Business Wire | May 19, 2021 07:00AM EDT

Analog Devices Reports Record Revenue and Earnings for the Second Quarter Fiscal 2021

May 19, 2021

WILMINGTON, Mass.--(BUSINESS WIRE)--May 19, 2021--Analog Devices, Inc. (Nasdaq: ADI), a leading global semiconductor company, today announced financial results for its second quarter of fiscal 2021, which ended May 1, 2021.

"ADI delivered record quarterly results that exceeded the high end of our outlook, reflecting the insatiable demand for our products and disciplined operational execution. Revenue increased 26% and gross and operating margins continued to expand, leading to earnings growth of 43%," said Vincent Roche, President and CEO. "The economic recovery has materialized faster and stronger than initially anticipated, increasing pressure across supply chains globally. Our decision to strategically invest in additional capacity ahead of this demand inflection has enabled us to move with speed and agility to better serve our customers. These investments combined with continued momentum in bookings give us confidence that our second half will be stronger than the first half."

Roche added, "Semiconductors are the bedrock of the modern digital economy and their importance to accelerating digitalization across all industries has never been more apparent. Our cadre of talented employees continues to push the edge of what is possible and deliver maximum customer impact. I am more optimistic than ever about ADI's position in this reordered world as we create long-term value for all stakeholders."

Performance for the Second Quarter of Fiscal 2021

Results Summary^(1)

(in millions, except per-share amounts and percentages)



Three Months Ended

May 1, May 2, Change 2021 2020

Revenue $ 1,661 $ 1,317 26 %

Gross margin $ 1,137 $ 847 34 %

Gross margin percentage 68.4 % 64.3 % 410 bps

Operating income $ 520 $ 344 51 %

Operating margin 31.3 % 26.1 % 520 bps

Diluted earnings per share $ 1.14 $ 0.72 58 %



Adjusted Results

Adjusted gross margin $ 1,177 $ 891 32 %

Adjusted gross margin percentage 70.9 % 67.7 % 320 bps

Adjusted operating income $ 694 $ 501 39 %

Adjusted operating margin 41.7 % 38.0 % 370 bps

Adjusted diluted earnings per share $ 1.54 $ 1.08 43 %



Three Trailing Months Twelve Ended Months

Cash Generation May 1, May 1, 2021 2021

Net cash provided by operating activities $ 736 $ 2,394

% of revenue 44 % 39 %

Capital expenditures $ (59 ) $ (177 )

Free cash flow $ 677 $ 2,217

% of revenue 41 % 36 %



Three Trailing Months Twelve Ended Months

Cash Return May 1, May 1, 2021 2021

Dividend paid $ (254 ) $ (942 )

Stock repurchases (189 ) (371 )

Total cash returned $ (443 ) $ (1,313 )



(1) The sum and/or computation of the individual amounts may not equal thetotal due to rounding.

Outlook for the Third Quarter of Fiscal Year 2021

For the third quarter of fiscal 2021, we are forecasting revenue of $1.7 billion, +/- $70 million. At the midpoint of this revenue outlook, we expect reported operating margin of approximately 32.9%, +/-140 bps, and adjusted operating margin of approximately 42.5%, +/-100 bps. We are planning for reported EPS to be $1.23, +/-$0.11, and adjusted EPS to be $1.61, +/-$0.11.

Our third quarter fiscal 2021 outlook is based on current expectations and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this release. These statements supersede all prior statements regarding our business outlook set forth in prior ADI news releases, and ADI disclaims any obligation to update these forward-looking statements.

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

Dividend Payment

The ADI Board of Directors has declared a quarterly cash dividend of $0.69 per outstanding share of common stock. The dividend will be paid on June 8, 2021 to all shareholders of record at the close of business on May 28, 2021.

Conference Call Scheduled for Today, Wednesday, May 19, 2021 at 10:00 am ET

ADI will host a conference call to discuss our second quarter fiscal 2021 results and short-term outlook today, beginning at 10:00 am ET. Investors may join via webcast, accessible at investor.analog.com, or by telephone (call 800-859-9560, or 706-634-7193 for international calls, ten minutes before the call begins and provide the password "ADI").

A replay will be available two hours after the completion of the call. The replay may be accessed for up to two weeks by dialing 855-859-2056 (replay only) and providing the conference ID: 2534357, or by visiting investor.analog.com.

