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operations, the largest of which are located in the Netherlands (and other countries whose functional currency is the Euro), the United Kingdom, Australia, the United Arab Emirates and China, have foreign currency risk relating to receipts from customers, payments to suppliers and intercompany transactions denominated in foreign currencies.
−Removed: Under certain conditions, we enter into hedging transactions, primarily forward foreign currency swaps, that enable us to mitigate the potential adverse impact of
−Removed: foreign currency exchange rate risk (see Note 9, “Derivatives” in the notes to the consolidated financial statements for further information).
+Added: Under certain conditions, we enter into hedging transactions, primarily forward foreign currency swaps, that enable us to mitigate the potential adverse impact of foreign currency exchange rate risk (see Note 9, “Derivatives” in the notes to the consolidated financial statements for further information).
We do not engage in trading or other speculative activities with these transactions, as established policies require that these hedging transactions relate to specific currency exposures.
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To illustrate the potential impact of changes in foreign currency exchange rates on the translation of our results of operations, annual sales and operating profit were remeasured assuming a ten percent reduction in foreign exchange rates compared to the U.S.
−Removed: Under this assumption, annual sales would have been $26 million lower and operating profit would have been $3 million higher for the twelve months ended August 31, 2019 .
+Added: Under this assumption, annual sales would have been $20 million lower and operating profit would have been $1 million lower for the twelve months ended August 31, 2020.
This sensitivity analysis assumes that each exchange rate would change in the same direction relative to the U.S.
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dollars, our reporting currency.
−Removed: Interest Rate Risk —We manage interest expense using a mixture of fixed-rate and variable-rate debt.
−Removed: A change in interest rates impacts the fair value of our 5.625% Senior Notes, but not our earnings or cash flow because the interest rate on such debt is fixed.
−Removed: Our variable-rate debt obligations consist primarily of revolver and term loan borrowings under our Senior Credit Facility.
−Removed: A ten percent increase in the average cost of our variable rate debt would have resulted in an approximate $1 million increase in financing costs for the year-ended August 31, 2019 .
+Added: Interest Rate Risk —In the current economic environment, we manage interest expense using a mixture of variable rate debt and fixed-interest-rate swaps.
+Added: As of August 31, 2020, long term debt consisted of $ 255 million of borrowings under the revolving line of credit (variable rate debt).
+Added: We are the fixed rate payor on an interest rate swap that effectively fixes the LIBOR-based index on $100 million of borrowings under our revolving line of credit.
C ommodity Risk —We source a wide variety of materials and components from a network of global suppliers.
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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.