SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Commission file number 1-34192



Delaware		94-2896096
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer I. D. No.)



~~Delaware~~ ~~(State or Other Jurisdiction~~Title of ~~Incorporation or Organization)~~each class	Trading Symbol	~~94-2896096~~Name of each exchange on which registered ~~(I.R.S. Employer I. D. No.)~~
Common stock, $0.001 par value	MXIM	The NASDAQ Global Select Market

~~San Jose, California 95134~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. ~~YES [x] NO [ ]~~Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ~~YES [x] NO [ ]~~Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller” reporting company in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer ~~[x]~~	☒	Accelerated filer ~~[ ]~~	☐	Non-accelerated filer ~~[ ]~~ ~~(Do not check if a smaller reporting company)~~	☐	Smaller reporting company ~~[ ]~~	☐	Emerging growth company ~~[ ]~~
				If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisited financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisited financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

As of October ~~19, 2018,~~15, 2019, there were ~~277,062,875~~270,609,296 shares of Common Stock, par value $.001 per share, of the registrant outstanding.

MAXIM INTEGRATED PRODUCTS, INC.



PART I - FINANCIAL INFORMATION		Page

Item 1. Financial Statements (Unaudited)		3

Condensed Consolidated Balance Sheets as of September ~~29, 2018~~28, 2019 and June ~~30, 2018~~29, 2019		3

Condensed Consolidated Statements of Income for the Three Months Ended September ~~29, 2018~~28, 2019 and September ~~23, 2017~~29, 2018		4

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended September ~~29, 2018~~28, 2019 and September ~~23, 2017~~29, 2018		5

Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended September 28, 2019 and September 29, 2018		6

Condensed Consolidated Statements of Cash Flows for the Three Months Ended September ~~29, 2018~~28, 2019 and September ~~23, 2017~~29, 2018		68

Notes to Condensed Consolidated Financial Statements		89

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2523

Item 3. Quantitative and Qualitative Disclosures About Market Risk		3028

Item 4. Controls and Procedures		3028

PART II - OTHER INFORMATION		3130

Item 1. Legal Proceedings		3130

Item 1A. Risk Factors		3130

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3130

Item 3. Defaults Upon Senior Securities		3130

Item 4. Mine Safety Disclosures		3130

Item 5. Other Information		3130

Item 6. Exhibits		3231

~~SIGNATURES~~SIGNATURE		3332

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

MAXIM INTEGRATED PRODUCTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying Notes to Condensed Consolidated Financial Statements.

MAXIM INTEGRATED PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended						Three Months Ended
	September 29, 2018			September 23, 2017			September 28, 2019		September 29, 2018
	(in thousands, except per share data)						(in thousands, except per share data)

Net revenues	$	638,495		$	575,676		$	533,040	$	638,495
Cost of goods sold	208,259			201,845			189,717		208,259
Gross margin	430,236			373,831			343,323		430,236
Operating expenses:
Research and development	112,708			108,601			108,989		112,708
Selling, general and administrative	81,518			73,681			76,115		81,518
Intangible asset amortization	773			1,752			756		773
Impairment of long-lived assets	—			42
Severance and restructuring expenses	994			5,433			1,434		994
Other operating expenses (income), net	60			(844		)	25		60
Total operating expenses	196,053			188,665			187,319		196,053
Operating income (loss)	234,183			185,166
Operating income							156,004		234,183
Interest and other income (expense), net	(546		)	(4,214		)	1,829		(546		)
Income (loss) before provision for income taxes	233,637			180,952
Income tax provision (benefit)	36,214			26,419
Net income (loss)	$	197,423		$	154,533
Income before provision for income taxes							157,833		233,637
Income tax provision							17,677		36,214
Net income							$	140,156	$	197,423

Earnings (loss) per share:
Earnings per share:
Basic	$	0.71		$	0.55		$	0.52	$	0.71
Diluted	$	0.70		$	0.54		$	0.51	$	0.70

Shares used in the calculation of earnings (loss) per share:
Shares used in the calculation of earnings per share:
Basic	278,045			282,170			271,388		278,045
Diluted	282,454			286,437			274,436		282,454

Dividends declared and paid per share	$	0.46		$	0.36

See accompanying Notes to Condensed Consolidated Financial Statements.

MAXIM INTEGRATED PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended
September 29,
2018 September 23,
2017
(in thousands)
Net income (loss) $ 197,423
$ 154,533
Other comprehensive income (loss), net of tax:
Change in net unrealized gains and losses on available-for-sale securities, net of tax benefit (expense) of $(27) and $0, respectively 1,092
(98 )
Change in net unrealized gains and losses on cash flow hedges, net of tax benefit (expense) of $(214) and $(120), respectively 1,095
353
Change in net unrealized gains and losses on post-retirement benefits, net of tax benefit (expense) of $(19) and $(22), respectively 78
44
Other comprehensive income (loss), net 2,265
299
Total comprehensive income (loss) $ 199,688
$ 154,832



	Three Months Ended
	September 28, 2019			September 29, 2018
	(in thousands)
Net income	$	140,156		$	197,423
Other comprehensive income (loss), net of tax:
Change in net unrealized gains and losses on available-for-sale securities, net of tax benefit (expense) of $(14) and $(27), respectively	118			1,092
Change in net unrealized gains and losses on cash flow hedges, net of tax benefit (expense) of $165 and $(214), respectively	(859		)	1,095
Change in net unrealized gains and losses on post-retirement benefits, net of tax benefit (expense) of $(22) and $(19), respectively	98			78
Other comprehensive income (loss), net	(643		)	2,265
Total comprehensive income	$	139,513		$	199,688

See accompanying Notes to Condensed Consolidated Financial Statements.

MAXIM INTEGRATED PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)



	Three Months Ended September 28, 2019
	Common Stock					Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	Shares		Par Value			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	(in thousands)

Balance, June 29, 2019	271,852		$	272		$	—		$	1,856,358		$	(11,354	)	$	1,845,276
Net income	—		—			—			140,156			—			140,156
Other comprehensive income (loss), net	—		—			—			—			(643		)	(643		)
Repurchase of common stock	(1,622	)	(1		)	(22,235		)	(71,316		)	—			(93,552		)
Cumulative-effect adjustment for adoption of ASU 2016-02	—		—			—			(1,964		)	—			(1,964		)
Net issuance of restricted stock units	387		—			(9,943		)	—			—			(9,943		)
Stock options exercised	266		—			7,482			—			—			7,482
Stock-based compensation	—		—			24,696			—			—			24,696
Dividends paid, $0.48 per common share	—		—			—			(130,222		)	—			(130,222		)
Balance, September 28, 2019	270,883		$	271		$	—		$	1,793,012		$	(11,997	)	$	1,781,286

See accompanying Notes to Condensed Consolidated Financial Statements.

MAXIM INTEGRATED PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)



	Three Months Ended September 29, 2018
	Common Stock				Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	Shares		Par Value		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	(in thousands)

Balance, June 30, 2018	278,664		$	279	$	—		$	1,945,646		$	(14,985	)	$	1,930,940
Net income	—		—		—			197,423			—			197,423
Other comprehensive income (loss), net	—		—		—			—			2,265			2,265
Repurchase of common stock	(1,862	)	—		(19,563		)	(92,935		)	—			(112,498		)
Cumulative-effect adjustment for adoption of ASU 2016-01	—		—		—			2,487			—			2,487
Net issuance of restricted stock units	297		—		(7,528		)	—			—			(7,528		)
Stock options exercised	331		—		6,608			—			—			6,608
Stock-based compensation	—		—		20,483			—			—			20,483
Dividends paid, $0.46 per common share	—		—		—			(127,857		)	—			(127,857		)
Balance, September 29, 2018	277,430		$	279	$	—		$	1,924,764		$	(12,720	)	$	1,912,323

See accompanying Notes to Consolidated Financial Statements.

MAXIM INTEGRATED PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended						Three Months Ended
	September 29, 2018			September 23, 2017			September 28, 2019			September 29, 2018
	(in thousands)						(in thousands)
Cash flows from operating activities:
Net income (loss)	$	197,423		$	154,533
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income							$	140,156		$	197,423
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	20,497			17,287			24,671			20,497
Depreciation and amortization	31,191			36,754			23,921			31,191
Deferred taxes	(3,032		)	12,115			453			(3,032		)
Loss (gain) from sale of property, plant and equipment	621			61
Loss (gain) on disposal of property, plant and equipment							376			621
Other adjustments	(117		)	42			27			(117		)
Changes in assets and liabilities:
Accounts receivable	(23,604		)	23,239			(20,584		)	(23,604		)
Inventories	7,002			1,835			10,578			7,002
Other current assets	(12,625		)	1,488			(52,443		)	(12,625		)
Accounts payable	(5,263		)	(9,979		)	1,242			(5,263		)
Income taxes payable	33,743			16,333			(25,341		)	33,743
Deferred margin on shipments to distributors	—			2,020
Accrued salary and related expenses	(45,408		)	(42,105		)	(22,536		)	(45,408		)
All other accrued liabilities	6,757			6,082			60,750			6,757
Net cash provided by (used in) operating activities	207,185			219,705			141,270			207,185

Cash flows from investing activities:
Purchases of property, plant and equipment	(18,316		)	(14,321		)	(20,631		)	(18,316		)
Proceeds from sale of property, plant and equipment	1			1,473			43			1
Proceeds from sale of available-for-sale securities	8,438			18,101			—			8,438
Proceeds from maturity of available-for-sale securities	301,834			—			42,921			301,834
Payment in connection with business acquisition, net of cash acquired	(2,949		)	—			—			(2,949		)
Purchases of available-for-sale securities	(190,880		)	(716,304		)	—			(190,880		)
Purchases of privately-held companies' securities	(750		)	(606		)
Purchases of private company investments							—			(750		)
Proceeds from private company investments							516			—
Other investing activities							(35		)	—
Net cash provided by (used in) investing activities	97,378			(711,657		)	22,814			97,378

Cash flows from financing activities:
Contingent consideration paid	(8,000		)	—			—			(8,000		)
Net issuance of restricted stock units	(7,528		)	(5,416		)	(9,943		)	(7,528		)
Proceeds from stock options exercised	6,608			5,160			7,482			6,608
Repurchase of common stock	(112,498		)	(75,291		)	(93,552		)	(112,498		)
Dividends paid	(127,857		)	(101,462		)	(130,222		)	(127,857		)
Net cash provided by (used in) financing activities	(249,275		)	(177,009		)	(226,235		)	(249,275		)

Net increase (decrease) in cash and cash equivalents	55,288			(668,961		)	(62,151		)	55,288
Cash and cash equivalents:
Beginning of period	$	1,543,484		$	2,246,121		$	1,757,342		$	1,543,484
End of period	$	1,598,772		$	1,577,160		$	1,695,191		$	1,598,772

Supplemental disclosures of cash flow information:
Cash paid, net, during the period for income taxes							$	32,156		$	10,988
Cash paid for interest							$	8,438		$	8,438
Noncash financing and investing activities:
Accounts payable related to property, plant and equipment purchases							$	8,307		$	5,590

Supplemental disclosures of cash flow information:
Cash paid, net, during the period for income taxes $ 10,988
$ 502
Cash paid for interest $ 8,438
$ 8,438

Noncash financing and investing activities:
Accounts payable related to property, plant and equipment purchases $ 5,590
$ 3,375

MAXIM INTEGRATED PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Maxim Integrated Products, Inc. and all of its majority-owned subsidiaries (collectively, the “Company” or “Maxim Integrated”) included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles of the United States of America (“GAAP”) have been condensed or omitted pursuant to applicable rules and regulations. In the opinion of management, all adjustments of a normal recurring nature which were considered necessary for fair ~~presentation~~statement have been included. The year-end condensed consolidated balance sheet data were derived from audited consolidated financial statements but do not include all disclosures required by GAAP. The results of operations for the three months ended September ~~29, 2018~~28, 2019 are not necessarily indicative of the results to be expected for the entire year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended June ~~30, 2018.~~29, 2019.

