Item 1. Financial Statements

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Item 1. Financial Statements

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except per share amounts)


	Three Months Ended				Nine Months Ended
	August 3, 2024		July 29, 2023		August 3, 2024		July 29, 2023
Revenue	$	2,312,209	$	3,076,495	$	6,983,952	$	9,589,055
Cost of sales	1,000,970		1,114,880		3,018,737		3,358,553
Gross margin	1,311,239		1,961,615		3,965,215		6,230,502
Operating expenses:
Research and development	362,671		423,751		1,108,960		1,253,600
Selling, marketing, general and administrative	257,213		334,113		791,420		984,648
Amortization of intangibles	187,754		250,719		567,030		756,882
Special charges, net	12,282		23,539		34,399		46,675
Total operating expenses	819,920		1,032,122		2,501,809		3,041,805
Operating income:	491,319		929,493		1,463,406		3,188,697
Nonoperating expense (income):
Interest expense	85,179		69,346		239,423		193,051
Interest income	(26,432)		(8,794)		(50,870)		(32,198)
Other, net	9,581		(5,880)		13,841		(8,373)
Total nonoperating expense (income)	68,328		54,672		202,394		152,480
Income before income taxes	422,991		874,821		1,261,012		3,036,217
Provision for (benefit from) income taxes	30,759		(2,198)		103,811		220,068
Net income	$	392,232	$	877,019	$	1,157,201	$	2,816,149

Shares used to compute earnings per common share – basic	496,338		500,018		496,077		503,951
Shares used to compute earnings per common share – diluted	498,794		503,503		498,689		507,804

Basic earnings per common share	$	0.79	$	1.75	$	2.33	$	5.59
Diluted earnings per common share	$	0.79	$	1.74	$	2.32	$	5.55

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)


	Three Months Ended				Nine Months Ended
	August 3, 2024		July 29, 2023		August 3, 2024		July 29, 2023
Net income	$	392,232	$	877,019	$	1,157,201	$	2,816,149
Foreign currency translation adjustments	198		(1,292)		847		343

Change in fair value of derivative instruments designated as cash flow hedges, net	7,426		2,379		16,752		25,737
Changes in pension plans, net	(141)		422		985		1,218
Other comprehensive income	7,483		1,509		18,584		27,298
Comprehensive income	$	399,715	$	878,528	$	1,175,785	$	2,843,447

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share amounts)


	August 3, 2024		October 28, 2023
ASSETS
Current Assets
Cash and cash equivalents	$	2,106,032	$	958,061
Short-term investments	439,667		—
Accounts receivable	1,127,158		1,469,734
Inventories	1,427,936		1,642,214



Prepaid expenses and other current assets	342,143		314,013
Total current assets	5,442,936		4,384,022
Non-current Assets

Net property, plant and equipment	3,395,748		3,219,157
Goodwill	26,909,775		26,913,134
Intangible assets, net	9,997,707		11,311,957
Deferred tax assets	2,105,430		2,223,272

Other assets	766,778		742,936
Total non-current assets	43,175,438		44,410,456
TOTAL ASSETS	$	48,618,374	$	48,794,478
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	424,735	$	493,041


Income taxes payable	398,347		309,046
Debt, current	899,251		499,052
Commercial paper notes	547,443		547,224

Accrued liabilities	956,853		1,352,608
Total current liabilities	3,226,629		3,200,971
Non-current Liabilities
Long-term debt	6,655,723		5,902,457
Deferred income taxes	2,743,015		3,127,852

Income taxes payable	266,150		417,076

Other non-current liabilities	536,748		581,000
Total non-current liabilities	10,201,636		10,028,385

Shareholders’ Equity
Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding	—		—
Common stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 496,493,455 shares outstanding (496,261,678 on October 28, 2023)	82,750		82,712
Capital in excess of par value	25,101,781		25,313,914
Retained earnings	10,175,296		10,356,798
Accumulated other comprehensive loss	(169,718)		(188,302)
Total shareholders’ equity	35,190,109		35,565,122
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	48,618,374	$	48,794,478

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(in thousands)


	Three Months Ended August 3, 2024
				Capital in				Accumulated Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss








BALANCE, MAY 4, 2024	496,217	$	82,704	$	25,103,737	$	10,239,549	$	(177,201)

Net income						392,232
Dividends declared and paid - $0.92 per share						(456,485)

Issuance of stock under stock plans and other	827	138		51,881
Stock-based compensation expense				64,051
Other comprehensive income								7,483
Common stock repurchased	(551)	(92)		(117,888)
BALANCE, AUGUST 3, 2024	496,493	$	82,750	$	25,101,781	$	10,175,296	$	(169,718)

	Nine Months Ended August 3, 2024
				Capital in				Accumulated Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss
BALANCE, OCTOBER 28, 2023	496,262	$	82,712	$	25,313,914	$	10,356,798	$	(188,302)
Net income						1,157,201
Dividends declared and paid - $2.70 per share						(1,338,703)
Issuance of stock under stock plans and other	2,989	498		115,857
Stock-based compensation expense				192,262
Other comprehensive income								18,584
Common stock repurchased	(2,758)	(460)		(520,252)
BALANCE, AUGUST 3, 2024	496,493	$	82,750	$	25,101,781	$	10,175,296	$	(169,718)

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(in thousands)


	Three Months Ended July 29, 2023
				Capital in				Accumulated Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss







BALANCE, APRIL 29, 2023	501,418	$	83,571	$	26,262,226	$	9,839,790	$	(172,363)

Net income						877,019
Dividends declared and paid - $0.86 per share						(430,456)
Issuance of stock under stock plans and other	583	97		45,893
Stock-based compensation expense				82,970
Other comprehensive income								1,509
Common stock repurchased	(3,687)	(614)		(685,896)
BALANCE, JULY 29, 2023	498,314	$	83,054	$	25,705,193	$	10,286,353	$	(170,854)

	Nine Months Ended July 29, 2023
				Capital in				Accumulated Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss
BALANCE, OCTOBER 29, 2022	509,296	$	84,880	$	27,857,270	$	8,721,325	$	(198,152)
Net income						2,816,149
Dividends declared and paid - $2.48 per share						(1,251,121)
Issuance of stock under stock plans and other	2,963	494		112,508
Stock-based compensation expense				227,113
Other comprehensive income								27,298
Common stock repurchased	(13,945)	(2,320)		(2,491,698)
BALANCE, JULY 29, 2023	498,314	$	83,054	$	25,705,193	$	10,286,353	$	(170,854)

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Nine Months Ended
	August 3, 2024		July 29, 2023
Cash flows from operating activities:
Net income	$	1,157,201	$	2,816,149
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	265,530		251,785
Amortization of intangibles	1,318,325		1,505,201

Stock-based compensation expense	192,262		227,113



Deferred income taxes	(269,566)		(431,393)

Other	23,826		19,130
Changes in operating assets and liabilities	114,134		(757,645)
Total adjustments	1,644,511		814,191
Net cash provided by operating activities	2,801,712		3,630,340
Cash flows from investing activities:
Purchases of short-term investments	(438,901)		—


Additions to property, plant and equipment	(565,053)		(785,070)



Other	10,710		(2,254)
Net cash used for investing activities	(993,244)		(787,324)
Cash flows from financing activities:

Proceeds from debt	1,087,856		—





Early termination of debt	—		(65,688)
Proceeds from commercial paper notes	7,709,492		2,646,509
Payments of commercial paper notes	(7,709,273)		(2,101,799)
Repurchase of common stock	(520,712)		(2,494,018)
Dividend payments to shareholders	(1,338,703)		(1,251,121)
Proceeds from employee stock plans	116,355		113,002

Other	(5,512)		(11,227)
Net cash used for financing activities	(660,497)		(3,164,342)

Net increase (decrease) in cash and cash equivalents	1,147,971		(321,326)
Cash and cash equivalents at beginning of period	958,061		1,470,572
Cash and cash equivalents at end of period	$	2,106,032	$	1,149,246

See accompanying notes.

