{"url_path":"/sec/adi/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Financial Statements","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-20","source_url":"https://www.sec.gov/Archives/edgar/data/6281/0000006281-26-000052-index.html","accession_number":"0000006281-26-000052","cik":"0000006281","ticker":"ADI","issuer_name":"ANALOG DEVICES INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/6281/0000006281-26-000052-index.html","primary_entity_key":"0000006281","primary_entity_name":"ANALOG DEVICES INC"},"word_count":3801,"has_tables":true,"body_markdown":"ITEM 1.Financial Statements\n\nANALOG DEVICES, INC.\n\nCONDENSED CONSOLIDATED STATEMENTS OF INCOME\n\n(Unaudited)\n\n(in thousands, except per share amounts)\n\n Three Months EndedSix Months Ended\n\n May 2, 2026May 3, 2025May 2, 2026May 3, 2025\n\nRevenue$3,623,465 $2,640,068 $6,783,728 $5,063,242 \n\nCost of sales1,183,667 1,028,458 2,298,955 2,021,329 \n\nGross margin2,439,798 1,611,610 4,484,773 3,041,913 \n\nOperating expenses:\n\nResearch and development509,323 441,837 976,723 844,729 \n\nSelling, marketing, general and administrative362,810 302,669 708,063 587,465 \n\nAmortization of intangibles187,985 187,415 375,300 374,830 \n\nSpecial charges, net— 1,745 47,982 65,632 \n\nTotal operating expenses1,060,118 933,666 2,108,068 1,872,656 \n\nOperating income:1,379,680 677,944 2,376,705 1,169,257 \n\nNonoperating expense (income):\n\nInterest expense87,619 74,703 173,963 149,967 \n\nInterest income(28,565)(21,725)(60,822)(45,212)\n\nOther, net(4,202)(962)(7,135)2,998 \n\nTotal nonoperating expense (income)54,852 52,016 106,006 107,753 \n\nIncome before income taxes1,324,828 625,928 2,270,699 1,061,504 \n\nProvision for income taxes148,478 56,158 263,523 100,418 \n\nNet income$1,176,350 $569,770 $2,007,176 $961,086 \n\nShares used to compute earnings per common share – basic487,605 496,173 488,239 496,145 \n\nShares used to compute earnings per common share – diluted490,458 498,201 491,057 498,434 \n\nBasic earnings per common share$2.41 $1.15 $4.11 $1.94 \n\nDiluted earnings per common share$2.40 $1.14 $4.09 $1.93 \n\nSee accompanying notes.\n\n1\n\nANALOG DEVICES, INC.\n\nCONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME\n\n(Unaudited)\n\n(in thousands)\n\nThree Months EndedSix Months Ended\n\nMay 2, 2026May 3, 2025May 2, 2026May 3, 2025\n\nNet income$1,176,350 $569,770 $2,007,176 $961,086 \n\nForeign currency translation adjustments1,036 (753)1,324 (912)\n\nChange in fair value of derivative instruments designated as cash flow hedges, net(5,033)17,573 620 17,496 \n\nChanges in pension plans, net195 517 395 1,040 \n\nOther comprehensive (loss) income(3,802)17,337 2,339 17,624 \n\nComprehensive income$1,172,548 $587,107 $2,009,515 $978,710 \n\nSee accompanying notes.\n\n2\n\nANALOG DEVICES, INC.\n\nCONDENSED CONSOLIDATED BALANCE SHEETS\n\n(Unaudited)\n\n(in thousands, except share and per share amounts)\n\nMay 2, 2026November 1, 2025\n\nASSETS  \n\nCurrent Assets\n\nCash and cash equivalents$2,436,916 $2,499,406 \n\nShort-term investments1,002,392 1,152,915 \n\nAccounts receivable2,051,733 1,436,075 \n\nInventories1,848,405 1,656,323 \n\nPrepaid expenses and other current assets470,327 363,342 \n\nTotal current assets7,809,773 7,108,061 \n\nNon-current Assets\n\nNet property, plant and equipment3,292,288 3,315,696 \n\nGoodwill26,973,180 26,945,180 \n\nIntangible assets, net7,255,362 8,013,815 \n\nDeferred tax assets1,729,558 1,867,102 \n\nOther assets888,934 742,858 \n\nTotal non-current assets40,139,322 40,884,651 \n\nTOTAL ASSETS$47,949,095 $47,992,712 \n\nLIABILITIES AND SHAREHOLDERS’ EQUITY\n\nCurrent