The Company has a 52-to-53-week fiscal year that ends on the last Saturday in June. Accordingly, every fifth or sixth fiscal year will be a 53-week fiscal year. Fiscal ~~year 2018 was a 53-week fiscal year~~years 2019 and ~~fiscal year 2019 is a~~2020 are 52-week fiscal ~~year.~~years.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Pronouncements

(i) New Accounting Updates Recently Adopted

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases (Topic 842). Topic 842 states that lessees will recognize a lease liability for the commitment to make lease payments and a right-of-use asset for the underlying asset, for the duration of the lease. The FASB also issued ASU ~~2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~.2018-10 and ASU 2018-11 which provide improvements to ASU 2016-02 and an additional transition method option, respectively. This ~~standard provides~~transition method allows a ~~single set of guidelines for revenue recognition~~Company to ~~be used across all industries. Under~~apply the new lease accounting standard revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires reporting companies to disclose the nature, amount, timing,on adoption date and ~~uncertainty of revenue and cash flows arising from contracts with customers.~~

~~On July 1, 2018, the Company adopted Topic 606 and related amendments (ASU 2015-14,~~ ~~Deferral of the Effective Date; ASU 2016-08,~~ ~~Principal versus Agent Considerations; ASU 2016-10,~~ ~~Identifying Performance Obligations and Licensing, ASU 2016-12,~~ ~~Narrow-Scope Improvements and Practical Expedients~~ ~~and ASU 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~) using the modified retrospective method applied to all contracts that are not completed at the date of initial application (i.e., July 1, 2018). Results for reporting periods beginning after July 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting standards under Topic 605.

There was no impact on the opening retained earnings as of July 1, 2018 due to the adoption of Topic 606. However, in conjunction with the adoption of the new standard, the Company recorded a reclassification of accrued revenue reserves for price adjustments and other revenue reserves from accounts receivable, net to price adjustment and other revenue reserves within current liabilities.

~~The cumulative effect of the changes to the condensed consolidated balance sheet from the adoption of Topic 606 was as follows (in thousands):~~

As of June 30, 2018 Effect of Adoption of Topic 606 As of July 1, 2018

Accounts receivable, net $ 280,072
$ 141,652
$ 421,724
Price adjustment and other revenue reserves —
141,652
141,652

~~Balance Sheet Reclassification~~

Under Topic 605, the gross amount of accrued revenue reserves for price adjustments and other revenue reserves of $141.7 million was included within accounts receivable, net as of June 30, 2018. Subsequent to the adoption of Topic 606, such

balances are presented on a gross basis as accrued price adjustments and other revenue reserves of $141.7 million, which is presented in the price adjustment and other revenue reserves balance sheet caption.

~~The adoption of Topic 606 has no impact on the total cash flows from operating, investing, or financing activities on the Condensed Consolidated Statement of Cash Flows.~~

~~The following table summarizes the impacts of adopting Topic 606 on the Company’s Condensed Consolidated Balance Sheets as of September 29, 2018 (in thousands):~~

As Reported If Reported Under Topic 605 Effect of Adoption of Topic 606

Accounts receivable, net $ 439,407
$ 304,220
$ 135,187
Price adjustment and other revenue reserves 135,187
—
135,187

~~Practical Expedients and Elections~~

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which we have the right to invoice for services performed.

~~The Company has elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods.~~

The Company has elected to exclude sales, use, value added, and some excise taxes, if applicable, from the measurement of the transaction price. The transaction price excludes sales and other similar taxes.

~~Updated Revenue Recognition Policy~~

The Company recognizes revenue for sales to direct customers and sales to distributors when a customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The transaction price is calculated as selling price net of variable considerations, such as distributor price adjustments. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration that is expected to be entitled. The transaction price does not include amounts collected on behalf of another party, such as sales taxes or value added tax. The Company elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The Company estimates returns for sales to direct customers and distributors based on historical return rates applied against current period gross revenue. Specific customer returns and allowances are considered within this estimate.

Accounts receivable from direct customers and distributors are recognized and inventory is relieved upon shipment as title to inventories generally transfers upon shipment, at which point the Company has a legally enforceable right to collection under normal terms. Accounts receivable related to consigned inventory is recognized when the customer takes title to such inventory from its consigned location, at which point inventory is relieved, title transfers, and the Company has a legally enforceable right to collection under the terms of the agreement with the related customers. Customers are generally required to pay for products and services within the Company’s standard terms, which is net 30 days from the date of invoice. The Company does not have any significant financing components greater than one year.

The Company estimates potential future returns and sales allowances related to current period product revenue. Management analyzes historical returns, changes in customer demand and acceptance of products when evaluating the adequacy of returns and sales allowances. Estimates made may differ from actual returns and sales allowances. These differences may materially impact reported revenue and amounts ultimately collected on accounts receivable. Historically, such differences have not been material.

Distributor price adjustments are estimated based on our historical experience rates and also considering economic conditions and contractual terms. To date, actual distributor claims activity has been materially consistent with the estimates we have made based on our historical rates.

The Company's revenue arrangements do not contain significant financing components. Revenue is recognized over a period of time when it is assessed that performance obligations are satisfied over a period rather than at a point in time. When any of the following criteria is fulfilled, revenue is recognized over a period of time:

~~(a) The customer simultaneously receives and consumes the benefits provided by the performance completed.~~

~~(b) Performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is created or enhanced.~~

~~(c) Performance does not create an asset with an alternative use, and has an enforceable right to payment for performance completed to date.~~

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,~~ with further classifications made recently with the issuance of ASU 2018-03 and ASU 2018-04, which provides guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The application of this ASU was made by the means of a cumulative-effect adjustment to the opening balance sheet for the equity securities that qualify for the practical expedient to estimate fair value using the net asset value per share. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) is being applied prospectively to equity investments that exist as of ~~the date of adoption.~~retained earnings. The Company adopted ASU ~~2016-01~~2016-02 in the first quarter of fiscal year ~~2019. As~~2020.

The Company adopted the new standard using the modified retrospective method and electing the optional transition method practical expedient. Under the optional transition method, the Company recognized a ~~result~~cumulative-effect adjustment to the consolidated balance sheet and did not adjust comparative prior period information.

The Company elected multiple practical expedients permitted:

the hindsight practical expedient, in which the Company elected to use hindsight up until the effective date in determining the lease term and assessing impairment of ~~this~~right-of-use assets;

the practical expedient package that allows the Company to carry forward its determination of whether a lease exists, the classification of a lease, and whether initial direct lease costs exist for purposes of transition to the new standard; and

the practical expedient to combine lease and non-lease components.

The Company also elected an accounting policy in which it will not apply the recognition requirements to leases with an initial term of 12 months or less.

Effective June 30, 2019, the first day of adoption, the Company recognized ~~an increase~~$61.0 million of ~~$2.5~~operating lease right-of-use assets and $65.2 million ~~net~~ of ~~tax, in retained earnings at the beginning of fiscal year 2019.~~

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~. ASU 2016-16 requires that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs instead of when the asset is sold. The Company adopted ASU 2016-16 in the first quarter of fiscal year 2019.operating lease liabilities on its Consolidated Balance Sheet. The adoption of ~~this guidance did not have~~the standard had an immaterial impact on retained earnings.

Updated Lease Accounting Policy

The Company determines if an arrangement is, or contains, a lease at inception. Lease right-of-use (ROU) assets are recorded as other assets, short-term lease obligations are recorded as accrued expenses and long-term lease obligations are recorded as other liabilities on the Company's ~~consolidated financial statements.~~Consolidated Balance Sheet. The Company’s classes of assets include real estate leases, equipment leases, and vehicle leases.

~~In March 2017,~~Lease ROU assets and lease liabilities are recognized based on the ~~FASB issued ASU 2017-07,~~ ~~Compensation - Retirement Benefits (Topic 715): Improving~~present value of future minimum lease payments over the ~~Presentation~~lease term at commencement date. When discount rates implicit in leases cannot be readily determined, the Company uses its incremental borrowing rate based on information available at commencement date in determining the present value of ~~Net Periodic Pension Cost~~future payments.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such option. Lease expense is recognized on a straight-line basis over the lease term. The Company elected to combine lease and ~~Net Periodic Postretirement Benefit Cost, which requires employers that offer or maintain defined benefit plans to disaggregate the service component from the other~~non-lease components of net benefit cost and provides guidance on presentation of the service component and the other components of net benefit cost in the statement of operations. The application of ASU 2017-07 requires retrospective basis for all ~~periods presented. The Company adopted ASU 2017-07 in~~asset classes. In addition, the ~~first quarter of fiscal year 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.~~

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting.~~ The amendments in this standard provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Unless the changes in terms or conditions meet all three criteria outlined in the guidance, modification accounting should be applied. The three criteria relate to changes in the terms and conditions that affect the fair value, vesting conditions, or classification of a share-based payment award. The guidance is required to be applied prospectively to an award modified on or after the adoption date. The Company adopted ASU 2017-09 in the first quarter of fiscal 2019. The adoption of this guidance did not have an impact on the Company's consolidated financial statements.

~~In February 2018, the FASB issued ASU 2018-02,~~ ~~Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~. This standard provides guidance about the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company adopted ASU 2018-02 in the first quarter of fiscal 2019. There was no material change to the Company's consolidated financial statements as a result of this adoption.

~~In June 2018, the FASB issued ASU 2018-07,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting~~. This ASU largely aligns the accounting for share-based payment awards to employees and non-employees. Under the new guidance, both sets of awards, for employees and non-employees, will essentially follow the same model, with small discrepancies related to the term assumption when valuing non-employee awards. The Company adopted ASU 2018-07 in the first quarter of fiscal 2019. The adoption of this guidance did not have an impact on the Company's consolidated financial statements.

~~(ii) Recent Accounting Updates Not Yet Effective~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~, which supersedes the lease accounting requirements in Topic 840. ASU 2016-02 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of use asset and a

corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. The guidance also requires qualitative and specific quantitative disclosures to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities, including significant judgments and changes in judgments. This guidance is effective beginning in the first quarter of fiscal year 2020 on a modified retrospective approach. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement,~~ which improves disclosures by removing, modifying and adding disclosure requirements related to fair value measurements. The update highlights adjustments in disclosures for changes in the fair value of Level 1, Level 2, and Level 3 instruments. This guidance is effective beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company does not ~~believe that this update will have a material impact on its consolidated financial statements.~~apply the recognition requirements to leases with lease terms of 12 months or less.

NOTE 3: BALANCE SHEET COMPONENTS

Inventories consist of:



	September 28, 2019		June 29, 2019
	(in thousands)
Raw materials	$	17,085	$	16,121
Work-in-process	148,350		160,273
Finished goods	70,524		70,118
Total inventories	$	235,959	$	246,512

September 29,
2018 June 30,
2018
Inventories: (in thousands)
Raw materials $ 15,113
$ 16,251
Work-in-process 170,192
173,859
Finished goods 90,069
92,280
$ 275,374
$ 282,390

Property, plant and equipment, net, ~~consists~~consist of:



	September 28, 2019			June 29, 2019
	(in thousands)
Land	$	17,720		$	17,720
Buildings and building improvements	287,437			265,191
Machinery, equipment and software	1,360,956			1,367,606
Total	1,666,113			1,650,517
Less: accumulated depreciation	(1,092,016		)	(1,072,795		)
Total property, plant and equipment, net	$	574,097		$	577,722

September 29,
2018 June 30,
2018
Property, plant and equipment, net: (in thousands)
Land $ 17,731
$ 17,731
Buildings and building improvements 258,403
254,733
Machinery, equipment and software 1,322,593
1,309,487
1,598,727
1,581,951
Less: accumulated depreciation (1,025,713 ) (1,002,587 )
$ 573,014
$ 579,364

Accrued salary and related expenses consist of:



	September 28, 2019		June 29, 2019
	(in thousands)
Accrued vacation	$	29,958	$	30,251
Accrued bonus	20,078		71,466
Accrued salaries	16,209		8,329
Accrued fringe benefits	5,222		4,807
Other	24,701		3,851
Total accrued salary and related expenses	$	96,168	$	118,704

September 29,
2018 June 30,
2018
Accrued salary and related expenses: (in thousands)
Accrued vacation $ 30,483
$ 30,695
Accrued bonus 29,844
92,288
Accrued salaries 15,476
8,210
ESPP Withholding 14,901
5,158
Accrued fringe benefits 4,625
4,752
Other 10,944
10,579
$ 106,273
$ 151,682

NOTE 4: FAIR VALUE MEASUREMENTS

The FASB established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs that may be used to measure fair value are as follows:

Level 1 - Quoted (unadjusted) prices in active markets for identical assets or liabilities.

The Company’s Level 1 assets consist of money market funds.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

The Company’s Level 2 assets and liabilities consist of U.S. Treasury securities, agency securities, corporate debt securities, certificates of deposit, commercial paper and foreign currency forward contracts that are valued using quoted market prices or are determined using a yield curve model based on current market rates.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's Level 3 assets and liabilities consist of ~~acquisition related~~acquisition-related contingent consideration liabilities.

