Analog Devices Inc 10-Q for FY2024 Q3
Analog Devices Inc (ADI)
10-Q
2024-08-21
For: 2024-08-03
View Original
Added on
April 02, 2026
About this 10-Q
Analog Devices Inc filed this 10-Q on August 21, 2024, covering the quarter ended August 3, 2024 (FY2024 Q3).
Headline figures
Quarter ended August 3, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.31B
- down 24.8% from $3.08B a year earlier
- Net income
- $392.23M
- down 55.3% from net income of $877.02M a year earlier
- Diluted EPS
- $0.79
- down 54.6% from $1.74 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended August 3, 2024
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File No. 1-7819
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(781 ) 935-5565
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☑ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of August 3, 2024 there were 496,493,455 shares of common stock of the registrant, $0.16 2/3 par value per share, outstanding.
PART I — FINANCIAL INFORMATION
| 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 | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross margin | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Selling, marketing, general and administrative | |||||||||||||||||||||||
| Amortization of intangibles | |||||||||||||||||||||||
| Special charges, net | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating income: | |||||||||||||||||||||||
| Nonoperating expense (income): | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Interest income | ( | ( | ( | ( | |||||||||||||||||||
| Other, net | ( | ( | |||||||||||||||||||||
| Total nonoperating expense (income) | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Provision for (benefit from) income taxes | ( | ||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Shares used to compute earnings per common share – basic | |||||||||||||||||||||||
| Shares used to compute earnings per common share – diluted | |||||||||||||||||||||||
| Basic earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes.
1
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 | $ | $ | $ | $ | |||||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||||||||
| Change in fair value of derivative instruments designated as cash flow hedges, net | |||||||||||||||||||||||
| Changes in pension plans, net | ( | ||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes.
2
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 | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Accounts receivable | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Non-current Assets | |||||||||||
| Net property, plant and equipment | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Deferred tax assets | |||||||||||
| Other assets | |||||||||||
| Total non-current assets | |||||||||||
| TOTAL ASSETS | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Income taxes payable | |||||||||||
| Debt, current | |||||||||||
| Commercial paper notes | |||||||||||
| Accrued liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Non-current Liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred income taxes | |||||||||||
| Income taxes payable | |||||||||||
| Other non-current liabilities | |||||||||||
| Total non-current liabilities | |||||||||||
| Shareholders’ Equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Capital in excess of par value | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | |||||||||
See accompanying notes.
3
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 | $ | $ | $ | $ | ( | ||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||
Dividends declared and paid - $ | ( | ||||||||||||||||||||||||||||
| Issuance of stock under stock plans and other | |||||||||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||
| Common stock repurchased | ( | ( | ( | ||||||||||||||||||||||||||
BALANCE, AUGUST 3, 2024 | $ | $ | $ | $ | ( | ||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | ( | ||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||
Dividends declared and paid - $ | ( | ||||||||||||||||||||||||||||
| Issuance of stock under stock plans and other | |||||||||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||
| Common stock repurchased | ( | ( | ( | ||||||||||||||||||||||||||
BALANCE, AUGUST 3, 2024 | $ | $ | $ | $ | ( | ||||||||||||||||||||||||
See accompanying notes.
4
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 | $ | $ | $ | $ | ( | ||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||
Dividends declared and paid - $ | ( | ||||||||||||||||||||||||||||
| Issuance of stock under stock plans and other | |||||||||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||
| Common stock repurchased | ( | ( | ( | ||||||||||||||||||||||||||
BALANCE, JULY 29, 2023 | $ | $ | $ | $ | ( | ||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | ( | ||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||
Dividends declared and paid - $ | ( | ||||||||||||||||||||||||||||
| Issuance of stock under stock plans and other | |||||||||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||
| Common stock repurchased | ( | ( | ( | ||||||||||||||||||||||||||
BALANCE, JULY 29, 2023 | $ | $ | $ | $ | ( | ||||||||||||||||||||||||
See accompanying notes.
5
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 | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operations: | |||||||||||
| Depreciation | |||||||||||
| Amortization of intangibles | |||||||||||
| Stock-based compensation expense | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Other | |||||||||||
| Changes in operating assets and liabilities | ( | ||||||||||
| Total adjustments | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of short-term investments | ( | ||||||||||
| Additions to property, plant and equipment | ( | ( | |||||||||
| Other | ( | ||||||||||
| Net cash used for investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from debt | |||||||||||
| Early termination of debt | ( | ||||||||||
| Proceeds from commercial paper notes | |||||||||||
| Payments of commercial paper notes | ( | ( | |||||||||
| Repurchase of common stock | ( | ( | |||||||||
| Dividend payments to shareholders | ( | ( | |||||||||
| Proceeds from employee stock plans | |||||||||||
| Other | ( | ( | |||||||||
| Net cash used for financing activities | ( | ( | |||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
See accompanying notes.