Liabilities\n\nAccounts payable$598,640 $543,760 \n\nIncome taxes payable325,626 610,370 \n\nDebt, current899,227 — \n\nCommercial paper notes550,198 446,639 \n\nAccrued liabilities2,083,216 1,645,032 \n\nTotal current liabilities4,456,907 3,245,801 \n\nNon-current Liabilities\n\nLong-term debt7,235,424 8,145,066 \n\nDeferred income taxes1,906,115 2,163,281 \n\nIncome taxes payable87,109 100,963 \n\nOther non-current liabilities521,507 521,846 \n\nTotal non-current liabilities9,750,155 10,931,156 \n\nShareholders’ Equity\n\nPreferred stock, $1.00 par value, 471,934 shares authorized, none outstanding\n— — \n\nCommon stock, $0.16 2/3 par value, 1,200,000,000 shares authorized, 487,087,040 shares outstanding (489,654,097 on November 1, 2025)\n81,183 81,611 \n\nCapital in excess of par value22,287,095 23,349,185 \n\nRetained earnings11,525,998 10,539,541 \n\nAccumulated other comprehensive loss(152,243)(154,582)\n\nTotal shareholders’ equity33,742,033 33,815,755 \n\nTOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$47,949,095 $47,992,712 \n\nSee accompanying notes.\n\n3\n\nANALOG DEVICES, INC.\n\nCONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY\n\n(Unaudited)\n\n(in thousands)\n\nThree Months Ended May 2, 2026\n\nCapital inAccumulated\nOther\n\n Common StockExcess ofRetainedComprehensive\n\nSharesAmountPar ValueEarningsLoss\n\nBALANCE, JANUARY 31, 2026\n488,204 $81,369 $22,968,224 $10,886,107 $(148,441)\n\nNet income1,176,350 \n\nDividends declared and paid - $1.10 per share\n(536,459)\n\nIssuance of stock under stock plans and other1,202 201 9,665 \n\nStock-based compensation expense81,721 \n\nOther comprehensive loss(3,802)\n\nCommon stock repurchased(2,319)(387)(772,515)\n\nBALANCE, MAY 2, 2026\n487,087 $81,183 $22,287,095 $11,525,998 $(152,243)\n\nSix Months Ended May 2, 2026\n\nCapital inAccumulated\nOther\n\nCommon StockExcess ofRetainedComprehensive\n\nSharesAmountPar ValueEarningsLoss\n\nBALANCE, NOVEMBER 1, 2025\n489,654 $81,611 $23,349,185 $10,539,541 $(154,582)\n\nNet income2,007,176 \n\nDividends declared and paid - $2.09 per share\n(1,020,719)\n\nIssuance of stock under stock plans and other1,663 277 59,210 \n\nStock-based compensation expense167,396 \n\nOther comprehensive income2,339 \n\nCommon stock repurchased(4,230)(705)(1,288,696)\n\nBALANCE, MAY 2, 2026\n487,087 $81,183 $22,287,095 $11,525,998 $(152,243)\n\nSee accompanying notes.\n\n4\n\nThree Months Ended May 3, 2025\n\nCapital inAccumulated\nOther\n\nCommon StockExcess ofRetainedComprehensive\n\nSharesAmountPar ValueEarningsLoss\n\nBALANCE, FEBRUARY 1, 2025495,976 $82,664 $25,041,250 $10,131,590 $(184,969)\n\nNet income569,770 \n\nDividends declared and paid - $0.99 per share\n(491,022)\n\nIssuance of stock under stock plans and other1,491 249 19,566 \n\nStock-based compensation expense72,831 \n\nOther comprehensive income17,337 \n\nCommon stock repurchased(1,219)(203)(248,443)\n\nBALANCE, MAY 3, 2025\n496,248 $82,710 $24,885,204 $10,210,338 $(167,632)\n\nSix Months Ended May 3, 2025\n\nCapital inAccumulated\nOther\n\nCommon StockExcess ofRetainedComprehensive\n\nSharesAmountPar ValueEarningsLoss\n\nBALANCE, NOVEMBER 2, 2024496,297 $82,718 $25,082,243 $10,196,612 $(185,256)\n\nNet income961,086 \n\nDividends declared and paid - $1.91 per share\n(947,360)\n\nIssuance of stock under stock plans and other1,902 317 61,245 \n\nStock-based compensation expense150,405 \n\nOther comprehensive income17,624 \n\nCommon stock repurchased(1,951)(325)(408,689)\n\nBALANCE, MAY 3, 2025\n496,248 $82,710 $24,885,204 $10,210,338 $(167,632)\n\nSee accompanying notes.\n\n5\n\nANALOG DEVICES, INC.