| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies a. Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and all of its subsidiaries. Upon consolidation, all intercompany accounts and transactions are eliminated. Certain amounts reported in previous years have been reclassified to conform to the presentation for the fiscal year ended November 2, 2019 (fiscal 2019). The Company’s fiscal year is the 52-week or 53-week period ending on the Saturday closest to the last day in October. Fiscal 2019 and fiscal 2017 were 52-week fiscal periods, while fiscal 2018 was a 53-week period. The additional week in fiscal 2018 was included in the first quarter ended February 3, 2018. Therefore, fiscal 2018 included an additional week of operations as compared to fiscal 2019 and fiscal 2017. On March 10, 2017 (Acquisition Date), the Company completed the acquisition of all of the voting interests of Linear Technology Corporation (Linear), an independent manufacturer of high performance analog integrated circuits. The total consideration paid to acquire Linear was approximately $15.8 billion, consisting of $11.1 billion in cash financed through existing cash on hand, net proceeds from bridge and term loan facilities and proceeds received from the issuance of senior unsecured notes, $4.6 billion from the issuance of the Company's common stock and $0.1 billion of consideration related to the replacement of outstanding equity awards held by Linear employees. The acquisition of Linear is referred to as the Acquisition. The Consolidated Financial Statements included in this Annual Report on Form 10-K include the financial results of Linear prospectively from the Acquisition Date. See Note 6, Acquisitions, of these Notes to Consolidated Financial Statements for further discussion related to the Acquisition. As further discussed in Note 2n, Revenue Recognition, the Company adopted the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09), in the first quarter of fiscal 2019. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period showing, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized as of the date of initial application. The Company adopted ASU 2014-09 using the full retrospective method and applied the practical expedient, in which the Company is not required to disclose the amount of consideration allocated to any remaining performance obligations or an explanation of when the Company expects to recognize that amount as revenue for all reporting periods presented before the date of the initial application. As a result of the adoption of ASU 2014-09, the Company changed its accounting policy for revenue recognition and recognizes revenue from product sales to its customers and distributors when title passes, which is generally upon shipment. Prior to the adoption of ASU 2014-09, revenue and the related cost of sales on shipments to certain distributors were deferred until the distributor resold the products to their end customers. See Note 2n, Revenue Recognition, in these Notes to Consolidated Financial Statements for the details of the Company’s revenue recognition policies. The adoption of ASU 2014-09 impacted the Company’s consolidated statements of income and consolidated balance sheets but did not impact its consolidated statements of cash flows, with the exceptions of net income and reclassifications within adjustments to reconcile net income to cash provided by operations, and did not impact the consolidated statement of shareholders' equity, with the exceptions of retained earnings and net income. As shown in the tables below, pursuant to the guidance in ASU 2014-09, the Company restated its historical financial results to be consistent with the standard. Accordingly, the amounts for fiscal 2019, fiscal 2018 and fiscal 2017 periods presented in this Form 10-K reflect the impact of ASU 2014-09. In addition, the Company adopted ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost in the first quarter of fiscal 2019. Under this ASU, the service cost component of net periodic benefit cost is recorded in Cost of sales, Research and development, Selling, marketing, general and administrate expenses, while the remaining components are recorded to Other, net within the Company's consolidated statements of income. As such, the prior year amounts have been reclassified to provide comparable presentation in line with the guidance in ASU 2017-07 based on amounts previously disclosed for the various components of net periodic pension cost. See Note 11, Retirement Plans, in these Notes to Consolidated Financial Statements for more information on the adoption of ASU 2017-07. The tables below reconcile the impact of ASU 2014-09 and ASU 2017-07 on the consolidated statements of income: Year Ended November 3, 2018 Consolidated Statement of Income As