What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-24 compared with 2023-02-15 · 96 added, 64 removed, 156 unchanged (51% of the section changed)

5 unchanged sentences

Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “could” and “will,” and variations of such words and similar expressions are intended to identify such forward-looking statements.

In addition, any statements that refer to projections regarding our future financial performance;

In addition, any statements that refer to projections regarding our future financial performance or results;

our anticipated growth and trends in our businesses;

4 unchanged sentences

our future liquidity, capital needs and capital expenditures;

our development of technologies and research and development investments;

our development of technologies and processes and research and development investments;

our future market position and expected competitive changes in the marketplace for our products;

2 unchanged sentences

servicing our outstanding debt;

our plans to borrow under our Revolving Credit Agreement and planned use of proceeds from such borrowing;

our plans to borrow under our Revolving Credit Agreement and issue notes under our commercial paper program and the planned use of proceeds from such borrowing and issuing;

our expected tax rate;

2 unchanged sentences

the effect of new accounting pronouncements;

our plans to integrate or realize the benefits or synergies expected of acquired businesses and technologies, including the acquired business, operations and employees of Maxim Integrated Products, Inc.;

our continued initiatives to consolidate our footprint related to our business units including our manufacturing, engineering, sales, marketing and administrative offices;

our plans to integrate or realize the benefits or synergies expected of acquired businesses and technologies;

our continued initiatives to consolidate our footprint related to our business units;

and other characterizations of future events or circumstances are forward-looking statements.

4 unchanged sentences

Three Months Ended

January 28, 2023 January 29, 2022 $ Change % Change

April 29, 2023 April 30, 2022 $ Change % Change

Revenue $ 3,262,930 $ 2,972,064 $ 290,866 10 %

3 unchanged sentences

Diluted EPS $ 1.92 $ 1.49 $ 0.43 29 %

Six Months Ended

April 29, 2023 April 30, 2022 $ Change % Change

Revenue $ 6,512,560 $ 5,656,357 $ 856,203 15 %

Gross margin % 65.5 % 59.2 %

Net income $ 1,939,130 $ 1,063,350 $ 875,780 82 %

Net income as a % of revenue 29.8 % 18.8 %

Diluted EPS $ 3.80 $ 2.01 $ 1.79 89 %

Revenue Trends by End Market

5 unchanged sentences

Three Months Ended

January 28, 2023 January 29, 2022

April 29, 2023 April 30, 2022

Revenue* Y/Y% Revenue % of

4 unchanged sentences

Total revenue $ 3,262,930 100 % 10 % $ 2,972,064 100 %

Six Months Ended

April 29, 2023 April 30, 2022

Revenue* Y/Y% Revenue % of

Industrial $ 3,438,006 53 % 21 % $ 2,849,577 50 %

Automotive 1,498,178 23 % 27 % 1,183,985 21 %

Communications 941,735 14 % 6 % 887,663 16 %

Consumer 634,641 10 % (14) % 735,132 13 %

Total revenue $ 6,512,560 100 % 15 % $ 5,656,357 100 %

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

Revenue increased 21% in the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year, primarily as a result of broad-based demand for our products sold into the Industrial, Automotive and Communications end markets, partially offset by a decrease in revenue in the Consumer end market primarily due to weakening market trends.

Revenue increased 10% and 15% in the three- and six-month periods ended April 29, 2023, respectively, as compared to the same periods of the prior fiscal year, primarily as a result of broad-based demand for our products sold into the Industrial and Automotive end markets, partially offset by a decrease in revenue in the Consumer end market primarily due to weakening market trends.

The Communications end market also decreased in the three-month period ended April 29, 2023 as compared to the same period of the prior fiscal year due to the timing of infrastructure deployment cycles.

Revenue by Sales Channel

6 unchanged sentences

Three Months Ended

January 28, 2023 January 29, 2022

April 29, 2023 April 30, 2022

Revenue % of Revenue* Revenue % of Revenue*

3 unchanged sentences

Total revenue $ 3,262,930 100 % $ 2,972,064 100 %

Six Months Ended

April 29, 2023 April 30, 2022

Revenue % of Revenue* Revenue % of Revenue*

Distributors $ 4,007,733 62 % $ 3,503,042 62 %

Direct customers 2,420,320 37 % 2,094,891 37 %

Other 84,507 1 % 58,424 1 %

Total revenue $ 6,512,560 100 % $ 5,656,357 100 %

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

As indicated in the table above, the percentage of total revenue sold via each channel has remained relatively consistent in the periods presented, but can fluctuate from time to time based on end customer demand.

