UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

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

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

Commission File No. 1-7819

Analog Devices, Inc.

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

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

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

     Indicate by check mark whether the registrant has submitted electronically and posted on it corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) YES þ NO o

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

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

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

     As of January 29, 2011 there were 299,610,446 shares of common stock of the registrant, $0.16 2/3 par value per share, outstanding.

 

 

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

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

	Three Months Ended
	January 29, 2011					January 30, 2010
Revenue		$	728,504				$	602,983
Cost of sales (1)			246,331					234,507
Gross margin			482,173					368,476
Operating expenses:
Research and development (1)			122,745					114,398
Selling, marketing, general and administrative (1)			100,022					88,481
Special charge			-					16,483
			222,767					219,362
Operating income from continuing operations			259,406					149,114
Nonoperating (income) expense:
Interest expense			2,830					2,538
Interest income			(2,285	)				(2,180	)
Other, net			41					489
			586					847
Income from continuing operations before income taxes			258,820					148,267
Provision for income taxes			43,214					28,667
Income from continuing operations, net of tax			215,606					119,600
Gain on sale of discontinued operations, net of tax			6,500					859
Net income		$	222,106				$	120,459
Shares used to compute earnings per share – basic			299,218					295,469
Shares used to compute earnings per share – diluted			308,848					304,730
Basic earnings per share from continuing operations			$0.72					$0.40
Basic earnings per share			$0.74					$0.41
Diluted earnings per share from continuing operations			$0.70					$0.39
Diluted earnings per share			$0.72					$0.40
Dividends declared and paid per share			$0.22					$0.20
(1) Includes stock-based compensation expense as follows:
Cost of sales			$    1,748					$    1,671
Research and development			$    5,585					$    5,359
Selling, marketing, general and administrative			$    5,270					$    4,805

See accompanying notes.

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

Assets		January 29, 2011				October 30, 2010

Cash and cash equivalents		$	1,570,321			$	1,070,000
Short-term investments			1,390,795				1,617,768
Accounts receivable, net			384,276				387,169
Inventory (1):
Raw materials			25,419				22,008
Work in process			170,950				171,390
Finished goods			86,611				84,080
			282,980				277,478
Deferred tax assets			69,275				74,710
Prepaid expenses and other current assets			39,382				51,874
Total current assets			3,737,029				3,478,999
Property, plant and equipment, at cost:
Land and buildings			404,164				401,277
Machinery and equipment			1,599,754				1,578,493
Office equipment			55,290				56,449
Leasehold improvements			64,223				65,326
			2,123,431				2,101,545
Less accumulated depreciation and amortization			1,654,890				1,628,880
Net property, plant and equipment			468,541				472,665
Deferred compensation plan investments			24,836				8,690
Other investments			3,283				1,317
Goodwill			256,243				255,580
Intangible assets, net			921				1,343
Deferred tax assets			54,582				52,765
Other assets			51,470				57,472
Total other assets			391,335				377,167
		$	4,596,905			$	4,328,831

(1) Includes $2,447 and $2,534 related to stock-based compensation at January 29, 2011 and October 30, 2010, respectively.

See accompanying notes.

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

Liabilities and Shareholders’ Equity		January 29, 2011				October 30, 2010

Accounts payable		$	125,876			$	133,111
Deferred income on shipments to distributors, net			253,254				242,848
Income taxes payable			73,304				60,421
Current portion of long-term debt			14,500				-
Accrued liabilities			141,557				207,087
Total current liabilities			608,491				643,467
Long-term debt			523,046				400,635
Deferred income taxes			1,597				1,800
Deferred compensation plan liability			24,852				8,690
Other non-current liabilities			74,492				74,522
Total non-current liabilities			623,987				485,647
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, 299,610,446 shares issued and outstanding (298,652,994 on October 30, 2010)			49,936				49,777
Capital in excess of par value			297,126				286,969
Retained earnings			3,052,862				2,896,566
Accumulated other comprehensive loss			(35,497	)			(33,595	)
Total shareholders’ equity			3,364,427				3,199,717
		$	4,596,905			$	4,328,831

See accompanying notes.

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

(thousands)		Three Months Ended
		January 29, 2011				January 30, 2010

Cash flows from operating activities:
Net income		$	222,106			$	120,459
Adjustments to reconcile net income to net cash provided by operations:
Depreciation			29,493				29,281
Amortization of intangibles			392				1,801
Stock-based compensation expense			12,603				11,835
Gain on sale of business			(6,500	)			(859	)
Excess tax benefit-stock options			(3,607	)			(53	)
Deferred income taxes			(2,305	)			5,597
Non-cash portion of special charge			-				487
Other non-cash activity			163				178
Changes in operating assets and liabilities			(35,594	)			45,047
Total adjustments			(5,355	)			93,314
Net cash provided by operating activities			216,751				213,773
Cash flows from investing activities:
Purchases of short-term available-for-sale investments			(664,148	)			(739,309	)
Maturities of short-term available-for-sale investments			651,887				625,921
Sales of short-term available-for-sale investments			239,419				24,977
Proceeds related to sale of businesses			10,000				63,036
Additions to property, plant and equipment			(25,547	)			(17,179	)
Increase in other assets			(3,475	)			(407	)
Net cash provided by (used for) investing activities			208,136				(42,961	)
Cash flows from financing activities:
Proceeds from long-term debt			145,000				-
Dividend payments to shareholders			(65,810	)			(58,870	)
Repurchase of common stock			(113,605	)			-
Net proceeds from employee stock plans			101,967				163,487
Other financing activities			4,576				-
Excess tax benefit-stock options			3,607				53
Net cash provided by financing activities			75,735				104,670
Effect of exchange rate changes on cash			(301	)			(943	)
Net increase in cash and cash equivalents			500,321				274,539
Cash and cash equivalents at beginning of period			1,070,000				639,729
Cash and cash equivalents at end of period		$	1,570,321			$	914,268

See accompanying notes.

