UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(Rule 13e-4)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
OF THE SECURITIES EXCHANGE ACT OF 1934
ANALOG DEVICES, INC.
(Name of Subject Company (Issuer) and Filing Person (Offeror))
Options to Purchase Common Stock, $0.162/3 par value
(Title of Class of Securities)
(Title of Class of Securities)
032654 10 5
(CUSIP Number of Class of Securities (Underlying Common Stock))
(CUSIP Number of Class of Securities (Underlying Common Stock))
Margaret K. Seif
V.P., General Counsel and Secretary
One Technology Way, Norwood, MA
(781) 329-4700
(Name, address and telephone number of person authorized to receive notices
and communications on behalf of filing persons)
V.P., General Counsel and Secretary
One Technology Way, Norwood, MA
(781) 329-4700
(Name, address and telephone number of person authorized to receive notices
and communications on behalf of filing persons)
with a copy to:
Mark G. Borden, Esq.
Graham Robinson, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
(617) 526-6000
Mark G. Borden, Esq.
Graham Robinson, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
(617) 526-6000
CALCULATION OF FILING FEE
| Transaction Valuation* | Amount of Filing Fee | |
| Not applicable* | Not applicable* |
| * | Pursuant to General Instruction D to Schedule TO, no filing fee is required in connection with this filing as it contains only preliminary communications made before the commencement of a tender offer. | |
| o | Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
Amount Previously Paid:
|
Not applicable | Filing Party: | Not applicable | |||
Form of Registration No.:
|
Not applicable | Date Filed: | Not applicable |
| þ | Check the box if the filing relates solely to preliminary communications made before the commencement of the tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
| o | third party tender offer subject to Rule 14d-1. | ||
| þ | issuer tender offer subject to Rule 13e-4. | ||
| o | going private transaction subject to Rule 13e-3. | ||
| o | amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting the results of the tender
offer: o
If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s)
relied upon:
| o | Rule 13e-4(i) (Cross-Border Issuer Tender Offer). | ||
| o | Rule 14d-1(d) (Cross-Border Third-Party Tender Offer). |
On June 12, 2009, Analog Devices, Inc. (Analog or the “Company”) made available to employees
supplemented questions and answers regarding the proposed option exchange program (the “Option
Exchange Program”). That employee communication is attached hereto as Exhibit 99.1.
The employee communications attached as an exhibit to this Schedule TO do not constitute an offer
to holders of the Company’s outstanding stock options to tender those options. The Option Exchange
Program will only be commenced, if at all, if the Company’s shareholders approve the Option
Exchange Program. Even if the requisite shareholder approval is obtained, the Company may still
decide later not to implement the Option Exchange Program.
The Option Exchange Program has not yet commenced. Analog will file a Tender Offer Statement on
Schedule TO with the Securities and Exchange Commission (“SEC”) upon the commencement of the Option
Exchange Program. Persons who are eligible to participate in the Option Exchange Program should
read the Tender Offer Statement on Schedule TO and other related materials when those materials
become available, because they will contain important information about the Option Exchange
Program.
In connection with the proposal to be voted on by Analog’s shareholders to approve the Option
Exchange Program, Analog has filed a preliminary proxy statement with the SEC and intends to file
other relevant materials with the SEC, including a definitive proxy statement. Analog shareholders
are urged to read such materials as and when they become available and before making any voting
decision regarding the Option Exchange Program, because they will contain important information
about the proposal to be voted on by shareholders with respect to the Option Exchange Program.
Analog shareholders and option holders will be able to obtain the written materials described above
and other documents filed by Analog with the SEC free of charge from the SEC’s website at
www.sec.gov. In addition, shareholders and option holders may obtain free copies of the documents
filed by Analog with the SEC by directing a written request to: Analog Devices, Inc. One Technology
Way, Norwood, MA 02062; Attention: Investor Relations.