Three Months Ended

January 28, 2023 January 29, 2022 $ Change % Change

Three Months Ended Six Months Ended

April 29, 2023 April 30, 2022 $ Change % Change April 29, 2023 April 30, 2022 $ Change % Change

Gross margin $ 2,144,546 $ 1,944,520 $ 200,026 10 % $ 4,268,887 $ 3,346,517 $ 922,370 28 %

Gross margin % 65.7 % 65.4 % 65.5 % 59.2 %

Gross margin percentage increased by 1,320 basis points in the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year primarily as a result of additional cost of goods sold of $271.4 million related to a nonrecurring fair value adjustment recorded to inventory as a result of the acquisition of Maxim Integrated Products, Inc.

(Maxim) included in the three-month period ended January 29, 2022.

The remainder of the increase primarily related to favorable product mix and synergies related to the acquisition of Maxim.

Gross margin percentage increased by 30 and 630 basis points in the three- and six-month periods ended April 29, 2023, respectively, as compared to the same period of the prior fiscal year.

The increase in the three-month period ended April 29, 2023 primarily related to favorable product mix.

The increase in the six-month period ended April 29, 2023 was primarily as a result of additional cost of goods sold of $271.4 million related to a nonrecurring fair value adjustment recorded to inventory in the six-month period ended April 30, 2022 as a result of the acquisition of Maxim Integrated Products, Inc.

The remainder of the increase in the six-month period ended April 29, 2023 primarily related to favorable product mix and synergies related to the acquisition of Maxim.

Research and Development (R&D)

Three Months Ended

January 28, 2023 January 29, 2022 $ Change % Change

Three Months Ended Six Months Ended

April 29, 2023 April 30, 2022 $ Change % Change April 29, 2023 April 30, 2022 $ Change % Change

R&D expenses $ 415,754 $ 420,901 $ (5,147) (1) % $ 829,849 $ 847,681 $ (17,832) (2) %

R&D expenses as a % of revenue 13 % 14 % 13 % 15 %

R&D expenses decreased in the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year, primarily as a result of lower salary and benefit expenses and lower discretionary spending, partially offset by higher R&D employee-related variable compensation expenses.

R&D expenses decreased both in the three- and six-month periods ended April 29, 2023, as compared to the same periods of the prior fiscal year.

In the three-month period ended April 29, 2023, the decrease was primarily a result of lower R&D employee-related variable compensation expenses and lower salary and benefit expenses, partially offset by higher discretionary spending.

In the six-month period ended April 29, 2023, the decrease was primarily a result of lower salary and benefit expenses and lower discretionary spending, partially offset by higher R&D employee-related variable compensation expenses.

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.

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Selling, Marketing, General and Administrative (SMG&A)

Three Months Ended

January 28, 2023 January 29, 2022 $ Change % Change

Three Months Ended Six Months Ended

April 29, 2023 April 30, 2022 $ Change % Change April 29, 2023 April 30, 2022 $ Change % Change

SMG&A expenses $ 324,251 $ 305,308 $ 18,943 6 % $ 650,535 $ 602,673 $ 47,862 8 %

SMG&A expenses as a % of revenue 10 % 10 % 10 % 11 %

SMG&A expenses increased in the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year, primarily as a result of higher variable compensation expenses, salary and benefit expenses and discretionary spending, partially offset by lower acquisition-related transaction costs.

SMG&A expenses increased in both the three- and six-month periods ended April 29, 2023, as compared to the same period of the prior fiscal year, primarily as a result of higher salary and benefit expenses and discretionary spending, partially offset by lower acquisition-related transaction costs.

The six-month period ended April 29, 2023 was also impacted by higher SMG&A employee-related variable compensation expenses.

Amortization of Intangibles

Three Months Ended

January 28, 2023 January 29, 2022 $ Change % Change

Three Months Ended Six Months Ended

April 29, 2023 April 30, 2022 $ Change % Change April 29, 2023 April 30, 2022 $ Change % Change

Amortization expenses $ 253,021 $ 253,476 $ (455) — % $ 506,163 $ 506,843 $ (680) — %

Amortization expenses as a % of revenue 8 % 9 % 8 % 9 %

Amortization expenses were relatively flat in the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year.

Amortization expenses were relatively flat in both the three- and six-month periods ended April 29, 2023, as compared to the same periods of the prior fiscal year.

