Analog Devices(US:ADI)2025-11-25 21:02Financial Performance - For the fiscal year ending November 1, 2025, the company reported sales to distributors of $6.1 billion, net of expected price protection credits and rights of return, with a liability balance of $785 million primarily related to price protection credits [238]. Interest Rate Sensitivity - The company’s annual interest expense would change by approximately $14.5 million and $15.5 million for each 100-basis point increase in interest rates for the years ending November 1, 2025 and November 2, 2024, respectively [224]. - A hypothetical 100-basis point increase in interest rates would increase the swap payable by approximately $45.9 million [227]. - The company’s cash and marketable securities outstanding as of November 1, 2025 would yield an annual interest income change of approximately $36.5 million for each 100-basis point increase in interest rates [225]. Foreign Currency Exposure - An immediate 10% unfavorable movement in foreign currency exchange rates would result in approximately $89.6 million of losses as of November 1, 2025 [229]. - The fair value of forward exchange contracts as of November 1, 2025 was $(1,267) thousand, with a potential liability of $(45,730) thousand after a 10% unfavorable movement in foreign currency exchange rates [231]. - The company’s largest foreign currency exposure is the Euro, due to the high proportion of local currency denominated expenses in its European operations [229]. Debt and Financial Instruments - The company had $8.2 billion in principal amount of senior unsecured notes outstanding as of November 1, 2025, with a fair value of $7.5 billion [228]. - The company had $1.0 billion notional of fixed for floating interest rate swaps outstanding as of November 1, 2025, with a fair value of $12.6 million [227]. Risk and Uncertainty - The company’s actual results may differ materially from forward-looking statements due to various risks and uncertainties [13]. Audit and Assumptions - The audit procedures included inspecting contractual terms in distributor agreements and testing the underlying data for completeness and accuracy [241]. - The company evaluated significant assumptions used in estimating price protection credits by comparing them to historical trends [241]. - The retrospective review analysis of actual price protection credits claimed by distributors was inspected and tested [241]. - Sensitivity analyses were performed on the company's significant assumptions to assess the impact on price protection credits [241]. - The company considered new information that could significantly change the estimated future price protection credits [241].