\n\nCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS\n\n(Unaudited)\n\n(in thousands)\n\n  \nSix Months Ended\n\n May 2, 2026May 3, 2025\n\nCash flows from operating activities:\n\nNet income$2,007,176 $961,086 \n\nAdjustments to reconcile net income to net cash provided by operations:\n\nDepreciation210,843 198,781 \n\nAmortization of intangibles770,593 817,429 \n\nStock-based compensation expense167,396 150,405 \n\nDeferred income taxes(120,930)(149,370)\n\nOther4,727 4,203 \n\nChanges in operating assets and liabilities(799,249)(36,247)\n\nTotal adjustments233,380 985,201 \n\nNet cash provided by operating activities2,240,556 1,946,287 \n\nCash flows from investing activities:\n\nMaturities of short-term available-for-sale investments147,817 372,778 \n\nAdditions to property, plant and equipment, net(247,015)(239,246)\n\nProceeds from sale of property, plant and equipment, net\n— 58,892 \n\nPayments for acquisitions, net of cash acquired(35,875)(45,652)\n\nOther(23,882)(12,880)\n\nNet cash (used for) provided by investing activities(158,955)133,892 \n\nCash flows from financing activities:\n\nDebt repayments— (399,998)\n\nProceeds from commercial paper notes7,154,789 4,316,340 \n\nPayments of commercial paper notes(7,051,230)(4,315,358)\n\nRepurchase of common stock(1,289,401)(409,014)\n\nDividend payments to shareholders(1,020,719)(947,360)\n\nProceeds from employee stock plans59,487 61,562 \n\nOther2,983 (1,458)\n\nNet cash used for financing activities(2,144,091)(1,695,286)\n\nNet (decrease) increase in cash and cash equivalents(62,490)384,893 \n\nCash and cash equivalents at beginning of period2,499,406 1,991,342 \n\nCash and cash equivalents at end of period$2,436,916 $2,376,235 \n\nSee accompanying notes.\n\n6\n\nANALOG DEVICES, INC.\n\nNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\nFOR THE THREE AND SIX MONTHS ENDED MAY 2, 2026 (UNAUDITED)\n\n(all tabular amounts in thousands except per share amounts and percentages)\n\nNote 1 – Basis of Presentation\n\nIn the opinion of management, the information furnished in the accompanying condensed consolidated financial statements reflects all normal recurring adjustments that are necessary to fairly state the results for these interim periods and should be read in conjunction with Analog Devices, Inc.’s (the Company) Annual Report on Form 10-K for the fiscal year ended November 1, 2025 (fiscal 2025) and related notes. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 2026 (fiscal 2026) or any future period.\n\nThe Company has a 52-53 week fiscal year that ends on the Saturday closest to the last day in October. Certain prior-year amounts have been reclassified to conform to the fiscal 2026 presentation.\n\nNote 2 – Shareholders’ Equity\n\nAs of May 2, 2026, the Company’s Board of Directors had authorized the repurchase of an aggregate of $26.7 billion of its common stock under its common stock repurchase program and $8.5 billion remained available for repurchases under the program.\n\nNote 3 – Accumulated Other Comprehensive (Loss) Income\n\nThe following table provides the changes in accumulated other comprehensive (loss) income (AOCI) by component and the related tax effects during the first six months of fiscal 2026.