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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.
−Removed: In attempts to manage these risks, we employ certain strategies to mitigate the effect of these fluctuations.
+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.
6 unchanged sentences
These contracts are recorded at fair value in our consolidated balance sheets as either an asset or liability, and are derivative contracts to hedge cash flow risks.
−Removed: 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 statements of operations and comprehensive (loss) income, as applicable to the transactions for which the forward currency exchange contracts were established.
+Added: Certain of these contracts are designated as hedges for hedge accounting purposes, while other contracts are not designated as hedges for accounting purposes.
+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 consolidated statements 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.
−Removed: For this sensitivity analysis, we assume a hypothetical change in U.S.
−Removed: Dollar against foreign exchange rates.
−Removed: Based on all foreign currency exchange contracts outstanding as of March 27, 2021, 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 March 27, 2021, would result in a net increase and decrease, respectively, of approximately $37 million in the fair value of these contracts.
−Removed: Net Investment Hedge
−Removed: We are exposed to adverse foreign currency exchange rate movements related to interest from our net investment hedges.
−Removed: As of March 27, 2021, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $3 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.
−Removed: Dollar and this currency.
−Removed: Under the term of these contracts, we will exchange the semi-annual fixed rate payments on U.S.
−Removed: denominated debt for fixed rate payments of 0% to 4.508% in Euros and 0% to 3.588% in Japanese Yen.
−Removed: Based on the net investment hedges outstanding as of March 27, 2021, 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 March 27, 2021, would result in a potential net increase or decrease upon settlement of approximately $329 million in the fair value of this contract, which include mandatory early termination dates between November 2022 and February 2026, while the remaining contracts have maturity dates between July 2022 and August 2027.
+Added: For this sensitivity analysis, we assume a hypothetical change in United States dollar against foreign exchange rates.
+Added: Based on all foreign currency exchange contracts outstanding as of April 2, 2022, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of April 2, 2022, would result in a potential net increase and decrease upon settlement of approximately $15 million in the fair value of these contracts.
+Added: Net Investment Hedges
+Added: We are exposed to adverse foreign currency exchange rate movements related to our net investment hedges.
+Added: As of April 2, 2022, 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 United States dollar and this currency.
+Added: Under the term of these contracts, we will exchange the semi-annual fixed rate payments on United States denominated debt for fixed rate payments of 0% to 3.565% in Euros and 0% to 3.408% in Japanese Yen.
+Added: Based on the net investment hedges outstanding as of April 2, 2022, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of April 2, 2022, would result in a potential net increase or decrease upon settlement of approximately $432 million in the fair value of this contract, which include mandatory early termination dates between August 2025 and February 2026, while the remaining contracts have maturity dates between March 2024 and February 2051.
+Added: In addition, certain other contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being November 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
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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 consolidated statements of operations and comprehensive (loss) income and cash flows are exposed to changes in those interest rates.
−Removed: 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 Facilities.
−Removed: At March 28, 2020, we had $681 million in long-term borrowings outstanding under our Revolving 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 Facility.
+Added: Therefore, our consolidated statements of operations and comprehensive income (loss) and cash flows are exposed to changes in those interest rates.
+Added: At April 2, 2022, we had $175 million borrowings outstanding under our Revolving Credit Facility, $495 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and no borrowings 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.
Any increases in the applicable interest rate(s) would cause an increase to the interest expense relative to any outstanding balance at that date.
−Removed: We have outstanding $450 million aggregate principal amount of Senior Notes due in 2024.
−Removed: The Senior Notes bear interest at a fixed rate equal to 4.500% per year, payable semi-annually.
+Added: As of April 2, 2022, our $450 million Senior Notes, due in 2024, bear interest at a fixed rate equal to 4.500% per year, payable semi-annually.
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.
−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: See Note 20 to the accompanying consolidated financial statements for additional information.
Financial Statements and Supplementary Data
−Removed: The response to this item is provided in this Annual Report on Form 10-K under Item 15.
−Removed: “Exhibits and Financial Statement Schedule” and is incorporated herein by reference.
+Added: See “Item 15.
+Added: Exhibits and Financial Statement Schedules” for a listing of the consolidated financial statements and supplementary data included in this report.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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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.