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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Massachusetts
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04-2348234
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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One Technology Way, Norwood, MA
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02062-9106
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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ITEM 1.
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Financial Statements
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ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(thousands, except per share amounts)
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
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April 29, 2017
|
|
April 30, 2016
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|
April 29, 2017
|
|
April 30, 2016
|
||||||||
Revenue
|
$
|
1,147,982
|
|
|
$
|
778,766
|
|
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$
|
2,132,431
|
|
|
$
|
1,548,195
|
|
Cost of sales (1)
|
507,539
|
|
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267,863
|
|
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843,484
|
|
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559,999
|
|
||||
Gross margin
|
640,443
|
|
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510,903
|
|
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1,288,947
|
|
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988,196
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development (1)
|
235,232
|
|
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160,235
|
|
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419,186
|
|
|
317,663
|
|
||||
Selling, marketing, general and administrative (1)
|
190,686
|
|
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112,186
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|
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321,345
|
|
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219,648
|
|
||||
Amortization of intangibles
|
68,690
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|
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17,419
|
|
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86,850
|
|
|
34,777
|
|
||||
Special charges
|
—
|
|
|
13,684
|
|
|
49,463
|
|
|
13,684
|
|
||||
|
494,608
|
|
|
303,524
|
|
|
876,844
|
|
|
585,772
|
|
||||
Operating income
|
145,835
|
|
|
207,379
|
|
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412,103
|
|
|
402,424
|
|
||||
Nonoperating expense (income):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
71,636
|
|
|
18,455
|
|
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114,250
|
|
|
31,517
|
|
||||
Interest income
|
(12,421
|
)
|
|
(5,243
|
)
|
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(22,421
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)
|
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(8,442
|
)
|
||||
Other, net
|
(94
|
)
|
|
(743
|
)
|
|
251
|
|
|
2,262
|
|
||||
|
59,121
|
|
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12,469
|
|
|
92,080
|
|
|
25,337
|
|
||||
Income before income taxes
|
86,714
|
|
|
194,910
|
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|
320,023
|
|
|
377,087
|
|
||||
(Benefit) provision for income taxes
|
(6,850
|
)
|
|
24,337
|
|
|
9,330
|
|
|
42,010
|
|
||||
Net income
|
$
|
93,564
|
|
|
$
|
170,573
|
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$
|
310,693
|
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$
|
335,077
|
|
Shares used to compute earnings per share – basic
|
341,316
|
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|
308,790
|
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|
325,051
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|
|
309,978
|
|
||||
Shares used to compute earnings per share – diluted
|
345,654
|
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312,250
|
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329,365
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|
313,521
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|
||||
Basic earnings per share
|
$
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0.27
|
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$
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0.55
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|
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$
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0.96
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$
|
1.08
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Diluted earnings per share
|
$
|
0.27
|
|
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$
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0.55
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|
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$
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0.94
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$
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1.07
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Dividends declared and paid per share
|
$
|
0.45
|
|
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$
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0.42
|
|
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$
|
0.87
|
|
|
$
|
0.82
|
|
(1) Includes stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
$
|
2,566
|
|
|
$
|
1,986
|
|
|
$
|
4,510
|
|
|
$
|
4,078
|
|
Research and development
|
$
|
11,910
|
|
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$
|
6,646
|
|
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$
|
18,931
|
|
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$
|
13,350
|
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Selling, marketing, general and administrative
|
$
|
8,010
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|
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$
|
7,327
|
|
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$
|
15,574
|
|
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$
|
14,140
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ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(thousands)
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
||||||||
Net income
|
$
|
93,564
|
|
|
$
|
170,573
|
|
|
$
|
310,693
|
|
|
$
|
335,077
|
|
Foreign currency translation adjustments
|
6,140
|
|
|
8,050
|
|
|
1,178
|
|
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(64
|
)
|
||||
Change in fair value of available-for-sale securities classified as short-term investments (net of taxes of $5, $42, $9 and $42, respectively)
|
(675
|
)
|
|
605
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|
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(456
|
)
|
|
530
|
|
||||
Change in fair value of derivative instruments designated as cash flow hedges (net of taxes of $912, $1,495, $2,307 and $1,138, respectively)
|
4,481
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7,880
|
|
|
6,566
|
|
|
6,300
|
|
||||
Changes in pension plans including prior service cost, transition obligation, net actuarial loss and foreign currency translation adjustments (net of taxes of $103, $52, $205 and $102 respectively)
|
(359
|
)
|
|
(453
|
)
|
|
(180
|
)
|
|
360
|
|
||||
Other comprehensive income
|
9,587
|
|
|
16,082
|
|
|
7,108
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|
|
7,126
|
|
||||
Comprehensive income
|
$
|
103,151
|
|
|
$
|
186,655
|
|
|
$
|
317,801
|
|
|
$
|
342,203
|
|
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(thousands, except share and per share amounts)
|
|||||||
|
April 29, 2017
|
|
October 29, 2016
|
||||
ASSETS
|
|
|
|
|
|
||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,697,743
|
|
|
$
|
921,132
|
|
Short-term investments
|
490,629
|
|
|
3,134,661
|
|
||
Accounts receivable
|
630,353
|
|
|
477,609
|
|
||
Inventories (1)
|
647,858
|
|
|
376,555
|
|
||
Prepaid income tax
|
9,490
|
|
|
6,405
|
|
||
Prepaid expenses and other current assets
|
59,394
|
|
|
58,501
|
|
||
Total current assets
|
7,535,467
|
|
|
4,974,863
|
|
||
Property, Plant and Equipment, at Cost
|
|
|
|
||||
Land and buildings
|
784,394
|
|
|
564,329
|
|
||
Machinery and equipment
|
2,287,022
|
|
|
1,994,115
|
|
||
Office equipment
|
63,533
|
|
|
58,785
|
|
||
Leasehold improvements
|
66,266
|
|
|
59,649
|
|
||
|
3,201,215
|
|
|
2,676,878
|
|
||
Less accumulated depreciation and amortization
|
2,111,896
|
|
|
2,040,762
|
|
||
Net property, plant and equipment
|
1,089,319
|
|
|
636,116
|
|
||
Other Assets
|
|
|
|
||||
Deferred compensation plan investments
|
27,323
|
|
|
26,152
|
|
||
Other investments
|
28,492
|
|
|
21,937
|
|
||
Goodwill
|
12,269,501
|
|
|
1,679,116
|
|
||
Intangible assets, net
|
5,587,862
|
|
|
549,368
|
|
||
Deferred tax assets
|
32,711
|
|
|
36,005
|
|
||
Other assets
|
52,008
|
|
|
46,721
|
|
||
Total other assets
|
17,997,897
|
|
|
2,359,299
|
|
||
|
$
|
26,622,683
|
|
|
$
|
7,970,278
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
190,245
|
|
|
$
|
171,439
|
|
Deferred income on shipments to distributors, net
|
377,792
|
|
|
351,538
|
|
||
Income taxes payable
|
60,563
|
|
|
4,100
|
|
||
Debt, current
|
4,321,169
|
|
|
—
|
|
||
Accrued liabilities
|
499,513
|
|
|
255,857
|
|
||
Total current liabilities
|
5,449,282
|
|
|
782,934
|
|
||
Non-current liabilities
|
|
|
|
||||
Long-term debt
|
8,572,364
|
|
|
1,732,177
|
|
||
Deferred income taxes
|
2,431,410
|
|
|
109,931
|
|
||
Deferred compensation plan liability
|
27,323
|
|
|
26,152
|
|
||
Other non-current liabilities
|
175,709
|
|
|
153,466
|
|
||
Total non-current liabilities
|
11,206,806
|
|
|
2,021,726
|
|
||
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, 367,011,463 shares outstanding (308,170,560 on October 29, 2016)
|
61,170
|
|
|
51,363
|
|
||
Capital in excess of par value
|
5,144,636
|
|
|
402,270
|
|
||
Retained earnings
|
4,827,495
|
|
|
4,785,799
|
|
||
Accumulated other comprehensive loss
|
(66,706
|
)
|
|
(73,814
|
)
|
||
Total shareholders’ equity
|
9,966,595
|
|
|
5,165,618
|
|
||
|
$
|
26,622,683
|
|
|
$
|
7,970,278
|
|
(1)
|
Includes
$3,007
and
$2,486
related to stock-based compensation at
April 29, 2017
and
October 29, 2016
, respectively.
