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We address our exposure to these risks through our normal operating and financing activities.
−Removed: We do not enter into derivative contracts for trading purposes.
+Added: We do not enter into derivative contracts for speculative purposes.
Interest Rate Risk
We are subject to exposure from changes in short-term interest rates related to interest payments on our borrowing arrangements.
−Removed: A significant amount of our borrowings as of April 1, 2022 are variable-rate facilities based on LIBOR.
+Added: A significant amount of our borrowings as of July 1, 2022 are variable-rate facilities based on SOFR.
In order to mitigate our interest rate risk, we may enter into interest rate swap or collar agreements.
−Removed: A hypothetical increase in interest rates of 1% during the three months ended April 1, 2022 and April 2, 2021 would have increased Interest expense for our variable rate-based debt by approximately $3.5 million and $2.0 million, respectively.
+Added: A hypothetical increase in interest rates of 1% during the three and six months ended July 1, 2022 would have increased Interest expense for our variable rate-based debt by approximately $1.5 million and $4.9 million, respectively.
Exchange Rate Risk
−Removed: We have manufacturing sites throughout the world and sell our products globally.
−Removed: As a result, we are exposed to movements in the exchange rates of various currencies against the U.S.
+Added: We are exposed to movements in the exchange rates of various currencies against the U.S.
dollar and against the currencies of other countries in which we manufacture and sell products and services.
−Removed: During both the three months ended April 1, 2022 and April 2, 2021, approximately 61% of our sales were derived from operations outside the U.S.
−Removed: We have significant manufacturing operations in European countries that are not part of the Eurozone.
+Added: During the three months ended July 1, 2022 and July 2, 2021, approximately 30% and 25% of our sales were derived from operations outside the U.S.
+Added: We have manufacturing operations in certain foreign countries including Mexico, Switzerland, Germany, Tunisia, and China.
Sales are more highly weighted toward the Euro and U.S.
We also have significant contractual obligations in U.S.
−Removed: dollars that are met with cash flows in other currencies as well as U.S.
−Removed: To better match revenue and expense, as well as cash needs from contractual liabilities, we regularly enter into currency swaps and forward contracts.
−Removed: We also face exchange rate risk from our investments in subsidiaries owned and operated in foreign countries.
−Removed: Euro denominated borrowings under the Euro Senior Notes provide a natural hedge to a portion of our European net asset position.
−Removed: The effect of a change in currency exchange rates on our net investment in international subsidiaries, net of the translation effect of our Euro denominated borrowings, is reflected in the Accumulated other comprehensive loss component of Equity.
−Removed: A 10% depreciation in major currencies relative to the U.S.
−Removed: dollar as of April 1, 2022 (net of the translation effect of our Euro denominated borrowings) would result in a reduction in Equity of approximately $186 million.
+Added: dollars that are met with
+Added: cash flows in other currencies as well as U.S.
+Added: To better match revenue and expense, as well as cash needs from contractual liabilities, we may enter into currency swaps and forward contracts.
We also face exchange rate risk from intercompany transactions between affiliates.
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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.