the estimated net sublease rental income discounted at a market rate and recorded an impairment discounted cash flows from the estimated net sublease rental income discounted at a market rate and recorded an impairment charge which represented the excess carrying value of the asset group associated with the Santa Clara, California leased charge which represented the excess carrying value of the asset group associated with the Santa Clara, California leased property over its estimated fair value. These assets are considered a Level 2 fair value measurement. See Note 5, Special property over its estimated fair value. These assets are considered a Level 2 fair value measurement. See Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements for additional information. Charges, Net, of the Notes to Consolidated Financial Statements for additional information. Debt — The table below presents the estimated fair value of certain financial instruments not recorded at fair value on a Debt — The table below presents the estimated fair value of certain financial instruments not recorded at fair value on a recurring basis. The fair values of the senior unsecured notes are obtained from broker prices and are classified as Level 1 recurring basis. The fair values of the senior unsecured notes are obtained from broker prices and are classified as Level 1 measurements according to the fair value hierarchy. See Note 14, Debt, of the Notes to Consolidated Financial Statements for measurements according to the fair value hierarchy. See Note 14, Debt, of the Notes to Consolidated Financial Statements for further discussion related to outstanding debt. further discussion related to outstanding debt. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Maxim 2023 Notes, due March 2023 Maxim 2023 Notes, due March 2023 $ $ — $ — $ — $ — $ 500,000 $ 500,000 $ 520,236 520,236 October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Principal Principal Amount Amount Outstanding Outstanding Fair Value Fair Value Principal Principal Amount Amount Outstanding Outstanding Fair Value Fair Value 2024 Notes, due October 2024 2024 Notes, due October 2024 2025 Notes, due April 2025 2025 Notes, due April 2025 2026 Notes, due December 2026 2026 Notes, due December 2026 Maxim 2027 Notes, due June 2027 Maxim 2027 Notes, due June 2027 2027 Notes, due June 2027 2027 Notes, due June 2027 2028 Notes, due October 2028 2028 Notes, due October 2028 2031 Notes, due October 2031 2031 Notes, due October 2031 2032 Notes, due October 2032 2032 Notes, due October 2032 2036 Notes, due December 2036 2036 Notes, due December 2036 2041 Notes, due October 2041 2041 Notes, due October 2041 2045 Notes, due December 2045 2045 Notes, due December 2045 2051 Notes, due October 2051 2051 Notes, due October 2051 Total Debt Total Debt k. Use of Estimates k. Use of Estimates 500,000 500,000 400,000 400,000 900,000 900,000 59,788 59,788 440,212 440,212 750,000 750,000 1,000,000 1,000,000 300,000 300,000 144,278 144,278 491,982 491,982 383,378 383,378 851,479 851,479 54,771 54,771 410,091 410,091 621,093 621,093 786,772 786,772 278,359 278,359 126,274 126,274 500,000 500,000 400,000 400,000 900,000 900,000 500,000 500,000 — — 750,000 750,000 1,000,000 1,000,000 — — 500,482 500,482 423,265 423,265 986,243 986,243 542,942 542,942 — — 743,109 743,109 996,702 996,702 — — 144,278 144,278 176,960 176,960 750,000 750,000 332,587 332,587 1,000,000 1,000,000 758,246 758,246 469,592 469,592 1,029,830 1,029,830 $ 6,576,865 $ 5,472,605 $ 6,776,865 $ 7,147,607 $ 6,576,865 $ 5,472,605 $ 6,776,865 $ 7,147,607 750,000 750,000 332,587 332,587 1,000,000 1,000,000 513,709 513,709 313,931 313,931 640,766 640,766 The preparation of financial statements in conformity with accounting principles generally accepted in the United States The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amounts of revenue and expenses during the reporting of contingencies at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates relate to the useful lives of fixed assets and identified intangible assets; allowances for doubtful accounts period. Such estimates relate to the useful lives of fixed assets and identified intangible assets; allowances for doubtful accounts and customer returns; the net realizable value of inventory; potential reserves relating to litigation matters; accrued liabilities, and customer returns; the net realizable value of inventory; potential reserves relating to litigation matters; accrued liabilities, including estimates of variable consideration related to distributor sales; accrued taxes; uncertain tax positions; deferred tax including estimates of variable consideration related to distributor sales; accrued taxes; uncertain tax positions; deferred tax valuation allowances; assumptions pertaining to stock-based compensation payments and defined benefit plans; and fair value valuation allowances; assumptions pertaining to stock-based compensation payments and defined benefit plans; and fair value of acquired assets and liabilities, including inventory, property, plant and equipment, goodwill, and acquired intangibles; and of acquired assets and liabilities, including inventory, property, plant and equipment, goodwill, and acquired intangibles; and other reserves. Actual results could differ from those estimates and such differences may be material to the financial statements. other reserves. Actual results could differ from those estimates and such differences may be material to the financial statements. l. Concentrations of Risk l. Concentrations of Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of investments and trade accounts receivable. investments and trade accounts receivable. The Company maintains cash and cash equivalents with high credit quality counterparties, continuously monitors the The Company maintains cash and cash equivalents with high credit quality counterparties, continuously monitors the amount of credit exposure to any one issuer and diversifies its investments in order to minimize its credit risk. amount of credit exposure to any one issuer and diversifies its investments in order to minimize its credit risk. The Company sells its products to distributors and original equipment manufacturers (OEMs) involved in a variety of The Company sells its products to distributors and original equipment manufacturers (OEMs) involved in a variety of industries including industrial, communications, automotive and consumer end markets. The Company has adopted credit industries including industrial, communications, automotive and consumer end markets. The Company has adopted credit policies and standards to accommodate growth in these markets. The Company performs continuing credit evaluations of its policies and standards to accommodate growth in these markets. The Company performs continuing credit evaluations of its customers’ financial condition and although the Company generally does not require collateral, the Company may require customers’ financial condition and although the Company generally does not require collateral, the Company may require letters of credit from customers in certain circumstances. The Company provides reserves for estimated amounts of accounts letters of credit from customers in certain circumstances. The Company provides reserves for estimated amounts of accounts receivable that may not be collected. receivable that may not be collected. The Company's largest customer, which is a distributor rather than an end customer, accounted for approximately 22%, The Company's largest customer, which is a distributor rather than an end customer, accounted for approximately 22%, 26%, and 29% of net revenues in fiscal 2022, fiscal 2021 and fiscal 2020, respectively. The Company's next largest customer, 26%, and 29% of net revenues in fiscal 2022, fiscal 2021 and fiscal 2020, respectively. The Company's next largest customer, which is also a distributor, accounted for approximately 10% and 11% of net revenues in fiscal 2022 and fiscal 2021, which is also a distributor, accounted for approximately 10% and 11% of net revenues in fiscal 2022 and fiscal 2021, respectively. This next largest customer accounted for less than 10% of net revenues in fiscal 2020. No other customer respectively. This next largest customer accounted for less than 10% of net revenues in fiscal 2020. No other customer accounted for greater than 10% of revenue in any period presented. accounted for greater than 10% of revenue in any period presented. m. Concentration of Other Risks m. Concentration of Other Risks The semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical The semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns. The Company’s financial results are affected by a wide variety of factors, including general economic market patterns. The Company’s financial results are affected by a wide variety of factors, including general economic conditions worldwide, economic conditions specific to the semiconductor industry, the timely implementation of new conditions worldwide, economic conditions specific to the semiconductor industry, the timely implementation of new 57 57 58 58 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) manufacturing technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and reliance manufacturing technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and reliance on assembly and test subcontractors, third-party wafer fabricators and independent distributors. In addition, the semiconductor on assembly and test subcontractors, third-party wafer fabricators and independent distributors. In addition, the semiconductor market has historically been cyclical and subject to significant economic downturns at various times. The Company is exposed market has historically been cyclical and subject to significant economic downturns at various times. The Company is exposed to the risk of obsolescence of its inventory depending on the mix of future business. Additionally, more than half of the to the risk of obsolescence of its inventory depending on the mix of future business. Additionally, more than half of the Company’s purchases of external wafer and foundry services are from a limited number of suppliers, such as Taiwan Company’s purchases of external wafer and foundry services are from a limited number of suppliers, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others. If these suppliers or any of the Company’s other key suppliers are Semiconductor Manufacturing Company (TSMC) and others. If these suppliers or any of the Company’s other key suppliers are unable or unwilling to manufacture and deliver sufficient quantities of components, on the time schedule and of the quality that unable or unwilling to manufacture and deliver sufficient quantities of components, on the time schedule and of the quality that the Company requires, the Company may be forced to engage additional or replacement suppliers, which could result in the Company requires, the Company may be forced to engage additional or replacement suppliers, which could result in significant expenses and disruptions or delays in manufacturing, product development and shipment of product to the significant expenses and disruptions or delays in manufacturing, product development and shipment of product to the Company’s customers. Given the current demand environment in the semiconductor industry, the Company expects to face a Company’s customers. Given the current demand environment in the semiconductor industry, the Company expects to face a constrained supply environment in the near term. Management is working to balance these constraints as it shifts the constrained supply environment in the near term. Management is working to balance these constraints as it shifts the Company's global resources and adds capacity where appropriate. Company's global resources and adds capacity where appropriate. n. Revenue Recognition n. Revenue Recognition Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services. The Company the consideration to which the providing entity expects to be entitled in exchange for those goods or services. The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company recognizes revenue consideration the Company expects to receive in exchange for those products or services. The Company recognizes revenue when all of the following criteria are met: (1) the Company has entered into a binding agreement, (2) the performance when all of the following criteria are met: (1) the Company has entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied. The been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied. The majority of the Company's shipping terms permit the Company to recognize revenue at point of shipment or delivery. Certain majority of the Company's shipping terms permit the Company to recognize revenue at point of shipment or delivery. Certain shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, the Company defers the revenue recognized until title has passed. Shipping costs are charged to selling, marketing, general and the Company defers the revenue recognized until title has passed. Shipping costs are charged to selling, marketing, general and administrative expense as incurred. Sales taxes are excluded from revenue. administrative expense as incurred. Sales taxes are excluded from revenue. Revenue from contracts with the United States government, government prime contractors and certain commercial Revenue from contracts with the United States government, government prime contractors and certain commercial customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward completion. These measures are used to measure results directly and is generally the best measure of progress toward completion. These measures are used to measure results directly and is generally the best measure of progress toward completion in circumstances in which a reliable measure of output can be established. Estimated revenue in excess of amounts completion in circumstances in which a reliable measure of output can be established. Estimated revenue in excess of amounts billed is reported as unbilled receivables. Contract accounting requires judgment in estimating costs and assumptions related to billed is reported as unbilled receivables. Contract accounting requires judgment in estimating costs and assumptions related to technical issues and delivery schedule. Contract costs include material, subcontract costs, labor and an allocation of indirect technical issues and delivery schedule. Contract costs include material, subcontract costs, labor and an allocation of indirect costs. The estimation of costs at completion of a contract is subject to numerous variables involving contract costs and estimates costs. The estimation of costs at completion of a contract is subject to numerous variables involving contract costs and estimates as to the length of time to complete the contract. Changes in contract performance, estimated gross margin, including the impact as to the length of time to complete the contract. Changes in contract performance, estimated gross margin, including the impact of final contract settlements, and estimated losses are recognized in the period in which the changes or losses are determined. of final contract settlements, and estimated losses are recognized in the period in which the changes or losses are determined. Performance Obligations: Substantially all of the Company’s contracts with customers contain a single performance Performance Obligations: Substantially all of the Company’s contracts with customers contain a single performance obligation, the sale of mixed-signal integrated circuit products. Such sales represent a single performance obligation because the obligation, the sale of mixed-signal integrated circuit products. Such sales represent a single performance obligation because the sale is one type of good or includes multiple goods that are neither capable of being distinct nor separable from the other sale is one type of good or includes multiple goods that are neither capable of being distinct nor separable from the other promises in the contract. This performance obligation is satisfied when control of the product is transferred to the customer, promises in the contract. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs upon shipment or delivery. Unsatisfied performance obligations primarily represent contracts for products with which occurs upon shipment or delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates and with an original expected duration of one year or less. The Company generally offers a twelve-month future delivery dates and with an original expected duration of one year or less. The Company generally offers a twelve-month warranty for its products. The Company’s warranty policy provides for replacement of defective products. Specific accruals are warranty for its products. The Company’s warranty policy provides for replacement of defective products. Specific accruals are recorded for known product warranty issues. Product warranty expenses during fiscal 2022, fiscal 2021 and fiscal 2020 were recorded for known product warranty issues. Product warranty expenses during fiscal 2022, fiscal 2021 and fiscal 2020 were not material. not material. Transaction Price: The transaction price reflects the Company’s expectations about the consideration it will be entitled to Transaction Price: The transaction price reflects the Company’s expectations about the consideration it will be entitled to receive from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to direct receive from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to direct customers and sales to distributors in which both the sale to the distributor and the sale to the end customer occur within the customers and sales to distributors in which both the sale to the distributor and the sale to the end customer occur within the same reporting period. Variable consideration includes sales in which the amount of consideration that the Company will same reporting period. Variable consideration includes sales in which the amount of consideration that the Company will receive is unknown as of the end of a reporting period. The vast majority of such consideration are credits issued to the receive is unknown as of the end of a reporting period. The vast majority of such consideration are credits issued to the distributor due to price protection, but also include sales made to distributors under agreements that allow certain rights of distributor due to price protection, but also include sales made to distributors under agreements that allow certain rights of return, referred to as stock rotation. Price protection represents price discounts granted to certain distributors to allow the return, referred to as stock rotation. Price protection represents price discounts granted to certain distributors to allow the distributor to earn an appropriate margin on sales negotiated with certain customers and in the event of a price decrease distributor to earn an appropriate margin on sales negotiated with certain customers and in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor. Stock rotation allows distributors limited levels of subsequent to the date the product was shipped and billed to the distributor. Stock rotation allows distributors limited levels of returns in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. A liability for returns in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. A liability for distributor credits covering variable consideration is made based on the Company's estimate of historical experience rates as distributor credits covering variable consideration is made based on the Company's estimate of historical experience rates as well as considering economic conditions and contractual terms. To date, actual distributor claims activity has been materially well as considering economic conditions and contractual terms. To date, actual distributor claims activity has been materially consistent with the provisions the Company has made based on its historical estimates. For fiscal 2022 and fiscal 2021, sales to consistent with the provisions the Company has made based on its historical estimates. For fiscal 2022 and fiscal 2021, sales to distributors were approximately $7.5 billion and $4.6 billion, respectively, net of variable consideration for which the liability distributors were approximately $7.5 billion and $4.6 billion, respectively, net of variable consideration for which the liability balances as of October 29, 2022 and October 30, 2021 were $749.4 million and $664.2 million, respectively, and were recorded balances as of October 29, 2022 and October 30, 2021 were $749.4 million and $664.2 million, respectively, and were recorded in Accrued liabilities on the Consolidated Balance Sheets. in Accrued liabilities on the Consolidated Balance Sheets. Contract Balances: Accounts receivable represents the Company’s unconditional right to receive consideration from its Contract Balances: Accounts receivable represents the Company’s unconditional right to receive consideration from its customers. Payments are typically due within 30 to 45 days of invoicing and do not include a significant financing component. customers. Payments are typically due within 30 to 45 days of invoicing and do not include a significant financing component. To date, there have been no material credit losses on accounts receivable. There were no material contract assets or contract To date, there have been no material credit losses on accounts receivable. There were no material contract assets or contract liabilities recorded on the Consolidated Balance Sheets in any of the periods presented. liabilities recorded on the Consolidated Balance Sheets in any of the periods presented. o. Accumulated Other Comprehensive (Loss) Income o. Accumulated Other Comprehensive (Loss) Income AOCI includes certain transactions that have generally been reported in the Consolidated Statement of Shareholders’ AOCI includes certain transactions that have generally been reported in the Consolidated Statement of Shareholders’ Equity. The changes in components of AOCI at October 29, 2022 and October 30, 2021 consisted of the following: Equity. The changes in components of AOCI at October 29, 2022 and October 30, 2021 consisted of the following: October 30, 2021 October 30, 2021 $ $ (25,795) $ (123,754) $ (25,795) $ (123,754) $ (37,016) $ (37,016) $ (186,565) (186,565) Other comprehensive income before reclassifications Other comprehensive income before reclassifications (46,341) (46,341) (33,233) (33,233) 36,035 36,035 Amounts reclassified out of other comprehensive loss Amounts reclassified out of other comprehensive loss Foreign Foreign currency currency translation translation adjustment adjustment Unrealized Unrealized holding holding gains/losses gains/losses on on derivatives derivatives Pension Pension plans plans Total Total — — — — 39,526 39,526 2,334 2,334 (2,152) (2,152) (7,756) (7,756) (46,341) (46,341) 4,141 4,141 30,613 30,613 (43,539) (43,539) 41,860 41,860 (9,908) (9,908) (11,587) (11,587) $ $ (72,136) $ (119,613) $ (72,136) $ (119,613) $ (6,403) $ (6,403) $ (198,152) (198,152) The amounts reclassified out of AOCI into the Consolidated Statements of Income, with presentation location during each The amounts reclassified out of AOCI into the Consolidated Statements of Income, with presentation location during each Comprehensive Income Component Comprehensive Income Component 2022 2022 2021 2021 Location Location Changes in unrealized holding gains/losses on derivatives Changes in unrealized holding gains/losses on derivatives Currency forwards Currency forwards $ $ 9,474 $ 9,474 $ (2,682) Cost of sales (2,682) Cost of sales Tax Tax Other comprehensive income Other comprehensive income October 29, 2022 October 29, 2022 period were as follows: period were as follows: Interest rate derivatives Interest rate derivatives 5,637 5,637 (1,622) Research and development (1,622) Research and development Selling, marketing, general and Selling, marketing, general and 9,492 9,492 14,923 14,923 39,526 39,526 (958) (958) administrative administrative 12,550 12,550 Interest expense Interest expense 7,288 Total before tax 7,288 Total before tax (5,054) (5,054) (189) Tax (189) Tax $ $ 34,472 $ 34,472 $ 7,099 Net of tax 7,099 Net of tax Amortization of pension components included in the computation of net periodic benefit cost Amortization of pension components included in the computation of net periodic benefit cost Actuarial losses Actuarial losses 2,334 2,334 (361) (361) 2,979 2,979 (1) (1) 339 Tax 339 Tax 1,973 $ 1,973 $ 3,318 Net of tax 3,318 Net of tax $ $ $ $ Total amounts reclassified out of AOCI, net of tax Total amounts reclassified out of AOCI, net of tax 36,445 $ 36,445 $ 10,417 10,417 _______________________________________ _______________________________________ (1) The amortization of pension components is included in the computation of net periodic benefit cost. See Note 11, Retirement Plans, of (1) The amortization of pension components is included in the computation of net periodic benefit cost. See Note 11, Retirement Plans, of the Notes to Consolidated Financial Statements for further information. the Notes to Consolidated Financial Statements for further information. 59 59 60 60 manufacturing technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and reliance manufacturing technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and reliance on assembly and test subcontractors, third-party wafer fabricators and independent distributors. In addition, the semiconductor on assembly and test subcontractors, third-party wafer fabricators and independent distributors. In addition, the semiconductor market has historically been cyclical and subject to significant economic downturns at various times. The Company is exposed market has historically been cyclical and subject to significant economic downturns at various times. The Company is exposed to the risk of obsolescence of its inventory depending on the mix of future business. Additionally, more than half of the to the risk of obsolescence of its inventory depending on the mix of future business. Additionally, more than half of the Company’s purchases of external wafer and foundry services are from a limited number of suppliers, such as Taiwan Company’s purchases of external wafer and foundry services are from a limited number of suppliers, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others. If these suppliers or any of the Company’s other key suppliers are Semiconductor Manufacturing Company (TSMC) and others. If these suppliers or any of the Company’s other key suppliers are unable or unwilling to manufacture and deliver sufficient quantities of components, on the time schedule and of the quality that unable or unwilling to manufacture and deliver sufficient quantities of components, on the time schedule and of the quality that the Company requires, the Company may be forced to engage additional or replacement suppliers, which could result in the Company requires, the Company may be forced to engage additional or replacement suppliers, which could result in significant expenses and disruptions or delays in manufacturing, product development and shipment of product to the significant expenses and disruptions or delays in manufacturing, product development and shipment of product to the Company’s customers. Given the current demand environment in the semiconductor industry, the Company expects to face a Company’s customers. Given the current demand environment in the semiconductor industry, the Company expects to face a constrained supply environment in the near term. Management is working to balance these constraints as it shifts the constrained supply environment in the near term. Management is working to balance these constraints as it shifts the Company's global resources and adds capacity where appropriate. Company's global resources and adds capacity where appropriate. n. Revenue Recognition n. Revenue Recognition Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services. The Company the consideration to which the providing entity expects to be entitled in exchange for those goods or services. The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company recognizes revenue consideration the Company expects to receive in exchange for those products or services. The Company recognizes revenue when all of the following criteria are met: (1) the Company has entered into a binding agreement, (2) the performance when all of the following criteria are met: (1) the Company has entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied. The been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied. The majority of the Company's shipping terms permit the Company to recognize revenue at point of shipment or delivery. Certain majority of the Company's shipping terms permit the Company to recognize revenue at point of shipment or delivery. Certain shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, the Company defers the revenue recognized until title has passed. Shipping costs are charged to selling, marketing, general and the Company defers the revenue recognized until title has passed. Shipping costs are charged to selling, marketing, general and administrative expense as incurred. Sales taxes are excluded from revenue. administrative expense as incurred. Sales taxes are excluded from revenue. Revenue from contracts with the United States government, government prime contractors and certain commercial Revenue from contracts with the United States government, government prime contractors and certain commercial customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward completion. These measures are used to measure results directly and is generally the best measure of progress toward completion. These measures are used to measure results directly and is generally the best measure of progress toward completion in circumstances in which a reliable measure of output can be established. Estimated revenue in excess of amounts completion in circumstances in which a reliable measure of output can be established. Estimated revenue in excess of amounts billed is reported as unbilled receivables. Contract accounting requires judgment in estimating costs and assumptions related to billed is reported as unbilled receivables. Contract accounting requires judgment in estimating costs and assumptions related to technical issues and delivery schedule. Contract costs include material, subcontract costs, labor and an allocation of indirect technical issues and delivery schedule. Contract costs include material, subcontract costs, labor and an allocation of indirect costs. The estimation of costs at completion of a contract is subject to numerous variables involving contract costs and estimates costs. The estimation of costs at completion of a contract is subject to numerous variables involving contract costs and estimates as to the length of time to complete the contract. Changes in contract performance, estimated gross margin, including the impact as to the length of time to complete the contract. Changes in contract performance, estimated gross margin, including the impact of final contract settlements, and estimated losses are recognized in the period in which the changes or losses are determined. of final contract settlements, and estimated losses are recognized in the period in which the changes or losses are determined. Performance Obligations: Substantially all of the Company’s contracts with customers contain a single performance Performance Obligations: Substantially all of the Company’s contracts with customers contain a single performance obligation, the sale of mixed-signal integrated circuit products. Such sales represent a single performance obligation because the obligation, the sale of mixed-signal integrated circuit products. Such sales represent a single performance obligation because the sale is one type of good or includes multiple goods that are neither capable of being distinct nor separable from the other sale is one type of good or includes multiple goods that are neither capable of being distinct nor separable from the other promises in the contract. This performance obligation is satisfied when control of the product is transferred to the customer, promises in the contract. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs upon shipment or delivery. Unsatisfied performance obligations primarily represent contracts for products with which occurs upon shipment or delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates and with an original expected duration of one year or less. The Company generally offers a twelve-month future delivery dates and with an original expected duration of one year or less. The Company generally offers a twelve-month warranty for its products. The Company’s warranty policy provides for replacement of defective products. Specific accruals are warranty for its products. The Company’s warranty policy provides for replacement of defective products. Specific accruals are recorded for known product warranty issues. Product warranty expenses during fiscal 2022, fiscal 2021 and fiscal 2020 were recorded for known product warranty issues. Product warranty expenses during fiscal 2022, fiscal 2021 and fiscal 2020 were not material. not material. Transaction Price: The transaction price reflects the Company’s expectations about the consideration it will be entitled to Transaction Price: The transaction price reflects the Company’s expectations about the consideration it will be entitled to receive from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to direct receive from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to direct customers and sales to distributors in which both the sale to the distributor and the sale to the end customer occur within the customers and sales to distributors in which both the sale to the distributor and the sale to the end customer occur within the same reporting period. Variable consideration includes sales in which the amount of consideration that the Company will same reporting period. Variable consideration includes sales in which the amount of consideration that the Company will receive is unknown as of the end of a reporting period. The vast majority of such consideration are credits issued to the receive is unknown as of the end of a reporting period. The vast majority of such consideration are credits issued to the distributor due to price protection, but also include sales made to distributors under agreements that allow certain rights of distributor due to price protection, but also include sales made to distributors under agreements that allow certain rights of return, referred to as stock rotation. Price protection represents price discounts granted to certain distributors to allow the return, referred to as stock rotation. Price protection represents price discounts granted to certain distributors to allow the distributor to earn an appropriate margin on sales negotiated with certain customers and in the event of a price decrease distributor to earn an appropriate margin on sales negotiated with certain customers and in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor. Stock rotation allows distributors limited levels of subsequent to the date the product was shipped and billed to the distributor. Stock rotation allows distributors limited levels of returns in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. A liability for returns in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. A liability for distributor credits covering variable consideration is made based on the Company's estimate of historical experience rates as distributor credits covering variable consideration is made based on the Company's estimate of historical experience rates as well as considering economic conditions and contractual terms. To date, actual distributor claims activity has been materially well as considering economic conditions and contractual terms. To date, actual distributor claims activity has been materially ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) consistent with the provisions the Company has made based on its historical estimates. For fiscal 2022 and fiscal 2021, sales to consistent with the provisions the Company has made based on its historical estimates. For fiscal 2022 and fiscal 2021, sales to distributors were approximately $7.5 billion and $4.6 billion, respectively, net of variable consideration for which the liability distributors were approximately $7.5 billion and $4.6 billion, respectively, net of variable consideration for which the liability balances as of October 29, 2022 and October 30, 2021 were $749.4 million and $664.2 million, respectively, and were recorded balances as of October 29, 2022 and October 30, 2021 were $749.4 million and $664.2 million, respectively, and were recorded in Accrued liabilities on the Consolidated Balance Sheets. in Accrued liabilities on the Consolidated Balance Sheets. Contract Balances: Accounts receivable represents the Company’s unconditional right to receive consideration from its Contract Balances: Accounts receivable represents the Company’s unconditional right to receive consideration from its customers. Payments are typically due within 30 to 45 days of invoicing and do not include a significant financing component. customers. Payments are typically due within 30 to 45 days of invoicing and do not include a significant financing component. To date, there have been no material credit losses on accounts receivable. There were no material contract assets or contract To date, there have been no material credit losses on accounts receivable. There were no material contract assets or contract liabilities recorded on the Consolidated Balance Sheets in any of the periods presented. liabilities recorded on the Consolidated Balance Sheets in any of the periods presented. o. Accumulated Other Comprehensive (Loss) Income o. Accumulated Other Comprehensive (Loss) Income AOCI includes certain transactions that have generally been reported in the Consolidated Statement of Shareholders’ AOCI includes certain transactions that have generally been reported in the Consolidated Statement of Shareholders’ Equity. The changes in components of AOCI at October 29, 2022 and October 30, 2021 consisted of the following: Equity. The changes in components of AOCI at October 29, 2022 and October 30, 2021 consisted of the following: October 30, 2021 October 30, 2021 Other comprehensive income before reclassifications Other comprehensive income before reclassifications Amounts reclassified out of other comprehensive loss Amounts reclassified out of other comprehensive loss Tax Tax Other comprehensive income Other comprehensive income October 29, 2022 October 29, 2022 Unrealized Unrealized holding holding gains/losses gains/losses on on derivatives derivatives Foreign Foreign currency currency translation translation adjustment adjustment $ $ (25,795) $ (123,754) $ (25,795) $ (123,754) $ (33,233) (33,233) (46,341) (46,341) 39,526 39,526 (2,152) (2,152) 4,141 4,141 (46,341) (46,341) (72,136) $ (119,613) $ (72,136) $ (119,613) $ — — — — $ $ Pension Pension plans plans (37,016) $ (37,016) $ 36,035 36,035 2,334 2,334 (7,756) (7,756) 30,613 30,613 (6,403) $ (6,403) $ Total Total (186,565) (186,565) (43,539) (43,539) 41,860 41,860 (9,908) (9,908) (11,587) (11,587) (198,152) (198,152) The amounts reclassified out of AOCI into the Consolidated Statements of Income, with presentation location during each The amounts reclassified out of AOCI into the Consolidated Statements of Income, with presentation location during each period were as follows: period were as follows: Comprehensive Income Component Comprehensive Income Component 2022 2022 2021 2021 Location Location Changes in unrealized holding gains/losses on derivatives Changes in unrealized holding gains/losses on derivatives Currency forwards Currency forwards Interest rate derivatives Interest rate derivatives $ $ $ $ 9,474 $ 9,474 $ 5,637 5,637 (2,682) Cost of sales (2,682) Cost of sales (1,622) Research and development (1,622) Research and development 9,492 9,492 14,923 14,923 39,526 39,526 (5,054) (5,054) 34,472 $ 34,472 $ Selling, marketing, general and Selling, marketing, general and administrative (958) (958) administrative 12,550 Interest expense Interest expense 12,550 7,288 Total before tax 7,288 Total before tax (189) Tax (189) Tax 7,099 Net of tax 7,099 Net of tax Amortization of pension components included in the computation of net periodic benefit cost Amortization of pension components included in the computation of net periodic benefit cost Actuarial losses Actuarial losses Total amounts reclassified out of AOCI, net of tax Total amounts reclassified out of AOCI, net of tax 2,334 2,334 (361) (361) 2,979 2,979 (1) (1) 339 Tax 339 Tax 1,973 $ 1,973 $ 3,318 Net of tax 3,318 Net of tax 36,445 $ 36,445 $ 10,417 10,417 $ $ $ $ _______________________________________ _______________________________________ (1) The amortization of pension components is included in the computation of net periodic benefit cost. See Note 11, Retirement Plans, of (1) The amortization of pension components is included in the computation of net periodic benefit cost. See Note 11, Retirement Plans, of the Notes to Consolidated Financial Statements for further information. the Notes to Consolidated Financial Statements for further information. 59 59 60 60 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) p. p. Income Taxes Income Taxes The following table sets forth the computation of basic and diluted earnings per share: The following table sets forth the computation of basic and diluted earnings per share: The Company makes certain estimates and judgments in determining income tax expense for financial statement The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of income tax credits, benefits, and deductions, and in the purposes. These estimates and judgments occur in the calculation of income tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses for tax and financial statement purposes. The likelihood of the realization of deferred tax assets is assessed and a corresponding for tax and financial statement purposes. The likelihood of the realization of deferred tax assets is assessed and a corresponding valuation allowance is recorded as necessary if management determines those deferred tax assets may not be realized due to the valuation allowance is recorded as necessary if management determines those deferred tax assets may not be realized due to the uncertainty of the timing and amount to be realized of certain state and international tax credit carryovers. In reaching this uncertainty of the timing and amount to be realized of certain state and international tax credit carryovers. In reaching this conclusion, the Company evaluates certain relevant criteria including the existence of deferred tax liabilities that can be used to conclusion, the Company evaluates certain relevant criteria including the existence of deferred tax liabilities that can be used to realize deferred tax assets, the taxable income in prior carryback years in the impacted state and international jurisdictions that realize deferred tax assets, the taxable income in prior carryback years in the impacted state and international jurisdictions that can be used to absorb net operating losses and taxable income in future years. Judgments regarding future profitability may can be used to absorb net operating losses and taxable income in future years. Judgments regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to these deferred tax assets, which may result in an increase or decrease to the income tax require material adjustments to these deferred tax assets, which may result in an increase or decrease to the income tax provision in future periods. provision in future periods. The Company accounts for uncertain tax positions by first determining if it is “more likely than not” that a tax position The Company accounts for uncertain tax positions by first determining if it is “more likely than not” that a tax position will be sustained by the appropriate taxing authorities prior to recording any benefit in the Consolidated Financial Statements. will be sustained by the appropriate taxing authorities prior to recording any benefit in the Consolidated Financial Statements. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. For those tax An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. For those tax positions where it is more likely than not that a tax position will be sustained, the Company has recorded the largest amount of positions where it is more likely than not that a tax position will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Management classifies interest and penalties related be sustained, no tax benefit has been recognized in the financial statements. Management classifies interest and penalties related to uncertain tax positions within the provision for (benefit from) income taxes line of the Consolidated Statements of Income. to uncertain tax positions within the provision for (benefit from) income taxes line of the Consolidated Statements of Income. Management reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not Management reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in known facts or circumstances, changes in tax law, effectively settled issues under audit, and new limited to, changes in known facts or circumstances, changes in tax law, effectively settled issues under audit, and new guidance on legislative interpretations. A change in these factors could result in the recognition of an increase or decrease to the guidance on legislative interpretations. A change in these factors could result in the recognition of an increase or decrease to the Company's income tax provision which could materially impact its consolidated financial position and results of operations. Company's income tax provision which could materially impact its consolidated financial position and results of operations. In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of cost reimbursement and royalty arrangements among related uncertain. Some of these uncertainties arise as a consequence of cost reimbursement and royalty arrangements among related entities. Although the Company believes its estimates are reasonable, no assurance can be given that the final tax outcome of entities. Although the Company believes its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in the historical income tax provisions and income tax liabilities. these matters will not be different than that which is reflected in the historical income tax provisions and income tax liabilities. In the event management's assumptions are incorrect, the differences could have a material impact on its income tax provision In the event management's assumptions are incorrect, the differences could have a material impact on its income tax provision and operating results in the period in which such determination is made. In addition to the factors described above, the current and operating results in the period in which such determination is made. In addition to the factors described above, the current and expected effective tax rate is based on then-current tax law. Significant changes in enacted tax law could affect these and expected effective tax rate is based on then-current tax law. Significant changes in enacted tax law could affect these estimates. See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements for further information related to estimates. See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements for further information related to income taxes. income taxes. q. Earnings Per Share of Common Stock q. Earnings Per Share of Common Stock Basic earnings per share is computed based only on the weighted average number of common shares outstanding during Basic earnings per share is computed based only on the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other potentially dilutive securities using the treasury stock method. In calculating diluted earnings per share, the dilutive effect of potentially dilutive securities using the treasury stock method. In calculating diluted earnings per share, the dilutive effect of stock options and restricted stock units is computed using the average market price for the respective period. In addition, the stock options and restricted stock units is computed using the average market price for the respective period. In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of stock options assumed proceeds under the treasury stock method include the average unrecognized compensation expense of stock options that are in-the-money and restricted stock units. This results in the “assumed” buyback of additional shares, thereby reducing that are in-the-money and restricted stock units. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of in-the-money stock options. Potential shares related to certain of the Company’s outstanding stock the dilutive impact of in-the-money stock options. Potential shares related to certain of the Company’s outstanding stock options and restricted stock units were excluded because they were anti-dilutive. Those potential shares, determined based on options and restricted stock units were excluded because they were anti-dilutive. Those potential shares, determined based on the weighted average exercise prices during the respective periods, could be dilutive in the future. the weighted average exercise prices during the respective periods, could be dilutive in the future. In connection with the acquisition of Linear Technology Corporate (Linear), the Company granted restricted stock In connection with the acquisition of Linear Technology Corporate (Linear), the Company granted restricted stock awards to replace outstanding restricted stock awards of Linear employees. These restricted stock awards entitle recipients to awards to replace outstanding restricted stock awards of Linear employees. These restricted stock awards entitle recipients to voting and nonforfeitable dividend rights from the date of grant. These unvested stock-based compensation awards are voting and nonforfeitable dividend rights from the date of grant. These unvested stock-based compensation awards are considered participating securities and the two-class method is used for purposes of calculating earnings per share. Under considered participating securities and the two-class method is used for purposes of calculating earnings per share. Under the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of earnings per share allocated to common stock, as shown in the table below. The difference between the income calculation of earnings per share allocated to common stock, as shown in the table below. The difference between the income allocated to participating securities under the basic and diluted two-class methods is not material. allocated to participating securities under the basic and diluted two-class methods is not material. Net income (1) Net income (1) Basic shares: Basic shares: 2022 2022 2021 2021 2020 2020 $ $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 $ 1,220,761 1,220,761 Weighted-average shares outstanding Weighted-average shares outstanding Earnings per common share basic Earnings per common share basic 519,226 519,226 397,462 397,462 $ $ 5.29 $ 5.29 $ 3.50 $ 3.50 $ 368,633 368,633 3.31 3.31 Diluted shares: Diluted shares: Weighted-average shares outstanding Weighted-average shares outstanding Assumed exercise of common stock equivalents Assumed exercise of common stock equivalents Weighted-average common and common equivalent shares Weighted-average common and common equivalent shares Earnings per common share diluted Earnings per common share diluted Anti-dilutive shares related to: Anti-dilutive shares related to: Outstanding stock options Outstanding stock options _______________________________________ _______________________________________ r. r. Stock-Based Compensation Stock-Based Compensation (1) For all fiscal years presented, income allocated to participating securities is not material. (1) For all fiscal years presented, income allocated to participating securities is not material. 519,226 519,226 3,952 3,952 523,178 523,178 397,462 397,462 3,826 3,826 401,288 401,288 $ $ 5.25 $ 5.25 $ 3.46 $ 3.46 $ 368,633 368,633 3,340 3,340 371,973 371,973 3.28 3.28 608 608 424 424 460 460 Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards ultimately Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards ultimately expected to vest and is recognized as an expense on a straight-line basis over the vesting period, which is generally four years expected to vest and is recognized as an expense on a straight-line basis over the vesting period, which is generally four years for stock options and restricted stock units, or in annual installments of 25% on each of the first, second, third and fourth for stock options and restricted stock units, or in annual installments of 25% on each of the first, second, third and fourth anniversaries of the date of grant. Restricted stock units with service and performance or market conditions generally vest in anniversaries of the date of grant. Restricted stock units with service and performance or market conditions generally vest in one installment on the third anniversary of the date of grant. For grants issued prior to fiscal 2018, the vesting period was one installment on the third anniversary of the date of grant. For grants issued prior to fiscal 2018, the vesting period was generally five years for stock options, or in annual installments of 20% on each of the first, second, third, fourth and fifth generally five years for stock options, or in annual installments of 20% on each of the first, second, third, fourth and fifth anniversaries of the date of grant and in one installment on the third anniversary of the date of grant for restricted stock units/ anniversaries of the date of grant and in one installment on the third anniversary of the date of grant for restricted stock units/ awards. The maximum contractual term of all stock options is ten years. awards. The maximum contractual term of all stock options is ten years. Determining the amount of stock-based compensation expense to be recorded requires the Company to develop estimates Determining the amount of stock-based compensation expense to be recorded requires the Company to develop estimates used in calculating the grant-date fair value of awards. These estimates may be based on different valuation models depending used in calculating the grant-date fair value of awards. These estimates may be based on different valuation models depending upon the type of award and may include assumptions, such as expected volatility, expected term, risk-free interest rate, upon the type of award and may include assumptions, such as expected volatility, expected term, risk-free interest rate, expected dividend yield, forfeiture rate and others. The Company uses the Black-Scholes valuation model to calculate the grant- expected dividend yield, forfeiture rate and others. The Company uses the Black-Scholes valuation model to calculate the grant- date fair value of stock option awards. The grant-date fair value of restricted stock units with a service condition and restricted date fair value of stock option awards. The grant-date fair value of restricted stock units with a service condition and restricted stock units with both service and performance conditions is calculated using the value of the Company's common stock on the stock units with both service and performance conditions is calculated using the value of the Company's common stock on the date of grant, reduced by the present value of dividends expected to be paid on the Company's common stock prior to vesting. date of grant, reduced by the present value of dividends expected to be paid on the Company's common stock prior to vesting. For restricted stock units with both service and performance conditions, this grant-date fair value is also impacted by the For restricted stock units with both service and performance conditions, this grant-date fair value is also impacted by the number of units that are expected to vest during the performance period and is adjusted through the related stock-based number of units that are expected to vest during the performance period and is adjusted through the related stock-based compensation expense at each reporting period based on the probability of achievement of that performance condition. If the compensation expense at each reporting period based on the probability of achievement of that performance condition. If the Company determines that an award is unlikely to vest, any previously recorded stock-based compensation expense is reversed Company determines that an award is unlikely to vest, any previously recorded stock-based compensation expense is reversed in the period of that determination. The grant date fair value of restricted stock units and performance-based stock options with in the period of that determination. The grant date fair value of restricted stock units and performance-based stock options with both service and market conditions is calculated using the Monte Carlo simulation model to estimate the probability of both service and market conditions is calculated using the Monte Carlo simulation model to estimate the probability of satisfying the performance condition stipulated in the award grant, including the possibility that the market condition may not satisfying the performance condition stipulated in the award grant, including the possibility that the market condition may not be satisfied. be satisfied. The fair value of shares to be issued under the Company's employee stock purchase plan (ESPP) is computed using the The fair value of shares to be issued under the Company's employee stock purchase plan (ESPP) is computed using the Black-Scholes model at the commencement of an offering period in June and December of each year. Stock-based Black-Scholes model at the commencement of an offering period in June and December of each year. Stock-based compensation for the ESPP is expensed using an accelerated amortization model. Additionally, the Company estimates compensation for the ESPP is expensed using an accelerated amortization model. Additionally, the Company estimates forfeitures at least annually based on historical experience and revises the estimates of forfeiture in subsequent periods if actual forfeitures at least annually based on historical experience and revises the estimates of forfeiture in subsequent periods if actual forfeitures differ from those estimates. forfeitures differ from those estimates. See Note 3, Stock-Based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial Statements for See Note 3, Stock-Based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial Statements for additional information relating to stock-based compensation. additional information relating to stock-based compensation. 