\n\nForeign currency translation adjustment\nUnrealized holding gains/losses on derivatives\nPension plansTotal\n\nNovember 1, 2025$(71,700)$(69,777)$(13,105)$(154,582)\n\nOther comprehensive income before reclassifications1,324 (6,694)— (5,370)\n\nAmounts reclassified out of other comprehensive income— 8,517 395 8,912 \n\nTax effects— (1,203)— (1,203)\n\nOther comprehensive income1,324 620 395 2,339 \n\nMay 2, 2026$(70,376)$(69,157)$(12,710)$(152,243)\n\nThe amounts reclassified out of AOCI into the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Shareholders’ Equity with presentation location during each period were as follows:\n\nThree Months EndedSix Months Ended\n\nComprehensive (Loss) Income ComponentMay 2, 2026May 3, 2025May 2, 2026May 3, 2025Location\n\nUnrealized holding gains/losses on derivatives:\n\nCurrency forwards $(552)$446 $72 $(1,133)Cost of sales\n\n(42)118 676 (729)Research and development\n\n(513)36 307 (2,048)Selling, marketing, general and administrative\n\nInterest rate derivatives3,731 3,731 7,462 7,462 Interest expense\n\n2,624 4,331 8,517 3,552 Total before tax\n\n(667)(850)(1,690)(1,008)Tax\n\nTotal amounts reclassified out of AOCI, net of tax$1,957 $3,481 $6,827 $2,544 \n\n7\n\nNote 4 – Earnings Per Share\n\nThe following table sets forth the computation of basic and diluted earnings per share:\n\n Three Months EndedSix Months Ended\n\n May 2, 2026May 3, 2025May 2, 2026May 3, 2025\n\nNet income$1,176,350 $569,770 $2,007,176 $961,086 \n\nBasic shares:\n\nWeighted-average shares outstanding487,605 496,173 488,239 496,145 \n\nEarnings per common share basic:$2.41 $1.15 $4.11 $1.94 \n\nDiluted shares:\n\nWeighted-average shares outstanding487,605 496,173 488,239 496,145 \n\nAssumed exercise of common stock equivalents2,853 2,028 2,818 2,289 \n\nWeighted-average common and common equivalent shares490,458 498,201 491,057 498,434 \n\nEarnings per common share diluted:$2.40 $1.14 $4.09 $1.93 \n\nAnti-dilutive shares related to:\n\nOutstanding stock-based awards21 52 63 121 \n\nNote 5 – Special Charges, Net\n\nLiabilities related to special charges, net are included in Accrued liabilities in the Condensed Consolidated Balance Sheets. The activity is detailed below:\n\nAccrued Special ChargesGlobal Repositioning Actions\n\nBalance at November 1, 2025$4,115 \n\nEmployee severance costs, net\n29,085 \n\nSeverance payments\n(1,952)\n\nBalance at January 31, 2026$31,248 \n\nSeverance payments\n(17,858)\n\nBalance at May 2, 2026$13,390 \n\nThe Company recorded net special charges of $32.4 million as part of its Global Repositioning Actions in the six months ended May 2, 2026. The Global Repositioning Actions were part of a transformation initiative aimed at aligning the Company’s enterprise strategy and organizational design and streamlining its operations to achieve its long-term strategic plan. The special charges include severance costs, in accordance with the Company’s ongoing benefit plan or statutory requirements at foreign locations, related to the termination of certain employees in manufacturing, engineering and selling, marketing, general and administrative roles.\n\nDuring the first quarter of fiscal 2026, the Company entered into a sublease agreement for its leased property in San Jose, California. As a result of the sublease transaction, the Company recorded an impairment charge of $15.6 million in net special charges, which represented the excess carrying value of the associated asset group over its estimated fair value. The Company estimated fair value using cash flows from the estimated net sublease rental income discounted at a market rate.