Non-GAAP Financial Information

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

Management uses non-GAAP measures internally to evaluate the Company's operating performance from continuing operations against past periods and to budget and allocate resources in future periods. These non-GAAP measures also assist management in evaluating the Company's core business and trends across different reporting periods on a consistent basis. Management also uses these non-GAAP measures as the primary performance measurement when communicating with analysts and investors regarding the Company's earnings results and outlook and believes that the presentation of these non-GAAP measures is useful to investors because it provides investors with the operating results that management uses to manage the Company and enables investors and analysts to evaluate the Company's core business. Management also believes that the non-GAAP liquidity measure free cash flow is useful both internally and to investors because it provides information about the amount of cash generated after capital expenditures that is then available to repay debt obligations, make investments and fund acquisitions, and for certain other activities.

The non-GAAP financial measures referenced by ADI in this release include: adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted operating expenses percentage, adjusted operating income, adjusted operating margin, adjusted income before income taxes, adjusted provision for income taxes, adjusted tax rate, adjusted diluted earnings per share (EPS), free cash flow, and free cash flow margin percentage.

Adjusted gross margin is defined as gross margin, determined in accordance with GAAP, excluding certain acquisition related expenses1 which are described further below. Adjusted gross margin percentage represents adjusted gross margin divided by revenue.

Adjusted operating expenses is defined as operating expenses, determined in accordance with GAAP, excluding: certain acquisition related expenses1; acquisition related transaction costs2; restructuring related expense3; and charitable foundation contribution4which are described further below. Adjusted operating expenses percentage represents adjusted operating expenses divided by revenue.

Adjusted operating income is defined as operating income, determined in accordance with GAAP, excluding: acquisition related expenses1; acquisition related transaction costs2; restructuring related expense3; and charitable foundation contribution4 which are described further below. Adjusted operating margin represents adjusted operating income divided by revenue.

Adjusted income before income taxes is defined as income before income taxes, determined in accordance with GAAP, excluding: acquisition related expenses1; acquisition related transaction costs2; restructuring related expense3; and charitable foundation contribution4 which are described further below.

Adjusted provision for income taxes is defined as provision for income taxes, determined in accordance with GAAP, excluding tax related items5which are described further below. Adjusted tax rate represents adjusted provision for income taxes divided by adjusted income before income taxes.

Adjusted diluted EPS is defined as diluted EPS, determined in accordance with GAAP, excluding: acquisition related expenses1; acquisition related transaction costs2; restructuring related expense3; charitable foundation contribution4; and tax related items5 which are described further below.

Free cash flow is defined as net cash provided by operating activities, determined in accordance with GAAP, less additions to property, plant and equipment, net. Free cash flow margin percentage represents free cash flow divided by revenue.

1Acquisition Related Expenses Expenses incurred as a result of current and prior period acquisitions and primarily include expenses associated with the fair value adjustments to inventory, property, plant and equipment and amortization of acquisition related intangibles, which include acquired intangibles such as purchased technology and customer relationships. Expenses also include severance payments, equity award accelerations, and the fair value adjustment associated with the replacement of share-based awards related to the Linear Technology Corporation (Linear) acquisition. We excluded these costs from our non-GAAP measures because they relate to specific transactions and are not reflective of our ongoing financial performance.

2Acquisition Related Transaction Costs Costs directly related to the proposed Maxim Integrated Products, Inc. acquisition, including legal, accounting and other professional fees as well as integration-related costs. We excluded these costs from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.

3Restructuring Related Expense Expenses incurred in connection with facility closures, consolidation of manufacturing facilities, severance, other accelerated stock-based compensation expense and other cost reduction efforts or reorganizational initiatives. We excluded these expenses from our non-GAAP measures because apart from ongoing expense savings as a result of such items, these expenses have no direct correlation to the operation of our business in the future.

4Charitable Foundation Contribution Expenses incurred in connection with a one time contribution of registered shares of common stock to the Analog Devices Foundation. We excluded this expense from our non-GAAP measures because this expense has no direct correlation to the operation of our business in the future.

5Tax Related Items Income tax effect of the non-GAAP items discussed above. We excluded the income tax benefit/provision effect of these tax related items from our non-GAAP measures because they are not associated with the tax expense on our ongoing operating results.