6
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 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
| Other comprehensive income before reclassifications | ( | ||||||||||||||||||||||||||||||||||
| Amounts reclassified out of other comprehensive income | |||||||||||||||||||||||||||||||||||
| Tax effects | ( | ( | |||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||
| August 3, 2024 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
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:
7
| 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 | $ | ( | $ | $ | ( | $ | Cost of sales | |||||||||||||||||||||||||
| ( | ( | Research and development | ||||||||||||||||||||||||||||||
| ( | ( | ( | ( | Selling, marketing, general and administrative | ||||||||||||||||||||||||||||
| Interest rate derivatives | Interest expense | |||||||||||||||||||||||||||||||
| Total before tax | ||||||||||||||||||||||||||||||||
| ( | ( | ( | ( | Tax | ||||||||||||||||||||||||||||
| $ | $ | $ | $ | Net of tax | ||||||||||||||||||||||||||||
| Amortization of pension components included in the computation of net periodic pension cost: | ||||||||||||||||||||||||||||||||
| Actuarial losses | $ | $ | $ | $ | Net of tax | |||||||||||||||||||||||||||
| Total amounts reclassified out of AOCI, net of tax | $ | $ | $ | $ | ||||||||||||||||||||||||||||
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 | $ | $ | $ | $ | |||||||||||||||||||
| Basic shares: | |||||||||||||||||||||||
| Weighted-average shares outstanding | |||||||||||||||||||||||
| Earnings per common share basic: | $ | $ | $ | $ | |||||||||||||||||||
| Diluted shares: | |||||||||||||||||||||||
| Weighted-average shares outstanding | |||||||||||||||||||||||
| Assumed exercise of common stock equivalents | |||||||||||||||||||||||
| Weighted-average common and common equivalent shares | |||||||||||||||||||||||
| Earnings per common share diluted: | $ | $ | $ | $ | |||||||||||||||||||
| Anti-dilutive shares related to: | |||||||||||||||||||||||
| Outstanding stock-based awards | |||||||||||||||||||||||
8
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 | $ | $ | |||||||||||||||||||||||||||||||||
| Employee severance and benefit costs, net | |||||||||||||||||||||||||||||||||||
| Severance and benefit payments | ( | ( | |||||||||||||||||||||||||||||||||
| Balance at February 3, 2024 | $ | $ | |||||||||||||||||||||||||||||||||
| Employee severance and benefit costs, net | ( | ||||||||||||||||||||||||||||||||||
| Severance and benefit payments | ( | ( | |||||||||||||||||||||||||||||||||
| Balance at May 4, 2024 | $ | $ | |||||||||||||||||||||||||||||||||
| Employee severance and benefit costs | |||||||||||||||||||||||||||||||||||
| Severance and benefit payments | ( | ( | |||||||||||||||||||||||||||||||||
| Balance at August 3, 2024 | $ | $ | |||||||||||||||||||||||||||||||||
| Accrued liabilities | $ | $ | |||||||||||||||||||||||||||||||||
| Other non-current liabilities | $ | $ | |||||||||||||||||||||||||||||||||
Note 6 – Commitments and Contingencies
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.
9
| Three Months Ended | |||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | ||||||||||||||||||||||||||||
| Revenue | % of Revenue* | Y/Y% | Revenue | % of Revenue* | |||||||||||||||||||||||||
| Industrial | $ | % | ( | % | $ | % | |||||||||||||||||||||||
| Automotive | % | ( | % | % | |||||||||||||||||||||||||
| Communications | % | ( | % | % | |||||||||||||||||||||||||
| Consumer | % | % | % | ||||||||||||||||||||||||||
| Total revenue | $ | % | ( | % | $ | % | |||||||||||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | ||||||||||||||||||||||||||||
| Revenue | % of Revenue* | Y/Y% | Revenue | % of Revenue* | |||||||||||||||||||||||||
| Industrial | $ | % | ( | % | $ | % | |||||||||||||||||||||||
| Automotive | % | ( | % | % | |||||||||||||||||||||||||
| Communications | % | ( | % | % | |||||||||||||||||||||||||
| Consumer | % | ( | % | % | |||||||||||||||||||||||||
| Total revenue | $ | % | ( | % | $ | % | |||||||||||||||||||||||
| * 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 | $ | % | $ | % | |||||||||||||||||||
| Direct customers | % | % | |||||||||||||||||||||
| Other | % | % | |||||||||||||||||||||
| Total revenue | $ | % | $ | % | |||||||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | ||||||||||||||||||||||
| Channel | Revenue | % of Revenue* | Revenue | % of Revenue* | |||||||||||||||||||
| Distributors | $ | % | $ | % | |||||||||||||||||||
| Direct customers | % | % | |||||||||||||||||||||
| Other | % | % | |||||||||||||||||||||
| Total revenue | $ | % | $ | % | |||||||||||||||||||
| * 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
10
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 | $ | $ | $ | ||||||||||||||||||||
| Corporate obligations (1) | |||||||||||||||||||||||
Bank obligations (1) | |||||||||||||||||||||||
Short-term investments: (2) | |||||||||||||||||||||||
| Available-for-sale: | |||||||||||||||||||||||
| Securities with one year or less to maturity: | |||||||||||||||||||||||
| Corporate obligations (1) | |||||||||||||||||||||||
| Bank obligations (1) | |||||||||||||||||||||||
| Other assets: | |||||||||||||||||||||||
Forward foreign currency exchange contracts (3) | |||||||||||||||||||||||
| Deferred compensation plan investments | |||||||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | ||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
Forward foreign currency exchange contracts (3) | $ | $ | $ | ||||||||||||||||||||
Interest rate derivatives (4) | |||||||||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | ||||||||||||||||||||
(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.