ANALOG DEVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JANUARY 29, 2011
(all tabular amounts in thousands except per share amounts and percentages)

Note 1 – Basis of Presentation

     In the opinion of management, the information furnished in the accompanying condensed consolidated financial statements reflects all normal recurring adjustments that are necessary to fairly state the results for these interim periods and should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended October 30, 2010 and related notes. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending October 29, 2011 or any future period.

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

     Certain amounts reported in previous years have been reclassified to conform to the fiscal 2011 presentation. Such reclassified amounts were immaterial. The Company has a 52-53 week fiscal year that ends on the Saturday closest to the last day in October. Fiscal 2011 and fiscal 2010 are 52-week fiscal years.

Note 2 – Revenue Recognition

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

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

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

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

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

     Title to the inventory transfers to the distributor at the time of shipment or delivery to the distributor, and payment from the distributor is due in accordance with the Company’s standard payment terms. These payment terms are not contingent upon the distributors’ sale of the products to their customers. Upon title transfer to distributors, inventory is reduced for the cost of

goods shipped, the margin (sales less cost of sales) is recorded as “deferred income on shipments to distributors, net” and an account receivable is recorded.

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

     As of January 29, 2011 and October 30, 2010, the Company had gross deferred revenue of $336.3 million and $327.2 million, respectively, and gross deferred cost of sales of $83.0 million and $84.4 million, respectively. Deferred income on shipments to distributors increased by approximately $10.5 million in the first three months of fiscal 2011 primarily, as a result of the Company’s shipments to its distributors in the first quarter of fiscal 2011 exceeding the distributors’ sales to their customers during this same time period.

     Shipping costs are charged to cost of sales as incurred.

     The Company generally offers a 12-month warranty for its products. The Company’s warranty policy provides for replacement of the defective product. Specific accruals are recorded for known product warranty issues. Product warranty expenses during either of the three-month periods ended January 29, 2011 and January 30, 2010 were not material.

Note 3 – Stock-Based Compensation

     Grant-Date Fair Value – The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of stock option awards. The grant-date fair value of restricted stock units represents the fair value of the Company’s common stock on the date of grant, reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting. Information pertaining to the Company’s stock option awards and the related estimated weighted-average assumptions used to calculate the fair value of stock options granted during the three-month periods ended January 29, 2011 and January 30, 2010 are as follows:

		Three Months Ended
Stock Options		January 29, 2011				January 30, 2010
Options granted (in thousands)			1,873				1,812
Weighted-average exercise price per share			$37.53				$31.55
Weighted-average grant-date fair value per share			$8.64				$7.80
Assumptions:
Weighted-average expected volatility			29.36%				31.43%
Weighted-average expected term (in years)			5.3				5.3
Weighted-average risk-free interest rate			2.1%				2.6%
Weighted-average expected dividend yield			2.3%				2.5%

     Expected volatility — The Company is responsible for estimating volatility and has considered a number of factors, including third-party estimates, when estimating volatility. The Company currently believes that the exclusive use of implied volatility results in the best estimate of the grant-date fair value of employee stock options because it reflects the market’s current expectations of future volatility. In evaluating the appropriateness of exclusively relying on implied volatility, the Company concluded that: (1) options in the Company’s common stock are actively traded with sufficient volume on several exchanges; (2) the market prices of both the traded options and the underlying shares are measured at a similar point in time to each other and on a date close to the grant date of the employee share options; (3) the traded options have exercise prices that are both near-the-money and close to the exercise price of the employee share options; and (4) the remaining maturities of the traded options used to estimate volatility are at least one year.

     Expected term — The Company uses historical employee exercise and option expiration data to estimate the expected term assumption for the Black-Scholes grant-date valuation. The Company believes that this historical data is currently the best estimate of the expected term of a new option, and that generally its employees exhibit similar exercise behavior.

     Risk-free interest rate — The yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption is used as the risk-free interest rate.

     Expected dividend yield — Expected dividend yield is calculated by annualizing the cash dividend declared by the Company’s Board of Directors for the current quarter and dividing that result by the closing stock price on the date of grant. Until such time as the Company’s Board of Directors declares a cash dividend for an amount that is different from the current quarter’s cash dividend, the current dividend will be used in deriving this assumption. Cash dividends are not paid on options, restricted stock or restricted stock units.

     Stock-Based Compensation Expense

     The amount of stock-based compensation expense recognized during a period is based on the value of the awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock-based award. Based on an analysis of its historical forfeitures, the Company has applied an annual forfeiture rate of 4.3% to all unvested stock-based awards as of January 29, 2011. The rate of 4.3% represents the portion that is expected to be forfeited each year over the vesting period. This analysis will be re-evaluated quarterly and the forfeiture rate will be adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest.

