ANALOG DEVICES INC [ADI] Filings

10-Q 1 adi-20220730.htm 10-Q adi-20220730

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-7819

Analog Devices, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts

04-2348234

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

One Analog Way,

Wilmington,

01887

(Address of principal executive offices)

(Zip Code)

(781) 935-5565

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $0.16 2/3 par value per share	ADI	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 30, 2022 there were 514,341,531 shares of common stock of the registrant, $0.16 2/3 par value per share, outstanding.

PART I - FINANCIAL INFORMATION


ITEM 1.			Financial Statements

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except per share amounts)


	Three Months Ended				Nine Months Ended
	July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Revenue	$	3,109,880	$	1,758,853	$	8,766,237	$	4,978,718
Cost of sales	1,066,738		537,669		3,376,578		1,575,526
Gross margin	2,043,142		1,221,184		5,389,659		3,403,192
Operating expenses:
Research and development	431,829		306,617		1,279,510		897,005
Selling, marketing, general and administrative	326,942		206,076		929,615		597,963
Amortization of intangibles	252,864		107,783		759,707		323,217
Special charges, net	138,201		(8,938)		244,603		(8,189)
Total operating expenses	1,149,836		611,538		3,213,435		1,809,996
Operating income:	893,306		609,646		2,176,224		1,593,196
Nonoperating expense (income):
Interest expense	51,189		44,659		152,701		130,204
Interest income	(1,797)		(300)		(2,578)		(799)
Other, net	(4,023)		(6,991)		(24,636)		(21,090)
Total nonoperating expense (income)	45,369		37,368		125,487		108,315
Income before income taxes	847,937		572,278		2,050,737		1,484,881
Provision for income taxes	98,952		68,967		238,402		170,146
Net income	$	748,985	$	503,311	$	1,812,335	$	1,314,735

Shares used to compute earnings per common share – basic	517,011		368,476		521,557		368,834
Shares used to compute earnings per common share – diluted	520,550		371,849		525,652		372,457

Basic earnings per common share	$	1.45	$	1.37	$	3.47	$	3.56
Diluted earnings per common share	$	1.44	$	1.35	$	3.45	$	3.53

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)


	Three Months Ended				Nine Months Ended
	July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Net income	$	748,985	$	503,311	$	1,812,335	$	1,314,735
Foreign currency translation adjustments	(9,028)		(2,952)		(31,500)		5,073

Change in fair value of derivative instruments designated as cash flow hedges (net of taxes of $854, $10,657, $1,103 and $6,452, respectively)	2,239		(40,040)		(471)		19,853
Changes in pension plans, net actuarial loss and foreign currency translation adjustments (net of taxes of $88, $85, $275 and $257, respectively)	1,770		964		5,902		(408)
Other comprehensive (loss) income	(5,019)		(42,028)		(26,069)		24,518
Comprehensive income	$	743,966	$	461,283	$	1,786,266	$	1,339,253

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share amounts)


	July 30, 2022		October 30, 2021
ASSETS
Current Assets
Cash and cash equivalents	$	1,524,960	$	1,977,964

Accounts receivable	1,742,646		1,459,056
Inventories	1,203,394		1,200,610



Prepaid expenses and other current assets	218,708		740,687
Total current assets	4,689,708		5,378,317
Non-current Assets

Net property, plant and equipment	2,180,048		1,979,051
Goodwill	26,920,335		26,918,470
Intangible assets, net	13,764,444		15,267,170
Deferred tax assets	2,297,122		2,267,269

Other assets	494,513		511,794
Total non-current assets	45,656,462		46,943,754
TOTAL ASSETS	$	50,346,170	$	52,322,071
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	545,068	$	443,434


Income taxes payable	445,726		332,685
Debt, current	—		516,663

Accrued liabilities	1,450,407		1,477,530
Total current liabilities	2,441,201		2,770,312
Non-current Liabilities
Long-term debt	6,252,839		6,253,212
Deferred income taxes	3,764,370		3,938,830

Income taxes payable	712,982		811,337

Other non-current liabilities	536,187		555,838
Total non-current liabilities	11,266,378		11,559,217

Shareholders’ Equity
Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding	—		—
Common stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 514,341,531 shares outstanding (525,330,672 on October 30, 2021)	85,725		87,554
Capital in excess of par value	28,590,056		30,574,237
Retained earnings	8,175,444		7,517,316
Accumulated other comprehensive loss	(212,634)		(186,565)
Total shareholders’ equity	36,638,591		37,992,542
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	50,346,170	$	52,322,071

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(in thousands)