ANALOG DEVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED AUGUST 3, 2024 (UNAUDITED)

(all tabular amounts in thousands except per share amounts and percentages)

Note 1 – Basis of Presentation

In the opinion of management, the information furnished in the accompanying condensed consolidated financial statements reflects all normal recurring adjustments that are necessary to fairly state the results for these interim periods and should be read in conjunction with Analog Devices, Inc.’s (the Company) Annual Report on Form 10-K for the fiscal year ended October 28, 2023 (fiscal 2023) and related notes. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending November 2, 2024 (fiscal 2024) or any future period.

The Company has a 52-53 week fiscal year that ends on the Saturday closest to the last day in October. Fiscal 2024 is a 53-week fiscal year and fiscal 2023 was a 52-week fiscal year. The additional week in fiscal 2024 was included in the first quarter ended February 3, 2024. Therefore, the first nine months of fiscal 2024 included an additional week of operations as compared to the first nine months of fiscal 2023.

Note 2 – Shareholders' Equity

As of August 3, 2024, the Company had repurchased a total of approximately 207.4 million shares of its common stock for approximately $14.9 billion under the Company's share repurchase program. As of August 3, 2024, an additional $1.7 billion remains available for repurchase of shares under the current authorized program. The Company also repurchases shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options as well as for the Company's employee stock purchase plan. Future repurchases of common stock will be dependent upon the Company's financial position, results of operations, outlook, liquidity and other factors deemed relevant by the Company.

Note 3 – Accumulated Other Comprehensive (Loss) Income

The following table provides the changes in accumulated other comprehensive (loss) income (AOCI) by component and the related tax effects during the first nine months of fiscal 2024.


	Foreign currency translation adjustment		Unrealized holding gains (losses) on derivatives		Pension plans		Total
October 28, 2023	$	(72,544)	$	(102,043)	$	(13,715)	$	(188,302)
Other comprehensive income before reclassifications	847		14,378		(562)		14,663
Amounts reclassified out of other comprehensive income	—		5,469		1,547		7,016
Tax effects	—		(3,095)		—		(3,095)
Other comprehensive income	847		16,752		985		18,584

August 3, 2024	$	(71,697)	$	(85,291)	$	(12,730)	$	(169,718)

The amounts reclassified out of AOCI into the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Shareholders' Equity with presentation location during each period were as follows:


	Three Months Ended				Nine Months Ended
Comprehensive (Loss) Income Component	August 3, 2024		July 29, 2023		August 3, 2024		July 29, 2023		Location
Unrealized holding (gains) losses on derivatives:
Currency forwards	$	(853)	$	650	$	(1,445)	$	933	Cost of sales
	(225)		560		(497)		683		Research and development
	(1,391)		(400)		(3,782)		(1,353)		Selling, marketing, general and administrative

Interest rate derivatives	3,731		3,731		11,193		11,189		Interest expense

	1,262		4,541		5,469		11,452		Total before tax
	(460)		(1,084)		(1,338)		(2,587)		Tax

	$	802	$	3,457	$	4,131	$	8,865	Net of tax

Amortization of pension components included in the computation of net periodic pension cost:




Actuarial losses	$	515	$	393	$	1,547	$	1,139	Net of tax

Total amounts reclassified out of AOCI, net of tax	$	1,317	$	3,850	$	5,678	$	10,004

Note 4 – Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended				Nine Months Ended
	August 3, 2024		July 29, 2023		August 3, 2024		July 29, 2023
Net income	$	392,232	$	877,019	$	1,157,201	$	2,816,149



Basic shares:
Weighted-average shares outstanding	496,338		500,018		496,077		503,951
Earnings per common share basic:	$	0.79	$	1.75	$	2.33	$	5.59
Diluted shares:
Weighted-average shares outstanding	496,338		500,018		496,077		503,951
Assumed exercise of common stock equivalents	2,456		3,485		2,612		3,853
Weighted-average common and common equivalent shares	498,794		503,503		498,689		507,804
Earnings per common share diluted:	$	0.79	$	1.74	$	2.32	$	5.55
Anti-dilutive shares related to:
Outstanding stock-based awards	3		211		94		306

Note 5 – Special Charges, Net

Liabilities related to special charges, net are included in Accrued liabilities and Other non-current liabilities in the Condensed Consolidated Balance Sheets. The activity is detailed below:


