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Balance Sheet Location

Fair Value

Interest rate swap agreements

Other assets

Forward foreign currency exchange contracts

Prepaid expenses and other current assets

Document and Company Information - USD ($)	12 Months Ended
Oct. 31, 2009	May 02, 2009
Document and Company Information [Abstract]
Entity Registrant Name	ANALOG DEVICES INC
Entity Central Index Key	0000006281
Document Type	10-K
Document Period End Date	Oct. 31, 2009
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 5,181,000,000
Entity Common Stock, Shares Outstanding	291,861,767

Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands

12 Months Ended

Oct. 31, 2009

Nov. 01, 2008

Nov. 03, 2007

Revenue

Product revenue

$ 2,014,908

$ 2,582,931

$ 2,429,721

Revenue from one-time IP license

35,000

Total revenue

2,014,908

2,582,931

2,464,721

Costs and Expenses

Cost of sales

^[1]

896,271

1,005,656

956,445

Gross margin

1,118,637

1,577,275

1,508,276

Operating expenses:

Research and development

^[1]

446,980

533,480

509,553

Selling, marketing, general and administrative

^[1]

333,184

415,682

389,505

Special charges

53,656

3,088

40,495

Total operating expenses

833,820

952,250

939,553

Operating income from continuing operations

284,817

625,025

568,723

Nonoperating (income) expenses:

Interest expense

4,094

Interest income

(15,621)

(41,041)

(77,007)

Other, net

(1,100)

(36)

(15,727)

Total nonoperating (income) expenses

(12,627)

(41,077)

(92,734)

Earnings

Income from continuing operations before income taxes and minority interest

297,444

666,102

661,457

Provision for income taxes:

Payable currently

38,441

152,294

162,403

Deferred

11,595

(11,369)

(2,850)

Total provision for income taxes

50,036

140,925

159,553

Minority interest

219

Income from continuing operations, net of tax

247,408

525,177

502,123

Discontinued operations, net of tax:

Income (loss) from discontinued operations

364

12,779

(5,216)

Gain on sale of discontinued operations

248,328

Total income (loss) from discontinued operations, net of tax

364

261,107

(5,216)

Net income

$ 247,772

$ 786,284

$ 496,907

Shares used to compute earnings per share - Basic

291,385

292,688

323,255

Shares used to compute earnings per share - Diluted

292,698

297,110

332,301

Earnings per share - Basic

Income from continuing operations, net of tax

$ 0.85

$ 1.79

$ 1.55

Net income

0.85

2.69

1.54

Earnings per share - Diluted

Income from continuing operations, net of tax

0.85

1.77

1.51

Net income

0.85

2.65

1.5

Dividends declared per share

$ 0.8

$ 0.76

$ 0.7

Includes stock-based compensation expense as follows:

Cost of sales

$ 7,469

$ 7,806

$ 10,591

Research and development

22,666

23,768

29,347

Selling, marketing, general and administrative

$ 18,478

$ 20,970

$ 27,329

[1]	Includes stock-based compensation expense.

Consolidated Balance Sheets - USD ($)
$ in Thousands

12 Months Ended

Oct. 31, 2009

Nov. 01, 2008

Current Assets

Cash and cash equivalents

$ 639,729

$ 593,599

Short-term investments

1,176,244

716,087

Accounts receivable less allowances of $1,681 ($5,501 in 2008)

301,036

315,290

Inventories

^[1]

253,161

314,629

Deferred tax assets

78,740

102,676

Deferred compensation plan investments

1,363

942

Prepaid expenses and other current assets

40,363

40,460

Current assets of discontinued operations

5,894

Total current assets

2,490,636

2,089,577

Property, Plant and Equipment, at Cost

Land and buildings

395,151

378,187

Machinery and equipment

1,511,822

1,512,984

Office equipment

56,294

63,071

Leasehold improvements

66,847

65,247

Property, plant and equipment, gross

2,030,114

2,019,489

Less accumulated depreciation and amortization

1,553,598

1,452,050

Net property, plant and equipment

476,516

567,439

Other Assets

Deferred compensation plan investments

6,580

31,099

Other investments

1,485

955

Goodwill

250,881

235,175

Intangible assets, net

6,855

12,300

Deferred tax assets

73,646

65,949

Other assets

35,658

26,461

Non-current assets of discontinued operations

62,037

Total other assets

437,142

433,976

Total assets

3,404,294

3,090,992

Current Liabilities

Accounts payable

107,334

130,451

Deferred income on shipments to distributors

149,278

175,358

Income taxes payable

6,445

52,546

Deferred compensation plan liability

1,363

942

Accrued liabilities

122,193

191,307

Current liabilities of discontinued operations

18,454

Total current liabilities

386,613

569,058

Noncurrent Liabilities

Long-term debt

379,626

Deferred income taxes

36,232

14,310

Deferred compensation plan liability

6,577

31,800

Other noncurrent liabilities

66,097

55,561

Total noncurrent liabilities

$ 488,532

$ 101,671

Commitments and contingencies

Shareholders' Equity

Preferred stock, $1.00 par value, 471,934 shares authorized, none outstanding

$ 0

Common stock, $0.162/3 par value, 1,200,000,000 shares authorized, 291,861,767 shares issued and outstanding (291,193,451 on November 1, 2008)

48,645

48,533

Retained earnings

2,490,752

2,419,908

Accumulated other comprehensive loss

(10,248)

(48,178)

Total shareholders' equity

2,529,149

2,420,263

Total liabilities and shareholders' equity

$ 3,404,294

$ 3,090,992

[1]	Includes $2,718 and $2,632 related to stock-based compensation at October 31, 2009 and November 1, 2008, respectively.

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2009	Nov. 01, 2008	Nov. 03, 2007
Cash flows from operating activities:
Net income	$ 247,772	$ 786,284	$ 496,907
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	132,493	144,222	142,173
Amortization of intangibles	7,377	9,250	12,610
Stock-based compensation expense	48,613	50,247	72,652
Gain on sale of business	0	(248,328)	0
Gain on sale of investments	0	0	(7,919)
Minority interest	0	0	(219)
Non-cash portion of special charges	15,468	0	438
Other non-cash activity	1,663	310	853
Excess tax benefit - stock options	(20)	(18,586)	(40,871)
Deferred income taxes	11,595	(11,369)	(2,850)
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable	16,561	48,903	(27,011)
Decrease in inventories	67,347	16,784	16,549
Decrease in prepaid expenses and other current assets	731	6,557	34,890
Decrease (increase) in deferred compensation plan investments	24,097	4,401	(4,755)
(Decrease) increase in accounts payable, deferred income and accrued liabilities	(100,064)	(60,736)	53,693
(Decrease) increase in deferred compensation plan liability	(24,801)	(3,811)	4,811
Income tax payments related to gain on sale of businesses	(4,105)	(110,401)	0
(Decrease) increase in income taxes payable	(24,909)	41,443	53,119
Increase in other liabilities	12,330	14,198	15,295
Total adjustments	184,376	(116,916)	323,458
Net cash provided by operating activities	432,148	669,368	820,365
Cash flows from investing:
Purchases of short-term available-for-sale investments	(2,787,141)	(1,831,363)	(1,807,476)
Maturities of short-term available-for-sale investments	2,324,181	1,774,391	2,943,468
Additions to property, plant and equipment, net	(56,095)	(157,408)	(141,810)
Proceeds from sale of investment	0	0	8,003
Net (expenditures) proceeds from sale of businesses	(1,653)	403,181	0
Payments for acquisitions	(8,360)	(3,146)	(9,160)
(Increase) decrease in other assets	(5,661)	2,708	(8,438)
Net cash (used) provided by investing activities	(534,729)	188,363	984,587
Cash flows from financing activities:
Proceeds from issuance of long-term debt	370,350	0	0
Dividend payments to shareholders	(232,988)	(222,530)	(228,281)
Repurchase of common stock	(3,762)	(569,853)	(1,647,212)
Net proceeds from employee stock plans	12,377	94,155	109,149
Other financing activities	0	(366)	0
Excess tax benefit - stock options	20	18,586	40,871
Net cash provided (used) by financing activities	145,997	(680,008)	(1,725,473)
Effect of exchange rate changes on cash	2,714	(9,096)	1,546
Net increase in cash and cash equivalents	46,130	168,627	81,025
Cash and cash equivalents at beginning of year	593,599	424,972	343,947
Cash and cash equivalents at end of year	$ 639,729	$ 593,599	$ 424,972

Summary of Significant Accounting Policies

12 Months Ended

Oct. 31, 2009

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies


2.	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. Amounts pertaining to the non-controlling ownership interest held by a third party in the operating results and financial position of the Company’s majority-owned subsidiaries are reported as “minority interest.” 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 year 2009 and fiscal year 2008 were 52-week periods and fiscal year 2007 was a 53-week period. Certain amounts reported in previous years have been reclassified to conform to the fiscal 2009 presentation. Such reclassifications were immaterial.

During the first quarter of fiscal 2008, the Company sold its baseband chipset business and related support operations (Baseband Chipset Business) to MediaTek Inc. and sold its CPU voltage regulation and PC thermal monitoring business to certain subsidiaries of ON Semiconductor Corporation. The Company has reflected the financial results of these businesses as discontinued operations in the consolidated statements of income for all periods presented. The assets and liabilities of these businesses are reflected as assets and liabilities of discontinued operations in the consolidated balance sheets as of October 31, 2009 and November 1, 2008. The historical results of operations of these businesses have been segregated from the Company’s consolidated financial statements and are included in income (loss) from discontinued operations, net of tax, in the consolidated statements of income.


b.	*Cash, Cash Equivalents and Short-term Investments*

Cash and cash equivalents are highly liquid investments with insignificant interest rate risk and maturities of three months or less at the time of acquisition. Cash, cash equivalents and short-term investments consist primarily of corporate obligations such as commercial paper and corporate bonds and institutional money market funds. They also include 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 and short-term investments 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. The Company’s deferred compensation plan investments are classified as trading.

See Note 7 for additional information on the Company’s deferred compensation plan investments. No realized gains or losses were recorded during any of the fiscal years presented.

The Company periodically evaluates these investments for impairment. There were no other-than-temporary impairments of short-term investments in any of the fiscal years presented.

There were no unrealized losses on available-for-sale securities classified as short-term investments at October 31, 2009 and November 1, 2008.

Unrealized gains on available-for-sale securities classified as short-term investments at October 31, 2009 and November 1, 2008 were as follows:


	2009		2008

Unrealized gains on securities classified as short term investments	$	4	$	2,807

Unrealized gains in 2009 and 2008 relate to corporate obligations.

