Item 1. Financial Statements

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except per share amounts)

			Three Months Ended
			January 28, 2023						January 29, 2022
Revenue			$	3,249,630					$	2,684,293
Cost of sales			1,125,289						1,282,296
Gross margin			2,124,341						1,401,997
Operating expenses:
Research and development			414,095						426,780
Selling, marketing, general and administrative			326,284						297,365
Amortization of intangibles			253,142						253,367
Special charges, net			—						59,728
Total operating expenses			993,521						1,037,240
Operating income:			1,130,820						364,757
Nonoperating expense (income):
Interest expense			60,453						51,964
Interest income			(10,829)						(218)
Other, net			7,723						(10,544)
Total nonoperating expense (income)			57,347						41,202
Income before income taxes			1,073,473						323,555
Provision for income taxes			111,999						43,478
Net income			$	961,474					$	280,077
Shares used to compute earnings per common share – basic			507,121						525,291
Shares used to compute earnings per common share – diluted			511,184						530,142
Basic earnings per common share			$	1.90					$	0.53
Diluted earnings per common share			$	1.88					$	0.53

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)

			Three Months Ended
			January 28, 2023						January 29, 2022
Net income			$	961,474					$	280,077
Foreign currency translation adjustments			2,499						(4,603)
Change in fair value of derivative instruments designated as cash flow hedges, net			25,467						1,046
Changes in pension plans, net actuarial gain/loss and foreign currency translation adjustments, net			452						1,504
Other comprehensive income (loss)			28,418						(2,053)
Comprehensive income			$	989,892					$	278,024

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except share and per share amounts)

			January 28, 2023						October 29, 2022
ASSETS
Current Assets
Cash and cash equivalents			$	1,670,462					$	1,470,572
Accounts receivable			1,629,870						1,800,462
Inventories			1,522,942						1,399,914
Prepaid expenses and other current assets			338,226						267,044
Total current assets			5,161,500						4,937,992
Non-current Assets
Net property, plant and equipment			2,524,655						2,401,304
Goodwill			26,913,134						26,913,134
Intangible assets, net			12,763,229						13,265,406
Deferred tax assets			2,267,178						2,264,888
Other assets			604,824						519,626
Total non-current assets			45,073,020						45,364,358
TOTAL ASSETS			$	50,234,520					$	50,302,350
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable			$	534,659					$	582,160
Income taxes payable			513,943						265,845
Accrued liabilities			1,385,075						1,594,650
Total current liabilities			2,433,677						2,442,655
Non-current Liabilities
Long-term debt			6,543,250						6,548,625
Deferred income taxes			3,477,044						3,622,538
Income taxes payable			712,376						707,846
Other non-current liabilities			536,688						515,363
Total non-current liabilities			11,269,358						11,394,372
Shareholders’ Equity
Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding			—						—
Common stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 505,852,499 shares outstanding (509,295,941 on October 29, 2022)			84,306						84,880
Capital in excess of par value			27,319,566						27,857,270
Retained earnings			9,297,347						8,721,325
Accumulated other comprehensive loss			(169,734)						(198,152)
Total shareholders’ equity			36,531,485						36,465,323
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	50,234,520					$	50,302,350

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(in thousands)

			Three Months Ended January 28, 2023
															Capital in												Accumulated Other
			Common Stock												Excess of						Retained						Comprehensive
			Shares						Amount						Par Value						Earnings						Loss
BALANCE, OCTOBER 29, 2022			509,296						$	84,880					$	27,857,270					$	8,721,325					$	(198,152)
Net income																					961,474
Dividends declared and paid - $0.76 per share																					(385,452)
Issuance of stock under stock plans and other			617						103						41,135
Stock-based compensation expense															75,041
Other comprehensive income																											28,418
Common stock repurchased			(4,061)						(677)						(653,880)
BALANCE, JANUARY 28, 2023			505,852						$	84,306					$	27,319,566					$	9,297,347					$	(169,734)

