Jerald Fishman – President & CEO David Zinsner – CFO Mindy Kohl – IR

Uche Orji - UBS Romit Shah - Barclays Capital Steve Smigie - Raymond James Ross Seymore - Deutsche Bank David Wu – [TC Research] Jim Covello - Goldman Sachs Tristan Gerra - Robert W. Baird Christopher Danely - JPMorgan Terence Whalen - Citigroup David Wong - Wells Fargo Stacy Rasgon – Sanford Bernstein Sumit Dhanda - Banc of America Securities - ML Craig Ellis - Caris & Company Mark Lipacis - Morgan Stanley

At this time I would like to welcome everyone to the Analog Devices fiscal third 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 really appreciate you joining us for today's call. If you have not yet seen our third quarter fiscal 2009 release, you can access it on the home page of our IR website at www.investor.analog.com. This conference call is also being broadcast live on the Internet and the web cast may be accessed by clicking on the microphone icon on the home page of our IR website. A recording of this conference 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 web cast will also be archived on our IR website. Participating in today’s call are Jerald Fishman, President and CEO, and David Zinsner, Vice President of Finance and CFO. During the first part of the call Jerald and David will present our third quarter results and our short-term outlook and then we will open it up for questions during the latter part of the call. 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 may be accurate only as of the date of the live broadcast, which is August 18, 2009. With that, I’ll turn the call over to Jerald Fishman.

Good afternoon and thanks for joining us on today’s call. As you can see from the press release and the 10-Q, we had a very solid quarter with sequential revenue growth of 4% and earnings growth of about 22%. These results were both ahead of our plan as orders were stronger then we predicted throughout the quarter. On a sequential basis revenues grew 28% in the consumer market, 21% in the automotive market and 3% in the industrial market. Communications revenues declined 9% sequentially as we expected as our largest wireless infrastructure customers in Asia reduced their order levels to lower their inventories. Sales to handset customers increased during the quarter in line with all these market trends, our revenues were approximately flat in the US and Europe, up in Japan, and declined slightly in Asia, mostly as a result of Chinese infrastructure revenue declines. Orders on ADI grew significantly in Q3, the result of a generally more positive outlook at most of our customers and also our distributors’ restocking after many quarters of reducing their inventory. As a result our book to bill ratio was above one for the quarter and our backlog increased. Distributor orders on ADI were higher than orders from our end customers on our distributors which is typical in this phase of the business cycle where the distributors are restocking their shelves. Overall our sense is that customers and distributors are more confident as they believe they’ve seen the low point of the cycle and they’re now planning for some growth in the future. I think most importantly orders from our industrial customers increased sequentially for the first time in many quarters. Given the importance of the industrial market to ADI we’ve now surveyed our largest industrial customers to better understand their expectations for the near-term future. Generally our most optimistic industrial customers are in Asia where growth prospects are the strongest and ADI is building a very significant industrial franchise that replicates our leadership position built over many years in the industrial markets in the United States and Europe. Overall most industrial customers across all the regions including the US and Europe believe that business has stabilized and they are planning for a continued gradual recovery later this year and into 2010. During Q3 our gross margins declined by about 100 basis points to 54.1% which was in line with the expectations given the somewhat lopsided mix of business that was atypical for the quarter. At this point in the cycle we believe we’ve now reached the trough for gross margins. The industrial business is now beginning to grow and our inventory levels are now back in line with our model so utilization will begin to increase in our fourth quarter. As we said last quarter we believe we’re at the very beginnings of a fairly significant ramp in gross margins in 2010 and beyond. Operating margins improved to 16% of sales. We continue to see the benefits of previous restructuring actions as operating expenses declined by an additional $4 million or approximately 2% sequentially representing now a cumulative decline of more than $53 million on a quarterly basis or 22% excluding restructuring costs since the end of the prior year period. We believe that ADI is now in a very strong position, perhaps the strongest in our recent history. During the downturn we continue to invest significantly in new product development to further improve our portfolio and our competitive position. At the same time we reduce our costs by over 20% a portion of which are permanent cost reductions. We believe that the third quarter as I said earlier marked the low point for our gross margins in the cycle and the tangible benefits of our margin improvement initiatives are just beginning to unfold. We are planning to tightly manage operating expenses in this cycle so that our earnings can grow much faster then our revenues. As we finalize next year’s operating plan later this quarter we’ll be able to provide more specific guidance regarding our financial goals for fiscal 2010 and we hope to do that, or be ready to talk about that by next quarter’s call. So now I’ll turn the podium over here to David who is going to review the financials in a bit more detail.

