QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
−Removed: Our operations expose us to a variety of market risks, including the effects of changes in interest rates.
+Added: Our operations expose us to a variety of market risks, including the effects of changes in interest rates as we have both fixed-rate and variable-rate debt.
We monitor and manage these financial exposures as an integral part of our overall risk management program.
2 unchanged sentences
Interest Rate Risk
−Removed: We have both fixed-rate and variable-rate debt, and, as a result, we are exposed to fluctuations in interest rates on our debt.
−Removed: We have interest rate swap contracts to hedge our interest rate exposure on our variable-rate debt.
−Removed: However, certain of our variable-rate debt instruments are subject to a 0.75% floor on interest payments while our interest rate swap contracts do not include a floor.
−Removed: If current LIBOR increases above 0.75%, the increase in our debt service obligations on most of our variable-rate indebtedness will be neutralized as we have entered into interest rate swaps that hedge any increase in current LIBOR above 0.75%.
−Removed: If current LIBOR is below 0.75%, even though the amount borrowed remains the same, our net income and cash flows, including cash available for servicing our indebtedness, will decrease by the impact of the difference between 0.75% and current LIBOR because certain of our variable-rate debt has an interest floor of 0.75% while the corresponding interest rate swap contracts do not have a LIBOR floor.
−Removed: The unrealized gains and losses of interest rate swap contracts recognized in interest expense, net, in the Condensed Consolidated Statements of Operations were losses of $14 million and $28 million during the three months ended June 30, 2021 and 2020, respectively, and $92 million gain and a $98 million loss during the six months ended June 30, 2021 and 2020, respectively.
−Removed: As of June 30, 2021, the carrying amount of our debt, excluding finance leases, was $9.5 billion with a fair value of $10.1 billion.
+Added: To manage interest rate exposure on our variable-rate debt, we entered into interest rate swap contracts.
+Added: If current LIBOR increases above 0.75%, the increase in our debt service obligations on the majority of our variable-rate indebtedness will be neutralized as we have entered into interest rate swaps that hedge any increase in current LIBOR above 0.75%.
+Added: However, if current LIBOR falls below 0.75%, even though the amount borrowed remains the same, our net income and cash flows, including cash available for servicing our indebtedness, will decrease by the impact of the difference between 0.75% and current LIBOR because certain of our variable-rate indebtedness has an interest floor of 0.75% while the corresponding interest rate swap contracts do not.
+Added: Unrealized gains and losses on interest rate swap contracts recognized in interest expense, net, in the Condensed Consolidated Statements of Operations were gains of $23 million and $8 million during the three months ended September 30, 2021 and 2020, respectively, and a $115 million gain and a $90 million loss during the nine months ended September 30, 2021 and 2020, respectively.
+Added: As of September 30, 2021, the carrying amount of our debt, excluding finance leases, was $9.5 billion with a fair value of $10.0 billion.
In addition, we had interest rate swap contracts with aggregate notional amounts of $3.2 billion with a net liability fair value of $161 million.
−Removed: As of June 30, 2021, a hypothetical 10% change in interest rates would change the fair value of our debt by approximately $167 million based on the implied yield from broker-quoted market prices on our debt, while a similar change in interest rates would change the fair value of our interest rate swap contracts by approximately $2 million based on a discounted cash flow analysis.
+Added: As of September 30, 2021, a hypothetical 10% change in interest rates would change the fair value of our debt by approximately $194 million based on the implied yield from broker-quoted market prices on our debt, while a similar change in interest rates would change the fair value of our interest rate swap contracts by approximately $1 million based on a discounted cash flow analysis.
Additionally, any 0.125% decrease in LIBOR below 0.75% would result in an increase of approximately $4 million in annualized interest expense on our variable-rate debt, including the impact of our interest rate swaps.
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.