|
|
Six Months Ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
310,693
|
|
|
$
|
335,077
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
||||
Depreciation
|
83,151
|
|
|
66,692
|
|
||
Amortization of intangibles
|
108,717
|
|
|
36,787
|
|
||
Cost of goods sold for inventory acquired
|
121,113
|
|
|
—
|
|
||
Stock-based compensation expense
|
39,015
|
|
|
31,568
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
3,290
|
|
||
Excess tax benefit-stock options
|
(25,953
|
)
|
|
(4,198
|
)
|
||
Deferred income taxes
|
(87,035
|
)
|
|
(7,178
|
)
|
||
Other non-cash activity
|
24,149
|
|
|
1,244
|
|
||
Changes in operating assets and liabilities
|
262,106
|
|
|
76,626
|
|
||
Total adjustments
|
525,263
|
|
|
204,831
|
|
||
Net cash provided by operating activities
|
835,956
|
|
|
539,908
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of short-term available-for-sale investments
|
(705,448
|
)
|
|
(3,571,764
|
)
|
||
Maturities of short-term available-for-sale investments
|
3,091,873
|
|
|
2,932,226
|
|
||
Sales of short-term available-for-sale investments
|
357,388
|
|
|
150,266
|
|
||
Additions to property, plant and equipment
|
(75,266
|
)
|
|
(48,645
|
)
|
||
Payments for acquisitions, net of cash acquired
|
(9,687,533
|
)
|
|
(2,203
|
)
|
||
Changes in other assets
|
(12,063
|
)
|
|
(9,457
|
)
|
||
Net cash used for investing activities
|
(7,031,049
|
)
|
|
(549,577
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Early termination of debt
|
—
|
|
|
(378,156
|
)
|
||
Payments of derivative instruments
|
—
|
|
|
(33,430
|
)
|
||
Proceeds from debt
|
11,156,164
|
|
|
1,235,331
|
|
||
Payments of deferred financing fees
|
(5,625
|
)
|
|
—
|
|
||
Proceeds from derivative instruments
|
3,904
|
|
|
—
|
|
||
Dividend payments to shareholders
|
(268,997
|
)
|
|
(254,583
|
)
|
||
Repurchase of common stock
|
(26,980
|
)
|
|
(345,627
|
)
|
||
Proceeds from employee stock plans
|
87,273
|
|
|
22,709
|
|
||
Changes in other financing activities
|
(16
|
)
|
|
(5,330
|
)
|
||
Excess tax benefit-stock options
|
25,953
|
|
|
4,198
|
|
||
Net cash provided by financing activities
|
10,971,676
|
|
|
245,112
|
|
||
Effect of exchange rate changes on cash
|
28
|
|
|
(134
|
)
|
||
Net increase in cash and cash equivalents
|
4,776,611
|
|
|
235,309
|
|
||
Cash and cash equivalents at beginning of period
|
921,132
|
|
|
884,353
|
|
||
Cash and cash equivalents at end of period
|
$
|
5,697,743
|
|
|
$
|
1,119,662
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Stock Options
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
||||||||
Options granted (in thousands)
|
1,362
|
|
|
1,679
|
|
|
1,376
|
|
|
1,715
|
|
||||
Weighted-average exercise price
|
|
$83.35
|
|
|
|
$54.90
|
|
|
|
$83.19
|
|
|
|
$54.90
|
|
Weighted-average grant-date fair value
|
|
$17.27
|
|
|
|
$12.81
|
|
|
|
$17.21
|
|
|
|
$12.79
|
|
Assumptions:
|
|
|
|
|
|
|
|
||||||||
Weighted-average expected volatility
|
26.4%
|
|
|
34.3
|
%
|
|
26.4
|
%
|
|
34.3
|
%
|
||||
Weighted-average expected term (in years)
|
5.1
|
|
|
5.1
|
|
|
5.1
|
|
|
5.1
|
|
||||
Weighted-average risk-free interest rate
|
2.1
|
%
|
|
1.4
|
%
|
|
2.1
|
%
|
|
1.4
|
%
|
||||
Weighted-average expected dividend yield
|
2.2
|
%
|
|
3.1
|
%
|
|
2.2
|
%
|
|
3.1
|
%
|
|
Three and Six Months Ended
|
|
Three and Six Months Ended
|
||||
Market-based Restricted Stock Units
|
April 29, 2017
|
|
April 30, 2016
|
||||
Units granted (in thousands)
|
59
|
|
|
102
|
|
||
Grant-date fair value
|
|
$94.25
|
|
|
|
$58.95
|
|
Assumptions:
|
|
|
|
||||
Historical stock price volatility
|
26.0
|
%
|
|
25.1
|
%
|
||
Risk-free interest rate
|
1.6
|
%
|
|
1.1
|
%
|
||
Expected dividend yield
|
2.2
|
%
|
|
3.0
|
%
|
Activity during the Three Months Ended April 29, 2017
|
Options
Outstanding
(in thousands)
|
|
Weighted-
Average Exercise
Price Per Share
|
|
Weighted-
Average
Remaining
Contractual
Term in Years
|
|
Aggregate
Intrinsic Value |
|||||
Options outstanding at January 28, 2017
|
10,704
|
|
|
|
$45.22
|
|
|
|
|
|
||
Options granted
|
1,362
|
|
|
|
$83.35
|
|
|
|
|
|
||
Options exercised
|
(1,300
|
)
|
|
|
$40.89
|
|
|
|
|
|
||
Options forfeited
|
(236
|
)
|
|
|
$53.93
|
|
|
|
|
|
||
Options outstanding at April 29, 2017
|
10,530
|
|
|
|
$50.49
|
|
|
6.4
|
|
|
$280,415
|
|
Options exercisable at April 29, 2017
|
6,016
|
|
|
|
$41.21
|
|
|
4.9
|
|
|
$210,535
|
|
Options vested or expected to vest at April 29, 2017 (1)
|
10,101
|
|
|
|
$49.82
|
|
|
6.3
|
|
|
$274,918
|
|
(1)
|
In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. The number of options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options.
|
Activity during the Six Months Ended April 29, 2017
|
Options
Outstanding
(in thousands)
|
|
Weighted-
Average Exercise
Price Per Share
|
|||
Options outstanding at October 29, 2016
|
11,704
|
|
|
|
$44.43
|
|
Options granted
|
1,377
|
|
|
|
$83.19
|
|
Options exercised
|
(2,268
|
)
|
|
|
$38.69
|
|
Options forfeited
|
(277
|
)
|
|
|
$53.65
|
|
Options expired
|
(6
|
)
|
|
|
$33.19
|
|
Options outstanding at April 29, 2017
|
10,530
|
|
|
|
$50.49
|
|
Activity during the Three Months Ended April 29, 2017
|
Restricted
Stock Units
Outstanding
(in thousands)
|
|
Weighted-
Average Grant-
Date Fair Value
Per Share
|
|||
Restricted stock units/awards outstanding at January 28, 2017
|
2,570
|
|
|
|
$50.31
|
|
Units/Awards granted (a)
|
3,658
|
|
|
|
$80.28
|
|
Restrictions lapsed
|
(822
|
)
|
|
|
$52.26
|
|
Forfeited
|
(93
|
)
|
|
|
$53.13
|
|
Restricted stock units/awards outstanding at April 29, 2017
|
5,313
|
|
|
|
$70.59
|
|
Activity during the Six Months Ended April 29, 2017
|
Restricted
Stock Units
Outstanding
(in thousands)
|
|
Weighted-
Average Grant-
Date Fair Value
Per Share
|
|||
Restricted stock units/awards outstanding at October 29, 2016
|
2,690
|
|
|
|
$50.11
|
|
Units/Awards granted (a)
|
3,663
|
|
|
|
$80.25
|
|
Restrictions lapsed
|
(930
|
)
|
|
|
$51.55
|
|
Forfeited
|
(110
|
)
|
|
|
$52.63
|
|
Restricted stock units/awards outstanding at April 29, 2017
|
5,313
|
|
|
|
$70.59
|
|
|
Foreign currency translation adjustment
|
|
Unrealized holding gains on available for sale securities classified as short-term investments
|
|
Unrealized holding (losses) on available for sale securities classified as short-term investments
|
|
Unrealized holding gains (losses) on derivatives
|
|
Pension plans
|
|
Total
|
||||||||||||
October 29, 2016
|
$
|
(24,063
|
)
|
|
$
|
800
|
|
|
$
|
(281
|
)
|
|
$
|
(18,884
|
)
|
|
$
|
(31,386
|
)
|
|
$
|
(73,814
|
)
|
Other comprehensive income (loss) before reclassifications
|
1,178
|
|
|
(751
|
)
|
|
286
|
|
|
1,629
|
|
|
(899
|
)
|
|
1,443
|
|
||||||
Amounts reclassified out of other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
7,244
|
|
|
923
|
|
|
8,167
|
|
||||||
Tax effects
|
—
|
|
|
19
|
|
|
(10
|
)
|
|
(2,307
|
)
|
|
(204
|
)
|
|
(2,502
|
)
|
||||||
Other comprehensive income (loss)
|
1,178
|
|
|
(732
|
)
|
|
276
|
|
|
6,566
|
|
|
(180
|
)
|
|
7,108
|
|
||||||
April 29, 2017
|
$
|
(22,885
|
)
|
|
$
|
68
|
|
|
$
|
(5
|
)
|
|
$
|
(12,318
|
)
|
|
$
|
(31,566
|
)
|
|
$
|
(66,706
|
)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
||||||||||||
Comprehensive Income Component
|
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
|
Location
|
||||||||
Unrealized holding losses (gains) on derivatives
|
|
|
|
|
|
|
|
|
|
|
||||||||
Currency forwards
|
|
$
|
1,248
|
|
|