Thanks Jerald, as Jerald stated revenues were $492 million, a 4% increase from the prior quarter and a 25% decrease from the prior year. Orders increased this quarter and we closed the quarter with a book to bill that was above one. Gross margins were 54.1% which was within our forecasted range of 54% to 55%. This was down from the 55.1% we reported in Q2 due to a greater mix of consumer and automotive revenue and less communications infrastructure revenue. In addition factory utilization remained low at approximately 45% as we continued to focus on reducing inventory levels in the third quarter. Inventory on our balance sheet declined by $29 million this quarter and our days of inventory are now at 112. We believe that third quarter gross margins represent a trough for this cycle and anticipate a gradual improvement in gross margins going forward as our product mix stabilizes to historical levels and we gradually begin to increase production levels. We anticipate more significant increases in gross margins beginning in Q1 and continuing throughout the next fiscal year as we realize the benefits of the manufacturing consolidation and cost reductions that we executed this year. Capital expenditures were approximately $5 million in Q3. We expect CapEx to be at or slightly below $55 million for the full year. Lower capital spending is the result of lower factory utilization and the outsourcing of advanced CMOS wafer production of higher volume products to Asia. In the longer term we expect capital spending in future years to continue to be well below current depreciation levels which should create the opportunity for important gross margin expansion as depreciation approximates capital spending. Operating expenses were $187 million, down $4 million excluding restructuring from the prior quarter and down $53 million from the prior year as we’re planning for operating expenses to remain under very tight control as business improves. Other income was $1 million, down from $4 million the prior quarter primarily due to lower interest rates earned on invested cash balances and interest expense as a result of the issuance of $375 million of five year 5% coupon bonds in Q3. Next quarter we expect to have a full quarter’s effect of the borrowing and thus expect that other income and expense will swing to an expense of $1 million assuming current interest rates stay the same. Our tax rate decreased to 18% this quarter as we adjusted our annual tax rate to 20% from the previously expected level of 21%. We expect our fourth quarter tax rate to be approximately 20%. Weighted average shares outstanding were 293 million this quarter. We expect weighted average shares to increase to 296 million next quarter. Diluted EPS from continuing operations was $0.22, compared to $0.44 in the year ago period and $0.18 in the immediate prior quarter. Total cash and investments was $1.7 billion, up $439 million from $1.3 billion last quarter due in part to the $375 million bond issuance. Net cash after debt was approximately $1.3 billion. Cash flow from operations was $134 million or 27% of sales and we paid out $58 million in dividends during the third quarter. Our AR balance increased slightly due to the increase in revenue however our DSO stayed relatively flat at 45 days and we have no customers that are late to their payment terms. In summary this was a good financial quarter for ADI. Most of the numbers came in better then our expectations. More importantly we have done a good job positioning the company for great leverage in the future. We have one [inaudible] consolidation behind us and we will begin to see the benefits of the savings from this in the first quarter of our next fiscal year. The second consolidation is on track to be completed by the end of this fiscal year and we should begin to see the savings from this in the back half of fiscal year 2010. We expect these two consolidations combined will save the company approximately $65 million on an annualized basis. Ultimately the combination of gross margin and expense leverage could produce significant operating leverage if revenues continue to increase in future quarters. As we stated on our last call our goal is to achieve margins equivalent to our peak margins at lower revenue levels then before, and higher margins at equivalent sales levels. The actions that we have taken over the past few years to heighten our focus on more profitable and sustainable businesses and to put in place far greater expense discipline should be the catalyst to achieve these objectives as revenues increase. Now I’ll turn the call over the Jerald to discuss key end market trends and our short-term outlook.

The revenues from our broad base of industrial customers were approximately 50% of our revenues during the quarter but still down 29% year over year even though it was up 3% sequentially. We were very pleased to see that orders and revenues from our factory automation and instrumentation customers increased in Q3 as these companies started to reverse the massive inventory de-stocking of the past year and at the margin are more enthusiastic about their prospects for next year. And particularly automotive sales were very strong in Q3 driven by increased production rates of European car manufacturers. The revenues from automotive customers increased 21% sequentially although this is still 28% below our third quarter 2008 sales peak in automotive. In the third quarter sales of our battery monitoring, brake sensing, and automotive MEMS products all increased significantly and we won design ins with several hybrid and electric vehicle system suppliers. Revenues from healthcare customers declined this quarter due to the ongoing capital spending constraints at hospitals in all regions of the world with the exception of China which experienced double-digit growth in healthcare sales for the second consecutive quarter. Overall design in activity in healthcare customers continues at a very brisk pace and we expect revenues in this market to begin to recover in our fourth quarter. Revenues from defense customers also declined sequentially and year over year as programs were cut and delayed but here too we also believe that order rates in this market have now stabilized. In the third quarter our revenues from communications customers were about 25% or 26% of total revenues, they were down 15% from last year and 9% sequentially. Communications infrastructure revenues decreased quarter to quarter with declines in sales of base station and optical products and an increase in sales of networking products. With respect to base stations, revenues from our non-Chinese base station customers which still represents the largest portion of our base station business were approximately flat sequentially. This was more then offset on the negative side by the sequential decrease in revenues from our Chinese base station customers who slowed their spending in Q3 as we expected making inventory corrections following accelerated buying for those customers in the first half of our fiscal year. In total our base station revenues are now expected to improve in Q4 with the strongest improvement at Chinese customers who have now normalized their inventory of ADI products. In addition trends such as network management outsourcing, the transition to mobile data in developing regions and the progressive rollout of the more data centric 3G and 4G standards should serve as critical growth drivers for our communications infrastructure business in the future. During Q3 revenues from our handset customers increased sequentially as a result of strong demand for our imaging, auto, RF, power management, and high speed internet connect products to market leading customers. We expect the revenues from this market to continue to increase in Q4 albeit at a somewhat slower rate then Q3. The revenues from the consumer end market were 21% of revenues but down 21% year over year but up 28% sequentially from the second quarter. The declines in the consumer end market we experienced in the first half of the year were at least partially driven by inventory depletion which now appears to be behind us. As a result our consumer revenues have now moved closer to end consumption with sales increasing for the second consecutive quarter albeit at a much more significant rate in Q3 then in Q2. Also contributing to our growth in the consumer market in Q3 were an increase in sales of our analog front ends and cameras, HDMI products, and MEMS solutions into consumer related products. Revenues from our computer customers which are now a diminimous portion of our sales, less then 2% declined both year over year and sequentially. As we’ve mentioned in previous quarters we’ve significantly reduced or eliminated investments in application specific products for computers given what we see as a very limited opportunity for high performance signal processing in the computer market. So now we’ll turn to the outlook for the fourth quarter, for our fourth quarter we’re planning for our revenues to grow to a range of $510 to $530 million. That’s a sequential increase of between 4% and 8%. This plan is based on assumptions that consumer revenues will grow seasonally as is typical in our Q4, industrial revenues will gradually increase again and our communications infrastructure sales will increase from Q3 levels. We expect increases in sales from both OEM and also from distributor customers. Its very important to note that at ADI we don’t get any revenue increases from distributor restocking orders since we only record revenues when our products are sold to end customers, [inaudible] we’re 100% on sell through and that’s true for ADI both domestically and internationally. We believe that’s a more intelligent and stable way to recognize revenue then to recognize revenue when distributor move their inventories up and down. We are planning for our gross margins to be approximately 55% in line with our plans for a small increase in factory utilization and still lower days of inventory that we’re planning for Q4. As we mentioned earlier our goal is to continue to maintain very disciplined control of all our operating expenses and as a result we’re planning for only a very slight increase of 1% to 2% in the fourth quarter. This would produce earnings from our continuing operations in the range of $0.24 to $0.26 in Q4. We expect operating cash flow to again be very strong in the quarter in line with higher revenues, higher gross margins, tight expense control, tight inventory control, and continued very low capital spending. So I would say in conclusion we’re more optimistic then we were last quarter. There is increasing evidence that our business has stabilized. Importantly we have and will continue to leverage this cycle to fundamentally realign ADI’s product portfolio and cost structure to become a much more competitive company, without damaging the innovation engine that has been the heart of our success for many years. Throughout this recent downturn we continue to invest very heavily in new technology to ensure our future growth rates. For example during the past four quarters alone we’ve introduced well over 300 new products which is a recent record for ADI. Moreover our design pipeline is up significantly, a testament to the fact that despite all of the economic uncertainty around the world, innovation and technology and at ADI continues. This combined with the very significant leverage that’s now inherent in our business model should bode very well for ADI for our customers and also for our shareholders as conditions continue to improve. So with that we’ll open up the lines for questions from any analysts.