     Stock-Based Compensation Activity

     A summary of the activity under the Company’s stock option plans as of January 29, 2011 and changes during the three- month period then ended is presented below:

									Weighted-
									Average
		Options			Weighted-				Remaining				Aggregate
		Outstanding			Average Exercise				Contractual				Intrinsic
Activity during the Three Months Ended January 29, 2011		(in thousands)			Price Per Share				Term in Years				Value
Options outstanding at October 30, 2010			43,079			$29.87
Options granted			1,873			$37.53
Options exercised			(4,020)			$25.38
Options forfeited			(62)			$27.23
Options expired			(1,996)			$44.46
Options outstanding at January 29, 2011			38,874			$29.96				5.0				$343,347
Options exercisable at January 29, 2011			22,054			$31.32				3.9				$172,972
Options vested or expected to vest at January 29, 2011 (1)			37,733			$29.99				4.9				$332,683

     During the three months ended January 29, 2011 and January 30, 2010, the total intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid by the employee to exercise the options) was $46.7 million and $13.2 million, respectively, and the total amount of proceeds received by the Company from exercise of these options was $102.0 million and $187.6 million, respectively. Proceeds from stock option exercises pursuant to employee stock plans in the Company’s statement of cash flows during the three months ended January 29, 2011 and January 30, 2010 of $102.0 million and $163.5 million, respectively, are net of the value of shares surrendered by employees in certain limited circumstances to satisfy the exercise price of options, and to satisfy employee tax obligations upon vesting of restricted stock units and in connection with the exercise of stock options granted to the Company’s employees under the Company’s equity compensation plans. The withholding amount is based on the Company’s minimum statutory withholding requirement. The total grant-date fair value of stock options that vested during the three months ended January 29, 2011 and January 30, 2010, was approximately $25.3 million and $31.4 million, respectively.

     A summary of the Company’s restricted stock unit award activity as of January 29, 2011 and changes during the three- month period then ended is presented below:

		Restricted				Weighted-
		Stock Units				Average Grant
Activity during the Three Months Ended January 29, 2011		Outstanding				Date Fair Value
		(in thousands)				Per Share
Restricted stock units outstanding at October 30, 2010			1,265				$28.21
Units granted			850				$34.92
Restrictions lapsed			(11)				$29.96
Forfeited			(5)				$31.77
Restricted stock units outstanding at January 29, 2011			2,099				$30.91

     As of January 29, 2011, there was $128.1 million (before tax consideration) of total unrecognized compensation cost related to unvested share-based awards, including stock options, restricted stock and restricted stock units. That cost is expected to be recognized over a weighted-average period of 1.6 years.

Note 4 – Comprehensive Income

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

		Three Months Ended
	January 29, 2011				January 30, 2010
Income from continuing operations, net of tax			$ 215,606			$	119,600
Foreign currency translation adjustments			(21	)			2,132
Change in unrealized holding gains (net of taxes of $23 and $5, respectively) on securities classified as short-term investments			162				36
Change in unrealized holding gains (losses) (net of taxes of $40 and $9, respectively) on securities classified as other investments			74				(17	)
Change in unrealized losses (net of taxes of $401 and $1,056, respectively) on derivative instruments designated as cash flow hedges			(3,023	)			(7,005	)
Pension plans
Prior service cost			-				(1	)
Transition asset			1				2
Net actuarial gain			905				300
Other comprehensive loss			(1,902	)			(4,553	)
Comprehensive income from continuing operations			213,704				115,047
Gain on sale of discontinued operations, net of tax			6,500				859
Comprehensive income			$220,204			$	115,906

  The components of accumulated other comprehensive loss at January 29, 2011 and October 30, 2010 consisted of the following:

		January 29, 2011				October 30, 2010
Foreign currency translation adjustment			$   (1,412	)			$   (1,391	)
Unrealized gains on available-for-sale securities			897				822
Unrealized losses on available-for-sale securities			(30	)			(191	)
Unrealized gains on derivative instruments			3,110				6,133
Pension plans
Transition obligation			(128	)			(129	)
Net actuarial loss			(37,934	)			(38,839	)
Total accumulated other comprehensive loss			$   (35,497	)			$   (33,595	)

     The aggregate fair value of investments with unrealized losses as of January 29, 2011 and October 30, 2010 was $634.9 million and $731.0 million, respectively. These unrealized losses are primarily related to commercial paper that earns lower interest rates than current market rates. None of these investments have been in a loss position for more than twelve months.

     Unrealized gains and losses on available-for-sale securities classified as short-term investments at January 29, 2011 and October 30, 2010 are as follows:

		January 29, 2011				October 30, 2010
Unrealized gains on available-for-sale securities classified as short-term investments			$  168				$  165
Unrealized losses on available-for-sale securities classified as short-term investments			(35)				(217)
Net unrealized gains (losses) on securities classified as short-term investments			$  133				$  (52)

Note 5 – Earnings Per Share

     Basic earnings per share is computed based only on the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other potentially dilutive securities using the treasury stock method. In calculating diluted earnings per share, the dilutive effect of stock options is computed using the average market price for the respective period. In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of stock options that are in-the-money and restricted stock units. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of stock options. Potential shares related to certain of the Company’s outstanding stock options were excluded because they were anti-dilutive. Those potential shares, determined based on the weighted average exercise prices during the respective years, related to the Company’s outstanding stock options could be dilutive in the future.