61 61 62 62 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) p. p. Income Taxes Income Taxes The following table sets forth the computation of basic and diluted earnings per share: The following table sets forth the computation of basic and diluted earnings per share: The Company makes certain estimates and judgments in determining income tax expense for financial statement The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of income tax credits, benefits, and deductions, and in the purposes. These estimates and judgments occur in the calculation of income tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses for tax and financial statement purposes. The likelihood of the realization of deferred tax assets is assessed and a corresponding for tax and financial statement purposes. The likelihood of the realization of deferred tax assets is assessed and a corresponding valuation allowance is recorded as necessary if management determines those deferred tax assets may not be realized due to the valuation allowance is recorded as necessary if management determines those deferred tax assets may not be realized due to the uncertainty of the timing and amount to be realized of certain state and international tax credit carryovers. In reaching this uncertainty of the timing and amount to be realized of certain state and international tax credit carryovers. In reaching this conclusion, the Company evaluates certain relevant criteria including the existence of deferred tax liabilities that can be used to conclusion, the Company evaluates certain relevant criteria including the existence of deferred tax liabilities that can be used to realize deferred tax assets, the taxable income in prior carryback years in the impacted state and international jurisdictions that realize deferred tax assets, the taxable income in prior carryback years in the impacted state and international jurisdictions that can be used to absorb net operating losses and taxable income in future years. Judgments regarding future profitability may can be used to absorb net operating losses and taxable income in future years. Judgments regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to these deferred tax assets, which may result in an increase or decrease to the income tax require material adjustments to these deferred tax assets, which may result in an increase or decrease to the income tax provision in future periods. provision in future periods. The Company accounts for uncertain tax positions by first determining if it is “more likely than not” that a tax position The Company accounts for uncertain tax positions by first determining if it is “more likely than not” that a tax position will be sustained by the appropriate taxing authorities prior to recording any benefit in the Consolidated Financial Statements. will be sustained by the appropriate taxing authorities prior to recording any benefit in the Consolidated Financial Statements. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. For those tax An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. For those tax positions where it is more likely than not that a tax position will be sustained, the Company has recorded the largest amount of positions where it is more likely than not that a tax position will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Management classifies interest and penalties related be sustained, no tax benefit has been recognized in the financial statements. Management classifies interest and penalties related to uncertain tax positions within the provision for (benefit from) income taxes line of the Consolidated Statements of Income. to uncertain tax positions within the provision for (benefit from) income taxes line of the Consolidated Statements of Income. Management reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not Management reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in known facts or circumstances, changes in tax law, effectively settled issues under audit, and new limited to, changes in known facts or circumstances, changes in tax law, effectively settled issues under audit, and new guidance on legislative interpretations. A change in these factors could result in the recognition of an increase or decrease to the guidance on legislative interpretations. A change in these factors could result in the recognition of an increase or decrease to the Company's income tax provision which could materially impact its consolidated financial position and results of operations. Company's income tax provision which could materially impact its consolidated financial position and results of operations. In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of cost reimbursement and royalty arrangements among related uncertain. Some of these uncertainties arise as a consequence of cost reimbursement and royalty arrangements among related entities. Although the Company believes its estimates are reasonable, no assurance can be given that the final tax outcome of entities. Although the Company believes its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in the historical income tax provisions and income tax liabilities. these matters will not be different than that which is reflected in the historical income tax provisions and income tax liabilities. In the event management's assumptions are incorrect, the differences could have a material impact on its income tax provision In the event management's assumptions are incorrect, the differences could have a material impact on its income tax provision and operating results in the period in which such determination is made. In addition to the factors described above, the current and operating results in the period in which such determination is made. In addition to the factors described above, the current and expected effective tax rate is based on then-current tax law. Significant changes in enacted tax law could affect these and expected effective tax rate is based on then-current tax law. Significant changes in enacted tax law could affect these estimates. See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements for further information related to estimates. See Note 12, Income Taxes, of the Notes to Consolidated Financial Statements for further information related to income taxes. income taxes. q. Earnings Per Share of Common Stock q. Earnings Per Share of Common Stock Basic earnings per share is computed based only on the weighted average number of common shares outstanding during Basic earnings per share is computed based only on the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other potentially dilutive securities using the treasury stock method. In calculating diluted earnings per share, the dilutive effect of potentially dilutive securities using the treasury stock method. In calculating diluted earnings per share, the dilutive effect of stock options and restricted stock units is computed using the average market price for the respective period. In addition, the stock options and restricted stock units is computed using the average market price for the respective period. In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of stock options assumed proceeds under the treasury stock method include the average unrecognized compensation expense of stock options that are in-the-money and restricted stock units. This results in the “assumed” buyback of additional shares, thereby reducing that are in-the-money and restricted stock units. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of in-the-money stock options. Potential shares related to certain of the Company’s outstanding stock the dilutive impact of in-the-money stock options. Potential shares related to certain of the Company’s outstanding stock options and restricted stock units were excluded because they were anti-dilutive. Those potential shares, determined based on options and restricted stock units were excluded because they were anti-dilutive. Those potential shares, determined based on the weighted average exercise prices during the respective periods, could be dilutive in the future. the weighted average exercise prices during the respective periods, could be dilutive in the future. In connection with the acquisition of Linear Technology Corporate (Linear), the Company granted restricted stock In connection with the acquisition of Linear Technology Corporate (Linear), the Company granted restricted stock awards to replace outstanding restricted stock awards of Linear employees. These restricted stock awards entitle recipients to awards to replace outstanding restricted stock awards of Linear employees. These restricted stock awards entitle recipients to voting and nonforfeitable dividend rights from the date of grant. These unvested stock-based compensation awards are voting and nonforfeitable dividend rights from the date of grant. These unvested stock-based compensation awards are considered participating securities and the two-class method is used for purposes of calculating earnings per share. Under considered participating securities and the two-class method is used for purposes of calculating earnings per share. Under the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of earnings per share allocated to common stock, as shown in the table below. The difference between the income calculation of earnings per share allocated to common stock, as shown in the table below. The difference between the income allocated to participating securities under the basic and diluted two-class methods is not material. allocated to participating securities under the basic and diluted two-class methods is not material. Net income (1) Net income (1) Basic shares: Basic shares: 2022 2022 2021 2021 2020 2020 $ $ 2,748,561 $ 2,748,561 $ 1,390,422 $ 1,390,422 $ 1,220,761 1,220,761 Weighted-average shares outstanding Weighted-average shares outstanding Earnings per common share basic Earnings per common share basic 519,226 519,226 397,462 397,462 $ $ 5.29 $ 5.29 $ 3.50 $ 3.50 $ 368,633 368,633 3.31 3.31 Diluted shares: Diluted shares: Weighted-average shares outstanding Weighted-average shares outstanding Assumed exercise of common stock equivalents Assumed exercise of common stock equivalents Weighted-average common and common equivalent shares Weighted-average common and common equivalent shares Earnings per common share diluted Earnings per common share diluted Anti-dilutive shares related to: Anti-dilutive shares related to: Outstanding stock options Outstanding stock options 519,226 519,226 3,952 3,952 523,178 523,178 397,462 397,462 3,826 3,826 401,288 401,288 $ $ 5.25 $ 5.25 $ 3.46 $ 3.46 $ 368,633 368,633 3,340 3,340 371,973 371,973 3.28 3.28 608 608 424 424 460 460 _______________________________________ _______________________________________ (1) For all fiscal years presented, income allocated to participating securities is not material. (1) For all fiscal years presented, income allocated to participating securities is not material. r. r. Stock-Based Compensation Stock-Based Compensation Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards ultimately Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards ultimately expected to vest and is recognized as an expense on a straight-line basis over the vesting period, which is generally four years expected to vest and is recognized as an expense on a straight-line basis over the vesting period, which is generally four years for stock options and restricted stock units, or in annual installments of 25% on each of the first, second, third and fourth for stock options and restricted stock units, or in annual installments of 25% on each of the first, second, third and fourth anniversaries of the date of grant. Restricted stock units with service and performance or market conditions generally vest in anniversaries of the date of grant. Restricted stock units with service and performance or market conditions generally vest in one installment on the third anniversary of the date of grant. For grants issued prior to fiscal 2018, the vesting period was one installment on the third anniversary of the date of grant. For grants issued prior to fiscal 2018, the vesting period was generally five years for stock options, or in annual installments of 20% on each of the first, second, third, fourth and fifth generally five years for stock options, or in annual installments of 20% on each of the first, second, third, fourth and fifth anniversaries of the date of grant and in one installment on the third anniversary of the date of grant for restricted stock units/ anniversaries of the date of grant and in one installment on the third anniversary of the date of grant for restricted stock units/ awards. The maximum contractual term of all stock options is ten years. awards. The maximum contractual term of all stock options is ten years. Determining the amount of stock-based compensation expense to be recorded requires the Company to develop estimates Determining the amount of stock-based compensation expense to be recorded requires the Company to develop estimates used in calculating the grant-date fair value of awards. These estimates may be based on different valuation models depending used in calculating the grant-date fair value of awards. These estimates may be based on different valuation models depending upon the type of award and may include assumptions, such as expected volatility, expected term, risk-free interest rate, upon the type of award and may include assumptions, such as expected volatility, expected term, risk-free interest rate, expected dividend yield, forfeiture rate and others. The Company uses the Black-Scholes valuation model to calculate the grant- expected dividend yield, forfeiture rate and others. The Company uses the Black-Scholes valuation model to calculate the grant- date fair value of stock option awards. The grant-date fair value of restricted stock units with a service condition and restricted date fair value of stock option awards. The grant-date fair value of restricted stock units with a service condition and restricted stock units with both service and performance conditions is calculated using the value of the Company's common stock on the stock units with both service and performance conditions is calculated using the value of the Company's common stock on the date of grant, reduced by the present value of dividends expected to be paid on the Company's common stock prior to vesting. date of grant, reduced by the present value of dividends expected to be paid on the Company's common stock prior to vesting. For restricted stock units with both service and performance conditions, this grant-date fair value is also impacted by the For restricted stock units with both service and performance conditions, this grant-date fair value is also impacted by the number of units that are expected to vest during the performance period and is adjusted through the related stock-based number of units that are expected to vest during the performance period and is adjusted through the related stock-based compensation expense at each reporting period based on the probability of achievement of that performance condition. If the compensation expense at each reporting period based on the probability of achievement of that performance condition. If the Company determines that an award is unlikely to vest, any previously recorded stock-based compensation expense is reversed Company determines that an award is unlikely to vest, any previously recorded stock-based compensation expense is reversed in the period of that determination. The grant date fair value of restricted stock units and performance-based stock options with in the period of that determination. The grant date fair value of restricted stock units and performance-based stock options with both service and market conditions is calculated using the Monte Carlo simulation model to estimate the probability of both service and market conditions is calculated using the Monte Carlo simulation model to estimate the probability of satisfying the performance condition stipulated in the award grant, including the possibility that the market condition may not satisfying the performance condition stipulated in the award grant, including the possibility that the market condition may not be satisfied. be satisfied. The fair value of shares to be issued under the Company's employee stock purchase plan (ESPP) is computed using the The fair value of shares to be issued under the Company's employee stock purchase plan (ESPP) is computed using the Black-Scholes model at the commencement of an offering period in June and December of each year. Stock-based Black-Scholes model at the commencement of an offering period in June and December of each year. Stock-based compensation for the ESPP is expensed using an accelerated amortization model. Additionally, the Company estimates compensation for the ESPP is expensed using an accelerated amortization model. Additionally, the Company estimates forfeitures at least annually based on historical experience and revises the estimates of forfeiture in subsequent periods if actual forfeitures at least annually based on historical experience and revises the estimates of forfeiture in subsequent periods if actual forfeitures differ from those estimates. forfeitures differ from those estimates. See Note 3, Stock-Based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial Statements for See Note 3, Stock-Based Compensation and Shareholders' Equity, of the Notes to Consolidated Financial Statements for additional information relating to stock-based compensation. additional information relating to stock-based compensation. 61 61 62 62 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) s. New Accounting Pronouncements s. New Accounting Pronouncements Standards Implemented During Fiscal 2022 Standards Implemented During Fiscal 2022 Reference Rate Reform Reference Rate Reform In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for accounting for contracts, hedging Reference Rate Reform on Financial Reporting, which provides optional guidance for accounting for contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The provisions of this standard relationships, and other transactions affected by reference rate reform, if certain criteria are met. The provisions of this standard are available for election through December 31, 2022. The Company adopted this standard in the first quarter of fiscal 2022 are available for election through December 31, 2022. The Company adopted this standard in the first quarter of fiscal 2022 with no material impact on the Company's financial position and results of operations. with no material impact on the Company's financial position and results of operations. Standards to Be Implemented Standards to Be Implemented Acquired Contract Assets and Contract Liabilities Acquired Contract Assets and Contract Liabilities In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities. Under the new guidance (ASC 805-20-30-28), the acquirer should determine what Contract Assets and Contract Liabilities. Under the new guidance (ASC 805-20-30-28), the acquirer should determine what contract assets and/or contract liabilities it would have recorded under ASC 606 (the revenue guidance) as of the acquisition contract assets and/or contract liabilities it would have recorded under ASC 606 (the revenue guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recorded on its books under ASC 606 as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after recorded on its books under ASC 606 as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 is effective for the Company in the first December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 is effective for the Company in the first quarter of fiscal 2024. Early adoption is permitted, including in an interim period, for any period for which financial statements quarter of fiscal 2024. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted. The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, new guidance is adopted. The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, adoption will have on its financial position and results of operations. adoption will have on its financial position and results of operations. 3. Stock-Based Compensation and Shareholders’ Equity 3. Stock-Based Compensation and Shareholders’ Equity Equity Compensation Plans Equity Compensation Plans The Company grants, or has granted, stock options and other stock and stock-based awards under the Company's 2020 The Company grants, or has granted, stock options and other stock and stock-based awards under the Company's 2020 Equity Incentive Plan (2020 Plan), which was approved by shareholders in March 2020. The 2020 Plan provides for the grant Equity Incentive Plan (2020 Plan), which was approved by shareholders in March 2020. The 2020 Plan provides for the grant of up to 21.2 million shares of the Company’s common stock, which includes shares under the Company’s previous equity of up to 21.2 million shares of the Company’s common stock, which includes shares under the Company’s previous equity compensation plans, including the Amended and Restated 2006 Stock Incentive Plan and the Amended and Restated 2010 compensation plans, including the Amended and Restated 2006 Stock Incentive Plan and the Amended and Restated 2010 Equity Incentive Plan. The 2020 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of Equity Incentive Plan. The 2020 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-statutory stock options, stock appreciation rights, restricted stock, the Internal Revenue Code of 1986, as amended, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. Employees, officers, directors, consultants and advisors of the Company restricted stock units and other stock-based awards. Employees, officers, directors, consultants and advisors of the Company and its subsidiaries are eligible to be granted awards under the 2020 Plan. No award may be made under the 2020 Plan after and its subsidiaries are eligible to be granted awards under the 2020 Plan. No award may be made under the 2020 Plan after March 11, 2030, but awards previously granted may extend beyond that date. The Company does not intend to grant further March 11, 2030, but awards previously granted may extend beyond that date. The Company does not intend to grant further equity awards under any previous legacy equity compensation plans. In connection with the Acquisition, the Company equity awards under any previous legacy equity compensation plans. In connection with the Acquisition, the Company assumed the Maxim 1996 Stock Incentive Plan (1996 Plan) and may grant stock options and other stock and stock-based assumed the Maxim 1996 Stock Incentive Plan (1996 Plan) and may grant stock options and other stock and stock-based awards under the 1996 Plan. As of October 29, 2022, a total of 16.8 million common shares were available for future grant awards under the 1996 Plan. As of October 29, 2022, a total of 16.8 million common shares were available for future grant under the 2020 Plan and 8.7 million common shares were available for future grant under the 1996 Plan. under the 2020 Plan and 8.7 million common shares were available for future grant under the 1996 Plan. Maxim Replacement Awards Maxim Replacement Awards In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock awards and restricted In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock awards and restricted stock units (replacement awards), to certain Maxim employees in replacement of Maxim equity awards. The replacement stock units (replacement awards), to certain Maxim employees in replacement of Maxim equity awards. The replacement awards consist of restricted stock and restricted stock unit awards for approximately 3.7 million shares of the Company's awards consist of restricted stock and restricted stock unit awards for approximately 3.7 million shares of the Company's common stock with a weighted average grant date fair value of $161.63. The terms and intrinsic value of these replacement common stock with a weighted average grant date fair value of $161.63. The terms and intrinsic value of these replacement awards are substantially the same as the converted Maxim awards. The fair value of the replacement awards associated with awards are substantially the same as the converted Maxim awards. The fair value of the replacement awards associated with services rendered through the Acquisition Date was recognized as a component of the total acquisition consideration, and the services rendered through the Acquisition Date was recognized as a component of the total acquisition consideration, and the remaining fair value of the replacement awards associated with post-Acquisition services will be recognized as an expense on a remaining fair value of the replacement awards associated with post-Acquisition services will be recognized as an expense on a straight-line basis over the remaining vesting period. straight-line basis over the remaining vesting period. Modification of Awards Modification of Awards The Company has, from time to time, modified the terms of its equity awards to employees and directors. The The Company has, from time to time, modified the terms of its equity awards to employees and directors. The modifications made to the Company’s equity awards in fiscal 2022, fiscal 2021 and fiscal 2020 did not result in significant modifications made to the Company’s equity awards in fiscal 2022, fiscal 2021 and fiscal 2020 did not result in significant incremental compensation costs, either individually or in the aggregate. incremental compensation costs, either individually or in the aggregate. Grant-Date Fair Value of Stock Options Grant-Date Fair Value of Stock Options Information pertaining to the Company’s stock option awards and the related estimated weighted-average assumptions to Information pertaining to the Company’s stock option awards and the related estimated weighted-average assumptions to calculate the fair value of stock options using the Black-Scholes valuation model granted in fiscal 2021 and fiscal 2020 is calculate the fair value of stock options using the Black-Scholes valuation model granted in fiscal 2021 and fiscal 2020 is below. The Company did not grant stock option awards in fiscal 2022. below. The Company did not grant stock option awards in fiscal 2022. Options granted (in thousands) Options granted (in thousands) Weighted-average exercise price Weighted-average exercise price Weighted-average grant-date fair value Weighted-average grant-date fair value Assumptions: Assumptions: Weighted-average expected volatility Weighted-average expected volatility Weighted-average expected term (in years) Weighted-average expected term (in years) Weighted-average risk-free interest rate Weighted-average risk-free interest rate Weighted-average expected dividend yield Weighted-average expected dividend yield 2021 2021 644 644 $145.04 $145.04 $33.35 $33.35 35.3 % 35.3 % 5.0 5.0 0.8 % 0.8 % 1.9 % 1.9 % 2020 2020 359 359 $94.41 $94.41 $18.81 $18.81 29.5 % 29.5 % 5.0 5.0 0.7 % 0.7 % 2.6 % 2.6 % Expected volatility — The Company is responsible for estimating volatility and has considered a number of factors, Expected volatility — The Company is responsible for estimating volatility and has considered a number of factors, including third-party estimates. The Company currently believes that the exclusive use of implied volatility results in the best including third-party estimates. The Company currently believes that the exclusive use of implied volatility results in the best estimate of the grant-date fair value of employee stock options because it reflects the market’s current expectations of future estimate of the grant-date fair value of employee stock options because it reflects the market’s current expectations of future volatility. In evaluating the appropriateness of exclusively relying on implied volatility, the Company concluded that: volatility. In evaluating the appropriateness of exclusively relying on implied volatility, the Company concluded that: (1) options in the Company’s common stock are actively traded with sufficient volume on several exchanges; (2) the market (1) options in the Company’s common stock are actively traded with sufficient volume on several exchanges; (2) the market prices of both the traded options and the underlying shares are measured at a similar point in time to each other and on a date prices of both the traded options and the underlying shares are measured at a similar point in time to each other and on a date close to the grant date of the employee share options; (3) the traded options have exercise prices that are both near-the-money close to the grant date of the employee share options; (3) the traded options have exercise prices that are both near-the-money and close to the exercise price of the employee share options; and (4) the remaining maturities of the traded options used to and close to the exercise price of the employee share options; and (4) the remaining maturities of the traded options used to estimate volatility are at least one year. estimate volatility are at least one year. Expected term — The Company uses historical employee exercise and option expiration data to estimate the expected Expected term — The Company uses historical employee exercise and option expiration data to estimate the expected term assumption for the Black-Scholes grant-date valuation. The Company believes that this historical data is currently the best term assumption for the Black-Scholes grant-date valuation. The Company believes that this historical data is currently the best estimate of the expected term of a new option, and that generally its employees exhibit similar exercise behavior. estimate of the expected term of a new option, and that generally its employees exhibit similar exercise behavior. Risk-free interest rate — The yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the Risk-free interest rate — The yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption is used as the risk-free interest rate. expected term assumption is used as the risk-free interest rate. Expected dividend yield — Expected dividend yield is calculated by annualizing the cash dividend declared by the Expected dividend yield — Expected dividend yield is calculated by annualizing the cash dividend declared by the Company’s Board of Directors for the current quarter and dividing that result by the closing stock price on the date of grant. Company’s Board of Directors for the current quarter and dividing that result by the closing stock price on the date of grant. Until such time as the Company’s Board of Directors declares a cash dividend for an amount that is different from the current Until such time as the Company’s Board of Directors declares a cash dividend for an amount that is different from the current quarter’s cash dividend, the current dividend will be used in deriving this assumption. Cash dividends are not paid on options, quarter’s cash dividend, the current dividend will be used in deriving this assumption. Cash dividends are not paid on options, restricted stock, replacement awards or restricted stock units. In connection with the acquisition of Linear, the Company granted restricted stock, replacement awards or restricted stock units. In connection with the acquisition of Linear, the Company granted restricted stock awards to replace outstanding restricted stock awards of Linear employees. These restricted stock awards restricted stock awards to replace outstanding restricted stock awards of Linear employees. These restricted stock awards specific to legacy Linear awards entitle recipients to voting and nonforfeitable dividend rights from the date of grant. specific to legacy Linear awards entitle recipients to voting and nonforfeitable dividend rights from the date of grant. 63 63 64 64 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) s. New Accounting Pronouncements s. New Accounting Pronouncements Standards Implemented During Fiscal 2022 Standards Implemented During Fiscal 2022 Reference Rate Reform Reference Rate Reform In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for accounting for contracts, hedging Reference Rate Reform on Financial Reporting, which provides optional guidance for accounting for contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The provisions of this standard relationships, and other transactions affected by reference rate reform, if certain criteria are met. The provisions of this standard are available for election through December 31, 2022. The Company adopted this standard in the first quarter of fiscal 2022 are available for election through December 31, 2022. The Company adopted this standard in the first quarter of fiscal 2022 with no material impact on the Company's financial position and results of operations. with no material impact on the Company's financial position and results of operations. Standards to Be Implemented Standards to Be Implemented Acquired Contract Assets and Contract Liabilities Acquired Contract Assets and Contract Liabilities In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities. Under the new guidance (ASC 805-20-30-28), the acquirer should determine what Contract Assets and Contract Liabilities. Under the new guidance (ASC 805-20-30-28), the acquirer should determine what contract assets and/or contract liabilities it would have recorded under ASC 606 (the revenue guidance) as of the acquisition contract assets and/or contract liabilities it would have recorded under ASC 606 (the revenue guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recorded on its books under ASC 606 as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after recorded on its books under ASC 606 as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 is effective for the Company in the first December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 is effective for the Company in the first quarter of fiscal 2024. Early adoption is permitted, including in an interim period, for any period for which financial statements quarter of fiscal 2024. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted. The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, new guidance is adopted. The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, adoption will have on its financial position and results of operations. adoption will have on its financial position and results of operations. 3. Stock-Based Compensation and Shareholders’ Equity 3. Stock-Based Compensation and Shareholders’ Equity Equity Compensation Plans Equity Compensation Plans The Company grants, or has granted, stock options and other stock and stock-based awards under the Company's 2020 The Company grants, or has granted, stock options and other stock and stock-based awards under the Company's 2020 Equity Incentive Plan (2020 Plan), which was approved by shareholders in March 2020. The 2020 Plan provides for the grant Equity Incentive Plan (2020 Plan), which was approved by shareholders in March 2020. The 2020 Plan provides for the grant of up to 21.2 million shares of the Company’s common stock, which includes shares under the Company’s previous equity of up to 21.2 million shares of the Company’s common stock, which includes shares under the Company’s previous equity compensation plans, including the Amended and Restated 2006 Stock Incentive Plan and the Amended and Restated 2010 compensation plans, including the Amended and Restated 2006 Stock Incentive Plan and the Amended and Restated 2010 Equity Incentive Plan. The 2020 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of Equity Incentive Plan. The 2020 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-statutory stock options, stock appreciation rights, restricted stock, the Internal Revenue Code of 1986, as amended, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. Employees, officers, directors, consultants and advisors of the Company restricted stock units and other stock-based awards. Employees, officers, directors, consultants and advisors of the Company and its subsidiaries are eligible to be granted awards under the 2020 Plan. No award may be made under the 2020 Plan after and its subsidiaries are eligible to be granted awards under the 2020 Plan. No award may be made under the 2020 Plan after March 11, 2030, but awards previously granted may extend beyond that date. The Company does not intend to grant further March 11, 2030, but awards previously granted may extend beyond that date. The Company does not intend to grant further equity awards under any previous legacy equity compensation plans. In connection with the Acquisition, the Company equity awards under any previous legacy equity compensation plans. In connection with the Acquisition, the Company assumed the Maxim 1996 Stock Incentive Plan (1996 Plan) and may grant stock options and other stock and stock-based assumed the Maxim 1996 Stock Incentive Plan (1996 Plan) and may grant stock options and other stock and stock-based awards under the 1996 Plan. As of October 29, 2022, a total of 16.8 million common shares were available for future grant awards under the 1996 Plan. As of October 29, 2022, a total of 16.8 million common shares were available for future grant under the 2020 Plan and 8.7 million common shares were available for future grant under the 1996 Plan. under the 2020 Plan and 8.7 million common shares were available for future grant under the 1996 Plan. Maxim Replacement Awards Maxim Replacement Awards In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock awards and restricted In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock awards and restricted stock units (replacement awards), to certain Maxim employees in replacement of Maxim equity awards. The replacement stock units (replacement awards), to certain Maxim employees in replacement of Maxim equity awards. The replacement awards consist of restricted stock and restricted stock unit awards for approximately 3.7 million shares of the Company's awards consist of restricted stock and restricted stock unit awards for approximately 3.7 million shares of the Company's common stock with a weighted average grant date fair value of $161.63. The terms and intrinsic value of these replacement common stock with a weighted average grant date fair value of $161.63. The terms and intrinsic value of these replacement awards are substantially the same as the converted Maxim awards. The fair value of the replacement awards associated with awards are substantially the same as the converted Maxim awards. The fair value of the replacement awards associated with services rendered through the Acquisition Date was recognized as a component of the total acquisition consideration, and the services rendered through the Acquisition Date was recognized as a component of the total acquisition consideration, and the remaining fair value of the replacement awards associated with post-Acquisition services will be recognized as an expense on a remaining fair value of the replacement awards associated with post-Acquisition services will be recognized as an expense on a straight-line basis over the remaining vesting period. straight-line basis over the remaining vesting period. Modification of Awards Modification of Awards The Company has, from time to time, modified the terms of its equity awards to employees and directors. The The Company has, from time to time, modified the terms of its equity awards to employees and directors. The modifications made to the Company’s equity awards in fiscal 2022, fiscal 2021 and fiscal 2020 did not result in significant modifications made to the Company’s equity awards in fiscal 2022, fiscal 2021 and fiscal 2020 did not result in significant incremental compensation costs, either individually or in the aggregate. incremental compensation costs, either individually or in the aggregate. Grant-Date Fair Value of Stock Options Grant-Date Fair Value of Stock Options Information pertaining to the Company’s stock option awards and the related estimated weighted-average assumptions to Information pertaining to the Company’s stock option awards and the related estimated weighted-average assumptions to calculate the fair value of stock options using the Black-Scholes valuation model granted in fiscal 2021 and fiscal 2020 is calculate the fair value of stock options using the Black-Scholes valuation model granted in fiscal 2021 and fiscal 2020 is below. The Company did not grant stock option awards in fiscal 2022. below. The Company did not grant stock option awards in fiscal 2022. Options granted (in thousands) Options granted (in thousands) Weighted-average exercise price Weighted-average exercise price Weighted-average grant-date fair value Weighted-average grant-date fair value Assumptions: Assumptions: Weighted-average expected volatility Weighted-average expected volatility Weighted-average expected term (in years) Weighted-average expected term (in years) Weighted-average risk-free interest rate Weighted-average risk-free interest rate Weighted-average expected dividend yield Weighted-average expected dividend yield 2021 2021 644 644 $145.04 $145.04 $33.35 $33.35 35.3 % 35.3 % 5.0 5.0 0.8 % 0.8 % 1.9 % 1.9 % 2020 2020 359 359 $94.41 $94.41 $18.81 $18.81 29.5 % 29.5 % 5.0 5.0 0.7 % 0.7 % 2.6 % 2.6 % Expected volatility — The Company is responsible for estimating volatility and has considered a number of factors, Expected volatility — The Company is responsible for estimating volatility and has considered a number of factors, including third-party estimates. The Company currently believes that the exclusive use of implied volatility results in the best including third-party estimates. The Company currently believes that the exclusive use of implied volatility results in the best estimate of the grant-date fair value of employee stock options because it reflects the market’s current expectations of future estimate of the grant-date fair value of employee stock options because it reflects the market’s current expectations of future volatility. In evaluating the appropriateness of exclusively relying on implied volatility, the Company concluded that: volatility. In evaluating the appropriateness of exclusively relying on implied volatility, the Company concluded that: (1) options in the Company’s common stock are actively traded with sufficient volume on several exchanges; (2) the market (1) options in the Company’s common stock are actively traded with sufficient volume on several exchanges; (2) the market prices of both the traded options and the underlying shares are measured at a similar point in time to each other and on a date prices of both the traded options and the underlying shares are measured at a similar point in time to each other and on a date close to the grant date of the employee share options; (3) the traded options have exercise prices that are both near-the-money close to the grant date of the employee share options; (3) the traded options have exercise prices that are both near-the-money and close to the exercise price of the employee share options; and (4) the remaining maturities of the traded options used to and close to the exercise price of the employee share options; and (4) the remaining maturities of the traded options used to estimate volatility are at least one year. estimate volatility are at least one year. Expected term — The Company uses historical employee exercise and option expiration data to estimate the expected Expected term — The Company uses historical employee exercise and option expiration data to estimate the expected term assumption for the Black-Scholes grant-date valuation. The Company believes that this historical data is currently the best term assumption for the Black-Scholes grant-date valuation. The Company believes that this historical data is currently the best estimate of the expected term of a new option, and that generally its employees exhibit similar exercise behavior. estimate of the expected term of a new option, and that generally its employees exhibit similar exercise behavior. Risk-free interest rate — The yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the Risk-free interest rate — The yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption is used as the risk-free interest rate. expected term assumption is used as the risk-free interest rate. Expected dividend yield — Expected dividend yield is calculated by annualizing the cash dividend declared by the Expected dividend yield — Expected dividend yield is calculated by annualizing the cash dividend declared by the Company’s Board of Directors for the current quarter and dividing that result by the closing stock price on the date of grant. Company’s Board of Directors for the current quarter and dividing that result by the closing stock price on the date of grant. Until such time as the Company’s Board of Directors declares a cash dividend for an amount that is different from the current Until such time as the Company’s Board of Directors declares a cash dividend for an amount that is different from the current quarter’s cash dividend, the current dividend will be used in deriving this assumption. Cash dividends are not paid on options, quarter’s cash dividend, the current dividend will be used in deriving this assumption. Cash dividends are not paid on options, restricted stock, replacement awards or restricted stock units. In connection with the acquisition of Linear, the Company granted restricted stock, replacement awards or restricted stock units. In connection with the acquisition of Linear, the Company granted restricted stock awards to replace outstanding restricted stock awards of Linear employees. These restricted stock awards restricted stock awards to replace outstanding restricted stock awards of Linear employees. These restricted stock awards specific to legacy Linear awards entitle recipients to voting and nonforfeitable dividend rights from the date of grant. specific to legacy Linear awards entitle recipients to voting and nonforfeitable dividend rights from the date of grant. 63 63 64 64 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Employee Stock Purchase Plan (ESPP) Employee Stock Purchase Plan (ESPP) Beginning in fiscal 2022, the Company offers an ESPP to eligible employees, providing the opportunity to purchase Beginning in fiscal 2022, the Company offers an ESPP to eligible employees, providing the opportunity to purchase shares of the Company's common stock at a discount through payroll deductions. Offering periods begin in June and December shares of the Company's common stock at a discount through payroll deductions. Offering periods begin in June and December each year. U.S. employees are allowed to purchase the Company's common stock at the lesser of 85% of the fair market value each year. U.S. employees are allowed to purchase the Company's common stock at the lesser of 85% of the fair market value of the common stock at either the beginning or end of the offering period. Eligible employees outside of the U.S. are allowed to of the common stock at either the beginning or end of the offering period. Eligible employees outside of the U.S. are allowed to purchase the Company's common stock at the lesser of 80% of the fair market value of the common stock at either the purchase the Company's common stock at the lesser of 80% of the fair market value of the common stock at either the beginning or end of the offering period. beginning or end of the offering period. Stock-Based Compensation Expense Stock-Based Compensation Expense The amount of stock-based compensation expense recognized during a period is based on the value of the awards that are The amount of stock-based compensation expense recognized during a period is based on the value of the awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock-based award. Based on an analysis of its historical forfeitures, the represents only the unvested portion of the surrendered stock-based award. Based on an analysis of its historical forfeitures, the Company has applied an annual forfeiture rate of 5.0% to all unvested stock-based awards as of October 29, 2022. This analysis Company has applied an annual forfeiture rate of 5.0% to all unvested stock-based awards as of October 29, 2022. This analysis will be re-evaluated annually and the forfeiture rate will be adjusted as necessary. Ultimately, the actual expense recognized will be re-evaluated annually and the forfeiture rate will be adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those awards that vest. over the vesting period will only be for those awards that vest. Total stock-based compensation expense recognized is as follows: Total stock-based compensation expense recognized is as follows: Common Stock Repurchases Common Stock Repurchases Cost of sales Cost of sales Research and development Research and development Selling, marketing, general and administrative Selling, marketing, general and administrative Special charges, net Special charges, net Total stock-based compensation expense Total stock-based compensation expense 2022 2022 2021 2021 2020 2020 $ $ $ $ 36,773 $ 36,773 $ 121,298 121,298 133,900 133,900 31,516 31,516 323,487 $ 323,487 $ 22,028 $ 22,028 $ 86,820 86,820 80,099 80,099 54,664 54,664 243,611 $ 243,611 $ 17,684 17,684 73,366 73,366 56,838 56,838 1,630 1,630 149,518 149,518 As of October 29, 2022 and October 30, 2021, the Company capitalized $13.1 million and $8.7 million, respectively, of As of October 29, 2022 and October 30, 2021, the Company capitalized $13.1 million and $8.7 million, respectively, of stock-based compensation in inventory. stock-based compensation in inventory. Stock-Based Compensation Activity Stock-Based Compensation Activity A summary of the activity under the Company’s stock option plans as of October 29, 2022 and changes during the fiscal A summary of the activity under the Company’s stock option plans as of October 29, 2022 and changes during the fiscal year then ended is presented below: year then ended is presented below: Options Options Outstanding Outstanding (in thousands) (in thousands) Weighted- Weighted- Average Exercise Average Exercise Price Per Share Price Per Share Weighted- Weighted- Average Average Remaining Remaining Contractual Contractual Term in Years Term in Years Aggregate Aggregate Intrinsic Intrinsic Value Value Options outstanding at October 30, 2021 Options outstanding at October 30, 2021 Options exercised Options exercised Options forfeited Options forfeited Options outstanding at October 29, 2022 Options outstanding at October 29, 2022 Options exercisable at October 29, 2022 Options exercisable at October 29, 2022 Options vested or expected to vest at October 29, 2022 (1) Options vested or expected to vest at October 29, 2022 (1) 3,746 3,746 (545) (545) (7) (7) 3,194 3,194 2,351 2,351 3,161 3,161 $85.22 $85.22 $62.16 $62.16 $97.94 $97.94 $89.13 $89.13 $73.93 $73.93 $88.67 $88.67 4.9 $178,511 4.9 $178,511 3.8 $166,927 3.8 $166,927 4.9 $178,134 4.9 $178,134 United States. United States. Analog Devices Foundation Analog Devices Foundation _______________________________________ _______________________________________ (1) (1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. The number In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. The number of options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options. of options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options. The total intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid The total intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid by the employee to exercise the options) during fiscal 2022, fiscal 2021 and fiscal 2020 was $56.2 million, $93.2 million and by the employee to exercise the options) during fiscal 2022, fiscal 2021 and fiscal 2020 was $56.2 million, $93.2 million and $76.3 million, respectively. $76.3 million, respectively. A summary of the Company’s restricted stock unit and award activity as of October 29, 2022 and changes during the A summary of the Company’s restricted stock unit and award activity as of October 29, 2022 and changes during the fiscal year then ended is presented below: fiscal year then ended is presented below: Restricted Restricted Stock Units/ Stock Units/ Awards Awards Outstanding Outstanding (in thousands) (in thousands) Weighted- Weighted- Average Grant- Average Grant- Date Fair Value Date Fair Value Per Share Per Share 5,924 5,924 2,173 2,173 (2,156) (2,156) (619) (619) 5,322 5,322 $132.59 $132.59 $154.46 $154.46 $128.19 $128.19 $139.12 $139.12 $142.54 $142.54 Restricted stock units/awards outstanding at October 30, 2021 Restricted stock units/awards outstanding at October 30, 2021 Units/Awards granted Units/Awards granted Restrictions lapsed Restrictions lapsed Forfeited Forfeited Restricted stock units/awards outstanding at October 29, 2022 Restricted stock units/awards outstanding at October 29, 2022 As of October 29, 2022, there was $545.2 million of total unrecognized compensation cost related to unvested stock- As of October 29, 2022, there was $545.2 million of total unrecognized compensation cost related to unvested stock- based awards comprised of stock options, restricted stock awards and restricted stock unit awards. That cost is expected to be based awards comprised of stock options, restricted stock awards and restricted stock unit awards. That cost is expected to be recognized over a weighted-average period of 1.4 years. The total grant-date fair value of awards that vested during fiscal 2022, recognized over a weighted-average period of 1.4 years. The total grant-date fair value of awards that vested during fiscal 2022, fiscal 2021 and fiscal 2020 was approximately $283.0 million, $207.0 million and $174.1 million, respectively. fiscal 2021 and fiscal 2020 was approximately $283.0 million, $207.0 million and $174.1 million, respectively. In fiscal 2021, the Company entered into accelerated share repurchase agreements (ASR) with third party financial In fiscal 2021, the Company entered into accelerated share repurchase agreements (ASR) with third party financial institutions, paid $2.5 billion and received an initial delivery of 12.3 million shares of common stock, which represented institutions, paid $2.5 billion and received an initial delivery of 12.3 million shares of common stock, which represented approximately 80% of the notional amount of the ASR. As of October 30, 2021, the Company recorded the remaining 20%, or approximately 80% of the notional amount of the ASR. As of October 30, 2021, the Company recorded the remaining 20%, or $500.0 million, within Prepaid expenses and other current assets on the Consolidated Balance Sheet, which was utilized during $500.0 million, within Prepaid expenses and other current assets on the Consolidated Balance Sheet, which was utilized during the first quarter of fiscal 2022. During the first quarter of fiscal 2022, the ASR was completed and an additional 2.1 million the first quarter of fiscal 2022. During the first quarter of fiscal 2022, the ASR was completed and an additional 2.1 million shares of common stock were received as final settlement of the ASR. In total, the Company repurchased 14.4 million shares of shares of common stock were received as final settlement of the ASR. In total, the Company repurchased 14.4 million shares of common stock under the ASR at an average price per share of $173.77. common stock under the ASR at an average price per share of $173.77. The Company’s share repurchase program has been in place since August 2004. In the aggregate, the Board of Directors The Company’s share repurchase program has been in place since August 2004. In the aggregate, the Board of Directors has authorized the Company to repurchase $16.7 billion of the Company’s common stock under the program, which includes has authorized the Company to repurchase $16.7 billion of the Company’s common stock under the program, which includes the $8.5 billion authorization approved by the Board of Directors on August 25, 2021. The Company may repurchase the $8.5 billion authorization approved by the Board of Directors on August 25, 2021. The Company may repurchase outstanding shares of its common stock from time to time in the open market and through privately negotiated transactions. outstanding shares of its common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of the Company’s Board of Directors, the repurchase program will expire when the Unless terminated earlier by resolution of the Company’s Board of Directors, the repurchase program will expire when the Company has repurchased all shares authorized under the program. As of October 29, 2022, the Company had repurchased a Company has repurchased all shares authorized under the program. As of October 29, 2022, the Company had repurchased a total of approximately 189.6 million shares of its common stock for approximately $11.7 billion under this program. An total of approximately 189.6 million shares of its common stock for approximately $11.7 billion under this program. An additional $4.9 billion remains available for repurchase of shares under the current authorized program. The repurchased shares additional $4.9 billion remains available for repurchase of shares under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. Future repurchases of common stock will be dependent upon the are held as authorized but unissued shares of common stock. Future repurchases of common stock will be dependent upon the Company's financial position, results of operations, outlook, liquidity, and other factors deemed relevant by the Company. Company's financial position, results of operations, outlook, liquidity, and other factors deemed relevant by the Company. The Company also, from time to time, repurchases shares in settlement of employee tax withholding obligations due upon The Company also, from time to time, repurchases shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options. The withholding amount is based on the employee's the vesting of restricted stock units/awards or the exercise of stock options. The withholding amount is based on the employee's minimum statutory withholding requirement. Any future common stock repurchases will be dependent upon several factors, minimum statutory withholding requirement. Any future common stock repurchases will be dependent upon several factors, including the Company's financial performance, outlook, liquidity and the amount of cash the Company has available in the including the Company's financial performance, outlook, liquidity and the amount of cash the Company has available in the During the first quarter of fiscal 2020, the Company contributed 335,654 shares of its common stock to the Analog During the first quarter of fiscal 2020, the Company contributed 335,654 shares of its common stock to the Analog Devices Foundation. As of the date of the charitable contribution, the shares had a fair value of approximately $40.0 million. Devices Foundation. As of the date of the charitable contribution, the shares had a fair value of approximately $40.0 million. This expense was recorded in Selling, marketing, general and administrative expense in the Consolidated Statement of Income. This expense was recorded in Selling, marketing, general and administrative expense in the Consolidated Statement of Income. Preferred Stock Preferred Stock time of issuance. time of issuance. The Company has 471,934 authorized shares of $1.00 par value preferred stock, none of which is issued or outstanding. The Company has 471,934 authorized shares of $1.00 par value preferred stock, none of which is issued or outstanding. The Board of Directors is authorized to fix designations, relative rights, preferences and limitations on the preferred stock at the The Board of Directors is authorized to fix designations, relative rights, preferences and limitations on the preferred stock at the 4. 