There were no cash equivalents or short-term investments classified as trading at October 31, 2009 and November 1, 2008. All of the Company’s short-term investments were classified as available-for-sale. All short-term securities at October 31, 2009 have maturities less than one year. The components of the Company’s cash, cash equivalents and short-term investments as of October 31, 2009 and November 1, 2008 were as follows:


	2009		2008

Cash and cash equivalents:
Cash	$	30,744	$	27,910
Available-for-sale:
Institutional money market funds		553,295		197,735
Corporate obligations		50,981		321,200
Held-to-maturity:
Euro time deposits		4,709		46,754

Total cash and cash equivalents	$	639,729	$	593,599

Short-term investments:
Securities with one year or less to maturity:
Corporate obligations	$	1,176,244	$	716,087

Total short-term investments	$	1,176,244	$	716,087

The amortized cost of the Company’s investments classified as corporate obligations as of October 31, 2009 and November 1, 2008 was $1,137.9 million and $991.3 million, respectively.


c.	*Supplemental Cash Flow Statement Information*


	2009		2008		2007

Cash paid during the fiscal year for:
Income taxes	$	60,609	$	201,974	$	102,349
Interest	$	2,502	$	—	$	—


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 October 31, 2009 and November 1, 2008 were as follows:


	2009		2008

Raw materials	$	13,373	$	15,350
Work in process		173,696		200,436
Finished goods		66,092		98,843

Total inventories	$	253,161	$	314,629


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; both straight-line and accelerated methods are used for income tax purposes. Leasehold improvements are amortized based upon the lesser of the term of the lease or the useful life of the asset. Repairs and maintenance charges are expensed as incurred. Depreciation and amortization are based on the following useful lives:


Buildings & building equipment		Up to 25 years
Machinery & equipment		3-8 years
Office equipment		3-8 years

Depreciation expense from continuing operations of property, plant and equipment was $132 million, $144 million and $139 million in fiscal 2009, 2008 and 2007, 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 measured 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 amortized over the revised useful life.


f.	*Goodwill and Intangible Assets*

Goodwill

The Company annually evaluates goodwill for impairment 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 (operating segment or one level below an operating segment) on an annual basis in the fourth quarter or more frequently if indicators of impairment exist. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using the income approach methodology of valuation that includes the discounted cash flow method as well as other generally accepted valuation methodologies. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. No impairment of goodwill resulted from the Company’s most recent evaluation of goodwill for impairment, which occurred in the fourth quarter of fiscal 2009. No impairment of goodwill resulted in any of the fiscal years presented. The Company’s next annual impairment assessment will be made in the fourth quarter of fiscal 2010 unless indicators arise that would require the Company to reevaluate at an earlier date. The following table presents the changes in goodwill during fiscal 2009 and 2008:


	2009		2008

Balance at beginning of year	$	235,175	$	279,469
Acquisition of AudioAsics(1)		3,071		—
Acquisition of Integrant Technologies(2)		2,098		2,988
Goodwill allocated to sale of businesses(3)		—		(12,649	)
Foreign currency translation adjustment		10,537		(34,633	)

Balance at end of year	$	250,881	$	235,175


(1)		The Company made its final milestone payment related to this 2006 acquisition in the second quarter of fiscal 2009.

(2)		The Company purchased the remaining outstanding minority shares related to this 2006 acquisition during fiscal 2008 and fiscal 2009, which resulted in an additional $3.0 million and $2.1 million, respectively, of goodwill.

(3)		The Company allocated $12.6 million of goodwill in connection with the sale of its Baseband Chipset Business to MediaTek Inc. and the sale of its CPU voltage regulation and PC thermal monitoring business to ON Semiconductor Corporation in fiscal 2008.

Intangible Assets

The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is measured by comparison of their carrying value to 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.

Intangible assets, which will continue to be amortized, consisted of the following:


	October 31, 2009				November 1, 2008
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization

Technology-based	$	39,924	$	34,213	$	36,516	$	25,731
Tradename		1,478		1,478		1,438		1,430
Customer relationships		5,181		4,037		4,529		3,022
Other		6,582		6,582		6,534		6,534

Total	$	53,165	$	46,310	$	49,017	$	36,717

Intangible assets are amortized on a straight-line basis over their estimated useful lives or on an accelerated method of amortization that is expected to reflect the estimated pattern of economic use. The remaining amortization expense will be recognized over a weighted-average period of approximately 0.9 years.

Amortization expense from continuing operations, related to intangibles was $7.4 million, $9.3 million and $9.2 million in fiscal 2009, 2008 and 2007, respectively.

The Company expects annual amortization expense for these intangible assets to be:


Fiscal Years	Amortization Expense

2010	$	5,425
2011	$	1,430


g.	*Grant Accounting*

Certain of the Company’s foreign subsidiaries have received various 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 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.


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 accumulated other comprehensive (loss) income. Transaction gains and losses and remeasurement 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 expenses, net, were not material in fiscal 2009, 2008 or 2007.


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 exposures include the Philippine Peso and the British Pound. 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 designated and documented at the inception of the respective hedges as cash flow hedges and are evaluated for effectiveness monthly. Derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified. As the terms of the contract and the underlying transaction are matched at inception, forward contract effectiveness is calculated by comparing the change in fair value of the contract to the change in the forward value of the anticipated transaction, with the effective portion of the gain or loss on the derivative instrument reported as a component of accumulated other comprehensive (loss) income (OCI) in shareholders’ equity and reclassified into earnings in the same period during which the hedged transaction affects earnings. Any residual change in fair value of the instruments, or ineffectiveness, is recognized immediately in other income/expense. Additionally, the Company enters into forward foreign currency contracts that economically hedge the gains and losses generated by the remeasurement 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 October 31, 2009, the total notional amount of these undesignated hedges was $38 million. The fair value of these hedging instruments in the Company’s condensed consolidated balance sheet as of October 31, 2009 was immaterial.

Interest Rate Exposure Management — On June 30, 2009, the Company entered into interest rate swap transactions related to its outstanding notes where the Company swapped the notional amount of its $375 million of fixed rate debt at 5.0% into floating interest rate debt through July 1, 2014. Under the terms of the swaps, the Company will (i) receive on the $375 million notional amount a 5.0% annual interest payment that is paid in two installments on the 1st of every January and July, commencing January 1, 2010 through and ending on the maturity date; and (ii) pay on the $375 million notional amount an annual three-month LIBOR plus 2.05% (2.34% as of October 31, 2009) interest payment, payable in four installments on the 1st of every January, April, July and October, commencing on October 1, 2009 and ending on the maturity date. The LIBOR based rate is set quarterly three months prior to the date of the interest payment. The Company designated these swaps as fair value hedges. The fair value of the swaps at inception were zero and subsequent changes in the fair value of the interest rate swaps were reflected in the carrying value of the interest rate swaps on the balance sheet. The carrying value of the debt on the balance sheet was adjusted by an equal and offsetting amount. The gain or loss on the hedged item (that is fixed-rate borrowings) attributable to the hedged benchmark interest rate risk and the offsetting gain or loss on the related interest rate swaps as of October 31, 2009 is as follows:


	Gain/(Loss) on		Gain/(Loss)			Net Income
Income Statement Classification	Swaps		on Note			Effect

Other income	$	6,109	$	(6,109	)	$	—

The amounts earned and owed under the swap agreements are accrued each period and are reported in interest expense. There was no ineffectiveness recognized in any of the periods presented.

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. The Company does not believe that there is significant risk of nonperformance by these counterparties because the Company continually monitors the credit ratings of such counterparties. Furthermore, none of the Company’s derivative transactions 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 the consolidated financial statements in other current assets, other assets or accrued 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 when the underlying contract matures. Changes in the fair values of derivatives not qualifying for hedge accounting are reported in earnings as they occur.

The total notional amount of derivative instruments designated as hedging instruments as of October 31, 2009 is as follows: $375 million of interest rate swap agreements accounted as fair value hedges, and $128.0 million of cash flow hedges denominated in Euros, British Pounds and Philippine Pesos. The fair value of these hedging instruments in our condensed consolidated balance sheet as of October 31, 2009 was as follows:

The effect of derivative instruments designated as cash flow hedges on our condensed consolidated statement of income for fiscal 2009 was as follows:


	2009

Gain recognized in OCI on derivatives, net of tax of $5,496	$	35,529
Loss reclassified from OCI into income, net of tax of $1,609	$	(9,657	)

The amounts reclassified into earnings before tax are recognized in cost of sales and operating expenses as follows: $4.9 million in cost of sales, $3.6 million in research and development and $2.8 million in selling, marketing, general and administrative. All derivative gains and losses included in OCI will be reclassified into earnings within the next 12 months. There was no ineffectiveness during the fiscal year ended October 31, 2009.

Accumulated Derivative Gains or Losses

The following table summarizes activity in accumulated other comprehensive (loss) income related to derivatives classified as cash flow hedges held by the Company during the period from November 4, 2007 through October 31, 2009:


	2009			2008

Balance at beginning of year	$	(20,263	)	$	6,312
Changes in fair value of derivatives — gain (loss), net of tax		35,529			(10,663	)
Reclassifications into earnings from other comprehensive loss , net of tax		(9,657	)		(15,912	)

Balance at end of year	$	5,609		$	(20,263	)

All of the accumulated gain will be reclassified into earnings over the next twelve months.


j.	*Fair Values of Financial Instruments*

The Company defines fair value as the price that would be received to sell an asset or 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 Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any market activity for the asset or liability at the measurement date. As of October 31, 2009, the Company held no assets or liabilities valued using Level 3 inputs during the period.

The table below sets forth by level the Company’s financial assets and liabilities that were accounted for at fair value as of October 31, 2009. The table does not include cash on hand and also does not include assets and liabilities that are measured at historical cost or any basis other than fair value.


			Fair Value measurement at
	Portion of		Reporting Date using:
	Carrying		Quoted Prices
	Value		in Active		Significant
	Measured at		Markets for		Other
	Fair Value		Identical		Observable
	October 31,		Assets		Inputs
	2009		(Level 1)		(Level 2)

Assets
Cash Equivalents:
Institutional money market funds	$	553,295	$	553,295	$	—
Corporate obligations		50,981		—		50,981
Euro time deposits		4,709		—		4,709
Short — term investments:
Corporate obligations		1,176,244		—		1,176,244
Other Assets:
Interest rate swap agreements		6,109		—		6,109
Deferred compensation investments		7,943		7,943		—
Forward foreign currency exchange contracts		6,427		—		6,427
Other investments		1,485		1,485		—

Total assets measured at fair value	$	1,807,193	$	562,723	$	1,244,470

Liabilities
Long-term debt	$	379,626	$	—	$	379,626

Total liabilities measured at fair value	$	379,626	$	—	$	379,626

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Cash equivalents and short-term investments — These investments are adjusted to fair value based on quoted market prices or are determined using a yield curve model based on current market rates.

