Analog_Devices_ADI

Important disclosures appear on the last page of this report.
The Henry Fund
Henry B. Tippie School of Management
Ajay Kaushik Rajagopalan [ajaykaushik-rajagopalan@uiowa.edu]
Analog Devices, Inc. (ADI) October 10, 2016
Information Technology – Semiconductors Stock Rating Buy
Investment Thesis Target Price $81-102
Analog devices, Inc. ranks third by revenue among the analog semiconductor
manufacturers. Its acquisition of Linear technologies (LLTC) is expected to
increase revenues from $3.43 billion to $5.26 billion. The accretive nature of
this acquisition combined with the possibility of cost savings of up to 5% of
ADI’s revenue is the driver for the buy recommendation.
Drivers of Thesis
 The diverse and complementary nature of the product mix from LLTC will
increase the combined entity’s revenue by 49% in comparison to ADI’s
revenues. The synergies from the acquisition of LLTC are expected to
increase the operating margin by 5% or higher.
 The end market demand drivers for the analog semiconductor industry are
particularly positive with Internet of Things (IoT) expected to grow at 23%
CAGR from 2015 to 2019. (11) The market for big data is expected to grow
at 10% CAGR to reach $85 billion by 2026. (13) The semiconductor industry
is strongly leveraged to this data growth paradigm.
 Electric/Hybrid car revenues are expected to grow at 18% CAGR from 2012
to 2019. Battery management systems from ADI – LLTC will benefit from
this growth.
Risks to Thesis
 Though the acquisition of LLTC has been agreed upon and ratified by both
the boards, any development that jeopardizes the acquisition will undercut
the upside potential on ADI’s stock from 45% to 7-9%. This will change the
recommendation from buy to hold.
 Close to $7.3 billion in debt needs to be raised by Analog devices to
complete the acquisition deal. A significant increase in the interest rates
before the debt issuance will have an adverse impact on the cost of debt
for ADI.
Henry Fund DCF $93.06
Henry Fund DDM $46.74
Relative Multiple $65.67
Price Data
Current Price $64.35
52wk Range $47.24 – 66.91
Consensus 1yr Target $72/ “NA”
Key Statistics
Market Cap (B) $19.41
Shares Outstanding (M) $312.06
Institutional Ownership 86.41%
Model Beta 1.41 & 1.82
Dividend Yield 2.71%
Est. 5yr Growth 4.09%
Price/Earnings (TTM) 29.15
Price/Earnings (FY1) 20.9/” NA”
Price/Sales (TTM) 5.59
Price/Book (mrq) 3.81
Profitability
Operating Margin 30.19%
Profit Margin 19.49%
Return on Assets (TTM) 8.65%
Return on Equity (TTM) 13.17%
Earnings Estimates
Year 2013 2014 2015 2016E 2017E 2018E
EPS $2.19 $2.01 $2.23 $2.67 $2.44 $3.63
growth 0.46% -8.22% 10.95% 19.64% -8.72% 49.06%
12 Month Performance Company Description
Analog devices, Inc. was started in 1965 and
has since grown to be a leader in design and
manufacture of a broad portfolio of solutions
that leverage high performance analog,
mixed signal, and digital signal processing
technologies. It ranks third by revenue
among its peers and has a strong product mix
that cater to the industrial, consumer,
automotive, and communication segment.
ADI’s acquisition of LLTC will increase its
market capitalization from $19 B to $30 B
20.9
13.2 13.3
18.2
13.0 13.3
0
5
10
15
20
25
P/E ROE (%) EV/EBITDA(X)
ADI Industry
-20%
-10%
0%
10%
20%
30%
40%
50%
O N D J F M A M J J A S
ADI LLTC S&P 500
Source : Yahoo Finance
Source: Sentieo Edge

EXECUTIVE SUMMARY
Analog Devices, currently ranks third by revenue among
the analog semiconductor manufacturers, is a designer
and manufacturer of integrated circuits (ICs), systems,
softwares, and solutions.
The semiconductor industry has seen increased
consolidation activities that have helped in expanding
volume and controlling costs. The Analog Devices (ADI)
Linear Technologies (LLTC) deal is one such merger that is
expected to increase the gross margin of ADI from 64% in
2016 to 68% 2018 and help in reducing the operating
expenses from 36% of sales in 2016 to 34% of sales by
2019. The revenue of ADI is expected to see a slump in
2016 with a decline of -2.10% YoY as compared to 2015,
but is expected to see a 49% jump in FY 2018 once the
merger with LLTC is completed. The CAGR for revenue
normalizing the effect of acquisition is expected to be
4.09% through 2020 and this robust revenue growth
expectation is in line with the end market expansion
potential. According to IC insights, the overall chip industry
is expected to grow at 4.3% from 2014 to 2019. (7)
Consumer and communications sector are expected to be
the major drivers of revenue growth, while the bleak
outlook for computers will be a major headwind.
This buy recommendation of this report is driven by the
45% upside suggested by the DCF model. This upside is
mainly driven by the accretive acquisition of Linear
Technologies. The acquisition deal is expected to be
completed by August 2017 and the team expects that the
market price of ADI will trend upwards through CY 2017.
The merger deal has been unanimously ratified by the
boards of ADI and LLTC. In the event the deal does not go
through, the accretive revenue growth will not be possible
and the upside potential in comparison to the intrinsic
value of ADI will only be 9%. This unlikely, but probable
event will force a change in recommendation from buy to
a hold.
COMPANY DESCRIPTION
Analog devices, Inc. was started in 1965 has since grown
to be a leader in the design and manufacture of a broad
portfolio of solutions that leverage high performance
analog, mixed signal, and digital signal processing
technology. According to the 10K of Analog devices, its
products are used by over 100,000 customers worldwide.
(3) Linear technologies, the company that Analog devices
is acquiring for $14.8 billion, concentrates on high
performance analog semiconductor markets. High
performance analog circuits are characterized by higher
efficiency of operations, higher precision, lower noise
margins, low power operations, and higher linearity of
operations. Linear technologies’ offerings in the high
performance analog domain complements the offerings of
ADI thereby minimizing the cannibalization of product
sales post-acquisition and hence leading to a very
accretive acquisition.
Revenue Decomposition
Analog devices, Inc. has 4 operating segments: Industrial,
Automotive, Consumer, and Communications. Linear
technologies Inc. has 6 operating segments: Industrial,
Automotive, Consumer, Communications, Computer, and
Military. The pre-acquisition and post-acquisition revenue
breakdown by operating segments have been shown in
the graphs below:
Source: ADI 10K (3)
43.56%
15.32%
21.25%
19.88%
Pre Merger Revenue
decomposition - ADI (FY 15)
Industrial Automotive Consumer Communications

Source: LLTC 10K (4)
The 2 charts above reflect the current state of affairs at
Analog devices and Linear technologies. The chart below
is the expected revenue mix post-acquisition.
Source: HF Estimates
While Analog devices caters to the military segment as
part of its industrial segment, its contribution to revenue
is insignificant enough to not merit a line item in its
financial reporting. However, with the acquisition of
Linear technologies Inc., the military offerings of the
combined entity would become significant enough to
merit a separate line item as its contribution to the net
revenue would be 1.68%.
The last aspect that will be discussed in this section is the
geographical mix of Analog devices’ revenue. It is
important to understand this as the future growth for
Analog devices will be driven to a great extent by
increasing internet penetration around the globe. The
charts below represent the current geographical
distribution (FY 15) and the expected geographical
distribution in FY 2020. As seen in the graph below, the
contribution to sales from US and Canada is expected to
decline from 42% in 2015 to 39% in 2020, with the
contribution from Asia increasing during the forecast
horizon. This is line with the market saturation expected in
North America and the fact that the GDP growth in China
and India will far outpace the world GDP during the
forecast horizon.
Source: ADI 10K (3)
43%
20%
19%
9%
6%
3%
Pre Merger Revenue
decomposition - LLTC (FY
15)
Industrial Automotive Communications
Computer Military Consumer
44.28%
18.49%
14.49%
19.30%
1.77%
1.68%
Post Merger Revenue
Decomposition - ADI (FY 18 E)
Industrial Automotive Consumer
Communications Computer (LLTC) Military (LLTC)
42.00%
27.00%
9.00%
15.00%
7.00%
FY 15 Geographical distribution (%
of Revenue)
North America Europe Japan China Rest of Asia

Industrial
The industrial segment constitutes the largest segment by
revenue for Analog devices with over 43% of the revenue
coming from products sold for industrial applications
ranging from instrumentation process control systems to
healthcare electronics. The demand for this segment is
highly correlated to the global GDP forecasts and hence
has been modelled to grow at 4.5% CAGR through 2020.
No breakdown is given regarding the cost of sales incurred
for the products that cater to the industrial segment.
However, no change in the product mix is expected during
the forecast except for the complementary product
portfolio inherited from the acquisition of Linear
technologies. The cost of sales post-acquisition is expected
to be a weighted average of the individual costs of the
product mix. The gross margins enjoyed by the premium
products of Linear technologies are higher than gross
margins enjoyed by Analog devices and this should
translate to a lower cost of sales post-acquisition.
Automotive
The automotive offerings of Analog devices is expected to
expand due to the acquisition of Linear technologies.
Product offerings of LLTC such as precision voltage
references and battery management systems will help
Analog strengthen its offerings for the hybrid/autonomous
automotive segment. Automotive segments’ revenue
share is expected to increase from 15.32% before
acquisition to 18.49% post-acquisition.
The chart below encapsulates the growth expected across
various categories of industries for the overall end markets
of integrated chips (ICs).
Source: IC Insights (6)
The chart above represents the growth expected for both
analog and digital chips. Since Analog devices and Linear
technologies only cater to the analog and mixed signal
market, the CAGR growth through 2020 has been
modelled to grow at 5%. This is within the expected
growth for the overall analog automotive market through
2019.
Source: IC Insights (7)
39.00%
25.00%
8.00%
17.00%
11.00%
FY 2020 (E) Geographical
Distribution (% of Revenue)
North America Europe Japan China Rest of Asia

Unlike digital semiconductor firms, analog semiconductor
firms cannot offer complete product offerings as each firm
specializes in a particular type of technology. The CAGR for
automotive revenues have been capped at 5% due to the
premium and exclusive nature of the offerings in the
analog semiconductor sphere.
Consumer
A major portion of the revenue in the consumer segment
is driven due to iPhone sales. Analog devices, Inc.
produces media related analog/mixed signal ICs that are
used in smartphones, tablets, and wearable devices.
Source: Statista (8)
The chart above suggests a 6.7% CAGR growth in
smartphone shipments from 2016 to 2019. This positive
outlook for the growth of smartphones is the driver of the
5% CAGR for consumer segment revenue. The
management of Linear technologies has stated in its
earlier earnings calls that it will not actively pursue the
consumer segment. This is the reason for the drop in
consumer segments contribution to revenue from 21.25%
to 14.49% as the product mix inherited in the other
segments are much larger than the Linear technologies’
offerings in the consumer segment.
Communications
The product offerings of Analog devices and Linear
Technologies in the communications segment cater to the
ICs for mobile phones, networking products, wireless
radios, satellite systems, cellular base station equipment,
and other data center equipment.
While the IC insights data suggests a 6.7% CAGR growth for
communications segment from 2014-2019, the end
markets that Analog devices and Linear technologies
caters to is reaching saturation. This has driven the 2%
revenue growth assumptions for the communications
segment post-acquisition.
Computer (LLTC)
This revenue segment will be inherited due to the
acquisition of Linear technologies.
The chart above represents a declining growth for PCs
translating to a market growth rate of 0.5 – 1.0% through
2020. This is the driver for the 0.5% revenue CAGR for the
computer segment post-acquisition.
Military (LLTC)
Military/Aerospace/Harsh Environment segment is
another inheritance of the LLTC acquisition. The revenues
of this segment have been modelled to grow at 3% post-

acquisition through 2020. This is line with the expectation
of a decrease in government military spending during the
forecast horizon.
RECENT DEVELOPMENTS
Acquisition of Linear Technologies (LLTC)
Analog devices announced on July 26th
2016 that they have
reached a definite agreement with Linear technologies
under which Analog devices will acquire Linear
technologies in cash and stock transaction. The combined
enterprise is expected to have a market capitalization of
USD 30 billion, which is a 1.57X increase over the current
market capitalization of Analog devices. On the
announcement of the acquisition, ADI’s stock went up
marginally by 0.7%.
Source: Street Insider (10)
Under the acquisition agreement, Analog devices will pay
$46 per outstanding share of Linear Technologies and
0.2321 share of Analog devices. This would approximately
work out to $60 per share of LLTC, representing a premium
of 30% over the trading price of LLTC before the
announcement of the merger. Analog devices, Inc. is
planning to issue 55-58 million new shares to cover the
stock transaction.
Source: Street Insider (10)
ADI is planning to raise new debt to the tune of $7.3 billion
that will take its debt to equity ratio from its current levels
of 17% to 85%. The interest coverage ratio will decrease
from 30X to 5X due to the issuance of new debt. This
increase in leverage is a major aspect of this acquisition
and this has been modelled in the DCF analysis to arrive at
the stock price of the combined entity.
The management of Analog devices has stated that the
stock repurchase plan will be curtailed or completely
suspended to enable the acquisition.
Recent Earnings and Future Estimate
Source: Bloomberg, HF Estimates
76%
24%
Deal Breakup of the $14.8 billion
acquisition
Cash Stock
70%
30%
Cash transaction breakup
New debt Cash from balance sheet
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Revenue (in billions) EPS (GAAP)
Annual Estimates (FY16E)
Analysts Consensus Estimates FY 16 (Mean)
Henry Fund Forecast FY 16
Guidance
Surpirse History Revenue and EPS (%)

