UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-7819

Analog Devices, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts		04-2348234
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
One Technology Way, Norwood, MA		02062-9106
(Address of principal executive offices)		(Zip Code)

(781) 329-4700
(Registrant’s telephone number, including area code)

     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 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 þ NO o

     Indicate by check mark whether the registrant has submitted electronically and posted on it corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) YES þ NO o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES o NO þ

     As of January 30, 2010 there were 297,690,739 shares of Common Stock, $0.16 2/3 par value per share, outstanding.

 

 

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

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

		Three Months Ended
		January 30, 2010				January 31, 2009
Revenue		$	602,983			$	476,569
Cost of sales (1)			234,507				207,567
Gross margin			368,476				269,002
Operating expenses:
Research and development (1)			114,398				119,828
Selling, marketing, general and administrative (1)			88,481				87,846
Special charge			16,483				41,737
			219,362				249,411
Operating income			149,114				19,591
Nonoperating (income) expense:
Interest expense			2,538				—
Interest income			(2,180	)			(7,796	)
Other, net			489				(571	)
			847				(8,367	)
Income from continuing operations before income taxes			148,267				27,958
Provision for income taxes			28,667				3,373
Income from continuing operations, net of tax			119,600				24,585
Discontinued operations, net of tax:
Income from discontinued operations			—				364
Gain on sale of discontinued operations			859				—
Total income from discontinued operations, net of tax			859				364
Net income		$	120,459			$	24,949
Shares used to compute earnings per share — basic			295,611				291,187
Shares used to compute earnings per share — diluted			304,871				291,248
Basic earnings per share from continuing operations		$	0.40			$	0.08
Basic earnings per share		$	0.41			$	0.09
Diluted earnings per share from continuing operations		$	0.39			$	0.08
Diluted earnings per share		$	0.40			$	0.09
Dividends declared and paid per share		$	0.20			$	0.20
(1) Includes stock-based compensation expense as follows:
Cost of sales		$	1,671			$	1,580
Research and development		$	5,359			$	5,321
Selling, marketing, general and administrative		$	4,805			$	4,510

     See accompanying notes.

ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(thousands)

		January 30, 2010				October 31, 2009
Assets
Cash and cash equivalents		$	914,268			$	639,729
Short-term investments			1,264,696				1,176,244
Accounts receivable, net			313,288				301,036
Inventory (1):
Raw materials			12,412				13,373
Work in process			167,803				173,696
Finished goods			63,060				66,092
			243,275				253,161
Deferred tax assets			74,036				78,740
Deferred compensation plan investments			1,441				1,363
Prepaid expenses and other current assets			29,951				40,363
Total current assets			2,840,955				2,490,636
Property, plant and equipment, at cost:
Land and buildings			395,051				395,151
Machinery and equipment			1,522,997				1,511,822
Office equipment			56,076				56,294
Leasehold improvements			66,824				66,847
			2,040,948				2,030,114
Less accumulated depreciation and amortization			1,576,492				1,553,598
Net property, plant and equipment			464,456				476,516
Deferred compensation plan investments			7,205				6,580
Other investments			1,459				1,485
Goodwill			253,510				250,881
Intangible assets, net			4,465				6,855
Deferred tax assets			76,639				73,646
Other assets			49,481				35,658
Non-current assets of discontinued operations			—				62,037
Total other assets			392,759				437,142
		$	3,698,170			$	3,404,294

See accompanying notes.

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

		January 30, 2010				October 31, 2009
Liabilities and Shareholders’ Equity
Accounts payable		$	113,746			$	107,334
Deferred income on shipments to distributors, net			177,029				149,278
Income taxes payable			21,293				6,445
Deferred compensation plan liability			1,441				1,363
Accrued liabilities			137,922				122,193
Total current liabilities			451,431				386,613
Long-term debt			381,425				379,626
Deferred income taxes			45,912				36,232
Deferred compensation plan liability			7,201				6,577
Other non-current liabilities			48,048				66,097
Total non-current liabilities			482,586				488,532
Commitments and contingencies
Shareholders’ Equity
Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding			—				—
Common stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 297,690,739 shares issued and outstanding (291,861,767 on October 31, 2009)			49,616				48,645
Capital in excess of par value			233,303				56,306
Retained earnings			2,496,035				2,434,446
Accumulated other comprehensive loss			(14,801	)			(10,248	)
Total shareholders’ equity			2,764,153				2,529,149
		$	3,698,170			$	3,404,294

See accompanying notes.

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

		Three Months Ended
		January 30, 2010				January 31, 2009
Cash flows from operating activities:
Net income		$	120,459			$	24,949
Adjustments to reconcile net income to net cash provided by operations:
Depreciation			29,281				38,755
Amortization of intangibles			1,801				1,957
Stock-based compensation expense			11,835				11,411
Gain on sale of business			(859	)			—
Excess tax benefit-stock options			(53	)			—
Deferred income taxes			5,597				(15,925	)
Non-cash portion of special charge			487				13,693
Other non-cash activity			178				207
Changes in operating assets and liabilities			45,047				(15,137	)
Total adjustments			93,314				34,961
Net cash provided by operating activities			213,773				59,910
Cash flows from investing activities:
Purchases of short-term available-for-sale investments			(714,332	)			(263,906	)
Maturities of short-term available-for-sale investments			625,921				464,197
Proceeds from sale of business			63,036				—
Additions to property, plant and equipment			(17,179	)			(22,235	)
Increase in other assets			(407	)			(2,063	)
Net cash (used) provided by investing activities			(42,961	)			175,993
Cash flows from financing activities:
Dividend payments to shareholders			(58,870	)			(58,238	)
Repurchase of common stock			—				(489	)
Net proceeds from employee stock plans			163,487				768
Excess tax benefit-stock options			53				—
Net cash provided (used) for financing activities			104,670				(57,959	)
Effect of exchange rate changes on cash			(943	)			(1,830	)
Net increase in cash and cash equivalents			274,539				176,114
Cash and cash equivalents at beginning of period			639,729				593,599
Cash and cash equivalents at end of period		$	914,268			$	769,713

See accompanying notes.

ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JANUARY 30, 2010
(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 the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2009 and related notes. The results of operations for the interim period shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending October 30, 2010 or any future period.

The Company sold its baseband chipset business and related support operations (Baseband Chipset Business) to MediaTek Inc. and sold its CPU voltage regulation and PC thermal monitoring business to certain subsidiaries of ON Semiconductor Corporation during the first quarter of fiscal 2008. The Company has reflected the financial results of these businesses as discontinued operations in the consolidated statements of income for all periods presented. The assets and liabilities of these businesses are reflected as assets and liabilities of discontinued operations in the consolidated balance sheet as of October 31, 2009.

The Company has a 52-53 week fiscal year that ends on the Saturday closest to the last day in October. Fiscal 2010 and fiscal 2009 are 52-week fiscal years. Certain amounts reported in previous years have been reclassified to conform to the fiscal 2010 presentation. Such reclassified amounts were immaterial.

Note 2 — Revenue Recognition

     Revenue from product sales to customers is generally recognized when title passes, which for shipments to certain foreign countries is subsequent to product shipment. Title for these shipments ordinarily passes within a week of shipment. A reserve for sales returns and allowances for customers is recorded based on historical experience or specific identification of an event necessitating a reserve.

