Mindy Kohl – Investor Relations Jerald G. Fishman – President & Chief Executive Officer David A. Zinsner – President of Finance & Chief Financial Officer

Ross Seymore - Deutsche Bank Securities John Barton - Cowen & Company Steven Smigie - Raymond James Uche Orji – UBS Jim Covello – Goldman Sachs John Pitzer - Credit Suisse Christopher Danely - J.P. Morgan Craig Ellis - Caris & Company David Wu - Global Crown Capital Doug Freedman - Broadpoint Amtech Terence Whalen – Citigroup Sumit Dhanda - BAS-ML

At this time I would like to welcome everyone to the Analog Devices fiscal second quarter 2009 earnings conference call. (Operator Instructions) Miss Kohl, you may begin your conference.

Good afternoon everyone. This is Mindy Kohl, Director of Investor Relations for Analog Devices. We appreciate you joining us for today's call. If you have not yet seen our second quarter fiscal 2009 release, you can access it by visiting our website at www.analog.com and clicking on the headline on the home page. This conference call is also being broadcast live on the Internet. From analog.com, select Investor Relations and follow the instructions shown next to the microphone icon. A recording of this call will be available today within about two hours of the call’s completion and will remain available via phone and Internet playback for one week. This webcast will also be archived on our IR website. Participating in today’s call are Jerry Fishman, President and CEO, and Dave Zinsner, Vice President of Finance and CFO. During the first part of the call Jerry and Dave will present our second quarter results and our short-term outlook and then we will open it up for questions. During today’s call, we will refer to several non-GAAP financial measures that have been adjusted for one-time items in order to provide investors with useful information regarding our results of operations and business trends. We have included reconciliations of these non-GAAP measures to the most directly comparable GAAP measures in today’s earnings release, which is now posted on the IR website. We’ve also updated the schedules on our IR website, which include the historical quarterly and annual summary P&L’s for continuing operations as well as historical quarterly and annual information for product revenue from continuing operations by end market and by product type. Next, I’d ask you to please note that the information we are about to discuss includes forward-looking statements, which include risks and uncertainties. The company’s actual results could differ materially from those we will be discussing. Factors that could contribute to such differences include, but are not limited to, those described in the company’s SEC filings, including our most recent quarterly report on Form 10-Q filed this afternoon. The forward-looking information that is provided by the company in this call represents the company’s outlook as of today and we do not undertake any obligation to update the forward-looking statements made by us. Subsequent events and developments may cause the company’s outlook to change. Therefore, this conference call will include time sensitive information that maybe accurate only as of the date of the live broadcast, which is May 19, 2009. With that, I’ll turn the call over to Jerry for opening remarks. Jerald G. Fishman: Good afternoon to everybody and thanks for joining us on today's call. As you can see from the press release we put out this afternoon and also our 10-Q, our Q2 revenues and profits were both well above the expectations that we communicated last quarter, as business levels stabilized and our cost reduction actions were more aggressive than originally thought in response to continuing economic uncertainty that still exists today. Revenues for our second quarter were approximately flat to Q1 levels and earnings per share increased sequentially by 17% excluding restructuring charges. On a sequential basis operating expenses, also excluding restructuring charges, declined by 8% sequentially and are now down 20%, or $48.0 million in total, over the past two quarters. Although the economic environment remains very challenging, we are encouraged by the continuing stability of our bookings activity over the past three months. We have also been given the very general sense from many of our customers that their incoming business levels have stabilized and their inventories have now reached satisfactory levels after two quarters of, in some cases, very significant declines. For the second quarter our revenues were $475.0 million, which was down 27% from the prior year and about flat to last quarter. In aggregate, our revenues grew sequentially in communications infrastructure and also in consumer products. However, our revenues continue to decline, albeit at a much reduced rate, in the industrial markets as capital spending worldwide remained depressed and our industrial customers have remained cautious. In line with these market trends, revenues increased sequentially in Asia and declined sequentially in Europe and North America, both of which are more dependent on industrial capital spending. Revenues for our very broad base of industrial customers, which were 52% of our revenues in Q2, were down 31% year-over-year and also down about 5% sequentially. Revenues from factory automation, instrumentation, and healthcare customers declined slightly from the prior quarter and while we don't expect much further erosion, we've not yet really seen any meaningful momentum in these markets. Not surprisingly, the automotive market remained troubled and our revenues from the automotive market were down 38% from the prior year, although we did see a small sequential increase as European automakers returned to production after numerous inventory reducing shut downs during the prior quarter. While automotive customers worldwide are plagued by very weak unit sales, their reliance on electronics to quickly bring differentiated features to the market continues to drive up vehicle signal processing content. So this bodes well for ADI when this industry does eventually regain some momentum. As was the case in the first quarter, in a few industrial markets, our revenue declines have been less severe. Revenues from defense customers were down only a small amount and products that sell into industrial infrastructure, such as security systems and energy management systems—and that's true particularly in China—were again much less affected than in the U.S. and in Europe. Despite the current weakness for our industrial customers we continue to be very enthusiastic about the mid- to long-term potential for ADI in the industrial markets for three important reasons. Number one, our sales to industrial customers over the past two quarters have declined at a significantly higher rate than industrial production has declined in the U.S. and Europe, which generally drives this business. Specifically, industrial production and output, which is often a very good leading indicator of industrial capital spending, declined approximately 9% over the last six months, while our sales to industrial customers from ADI declined 28% during the same period. This implies that we have absorbed the very significant inventory correction and that our sales to industrial customers have been well below their consumption rate of our products. Therefore, even if capital spending stays at depressed levels it would be logical to assume that our sales to industrial customers have reached, or will soon reach or approach, trough levels and will recover very quickly when capital spending begins to improve. Secondly, we have seen an increase in our industrial sales in China, in line with the government's industrial stimulus spending and that is likely to continue or perhaps even accelerate in the future. And lastly, our industrial customers buy our highest-performance converters and amplifiers as well as many ASSPs and our competitive position and our share continue to strengthen in many of these product categories. In fact, the most recent data that was published just recently in the last couple of weeks, I believe, by the Gartner Group, indicates that our converter market share increased to 40% in 2008, up from 37% the year before. We are also seeing very good design activity and good design wins across all the industrial markets we serve, which could accelerate our sales rebound when our customers' confidence improves in the United States and Europe. In the second quarter revenues from our communications customers were 29% of our revenues, down 7% from last year but up 8% to 10% sequentially. The recovery of the communications infrastructure market was driven in large part by China rewarding 3G licenses in January. ADI is very well positioned across many customers, many standards, and of course many geographies, to take advantage of the upside from the China 3G roll outs as well as continued 2G expansion in emerging markets and upcoming 4G infrastructure build outs in the future. Design activity remains very strong with these customers as we expand the builder materials presence we have to a much broader section of products and that should continue to improve our long-term market share in this market as we emerge from the