Source: ADI 10K, Bloomberg
The DCF model forecasts reveal the revenue and EPS
estimates to be in line with the consensus estimates of all
28 analysts covering Analog devices. Historical data trends
reveal a healthy level of positive surprise history both for
annual revenue and EPS. This would indicate that not only
does ADI consistently exceed the consensus estimates, but
also its own guidance. It would not be surprising if Analog
devices were to exceed the revenue estimates suggested
by the Henry Fund DCF model and a positive surprise this
fiscal year will result in the stock prices going up. While
clear estimates are available for FY16, no information is
available with regards to the revenue potential and the
EPS potential of the combined entity of Analog devices and
Linear technologies.
INDUSTRY TRENDS
Internet of Things (IoT)
IoTs include every product that involves a sensor, a
microprocessor, and a chip that ensures data collected can
be transferred across devices. The IoT market forecasted
to grow at 23% CAGR from 2015-2019 and this will
translate to increased demand for analog semiconductor
chips and ICs.
This strong leverage enjoyed by the analog semiconductor
industry to the growth of the consumer discretionary
electronics segment suggests a potential for strong future
growth for both the analog semiconductor industry as well
as the overall semiconductor industry.
Big Data Paradigm
Companies Levered to Big Data
Source: Credit Suisse (12)
Data Growth – A Self Perpetuating Dynamic
Source: Credit Suisse (12)
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-10.00%
-5.00%
0.00%
5.00%
10.00%
0
0.2
0.4
0.6
0.8
1
Revenue (in billions ) EPS (GAAP)
Quarterly results in 2016
Q1 16 (A) Q2 16 (A)
Q3 16 (A) Surprise History Q1
Surprise History Q2 Surprise History Q3
0.
500.
1,000.
1,500.
2,000.
billionsofdollars
Global IOT Market Size
Market Size (billions of dollars)

The charts above demonstrate the business model that the
semiconductor industry has established around Big Data.
The semiconductor companies have a product portfolio
that aid in data creation, data transmission, and data
analytics. Sensors help in data collection and creation. This
data can then be transferred using either using wireless
techniques to electronic devices such as smartphones,
tablets, PCs, or in some cases directly to the cloud. Once
the data is collected and stored, computing resources
need to be expended for data analytics. This shows how
the semiconductor industry is linked to the Big Data
growth. The analog semiconductor companies such as
Analog devices and Linear Technologies will benefit from
the 10% YoY growth expected in Big Data and Big Data
applications through 2025. Analog semiconductor
companies have chips and ICs that propel the equipments
involved in data creation and data transmission.
Electric cars
Source: Statista
Analog devices through its acquisition of Linear
technologies will be able to leverage the battery
monitoring products that are needed for the electric cars.
The analog converter chips that convert real world signals
into digital signals will be another area where ADI can
leverage its product portfolio. The 18% YoY growth
expected from 2012 to 2019 for electric cars augurs well
for the analog semiconductor industry.
Book to Bill ratio
Source: semi.org (13)
The book-to-bill ratio is an indication of the health of the
semiconductor industry and can be used to predict
whether the semiconductor industry is heading towards
the trough or the peak of its cycle. The ratio represents the
number of outstanding order to the available production
capacity. A number lesser than 1 indicates overcapacity
while a number greater than 1 indicates higher demand.
As seen in the graph, the latest book to bill ratio of 1.03
indicates that demand is outpacing supply. Though 1.03 is
barely above 1, it still indicates a positive outlook for the
semiconductor industry going forward as it represents an
improvement compared to the FY 15 levels of 0.96. In the
semiconductor industry, the book to bill ratio is one of the
most important industry trend to be tracked as it helps
understand the demand vs supply balance.
MARKETS AND COMPETITION
The analog semiconductor industry is different from the
digital semiconductor industry due to the specific nature
of the problem that the analog chips solve. Digital
semiconductor products, barring a few application specific
ICs (ASICs) are commodity products. Analog companies on
the other hand have specialty areas barring products for a
few solutions. Converters, that is products that convert
analog signals such as temperature, pressure, sound, light
etc. to binary signals are often times products where one
can find a level of commoditization. All other analog
applications need specific expertise and hence the
technology specialization of the analog semiconductor
company determines the competition that exists in the
industry. The technology expertise is patent protected and
hence is not easily replicable. One of the most important
and often underappreciated competition in the analog
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2012 2019E
YoYGrowth
Revenue
Electric Cars Revenue Growth
Revenue from electric cars (USD billions) YoY Growth (%)
1.03
1.05
1.00
1.091.09
1.15
1.05
1.07
0.95
1.00
1.05
1.10
1.15
1.20
Dec-15 Jan-16 Mar-16 May-16 Jun-16 Aug-16 Oct-16
Book to Bill Ratio

space is the competition for talented human capital.
Analog design engineers require more than 10 years of real
world application work experience before they become
proficient. The competition for attracting quality
engineering talent is very intense among the firms in the
analog semiconductor industry. With longer design cycles
and longer life cycle of analog products, the firms in the
analog semiconductor are competing based on their
technological expertise and the limited number of
commodity products helps preserve the premium charged
per analog product.
Peer Comparisons
Revenue and Price to Sales
The graph below represents the comparison between the
peer firms in terms of total sales and P/S ratio. The exercise
will help understand the revenue of the firm and the
relative multiple that the market is associating for the
products sold by each of these firms.
Source: Sentieo Equity Terminal (15)
The chart above represents the comparison between sales
and the forward P/S ratios. Texas Instruments (TXN) is the
largest company in the analog semiconductor space by
sales followed by the Dutch based NXP semiconductors.
Analog devices and Skyworks solutions come in third by
sales. ADIs acquisition of LLTC will help increase ADIs sales
from expected levels of $3.3 billion in 2016 to $5.2 billion
in 2018. According to recent news reports, Qualcomm Inc.
is exploring the possibility of acquiring NXP
semiconductors. The string of recent acquisitions in the
semiconductor industry is leading to increased market
consolidation and the blurring of lines between analog and
digital semiconductor firms. Texas Instruments has a rich
product portfolio encompassing both analog and digital
products and Qualcomm’s acquisition of NXP would also
result in a firm with dual product lines. ADIs acquisition of
LLTC would however not lead to an increased presence in
the digital semiconductor space as ADI and LLTC are
inherently analog semiconductor companies.
The forward price-to-sales ratio is a good indication of
whether market expects the firms to maintain the
premium pricing of its products and safeguard its margins.
The comparison reveals that ADI and TXN have a higher
P/S ratio as compared to the industry median indicating a
healthy gross margin line going into the future. LLTC has
been disregarded for this analysis as the P/S ratio is
skewed by the announcement of its acquisition, which
resulted in the stock price appreciating by more 30% in a
single trading day.
Margins – Gross and Operating
Since a major portion of the analog semiconductor
product mix command a premium pricing, a comparison
was done across the peer landscape to study the
difference in gross margins and their translation into
operating margins.
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Sales vs Fwd P/S (FY 15 )
Sales (B)
Industry Median P/S (FY +1 )
P/S (FY + 1)
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80.00%
100.00%
FY 15 Gross and EBITDA Margins
Gross Margin (FY 15)
Median (Gross Margin)
Median ( EBITDA Margin)
EBITDA Margin (FY 15)

As seen in the graph above, both Analog devices and linear
technologies have gross margins that are above the
median line. Analog devices’ acquisition of Linear
technologies is expected to increase the gross margin
further and this bodes well for the combined entity. The
gross margin for the combined entity is expected to
increase from 64% (present) to 68% after the acquisition.
EBITDA margins rather than EBIT margins have been used
to compare the operational efficiency as EBITDA normalize
for expenses directly related to operational leverage. It can
be seen in the graph above that ADI’s EBITDA margins are
about the median EBITDA margins of the peer firms while
LLTC enjoys a superior EBITDA margin. The acquisition of
LLTC by ADI is expected to drive cost savings due to
synergies that would be as high as 5% of revenue or 150
million dollars.
Enterprise value/EBITDA vs Price/Earnings
EV/EBITDA is a ratio that is hinges around parameters that
represent the intrinsic value of a firm while forward P/E
ratio represents the market sentiment about the firm’s
earning prospects. By combining these two metrics, one
can understand which firms are intrinsically overvalued
and which firms are relatively overvalued. The graph
above shows that both ADI and LLTC have a higher
EV/EBITDA as well as a forward P/E than the industry
median. Strictly from the graph above, NXP
semiconductors seems be to be undervalued compared to
its peers.
Debt/Equity and Interest Coverage
Unlike other companies in the technology space, the
analog semiconductor companies are usually leveraged.
Thus a comparison was done between leverage ratios and
the (EBITDA – CapEx) / Interest Expense ratio.
As seen in the chart above, all firms other than Microchip
and NXP semiconductors have debt to equity ratios much
lower than the industry median. ADIs D/E is less than 10%,
significantly lower than the industry median of 42%. This
reflects in the significantly higher interest coverage ratio
for ADI. To finance the LLTC acquisition, ADI will increase
its leverage from its current levels 9.34% to more than 84%
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EV/EBITDA vs Fwd P/E (FY 15)
EV/EBITDA (FY 15) Industry EV/EBITDA
Industry P/E (FY + 1) P/E (FY + 1)
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D/E vs Interest Coverage (FY 15)
FY-1 Total Debt/Equity
Median D/E
Median Interest Coverage
FY-1 (EBITDA-CapEx)/Interest Expenses

which will result in its interest coverage falling from 30X to
5X. This is a trend that needs to be monitored closely as
any adverse impact to ADIs sales at those high leverage
levels will significantly impact the value of the firm.
ECONOMIC OUTLOOK
Economic drivers for the semiconductor industry, of which
ADI and LLTC are a part of, are GDP growth (US, China &
Global), unemployment rates, fed fund rates, and strength
of the US dollar.
Source: Global Economic Prospects 2016, World Bank (1)
Going forward, the US GDP growth is expected to remain
stable at around 2% and this should translate to a steady
demand in consumer discretionary electronic products
such as smartphones, tablets, PCs, and other electronic
devices. GDP positively correlates to the disposable
income available. Increased disposable income would lead
to an increase in demand for discretionary electronic
products and hence would translate to demand for
semiconductor products. The forecasted decline in the
Chinese GDP growth is a cause for concern with nearly 15%
of the revenue dependent on the Chinese market. Any
slowdown in the end market demand in China would be
partially offset by the increasing demand from India.
India’s GDP is expected to grow at 7-8% during the forecast
period.
Near 0% interest rates have kept the cost of debt low for
the semiconductor firms. Once the recent weakness in the
economy passes, the fed fund rates are expected to move
towards the 1.25% in the next couple of years. Even
though this increase in the fed fund rates will not take the
interest rate to the levels that were existing before the
economic recession of 2008-2009, it is still expected to
make the cost of capital dearer for the semiconductor
industries. This would eventually slow the frenetic pace of
consolidation taking place in the industry and would
dampen capex outflows. The increased leverage that ADI
is faced with due to the debt fueled acquisition of LLTC will
make it hard for ADI to raise any future debt. It will also
discourage ADI from another acquisition of any significant
size.
Unemployment rates have a negative correlation with
semiconductor sales. Increasing employment increases
the median disposable income and that correlates
positively with spending on consumer discretionary
electronics such as smartphones, tablets, PCs etc. The
unemployment rate in the US has continued to decline and
the Henry Fund team believes that unemployment will
settle at 4.7% over the next 2 years.
Source: IBIS World (2)
The Per capita disposable income chart suggests that the
disposable income available for discretionary spending will
remain steady through 2021. Per capita disposable income
is an important measure of customer’s willingness to pay
and the steady levels indicate a similar spending outlook
throughout the forecast horizon.
With 58% coming from international sales, the
strengthening dollar negatively impacts the earnings of
ADI. The revenue from foreign sales is expected to grow to
61% by 2020 and this makes tracking the strength of the
dollar imperative. Drivers such as potential fed fund rate
hikes, Chinese GDP slowdown, and the economic
uncertainty in Europe will make the US dollar appreciate
further and this would eat further into the earnings of
Analog Devices. A strengthening US dollar however has the
advantage of making foreign acquisitions cheaper. The
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2013 2014 2015E 2016F 2017F 2018F
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US China Global