ITEM 12. EXHIBITS.
| Exhibit No. | Document | |
99.1
|
Supplemented Q&As for employees regarding the Stock Option Exchange Program (June 12, 2009). |
EXHIBIT INDEX
| Exhibit No. | Document | |
99.1
|
Supplemented Q&As for employees regarding the Stock Option Exchange Program (June 12, 2009). |
Exhibit 99.1
ADI’s Proposed Stock Option Exchange Program
Employee Q & A
Employee Q & A
Thursday, June 4, 2009
| 1. | What is ADI’s proposed Stock Option Exchange Program? |
ADI is seeking shareholder approval for a proposed Stock Option Exchange Program which is a
voluntary, one-time opportunity for eligible employees to exchange certain past stock option awards
with an exercise price significantly higher than the current market price of our common stock
(known as “underwater” options) for a fewer number of new stock options at the then current market
price. The number of new stock options will be determined using exchange ratios designed to yield
new stock options with a value approximately equal to the stock options that are exchanged.
| 2. | What is the purpose of the Stock Option Exchange Program? |
The price of our common stock, along with that of other technology companies, has been
significantly affected by the worldwide economic downturn. As a result, many of our employees hold
a significant number of stock options, granted to them as part of ADI’s compensation plan, that are
underwater. These stock options have not delivered the value to our employees that we intended to
provide at the time the options were granted. If approved by shareholders, this stock option
exchange proposal will allow us to address this concern and increase the motivational and retention
value of our stock program. ADI stock options constitute a key component of our total compensation
program, encouraging our employees to think and act like owners of the business, motivating them to
work toward the Company’s success and rewarding their contributions by allowing them to benefit
from increases in our stock value.
| 3. | Why is Analog submitting the Stock Option Exchange Program for stockholder approval? |
We are asking our shareholders to approve the proposed Stock Option Exchange Program in order to
satisfy the terms of our stock plans and NYSE rules, and as a matter of good corporate governance.
We expect to hold a special shareholder meeting on July 20, 2009. We cannot proceed with this
proposal if we do not receive shareholder approval.
| 4. | Will ADI benefit from the proposed Stock Option Exchange Program? |
Yes. The Stock Option Exchange Program allows ADI to replace stock options that have little or no
retention or incentive value with stock options that we believe will provide both retention and
incentive value without creating significant additional compensation expense.
| 5. | Will this proposed Stock Option Exchange Program increase costs to ADI? |
We do not expect the Stock Option Exchange Program to result in a significant increase in costs to
ADI.
| 6. | Who will be eligible to participate in the Stock Option Exchange Program? |
We anticipate that the Stock Option Exchange Program will be open to all active employees who hold
eligible stock option grants other than our “named executive officers” as described below, in the
answer to the next question. Although we intend to include all eligible employees, ADI may have to
exclude eligible employees in certain locations outside the US if, for any reason, we find that
their participation would be illegal, inadvisable, or impractical.
| 7. | Will ADI’s executive leadership participate in the Stock Option Exchange Program? |
Members of ADI’s Board of Directors and ADI’s “named executive officers” (our CEO, chief financial
officer, and other three highest paid executive officers) as listed in our most recent proxy
statement will not be eligible to participate in the Stock Option Exchange Program.
| 8. | Are former employees who recently left ADI eligible to participate in the Stock Option Exchange Program? |
No, only active employees on the date the offer to exchange begins are eligible to participate in
the Program. Employees also must remain employed by Analog through the grant date of the new
options in order to exchange their options.
| 9. | When will the Stock Option Exchange Program begin, if our shareholders approve it? |
If shareholders approve the proposed Stock Option Exchange Program at our special shareholder
meeting currently planned for July 20, 2009, we expect to commence the Stock Option Exchange
Program in late August (but in no event more than 12 months after we receive shareholder approval).
