What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-02-21 compared with 2023-08-23 · 86 added, 121 removed, 152 unchanged (58% of the section changed)

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our plans to pay dividends or repurchase stock;

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;

servicing our outstanding debt;

our plans to borrow under our third amended and restated revolving credit agreement, as amended, and issue notes under our commercial paper program and the planned use of proceeds from such borrowing and issuing;

our expected tax rate;

the effect of changes in or the application of new or revised tax laws;

expected cost savings;

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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;

our Global Repositioning Actions and Q4 2023 Plan;

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

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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;

economic, political, legal and regulatory uncertainty or conflicts;

changes in demand for semiconductor products;

manufacturing delays, product and raw materials availability and supply chain disruptions;

products that may be diverted from our authorized distribution channels;

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

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

our development of technologies and research and development investments;

our future liquidity, capital needs and capital expenditures;

our ability to compete successfully in the markets in which we operate;

our ability to recruit and retain key personnel;

risks related to acquisitions or other strategic transactions;

security breaches or other cyber incidents;

adverse results in litigation matters;

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;

reputational damage;

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

risks related to our indebtedness;

unanticipated difficulties or expenditures relating to integrating Maxim;

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

factors impacting our ability to repurchase shares;

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.

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

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

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Three Months Ended

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

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

Gross margin % 63.8 % 65.7 %

Net income $ 877,019 $ 748,985 $ 128,034 17 %

Net income as a % of revenue 28.5 % 24.1 %

Diluted EPS $ 1.74 $ 1.44 $ 0.30 21 %

Nine Months Ended

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

February 3, 2024 January 28, 2023 $ Change % Change

Revenue $ 2,512,704 $ 3,249,630 $ (736,926) (23) %

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Revenue Trends by End Market

The following tables summarize revenue 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 our product will be incorporated.

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When this occurs, we reclassify revenue by end market for prior periods.

Such reclassifications typically do not materially change the sizing of, or the underlying trends of revenue within, each end market.

Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.

Three Months Ended

July 29, 2023 July 30, 2022

Revenue* Y/Y% Revenue % of

Industrial $ 1,629,201 53 % 4 % $ 1,566,885 50 %

Automotive 747,554 24 % 15 % 648,153 21 %

Communications 380,504 12 % (23) % 491,515 16 %

Consumer 319,236 10 % (21) % 403,327 13 %

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

Nine Months Ended

July 29, 2023 July 30, 2022

February 3, 2024 January 28, 2023

Revenue* Y/Y% Revenue % of

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

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 decreased 23% in the three-month period ended February 3, 2024 as compared to the same period of the prior fiscal year, primarily as a result of broad-based decline in demand for our products, partially offset by increased demand in the Automotive end market, namely in cabin electronics, as well as an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.

Revenue by Sales Channel

The following tables summarize revenue by sales channel.

The following table summarizes revenue by sales channel.

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

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Three Months Ended

July 29, 2023 July 30, 2022

Revenue % of Revenue* Revenue % of Revenue*

Distributors $ 1,904,496 62 % $ 1,922,982 62 %

Direct customers 1,126,796 37 % 1,146,538 37 %

Other 45,203 1 % 40,360 1 %

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

Nine Months Ended

July 29, 2023 July 30, 2022

February 3, 2024 January 28, 2023

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 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

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

February 3, 2024 January 28, 2023 $ Change % Change

Gross margin $ 1,473,941 $ 2,124,341 $ (650,400) (31) %

Gross margin % 58.7 % 65.4 %

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.

Gross margin percentage decreased by 670 basis points in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, primarily due to lower utilization of our factories due to decreased customer demand and unfavorable product mix.

Research and Development (R&D)

Three Months Ended Nine Months Ended

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

Three Months Ended

February 3, 2024 January 28, 2023 $ Change % Change

R&D expenses $ 391,427 $ 414,095 $ (22,668) (5) %

R&D expenses as a % of revenue 16 % 13 %

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 decreased in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year.

The decrease was primarily as a result of lower R&D employee-related variable compensation expenses, partially offset by higher salary and benefit expenses, as well as an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.

R&D expenses as a percentage of revenue will fluctuate from year-to-year depending on the amount of revenue and the success of new product development efforts, which we view as critical to our future growth.

