Published
# Analog Devices, Inc. (ADI) — Business, Risks and Management's Discussion **Fiscal period covered:** third quarter of fiscal 2026, the thirteen weeks ended August 1, 2026. **Source filings.** Business, risk factors and the annual operating review are drawn from the Annual Report on Form 10-K for fiscal 2025 (fiscal year ended November 1, 2025), filed November 25, 2025, SEC accession 0000006281-25-000153. Current-quarter results, liquidity and subsequent events are drawn from the Quarterly Report on Form 10-Q for the quarter ended August 1, 2026, filed August 19, 2026, SEC accession 0000006281-26-000073. Fourth-quarter guidance and the non-GAAP reconciliations are from the earnings release furnished on Form 8-K on August 19, 2026, accession 0000006281-26-000072. Other current reports are cited where used. --- ## Business Analog Devices is a Massachusetts corporation, incorporated in 1965, headquartered at One Analog Way in Wilmington, Massachusetts, and listed on the Nasdaq Global Select Market under the symbol ADI. Its fiscal year is the 52- or 53-week period ending on the Saturday closest to the last day of October. Fiscal 2025 (ended November 1, 2025) was a 52-week year; fiscal 2024 (ended November 2, 2024) was a 53-week year, with the extra week falling in the first quarter. **What the company sells.** ADI designs, manufactures, tests and markets integrated circuits, software and subsystems built on high-performance analog, mixed-signal and digital signal processing technology. The company describes its role as providing the building blocks to "sense, measure, interpret, connect and power," positioned at the intersection of the physical and digital worlds — what it calls the Intelligent Edge. The portfolio spans more than 75,000 stock keeping units organized into these categories: - **Analog and mixed signal** — data converters, which translate real-world analog signals into digital data and back. The 10-K describes data converters as ADI's largest and most diverse product family. - **Power management and reference** — power conversion, driver monitoring, sequencing and energy management, sold into automotive, communications, industrial and high-end consumer applications. - **Amplifiers, RF and microwave** — precision, instrumentation, high-speed and broadband amplifiers, plus RF and microwave ICs covering the entire RF signal chain. - **Sensors and actuators** — MEMS accelerometers, gyroscopes and inertial measurement units, temperature and magnetic-field sensors, and isolators. - **Digital signal processing and system products** — programmable DSPs designed in families that share common architectures. - **Interface** — general-purpose analog ICs that shape signals for transmission and reconstruct them on receipt. - **Software, digital platforms and AI** — CodeFusion Studio 2.0, an open-source embedded development platform, and Power Studio, a simulation and design ecosystem launched in fiscal 2025. Both sit under a broader "Physical Intelligence" initiative aimed at foundational AI models that reason about electro-physical systems. Analog ICs typically have long product life cycles, and many individual parts serve several hundred end customers. That breadth is central to the business model: general-purpose parts sold across thousands of customers, supplemented by application-specific solutions built off the same core technology platforms. **How the business is reported.** ADI operates as a single operating segment with a single reporting unit for goodwill-testing purposes. Rather than product segments, it reports revenue by **end market** — Industrial, Automotive, Communications and Consumer — and separately by sales channel and geography. End-market assignment is made from the technical characteristics of the part, sold-to and ship-to customer data, and the end application; when methodology changes, prior periods are reclassified. Fiscal-year revenue mix by end market, as disclosed in the 10-K: | End market | FY2025 | FY2024 | FY2023 | |---|---|---|---| | Industrial | 45% | 46% | 53% | | Automotive | 30% | 30% | 24% | | Consumer | 13% | 13% | 10% | | Communications | 13% | 12% | 13% | Within Industrial, the 10-K identifies industrial automation (robotics, motion control, condition-based monitoring, process control), instrumentation and measurement (automated test equipment, electronic test, life sciences and drug discovery), aerospace and defense (navigation, radar, space and satellite communications, electronic surveillance), healthcare (ultrasound/PET/MRI, robotic surgery, continuous glucose monitoring, insulin pumps) and energy management (utility meters, EV charging infrastructure, solar inverters, substation automation). Communications is split between wireless infrastructure (cellular base stations, microwave backhaul, fixed wireless access) and **data center**, which the 10-K describes as driven by AI, machine learning and hyperscale architectures requiring advanced power delivery, thermal management and high-speed connectivity. Automotive covers audio and connectivity, video processing and networking, battery monitoring and management, and intelligent power. Consumer covers portable and hearable devices and prosumer audio/video. **Channel.