Reported Impact of Adoption of ASU 2014-09 Impact of Adoption of ASU 2017-07 As Adjusted Revenue $ 6,200,942 $ 23,747 $ — $ 6,224,689 Cost of sales 1,967,640 6,950 (297) 1,974,293 Gross margin 4,233,302 16,797 297 4,250,396 Operating expenses: Research and development 1,165,410 — (363) 1,165,047 Selling, marketing, general and administrative 695,937 — (397) 695,540 Amortization of intangibles 428,902 — — 428,902 Special charges 61,318 — — 61,318 2,351,567 — (760) 2,350,807 Operating income 1,881,735 16,797 1,057 1,899,589 Nonoperating expense (income): Interest expense 253,589 — — 253,589 Interest income (9,383) — — (9,383) Other, net (988) — 1,057 69 243,218 — 1,057 244,275 Income before income taxes 1,638,517 16,797 — 1,655,314 Provision for income taxes 143,085 5,249 — 148,334 Net income $ 1,495,432 $ 11,548 $ — $ 1,506,980 Shares used to compute earnings per common share – basic 370,430 — — 370,430 Shares used to compute earnings per common share – diluted 374,938 — — 374,938 Basic earnings per common share $ 4.02 $ 0.03 $ — $ 4.05 Diluted earnings per common share $ 3.97 $ 0.03 $ — $ 4.00 Year Ended October 28, 2017 Consolidated Statement of Income As Reported Impact of Adoption of ASU 2014-09 Impact of Adoption of ASU 2017-07 As Adjusted Revenue $ 5,107,503 $ 138,851 $ — $ 5,246,354 Cost of sales 2,045,907 32,589 (383) 2,078,113 Gross margin 3,061,596 106,262 383 3,168,241 Operating expenses: Research and development 968,602 — (469) 968,133 Selling, marketing, general and administrative 691,046 — (513) 690,533 Amortization of intangibles 297,351 — — 297,351 Special charges 49,463 — — 49,463 2,006,462 — (982) 2,005,480 Operating income 1,055,134 106,262 1,365 1,162,761 Nonoperating expense (income): Interest expense 250,840 — — 250,840 Interest income (30,333) — — (30,333) Other, net 6,142 — 1,365 7,507 226,649 — 1,365 228,014 Income before income taxes 828,485 106,262 — 934,747 Provision for income taxes 101,226 28,142 — 129,368 Net income $ 727,259 $ 78,120 $ — $ 805,379 Shares used to compute earnings per common share – basic 346,371 — — 346,371 Shares used to compute earnings per common share – diluted 350,484 — — 350,484 Basic earnings per common share $ 2.09 $ 0.23 $ — $ 2.32 Diluted earnings per common share $ 2.07 $ 0.22 $ — $ 2.29 The impact on the Company's previously reported consolidated balance sheet line items is as follows: November 3, 2018 As Reported Impact of Adoption of ASU 2014-09 As Adjusted Deferred tax assets $ 21,078 $ (11,413) $ 9,665 Deferred income on shipments to distributors, net $ 487,417 $ (487,417) $ — Accrued liabilities $ 497,080 $ 133,027 $ 630,107 Deferred income taxes $ 927,065 $ 63,344 $ 990,409 Retained earnings $ 5,703,064 $ 279,633 $ 5,982,697 In addition, in the first quarter of fiscal 2019, the Company adopted ASU 2016-16, Income Taxes (Topic 740) (ASU 2016-16) using the modified retrospective method with a cumulative-effect adjustment directly to retained earnings. ASU 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The adoption of ASU 2016-16 resulted in the following cumulative-effect increase in the Company's deferred tax assets, deferred tax liabilities and retained earnings as follows: November 4, 2018 Beginning Balance November 3, 2018 as Adjusted Impact of Adoption of ASU 2016-16 Balance November 4, 2018 Deferred tax assets $ 9,665 $ 1,655,129 $ 1,664,794 Deferred income taxes $ 990,409 $ 1,324,103 $ 2,314,512 Retained earnings $ 5,982,697 $ 331,026 $ 6,313,723 See Note 12, Income Taxes, in these Notes to Consolidated Financial Statements for more information on the adoption of ASU 2016-16. b. Cash and Cash Equivalents Cash and cash equivalents are highly liquid investments with insignificant interest rate risk and maturities of ninety days or less at the time of acquisition. Cash and cash equivalents consist primarily of government and institutional money market funds, corporate obligations such as commercial paper and floating rate notes, bonds and bank time deposits. The Company classifies its investments in readily marketable debt and equity securities as “held-to-maturity,” “available-for-sale” or “trading” at the time of purchase. There were no transfers between investment classifications in any of the fiscal years presented. Held-to-maturity securities, which are carried at amortized cost, include only those securities the Company has the positive intent and ability to hold to maturity. Securities such as bank time deposits, which by their nature are typically held to maturity, are classified as such. The Company’s other readily marketable cash equivalents are classified as available-for-sale. Available-for-sale securities are carried at fair value with unrealized gains and losses, net of related tax, reported in accumulated other comprehensive (loss) income (AOCI). Adjustments to