Accrued Special Charges	Global Repositioning Actions		Q4 2023 Plan















































Balance at October 28, 2023	$	36,981	$	110,446
Employee severance and benefit costs, net	—		11,977

Severance and benefit payments	(4,420)		(87,013)


Balance at February 3, 2024	$	32,561	$	35,410
Employee severance and benefit costs, net	(5,106)		23,172

Severance and benefit payments	(5,767)		(40,559)



Balance at May 4, 2024	$	21,688	$	18,023
Employee severance and benefit costs	—		4,099

Severance and benefit payments	(453)		(14,592)


Balance at August 3, 2024	$	21,235	$	7,530
Accrued liabilities	$	16,846	$	7,530
Other non-current liabilities	$	4,389	$	—

Note 6 – Commitments and Contingencies

On March 17, 2022, Walter E. Ryan and Ryan Asset Management, LLC, purported stockholders of Maxim Integrated Products, Inc. (Maxim), filed a putative class action in the Court of Chancery of the State of Delaware (C.A. No. 2022—0255) against the Company and the former directors of Maxim. The complaint alleged breaches of fiduciary duties by the individual defendants in connection with Maxim’s agreement, as part of the merger negotiations with the Company, to suspend Maxim dividends for up to four quarters prior to the closing of the Company's acquisition of Maxim. The complaint further alleged that the Company aided and abetted those alleged breaches of fiduciary duties. The plaintiffs sought damages in an amount to be determined at trial, plaintiffs’ costs and disbursements, including reasonable attorneys’ and experts’ fees, costs and other expenses. On May 2, 2023, the Court of Chancery entered an order dismissing the action in its entirety and with prejudice. On May 9, 2023, the plaintiffs filed a Motion for Reargument, which the Court of Chancery denied on May 30, 2023. On June 21, 2023, the plaintiffs filed a Notice of Appeal to the Delaware Supreme Court. On February 26, 2024, the Delaware Supreme Court issued an order affirming the dismissal of the action.

Note 7 – Revenue

Revenue Trends by End Market

The following tables summarize revenue by end market. The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the “ship to” customer information and the end customer product or application into which the Company’s product will be incorporated. As data systems for capturing and tracking this data and the Company's methodology evolves and improves, the categorization of products by end market can vary over time. When this occurs, the Company reclassifies revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.


	Three Months Ended
	August 3, 2024						July 29, 2023
	Revenue		% of Revenue*		Y/Y%		Revenue		% of Revenue*
Industrial	$	1,058,704	46	%	(37)	%	$	1,683,843	55	%
Automotive	670,304		29	%	(8)	%	727,315		24	%
Communications	266,599		12	%	(26)	%	358,520		12	%
Consumer	316,602		14	%	3	%	306,817		10	%


Total revenue	$	2,312,209	100	%	(25)	%	$	3,076,495	100	%

	Nine Months Ended
	August 3, 2024						July 29, 2023
	Revenue		% of Revenue*		Y/Y%		Revenue		% of Revenue*
Industrial	$	3,252,757	47	%	(38)	%	$	5,252,078	55	%
Automotive	2,082,869		30	%	(3)	%	2,146,320		22	%
Communications	811,150		12	%	(36)	%	1,273,265		13	%
Consumer	837,176		12	%	(9)	%	917,392		10	%
Total revenue	$	6,983,952	100	%	(27)	%	$	9,589,055	100	%

* The sum of the individual percentages may not equal the total due to rounding.

Revenue by Sales Channel

The following tables summarize revenue by channel. The Company sells its products globally through a direct sales force, third party distributors, independent sales representatives and via its website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers. Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time.


	Three Months Ended
	August 3, 2024				July 29, 2023
Channel	Revenue		% of Revenue*		Revenue		% of Revenue*
Distributors	$	1,332,244	58	%	$	1,904,496	62	%
Direct customers	940,317		41	%	1,126,796		37	%
Other	39,648		2	%	45,203		1	%
Total revenue	$	2,312,209	100	%	$	3,076,495	100	%

	Nine Months Ended
	August 3, 2024				July 29, 2023
Channel	Revenue		% of Revenue*		Revenue		% of Revenue*
Distributors	$	4,115,836	59	%	$	5,912,229	62	%
Direct customers	2,753,885		39	%	3,547,116		37	%
Other	114,231		2	%	129,710		1	%
Total revenue	$	6,983,952	100	%	$	9,589,055	100	%

* The sum of the individual percentages may not equal the total due to rounding.