11
| 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 | $ | $ | $ | ||||||||||||||||||||
| Other assets: | |||||||||||||||||||||||
| Forward foreign currency exchange contracts (1) | |||||||||||||||||||||||
| Deferred compensation plan investments | |||||||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | ||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Forward foreign currency exchange contracts (1) | $ | $ | $ | ||||||||||||||||||||
| Interest rate derivatives (2) | |||||||||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | ||||||||||||||||||||
(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.
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 | $ | $ | $ | $ | |||||||||||||||||||
| 2025 Notes, due April 2025 | |||||||||||||||||||||||
| 2026 Notes, due December 2026 | |||||||||||||||||||||||
| 2027 Notes, due June 2027 | |||||||||||||||||||||||
| 2028 Notes, due October 2028 | |||||||||||||||||||||||
| 2031 Notes, due October 2031 | |||||||||||||||||||||||
| 2032 Notes, due October 2032 | |||||||||||||||||||||||
| 2034 Notes, due April 2034 | |||||||||||||||||||||||
| 2036 Notes, due December 2036 | |||||||||||||||||||||||
| 2041 Notes, due October 2041 | |||||||||||||||||||||||
| 2045 Notes, due December 2045 | |||||||||||||||||||||||
| 2051 Notes, due October 2051 | |||||||||||||||||||||||
| 2054 Notes, due April 2054 | |||||||||||||||||||||||
Total senior unsecured notes | $ | $ | $ | $ | |||||||||||||||||||
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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 | $ | $ | ||||||||||||||
| Forward foreign currency exchange contracts | Accrued liabilities | $ | $ | ||||||||||||||
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 | $ | $ | ||||||||||||||
Undesignated hedges related to forward foreign currency exchange contracts | Accrued liabilities | $ | $ | ||||||||||||||
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 | $ | $ | ||||||||||||||||||||||||
Long-term debt | $ | $ | ||||||||||||||||||||||||
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 | $ | $ | |||||||||
| Work in process | |||||||||||
| Finished goods | |||||||||||
| Total inventories | $ | $ | |||||||||
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
13
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
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.
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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.
15
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||
This information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended October 28, 2023 (fiscal 2023).
This Quarterly Report on Form 10-Q, including the following discussion, contains forward-looking statements regarding future events and our future results that are subject to the safe harbor created under the Private Securities Litigation Reform Act of 1995 and other safe harbors under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “potential,” “may,” “could” and “will,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections regarding our future financial performance or results; our anticipated growth and trends in our businesses; the effects of business, economic, political, legal and regulatory impacts or conflicts upon our global operations; changes in demand for semiconductors and the related changes in demand and supply for our products; manufacturing delays, product availability and supply chain disruptions; our ability to recruit or retain our key personnel; our future liquidity, capital needs and capital expenditures; our development of technologies and processes and research and development investments; our future market position and expected competitive changes in the marketplace for our products; the anticipated result of litigation matters; our plans to pay dividends or repurchase stock; servicing our outstanding debt; our plans to borrow under our third amended and restated revolving credit agreement, as amended, and issue notes under our commercial paper program and the planned use of proceeds from such borrowing and issuing; our expected tax rate; expected cost savings; the effect of new accounting pronouncements; our plans to integrate or realize the benefits or synergies expected of acquired businesses and technologies; our Global Repositioning Actions and Q4 2023 Plan; and other characterizations of future events or circumstances are forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors.
The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in the forward-looking statements: economic, political, legal and regulatory uncertainty or conflicts; changes in demand for semiconductor products; manufacturing delays, product and raw materials availability and supply chain disruptions; products that may be diverted from our authorized distribution channels; changes in export classifications, import and export regulations or duties and tariffs; our development of technologies and research and development investments; our future liquidity, capital needs and capital expenditures; our ability to compete successfully in the markets in which we operate; our ability to recruit and retain key personnel; risks related to acquisitions or other strategic transactions; security breaches or other cyber incidents; adverse results in litigation matters; reputational damage; changes in our estimates of our expected tax rates based on current tax law; risks related to our indebtedness; unanticipated difficulties or expenditures relating to integrating Maxim; the discretion of our Board of Directors to declare dividends and our ability to pay dividends in the future; factors impacting our ability to repurchase shares; and uncertainty as to the long-term value of our common stock. Additional factors that could cause actual results to differ materially from those described in these forward-looking statements include the risk factors included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for fiscal 2023. We undertake no obligation to revise or update any forward-looking statements, including to reflect events or circumstances occurring after the date of the filing of this report, except to the extent required by law.