     In all regions of the world, the Company defers revenue and the related cost of sales on shipments to distributors until the distributors resell the products to their customers. Therefore, the Company’s product revenue fully reflects end customer purchases and is not impacted by distributor inventory levels. Sales to distributors are made under agreements that allow distributors to receive price adjustment credits, as discussed below, and to return qualifying products for credit, as determined by the Company, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such returns to a certain percentage of the value of the Company’s shipments to that distributor during the prior quarter. In addition, distributors are allowed to return unsold products if the Company terminates the relationship with the distributor.

     Distributors are granted price-adjustment credits related to many of their sales to their customers. Price adjustment credits are granted when the distributor’s standard cost (i.e., the Company’s sales price to the distributor) does not provide the distributor with an appropriate margin on its sales to its customers. As distributors negotiate selling prices with their customers, the final sales price agreed to with the customer will be influenced by many factors, including the particular product being sold, the quantity ordered, the particular customer, the geographic location of the distributor, and the competitive landscape. As a result, the distributor may request and receive a price adjustment credit from the Company to allow the distributor to earn an appropriate margin on the transaction.

     Distributors are also granted price adjustment credits in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor. Generally, the Company will provide a credit equal to the difference between the price paid by the distributor (less any prior credits on such products) and the new price for the product multiplied by the quantity of such product in the distributor’s inventory at the time of the price decrease.

     Given the uncertainties associated with the levels of price adjustment credits to be granted to distributors, the sales price to the distributor is not fixed or determinable until the distributor resells the products to their customers. Therefore, the Company defers revenue recognition from sales to distributors until the distributors have sold the products to their customers.

     Title to the inventory transfers to the distributor at the time of shipment or delivery to the distributor, and payment from the distributor is due in accordance with the Company’s standard payment terms. These payment terms are not contingent upon the distributors’ sale of the products to their customers. Upon title transfer to distributors, inventory is reduced for the cost of goods shipped, the margin (sales less cost of sales) is recorded as “deferred income on shipments to distributors, net” and an account receivable is recorded.

     The deferred costs of sales to distributors have historically had very little risk of impairment due to the margins the Company earns on sales of its products and the relatively long life-cycle of the Company’s products. Product returns from distributors that are ultimately scrapped have historically been immaterial. In addition, price protection and price adjustment credits granted to distributors historically have not exceeded the margins the Company earns on sales of its products. The Company continuously monitors the level and nature of product returns and is in continuous contact with the distributors to ensure reserves are established for all known material issues.

     As of January 30, 2010 and October 31, 2009, the Company had gross deferred revenue of $253.3 million and $230.8 million, respectively, and gross deferred cost of sales of $76.3 million and $81.5 million, respectively. Deferred income on shipments to distributors as of January 30, 2010 was higher than the amount as of October 31, 2009 by $28 million, primarily as a result of the Company’s shipments to its distributors in the first quarter of fiscal 2010 exceeding the distributors’ sales to their customers during this same time period.

     Shipping costs are charged to cost of sales as incurred.

The Company generally offers a 12-month warranty for its products. The Company’s warranty policy provides for replacement of the defective product. Specific accruals are recorded for known product warranty issues. Product warranty expenses during either of the three-month periods ended January 30, 2010 and January 31, 2009 were not material.

Grant-Date Fair Value — The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. Information pertaining to the Company’s stock option awards and the related estimated weighted-average assumptions to calculate the fair value of stock options granted during the three-month periods ended January 30, 2010 and January 31, 2009 are as follows:

		Three Months Ended
Stock Options		January 30, 2010				January 31, 2009
Options granted (in thousands)			1,812				5,420
Weighted-average exercise price per share		$	31.55			$	19.56
Weighted-average grant-date fair value per share		$	7.80			$	7.47
Assumptions:
Weighted-average expected volatility			31.43	%			59.5	%
Weighted-average expected term (in years)			5.3				5.3
Risk-free interest rate			2.6	%			1.7	%
Expected dividend yield			2.5	%			4.1	%

Expected volatility — The Company is responsible for estimating volatility and has considered a number of factors, including third-party estimates, when estimating volatility. 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 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 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 and close to the exercise price of the employee share options; and (4) the maturities of the traded options used to estimate volatility are at least one year.

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 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 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 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 quarter’s cash dividend, the current dividend will be used in deriving this assumption. Cash dividends are not paid on options, restricted stock or restricted stock units.

          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 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 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 4.3% to all unvested stock-based awards as of January 30, 2010. The rate of 4.3% represents the portion that is expected to be forfeited each year over the vesting period. This analysis will be re-evaluated quarterly 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.

          Stock-Based Compensation Activity

A summary of the activity under the Company’s stock option plans as of January 30, 2010 and changes during the three-month period then ended is presented below:

										Weighted-
										Average
		Options				Weighted-				Remaining				Aggregate
		Outstanding				Average Exercise				Contractual				Intrinsic
Activity during the Three Months Ended January 30, 2010		(in thousands)				Price Per Share				Term in Years				Value
Options outstanding at October 31, 2009			52,463			$	29.71
Options granted			1,812			$	31.55
Options exercised			(6,609	)		$	28.38
Options forfeited			(359	)		$	27.91
Options expired			(413	)		$	38.68
Options outstanding at January 30, 2010			46,894			$	29.91				5.2			$	79,510
Options exercisable at January 30, 2010			21,026			$	33.03				4.1			$	46,690
Options vested or expected to vest at January 30, 2010 (1)			45,003			$	30.03				5.1			$	76,261

     During the three months ended January 30, 2010 and January 31, 2009, the total intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid by the employee to exercise the options) was $13.2 million and $0.1 million, respectively, and the total amount of proceeds received from exercise of these options was $187.6 million and $1 million, respectively. Proceeds from stock option exercises pursuant to employee stock plans in the Company’s statement of cash flows during the three months ended January 30, 2010 and January 31, 2009 of $163.5 million and $0.8 million, respectively, is net of the value of shares surrendered by employees in certain limited circumstances to satisfy the exercise price of options, and to satisfy employee tax obligations upon vesting of restricted stock or restricted stock units and in connection with the exercise of stock options granted to the Company’s employees under the Company’s equity compensation plans. The withholding amount is based on the Company’s minimum statutory withholding requirement. The total grant-date fair value of stock options that vested during the three months ended January 30, 2010 and January 31, 2009 was approximately $31.4 million and $70.5 million, respectively.

     A summary of the Company’s restricted stock and restricted stock unit award activity as of January 30, 2010 and changes during the quarter then ended is presented below:

		Restricted				Weighted-
		Shares and/ or				Average Grant
		Units				Date Fair Value
Activity during the Three Months Ended January 30, 2010		Outstanding				Per Share
Non-vested shares outstanding at October 31, 2009			135			$	22.19
Awards and/or units granted			1,128			$	28.93
Restrictions lapsed			(4	)		$	31.27
Forfeited			(3	)		$	29.88
Non-vested shares outstanding at January 30, 2010			1,256			$	28.20

     As of January 30, 2010, there was $136 million (before tax consideration) of total unrecognized compensation cost related to unvested share-based awards, including stock options, restricted stock and restricted stock units. That cost is expected to be recognized over a weighted-average period of 1.7 years.