	Three Months Ended July 30, 2022
				Capital in				Accumulated Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss








BALANCE, APRIL 30, 2022	519,806	$	86,636	$	29,400,284	$	7,820,477	$	(207,615)

Net income						748,985
Dividends declared and paid - $0.76 per share						(394,018)

Issuance of stock under stock plans and other	413	69		9,891
Stock-based compensation expense				84,874
Other comprehensive loss								(5,019)
Common stock repurchased	(5,878)	(980)		(904,993)
BALANCE, JULY 30, 2022	514,341	$	85,725	$	28,590,056	$	8,175,444	$	(212,634)

	Nine Months Ended July 30, 2022
				Capital in				Accumulated Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss
BALANCE, OCTOBER 30, 2021	525,331	$	87,554	$	30,574,237	$	7,517,316	$	(186,565)
Net income						1,812,335
Dividends declared and paid - $2.21 per share						(1,154,207)
Issuance of stock under stock plans and other	2,396	400		29,613
Stock-based compensation expense				242,809
Other comprehensive loss								(26,069)
Common stock repurchased	(13,386)	(2,229)		(2,256,603)
BALANCE, JULY 30, 2022	514,341	$	85,725	$	28,590,056	$	8,175,444	$	(212,634)

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(in thousands)


	Three Months Ended July 31, 2021
				Capital in				Accumulated Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss







BALANCE, MAY 1, 2021	368,827	$	61,472	$	4,724,493	$	7,564,054	$	(182,915)

Net income						503,311
Dividends declared and paid - $0.69 per share						(254,506)
Issuance of stock under stock plans and other	396	66		11,610
Stock-based compensation expense				41,687
Other comprehensive loss								(42,028)
Common stock repurchased	(1,009)	(168)		(163,113)
BALANCE, JULY 31, 2021	368,214	$	61,370	$	4,614,677	$	7,812,859	$	(224,943)

	Nine Months Ended July 31, 2021
				Capital in				Accumulated Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss
BALANCE, OCTOBER 31, 2020	369,485	$	61,582	$	4,949,586	$	7,236,238	$	(249,461)
Net income						1,314,735
Dividends declared and paid - $2.00 per share						(738,114)
Issuance of stock under stock plans and other	2,040	340		55,008
Stock-based compensation expense				118,683
Other comprehensive income								24,518
Common stock repurchased	(3,311)	(552)		(508,600)
BALANCE, JULY 31, 2021	368,214	$	61,370	$	4,614,677	$	7,812,859	$	(224,943)

See accompanying notes.

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Nine Months Ended
	July 30, 2022		July 31, 2021
Cash flows from operating activities:
Net income	$	1,812,335	$	1,314,735
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	212,635		158,937
Amortization of intangibles	1,512,250		436,734

Stock-based compensation expense	242,809		118,683
Non-cash impairment charge	91,953		—
Gain on sale of property, plant, and equipment	(4,352)		(13,557)
Cost of goods sold for inventory acquired	271,396		—
Deferred income taxes	(205,128)		(72,578)
Non-cash operating lease costs	(17,958)		16,855
Other	(7,061)		(14,965)
Changes in operating assets and liabilities	(582,813)		(150,499)
Total adjustments	1,513,731		479,610
Net cash provided by operating activities	3,326,066		1,794,345
Cash flows from investing activities:



Additions to property, plant and equipment	(394,796)		(212,899)



Other	43,761		29,619
Net cash used for investing activities	(351,035)		(183,280)
Cash flows from financing activities:





Proceeds from revolver	400,000		—
Payments on revolver	(400,000)		—
Early termination of debt	(519,116)		—
Dividend payments to shareholders	(1,154,207)		(738,114)
Repurchase of common stock	(1,758,832)		(509,152)
Proceeds from employee stock plans	30,013		55,348

Other	(1,718)		1,952
Net cash used for financing activities	(3,403,860)		(1,189,966)
Effect of exchange rate changes on cash	(24,175)		3,742
Net (decrease) increase in cash and cash equivalents	(453,004)		424,841
Cash and cash equivalents at beginning of period	1,977,964		1,055,860
Cash and cash equivalents at end of period	$	1,524,960	$	1,480,701

See accompanying notes.

ANALOG DEVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JULY 30, 2022 (UNAUDITED)

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

Note 1 – Basis of Presentation

In the opinion of management, the information furnished in the accompanying condensed consolidated financial statements reflects all normal recurring adjustments that are necessary to fairly state the results for these interim periods and should be read in conjunction with Analog Devices, Inc.’s (the Company) Annual Report on Form 10-K for the fiscal year ended October 30, 2021 (fiscal 2021) and related notes. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending October 29, 2022 (fiscal 2022) or any future period.