Deferred compensation plan investments and other investments — The fair value of these investments is based on quoted market prices.

Long-term debt — The fair value of long-term debt is based on quoted market values.

Interest rate swap agreements — The fair value of interest rate swap agreements is based on quotes received from third party banks. These values represent the estimated amount the Company would receive or pay to terminate the agreements taking into consideration current interest rates as well as the creditworthiness of the counterparty.

Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow hedges, is based on the estimated amount the Company would receive to sell these agreements at the reporting date taking into consideration current interest rates as well as the creditworthiness of the counterparty for assets and our creditworthiness for liabilities.


k.	*Use of Estimates*

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates relate to the useful lives of fixed assets and identified intangible assets, allowances for doubtful accounts and customer returns, the net realizable value of inventory, potential reserves relating to litigation matters, accrued liabilities, accrued taxes, deferred tax valuation allowances, assumptions pertaining to share-based payments and other reserves. Actual results could differ from those estimates, and such differences may be material to the financial statements.


l.	*Concentrations of Risk*

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of investments and trade accounts receivable.

The Company maintains cash, cash equivalents and short-term investments and long-term investments with high credit quality financial institutions and monitors the amount of credit exposure to any one issuer.

The Company sells its products to distributors and original equipment manufacturers involved in a variety of industries including industrial process automation, instrumentation, defense/aerospace, automotive, communications, computers and computer peripherals and consumer electronics. The Company has adopted credit policies and standards to accommodate growth in these markets. The Company performs continuing credit evaluations of its customers’ financial condition and although the Company generally does not require collateral, the Company may require letters of credit from customers in certain circumstances. The Company provides reserves for estimated amounts of accounts receivable that may not be collected.


m.	*Concentration of Other Risks*

The semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns. The Company’s financial results are affected by a wide variety of factors, including general economic conditions worldwide, economic conditions specific to the semiconductor industry, the timely implementation of new manufacturing technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and reliance on assembly and test subcontractors, third-party wafer fabricators and independent distributors. In addition, the semiconductor market has historically been cyclical and subject to significant economic downturns at various times. The Company is exposed to the risk of obsolescence of its inventory depending on the mix of future business. Additionally, a large portion of the Company’s purchases of external wafer and foundry services are from a limited number of suppliers, primarily Taiwan Semiconductor Manufacturing Company (TSMC). If TSMC or any of the Company’s other key suppliers are unable or unwilling to manufacture and deliver sufficient quantities of components, on the time schedule and of the quality that the Company requires, the Company may be forced to engage additional or replacement suppliers, which could result in significant expenses and disruptions or delays in manufacturing, product development and shipment of product to the Company’s customers. Although the Company has experienced shortages of components, materials and external foundry services from time to time, these items have generally been available to the Company as needed.


n.	*Revenue Recognition*

Revenue from product sales to customers is generally recognized when title passes, which for shipments to certain foreign countries is subsequent to product shipment. Title for these shipments ordinarily passes within a week of shipment. A reserve for sales returns and allowances for customers is recorded based on historical experience or specific identification of an event necessitating a reserve.

In all regions of the world, the Company defers revenue and the related cost of sales on shipments to distributors until the distributors resell the products to their customers. Therefore, the Company’s product revenue fully reflects end customer purchases and is not impacted by distributor inventory levels. Sales to distributors are made under agreements that allow distributors to receive price adjustment credits, as discussed below, and to return qualifying products for credit, as determined by the Company, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such returns to a certain percentage of the value of the Company’s shipments to that distributor during the prior quarter. In addition, distributors are allowed to return unsold products if the Company terminates the relationship with the distributor.

Distributors are granted price-adjustment credits related to many of their sales to their customers. Price adjustment credits are granted when the distributor’s standard cost (i.e., the Company’s sales price to the distributor) does not provide the distributor with an appropriate margin on its sales to its customers. As distributors negotiate selling prices with their customers, the final sales price agreed to with the customer will be influenced by many factors, including the particular product being sold, the quantity ordered, the particular customer, the geographic location of the distributor, and the competitive landscape. As a result, the distributor may request and receive a price adjustment credit from the Company to allow the distributor to earn an appropriate margin on the transaction.

Distributors are also granted price adjustment credits in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor. Generally, the Company will provide a credit equal to the difference between the price paid by the distributor (less any prior credits on such products) and the new price for the product multiplied by the quantity of such product in the distributor’s inventory at the time of the price decrease.

Given the uncertainties associated with the levels of price adjustment credits to be granted to distributors, the sales price to the distributor is not fixed or determinable until the distributor resells the products to their customers. Therefore, the Company defers revenue recognition from sales to distributors until the distributors have sold the products to their customers.

Title to the inventory transfers to the distributor at the time of shipment or delivery to the distributor, and payment from the distributor is due in accordance with the Company’s standard payment terms. These payment terms are not contingent upon the distributors’ sale of the products to their customers. Upon title transfer to distributors, inventory is reduced for the cost of goods shipped, the margin (sales less cost of sales) is recorded as “deferred income on shipments to distributors, net” and an account receivable is recorded.

The deferred costs of sales to distributors have historically had very little risk of impairment due to the margins the Company earns on sales of its products and the relatively long life-cycle of the Company’s products. Product returns from distributors that are ultimately scrapped have historically been immaterial. In addition, price protection and price adjustment credits granted to distributors historically have not exceeded the margins the Company earns on sales of its products. The Company continuously monitors the level and nature of product returns and is in continuous contact with the distributors to ensure reserves are established for all known material issues.

As of October 31, 2009 and November 1, 2008, the Company had gross deferred revenue of $230.8 million and $279.3 million, respectively, and gross deferred cost of sales of $81.5 million and $103.9 million, respectively. Deferred income on shipments to distributors decreased by $26.1 million in fiscal 2009 as a result of the distributors’ sales to their customers in fiscal 2009 exceeding the Company’s shipments to its distributors during this same time period.

Shipping costs are charged to cost of sales as incurred.

The Company generally offers a 12-month warranty for its products. The Company’s warranty policy provides for replacement of the defective product. Specific accruals are recorded for known product warranty issues. Product warranty expenses during fiscal 2009, 2008 and 2007 were not material.

During the first quarter of fiscal 2007, the Company recorded revenue of $35 million received in exchange for licensing of certain intellectual property rights to a third party.


o.	*Accumulated Other Comprehensive (Loss) Income*

Other comprehensive (loss) income includes certain transactions that have generally been reported in the consolidated statement of shareholders’ equity. The components of accumulated other comprehensive (loss) income at October 31, 2009 and November 1, 2008 consisted of the following:


	2009			2008

Accumulated other comprehensive (loss) income — pension plans:
Prior service income	$	—		$	(5	)
Transition obligation		(49	)		(15	)
Net actuarial loss		(8,688	)		(8,025	)
Unrealized gain on available-for-sale securities		356			2,446
Foreign currency translation		(7,476	)		(22,316	)
Unrealized gains (losses) on derivative instruments		5,609			(20,263	)

Total accumulated other comprehensive loss	$	(10,248	)	$	(48,178	)


p.	*Advertising Expense*

Advertising costs are expensed as incurred. Advertising expense was $5.2 million in fiscal 2009, $10.0 million in fiscal 2008 and $10.2 million in fiscal 2007.


q.	*Income Taxes*

Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted income tax rates and laws that are expected to be in effect when the temporary differences are expected to reverse. Additionally, deferred tax assets and liabilities are separated into current and noncurrent amounts based on the classification of the related assets and liabilities for financial reporting purposes.


r.	*Earnings Per Share of Common Stock*

Basic earnings per share is computed based only on the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other potentially dilutive securities using the treasury stock method. In calculating diluted earnings per share, the dilutive effect of stock options is computed using the average market price for the respective period. In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of stock options that are in-the-money. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of stock options. Potential shares related to certain of the Company’s outstanding stock options were excluded because they were anti-dilutive. Those potential shares, determined based on the weighted average exercise prices during the respective years, related to the Company’s outstanding stock options could be dilutive in the future.

The following table sets forth the computation of basic and diluted earnings per share:


	2009		2008		2007

Income from continuing operations, net of tax	$	247,408	$	525,177	$	502,123

Total income (loss) from discontinued operations, net of tax		364		261,107		(5,216	)

Net income	$	247,772	$	786,284	$	496,907

Basic shares:
Weighted-average shares outstanding		291,385		292,688		323,255

Earnings per share-basic:
Income from continuing operations, net of tax	$	0.85	$	1.79	$	1.55

Total income (loss) from discontinued operations, net of tax		0.00		0.89		(0.02	)

Net income(1)	$	0.85	$	2.69	$	1.54

Diluted shares:
Weighted-average shares outstanding		291,385		292,688		323,255
Assumed exercise of common stock equivalents		1,313		4,422		9,046

Weighted-average common and common equivalent shares		292,698		297,110		332,301

Earnings per share-diluted:
Income from continuing operations, net of tax	$	0.85	$	1.77	$	1.51

Total income (loss) from discontinued operations, net of tax		0.00		0.88		(0.02	)

Net income(1)	$	0.85	$	2.65	$	1.50

Weighted-average anti-dilutive shares related to:
Outstanding stock options		55,827		57,364		49,915


(1)		The sum of the individual per share amounts may not equal due to rounding.


s.	*Stock-Based Compensation*

Stock-based compensation is measured at the grant date, based on the grant-date fair value of the awards ultimately expected to vest and is recognized as an expense, on a straight-line basis, over the vesting period, which is generally five years. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates used in calculating the grant-date fair value of stock options. The Company calculates the grant-date fair value using the Black-Scholes valuation model. The use of valuation models requires the Company to make estimates of assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield and forfeiture rates.

See Note 3 for additional information relating to stock-based compensation.


t.	*New Accounting Pronouncements*

Revenue Arrangements That Include Software Elements

In October 2009, the FASB issued ASU No. 2009-14 — Software (Topic 985): Certain Revenue Arrangements That Include Software Elements (formerly EITF Issue No. 09-3). This standard removes tangible products from the scope of software revenue recognition guidance and also provides guidance on determining whether software deliverables in an arrangement that includes a tangible product are within the scope of the software revenue guidance. More specifically, if the software sold with or embedded within the tangible product is essential to the functionality of the tangible product, then this software, as well as undelivered software elements that relate to this software, are excluded from the scope of existing software revenue guidance. ASU No. 2009-14 is effective for fiscal years that begin on or after June 15, 2010, which is the Company’s fiscal year 2011. The Company is currently evaluating the impact, if any, that ASU No. 2009-14 may have on the Company’s financial condition and results of operations.

