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We do not believe that we have a material exposure to interest rate risk as our investment policies specify credit quality standards for our investments and limit the amount of credit exposure from any single issue, issuer or type of investment.
−Removed: We do not believe that inflation and changing prices have had a material impact on our results of operations, and as approximately 46% and 29% of our investments at December 31, 2021 are in corporate debt securities with a minimum rating of Aa2 (Moody’s)/AA (Standard and Poor’s) and debt securities issued by the U.S.
−Removed: government or its agencies, respectively, our exposure to liquidity and credit risk is not believed to be significant.
+Added: Although we have seen a significant increase in the number of our investment securities in unrealized loss positions, we do not believe our exposure to liquidity and credit risk to be significant as approximately 47% and 45% of our investments at December 31, 2022 are in corporate debt securities with a minimum rating of A2 (Moody’s)/A (Standard and Poor’s) and debt securities issued by the U.S.
+Added: government or its agencies, respectively.
+Added: We have the intent and ability to hold these securities until recovery, which may be at maturity.
At December 31, 2022, our borrowings consisted of $294.8 million outstanding under the 2026 Term Loans.
The 2026 Term Loans bear interest at the one-, three- or six-month LIBOR rate of our choosing, plus 2.5% with a 0.5% LIBOR floor.
−Removed: We are currently using the three-month LIBOR rate, which was 0.21% at December 31, 2021.
−Removed: A 10% increase in the one-month LIBOR rate would not have increased the amount of interest we owed under this agreement as the LIBOR floor of 0.5% is higher than the LIBOR rate plus 10%.
−Removed: At December 31, 2020, under the 2023 Term Loans which had no LIBOR floor, a 10% increase in the one-month LIBOR rate, which was the LIBOR rate in use at the time, would have increased the amount of interest we owed by approximately $0.4 million.
−Removed: For a discussion about risks relating to LIBOR, see “Item 1A—Risk Factors” in this Annual Report and specifically the section entitled “Discontinuation, reform or replacement of LIBOR, or uncertainty related to the potential for any of the foregoing, may adversely affect us.”
+Added: We are currently using the one-month LIBOR rate, which was 4.32% at December 31, 2022.
+Added: A 10% increase in the one-month LIBOR rate would have increased the amount of interest we owed by approximately $1.3 million.
+Added: At December 31, 2021, a 10% increase in the three-month LIBOR rate, which was the LIBOR rate in use at the time, would not have increased the amount of interest we owed under this agreement as the LIBOR floor of 0.5% was higher than the then-current LIBOR rate of 0.21% plus 10%.
+Added: In 2017, the U.K.
+Added: Financial Conduct Authority announced its intention to phase out LIBOR after 2023.
+Added: Currently, it is anticipated that LIBOR will be completely phased out by June 30, 2023.
+Added: On July 29, 2021, the ARRC, a steering committee comprised of large U.S.
+Added: financial institutions, formally recommended SOFR as its preferred alternative replacement rate for USD LIBOR.
+Added: The 2026 Term Loans contain customary ARRC hardwired benchmark replacement language to transition from LIBOR to SOFR.
+Added: At this time, it is not possible to predict the effect that the anticipated discontinuance of LIBOR, or the establishment of alternative reference rates such as SOFR, will have on us or our borrowing costs.
+Added: SOFR is a relatively new reference rate and its composition and characteristics are not the same as LIBOR.
+Added: Given SOFR’s very limited history and potential volatility as compared to other benchmark or market rates, the future performance of SOFR cannot be predicted based on historical performance.
+Added: The consequences of using SOFR could include an increase in the cost of our variable rate indebtedness.
+Added: We are monitoring these transition efforts and, although the 2026 Term Loans contain provisions designed to accommodate an alternate reference rate, we may need to amend these and other contracts to accommodate any replacement rate.
+Added: The potential effect of any such event on our cost of capital cannot yet be determined, but we do not expect it to have a material impact on our consolidated financial condition, results of operations, or cash flows.
+Added: For a discussion about risks relating to LIBOR, see “Item 1A—Risk Factors” in this Annual Report and specifically the section entitled “Discontinuation, reform or replacement of LIBOR and SOFR, or uncertainty related to the potential for any of the foregoing, may adversely affect us.”
Currency Exchange Rate Risk
−Removed: Manufacturing and royalty revenues we receive on certain of our products and services are a percentage of the net sales made by our licensees, and a portion of these sales are made in countries outside the U.S.
+Added: Manufacturing and royalty revenues that we receive on certain of our products and services are a percentage of the net sales made by our licensees, and a portion of these sales are made in countries outside the U.S.
and are denominated in currencies in which the product is sold, which is predominantly the euro.
The manufacturing and royalty payments on these non‑U.S.
−Removed: sales are calculated initially in the currency in which the sale is made and are then converted into USD to determine the amount that our licensees pay us for manufacturing and royalty revenues.
+Added: sales are calculated initially in the currency in which the sale is made and are then converted into USD to determine the amount that our licensees pay us
+Added: for manufacturing and royalty revenues.
Fluctuations in the exchange ratio of the USD and these non ‑U.S.
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currency, then our revenues will increase given a constant amount of sales in such non ‑U.S.
−Removed: For the year ended December 31, 2021, an average 10% strengthening of the USD relative to the currencies in which these
−Removed: products are sold would have resulted in revenues being reduced by approximately $ 33.1 million, as compared to a reduction in revenues of approximately $ 2 8.9 million for the year ended December 31, 20 20 .
+Added: For the year ended December 31, 202 2 , an average 10% strengthening of the USD relative to the currencies in which these products are sold would have resulted in revenues being reduced by approximately $ 1.1 million, as compared to a reduction in revenues of approximately $ 33.1 million for the year ended December 31, 20 2 1 .
We incur significant operating costs in Ireland and face exposure to changes in the exchange ratio of the USD and the euro arising from expenses and payables at our Irish operations that are settled in euro.
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Financial Statements and Supplementary Data
−Removed: All financial statements required to be filed hereunder are filed as exhibits hereto, are listed under Item 15(a) (1) and (2) and are incorporated herein by reference.
+Added: All financial statements required to be filed hereunder are filed as exhibits hereto, are listed under Item 15(a)(1) below and are incorporated herein by reference.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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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.