The actual launch date of the program will be communicated to employees in advance of the program’s
commencement. From the time the Stock Option Exchange Program commences, eligible employees will
be given at least 20 business days to make an election to exchange their eligible stock options.
New stock option grants will be issued shortly after the close of the Stock Option Exchange Program
which we currently anticipate to be in late September 2009. However, even if shareholder approval
is obtained, ADI’s Board of Directors retains the authority, in its sole discretion, to determine
not to implement the Stock Option Exchange Program or to modify its terms.
| 10. | What stock options will be eligible for exchange under the Stock Option Exchange Program? |
To be eligible for exchange, a stock option grant will have to meet two basic criteria. It must:
(a) be significantly underwater which is commonly defined as having an exercise price above
the highest price ADI stock has traded at ($30.68) over the 52 weeks immediately preceding
the date the Stock Option Exchange Program begins,
and
(b) have a grant date from November 10th 2000 through December 31st
2007.
| 11. | If I participate in the Stock Option Exchange Program, how will the number of new stock options I receive be determined? |
Eligible stock options will be exchanged for a smaller number of stock options with a lower
exercise price. The number of new stock options will be determined by dividing the number of old
stock options by the specific exchange ratio applicable to that old stock option as more fully
described in the answer to the next question. ADI will use a commonly accepted stock option
valuation model to determine the actual exchange ratios to calculate the number of options granted
in a new stock option grant. The exchange ratios will be designed to result in a fair value of the
new stock option grant that is approximately equal to the fair value of the stock options that are
exchanged. The actual exchange ratios will be determined shortly before the commencement of the
Stock Option Exchange Program and communicated to employees in materials distributed at that time.
| 12. | Can you provide me with an example of how the exchange ratios work? |
The exchange ratio is based on the relationship between the current value of the original stock
options held by the eligible employee and the value of the new stock options that will be granted
in exchange. It is calculated by dividing the value of the new stock option by the value of the
original stock option that is to be exchanged with both values determined shortly before the
commencement of the program.
The value of the original stock options is determined by such factors as the original grant price
(the higher the exercise price, the less valuable the option), the year the stock option was
granted (the older the stock option, the less time for it to appreciate making it less valuable),
and the volatility of our stock (more stable stocks are less likely to show significant
appreciation and are therefore less valuable). These same factors are also applied to the new
stock options. The valuation is subject to US accounting standards which define how all companies
report the associated expense of the option grants.
The table below shows how these standards could apply to stock options that might be eligible for
exchange in Analog’s program. The older stock options with a higher exercise price are less
valuable, meaning you will need to exchange more of them for each new stock option granted.
The table below reflects the current assumptions used in our proposal to shareholders and will
likely change once we apply the final factors in effect at the time we launch the Stock Option
Exchange Program.
| Option Grant Date | Strike Price | Exchange Ratio | ||||||
Nov 10, 2000 — Sept 28, 2003 |
$ | 50.00 | + | 70:1 | ||||
| $ | 42.00-$49.99 | 24:1 | ||||||
| $ | 30.68-$41.99 | 4.5:1 | ||||||
Sept 29, 2003 — Sept 15, 2006 |
$ | 45.00 | + | 3.5:1 | ||||
| $ | 30.68-$44.99 | 2:1 | ||||||
Sept 16, 2006 — Dec 31, 2007 |
$ | 30.68 | + | 1.5:1 | ||||
The exchange ratios will be applied on a grant-by-grant basis based on where your respective stock
options fit in the above table.
| 13. | Why isn’t the exchange ratio 1-to-1 for all eligible stock options? |
As described above, underwater stock options have less value than the “at the money” new stock
options that will be granted in the Stock Option Exchange Program; therefore, more underwater stock
options are required to equal the fair value of one new stock option.
| 14. | What will be the exercise price of the replacement stock options? |
The new stock option grant will be granted with an exercise price equal to the closing price of
ADI’s stock on the new stock option grant date (which will be shortly after the close of the Stock
Option Exchange Program) as reported on the New York Stock Exchange (NYSE).