Multiple-Deliverable Revenue Arrangements

In October 2009, the FASB issued ASU No. 2009-13 — Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (formerly EITF Issue No. 08-1). This standard modifies the revenue recognition guidance for arrangements that involve the delivery of multiple elements, such as product, software, services or support, to a customer at different times as part of a single revenue generating transaction. This standard provides principles and application guidance to determine whether multiple deliverables exist, how the individual deliverables should be separated and how to allocate the revenue in the arrangement among those separate deliverables. The standard also expands the disclosure requirements for multiple deliverable revenue arrangements. ASU No. 2009-13 is effective for fiscal years that begin on or after June 15, 2010, which is the Company’s fiscal year 2011. The Company is currently evaluating the impact, if any, that ASU No. 2009-13 may have on the Company’s financial condition and results of operations.

Variable Interest Entities

In June 2009, the FASB issued SFAS 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167). SFAS 167 requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entity’s economic performance. SFAS 167 is effective for fiscal years that begin after November 15, 2009, which is the Company’s fiscal year 2011. The Company is currently evaluating the impact, if any, that SFAS 167 may have on the Company’s financial condition and results of operations.

Transfers of Financial Assets

In June 2009, the FASB issued SFAS 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140 (SFAS 166). SFAS 166 changes the way entities account for securitizations and other transfers of financial instruments. SFAS 166 is effective for fiscal years that begin after November 15, 2009, which is the Company’s fiscal year 2011. The Company is currently evaluating the impact, if any, that SFAS 166 may have on the Company’s financial condition and results of operations.

Business Combinations

In December 2007, the FASB issued ASC 805-10 (formerly SFAS 141R, “Business Combinations”). ASC 805-10 requires an acquiring entity in a business combination to recognize the assets acquired, liabilities assumed and any noncontrolling interest in the acquiree at their fair value on the acquisition date. It further requires that acquisition-related costs and restructuring costs be recognized separately from the acquisition. In April 2009 the FASB updated ASC 805-10 to amend the provisions for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. This update also eliminates the distinction between contractual and non-contractual contingencies. ASC 805-10 is effective for fiscal years beginning after December 15, 2008, which is the Company’s fiscal year 2010. The Company is currently evaluating the impact, if any, that this rule may have on the Company’s financial condition and results of operations. The adoption of ASC 805-10 will change the Company’s accounting treatment for business combinations on a prospective basis beginning in the first quarter of fiscal year 2010.

Noncontrolling Interests

In December 2007, the FASB issued ASC 810-10 (formerly SFAS 160, Noncontrolling Interests in Consolidated Financial Statements). ASC 810-10 clarifies that a noncontrolling or minority interest in a subsidiary is considered an ownership interest and, accordingly, requires all entities to report such interests in subsidiaries as equity in the consolidated financial statements. This topic is effective for fiscal years beginning after December 15, 2008, which is the Company’s fiscal year 2010. The Company is currently evaluating the impact, if any, that this rule may have on the Company’s financial condition and results of operations.


u.	*Discontinued Operations*

In November 2007, the Company entered into a purchase and sale agreement with certain subsidiaries of ON Semiconductor Corporation to sell the Company’s CPU voltage regulation and PC thermal monitoring business which consists of core voltage regulator products for the central processing unit in computing and gaming applications and temperature sensors and fan-speed controllers for managing the temperature of the central processing unit. During the first quarter of fiscal 2008, the Company completed the sale of this business for net cash proceeds of $138 million, which was net of other cash payments of approximately $1.4 million. The Company made final additional cash payments of approximately $2.2 million in the second quarter of fiscal 2008. In connection with the purchase and sale agreement, $7.5 million was placed into escrow and was excluded from the gain calculations. The Company recorded a pre-tax gain in the first quarter of fiscal 2008 of $78 million, or $43 million net of tax, which was recorded as a gain on sale of discontinued operations. During the third quarter of fiscal 2008, additional proceeds were released from escrow and an additional pre-tax gain of $6.6 million, or $3.8 million net of tax, was recorded as a gain on sale of discontinued operations. Additionally, at the time of the sale, the Company entered into a one-year manufacturing supply agreement with a subsidiary of ON Semiconductor Corporation for an additional $37 million. The Company has allocated the proceeds from this arrangement based on the fair value of the two elements of this transaction: 1) the sale of a business and 2) the obligation to manufacture product for a one-year period. As a result, $85 million was recorded as a liability related to the manufacturing supply agreement, all of which has been utilized. The liability was included in current liabilities of discontinued operations on the Company’s consolidated balance sheet. The Company recorded the revenue associated with this manufacturing supply agreement in discontinued operations. As a result, the Company classified inventory for this arrangement as a current asset of discontinued operations. The Company may receive additional proceeds of up to $1 million, currently held in escrow, upon the resolution of certain contingent items, which would be recorded as additional gain from the sale of discontinued operations.

In September 2007, the Company entered into a definitive agreement to sell its Baseband Chipset Business to MediaTek Inc. The decision to sell the Baseband Chipset Business was due to the Company’s decision to focus its resources in areas where its signal processing expertise can provide unique capabilities and earn superior returns. On January 11, 2008, the Company completed the sale of its Baseband Chipset Business for net cash proceeds of $269 million. The cash proceeds received were net of a refundable withholding tax of $62 million and other cash payments of approximately $9 million. The Company made additional cash payments of $7.8 million during fiscal 2008, primarily related to transaction fees and retention payments to employees that transferred to MediaTek Inc. The Company made additional cash payments of $1.7 million during fiscal 2009 related to retention payments for employees who transferred to MediaTek Inc and for the reimbursement of intellectual property license fees incurred by MediaTek Inc. The Company recorded a pre-tax gain in fiscal 2008 of $278 million, or $202 million net of tax, which is recorded as a gain on sale of discontinued operations. The Company may receive additional proceeds of up to $10 million, currently held in escrow, upon the resolution of certain contingent items, which would be recorded as additional gain from the sale of discontinued operations.

The Company received additional amounts under various transition service agreements entered into in connection with these dispositions. The transition service agreements included manufacturing, engineering support and certain human resource services and information technology systems support. At the time of the disposition, the Company evaluated the nature of the transition services and concluded the services would be primarily completed within the one-year assessment period, and the Company did not have the ability to exert significant influence over the disposed businesses’ operating and financial policies. Accordingly, the Company concluded that it did not have a significant continuing involvement with the disposed businesses and has presented the disposition of these businesses as discontinued operations.

The following amounts related to the CPU voltage regulation and PC thermal monitoring and baseband chipset businesses have been segregated from continuing operations and reported as discontinued operations. These amounts also include the revenue and costs of sales provided under a manufacturing supply agreement between the Company and a subsidiary of ON Semiconductor Corporation, which terminated during the first quarter of fiscal year 2009.


	2009			2008		2007

Total revenue	$	10,332		$	115,600	$	275,106
Cost of sales		10,847			95,070		197,965
Operating expenses:
Research and development		(42	)		12,639		80,977
Selling, marketing, general and administrative		58			2,312		10,639
Gain on sale of discontinued operations		—			362,594		—

Income (loss) before income taxes		(531	)		368,173		(14,475	)

Provision for (benefit from) income taxes		(895	)		107,066		(9,259	)

Income (loss) from discontinued operations, net of tax	$	364		$	261,107	$	(5,216	)


	October 31, 2009		November 1, 2008

Inventory	$	—	$	5,894

Total assets reclassified to current assets of discontinued operations	$	—	$	5,894

Refundable foreign withholding tax	$	62,037	$	62,037

Total assets reclassified to non-current assets of discontinued operations	$	62,037	$	62,037

Accounts payable	$	—	$	1,540
Income taxes payable		—		4,105
Accrued liabilities		—		12,809

Total liabilities reclassified to current liabilities of discontinued operations	$	—	$	18,454

Stock-Based Compensation and Shareholders Equity

12 Months Ended

Oct. 31, 2009

Stock-Based Compensation and Shareholders' Equity [Abstract]

Stock-Based Compensation and Shareholders' Equity


3.	Stock-Based Compensation and Shareholders’ Equity

Equity Compensation Plans

The Company grants, or has granted, stock options and other stock and stock-based awards under The 2006 Stock Incentive Plan (2006 Plan). The 2006 Plan was approved by the Company’s Board of Directors on January 23, 2006 and was approved by shareholders on March 14, 2006 and subsequently amended in March 2006, June 2009 and September 2009. The 2006 Plan provides for the grant of up to 15 million shares of the Company’s common stock, plus such number of additional shares that were subject to outstanding options under the Company’s previous plans that are not issued because the applicable option award subsequently terminates or expires without being exercised. The 2006 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. Employees, officers, directors, consultants and advisors of the Company and its subsidiaries are eligible to be granted awards under the 2006 Plan. No award may be made under the 2006 Plan after March 13, 2016, but awards previously granted may extend beyond that date. The Company will not grant further options under any previous plans.

While the Company may grant to employees options that become exercisable at different times or within different periods, the Company has generally granted to employees options that vest over five years and become exercisable in annual installments of 20% on each of the first, second, third, fourth and fifth anniversaries of the date of grant; 33¹/₃% on each of the third, fourth, and fifth anniversaries of the date of grant; or in annual installments of 25% on each of the second, third, fourth and fifth anniversaries of the date of grant. The maximum contractual term of all options is ten years.

Grant-Date Fair Value

The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. Information pertaining to the Company’s stock option awards and the related estimated weighted-average assumptions to calculate the fair value of stock options granted are as follows:


	2009 Excluding
	Option Exchange
	Program			2009*			2008			2007

Options granted (in thousands)		5,675			20,873			5,827			7,691
Weighted-average exercise prices-stock options	$	19.63		$	25.74		$	29.79		$	33.52
Weighted-average grant date fair value-stock options	$	7.42		$	5.97		$	7.90		$	9.50
Assumptions:
Weighted-average expected volatility		58.8	%		41.3	%		32.4	%		30.5	%
Weighted-average expected term (in years)		5.3			4.7			5.1			5.1
Risk-free interest rate		1.7	%		1.4	%		3.2	%		4.6	%
Expected dividend yield		4.1	%		3.2	%		2.4	%		2.2	%


*		Includes options granted under the stock option exchange program which is described below.

Expected volatility — The Company is responsible for estimating volatility and has considered a number of factors, including third-party estimates, when estimating volatility. The Company currently believes that the exclusive use of implied volatility results in the best estimate of the grant-date fair value of employee stock options because it reflects the market’s current expectations of future volatility. In evaluating the appropriateness of exclusively relying on implied volatility, the Company concluded that: (1) options in the Company’s common stock are actively traded with sufficient volume on several exchanges; (2) the market prices of both the traded options and the underlying shares are measured at a similar point in time to each other and on a date close to the grant date of the employee share options; (3) the traded options have exercise prices that are both near-the-money and close to the exercise price of the employee share options; and (4) the maturities of the traded options used to estimate volatility are at least one year.