\n\n8\n\nNote 6 – Industry and Segment Information\n\nThe Company’s Chief Executive Officer and Chair has been identified as its Chief Operating Decision Maker (CODM). The following table presents a summary of consolidated net income inclusive of significant segment expenses and other expense information provided to the CODM:\n\nThree Months EndedSix Months Ended\n\nMay 2, 2026May 3, 2025May 2, 2026May 3, 2025\n\nRevenue\n$3,623,465 $2,640,068 $6,783,728 $5,063,242 \n\nLess:\n\nCost of sales, including human capital expenses therein1,183,667 1,028,458 2,298,955 2,021,329 \n\nOperating expenses:\n\nEmployee compensation costs640,791 531,119 1,243,278 998,715 \n\nAmortization of acquired intangible assets187,985 187,415 375,300 374,830 \n\nResearch and development related costs (excluding employee compensation costs)150,186 132,443 279,035 263,925 \n\nSpecial charges, net— 1,745 47,982 65,632 \n\nOther operating expense (excluding employee compensation costs) (1)\n81,156 80,944 162,473 169,554 \n\nNonoperating expense (income)\n54,852 52,016 106,006 107,753 \n\nProvision for income taxes148,478 56,158 263,523 100,418 \n\nNet income$1,176,350 $569,770 $2,007,176 $961,086 \n\n_______________________________________\n\n(1)Includes depreciation and amortization expenses, facilities expenses, legal expenses and other discretionary expenses.\n\nRevenue Trends by End Market\n\nThe following tables summarize revenue by end market. The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the “ship to” customer information and the end customer product or application into which the Company’s product will be incorporated. The assignment of products to end markets may change over time. When this occurs, the Company reclassifies revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.\n\nThree Months Ended\n\n May 2, 2026May 3, 2025\n\n Revenue% of Revenue*Y/Y%Revenue% of Revenue*\n\nIndustrial$1,799,413 50 %56 %$1,150,315 44 %\n\nAutomotive871,565 24 %2 %856,090 32 %\n\nCommunications554,728 15 %79 %310,604 12 %\n\nConsumer397,759 11 %23 %323,059 12 %\n\nTotal revenue$3,623,465 100 %37 %$2,640,068 100 %\n\nSix Months Ended\n\nMay 2, 2026May 3, 2025\n\nRevenue% of Revenue*Y/Y%Revenue% of Revenue*\n\nIndustrial$3,296,449 49 %48 %$2,220,569 44 %\n\nAutomotive1,681,709 25 %5 %1,596,349 32 %\n\nCommunications1,009,911 15 %65 %610,905 12 %\n\nConsumer795,659 12 %25 %635,419 13 %\n\nTotal revenue$6,783,728 100 %34 %$5,063,242 100 %\n\n* The sum of the individual percentages may not equal the total due to rounding.\n\n9\n\nRevenue by Sales Channel\n\nThe following tables summarize revenue by sales channel. The Company sells its products globally through a direct sales force, third-party distributors, independent sales representatives and via its website. Distributors are customers that buy products with the intention of reselling them. Direct customers are non-distributor customers and consist primarily of original equipment manufacturers. Other customers include the U.S. government, government prime contractors and certain commercial customers for which revenue is recorded over time.\n\nThree Months Ended\n\nMay 2, 2026May 3, 2025\n\nChannelRevenue% of Revenue*Revenue% of Revenue*\n\n   Distributors$2,071,312 57 %$1,480,088 56 %\n\n   Direct customers1,520,090 42 %1,125,775 43 %\n\n   Other32,063 1 %34,205 1 %\n\nTotal revenue$3,623,465 100 %$2,640,068 100 %\n\nSix Months Ended\n\nMay 2, 2026May 3, 2025\n\nChannelRevenue% of Revenue*Revenue% of Revenue*\n\n    Distributors$3,813,606 56 %$2,855,552 56 %\n\n    Direct customers2,897,220 43 %2,145,647 42 %\n\n    Other72,902 1 %62,043 1 %\n\nTotal revenue$6,783,728 100 %$5,063,242 100 %\n\n* The sum of the individual percentages may not equal the total due to rounding.\n\n10\n\nNote 7 – Fair Value\n\nAssets and Liabilities Recorded at Fair Value on a Recurring Basis\n\nThe tables below, set forth by level, present the Company’s financial assets and liabilities, excluding accrued interest components that were accounted for at fair value on a recurring basis as of May 2, 2026 and November 1, 2025. The tables exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of May 2, 2026 and November 1, 2025, the Company held $1.3 billion and $1.4 billion, respectively, of cash that is excluded from the tables below.