** Products are sold through a direct sales force, third-party distributors, independent sales representatives and the company website, with sales offices, representatives or distributors in approximately 50 countries. Distributors accounted for roughly 56% of fiscal 2025 revenue. Concentration is meaningful: one distributor represented 24% of total revenue in each of fiscal 2025 and fiscal 2024 (25% in fiscal 2023), and a second represented 13% in fiscal 2025. No other customer exceeded 10% of revenue in any period presented. Distributor agreements allow price-adjustment credits and limited stock-rotation returns, which ADI must estimate at the time of sale. ADI generally does not hold long-term purchase contracts with customers. Backlog is defined as firm orders with a requested delivery date within thirteen weeks, and most orders can be cancelled within a reasonable notice period without significant penalty. Sales are modestly seasonal — the first fiscal quarter is historically lower because of customer plant shutdowns — but the 10-K states quarter-to-quarter revenue is more likely to be influenced by semiconductor-industry cyclicality than by season. **Competition.** The integrated-circuit market is highly competitive. ADI names the bases on which it believes competitive performance is decided — technological innovation, strength of brand, diversity of product portfolio, product performance, technical support, delivery capabilities, customer service quality, reliability and price — with the weight of each varying by product, market and customer. Its competitors include large diversified semiconductor companies with sufficient financial, manufacturing, technical, sales and marketing resources to develop and market competing products, some of which may hold more advantageous supply or development relationships with ADI's current and potential customers or suppliers, alongside emerging companies selling specialized products into ADI's markets and non-U.S. entities associated with well-funded government efforts to build indigenous semiconductor industries. ADI positions itself against that field on technical innovation emphasizing product performance and reliability, backed by customer service and technical support. **Manufacturing.** ADI runs a hybrid model. Internal wafer fabrication is at Wilmington, Massachusetts; Camas, Washington; Beaverton, Oregon; and Limerick, Ireland. More than half of annual wafer requirements are sourced from third-party foundries, Taiwan Semiconductor Manufacturing Company among them. The company operates an assembly, wafer sort and test facility in Penang, Malaysia and wafer sort and test facilities in the Philippines and Thailand, and makes extensive use of assembly and test subcontractors. **Intellectual property and people.** As of November 1, 2025 ADI held approximately 4,780 U.S. patents and approximately 500 published pending U.S. applications. Headcount was approximately 24,500, of whom roughly 13,000 are in engineering roles; voluntary turnover for fiscal 2025 was approximately 7.2%. --- ## Risk factors Condensed from Item 1A of the fiscal 2025 10-K, updated by the revised cybersecurity risk factor in Part II, Item 1A of the third-quarter 10-Q. Boilerplate and forward-looking disclaimers are omitted. **Semiconductor cyclicality and demand volatility.** The industry's cyclical nature has produced periods of rapidly rising and falling demand. Overbuilding inventory or expanding capacity and workforce into demand that does not materialize exposes ADI to underutilization, obsolete-inventory charges, impairments and margin compression; capacity additions across the industry can produce overcapacity and price erosion. Conversely, in rapid upturns available capacity may be insufficient to meet demand. ADI notes it has experienced customer inventory-adjustment cycles and expects such behavior to recur. **Competition.** A standalone risk factor states that ADI may not be able to compete successfully in semiconductor markets in the future. It describes competition as intense and expected to intensify, including from companies outside the United States, and adds availability and capacity, and the availability of integrated system solutions, to the bases of competition set out in the business description above. Government incentives — the CHIPS Act is the example given — may benefit competitors on terms not available to ADI. Competitors developing products with better performance, features, integration, power consumption or cost could leave ADI with excess or obsolete inventory, and increased competition has already produced declining average selling prices, reduced gross margins and market-share loss in certain markets. Industry consolidation is flagged as a further threat to competitive position. **Tariffs and trade restrictions.