Expected term — The Company uses historical employee exercise and option expiration data to estimate the expected term assumption for the Black-Scholes grant-date valuation. The Company believes that this historical data is currently the best estimate of the expected term of a new option, and that generally its employees exhibit similar exercise behavior.

Risk-free interest rate — The yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption is used as the risk-free interest rate.

Expected dividend yield — Expected dividend yield is calculated by annualizing the cash dividend declared by the Company’s Board of Directors for the current quarter and dividing that result by the closing stock price on the date of grant. Until such time as the Company’s Board of Directors declares a cash dividend for an amount that is different from the current quarter’s cash dividend, the current dividend will be used in deriving this assumption. Cash dividends are not paid on options, restricted stock or restricted stock units.

Stock-based Compensation Expense

The amount of stock-based compensation expense recognized during a period is based on the value of the awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock-based award. Based on an analysis of its historical forfeitures, the Company has applied an annual forfeiture rate of 4.3% to all unvested stock-based awards as of October 31, 2009. The rate of 4.3% represents the portion that is expected to be forfeited each year over the vesting period. This analysis will be re-evaluated quarterly and the forfeiture rate will be adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest.

Stock-option Exchange

During fiscal 2009, shareholders approved and the Company completed an employee stock option exchange program (Option Exchange). The Option Exchange provided eligible employees of the Company, except named executive officers and directors, the opportunity to exchange eligible stock option grants for a smaller number of new stock options, with a lower exercise price, or in some instances, cash, that had approximately the same fair value as the options surrendered.

On September 28, 2009 the Company granted stock options for approximately 15.2 million shares in the aggregate to approximately 3,100 employees who elected to participate in the Option Exchange. The new stock options issued were subject to a new vesting period and a new contractual term based on the grant date of the original options. In addition, the Company made cash payments of approximately $2.6 million to approximately 5,100 employees whose exchanged options would each have resulted in a new stock option for fewer than 100 shares. As a result of the exchange, employees elected to surrender options for approximately 33.6 million options, which were cancelled upon the grant of the new options on September 28, 2009.

The exchange of options in this Option Exchange is treated as a modification of the existing stock options for accounting purposes. Accordingly, any unrecognized compensation expense from the surrendered stock options will be recognized over the original service period of the surrendered option. Because the exchange ratios were calculated to result in the fair value of surrendered eligible stock options that was approximately equal to the fair value of the new stock options replacing them, the amount of incremental expense was immaterial.

Stock-Based Compensation Activity

A summary of the activity under the Company’s stock option plans as of October 31, 2009 and changes during the fiscal year then ended is presented below:


						Weighted-
				Weighted-		Average
				Average		Remaining
	Options			Exercise Price		Contractual		Aggregate
	Outstanding			Per Share		Term in Years		Intrinsic Value

Options outstanding at November 1, 2008		70,340		$	36.63
Options granted		5,675		$	19.63
Options exercised		(785	)	$	19.28
Options forfeited		(992	)	$	33.01
Options expired		(3,313	)	$	39.78
Options granted under Option Exchange		15,198		$	28.02
Options cancelled under Option Exchange		(33,660	)	$	40.87

Options outstanding October 31, 2009		52,463		$	29.71		4.6	$	66,908

Options exercisable at October 31, 2009		24,484		$	32.39		2.8	$	33,129
Options vested or expected to vest October 31, 2009(1)		50,481		$	29.84		4.6	$	63,891


(1)		In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options.

The total intrinsic value of options exercised (i.e. the difference between the market price at exercise and the price paid by the employee to exercise the options) during fiscal 2009, fiscal 2008 and fiscal 2007 was $4.7 million, $121.7 million and $152.6 million, respectively. The total amount of proceeds received by the Company from exercise of these options during fiscal 2009, fiscal 2008 and fiscal 2007 was $15.1 million, $100.6 million and $109.1 million, respectively. The total grant-date fair value of stock options that vested during fiscal 2009, fiscal 2008 and fiscal 2007 was approximately $73.6 million, $77.6 million and $72.8 million, respectively.

The total cash received from stock option exercises pursuant to employee stock plans in the Company’s statement of cash flows is net of the value of shares surrendered by employees to satisfy employee tax obligations upon vesting of restricted stock or restricted stock units and in connection with the exercise of stock options granted to the Company’s employees under the Company’s equity compensation plans. The withholding amount is based on the Company’s minimum statutory withholding requirement.

A summary of the Company’s restricted stock and restricted stock unit award activity as of October 31, 2009 and changes during the year then ended is presented below:


	Restricted			Weighted-
	Shares or			Average Grant
	Units			Date Fair Value
	Outstanding			Per Share

Restricted shares and units outstanding at November 1, 2008		92		$	30.41
Awards granted		76		$	17.14
Restrictions lapsed		(25	)	$	33.30
Awards forfeited		(8	)	$	33.70

Restricted shares and units outstanding at October 31, 2009		135		$	22.19

As of October 31, 2009, there was $103.4 million of total unrecognized compensation cost related to unvested share-based awards comprised of stock options and restricted shares. That cost is expected to be recognized over a weighted-average period of 1.6 years.

Information with respect to activity under the Company’s stock option plans is set forth below:


				Restricted Awards
				Outstanding					Options Outstanding
							Weighted-
							Average
	Shares						Grant Date
	Available						Fair-Value Per					Weighted-Average
Stock Award Activity	for Grant			Number			Share		Number			Price Per Share

Balance, October 28, 2006		17,970			55		$	35.35		84,461		$	34.09

Shares cancelled upon termination of stock plans		(5	)		—			—		—			—
Restricted awards granted(1)		(118	)		39			34.89		—			—
Restrictions lapsed		—			(15	)		36.12		—			—
Options granted		(7,691	)		—			—		7,691			33.52
Options exercised		—			—			—		(7,252	)		15.06
Options forfeited or expired		4,742			—			—		(4,742	)		40.42

Balance, November 3, 2007		14,898			79		$	34.97		80,158		$	35.39

Shares cancelled upon termination of stock plans		(34	)		—			—		—			—
Restricted awards granted(1)		(106	)		35			27.06		—			—
Restrictions lapsed		—			(20	)		35.86		—			—
Restricted awards forfeited		4			(2	)		31.09		—			—
Options granted		(5,827	)		—			—		5,827			29.79
Options exercised		—			—			—		(7,418	)		13.56
Options forfeited or expired		8,227			—			—		(8,227	)		40.47

Balance, November 1, 2008		17,162			92		$	30.41		70,340		$	36.63

Shares cancelled upon termination of stock plans		(3	)							—			—
Restricted awards granted(1)		(228	)		76			17.14		—			—
Restrictions lapsed		—			(25	)		33.30		—			—
Restricted awards forfeited		24			(8	)		33.70		—			—
Options granted		(5,675	)		—			—		5,675			19.63
Options exercised		—			—			—		(785	)		19.28
Options forfeited or expired		4,305			—			—		(4,305	)		38.22
Options granted under Option Exchange		(15,198	)		—			—		15,198			28.02
Options cancelled under Option Exchange(2)		15,198			—			—		(33,660	)		40.87

Balance, October 31, 2009		15,585			135		$	22.19		52,463		$	29.71


(1)		The 2006 Plan provides that for purposes of determining the number of shares available for issuance under the 2006 Plan, any restricted stock award, restricted stock unit or other stock-based award with a per share or per unit price lower than the fair market value of our common stock on the date of grant (a “Full-Value Award”) will be counted as three shares for each share subject to the Full-Value Award.

(2)		Per the terms of the option exchange program, shares underlying options surrendered that were not exchanged for new options are no longer available for future grants.

As of October 31, 2009, a total of 68,183,182 common shares were reserved for issuance under the Company’s stock option plans.

Common Stock Repurchase Program

The Company’s common stock repurchase program has been in place since August 2004. In the aggregate, the Board of Directors has authorized the Company to repurchase $4 billion of the Company’s common stock under the program. Under the program, the Company may repurchase outstanding shares of its common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of the Company’s Board of Directors, the repurchase program will expire when the Company has repurchased all shares authorized under the program. As of October 31, 2009, the Company had repurchased a total of approximately 114.7 million shares of its common stock for approximately $3,908.4 million under this program. An additional $91.6 million of shares remains available for repurchase under the current authorized program. The repurchased shares are held as authorized but unissued shares of common stock. The Company also from time to time repurchases shares in settlement of employee tax withholding obligations due upon the vesting of restricted stock or restricted stock units, or the exercise of stock options. Any future common stock repurchases will be dependent upon several factors including the amount of cash available to the Company in the United States, and the Company’s financial performance, outlook and liquidity.

Preferred Stock

The Company has 471,934 authorized shares of $1.00 par value preferred stock, none of which is issued or outstanding. The Board of Directors is authorized to fix designations, relative rights, preferences and limitations on the preferred stock at the time of issuance.

Special Charges

12 Months Ended

Oct. 31, 2009

Special Charges [Abstract]

Special Charges


5.	Special Charges

A summary of the Company’s special charges is as follows:


				Reorganization
				of Product			Consolidation
	Closure of Wafer			Development			of a Wafer		Reduction of				Closure of Wafer
	Fabrication			and			Fabrication		Overhead		Reduction of		Fabrication		Total
	Facility			Support			Facility in		Infrastructure		Operating		Facility		Special
Income Statement	in Sunnyvale			Programs			Limerick		Costs		Costs		in Cambridge		Charges

Fiscal 2005 Charges:
Workforce reductions	$	20,315		$	11,165		$	—	$	—	$	—	$	—	$	31,480

Total Fiscal 2005 Charges	$	20,315		$	11,165		$	—	$	—	$	—	$	—	$	31,480

Fiscal 2006 Charges:
Facility closure costs		—			554			—		—		—		—		554
Abandonment of equipment		—			459			—		—		—		—		459
Other items		—			462			—		—		—		—		462
Change in estimate		(2,029	)		—			—		—		—		—		(2,029	)
Workforce reductions		—			2,344			—		—		—		—		2,344

Total Fiscal 2006 Charges	$	(2,029	)	$	3,819		$	—	$	—	$	—	$	—	$	1,790

Fiscal 2007 Charges:
Facility closure costs		10,288			—			—		—		—		—		10,288
Workforce reductions		—			4,165			13,748		10,711		—		—		28,624
Other items		—			859			—		1,637		—		—		2,496
Change in estimate		—			(913	)		—		—		—		—		(913	)