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Results of Operations
Overview
(all tabular amounts in thousands except per share amounts and percentages)
| Three Months Ended | |||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | % Change | ||||||||||||||||||||||||||
| Revenue | $ | 2,312,209 | $ | 3,076,495 | $ | (764,286) | (25) | % | |||||||||||||||||||||
| Gross margin % | 56.7 | % | 63.8 | % | |||||||||||||||||||||||||
| Net income | $ | 392,232 | $ | 877,019 | $ | (484,787) | (55) | % | |||||||||||||||||||||
| Net income as a % of revenue | 17.0 | % | 28.5 | % | |||||||||||||||||||||||||
| Diluted EPS | $ | 0.79 | $ | 1.74 | $ | (0.95) | (55) | % | |||||||||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | % Change | ||||||||||||||||||||||||||
| Revenue | $ | 6,983,952 | $ | 9,589,055 | $ | (2,605,103) | (27) | % | |||||||||||||||||||||
| Gross margin % | 56.8 | % | 65.0 | % | |||||||||||||||||||||||||
| Net income | $ | 1,157,201 | $ | 2,816,149 | $ | (1,658,948) | (59) | % | |||||||||||||||||||||
| Net income as a % of revenue | 16.6 | % | 29.4 | % | |||||||||||||||||||||||||
| Diluted EPS | $ | 2.32 | $ | 5.55 | $ | (3.23) | (58) | % | |||||||||||||||||||||
We have a 52-53 week fiscal year that ends on the Saturday closest to the last day in October. The fiscal year ending November 2, 2024 (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.
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 our product will be incorporated. As data systems for capturing and tracking this data and our methodology evolves and improves, the categorization of products by end market
17
can vary over time. When this occurs, we reclassify 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 decreased 25% and 27% in the three- and nine-month periods ended August 3, 2024, respectively, as compared to the same periods of the prior fiscal year, primarily as a result of broad-based decline in demand for our products. The decrease in the nine-month period was partially offset by an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.
Revenue by Sales Channel
The following tables summarize revenue by sales channel. We sell our products globally through a direct sales force, third party distributors, independent sales representatives and via our 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.
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| Three Months Ended | |||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | ||||||||||||||||||||||
| Revenue | % of Revenue* | Revenue | % of Revenue* | ||||||||||||||||||||
| Channel | |||||||||||||||||||||||
| 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 | ||||||||||||||||||||||
| Revenue | % of Revenue* | Revenue | % of Revenue* | ||||||||||||||||||||
| Channel | |||||||||||||||||||||||
| 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. | |||||||||||||||||||||||
As indicated in the table above, the percentage of total revenue sold via each channel has remained relatively consistent in the periods presented, but can fluctuate from time to time based on end market revenue trends.
Gross Margin
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | % Change | August 3, 2024 | July 29, 2023 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Gross margin | $ | 1,311,239 | $ | 1,961,615 | $ | (650,376) | (33) | % | $ | 3,965,215 | $ | 6,230,502 | $ | (2,265,287) | (36) | % | |||||||||||||||||||||||||||||||
| Gross margin % | 56.7 | % | 63.8 | % | 56.8 | % | 65.0 | % | |||||||||||||||||||||||||||||||||||||||
Gross margin percentage decreased by 710 and 820 basis points in the three- and nine-month periods ended August 3, 2024, respectively, as compared to the same periods of the prior fiscal year, primarily due to lower utilization of our factories due to decreased customer demand and unfavorable product mix.
Research and Development (R&D)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | % Change | August 3, 2024 | July 29, 2023 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| R&D expenses | $ | 362,671 | $ | 423,751 | $ | (61,080) | (14) | % | $ | 1,108,960 | $ | 1,253,600 | $ | (144,640) | (12) | % | |||||||||||||||||||||||||||||||
| R&D expenses as a % of revenue | 16 | % | 14 | % | 16 | % | 13 | % | |||||||||||||||||||||||||||||||||||||||
R&D expenses decreased in the three- and nine-month periods ended August 3, 2024, as compared to the same periods of the prior fiscal year. The decrease in the three-month period was primarily as a result of lower R&D employee-related variable compensation expenses and lower salary and benefit expenses. The decrease in the nine-month period was primarily as a result of lower R&D employee-related variable compensation expenses, partially offset by higher salary and benefit expenses and the impact of an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.
R&D expenses as a percentage of revenue will fluctuate from year-to-year depending on the amount of revenue and the success of new product development efforts, which we view as critical to our future growth. We expect to continue the development of innovative technologies and processes for new products. We believe that a continued commitment to R&D is essential to maintain product leadership with our existing products as well as to provide innovative new product offerings.
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Selling, Marketing, General and Administrative (SMG&A)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | % Change | August 3, 2024 | July 29, 2023 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| SMG&A expenses | $ | 257,213 | $ | 334,113 | $ | (76,900) | (23) | % | $ | 791,420 | $ | 984,648 | $ | (193,228) | (20) | % | |||||||||||||||||||||||||||||||
| SMG&A expenses as a % of revenue | 11 | % | 11 | % | 11 | % | 10 | % | |||||||||||||||||||||||||||||||||||||||
SMG&A expenses decreased in the three- and nine-month periods ended August 3, 2024, as compared to the same periods of the prior fiscal year, primarily as a result of lower SMG&A employee-related variable compensation expenses, salary and benefit expenses and discretionary spending. The decrease in the nine-month period was partially offset by an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.