Note 4 — Comprehensive Income

Components of comprehensive income include net income and certain transactions that have generally been reported in the consolidated statement of shareholders’ equity and consist of the following:

		Three Months Ended
		January 30, 2010				January 31, 2009
Income from continuing operations, net of tax		$	119,600			$	24,585
Foreign currency translation adjustments			2,132				(1,372	)
Change in unrealized holding gains (losses) (net of taxes of $5 and $296, respectively) on securities classified as short-term investments			36				(2,082	)
Change in unrealized holding losses (net of taxes of $9 and $88, respectively) on securities classified as other investments			(17	)			(163	)
Change in unrealized (losses) gains (net of taxes of $459 and $1,042, respectively) on derivative instruments designated as cash flow hedges			(7,005	)			8,221
Pension plans
Prior service cost			(1	)			1
Transition asset (obligation)			2				(4	)
Net actuarial gain (loss)			300				(676	)
Other comprehensive (loss) income			(4,553	)			3,925
Comprehensive income from continuing operations			115,047				28,510
Income from discontinued operations, net of tax			859				364
Comprehensive income		$	115,906			$	28,874

The components of accumulated other comprehensive income at January 30, 2010 and October 31, 2009 consisted of the following:

		January 30, 2010				October 31, 2009
Foreign currency translation adjustment		$	(5,344	)		$	(7,476	)
Unrealized gain on available-for-sale securities			880				948
Unrealized losses on available-for-sale securities			(505	)			(592	)
Unrealized (losses) gains on derivative instruments			(1,396	)			5,609
Pension plans
Prior service cost			(1	)			—
Transition obligation			(47	)			(49	)
Net actuarial loss			(8,388	)			(8,688	)
Total accumulated other comprehensive loss		$	(14,801	)		$	(10,248	)

The aggregate fair value of investments with unrealized losses as of January 30, 2010 and October 31, 2009 was $479.8 million and $535.3 million, respectively. These unrealized losses are all related to commercial paper that earns lower interest rates than current market rates. None of these investments have been in a loss position for more than twelve months.

Note 5 — Earnings Per Share

     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, 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 stock options 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, restricted stock, and RSU’s that are in-the-money. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of stock options. Potential shares related to certain of the Company’s outstanding stock options were excluded because they were anti-dilutive. Those potential shares, determined based on the weighted average exercise prices during the respective years, related to the Company’s outstanding stock options could be dilutive in the future.

		Three Months Ended
		January 30, 2010				January 31, 2009
Income from continuing operations, net of tax		$	119,600			$	24,585
Total income from discontinued operations, net of tax			859				364
Net income		$	120,459			$	24,949
Basic shares:
Weighted-average shares outstanding			295,611				291,187
Earnings per share-basic:
Income from continuing operations, net of tax		$	0.40			$	0.08
Total income from discontinued operations, net of tax			0.00				0.00
Net income (1)		$	0.41			$	0.09
Diluted shares:
Weighted-average shares outstanding			295,611				291,187
Assumed exercise of common stock equivalents			9,260				61
Weighted-average common and common equivalent shares			304,871				291,248
Earnings per share-diluted:
Income from continuing operations, net of tax		$	0.39			$	0.08
Total income from discontinued operations, net of tax			0.00				0.00
Net income (1)		$	0.40			$	0.09
Anti-dilutive common stock equivalents related to outstanding stock options			19,159				70,657

Note 6 — Special Charges

A summary of the Company’s special charges is as follows:

						Consolidation								Closure of
		Closure of Wafer				of a Wafer				Reduction				Wafer
		Fabrication				Fabrication				of				Fabrication
		Facility				Facility in				Operating				Facility				Total Special
Income Statement		in Sunnyvale				Limerick				Costs				in Cambridge				Charges
Fiscal 2005 Charges:
Workforce reductions		$	20,315			$	—			$	—			$	—			$	20,315
Total Fiscal 2005 Charges		$	20,315			$	—			$	—			$	—			$	20,315
Fiscal 2006 Charges:
Facility closure costs			—				—				—				—				—
Abandonment of equipment			—				—				—				—				—
Other items			—				—				—				—				—
Change in estimate			(2,029	)			—				—				—				(2,029	)
Workforce reductions			—				—				—				—				—
Total Fiscal 2006 Charges		$	(2,029	)		$	—			$	—			$	—			$	(2,029	)
Fiscal 2007 Charges:
Facility closure costs			10,288				—				—				—				10,288
Workforce reductions			—				13,748				—				—				13,748
Other items			—				—				—				—				—
Change in estimate			—				—				—				—				—
Total Fiscal 2007 Charges		$	10,288			$	13,748			$	—			$	—			$	24,036
Fiscal 2008 Charges:
Workforce reductions			—				—				1,627				—				1,627
Change in estimate			—				1,461				—				—				1,461
Total Fiscal 2008 Charges		$	—			$	1,461			$	1,627			$	—			$	3,088
Fiscal 2009 Charges:
Workforce reductions			—				—				26,583				7,446				34,029
Facility closure costs			—				1,191				2,411				57				3,659
Non-cash impairment charge			—				—				839				14,629				15,468
Other items			—				—				500				—				500
Total Fiscal 2009 Charges		$	—			$	1,191			$	30,333			$	22,132			$	53,656
Fiscal 2010 Charges:
Workforce reductions			—				—				10,908				—				10,908
Facility closure costs			375				—				—				4,689				5,064
Non-cash impairment charge			—				—				487				—				487
Other items			—				—				24								24
Total Fiscal 2010 Charges		$	375			$	—			$	11,419			$	4,689			$	16,483

						Consolidation								Closure of
						of a Wafer								Wafer
		Closure of Wafer				Fabrication				Reduction of				Fabrication
		Fabrication Facility				Facility in				Operating				Facility				Total Special
Balance Sheet		in Sunnyvale				Limerick				Costs				in Cambridge				Charges
Balance at October 31, 2009		$	169			$	312			$	8,161			$	6,690			$	15,332
Fiscal 2010 special charges			375				—				11,419				4,689				16,483
Severance payments			—				(155	)			(2,464	)			(3,029	)			(5,648	)
Facility closure costs			(169	)			—				(261	)			(2,025	)			(2,455	)
Non-cash impairment charge			—				—				(487	)			—				(487	)
Effect of foreign currency on accrual			—				(10	)			(65	)			—				(75	)
Balance at January 30, 2010		$	375			$	147			$	16,303			$	6,325			$	23,150

 Closure of Wafer Fabrication Facility in Sunnyvale

The Company ceased production at its California wafer fabrication facility in November 2006. The Company has been paying the related lease obligation costs on a monthly basis over the remaining lease term, which expires in March 2010. A one-time settlement charge of $0.4 million was recorded in the first quarter of fiscal 2010 related to the termination of the lease. The Company does not expect to incur any additional charges related to this action.

 Consolidation of a Wafer Fabrication Facility in Limerick

In fiscal 2007, the Company recorded a special charge of $13.7 million as a result of its decision to only use eight-inch technology at its wafer fabrication facility in Limerick. Certain manufacturing processes and products produced on the Limerick facility’s six-inch production line have transitioned to the Company’s existing eight-inch production line in Limerick while others have transitioned to external foundries. The charge was for severance and fringe benefit costs recorded in accordance with the Company’s ongoing benefit plan for 150 manufacturing employees associated with this action. As of January 30, 2010, the Company still employed 1 of the 150 employees included in this action. The employee must continue to be employed by the Company until his employment is involuntarily terminated in order to receive the severance benefit. During fiscal 2008, the Company recorded an additional charge of $1.5 million related to this action, of which $1.2 million was an adjustment to the original estimate of the severance costs and $0.3 million was for clean-up and closure costs that were expensed as incurred. During fiscal 2009, the Company recorded additional charges of $1.2 million for clean-up and closure costs that were expensed as incurred. The production in the six-inch wafer fabrication facility ceased during the fourth quarter of fiscal 2009. The Company does not expect to incur any further charges related to this action.