downturn. We also saw an increase in our wireless handset business in Q2, which has become right now a relatively small part of our overall communications business as we have now focused our investments primarily on analog products and higher-end phones. We believe the handset business, which was down significantly in the first quarter, most likely has adjusted production levels to be more in line now with end demand. Revenues from the consumer end market was 17% of our total revenues, down 36% from last year but up 5% sequentially, primarily due to increased sales of products like digital cameras, after very significant declines in our first quarter. Although the consumer market of course continues to be weak, here again the second quarter saw a modest increase in sales as many customers began to better align their production with end demand and stocked with a relentless declines in their inventories. Revenues from our computer customers, which comprised only 3% of our revenues, declined 44% year-over-year and 17% sequentially. As you might remember, we have mentioned previously that we have significantly reduced our investment in ASS products for computers, given what we see as a very limited opportunity for high-performance signal processing technology in the personal computer market. So now I will turn the call over to Dave, who is going to review in a little more detail on the financial results for Q2. David A. Zinsner: I will start with gross margins. In Q2 gross margins were 55.1%, above plan for the quarter. Gross margins were down 590 basis points year-over-year and 130 basis points sequentially, primarily a result of utilization rates of approximately 40% in our internal fabs as we further reduced inventories. As a result of lower utilization, inventories declined $16.0 million sequentially and days in inventory declined from 141 days to 130 days. These results were achieved despite a $7.0 million inventory build related to our ongoing fab consolidations and a further meaningful drop in distribution inventory. Moving forward, we're still on track to complete our fab consolidations by the end of this fiscal year, which in aggregate should lead to an annualized decrease in cost of sales from current levels of approximately $65.0 million by the third quarter of fiscal 2010. We should begin to see the impact of these cost reductions in the first quarter of fiscal 2010 with the full savings benefits realized by the third quarter of fiscal 2010. In the second quarter operating expenses, excluding restructuring, were $192.0 million, down 8% from the prior quarter. In total, operating expenses were down $48.0 million, or 20%, from the fourth quarter of fiscal 2008. Approximately 40%, or $20.0 million, of the $48.0 million drop is of a temporary nature. It is mainly related to a drop in variable compensation and forced time off. The remaining 60% of the savings are permanent reductions in labor and related expenses and reductions in discretionary expenses. Our goal is to retain a large portion of the saving in discretionary spending as revenues grow. We are also planning additional savings from actions already taken but for which the benefits have not yet been realized, as well as from future infrastructure cost reductions throughout the company. In Q2 operating income, excluding restructuring charges, increased 14% from the prior quarter to $70.0 million as operating expense management more than offset slightly lower gross margins on flat sales. Excluding restructuring charges, diluted EPS from continuing operations was $0.21, up 17% from the prior quarter. Higher operating income and a better than planned tax rate of 18.8% drove higher net income. We expect our tax rate to be approximately 21% for the remainder of the fiscal year. Cash flow from operations was $76.0 million and capital expenditures were $12.0 million. Because our current level of internal capacity can support more than twice our current revenue level, we have significantly reduced capital spending plans for the year, down from $157.0 million last year to an expected $60.0 million in 2009, the bulk of which is tied to our fab consolidations. We believe that in future years our capital spending will be at similar levels to 2009. As a result, over time our annual depreciation, which was $144.0 million in fiscal 2008, should begin to move closer to our expected $60.0 million capital spending rate. Since most of our capital spending is manufacturing-related, this should be accretive to our gross margins. Accounts receivable decreased slightly from last quarter. DSO decreased to 44 days and 100% of our customers are current to terms. These are impressive results, particularly in the context of the current credit environment. During Q2 we paid out $58.0 million in dividends and this quarter our board once again approved a $0.20 per share quarterly cash dividend. At current prices, our dividend yield is approximately 4%. We ended the quarter with $1.3 billion in cash and no debt. Although much of our cash is overseas, we continue to believe that our dividend is an important mechanism for returning value to our shareholders. We expect U.S. cash flow to increase when industrial revenues recover and as we realize the benefits of the Massachusetts fab consolidation. This consolidation should result in significantly increased U.S. profits and lower capital spending. Even during this difficult economic cycle, our business continues to generate strong cash flow, as it has done for many years. We believe that as economic conditions improve, demand recovers, and we fully realize the benefits of our fundamentally lower cost structure, our cash flow will significantly increase as will our earnings leverage. With that, I will turn the call back to Jerry. Jerald G. Fishman: The orders to ADI and to our distributors recovered significantly in Q2 as customer inventory reductions abated. Our book-to-bill ratio for Q2, as measured by end customer bookings, was slightly above one for the first time since Q3 of 2008, and our Q3 opening backlog was up from last quarter. In addition, order levels were stable throughout the second quarter and have remained at these levels through the first two weeks in May. Nevertheless, lead times are short and we are still receiving a significant portion of new orders as turns orders, which gives us, of course, very limited visibility. So given all these factors, we’re planning for our third quarter revenues to be approximately flat on a sequential basis. We plan to continue to reduce inventories in Q3, and keep very tight control over operating costs. As a result, we expect gross margins to be in the 54% to 55% region and that will, of course, depend on the actual mix of business we ship and what ultimately we decide to be the appropriate factory utilization through the quarter. Overall, pricing for our products remains stable. We are planning for the operating expenses in Q2 to remain approximately flat sequentially and of course, to gain significant operating leverage when growth does resume. And as Dave mentioned, we expect our tax rate to be approximately 21% for the balance of the year. As a result of all those things, we are planning for diluted earnings per share from continuing operations to be approximately $0.17 to $0.19 in Q3. So before we open up the call for questions, I just wanted to close with a few key points. Obviously in the last six months it's been a difficult environment in which to operate a company, particularly companies like semi-conductor companies that have large portion of the cost as fixed cost. However, ADI's business model has allowed us to remain solidly profitable and continue to generate positive cash flow, despite the substantial short-term revenue declines that are the result of the economic chaos that's out there. Today our balance sheet remains one of the strongest in the industry and are one of the very few companies that we compete with that has no net debt, as well as the opportunity for significant operating leverage as revenues increase. This leverage will be driven by our much richer product mix, which is the result of having refocused ADI on more profitable and sustainable products and markets over the past 18 months and a fundamentally lower expense structure, the result of actions that we have taken to permanently reduce our infrastructure costs. All these actions are designed to set us back on course towards our long-term model of 30% operating margins, which we now expect to achieve at lower revenue levels than we previously expected. Our strategic investment priorities within the company are now very well defined and our current portfolio and our competitive position are about the strongest they have been in many years. Very importantly, our customers continue to view ADI as a technology leader, a reliable and trustworthy partner, and a financially stable supplier in a very chaotic environment. Our employees around the world understand where we are headed and despite all the pain of the last few quarters, I believe we are as committed as ever to ADI remaining one of the best technologies companies around. And I think all of that bodes very well for earnings growth and improved shareholder returns as the economy recovers.