$
|
147
|
|
|
$
|
2,948
|
|
|
$
|
1,626
|
|
|
Cost of sales
|
|
|
494
|
|
|
27
|
|
|
1,508
|
|
|
690
|
|
|
Research and development
|
||||
|
|
702
|
|
|
(448
|
)
|
|
1,795
|
|
|
346
|
|
|
Selling, marketing, general and administrative
|
||||
Interest rate derivatives
|
|
464
|
|
|
562
|
|
|
993
|
|
|
845
|
|
|
Interest expense
|
||||
|
|
2,908
|
|
|
288
|
|
|
7,244
|
|
|
3,507
|
|
|
Total before tax
|
||||
|
|
(534
|
)
|
|
(243
|
)
|
|
(1,389
|
)
|
|
(753
|
)
|
|
Tax
|
||||
|
|
$
|
2,374
|
|
|
$
|
45
|
|
|
$
|
5,855
|
|
|
$
|
2,754
|
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of pension components
|
|
|
|
|
|
|
|
|
|
|
||||||||
Transition obligation
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
$
|
8
|
|
|
(a)
|
Prior service credit
|
|
(2
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(a)
|
||||
Actuarial losses
|
|
466
|
|
|
176
|
|
|
921
|
|
|
343
|
|
|
(a)
|
||||
|
|
467
|
|
|
180
|
|
|
923
|
|
|
351
|
|
|
Total before tax
|
||||
|
|
(103
|
)
|
|
(52
|
)
|
|
(204
|
)
|
|
(102
|
)
|
|
Tax
|
||||
|
|
$
|
364
|
|
|
$
|
128
|
|
|
$
|
719
|
|
|
$
|
249
|
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total amounts reclassified out of accumulated other comprehensive income (loss), net of tax
|
|
$
|
2,738
|
|
|
$
|
173
|
|
|
$
|
6,574
|
|
|
$
|
3,003
|
|
|
|
|
April 29, 2017
|
|
October 29, 2016
|
||||
Unrealized gains on securities classified as short-term investments
|
$
|
95
|
|
|
$
|
846
|
|
Unrealized losses on securities classified as short-term investments
|
(8
|
)
|
|
(294
|
)
|
||
Net unrealized gains on securities classified as short-term investments
|
$
|
87
|
|
|
$
|
552
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
||||||||
Net Income
|
$
|
93,564
|
|
|
$
|
170,573
|
|
|
$
|
310,693
|
|
|
$
|
335,077
|
|
Less: income allocated to participating securities
|
—
|
|
|
—
|
|
|
82
|
|
|
—
|
|
||||
Net income allocated to common stockholders
|
$
|
93,564
|
|
|
$
|
170,573
|
|
|
$
|
310,611
|
|
|
$
|
335,077
|
|
|
|
|
|
|
|
|
|
||||||||
Basic shares:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding
|
341,316
|
|
|
308,790
|
|
|
325,051
|
|
|
309,978
|
|
||||
Earnings per share basic:
|
$
|
0.27
|
|
|
$
|
0.55
|
|
|
$
|
0.96
|
|
|
$
|
1.08
|
|
Diluted shares:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding
|
341,316
|
|
|
308,790
|
|
|
325,051
|
|
|
309,978
|
|
||||
Assumed exercise of common stock equivalents
|
4,338
|
|
|
3,460
|
|
|
4,314
|
|
|
3,543
|
|
||||
Weighted-average common and common equivalent shares
|
345,654
|
|
|
312,250
|
|
|
329,365
|
|
|
313,521
|
|
||||
Earnings per share diluted:
|
$
|
0.27
|
|
|
$
|
0.55
|
|
|
$
|
0.94
|
|
|
$
|
1.07
|
|
Anti-dilutive shares related to:
|
|
|
|
|
|
|
|
||||||||
Outstanding stock options
|
1,580
|
|
|
4,131
|
|
|
823
|
|
|
3,364
|
|
|
Reduction of Operating Costs Action
|
Early Retirement Action
|
Total Special Charges
|
||||||
Statements of Income
|
|
|
|
||||||
Fiscal 2016 - Workforce reductions
|
$
|
13,684
|
|
$
|
—
|
|
13,684
|
|
|
Fiscal 2017 - Workforce reductions
|
$
|
8,126
|
|
$
|
41,337
|
|
$
|
49,463
|
|
Accrued Restructuring
|
Reduction of Operating Costs Action
|
Early Retirement Action
|
||||
Balance at October 29, 2016
|
$
|
12,374
|
|
$
|
—
|
|
Fiscal 2017 - workforce reductions
|
8,126
|
|
41,337
|
|
||
Severance and other payments
|
(2,611
|
)
|
(199
|
)
|
||
Effect of foreign currency on accrual
|
(6
|
)
|
—
|
|
||
Balance at January 28, 2017
|
$
|
17,883
|
|
$
|
41,138
|
|
Severance and other payments
|
(3,987
|
)
|
(697
|
)
|
||
Effect of foreign currency on accrual
|
108
|
|
—
|
|
||
Balance at April 29, 2017
|
$
|
14,004
|
|
$
|
40,441
|
|
|
Three Months Ended
|
|||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|||||||||||||
|
Revenue
|
|
% of
Revenue*
|
|
Y/Y%
|
|
Revenue
|
|
% of
Revenue*
|
|||||||
Industrial
|
$
|
462,913
|
|
|
46
|
%
|
|
20
|
%
|
|
$
|
384,706
|
|
|
49
|
%
|
Automotive
|
150,418
|
|
|
15
|
%
|
|
9
|
%
|
|
138,398
|
|
|
18
|
%
|
||
Consumer
|
205,444
|
|
|
21
|
%
|
|
156
|
%
|
|
80,385
|
|
|
10
|
%
|
||
Communications
|
181,744
|
|
|
18
|
%
|
|
4
|
%
|
|
175,277
|
|
|
23
|
%
|
||
Total revenue (excluding Linear revenue)
|
$
|
1,000,519
|
|
|
100
|
%
|
|
28
|
%
|
|
$
|
778,766
|
|
|
100
|
%
|
Linear revenue
|
147,463
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
||
Total revenue
|
$
|
1,147,982
|
|
|
|
|
|
47
|
%
|
|
$
|
778,766
|
|
|
|
|
|
Six Months Ended
|
|||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|||||||||||||
|
Revenue
|
|
% of
Revenue*
|
|
Y/Y%
|
|
Revenue
|
|
% of
Revenue*
|
|||||||
Industrial
|
$
|
865,499
|
|
|
44
|
%
|
|
18
|
%
|
|
$
|
733,635
|
|
|
47
|
%
|
Automotive
|
289,182
|
|
|
15
|
%
|
|
9
|
%
|
|
265,046
|
|
|
17
|
%
|
||
Consumer
|
475,590
|
|
|
24
|
%
|
|
130
|
%
|
|
207,143
|
|
|
13
|
%
|
||
Communications
|
354,697
|
|
|
18
|
%
|
|
4
|
%
|
|
342,371
|
|
|
22
|
%
|
||
Total revenue (excluding Linear revenue)
|
$
|
1,984,968
|
|
|
100
|
%
|
|
28
|
%
|
|
$
|
1,548,195
|
|
|
100
|
%
|
Linear revenue
|
147,463
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
||
Total revenue
|
$
|
2,132,431
|
|
|
|
|
|
38
|
%
|
|
$
|
1,548,195
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Region
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
||||||||
United States
|
$
|
422,328
|
|
|
$
|
245,283
|
|
|
$
|
853,326
|
|
|
$
|
511,952
|
|
Rest of North and South America
|
27,630
|
|
|
21,423
|
|
|
50,587
|
|
|
42,135
|
|
||||
Europe
|
293,178
|
|
|
245,160
|
|
|
519,513
|
|
|
461,876
|
|
||||
Japan
|
96,289
|
|
|
69,963
|
|
|
185,180
|
|
|
140,185
|
|
||||
China
|
198,209
|
|
|
140,940
|
|
|
351,192
|
|
|
279,663
|
|
||||
Rest of Asia
|
110,348
|
|
|
55,997
|
|
|
172,633
|
|
|
112,384
|
|
||||
Total revenue
|
$
|
1,147,982
|
|
|
$
|
778,766
|
|
|
$
|
2,132,431
|
|
|
$
|
1,548,195
|
|
|
April 29, 2017
|
||||||||||||||
|
Fair Value measurement at
Reporting Date using:
|
|
|
||||||||||||
|
Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Institutional money market funds
|
$
|
2,697,263
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,697,263
|
|
Corporate obligations (1)
|
—
|
|
|
1,238,710
|
|
|
—
|
|
|
1,238,710
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Securities with one year or less to maturity:
|
|
|
|
|
|
|
|
||||||||
Corporate obligations (1)
|
—
|
|
|
253,359
|
|
|
—
|
|
|
253,359
|
|
||||
Investments in municipal bonds, obligations of U.S. government-sponsored enterprises and commercial paper
|
—
|
|
|
64,071
|
|
|
—
|
|
|
64,071
|
|
||||
Securities with greater than one year to maturity:
|
|
|
|
|
|
|
|
||||||||
Investments in municipal bonds, obligations of U.S. government-sponsored enterprises and commercial paper
|
—
|
|
|
13,199
|
|
|
—
|
|
|
13,199
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation investments
|
30,612
|
|
|
—
|
|
|
—
|
|
|
30,612
|
|
||||
Forward foreign currency exchange contracts (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
2,727,875
|
|
|
$
|
1,569,339
|
|
|
$
|
—
|
|
|
$
|
4,297,214
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
—
|
|
|
—
|
|
|
9,722
|
|
|
9,722
|
|
||||
Forward foreign currency exchange contracts (2)
|
—
|
|
|
895
|
|
|
—
|
|
|
895
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
895
|
|
|
$
|
9,722
|
|
|
$
|
10,617
|
|
(1)
|
The amortized cost of the Company’s investments classified as available-for-sale as of
April 29, 2017
was
$1.3 billion
.