model does not however assume any future acquisition
other than the announced merger with LLTC.
After considering all the economic parameters, no
alarming macro-economic trends were found and this
indicates a steady growth scenario for analog
semiconductor companies such as Analog Devices.
CATALYSTS FOR GROWTH
Innovation would be a major catalyst for growth for Analog
devices. The automotive sector provides significant
growth opportunity especially due to the increased
demand for electric/hybrid cars. Though the acquisition of
LLTC will help ADI position itself favourably to ride the
automotive growth, the investments that ADI has made in
R&D for automotive can help ADI carve out a bigger share
in the automotive growth story.
IoT and Big data provide are the other major catalysts for
growth. ADI and LLTC have a product portfolio that aid in
data creation, data collection, and data transmission. The
current product portfolio along with its investment in R&D
can help ADI to leverage the 23% and 10% CAGR that these
markets are going to witness in the next 5-10 years.
INVESTMENT POSITIVES
 The accretive nature of the announced acquisition of
LLTC is a major investment positive. Due to the diverse
and complementary nature of the product mix from
LLTC, the combined entities revenue will increase by
49% in comparison to ADI’s revenues and the
synergies are expected to increase the operating
margin by 5% or higher
 The end market demand drivers for the analog
semiconductor industry are particularly positive with
Internet of Things (IoT) expected to grow at 23% CAGR
from 2015 to 2019. (11) The market for big data is
expected to grow at 10% CAGR to reach $85 billion by
2026. (13) The semiconductor industry is strongly
leveraged to this data growth paradigm
 Electric/Hybrid car revenues are expected to grow at
18% CAGR from 2012 to 2019. The battery
management systems of ADI – LLTC combine will
benefit from this growth
INVESTMENT NEGATIVES
 Though the acquisition of LLTC has been agreed upon
and ratified by both the boards, any development that
jeopardizes the acquisition will undercut the upside
potential on ADI’s stock from 45% to 7-9%. This is a
major investment negative.
 Close to $7.3 billion in debt needs to be raised by
Analog devices to complete the acquisition deal. A
significant increase in the fed funds rate before the
debt issuance will have an adverse impact on the cost
of debt for ADI. Moreover, change in interest rates can
result in a credit rating downgrade for ADI. Any credit
rating downgrade will make the investment a risky
proposition and hence would constitute a major
investment negative.
VALUATION
DCF-EP, DDM, and relative P/E analysis have been used to
value Analog Devices. The impending merger of Analog
Devices with Linear Technologies is best modelled by a
discounted cash flow analysis and hence the price
suggested by the DCF model will be considered as the true
indication of the intrinsic value of a stock of ADI.
64.35
93.3
46.74
65.67
72
0
10
20
30
40
50
60
70
80
90
100
Current
Stock Price
(as of
10/6/2016)
DCF - Stock
Price
DDM -
Stock Price
Relative P/E
- Stock
Price
Median
Analysts'
Estimates
(no
estimate
available
for
combined
entity)
Price (in USD)
Price (in USD)

Analog devices, Inc. has a 5-year long history of paying
dividends
The chart above represents the historical and the
forecasted payout ratio. The slump in dividend payout
ratio seen from 2015 to 2016 is due to impending
acquisition of Linear Technologies. Cash will constitute
nearly 23% of the $14.8 billion acquisition and this will
force Analog devices to restrain their dividend payouts. A
major insight that can be derived from the DDM model is
the theoretical P/E value of Analog Devices leading into its
steady state. The continuing P/E multiple leading to the
steady state turns out to be 12.42.
The continuing value P/E is lesser than the current
expected forward P/E of 24.2. For a firm whose revenue is
modelled to grow at 4.09% CAGR from 2016 to 2020 and
with a long term growth rate of 1%, the P/E multiple of
12.42 represents a stock price that is relatively
undervalued to its future earnings potential. No
importance has been attached to the stock price derived
from the DDM model due to the theoretical limitations of
the DDM model not accounting for the complete residual
income attributable to equity holders of a firm.
Source: ADI 10K (3) and HF Estimates
The chart above represents the modelled dividend
payouts as well as the historical dividend payouts.
Analog devices, Inc. has a number of pure play competitors
in the analog semiconductor devices space and the median
forward 1year, 2year, and 3year P/E estimates have been
used to arrive at the stock price of Analog devices. Using
this approach, the stock price of ADI was computed to be
$65.57 which is right in line with the current share price of
Analog devices. While the relative P/E valuation method
has the advantage of understanding the P/E multiple that
the market is applying to the industry and the peers, the
relative valuation approach is not a true indication of the
intrinsic value of the stock as the firm specific drivers are
not accounted for. The chart shown below indicates the
firms that have been considered for the relative valuation
approach. The price suggested by the relative valuation
model will be considered subservient to the price
suggested by the DCF valuation.
54.00%
56.00%
58.00%
60.00%
62.00%
64.00%
66.00%
68.00%
70.00%
72.00%
74.00%
2014 2015 2016E 2017E 2018E 2019E 2020E
PayoutRatio
Payout Ratio
0.97
1.2
1.36 1.48 1.6 1.62 1.62
2.2 2.34 2.46
0
0.5
1
1.5
2
2.5
3
Dividend Payments per share
(USD)
Dividend Payments (USD)

Short-Term Revenue Growth Assumptions
The 5-year revenue growth assumptions for individual
segments of Analog devices have been determined by
studying the end market demand for each of these
segments. Revenue from industrial, automotive,
consumer, and communications constitute the major
revenue segments of Analog devices. Post its acquisition of
Linear Technologies, Analog devices will also cater to the
computer industry. The demand drivers for each of these
segments have been discussed in detail in the earlier
sections of this report under company description section.
The 5-year growth assumptions as well as the revenue
forecasts for ADI have been shown in the graphs below:
Indus. Auto. Cons Comm. Comp
(LLTC)
Military
(LLTC)
2016* -0.2% 2.6% -
12.1%
0.6%
2017* 5.0% 6.0% 6.0% 3.0%
2018* 48.7% 70.1% 12.2% 43.7%
2019* 4.5% 5.0% 5.0% 2.0% 0.5% 3.00%
2020* 4.5% 5.0% 5.0% 2.0% 0.5% 3.00%
Source: *HF Forecasts
The steep jumps seen in growth expectations and
forecasted revenue for Analog devices in FY2018 is due to
the combined reporting of revenues from both Analog
devices and Linear technologies.
Costs and Margins
Cost of Goods sold as well as the operational fixed costs
are the important assumptions that influence the intrinsic
value of the stock derived using the DCF model.
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
TXN NXPI MCHPMXIM CRUS ISIL SLAB SMTC ADI
P/E Trends - Relative Valuation
P/E 16 P/E 17 P/E 18 Median (P/E 16)
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
0
1000
2000
3000
4000
5000
6000
Forecasted Revenue
Revenue YoY Growth

Source: LLTC 10K (4) and HF Estimates
Source: 10K (3) and HF Estimates
The chart above represents cost of goods sold as a
percentage of sales and it can be seen that Analog devices
has a much higher cost of sales as compared to the cost of
sales of Linear Technologies. The major reason for the
disparity in the cost of sales between Analog devices and
Linear Technologies is the product portfolio mix of the
both these companies. With very little product overlap
between the two companies, the acquisition should result
in increased gross margins for Analog devices. Considering
the importance and the criticality of this assumption, a
sensitivity analysis was performed on the cost of sales and
the variations in the stock price studied.
As seen in the chart above, failure to the capitalize on the
opportunity to expand the gross margins post-merger will
significantly impact the stock price of Analog devices. The
cost of sales post-merger is hence one of the most
important metrics to be monitored during the forecast
horizon.
Source: LLTC 10K (4) and HF Estimates
24% 24%
21% 21% 21% 21%
19%
20%
21%
22%
23%
24%
25%
2015 2016 2017E 2018E 2019E 2020E
COGS as % of Sales (LLTC)
COGS as % of Sales (LLTC)
36.11%
34.23%
36.11% 36.11%
31.78% 31.78% 31.78%
29.00%
30.00%
31.00%
32.00%
33.00%
34.00%
35.00%
36.00%
37.00%
2014 2015 2016E 2017E 2018E 2019E 2020E
COGS (% of Sales) - ADI
COGS (% of Sales) - ADI
y = -1.416x + 95.23
R² = 0.9948
$70.00
$75.00
$80.00
$85.00
$90.00
$95.00
COGS/Sales vs DCF Stock Price
(Post Merger)
DCF Stock Price
46%
44%
46% 46% 46%
45%
43%
44%
45%
46%
47%
2015 2016 2017E 2018E 2019E 2020E
Operating Margin (%)-LLTC
Operating Margin (%)-LLTC

Source: ADI 10K (3) and HF Estimates
As seen in the charts above, the acquisition of Linear
technologies will help Analog devices to expand its
operating margins, driven mostly due to the expansion in
the gross margin line. As operation expenses are mostly
fixed costs, a sensitivity analysis was performed to check
the impact of operation leverage on the DCF stock price.
Increased operational leverage, i.e. SG&A costs as a
percentage of sales is a significant factor that influences
the DCF stock price as shown by the graph above. This is
another factor that needs to be monitored carefully post-
acquisition as a failure to leverage higher operating
margins of Linear Technologies will pull the intrinsic value
of the Analog Technologies stock downwards.
Research and Development expenses as a percentage of
sales is another operating cost that has been modelled as
a weighted average of the historical trends seen in Analog
devices and Linear technologies. The weights used are
based on the composition of ADI and LLTC in the combined
entity (ADI: LLTC: 2:1). No sensitivity analysis has been
performed on the R&D costs as oftentimes a positive
correlation exists between R&D expenses and revenue
growth, a correlation that can’t be modelled by simple
sensitivity analysis.
Debt and Weighted Average Cost of Capital
(WACC)
An important facet of the acquisition deal between Analog
devices and Linear technologies is the $7.3 billion in debt
that needs to be raised by Analog devices. This new debt
issuance will finance approximately 49% of the deal.
Analog devices, Inc. enjoys an investment grade credit
rating of “BBB” and this is expected to continue through
the forecast horizon. Any downward correction in the
credit rating will increase the cost of borrowing for Analog
devices and will impact the DCF share price. The increased
leverage and the possibility of changes in cost of capital
have been modelled in 2 ways. The current debt on Analog
devices’ balance sheet is $873 million and this is expected
to increase to $7.8 billion by the end of FY2017. Hence a
variable WACC has been computed for across the forecast
horizon depending on the expected capital structure
during the fiscal year.
Period WACC
2016 9.08%
2017-CV 9.34%
A 2 dimensional sensitivity analysis was performed by
varying the WACC post 2016 as well as the perpetuity
growth assumption to capture the effect of credit rating
downgrades as well as the impact of terminal value
growth. A 10% WACC in a 0.5% terminal growth rate
scenario will result in a stock price of $88. This reflects that
the intrinsic value of the stock does not plummet
alarmingly due to credit downgrades and sluggish growth
outlook.
24.19%
27.69% 27.79%
33.90% 34.26% 34.31%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2015 2016E 2017E 2018E 2019E 2020E
Operating Margin - ADI
Operating Margin - ADI
y = -1.5646x + 93.467
R² = 0.9899
$70.00
$75.00
$80.00
$85.00
$90.00
$95.00
DCFStockPrice
Operating Expenses / Sales
SG&A/Sales vs DCF Stock Price
(post merger)

Perpetuity Growth Assumption
Source: Statista, IMF (5)
The forecast for Global GDP suggests a 3.9% GDP growth
in 2020. Considering that the analog semiconductor
devices sector is a cyclical industry with periods of
contraction and growth, a conservative growth terminal
growth target of 1% has been used. Since the DCF model
price is most sensitive to the perpetuity growth
assumption, a sensitivity analysis was done by varying the
CV growth of NOPLAT. In the unlikely event that the Linear
technologies deal is called off and Analog devices faces a
terminal growth of 0%, the stock price of ADI will be $48
as compared to its current market price of $64.35.
Valuation Summary
The stock price according to the DCF model is $93.06 and
this represents a 45% premium over the current market
price of Analog devices. The various sensitivity analysis
performed have been described in the sections above and
the analysis reveals a target price for Analog devices
between $81-102. There are no available consensus
estimates for the value of a stock of Analog devices that
accounts for the acquisition of Linear Technologies as of
the date this report was written. The consensus estimates
of stand-alone entity of Analog devices indicates a 9%
upside over the current market price of ADI. The 45%
upside suggested by the DCF model for the combined
entity of LLTC and ADI is the driver for the buy
recommendation.
KEYS TO MONITOR
LLTC acquisition and its assimilation
The biggest driver of the buy recommendation is the
accretive acquisition of Linear technologies. The
acquisition synergies are expected to not only increase
sales, but also increase the gross and operating margins.
Any developments that adversely impact the acquisition or
the assimilation needs to be monitored.
Interest rate hike or credit rating downgrade
Analog devices will increase its leverage from its current
levels of 10% of Equity to almost 85% of Equity. With an
investment grade rating of BBB, the cost of debt does leave
a cushion of 5X in terms of interest coverage. Any
downgrade in the credit rating or an interest rate hike
would make the cost of debt dearer for ADI. This is another
important trend that needs to be monitored.
REFERENCES
1. Word Bank Global GDP forecasts:
http://pubdocs.worldbank.org/pubdocs/publicdoc/20
16/1/88501452035054522/Global-Economic-
Prospects-January-2016-Table1.pdf
2. Per Capita disposable income forecasts:
https://www.ibisworld.com/gosample.aspx?cid=1&rti
d=4
3. ADI 10-K
4. LLTC 10-K
5. Global GDP forecasts:
http://www.statista.com/statistics/273951/growth-of-
the-global-gross-domestic-product-gdp/
6. IC Insights:
http://electroiq.com/blog/2015/03/comparing-
market-sizes-and-forecasted-growth-rates-for-
systems-ics
7. IC Insights Analog IC growth:
http://www.waysion.com/blogs/view/automotive-
industry-s-demand-for-chip-show-the-strongest-
growth/
8. Smartphone growth:
http://www.statista.com.proxy.lib.uiowa.edu/statistic
s/263441/global-smartphone-shipments-forecast
9. PC Growth:
s/272595/global-shipments-forecast-for-tablets-
laptops-and-desktop-pcs
3.2
3.4
3.6
3.8
4
2016 2017 2018 2019
Forecasted Global GDP (%)
Forecasted Global GDP (%)

10. Street Insider:
http://www.streetinsider.com/Corporate+News/Analo
g+Devices+(ADI)+to+Acquire+Linear+Technology+(LLT
C)+for+~$60Share/11864486.html
11. IOT Growth:
s/485136/global-internet-of-things-market-size/
12. Credit Suisse Sector forecast for Semiconductors:
“2016 Outlook - In Like a Lamb, Out Like a Lion”
13. Book to Bill ratio:
http://www.semi.org/en/MarketInfo/Book-to-Bill
14. FactSet, Bloomberg, and Yahoo Finance
15. Sentieo Edge Equity Terminal
IMPORTANT DISCLAIMER
Henry Fund reports are created by student enrolled in the
Applied Securities Management (Henry Fund) program at
the University of Iowa’s Tippie School of Management.
These reports are intended to provide potential employers
and other interested parties an example of the analytical
skills, investment knowledge, and communication abilities
of Henry Fund students. Henry Fund analysts are not
registered investment advisors, brokers or officially
licensed financial professionals. The investment opinion
contained in this report does not represent an offer or
solicitation to buy or sell any of the aforementioned
securities. Unless otherwise noted, facts and figures
included in this report are from publicly available sources.
This report is not a complete compilation of data, and its
accuracy is not guaranteed. From time to time, the
University of Iowa, its faculty, staff, students, or the Henry
Fund may hold a financial interest in the companies
mentioned in this report.