Total Fiscal 2007 Charges	$	10,288		$	4,111		$	13,748	$	12,348	$	—	$	—	$	40,495

Fiscal 2008 Charges:
Workforce reductions		—			—			—		—		1,627		—		1,627
Change in estimate		—			—			1,461		—		—		—		1,461

Total Fiscal 2008 Charges	$	—		$	—		$	1,461	$	—	$	1,627	$	—	$	3,088

Fiscal 2009 Charges:
Workforce reductions		—			—			—		—		26,583		7,446		34,029
Facility closure costs		—			—			1,191		—		2,411		57		3,659
Non-cash impairment charge		—			—			—		—		839		14,629		15,468
Other items		—			—			—		—		500		—		500

Total Fiscal 2009 Charges	$	—		$	—		$	1,191	$	—	$	30,333	$	22,132	$	53,656


				Reorganization
				of Product			Consolidation
	Closure of Wafer			Development			of a Wafer			Reduction of						Closure of Wafer
	Fabrication			and			Fabrication			Overhead			Reduction of			Fabrication			Total
	Facility			Support			Facility in			Infrastructure			Operating			Facility			Special
Accrued Restructuring	in Sunnyvale			Programs			Limerick			Costs			Costs			in Cambridge			Charges

Balance at October 28, 2006	$	5,903		$	4,976		$	—		$	—		$	—		$	—		$	10,879

Fiscal 2007 special charges		10,288			4,111			13,748			12,348			—			—			40,495
Severance payments		(5,573	)		(4,717	)		—			(767	)		—			—			(11,057	)
Facility closure costs		(6,616	)		(23	)		—			—			—			—			(6,639	)
Non-cash impairment charge		—			—			—			(438	)		—			—			(438	)
Other payments		—			(596	)		—			—			—			—			(596	)
Effect of foreign currency on accrual		—			18			—			3			—			—			21

Balance at November 3, 2007	$	4,002		$	3,769		$	13,748		$	11,146		$	—		$	—		$	32,665

Fiscal 2008 special charges		—			—			1,461			—			1,627			—			3,088
Severance payments		(253	)		(2,178	)		(1,727	)		(8,085	)		(126	)		—			(12,369	)
Facility closure costs		(2,002	)		(45	)		(279	)		—			—			—			(2,326	)
Other payments		—			(155	)		—			(1,200	)		—			—			(1,355	)
Effect of foreign currency on accrual		—			24			(1,449	)		(97	)		—			—			(1,522	)

Balance at November 1, 2008	$	1,747		$	1,415		$	11,754		$	1,764		$	1,501		$	—		$	18,181

Fiscal 2009 special charges		—			—			1,191			—			30,333			22,132			53,656
Severance payments		—			(1,441	)		(11,802	)		(1,816	)		(21,156	)		(756	)		(36,971	)
Facility closure costs		(1,578	)		(25	)		(1,164	)		—			(1,195	)		(57	)		(4,019	)
Non-cash impairment charge		—			—			—			—			(839	)		(14,629	)		(15,468	)
Other payments		—			—			—			—			(503	)		—			(503	)
Effect of foreign currency on accrual		—			51			333			52			20			—			456

Balance at October 31, 2009	$	169		$	—		$	312		$	—		$	8,161		$	6,690		$	15,332

Special Charges

Closure of Wafer Fabrication Facility in Sunnyvale

The Company ceased production at its California wafer fabrication facility in November 2006. The Company is paying the lease obligation costs on a monthly basis over the remaining lease term, which expires in 2010. The Company completed the clean-up activity during fiscal 2007, and does not expect to incur any additional charges related to this action.

Reorganization of Product Development and Support Programs

The Company recorded special charges in fiscal years 2005, 2006 and 2007 as a result of its decision to reorganize its product development and support programs with the goal of providing greater focus on its analog and digital signal processing product programs. The Company terminated the employment of all employees associated with these programs and has paid out all amounts owed to employees for severance. The Company does not expect to incur any further charges related to this reorganization action.

Consolidation of a Wafer Fabrication Facility in Limerick

In fiscal 2007, the Company recorded a special charge of $13.7 million as a result of its decision to only use eight-inch technology at its wafer fabrication facility in Limerick. Certain manufacturing processes and products produced on the Limerick facility’s six-inch production line have transitioned to the Company’s existing eight-inch production line in Limerick while others have transitioned to external foundries. The charge was for severance and fringe benefit costs recorded under the Company’s ongoing benefit plan for 150 manufacturing employees associated with this action. As of October 31, 2009, the Company still employed 2 of the 150 employees included in this action. These employees must continue to be employed by the Company until their employment is involuntarily terminated in order to receive the severance benefit. During fiscal 2008, the Company recorded an additional charge of $1.5 million related to this action, of which $1.2 million was an adjustment to the original estimate of the severance costs and $0.3 million was for clean-up and closure costs that were expensed as incurred. During fiscal 2009, the Company recorded additional charges of $1.2 million for clean-up and closure costs that were expensed as incurred. The production in the six-inch wafer fabrication facility ceased during the fourth quarter of fiscal 2009. The Company does not expect to incur any further charges related to this action.

Reduction of Overhead Infrastructure Costs

During the fourth quarter of fiscal 2007, the Company recorded a special charge as a result of its decision to either deemphasize or exit certain businesses or products and focus investments in products and end markets where it has better opportunities for profitable growth. In September 2007, the Company entered into a definitive agreement to sell its Baseband Chipset Business. As a result, the Company decided to reduce the support infrastructure in manufacturing, engineering and SMG&A to more appropriately reflect its required overhead structure. The Company terminated the employment of all employees associated with this action and has paid all amounts owed to employees for severance as income continuance. The Company does not expect to incur any further charges related to this action.

Reduction of Operating Costs

During the fourth quarter of fiscal 2008, in order to further reduce its operating cost structure, the Company recorded a special charge of $1.6 million for severance and fringe benefit costs recorded under its ongoing benefit plan or statutory requirements at foreign locations for 19 engineering and SMG&A employees. The Company terminated the employment of all employees associated with this charge and is paying amounts owed to employees for severance as income continuance.

During fiscal 2009, the Company recorded an additional charge of $30.3 million related to this cost reduction action. Approximately $2.1 million of this charge was for lease obligation costs for facilities that the Company ceased using during the first quarter of fiscal 2009; approximately $0.9 million was for the write-off of property, plant and equipment; and approximately $0.8 million was for contract termination costs and for clean-up and closure costs that were expensed as incurred. The remaining $26.5 million related to the severance and fringe benefit costs recorded under the Company’s ongoing benefit plan or statutory requirements at foreign locations, for 245 manufacturing employees and 302 engineering and SMG&A employees. As of October 31, 2009, the Company still employed 16 of the 547 employees included in this cost reduction action. These employees must continue to be employed by the Company until their employment is involuntarily terminated in order to receive the severance benefit.

Closure of Wafer Fabrication Facility in Cambridge

During the first quarter of fiscal 2009, the Company recorded a special charge of $22.1 million as a result of its decision to consolidate its Cambridge, Massachusetts wafer fabrication facility into its existing Wilmington, Massachusetts facility. In connection with the anticipated closure of this facility, the Company evaluated the recoverability of the facility’s manufacturing assets and concluded that there was an impairment of approximately $12.9 million based on the revised period of intended use. The remaining $9.2 million was for severance and fringe benefit costs recorded under the Company’s ongoing benefit plan for 175 manufacturing employees and 9 SMG&A employees associated with this action.

We finished production in the Cambridge fabrication facility and began clean-up activities during the fourth quarter of fiscal 2009. During the fourth quarter of fiscal 2009, the Company reversed approximately $1.8 million of its severance accrual. The accrual reversal was required because 51 employees either voluntarily left the Company or found alternative employment within the Company. In addition, the Company recorded a special charge of approximately $1.7 million for the impairment of manufacturing assets that were originally going to be moved to our other wafer fabrication facilities but are no longer needed at those facilities and therefore have no future use. The Company also recorded a special charge of $0.1 million for clean-up costs as the Company began its cleanup of the Cambridge fabrication facility at the end of the fourth quarter of fiscal 2009. As of October 31, 2009, the Company still employed 33 of the employees included in this action. The remaining employees will continue working during the first quarter of fiscal 2010 on the cleanup and closure of the wafer fabrication facility. These employees must continue to be employed by the Company until their employment is involuntarily terminated in order to receive the severance benefit. The Company expects to incur additional expenses, that cannot be precisely determined at this time, related to this action in the first quarter of fiscal 2010 for lease termination, cleanup and closure costs. The lease charge will be taken when the Company ceases using the building and the cleanup and closure costs will be expensed as incurred.

Retirement Plans

12 Months Ended

Oct. 31, 2009

Retirement Plans [Abstract]

Retirement Plans


14.	Retirement Plans

The Company and its subsidiaries have various savings and retirement plans covering substantially all employees. The Company maintains a defined contribution plan for the benefit of its eligible U.S. employees. This plan provides for Company contributions of up to 5% of each participant’s total eligible compensation. In addition, the Company contributes an amount equal to each participant’s pre-tax contribution, if any, up to a maximum of 3% of each participant’s total eligible compensation. The total expense related to the defined contribution plan for U.S. employees was $21.5 million in fiscal 2009, $22.6 million in fiscal 2008 and $20.8 million in fiscal 2007. The Company also has various defined benefit pension and other retirement plans for certain non-U.S. employees that are consistent with local statutory requirements and practices. The total expense related to the various defined benefit pension and other retirement plans for certain non-U.S. employees was $10.9 million in fiscal 2009, $13.9 million in fiscal 2008 and $17.3 million in fiscal 2007.

In the fourth quarter of fiscal 2007, the Company began to recognize the funded status of defined-benefit post retirement plans on the Company’s consolidated balance sheets and changes in the funded status in comprehensive (loss) income. During fiscal 2009 the measurement date of the plan’s funded status was changed from September 30 to October 31, 2009, the same as the Company’s fiscal year end.

Non-U.S. Plan Disclosures

The Company’s funding policy for its foreign defined benefit pension plans is consistent with the local requirements of each country. The plans’ assets consist primarily of U.S. and non-U.S. equity securities, bonds, property and cash. The benefit obligations and related assets under these plans have been measured at October 31, 2009 and September 30, 2008.

Net annual periodic pension cost of non-U.S. plans is presented in the following table:


	2009			2008			2007

Service cost	$	6,368		$	9,580		$	10,890
Interest cost		9,525			10,234			8,862
Expected return on plan assets		(10,703	)		(12,312	)		(9,584	)
Amortization of prior service cost		5			8			8
Amortization of transitional asset		(40	)		(44	)		(39	)
Recognized actuarial loss		(519	)		189			804

Net periodic pension cost	$	4,636		$	7,655		$	10,941

Curtailment impact	$	—		$	1		$	—
Settlement impact	$	207		$	—		$	85
Special termination benefits	$	281		$	15		$	207

The special termination benefits presented relate to certain early retirement benefits provided in certain jurisdictions.