|
(2)
|
The Company has a master netting arrangement by counterparty with respect to derivative contracts. See Note 9,
Derivatives,
of these Notes to Condensed Consolidated Financial Statements for more information related to the Company's master netting arrangements.
|
|
October 29, 2016
|
||||||||||||||
|
Fair Value measurement at
Reporting Date using:
|
|
|
||||||||||||
|
Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Institutional money market funds
|
$
|
277,595
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
277,595
|
|
Corporate obligations (1)
|
—
|
|
|
415,660
|
|
|
—
|
|
|
415,660
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Securities with one year or less to maturity:
|
|
|
|
|
|
|
|
||||||||
Corporate obligations (1)
|
—
|
|
|
2,518,148
|
|
|
—
|
|
|
2,518,148
|
|
||||
Floating rate notes, issued at par
|
—
|
|
|
29,989
|
|
|
—
|
|
|
29,989
|
|
||||
Floating rate notes (1)
|
—
|
|
|
561,874
|
|
|
—
|
|
|
561,874
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation investments
|
26,916
|
|
|
—
|
|
|
—
|
|
|
26,916
|
|
||||
Total assets measured at fair value
|
$
|
304,511
|
|
|
$
|
3,525,671
|
|
|
$
|
—
|
|
|
$
|
3,830,182
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
—
|
|
|
—
|
|
|
7,555
|
|
|
7,555
|
|
||||
Forward foreign currency exchange contracts (2)
|
—
|
|
|
5,231
|
|
|
—
|
|
|
5,231
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
5,231
|
|
|
$
|
7,555
|
|
|
$
|
12,786
|
|
(1)
|
The amortized cost of the Company’s investments classified as available-for-sale as of
October 29, 2016
was
$3.5 billion
.
|
(2)
|
The Company has a master netting arrangement by counterparty with respect to derivative contracts. See Note 9,
Derivatives,
of these Notes to Condensed Consolidated Financial Statements for more information related to the Company's master netting arrangements.
|
Unobservable Inputs
|
Range
|
Estimated contingent consideration payments
|
$10,500
|
Discount rate
|
0% - 2%
|
Timing of cash flows
|
1 - 3 years
|
Probability of achievement
|
90% - 100%
|
|
Contingent
Consideration
|
||
Balance as of October 29, 2016
|
$
|
7,555
|
|
Contingent consideration liability recorded (1)
|
2,000
|
|
|
Fair value adjustment (2)
|
167
|
|
|
Balance as of April 29, 2017
|
$
|
9,722
|
|
|
|
|
Fair Value At
|
||||||
|
Balance Sheet Location
|
|
April 29, 2017
|
|
October 29, 2016
|
||||
Forward foreign currency exchange contracts
|
Accrued liabilities
|
|
$
|
1,064
|
|
|
$
|
5,260
|
|
|
April 29, 2017
|
|
October 29, 2016
|
||||
Gross amount of recognized liabilities
|
$
|
(3,044
|
)
|
|
$
|
(5,788
|
)
|
Gross amounts of recognized assets offset in the condensed consolidated balance sheet
|
2,149
|
|
|
557
|
|
||
Net liabilities presented in the condensed consolidated balance sheet
|
$
|
(895
|
)
|
|
$
|
(5,231
|
)
|
|
Six Months Ended
|
||
|
April 29, 2017
|
||
Balance as of October 29, 2016
|
$
|
1,679,116
|
|
Goodwill related to acquisition of Linear (Note 15)
|
10,584,333
|
|
|
Goodwill related to other acquisitions (1)
|
4,884
|
|
|
Foreign currency translation adjustment
|
1,168
|
|
|
Balance as of April 29, 2017
|
$
|
12,269,501
|
|
|
April 29, 2017
|
|
October 29, 2016
|
||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Customer relationships
|
$
|
4,671,255
|
|
|
$
|
244,270
|
|
|
$
|
649,159
|
|
|
$
|
158,979
|
|
Technology-based
|
1,097,030
|
|
|
31,746
|
|
|
38,731
|
|
|
9,958
|
|
||||
Trade-name
|
72,800
|
|
|
1,598
|
|
|
600
|
|
|
60
|
|
||||
Backlog
|
200
|
|
|
100
|
|
|
200
|
|
|
—
|
|
||||
IPR&D
|
24,291
|
|
|
—
|
|
|
29,675
|
|
|
—
|
|
||||
Total (1)(2)
|
$
|
5,865,576
|
|
|
$
|
277,714
|
|
|
$
|
718,365
|
|
|
$
|
168,997
|
|
Fiscal Year
|
Amortization Expense
|
||
Remainder of fiscal 2017
|
|
$294,478
|
|
2018
|
|
$587,637
|
|
2019
|
|
$584,448
|
|
2020
|
|
$584,210
|
|
2021
|
|
$583,789
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
April 30, 2016
|
||||||||
Service cost
|
$
|
1,658
|
|
|
$
|
1,394
|
|
|
$
|
3,306
|
|
|
$
|
2,773
|
|
Interest cost
|
890
|
|
|
933
|
|
|
1,774
|
|
|
1,871
|
|
||||
Expected return on plan assets
|
(1,017
|
)
|
|
(959
|
)
|
|
(2,023
|
)
|
|
(1,940
|
)
|
||||
Amortization of initial net obligation
|
3
|
|
|
4
|
|
|
6
|
|
|
8
|
|
||||
Amortization of prior service cost
|
(2
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
||||
Amortization of net loss
|
466
|
|
|
176
|
|
|
921
|
|
|
343
|
|
||||
Net periodic pension cost
|
$
|
1,998
|
|
|
$
|
1,548
|
|
|
$
|
3,980
|
|
|
$
|
3,055
|
|
|
April 29, 2017
|
|
October 29, 2016
|
||||||||||||
|
Principal
|
|
Unamortized discount and debt issuance costs
|
|
Principal
|
|
Unamortized discount and debt issuance costs
|
||||||||
3-Year term loan
|
2,400,000
|
|
|
3,970
|
|
|
—
|
|
|
—
|
|
||||
5-Year term loan
|
2,375,000
|
|
|
5,272
|
|
|
—
|
|
|
—
|
|
||||
2021 Notes, due December 2021
|
400,000
|
|
|
4,211
|
|
|
—
|
|
|
—
|
|
||||
2023 Notes, due June 2023
|
500,000
|
|
|
3,740
|
|
|
500,000
|
|
|
4,047
|
|
||||
2023 Notes, due December 2023
|
550,000
|
|
|
5,831
|
|
|
—
|
|
|
—
|
|
||||
2025 Notes, due December 2025
|
850,000
|
|
|
7,593
|
|
|
850,000
|
|
|
8,034
|
|
||||
2026 Notes, due December 2026
|
900,000
|
|
|
12,292
|
|
|
—
|
|
|
—
|
|
||||
2036 Notes, due December 2036
|
250,000
|
|
|
4,084
|
|
|
—
|
|
|
—
|
|
||||
2045 Notes, due December 2045
|
400,000
|
|
|
5,643
|
|
|
400,000
|
|
|
5,742
|
|
||||
Total Long-Term Debt
|
$
|
8,625,000
|
|
|
$
|
52,636
|
|
|
$
|
1,750,000
|
|
|
$
|
17,823
|
|
Bridge credit agreement
|
4,100,000
|
|
|
3,831
|
|
|
—
|
|
|
—
|
|
||||
3-Year term loan, current
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
5-Year term loan, current
|
125,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total Current Debt
|
$
|
4,325,000
|
|
|
$
|
3,831
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total Debt
|
$
|
12,950,000
|
|
|
$
|
56,467
|
|
|
$
|
1,750,000
|
|
|
$
|
17,823
|
|
|
April 29, 2017
|
|
October 29, 2016
|
||||
Raw materials
|
$
|
30,557
|
|
|
$
|
20,263
|
|
Work in process
|
448,296
|
|
|
232,196
|
|
||
Finished goods
|
169,005
|
|
|
124,096
|
|
||
Total inventories
|
$
|
647,858
|
|
|
$
|
376,555
|
|
(in thousands)
|
|
||
Cash and cash equivalents
|
$
|
1,411,550
|
|
Marketable securities
|
100,246
|
|
|
Accounts receivable (a)
|
154,175
|
|
|
Inventories
|
437,907
|
|
|
Prepaid expenses and other assets
|
14,782
|
|
|
Property, plant and equipment
|
461,565
|
|
|
Intangible assets (Note 10)
|
5,140,400
|
|
|
Goodwill (Note 10)
|
10,584,333
|
|
|
Total assets
|
$
|
18,304,958
|
|
Assumed liabilities
|
138,452
|
|
|
Deferred tax liabilities
|
2,409,850
|
|
|
Total estimated purchase price
|
$
|
15,756,656
|
|
(a)
|
The fair value of accounts receivable was
$154.2 million
, with the gross contractual amount being
$155.9 million
, of which the Company estimates that
$1.7 million
is uncollectible.