** The 10-K treats this as a standalone risk. In 2025 the U.S. announced broad and country- and industry-specific tariffs, drawing reciprocal measures; in April 2025 the Department of Commerce opened a Section 232 investigation into the national-security impact of imported semiconductors and semiconductor manufacturing equipment, which the company expects to result in additional tariffs and restrictions. Consequences flagged include higher input costs, reduced supply availability, customers advancing, delaying or cancelling orders, harder demand forecasting and greater supply-chain complexity. **International operations and China specifically.** Significant manufacturing sits in Ireland, the Philippines, Thailand and Malaysia, and a large share of revenue is international. The company cites political and economic instability, tensions across the Taiwan Strait, the Russia–Ukraine conflict and Middle East tensions, export-control and sanctions regimes, and currency exposure. On China, ADI states that export restrictions have already impacted revenue and results in China and elsewhere, that they may push customers to stockpile, to substitute non-U.S. suppliers, or to build indigenous capacity, and that being perceived as an unreliable U.S. supplier could cost business to foreign competitors. **Distributor dependence.** With roughly 56% of revenue through third-party distributors and no letters of credit required — including from the largest distributor — ADI is unprotected against receivable default or distributor bankruptcy. Distributors can terminate representation on short notice, may be constrained by tariffs or export controls, and industry consolidation could remove a significant channel partner. ADI must also estimate price-protection and stock-rotation liabilities at the time of sale; material understatement would force later adjustments to revenue and gross profit. **Third-party supply and foundry concentration.** More than half of wafer requirements come from external foundries, including TSMC. Those foundries also serve competitors, so demand upturns can create capacity constraints, and geopolitical disruption to TSMC's operations would directly impair ADI's ability to build certain products. Some vendors are sole sources of specialized processing or materials. **Manufacturing disruption.** A prolonged shutdown of an internal or third-party facility from natural or man-made disaster, cybersecurity incident, civil unrest or labor loss would delay production, shipments and revenue. **Cybersecurity — updated for the June 2026 incident.** The 10-Q's revised risk factor is materially more specific than the annual version. ADI states it has experienced cybersecurity attacks and incidents, "such as the June 2026 incident and other cybersecurity events, some of which resulted in the exfiltration of files from certain affected systems." Operations were not interrupted and, based on information currently known, ADI does not believe the June 2026 incident is reasonably likely to materially impact its business, operations or financial condition — but the investigation into the nature and scope of the exfiltrated information remains ongoing, and the company warns there is no assurance that assessment will not change as facts emerge, that exfiltrated data will not be misused, or that further incidents will not occur. It adds that it expects to continue experiencing attacks, has incurred and expects to keep incurring response and remediation costs, and faces potential litigation, regulatory action, customer loss and reputational damage. The company also notes the SEC four-business-day materiality-disclosure rule and the risk that the SEC disagrees with its materiality determinations. **Artificial intelligence.** ADI embeds AI across technologies, operations, products and services. Risks named are competitive (rivals may deploy AI capabilities customers perceive as superior), regulatory (the EU AI Act and inconsistent regimes across jurisdictions), and technical (flawed algorithms or biased datasets, intellectual-property loss, and AI-generated code as a cybersecurity vector). **Acquisition execution.** Expansion by acquisition is an explicit element of strategy. The 10-K lists diversion of management attention, integration difficulty, funding requirements of acquired businesses, debt service, key-employee loss, unforeseen liabilities, higher-than-expected costs and failure to realize expected synergies. It also notes that antitrust and other regulatory review of acquisitions has become more complex and may prevent transactions. **Tax.