QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: 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.
−Removed: In attempts to manage these risks, we employ certain strategies to mitigate the effect of these fluctuations.
+Added: 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: In order to manage these risks, we employ certain strategies to mitigate the effect of these fluctuations.
We enter into foreign currency forward contracts to manage our foreign currency exposure to the fluctuations of certain foreign currencies.
7 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, 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, based on the underlying 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 income, and upon maturity (settlement) are recorded in, or reclassified into, our cost of goods sold or operating expenses, in our
+Added: consolidated statement of operations and comprehensive income (loss), as applicable to the 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 26, 2020, 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 26, 2020, would result in a net increase and decrease, respectively, of approximately $18 million in the fair value of these contracts.
−Removed: Net Investment Hedges
+Added: Based on all foreign currency exchange contracts outstanding as of June 26, 2021, 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 26, 2021, would result in a net increase and decrease, respectively, of approximately $18 million in the fair value of these contracts.
+Added: Net Investment Hedge
We are exposed to adverse foreign currency exchange rate movements related to interest from our net investment hedges.
−Removed: As of December 26, 2020, the net investment hedges have an aggregate notional amount of $3.0 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, the Company will exchange the semi-annual fixed rate payments on U.S.
+Added: As of June 26, 2021, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $4 billion to hedge our net investment in Euro-denominated subsidiaries and $194 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 term of these contracts, we will exchange the semi-annual fixed rate payments on U.S.
denominated debt for fixed rate payments of 0% to 4.457% in Euros and 3.588% in Japanese Yen.
−Removed: Some of these contracts include mandatory early termination dates between September 2023 and September 2025, while the remaining contracts have maturity dates between July 2022 and August 2027.
−Removed: Based on all net investment hedges outstanding as of December 26, 2020, 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 26, 2020, would result in a potential net increase or decrease upon settlement of approximately $348 million in the fair value of these contracts, which have staggered maturities, as stated above.
+Added: Based on the net investment hedges outstanding as of June 26, 2021, 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 26, 2021, would result in a potential net increase or decrease upon settlement of approximately $552 million in the fair value of this contract, which include mandatory early termination dates between February 2024 and February 2026, while the remaining contracts have maturity dates between March 2024 and August 2050.
+Added: Certain of these contracts are supported by a credit support annex ("CSA") which provides for collateral exchange with the earliest effective date being May 2023.
+Added: If the outstanding position of a contract exceeds a certain threshold governed by the aforementioned CSA's, either party is required to post cash collateral.
Interest Rate Risk
6 unchanged sentences
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: 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.
−Removed: 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.
−Removed: 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.
−Removed: At December 26, 2020, we had no long-term borrowings outstanding under our 2018 Credit Facility, $890 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and $55 million outstanding under our Versace Credit Facility.
−Removed: 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.
+Added: Therefore, our statements of operations and comprehensive income (loss) and cash flows are exposed to changes in those interest rates.
+Added: At June 26, 2021, we had no borrowings outstanding under our Revolving Credit Facility, $842 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and no borrowings
+Added: outstanding under our Versace Credit Facilities.
+Added: At March 27, 2021, we had no borrowings outstanding under our Revolving Credit Facility, $865 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and no borrowings outstanding under our Versace Credit Facility.
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.
1 unchanged sentence
We have outstanding $450 million aggregate principal amount of Senior Notes due in 2024.
−Removed: The Senior Notes initially beared interest at a fixed rate equal to 4.000% per year, payable semi-annually.
−Removed: 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) changes the credit rating assigned to the Senior Notes.
−Removed: In March 2020, Moody's Investor Service downgraded their credit rating of us from Baa2 to Ba1, and in April 2020 Fitch ratings downgraded their credit rating of us from BBB- to BB+.
−Removed: As a result, the Senior Notes currently bear interest at a fixed rate equal to 4.500% per year, payable semi-annually.
+Added: The Senior Notes bear interest at a fixed rate equal to 4.500% per year, payable semi-annually.
+Added: 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 subsequently upgrades) the credit rating assigned to the Senior Notes.
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.
2 unchanged sentences
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.