Note 8 – Fair Value

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The tables below, set forth by level, present the Company’s financial assets and liabilities, excluding accrued interest components that were accounted for at fair value on a recurring basis as of August 3, 2024 and October 28, 2023. The tables exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of August 3, 2024 and October 28, 2023, the Company held $1,018.8 million and $642.1 million, respectively, of cash that is

excluded from the tables below.


	August 3, 2024
	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds	$	620,853	$	—	$	620,853
Corporate obligations (1)	—		168,422		168,422
Bank obligations (1)	—		298,000		298,000
Short-term investments: (2)
Available-for-sale:
Securities with one year or less to maturity:
Corporate obligations (1)	—		139,614		139,614

Bank obligations (1)	—		300,053		300,053








Other assets:
Forward foreign currency exchange contracts (3)	—		7,514		7,514
Deferred compensation plan investments	97,586		—		97,586

Total assets measured at fair value	$	718,439	$	913,603	$	1,632,042
Liabilities

Forward foreign currency exchange contracts (3)	$	—	$	5,996	$	5,996
Interest rate derivatives (4)	—		15,905		15,905
Total liabilities measured at fair value	$	—	$	21,901	$	21,901

(1)The amortized cost of the Company's investments classified as available-for-sale as of August 3, 2024 was $914.6 million.

(2)These investments are adjusted to fair value based on quoted market prices or are determined using a yield curve model based on current market rates.

(3)The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 9, Derivatives, in these Notes to Condensed Consolidated Financial Statements for more information related to the Company's master netting arrangements.

(4)The carrying value of the related debt was adjusted by an equal and offsetting amount. The fair value of interest rate derivatives is estimated using a discounted cash flow analysis based on the contractual terms of the derivatives. See Note 9, Derivatives, in these Notes to Condensed Consolidated Financial Statements.


	October 28, 2023
	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds	$	315,980	$	—	$	315,980









Other assets:
Forward foreign currency exchange contracts (1)	—		1,940		1,940
Deferred compensation plan investments	78,246		—		78,246

Total assets measured at fair value	$	394,226	$	1,940	$	396,166
Liabilities

Forward foreign currency exchange contracts (1)	$	—	$	13,515	$	13,515
Interest rate derivatives (2)	—		81,602		81,602
Total liabilities measured at fair value	$	—	$	95,117	$	95,117

(1)The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 9, Derivatives, in these Notes to Condensed Consolidated Financial Statements for more information related to the Company's master netting arrangements.

(2)The carrying value of the related debt was adjusted by an equal and offsetting amount. The fair value of interest rate derivatives is estimated using a discounted cash flow analysis based on the contractual terms of the derivatives. See Note 9, Derivatives, in these Notes to Condensed Consolidated Financial Statements.

Assets and Liabilities Not Recorded at Fair Value on a Recurring Basis

The table below presents the estimated fair values of certain financial instruments not recorded at fair value on a recurring basis. Given the short tenure of the Company's commercial paper notes, the carrying value of the outstanding commercial paper notes approximates the fair values, and therefore, are excluded from the table below ($547.4 million and $547.2 million as of August 3, 2024 and October 28, 2023, respectively). The fair values of the senior unsecured notes are obtained from broker prices and are classified as Level 1 measurements according to the fair value hierarchy.