** ADI's effective rate is below the 21% U.S. statutory rate because income is earned in lower-rate foreign jurisdictions, principally Ireland at 12.5%. The 10-K flags an IRS audit for fiscal 2018, 2019 and 2021, a separate IRS audit of Maxim's fiscal years 2015 through 2021, and Irish corporate tax audits. Most significant: during fiscal 2025 ADI received an IRS assessment for fiscal 2018 and 2019 totaling approximately **$267.0 million** excluding penalties and interest, relating to transfer pricing between ADI and a wholly-owned foreign subsidiary. ADI firmly disagrees, has recorded no additional liability for those or any other periods, and is preparing an appeal; the 10-Q repeats that if the IRS prevails the resolution and any read-through to later years could have a material adverse effect on income tax expense and net earnings. The OECD 15% global minimum tax applied to ADI beginning in fiscal 2025. **Indebtedness.** As of November 1, 2025 ADI carried approximately $8.6 billion of outstanding indebtedness including $446.6 million of commercial paper, with capacity for roughly $2.6 billion more in direct commercial paper borrowings. Leverage increases vulnerability to adverse conditions, constrains financing and acquisitions, and exposes net interest expense to market rates; a credit-ratings downgrade would raise borrowing costs. Covenants restrict liens, sale-leasebacks, mergers and subsidiary indebtedness, and the revolving facilities require consolidated EBITDA to consolidated interest charges above 3.0 to 1.0. **Sustainability-linked notes.** The $750 million sustainability-linked senior notes issued October 5, 2021 bear interest at 1.7% and step up by an additional 30 basis points per annum from April 1, 2026 to maturity on October 1, 2028 unless the defined Sustainability Performance Target is satisfied. **Other named risks.** Product defects and warranty, indemnity and product-liability claims, made sharper by sales into automotive, aerospace, defense, healthcare and industrial systems where failure can cause damage to property or persons; gray-market diversion of products from authorized channels; recruitment and retention of engineers in a tight labor market, including exposure to U.S. immigration policy changes; intellectual-property protection, particularly where foreign law affords weak remedies; privacy and data-protection regimes (GDPR, China's PIPL, CCPA, and HIPAA for digital-healthcare offerings); U.S. government contracting regulations, where noncompliance can bring price adjustments, refunds, penalties or debarment; environmental, health and safety standards, including possible restrictions on per- and polyfluoroalkyl substances used in semiconductor manufacturing; ESG expectations; natural disasters and climate effects on water and utility availability at fabrication facilities; and stock-price volatility. --- ## Management's discussion — fiscal 2025 From Item 7 of the fiscal 2025 10-K. Fiscal 2025 was a 52-week year against a 53-week fiscal 2024, so fiscal 2025 carried one less week of operations. **Results overview.** | | FY2025 | FY2024 | Change | |---|---|---|---| | Revenue | $11,019.7M | $9,427.2M | +17% | | Gross margin % | 61.5% | 57.1% | +440 bps | | Net income | $2,267.3M | $1,635.3M | +39% | | Net income % of revenue | 20.6% | 17.3% | | | Diluted EPS | $4.56 | $3.28 | +39% | **Revenue by end market.** Industrial $4,929.4M (+15%), Automotive $3,277.9M (+16%), Consumer $1,434.6M (+19%), Communications $1,377.9M (+26%). Management attributed the increase to broad-based demand: in Industrial, to customer inventory balances normalizing and growth in test equipment and aerospace and defense; in Automotive, to connectivity solutions; in Consumer, to portable products; in Communications, to the wireline sub-market and data center infrastructure expansion supporting AI applications. All of it was partially offset by the extra week in fiscal 2024. **Revenue by channel.** Distributors $6,144.8M (56% of revenue, down from 58%), direct customers $4,719.0M (43%, up from 40%), other $155.9M (1%). The decline in distributor share tracked the decline in Industrial's share of revenue. **Revenue by geography.** United States $3,238.1M (+14%), rest of North and South America $162.5M (+161%), Europe $2,285.6M (+8%), Japan $989.9M (−9%), China $2,858.3M (+34%), rest of Asia $1,485.3M (+24%). **Operating lines.** Gross margin of $6,773.5M rose 440 basis points to 61.5% on higher factory utilization and lower amortization of acquired intangibles. R&D was $1,766.0M (+19%, 16% of revenue) and SMG&A $1,255.3M (+17%, 11% of revenue), both driven by variable compensation and salary and benefit costs and both partly offset by the extra fiscal 2024 week. Amortization of intangibles reported in operating expense was $749.7M, down 1%, as a portion of acquired intangibles became fully amortized. Special charges, net rose 88% to $70.0M on increased Global Repositioning Actions charges; cumulative net special charges under that program reached $591.6 million through November 1, 2025, tied to the integration of Maxim Integrated Products and to consolidating the global footprint. Nonoperating expense fell 14% to $220.4M on higher interest income. **The GAAP-versus-adjusted gap, explained once.