Ticker Symbol ADI
Current Share Price $64.35
Current Model Date 10/6/2016
Fiscal Year End Oct. 31
Scale Millions
Pre‐Tax Cost of Debt 4.50%
Beta 1.41
Risk‐Free Rate 2.28%
Equity Risk Premium 5% 1.02
CV Growth of NOPLAT 1.00%
CV Growth of EPS 3.00%
Operating Cash Assumption 2%
Marginal Tax Rate 10.00%
Marginal Tax Rate (Post Merger) 10.17%
WACC (2016) 9.08%
WACC (2017‐CV) 9.34%
Total Shares outstanding (FY15) 312.66
Total Shares outstanding (FY17) 366.62
Current Dividend Yield 2.61%
Dividend growth Rate 9%
DCF Share price $93.06
Upside potential 44.62%
Number of new shares Issued 55.62
Analog Devices
Key Assumptions of Valuation Model

Beta
93.06 0.9 0.95 0.97 1 1.05 1.1 1.15 1.2 1.277 1.3 1.41 1.5 1.8
4.00% 128.11 124.95 124.00 121.99 119.23 116.63 114.20 111.90 108.61 107.68 103.69 100.49 91.99
4.25% 124.57 121.46 120.54 118.56 115.86 113.32 110.94 108.69 105.49 104.58 100.69 97.58 89.33
4.50% 121.29 118.24 117.33 115.40 112.74 110.26 107.93 105.74 102.61 101.73 97.94 94.91 86.89
4.75% 118.24 115.24 114.35 112.46 109.86 107.43 105.16 103.02 99.96 99.10 95.40 92.46 84.66
Equity Risk 5.00% 115.40 112.46 111.59 109.73 107.19 104.81 102.58 100.49 97.51 96.67 93.06 90.19 82.60
Premium 5.25% 112.74 109.86 109.01 107.19 104.69 102.37 100.19 98.14 95.23 94.41 90.89 88.08 80.69
5.50% 110.26 107.43 106.59 104.81 102.37 100.09 97.95 95.95 93.10 92.30 88.86 86.13 78.91
5.75% 107.93 105.16 104.33 102.58 100.19 97.95 95.86 93.91 91.12 90.33 86.97 84.30 77.26
6.00% 105.74 103.02 102.21 100.49 98.14 95.95 93.91 91.99 89.26 88.49 85.21 82.60 75.72
6.25% 103.68 101.00 100.21 98.52 96.22 94.07 92.07 90.19 87.52 86.76 83.55 81.00 74.27
6.50% 101.73 99.10 98.32 96.67 94.41 92.30 90.33 88.49 85.87 85.14 81.99 79.49 72.91
6.75% 99.89 97.30 96.54 94.91 92.69 90.63 88.70 86.89 84.33 83.61 80.52 78.07 71.63
Beta
93.06 0.9 0.95 0.97 1 1.05 1.1 1.15 1.2 1.277 1.3 1.41 1.5 1.8
0.00% 106.86 104.58 103.90 102.45 100.43 98.53 96.74 95.04 92.60 91.90 88.90 86.48 79.95
0.50% 110.80 108.23 107.46 105.83 103.58 101.46 99.47 97.59 94.90 94.14 90.86 88.23 81.21
1.00% 115.40 112.46 111.59 109.73 107.19 104.81 102.58 100.49 97.51 96.67 93.06 90.19 82.60
1.50% 120.83 117.43 116.43 114.29 111.38 108.68 106.16 103.81 100.47 99.53 95.54 92.38 84.13
CV NOPLAT 2.00% 127.36 123.36 122.18 119.69 116.32 113.21 110.32 107.65 103.88 102.82 98.36 94.85 85.82
Growth 2.50% 135.35 130.55 129.14 126.19 122.21 118.57 115.23 112.14 107.83 106.63 101.59 97.67 87.72
3.00% 145.35 139.44 137.72 134.14 129.36 125.03 121.08 117.47 112.47 111.09 105.33 100.90 89.84
3.50% 158.22 150.73 148.57 144.11 138.22 132.95 128.19 123.89 117.99 116.38 109.71 104.64 92.24
4.00% 175.42 165.53 162.73 156.98 149.49 142.89 137.03 131.77 124.68 122.77 114.91 109.04 94.98
4.50% 199.56 185.80 181.98 174.21 164.31 155.75 148.28 141.70 132.96 130.62 121.18 114.26 98.12
5.00% 235.91 215.25 209.65 198.51 184.67 173.04 163.12 154.56 143.44 140.52 128.90 120.58 101.78
CV NOPLAT Growth
93.06 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
6.50% 108.90 113.42 118.76 125.16 132.99 142.77 155.35 172.12 195.61 230.83 289.53
6.75% 106.47 110.61 115.48 121.27 128.28 136.94 147.91 162.25 181.81 210.06 254.46
7.00% 104.20 108.02 112.47 117.73 124.04 131.75 141.39 153.78 170.31 193.45 228.16
7.25% 102.10 105.62 109.70 114.49 120.20 127.11 135.64 146.45 160.58 179.86 207.70
7.42% 100.73 104.06 107.92 112.42 117.76 124.18 132.05 141.94 154.70 171.84 196.05
7.75% 98.29 101.31 104.78 108.80 113.52 119.15 125.95 134.36 145.01 158.94 177.93
WACC‐CV 7.83% 97.72 100.67 104.06 107.97 112.56 118.01 124.59 132.69 142.90 156.18 174.15
8.00% 96.56 99.37 102.58 106.28 110.60 115.71 121.84 129.32 138.69 150.72 166.77
8.25% 94.94 97.56 100.53 103.95 107.92 112.57 118.11 124.82 133.10 143.60 157.32
8.45% 93.71 96.19 98.99 102.21 105.92 110.25 115.38 121.54 129.09 138.55 150.75
8.75% 91.98 94.26 96.84 99.77 103.14 107.04 111.63 117.09 123.70 131.86 142.21
9.00% 90.62 92.75 95.16 97.89 101.00 104.60 108.80 113.75 119.70 126.98 136.06
9.34% 88.90 90.86 93.06 95.54 98.36 101.59 105.33 109.71 114.91 121.18 128.90
9.50% 88.11 90.00 92.11 94.48 97.16 100.23 103.78 107.91 112.80 118.66 125.83
9.75% 86.96 88.73 90.71 92.93 95.43 98.28 101.55 105.34 109.79 115.10 121.52
10.00% 85.86 87.53 89.39 91.47 93.80 96.45 99.48 102.97 107.04 111.86 117.63
$93.06
31.78% $93.06
32% $92.73
33% $91.25
Cost of Sales 34% $89.78
after merger 35% $88.30
36% $86.82
37% $85.34
38% $83.86
39% $82.38
40% $80.90
$93.06
13.83% $93.06
16% $89.85
17% $88.37
SG&A 18% $86.89
after merger 19% $85.41
20% $83.93
21% $82.45
22% $80.97
23% $79.53
24% $78.16

Analog Devices
All Figures in Millions
Fiscal Years Ending Oct. 31 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Total Revenue 2633.69 2864.77 3435.09 3363.00 3529.23 5267.30 5482.55 5707.35
% of Total Revenue 100% 100% 100% 100% 100% 100% 100% 100%
Total Revenue Growth ‐2.50% 8.77% 19.91% ‐2.10% 4.94% 49.25% 4.09% 4.10%
Revenue Breakdown by Segments:
Industrial 1220.14 1343.26 1496.2 1494.00 1568.70 2332.14 2437.08 2546.75
Automotive 483.78 525.71 526.12 540.00 572.40 973.74 1022.43 1073.55
Consumer 401.37 327.22 729.97 642.00 680.52 763.35 801.52 841.59
Communications 528.41 668.58 682.81 687.00 707.61 1016.84 1037.18 1057.92
Computer (LLTC) NA NA NA NA NA 93.00 93.47 93.93
Military (LLTC) NA NA NA NA NA 88.23 90.88 93.60
% Industrial 46.33% 46.89% 43.56% 44.42% 44.45% 44.28% 44.45% 44.62%
% Automotive 18.37% 18.35% 15.32% 16.06% 16.22% 18.49% 18.65% 18.81%
% Consumer 15.24% 11.42% 21.25% 19.09% 19.28% 14.49% 14.62% 14.75%
% Communications 20.06% 23.34% 19.88% 20.43% 20.05% 19.30% 18.92% 18.54%
Computer(LLTC) NA NA NA NA NA 1.77% 1.70% 1.65%
Military(LLTC) NA NA NA NA NA 1.68% 1.66% 1.64%
Industrial Growth ‐1.63% 10.09% 11.39% ‐0.15% 5.00% 48.67% 4.50% 4.50%
Automotive Growth 4.36% 8.67% 0.08% 2.64% 6.00% 70.12% 5.00% 5.00%
Consumer Growth ‐14.17% ‐18.47% 123.08% ‐12.05% 6.00% 12.17% 5.00% 5.00%
Communications Growth ‐0.22% 26.53% 2.13% 0.61% 3.00% 43.70% 2.00% 2.00%
Computer Growth (LLTC) NA NA NA NA NA NA 0.50% 0.50%
Military Growth (LLTC) NA NA NA NA NA NA 3.00% 3.00%
Geographic Decomposition :
North America 35.00% 32.00% 42.00% 42.00% 41.00% 40.00% 39.00% 39.00%
Europe 32.00% 32.00% 27.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Japan 11.00% 11.00% 9.00% 8.00% 8.00% 8.00% 8.00% 8.00%
China 13.00% 16.00% 15.00% 15.00% 15.00% 16.00% 17.00% 17.00%
Rest of Asia 9.00% 9.00% 7.00% 10.00% 11.00% 11.00% 11.00% 11.00%

Analog Devices
Revenue 2633.69 2864.77 3435.09 3363.00 3529.23 5267.30 5482.55 5707.35
Cost of sales 941.28 1034.59 1175.83 1214.51 1274.55 1673.90 1742.31 1813.75
Gross margin 1692.41 1830.19 2259.26 2148.49 2254.68 3593.39 3740.24 3893.60
Research & development expenses 513.26 559.69 637.46 643.49 675.29 992.77 1033.34 1075.72
Selling, marketing, general & administrative expenses 396.23 454.68 478.97 500.58 525.32 728.35 758.12 789.20
Amortization of intangibles 0.00 26.02 88.32 73.21 73.21 86.65 70.63 70.63
Special charges 29.85 37.32 0.00 0.00 0.00 0.00 0.00 0.00
Other operating expenses 0.00 0.00 223.67 0.00 0.00 0.00 0.00 0.00
Total operating expenses 939.34 1077.70 1428.42 1217.27 1273.82 1807.78 1862.09 1935.55
Operating income 753.08 752.48 830.84 931.21 980.86 1785.62 1878.15 1958.05
Interest expense 27.10 34.78 27.03 39.33 22.45 351.17 351.17 351.17
Interest income 12.75 12.17 8.63 8.15 8.23 8.31 4.17 4.21
Other nonoperating income (expenses), net 76.60 -0.53 -2.32 24.18 25.38 37.88 39.42 41.04
Total nonoperating income (expenses) 62.25 -23.14 -20.73 ‐6.99 11.16 ‐304.98 ‐307.57 ‐305.91
Income from continuing operations before income taxes 815.32 729.35 810.11 924.22 992.02 1480.64 1570.58 1652.14
Total provision for (benefit from) income taxes 141.84 100.03 113.24 92.42 99.20 150.58 159.73 168.02
Net income (loss) 673.49 629.32 696.88 831.80 892.82 1330.06 1410.85 1484.12
Weighted average shares outstanding - basic 307.76 313.20 312.66 311.78 366.62 366.41 366.02 365.69
Year end shares outstanding 311.05 311.21 312.06 311.49 366.62 366.20 365.84 365.55
Net earnings (loss) per share - basic 2.19 2.01 2.23 2.67 2.44 3.63 3.85 4.06
Dividends declared & paid per share 1.32 1.45 1.57 1.62 1.62 2.20 2.34 2.46
Payout Ratio 60.27% 72.14% 70.40% 60.72% 66.52% 60.72% 60.72% 60.72%
EPS Growth 0.46% ‐8.22% 10.95% 19.64% ‐8.72% 49.06% 6.19% 5.29%