		Three Months Ended
	January 29, 2011				January 30, 2010
Income from continuing operations, net of tax		$	215,606			$	119,600
Gain on sale of discontinued operations, net of tax			6,500				859
Net income		$	222,106			$	120,459
Basic shares:
Weighted-average shares outstanding			299,218				295,469
Earnings per share-basic:
Income from continuing operations, net of tax		$	0.72			$	0.40
Gain on sale of discontinued operations, net of tax			0.02				0.00
Net income (1)		$	0.74			$	0.41
Diluted shares:
Weighted-average shares outstanding			299,218				295,469
Assumed exercise of common stock equivalents			9,630				9,261
Weighted-average common and common equivalent shares			308,848				304,730
Earnings per share-diluted:
Income from continuing operations, net of tax		$	0.70			$	0.39
Gain on sale of discontinued operations, net of tax			0.02				0.00
Net income (1)		$	0.72			$	0.40
Anti-dilutive common stock equivalents related to outstanding stock options			8,097				19,159

          Note 6 – Special Charges

A summary of the Company’s special charges and accruals related to ongoing actions is as follows:

									Closure of
	Closure of Wafer								Wafer
	Fabrication				Reduction of				Fabrication
	Facility				Operating				Facility					Total Special
Income Statement	in Sunnyvale				Costs				in Cambridge					Charges
Workforce reductions		$	—			$	1,627			$	—			$	1,627
Total Fiscal 2008 Charges		$	—			$	1,627			$	—			$	1,627
Fiscal 2009 Charges:
Workforce reductions			—				26,583				7,446				34,029
Facility closure costs			—				2,411				57				2,468
Non-cash impairment charge			—				839				14,629				15,468
Other items			—				500				—				500
Total Fiscal 2009 Charges		$	—			$	30,333			$	22,132			$	52,465
Fiscal 2010 Charges:
Workforce reductions			—				10,908				—				10,908
Facility closure costs			375				—				4,689				5,064
Non-cash impairment charge			—				487				—				487
Other items			—				24				—				24
Total Fiscal 2010 Charges		$	375			$	11,419			$	4,689			$	16,483

					Closure of
					Wafer
	Reduction of				Fabrication
	Operating				Facility				Total Special
Balance Sheet	Costs				in Cambridge				Charges
Balance at October 30, 2010		$	5,546			$	1,963			$	7,509
Severance payments			(1,300	)			(457	)			(1,757	)
Facility closure costs							(560	)			(560	)
Effect of foreign currency on accrual			(10	)			—				(10	)
Balance at January 29, 2011		$	4,236			$	946			$	5,182

   Closure of Wafer Fabrication Facility in Sunnyvale

     The Company ceased production at its California wafer fabrication facility in November 2006. The Company paid the related lease obligation costs on a monthly basis over the remaining lease term, which expired in March 2010. We recorded a one-time settlement charge of $0.4 million in the first quarter of fiscal 2010 related to the termination of the lease. This action was completed during fiscal 2010.

   Reduction of Operating Costs

     During the fourth quarter of fiscal 2008, in order to further reduce its operating cost structure, the Company recorded a special charge of $1.6 million for severance and fringe benefit costs in accordance with its ongoing benefit plan or statutory requirements at foreign locations for 19 engineering, and selling, marketing, general and administrative (SMG&A) employees.

     During fiscal 2009, the Company recorded an additional charge of $30.3 million related to this cost reduction action. Approximately $2.1 million of this charge was for lease obligation costs for facilities that the Company ceased using during the first quarter of fiscal 2009; approximately $0.8 million was for the write-off of property, plant and equipment no longer used as a result of this action; and approximately $0.5 million was for contract termination costs and approximately $0.3 million was for clean-up and closure costs that were expensed as incurred. The remaining $26.6 million related to the severance and fringe benefit costs recorded in accordance with the Company’s ongoing benefit plan or statutory requirements at foreign locations for 245 manufacturing employees and 302 engineering and SMG&A employees.

     During the first quarter of fiscal 2010, the Company recorded an additional charge of $11.4 million related to the further reduction of its operating cost structure. Approximately $10.9 million of this charge was for severance and fringe benefit costs recorded in accordance with the Company’s ongoing benefit plan or statutory requirements at foreign locations for 149 engineering and SMG&A employees. Approximately $0.5 million of the charge relates to the Company’s decision to abandon efforts to develop a particular expertise in power management, resulting in the impairment of related intellectual property.

     The Company terminated the employment of all employees associated with this action and is paying amounts owed to them as income continuance.

   Closure of a Wafer Fabrication Facility in Cambridge

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

     The Company finished production in the Cambridge wafer fabrication facility and began clean-up activities during the fourth quarter of fiscal 2009. During the fourth quarter of fiscal 2009, the Company reversed approximately $1.8 million of its severance accrual. The accrual reversal was required because 51 employees either voluntarily left the Company or found alternative employment within the Company. In addition, the Company recorded a special charge of approximately $1.7 million for the impairment of manufacturing assets that were originally going to be moved to the Company’s other wafer fabrication facilities but were no longer needed at those facilities and therefore had no future use. The Company also recorded a special charge of $0.1 million for clean-up costs as the Company began its cleanup of the Cambridge wafer fabrication facility at the end of the fourth quarter of fiscal 2009. The Company terminated the employment of all employees associated with this charge and is paying amounts owed to them as income continuance.