Assets and liabilities measured at fair value on a recurring basis were as follows:



	September 28, 2019								June 29, 2019
	Fair Value Measurements Using						Total Balance		Fair Value Measurements Using						Total Balance
	Level 1		Level 2		Level 3		Total Balance		Level 1		Level 2		Level 3		Total Balance
	(in thousands)
Assets
Cash and cash equivalents
Money market funds	$	176,919	$	—	$	—	$	176,919	$	186,819	$	—	$	—	$	186,819
Short-term investments
Certificates of deposit	—		—		—		—		—		1,000		—		1,000
Corporate debt securities	—		98,176		—		98,176		—		139,990		—		139,990
Other current assets
Foreign currency forward contracts	—		104		—		104		—		651		—		651
Total assets	$	176,919	$	98,280	$	—	$	275,199	$	186,819	$	141,641	$	—	$	328,460

Liabilities
Accrued expenses
Foreign currency forward contracts	$	—	$	638	$	—	$	638	$	—	$	148	$	—	$	148
Contingent consideration	—		—		9,052		9,052		—		—		9,052		9,052
Total Liabilities	$	—	$	638	$	9,052	$	9,690	$	—	$	148	$	9,052	$	9,200

As of September 29, 2018 As of June 30, 2018

Fair Value
Measurements Using

Total
Balance

Fair Value
Measurements Using
Total
Balance
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
(in thousands)
Assets
Cash and cash equivalents
    Agency securities $ —
$ 2,669
$ —
$ 2,669
$ —
$ 13,946
$ —
$ 13,946
    Certificates of deposit —
—
—
—
—
6,000
—
6,000
    Commercial paper —
52,145
—
52,145
—
45,063
—
45,063
    Corporate debt securities —
12,237
—
12,237
—
3,819
—
3,819
    Money market funds 104,961
—
—
104,961
98,467
—
—
98,467
    U.S. Treasury securities —
49,881
—
49,881
—
30,988
—
30,988
Short term investments

    Certificates of deposit —
63,940
—
63,940
—
52,428
—
52,428
    Commercial paper —
71,666
—
71,666
—
64,354
—
64,354
    Corporate debt securities —
345,669
—
345,669
—
367,765
—
367,765
    U.S. Treasury securities —
483,368
—
483,368
—
598,368
—
598,368
Other current assets
Foreign currency forward contracts —
293
—
293
—
235
—
235
Total assets $ 104,961
$ 1,081,868
$ —
$ 1,186,829
$ 98,467
$ 1,182,966
$ —
$ 1,281,433

Liabilities
Accrued expenses
Foreign currency forward contracts $ —
$ 561
$ —
$ 561
$ —
$ 1,845
$ —
$ 1,845
Contingent consideration —
—
9,052
9,052
—
—
8,000
8,000
Other liabilities
Contingent consideration —
—
1,052
1,052
—
—
8,000
8,000
Total Liabilities $ —
$ 561
$ 10,104
$ 10,665
$ —
$ 1,845
$ 16,000
$ 17,845

During the three months ended September ~~29, 2018~~28, 2019 and the year ended June ~~30, 2018,~~29, 2019, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.

There were no assets or liabilities measured at fair value on a non-recurring basis as of September ~~29, 2018~~28, 2019 and June ~~30, 2018~~29, 2019 other than impairments of long-lived assets. ~~For~~

As of September 28, 2019 and June 29, 2019, the fair market value of private company investments amounted to $20.2 million and $20.7 million, respectively. The aggregate amount of unrealized losses recognized from these investments were $3.6 million and $3.6 million, respectively, as of September 28, 2019 and June 29, 2019.

Unrealized gains (losses) on private company investments were not material during the three months ended September 28, 2019 and September 29, 2018, the Company did not record any impairment of long-lived assets. For the fiscal year ended June 30, 2018, the Company recorded $0.9 million in impairment of long-lived assets in the Company's Consolidated Statements of Income. The Company uses various inputs to evaluate investments in privately held companies, including valuations of recent financing events as well as other relevant information regarding the performance of the issuer.2018.

NOTE 5: FINANCIAL INSTRUMENTS

Short-term investments

Fair values were as follows:



	September 28, 2019									June 29, 2019
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
	(in thousands)
Available-for-sale investments
Certificates of deposit	$	—	$	—	$	—		$	—	$	1,000	$	—	$	—		$	1,000
Corporate debt securities	98,099		83		(6		)	98,176		140,031		68		(109		)	139,990
Total available-for-sale investments	$	98,099	$	83	$	(6	)	$	98,176	$	141,031	$	68	$	(109	)	$	140,990

September 29,
2018 June 30,
2018
Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value
(in thousands)
Available-for-sale investments
Certificates of deposit $ 63,940
$ —
$ —
$ 63,940
$ 52,429
$ —
$ (1 ) $ 52,428
Commercial paper 71,666
—
—
71,666
64,354
—
—
64,354
Corporate debt securities 347,147
52
(1,530 ) 345,669
369,734
39
(2,008 ) 367,765
U.S. Treasury securities 484,468
—
(1,100 ) 483,368
600,068
10
(1,710 ) 598,368
Total available-for-sale investments $ 967,221
$ 52
$ (2,630 ) $ 964,643
$ 1,086,585
$ 49
$ (3,719 ) $ 1,082,915

In the three months ended September ~~29, 2018~~28, 2019 and ~~June 30,~~September 29, 2018, the Company did not recognize any impairment charges on short-term investments. All available-for-sale investments have maturity dates between September 29, ~~2018~~2019 and March 12, 2021.

The Company invests in various financial instruments including U.S. Treasury securities, corporate debt securities, commercial paper, and certificates of deposit which include instruments issued or managed by industrial, financial, and utility institutions and U.S. Treasury securities which include U.S. government Treasury bills and Treasury notes.

Derivative instruments and hedging activities

The Company incurs expenditures denominated in non-U.S. currencies, primarily the Philippine Peso and the Thai Baht associated with the Company's manufacturing activities in the Philippines and Thailand, respectively, and the European Euro, Indian Rupee, Japanese Yen, Taiwan New Dollar, South Korean Won, Chinese Yuan and Canadian Dollar, ~~expenditures~~ for sales offices and research and development activities undertaken outside of the U.S.

The Company has established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. The Company does not use these foreign currency forward contracts for trading purposes.

Derivatives designated as cash flow hedging instruments

The Company designates certain forward contracts as hedging instruments pursuant to Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”). As of September ~~29, 2018~~28, 2019 and June ~~30, 2018,~~29, 2019, the notional amounts of the forward contracts the Company held to purchase international currencies were ~~$41.8~~$43.0 million and ~~$49.7~~$48.5 million, respectively. As of September 28, 2019 and June 29, 2019, the Company did not hold any forward contracts to sell international currencies.

Derivatives not designated as hedging instruments

As of September 28, 2019 and June 29, 2019, the notional amounts of the forward contracts the Company held to purchase international currencies were $21.7 million and $19.6 million, respectively, and the notional amounts of forward contracts the Company held to sell international currencies were ~~$0.7 million and $1.2 million, respectively.~~

~~Derivatives not designated as hedging instruments~~

~~As of September 29, 2018 and June 30, 2018, the notional amounts of the forward contracts the Company held to purchase international currencies were $21.8~~$21.9 million and $21.1 million, ~~respectively, and the notional amounts of forward contracts the Company held to sell international currencies were $25.8 million and $21.3 million,~~ respectively. The ~~fair values of our outstanding~~Company's foreign currency

forward ~~contracts and gain (loss)~~contract gains or losses included in the Condensed Consolidated Statements of Income were not material for the three months ended September ~~29, 2018~~28, 2019 and ~~June 30,~~September 29, 2018.

Effect of hedge accounting on the Condensed Consolidated Statements of Income

The following ~~table summarizes~~tables summarize the gains ~~and~~ (losses) from hedging activities recognized in the Company's Condensed Consolidated Statements of Income:



	Three Months Ended							Three Months Ended
	September 28, 2019							September 29, 2018
	Net Revenue		Cost of Goods Sold		Operating Expenses				Net Revenue		Cost of Goods Sold			Operating Expenses
	(in thousands)
Income and expenses line items in which the effects of cash flow hedges are recorded	$	533,040	$	189,717	$	187,319			$	638,495	$	208,259		$	196,053

Gain (loss) on cash flow hedges:
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income	$	—	$	120	$	(370	)		$	39	$	(514	)	$	(1,225	)

September 29,
2018 September 23,
2017
Net Revenue Cost of Goods Sold Operating Expenses Net Revenue Cost of Goods Sold Operating Expenses
(in thousands)
Income and expenses line items in which the effects of cash flow hedges are recorded $ 638,495
$ 208,259
$ 196,053
$ 575,676
$ 201,845
$ 188,665

Gain (loss) on cash flow hedges:
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income $ 39
$ (514 ) $ (1,225 ) $ (41 ) $ 3
$ 1,148

Outstanding debt obligations

The following table summarizes the Company’s outstanding debt obligations:



	September 28, 2019			June 29, 2019
	(in thousands)
3.45% fixed rate notes due June 2027	$	500,000		$	500,000
3.375% fixed rate notes due March 2023	500,000			500,000
Total outstanding debt	1,000,000			1,000,000
Less: Reduction for unamortized discount and debt issuance costs	(7,056		)	(7,416		)
Total long-term debt	$	992,944		$	992,584

September 29,
2018 June 30,
2018
(in thousands)
3.45% fixed rate notes due June 2027 $ 500,000
$ 500,000
2.5% fixed rate notes due November 2018 500,000
500,000
3.375% fixed rate notes due March 2023 500,000
500,000
Total outstanding debt 1,500,000
1,500,000
Less: Current portion (included in "Current portion of debt") (499,762 ) (499,406 )
Less: Reduction for unamortized discount and debt issuance costs (8,732 ) (9,447 )
Total long-term debt $ 991,506
$ 991,147

On June 15, 2017, the Company completed a public offering of $500 million aggregate principal amount of the Company's 3.45% senior unsecured and unsubordinated notes due in June 2027 (“2027 Notes”), with an effective interest rate of 3.5%. Interest on the 2027 Notes is payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2017. The net proceeds of this offering were approximately $495.2 million, after issuing at a discount and deducting paid expenses.

On November 21, 2013, the Company completed a public offering of $500 million aggregate principal amount of the Company’s 2.5% coupon senior unsecured and unsubordinated notes due in November 2018 (“2018 Notes”), with an effective interest rate of 2.6%. Interest on the 2018 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2014. The net proceeds of this offering were approximately $494.5 million, after issuing at a discount and deducting paid expenses. In November of 2018, the Company repaid the entire $500 million in principal and any outstanding interest, related to these outstanding notes.

On March 18, 2013, the Company completed a public offering of $500 million aggregate principal amount of the Company’s 3.375% senior unsecured and unsubordinated notes due in March 2023 (“2023 Notes”), with an effective interest rate of 3.5%. Interest on the 2023 Notes is payable semi-annually in arrears on March 15 and September 15 of each ~~year, commencing on September 15, 2013.~~year. The net proceeds of this offering were approximately ~~$490~~$490.0 million, after issuing at a discount and deducting paid expenses.

The debt indentures that govern the 2027 Notes and the 2023 Notes ~~and the 2018 Notes, respectively,~~ include covenants that limit the Company's ability to grant liens on its facilities and to enter into sale and leaseback transactions, which could limit the Company's ability to secure additional debt funding in the future. In circumstances involving a change of control of the Company followed by a downgrade of the rating of the 2027 Notes ~~the 2023 Notes~~ or the ~~2018~~2023 Notes, the Company would be required to make an offer to repurchase the affected notes at a purchase price equal to 101% of the aggregate principal amount of such notes, plus accrued and unpaid interest.

The Company accounts for all the notes above based on their amortized cost. The discount and expenses are being amortized to Interest and other income (expense), net in the Condensed Consolidated Statements of Income over the life of the notes. The interest expense is recorded in Interest and other income (expense), net in the Condensed Consolidated Statements of Income. Amortized discount and expenses, as well as interest expense associated with the notes, were ~~$12.4~~$8.9 million and ~~$12.6~~$12.4 million during the three months ended September 28, 2019 and September 29, 2018, ~~and September 23, 2017,~~ respectively.

The estimated fair value of the Company’s outstanding debt obligations was approximately ~~$1,461 million~~$1.03 billion as of September ~~29, 2018.~~28, 2019. The estimated fair value of the debt is based primarily on observable market inputs and is a Level 2 measurement.