Analog Devices
Balance Sheet
Assets:
Cash 45.6 117.3 72.6 54.4 11235.5 51.6 537.0 1044.4
Institutional Money Market Funds 346.5 451.9 811.7 771.1 732.6 586.1 591.9 597.8
Cash & cash equivalents 392.1 569.2 884.4 825.6 11968.1 637.6 1128.9 1642.2
Short-term investments 4290.8 2297.2 2144.6 2166.0 2187.7 1098.0 1109.0 1120.1
Accounts receivable, gross 327.7 399.5 468.6 443.2 465.1 672.7 700.1 728.8
Less: allowances 2.6 2.9 2.1 2.0 2.1 4.3 4.5 4.7
Accounts receivable, net 325.1 396.6 466.5 441.2 463.0 668.3 695.6 724.2
Inventories 283.3 367.9 412.3 397.0 416.6 531.7 553.4 576.1
Deferred tax assets 136.3 128.9 129.2 112.3 120.5 95.3 99.2 103.2
Prepaid income tax 2.4 6.6 1.9 1.6 1.7 1.8 1.8 1.9
Prepaid expenses & other current assets 42.3 45.3 40.6 50.2 52.7 101.7 105.8 110.2
Total current assets 5472.4 3811.9 4079.5 3993.9 15210.3 3134.4 3693.8 4277.9
Property, plant & equipment, at cost 2292.9 2478.3 2602.1 2732.2 2868.8 4150.8 4374.5 4608.1
Less accumulated depreciation & amortization 1784.7 1855.9 1958.0 2063.6 2173.2 3152.2 3319.4 3494.0
Net property, plant & equipment 508.2 622.4 644.1 668.6 695.6 998.6 1055.1 1114.2
Deferred compensation plan investments 17.4 21.1 23.8 24.5 25.2 26.0 26.7 27.5
Other investments 3.8 13.4 17.5 18.2 18.9 19.3 19.7 20.1
Goodwill 284.1 1642.4 1636.5 1636.5 1636.5 14203.4 14203.4 14203.4
Intangible assets, gross 0.0 0.0 666.6 666.6 666.6 683.7 683.7 683.7
Less: total accumulated amortization 0.0 0.0 83.1 156.3 229.5 316.1 386.8 457.4
Intangible assets, net 28.6 671.4 583.5 510.3 437.1 367.6 296.9 226.3
Deferred tax assets 26.2 27.2 33.3 23.1 24.8 31.1 38.8 48.6
Other assets 41.1 49.8 44.0 50.0 52.4 78.3 81.5 84.8
Total assets 6381.8 6859.7 7062.2 6925.1 18100.9 18858.5 19415.9 20002.7
Liabilities:
Accounts payable 120.0 139.0 174.2 170.6 179.0 199.7 207.8 216.3
Deferred income on shipments to distributors, net 247.4 278.4 300.1 308.4 323.6 362.3 377.1 392.5
Income taxes payable 45.5 62.8 15.1 12.3 13.2 14.5 15.4 16.2
Current portion of long-term debt 0.0 0.0 374.8 0.0 0.0 0.0 0.0 498.5
Accrued compensation & benefits 71.1 101.3 125.5 108.7 114.0 170.2 177.2 184.4
Interest rate swap 0.0 0.0 32.7 0.0 0.0 0.0 0.0 0.0
Accrued special charges 20.0 40.5 5.9 0.0 0.0 0.0 0.0 0.0
Other accrued liabilities 66.6 87.1 85.5 87.6 91.9 137.2 142.8 148.7
Total current liabilities 570.5 709.1 1113.8 687.6 721.8 883.9 920.3 1456.7
Long-term debt 872.2 872.8 498.5 498.5 7798.5 7798.5 7798.5 7300.0
Deferred income taxes 6.0 235.8 227.4 201.7 216.5 259.7 275.5 289.8
Deferred compensation plan liability 17.4 21.1 23.8 24.2 24.7 25.2 25.7 26.2
Other non-current liabilities 176.0 263.0 125.8 173.9 182.5 272.4 283.6 295.2
Total non-current liabilities 1071.7 1392.7 875.4 898.4 8222.3 8355.9 8383.3 7911.2
Total Liabilities 1642.2 2101.8 1989.2 1586.0 8944.1 9239.7 9303.6 9367.9
Shareholder's Equity:
Common stock and additional paid in capital 763.7 694.9 686.5 626.0 4144.7 4084.2 4023.7 3963.2
Retained earnings 4056.4 4231.5 4437.3 4764.0 5062.9 5585.4 6139.5 6722.5
Accumulated other comprehensive income (loss) -80.5 -168.5 -50.9 ‐50.9 ‐50.9 ‐50.9 ‐50.9 ‐50.9
Total shareholders' equity 4739.6 4757.9 5073.0 5339.2 9156.8 9618.7 10112.4 10634.8
Total Liabilities and Shareholder's Equity 6381.8 6859.7 7062.2 6925.1 18100.9 18858.5 19415.9 20002.7

Analog Devices
Cash Flow Statement
Fiscal Years Ending Oct. 31 2016E 2017E 2018E 2019E 2020E
Cash Flow From Operations:
Net Income 831.8 892.8 1330.1 1410.8 1484.1
Depreciation 105.6 109.6 979.0 167.2 174.6
Amortization 73.2 73.2 86.6 70.6 70.6
Changes:
Accounts receivable, net 25.3 ‐21.8 ‐205.3 ‐27.3 ‐28.5
Inventories 15.3 ‐19.6 ‐115.1 ‐21.7 ‐22.7
Deferred tax assets 16.9 ‐8.2 25.3 ‐3.9 ‐4.1
Prepaid income tax 0.4 ‐0.1 ‐0.1 ‐0.1 ‐0.1
Prepaid expenses & other current assets ‐9.6 ‐2.5 ‐49.0 ‐4.2 ‐4.3
Deferred tax assets 10.1 ‐1.7 ‐6.2 ‐7.8 ‐9.7
Other assets ‐6.0 ‐2.5 ‐25.8 ‐3.2 ‐3.3
Accounts payable ‐3.7 8.4 20.6 8.2 8.5
Deferred income on shipments to distributors, net 8.3 15.2 38.6 14.8 15.5
Income taxes payable ‐2.8 0.9 1.3 0.9 0.8
Accrued compensation & benefits ‐16.8 5.4 56.2 7.0 7.3
Accrued special charges ‐5.9 0.0 0.0 0.0 0.0
Other accrued liabilities 2.1 4.3 45.3 5.6 5.9
Deferred income taxes ‐25.7 14.8 43.2 15.8 14.3
Other non-current liabilities 48.2 8.6 89.9 11.1 11.6
Cash Flow From Operations: 1066.9 1076.9 2314.6 1643.8 1720.4
Cash Flow From Investing :
Institutional Money Market Funds 40.6 38.6 146.5 ‐5.9 ‐5.9
Short-term investments ‐21.4 ‐21.7 1089.7 ‐11.0 ‐11.1
Property, plant & equipment, at cost ‐130.1 ‐136.6 ‐1281.9 ‐223.7 ‐233.6
Goodwill 0.0 0.0 ‐12566.8 0.0 0.0
Deferred compensation plan investments ‐0.7 ‐0.7 ‐0.8 ‐0.8 ‐0.8
Other investments ‐0.7 ‐0.7 ‐0.4 ‐0.4 ‐0.4
Intangible assets, gross 0.0 0.0 ‐17.1 0.0 0.0
Deferred compensation plan liability 0.5 0.5 0.5 0.5 0.5
Cash Flow From Investing Activities ‐111.9 ‐120.7 ‐12630.4 ‐241.2 ‐251.3
Cash Flow From Financing :
Current portion of long-term debt ‐374.8 0.0 0.0 0.0 498.5
Interest rate swap ‐32.7 0.0 0.0 0.0 0.0
Long-term debt 0.0 7300.0 0.0 0.0 ‐498.5
Common stock and additional paid in capital ‐60.5 3518.8 ‐60.5 ‐60.5 ‐60.5
Accumulated other comprehensive income (loss) 0.0 0.0 0.0 0.0 0.0
Dividends Paid ‐505.1 ‐593.9 ‐807.6 ‐856.7 ‐901.2
Cash Flow From Financing ‐973.2 10224.9 ‐868.2 ‐917.2 ‐961.7
Net Change in Cash ‐18.2 11181.1 ‐11183.9 485.4 507.4
Cash at the Beginning of the Year 72.6 54.4 11235.5 51.6 537.0
Cash at the End of the Year 54.4 11235.5 51.6 537.0 1044.4

Analog Devices
Cash Flow Statement
Fiscal Years Ending Oct. 31 2013 2014 2015
Net income (loss) 673.5 629.3 696.9
Depreciation 110.2 114.1 130.1
Amortization of intangibles 0.2 27.9 92.1
Stock-based compensation expense 56.9 50.8 68.9
Loss (gain) on sale of business - - -
Loss (gain) on sale of investments - - -
Loss (gain) on sale of product line -85.4 - -
Loss on extinguishment of debt 10.2 - -
Non-cash portion of special charges - - -
Minority interest - - -
Purchased in-process research & development - - -
Other non-cash activity -0.2 4.4 7.0
Excess tax benefit - stock options -16.2 -22.2 -25.0
Deferred income taxes -17.7 -77.7 -52.2
Accounts receivable 12.4 -36.5 -71.2
Inventories 28.5 24.6 -35.6
Prepaid expenses & other current assets 4.7 -5.4 2.9
Investments - trading - - -
Deferred compensation plan investments 11.1 -3.7 -2.6
Prepaid income tax 6.1 10.5 4.5
Accounts payable, deferred income & accrued liabilities 17.5 58.4 56.6
Deferred compensation plan liability -11.1 3.7 2.6
Income tax payments related to gain on sale of businesses - - -
Income taxes payable 50.7 96.5 25.1
Other liabilities 61.0 -3.2 7.7
Total adjustments 238.9 242.3 210.9
Net cash flows from operating activities 912.3 871.6 907.8
Purchases of short-term available-for-sale investments -8540.3 -7485.2 -6084.0
Maturities of short-term available-for-sale investments 6970.9 7318.9 4985.0
Sales of short-term available-for-sale investments 650.7 2187.4 1251.2
Additions to property, plant & equipment, net -123.1 -177.9 -154.0
Net proceeds (expenditures) related to sale of businesses - - -
Proceeds related to sale of investments - - -
Proceeds from sale of property, plant & equipment - - -
Proceeds related to sale of product line 100.0 - -
Payments for acquisitions , net of cash acquired -2.5 -1945.9 -7.1
Decrease (increase) in other assets -5.7 -12.1 -8.3
Net cash flows from investing activities -949.9 -114.8 -17.1
Proceeds from debt 493.9 1995.4 -
Payment of senior unsecured notes -392.8 - -
Early termination of swap agreements - - -
Proceeds from derivative instruments 11.0 - -
Term loan repayments -60.1 -1995.4 -
Dividend payments to shareholders -406.0 -454.2 -491.1
Repurchase of common stock -60.5 -356.3 -227.0
Proceeds from employee stock plans 306.3 200.1 122.6
Contingent consideration payment -5.7 -3.6 -1.8
Increase in liability from stock repurchase - - -
Credit facility fees - - -
Change in other financing activities -2.8 15.2 0.5
Excess tax benefit - stock options 16.2 22.2 25.0
Net cash flows from financing activities -100.6 -576.6 -571.6
Effect of exchange rate changes on cash 1.4 -3.1 -4.0
Net increase (decrease) in cash & cash equivalents -136.7 177.1 315.1
Cash & cash equivalents at beginning of year 528.8 392.1 569.2
Cash & cash equivalents at end of year 392.1 569.2 884.4
Cash paid during the fiscal year for income taxes 36.9 73.1 142.9
Cash paid during the fiscal year for interest 29.4 27.9 25.6

Analog Devices
Common Size Income Statement
Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of sales 35.74% 36.11% 34.23% 36.11% 36.11% 31.78% 31.78% 31.78%
Gross margin 64.26% 63.89% 65.77% 63.89% 63.89% 68.22% 68.22% 68.22%
Research & development expenses 19.49% 19.54% 18.56% 19.13% 19.13% 18.85% 18.85% 18.85%
Selling, marketing, general & administrative expenses 15.04% 15.87% 13.94% 14.88% 14.88% 13.83% 13.83% 13.83%
Amortization of intangibles 0.00% 0.91% 2.57% 2.18% 2.07% 1.65% 1.29% 1.24%
Special charges 1.13% 1.30% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other operating expenses 0.00% 0.00% 6.51% 0.00% 0.00% 0.00% 0.00% 0.00%
Total operating expenses 35.67% 37.62% 41.58% 36.20% 36.09% 34.32% 33.96% 33.91%
Operating income 28.59% 26.27% 24.19% 27.69% 27.79% 33.90% 34.26% 34.31%
Interest expense 1.03% 1.21% 0.79% 1.17% 0.64% 6.67% 6.41% 6.15%
Interest income 0.48% 0.42% 0.25% 0.24% 0.23% 0.16% 0.08% 0.07%
Other nonoperating income (expenses), net 2.91% ‐0.02% ‐0.07% 0.72% 0.72% 0.72% 0.72% 0.72%
Total nonoperating income (expenses) 2.36% ‐0.81% ‐0.60% ‐0.21% 0.32% ‐5.79% ‐5.61% ‐5.36%
Income from continuing operations before income taxes 30.96% 25.46% 23.58% 27.48% 28.11% 28.11% 28.65% 28.95%
Provision for income taxes payable currently 6.06% 6.20% 4.82% 0.00% 0.00% 0.00% 0.00% 0.00%
Provision for deferred (prepaid) income taxes ‐0.67% ‐2.71% ‐1.52% 0.00% 0.00% 0.00% 0.00% 0.00%
Total provision for (benefit from) income taxes 5.39% 3.49% 3.30% 2.75% 2.81% 2.86% 2.91% 2.94%
Net income (loss) 25.57% 21.97% 20.29% 24.73% 25.30% 25.25% 25.73% 26.00%