     During the first quarter of fiscal 2010, the Company recorded an additional charge of $4.7 million related to this cost reduction action. Approximately $3.4 million of the charge related to lease obligation costs for the Cambridge wafer fabrication facility, which the Company ceased using in the first quarter of fiscal 2010. The remaining $1.3 million of the charge related to clean-up and closure costs that were expensed as incurred.

Note 7 – Segment Information

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

Revenue Trends by End Market

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

		Three Months Ended												Three Months Ended
		January 29, 2011												January 30, 2010
						% of												% of
		Revenue					Revenue			Y/Y%				Revenue					Revenue
Industrial		$	336,799				46%				28%			$	262,786				44%
Automotive			94,685				13%				30%				72,826				12%
Consumer			120,940				17%				-1%				121,590				20%
Communications			163,478				22%				22%				133,471				22%
Computer			12,602				2%				2%				12,310				2%
Total revenue		$	728,504				100%				21%			$	602,983				100%

Revenue Trends by Product Type

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

		Three Months Ended												Three Months Ended
		January 29, 2011												January 30, 2010
						% of												% of
		Revenue					Revenue			Y/Y%				Revenue					Revenue*
Converters		$	329,791				45%				13%			$	291,174				48%
Amplifiers / Radio frequency			195,635				27%				33%				147,591				24%
Other analog			93,757				13%				29%				72,494				12%
Subtotal analog signal processing			619,183				85%				21%				511,259				85%
Power management & reference			53,357				7%				36%				39,197				7%
Total analog products		$	672,540				92%				22%			$	550,456				91%
Digital signal processing			55,964				8%				7%				52,527				9%
Total revenue		$	728,504				100%				21%			$	602,983				100%

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

Revenue Trends by Geographic Region

     Revenue by geographic region, based upon customer location, for the three-month periods ended January 29, 2011 and January 30, 2010 was as follows:

		Three Months Ended
Region		January 29, 2011				January 30, 2010
United States		$	130,397			$	116,963
Rest of North and South America			41,893				29,879
Europe			191,289				142,066
Japan			104,167				110,350
China			148,121				106,522
Rest of Asia			112,637				97,203
Total revenue		$	728,504			$	602,983

     In the three-month period ended January 29, 2011, the predominant countries comprising “Rest of North and South America” are Canada and Mexico; the predominant countries comprising “Europe” are Germany, Sweden, France and the United Kingdom; and the predominant countries comprising “Rest of Asia” are Taiwan and South Korea.

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

Note 8 – Fair Value

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

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

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

     Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. As of January 29, 2011 and October 30, 2010 the Company held no assets or liabilities valued using Level 3 inputs.

     The table below sets forth by level the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of January 29, 2011 and October 30, 2010. The table excludes cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value.

		January 29, 2011												October 30, 2010
		Fair Value measurement at												Fair Value measurement at
		Reporting Date using:												Reporting Date using:
		Quoted												Quoted
		Prices in												Prices in
		Active												Active
		Markets				Significant								Markets				Significant
		for				Other								for				Other
		Identical				Observable								Identical				Observable
		Assets				Inputs								Assets				Inputs
		(Level 1)				(Level 2)				Total				(Level 1)				(Level 2)				Total
Assets
Cash equivalents:
Available-for-sale:
Institutional money market funds		$	1,126,866			$	—			$	1,126,866			$	921,034			$	—			$	921,034
Corporate obligations			—				419,666				419,666				—				99,959				99,959
Short — term investments:
Available-for-sale:
Securities with one year or less to maturity:
Corporate obligations (1)			—				1,343,208				1,343,208				—				1,520,220				1,520,220
Floating rate notes, issued at par			—				—				—				—				50,000				50,000
Securities with greater than one year to maturity:
Floating rate notes (1)			—				17,587				17,587				—				17,548				17,548
Other assets:
Forward foreign currency exchange contracts(2)			—				4,490				4,490				—				7,256				7,256
Deferred compensation investments			24,836				—				24,836				8,690				—				8,690
Other investments			1,429				—				1,429				1,317				—				1,317
Interest rate swap agreements			—				18,633				18,633				—				26,801				26,801
Total assets measured at fair value		$	1,153,131			$	1,803,584			$	2,956,715			$	931,041			$	1,721,784			$	2,652,825
Liabilities
Long-term debt
$375 million aggregate principle debt (3)		$	—			$	392,546			$	392,546			$	—			$	400,635			$	400,635
Total liabilities measured at fair value		$	—			$	392,546			$	392,546			$	—			$	400,635			$	400,635

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

     Cash equivalents and short-term investments — These investments are adjusted to fair value based on quoted market prices or are determined using a yield curve model based on current market rates.

     Deferred compensation plan investments and other investments — The fair value of these mutual fund, money market fund and equity investments are based on quoted market prices.

     Long-term debt — The fair value of long-term debt is based on quotes received from third party banks.

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

     Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow hedges, is

based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking into consideration current interest rates as well as the creditworthiness of the counterparty for assets and the Company’s creditworthiness for liabilities.

     The Company accounts for its equity investments in privately held companies under the cost method. These investments are subject to periodic impairment review and measured and recorded at fair value when they are deemed to be other-than-temporarily impaired. The aggregate carrying value of the Company’s investments in privately held companies was approximately $1.9 million and was classified in other investments on the Company’s Condensed Consolidated Balance Sheets as of January 29, 2011. The Company did not have any investments in privately held companies as of October 30, 2010.