Special Charges, Net

Three Months Ended

January 28, 2023 January 29, 2022 $ Change % Change

Special charges, net $ — $ 59,728 $ (59,728) n/a

Three Months Ended Six Months Ended

April 29, 2023 April 30, 2022 $ Change % Change April 29, 2023 April 30, 2022 $ Change % Change

Special charges, net $ 23,136 $ 46,674 $ (23,538) (50) % $ 23,136 $ 106,402 $ (83,266) (78) %

Special charges, net as a % of revenue 1 % 2 % — % 2 %

Special charges, net decreased in the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year, primarily as a result of charges recorded in the first quarter of fiscal 2022 as part of the integration of Maxim and continued organizational initiatives to better align our global workforce with our long-term strategic plan.

Special charges, net decreased in both the three- and six-month periods ended April 29, 2023, as compared to the same periods of the prior fiscal year, primarily as a result of higher charges recorded in the first half of fiscal 2022 as part of the integration of Maxim and continued organizational initiatives to better align our global workforce with our long-term strategic plan.

Operating Income

Three Months Ended

January 28, 2023 January 29, 2022 $ Change % Change

Three Months Ended Six Months Ended

April 29, 2023 April 30, 2022 $ Change % Change April 29, 2023 April 30, 2022 $ Change % Change

Operating income $ 1,128,384 $ 918,161 $ 210,223 23 % $ 2,259,204 $ 1,282,918 $ 976,286 76 %

Operating income as a % of revenue 34.6 % 30.9 % 34.7 % 22.7 %

The year-over-year increase in operating income in the three-month period ended January 28, 2023 was primarily the result of an increase in revenue of $565.3 million, which contributed to an increase in gross margin of $722.3 million, and decreases of $59.7 million in special charges, net and $12.7 million in R&D expenses, offset by an increase of $28.9 million in SMG&A expenses .

The year-over-year increase in operating income in the three-month period ended April 29, 2023 was primarily the result of an increase in revenue of $290.9 million, which contributed to an increase in gross margin of $200.0 million, and decreases of $23.5 million in special charges, net and $5.1 million in R&D expenses, partially offset by an increase of $18.9 million in SMG&A expenses .

The year-over-year increase in operating income in the six-month period ended April 29, 2023 was primarily the result of an increase in revenue of $856.2 million and an increase in gross margin percent, which contributed to an increase in gross margin of $922.4 million, and decreases of $83.3 million in special charges, net and $17.8 million in R&D expenses, partially offset by an increase of $47.9 million in SMG&A expenses .

Nonoperating Expense (Income)

Three Months Ended

January 28, 2023 January 29, 2022 $ Change

Three Months Ended Six Months Ended

April 29, 2023 April 30, 2022 $ Change April 29, 2023 April 30, 2022 $ Change

Total nonoperating expense (income) $ 40,461 $ 38,916 $ 1,545 $ 97,808 $ 80,118 $ 17,690

The year-over-year increase in nonoperating expense (income) in the three-month period ended January 28, 2023 as compared to the same period of the prior year was the result of higher interest expense related to our debt obligations and lower net gains from other investments.

The year-over-year increase in nonoperating expense (income) in the three-month period ended April 29, 2023 as compared to the same period of the prior year was the result of higher interest expense related to our debt obligations partially offset by higher interest income.

The year-over-year increase in nonoperating expense (income) in the six-month period ended April 29, 2023 as compared to the same period of the prior year was the result of higher interest expense related to our debt obligations and lower net gains from other investments partially offset by higher interest income.

Provision for Income Taxes

Three Months Ended

January 28, 2023 January 29, 2022 $ Change

Three Months Ended Six Months Ended

April 29, 2023 April 30, 2022 $ Change April 29, 2023 April 30, 2022 $ Change

Provision for income taxes $ 110,267 $ 95,972 $ 14,295 $ 222,266 $ 139,450 $ 82,816

Effective income tax rate 10.1 % 10.9 % 10.3 % 11.6 %

The effective tax rates for the three-month periods ended January 28, 2023 and January 29, 2022 were below the U.S.

The effective tax rates for both the three- and six-month periods ended April 29, 2023 and April 30, 2022 were below the U.S.

statutory tax rate of 21% due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income.

Our pretax income for the three-month periods ended January 28, 2023 and January 29, 2022 was primarily generated in Ireland at a tax rate of 12.5%.

The Company's effective tax rate for the three-month period ended January 28, 2023 also includes the effects of the mandatory capitalization and amortization of research and development expenses which began in fiscal 2023 under the 2017 Tax Cuts and Jobs Act.