About Analog Devices

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

Forward-Looking Statements

This press release contains forward-looking statements, which address a variety of subjects including, for example, our statements regarding our proposed acquisition of Maxim Integrated Products, Inc. ("Maxim"); the impact of the COVID-19 pandemic on our business, financial condition and results of operations; expected revenue, operating margin, tax rate, earnings per share, and other financial results; expected market trends, market share gains, operating leverage, production and inventory levels; expected customer demand and order rates for our products and expected product offerings; product development; and marketing position. Statements that are not historical facts, including statements about our beliefs, plans and expectations, are forward-looking statements. Such statements are based on our current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: the uncertainty as to the extent of the duration, scope and impacts of the COVID-19 pandemic; political and economic uncertainty, including any faltering in global economic conditions or the stability of credit and financial markets; erosion of consumer confidence and declines in customer spending; unavailability of raw materials, services, supplies or manufacturing capacity; changes in geographic, product or customer mix; changes in export classifications, import and export regulations or duties and tariffs; changes in our or Maxim's estimates of our respective expected tax rates based on current tax law; our ability to successfully integrate Maxim's businesses and technologies; the risk that the expected benefits and synergies of the proposed transaction and growth prospects of the combined company may not be fully achieved in a timely manner, or at all; adverse results in litigation matters, including the potential for litigation related to the proposed transaction; the risk that we or Maxim will be unable to retain and hire key personnel; the risk associated with the timing of the closing of the proposed transaction, including the risk that the conditions to the transaction are not satisfied on a timely basis or at all or the failure of the transaction to close for any other reason or to close on the anticipated terms, including the anticipated tax treatment; the risk that any regulatory approval, consent or authorization that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated; unanticipated difficulties or expenditures relating to the transaction, the response of business partners and retention as a result of the announcement and pendency of the transaction; uncertainty as to the long-term value of our common stock; the diversion of management time on transaction-related matters; our ability to successfully integrate acquired businesses and technologies; and the risk that expected benefits, synergies and growth prospects of acquisitions may not be fully achieved in a timely manner, or at all. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our filings with the Securities and Exchange Commission ("SEC"), including the risk factors contained in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Forward-looking statements represent management's current expectations and are inherently uncertain. Except as required by law, we do not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.

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

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended Six Months Ended

May 1, 2021 May 2, 2020 May 1, 2021 May 2, 2020

Revenue $ 1,661,407 $ 1,317,060 $ 3,219,865 $ 2,620,625

Cost of sales 524,770 470,386 1,037,857 925,809

Gross margin 1,136,637 846,674 2,182,008 1,694,816

Operating expenses:

Research and 302,238 252,413 590,388 509,486 development

Selling,marketing, 206,612 141,775 391,887 341,055 general andadministrative

Amortization of 107,786 107,146 215,434 214,371 intangibles

Special charges 311 1,320 749 12,456

Total operating 616,947 502,654 1,198,458 1,077,368 expenses

Operating income 519,690 344,020 983,550 617,448

Nonoperating expense (income):

Interest expense 43,066 49,985 85,545 98,798

Interest income (290 ) (1,334 ) (499 ) (3,274 )

Other, net 929 308 (14,099 ) 646

43,705 48,959 70,947 96,170

Income before 475,985 295,061 912,603 521,278 income taxes

Provision for 53,080 27,365 101,179 49,708 income taxes

Net income $ 422,905 $ 267,696 $ 811,424 $ 471,570



Shares used tocompute earnings 368,823 368,217 369,013 368,229 per common share- basic

Shares used tocompute earnings 372,418 371,305 372,762 371,784 per common share- diluted



