QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: We are exposed to certain market risks during the normal course of our business, such as risk arising from fluctuations in foreign currency exchange rates, as well as fluctuations in interest rates.
+Added: We are exposed to certain market risks during the normal course of our business, such as risks arising from fluctuations in foreign currency exchange rates, as well as fluctuations in interest rates.
In attempts to manage these risks, we employ certain strategies to mitigate the effect of these fluctuations.
8 unchanged sentences
Certain of these contracts are designated as hedges for hedge accounting purposes, while certain of these contracts, are not designated as hedges for accounting purposes.
−Removed: Accordingly, the changes in the fair value of the majority of these contracts at the balance sheet date are recorded in our equity as a component of accumulated other comprehensive income (loss), and upon maturity (settlement) are recorded in, or reclassified into, our cost of sales or operating expenses, in our consolidated statement of operations and comprehensive income, as applicable to the transactions for which the forward currency exchange contracts were established.
+Added: Accordingly, the changes in the fair value of the majority of these contracts at the balance sheet date are recorded in our equity as a component of accumulated other comprehensive (loss) income, and upon maturity (settlement) are recorded in, or reclassified into, our cost of sales or operating expenses, in our consolidated statement of operations and comprehensive (loss) income, as applicable, based on the underlying transactions for which the forward currency exchange contracts were established.
We perform a sensitivity analysis on our forward currency contracts, both designated and not designated as hedges for accounting purposes, to determine the effects of fluctuations in foreign currency exchange rates.
1 unchanged sentence
Dollar against foreign exchange rates.
−Removed: Based on all foreign currency exchange contracts outstanding as of December 28, 2019, a 10% appreciation or devaluation of the U.S.
−Removed: Dollar compared to the level of foreign currency exchange rates for currencies under contract as of December 28, 2019, would result in a net increase and decrease, respectively, of approximately $17 million in the fair value of these contracts.
−Removed: Net Investment Hedges
−Removed: We are exposed to adverse foreign currency exchange rate movements related to interest from our net investment hedges.
−Removed: As of December 28, 2019, the net investment hedges have aggregate notional amounts of $3.190 billion to hedge our net investments in Euro-denominated subsidiaries, and $44 million to hedge our net investments in Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between the U.S.
−Removed: Dollar and these currencies.
−Removed: Under the terms of these contracts, which mature between January 2022 and June 2026, we will exchange the semi-annual fixed rate payments made under our Senior Notes for fixed rate payments of 0% to 1.674% in Euros and 0.89% in Japanese Yen.
−Removed: Based on all net investment hedges outstanding as of December 28, 2019, a 10% appreciation or devaluation of the U.S.
−Removed: Dollar compared to the level of foreign currency exchange rates under contract as of December 28, 2019, would result in a potential net cash increase or decrease upon settlement of approximately $329 million in the fair value of these contracts, which have staggered maturities of 3 to 7 years.
+Added: Based on all foreign currency exchange contracts outstanding as of June 27, 2020, a 10% appreciation or devaluation of the U.S.
+Added: Dollar compared to the level of foreign currency exchange rates for currencies under contract as of June 27, 2020, would result in a net increase and decrease, respectively, of approximately $10 million in the fair value of these contracts.
+Added: Net Investment Hedge
+Added: We are exposed to adverse foreign currency exchange rate movements related to interest from our net investment hedge.
+Added: As of June 27, 2020, the net investment hedge has an aggregate notional amount of $44 million to hedge our net investments in Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between the U.S.
+Added: Dollar and this currency.
+Added: Under the terms of this contract, which matures November 2024, we will exchange the semi-annual fixed rate payments made under our Senior Notes for fixed rate payments of 0.89% in Japanese Yen.
+Added: Based on the net investment hedge outstanding as of June 27, 2020, a 10% appreciation or devaluation of the U.S.
+Added: Dollar compared to the level of foreign currency exchange rates for currencies under contract as of June 27, 2020, would result in a potential net increase or decrease upon settlement of approximately $5 million in the fair value of this contract, which matures in 4 years.
Interest Rate Risk
−Removed: We are exposed to interest rate risk in relation to borrowings outstanding under our 2018 Term Loan Facility, our 2018 Credit Facility, our Hong Kong Credit Facility, our Japan Credit Facility and our Versace Credit Facility.
+Added: We are exposed to interest rate risk in relation to borrowings outstanding under our 2018 Term Loan Facility, our 2018 Credit Facility, our Hong Kong Credit Facility, our Japan Credit Facility and our Versace Credit Facilities.
Our 2018 Term Loan Facility carries interest at a rate that is based on LIBOR.
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Our Versace Credit Facility carries interest at a rate set by the bank on the date of borrowing that is tied to the European Central Bank.
−Removed: Therefore, our statements of operations and comprehensive income and cash flows are exposed to changes in those interest rates.
−Removed: At December 28, 2019, we had $503 million in short-term borrowings outstanding under our 2018 Credit Facility and $1.119 billion, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and $45 million outstanding under our Versace Credit Facilities.
−Removed: At March 30, 2019, we had $539 million in short-term borrowings outstanding under our 2018 Credit Facility, $1.570 billion, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and $11 million outstanding under our Versace Credit Facility.
+Added: Therefore, our statements of operations and comprehensive (loss) income and cash flows are exposed to changes in those interest rates.
+Added: As part of our strategy to limit exposure to interest rate risk, we entered into an interest rate swap agreement with a notional amount of $500 million that will decrease to $350 million in April 2022.
+Added: The swap was designated as a cash flow hedge designed to mitigate the impact of adverse interest rate fluctuations for a portion of our variable-rate debt equal to the notional amount of the swap.
+Added: The interest rate swap converts the one-month Adjusted LIBOR interest rate on these borrowings to a fixed interest rate of 0.237% through December 2022.
+Added: At June 27, 2020, we had $270 million in long-term borrowings outstanding under our 2018 Credit Facility, $985 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and $50 million outstanding under our Versace Credit Facility.
+Added: At March 28, 2020, we had $681 million in long-term borrowings outstanding under our 2018 Credit Facility, $1.010 billion, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and $39 million outstanding under our Versace Credit Facilities.
These balances are not indicative of future balances that may be outstanding under our revolving credit facilities that may be subject to fluctuations in interest rates.
3 unchanged sentences
Our Senior Notes interest rate payable may be subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency) downgrades (or downgrades and subsequent upgrades) the credit rating assigned to the Senior Notes.
+Added: On an overall basis, our exposure to market risk has not significantly changed from what we reported in our Annual Report on Form 10-K.
+Added: The COVID-19 pandemic does present new and emerging uncertainty to the financial markets.
+Added: “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 28, 2020 for additional information.
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.