Analog Devices
Common Size Balance Sheet
Assets:
Cash 1.73% 4.10% 2.11% 1.62% 318.36% 0.98% 9.79% 18.30%
Institutional Money Market Funds 13.15% 15.77% 23.63% 22.93% 20.76% 11.13% 10.80% 10.47%
Cash & cash equivalents 14.89% 19.87% 25.74% 24.55% 339.11% 12.11% 20.59% 28.77%
Short-term investments 162.92% 80.19% 62.43% 64.41% 61.99% 20.85% 20.23% 19.63%
Accounts receivable, gross 12.44% 13.95% 13.64% 13.18% 13.18% 12.77% 12.77% 12.77%
Less: allowances 0.10% 0.10% 0.06% 0.06% 0.06% 0.08% 0.08% 0.08%
Accounts receivable, net 12.35% 13.84% 13.58% 13.12% 13.12% 12.69% 12.69% 12.69%
Inventories 10.76% 12.84% 12.00% 11.80% 11.80% 10.09% 10.09% 10.09%
Deferred tax assets 5.18% 4.50% 3.76% 3.34% 3.42% 1.81% 1.81% 1.81%
Prepaid income tax 0.09% 0.23% 0.06% 0.05% 0.05% 0.03% 0.03% 0.03%
Prepaid expenses & other current assets 1.61% 1.58% 1.18% 1.49% 1.49% 1.93% 1.93% 1.93%
Total current assets 207.79% 133.06% 118.76% 118.76% 430.98% 59.51% 67.37% 74.95%
Property, plant & equipment, at cost 87.06% 86.51% 75.75% 81.24% 81.29% 78.80% 79.79% 80.74%
Less accumulated depreciation & amortization 67.77% 64.78% 57.00% 61.36% 61.58% 59.84% 60.54% 61.22%
Net property, plant & equipment 19.30% 21.73% 18.75% 19.88% 19.71% 18.96% 19.25% 19.52%
Deferred compensation plan investments 0.66% 0.74% 0.69% 0.73% 0.71% 0.49% 0.49% 0.48%
Other investments 0.14% 0.47% 0.51% 0.54% 0.54% 0.37% 0.36% 0.35%
Goodwill 10.79% 57.33% 47.64% 48.66% 46.37% 269.65% 259.07% 248.86%
Intangible assets, gross 0.00% 0.00% 19.41% 19.82% 18.89% 12.98% 12.47% 11.98%
Less: total accumulated amortization 0.00% 0.00% 2.42% 4.65% 6.50% 6.00% 7.05% 8.01%
Intangible assets, net 1.08% 23.44% 16.99% 15.17% 12.39% 6.98% 5.42% 3.96%
Deferred tax assets 1.00% 0.95% 0.97% 0.69% 0.70% 0.59% 0.71% 0.85%
Other assets 1.56% 1.74% 1.28% 1.49% 1.49% 1.49% 1.49% 1.49%
Total assets 242.31% 239.45% 205.59% 205.92% 512.89% 358.03% 354.14% 350.47%
Liabilities:
Accounts payable 4.56% 4.85% 5.07% 5.07% 5.07% 3.79% 3.79% 3.79%
Deferred income on shipments to distributors, net 9.39% 9.72% 8.74% 9.17% 9.17% 6.88% 6.88% 6.88%
Income taxes payable 1.73% 2.19% 0.44% 0.37% 0.37% 0.28% 0.28% 0.28%
Current portion of long-term debt 0.00% 0.00% 10.91% 0.00% 0.00% 0.00% 0.00% 8.73%
Accrued compensation & benefits 2.70% 3.54% 3.65% 3.23% 3.23% 3.23% 3.23% 3.23%
Interest rate swap 0.00% 0.00% 0.95% 0.00% 0.00% 0.00% 0.00% 0.00%
Accrued special charges 0.76% 1.41% 0.17% 0.00% 0.00% 0.00% 0.00% 0.00%
Other accrued liabilities 2.53% 3.04% 2.49% 2.61% 2.61% 2.61% 2.61% 2.61%
Total current liabilities 21.66% 24.75% 32.43% 20.44% 20.45% 16.78% 16.79% 25.52%
Long-term debt 33.12% 30.47% 14.51% 14.82% 220.97% 148.06% 142.24% 127.91%
Deferred income taxes 0.23% 8.23% 6.62% 6.00% 6.14% 4.93% 5.03% 5.08%
Deferred compensation plan liability 0.66% 0.74% 0.69% 0.72% 0.70% 0.48% 0.47% 0.46%
Other non-current liabilities 6.68% 9.18% 3.66% 5.17% 5.17% 5.17% 5.17% 5.17%
Total non-current liabilities 40.69% 48.62% 25.48% 26.71% 232.98% 158.64% 152.91% 138.61%
Total Liabilities 62.35% 73.37% 57.91% 47.16% 253.43% 175.42% 169.69% 164.14%
Shareholder's Equity:
Common stock 1.97% 1.81% 1.51% 1.55% 1.73% 1.16% 1.11% 1.07%
Capital in excess of par value 27.03% 22.45% 18.47% 17.07% 115.71% 76.38% 72.28% 68.37%
Retained earnings 154.02% 147.71% 129.18% 141.66% 143.46% 106.04% 111.98% 117.79%
Accumulated other comprehensive income (loss) ‐3.06% ‐5.88% ‐1.48% ‐1.51% ‐1.44% ‐0.97% ‐0.93% ‐0.89%
Total shareholders' equity 179.96% 166.08% 147.68% 158.76% 259.46% 182.61% 184.45% 186.34%
Total Liabilities and Shareholder's Equity 242.31% 239.45% 205.59% 205.92% 512.89% 358.03% 354.14% 350.47%

Present Value of Operating Lease Obligations (2015) Present Value of Operating Lease Obligations (2014) Present Value of Operating Lease Obligations (2013) Present Value of Operating Lease Obligations (2012)
Operating Operating Operating Operating
Fiscal Years Ending Oct. 31 Leases Fiscal Years Ending Oct. 31 Leases Fiscal Years Ending 0.0425 Leases Fiscal Years Ending 115.856687807705 Leases
2016 21.78 2015 22.78 2014 28.05 2013 29.56
2017 14.17 2016 11.14 2015 13.88 2014 18.15
2018 14.17 2017 11.14 2016 13.88 2015 18.15
2019 4.76 2018 3.39 2017 5.75 2016 5.37
2020 4.76 2019 3.39 2018 5.75 2017 5.37
Thereafter 6.21 Thereafter 0.45 Thereafter 1.75 Thereafter 12.44
Total Minimum Payments 65.86 Total Minimum Payments 52.293 Total Minimum Payments 69.071 Total Minimum Payments 89.028
Less: Interest 7 Less: Interest 5 Less: Interest 7 Less: Interest 10
PV of Minimum Payments 58.79 PV of Minimum Payments 47.67 PV of Minimum Payments 62.50 PV of Minimum Payments 78.89
Capitalization of Operating Leases Capitalization of Operating Leases Capitalization of Operating Leases Capitalization of Operating Leases
Pre‐Tax Cost of Debt 4.50% Pre‐Tax Cost of Debt 4.50% Pre‐Tax Cost of Debt 4.50% Pre‐Tax Cost of Debt 4.50%
Number Years Implied by Year 6 Payment 1.3 Number Years Implied by Year 6 Payment 1.0 Number Years Implied by Year 6 Payment 1.0 Number Years Implied by Year 6 Payment 2.3
Lease PV Lease Lease PV Lease Lease PV Lease Lease PV Lease
Year Commitment Payment Year Commitment Payment Year Commitment Payment Year Commitment Payment
1 21.78 20.8 1 22.781 21.8 1 28.045 26.8 1 29.559 28.3
2 14.1745 13.0 2 11.139 10.2 2 13.883 12.7 2 18.1495 16.6
3 14.1745 12.4 3 11.139 9.8 3 13.883 12.2 3 18.1495 15.9
4 4.76 4.0 4 3.3905 2.8 4 5.7535 4.8 4 5.3665 4.5
5 4.76 3.8 5 3.3905 2.7 5 5.7535 4.6 5 5.3665 4.3
6 & beyond 4.76 4.7 6 & beyond 0.453 0.3 6 & beyond 1.753 1.3 6 & beyond 5.3665 9.3
PV of Minimum Payments 58.79 PV of Minimum Payments 47.67 PV of Minimum Payments 62.50 PV of Minimum Payments 78.89

Analog Devices
Value Driver Estimation
Marginal Tax Rate Calculation:
Federal Statuatory rate 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00%
State income taxes, net of federal effect ‐0.26% ‐0.87% ‐0.55% ‐0.55% ‐0.55% ‐0.38% ‐0.38% ‐0.38%
Foreign rate differential ‐19.90% ‐24.59% ‐24.45% ‐24.45% ‐24.45% ‐24.45% ‐24.45% ‐24.45%
Marginal Tax Rate 14.84% 9.54% 10.00% 10.00% 10.00% 10.17% 10.17% 10.17%
EBITA Calculations:
Net Revenue 2633.69 2864.77 3435.09 3363.00 3529.23 5267.30 5482.55 5707.35
Less: Cost of sales 941.28 1034.59 1175.83 1214.51 1274.55 1673.90 1742.31 1813.75
Less: Research & development expenses 513.26 559.69 637.46 643.49 675.29 992.77 1033.34 1075.72
Less: Selling, marketing, general & administrative expenses 396.23 454.68 478.97 500.58 525.32 728.35 758.12 789.20
Less: Amortization of intangibles 0.00 26.02 88.32 73.21 73.21 86.65 70.63 70.63
Less: Other operating expenses 0.00 0.00 223.67 0.00 0.00 0.00 0.00 0.00
Add: Implied Interest on Operating Leases 3.55 2.81 2.15 2.65 2.78 2.92 3.06 3.22
EBITA 786.48 792.62 832.99 933.86 983.64 1788.54 1881.21 1961.27
Less Adjusted Income Taxes:
Provision for Income Taxes 141.84 100.03 113.24 92.42 99.20 150.58 159.73 168.02
Add Tax Shield on Special Charges 4.43 3.56 0.00 0.00 0.00 0.00 0.00 0.00
Add Tax Shield on Interest Expense 4.02 3.32 2.70 3.93 2.24 35.71 35.71 35.71
Add Tax Shield on Implied Interest on Operating Leases 0.53 0.27 0.21 0.26 0.28 0.30 0.31 0.33
Less Tax on Interest Income 1.89 1.16 0.86 0.81 0.82 0.85 0.42 0.43
Less Tax on other non operating income (expenses) 11.37 ‐0.05 ‐0.23 2.42 2.54 3.85 4.01 4.17
Adjusted income Taxes 137.56 106.06 115.52 93.39 98.36 181.89 191.32 199.46
Add Change in Deferred Taxes:
DT Liabilities 6.04 235.79 227.38 201.73 216.52 259.73 275.51 289.82
DT Assets 162.53 156.18 162.52 135.45 145.39 126.35 138.02 151.80
Net Changes to DT ‐156.49 79.61 64.86 66.27 71.13 133.39 137.49 138.02
Change in DT ‐23.75 236.10 ‐14.75 1.42 4.86 62.25 4.10 0.53
NOPLAT : EBITA ‐ Adjusted Taxes + Change in DT
NOPLAT 625.17 922.65 702.71 841.89 890.14 1668.90 1694.00 1762.34
Operating Current Assets:
Cash on Balance Sheet 45.64 117.34 72.64 54.42 11235.48 51.58 536.96 1044.37
Operating Cash Assumption (2% of Revenue) 52.67 57.30 68.70 67.26 70.58 105.35 109.65 114.15
Accounts receivable, net 325.14 396.61 466.53 441.24 463.05 668.34 695.65 724.17
Inventories 283.34 367.93 412.31 396.99 416.61 531.71 553.44 576.13
Prepaid income tax 2.39 6.63 1.94 1.58 1.70 1.77 1.84 1.92
Prepaid expenses & other current assets 42.34 45.32 40.60 50.21 52.70 101.66 105.81 110.15
Operating Current Assets 698.85 873.78 990.08 944.45 1004.64 1355.06 1466.39 1526.52
Operating Current Liabilities:
Accounts payable 119.99 138.97 174.25 170.59 179.02 199.66 207.82 216.34
Deferred income on shipments to distributors, net 247.43 278.44 300.09 308.40 323.64 362.27 377.07 392.53
Income taxes payable 45.49 62.77 15.06 12.29 13.20 14.51 15.39 16.19
Accrued compensation & benefits 71.09 101.31 125.50 108.67 114.05 170.21 177.17 184.43
Other accrued liabilities 66.55 87.07 85.48 87.61 91.94 137.21 142.82 148.68
Operating Current Liabilities 550.56 668.55 700.38 687.56 721.84 883.86 920.27 958.17
Other Operating Assets:
Net property, plant & equipment 508.17 622.42 644.11 668.60 695.58 998.56 1055.13 1114.17
Intangible assets, net 28.55 671.40 583.52 510.31 437.10 367.55 296.92 226.29
Other assets 41.08 49.79 43.96 49.98 52.45 78.28 81.48 84.82
PV of Operating Leases 62.50 47.67 58.79 61.73 64.82 68.06 71.46 75.03
Other Operating Assets 640.31 1391.28 1330.38 1290.62 1249.94 1512.44 1504.98 1500.30
Other Operating Liabilities:
Other non-current liabilities 176.02 263.05 125.76 173.94 182.54 272.44 283.57 295.20
Other Operating Liabilities 176.02 263.05 125.76 173.94 182.54 272.44 283.57 295.20
Invested Capital:
Invested Capital 612.58 1333.46 1494.32 1373.56 1350.20 1711.20 1767.54 1773.45
Return on Invested Capital:
NOPLAT 625.17 922.65 702.71 841.89 890.14 1668.90 1694.00 1762.34
Beginning Invested Capital 785.49 612.58 1333.46 1494.32 1373.56 1350.20 1711.20 1767.54
ROIC 79.59% 150.62% 52.70% 56.34% 64.81% 123.60% 98.99% 99.71%
Economic Profit: Begin IC * ( ROIC ‐WACC)
Beginning Invested Capital 785.49 612.58 1333.46 1494.32 1373.56 1350.20 1711.20 1767.54
ROIC 79.59% 150.62% 52.70% 56.34% 64.81% 123.60% 98.99% 99.71%
WACC 9.08% 9.08% 9.08% 9.08% 9.34% 9.34% 9.34% 9.34%
Economic Profit 553.87 867.05 581.67 706.25 761.89 1542.83 1534.22 1597.30
FCF: NOPLAT+Change in Invested Capital
NOPLAT 625.17 922.65 702.71 841.89 890.14 1668.90 1694.00 1762.34
Add: Beg Invested Capital 785.49 612.58 1333.46 1494.32 1373.56 1350.20 1711.20 1767.54
Less: Current Invested Capital 612.58 1333.46 1494.32 1373.56 1350.20 1711.20 1767.54 1773.45
FCF 798.08 201.78 541.85 962.65 913.50 1307.90 1637.66 1756.42

