2 unchanged sentences
We monitor and manage these financial exposures as an integral part of our overall risk management program.
−Removed: Our policies allow for the use of specified financial instruments for hedging purposes only.
−Removed: Use of derivatives for speculation purposes is prohibited.
+Added: While our policies allow for the use of specified financial instruments for hedging purposes only, the use of derivatives for speculation purposes is prohibited.
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 1.00% floor on interest payments while our interest rate swap contracts do not include a floor.
−Removed: If current LIBOR increases above 1.00%, 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 1.00%.
−Removed: If current LIBOR is below 1.00%, 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 1.00% and current LIBOR because certain of our variable-rate debt has an interest floor of 1.00% while the corresponding interest rate swap contracts do not have a LIBOR floor.
−Removed: In January 2021, we amended our variable-rate debt and reduced the floor from 1.00% to 0.75%.
−Removed: As a result of recent changes in the interest rate environment, our interest rate swap contracts designated as cash flow hedges with an aggregate notional amount of $3 billion were no longer highly effective beginning in March 2020.
−Removed: Accordingly, we de-designated the cash flow hedges and the unrealized gains and losses for the period in which these cash flow hedges were no longer highly effective were recognized in interest expense.
−Removed: Unrealized losses recognized as a component of accumulated other comprehensive (loss) income (“AOCI”) prior to de-designation will be reclassified into interest expense in the same period in which the related interest on variable-rate debt affects earnings through the maturity dates of the interest rate swap contracts as the forecasted cash flows are probable or reasonably possible of occurring.
−Removed: The unrealized losses on interest rate swap contracts recognized in interest expense, net, in the Consolidated Statements of Operations were $60 million and $9 million during 2020 and 2019, respectively.
−Removed: Additionally, we reclassified $54 million of accumulated unrealized losses in AOCI related to interest rate swap contracts that have been de-designated as cash flow hedges to interest expense, net, during 2020.
−Removed: There were no material reclassification adjustments associated with cash flow hedges during 2019.
−Removed: As of December 31, 2020, the carrying amount of our debt, excluding finance leases, was $9.4 billion with a fair value of $10.1 billion.
−Removed: In addition, we had interest rate swap contracts with aggregate notional amounts of $3.2 billion with a fair value of $276 million as a net liability.
−Removed: As of December 31, 2020, a hypothetical 10% change in interest rates would change the fair value of our debt by approximately $191 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.
−Removed: Additionally, any 0.125% decrease in LIBOR below 1.0% 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.
−Removed: As of December 31, 2019, the carrying amount of our debt, excluding finance leases, was $9.6 billion with a fair value of $10.2 billion.
−Removed: In addition, we had interest rate swap contracts with aggregate notional amounts of $3.2 billion with a fair value of $84 million as a net liability.
−Removed: As of December 31, 2019, a hypothetical 10% change in interest rates would change the fair value of our debt by approximately $214 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 $34 million based on a discounted cash flow analysis.
−Removed: Additionally, any 0.125% decrease in LIBOR below 1.0% 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.
+Added: We manage interest rate exposure on our variable-rate debt through interest rate swap contracts.
+Added: Certain of our variable-rate debt instruments are subject to a LIBOR-based floor on interest payments, which was 0.75% and 1.00% as of December 31, 2021 and 2020, respectively, while our interest rate swap contracts are not subject to the same floor.
+Added: If current LIBOR increases above the floor, the increase in our debt service obligations on the majority of our variable-rate indebtedness will be neutralized as our interest rate swaps hedge any increase in current LIBOR above the floor.
+Added: However, if current LIBOR falls below the floor, our net income and cash flows, including cash available for servicing our indebtedness, will decrease by the impact of the difference between the floor and current LIBOR, even though the amount borrowed remains the same.
+Added: Including the impact of our interest rate swaps, any 0.125% decrease in LIBOR below the floor would not result in a material increase in annualized interest expense on our variable-rate debt.
+Added: A hypothetical 10% change in interest rates would change the fair value of our debt and interest rate swap contracts as follows:
+Added: As of December 31,
+Added: Long-term debt (excluding finance leases):
+Added: Carrying amount $ 9.6 billion $ 9.4 billion
+Added: Fair value (1)
+Added: $ 10.0 billion $ 10.1 billion
+Added: Fair value impact of hypothetical 10% change in interest rates $ 182 million $ 191 million
+Added: Interest rate swap contracts:
+Added: Notional value $ 3.2 billion $ 3.2 billion
+Added: Fair value (2)
+Added: $ 118 million $ 276 million
+Added: Fair value impact of hypothetical 10% change in interest rates $ 1 million $ 2 million
+Added: __________________
+Added: (1) Fair value of long-term debt is based on the implied yield from broker-quoted market prices.
+Added: The carrying amounts of debt outstanding, if any, under the Company’s revolving credit facility and receivables facility approximate fair values as interest rates on these borrowings approximate current market rates.
+Added: (2) Fair value of interest rate swaps contracts is based on discounted cash flow analyses and was in a net liability position as of December 31, 2021 and 2020.
+Added: In 2020, we de-designated interest rate swap contracts as cash flow hedges with an aggregate notional amount of $3.0 billion, as they were no longer highly effective beginning in March 2020.
+Added: We reclassified $61 million and $54 million of accumulated unrealized losses in accumulated other comprehensive income (loss) (“AOCI”) to interest expense, net, during 2021 and 2020, respectively, as any unrealized losses previously recognized as a component of AOCI prior to de-designation are reclassified into interest expense, net, in the same period in which the related interest on variable-rate debt affects earnings through the maturity dates of the interest rate swap contracts as the forecasted cash flows are probable or reasonably possible of occurring.
+Added: Unrealized gains and losses for periods in which these cash flow hedges are no longer highly effective are recognized in interest expense, net, in the Consolidated Statements of Operations and included a $158 million gain and a $60 million loss during 2021 and 2020, respectively.
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.