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0000006281false00000062812019-11-262019-11-26

_________________________________________________________________________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________________________________________

FORM 8-K
_____________________________________________________________________________________________________

CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 26, 2019
_____________________________________________________________________________________________________

Analog Devices, Inc.
(Exact name of Registrant as Specified in its Charter)
______________________________________________________________________________________________________
Massachusetts1-781904-2348234
(State or Other Jurisdiction
of Incorporation) 		(Commission
File Number)		(IRS Employer
Identification No.)

One Technology Way,Norwood,MA02062
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code: (781) 329-4700  

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
______________________________________________________________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)		Name of each exchange
on which registered
Common Stock $0.16 2/3 par value per shareADINasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02.     Results of Operations and Financial Condition
On November 26, 2019, Analog Devices, Inc. (the “Registrant”) announced its financial results for its fourth quarter and fiscal year ended November 2, 2019. The full text of the press release issued by the Registrant concerning the foregoing results is furnished herewith as Exhibit 99.1.  
The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01.     Financial Statements and Exhibits
(d)  Exhibits
Exhibit No.Description
 
99.1
101.INS    The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.**
101.SCH    Inline XBRL Schema Document.**
101.CAL    Inline XBRL Calculation Linkbase Document.**
101.LAB    Inline XBRL Labels Linkbase Document.**
101.PRE    Inline XBRL Presentation Linkbase Document.**
101.DEF    Inline XBRL Definition Linkbase Document.**
104  Cover page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
**    Submitted electronically herewith.



SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
     
Date:November 26, 2019ANALOG DEVICES, INC.
 		 
 By:  /s/ Prashanth Mahendra-Rajah 
  Prashanth Mahendra-Rajah 
  Senior Vice President, Finance and Chief Financial Officer 
Document

Exhibit 99.1

Analog Devices Reports Fourth Quarter and Fiscal 2019 Results

•Revenue was $1.44 billion for the fourth quarter and $6 billion for fiscal 2019
•Operating cash flow was $2.3 billion and free cash flow was $2 billion for fiscal 2019
•Returned over $370 million to shareholders in the fourth quarter, and nearly $1.4 billion for fiscal 2019 or over 120% of free cash flow after debt payments

NORWOOD, Mass.--(BUSINESS WIRE)--November 26, 2019--Analog Devices, Inc. (Nasdaq: ADI), a leading global high-performance analog technology company, today announced financial results for its fourth quarter and fiscal 2019, which ended November 2, 2019.

“ADI delivered solid fourth quarter and full-year results amidst continued trade and macro uncertainty,” said Vincent Roche, President and CEO. “Over the course of the year, we generated revenue of $6 billion and effectively managed costs, while continuing to prioritize strategic investments to drive innovation. Our strong margins and cash flow reflect the resiliency of our business model, which enabled us to return nearly $1.4 billion to shareholders, or over 120% of free cash flow after debt payments.”

“Looking ahead, the underlying fundamentals and long-term outlook for ADI are strong. Our diverse product portfolio of cutting-edge technologies is well positioned to solve customers’ challenges and aligned with attractive secular trends that will shape the industry’s future. As such, I believe we are in a superior competitive position as demand returns to deliver our next chapter of growth.”







Performance for the Fourth Quarter of Fiscal 2019

Results Summary
(in millions, except per-share amounts and percentages)
Three Months Ended
Nov 2, 2019
Nov 3, 2018 (1)
Change
Revenue$1,443  $1,536  (6)%
Gross margin$942  $1,046  (10)%
Gross margin percentage65.3 %(2) 68.1 %(280 bps)
Operating income$338  $465  (27)%
Operating margin percentage23.4 %30.3 %(690 bps)
Diluted earnings per share$0.74  $1.08  (31)%
Adjusted Results
Adjusted gross margin$987  $1,089  (9)%
Adjusted gross margin percentage68.4 %(2) 70.9 %(250 bps)
Adjusted operating income$560  $638  (12)%
Adjusted operating margin percentage38.8 %41.5 %(270 bps)
Adjusted diluted earnings per share$1.19  $1.48  (20)%
Three Months EndedTrailing Twelve Months
Cash GenerationNov 2, 2019Nov 2, 2019
Net cash provided by operating activities$658  $2,253  
% of revenue46 %38 %
Capital expenditures$(51) $(275) 
Free cash flow$607  $1,978  
% of revenue42 %33 %
Three Months EndedTrailing Twelve Months
Cash ReturnNov 2, 2019Nov 2, 2019
Dividend paid$(200) $(777) 
Stock repurchases(172) (613) 
Total cash returned (3) $(373) $(1,390) 
(1) Prior year balances have been restated to reflect the adoption of the new revenue recognition standard in the first quarter of fiscal 2019.
(2) Includes approximately 140 basis points of impact from a write-down of inventory associated with a customer within our Communications end market.
(3) The sum of the individual amounts may not equal the total due to rounding.