Our pretax income for the three- and six-month periods ended April 29, 2023 and April 30, 2022 was primarily generated in Ireland at a tax rate of 12.5%.

The Company's effective tax rate for the three- and six-month periods ended April 29, 2023 also included the effects of the mandatory capitalization and amortization of research and development expenses which began in fiscal 2023 under the 2017 Tax Cuts and Jobs Act.

The mandatory capitalization requirement decreased our effective tax rate primarily by increasing the foreign-derived intangible income deduction.

See Note 12, Income Taxes , in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

Three Months Ended

January 28, 2023 January 29, 2022 $ Change % Change

Three Months Ended Six Months Ended

April 29, 2023 April 30, 2022 $ Change % Change April 29, 2023 April 30, 2022 $ Change % Change

Net Income $ 977,656 $ 783,273 $ 194,383 25 % $ 1,939,130 $ 1,063,350 $ 875,780 82 %

1 unchanged sentence

Diluted EPS $ 1.92 $ 1.49 $ 3.80 $ 2.01

Net income increased in the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year, as a result of a $766.1 million increase in operating income, partially offset by a $68.5 million increase in provision for income taxes and a $16.1 million increase in nonoperating expense (income).

Net income increased in the three-month period ended April 29, 2023, as compared to the same period of the prior fiscal year, as a result of a $210.2 million increase in operating income, partially offset by a $14.3 million increase in provision for income taxes.

Net income increased in the six-month period ended April 29, 2023, as compared to the same period of the prior fiscal year, as a result of a $976.3 million increase in operating income, partially offset by a $82.8 million increase in provision for income taxes.

Liquidity and Capital Resources

At January 28, 2023, our principal source of liquidity was $1,670.5 million of cash and cash equivalents, of which approximately $386.6 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.

At April 29, 2023, our principal source of liquidity was $1,177.6 million of cash and cash equivalents, of which approximately $339.4 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.

We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States.

3 unchanged sentences

We believe that our existing sources of liquidity and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing, will be sufficient to fund operations, capital expenditures, research and development efforts and dividend payments (if any) in the immediate future and for at least the next twelve months.

Three Months Ended

January 28, 2023 January 29, 2022

Six Months Ended

April 29, 2023 April 30, 2022

Net cash provided by operating activities $ 2,487,886 $ 2,078,220

2 unchanged sentences

Net cash used for financing activities $ (2,320,272) $ (2,085,454)

The following changes contributed to the net change in cash and cash equivalents in the three-month period ended January 28, 2023 as compared to the same period in fiscal 2022.

The following changes contributed to the net change in cash and cash equivalents in the six-month period ended April 29, 2023 as compared to the same period in fiscal 2022.

Operating Activities

Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities.

The increase in cash provided by operating activities during the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year, was the result of higher net income adjusted for noncash items offset by changes in working capital.

The increase in cash provided by operating activities during the six-month period ended April 29, 2023, as compared to the same period of the prior fiscal year, was the 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 increase in cash used for investing activities during the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year, was primarily the result of an increase in cash used for capital expenditures.

The increase in cash used for investing activities during the six-month period ended April 29, 2023, as compared to the same period of the prior fiscal year, was primarily the result of an increase in cash used for capital expenditures.

Financing Activities

Financing cash flows generally consist of payments of dividends to stockholders, repurchases of common stock, issuance and repayment of debt and proceeds from the sale of shares of common stock pursuant to employee equity incentive plans.

The increase in cash used for financing activities during the three-month period ended January 28, 2023, as compared to the same period of the prior fiscal year, was primarily the result of higher common stock repurchases partially offset by the early termination of debt in the first quarter of fiscal 2022.

The increase in cash used for financing activities during the six-month period ended April 29, 2023, as compared to the same period of the prior fiscal year, was primarily the result of higher common stock repurchases and lower debt repayments, partially offset by proceeds from the issuance of commercial paper notes.

Working Capital

January 28, 2023 October 29, 2022 $ Change % Change

April 29, 2023 October 29, 2022 $ Change % Change

Accounts receivable $ 1,616,256 $ 1,800,462 $ (184,206) (10) %

8 unchanged sentences

Our inventory levels are impacted by our need to support forecasted sales demand and variations between those forecasts and actual demand.

Current liabilities were relatively flat at approximately $2,433.7 million at January 28, 2023 and approximately $2,442.7 million at the end of fiscal 2022.

This was due to higher income taxes payable offset by lower accrued liabilities and accounts payable.