** ADI's reported margins carry a very large non-cash charge for amortization of intangible assets recognized in prior acquisitions — Maxim Integrated Products is the acquisition the 10-K names in connection with its integration program. At November 1, 2025 gross intangibles stood at $18,027.8 million against accumulated amortization of $10,014.0 million, with customer relationships ($10.34 billion gross) and technology-based assets ($7.62 billion gross) making up nearly all of it. Total amortization expense — recorded partly in cost of sales and partly in the operating-expense line — was $1.6 billion in fiscal 2025, $1.7 billion in fiscal 2024 and $2.0 billion in fiscal 2023, with a remaining weighted-average life of approximately 3.4 years. The company's own schedule of expected annual amortization is $1,537.5M in fiscal 2026, $1,533.0M in fiscal 2027, $1,465.3M in fiscal 2028, $1,128.2M in fiscal 2029 and $404.2M in fiscal 2030. This single item is the bulk of the difference between ADI's reported and adjusted margins, and on the company's schedule it steps down sharply after fiscal 2028. Goodwill of $26,945.2 million at fiscal 2025 year-end has never been impaired; ADI tests it on the first day of the fourth quarter as a single reporting unit and concluded fair value exceeded carrying value in every period presented. **Taxes.** The fiscal 2025 effective rate was 16.4% against 8.0% in fiscal 2024, both below the 21% U.S. statutory rate because pretax income is generated primarily in Ireland at 12.5%. Fiscal 2025 included a net deferred tax expense of $153.8 million from remeasuring Global Intangible Low-Taxed Income-related deferred tax assets and liabilities on passage of the One Big Beautiful Bill Act. Total liabilities for uncertain tax positions were $199.7 million. **Liquidity at fiscal year-end 2025.** Cash, cash equivalents and short-term investments were $3.7 billion, approximately $2.4 billion of it in the United States. Operating cash flow was $4,812.2M (44% of revenue) against $3,852.5M (41%); investing used $1,321.5M; financing used $2,982.6M, up on higher buybacks and dividends, partly offset by net debt proceeds. Senior notes carrying value was approximately $8.1 billion, commercial paper outstanding $446.6 million against a $3.0 billion program ceiling, and the five-year revolving facility entered April 11, 2025 provided up to $3.0 billion undrawn. Net additions to property, plant and equipment were $533.6 million, with fiscal 2026 capital expenditures guided to approximately 4% to 6% of revenue. Of a cumulative $26.7 billion buyback authorization, $9.7 billion remained. On November 24, 2025 the board declared a quarterly dividend of $0.99 per share, approximately $484.8 million, paid December 22, 2025. --- ## Current quarter — third quarter of fiscal 2026 Thirteen weeks ended August 1, 2026, from the Form 10-Q filed August 19, 2026. **Headline results.** | | Q3 FY26 | Q3 FY25 | Change | |---|---|---|---| | Revenue | $4,021.9M | $2,880.3M | +40% | | Gross margin | $2,707.5M | $1,789.7M | +51% | | Gross margin % | 67.3% | 62.1% | +520 bps | | Operating income | $1,613.0M | $818.0M | +97% | | Net income | $1,340.1M | $518.5M | +158% | | Diluted EPS | $2.74 | $1.04 | +163% | For the nine months, revenue was $10,805.6M (+36%), gross margin 66.6% (+580 bps), net income $3,347.3M (+126%) and diluted EPS $6.83 (+130%). **End markets.** Industrial $1,971.9M, 49% of revenue, +53% year over year. Automotive $998.2M, 25%, +16%. Communications $654.5M, 16%, +84%. Consumer $397.2M, 10%, +6%. Management states all Industrial sub-markets grew, with test equipment and aerospace and defense the strongest, and that the strongest growth within Communications came from the data center sub-market, driven by AI-related infrastructure investment. Communications revenue nearly doubled year over year — up 84%, from $354.8M to $654.5M — and that growth lifted its share of revenue from 12% to 16%, while Automotive and Consumer both lost share to a faster-growing Industrial and Communications base rather than declining in absolute terms. **Channel.** Distributors $2,327.1M (58% of revenue, up from 55%), direct customers $1,588.6M (39%), other $106.2M (3%). The distributor share increase follows the increase in Industrial's share of revenue. **Cost lines.