			Three Months Ended January 29, 2022
															Capital in												Accumulated Other
			Common Stock												Excess of						Retained						Comprehensive
			Shares						Amount						Par Value						Earnings						Loss
BALANCE, OCTOBER 30, 2021			525,331						$	87,554					$	30,574,237					$	7,517,316					$	(186,565)
Net income																					280,077
Dividends declared and paid - $0.69 per share																					(362,645)
Issuance of stock under stock plans and other			579						100						8,371
Stock-based compensation expense															86,939
Other comprehensive loss																											(2,053)
Common stock repurchased			(2,595)						(433)						(575,586)
BALANCE, JANUARY 29, 2022			523,315						$	87,221					$	30,093,961					$	7,434,748					$	(188,618)

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

			Three Months Ended
			January 28, 2023						January 29, 2022
Cash flows from operating activities:
Net income			$	961,474					$	280,077
Adjustments to reconcile net income to net cash provided by operations:
Depreciation			85,321						65,165
Amortization of intangibles			502,177						504,645
Cost of goods sold for inventory acquired			—						271,396
Stock-based compensation expense			75,041						86,939
Deferred income taxes			(146,354)						(34,651)
Non-cash operating lease costs			(2,646)						7,823
Other			12,378						(9,571)
Changes in operating assets and liabilities			(81,086)						(315,410)
Total adjustments			444,831						576,336
Net cash provided by operating activities			1,406,305						856,413
Cash flows from investing activities:
Additions to property, plant and equipment			(176,158)						(111,133)
Other			102						7,824
Net cash used for investing activities			(176,056)						(103,309)
Cash flows from financing activities:
Early termination of debt			—						(519,116)
Dividend payments to shareholders			(385,452)						(362,645)
Repurchase of common stock			(654,557)						(76,019)
Proceeds from employee stock plans			41,238						8,471
Other			(31,588)						12,041
Net cash used for financing activities			(1,030,359)						(937,268)
Effect of exchange rate changes on cash			—						(3,401)
Net increase (decrease) in cash and cash equivalents			199,890						(187,565)
Cash and cash equivalents at beginning of period			1,470,572						1,977,964
Cash and cash equivalents at end of period			$	1,670,462					$	1,790,399

See accompanying notes.

ANALOG DEVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JANUARY 28, 2023 (UNAUDITED)

(all tabular amounts in thousands except per share amounts and percentages)

Note 1 – Basis of Presentation

In the opinion of management, the information furnished in the accompanying condensed consolidated financial statements reflects all normal recurring adjustments that are necessary to fairly state the results for these interim periods and should be read in conjunction with Analog Devices, Inc.’s (the Company) Annual Report on Form 10-K for the fiscal year ended October 29, 2022 (fiscal 2022) and related notes. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending October 28, 2023 (fiscal 2023) or any future period.

The Company has a 52-53 week fiscal year that ends on the Saturday closest to the last day in October. Certain amounts reported in previous periods have been reclassified to conform to the fiscal 2023 presentation.

Note 2 – Shareholders' Equity

As of January 28, 2023, the Company had repurchased a total of approximately 193.6 million shares of its common stock for approximately $12.4 billion under the Company's share repurchase program. As of January 28, 2023, an additional $4.3 billion remains available for repurchase of shares under the current authorized program. The Company also repurchases shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options as well as for the Company's employee stock purchase plan. 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.

Note 3 – Accumulated Other Comprehensive (Loss) Income

The following table provides the changes in accumulated other comprehensive (loss) income (AOCI) by component and the related tax effects during the first three months of fiscal 2023.