During today's Q&A period we ask you to please limit yourself to one primary question and one follow-up question and we will do our best to give you another opportunity to ask additional questions if we have time remaining.

(Operator Instructions) Your first question comes from Ross Seymore - Deutsche Bank Securities. Ross Seymore - Deutsche Bank Securities: Just a question on the inventory commentary, you mentioned that you expect to bring down your own inventory in the next quarter. You did see inventory drop substantially. What are your plans in that and what should we imply about your utilization going into the next quarter? Jerald G. Fishman: I think in general, it's always hard to say what the distis are going to do with their inventory in advance, but I think our utilization is going to probably be very similar to what it was this quarter. We still have pretty healthy inventories and we are going to try to get them down to give us the maximum upside leverage when business gets better. Ross Seymore - Deutsche Bank Securities: On the opex side of things, how long should we think about you being able to keep the opex at roughly under $200.0 million or if you wanted to add that $20.0 million that was temporary to the number, how should we think about opex growing versus revenues? David A. Zinsner: First, I think it's important to note that that 20% that is temporary, a lot of that is highly contingent on actually profits increasing, so there is a sustainability to it that is pretty good if the business doesn't improve. Having said that, our goal is really, as we look at different revenue levels, take for example $550.0 million in revenue, as we get to that level, the last time we were at that revenue level our operating margins were kind of in the 20% range. Our goal is to get meaningfully about that and that's kind of how we're looking at opex. So opex, to some extent, is dependent on kind of timing and where we are making our investments and where the revenue is being generated, but I think it's safe to assume that our goal is really to expand operating margins, much beyond where we were the last time revenue was going up. Ross Seymore - Deutsche Bank Securities: The $48.0 million you said you cut in opex, was the percent, 20% of that was temporary or was $20.0 million out of the $48.0 million? David A. Zinsner: About 40% of the $48.0 million was temporary. I think I said 20%, I meant 40%. And that roughly equates to the $20.0 million of temporary. But most of it is variable comp, which is highly dependent on how our operating margins do over time. Jerald G. Fishman: I think there is very little doubt that any increase to opex is going to be very carefully controlled, no matter what happens on the upside. And we are certainly going to grow the revenues at quite a bit above any increase in opex. As we said earlier, I think in Dave's comments, we still haven't even really realized all the savings for actions we've already taken. As they come in over the next couple of quarters, on both the opex line and the cost of goods line. So, I think we have a lot of downward cost pressure in the company and the main reason is we expect to get to higher margins at lower revenues than we did last time and that's sort of the mantra around the company.

