4 unchanged sentences
We have operations in foreign countries, which expose us to foreign currency exchange rate fluctuations due to transactions denominated in foreign currencies.
−Removed: Our primary risk of loss due to foreign currency exchange rate risk is related to Euro to British Pound and Indian Rupee to U.S.
−Removed: dollar exchange rates.
+Added: Our primary foreign currency exposures relate to the British Pound, Euro, and Indian Rupee.
We continuously evaluate and manage our foreign currency risk through the use of derivative financial instruments, including foreign currency forward contracts with financial counterparties where practicable.
Such derivative instruments are viewed as risk management tools and are not used for speculative or trading purposes.
−Removed: We have currency exchange forward contracts that reduce the effects of currency exchange rate fluctuations between the British Pound and Euro.
−Removed: These derivative contracts generally mature within one to three months and are not designated as hedge instruments for accounting purposes.
−Removed: The gains or losses on these derivative contracts are recognized in other income or expense in the consolidated statements of operations based on fair value changes.
−Removed: As of December 31, 2019, we had outstanding foreign currency forward contracts that hedge our risk of foreign currency exchange between the British Pound and Euro with a net fair value asset position of approximately $1.0 million.
−Removed: The functional currency of the subsidiary that carries the hedge contracts is the British Pound and the reporting currency is the U.S.
−Removed: We considered the historical trends in currency exchange rates and determined that it was reasonably possible that changes in exchange rates of 10% between the British Pound and the Euro and 10% between the British Pound and U.S.
−Removed: dollar could be experienced in the near term.
−Removed: A hypothetical 10% change in foreign exchange rates at December 31, 2019 related to the foreign exchange forward contracts would have a $6.7 million impact on income from continuing operations before income taxes.
−Removed: In addition, we have currency exchange forward contracts that reduce the effects of currency exchange rate fluctuations between the U.S.
−Removed: dollar and Indian Rupee.
−Removed: These foreign currency forward contracts are designated as cash flow hedging instruments and qualify for hedge accounting treatment.
−Removed: Gains and losses arising from the effective portion of such contracts are recorded as a component of accumulated other comprehensive income (“OCI”) as gains and losses on derivative instruments, net of income taxes.
−Removed: The hedging gains and losses in OCI are subsequently reclassified into earnings in the same period in which the underlying transactions affect our earnings.
−Removed: As of December 31, 2019, our outstanding foreign currency forward contracts that hedge our risk of foreign currency exchange against the Indian Rupee had a fair value asset position of $0.4 million.
−Removed: We considered the historical trends in currency exchange rates and determined that it was reasonably possible that changes in exchange rates of 10% for the Indian Rupee could be experienced in the near term.
−Removed: dollar weakened by 10% against the Indian Rupee at December 31, 2019, the result would have had a favorable effect to the fair value of the derivatives of approximately $1.6 million.
−Removed: dollar strengthened by 10% against the Indian Rupee at December 31, 2019 the result would have had an unfavorable effect to the fair value of the derivatives of approximately $1.3 million.
+Added: Cross-currency swap agreements are used to effectively convert fixed-rate Euro-denominated borrowings, including the principal amount of the underlying debt and periodic interest payments, to fixed-rate U.S.
+Added: dollar denominated debt and are accounted for as cash flow hedges.
+Added: As of December 31, 2020, we had €350.0 million (approximately $426.8 million based on an exchange rate of $1.00 to €0.82, the exchange rate as of December 31, 2020) of outstanding Euro-denominated borrowings in our U.S.
+Added: dollar functional currency entity.
+Added: We have four cross-currency swap agreements with a total notional amount of €350.0 million that effectively convert interest and principal payments on this debt from Euro to U.S.
+Added: The cross-currency derivative instruments have maturities of October 2023.
+Added: As of December 31, 2020, the cross-currency swap agreements had a fair value asset position of $11.6 million.
+Added: These swaps eliminate the foreign currency risk associated with our Euro-denominated borrowings.
Interest Rates
1 unchanged sentence
We have, from time to time, utilized derivative financial instruments, including interest rate swap contracts and interest rate cap contracts with financial counterparties to manage our interest rate risk.
−Removed: As of December 31, 2019, we had four interest rate swap agreements outstanding with a total notional amount of $331.7 million.
−Removed: As of December 31, 2019, we held three interest rate cap contracts with a total notional amount of approximately $913.0 million used to manage risk related to interest rate fluctuations.
−Removed: Both the interest rate cap and interest rate swap instruments are designated as cash flow hedges and are accounted for using hedge accounting.
+Added: As of December 31, 2020, we had two interest rate swap agreements outstanding with a total notional amount of $196.4 million.
+Added: As of December 31, 2020, we held two interest rate cap contracts with a total notional amount of approximately $965.8 million used to manage risk related to interest rate fluctuations.
+Added: Both the interest rate swap and interest rate cap instruments are designated as cash flow hedges and are accounted for using hedge accounting.
Our variable interest-bearing debt that is not hedged by derivative financial instruments is subject to the risk of interest rate fluctuations.
Significant increases in future interest rates on our variable rate debt could lead to a material decrease in future earnings assuming all other factors remain constant.
−Removed: A hypothetical 50 basis points change in interest rates at December 31, 2019 related to variable rate debt agreements not hedged by derivatives would have a $3.2 million impact on income from continuing operations before income taxes.
+Added: The rates used in our variable interest-bearing debt are based LIBOR, or other index rates, which in certain cases are subject to a floor.
+Added: A hypothetical 50 basis points increase in interest rates as of December 31, 2020 related to variable rate debt agreements not hedged by derivatives would have a $3.1 million negative impact on income before income taxes.
+Added: Conversely, a hypothetical 50 basis points decrease in interest rates as of December 31, 2020 related to variable rate debt agreements not hedged by derivatives would have a $0.8 million positive impact on income before income taxes.
As of December 31, 2020, our outstanding interest rate swap agreements had a fair value liability position of $5.2 million.
5 unchanged sentences
Our analysis and methods used to assess and mitigate the risks discussed above should not be considered projections of future risks.
−Removed: Item 8—Financial Statements and Supplementary Data
−Removed: Our consolidated financial statements, the notes thereto and the Report of BDO USA, LLP, our Independent Registered Public Accounting Firm, are included in this Annual Report on Form 10-K on pages F-1 through F-40.
−Removed: Item 9—Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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.