The Company recorded interest expense of ~~$12.6~~$9.3 million and $12.6 million during the three months ended September ~~29, 2018,~~28, 2019, and ~~September 23, 2017, respectively.~~

~~Credit Facility~~

~~Revolving credit facility~~

The Company has access to a $350 million senior unsecured revolving credit facility with certain institutional lenders that expires on June 27, 2019. The facility fee is at a rate per annum that varies based on the Company’s index debt rating and any advances under the credit agreement will accrue interest at a base rate plus a margin based on the Company’s index debt rating. The credit agreement requires the Company to comply with certain covenants, including a requirement that the Company maintain a ratio of debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) of not more than 3~~to 1 and a minimum interest coverage ratio (EBITDA divided by interest expense) greater than 3.5 to 1. As of~~ September 29, 2018, ~~the Company had not borrowed any amounts from this credit facility and was in compliance with all debt covenants.~~respectively.

Other Financial Instruments

For the balance of the Company’s financial instruments, cash equivalents, accounts receivable, accounts payable and other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.

NOTE 6: STOCK-BASED COMPENSATION

At September ~~29, 2018,~~28, 2019, the Company had one stock incentive plan, the Company's 1996 Stock Incentive Plan (the “1996 Plan”) and one employee stock purchase plan, the 2008 Employee Stock Purchase Plan (the “2008 ESPP”). The 1996 Plan was adopted by the ~~board~~Board of ~~directors~~Directors to provide the grant of incentive stock options, non-statutory stock options, restricted stock units (“RSUs”), and market stock units (“MSUs”) to employees, directors, and consultants.

Pursuant to the 1996 Plan, the exercise price for incentive stock options and non-statutory stock options is determined to be the fair market value of the underlying shares on the date of grant. Options typically vest ratably over a four-year period measured from the date of grant. Options generally expire no later than seven years after the date of grant, subject to earlier termination upon an optionee's cessation of employment or service.

RSUs granted to employees typically vest ratably over a four-year period and are converted into shares of the Company's common stock upon vesting, subject to the employee's continued service to the Company over that period. RSUs granted after August 2017 will continue to vest post-employment at the Company for certain individuals satisfying specific eligibility requirements.

MSUs granted to employees typically vest over a four-year cliff period and are converted into shares of the Company's common stock upon vesting, subject to the employee's continued service to the Company over that period. The number of shares that are released at the end of the performance period can range from zero to a maximum cap depending on the Company's performance. For MSUs granted prior to September 2017, the performance metrics of this program are based on relative performance of the Company’s stock price as compared to the Semiconductor Exchange Traded Fund index SPDR S&P (the “XSD”). For MSUs granted September 2017 and after, the performance metrics for this program are based on the total shareholder return ("TSR") of the Company relative to the TSR of the other companies included in the XSD; these MSUs vest based upon annual performance subject to continued service through the end of the four-year cliff period. MSUs granted after August 2017 will continue to vest post-employment at the Company for certain individuals satisfying specific eligibility requirements.

The following tables show total stock-based compensation expense by type of award, and the resulting tax effect, included in the Condensed Consolidated Statements of Income for the three months ended September 28, 2019 and September 29, 2018, ~~and September 23, 2017,~~ respectively:



	Three Months Ended								Three Months Ended
	September 28, 2019								September 29, 2018
	Stock Options		Restricted Stock Units		Employee Stock Purchase Plan		Total		Stock Options		Restricted Stock Units		Employee Stock Purchase Plan		Total
	(in thousands)
Cost of goods sold	$	9	$	2,280	$	669	$	2,958	$	10	$	1,761	$	507	$	2,278
Research and development	4		9,485		1,395		10,884		11		8,692		1,155		9,858
Selling, general and administrative	67		9,953		810		10,830		56		7,645		661		8,362
Pre-tax stock-based compensation expense	$	80	$	21,718	$	2,874	$	24,672	$	77	$	18,098	$	2,323	$	20,498
Less: income tax effect							2,888								1,964
Net stock-based compensation expense							$	21,784							$	18,534

Three Months Ended

September 29, 2018
September 23, 2017

Stock Options
Restricted Stock Units
Employee Stock Purchase Plan
Total
Stock Options
Restricted Stock Units
Employee Stock Purchase Plan
Total

(in thousands)
Cost of goods sold $ 10

$ 1,761

$ 507

$ 2,278

$ 86

$ 1,836

$ 478

$ 2,400
Research and development 11

8,692

1,155

9,858

308

6,588

970

7,866
Selling, general and administrative 56

7,645

661

8,362

363

6,130

528

7,021
Pre-tax stock-based compensation expense $ 77

$ 18,098

$ 2,323

$ 20,498

$ 757

$ 14,554

$ 1,976

$ 17,287
Less: income tax effect

1,964

2,890
Net stock-based compensation expense

$ 18,534

$ 14,397

The expenses included in the Condensed Consolidated Statements of Income for RSUs include expenses related to MSUs of ~~$2.4~~$4.4 million and ~~$1.4~~$2.4 million for the three months ended September 28, 2019 and September 29, 2018, ~~and September 23, 2017,~~ respectively.

Stock Options

The fair value of options granted to employees under the 1996 Plan is estimated on the date of grant using the Black-Scholes option valuation model.

There were no0 stock options granted in the three months ended September 28, 2019 and September 29, ~~2018 or September 23, 2017.~~2018.

The following table summarizes outstanding, exercisable and vested and expected to vest stock options as of September ~~29, 2018~~28, 2019 and ~~their~~related activity for the three months ended September ~~29, 2018:~~28, 2019:

Number of
Shares
Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (1)
Balance at June 30, 2018 1,688,253
$ 27.72

Options Granted —
—

Options Exercised (331,332 ) 26.66

Options Cancelled (3,439 ) 28.08

Balance at September 29, 2018 1,353,482
$ 27.98
1.7 $ 42,687,390
Exercisable, September 29, 2018 1,353,482
$ 27.98
1.7 $ 42,687,390
Vested and expected to vest, September 29, 2018 1,353,482
$ 27.98
1.7 $ 42,687,390



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value⁽¹⁾
Balance at June 29, 2019	777,413		$	28.30
Options Granted	—		—
Options Exercised	(253,017	)	27.99
Options Cancelled	(16,575	)	27.30
Balance at September 28, 2019	507,821		$	28.34	1.0	$	14,665,580
Exercisable, September 28, 2019	507,821		$	28.34	1.0	$	14,665,580
Vested and expected to vest, September 28, 2019	507,821		$	28.34	1.0	$	14,665,580



(1)	Aggregate intrinsic value represents the difference between the exercise price and the closing price per share of the Company’s common stock on September ~~28, 2018,~~27, 2019, the last business day preceding the fiscal quarter-end, multiplied by the number of options outstanding, exercisable or vested and expected to vest as of September ~~29, 2018.~~28, 2019.

As of September ~~29, 2018,~~28, 2019, there was no0 unrecognized stock compensation from unvested stock options.

Restricted Stock Units and Other Awards

The fair value of RSUs and other awards under the Company’s 1996 Plan is estimated using the value of the Company’s common stock on the date of grant, reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting. The Company also estimates forfeitures at the time of grant and makes revisions to forfeitures on a quarterly basis.

The weighted-average fair value of RSUs and other awards granted was ~~$54.98~~$47.61 and ~~$41.69~~$54.98 per share for the three months ended September 28, 2019 and September 29, 2018, ~~and September 23, 2017,~~ respectively.

The following table summarizes the outstanding and expected to vest RSUs and other awards as of September ~~29, 2018~~28, 2019 and ~~their~~related activity during the three months ended September ~~29, 2018:~~28, 2019:

Number of
Shares

Weighted Average
Remaining
Contractual Term
(in Years)

Aggregate Intrinsic
Value (1)
Balance at June 30, 2018 5,524,432

Restricted stock units and other awards granted 1,232,654

Restricted stock units and other awards released (407,431 )
Restricted stock units and other awards cancelled (127,997 )
Balance at September 29, 2018 6,221,658
3.0 $ 370,516,643
Outstanding and expected to vest, September 29, 2018 5,121,814
2.9 $ 304,850,402



	Number of Shares		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value⁽¹⁾
Balance at June 29, 2019	4,918,306
Restricted stock units and other awards granted	1,427,637
Restricted stock units and other awards released	(393,643	)
Restricted stock units and other awards cancelled	(124,175	)
Balance at September 28, 2019	5,828,125		3.0	$	333,485,313
Outstanding and expected to vest, September 28, 2019	4,806,421		2.9	$	275,023,419



(1)	Aggregate intrinsic value for RSUs and other awards represents the closing price per share of the Company’s common stock on September ~~28, 2018,~~27, 2019, the last business day preceding the fiscal quarter-end, multiplied by the number of RSUs outstanding or expected to vest as of September ~~29, 2018.~~28, 2019.

The Company withheld shares totaling ~~$7.5~~$9.9 million in value as a result of employee withholding taxes based on the value of ~~the~~ RSUs on their vesting date for the three months ended September ~~29, 2018. The total~~28, 2019. Total payments for ~~the~~ employees’ tax obligations to ~~the~~ taxing authorities are reflected as financing activities within the Condensed Consolidated Statements of Cash Flows.

As of September ~~29, 2018,~~28, 2019, there was ~~$187.7~~$193.4 million of unrecognized compensation expense related to ~~6.2~~5.8 million unvested RSUs and other awards, which is expected to be recognized over a weighted average period of approximately 3.0 years.

Market Stock Units (MSUs)

The Company grants MSUs to senior members of management in lieu of granting stock options. For MSUs granted prior to September 2017, the performance metrics of this program are based on relative performance of the Company’s stock price as compared to the Semiconductor Exchange Traded Fund index SPDR S&P (the “XSD”). For MSUs granted in September 2017 and after, the performance metrics for this program are based on the total shareholder return ("TSR") of the Company relative to the TSR of the other companies included in the XSD. The fair value of MSUs is estimated using a Monte Carlo simulation model on the date of grant. The Company also estimates forfeitures at the time of grant and makes revisions to forfeitures on a quarterly basis. Compensation expense is recognized based on the initial valuation and is not subsequently adjusted as a result of the Company’s performance relative to that of the XSD or the TSR of the companies included in the XSD, as applicable. Vesting for MSUs is contingent upon both service and market conditions and has a four-year vesting cliff period. MSUs granted ~~in September~~after August 2017 vest based upon annual performance and are subject to continued service through the end of the four-year period but will continue to vest post-employment at the Company for certain individuals satisfying specific eligibility requirements.

The weighted-average fair value of MSUs granted was ~~$75.48~~$54.70 and ~~$51.03~~$75.48 per share for the three months ended September 28, 2019 and September 29, 2018, ~~and September 23, 2017,~~ respectively.

The following table summarizes the number of MSUs outstanding and expected to vest as of September ~~29, 2018~~28, 2019 and their activity during the three months ended September ~~29, 2018:~~28, 2019:

Number of
Shares

Weighted Average
Remaining
Contractual Term
(in Years)

Aggregate Intrinsic
Value (1)
Balance at June 30, 2018 1,079,064

Market stock units granted 247,804

Market stock units released (13,594 )
Market stock units cancelled (245,082 )
Balance at September 29, 2018 1,068,192
3.1 $ 63,578,788
Outstanding and expected to vest, September 29, 2018 925,295
3.0 $ 55,073,544



	Number of Shares		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value⁽¹⁾
Balance at June 29, 2019	1,048,532
Market stock units granted	259,984
Market stock units released	(183,974	)
Market stock units cancelled	(98,418	)
Balance at September 28, 2019	1,026,124		3.0	$	58,714,815
Outstanding and expected to vest, September 28, 2019	404,928		2.9	$	23,169,973



(1)	Aggregate intrinsic value for MSUs represents the closing price per share of the Company’s common stock on September ~~28, 2018,~~27, 2019, the last business day preceding the fiscal quarter-end, multiplied by the number of MSUs outstanding or expected to vest as of September ~~29, 2018.~~28, 2019.

As of September ~~29, 2018,~~28, 2019, there was ~~$38.0~~$37.1 million of unrecognized compensation expense related to ~~1.1~~1.0 million unvested MSUs, which is expected to be recognized over a weighted average period of approximately ~~3.1~~3.0 years.

Employee Stock Purchase Plan

Employees are granted rights to acquire common stock under the 2008 ESPP.