			Foreign currency translation adjustment																		Unrealized holding gains (losses) on derivatives						Pension plans						Total
October 29, 2022			$	(72,136)																	$	(119,613)					$	(6,403)					$	(198,152)
Other comprehensive income before reclassifications			2,499																		28,211						82						30,792
Amounts reclassified out of other comprehensive income			—																		924						370						1,294
Tax effects			—																		(3,668)						—						(3,668)
Other comprehensive income			2,499																		25,467						452						28,418
January 28, 2023			$	(69,637)																	$	(94,146)					$	(5,951)					$	(169,734)

The amounts reclassified out of AOCI into the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Shareholders' Equity with presentation location during each period were as follows:

						Three Months Ended
Comprehensive (Loss) Income Component						January 28, 2023						January 29, 2022																		Location
Unrealized holding (gains) losses on derivatives:
Currency forwards						$	(1,059)					$	1,751																	Cost of sales
						(447)						1,210																		Research and development
						(1,297)						1,873																		Selling, marketing, general and administrative
Interest rate derivatives						3,727						3,731																		Interest expense
						924						8,565																		Total before tax
						(802)						(1,301)																		Tax
						$	122					$	7,264																	Net of tax
Amortization of pension components included in the computation of net periodic pension cost:
Actuarial losses						$	370					$	489																	Net of tax
Total amounts reclassified out of AOCI, net of tax						$	492					$	7,753

Note 4 – Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

			Three Months Ended
			January 28, 2023						January 29, 2022
Net Income			$	961,474					$	280,077
Basic shares:
Weighted-average shares outstanding			507,121						525,291
Earnings per common share basic:			$	1.90					$	0.53
Diluted shares:
Weighted-average shares outstanding			507,121						525,291
Assumed exercise of common stock equivalents			4,063						4,851
Weighted-average common and common equivalent shares			511,184						530,142
Earnings per common share diluted:			$	1.88					$	0.53
Anti-dilutive shares related to:
Outstanding stock-based awards			322						185

Note 5 – Special Charges, Net

Liabilities related to special charges, net are included in Accrued liabilities in the Condensed Consolidated Balance Sheets. The activity is detailed below:

Accrued Special Charges																					Global Repositioning Actions
Balance at October 29, 2022																					$	52,070
Severance and benefit payments																					(16,298)
Balance at January 28, 2023																					$	35,772

Note 6 - Commitments and Contingencies

On March 17, 2022, Walter E. Ryan and Ryan Asset Management, LLC, purported stockholders of Maxim Integrated Products, Inc. (Maxim), filed a putative class action in the Court of Chancery of the State of Delaware (C.A. 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 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 Company's acquisition of Maxim. 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, 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 outcome of this matter or determine an estimate, or a range of estimates, of potential losses, if any.

Note 7 – Revenue

Revenue Trends by End Market

The following table summarizes revenue by end market. The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the “ship to” customer information and the end customer product or application into which the Company’s product will be incorporated. As data systems for capturing and tracking this data and the Company's methodology evolves and improves, the categorization of products by end market can vary over time. When this occurs, the Company reclassifies revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of revenue within, each end market.

			Three Months Ended
			January 28, 2023																		January 29, 2022
			Revenue						% of Revenue*						Y/Y%						Revenue						% of Revenue*
Industrial			$	1,690,202					52		%				26		%				$	1,340,284					50		%
Automotive			718,165						22		%				29		%				557,634						21		%
Communications			487,986						15		%				18		%				412,754						15		%
Consumer			353,277						11		%				(5)		%				373,621						14		%
Total revenue			$	3,249,630					100		%				21		%				$	2,684,293					100		%
* The sum of the individual percentages may not equal the total due to rounding.

Revenue by Sales Channel

The following table summarizes revenue by channel. The Company sells its products globally through a direct sales force, third party distributors, independent sales representatives and via its website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers. Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time.

			Three Months Ended
			January 28, 2023												January 29, 2022
Channel			Revenue						% of Revenue*						Revenue						% of Revenue*
Distributors			$	2,011,323					62		%				$	1,653,054					62		%
Direct customers			1,195,534						37		%				1,003,181						37		%
Other			42,773						1		%				28,058						1		%
Total revenue			$	3,249,630					100		%				$	2,684,293					100		%
* The sum of the individual percentages may not equal the total due to rounding.

Note 8 – Fair Value

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 January 28, 2023 and October 29, 2022. 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

January 28, 2023 and October 29, 2022, the Company held $702.6 million and $1,016.0 million, respectively, of cash that was excluded from the tables below.