4. Industry, Segment and Geographic Information Industry, Segment and Geographic Information The Company operates and tracks its results in one reportable segment based on the aggregation of its operating The Company operates and tracks its results in one reportable segment based on the aggregation of its operating segments. The Company designs, develops, manufactures and markets a broad range of integrated circuits (ICs). The Chief segments. The Company designs, develops, manufactures and markets a broad range of integrated circuits (ICs). The Chief 65 65 66 66 Employee Stock Purchase Plan (ESPP) Employee Stock Purchase Plan (ESPP) Beginning in fiscal 2022, the Company offers an ESPP to eligible employees, providing the opportunity to purchase Beginning in fiscal 2022, the Company offers an ESPP to eligible employees, providing the opportunity to purchase shares of the Company's common stock at a discount through payroll deductions. Offering periods begin in June and December shares of the Company's common stock at a discount through payroll deductions. Offering periods begin in June and December each year. U.S. employees are allowed to purchase the Company's common stock at the lesser of 85% of the fair market value each year. U.S. employees are allowed to purchase the Company's common stock at the lesser of 85% of the fair market value of the common stock at either the beginning or end of the offering period. Eligible employees outside of the U.S. are allowed to of the common stock at either the beginning or end of the offering period. Eligible employees outside of the U.S. are allowed to purchase the Company's common stock at the lesser of 80% of the fair market value of the common stock at either the purchase the Company's common stock at the lesser of 80% of the fair market value of the common stock at either the beginning or end of the offering period. beginning or end of the offering period. Stock-Based Compensation Expense Stock-Based Compensation Expense The amount of stock-based compensation expense recognized during a period is based on the value of the awards that are The amount of stock-based compensation expense recognized during a period is based on the value of the awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock-based award. Based on an analysis of its historical forfeitures, the represents only the unvested portion of the surrendered stock-based award. Based on an analysis of its historical forfeitures, the Company has applied an annual forfeiture rate of 5.0% to all unvested stock-based awards as of October 29, 2022. This analysis Company has applied an annual forfeiture rate of 5.0% to all unvested stock-based awards as of October 29, 2022. This analysis will be re-evaluated annually and the forfeiture rate will be adjusted as necessary. Ultimately, the actual expense recognized will be re-evaluated annually and the forfeiture rate will be adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those awards that vest. over the vesting period will only be for those awards that vest. Total stock-based compensation expense recognized is as follows: Total stock-based compensation expense recognized is as follows: 2022 2022 2021 2021 2020 2020 $ $ 36,773 $ 36,773 $ 22,028 $ 22,028 $ 121,298 121,298 133,900 133,900 31,516 31,516 86,820 86,820 80,099 80,099 54,664 54,664 17,684 17,684 73,366 73,366 56,838 56,838 1,630 1,630 Cost of sales Cost of sales Research and development Research and development Selling, marketing, general and administrative Selling, marketing, general and administrative Special charges, net Special charges, net stock-based compensation in inventory. stock-based compensation in inventory. Stock-Based Compensation Activity Stock-Based Compensation Activity year then ended is presented below: year then ended is presented below: Total stock-based compensation expense Total stock-based compensation expense $ $ 323,487 $ 323,487 $ 243,611 $ 243,611 $ 149,518 149,518 As of October 29, 2022 and October 30, 2021, the Company capitalized $13.1 million and $8.7 million, respectively, of As of October 29, 2022 and October 30, 2021, the Company capitalized $13.1 million and $8.7 million, respectively, of A summary of the activity under the Company’s stock option plans as of October 29, 2022 and changes during the fiscal A summary of the activity under the Company’s stock option plans as of October 29, 2022 and changes during the fiscal Options Options Outstanding Outstanding (in thousands) (in thousands) Weighted- Weighted- Average Exercise Average Exercise Price Per Share Price Per Share Weighted- Weighted- Average Average Remaining Remaining Contractual Contractual Term in Years Term in Years Aggregate Aggregate Intrinsic Intrinsic Value Value 3,746 3,746 (545) (545) (7) (7) 3,194 3,194 2,351 2,351 3,161 3,161 $85.22 $85.22 $62.16 $62.16 $97.94 $97.94 $89.13 $89.13 $73.93 $73.93 $88.67 $88.67 4.9 $178,511 4.9 $178,511 3.8 $166,927 3.8 $166,927 4.9 $178,134 4.9 $178,134 Options outstanding at October 30, 2021 Options outstanding at October 30, 2021 Options exercised Options exercised Options forfeited Options forfeited Options outstanding at October 29, 2022 Options outstanding at October 29, 2022 Options exercisable at October 29, 2022 Options exercisable at October 29, 2022 Options vested or expected to vest at October 29, 2022 (1) Options vested or expected to vest at October 29, 2022 (1) _______________________________________ _______________________________________ $76.3 million, respectively. $76.3 million, respectively. (1) (1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. The number In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. The number of options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options. of options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) A summary of the Company’s restricted stock unit and award activity as of October 29, 2022 and changes during the A summary of the Company’s restricted stock unit and award activity as of October 29, 2022 and changes during the fiscal year then ended is presented below: fiscal year then ended is presented below: Restricted stock units/awards outstanding at October 30, 2021 Restricted stock units/awards outstanding at October 30, 2021 Units/Awards granted Units/Awards granted Restrictions lapsed Restrictions lapsed Forfeited Forfeited Restricted stock units/awards outstanding at October 29, 2022 Restricted stock units/awards outstanding at October 29, 2022 Restricted Restricted Stock Units/ Stock Units/ Awards Awards Outstanding Outstanding (in thousands) (in thousands) Weighted- Weighted- Average Grant- Average Grant- Date Fair Value Date Fair Value Per Share Per Share 5,924 5,924 2,173 2,173 (2,156) (2,156) (619) (619) 5,322 5,322 $132.59 $132.59 $154.46 $154.46 $128.19 $128.19 $139.12 $139.12 $142.54 $142.54 As of October 29, 2022, there was $545.2 million of total unrecognized compensation cost related to unvested stock- As of October 29, 2022, there was $545.2 million of total unrecognized compensation cost related to unvested stock- based awards comprised of stock options, restricted stock awards and restricted stock unit awards. That cost is expected to be based awards comprised of stock options, restricted stock awards and restricted stock unit awards. That cost is expected to be recognized over a weighted-average period of 1.4 years. The total grant-date fair value of awards that vested during fiscal 2022, recognized over a weighted-average period of 1.4 years. The total grant-date fair value of awards that vested during fiscal 2022, fiscal 2021 and fiscal 2020 was approximately $283.0 million, $207.0 million and $174.1 million, respectively. fiscal 2021 and fiscal 2020 was approximately $283.0 million, $207.0 million and $174.1 million, respectively. Common Stock Repurchases Common Stock Repurchases In fiscal 2021, the Company entered into accelerated share repurchase agreements (ASR) with third party financial In fiscal 2021, the Company entered into accelerated share repurchase agreements (ASR) with third party financial institutions, paid $2.5 billion and received an initial delivery of 12.3 million shares of common stock, which represented institutions, paid $2.5 billion and received an initial delivery of 12.3 million shares of common stock, which represented approximately 80% of the notional amount of the ASR. As of October 30, 2021, the Company recorded the remaining 20%, or approximately 80% of the notional amount of the ASR. As of October 30, 2021, the Company recorded the remaining 20%, or $500.0 million, within Prepaid expenses and other current assets on the Consolidated Balance Sheet, which was utilized during $500.0 million, within Prepaid expenses and other current assets on the Consolidated Balance Sheet, which was utilized during the first quarter of fiscal 2022. During the first quarter of fiscal 2022, the ASR was completed and an additional 2.1 million the first quarter of fiscal 2022. During the first quarter of fiscal 2022, the ASR was completed and an additional 2.1 million shares of common stock were received as final settlement of the ASR. In total, the Company repurchased 14.4 million shares of shares of common stock were received as final settlement of the ASR. In total, the Company repurchased 14.4 million shares of common stock under the ASR at an average price per share of $173.77. common stock under the ASR at an average price per share of $173.77. The Company’s share repurchase program has been in place since August 2004. In the aggregate, the Board of Directors The Company’s share repurchase program has been in place since August 2004. In the aggregate, the Board of Directors has authorized the Company to repurchase $16.7 billion of the Company’s common stock under the program, which includes has authorized the Company to repurchase $16.7 billion of the Company’s common stock under the program, which includes the $8.5 billion authorization approved by the Board of Directors on August 25, 2021. The Company may repurchase the $8.5 billion authorization approved by the Board of Directors on August 25, 2021. The Company may repurchase outstanding shares of its common stock from time to time in the open market and through privately negotiated transactions. outstanding shares of its common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of the Company’s Board of Directors, the repurchase program will expire when the Unless terminated earlier by resolution of the Company’s Board of Directors, the repurchase program will expire when the Company has repurchased all shares authorized under the program. As of October 29, 2022, the Company had repurchased a Company has repurchased all shares authorized under the program. As of October 29, 2022, the Company had repurchased a total of approximately 189.6 million shares of its common stock for approximately $11.7 billion under this program. An total of approximately 189.6 million shares of its common stock for approximately $11.7 billion under this program. An additional $4.9 billion remains available for repurchase of shares under the current authorized program. The repurchased shares additional $4.9 billion remains available for repurchase of shares under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. Future repurchases of common stock will be dependent upon the are held as authorized but unissued shares of common stock. Future repurchases of common stock will be dependent upon the Company's financial position, results of operations, outlook, liquidity, and other factors deemed relevant by the Company. Company's financial position, results of operations, outlook, liquidity, and other factors deemed relevant by the Company. The Company also, from time to time, repurchases shares in settlement of employee tax withholding obligations due upon The Company also, from time to time, repurchases shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options. The withholding amount is based on the employee's the vesting of restricted stock units/awards or the exercise of stock options. The withholding amount is based on the employee's minimum statutory withholding requirement. Any future common stock repurchases will be dependent upon several factors, minimum statutory withholding requirement. Any future common stock repurchases will be dependent upon several factors, including the Company's financial performance, outlook, liquidity and the amount of cash the Company has available in the including the Company's financial performance, outlook, liquidity and the amount of cash the Company has available in the United States. United States. Analog Devices Foundation Analog Devices Foundation During the first quarter of fiscal 2020, the Company contributed 335,654 shares of its common stock to the Analog During the first quarter of fiscal 2020, the Company contributed 335,654 shares of its common stock to the Analog Devices Foundation. As of the date of the charitable contribution, the shares had a fair value of approximately $40.0 million. Devices Foundation. As of the date of the charitable contribution, the shares had a fair value of approximately $40.0 million. This expense was recorded in Selling, marketing, general and administrative expense in the Consolidated Statement of Income. This expense was recorded in Selling, marketing, general and administrative expense in the Consolidated Statement of Income. The total intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid The total intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid by the employee to exercise the options) during fiscal 2022, fiscal 2021 and fiscal 2020 was $56.2 million, $93.2 million and by the employee to exercise the options) during fiscal 2022, fiscal 2021 and fiscal 2020 was $56.2 million, $93.2 million and Preferred Stock Preferred Stock The Company has 471,934 authorized shares of $1.00 par value preferred stock, none of which is issued or outstanding. The Company has 471,934 authorized shares of $1.00 par value preferred stock, none of which is issued or outstanding. The Board of Directors is authorized to fix designations, relative rights, preferences and limitations on the preferred stock at the The Board of Directors is authorized to fix designations, relative rights, preferences and limitations on the preferred stock at the time of issuance. time of issuance. 4. 4. Industry, Segment and Geographic Information Industry, Segment and Geographic Information The Company operates and tracks its results in one reportable segment based on the aggregation of its operating The Company operates and tracks its results in one reportable segment based on the aggregation of its operating segments. The Company designs, develops, manufactures and markets a broad range of integrated circuits (ICs). The Chief segments. The Company designs, develops, manufactures and markets a broad range of integrated circuits (ICs). The Chief 65 65 66 66 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Executive Officer has been identified as the Company's Chief Operating Decision Maker. The Company has determined that all Executive Officer has been identified as the Company's Chief Operating Decision Maker. The Company has determined that all of the Company's operating segments share the following similar economic characteristics, and therefore meet the criteria of the Company's operating segments share the following similar economic characteristics, and therefore meet the criteria established for operating segments to be aggregated into one reportable segment, namely: established for operating segments to be aggregated into one reportable segment, namely: • The primary source of revenue for each operating segment is the sale of ICs. • The primary source of revenue for each operating segment is the sale of ICs. • The ICs sold by each of the Company's operating segments are manufactured using similar semiconductor • The ICs sold by each of the Company's operating segments are manufactured using similar semiconductor manufacturing processes and raw materials in either the Company’s own production facilities or by third-party wafer fabricators manufacturing processes and raw materials in either the Company’s own production facilities or by third-party wafer fabricators using proprietary processes. using proprietary processes. • The Company sells its products to tens of thousands of customers worldwide. Many of these customers use products • The Company sells its products to tens of thousands of customers worldwide. Many of these customers use products spanning all operating segments in a wide range of applications. spanning all operating segments in a wide range of applications. • The ICs marketed by each of the Company's operating segments are sold globally through a direct sales force, third- • The ICs marketed by each of the Company's operating segments are sold globally through a direct sales force, third- party distributors, independent sales representatives and via the Company's website to the same types of customers. party distributors, independent sales representatives and via the Company's website to the same types of customers. All of the Company's operating segments share a similar long-term financial model as they have similar economic All of the Company's operating segments share a similar long-term financial model as they have similar economic characteristics. The causes for variation in operating and financial performance are the same among the Company's operating characteristics. The causes for variation in operating and financial performance are the same among the Company's operating segments and include factors such as (i) life cycle and price and cost fluctuations, (ii) number of competitors, (iii) product segments and include factors such as (i) life cycle and price and cost fluctuations, (ii) number of competitors, (iii) product differentiation and (iv) size of market opportunity. Additionally, each operating segment is subject to the overall cyclical nature differentiation and (iv) size of market opportunity. Additionally, each operating segment is subject to the overall cyclical nature of the semiconductor industry. Lastly, the number and composition of employees and the amounts and types of tools and of the semiconductor industry. Lastly, the number and composition of employees and the amounts and types of tools and materials required for production of products are proportionally similar for each operating segment. materials required for production of products are proportionally similar for each operating segment. Revenue Trends by End Market Revenue Trends by End Market The following table summarizes revenue by end market. The categorization of revenue by end market is determined using The following table summarizes revenue by end market. The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" customer information and the end customer product or application into which the Company’s product will be incorporated. As customer information and the end customer product or application into which the Company’s product will be incorporated. As data systems for capturing and tracking this data and the Company's methodology evolves and improves, the categorization of data systems for capturing and tracking this data and the Company's methodology evolves and improves, the categorization of products by end market can vary over time. When this occurs, the Company reclassifies revenue by end market for prior products by end market can vary over time. When this occurs, the Company reclassifies revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within each periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within each end market. end market. Industrial Industrial Automotive Automotive Communications Communications Consumer Consumer Total revenue Total revenue 2022 2022 2021 2021 2020 2020 Revenue Revenue $ $ 6,069,332 6,069,332 2,515,513 2,515,513 1,880,697 1,880,697 1,548,411 1,548,411 $ 12,013,953 $ 12,013,953 % of % of Total Total Revenue Revenue (1) (1) 51 % $ 51 % $ 21 % 21 % 16 % 16 % 13 % 13 % 100 % $ 100 % $ Revenue Revenue 4,026,909 4,026,909 1,248,169 1,248,169 1,206,867 1,206,867 836,341 836,341 7,318,286 7,318,286 % of % of Total Total Revenue Revenue (1) (1) 55 % $ 55 % $ 17 % 17 % 16 % 16 % 11 % 11 % 100 % $ 100 % $ Revenue Revenue 3,005,585 3,005,585 778,714 778,714 1,193,809 1,193,809 624,948 624,948 5,603,056 5,603,056 % of % of Total Total Revenue Revenue (1) (1) 54 % 54 % 14 % 14 % 21 % 21 % 11 % 11 % 100 % 100 % _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. Revenue by Sales Channel Revenue by Sales Channel The following tables summarize revenue by sales channel. The Company sells its products globally through a direct sales The following tables summarize revenue by sales channel. The Company sells its products globally through a direct sales force, third party distributors, independent sales representatives and via its website. Distributors are customers that buy products force, third party distributors, independent sales representatives and via its website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers (OEMs). Other customers include the U.S. government, government prime contractors and certain commercial manufacturers (OEMs). Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time. customers for which revenue is recorded over time. Distributors Distributors Direct customers Direct customers Other Other Total revenue Total revenue 2022 2022 2021 2021 2020 2020 % of % of Total Total Revenue Revenue (1) (1) % of % of Total Total Revenue Revenue (1) (1) Revenue Revenue Revenue Revenue Revenue Revenue $ $ 7,458,478 7,458,478 62 % $ 62 % $ 4,589,944 4,589,944 63 % $ 63 % $ 3,216,302 3,216,302 4,423,883 4,423,883 37 % 37 % 2,600,353 2,600,353 36 % 36 % 2,300,493 2,300,493 131,592 131,592 1 % 1 % 127,989 127,989 2 % 2 % 86,261 86,261 % of % of Total Total Revenue Revenue (1) (1) 57 % 57 % 41 % 41 % 2 % 2 % $ 12,013,953 $ 12,013,953 100 % $ 100 % $ 7,318,286 7,318,286 100 % $ 100 % $ 5,603,056 5,603,056 100 % 100 % _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. Geographic Information Geographic Information Geographic revenue information for fiscal 2022, fiscal 2021 and fiscal 2020 reflects the geographic location of the Geographic revenue information for fiscal 2022, fiscal 2021 and fiscal 2020 reflects the geographic location of the distributors or OEMs who purchased the Company's products. This may differ from the geographic location of the end distributors or OEMs who purchased the Company's products. This may differ from the geographic location of the end customers. In all periods presented, the predominant countries comprising “Rest of North and South America” are Canada and customers. In all periods presented, the predominant countries comprising “Rest of North and South America” are Canada and Mexico; the predominant countries comprising “Europe” are Germany, Sweden, and the Netherlands; and the predominant Mexico; the predominant countries comprising “Europe” are Germany, Sweden, and the Netherlands; and the predominant countries comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore. countries comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore. Rest of North and South America Rest of North and South America Subtotal all foreign countries Subtotal all foreign countries Total revenue Total revenue Property, plant and equipment Property, plant and equipment Revenue Revenue United States United States Europe Europe Japan Japan China China Rest of Asia Rest of Asia United States United States Ireland Ireland Philippines Philippines Thailand Thailand Singapore (1) Singapore (1) Malaysia Malaysia All other countries All other countries Subtotal all foreign countries Subtotal all foreign countries Total property, plant and equipment Total property, plant and equipment _______________________________________ _______________________________________ in fiscal 2021. in fiscal 2021. 5. 5. Special Charges, Net Special Charges, Net 2022 2022 2021 2021 2020 2020 $ $ 4,025,398 $ 4,025,398 $ 2,389,439 $ 2,389,439 $ 1,887,443 1,887,443 72,497 72,497 2,534,423 2,534,423 1,221,549 1,221,549 2,563,536 2,563,536 1,596,550 1,596,550 7,988,555 7,988,555 42,830 42,830 1,592,989 1,592,989 787,966 787,966 1,614,396 1,614,396 890,666 890,666 4,928,847 4,928,847 $ $ 12,013,953 $ 12,013,953 $ 7,318,286 $ 7,318,286 $ 5,603,056 5,603,056 $ $ 1,117,404 $ 1,117,404 $ 956,624 $ 956,624 $ 343,728 343,728 608,474 608,474 143,558 143,558 — — 119,670 119,670 68,470 68,470 206,353 206,353 524,128 524,128 126,040 126,040 — — 84,971 84,971 80,935 80,935 1,283,900 1,283,900 1,022,427 1,022,427 540,806 540,806 $ $ 2,401,304 $ 2,401,304 $ 1,979,051 $ 1,979,051 $ 1,120,561 1,120,561 41,250 41,250 1,245,695 1,245,695 521,720 521,720 1,348,011 1,348,011 558,937 558,937 3,715,613 3,715,613 579,755 579,755 169,968 169,968 256,470 256,470 — — 18,518 18,518 53,616 53,616 42,234 42,234 (1) As further discussed in Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements, the Company sold this facility (1) As further discussed in Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements, the Company sold this facility The Company monitors global macroeconomic conditions on an ongoing basis and continues to assess opportunities for The Company monitors global macroeconomic conditions on an ongoing basis and continues to assess opportunities for improved operational effectiveness and efficiency, as well as a better alignment of expenses with revenues. As a result of these improved operational effectiveness and efficiency, as well as a better alignment of expenses with revenues. As a result of these assessments, the Company has undertaken various actions resulting in special charges over the past several years. assessments, the Company has undertaken various actions resulting in special charges over the past several years. Liabilities related to special charges, net are presented in Accrued Liabilities in the Consolidated Balance Sheets. The Liabilities related to special charges, net are presented in Accrued Liabilities in the Consolidated Balance Sheets. The activity is detailed below: activity is detailed below: 67 67 68 68 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Executive Officer has been identified as the Company's Chief Operating Decision Maker. The Company has determined that all Executive Officer has been identified as the Company's Chief Operating Decision Maker. The Company has determined that all of the Company's operating segments share the following similar economic characteristics, and therefore meet the criteria of the Company's operating segments share the following similar economic characteristics, and therefore meet the criteria established for operating segments to be aggregated into one reportable segment, namely: established for operating segments to be aggregated into one reportable segment, namely: • The primary source of revenue for each operating segment is the sale of ICs. • The primary source of revenue for each operating segment is the sale of ICs. • The ICs sold by each of the Company's operating segments are manufactured using similar semiconductor • The ICs sold by each of the Company's operating segments are manufactured using similar semiconductor manufacturing processes and raw materials in either the Company’s own production facilities or by third-party wafer fabricators manufacturing processes and raw materials in either the Company’s own production facilities or by third-party wafer fabricators using proprietary processes. using proprietary processes. • The Company sells its products to tens of thousands of customers worldwide. Many of these customers use products • The Company sells its products to tens of thousands of customers worldwide. Many of these customers use products spanning all operating segments in a wide range of applications. spanning all operating segments in a wide range of applications. • The ICs marketed by each of the Company's operating segments are sold globally through a direct sales force, third- • The ICs marketed by each of the Company's operating segments are sold globally through a direct sales force, third- party distributors, independent sales representatives and via the Company's website to the same types of customers. party distributors, independent sales representatives and via the Company's website to the same types of customers. All of the Company's operating segments share a similar long-term financial model as they have similar economic All of the Company's operating segments share a similar long-term financial model as they have similar economic characteristics. The causes for variation in operating and financial performance are the same among the Company's operating characteristics. The causes for variation in operating and financial performance are the same among the Company's operating segments and include factors such as (i) life cycle and price and cost fluctuations, (ii) number of competitors, (iii) product segments and include factors such as (i) life cycle and price and cost fluctuations, (ii) number of competitors, (iii) product differentiation and (iv) size of market opportunity. Additionally, each operating segment is subject to the overall cyclical nature differentiation and (iv) size of market opportunity. Additionally, each operating segment is subject to the overall cyclical nature of the semiconductor industry. Lastly, the number and composition of employees and the amounts and types of tools and of the semiconductor industry. Lastly, the number and composition of employees and the amounts and types of tools and materials required for production of products are proportionally similar for each operating segment. materials required for production of products are proportionally similar for each operating segment. Revenue Trends by End Market Revenue Trends by End Market The following table summarizes revenue by end market. The categorization of revenue by end market is determined using The following table summarizes revenue by end market. The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" customer information and the end customer product or application into which the Company’s product will be incorporated. As customer information and the end customer product or application into which the Company’s product will be incorporated. As data systems for capturing and tracking this data and the Company's methodology evolves and improves, the categorization of data systems for capturing and tracking this data and the Company's methodology evolves and improves, the categorization of products by end market can vary over time. When this occurs, the Company reclassifies revenue by end market for prior products by end market can vary over time. When this occurs, the Company reclassifies revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within each periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within each end market. end market. Industrial Industrial Automotive Automotive Communications Communications Consumer Consumer Total revenue Total revenue 2022 2022 2021 2021 2020 2020 % of % of Total Total Revenue Revenue (1) (1) % of % of Total Total Revenue Revenue (1) (1) Revenue Revenue Revenue Revenue Revenue Revenue $ $ 6,069,332 6,069,332 51 % $ 51 % $ 4,026,909 4,026,909 55 % $ 55 % $ 3,005,585 3,005,585 2,515,513 2,515,513 1,880,697 1,880,697 1,548,411 1,548,411 21 % 21 % 16 % 16 % 13 % 13 % 1,248,169 1,248,169 1,206,867 1,206,867 836,341 836,341 17 % 17 % 16 % 16 % 11 % 11 % 778,714 778,714 1,193,809 1,193,809 624,948 624,948 % of % of Total Total Revenue Revenue (1) (1) 54 % 54 % 14 % 14 % 21 % 21 % 11 % 11 % $ 12,013,953 $ 12,013,953 100 % $ 100 % $ 7,318,286 7,318,286 100 % $ 100 % $ 5,603,056 5,603,056 100 % 100 % _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. Revenue by Sales Channel Revenue by Sales Channel The following tables summarize revenue by sales channel. The Company sells its products globally through a direct sales The following tables summarize revenue by sales channel. The Company sells its products globally through a direct sales force, third party distributors, independent sales representatives and via its website. Distributors are customers that buy products force, third party distributors, independent sales representatives and via its website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers (OEMs). Other customers include the U.S. government, government prime contractors and certain commercial manufacturers (OEMs). Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time. customers for which revenue is recorded over time. Distributors Distributors Direct customers Direct customers Other Other Total revenue Total revenue 2022 2022 2021 2021 2020 2020 % of % of Total Total Revenue Revenue (1) (1) % of % of Total Total Revenue Revenue (1) (1) Revenue Revenue Revenue Revenue Revenue Revenue $ $ 7,458,478 7,458,478 62 % $ 62 % $ 4,589,944 4,589,944 63 % $ 63 % $ 3,216,302 3,216,302 4,423,883 4,423,883 37 % 37 % 2,600,353 2,600,353 36 % 36 % 2,300,493 2,300,493 131,592 131,592 1 % 1 % 127,989 127,989 2 % 2 % 86,261 86,261 % of % of Total Total Revenue Revenue (1) (1) 57 % 57 % 41 % 41 % 2 % 2 % $ 12,013,953 $ 12,013,953 100 % $ 100 % $ 7,318,286 7,318,286 100 % $ 100 % $ 5,603,056 5,603,056 100 % 100 % _______________________________________ _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding. (1) The sum of the individual percentages may not equal the total due to rounding. Geographic Information Geographic Information Geographic revenue information for fiscal 2022, fiscal 2021 and fiscal 2020 reflects the geographic location of the Geographic revenue information for fiscal 2022, fiscal 2021 and fiscal 2020 reflects the geographic location of the distributors or OEMs who purchased the Company's products. This may differ from the geographic location of the end distributors or OEMs who purchased the Company's products. This may differ from the geographic location of the end customers. In all periods presented, the predominant countries comprising “Rest of North and South America” are Canada and customers. In all periods presented, the predominant countries comprising “Rest of North and South America” are Canada and Mexico; the predominant countries comprising “Europe” are Germany, Sweden, and the Netherlands; and the predominant Mexico; the predominant countries comprising “Europe” are Germany, Sweden, and the Netherlands; and the predominant countries comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore. countries comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore. Revenue Revenue United States United States Rest of North and South America Rest of North and South America Europe Europe Japan Japan China China Rest of Asia Rest of Asia Subtotal all foreign countries Subtotal all foreign countries Total revenue Total revenue Property, plant and equipment Property, plant and equipment United States United States Ireland Ireland Philippines Philippines Thailand Thailand Singapore (1) Singapore (1) Malaysia Malaysia All other countries All other countries Subtotal all foreign countries Subtotal all foreign countries Total property, plant and equipment Total property, plant and equipment 2022 2022 2021 2021 2020 2020 $ $ $ $ $ $ 4,025,398 $ 4,025,398 $ 72,497 72,497 2,534,423 2,534,423 1,221,549 1,221,549 2,563,536 2,563,536 1,596,550 1,596,550 7,988,555 7,988,555 12,013,953 $ 12,013,953 $ 1,117,404 $ 1,117,404 $ 343,728 343,728 608,474 608,474 143,558 143,558 — — 119,670 119,670 68,470 68,470 2,389,439 $ 2,389,439 $ 42,830 42,830 1,592,989 1,592,989 787,966 787,966 1,614,396 1,614,396 890,666 890,666 4,928,847 4,928,847 7,318,286 $ 7,318,286 $ 956,624 $ 956,624 $ 206,353 206,353 524,128 524,128 126,040 126,040 — — 84,971 84,971 80,935 80,935 1,283,900 1,283,900 1,022,427 1,022,427 1,887,443 1,887,443 41,250 41,250 1,245,695 1,245,695 521,720 521,720 1,348,011 1,348,011 558,937 558,937 3,715,613 3,715,613 5,603,056 5,603,056 579,755 579,755 169,968 169,968 256,470 256,470 — — 18,518 18,518 53,616 53,616 42,234 42,234 540,806 540,806 $ $ 2,401,304 $ 2,401,304 $ 1,979,051 $ 1,979,051 $ 1,120,561 1,120,561 _______________________________________ _______________________________________ (1) As further discussed in Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements, the Company sold this facility (1) As further discussed in Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements, the Company sold this facility in fiscal 2021. in fiscal 2021. 5. 5. Special Charges, Net Special Charges, Net The Company monitors global macroeconomic conditions on an ongoing basis and continues to assess opportunities for The Company monitors global macroeconomic conditions on an ongoing basis and continues to assess opportunities for improved operational effectiveness and efficiency, as well as a better alignment of expenses with revenues. As a result of these improved operational effectiveness and efficiency, as well as a better alignment of expenses with revenues. As a result of these assessments, the Company has undertaken various actions resulting in special charges over the past several years. assessments, the Company has undertaken various actions resulting in special charges over the past several years. Liabilities related to special charges, net are presented in Accrued Liabilities in the Consolidated Balance Sheets. The Liabilities related to special charges, net are presented in Accrued Liabilities in the Consolidated Balance Sheets. The activity is detailed below: activity is detailed below: 67 67 68 68 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Accrued Special Charges Accrued Special Charges Balance at November 2, 2019 Balance at November 2, 2019 Employee severance and benefit costs Employee severance and benefit costs Facility closure costs Facility closure costs Severance and benefit payments Severance and benefit payments Facility closure cost payments Facility closure cost payments Effect of foreign currency on accrual Effect of foreign currency on accrual Balance at October 31, 2020 Balance at October 31, 2020 Employee severance and benefit costs Employee severance and benefit costs Facility closure costs Facility closure costs Severance and benefit payments Severance and benefit payments Facility closure cost payments Facility closure cost payments Effect of foreign currency on accrual Effect of foreign currency on accrual Balance at October 30, 2021 Balance at October 30, 2021 Employee severance and benefit costs Employee severance and benefit costs Facility closure costs Facility closure costs Severance and benefit payments Severance and benefit payments Facility closure cost payments Facility closure cost payments Effect of foreign currency on accrual Effect of foreign currency on accrual Balance at October 29, 2022 Balance at October 29, 2022 Closure of Manufacturing Facilities Closure of Manufacturing Facilities Closure of Closure of Manufacturing Manufacturing Facilities Facilities Global Repositioning Global Repositioning Actions Actions $ $ 50,401 $ 50,401 $ — — 2,918 2,918 (5,098) (5,098) (2,969) (2,969) (76) (76) $ $ 45,176 $ 45,176 $ 200 200 11,880 11,880 (19,602) (19,602) (11,880) (11,880) — — 25,774 $ 25,774 $ 75 75 12,076 12,076 (22,805) (22,805) (12,491) (12,491) — — 2,629 $ 2,629 $ $ $ $ $ 58,895 58,895 47,326 47,326 — — (85,301) (85,301) — — (146) (146) 20,774 20,774 28,731 28,731 — — (28,604) (28,604) — — 164 164 21,065 21,065 149,853 149,853 — — (118,567) (118,567) — — (281) (281) 52,070 52,070 The Company recorded special charges of $63.8 million on a cumulative basis through October 29, 2022 as a result of its The Company recorded special charges of $63.8 million on a cumulative basis through October 29, 2022 as a result of its decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear. decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear. During the third quarter of fiscal 2022, the Company completed the sale of its Hillview wafer fabrication facility and During the third quarter of fiscal 2022, the Company completed the sale of its Hillview wafer fabrication facility and certain equipment located in Milpitas, California, which were previously classified as held for sale, for proceeds of certain equipment located in Milpitas, California, which were previously classified as held for sale, for proceeds of approximately $31.8 million, which resulted in a gain of $4.4 million. During fiscal 2021, the Company completed the sale of approximately $31.8 million, which resulted in a gain of $4.4 million. During fiscal 2021, the Company completed the sale of its facility and certain equipment in Singapore, which were previously classified as held for sale, for approximately its facility and certain equipment in Singapore, which were previously classified as held for sale, for approximately $35.7 million, which resulted in a gain of $13.6 million. $35.7 million, which resulted in a gain of $13.6 million. Global Repositioning Actions Global Repositioning Actions The Company recorded net special charges of $487.6 million on a cumulative basis through October 29, 2022, as part of The Company recorded net special charges of $487.6 million on a cumulative basis through October 29, 2022, as part of the integration of the Acquisition and continued organizational initiatives to consolidate its global footprint related to certain the integration of the Acquisition and continued organizational initiatives to consolidate its global footprint related to certain manufacturing, engineering, sales, marketing and administrative offices and to better align its global workforce with the manufacturing, engineering, sales, marketing and administrative offices and to better align its global workforce with the Company's long-term strategic plan. The special charges include severance and fringe benefit costs, in accordance with the Company's long-term strategic plan. The special charges include severance and fringe benefit costs, in accordance with the Company's ongoing benefit plan or statutory requirements at foreign locations, and the write-off of acquired intellectual Company's ongoing benefit plan or statutory requirements at foreign locations, and the write-off of acquired intellectual property due to the Company's decision to discontinue certain product development strategies. property due to the Company's decision to discontinue certain product development strategies. In connection with the Company’s decision during the third quarter of fiscal 2022 to transition its engineering, sales, In connection with the Company’s decision during the third quarter of fiscal 2022 to transition its engineering, sales, marketing and administrative activities from its leased property in Santa Clara, California to its owned property in San Jose, marketing and administrative activities from its leased property in Santa Clara, California to its owned property in San Jose, California, the Company entered into a sublease agreement for a portion of the leased property and intends to sublease the California, the Company entered into a sublease agreement for a portion of the leased property and intends to sublease the remainder of this property. As a result of the sublease transaction, the Company recorded an impairment charge of remainder of this property. As a result of the sublease transaction, the Company recorded an impairment charge of $91.9 million in net special charges which represented the excess carrying value of the associated asset group over its estimated $91.9 million in net special charges which represented the excess carrying value of the associated asset group over its estimated fair value. The Company estimated fair value using cash flows from the estimated net sublease rental income discounted at a fair value. The Company estimated fair value using cash flows from the estimated net sublease rental income discounted at a market rate. The Company allocated $60.6 million, $28.1 million and $3.2 million of the impairment charge to right of use market rate. The Company allocated $60.6 million, $28.1 million and $3.2 million of the impairment charge to right of use assets, leasehold improvements and office equipment, respectively. assets, leasehold improvements and office equipment, respectively. The Company also recorded special charges of $174.8 million in fiscal 2022 primarily consisting of $180.4 million of The Company also recorded special charges of $174.8 million in fiscal 2022 primarily consisting of $180.4 million of severance and benefit costs, as well as charges recorded from the acceleration of equity awards in connection with the severance and benefit costs, as well as charges recorded from the acceleration of equity awards in connection with the termination of certain employees in manufacturing, engineering and selling, marketing, general and administrative roles at sites termination of certain employees in manufacturing, engineering and selling, marketing, general and administrative roles at sites assumed related to the Acquisition and various locations throughout the world, partially offset by a gain of $8.3 million assumed related to the Acquisition and various locations throughout the world, partially offset by a gain of $8.3 million recognized upon the sale of a business. recognized upon the sale of a business. 6. 6. Acquisitions Acquisitions Maxim Integrated Products, Inc. Maxim Integrated Products, Inc. On the Acquisition Date, the Company completed its acquisition of all of the voting interests of Maxim, an independent On the Acquisition Date, the Company completed its acquisition of all of the voting interests of Maxim, an independent manufacturer of innovative analog and mixed-signal products and technologies. Under the terms of the agreement pursuant to manufacturer of innovative analog and mixed-signal products and technologies. Under the terms of the agreement pursuant to which the Company acquired Maxim (Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim which the Company acquired Maxim (Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company's common stock at the closing. The Company believes the combination common stock, 0.6300 of a share of the Company's common stock at the closing. The Company believes the combination creates an expanded suite of top-performing mixed-signal and power management technology offerings and complements the creates an expanded suite of top-performing mixed-signal and power management technology offerings and complements the Company's legacy offerings. The results of operations of Maxim from the Acquisition Date are included in the Company’s Company's legacy offerings. The results of operations of Maxim from the Acquisition Date are included in the Company’s Consolidated Statement of Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows and Consolidated Consolidated Statement of Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows and Consolidated Statement of Shareholders’ Equity for fiscal 2021. The amount of revenue attributable to Maxim included in the Company's Statement of Shareholders’ Equity for fiscal 2021. The amount of revenue attributable to Maxim included in the Company's Consolidated Statement of Income for fiscal 2021 was $558.8 million. The amount of Maxim's earnings included in the Consolidated Statement of Income for fiscal 2021 was $558.8 million. The amount of Maxim's earnings included in the Consolidated Statement of Income for fiscal 2021 is impracticable to calculate. Consolidated Statement of Income for fiscal 2021 is impracticable to calculate. The Acquisition Date fair value of the consideration transferred in the Acquisition consisted of the following: The Acquisition Date fair value of the consideration transferred in the Acquisition consisted of the following: Fair value of partially vested restricted stock and restricted stock unit replacement awards (c) Fair value of partially vested restricted stock and restricted stock unit replacement awards (c) Cash consideration (a) Cash consideration (a) Issuance of common stock (b) Issuance of common stock (b) Total purchase consideration Total purchase consideration ____________________ ____________________ $ $ $ $ 47 47 27,754,161 27,754,161 194,890 194,890 27,949,098 27,949,098 (a) This reflects the cash paid for fractional shares of the Company’s common stock in respect of shares of Maxim (a) This reflects the cash paid for fractional shares of the Company’s common stock in respect of shares of Maxim common stock outstanding. common stock outstanding. (b) The fair value is based on the issuance of approximately 169.2 million shares of the Company's common stock with a (b) The fair value is based on the issuance of approximately 169.2 million shares of the Company's common stock with a per share value of $164.00 on the Acquisition Date. per share value of $164.00 on the Acquisition Date. (c) In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock and restricted (c) In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock and restricted stock units, to certain Maxim employees in replacement of Maxim equity awards that were cancelled at closing. The stock units, to certain Maxim employees in replacement of Maxim equity awards that were cancelled at closing. The replacement awards consist of restricted stock and restricted stock unit awards for approximately 3.7 million shares of replacement awards consist of restricted stock and restricted stock unit awards for approximately 3.7 million shares of the Company's common stock with a weighted average grant date fair value of $161.63. This amount represents the the Company's common stock with a weighted average grant date fair value of $161.63. This amount represents the portion of the fair value of the replacement equity awards associated with services rendered through the Acquisition portion of the fair value of the replacement equity awards associated with services rendered through the Acquisition Date and has been included as a component of the total purchase consideration. Date and has been included as a component of the total purchase consideration. During fiscal 2022, the Company completed the acquisition accounting for the Acquisition. The following is a summary During fiscal 2022, the Company completed the acquisition accounting for the Acquisition. The following is a summary of the amounts recognized in accounting for the Acquisition: of the amounts recognized in accounting for the Acquisition: 69 69 70 70 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Accrued Special Charges Accrued Special Charges Balance at November 2, 2019 Balance at November 2, 2019 Employee severance and benefit costs Employee severance and benefit costs Facility closure costs Facility closure costs Severance and benefit payments Severance and benefit payments Facility closure cost payments Facility closure cost payments Effect of foreign currency on accrual Effect of foreign currency on accrual Balance at October 31, 2020 Balance at October 31, 2020 Employee severance and benefit costs Employee severance and benefit costs Facility closure costs Facility closure costs Severance and benefit payments Severance and benefit payments Facility closure cost payments Facility closure cost payments Effect of foreign currency on accrual Effect of foreign currency on accrual Balance at October 30, 2021 Balance at October 30, 2021 Employee severance and benefit costs Employee severance and benefit costs Facility closure costs Facility closure costs Severance and benefit payments Severance and benefit payments Facility closure cost payments Facility closure cost payments Effect of foreign currency on accrual Effect of foreign currency on accrual Balance at October 29, 2022 Balance at October 29, 2022 Closure of Manufacturing Facilities Closure of Manufacturing Facilities Closure of Closure of Manufacturing Manufacturing Facilities Facilities Global Repositioning Global Repositioning Actions Actions $ $ 50,401 $ 50,401 $ $ $ 45,176 $ 45,176 $ $ $ 25,774 $ 25,774 $ — — 2,918 2,918 (5,098) (5,098) (2,969) (2,969) (76) (76) 200 200 11,880 11,880 (19,602) (19,602) (11,880) (11,880) — — 75 75 12,076 12,076 (22,805) (22,805) (12,491) (12,491) — — 58,895 58,895 47,326 47,326 — — (85,301) (85,301) — — (146) (146) 20,774 20,774 28,731 28,731 — — (28,604) (28,604) — — 164 164 21,065 21,065 149,853 149,853 — — (118,567) (118,567) — — (281) (281) $ $ 2,629 $ 2,629 $ 52,070 52,070 The Company recorded special charges of $63.8 million on a cumulative basis through October 29, 2022 as a result of its The Company recorded special charges of $63.8 million on a cumulative basis through October 29, 2022 as a result of its decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear. decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear. During the third quarter of fiscal 2022, the Company completed the sale of its Hillview wafer fabrication facility and During the third quarter of fiscal 2022, the Company completed the sale of its Hillview wafer fabrication facility and certain equipment located in Milpitas, California, which were previously classified as held for sale, for proceeds of certain equipment located in Milpitas, California, which were previously classified as held for sale, for proceeds of approximately $31.8 million, which resulted in a gain of $4.4 million. During fiscal 2021, the Company completed the sale of approximately $31.8 million, which resulted in a gain of $4.4 million. During fiscal 2021, the Company completed the sale of its facility and certain equipment in Singapore, which were previously classified as held for sale, for approximately its facility and certain equipment in Singapore, which were previously classified as held for sale, for approximately $35.7 million, which resulted in a gain of $13.6 million. $35.7 million, which resulted in a gain of $13.6 million. Global Repositioning Actions Global Repositioning Actions The Company recorded net special charges of $487.6 million on a cumulative basis through October 29, 2022, as part of The Company recorded net special charges of $487.6 million on a cumulative basis through October 29, 2022, as part of the integration of the Acquisition and continued organizational initiatives to consolidate its global footprint related to certain the integration of the Acquisition and continued organizational initiatives to consolidate its global footprint related to certain manufacturing, engineering, sales, marketing and administrative offices and to better align its global workforce with the manufacturing, engineering, sales, marketing and administrative offices and to better align its global workforce with the Company's long-term strategic plan. The special charges include severance and fringe benefit costs, in accordance with the Company's long-term strategic plan. The special charges include severance and fringe benefit costs, in accordance with the Company's ongoing benefit plan or statutory requirements at foreign locations, and the write-off of acquired intellectual Company's ongoing benefit plan or statutory requirements at foreign locations, and the write-off of acquired intellectual property due to the Company's decision to discontinue certain product development strategies. property due to the Company's decision to discontinue certain product development strategies. In connection with the Company’s decision during the third quarter of fiscal 2022 to transition its engineering, sales, In connection with the Company’s decision during the third quarter of fiscal 2022 to transition its engineering, sales, marketing and administrative activities from its leased property in Santa Clara, California to its owned property in San Jose, marketing and administrative activities from its leased property in Santa Clara, California to its owned property in San Jose, California, the Company entered into a sublease agreement for a portion of the leased property and intends to sublease the California, the Company entered into a sublease agreement for a portion of the leased property and intends to sublease the remainder of this property. As a result of the sublease transaction, the Company recorded an impairment charge of remainder of this property. As a result of the sublease transaction, the Company recorded an impairment charge of $91.9 million in net special charges which represented the excess carrying value of the associated asset group over its estimated $91.9 million in net special charges which represented the excess carrying value of the associated asset group over its estimated fair value. The Company estimated fair value using cash flows from the estimated net sublease rental income discounted at a fair value. The Company estimated fair value using cash flows from the estimated net sublease rental income discounted at a market rate. The Company allocated $60.6 million, $28.1 million and $3.2 million of the impairment charge to right of use market rate. The Company allocated $60.6 million, $28.1 million and $3.2 million of the impairment charge to right of use assets, leasehold improvements and office equipment, respectively. assets, leasehold improvements and office equipment, respectively. The Company also recorded special charges of $174.8 million in fiscal 2022 primarily consisting of $180.4 million of The Company also recorded special charges of $174.8 million in fiscal 2022 primarily consisting of $180.4 million of severance and benefit costs, as well as charges recorded from the acceleration of equity awards in connection with the severance and benefit costs, as well as charges recorded from the acceleration of equity awards in connection with the termination of certain employees in manufacturing, engineering and selling, marketing, general and administrative roles at sites termination of certain employees in manufacturing, engineering and selling, marketing, general and administrative roles at sites assumed related to the Acquisition and various locations throughout the world, partially offset by a gain of $8.3 million assumed related to the Acquisition and various locations throughout the world, partially offset by a gain of $8.3 million recognized upon the sale of a business. recognized upon the sale of a business. 6. 