The fair value of 2008 ESPP rights granted to employees has been estimated at the date of grant using the Black-Scholes option valuation model using the following assumptions for the offering periods outstanding:



	Three Months Ended
	September ~~29,~~ ~~2018~~28, 2019	September ~~23,~~ ~~2017~~29, 2018
Expected holding period (in years)	0.5 years	0.5 years
Risk-free interest rate	2.3% - 2.7%	1.6% - 2.1%	~~0.8% - 1.1%~~
Expected stock price volatility	29.5 % - 31.3%	19.6% - 32.7%	~~19.1% - 24.7%~~
Dividend yield	~~2.8% -3.1%~~3.1% - 3.4%	~~3.0%~~2.8% - ~~3.4%~~3.1%

As of September ~~29, 2018 and September 23, 2017,~~28, 2019, there was ~~$3.5~~$4.0 million ~~and $2.9 million, respectively,~~ of unrecognized compensation expense related to the 2008 ESPP.

NOTE 7: EARNINGS ~~(LOSS)~~ PER SHARE

Basic earnings ~~(loss)~~ per share are computed using the weighted average number of shares of common stock outstanding during the period. For purposes of computing basic earnings ~~(loss)~~ per share, the weighted average number of outstanding shares of common stock excludes unvested RSUs and other awards as well as MSUs. Diluted earnings ~~(loss)~~ per share incorporates the incremental shares issuable upon the assumed exercise of stock options, assumed release of unvested RSUs and other awards as well as MSUs, and assumed issuance of common stock under the 2008 ESPP using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings ~~(loss)~~ per share:



	Three Months Ended
	September 28, 2019		September 29, 2018
	(in thousands, except per share data)
Numerator for basic earnings per share and diluted earnings per share
Net income	$	140,156	$	197,423

Denominator for basic earnings per share	271,388		278,045
Effect of dilutive securities:
Stock options, ESPP, RSUs, and MSUs	3,048		4,409
Denominator for diluted earnings per share	274,436		282,454

Earnings per share
Basic	$	0.52	$	0.71
Diluted	$	0.51	$	0.70

Three Months Ended
September 29,
2018 September 23,
2017
(in thousands, except per share data)
Numerator for basic earnings (loss) per share and diluted earnings (loss) per share
Net income (loss) $ 197,423
$ 154,533

Denominator for basic earnings (loss) per share 278,045
282,170
Effect of dilutive securities:
Stock options, ESPP, RSUs, and MSUs 4,409
4,267
Denominator for diluted earnings (loss) per share 282,454
286,437

Earnings (loss) per share
Basic $ 0.71
$ 0.55
Diluted $ 0.70
$ 0.54

NOTE 8: SEGMENT INFORMATION

The Company designs, develops, manufactures and markets a broad range of linear and mixed signal integrated circuits. All of the Company's products are designed through a centralized R&D function, manufactured using centralized manufacturing (internal and external), and sold through a centralized sales force and shared wholesale distributors.

The Company currently has ~~one~~1 operating segment and reportable segment. In accordance with ASC No. 280, Segment Reporting (“(“ASC 280”), the Company considers operating segments to be components of the Company’s business for which separate financial information is available that is evaluated regularly by the Company’s Chief Operating Decision Maker in deciding how to allocate resources and in assessing performance. The Chief Operating Decision Maker for the Company was assessed and determined to be the CEO. The CEO reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, the Company has determined that it has a single operating and reportable segment.

Enterprise-wide information is provided in accordance with ASC 280. Geographical revenue information is based on customers’ ship-to location. Long-lived assets consist of property, plant and equipment. Property, plant and equipment information is based on the physical location of the assets at the end of each fiscal year.

Net revenues from unaffiliated customers by geographic region were as follows:



	September 28, 2019		June 29, 2019
	(in thousands)
United States	$	379,053	$	379,308
Philippines	99,518		102,634
Rest of World	95,526		95,780
	$	574,097	$	577,722

September 29,
2018 June 30,
2018
(in thousands)
United States $ 360,958
$ 361,432
Philippines 116,282
120,657
Rest of World 95,774
97,275
$ 573,014
$ 579,364

NOTE 9: COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component and related tax effects in the three months ended September ~~29, 2018~~28, 2019 and September ~~23, 2017~~29, 2018 were as follows:



(in thousands)	Unrealized Gains and (Losses) on Intercompany Receivables			Unrealized Gains and (Losses) on Post-Retirement Benefits			Cumulative Translation Adjustment			Unrealized Gains and (Losses) on Cash Flow Hedges			Unrealized Gains and (Losses) on Available-For-Sale Securities			Total
June 29, 2019	$	(6,280	)	$	(4,322	)	$	(1,136	)	$	425		$	(41	)	$	(11,354	)
Other comprehensive income (loss) before reclassifications	—			—			—			(1,274		)	132			(1,142		)
Amounts reclassified out of accumulated other comprehensive (income) loss	—			120			—			250			—			370
Tax effects	—			(22		)	—			165			(14		)	129
Other comprehensive income (loss), net	—			98			—			(859		)	118			(643		)
September 28, 2019	$	(6,280	)	$	(4,224	)	$	(1,136	)	$	(434	)	$	77		$	(11,997	)

(in thousands) Unrealized Gains and Losses on Intercompany Receivables Unrealized Gains and Losses on Post-Retirement Benefits Cumulative Translation Adjustment Unrealized Gains and Losses on Cash Flow Hedges Unrealized Gains and Losses on Available-For-Sale Securities Total
June 30, 2018 $ (6,280 ) $ (2,516 ) $ (1,136 ) $ (1,383 ) $ (3,670 ) $ (14,985 )
Other comprehensive income (loss) before reclassifications —
—
—
(391 ) 1,119
728
Amounts reclassified out of accumulated other comprehensive loss (income) —
97
—
1,700
—
1,797
Tax effects —
(19 ) —
(214 ) (27 ) (260 )
Other comprehensive income (loss), net —
78
—
1,095
1,092
2,265
September 29, 2018 $ (6,280 ) $ (2,438 ) $ (1,136 ) $ (288 ) $ (2,578 ) $ (12,720 )



(in thousands)	Unrealized Gains and (Losses) on Intercompany Receivables			Unrealized Gains and (Losses) on Post-Retirement Benefits			Cumulative Translation Adjustment			Unrealized Gains and (Losses) on Cash Flow Hedges			Unrealized Gains and (Losses) on Available-For-Sale Securities			Total
June 30, 2018	$	(6,280	)	$	(2,516	)	$	(1,136	)	$	(1,383	)	$	(3,670	)	$	(14,985	)
Other comprehensive income (loss) before reclassifications	—			—			—			(391		)	1,119			728
Amounts reclassified out of accumulated other comprehensive (income) loss	—			97			—			1,700			—			1,797
Tax effects	—			(19		)	—			(214		)	(27		)	(260		)
Other comprehensive income (loss), net	—			78			—			1,095			1,092			2,265
September 29, 2018	$	(6,280	)	$	(2,438	)	$	(1,136	)	$	(288	)	$	(2,578	)	$	(12,720	)

(in thousands) Unrealized Gains and Losses on Intercompany Receivables Unrealized Gains and Losses on Post-Retirement Benefits Cumulative Translation Adjustment Unrealized Gains and Losses on Cash Flow Hedges Unrealized Gains and Losses on Available-For-Sale Securities Total
June 24, 2017 $ (6,280 ) $ (1,258 ) $ (1,136 ) $ 18
$ (1,234 ) $ (9,890 )
Other comprehensive income (loss) before reclassifications —
—
—
1,583
(98 ) 1,485
Amounts reclassified out of accumulated other comprehensive loss (income) —
66
—
(1,110 ) —
(1,044 )
Tax effects —
(22 ) —
(120 ) —
(142 )
Other comprehensive income (loss), net —
44
—
353
(98 ) 299
September 23, 2017 $ (6,280 ) $ (1,214 ) $ (1,136 ) $ 371
$ (1,332 ) $ (9,591 )

NOTE 10: INCOME TAXES

In the three months ended September ~~29, 2018~~28, 2019 and September ~~23, 2017,~~29, 2018, the Company recorded an income tax provision of ~~$36.2~~$17.7 million and ~~$26.4~~$36.2 million, respectively. The Company’s effective tax rate for the three months ended September 28, 2019 and September 29, 2018 was 11.2% and ~~September 23, 2017 was~~ 15.5% ~~and 14.6%~~, respectively.

On December 22, 2017 legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Act”), was enacted. The Act included a one-time tax on accumulated unremitted earnings of our foreign subsidiaries (“Transition Tax”). SEC Staff Accounting Bulletin No. 118 allows the use of provisional amounts (reasonable estimates) if accounting for the income tax effects of the Act has not been completed. Provisional amounts must be adjusted within one year from the enactment date of the Act. In the second quarter of fiscal year 2018, the Company recorded a $236.9 million discrete provisional Transition Tax charge. No adjustment to the provisional Transition Tax charge was made in the first quarter of fiscal year 2019 as the Company continues to gather information and analyze available guidance to more precisely compute the amount of the Transition Tax.

The Act reduced the federal statutory tax rate from 35% to 21%, effective January 1, 2018, which resulted in a fiscal year 2018 federal statutory tax rate of 28.1% for the Company (average of a 35% rate for the first half of fiscal year 2018 and a 21% rate for the second half of fiscal year 2018). The Company’s federal statutory tax rate for fiscal year 2019 is 21%.

The Act contains Global Intangible Low-Taxed Income (“GILTI”) provisions, which first impact the Company in fiscal year 2019. The GILTI provisions effectively subject income earned by the Company’s foreign subsidiaries to current U.S. tax at a rate of 10.5%, less foreign tax credits. Under U.S. GAAP the Company can make an accounting policy election to either recognize deferred taxes for temporary differences expected to impact GILTI in future years or provide for tax expense related to GILTI in the year the tax is incurred as a period expense. The Company has elected to treat tax generated by the GILTI provisions as a period expense.

The Company’s federal statutory tax rate ~~for the first quarter of fiscal year 2019~~ is 21%. The Company’s effective tax rate for the three months ended September 28, 2019 and September 29, 2018 ~~of 15.5%~~ was lower than the statutory rate primarily due to earnings of foreign subsidiaries, generated primarily by the Company's international operations managed in Ireland, that were taxed at lower rates, partially offset by U.S. tax expense related to ~~GILTI.~~Global Intangible Low-Taxed Income.

The Company’s federal statutory tax rate for the first quarter of fiscal year 2018 was 35%. The Act did not impact the federal statutory tax rate and income tax provision for the first quarter of fiscal year 2018 because it was enacted after the end of that quarter. The Company’s effective tax rate for the three months ended September 23, 2017 of 14.6% was lower than the statutory rate primarily due to earnings of foreign subsidiaries, generated primarily by the Company's international operations managed in Ireland, that were taxed at lower rates, and a $2.0 million discrete benefit for excess tax benefits generated by the settlement of share-based awards, partially offset by share-based compensation for which no tax benefit is expected and $3.9 million of discrete interest accruals for unrecognized tax benefits.

The Company engages in continuous discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. It is reasonably possible that the balance of gross unrecognized tax benefits, including accrued interest and penalties, could decrease up to $439.0 million within the next twelve months due to the completion of federal tax audits, including any administrative appeals. The $439.0 million primarily relates to matters involving federal taxation of cross-border transactions.

The Company’s federal corporate income tax returns are audited on a recurring basis by the Internal Revenue Service (“IRS”). The IRS concluded its field examination of the Company’s federal corporate income tax returns for fiscal years 2009 through 2011 and issued an IRS Revenue Agent's Report in July 2016 that included proposed adjustments for transfer pricing issues related to cost sharing and buy-in license payments for the use of intangible property by one of the Company’s international subsidiaries. The Company disagreed with the proposed transfer pricing adjustments and related penalties, and in September 2016, the Company filed a protest to challenge the proposed adjustments and request a conference with the Appeals Office of the IRS. In May 2018, a preliminary understanding was reached with the IRS regarding the contested issues for the audit and post-audit years, which the Company expects may be finalized in fiscal year 2019 with the execution of a closing agreement. In June 2018, the Company made advance payments for audit and post-audit year tax of $140.7 million and interest of $37.4 million. These payments will reduce the accrual of interest on audit and post-audit year tax deficiencies that would be owed if the preliminary understanding is finalized. The Company’s reserves for unrecognized tax benefits are sufficient to cover the audit and post-audit year tax deficiencies that would be owed as a result of the preliminary understanding. In fiscal year 2017, the IRS commenced an audit of the Company’s federal corporate income tax returns for fiscal years 2012 through 2014, which is ongoing. ~~In the first quarter of~~The Company expects that in fiscal year ~~2019, the Company was notified that~~2020 the IRS will commence an audit of the Company's federal corporate income tax returns for fiscal years 2015 through ~~2016.~~2017.