			January 28, 2023
			Fair Value measurement at Reporting Date using:
			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)												Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds			$	967,897					$	—											$	967,897
Other assets:
Deferred compensation plan investments			70,236						—												70,236
Forward foreign currency exchange contracts			—						15,099												15,099
Total assets measured at fair value			$	1,038,133					$	15,099											$	1,053,232
Liabilities
Interest rate derivatives (1)			$	—					$	5,078											$	5,078
Total liabilities measured at fair value			$	—					$	5,078											$	5,078

(1)The carrying value of the related debt was adjusted by an equal and offsetting amount. The fair value of interest rate derivatives is estimated using a discounted cash flow analysis based on the contractual terms of the derivatives. See Note 9, Derivatives, in these Notes to Condensed Consolidated Financial Statements.

			October 29, 2022
			Fair Value measurement at Reporting Date using:
			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)												Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds			$	454,545					$	—											$	454,545
Other assets:
Deferred compensation plan investments			63,211						—												63,211
Total assets measured at fair value			$	517,756					$	—											$	517,756
Liabilities
Forward foreign currency exchange contracts			$	—					$	16,984											$	16,984
Total liabilities measured at fair value			$	—					$	16,984											$	16,984

Assets and Liabilities Not Recorded at Fair Value on a Recurring Basis

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 measurements according to the fair value hierarchy.

			January 28, 2023												October 29, 2022
			Principal Amount Outstanding						Fair Value						Principal Amount Outstanding						Fair Value
2024 Notes, due October 2024			$	500,000					$	493,553					$	500,000					$	491,982
2025 Notes, due April 2025			400,000						387,653						400,000						383,378
2026 Notes, due December 2026			900,000						873,065						900,000						851,479
Maxim 2027 Notes, due June 2027			59,788						56,272						59,788						54,771
2027 Notes, due June 2027			440,212						423,393						440,212						410,091
2028 Notes, due October 2028			750,000						652,779						750,000						621,093
2031 Notes, due October 2031			1,000,000						839,410						1,000,000						786,772
2032 Notes, due October 2032			300,000						293,118						300,000						278,359
2036 Notes, due December 2036			144,278						136,279						144,278						126,274
2041 Notes, due October 2041			750,000						582,974						750,000						513,709
2045 Notes, due December 2045			332,587						346,169						332,587						313,931
2051 Notes, due October 2051			1,000,000						731,707						1,000,000						640,766
Total debt			$	6,576,865					$	5,816,372					$	6,576,865					$	5,472,605

Note 9 – Derivatives

Foreign Exchange Exposure Management — The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash flow hedges denominated in Euros, British Pounds, Philippine Pesos, Thai Baht, South Korean Won and Japanese Yen as of January 28, 2023 and October 29, 2022 were $310.3 million and $307.1 million, respectively. The fair values of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Condensed Consolidated Balance Sheets as of January 28, 2023 and October 29, 2022 were as follows:

									Fair Value At
			Balance Sheet Location						January 28, 2023						October 29, 2022
Forward foreign currency exchange contracts			Prepaid expenses and other current assets						$	8,631					$	—
Forward foreign currency exchange contracts			Accrued liabilities						$	—					$	18,050

As of January 28, 2023 and October 29, 2022, the total notional amounts of undesignated hedges related to forward foreign currency exchange contracts were $334.9 million and $246.4 million, respectively.

The following table presents the gross amounts of the Company's forward foreign currency exchange contract derivative assets and liabilities and the net amounts recorded in the Company's Condensed Consolidated Balance Sheets:

			January 28, 2023						October 29, 2022
Gross amounts of recognized liabilities			$	(1,815)					$	(19,846)
Gross amount of recognized assets			16,914						2,862
Net assets (liabilities) presented in the Condensed Consolidated Balance Sheets			$	15,099					$	(16,984)