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

Three Months Ended Nine Months Ended

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

Three Months Ended

February 3, 2024 January 28, 2023 $ Change % Change

SMG&A expenses $ 290,078 $ 326,284 $ (36,206) (11) %

SMG&A expenses as a % of revenue 12 % 10 %

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.

SMG&A expenses decreased in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, primarily as a result of lower SMG&A employee-related variable compensation expenses and discretionary spending, partially offset by higher salary and benefit expenses, as well as an additional week of operations in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023.

Amortization of Intangibles

Three Months Ended Nine Months Ended

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

Three Months Ended

February 3, 2024 January 28, 2023 $ Change % Change

Amortization expenses $ 190,332 $ 253,142 $ (62,810) (25) %

Amortization expenses as a % of revenue 8 % 8 %

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 Nine Months Ended

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

Amortization expenses decreased in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year as a result of a portion of our acquired intangible assets becoming fully amortized during fiscal 2023.

Special Charges, Net

Three Months Ended

February 3, 2024 January 28, 2023 $ Change % Change

Special charges, net $ 16,140 $ — $ 16,140 n/a

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

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.

Special charges, net increased in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, primarily as a result of the charges recorded for our plan, committed to during fiscal 2023, to reorganize our business (the Q4 2023 Plan).

The Q4 2023 Plan, consisting of voluntary and involuntary reductions-in-force, and other cost-savings initiatives, was commenced to adjust our cost structure and business activities to better align with weaker market demand and continued economic uncertainty in our end markets, as well as make certain strategic shifts in our workforce necessary to achieve our long-term vision.

See Note 5, Special Charges, Net , in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

Operating Income

Three Months Ended Nine Months Ended

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

Three Months Ended

February 3, 2024 January 28, 2023 $ Change % Change

Operating income $ 585,964 $ 1,130,820 $ (544,856) (48) %

Operating income as a % of revenue 23.3 % 34.8 %

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 .

The year-over-year decrease in operating income in the three-month period ended February 3, 2024 was primarily the result of a decrease in revenue, which contributed to a decrease in gross margin of $650.4 million, and an increase of $16.1 million in special charges, net, partially offset by decreases of $62.8 million in amortization expenses, $36.2 million in SMG&A expenses and $22.7 million in R&D expenses.

Nonoperating Expense (Income)

Three Months Ended Nine Months Ended

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

Three Months Ended

February 3, 2024 January 28, 2023 $ Change

Total nonoperating expense (income) $ 72,546 $ 57,347 $ 15,199

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)

The year-over-year increase in nonoperating expense (income) in the three-month period ended February 3, 2024 as compared to the same period of the prior fiscal year was primarily the result of higher interest expense related to our commercial paper obligations and higher interest rates on certain of our existing debt obligations.

Provision for Income Taxes

Three Months Ended

February 3, 2024 January 28, 2023 $ Change

Provision for income taxes $ 50,691 $ 111,999 $ (61,308)

Effective income tax rate 9.9 % 10.4 %

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.

The effective tax rates for the three-month periods ended February 3, 2024 and January 28, 2023 were below the U.S.

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

Our pretax income for the three- and nine-month periods ended 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.

Our pretax income for the three-month periods ended February 3, 2024 and January 28, 2023 was primarily generated in Ireland at a tax rate of 12.5%.

See Note 11, 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 Nine Months Ended

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

Three Months Ended

February 3, 2024 January 28, 2023 $ Change % Change

Net income $ 462,727 $ 961,474 $ (498,747) (52) %

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Diluted EPS $ 0.93 $ 1.88

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).

Net income decreased in the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year as the result of a $544.9 million decrease in operating income and a $15.2 million increase in nonoperating expense (income), partially offset by a $61.3 million decrease in provision for income taxes.

Liquidity and Capital Resources

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.

At February 3, 2024, our principal source of liquidity was $1.3 billion of cash and cash equivalents, of which approximately $597.8 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.

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

Nine Months Ended

July 29, 2023 July 30, 2022

Three Months Ended

February 3, 2024 January 28, 2023

Net cash provided by operating activities $ 1,138,832 $ 1,406,305

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Net cash used for financing activities $ (574,232) $ (1,030,359)

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.