NOTE 11: COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is party or subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including proceedings and claims that relate to intellectual property matters. While the outcome of these matters cannot be predicted with certainty, the Company does not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized or reserved, if any.

Indemnification

The Company indemnifies certain customers, distributors, suppliers and subcontractors for attorney fees, damages and costs awarded against such parties in certain circumstances in which the Company's products are alleged to infringe third party intellectual property rights, including patents, registered trademarks or copyrights. The terms of the Company's indemnification obligations are generally perpetual from the effective date of the agreement. In certain cases, there are limits on and exceptions to the Company's potential liability for indemnification relating to intellectual property infringement claims.

Pursuant to the Company's charter documents and separate written indemnification agreements, the Company has certain indemnification obligations to its current officers, employees and directors, as well as certain former officers and directors.

NOTE 12: COMMON STOCK REPURCHASES

On July 20, 2017, the board of directors of the Company authorized the repurchase of up to $1.0 billion of the Company's common stock. The stock repurchase authorization does not have an expiration date and the pace of repurchase activity will depend on factors such as current stock price, levels of cash generation from operations, cash requirements, and other factors. All prior repurchase authorizations by the Company’s board of directors for the repurchase of common stock were cancelled and superseded by this repurchase authorization.

During the three months ended September 29, 2018, the Company repurchased approximately 1.9 million shares of its common stock for $112.5 million. As of September 29, 2018, the Company had remaining authorization of $505.9 million for future share repurchases. The number of shares to be repurchased and the timing of such repurchases will be based on several factors, including the price of the Company’s common stock and general market and business conditions.

On October 30, 2018, the ~~board~~Board of ~~directors~~Directors of the Company authorized the repurchase of up to $1.5 billion of the Company’s common stock. The stock repurchase authorization does not have an expiration date and the pace of repurchase activity will depend on factors such as current stock price, levels of cash generation from operations, cash requirements, and other factors. ~~The Company’s~~All prior repurchase ~~authorization has been~~authorizations by the Company’s Board of Directors for the repurchase of common stock were cancelled and superseded by this ~~new~~ repurchase authorization.

During the three months ended September 28, 2019, the Company repurchased approximately 1.6 million shares of its common stock for $93.6 million. As of September 28, 2019, the Company had remaining authorization of $1.0 billion for future share repurchases. The number of shares to be repurchased and the timing of such repurchases will be based on several factors, including the price of the Company’s common stock and general market and business conditions.

NOTE 13: ~~ACQUISITION~~LEASES

~~On January 26, 2018, the Company acquired a privately-held corporation specializing in the development~~The Company's lease obligations consist of ~~high performance USB~~operating leases for domestic and video extension technology. Total cash consideration paid in connection with this acquisition was $57.8 million, net of cash acquired. The Company also agreed to pay up to an additional $16.0 million if the acquired business achieves certain financial milestones for the annual periods ended August 31, 2018international office facilities, data centers, and ~~August 31, 2019, of which $8.0 million was paid during~~equipment. These leases expire at various dates through fiscal year 2031. For the three months ended September ~~29, 2018. The acquired assets~~28, 2019, the Company recorded operating lease expense of $2.9 million.

Leases are included ~~$26.0 million of developed technology and $10.5 million of other intangible assets. The Company also recorded $41.9 million of goodwill~~ in ~~connection with this acquisition. The goodwill is not deductible for tax purposes.~~the following Condensed Consolidated Balance Sheet lines:



	September 28, 2019
	(in thousands)
Other assets	$	58,881

Accrued expenses	$	10,024
Other liabilities	$	53,099

Future minimum lease payments under non-cancelable operating leases as of September 28, 2019 are as follows:



	Operating Lease Obligations
Fiscal Year	(in thousands)
Remainder of 2020	$	9,051
2021	11,647
2022	10,665
2023	9,549
2024	8,215
Thereafter	22,064
Total	71,191
Less imputed interest	8,204
Total	$	62,987

Other information related to leases as of September 28, 2019 are as follows:



	Three Months Ended
	September 28, 2019
Supplemental cash flow information	(in thousands)
Operating cash flows used for operating leases	$	2,863
Weighted-average remaining lease term - operating leases, in years	7
Weighted-average discount rate - operating leases	3.45		%

The incremental borrowing rate used by the Company is based on the most recent June 2017 debt offering of the Company's 3.450% senior unsecured and unsubordinated notes.

NOTE 14: GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company monitors the recoverability of goodwill recorded in connection with acquisitions, by reporting unit, annually, or more often if events or changes in circumstances indicate that the carrying amount may not be recoverable.

There were no changes to goodwill for the three months ended September ~~29, 2018.~~28, 2019.

No indicators or instances of impairment were identified in the three months and fiscal year ended September ~~29, 2018~~28, 2019 and June ~~30, 2018,~~29, 2019, respectively.

Intangible Assets

Intangible assets consisted of the following:



	September 28, 2019						June 29, 2019
	Original Cost		Accumulated Amortization		Net		Original Cost		Accumulated Amortization		Net
	(in thousands)
Intellectual property	$	490,136	$	448,668	$	41,468	$	487,346	$	445,558	$	41,788
Customer relationships	116,505		106,573		9,932		116,505		105,901		10,604
Trade name	9,974		8,998		976		9,974		8,914		1,060
Patents	2,500		2,500		—		2,500		2,500		—
Total amortizable purchased intangible assets	619,115		566,739		52,376		616,325		562,873		53,452
In-process research & development (IPR&D)	—		—		—		2,790		—		2,790
Total purchased intangible assets	$	619,115	$	566,739	$	52,376	$	619,115	$	562,873	$	56,242

September 29,
2018 June 30,
2018

Original
Cost

Accumulated
Amortization
Net
Original
Cost

Accumulated
Amortization
Net
(in thousands)
Intellectual property $ 488,846
$ 430,784
$ 58,062
$ 485,465
$ 423,869
$ 61,596
Customer relationships 116,505
103,885
12,620
116,294
103,217
13,077
Trade name 9,974
8,661
1,313
9,340
8,588
752
Patents 2,500
2,500
—
2,500
2,469
31
Total amortizable purchased intangible assets 617,825
545,830
71,995
613,599
538,143
75,456
IPR&D 2,790
—
2,790
2,790
—
2,790
Total purchased intangible assets $ 620,615
$ 545,830
$ 74,785
$ 616,389
$ 538,143
$ 78,246

The following table presents the amortization expense of intangible assets and its presentation in the Condensed Consolidated Statements of Income:



	Three Months Ended
	September 28, 2019		September 29, 2018
	(in thousands)
Cost of goods sold	$	3,111	$	6,915
Intangible asset amortization	756		773
Total intangible asset amortization expenses	$	3,867	$	7,688

Three Months Ended
September 29,
2018 September 23,
2017
(in thousands)
Cost of goods sold $ 6,915
$ 11,064
Intangible asset amortization 773
1,752
Total intangible asset amortization expenses $ 7,688
$ 12,816

The following table represents the estimated future amortization expense of intangible assets as of September ~~29, 2018:~~

28, 2019:



	Amount
Fiscal Year	(in thousands)
Remaining nine months of 2020	$	11,600
2021	13,767
2022	8,088
2023	7,604
2024	4,628
Thereafter	6,689
Total intangible assets	$	52,376

Fiscal Year Amount
(in thousands)
Remaining nine months of 2019 $ 17,267
2020 15,368
2021 13,669
2022 7,989
2023 7,505
Thereafter 10,197
Total intangible assets $ 71,995

~~NOTE 15: RESTRUCTURING ACTIVITIES~~

~~Fiscal year 2019:~~

During the three months ended September 29, 2018, the Company recorded $1.0 million in "Severance and restructuring expenses" in the Condensed Consolidated Statements of Income related to various restructuring plans designed to reduce costs. These charges were primarily associated with continued reorganization of certain business units and functions, which impacted multiple job classifications and locations.

~~Fiscal year 2018:~~

During the three months ended September 23, 2017 and fiscal year ended June 30, 2018, the Company recorded $5.4 million and $15.1 million in “Severance and restructuring expenses" respectively, in the Condensed Consolidated Statements of Income related to various restructuring plans designed to reduce costs. These charges were primarily associated with continued reorganization of

~~certain business units and functions, as well as employee enrollments in voluntary separation programs. Multiple job classifications and locations were impacted by these activities.~~

~~Restructuring Accruals~~

The Company has accruals for severance and restructuring payments within Accrued salary and related expenses in the accompanying Condensed Consolidated Balance Sheets. The following table summarizes changes in the accruals associated with these restructuring activities during the three months ended September 29, 2018:

Balance, June 30, 2018
Three Months Ended
September 29, 2018
Balance, September 29, 2018
Charges Cash Payments Change in Estimates
(in thousands)
Severance and Related - All plans (1) 2,969
987
(3,139 ) 7
$ 824


~~(1)~~	~~Charges and change in estimates are included in Severance and restructuring expenses in the accompanying Condensed Consolidated Statements of Income.~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Maxim Integrated Products, Inc. (“Maxim Integrated” or the “Company” and also referred to as “we,” “our” or “us”) disclaims any duty to and undertakes no obligation to update any forward-looking statement, whether as a result of new information relating to existing conditions, future events or otherwise or to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by federal securities laws. Readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Readers should carefully review future reports and documents that the Company files with or furnishes to the SEC from time to time, such as its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, and any Current Reports on Form 8-K.

Overview of Business

Maxim Integrated ~~is incorporated in~~Products, Inc. (“Maxim Integrated” or the ~~state of Delaware. Maxim Integrated~~“Company” and also referred to as “we,” “our” or “us”) designs, develops, manufactures and markets a broad range of linear and mixed-signal integrated circuits, commonly referred to as analog circuits, for a large number of ~~geographically~~customers in diverse ~~customers. We also provide a range of high-frequency process technologies and capabilities that can be used in custom designs.~~geographical locations. The analog market is fragmented and characterized by many diverse applications, a great number of product variations and, with respect to many circuit types, relatively long product life cycles. We are a global company with a wafer manufacturing facility in the U.S., ~~testing~~test facilities in the Philippines and Thailand, and sales and circuit design offices around the world. We also utilize third ~~party foundries~~parties for manufacturing and assembly of our products.

The ~~major end-markets~~Linear and Mixed-Signal Analog Integrated Circuit Market

All electronic signals generally fall into one of two categories, linear or digital. Linear (or analog) signals represent real world phenomena, such as temperature, pressure, sound or speed, and are continuously variable over a wide range of values. Digital signals represent the “ones” and “zeros” of binary arithmetic and are either on or off.

Three general classes of semiconductor products arise from this distinction between linear and digital signals:

digital devices, such as memories and microprocessors that operate primarily in ~~which~~the digital domain;

linear devices, such as amplifiers, references, analog multiplexers and switches that operate primarily in the analog domain; and

mixed-signal devices such as data converter devices that combine linear and digital functions on the same integrated circuit and interface between the analog and digital domains.

Our strategy has been to target both the linear and mixed-signal markets, often collectively referred to as the analog market. However, some of our products are ~~sold are~~exclusively or principally digital. While our focus continues to be on the ~~Automotive,~~linear and mixed-signal market, our capabilities in the digital domain enable development of new mixed-signal and other products with highly sophisticated digital characteristics.

At the beginning of fiscal year 2020, we combined our Computing Major End-Market category with our Communications and Data Center Major End-Market category. Our former Computing ~~Consumer~~Major End-Market category focused on Desktop Computers, Notebook Computers, and ~~Industrial~~Peripherals and Other Computer markets.