Analog Devices
Weighted Average Cost of Capital (WACC) Estimation
Marginal Tax Rate (2016 ‐ 2017) 10.00%
Marginal Tax Rate (2018 ‐  CV) 10.17%
Cost of equity Calculation
Risk Free Rate 2.28% (30 Yr Treasury Note)
+
Beta* 1.41
Market Risk Premium 5.00%
= Cost of Equity 9.31%
WACC Calculation  (2016)
Shares outstanding 312.66
MV of shares 64.35
=Total MV of Equity [E] 20119.67
MV of ST Debt (ST) 374.84
MV of LT Debt (LT) 498.50
PV of Operating Leases (OL) 58.79
Cost of ST Debt 4.50% (Assuming Long Term Cost of Debt)
Cost of LT Debt 4.50%
Cost of Operating Leases 4.50% (Assuming Long Term Cost of Debt)
MV of equity 20119.67
+
MV of debt 932.13
= MV of the firm [V] 21051.80
Cost of Equity * 9.31%
(E/V) 95.57%
+
Cost of ST Debt 4.50%
(1‐Marginal tax Rate) 90.00%
(ST/V) 1.78%
+
(LT/V) 2.37%
+
Cost of Operating Leases 4.50%
(OL/V) 0.28%
= WACC 9.08%
WACC Calculation  (2017‐CV)
Marginal Tax Rate (2016 ‐ 2017) 10.00%
Marginal Tax Rate (2018 ‐  CV) 10.17%
Cost of equity Calculation
Risk Free Rate 2.28%
+
Beta* 1.82
Market Risk Premium 5.00%
= Cost of Equity 11.40%
Shares outstanding 312.66
MV of shares 64.35
=Total MV of Equity [E] 20119.67
MV of ST Debt (ST) 0.00
MV of LT Debt (LT) 7798.50
PV of Operating Leases (OL) 64.82
Cost of ST Debt 4.50% (Assuming Long Term Cost of Debt)
Cost of Operating Leases 4.50% (Assuming Long Term Cost of Debt)
MV of equity 20119.67
+
MV of debt 7863.32
= MV of the firm [V] 27982.99
Cost of Equity * 11.40%
(E/V) 71.90%
+
Cost of ST Debt 4.50%
(ST/V) 0.00%
+
(LT/V) 27.87%
+
Cost of Operating Leases 4.50%
(OL/V) 0.23%
= WACC 9.34%

Analog Devices
Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models
Key Inputs:
     CV Growth 1.00%
     CV ROIC 99.71%
     WACC (2016) 9.08%
     WACC (2017 ‐CV) 9.34%
     Cost of Equity 9.31%
DCF Model
Discount period 1 2 3 4 5
NOPLAT 842 890 1669 1694 1762
Continuing Value 20926
Free Cash Flow 963 913 1308 1638 1756
Net FCF 963 913 1308 22564
(Discounting Factor) ^‐1 1.09 1.19 1.09 1.20
PV of free cash flows 883 766 1196 18875
Value of Operations (2016 ‐2017) discounted to 2015 1648
Value of Operations (2018 ‐CV) discounted to 2017 20071
Non Operating Assets (2017)
Excess Cash 11165
Institutional Money Market Funds 733
Short-term investments 11968
Deferred compensation plan investments 25
Other investments 19
Value of Non Operating Assets 23910
Non Operating Liabilities (2017)
PV of Operating Leases 65
Interest rate swap 0
Deferred compensation plan liability 25
Total Debt 7799
PV of employee stock options 26
Value of Non Operating Liabilities 7914
Equity Value with Value of Operations computed for 2016 ‐ 2017 1648
Shares outstanding 313
Intrinsic Share Price (FY 15 End) 5
Equity Value with Value of Operations computed for 2018 ‐ CV 36066
Net Intrinsic Share Price (FY 15 End) $88
Intrinsic Share Price (Today) $93
EP Model
Periods to discount 1 2 3 4 5
Economic Profit 706 762 1543 1534 1597
Continuing Value 19159
Net  EP 706 762 1543 20693
(Discounting Factor) ^‐1 1.09 1.19 1.09 1.20
PV of Economic Profit 647 639 1411 17310
Initial Invested Capital (2015) 1494
Initial Invested Capital (2017) 1350
Value of Operations (2016 ‐2017) discounted to 2015 2781
Value of Operations (2018 ‐CV) discounted to 2017 20071
Non Operating Assets (2017)
Excess Cash 11165
Institutional Money Market Funds 733
Short-term investments 11968
Deferred compensation plan investments 25
Other investments 19
Value of Non Operating Assets 23910
Non Operating Liabilities (2017)
PV of Operating Leases 65
Interest rate swap 0
Deferred compensation plan liability 25
Total Debt 7799
PV of employee stock options 26
Value of Non Operating Liabilities 7914
Equity Value with Value of Operations computed for 2016 ‐ 2017 2781
Equity Value with Value of Operations computed for 2018 ‐ CV 36066
Net Intrinsic Share Price (FY 15 End) $91
Intrinsic Share Price (Today) $97

Analog Devices
Dividend Discount Model (DDM) or Fundamental P/E Valuation Model
Period of Discount 1 2 3 4 4
EPS 2.67 2.44 3.63 3.85 4.06
Key Assumptions
   CV growth 3.00%
   CV ROE 13.96%
   Cost of Equity 9.31%
Future Cash Flows
     P/E Multiple (CV Year) 12.44
     EPS (CV Year) 4.06
     Future Stock Price 50.49
     Dividends Per Share 1.62 1.62 2.20 2.34 2.46
     Future Cash Flows 1.62 1.62 2.20 2.34 52.95
     Discounted Cash Flows 1.48 1.36 1.69 1.64 37.09
Intrinsic Value (FY 15 end) 43.26$
Intrinsic Value Today 46.74$
Price Today $64.35

Analog Devices
Relative Valuation Models
EPS EPS EPS
Ticker Company Price 2016E 2017E 2018E P/E 16 P/E 17 P/E 18
TXN Texas Instruments $70.08 $3.06 $3.34 $3.58 22.9          21.0          19.6
NXPI NXP Semiconductors $101.78 $5.75 $7.43 $8.32 17.7          13.7          12.2
MCHP Microchip Technology Inc. $61.82 $2.68 $3.40 $3.82 23.1          18.2          16.2
MXIM Maxim Integrated Products Inc. $39.54 $1.63 $1.97 $2.20 24.3          20.1          18.0
CRUS Cirrus Logic Inc. $53.10 $2.40 $3.28 $3.78 22.1          16.2          14.0
ISIL Intersil Corporation $22.04 $0.69 $0.76 $0.84 31.9          29.0          26.2
SLAB Silicon Laboratories $58.79 $2.53 $2.65 $3.01 23.2          22.2          19.5
SMTC Semtech Corp $27.26 $0.86 $1.34 $1.59 31.7          20.3          17.1
Average 24.6          20.1          17.9
ADI Analog Devices $64.35 $2.67 $2.44 $3.63 24.1          26.4          17.7
Implied Value:
   Relative P/E (EPS16) $    65.67
   Relative P/E (EPS17) 48.90$
   Relative P/E (EPS18) 64.85$

Analog Devices
Key Management Ratios
Liquidity Ratios
Current Ratio (Current Assets/ Current Liabilities) 959.21% 537.60% 366.26% 580.88% 2107.16% 354.63% 401.38% 293.68%
Operating Cash Flow Ratio (Operating CF/ Current Liabilities) 159.92% 122.92% 81.50% 155.17% 149.19% 261.87% 178.63% 118.11%
Quick Ratio (Cash and other liquid assets) / current liabilities 877.82% 460.20% 313.82% 499.27% 2025.21% 271.99% 318.77% 239.35%
Activity or Asset‐Management Ratios
Asset Turnover Ratio (Sales/Total Assets) 0.41 0.42 0.49 0.49 0.19 0.28 0.28 0.29
Inventory Turnover Ratio (Sales/Total Inventory) 9.30 7.79 8.33 8.47 8.47 9.91 9.91 9.91
Receivables Turnover Ratio (Sales/Average Accounts Receivable) 7.92 7.94 7.96 7.41 7.81 9.31 8.04 8.04
Financial Leverage Ratios
Debt‐to‐Equity Ratio (Total Debt/Total Equity) 18.40% 18.34% 17.22% 9.34% 85.17% 81.08% 77.12% 73.33%
Equity Ratio (Total Equity/ Total Assets) 74.27% 69.36% 71.83% 77.10% 50.59% 51.00% 52.08% 53.17%
Interest Coverage (Operating Income) / (Interest Expense) 29.019 22.787 30.817 23.746 43.820 5.093 5.357 5.585
Profitability Ratios
Return on Assets (Net Income/Total Assets) 10.55% 9.17% 9.87% 12.01% 4.93% 7.05% 7.27% 7.42%
Return on Equity (Net Income/Shareholders Equity) 14.21% 13.23% 13.74% 15.58% 9.75% 13.83% 13.95% 13.96%
Gross Margin (Revenue‐COGS)/Revenue 64.26% 63.89% 65.77% 63.89% 63.89% 68.22% 68.22% 68.22%
EBIT Margin (EBIT/Sales) 28.59% 26.27% 24.19% 27.69% 27.79% 33.90% 34.26% 34.31%
Profit Margin (Net Income/Sales) 25.57% 21.97% 20.29% 24.73% 25.30% 25.25% 25.73% 26.00%
Payout Policy Ratios
69.31% 128.79% 103.01% 68.00% 73.30% 65.27% 65.01% 64.80%
Payout Ratio (Dividend Payout Ratio) 60.27% 72.14% 70.40% 60.72% 66.52% 60.72% 60.72% 60.72%
Total Payout Ratio (Dividends paid + Repurchases)/NI

Effects of ESOP Exercise and Share Repurchases on Common Stock Balance Sheet Account and Number of Shares Outstanding
Number of Options Outstanding (shares): 1.95
Average Time to Maturity (years): 5.30
Expected Annual Number of Options Exercised: 0.37
Current Average Strike Price: 57.20$
Cost of Equity: 9.08%
Current Stock Price: $64.35
2016E 2017E 2018E 2019E 2020E
Increase in Shares Outstanding: 0.37 0.37 0.37 0.37 0.37
Average Strike Price: 57.20$          57.20$          57.20$          57.20$          57.20$
Increase in Common Stock Account: 21                  21                  21                  21                  21                  (Assumes common stock and additional paid in capital are combined into one account).
Change in Treasury Stock 61 61 61 61 61
Expected Price of Repurchased Shares: 64.35$          70.19$          76.56$          83.51$          91.09$
Number of Shares Repurchased: 1                    1                    1                    1                    1
Shares Outstanding (beginning of the year) 312 311 311 311 310
Plus: Shares Issued Through ESOP 0.37 0.37 0.37 0.37 0.37
Less: Shares Repurchased in Treasury 0.94              0.86              0.79              0.72              0.66
Shares Outstanding (end of the year) 311 311 311 310 310