Outlook for the First Quarter of Fiscal Year 2020

For the first quarter of fiscal 2020, we are forecasting revenue of $1.30 billion, +/- $50 million. At the midpoint of this revenue outlook, we expect reported operating margins of approximately 23.7%, and adjusted operating margins of approximately 36.7%. We are planning for reported EPS to be $0.61, +/- $0.07, and adjusted EPS to be $1.00, +/- $0.07.

Our first quarter fiscal 2020 outlook is based on current expectations and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this release. These statements supersede all prior statements regarding our business outlook set forth in prior ADI news releases, and ADI disclaims any obligation to update these forward-looking statements.

The adjusted results and adjusted anticipated results above are financial measures presented on a non-GAAP basis. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are provided in the financial tables included in this press release. See also “Non-GAAP Financial Information” section for additional information.

Dividend Payment

The ADI Board of Directors has declared a quarterly cash dividend of $0.54 per outstanding share of common stock. The dividend will be paid on December 17, 2019 to all shareholders of record at the close of business on December 6, 2019.

Conference Call Scheduled for Today, Tuesday, November 26, 2019 at 10:00 am ET

ADI will host a conference call to discuss our fourth quarter fiscal 2019 results and short-term outlook today, beginning at 10:00 am ET. Investors may join via webcast, accessible at investor.analog.com, or by telephone (call 706-634-7193 ten minutes before the call begins and provide the password "ADI").

A replay will be available two hours after the completion of the call. The replay may be accessed for up to two weeks by dialing 855-859-2056 (replay only) and providing the conference ID: 9099003, or by visiting investor.analog.com.

Non-GAAP Financial Information

This release includes non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. These non-GAAP measures have material limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and should not be considered in isolation from, or as a substitute for, the Company’s financial results presented in accordance with GAAP. The Company’s use of non-GAAP measures, and the underlying methodology when including or excluding certain items, is not necessarily an indication of the results of operations that may be expected in the future, or that the Company will not, in fact, record such items in future periods. You are cautioned not to place undue reliance on these non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.


Management uses non-GAAP measures internally to evaluate the Company’s operating performance from continuing operations against past periods and to budget and allocate resources in future periods. These non-GAAP measures also assist management in evaluating the Company’s core business and trends across different reporting periods on a consistent basis. Management also uses these non-GAAP measures as the primary performance measurement when communicating with analysts and investors regarding the Company’s earnings results and outlook and believes that the presentation of these non-GAAP measures is useful to investors because it provides investors with the operating results that management uses to manage the Company and enables investors and analysts to evaluate the Company’s core business. Management also believes that the non-GAAP liquidity measure free cash flow is useful both internally and to investors because it provides information about the amount of cash generated after capital expenditures that is then available to repay debt obligations, make investments and fund acquisitions, and for certain other activities.
The non-GAAP financial measures referenced by ADI in this release include: adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted operating expenses percentage, adjusted operating income, adjusted operating margin, adjusted income before income taxes, adjusted provision for income taxes, adjusted tax rate, adjusted diluted earnings per share (EPS), free cash flow, and free cash flow margin percentage.
Adjusted gross margin is defined as gross margin, determined in accordance with GAAP, excluding certain acquisition-related expenses1 which are described further below. Adjusted gross margin percentage represents adjusted gross margin divided by revenue.
Adjusted operating expenses is defined as operating expenses, determined in accordance with GAAP, excluding: certain acquisition-related expenses1; acquisition-related transaction costs2; accelerated stock-based compensation expense3; and restructuring related expense4 which are described further below. Adjusted operating expenses percentage represents adjusted operating expenses divided by revenue.
Adjusted operating income is defined as operating income, determined in accordance with GAAP, excluding: acquisition-related expenses1; acquisition-related transaction costs2; accelerated stock-based compensation expense3; and restructuring related expense4 which are described further below. Adjusted operating margin represents adjusted operating income divided by revenue.
Adjusted income before income taxes is defined as income before income taxes, determined in accordance with GAAP, excluding: acquisition-related expenses1; acquisition-related transaction costs2; accelerated stock-based compensation expense3; and restructuring related expense4 which are described further below.
Adjusted provision for income taxes is defined as provision for income taxes, determined in accordance with GAAP, excluding tax related items5 described further below. Adjusted tax rate represents adjusted provision for income taxes divided by adjusted income before income taxes.
Adjusted diluted EPS is defined as diluted EPS, determined in accordance with GAAP, excluding: acquisition-related expenses1; acquisition-related transaction costs2; accelerated stock-based compensation expense3; restructuring related expense4; and tax related items5 which are described further below.
Free cash flow is defined as net cash provided by operating activities, determined in accordance with GAAP, less additions to property, plant and equipment, net. Free cash flow margin percentage represents free cash flow divided by revenue.
1Acquisition-Related Expenses: Expenses incurred as a result of current and prior period acquisitions and primarily include expenses associated with the fair value adjustments to inventory, property, plant and equipment and amortization of acquisition related intangibles, which include acquired intangibles such as purchased technology and customer relationships. Expenses also include severance payments, equity award accelerations and the fair value adjustment