** Gross margin expanded 520 basis points on higher utilization of manufacturing fixed costs and favorable end-market mix. R&D was $533.5M, up 17%, but fell to 13% of revenue from 16%. SMG&A was $397.3M, up 22%, but fell to 10% of revenue from 11%; the increase includes acquisition-related transaction costs. Amortization of intangibles in the operating-expense line was essentially flat at $188.0M. Special charges, net were a **net credit of $24.2 million** for the quarter, against a $4.3M charge a year earlier, the swing driven by ADI's completed sale of a subsidiary in Penang, Malaysia — its facility and certain equipment previously classified as held for sale. Note 5 to the financial statements puts the gain on that sale at approximately $24.2 million; management's discussion in the same filing describes the gain as $24.4 million. Proceeds net of cash were $96.6 million. For the nine months, special charges were a net $23.8M charge, including $32.4 million of Global Repositioning Actions severance and a $15.6 million impairment recorded in the first quarter on the asset group at the leased San Jose, California facility following a sublease. **Taxes.** The effective rate was 13.3% for the quarter and 12.3% for the nine months, both below the 21% statutory rate on the foreign-jurisdiction mix. The prior-year comparisons (32.1% and 18.9%) were elevated by the $153.8 million deferred tax expense recorded in the third quarter of fiscal 2025 on the One Big Beautiful Bill Act. **Empower Semiconductor acquisition.** On July 7, 2026 ADI completed the acquisition of all voting interests of **Empower Semiconductor, Inc.**, a provider of integrated voltage regulators and power management solutions, for approximately **$1.5 billion**, accounted for as a business combination. The deal had been announced May 19, 2026 as an all-cash transaction at $1.5 billion (Form 8-K, accession 0000006281-26-000048), positioned as expanding ADI's addressable market in AI compute power delivery through integrated voltage regulator and silicon capacitor technology, with Empower CEO Tim Phillips continuing to lead IVR technology efforts inside ADI. The preliminary purchase price allocation recognized $1.0 billion of goodwill (specifically $1,028.9 million in the goodwill rollforward), $0.6 billion of intangible assets primarily technology-based, and $0.1 billion of deferred tax liabilities; none of the goodwill is expected to be tax-deductible. Revenue and earnings attributable to Empower since acquisition were immaterial. ADI expensed approximately **$23.4 million** of transaction-related costs in the third quarter within SMG&A. Purchase accounting is preliminary and expected to be completed within a year of the acquisition date. Cash paid for acquisitions net of cash acquired was $1,500.2 million in the quarter and $1,536.0 million for the nine months. **Cybersecurity incidents.** On June 23, 2026 — within the quarter — ADI identified unauthorized access to certain company systems, activated incident-response protocols, engaged external cybersecurity experts and notified law enforcement (Form 8-K, accession 0001193125-26-324223). Operations were not interrupted. The investigation found that certain files were exfiltrated; the scope of the exfiltrated information remains under investigation and, to the company's knowledge, the data has not been publicly released or used fraudulently. ADI does not believe the incident is reasonably likely to materially impact its business, operations or financial condition based on what it currently knows. Separately and unrelated, on July 26, 2026 the company was made aware of public reports regarding a different cybersecurity matter and is assessing its validity, scope and potential impact. No financial impact has been quantified in the quarterly financial statements. **Balance sheet and liquidity.** Cash, cash equivalents and short-term investments were $2.3 billion at August 1, 2026, approximately $1.0 billion of it held in the United States — down from $3.7 billion at fiscal year-end, principally reflecting the Empower purchase and shareholder returns. Total assets were $48,424.4M; goodwill rose to $27,988.7M and net intangibles fell to $7,468.2M. Accounts receivable rose 66% to $2,389.6M, taking days sales outstanding to 50 from 44, on higher sales and collection timing. Inventory rose 17% to $1,931.5M (days cost of sales in inventory 131 versus 130) as ADI built stock to support demand; work in process is the bulk of it at $1,458.1M. Current liabilities rose to $5.7 billion from $3.2 billion, driven by reclassification of $1.3 billion of debt maturing within a year into current, higher commercial paper and higher accrued liabilities, partly offset by lower income taxes payable. Total debt principal outstanding was $9,222.2 million: $1,005.1 million of commercial paper (against the $3.0 billion program ceiling) plus $8,217.1 million of senior unsecured notes maturing between December 2026 and April 2054. The fair value of the senior notes was $7,304.7 million, below par, reflecting rates. On July 2, 2026 ADI entered a **364-day revolving credit agreement** with Bank of America, N.A. as administrative agent providing up to **$3.0 billion**, expiring July 1, 2027 and extendable, with an option to convert outstanding loans to a one-year non-amortizing term loan for a 0.50% fee (Form 8-K, accession 0001193125-26-294488). Together with the April 2025 five-year facility, committed revolving capacity is now up to $6.0 billion. ADI was in compliance with the 3.0-to-1.0 EBITDA-to-interest covenant. **Cash flow and shareholder returns.