(Operator Instructions) Your first question comes from the line of Uche Orji - UBS Uche Orji - UBS: Let me ask you with the comments you’re giving by how much do you think utilization rates will go up next quarter and when should we expect that to naturally start to impact gross margins, so if we look a little bit further down the line, am I’m not trying to ask you to give me a definite guidance because many things can effect the January quarter, but if utilization rate rises in the current quarter should we expect that impact gross margin in the following quarter.

The utilization is going to go up by a couple of points next quarter and that will impact gross margins that’s one of the reasons why we’re guiding up about 90 basis points or so. Our expectation is that utilization start to pick up, it obviously depends on how the market performs over the next several quarters but if it continues to go up and to the right, our expectation is that we would start to bring utilization up during that time. We’re now at a point in terms of inventory where we kind of like where the days of inventory are. We think inventory days will be down a few more days but we’re at a point now where I think we can start to tick up utilization. Now might be a good time to go into gross margins because that’s kind of the corollary with utilization. Our expectation is given our mix profile on a long-term basis we really believe that we can get our gross margin into the low 60’s. We have obviously a number of tailwinds that are going to impact gross margins going forward as I talked about our limerick six inch line is for the most part now closed. That’s $25 million of annualized savings and that will start impacting the P&L in the first quarter of next year. We have about $40 million of savings coming from the closure of Cambridge which will come to completion at the end of this fiscal year and once we get through the old inventory in the first half of the year by sometime in the second half of the year we’ll start to see the annualized benefit of that. On top of that we have really have done an outstanding job on capital spending. Our capital spending this year will be $55 million. A couple of years ago I think it was running in the $150 million range. We really see now given our model what we think we’ll use internally versus externally that really somewhere in the $50 to $60 million of capital spending per year is really the go forward model for us. Our depreciation right now is running I think this quarter on an annualized basis is running somewhere between $120 and $130 million. So eventually that depreciation on an annualized basis will move from $120 to $130 a year to somewhere in the $50 to $60 million over the next several years. That’s going to have a definite tailwind to gross margin and immediately will have a very good benefit on our free cash flow. Uche Orji - UBS: If I look at the Chinese business that you talked about on the base station side, first of all do you think you were disproportionately impacted with regards to the inventory [inaudible] correction and obviously demand has come back, do you think that the demand you’re seeing now is more in line with their consumption and if you look for that down, given what you know with that marketplace do you think that, what is your sense as to when we might experience it slip again, or do you think from here it should be stable for a little bit longer.

The largest part of our base station business as I said in my earlier comments over 50% is not in China and that part has been relatively stable and we expect it to be stable going forward. The Chinese part as you might remember from the first and second quarter that was sort of keeping us alive when the world was coming unglued in the first and second quarter. And what really happened over there and I think its been well publicized and written about is the Chinese companies were really gearing up pretty hard and didn’t want to be out of inventory so it looks like they built some good sized inventory in the first and second quarter and so they bought more then they consumed during that quarter and I think that’s a result, the reason why there’s been so much chatter in the marketplace about what’s going on there is they just have too much inventory. And I think everybody who is supplying to them, some people will take it all in one quarter, some will take it over a couple of quarters, but I think they just cut back on inventory across the board as far as we could see. We expect that in our fourth quarter coming up the Chinese market is going to recover from us from where it was in this quarter and we expect in Q4 that’s going to go up again. So our sense is that’s an important business for us. Its one of the higher margin businesses that we have. We have great customers, we have very strong position on our analog products in that business that our market share is extremely high and that’s going to be a very good business for us going forward. It did cost us a bunch of sales this quarter relative to the quarter before and certainly that put pressure on the margins a little bit but there’s every reason to expect that’s going to continue to be a very important business once its inventory correction. And I think for analog its just going to be one quarter correction given the way that its flowing at least from the forecast that we now have from the large Chinese customers for the quarter and the first quarter.