 Reduction of Operating Costs

During the fourth quarter of fiscal 2008, in order to further reduce its operating cost structure, the Company recorded a special charge of $1.6 million for severance and fringe benefit costs recorded in accordance with its ongoing benefit plan or statutory requirements at foreign locations for 19 engineering, selling, marketing, general and administrative employees. The Company terminated the employment of all employees associated with this charge and is paying amounts owed to employees for severance as income continuance.

During fiscal 2009, the Company recorded an additional charge of $30.3 million related to this cost reduction action. Approximately $2.1 million of this charge was for lease obligation costs for facilities that the Company ceased using during the first quarter of fiscal 2009; approximately $0.9 million was for the write-off of property, plant and equipment; and approximately $0.8 million was for contract termination costs and for clean-up and closure costs that were expensed as

incurred. The remaining $26.5 million related to the severance and fringe benefit costs recorded in accordance with the Company’s ongoing benefit plan or statutory requirements at foreign locations for 245 manufacturing employees and 302 engineering and SMG&A employees. As of January 30, 2010, the Company still employed 3 of the 547 employees included in this cost reduction action. These employees must continue to be employed by the Company until their employment is involuntarily terminated in order to receive the severance benefit.

During the first quarter of fiscal 2010, the Company recorded an additional charge of $11.4 million related to the further reduction of its operating cost structure. Approximately $10.9 million of this charge was for severance and fringe benefit costs recorded in accordance with the Company’s ongoing benefit plan or statutory requirements at foreign locations for 149 engineering and SMG&A employees. As of January 30, 2010, the Company still employed 86 of the 149 employees included in this cost reduction action. These employees must continue to be employed by the Company until their employment is involuntarily terminated in order to receive the severance benefit. Approximately $0.5 million of the charge relates to the Company’s decision to abandon efforts to develop a particular expertise in power management, resulting in the impairment of related intellectual property.

 Closure of a Wafer Fabrication Facility in Cambridge

     During the first quarter of fiscal 2009, the Company recorded a special charge of $22.1 million as a result of its decision to consolidate its Cambridge, Massachusetts wafer fabrication facility into its existing Wilmington, Massachusetts facility. In connection with the anticipated closure of this facility, the Company evaluated the recoverability of the facility’s manufacturing assets and concluded that there was an impairment of approximately $12.9 million based on the revised period of intended use. The remaining $9.2 million was for severance and fringe benefit costs recorded in accordance with the Company’s ongoing benefit plan for 175 manufacturing employees and 9 SMG&A employees associated with this action.

The Company finished production in the Cambridge wafer fabrication facility and began clean-up activities during the fourth quarter of fiscal 2009. During the fourth quarter of fiscal 2009, the Company reversed approximately $1.8 million of its severance accrual. The accrual reversal was required because 51 employees either voluntarily left the Company or found alternative employment within the Company. In addition, the Company recorded a special charge of approximately $1.7 million for the impairment of manufacturing assets that were originally going to be moved to the Company’s other wafer fabrication facilities but are no longer needed at those facilities and therefore have no future use. The Company also recorded a special charge of $0.1 million for clean-up costs as the Company began its cleanup of the Cambridge wafer fabrication facility at the end of the fourth quarter of fiscal 2009. As of January 30, 2010, the Company still employed 9 of the employees included in this action. These employees must continue to be employed by the Company until their employment is involuntarily terminated in order to receive the severance benefit.

During the first quarter of fiscal 2010, the Company recorded an additional charge of $4.7 million related to this cost reduction action. Approximately $3.4 million of the charge related to lease obligation costs for the Cambridge wafer fabrication facility, which the Company ceased using in the first quarter of fiscal 2010; the remaining $1.3 million of the charge related to cleanup and closure costs.

Note 7 — Segment Information

The Company operates and tracks its results in one reportable segment based on the aggregation of five operating segments. The Company designs, develops, manufactures and markets a broad range of integrated circuits. The Chief Executive Officer has been identified as the Chief Operating Decision Maker.

Revenue Trends 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 evolve and improve, the categorization of products by end market can vary over time. When this occurs, the Company reclassifies revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.

		Three Months Ended												Three Months Ended
		January 30, 2010												January 31, 2009
						% of												% of
		Revenue				Revenue				Y/Y%				Revenue				Revenue
Industrial		$	259,962				43	%			19	%		$	218,662				46	%
Automotive			74,643				12	%			81	%			41,246				9	%
Consumer			117,703				20	%			53	%			76,702				16	%
Communications			135,519				22	%			8	%			125,708				26	%
Computer			15,156				3	%			6	%			14,251				3	%
Total revenue		$	602,983				100	%			27	%		$	476,569				100	%

Revenue Trends by Product Type

The following table summarizes revenue by product categories. The categorization of the Company’s products into broad categories is based on the characteristics of the individual products, the specification of the products and in some cases the specific uses that certain products have within applications. The categorization of products into categories is therefore subject to judgment in some cases and can vary over time. In instances where products move between product categories, the Company reclassifies the amounts in the product categories for all prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each product category.

		Three Months Ended												Three Months Ended
		January 30, 2010												January 31, 2009
						% of												% of
		Revenue				Revenue*				Y/Y%				Revenue				Revenue
Converters		$	317,403				53	%			25	%		$	252,925				53	%
Amplifiers / Radio frequency			148,066				25	%			13	%			130,716				27	%
Other analog			46,279				8	%			95	%			23,754				5	%
Subtotal analog signal processing			511,748				85	%			26	%			407,395				85	%
Power management & reference			38,708				6	%			50	%			25,738				5	%
Total analog products		$	550,456				91	%			27	%		$	433,133				91	%
Digital signal processing		$	52,527				9	%			21	%		$	43,436				9	%
Total revenue		$	602,983				100	%			27	%		$	476,569				100	%

Revenue Trends by Geographic Region

Revenue by geographic region, based upon customer location, for the three-month periods ended January 30, 2010 and January 31, 2009 was as follows:

		Three Months Ended
Region		January 30, 2010				January 31, 2009
United States		$	116,963			$	107,298
Rest of North and South America			29,879				19,332
Europe			142,066				127,745
Japan			110,350				72,733
China			106,522				89,712
Rest of Asia			97,203				59,749
Total revenue		$	602,983			$	476,569

In the three-month period ended January 30, 2010, the predominant countries comprising “Rest of North and South America” are Canada and Mexico; the predominant countries comprising “Europe” are Germany, Sweden, France and Holland; and the predominant countries comprising “Rest of Asia” are Taiwan and Korea.

In the three-month period ended January 31, 2009 the predominant countries comprising “Rest of North and South America” are Canada and Mexico; the predominant countries comprising “Europe” are Germany, Sweden, France and Italy; and the predominant countries comprising “Rest of Asia” are Taiwan and Singapore.

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. As of January 30, 2010, the Company held no assets or liabilities valued using Level 3 inputs.

The table below sets forth by level the Company’s financial assets and liabilities that were accounted for at fair value as of January 30, 2010. The table does not include cash on hand and also does not include assets and liabilities that are measured at historical cost or any basis other than fair value.