	August 3, 2024				October 28, 2023
	Principal Amount Outstanding		Fair Value		Principal Amount Outstanding		Fair Value

2024 Notes, due October 2024	$	500,000	$	499,698	$	500,000	$	499,473
2025 Notes, due April 2025	400,000		394,533		400,000		385,231
2026 Notes, due December 2026	900,000		885,380		900,000		851,023

2027 Notes, due June 2027	440,212		431,739		440,212		408,595
2028 Notes, due October 2028	750,000		680,664		750,000		628,999
2031 Notes, due October 2031	1,000,000		856,266		1,000,000		773,404
2032 Notes, due October 2032	300,000		296,644		300,000		269,828
2034 Notes, due April 2034	550,000		570,226		—		—
2036 Notes, due December 2036	144,278		135,720		144,278		118,554
2041 Notes, due October 2041	750,000		558,156		750,000		479,078
2045 Notes, due December 2045	332,587		338,550		332,587		292,248
2051 Notes, due October 2051	1,000,000		694,750		1,000,000		590,666
2054 Notes, due April 2054	550,000		566,002		—		—
Total senior unsecured notes	$	7,617,077	$	6,908,328	$	6,517,077	$	5,297,099

Note 9 – Derivatives

Foreign Exchange Exposure Management — The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash flow hedges denominated in Euros, British Pounds, Philippine Pesos, Thai Baht, South Korean Won and Japanese Yen as of August 3, 2024 and October 28, 2023 were $262.6 million and $322.6 million, respectively. The fair values of forward foreign currency derivative instruments designated as hedging instruments in the Company’s Condensed Consolidated Balance Sheets as of August 3, 2024 and October 28, 2023 were as follows:


		Fair Value At
	Balance Sheet Location	August 3, 2024		October 28, 2023
Forward foreign currency exchange contracts	Prepaid expenses and other current assets	$	2,488	$	471
Forward foreign currency exchange contracts	Accrued liabilities	$	2,667	$	9,897

As of August 3, 2024 and October 28, 2023, the total notional amounts of undesignated hedges related to forward foreign currency exchange contracts were $167.1 million and $334.7 million, respectively. The fair values of undesignated hedges in the Company’s Condensed Consolidated Balance Sheets as of August 3, 2024 and October 28, 2023 were as follows:


		Fair Value At
	Balance Sheet Location	August 3, 2024		October 28, 2023
Undesignated hedges related to forward foreign currency exchange contracts	Prepaid expenses and other current assets	$	5,026	$	1,469
Undesignated hedges related to forward foreign currency exchange contracts	Accrued liabilities	$	3,329	$	3,618

Interest Rate Exposure Management — The Company does not consider the risk of counterparty default to be significant. The gain or loss on the Company's interest rate swap transactions attributable to the hedged benchmark interest rate risk and the offsetting gain or loss on the related interest rate swaps were recorded as follows:


	August 3, 2024
Balance Sheet Location	Loss on Swaps		Gain on Note
Accrued liabilities	$	15,905	$	—
Long-term debt	$	—	$	15,905

For information on the unrealized holding gains (losses) on derivatives included in and reclassified out of AOCI into the Condensed Consolidated Statements of Income related to forward foreign currency exchange contracts, see Note 3, Accumulated Other Comprehensive (Loss) Income, in these Notes to Condensed Consolidated Financial Statements for further information.

Note 10 – Inventories

Inventories at August 3, 2024 and October 28, 2023 were as follows:


	August 3, 2024		October 28, 2023
Raw materials	$	109,307	$	128,142
Work in process	1,021,612		1,125,819
Finished goods	297,017		388,253
Total inventories	$	1,427,936	$	1,642,214

Note 11 – Debt

Senior Notes Offering. On April 3, 2024, in an underwritten public offering, the Company issued $550.0 million aggregate principal amount of 5.050% senior notes due April 1, 2034 (the 2034 Notes) with semi-annual fixed interest payments due on April 1 and October 1 of each year, commencing October 1, 2024. The net proceeds of the offering were $545.5 million, after discounts and issuance costs. Prior to January 1, 2034 (three months prior to the maturity date of the 2034 Notes), the Company may, at its option, redeem the 2034 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the 2034 Notes matured on January 1, 2034) on a semi-annual basis at the applicable treasury rate plus 15 basis points less (b) interest accrued to the date of redemption, and (2) 100% of the principal amount of the 2034 Notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to the redemption date. On or after January 1, 2034, the Company may, at its option, redeem the 2034 Notes, in whole or in part, at any time and

from time to time, at a redemption price equal to 100% of the principal amount of the 2034 Notes being redeemed plus accrued and unpaid interest thereon to the redemption date. The 2034 Notes are unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior indebtedness.