| 15. | Isn’t this just the same as re-pricing employees’ stock options? |
No. Under the terms of this program, employees who choose to give up their eligible stock option
grants will receive a lesser number of new ones in exchange. These new stock options will also
have a new vesting schedule and a new “term,” or period of time during which they may be exercised.
| 16. | What is the vesting schedule and term for the new stock option grants? |
The new stock option awards will have a new vesting period that will require employees to continue
their employment with us in order to realize the benefit of the new awards regardless of whether
the eligible options were already partially or fully vested. As a result, eligible employees will
have to continue their employment with us to realize any benefit from the new options. Except
where prohibited by local law, new options that are not vested at termination of
employment will be forfeited. The new options will also have a new contractual term which
represents the period of time during which they may be exercised prior to expiration.
| New Vesting | ||||
| Option Grant Date | Schedule | New Term | ||
Nov 10, 2000 — Sept 28, 2003
|
1 year (100%) |
2 years | ||
Sept 29, 2003 — Sept 15, 2006
|
3 years (33.3% per year) |
5 years | ||
Sept 16, 2006 — Dec 31, 2007
|
3 years (33.3% per year) |
7 years |
| 17. | If I elect to participate, when will I receive my new stock option grant? |
The new stock option grant date will be as soon as is practicable after the close of the Stock
Option Exchange Program. The new stock options will appear in your Fidelity account within 14
business days after the grant date.
| 18. | Do I have to participate in the Stock Option Exchange Program? |
No. Participation in the Stock Option Exchange Program is completely voluntary. If you choose not
to participate, you will keep all of your current outstanding stock options, including stock
options eligible for the Stock Option Exchange Program, and you will not receive a new stock option
grant as part of this program. No changes will be made to the terms of your current stock options
if you decide not to participate.
| 19. | If I choose to participate in the Stock Option Exchange Program, do I have to exchange all of my eligible stock option grants? |
No. Under the Stock Option Exchange Program, you will be able to exchange stock options on a
grant-by-grant basis. This means that you may choose to exchange some eligible grants, and choose
not to exchange others. But if you elect to exchange any stock options within a particular grant,
you must exchange all the stock options in that grant. You will not be able to exchange only a
portion of a single grant.
| 20. | What if after the exchange ratios are applied, I am eligible to receive a relatively small number of new stock options? |
The exchange ratios will be applied to each individual old stock option you elect to exchange. If
after applying the exchange ratio to a particular old stock option it results in you receiving
fewer than 100 new stock options per grant, those old stock options will be exchanged for a cash
value equivalent to the fair value of the new stock options you would have received.
| 21. | Will I be required to give up all of my rights to any original stock option that I choose to exchange under the Stock Option Exchange Program? |
Yes. The stock options you surrender in exchange for new stock options in the Stock Option Exchange
Program will be cancelled and you will no longer have any rights under those surrendered stock
options.
| 22. | Does ADI recommend that eligible employees participate in the Stock Option Exchange Program, if approved? |
ADI cannot advise you as to whether or not you should participate in the Stock Option Exchange
Program, if approved. Your participation is completely voluntary and you should seek your own
financial planning advice.
| 23. | What are the next steps in the proposed Stock Option Exchange Program? |
There is no action required by employees at this time. Below is the expected timeline of key
events for the program:
July 20th: Special Shareholder Meeting
July 21st: Communicate outcome of the Shareholder Meeting to employees
Late August: Planned commencement of the Stock Option Exchange Program
| • | Comprehensive set of information provided to employees, including a statement of eligible stock options | ||
| • | Education materials, which will help employees decide whether or not to participate in the program, will be provided to employees |
Late
September: Planned conclusion of the Stock Option Exchange
Program and granting of new stock
options
| 24. | Where can I go if I have additional questions about the Stock Option Exchange Program? |
You can find the answers to most of your questions on the Stock Option Exchange Program page on
Signals (Home > Knowledge Centers > HR > ADI Stock Option Exchange Program >). This
site will be updated weekly with answers to additional questions we receive from employees.
