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What changed in Analog Devices's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Analog Devices's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+245 added−264 removedSource: 10-K (2024-11-26) vs 10-K (2023-11-21)

Top changes in Analog Devices's 2024 10-K

245 paragraphs added · 264 removed · 201 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThese products include: • Portable devices (smart phones, tablets and wearable devices) for media and vital signs monitoring applications • Prosumer audio/video equipment See Note 4, Industry, Segment and Geographic Information , of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K for further information about our products by end market.
Biggest changeThese products include: • Portable devices (smart phones, tablets and wearable devices) for media and vital signs monitoring applications • Prosumer audio/video equipment See Note 4, Industry, Segment and Geographic Information , of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K for further information about our products by end market. 6 Competition We believe that competitive performance in the marketplace for integrated circuits depends upon multiple factors, including technological innovation, strength of brand, diversity of product portfolio, product performance, technical support, delivery capabilities, customer service quality, reliability and price, with the relative importance of these factors varying among products, markets, and customers.
As end systems are becoming more complex, many of our customers in this market also look for us to provide higher levels of integration in order to minimize size, weight and power and to improve ease-of-use. As such, we also sell products in the form of SiPs (system in package), printed circuit board assemblies, modules, and subsystems.
As end systems are becoming more complex, many of our customers in this market also look for us to provide higher levels of integration in order to minimize size, weight and power and to improve ease-of-use. As such, we also sell products in the form of system in package (SiPs), printed circuit board assemblies, modules, and subsystems.
Environment, Social and Governance We are a member of the Responsible Business Alliance as well as a signatory to the United Nations Global Compact and the Business Ambition for 1.5°C campaign.
Environment, Social and Governance We are a signatory to the United Nations Global Compact and the Business Ambition for 1.5°C campaign, as well as a member of the Responsible Business Alliance.
In wireless and wireline communication applications, our products are incorporated into: • Cellular base station equipment • Satellite and terrestrial broadband access equipment • Microwave backhaul systems • Optical and cable networking equipment for data center and carrier providers • Data centers and data storage 6 Consumer — To address the market demand for state of the art personal and professional entertainment systems and the consumer demand for high quality user interfaces, music, movies and photographs, we have developed analog, digital and mixed-signal and power solutions that meet the rigorous cost and time-to-market requirements of the consumer electronics market.
In wireless and wireline communication applications, our products are incorporated into: • Cellular base station equipment • Satellite and terrestrial broadband access equipment • Microwave backhaul systems • Optical and cable networking equipment for data center and carrier providers • Data centers and data storage Consumer — To address the market demand for state of the art personal and professional entertainment systems and the consumer demand for high quality user interfaces, music, movies and photographs, we have developed analog, digital and mixed-signal and power solutions that meet the rigorous cost and time-to-market requirements of the consumer electronics market.
As is customary in the semiconductor industry, we allow most orders to be canceled within a reasonable notification period or deliveries to be delayed by customers without significant penalty, while also allowing certain distributors to receive price adjustment credits and to return qualifying products for credit, as determined by us, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory.
As is customary in the semiconductor industry, we allow most orders to be canceled within a reasonable notification period or deliveries to be delayed by customers without significant penalty, while also allowing certain distributors to receive price adjustment credits and to return qualifying products for credit, typically as determined by us, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory.
In some of our markets where end-user demand may be particularly volatile and difficult to predict, some customers place orders that require us to manufacture product and have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even any, of the product.
In some of our markets where end-user demand may be particularly volatile and difficult to predict, some customers place orders that require us to manufacture product and have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even 4 any, of the product.
We currently source more than half of our wafer requirements annually from third-party wafer fabrication foundries, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others, and 7 the remainder is sourced internally. In addition, we operate an assembly, wafer sort and testing facility in Penang, Malaysia and wafer sort and test facilities in the Philippines and Thailand.
We currently source more than half of our wafer requirements annually from third-party wafer fabrication foundries, such as Taiwan Semiconductor Manufacturing Company (TSMC) and others, and the remainder is sourced internally. In addition, we operate an assembly, wafer sort and testing facility in Penang, Malaysia and wafer sort and test facilities in the Philippines and Thailand.
Our high-performance power ICs include powerful performance, integration and software design simulation tools to provide fast and accurate power supply designs. • Amplifiers/RF and Microwave —We are also a leading supplier of high-performance amplifiers which are used to condition analog signals. High performance amplifiers emphasize the performance dimensions of speed and precision.
Our high-performance power ICs include powerful performance, integration and software design simulation tools to provide fast and accurate power supply designs. 3 • Amplifiers/RF and Microwave —We are also a leading supplier of high-performance amplifiers which are used to condition analog signals. High performance amplifiers emphasize the performance dimensions of speed and precision.
Many of our ICs can be supplied in versions that meet these standards. In addition, many products can be supplied to meet the standards required for broadcast satellites and other commercial space 5 applications. Most of our products sold in this market are specially tested versions of products derived from our standard product offering.
Many of our ICs can be supplied in versions that meet these standards. In addition, many products can be supplied to meet the standards required for broadcast satellites and other commercial space applications. Most of our products sold in this market are specially tested versions of products derived from our standard product offering.
Close customer relationships influence aspects of our business: from our broad range of product portfolios and applications expertise to manufacturing capabilities in high-performance power management and precision and high-speed signal processing technologies.
Close customer relationships influence all aspects of our business: from our broad range of product portfolios and applications expertise to manufacturing capabilities in high-performance power management and precision and high-speed signal processing technologies.
We take real-world phenomena in the most complex environments on the factory floor and translate it into valuable insights and outcomes. We co-create with customers to architect robotics systems and solutions that improve dynamic behavior and precision while enhancing worker safety, machine health, and manufacturing flexibility.
We take real-world phenomena in the most complex environments on the factory floor and translate them into valuable insights and outcomes. We co-create with customers to architect robotics systems and solutions that improve dynamic behavior and precision while enhancing worker safety, machine health, and manufacturing flexibility.
We make sales to distributors under agreements that allow certain distributors to receive price adjustment credits and to return qualifying products for credit, as determined by us, in order 4 to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory.
We make sales to distributors under agreements that allow certain distributors to receive price adjustment credits and to return qualifying products for credit, typically as determined by us, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory.
We are working to achieve this by expanding the diversity of our workforce, creating growth and development opportunities for our employees, embracing different perspectives and fostering an inclusive work environment for all. In addition, we encourage employees to organize and develop different employment networks, which contribute to our broader diversity and inclusion initiatives.
We are working to achieve this by expanding the diversity of our workforce, creating growth and development opportunities for our employees, embracing different perspectives and fostering an inclusive work environment for all. In addition, we encourage employees to develop different networks, which contribute to our broader diversity and inclusion initiatives.
It is generally our policy to seek patent protection for significant inventions that may be patented, though we may elect, in certain cases, not to seek patent protection even for significant inventions, if we determine other protection, such as maintaining the invention as a trade secret, to be more advantageous.
Although it is generally our policy to seek patent protection for significant inventions that may be patented, we may elect, in certain cases, not to seek patent protection even for significant inventions, if we determine other protection, such as maintaining the invention as a trade secret, to be more advantageous.
Our comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend across high-performance precision and high-speed mixed-signal, power management and processing technologies – including data converters, amplifiers, power management, radio frequency (RF) ICs, edge processors and other sensors. The Intelligent Edge is characterized by ubiquitous sensing, hyper-scale and edge computing and pervasive connectivity.
Our comprehensive product portfolio, deep domain expertise and advanced manufacturing capabilities extend across high-performance precision and high-speed mixed-signal, power management and processing technologies – including data converters, amplifiers, power management, radio frequency (RF) ICs, edge processors and other sensors. The Intelligent Edge is characterized by ubiquitous sensing, hyper-scale and edge computing, artificial intelligence (AI) and pervasive connectivity.
Together, our products and our engineering talent enable us to partner with our customers, leveraging our analog domain expertise and receiving the full benefit of our technology capabilities to develop complete and innovative solutions. • Capitalizing on secular trends.
Together, our products and our engineering talent enable us to partner with our customers, leveraging our analog domain expertise and receive the full benefit of our technology capabilities to develop complete and innovative solutions. • Capitalizing on secular trends.
Customer products include applications such as: • Navigation systems • Radar systems • Space and satellite communications • Security devices • Communication systems • Electronic surveillance and countermeasures Healthcare — The healthcare market is evolving in response to the need for increased access to better and more affordable care, as well as a growing focus on preventative healthcare and the need to better manage chronic conditions.
Customer products include applications such as: • Navigation systems • Radar systems • Space and satellite communications • Security devices • Communication systems • Electronic surveillance and countermeasures 5 Healthcare — The healthcare market is evolving in response to the need for increased access to better and more affordable care, as well as a growing focus on preventative healthcare and the need to better and more cost effectively manage chronic conditions.
We use two industry standard metrics to assess injury performance and trends worldwide. In fiscal 2023 and fiscal 2022, our global injury rates were lower than the U.S. semiconductor industry benchmark.
We use two industry standard metrics to assess injury performance and trends worldwide. In fiscal 2024 and fiscal 2023, our global injury rates were lower than the U.S. semiconductor industry benchmark.
With the rapid pace of global transformation, from ubiquitous connectivity, to electrification, to artificial intelligence, to human health and environmental sustainability — all these trends require reliable and efficient test solutions from R&D to manufacturing to field deployment. We enable high performance measurement through our components and system solutions.
With the rapid pace of global transformation, from ubiquitous connectivity, to electrification, to AI, to human health and environmental sustainability — all of these trends require reliable and efficient test solutions from R&D to manufacturing to field deployment. We enable high performance measurement through our components and system solutions.
In certain cases, because we have already developed the core technology platform for our general-purpose products, we can create application-specific solutions quickly and efficiently. Our analog and mixed-signal IC technology have been the foundation of our business for over five decades, and we are one of the world’s largest suppliers of high-performance analog ICs.
In certain cases, because we have already developed the core technology platform for our general-purpose products, we can create application-specific solutions quickly and efficiently. Our analog and mixed-signal IC technology have been the foundation of our business for nearly six decades, and we are one of the world’s largest suppliers of high-performance analog ICs.
Historically, sales to customers during our first fiscal quarter may be lower than other quarters due to plant shutdowns at some of our customers. In general, the seasonality for any specific period of time has not had a material impact on our results of operations.
Historically, sales to customers during our first fiscal quarter have been lower than other quarters due to plant shutdowns at some of our customers. In general, the seasonality for any specific period of time has not had a material impact on our results of operations.
As noted in "Environment, Social and Governance" above, we published our 2022 ESG Report which details our sustainability efforts, operations efficiency, employee engagement and governance, and also provides a look at the state of our organization and an overview of some of the initiatives we have launched to drive continuous improvements across diversity and inclusion.
As noted in “Environment, Social and Governance” above, we published our 2023 ESG Report which details our sustainability efforts, operations efficiency, employee engagement and governance, and also provides a look at the state of our organization and an overview of some of the initiatives we have launched to drive continuous improvements across diversity and inclusion.
For fiscal 2023, our voluntary employee turnover rate was approximately 7.6%. Our human capital resource objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and future employees. We strive to attract and retain the most talented employees in the industry and across the globe by 9 offering competitive compensation and benefits that support their health, financial and emotional well-being.
For fiscal 2024, our voluntary employee turnover rate was approximately 8%. Our human capital resource objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and future employees. We strive to attract and retain the most talented employees in the industry and across the globe by offering competitive compensation and benefits that support their health, financial and emotional well-being.
Our dual focus of being a great place to work and providing industry-leading benefits and work culture has led to strong employee satisfaction and pride that has been recognized across the globe, as evidenced with the following awards: TIME World's Best Companies (2023), Forbes America's Best Employers by State (2023), Forbes World's Top Female Friendly Companies (2022, 2021) and The Boston Globe’s Top Places to Work (2021). 10
Our dual focus of being a great place to work and providing industry-leading benefits and work culture has led to strong employee satisfaction and pride that has been recognized across the globe, as evidenced with the following awards: TIME World’s Best Companies (2024, 2023), Forbes America’s Best Large Employers (2024), Forbes America’s Best Employers for Diversity (2024), Forbes America’s Best Employers by State (2023), The Boston Globe’s Top Places to Work (2023), and Forbes World’s Top Female Friendly Companies (2022). 9
To help achieve this, we are collaborating with customers and partners on innovative solutions that are designed to achieve better outcomes for patients and physicians at reduced costs for all.
To help achieve this, we are collaborating with customers and partners on innovative solutions that are designed to achieve better outcomes for patients and more efficient workflows for physicians at reduced costs.
We have obtained a substantial number of patents and trademarks in the United States and in other countries. As of October 28, 2023, we held approximately 4,842 U.S. patents and approximately 416 published pending U.S. patent applications. There can be no assurance, however, that the rights obtained can be successfully enforced against infringing products in every jurisdiction.
We have obtained a substantial number of patents and trademarks in the United States and in other countries. As of November 2, 2024, we held approximately 4,660 U.S. patents and approximately 470 published pending U.S. patent applications. There can be no assurance, however, that the rights obtained can be successfully enforced against infringing products in every jurisdiction.
Our manufacturing facilities are subject to numerous and increasingly strict federal, state, local and foreign EHS laws and regulations, particularly with respect to the transportation, storage, handling, use, emission, discharge and disposal of certain 8 chemicals used or produced in the semiconductor manufacturing process.
Our manufacturing facilities are subject to numerous and increasingly strict federal, state, local and foreign EHS laws and regulations, particularly with respect to the transportation, storage, handling, use, emission, discharge and disposal of certain chemicals used or produced in the semiconductor manufacturing process. Our products are subject to increasingly stringent regulations regarding substance content in jurisdictions where we do business.
Our offerings include both standard and application-specific products and are used in applications such as: • Ultrasound systems • Anesthesia equipment • X-Ray equipment (CT and DR) • Lab diagnostic equipment • Image guided therapy • Surgical tools and instruments • Multi-parameter vital signs monitors • Blood analyzers • Remote patient monitoring • Point-of-care diagnostics Energy Management — The global drive towards improved energy efficiency, conservation, reliability and cleanliness is driving investments in electrification across many different application areas, including electric vehicle charging infrastructure, renewable energy, power transmission and distribution systems, electric meters and other innovative areas.
Our offerings include both standard and application-specific hardware, software and service-based products and are used in applications such as: • Ultrasound, PET and MRI systems • Anesthesia equipment • X-Ray equipment (CT and DX-Ray) • Lab and point of care diagnostic equipment • Image guided therapy • Robotic surgery, surgical tools and instruments • Multi-parameter vital signs monitors • Blood analyzers and infusion pumps • Remote patient monitoring and wellness • Renal therapy and organ transplant systems • Continuous glucose monitoring • Insulin pumps Energy Management — The global drive towards improved energy efficiency, conservation, reliability and clean energy is driving investments in electrification across many different application areas, including electric vehicle charging infrastructure, renewable energy, power transmission and distribution systems, electric meters and other innovative areas.
Data converters translate real-world analog signals into digital data and also translate digital data into analog signals. Data converters remain our largest and most diverse product family and an area where we are continuously innovating to enable our customers to redefine and differentiate their products.
Data converters remain our largest and most diverse product family and an area where we are continuously innovating to enable our customers to redefine and differentiate their products.
In addition, we are well-aligned with the key B2B markets driving the increase in data at the Intelligent Edge and we will continue to be a critical partner in the collection, creation and communication of our customers’ edge data.