the fair value of investments classified as available-for-sale are recorded as an increase or decrease in AOCI, unless the adjustment is considered an other-than-temporary impairment, in which case the adjustment is recorded as a charge in the consolidated statements of income. The Company’s deferred compensation plan investments are classified as trading. See Note 2j, Fair Value and Note 11, Retirement Plans, of these Notes to Consolidated Financial Statements for additional information on these investments. The Company periodically evaluates its investments for impairment. There were no other-than-temporary impairments of investments in any of the fiscal years presented. Realized gains or losses on investments are determined based on the specific identification basis and are recognized in nonoperating (income) expense. There were no material net realized gains or losses from the sales of available-for-sale investments during any of the fiscal periods presented. The components of the Company’s cash and cash equivalents as of November 2, 2019 and November 3, 2018 were as follows: 2019 2018 Cash and cash equivalents: Cash $ 152,432 $ 147,629 Available-for-sale 416,890 598,962 Held-to-maturity 79,000 70,000 Total cash and cash equivalents $ 648,322 $ 816,591 See Note 2j, Fair Value, of these Notes to Consolidated Financial Statements for additional information on the Company’s cash equivalents. c. Supplemental Cash Flow Statement Information 2019 2018 2017 Cash paid during the fiscal year for: Income taxes $ 205,762 $ 211,473 $ 868,492 Interest $ 216,143 $ 233,436 $ 183,117 d. Inventories Inventories are valued at the lower of cost (first-in, first-out method) or market. The valuation of inventory requires the Company to estimate obsolete or excess inventory as well as inventory that is not of saleable quality. The Company employs a variety of methodologies to determine the net realizable value of its inventory. While a portion of the calculation to record inventory at its net realizable value is based on the age of the inventory and lower of cost or market calculations, a key factor in estimating obsolete or excess inventory requires the Company to estimate the future demand for its products. If actual demand is less than the Company’s estimates, impairment charges, which are recorded to cost of sales, may need to be recorded in future periods. Inventory in excess of saleable amounts is not valued, and the remaining inventory is valued at the lower of cost or market. Inventories at November 2, 2019 and November 3, 2018 were as follows: 2019 2018 Raw materials $ 35,447 $ 30,511 Work in process 400,409 375,908 Finished goods 174,030 180,341 Total inventories $ 609,886 $ 586,760 e. Property, Plant and Equipment Property, plant and equipment is recorded at cost, less allowances for depreciation. The straight-line method of depreciation is used for all classes of assets for financial statement purposes while both straight-line and accelerated methods are used for income tax purposes. Leasehold improvements are depreciated over the lesser of the term of the lease or the useful life of the asset. Repairs and maintenance charges are expensed as incurred. Depreciation is based on the following ranges of estimated useful lives: Buildings Up to 30 years Machinery & equipment 3-10 years Office equipment 3-10 years Leasehold improvements 7-20 years Depreciation expense for property, plant and equipment was $240.7 million, $228.5 million and $194.7 million in fiscal 2019, 2018 and 2017, respectively. The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Recoverability of these assets is determined by comparison of their carrying amount to the future undiscounted cash flows the assets are expected to generate over their remaining economic lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. If such assets are not impaired, but their useful lives have decreased, the remaining net book value is depreciated over the revised useful life. The Company has not recorded any material impairment charges related to our property, plant and equipment in fiscal 2019, fiscal 2018 or fiscal 2017. f. Goodwill and Intangible Assets Goodwill The Company evaluates goodwill for impairment annually, utilizing either the qualitative or quantitative method, as well as whenever events or changes in circumstances suggest that the carrying value of goodwill may not be recoverable. The Company tests goodwill for impairment at the reporting unit level, which the Company has determined is consistent with our eight identified operating segments, on an annual basis on the first day of the fourth quarter (on or about August 4) or more frequently if indicators of impairment exist or the Company reorganizes its reporting units. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its net book value. If the Company elects not to use this option, or it determines that it is more likely than not that the fair value of a reporting unit is less than its net book value, then the Company performs the quantitative goodwill impairment test. In the Company's annual impairment evaluation that occurred for fiscal 2019, management used the qualitative method of assessing goodwill for seven of its eight reporting units and the quantitative method for one reporting unit. In fiscal 2018, the Company used the qualitative method for all eight of its identified reporting units. For each of the reporting units evaluated using the qualitative method in fiscal 2019 and fiscal 2018, the Company determined that it was not more likely than not that the fair values were less than their net book values. In making this determination, the Company considered several factors, including the following: – the amount by which the fair values of each reporting unit exceeded their carrying values as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which these reporting units operate in order for there to be potential impairment; – the carrying values of these reporting units as of the first day of the fourth quarter compared to the previously calculated fair values as of the date of the most recent quantitative impairment analysis; – the Company's current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; – public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses, such as significant declines in market capitalization or significant goodwill impairment charges that could be an indication that the goodwill of our reporting units was potentially impaired; – changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting units; – changes in our market capitalization and overall enterprise valuation to determine if there were any significant decreases that could be an indication that the valuation of our reporting units had significantly decreased; and – whether there had been any significant increases to the weighted-average cost of capital (WACC) rates for each reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach. As a result of the quantitative goodwill impairment analysis performed in fiscal 2019 for one of the Company's reporting units, the Company concluded the reporting unit’s fair value exceeded its carrying amount as of the assessment date and no risk of impairment existed. The first step of the goodwill impairment test requires an entity to compare the fair value of a reporting unit with its carrying amount. The Company determined the fair value of its reporting unit using a weighting of the income and market approaches. Under the income approach, the Company used a discounted cash flow methodology which required management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, perpetual growth rates, and long-term discount rates, among others. For the market approach, the Company used the guideline public company method. Under this method the Company utilized information from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit, to estimate valuation multiples that are applied to the operating performance of the reporting unit, in order to estimate its fair value. There was no impairment of goodwill in any of the fiscal years presented. The Company’s next annual impairment assessment will be performed as of the first day of the fourth quarter of the fiscal year ending October 31, 2020 (fiscal 2020) unless indicators arise that would require the Company to reevaluate at an earlier date. The following table presents the changes in goodwill during fiscal 2019 and fiscal 2018: 2019 2018 Balance at beginning of year $ 12,252,604 $ 12,217,455 Acquisition of Linear (Note 6) — 1,647 Goodwill adjustment related to other acquisitions (1) 6,702 36,558 Foreign currency translation adjustment (2,426) (3,056) Balance at end of year $ 12,256,880 $ 12,252,604 _______________________________________ (1) Represents goodwill related to other acquisitions that were not material to the Company on either an individual or aggregate basis. Intangible Assets The Company reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. If required, recoverability of these assets is determined by comparison of their carrying value to the estimated future undiscounted cash flows the assets are expected to generate over their remaining estimated useful lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their estimated fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. In-process research and development (IPR&D) assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development (R&D) efforts. Upon completion of the projects, the IPR&D assets are reclassified to technology-based intangible assets and amortized over their estimated useful lives. During fiscal 2019, the company