6. Acquisitions Acquisitions Maxim Integrated Products, Inc. Maxim Integrated Products, Inc. On the Acquisition Date, the Company completed its acquisition of all of the voting interests of Maxim, an independent On the Acquisition Date, the Company completed its acquisition of all of the voting interests of Maxim, an independent manufacturer of innovative analog and mixed-signal products and technologies. Under the terms of the agreement pursuant to manufacturer of innovative analog and mixed-signal products and technologies. Under the terms of the agreement pursuant to which the Company acquired Maxim (Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim which the Company acquired Maxim (Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company's common stock at the closing. The Company believes the combination common stock, 0.6300 of a share of the Company's common stock at the closing. The Company believes the combination creates an expanded suite of top-performing mixed-signal and power management technology offerings and complements the creates an expanded suite of top-performing mixed-signal and power management technology offerings and complements the Company's legacy offerings. The results of operations of Maxim from the Acquisition Date are included in the Company’s Company's legacy offerings. The results of operations of Maxim from the Acquisition Date are included in the Company’s Consolidated Statement of Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows and Consolidated Consolidated Statement of Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows and Consolidated Statement of Shareholders’ Equity for fiscal 2021. The amount of revenue attributable to Maxim included in the Company's Statement of Shareholders’ Equity for fiscal 2021. The amount of revenue attributable to Maxim included in the Company's Consolidated Statement of Income for fiscal 2021 was $558.8 million. The amount of Maxim's earnings included in the Consolidated Statement of Income for fiscal 2021 was $558.8 million. The amount of Maxim's earnings included in the Consolidated Statement of Income for fiscal 2021 is impracticable to calculate. Consolidated Statement of Income for fiscal 2021 is impracticable to calculate. The Acquisition Date fair value of the consideration transferred in the Acquisition consisted of the following: The Acquisition Date fair value of the consideration transferred in the Acquisition consisted of the following: Cash consideration (a) Cash consideration (a) Issuance of common stock (b) Issuance of common stock (b) Fair value of partially vested restricted stock and restricted stock unit replacement awards (c) Fair value of partially vested restricted stock and restricted stock unit replacement awards (c) Total purchase consideration Total purchase consideration $ $ $ $ 47 47 27,754,161 27,754,161 194,890 194,890 27,949,098 27,949,098 ____________________ ____________________ (a) This reflects the cash paid for fractional shares of the Company’s common stock in respect of shares of Maxim (a) This reflects the cash paid for fractional shares of the Company’s common stock in respect of shares of Maxim common stock outstanding. common stock outstanding. (b) The fair value is based on the issuance of approximately 169.2 million shares of the Company's common stock with a (b) The fair value is based on the issuance of approximately 169.2 million shares of the Company's common stock with a per share value of $164.00 on the Acquisition Date. per share value of $164.00 on the Acquisition Date. (c) In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock and restricted (c) In connection with the Acquisition, the Company issued equity awards, consisting of restricted stock and restricted stock units, to certain Maxim employees in replacement of Maxim equity awards that were cancelled at closing. The stock units, to certain Maxim employees in replacement of Maxim equity awards that were cancelled at closing. The replacement awards consist of restricted stock and restricted stock unit awards for approximately 3.7 million shares of replacement awards consist of restricted stock and restricted stock unit awards for approximately 3.7 million shares of the Company's common stock with a weighted average grant date fair value of $161.63. This amount represents the the Company's common stock with a weighted average grant date fair value of $161.63. This amount represents the portion of the fair value of the replacement equity awards associated with services rendered through the Acquisition portion of the fair value of the replacement equity awards associated with services rendered through the Acquisition Date and has been included as a component of the total purchase consideration. Date and has been included as a component of the total purchase consideration. During fiscal 2022, the Company completed the acquisition accounting for the Acquisition. The following is a summary During fiscal 2022, the Company completed the acquisition accounting for the Acquisition. The following is a summary of the amounts recognized in accounting for the Acquisition: of the amounts recognized in accounting for the Acquisition: 69 69 70 70 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Cash and cash equivalents Cash and cash equivalents Accounts receivable Accounts receivable Inventories Inventories Prepaid expenses and other current assets Prepaid expenses and other current assets Property, plant and equipment Property, plant and equipment Intangible assets (Note 2f) Intangible assets (Note 2f) Goodwill (Note 2f) Goodwill (Note 2f) Other long-term assets Other long-term assets Total assets Total assets Accounts payable Accounts payable Income taxes payable Income taxes payable Accrued liabilities Accrued liabilities Long-term debt Long-term debt Deferred income taxes Deferred income taxes Other non-current liabilities Other non-current liabilities Total liabilities Total liabilities Total purchase consideration Total purchase consideration $ $ 2,450,597 2,450,597 609,245 609,245 858,300 858,300 59,310 59,310 759,544 759,544 12,429,100 12,429,100 14,660,343 14,660,343 80,373 80,373 $ $ 31,906,812 31,906,812 112,828 112,828 156,592 156,592 592,432 592,432 1,072,150 1,072,150 1,661,907 1,661,907 361,805 361,805 3,957,714 3,957,714 27,949,098 27,949,098 $ $ $ $ The acquired intangible assets consisted of the following, which are being amortized on a straight-line basis over their The acquired intangible assets consisted of the following, which are being amortized on a straight-line basis over their estimated useful lives or on an accelerated method of amortization that is expected to reflect the estimated pattern of economic estimated useful lives or on an accelerated method of amortization that is expected to reflect the estimated pattern of economic use. use. Customer relationships Customer relationships Developed technology Developed technology Backlog Backlog Total amortizable intangible assets Total amortizable intangible assets Fair Value Fair Value (in thousands) (in thousands) $ $ $ $ 5,642,100 5,642,100 6,425,800 6,425,800 361,200 361,200 12,429,100 12,429,100 Weighted Average Weighted Average Useful Life Useful Life (in Years) (in Years) 14 14 8 8 2 2 10 10 The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future technologies that have yet to be determined and product portfolio and opportunities in new and existing markets, future technologies that have yet to be determined and Maxim’s assembled workforce. Future technologies do not meet the criteria for recognition separately from goodwill because Maxim’s assembled workforce. Future technologies do not meet the criteria for recognition separately from goodwill because they are part of future development and growth of the business. they are part of future development and growth of the business. There were no significant contingencies assumed as part of the Acquisition. There were no significant contingencies assumed as part of the Acquisition. In aggregate, the Company recognized $166.9 million of transaction-related costs, including legal, accounting and other In aggregate, the Company recognized $166.9 million of transaction-related costs, including legal, accounting and other related fees that were expensed in fiscal 2022, fiscal 2021 and fiscal 2020. These costs are included in the Consolidated related fees that were expensed in fiscal 2022, fiscal 2021 and fiscal 2020. These costs are included in the Consolidated Statements of Income in operating expenses within Selling, marketing, general and administrative expenses (SMG&A). Statements of Income in operating expenses within Selling, marketing, general and administrative expenses (SMG&A). The following unaudited pro forma consolidated financial information for the twelve months ended October 30, 2021 The following unaudited pro forma consolidated financial information for the twelve months ended October 30, 2021 combines the results of the Company for fiscal 2021 and the unaudited results of Maxim for the corresponding period through combines the results of the Company for fiscal 2021 and the unaudited results of Maxim for the corresponding period through the Acquisition Date. The following unaudited pro forma consolidated financial information for the twelve months ended the Acquisition Date. The following unaudited pro forma consolidated financial information for the twelve months ended October 31, 2020 combines the results of the Company for fiscal 2020 and the unaudited results of Maxim for the October 31, 2020 combines the results of the Company for fiscal 2020 and the unaudited results of Maxim for the corresponding period. The unaudited pro forma consolidated financial information assumes that the Acquisition, which closed corresponding period. The unaudited pro forma consolidated financial information assumes that the Acquisition, which closed on August 26, 2021, was completed on November 3, 2019 (the first day of fiscal 2020). The pro forma consolidated financial on August 26, 2021, was completed on November 3, 2019 (the first day of fiscal 2020). The pro forma consolidated financial information has been calculated after applying the Company’s accounting policies and includes adjustments for amortization information has been calculated after applying the Company’s accounting policies and includes adjustments for amortization expense of acquired intangible assets, fair value adjustments for acquired inventory, property, plant and equipment and long- expense of acquired intangible assets, fair value adjustments for acquired inventory, property, plant and equipment and long- term debt and compensation expense for ongoing share-based compensation arrangements that were replaced in conjunction term debt and compensation expense for ongoing share-based compensation arrangements that were replaced in conjunction with the Acquisition, together with the consequential tax effects. For fiscal 2020, non-recurring pro forma adjustments directly with the Acquisition, together with the consequential tax effects. For fiscal 2020, non-recurring pro forma adjustments directly attributable to the Acquisition included pre-tax amounts of $602.5 million related to the acquisition accounting effect of attributable to the Acquisition included pre-tax amounts of $602.5 million related to the acquisition accounting effect of inventories acquired and $54.2 million of accelerated stock-based compensation expense, together with the consequential tax inventories acquired and $54.2 million of accelerated stock-based compensation expense, together with the consequential tax effects. Additionally, $309.0 million of pre-tax transaction costs, together with the consequential tax effects, that were incurred effects. Additionally, $309.0 million of pre-tax transaction costs, together with the consequential tax effects, that were incurred related to the Acquisition are reflected in the pro forma results for fiscal 2020. These pro forma results have been prepared for related to the Acquisition are reflected in the pro forma results for fiscal 2020. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the Acquisition actually taken place on November 3, 2019. In addition, these results are not intended to be a achieved had the Acquisition actually taken place on November 3, 2019. In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after the Acquisition, including but not limited to revenue projection of future results and do not reflect events that may occur after the Acquisition, including but not limited to revenue enhancements, cost savings or operating synergies that the combined Company may achieve as a result of the Acquisition. enhancements, cost savings or operating synergies that the combined Company may achieve as a result of the Acquisition. The Company has not provided pro forma results of operations for any other acquisitions completed in fiscal 2022, fiscal The Company has not provided pro forma results of operations for any other acquisitions completed in fiscal 2022, fiscal 2021 or fiscal 2020 herein as they were not material to the Company on either an individual or an aggregate basis. The 2021 or fiscal 2020 herein as they were not material to the Company on either an individual or an aggregate basis. The Company included the results of operations of each acquisition in its Consolidated Statements of Income from the closing date Company included the results of operations of each acquisition in its Consolidated Statements of Income from the closing date Other investments consist of interests in venture capital funds and other long-term investments. Investments are accounted Other investments consist of interests in venture capital funds and other long-term investments. Investments are accounted for using the equity method of accounting or cost, less any impairment, plus or minus changes resulting from observable price for using the equity method of accounting or cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. For equity method investments, changes in orderly transactions for an identical or similar investment of the same issuer. For equity method investments, realized gains and losses are reflected in Other, net based upon the Company's ownership share of the investee's financial realized gains and losses are reflected in Other, net based upon the Company's ownership share of the investee's financial Accrued liabilities at October 29, 2022 and October 30, 2021 consisted of the following: Accrued liabilities at October 29, 2022 and October 30, 2021 consisted of the following: Distributor price adjustments and other revenue reserves Distributor price adjustments and other revenue reserves Revenue Revenue Net income (loss) Net income (loss) Basic net income (loss) per common share Basic net income (loss) per common share Diluted net income (loss) per common share Diluted net income (loss) per common share Other Acquisitions Other Acquisitions of each acquisition. of each acquisition. 7. 7. Other Investments Other Investments results. results. 8. 8. Accrued Liabilities Accrued Liabilities Accrued compensation and benefits Accrued compensation and benefits Accrued special charges Accrued special charges Lease liabilities Lease liabilities Accrued interest Accrued interest Accrued withholdings related to ESPP Accrued withholdings related to ESPP Accrued taxes Accrued taxes Accrued professional fees Accrued professional fees Other Other Total accrued liabilities Total accrued liabilities 9. 9. Leases Leases Pro Forma Twelve Months Ended Pro Forma Twelve Months Ended (unaudited) (unaudited) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020 $ $ $ $ $ $ $ $ 9,541,488 $ 9,541,488 $ 7,897,855 7,897,855 1,578,274 $ 1,578,274 $ (144,198) (144,198) 2.94 $ 2.94 $ 2.91 $ 2.91 $ (0.27) (0.27) (0.27) (0.27) 2022 2022 2021 2021 $ $ 749,402 $ 749,402 $ 465,536 465,536 54,699 54,699 53,628 53,628 33,298 33,298 28,131 28,131 22,815 22,815 7,955 7,955 179,186 179,186 664,198 664,198 381,678 381,678 46,839 46,839 52,576 52,576 29,361 29,361 — — 29,321 29,321 152,689 152,689 120,868 120,868 $ $ 1,594,650 $ 1,594,650 $ 1,477,530 1,477,530 The Company enters into operating leases which primarily relate to certain facilities and, to a lesser extent, finance leases. The Company enters into operating leases which primarily relate to certain facilities and, to a lesser extent, finance leases. Finance leases were not a material component of the Company's lease portfolio in the periods presented. The Company Finance leases were not a material component of the Company's lease portfolio in the periods presented. The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. Lease assets represent the Company's right to use underlying assets for the lease term, and lease liabilities of an arrangement. Lease assets represent the Company's right to use underlying assets for the lease term, and lease liabilities represent the obligation to make lease payments over the lease term. At lease commencement, leases are evaluated for represent the obligation to make lease payments over the lease term. At lease commencement, leases are evaluated for classification, and assets and liabilities are recognized based on the present value of lease payments over the lease term. The classification, and assets and liabilities are recognized based on the present value of lease payments over the lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received, such as construction allowances from landlords and/or rent items such as initial direct costs paid or incentives received, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property. The Company has agreements with lease and non-lease abatements subsequent to taking possession of the leased property. The Company has agreements with lease and non-lease 71 71 72 72 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Cash and cash equivalents Cash and cash equivalents Accounts receivable Accounts receivable Inventories Inventories Prepaid expenses and other current assets Prepaid expenses and other current assets Property, plant and equipment Property, plant and equipment Intangible assets (Note 2f) Intangible assets (Note 2f) Goodwill (Note 2f) Goodwill (Note 2f) Other long-term assets Other long-term assets Total assets Total assets Accounts payable Accounts payable Income taxes payable Income taxes payable Accrued liabilities Accrued liabilities Long-term debt Long-term debt Deferred income taxes Deferred income taxes Other non-current liabilities Other non-current liabilities Total liabilities Total liabilities Total purchase consideration Total purchase consideration use. use. Customer relationships Customer relationships Developed technology Developed technology Backlog Backlog Total amortizable intangible assets Total amortizable intangible assets $ $ 2,450,597 2,450,597 $ $ 31,906,812 31,906,812 609,245 609,245 858,300 858,300 59,310 59,310 759,544 759,544 12,429,100 12,429,100 14,660,343 14,660,343 80,373 80,373 112,828 112,828 156,592 156,592 592,432 592,432 1,072,150 1,072,150 1,661,907 1,661,907 361,805 361,805 3,957,714 3,957,714 27,949,098 27,949,098 $ $ $ $ Fair Value Fair Value (in thousands) (in thousands) Weighted Average Weighted Average Useful Life Useful Life (in Years) (in Years) $ $ $ $ 5,642,100 5,642,100 6,425,800 6,425,800 361,200 361,200 12,429,100 12,429,100 14 14 8 8 2 2 10 10 The acquired intangible assets consisted of the following, which are being amortized on a straight-line basis over their The acquired intangible assets consisted of the following, which are being amortized on a straight-line basis over their estimated useful lives or on an accelerated method of amortization that is expected to reflect the estimated pattern of economic estimated useful lives or on an accelerated method of amortization that is expected to reflect the estimated pattern of economic The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future technologies that have yet to be determined and product portfolio and opportunities in new and existing markets, future technologies that have yet to be determined and Maxim’s assembled workforce. Future technologies do not meet the criteria for recognition separately from goodwill because Maxim’s assembled workforce. Future technologies do not meet the criteria for recognition separately from goodwill because they are part of future development and growth of the business. they are part of future development and growth of the business. There were no significant contingencies assumed as part of the Acquisition. There were no significant contingencies assumed as part of the Acquisition. In aggregate, the Company recognized $166.9 million of transaction-related costs, including legal, accounting and other In aggregate, the Company recognized $166.9 million of transaction-related costs, including legal, accounting and other related fees that were expensed in fiscal 2022, fiscal 2021 and fiscal 2020. These costs are included in the Consolidated related fees that were expensed in fiscal 2022, fiscal 2021 and fiscal 2020. These costs are included in the Consolidated Statements of Income in operating expenses within Selling, marketing, general and administrative expenses (SMG&A). Statements of Income in operating expenses within Selling, marketing, general and administrative expenses (SMG&A). The following unaudited pro forma consolidated financial information for the twelve months ended October 30, 2021 The following unaudited pro forma consolidated financial information for the twelve months ended October 30, 2021 combines the results of the Company for fiscal 2021 and the unaudited results of Maxim for the corresponding period through combines the results of the Company for fiscal 2021 and the unaudited results of Maxim for the corresponding period through the Acquisition Date. The following unaudited pro forma consolidated financial information for the twelve months ended the Acquisition Date. The following unaudited pro forma consolidated financial information for the twelve months ended October 31, 2020 combines the results of the Company for fiscal 2020 and the unaudited results of Maxim for the October 31, 2020 combines the results of the Company for fiscal 2020 and the unaudited results of Maxim for the corresponding period. The unaudited pro forma consolidated financial information assumes that the Acquisition, which closed corresponding period. The unaudited pro forma consolidated financial information assumes that the Acquisition, which closed on August 26, 2021, was completed on November 3, 2019 (the first day of fiscal 2020). The pro forma consolidated financial on August 26, 2021, was completed on November 3, 2019 (the first day of fiscal 2020). The pro forma consolidated financial information has been calculated after applying the Company’s accounting policies and includes adjustments for amortization information has been calculated after applying the Company’s accounting policies and includes adjustments for amortization expense of acquired intangible assets, fair value adjustments for acquired inventory, property, plant and equipment and long- expense of acquired intangible assets, fair value adjustments for acquired inventory, property, plant and equipment and long- term debt and compensation expense for ongoing share-based compensation arrangements that were replaced in conjunction term debt and compensation expense for ongoing share-based compensation arrangements that were replaced in conjunction with the Acquisition, together with the consequential tax effects. For fiscal 2020, non-recurring pro forma adjustments directly with the Acquisition, together with the consequential tax effects. For fiscal 2020, non-recurring pro forma adjustments directly attributable to the Acquisition included pre-tax amounts of $602.5 million related to the acquisition accounting effect of attributable to the Acquisition included pre-tax amounts of $602.5 million related to the acquisition accounting effect of inventories acquired and $54.2 million of accelerated stock-based compensation expense, together with the consequential tax inventories acquired and $54.2 million of accelerated stock-based compensation expense, together with the consequential tax effects. Additionally, $309.0 million of pre-tax transaction costs, together with the consequential tax effects, that were incurred effects. Additionally, $309.0 million of pre-tax transaction costs, together with the consequential tax effects, that were incurred related to the Acquisition are reflected in the pro forma results for fiscal 2020. These pro forma results have been prepared for related to the Acquisition are reflected in the pro forma results for fiscal 2020. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the Acquisition actually taken place on November 3, 2019. In addition, these results are not intended to be a achieved had the Acquisition actually taken place on November 3, 2019. In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after the Acquisition, including but not limited to revenue projection of future results and do not reflect events that may occur after the Acquisition, including but not limited to revenue enhancements, cost savings or operating synergies that the combined Company may achieve as a result of the Acquisition. enhancements, cost savings or operating synergies that the combined Company may achieve as a result of the Acquisition. Revenue Revenue Net income (loss) Net income (loss) Basic net income (loss) per common share Basic net income (loss) per common share Diluted net income (loss) per common share Diluted net income (loss) per common share Other Acquisitions Other Acquisitions Pro Forma Twelve Months Ended Pro Forma Twelve Months Ended (unaudited) (unaudited) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020 $ $ $ $ $ $ $ $ 9,541,488 $ 9,541,488 $ 1,578,274 $ 1,578,274 $ 2.94 $ 2.94 $ 2.91 $ 2.91 $ 7,897,855 7,897,855 (144,198) (144,198) (0.27) (0.27) (0.27) (0.27) The Company has not provided pro forma results of operations for any other acquisitions completed in fiscal 2022, fiscal The Company has not provided pro forma results of operations for any other acquisitions completed in fiscal 2022, fiscal 2021 or fiscal 2020 herein as they were not material to the Company on either an individual or an aggregate basis. The 2021 or fiscal 2020 herein as they were not material to the Company on either an individual or an aggregate basis. The Company included the results of operations of each acquisition in its Consolidated Statements of Income from the closing date Company included the results of operations of each acquisition in its Consolidated Statements of Income from the closing date of each acquisition. of each acquisition. 7. 7. Other Investments Other Investments Other investments consist of interests in venture capital funds and other long-term investments. Investments are accounted Other investments consist of interests in venture capital funds and other long-term investments. Investments are accounted for using the equity method of accounting or cost, less any impairment, plus or minus changes resulting from observable price for using the equity method of accounting or cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. For equity method investments, changes in orderly transactions for an identical or similar investment of the same issuer. For equity method investments, realized gains and losses are reflected in Other, net based upon the Company's ownership share of the investee's financial realized gains and losses are reflected in Other, net based upon the Company's ownership share of the investee's financial results. results. 8. 8. Accrued Liabilities Accrued Liabilities Accrued liabilities at October 29, 2022 and October 30, 2021 consisted of the following: Accrued liabilities at October 29, 2022 and October 30, 2021 consisted of the following: Distributor price adjustments and other revenue reserves Distributor price adjustments and other revenue reserves Accrued compensation and benefits Accrued compensation and benefits Accrued special charges Accrued special charges Lease liabilities Lease liabilities Accrued interest Accrued interest Accrued withholdings related to ESPP Accrued withholdings related to ESPP Accrued taxes Accrued taxes Accrued professional fees Accrued professional fees Other Other Total accrued liabilities Total accrued liabilities 9. 9. Leases Leases $ $ 2022 2022 2021 2021 749,402 $ 749,402 $ 465,536 465,536 54,699 54,699 53,628 53,628 33,298 33,298 28,131 28,131 22,815 22,815 7,955 7,955 179,186 179,186 664,198 664,198 381,678 381,678 46,839 46,839 52,576 52,576 29,361 29,361 — — 29,321 29,321 152,689 152,689 120,868 120,868 $ $ 1,594,650 $ 1,594,650 $ 1,477,530 1,477,530 The Company enters into operating leases which primarily relate to certain facilities and, to a lesser extent, finance leases. The Company enters into operating leases which primarily relate to certain facilities and, to a lesser extent, finance leases. Finance leases were not a material component of the Company's lease portfolio in the periods presented. The Company Finance leases were not a material component of the Company's lease portfolio in the periods presented. The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. Lease assets represent the Company's right to use underlying assets for the lease term, and lease liabilities of an arrangement. Lease assets represent the Company's right to use underlying assets for the lease term, and lease liabilities represent the obligation to make lease payments over the lease term. At lease commencement, leases are evaluated for represent the obligation to make lease payments over the lease term. At lease commencement, leases are evaluated for classification, and assets and liabilities are recognized based on the present value of lease payments over the lease term. The classification, and assets and liabilities are recognized based on the present value of lease payments over the lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received, such as construction allowances from landlords and/or rent items such as initial direct costs paid or incentives received, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property. The Company has agreements with lease and non-lease abatements subsequent to taking possession of the leased property. The Company has agreements with lease and non-lease 71 71 72 72 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) components, which are accounted for as a single lease component. Non-lease components may include real estate taxes, components, which are accounted for as a single lease component. Non-lease components may include real estate taxes, insurance, maintenance, parking and other operating costs. If these costs are variable costs they are not included in the insurance, maintenance, parking and other operating costs. If these costs are variable costs they are not included in the measurement of the right-of-use assets and lease liabilities, but are expensed when the event determining the amount of variable measurement of the right-of-use assets and lease liabilities, but are expensed when the event determining the amount of variable consideration to be paid occurs. The Company’s leases have remaining lease terms of less than one year to approximately consideration to be paid occurs. The Company’s leases have remaining lease terms of less than one year to approximately twenty-three years, some of which may include options to extend the initial term of the lease. These options are included in twenty-three years, some of which may include options to extend the initial term of the lease. These options are included in determining the initial lease term at lease commencement only if the Company is reasonably certain to exercise the option. determining the initial lease term at lease commencement only if the Company is reasonably certain to exercise the option. Lease costs are recognized on a straight-line basis as lease expense over the lease term. For leases with terms of twelve months Lease costs are recognized on a straight-line basis as lease expense over the lease term. For leases with terms of twelve months or less the Company recognizes the related lease payments as expense either on a straight-line basis over the lease term or as or less the Company recognizes the related lease payments as expense either on a straight-line basis over the lease term or as incurred depending on whether the lease payments are fixed or variable. The Company subleases certain properties that are not incurred depending on whether the lease payments are fixed or variable. The Company subleases certain properties that are not used in its core business operations (See Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements). used in its core business operations (See Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements). Sublease income was not significant for the periods presented. Sublease income was not significant for the periods presented. The following table presents supplemental balance sheet information related to the Company's operating leases: The following table presents supplemental balance sheet information related to the Company's operating leases: October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 defendants have meritorious defenses to these allegations; however, the Company is currently unable to determine the ultimate defendants have meritorious defenses to these allegations; however, the Company is currently unable to determine the ultimate Assets Assets Operating lease right-of-use assets in Other assets Operating lease right-of-use assets in Other assets Liabilities Liabilities Operating lease liabilities in Accrued liabilities Operating lease liabilities in Accrued liabilities Operating lease liabilities in Other non-current liabilities Operating lease liabilities in Other non-current liabilities Details of the Company's operating leases are as follows: Details of the Company's operating leases are as follows: $ $ $ $ $ $ 262,997 262,997 $ $ 279,542 279,542 53,628 53,628 337,279 337,279 $ $ $ $ 52,576 52,576 295,782 295,782 October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Defined Contribution Plans Defined Contribution Plans Lease expense Lease expense Cash paid for amounts included in the measurement of operating lease liabilities Cash paid for amounts included in the measurement of operating lease liabilities $ $ 60,660 $ 60,660 $ 50,799 50,799 Operating cash flows from operating leases Operating cash flows from operating leases Lease assets obtained in exchange for new lease liabilities Lease assets obtained in exchange for new lease liabilities Weighted average remaining lease term Weighted average remaining lease term Weighted average discount rate Weighted average discount rate $ $ $ $ 61,915 $ 61,915 $ 107,631 $ 107,631 $ 7.6 years 7.6 years 3.3 % 3.3 % 53,724 53,724 25,946 25,946 7.9 years 7.9 years 2.9 % 2.9 % The following table presents the maturities of the Company's operating lease liabilities as of October 29, 2022: The following table presents the maturities of the Company's operating lease liabilities as of October 29, 2022: Fiscal year Fiscal year 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 Thereafter Thereafter Total future minimum operating lease payments Total future minimum operating lease payments Less: imputed interest Less: imputed interest Present value of operating lease liabilities Present value of operating lease liabilities $ $ $ $ The following table presents the future minimum cash receipts as a result of subleases as of October 29, 2022: The following table presents the future minimum cash receipts as a result of subleases as of October 29, 2022: Fiscal year Fiscal year 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 Thereafter Thereafter Total future minimum cash receipts Total future minimum cash receipts $ $ $ $ 31,199 31,199 68,433 68,433 63,065 63,065 59,156 59,156 54,027 54,027 178,663 178,663 454,543 454,543 (63,636) (63,636) 390,907 390,907 1,928 1,928 12,664 12,664 13,843 13,843 14,259 14,259 14,687 14,687 42,734 42,734 100,115 100,115 73 73 74 74 10. Commitments and Contingencies 10. Commitments and Contingencies From time to time, in the ordinary course of the Company’s business, various claims, charges and litigation are asserted From time to time, in the ordinary course of the Company’s business, various claims, charges and litigation are asserted or commenced against the Company arising from, or related to, among other things, contractual matters, acquisitions, patents, or commenced against the Company arising from, or related to, among other things, contractual matters, acquisitions, patents, trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employment benefits. trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employment benefits. As to such claims and litigation, the Company can give no assurance that it will prevail. As to such claims and litigation, the Company can give no assurance that it will prevail. On March 17, 2022, Walter E. Ryan and Ryan Asset Management, LLC, purported stockholders of Maxim, filed a On March 17, 2022, Walter E. Ryan and Ryan Asset Management, LLC, purported stockholders of Maxim, filed a putative class action in the Court of Chancery of the State of Delaware (C.A. No. 2022—0255) against the Company and the putative class action in the Court of Chancery of the State of Delaware (C.A. No. 2022—0255) against the Company and the former directors of Maxim. The complaint alleges breach of fiduciary duties by the individual defendants in connection with former directors of Maxim. The complaint alleges breach of fiduciary duties by the individual defendants in connection with Maxim’s agreement, as part of the merger negotiations with the Company, to suspend Maxim dividends for up to four quarters Maxim’s agreement, as part of the merger negotiations with the Company, to suspend Maxim dividends for up to four quarters prior to the closing of the Acquisition. The complaint further alleges that the Company aided and abetted that alleged breach of prior to the closing of the Acquisition. The complaint further alleges that the Company aided and abetted that alleged breach of fiduciary duties. The plaintiffs seek damages in an amount to be determined at trial, plaintiffs’ costs and disbursements, fiduciary duties. The plaintiffs seek damages in an amount to be determined at trial, plaintiffs’ costs and disbursements, including reasonable attorneys’ and experts’ fees, costs and other expenses. The Company believes that it and the other including reasonable attorneys’ and experts’ fees, costs and other expenses. The Company believes that it and the other outcome of this matter or determine an estimate, or a range of estimates, of potential losses, if any. outcome of this matter or determine an estimate, or a range of estimates, of potential losses, if any. The Company has a supplier commitment of approximately $428.4 million for the purchase of materials and supplies in The Company has a supplier commitment of approximately $428.4 million for the purchase of materials and supplies in advance or with minimum purchase quantities through 2031. advance or with minimum purchase quantities through 2031. 11. 11. Retirement Plans Retirement Plans The Company and its subsidiaries have various savings and retirement plans covering substantially all employees. The Company and its subsidiaries have various savings and retirement plans covering substantially all employees. The Company maintains a defined contribution plan for the benefit of its eligible U.S. employees. This plan provides for The Company maintains a defined contribution plan for the benefit of its eligible U.S. employees. This plan provides for Company contributions of up to 5% of each participant’s total eligible compensation. In addition, the Company contributes an Company contributions of up to 5% of each participant’s total eligible compensation. In addition, the Company contributes an amount equal to each participant’s pre-tax contribution, if any, up to a maximum of 3% of each participant’s total eligible amount equal to each participant’s pre-tax contribution, if any, up to a maximum of 3% of each participant’s total eligible compensation. The total expense related to the defined contribution plans for all eligible U.S. employees was $65.2 million in compensation. The total expense related to the defined contribution plans for all eligible U.S. employees was $65.2 million in fiscal 2022, $52.1 million in fiscal 2021 and $48.7 million in fiscal 2020. fiscal 2022, $52.1 million in fiscal 2021 and $48.7 million in fiscal 2020. Non-Qualified Deferred Compensation Plan Non-Qualified Deferred Compensation Plan The Deferred Compensation Plan (DCP) allows certain members of management and other highly-compensated The Deferred Compensation Plan (DCP) allows certain members of management and other highly-compensated employees and non-employee directors to defer receipt of all or any portion of their compensation. The DCP was established to employees and non-employee directors to defer receipt of all or any portion of their compensation. The DCP was established to provide participants with the opportunity to defer receiving all or a portion of their compensation, which includes salary, bonus, provide participants with the opportunity to defer receiving all or a portion of their compensation, which includes salary, bonus, commissions and director fees. Under the DCP, the Company provides all participants (other than non-employee directors) with commissions and director fees. Under the DCP, the Company provides all participants (other than non-employee directors) with Company contributions equal to 8% of eligible deferred contributions. The DCP is a non-qualified plan that is maintained in a Company contributions equal to 8% of eligible deferred contributions. The DCP is a non-qualified plan that is maintained in a rabbi trust. The fair value of the investments held in the rabbi trust are included within other investments, with the current rabbi trust. The fair value of the investments held in the rabbi trust are included within other investments, with the current portion of the investment included in prepaid expenses and other current assets in the Consolidated Balance Sheets. See portion of the investment included in prepaid expenses and other current assets in the Consolidated Balance Sheets. See Note 2j, Fair Value, of the Notes to Consolidated Financial Statements for further information on these investments. The Note 2j, Fair Value, of the Notes to Consolidated Financial Statements for further information on these investments. The deferred compensation obligation represents DCP participant accumulated deferrals and earnings thereon since the inception of deferred compensation obligation represents DCP participant accumulated deferrals and earnings thereon since the inception of the DCP net of withdrawals. The deferred compensation obligation is included within other non-current liabilities, with the the DCP net of withdrawals. The deferred compensation obligation is included within other non-current liabilities, with the current portion of the obligation in accrued liabilities in the Consolidated Balance Sheets. The Company’s liability under the current portion of the obligation in accrued liabilities in the Consolidated Balance Sheets. The Company’s liability under the DCP is an unsecured general obligation of the Company. DCP is an unsecured general obligation of the Company. Defined Benefit Pension and Post Retirement Benefit Plans Defined Benefit Pension and Post Retirement Benefit Plans The Company also has various defined benefit pension and other retirement plans for certain non-U.S. employees that are The Company also has various defined benefit pension and other retirement plans for certain non-U.S. employees that are consistent with local statutory requirements and practices. The total expense related to the various defined benefit pension, consistent with local statutory requirements and practices. The total expense related to the various defined benefit pension, contribution and other retirement plans for certain non-U.S. employees was $51.4 million in fiscal 2022, $45.9 million in fiscal contribution and other retirement plans for certain non-U.S. employees was $51.4 million in fiscal 2022, $45.9 million in fiscal 2021 and $37.6 million in fiscal 2020. 2021 and $37.6 million in fiscal 2020. The Company’s funding policy for its foreign defined benefit pension plans is consistent with the local requirements of The Company’s funding policy for its foreign defined benefit pension plans is consistent with the local requirements of each country. The plans’ assets consist primarily of U.S. and non-U.S. equity securities, bonds, property and cash. The each country. The plans’ assets consist primarily of U.S. and non-U.S. equity securities, bonds, property and cash. The Company has elected to measure defined benefit plan assets and obligations as of October 31, which is the month-end that is Company has elected to measure defined benefit plan assets and obligations as of October 31, which is the month-end that is closest to its fiscal year-ends, which were October 29, 2022 for fiscal 2022 and October 30, 2021 for fiscal 2021. closest to its fiscal year-ends, which were October 29, 2022 for fiscal 2022 and October 30, 2021 for fiscal 2021. As a result of the Acquisition, the Company acquired a postretirement plan that provides postretirement medical expenses As a result of the Acquisition, the Company acquired a postretirement plan that provides postretirement medical expenses to certain former employees of a Maxim acquired company and certain former Maxim executives in the U.S. to certain former employees of a Maxim acquired company and certain former Maxim executives in the U.S. components, which are accounted for as a single lease component. Non-lease components may include real estate taxes, components, which are accounted for as a single lease component. Non-lease components may include real estate taxes, insurance, maintenance, parking and other operating costs. If these costs are variable costs they are not included in the insurance, maintenance, parking and other operating costs. If these costs are variable costs they are not included in the measurement of the right-of-use assets and lease liabilities, but are expensed when the event determining the amount of variable measurement of the right-of-use assets and lease liabilities, but are expensed when the event determining the amount of variable consideration to be paid occurs. The Company’s leases have remaining lease terms of less than one year to approximately consideration to be paid occurs. The Company’s leases have remaining lease terms of less than one year to approximately twenty-three years, some of which may include options to extend the initial term of the lease. These options are included in twenty-three years, some of which may include options to extend the initial term of the lease. These options are included in determining the initial lease term at lease commencement only if the Company is reasonably certain to exercise the option. determining the initial lease term at lease commencement only if the Company is reasonably certain to exercise the option. Lease costs are recognized on a straight-line basis as lease expense over the lease term. For leases with terms of twelve months Lease costs are recognized on a straight-line basis as lease expense over the lease term. For leases with terms of twelve months or less the Company recognizes the related lease payments as expense either on a straight-line basis over the lease term or as or less the Company recognizes the related lease payments as expense either on a straight-line basis over the lease term or as incurred depending on whether the lease payments are fixed or variable. The Company subleases certain properties that are not incurred depending on whether the lease payments are fixed or variable. The Company subleases certain properties that are not used in its core business operations (See Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements). used in its core business operations (See Note 5, Special Charges, Net, of the Notes to Consolidated Financial Statements). Sublease income was not significant for the periods presented. Sublease income was not significant for the periods presented. The following table presents supplemental balance sheet information related to the Company's operating leases: The following table presents supplemental balance sheet information related to the Company's operating leases: October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Operating lease right-of-use assets in Other assets Operating lease right-of-use assets in Other assets 262,997 262,997 $ $ 279,542 279,542 Operating lease liabilities in Accrued liabilities Operating lease liabilities in Accrued liabilities Operating lease liabilities in Other non-current liabilities Operating lease liabilities in Other non-current liabilities Details of the Company's operating leases are as follows: Details of the Company's operating leases are as follows: Cash paid for amounts included in the measurement of operating lease liabilities Cash paid for amounts included in the measurement of operating lease liabilities Operating cash flows from operating leases Operating cash flows from operating leases Lease assets obtained in exchange for new lease liabilities Lease assets obtained in exchange for new lease liabilities Weighted average remaining lease term Weighted average remaining lease term Weighted average discount rate Weighted average discount rate October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 60,660 $ 60,660 $ 50,799 50,799 61,915 $ 61,915 $ 107,631 $ 107,631 $ 7.6 years 7.6 years 3.3 % 3.3 % 53,724 53,724 25,946 25,946 7.9 years 7.9 years 2.9 % 2.9 % The following table presents the maturities of the Company's operating lease liabilities as of October 29, 2022: The following table presents the maturities of the Company's operating lease liabilities as of October 29, 2022: $ $ $ $ $ $ $ $ $ $ $ $ Total future minimum operating lease payments Total future minimum operating lease payments Less: imputed interest Less: imputed interest Present value of operating lease liabilities Present value of operating lease liabilities The following table presents the future minimum cash receipts as a result of subleases as of October 29, 2022: The following table presents the future minimum cash receipts as a result of subleases as of October 29, 2022: Assets Assets Liabilities Liabilities Lease expense Lease expense Fiscal year Fiscal year 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 Thereafter Thereafter Fiscal year Fiscal year 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 Thereafter Thereafter Total future minimum cash receipts Total future minimum cash receipts $ $ $ $ $ $ $ $ 31,199 31,199 68,433 68,433 63,065 63,065 59,156 59,156 54,027 54,027 178,663 178,663 454,543 454,543 (63,636) (63,636) 390,907 390,907 1,928 1,928 12,664 12,664 13,843 13,843 14,259 14,259 14,687 14,687 42,734 42,734 100,115 100,115 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 10. Commitments and Contingencies 10. Commitments and Contingencies From time to time, in the ordinary course of the Company’s business, various claims, charges and litigation are asserted From time to time, in the ordinary course of the Company’s business, various claims, charges and litigation are asserted or commenced against the Company arising from, or related to, among other things, contractual matters, acquisitions, patents, or commenced against the Company arising from, or related to, among other things, contractual matters, acquisitions, patents, trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employment benefits. trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employment benefits. As to such claims and litigation, the Company can give no assurance that it will prevail. As to such claims and litigation, the Company can give no assurance that it will prevail. On March 17, 2022, Walter E. Ryan and Ryan Asset Management, LLC, purported stockholders of Maxim, filed a On March 17, 2022, Walter E. Ryan and Ryan Asset Management, LLC, purported stockholders of Maxim, filed a putative class action in the Court of Chancery of the State of Delaware (C.A. No. 2022—0255) against the Company and the putative class action in the Court of Chancery of the State of Delaware (C.A. No. 2022—0255) against the Company and the former directors of Maxim. The complaint alleges breach of fiduciary duties by the individual defendants in connection with former directors of Maxim. The complaint alleges breach of fiduciary duties by the individual defendants in connection with Maxim’s agreement, as part of the merger negotiations with the Company, to suspend Maxim dividends for up to four quarters Maxim’s agreement, as part of the merger negotiations with the Company, to suspend Maxim dividends for up to four quarters prior to the closing of the Acquisition. The complaint further alleges that the Company aided and abetted that alleged breach of prior to the closing of the Acquisition. The complaint further alleges that the Company aided and abetted that alleged breach of fiduciary duties. The plaintiffs seek damages in an amount to be determined at trial, plaintiffs’ costs and disbursements, fiduciary duties. The plaintiffs seek damages in an amount to be determined at trial, plaintiffs’ costs and disbursements, including reasonable attorneys’ and experts’ fees, costs and other expenses. The Company believes that it and the other including reasonable attorneys’ and experts’ fees, costs and other expenses. The Company believes that it and the other defendants have meritorious defenses to these allegations; however, the Company is currently unable to determine the ultimate defendants have meritorious defenses to these allegations; however, the Company is currently unable to determine the ultimate outcome of this matter or determine an estimate, or a range of estimates, of potential losses, if any. outcome of this matter or determine an estimate, or a range of estimates, of potential losses, if any. The Company has a supplier commitment of approximately $428.4 million for the purchase of materials and supplies in The Company has a supplier commitment of approximately $428.4 million for the purchase of materials and supplies in advance or with minimum purchase quantities through 2031. advance or with minimum purchase quantities through 2031. 53,628 53,628 337,279 337,279 $ $ $ $ 52,576 52,576 295,782 295,782 11. 11. Retirement Plans Retirement Plans The Company and its subsidiaries have various savings and retirement plans covering substantially all employees. The Company and its subsidiaries have various savings and retirement plans covering substantially all employees. Defined Contribution Plans Defined Contribution Plans The Company maintains a defined contribution plan for the benefit of its eligible U.S. employees. This plan provides for The Company maintains a defined contribution plan for the benefit of its eligible U.S. employees. This plan provides for Company contributions of up to 5% of each participant’s total eligible compensation. In addition, the Company contributes an Company contributions of up to 5% of each participant’s total eligible compensation. In addition, the Company contributes an amount equal to each participant’s pre-tax contribution, if any, up to a maximum of 3% of each participant’s total eligible amount equal to each participant’s pre-tax contribution, if any, up to a maximum of 3% of each participant’s total eligible compensation. The total expense related to the defined contribution plans for all eligible U.S. employees was $65.2 million in compensation. The total expense related to the defined contribution plans for all eligible U.S. employees was $65.2 million in fiscal 2022, $52.1 million in fiscal 2021 and $48.7 million in fiscal 2020. fiscal 2022, $52.1 million in fiscal 2021 and $48.7 million in fiscal 2020. Non-Qualified Deferred Compensation Plan Non-Qualified Deferred Compensation Plan The Deferred Compensation Plan (DCP) allows certain members of management and other highly-compensated The Deferred Compensation Plan (DCP) allows certain members of management and other highly-compensated employees and non-employee directors to defer receipt of all or any portion of their compensation. The DCP was established to employees and non-employee directors to defer receipt of all or any portion of their compensation. The DCP was established to provide participants with the opportunity to defer receiving all or a portion of their compensation, which includes salary, bonus, provide participants with the opportunity to defer receiving all or a portion of their compensation, which includes salary, bonus, commissions and director fees. Under the DCP, the Company provides all participants (other than non-employee directors) with commissions and director fees. Under the DCP, the Company provides all participants (other than non-employee directors) with Company contributions equal to 8% of eligible deferred contributions. The DCP is a non-qualified plan that is maintained in a Company contributions equal to 8% of eligible deferred contributions. The DCP is a non-qualified plan that is maintained in a rabbi trust. The fair value of the investments held in the rabbi trust are included within other investments, with the current rabbi trust. The fair value of the investments held in the rabbi trust are included within other investments, with the current portion of the investment included in prepaid expenses and other current assets in the Consolidated Balance Sheets. See portion of the investment included in prepaid expenses and other current assets in the Consolidated Balance Sheets. See Note 2j, Fair Value, of the Notes to Consolidated Financial Statements for further information on these investments. The Note 2j, Fair Value, of the Notes to Consolidated Financial Statements for further information on these investments. The deferred compensation obligation represents DCP participant accumulated deferrals and earnings thereon since the inception of deferred compensation obligation represents DCP participant accumulated deferrals and earnings thereon since the inception of the DCP net of withdrawals. The deferred compensation obligation is included within other non-current liabilities, with the the DCP net of withdrawals. The deferred compensation obligation is included within other non-current liabilities, with the current portion of the obligation in accrued liabilities in the Consolidated Balance Sheets. The Company’s liability under the current portion of the obligation in accrued liabilities in the Consolidated Balance Sheets. The Company’s liability under the DCP is an unsecured general obligation of the Company. DCP is an unsecured general obligation of the Company. Defined Benefit Pension and Post Retirement Benefit Plans Defined Benefit Pension and Post Retirement Benefit Plans The Company also has various defined benefit pension and other retirement plans for certain non-U.S. employees that are The Company also has various defined benefit pension and other retirement plans for certain non-U.S. employees that are consistent with local statutory requirements and practices. The total expense related to the various defined benefit pension, consistent with local statutory requirements and practices. The total expense related to the various defined benefit pension, contribution and other retirement plans for certain non-U.S. employees was $51.4 million in fiscal 2022, $45.9 million in fiscal contribution and other retirement plans for certain non-U.S. employees was $51.4 million in fiscal 2022, $45.9 million in fiscal 2021 and $37.6 million in fiscal 2020. 