						Fair Value measurement at
		Portion of				Reporting Date using:
		Carrying				Quoted Prices
		Value				in Active				Significant
		Measured at				Markets for				Other
		Fair Value				Identical				Observable
		January 30,				Assets				Inputs
		2010				(Level 1)				(Level 2)
Assets
Cash Equivalents:
Institutional money market funds		$	783,419			$	783,419			$	—
Corporate Obligations			104,944				—				104,944
Euro time deposits			7,004				—				7,004
Short–term investments:
Corporate obligations			1,264,696				—				1,264,696
Other Assets:
Forward foreign currency exchange contracts (1)			121				—				121
Deferred compensation investments			8,646				8,646				—
Other investments			1,459				1,459				—
Interest rate swap agreements			7,829				—				7,829
Total assets measured at fair value		$	2,178,118			$	793,524			$	1,384,594
Liabilities
Forward foreign currency exchange contracts (2)		$	986				—			$	986
Long-term debt			381,425				—				381,425
Total liabilities measured at fair value		$	382,411			$	—			$	382,411

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

     Cash equivalents and short-term investments — 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.

     Deferred compensation plan investments and other investments — The fair value of these investments is based on quoted market prices.

     Long-term debt — The fair value of long-term debt is based on quoted market values.

     Interest rate swap agreements — The fair value of interest rate swap agreements is based on quotes received from third party banks. These values represent the estimated amount the Company would receive or pay to terminate the agreements taking into consideration current interest rates as well as the creditworthiness of the counterparty.

     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 hedges, is based on the estimated amount the Company would receive to sell these agreements at the reporting date taking into consideration current interest rates as well as the creditworthiness of the counterparty for assets and our creditworthiness for liabilities.

     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 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 exposures include the Philippine Peso and the British Pound. 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 for periods consistent with the terms of the underlying transactions, generally one year or less. Hedges related to anticipated transactions are designated and documented at the inception of the respective hedges as cash flow hedges and are evaluated for effectiveness monthly. Derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified. As the terms of the contract and the underlying transaction are matched at inception, forward contract effectiveness is calculated by comparing the change in fair value of the contract to the change in the forward value of the anticipated transaction, with the effective portion of the gain or loss on the derivative instrument reported as a component of accumulated other comprehensive (loss) income (OCI) in shareholders’ equity and reclassified into earnings in the same period during which the hedged transaction affects earnings. Any residual change in fair value of the instruments, or ineffectiveness, is recognized immediately in other income/expense. Additionally, the Company enters into forward foreign currency contracts that economically hedge the gains and losses generated by the remeasurement 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 the asset or liability being hedged. As of January 30, 2010, the total notional amount of these undesignated hedges was $76 million. The fair value of these hedging instruments in the Company’s condensed consolidated balance sheet as of January 30, 2010 was $0.3 million.

     Interest Rate Exposure Management — On June 30, 2009, the Company entered into interest rate swap transactions related to its outstanding 5% senior unsecured notes where the Company swapped the notional amount of its $375 million of fixed rate debt at 5.0% into floating interest rate debt through July 1, 2014. Under the terms of the swaps, the Company will (i) receive on the $375 million notional amount a 5.0% annual interest payment that is paid in two installments on the 1st of every January and July, commencing January 1, 2010 through and ending on the maturity date; and (ii) pay on the $375 million notional amount an annual three-month LIBOR plus 2.05% (2.30% as of January 30, 2010) interest payment, payable in four installments on the 1st of every January, April, July and October, commencing on October 1, 2009 and ending on the maturity date. The LIBOR based rate is set quarterly three months prior to the date of the interest payment. The Company designated these swaps as fair value hedges. The fair value of the swaps at inception were 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 gain or loss on the hedged item (that is fixed-rate borrowings) attributable to the hedged benchmark interest rate risk and the offsetting gain or loss on the related interest rate swaps as of January 30, 2010 is as follows:

										Net
		Gain/(Loss) on				Gain/(Loss)				Income
Income Statement Classification		Swaps				on Note				Effect
Other income		$	7,829			$	(7,829	)		$	—

The amounts earned and owed under the swap agreements are accrued each period and are reported in interest expense. There was no ineffectiveness recognized in any of the periods presented.

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 counterparties to the agreements relating to the Company’s derivative instruments consist of a number of major international financial institutions with high credit ratings. The Company does not believe that there is significant risk of nonperformance by these counterparties because the Company continually monitors the credit ratings of such counterparties. Furthermore, none of the Company’s derivative transactions 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 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 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 does not consider the risk of counterparty default to be significant.

The Company records the fair value of its derivative financial instruments in the consolidated financial statements in other current assets, other assets or accrued 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 either recognized periodically in earnings or in shareholders’ equity as a component of OCI. Changes in the fair value of cash flow hedges are recorded in OCI and reclassified into earnings when the underlying contract matures. Changes in the fair values of derivatives not qualifying for hedge accounting are reported in earnings as they occur.

The total notional amount of derivative instruments designated as hedging instruments as of January 30, 2010 is as follows: $375 million of interest rate swap agreements accounted for as fair value hedges, and $161 million of cash flow hedges denominated in Euros, British Pounds and Philippine Pesos. The fair value of these hedging instruments in the Company’s condensed consolidated balance sheet as of January 30, 2010 was as follows:

		Balance Sheet Location		Fair Value
Interest rate swap agreements		Other Assets		$	7,829
Forward foreign currency exchange contracts		Prepaid expenses and other current assets		$	121
		Accrued liabilities		$	986

The effect of derivative instruments designated as cash flow hedges on our condensed consolidated statement of income for the three months ended January 30, 2010 was as follows:

		Three Months
		Ended
		January 30, 2010
Loss recognized in OCI on derivative, net of tax of $1,417		$	(9,402	)
Gain reclassified from OCI into income, net of tax of $361		$	2,397

The amounts reclassified into earnings before tax are recognized in cost of sales and operating expenses as follows: for the three-month period ended January 30, 2010, $1.4 million in cost of sales, and $1.4 million in selling, marketing, general and administrative. All derivative gains included in OCI will be reclassified into earnings within the next 12 months. There was no ineffectiveness recognized in the three months ended January 30, 2010.

Note 10 — Goodwill and Intangible Assets

Goodwill

     The Company annually evaluates goodwill for impairment as well as whenever events or changes in circumstances suggest that the carrying value of goodwill may not be recoverable. The Company tests goodwill for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis in the fourth quarter or more frequently if indicators of impairment exist. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using the income approach methodology of valuation that includes the discounted cash flow method as well as other generally accepted valuation methodologies. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. No impairment of goodwill resulted from the Company’s most recent impairment evaluation of goodwill, which occurred in the fourth quarter of fiscal 2009. No impairment of goodwill resulted in any of the fiscal years presented. The Company’s next annual impairment assessment will be made in the fourth quarter of fiscal 2010 unless indicators arise that would require the Company to reevaluate at an earlier date. The following table presents the changes in goodwill during the first three months of fiscal 2010:

		Three Months
		Ended
		January 30,
		2010
Balance at beginning of period		$	250,881
Foreign currency translation adjustment			2,629
Balance at end of period		$	253,510

Intangible Assets

The Company reviews identified 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 measured by comparison of their carrying value to 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 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.