associated with the replacement of share-based awards related to the Linear Technology acquisition. We excluded these costs from our non-GAAP measures because they relate to specific transactions and are not reflective of our ongoing financial performance.
2Acquisition-Related Transaction Costs: Costs directly related to the Linear Technology acquisition, including legal, accounting and other professional fees, as well as integration-related costs. We excluded these costs from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.
3Accelerated Stock-Based Compensation Expense: Stock-based compensation expense for one former executive officer due to the accelerated vesting of restricted stock units and stock options resulting from a reduction in the requisite service period for each in accordance with the terms of the applicable agreements. We excluded these costs because accelerated stock-based compensation expense and the related tax effect have no direct correlation to the operation of our business in the future.
4Restructuring-Related Expense: Expenses incurred in connection with facility closures, consolidation of manufacturing facilities, severance, other accelerated stock-based compensation expense and other cost reduction efforts. We excluded these expenses from our non-GAAP measures because apart from ongoing expense savings as a result of such items, these expenses have no direct correlation to the operation of our business in the future.
5Tax-Related Items: Tax adjustments associated with the non-GAAP items discussed above, discrete tax items including tax expense or benefit related to prior periods, income tax from prior period tax credits, income tax on certain inventory intra-entity transfers, tax expense or benefit related to the impact of the Tax Cuts and Jobs Act of 2017 and other deferred tax recalibration adjustments, income tax from state valuation allowance adjustments, income tax from certain uncertain tax positions, and the impact of a voluntary accounting policy change. We excluded these tax-related items from our non-GAAP measures because they are not associated with the tax expense on our current operating results.

About Analog Devices

Analog Devices (Nasdaq: ADI) is a leading global high-performance analog technology company dedicated to solving the toughest engineering challenges. We enable our customers to interpret the world around us by intelligently bridging the physical and digital with unmatched technologies that sense, measure, power, connect and interpret. Visit http://www.analog.com.

Forward Looking Statements

This press release contains forward-looking statements, which address a variety of subjects including, for example, our statements regarding expected revenue, operating margin, tax rate, earnings per share, and other financial results, expected market trends, market share gains, operating leverage, production and inventory levels, and expected customer demand and order rates for our products, expected product offerings, product development and marketing position. Statements that are not historical facts, including statements about our beliefs, plans and expectations, are forward-looking statements. Such statements are based on our current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: political and economic uncertainty, including any faltering in global economic conditions or the stability of credit and financial markets, erosion of consumer confidence and declines in customer spending, unavailability of raw materials,


services, supplies or manufacturing capacity, changes in geographic, product or customer mix; changes in export classifications, import and export regulations or duties and tariffs; changes in our estimates of our expected tax rate based on current tax law; our ability to successfully integrate acquired businesses and technologies; the risk that expected benefits, synergies and growth prospects of acquisitions may not be fully achieved in a timely manner, or at all; adverse results in litigation matters; and the risk that we will be unable to retain and hire key personnel. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our filings with the Securities and Exchange Commission (“SEC”), including the risk factors contained in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Forward-looking statements represent management’s current expectations and are inherently uncertain. Except as required by law, we do not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.

Analog Devices and the Analog Devices logo are registered trademarks or trademarks of Analog Devices, Inc. All other trademarks mentioned in this document are the property of their respective owners.