The Company has a 52-53 week fiscal year that ends on the Saturday closest to the last day in October. Certain amounts reported in previous periods have been reclassified to conform to the fiscal 2022 presentation.

On August 26, 2021 (Acquisition Date), the Company completed the acquisition of Maxim Integrated Products, Inc. (Maxim), an independent manufacturer of innovative analog and mixed-signal products and technologies. The acquisition of Maxim is referred to as the Acquisition. The consolidated financial statements included in this Quarterly Report on Form 10-Q include the financial results of Maxim prospectively from the Acquisition Date. See Note 14, Acquisitions, in these Notes to Condensed Consolidated Financial Statements for additional information.

Note 2 – Shareholders' Equity

In fiscal 2021, the Company entered into accelerated share repurchase agreements (ASR) with third party financial institutions, paid $2.5 billion and received an initial delivery of 12.3 million shares of common stock, which represented approximately 80% of the notional amount of the ASR. As of October 30, 2021, the Company recorded the remaining 20%, or $500.0 million, within Prepaid expenses and other current assets on the Consolidated Balance Sheet, which was utilized during the first quarter of fiscal 2022. During the first quarter of fiscal 2022, the ASR was completed and an additional 2.1 million shares of common stock were received as final settlement of the ASR. In total, the Company repurchased 14.4 million shares under the ASR at an average price per share of $173.77.

As of July 30, 2022, the Company had repurchased a total of approximately 184.3 million shares of its common stock for approximately $10.9 billion under the Company's share repurchase program. As of July 30, 2022, an additional $5.7 billion remains available for repurchase of shares under the current authorized program. The Company also repurchases shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock units/awards or the exercise of stock options. Future repurchases of common stock will be dependent upon the Company's financial position, results of operations, outlook, liquidity and other factors deemed relevant by the Company.

Note 3 – Accumulated Other Comprehensive (Loss) Income

The following table provides the changes in accumulated other comprehensive (loss) income (AOCI) by component and the related tax effects during the first nine months of fiscal 2022.


	Foreign currency translation adjustment		Unrealized holding gains (losses) on derivatives		Pension plans		Total
October 30, 2021	$	(25,795)	$	(123,754)	$	(37,016)	$	(186,565)
Other comprehensive (loss) income before reclassifications	(31,500)		(27,471)		4,513		(54,458)
Amounts reclassified out of other comprehensive income	—		28,103		1,664		29,767
Tax effects	—		(1,103)		(275)		(1,378)
Other comprehensive (loss) income	(31,500)		(471)		5,902		(26,069)

July 30, 2022	$	(57,295)	$	(124,225)	$	(31,114)	$	(212,634)

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


	Three Months Ended				Nine Months Ended
Comprehensive (Loss) Income Component	July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021		Location
Unrealized holding (gains) losses on derivatives
Currency forwards	$	2,520	$	(351)	$	6,384	$	(3,700)	Cost of sales
	1,320		(283)		3,903		(2,138)		Research and development
	2,265		28		6,623		(1,796)		Selling, marketing, general and administrative

Interest rate derivatives	3,731		464		11,193		1,391		Interest expense

	9,836		(142)		28,103		(6,243)		Total before tax
	(423)		(28)		(3,209)		505		Tax

	$	9,413	$	(170)	$	24,894	$	(5,738)	Net of tax

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


Actuarial losses	529		747		1,664		2,245
	(88)		(85)		(275)		(257)		Tax
	$	441	$	662	$	1,389	$	1,988	Net of tax

Total amounts reclassified out of AOCI, net of tax	$	9,854	$	492	$	26,283	$	(3,750)

Note 4 – Earnings Per Share

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


	Three Months Ended				Nine Months Ended
	July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Net Income	$	748,985	$	503,311	$	1,812,335	$	1,314,735



Basic shares:
Weighted-average shares outstanding	517,011		368,476		521,557		368,834
Earnings per common share basic:	$	1.45	$	1.37	$	3.47	$	3.56
Diluted shares:
Weighted-average shares outstanding	517,011		368,476		521,557		368,834
Assumed exercise of common stock equivalents	3,539		3,373		4,095		3,623
Weighted-average common and common equivalent shares	520,550		371,849		525,652		372,457
Earnings per common share diluted:	$	1.44	$	1.35	$	3.45	$	3.53
Anti-dilutive shares related to:
Outstanding stock-based awards	755		645		559		502

Note 5 – Special Charges, Net

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


Accrued Special Charges	Closure of Manufacturing Facilities		Global Repositioning Actions















