Intangible assets, which will continue to be amortized, consisted of the following:

		January 30, 2010								October 31, 2009
		Gross								Gross
		Carrying				Accumulated				Carrying				Accumulated
		Amount				Amortization				Amount				Amortization
Technology-based		$	40,224			$	36,692			$	39,924			$	34,213
Tradename			1,496				1,496				1,478				1,478
Customer Relationships			5,100				4,167				5,181				4,037
Other			6,603				6,603				6,582				6,582
Total		$	53,423			$	48,958			$	53,165			$	46,310

Intangible assets are 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 use. The remaining amortization expense will be recognized over a weighted-average period of approximately 1.3 years.

Amortization expense was $1.8 million and $2.0 million for the three-month periods ended January 30, 2010 and January 31, 2009, respectively.

The Company expects amortization expense for these intangible assets to be:

Fiscal		Amortization
Year		Expense
Remainder of 2010		$	3,116
2011		$	1,349

The Company 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 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.

Net periodic pension cost of non-U.S. plans is presented in the following table:

		Three Months Ended
		January 30, 2010				January 31, 2009
Service cost		$	1,507			$	1,552
Interest cost			2,464				2,301
Expected return on plan assets			(2,849	)			(2,583	)
Amortization of prior service cost			—				1
Amortization of initial net asset			(7	)			(10	)
Amortization of net gain			(24	)			(125	)
Net periodic pension cost		$	1,091			$	1,136

Pension contributions of $23.2 million were made by the Company during the three months ended January 30, 2010. The Company presently anticipates contributing an additional $6.1 million to fund its defined benefit pension plans in fiscal year 2010 for a total of $29.3 million.

     As of January 30, 2010, the Company had $2,179.0 million of cash and cash equivalents and short term investments, of which $628 million was held in the United States. The balance of the Company’s cash and cash equivalents and short term investments was held outside the United States in various foreign subsidiaries. As the Company intends to reinvest certain of its foreign earnings indefinitely, this cash is not available to meet certain of the Company’s cash requirements in the United States, including for cash dividends and common stock repurchases. The Company entered into a five-year, $165 million unsecured revolving credit facility with certain institutional lenders in May 2008. To date, the Company has not borrowed under this credit facility but the Company may borrow in the future and use the proceeds for support of commercial paper issuance, stock repurchases, dividend payments, acquisitions, capital expenditures, working capital and other lawful corporate purposes. Any advances under this credit agreement will accrue interest at rates that are equal to LIBOR plus a margin that is based on the Company’s leverage ratio. The terms of this facility also include financial covenants that require the Company to maintain a minimum interest coverage ratio and not exceed a maximum leverage ratio. As of January 30, 2010, the Company is compliant with these covenants. The terms of the

facility also impose restrictions on the Company’s ability to undertake certain transactions, to create certain liens on assets and to incur certain subsidiary indebtedness.

     On June 30, 2009, the Company issued $375 million aggregate principal amount of 5.0% senior unsecured notes due July 1, 2014 (the Notes) with semi-annual fixed interest payments on January 1 and July 1 of each year, commencing January 1, 2010. The sale of the Notes was made pursuant to the terms of an underwriting agreement dated June 25, 2009 between the Company and Credit Suisse Securities (USA) LLC, as representative of the several underwriters named therein. The net proceeds of the offering were $370.4 million, after issuing at a discount and deducting expenses, underwriting discounts and commissions, which will be amortized over the term of the Notes. The indenture governing the Notes contains covenants that may limit the Company’s ability to: incur, create, assume or guarantee any debt for 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 substantially all of its assets to, any other party.

     On June 30, 2009, the Company entered into interest rate swap transactions where the Company swapped the notional amount of its $375 million of fixed rate debt at 5.0% into floating interest rate debt through July 1, 2014. Under the terms of the swaps, the Company will (i) receive on the $375 million notional amount a 5.0% annual interest payment that is paid in two installments on the 1st of every January and July, commencing January 1, 2010 through and ending on the maturity date; and (ii) pay on the $375 million notional amount an annual three-month LIBOR plus 2.05% (2.30% as of January 30, 2010) interest payment, payable in four installments on the 1st of every January, April, July and October, commencing on October 1, 2009 and ending on the maturity date. The LIBOR based rate is set quarterly three months prior to the date of the interest payment. The Company designated these swaps as fair value hedges. The changes in the fair value of the interest rate swaps were reflected in the carrying value of the interest rate swaps in other assets on the balance sheet. The carrying value of the debt on the balance sheet was adjusted by an equal and offsetting amount.

     The Company’s common stock repurchase program has been in place since August 2004. In the aggregate, the Board of Directors has authorized the Company to repurchase $4 billion of the Company’s common stock under the program. Under the program, the Company may repurchase 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 Company has repurchased all shares authorized under the program. As of January 30, 2010, the Company had repurchased a total of approximately 114.7 million shares of its common stock for approximately $3,908.4 million under this program. An additional $91.6 million remains available for repurchase of shares under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. Any future common stock repurchases will be dependent upon several factors including the amount of cash available to the Company in the United States, and the Company’s financial performance, outlook and liquidity. The Company also from time to time repurchases shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock or restricted stock units, or in certain limited circumstances to satisfy the exercise price of options granted to the Company’s employees under the Company’s equity compensation plans.

     In November 2007, the Company entered into a purchase and sale agreement with certain subsidiaries of ON Semiconductor Corporation to sell the Company’s CPU voltage regulation and PC thermal monitoring business which consisted of core voltage regulator products for the central processing unit in computing and gaming applications and temperature sensors and fan-speed controllers for managing the temperature of the central processing unit. During the first quarter of fiscal 2008, the Company completed the sale of this business for net cash proceeds of $138 million, which was net of other cash payments of approximately $1.4 million. The Company made final additional cash payments of approximately $2.2 million in the second quarter of fiscal 2008. In connection with the purchase and sale agreement, $7.5 million was placed into escrow and was excluded from the gain calculations. The Company recorded a pre-tax gain in the first quarter of fiscal 2008 of $78 million, or $43 million net of tax, which was recorded as a gain on sale of discontinued operations. During the third quarter of fiscal 2008, additional proceeds were released from escrow and an additional pre-tax gain of $6.6 million, or $3.8 million net of tax, was recorded as a gain on sale of discontinued operations. Additionally, at the time of the sale, the Company entered into a one-year manufacturing supply agreement with a subsidiary of ON Semiconductor Corporation for an additional $37 million. The Company has allocated the proceeds from this arrangement based on the fair value of the two elements of this transaction: (i) the sale of a business and (ii) the obligation to manufacture product for a one-year period. As a result, $85 million was recorded as a liability related to the manufacturing supply agreement, all of which has been utilized. The liability was included in current liabilities of discontinued operations on the Company’s consolidated balance sheet. The Company recorded the

revenue associated with this manufacturing supply agreement in discontinued operations. In the first quarter of fiscal 2010, additional proceeds $1 million were released from escrow and $0.6 million net of tax, was recorded as additional gain from the sale of discontinued operations.