Basic earnings $ 1.15 $ 0.73 $ 2.20 $ 1.28 per common share

Diluted earnings $ 1.14 $ 0.72 $ 2.18 $ 1.27 per common share

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

May 1, 2021

Oct. 31, 2020

Cash & cash equivalents

$

1,305,216

$

1,055,860

Accounts receivable

814,135

737,536

Inventories

641,202

608,260

Other current assets

142,247

116,032

Total current assets

2,902,800

2,517,688

Net property, plant and equipment

1,160,586

1,120,561

Other investments

94,033

86,729

Goodwill

12,282,465

12,278,425

Intangible assets, net

3,393,546

3,650,280

Deferred tax assets

1,448,018

1,503,064

Other assets

306,769

311,856

Total assets

$

21,588,217

$

21,468,603

Other current liabilities

$

1,452,378

$

1,364,986

Debt, current

1,324,451

-

Long-term debt

3,823,595

5,145,102

Deferred income taxes

1,833,520

1,919,595

Other non-current liabilities

987,169

1,040,975

Shareholders' equity

12,167,104

11,997,945

Total liabilities & equity

$

21,588,217

$

21,468,603

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

May 1, 2021 Oct. 31, 2020

Cash & cash equivalents $ 1,305,216 $ 1,055,860

Accounts receivable 814,135 737,536

Inventories 641,202 608,260

Other current assets 142,247 116,032

Total current assets 2,902,800 2,517,688

Net property, plant and equipment 1,160,586 1,120,561

Other investments 94,033 86,729

Goodwill 12,282,465 12,278,425

Intangible assets, net 3,393,546 3,650,280

Deferred tax assets 1,448,018 1,503,064

Other assets 306,769 311,856

Total assets $ 21,588,217 $ 21,468,603



Other current liabilities $ 1,452,378 $ 1,364,986

Debt, current 1,324,451 -

Long-term debt 3,823,595 5,145,102

Deferred income taxes 1,833,520 1,919,595

Other non-current liabilities 987,169 1,040,975

Shareholders' equity 12,167,104 11,997,945

Total liabilities & equity $ 21,588,217 $ 21,468,603

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Three Months Ended

Six Months Ended

May 1, 2021

May 2, 2020

May 1, 2021

May 2, 2020

Cash flows from operating activities:

Net income

$

422,905

$

267,696

$

811,424

$

471,570

Adjustments to reconcile net income to net cash provided by operations:

Depreciation

52,466

59,261

108,775

119,124

Amortization of intangibles

145,701

144,051

290,745

288,120

Stock-based compensation expense

40,358

35,900

76,996

73,401

Deferred income taxes

(21,017

)

(21,408

)

(48,292

)

(35,390

)

Non-cash contribution to charitable foundation

-

-

-

40,000

Other non-cash activity

2,431

1,469

(12,122

)

3,801

Changes in operating assets and liabilities

93,517

(57,928

)

(63,223

)

(181,937

)

Total adjustments

313,456

161,345

352,879

307,119

Net cash provided by operating activities

736,361

429,041

1,164,303

778,689

Percent of revenue

44

%

33

%

36

%

30

%

Cash flows from investing activities:

Proceeds from other investments

-

-

18,566

-

Additions to property, plant and equipment

(59,170

)

(60,161

)

(126,558

)

(115,000

)

Cash paid for asset acquisition

-

-

(22,522

)

-

Payments for acquisitions, net of cash acquired

-

-

(2,428

)

-

Changes in other assets

(1,526

)

(1,391

)

(2,826

)

(1,284

)

Net cash used for investing activities

(60,696

)

(61,552

)

(135,768

)

(116,284

)

Cash flows from financing activities:

Proceeds from debt

-

395,646

-

395,646

Payments on revolver

-

(350,000

)

-

(350,000

)

Proceeds from revolver

-

350,000

-

350,000

Debt repayments

-

(300,000

)

-

(300,000

)

Dividend payments to shareholders

(254,429

)

(228,600

)

(483,608

)

(427,760

)

Repurchase of common stock

(188,814

)

(113,584

)

(345,871

)

(219,614

)

Proceeds from employee stock plans

23,752

14,784

43,672

30,897

Changes in other financing activities

(94

)

(3,956

)

2,399

(4,451

)

Net cash used for financing activities

(419,585

)

(235,710

)

(783,408

)

(525,282

)

Effect of exchange rate changes on cash

1,073

(1,250

)

4,229

(508

)

Net increase in cash and cash equivalents

257,153

130,529

249,356

136,615

Cash and cash equivalents at beginning of period

1,048,063

654,408

1,055,860

648,322

Cash and cash equivalents at end of period

$

1,305,216

$

784,937

$

1,305,216

$

784,937

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

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

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)



Three Months Ended Six Months Ended

May 1, 2021 May 2, 2020 May 1, 2021 May 2, 2020

Cash flows from operating activities:

Net income $ 422,905 $ 267,696 $ 811,424 $ 471,570

Adjustments toreconcile net income to net cash providedby operations:

Depreciation 52,466 59,261 108,775 119,124

Amortization of 145,701 144,051 290,745 288,120 intangibles

Stock-based 40,358 35,900 76,996 73,401 compensation expense

Deferred income taxes (21,017 ) (21,408 ) (48,292 ) (35,390 )

