4 unchanged sentences
Based on the $500.0 million of our floating rate debt outstanding as of October 29, 2022, our annual interest expense would change by approximately $5.0 million for each 100 basis point increase in interest rates.
−Removed: In certain instances, we utilize interest rate derivatives to manage interest rate exposure on both outstanding debt as well as future issuances.
−Removed: As of October 30, 2021, we had no outstanding interest rate derivative instruments.
−Removed: As of October 31, 2020, for each 100 basis point decrease in the ten-year U.S.
−Removed: Treasury rate, the fair value of our outstanding derivative instruments would have changed by approximately $102.0 million.
−Removed: Based on our marketable securities outstanding as of October 30, 2021 and October 31, 2020, our annual interest income would change by approximately $19.7 million and $10.6 million, respectively, for each 100 basis point increase in interest rates.
−Removed: To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of our investment portfolio assuming a 100 basis point parallel shift in the yield curve.
+Added: Based on our cash and marketable securities outstanding as of October 29, 2022 and October 30, 2021, our annual interest income would change by approximately $14.7 million and $19.7 million, respectively, for each 100 basis point increase in interest rates.
+Added: To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of our investment portfolio assuming an immediate 100 basis point parallel shift in the yield curve.
Based on investment positions as of October 29, 2022 and October 30, 2021, a hypothetical 100 basis point increase in interest rates across all maturities would not materially impact the fair market value of the portfolio in either period.
6 unchanged sentences
(thousands) Principal Amount Outstanding Fair Value Fair Value given an increase in interest rates of 100 basis points Principal Amount Outstanding Fair Value Fair Value given an increase in interest rates of 100 basis points
−Removed: 2021 Notes, due December 2021 $ — $ — $ — $ 400,000 $408,565 $ 404,170
−Removed: 2023 Notes, due March 2023 500,000 520,236 513,273 — — —
−Removed: Maxim 2023 Notes, due June 2023 — — — 500,000 526,855 513,874
−Removed: 2023 Notes, due December 2023 — — — 550,000 590,177 572,965
+Added: Maxim 2023 Notes, due March 2023 $ — $ — $ — $ 500,000 $ 520,236 $ 513,273
2024 Notes, due October 2024 500,000 491,982 483,035 500,000 500,482 486,201
1 unchanged sentence
2026 Notes, due December 2026 900,000 851,479 820,203 900,000 986,243 941,160
−Removed: 2026 Notes, due December 2026 900,000 986,243 941,160 900,000 1,017,505 962,821
Maxim 2027 Notes, due June 2027 59,788 54,771 52,534 500,000 542,942 515,866
+Added: 2027 Notes, due June 2027 440,212 410,091 393,294 — — —
2028 Notes, due October 2028 750,000 621,093 588,044 750,000 743,109 696,554
2031 Notes, due October 2031 1,000,000 786,772 727,579 1,000,000 996,702 912,196
+Added: 2032 Notes, due October 2032 300,000 278,359 257,337 — — —
2036 Notes, due December 2036 144,278 126,274 114,389 144,278 176,960 158,110
7 unchanged sentences
Currently, our largest foreign currency exposure is the Euro, primarily because our European operations have the highest proportion of our local currency denominated expenses.
−Removed: Relative to foreign currency exposures existing at October 30, 2021 and October 31, 2020, a 10% unfavorable movement in foreign currency exchange rates over the course of the year would result in approximately $39.5 million of losses and $18.5 million of losses, respectively, in changes in earnings or cash flows.
+Added: Relative to the net unhedged foreign currency exposures existing at October 29, 2022 and October 30, 2021, an immediate 10% unfavorable movement in foreign currency exchange rates would result in approximately $69.5 million of losses and $39.5 million of losses, respectively, in changes in earnings or cash flows over the course of the year.
The market risk associated with our derivative instruments results from currency exchange rates that are expected to offset the market risk of the underlying transactions, assets and liabilities being hedged.
3 unchanged sentences
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 our obligations to the counterparties.
−Removed: The following table illustrates the effect that a 10% unfavorable or favorable movement in foreign currency exchange rates, relative to the U.S.
+Added: The following table illustrates the effect that an immediate 10% unfavorable or favorable movement in foreign currency exchange rates, relative to the U.S.
dollar, would have on the fair value of our forward exchange contracts as of October 29, 2022 and October 30, 2021:
7 unchanged sentences
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
−Removed: The Board of Directors and Shareholders
−Removed: Analog Devices, Inc.
+Added: To the Shareholders and the Board of Directors of Analog Devices, Inc.
Opinion on the Financial Statements
3 unchanged sentences
generally accepted accounting principles.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 30, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated December 3, 2021 expressed an unqualified opinion thereon.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 29, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 22, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
9 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matters
−Removed: The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:
−Removed: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Revenue Recognition – Measuring Variable Consideration
−Removed: Description of the Matter As described in Note 2 to the consolidated financial statements, the Company's sales contracts provide certain distributors with credits for price protection and rights of return, which results in variable consideration.