Our linear and mixed-signal products now serve four major end-markets: (i) Automotive, (ii) Communications and Data Center, (iii) Consumer and (iv) Industrial. These major end-markets and their corresponding markets are noted in the table below:



MAJOR END-MARKET		MARKET

AUTOMOTIVE		Infotainment
		Powertrain
		Body Electronics
		Safety and Security

COMMUNICATIONS & DATA CENTER		Base Stations
		Data Center
		Data Storage
		Desktop Computers
		Network & Datacom
		Notebook Computers
		Peripherals & Other Computer
		Server
		Telecom
		Other Communications

CONSUMER		Smartphones
		Digital Cameras
		Handheld Computers
		Home Entertainment & Appliances
		Wearables
		Other Consumer

INDUSTRIAL		Automatic Test Equipment
		Control & Automation
		Electrical Instrumentation
		Financial Terminals
		Medical
		Security
		USB Extension
		Other Industrial

CRITICAL ACCOUNTING POLICIES

The methods, estimates, and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our financial statements. The Securities and Exchange Commission (“SEC”) has defined the most critical accounting policies as the ones that are most important to the presentation of our financial condition and results of operations, and that require us to make our most difficult and subjective accounting judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our most critical accounting policies include revenue recognition, which impacts the recording of net revenues; valuation of inventories, which impacts costs of goods sold and gross margins; the assessment of recoverability of long-lived assets, which impacts impairment of long-lived assets; assessment of recoverability of intangible assets and goodwill, which impacts impairment of goodwill and intangible assets; accounting for income taxes, which impacts the income tax provision; and assessment of litigation and contingencies, which impacts charges recorded in cost of goods

sold, selling, general and administrative expenses and income taxes. These policies and the estimates and judgments involved are discussed further in the Management’s Discussion and Analysis of Financial Condition in our Annual Report on Form 10-K for the fiscal year ended June ~~30, 2018.~~29, 2019. We have other significant accounting policies that either do not generally require estimates

and judgments that are as difficult or subjective, or it is less likely that such accounting policies would have a material impact on our reported results of operations for a given period.

Except for the accounting policies and estimates outlined under Part I, Item 1. Financial Statements - Note 2, there have been no material changes during the three months ended September ~~29, 2018~~28, 2019 to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June ~~30, 2018.~~29, 2019.

RESULTS OF OPERATIONS

The following table sets forth certain Condensed Consolidated Statements of Income data expressed as a percentage of net revenues for the periods indicated:


	Three Months Ended				Three Months Ended
	September 29, 2018		September 23, 2017		September 28, 2019		September 29, 2018

Net revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	32.6	%	35.1	%	35.6	%	32.6	%
Gross margin	67.4	%	64.9	%	64.4	%	67.4	%
Operating expenses:
Research and development	17.7	%	18.9	%	20.4	%	17.7	%
Selling, general and administrative	12.8	%	12.8	%	14.3	%	12.8	%
Intangible asset amortization	0.1	%	0.3	%	0.1	%	0.1	%
Impairment of long-lived assets	—	%	—	%
Severance and restructuring expenses	0.2	%	0.9	%	0.3	%	0.2	%
Other operating expenses (income), net	—	%	(0.1	)%	—	%	—	%
Total operating expenses	30.7	%	32.8	%	35.1	%	30.7	%
Operating income (loss)	36.7	%	32.2	%
Operating income					29.3	%	36.7	%
Interest and other income (expense), net	(0.1	)%	(0.7	)%	0.3	%	(0.1	)%
Income before provision for income taxes	36.6	%	31.4	%	29.6	%	36.6	%
Income tax provision (benefit)	5.7	%	4.6	%	3.3	%	5.7	%
Net income (loss)	30.9	%	26.8	%
Net income					26.3	%	30.9	%

The following table shows stock-based compensation included in the components of the Condensed Consolidated Statements of Income reported above as a percentage of net revenues for the periods indicated:


	Three Months Ended				Three Months Ended
	September 29, 2018		September 23, 2017		September 28, 2019		September 29, 2018
Cost of goods sold	0.5	%	0.4	%	0.6	%	0.5	%
Research and development	1.4	%	1.4	%	2.0	%	1.4	%
Selling, general and administrative	1.2	%	1.2	%	2.0	%	1.2	%
	3.1	%	3.0	%	4.6	%	3.1	%

Net revenues were $533.0 million and $638.5 million for the three months ended September 28, 2019 and ~~$575.7 million~~September 29, 2018, respectively. Revenue from industrial products was down by 21% due to lower shipments in control and automation and automatic test equipment products. Revenue from communication and data center products was down by 25% due to lower shipments in network and data communications, data center and other communications products. These results include net revenues for the three months ended September 29, 2018 and September 23, 2017, respectively. Revenue from consumer products was up 13%, primarily driven by higher sales of wearables, smartphones and other consumer products. Revenue from automotive products was up 15%, primarily driven by growth in battery management systems for electric vehicles and auto safety and security products. Revenue from industrial products was also up 12%, primarily driven by higher sales of control and automation products.that align with our revised end-market categories.

During the three months ended September 28, 2019 and September 29, 2018, ~~and September 23, 2017,~~ approximately ~~89%~~90% and 89% of net revenues, respectively, were derived from customers outside of the United States. While less than 1.0% of our sales are denominated in currencies other than U.S. dollars, we enter into foreign currency forward contracts to mitigate our risks on firm commitments and net monetary assets denominated in foreign currencies. The impact of changes in foreign exchange rates on our revenue and results of operations for the three months ended September ~~29, 2018~~28, 2019 and September ~~23, 2017~~29, 2018 was immaterial.

Our gross margin percentages were ~~67.4%~~64.4% and ~~64.9%~~67.4% for the three months ended September ~~29, 2018~~28, 2019 and September ~~23, 2017,~~29, 2018, respectively. Our gross margin ~~increased~~decreased by ~~2.5~~3.0 percentage points, primarily due to ~~improved factory utilization and a reduction in intangible amortization.~~lower revenues.

Research and Development

Research and development expenses were ~~$112.7~~$109.0 million and ~~$108.6~~$112.7 million for the three months ended September ~~29, 2018~~28, 2019 and September ~~23, 2017,~~29, 2018, respectively, which represented ~~17.7%~~20.4% and ~~18.9%~~17.7% of net revenues for each respective period. The ~~$4.1~~$3.7 million ~~increase~~decrease was ~~primarily attributable~~due to ~~an increase in~~lower salaries and related ~~expenses.~~personnel costs.

Selling, General and Administrative

Selling, general and administrative expenses were ~~$81.5~~$76.1 million and ~~$73.7~~$81.5 million for the three months ended September ~~29, 2018~~28, 2019 and September ~~23, 2017,~~29, 2018, respectively, which represented ~~12.8%~~14.3% and 12.8% of net revenues for each respective period. The ~~$7.8~~$5.4 million ~~increase~~decrease was ~~primarily attributable~~due to ~~an increase in~~lower salaries and related ~~expenses.~~personnel costs, and lower depreciation expense.

~~Severance and Restructuring Expenses~~

Severance and restructuring expenses were $1.0 million and $5.4 million for the three months ended September 29, 2018 and September 23, 2017, respectively, which represented 0.2% and 0.9% of net revenues for each respective period. The $4.4 million decrease was primarily due to the timing of reorganization of certain business units and functions.

Provision for Income Taxes

On December 22, 2017 legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Act”), was enacted. The Act included a one-time tax on accumulated unremitted earnings of our foreign subsidiaries (“Transition Tax”). SEC Commission Staff Accounting Bulletin No. 118 allows the use of provisional amounts (reasonable estimates) if accounting for the income tax effects of the Act has not been completed. Provisional amounts must be adjusted within one year from the enactment date of the Act. In the second quarter of fiscal year 2018, the Company recorded a $236.9 million discrete provisional Transition Tax charge. No adjustment to the provisional Transition Tax charge was made in the first quarter of fiscal year 2019 as the Company continues to gather information and analyze available guidance to more precisely compute the amount of the Transition Tax.

AtAs of September ~~29, 2018~~28, 2019 and June ~~30, 2018,~~29, 2019, our current quarter backlog was approximately ~~$417.6~~$401.8 million and ~~$441.1~~$391.3 million respectively. In backlog, we include orders with customer request dates within the next three months. As is customary in the semiconductor industry, these orders may be canceled in most cases without penalty to customers. Accordingly, we believe that our backlog is not a reliable measure of future revenues. All backlog numbers have been adjusted for estimated future distribution ship and debit pricing adjustments.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Operating activities

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

Cash provided by operating activities ~~was $207.2~~decreased by $65.9 million infor the three months ended September 28, 2019 compared with the three months ended September 29, 2018 ~~a decrease of $12.5 million compared with the three months ended September 23, 2017. This decrease was~~ due ~~primarily~~ to ~~an increase of $23.6 million in accounts receivable and an increase of $12.6 million in other current assets,~~lower net income, partially offset by ~~an increase~~changes in ~~income before provision for income taxes, which resulted from higher revenue and improved gross margin.~~working capital.

Investing activities

Investing cash flows consist primarily of net investment purchases and maturities, and capital expenditures.

Cash provided by investing activities ~~was $97.4~~decreased by $74.6 million for the three months ended September ~~29, 2018,~~28, 2019 compared with cash used by investing activities of $711.7 million for the three months ended September 23, 2017, a change of $809.1 million. The change was due primarily to purchasing $525.4 million less available-for-sale-securities and an increase of $301.8 million in proceeds from the maturity of available-for-sale securities during the three months ended September 29, ~~2018 compared~~2018. The decrease was due to ~~the three months ended September 23, 2017.~~lower proceeds from maturity of available-for-sale securities and lower purchases of available-for-sale securities.

Financing activities

Financing cash flows consist primarily of debt issuance, repurchases of common stock, and payment of dividends to stockholders.

~~Net cash~~Cash used in financing activities ~~increased~~decreased by ~~approximately $72.3~~$23.0 million for the three months ended September ~~29, 2018~~28, 2019 compared to the three months ended September 23, 2017. The increase was primarily due to an increase of $37.2 million in repurchases of our common stock and a $26.4 million increase in dividends paid to stockholders duringwith the three months ended September 29, ~~2018.~~2018 due to lower share repurchases.

Liquidity and Capital Resources

Our primary source of liquidity is our cash flows from operating activities resulting from net income and management of working capital.

As of September ~~29, 2018,~~28, 2019, our available funds consisted of ~~$2.6~~$1.8 billion in cash, cash equivalents and short-term investments.

On October 30, 2018, we were authorized to repurchase up to $1.5 billion of the Company's common stock. During the three months ended September 28, 2019, we repurchased an aggregate of $93.6 million of the Company's common stock.

During the three months ended September 28, 2019, we paid cash dividends of $0.48 per common share totaling $130.2 million.

We anticipate that the available funds and cash generated from operations will be sufficient to meet cash and working capital requirements, including the anticipated level of capital expenditures, common stock repurchases, debt repayments and dividend payments for at least the next twelve months.

~~Current portion of debt~~

On November 21, 2013, we completed a public offering of $500 million aggregate principal amount of the Company's 2.5% senior unsecured and unsubordinated notes due on November 15, 2018 (“2018 Notes”). The Company intends and has the ability to pay this debt upon maturity in the second quarter of fiscal 2019.

~~Available Borrowing Resources~~

~~We have access to a $350 million senior unsecured revolving credit facility that expires on June 27, 2019. As of September 29, 2018, we had not borrowed any amounts from this credit facility.~~

Off-Balance-Sheet Arrangements

As of September ~~29, 2018,~~28, 2019, we did not have any material off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s market risk has not changed materially from the interest rate and foreign currency risks disclosed in Item 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended June ~~30, 2018.~~29, 2019.

The impact of inflation and changing prices on the Company’s net revenues and on operating income during the three months ended September ~~29, 2018~~28, 2019 and September ~~23, 2017~~29, 2018 was not material.

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer (“CEO”) and our chief financial officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of September ~~29, 2018.~~28, 2019. Our management, including the CEO and the CFO, has concluded that the Company’s disclosure controls and procedures were effective as of September ~~29, 2018.~~28, 2019. The purpose of these controls and procedures is to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, and that such information is accumulated and communicated to our management, including our CEO and our CFO, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September ~~29, 2018~~28, 2019 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Internal Controls

A system of internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with GAAP, and no control system, no matter how well designed and operated, can provide absolute assurance. The design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of its inherent limitations, internal control over financial reporting may not prevent or detect financial statement errors and misstatements. Also, projection of any evaluation of effectiveness to future periods is 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.

PART II. OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

The information set forth above under Part I, Item 1, Note 11 “Commitments and Contingencies” to the Condensed Consolidated Financial Statements is incorporated herein by reference.

ITEM 1A: RISK FACTORS

A description of risks associated with our business, financial condition and results of our operations is set forth in Item 1A - Risk Factors of our Annual Report on Form 10-K for the fiscal year ended June ~~30, 2018,~~29, 2019, which is incorporated herein by reference.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 20, 2017, the board of directors of the Company authorized the repurchase of up to $1.0 billion of the Company's common stock. The stock repurchase authorization does not have an expiration date and the pace of repurchase activity will depend on factors such as current stock price, levels of cash generation from operations, cash requirements, and other factors. The Company's prior repurchase authorization was cancelled and superseded by this repurchase authorization.