Amortization of Intangibles
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | % Change | August 3, 2024 | July 29, 2023 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Amortization expenses | $ | 187,754 | $ | 250,719 | $ | (62,965) | (25) | % | $ | 567,030 | $ | 756,882 | $ | (189,852) | (25) | % | |||||||||||||||||||||||||||||||
| Amortization expenses as a % of revenue | 8 | % | 8 | % | 8 | % | 8 | % | |||||||||||||||||||||||||||||||||||||||
Amortization expenses decreased in the three- and nine-month periods ended August 3, 2024, as compared to the same periods of the prior fiscal year, primarily as a result of a portion of our acquired intangible assets becoming fully amortized during fiscal 2023.
Special Charges, Net
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | % Change | August 3, 2024 | July 29, 2023 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Special charges, net | $ | 12,282 | $ | 23,539 | $ | (11,257) | (48) | % | $ | 34,399 | $ | 46,675 | $ | (12,276) | (26) | % | |||||||||||||||||||||||||||||||
Special charges, net decreased in the three- and nine-month periods ended August 3, 2024, as compared to the same periods of the prior fiscal year, primarily due to the timing of charges recorded in each period. Fiscal 2023 charges were primarily related to Global Repositioning Actions, while fiscal 2024 charges were primarily related to the Q4 2023 Plan.
Operating Income
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | % Change | August 3, 2024 | July 29, 2023 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 491,319 | $ | 929,493 | $ | (438,174) | (47) | % | $ | 1,463,406 | $ | 3,188,697 | $ | (1,725,291) | (54) | % | |||||||||||||||||||||||||||||||
| Operating income as a % of revenue | 21.2 | % | 30.2 | % | 21.0 | % | 33.3 | % | |||||||||||||||||||||||||||||||||||||||
The year-over-year decrease in operating income in the three-month period ended August 3, 2024 was primarily the result of a decrease in revenue, which contributed to a decrease in gross margin of $650.4 million, partially offset by a decrease of $212.2 million in net operating expenses.
The year-over-year decrease in operating income in the nine-month period ended August 3, 2024 was primarily the result of a decrease in revenue, which contributed to a decrease in gross margin of $2,265.3 million, partially offset by a decrease of $540.0 million in net operating expenses.
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Nonoperating Expense (Income)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | August 3, 2024 | July 29, 2023 | $ Change | ||||||||||||||||||||||||||||||
| Total nonoperating expense (income) | $ | 68,328 | $ | 54,672 | $ | 13,656 | $ | 202,394 | $ | 152,480 | $ | 49,914 | |||||||||||||||||||||||
The year-over-year increases in nonoperating expense (income) in the three- and nine-month periods ended August 3, 2024, as compared to the same periods of the prior fiscal year, were primarily the result of higher foreign currency expenses.
Provision for (Benefit from) Income Taxes
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | August 3, 2024 | July 29, 2023 | $ Change | ||||||||||||||||||||||||||||||
| Provision for (benefit from) income taxes | $ | 30,759 | $ | (2,198) | $ | 32,957 | $ | 103,811 | $ | 220,068 | $ | (116,257) | |||||||||||||||||||||||
| Effective income tax rate | 7.3 | % | (0.3) | % | 8.2 | % | 7.2 | % | |||||||||||||||||||||||||||
The 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% due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income. Our pretax income for the three- and nine-month periods ended August 3, 2024 and July 29, 2023 was primarily generated in Ireland at a tax rate of 12.5%.
See Note 12, Income Taxes, in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Net Income
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| August 3, 2024 | July 29, 2023 | $ Change | % Change | August 3, 2024 | July 29, 2023 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 392,232 | $ | 877,019 | $ | (484,787) | (55) | % | $ | 1,157,201 | $ | 2,816,149 | $ | (1,658,948) | (59) | % | |||||||||||||||||||||||||||||||
| Net income as a % of revenue | 17.0 | % | 28.5 | % | 16.6 | % | 29.4 | % | |||||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | 0.79 | $ | 1.74 | $ | 2.32 | $ | 5.55 | |||||||||||||||||||||||||||||||||||||||
Net income decreased in the three-month period ended August 3, 2024, as compared to the same period of the prior fiscal year, as the result of a $438.2 million decrease in operating income, a $33.0 million increase in provision for (benefit from) income taxes and a $13.7 million increase in nonoperating expense (income).
Net income decreased in the nine-month period ended August 3, 2024, as compared to the same period of the prior fiscal year, as the result of a $1,725.3 million decrease in operating income and a $49.9 million increase in nonoperating expense (income), partially offset by a $116.3 million decrease in provision for (benefit from) income taxes.