VALUATION OF OPTIONS GRANTED IN ESOP
Ticker Symbol ADI
Current Stock Price $64.35
Risk Free Rate 2.28%
Current Dividend Yield 2.61%
Annualized St. Dev. of Stock Returns 21.96%
Average Average B‐S Value
Range of Number Exercise Remaining Option of Options
Outstanding Options of Shares Price Life (yrs) Price Granted
Range 1 2 57.20 5.30 13.53$ 26$
Total 2 57.20$ 5.30 19.13$ 26$

Linear Technologies Pro‐Forma Income Statement Forecast
Income Statement 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sales 1,266.62 1,282.24 1,388.39 1,475.14 1,423.94 1,561.62 1,605.81 1,776.79 1,852.89
Cost of Goods Sold (COGS) incl. D&A 312.54 324.12 338.58 355.73 343.80 333.10 341.33 381.08 395.64
Depreciation & Amortization Expense 55.93 55.37 51.26 54.10 51.41 49.50 52.09 54.23 58.32
Gross Income 954.08 958.12 1,049.81 1,119.41 1,080.14 1,179.02 1,212.39 1,341.48 1,398.93
Research & Development 224.47 233.58 250.43 266.76 276.46 285.00 293.06 324.26 338.15
Other SG&A 147.58 151.38 159.64 169.95 170.12 183.49 188.68 208.77 217.71
EBIT (Operating Income) 582.04 573.15 639.73 682.70 633.55 710.54 730.64 808.44 843.06
Nonoperating Income ‐ Net 4.59 4.07 2.71 2.69 5.90 5.90 5.90 5.90 5.90
Interest Expense 47.52 48.34 41.17 0.00 0.00 0.00 0.00 0.00 0.00
Pretax Income 535.91 528.88 601.27 685.39 639.45 716.43 736.54 814.34 848.96
Income Taxes 137.80 121.96 141.31 164.43 145.10 162.57 167.13 184.79 192.64
Consolidated Net Income 398.11 406.93 459.96 520.96 494.35 553.86 569.40 629.55 656.32
Net Income 398.11 406.93 459.96 520.96 494.35 553.86 569.40 629.55 656.32
Net Income available to Common 398.11 406.93 459.96 520.96 494.35 553.86 569.40 629.55 656.32
EPS (recurring) 1.71 1.71 1.90 2.12 2.02 2.31 2.38 2.63 2.74
Total Shares Outstanding 230.03 233.03 239.10 239.75 239.65
Dividends per Share 0.99 1.03 1.07 1.17 1.26
Payout Ratio 58.24 60.23 56.32 55.19 62.38
EBITDA 637.97 628.52 690.99 736.80 684.96
EBIT 582.04 573.15 639.73 682.70 633.55
Depreciation & Amortization Expense 55.93 55.37 51.26 54.10 51.41

Linear Technologies Pro‐Forma Balance Sheet Forecast
Balance Sheet 2012 2013 2014 2015 2016 2017 2018 2019 2020
Assets
Cash & Short‐Term Investments 1,203.06 1,524.74 1,012.79 1,202.72 1,448.28 1,471.60 1,578.07 1,646.30 1,734.88
Cash Only 79.28 87.39 157.32 195.68 263.68 523.92 819.93 1,039.79 1,249.67
Total Short Term Investments 1,123.78 1,437.36 855.46 1,007.04 1,184.59 947.67 758.14 606.51 485.21
Short‐Term Receivables 153.09 145.27 173.34 179.26 157.46 194.80 200.31 221.64 231.13
Inventories 79.66 87.23 91.31 99.86 97.25 104.63 107.59 119.05 124.14
Other Current Assets 69.60 36.65 87.28 102.91 51.74 57.78 59.42 65.74 68.56
Total Current Assets 1,505.41 1,793.89 1,364.71 1,584.75 1,754.73 1,828.80 1,945.39 2,052.73 2,158.71
Net Property, Plant & Equipment 320.22 288.47 277.08 287.74 285.87 289.49 285.17 320.98 356.51
Property, Plant & Equipment ‐ Gross 907.30 921.27 953.75 1,010.26 1,054.52 1,106.28 1,152.85 1,241.69 1,334.34
Accumulated Depreciation 587.08 632.81 676.67 722.52 768.65 816.79 867.68 920.71 977.83
Net Goodwill 2.19 2.19 2.19 2.19 2.19 2.19 2.19 2.19 2.19
Intangible,Gross 17.10 17.10 17.10 17.10 17.10
Accumulated Amortization 11.60 13.30 14.50 15.70 16.90
Net Other Intangibles 19.77 13.80 11.60 9.40 7.20 3.80 2.60 1.40 0.20
Deferred Tax Assets 0.00 0.00 0.00 0.00 49.05 0.00 0.00 0.00 0.00
Deferred Charges 3.48 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Tangible Other Assets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Assets 1,851.07 2,098.34 1,655.58 1,884.08 2,099.03 2,124.28 2,235.35 2,377.29 2,517.61
Liabilities & Shareholders' Equity
ST Debt & Curr. Portion LT Debt 0.00 826.63 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Accounts Payable 11.46 10.26 28.22 17.61 17.47 19.22 19.76 21.87 22.81
Income Tax Payable 13.55 48.31 41.73 5.82 3.34 0.00 0.00 0.00 0.00
Other Current Liabilities 145.58 140.68 145.16 159.49 159.16 169.169 173.957 192.48 200.723
Total Current Liabilities 170.58 1,025.88 215.12 182.92 179.97 188.39 193.72 214.35 223.53
Long‐Term Debt 805.60 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Deferred Tax Liabilities 97.82 48.03 68.00 85.61 117.43 117.43 117.43 117.43 117.43
Other Liabilities 40.56 42.53 41.10 37.62 42.45 42.45 42.45 42.45 42.45
Total Liabilities 1,114.56 1,116.43 324.21 306.15 339.85 348.27 353.61 374.23 383.41
Common Equity 736.51 981.91 1,331.37 1,577.93 1,759.18 1,776.01 1,881.74 2,003.06 2,134.19
Total Shareholders' Equity 736.51 981.91 1,331.37 1,577.93 1,759.18 1,776.01 1,881.74 2,003.06 2,134.19
Total Equity 736.51 981.91 1,331.37 1,577.93 1,759.18 1,776.01 1,881.74 2,003.06 2,134.19
Total Liabilities & Shareholders' Equity 1,851.07 2,098.34 1,655.58 1,884.08 2,099.03 2,124.28 2,235.35 2,377.29 2,517.61

Linear Technologies Common Size Income Statement
Income Statement 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sales 100% 100% 100% 100% 100% 100% 100% 100% 100%
Cost of Goods Sold (COGS) incl. D&A 25% 25% 24% 24% 24% 21% 21% 21% 21%
Depreciation & Amortization Expense 4% 4% 4% 4% 4% 3% 3% 3% 3%
Gross Income 75% 75% 76% 76% 76% 76% 75% 75% 75%
Research & Development 18% 18% 18% 18% 19% 18% 18% 18% 18%
Other SG&A 12% 12% 11% 12% 12% 12% 12% 12% 12%
EBIT (Operating Income) 46% 45% 46% 46% 44% 46% 46% 46% 45%
Nonoperating Income ‐ Net 0% 0% 0% 0% 0% 0% 0% 0% 0%
Interest Expense 4% 4% 3% 0% 0% 0% 0% 0% 0%
Pretax Income 42% 41% 43% 46% 45% 46% 46% 46% 46%
Income Taxes 11% 10% 10% 11% 10% 10% 10% 10% 10%
Consolidated Net Income 31% 32% 33% 35% 35% 35% 35% 35% 35%
Net Income 31% 32% 33% 35% 35% 35% 35% 35% 35%

Linear Technologies Common Size Balance Sheet
Assets 2012 2013 2014 2015 2016 2017 2018 2019 2020
Cash & Short‐Term Investments 94.98% 118.91% 72.95% 81.53% 101.71% 33.55% 51.06% 58.52% 67.44%
Cash Only 6.26% 6.82% 11.33% 13.27% 18.52% 33.55% 51.06% 58.52% 67.44%
Total Short Term Investments 88.72% 112.10% 61.62% 68.27% 83.19% 60.69% 47.21% 34.14% 26.19%
Short‐Term Receivables 12.09% 11.33% 12.49% 12.15% 11.06% 12.47% 12.47% 12.47% 12.47%
Accounts Receivables, Net 12.09% 11.33% 12.49% 12.15% 11.06% 0.00% 0.00% 0.00% 0.00%
Accounts Receivables, Gross 12.25% 11.48% 12.60% 12.26% 11.17% 0.00% 0.00% 0.00% 0.00%
Bad Debt/Doubtful Accounts ‐0.16% ‐0.15% ‐0.12% ‐0.11% ‐0.12% 0.00% 0.00% 0.00% 0.00%
Inventories 6.29% 6.80% 6.58% 6.77% 6.83% 6.70% 6.70% 6.70% 6.70%
Finished Goods 1.47% 1.43% 1.30% 1.53% 1.49% 0.00% 0.00% 0.00% 0.00%
Work in Progress 4.14% 4.64% 4.52% 4.51% 4.65% 0.00% 0.00% 0.00% 0.00%
Raw Materials 0.68% 0.73% 0.76% 0.72% 0.70% 0.00% 0.00% 0.00% 0.00%
Other Current Assets 5.49% 2.86% 6.29% 6.98% 3.63% 3.70% 3.70% 3.70% 3.70%
Total Current Assets 118.85% 139.90% 98.29% 107.43% 123.23% 117.11% 121.15% 115.53% 116.51%
Net Property, Plant & Equipment 25.28% 22.50% 19.96% 19.51% 20.08% 18.54% 17.76% 18.07% 19.24%
Property, Plant & Equipment ‐ Gross 71.63% 71.85% 68.69% 68.49% 74.06% 70.84% 71.79% 69.88% 72.01%
Accumulated Depreciation 46.35% 49.35% 48.74% 48.98% 53.98% 52.30% 54.03% 51.82% 52.77%
Net Goodwill 0.17% 0.17% 0.16% 0.15% 0.15% 0.14% 0.14% 0.12% 0.12%
Net Other Intangibles 1.56% 1.08% 0.84% 0.64% 0.51% 0.24% 0.16% 0.08% 0.01%
Deferred Tax Assets 0.00% 0.00% 0.00% 0.00% 3.44% 0.00% 0.00% 0.00% 0.00%
Deferred Charges 0.27% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Tangible Other Assets 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Assets 146.14% 163.65% 119.24% 127.72% 147.41% 136.03% 139.20% 133.80% 135.87%
Liabilities & Shareholders' Equity
ST Debt & Curr. Portion LT Debt 0.00% 64.47% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Accounts Payable 0.90% 0.80% 2.03% 1.19% 1.23% 1.23% 1.23% 1.23% 1.23%
Income Tax Payable 1.07% 3.77% 3.01% 0.39% 0.23% 0.00% 0.00% 0.00% 0.00%
Other Current Liabilities 11.49% 10.97% 10.46% 10.81% 11.18% 10.83% 10.83% 10.83% 10.83%
Accrued Payroll 6.16% 6.06% 6.36% 6.68% 6.54% 0.00% 0.00% 0.00% 0.00%
Miscellaneous Current Liabilities 5.34% 4.91% 4.09% 4.13% 4.63% 0.00% 0.00% 0.00% 0.00%
Total Current Liabilities 13.47% 80.01% 15.49% 12.40% 12.64% 12.06% 12.06% 12.06% 12.06%
Long‐Term Debt 63.60% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Tax Liabilities 7.72% 3.75% 4.90% 5.80% 8.25% 7.52% 7.31% 6.61% 6.34%
Other Liabilities 3.20% 3.32% 2.96% 2.55% 2.98% 2.72% 2.64% 2.39% 2.29%
Other Liabilities (excl. Deferred Income) 3.20% 3.32% 2.96% 2.55% 2.98% 0.00% 0.00% 0.00% 0.00%
Total Liabilities 87.99% 87.07% 23.35% 20.75% 23.87% 22.30% 22.02% 21.06% 20.69%
Common Equity 58.15% 76.58% 95.89% 106.97% 123.54% 113.73% 117.18% 112.73% 115.18%
Common Stock Par/Carry Value 0.02% 0.02% 0.02% 0.02% 0.02% 0.00% 0.00% 0.00% 0.00%
Additional Paid‐In Capital/Capital Surplus 125.36% 135.43% 140.29% 139.12% 150.07% 0.00% 0.00% 0.00% 0.00%
Retained Earnings ‐67.24% ‐58.85% ‐44.44% ‐32.21% ‐26.63% 0.00% 0.00% 0.00% 0.00%
Unrealized Gain/Loss Marketable Securities 0.01% ‐0.02% 0.03% 0.04% 0.09% 0.00% 0.00% 0.00% 0.00%
Total Shareholders' Equity 58.15% 76.58% 95.89% 106.97% 123.54% 113.73% 117.18% 112.73% 115.18%
Total Equity 58.15% 76.58% 95.89% 106.97% 123.54% 113.73% 117.18% 112.73% 115.18%
Total Liabilities & Shareholders' Equity 146.14% 163.65% 119.24% 127.72% 147.41% 136.03% 139.20% 133.80% 135.87%

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