SKYWORKS SOLUTIONS, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The following consolidated financial statements of the Company are included herewith: (1) Report of Independent Registered Public Accounting Firm Page 38 (2) Consolidated Statements of Operations for the three years ended September 29 , 202 3 Page 40 (3) Consolidated Statements of Comprehensive Income for the three years ended September 29 , 202 3 Page 41 (4) Consolidated Balance Sheets at September 29 , 202 3 , and September 30, 2022 Page 42 (5) Consolidated Statements of Cash Flows for the three years ended September 29 , 202 3 Page 43 (6) Consolidated Statements of Stockholders’ Equity for the three years ended September 29 , 202 3 Page 44 (7) Notes to Consolidated Financial Statements Page 45 through 63 37 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Skyworks Solutions, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Skyworks Solutions, Inc. and subsidiaries (the Company) as of September 29, 2023 and September 30, 2022, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ equity for each of the years in the three-year period ended September 29, 2023, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of September 29, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 29, 2023 and September 30, 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended September 29, 2023, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 29, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting . Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable 38 assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Application of tax laws and regulations As discussed in Note 2 and Note 8 to the consolidated financial statements, the Company recorded an income tax provision of $96.0 million for the year ended September 29, 2023, which is comprised of current and deferred taxes on domestic and foreign income. The application of tax laws and regulations to calculate tax liabilities is subject to legal and factual interpretation, judgment, and uncertainty in a multitude of jurisdictions. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations, and court rulings. We identified the evaluation of the application of tax laws and regulations in certain jurisdictions as a critical audit matter. Challenging auditor judgment and the involvement of tax professionals with specialized skills and knowledge were required due to the Company’s application of the tax laws and regulations within the manually prepared income tax provision. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s income tax process, including controls relating to the application of the tax laws and regulations. We involved tax professionals with specialized skills and knowledge, who assisted in evaluating the Company’s application of the tax laws and regulations in certain jurisdictions, including the resulting calculations, within the manually prepared income tax provision. /s/ KPMG LLP We have served as the Company’s auditor since 2002. Irvine, California November 17, 2023 39 SKYWORKS SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts) Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Net revenue $ 4,772.4 $ 5,485.5 $ 5,109.1 Cost of goods sold 2,665.1 2,881.2 2,596.7 Gross profit 2,107.3 2,604.3 2,512.4 Operating expenses: Research and development 606.8 617.9 532.3 Selling, general, and administrative 314.0 329.8 322.5 Amortization of intangibles 33.2 98.9 36.0 Restructuring, impairment, and other charges 28.3 30.7 8.9 Total operating expenses 982.3 1,077.3 899.7 Operating income 1,125.0 1,527.0 1,612.7 Interest expense ( 64.4 ) ( 47.9 ) ( 13.4 ) Other income (expense), net 18.2 ( 2.5 ) ( 0.6 ) Income before income taxes 1,078.8 1,476.6 1,598.7 Provision for income taxes 96.0 201.4 100.4 Net income $ 982.8 $ 1,275.2 $ 1,498.3 Earnings per share: Basic $ 6.17 $ 7.85 $ 9.07 Diluted $ 6.13 $ 7.81 $ 8.97 Weighted average shares: Basic 159.4 162.4 165.2 Diluted 160.3 163.3 167.0 See accompanying Notes to Consolidated Financial Statements. 40 SKYWORKS SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Net income $ 982.8 $ 1,275.2 $ 1,498.3 Other comprehensive income (loss), net of tax: Fair value of investments — ( 0.2 ) ( 0.5 ) Pension adjustments ( 0.8 ) 3.3 0.4 Comprehensive income $ 982.0 $ 1,278.3 $ 1,498.2 See accompanying Notes to Consolidated Financial Statements. 41 SKYWORKS SOLUTIONS, INC. CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) As of September 29, 2023 September 30, 2022 ASSETS Current assets: Cash and cash equivalents $ 718.8 $ 566.0 Marketable securities 15.6 20.3 Receivables, net of allowances of $ 0.8 and $ 0.8 , respectively 864.3 1,094.0 Inventory 1,119.7 1,212.1 Other current assets 461.1 337.5 Total current assets 3,179.5 3,229.9 Property, plant, and equipment, net 1,390.1 1,604.8 Operating lease right-of-use assets 205.4 223.0 Goodwill 2,176.7 2,176.7 Intangible assets, net 1,222.1 1,444.7 Deferred tax assets, net 192.3 52.7 Marketable securities 4.1 0.5 Other long-term assets 56.5 141.5 Total assets $ 8,426.7 $ 8,873.8 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 159.2 $ 274.2 Accrued compensation and benefits 94.3 114.3 Current portion of long-term debt 299.4 499.2 Other current liabilities 402.8 339.2 Total current liabilities 955.7 1,226.9 Long-term debt 992.9 1,689.9 Long-term tax liabilities 162.8 213.5 Long-term operating lease liabilities 188.7 206.9 Other long-term liabilities 43.9 67.6 Total liabilities 2,344.0 3,404.8 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock, no par value: 25.0 shares authorized, no shares issued — — Common stock, $ 0.25 par value: 525.0 shares authorized; 159.5 shares issued and outstanding at September 29, 2023, and 160.2 shares issued and outstanding at September 30, 2022 39.9 40.0 Additional paid-in capital 172.4 11.9 Retained earnings 5,876.0 5,421.9 Accumulated other comprehensive loss ( 5.6 ) ( 4.8 ) Total stockholders’ equity 6,082.7 5,469.0 Total liabilities and stockholders’ equity $ 8,426.7 $ 8,873.8 See accompanying Notes to Consolidated Financial Statements. 42 SKYWORKS SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Cash flows from operating activities: Net income $ 982.8 $ 1,275.2 $ 1,498.3 Adjustments to reconcile net income to net cash provided by operating activities: Share-based compensation 185.1 195.2 191.9 Depreciation 387.8 394.4 332.2 Amortization of intangible assets, including inventory step-up 225.9 295.7 104.5 Deferred income taxes ( 151.2 ) 68.4 ( 59.5 ) Asset impairment charges 64.5 20.7 7.1 Amortization of debt discount and issuance costs 4.0 4.0 1.1 Other, net ( 3.5 ) ( 1.5 ) 0.2 Changes in assets and liabilities: Receivables, net 229.8 ( 337.8 ) ( 397.7 ) Inventory 90.8 ( 337.3 ) ( 41.2 ) Accounts payable ( 87.1 ) 31.3 59.6 Other current and long-term assets and liabilities ( 72.5 ) ( 183.7 ) 75.5 Net cash provided by operating activities 1,856.4 1,424.6 1,772.0 Cash flows from investing activities: Capital expenditures ( 210.3 ) ( 489.4 ) ( 637.8 ) Purchased intangibles ( 25.8 ) ( 20.3 ) ( 14.3 ) Purchases of marketable securities ( 288.8 ) ( 97.2 ) ( 500.8 ) Sales and maturities of marketable securities 294.0 220.3 770.7 Payments for acquisitions — — ( 2,751.0 ) Other 6.5 7.7 — Net cash used in investing activities ( 224.4 ) ( 378.9 ) ( 3,133.2 ) Cash flows from financing activities: Repurchase of common stock — payroll tax withholdings on equity awards ( 35.9 ) ( 88.5 ) ( 55.2 ) Repurchase of common stock — stock repurchase program ( 175.3 ) ( 886.8 ) ( 195.6 ) Dividends paid ( 405.2 ) ( 373.1 ) ( 340.6 ) Net proceeds from exercise of stock options 5.1 6.4 11.6 Proceeds from employee stock purchase plan 32.1 29.4 24.8 Proceeds from issuance of long-term debt, net — — 2,488.2 Debt financing costs — — ( 5.8 ) Payments of debt ( 900.0 ) ( 50.0 ) ( 250.0 ) Net cash (used in) provided by financing activities ( 1,479.2 ) ( 1,362.6 ) 1,677.4 Net increase (decrease) in cash and cash equivalents 152.8 ( 316.9 ) 316.2 Cash and cash equivalents at beginning of period 566.0 882.9 566.7 Cash and cash equivalents at end of period $ 718.8 $ 566.0 $ 882.9 Supplemental cash flow disclosures: Income taxes paid $ 228.9 $ 230.0 $ 184.0 Interest paid $ 62.3 $ 44.4 $ 2.2 Incentives paid in common stock $ 19.2 $ 32.2 $ 27.5 Non-cash investing in capital expenditures, accrued but not paid $ 12.0 $ 43.2 $ 29.3 See accompanying Notes to Consolidated Financial Statements. 43 SKYWORKS SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In millions) Shares of common stock Par value of common stock Shares of treasury stock Value of treasury stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total stockholders ’ equity Balance at October 2, 2020 165.6 $ 41.4 66.7 $ ( 4,093.5 ) $ 3,403.7 $ 4,820.4 $ ( 7.8 ) $ 4,164.2 Net income — — — — — 1,498.3 — 1,498.3 Exercise and settlement of share-based awards, net of shares withheld for taxes 1.1 0.3 0.4 ( 55.2 ) 63.6 — — 8.7 Share-based compensation expense — — — — 158.1 — — 158.1 Stock repurchase program ( 1.4 ) ( 0.4 ) ( 67.1 ) 4,147.0 ( 3,549.9 ) ( 792.3 ) — ( 195.6 ) Dividends declared — — — — — ( 340.6 ) — ( 340.6 ) Pre-combination service on replacement awards — — — — 4.1 — — 4.1 Other comprehensive income — — — — — — ( 0.1 ) ( 0.1 ) Balance at October 1, 2021 165.3 $ 41.3 — $ ( 1.7 ) $ 79.6 $ 5,185.8 $ ( 7.9 ) $ 5,297.1 Net income — — — — — 1,275.2 — 1,275.2 Exercise and settlement of share-based awards, net of shares withheld for taxes 1.4 0.3 0.6 ( 88.5 ) 67.8 — — ( 20.4 ) Share-based compensation expense — — — — 173.9 — — 173.9 Repurchase and retirement of common stock ( 6.5 ) ( 1.6 ) ( 0.6 ) 90.2 ( 309.4 ) ( 666.0 ) — ( 886.8 ) Dividends declared — — — — — ( 373.1 ) — ( 373.1 ) Other comprehensive loss — — — — — — 3.1 3.1 Balance at September 30, 2022 160.2 $ 40.0 — $ — $ 11.9 $ 5,421.9 $ ( 4.8 ) $ 5,469.0 Net income — — — — — 982.8 — 982.8 Exercise and settlement of share-based awards, net of shares withheld for taxes 1.2 0.3 0.4 ( 35.9 ) 56.3 — — 20.7 Share-based compensation expense — — — — 191.5 — — 191.5 Repurchase and retirement of common stock ( 1.9 ) ( 0.4 ) ( 0.4 ) 35.9 ( 87.3 ) ( 123.5 ) — ( 175.3 ) Dividends declared — — — — — ( 405.2 ) — ( 405.2 ) Other comprehensive income — — — — — — ( 0.8 ) ( 0.8 ) Balance at September 29, 2023 159.5 $ 39.9 — $ — $ 172.4 $ 5,876.0 $ ( 5.6 ) $ 6,082.7 See accompanying Notes to Consolidated Financial Statements. 