Your next question comes from John Barton - Cowen & Company. John Barton - Cowen & Company: Jerry, you went through a bunch of details of the industrial end market and basically highlighting the fact that your sales in the end market have contracted much more than the actual industrial market itself. You then kind of went on to say that they are getting near trough inventories. And then you went on to say that you are poised to really bounce back when industrial spending comes back. If I'm not misinterpreting your statements, you are chipping into the industrial market at a fair rate below what they are truly consuming at today, even without a bounce back in spending. And if that assertion is correct, doesn't that mean that your sales could bounce back even before true industrial spending starts to recover? Jerald G. Fishman: It's always hard to be precise when you are talking about a business with tens of thousands of customers in every geography. I think what I was trying to communicate is while that's possible, if you want to be pessimistic about the world, which we all tend to be right now, or cautious, we are saying that at least the rate of decline certainly abated last quarter. I believe we are reaching the trough in these businesses, given the disconnect between what's happened in the markets and what's happened with our sales and all our competitors' sales in the industrial market. So there's not a lot more downside, I think, and for a lot of reasons, including the ones that you mentioned, there might be some upside, but it's too early to be optimistic about that. At least in the very short term. You know, we would like to see a real fundamental change in the momentum in the market before we really declare that that's going to get better. And you know, there are machinations going on about inventory going up and inventory going down but eventually there is going to be demand getting better and that's the time when you'll really see that business getting better. So my comments, in the summary, on the industrial market were more about given the fact that the inventories are ahead of what's going on in the market, it's at least unlikely that it's not going to go down anymore and maybe with the margin there will be a little bounce or something because of the abatement of the inventory reductions. But it's hard to tell. John Barton - Cowen & Company: Comm infrastructure and market, what are your thoughts on that as you look out over the next several months and quarters and obviously it's starting to bounce back. Do you think that can continue consistently or how do you view that? Jerald G. Fishman: Your question is about the communications infrastructure? John Barton - Cowen & Company: That's correct. Jerald G. Fishman: Well, clearly, it's been explosive in China. That's been well described by us and I believe many of our competitors and other people that participate in that market. You know, there are concerns out in the market that there is going to be a pause in China while they absorb all the stuff, but it's hard to predict that far in advance. I think in the long term in China there is going to be a huge build out that's going to continue. Whether there is a pause in that market in the short term, for a quarter, or maybe a little bit longer, it's very hard to predict. I think the infrastructure part of the market, outside of China, is probably more predictable than in China right now. And if you look at the large infrastructure providers in Europe and the United States, they are still blessed and headed pretty well. So the uncertainty over the next quarter or two is probably in the Chinese infrastructure market and there's a lot of different opinions of what might happen there in the short term. But I would say very few different opinions of what's going to happen in that market over the longer term.

Your next question comes from Steven Smigie - Raymond James. Steven Smigie - Raymond James: I was wondering if you could comment a little on how much inventory you're thinking about taking out of the channel and internally here and what gross margin might have looked like if you weren't taking that out? David A. Zinsner: Our goal really is to get our inventory down to in the 110 days on our balance sheet. As we look at inventory, you never know, but it's pretty close to where I would consider historical levels have been. Maybe it comes down a little bit more but not much more. It's tough to say on utilization. Obviously when we were a relatively utilized business model we were running at 61% gross margins, we got a couple of things going in our favor now coming into the next cycle. Our Limerick consolidation is now pretty much complete and we will start seeing the savings at the beginning of next year. We have the Cambridge consolidation going on right now. That will be complete by the end of this fiscal year and we're expecting to see savings middle of next year. So there's at least a couple of hundred basis points of improvement from those consolidations and as the revenue starts to pick back up we will start to see gross margin expansion, just from the absorption side of things. So our goal is really to see if we were at 61% back at the last peak, that if we get up to those revenue levels at some point, that we're at least a couple of hundred basis points about that. Steven Smigie - Raymond James: That was definitely a question I was looking for an answer to but I also mean specifically in this quarter, if you weren't doing inventory reductions this quarter. David A. Zinsner: It's difficult to say. I couldn't even ballpark it. Jerald G. Fishman: I think it's probably fair to say that the lion's share of the declines that we have seen in the gross margin from the peak are about utilizations. So I mean there's nothing else going on with the mix that's very substantial. If anything, the industrial mix is down quite a bit, which is really whacked the utilization hardest and throws the most of the products from builders so, I think the real take away is that there is a lot of gross margin leverage in the system here and we are not planning yet in Q3 to turn out production because we're trying to work inventory down a bit. We'll have to take another look at that at the end of third quarter, decide what we do, and fourth quarter and for the balance of the year. And that will really determine, in the short term, what happens with gross margins. Steven Smigie - Raymond James: And following up, drawing a conclusion from your comments there about what gross margin looks like several quarters out, I know you mentioned you were looking to hit that 30% operating margin on lower revenues, but presumably that operating margin will be quite a bit above 30%, as a few years out also, so basically is there some time maybe in the next quarter or two where you would come out with a new operating model? Jerald G. Fishman: I would say once the business starts considerably moving up and there is real demand behind that as compared to supply issues, which are mostly driving the cycle right now, I think we are working on that very hard, we have a lot of ideas on what that is and how to get there clearly. Some of the actions we have taken are behind that new model. But I think it's a little premature to communicate a new model when we're running below 15% and the goal is 30%. As we start marching towards that goal, we will have a lot of updates on a different model above that. But I think for now I would try to keep the focus on let's keep moving it up, let's build in a lot of leverage as the sales grow, let's keep raising that every quarter in terms of the margins, as business gets better, and then we'll take a look at what the long-term model is as we start moving towards that objective.