Note 9 – Derivatives

     Foreign Exchange Exposure Management — The Company enters into forward foreign currency exchange contracts to offset certain operational and balance sheet exposures from the impact of changes in foreign currency exchange rates. Such exposures result from the portion of the Company’s operations, assets and liabilities that are denominated in currencies other than the U.S. dollar, primarily the Euro; other exposures include the Philippine Peso and the British Pound. These foreign currency exchange contracts are entered into to support transactions made in the normal course of business, and accordingly, are not speculative in nature. The contracts are for periods consistent with the terms of the underlying transactions, generally one year or less. Hedges related to anticipated transactions are designated and documented at the inception of the respective hedges as cash flow hedges and are evaluated for effectiveness monthly. Derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified. As the terms of the contract and the underlying transaction are matched at inception, forward contract effectiveness is calculated by comparing the change in fair value of the contract to the change in the forward value of the anticipated transaction, with the effective portion of the gain or loss on the derivative instrument reported as a component of accumulated other comprehensive (loss) income (OCI) in shareholders’ equity and reclassified into earnings in the same period during which the hedged transaction affects earnings. Any residual change in fair value of the instruments, or ineffectiveness, is recognized immediately in other (income) expense. Additionally, the Company enters into forward foreign currency contracts that economically hedge the gains and losses generated by the re-measurement of certain recorded assets and liabilities in a non-functional currency. Changes in the fair value of these undesignated hedges are recognized in other (income) expense immediately as an offset to the changes in the fair value of the asset or liability being hedged. As of January 29, 2011 and October 30, 2010, the total notional amount of these undesignated hedges was $46.1 million and $42.1 million, respectively. The fair value of these hedging instruments in the Company’s condensed consolidated balance sheets as of January 29, 2011 was $0.7 million. As of October 30, 2010, the amount was immaterial.

     Interest Rate Exposure Management — On June 30, 2009, the Company entered into interest rate swap transactions related to its outstanding 5.0% senior unsecured notes where the Company swapped the notional amount of its $375 million of fixed rate debt at 5.0% into floating interest rate debt through July 1, 2014. Under the terms of the swaps, the Company will (i) receive on the $375 million notional amount a 5.0% annual interest payment that is paid in two installments on the 1st of every January and July, commencing January 1, 2010 through and ending on the maturity date; and (ii) pay on the $375 million notional amount an annual three-month LIBOR plus 2.05% (2.35% as of January 29, 2011) interest payment, payable in four installments on the 1st of every January, April, July and October, commencing on October 1, 2009 and ending on the maturity date. The LIBOR-based rate is set quarterly three months prior to the date of the interest payment. The Company designated these swaps as fair value hedges. The fair value of the swaps at inception was zero and subsequent changes in the fair value of the interest rate swaps were reflected in the carrying value of the interest rate swaps on the balance sheet. The carrying value of the debt on the balance sheet was adjusted by an equal and offsetting amount. The gain or loss on the hedged item (that is, the fixed-rate borrowings) attributable to the hedged benchmark interest rate risk and the offsetting gain or loss on the related interest rate swaps for the three-month periods ended January 29, 2011 and January 30, 2010 are as follows:

Income Statement		January 29, 2011												January 30, 2010
Classification		Loss on Swaps				Gain on Note				Net Income Effect				Gain on Swaps				Loss on Note				Net Income Effect
Other income		$	(8,168	)		$	8,168			$	—			$	1,720			$	(1,720	)		$	—

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

     The market risk associated with the Company’s derivative instruments results from currency exchange rate or interest rate movements that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. The counterparties to the agreements relating to the Company’s derivative instruments consist of a number of major international financial institutions with high credit ratings. The Company does not believe that there is significant risk of nonperformance by these counterparties because the Company continually monitors the credit ratings of such counterparties. Furthermore, none of the Company’s derivative transactions are subject to collateral or other security arrangements and none contain provisions that are dependent on the Company’s credit ratings from any credit rating agency. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Company’s exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of

counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the obligations of the Company to the counterparties. As a result of the above considerations, the Company does not consider the risk of counterparty default to be significant.

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

     The total notional amount of derivative instruments designated as hedging instruments as of January 29, 2011 and October 30, 2010 was as follows: $375 million of interest rate swap agreements accounted for as fair value hedges, and $143.8 million and $128 million, respectively, of cash flow hedges denominated in Euros, British Pounds and Philippine Pesos. The fair value of these hedging instruments in the Company’s condensed consolidated balance sheets as of January 29, 2011 and October 30, 2010 was as follows:

				Fair Value at				Fair Value at
		Balance Sheet Location		January 29, 2011				October 30, 2010
Interest rate swap agreements		Other assets		$	18,633			$	26,801
Forward foreign currency exchange contracts		Prepaid expenses and other current assets		$	3,789			$	7,542

     The effect of derivative instruments designated as cash flow hedges on the condensed consolidated statements of income for the three-month periods ended January 29, 2011 and January 30, 2010 are as follows:

		January 29, 2011				January 30, 2010
Loss recognized in OCI on derivatives (net of tax of $346 in 2011 and $695 in 2010)		$	(2,611	)		$	(4,608	)
Gain reclassified from OCI into income (net of tax of $55 in 2011 and $361 in 2010)		$	(412	)		$	(2,397	)

     The amounts reclassified into earnings before tax are recognized in cost of sales and operating expenses for the three-month periods ended January 29, 2011 and January 30, 2010 are as follows:

		January 29, 2011				January 30, 2010
Cost of sales		$	434			$	1,393
Research and development		$	29			$	710
Selling, marketing, general and administrative		$	4			$	655

     All derivative gains and losses included in OCI will be reclassified into earnings within the next 12 months. There was no ineffectiveness in the three-month periods ended January 29, 2011 or January 30, 2010.