\n\n May 2, 2026\n\n \nFair Value Measurement at\n\nReporting Date Using:\n\n \n\n \nQuoted Prices in Active Markets for Identical Assets\n\n(Level 1)\n\nSignificant Other Observable Inputs\n\n(Level 2)\n\nTotal\n\nAssets\n\nCash equivalents:\n\nAvailable-for-sale:\n\nGovernment and institutional money market funds$702,844 $— $702,844 \n\nCorporate obligations (1)— 397,786 397,786 \n\nShort-term investments:\n\nAvailable-for-sale:\n\nCorporate obligations (1)\n— 507,277 507,277 \n\nBank obligations (1)— 495,115 495,115 \n\nOther assets:\n\nForward foreign currency exchange contracts (2)— 6,500 6,500 \n\nDeferred compensation plan investments117,894 — 117,894 \n\nTotal assets measured at fair value$820,738 $1,406,678 $2,227,416 \n\nLiabilities\n\nForward foreign currency exchange contracts (2)$— $10,020 $10,020 \n\nInterest rate derivatives (3)— 23,882 23,882 \n\nTotal liabilities measured at fair value$— $33,902 $33,902 \n\n(1)The amortized cost of the Company’s investments classified as available-for-sale as of May 2, 2026 was $1.4 billion.\n\n(2)The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 8, Derivatives, in these Notes to Condensed Consolidated Financial Statements for more information related to the Company’s master netting arrangements.\n\n(3)The carrying value of the related debt was adjusted by an equal and offsetting amount. The fair value of interest rate derivatives is estimated using a discounted cash flow analysis based on the contractual terms of the derivatives. See Note 8, Derivatives, in these Notes to Condensed Consolidated Financial Statements.\n\n11\n\n November 1, 2025\n\n \nFair Value Measurement at\n\nReporting Date Using:\n\n \n\n \nQuoted Prices in Active Markets for Identical Assets\n\n(Level 1)\n\nSignificant Other Observable Inputs\n\n(Level 2)\n\nTotal\n\nAssets\n\nCash equivalents:\n\nAvailable-for-sale:\n\nGovernment and institutional money market funds$740,730 $— $740,730 \n\nCorporate obligations (1)— 397,707 397,707 \n\nShort-term investments (2):\n\nAvailable-for-sale:\n\nCorporate obligations (1)— 656,839 656,839 \n\nBank obligations (1)— 496,076 496,076 \n\nOther assets:\n\nForward foreign currency exchange contracts (3)— 6,708 6,708 \n\nDeferred compensation plan investments105,188 — 105,188 \n\nTotal assets measured at fair value$845,918 $1,557,330 $2,403,248 \n\nLiabilities\n\nForward foreign currency exchange contracts (3)$— $7,975 $7,975 \n\nInterest rate derivatives (4)— 12,550 12,550 \n\nTotal liabilities measured at fair value$— $20,525 $20,525 \n\n(1)The amortized cost of the Company’s investments classified as available-for-sale as of November 1, 2025 was $1.6 billion.\n\n(2)Available-for-sale securities are classified as current assets on the Condensed Consolidated Balance Sheets if the securities are available to be converted into cash to fund current operations.\n\n(3)The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 8, Derivatives, in these Notes to Condensed Consolidated Financial Statements for more information related to the Company’s master netting arrangements.\n\n(4)The carrying value of the related debt was adjusted by an equal and offsetting amount. The fair value of interest rate derivatives is estimated using a discounted cash flow analysis based on the contractual terms of the derivatives. See Note 8, Derivatives, in these Notes to Condensed Consolidated Financial Statements.