(ADI-WEB)

For more information, please contact:

Investor Contact:
Analog Devices, Inc.
Mr. Michael Lucarelli
Director of Investor Relations
781-461-3282
investor.relations@analog.com

Media Contacts:
Teneo
Andrea Calise
917-826-3804
andrea.calise@teneo.com

Teneo
Megan Fenton
917-860-0356
megan.fenton@teneo.com


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

Three Months EndedTwelve Months Ended
Nov 2, 2019Nov 3, 2018 (1)Nov 2, 2019Nov 3, 2018 (1)
Revenue$1,443,219  $1,536,128  $5,991,065  $6,224,689  
Cost of sales 501,028  490,585  1,977,315  1,974,293  
Gross margin942,191  1,045,543  4,013,750  4,250,396  
Operating expenses:
   Research & development 277,018  295,609  1,130,348  1,165,047  
   Selling, marketing, general and administrative 154,799  175,296  648,094  695,540  
   Amortization of intangibles107,225  107,345  429,041  428,902  
   Special charges64,788  1,842  95,659  61,318  
Total operating expenses603,830  580,092  2,303,142  2,350,807  
Operating income338,361  465,451  1,710,608  1,899,589  
Nonoperating expenses (income):
   Interest expense50,775  59,102  229,075  253,589  
   Interest income(1,988) (2,791) (10,229) (9,383) 
   Other, net1,747  (196) 6,034  69  
50,534  56,115  224,880  244,275  
Income before income tax287,827  409,336  1,485,728  1,655,314  
Provision for income taxes10,133  4,481  122,717  148,334  
Net income$277,694  $404,855  $1,363,011  $1,506,980  
Shares used to compute earnings per share - basic369,051  371,074  369,133  370,430  
Shares used to compute earnings per share - diluted372,584  375,116  372,871  374,938  
Basic earnings per common share$0.75  $1.09  $3.68  $4.05  
Diluted earnings per common share$0.74  $1.08  $3.65  $4.00  
(1) Balances have been restated to reflect the adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.



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

November 2, 2019November 3, 2018 (1)
Cash & cash equivalents$648,322  $816,591  
Accounts receivable635,136  639,717  
Inventories609,886  586,760  
Other current assets91,782  69,058  
  Total current assets1,985,126  2,112,126  
Net property, plant and equipment1,219,989  1,154,328  
Investments77,324  68,583  
Goodwill12,256,880  12,252,604  
Intangible assets, net4,217,224  4,778,192  
Deferred tax assets1,582,382  9,665  
Other53,716  62,868  
Total assets$21,392,641  $20,438,366  
Other current liabilities$1,208,965  $984,748  
Debt, current299,667  67,000  
Long-term debt5,192,252  6,265,674  
Deferred income taxes2,088,212  990,409  
Other non-current liabilities894,357  862,362  
Shareholders' equity11,709,188  11,268,173  
Total liabilities & equity$21,392,641  $20,438,366  
(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.






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

Three Months EndedTwelve Months Ended
Nov 2, 2019Nov 3, 2018 (1)Nov 2, 2019Nov 3, 2018 (1)
Cash flows from operating activities:
  Net income$277,694  $404,855  $1,363,011  $1,506,980  
  Adjustments to reconcile net income to net cash provided by operations:
       Depreciation61,636  58,874  240,677  228,525  
       Amortization of intangibles143,528  142,316  570,574  570,538  
       Stock-based compensation expense37,580  37,454  150,300  151,165  
       Non-cash portion of special charge9,800  —  14,167  —  
       Deferred income taxes(35,809) (18,892) (91,253) (730,376) 
       Other non-cash activity14,206  14,550  40,907  36,569  
       Changes in operating assets and liabilities149,270  75,284  (35,283) 678,960  
   Total adjustments380,211  309,586  890,089  935,381  
Net cash provided by operating activities657,905  714,441  2,253,100  2,442,361  
   Percent of revenue45.6 %46.5 %37.6 %39.2 %
Cash flows from investing activities:
  Additions to property, plant and equipment(51,076) (86,004) (275,372) (254,876) 
  Payments for acquisitions, net of cash acquired(11,170) —  (11,170) (52,839) 
  Change in other assets(1,512) (3,015) (6,644) (6,283) 
Net cash used for investing activities(63,758) (89,019) (293,186) (313,998) 
Cash flows from financing activities:
  Proceeds from debt—  —  1,250,000  743,778  
  Early termination of debt—  —  (1,250,000) —  
  Proceeds from revolver—  —  75,000  —  
  Payments on revolver—  —  (75,000) —  
  Debt repayments(200,000) (225,000) (850,000) (2,275,000) 
  Dividend payments to shareholders(200,196) (179,416) (777,481) (703,307) 
  Repurchase of common stock(172,389) (184,116) (613,005) (225,977) 
  Proceeds from employee stock plans10,388  10,668  116,523  99,027  
  Change in other financing activities5,087  (2,882) (2,831) 3,437  
Net cash used for financing activities(557,110) (580,746) (2,126,794) (2,358,042) 
Effect of exchange rate changes on cash(879) (660) (1,389) (1,568) 
Net increase (decrease) in cash and cash equivalents36,158  44,016  (168,269) (231,247) 
Cash and cash equivalents at beginning of period612,164  772,575  816,591  1,047,838  
Cash and cash equivalents at end of period$648,322  $816,591  $648,322  $816,591  
(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.