|
|
Fair Value
(in thousands)
|
Weighted Average Useful Lives
(in Years)
|
||
|
|
|
||
Technology-based
|
$
|
1,046,100
|
|
8
|
Trade name
|
72,200
|
|
7
|
|
Customer relationships
|
4,022,100
|
|
11
|
|
Total amortizable intangible assets
|
$
|
5,140,400
|
|
10
|
(thousands, except per share data)
|
Pro Forma Three Months Ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
Revenue
|
$
|
1,366,946
|
|
|
$
|
1,137,468
|
|
Net income
|
$
|
119,134
|
|
|
$
|
58,695
|
|
Basic net income per common share
|
$
|
0.33
|
|
|
$
|
0.16
|
|
Diluted net income per common share
|
$
|
0.32
|
|
|
$
|
0.16
|
|
(thousands, except per share data)
|
Pro Forma Six Months Ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
Revenue
|
$
|
2,729,393
|
|
|
$
|
2,218,047
|
|
Net income
|
$
|
351,625
|
|
|
$
|
(136,034
|
)
|
Basic net income per common share
|
$
|
0.96
|
|
|
$
|
(0.37
|
)
|
Diluted net income per common share
|
$
|
0.95
|
|
|
$
|
(0.37
|
)
|
|
Unrealized Tax Benefits
|
||
Balance, October 29, 2016
|
$
|
68,535
|
|
Additions related to acquisitions
|
12,332
|
|
|
Additions for tax positions related to current year
|
288
|
|
|
Reductions for tax positions related to prior years
|
(1,361
|
)
|
|
Balance, April 29, 2017
|
$
|
79,794
|
|
ITEM 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
|||||||
Revenue
|
$
|
1,147,982
|
|
|
$
|
778,766
|
|
|
$
|
369,216
|
|
|
47
|
%
|
Gross margin %
|
55.8
|
%
|
|
65.6
|
%
|
|
|
|
|
|||||
Net income
|
$
|
93,564
|
|
|
$
|
170,573
|
|
|
$
|
(77,009
|
)
|
|
(45
|
)%
|
Net income as a % of revenue
|
8.2
|
%
|
|
21.9
|
%
|
|
|
|
|
|||||
Diluted EPS
|
$
|
0.27
|
|
|
$
|
0.55
|
|
|
$
|
(0.28
|
)
|
|
(51
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
Six Months Ended
|
|||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
|||||||
Revenue
|
$
|
2,132,431
|
|
|
$
|
1,548,195
|
|
|
$
|
584,236
|
|
|
38
|
%
|
Gross margin %
|
60.4
|
%
|
|
63.8
|
%
|
|
|
|
|
|||||
Net income
|
$
|
310,693
|
|
|
$
|
335,077
|
|
|
$
|
(24,384
|
)
|
|
(7
|
)%
|
Net income as a % of revenue
|
14.6
|
%
|
|
21.6
|
%
|
|
|
|
|
|||||
Diluted EPS
|
$
|
0.94
|
|
|
$
|
1.07
|
|
|
$
|
(0.13
|
)
|
|
(12
|
)%
|
|
Three Months Ended
|
|||||||||||||
Region
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
|||||||
United States
|
$
|
422,328
|
|
|
$
|
245,283
|
|
|
$
|
177,045
|
|
|
72
|
%
|
Rest of North and South America
|
27,630
|
|
|
21,423
|
|
|
6,207
|
|
|
29
|
%
|
|||
Europe
|
293,178
|
|
|
245,160
|
|
|
48,018
|
|
|
20
|
%
|
|||
Japan
|
96,289
|
|
|
69,963
|
|
|
26,326
|
|
|
38
|
%
|
|||
China
|
198,209
|
|
|
140,940
|
|
|
57,269
|
|
|
41
|
%
|
|||
Rest of Asia
|
110,348
|
|
|
55,997
|
|
|
54,351
|
|
|
97
|
%
|
|||
Total revenue
|
$
|
1,147,982
|
|
|
$
|
778,766
|
|
|
$
|
369,216
|
|
|
47
|
%
|
|
Six Months Ended
|
|||||||||||||
Region
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
|||||||
United States
|
$
|
853,326
|
|
|
$
|
511,952
|
|
|
$
|
341,374
|
|
|
67
|
%
|
Rest of North and South America
|
50,587
|
|
|
42,135
|
|
|
8,452
|
|
|
20
|
%
|
|||
Europe
|
519,513
|
|
|
461,876
|
|
|
57,637
|
|
|
12
|
%
|
|||
Japan
|
185,180
|
|
|
140,185
|
|
|
44,995
|
|
|
32
|
%
|
|||
China
|
351,192
|
|
|
279,663
|
|
|
71,529
|
|
|
26
|
%
|
|||
Rest of Asia
|
172,633
|
|
|
112,384
|
|
|
60,249
|
|
|
54
|
%
|
|||
Total revenue
|
$
|
2,132,431
|
|
|
$
|
1,548,195
|
|
|
$
|
584,236
|
|
|
38
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Gross margin
|
$
|
640,443
|
|
|
$
|
510,903
|
|
|
$
|
129,540
|
|
|
25
|
%
|
|
$
|
1,288,947
|
|
|
$
|
988,196
|
|
|
$
|
300,751
|
|
|
30
|
%
|
Gross margin %
|
55.8
|
%
|
|
65.6
|
%
|
|
|
|
|
|
60.4
|
%
|
|
63.8
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
R&D expenses
|
$
|
235,232
|
|
|
$
|
160,235
|
|
|
$
|
74,997
|
|
|
47
|
%
|
|
$
|
419,186
|
|
|
$
|
317,663
|
|
|
$
|
101,523
|
|
|
32
|
%
|
R&D expenses as a % of revenue
|
20.5
|
%
|
|
20.6
|
%
|
|
|
|
|
|
19.7
|
%
|
|
20.5
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Amortization expenses
|
$
|
68,690
|
|
|
$
|
17,419
|
|
|
$
|
51,271
|
|
|
294
|
%
|
|
$
|
86,850
|
|
|
$
|
34,777
|
|
|
$
|
52,073
|
|
|
150
|
%
|
Amortization expenses as a % of revenue
|
6.0
|
%
|
|
2.2
|
%
|
|
|
|
|
|
4.1
|
%
|
|
2.2
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Operating income
|
$
|
145,835
|
|
|
$
|
207,379
|
|
|
$
|
(61,544
|
)
|
|
(30
|
)%
|
|
$
|
412,103
|
|
|
$
|
402,424
|
|
|
$
|
9,679
|
|
|
2
|
%
|
Operating income as a % of revenue
|
12.7
|
%
|
|
26.6
|
%
|
|
|
|
|
|
19.3
|
%
|
|
26.0
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
||||||||||||
Interest expense
|
$
|
71,636
|
|
|
$
|
18,455
|
|
|
$
|
53,181
|
|
|
$
|
114,250
|
|
|
$
|
31,517
|
|
|
$
|
82,733
|
|
Interest income
|
(12,421
|
)
|
|
(5,243
|
)
|
|
(7,178
|
)
|
|
(22,421
|
)
|
|
(8,442
|
)
|
|
(13,979
|
)
|
||||||
Other, net
|
(94
|
)
|
|
(743
|
)
|
|
649
|
|
|
251
|
|
|
2,262
|
|
|
(2,011
|
)
|
||||||
Total nonoperating expense
|
$
|
59,121
|
|
|
$
|
12,469
|
|
|
$
|
46,652
|
|
|
$
|
92,080
|
|
|
$
|
25,337
|
|
|
$
|
66,743
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
||||||||||||
(Benefit) provision for income taxes
|
$
|
(6,850
|
)
|
|
$
|
24,337
|
|
|
$
|
(31,187
|
)
|
|
$
|
9,330
|
|
|
$
|
42,010
|
|
|
$
|
(32,680
|
)
|
Effective income tax rate
|
(7.9
|
)%
|
|
12.5
|
%
|
|
|
|
2.9
|
%
|
|
11.1
|
%
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
|
April 29, 2017
|
|
April 30, 2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Net Income
|
$
|
93,564
|
|
|
$
|
170,573
|
|
|
$
|
(77,009
|
)
|
|
(45
|
)%
|
|
$
|
310,693
|
|
|
$
|
335,077
|
|
|
$
|
(24,384
|
)
|
|
(7
|
%)
|
Net Income as a % of revenue
|
8.2
|
%
|
|
21.9
|
%
|
|
|
|
|
|
14.6
|
%
|
|
21.6
|
%
|
|
|
|
|
||||||||||
Diluted EPS
|
$
|
0.27
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
$0.94
|
|
|
|
$1.07
|
|
|
|
|
|
|
Six Months Ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
Net cash provided by operating activities
|
$
|
835,956
|
|
|
$
|
539,908
|
|
Net cash provided by operations as a % of revenue
|
39.2
|
%
|
|
34.9
|
%
|
||
Net cash used for investing activities
|
$
|
(7,031,049
|
)
|
|
$
|
(549,577
|
)
|
Net cash provided by financing activities
|
$
|
10,971,676
|
|
|
$
|
245,112
|
|
|
April 29, 2017
|
|
October 29, 2016
|
|
$ Change
|
|
% Change
|
|||||||
Accounts receivable, net
|
$
|
630,353
|
|
|
$
|
477,609
|
|
|
$
|
152,744
|
|
|
32
|
%
|
Days sales outstanding*
|
45
|
|
|
42
|
|
|
|
|
|
|||||
Inventory
|
$
|
647,858
|
|
|
$
|
376,555
|
|
|
$
|
271,303
|
|
|
72
|
%
|
Days cost of sales in inventory*
|
102
|
|
|
104
|
|
|
|
|
|
|
|
|
|
Payment due by period
|
||||||||||||||||
(thousands)
|
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
Contractual obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating leases (a)
|
|
11,188
|
|
|
3,374
|
|
|
3,738
|
|
|
2,075
|
|
|
2,001
|
|
|||||
Debt obligations (b)
|
|
11,200,000
|
|
|
4,225,000
|
|
|
2,875,000
|
|
|
2,400,000
|
|
|
1,700,000
|
|
|||||
Interest payments associated with debt obligations (c)
|
|
1,106,408
|
|
|
193,004
|
|
|
343,254
|
|
|
209,525
|
|
|
360,625
|
|
|||||
Total
|
|
$
|
12,317,596
|
|
|
$
|
4,421,378
|
|
|
$
|
3,221,992
|
|
|
$
|
2,611,600
|
|
|
$
|
2,062,626
|
|
ITEM 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
ITEM 4.