44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS Skyworks Solutions, Inc., together with its consolidated subsidiaries (“Skyworks” or the “Company”), is empowering the wireless networking revolution. The Company’s analog and mixed-signal semiconductors are connecting people, places, and things, spanning a number of new applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, defense, entertainment and gaming, industrial, medical, smartphone, tablet, and wearable markets. 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation All Skyworks subsidiaries are included in the Company’s consolidated financial statements and all intercompany balances are eliminated in consolidation. Certain items in the fiscal years 2022 and 2021 financial statements, including certain account groupings in the tax reconciliation disclosure, have been reclassified to conform to the fiscal 2023 presentation. Fiscal Year The Company’s fiscal year ends on the Friday closest to September 30. Fiscal years 2023 , 2022, and 2021 each consisted of 52 weeks and ended on September 29, 2023, September 30, 2022, and October 1, 2021, respectively. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, expenses, comprehensive income, and accumulated other comprehensive loss that are reported during the reporting period. The Company evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment. Judgment is required in determining the reserves for, and fair value of, items such as overall fair value assessments of assets and liabilities, particularly those classified as Level 2 or Level 3 in the fair value hierarchy, marketable securities, inventory, intangible assets associated with business combinations, share-based compensation, revenue reserves, loss contingencies, and income taxes. In addition, judgment is required in determining whether a potential indicator of impairment of long-lived assets, indefinite-lived intangible assets, and goodwill exists and in estimating future cash flows for any necessary impairment testing. Actual results could differ significantly from these estimates. Cash and Cash Equivalents The Company invests excess cash in money market funds, U.S. Treasury securities, agency securities, other government securities, and corporate debt securities. The Company considers highly liquid investments as cash equivalents including money market funds and investments with maturities of 90 days or less when purchased. Investments The Company classifies its investment in marketable debt securities as “available-for-sale.” Available-for-sale securities are carried at fair value with unrealized holding gains or losses recorded in other comprehensive income, net of tax. Gains or losses are included in earnings in the period in which they are realized. The cost of securities sold is determined based on the specific identification method. The cost of available-for-sale debt securities is adjusted for premiums and discounts, with the amortization or accretion of such amounts included as a portion of interest. Available-for-sale debt securities with an original maturity date greater than three months and less than one year are classified as current investments. Available-for-sale debt securities with an original maturity date exceeding one year are classified as long-term. Fair Value Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principle or most advantageous market in an orderly transaction between market participants at the measurement date. Applicable accounting guidance provides a hierarchy for inputs used in measuring fair value that prioritize the use of observable inputs over the use of unobservable inputs, when such observable inputs are available. The three levels of inputs that may be used to measure fair value are as follows: • Level 1 - Quoted prices in active markets for identical assets or liabilities. 45 • Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data. • Level 3 - Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including assumptions and judgments made by the Company. It is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. When available, the Company uses quoted market prices to measure fair value. If market prices are not available, the Company is required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument. The Company measures certain assets and liabilities at fair value on a recurring basis in three levels, based on the market in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. It recognizes transfers within the fair value hierarchy at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred. The carrying value of cash and cash equivalents, accounts receivable, other current assets, accounts payable, and accrued liabilities approximates fair value due to the short-term maturities of these assets and liabilities. Inventory Inventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. Reserves for excess and obsolete inventory are established on a quarterly basis and are based on a detailed analysis of aged material, salability of our inventory, market conditions, and product life cycles. Once reserves are established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory. Property, Plant, and Equipment Property, plant, and equipment are carried at cost less accumulated depreciation, with significant renewals and betterments being capitalized and retired equipment written off in the respective periods. Maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives, which range from five to forty years for buildings and improvements and five to ten years for machinery and equipment. Leasehold improvements are depreciated over the lesser of the economic life or the life of the associated lease. Leases The Company determines if an arrangement is a lease at its inception. Right-of-use (“ROU”) assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date. The lease term includes renewal options when it is reasonably certain that the option will be exercised and excludes termination options. To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for these leases is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included in operating lease ROU assets, other current liabilities, and long-term operating lease liabilities in the Company’s condensed consolidated balance sheet. Valuation of Long-Lived Assets Definite lived intangible assets are carried at cost less accumulated amortization. Amortization is calculated based on the pattern of benefit to be recognized from the underlying asset over its estimated useful life. Carrying values for long-lived assets and definite lived intangible assets are reviewed for possible impairment as circumstances warrant. Factors considered important that could result in an impairment review include significant underperformance relative to expected, historical or projected future operating results, significant changes in the manner of use of assets or the Company’s business strategy, or significant negative industry or economic trends. In addition, impairment reviews are conducted at the judgment of 46 management whenever asset values are deemed to be unrecoverable relative to future undiscounted cash flows expected to be generated by that particular asset group. The determination of recoverability is based on an estimate of undiscounted cash flows expected to result from the use of an asset group and its eventual disposition. Such estimates require management to exercise judgment and make assumptions regarding factors such as future revenue streams, operating expenditures, cost allocation and asset utilization levels, all of which collectively impact future operating performance. The Company’s estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, technological changes, economic conditions, changes to its business model, or changes in its operating performance. If the sum of the undiscounted cash flows is less than the carrying value of an asset group, the Company would recognize an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset group. Goodwill and Indefinite-Lived Intangible Assets Goodwill and indefinite-lived intangible assets are not amortized but are tested at least annually as of the first day of the fourth fiscal quarter for impairment or more frequently if indicators of impairment exist during the fiscal year. The Company assesses its conclusion regarding segments and reporting units in conjunction with its annual goodwill impairment test and has determined that it has one reporting unit for the purposes of allocating and testing goodwill. The Company’s impairment analysis compares its fair value to its net book value to determine if there is an indicator of impairment. In the Company’s calculation of fair value, it considers the closing price of its common stock on the selected testing date, the number of shares of its common stock outstanding and other marketplace activity such as a related control premium. If the calculated fair value is determined to be less than the book value of the reporting unit, an impairment loss is recognized equal to that excess; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Business Combinations The Company uses the acquisition method of accounting for business combinations and recognizes assets acquired and liabilities assumed at their fair values on the date acquired. Goodwill represents the excess of the purchase price over the fair value of the acquired identifiable net assets. The fair values of the assets and liabilities acquired are determined based upon the Company’s valuation using a combination of market, income, or cost approaches. The valuation involves making significant estimates and assumptions, which are based on detailed financial models including the projection of future cash flows, the weighted average cost of capital, and any cost savings that are expected to be derived in the future from the viewpoint of a market participant. Revenue Recognition The Company derives its revenue primarily from the sale of semiconductor products under individual customer purchase orders, some of which have underlying master sales agreements that specify terms governing the product sales. In the absence of a sales agreement, the Company’s standard terms and conditions apply. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company applies a five-step approach as defined in FASB ASC 606, Revenue from Contracts with Customers (Topic 606), in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied. Each distinct promise to transfer products is considered to be an identified performance obligation for which revenue is recognized at a point in time upon transfer of control of the products to the customer. Transfer of control occurs upon shipment to the distributor or direct customer or when products are pulled from consignment inventory by the customer. Point in time recognition is determined as products manufactured under non-cancellable orders create an asset with an alternative use to the Company. Returns under the Company’s general assurance warranty of products have not been material, and warranty-related services are not considered a separate performance obligation. Pricing adjustments and estimates of returns are treated as variable consideration for purposes of determining the transaction price. Sales returns are generally accepted at the Company’s discretion or from distributors with stock rotation rights. Stock rotation allows distributors limited levels of returns and is based on the distributor’s prior purchases. Price protection represents price discounts granted to certain distributors and is based on negotiations on sales to end customers. Variable consideration is estimated using the expected value method considering all reasonably available information, including the Company’s historical experience and its current expectations, and is reflected in the transaction price when sales are recorded. The Company records 47 net revenue excluding taxes on its sales to trade customers. The Company recognizes shipping fees, if any, received from customers in revenue and includes the related shipping and handling costs in cost of revenue. Accounts receivable represents the Company’s unconditional right to receive consideration from its customer. Substantially all payments are collected within the Company’s standard terms, which do not include a significant financing component. To date, there have been no material impairment losses on accounts receivable. There were no material contract assets or contract liabilities recorded on the consolidated balance sheet in any of the periods presented. All incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration. Share-Based Compensation The Company recognizes compensation expense for all share-based payment awards made to employees and directors including non-qualified employee stock options, share awards and units, employee stock purchase plan, and other special share-based awards based on estimated fair values. The determination of fair value of restricted and certain performance stock awards and units is based on the value of the Company’s stock on the date of grant with performance awards and units adjusted for the actual outcome of the underlying performance condition. For more complex performance awards including units with market-based performance conditions the Company employs a Monte Carlo simulation valuation method to calculate the fair value of the awards based on the most likely outcome. Under the Monte Carlo simulation, a number of variables and assumptions are used including, but not limited to: the expected stock price volatility over the term of the award, a correlation coefficient, the risk-free rate, and dividend yield. The fair value of share-based payment awards is amortized over the requisite service period, which is defined as the period during which an employee is required to provide service in exchange for an award. The Company generally uses a straight-line attribution method for all grants that include only a service condition. Awards with both performance and service conditions are expensed over the service period for each separately vesting tranche. Share-based compensation expense recognized during the period includes actual expense on vested awards and expense associated with unvested awards. Forfeitures are recorded as incurred. Research and Development Costs Research and development costs are expensed as incurred. Loss Contingencies The Company records its best estimates of a loss contingency when it is considered probable and the amount can be reasonably estimated. When a range of loss can be reasonably estimated with no best estimate in the range, the minimum estimated liability related to the claim is recorded. As additional information becomes available, the Company assesses the potential liability related to the potential pending loss contingency and revises its estimates. Material loss contingencies are disclosed if there is at least a reasonable possibility that a loss or an additional loss may have been incurred and include estimated legal costs. Restructuring A liability for post-employment benefits is recorded when payment is probable and the amount is reasonably estimable. Contract exit costs include contract termination fees and are recognized in the period in which the Company terminates the contract. Foreign Currencies The Company’s functional currency is the United States dollar. Gains and losses related to foreign currency transactions and conversion of foreign denominated cash balances are included in current results. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. This method also requires the recognition of future tax benefits such as net operating loss carry forwards, to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 48 The carrying value of the Company’s net deferred tax assets assumes the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets resulting in additional income tax expense in its Consolidated Statement of Operations. Management evaluates the realizability of the deferred tax assets and assesses the adequacy of the valuation allowance quarterly. Likewise, in the event the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made. The determination of recording or releasing tax valuation allowances is made, in part, pursuant to an assessment performed by management regarding the likelihood that the Company will generate future taxable income in the jurisdiction that generated the deferred tax assets. This assessment requires management to exercise judgment and make estimates with respect to its ability to generate revenues, gross profits, operating income, and taxable income in future periods. Amongst other factors, management must make assumptions regarding overall business and semiconductor industry conditions, operating efficiencies, the Company’s ability to develop products to its customers’ specifications, technological change, the competitive environment, and changes in regulatory requirements which may impact its ability to generate taxable income and, in turn, realize the value of its deferred tax assets. The calculation of the Company’s tax liabilities includes addressing uncertainties in the application of complex tax regulations and is based on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its recognition threshold and measurement attribute of whether it is more likely than not that the positions the Company has taken in tax filings will be sustained upon tax audit, and the extent to which, additional taxes would be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period in which it is determined the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result. The Company recognizes any interest or penalties, if incurred, on any unrecognized tax liabilities or benefits as a component of income tax expense. Earnings Per Share Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share incorporate the potentially dilutive incremental shares issuable upon the assumed exercise of stock options, the assumed vesting of outstanding restricted stock units, and the assumed issuance of common stock under the stock purchase plan using the treasury share method. Shares issuable upon the vesting of performance stock awards are likewise included in the calculation of diluted earnings per share as of the date the condition(s) have been satisfied, assuming the end of the reporting period was the end of the contingency period. Stock Repurchase The Company accounts for stock repurchases in the consolidated balance sheet by reducing common stock for the par value of the shares, reducing paid-in capital for the amount in excess of par to zero during the period in which the shares are repurchased, and recording the residual amount, if any, to retained earnings. Excise tax on stock repurchases is recorded as part of the cost basis of shares