ANALOG DEVICES, INC.
REVENUE TRENDS BY END MARKET
(Unaudited)
(In thousands)

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 and our methodology evolves and improves, the categorization of products by end market can vary over time. When this occurs, we reclassify revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.

Three Months Ended
Nov 2, 2019Nov 3, 2018 (1)
Revenue% of revenue (2)Y/Y %Revenue% of revenue (2)
Industrial$744,137  52%  —%  $742,549  48%  
Communications260,128  18%  (19)% 320,827  21%  
Automotive226,124  16%  (8)% 244,759  16%  
Consumer212,830  15%  (7)% 227,993  15%  
Total revenue$1,443,219  100%  (6)% $1,536,128  100%  
Twelve Months Ended
Nov 2, 2019Nov 3, 2018 (1)
Revenue% of revenue (2)Y/Y %Revenue% of revenue (2)
Industrial$3,003,927  50%  (4)% $3,129,569  50%  
Communications1,284,087  21%  12%  1,151,359  18%  
Automotive933,143  16%  (8)% 1,009,927  16%  
Consumer769,908  13%  (18)% 933,834  15%  
Total revenue$5,991,065  100%  (4)% $6,224,689  100%  
(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.
(2) The sum of the individual percentages may not equal the total due to rounding.





ANALOG DEVICES, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(Unaudited)
(In thousands, except per share amounts)
Three Months EndedTwelve Months Ended
Nov 2, 2019Nov 3, 2018 (1)Nov 2, 2019Nov 3, 2018 (1)
Gross margin$942,191  $1,045,543  $4,013,750  $4,250,396  
  Gross margin percentage65.3 %68.1 %67.0 %68.3 %
      Acquisition related expenses44,822  43,896  175,266  180,903  
Adjusted gross margin$987,013  $1,089,439  $4,189,016  $4,431,299  
  Adjusted gross margin percentage68.4 %70.9 %69.9 %71.2 %
Operating expenses$603,830  $580,092  $2,303,142  $2,350,807  
  Percent of revenue41.8 %37.8 %38.4 %37.8 %
      Acquisition related expenses(112,219) (117,651) (451,511) (477,132) 
      Acquisition related transaction costs—  (5,628) —  (22,197) 
      Accelerated stock-based compensation expense—  (3,402) —  (3,402) 
      Restructuring related expense(64,788) (1,842) (95,659) (61,318) 
Adjusted operating expenses$426,823  $451,569  $1,755,972  $1,786,758  
  Adjusted operating expenses percentage29.6 %29.4 %29.3 %28.7 %
Operating income$338,361  $465,451  $1,710,608  $1,899,589  
  Operating margin23.4 %30.3 %28.6 %30.5 %
      Acquisition related expenses157,041  161,547  626,777  658,035  
      Acquisition related transaction costs—  5,628  —  22,197  
      Accelerated stock-based compensation expense—  3,402  —  3,402  
      Restructuring related expense64,788  1,842  95,659  61,318  
Adjusted operating income$560,190  $637,870  $2,433,044  $2,644,541  
  Adjusted operating margin38.8 %41.5 %40.6 %42.5 %
Provision for income taxes$10,133  $4,481  $122,717  $148,334  
      Income tax on non discrete tax items above35,903  7,285  104,470  32,260  
      Income tax from prior period tax liabilities7,622  (10,333) 7,622  (12,289) 
      Income tax on certain inventory intra-entity transfers14,500  —  14,500  —  
      Income tax from state tax valuation allowance adjustment(13,435) 11,311  (13,435) 11,311  
     Income tax from prior period tax credits
—  —  11,210  —  
      Income tax on voluntary accounting policy change
—  —  17,155  —  
      Income tax from uncertain tax positions—  25,676  —  32,832  
      Income tax from one time transitional tax—  (3,904) 7,500  (690,965) 
      Income tax from deferred tax recalibration11,615  (6,125) 16,675  633,573  
Adjusted provision for income taxes$66,338  $28,391  $288,414  $155,056  
Income before income taxes$287,827  $409,336  $1,485,728  $1,655,314  
  Effective tax rate3.5 %1.1 %8.3 %9.0 %
      Acquisition related expenses157,041  161,547  626,777  658,035  
      Acquisition related transaction costs—  5,628  —  22,197  
      Accelerated stock-based compensation expense—  3,402  —  3,402  
      Restructuring related expense64,788  1,842  95,659  61,318  
Adjusted income before income taxes$509,656  $581,755  $2,208,164  $2,400,266  
  Adjusted tax rate13.0 %4.9 %13.1 %6.5 %
Diluted EPS$0.74  $1.08  $3.65  $4.00  
      Acquisition related expenses0.42  0.43  1.68  1.76  
      Acquisition related transaction costs—  0.02  —  0.06  
      Accelerated stock-based compensation expense—  0.01  —  0.01  
      Restructuring related expense0.17  0.000.26  0.16  
      Income tax on non discrete tax items above(0.10) (0.02) (0.28) (0.09) 
      Income from prior period tax liabilities(0.02) 0.03  (0.02) 0.03  
      Income tax on certain inventory intra-entity transfers(0.04) —  (0.04) —  
      Income tax from state tax valuation allowance adjustment0.04  (0.03) 0.04  (0.03) 
      Income tax from prior period tax credits—  —  (0.03) —  
      Income tax on voluntary accounting policy change
—  —  (0.05) —  
      Income tax from uncertain tax positions—  (0.07) —  (0.09) 
      Income tax from one time transitional tax—  0.01  (0.02) 1.84  
      Income tax from deferred tax recalibration(0.03) 0.02  (0.04) (1.69) 
Adjusted diluted EPS (2)$1.19  $1.48  $5.15  $5.97  