2021 and $37.6 million in fiscal 2020. The Company’s funding policy for its foreign defined benefit pension plans is consistent with the local requirements of The Company’s funding policy for its foreign defined benefit pension plans is consistent with the local requirements of each country. The plans’ assets consist primarily of U.S. and non-U.S. equity securities, bonds, property and cash. The each country. The plans’ assets consist primarily of U.S. and non-U.S. equity securities, bonds, property and cash. The Company has elected to measure defined benefit plan assets and obligations as of October 31, which is the month-end that is Company has elected to measure defined benefit plan assets and obligations as of October 31, which is the month-end that is closest to its fiscal year-ends, which were October 29, 2022 for fiscal 2022 and October 30, 2021 for fiscal 2021. closest to its fiscal year-ends, which were October 29, 2022 for fiscal 2022 and October 30, 2021 for fiscal 2021. As a result of the Acquisition, the Company acquired a postretirement plan that provides postretirement medical expenses As a result of the Acquisition, the Company acquired a postretirement plan that provides postretirement medical expenses to certain former employees of a Maxim acquired company and certain former Maxim executives in the U.S. to certain former employees of a Maxim acquired company and certain former Maxim executives in the U.S. 73 73 74 74 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Components of Net Periodic Benefit Cost Components of Net Periodic Benefit Cost Net annual periodic benefit cost of the Company’s pension and postretirement benefit plans for fiscal 2022, fiscal 2021 Net annual periodic benefit cost of the Company’s pension and postretirement benefit plans for fiscal 2022, fiscal 2021 and fiscal 2020 is presented in the following table: and fiscal 2020 is presented in the following table: Reconciliation of Amounts Recognized in the Statement of Financial Position Reconciliation of Amounts Recognized in the Statement of Financial Position Service cost Service cost Interest cost Interest cost Expected return on plan assets Expected return on plan assets Recognized actuarial loss Recognized actuarial loss Subtotal Subtotal Curtailment impact Curtailment impact Settlement impact Settlement impact Net periodic benefit cost Net periodic benefit cost 2022 2022 2021 2021 2020 2020 $ $ 10,914 $ 10,914 $ 9,207 $ 9,207 $ 6,148 6,148 4,071 4,071 8,587 8,587 3,917 3,917 (4,540) (4,540) (3,759) (3,759) (5,296) (5,296) 2,299 2,299 2,973 2,973 14,821 $ 14,821 $ 12,492 $ 12,492 $ — — (35) $ (35) $ — — (6) $ (6) $ 14,786 $ 14,786 $ 12,486 $ 12,486 $ $ $ $ $ $ $ 2,583 2,583 9,791 9,791 (203) (203) — — 9,588 9,588 The service cost component of net periodic benefit cost above is recorded in Cost of sales, Research and development, The service cost component of net periodic benefit cost above is recorded in Cost of sales, Research and development, Selling, marketing, general and administrative expenses within the Consolidated Statements of Income, while the remaining Selling, marketing, general and administrative expenses within the Consolidated Statements of Income, while the remaining components are recorded to Other, net. components are recorded to Other, net. Benefit Obligations and Plan Assets Benefit Obligations and Plan Assets Obligation and asset data of the Company’s pension and postretirement benefit plans at October 29, 2022 and October 30, Obligation and asset data of the Company’s pension and postretirement benefit plans at October 29, 2022 and October 30, 2021 is presented in the following table: 2021 is presented in the following table: Change in Benefit Obligation Change in Benefit Obligation Benefit obligation at beginning of year Benefit obligation at beginning of year Service cost Service cost Interest cost Interest cost Acquisition of Maxim benefit obligation Acquisition of Maxim benefit obligation Settlement Settlement Actuarial gain Actuarial gain Benefits paid Benefits paid Exchange rate adjustment Exchange rate adjustment Benefit obligation at end of year Benefit obligation at end of year Change in Plan Assets Change in Plan Assets Fair value of plan assets at beginning of year Fair value of plan assets at beginning of year Actual return on plan assets Actual return on plan assets Employer contributions Employer contributions Settlements Settlements Benefits paid Benefits paid Acquisitions Acquisitions Exchange rate adjustment Exchange rate adjustment Fair value of plan assets at end of year Fair value of plan assets at end of year Reconciliation of Funded Status Reconciliation of Funded Status Funded status Funded status Amounts Recognized in the Balance Sheet Amounts Recognized in the Balance Sheet Non-current assets Non-current assets Current liabilities Current liabilities Non-current liabilities Non-current liabilities Net amount recognized Net amount recognized $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2022 2022 2021 2021 242,593 $ 242,593 $ 10,914 10,914 6,148 6,148 — — (1,052) (1,052) (68,806) (68,806) (3,596) (3,596) (28,471) (28,471) 157,730 $ 157,730 $ 186,735 186,735 9,207 9,207 4,071 4,071 49,807 49,807 (885) (885) (4,005) (4,005) (3,983) (3,983) 1,646 1,646 242,593 242,593 128,283 $ 128,283 $ 107,505 107,505 (34,231) (34,231) 11,344 11,344 (1,052) (1,052) (3,596) (3,596) — — (16,719) (16,719) 10,637 10,637 11,035 11,035 (885) (885) (3,983) (3,983) 1,728 1,728 2,246 2,246 84,029 $ 84,029 $ 128,283 128,283 Discount rate Discount rate Rate of increase in compensation levels Rate of increase in compensation levels (73,701) $ (73,701) $ (114,310) (114,310) 1,185 $ 1,185 $ (2,638) $ (2,638) $ (72,248) (72,248) (73,701) $ (73,701) $ 1,709 1,709 (2,730) (2,730) (113,289) (113,289) (114,310) (114,310) Discount rate Discount rate Expected long-term return on plan assets Expected long-term return on plan assets Rate of increase in compensation levels Rate of increase in compensation levels Net annual periodic benefit cost was determined using the following weighted average assumptions: Net annual periodic benefit cost was determined using the following weighted average assumptions: Prior service credit Prior service credit Net loss Net loss Accumulated other comprehensive loss Accumulated other comprehensive loss Accumulated contributions less than net periodic benefit cost Accumulated contributions less than net periodic benefit cost Net amount recognized Net amount recognized Changes Recognized in Other Comprehensive Income (Loss) Changes Recognized in Other Comprehensive Income (Loss) (loss) (loss) Net gain/loss arising during the year Net gain/loss arising during the year Effect of exchange rates on amounts included in AOCI Effect of exchange rates on amounts included in AOCI Amounts recognized as a component of net periodic benefit cost Amounts recognized as a component of net periodic benefit cost Amortization or settlement recognition of net loss Amortization or settlement recognition of net loss Total recognized in other comprehensive gain/loss Total recognized in other comprehensive gain/loss Changes in plan assets and benefit obligations recognized in other comprehensive income Changes in plan assets and benefit obligations recognized in other comprehensive income Total recognized in net periodic cost and other comprehensive loss Total recognized in net periodic cost and other comprehensive loss Estimated amounts that will be amortized from AOCI over the next fiscal year Estimated amounts that will be amortized from AOCI over the next fiscal year Net loss Net loss The accumulated benefit obligation for the Company’s pension and postretirement benefit plans was $111.3 million and The accumulated benefit obligation for the Company’s pension and postretirement benefit plans was $111.3 million and $178.2 million at October 29, 2022 and October 30, 2021, respectively. $178.2 million at October 29, 2022 and October 30, 2021, respectively. Information relating to the Company’s pension and postretirement benefit plans with projected benefit obligations in Information relating to the Company’s pension and postretirement benefit plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets at October 29, 2022 and October 30, 2021 is excess of plan assets and accumulated benefit obligations in excess of plan assets at October 29, 2022 and October 30, 2021 is Plans with projected benefit obligations in excess of plan assets: Plans with projected benefit obligations in excess of plan assets: Plans with accumulated benefit obligations in excess of plan assets: Plans with accumulated benefit obligations in excess of plan assets: presented in the following table: presented in the following table: Projected benefit obligation Projected benefit obligation Fair value of plan assets Fair value of plan assets Projected benefit obligation Projected benefit obligation Accumulated benefit obligation Accumulated benefit obligation Fair value of plan assets Fair value of plan assets Assumptions Assumptions The range of assumptions used for the Company’s pension and postretirement benefit plans reflects the different The range of assumptions used for the Company’s pension and postretirement benefit plans reflects the different economic environments within the various countries as well as the differences in the attributes of the participants. economic environments within the various countries as well as the differences in the attributes of the participants. The projected benefit obligation was determined using the following weighted-average assumptions: The projected benefit obligation was determined using the following weighted-average assumptions: 2022 2022 2021 2021 (29) (29) (5,302) (5,302) (5,331) (5,331) (68,370) (68,370) (38) (38) (43,662) (43,662) (43,700) (43,700) (70,610) (70,610) $ $ (73,701) $ (73,701) $ (114,310) (114,310) $ $ (31,223) $ (31,223) $ (10,884) (10,884) (4,882) (4,882) 1,565 1,565 (2,264) (2,264) (2,967) (2,967) (38,369) $ (38,369) $ (12,286) (12,286) (23,583) $ (23,583) $ 200 200 (1,067) $ (1,067) $ (2,413) (2,413) 2022 2022 2021 2021 120,763 $ 120,763 $ 161,803 161,803 45,879 $ 45,879 $ 45,784 45,784 62,980 $ 62,980 $ 49,429 $ 49,429 $ 2,573 $ 2,573 $ 94,038 94,038 77,337 77,337 3,544 3,544 2022 2022 2021 2021 5.44 % 5.44 % 4.08 % 4.08 % 2.77 % 2.77 % 3.70 % 3.70 % 2022 2022 2021 2021 2.77 % 2.77 % 3.73 % 3.73 % 3.70 % 3.70 % 2.15 % 2.15 % 3.32 % 3.32 % 3.19 % 3.19 % $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 75 75 76 76 Components of Net Periodic Benefit Cost Components of Net Periodic Benefit Cost Service cost Service cost Interest cost Interest cost Expected return on plan assets Expected return on plan assets Recognized actuarial loss Recognized actuarial loss Subtotal Subtotal Curtailment impact Curtailment impact Settlement impact Settlement impact Net periodic benefit cost Net periodic benefit cost components are recorded to Other, net. components are recorded to Other, net. Benefit Obligations and Plan Assets Benefit Obligations and Plan Assets 2021 is presented in the following table: 2021 is presented in the following table: Change in Benefit Obligation Change in Benefit Obligation Benefit obligation at beginning of year Benefit obligation at beginning of year Acquisition of Maxim benefit obligation Acquisition of Maxim benefit obligation Service cost Service cost Interest cost Interest cost Settlement Settlement Actuarial gain Actuarial gain Benefits paid Benefits paid Settlements Settlements Benefits paid Benefits paid Acquisitions Acquisitions Exchange rate adjustment Exchange rate adjustment Benefit obligation at end of year Benefit obligation at end of year Change in Plan Assets Change in Plan Assets Fair value of plan assets at beginning of year Fair value of plan assets at beginning of year Actual return on plan assets Actual return on plan assets Employer contributions Employer contributions Exchange rate adjustment Exchange rate adjustment Fair value of plan assets at end of year Fair value of plan assets at end of year Reconciliation of Funded Status Reconciliation of Funded Status Funded status Funded status Amounts Recognized in the Balance Sheet Amounts Recognized in the Balance Sheet Non-current assets Non-current assets Current liabilities Current liabilities Non-current liabilities Non-current liabilities Net amount recognized Net amount recognized 2022 2022 2021 2021 2020 2020 $ $ 10,914 $ 10,914 $ 9,207 $ 9,207 $ 6,148 6,148 4,071 4,071 2,299 2,299 2,973 2,973 14,821 $ 14,821 $ 12,492 $ 12,492 $ — — (35) $ (35) $ — — (6) $ (6) $ 14,786 $ 14,786 $ 12,486 $ 12,486 $ $ $ $ $ $ $ 8,587 8,587 3,917 3,917 2,583 2,583 9,791 9,791 (203) (203) — — 9,588 9,588 9,207 9,207 4,071 4,071 49,807 49,807 (885) (885) (4,005) (4,005) (3,983) (3,983) 1,646 1,646 10,637 10,637 11,035 11,035 (885) (885) (3,983) (3,983) 1,728 1,728 2,246 2,246 2022 2022 2021 2021 $ $ 242,593 $ 242,593 $ 186,735 186,735 10,914 10,914 6,148 6,148 — — (1,052) (1,052) (68,806) (68,806) (3,596) (3,596) (28,471) (28,471) (34,231) (34,231) 11,344 11,344 (1,052) (1,052) (3,596) (3,596) — — (16,719) (16,719) 157,730 $ 157,730 $ 242,593 242,593 128,283 $ 128,283 $ 107,505 107,505 (73,701) $ (73,701) $ (114,310) (114,310) 1,185 $ 1,185 $ (2,638) $ (2,638) $ 1,709 1,709 (2,730) (2,730) (72,248) (72,248) (113,289) (113,289) (73,701) $ (73,701) $ (114,310) (114,310) $ $ $ $ $ $ $ $ $ $ $ $ $ $ ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Net annual periodic benefit cost of the Company’s pension and postretirement benefit plans for fiscal 2022, fiscal 2021 Net annual periodic benefit cost of the Company’s pension and postretirement benefit plans for fiscal 2022, fiscal 2021 and fiscal 2020 is presented in the following table: and fiscal 2020 is presented in the following table: Reconciliation of Amounts Recognized in the Statement of Financial Position Reconciliation of Amounts Recognized in the Statement of Financial Position (4,540) (4,540) (3,759) (3,759) (5,296) (5,296) Accumulated contributions less than net periodic benefit cost Accumulated contributions less than net periodic benefit cost Prior service credit Prior service credit Net loss Net loss Accumulated other comprehensive loss Accumulated other comprehensive loss The service cost component of net periodic benefit cost above is recorded in Cost of sales, Research and development, The service cost component of net periodic benefit cost above is recorded in Cost of sales, Research and development, Selling, marketing, general and administrative expenses within the Consolidated Statements of Income, while the remaining Selling, marketing, general and administrative expenses within the Consolidated Statements of Income, while the remaining Net amount recognized Net amount recognized Changes Recognized in Other Comprehensive Income (Loss) Changes Recognized in Other Comprehensive Income (Loss) Changes in plan assets and benefit obligations recognized in other comprehensive income Changes in plan assets and benefit obligations recognized in other comprehensive income (loss) (loss) Net gain/loss arising during the year Net gain/loss arising during the year Effect of exchange rates on amounts included in AOCI Effect of exchange rates on amounts included in AOCI Amounts recognized as a component of net periodic benefit cost Amounts recognized as a component of net periodic benefit cost Amortization or settlement recognition of net loss Amortization or settlement recognition of net loss Total recognized in other comprehensive gain/loss Total recognized in other comprehensive gain/loss Total recognized in net periodic cost and other comprehensive loss Total recognized in net periodic cost and other comprehensive loss Obligation and asset data of the Company’s pension and postretirement benefit plans at October 29, 2022 and October 30, Obligation and asset data of the Company’s pension and postretirement benefit plans at October 29, 2022 and October 30, Estimated amounts that will be amortized from AOCI over the next fiscal year Estimated amounts that will be amortized from AOCI over the next fiscal year Net loss Net loss 2022 2022 2021 2021 (29) (29) (5,302) (5,302) (5,331) (5,331) (68,370) (68,370) (38) (38) (43,662) (43,662) (43,700) (43,700) (70,610) (70,610) $ $ (73,701) $ (73,701) $ (114,310) (114,310) $ $ (31,223) $ (31,223) $ (10,884) (10,884) (4,882) (4,882) 1,565 1,565 (2,264) (2,264) (38,369) $ (38,369) $ (23,583) $ (23,583) $ (2,967) (2,967) (12,286) (12,286) 200 200 (1,067) $ (1,067) $ (2,413) (2,413) $ $ $ $ $ $ The accumulated benefit obligation for the Company’s pension and postretirement benefit plans was $111.3 million and The accumulated benefit obligation for the Company’s pension and postretirement benefit plans was $111.3 million and $178.2 million at October 29, 2022 and October 30, 2021, respectively. $178.2 million at October 29, 2022 and October 30, 2021, respectively. Information relating to the Company’s pension and postretirement benefit plans with projected benefit obligations in Information relating to the Company’s pension and postretirement benefit plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets at October 29, 2022 and October 30, 2021 is excess of plan assets and accumulated benefit obligations in excess of plan assets at October 29, 2022 and October 30, 2021 is presented in the following table: presented in the following table: Plans with projected benefit obligations in excess of plan assets: Plans with projected benefit obligations in excess of plan assets: Projected benefit obligation Projected benefit obligation Fair value of plan assets Fair value of plan assets Plans with accumulated benefit obligations in excess of plan assets: Plans with accumulated benefit obligations in excess of plan assets: Projected benefit obligation Projected benefit obligation Accumulated benefit obligation Accumulated benefit obligation Fair value of plan assets Fair value of plan assets Assumptions Assumptions 2022 2022 2021 2021 $ $ $ $ $ $ $ $ $ $ 120,763 $ 120,763 $ 45,879 $ 45,879 $ 161,803 161,803 45,784 45,784 62,980 $ 62,980 $ 49,429 $ 49,429 $ 2,573 $ 2,573 $ 94,038 94,038 77,337 77,337 3,544 3,544 The range of assumptions used for the Company’s pension and postretirement benefit plans reflects the different The range of assumptions used for the Company’s pension and postretirement benefit plans reflects the different economic environments within the various countries as well as the differences in the attributes of the participants. economic environments within the various countries as well as the differences in the attributes of the participants. The projected benefit obligation was determined using the following weighted-average assumptions: The projected benefit obligation was determined using the following weighted-average assumptions: 84,029 $ 84,029 $ 128,283 128,283 Discount rate Discount rate Rate of increase in compensation levels Rate of increase in compensation levels 2022 2022 2021 2021 5.44 % 5.44 % 4.08 % 4.08 % 2.77 % 2.77 % 3.70 % 3.70 % Net annual periodic benefit cost was determined using the following weighted average assumptions: Net annual periodic benefit cost was determined using the following weighted average assumptions: Discount rate Discount rate Expected long-term return on plan assets Expected long-term return on plan assets Rate of increase in compensation levels Rate of increase in compensation levels 2022 2022 2021 2021 2.77 % 2.77 % 3.73 % 3.73 % 3.70 % 3.70 % 2.15 % 2.15 % 3.32 % 3.32 % 3.19 % 3.19 % 75 75 76 76 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The expected long-term rate of return on assets is a weighted-average of the long-term rates of return selected for the The expected long-term rate of return on assets is a weighted-average of the long-term rates of return selected for the Estimated future cash flows Estimated future cash flows Expected fiscal 2023 Company contributions and estimated future benefit payments are as follows: Expected fiscal 2023 Company contributions and estimated future benefit payments are as follows: various countries where the Company has funded pension plans. The expected long-term rate of return on assets assumption is various countries where the Company has funded pension plans. The expected long-term rate of return on assets assumption is selected based on the facts and circumstances that exist as of the measurement date and the specific portfolio mix of plan assets. selected based on the facts and circumstances that exist as of the measurement date and the specific portfolio mix of plan assets. Management, in conjunction with its actuaries, reviewed anticipated future long-term performance of individual asset categories Management, in conjunction with its actuaries, reviewed anticipated future long-term performance of individual asset categories and considered the asset allocation strategy adopted by the Company and/or the trustees of the plans. While the review and considered the asset allocation strategy adopted by the Company and/or the trustees of the plans. While the review considered recent fund performance and historical returns, the assumption is primarily a long-term prospective rate. considered recent fund performance and historical returns, the assumption is primarily a long-term prospective rate. The Company’s investment strategy is based on an expectation that equity securities will outperform debt securities over The Company’s investment strategy is based on an expectation that equity securities will outperform debt securities over the long term. Investments within each asset class are diversified to reduce the impact of losses in single investments. The use the long term. Investments within each asset class are diversified to reduce the impact of losses in single investments. The use of derivative instruments is permitted where appropriate and necessary to achieve overall investment policy objectives and asset of derivative instruments is permitted where appropriate and necessary to achieve overall investment policy objectives and asset class targets. The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for each class targets. The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for each significant asset class to obtain a prudent balance between return and risk. The interaction between plan assets and benefit significant asset class to obtain a prudent balance between return and risk. The interaction between plan assets and benefit obligations is periodically studied by the Company and its actuaries to assist in the establishment of strategic asset allocation obligations is periodically studied by the Company and its actuaries to assist in the establishment of strategic asset allocation targets. targets. Fair value of plan assets Fair value of plan assets The following table presents plan assets measured at fair value on a recurring basis by investment categories as of The following table presents plan assets measured at fair value on a recurring basis by investment categories as of October 29, 2022 and October 30, 2021 using the same three-level hierarchy described in Note 2j, Fair Value, of the Notes to October 29, 2022 and October 30, 2021 using the same three-level hierarchy described in Note 2j, Fair Value, of the Notes to Consolidated Financial Statements: Consolidated Financial Statements: October 29, 2022 October 29, 2022 Fair Value Measurement at Fair Value Measurement at Reporting Date Using: Reporting Date Using: Quoted Prices Quoted Prices in Active in Active Markets for Markets for Identical Assets Identical Assets (Level 1) (Level 1) Significant Significant Other Other Observable Observable Inputs Inputs (Level 2) (Level 2) October 30, 2021 October 30, 2021 Fair Value Measurement at Fair Value Measurement at Reporting Date Using: Reporting Date Using: Quoted Prices Quoted Prices in Active in Active Markets for Markets for Identical Assets Identical Assets (Level 1) (Level 1) Significant Significant Other Other Observable Observable Inputs Inputs (Level 2) (Level 2) Total Total Total Total $ $ — $ — $ 3,625 3,625 $ $ 3,625 $ 3,625 $ — $ — $ 5,874 $ 5,874 $ 5,874 5,874 6,700 6,700 — — — — — — 3,190 3,190 7,767 7,767 28,214 28,214 4,773 4,773 29,760 29,760 — — 14,467 14,467 28,214 28,214 4,773 4,773 29,760 29,760 3,190 3,190 8,010 8,010 — — — — — — 2,018 2,018 24,613 24,613 29,957 29,957 5,431 5,431 52,380 52,380 — — 32,623 32,623 29,957 29,957 5,431 5,431 52,380 52,380 2,018 2,018 Unit trust funds(1) Unit trust funds(1) Equities(1) Equities(1) Fixed income securities(2) Fixed income securities(2) Property (3) Property (3) Investment Funds (4) Investment Funds (4) Cash and cash equivalents Cash and cash equivalents Total assets measured at fair value $ Total assets measured at fair value $ 9,890 $ 9,890 $ 74,139 74,139 $ $ 84,029 $ 84,029 $ 10,028 $ 10,028 $ 118,255 $ 118,255 $ 128,283 128,283 _______________________________________ _______________________________________ (1) The majority of the assets in these categories are invested in a mix of equities, including those from North America, Europe and Asia. (1) The majority of the assets in these categories are invested in a mix of equities, including those from North America, Europe and Asia. The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to value the fund. Due to the nature of the underlying assets of these funds, changes in market conditions and the economic environment value the fund. Due to the nature of the underlying assets of these funds, changes in market conditions and the economic environment may significantly impact the net asset value of these investments and, consequently, the fair value of the investments. These investments may significantly impact the net asset value of these investments and, consequently, the fair value of the investments. These investments are redeemable at net asset value to the extent provided in the documentation governing the investments. However, these redemption are redeemable at net asset value to the extent provided in the documentation governing the investments. However, these redemption rights may be restricted in accordance with governing documents. Publicly traded securities are valued at the last trade or closing price rights may be restricted in accordance with governing documents. Publicly traded securities are valued at the last trade or closing price reported in the active market in which the individual securities are traded. reported in the active market in which the individual securities are traded. (2) Consists of funds primarily concentrated in non-U.S. debt instruments. The funds are valued using the net asset value method in which (2) Consists of funds primarily concentrated in non-U.S. debt instruments. The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to value the fund. an average of the market prices for underlying investments is used to value the fund. (3) Consists of funds that primarily invest in global real estate and infrastructure funds. The funds are valued using the net asset value (3) Consists of funds that primarily invest in global real estate and infrastructure funds. The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to value the fund. method in which an average of the market prices for underlying investments is used to value the fund. (4) Consists of liability driven investment funds that may hold a range of low-risk hedging instruments including but not limited to (4) Consists of liability driven investment funds that may hold a range of low-risk hedging instruments including but not limited to government bonds, interest rate and inflation swaps, physical inflation-linked and nominal gilts, synthetic gilts, cash and money market government bonds, interest rate and inflation swaps, physical inflation-linked and nominal gilts, synthetic gilts, cash and money market instruments. The investment funds are valued at the closing price reported if traded on an active market or at yields currently available instruments. The investment funds are valued at the closing price reported if traded on an active market or at yields currently available on comparable securities of issuers with similar credit ratings. on comparable securities of issuers with similar credit ratings. Expected Company Contributions Expected Company Contributions Expected Benefit Payments Expected Benefit Payments 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 2028 2028 2029 through 2033 2029 through 2033 12. 12. Income Taxes Income Taxes U.S. federal statutory tax rate U.S. federal statutory tax rate Income tax provision reconciliation: Income tax provision reconciliation: Tax at statutory rate Tax at statutory rate Net foreign income subject to lower tax rate Net foreign income subject to lower tax rate State income taxes, net of federal benefit State income taxes, net of federal benefit Valuation allowance Valuation allowance Federal research and development tax credits Federal research and development tax credits Change in uncertain tax positions Change in uncertain tax positions Amortization of purchased intangibles Amortization of purchased intangibles Acquisition and integration costs Acquisition and integration costs U.S. effects of international operations U.S. effects of international operations Windfalls (under ASU 2016-09) Windfalls (under ASU 2016-09) Intra-entity transfer of intangible assets Intra-entity transfer of intangible assets Other, net Other, net Income before income taxes (1) Income before income taxes (1) Domestic Domestic Foreign Foreign Income before income taxes Income before income taxes _______________________________________ _______________________________________ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 10,579 10,579 6,575 6,575 5,506 5,506 5,789 5,789 6,524 6,524 7,060 7,060 48,355 48,355 2022 2022 2021 2021 2020 2020 21.0 % 21.0 % 21.0 % 21.0 % 21.0 % 21.0 % $ $ 650,737 650,737 $ $ 279,030 279,030 $ $ 275,439 275,439 (358,725) (358,725) (227,470) (227,470) (225,937) (225,937) (15,615) (15,615) 29,737 29,737 (58,625) (58,625) 19,394 19,394 142,375 142,375 — — (47,665) (47,665) (16,717) (16,717) — — 5,292 5,292 (28,052) (28,052) 13,263 13,263 (37,902) (37,902) (1,061) (1,061) 146,094 146,094 11,367 11,367 (24,624) (24,624) (26,365) (26,365) (188,804) (188,804) 22,816 22,816 (23,537) (23,537) 13,655 13,655 (31,055) (31,055) (13,304) (13,304) 101,906 101,906 1,714 1,714 11,903 11,903 (16,240) (16,240) — — (3,688) (3,688) 2022 2022 2021 2021 2020 2020 $ $ 958,465 $ 958,465 $ 508,100 $ 508,100 $ 2,140,284 2,140,284 820,614 820,614 355,442 355,442 956,175 956,175 $ $ 3,098,749 $ 3,098,749 $ 1,328,714 $ 1,328,714 $ 1,311,617 1,311,617 Total income tax provision (benefit) Total income tax provision (benefit) $ $ 350,188 350,188 $ $ (61,708) (61,708) $ $ 90,856 90,856 Income before income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 includes the following components: Income before income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 includes the following components: (1) (1) Income before income taxes reflects deemed intercompany royalties in all periods presented. Income before income taxes reflects deemed intercompany royalties in all periods presented. The Company's effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world The Company's effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world where the Company's income is earned. The reconciliation of income tax computed at the U.S. federal statutory rates to income where the Company's income is earned. The reconciliation of income tax computed at the U.S. federal statutory rates to income tax expense for fiscal 2022, fiscal 2021 and fiscal 2020 is as follows: tax expense for fiscal 2022, fiscal 2021 and fiscal 2020 is as follows: 77 77 78 78 various countries where the Company has funded pension plans. The expected long-term rate of return on assets assumption is various countries where the Company has funded pension plans. The expected long-term rate of return on assets assumption is selected based on the facts and circumstances that exist as of the measurement date and the specific portfolio mix of plan assets. selected based on the facts and circumstances that exist as of the measurement date and the specific portfolio mix of plan assets. Management, in conjunction with its actuaries, reviewed anticipated future long-term performance of individual asset categories Management, in conjunction with its actuaries, reviewed anticipated future long-term performance of individual asset categories and considered the asset allocation strategy adopted by the Company and/or the trustees of the plans. While the review and considered the asset allocation strategy adopted by the Company and/or the trustees of the plans. While the review considered recent fund performance and historical returns, the assumption is primarily a long-term prospective rate. considered recent fund performance and historical returns, the assumption is primarily a long-term prospective rate. The Company’s investment strategy is based on an expectation that equity securities will outperform debt securities over The Company’s investment strategy is based on an expectation that equity securities will outperform debt securities over the long term. Investments within each asset class are diversified to reduce the impact of losses in single investments. The use the long term. Investments within each asset class are diversified to reduce the impact of losses in single investments. The use of derivative instruments is permitted where appropriate and necessary to achieve overall investment policy objectives and asset of derivative instruments is permitted where appropriate and necessary to achieve overall investment policy objectives and asset class targets. The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for each class targets. The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for each significant asset class to obtain a prudent balance between return and risk. The interaction between plan assets and benefit significant asset class to obtain a prudent balance between return and risk. The interaction between plan assets and benefit obligations is periodically studied by the Company and its actuaries to assist in the establishment of strategic asset allocation obligations is periodically studied by the Company and its actuaries to assist in the establishment of strategic asset allocation targets. targets. Fair value of plan assets Fair value of plan assets The following table presents plan assets measured at fair value on a recurring basis by investment categories as of The following table presents plan assets measured at fair value on a recurring basis by investment categories as of October 29, 2022 and October 30, 2021 using the same three-level hierarchy described in Note 2j, Fair Value, of the Notes to October 29, 2022 and October 30, 2021 using the same three-level hierarchy described in Note 2j, Fair Value, of the Notes to Consolidated Financial Statements: Consolidated Financial Statements: October 29, 2022 October 29, 2022 Fair Value Measurement at Fair Value Measurement at Reporting Date Using: Reporting Date Using: Quoted Prices Quoted Prices in Active in Active Markets for Markets for Identical Assets Identical Assets (Level 1) (Level 1) Significant Significant Other Other Observable Observable Inputs Inputs (Level 2) (Level 2) October 30, 2021 October 30, 2021 Fair Value Measurement at Fair Value Measurement at Reporting Date Using: Reporting Date Using: Quoted Prices Quoted Prices in Active in Active Markets for Markets for Identical Assets Identical Assets (Level 1) (Level 1) Significant Significant Other Other Observable Observable Inputs Inputs (Level 2) (Level 2) Unit trust funds(1) Unit trust funds(1) Equities(1) Equities(1) Fixed income securities(2) Fixed income securities(2) Property (3) Property (3) Investment Funds (4) Investment Funds (4) Cash and cash equivalents Cash and cash equivalents $ $ — $ — $ 3,625 3,625 $ $ 3,625 $ 3,625 $ — $ — $ 5,874 $ 5,874 $ 5,874 5,874 6,700 6,700 — — — — — — 3,190 3,190 7,767 7,767 28,214 28,214 4,773 4,773 29,760 29,760 — — Total Total 14,467 14,467 28,214 28,214 4,773 4,773 29,760 29,760 3,190 3,190 8,010 8,010 — — — — — — 2,018 2,018 24,613 24,613 29,957 29,957 5,431 5,431 52,380 52,380 — — Total Total 32,623 32,623 29,957 29,957 5,431 5,431 52,380 52,380 2,018 2,018 Total assets measured at fair value $ Total assets measured at fair value $ 9,890 $ 9,890 $ 74,139 74,139 $ $ 84,029 $ 84,029 $ 10,028 $ 10,028 $ 118,255 $ 118,255 $ 128,283 128,283 _______________________________________ _______________________________________ (1) The majority of the assets in these categories are invested in a mix of equities, including those from North America, Europe and Asia. (1) The majority of the assets in these categories are invested in a mix of equities, including those from North America, Europe and Asia. The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to value the fund. Due to the nature of the underlying assets of these funds, changes in market conditions and the economic environment value the fund. Due to the nature of the underlying assets of these funds, changes in market conditions and the economic environment may significantly impact the net asset value of these investments and, consequently, the fair value of the investments. These investments may significantly impact the net asset value of these investments and, consequently, the fair value of the investments. These investments are redeemable at net asset value to the extent provided in the documentation governing the investments. However, these redemption are redeemable at net asset value to the extent provided in the documentation governing the investments. However, these redemption rights may be restricted in accordance with governing documents. Publicly traded securities are valued at the last trade or closing price rights may be restricted in accordance with governing documents. Publicly traded securities are valued at the last trade or closing price reported in the active market in which the individual securities are traded. reported in the active market in which the individual securities are traded. (2) Consists of funds primarily concentrated in non-U.S. debt instruments. The funds are valued using the net asset value method in which (2) Consists of funds primarily concentrated in non-U.S. debt instruments. The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to value the fund. an average of the market prices for underlying investments is used to value the fund. (3) Consists of funds that primarily invest in global real estate and infrastructure funds. The funds are valued using the net asset value (3) Consists of funds that primarily invest in global real estate and infrastructure funds. The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to value the fund. method in which an average of the market prices for underlying investments is used to value the fund. (4) Consists of liability driven investment funds that may hold a range of low-risk hedging instruments including but not limited to (4) Consists of liability driven investment funds that may hold a range of low-risk hedging instruments including but not limited to government bonds, interest rate and inflation swaps, physical inflation-linked and nominal gilts, synthetic gilts, cash and money market government bonds, interest rate and inflation swaps, physical inflation-linked and nominal gilts, synthetic gilts, cash and money market instruments. The investment funds are valued at the closing price reported if traded on an active market or at yields currently available instruments. The investment funds are valued at the closing price reported if traded on an active market or at yields currently available on comparable securities of issuers with similar credit ratings. on comparable securities of issuers with similar credit ratings. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The expected long-term rate of return on assets is a weighted-average of the long-term rates of return selected for the The expected long-term rate of return on assets is a weighted-average of the long-term rates of return selected for the Estimated future cash flows Estimated future cash flows Expected fiscal 2023 Company contributions and estimated future benefit payments are as follows: Expected fiscal 2023 Company contributions and estimated future benefit payments are as follows: Expected Company Contributions Expected Company Contributions 2023 2023 Expected Benefit Payments Expected Benefit Payments 2024 2024 2025 2025 2026 2026 2027 2027 2028 2028 2029 through 2033 2029 through 2033 12. 12. Income Taxes Income Taxes $ $ $ $ $ $ $ $ $ $ $ $ $ $ 10,579 10,579 6,575 6,575 5,506 5,506 5,789 5,789 6,524 6,524 7,060 7,060 48,355 48,355 The Company's effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world The Company's effective tax rate reflects the applicable tax rate in effect in the various tax jurisdictions around the world where the Company's income is earned. The reconciliation of income tax computed at the U.S. federal statutory rates to income where the Company's income is earned. The reconciliation of income tax computed at the U.S. federal statutory rates to income tax expense for fiscal 2022, fiscal 2021 and fiscal 2020 is as follows: tax expense for fiscal 2022, fiscal 2021 and fiscal 2020 is as follows: U.S. federal statutory tax rate U.S. federal statutory tax rate Income tax provision reconciliation: Income tax provision reconciliation: Tax at statutory rate Tax at statutory rate Net foreign income subject to lower tax rate Net foreign income subject to lower tax rate State income taxes, net of federal benefit State income taxes, net of federal benefit Valuation allowance Valuation allowance Federal research and development tax credits Federal research and development tax credits Change in uncertain tax positions Change in uncertain tax positions Amortization of purchased intangibles Amortization of purchased intangibles Acquisition and integration costs Acquisition and integration costs U.S. effects of international operations U.S. effects of international operations Windfalls (under ASU 2016-09) Windfalls (under ASU 2016-09) Intra-entity transfer of intangible assets Intra-entity transfer of intangible assets Other, net Other, net Total income tax provision (benefit) Total income tax provision (benefit) 2022 2022 2021 2021 2020 2020 21.0 % 21.0 % 21.0 % 21.0 % 21.0 % 21.0 % $ $ $ $ 650,737 650,737 (358,725) (358,725) (15,615) (15,615) 29,737 29,737 (58,625) (58,625) 19,394 19,394 142,375 142,375 — — (47,665) (47,665) (16,717) (16,717) — — 5,292 5,292 350,188 350,188 $ $ $ $ 279,030 279,030 (227,470) (227,470) (28,052) (28,052) 13,263 13,263 (37,902) (37,902) (1,061) (1,061) 146,094 146,094 11,367 11,367 (24,624) (24,624) (26,365) (26,365) (188,804) (188,804) 22,816 22,816 (61,708) (61,708) $ $ $ $ 275,439 275,439 (225,937) (225,937) (23,537) (23,537) 13,655 13,655 (31,055) (31,055) (13,304) (13,304) 101,906 101,906 1,714 1,714 11,903 11,903 (16,240) (16,240) — — (3,688) (3,688) 90,856 90,856 Income before income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 includes the following components: Income before income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 includes the following components: Income before income taxes (1) Income before income taxes (1) Domestic Domestic Foreign Foreign Income before income taxes Income before income taxes 2022 2022 2021 2021 2020 2020 $ $ 958,465 $ 958,465 $ 508,100 $ 508,100 $ 2,140,284 2,140,284 820,614 820,614 355,442 355,442 956,175 956,175 $ $ 3,098,749 $ 3,098,749 $ 1,328,714 $ 1,328,714 $ 1,311,617 1,311,617 _______________________________________ _______________________________________ (1) (1) Income before income taxes reflects deemed intercompany royalties in all periods presented. Income before income taxes reflects deemed intercompany royalties in all periods presented. 77 77 78 78 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The components of the provision for (benefit from) income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 are as The components of the provision for (benefit from) income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 are as The significant components of the Company’s deferred tax assets and liabilities for fiscal 2022 and fiscal 2021 are as The significant components of the Company’s deferred tax assets and liabilities for fiscal 2022 and fiscal 2021 are as follows: follows: Current: Current: Federal tax Federal tax State State Foreign Foreign Total current Total current Deferred: Deferred: Federal Federal State State Foreign Foreign Total deferred Total deferred Provision for (benefit from) income tax Provision for (benefit from) income tax 2022 2022 2021 2021 2020 2020 $ $ 304,556 $ 304,556 $ 134,652 $ 134,652 $ 13,214 13,214 359,173 359,173 7,772 7,772 202,790 202,790 676,943 $ 676,943 $ 345,214 $ 345,214 $ 64,876 64,876 4,882 4,882 135,046 135,046 204,804 204,804 (341,777) $ (341,777) $ 515,541 $ 515,541 $ (159,229) (159,229) (612) (612) (12,444) (12,444) 15,634 15,634 (910,019) (910,019) (12,684) (12,684) 57,965 57,965 (326,755) $ (326,755) $ (406,922) $ (406,922) $ (113,948) (113,948) 350,188 $ 350,188 $ (61,708) $ (61,708) $ 90,856 90,856 $ $ $ $ $ $ $ $ U.S. tax legislation subjects a U.S. shareholder to tax on global intangible low-taxed income (GILTI). Under U.S. U.S. tax legislation subjects a U.S. shareholder to tax on global intangible low-taxed income (GILTI). Under U.S. GAAP, an accounting policy election can be made to either treat taxes due on the GILTI inclusion as a current period expense GAAP, an accounting policy election can be made to either treat taxes due on the GILTI inclusion as a current period expense or to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years. The Company or to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years. The Company elected the deferral method and recorded the corresponding GILTI deferred tax assets and liabilities on its Consolidated elected the deferral method and recorded the corresponding GILTI deferred tax assets and liabilities on its Consolidated Balance Sheets. Balance Sheets. The Company carries other outside basis differences in its subsidiaries, primarily arising from acquisition accounting The Company carries other outside basis differences in its subsidiaries, primarily arising from acquisition accounting adjustments and certain undistributed earnings that are considered indefinitely reinvested. As of October 29, 2022, the adjustments and certain undistributed earnings that are considered indefinitely reinvested. As of October 29, 2022, the Company has not recognized deferred income tax on $33.6 billion of outside basis differences because of its intent and ability Company has not recognized deferred income tax on $33.6 billion of outside basis differences because of its intent and ability to indefinitely reinvest these basis differences. These basis differences could be reversed through a sale of the subsidiaries or to indefinitely reinvest these basis differences. These basis differences could be reversed through a sale of the subsidiaries or the receipt of dividends from the subsidiaries, as well as various other events, none of which are considered probable at this the receipt of dividends from the subsidiaries, as well as various other events, none of which are considered probable at this time. Determination of the amount of unrecognized deferred income tax liability related to these outside basis differences is not time. Determination of the amount of unrecognized deferred income tax liability related to these outside basis differences is not practicable. practicable. 79 79 80 80 follows: follows: Deferred tax assets: Deferred tax assets: Inventory reserves Inventory reserves Reserves for compensation and benefits Reserves for compensation and benefits Tax credit carryovers Tax credit carryovers Stock-based compensation Stock-based compensation Net operating losses Net operating losses Intangible assets Intangible assets Lease liability Lease liability Other Other Total gross deferred tax assets Total gross deferred tax assets Valuation allowance Valuation allowance Total deferred tax assets Total deferred tax assets Deferred tax liabilities: Deferred tax liabilities: Inventory reserves Inventory reserves Depreciation Depreciation Deferred GILTI tax liabilities Deferred GILTI tax liabilities Right of use asset Right of use asset Acquisition-related intangibles Acquisition-related intangibles Total gross deferred tax liabilities Total gross deferred tax liabilities Net deferred tax liabilities Net deferred tax liabilities 2022 2022 2021 2021 $ $ 16,584 $ 16,584 $ 60,871 60,871 327,671 327,671 25,059 25,059 43,696 43,696 76,709 76,709 248,796 248,796 — — 64,274 64,274 295,345 295,345 26,541 26,541 62,876 62,876 60,954 60,954 248,075 248,075 1,975,096 1,975,096 2,002,041 2,002,041 2,774,482 2,774,482 2,760,106 2,760,106 (339,105) (339,105) (315,434) (315,434) 2,435,377 2,435,377 2,444,672 2,444,672 — — (96,660) (96,660) (18,570) (18,570) (91,846) (91,846) (2,824,332) (2,824,332) (3,059,919) (3,059,919) (55,858) (55,858) (53,686) (53,686) (816,177) (816,177) (892,212) (892,212) (3,793,027) (3,793,027) (4,116,233) (4,116,233) $ $ (1,357,650) $ (1,357,650) $ (1,671,561) (1,671,561) The valuation allowances of $339.1 million and $315.4 million as of October 29, 2022 and October 30, 2021, The valuation allowances of $339.1 million and $315.4 million as of October 29, 2022 and October 30, 2021, respectively, are primarily for the Company’s state R&D credit carryforwards, foreign net operating loss and international respectively, are primarily for the Company’s state R&D credit carryforwards, foreign net operating loss and international credit carryforwards. The Company believes that it is more-likely-than-not that these credit carryovers will not be realized and credit carryforwards. The Company believes that it is more-likely-than-not that these credit carryovers will not be realized and as a result has recorded a partial valuation allowance. as a result has recorded a partial valuation allowance. The federal and state net operating losses of $142.4 million will begin to expire in fiscal 2023 while foreign net operating The federal and state net operating losses of $142.4 million will begin to expire in fiscal 2023 while foreign net operating loss carryovers of $144.8 million have no expiration date. There are also $312.7 million of state credit carryovers and loss carryovers of $144.8 million have no expiration date. There are also $312.7 million of state credit carryovers and $15.0 million of foreign investment tax credit carryovers that begin to expire in the fiscal year ending November 1, 2025. $15.0 million of foreign investment tax credit carryovers that begin to expire in the fiscal year ending November 1, 2025. As of October 29, 2022 and October 30, 2021, the Company had unrealized tax benefits, net of indirect tax benefits, of As of October 29, 2022 and October 30, 2021, the Company had unrealized tax benefits, net of indirect tax benefits, of $165.3 million and $132.5 million, respectively, which if settled in the Company's favor, would lower the Company's effective $165.3 million and $132.5 million, respectively, which if settled in the Company's favor, would lower the Company's effective tax rate in the period recorded. Liabilities for unrealized tax benefits are primarily classified as non-current because the tax rate in the period recorded. Liabilities for unrealized tax benefits are primarily classified as non-current because the Company believes that the ultimate payment or settlement of these liabilities will not occur within the next twelve months. As Company believes that the ultimate payment or settlement of these liabilities will not occur within the next twelve months. As of October 29, 2022 and October 30, 2021, the Company had liabilities of approximately $45.5 million and $38.0 million, of October 29, 2022 and October 30, 2021, the Company had liabilities of approximately $45.5 million and $38.0 million, respectively, for interest and penalties, which is included within the provision for (benefit from) income taxes in the respectively, for interest and penalties, which is included within the provision for (benefit from) income taxes in the Consolidated Statements of Income. Consolidated Statements of Income. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The components of the provision for (benefit from) income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 are as The components of the provision for (benefit from) income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 are as The significant components of the Company’s deferred tax assets and liabilities for fiscal 2022 and fiscal 2021 are as The significant components of the Company’s deferred tax assets and liabilities for fiscal 2022 and fiscal 2021 are as follows: follows: Current: Current: Federal tax Federal tax State State Foreign Foreign Deferred: Deferred: Federal Federal State State Foreign Foreign Total current Total current Balance Sheets. Balance Sheets. practicable. practicable. 2022 2022 2021 2021 2020 2020 $ $ 304,556 $ 304,556 $ 134,652 $ 134,652 $ 13,214 13,214 359,173 359,173 7,772 7,772 202,790 202,790 676,943 $ 676,943 $ 345,214 $ 345,214 $ 64,876 64,876 4,882 4,882 135,046 135,046 204,804 204,804 (341,777) $ (341,777) $ 515,541 $ 515,541 $ (159,229) (159,229) (612) (612) (12,444) (12,444) 15,634 15,634 (910,019) (910,019) (12,684) (12,684) 57,965 57,965 (326,755) $ (326,755) $ (406,922) $ (406,922) $ (113,948) (113,948) 350,188 $ 350,188 $ (61,708) $ (61,708) $ 90,856 90,856 $ $ $ $ $ $ $ $ Total deferred Total deferred Provision for (benefit from) income tax Provision for (benefit from) income tax U.S. tax legislation subjects a U.S. shareholder to tax on global intangible low-taxed income (GILTI). Under U.S. U.S. tax legislation subjects a U.S. shareholder to tax on global intangible low-taxed income (GILTI). Under U.S. GAAP, an accounting policy election can be made to either treat taxes due on the GILTI inclusion as a current period expense GAAP, an accounting policy election can be made to either treat taxes due on the GILTI inclusion as a current period expense or to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years. The Company or to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years. The Company elected the deferral method and recorded the corresponding GILTI deferred tax assets and liabilities on its Consolidated elected the deferral method and recorded the corresponding GILTI deferred tax assets and liabilities on its Consolidated The Company carries other outside basis differences in its subsidiaries, primarily arising from acquisition accounting The Company carries other outside basis differences in its subsidiaries, primarily arising from acquisition accounting adjustments and certain undistributed earnings that are considered indefinitely reinvested. As of October 29, 2022, the adjustments and certain undistributed earnings that are considered indefinitely reinvested. As of October 29, 2022, the Company has not recognized deferred income tax on $33.6 billion of outside basis differences because of its intent and ability Company has not recognized deferred income tax on $33.6 billion of outside basis differences because of its intent and ability to indefinitely reinvest these basis differences. These basis differences could be reversed through a sale of the subsidiaries or to indefinitely reinvest these basis differences. These basis differences could be reversed through a sale of the subsidiaries or the receipt of dividends from the subsidiaries, as well as various other events, none of which are considered probable at this the receipt of dividends from the subsidiaries, as well as various other events, none of which are considered probable at this time. Determination of the amount of unrecognized deferred income tax liability related to these outside basis differences is not time. Determination of the amount of unrecognized deferred income tax liability related to these outside basis differences is not follows: follows: Deferred tax assets: Deferred tax assets: Inventory reserves Inventory reserves Reserves for compensation and benefits Reserves for compensation and benefits Tax credit carryovers Tax credit carryovers Stock-based compensation Stock-based compensation Net operating losses Net operating losses Intangible assets Intangible assets Lease liability Lease liability Other Other Total gross deferred tax assets Total gross deferred tax assets Valuation allowance Valuation allowance Total deferred tax assets Total deferred tax assets Deferred tax liabilities: Deferred tax liabilities: Inventory reserves Inventory reserves Depreciation Depreciation Deferred GILTI tax liabilities Deferred GILTI tax liabilities Right of use asset Right of use asset Acquisition-related intangibles Acquisition-related intangibles Total gross deferred tax liabilities Total gross deferred tax liabilities Net deferred tax liabilities Net deferred tax liabilities 2022 2022 2021 2021 $ $ 16,584 $ 16,584 $ 60,871 60,871 327,671 327,671 25,059 25,059 43,696 43,696 — — 64,274 64,274 295,345 295,345 26,541 26,541 62,876 62,876 1,975,096 1,975,096 2,002,041 2,002,041 76,709 76,709 248,796 248,796 60,954 60,954 248,075 248,075 2,774,482 2,774,482 2,760,106 2,760,106 (339,105) (339,105) (315,434) (315,434) 2,435,377 2,435,377 2,444,672 2,444,672 — — (96,660) (96,660) (2,824,332) (2,824,332) (55,858) (55,858) (816,177) (816,177) (3,793,027) (3,793,027) (1,357,650) $ (1,357,650) $ (18,570) (18,570) (91,846) (91,846) (3,059,919) (3,059,919) (53,686) (53,686) (892,212) (892,212) (4,116,233) (4,116,233) (1,671,561) (1,671,561) $ $ The valuation allowances of $339.1 million and $315.4 million as of October 29, 2022 and October 30, 2021, The valuation allowances of $339.1 million and $315.4 million as of October 29, 2022 and October 30, 2021, respectively, are primarily for the Company’s state R&D credit carryforwards, foreign net operating loss and international respectively, are primarily for the Company’s state R&D credit carryforwards, foreign net operating loss and international credit carryforwards. The Company believes that it is more-likely-than-not that these credit carryovers will not be realized and credit carryforwards. The Company believes that it is more-likely-than-not that these credit carryovers will not be realized and as a result has recorded a partial valuation allowance. as a result has recorded a partial valuation allowance. The federal and state net operating losses of $142.4 million will begin to expire in fiscal 2023 while foreign net operating The federal and state net operating losses of $142.4 million will begin to expire in fiscal 2023 while foreign net operating loss carryovers of $144.8 million have no expiration date. There are also $312.7 million of state credit carryovers and loss carryovers of $144.8 million have no expiration date. There are also $312.7 million of state credit carryovers and $15.0 million of foreign investment tax credit carryovers that begin to expire in the fiscal year ending November 1, 2025. $15.0 million of foreign investment tax credit carryovers that begin to expire in the fiscal year ending November 1, 2025. As of October 29, 2022 and October 30, 2021, the Company had unrealized tax benefits, net of indirect tax benefits, of As of October 29, 2022 and October 30, 2021, the Company had unrealized tax benefits, net of indirect tax benefits, of $165.3 million and $132.5 million, respectively, which if settled in the Company's favor, would lower the Company's effective $165.3 million and $132.5 million, respectively, which if settled in the Company's favor, would lower the Company's effective tax rate in the period recorded. Liabilities for unrealized tax benefits are primarily classified as non-current because the tax rate in the period recorded. Liabilities for unrealized tax benefits are primarily classified as non-current because the Company believes that the ultimate payment or settlement of these liabilities will not occur within the next twelve months. As Company believes that the ultimate payment or settlement of these liabilities will not occur within the next twelve months. As of October 29, 2022 and October 30, 2021, the Company had liabilities of approximately $45.5 million and $38.0 million, of October 29, 2022 and October 30, 2021, the Company had liabilities of approximately $45.5 million and $38.0 million, respectively, for interest and penalties, which is included within the provision for (benefit from) income taxes in the respectively, for interest and penalties, which is included within the provision for (benefit from) income taxes in the Consolidated Statements of Income. Consolidated Statements of Income. 79 79 80 80 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table summarizes the changes in the total amounts of unrealized tax benefits for fiscal 2020 through fiscal The following table summarizes the changes in the total amounts of unrealized tax benefits for fiscal 2020 through fiscal Agreement) in effect. The Revolving Credit Agreement also contains a sustainability-linked pricing component which provides Agreement) in effect. The Revolving Credit Agreement also contains a sustainability-linked pricing component which provides 2022: 2022: Balance, November 2, 2019 Balance, November 2, 2019 Additions for tax positions related to current year Additions for tax positions related to current year Reductions for tax positions related to prior years Reductions for tax positions related to prior years Reductions due to lapse of applicable statute of limitations Reductions due to lapse of applicable statute of limitations Balance, October 31, 2020 Balance, October 31, 2020 Additions for tax positions related to current year Additions for tax positions related to current year Additions for tax positions related to prior years Additions for tax positions related to prior years Additions for tax positions related to the Acquisition Additions for tax positions related to the Acquisition Reductions due to lapse of applicable statute of limitations Reductions due to lapse of applicable statute of limitations Balance, October 30, 2021 Balance, October 30, 2021 Additions for tax positions related to the Acquisition Additions for tax positions related to the Acquisition Additions for tax positions related to current year Additions for tax positions related to current year Additions for tax positions related to prior years Additions for tax positions related to prior years Reductions due to lapse of applicable statute of limitations Reductions due to lapse of applicable statute of limitations Balance, October 29, 2022 Balance, October 29, 2022 Unrealized Tax Benefits Unrealized Tax Benefits $ $ $ $ $ $ $ $ 34,343 34,343 3,270 3,270 (16,152) (16,152) (170) (170) 21,291 21,291 4,713 4,713 19,790 19,790 91,179 91,179 (4,452) (4,452) 132,521 132,521 15,267 15,267 11,800 11,800 9,704 9,704 (3,965) (3,965) 165,327 165,327 In fiscal 2020, the Company released reserves of $18.6 million, which included accrued interest as a result of the In fiscal 2020, the Company released reserves of $18.6 million, which included accrued interest as a result of the resolution of the amended tax return that was previously under review by the Joint Committee on Taxation, combined with resolution of the amended tax return that was previously under review by the Joint Committee on Taxation, combined with other tax positions resolved by the closing of the Internal Revenue Service audit of Linear’s pre-acquisition federal income tax other tax positions resolved by the closing of the Internal Revenue Service audit of Linear’s pre-acquisition federal income tax returns for fiscal 2015 through fiscal 2017. returns for fiscal 2015 through fiscal 2017. In fiscal 2021, the Company acquired $125.5 million in reserves as part of the Acquisition consisting of $91.2 million in In fiscal 2021, the Company acquired $125.5 million in reserves as part of the Acquisition consisting of $91.2 million in tax and $34.3 million in accrued interest. tax and $34.3 million in accrued interest. In fiscal 2022, the Company continued to engage in discussions and negotiations with tax authorities regarding tax matters In fiscal 2022, the Company continued to engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. It is reasonably possible that the balance of unrealized tax benefits, including accrued interest and in various jurisdictions. It is reasonably possible that the balance of unrealized tax benefits, including accrued interest and penalties, could decrease by up to $127.0 million within the next twelve months due to the completion of federal tax audits, penalties, could decrease by up to $127.0 million within the next twelve months due to the completion of federal tax audits, including any administrative appeals. The $127.0 million primarily relates to matters involving federal taxation of international including any administrative appeals. The $127.0 million primarily relates to matters involving federal taxation of international income and cross-border transactions. income and cross-border transactions. The Company has numerous audits ongoing at any time throughout the world including: an IRS income tax audit for fiscal The Company has numerous audits ongoing at any time throughout the world including: an IRS income tax audit for fiscal 2019 and fiscal 2018, a pre-Acquisition IRS income tax audit for Maxim's fiscal years ended June 27, 2015 through August 26, 2019 and fiscal 2018, a pre-Acquisition IRS income tax audit for Maxim's fiscal years ended June 27, 2015 through August 26, 2021, and various U.S. state and local tax audits and international audits. The Company’s U.S. federal tax returns prior to fiscal 2021, and various U.S. state and local tax audits and international audits. The Company’s U.S. federal tax returns prior to fiscal 2018 are no longer subject to examination, except for the applicable Maxim pre-Acquisition fiscal years noted above. 