acquired in the consolidated statement of stockholders’ equity. Government Assistance The Company receives government assistance for qualifying capital investments, research and development, and other activities as defined by the relevant government entities awarding the incentive. Incentives provided by government entities are recognized when the Company has reasonable assurance that it will comply with the conditions of the incentive and the incentive will be received. The Company records capital-related incentives as a reduction to property, plant and equipment and recognizes a reduction to depreciation expense over the useful life of the corresponding asset. Incentives for specific operating activities are offset against the related expense in the period the expense is incurred. As of September 29, 2023, the Company has recognized $10.2 million of receivables in other short-term assets with a corresponding reduction to the carrying amounts of the qualifying manufacturing assets, recorded as a reduction to cost of goods sold as the related assets depreciate. The Company recognized an immaterial benefit in the consolidated statement of operations in fiscal 2023 for grants related to operating activities. Recently Adopted Accounting Pronouncements and Other Developments 49 In November 2021, the Financial Accounting Standards Board issued ASU 2021-10 - Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance (“ASU 2021-10”) to increase transparency of government assistance received by most business entities. The standard requires annual disclosures of the nature of the transactions, including the commitments, contingencies, and the terms and conditions attached to the grant, the form in which the assistance was provided, the accounting policies used to account for the transactions and the effect of the transactions on the entity's financial statements. The Company adopted ASU 2021-10 in fiscal 2023 and the adoption did not have a significant impact on the consolidated financial statements. In August 2022, the U.S. government enacted the CHIPS and Science Act, which provides funding for manufacturing grants and research investments and establishes a 25% investment tax credit for certain investments in U.S. semiconductor manufacturing that is placed in service after December 31, 2022. This new law did not have a material impact to the Company in fiscal 2023. In August 2022, the U.S. government enacted the Inflation Reduction Act, which imposes a corporate alternative minimum tax (“CAMT”) of 15% on corporations with three-year average annual adjusted financial statement income exceeding $1.0 billion, as well as a 1% excise tax on corporate stock repurchases made after December 31, 2022. The Company did not incur an excise tax on stock repurchases in fiscal 2023 and is currently evaluating the provisions of CAMT and its potential impact to the Company. CAMT is effective for the Company in fiscal 2024. 3 . MARKETABLE SECURITIES The Company’s portfolio of available-for-sale marketable securities consists of the following (in millions): Current Noncurrent September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022 U.S. Treasury and government $ 15.1 $ 13.1 $ 4.1 $ 0.5 Corporate bonds and notes — 0.2 — — Municipal bonds 0.5 7.0 — — Total marketable securities $ 15.6 $ 20.3 $ 4.1 $ 0.5 The contractual maturities of noncurrent available-for-sale marketable securities were within two years or less of issuance of the applicable securities. Neither gross unrealized gains and losses nor realized gains and losses were material as of September 29, 2023, and September 30, 2022, respectively. 4 . FAIR VALUE Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis The Company measures certain assets and liabilities at fair value on a recurring basis such as its financial instruments. There have been no transfers between Level 1, 2, or 3 assets or liabilities during fiscal 2023 . Assets and liabilities recorded at fair value on a recurring basis consisted of the following (in millions): As of September 29, 2023 As of September 30, 2022 Fair Value Measurements Fair Value Measurements Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Assets Cash and cash equivalents (1) $ 718.8 $ 718.5 $ 0.3 $ — $ 566.0 $ 565.7 $ 0.3 $ — U.S. Treasury and government securities 19.2 — 19.2 — 13.6 3.6 10.0 — Corporate bonds and notes — — — — 0.2 — 0.2 — Municipal bonds 0.5 — 0.5 — 7.0 — 7.0 — Total assets at fair value $ 738.5 $ 718.5 $ 20.0 $ — $ 586.8 $ 569.3 $ 17.5 $ — (1) Cash equivalents included in Levels 1 and 2 consist of money market funds and corporate bonds and notes, US Treasury and government securities, and agency securities purchased with less than ninety days until maturity. 50 Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company’s non-financial assets and liabilities, such as goodwill, intangible assets, and other long-lived assets resulting from business combinations, are measured at fair value using income approach valuation methodologies at the date of acquisition and are subsequently re-measured if there are indicators of impairment. During fiscal 2023, the Company recorded impairment charges of $ 64.5 million primarily due to reduced overall market demand related to long-term supply capacity deposits of $ 47.5 million recorded within cost of goods sold and a loss on divested assets of $ 12.3 million recorded within restructuring, impairment, and other. During the fiscal years ended September 30, 2022, and October 1, 2021, the Company recorded impairment charges of $ 20.7 million and $ 7.1 million, respectively. Fair Value of Debt The Company’s debt is carried at amortized cost and is measured at fair value quarterly for disclosure purposes. The estimated fair values are based on Level 2 inputs as the fair value is based on quoted prices for the Company’s debt. The carrying value of the Term Loans approximates its fair value as the Term Loans are carried at a market observable interest rate that resets periodically. The carrying amount and estimated fair value of debt under Senior Notes consists of the following (in millions): As of September 29, 2023 September 30, 2022 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value 0.90% Senior Notes due 2023 $ — $ — $ 499.2 $ 488.5 1.80% Senior Notes due 2026 497.7 444.5 496.8 431.2 3.00% Senior Notes due 2031 495.2 390.4 494.5 377.6 Total debt under Senior Notes $ 992.9 $ 834.9 $ 1,490.5 $ 1,297.3 5 . INVENTORY Inventory consists of the following (in millions): As of September 29, 2023 September 30, 2022 Raw materials $ 57.2 $ 81.3 Work-in-process 746.8 805.3 Finished goods 315.7 325.5 Total inventory $ 1,119.7 $ 1,212.1 6 . PROPERTY, PLANT, AND EQUIPMENT, NET Property, plant, and equipment, net consists of the following (in millions): As of September 29, 2023 September 30, 2022 Land and improvements $ 11.8 $ 11.9 Buildings and improvements 588.2 555.6 Furniture and fixtures 74.8 70.1 Machinery and equipment 3,389.3 3,316.3 Construction in progress 107.6 157.2 Total property, plant, and equipment, gross 4,171.7 4,111.1 Accumulated depreciation ( 2,781.6 ) ( 2,506.3 ) Total property, plant, and equipment, net $ 1,390.1 $ 1,604.8 51 7 . GOODWILL AND INTANGIBLE ASSETS The Company’s goodwill balance was $ 2,176.7 million as of each of September 29, 2023, and September 30, 2022. The Company performed an impairment test of its goodwill and its indefinite-lived intangible assets as of the first day of the fourth fiscal quarter in accordance with its regularly scheduled testing. The results of these tests indicated that the Company’s goodwill and indefinite-lived intangible assets were not impaired. There were no indicators of impairment noted during the fiscal year ended September 29, 2023. Intangible assets consist of the following (in millions): As of As of Weighted average amortization period (years) September 29, 2023 September 30, 2022 Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer relationships and backlog 2.3 $ 154.6 $ ( 154.6 ) $ — $ 154.6 $ ( 122.3 ) $ 32.3 Developed technology and other 6.1 1,290.4 ( 379.4 ) 911.0 1,280.9 ( 209.2 ) 1,071.7 Technology licenses 2.8 75.8 ( 36.0 ) 39.8 105.1 ( 45.2 ) 59.9 In-process research and development 271.3 — 271.3 280.8 — 280.8 Total intangible assets $ 1,792.1 $ ( 570.0 ) $ 1,222.1 $ 1,821.4 $ ( 376.7 ) $ 1,444.7 Fully amortized intangible assets are eliminated from both the gross and accumulated amortization amounts in the first quarter of each fiscal year. During fiscal 2023 and fiscal 2022, $ 9.5 million and $ 293.5 million, respectively, of IPR&D assets were transferred to definite-lived intangible assets, and are being amortized over their useful lives of 12 years. Amortization expense related to definite-lived intangible assets was $ 225.9 million, $ 288.4 million, and $ 86.8 million for the fiscal years ended September 29, 2023, September 30, 2022, and October 1, 2021, respectively. Annual amortization expense for the next five fiscal years related to definite-lived intangible assets, excluding IPR&D, is expected to be as follows (in millions): 2024 2025 2026 2027 2028 Thereafter Amortization expense $ 179.1 $ 155.7 $ 127.8 $ 112.6 $ 89.9 $ 285.7 52 8 . INCOME TAXES Income before income taxes consists of the following components (in millions): Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 United States $ 484.9 $ 663.0 $ 804.7 Foreign 593.9 813.6 794.0 Income before income taxes $ 1,078.8 $ 1,476.6 $ 1,598.7 The provision for income taxes consists of the following components (in millions): Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Current tax expense: Federal $ 164.4 $ 88.7 $ 87.5 State 0.1 0.1 — Foreign 74.4 51.5 70.7 238.9 140.3 158.2 Deferred tax expense (benefit): Federal ( 102.4 ) 43.9 ( 45.8 ) State ( 0.1 ) 0.1 ( 0.1 ) Foreign ( 40.4 ) 17.1 ( 11.9 ) ( 142.9 ) 61.1 ( 57.8 ) Provision for income taxes $ 96.0 $ 201.4 $ 100.4 The actual income tax expense is different than that which would have been computed by applying the federal statutory tax rate to income before income taxes. A reconciliation of income tax expense as computed at the United States federal statutory income tax rate to the provision for income tax expense is as follows (in millions): Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Tax expense at United States statutory rate $ 226.5 $ 310.1 $ 335.7 Foreign tax rate difference ( 90.7 ) ( 105.3 ) ( 111.7 ) Effect of stock compensation 16.0 ( 13.1 ) ( 6.7 ) Research and development credits ( 29.7 ) ( 26.1 ) ( 27.0 ) Change in tax reserve 8.1 7.4 ( 51.5 ) Global Intangible Low-Taxed Income 16.3 36.1 25.5 Foreign Derived Intangible Income ( 65.9 ) ( 39.9 ) ( 79.7 ) Other, net 15.4 32.2 15.8 Provision for income taxes $ 96.0 $ 201.4 $ 100.4 The Company operates in foreign jurisdictions with income tax rates lower than the United States tax rate of 21.0 % for the fiscal years ended September 29, 2023, September 30, 2022, and October 1, 2021. The Company had accrued $ 34.9 million and $ 105.8 million of the deemed repatriation tax in short-term and long-term liabilities within the consolidated balance sheet, respectively, as of September 29, 2023. The Company had accrued $ 18.6 million and $ 139.7 million of the deemed repatriation tax in short-term and long-term liabilities within the consolidated balance sheet, respectively, as of September 30, 2022. The remaining repatriation tax is payable over the next three years: $ 34.9 million in 2024, $ 47.6 million in 2025, and $ 58.2 million in 2026. 53 On October 2, 2010, the Company expanded its presence in Asia by launching operations in Singapore. The Company operates under a tax holiday in Singapore, which is effective through September 30, 2030 . The current tax holiday is conditioned upon the Company’s compliance with certain employment and investment thresholds in Singapore. The impact of the tax holiday decreased Singapore taxes owed by $ 66.0 million, $ 96.6 million, and $ 99.5 million for the fiscal years ended September 29, 2023, September 30, 2022, and October 1, 2021, respectively, which resulted in tax benefits of $ 0.41 , $ 0.59 , and $ 0.60 of diluted earnings per share, respectively. These tax benefits were partially offset by an increase in tax expense on GILTI. Deferred income tax assets and liabilities consist of the tax effects of temporary differences related to the following (in millions): Fiscal Years Ended September 29, 2023 September 30, 2022 Deferred tax assets: Inventory $ 24.1 $ 21.4 Accrued compensation and benefits 14.4 11.6 Product returns, allowances, and warranty 7.0 1.5 Share-based and other deferred compensation 24.5 27.8 Net operating loss carry forwards 12.2 14.0 Non-United States tax credits 15.7 17.0 State tax credits 140.0 138.0 Operating leases 45.6 56.8 R&D capitalization 95.3 — Intangible assets 34.0 20.4 Property, plant, and equipment 34.5 31.4 Other, net 13.9 8.7 Deferred tax assets 461.2 348.6 Less valuation allowance ( 164.2 ) ( 161.4 ) Net deferred tax assets 297.0 187.2 Deferred tax liabilities: Property, plant, and equipment ( 52.8 ) ( 59.2 ) Intangible assets ( 9.6 ) ( 4.7 ) Operating leases ( 44.3 ) ( 51.5 ) Other, net ( 7.1 ) ( 39.7 ) Net deferred tax liabilities ( 113.8 ) ( 155.1 ) Total net deferred tax assets $ 183.2 $ 32.1 The deferred tax assets and liabilities based on tax jurisdictions are presented on our Consolidated Balance Sheets as follows: As of September 29, 2023 September 30, 2022 Deferred tax assets $ 192.3 $ 52.7 Deferred tax liabilities ( 9.1 ) ( 20.6 ) Net deferred tax asset $ 183.2 $ 32.1 In accordance with GAAP, management has determined that it is more likely than not that a portion of the Company’s historic and current year income tax benefits will not be realized. As of September 29, 2023, the Company has a valuation allowance of $ 164.2 million. This valuation allowance is comprised of $ 140.0 million related to United States tax credits, $ 4.0 million related to United States state net operating loss carry forwards, and $ 20.2 million related to foreign deferred tax assets. The United States tax credits relate primarily to California research tax credits that can be carried forward indefinitely, for which the Company has provided a full valuation allowance. The Company does not anticipate sufficient taxable income or tax liability to utilize the United States and foreign credits. If these benefits are recognized in a future period, the valuation allowance on deferred tax assets will be reversed and up to a $ 164.2 million income tax benefit may be recognized. The Company will need 54 to generate $ 656.6 million of future United States federal taxable income to utilize its United States deferred tax assets, net of deferred tax liabilities and excluding state deferred tax assets with a full valuation allowance, as of September 29, 2023. The Company believes that future reversals of taxable temporary differences, and its forecast of continued earnings in its domestic and foreign jurisdictions, support its decision to not record a valuation allowance on other deferred tax assets. The Company will continue to assess its valuation allowance in future periods. The net valuation allowance increased by $ 2.8 million and $ 11.4 million in fiscal 2023 and fiscal 2022, respectively, primarily related to increases in state tax credit carryovers. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in millions): Unrecognized tax benefits Balance at September 30, 2022 $ 62.5 Increases based on positions related to prior years 25.4 Decreases based on positions related to prior years ( 21.7 ) Increases based on positions related to current year 3.7 Decreases based on settlements with taxing authorities ( 12.0 ) Balance at September 29, 2023 $ 57.9 Of the total unrecognized tax benefits at September 29, 2023, $ 40.4 million would impact the effective tax rate, if recognized. The remaining unrecognized tax benefits would not impact the effective tax rate, if recognized, due to the Company’s valuation allowance and certain positions that were required to be capitalized. The Company anticipates reversals within the next 12 months related to items such as the lapse of the statute of limitations, audit closures, and other items that occur in the normal course of business. Although the Company cannot predict the timing of resolution with taxing authorities, if any, the Company believes it is reasonably possible that its unrecognized tax benefits will be reduced by $ 13.1 million in the next 12 months due to expiration of the applicable statute of limitations. During fiscal 2023 and fiscal 2022, the Company recognized $ 2.9 million and $ 1.2 million, respectively, of interest or penalties related to unrecognized tax benefits. During fiscal 2021, the Company recognized an $ 11.6 million benefit for interest and penalties related to unrecognized tax benefits. Accrued interest and penalties of $ 6.2 million and $ 5.7 million related to uncertain tax positions have been included in long-term tax liabilities within the consolidated balance sheet as of September 29, 2023, and September 30, 2022, respectively. During fiscal 2023, the Company concluded an Internal Revenue Service examination of its federal income tax returns for the fiscal year ended September 28, 2018 (“fiscal 2018”) and the fiscal year ended September 27, 2019 (“fiscal 2019”). The Company agreed to various adjustments to fiscal 2018 and fiscal 2019 tax returns that resulted in the recognition of net tax expense of $1.6 million during fiscal 2023. The Company’s major tax jurisdictions as of September 29, 2023, are the United States, California, Canada, Mexico, Japan, and Singapore. For the United States, the Company has open tax years dating back to fiscal 2020 . For California, the Company has open tax years dating back to fiscal 2004 . For Canada, the Company has open tax years dating back to fiscal 2016 . For Mexico, the Company has open tax years dating back to fiscal 2013 . For Japan, the Company has open tax years dating back to fiscal 2016 . For Singapore, the Company has open tax years dating back to fiscal 2019 . The Company is subject to audit examinations by the respective taxing authorities on a periodic basis, of which the results could impact its financial position, results of operations, or cash flows. 9 . STOCKHOLDERS’ EQUITY Common Stock At September 29, 2023, the Company is authorized to issue 525.0 million shares of common stock, par value $ 0.25 per share, of which 159.5 million shares are issued and outstanding. Holders of the Company’s common stock are entitled to dividends in the event declared by the Company’s Board of Directors out of funds legally available for such purpose. Dividends may not be paid on common stock unless all accrued dividends on preferred stock, if any, have been paid or declared and set aside. In the event of the Company’s liquidation, dissolution, or winding up, the holders of common stock will be entitled to share pro rata in the assets remaining after payment to creditors and after payment of the liquidation preference plus any unpaid dividends to holders of any outstanding preferred stock. 