(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.
(2) The sum of the individual per share amounts may not equal the total due to rounding.


ANALOG DEVICES, INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(Unaudited)
(In thousands)

Trailing Twelve MonthsThree Months Ended
Nov 2, 2019Nov 2, 2019Aug 3, 2019May 4, 2019Feb 2, 2019
Revenue$5,991,065  $1,443,219  $1,480,143  $1,526,602  $1,541,101  
Net cash provided by operating activities$2,253,100  $657,905  $552,546  $670,882  $371,767  
% of Revenue38 %46 %37 %44 %24 %
Capital expenditures$(275,372) $(51,076) $(58,094) $(75,209) $(90,993) 
Free cash flow$1,977,728  $606,829  $494,452  $595,673  $280,774  
% of Revenue33 %42 %33 %39 %18 %




ANALOG DEVICES, INC.
RECONCILIATION OF PROJECTED GAAP TO NON-GAAP RESULTS
(Unaudited)

Three Months Ending Feb 1, 2020
ReportedAdjusted
Revenue$1.30 Billion $1.30 Billion
(+/- $50 Million)(+/- $50 Million)
Operating margin23.7%  36.7% (1)
(+/-150 bps)(+/-100 bps)
Nonoperating expenses~ $49 Million~ $49 Million  
Tax rate12% to 15%12% to 15% (2)
Earnings per share$0.61  $1.00 (3)
(+/- $0.07)(+/- $0.07)

(1) Includes $158 million of adjustments related to acquisition related expenses and approximately $10 million of restructuring related expenses, as previously defined in the Non-GAAP Financial Information section of this press release.
(2) Includes $23 million of tax effects associated with the adjustment for acquisition and restructuring related expenses noted above.
(3) Includes $0.39 of adjustments related to the net impact of $0.42 of acquisition related expenses, $0.03 of restructuring related expenses and $0.06 of tax effects on those items.


Investor Contact:
Analog Devices, Inc.
Mr. Michael Lucarelli, 781-461-3282
Director of Investor Relations
investor.relations@analog.com

Media Contacts:
Teneo
Andrea Calise, 917-826-3804
andrea.calise@teneo.com

Teneo
Megan Fenton, 917-860-0356
megan.fenton@teneo.com