     In September 2007, the Company entered into a definitive agreement to sell its Baseband Chipset Business to MediaTek Inc. The decision to sell the Baseband Chipset Business was due to the Company’s decision to focus its resources in areas where its signal processing expertise can provide unique capabilities and earn superior returns. On January 11, 2008, the Company completed the sale of its Baseband Chipset Business for net cash proceeds of $269 million. The cash proceeds received were net of a refundable withholding tax of $62 million and other cash payments of approximately $9 million. The Company made additional cash payments of $7.8 million during fiscal 2008, primarily related to transaction fees and retention payments to employees that transferred to MediaTek Inc. In connection with the purchase and sale agreement, $10 million was placed into escrow and was excluded from the gain calculations. The Company recorded a pre-tax gain in fiscal 2008 of $278 million, or $202 million net of tax, which is recorded as a gain on sale of discontinued operations. The Company made additional cash payments of $1.7 million during fiscal 2009 related to retention payments for employees who transferred to MediaTek Inc and for the reimbursement of intellectual property license fees incurred by MediaTek Inc. In the first quarter of fiscal 2010, the Company received cash proceeds of $62 million as a result of the refund of the withholding tax and also recorded an additional gain on sale of $0.3 million, or $0.2 million net of tax, due to the settlement of certain items at less than the amounts accrued. The Company may receive additional proceeds of up to $10 million, currently held in escrow, upon the resolution of certain contingent items, which would be recorded as additional gain from the sale of discontinued operations.

     The Company received additional amounts under various transition service agreements entered into in connection with these dispositions. The transition service agreements included manufacturing, engineering support and certain human resource services and information technology systems support. At the time of the disposition, the Company evaluated the nature of the transition services and concluded the services would be primarily completed within the one-year assessment period, and the Company did not have the ability to exert significant influence over the disposed businesses’ operating and financial policies. Accordingly, the Company concluded that it did not have a significant continuing involvement with the disposed businesses and has presented the disposition of these businesses as discontinued operations.

     The following amounts related to the CPU voltage regulation and PC thermal monitoring and baseband chipset businesses have been segregated from continuing operations and reported as discontinued operations. These amounts also include the revenue and costs of sales provided under a manufacturing supply agreement between the Company and a subsidiary of ON Semiconductor Corporation, which terminated during the first quarter of fiscal year 2009.

		Three Months Ended
		January 30, 2010				January 31, 2009
Total revenue		$	—			$	10,332
Cost of sales			—				10,847
Operating expenses			—				15
Gain on sale of discontinued operations			1,316				—
Gain (loss) before income taxes			1,316				(530	)
Provision for (benefit from) income taxes			457				(894	)
Total income from discontinued operations, net of tax		$	859				364
		January 30, 2010				October 31, 2009
Refundable foreign withholding tax		$	—			$	62,037
Total assets reclassified to non-current assets of discontinued operations		$	—			$	62,037

The Company has provided for potential liabilities due in the various jurisdictions in which the Company operates. Judgment is required in determining the worldwide income tax expense provision. 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 arrangements among related 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 accruals. Such differences could have a material impact on the Company’s income tax provision and operating results in the period in which such determination is made.

Fiscal Year 2004 and 2005 IRS Examination

     During the fourth quarter of fiscal 2007, the IRS completed its field examination of the Company’s fiscal years 2004 and 2005. On January 2, 2008, the IRS issued its report for fiscal 2004 and 2005, which included proposed adjustments related to these two fiscal years. The Company has recorded taxes and penalties related to certain of these proposed adjustments. There are four items with an additional potential total tax liability of $46 million. The Company has concluded, based on discussions with its tax advisors, that these four items are not likely to result in any additional tax liability. Therefore, the Company has not recorded any additional tax liability for these items and is appealing these proposed adjustments through the normal processes for the resolution of differences between the IRS and taxpayers. The Company’s initial meetings with the appellate division of the IRS were held during fiscal year 2009. Two of the unresolved matters are one-time issues and pertain to Section 965 of the Internal Revenue Code related to the beneficial tax treatment of dividends from foreign owned companies under The American Jobs Creation Act. The other matters pertain to the computation of research and development (R&D) tax credits and the profits earned from manufacturing activities carried on outside the United States. These latter two matters could impact taxes payable for fiscal 2004 and 2005 as well as for subsequent years.

Fiscal Year 2006 and 2007 IRS Examination

     During the third quarter of fiscal 2009, the IRS completed its field examination of the Company’s fiscal years 2006 and 2007. The IRS and the Company have agreed on the treatment of a number of issues that have been included in an Issue Resolutions Agreement related to the 2006 and 2007 tax returns. However, no agreement was reached on the tax treatment of a number of issues, including the same R&D credit and foreign manufacturing issues mentioned above related to fiscal 2004 and 2005, the pricing of intercompany sales (transfer pricing), and the deductibility of certain stock option compensation expenses. During the third quarter of fiscal 2009, the IRS issued its report for fiscal 2006 and fiscal 2007, which included proposed adjustments related to these two fiscal years. The Company has recorded taxes and penalties related to certain of these proposed adjustments. There are four items with an additional potential total tax liability of $195 million. The Company concluded, based on discussions with its tax advisors, that these four items are not likely to result in any additional tax liability. Therefore, the Company has not recorded any additional tax liability for these items and is appealing these proposed adjustments through the normal processes for the resolution of differences between the IRS and taxpayers. With the exception of the proposed adjustment related to the deductibility of certain stock option expenses, the other three matters could impact taxes payable for fiscal 2006 and 2007 as well as for subsequent years.

Fiscal Year 2008 and 2009 IRS Examination

     The IRS has not started their examination of fiscal year 2008 or fiscal year 2009.

     Although the Company believes its estimates of income tax payable are reasonable, no assurance can be given that the Company will prevail in the matters raised and that the outcome of one or all of these matters will not be different than that which is reflected in the historical income tax provisions and accruals. The Company believes such differences would not have a material impact on the Company’s financial condition but could have a material impact on the Company’s income tax provision, operating results and operating cash flows in the period in which such matters are resolved.

Note 17 — New Accounting Pronouncements

Fair Value Measurements and Disclosures

     In January 2010, FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (ASC Topic 820) — Improving Disclosures About Fair Value Measurements. The ASU requires new disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The new disclosures and clarifications of existing disclosures are effective for the Company’s first quarter of fiscal year 2010, except for the disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements, which are effective for the Company’s first quarter of fiscal year 2012. Other than requiring additional

disclosures, the adoption of this new guidance does not have a material impact on the Company’s consolidated results of operations and financial position.

     In October 2009, the FASB issued ASU No. 2009-14 — Software (Topic 985): Certain Revenue Arrangements That Include Software Elements (formerly EITF Issue No. 09-3). This standard removes tangible products from the scope of software revenue recognition guidance and also provides guidance on determining whether software deliverables in an arrangement that includes a tangible product are within the scope of the software revenue guidance. More specifically, if the software sold with or embedded within the tangible product is essential to the functionality of the tangible product, then this software, as well as undelivered software elements that relate to this software, are excluded from the scope of existing software revenue guidance. ASU No. 2009-14 is effective for fiscal years that begin on or after June 15, 2010, which is our fiscal year 2011. The Company is currently evaluating the impact, if any, that ASU No. 2009-14 may have on the Company financial condition and results of operations.

     In October 2009, the FASB issued ASU No. 2009-13 — Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (formerly EITF Issue No. 08-1). This standard modifies the revenue recognition guidance for arrangements that involve the delivery of multiple elements, such as product, software, services or support, to a customer at different times as part of a single revenue generating transaction. This standard provides principles and application guidance to determine whether multiple deliverables exist, how the individual deliverables should be separated and how to allocate the revenue in the arrangement among those separate deliverables. The standard also expands the disclosure requirements for multiple deliverable revenue arrangements. ASU No. 2009-13 is effective for fiscal years that begin on or after June 15, 2010, which is the Company’s fiscal year 2011. The Company is currently evaluating the impact, if any, that ASU No. 2009-13 may have on the Company’s financial condition and results of operations.