55 Each holder of the Company’s common stock is entitled to one vote for each such share outstanding in the holder’s name. No holder of common stock is entitled to cumulate votes in voting for directors. The Company’s restated certificate of incorporation as amended to date (the “Certificate of Incorporation”) provides that, unless otherwise determined by the Company’s Board of Directors, no holder of stock has any preemptive right to purchase or subscribe for any stock of any class which the Company may issue or sell. Preferred Stock The Company’s Certificate of Incorporation has authorized and permits the Company to issue up to 25.0 million shares of preferred stock without par value in one or more series and with rights and preferences that may be fixed or designated by the Company’s Board of Directors without any further action by the Company’s stockholders. The designation, powers, preferences, rights and qualifications, limitations, and restrictions of the preferred stock of each series will be fixed by the certificate of designation relating to such series, which will specify the terms of the preferred stock. At September 29, 2023, the Company had no shares of preferred stock issued or outstanding. Stock Repurchase and Retirement On January 31, 2023, the Board of Directors approved a stock repurchase program (“January 31, 2023 stock repurchase program”), pursuant to which the Company is authorized to repurchase up to $ 2.0 billion of its common stock from time to time through February 1, 2025, on the open market or in privately negotiated transactions, in compliance with applicable securities laws and other legal requirements. The January 31, 2023 stock repurchase program succeeds in its entirety the stock repurchase program approved by the Board of Directors on January 26, 2021 (“January 26, 2021 stock repurchase program”). The timing and amount of any shares of the Company’s common stock that are repurchased under the January 31, 2023 stock repurchase program will be determined by the Company’s management based on its evaluation of market conditions and other factors. The January 31, 2023 stock repurchase program may be suspended or discontinued at any time. The Company currently expects to fund the January 31, 2023 stock repurchase program using the Company’s working capital. During the fiscal year ended September 29, 2023, the Company paid approximately $ 175.3 million (including commissions) in connection with the repurchase of 1.9 million shares of its common stock (paying an average price of $ 90.60 per share) all of which shares were repurchased pursuant to the January 26, 2021 stock repurchase program. As of September 29, 2023, $ 2.0 billion remained available under the January 31, 2023 stock repurchase program. During the fiscal year ended September 30, 2022, the Company paid approximately $ 886.8 million (including commissions) in connection with the repurchase of 6.5 million shares of its common stock (paying an average price of $ 136.32 per share) all of which shares were repurchased pursuant to the January 26, 2021, stock repurchase program. During the fiscal year ended October 1, 2021, the Company paid approximately $ 195.6 million (including commissions) in connection with the repurchase of 1.4 million shares of its common stock (paying an average price of $ 138.85 per share) all of which shares were repurchased pursuant to the January 30, 2019 stock repurchase program. During the fiscal years ended September 30, 2022 and October 1, 2021, the Board of Directors approved the retirement of 6.2 million and 68.5 million treasury shares at an aggregate historical cost of $ 893.4 million and $ 4,342.6 million, respectively. Upon retirement, the shares assumed the status of authorized and unissued. All future repurchases of shares will assume the status of authorized and unissued. Dividends On November 2, 2023 , the Company announced that the Board of Directors had declared a cash dividend on the Company’s common stock of $ 0.68 per share. This dividend is payable on December 12, 2023 , to the Company’s stockholders of record as 56 of the close of business on November 21, 2023 . Future dividends are subject to declaration by the Board of Directors. The dividends charged to retained earnings in fiscal 2023 and 2022 were as follows (in millions except per share data): Fiscal Years Ended September 29, 2023 September 30, 2022 Per Share Total Per Share Total First quarter $ 0.62 $ 99.4 $ 0.56 $ 92.5 Second quarter 0.62 98.6 0.56 91.2 Third quarter 0.62 98.7 0.56 90.0 Fourth quarter 0.68 108.5 0.62 99.4 $ 2.54 $ 405.2 $ 2.30 $ 373.1 Employee Stock Benefit Plans As of September 29, 2023, the Company has the following equity compensation plans under which its equity securities were authorized for issuance to its employees and/or directors: ◦ the 2002 Employee Stock Purchase Plan ◦ the Non-Qualified Employee Stock Purchase Plan ◦ the 2008 Director Long-Term Incentive Plan ◦ the 2015 Long-Term Incentive Plan Except for the Non-Qualified Employee Stock Purchase Plan, each of the foregoing equity compensation plans was approved by the Company’s stockholders. As of September 29, 2023, a total of 37.5 million shares are authorized for grant under the Company’s share-based compensation plans. The number of common shares reserved for future awards to employees and directors under these plans was 10.5 million at September 29, 2023. The Company currently grants new equity awards to employees under the 2015 Long-Term Incentive Plan and to non-employee directors under the 2008 Director Long-Term Incentive Plan. 2015 Long-Term Incentive Plan. Under this plan, officers, employees, and certain consultants may be granted stock options, restricted stock units, performance stock units, and other share-based awards. The plan has been approved by the stockholders. Under the plan, up to 24.5 million shares have been authorized for grant. A total of 8.9 million shares were available for new grants as of September 29, 2023. The maximum contractual term of options under the plan is seven years from the date of grant. Options granted under the plan at the determination of the compensation committee generally vest ratably over four years. Restricted stock units granted under the plan at the determination of the compensation committee generally vest over three or more years. No dividends or dividend equivalents are accumulated or paid with respect to restricted stock unit awards or other awards until the shares underlying such awards vest and are issued to the award holder. Performance stock units are contingently granted depending on the achievement of certain predetermined performance goals and generally vest over one or more years. 2008 Director Long-Term Incentive Plan. Under this plan, non-employee directors may be granted stock options, restricted stock units, and other share-based awards. The plan has been approved by the stockholders. Under the plan a total of 1.5 million shares have been authorized for grant. A total of 0.5 million shares were available for new grants as of September 29, 2023. The maximum contractual term of options granted under the plan is ten years from the date of grant. Options granted under the plan generally vest ratably over four years. Restricted stock units granted under the plan generally vest over one or more years. Employee Stock Purchase Plans. The Company maintains a domestic and an international employee stock purchase plan. Under these plans, eligible employees may purchase common stock through payroll deductions of up to 15 % of their compensation. The price per share is the lower of 85 % of the fair market value of the common stock at the beginning or end of each offering period (six months). The plans provide for purchases by employees of up to an aggregate of 11.6 million shares. Shares of common stock purchased under these plans in the fiscal years ended September 29, 2023, September 30, 2022, and October 1, 2021, were 0.3 million, 0.3 million, and 0.2 million, respectively. At September 29, 2023, there were 1.0 million shares available for purchase. The Company recognized compensation expense of $ 10.9 million, $ 9.2 million, and $ 8.7 million for the fiscal years ended September 29, 2023, September 30, 2022, and October 1, 2021, respectively, related to the employee stock 57 purchase plan. The unrecognized compensation expense on the employee stock purchase plan at September 29, 2023, was $ 3.5 million. The weighted average period over which the cost is expected to be recognized is approximately four months. Restricted and Performance Awards and Units The following table represents a summary of the Company’s restricted and performance awards and units: Shares (in millions) Weighted average grant date fair value Non-vested awards outstanding at September 30, 2022 2.4 $ 139.63 Granted (1) 2.6 $ 92.86 Vested ( 1.2 ) $ 123.60 Canceled/forfeited ( 0.4 ) $ 112.15 Non-vested awards outstanding at September 29, 2023 3.4 $ 112.69 (1) includes performance stock awards granted and earned assuming target performance under the underlying performance metrics The weighted-average grant date fair value per share for awards granted during the fiscal years ended September 29, 2023, September 30, 2022, and October 1, 2021, was $ 92.86 , $ 151.20 , and $ 148.96 , respectively. The following table summarizes the total intrinsic value for awards vested (in millions): Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Awards $ 111.9 $ 249.6 $ 167.4 Valuation and Expense Information The following table summarizes pre-tax share-based compensation expense by financial statement line and related tax benefit (in millions): Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Cost of goods sold $ 20.7 $ 26.9 $ 28.9 Research and development 94.8 93.8 85.7 Selling, general, and administrative 69.6 74.5 77.3 Total share-based compensation expense $ 185.1 $ 195.2 $ 191.9 Share-based compensation tax expense (benefit) $ 9.1 $ ( 20.1 ) $ ( 13.5 ) Capitalized share-based compensation expense at period end $ 14.5 $ 6.8 $ 9.8 The following table summarizes total compensation costs related to unvested