Liquidity and Capital Resources
At August 3, 2024, our principal source of liquidity was $2.5 billion of cash, cash equivalents and short-term investments, of which approximately $1.4 billion was held in the United States, and the balance of our cash, cash equivalents and short-term investments was held outside the United States in various foreign subsidiaries. We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States. We do not expect current regulatory restrictions or taxes on repatriation to have a material adverse effect on our overall liquidity, financial condition or results of operations. Our cash, cash equivalents and short-term investments consist of highly liquid investments, including money market funds and corporate and bank obligations. We maintain these balances with counterparties with high credit ratings, and continually monitor the amount of credit exposure to any one issuer and diversify our investments in order to minimize our credit risk.
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We believe that our existing sources of liquidity and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing, will be sufficient to fund operations, capital expenditures, research and development efforts and dividend payments (if any) in the immediate future and for at least the next twelve months.
| Nine Months Ended | |||||||||||
| August 3, 2024 | July 29, 2023 | ||||||||||
| Net cash provided by operating activities | $ | 2,801,712 | $ | 3,630,340 | |||||||
| Net cash provided by operations as a % of revenue | 40 | % | 56 | % | |||||||
| Net cash used for investing activities | $ | (993,244) | $ | (787,324) | |||||||
| Net cash used for financing activities | $ | (660,497) | $ | (3,164,342) | |||||||
The following changes contributed to the net change in cash and cash equivalents in the nine-month period ended August 3, 2024 as compared to the same period in fiscal 2023.
Operating Activities
Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities. The decrease in cash provided by operating activities during the nine-month period ended August 3, 2024, as compared to the same period of the prior fiscal year, was mainly the result of lower net income adjusted for noncash items offset by changes in working capital.
Investing Activities
Investing cash flows generally consist of capital expenditures and cash used for acquisitions. The increase in cash used for investing activities during the nine-month period ended August 3, 2024, as compared to the same period of the prior fiscal year, was primarily the result of the purchase of short-term investments, partially offset by a decrease in cash used for capital expenditures.
Financing Activities
Financing cash flows generally consist of payments of dividends to stockholders, repurchases of common stock, issuance and repayment of debt and proceeds from the sale of shares of common stock pursuant to employee equity incentive plans. The change in cash used for financing activities during the nine-month period ended August 3, 2024, as compared to the same period of the prior fiscal year, was primarily the result of lower common stock repurchases and net proceeds from the issuance of debt during fiscal 2024. For additional information, see Note 11, Debt, in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Working Capital
| August 3, 2024 | October 28, 2023 | $ Change | % Change | ||||||||||||||||||||
| Accounts receivable | $ | 1,127,158 | $ | 1,469,734 | $ | (342,576) | (23) | % | |||||||||||||||
| Days sales outstanding* | 42 | 52 | |||||||||||||||||||||
| Inventory | $ | 1,427,936 | $ | 1,642,214 | $ | (214,278) | (13) | % | |||||||||||||||
| Days cost of sales in inventory* | 132 | 143 | |||||||||||||||||||||
_______________________________________
*We use the average of the current quarter and prior quarter ending net accounts receivable and ending inventory balance in our calculation of days sales outstanding and days cost of sales in inventory, respectively.
The decrease in accounts receivable in dollars was primarily the result of variations in the timing of collections and billings and decreased revenue levels in the third quarter of fiscal 2024 as compared to the fourth quarter of fiscal 2023.
Inventory decreased primarily as a result of our efforts to balance manufacturing production, demand and inventory levels. Our inventory levels are impacted by our need to support forecasted sales demand and variations between those forecasts and actual demand.
Current liabilities increased to $3,226.6 million at August 3, 2024 as compared to $3,201.0 million at the end of fiscal 2023 due to higher current debt and income taxes payable, partially offset by lower accrued liabilities and accounts payable.
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Debt
As of August 3, 2024, our debt obligations consisted of the following:
| Principal Amount Outstanding | ||||||||
| Commercial paper notes | $ | 547,443 | ||||||
| 2024 Notes, due October 2024 | 500,000 | |||||||
| 2025 Notes, due April 2025 | 400,000 | |||||||
| 2026 Notes, due December 2026 | 900,000 | |||||||
| 2027 Notes, due June 2027 | 440,212 | |||||||
| 2028 Notes, due October 2028 | 750,000 | |||||||
| 2031 Notes, due October 2031 | 1,000,000 | |||||||
| 2032 Notes, due October 2032 | 300,000 | |||||||
| 2034 Notes, due April 2034 | 550,000 | |||||||
| 2036 Notes, due December 2036 | 144,278 | |||||||
| 2041 Notes, due October 2041 | 750,000 | |||||||
| 2045 Notes, due December 2045 | 332,587 | |||||||
| 2051 Notes, due October 2051 | 1,000,000 | |||||||
| 2054 Notes, due April 2054 | 550,000 | |||||||
| Total debt | $ | 8,164,520 | ||||||
The indentures governing our outstanding notes contain covenants that may limit our ability to: incur, create, assume or guarantee any debt for borrowed money 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 our assets to, any other party. As of August 3, 2024, we were in compliance with these covenants.