     In December 2009, the FASB issued ASU No. 2009-17 — Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, which amends ASC 810, Consolidation. This standard requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entity’s economic performance. ASU No. 2009-17 is effective for fiscal years that begin after November 15, 2009, which is our fiscal year 2011. The Company is currently evaluating the impact, if any, that ASU No. 2009-17 may have on the Company’s financial condition and results of operations.

     In June 2009, the FASB issued ASU No. 2009-16, Accounting for Transfers of Financial Asset, (Topic 820). This standard changes the way entities account for securitizations and other transfers of financial instruments. ASU No. 2009-16 is effective for fiscal years that begin after November 15, 2009, which is our fiscal year 2011. The Company is currently evaluating the impact, if any, that ASU No. 2009-16 may have on the Company’s financial condition and results of operations.

     In December 2007, the FASB issued ASC 805-10 (formerly SFAS 141R, “Business Combinations”). ASC 805-10 requires an acquiring entity in a business combination to recognize the assets acquired, liabilities assumed and any noncontrolling interest in the acquiree at their fair value on the acquisition date. It further requires that acquisition-related costs and restructuring costs be recognized separately from the acquisition. In April 2009, the FASB updated ASC 805-10 to amend the provisions for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. This update also eliminates the distinction between contractual and non-contractual contingencies. ASC 805-10 is effective for fiscal years beginning after December 15, 2008, which is the Company’s fiscal year 2010. On a prospective basis the adoption of ASC 805-10 changed the Company’s accounting treatment for business combinations beginning in the first quarter of fiscal year 2010.

     In December 2007, the FASB issued ASC810-10 (formerly SFAS 160, Noncontrolling Interests in Consolidated Financial Statements). ASC 810-10 clarifies that a noncontrolling or minority interest in a subsidiary is considered an ownership interest and, accordingly, requires all entities to report such interests in subsidiaries as equity in the consolidated financial statements. The adoption of ASC 810-10 in the first quarter of fiscal year 2010 did not impact the Company’s financial condition or results of operations.

In accordance with SFAS 165, the Company has evaluated subsequent events through the issuance of these financial statements. On February 16, 2010, the Company’s Board of Directors declared a cash dividend of $0.20 per outstanding share of common stock. The dividend will be paid on March 24, 2010 to all shareholders of record at the close of business on March 5, 2010.

This information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended October 31, 2009.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations, including in particular the section entitled “Outlook,” contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). 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 “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” 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, particularly in light of the recent global credit and financial market crisis; our anticipated growth and trends in our businesses, our capital needs and capital expenditures; our market position and competitive changes in the marketplace for our products; our ability to innovate new products and technologies; the timing or the effectiveness of our efforts to refocus our operations and reduce our cost structure and the expected amounts of any cost savings related to those efforts; our ability to access credit or capital markets; our ability to pay dividends or repurchase stock; our ability to service our outstanding debt; our expected tax rate; our third-party suppliers; intellectual property and litigation matters; potential acquisitions or divestitures; key personnel; the effect of new accounting pronouncements 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 are difficult to predict, including those identified in Part II, Item 1A. Risk Factors and elsewhere in our Quarterly Report on Form 10-Q. 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 except to the extent required by law.

During the first quarter of fiscal 2008, we sold our baseband chipset business and related support operations, or Baseband Chipset Business, to MediaTek Inc. and sold our CPU voltage regulation and PC thermal monitoring business to certain subsidiaries of ON Semiconductor Corporation. The financial results of these businesses are presented as discontinued operations in the consolidated statements of income for all periods presented. The assets and liabilities related to these businesses are reflected as assets and liabilities of discontinued operations in the consolidated balance sheet as of October 31, 2009. Unless otherwise noted, this Management’s Discussion and Analysis relates only to financial results from continuing operations.

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

		Three Months Ended
		January 30, 2010				January 31, 2009
Revenue		$	602,983			$	476,569
Gross margin %			61.1	%			56.4	%
Income from continuing operations, net of tax		$	119,600			$	24,585
Income from continuing operations, net of tax as a % of revenue			19.8	%			5.2	%
Diluted EPS from continuing operations		$	0.39			$	0.08
Diluted EPS		$	0.40			$	0.09

The year-to-year revenue changes by end market and product category are more fully outlined below under Revenue Trends by End Market and Revenue Trends by Product Type.

In the first quarter of fiscal 2010, our revenue increased 26.5% from the first quarter of fiscal 2009 and our diluted earnings per share from continuing operations increased 388%. Cash flow from operations in the first quarter of fiscal 2010 was $213.8 million, or 35.5% of revenue. In addition, we received $163.5 million net proceeds related to employee stock option exercises and distributed $58.9 million to our shareholders in dividend payments. These factors contributed to the net increase in cash, cash equivalents and short-term investments of $363 million in the first quarter of fiscal 2010.

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 our product will be incorporated. As data systems for capturing and tracking this data evolve and improve, 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 not materially change the sizing of, or the underlying trends of results within, each end market.

		Three Months Ended												Three Months Ended
		January 30, 2010												January 31, 2009
						% of												% of
		Revenue				Revenue				Y/Y%				Revenue				Revenue
Industrial		$	259,962				43	%			19	%		$	218,662				46	%
Automotive			74,643				12	%			81	%			41,246				9	%
Consumer			117,703				20	%			53	%			76,702				16	%
Communications			135,519				22	%			8	%			125,708				26	%
Computer			15,156				3	%			6	%			14,251				3	%
Total revenue		$	602,983				100	%			27	%		$	476,569				100	%

Industrial — The year-to-year increase in the first quarter of fiscal 2010 in industrial end market revenue was primarily the result of a broad-based increase in demand in this end market, which was most significant for products sold into the instrumentation, automation, energy and healthcare sectors of this end market.

Automotive — The year-to-year increase in the first quarter of fiscal 2010 in automotive end market revenue was primarily the result of increased demand due to various government-initiated incentive programs and inventory replenishment in this end market.

Consumer — The year-to-year increase in the first quarter of fiscal 2010 in consumer end market revenue was primarily the result of a broad-based increase in demand for products used in digital cameras, home entertainment and other consumer applications in this end market.

Communications — The year-to-year increase in the first quarter of fiscal 2010 in communications end market revenue was the result of an increase in sales in the infrastructure and handset sectors, offset by a sales reduction in the base station end market sector.

Revenue Trends by Product Type

The following table summarizes revenue by product categories. The categorization of our products into broad categories is based on the characteristics of the individual products, the specification of the products and in some cases the specific uses that certain products have within applications. The categorization of products into categories is therefore subject to judgment in some cases and can vary over time. In instances where products move between product categories, we reclassify the amounts in the product categories for all prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each product category.

		Three Months Ended												Three Months Ended
		January 30, 2010												January 31, 2009
						% of												% of
		Revenue				Revenue*				Y/Y%				Revenue				Revenue
Converters		$	317,403				53	%			25	%		$	252,925				53	%
Amplifiers / Radio frequency			148,066				25	%			13	%			130,716				27	%
Other analog			46,279				8	%			95	%			23,754				5	%
Subtotal analog signal processing			511,748				85	%			26	%			407,395				85	%
Power management & reference			38,708				6	%			50	%			25,738				5	%
Total analog products		$	550,456				91	%			27	%		$	433,133				91	%
Digital signal processing		$	52,527				9	%			21	%		$	43,436				9	%
Total revenue		$	602,983				100	%			27	%		$	476,569				100	%