Your next question comes from Uche Orji – UBS. Uche Orji – UBS: Jerry, can I just ask you about some clarification as to one of the things you said in your closing remarks. You talked about the revenue level you need to achieve your 30% target model being less now than what you had expected. Are you able to give us some idea as to what those numbers are in terms of what expectation was before and what it is now? Jerald G. Fishman: I'm not going to try to provide specificity on that right now. We're too far away from it. But I would say generically we got up to 25% or 26% at 650, which was the peak quarter. I guess that was Q4 of last year, and that we think we can do a lot better than that at lower revenue levels but I think it's premature to pick a revenue level and say at that revenue level we'll have this margin. I think we would like another quarter or so to see how the business unfolds and then we will give you a little more guidance on that in the future. Uche Orji – UBS: If I look at the guidance you've given to next quarter, do you mean that the end revenue mix should be similar to the quarter just ended, and if not, where do you think is and based on what you've seen so far should we expect to see the most surprise on the upside or the downside? Jerald G. Fishman: That revenue target that we put out about flat, there's obviously pluses and minuses to that that are possible. It's very hard to be precise when most of it is turns business and the market is very volatile right now. So what we really communicated was the plan we're going to run the company at. I think it's important to say that that the expense levels and the way we're going to run the factories is going to be somewhat independent of what the revenue levels are for the next quarter. So I think as we generically think about the whole question of the expense levels and the revenue levels associated with that, it seems to me the upside is probably that the inventory declines in the industrial business might continue to abate and that might give us a little more upside. We're expecting the consumer market to be a little bit better than it was seasonally because that typically is what happens. On the risk side, we have the month of July, which is a great unknown and nobody can really predict what's going to happen in July. In typical years July is usually a weak month but lately there is no typical year because there are so many different things going on. And of course, there is risk in the infrastructure part of the business in China. So when we look at the pluses and minuses, our product groups, when they looked at all the details of that, came up with a number plus or minus a little bit that it's roughly flat. But how it actually turns out, I think we'll have to wait until the end of the third quarter to see. Uche Orji – UBS: Jerry, can you just tell us now about what your priorities are beyond taking inventory down and taking cost on the product side. Are there areas where you think that you need some more specificity on management and maps, [inaudible]. Jerald G. Fishman: I'm not sure I understood your question. Did you ask what our strategic priorities are for the MEMS and the power business? Uche Orji – UBS: Yes. Jerald G. Fishman: I think as we said before, they have both been strategic priorities for the company, each for different reasons. On the power side we have said that because it really is the one category in the analog business that we haven't had much sales and our customers really want us to be, as they continue to contract the amount of vendors, they want to do business and we've put a lot of money into that business. And as I mentioned, I think last quarter, despite all the economic chaos, it looks like we're really beginning to get some traction on some products and some customers in that business. It's been a long haul but we are. The MEMS business is a little bit different. The real strategic rationale for that business is that of course there's a lot of customers that have a lot of applications in MEMS. Increasingly that requires signal processing so it's a great addendum to things we already do. But another important rationale to that is that it's hard to do and not many people can do it. It takes 15 years to figure out how to do it and it really does give us a real technology that it's not likely that we're going to have a lot of competition in, particularly amongst our traditional competitors. So it really, in a lot of applications, particularly automotive applications, but increasingly in industrial and other applications. I mean, it's just a tremendous building enthusiasm for things that can sense motion. And it started out with accelerometers for cars, it's now moving into gyroscopes for cars and many other applications and behind every electronic stability control system, which is mandated pretty soon, there are going to be gyroscopes. And they are hard to do, believe me. It's taken us years to figure out how to do it. So I think it's a compelling technology, we believe it's hard to replicate, we believe it goes hand in hand with many other technologies that we have in the company, be they analog or DSP light technologies. And the customers—this is one of the businesses where the customers really drag us into it because it really does change the end product if you can figure out to reliably and cost-effectively sense motion. In many different dimensions. So that's the rationale for each of those businesses. I think they both remain strategic priorities in the company and we're working to get more revenues and less cost, as we always are, like in every business, but they are important priorities for us.

Your next question comes from Jim Covello – Goldman Sachs. Jim Covello – Goldman Sachs: First question, within the consumer segment, I think you commented the digital still camera was strong. Could you talk about the trends in the other two key segments within the consumer? I think that's digital TV and gaming. Jerald G. Fishman: The digital TV market took a little pause out there, a large pause. That's been a very weak market over the last two quarters. Our internal forecasts indicate that that's going to get a little better this quarter. Time will tell if that really comes true. The AV market has also been extremely weak. If we believe the forecast we're getting from some of those customers, at least on a seasonal basis, they're expecting some recovery. So we'll have to wait and see how that happens. Typically about third quarter we begin to see the build-up of that business and if this year turns out to be like other years, we should see some increase in that business next quarter. But I think it would be very premature to say that the consumer market has turned and everything is going to go great. I think until the unemployment rate starts to abate we're not going to see big bulges in consumer spending. Or at least that's the theory under which we're running our company. Jim Covello – Goldman Sachs: Relative to the turns business that you're assuming this quarter versus historically that you normally see in this quarter, about the same, little more conservative? David A. Zinsner: It's relatively similar to historical levels. Last quarter obviously we did better and we had higher turns than we historically have, but the turns that we're building into our guidance this time around are pretty close to what the historical levels are. Jerald G. Fishman: It's basically all turns. Nobody wants to hold inventory, nobody wants to give you any lead time. So I think that's the way the environment is going to stay for a while, at least for companies like ours. Jim Covello – Goldman Sachs: Do you consider the ISM index a decent proxy for your overall industrial business? I know there's a lot of components to it but do you think that's a fair way to think about it? Jerald G. Fishman: Yes, I would say that there are certainly trends that, with some lag or lead, tend to line up. And we look at that very closely and we have been encouraged by what we've seen over the last month or so, so time will tell. I think there's no doubt there's a correlation between those two, the question is the lag of that correlation to our business. But certainly when you see that starting to move up, that can't be viewed as a bad sign.

Your next question comes from John Pitzer - Credit Suisse. John Pitzer - Credit Suisse: David, I think that despite the inventory draw down in the April quarter there were still $7.0 million of buffer inventory you built for the upcoming fab closure. Is that something that will reoccur this quarter and how much excess inventory, or buffer inventory, should we think about relative to the fab consolidation? David A. Zinsner: It is something for Cambridge that is likely to be repeated all the way up until we close Cambridge, which is at the end of the year. It's probably adding about 10 days to our inventory, the buffer builds. John Pitzer - Credit Suisse: And Jerry, help me understand the upside in the April quarter relative to the down 10% mid-point guidance. What really drove that? Was it industrial mopping as that as you had first feared, was it the communications being stronger than expected? Just help me understand within the April quarter what drove the better than expected results in the top line. Jerald G. Fishman: I think the answer to that is yes. The industrial business was a real collision course with Earth when we reported the numbers and we had really no understanding of where that was headed. The infrastructure business did a little bit better than we would have thought. Even the consumer business did a little better than we feared, I would say. So I think just generally, the amount of inventory that customers were getting rid of just abated at a faster rate than we feared and that gave us some upside. You know the 27% down year-over-year is not a great quarter, it just isn't as bad as we feared, which is really the way to think about it. And I think it was in those areas where we did a little bit better. John Pitzer - Credit Suisse: The power management market, given that is a much more fragmented market than the converter market, can you help me understand the margin profile you are targeting in that market. And you mad the comment that your customers are pulling you into that business. What do they see that you have that they can't get elsewhere? Jerald G. Fishman: In some of the more commodity power management areas where it's just really providing the function and five different people can do it and so on. We have gravitated a large part of the R&D away from that part of the power business, but we see tremendous opportunity in others in the commodity part of the power business, in industrial products, in infrastructure products, and even in some of the consumer products where we can really do things in terms of integrating power with signal processing that is very hard for other, more power management-centric companies. So the very fragmentation that you mentioned of the power business is what gives us a good chance to actually get some meaningful revenues and make attractive margins in that business. I think if we stay out of the commodity parts of the power management business and focus on the areas that I mentioned, I don't think there is much of a difference in the gross margins we can achieve for other products that we sell into those particular markets.