\n\nAssets and Liabilities Not Recorded at Fair Value on a Recurring Basis\n\nSan Jose, California leased property asset group — As a result of a sublease transaction involving a leased property\n\nin San Jose, California, the Company estimated the fair value of the sublease assets using discounted cash flows from the estimated net sublease rental income discounted at a market rate and recorded an impairment charge which represented the excess carrying value of the asset group associated with the leased property over its estimated fair value. These assets are considered a Level 2 fair value measurement. See Note 5, Special Charges, Net, in these Notes to Condensed Consolidated Financial Statements for additional information.\n\nDebt — The table below presents the estimated fair values of certain financial instruments not recorded at fair value on a recurring basis. Given the short tenure of the Company’s commercial paper notes, the carrying value of the outstanding commercial paper notes approximates the fair values, and therefore, are excluded from the table below ($550.2 million and $446.6 million as of May 2, 2026 and November 1, 2025, respectively). The fair values of the senior unsecured notes are obtained from broker prices and are classified as Level 1 measurements according to the fair value hierarchy.\n\n12\n\nMay 2, 2026November 1, 2025\n\nPrincipal Amount OutstandingFair Value Principal Amount Outstanding Fair Value\n\n2026 Notes, due December 2026900,000 897,767 900,000 895,623 \n\n2027 Notes, due June 2027440,212 437,241 440,212 436,916 \n\n2028 Notes, due June 2028850,000 850,341 850,000 856,345 \n\n2028 Notes, due October 2028750,000 707,652 750,000 704,186 \n\n2030 Notes, due June 2030650,000 652,444 650,000 659,834 \n\n2031 Notes, due October 20311,000,000 884,422 1,000,000 884,390 \n\n2032 Notes, due October 2032300,000 298,028 300,000 301,546 \n\n2034 Notes, due April 2034550,000 561,447 550,000 571,370 \n\n2036 Notes, due December 2036144,278 137,425 144,278 138,756 \n\n2041 Notes, due October 2041750,000 546,296 750,000 555,925 \n\n2045 Notes, due December 2045332,587 321,506 332,587 327,992 \n\n2051 Notes, due October 20511,000,000 641,436 1,000,000 662,609 \n\n2054 Notes, due April 2054550,000 524,949 550,000 541,087 \n\nTotal senior unsecured notes\n$8,217,077 $7,460,954 $8,217,077 $7,536,579 \n\nNote 8 – Derivatives\n\nForeign Exchange Exposure Management — The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash flow hedges as of May 2, 2026 and November 1, 2025 were $343.2 million and $297.0 million, respectively, and the fair values of these instruments in the Company’s Condensed Consolidated Balance Sheets were as follows:\n\nFair Value At\n\nBalance Sheet LocationMay 2, 2026November 1, 2025\n\nForward foreign currency exchange contractsPrepaid expenses and other current assets$1,162 $4,403 \n\nForward foreign currency exchange contractsAccrued liabilities$6,150 $4,399 \n\nAs of May 2, 2026 and November 1, 2025, the total notional amounts of undesignated hedges related to forward foreign currency exchange contracts were $319.0 million and $207.3 million, respectively, and the fair values of undesignated hedges in the Company’s Condensed Consolidated Balance Sheets were as follows:\n\nFair Value At\n\nBalance Sheet LocationMay 2, 2026November 1, 2025\n\nUndesignated hedges related to forward foreign currency exchange contracts\nPrepaid expenses and other current assets$5,338 $2,305 \n\nUndesignated hedges related to forward foreign currency exchange contracts\nAccrued liabilities$3,870 $3,576 \n\nInterest Rate Exposure Management — The Company does not consider the