Quantitative and Qualitative Disclosures About Market Risk
−Removed: We are exposed to various market risks related to fluctuations in foreign currency exchange and interest rates.
−Removed: We may use derivative financial instruments to reduce the volatility of earnings and cash flow that may result from adverse economic conditions and events or changes in foreign currency exchange and interest rates.
+Added: We are exposed to various market risks related to fluctuations in interest rates and foreign currency exchange rates.
+Added: We may use derivative and non-derivative financial instruments to reduce the volatility of earnings and cash flow that may result from adverse economic conditions and events or changes in interest rates and foreign currency exchange rates.
Interest rate risk
−Removed: As of December 30, 2022, we had $2,600 million in aggregate principal amount of fixed-rate Senior Notes outstanding, with a carrying amount and a fair value of $2,552 million, based on Level 2 inputs.
+Added: As of June 30, 2023, we had $2,600 million in aggregate principal amount of fixed-rate Senior Notes outstanding, with a carrying amount and a fair value of $2,578 million, based on Level 2 inputs.
The fair value of these notes fluctuates when interest rates change.
−Removed: Since these notes bear interest at fixed rates, financial statement risk associated with changes in interest rates is limited to future refinancing of current debt obligations.
+Added: Since these notes bear interest at fixed rates, the financial statement risk associated with changes in interest rates is limited to future refinancing of current debt obligations.
If these notes were refinanced at higher interest rates prior to maturity, our total interest payments could increase by a material amount;
however, this risk is mitigated by our strong cash position and expected future cash generated from operations, which will be sufficient to satisfy this increase in obligation.
−Removed: As of December 30, 2022, we also had $7,600 million outstanding debt with variable interest rates based on the Secured Overnight Financing Rate (SOFR).
−Removed: A hypothetical 1% change in SOFR would have resulted in a $76 million increase in interest expense on an annualized basis.
+Added: As of June 30, 2023, we also had $7,084 million outstanding debt with variable interest rates based on the Secured Overnight Financing Rate (SOFR).
+Added: A hypothetical 100 basis point change in SOFR would have resulted in a $71 million increase in interest expense on an annualized basis.
+Added: In March 2023, we entered into interest rate swap agreements to mitigate risks associated with the variable interest rate of our Term A Facility.
+Added: These pay-fixed, receive-floating rate interest rate swaps have the economic effect of hedging the variability of forecasted interest payments until their maturity on March 31, 2026.
+Added: Pursuant to the agreements, we have effectively converted $1 billion of our variable rate borrowings under Term A Facility to fixed rates, with $500 million at a fixed rate of 3.762% and $500 million at a fixed rate of 3.55%.
+Added: A hypothetical 100 basis point increase or decrease in interest rates would have resulted in a $23 million increase or $24 million decrease in the fair values of our floating to fixed rate interest swaps on June 30, 2023.
+Added: The objective of our interest rate swaps, all of which are designated as cash flow hedges, is to manage the variability of future interest expense.
In addition, we have a $1,500 million revolving credit facility that if drawn bears interest at a variable rate based on SOFR and would be subject to the same risks associated with adverse changes in SOFR.
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Growth in our international operations will incrementally increase our exposure to foreign currency fluctuations as well as volatile market conditions, including the weakening of foreign currencies relative to USD, which has and may in the future negatively affect our revenue expressed in USD.
−Removed: We manage these exposures and reduce the potential effects of currency fluctuations on our results of operations through monthly foreign exchange forward contracts on our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries.
−Removed: The gains and losses on these foreign exchange contracts are recorded in Other income (expense), net in the Consolidated Statements of Operations.
+Added: We manage these exposures and reduce the potential effects of currency fluctuations by executing monthly foreign exchange forward contracts to hedge foreign currency balance sheet exposures.
+Added: The gains and losses on these foreign exchange contracts are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations.
We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of the changes in foreign exchange rates.
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.