recorded $14.2 million of special charges related to the write-off of acquired intellectual property, classified as IPR&D, due to the Company's decision to discontinue certain product development strategies. As of November 2, 2019 and November 3, 2018, the Company’s intangible assets consisted of the following: November 2, 2019 November 3, 2018 Gross Carrying Accumulated Gross Carrying Accumulated Customer relationships $ 4,696,562 $ 1,284,256 $ 4,697,716 $ 867,207 Technology-based 1,145,283 385,618 1,114,080 243,350 Trade-name 73,417 28,164 74,031 17,846 IPR&D — — 20,768 — Total (1) (2) $ 5,915,262 $ 1,698,038 $ 5,906,595 $ 1,128,403 _______________________________________ (1) Foreign intangible asset carrying amounts are affected by foreign currency translation. (2) Increases in intangible assets primarily relate to acquisitions that were not material to the Company on either an individual or aggregate basis. Intangible assets, along with the related accumulated amortization, are removed from the table above at the end of the fiscal year they become fully amortized. Amortization expense related to finite-lived intangible assets was $570.6 million, $570.5 million and $389.4 million in fiscal 2019, 2018 and 2017, respectively, and is recorded in Cost of sales and Amortization of intangibles on the consolidated statements of income. The remaining amortization expense will be recognized over a weighted average life of approximately 4.1 years. The Company expects annual amortization expense for intangible assets as follows: Fiscal Year Amortization Expense 2020 $ 575,004 2021 $ 574,404 2022 $ 571,474 2023 $ 548,276 2024 $ 486,376 g. Grant Accounting Certain of the Company’s foreign subsidiaries have received grants from governmental agencies. These grants include capital, employment and research and development grants. Capital grants for the acquisition of property and equipment are netted against the related capital expenditures and amortized as a credit to depreciation expense over the estimated useful life of the related asset. Employment grants, which relate to employee hiring and training, and research and development grants are recognized in earnings in the period in which the related expenditures are incurred by the Company. The amounts recognized were not material in fiscal 2019, fiscal 2018 or fiscal 2017. h. Translation of Foreign Currencies The functional currency for the Company’s foreign sales and research and development operations is the applicable local currency. Gains and losses resulting from translation of these foreign currencies into U.S. dollars are recorded in AOCI. Transaction gains and losses and re-measurement of foreign currency denominated assets and liabilities are included in income currently, including those at the Company’s principal foreign manufacturing operations where the functional currency is the U.S. dollar. Foreign currency transaction gains or losses included in other, net, were not material in fiscal 2019, 2018 or 2017. i. Derivative Instruments and Hedging Agreements Foreign Exchange Exposure Management — The Company enters into forward foreign currency exchange contracts to offset certain operational and balance sheet exposures from the impact of changes in foreign currency exchange rates. Such exposures result from the portion of the Company’s operations, assets and liabilities that are denominated in currencies other than the U.S. dollar, primarily the Euro; other significant exposures include the British Pound, Philippine Peso and the Japanese Yen. Derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified. These foreign currency exchange contracts are entered into to support transactions made in the normal course of business, and accordingly, are not speculative in nature. The contracts are for periods consistent with the terms of the underlying transactions, generally one year or less. Hedges related to anticipated transactions are matched with the underlying exposures at inception and designated and documented as cash flow hedges. They are qualitatively evaluated for effectiveness on a quarterly basis. The gain or loss on the derivatives are reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same line item on the consolidated statements of income as the impact of the hedged transaction in the same period during which the hedged transaction affects earnings. The total notional amounts of forward foreign currency derivative instruments designated as hedging instruments of cash flow hedges denominated in Euros, British Pounds, Philippine Pesos and Japanese Yen as of November 2, 2019 and November 3, 2018 was $191.1 million and $194.4 million, respectively. The fair values of forward foreign currency derivative instruments designated as hedging instruments in the Company’s consolidated balance sheets