share-based awards not yet recognized and the weighted-average period over which it is expected to be recognized at September 29, 2023: Unrecognized compensation cost for unvested awards (in millions) Weighted average remaining recognition period (in years) Awards $ 242.3 2.6 The fair value of the restricted stock units is equal to the closing market price of the Company’s common stock on the date of grant. The Company issued performance stock unit awards during fiscal 2023, fiscal 2022, and fiscal 2021 that contained market-based conditions. The fair value of these performance stock unit awards was estimated on the date of the grant using a Monte Carlo simulation with the following weighted average assumptions: 58 Fiscal Year Ended September 29, 2023 September 30, 2022 October 1, 2021 Volatility of common stock 45.71 % 44.04 % 43.20 % Average volatility of peer companies 40.74 % 46.28 % 45.96 % Average correlation coefficient of peer companies 0.65 0.65 0.65 Risk-free interest rate 4.51 % 0.79 % 0.25 % Dividend yield 2.80 % 1.40 % 1.39 % 10. LEASES The Company’s lease arrangements consist primarily of corporate, manufacturing, design, and other facility agreements as well as various machinery and office equipment agreements. The leases expire at various dates through 2061, some of which include options to extend the lease term. The longest potential total lease term consists of a 40 -year land lease in Osaka, Japan. During the fiscal years ended September 29, 2023, September 30, 2022, and October 1, 2021, the Company recorded $ 39.8 million, $ 43.6 million, and $ 33.9 million of operating lease expense, and $ 19.2 million, $ 12.3 million, and $ 3.2 million of variable lease expense, respectively. Supplemental cash information and non-cash activities related to operating leases are as follows (in millions): Fiscal Year Ended September 29, 2023 September 30, 2022 October 1, 2021 Operating cash outflows from operating leases $ 34.0 $ 32.0 $ 32.5 Operating lease assets obtained in exchange for new lease liabilities $ 11.1 $ 84.6 $ 24.8 Operating leases are classified as follows (in millions): As of September 29, 2023 September 30, 2022 Other current liabilities $ 28.3 $ 18.5 Long-term operating lease liabilities 188.7 206.9 Total lease liabilities $ 217.0 $ 225.4 Maturities of lease liabilities under operating leases by fiscal year are as follows (in millions): As of September 29, 2023 2024 $ 20.6 2025 32.7 2026 29.3 2027 28.5 2028 26.3 Thereafter 123.9 Total lease payments 261.3 Less: imputed interest ( 44.3 ) Present value of lease liabilities 217.0 Less: current portion (included in other current liabilities) (28.3) Total $ 188.7 59 Weighted-average remaining lease term and discount rate related to operating leases are as follows: As of September 29, 2023 September 30, 2022 Weighted-average remaining lease term (years) 12.3 12.1 Weighted-average discount rate 3.6 % 3.3 % 11. COMMITMENTS AND CONTINGENCIES Legal Matters From time to time, various lawsuits, claims, and proceedings have been, and may in the future be, instituted or asserted against the Company, including those pertaining to patent infringement, intellectual property, environmental hazards, product liability and warranty, safety and health, employment, and contractual matters. The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights. Third parties have asserted, and may in the future, assert patent, copyright, trademark, and other intellectual property rights to technologies that are important to the Company’s business and have demanded and may in the future demand that the Company license their technology. The outcome of any such litigation cannot be predicted with certainty and some such lawsuits, claims, or proceedings may be disposed of unfavorably to the Company. Generally speaking, intellectual property disputes often have a risk of injunctive relief, which, if imposed against the Company, could materially and adversely affect the Company’s financial condition or results of operations. From time to time the Company may also be involved in legal proceedings in the ordinary course of business. The Company monitors the status of legal proceedings and other contingencies on an ongoing basis to ensure loss contingencies are recognized and/or disclosed in its financial statements and footnotes. The Company does not believe there are any pending legal proceedings that are reasonably possible to result in a material loss. The Company is engaged in various legal actions in the normal course of business and, while there can be no assurances, the Company believes the outcome of all pending litigation involving the Company will not have, individually or in the aggregate, a material adverse effect on its business or financial statements. Purchase Commitments The Company purchases materials primarily pursuant to individual purchase orders, some of which have underlying master purchase agreements. Some of these purchase commitments are cancellable, and some are non-cancelable, depending on the terms with each individual supplier. In the event of cancellation, the Company may be required to pay costs incurred through the date of cancellation or other fees. When cancellation would result in incurring costs or other fees, the Company has historically sought to negotiate amended terms to the original agreements and orders to limit its exposure and, as such, the Company believes that purchase commitments as of any particular date may not be a reliable indicator of future commitments. The Company maintains certain minimum purchase commitments under long-term capacity reservation agreements primarily with foundries for the purchase of wafers. Under these agreements, the Company agreed to pay refundable deposits to the suppliers in exchange for reserved manufacturing production capacity over the term of the agreements. During fiscal 2023, the Company recorded impairment charges of $ 47.5 million within cost of goods sold due to reduced overall market demand related to long-term supply capacity deposits. As of September 29, 2023, the remaining deposits under the long-term capacity reservation agreements were $43.0 million and $16.0 million recorded within other current assets and other long-term assets, respectively. 12. GUARANTEES AND INDEMNITIES The Company has made no significant contractual guarantees for the benefit of third parties. However, the Company generally indemnifies its customers from third-party intellectual property infringement litigation claims related to its products and, on occasion, also provides other indemnities related to product sales. In connection with certain facility leases, the Company has indemnified its lessors for certain claims arising from the facility or the lease. The Company indemnifies its directors and officers to the maximum extent permitted under the laws of the state of Delaware. The duration of the indemnities varies, and in many cases is indefinite. The indemnities to customers in connection with product sales generally are subject to limits based upon the amount of the related product sales and in many cases are subject to geographic and other restrictions. In certain instances, the Company’s indemnities do not provide for any limitation of the 60 maximum potential future payments the Company could be obligated to make. The Company has not recorded any liability for these indemnities in the accompanying consolidated balance sheets and does not expect that such obligations will have a material adverse impact on its financial statements. 13. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts): Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Net income $ 982.8 $ 1,275.2 $ 1,498.3 Weighted average shares outstanding – basic 159.4 162.4 165.2 Dilutive effect of equity-based awards 0.9 0.9 1.8 Weighted average shares outstanding – diluted 160.3 163.3 167.0 Net income per share – basic $ 6.17 $ 7.85 $ 9.07 Net income per share – diluted $ 6.13 $ 7.81 $ 8.97 Anti-dilutive common stock equivalents 0.1 0.7 — Basic earnings per share are calculated by dividing net income by the weighted average number of shares of the Company’s common stock outstanding during the period. The calculation of diluted earnings per share includes the dilutive effect of equity-based awards that were outstanding during the fiscal years ended September 29, 2023, September 30, 2022, and October 1, 2021, using the treasury stock method. Shares issuable upon the vesting of performance stock awards are likewise included in the calculation of diluted earnings per share as of the date the condition(s) have been satisfied, assuming the end of the reporting period was the end of the contingency period. Certain of the Company’s outstanding share-based awards, noted in the table above, were excluded because they were anti-dilutive, but they could become dilutive in the future. 