Note 10 – Goodwill and Intangible Assets

Goodwill

     The Company annually evaluates goodwill for impairment as well as whenever events or changes in circumstances suggest that the carrying value of goodwill may not be recoverable. The Company tests goodwill for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis on the first day of the fourth quarter (on or about August 1) or more frequently if indicators of impairment exist. For our latest annual impairment assessment which occurred on August 1, 2010, the Company identified its reporting units to be its five operating segments, which meet the aggregation criteria for one reportable segment. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company determines the fair value of its reporting units using the income approach methodology of valuation that includes the discounted cash flow method as well as other generally accepted valuation methodologies. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. No impairment of goodwill resulted in any of the fiscal years presented. The Company’s next annual

impairment assessment will be made on the first day of the fourth quarter of fiscal 2011 unless indicators arise that would require the Company to reevaluate at an earlier date. The following table presents the changes in goodwill during the first three months of fiscal 2011:

	Three Months
	Ended
	January 29, 2011
Balance at beginning of period		$	255,580
Foreign currency translation adjustment			663
Balance at end of period		$	256,243

Intangible Assets

          The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is measured by comparison of their carrying value to future undiscounted cash flows the assets are expected to generate over their remaining economic lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique.

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

		January 29, 2011								October 30, 2010
		Gross								Gross
		Carrying				Accumulated				Carrying				Accumulated
		Amount				Amortization				Amount				Amortization
Technology-based		$	6,146			$	5,575			$	7,166			$	6,323
Customer relationships			2,803				2,453				2,858				2,358
Total		$	8,949			$	8,028			$	10,024			$	8,681

          Intangible assets are amortized on a straight-line basis over their estimated useful lives or on an accelerated method of amortization that is expected to reflect the estimated pattern of economic use. The remaining amortization expense will be recognized over a weighted-average period of approximately 0.6 years.

     Amortization expense was $0.4 million and $1.8 million for the three-month periods ended January 29, 2011 and January 30, 2010, respectively.

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

		Fiscal				Amortization
		Year				Expense
		Remainder of 2011				$	921

Note 11 – Pension Plans

     The Company has various defined benefit pension and other retirement plans for certain non-U.S. employees that are consistent with local statutory requirements and practices. The Company’s funding policy for its foreign defined benefit pension plans is consistent with the local requirements of each country. The plans’ assets consist primarily of U.S. and non-U.S. equity securities, bonds, property and cash.

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

		Three Months Ended
	January 29, 2011				January 30, 2010
Service cost		$	2,224			$	1,507
Interest cost			2,753				2,464
Expected return on plan assets			(2,645	)			(2,849	)
Amortization of initial net obligation (asset)			4				(7	)
Amortization of net loss (gain)			393				(24	)
Net periodic pension cost		$	2,729			$	1,091

     Pension contributions of $3.5 million were made by the Company during the three months ended January 29, 2011. The Company presently anticipates contributing an additional $5.5 million to fund its defined benefit pension plans in fiscal year 2011 for a total of $9.0 million.

Note 12 – Revolving Credit Facility

     As of January 29, 2011, the Company had $2,961.1 million of cash and cash equivalents and short-term investments, of which $922.4 million was held in the United States. The balance of the Company’s cash and cash equivalents and short-term investments was held outside the United States in various foreign subsidiaries. As the Company intends to reinvest certain of its foreign earnings indefinitely, this cash is not available to meet certain of the Company’s cash requirements in the United States, including for cash dividends and common stock repurchases. The Company entered into a five-year, $165 million unsecured revolving credit facility with certain institutional lenders in May 2008. To date, the Company has not borrowed under this credit facility but the Company may borrow in the future and use the proceeds for support of commercial paper issuance, stock repurchases, dividend payments, acquisitions, capital expenditures, working capital and other lawful corporate purposes. Any advances under this credit agreement will accrue interest at rates that are equal to LIBOR plus a margin that is based on the Company’s leverage ratio. The terms of this facility also include financial covenants that require the Company to maintain a minimum interest coverage ratio and not exceed a maximum leverage ratio. As of January 29, 2011, the Company was compliant with these covenants. The terms of the facility also impose restrictions on the Company’s ability to undertake certain transactions, to create certain liens on assets and to incur certain subsidiary indebtedness.