2018 are no longer subject to examination, except for the applicable Maxim pre-Acquisition fiscal years noted above. 13. Revolving Credit Facility 13. Revolving Credit Facility On June 23, 2021, the Company entered into a Third Amended and Restated Credit Agreement (Revolving Credit On June 23, 2021, the Company entered into a Third Amended and Restated Credit Agreement (Revolving Credit Agreement) with Bank of America, N.A. as administrative agent and the other banks identified therein as lenders. The Agreement) with Bank of America, N.A. as administrative agent and the other banks identified therein as lenders. The Revolving Credit Agreement provides for a five year, unsecured, revolving credit facility in an aggregate principal amount not Revolving Credit Agreement provides for a five year, unsecured, revolving credit facility in an aggregate principal amount not to exceed $2.5 billion (subject to certain terms and conditions). In June 2022, the Company borrowed $400.0 million under this to exceed $2.5 billion (subject to certain terms and conditions). In June 2022, the Company borrowed $400.0 million under this revolving credit facility and utilized the proceeds for the repayment of existing indebtedness and working capital requirements. revolving credit facility and utilized the proceeds for the repayment of existing indebtedness and working capital requirements. The Company repaid the $400.0 million plus interest in July 2022. As of October 29, 2022, the Company had no outstanding The Company repaid the $400.0 million plus interest in July 2022. As of October 29, 2022, the Company had no outstanding borrowings under this revolving credit facility but may borrow in the future and use the proceeds for repayment of existing borrowings under this revolving credit facility but may borrow in the future and use the proceeds for repayment of existing indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes. indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes. Revolving loans under the Revolving Credit Agreement can be Eurocurrency Rate Loans or Base Rate Loans (each as Revolving loans under the Revolving Credit Agreement can be Eurocurrency Rate Loans or Base Rate Loans (each as defined in the Revolving Credit Agreement) at the Company's option. Each Eurocurrency Rate Loan will bear interest at a rate defined in the Revolving Credit Agreement) at the Company's option. Each Eurocurrency Rate Loan will bear interest at a rate per annum equal to the applicable Eurocurrency Rate plus a margin based on the Company's Debt Ratings (as defined in the per annum equal to the applicable Eurocurrency Rate plus a margin based on the Company's Debt Ratings (as defined in the Revolving Credit Agreement) from time to time of between 0.690% and 1.175%. Each Base Rate Loan will bear interest at a Revolving Credit Agreement) from time to time of between 0.690% and 1.175%. Each Base Rate Loan will bear interest at a rate per annum equal to the Base Rate plus a margin based on the Company's debt ratings from time to time of between 0.00% rate per annum equal to the Base Rate plus a margin based on the Company's debt ratings from time to time of between 0.00% and 0.175%. In addition, the Company has agreed to pay a facility fee based on the Company's Debt Ratings from time to time and 0.175%. In addition, the Company has agreed to pay a facility fee based on the Company's Debt Ratings from time to time of between 0.060% and 0.200% multiplied by the actual daily amount of the Commitments (as defined in the Revolving Credit of between 0.060% and 0.200% multiplied by the actual daily amount of the Commitments (as defined in the Revolving Credit for interest rate and facility fee reductions or increases based on the Company meeting or missing targets related to for interest rate and facility fee reductions or increases based on the Company meeting or missing targets related to environmental sustainability, specifically greenhouse gas emissions and renewable energy usage. For calendar year 2021, the environmental sustainability, specifically greenhouse gas emissions and renewable energy usage. For calendar year 2021, the Company did not achieve its greenhouse gas emissions reduction threshold goal related to this sustainability-linked pricing Company did not achieve its greenhouse gas emissions reduction threshold goal related to this sustainability-linked pricing component due in part to increased demand for product, which did not have a material impact on the Company's business, net component due in part to increased demand for product, which did not have a material impact on the Company's business, net income or financing costs. The Revolving Credit Agreement includes a multicurrency borrowing feature for certain specified income or financing costs. The Revolving Credit Agreement includes a multicurrency borrowing feature for certain specified foreign currencies. The Company will guarantee the obligations of each subsidiary that is named a Designated Borrower under foreign currencies. The Company will guarantee the obligations of each subsidiary that is named a Designated Borrower under The Revolving Credit Agreement contains customary representations and warranties, and affirmative and negative The Revolving Credit Agreement contains customary representations and warranties, and affirmative and negative covenants and events of default applicable to the Company and its subsidiaries. As of October 29, 2022, the Company was in covenants and events of default applicable to the Company and its subsidiaries. As of October 29, 2022, the Company was in the Revolving Credit Agreement. the Revolving Credit Agreement. compliance with these covenants. compliance with these covenants. 14. Debt 14. Debt On December 14, 2015, the Company issued $850.0 million aggregate principal amount of 3.9% senior unsecured notes On December 14, 2015, the Company issued $850.0 million aggregate principal amount of 3.9% senior unsecured notes due December 15, 2025 (the December 2025 Notes) and $400.0 million aggregate principal amount of 5.3% senior unsecured due December 15, 2025 (the December 2025 Notes) and $400.0 million aggregate principal amount of 5.3% senior unsecured notes due December 15, 2045 (the 2045 Notes) with semi-annual fixed interest payments due on June 15 and December 15 of notes due December 15, 2045 (the 2045 Notes) with semi-annual fixed interest payments due on June 15 and December 15 of each year, commencing June 15, 2016. The net proceeds of the offering were $1.2 billion, after discounts and issuance costs. each year, commencing June 15, 2016. The net proceeds of the offering were $1.2 billion, after discounts and issuance costs. On October 5, 2021 and October 7, 2021, $325.5 million, or 38.3%, of the $850.0 million aggregate principal amount of the On October 5, 2021 and October 7, 2021, $325.5 million, or 38.3%, of the $850.0 million aggregate principal amount of the December 2025 Notes at a price of $1,112.13 for each $1,000 principal amount of December 2025 Notes, and $67.4 million, or December 2025 Notes at a price of $1,112.13 for each $1,000 principal amount of December 2025 Notes, and $67.4 million, or 16.85%, of the $400.0 million aggregate principal amount of the 2045 Notes at a price of $1,400.67 for each $1,000 principal 16.85%, of the $400.0 million aggregate principal amount of the 2045 Notes at a price of $1,400.67 for each $1,000 principal amount of 2045 Notes, were tendered for repurchase and canceled. On October 20, 2021, the remaining December 2025 Notes amount of 2045 Notes, were tendered for repurchase and canceled. On October 20, 2021, the remaining December 2025 Notes were redeemed for cash at a redemption price equal to $1,103.81 for each $1,000 principal amount of the December 2025 were redeemed for cash at a redemption price equal to $1,103.81 for each $1,000 principal amount of the December 2025 Notes. Debt discounts and issuance costs will be amortized through interest expense over the term of the 2045 Notes. The 2045 Notes. Debt discounts and issuance costs will be amortized through interest expense over the term of the 2045 Notes. The 2045 Notes are subordinated to any future secured debt and to the other liabilities of the Company's subsidiaries. The 2045 Notes Notes are subordinated to any future secured debt and to the other liabilities of the Company's subsidiaries. The 2045 Notes were issued pursuant to a base indenture (the ADI Base Indenture) between the Company and The Bank of New York Mellon were issued pursuant to a base indenture (the ADI Base Indenture) between the Company and The Bank of New York Mellon Trust Company as trustee, as supplemented by a supplemental indenture, which contain certain covenants, events of default and Trust Company as trustee, as supplemented by a supplemental indenture, which contain certain covenants, events of default and other customary provisions. The covenants applicable to the 2045 Notes limit the Company's ability to incur, create, assume or other customary provisions. The covenants applicable to the 2045 Notes limit the Company's ability to incur, create, assume or guarantee any debt secured by a lien upon a principal property; enter into sale and lease-back transactions with respect to a guarantee any debt secured by a lien upon a principal property; enter into sale and lease-back transactions with respect to a principal property; and consolidate with or merge into, or transfer or lease all or substantially all of its assets to, any other party. principal property; and consolidate with or merge into, or transfer or lease all or substantially all of its assets to, any other party. As of October 29, 2022, the Company was in compliance with these covenants. As of October 29, 2022, the Company was in compliance with these covenants. On December 5, 2016, the Company issued $400.0 million aggregate principal amount of 2.5% senior unsecured notes On December 5, 2016, the Company issued $400.0 million aggregate principal amount of 2.5% senior unsecured notes due December 5, 2021 (the 2021 Notes), $550.0 million aggregate principal amount of 3.125% senior unsecured notes due due December 5, 2021 (the 2021 Notes), $550.0 million aggregate principal amount of 3.125% senior unsecured notes due December 5, 2023 (the December 2023 Notes), $900.0 million aggregate principal amount of 3.5% senior unsecured notes due December 5, 2023 (the December 2023 Notes), $900.0 million aggregate principal amount of 3.5% senior unsecured notes due December 5, 2026 (the 2026 Notes) and $250.0 million aggregate principal amount of 4.5% senior unsecured notes due December 5, 2026 (the 2026 Notes) and $250.0 million aggregate principal amount of 4.5% senior unsecured notes due December 5, 2036 (the 2036 Notes) with semi-annual fixed interest payments due on June 5 and December 5 of each year, December 5, 2036 (the 2036 Notes) with semi-annual fixed interest payments due on June 5 and December 5 of each year, commencing June 5, 2017. The net proceeds of the offering were $2.1 billion, after discounts and issuance costs. On October 5, commencing June 5, 2017. The net proceeds of the offering were $2.1 billion, after discounts and issuance costs. On October 5, 2021, (i) $71.2 million, or 17.80%, of the $400.0 million aggregate principal amount of the 2021 Notes at a price of $1,001.77 2021, (i) $71.2 million, or 17.80%, of the $400.0 million aggregate principal amount of the 2021 Notes at a price of $1,001.77 for each $1,000 principal amount of 2021 Notes, (ii) $282.7 million, or 51.41%, of the $550.0 million aggregate principal for each $1,000 principal amount of 2021 Notes, (ii) $282.7 million, or 51.41%, of the $550.0 million aggregate principal amount of the December 2023 Notes at a price of $1,053.78 for each $1,000 principal amount of December 2023 Notes and (iii) amount of the December 2023 Notes at a price of $1,053.78 for each $1,000 principal amount of December 2023 Notes and (iii) $105.7 million, or 42.29%, of the $250.0 million aggregate principal amount of the 2036 Notes at a price of $1,239.96 for each $105.7 million, or 42.29%, of the $250.0 million aggregate principal amount of the 2036 Notes at a price of $1,239.96 for each $1,000 principal amount of 2036 Notes were tendered for redemption. On October 20, 2021, the remaining 2021 Notes and $1,000 principal amount of 2036 Notes were tendered for redemption. On October 20, 2021, the remaining 2021 Notes and December 2023 Notes were redeemed for cash at a redemption price equal to $1,000.98 for each $1,000 principal amount of December 2023 Notes were redeemed for cash at a redemption price equal to $1,000.98 for each $1,000 principal amount of 2021 Notes and $1,050.17 for each $1,000 principal amount of December 2023 Notes. Debt discounts and issuance costs will 2021 Notes and $1,050.17 for each $1,000 principal amount of December 2023 Notes. Debt discounts and issuance costs will be amortized through interest expense over the term of the respective notes. The 2026 Notes and 2036 Notes rank without be amortized through interest expense over the term of the respective notes. The 2026 Notes and 2036 Notes rank without preference or priority among themselves and equally in right of payment with all other existing and future senior unsecured preference or priority among themselves and equally in right of payment with all other existing and future senior unsecured debt and senior in right of payment to all of the Company's future subordinated debt. The 2026 Notes and 2036 Notes were debt and senior in right of payment to all of the Company's future subordinated debt. The 2026 Notes and 2036 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, 2022, the Company those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, 2022, the Company was in compliance with these covenants. was in compliance with these covenants. 81 81 82 82 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table summarizes the changes in the total amounts of unrealized tax benefits for fiscal 2020 through fiscal The following table summarizes the changes in the total amounts of unrealized tax benefits for fiscal 2020 through fiscal 2022: 2022: Unrealized Tax Benefits Unrealized Tax Benefits Balance, November 2, 2019 Balance, November 2, 2019 Additions for tax positions related to current year Additions for tax positions related to current year Reductions for tax positions related to prior years Reductions for tax positions related to prior years Reductions due to lapse of applicable statute of limitations Reductions due to lapse of applicable statute of limitations Balance, October 31, 2020 Balance, October 31, 2020 Additions for tax positions related to current year Additions for tax positions related to current year Additions for tax positions related to prior years Additions for tax positions related to prior years Additions for tax positions related to the Acquisition Additions for tax positions related to the Acquisition Reductions due to lapse of applicable statute of limitations Reductions due to lapse of applicable statute of limitations Balance, October 30, 2021 Balance, October 30, 2021 Additions for tax positions related to the Acquisition Additions for tax positions related to the Acquisition Additions for tax positions related to current year Additions for tax positions related to current year Additions for tax positions related to prior years Additions for tax positions related to prior years Reductions due to lapse of applicable statute of limitations Reductions due to lapse of applicable statute of limitations Balance, October 29, 2022 Balance, October 29, 2022 $ $ $ $ $ $ $ $ 34,343 34,343 3,270 3,270 (16,152) (16,152) (170) (170) 21,291 21,291 4,713 4,713 19,790 19,790 91,179 91,179 (4,452) (4,452) 132,521 132,521 15,267 15,267 11,800 11,800 9,704 9,704 (3,965) (3,965) 165,327 165,327 In fiscal 2020, the Company released reserves of $18.6 million, which included accrued interest as a result of the In fiscal 2020, the Company released reserves of $18.6 million, which included accrued interest as a result of the resolution of the amended tax return that was previously under review by the Joint Committee on Taxation, combined with resolution of the amended tax return that was previously under review by the Joint Committee on Taxation, combined with other tax positions resolved by the closing of the Internal Revenue Service audit of Linear’s pre-acquisition federal income tax other tax positions resolved by the closing of the Internal Revenue Service audit of Linear’s pre-acquisition federal income tax returns for fiscal 2015 through fiscal 2017. returns for fiscal 2015 through fiscal 2017. tax and $34.3 million in accrued interest. tax and $34.3 million in accrued interest. In fiscal 2021, the Company acquired $125.5 million in reserves as part of the Acquisition consisting of $91.2 million in In fiscal 2021, the Company acquired $125.5 million in reserves as part of the Acquisition consisting of $91.2 million in In fiscal 2022, the Company continued to engage in discussions and negotiations with tax authorities regarding tax matters In fiscal 2022, the Company continued to engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. It is reasonably possible that the balance of unrealized tax benefits, including accrued interest and in various jurisdictions. It is reasonably possible that the balance of unrealized tax benefits, including accrued interest and penalties, could decrease by up to $127.0 million within the next twelve months due to the completion of federal tax audits, penalties, could decrease by up to $127.0 million within the next twelve months due to the completion of federal tax audits, including any administrative appeals. The $127.0 million primarily relates to matters involving federal taxation of international including any administrative appeals. The $127.0 million primarily relates to matters involving federal taxation of international income and cross-border transactions. income and cross-border transactions. The Company has numerous audits ongoing at any time throughout the world including: an IRS income tax audit for fiscal The Company has numerous audits ongoing at any time throughout the world including: an IRS income tax audit for fiscal 2019 and fiscal 2018, a pre-Acquisition IRS income tax audit for Maxim's fiscal years ended June 27, 2015 through August 26, 2019 and fiscal 2018, a pre-Acquisition IRS income tax audit for Maxim's fiscal years ended June 27, 2015 through August 26, 2021, and various U.S. state and local tax audits and international audits. The Company’s U.S. federal tax returns prior to fiscal 2021, and various U.S. state and local tax audits and international audits. The Company’s U.S. federal tax returns prior to fiscal 2018 are no longer subject to examination, except for the applicable Maxim pre-Acquisition fiscal years noted above. 2018 are no longer subject to examination, except for the applicable Maxim pre-Acquisition fiscal years noted above. 13. Revolving Credit Facility 13. Revolving Credit Facility On June 23, 2021, the Company entered into a Third Amended and Restated Credit Agreement (Revolving Credit On June 23, 2021, the Company entered into a Third Amended and Restated Credit Agreement (Revolving Credit Agreement) with Bank of America, N.A. as administrative agent and the other banks identified therein as lenders. The Agreement) with Bank of America, N.A. as administrative agent and the other banks identified therein as lenders. The Revolving Credit Agreement provides for a five year, unsecured, revolving credit facility in an aggregate principal amount not Revolving Credit Agreement provides for a five year, unsecured, revolving credit facility in an aggregate principal amount not to exceed $2.5 billion (subject to certain terms and conditions). In June 2022, the Company borrowed $400.0 million under this to exceed $2.5 billion (subject to certain terms and conditions). In June 2022, the Company borrowed $400.0 million under this revolving credit facility and utilized the proceeds for the repayment of existing indebtedness and working capital requirements. revolving credit facility and utilized the proceeds for the repayment of existing indebtedness and working capital requirements. The Company repaid the $400.0 million plus interest in July 2022. As of October 29, 2022, the Company had no outstanding The Company repaid the $400.0 million plus interest in July 2022. As of October 29, 2022, the Company had no outstanding borrowings under this revolving credit facility but may borrow in the future and use the proceeds for repayment of existing borrowings under this revolving credit facility but may borrow in the future and use the proceeds for repayment of existing indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes. indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes. Revolving loans under the Revolving Credit Agreement can be Eurocurrency Rate Loans or Base Rate Loans (each as Revolving loans under the Revolving Credit Agreement can be Eurocurrency Rate Loans or Base Rate Loans (each as defined in the Revolving Credit Agreement) at the Company's option. Each Eurocurrency Rate Loan will bear interest at a rate defined in the Revolving Credit Agreement) at the Company's option. Each Eurocurrency Rate Loan will bear interest at a rate per annum equal to the applicable Eurocurrency Rate plus a margin based on the Company's Debt Ratings (as defined in the per annum equal to the applicable Eurocurrency Rate plus a margin based on the Company's Debt Ratings (as defined in the Revolving Credit Agreement) from time to time of between 0.690% and 1.175%. Each Base Rate Loan will bear interest at a Revolving Credit Agreement) from time to time of between 0.690% and 1.175%. Each Base Rate Loan will bear interest at a rate per annum equal to the Base Rate plus a margin based on the Company's debt ratings from time to time of between 0.00% rate per annum equal to the Base Rate plus a margin based on the Company's debt ratings from time to time of between 0.00% and 0.175%. In addition, the Company has agreed to pay a facility fee based on the Company's Debt Ratings from time to time and 0.175%. In addition, the Company has agreed to pay a facility fee based on the Company's Debt Ratings from time to time of between 0.060% and 0.200% multiplied by the actual daily amount of the Commitments (as defined in the Revolving Credit of between 0.060% and 0.200% multiplied by the actual daily amount of the Commitments (as defined in the Revolving Credit Agreement) in effect. The Revolving Credit Agreement also contains a sustainability-linked pricing component which provides Agreement) in effect. The Revolving Credit Agreement also contains a sustainability-linked pricing component which provides for interest rate and facility fee reductions or increases based on the Company meeting or missing targets related to for interest rate and facility fee reductions or increases based on the Company meeting or missing targets related to environmental sustainability, specifically greenhouse gas emissions and renewable energy usage. For calendar year 2021, the environmental sustainability, specifically greenhouse gas emissions and renewable energy usage. For calendar year 2021, the Company did not achieve its greenhouse gas emissions reduction threshold goal related to this sustainability-linked pricing Company did not achieve its greenhouse gas emissions reduction threshold goal related to this sustainability-linked pricing component due in part to increased demand for product, which did not have a material impact on the Company's business, net component due in part to increased demand for product, which did not have a material impact on the Company's business, net income or financing costs. The Revolving Credit Agreement includes a multicurrency borrowing feature for certain specified income or financing costs. The Revolving Credit Agreement includes a multicurrency borrowing feature for certain specified foreign currencies. The Company will guarantee the obligations of each subsidiary that is named a Designated Borrower under foreign currencies. The Company will guarantee the obligations of each subsidiary that is named a Designated Borrower under the Revolving Credit Agreement. the Revolving Credit Agreement. The Revolving Credit Agreement contains customary representations and warranties, and affirmative and negative The Revolving Credit Agreement contains customary representations and warranties, and affirmative and negative covenants and events of default applicable to the Company and its subsidiaries. As of October 29, 2022, the Company was in covenants and events of default applicable to the Company and its subsidiaries. As of October 29, 2022, the Company was in compliance with these covenants. compliance with these covenants. 14. Debt 14. Debt On December 14, 2015, the Company issued $850.0 million aggregate principal amount of 3.9% senior unsecured notes On December 14, 2015, the Company issued $850.0 million aggregate principal amount of 3.9% senior unsecured notes due December 15, 2025 (the December 2025 Notes) and $400.0 million aggregate principal amount of 5.3% senior unsecured due December 15, 2025 (the December 2025 Notes) and $400.0 million aggregate principal amount of 5.3% senior unsecured notes due December 15, 2045 (the 2045 Notes) with semi-annual fixed interest payments due on June 15 and December 15 of notes due December 15, 2045 (the 2045 Notes) with semi-annual fixed interest payments due on June 15 and December 15 of each year, commencing June 15, 2016. The net proceeds of the offering were $1.2 billion, after discounts and issuance costs. each year, commencing June 15, 2016. The net proceeds of the offering were $1.2 billion, after discounts and issuance costs. On October 5, 2021 and October 7, 2021, $325.5 million, or 38.3%, of the $850.0 million aggregate principal amount of the On October 5, 2021 and October 7, 2021, $325.5 million, or 38.3%, of the $850.0 million aggregate principal amount of the December 2025 Notes at a price of $1,112.13 for each $1,000 principal amount of December 2025 Notes, and $67.4 million, or December 2025 Notes at a price of $1,112.13 for each $1,000 principal amount of December 2025 Notes, and $67.4 million, or 16.85%, of the $400.0 million aggregate principal amount of the 2045 Notes at a price of $1,400.67 for each $1,000 principal 16.85%, of the $400.0 million aggregate principal amount of the 2045 Notes at a price of $1,400.67 for each $1,000 principal amount of 2045 Notes, were tendered for repurchase and canceled. On October 20, 2021, the remaining December 2025 Notes amount of 2045 Notes, were tendered for repurchase and canceled. On October 20, 2021, the remaining December 2025 Notes were redeemed for cash at a redemption price equal to $1,103.81 for each $1,000 principal amount of the December 2025 were redeemed for cash at a redemption price equal to $1,103.81 for each $1,000 principal amount of the December 2025 Notes. Debt discounts and issuance costs will be amortized through interest expense over the term of the 2045 Notes. The 2045 Notes. Debt discounts and issuance costs will be amortized through interest expense over the term of the 2045 Notes. The 2045 Notes are subordinated to any future secured debt and to the other liabilities of the Company's subsidiaries. The 2045 Notes Notes are subordinated to any future secured debt and to the other liabilities of the Company's subsidiaries. The 2045 Notes were issued pursuant to a base indenture (the ADI Base Indenture) between the Company and The Bank of New York Mellon were issued pursuant to a base indenture (the ADI Base Indenture) between the Company and The Bank of New York Mellon Trust Company as trustee, as supplemented by a supplemental indenture, which contain certain covenants, events of default and Trust Company as trustee, as supplemented by a supplemental indenture, which contain certain covenants, events of default and other customary provisions. The covenants applicable to the 2045 Notes limit the Company's ability to incur, create, assume or other customary provisions. The covenants applicable to the 2045 Notes limit the Company's ability to incur, create, assume or guarantee any debt secured by a lien upon a principal property; enter into sale and lease-back transactions with respect to a guarantee any debt secured by a lien upon a principal property; enter into sale and lease-back transactions with respect to a principal property; and consolidate with or merge into, or transfer or lease all or substantially all of its assets to, any other party. principal property; and consolidate with or merge into, or transfer or lease all or substantially all of its assets to, any other party. As of October 29, 2022, the Company was in compliance with these covenants. As of October 29, 2022, the Company was in compliance with these covenants. On December 5, 2016, the Company issued $400.0 million aggregate principal amount of 2.5% senior unsecured notes On December 5, 2016, the Company issued $400.0 million aggregate principal amount of 2.5% senior unsecured notes due December 5, 2021 (the 2021 Notes), $550.0 million aggregate principal amount of 3.125% senior unsecured notes due due December 5, 2021 (the 2021 Notes), $550.0 million aggregate principal amount of 3.125% senior unsecured notes due December 5, 2023 (the December 2023 Notes), $900.0 million aggregate principal amount of 3.5% senior unsecured notes due December 5, 2023 (the December 2023 Notes), $900.0 million aggregate principal amount of 3.5% senior unsecured notes due December 5, 2026 (the 2026 Notes) and $250.0 million aggregate principal amount of 4.5% senior unsecured notes due December 5, 2026 (the 2026 Notes) and $250.0 million aggregate principal amount of 4.5% senior unsecured notes due December 5, 2036 (the 2036 Notes) with semi-annual fixed interest payments due on June 5 and December 5 of each year, December 5, 2036 (the 2036 Notes) with semi-annual fixed interest payments due on June 5 and December 5 of each year, commencing June 5, 2017. The net proceeds of the offering were $2.1 billion, after discounts and issuance costs. On October 5, commencing June 5, 2017. The net proceeds of the offering were $2.1 billion, after discounts and issuance costs. On October 5, 2021, (i) $71.2 million, or 17.80%, of the $400.0 million aggregate principal amount of the 2021 Notes at a price of $1,001.77 2021, (i) $71.2 million, or 17.80%, of the $400.0 million aggregate principal amount of the 2021 Notes at a price of $1,001.77 for each $1,000 principal amount of 2021 Notes, (ii) $282.7 million, or 51.41%, of the $550.0 million aggregate principal for each $1,000 principal amount of 2021 Notes, (ii) $282.7 million, or 51.41%, of the $550.0 million aggregate principal amount of the December 2023 Notes at a price of $1,053.78 for each $1,000 principal amount of December 2023 Notes and (iii) amount of the December 2023 Notes at a price of $1,053.78 for each $1,000 principal amount of December 2023 Notes and (iii) $105.7 million, or 42.29%, of the $250.0 million aggregate principal amount of the 2036 Notes at a price of $1,239.96 for each $105.7 million, or 42.29%, of the $250.0 million aggregate principal amount of the 2036 Notes at a price of $1,239.96 for each $1,000 principal amount of 2036 Notes were tendered for redemption. On October 20, 2021, the remaining 2021 Notes and $1,000 principal amount of 2036 Notes were tendered for redemption. On October 20, 2021, the remaining 2021 Notes and December 2023 Notes were redeemed for cash at a redemption price equal to $1,000.98 for each $1,000 principal amount of December 2023 Notes were redeemed for cash at a redemption price equal to $1,000.98 for each $1,000 principal amount of 2021 Notes and $1,050.17 for each $1,000 principal amount of December 2023 Notes. Debt discounts and issuance costs will 2021 Notes and $1,050.17 for each $1,000 principal amount of December 2023 Notes. Debt discounts and issuance costs will be amortized through interest expense over the term of the respective notes. The 2026 Notes and 2036 Notes rank without be amortized through interest expense over the term of the respective notes. The 2026 Notes and 2036 Notes rank without preference or priority among themselves and equally in right of payment with all other existing and future senior unsecured preference or priority among themselves and equally in right of payment with all other existing and future senior unsecured debt and senior in right of payment to all of the Company's future subordinated debt. The 2026 Notes and 2036 Notes were debt and senior in right of payment to all of the Company's future subordinated debt. The 2026 Notes and 2036 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, 2022, the Company those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, 2022, the Company was in compliance with these covenants. was in compliance with these covenants. 81 81 82 82 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) On April 8, 2020, in an underwritten public offering of green bonds, the Company issued $400.0 million aggregate On April 8, 2020, in an underwritten public offering of green bonds, the Company issued $400.0 million aggregate principal amount of 2.95% senior unsecured notes due April 1, 2025 (the April 2025 Notes), with semi-annual fixed interest principal amount of 2.95% senior unsecured notes due April 1, 2025 (the April 2025 Notes), with semi-annual fixed interest payments due on April 1 and October 1 of each year, commencing on October 1, 2020. The Company used the net proceeds of payments due on April 1 and October 1 of each year, commencing on October 1, 2020. The Company used the net proceeds of $395.6 million from the green bond offering to finance or refinance new and existing eligible projects involving renewable $395.6 million from the green bond offering to finance or refinance new and existing eligible projects involving renewable energy, green buildings, and eco-efficient products, production technologies and processes. Debt discounts and underwriting energy, green buildings, and eco-efficient products, production technologies and processes. Debt discounts and underwriting fees will be amortized through interest expense over the term of the April 2025 Notes. At any time prior to March 1, 2025, the fees will be amortized through interest expense over the term of the April 2025 Notes. At any time prior to March 1, 2025, the Company may, at its option, redeem some or all of the April 2025 Notes at a redemption price equal to the greater of 100% of Company may, at its option, redeem some or all of the April 2025 Notes at a redemption price equal to the greater of 100% of the principal amount of the April 2025 Notes being redeemed and the make-whole premium, plus accrued and unpaid interest the principal amount of the April 2025 Notes being redeemed and the make-whole premium, plus accrued and unpaid interest on the April 2025 Notes being redeemed, if any, to but excluding the date of redemption. The April 2025 Notes are unsecured on the April 2025 Notes being redeemed, if any, to but excluding the date of redemption. The April 2025 Notes are unsecured and rank equally in right of payment with all of the Company's other existing and future unsecured senior indebtedness. The and rank equally in right of payment with all of the Company's other existing and future unsecured senior indebtedness. The April 2025 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain April 2025 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, 2022, the Company was in compliance with these covenants. 2022, the Company was in compliance with these covenants. In conjunction with the Acquisition, the Company recognized $500.0 million aggregate principal amount of Maxim’s In conjunction with the Acquisition, the Company recognized $500.0 million aggregate principal amount of Maxim’s 3.375% senior unsecured and unsubordinated notes due March 15, 2023 (the Maxim 2023 Notes) and $500.0 million aggregate 3.375% senior unsecured and unsubordinated notes due March 15, 2023 (the Maxim 2023 Notes) and $500.0 million aggregate principal amount of Maxim’s 3.45% senior unsecured and unsubordinated notes due June 15, 2027 (the Maxim 2027 Notes), principal amount of Maxim’s 3.45% senior unsecured and unsubordinated notes due June 15, 2027 (the Maxim 2027 Notes), which were recognized at fair value as of the Acquisition Date. On October 5, 2021, Maxim gave notice that it would redeem which were recognized at fair value as of the Acquisition Date. On October 5, 2021, Maxim gave notice that it would redeem the Maxim 2023 Notes, and in November 2021 (fiscal 2022), the Maxim 2023 Notes were redeemed for cash. the Maxim 2023 Notes, and in November 2021 (fiscal 2022), the Maxim 2023 Notes were redeemed for cash. On October 7, 2022, the Company completed an offer to exchange any and all outstanding Maxim 2027 Notes, for new On October 7, 2022, the Company completed an offer to exchange any and all outstanding Maxim 2027 Notes, for new 3.450% Senior Notes due June 15, 2027 (the ADI 2027 Notes) to be issued by the Company and cash. Pursuant to the exchange 3.450% Senior Notes due June 15, 2027 (the ADI 2027 Notes) to be issued by the Company and cash. Pursuant to the exchange offer, $440.2 million aggregate principal amount of the Maxim 2027 Notes were tendered and subsequently accepted for offer, $440.2 million aggregate principal amount of the Maxim 2027 Notes were tendered and subsequently accepted for exchange, and the Company retired and canceled all Maxim 2027 Notes accepted for exchange. In exchange for the tendered exchange, and the Company retired and canceled all Maxim 2027 Notes accepted for exchange. In exchange for the tendered Maxim 2027 Notes, the Company issued approximately $440.2 million aggregate principal amount of ADI 2027 Notes pursuant Maxim 2027 Notes, the Company issued approximately $440.2 million aggregate principal amount of ADI 2027 Notes pursuant to a private exchange offer exempt from, or not subject to, registration under the Securities Act of 1933, as amended and to a private exchange offer exempt from, or not subject to, registration under the Securities Act of 1933, as amended and $0.5 million in cash. The ADI 2027 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental $0.5 million in cash. The ADI 2027 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain certain covenants similar to those applicable to the 2045 Notes, events of default and other customary indenture, which contain certain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. The ADI 2027 Notes bear interest at a rate of 3.450% per annum, with semi-annual fixed interest payments due on provisions. The ADI 2027 Notes bear interest at a rate of 3.450% per annum, with semi-annual fixed interest payments due on June 15 and December 15 of each year, commencing on December 15, 2022 and will mature on June 15, 2027. As of October June 15 and December 15 of each year, commencing on December 15, 2022 and will mature on June 15, 2027. As of October 29, 2022, the Company was in compliance with the covenants in the ADI 2027 Notes and the outstanding Maxim 2027 Notes. 29, 2022, the Company was in compliance with the covenants in the ADI 2027 Notes and the outstanding Maxim 2027 Notes. The indenture and supplemental indentures with respect to the outstanding Maxim 2027 Notes have been modified to, among The indenture and supplemental indentures with respect to the outstanding Maxim 2027 Notes have been modified to, among other things, eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events of default (other than for the other things, eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events of default (other than for the failure to pay principal, premium or interest), (iii) the obligation to offer to repurchase the Maxim 2027 Notes upon certain failure to pay principal, premium or interest), (iii) the obligation to offer to repurchase the Maxim 2027 Notes upon certain change of control transactions and (iv) any restrictions on consolidating with or merging into any other person or conveying, change of control transactions and (iv) any restrictions on consolidating with or merging into any other person or conveying, transferring or leasing all or any of its properties and assets to any person. Following settlement of the exchange offer, transferring or leasing all or any of its properties and assets to any person. Following settlement of the exchange offer, $59.8 million aggregate principal amount of the Maxim 2027 Notes remain outstanding. $59.8 million aggregate principal amount of the Maxim 2027 Notes remain outstanding. On October 5, 2021, in an underwritten public offering, the Company issued $500.0 million aggregate principal amount of On October 5, 2021, in an underwritten public offering, the Company issued $500.0 million aggregate principal amount of floating rate senior notes due October 1, 2024 (the Floating Rate Notes), $750.0 million aggregate principal amount of 1.7% floating rate senior notes due October 1, 2024 (the Floating Rate Notes), $750.0 million aggregate principal amount of 1.7% sustainability-linked senior notes due October 1, 2028 (the Sustainability-Linked Senior Notes), $1.0 billion aggregate principal sustainability-linked senior notes due October 1, 2028 (the Sustainability-Linked Senior Notes), $1.0 billion aggregate principal amount of 2.1% senior notes due October 1, 2031 (the 2031 Notes), $750.0 million aggregate principal amount of 2.8% senior amount of 2.1% senior notes due October 1, 2031 (the 2031 Notes), $750.0 million aggregate principal amount of 2.8% senior notes due October 1, 2041 (the 2041 Notes), and $1.0 billion aggregate principal amount of 2.95% senior notes due October 1, notes due October 1, 2041 (the 2041 Notes), and $1.0 billion aggregate principal amount of 2.95% senior notes due October 1, 2051 (the 2051 Notes, and, together with the Floating Rate Notes, the Sustainability-Linked Senior Notes, the 2031 Notes and 2051 (the 2051 Notes, and, together with the Floating Rate Notes, the Sustainability-Linked Senior Notes, the 2031 Notes and the 2041 Notes, the Notes). The Floating Rate Notes bear interest at a floating annual rate equal to a benchmark rate, which the 2041 Notes, the Notes). The Floating Rate Notes bear interest at a floating annual rate equal to a benchmark rate, which initially is Compounded SOFR (as defined in the Supplemental Indenture) plus 25 basis points. As of October 29, 2022, the initially is Compounded SOFR (as defined in the Supplemental Indenture) plus 25 basis points. As of October 29, 2022, the interest rate on the Floating Rate Notes was 0.3% per annum. Interest payments on the Floating Rate Notes are due on January interest rate on the Floating Rate Notes was 0.3% per annum. Interest payments on the Floating Rate Notes are due on January 1, April 1, July 1 and October 1 of each year, beginning on January 1, 2022. The Sustainability-Linked Senior Notes initially 1, April 1, July 1 and October 1 of each year, beginning on January 1, 2022. The Sustainability-Linked Senior Notes initially bear interest at a rate of 1.7% per annum and are subject to an increase of an additional 30 basis points from April 1, 2026 to the bear interest at a rate of 1.7% per annum and are subject to an increase of an additional 30 basis points from April 1, 2026 to the maturity date unless the Sustainability Performance Target (as defined in the Sustainability-Linked Senior Notes) has been maturity date unless the Sustainability Performance Target (as defined in the Sustainability-Linked Senior Notes) has been satisfied. Semi-annual fixed interest payments on the Sustainability-Linked Senior Notes, the 2031 Notes, the 2041 Notes and satisfied. Semi-annual fixed interest payments on the Sustainability-Linked Senior Notes, the 2031 Notes, the 2041 Notes and the 2051 Notes are due on April 1 and October 1 of each year, beginning on April 1, 2022. the 2051 Notes are due on April 1 and October 1 of each year, beginning on April 1, 2022. At any time prior to August 1, 2028 in the case of the Sustainability-Linked Senior Notes, July 1, 2031 in the case of the At any time prior to August 1, 2028 in the case of the Sustainability-Linked Senior Notes, July 1, 2031 in the case of the 2031 Notes, April 1, 2041 in the case of the 2041 Notes and April 1, 2051 in the case of the 2051 Notes (each, a Par Call Date), 2031 Notes, April 1, 2041 in the case of the 2041 Notes and April 1, 2051 in the case of the 2051 Notes (each, a Par Call Date), the Company may, at its option, redeem some or all of the applicable series of Notes at a redemption price equal to the greater the Company may, at its option, redeem some or all of the applicable series of Notes at a redemption price equal to the greater of (i) 100% of the principal amount of such series of Notes being redeemed and (ii) the make-whole redemption price (as of (i) 100% of the principal amount of such series of Notes being redeemed and (ii) the make-whole redemption price (as described in the Supplemental Indenture). On and after the applicable Par Call Date, the Company may, at its option, redeem described in the Supplemental Indenture). On and after the applicable Par Call Date, the Company may, at its option, redeem some or all of the applicable series of Notes at a redemption price equal to 100% of the principal amount of the Notes being some or all of the applicable series of Notes at a redemption price equal to 100% of the principal amount of the Notes being redeemed. In each case, the Company will also pay the accrued and unpaid interest on the Notes being redeemed to, but redeemed. In each case, the Company will also pay the accrued and unpaid interest on the Notes being redeemed to, but excluding, the date of redemption. The Company may not redeem the Floating Rate Notes prior to their maturity. The Notes are excluding, the date of redemption. The Company may not redeem the Floating Rate Notes prior to their maturity. The Notes are unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior indebtedness. Debt discounts and issuance costs will be amortized through interest expense over the term of the respective indebtedness. Debt discounts and issuance costs will be amortized through interest expense over the term of the respective Notes. The Notes were issued pursuant to an indenture, as supplemented by a supplemental indenture, and the indenture and Notes. The Notes were issued pursuant to an indenture, as supplemented by a supplemental indenture, and the indenture and supplemental indenture contain certain covenants, events of default and other customary provisions. As of October 29, 2022, supplemental indenture contain certain covenants, events of default and other customary provisions. As of October 29, 2022, the Company was in compliance with these covenants. the Company was in compliance with these covenants. On September 15, 2022, in an underwritten public offering, the Company issued $300.0 million aggregate principal On September 15, 2022, in an underwritten public offering, the Company issued $300.0 million aggregate principal amount of 4.250% senior notes due October 1, 2032 (the 2032 Notes) with semi-annual fixed interest payments due on April 1 amount of 4.250% senior notes due October 1, 2032 (the 2032 Notes) with semi-annual fixed interest payments due on April 1 and October 1 of each year, commencing April 1, 2023. The net proceeds of the offering were $296.1 million, after discounts and October 1 of each year, commencing April 1, 2023. The net proceeds of the offering were $296.1 million, after discounts and issuance costs. Prior to July 1, 2032 (three months prior to the maturity date), the Company may, at its option, redeem the and issuance costs. Prior to July 1, 2032 (three months prior to the maturity date), the Company may, at its option, redeem the 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of: (1) (a) the sum 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the notes matured on July 1, 2032) on a semi-annual basis at the Treasury Rate plus 20 basis points less (b) interest (assuming the notes matured on July 1, 2032) on a semi-annual basis at the Treasury Rate plus 20 basis points less (b) interest accrued to the date of redemption, and (2) 100% of the principal amount of the notes to be redeemed, plus, in either case, accrued to the date of redemption, and (2) 100% of the principal amount of the notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to the redemption date. On or after July 1, 2032, the Company may, at its option, redeem accrued and unpaid interest thereon to the redemption date. On or after July 1, 2032, the Company may, at its option, redeem the 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal the 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 2032 Notes being redeemed plus accrued and unpaid interest thereon to the redemption date. The 2032 Notes are amount of the 2032 Notes being redeemed plus accrued and unpaid interest thereon to the redemption date. The 2032 Notes are unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior indebtedness. The 2032 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, indebtedness. The 2032 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, 2022, the Company was in compliance with these covenants. October 29, 2022, the Company was in compliance with these covenants. The Company’s debt consisted of the following as of October 29, 2022 and October 30, 2021: The Company’s debt consisted of the following as of October 29, 2022 and October 30, 2021: October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Unamortized Unamortized discounts, debt discounts, debt issuance costs and issuance costs and fair value fair value adjustments adjustments Principal Principal Principal Principal $ $ 500,000 $ 500,000 $ 1,973 $ 1,973 $ 500,000 $ 500,000 $ Unamortized Unamortized discount and debt discount and debt issuance costs issuance costs 400,000 400,000 900,000 900,000 59,788 59,788 440,212 440,212 750,000 750,000 1,000,000 1,000,000 300,000 300,000 144,278 144,278 750,000 750,000 332,587 332,587 1,000,000 1,000,000 2,145 2,145 5,258 5,258 (5,311) (5,311) (37,182) (37,182) 8,795 8,795 12,381 12,381 3,822 3,822 1,696 1,696 12,868 12,868 3,787 3,787 18,008 18,008 400,000 400,000 900,000 900,000 500,000 500,000 — — 750,000 750,000 1,000,000 1,000,000 — — 144,278 144,278 750,000 750,000 332,587 332,587 1,000,000 1,000,000 $ $ $ $ $ $ 6,576,865 $ 6,576,865 $ 28,240 $ 28,240 $ 6,276,865 $ 6,276,865 $ — — — $ — $ — — 500,000 500,000 — $ — $ 500,000 $ 500,000 $ 6,576,865 $ 6,576,865 $ 28,240 $ 28,240 $ 6,776,865 $ 6,776,865 $ 3,091 3,091 3,029 3,029 6,534 6,534 (51,646) (51,646) — — 10,419 10,419 13,956 13,956 — — 1,814 1,814 13,690 13,690 3,952 3,952 18,814 18,814 23,653 23,653 (16,663) (16,663) (16,663) (16,663) 6,990 6,990 2024 Notes, due October 2024 2024 Notes, due October 2024 2025 Notes, due April 2025 2025 Notes, due April 2025 2026 Notes, due December 2026 2026 Notes, due December 2026 Maxim 2027 Notes, due June 2027 Maxim 2027 Notes, due June 2027 2027 Notes, due June 2027 2027 Notes, due June 2027 2028 Notes, due October 2028 2028 Notes, due October 2028 2031 Notes, due October 2031 2031 Notes, due October 2031 2032 Notes, due October 2032 2032 Notes, due October 2032 2036 Notes, due December 2036 2036 Notes, due December 2036 2041 Notes, due October 2041 2041 Notes, due October 2041 2045 Notes, due December 2045 2045 Notes, due December 2045 2051 Notes, due October 2051 2051 Notes, due October 2051 Total Long-Term Debt Total Long-Term Debt Maxim 2023 Notes, due March 2023 Maxim 2023 Notes, due March 2023 Total Current Debt Total Current Debt Total Debt Total Debt 15. 15. Subsequent Events Subsequent Events On November 21, 2022, the Board of Directors of the Company declared a cash dividend of $0.76 per outstanding share On November 21, 2022, the Board of Directors of the Company declared a cash dividend of $0.76 per outstanding share of common stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on of common stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, 2022 and is expected to total approximately $387.1 million. December 5, 2022 and is expected to total approximately $387.1 million. 83 83 84 84 ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANALOG DEVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) On April 8, 2020, in an underwritten public offering of green bonds, the Company issued $400.0 million aggregate On April 8, 2020, in an underwritten public offering of green bonds, the Company issued $400.0 million aggregate principal amount of 2.95% senior unsecured notes due April 1, 2025 (the April 2025 Notes), with semi-annual fixed interest principal amount of 2.95% senior unsecured notes due April 1, 2025 (the April 2025 Notes), with semi-annual fixed interest payments due on April 1 and October 1 of each year, commencing on October 1, 2020. The Company used the net proceeds of payments due on April 1 and October 1 of each year, commencing on October 1, 2020. The Company used the net proceeds of $395.6 million from the green bond offering to finance or refinance new and existing eligible projects involving renewable $395.6 million from the green bond offering to finance or refinance new and existing eligible projects involving renewable energy, green buildings, and eco-efficient products, production technologies and processes. Debt discounts and underwriting energy, green buildings, and eco-efficient products, production technologies and processes. Debt discounts and underwriting fees will be amortized through interest expense over the term of the April 2025 Notes. At any time prior to March 1, 2025, the fees will be amortized through interest expense over the term of the April 2025 Notes. At any time prior to March 1, 2025, the Company may, at its option, redeem some or all of the April 2025 Notes at a redemption price equal to the greater of 100% of Company may, at its option, redeem some or all of the April 2025 Notes at a redemption price equal to the greater of 100% of the principal amount of the April 2025 Notes being redeemed and the make-whole premium, plus accrued and unpaid interest the principal amount of the April 2025 Notes being redeemed and the make-whole premium, plus accrued and unpaid interest on the April 2025 Notes being redeemed, if any, to but excluding the date of redemption. The April 2025 Notes are unsecured on the April 2025 Notes being redeemed, if any, to but excluding the date of redemption. The April 2025 Notes are unsecured and rank equally in right of payment with all of the Company's other existing and future unsecured senior indebtedness. The and rank equally in right of payment with all of the Company's other existing and future unsecured senior indebtedness. The April 2025 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain April 2025 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, 2022, the Company was in compliance with these covenants. 2022, the Company was in compliance with these covenants. In conjunction with the Acquisition, the Company recognized $500.0 million aggregate principal amount of Maxim’s In conjunction with the Acquisition, the Company recognized $500.0 million aggregate principal amount of Maxim’s 3.375% senior unsecured and unsubordinated notes due March 15, 2023 (the Maxim 2023 Notes) and $500.0 million aggregate 3.375% senior unsecured and unsubordinated notes due March 15, 2023 (the Maxim 2023 Notes) and $500.0 million aggregate principal amount of Maxim’s 3.45% senior unsecured and unsubordinated notes due June 15, 2027 (the Maxim 2027 Notes), principal amount of Maxim’s 3.45% senior unsecured and unsubordinated notes due June 15, 2027 (the Maxim 2027 Notes), which were recognized at fair value as of the Acquisition Date. On October 5, 2021, Maxim gave notice that it would redeem which were recognized at fair value as of the Acquisition Date. On October 5, 2021, Maxim gave notice that it would redeem the Maxim 2023 Notes, and in November 2021 (fiscal 2022), the Maxim 2023 Notes were redeemed for cash. the Maxim 2023 Notes, and in November 2021 (fiscal 2022), the Maxim 2023 Notes were redeemed for cash. On October 7, 2022, the Company completed an offer to exchange any and all outstanding Maxim 2027 Notes, for new On October 7, 2022, the Company completed an offer to exchange any and all outstanding Maxim 2027 Notes, for new 3.450% Senior Notes due June 15, 2027 (the ADI 2027 Notes) to be issued by the Company and cash. Pursuant to the exchange 3.450% Senior Notes due June 15, 2027 (the ADI 2027 Notes) to be issued by the Company and cash. Pursuant to the exchange offer, $440.2 million aggregate principal amount of the Maxim 2027 Notes were tendered and subsequently accepted for offer, $440.2 million aggregate principal amount of the Maxim 2027 Notes were tendered and subsequently accepted for exchange, and the Company retired and canceled all Maxim 2027 Notes accepted for exchange. In exchange for the tendered exchange, and the Company retired and canceled all Maxim 2027 Notes accepted for exchange. In exchange for the tendered Maxim 2027 Notes, the Company issued approximately $440.2 million aggregate principal amount of ADI 2027 Notes pursuant Maxim 2027 Notes, the Company issued approximately $440.2 million aggregate principal amount of ADI 2027 Notes pursuant to a private exchange offer exempt from, or not subject to, registration under the Securities Act of 1933, as amended and to a private exchange offer exempt from, or not subject to, registration under the Securities Act of 1933, as amended and $0.5 million in cash. The ADI 2027 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental $0.5 million in cash. The ADI 2027 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain certain covenants similar to those applicable to the 2045 Notes, events of default and other customary indenture, which contain certain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. The ADI 2027 Notes bear interest at a rate of 3.450% per annum, with semi-annual fixed interest payments due on provisions. The ADI 2027 Notes bear interest at a rate of 3.450% per annum, with semi-annual fixed interest payments due on June 15 and December 15 of each year, commencing on December 15, 2022 and will mature on June 15, 2027. As of October June 15 and December 15 of each year, commencing on December 15, 2022 and will mature on June 15, 2027. As of October 29, 2022, the Company was in compliance with the covenants in the ADI 2027 Notes and the outstanding Maxim 2027 Notes. 