Your next question comes from the line of Romit Shah - Barclays Capital Romit Shah - Barclays Capital: Just a question again on utilization given that inventories will probably drop down below 110 days, that’s at the low end of where they’ve been historically and so given that and the fact that your customers and distributors are feeling better about their business, why are we not raising production levels more aggressively.

Well because we don’t think we need to. What we’re trying to do in analog now is there’s a bunch of different factors. One is we don’t want the lead times to extend so we want to make sure we have enough inventory but I think we have, we believe we can run the business with less inventory then we used to. So I think it’s a balancing act and we are going to turn it up a little this quarter and we’re going to watch it through the quarter and then we’ll see what happens and if it turns out that the order rates continue to improve at the rates they’ve been its possible we’ll turn it up a little bit faster. And certainly it depends on the mix of products, how many of those are internal. It really depends on what happens with the industrial business. If it turns out all the increases we see in other businesses then that’s not going to help our utilization but that’s not what we expect. We expect a couple of percent up again in the industrial business next quarter and we’re going to set the capacities to follow that trend. And like I said if it turns out its better then that, we hope it is, we’ll turn it up a little harder. Romit Shah - Barclays Capital: Your guidance for the industrial business in Q4 include automotive.

Yes, but it also includes non-automotive which I think, we saw a large increase last quarter in automotive. I don’t expect we’ll see another very large increase, I think it was up like 20% plus last quarter so I think a more significant part of the increase in our industrial sales will be more of our traditional industrial products, instrumentation, process control, even we’re expecting an increase in medical stuff. So that’s more the traditional stuff that we really lopsided this quarter on the automotive side but I don’t think that’s going to continue. Romit Shah - Barclays Capital: And that strengthened the core industrial business, I know you service a lot of customers there but to the best of your ability are we seeing evidence of real end demand improving or is it just an abatement of inventory reduction.

Well certainly the inventory abatement is clear. When you talk to those customers you hear that all the time. I think it varies from customer to customer. There are some customers that are saying well its stable, there are others that are saying, at the margin they’re seeing some improvements. Now the ones that are talking the most about improvement I would say are in Asia compared to the US but I think overall it’s a mixture of those two, the more tangible part of that is certainly the fact their inventory levels got down pretty low but I think there’s another part of it that says that people are sniffing around and beginning to buy a little bit more and they’re more optimistic. I don’t think they’ve seen that in terms of their sales yet but I believe from the comments we’ve gotten they’re seeing that in terms of their communications with their customers and its very interesting with many of those customers, whereas a quarter or two ago they couldn’t get rid of inventory fast enough. With many of those customers now, they are now concerned that with the more confident view some of their customers have about the future that their inventories are too low. So we’ll have to see how that comes out over the next quarter or two but that’s the reason why we’re being a little bit cautious and believe me it would be very easy to ramp the fabs and put another couple hundred basis points of gross margin on next quarter. The temptation to do that is great, I can assure you. But I don’t think quite yet it’s the right time to do that. And particularly because of some of the comments and concerns that you’re expressing. Romit Shah - Barclays Capital: This year has been very unseasonal but is the January quarter normally a growth quarter for ADI.

It all depends. What happens in the typical quarter is that the consumer business starts to contract in first quarter because they bought everything they’re going to buy in our fourth quarter and the industrial business it’s a question of how much vacations people take or not. So typically the first quarter is not a very strong quarter for us but this year is very atypical. And David and I have these conversations all the time. I think the next couple of quarters are going to be much more related to secular trends then seasonal trends and I would expect Q1 is going to be the same way this year.

Your next question comes from the line of Steve Smigie - Raymond James Steve Smigie - Raymond James: I was wondering if you could comment a little bit on the amplifier business, that business seemed a little bit softer in the quarter and then also just generally on converters that seemed fairly strong.

Well that had to do with which market segments are really moving one way or the other. In the converter business we sell a lot of converters into the consumer business. We sell converters into cameras and a bunch of other products in the consumer area so that tends, given the growth rate of the consumer business that tends to drive that a little bit. On the amplifier side as best as we can sort that out for the quarter it seems like most of that was declines in our base station business where we sell a lot of amplifiers. But the base line is relatively stable so if the margin, these couple of percent increases or decreases per quarter seem to be more relevant to which market segment is growing then anything to do with the products. Those products sell into every market segment, some more so then others. So that’s much more determinant of what happens on a quarter to quarter basis. In the long-term of course the strength of the product group is important but in the short-term it mostly related to the segments. Steve Smigie - Raymond James: And then in terms of the new products you discussed earlier in the call, is there any particular weighting within those new products towards converters versus other products, help us think about where the growth there is maybe by product going forward.

They’re all over the place. Over the last couple of quarters we’ve introduced a very large amount of power management products after investing in that business for quite a while, but on the other hand we introduced a lot of converters. That’s our most important business. A lot of amplifiers, a lot of new MEMS products, its really pretty much across the board. Its not anyplace that is really sure. The only place where we’ve really not had any new products is as I mentioned in the computer space for application specific computer products. We’re not introducing too many of those. And of course we’ve decreased our investments in other businesses over the last couple of years. So I think its pretty much across the board of the businesses that are still today strategically relevant to us.

Your next question comes from the line of Ross Seymore - Deutsche Bank Ross Seymore - Deutsche Bank: Given the mix dynamic impacting gross margins can you give us an idea of the range of gross margins within your end market segments.

I would say that they, if I look at the, I can only talk about standard gross margins right now but I’d say the range is low 50’s to high 70’s or low 80’s. We don’t have any segment where the standard gross margins are below 50. Ross Seymore - Deutsche Bank: And the hierarchy is about the same between those four segments if you could just list those again.

Well in the base station business its extremely high. The industrial business is extremely high. The military business is extremely high and that cost us a little last quarter because military sales were down quite a bit last quarter for us. The consumer business is on the low end of that spectrum as is the automotive business. And everything else is somewhere in between. So I think the important takeaway about this quarter is I don’t think there’s any fundamental shift in what the mix is going to be of our products. There are unusually strong bounce back in consumer and automotive mostly because they were down so low. They’ve seen the biggest decreases but I think over time we believe our revenue mix is stable and this quarter it was sort of lopsided. We had the highest margin business go the wrong way by quite a bit, the lowest margin businesses go higher by quite a bit even though those lower margin businesses are better then the gross margin that many people would love to have in this business. So that’s the mix. Ross Seymore - Deutsche Bank: And if I look at the internally produced wafers versus where you use foundry can you update us on what percentage of those are today and where you think that can go over the next year or so.

They’re roughly 50/50 today give or take. I think the expectation is that over time industrial will become a bigger mix of our business again and if that’s the case then obviously utilization internally will start to ramp up. Ross Seymore - Deutsche Bank: On the OpEx side of things, last quarter I think you talked about what percentage of the cuts were temporary versus permanent can you just walk us through if we should be on the look out for any of those temporary cost cuts reversing themselves.

Actually some of the temporary is phasing back in this quarter and in fact we’re actually finding some offsets to that which is why the expenses are only going up by about a percent or two. We’re down roughly from peak to trough about $53 million and just a little over $20 million was related to bonuses and shut down expenses, forced time off for our employees. A lot of that stuff is, a fair amount of that is phasing back in next quarter. I don’t even think that’s a great way to look at our OpEx. I mean really what we’re doing is trying to manage our OpEx going forward to where we really constrain it over time regardless of what sort of temporary expenses might come back in. This quarter we’ll start to formulate our plan, our five year plan plus build the first year of that into a budget and I can tell you that Jerald and the team are very, very focused on making sure that OpEx stays in very, very tight control so that as revenue starts to ramp, as gross margins start to come back, we should start to see really, really nice leverage to the bottom line.

Your next question comes from the line of David Wu – [TC Research] David Wu – [TC Research]: I got a question on gross margins, if your mix were normal and we get back some time in the second half of fiscal 2010 let’s say a $600 million quarter rate, what should I expect in terms of gross margin, the effect of all the consolidation would have been in place and your industrial would be back to normal, should we think about high 50’s at $600 million run rate or even 60%.

That’s part of what I was saying before, our expectation is given our, if our mix is consistent with what its been in the past which we believe it will over time, given the amount of other tailwinds we’ve got in terms of fab consolidations and the depreciation rolling off, that we really should be in the low 60’s. David Wu – [TC Research]: At $600 million a quarter.

In that general vicinity. Obviously the mix plays some part of it. But yes. David Wu – [TC Research]: So it’s the mix that is much more important then absolute dollar revenue.

Well I think where we are today at 54%, the real issue is getting our fab back in line, getting utilization up and really it’s a function of the industrial business coming back. I’d say that’s the bigger driver. I guess that is mix in and of itself.

Its also revenue growth. If everything just keeps down, but the mix shifts around, its not going to help us much more in the industrial business. So to some degree its dependent on the absolute dollars or revenues on the industrial and some other market segments that we build internally as compared to where to we build externally. David Wu – [TC Research]: The other thing I was wondering is in terms of OpEx I assume that this is, next fiscal year will be one of the years where we can have a three or four [weeks] difference between revenue growth and expense growth, if revenue growth will be up double-digit, low single-digit. If we have double-digit revenue growth for your business next fiscal year, should I think about your OpEx as up only low single-digit to support a double-digit top line growth.

We’ll give you a little more sense of that when we put our plan together, but certainly as David and I are thinking about this thing we’re thinking of serious constraints on the OpEx next year independent of the revenues. So we’ll give you a little more guidance on that when we close the plans. We’re a little loathe to make a statement on that before we have a plan behind it but I can just give you what in my and David said, as we start putting together the objectives for the company for next year. David Wu – [TC Research]: Tax rate will be about 20% next year also roughly.

Yes, in that range.

Your next question comes from the line of Jim Covello - Goldman Sachs Jim Covello - Goldman Sachs: My question was on lead times you had alluded I think during the call that the goal is not to have lead times stretch out, I was just curious if you have seen any change in your lead times yet.

Not really, a couple of little things here and there but no, I’d say our lead times have been about what they were last quarter. They’re very short. Jim Covello - Goldman Sachs: More on the administrative side, in terms of your interest and other expense you talked about it being an expense in Q4, how should we think about it in fiscal 2010. Do you expect to start generating interest income as we head into next year.

Can you tell us what the interest rates are going to be? We got a lot of net cash. So the way to think about it is it really depends on we have that money very conservatively invested. That’s the bad news. The good news is we haven’t lost any of it which is the real goal and so I think it really depends on interest rates. If short-term rates or secure rates begin to move up, we’ll do better. If they stay at approximately zero probably not.

Your next question comes from the line of Tristan Gerra - Robert W. Baird Tristan Gerra - Robert W. Baird: Based on your order visibility do you expect the October quarter to be front end loaded or back end loaded from a shipment standpoint.

I think it will be about linear, most of our quarters are, and there’s no reason to think this quarter will be much different then that. The backlog is good starting out. The first couple of weeks in August looked pretty good so I would expect it will be relatively linear. Tristan Gerra - Robert W. Baird: And then regarding your utilization rates and I understand that you’re still ramping capacity this quarter, its less then the end demand as you reduce slightly inventories, but we’re still a little bit less than 50%, end demand is picking up now but let’s assume that there is weakness again next year, what room do you have for additional potential cuts in output versus what you’ve done so far in terms of consolidation.

I think there’s always new things that I don’t want to speculate on hypotheticals here, but I think what we’ve demonstrated is that when the revenues went down 20%, 25% we dropped the OpEx by similar amounts and I think we’re sort of committed to those kind of things so we’ll respond if we have to in a way that’s responsible just like we did in this cycle. And as I look at it and see what we’ve been able to do during this cycle in terms of getting the costs down, I think we did a pretty good job of that and people in the company did a pretty good job of that. And I think we did a better job then historically we’ve been known to do as the cycles have gone down. So I think we’ll have to wait and see how that turns out.

Your next question comes from the line of Christopher Danely - JPMorgan Christopher Danely - JPMorgan: Can you just give us your sense on how you see the end markets progressing going forward here. Do you think that we’re done with the inventory restocking and consumer and now we’re going to start in industrial, or just how you expect the recovery to play out now that we’ve bottomed.

I think there’s still more restocking to go on in the industrial business because I think we commented on this last time that our sales into the industrial market were down 30 some odd percent and our customers’ business wasn’t down 30 some odd percent. So I think that there’s probably some more to go in the industrial business and it seems like in the consumer business the inventory levels were okay and now in the communication infrastructure business the inventory levels seem to be okay. I think in the industrial market of course the recovery has lagged those markets a little bit so we’re hoping that continues and we can get back to more rational levels of production for the industrial customers over the next couple of quarters. But we’ll have to wait and see how that really turns out. Christopher Danely - JPMorgan: And so I guess you think that industrial won’t be sort of this one quarter of pop, it will be more spread out over the next couple of quarters.

That’s my belief because the, we’re still operating at numbers that are well, well, well below where we were four quarters ago. And we’re enthusiastic that we’ve seen the beginnings of a recovery but we haven’t seen a lot of it yet and our hope is that continues for the next couple of quarters but I think it will be more gradual then say the recovery in consumer or automotive, yes. That’s what I believe. Christopher Danely - JPMorgan: When you talk to the distributors how is there behavior these days. Are they ready to start restocking a little bit of certain products yet or do you still see them looking to take down inventory.

No, I think this was the first quarter if I’m correct about this, correct me if I’m wrong, where distributor inventory didn’t go down.

It was down just a hair.

Just a little bit, gone down quite a bit before, and so I think at the margin they seem to be as much concerned that they’re going to miss the next cycle on the upside as they’re going to wind up with too much inventory on the down side. So I think distributor are going to demonstrate the usual patterns of they want to be on the right of the cycle and I sense that they’re trying to get on the right side of the cycle being that they expect some growth coming up in the next couple of quarters.

Your next question comes from the line of Terence Whalen - Citigroup Terence Whalen - Citigroup: I think a lot of the blocking and tackling has already been done, if I could revisit the topic of gross margin not with regard to the October quarter but to the January quarter, it sounds like we could get an increase in utilization as sort of maybe consumer begins to pull back in the January quarter and as industrial begins to build in the first half if I’m to think about the levers between utilization and mix and I know they are correlated, which is going to be the dominant driver to drive gross margin and I think it might have been Jerald, you had said we could get it up a couple of points and I think David you earlier said its going to increase at a faster rate then the 90 bps in October, can you just put those together and help me understand that a little bit better.

I think its tough to say, I mean really they’re almost so correlated together. When industrial mix improves it also improves our utilization which thus improves our gross margin so industrial is a pretty big component of our gross margin and I think Jerald is right in that I don’t know that seasonality is a really big component but if you believe that we’re in the beginning of a recovery in industrial and industrial starts to improve again in the first quarter then we’ll clearly see gross margin improvement in the first quarter.

Plus we have some tailwinds in some of the restructuring things that David talked about which ought to start to appear some time in first or second quarter so we’re more optimistic about the gross margin then we’ve been in a while because some of these improvements were already dialed in and they’re going to happen unless the world falls off the cliff completely and others are going to be dependent on the mix and the industrial business, better utilization but others are going, these are serious cost reductions and serious consolidations that we’ve done and the capital spending, when you’re spending what we’re spending now eventually it starts matching depreciation. So I don’t know, we have a lot of tailwinds on this thing and I don’t think we have many headwinds on the gross margin because I think the mix is going to revert back to the historical mix of the company. There’s no reason to believe it going to get lopsided towards consumer or automotive which carries somewhat lower gross margin. So I think when you add it all up, the 10,000 products and 100,000 customers we sell to we think the mix is going to be about the same when its all said and done. Terence Whalen - Citigroup: Related to that, can you talk a little bit about the consumer business, its not a business I have great visibility into. I typically think of things like digital still cameras, and things like home audio and video can you just revisit that segment again and is that a segment that would decline just naturally with seasonality in January or would that be April.

Yes, typically what happens is in the consumer business customers order up which is why our fourth quarter is usually reasonably good consumer quarter before the holidays and then all of a sudden it comes the first quarter and they realized either they sold not enough or too many and make adjustments. Then the Chinese New Year comes in February and so I’d say our fourth quarter is probably going to be our peak consumer quarter as a percentage of revenues. At least that’s our planning assumption going forward. Terence Whalen - Citigroup: And then granularity on the revenues, if you could help us with that a little bit just to get a feel for what applications are really driving growth there.

Well certainly for many years we’ve had a very strong position in the camera business, we’ve developed strong positions in segments of the high definition TV business, not so much related to the signal processing, the big digital processors which we don’t do, but a lot of the peripheral functions that are in TVs, HDMI and other things. We have a MEMS business which has a consumer content of it. We’re starting to build microphones for consumer products and those look like they’re going to be very successful products. We have a lot of audio, very high end audio products into the consumer mix so what we try to do in the consumer business is focus on the application where what we do really changes the sight, the sound or the experience and not spend much resources focusing on things that rapidly commoditize and therefore have impaired gross margin forever. We have a lot of rules we are putting in place in analog about what kind of consumer applications we’re after and our sense increasingly is the way you see the quality of the technology in consumer products is, you look at the gross margin and if people aren’t willing to pay anything for it it may be great stuff, but its not worth much. So if it makes a big difference to the customer, if they can get more money for it in their end product, then those are good applications and if they’re not, they’re not very useful for us.

Your next question comes from the line of David Wong - Wells Fargo David Wong - Wells Fargo: You mentioned just now that you were somewhat less interested in the computer end market can you tell us what segments both in terms of product type converters or so on or the end market you are particularly interested in in channeling your R&D dollars.

Well certainly the industrial market has been a goldmine for analog for many years. Its highly fragmented. There’s thousands and thousands of customers lifecycles are long, the margins are high, its sort of like a perfect business school example of a great business to be in. We have a brand that sells the products, customers call us first, that’s a great business and if we let the R&D drift away from that business we’d be total fools in my opinion. The communication segments of the communications business have been very, very good businesses for us. The base station business certainly many other parts of communication infrastructure have been good businesses for us. Even though we’ve withdrawn from the base band processor in the handsets, many of the smart phones and other things have a lot of good analog functionality attached to them. You’ve probably seen it if you use those phones. We get paid for that functionality in the higher end phones. And of course many high end consumer products are very, they’re bundles of signal processing technology that impact sound, what you hear and so on. So I think we looked at the computer market a year or two ago and said, the rate of commoditization is high, we sold the business that was building power management products for PCs. We just didn’t see where the value of that was for analog devices and we just look inside a personal computer today and we just don’t see a lot of functions where our products can really make a consumer buy a particular PC or not and our experience is if you can’t say that then its not very valuable business for us.

Your next question comes from the line of Stacy Rasgon – Sanford Bernstein Stacy Rasgon – Sanford Bernstein: I had a question on the industrial and auto so you said that I know auto was up tremendously in the quarter, you said it was driven in part by a strength in Europe, I note that though Europe itself was still flat, North America was down, is it fair to say that industrial was all in the US and Europe was actually down in the quarter.

I don’t think so, I think they were about flat. So there were obviously some other things there. The automotive business in Europe isn’t all that large that it carries a huge amount of weight on the revenues so our automotive sales are 7% or 8% of our total sales and so I don’t think those numbers are determinant to the total right now. Stacy Rasgon – Sanford Bernstein: And it sounds like recently you’re hearing more positive feedback in the industrial is coming out of Asia are you hearing anything positive at all coming out of North America and Europe because I would assume that the bulk of your industrial sales are still in the US and in Europe.

Yes they are. And that’s changing but its going to take awhile for them for equal what’s going on in the US and Europe given the position that we have. I think as we’ve talked to US and European customers they’re at the margin more optimistic, they’re cautious. I think their optimism is more from what I heard personally more related to 2010 then 2009, at least our 2010 which begins in November. So I think that business is going to come back. The US industrial world is under pressure but its not under the kind of pressure that we’ve seen in our orders from industrial customers. The US isn’t completely dead yet although we’ll have to see how all the policies and practices that people are talking about actually impacts US industrial companies but I think at the margin you hear from most of the customers and you guys listen to the reports of those customers, at the margin they’re a little bit more optimistic. And I think we’ve seen these cycles before and this one certainly is a lot worse then others but these things come back and it takes a while and the industrial market always comes back a little slower then some of the more faster moving markets like handsets and PCs and so on, but its going to come back, its just going to come back more gradually then other markets. Stacy Rasgon – Sanford Bernstein: On the strength that you’re seeing in industrial in Asia how much do you think of that is being driven by a government stimulus spending and how sustainable do you think it actually is—

I think some of it clearly is, but our industrial sales in China were growing at a pretty good clip before anyone decided to put more money into it. That’s a franchise that if it was just stimulus we wouldn’t see much because the design cycles of some of those products can be two or three years so our sense is yes, that’s helping at the margin a little bit. But it’s a base of business that we’ve been building for the last two or three years well before stimulus became fashionable.