Note 13 – Debt

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

     On June 30, 2009, the Company entered into interest rate swap transactions where the Company swapped the notional amount of its $375 million of fixed rate debt at 5.0% into floating interest rate debt through July 1, 2014. Under the terms of the swaps, the Company will (i) receive on the $375 million notional amount a 5.0% annual interest payment that is paid in two installments on the 1st business day of every January and July, commencing January 1, 2010 through and ending on the maturity date; and (ii) pay on the $375 million notional amount an annual three-month LIBOR plus 2.05% (2.35% as of January 29, 2011) interest payment, payable in four installments on the 1st business day of every January, April, July and October, commencing on October 1, 2009 and ending on the maturity date. The LIBOR- based rate is set quarterly three months prior to the date of the interest payment. The Company designated these swaps as fair value hedges. The changes in the fair value of the interest rate swaps were reflected in the carrying value of the interest rate swaps in other assets on the balance sheet. The carrying value of the debt on the balance sheet was adjusted by an equal and offsetting amount.

     On December 22, 2010, Analog Devices Holdings B.V. a wholly owned subsidiary of the Company, entered into a credit agreement with Bank of America, N.A., London Branch as administrative agent. The borrower’s obligations are guaranteed by the Company. The credit agreement provides for a term loan facility of $145 million, which matures on December 22, 2013. The terms of the agreement provide for a three-year principle amortization schedule with $3.6 million payable quarterly every March, June, September and December with the balance payable upon the maturity date. The loan will bear interest at a fluctuating rate for each period equal to the annual LIBOR rate applicable to that interest period plus 1.25% (1.55% as of January 29, 2011). The terms of this facility include limitations on subsidiary indebtedness and on liens against the assets of the Company and its subsidiaries, and also include financial covenants that require the Company to maintain a minimum interest coverage ratio and not exceed a maximum leverage ratio. As of January 29, 2011, the Company was compliant with these covenants. As of January 29, 2011, $14.5 million of this debt was classified as short-term.

Note 14 – Common Stock Repurchase

     The Company’s common stock repurchase program has been in place since August 2004. In the aggregate, the Board of Directors has authorized the Company to repurchase $5 billion of the Company’s common stock under the program. Under the program, the Company may repurchase outstanding shares of its common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of the Company’s Board of Directors, the repurchase program will expire when the Company has repurchased all shares authorized under the program. As of January 29, 2011, the Company had repurchased a total of approximately 119.1 million shares of its common stock for approximately $4,061.8 million under this program. An additional $938.2 million remains available for repurchase of shares under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. Any future common stock repurchases will be dependent upon several factors including the amount of cash available to the Company in the United States, and the Company’s financial performance, outlook and liquidity. The Company also from time to time repurchases shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units, or in certain limited circumstances to satisfy the exercise price of options granted to the Company’s employees under the Company’s equity compensation plans.

Note 15 – Discontinued Operations

     In November 2007, the Company entered into a purchase and sale agreement with certain subsidiaries of ON Semiconductor Corporation to sell the Company’s CPU voltage regulation and PC thermal monitoring business which consisted of core voltage regulator products for the central processing unit in computing and gaming applications and temperature sensors and fan-speed controllers for managing the temperature of the central processing unit. In connection with the purchase and sale agreement, $7.5 million was placed into escrow and was excluded from the gain calculations. During the third quarter of fiscal 2008, additional proceeds were released from escrow and an additional pre-tax gain of $6.6 million, or $3.8 million net of tax, was recorded as a gain on sale of discontinued operations. Additionally, at the time of the sale, the Company entered into a one-year manufacturing supply agreement with a subsidiary of ON Semiconductor Corporation for an additional $37 million.

The Company has allocated the proceeds from this arrangement based on the fair value of the two elements of this transaction: (i) the sale of a business and (ii) the obligation to manufacture product for a one-year period. As a result, $85 million was recorded as a liability related to the manufacturing supply agreement, all of which has been utilized. The liability was included in current liabilities of discontinued operations on the Company’s consolidated balance sheet. The Company recorded the revenue associated with this manufacturing supply agreement in discontinued operations. In the first quarter of fiscal 2010, additional proceeds of $1 million were released from escrow and $0.6 million net of tax was recorded as additional gain from the sale of discontinued operations. The Company does not expect any additional proceeds from this sale.

     In September 2007, the Company entered into a definitive agreement to sell its Baseband Chipset Business to MediaTek Inc. The decision to sell the Baseband Chipset Business was due to the Company’s decision to focus its resources in areas where its signal processing expertise can provide unique capabilities and earn superior returns. The cash proceeds received were net of a refundable withholding tax of $62 million. In connection with the purchase and sale agreement, $10 million was placed into escrow and was excluded from the gain calculations. The Company made additional cash payments of $1.7 million during fiscal 2009 related to retention payments for employees who transferred to MediaTek Inc. and for the reimbursement of intellectual property license fees incurred by MediaTek Inc. In the first quarter of fiscal 2010, the Company received cash proceeds of $62 million as a result of the refund of the withholding tax and also recorded an additional gain on sale of $0.3 million, or $0.2 million net of tax, due to the settlement of certain items at less than the amounts accrued. In the first quarter of fiscal 2011, additional proceeds of $10 million were released from escrow and $6.5 million net of tax was recorded as additional gain from the sale of discontinued operations. The Company does not expect any additional proceeds from this sale.

     The following amounts related to the CPU voltage regulation and PC thermal monitoring and Baseband Chipset Businesses have been segregated from continuing operations and reported as discontinued operations.

	Three Months Ended
	January 29, 2011				January 30, 2010
Gain on sale of discontinued operations before income taxes			10,000				1,316
Provision for income taxes			3,500				457
Gain on sale of discontinued operations, net of tax		$	6,500			$	859