** Nine-month operating cash flow was $3,844.5M (36% of revenue) against $3,111.4M (39%); the percentage fell despite far higher net income because working capital consumed $940.7M against $8.0M a year earlier. Investing used $873.9M for the nine months, dominated by the Empower payment and offset by $990.7M of investment maturities and the $96.6M subsidiary sale. Financing used $3,304.1M, on $2,446.4M of buybacks and $1,556.0M of dividends with no new debt issuance this year (against $1,490.8M of debt proceeds in the prior-year period). Capital expenditures were $392.7M for the nine months, with fiscal 2026 spending still guided to approximately 4% to 6% of revenue. In the third quarter ADI repurchased 2,881,594 shares at an average $398.07 and paid $1.10 per share in dividends; shares outstanding fell to 484,565,465 from 489,654,097 at fiscal year-end. Of the $26.7 billion cumulative authorization, $7.4 billion remained available. On the company's trailing-twelve-month basis, as presented in the free-cash-flow reconciliation accompanying the third-quarter earnings release, revenue was $13,881.5 million, operating cash flow $5,545.3 million (40% of revenue) and free cash flow $4,937.5 million (36%), with $5,170 million returned to shareholders over that period. **Reported versus adjusted.** In the earnings release, third-quarter adjusted gross margin was 72.5% versus 67.3% reported, adjusted operating margin 50.0% versus 40.1% reported, and adjusted diluted EPS $3.45 versus $2.74 reported. The gap is almost entirely the acquisition-related amortization described in the annual review above: $397.8 million of acquisition-related expenses at the operating-income line in the quarter ($209.2 million in cost of sales, $188.6 million in operating expenses), plus the $23.4 million of Empower transaction costs and the special-charges credit. **Fourth-quarter fiscal 2026 outlook** (earnings release, August 19, 2026). Revenue of **$4.3 billion plus or minus $100 million**; at the midpoint, reported operating margin of approximately 42.6% (+/−150 bps) and adjusted operating margin of approximately 52.0% (+/−100 bps); nonoperating expense of approximately $80 million; a tax rate of 12% to 14%; reported EPS of **$3.14 plus or minus $0.15** and adjusted EPS of **$3.86 plus or minus $0.15**. The adjusted figures include $405 million of acquisition-related expense adjustments and $53 million of associated tax effects, equal to $0.72 per share. Management characterized the outlook as a record fourth quarter and described demand as strengthening across the product portfolio and regions through the third quarter. **Governance and other.** Vincent Roche remains Chief Executive Officer and Chair; Richard C. Puccio, Jr. is Executive Vice President and Chief Financial Officer, and adopted a Rule 10b5-1 plan on May 21, 2026 to sell up to 14,292 shares, running until February 16, 2027. Effective January 20, 2026, Dr. Yoky Matsuoka was appointed as an independent director and member of the Corporate Development Committee, expanding the board to eleven members (Form 8-K, accession 0000006281-26-000008). Disclosure controls were concluded effective as of August 1, 2026, with no material change in internal control over financial reporting during the quarter. --- ## Subsequent events The quarter ended August 1, 2026 and the Quarterly Report was filed August 19, 2026, so the post-period window is only eighteen days. The company's subsequent-events note discloses a single item, and there were no post-period acquisitions, divestitures, financings, borrowings or litigation outcomes disclosed: - **Dividend declaration.** On August 18, 2026, the Board of Directors declared a cash dividend of **$1.10 per outstanding share** of common stock, payable **September 15, 2026** to shareholders of record at the close of business on **September 1, 2026**, expected to total approximately **$533.0 million**. This is the same declaration announced in the August 19, 2026 earnings release, and it holds the per-share rate flat with the $1.10 paid during the third quarter, against $0.99 in the year-ago quarter. Two items disclosed in the quarterly report describe matters that remain open past the period end without being post-period events themselves: the investigation into the scope of information exfiltrated in the June 23, 2026 cybersecurity incident, and the assessment of the separate cybersecurity matter the company was made aware of on July 26, 2026, both of which were continuing as of the filing date; and the appeal ADI is preparing against the approximately $267.0 million IRS transfer-pricing assessment for fiscal 2018 and fiscal 2019, for which no additional liability has been recorded.