Commercial Paper Program
Under our commercial paper program, we may issue short-term, unsecured commercial paper notes in amounts up to a maximum aggregate face amount of $2.5 billion outstanding at any time, with maturities of up to 397 days from the date of issuance. As of August 3, 2024, we had $547.4 million of outstanding borrowings under the commercial paper program recorded in the Condensed Consolidated Balance Sheet. We use the net proceeds of the commercial paper program for general corporate purposes, including without limitation, repayment of indebtedness, stock repurchases, acquisitions, capital expenditures and working capital.
Revolving Credit Facility
Our Third Amended and Restated Revolving Credit Agreement, dated as of June 23, 2021 and as amended (Revolving Credit Agreement), provides for a five year unsecured revolving credit facility in an aggregate principal amount not to exceed $2.5 billion (subject to certain terms and conditions).
We may borrow under this revolving credit facility in the future and use the proceeds for repayment of existing indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes. The terms of the Revolving Credit Agreement impose restrictions on our ability to undertake certain transactions, to create certain liens on assets and to incur certain subsidiary indebtedness. In addition, the Revolving Credit Agreement contains a consolidated leverage ratio covenant of total consolidated funded debt to consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) of not greater than 3.5 to 1.0. As of August 3, 2024, we were in compliance with these covenants.
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Stock Repurchase Program
In the aggregate, our Board of Directors has authorized us to repurchase $16.7 billion of our common stock under our common stock repurchase program. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized under the program. As of August 3, 2024, an additional $1.7 billion remains available for repurchase under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. We also repurchase 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 our employee stock purchase plan. Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity and other factors we deem relevant.
Capital Expenditures
Net additions to property, plant and equipment were $565.1 million in the first nine months of fiscal 2024. We expect capital expenditures for fiscal 2024 to be between approximately $650 million and $750 million. These capital expenditures will be funded with a combination of cash on hand and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing.
Dividends
On August 20, 2024, our Board of Directors 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. We currently expect quarterly dividends to continue in future periods. The payment of any future quarterly dividends, or a future increase in the quarterly dividend amount, will be at the discretion of the Board of Directors and will be dependent upon our financial position, results of operations, outlook, liquidity and other factors deemed relevant by the Board of Directors.
Contractual Obligations
In the second quarter of fiscal 2024, we issued $550.0 million aggregate principal amount of 5.050% senior unsecured notes due April 1, 2034 (2034 Notes) and $550.0 million aggregate principal amount of 5.300% senior unsecured notes due April 1, 2054 (2054 Notes). The 2034 Notes and the 2054 Notes have semi-annual fixed interest payments due on April 1 and October 1 of each year, commencing October 1, 2024. For additional information, see Note 11, Debt, in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board that are adopted by us as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards will not have a material impact on our future financial condition and results of operations. See Note 13, New Accounting Pronouncements, in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of recently issued and adopted accounting pronouncements, including the dates of adoption and impact on our historical financial condition and results of operations.
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| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | ||||
We are subject to market risks related to our financial instruments, including those identified in Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K for the fiscal year ended October 28, 2023, which was filed with the Securities and Exchange Commission on November 21, 2023.
| ITEM 4. | Controls and Procedures | ||||
(a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of August 3, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of August 3, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
(b) Changes in Internal Control over Financial Reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended August 3, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
| ITEM 1. | Legal Proceedings | ||||
The information required by this Item is provided in Note 6, Commitments and Contingencies, of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
| ITEM 1A. | Risk Factors | ||||
We are subject to a number of risks that could adversely affect our business, results of operations, financial condition and future prospects, including those identified in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended October 28, 2023, which was filed with the Securities and Exchange Commission on November 21, 2023.
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| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||||
Issuer Purchases of Equity Securities
| Period | Total Number of Shares Purchased (a) | Average Price Paid Per Share (b) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (c) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||
| May 5, 2024 through June 1, 2024 | 312,392 | $ | 215.31 | 281,773 | $ | 1,761,966,880 | |||||||||||||||||
| June 2, 2024 through June 29, 2024 | 106,372 | $ | 231.45 | 46,526 | $ | 1,751,134,187 | |||||||||||||||||
| June 30, 2024 through August 3, 2024 | 132,044 | $ | 229.80 | 77,494 | $ | 1,733,383,875 | |||||||||||||||||
| Total | 550,808 | $ | 221.90 | 405,793 | $ | 1,733,383,875 | |||||||||||||||||
(a)Includes 145,015 shares withheld by us from employees to satisfy employee tax obligations upon vesting of restricted stock units/awards granted to our employees under our equity compensation plans.
(b)The average price paid for shares in connection with vesting of restricted stock units/awards are averages of the closing stock price at the vesting date which is used to calculate the number of shares to be withheld.