14. SEGMENT INFORMATION AND CONCENTRATIONS The Company has a single reportable operating segment which designs, develops, manufactures, and markets similar proprietary semiconductor products, including intellectual property. In reaching this conclusion, management considers the definition of the chief operating decision maker (“ CODM ”), how the business is defined by the CODM, the nature of the information provided to the CODM, and how that information is used to make operating decisions, allocate resources, and assess performance. The Company’s CODM is the president and chief executive officer. The results of operations provided to and analyzed by the CODM are at the consolidated level and accordingly, key resource decisions and assessment of performance are performed at the consolidated level. The Company assesses its determination of operating segments at least annually. Disaggregation of Revenue and Geographic Information The Company presents net revenue by geographic area based upon the location of the OEMs’ headquarters and sales channel as it believes that doing so best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by 61 economic factors. Individually insignificant OEMs are presented based on sales region. Net revenue by geographic area is as follows (in millions): Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 United States $ 3,603.9 $ 3,685.7 $ 3,228.1 China 358.3 599.6 994.2 Taiwan 344.4 430.4 404.2 Europe, Middle East, and Africa 204.2 235.8 180.1 South Korea 198.3 458.2 264.5 Other Asia-Pacific 63.3 75.8 38.0 Total $ 4,772.4 $ 5,485.5 $ 5,109.1 Net revenue by sales channel is as follows (in millions): Fiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Distributors $ 4,235.7 $ 4,488.1 $ 4,539.7 Direct customers 536.7 997.4 569.4 Total $ 4,772.4 $ 5,485.5 $ 5,109.1 The Company’s revenue from external customers is generated principally from the sale of semiconductor products. Accordingly, the Company considers its product offerings to be similar in nature and therefore not segregated for reporting purposes. Net property, plant, and equipment balances, based on the physical locations within the indicated geographic areas are as follows (in millions): As of September 29, 2023 September 30, 2022 Japan $ 606.4 $ 679.7 Singapore 307.5 363.3 Mexico 233.1 296.7 United States 219.7 246.0 Rest of world 23.4 19.1 $ 1,390.1 $ 1,604.8 Concentrations Financial instruments that potentially subject the Company to concentration of credit risk consist principally of trade accounts receivable. Trade accounts receivable are primarily derived from sales to manufacturers of communications and consumer products and electronic component distributors. The Company performs ongoing credit evaluations of customers. In fiscal 2023, 2022, and 2021, Apple, through sales to multiple distributors, contract manufacturers, and direct sales for multiple applications including smartphones, tablets, desktop, and notebook computers, watches and other devices, in the aggregate accounted for 66 %, 58 %, and 59 % of the Company’s net revenue, respectively. At September 29, 2023, the Company’s three largest accounts receivable balances comprised 83 % of aggregate gross accounts receivable. This concentration was 79 % at September 30, 2022, and 70 % at October 1, 2021. 62 15. SUPPLEMENTAL FINANCIAL INFORMATION Other current assets consist of the following (in millions): As of September 30, 2022 October 1, 2021 Prepaid expenses $ 306.0 $ 242.3 Other 155.1 95.2 Total other current assets $ 461.1 $ 337.5 Other current liabilities consist of the following (in millions): As of September 29, 2023 September 30, 2022 Accrued customer liabilities $ 270.9 $ 226.9 Accrued taxes 58.8 48.8 Short-term operating lease liabilities 28.3 18.5 Other 44.8 45.0 Total other current liabilities $ 402.8 $ 339.2 16. DEBT Debt consists of the following (in millions, except percentages): As of Effective Interest Rate September 29, 2023 September 30, 2022 0.90% Senior Notes due 2023 — % $ — $ 500.0 1.80% Senior Notes due 2026 1.97 % 500.0 500.0 3.00% Senior Notes due 2031 3.13 % 500.0 500.0 Term Loans due 2024 6.37 % 300.0 700.0 Unamortized debt discount and issuance costs ( 7.7 ) ( 10.9 ) Total debt 1,292.3 2,189.1 Less: current portion of long-term debt 299.4 499.2 Total long-term debt $ 992.9 $ 1,689.9 Senior Notes On May 26, 2021, the Company issued $ 500.0 million of its 0.90 % Senior Notes due 2023 (the “2023 Notes”), $ 500.0 million of its 1.80 % Senior Notes due 2026 (the “2026 Notes”), and $ 500.0 million of its 3.00 % Senior Notes due 2031 (the “2031 Notes” and, together with the 2026 Notes, the “Notes”). During fiscal 2023, the Company repaid $ 500.0 million of the 2023 Notes at maturity. The Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of its existing and future senior unsecured debt but effectively junior to any of the Company’s senior secured debt to the extent of the value of collateral securing such debt, and are structurally subordinated to all existing and future obligations of the Company’s subsidiaries. The Notes will mature on each respective maturity date, unless earlier redeemed in accordance with their terms. Interest on the Notes is payable on June 1 and December 1 of each year. The Company may redeem all or a portion of the 2026 Notes and the 2031 Notes at any time and from time to time prior to maturity, in whole or in part, for cash at the applicable redemption prices set forth in the respective supplemental indenture. If the Company undergoes a change of control repurchase event, as defined in the indenture governing the Notes (as supplemented, the “Indenture”), holders may require the Company to repurchase the Notes in whole or in part for cash at a price equal to 101 % of the principal amount of the Notes to be purchased, plus any accrued and unpaid interest. As of September 29, 2023, the Company considered the likelihood of acceleration related to the 2026 and 2031 Notes and recorded the Notes as long-term debt. The Notes are recorded net of discount and issuance costs, which are amortized to interest expense over the respective terms of these borrowings. 63 The Indenture contains customary events of default, including failure to make required payments of principal and interest, certain events of bankruptcy and insolvency, and default in the performance or breach of any covenant or warranty contained in the Indenture or the Notes. As of September 29, 2023, the Company was in material compliance with all debt covenants under the Senior Notes. Term Credit Agreement On May 21, 2021, the Company entered into a term credit agreement (as amended, the “Term Credit Agreement”) providing for a $ 1.0 billion term loan facility (the “Term Loan Facility”). On July 26, 2021, the Company borrowed $ 1.0 billion in aggregate principal amount of term loans (the “Term Loans”) under the Term Loan Facility to finance a portion of the purchase price for the acquisition of the Infrastructure and Automotive business of Silicon Laboratories Inc. and to pay fees and expenses incurred in connection therewith. During fiscal 2023, 2022, and 2021 the Company repaid $ 400.0 million, $ 50.0 million, and $ 250.0 million, respectively, of outstanding borrowings under the Term Loans. As of September 29, 2023, there were $ 300.0 million of borrowings outstanding under the Term Credit Agreement. Borrowings under the Term Loan Facility are not currently guaranteed by any of the Company’s subsidiaries. Interest on the Term Loans is payable either monthly or quarterly elected at the Company’s discretion and is based on the applicable floating interest rate, plus an applicable margin based on the Company’s public debt credit ratings. The Term Loans mature on July 26, 2024, and all amounts then-outstanding under the Term Loans, together with accrued and unpaid interest thereon, are repayable at maturity. There is no premium or penalty for prepayment. The Term Credit Agreement contains customary representations and warranties and covenants, including restrictions on the incurrence of indebtedness by non-guarantor subsidiaries and the creation of liens, and a financial covenant consisting of a limitation on leverage, defined as consolidated total indebtedness divided by consolidated earnings before interest, taxes, depreciation, and amortization for the period of four consecutive quarters not to exceed a ratio of 3.0 to 1.0. The Term Credit Agreement also contains customary events of default, which include failure to make required payments of principal and interest, breaches of representations and warranties, changes of control or failures to pay money judgments, and certain defaults in respect of specified material indebtedness, upon the occurrence of which, among other remedies, the lenders may accelerate the maturity of the indebtedness and other obligations under the Term Credit Agreement. As of September 29, 2023, the Company was in material compliance with all debt covenants under the Term Credit Agreement. Revolving Credit Agreement On May 21, 2021, the Company entered into a revolving credit agreement (as amended, the “Revolving Credit Agreement”) providing for a $ 750.0 million revolving credit facility (the “Revolver”). The proceeds of the Revolver will be used for general corporate purposes and working capital needs of the Company and its subsidiaries. The Revolver provides for revolving credit borrowings and letters of credit, with sublimits for letters of credit. The Revolver may be increased in specified circumstances by up to $ 250.0 million at the discretion of the lenders. The Revolver matures on July 26, 2026, and all unpaid borrowings, together with accrued and unpaid interest thereon, are repayable at maturity. The Revolving Credit Agreement contains customary representations and warranties and covenants, including restrictions on the incurrence of indebtedness by non-guarantor subsidiaries and the creation of liens, and a financial covenant consisting of a limitation on leverage, defined as consolidated total indebtedness divided by consolidated earnings before interest, taxes, depreciation, and amortization for the period of four consecutive quarters not to exceed a ratio of 3.0 to 1.0. As of September 29, 2023, there were no borrowings outstanding and the Company was in material compliance with all debt covenants under the Revolver. 17. SUBSEQUENT EVENT On October 4, 2023, the Company repaid $ 150.0 million of outstanding borrowings under the Term Loans. As of October 4, 2023, there were $ 150.0 million of borrowings outstanding under the Term Credit Agreement. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 64