|
Controls and Procedures
|
ITEM 1A.
|
Risk Factors
|
•
|
the inability to successfully integrate the respective businesses of the two companies in a manner that permits the combined company to achieve the cost savings and operating synergies anticipated to result from the Acquisition, which could result in the anticipated benefits of the acquisition not being realized partly or wholly in the time frame currently anticipated or at all;
|
•
|
lost sales and customers as a result of certain customers of either or both of the two companies deciding not to do business with the combined company, or deciding to decrease their amount of business in order to reduce their reliance on a single company;
|
•
|
loss of key management and technical personnel, particularly our experienced engineers;
|
•
|
integrating personnel, IT systems and corporate, finance and administrative infrastructures from the two companies while maintaining focus on providing consistent, high quality products and services;
|
•
|
coordinating and integrating our internal operations and corporate structures;
|
•
|
potential unknown liabilities and unforeseen or increased costs and expenses;
|
•
|
the possibility of faulty assumptions underlying expectations regarding potential synergies and the integration process;
|
•
|
incurring significant Acquisition-related costs and expenses associated with combining our operations;
|
•
|
performance shortfalls at one or both of the two companies as a result of the diversion of management’s attention caused by integrating the companies’ operations; and
|
•
|
servicing the substantial debt that we have incurred in connection with the Acquisition.
|
•
|
the effects of adverse economic conditions in the markets in which we sell our products;
|
•
|
changes in customer demand for our products and/or for end products that incorporate our products;
|
•
|
the timing, delay, reduction or cancellation of significant customer orders and our ability to manage inventory;
|
•
|
fluctuations in customer order patterns and seasonality;
|
•
|
our ability to effectively manage our cost structure in both the short term and over a longer duration;
|
•
|
changes in geographic, product or customer mix;
|
•
|
changes in our effective tax rates or new or revised tax legislation in the United States, Ireland or worldwide;
|
•
|
the timing of new product announcements or introductions by us, our customers or our competitors and the market acceptance of such products;
|
•
|
competitive pricing pressures;
|
•
|
fluctuations in manufacturing yields, adequate availability of wafers and other raw materials, and manufacturing, assembly and test capacity;
|
•
|
the ability of our third-party suppliers, subcontractors and manufacturers to supply us with sufficient quantities of raw materials, products and/or components;
|
•
|
a decline in infrastructure spending by foreign governments, including China;
|
•
|
a decline in the U.S. Government defense budget, changes in spending or budgetary priorities, a prolonged U.S. Government shutdown or delays in contract awards;
|
•
|
any significant decline in our backlog;
|
•
|
our ability to recruit, hire, retain and motivate adequate numbers of engineers and other qualified employees to meet the demands of our customers;
|
•
|
our ability to generate new design opportunities and win competitive bid selection processes;
|
•
|
the increasing costs of providing employee benefits, including health insurance, retirement plan and pension plan contributions and retirement benefits;
|
•
|
our ability to utilize our manufacturing facilities at efficient levels;
|
•
|
potential significant litigation-related costs or product warranty and/or indemnity claims, including those not covered by our suppliers or insurers;
|
•
|
the difficulties inherent in forecasting future operating expense levels, including with respect to costs associated with labor, utilities, transportation and raw materials;
|
•
|
the costs related to compliance with increasing worldwide government, environmental and social responsibility regulations;
|
•
|
new accounting pronouncements or changes in existing accounting standards and practices; and
|
•
|
the effects of public health emergencies, natural disasters, widespread travel disruptions, security risks, terrorist activities, international conflicts, government sanctions, changes in law, including executive orders, changes in import and export regulations and other events beyond our control.
|
•
|
seek additional financing in the debt or equity markets;
|
•
|
refinance or restructure all or a portion of our indebtedness;
|
•
|
borrow under our revolving credit facility;
|
•
|
divert funds that would otherwise be invested in our operations;
|
•
|
repatriate earnings at higher tax rates that are indefinitely reinvested in foreign locations;
|
•
|
sell selected assets; or
|
•
|
reduce or delay planned capital expenditures or operating expenditures.
|
•
|
difficulty or delay integrating acquired technologies, operations and personnel with our existing businesses;
|
•
|
diversion of management's attention in connection with both negotiating the transaction and integrating the assets;
|
•
|
strain on managerial and operational resources as management tries to oversee larger or more complex operations;
|
•
|
the future funding requirements for acquired companies, which may be significant;
|
•
|
potential loss of key employees;
|
•
|
exposure to unforeseen liabilities of acquired companies;
|
•
|
higher than expected or unexpected costs relating to or associated with an acquisition and integration of assets;
|
•
|
difficulty realizing synergies and growth prospects of an acquisition in a timely manner or at all; and
|
•
|
increased risk of costly and time-consuming litigation.
|
•
|
political, legal and economic changes or instability and civil unrest in foreign markets;
|
•
|
currency conversion risks and exchange rate and interest rate fluctuations;
|
•
|
limitations on the repatriation of earnings;
|
•
|
trade and travel restrictions or government sanctions, including import or export tariffs or restrictions imposed by the U.S. government on trading with parties in foreign countries;
|
•
|
complex, varying and changing government regulations and legal standards and requirements, particularly with respect to price protection, competition practices, export control regulations and restrictions, customs and tax requirements, immigration, anti-boycott regulations, data privacy, intellectual property, anti-corruption and environmental compliance, including U.S. customs and export regulations and restrictions, including International Traffic in Arms Regulations and the Foreign Corrupt Practices Act;
|
•
|
economic disruption from terrorism and threats of terrorism and the response to them by the U.S. and its allies;
|
•
|
increased managerial complexities, including different employment practices and labor issues;
|
•
|
greater difficulty enforcing intellectual property rights and weaker laws protecting such rights;
|
•
|
natural disasters or pandemics;
|
•
|
transportation disruptions and delays and increases in labor and transportation costs;
|
•
|
changes to foreign taxes, tariffs and freight rates;
|
•
|
fluctuations in raw material costs and energy costs;
|
•
|
greater difficulty in accounts receivable collections and longer collection periods; and
|
•
|
costs associated with our foreign defined benefit pension plans.
|
•
|
global economic conditions generally;
|
•
|
crises in global credit, debt and financial markets;
|
•
|
actual or anticipated fluctuations in our revenue and operating results;
|
•
|
changes in financial estimates or other statements made by securities analysts or others in analyst reports or other publications or our failure to perform in line with those estimates or statements or our published guidance;
|
•
|
financial results and prospects of our customers;
|
•
|
U.S. and foreign government actions;
|
•
|
changes in market valuations of other semiconductor companies;
|
•
|
rumors and speculation in the press, investment community or on social media about us, our customers or other companies in our industry;
|
•
|
announcements by us, our customers or our competitors of significant new products, technical innovations, material transactions, acquisitions or dispositions, litigation, capital commitments or revised earnings estimates;
|
•
|
departures of key personnel;
|
•
|
alleged noncompliance with laws, regulations or ethics standards by us or any of our employees, officers or directors; and
|
•
|
negative media publicity targeting us or our suppliers, customers or competitors.
|
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total Number of
Shares Purchased
(a)
|
|
Average Price
Paid Per Share (b)
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (c)
|
|
Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under
the Plans or
Programs
|
||||||
January 29, 2017 through February 25, 2017
|
2,566
|
|
|
$
|
76.48
|
|
|
—
|
|
|
$
|
792,501,619
|
|
February 26, 2017 through March 25, 2017
|
212,356
|
|
|
$
|
82.77
|
|
|
—
|
|
|
$
|
792,501,619
|
|
March 26, 2017 through April 29, 2017
|
76,705
|
|
|
$
|
79.40
|
|
|
—
|
|
|
$
|
792,501,619
|
|
Total
|
291,627
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
792,501,619
|
|
(a)
|
Consists of 291,627 shares withheld by us from employees to satisfy minimum employee tax obligations upon vesting of restricted stock units granted to our employees under our equity compensation plans.
|
(b)
|
The average price paid for shares in connection with vesting of restricted stock units are averages of the closing stock price at the vesting date which is used to calculate the number of shares to be withheld.
|
(c)
|
Shares repurchased pursuant to the stock repurchase program publicly announced on August 12, 2004. On February 15, 2016, the Board of Directors of the Company approved an increase to the current authorization for the stock repurchase program by $600.0 million to $1.0 billion in the aggregate. In the aggregate, our Board of Directors has authorized us to repurchase $6.2 billion of our common stock under the program. Under the repurchase program, we may repurchase outstanding shares of our common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the repurchase program.
|
ITEM 6.
|
Exhibits
|
|
ANALOG DEVICES, INC.
|
||
|
|
|
|
Date: May 31, 2017
|
By:
|
|
/
S
/ V
INCENT
R
OCHE
|
|
|
|
Vincent Roche
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date: May 31, 2017
|
By:
|
|
/
S
/ E
ILEEN
W
YNNE
|
|
|
|
Eileen Wynne
|
|
|
|
Vice President, Chief Accounting Officer
|
|
|
|
and Interim Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
Exhibit Index
|
||
Exhibit No.
|
|
Description
|
4.1
|
|
Linear Technology Corporation Amended and Restated 2005 Equity Incentive Plan, filed as exhibit 4.1 to the Post-Effective Amendment No. 1 on Form S-8 to the Company's Registration Statement on Form S-4 (File No. 333-213454) as filed with the Commission on March 15, 2017 and incorporated herein by reference.
|
4.2
|
|
Analog Devices, Inc. Amended and Restated 2010 Equity Incentive Plan, filed as exhibit 4.2 to the Post-Effective Amendment No. 1 on Form S-8 to the Company's Registration Statement on Form S-4 (File No. 333-213454) as filed with the Commission on March 15, 2017 and incorporated herein by reference.
|
10.1†
|
|
Form of Analog Devices, Inc. Equity Award Conversion Notice to Linear employees.
|
10.2†
|
|
Form of Global Restricted Stock Unit Agreement for Eligible Employees for usage under the Analog Devices, Inc. Amended and Restated 2010 Equity Incentive Plan.
|
10.3†
|
|
Separation Agreement between Analog Devices, Inc. and David A. Zinsner, dated March 27, 2017.
|
10.4
|
|
Bridge Credit Agreement, dated as of March 10, 2017, among Analog Devices, Inc., as Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, and each lender from time to time party thereto, filed as exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-07819) as filed with the Commission on March 10, 2017 and incorporated herein by reference.
|
31.1†
|
|
Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
|
31.2†
|
|
Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
|
32.1†
|
|
Certification Pursuant to 18 U.S.C. Section 1350 (Chief Executive Officer).
|
32.2†
|
|
Certification Pursuant to 18 U.S.C. Section 1350 (Chief Financial Officer).
|
101.INS
|
|
XBRL Instance Document.**
|
101.SCH
|
|
XBRL Schema Document.**
|
101.CAL
|
|
XBRL Calculation Linkbase Document.**
|
101.LAB
|
|
XBRL Labels Linkbase Document.**
|
101.PRE
|
|
XBRL Presentation Linkbase Document.**
|
101.DEF
|
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XBRL Definition Linkbase Document.**
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†
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Filed or furnished herewith.
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**
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Submitted electronically herewith.
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1.
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Grant of Restricted Stock Unit
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2.
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Vesting and Conversion
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(a)
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Subject to the terms of the Plan and this Agreement, the RSUs shall vest in accordance with the schedule set forth in Section 1. For purposes of this Agreement, RSUs that have not vested as of any particular time in accordance with this Section 2(a) are referred to as “Unvested RSUs.” The shares of Common Stock that are issuable upon the vesting and conversion of the RSUs are referred to in this Agreement as “Shares.” As soon as administratively practicable after the issuance of any Shares upon the vesting and conversion of RSUs, and subject to the terms and conditions set forth herein, the Company shall deliver or cause to be delivered evidence (which may include a book entry by the Company’s transfer agent) of the Shares so issued in the name of the Participant to the brokerage firm designated by the Company to maintain the brokerage account established for the Participant. Notwithstanding the foregoing, the Company shall not be obligated to issue Shares to or in the name of the Participant upon the vesting and conversion of any RSUs unless the issuance of such Shares shall comply with all relevant provisions of law and other legal requirements including, without limitation, any applicable securities laws and the requirements of any stock exchange upon which shares of Common Stock may then be listed.
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(b)
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In the event the Participant’s employment with the Company or the Employer (as defined in Section 2(e)) is terminated either by the Participant, the Company, or the Employer for any reason or no reason (other than due to death or disability or as otherwise provided in the Plan or below), then in each such case, all of the Unvested RSUs as of the date of termination shall terminate and be cancelled immediately and automatically and the Participant shall have no further rights with respect to such Unvested RSUs.
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(c)
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In the event the Participant’s employment with the Company or the Employer is terminated by reason of the Participant’s
death
, all Unvested RSUs shall vest in full as of the date of the Participant’s death.
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(d)
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In the event the Participant becomes
Disabled
, regardless of whether the Participant terminates employment with the Company or the Employer, all Unvested RSUs shall vest in full as of the date the Participant is determined to be Disabled. “Disabled” with respect to the Participant means, when and if, as a result of disease, injury or mental disorder, the Participant is incapable of engaging in regular service or occupation with the Company or the Employer (as defined in paragraph e) which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Company.
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(e)
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For purposes of this Agreement, employment shall include being an employee with the Company. Employment shall also include being an employee with any direct or indirect Parent or Subsidiary of the Company, or any successor to the Company or any such Parent or Subsidiary of the Company (the “Employer”). Should a Participant transfer employment to become a Director, Consultant or advisor to the Company or the Employer following the Date of Grant, he or she will still be considered employed for vesting
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3.
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Restrictions on Transfer
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(a)
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The Participant shall not sell, assign, transfer, pledge or otherwise encumber any RSUs, either voluntarily or by operation of law.
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(b)
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The Company shall not be required (i) to transfer on its books any of the RSUs which have been transferred in violation of any of the provisions set forth herein or (ii) to treat as the owner of such RSUs any transferee to whom such RSUs have been transferred in violation of any of the provisions contained herein.
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4.
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Not a Shareholder
. The RSUs represent an unfunded, unsecured promise by the Company to deliver Shares upon vesting and conversion of the RSUs, and until vesting of the RSUs and issuance of the Shares, the Participant shall not have any of the rights of a shareholder with respect to the Shares underlying the RSUs. For the avoidance of doubt, the Participant shall have no right to receive any dividends and shall have no voting rights with respect to the Shares underlying the RSUs for which the record date is on or before the date on which the Shares underlying the RSUs are issued to the Participant.
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5.
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Provisions of the Plan
. The RSUs and Shares, including the grant and issuance thereof, are subject to the provisions of the Plan. A copy of the Plan prospectus is available on the Company’s Intranet at http://signals.corpnt.analog.com/default.aspx. (From Signals home page, click Knowledge Centers, HR, Employee Stock Programs. The related documents can be found in the right-hand column). If the Participant is unable to access this information via the Intranet, the Company’s or the Participant’s regional stock plan administrator can provide the Participant with copies.
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6.
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Withholding Taxes
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(a)
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Regardless of any action the Company and/or the Employer, if different, takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally applicable to the Participant is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including the grant of the RSUs, the vesting of the RSUs, the subsequent sale of any Shares acquired pursuant to the RSUs and the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant becomes subject to Tax-Related Items in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
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(b)
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Prior to any relevant taxable or tax withholding event, as applicable, the Participant will pay or make adequate arrangements satisfactory to the Company to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the methods set forth below:
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(i)
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the Company may withhold a sufficient number of whole Shares otherwise issuable upon the vesting of the RSUs that have an aggregate Fair Market Value (as defined under the Plan) sufficient to pay the minimum Tax-Related Items required to be withheld with respect to the Shares. The cash equivalent of the Shares withheld will be used to settle the obligation to withhold the Tax-Related Items (determined by reference to the closing price of the Common Stock on the NASDAQ Global Select Market on the applicable vesting date); or
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(ii)
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the Company may, in its discretion, withhold any amount necessary to pay the Tax-Related Items from the Participant’s salary or other amounts payable to the Participant; or
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(iii)
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the Company may withhold from proceeds of the sale of Shares either through a voluntary sale or through a mandatory sale arranged by the Company
(on the Participant’s behalf pursuant to this authorization);
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7.
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Option of Company to Deliver Cash
. Notwithstanding any of the other provisions of this Agreement, and except as set forth in Appendix A, where share settlement is otherwise prohibited under local law or may present adverse tax consequences to the Participant, at the time the RSUs vest, the Company may elect, in the sole discretion of the Compensation Committee of the Board, to deliver by wire transfer to the Participant in lieu of Shares an equivalent amount of cash (determined by reference to the closing price of the Common Stock on the NASDAQ Global Select Market on the applicable vesting date). If the Company elects to deliver cash to the Participant, the Company is authorized to retain such amount as is sufficient in the opinion of the Company to satisfy the Tax-Related Items withholding obligations of the Company pursuant to Section 6 herein.
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8.
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Data Privacy
. The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data set forth in this Agreement and any other RSU grant materials by and among, as applicable, the Employer, the Company and its subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
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9.