Your next question comes from Christopher Danely - J.P. Morgan. Christopher Danely - J.P. Morgan: Just a quick clarification. If you look at end markets within the flat guidance it sounds like you think that [inaudible] PC end markets will be up and the communication and industrial end markets will be down. Is that what we should imply? Jerald G. Fishman: They are very—there is a fragmented answer to that question. I think there are some elements of each of those markets that you are saying will be down that really we are not planning for them to be down. There's part of the communications market which—the Chinese infrastructure market—that we will have to see how that goes. The rest of the infrastructure market I think remains pretty strong, as we see it. Many of the other communications applications, some of the networking stuff, some of the optical stuff, maybe even the handset stuff, might actually turn out to be a little bit better next quarter. We expect the consumer market to be a little bit better. One of the major concerns is just what happens in the month of July overall. If we wind up with a July like our December, when people shut down and nobody did anything and everyone went to [inaudible] for the month, then I think there are some risks to that. If July turns out to be a reasonable month, and there are no disasters, I think the estimate is probably in the mid-range of what's probably going to happen. Christopher Danely - J.P. Morgan: In terms of our thoughts on just inventory versus demand out there, it sounds like you're thinking that the channel is going to reduce inventory again in your end markets and maybe it's wait until next quarter where your business starts tracking in demand, is that a correct statement? Jerald G. Fishman: What the channel does with our inventory doesn't affect our sales very much. It more affects our production levels. So we really don't know the answer to your question, so I mean, we get orders every week from the distributors, they get orders every week from the customers, we watch it very closely to see if there are any trends. You know, the distributor inventory is down quite a bit over the last two quarters. So on the other hand the turns are about flat because their sales are way down. So when the turns are about flat it's hard to predict which way they're going to apply pressure on this thing. If they believe the market is going to get stronger the end of the year and they're worried about shortages in the foundries and the like, I think they'll start to add inventory. If it turns out hopefully that they won't. I think that they could probably give you a better picture of what they're going to do with their inventories because we sure don't know. Christopher Danely - J.P. Morgan: I was thinking more on your end customers or direct customers. And any words of wisdom for us on what you think their inventory trends are? Are they done working it down? Jerald G. Fishman: I guess we hear different stories from different customers but I think generally—I mean, inventories came down pretty far so what it really has to do is, are they really optimistic or pessimistic about the future. In other words, there are some customers that basically keep singing the blues and I think those customers will continue to bang the inventories down. And there are many other customers that actually now are getting concerned about their inventory levels. They are very low. There's all the reports coming out of Taiwan about foundry capacity and so on. And they're getting a little nervous that they pushed this pretty hard. It's very interesting that this cycle, it's true that the reaction of customers to demand changes is about the most extreme we've ever seen, so customers this time were not going to make the mistake they made in 2001 and they reacted enormously quickly and severely to the changing outlook for their business. The good news is that got a lot of inventory out the cycle quickly and that's why I think when the demand, or the sentiment out there about the economy and what's going to happen, gets better, I think the snap-back will be good. But it's very hard to predict on as wide a customer base what the average customer is going to do. I think we have customers in both camps.

Your next question comes from Craig Ellis - Caris & Company. Craig Ellis - Caris & Company: Dave, you mentioned the growing delta between your capex and depreciation. When do we start to see depreciation falling meaningful? Is that the middle of next year after the two fabs are shut down or is it later than that? David A. Zinsner: Well, actually, depreciation will have a pretty decent fall, I think, next quarter but you really won't see that savings to the P&L because most of that gets kind of hung on the balance sheet until the first quarter of next year. So there will be kind of a step function decline in the next couple of quarters but then after that our best estimation is that it's going to kind of trail downward over the next five years or so because that's generally what we put the capital on the balance sheet at. Craig Ellis - Caris & Company: And then more of a revenue question for Jerry. Jerry, you talked about, on this call and prior calls, the growth in the industrials business in China. Can you help us understand how big that business is relative to our overall industrials business, and how should we think about the growth characteristics of that business versus the broader industrials over the next couple of years? Jerald G. Fishman: I don't have the exact numbers in front of us, we are going to have to dig those out for you, but I would say generally it's not surprising there's a huge industrialization. That's been going in China. Our sense when we talk to these large industrial customers over there, is that the government is really pumping an awful lot of money into new factories, for obvious reasons. Now, eventually those factories have to produce stuff that sells, at the beginning in China but ultimately they have got to export stuff to justify all that and they're making a bet that when the economy starts turning in other locations that the exports out of China are going to go up very dramatically. So I think initially, mostly, it's to support Chinese consumption but eventually it's going to wind up supporting American and European and Japanese and other consumption. So I don't have any doubt that we've put in a tremendous amount of focus to building our industrial and other businesses in China because we really believe it's going to be like the United States as 40 or 50 years ago, where there was the industrial revolution here. And that business was an enormously fast growing business. So we have put in a fair amount of infrastructure into China. You know, the early signs are that our brand in China, which is a very good leading indicator of our industrial sales across many, many companies, is very strong in China. We have a great team over there and we have good leadership there. We have a lot of good engineers over there that actually design some of the products and we have good sales people and applications people over there. So I think China is not only going to be the home of some of the very high volume commoditized products, but it's also going to provide a great opportunity for those that get in early into the base of what will turn out to be tens of thousands of industrial customers in China. It's not going to be any different than the United States in that way and Europe. It's just going to be about 40 years, 50 years later than in the U.S. So that's an important business lesson. I think if you want us to try to quantify that any more we would have to dig into the data, which I don't happen to have in front of me, but I would say, on a absolute basis, it's not a very significant part of our industrial business but certainly the percentage of our industrial business as it is has been climbing as that business has been growing and the rest of it leapt the track. Craig Ellis - Caris & Company: Jerry, you mentioned the converter market share data. As we've gone through the downturn, have you noticed any change in competitive dynamics in your core converter and amplifier businesses? Jerald G. Fishman: Well, I think everybody wants it. That's not a big change in this part of the cycle. So I think there's competition out there. There's always competition, always has been competition. So our job is just to continue the rate of innovation. We have a very dominant brand with the largest consumers of converter products and we have done a pretty job at Analog of doing that, despite all the competition over the last couple of years. So our job is to make sure we don't take our eyes off that ball since that is, those are, one of the most important things we do in analog. So, so far so good. We keep enormous pressure on making sure our technology is really strong, the customers know it, the sales guys sell it and I think there are a lot of people who find it hard to believe that in a market that size with all the competition we have been able to do as well as we have over the past five years in that business. So we are trying hard not to get complacent about that but it is an important of the R&D that we put into the company and it's a very important part of our competitive advantage.