On April 3, 2024, in an underwritten public offering, the Company issued $550.0 million aggregate principal amount of 5.300% senior notes due April 1, 2054 (the 2054 Notes) with semi-annual fixed interest payments due on April 1 and October 1 of each year, commencing October 1, 2024. The net proceeds of the offering were $542.3 million, after discounts and issuance costs. Prior to October 1, 2053 (six months prior to the maturity date of the 2054 Notes), the Company may, at its option, redeem the 2054 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the 2054 Notes matured on October 1, 2053) on a semi-annual basis at the applicable treasury rate plus 15 basis points less (b) interest accrued to the date of redemption, and (2) 100% of the principal amount of the 2054 Notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to the redemption date. On or after October 1, 2053, the Company may, at its option, redeem the 2054 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 2054 Notes being redeemed plus accrued and unpaid interest thereon to the redemption date. The 2054 Notes are unsecured and rank equally in right of payment with all of the Company’s other existing and future unsecured senior indebtedness.

The 2034 Notes and the 2054 Notes were issued pursuant to a base indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by a supplemental indenture, which contains certain covenants, events of default and other customary provisions. The covenants applicable to the 2034 Notes and the 2054 Notes limit the Company’s ability to incur, create, assume or guarantee any debt secured by a lien upon a principal property; enter into sale and lease-back transactions with respect to a principal property; and consolidate with or merge into, or transfer or lease all or substantially all of its assets to, any other party. As of August 3, 2024, the Company was in compliance with these covenants.

Note 12 – Income Taxes

The Company’s effective tax rates for the three- and nine-month periods ended August 3, 2024 and July 29, 2023 were below the U.S. statutory tax rate of 21.0%, due to lower statutory tax rates applicable to the Company's operations in the foreign jurisdictions in which it earns income. The Company's effective tax rate also includes the effects of the mandatory capitalization and amortization of research and development expenses which began in fiscal 2023 under the Tax Cuts and Jobs Act of 2017. The mandatory capitalization requirement decreases the Company's effective tax rate primarily by increasing the foreign-derived intangible income deduction.

It is reasonably possible that the balance of gross unrealized tax benefits, including accrued interest and penalties, could decrease by as much as approximately $142.0 million within the next twelve months due to the completion of tax audits, including any administrative appeals.

The Company has numerous audits ongoing throughout the world including: an IRS income tax audit for the fiscal years ended October 30, 2021, November 2, 2019 and November 3, 2018; a pre-acquisition IRS income tax audit for Maxim's fiscal years ended June 27, 2015 through August 26, 2021; and various U.S. state and local audits and international audits, including an Irish corporate tax audit for the fiscal year ended November 2, 2019. The Company's U.S. federal income tax returns prior to the fiscal year ended November 3, 2018 are no longer subject to examination, except for the applicable Maxim pre-acquisition fiscal years noted above.

Note 13 – New Accounting Pronouncements

Standards Implemented

Acquired Contract Assets and Contract Liabilities

In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2021-08, Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities. Under this guidance (ASC 805-20-30-28), the acquirer should determine what contract assets and/or contract liabilities it would have recorded under ASC 606 (the revenue guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recorded on its books under ASC 606 as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2021-08 in the first quarter of fiscal 2024. Upon adoption, ASU 2021-08 did not have a material impact on the Company's financial position and results of operations.

Standards to be Implemented

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances the disclosure requirements for reportable segments. ASU 2023-07 requires segment disclosure to include significant segment expense categories and amounts, and qualitative detail of other segment items. Disclosure of multiple measures of segment profit and loss may also be reported. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its financial position and results of operations.

Income Taxes

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires the disaggregation of information in existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its financial position and results of operations.

Note 14 – Subsequent Events

On August 20, 2024, the Board of Directors of the Company declared a cash dividend of $0.92 per outstanding share of common stock. The dividend will be paid on September 17, 2024 to all shareholders of record at the close of business on September 3, 2024 and is expected to total approximately $456.8 million.

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