As of January 28, 2023, our debt obligations consisted of the following:

Current liabilities increased to $2,646.4 million at April 29, 2023 as compared to $2,442.7 million at the end of fiscal 2022 due to an increase in commercial paper notes and income taxes payable, partially offset by lower accrued liabilities.

As of April 29, 2023, our debt obligations consisted of the following:

Principal Amount Outstanding

2 unchanged sentences

2026 Notes, due December 2026 900,000

Maxim 2027 Notes, due June 2027 59,788

2027 Notes, due June 2027 440,212

11 unchanged sentences

and consolidate with or merge into, or transfer or lease all or substantially all of our assets to, any other party.

As of January 28, 2023, we were in compliance with these covenants.

As of April 29, 2023, we were in compliance with these covenants.

Commercial Paper Program

On April 14, 2023, we established a commercial paper program under which we may issue short-term, unsecured commercial paper notes in an amount up to a maximum aggregate face amount of $2.5 billion outstanding at any time, with maturities up to 397 days from the date of issuance.

As of April 29, 2023, we had $253.6 million of outstanding borrowings under the commercial paper program recorded in the Condensed 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.

Revolving Credit Facility

Our Third Amended and Restated Revolving Credit Agreement, dated as of June 23, 2021 and as amended, provides for a five year unsecured revolving credit facility in an aggregate principal amount not to exceed $2.5 billion (subject to certain terms and conditions).

Our Third Amended and Restated Revolving Credit Agreement, dated as of June 23, 2021 and as amended (Revolving Credit Agreement), provides for a five year unsecured revolving credit facility in an aggregate principal amount not to exceed $2.5 billion (subject to certain terms and conditions).

We may borrow under this revolving credit facility in the future and use the proceeds for repayment of existing indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes.

1 unchanged sentence

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 January 28, 2023, we were in compliance with these covenants.

As of April 29, 2023, we were in compliance with these covenants.

Stock Repurchase Program

1 unchanged sentence

Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized under the program.

As of January 28, 2023, an additional $4.3 billion remains available for repurchase under the current authorized program.

As of April 29, 2023, an additional $3.2 billion remains available for repurchase under the current authorized program.

The repurchased shares are held as authorized but unissued shares of common stock.

2 unchanged sentences

Capital Expenditures

Net additions to property, plant and equipment were $176.2 million in the first three months of fiscal 2023 and were funded with a combination of cash on hand and cash generated from operations.

We expect capital expenditures for fiscal 2023 to be between approximately 6% and 8% of revenue, which is above our historical levels primarily due to our plans to expand internal manufacturing capacity.

Net additions to property, plant and equipment were $460.5 million in the first six months of fiscal 2023.

We expect capital expenditures for fiscal 2023 to be between approximately 7% to 9% of revenue, which is above our historical levels primarily due to our plans to expand internal manufacturing capacity.

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.

On February 14, 2023, our Board of Directors declared a cash dividend of $0.86 per outstanding share of common stock.

The dividend will be paid on March 8, 2023 to all shareholders of record at the close of business on February 27, 2023 and is expected to total approximately $435.0 million.

On May 23, 2023, our Board of Directors declared a cash dividend of $0.86 per outstanding share of common stock.

The dividend will be paid on June 14, 2023 to all shareholders of record at the close of business on June 5, 2023 and is expected to total approximately $431.2 million.

We currently expect quarterly dividends to continue in future periods.

1 unchanged sentence

Contractual Obligations

There have not been any material changes during the three-month period ended January 28, 2023 to the amounts presented in the table summarizing our contractual obligations included in our Annual Report on Form 10-K for the fiscal year ended October 29, 2022.

There have not been any material changes during the six-month period ended April 29, 2023 to the amounts presented in the table summarizing our contractual obligations included in our Annual Report on Form 10-K for the fiscal year ended October 29, 2022.

New Accounting Pronouncements

3 unchanged sentences

Critical Accounting Policies and Estimates

There were no material changes in the three-month period ended January 28, 2023 to the information provided under the heading “Critical Accounting Policies and Estimates” in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended October 29, 2022.

There were no material changes in the six-month period ended April 29, 2023 to the information provided under the heading “Critical Accounting Policies and Estimates” in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended October 29, 2022.

Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in the three-month period ended January 28, 2023 to the information provided under Item 7A.

There were no material changes in the six-month period ended April 29, 2023 to the information provided under Item 7A.

“Quantitative and Qualitative Disclosures about Market Risk,” set forth in our Annual Report on Form 10-K for the fiscal year ended October 29, 2022 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis