What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-23 compared with 2023-05-24 · 101 added, 80 removed, 172 unchanged (51% of the section changed)

4 unchanged sentences

These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management.

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

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

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

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our plans to pay dividends or repurchase stock;

servicing our outstanding debt;

servicing our outstanding debt, including our plans to offer to exchange existing unregistered notes for new registered notes;

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;

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Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors.

Important factors that could cause actual results to differ materially from those in these forward-looking statements include the risk factors included in Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for fiscal 2022 and, if applicable, those included under Part II, Item 1A of this Quarterly Report on Form 10-Q.

The following important factors and uncertainties, among others, could cause results to differ materially from those described in the forward-looking statements:

political and economic uncertainty, including any faltering in global economic conditions or the stability of credit and financial markets;

erosion of consumer confidence and declines in customer spending or cancellations of orders for our products;

unavailability of raw materials, services, supplies or manufacturing capacity;

disruptions to our manufacturing operations or our ability to execute our business strategy;

changes in geographic, product or customer mix;

changes in export classifications, import and export regulations or duties and tariffs;

changes in our estimates of our expected tax rates based on current tax law;

adverse results in litigation matters;

the risk that we will be unable to retain and hire key personnel including as a result of labor shortages;

changes in demand for semiconductors;

attempted or actual security breaches and other cybersecurity incidents that disrupt our operations;

unanticipated difficulties or expenditures relating to integrating Maxim Integrated Products, Inc.

uncertainty as to the long-term value of our common stock;

the discretion of our board of directors to declare dividends and our ability to pay dividends in the future;

factors impacting our ability to repurchase shares;

the diversion of management time on integrating Maxim's business and operations;

our ability to successfully integrate acquired business and technologies, including Maxim;

and the risk that expected benefits, synergies and growth prospects of acquisitions, including our acquisition of Maxim, may not be fully achieved in a timely manner, or at all.

Additional factors that could cause actual results to differ materially from those in these forward-looking statements include the risk factors included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for fiscal 2022 and, if applicable, those included under Part II, Item 1A of this Quarterly Report on Form 10-Q.

We undertake no obligation to revise or update any forward-looking statements, including to reflect events or circumstances occurring after the date of the filing of this report, except to the extent required by law.

Results of Operations

1 unchanged sentence

Three Months Ended

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

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

Revenue $ 3,076,495 $ 3,109,880 $ (33,385) (1) %

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Diluted EPS $ 1.74 $ 1.44 $ 0.30 21 %

Six Months Ended

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

Nine Months Ended

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

Revenue $ 9,589,055 $ 8,766,237 $ 822,818 9 %

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Revenue Trends by End Market

The following table summarizes revenue by end market.

The following tables summarize revenue by end market.

The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the “ship to” customer information and the end customer product or application into which our product will be incorporated.

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Three Months Ended

April 29, 2023 April 30, 2022

July 29, 2023 July 30, 2022

Revenue* Y/Y% Revenue % of

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Total revenue $ 3,076,495 100 % (1) % $ 3,109,880 100 %

Six Months Ended

April 29, 2023 April 30, 2022

Nine Months Ended

July 29, 2023 July 30, 2022

Revenue* Y/Y% Revenue % of

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

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 decreased 1% in the three-month period ended July 29, 2023 as compared to the same period of the prior fiscal year, primarily the result of 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, partially offset by

increases in our Industrial end market, namely sustainable energy and aerospace and defense and our Automotive end market, namely cabin electronics and battery management systems.

Revenue increased 9% in the nine-month period ended July 29, 2023 as compared to the same period of the prior fiscal year, primarily the result of broad-based demand for our products sold into the Industrial end market, namely sustainable energy and aerospace and defense and the Automotive end market, namely cabin electronics and battery management systems, 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.

The following tables summarize revenue by sales channel.

We sell our products globally through a direct sales force, third party distributors, independent sales representatives and via our website.

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Three Months Ended

April 29, 2023 April 30, 2022

July 29, 2023 July 30, 2022

Revenue % of Revenue* Revenue % of Revenue*

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Total revenue $ 3,076,495 100 % $ 3,109,880 100 %

Six Months Ended

April 29, 2023 April 30, 2022

Nine Months Ended

July 29, 2023 July 30, 2022

Revenue % of Revenue* Revenue % of Revenue*

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* 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 Six Months Ended

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

As indicated in the tables 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 Nine Months Ended

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

Gross margin $ 1,961,615 $ 2,043,142 $ (81,527) (4) % $ 6,230,502 $ 5,389,659 $ 840,843 16 %

Gross margin % 63.8 % 65.7 % 65.0 % 61.5 %

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.

Gross margin percentage decreased by 190 basis points and increased by 350 basis points in the three- and nine-month periods ended July 29, 2023, respectively, as compared to the same periods of the prior fiscal year.

The decrease in the three-month period ended July 29, 2023 primarily relates to lower utilization of our factories due to decreased customer demand.

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

Research and Development (R&D)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

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

R&D expenses $ 423,751 $ 431,829 $ (8,078) (2) % $ 1,253,600 $ 1,279,510 $ (25,910) (2) %

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

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 decreased both in the three- and nine-month periods ended July 29, 2023, as compared to the same periods of the prior fiscal year.

The decrease in the three-month period was primarily the result of lower R&D employee-related variable compensation expenses, partially offset by higher salary and benefit expenses.

The decrease in the nine-month period was primarily the result of lower 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 Six Months Ended

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

Three Months Ended Nine Months Ended

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

SMG&A expenses $ 334,113 $ 326,942 $ 7,171 2 % $ 984,648 $ 929,615 $ 55,033 6 %

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

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.

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

Amortization of Intangibles

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

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

Amortization expenses $ 250,719 $ 252,864 $ (2,145) (1) % $ 756,882 $ 759,707 $ (2,825) — %

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

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.

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

Special Charges, Net

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

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

Special charges, net $ 23,539 $ 138,201 $ (114,662) (83) % $ 46,675 $ 244,603 $ (197,928) (81) %

Special charges, net as a % of revenue 1 % 4 % — % 3 %

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.

Special charges, net decreased in both the three- and nine-month periods ended July 29, 2023, as compared to the same periods of the prior fiscal year, primarily the result of higher charges recorded in 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 Six Months Ended

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

Three Months Ended Nine Months Ended

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

Operating income $ 929,493 $ 893,306 $ 36,187 4 % $ 3,188,697 $ 2,176,224 $ 1,012,473 47 %

Operating income as a % of revenue 30.2 % 28.7 % 33.3 % 24.8 %

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 .

The year-over-year increase in operating income in the three-month period ended July 29, 2023 was primarily the result of decreases of $114.7 million in special charges, net and $8.1 million in R&D expenses, partially offset by decreases in gross margin of $81.5 million and an increase of $7.2 million in SMG&A expenses.

The year-over-year increase in operating income in the nine-month period ended July 29, 2023 was primarily the result of an increase in revenue of $822.8 million and an increase in gross margin percent, which contributed to an increase in gross margin of $840.8 million, and decreases of $197.9 million in special charges, net and $25.9 million in R&D expenses, partially offset by an increase of $55.0 million in SMG&A expenses .

Nonoperating Expense (Income)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

July 29, 2023 July 30, 2022 $ Change July 29, 2023 July 30, 2022 $ Change

Total nonoperating expense (income) $ 54,672 $ 45,369 $ 9,303 $ 152,480 $ 125,487 $ 26,993

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 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

The year-over-year increase in nonoperating expense (income) in the three-month period ended July 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 nine-month period ended July 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.

(Benefit from) Provision for Income Taxes

Three Months Ended Nine Months Ended

July 29, 2023 July 30, 2022 $ Change July 29, 2023 July 30, 2022 $ Change

(Benefit from) provision for income taxes $ (2,198) $ 98,952 $ (101,150) $ 220,068 $ 238,402 $ (18,334)

Effective income tax rate (0.3) % 11.7 % 7.2 % 11.6 %

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.

The effective tax rates for both the three- and nine-month periods ended July 29, 2023 and July 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- 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.

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

The Company's effective tax rate for the three- and nine-month periods ended July 29, 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.

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

Our effective tax rate for the third quarter of fiscal 2023 was also impacted by a discrete income tax benefit recorded of $81.1 million 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 under the Tax Cuts and Jobs Act.

See Note 13, 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 Six Months Ended

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

Three Months Ended Nine Months Ended

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

Net income $ 877,019 $ 748,985 $ 128,034 17 % $ 2,816,149 $ 1,812,335 $ 1,003,814 55 %

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Diluted EPS $ 1.74 $ 1.44 $ 5.55 $ 3.45

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.

Net income increased in the three-month period ended July 29, 2023, as compared to the same period of the prior fiscal year, the result of a $36.2 million increase in operating income and a $101.2 million decrease in (benefit from) provision for income taxes, partially offset by a $9.3 million increase in nonoperating expense (income).

Net income increased in the nine-month period ended July 29, 2023, as compared to the same period of the prior fiscal year, the result of a $1,012.5 million increase in operating income and a $18.3 million decrease in (benefit from) provision for income taxes, partially offset by a $27.0 million increase in nonoperating expense (income).

Liquidity and Capital Resources

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.

At July 29, 2023, our principal source of liquidity was $1,149.2 million of cash and cash equivalents, of which approximately $253.9 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.

We do not expect current regulatory restrictions or taxes on repatriation to have a material adverse effect on our overall liquidity, financial condition or the results of operations.

We do not expect current regulatory restrictions or taxes on repatriation to have a material adverse effect on our overall liquidity, financial condition or results of operations.

Our cash and cash equivalents consist of highly liquid investments with maturities of three months or less, including money market funds.

We maintain these balances with high credit quality counterparties, continually monitor the amount of credit exposure to any one issuer and diversify our investments in order to minimize our credit risk.

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.

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.

Six Months Ended

April 29, 2023 April 30, 2022

Nine Months Ended

July 29, 2023 July 30, 2022

Net cash provided by operating activities $ 3,630,340 $ 3,326,066

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Net cash used for financing activities $ (3,164,342) $ (3,403,860)

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.

The following changes contributed to the net change in cash and cash equivalents in the nine-month period ended July 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 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.

The increase in cash provided by operating activities during the nine-month period ended July 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 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.

The increase in cash used for investing activities during the nine-month period ended July 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 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.

The decrease in cash used for financing activities during the nine-month period ended July 29, 2023, as compared to the same

period of the prior fiscal year, was primarily the result of higher net proceeds from the issuance of commercial paper notes and lower debt repayments, partially offset by higher common stock repurchases.

Working Capital

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

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

Accounts receivable $ 1,616,243 $ 1,800,462 $ (184,219) (10) %

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

Current liabilities increased to $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:

Current liabilities increased to $2,831.0 million at July 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 July 29, 2023, our debt obligations consisted of the following:

Principal Amount Outstanding

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

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

As of July 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.

On April 14, 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 up to 397 days from the date of issuance.

As of July 29, 2023, we had $544.7 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.

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

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

Stock Repurchase Program

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

As of July 29, 2023, an additional $2.6 billion remains available for repurchase under the current authorized program.

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

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Capital Expenditures

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

Net additions to property, plant and equipment were $785.1 million in the first nine 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 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.

On August 22, 2023, our Board of Directors declared a cash dividend of $0.86 per outstanding share of common stock.

The dividend will be paid on September 14, 2023 to all shareholders of record at the close of business on September 5, 2023 and is expected to total approximately $428.6 million.

We currently expect quarterly dividends to continue in future periods.

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Contractual Obligations

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.

There have not been any material changes during the nine-month period ended July 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

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Critical Accounting Policies and Estimates

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.

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

There were no material changes in the nine-month period ended July 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