as of November 2, 2019 and November 3, 2018 were as follows: Fair Value At Balance Sheet Location November 2, 2019 November 3, 2018 Forward foreign currency exchange contracts Prepaid expenses and other current assets $ 65 $ — Forward foreign currency exchange contracts Accrued liabilities $ — $ 6,934 Additionally, the Company enters into forward foreign currency contracts that economically hedge the gains and losses generated by the re-measurement of certain recorded assets and liabilities in a non-functional currency. Changes in the fair value of these undesignated hedges are recognized in other (income) expense immediately as an offset to the changes in the fair value of the asset or liability being hedged. As of November 2, 2019 and November 3, 2018, the total notional amount of these undesignated hedges was $55.3 million and $40.6 million, respectively. The fair value of these hedging instruments in the Company’s consolidated balance sheets was immaterial as of November 2, 2019 and November 3, 2018. The Company estimates that settlements of forward foreign currency derivative instruments included in OCI that will be reclassified into earnings will be immaterial within the next 12 months. All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparties to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's consolidated balance sheets on a net basis. As of November 2, 2019 and November 3, 2018, none of the netting arrangements involved collateral. The following table presents the gross amounts of the Company's derivative assets and liabilities and the net amounts recorded in the Company's consolidated balance sheets as of November 2, 2019 and November 3, 2018: November 2, 2019 November 3, 2018 Gross amount of recognized liabilities $ (2,828) $ (8,054) Gross amounts of recognized assets offset in the consolidated balance sheets 2,828 904 Net liabilities presented in the consolidated balance sheets $ — $ (7,150) Interest Rate Exposure Management — The Company's current and future debt may be subject to interest rate risk. The Company utilizes interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of the changes in interest rates. During fiscal 2019, the Company entered into an interest rate swap agreement which locked in the interest rate for up to $1 billion in future debt issuances. The interest rate swap was designated and qualified as a cash flow hedge. The fair value of this hedge was $138.8 million as of November 2, 2019 and is included within accrued liabilities in the Company's consolidated balance sheets. The market risk associated with the Company’s derivative instruments results from currency exchange rate or interest rate movements that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. The counterparties to the agreements relating to the Company’s derivative instruments consist of a number of major international financial institutions with high credit ratings. Based on the credit ratings of the Company’s counterparties as of November 2, 2019 and November 3, 2018, nonperformance is not perceived to be a material risk. Furthermore, none of the Company’s derivatives are subject to collateral or other security arrangements and none contain provisions that are dependent on the Company’s credit ratings from any credit rating agency. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Company’s exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the obligations of the Company to the counterparties. As a result of the above considerations, the Company does not consider the risk of counterparty default to be significant. The Company records the fair value of its derivative financial instruments in its consolidated financial statements in other current assets, other assets, accrued liabilities and other non-current liabilities, depending on their net position, regardless of the purpose or intent for holding the derivative contract. Changes in the fair value of the derivative financial instruments are either recognized periodically in earnings or in shareholders’ equity as a component of OCI. Changes in the fair value of cash flow hedges are recorded in OCI and reclassified into earnings in the same line item on the consolidated statements of income as the impact of the hedged transaction when the underlying contract matures. Changes in the fair values of derivatives not qualifying for hedge accounting are reported in earnings as they occur. For information on the unrealized holding gains (losses) on derivatives included in and reclassified out of AOCI into the consolidated statements of income related to forward foreign currency exchange contracts, see Note 2o, Accumulated Other Comprehensive (Loss) Income of these Notes to Consolidated Financial Statements. j. Fair Value The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Le |