Obligation and asset data of the Company’s non-U.S. plans at each fiscal year end is presented in the following table:


	2009			2008

Change in Benefit Obligation
Benefit obligation at beginning of year	$	149,428		$	180,771
Adjustments due to change in defined benefit plans measurement date:
a. Service cost and interest cost during gap period		1,204			—
b. Additional experience during gap period		(10,099	)		—
c. Gap period benefit payments from plan, employee contributions, expenses, taxes and premiums paid		(1,222	)		—
Service cost		6,368			9,580
Interest cost		9,525			10,234
Curtailment		—			(335	)
Settlement		(2,816	)		—
Special termination benefits		281			15
Participant contributions		2,496			2,973
Transfers		(1,298	)		—
Premiums paid		(201	)		(207	)
Actuarial gain		(3,244	)		(28,117	)
Benefits paid		(3,925	)		(3,642	)
Exchange rate adjustment		18,550			(21,844	)

Benefit obligation at end of year	$	165,047		$	149,428

Change in Plan Assets
Fair value of plan assets at beginning of year	$	120,914		$	167,805
Adjustments due to change in defined benefit plans measurement date:
b. Additional experience during gap period		(9,807	)		—
c. Gap period benefit payments from plan, employee contributions, expenses, taxes and premiums paid		(1,222	)		—
Actual return on plan assets		8,839			(36,452	)
Employer contributions		7,639			7,955
Participant contributions		2,496			2,973
Settlements		(2,816	)		—
Acquisitions/divestitures		(1,298	)		—
Premiums paid		(201	)		(207	)
Benefits paid		(3,925	)		(3,642	)
Exchange rate adjustment		15,024			(17,518	)

Fair value of plan assets at end of year	$	135,643		$	120,914

Reconciliation of Funded Status
Funded status	$	(29,404	)	$	(28,514	)
Contribution between September 30 and fiscal year end		—			596

Net amount recognized	$	(29,404	)	$	(27,918	)

Amounts Recognized in the Balance Sheet
*For years after the change in accounting principle related to defined benefit plans*
Current liabilities	$	(832	)	$	(758	)
Noncurrent liabilities		(28,572	)		(27,160	)

Net amount recognized	$	(29,404	)	$	(27,918	)

Reconciliation of Amounts Recognized in the Statement of Financial Position
Initial net obligation	$	(93	)	$	(58	)
Prior service cost		(1	)		(7	)
Net loss		(10,720	)		(10,344	)

Accumulated other comprehensive loss		(10,814	)		(10,409	)
Accumulated contributions below net periodic benefit cost		(18,590	)		(17,509	)

Net amount recognized	$	(29,404	)	$	(27,918	)

Other Comprehensive Income Changes Recognized in Other Comprehensive Income
Changes in plan assets and benefit obligations recognized in other comprehensive income
Net loss arising during the year (includes curtailment gains not recognized as a component of net periodic cost)	$	(1,380	)	$	20,313
Effect of exchange rates on amounts included in accumulated other comprehensive income		843			(2,964	)
Amounts recognized as a component of net periodic benefit cost
Amortization, settlement or curtailment recognition of net transition asset		40			44
Amortization or curtailment recognition of prior service cost		(5	)		(9	)
Amortization or settlement recognition of net gain (loss)		312			(189	)

Total recognized in other comprehensive (income) loss	$	(190	)	$	17,195

Total recognized in net periodic benefit and other comprehensive loss (income)	$	4,934		$	24,866

Changes recognized in balance sheet
Balance sheet recognition of change in defined benefit plans measurement date
Amortization amounts during gap period	$	21			N/A
Experience gain during gap period		574			N/A

Total	$	595			N/A

Estimated amounts that will be amortized from accumulated other comprehensive (loss) income over the next fiscal year
Initial net asset	$	33		$	36
Prior service cost		(1	)		(6	)
Net gain		113			191

Total	$	145		$	221

The accumulated benefit obligation for non-U.S. pension plans was $127.3 million and $107.4 million at October 31, 2009 and September 30, 2008, respectively.

The projected benefit obligation and fair value of plan assets for non-U.S. pension plans with projected benefit obligations in excess of plan assets were $165.0 million and $135.6 million, respectively, at October 31, 2009 and $149.4 million and $120.9 million, respectively, at September 30, 2008.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for non-U.S. pension plans with accumulated benefit obligation in excess of plan assets were $42.5 million, $38.7 million and $19.4 million, respectively, at October 31, 2009, and $37.1 million, $32.8 million and $16.6 million, respectively, at September 30, 2008.

The range of assumptions used for the non-U.S. defined benefit plans reflects the different economic environments within the various countries. The projected benefit obligation was determined using the following weighted average assumptions:


	2009			2008

Discount rate		6.32	%		6.39	%
Rate of increase in compensation levels		3.72	%		3.94	%

Net annual periodic pension cost was determined using the following weighted average assumptions:


	2009			2008

Discount rate		6.60	%		5.64	%
Expected long-term return on plan assets		7.16	%		7.14	%
Rate of increase in compensation levels		3.87	%		3.83	%

The expected long-term rate of return on assets is a weighted average of the long-term rates of return selected for the various countries where the Company has funded pension plans. The expected long-term rate of return on assets assumption is selected based on the facts and circumstances that exist as of the measurement date, and the specific portfolio mix of plan assets. Management, in conjunction with its actuaries, reviewed anticipated future long-term performance of individual asset categories and considered the asset allocation strategy adopted by the Company and or the trustees of the plans. While the review considered recent fund performance and historical returns, the assumption is primarily a long-term, prospective rate.

Expected fiscal 2010 Company contributions and estimated future benefit payments are as follows:


Expected Company Contributions
2010	$	30,050
Expected Benefit Payments
2010	$	3,454
2011	$	3,450
2012	$	4,600
2013	$	6,031
2014	$	6,587
2015-2018	$	32,533

The Company’s year-end pension plan weighted average asset allocations by category were:


	2009			Strategic Target

Equities		69	%		69	%
Bonds		27	%		27	%
Cash		1	%		0	%
Property		3	%		4	%

Total		100	%		100	%


Determination for adjustment due to change in defined benefit plans measurement date
Adjustment to retained earnings
a. Service (cost)	$	(479	)
b. Interest (cost)		(725	)
c. Expected return on asset		866

Service (cost), interest (cost), and expected return on assets		(338	)

d. Amortization of transition asset		2
e. Amortization of past service credit (cost)		—
f. Amortization of gain		19

Total amortizations		21

g. Total adjustment to retained earnings	$	(317	)

Adjustment to accumulated other comprehensive income (loss)
a. Total amortizations	$	(21	)
b. Additional experience gain (loss) during gap period
Liability gain during gap period		10,099
Asset loss during gap period		(10,673	)

Total experience loss during gap period		(574	)

c. Total adjustment to accumulated other comprehensive income (loss)	$	(595	)

The fundamental goal underlying the pension plans’ investment policy is to achieve a total rate of return that exceeds inflation over the long-term by using a certain mix of assets depending on the profile of the specific plan. Investment practices must comply with applicable laws and regulations.

The Company’s investment strategy is based on an expectation that equity securities will outperform debt securities over the long term. Accordingly, in order to maximize the return on assets, a majority of assets are invested in equities. Investments within each asset class are diversified to reduce the impact of losses in single investments. The use of derivative instruments is permitted where appropriate and necessary to achieve overall investment policy objectives and asset class targets.

The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for each significant asset class to obtain a prudent balance between return and risk. The interaction between plan assets and benefit obligations is periodically studied by the Company and its actuaries to assist in the establishment of strategic asset allocation targets.

Income Taxes

12 Months Ended

Oct. 31, 2009

Income Taxes [Abstract]

Income Taxes


15.	Income Taxes

The reconciliation of income tax computed at the U.S. federal statutory rates to income tax expense is as follows:


	2009			2008			2007

U.S. federal statutory tax rate		35.0	%		35.0	%		35.0	%
Income tax provision reconciliation:
Tax at statutory rate:	$	104,105		$	233,136		$	231,510
Irish income subject to lower tax rate		(50,972	)		(92,732	)		(65,673	)
Domestic and international tax examination charges including penalties.		—			—			4,363
State income taxes, net of federal benefit		406			1,150			1,744
Research and development tax credits		(5,153	)		(3,401	)		(14,667	)
Net foreign tax in excess of U.S. federal statutory tax rate		1,123			2,350			1,729
Other, net		527			422			547

Total income tax provision	$	50,036		$	140,925		$	159,553

For financial reporting purposes, income before income taxes includes the following components:


	2009		2008		2007

Pretax income:
Domestic	$	1,133	$	186,130	$	282,410
Foreign		296,311		479,972		379,047

Total income before income taxes and discontinued operations	$	297,444	$	666,102	$	661,457

The components of the provision for income taxes are as follows:


	2009			2008			2007

Current:
Federal (benefit) tax	$	(5,191	)	$	79,642		$	101,183
Foreign		43,007			70,882			58,785
State		625			1,770			2,435

Total current	$	38,441		$	152,294		$	162,403

Deferred (prepaid):
Federal	$	17,033		$	(7,268	)	$	(2,336	)
Foreign		(5,438	)		(4,101	)		(514	)

Total deferred	$	11,595		$	(11,369	)	$	(2,850	)

The Company continues to intend to reinvest certain of its foreign earnings indefinitely. Accordingly, no U.S. income taxes have been provided for approximately $1,851 million of unremitted earnings of international subsidiaries. As of October 31, 2009, the amount of unrecognized deferred tax liability on these earnings was $480 million.

The significant components of the Company’s deferred tax assets and liabilities for the fiscal years ended October 31, 2009 and November 1, 2008 are as follows:


	2009			2008

Deferred tax assets:
Inventory reserves	$	30,365		$	33,058
Deferred income on shipments to distributors		25,775			24,913
Reserves for compensation and benefits		25,182			29,287
Tax credit carryovers		52,443			48,073
Mark-to-market adjustment		(124	)		4,657
Stock-based compensation		62,496			73,619
Depreciation		4,163			—
Other		3,702			3,091

Total gross deferred tax assets		204,002			216,698
Valuation allowance		(51,616	)		(48,073	)

Total deferred tax assets		152,386			168,625

Deferred tax liabilities:
Depreciation		(13,498	)		673
Acquisition Accounting		(2,226	)		(4,318	)
Undistributed earnings of foreign subsidiaries		(18,853	)		(9,484	)
Other		(1,655	)		(1,181	)

Total gross deferred tax liabilities		(36,232	)		(14,310	)

Net deferred tax assets	$	116,154		$	154,315

The valuation allowances of $51.6 million and $48.1 million at October 31, 2009 and November 1, 2008, respectively, are a full valuation allowance for the Company’s state credit carryovers that began expiring in 2008.