Your next question comes from the line of Sumit Dhanda - Banc of America Securities - ML Sumit Dhanda - Banc of America Securities - ML: Just a question on your utilization rates, are you actually taking a period charge given the low levels of utilization and does that persist and if you could quantify that charge if there is one.

We’re certainly under absorbing our expenses within our manufacturing. Sumit Dhanda - Banc of America Securities - ML: I guess the question was but are you expensing that as a period charge in the same quarter as opposed to the impact of the under absorption flowing through the—

No, all this kind of works its way through inventory. Sumit Dhanda - Banc of America Securities - ML: Any more thoughts on the convert which occurred I guess during the course of the July quarter, meaning in terms of strategically what’s the thought process behind it.

We did a straight debt financing for $375 million and that’s a five year fixed note. We wound up swapping it for floating rate given all the cash we have so if interest rates go up we have plenty of cash, we have plenty of interest we’re going to get on the other side. The thought with that was actually very simple, it was that a large part of our cash balance are offshore. We don’t really want to bring it back right now. And we were relatively committed to the US dividend so we just wanted to build a little more cushion in to whatever happens that we don’t have to think about that and that was why we did it. We wound up with an A credit, we wound up being able to borrow money at very low rates very quickly I would say. And there was a lot of competition for those bonds which is why the pricing came out where it did. It was more of an insurance policy then anything else given that the world is a very uncertain place. And it became available and the rates looked good and the demand was very high.

Your next question comes from the line of Craig Ellis - Caris & Company Craig Ellis - Caris & Company: Just to follow-up on the operating expense issue, you have done a very good job bringing down OpEx structurally and I know you don’t want to give particular guidance for the first quarter of next year, or next year specifically, but as you look at the operating expense structure that you now have do you continue to see opportunity for structural improvement or with the work that you’ve done this year have you really exhausted the opportunities that you think exist in the model.

No I think there’s more opportunities. I think where David and I have come out on this thing together is that we went into this cycle with the operating expenses too high in the company even at the revenue levels when they were $650 million a quarter. So we’ve been banging on this whole question pretty hard for the better part of a year and a half, two years. Some of that is getting out of businesses where the OpEx ratios were absurd relative to the returns. Other parts of it were just tightening up a lot of things around the company. I think those, what we’re communicating around Analog is that’s not a one time thing that you only do when business is bad, we believe we have a lot of OpEx leverage in this company that we can get with tenacity and we understand the implications of getting that leverage on what our stock is worth ultimately so we’re going to work hard to get that leverage. And we’ve done some things, there’s more to do. There’s lots of different things we can to do tighten up the expense structure of the company. We continuously look at businesses more critically for those that are either because the competition has changed, the market structure has changed, some cases we didn’t get the products out in time, products aren’t any good, to look at these businesses very often and say is this still meeting our strategic content or the intent for getting into those businesses to begin with. There’s lots of ways to tighten up the R&D process in the company, selling process, the administrative processes in the company, and we’re continuously working on all of those. We haven’t called the dogs off yet and I don’t expect we will next year either. Craig Ellis - Caris & Company: Yes, keep the dogs going at it.

We’ve got a lot of big dogs barking at us on the operating expenses. Craig Ellis - Caris & Company: Relatedly when you shut down the two fabs is there any incremental savings in the middle of the income statement or does it all flow into COGS.

I’d say most of it falls into COGS. There is a little bit within the IT and R&D function that does come out too, but its relatively small.

Your next question comes from the line of Mark Lipacis - Morgan Stanley Mark Lipacis - Morgan Stanley: The impact, when you shut down a factory is the impact to gross margin purely a function of the cost savings that you discussed or are there puts and takes incrementally either positive or negative associated with ramping production of new products at the new factory, either improving yields or yield hiccups as you’re ramping the new product.

Our experience has been when you start ramping down a fab and ramping it up at a location as you wind up with cost increases in the interim because the yield, people stop focusing on it, these aren’t large numbers but I think at the margin it costs you a little bit of margin while you’re doing it, but once you do it and you’re done, and you got a group of people that are now focused on yield improvement on those products in the location where the products are actually going to be built, you see a very rapid turnaround. At least that’s been our experience in doing these things before. Mark Lipacis - Morgan Stanley: With the inventory days coming down I have to believe that the effective lead times nudged up a little bit and the question for you is in your experience is extending lead times translate to double ordering on a linear basis, for example if the lead times go up there’s more propensity for customers distributors to double order or is it more like a step function, say you hit lead times of 10, 12, 14, 16 weeks or something like that and then at some magical threshold you get a step function and double ordering.

I think it winds up being more of a step function then you think because its not based on the lead time for this product went from four weeks to five weeks or three weeks to four weeks. Its based on a general fear that develops in the industry when they hear of shortages and that fear in the internet age usually you see within a period of one or two months. Certainly we saw the inverse fear when the world collapsed on us that within a very, very short period of time, everybody panicked and stopped ordering everything and so I think there are trigger points on that. It doesn’t happen every place at the same time but the response to the markets to perceive shortages is usually quite rapid in my experience. But I don’t think we’re seeing that. At least for our type of products I don’t think any of our competitors that really stretched out the lead times, I don’t think there’s any, I don’t get any calls from customers worrying about this or so, I think at the margin lead times are under pretty good control. At least at this point.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

We’d just like to thank everyone for your participation today. We really appreciate you joining us and we look forward to talking with all of you again when we report our fourth quarter and fiscal year end results on Monday, November 23, 2009 after the market closes. Thank you very much and have a great day.