Let C be a separable Hilbert Space, and let Λ be the halfplane {(m, n) ∈ Ζ2 : m ≥ 1} ∪ {(0, n) ∈ Ζ2 : n ≥ 0} of the integer lattice. Consider the subspace ℳc(Λ) of on the torus spanned by the C-valued trigonometric functions {Ceims+int : с ∈ C, (m, n) ∈ Λ}. The notion of a Λ-analytic operator on ℳc(Λ) is defined with respect to the family of shift operators {Smn}Λ on ℳC(Λ) given by (Smnƒ)(eis, eit) = eims+intƒ(eis, eit). The corresponding concepts of inner function, outer function and analytic range function are explored. These ideas are applied to the spectral factorization problem in prediction theory.