The Company has provided for potential liabilities due in the various jurisdictions in which the Company operates. Judgment is required in determining the worldwide income tax expense provision. In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of cost reimbursement arrangements among related entities. Although the Company believes its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in the historical income tax provisions and accruals. Such differences could have a material impact on the Company’s income tax provision and operating results in the period in which such determination is made.

On November 4, 2007 (the first day of its 2008 fiscal year), the Company adopted new accounting principles on accounting for uncertain tax positions. These principles require companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any benefit can be recorded in the financial statements. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. There were no changes to the Company’s liabilities for uncertain tax positions as a result of the adoption these provisions. As of October 31, 2009 and November 1, 2008, the Company had a liability of $18.2 million and $13.8 million, respectively, for gross unrealized tax benefits, all of which, if settled in the Company’s favor, would lower the Company’s effective tax rate in the period recorded. In addition, as of October 31, 2009 and November 1, 2008, the Company had a liability of approximately $8.0 million and $6.4 million respectively, for interest and penalties. The total liability as of October 31, 2009 and November 1, 2008 of $26.2 million and $20.2 million, respectively, for uncertain tax positions is classified as non-current, and included in other non-current liabilities, because the Company believes that the ultimate payment or settlement of these liabilities will not occur within the next twelve months. Prior to the adoption of these provisions, these amounts were included in current income tax payable. The Company includes interest and penalties related to unrecognized tax benefits within the provision for taxes in the condensed consolidated statements of income, and as a result, no change in classification was made upon adopting these provisions. The condensed consolidated statements of income for fiscal year 2009 and fiscal year 2008 include $1.7 million and $1.3 million, respectively, of interest and penalties related to these uncertain tax positions. Due to the complexity associated with its tax uncertainties, the Company cannot make a reasonably reliable estimate as to the period in which it expects to settle the liabilities associated with these uncertain tax positions.

The following table summarizes the changes in the total amounts of uncertain tax positions for fiscal 2008 and fiscal 2009.


Balance, November 3, 2007	$	9,889
Additions for tax positions of current year		3,861

Balance, November 1, 2008		13,750
Additions for tax positions of current year		4,411

Balance, October 31, 2009	$	18,161

Fiscal Year 2004 and 2005 IRS Examination

During the fourth quarter of fiscal 2007, the IRS completed its field examination of the Company’s fiscal years 2004 and 2005. On January 2, 2008, the IRS issued its report for fiscal 2004 and 2005, which included proposed adjustments related to these two fiscal years. The Company has recorded taxes and penalties related to certain of these proposed adjustments. There are four items with an additional potential total tax liability of $46 million. The Company has concluded, based on discussions with its tax advisors, that these four items are not likely to result in any additional tax liability. Therefore, the Company has not recorded any additional tax liability for these items and is appealing these proposed adjustments through the normal processes for the resolution of differences between the IRS and taxpayers. The Company’s initial meetings with the appellate division of the IRS were held during fiscal year 2009. Two of the unresolved matters are one-time issues and pertain to Section 965 of the Internal Revenue Code related to the beneficial tax treatment of dividends from foreign owned companies under The American Jobs Creation Act. The other matters pertain to the computation of research and development (R&D) tax credits and the profits earned from manufacturing activities carried on outside the United States. These latter two matters could impact taxes payable for fiscal 2004 and 2005 as well as for subsequent years.

Fiscal Year 2006 and 2007 IRS Examination

During the third quarter of fiscal 2009, the IRS completed its field examination of the Company’s fiscal years 2006 and 2007. The IRS and the Company have agreed on the treatment of a number of issues that have been included in an Issue Resolutions Agreement related to the 2006 and 2007 tax returns. However, no agreement was reached on the tax treatment of a number of issues, including the same R&D credit and foreign manufacturing issues mentioned above related to fiscal 2004 and 2005, the pricing of intercompany sales (transfer pricing), and the deductibility of certain stock option compensation expenses. During the third quarter of fiscal 2009, the IRS issued its report for fiscal 2006 and fiscal 2007, which included proposed adjustments related to these two fiscal years. The Company has recorded taxes and penalties related to certain of these proposed adjustments. There are four items with an additional potential total tax liability of $195 million. The Company concluded, based on discussions with its tax advisors, that these four items are not likely to result in any additional tax liability. Therefore, the Company has not recorded any additional tax liability for these items and is appealing these proposed adjustments through the normal processes for the resolution of differences between the IRS and taxpayers. With the exception of the proposed adjustment related to the deductibility of certain stock option expenses, the other three matters could impact taxes payable for fiscal 2006 and 2007 as well as for subsequent years.

Fiscal Year 2008 and 2009 IRS Examination

The IRS has not started their examination of fiscal year 2008 or fiscal year 2009.

Although the Company believes its estimates of income tax payable are reasonable, no assurance can be given that the Company will prevail in the matters raised and that the outcome of one or all of these matters will not be different than that which is reflected in the historical income tax provisions and accruals. The Company believes such differences would not have a material impact on the Company’s financial condition but could have a material impact on the Company’s income tax provision, operating results and operating cash flows in the period in which such matters are resolved.

Consolidated Statements of Shareholders Equity - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Oct. 31, 2009	Nov. 01, 2008	Nov. 03, 2007
Common Stock
Statement [Line Items]
Beginning Balance	$ 48,533	$ 50,560	$ 57,001
Beginning Balance, shares	291,193	303,354	342,000
Issuance of stock under stock plans and other, net of repurchases	$ 142	$ 1,209	$ 1,215
Issuance of stock under stock plans and other, net of repurchases, shares	851	7,256	7,291
Common stock repurchased	$ (30)	$ (3,236)	$ (7,656)
Common stock repurchased, shares	(182)	(19,417)	(45,937)
Ending Balance	$ 48,645	$ 48,533	$ 50,560
Ending Balance, shares	291,862	291,193	303,354
Retained Earnings
Statement [Line Items]
Beginning Balance	$ 2,419,908	$ 2,253,483	$ 3,378,999
Change in defined benefit plan measurement date	(246)
Net income	247,772	786,284	496,907
Dividends declared and paid	(232,988)	(222,530)	(228,281)
Issuance of stock under stock plans and other, net of repurchases	12,235	92,946	107,934
Tax benefit (deficit) - stock options	(810)	26,095	65,131
Stock-based compensation expense	48,613	50,247	72,349
Common stock repurchased	(3,732)	(566,617)	(1,639,556)
Ending Balance	2,490,752	2,419,908	2,253,483
Accumulated Other Comprehensive (Loss) Income
Statement [Line Items]
Beginning Balance	(48,178)	33,091	(261)
Change in accounting principle related to defined benefit plans			10,361
Other comprehensive income (loss)	37,930	(81,269)	22,991
Common stock repurchased	0	0	0
Ending Balance	$ (10,248)	$ (48,178)	$ 33,091

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2009	Nov. 01, 2008	Nov. 03, 2007
Statement [Line Items]
Income from continuing operations, net of tax	$ 247,408	$ 525,177	$ 502,123
Foreign currency translation adjustment	14,840	(42,370)	10,640
Net unrealized (losses) gains on securities:
Net unrealized holding (losses) gains (net of taxes of $347 in 2009, $372 in 2008 and $2,746 in 2007) on securities classified as short-term investments	(2,456)	2,508	5,094
Net unrealized holding gains (losses) (net of taxes of $197 in 2009, $217 in 2008 and $100 in 2007) on securities classified as other investments	366	400	(185)
Net unrealized (losses) gains on securities	(2,090)	2,908	4,909
Derivative instruments designated as cash flow hedges:
Changes in fair value of derivatives (net of taxes of $5,496 in 2009, $1,622 in 2008 and $846 in 2007)	35,529	(10,663)	5,282
Realized (gain) loss reclassification (net of taxes of $1,609 in 2009, $2,420 in 2008 and $107 in 2007)	(9,657)	(15,912)	665
Net change in derivative instruments designated as cash flow hedges	25,872	(26,575)	5,947
Minimum pension liability adjustment (net of taxes of $0 in 2009, $0 in 2008 and $640 in 2007)	0	0	1,495
Accumulated other comprehensive (loss) income - pension plans:
Transition obligation (net of taxes of $1 in 2009 and $4 in 2008)	(34)	(43)	0
Net actuarial loss (net of taxes of $287 in 2009 and $1,971 in 2008)	(663)	(15,197)	0
Net prior service income (net of taxes of $1 in 2009 and $4 in 2008)	5	8	0
Net change in accumulated other comprehensive loss- pension plans (net of taxes of $286 in 2009 and $1,963 in 2008)	(692)	(15,232)	0
Other comprehensive income (loss)	37,930	(81,269)	22,991
Comprehensive income from continuing operations	285,338	443,908	525,114
Total income (loss) from discontinued operations, net of tax	364	261,107	(5,216)
Comprehensive income	$ 285,702	$ 705,015	$ 519,898

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2009	Nov. 01, 2008	Nov. 03, 2007
Net unrealized (losses) gains on securities:
Tax effect on unrealized holding gains on securities classified as short-term investments	$ 347	$ 372	$ 2,746
Tax effect on unrealized holding gains (losses) on securities classified as other investments	197	217	100
Derivative instruments designated as cash flow hedges:
Tax effect on Changes in fair value of derivatives	5,496	1,622	846
Tax effect on realized (gain) loss reclassification	1,609	2,420	107
Tax effect on minimum pension liability adjustment	0	0	640
Accumulated other comprehensive (loss) income - pension plans:
Tax effect on transition obligation	1	4
Tax effect on actuarial loss	287	1,971
Tax effect on prior service income	1	4
Tax effect on change in accumulated other comprehensive (loss) income- pension plans	$ 286	$ 1,963
Adjustment, related to a change in accounting principle related to defined benefit plans			10,400
Tax effect related to a change in accounting principle related to defined benefit plans			$ 1,400

Consolidated Balance Sheets (Parenthetical) - USD ($)	Oct. 31, 2009	Nov. 01, 2008
Current Assets
Allowances for accounts receivable	$ 1,681,000	$ 5,501,000
Shareholders' Equity
Preferred stock, par value	$ 1	$ 1
Preferred stock, shares authorized	471,934	471,934
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.166	$ 0.166
Common stock, shares authorized	1,200,000,000	1,200,000,000
Common stock, shares issued	291,861,767	291,193,451
Common stock, shares outstanding	291,861,767	291,193,451