(c)Shares repurchased pursuant to the stock repurchase program publicly announced on August 12, 2004 and updated thereafter. Under the repurchase program, we may repurchase outstanding shares of our common stock from time to time in the open market and through privately negotiated transactions in an aggregate amount of up to $16.7 billion. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the repurchase program.
| ITEM 5. | Other Information | ||||
The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted by our directors or officers during the third quarter of fiscal 2024 that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (Rule 10b5-1 trading arrangement).
| Name and Title | Date of Adoption | Duration of Rule 10b5-1 Trading Arrangement | Aggregate Number of Securities to Be Purchased or Sold | ||||||||
Until | Sale of up to | ||||||||||
(1)Includes 50,000 shares owned outright and 35,187 shares underlying restricted stock units (RSUs). Also includes 118,757 shares underlying performance-based RSUs (PRSUs) as described in the table below. PRSUs may be earned based on the achievement of Company performance targets anywhere from zero to 200% of the target award.
Shares Underlying PRSUs | Shares Earned to Date | Total Shares that May be Earned | Total Shares Issued | ||||||||
| 10,615 | -- | 21,230 | -- | ||||||||
| 80,046 | 120,069 | -- | 69,820* | ||||||||
| 28,096 | 22,472 | 33,708 | -- | ||||||||
None of our officers or directors terminated a Rule 10b5-1 trading arrangement or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the third quarter of fiscal 2024.
In our Quarterly Report on Form 10-Q for the period ended May 4, 2024, which was filed with the Securities and Exchange Commission on May 22, 2024, we reported the adoption of a Rule 10b5-1 trading arrangement by Vincent Roche, our Chief Executive Officer and Chair of the Board of Directors. The disclosure inadvertently omitted 29,983 shares that may be sold under such Rule 10b5-1 trading arrangement. The correct amount of the total number of shares that may be sold under
27
the Rule 10b5-1 trading arrangement is 120,000. As contemplated by the Rule 10b5-1 trading arrangement, the schedule for sales of the 29,983 shares begins in March 2025, and as of the date of this report, none of those shares have been sold.
28
| ITEM 6. | Exhibits | ||||
| Exhibit No. | Description | |||||||
| 31.1† | ||||||||
| 31.2† | ||||||||
| 32.1†* | ||||||||
| 32.2†* | ||||||||
| 101.INS | The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.** | |||||||
| 101.SCH | Inline XBRL Schema Document.** | |||||||
| 101.CAL | Inline XBRL Calculation Linkbase Document.** | |||||||
| 101.LAB | Inline XBRL Labels Linkbase Document.** | |||||||
| 101.PRE | Inline XBRL Presentation Linkbase Document.** | |||||||
| 101.DEF | Inline XBRL Definition Linkbase Document.** | |||||||
| 104 | Cover page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). | |||||||
| † | Filed or furnished herewith. | |||||||
| * | The certification furnished in each of Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates each by reference. Such certification will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. | |||||||
| ** | Submitted electronically herewith. | |||||||
Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the three- and nine-months ended August 3, 2024 and July 29, 2023, (ii) Condensed Consolidated Statements of Comprehensive Income for the three- and nine-months ended August 3, 2024 and July 29, 2023, (iii) Condensed Consolidated Balance Sheets at August 3, 2024 and October 28, 2023, (iv) Condensed Consolidated Statements of Shareholders' Equity for the three- and nine-months ended August 3, 2024 and July 29, 2023, (v) Condensed Consolidated Statements of Cash Flows for the nine months ended August 3, 2024 and July 29, 2023 and (vi) Notes to Condensed Consolidated Financial Statements for the three- and nine-months ended August 3, 2024.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ANALOG DEVICES, INC. | |||||||||||
| Date: August 21, 2024 | By: | /s/ Vincent Roche | |||||||||
| Vincent Roche | |||||||||||
| Chief Executive Officer and Chair of the Board of Directors | |||||||||||
| (Principal Executive Officer) | |||||||||||
| Date: August 21, 2024 | By: | /s/ Richard C. Puccio, Jr. | |||||||||
Richard C. Puccio, Jr. | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
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Exhibit 31.1
CERTIFICATION
I, Vincent Roche, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Analog Devices, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ Vincent Roche | ||||||||
Vincent Roche | ||||||||
Chief Executive Officer and Chair of the Board of | ||||||||
Directors | ||||||||
(Principal Executive Officer) | ||||||||
Date: August 21, 2024 | ||||||||
Exhibit 31.2
CERTIFICATION
I, Richard C. Puccio, Jr., certify that:
1.I have reviewed this quarterly report on Form 10-Q of Analog Devices, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Richard C. Puccio, Jr. | ||||||||
Richard C. Puccio, Jr. | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
Date: August 21, 2024 | ||||||||
Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Analog Devices, Inc. (the “Company”) for the period ended August 3, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Vincent Roche, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Vincent Roche | ||||||||
Vincent Roche | ||||||||
Chief Executive Officer | ||||||||
Date: August 21, 2024 | ||||||||
Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Analog Devices, Inc. (the “Company”) for the period ended August 3, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Richard C. Puccio, Jr., Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Richard C. Puccio, Jr. | ||||||||
Richard C. Puccio, Jr. | ||||||||
| Chief Financial Officer | ||||||||
Date: August 21, 2024 | ||||||||