You also can read our preliminary proxy statement that we filed with the SEC on June 4, 2009 at
www.sec.gov or on the investor relations portion of our website at investor.analog.com
If you
have other questions, please send them to
stockoptionexchangeinfo@analog.com. Employees
without email access may call 6585-3500 to have their questions submitted to this email box. Each
Friday, the Signals site will be updated with the latest questions and answers.
Friday, June 12, 2009
| 25. | Why are you excluding grants prior to November 10, 2000 and grants after December 31, 2007? |
The Stock Option Exchange Program requires shareholder approval. Shareholders are less likely to
support a program that includes stock options that have a relatively short period of time before
they expire. Therefore, in an effort to maximize shareholder support, we excluded all stock
options with grant dates prior to our November 10, 2000 on-cycle grant. This grant represents the
first on-cycle grant date with an expiration date more than one year from the exchange date. In
addition, shareholders are less likely to support a program that includes stock options that have
been granted relatively recently because those options, while currently underwater, have a longer
period of time to appreciate in value because they have a longer period of time before they expire.
As a result, in an effort to maximize shareholder support, we excluded all stock options with
grant dates after December 31, 2007.
| 26. | What if I elect to exchange my original options and retire prior to the new stock options vesting? |
Analog introduced a retirement provision beginning with the November 10, 2000 grant, which provided
that all, or some portion of, options whether exercisable or not on the date of the employee’s
departure would continue to vest and be exercisable over the remaining term of the option. You
should review your stock option agreement to determine if your grant included this retirement
provision. This retirement provision was modified for most options granted after September 2006.
If you elect to exchange any original options granted between
November 10, 2000 and September 4,
2006, your new option will include the current 2006 retirement provision, which is different than
the retirement provision in the original grant. For your information, unless prohibited by law,
the following reflects the 2006 retirement provision that will be included in the new option
grants:
“If the Optionee’s employment with the Company or one of its subsidiaries terminates by reason of
the retirement of the Optionee after attaining age 60, the Option shall terminate on the date of
such retirement, but any Option Shares that are exercisable on the date of such retirement shall
continue to be exercisable over the remaining term of the Option; provided that all
then-exercisable Option Shares held by such Optionee shall immediately cease to be exercisable in
the event that such Optionee becomes an employee of any competitor of the Company or one of its
subsidiaries (as determined in the sole discretion of the Company).”
Thus, the 2006 retirement provision results in the forfeiture of the unvested portion of your
options at the time of your retirement.
| 27. | What if I plan to leave Analog in the next year? |
Keep in mind that all new stock option awards will have a new vesting period that will require
employees to continue their employment with us in order to realize the benefit of the new awards
regardless of whether the old options were already partially or fully vested. The minimum new
vesting period is one year. As a result, eligible employees will have to continue their employment
with us for at least one year to realize any benefit from the new options. Except where prohibited
by local law, new options that are not vested when you leave Analog
will be forfeited.
*****
The Stock Option Exchange Program has not yet started. We will file a Tender Offer Statement on
Schedule TO with the Securities and Exchange Commission when we launch the program. If you are
eligible to participate, you should read the Tender Offer Statement and other related materials
when they become available because they will contain important information about the program. Our
shareholders should also read the preliminary proxy statement filed on June 4, 2009 with the SEC
along with related materials we file with the SEC, which contain additional information about the
proposal to approve the program, before making any voting decision regarding the program. You will
be able to obtain the written materials described above and other documents we file with the SEC
free of charge from the SEC’s website at www.sec.gov or by sending a request to: Analog
Devices, Inc. One Technology Way, Norwood, MA 02062; Attention: Investor Relations.