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Repatriation and Other Legal Requirements
. The Participant agrees as a condition of the grant of the RSUs, as applicable, to repatriate all payments attributable to the Shares and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived from the sale of the Shares acquired pursuant to the RSUs) in accordance with all foreign exchange rules and regulations applicable to the Participant. In addition, the Participant also agrees to take any and all actions, and consent to any and all actions taken by the Company and its subsidiaries, as may be required to allow the Company and its subsidiaries to comply with all laws, rules and regulations applicable to the Participant. Finally, the Participant agrees to take any and all actions as may be required to comply with the Participant’s personal legal and tax obligations under all laws, rules and regulations applicable to the Participant.
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10.
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Miscellaneous
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(a)
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No Rights to Employment
. The grant of the RSUs shall not confer upon the Participant any right to continue in the employ of the Company or the Employer, nor limit in any way the right of the Company or the Employer to terminate the Participant’s employment at any time. Except in the event of disability or a termination of employment due to death, the vesting of the RSUs pursuant to Section 2 hereof is earned only by satisfaction of the performance conditions, if any, and continuing service as an employee at the will of the Company or the Employer (not through the act of being hired or engaged or being granted the RSUs hereunder).
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(b)
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Discretionary Nature
. The Participant acknowledges and agrees that the Plan is discretionary in nature and may be amended, cancelled, or terminated by the Company at any time, to the extend permitted under the Plan. The Participant’s participation in the Plan is voluntary. The grant of the RSUs under the Plan is a one-time benefit and does not create any contractual or other right to receive a grant of RSUs or any other award under the Plan or other benefits in lieu thereof in the future. Future grants, if any, will be at the sole discretion of the Company, including, but not limited to, the form and timing of any grant, the number of Shares subject to the grant, and the vesting provisions. Any amendment, modification or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Participant’s employment with the Company or the Employer. The RSUs and income from such RSUs shall not be included in any calculation of severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments. The grant of RSUs should in no event be considered as compensation for, or relating in any way to, past services for the Company or the Employer.
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(c)
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Exclusion from Termination Indemnities and Other Benefits
. This Section 10(c) applies if the Participant resides outside the U.S.: The value of the RSUs and any other awards granted under the Plan is an extraordinary item of compensation outside the scope of the Participant’s employment with the Company or the Employer (and the Participant’s employment contract, if any). Any grant under the Plan, including the grant of the RSUs and the income and value of same, is not part of normal or expected compensation or salary. Further, the RSUs and the Shares, and the income and value of same, are not intended to replace any pension rights or compensation.
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(d)
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No Entitlement
. This Section 10(d) applies if the Participant resides outside the U.S. and/or the Company is not the Participant's employer: In consideration of the grant of RSUs, no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from termination of the Participant’s employment with the Company or the Employer (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment contract, if any) and the Participant irrevocably releases the Company from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, the Participant shall be deemed irrevocably to have waived the Participant’s entitlement to pursue such claim.
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(e)
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Exchange Rates
. This Section 10(e) applies if the Participant resides outside the U.S.: The Participant acknowledges and agrees that neither the Company nor the Employer shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the vesting and settlement of the RSUs or the subsequent sale of any Shares.
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(f)
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Future Value of Shares
. The future value of the underlying Shares is unknown, indeterminable, and cannot be predicted with certainty.
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(g)
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Severability
. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.
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(h)
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Binding Effect
. This Agreement shall be binding upon and inure to the benefit of the Company and the Participant and his or her respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the restrictions on transfer set forth in Section 3 of this Agreement.
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(i)
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Notice
. Each notice relating to this Award shall be in writing (which shall include electronic form) and delivered in person, electronically or by first class mail, postage prepaid, to the address as hereinafter provided. Each notice shall be deemed to have been given on the date it is received. Each notice to the Company shall be addressed to it at its offices at Analog Devices, Inc., One Technology Way, Norwood, Massachusetts, 02062 U.S.A., Attention: Stock Plan Administrator, Treasury Department. Each notice to the Participant shall be addressed to the Participant at the Participant’s last known mailing or email address, as applicable, on the records of the Company.
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(j)
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Pronouns
. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.
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(k)
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Entire Agreement
. This Agreement and the Plan constitute the entire understanding between the parties, and supersede all prior agreements and understandings, relating to the subject matter of these documents.
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(l)
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Governing Law
. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the Commonwealth of Massachusetts without regard to any applicable conflicts of laws.
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(m)
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Compliance with Laws
. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. The Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale
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(n)
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Interpretation
. The interpretation and construction of any terms or conditions of this Agreement or the Plan, or other matters related to the Plan, by the Compensation Committee of the Board of the Company shall be final and conclusive.
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(o)
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Participant’s Acceptance
. The Participant is urged to read this Agreement carefully and to consult with his or her own legal counsel regarding the terms and consequences of this Agreement and the legal and binding effect of this Agreement. By virtue of his or her acceptance of this Award, the Participant is deemed to have accepted and agreed to all of the terms and conditions of this Agreement and the provisions of the Plan.
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(p)
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Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to the RSUs or other awards granted to the Participant under the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
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(q)
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English Language
. The Participant acknowledges and agrees that it is the Participant’s express intent that this Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the RSUs, be drawn up in English. If the Participant has received this Agreement, the Plan or any other documents related to the RSUs translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version shall control.
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(r)
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Appendix A
. Notwithstanding any provisions herein to the contrary, if the Participant transfers the Participant’s residence and/or employment to a country other than the United States, the RSUs shall be subject to any special terms and conditions for such country as may be set forth in Appendix A to this Agreement. Moreover, if the Participant relocates to one of the countries included in Appendix A, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. Appendix A constitutes part of this Agreement.
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(s)
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Additional Requirements
. The Company reserves the right to impose other requirements on the RSUs, any Shares acquired pursuant to the RSUs, and the Participant’s participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable for legal or administrative reasons. Such requirements may include (but are not limited to) requiring the Participant to sign any agreements or undertakings that may be necessary to accomplish the foregoing.
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(t)
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Private Placement
. The Company has submitted filings in the United States in connection with the stock incentive plan under which this Award was made. The Company has not submitted any registration statement, prospectus or other filings with other local securities authorities (unless otherwise required under such local law), and the grant of the Award is not intended to be a public offering of securities in any other jurisdiction or subject to the supervision of other local securities authorities.
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(u)
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Changes in Capitalization
. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any non-cash distribution to holders of Common Stock, the number of RSUs, and Shares issuable upon vesting and conversion thereof, shall be appropriately adjusted in such manner as shall be determined by the Compensation Committee of the Board.
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(v)
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No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
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(w)
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Insider Trading Restrictions/Market Abuse Laws
. The Participant acknowledges that, depending on his or her country of residence, the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect Participant’s ability to, directly or indirectly, acquire, sell, or attempt to sell Shares or rights to Shares under the Plan during such times as Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions or the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant acknowledges that it is his or her responsibility to comply with any applicable restrictions, and the Participant is advised to speak to his or her personal advisor on this matter.
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(x)
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Foreign Asset/Account, Exchange Control, and Tax Reporting
. Depending on the Participant’s country, the Participant may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the vesting of the RSUs, the acquisition, holding, and/or transfer of Shares or cash resulting from participation in the Plan and/or the opening and maintenance of a brokerage or bank account in connection with the Plan. The Participant may be required to report such assets, accounts, account balances and values and/or related transactions to the applicable authorities in his or her country. The Participant acknowledges
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(y)
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Waiver
. The Participant acknowledges that a waiver by the Company or breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant.
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i.
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You acknowledge and agree that the benefits provided to you under this Agreement, to which you are not otherwise entitled, are good and sufficient consideration for the covenants in this Section 9.
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ii.
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You acknowledge and agree that the restrictions contained in this Section 9 are reasonably necessary to protect the legitimate business interests of the Company, and that these restrictions are reasonable in time and geographic scope, given that the Company conducts business throughout the United States and internationally.
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iii.
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You acknowledge and agree that a breach of your obligations under this Agreement will cause the Company immediate and irreparable harm, and that monetary damages would be insufficient and inadequate to remedy the harm to the Company from such breach. You therefore acknowledge and agree that the Company may seek emergency, preliminary and injunctive relief and seek specific performance to enforce this Agreement in response to any breach or threatened breach of this Agreement. Nothing in this
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iv.
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The covenants of this Section 9 are in addition to, and shall not supersede, any post-employment restrictions or covenants to which you have previously agreed. To the extent that any of the restrictions contained in this Section 9 conflict in any way with any prior restrictions or covenants, such conflict shall be resolved by giving effect to the provision that provides the greatest protection to the Company that is enforceable under applicable law.
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v.
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The parties expressly agree that any of the provisions of this Section 9 may be reformed, modified, revised, edited or blue-penciled to make such provision enforceable. If any provision cannot be modified to make it enforceable, such provision shall be severed and all remaining provisions shall continue in full force and effect.
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1.
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I have reviewed this quarterly report on Form 10-Q of Analog Devices, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated: May 31, 2017
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/
S
/ V
INCENT
R
OCHE
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Vincent Roche
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President and Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this quarterly report on Form 10-Q of Analog Devices, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated: May 31, 2017
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/S/ E
ILEEN
W
YNNE
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Eileen Wynne
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Vice President, Chief Accounting Officer
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and Interim Chief Financial Officer
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(Principal Financial Officer)
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: May 31, 2017
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/S/ V
INCENT
R
OCHE
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Vincent Roche
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Chief Executive Officer
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: May 31, 2017
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/S/ E
ILEEN
W
YNNE
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Eileen Wynne
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Interim Chief Financial Officer
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