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 changes in interest rates. During fiscal 2023, the Company entered into interest rate swap transactions related to its outstanding $1,000.0 million aggregate principal amount of 2.1% senior unsecured notes (the 2031 Notes) where the Company swapped the notional amount of its $1,000.0 million of fixed rate debt at 2.1% into floating interest rate debt through April 1, 2031. The fair value of the swaps at inception was zero and subsequent changes in the fair value of the interest rate swaps were reflected in the carrying value of the interest rate swaps on the balance sheet. The carrying value of the debt on the balance sheet was adjusted by an equal and offsetting amount. The interest rate swaps were designated and qualified as fair value hedges. The Company does not consider the risk of counterparty default to be significant. The gain or loss on the hedged item attributable to the hedged benchmark interest rate risk and the offsetting gain or loss on the related interest rate swaps were recorded as follows:

						January 28, 2023
Balance Sheet location						Loss on Swaps						Gain on Note
Accrued liabilities						$	5,078					$	—
Long term debt						$	—					$	5,078

For information on the unrealized holding gains (losses) on derivatives included in and reclassified out of AOCI into the Condensed Consolidated Statements of Income related to forward foreign currency exchange contracts, see Note 3, Accumulated Other Comprehensive (Loss) Income, in these Notes to Condensed Consolidated Financial Statements for further information.

Note 10 – Inventories

Inventories at January 28, 2023 and October 29, 2022 were as follows:

			January 28, 2023						October 29, 2022
Raw materials			$	118,737					$	110,908
Work in process			948,201						904,648
Finished goods			456,004						384,358
Total inventories			$	1,522,942					$	1,399,914

Note 11 – Debt

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 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 the first quarter of fiscal 2023, the Company amended the Revolving Credit Agreement, replacing the LIBOR interest rate provisions with interest rate provisions based on a forward-looking term rate based on the secured overnight financing rate (SOFR) plus a 10 basis point credit spread adjustment. After the amendment, revolving loans under the Revolving Credit Agreement can be Term SOFR Loans or Base Rate Loans (each as defined in the Revolving Credit Agreement, as amended) at the Company's option. Each Term SOFR Loan will bear interest at a rate per annum equal to the applicable adjusted term SOFR plus a margin based on the Company's Debt Ratings (as defined in the Revolving Credit Agreement, as amended) from time to time of between 0.690% and 1.175%. As of January 28, 2023, the Company had no outstanding borrowings under this revolving credit facility but may borrow in the future and use the proceeds for repayment of existing indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes.

Note 12 – Income Taxes

The Company’s effective tax rates for the three-month periods ended January 28, 2023 and January 29, 2022 were below the U.S. statutory tax rate of 21.0%, due to lower statutory tax rates applicable to the Company's operations in the foreign jurisdictions in which it earns income. The Company's effective tax rate also includes the effects of the mandatory capitalization and amortization of research and development expenses which began in fiscal 2023 under the Tax Cuts and Jobs Act of 2017. The mandatory capitalization requirement decreases the Company's effective tax rate primarily by increasing the foreign-derived intangible income deduction.

It is reasonably possible that the balance of gross unrealized tax benefits, including accrued interest and penalties, could decrease by as much as $129.0 million within the next twelve months due to the completion of tax audits, including any administrative appeals.

The Company has numerous audits ongoing throughout the world including: an IRS income tax audit for the fiscal years ended November 3, 2018 and November 2, 2019; a pre-acquisition IRS income tax audit for Maxim's fiscal years ended June 27, 2015 through August 26, 2021; various U.S. state and local audits and various international audits. The Company's U.S. federal income tax returns prior to the fiscal year ended November 3, 2018 are no longer subject to examination, except for the applicable Maxim pre-acquisition fiscal years noted above.

Note 13 – New Accounting Pronouncements

Standards to Be Implemented

Acquired Contract Assets and Contract Liabilities

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update (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/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 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 December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 is effective for the Company in the first quarter of the fiscal year ended November 2, 2024. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted. The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, adoption will have on its financial position and results of operations.

Note 14 – Subsequent Events

On February 14, 2023, the Board of Directors of the Company declared a cash dividend of $0.86 per outstanding share of common stock. The dividend will be paid on March 8, 2023 to all shareholders of record at the close of business on February 27, 2023 and is expected to total approximately $435.0 million.