Non-cash contributionto charitable - - - 40,000 foundation

Other non-cash 2,431 1,469 (12,122 ) 3,801 activity

Changes in operatingassets and 93,517 (57,928 ) (63,223 ) (181,937 )liabilities

Total adjustments 313,456 161,345 352,879 307,119

Net cash provided by 736,361 429,041 1,164,303 778,689 operating activities

Percent of revenue 44 % 33 % 36 % 30 %

Cash flows from investing activities:

Proceeds from other - - 18,566 - investments

Additions toproperty, plant and (59,170 ) (60,161 ) (126,558 ) (115,000 )equipment

Cash paid for asset - - (22,522 ) - acquisition

Payments foracquisitions, net of - - (2,428 ) - cash acquired

Changes in other (1,526 ) (1,391 ) (2,826 ) (1,284 )assets

Net cash used for (60,696 ) (61,552 ) (135,768 ) (116,284 )investing activities



Cash flows from financing activities:

Proceeds from debt - 395,646 - 395,646

Payments on revolver - (350,000 ) - (350,000 )

Proceeds from - 350,000 - 350,000 revolver

Debt repayments - (300,000 ) - (300,000 )

Dividend payments to (254,429 ) (228,600 ) (483,608 ) (427,760 )shareholders

Repurchase of common (188,814 ) (113,584 ) (345,871 ) (219,614 )stock

Proceeds from 23,752 14,784 43,672 30,897 employee stock plans

Changes in other (94 ) (3,956 ) 2,399 (4,451 )financing activities

Net cash used for (419,585 ) (235,710 ) (783,408 ) (525,282 )financing activities

Effect of exchange 1,073 (1,250 ) 4,229 (508 )rate changes on cash



Net increase in cash 257,153 130,529 249,356 136,615 and cash equivalents

Cash and cashequivalents at 1,048,063 654,408 1,055,860 648,322 beginning of period

Cash and cashequivalents at end of $ 1,305,216 $ 784,937 $ 1,305,216 $ 784,937 period

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

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

Three Months Ended

May 1, 2021 May 2, 2020

Revenue % of Y/Y Revenue % of revenue* % revenue*

Industrial $ 972,177 59% 36% $ 716,364 54%

Communications 276,960 17% -% 276,575 21%

Automotive 257,586 16% 42% 181,211 14%

Consumer 154,684 9% 8% 142,910 11%

Total revenue $ 1,661,407 100% 26% $ 1,317,060 100%



Six Months Ended

May 1, 2021 May 2, 2020

Revenue % of Y/Y Revenue % of revenue* % revenue*

Industrial $ 1,828,140 57% 30% $ 1,405,224 54%

Communications 557,786 17% 8% 517,872 20%

Automotive 503,501 16% 30% 386,618 15%

Consumer 330,438 10% 6% 310,911 12%

Total revenue $ 3,219,865 100% 23% $ 2,620,625 100%



*The sum of the individual percentages may not equal the total due to rounding.

ANALOG DEVICES, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended

Six Months Ended

May 1, 2021

May 2, 2020

May 1, 2021

May 2, 2020

Gross margin

$

1,136,637

$

846,674

$

2,182,008

$

1,694,816

Gross margin percentage

68.4

%

64.3

%

67.8

%

64.7

%

Acquisition related expenses

40,711

44,395

85,709

89,411

Adjusted gross margin

$

1,177,348

$

891,069

$

2,267,717

$

1,784,227

Adjusted gross margin percentage

70.9

%

67.7

%

70.4

%

68.1

%

Operating expenses

$

616,947

$

502,654

$

1,198,458

$

1,077,368

Percent of revenue

37.1

%

38.2

%

37.2

%

41.1

%

Acquisition related expenses

(109,903

)

(111,057

)

(220,203

)

(222,838

)

Acquisition related transaction costs

(23,008

)

-

(38,244

)

-

Charitable foundation contribution

-

-

-

(40,000

)

Restructuring related expense

(311

)

(1,320

)

(749

)

(12,456

)