29, 2022, the Company was in compliance with the covenants in the ADI 2027 Notes and the outstanding Maxim 2027 Notes. The indenture and supplemental indentures with respect to the outstanding Maxim 2027 Notes have been modified to, among The indenture and supplemental indentures with respect to the outstanding Maxim 2027 Notes have been modified to, among other things, eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events of default (other than for the other things, eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events of default (other than for the failure to pay principal, premium or interest), (iii) the obligation to offer to repurchase the Maxim 2027 Notes upon certain failure to pay principal, premium or interest), (iii) the obligation to offer to repurchase the Maxim 2027 Notes upon certain change of control transactions and (iv) any restrictions on consolidating with or merging into any other person or conveying, change of control transactions and (iv) any restrictions on consolidating with or merging into any other person or conveying, transferring or leasing all or any of its properties and assets to any person. Following settlement of the exchange offer, transferring or leasing all or any of its properties and assets to any person. Following settlement of the exchange offer, $59.8 million aggregate principal amount of the Maxim 2027 Notes remain outstanding. $59.8 million aggregate principal amount of the Maxim 2027 Notes remain outstanding. On October 5, 2021, in an underwritten public offering, the Company issued $500.0 million aggregate principal amount of On October 5, 2021, in an underwritten public offering, the Company issued $500.0 million aggregate principal amount of floating rate senior notes due October 1, 2024 (the Floating Rate Notes), $750.0 million aggregate principal amount of 1.7% floating rate senior notes due October 1, 2024 (the Floating Rate Notes), $750.0 million aggregate principal amount of 1.7% sustainability-linked senior notes due October 1, 2028 (the Sustainability-Linked Senior Notes), $1.0 billion aggregate principal sustainability-linked senior notes due October 1, 2028 (the Sustainability-Linked Senior Notes), $1.0 billion aggregate principal amount of 2.1% senior notes due October 1, 2031 (the 2031 Notes), $750.0 million aggregate principal amount of 2.8% senior amount of 2.1% senior notes due October 1, 2031 (the 2031 Notes), $750.0 million aggregate principal amount of 2.8% senior notes due October 1, 2041 (the 2041 Notes), and $1.0 billion aggregate principal amount of 2.95% senior notes due October 1, notes due October 1, 2041 (the 2041 Notes), and $1.0 billion aggregate principal amount of 2.95% senior notes due October 1, 2051 (the 2051 Notes, and, together with the Floating Rate Notes, the Sustainability-Linked Senior Notes, the 2031 Notes and 2051 (the 2051 Notes, and, together with the Floating Rate Notes, the Sustainability-Linked Senior Notes, the 2031 Notes and the 2041 Notes, the Notes). The Floating Rate Notes bear interest at a floating annual rate equal to a benchmark rate, which the 2041 Notes, the Notes). The Floating Rate Notes bear interest at a floating annual rate equal to a benchmark rate, which initially is Compounded SOFR (as defined in the Supplemental Indenture) plus 25 basis points. As of October 29, 2022, the initially is Compounded SOFR (as defined in the Supplemental Indenture) plus 25 basis points. As of October 29, 2022, the interest rate on the Floating Rate Notes was 0.3% per annum. Interest payments on the Floating Rate Notes are due on January interest rate on the Floating Rate Notes was 0.3% per annum. Interest payments on the Floating Rate Notes are due on January 1, April 1, July 1 and October 1 of each year, beginning on January 1, 2022. The Sustainability-Linked Senior Notes initially 1, April 1, July 1 and October 1 of each year, beginning on January 1, 2022. The Sustainability-Linked Senior Notes initially bear interest at a rate of 1.7% per annum and are subject to an increase of an additional 30 basis points from April 1, 2026 to the bear interest at a rate of 1.7% per annum and are subject to an increase of an additional 30 basis points from April 1, 2026 to the maturity date unless the Sustainability Performance Target (as defined in the Sustainability-Linked Senior Notes) has been maturity date unless the Sustainability Performance Target (as defined in the Sustainability-Linked Senior Notes) has been satisfied. Semi-annual fixed interest payments on the Sustainability-Linked Senior Notes, the 2031 Notes, the 2041 Notes and satisfied. Semi-annual fixed interest payments on the Sustainability-Linked Senior Notes, the 2031 Notes, the 2041 Notes and the 2051 Notes are due on April 1 and October 1 of each year, beginning on April 1, 2022. the 2051 Notes are due on April 1 and October 1 of each year, beginning on April 1, 2022. At any time prior to August 1, 2028 in the case of the Sustainability-Linked Senior Notes, July 1, 2031 in the case of the At any time prior to August 1, 2028 in the case of the Sustainability-Linked Senior Notes, July 1, 2031 in the case of the 2031 Notes, April 1, 2041 in the case of the 2041 Notes and April 1, 2051 in the case of the 2051 Notes (each, a Par Call Date), 2031 Notes, April 1, 2041 in the case of the 2041 Notes and April 1, 2051 in the case of the 2051 Notes (each, a Par Call Date), the Company may, at its option, redeem some or all of the applicable series of Notes at a redemption price equal to the greater the Company may, at its option, redeem some or all of the applicable series of Notes at a redemption price equal to the greater of (i) 100% of the principal amount of such series of Notes being redeemed and (ii) the make-whole redemption price (as of (i) 100% of the principal amount of such series of Notes being redeemed and (ii) the make-whole redemption price (as described in the Supplemental Indenture). On and after the applicable Par Call Date, the Company may, at its option, redeem described in the Supplemental Indenture). On and after the applicable Par Call Date, the Company may, at its option, redeem some or all of the applicable series of Notes at a redemption price equal to 100% of the principal amount of the Notes being some or all of the applicable series of Notes at a redemption price equal to 100% of the principal amount of the Notes being redeemed. In each case, the Company will also pay the accrued and unpaid interest on the Notes being redeemed to, but redeemed. In each case, the Company will also pay the accrued and unpaid interest on the Notes being redeemed to, but excluding, the date of redemption. The Company may not redeem the Floating Rate Notes prior to their maturity. The Notes are excluding, the date of redemption. The Company may not redeem the Floating Rate Notes prior to their maturity. The Notes are unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior indebtedness. Debt discounts and issuance costs will be amortized through interest expense over the term of the respective indebtedness. Debt discounts and issuance costs will be amortized through interest expense over the term of the respective Notes. The Notes were issued pursuant to an indenture, as supplemented by a supplemental indenture, and the indenture and Notes. The Notes were issued pursuant to an indenture, as supplemented by a supplemental indenture, and the indenture and supplemental indenture contain certain covenants, events of default and other customary provisions. As of October 29, 2022, supplemental indenture contain certain covenants, events of default and other customary provisions. As of October 29, 2022, the Company was in compliance with these covenants. the Company was in compliance with these covenants. On September 15, 2022, in an underwritten public offering, the Company issued $300.0 million aggregate principal On September 15, 2022, in an underwritten public offering, the Company issued $300.0 million aggregate principal amount of 4.250% senior notes due October 1, 2032 (the 2032 Notes) with semi-annual fixed interest payments due on April 1 amount of 4.250% senior notes due October 1, 2032 (the 2032 Notes) with semi-annual fixed interest payments due on April 1 and October 1 of each year, commencing April 1, 2023. The net proceeds of the offering were $296.1 million, after discounts and October 1 of each year, commencing April 1, 2023. The net proceeds of the offering were $296.1 million, after discounts and issuance costs. Prior to July 1, 2032 (three months prior to the maturity date), the Company may, at its option, redeem the and issuance costs. Prior to July 1, 2032 (three months prior to the maturity date), the Company may, at its option, redeem the 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of: (1) (a) the sum 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the notes matured on July 1, 2032) on a semi-annual basis at the Treasury Rate plus 20 basis points less (b) interest (assuming the notes matured on July 1, 2032) on a semi-annual basis at the Treasury Rate plus 20 basis points less (b) interest accrued to the date of redemption, and (2) 100% of the principal amount of the notes to be redeemed, plus, in either case, accrued to the date of redemption, and (2) 100% of the principal amount of the notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to the redemption date. On or after July 1, 2032, the Company may, at its option, redeem accrued and unpaid interest thereon to the redemption date. On or after July 1, 2032, the Company may, at its option, redeem the 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal the 2032 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 2032 Notes being redeemed plus accrued and unpaid interest thereon to the redemption date. The 2032 Notes are amount of the 2032 Notes being redeemed plus accrued and unpaid interest thereon to the redemption date. The 2032 Notes are unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior indebtedness. The 2032 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, indebtedness. The 2032 Notes were issued pursuant to the ADI Base Indenture, as supplemented by a supplemental indenture, which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of which contain covenants similar to those applicable to the 2045 Notes, events of default and other customary provisions. As of October 29, 2022, the Company was in compliance with these covenants. October 29, 2022, the Company was in compliance with these covenants. The Company’s debt consisted of the following as of October 29, 2022 and October 30, 2021: The Company’s debt consisted of the following as of October 29, 2022 and October 30, 2021: October 29, 2022 October 29, 2022 October 30, 2021 October 30, 2021 Unamortized Unamortized discounts, debt discounts, debt issuance costs and issuance costs and fair value fair value adjustments adjustments Principal Principal Principal Principal Unamortized Unamortized discount and debt discount and debt issuance costs issuance costs $ $ $ $ $ $ $ $ 500,000 $ 500,000 $ 400,000 400,000 900,000 900,000 59,788 59,788 440,212 440,212 750,000 750,000 1,000,000 1,000,000 300,000 300,000 144,278 144,278 750,000 750,000 332,587 332,587 1,000,000 1,000,000 1,973 $ 1,973 $ 2,145 2,145 5,258 5,258 (5,311) (5,311) (37,182) (37,182) 8,795 8,795 12,381 12,381 3,822 3,822 1,696 1,696 12,868 12,868 3,787 3,787 18,008 18,008 500,000 $ 500,000 $ 400,000 400,000 900,000 900,000 500,000 500,000 — — 750,000 750,000 1,000,000 1,000,000 — — 144,278 144,278 750,000 750,000 332,587 332,587 1,000,000 1,000,000 6,576,865 $ 6,576,865 $ 28,240 $ 28,240 $ 6,276,865 $ 6,276,865 $ — — — $ — $ — — 500,000 500,000 — $ — $ 500,000 $ 500,000 $ 6,576,865 $ 6,576,865 $ 28,240 $ 28,240 $ 6,776,865 $ 6,776,865 $ 3,091 3,091 3,029 3,029 6,534 6,534 (51,646) (51,646) — — 10,419 10,419 13,956 13,956 — — 1,814 1,814 13,690 13,690 3,952 3,952 18,814 18,814 23,653 23,653 (16,663) (16,663) (16,663) (16,663) 6,990 6,990 2024 Notes, due October 2024 2024 Notes, due October 2024 2025 Notes, due April 2025 2025 Notes, due April 2025 2026 Notes, due December 2026 2026 Notes, due December 2026 Maxim 2027 Notes, due June 2027 Maxim 2027 Notes, due June 2027 2027 Notes, due June 2027 2027 Notes, due June 2027 2028 Notes, due October 2028 2028 Notes, due October 2028 2031 Notes, due October 2031 2031 Notes, due October 2031 2032 Notes, due October 2032 2032 Notes, due October 2032 2036 Notes, due December 2036 2036 Notes, due December 2036 2041 Notes, due October 2041 2041 Notes, due October 2041 2045 Notes, due December 2045 2045 Notes, due December 2045 2051 Notes, due October 2051 2051 Notes, due October 2051 Total Long-Term Debt Total Long-Term Debt Maxim 2023 Notes, due March 2023 Maxim 2023 Notes, due March 2023 Total Current Debt Total Current Debt Total Debt Total Debt 15. 15. Subsequent Events Subsequent Events On November 21, 2022, the Board of Directors of the Company declared a cash dividend of $0.76 per outstanding share On November 21, 2022, the Board of Directors of the Company declared a cash dividend of $0.76 per outstanding share of common stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on of common stock. The dividend will be paid on December 15, 2022 to all shareholders of record at the close of business on December 5, 2022 and is expected to total approximately $387.1 million. December 5, 2022 and is expected to total approximately $387.1 million. 83 83 84 84 ITEM 9. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE FINANCIAL DISCLOSURE (c) Attestation Report of the Registered Public Accounting Firm (c) Attestation Report of the Registered Public Accounting Firm Not applicable. Not applicable. ITEM 9A. CONTROLS AND PROCEDURES ITEM 9A. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive (a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of Analog’s disclosure controls and procedures as of Officer and Chief Financial Officer, evaluated the effectiveness of Analog’s disclosure controls and procedures as of October 29, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the October 29, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of October 29, 2022, our Chief Executive Officer and Chief Financial evaluation of our disclosure controls and procedures as of October 29, 2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. (b) Management’s Report on Internal Control Over Financial Reporting. (b) Management’s Report on Internal Control Over Financial Reporting. Management’s Report on Internal Control Over Financial Reporting Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: with generally accepted accounting principles and includes those policies and procedures that: • • • • • • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; dispositions of the assets of the company; Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and company are being made only in accordance with authorizations of management and directors of the company; and Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of October 29, 2022. In Our management assessed the effectiveness of our internal control over financial reporting as of October 29, 2022. In making this assessment, the company’s management used the criteria set forth by the Committee of Sponsoring Organizations making this assessment, the company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated 2013 Framework. of the Treadway Commission (COSO) in Internal Control-Integrated 2013 Framework. Based on this assessment, our management concluded that, as of October 29, 2022, our internal control over financial Based on this assessment, our management concluded that, as of October 29, 2022, our internal control over financial reporting is effective based on those criteria. reporting is effective based on those criteria. Our independent registered public accounting firm that audited the financial statements included in this annual report has Our independent registered public accounting firm that audited the financial statements included in this annual report has issued an attestation report on our internal control over financial reporting. This report appears below. issued an attestation report on our internal control over financial reporting. This report appears below. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Analog Devices, Inc. To the Shareholders and the Board of Directors of Analog Devices, Inc. Opinion on Internal Control Over Financial Reporting Opinion on Internal Control Over Financial Reporting We have audited Analog Devices, Inc.’s internal control over financial reporting as of October 29, 2022, based on criteria We have audited Analog Devices, Inc.’s internal control over financial reporting as of October 29, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Analog Devices, Inc. (the Company) maintained, in all Commission (2013 framework) (the COSO criteria). In our opinion, Analog Devices, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 29, 2022, based on the COSO criteria. material respects, effective internal control over financial reporting as of October 29, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Analog Devices, Inc. as of October 29, 2022 and October 30, 2021, the related (PCAOB), the consolidated balance sheets of Analog Devices, Inc. as of October 29, 2022 and October 30, 2021, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended October 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) the period ended October 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated November 22, 2022 expressed an unqualified opinion thereon. and our report dated November 22, 2022 expressed an unqualified opinion thereon. Basis for Opinion Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP /s/ Ernst & Young LLP Boston, Massachusetts Boston, Massachusetts November 22, 2022 November 22, 2022 85 85 86 86 ITEM 9. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND (c) Attestation Report of the Registered Public Accounting Firm (c) Attestation Report of the Registered Public Accounting Firm FINANCIAL DISCLOSURE FINANCIAL DISCLOSURE Not applicable. Not applicable. ITEM 9A. CONTROLS AND PROCEDURES ITEM 9A. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive (a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of Analog’s disclosure controls and procedures as of Officer and Chief Financial Officer, evaluated the effectiveness of Analog’s disclosure controls and procedures as of October 29, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the October 29, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of October 29, 2022, our Chief Executive Officer and Chief Financial evaluation of our disclosure controls and procedures as of October 29, 2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. (b) Management’s Report on Internal Control Over Financial Reporting. (b) Management’s Report on Internal Control Over Financial Reporting. Management’s Report on Internal Control Over Financial Reporting Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: with generally accepted accounting principles and includes those policies and procedures that: Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; dispositions of the assets of the company; Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and company are being made only in accordance with authorizations of management and directors of the company; and Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. disposition of the company’s assets that could have a material effect on the financial statements. • • • • • • Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of October 29, 2022. In Our management assessed the effectiveness of our internal control over financial reporting as of October 29, 2022. In making this assessment, the company’s management used the criteria set forth by the Committee of Sponsoring Organizations making this assessment, the company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated 2013 Framework. of the Treadway Commission (COSO) in Internal Control-Integrated 2013 Framework. Based on this assessment, our management concluded that, as of October 29, 2022, our internal control over financial Based on this assessment, our management concluded that, as of October 29, 2022, our internal control over financial reporting is effective based on those criteria. reporting is effective based on those criteria. Our independent registered public accounting firm that audited the financial statements included in this annual report has Our independent registered public accounting firm that audited the financial statements included in this annual report has issued an attestation report on our internal control over financial reporting. This report appears below. issued an attestation report on our internal control over financial reporting. This report appears below. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Analog Devices, Inc. To the Shareholders and the Board of Directors of Analog Devices, Inc. Opinion on Internal Control Over Financial Reporting Opinion on Internal Control Over Financial Reporting We have audited Analog Devices, Inc.’s internal control over financial reporting as of October 29, 2022, based on criteria We have audited Analog Devices, Inc.’s internal control over financial reporting as of October 29, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Analog Devices, Inc. (the Company) maintained, in all Commission (2013 framework) (the COSO criteria). In our opinion, Analog Devices, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 29, 2022, based on the COSO criteria. material respects, effective internal control over financial reporting as of October 29, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Analog Devices, Inc. as of October 29, 2022 and October 30, 2021, the related (PCAOB), the consolidated balance sheets of Analog Devices, Inc. as of October 29, 2022 and October 30, 2021, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended October 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) the period ended October 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated November 22, 2022 expressed an unqualified opinion thereon. and our report dated November 22, 2022 expressed an unqualified opinion thereon. Basis for Opinion Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP /s/ Ernst & Young LLP Boston, Massachusetts Boston, Massachusetts November 22, 2022 November 22, 2022 85 85 86 86 (d) Changes in Internal Controls over Financial Reporting. No change in our internal control over financial reporting (as (d) Changes in Internal Controls over Financial Reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) occurred during the fiscal quarter ended defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) occurred during the fiscal quarter ended October 29, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial October 29, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. reporting. ITEM 9B. OTHER INFORMATION ITEM 9B. OTHER INFORMATION Not applicable. Not applicable. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. Not applicable. PART III PART III ITEM 10. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information required by this item is contained in our 2023 proxy statement to be filed with the U.S. Securities and Information required by this item is contained in our 2023 proxy statement to be filed with the U.S. Securities and Exchange Commission (the SEC) within 120 days after October 29, 2022 and is incorporated herein by reference. Exchange Commission (the SEC) within 120 days after October 29, 2022 and is incorporated herein by reference. We have adopted a written code of business conduct and ethics that applies to our principal executive officer, principal We have adopted a written code of business conduct and ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and have posted it in the financial officer, principal accounting officer or controller, or persons performing similar functions and have posted it in the Corporate Governance section of our website which is located at www.analog.com. To the extent permitted by Nasdaq and Corporate Governance section of our website which is located at www.analog.com. To the extent permitted by Nasdaq and SEC regulations, we intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding any amendments to, or SEC regulations, we intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding any amendments to, or waivers from, our code of business conduct and ethics by posting such information on our website which is located at waivers from, our code of business conduct and ethics by posting such information on our website which is located at www.analog.com. www.analog.com. During fiscal 2022, we made no material change to the procedures by which shareholders may recommend nominees to During fiscal 2022, we made no material change to the procedures by which shareholders may recommend nominees to our Board of Directors, as described in our 2022 proxy statement. our Board of Directors, as described in our 2022 proxy statement. ITEM 11. ITEM 11. EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after October 29, 2022 and is incorporated herein by reference. October 29, 2022 and is incorporated herein by reference. ITEM 12. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS RELATED STOCKHOLDER MATTERS Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after October 29, 2022 and is incorporated herein by reference. October 29, 2022 and is incorporated herein by reference. ITEM 13. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE INDEPENDENCE Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after October 29, 2022 and is incorporated herein by reference. October 29, 2022 and is incorporated herein by reference. ITEM 14. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES PRINCIPAL ACCOUNTANT FEES AND SERVICES Our independent registered accounting firm is Ernst & Young, Boston, Massachusetts (PCAOB ID: 42). Our independent registered accounting firm is Ernst & Young, Boston, Massachusetts (PCAOB ID: 42). Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after October 29, 2022 and is incorporated herein by reference. October 29, 2022 and is incorporated herein by reference. 87 87 88 88 (d) Changes in Internal Controls over Financial Reporting. No change in our internal control over financial reporting (as (d) Changes in Internal Controls over Financial Reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) occurred during the fiscal quarter ended defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) occurred during the fiscal quarter ended October 29, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial October 29, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. reporting. ITEM 9B. OTHER INFORMATION ITEM 9B. OTHER INFORMATION Not applicable. Not applicable. Not applicable. Not applicable. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS PART III PART III ITEM 10. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information required by this item is contained in our 2023 proxy statement to be filed with the U.S. Securities and Information required by this item is contained in our 2023 proxy statement to be filed with the U.S. Securities and Exchange Commission (the SEC) within 120 days after October 29, 2022 and is incorporated herein by reference. Exchange Commission (the SEC) within 120 days after October 29, 2022 and is incorporated herein by reference. We have adopted a written code of business conduct and ethics that applies to our principal executive officer, principal We have adopted a written code of business conduct and ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and have posted it in the financial officer, principal accounting officer or controller, or persons performing similar functions and have posted it in the Corporate Governance section of our website which is located at www.analog.com. To the extent permitted by Nasdaq and Corporate Governance section of our website which is located at www.analog.com. To the extent permitted by Nasdaq and SEC regulations, we intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding any amendments to, or SEC regulations, we intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding any amendments to, or waivers from, our code of business conduct and ethics by posting such information on our website which is located at waivers from, our code of business conduct and ethics by posting such information on our website which is located at www.analog.com. www.analog.com. During fiscal 2022, we made no material change to the procedures by which shareholders may recommend nominees to During fiscal 2022, we made no material change to the procedures by which shareholders may recommend nominees to our Board of Directors, as described in our 2022 proxy statement. our Board of Directors, as described in our 2022 proxy statement. ITEM 11. ITEM 11. EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after October 29, 2022 and is incorporated herein by reference. October 29, 2022 and is incorporated herein by reference. ITEM 12. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS RELATED STOCKHOLDER MATTERS Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after October 29, 2022 and is incorporated herein by reference. October 29, 2022 and is incorporated herein by reference. ITEM 13. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE INDEPENDENCE Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after October 29, 2022 and is incorporated herein by reference. October 29, 2022 and is incorporated herein by reference. ITEM 14. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES PRINCIPAL ACCOUNTANT FEES AND SERVICES Our independent registered accounting firm is Ernst & Young, Boston, Massachusetts (PCAOB ID: 42). Our independent registered accounting firm is Ernst & Young, Boston, Massachusetts (PCAOB ID: 42). Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after Information required by this item is contained in our 2023 proxy statement to be filed with the SEC within 120 days after October 29, 2022 and is incorporated herein by reference. October 29, 2022 and is incorporated herein by reference. 87 87 88 88 PART IV PART IV Exhibit No. Exhibit No. Description Description ITEM 15. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following are filed as part of this Annual Report on Form 10-K: (a) The following are filed as part of this Annual Report on Form 10-K: 1. Financial Statements 1. Financial Statements The following consolidated financial statements are included in Item 8 of this Annual Report on Form 10-K: The following consolidated financial statements are included in Item 8 of this Annual Report on Form 10-K: — — Consolidated Statements of Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 Consolidated Statements of Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 — — Consolidated Statements of Comprehensive Income for the years ended October 29, 2022, October 30, 2021 and Consolidated Statements of Comprehensive Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 October 31, 2020 — — Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021 Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021 — — Consolidated Statements of Shareholders’ Equity for the years ended October 29, 2022, October 30, 2021 and Consolidated Statements of Shareholders’ Equity for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 October 31, 2020 — — Consolidated Statements of Cash Flows for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 Consolidated Statements of Cash Flows for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 2. Financial Statement Schedules 2. Financial Statement Schedules Schedule II — Valuation and Qualifying Accounts Schedule II — Valuation and Qualifying Accounts All other schedules have been omitted since the required information is not present, or not present in amounts sufficient All other schedules have been omitted since the required information is not present, or not present in amounts sufficient to require submission of the schedule or because the information required is included in the Consolidated Financial Statements to require submission of the schedule or because the information required is included in the Consolidated Financial Statements or the Notes thereto. or the Notes thereto. 3. Exhibits 3. Exhibits Exhibit No. 2.1 Description Description Exhibit No. 2.1 Agreement and Plan of Merger, dated as of July 26, 2016, by and among Analog Devices, Inc., Linear Agreement and Plan of Merger, dated as of July 26, 2016, by and among Analog Devices, Inc., Linear Technology Corporation and Agreement and Plan of Merger, dated as of July 26, 2016, by and among Analog Technology Corporation and Agreement and Plan of Merger, dated as of July 26, 2016, by and among Analog Devices, Inc., Linear Technology Corporation and Tahoe Acquisition Corp., filed as exhibit 2.1 to the Devices, Inc., Linear Technology Corporation and Tahoe Acquisition Corp., filed as exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 29, 2016 and Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 29, 2016 and incorporated herein by reference. incorporated herein by reference. 2.2 Agreement and Plan of Merger, dated as of July 12, 2020, by and among Analog Devices, Inc., Maxim Agreement and Plan of Merger, dated as of July 12, 2020, by and among Analog Devices, Inc., Maxim Integrated Products, Inc. and Magneto Corp., filed as exhibit 2.1 to the Company’s Current Report on Form 8-K Integrated Products, Inc. and Magneto Corp., filed as exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 15, 2020 and incorporated herein by reference. (File No. 1-7819) as filed with the Commission on July 15, 2020 and incorporated herein by reference. 2.2 3.1 3.2 3.3 4.1 4.2 4.3 4.4 3.1 Restated Articles of Organization of Analog Devices, Inc., as amended, filed as exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 2008 (File No. 1-7819) as filed with the Commission on May 20, 2008 and incorporated herein by reference. Restated Articles of Organization of Analog Devices, Inc., as amended, filed as exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 2008 (File No. 1-7819) as filed with the Commission on May 20, 2008 and incorporated herein by reference. Amendment to Restated Articles of Organization of Analog Devices, Inc., filed as exhibit 3.1 to the Company's 3.2 Amendment to Restated Articles of Organization of Analog Devices, Inc., filed as exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 8, 2008 and Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 8, 2008 and incorporated herein by reference. incorporated herein by reference. 3.3 Amended and Restated By-Laws of Analog Devices, Inc., filed as exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 17, 2018 and incorporated herein by reference. Amended and Restated By-Laws of Analog Devices, Inc., filed as exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 17, 2018 and incorporated herein by reference. 4.1 Indenture, dated as of June 10, 2010, between Maxim Integrated Products, Inc. and Wells Fargo Bank, National Association, as trustee, filed as exhibit 4.4 to Maxim Integrated Products, Inc.'s Registration Statement on Form S-3 (File No. 1-34192) as filed with the Commission on June 10, 2010 and incorporated herein by reference. Indenture, dated as of June 10, 2010, between Maxim Integrated Products, Inc. and Wells Fargo Bank, National Association, as trustee, filed as exhibit 4.4 to Maxim Integrated Products, Inc.'s Registration Statement on Form S-3 (File No. 1-34192) as filed with the Commission on June 10, 2010 and incorporated herein by reference. Second Supplemental Indenture, dated as of March 18, 2013, between Maxim Integrated Products, Inc. and 4.2 Second Supplemental Indenture, dated as of March 18, 2013, between Maxim Integrated Products, Inc. and Wells Fargo Bank, National Association, as trustee (including the form of note contained therein), filed as Wells Fargo Bank, National Association, as trustee (including the form of note contained therein), filed as exhibit 4.1 to Maxim Integrated Products, Inc.'s Current Report on Form 8-K (File No. 1-34192) as filed with the exhibit 4.1 to Maxim Integrated Products, Inc.'s Current Report on Form 8-K (File No. 1-34192) as filed with the Commission on March 21, 2013 and incorporated herein by reference. Commission on March 21, 2013 and incorporated herein by reference. 4.3 Indenture, dated as of June 3, 2013, by and between Analog Devices, Inc. and The Bank of New York Mellon Indenture, dated as of June 3, 2013, by and between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, filed as exhibit 4.1 to the Company's Current Report on Form 8-K (File No. Trust Company, N.A., as trustee, filed as exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on June 3, 2013 and incorporated herein by reference. 1-7819) as filed with the Commission on June 3, 2013 and incorporated herein by reference. 4.4 Supplemental Indenture, dated as of June 3, 2013, by and between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on June 3, 2013 and incorporated herein by reference. Supplemental Indenture, dated as of June 3, 2013, by and between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on June 3, 2013 and incorporated herein by reference. 89 89 90 4.5 4.6 4.5 Supplemental Indenture, dated December 14, 2015, between Analog Devices, Inc. and The Bank of New York Supplemental Indenture, dated December 14, 2015, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 14, the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 14, 2015 and incorporated herein by reference. 2015 and incorporated herein by reference. 4.6 Supplemental Indenture, dated December 5, 2016, between Analog Devices, Inc. and The Bank of New York Supplemental Indenture, dated December 5, 2016, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 5, the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 5, 2016 and incorporated herein by reference. 2016 and incorporated herein by reference. 4.7 4.7 Fourth Supplemental Indenture, dated as of June 15, 2017, between Maxim Integrated Products, Inc. and Wells Fourth Supplemental Indenture, dated as of June 15, 2017, between Maxim Integrated Products, Inc. and Wells Fargo Bank, National Association, as trustee (including the form of note contained therein), filed as exhibit 4.1 Fargo Bank, National Association, as trustee (including the form of note contained therein), filed as exhibit 4.1 to Maxim Integrated Products, Inc.'s Current Report on Form 8-K (File No. 1-34192) as filed with the to Maxim Integrated Products, Inc.'s Current Report on Form 8-K (File No. 1-34192) as filed with the Commission on June 20, 2017 and incorporated herein by reference. Commission on June 20, 2017 and incorporated herein by reference. 4.8 4.8 Supplemental Indenture, dated March 12, 2018, between Analog Devices, Inc. and The Bank of New York Supplemental Indenture, dated March 12, 2018, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on March 12, 2018 the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on March 12, 2018 and incorporated herein by reference. and incorporated herein by reference. 4.9 4.9 Supplemental Indenture, dated April 8, 2020, between Analog Devices, Inc. and The Bank of New York Mellon Supplemental Indenture, dated April 8, 2020, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on April 8, 2020 and Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on April 8, 2020 and incorporated herein by reference. incorporated herein by reference. 4.10 4.10 Supplemental Indenture, dated October 5, 2021, between Analog Devices, Inc. and The Bank of New York Supplemental Indenture, dated October 5, 2021, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 5, 2021 the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 5, 2021 and incorporated herein by reference. and incorporated herein by reference. 4.11 4.11 Supplemental Indenture, dated September 15, 2022, between Analog Devices, Inc. and The Bank of New York Supplemental Indenture, dated September 15, 2022, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on September 15, 2022 Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on September 15, 2022 and incorporated herein by reference. and incorporated herein by reference. 4.12 4.12 Supplemental Indenture, dated as of October 7, 2022, between Analog Devices, Inc. and The Bank of New York Supplemental Indenture, dated as of October 7, 2022, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 7, 2022 and Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 7, 2022 and incorporated herein by reference. incorporated herein by reference. 4.13 4.13 Fifth Supplemental Indenture, dated as of October 7, 2022, between Maxim Integrated Products, Inc. and Fifth Supplemental Indenture, dated as of October 7, 2022, between Maxim Integrated Products, Inc. and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee, filed Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee, filed as exhibit 4.4 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on as exhibit 4.4 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 7, 2022 and incorporated herein by reference. October 7, 2022 and incorporated herein by reference. 4.14 4.14 Registration Rights Agreement, dated as of October 7, 2022, between Analog Devices, Inc. and TD Securities Registration Rights Agreement, dated as of October 7, 2022, between Analog Devices, Inc. and TD Securities (USA) LLC. filed as exhibit 4.5 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with (USA) LLC. filed as exhibit 4.5 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 7, 2022, and incorporated herein by reference. the Commission on October 7, 2022, and incorporated herein by reference. 4.15 4.15 Description of the Registrant's Securities, filed as exhibit 4.6 to the Company's Annual Report on Form 10-K for Description of the Registrant's Securities, filed as exhibit 4.6 to the Company's Annual Report on Form 10-K for the fiscal year ended November 2, 2019 (File No. 1-7819) as filed with the Commission on November 26, 2019 the fiscal year ended November 2, 2019 (File No. 1-7819) as filed with the Commission on November 26, 2019 and incorporated herein by reference. and incorporated herein by reference. *10.1 *10.1 Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Current Report on Form 8-K as filed with the Commission on December 8, 2008 (File No. 1-7819) Company's Current Report on Form 8-K as filed with the Commission on December 8, 2008 (File No. 1-7819) and incorporated herein by reference. and incorporated herein by reference. *10.2 *10.2 First Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as First Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2011 (File exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2011 (File No. 1-7819) as filed with the Commission on August 16, 2011 and incorporated herein by reference. No. 1-7819) as filed with the Commission on August 16, 2011 and incorporated herein by reference. *10.3 *10.3 Second Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as Second Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended August 1, 2015 (File exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended August 1, 2015 (File No. 1-7819) as filed with the Commission on August 18, 2015 and incorporated herein by reference. No. 1-7819) as filed with the Commission on August 18, 2015 and incorporated herein by reference. *10.4 *10.4 Third Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as Third Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 29, 2017 exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 29, 2017 (File No. 1-7819) as filed with the Commission on August 30, 2017 and incorporated herein by reference. (File No. 1-7819) as filed with the Commission on August 30, 2017 and incorporated herein by reference. *10.5 *10.5 Fourth Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as Fourth Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended November 2, 2019 (File exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended November 2, 2019 (File No. 1-7819) as filed with the Commission on November 26, 2019 and incorporated herein by reference. No. 1-7819) as filed with the Commission on November 26, 2019 and incorporated herein by reference. *10.6 *10.6 Fifth Amendment to the Analog Devices, Inc. Amended and Restate Deferred Compensation Plan, filed as Fifth Amendment to the Analog Devices, Inc. Amended and Restate Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2021 (File exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2021 (File No. 1-7819) as filed with the Commission on August 18, 2021 and incorporated herein by reference. No. 1-7819) as filed with the Commission on August 18, 2021 and incorporated herein by reference. PART IV PART IV ITEM 15. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following are filed as part of this Annual Report on Form 10-K: (a) The following are filed as part of this Annual Report on Form 10-K: 1. Financial Statements 1. Financial Statements The following consolidated financial statements are included in Item 8 of this Annual Report on Form 10-K: The following consolidated financial statements are included in Item 8 of this Annual Report on Form 10-K: — — Consolidated Statements of Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 Consolidated Statements of Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 — — Consolidated Statements of Comprehensive Income for the years ended October 29, 2022, October 30, 2021 and Consolidated Statements of Comprehensive Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 October 31, 2020 October 31, 2020 October 31, 2020 — — Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021 Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021 — — Consolidated Statements of Shareholders’ Equity for the years ended October 29, 2022, October 30, 2021 and Consolidated Statements of Shareholders’ Equity for the years ended October 29, 2022, October 30, 2021 and — — Consolidated Statements of Cash Flows for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 Consolidated Statements of Cash Flows for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 2. Financial Statement Schedules 2. Financial Statement Schedules Schedule II — Valuation and Qualifying Accounts Schedule II — Valuation and Qualifying Accounts All other schedules have been omitted since the required information is not present, or not present in amounts sufficient All other schedules have been omitted since the required information is not present, or not present in amounts sufficient to require submission of the schedule or because the information required is included in the Consolidated Financial Statements to require submission of the schedule or because the information required is included in the Consolidated Financial Statements or the Notes thereto. or the Notes thereto. 3. Exhibits 3. Exhibits Exhibit No. Exhibit No. Description Description 2.1 2.1 Agreement and Plan of Merger, dated as of July 26, 2016, by and among Analog Devices, Inc., Linear Agreement and Plan of Merger, dated as of July 26, 2016, by and among Analog Devices, Inc., Linear Technology Corporation and Agreement and Plan of Merger, dated as of July 26, 2016, by and among Analog Technology Corporation and Agreement and Plan of Merger, dated as of July 26, 2016, by and among Analog Devices, Inc., Linear Technology Corporation and Tahoe Acquisition Corp., filed as exhibit 2.1 to the Devices, Inc., Linear Technology Corporation and Tahoe Acquisition Corp., filed as exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 29, 2016 and Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 29, 2016 and incorporated herein by reference. incorporated herein by reference. 2.2 2.2 Agreement and Plan of Merger, dated as of July 12, 2020, by and among Analog Devices, Inc., Maxim Agreement and Plan of Merger, dated as of July 12, 2020, by and among Analog Devices, Inc., Maxim Integrated Products, Inc. and Magneto Corp., filed as exhibit 2.1 to the Company’s Current Report on Form 8-K Integrated Products, Inc. and Magneto Corp., filed as exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 15, 2020 and incorporated herein by reference. (File No. 1-7819) as filed with the Commission on July 15, 2020 and incorporated herein by reference. 3.1 3.1 Restated Articles of Organization of Analog Devices, Inc., as amended, filed as exhibit 3.1 to the Company's Restated Articles of Organization of Analog Devices, Inc., as amended, filed as exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 2008 (File No. 1-7819) as filed with the Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 2008 (File No. 1-7819) as filed with the Commission on May 20, 2008 and incorporated herein by reference. Commission on May 20, 2008 and incorporated herein by reference. 3.2 3.2 Amendment to Restated Articles of Organization of Analog Devices, Inc., filed as exhibit 3.1 to the Company's Amendment to Restated Articles of Organization of Analog Devices, Inc., filed as exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 8, 2008 and Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 8, 2008 and incorporated herein by reference. incorporated herein by reference. 3.3 Amended and Restated By-Laws of Analog Devices, Inc., filed as exhibit 3.1 to the Company's Current Report Amended and Restated By-Laws of Analog Devices, Inc., filed as exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 17, 2018 and incorporated herein by on Form 8-K (File No. 1-7819) as filed with the Commission on December 17, 2018 and incorporated herein by reference. reference. 4.1 Indenture, dated as of June 10, 2010, between Maxim Integrated Products, Inc. and Wells Fargo Bank, National Indenture, dated as of June 10, 2010, between Maxim Integrated Products, Inc. and Wells Fargo Bank, National Association, as trustee, filed as exhibit 4.4 to Maxim Integrated Products, Inc.'s Registration Statement on Form Association, as trustee, filed as exhibit 4.4 to Maxim Integrated Products, Inc.'s Registration Statement on Form S-3 (File No. 1-34192) as filed with the Commission on June 10, 2010 and incorporated herein by reference. S-3 (File No. 1-34192) as filed with the Commission on June 10, 2010 and incorporated herein by reference. 4.2 Second Supplemental Indenture, dated as of March 18, 2013, between Maxim Integrated Products, Inc. and Second Supplemental Indenture, dated as of March 18, 2013, between Maxim Integrated Products, Inc. and Wells Fargo Bank, National Association, as trustee (including the form of note contained therein), filed as Wells Fargo Bank, National Association, as trustee (including the form of note contained therein), filed as exhibit 4.1 to Maxim Integrated Products, Inc.'s Current Report on Form 8-K (File No. 1-34192) as filed with the exhibit 4.1 to Maxim Integrated Products, Inc.'s Current Report on Form 8-K (File No. 1-34192) as filed with the Commission on March 21, 2013 and incorporated herein by reference. Commission on March 21, 2013 and incorporated herein by reference. 4.3 Indenture, dated as of June 3, 2013, by and between Analog Devices, Inc. and The Bank of New York Mellon Indenture, dated as of June 3, 2013, by and between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, filed as exhibit 4.1 to the Company's Current Report on Form 8-K (File No. Trust Company, N.A., as trustee, filed as exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on June 3, 2013 and incorporated herein by reference. 1-7819) as filed with the Commission on June 3, 2013 and incorporated herein by reference. 4.4 Supplemental Indenture, dated as of June 3, 2013, by and between Analog Devices, Inc. and The Bank of New Supplemental Indenture, dated as of June 3, 2013, by and between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on June 3, 2013 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on June 3, 2013 and incorporated herein by reference. and incorporated herein by reference. 3.3 4.1 4.2 4.3 4.4 Exhibit No. 4.5 Exhibit No. 4.5 Description Supplemental Indenture, dated December 14, 2015, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 14, 2015 and incorporated herein by reference. Description Supplemental Indenture, dated December 14, 2015, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 14, 2015 and incorporated herein by reference. 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 *10.1 *10.2 *10.3 *10.4 *10.5 *10.6 4.6 Supplemental Indenture, dated December 5, 2016, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 5, 2016 and incorporated herein by reference. Supplemental Indenture, dated December 5, 2016, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on December 5, 2016 and incorporated herein by reference. 4.7 Fourth Supplemental Indenture, dated as of June 15, 2017, between Maxim Integrated Products, Inc. and Wells Fourth Supplemental Indenture, dated as of June 15, 2017, between Maxim Integrated Products, Inc. and Wells Fargo Bank, National Association, as trustee (including the form of note contained therein), filed as exhibit 4.1 Fargo Bank, National Association, as trustee (including the form of note contained therein), filed as exhibit 4.1 to Maxim Integrated Products, Inc.'s Current Report on Form 8-K (File No. 1-34192) as filed with the to Maxim Integrated Products, Inc.'s Current Report on Form 8-K (File No. 1-34192) as filed with the Commission on June 20, 2017 and incorporated herein by reference. Commission on June 20, 2017 and incorporated herein by reference. 4.8 Supplemental Indenture, dated March 12, 2018, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on March 12, 2018 and incorporated herein by reference. Supplemental Indenture, dated March 12, 2018, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on March 12, 2018 and incorporated herein by reference. 4.9 Supplemental Indenture, dated April 8, 2020, between Analog Devices, Inc. and The Bank of New York Mellon Supplemental Indenture, dated April 8, 2020, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on April 8, 2020 and Company’s Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on April 8, 2020 and incorporated herein by reference. incorporated herein by reference. Supplemental Indenture, dated October 5, 2021, between Analog Devices, Inc. and The Bank of New York Supplemental Indenture, dated October 5, 2021, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to Mellon Trust Company, N.A., as trustee (including the forms of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 5, 2021 the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 5, 2021 and incorporated herein by reference. and incorporated herein by reference. Supplemental Indenture, dated September 15, 2022, between Analog Devices, Inc. and The Bank of New York Supplemental Indenture, dated September 15, 2022, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on September 15, 2022 Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on September 15, 2022 and incorporated herein by reference. and incorporated herein by reference. Supplemental Indenture, dated as of October 7, 2022, between Analog Devices, Inc. and The Bank of New York Supplemental Indenture, dated as of October 7, 2022, between Analog Devices, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Mellon Trust Company, N.A., as trustee (including the form of note contained therein), filed as exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 7, 2022 and Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 7, 2022 and incorporated herein by reference. incorporated herein by reference. Fifth Supplemental Indenture, dated as of October 7, 2022, between Maxim Integrated Products, Inc. and Fifth Supplemental Indenture, dated as of October 7, 2022, between Maxim Integrated Products, Inc. and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee, filed Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee, filed as exhibit 4.4 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on as exhibit 4.4 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 7, 2022 and incorporated herein by reference. October 7, 2022 and incorporated herein by reference. 4.10 4.11 4.12 4.13 4.14 Registration Rights Agreement, dated as of October 7, 2022, between Analog Devices, Inc. and TD Securities (USA) LLC. filed as exhibit 4.5 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 7, 2022, and incorporated herein by reference. Registration Rights Agreement, dated as of October 7, 2022, between Analog Devices, Inc. and TD Securities (USA) LLC. filed as exhibit 4.5 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on October 7, 2022, and incorporated herein by reference. 4.15 Description of the Registrant's Securities, filed as exhibit 4.6 to the Company's Annual Report on Form 10-K for Description of the Registrant's Securities, filed as exhibit 4.6 to the Company's Annual Report on Form 10-K for the fiscal year ended November 2, 2019 (File No. 1-7819) as filed with the Commission on November 26, 2019 the fiscal year ended November 2, 2019 (File No. 1-7819) as filed with the Commission on November 26, 2019 and incorporated herein by reference. and incorporated herein by reference. Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Current Report on Form 8-K as filed with the Commission on December 8, 2008 (File No. 1-7819) Company's Current Report on Form 8-K as filed with the Commission on December 8, 2008 (File No. 1-7819) and incorporated herein by reference. and incorporated herein by reference. *10.1 *10.2 First Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2011 (File No. 1-7819) as filed with the Commission on August 16, 2011 and incorporated herein by reference. First Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2011 (File No. 1-7819) as filed with the Commission on August 16, 2011 and incorporated herein by reference. *10.3 Second Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended August 1, 2015 (File No. 1-7819) as filed with the Commission on August 18, 2015 and incorporated herein by reference. Second Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended August 1, 2015 (File No. 1-7819) as filed with the Commission on August 18, 2015 and incorporated herein by reference. *10.4 Third Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 29, 2017 (File No. 1-7819) as filed with the Commission on August 30, 2017 and incorporated herein by reference. Third Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 29, 2017 (File No. 1-7819) as filed with the Commission on August 30, 2017 and incorporated herein by reference. *10.5 Fourth Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended November 2, 2019 (File No. 1-7819) as filed with the Commission on November 26, 2019 and incorporated herein by reference. Fourth Amendment to the Analog Devices, Inc. Amended and Restated Deferred Compensation Plan, filed as exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended November 2, 2019 (File No. 1-7819) as filed with the Commission on November 26, 2019 and incorporated herein by reference. *10.6 Fifth Amendment to the Analog Devices, Inc. Amended and Restate Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2021 (File No. 1-7819) as filed with the Commission on August 18, 2021 and incorporated herein by reference. Fifth Amendment to the Analog Devices, Inc. Amended and Restate Deferred Compensation Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2021 (File No. 1-7819) as filed with the Commission on August 18, 2021 and incorporated herein by reference. 