We are well-aligned with the key B2B markets driving the increase in data at the Intelligent Edge and we will continue to be a critical partner in the collection, creation and communication of our customers’ edge data. In addition, we are increasingly incorporating AI capabilities into the development of technologies and our business operations, and into our products and services.
Central to our strategy is our focus on challenges that our customers have across the most impactful application areas. That is built around the following three key priorities, which will continue to drive our long-term success: • Efficient use of capital. Research and development (R&D) is critical to continue our cycle of innovation-driven success.
Central to our strategy is our focus on challenges that our customers have across the most impactful application areas. That is built around the following key priorities, which we believe will continue to drive our long-term success: • Efficient use of capital.
Markets The breakdown of our annual revenue by end market is set out in the table below: End Market* Percent of Fiscal 2023 Revenue Percent of Fiscal 2022 Revenue Percent of Fiscal 2021 Revenue Industrial 53% 51% 55% Automotive 24% 20% 17% Communications 13% 16% 17% Consumer 10% 13% 11% *The sum of the individual percentages may not equal 100% due to rounding.
Markets The breakdown of our annual revenue by end market is set out in the table below: End Market* Percent of Fiscal 2024 Revenue Percent of Fiscal 2023 Revenue Percent of Fiscal 2022 Revenue Industrial 46% 54% 52% Automotive 30% 23% 20% Communications 11% 13% 15% Consumer 13% 10% 13% *The sum of the individual percentages may not equal 100% due to rounding.
These quarterly reports include updates on progress against targets, as well as updates on topics such as stakeholder value, risks and opportunities, regulatory preparedness, ESG ratings and key ESG focus areas. We are committed to protecting the environment and the health and safety of our employees, customers and the public.
These quarterly reports include updates on programs, as well as updates on topics such as stakeholder value, risks and opportunities, regulatory preparedness and key ESG focus areas. We have programs and management systems in place to protect the environment and the health and safety of our employees, customers and the public.
Our fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October; October 28, 2023 (fiscal 2023), the fiscal year ended October 29, 2022 (fiscal 2022) and the fiscal year ended October 30, 2021 were 52-week fiscal periods. 2 Acquisition of Maxim Integrated Products, Inc.
Our fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October; November 2, 2024 (fiscal 2024) was a 53-week fiscal period, while the fiscal year ended October 28, 2023 (fiscal 2023) and the fiscal year ended October 29, 2022 (fiscal 2022) were 52-week fiscal periods.
As of October 28, 2023, we had approximately 26,000 employees, of whom approximately 13,000 are in engineering roles. Approximately 60% of our workforce is male and 40% female. Our senior leadership team is 73% male and 27% female, while manager roles are approximately 75% male and 25% female. 33% of the members of our Board of Directors are female.
As of November 2, 2024, we had approximately 24,000 employees, of whom approximately 13,000 are in engineering roles. Approximately 62% of our workforce is male and 38% female. Our senior leadership team is 64% male and 36% female, while manager roles are approximately 75% male and 25% female. 36% of the members of our Board of Directors are female.
Our customers include original equipment manufacturers (OEMs) and customers who build electronic subsystems for integration into larger systems. 3 Our product offerings include more than 75,000 stock keeping units (SKUs) that can be aggregated into the following general categories: • Analog and Mixed Signal —We are a leading supplier of data converter products.
Our product offerings include more than 75,000 stock keeping units (SKUs) that can be aggregated into the following general categories: • Analog and Mixed Signal —We are a leading supplier of data converter products. Data converters translate real-world analog signals into digital data and also translate digital data into analog signals.
To support our commitment to ESG, we have implemented an oversight structure which includes a quarterly reporting cadence both to senior management and the Nominating and Corporate Governance Committee of the Board of Directors.
The contents of our website and the information contained in our ESG Report are not incorporated by reference into this Annual Report on Form 10-K. To support our commitment to ESG, we have implemented an oversight structure which includes a quarterly reporting cadence both to senior management and the Nominating and Corporate Governance Committee of the Board of Directors.
Sales Channel We sell our products globally through a direct sales force, third-party distributors, independent sales representatives and via our website. We have direct sales offices, sales representatives and/or distributors in over 50 countries.
These include devices that shape the signal for transmission over the medium or reconstruct the received signal after transmission to recover the intended signal integrity. Sales Channel We sell our products globally through a direct sales force, third-party distributors, independent sales representatives and via our website. We have direct sales offices, sales representatives and/or distributors in approximately 50 countries.
Our product portfolio includes several thousand analog ICs, many of which can have several hundred end customers. Our analog ICs typically have long product life cycles.
Our product portfolio includes several thousand analog ICs, many of which can have several hundred end customers. Our analog ICs typically have long product life cycles. Our customers include original equipment manufacturers (OEMs) and customers who build electronic subsystems for integration into larger systems.
Although we have experienced shortages of components, materials and external foundry services from time to time, we work to balance these constraints by shifting global resources and capacity where appropriate.
Although we have experienced shortages of components, materials and external foundry services from time to time, we work to balance these constraints by shifting global resources and capacity where appropriate. 7 Patents and Intellectual Property Rights We seek to establish and maintain our proprietary rights in our technology and products through the use of patents, copyrights, mask works, trademarks and trade secrets.
Our general-purpose DSP IC customers typically write their own algorithms using software development tools provided by us and third-party suppliers. Our DSPs are designed in families of products that share common architectures and therefore can execute the same software across a range of products.
Our general-purpose DSP IC customers typically write their own algorithms using software development tools provided by us and third-party suppliers.
Any failure by us to comply with applicable environmental laws, regulations and contractual obligations could result in fines, suspension of production, the need to alter manufacturing processes and legal liability. Cybersecurity and Information Security Risk Oversight We regularly perform risk assessments relating to cybersecurity and technology risks.
There can be no assurance, however, that current or future environmental laws and regulations will not impose costly requirements upon us. Any failure by us to comply with applicable EHS laws, regulations and contractual obligations could result in fines, suspension of production, the need to alter manufacturing processes and legal liability.
Our products are subject to increasingly stringent regulations regarding substance content in jurisdictions where we sell products. Contracts with many of our customers reflect these and additional EHS compliance standards. Substance content of our products includes materials that are subject to conflict mineral reporting requirements.
Contracts with many of our customers reflect these and additional EHS compliance standards. Substance content of our products includes materials that are subject to reporting requirements, including conflict minerals. Compliance with these laws and regulations has not had a material impact 8 on our capital expenditures, earnings, financial condition or competitive position.
The acquisition of Maxim is referred to as the Acquisition. Available Information We maintain a website with the address www.analog.com.
The additional week in fiscal 2024 is included in the first quarter ended February 3, 2024. Therefore, fiscal 2024 includes an additional week of operations as compared to fiscal 2023 and fiscal 2022. 2 Available Information We maintain a website with the address www.analog.com.
We target the most attractive opportunities, particularly across our business-to-business (B2B) markets including Industrial, Automotive and Communications. We are also deeply committed to realizing targeted shareholder value creation from our recent acquisitions to complement our R&D and drive long-term value creation.
Research and development (R&D) is critical to continue our cycle of innovation, driven by a diverse array of engineering talent who “engineer good” for our planet and society. We are also deeply committed to realizing targeted shareholder value creation from our acquisitions to complement our R&D and drive long-term value creation.
Our latest survey completed in fiscal 2022 had a participation rate of over 83% of all our employees and the survey results indicated that we excel in areas including purpose, respectful treatment, commitment to diversity/inclusion and accountability.
Our latest survey completed in fiscal 2024 had a 92% participation rate among all employees and the survey results indicated employee satisfaction in areas such as purpose, demonstrating culture, fostering belonging, aligning with our strategy and leadership commitment, while also supporting decision speed and reducing barriers to execution.
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In addition to driving organic growth, our strategy involves expansion through the acquisition of businesses, assets or technologies, including the acquisition of Maxim Integrated Products, Inc. (Maxim) in the fiscal year ended October 30, 2021 (fiscal 2021) which allow us to complement our existing product offerings, expand our market coverage, increase our engineering talent or enhance our technological capabilities.
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Our DSPs are designed in families of products that share common architectures and therefore can execute the same software across a range of products. • Interface —Includes general purpose analog ICs whose primary function is to modify or shape the signal in order to ensure signal integrity for transmission over a distance through a physical medium such as a wire, cable, waveguide, or tracks within a printed circuit board.
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On August 26, 2021 (Acquisition Date), we completed the acquisition of Maxim, an independent manufacturer of innovative analog and mixed-signal products and technologies.
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Government Regulation Our business activities are subject to various federal, state, local and foreign laws and regulations, including those related to financial and other disclosures, accounting standards, corporate governance, intellectual property, tax, trade, including import, export and customs, antitrust, environment, health and safety, employment, immigration and travel, cybersecurity, privacy, data protection and localization and anti-corruption.
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Pursuant to the Agreement and Plan of Merger, dated as of July 12, 2020 (the Merger Agreement), Maxim stockholders received, for each outstanding share of Maxim common stock, 0.6300 of a share of the Company’s common stock as of the Acquisition Date, for total consideration of approximately $28.0 billion of our common stock.
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These laws and regulations may differ among jurisdictions, and compliance with them may have a materially adverse impact on our business and results of operations. For more information about these potential impacts, see the section titled “Risk Factors—Risks Related to Cyber, Artificial Intelligence, Intellectual Property, Legal and Regulatory” of this Annual Report on Form 10-K.
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Competition We believe that competitive performance in the marketplace for signal processing products depends upon multiple factors, including technological innovation, strength of brand, diversity of product portfolio, product performance, technical support, delivery capabilities, customer service quality, reliability and price, with the relative importance of these factors varying among products, markets, and customers.
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Our Environment, Social and Governance (ESG) aspirations and programs, including our climate targets and our approach to ethical business conduct and ethics and applying fair labor standards, are communicated in our 2023 ESG Report. The ESG Report is available on our website at www.analog.com/corporate-responsibility.
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Patents and Intellectual Property Rights We seek to establish and maintain our proprietary rights in our technology and products through the use of patents, copyrights, mask works, trademarks and trade secrets.
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Our 2022 Environment, Social and Governance (ESG) Report states our goals to be carbon neutral by calendar year 2030, to achieve net zero emissions by calendar year 2050 or sooner, to achieve a water recycling rate of at least 50% in manufacturing facilities by 2025, to comply with our code of business conduct and ethics and to apply fair labor standards.
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The ESG Report is available on our website at www.analog.com/sustainability. The contents of our website and the information contained in our ESG Report are not incorporated by reference into this Annual Report on Form 10-K.
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Compliance with these laws and regulations has not had a material impact on our capital expenditures, earnings, financial condition or competitive position. There can be no assurance, however, that current or future environmental laws and regulations will not impose costly requirements upon us.
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Our enterprise security program has been developed based on industry standards, including those published by the International Organization for Standardization (ISO) and the National Institute of Standards and Technology.
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Highlights of the program include: • A comprehensive set of enterprise security policies and procedures that guide our protection strategy. • Protecting against threats through use of the following measures: identifying critical assets and high-risk threats; implementing cybersecurity detection, controls and remediation practices; implementing a third-party risk management program to evaluate our critical partners’ cyber posture; and evaluating our program effectiveness by performing internal and external assessments.
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Risks identified by our cybersecurity program are analyzed to determine the potential impact on us and the likelihood of occurrence. Such risks are continuously monitored to ensure that the circumstances and severity of such risks have not changed.
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Senior leadership and our internal audit team provides the Audit Committee of the Board of Directors with quarterly updates on the performance of our program. The Chief Information Officer regularly updates the full Board of Directors on information security matters and risk, including cybersecurity.
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We conduct regular workforce training to instruct employees to identify cybersecurity concerns and take the appropriate action. We install and regularly update antivirus software on all company managed systems and workstations to detect and prevent malicious code from impacting our systems.
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In addition, we have a product security team focused on integrating risk and security best practices into our product development life cycle. Periodically, we are audited by an independent information systems expert to determine both the adequacy of, and compliance with, controls and standards. We self-insure for cybersecurity risks and continue to monitor mitigation strategies.
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We have not experienced a material security breach in the last three years, and as a result, we have not incurred any net expenses from such a breach. Furthermore, we have not been penalized or paid any amount under an information security breach settlement over the last three years.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result of our international operations, our business, financial condition and results of operations could be negatively impacted by, among others, the following factors: • political, legal and economic changes, crises or instability and civil unrest that may impact markets in which we do business, such as macroeconomic weakness related to trade and political disputes between the United States and China, tensions across the Taiwan Strait that may adversely affect our operations in Taiwan, our customers and the technology industry supply chain, and the ongoing conflicts between Israel and Hamas and between Russia and Ukraine; • compliance requirements of customs and export regulations, including the Export Administration Regulations and the International Traffic and Arms Regulations; • currency conversion risks and exchange rate and interest rate fluctuations, including the potential impact of elevated interest rates; • instability of global credit and financial markets due to adverse macroeconomic conditions such as rising inflation, high interest rates, bank failures and slower economic growth or recession that could, among other impacts, affect our ability to access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges; • trade policy, commercial, travel, export or taxation disputes or restrictions, import or export tariffs, changes to export classifications or other restrictions imposed by the U.S. government or by the governments of the countries in which we do business, particularly with respect to China; • sanctions imposed by governments in countries in which we do business, including those imposed on Russia by, among others, the European Union, the United States and the United Kingdom in response to the ongoing conflict between Russia and Ukraine, which sanctions restrict a wide range of trade and financial dealings with Russian and Russian persons, as well as with certain regions in Ukraine; • complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax, price protection, competition practices, export control, customs, immigration, anti-boycott, data privacy, cyber and product security, sustainability, climate and other ESG matters, intellectual property, anti-corruption, including the Foreign Corrupt Practices Act, and environmental compliance; • economic disruption from terrorism and threats of terrorism and the response to them by the United States and its allies; • increased managerial complexities, including different employment practices and labor issues; • changes in immigration laws, regulations and procedures and enforcement practices of various government agencies; • greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; • natural disasters, public health emergencies, such as the COVID-19 pandemic, or other catastrophic events; • transportation disruptions and delays and increases in labor and transportation costs; • fluctuations in raw material costs and energy costs due to general market factors and conditions such as inflationary pressures and supply chain constraints; • greater difficulty in accounts receivable collections and longer collection periods; and • increased costs associated with our foreign defined benefit pension plans. 11 Many of these factors and risks are present and may be exacerbated within our business operations in China.
Biggest changeAs a result of our international operations, our business, financial condition and results of operations could be negatively impacted by, among others, the following factors: • political, legal and economic changes, crises or instability and civil unrest that may impact markets in which we do business, such as macroeconomic weakness related to trade and political disputes between the United States and Europe or China, tensions across the Taiwan Strait that may adversely affect our operations in Taiwan, our customers and the technology industry supply chain, and the ongoing conflicts between Russia and Ukraine and in Israel and the Middle East; • compliance requirements of customs and export regulations, including the Export Administration Regulations and the International Traffic and Arms Regulations; • currency conversion risks and exchange rate and interest rate fluctuations, including the potential impact of elevated interest rates; • instability of global credit and financial markets due to adverse macroeconomic conditions such as elevated inflation, high interest rates, bank failures and slower economic growth or recession that could, among other impacts, affect our ability to timely access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges; • trade policy, commercial, travel, export or taxation disputes or restrictions, import or export tariffs, changes to export classifications or other restrictions imposed by the U.S. government or by the governments of the countries in which we do business, particularly with respect to China; • sanctions imposed by governments in countries in which we do business; • complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax, price protection, competition practices, export control, customs, immigration, anti-boycott, AI, data privacy, cyber and product security, sustainability, climate and other ESG matters, intellectual property, anti-corruption, including the Foreign Corrupt Practices Act, and environmental compliance; • economic disruption from terrorism and threats of terrorism and the response to them by the United States and its allies; • increased managerial complexities, including different employment practices and labor issues; • changes in immigration laws, regulations and procedures and enforcement practices of various government agencies; • greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; • natural disasters, public health emergencies, such as the COVID-19 pandemic, or other catastrophic events; • transportation disruptions and delays and increases in labor and transportation costs; • fluctuations in raw material costs and energy costs due to general market factors and conditions such as inflationary pressures and supply chain constraints; • greater difficulty in accounts receivable collections and longer collection periods; and • increased costs associated with our foreign defined benefit pension plans.
In addition, global 22 climate change may result in certain natural disasters or other severe weather events occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, extreme temperatures and flooding, and could disrupt the availability of water necessary for the operation of our fabrication facilities.
In addition, global climate change may result in certain natural disasters or other severe weather events occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, extreme temperatures and flooding, and could disrupt the availability of water necessary for the operation of our fabrication 22 facilities.
A number of factors may increase our future effective tax rate, including: new or revised tax laws or legislation or the interpretation of such laws or legislation by governmental authorities; increases in tax rates in various jurisdictions; variation in the mix of jurisdictions in which our profits are earned and taxed; deferred taxes arising from basis differences in investments in foreign subsidiaries; any adverse resolution of ongoing tax audits or adverse rulings from taxing authorities worldwide; changes in the valuation of our deferred tax assets and liabilities; adjustments to income taxes upon finalization of various tax returns; increases in expenses not deductible for tax purposes, including executive compensation subject to the limitations of Section 162(m) of the Internal Revenue Code and amortization of assets acquired in connection with strategic transactions; decreased availability of tax deductions for stock-based compensation awards worldwide; and changes in available tax credits.
A number of factors may increase our future effective tax rate, including: new or revised tax laws or legislation or the interpretation of such laws or legislation by governmental authorities; increases in tax rates in various jurisdictions; variation in the mix of jurisdictions in which our profits are earned and taxed; deferred taxes arising from basis differences in investments in foreign subsidiaries; any adverse resolution of ongoing tax audits or adverse rulings from taxing authorities worldwide; changes 20 in the valuation of our deferred tax assets and liabilities; adjustments to income taxes upon finalization of various tax returns; increases in expenses not deductible for tax purposes, including executive compensation subject to the limitations of Section 162(m) of the Internal Revenue Code and amortization of assets acquired in connection with strategic transactions; decreased availability of tax deductions for stock-based compensation awards worldwide; and changes in available tax credits.
Any failure to control such materials adequately or to comply with existing or future EHS statutory or regulatory standards, requirements or contractual obligations could result in any of the following, each of which could have a material adverse effect on our business and operating results: • liability for damages and remediation; • the imposition of regulatory penalties and civil and criminal fines; • the suspension or termination of the development, manufacture, sale or use of certain of our products; • changes to our manufacturing processes or a need to substitute materials that may cost more or be less available; • damage to our reputation; or • increased expenses associated with compliance.
Any failure to control such materials adequately or to comply with existing or future EHS statutory or regulatory standards, requirements or contractual obligations could result in any of the following, each of which could have a material adverse effect on our business and operating results: • liability for damages and remediation; 19 • the imposition of regulatory penalties and civil and criminal fines; • the suspension or termination of the development, manufacture, sale or use of certain of our products; • changes to our manufacturing processes or a need to substitute materials that may cost more or be less available; • damage to our reputation; or • increased expenses associated with compliance.
For example, we have experienced, and may in the future experience, periods of customer inventory adjustments that may adversely affect our operating results. Further, any capacity expansions by us or other semiconductor manufacturers could also lead to overcapacity in our target markets which could lead to price erosion that could adversely impact our operating results.
For example, we have experienced, and may in the future experience, periods of customer inventory adjustments and other customer behaviors that may adversely affect our operating results. Further, any capacity expansions by us or other semiconductor manufacturers could also lead to overcapacity in our target markets which could lead to price erosion that could adversely impact our operating results.
Our products generally must conform to various evolving and sometimes competing industry standards, which may adversely affect our ability to compete in certain markets or require us to incur significant costs. In addition, our customers generally impose very high quality and reliability standards on our products, which often change and may be difficult or costly to satisfy.
Our products generally must conform to various evolving and sometimes competing industry and regulatory standards, which may adversely affect our ability to compete in certain markets or require us to incur significant costs. In addition, our customers generally impose very high quality and reliability standards on our products, which often change and may be difficult or costly to satisfy.
As we grow, including from the integration of employees and businesses acquired in connection with previous or future acquisitions, we may find it difficult to maintain important aspects of our corporate culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future success.
As we grow, including from the integration of employees and businesses 14 acquired in connection with previous or future acquisitions, we may find it difficult to maintain important aspects of our corporate culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future success.
Despite our efforts to protect our intellectual property, it is possible that competitors or other unauthorized third parties may obtain or disclose our confidential information, reverse engineer or copy our technologies, products or processes, make unlicensed copies or engage in unapproved distributions of our technology for unauthorized uses, or otherwise misappropriate our intellectual property.
Despite our efforts to protect our intellectual property, it is possible that competitors or other unauthorized parties may obtain or disclose our confidential information, reverse engineer or copy our technologies, products or processes, make unlicensed copies or engage in unapproved distributions of our technology for unauthorized uses, or otherwise misappropriate our intellectual property.
Moreover, the laws of foreign countries in which we design, manufacture, market and sell our products may afford little or no effective protection of our intellectual property. There can be no assurance that the claims allowed in our issued patents will be sufficiently broad to protect our technology.
Moreover, the laws of foreign countries in which we design, manufacture, market and sell our products may afford little or no effective protection of our intellectual property. 17 There can be no assurance that the claims allowed in our issued patents will be sufficiently broad to protect our technology.
We may be subject to reputational risks and our brand loyalty may decline if others adopt the same or confusingly similar marks in an effort to misappropriate and profit on our brand name and do not provide the same level of quality as is delivered by our solutions and 20 services.
We may be subject to reputational risks and our brand loyalty may decline if others adopt the same or confusingly similar marks in an effort to misappropriate and profit on our brand name and do not provide the same level of quality as is delivered by our solutions and services.
Such measures might not be sufficient to enable us to service our debt, which could negatively impact our financial results. In addition, we may not be able to obtain any such financing, refinancing or 21 complete a sale of assets on economically favorable terms.
Such measures might not be sufficient to enable us to service our debt, which could negatively impact our financial results. In addition, we may not be able to obtain any such financing, refinancing or complete a sale of assets on economically favorable terms.
Further, our product offerings in the digital healthcare solutions space, which include the collection and 18 processing of sensitive personal information, subject us to heightened requirements under data privacy laws, such as the Health Insurance Portability and Accountability Act.
Further, our product offerings in the digital healthcare solutions space, which include the collection and processing of sensitive personal information, subject us to heightened requirements under data privacy laws, such as the Health Insurance Portability and Accountability Act.
Acquisitions also involve a number of challenges and risks, including: • diversion of management’s attention in connection with both negotiating the transaction and integrating the acquired assets and businesses; • difficulty or delay integrating acquired technologies, operations, systems, infrastructure and personnel with our existing businesses; • strain on managerial and operational resources as management oversees larger or more complex operations; • future funding requirements for acquired companies, including research and development costs, employee compensation and benefits, and operating expenses, which may be significant; • servicing significant debt that may be incurred in connection with acquisitions; • potential loss of key employees; • exposure to unforeseen liabilities or regulatory compliance issues of acquired companies; • higher than expected or unexpected acquisition or integration costs; • difficulty realizing expected cost savings, operating synergies and growth prospects of an acquisition in a timely manner or at all; and • increased risk of costly and time-consuming legal proceedings.
Acquisitions also involve a number of challenges and risks, including: • diversion of management’s attention in connection with both negotiating the transaction and integrating the acquired assets and businesses; • difficulty or delay integrating acquired technologies, operations, processes, policies, procedures, systems, technologies, infrastructure and personnel with our existing businesses; • strain on managerial and operational resources as management oversees larger or more complex operations; • future funding requirements for acquired companies, including research and development costs, employee compensation and benefits, and operating expenses, which may be significant; • servicing significant debt that may be incurred in connection with acquisitions; • potential loss of key employees; • exposure to unforeseen liabilities or regulatory compliance issues of acquired companies; • higher than expected or unexpected acquisition or integration costs; • difficulty realizing expected cost savings, operating synergies and growth prospects of an acquisition in a timely manner or at all; and • increased risk of costly and time-consuming legal proceedings.
Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to develop and market products that compete with our products. Some of our competitors may 14 have more advantageous supply or development relationships with our current and potential customers or suppliers.
Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to develop and market products that compete with our products. Some of our competitors may have more advantageous supply or development relationships with our current and potential customers or suppliers.
We may not be able to find businesses that have the technology or resources we need and, if we find such businesses, we may not be able to invest in, purchase or license the technology or resources on commercially favorable terms or at all.
We may not be able to identify businesses that have the technology or resources we need and, if we find such businesses, we may not be able to invest in, purchase or license the technology or resources on commercially favorable terms or at all.
If additional or replacement vendors are not available, we may also experience delays in product development or shipment which could, in turn, result in reputational harm or the temporary or permanent loss of customers, and as a result could adversely affect our business and results of operations. 12 Our industry faces challenges associated with products diverted from authorized distribution channels, which could result in reputational harm and have a material adverse effect on our business and results of operations.
If additional or replacement vendors are not available, we may also experience delays in product development or shipment which could, in turn, result in reputational harm or the temporary or permanent loss of customers, and as a result could adversely affect our business and results of operations. 11 Our industry faces challenges associated with products diverted from authorized distribution channels, which could result in reputational harm and have a material adverse effect on our business and results of operations.
As regulations and guidance evolve with respect to tax legislation, and as more information is gathered and analyzed, our results may differ from previous estimates and may materially affect our Consolidated Financial Statements.
As regulations and guidance evolve with respect to tax legislation and regulation, and as more information is gathered and analyzed, our results may differ from previous estimates and may materially affect our Consolidated Financial Statements.
Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may be materially affected by a number of factors, including: • the effects of adverse economic conditions in the markets in which we sell our products, including inflationary pressures, which has resulted, and may continue to result, in increased interest rates, fuel prices, wages and other costs; • changes in customer demand or order patterns for our products or for end products that incorporate our products; • the timing, delay, reduction or cancellation of significant customer orders and our ability to manage inventory; • our ability to accurately forecast distributor demand for our products; • future distributor pricing credits or stock rotation rights; • our ability to effectively manage our cost structure in both the short term and over a longer duration; 13 • changes in geographic, product or customer mix; • changes in our effective tax rates or new or revised tax legislation in the United States, Ireland or worldwide; • the effects of issued, threatened or retaliatory government sanctions, trade barriers or economic restrictions; changes in law, regulations or other restrictions, including executive orders; and changes in import and export regulations, including restrictions on exports to certain companies or to third parties that do business with such companies, export classifications, or duties and tariffs, including with respect to China; • the timing of new product announcements or introductions by us, our customers or our competitors and the market acceptance of such products; • pricing decisions and competitive pricing pressures; • fluctuations in manufacturing yields, adequate availability of wafers and other raw materials, and manufacturing, assembly and test capacity; • the ability of our third-party suppliers, subcontractors and manufacturers to supply us with sufficient quantities of raw materials, products and components; • a decline in infrastructure spending by foreign governments, including China; • a decline in the U.S. government defense budget, changes in spending or budgetary priorities, a prolonged U.S. government shutdown or delays in contract awards; • a decline in our backlog; • our ability to recruit, hire, retain and motivate adequate numbers of engineers and other qualified employees to meet the demands of our customers; • our ability to generate new design opportunities and win competitive bid selection processes; • the increasing costs of providing employee benefits worldwide, including health insurance, retirement and pension plan contributions and other retirement benefits; • our ability to utilize our manufacturing facilities at efficient levels; • fluctuations in foreign currency exchange rates; • litigation-related costs or product liability, warranty and indemnity claims, including those not covered by our suppliers or insurers; • the difficulties inherent in forecasting future operating expense levels, including with respect to costs associated with labor, utilities, transportation and raw materials; • the costs related to compliance with increasing worldwide complex government regulations and legal standards and requirements, including those related to ESG matters; • new accounting pronouncements or changes in existing accounting standards and practices; and • the effects of public health emergencies, civil unrest, natural disasters or other severe weather events, widespread travel disruptions, security risks, terrorist activities, international conflicts and other events beyond our control.
Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may be materially affected by a number of factors, including: • the effects of adverse economic or geopolitical conditions in the markets in which we sell our products, including inflationary pressures, which has resulted, and may continue to result, in increased interest rates, fuel prices, wages and other costs; • changes in customer demand or order patterns for our products or for end products that incorporate our products; • the timing, delay, reduction or cancellation of significant customer orders and our ability to manage inventory; • our ability to accurately forecast distributor demand for our products; • future distributor pricing credits or stock rotation rights; • our ability to effectively manage our cost structure in both the short term and over a longer duration; • changes in geographic, product or customer mix; • changes in our effective tax rates, adverse tax decisions or new or revised tax legislation in the United States, Ireland or worldwide; • the effects of issued, threatened or retaliatory government sanctions, trade barriers or economic restrictions; changes in law, regulations or other restrictions, including executive orders; and changes in import and export regulations, including restrictions on exports to certain companies or to third parties that do business with such companies, export classifications, or duties and tariffs, including with respect to China; • the timing of new product announcements or introductions, including products that may incorporate, or are based upon, software or AI technology, by us, our customers or our competitors and the market acceptance of such products; • pricing decisions and competitive pricing pressures; • fluctuations in manufacturing yields, adequate availability of wafers and other raw materials, and manufacturing, assembly and test capacity; • the ability of our third-party suppliers, subcontractors and manufacturers to supply us with sufficient quantities of raw materials, products and components; • a decline in infrastructure spending by foreign governments, including China; • political changes in the United States, including those related to the incoming administration and executive offices of the U.S. government, a decline in the U.S. government defense budget, changes in spending or budgetary priorities, a prolonged U.S. government shutdown or delays in contract awards; • a decline in our backlog; • our ability to recruit, hire, retain and motivate adequate numbers of engineers and other qualified employees to meet the demands of our customers; • our ability to generate new design opportunities and win competitive bid selection processes; • the increasing costs of providing employee benefits worldwide, including health insurance, retirement and pension plan contributions and other retirement benefits; • our ability to utilize our manufacturing facilities at efficient levels; • fluctuations in foreign currency exchange rates; • litigation-related costs or product liability, warranty and indemnity claims, including those not covered by our suppliers or insurers; • the difficulties inherent in forecasting future operating expense levels, including with respect to costs associated with labor, utilities, transportation and raw materials; 13 • the costs related to compliance with increasing worldwide complex government regulations and legal standards and requirements, including those related to ESG matters; • new accounting pronouncements or changes in existing accounting standards and practices; and • the effects of public health emergencies, civil unrest, natural disasters or other severe weather events, widespread travel disruptions, security risks, terrorist activities, international conflicts and other events beyond our control.
In addition, we use hazardous and other regulated materials that subject us to risks of strict liability for damages caused by potential or actual releases of such materials.
In addition, we use hazardous and other regulated materials that subject us to risks of liability for damages caused by potential or actual releases of such materials.
There is an increasing focus from regulators, investors, customers, employees and potential talent, as well as other stakeholders, concerning ESG matters, including climate change and sustainability, human rights, support for local communities, Board of Directors and employee diversity, human capital management, employee health and safety practices, product quality, worker rights, supply chain management and corporate governance and transparency.
There is an increasing focus from regulators, investors, customers, employees and potential talent, as well as other stakeholders, concerning ESG matters, including climate change and sustainability, human rights, support for local communities, Board of Directors’ and employee diversity, human capital management, employee health and safety practices, product quality, worker rights, supply chain management and corporate governance and transparency.
Earthquakes, fires, tsunamis, flooding, public health emergencies or other catastrophic events may disrupt local semiconductor-related businesses and adversely affect manufacturing capacity, availability and cost of key raw materials, utilities and equipment, and availability of key services, including transport of our products worldwide. Our insurance may not adequately cover losses resulting from such disruptions.
Earthquakes, fires, tsunamis, extreme precipitation and flooding, public health emergencies or other catastrophic events may disrupt local semiconductor-related businesses and adversely affect manufacturing capacity, availability and cost of key raw materials, utilities and equipment, and availability of key services, including transport of our products worldwide. Our insurance may not adequately cover losses resulting from such disruptions.
We require a substantial amount of cash in the United States for operating requirements, stock repurchases, cash dividends and acquisitions.
However, we require a substantial amount of cash in the United States for operating requirements, stock repurchases, cash dividends and acquisitions.
From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and investigations relating to our business, including inquiries from and discussions with government entities regarding the compliance of our contracting and sales practices with laws and regulations, which may result in claims with respect to commercial, product liability, intellectual property, cybersecurity, privacy, data protection, antitrust, breach of contract, employment, class action, whistleblower, mergers and acquisitions and other matters.
From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and investigations relating to our business, including inquiries from and discussions with government entities regarding the compliance of our contracting and sales practices with laws and regulations, which may result in claims, fines or penalties with respect to commercial, product liability, intellectual property, AI, cybersecurity, privacy, data protection, antitrust, breach of contract, employment, class action, whistleblower, mergers and acquisitions and other matters.
Our future success significantly depends on our ability to execute our business strategy, continue to innovate, improve our existing products, and design, develop, produce and market innovative new products and system-level solutions, including those that may incorporate, or are based upon, software or artificial intelligence technology.
Our future success significantly depends on our ability to execute our business strategy, continue to innovate, improve our existing products and design, develop, produce and market innovative new products and system-level solutions, including those that may incorporate, or are based upon, software or AI technology.
We generally do not require letters of credit from our 15 distributors, including our largest distributor, and are not protected against accounts receivable default or declarations of bankruptcy by these distributors. Our inability to collect open accounts receivable could adversely affect our operating results.
In addition, we generally do not require letters of credit from our distributors, including our largest distributor, and are not protected against accounts receivable default or declarations of bankruptcy by these distributors. Our inability to collect open accounts receivable could adversely affect our operating results.
Certain of our products and services, including those that may incorporate, or are based upon, software or artificial intelligence technology, could also contain security vulnerabilities, defects, bugs and errors, which could also result in significant data losses, security breaches and theft of intellectual property.
Certain of our products and services, including those that may incorporate, or are based upon, software or AI technology, could also contain security vulnerabilities, defects, bugs and errors, which could also result in significant data losses, security breaches and theft of intellectual property.
If our ESG practices fail to meet the expectations of investors, customers, employees or other stakeholders’ evolving standards, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us.
If our ESG practices fail to meet our or the evolving expectations of investors, customers, employees or other stakeholders, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us.
In addition, investments in companies are subject to a risk of a partial or total loss of our investment. Both in the United States and abroad, governmental regulation of acquisitions, including antitrust and other regulatory reviews and approvals, has become more complex, increasing the costs and risks of undertaking and consummating significant acquisitions.
In addition, investments in companies are subject to a risk of a partial or total loss of our investment. Both in the United States and abroad, governmental regulation of acquisitions, including antitrust and other regulatory reviews and approvals, has become more complex, increasing the costs and risks of undertaking, and may prevent us from consummating, significant acquisitions.
Any prolonged inability to utilize one of our manufacturing facilities, or those of our subcontractors or third-party wafer fabrication foundries, as a result of fire, flood, natural disaster, unavailability of utilities or otherwise, could result in a temporary or permanent loss of customers for affected products, which could have a material adverse effect on our results of operations and financial condition.
Any prolonged inability to utilize one of our manufacturing facilities, or those of our subcontractors or third-party wafer fabrication foundries, or to access key raw materials, utilities and equipment as a result of fire, flood, natural disaster, unavailability of utilities or otherwise, could result in a temporary or permanent loss of customers for affected products, which could have a material adverse effect on our results of operations and financial condition.
The stock market has historically experienced volatility, especially within the semiconductor industry, that often has been unrelated to the performance of particular companies, such as the response to rising inflation and increasing interest rates. These market fluctuations may cause our stock price to fall regardless of our operating results.
The stock market has historically experienced volatility, especially within the semiconductor industry, that often has been unrelated to the performance of particular companies, such as the response to elevated inflation and high interest rates. These market fluctuations may cause our stock price to fall regardless of our operating results.
In addition, our success in the Chinese markets may be adversely affected by China’s continuously evolving policies, laws and regulations, including those relating to antitrust, cybersecurity, data protection and data privacy, the environment, indigenous innovation and the promotion of a domestic semiconductor industry and intellectual property rights and enforcement and protection of those rights.
In addition, our success may be adversely affected by China’s continuously evolving policies, laws and regulations, including those relating to imports and exports, antitrust, AI, cybersecurity, data protection and data privacy, the environment, indigenous innovation, the promotion of a domestic semiconductor industry, intellectual property rights and enforcement and protection of those rights.
Risks Related to Cyber, Intellectual Property, Legal and Regulatory Our computer systems and networks may be subject to attempted security breaches and other cyber incidents and a significant disruption in, or breach in security of, our information technology systems or certain products could materially and adversely affect our business or reputation.
Risks Related to Cyber, Artificial Intelligence, Intellectual Property, Legal and Regulatory Our computer systems and networks are subject to attempted security breaches and other cyber incidents and a significant disruption in, or breach in security of, our information technology systems or certain products could materially and adversely affect our business or reputation.
In addition, if our credit ratings are downgraded or put on watch for a potential downgrade, the applicable interest rate on borrowings under our current revolving credit facility and commercial paper issuances may rise and our ability to obtain additional financing or refinance our existing debt may be negatively affected.
In addition, if our credit ratings are downgraded or put on watch for a potential downgrade, the applicable interest rate on borrowings under our current revolving credit facility and commercial paper issuances may rise and our ability to obtain additional financing or refinance our existing debt may be negatively affected. 21 Restrictions in our revolving credit facility and outstanding debt instruments may limit our activities.
The GDPR includes significant penalties for non-compliance, and China’s PIPL imposes additional operational requirements relating to processing personal information and provides comprehensive penalty and enforcement mechanisms. In the United States, California enacted the CCPA that requires covered companies to provide additional disclosures and data rights to data subjects, including employees. The CCPA went into effect on January 1, 2020.
The GDPR includes significant penalties for non-compliance, and China’s PIPL imposes additional operational requirements relating to processing personal information and provides comprehensive penalty and enforcement mechanisms. In the United States, California enacted the CCPA that requires covered companies to provide additional disclosures and data rights to data subjects, including employees.
We market and sell our products directly and through third-party distributors. There is a risk that our products may be diverted from our authorized distribution channels and sold on the “gray market” in ways that are not in accordance with our established agreements, controls, policies and procedures.
We market and sell our products directly and through third-party distributors. In the past, certain of our products have been, and there is a risk that our products may continue to be, diverted from our authorized distribution channels and sold on the “gray market” in ways that are not in accordance with our established agreements, controls, policies and procedures.
Our effective tax rate for the fiscal year ended October 28, 2023 was below the U.S. federal statutory rate of 21%. This is primarily due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income.
Our effective tax rate for the fiscal year ended November 2, 2024 was below the U.S. federal statutory rate of 21%. This is primarily due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income.
The foregoing risks may be exacerbated in times of macroeconomic uncertainty, including as a result of rising inflation, high interest rates, bank failures and slower economic growth or recession. Incorrect forecasts, or reductions, cancellations or delays in orders for our products, could adversely affect our operating results. Our operating results are dependent on the performance of independent distributors.
The foregoing risks may be exacerbated in times of macroeconomic uncertainty, including as a result of elevated inflation, high interest rates, bank failures and slower economic growth or recession. Incorrect forecasts, or reductions, cancellations or delays in orders for our products, could adversely affect our operating results.
The California Privacy Rights Act (CPRA), which will become enforceable in March 2024, expands the CCPA and establishes the California Privacy Protection Agency to enforce Californians’ privacy rights under the CCPA. Since the CCPA was enacted, other states, including Virginia and Colorado, have enacted or are in the process of enacting comprehensive privacy schemes.
The California Privacy Rights Act expands the CCPA and establishes the California Privacy Protection Agency to enforce Californians’ privacy rights under the CCPA. Since the CCPA was enacted, other states, including Virginia and Colorado, have enacted or are in the process of enacting comprehensive privacy schemes.
The loss of key personnel or the inability to attract, timely hire and retain key employees with critical technical skills to achieve our strategy, including as a result of changes to immigration policies, could cause business disruptions, increased expenses to address any disruptions and could have a material adverse effect on our business.
The loss of key personnel or the inability to attract, timely hire and retain key employees with critical technical skills to achieve our strategy, including as a result of changes to immigration policies, and the increased uncertainty surrounding such policies in light of the incoming administration’s expected immigration agenda, could cause business disruptions, increased expenses to address any disruptions and could have a material adverse effect on our business.
ITEM 1A. RISK FACTORS Set forth below and elsewhere in this report and in other documents we file with the Securities and Exchange Commission (SEC) are descriptions of certain risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report.
ITEM 1A. RISK FACTORS Set forth below and elsewhere in this report are descriptions of certain risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report.
If we do not adapt our strategy or execution quickly enough to meet evolving regulatory requirements or the expectations of our investors, customers, employees, regulators or other stakeholders, or if our ESG disclosures, including data input, processing and reporting, are incomplete or inaccurate, our business, financial condition, results of operations, brand and reputation could be adversely affected. 19 We are subject to environment, health and safety standards and hazards which have the potential to adversely affect our business, increase our expenses and adversely affect our reputation.
If we do not adapt our strategy or execution quickly enough to meet evolving regulatory requirements or the expectations of our investors, customers, employees, regulators or other stakeholders, or if our ESG disclosures, including data input, processing and reporting, are incomplete or inaccurate, our business, financial condition, results of operations, brand and reputation could be adversely affected.
As a result, we could forgo revenue opportunities, potentially lose market share and damage our customer relationships, all of which could materially and adversely affect our business, financial condition and results of operations.
As a result, we could forgo revenue opportunities, potentially lose market share and damage our customer relationships, all of which could materially and adversely affect our business, financial condition and results of operations. Our operating results are dependent on the performance of independent distributors.
We primarily rely on patent, mask work, copyright, trademark and trade secret laws, as well as nondisclosure agreements, information security practices and other methods, to protect our proprietary information, technologies and processes.
Our future success depends, in part, on our ability to protect our intellectual property. We primarily rely on patent, mask work, copyright, trademark and trade secret laws, as well as nondisclosure agreements, information security practices and other methods, to protect our proprietary information, technologies and processes.
Existing or new competitors may develop products or technologies that more effectively address the demands of our customers and markets with enhanced performance, features and functionality, lower power requirements, greater levels of integration or lower cost.
Existing or new competitors may develop products or technologies that more effectively address the demands of our customers and markets with enhanced performance, features and functionality, lower power requirements, greater levels of integration or lower cost, which may increase our obsolete or excess inventory and result in inventory write-offs.
If we were to experience a prolonged disruption in the information technology systems that involve our internal communications or our interactions with customers or suppliers, it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business.
A prolonged disruption in the information technology systems that involve our internal communications or our interactions with customers or suppliers, could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business. We face risks related to the use of AI in our business operations, products and services.
Changes in EHS laws, regulations or customer requirements may require us to invest in equipment or make manufacturing process or material changes, all of which could adversely affect our business, financial condition and results of operations.
Changes in EHS laws or regulations, uncertainties about those laws or regulations, or customer requirements may require us to invest in equipment, make manufacturing process or material changes or re-assess current and planned expenditures and initiatives, any of which could adversely affect our business, financial condition and results of operations.
In addition, the cost and operational consequences of responding to breaches and implementing remediation measures could be significant. Our information technology systems and those of our third-party service providers and strategic partners may also be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures, user errors, catastrophes or other unforeseen events.
Our information technology systems and those of our third-party service providers and strategic partners may also be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures, user errors, catastrophes or other unforeseen events.
We could also be subject to litigation or arbitration disputes arising under our contractual obligations, customer indemnity, warranty or product liability claims, or other matters that could lead to significant costs and expenses as we defend those claims or pay damage awards.
We could also be subject to litigation or arbitration disputes arising under our contractual obligations, customer indemnity, warranty or product liability claims, or other matters that could lead to significant costs and expenses as we defend those claims or pay damage awards. 18 Further, the semiconductor industry is characterized by frequent claims and litigation involving patent and other intellectual property rights.
Organizations may also purchase counterfeit or substandard products, including products that have been altered, mishandled or damaged, or purchase used products presented as new, each of which could result in damage to property or persons. These situations could have a material adverse effect on our reputation and business and operating results.
Organizations may also purchase counterfeit or substandard products, including products that have been altered, mishandled or damaged, or purchase used products presented as new, each of which could result in damage to property or persons and adversely affect our reputation and customer satisfaction.
Our ability to make payments of principal and interest on our indebtedness when due depends upon our future operating performance, which may be impacted by general economic conditions, industry cycles and other factors beyond our control.
We may also incur additional debt, including debt with variable interest rates, in the future, which would exacerbate these risks. Our ability to make payments of principal and interest on our indebtedness when due depends upon our future operating performance, which may be impacted by general economic conditions, industry cycles and other factors beyond our control.
General Risk Factors Our results of operations could be affected by natural disasters or other catastrophic events in the locations in which we operate. We, like many companies in the semiconductor industry, rely on supplies, services, internal manufacturing capacity, wafer fabrication foundries and other subcontractors in locations around the world that are susceptible to natural disasters and other significant disruptions.
We, like many companies in the semiconductor industry, rely on supplies, services, internal manufacturing capacity, wafer fabrication foundries and other subcontractors in locations around the world that are susceptible to natural disasters and other significant disruptions.
If our competitors can benefit from such government incentives and we cannot, it could strengthen our competitors' relative position and have a material adverse effect on our business.
Further, such programs typically require companies to adhere to various performance obligations, which we may not achieve. If our competitors can benefit from such government incentives and we cannot, it could strengthen our competitors’ relative position and have a material adverse effect on our reputation and business.
For calendar year 2022, we were within the threshold range for greenhouse gas emissions and exceeded the target threshold for renewable energy usage related to this sustainability-linked pricing component. On October 5, 2021, we issued $750 million sustainability-linked senior notes (Sustainability-Linked Senior Notes).
For calendar year 2023, we exceeded the target thresholds for greenhouse gas emissions and renewable energy usage related to this sustainability-linked pricing component, which resulted in immaterial adjustments to administrative and interest fees due under the facility. On October 5, 2021, we issued $750 million sustainability-linked senior notes (Sustainability-Linked Senior Notes).
Limited or delayed access to these items could adversely affect our results of operations. In certain instances, one of our vendors may be the sole source of highly specialized processing services or materials.
In certain instances, one of our vendors may be the sole source of highly specialized processing services or materials.
A prolonged disruption of our or our third parties’ manufacturing operations could have a material adverse effect on our business, financial condition and results of operations. In addition to leveraging an outsourcing model for certain manufacturing operations, we also rely on our internal manufacturing operations located in the United States, Ireland, the Philippines, Thailand and Malaysia.
In addition to leveraging an outsourcing model for certain manufacturing operations, we also rely on our internal manufacturing operations located in the United States, Ireland, the Philippines, Thailand and Malaysia.
Our growth is also dependent on our ability to identify and penetrate new markets where we have limited experience yet require significant investments, resources and technological advancements in order to compete effectively, and there can be no assurance that we will achieve success in these markets.
Any inability to satisfy customer quality and reliability standards or comply with industry and regulatory standards and technical requirements may adversely affect demand for our products and our results of operations. 12 Our growth is also dependent on our ability to identify and penetrate new markets where we have limited experience yet require significant investments, resources and technological advancements in order to compete effectively, and there can be no assurance that we will achieve success in these markets.
Changes in laws and regulations regarding these matters, including those that align to or are associated with the Organization for Economic Cooperation and Development's Base Erosion and Profit Shifting Actions Plans, could impact the jurisdictions where we are deemed to earn income, which could in turn adversely affect our tax liability and results of operations.
Changes in laws and regulations regarding these matters could impact the jurisdictions where we are deemed to earn income, which could in turn adversely affect our tax liability and results of operations.
To remain competitive, we may need to invest in or acquire other companies, purchase or license technology from third parties, or enter into other strategic transactions in order to introduce new products or enhance our existing products.
This instability could result in manufacturing delays and product shortages, which could have a material adverse effect on our operating results. 15 Risks Related to Acquisitions and Strategic Transactions To remain competitive, we may need to invest in or acquire other companies, purchase or license technology from third parties, or enter into other strategic transactions in order to introduce new products or enhance our existing products.
Any significant increase in our future effective tax rate could adversely impact our net income during future periods. Compliance with tax legislation may require the collection of information not regularly produced by us, and therefore necessitate the use of estimates in our Consolidated Financial Statements and the exercise of significant judgment in accounting for its provisions.
Tax legislation and regulation may require the collection of information not regularly produced by us, and therefore necessitate the use of estimates in our Consolidated Financial Statements and the exercise of significant judgment in accounting for its provisions, which may subject us to additional tax liability, tax examination and other risks.
Risks Related to Financial Markets, Indebtedness and Capital Return We have substantial existing indebtedness and the ability to incur significant additional indebtedness, which could limit our operations and our use of our cash flow and negatively impact our credit ratings. As of October 28, 2023, we had approximately $6.9 billion in outstanding indebtedness, including $0.5 billion of short-term commercial paper.
As additional jurisdictions enact such legislation, our effective tax rate and cash tax payments could increase. Risks Related to Financial Markets, Indebtedness and Capital Return We have substantial existing indebtedness and the ability to incur significant additional indebtedness, which could limit our operations and our use of our cash flow and negatively impact our credit ratings.
Our leverage could have negative consequences, including increasing our vulnerability to adverse economic and industry conditions, limiting our ability to obtain additional financing and limiting our ability to acquire new products and technologies through strategic acquisitions. Further, on October 5, 2021, we issued $500 million aggregate principal amount of floating rate senior notes (Floating Rate Notes).
Our leverage could have negative consequences, including increasing our vulnerability to adverse economic and industry conditions, limiting our ability to obtain additional financing and limiting our ability to acquire new products and technologies through strategic acquisitions. Further, our net interest expense is exposed to changes in market interest rates.
For example, in August 2022, the United States government enacted the CHIPS and Science Act of 2022 to provide financial incentives to the U.S. semiconductor industry. Government incentives, including any that may be offered in connection with the CHIPS Act, may not be available to us on acceptable terms or at all.
Government incentives, including any that may be offered in connection with the CHIPS Act, may not be available to us on acceptable terms or at all, and to the extent that the incoming administration modifies or repeals the CHIPS Act, the availability of any such incentives may be even less certain.
While we have significant expertise in semiconductor manufacturing, it is possible that some processes could become unstable. This instability could result in manufacturing delays and product shortages, which could have a material adverse effect on our operating results.
While we have significant expertise in semiconductor manufacturing, it is possible that some processes could become unstable.
In the event of a breach, our operations may be disrupted, our proprietary information or that of our employees, contractors, partners, customers, suppliers or other third parties may be misappropriated, and we could be exposed to potential liability, 17 litigation, and regulatory action, as well as the loss of existing or potential customers, damage to our reputation and other financial loss.
In the event of unauthorized access to, or a security breach of, our systems or those of our third-party service providers or strategic partners, our operations may be disrupted and our proprietary information or that of our employees, contractors, partners, customers, suppliers or other third parties may be misappropriated.
The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear, but could be severe. The extent to which the novel strain of the coronavirus (COVID-19) pandemic will adversely affect our business, financial condition and results of operations is uncertain.
The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear, but could be severe. Our stock price may be volatile.
In addition, expanded export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies.
The incoming administration has 10 indicated that it intends to impose or significantly increase tariffs on imports to the United States, which could exacerbate many of these issues. In addition, expanded export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies.
In addition, we provide our confidential and proprietary information to our strategic partners in certain cases, who may maintain such information on their information technology systems. Our security measures or those of our third-party service providers or strategic partners may not detect or prevent security breaches, cyberattacks, defects, bugs or errors.
Our security measures or those of our third-party service providers or strategic partners may not detect or prevent security breaches, cyberattacks, defects, bugs or errors. Further, geopolitical tensions and conflicts have escalated the volume and sophistication of cyberattacks.
Further, public attention to environmental and social responsibility remains high, and our customers routinely include stringent environmental and other standards in their contracts with us.
Further, public attention to environmental and social responsibility remains high, and our customers routinely include stringent environmental and other standards in their contracts with us. It is expected that there will be changes to EHS laws or regulations by the incoming administration, but the impacts of any such changes on us are not currently known.
A significant portion of our sales are through independent global and regional distributors that are not under our control. These independent distributors generally represent product lines offered by several companies and thus could reduce their sales efforts for our products or they could terminate their representation of us.
Sales to third-party distributors accounted for approximately 58% of our revenue in the year ended November 2, 2024. These independent distributors generally represent product lines offered by several companies and thus could reduce their sales efforts for our products. Further, our distributors could terminate their representation of us with little advance notice.
We and our third-party service providers or strategic partners may be subject to security breaches of information technology systems or certain products caused by viruses, illegal break-ins or hacking, sabotage, other cyberattacks or acts of vandalism by third parties or our employees or contractors.
We and our third-party service providers or strategic partners are susceptible to security breaches of information technology systems or certain products and other incidents such as unauthorized access, supply-chain attacks, exfiltration or destruction of data, disruption of service, viruses or other malicious code, illegal break-ins or hacking, sabotage, phishing attempts and other forms of social engineering, malware, ransomware and other forms of cyber extortion and similar events.
We may be unable to adequately protect our proprietary intellectual property rights, which may limit our ability to compete effectively. Our future success depends, in part, on our ability to protect our intellectual property.
Any failure or perceived failure by us to comply with any legal or regulatory requirement could subject us to legal liabilities, damage our reputation or otherwise adversely affect our business. We may be unable to adequately protect our proprietary intellectual property rights, which may limit our ability to compete effectively.
Removed
Any inability to satisfy customer quality and reliability standards or comply with industry standards and technical requirements may adversely affect demand for our products and our results of operations.
Added
Many of these factors and risks are present and may be exacerbated within our business operations in China.
Removed
Risk Related to Acquisitions and Strategic Transactions Our acquisition of Maxim involves a number of risks that could adversely affect our business, financial condition and operating results, and we may not realize the financial and strategic goals we anticipate. In August 2021, we completed our acquisition of Maxim, which we refer to as the acquisition or the merger.
Added
The demand for our products may vary based on market conditions in our major end markets. Demand in these end markets can fluctuate significantly based upon, for example, consumer spending, consumer preferences, the development of new technologies and macroeconomic conditions.
Removed
The ultimate success of the merger will depend on, among other things, the ability to continue to combine the two businesses in a manner that facilitates growth opportunities. Further, there are a large number of processes, policies, procedures, operations, technologies and systems that must continue to be integrated in connection with the ongoing integration of Maxim’s business.
Added
Limited or delayed access to these items, including as a result of, global trade issues, supply chain constraints, difficulties obtaining import or export licenses, natural disasters, public health emergencies or changes in or new laws or regulations, could adversely affect our results of operations.
Removed
The combined company has and may continue to incur ongoing restructuring, integration and other costs associated with combining the operations of the two companies in connection with the merger.
Added
In addition, governments and regulatory bodies may inquire into our processes to mitigate risks related to product diversion. For example, during 2024, we participated in an inquiry from the U.S. Senate Permanent Subcommittee on Investigations related to the unauthorized misuse of U.S. chips in Russian weapon systems.
Removed
It is possible that the ongoing integration process could result in the loss of customers, the disruption of ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall integration process that takes longer than originally anticipated and actual growth, if achieved, may be lower than what we expect and may take longer to achieve than anticipated.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFt. (fiscal year) Renewals Bangalore, India Engineering and administrative offices 175,000 sq. ft. 2027 1, five-yr. period Durham, NC Testing, engineering, and administrative offices 156,000 sq. ft. 2035 2, five-yr. periods San Jose, CA Manufacturing, marketing and administrative offices 103,000 sq. ft. 2033 1, five-yr. period (1) Leases on the land used for this facility expire in 2054 through 2057.
Biggest change(fiscal year) Renewals Bangalore, India Engineering and administrative offices 175,000 sq. ft. 2027 1, five-yr. period Durham, NC Testing, engineering, and administrative offices 156,000 sq. ft. 2035 2, five-yr. periods San Jose, CA Manufacturing, marketing and administrative offices 102,000 sq. ft. 2033 1, five-yr. period (1) Leases on the land used for this owned facility expire in 2054 through 2057.
For information concerning our obligations under all operating leases, see Note 9, Leases , of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. 24
For information concerning our obligations under all operating leases, see Note 9, Leases , of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. 25
San Jose, CA Engineering, sales, marketing and administrative offices 435,000 sq. ft. Chonburi Province, Thailand Wafer probe and testing, warehouse, engineering and administrative offices 194,000 sq. ft. Chelmsford, MA Final assembly of certain module and subsystem-level products, testing, engineering and administrative offices 174,000 sq. ft. Camas, WA Wafer fabrication 105,000 sq. ft. Lease Properties Approximate Termination Leased: Use Total Sq.
San Jose, CA Engineering, sales, marketing and administrative offices 441,000 sq. ft. Chonburi Province, Thailand Wafer probe and testing, warehouse, engineering and administrative offices 194,000 sq. ft. Chelmsford, MA Final assembly of certain module and subsystem-level products, testing, engineering and administrative offices 174,000 sq. ft. Camas, WA Wafer fabrication 97,000 sq. ft. Lease Properties Approximate Termination Leased: Use Total Sq.
Wilmington, MA Corporate headquarters, wafer fabrication, testing, engineering, sales, marketing and administrative offices 826,000 sq. ft. Limerick, Ireland Wafer fabrication, wafer probe and testing, warehouse and distribution, engineering and administrative offices 708,500 sq. ft. Penang, Malaysia (1) Wafer probe and testing, assembly and engineering offices 696,680 sq. ft. Beaverton, OR Wafer fabrication, engineering and administrative offices 457,917 sq. ft.
Wilmington, MA Corporate headquarters, wafer fabrication, testing, engineering, sales, marketing and administrative offices 826,000 sq. ft. Limerick, Ireland Wafer fabrication, wafer probe and testing, warehouse and distribution, engineering and administrative offices 708,500 sq. ft. Penang, Malaysia (1) Wafer probe and testing, assembly and engineering offices 697,000 sq. ft. Beaverton, OR Wafer fabrication, engineering and administrative offices 458,000 sq. ft.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time in the ordinary course of our business, various claims, charges and litigation are asserted or commenced against us arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employee benefits.
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time in the ordinary course of our business, we are involved in various claims, charges and litigation arising from, or related to, among other things, contractual matters, patents, trademarks, personal injury, environmental matters, product liability, insurance coverage, employment or employee benefits.
For information regarding material pending legal proceedings in which we are involved, see Note 10, Commitments and Contingencies of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 25 PART II
For information regarding material pending legal proceedings in which we are involved, see Note 10, Commitments and Contingencies of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 26 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs July 30, 2023 through August 26, 2023 1,209,834 $ 184.50 1,162,168 $ 2,338,207,217 August 27, 2023 through September 23, 2023 464,040 $ 178.97 456,466 $ 2,256,508,676 September 24, 2023 through October 28, 2023 855,157 $ 168.57 744,321 $ 2,130,110,767 Total 2,529,031 $ 178.10 2,362,955 $ 2,130,110,767 _______________________________________ (1) Includes 166,076 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.
Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs August 4, 2024 through August 31, 2024 143,269 $ 219.84 95,944 $ 1,712,491,367 September 1, 2024 through September 28, 2024 109,336 $ 223.90 102,240 $ 1,689,594,092 September 29, 2024 through November 2, 2024 169,648 $ 227.53 163,568 $ 1,652,367,857 Total 422,253 $ 223.98 361,752 $ 1,652,367,857 _______________________________________ (1) Includes 60,501 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.
Issuer Purchases of Equity Securities The table below summarizes the activity related to stock repurchases for the three months ended October 28, 2023. We have an ongoing authorization, originally approved by our Board of Directors in 2004, and subsequently amended, to repurchase shares of our common stock in open market or negotiated transactions.
Issuer Purchases of Equity Securities The table below summarizes the activity related to stock repurchases for the three months ended November 2, 2024. We have an ongoing authorization, originally approved by our Board of Directors in 2004, and subsequently amended, to repurchase shares of our common stock in open market or negotiated transactions.
This graph assumes the investment of $100 on November 3, 2018 in our common stock, the S&P 500 Index and the S&P Semiconductors Index and assumes all dividends are reinvested. Measurement points are the last trading day for each respective fiscal year. ITEM 6. RESERVED 27
This graph assumes the investment of $100 on November 2, 2019 in our common stock, the S&P 500 Index and the S&P Semiconductors Index and assumes all dividends are reinvested. Measurement points are the last trading day for each respective fiscal year. ITEM 6. RESERVED 28
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on The Nasdaq Global Select Market under the symbol ADI. The number of holders of record of our common stock at November 17, 2023 was 2,316.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on The Nasdaq Global Select Market under the symbol ADI. The number of holders of record of our common stock at November 22, 2024 was 2,230.
(2) 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. 26 Comparative Stock Performance Graph The following graph compares cumulative total shareholder return on our common stock since November 3, 2018 with the cumulative total return of the Standard & Poor’s (S&P) 500 Index and the S&P Semiconductors Index.
(2) The average price paid for shares in connection with vesting of restricted stock units/awards are averages of the closing stock prices at the vesting dates which are used to calculate the number of shares to be withheld. 27 Comparative Stock Performance Graph The following graph compares cumulative total shareholder return on our common stock since November 2, 2019 with the cumulative total return of the Standard & Poor’s (S&P) 500 Index and the S&P Semiconductors Index.
The dividend will be paid on December 14, 2023 to all shareholders of record at the close of business on December 4, 2023 and is expected to total approximately $426.8 million. We currently expect quarterly dividends to continue in future periods, although they remain subject to determination and declaration by our Board of Directors.
The dividend will be paid on December 20, 2024 to all shareholders of record at the close of business on December 9, 2024 and is expected to total approximately $456.6 million. We currently expect quarterly dividends to continue in future periods, although they remain subject to determination and declaration by our Board of Directors.
This number does not include shareholders for whom shares are held in a “nominee” or “street” name. On October 27, 2023, the last reported sales price of our common stock on The Nasdaq Global Select Market was $160.57 per share. On November 20, 2023, our Board of Directors declared a cash dividend of $0.86 per outstanding share of common stock.
This number does not include shareholders for whom shares are held in a “nominee” or “street” name. On November 1, 2024, the last reported sales price of our common stock on The Nasdaq Global Select Market was $225.48 per share. On November 25, 2024, our Board of Directors declared a cash dividend of $0.92 per outstanding share of common stock.
As of October 28, 2023, the Company had repurchased a total of approximately 205.3 million shares of its common stock for approximately $14.5 billion under our share repurchase program. An additional $2.1 billion remains available for repurchase of shares under the current authorized program.
As of November 2, 2024, the Company had repurchased a total of approximately 207.7 million shares of its common stock for approximately $15.0 billion under our share repurchase program. An additional $1.7 billion remains available for repurchase of shares under the current authorized program.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. Reserved 27 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 39 Report of Independent Registered Public Accounting Firm 41 Item 8.
Biggest changeItem 6. Reserved 28 Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 39 Report of Independent Registered Public Accounting Firm 41 Item 8.
Financial Statements and Supplementary Data 43 Consolidated Statements of Income 43 Consolidated Statements of Comprehensive Income 44 Consolidated Balance Sheets 45 Consolidated Statements of Shareholders' Equity 46 Consolidated Statements of Cash Flows 47 Notes to Consolidated Financial Statements 48
Financial Statements and Supplementary Data 43 Consolidated Statements of Income 43 Consolidated Statements of Comprehensive Income 44 Consolidated Balance Sheets 45 Consolidated Statements of Shareholders ’ Equity 46 Consolidated Statements of Cash Flows 47 Notes to Consolidated Financial Statements 48

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

54 edited+7 added−32 removed56 unchanged
Biggest changeProvision for (Benefit From) Income Taxes Fiscal Year 2023 over 2022 2023 2022 $ Change % Change Provision for (benefit from) income taxes $ 293,424 $ 350,188 $ (56,764) (16) % Effective income tax rate 8.1 % 11.3 % Our effective tax rates for fiscal 2023 and fiscal 2022 were below the U.S. statutory rate of 21% due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income.
Biggest changeNonoperating Expense (Income) Fiscal Year 2024 over 2023 2024 2023 $ Change % Change Nonoperating expense (income) $ 255,458 $ 215,109 $ 40,349 19 % The year-over-year increase in nonoperating expense in fiscal 2024 as compared to fiscal 2023 was primarily the result of higher interest expense related to our debt obligations and lower net gains from other investments, partially offset by higher interest income. 31 Provision for Income Taxes Fiscal Year 2024 over 2023 2024 2023 $ Change % Change Provision for income taxes $ 142,067 $ 293,424 $ (151,357) (52) % Effective income tax rate 8.0 % 8.1 % Our effective tax rates for fiscal 2024 and fiscal 2023 were below the U.S. statutory rate of 21% due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income.
When using the qualitative method, we consider several factors, including the following: – the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which these reporting units operate in order for there to be potential impairment; – the carrying values of these reporting units as of the assessment date compared to their previously calculated fair values as of the date of the most recent quantitative impairment analysis; – the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; – public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses; – changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting units; – changes in our market capitalization and overall enterprise valuation to determine if there were any significant decreases that could be an indication that the valuation of our reporting units had significantly decreased; and – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach.
When using the qualitative method, we consider several factors, including the following: 36 – the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which these reporting units operate in order for there to be potential impairment; – the carrying values of these reporting units as of the assessment date compared to their previously calculated fair values as of the date of the most recent quantitative impairment analysis; – the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; – public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors’ businesses; – changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting units; – changes in our market capitalization and overall enterprise valuation to determine if there were any significant decreases that could be an indication that the valuation of our reporting units had significantly decreased; and – whether there had been any significant increases to the weighted-average cost of capital rates for each reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach.
Shipping costs are charged to selling, marketing, general and administrative expense as incurred. Sales taxes are excluded from revenue. 34 Revenue from contracts with the United States government, government prime contractors and certain commercial customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward completion.
Shipping costs are charged to selling, marketing, general and administrative expense as incurred. Sales taxes are excluded from revenue. Revenue from contracts with the United States government, government prime contractors and certain commercial customers is recorded over time using either units delivered or costs incurred as the measurement basis for progress toward completion.
A change in these factors could result in the recognition of an increase or decrease to our income tax provision, which could materially impact our consolidated financial position and results of operations. In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is uncertain.
A change in these factors could 37 result in the recognition of an increase or decrease to our income tax provision, which could materially impact our consolidated financial position and results of operations. In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is uncertain.
The majority of our shipping terms permit us to recognize revenue at point of shipment or delivery. Certain shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, we defer the revenue recognized until title and control of the promised goods have passed to the customer.
The majority of our shipping terms permit us to recognize revenue at point of shipment or delivery. Certain shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, we defer the revenue recognized until title and control of the promised goods 35 have passed to the customer.
For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. We classify interest and penalties related to uncertain tax positions within the provision for (benefit from) income taxes line of the Consolidated Statements of Income.
For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. We classify interest and penalties related to uncertain tax positions within the provision for income taxes line of the Consolidated Statements of Income.
See Note 2s, New Accounting Pronouncements, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K 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.
See Note 2s, New Accounting Pronouncements, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for a description of recently issued and adopted accounting pronouncements, including the dates of adoption and impact on our financial condition and results of operations.
In all periods presented, the predominant regions comprising “Rest of North and South America” are Canada and Mexico; the predominant regions comprising “Europe” are Germany, Sweden and the Netherlands; and the predominant regions comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore.
In all periods presented, the predominant regions comprising “Rest of North and South America” are Canada and Mexico; the predominant regions comprising “Europe” are Germany, Sweden, Israel and the Netherlands; and the predominant regions comprising “Rest of Asia” are Taiwan, Malaysia, South Korea and Singapore.
The decrease in accounts receivable for fiscal 2023 compared to fiscal 2022 was primarily the result of variations in the timing of collections and billings and decreased revenue levels in the fourth quarter of fiscal 2023 as compared to the fourth quarter of fiscal 2022.
The decrease in accounts receivable for fiscal 2024 compared to fiscal 2023 was primarily the result of variations in the timing of collections and billings and decreased revenue levels in the fourth quarter of fiscal 2024 as compared to the fourth quarter of fiscal 2023.
These escalating payment requirements are reflected in the table. (4) We have supplier commitments for the purchase of materials and supplies in advance or with minimum purchase quantities.
These escalating payment requirements are reflected in the table. (5) We have supplier commitments for the purchase of materials and supplies in advance or with minimum purchase quantities.
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.
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.
Inventory increased in fiscal 2023 as compared to fiscal 2022, 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.
Inventory decreased in fiscal 2024 as compared to fiscal 2023, 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.
We test goodwill for impairment at the reporting unit level, which we determined is consistent with our identified operating segments, on an annual basis on the first day of the fourth quarter (on or about July 30) or more frequently if we believe indicators of impairment exist or we reorganize our operating segments or reporting units.
We test goodwill for impairment at the reporting unit level, which we determined is consistent with our identified operating segments, on an annual basis on the first day of the fourth quarter (on or about August 4 th ) or more frequently if we believe indicators of impairment exist or we reorganize our operating segments or reporting units.
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 customer demand.
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.
For discussion on results of operations and financial condition for fiscal 2022 and the fiscal year ended October 30, 2021 (fiscal 2021) and year-over-year comparisons between fiscal 2022 and fiscal 2021, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for fiscal 2022 filed with the Securities and Exchange Commission on November 22, 2022.
For discussion on results of operations and financial condition for fiscal 2023 and the fiscal year ended October 29, 2022 (fiscal 2022) and year-over-year comparisons between fiscal 2023 and fiscal 2022, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for fiscal 2023 filed with the Securities and Exchange Commission on November 21, 2023.
As of October 28, 2023, we had $547.2 million of outstanding borrowings under the commercial paper program recorded in the Consolidated Balance Sheet. We intend to 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.
As of November 2, 2024, we had $547.7 million of outstanding borrowings under the commercial paper program recorded in the Consolidated Balance Sheet. We intend to 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.
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 October 28, 2023, we were in compliance with these covenants.
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 November 2, 2024, we were in compliance with these covenants.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (all tabular amounts in thousands except per share amounts) The following discussion includes results of operations and financial condition for the fiscal year ended October 28, 2023 (fiscal 2023) and the fiscal year ended October 29, 2022 (fiscal 2022) and year-over-year comparisons between fiscal 2023 and fiscal 2022.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (all tabular amounts in thousands except per share amounts) The following discussion includes results of operations and financial condition for the fiscal year ended November 2, 2024 (fiscal 2024) and the fiscal year ended October 28, 2023 (fiscal 2023) and year-over-year comparisons between fiscal 2024 and fiscal 2023.
Commercial Paper Program During fiscal 2023, we established a commercial paper program under which 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.
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 October 28, 2023, we were compliant with these covenants. See Note 14, Debt of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further information on our outstanding debt.
As of November 2, 2024, we were compliant with these covenants. See Note 14, Debt of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further information on our outstanding debt.
The increase in cash provided by operating activities during fiscal 2023 as compared to fiscal 2022 was primarily a result of higher 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 decrease in cash provided by operating activities during fiscal 2024 as compared to fiscal 2023 was primarily a result of lower net income adjusted for noncash items partially offset by changes in working capital. Investing Activities Investing cash flows generally consist of capital expenditures and cash used for acquisitions.
As of October 28, 2023, our total liabilities associated with uncertain tax positions was $186.2 million, which are included in non-current income taxes payable in our Consolidated Balance Sheets contained in Item 8 of this Annual Report on Form 10-K.
As of November 2, 2024, our total liabilities associated with uncertain tax positions was $185.8 million, which are included in non-current income taxes payable in our Consolidated Balance Sheets contained in Item 8 of this Annual Report on Form 10-K.
In order to assess the reasonableness of the calculated reporting unit fair values, we reconcile the aggregate fair values of our reporting units determined, as described above, to our total company market capitalization, allowing for a reasonable control premium. In fiscal 2023, we used the qualitative method of assessing goodwill for our reporting units.
In order to assess the reasonableness of the calculated reporting unit fair values, we reconcile the aggregate fair values of our reporting units determined, as described above, to our total company market capitalization, allowing for a reasonable control premium.
Our cash and cash equivalents consist of highly liquid investments with maturities of three months or less, including money market funds. 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.
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.
Significant changes during the year in enacted tax law could affect these estimates. See Note 12, Income Taxes , of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further discussion. Stock-Based Compensation Stock-based compensation expense associated with stock related awards is recognized in the Consolidated Statements of Income.
Significant changes during the year in enacted tax law could affect these estimates. See Note 12, Income Taxes , of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further discussion. 38
See Note 13, Revolving Credit Facility , of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further information on our revolving credit facility. 32 Debt As of October 28, 2023, we had approximately $6.4 billion of carrying value outstanding on our senior notes.
See Note 13, Revolving Credit Facility , of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further information on our revolving credit facility. 33 Debt As of November 2, 2024, we had approximately $7.0 billion of carrying value outstanding on our senior notes.
Under the program, we may repurchase outstanding shares of our common stock from time to time in the open market and through privately negotiated transactions. 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.
Under the program, we may repurchase outstanding shares of our common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when the full dollar amount of the authorization has been used to repurchase shares under the program.
Fiscal Year 2023 2022 Net cash provided by operating activities $ 4,817,634 $ 4,475,402 Net cash provided by operating activities as a % of revenue 39 % 37 % Net cash used for investing activities $ (1,266,385) $ (657,368) Net cash used for financing activities $ (4,063,760) $ (4,290,720) The following changes contributed to the net change in cash and cash equivalents from fiscal 2022 to fiscal 2023. 31 Operating Activities Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.
Fiscal Year 2024 2023 Net cash provided by operating activities $ 3,852,529 $ 4,817,634 Net cash provided by operating activities as a % of revenue 41 % 39 % Net cash used for investing activities $ (1,104,858) $ (1,266,385) Net cash used for financing activities $ (1,714,390) $ (4,063,760) The following changes contributed to the net change in cash and cash equivalents from fiscal 2023 to fiscal 2024. 32 Operating Activities Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.
Amortization of Intangibles Fiscal Year 2023 over 2022 2023 2022 $ Change % Change Amortization expenses $ 959,618 $ 1,012,572 $ (52,954) (5) % Amortization expenses as a % of revenue 8 % 8 % Amortization expenses decreased in fiscal 2023 as compared to fiscal 2022, primarily as a result of a portion of our acquired intangible assets becoming fully amortized during fiscal 2023.
Amortization of Intangibles Fiscal Year 2024 over 2023 2024 2023 $ Change % Change Amortization expenses $ 754,784 $ 959,618 $ (204,834) (21) % Amortization expenses as a % of revenue 8 % 8 % Amortization expenses decreased in fiscal 2024 as compared to fiscal 2023, primarily as a result of a portion of our acquired intangible assets becoming fully amortized during fiscal 2023.
Research and Development (R&D) Fiscal Year 2023 over 2022 2023 2022 $ Change % Change R&D expenses $ 1,660,194 $ 1,700,518 $ (40,324) (2) % R&D expenses as a % of revenue 13 % 14 % R&D expenses decreased in fiscal 2023 as compared to fiscal 2022 primarily as a result of lower employee related variable compensation expenses, partially offset by higher salary and benefit expenses. 29 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.
Research and Development (R&D) Fiscal Year 2024 over 2023 2024 2023 $ Change % Change R&D expenses $ 1,487,863 $ 1,660,194 $ (172,331) (10) % R&D expenses as a % of revenue 16 % 13 % R&D expenses decreased in fiscal 2024 as compared to fiscal 2023 primarily as a result of lower R&D employee related variable compensation expenses, partially offset by the impact of an additional week of operations in fiscal 2024 as compared to fiscal 2023. 30 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.
In fiscal 2022, we used a combination of the qualitative and quantitative methods of assessing goodwill for all reporting units. In all periods presented, we concluded the reporting units' fair values exceeded their carrying amounts as of the assessment dates and no risk of impairment existed.
During fiscal 2024 and fiscal 2023, we elected to use the qualitative method of assessing goodwill for all of our reporting units. In all periods presented, we concluded the reporting units’ fair values exceeded their carrying amounts as of the assessment dates and no risk of impairment existed.
Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time. 28 Fiscal 2023 Fiscal 2022 Revenue % of Total Revenue (1) Revenue % of Total Revenue (1) Distributors $ 7,534,894 61 % $ 7,458,478 62 % Direct customers 4,603,166 37 % 4,423,883 37 % Other 167,479 1 % 131,592 1 % Total Revenue $ 12,305,539 100 % $ 12,013,953 100 % _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding.
Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time. 29 Fiscal 2024 Fiscal 2023 Revenue % of Total Revenue (1) Revenue % of Total Revenue (1) Distributors $ 5,505,779 58 % $ 7,534,894 61 % Direct customers 3,772,945 40 % 4,603,166 37 % Other 148,433 2 % 167,479 1 % Total Revenue $ 9,427,157 100 % $ 12,305,539 100 % _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding.
Selling, Marketing, General and Administrative (SMG&A) Fiscal Year 2023 over 2022 2023 2022 $ Change % Change SMG&A expenses $ 1,273,584 $ 1,266,175 $ 7,409 1 % SMG&A expenses as a % of revenue 10 % 11 % SMG&A expenses increased in fiscal 2023 as compared to fiscal 2022, primarily as a result of higher employee related salary and benefit expenses and discretionary spending, partially offset by lower variable compensation expenses and acquisition-related transaction costs.
Selling, Marketing, General and Administrative (SMG&A) Fiscal Year 2024 over 2023 2024 2023 $ Change % Change SMG&A expenses $ 1,068,640 $ 1,273,584 $ (204,944) (16) % SMG&A expenses as a % of revenue 11 % 10 % SMG&A expenses decreased in fiscal 2024 as compared to fiscal 2023, primarily as a result of lower variable compensation expenses, SMG&A employee related salary and benefit expenses and discretionary spending.
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 (OEMs).
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 (OEMs).
Liquidity and Capital Resources At October 28, 2023, our principal source of liquidity was $958.1 million of cash and cash equivalents, of which approximately $201.1 million was held in the United States and the balance of our cash and cash equivalents was held outside the United States in various foreign subsidiaries.
Liquidity and Capital Resources At November 2, 2024, our principal source of liquidity was $2.4 billion of cash, cash equivalents and short-term investments, of which approximately $1.3 billion was held in the United States, with the balance held outside the United States in various foreign subsidiaries.
Current liabilities increased to $3.2 billion at October 28, 2023 from $2.4 billion recorded at the end of fiscal 2022, primarily due to increases in commercial paper notes and current debt, partially offset by lower accrued liabilities.
Current liabilities decreased to $3.0 billion at November 2, 2024 from $3.2 billion recorded at the end of fiscal 2023, primarily due to decreases in accrued liabilities and current debt, partially offset by increases in income taxes payable.
The decrease in cash used for financing activities during fiscal 2023 as compared to fiscal 2022 was primarily the result of the net proceeds from the issuance of commercial paper notes during fiscal 2023 and lower debt repayments, partially offset by higher common stock repurchases.
The decrease in cash used for financing activities during fiscal 2024 as compared to fiscal 2023 was primarily the result of lower common stock repurchases.
Working Capital Fiscal Year 2023 2022 $ Change % Change Accounts receivable, net $ 1,469,734 $ 1,800,462 $ (330,728) (18) % Days sales outstanding (1) 48 50 Inventory $ 1,642,214 $ 1,399,914 $ 242,300 17 % Days cost of sales in inventory (1) 125 106 _______________________________________ (1) We use the average of the current year and prior year ending net accounts receivable and ending inventory balance in our calculation of days sales outstanding and days cost of sales in inventory, respectively.
Working Capital Fiscal Year 2024 2023 $ Change % Change Accounts receivable, net $ 1,336,331 $ 1,469,734 $ (133,403) (9) % Days sales outstanding (1) 54 48 Inventory $ 1,447,687 $ 1,642,214 $ (194,527) (12) % Days cost of sales in inventory (1) 139 125 _______________________________________ (1) We use the average of the current year and prior year ending net accounts receivable and ending inventory balance in our calculation of days sales outstanding and days cost of sales in inventory, respectively.
Our fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October. Fiscal 2023 and fiscal 2022 were 52-week fiscal periods.
Our fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October. Fiscal 2024 was a 53-week fiscal period, while fiscal 2023 was a 52-week fiscal period. The additional week in fiscal 2024 is included in the first quarter ended February 3, 2024.
We expect capital expenditures for fiscal 2024 to be between approximately $600.0 million and $800.0 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.
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 November 25, 2024, our Board of Directors declared a cash dividend of $0.92 per outstanding share of common stock.
Results of Operations Overview Fiscal Year 2023 over 2022 2023 2022 $ Change % Change Revenue $ 12,305,539 $ 12,013,953 $ 291,586 2 % Gross margin % 64.0 % 62.7 % Net income $ 3,314,579 $ 2,748,561 $ 566,018 21 % Net income as a % of revenue 26.9 % 22.9 % Diluted EPS $ 6.55 $ 5.25 $ 1.30 25 % Revenue Trends by End Market The following table summarizes revenue by end market.
Results of Operations Overview Fiscal Year 2024 over 2023 2024 2023 $ Change % Change Revenue $ 9,427,157 $ 12,305,539 $ (2,878,382) (23) % Gross margin % 57.1 % 64.0 % Net income $ 1,635,273 $ 3,314,579 $ (1,679,306) (51) % Net income as a % of revenue 17.3 % 26.9 % Diluted EPS $ 3.28 $ 6.55 $ (3.27) (50) % Revenue Trends by End Market The following table summarizes revenue by end market.
Net Income Fiscal Year 2023 over 2022 2023 2022 $ Change % Change Net income $ 3,314,579 $ 2,748,561 $ 566,018 21 % Net income, as a % of revenue 26.9 % 22.9 % Diluted EPS $ 6.55 $ 5.25 $ 1.30 25 % The increase in net income in fiscal 2023 as compared to fiscal 2022 was a result of a $544.4 million increase in operating income and a $56.8 million decrease in provision for income taxes, partially offset by a $35.2 million increase in nonoperating expense, as more fully described above under the headings Operating Income, Provision for (Benefit From) Income Taxes and Nonoperating (Income) Expense.
Net Income Fiscal Year 2024 over 2023 2024 2023 $ Change % Change Net income $ 1,635,273 $ 3,314,579 $ (1,679,306) (51) % Net income, as a % of revenue 17.3 % 26.9 % Diluted EPS $ 3.28 $ 6.55 $ (3.27) (50) % The decrease in net income in fiscal 2024 as compared to fiscal 2023 was a result of a $1,790.3 million decrease in operating income and a $40.3 million increase in nonoperating expense, partially offset by a $151.4 million decrease in provision for income taxes.
The increase in cash used for investing activities during fiscal 2023 as compared to fiscal 2022 was primarily the result of an increase in cash used for capital expenditures.
The decrease in cash used for investing activities during fiscal 2024 as compared to fiscal 2023 was primarily the result of a decrease in cash used for capital expenditures, partially offset by the net impact of purchases and maturities of short-term investments during fiscal 2024.
Operating Income Fiscal Year 2023 over 2022 2023 2022 $ Change % Change Operating income $ 3,823,112 $ 3,278,700 $ 544,412 17 % Operating income as a % of revenue 31.1 % 27.3 % The increase in operating income in fiscal 2023 as compared to fiscal 2022 was primarily the result of a $344.7 million increase in gross margin, a $113.8 million decrease in special charges, net, a $53.0 million decrease in amortization expenses and a $40.3 million decrease in R&D expenses, partially offset by a $7.4 million increase in SMG&A expenses, as more fully described above under the headings Gross Margin, Special Charges, Net, Amortization of Intangibles, Research and Development (R&D) and Selling, Marketing, General and Administrative (SMG&A).
Operating Income Fiscal Year 2024 over 2023 2024 2023 $ Change % Change Operating income $ 2,032,798 $ 3,823,112 $ (1,790,314) (47) % Operating income as a % of revenue 21.6 % 31.1 % The decrease in operating income in fiscal 2024 as compared to fiscal 2023 was primarily the result of a decrease in revenue which contributed to a decrease in gross margin of $2,495.9 million, partially offset by a $204.9 million decrease in SMG&A expenses, a $204.8 million decrease in amortization expenses, a $172.3 million decrease in R&D expenses and a $123.5 million decrease in special charges, net, as more fully described above.
We currently expect quarterly dividends to continue in future periods, although they remain subject to determination and declaration by our Board of Directors.
The dividend will be paid on December 20, 2024 to all shareholders of record at the close of business on December 9, 2024 and is expected to total approximately $456.6 million. We currently expect quarterly dividends to continue in future periods, although they remain subject to determination and declaration by our Board of Directors.
For fiscal 2023 and fiscal 2022 our pretax income was primarily generated in Ireland at a tax rate of 12.5%. Our effective tax rate for fiscal 2023 also included 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.
For fiscal 2024 and fiscal 2023 our pretax income was primarily generated in Ireland at a tax rate of 12.5%.
Total revenue increased in fiscal 2023 as compared to fiscal 2022 due to the revenue trends discussed above, partially offset by weaker customer demand in China and Rest of Asia primarily due to deteriorating macroeconomic conditions in those regions.
Total revenue decreased in fiscal 2024 as compared to fiscal 2023 in all regions due to weaker macroeconomic conditions as discussed above under the heading Revenue Trends by End Market.
Special Charges, Net Fiscal Year 2023 over 2022 2023 2022 $ Change % Change Special charges, net $ 160,710 $ 274,509 $ (113,799) (41) % Special charges, net as a % of revenue 1 % 2 % Special charges, net decreased in fiscal 2023 as compared to fiscal 2022, primarily due to increased charges recorded in fiscal 2022 related to our Global Repositioning Actions offset by $160.7 million of charges recorded in fiscal 2023 primarily related to $114.0 million recorded for our plan committed to during the three months ended October 28, 2023, to reorganize our business (the Q4 2023 Plan).
Special Charges, Net Fiscal Year 2024 over 2023 2024 2023 $ Change % Change Special charges, net $ 37,258 $ 160,710 $ (123,452) (77) % Special charges, net as a % of revenue — % 1 % Special charges, net decreased in fiscal 2024 as compared to fiscal 2023, primarily due to decreased charges related to our Q4 2023 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 $1.3 billion in fiscal 2023 as we invested to enhance our global resiliency.
As of November 2, 2024, $1.7 billion remained available for repurchase under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. Future repurchases of common stock will be dependent upon our financial position, results of operations, outlook, liquidity and other factors we deem relevant.
The payment of future dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. 33 Contractual Obligations The table below summarizes our material contractual obligations in specified periods as of October 28, 2023: Payment due by period Less than More than (thousands) Total 1 Year 1-3 Years 3-5 Years 5 Years Debt obligations (1) $ 7,064,301 $ 1,047,224 $ 400,000 $ 2,090,212 $ 3,526,865 Interest payments associated with debt obligations 2,253,446 209,595 341,514 273,176 1,429,161 Transition tax (2) 484,244 196,066 288,178 — — Operating leases ( 3) 494,662 80,998 148,565 118,203 146,896 Inventory-related purchase commitments (4) 705,607 170,042 361,255 130,977 43,333 Total $ 11,002,260 $ 1,703,925 $ 1,539,512 $ 2,612,568 $ 5,146,255 _______________________________________ (1) Debt obligations are assumed to be held to maturity.
The payment of future dividends, if any, will be based on several factors, including our financial performance, outlook and liquidity. 34 Contractual Obligations The table below summarizes our material contractual obligations in specified periods as of November 2, 2024: Payment due by period Less than More than (thousands) Total 1 Year 1-3 Years 3-5 Years 5 Years Debt obligations (1) $ 7,664,815 $ 947,738 $ 1,340,212 $ 750,000 $ 4,626,865 Interest payments associated with debt obligations 3,169,308 232,301 433,714 343,339 2,159,954 Investment-related commitments (2) 198,000 33,000 66,000 66,000 33,000 Transition tax (3) 302,141 149,224 152,917 — — Operating leases ( 4) 434,856 83,059 146,604 106,743 98,450 Inventory-related purchase commitments (5) 485,355 153,434 259,236 49,352 23,333 Total $ 12,254,475 $ 1,598,756 $ 2,398,683 $ 1,315,434 $ 6,941,602 _______________________________________ (1) Debt obligations are assumed to be held to maturity.
(2) Tax obligation relates to the one-time tax on deemed repatriated earnings under the Tax Cuts and Jobs Act and includes a reduction resulting from the approval granted by the Joint Committee on Taxation of our federal corporate income tax relief claim which reduced the amount of transition tax owed. (3) Certain of our operating lease obligations include escalation clauses.
(2) Commitments related to certain investments in venture funds directed to our strategic areas of targeted growth in digital biology, life sciences and sustainability, among others. (3) Tax obligation relates to the one-time tax on deemed repatriated earnings under the Tax Cuts and Jobs Act. (4) Certain of our operating lease obligations include escalation clauses.
Gross Margin Fiscal Year 2023 over 2022 2023 2022 $ Change % Change Gross margin $ 7,877,218 $ 7,532,474 $ 344,744 5 % Gross margin % 64.0 % 62.7 % Gross margin percentage in fiscal 2023 increased by 130 basis points compared to fiscal 2022.
Gross Margin Fiscal Year 2024 over 2023 2024 2023 $ Change % Change Gross margin $ 5,381,343 $ 7,877,218 $ (2,495,875) (32) % Gross margin % 57.1 % 64.0 % Gross margin percentage in fiscal 2024 decreased by 690 basis points compared to fiscal 2023, primarily due to lower utilization of our factories due to decreased customer demand and unfavorable product mix.
Revenue Trends by Geographic Region Revenue by geographic region, based upon the geographic location of the distributors or OEMs who purchased the Company's products, for fiscal 2023 and fiscal 2022 was as follows: Fiscal Year 2023 over 2022 2023 2022 $ Change % Change (1) United States $ 4,165,296 $ 4,025,398 $ 139,898 3 % Rest of North and South America 88,579 72,497 16,082 22 % Europe 3,001,871 2,534,423 467,448 18 % Japan 1,397,119 1,221,549 175,570 14 % China 2,229,631 2,563,536 (333,905) (13) % Rest of Asia 1,423,043 1,596,550 (173,507) (11) % Total Revenue $ 12,305,539 $ 12,013,953 $ 291,586 2 % _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding.
Fiscal Year 2024 over 2023 2024 2023 $ Change % Change (1) United States $ 2,840,426 $ 4,165,296 $ (1,324,870) (32) % Rest of North and South America 62,318 88,579 (26,261) (30) % Europe 2,109,529 3,001,871 (892,342) (30) % Japan 1,085,631 1,397,119 (311,488) (22) % China 2,128,840 2,229,631 (100,791) (5) % Rest of Asia 1,200,413 1,423,043 (222,630) (16) % Total Revenue $ 9,427,157 $ 12,305,539 $ (2,878,382) (23) % _______________________________________ (1) The sum of the individual percentages may not equal the total due to rounding.
Fiscal 2023 Fiscal 2022 Revenue % of Total Revenue (1) Y/Y% Revenue % of Total Revenue (1) Industrial $ 6,555,222 53 % 6 % $ 6,186,114 51 % Automotive 2,915,199 24 % 19 % 2,442,705 20 % Communications 1,619,517 13 % (13) % 1,863,156 16 % Consumer 1,215,601 10 % (20) % 1,521,978 13 % Total Revenue $ 12,305,539 100 % 2 % $ 12,013,953 100 % _______________________________________ (1) The su m of the individual percentages may not equal the total due to rounding.
Fiscal 2024 Fiscal 2023 Revenue % of Total Revenue (1) Y/Y% Revenue % of Total Revenue (1) Industrial $ 4,314,280 46 % (35) % $ 6,611,794 54 % Automotive 2,827,439 30 % (2) % 2,876,140 23 % Communications 1,080,496 11 % (33) % 1,606,426 13 % Consumer 1,204,942 13 % (1) % 1,211,179 10 % Total Revenue $ 9,427,157 100 % (23) % $ 12,305,539 100 % _______________________________________ (1) The su m of the individual percentages may not equal the total due to rounding.
Removed
Revenue increased 2% in fiscal 2023 as compared to fiscal 2022 primarily as a result of broad-based demand for our products sold into the Industrial end market, namely aerospace and defense and instrumentation, as well as the Automotive end market, namely cabin electronics and battery management systems.
Added
Therefore, fiscal 2024 includes an additional week of operations as compared to fiscal 2023.
Removed
These increases were partially offset by a decrease in revenue in the Consumer end market primarily due to weakening market trends and a decrease in revenue in the Communications end market due to the timing of infrastructure deployment cycles. Revenue by Sales Channel The following table summarizes revenue by sales channel.
Added
Revenue decreased 23% in fiscal 2024 as compared to fiscal 2023 primarily as a result of weaker macroeconomic trends. This was pronounced in our Industrial end market as customers decreased their inventory balances and in the Communications end market primarily due to the timing of infrastructure deployment cycles.
Removed
Fiscal 2022 included $271.4 million of additional cost of goods sold that did not repeat in fiscal 2023 related to a nonrecurring fair value adjustment recorded to inventory. This increase in gross margin percentage was partially offset by lower utilization of our factories due to decreasing customer demand during fiscal 2023.
Added
The Automotive and Consumer end markets declined to a lesser extent as demand weakened driven by reduced consumer spending. Revenue by Sales Channel The following table summarizes revenue by sales channel. We sell our products globally through a direct sales force, third-party distributors, independent sales representatives and via our website.
Removed
The Q4 2023 Plan, consisting of voluntary and involuntary reductions-in-force, and other cost-savings initiatives, was commenced to adjust our cost structure and business activities to better align with weaker market demand and continued economic uncertainty in our end markets, as well as make certain strategic shifts in our workforce necessary to achieve our long-term vision.
Added
As a percentage of total revenue, the decrease in the distributor channel is primarily due to the decrease in revenue in our Industrial end market. Revenue Trends by Geographic Region Geographic revenue information for fiscal 2024 and fiscal 2023 reflects the geographic location of the distributors or OEMs who purchased the Company’s products.
Removed
Nonoperating Expense (Income) Fiscal Year 2023 over 2022 2023 2022 $ Change % Change Nonoperating expense (income) $ 215,109 $ 179,951 $ 35,158 20 % The year-over-year increase in nonoperating expense in fiscal 2023 as compared to fiscal 2022 was primarily the result of 30 higher interest expense related to our debt obligations and lower net gains from other investments, partially offset by higher interest income.
Added
This may differ from the geographic location of the end customers particularly in cases where a third-party contract manufacturer purchases the Company’s products through distributors.
Removed
The mandatory capitalization requirement decreased our effective tax rate primarily by increasing the foreign-derived intangible income deduction.
Added
The decrease was partially offset by an additional week of operations in fiscal 2024 as compared to fiscal 2023.
Removed
As of October 28, 2023, $2.1 billion remained 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.
Added
Capital Expenditures Net additions to property, plant and equipment were $730.5 million in fiscal 2024 as we invested to enhance our global resiliency and continue to diversify our global manufacturing footprint. We expect capital expenditures for fiscal 2025 to be between approximately 4% and 6% of fiscal 2025 revenue.
Removed
Dividends On November 20, 2023, our Board of Directors declared a cash dividend of $0.86 per outstanding share of common stock. The dividend will be paid on December 14, 2023 to all shareholders of record at the close of business on December 4, 2023 and is expected to total approximately $426.8 million.
Removed
Long-Lived Assets We review property, plant, and equipment and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable.
Removed
Recoverability of these assets is determined by comparison of their carrying value to the estimated future undiscounted cash flows that the assets are expected to generate over their remaining estimated lives.
Removed
If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique.
Removed
Material impairment adjustments related to our property, plant, and equipment are reflected in our financial statements for the periods presented. Any deterioration in our business in the future could lead to such impairment adjustments in future periods.
Removed
Evaluation of impairment of long-lived assets requires estimates of future operating results that are used in the preparation of the expected future undiscounted cash flows. Actual future operating results and the remaining economic lives of our long-lived assets could differ from the estimates used in assessing the recoverability of these assets.
Removed
These differences could 35 result in impairment charges, which could have a material adverse impact on our results of operations. In addition, in certain instances, assets may not be impaired but their estimated useful lives may have decreased. In these situations, we amortize the remaining net book values over the revised useful lives.
Removed
Business Combinations Under the acquisition method of accounting, we recognize tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. We record the excess of the fair value of the purchase consideration over the value of the net assets acquired as goodwill.
Removed
The accounting for business combinations requires us to make significant estimates and assumptions, especially with respect to intangible assets and the fair value of contingent payment obligations. Critical estimates in valuing purchased technology, customer lists and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets.
Removed
If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could experience impairment charges which could be material. In addition, we have estimated the economic lives of certain acquired 36 assets and these lives are used to calculate depreciation and amortization expense.
Removed
If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed. We record contingent consideration resulting from a business combination at its fair value on the acquisition date. We generally determine the fair value of the contingent consideration using the income approach methodology of valuation.
Removed
Each reporting period thereafter, we revalue these obligations and record increases or decreases in their fair value as an adjustment to operating expenses within the Consolidated Statements of Income. Changes in the fair value of the contingent consideration can result from changes in assumed discount periods and rates, and from changes pertaining to the achievement of the defined milestones.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe fair values of our notes as of October 28, 2023 and October 29, 2022, assuming a hypothetical 100 basis point increase in market interest rates, are as follows: October 28, 2023 October 29, 2022 (thousands) Principal Amount Outstanding Fair Value Fair Value given an increase in interest rates of 100 basis points Principal Amount Outstanding Fair Value Fair Value given an increase in interest rates of 100 basis points Commercial paper notes $ 547,225 $ 547,185 $ 546,875 $ — $ — $ — 2024 Notes, due October 2024 500,000 499,473 495,058 500,000 491,982 483,035 2025 Notes, due April 2025 400,000 385,231 380,013 400,000 383,378 374,686 2026 Notes, due December 2026 900,000 851,023 826,888 900,000 851,479 820,203 Maxim Notes, due June 2027 — — — 59,788 54,771 52,534 2027 Notes, due June 2027 440,212 408,595 395,208 440,212 410,091 393,294 2028 Notes, due October 2028 750,000 628,999 600,812 750,000 621,093 588,044 2031 Notes, due October 2031 1,000,000 773,404 721,064 1,000,000 786,772 727,579 2032 Notes, due October 2032 300,000 269,828 251,153 300,000 278,359 257,337 2036 Notes, due December 2036 144,278 118,554 108,085 144,278 126,274 114,389 2041 Notes, due October 2041 750,000 479,078 422,949 750,000 513,709 450,337 2045 Notes, due December 2045 332,587 292,248 259,323 332,587 313,931 276,820 2051 Notes, due October 2051 1,000,000 590,666 507,297 1,000,000 640,766 545,958 39 Foreign Currency Exposure As more fully described in Note 2i, Derivative and Hedging Agreements , of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K, we regularly hedge our non-U.S. dollar-based exposures by entering into forward foreign currency exchange contracts.
Biggest changeThe fair values of our notes as of November 2, 2024 and October 28, 2023, assuming a hypothetical 100 basis point increase in market interest rates, are as follows: November 2, 2024 October 28, 2023 (thousands) Principal Amount Outstanding Fair Value Fair Value given an increase in interest rates of 100 basis points Principal Amount Outstanding Fair Value Fair Value given an increase in interest rates of 100 basis points Commercial paper notes $ 547,738 $ 547,718 $ 547,532 $ 547,225 $ 547,185 $ 546,875 2024 Notes, due October 2024 — — — 500,000 499,473 495,058 2025 Notes, due April 2025 400,000 397,027 395,418 400,000 385,231 380,013 2026 Notes, due December 2026 900,000 882,795 865,439 900,000 851,023 826,888 2027 Notes, due June 2027 440,212 421,077 410,868 440,212 408,595 395,208 2028 Notes, due October 2028 750,000 673,316 648,856 750,000 628,999 600,812 2031 Notes, due October 2031 1,000,000 843,766 792,665 1,000,000 773,404 721,064 2032 Notes, due October 2032 300,000 287,172 268,903 300,000 269,828 251,153 2034 Notes, due April 2034 550,000 553,375 514,043 — — — 2036 Notes, due December 2036 144,278 136,718 124,895 144,278 118,554 108,085 2041 Notes, due October 2041 750,000 534,435 472,539 750,000 479,078 422,949 2045 Notes, due December 2045 332,587 322,942 285,905 332,587 292,248 259,323 2051 Notes, due October 2051 1,000,000 655,668 560,843 1,000,000 590,666 507,297 2054 Notes, due April 2054 550,000 541,912 470,255 — — — 39 Foreign Currency Exposure As more fully described in Note 2i, Derivative and Hedging Agreements , of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K, we regularly hedge our non-U.S. dollar-based exposures by entering into forward foreign currency exchange contracts.
(the Company) as of October 28, 2023 and October 29, 2022, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended October 28, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).
(the Company) as of November 2, 2024 and October 28, 2023, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended November 2, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).
Based on investment positions as of October 28, 2023 and October 29, 2022, a hypothetical 100 basis point increase in interest rates across all maturities would not materially impact the fair market value of the portfolio in either period. If significant, such losses would only be realized if we sold the investments prior to maturity.
Based on investment positions as of November 2, 2024 and October 28, 2023, a hypothetical 100 basis point increase in interest rates across all maturities would not materially impact the fair market value of the portfolio in either period. If significant, such losses would only be realized if we sold the investments prior to maturity.
We also evaluated whether the Company appropriately considered new information that could significantly change the estimated future price protection credits. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1967. Boston, Massachusetts November 21, 2023 42
We also evaluated whether the Company appropriately considered new information that could significantly change the estimated future price protection credits. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1967. Boston, Massachusetts November 26, 2024 42
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 28, 2023 and October 29, 2022, and the results of its operations and its cash flows for each of the three years in the period ended October 28, 2023, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at November 2, 2024 and October 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended November 2, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 28, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 21, 2023 expressed an unqualified opinion thereon.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of November 2, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 26, 2024 expressed an unqualified opinion thereon.
Based on the credit ratings of our counterparties as of October 28, 2023, we do not believe that there is significant risk of nonperformance by them. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of our exposure to credit risk.
Based on the credit ratings of our counterparties as of November 2, 2024, we do not believe that there is significant risk of nonperformance by them. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of our exposure to credit risk.
Relative to the net unhedged foreign currency exposures existing at October 28, 2023 and October 29, 2022, an immediate 10% unfavorable movement in foreign currency exchange rates would result in approximately $66.5 million of losses and $69.5 million of losses, respectively, in changes in earnings or cash flows over the course of the year.
Relative to the net unhedged foreign currency exposures existing at November 2, 2024 and October 28, 2023, an immediate 10% unfavorable movement in foreign currency exchange rates would result in approximately $32.2 million of losses and $66.5 million of losses, respectively, in changes in earnings or cash flows over the course of the year.
Based on our floating rate debt outstanding as of October 28, 2023 and October 29, 2022, inclusive of our commercial paper notes and interest rate swap outstanding, as applicable, our annual interest expense would change by approximately $20.5 million and $5.0 million, respectively, for each 100 basis point increase in interest rates.
Based on our floating rate debt outstanding as of November 2, 2024 and October 28, 2023, inclusive of our commercial paper notes and interest rate swap outstanding, as applicable, our annual interest expense would change by approximately $15.5 million and $20.5 million, respectively, for each 100 basis point increase in interest rates.
As of October 28, 2023, we had $6.5 billion in principal amount of senior unsecured notes outstanding, with a fair value of $5.3 billion. We also had $547.2 million of commercial paper notes outstanding. As commercial paper notes issuances are at then-current rates and with very short maturities, the carrying value will approximate the fair value.
As of November 2, 2024, we had $7.1 billion in principal amount of senior unsecured notes outstanding, with a fair value of $6.3 billion. We also had $547.7 million of commercial paper notes outstanding. As commercial paper notes issuances are at then-current rates and with very short maturities, the carrying value will approximate the fair value.
Based on our cash and marketable securities outstanding as of October 28, 2023 and October 29, 2022, our annual interest income would change by approximately $9.6 million and $14.7 million, respectively, for each 100 basis point increase in interest rates.
Based on our cash and marketable securities outstanding as of November 2, 2024 and October 28, 2023, our annual interest income would change by approximately $19.9 million and $9.6 million, respectively, for each 100 basis point increase in interest rates.
As of October 28, 2023 we had $1.0 billion notional of fixed for floating interest rate swaps outstanding, with the swap payable having a fair value of $81.6 million. A hypothetical 100 basis point increase in interest rates would increase the swap payable by approximately $57.0 million with a corresponding adjustment to the carrying value of the related debt.
As of November 2, 2024 we had $1.0 billion notional of fixed for floating interest rate swaps outstanding, with the swap payable having a fair value of $36.9 million. A hypothetical 100 basis point increase in interest rates would increase the swap payable by approximately $54.0 million with a corresponding adjustment to the carrying value of the related debt.
The following table illustrates the effect that an immediate 10% unfavorable or favorable movement in foreign currency exchange rates, relative to the U.S. dollar, would have on the fair value of our forward exchange contracts as of October 28, 2023 and October 29, 2022: October 28, 2023 October 29, 2022 Fair value of forward exchange contracts $ (11,575) $ (16,984) Fair value of forward exchange contracts after a 10% unfavorable movement in foreign currency exchange rates asset $ 49,284 $ 21,193 Fair value of forward exchange contracts after a 10% favorable movement in foreign currency exchange rates liability $ (70,461) $ (51,604) The calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar.
The following table illustrates the effect that an immediate 10% unfavorable or favorable movement in foreign currency exchange rates, relative to the U.S. dollar, would have on the fair value of our forward exchange contracts as of November 2, 2024 and October 28, 2023: November 2, 2024 October 28, 2023 Fair value of forward exchange contracts $ (8,961) $ (11,575) Fair value of forward exchange contracts after a 10% unfavorable movement in foreign currency exchange rates asset $ 31,564 $ 49,284 Fair value of forward exchange contracts after a 10% favorable movement in foreign currency exchange rates liability $ (45,922) $ (70,461) The calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar.
During 2023, sales to distributors were $7.5 billion net of expected price protection credits and rights of return for which the liability balance as of October 28, 2023 was $525.4 million, of which the vast majority relates to the price protection credits.
During 2024, sales to distributors were $5.5 billion net of expected price protection credits and rights of return for which the liability balance as of November 2, 2024 was $508.7 million, of which the vast majority relates to the price protection credits.

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