Adjusted operating expenses

$

483,725

$

390,277

$

939,262

$

802,074

Adjusted operating expenses percentage

29.1

%

29.6

%

29.2

%

30.6

%

Operating income

$

519,690

$

344,020

$

983,550

$

617,448

Operating margin

31.3

%

26.1

%

30.5

%

23.6

%

Acquisition related expenses

150,614

155,452

305,912

312,249

Acquisition related transaction costs

23,008

-

38,244

-

Charitable foundation contribution

-

-

-

40,000

Restructuring related expense

311

1,320

749

12,456

Adjusted operating income

$

693,623

$

500,792

$

1,328,455

$

982,153

Adjusted operating margin

41.7

%

38.0

%

41.3

%

37.5

%

Provision for income taxes

$

53,080

$

27,365

$

101,179

$

49,708

Tax related items

22,983

21,867

45,780

50,147

Adjusted provision for income taxes

$

76,063

$

49,232

$

146,959

$

99,855

Income before income taxes

475,985

295,061

912,603

521,278

Effective tax rate

11.2

%

9.3

%

11.1

%

9.5

%

Acquisition related expenses

150,614

155,452

305,912

312,249

Acquisition related transaction costs

23,008

-

38,244

-

Charitable foundation contribution

-

-

-

40,000

Restructuring related expense

311

1,320

749

12,456

Adjusted income before income taxes

$

649,918

$

451,833

$

1,257,508

$

885,983

Adjusted tax rate

11.7

%

10.9

%

11.7

%

11.3

%

Diluted EPS

$

1.14

$

0.72

$

2.18

$

1.27

Acquisition related expenses

0.40

0.42

0.82

0.84

Acquisition related transaction costs

0.06

-

0.10

-

Charitable foundation contribution

-

-

-

0.11

Restructuring related expense

0.00

0.00

0.00

0.03

Tax related items

(0.06

)

(0.06

)

(0.12

)

(0.13

)

Adjusted diluted EPS*

$

1.54

$

1.08

$

2.98

$

2.11

* The sum of the individual per share amounts may not equal the total due to rounding.

ANALOG DEVICES, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended Six Months Ended

May 1, 2021 May 2, 2020 May 1, 2021 May 2, 2020



Gross margin $ 1,136,637 $ 846,674 $ 2,182,008 $ 1,694,816

Gross margin 68.4 % 64.3 % 67.8 % 64.7 %percentage

Acquisition related 40,711 44,395 85,709 89,411 expenses

Adjusted gross $ 1,177,348 $ 891,069 $ 2,267,717 $ 1,784,227 margin

Adjusted gross 70.9 % 67.7 % 70.4 % 68.1 %margin percentage



Operating expenses $ 616,947 $ 502,654 $ 1,198,458 $ 1,077,368

Percent of revenue 37.1 % 38.2 % 37.2 % 41.1 %

Acquisition related (109,903 ) (111,057 ) (220,203 ) (222,838 )expenses

Acquisition related (23,008 ) - (38,244 ) - transaction costs

Charitablefoundation - - - (40,000 )contribution

Restructuring (311 ) (1,320 ) (749 ) (12,456 )related expense

Adjusted operating $ 483,725 $ 390,277 $ 939,262 $ 802,074 expenses

Adjusted operating 29.1 % 29.6 % 29.2 % 30.6 %expenses percentage



Operating income $ 519,690 $ 344,020 $ 983,550 $ 617,448

Operating margin 31.3 % 26.1 % 30.5 % 23.6 %

Acquisition related 150,614 155,452 305,912 312,249 expenses

Acquisition related 23,008 - 38,244 - transaction costs

Charitablefoundation - - - 40,000 contribution

Restructuring 311 1,320 749 12,456 related expense

Adjusted operating $ 693,623 $ 500,792 $ 1,328,455 $ 982,153 income

Adjusted operating 41.7 % 38.0 % 41.3 % 37.5 %margin



Provision for $ 53,080 $ 27,365 $ 101,179 $ 49,708 income taxes

Tax related items 22,983 21,867 45,780 50,147

Adjusted provision $ 76,063 $ 49,232 $ 146,959 $ 99,855 for income taxes



Income before 475,985 295,061 912,603 521,278 income taxes

Effective tax rate 11.2 % 9.3 % 11.1 % 9.5 %

Acquisition related 150,614 155,452 305,912 312,249 expenses

Acquisition related 23,008 - 38,244 - transaction costs

Charitablefoundation - - - 40,000 contribution

Restructuring 311 1,320 749 12,456 related expense

Adjusted income $ 649,918 $ 451,833 $ 1,257,508 $ 885,983 before income taxes

Adjusted tax rate 11.7 % 10.9 % 11.7 % 11.3 %



Diluted EPS $ 1.14 $ 0.72 $ 2.18 $ 1.27

Acquisition related 0.40 0.42 0.82 0.84 expenses

Acquisition related 0.06 - 0.10 - transaction costs

Charitablefoundation - - - 0.11 contribution

Restructuring 0.00 0.00 0.00 0.03 related expense

Tax related items (0.06 ) (0.06 ) (0.12 ) (0.13 )

Adjusted diluted $ 1.54 $ 1.08 $ 2.98 $ 2.11 EPS*

* The sum of the individual per share amounts may not equal the total due torounding.