89 89 90 Exhibit No. *10.7 Exhibit No. *10.7 Description Description Description Description Trust Agreement for Deferred Compensation Plan dated as of October 1, 2003 between Analog Devices, Inc. and Fidelity Management Trust Company, filed as exhibit 10.28 to the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2003 (File No. 1-7819) as filed with the Commission on December 23, 2003 and incorporated herein by reference. Trust Agreement for Deferred Compensation Plan dated as of October 1, 2003 between Analog Devices, Inc. and Fidelity Management Trust Company, filed as exhibit 10.28 to the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2003 (File No. 1-7819) as filed with the Commission on December 23, 2003 and incorporated herein by reference. *10.8 *10.9 *10.10 *10.11 *10.12 *10.13 *10.14 *10.15 *10.16 *10.17 *10.18 *10.19 *10.20 *10.21 *10.22 *10.8 First Amendment to Trust Agreement for Deferred Compensation Plan between Analog Devices, Inc. and First Amendment to Trust Agreement for Deferred Compensation Plan between Analog Devices, Inc. and Fidelity Management Trust Company dated as of January 1, 2005, filed as exhibit 10.3 to the Company's Annual Fidelity Management Trust Company dated as of January 1, 2005, filed as exhibit 10.3 to the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2006 (File No. 1-7819) as filed with the Commission Report on Form 10-K for the fiscal year ended October 28, 2006 (File No. 1-7819) as filed with the Commission on November 20, 2006 and incorporated herein by reference. on November 20, 2006 and incorporated herein by reference. *10.9 Second Amendment to Trust Agreement for Deferred Compensation Plan between Analog Devices, Inc. and Fidelity Management Trust Company dated as of December 10, 2007, filed as exhibit 10.41 to the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2008 (File No. 1-7819) as filed with the Commission on November 25, 2008 and incorporated herein by reference. Second Amendment to Trust Agreement for Deferred Compensation Plan between Analog Devices, Inc. and Fidelity Management Trust Company dated as of December 10, 2007, filed as exhibit 10.41 to the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2008 (File No. 1-7819) as filed with the Commission on November 25, 2008 and incorporated herein by reference. Amended and Restated 2006 Stock Incentive Plan of Analog Devices, Inc., filed as exhibit 10.1 to the Amended and Restated 2006 Stock Incentive Plan of Analog Devices, Inc., filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2014 (File No. 1-7819) as Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2014 (File No. 1-7819) as filed with the Commission on February 18, 2014 and incorporated herein by reference. filed with the Commission on February 18, 2014 and incorporated herein by reference. *10.10 *10.11 Analog Devices, Inc. Amended and Restated 2010 Equity Incentive Plan, filed as Exhibit 4.2 to the Post- Effective Amendment No. 1 on Form S-8 to the Company's Registration Statement on Form S-4 (File No. 333-213454) as filed with the Commission on March 15, 2017 and incorporated herein by reference. Analog Devices, Inc. Amended and Restated 2010 Equity Incentive Plan, filed as Exhibit 4.2 to the Post- Effective Amendment No. 1 on Form S-8 to the Company's Registration Statement on Form S-4 (File No. 333-213454) as filed with the Commission on March 15, 2017 and incorporated herein by reference. *10.12 *10.13 Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and incorporated herein by reference. Form of Non-Qualified Stock Option Agreement for Directors for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 28, 2017 (File No. 1-7819) as filed with the Commission on February 15, 2017 and incorporated herein by reference. Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and incorporated herein by reference. Form of Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 3, 2018 (File No. 1-7819) as filed with the Commission on February 28, 2018 and incorporated herein by reference. Form of Relative TSR Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 4, 2019 (File No. 1-7819) as filed with the Commission on May 22, 2019 and incorporated herein by reference. Form of Financial Key Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 4, 2019 (File No. 1-7819) as filed with the Commission on May 22, 2019 and incorporated herein by reference. Form of Restricted Stock Unit Agreement for Directors for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and incorporated herein by reference. Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and incorporated herein by reference. Form of Non-Qualified Stock Option Agreement for Directors for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 28, 2017 (File No. 1-7819) as filed with the Commission on February 15, 2017 and incorporated herein by reference. Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and incorporated herein by reference. Form of Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 3, 2018 (File No. 1-7819) as filed with the Commission on February 28, 2018 and incorporated herein by reference. Form of Relative TSR Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 4, 2019 (File No. 1-7819) as filed with the Commission on May 22, 2019 and incorporated herein by reference. Form of Financial Key Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 4, 2019 (File No. 1-7819) as filed with the Commission on May 22, 2019 and incorporated herein by reference. Form of Restricted Stock Unit Agreement for Directors for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and incorporated herein by reference. *10.14 *10.15 *10.16 *10.17 *10.18 *10.19 Form of Linear Integration Performance Restricted Stock Unit Agreement for Employees for usage under the Analog Devices, Inc. Amended and Restated 2006 Stock Incentive Plan, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 11, 2017 and incorporated by herein reference. Form of Linear Integration Performance Restricted Stock Unit Agreement for Employees for usage under the Analog Devices, Inc. Amended and Restated 2006 Stock Incentive Plan, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 11, 2017 and incorporated by herein reference. *10.20 Analog Devices, Inc. 2020 Equity Incentive Plan, filed as Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A (File No. 1-7819), as filed with the Commission on January 24, 2020 and incorporated herein by reference. Analog Devices, Inc. 2020 Equity Incentive Plan, filed as Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A (File No. 1-7819), as filed with the Commission on January 24, 2020 and incorporated herein by reference. *10.21 Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. *10.22 91 92 Exhibit No. Exhibit No. *10.23 *10.23 Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter Incentive Plan, filed as exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. herein by reference. *10.24 *10.24 Form of Restricted Stock Unit Agreement for Directors for usage under the Company's 2020 Equity Incentive Form of Restricted Stock Unit Agreement for Directors for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended Plan, filed as exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. by reference. *10.25 *10.25 Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.5 to the Company’s Quarterly Report usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. February 19, 2020 and incorporated herein by reference. *10.26 *10.26 Non-Qualified Performance Stock Option Agreement – CEO Performance Stock Option Award, filed as Exhibit Non-Qualified Performance Stock Option Agreement – CEO Performance Stock Option Award, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-07819) as filed with the Commission on 10.1 to the Company’s Current Report on Form 8-K (File No. 001-07819) as filed with the Commission on December 17, 2020 and incorporated herein by reference. December 17, 2020 and incorporated herein by reference. *10.27 *10.27 Form of Performance Restricted Stock Unit Agreement – Integration Award, filed as Exhibit 10.2 to the Form of Performance Restricted Stock Unit Agreement – Integration Award, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-07819) as filed with the Commission on December 17, Company’s Current Report on Form 8-K (File No. 001-07819) as filed with the Commission on December 17, 2020 and incorporated herein by reference. 2020 and incorporated herein by reference. *10.28 *10.28 Form of Restricted Stock Unit Agreement for Non-Employee Directors for usage under the Company’s 2020 Form of Restricted Stock Unit Agreement for Non-Employee Directors for usage under the Company’s 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.3 to the Company's Quarterly Report on Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. February 17, 2021 and incorporated herein by reference. *10.29 *10.29 Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company’s 2020 Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.4 to the Company's Quarterly Report on Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. February 17, 2021 and incorporated herein by reference. *10.30 *10.30 Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.5 to the Company's Quarterly Report on Form 10- Incentive Plan adopted December 8, 2020, filed as exhibit 10.5 to the Company's Quarterly Report on Form 10- Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. 2021 and incorporated herein by reference. *10.31 *10.31 Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.6 to the usage under the Company's 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. filed with the Commission on February 17, 2021 and incorporated herein by reference. *10.32 *10.32 Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.7 to the Company's Quarterly Report 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. February 17, 2021 and incorporated herein by reference. *10.33 *10.33 Form of Financial Metric Performance Restricted Stock Unit Agreement for China Employees for usage under Form of Financial Metric Performance Restricted Stock Unit Agreement for China Employees for usage under the 2020 Equity Stock Incentive Plan adopted December 8, 2020, filed as exhibit 10.8 to the Company's the 2020 Equity Stock Incentive Plan adopted December 8, 2020, filed as exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. Commission on February 17, 2021 and incorporated herein by reference. *10.34 *10.34 Form of Restricted Stock Unit Agreement for Non-Employee Directors for usage under the Company’s 2020 Form of Restricted Stock Unit Agreement for Non-Employee Directors for usage under the Company’s 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.1 to the Company's Quarterly Report on Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. February 16, 2022 and incorporated herein by reference. *10.35 *10.35 Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10- Incentive Plan adopted December 7, 2021, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10- Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. 2022 and incorporated herein by reference. *10.36 *10.36 Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.4 to the usage under the Company's 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. filed with the Commission on February 16, 2022 and incorporated herein by reference. *10.37 *10.37 Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.5 to the Company’s Company's 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. Commission on February 16, 2022 and incorporated herein by reference. Description Description Exhibit No. *10.23 Exhibit No. *10.23 Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. Exhibit No. Exhibit No. Description Description *10.7 *10.7 Trust Agreement for Deferred Compensation Plan dated as of October 1, 2003 between Analog Devices, Inc. Trust Agreement for Deferred Compensation Plan dated as of October 1, 2003 between Analog Devices, Inc. and Fidelity Management Trust Company, filed as exhibit 10.28 to the Company's Annual Report on Form 10-K and Fidelity Management Trust Company, filed as exhibit 10.28 to the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2003 (File No. 1-7819) as filed with the Commission on December 23, for the fiscal year ended November 1, 2003 (File No. 1-7819) as filed with the Commission on December 23, 2003 and incorporated herein by reference. 2003 and incorporated herein by reference. *10.8 *10.8 First Amendment to Trust Agreement for Deferred Compensation Plan between Analog Devices, Inc. and First Amendment to Trust Agreement for Deferred Compensation Plan between Analog Devices, Inc. and Fidelity Management Trust Company dated as of January 1, 2005, filed as exhibit 10.3 to the Company's Annual Fidelity Management Trust Company dated as of January 1, 2005, filed as exhibit 10.3 to the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2006 (File No. 1-7819) as filed with the Commission Report on Form 10-K for the fiscal year ended October 28, 2006 (File No. 1-7819) as filed with the Commission on November 20, 2006 and incorporated herein by reference. on November 20, 2006 and incorporated herein by reference. *10.9 *10.9 Second Amendment to Trust Agreement for Deferred Compensation Plan between Analog Devices, Inc. and Second Amendment to Trust Agreement for Deferred Compensation Plan between Analog Devices, Inc. and Fidelity Management Trust Company dated as of December 10, 2007, filed as exhibit 10.41 to the Company's Fidelity Management Trust Company dated as of December 10, 2007, filed as exhibit 10.41 to the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2008 (File No. 1-7819) as filed with the Annual Report on Form 10-K for the fiscal year ended November 1, 2008 (File No. 1-7819) as filed with the Commission on November 25, 2008 and incorporated herein by reference. Commission on November 25, 2008 and incorporated herein by reference. *10.10 *10.10 Amended and Restated 2006 Stock Incentive Plan of Analog Devices, Inc., filed as exhibit 10.1 to the Amended and Restated 2006 Stock Incentive Plan of Analog Devices, Inc., filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2014 (File No. 1-7819) as Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2014 (File No. 1-7819) as filed with the Commission on February 18, 2014 and incorporated herein by reference. filed with the Commission on February 18, 2014 and incorporated herein by reference. *10.11 *10.11 Analog Devices, Inc. Amended and Restated 2010 Equity Incentive Plan, filed as Exhibit 4.2 to the Post- Analog Devices, Inc. Amended and Restated 2010 Equity Incentive Plan, filed as Exhibit 4.2 to the Post- Effective Amendment No. 1 on Form S-8 to the Company's Registration Statement on Form S-4 (File No. Effective Amendment No. 1 on Form S-8 to the Company's Registration Statement on Form S-4 (File No. 333-213454) as filed with the Commission on March 15, 2017 and incorporated herein by reference. 333-213454) as filed with the Commission on March 15, 2017 and incorporated herein by reference. *10.12 *10.12 Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company's Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and incorporated herein by reference. February 20, 2019 and incorporated herein by reference. *10.13 *10.13 Form of Non-Qualified Stock Option Agreement for Directors for usage under the Company's Amended and Form of Non-Qualified Stock Option Agreement for Directors for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for Restated 2006 Stock Incentive Plan, filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 28, 2017 (File No. 1-7819) as filed with the Commission on February 15, 2017 the fiscal quarter ended January 28, 2017 (File No. 1-7819) as filed with the Commission on February 15, 2017 and incorporated herein by reference. and incorporated herein by reference. *10.14 *10.14 Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for Restated 2006 Stock Incentive Plan, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and incorporated herein by reference. and incorporated herein by reference. *10.15 *10.15 Form of Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended Form of Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.7 to the Company's Quarterly Report on Form 10-Q and Restated 2006 Stock Incentive Plan, filed as exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 3, 2018 (File No. 1-7819) as filed with the Commission on February 28, for the fiscal quarter ended February 3, 2018 (File No. 1-7819) as filed with the Commission on February 28, 2018 and incorporated herein by reference. 2018 and incorporated herein by reference. *10.16 *10.16 Form of Relative TSR Performance Restricted Stock Unit Agreement for Employees for usage under the Form of Relative TSR Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.1 to the Company's Quarterly Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 4, 2019 (File No. 1-7819) as filed with the Commission Report on Form 10-Q for the fiscal quarter ended May 4, 2019 (File No. 1-7819) as filed with the Commission on May 22, 2019 and incorporated herein by reference. on May 22, 2019 and incorporated herein by reference. *10.17 *10.17 Form of Financial Key Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Form of Financial Key Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as Exhibit 10.2 to the Company's Quarterly Company's Amended and Restated 2006 Stock Incentive Plan, filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 4, 2019 (File No. 1-7819) as filed with the Commission Report on Form 10-Q for the fiscal quarter ended May 4, 2019 (File No. 1-7819) as filed with the Commission on May 22, 2019 and incorporated herein by reference. on May 22, 2019 and incorporated herein by reference. *10.18 *10.18 Form of Restricted Stock Unit Agreement for Directors for usage under the Company's Amended and Restated Form of Restricted Stock Unit Agreement for Directors for usage under the Company's Amended and Restated 2006 Stock Incentive Plan, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal 2006 Stock Incentive Plan, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and quarter ended February 2, 2019 (File No. 1-7819) as filed with the Commission on February 20, 2019 and incorporated herein by reference. incorporated herein by reference. *10.19 *10.19 Form of Linear Integration Performance Restricted Stock Unit Agreement for Employees for usage under the Form of Linear Integration Performance Restricted Stock Unit Agreement for Employees for usage under the Analog Devices, Inc. Amended and Restated 2006 Stock Incentive Plan, filed as Exhibit 10.1 to the Company's Analog Devices, Inc. Amended and Restated 2006 Stock Incentive Plan, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 11, 2017 and incorporated Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 11, 2017 and incorporated by herein reference. by herein reference. *10.20 *10.20 Analog Devices, Inc. 2020 Equity Incentive Plan, filed as Appendix B to the Company’s Definitive Proxy Analog Devices, Inc. 2020 Equity Incentive Plan, filed as Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A (File No. 1-7819), as filed with the Commission on January 24, 2020 and Statement on Schedule 14A (File No. 1-7819), as filed with the Commission on January 24, 2020 and incorporated herein by reference. incorporated herein by reference. *10.21 *10.21 Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q Company's 2020 Equity Incentive Plan, filed as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. 2020 and incorporated herein by reference. *10.22 *10.22 Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company's 2020 Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal Equity Incentive Plan, filed as exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. incorporated herein by reference. *10.24 *10.25 *10.26 *10.27 *10.28 *10.29 *10.30 *10.31 *10.32 *10.33 *10.34 *10.35 *10.36 *10.37 *10.24 Form of Restricted Stock Unit Agreement for Directors for usage under the Company's 2020 Equity Incentive Form of Restricted Stock Unit Agreement for Directors for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended Plan, filed as exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. by reference. *10.25 Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan, filed as exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 1, 2020 (File No. 1-7819) as filed with the Commission on February 19, 2020 and incorporated herein by reference. *10.26 Non-Qualified Performance Stock Option Agreement – CEO Performance Stock Option Award, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-07819) as filed with the Commission on December 17, 2020 and incorporated herein by reference. Non-Qualified Performance Stock Option Agreement – CEO Performance Stock Option Award, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-07819) as filed with the Commission on December 17, 2020 and incorporated herein by reference. *10.27 Form of Performance Restricted Stock Unit Agreement – Integration Award, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-07819) as filed with the Commission on December 17, 2020 and incorporated herein by reference. Form of Performance Restricted Stock Unit Agreement – Integration Award, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-07819) as filed with the Commission on December 17, 2020 and incorporated herein by reference. *10.28 *10.29 *10.30 *10.31 Form of Restricted Stock Unit Agreement for Non-Employee Directors for usage under the Company’s 2020 Form of Restricted Stock Unit Agreement for Non-Employee Directors for usage under the Company’s 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.3 to the Company's Quarterly Report on Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. February 17, 2021 and incorporated herein by reference. Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company’s 2020 Form of Global Non-Qualified Stock Option Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.4 to the Company's Quarterly Report on Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. February 17, 2021 and incorporated herein by reference. Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.5 to the Company's Quarterly Report on Form 10- Incentive Plan adopted December 8, 2020, filed as exhibit 10.5 to the Company's Quarterly Report on Form 10- Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. 2021 and incorporated herein by reference. Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.6 to the usage under the Company's 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. filed with the Commission on February 17, 2021 and incorporated herein by reference. Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.7 to the Company's Quarterly Report 2020 Equity Incentive Plan adopted December 8, 2020, filed as exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. February 17, 2021 and incorporated herein by reference. Form of Financial Metric Performance Restricted Stock Unit Agreement for China Employees for usage under Form of Financial Metric Performance Restricted Stock Unit Agreement for China Employees for usage under the 2020 Equity Stock Incentive Plan adopted December 8, 2020, filed as exhibit 10.8 to the Company's the 2020 Equity Stock Incentive Plan adopted December 8, 2020, filed as exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Quarterly Report on Form 10-Q for the fiscal quarter ended January 30, 2021 (File No. 1-7819) as filed with the Commission on February 17, 2021 and incorporated herein by reference. Commission on February 17, 2021 and incorporated herein by reference. Form of Restricted Stock Unit Agreement for Non-Employee Directors for usage under the Company’s 2020 Form of Restricted Stock Unit Agreement for Non-Employee Directors for usage under the Company’s 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.1 to the Company's Quarterly Report on Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. February 16, 2022 and incorporated herein by reference. *10.32 *10.33 *10.34 *10.35 Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10- Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10- Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. *10.36 Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. *10.37 Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. Form of Financial Metric Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted December 7, 2021, filed as exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. 91 92 Exhibit No. *10.38 Exhibit No. *10.38 Description Description Exhibit No. Exhibit No. Description Description Form of EVP Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted March 7, 2022, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. Form of EVP Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted March 7, 2022, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. *10.39 *10.40 *10.41 *10.42 *10.43 *10.44 *10.45 *10.46 *10.47 *10.48 *10.49 *10.50 *10.51 *10.39 Form of EVP Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted March 7, 2022, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. Form of EVP Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted March 7, 2022, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. *10.40 Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted April 4, 2022, filed as exhibit 10.3 to the usage under the Company's 2020 Equity Incentive Plan adopted April 4, 2022, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. with the Commission on May 18, 2022 and incorporated herein by reference. *10.41 ADI Executive Performance Incentive Plan, filed as exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. ADI Executive Performance Incentive Plan, filed as exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. *10.42 Form of Executive Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted June 6, 2022, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2022 (File No. 1-7819) as filed with the Commission on August 17, 2022 and incorporated herein by reference. Form of Executive Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted June 6, 2022, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2022 (File No. 1-7819) as filed with the Commission on August 17, 2022 and incorporated herein by reference. Form of Executive Financial Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted June 6, 2022, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2022 (File No. 1-7819) as filed with the Commission on August 17, 2022 and incorporated herein by reference. Form of Executive Financial Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted June 6, 2022, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2022 (File No. 1-7819) as filed with the Commission on August 17, 2022 and incorporated herein by reference. *10.43 *10.44 *10.45 Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.36 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. Form of Global Restricted Stock Unit Agreement for usage under the Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.37 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. Form of Global Non-Qualified Stock Option Agreement for usage under the Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.38 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 1996 Stock Incentive Plan adopted December 7, 2021, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10- Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.36 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. Form of Global Restricted Stock Unit Agreement for usage under the Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.37 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. Form of Global Non-Qualified Stock Option Agreement for usage under the Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.38 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 1996 Stock Incentive Plan adopted December 7, 2021, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10- Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. *10.46 *10.47 *10.48 Form of Employee Retention Agreement, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 5, 2012 (File No. 1-7819) as filed with the Commission on May 22, 2012 and incorporated herein by reference. Form of Employee Retention Agreement, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 5, 2012 (File No. 1-7819) as filed with the Commission on May 22, 2012 and incorporated herein by reference. *10.49 Employee Change in Control Severance Policy of Analog Devices, Inc., as amended, filed as exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1999 (File No. 1-7819) as filed with the Commission on January 28, 2000 and incorporated herein by reference. Employee Change in Control Severance Policy of Analog Devices, Inc., as amended, filed as exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1999 (File No. 1-7819) as filed with the Commission on January 28, 2000 and incorporated herein by reference. *10.50 Senior Management Change in Control Severance Policy of Analog Devices, Inc., as amended, filed as exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1999 (File No. 1-7819) as filed with the Commission on January 28, 2000 and incorporated herein by reference. Offer Letter for Prashanth Mahendra-Rajah, dated August 4, 2017, filed as exhibit 10.28 to the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2017 (File No. 1-7819) as filed with the Commission on November 22, 2017 and incorporated herein by reference. Senior Management Change in Control Severance Policy of Analog Devices, Inc., as amended, filed as exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1999 (File No. 1-7819) as filed with the Commission on January 28, 2000 and incorporated herein by reference. Offer Letter for Prashanth Mahendra-Rajah, dated August 4, 2017, filed as exhibit 10.28 to the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2017 (File No. 1-7819) as filed with the Commission on November 22, 2017 and incorporated herein by reference. *10.51 *10.52 Maxim Integrated Products, Inc. Amended and Restated Change in Control Employee Severance Plan for U.S. *10.52 Maxim Integrated Products, Inc. Amended and Restated Change in Control Employee Severance Plan for U.S. *10.53 *10.53 Based Employees, filed as exhibit 10.1 to Maxim Integrated Products, Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter ended December 26, 2020 (File No. 1-34192) as filed with the Commission on January 27, 2021 and incorporated herein by reference. Based Employees, filed as exhibit 10.1 to Maxim Integrated Products, Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter ended December 26, 2020 (File No. 1-34192) as filed with the Commission on January 27, 2021 and incorporated herein by reference. Form of Indemnification Agreement for Directors and Officers, filed as exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2008 (File No. 1-7819) as filed with the Commission on November 25, 2008 and incorporated herein by reference. Form of Indemnification Agreement for Directors and Officers, filed as exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2008 (File No. 1-7819) as filed with the Commission on November 25, 2008 and incorporated herein by reference. 93 94 *10.54 *10.54 Credit Agreement, dated as of June 28, 2019, among Analog Devices, Inc., as Borrower, JPMorgan Chase Bank, Credit Agreement, dated as of June 28, 2019, among Analog Devices, Inc., as Borrower, JPMorgan Chase Bank, N.A. as Administrative Agent and each lender from time to time party thereto, filed as exhibit 10.1 to the N.A. as Administrative Agent and each lender from time to time party thereto, filed as exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 1, 2019 and Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 1, 2019 and incorporated herein by reference. incorporated herein by reference. *10.55 *10.55 Third Amended and Restated Credit Agreement, dated as of June 23, 2021, among Analog Devices, Inc., as Third Amended and Restated Credit Agreement, dated as of June 23, 2021, among Analog Devices, Inc., as Borrower, Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, and each lender Borrower, Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, and each lender from time to time party thereto, filed as exhibit 10.1 to the Company's Current Report on Form 8-K (File No. from time to time party thereto, filed as exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on June 23, 2021 and incorporated herein by reference. 1-7819) as filed with the Commission on June 23, 2021 and incorporated herein by reference. *10.56 *10.56 Analog Devices, Inc. 2022 Employee Stock Purchase Plan, included as Appendix B to the Company’s definitive Analog Devices, Inc. 2022 Employee Stock Purchase Plan, included as Appendix B to the Company’s definitive proxy statement on Schedule 14A (File No. 001-07819) as filed with the Securities and Exchange Commission proxy statement on Schedule 14A (File No. 001-07819) as filed with the Securities and Exchange Commission on January 21, 2022 and incorporated herein by reference. on January 21, 2022 and incorporated herein by reference. *10.57 *10.57 Offer Letter for Gregory Bryant dated December 14, 2021 filed as exhibit 10.4 to the Company's Quarterly Offer Letter for Gregory Bryant dated December 14, 2021 filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. on May 18, 2022 and incorporated herein by reference. *10.58 *10.58 2022 First and Second Fiscal Quarters Executive Performance Incentive Plan filed as exhibit 10.40 to the 2022 First and Second Fiscal Quarters Executive Performance Incentive Plan filed as exhibit 10.40 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. with the Commission on December 3, 2021 and incorporated herein by reference. †21 Subsidiaries of the Company. Subsidiaries of the Company. †21 †23 †23 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. †31.1 †31.1 Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). †31.2 †31.2 Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). †32.1 †32.1 Certification Pursuant to 18 U.S.C. Section 1350 (Chief Executive Officer). Certification Pursuant to 18 U.S.C. Section 1350 (Chief Executive Officer). †32.2 †32.2 Certification Pursuant to 18 U.S.C. Section 1350 (Chief Financial Officer). Certification Pursuant to 18 U.S.C. Section 1350 (Chief Financial Officer). 101. INS 101. INS The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.** the inline XBRL document.** 101. SCH Inline XBRL Schema Document.** 101. SCH Inline XBRL Schema Document.** 101. CAL Inline XBRL Calculation Linkbase Document.** 101. CAL Inline XBRL Calculation Linkbase Document.** 101. LAB Inline XBRL Labels Linkbase Document.** 101. LAB Inline XBRL Labels Linkbase Document.** 101. PRE 101. PRE Inline XBRL Presentation Linkbase Document.** Inline XBRL Presentation Linkbase Document.** 101. DEF 101. DEF Inline XBRL Definition Linkbase Document** Inline XBRL Definition Linkbase Document** contained in Exhibits 101). contained in Exhibits 101). _______________________________________ _______________________________________ Filed herewith. Filed herewith. † * † * Item 15(b) of Form 10-K. Item 15(b) of Form 10-K. ** ** Submitted electronically herewith. Submitted electronically herewith. 104 104 Cover page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information Cover page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information Management contracts and compensatory plan or arrangements required to be filed as an Exhibit pursuant to Management contracts and compensatory plan or arrangements required to be filed as an Exhibit pursuant to Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline Extensible Business Reporting Language): Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (i) Consolidated Statements of Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (ii) Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021, (iii) Consolidated Statements of Shareholders’ (ii) Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021, (iii) Consolidated Statements of Shareholders’ Equity for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (iv) Consolidated Statements of Equity for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (iv) Consolidated Statements of Comprehensive Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (v) Consolidated Comprehensive Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (v) Consolidated Statements of Cash Flows for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 and (vi) Notes to Statements of Cash Flows for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 and (vi) Notes to Consolidated Financial Statements for the years ended October 29, 2022, October 30, 2021 and October 31, 2020. Consolidated Financial Statements for the years ended October 29, 2022, October 30, 2021 and October 31, 2020. Exhibit No. Exhibit No. *10.38 *10.38 Description Description Form of EVP Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Form of EVP Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 2020 Equity Incentive Plan adopted March 7, 2022, filed as exhibit 10.1 to the Company's Quarterly Report on Form Equity Incentive Plan adopted March 7, 2022, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. 2022 and incorporated herein by reference. *10.39 *10.39 Form of EVP Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Form of EVP Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted March 7, 2022, filed as exhibit 10.2 to the Company's Quarterly Report on Form Equity Incentive Plan adopted March 7, 2022, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. 2022 and incorporated herein by reference. *10.40 *10.40 Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for Form of Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted April 4, 2022, filed as exhibit 10.3 to the usage under the Company's 2020 Equity Incentive Plan adopted April 4, 2022, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. with the Commission on May 18, 2022 and incorporated herein by reference. *10.41 *10.41 ADI Executive Performance Incentive Plan, filed as exhibit 10.6 to the Company's Quarterly Report on Form ADI Executive Performance Incentive Plan, filed as exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. 2022 and incorporated herein by reference. *10.42 *10.42 Form of Executive Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Form of Executive Relative Total Shareholder Return Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted June 6, 2022, filed as exhibit Employees for usage under the Company's 2020 Equity Incentive Plan adopted June 6, 2022, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2022 (File No. 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2022 (File No. 1-7819) as filed with the Commission on August 17, 2022 and incorporated herein by reference. 1-7819) as filed with the Commission on August 17, 2022 and incorporated herein by reference. *10.43 *10.43 Form of Executive Financial Performance Restricted Stock Unit Agreement for Employees for usage under the Form of Executive Financial Performance Restricted Stock Unit Agreement for Employees for usage under the Company's 2020 Equity Incentive Plan adopted June 6, 2022, filed as exhibit 10.2 to the Company's Quarterly Company's 2020 Equity Incentive Plan adopted June 6, 2022, filed as exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2022 (File No. 1-7819) as filed with the Commission Report on Form 10-Q for the fiscal quarter ended July 30, 2022 (File No. 1-7819) as filed with the Commission on August 17, 2022 and incorporated herein by reference. on August 17, 2022 and incorporated herein by reference. *10.44 *10.44 Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.36 to the Company's Annual Report on Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.36 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. December 3, 2021 and incorporated herein by reference. *10.45 *10.45 Form of Global Restricted Stock Unit Agreement for usage under the Amended and Restated 1996 Stock Form of Global Restricted Stock Unit Agreement for usage under the Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.37 to the Company's Annual Report on Form 10-K for the fiscal year ended Incentive Plan, filed as exhibit 10.37 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. by reference. by reference. by reference. *10.46 *10.46 Form of Global Non-Qualified Stock Option Agreement for usage under the Amended and Restated 1996 Stock Form of Global Non-Qualified Stock Option Agreement for usage under the Amended and Restated 1996 Stock Incentive Plan, filed as exhibit 10.38 to the Company's Annual Report on Form 10-K for the fiscal year ended Incentive Plan, filed as exhibit 10.38 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein *10.47 *10.47 Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 1996 Stock Form of Global Restricted Stock Unit Agreement for Employees for usage under the Company’s 1996 Stock Incentive Plan adopted December 7, 2021, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10- Incentive Plan adopted December 7, 2021, filed as exhibit 10.3 to the Company's Quarterly Report on Form 10- Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, Q for the fiscal quarter ended January 29, 2022 (File No. 1-7819) as filed with the Commission on February 16, 2022 and incorporated herein by reference. 2022 and incorporated herein by reference. *10.48 *10.48 Form of Employee Retention Agreement, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q Form of Employee Retention Agreement, filed as exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 5, 2012 (File No. 1-7819) as filed with the Commission on May 22, 2012 and for the fiscal quarter ended May 5, 2012 (File No. 1-7819) as filed with the Commission on May 22, 2012 and incorporated herein by reference. incorporated herein by reference. *10.49 *10.49 Employee Change in Control Severance Policy of Analog Devices, Inc., as amended, filed as exhibit 10.20 to the Employee Change in Control Severance Policy of Analog Devices, Inc., as amended, filed as exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1999 (File No. 1-7819) as filed Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1999 (File No. 1-7819) as filed with the Commission on January 28, 2000 and incorporated herein by reference. with the Commission on January 28, 2000 and incorporated herein by reference. *10.50 *10.50 Senior Management Change in Control Severance Policy of Analog Devices, Inc., as amended, filed as exhibit Senior Management Change in Control Severance Policy of Analog Devices, Inc., as amended, filed as exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1999 (File No. 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 1999 (File No. 1-7819) as filed with the Commission on January 28, 2000 and incorporated herein by reference. 1-7819) as filed with the Commission on January 28, 2000 and incorporated herein by reference. *10.51 *10.51 Offer Letter for Prashanth Mahendra-Rajah, dated August 4, 2017, filed as exhibit 10.28 to the Company's Offer Letter for Prashanth Mahendra-Rajah, dated August 4, 2017, filed as exhibit 10.28 to the Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2017 (File No. 1-7819) as filed with the Annual Report on Form 10-K for the fiscal year ended October 28, 2017 (File No. 1-7819) as filed with the Commission on November 22, 2017 and incorporated herein by reference. Commission on November 22, 2017 and incorporated herein by reference. *10.52 Maxim Integrated Products, Inc. Amended and Restated Change in Control Employee Severance Plan for U.S. *10.52 Maxim Integrated Products, Inc. Amended and Restated Change in Control Employee Severance Plan for U.S. Based Employees, filed as exhibit 10.1 to Maxim Integrated Products, Inc.'s Quarterly Report on Form 10-Q for Based Employees, filed as exhibit 10.1 to Maxim Integrated Products, Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter ended December 26, 2020 (File No. 1-34192) as filed with the Commission on January 27, the fiscal quarter ended December 26, 2020 (File No. 1-34192) as filed with the Commission on January 27, 2021 and incorporated herein by reference. 2021 and incorporated herein by reference. *10.53 *10.53 Form of Indemnification Agreement for Directors and Officers, filed as exhibit 10.30 to the Company's Annual Form of Indemnification Agreement for Directors and Officers, filed as exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended November 1, 2008 (File No. 1-7819) as filed with the Report on Form 10-K for the fiscal year ended November 1, 2008 (File No. 1-7819) as filed with the Commission on November 25, 2008 and incorporated herein by reference. Commission on November 25, 2008 and incorporated herein by reference. *10.55 *10.56 *10.57 *10.58 †21 †23 †31.1 †31.2 Exhibit No. *10.54 Exhibit No. *10.54 Description Description Credit Agreement, dated as of June 28, 2019, among Analog Devices, Inc., as Borrower, JPMorgan Chase Bank, Credit Agreement, dated as of June 28, 2019, among Analog Devices, Inc., as Borrower, JPMorgan Chase Bank, N.A. as Administrative Agent and each lender from time to time party thereto, filed as exhibit 10.1 to the N.A. as Administrative Agent and each lender from time to time party thereto, filed as exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 1, 2019 and Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on July 1, 2019 and incorporated herein by reference. incorporated herein by reference. *10.55 Third Amended and Restated Credit Agreement, dated as of June 23, 2021, among Analog Devices, Inc., as Third Amended and Restated Credit Agreement, dated as of June 23, 2021, among Analog Devices, Inc., as Borrower, Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, and each lender Borrower, Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, and each lender from time to time party thereto, filed as exhibit 10.1 to the Company's Current Report on Form 8-K (File No. from time to time party thereto, filed as exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-7819) as filed with the Commission on June 23, 2021 and incorporated herein by reference. 1-7819) as filed with the Commission on June 23, 2021 and incorporated herein by reference. *10.56 Analog Devices, Inc. 2022 Employee Stock Purchase Plan, included as Appendix B to the Company’s definitive proxy statement on Schedule 14A (File No. 001-07819) as filed with the Securities and Exchange Commission on January 21, 2022 and incorporated herein by reference. Analog Devices, Inc. 2022 Employee Stock Purchase Plan, included as Appendix B to the Company’s definitive proxy statement on Schedule 14A (File No. 001-07819) as filed with the Securities and Exchange Commission on January 21, 2022 and incorporated herein by reference. *10.57 Offer Letter for Gregory Bryant dated December 14, 2021 filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. Offer Letter for Gregory Bryant dated December 14, 2021 filed as exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022 (File No. 1-7819) as filed with the Commission on May 18, 2022 and incorporated herein by reference. *10.58 2022 First and Second Fiscal Quarters Executive Performance Incentive Plan filed as exhibit 10.40 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. 2022 First and Second Fiscal Quarters Executive Performance Incentive Plan filed as exhibit 10.40 to the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (File No. 1-7819) as filed with the Commission on December 3, 2021 and incorporated herein by reference. †21 †23 †31.1 †31.2 Subsidiaries of the Company. Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). Certification Pursuant to 18 U.S.C. Section 1350 (Chief Executive Officer). Subsidiaries of the Company. Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). Certification Pursuant to 18 U.S.C. Section 1350 (Chief Executive Officer). Certification Pursuant to 18 U.S.C. Section 1350 (Chief Financial Officer). The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.** Certification Pursuant to 18 U.S.C. Section 1350 (Chief Financial Officer). The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.** †32.1 †32.2 101. INS †32.1 †32.2 101. INS 101. SCH Inline XBRL Schema Document.** 101. SCH Inline XBRL Schema Document.** 101. CAL Inline XBRL Calculation Linkbase Document.** 101. CAL Inline XBRL Calculation Linkbase Document.** 101. LAB Inline XBRL Labels Linkbase Document.** 101. LAB Inline XBRL Labels Linkbase Document.** 101. PRE 101. PRE Inline XBRL Presentation Linkbase Document.** 101. DEF 101. DEF Inline XBRL Definition Linkbase Document** 104 104 Cover page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). Inline XBRL Presentation Linkbase Document.** Inline XBRL Definition Linkbase Document** Cover page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). _______________________________________ _______________________________________ † * ** Filed herewith. Management contracts and compensatory plan or arrangements required to be filed as an Exhibit pursuant to Item 15(b) of Form 10-K. † Filed herewith. * Management contracts and compensatory plan or arrangements required to be filed as an Exhibit pursuant to Item 15(b) of Form 10-K. ** Submitted electronically herewith. Submitted electronically herewith. Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline Extensible Business Reporting Language): Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (i) Consolidated Statements of Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (ii) Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021, (iii) Consolidated Statements of Shareholders’ (ii) Consolidated Balance Sheets as of October 29, 2022 and October 30, 2021, (iii) Consolidated Statements of Shareholders’ Equity for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (iv) Consolidated Statements of Equity for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (iv) Consolidated Statements of Comprehensive Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (v) Consolidated Comprehensive Income for the years ended October 29, 2022, October 30, 2021 and October 31, 2020, (v) Consolidated Statements of Cash Flows for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 and (vi) Notes to Statements of Cash Flows for the years ended October 29, 2022, October 30, 2021 and October 31, 2020 and (vi) Notes to Consolidated Financial Statements for the years ended October 29, 2022, October 30, 2021 and October 31, 2020. Consolidated Financial Statements for the years ended October 29, 2022, October 30, 2021 and October 31, 2020. 93 94 ANALOG DEVICES, INC. ANALOG DEVICES, INC. SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (dollar amounts in thousands) (dollar amounts in thousands) Balance at Balance at Beginning of Beginning of Period Period Additions Additions (Reductions) (Reductions) Charged to Charged to Income Income Statement Statement Other Other Deductions Deductions Balance at Balance at End of Period End of Period Description Description Asset: Asset: Valuation Allowance for Deferred Tax Valuation Allowance for Deferred Tax Year ended October 31, 2020 Year ended October 31, 2020 Year ended October 30, 2021 Year ended October 30, 2021 Year ended October 29, 2022 Year ended October 29, 2022 $ $ $ $ $ $ 116,349 $ 116,349 $ 37,622 $ 37,622 $ 159 159 154,130 $ 154,130 $ 13,714 $ 13,714 $ 147,590 (1) $ 147,590 (1) $ 315,434 $ 315,434 $ 29,738 $ 29,738 $ (6,067) (6,067) $ $ $ $ — $ — $ — $ — $ — $ — $ 154,130 154,130 315,434 315,434 339,105 339,105 _______________________________________ _______________________________________ (1) Represents balances assumed as part of the Acquisition. (1) Represents balances assumed as part of the Acquisition. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANNUAL REPORT ON FORM 10-K ANNUAL REPORT ON FORM 10-K YEAR ENDED OCTOBER 29, 2022 YEAR ENDED OCTOBER 29, 2022 FINANCIAL STATEMENT SCHEDULE FINANCIAL STATEMENT SCHEDULE 95 95 96 96 ANALOG DEVICES, INC. ANALOG DEVICES, INC. SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Years ended October 29, 2022, October 30, 2021 and October 31, 2020 Years ended October 29, 2022, October 30, 2021 and October 31, 2020 (dollar amounts in thousands) (dollar amounts in thousands) Balance at Balance at Beginning of Beginning of Period Period Additions Additions (Reductions) (Reductions) Charged to Charged to Income Income Statement Statement Other Other Deductions Deductions Balance at Balance at End of Period End of Period Description Description Valuation Allowance for Deferred Tax Valuation Allowance for Deferred Tax Asset: Asset: 159 159 $ $ 147,590 (1) $ 147,590 (1) $ $ $ (6,067) (6,067) — $ — $ — $ — $ — $ — $ 154,130 154,130 315,434 315,434 339,105 339,105 Year ended October 31, 2020 Year ended October 31, 2020 Year ended October 30, 2021 Year ended October 30, 2021 Year ended October 29, 2022 Year ended October 29, 2022 $ $ $ $ $ $ 116,349 $ 116,349 $ 37,622 $ 37,622 $ 154,130 $ 154,130 $ 315,434 $ 315,434 $ 13,714 $ 13,714 $ 29,738 $ 29,738 $ _______________________________________ _______________________________________ (1) Represents balances assumed as part of the Acquisition. (1) Represents balances assumed as part of the Acquisition. ANALOG DEVICES, INC. ANALOG DEVICES, INC. ANNUAL REPORT ON FORM 10-K ANNUAL REPORT ON FORM 10-K YEAR ENDED OCTOBER 29, 2022 YEAR ENDED OCTOBER 29, 2022 FINANCIAL STATEMENT SCHEDULE FINANCIAL STATEMENT SCHEDULE 95 95 96 96 ITEM 16. ITEM 16. FORM 10-K SUMMARY FORM 10-K SUMMARY None. None. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES SIGNATURES Date: November 22, 2022 Date: November 22, 2022 By: By: ANALOG DEVICES, INC. ANALOG DEVICES, INC. /s/ Vincent Roche /s/ Vincent Roche Vincent Roche Vincent Roche Chief Executive Officer and Chair of the Board of Directors Chief Executive Officer and Chair of the Board of Directors (Principal Executive Officer) (Principal Executive Officer) Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. persons on behalf of the registrant and in the capacities and on the dates indicated. Name Name Title Title Date Date /s/ Vincent Roche /s/ Vincent Roche Vincent Roche Vincent Roche Chief Executive Officer and Chair of Chief Executive Officer and Chair of November 22, 2022 November 22, 2022 the Board of Directors the Board of Directors (Principal Executive Officer) (Principal Executive Officer) /s/ Prashanth Mahendra-Rajah /s/ Prashanth Mahendra-Rajah Prashanth Mahendra-Rajah Prashanth Mahendra-Rajah Executive Vice President, Finance and Executive Vice President, Finance and November 22, 2022 November 22, 2022 Chief Financial Officer Chief Financial Officer (Principal Financial Officer) (Principal Financial Officer) /s/ Michael Sondel /s/ Michael Sondel Michael Sondel Michael Sondel /s/ André Andonian /s/ André Andonian André Andonian André Andonian /s/ James A. Champy /s/ James A. Champy James A. Champy James A. Champy /s/ Anantha P. Chandrakasan /s/ Anantha P. Chandrakasan Anantha P. Chandrakasan Anantha P. Chandrakasan /s/ Tunç Doluca /s/ Tunç Doluca Tunç Doluca Tunç Doluca /s/ Bruce R. Evans /s/ Bruce R. Evans Bruce R. Evans Bruce R. Evans /s/ Edward H. Frank /s/ Edward H. Frank Edward H. Frank Edward H. Frank /s/ Laurie H. Glimcher /s/ Laurie H. Glimcher Laurie H. Glimcher Laurie H. Glimcher /s/ Karen M. Golz /s/ Karen M. Golz Karen M. Golz Karen M. Golz Corporate Vice President and Chief Corporate Vice President and Chief November 22, 2022 November 22, 2022 Accounting Officer Accounting Officer (Principal Accounting Officer) (Principal Accounting Officer) Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 97 97 98 98 ITEM 16. ITEM 16. FORM 10-K SUMMARY FORM 10-K SUMMARY None. None. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES SIGNATURES Date: November 22, 2022 Date: November 22, 2022 By: By: /s/ Vincent Roche /s/ Vincent Roche ANALOG DEVICES, INC. ANALOG DEVICES, INC. Vincent Roche Vincent Roche Chief Executive Officer and Chair of the Board of Directors Chief Executive Officer and Chair of the Board of Directors (Principal Executive Officer) (Principal Executive Officer) Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. persons on behalf of the registrant and in the capacities and on the dates indicated. Name Name Title Title Date Date /s/ Vincent Roche /s/ Vincent Roche Vincent Roche Vincent Roche Chief Executive Officer and Chair of Chief Executive Officer and Chair of the Board of Directors the Board of Directors (Principal Executive Officer) (Principal Executive Officer) November 22, 2022 November 22, 2022 /s/ Prashanth Mahendra-Rajah /s/ Prashanth Mahendra-Rajah Prashanth Mahendra-Rajah Prashanth Mahendra-Rajah Executive Vice President, Finance and Executive Vice President, Finance and Chief Financial Officer Chief Financial Officer (Principal Financial Officer) (Principal Financial Officer) November 22, 2022 November 22, 2022 /s/ Michael Sondel /s/ Michael Sondel Michael Sondel Michael Sondel /s/ André Andonian /s/ André Andonian André Andonian André Andonian /s/ James A. Champy /s/ James A. Champy James A. Champy James A. Champy /s/ Anantha P. Chandrakasan /s/ Anantha P. Chandrakasan Anantha P. Chandrakasan Anantha P. Chandrakasan /s/ Tunç Doluca /s/ Tunç Doluca Tunç Doluca Tunç Doluca /s/ Bruce R. Evans /s/ Bruce R. Evans Bruce R. Evans Bruce R. Evans /s/ Edward H. Frank /s/ Edward H. Frank Edward H. Frank Edward H. Frank /s/ Laurie H. Glimcher /s/ Laurie H. Glimcher Laurie H. Glimcher Laurie H. Glimcher /s/ Karen M. Golz /s/ Karen M. Golz Karen M. Golz Karen M. Golz Corporate Vice President and Chief Corporate Vice President and Chief Accounting Officer Accounting Officer (Principal Accounting Officer) (Principal Accounting Officer) November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 Director Director November 22, 2022 November 22, 2022 97 97 98 98 Name /s/ Mercedes Johnson Mercedes Johnson /s/ Kenton J. Sicchitano Kenton J. Sicchitano /s/ Ray Stata Ray Stata /s/ Susie Wee Susie Wee Title Director Date November 22, 2022 Director November 22, 2022 Director November 22, 2022 Director November 22, 2022 99 Name /s/ Mercedes Johnson Mercedes Johnson /s/ Kenton J. Sicchitano Kenton J. Sicchitano /s/ Ray Stata Ray Stata /s/ Susie Wee Susie Wee Title Director Date November 22, 2022 Director November 22, 2022 Director November 22, 2022 Director November 22, 2022 Notes 99 BOARD OF DIRECTORS Nominees at the Annual Meeting Anantha P. Chandrakasan, Ph.D. Dean of the MIT School of Engineering and Vannevar Bush Professor of Electrical Engineering and Computer Science Dr. Laurie H. Glimcher Professor of Medicine at Harvard Medical School and President and Chief Executive Officer of the Dana-Farber Cancer Institute Edward H. Frank, Ph.D. Executive Chair of Gradient Technologies Karen M. Golz Former Global Vice Chair of Ernst & Young Mercedes Johnson Former Chief Financial Officer of Avago Technologies (now Broadcom Inc.) Vincent Roche Chief Executive Officer and Chair of the Board of Directors of Analog Devices, Inc. James A. Champy Former Vice President of the Dell/Perot Systems business unit of Dell, Inc. André Andonian Chief Executive Officer of Andonian Advisory Pte. Ltd. and Senior Partner Emeritus at McKinsey & Company Kenton J. Sicchitano Former Global Managing Partner of PricewaterhouseCoopers LLP Ray Stata Co-Founder and Former Chair of the Board of Directors of Analog Devices, Inc. Susie Wee, Ph.D. Vice President, Google Vincent Roche Chief Executive Officer and Chair of the Board of Directors Janene Asgeirsson Senior Vice President, Chief Legal Officer, Chief Risk Officer and Secretary Gregory Bryant Executive Vice President and President of Business Units LEADERSHIP TEAM John Hassett Senior Vice President and Chief Operating Officer, Maxim Business Vivek Jain Executive Vice President, Global Operations & Technology Prashanth Mahendra-Rajah Executive Vice President, Finance and Chief Financial Officer Anelise Sacks Senior Vice President and Chief Customer Officer Mariya Trickett Senior Vice President and Chief People Officer Independent Registered Public Accounting Firm Ernst & Young LLP 200 Clarendon Street Boston, MA 02116 Transfer Agent Computershare P.O. Box 43006 Providence, RI 02940-3006 (877) 282-1168 (U.S.) (781) 575-2715 (Outside U.S.) computershare.com/investor Shareholder Inquiries Shareholders of record should contact Computershare with inquiries about their holdings, dividends, transfers of ownership, address changes or account consolidations. Stock Trading Analog Devices’ common stock trades on The Nasdaq Global Select Market under the symbol ADI. Other Information To obtain a free copy of the 2022 Annual Report on Form 10-K, Corporate Governance Guidelines, Code of Business Conduct and Ethics, or additional information, visit investor.analog.com or write to: Analog Devices, Inc. Investor Relations One Analog Way Wilmington, MA 01887 Email: investor.relations@analog.com Annual Meeting Analog Devices will hold its Annual Shareholders’ Meeting at 9:00 a.m. (local time) on Wednesday, March 8, 2023 at 125 Summer Street Boston, MA 02110. Analog Devices and the Analog Devices logo are registered trademarks of Analog Devices, Inc. All other marks are trademarks of their respective owners. 

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