The following changes contributed to the net change in cash and cash equivalents in the three-month period ended February 3, 2024 as compared to the same period in fiscal 2023.

Operating Activities

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

The 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.

The decrease in cash provided by operating activities during the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, was mainly the result of lower net income adjusted for noncash items offset by changes in working capital.

Investing Activities

Investing cash flows generally consist of capital expenditures and cash used for acquisitions.

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

The increase in cash used for investing activities during the three-month period ended February 3, 2024, 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 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.

The decrease in cash used for financing activities during the three-month period ended February 3, 2024, as compared to the same period of the prior fiscal year, was primarily the result of lower common stock repurchases, partially offset by higher dividend payments.

Working Capital

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

February 3, 2024 October 28, 2023 $ Change % Change

Accounts receivable $ 1,196,721 $ 1,469,734 $ (273,013) (19) %

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* We use the average of the current quarter and prior quarter ending net accounts receivable and ending inventory balance in our calculation of days sales outstanding and days cost of sales in inventory, respectively.

Cost of sales amounts used in the calculation of days cost of sales in inventory include accounting adjustments related to amortization of developed technology intangible assets acquired and depreciation related to the write-up of fixed assets to fair value as a result of the acquisition of Maxim.

The decrease in accounts receivable in dollars was primarily the result of variations in the timing of collections and billings.

Inventory increased primarily as a result of our efforts to balance manufacturing production, demand and inventory levels.

The first quarter of fiscal 2024 included an additional week of operations as compared to the first quarter of 2023.

The decrease in accounts receivable in dollars was primarily the result of variations in the timing of collections and billings and decreased revenue levels in the first quarter of fiscal 2024 as compared to the fourth quarter of fiscal 2023.

Inventory decreased primarily as a result of our efforts to balance manufacturing production, demand and inventory levels.

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

Current liabilities increased to $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:

Current liabilities decreased to $2,923.4 million at February 3, 2024 as compared to $3,201.0 million at the end of fiscal 2023 due to lower accrued liabilities and accounts payable, partially offset by higher income taxes payable.

As of February 3, 2024, our debt obligations consisted of the following:

Principal Amount Outstanding

Commercial paper notes $ 544,444

2024 Notes, due October 2024 500,000

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

As of February 3, 2024, 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 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.

Under our commercial paper program, we may issue short-term, unsecured commercial paper notes in amounts up to a maximum aggregate face amount of $2.5 billion outstanding at any time, with maturities of up to 397 days from the date of issuance.

As of February 3, 2024, we had $544.4 million of outstanding borrowings under the commercial paper program recorded in the Condensed Consolidated Balance Sheet.

We use the net proceeds of the commercial paper program for general corporate purposes, including without limitation, repayment of indebtedness, stock repurchases, acquisitions, capital expenditures and working capital.

Revolving Credit Facility

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

As of February 3, 2024, 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 July 29, 2023, an additional $2.6 billion remains available for repurchase under the current authorized program.

As of February 3, 2024, an additional $2.0 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 $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.

Net additions to property, plant and equipment were $223.0 million in the first three months of fiscal 2024.

We expect capital expenditures for fiscal 2024 to be between approximately $600 million and $800 million.

These capital expenditures will be funded with a combination of cash on hand and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing.

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.

On February 20, 2024, our Board of Directors declared a cash dividend of $0.92 per outstanding share of common stock.

The dividend will be paid on March 15, 2024 to all shareholders of record at the close of business on March 5, 2024 and is expected to total approximately $456.2 million.

We currently expect quarterly dividends to continue in future periods.

The payment of any future quarterly dividends, or a future increase in the quarterly dividend amount, will be at the discretion of the Board and will be dependent upon our financial position, results of operations, outlook, liquidity and other factors deemed relevant by the Board.

Contractual Obligations

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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See Note 12, New Accounting Pronouncements, in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of recently issued and adopted accounting pronouncements, including the dates of adoption and impact on our historical financial condition and results of operations.

Critical Accounting Policies and Estimates

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 nine-month period ended July 29, 2023 to the information provided under Item 7A.

There were no material changes in the three-month period ended February 3, 2024 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 28, 2023 .

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