Balance at October 30, 2021	$	25,774	$	21,065
Employee severance and benefit costs	75		44,411
Facility closure costs	6,513		—
Severance and benefit payments	(4,016)		(25,776)
Facility closure cost payments	(6,513)		—
Effect of foreign currency on accrual	—		(54)
Balance at January 29, 2022	$	21,833	$	39,646
Employee severance and benefit costs	—		39,610
Facility closure costs	4,287		—
Severance and benefit payments	(14,026)		(25,608)
Facility closure cost payments	(4,287)		—
Effect of foreign currency on accrual	—		(156)
Balance at April 30, 2022	$	7,807	$	53,492
Employee severance and benefit costs	—		49,712
Facility closure costs	888		—
Severance and benefit payments	(4,663)		(44,638)
Facility closure cost payments	(1,303)		—
Effect of foreign currency on accrual	—		(35)
Balance at July 30, 2022	$	2,729	$	58,531

Closure of Manufacturing Facilities

The Company recorded net special charges of $63.4 million on a cumulative basis through July 30, 2022 as a result of its decision to consolidate certain wafer and test facility operations acquired as part of the acquisition of Linear Technology Corporation.

During the third quarter of fiscal 2022, the Company completed the sale of its Hillview wafer fabrication facility and certain equipment located in Milpitas, California, which were previously classified as held for sale, for approximately $31.8 million, which resulted in a gain of $4.4 million. During fiscal 2021, the Company completed the sale of its facility and certain equipment in Singapore, which were previously classified as held for sale, for approximately $35.7 million, which resulted in a gain of $13.6 million.

Global Repositioning Actions

The Company recorded net special charges of $458.1 million on a cumulative basis through July 30, 2022, as part of the integration of the Acquisition and continued organizational initiatives to consolidate its footprint related to certain manufacturing, engineering, sales, marketing and administrative offices and to better align its global workforce with the Company's long-term strategic plan.

In connection with the Company’s decision during the third quarter of fiscal 2022 to transition its engineering, sales, marketing and administrative activities from its leased property in Santa Clara, California to its owned property in San Jose, California, the Company entered into a sublease agreement for a portion of the leased property and intends to sublease the remainder of this property. As a result of the sublease transaction, the Company recorded an impairment charge of $91.9 million in net special charges which represented the excess carrying value of the associated asset group over its estimated fair value. The Company estimated fair value using cash flows from the estimated net sublease rental income discounted at a market rate. The Company allocated $60.6 million, $28.1 million and $3.2 million of the impairment charge to right of use assets, leasehold improvements and office equipment, respectively.

Special charges also included $145.2 million in the first nine months of fiscal 2022 primarily consisting of $153.5 million of severance and benefit costs as well as charges recorded from the acceleration of equity awards in connection with the termination of certain employees in manufacturing, engineering and selling, marketing, general and administrative roles at sites assumed related to the Acquisition and various locations throughout the world. These charges were partially offset by a gain of $8.3 million recognized upon the sale of a business.

Note 6 - Commitments and Contingencies

On March 17, 2022, Walter E. Ryan and Ryan Asset Management, LLC, purported stockholders of Maxim, filed a putative class action in the Court of Chancery of the State of Delaware (C.A. No. 2022—0255) against the Company and the former directors of Maxim. The complaint alleges breach of fiduciary duties by the individual defendants in connection with Maxim’s agreement, as part of the merger negotiations with the Company, to suspend Maxim dividends for up to four quarters prior to the closing of the Acquisition. The complaint further alleges that the Company aided and abetted that alleged breach of fiduciary duties. The plaintiffs seek damages in an amount to be determined at trial, plaintiffs’ costs and disbursements, including reasonable attorneys’ and experts’ fees, costs and other expenses. The Company believes that it and the other defendants have meritorious defenses to these allegations; however, the Company is currently unable to determine the ultimate outcome of this matter or determine an estimate, or a range of estimates, of potential losses, if any.

Note 7 – Revenue

Revenue Trends by End Market

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


	Three Months Ended
	July 30, 2022						July 31, 2021
	Revenue		% of Revenue*		Y/Y%		Revenue		% of Revenue*
Industrial	$	1,555,070	50	%	55	%	$	1,006,383	57	%
Automotive	659,090		21	%	127	%	290,182		16	%
Communications	490,732		16	%	69	%	290,391		17	%
Consumer	404,988		13	%	136	%	171,897		10	%


Total revenue	$	3,109,880	100	%	77	%	$	1,758,853	100	%


	Nine Months Ended
	July 30, 2022						July 31, 2021
	Revenue		% of Revenue*		Y/Y%		Revenue		% of Revenue*
Industrial	$	4,402,912	50	%	55	%	$	2,841,665	57	%
Automotive	1,844,017		21	%	132	%	794,739		16	%
Communications	1,376,182		16	%	62	%	850,153		17	%
Consumer	1,143,126		13	%	132	%	492,161		10	%
Total revenue	$	8,766,237	100	%	76	%	$	4,978,718	100	%
* The sum of the individual percentages may not equal the total due to rounding.