−Removed: During 2021, sales to distributors were $4.6 billion net of expected price protection discounts and rights of return for which the liability balance as of October 30, 2021 was $664.2 million.
−Removed: Auditing the Company's measurement of variable consideration under distributor contracts involved especially challenging judgment because the calculation involves subjective management assumptions about estimates of expected price protection discounts and returns.
−Removed: For example, estimated variable consideration included in the transaction price reflects management's evaluation of contractual terms, historical experience and assumptions about future economic conditions.
−Removed: Changes in those assumptions can have a material effect on the amount of variable consideration recognized.
−Removed: How We Addressed the Matter in Our Audit We obtained an understanding over the Company's process to calculate the variable consideration.
−Removed: With the exception of the portion of the balance that related to Maxim Integrated Products, Inc., we also evaluated the design and tested the operating effectiveness of the relevant controls.
−Removed: For example, we tested controls over the appropriateness of assumptions management used as well as controls over the completeness and accuracy of the data underlying estimates of expected price protection discounts and returns.
−Removed: Our audit procedures included, among others, inspecting contractual terms in distributor agreements and testing the underlying data used in management’s calculation for completeness and accuracy as well as evaluating the significant assumptions used in the estimation of variable consideration.
+Added: Critical Audit Matter
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
+Added: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
+Added: The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
+Added: Revenue Recognition – Measuring Price Protection Credits
+Added: Description of the Matter As described in Note 2n to the consolidated financial statements, the Company's sales contracts provide certain distributors with credits for price protection and rights of return, which results in variable consideration.
+Added: During 2022, sales to distributors were $7.5 billion net of expected price protection credits and rights of return for which the liability balance as of October 29, 2022 was $749.4 million, of which the vast majority relates to the price protection credits.
+Added: Auditing the Company's measurement for price protection credits under distributor contracts involved especially challenging judgment because the calculation involves subjective management assumptions about estimates of expected price protection credits.
+Added: For example, estimated price protection credits included in the transaction price reflects management's evaluation of contractual terms, historical experience and assumptions about future economic conditions.
+Added: Changes in those assumptions can have a material effect on the amount recognized for price protection credits.
+Added: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process to calculate the price protection credits.
+Added: For example, we tested controls over the appropriateness of assumptions management used as well as controls over the completeness and accuracy of the data underlying estimates of expected price protection credits.
+Added: Our audit procedures included, among others, inspecting contractual terms in distributor agreements and testing the underlying data used in management’s calculation for completeness and accuracy as well as evaluating the significant assumptions used in the estimation of the price protection credits.
We evaluated the Company’s methods and assumptions used in the estimates, which included comparing the assumptions to historical trends.
−Removed: We inspected and tested the results of the Company's retrospective review analysis of actual returns and price protection discounts claimed by distributors, evaluated the estimates made based on historical experience and performed sensitivity analyses of the Company’s significant assumptions to assess the impact on the variable consideration.
−Removed: We also evaluated whether the Company appropriately considered new information that could significantly change the estimated future price protection discounts or returns.
−Removed: Accounting for Acquisitions – Valuation of Identified Intangibles
−Removed: Description of the Matter During 2021, the Company completed its acquisition of Maxim Integrated Products, Inc.
−Removed: (Maxim) for total consideration of $27.9 billion, as disclosed in Note 6 to the consolidated financial statements.
−Removed: The transaction was accounted for as a business combination.
−Removed: Auditing the Company's accounting for its acquisition of Maxim was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of identifiable intangible assets of $12.4 billion, which principally consisted of developed technology and customer relationships.
−Removed: The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business.
−Removed: The Company used discounted cash flow models to measure the developed technology and customer relationship intangible assets.
−Removed: The significant assumptions used to estimate the fair value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results (e.g., annual revenue growth rates, developed technology obsolescence rates and customer attrition rates).
−Removed: These significant assumptions are forward looking and could be affected by future economic and market conditions.
−Removed: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's accounting for acquisitions process.
−Removed: For example, we tested controls over the appropriateness of the valuation model, assumptions management used as well as controls over the completeness and accuracy of the data underlying the valuation of the developed technology and customer relationship intangible assets.
−Removed: To test the estimated fair value of the developed technology and customer relationship intangible assets, our audit procedures included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data supporting the significant assumptions and estimates used by the Company in the valuation.
−Removed: We tested significant assumptions through a combination of procedures, as applicable for each assumption, including comparing them to current and forecasted industry and economic trends, as well as to the historical results of the acquired business and other guideline companies within the same industry.
−Removed: With the assistance of our valuation specialists, we evaluated the methodology used by the Company and significant assumptions included in the fair value estimates.
+Added: We inspected and tested the results of the Company's retrospective review analysis of actual price protection credits claimed by distributors, evaluated the estimates made based on historical experience and performed sensitivity analyses of the Company’s significant assumptions to assess the impact on the price protection credits.
+Added: We also evaluated whether the Company appropriately considered new information that could significantly change the estimated future price protection credits.
/s/ Ernst & Young LLP
1 unchanged sentence
Boston, Massachusetts
−Removed: December 3, 2021
+Added: November 22, 2022
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.