risk of counterparty default to be significant. The gain or loss on the Company’s interest rate swap transactions attributable to the hedged benchmark interest rate risk and the offsetting gain or loss on the related interest rate swaps were recorded as follows:\n\nMay 2, 2026November 1, 2025\n\nBalance Sheet LocationLoss on SwapsGain on NoteLoss on SwapsGain on Note\n\nAccrued liabilities$23,882 $— $12,550 $— \n\nLong-term debt\n$— $23,882 $— $12,550 \n\nFor further information on the unrealized holding gains (losses) on derivatives included in and reclassified out of AOCI into the Condensed Consolidated Statements of Income related to forward foreign currency exchange contracts, see Note 3, Accumulated Other Comprehensive (Loss) Income, in these Notes to Condensed Consolidated Financial Statements.\n\n13\n\nNote 9 – Inventories\n\nInventories at May 2, 2026 and November 1, 2025 were as follows:\n\nMay 2, 2026November 1, 2025\n\nRaw materials$68,165 $70,183 \n\nWork in process1,389,341 1,218,625 \n\nFinished goods390,899 367,515 \n\nTotal inventories$1,848,405 $1,656,323 \n\nNote 10 – Income Taxes\n\nThe Company’s effective tax rates for the three- and six-month periods ended May 2, 2026 and May 3, 2025 were below the U.S. statutory tax rate of 21%, due to lower statutory tax rates applicable to the Company's operations in the foreign jurisdictions in which it earns income.\n\nDuring fiscal 2025, the Company received an assessment from the U.S. Internal Revenue Service (IRS) for fiscal 2018 and fiscal 2019, totaling approximately $267.0 million. The assessment excludes any penalties and interest. The assessment pertains to transfer pricing arrangements between the Company and one of its wholly-owned foreign subsidiaries. The Company firmly disagrees with this assessment and maintains that its transfer pricing is appropriate. Consequently, the Company has not recorded any additional tax liability related to fiscal 2018 and fiscal 2019 in relation to this issue, nor to any other periods. The Company intends to vigorously defend its original tax return position and is currently preparing for an appeal with the IRS. Should the IRS ultimately prevail regarding its assessments for fiscal 2018 and fiscal 2019, such a resolution, along with any potential impact on subsequent fiscal years, could have a material adverse effect on the Company’s income tax expense and net earnings in future periods.\n\nNote 11 – New Accounting Pronouncements\n\nStandards Implemented\n\nIncome Taxes\n\nIn December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires the disaggregation of information in existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted this ASU in fiscal 2026 and will include required financial statement disclosures in its Annual Report on Form 10-K for fiscal 2026.\n\nStandards to Be Implemented\n\nDisaggregation of Income Statement Expenses\n\nIn November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, requiring public companies to disaggregate key expense categories such as inventory purchases, employee compensation and depreciation in their financial statements. This aims to improve investor insights into company performance. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact adoption will have on its financial statement disclosures.\n\nNote 12 – Subsequent Events\n\nOn May 19, 2026, the Board of Directors of the Company declared a cash dividend of $1.10 per outstanding share of common stock. The dividend will be paid on June 16, 2026 to all shareholders of record at the close of business on June 2, 2026 and is expected to total approximately $535.8 million.\n\n14"}