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Interest Rate Risk
−Removed: Our exposure to risk based on changes in interest rates during the nine-month period ended September 30, 2022 relates primarily to the Revolving Credit Facility.
+Added: Our exposure to risk based on changes in interest rates during the three-month period ended March 31, 2023 relates primarily to the Revolving Credit Facility.
The Revolving Credit Facility bears interest at floating rates.
−Removed: For variable rate debt,
−Removed: interest rate changes generally do not affect the fair market value of such debt assuming all other factors remain constant but do impact future earnings and cash flows.
+Added: For variable rate debt, interest rate changes generally do not affect the fair market value of such debt assuming all other factors remain constant but do impact future earnings and cash flows.
Accordingly, we may be exposed to interest rate risk on borrowings under the Credit Agreement.
−Removed: As of September 30, 2022, the Company had one interest rate swap agreement outstanding for a total notional amount of $50 million to exchange floating for fixed rate interest payments for our LIBOR-based borrowings.
−Removed: The interest rate swap had a fair value of zero at inception and was effective July 31, 2019 with a maturity date of February 21, 2023.
−Removed: The interest rate swap has been designated as a cash flow hedge and converts the Company's interest rate payments on the first $50 million of variable-rate, 1-month LIBOR-based debt to a fixed interest rate.
−Removed: As a result of this interest rate swap, interest payments on approximately 37% of our borrowings, as of September 30, 2022, have been swapped from floating rate to fixed rate for the life of the swap, without an exchange of the underlying principal amount.
−Removed: A hedge effectiveness assessment was completed by comparing the critical terms of the hedged items with the hedging instruments, and also by reviewing the credit standing of the counterparties.
−Removed: As of September 30, 2022, it was determined that the critical terms continued to exactly match, and that the counterparties still had the ability to honor their obligations.
−Removed: As a result, the hedges continue to be deemed effective.
−Removed: Based on current borrowing levels at September 30, 2022, net of the interest rate swap, a 25-basis point fluctuation in interest rates for the nine months ended September 30, 2022 would have resulted in an increase or decrease to our interest expense of approximately $0.2 million.
+Added: Based on current borrowing levels at March 31, 2023, a 25-basis point fluctuation in interest rates for the three months ended March 31, 2023 would have resulted in an increase or decrease to our interest expense of approximately $0.3 million.
See “Note 12.
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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.