Revenue by Sales Channel

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


	Three Months Ended
	July 30, 2022				July 31, 2021
Channel	Revenue		% of Revenue*		Revenue		% of Revenue*
Distributors	$	1,922,982	62	%	$	1,123,301	64	%
Direct customers	1,146,538		37	%	588,001		33	%
Other	40,360		1	%	47,551		3	%
Total revenue	$	3,109,880	100	%	$	1,758,853	100	%

	Nine Months Ended
	July 30, 2022				July 31, 2021
Channel	Revenue		% of Revenue*		Revenue		% of Revenue*
Distributors	$	5,426,024	62	%	$	3,162,615	64	%
Direct customers	3,241,429		37	%	1,724,012		35	%
Other	98,784		1	%	92,091		2	%
Total revenue	$	8,766,237	100	%	$	4,978,718	100	%
* The sum of the individual percentages may not equal the total due to rounding.

Note 8 – Fair Value

The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The tables below, set forth by level, presents the Company’s financial assets and liabilities, excluding accrued interest components that were accounted for at fair value on a recurring basis as of July 30, 2022 and October 30, 2021. The tables exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of July 30, 2022 and October 30, 2021, the Company held $951.9 million and $1,315.0 million, respectively, of cash that was excluded from the tables below.


	July 30, 2022
	Fair Value measurement at Reporting Date using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds	$	573,019	$	—	$	573,019















Other assets:
Deferred compensation plan investments	68,128		—		68,128


Total assets measured at fair value	$	641,147	$	—	$	641,147
Liabilities

Forward foreign currency exchange contracts (1)	$	—	$	23,677	$	23,677

Total liabilities measured at fair value	$	—	$	23,677	$	23,677

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


	October 30, 2021
	Fair Value measurement at Reporting Date using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds	$	662,997	$	—	$	662,997









Other assets:

Deferred compensation plan investments	71,301		—		71,301

Total assets measured at fair value	$	734,298	$	—	$	734,298
Liabilities

Forward foreign currency exchange contracts (1)	$	—	$	8,085	$	8,085

Total liabilities measured at fair value	$	—	$	8,085	$	8,085

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Cash equivalents — These investments are adjusted to fair value based on quoted market prices or are determined using a yield curve model based on current market rates.

Deferred compensation plan investments — The fair value of these mutual fund, money market fund and equity investments are based on quoted market prices.

Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow hedges, is based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking into consideration current interest rates as well as the creditworthiness of the counterparty for assets and the Company’s creditworthiness for liabilities. The fair value of these instruments is based upon valuation models using current market information such as strike price, spot rate, maturity date and volatility.

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

Santa Clara, California leased property asset group — As a result of a sublease transaction involving a leased property in Santa Clara, California during the third quarter of 2022, the Company estimated the fair value of the sublease assets using discounted cash flows from the estimated net sublease rental income discounted at a market rate and recorded an impairment charge which represented the excess carrying value of the asset group associated with the Santa Clara, California leased property over its estimated fair value. These assets are considered a Level 2 fair value measurement. See Note 5, Special Charges, Net, in these Notes to Condensed Consolidated Financial Statements for additional information.

Debt — The table below presents the estimated fair value of certain financial instruments not recorded at fair value on a recurring basis. The fair values of the senior unsecured notes are obtained from broker prices and are classified as Level 1 measurements according to the fair value hierarchy.


	July 30, 2022				October 30, 2021
	Principal Amount Outstanding		Fair Value		Principal Amount Outstanding		Fair Value
Maxim 2023 Notes, due March 2023	$	—	$	—	$	500,000	$	520,236
2024 Notes, due October 2024	500,000		489,243		500,000		500,482
2025 Notes, due April 2025	400,000		395,881		400,000		423,265
2026 Notes, due December 2026	900,000		907,976		900,000		986,243
Maxim 2027 Notes, due June 2027	500,000		488,514		500,000		542,942
2028 Notes, due October 2028	750,000		678,323		750,000		743,109
2031 Notes, due October 2031