ANALOG DEVICES, INC.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(Unaudited)

(In thousands)

Trailing Twelve Months

Three Months Ended

May 1, 2021

May 1, 2021

Jan. 30, 2021

Oct 31, 2021

Aug. 1, 2020

Revenue

$

6,202,296

$

1,661,407

$

1,558,458

$

1,526,295

$

1,456,136

Net cash provided by operating activities

$

2,394,100

$

736,361

$

427,941

$

672,598

$

557,200

% of Revenue

39

%

44

%

27

%

44

%

38

%

Capital expenditures

$

(177,250

)

$

(59,170

)

$

(67,388

)

$

(29,888

)

$

(20,804

)

Free cash flow

$

2,216,850

$

677,191

$

360,553

$

642,710

$

536,396

% of Revenue

36

%

41

%

23

%

42

%

37

%

ANALOG DEVICES, INC.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(Unaudited)

(In thousands)



Trailing Twelve Three Months Ended Months

May 1, 2021 May 1, 2021 Jan. 30, 2021 Oct 31, 2021 Aug. 1, 2020

Revenue $ 6,202,296 $ 1,661,407 $ 1,558,458 $ 1,526,295 $ 1,456,136

Net cashprovided by $ 2,394,100 $ 736,361 $ 427,941 $ 672,598 $ 557,200 operatingactivities

% of Revenue 39 % 44 % 27 % 44 % 38 %

Capital $ (177,250 ) $ (59,170 ) $ (67,388 ) $ (29,888 ) $ (20,804 )expenditures

Free cash $ 2,216,850 $ 677,191 $ 360,553 $ 642,710 $ 536,396 flow

% of Revenue 36 % 41 % 23 % 42 % 37 %

ANALOG DEVICES, INC.

RECONCILIATION OF PROJECTED GAAP TO NON-GAAP RESULTS

(Unaudited)

Three Months Ending July 31, 2021

Reported

Adjusted

Revenue

$1.7 Billion

$1.7 Billion

(+/- $70 Million)

(+/- $70 Million)

Operating margin

32.9%

42.5% (1)

(+/-140 bps)

(+/-100 bps)

Nonoperating expense

~ $43 Million

~ $43 Million

Tax rate

11% to 13%

11% to 13% (2)

Earnings per share

$1.23

$1.61 (3)

(+/- $0.11)

(+/- $0.11)

ANALOG DEVICES, INC.

RECONCILIATION OF PROJECTED GAAP TO NON-GAAP RESULTS

(Unaudited)

Three Months Ending July 31, 2021

Reported Adjusted

Revenue $1.7 Billion $1.7 Billion

(+/- $70 Million) (+/- $70 Million)

Operating margin 32.9% 42.5% (1)

(+/-140 bps) (+/-100 bps)

Nonoperating expense ~ $43 Million ~ $43 Million

Tax rate 11% to 13% 11% to 13% (2)

Earnings per share $1.23 $1.61 (3)

(+/- $0.11) (+/- $0.11)

(1) Includes $163 million of adjustments related to acquisition related expenses and acquisition related transaction costs as previously defined in the Non-GAAP Financial Information section of this press release. This excludes acquisition related transaction costs that are contingent upon closing of the proposed Maxim Integrated Products, Inc. acquisition as we cannot reasonably predict the timing of this transaction.

(2) Includes $23 million of tax effects associated with the adjustments for acquisition related expenses and acquisition related transaction costs noted above.

(3) Includes $0.38 of adjustments related to the net impact of $0.44 of acquisition related expenses and acquisition related transaction costs, as well as $0.06 of tax effects on those items.

(ADI-WEB)

View source version on businesswire.com: https://www.businesswire.com/news/home/20210519005169/en/

CONTACT: For more information, please contact:

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

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

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