~~The following table summarizes the activity related to stock repurchases for the three months ended September 29, 2018:~~

Issuer Repurchases of Equity Securities
(in thousands, except per share amounts)
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
Jul 1, 2018 - Jul 28, 2018 554
$ 60.16
554
$ 585,052
Jul 29, 2018 - Aug 25, 2018 585
61.45
585
549,071
Aug 26, 2018 - Sep 29, 2018 723
59.75
723
505,861
Total for the quarter 1,862
$ 60.41
1,862
$ 505,861

In the fiscal quarter ended September 29, 2018, the Company repurchased approximately 1.9 million shares of its common stock for approximately $112.5 million. As of September 29, 2018, the Company had remaining authorization of $505.9 million for future share repurchases. The number of shares to be repurchased and the timing of such repurchases will be based on several factors, including the price of the Company’s common stock and general market and business conditions.

On October 30, 2018, the ~~board~~Board of ~~directors~~Directors of the Company authorized the repurchase of up to $1.5 billion of the Company’s common stock. This stock repurchase authorization does not have an expiration date and the pace of repurchase activity will depend on factors such as current stock price, levels of cash generation from operations, cash requirements, and other factors. The Company’s prior repurchase authorization ~~has been~~was cancelled and superseded by this new repurchase authorization.

The following table summarizes the activity related to stock repurchases for the three months ended September 28, 2019:



	Issuer Repurchases of Equity Securities
	(in thousands, except per share amounts)
	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
Jun 30, 2019 - Jul 27, 2019	436	$	61.35	436	$	1,088,234
Jul 28, 2019 - Aug 24, 2019	531	56.22		531	1,058,397
Aug 25, 2019 - Sep 28, 2019	655	56.45		655	1,021,431
Total for the quarter	1,622	$	57.69	1,622	$	1,021,431

In the three months ended September 28, 2019, the Company repurchased approximately 1.6 million shares of its common stock for approximately $93.6 million. As of September 28, 2019, the Company had remaining authorization of $1.0 billion for future share repurchases. The number of shares to be repurchased and the timing of such repurchases will be based on several factors, including the price of the Company’s common stock and general market and business conditions.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4: MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5: OTHER INFORMATION

None.

ITEM 6: EXHIBITS

(a) Exhibits



10.1 ~~(A)~~	Form of Global Performance Share Agreement for ~~FY19 Grants~~FY2020
10.2 ~~(A)~~	Form of Global Restricted Stock Unit Agreement
10.3	Form of Global Employee Stock Purchase Plan Agreement
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act⁽¹⁾
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act⁽¹⁾
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350⁽¹⁾
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350⁽¹⁾
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. ⁽¹⁾
101.SCH	Inline XBRL Taxonomy Extension Schema Document ⁽¹⁾
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document ⁽¹⁾
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document ⁽¹⁾
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document ⁽¹⁾
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document ⁽¹⁾
104	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. ⁽¹⁾



~~(A) Management contract~~(1) Filed or ~~compensatory plan or arrangement.~~
~~(1) This exhibit is being~~ furnished ~~rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.~~herewith.

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the three months ended September 29, 2018, (ii) Condensed Consolidated Balance Sheets at September 29, 2018 and June 30, 2018, (iii) Condensed Consolidated Statement of Comprehensive Income for the three months ended September 29, 2018, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended September 29, 2018 and (v) Notes to Condensed Consolidated Financial Statements.

In accordance with Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

~~SIGNATURES~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report ~~has been~~to be signed ~~below~~on its behalf by the ~~following person on behalf of the registrant and in the capacity indicated.~~undersigned thereunto duly authorized.



~~November 1, 2018~~October 30, 2019		MAXIM INTEGRATED PRODUCTS, INC.

		By:/s/ ~~Sumeet Gagneja~~ Brian C. White
		Brian C. White
		~~Sumeet Gagneja~~
		Senior Vice President, Chief ~~Accounting~~Financial Officer
		~~(Chief Accounting Officer and Duly Authorized Officer)~~

3332


	September 29, 2018			June 30, 2018			September 28, 2019			June 29, 2019
	(in thousands)						(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	1,598,772		$	1,543,484		$	1,695,191		$	1,757,342
Short-term investments	964,643			1,082,915			98,176			140,990
Total cash, cash equivalents and short-term investments	2,563,415			2,626,399			1,793,367			1,898,332
Accounts receivable, net of allowances of $164 at September 29, 2018 and $140,296 at June 30, 2018	439,407			280,072
Accounts receivable, net of allowances of $99 at September 28, 2019 and $148 at June 29, 2019							370,316			360,016
Inventories	275,374			282,390			235,959			246,512
Other current assets	33,329			21,548			24,982			34,640
Total current assets	3,311,525			3,210,409			2,424,624			2,539,500
Property, plant and equipment, net	573,014			579,364			574,097			577,722
Intangible assets, net	74,785			78,246			52,376			56,242
Goodwill	532,251			532,251			532,251			532,251
Other assets	56,977			51,291			97,439			38,267
TOTAL ASSETS	$	4,548,552		$	4,451,561		$	3,680,787		$	3,743,982

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	84,087		$	92,572		$	81,794		$	84,335
Price adjustment and other revenue reserves	135,187			—			90,206			100,490
Income taxes payable	60,877			17,961			31,704			33,765
Accrued salary and related expenses	106,273			151,682			96,168			118,704
Accrued expenses	42,091			35,774			42,644			33,873
Current portion of long-term debt	499,762			499,406
Total current liabilities	928,277			797,395			342,516			371,167
Long-term debt	991,506			991,147			992,944			992,584
Income taxes payable	652,163			661,336			446,138			469,418
Other liabilities	64,283			70,743			117,903			65,537
Total liabilities	2,636,229			2,520,621			1,899,501			1,898,706

Commitments and contingencies (Note 11)

Stockholders’ equity:
Common stock and capital in excess of par value	279			279			271			272
Retained earnings	1,924,764			1,945,646			1,793,012			1,856,358
Accumulated other comprehensive loss	(12,720		)	(14,985		)	(11,997		)	(11,354		)
Total stockholders’ equity	1,912,323			1,930,940			1,781,286			1,845,276
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	4,548,552		$	4,451,561		$	3,680,787		$	3,743,982


	Three Months Ended				Three Months Ended
	September 29, 2018		September 23, 2017		September 28, 2019		September 29, 2018
	(in thousands)				(in thousands)
United States	$	72,129	$	64,641	$	55,799	$	72,129
China	219,298		212,766		197,299		219,298
Rest of Asia	220,381		180,950		169,914		220,381
Europe	111,369		104,134		95,940		111,369
Rest of World	15,318		13,185		14,088		15,318
	$	638,495	$	575,676	$	533,040	$	638,495



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	September ~~29, 2018~~28, 2019



~~[ ]~~☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to ________.



	As of June 30, 2018		Effect of Adoption of Topic 606		As of July 1, 2018

Accounts receivable, net	$	280,072	$	141,652	$	421,724
Price adjustment and other revenue reserves	—		141,652		141,652



	As Reported		If Reported Under Topic 605		Effect of Adoption of Topic 606

Accounts receivable, net	$	439,407	$	304,220	$	135,187
Price adjustment and other revenue reserves	135,187		—		135,187



	September 29, 2018		June 30, 2018
Inventories:	(in thousands)
Raw materials	$	15,113	$	16,251
Work-in-process	170,192		173,859
Finished goods	90,069		92,280
	$	275,374	$	282,390



	September 29, 2018			June 30, 2018
Property, plant and equipment, net:	(in thousands)
Land	$	17,731		$	17,731
Buildings and building improvements	258,403			254,733
Machinery, equipment and software	1,322,593			1,309,487
	1,598,727			1,581,951
Less: accumulated depreciation	(1,025,713		)	(1,002,587		)
	$	573,014		$	579,364



	September 29, 2018		June 30, 2018
Accrued salary and related expenses:	(in thousands)
Accrued vacation	$	30,483	$	30,695
Accrued bonus	29,844		92,288
Accrued salaries	15,476		8,210
ESPP Withholding	14,901		5,158
Accrued fringe benefits	4,625		4,752
Other	10,944		10,579
	$	106,273	$	151,682



	As of September 29, 2018								As of June 30, 2018
	Fair Value Measurements Using						Total Balance		Fair Value Measurements Using						Total Balance
	Level 1		Level 2		Level 3		Total Balance		Level 1		Level 2		Level 3		Total Balance
	(in thousands)
Assets
Cash and cash equivalents
Agency securities	$	—	$	2,669	$	—	$	2,669	$	—	$	13,946	$	—	$	13,946
Certificates of deposit	—		—		—		—		—		6,000		—		6,000
Commercial paper	—		52,145		—		52,145		—		45,063		—		45,063
Corporate debt securities	—		12,237		—		12,237		—		3,819		—		3,819
Money market funds	104,961		—		—		104,961		98,467		—		—		98,467
U.S. Treasury securities	—		49,881		—		49,881		—		30,988		—		30,988
Short term investments
Certificates of deposit	—		63,940		—		63,940		—		52,428		—		52,428
Commercial paper	—		71,666		—		71,666		—		64,354		—		64,354
Corporate debt securities	—		345,669		—		345,669		—		367,765		—		367,765
U.S. Treasury securities	—		483,368		—		483,368		—		598,368		—		598,368
Other current assets
Foreign currency forward contracts	—		293		—		293		—		235		—		235
Total assets	$	104,961	$	1,081,868	$	—	$	1,186,829	$	98,467	$	1,182,966	$	—	$	1,281,433

Liabilities
Accrued expenses
Foreign currency forward contracts	$	—	$	561	$	—	$	561	$	—	$	1,845	$	—	$	1,845
Contingent consideration	—		—		9,052		9,052		—		—		8,000		8,000
Other liabilities
Contingent consideration	—		—		1,052		1,052		—		—		8,000		8,000
Total Liabilities	$	—	$	561	$	10,104	$	10,665	$	—	$	1,845	$	16,000	$	17,845



	Three Months Ended
	September 29, 2018								September 23, 2017
	Stock Options		Restricted Stock Units		Employee Stock Purchase Plan		Total		Stock Options		Restricted Stock Units		Employee Stock Purchase Plan		Total
	(in thousands)
Cost of goods sold	$	10	$	1,761	$	507	$	2,278	$	86	$	1,836	$	478	$	2,400
Research and development	11		8,692		1,155		9,858		308		6,588		970		7,866
Selling, general and administrative	56		7,645		661		8,362		363		6,130		528		7,021
Pre-tax stock-based compensation expense	$	77	$	18,098	$	2,323	$	20,498	$	757	$	14,554	$	1,976	$	17,287
Less: income tax effect							1,964								2,890
Net stock-based compensation expense							$	18,534							$	14,397



	Number of Shares		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (1)
Balance at June 30, 2018	5,524,432
Restricted stock units and other awards granted	1,232,654
Restricted stock units and other awards released	(407,431	)
Restricted stock units and other awards cancelled	(127,997	)
Balance at September 29, 2018	6,221,658		3.0	$	370,516,643
Outstanding and expected to vest, September 29, 2018	5,121,814		2.9	$	304,850,402



~~[X]~~FORM	10-Q



(in thousands)	Unrealized Gains and Losses on Intercompany Receivables			Unrealized Gains and Losses on Post-Retirement Benefits			Cumulative Translation Adjustment			Unrealized Gains and Losses on Cash Flow Hedges			Unrealized Gains and Losses on Available-For-Sale Securities			Total
June 30, 2018	$	(6,280	)	$	(2,516	)	$	(1,136	)	$	(1,383	)	$	(3,670	)	$	(14,985	)
Other comprehensive income (loss) before reclassifications	—			—			—			(391		)	1,119			728
Amounts reclassified out of accumulated other comprehensive loss (income)	—			97			—			1,700			—			1,797
Tax effects	—			(19		)	—			(214		)	(27		)	(260		)
Other comprehensive income (loss), net	—			78			—			1,095			1,092			2,265
September 29, 2018	$	(6,280	)	$	(2,438	)	$	(1,136	)	$	(288	)	$	(2,578	)	$	(12,720	)



	Balance, June 30, 2018	Three Months Ended September 29, 2018				Balance, September 29, 2018
	Balance, June 30, 2018	Charges	Cash Payments		Change in Estimates	Balance, September 29, 2018
			(in thousands)
Severance and Related - All plans (1)	2,969	987	(3,139	)	7	$	824