Your next question comes from David Wu - Global Crown Capital. David Wu - Global Crown Capital: Dave, maybe you could help me with this. Once you consolidated two fabs in the first quarter fiscal 2010 how much does your manufacturing cost decline? Do you get it all at once or do you have it spread over two consecutive quarters and won't get the full amount until Q2? David A. Zinsner: Actually, we don't get the full amount until the third quarter but the reason is more to do with how the inventory gets digested, so we have actually completed the Limerick consolidation for the most part so from a cash flow basis we are already seeing the savings but that inventory has to get digested through the system and that won't happen until the first quarter of 2010. So that's roughly about $6.0 a quarter, or $24.0 million or $25.0 million a year on an annualized basis. Then the Cambridge consolidation with Wilmington happens at the end of this year and we'll start seeing the cash flow benefit of that at the beginning of next year, however, because we will build some inventory obviously on that and that has to get digested, our expectation is that will happen in the first two quarters of fiscal 2010 and so the new inventory at new cost, excluding these expenses associated with Cambridge, will start to be realized through the P&L in the third quarter of 2010. That's roughly about $10.0 million a quarter, or about $40.0 million on an annualized basis. So by the third quarter of 2010 the expectation is that we're at the $65.0 million of annualized savings run rate. David Wu - Global Crown Capital: The $6.0 million would be achieved by what, the second quarter? David A. Zinsner: The first quarter of 2010. David Wu - Global Crown Capital: So $6.0 million and then $16.0 million by the third quarter. David A. Zinsner: Right. David Wu - Global Crown Capital: The second question I have is regarding this utilization rate. Once you consolidate your two fabs, does it automatically move higher? From the 40% rate that you have currently. David A. Zinsner: Yes, we have more capacity than we need. We're eliminating some of that capacity so the utilization rate does improve. David Wu - Global Crown Capital: Would it jump 10 or 15 points? David A. Zinsner: I think it is about 10 points that it jumps.

Your next question comes from Doug Freedman - Broadpoint Amtech. Doug Freedman - Broadpoint Amtech: Can you spend a little bit of time talking about this cycle and what you are expecting to see from an ASP trend standpoint? Are there any early signs of aggressive behavior from your competitors? Jerald G. Fishman: There are always competitors that are a little erratic on the pricing. We have live with that for many years but it is interesting when you look at ADI, our average selling price, which is made up of many different customers, many markets, many products, and many geographies, and many currencies, our average selling price hasn't moved very much. So there is always competitive pressure. We have good competitors, some of them are very aggressive on price, but overall, our average selling price has been reasonably flat for quite a while. On a particular product, the average selling prices typically go down as the products get older and then the ones that get really old go back up. In the analog business, that's just the way it happens when some of those products have 20-year life cycles. But there are incidences where we have competition and they quote a lower price and sometimes we react to it and sometimes we don't. And sometimes we have a better product that we can sell them at a lower price than the old product we sold them. That's just the nature of this business. But I don't see any alarming trends that are significantly reducing our average selling price in anyplace really in the market. We always have aggressive competitors. There are some that think we are an aggressive competitor to other people's business that's out there, so it really depends on where you sit and what product areas you're in. Doug Freedman - Broadpoint Amtech: Do you think you could compare your July quarter guidance to your April quarter guidance and what level of tier you're pricing into your guidance, because clearly you said you were very concerned entering the present quarter that you just put up and you're still sort of echoing a level of concern. Can you calibrate us on how that's changed? Jerald G. Fishman: I think it's a little bit less concerned than last quarter. Last quarter when we put the guidance out, you know, when you have a downward spiral it's always hard to predict the rate of that spiral whether it's going to abate or accelerate. I think the thing that's been encouraging, to a bunch of pessimists like us, are that the weekly order rates have been remarkably consistent for about three months now and when the rates are consistent you are not seeing rates that are 40% or 50% different every week, it gives you a little more confidence that there's a broad customer base out there that has sort of calibrated their worlds at a certain level. So I think there's always ups and downs in that but certainly the stability in the business we've seen gives us a little more confidence than when you're in a downward spiral. I think having said that, there's still a lot of uncertainty out there and we could have put out a large range and said it might be down some, might be up some and everybody would have put a flat number there anyhow, so we just sort of said that's about the plan for the quarter, that as you said, there is still uncertainty out there. I wouldn't in any way say that plan is a slam dunk. I don't think it's a sandbag plan. On the other hand, at least if I listen to our sales guys and our product guys, I don't think any of them are contending that there's a disaster out there. But plus or minus a few percent it's always very hard to call.

Your next question comes from Terence Whalen – Citigroup. Terence Whalen – Citigroup: With regard to gross margin, given that we are taking about 300 basis points plus out of the gross margin from the COGS reductions of the Limerick and Massachusetts fabs, and also based on lower depreciation, Dave, looking out several years, assuming you get back to a $2.5 billion annual run rate, would the gross margin level be somewhere above 65% then? David A. Zinsner: It's tough to call based on mix. What we know is that the last time we were at the 650 level we were at 61% gross margins. We feel pretty confident that we can do better than that. The question is how much I think is really dependent on mix. We have got obviously the depreciation going in our favor, some of which is coming from the consolidations, but some of it is coming from lower capital spending. We also have the consolidations, which takes out fixed costs outside of depreciation. So we feel like we have got a lot of momentum going in our favor for gross margins. Mix will ultimately play a factor in that and our belief is that we can get well above 61%. I don't know exactly what level we will ultimately end at. Jerald G. Fishman: I think the way to think about is, again, we're running 55, so let's calibrate the world on that. And we have put in a lot of programs to fundamentally reduce the cost of goods sold for analog devices, and most of those are these fab consolidations, there's other things that we've done to fundamentally reduce the cost structure. I think that as we get closer and we start seeing sequential increases in the gross margin line rather than sequential decreases, as we've seen, I think we can be a lot more thoughtful and accurate about what actual gross margin we can achieve. I think what we're really trying to do and what we have been trying to do, is start putting up quarters when business gets better where the gross margins go up, the opex ratio goes down and we've got a lot of leverage on the sales as they increase. I think trying to pin down the specifics of that when we're at 55% gross margin and 15% operating profit is very hard to do. So I think each quarter as we get more confidence—all we can really do is tell you the things we've done and what we think the cost savings are as a result of that. Those are things that are under our control that we know. The rest of it, we'll just have to wait and see how it goes. And what we're trying to build is a model tier with extremely high leverage. That's the take away. Terence Whalen – Citigroup: Regarding the monthly order linearity in the July quarter. It sounds like you're staying with a little bit higher backlog for the July quarter than you had started for the April quarter. And implied in that maybe is a little bit of tapering in the month of July orders. What are the swing factors that will determine whether July does taper off and might be expected for a flat number, or what would be the potential source of upside in your view, based on what you see now, potentially in July? Would it be coming from better comps, infrastructure? Would it be coming from some aseasonal industrial pickup or would it be the consumer and computing businesses? Jerald G. Fishman: The third quarter will really depend more I think than any major trends in any of the segments, which I think are relatively small relative to our sales, will depend on just how customers feel about the world. If we get out to July and everybody is still thinking the world is coming unglued and the like, I think July could turn out to be a bad month and we will be on the long side of this. I think if it turns out that as we get out to July and people are believing that the end of the year is going to be good, that there is reason for the economies to believe that they are going to get a little bit better, and customers a little less afraid, credit eases up and you don't keep hearing about 600,000 jobs a month being lost in the U.S. and so on, and people get a little more confident, I think we could get better than typical seasonality in July. Because I think people are concerned about how low the inventories are. So I think we're not going to know that until July and I think that most of it, at least my view, other than some small ups and downs between one market segment or another, I think it will be mostly dependent upon sentiment out there. And that's the thing that's so hard to predict.

Your final question comes from Sumit Dhanda - BAS-ML. Sumit Dhanda - BAS-ML: Dave, in terms of the reduction in infrastructure expenses or the plan to reduce those expenses, can you tell us what the extent of the benefit from that will be and how it will flow through in coming quarters? David A. Zinsner: Some of which we have actually taken action on and you are seeing the savings in the drop we've gotten to today at the $192.0 million level. There is some benefit coming in the next few quarters. It's of the few million dollars per quarter kind of range, from we have talked about to date. We are still looking—we have an active process of looking at infrastructure expenses and identifying better and less expensive ways to go about delivering our infrastructure services to the company and over the next couple of quarters I think we will identify more opportunities but at this point we are unable to quantify it. Getting back to Jerry's comment at the very beginning, the opex is at $192.0 million and our goal is to really constrain that a lot while revenues are flat and if things return to growth, which we assume they will at some point, is to really constrain the growth on opex so that it is much slower than the growth on the revenue side, until we see a lot of leverage. Sumit Dhanda - BAS-ML: Given that you are reporting a month after a lot of other companies, is it clear to you that there is going to be a pause in the China 3G build out here in the July quarter. Is that how you're planning for business or are the lead times still short that you don't know for sure? Jerald G. Fishman: We never know for sure. I think that we know sort of that we listened to a lot of our competitors who talked about that a little bit. When you talk to the large companies in China there is sort of differences of opinion of their views on what's going to happen this quarter. A lot of these products are very short delivery items so we don't really know, but I would say generically we are planning for a little bit of weakness on the Chinese side of the infrastructure market and not so much weakness on the European and U.S. side of the infrastructure market. But built into our assumptions is this, probably, certainly the rate of growth is going to pause for a while there and it's possible it could decline sequentially quarter-to-quarter. But I think the important take away for us on that business is it's not going to be a very long one. There is a tremendous build out that's still ahead of us and whenever you see a large increase in a business as we've seen, in the Chinese infrastructure business, it wouldn't be surprising to see a pause, although there's lots of different opinions about that. But the direct answer to your question is our assumptions are that is going to decline a little bit in the third quarter although not a tremendous amount. Sumit Dhanda - BAS-ML: And that's an assumption or based on actual feedback? Jerald G. Fishman: I think it's a combination of both.

Thank you very much for joining us today and we look forward to talking to all of you again during the Q3 conference call which is scheduled for August 18, 2009.

This concludes today’s conference call.