Quantitative and Qualitative Disclosure about Market Risk
+Added: The company is exposed to certain market risks that exist as part of its ongoing business operations, including fluctuations in changes in interest rates, foreign currency exchange rates and price volatility for certain commodities.
+Added: The company does not hold or issue derivative financial instruments for trading or speculative purposes.
Interest Rate Risk
The company is exposed to market risk related to changes in interest rates.
−Removed: The following table summarizes the maturity of the company's debt obligations, and considers the company’s entering into an amended and restated five-year, $3.5 billion multi-currency senior secured credit agreement described below:
+Added: The following table summarizes the maturity of the company's debt obligations:
Variable Rate Debt
+Added: 2021 $ 22,944
2025 and thereafter 1,649,266
−Removed: On July 28, 2016, the company entered into an amended and restated five-year $ 2.5 billion multi-currency senior secured revolving credit agreement (the "Credit Facility").
−Removed: On December 18, 2018, the company entered into an amendment to the Credit Facility, increasing the revolving commitments under the Credit Facility by $ 500.0 million to a total of $ 3.0 billion .
−Removed: Subsequent to the end of fiscal year December 28, 2019 , the company entered into an amended and restated credit agreement.
−Removed: See Note 14 to the consolidated Financial Statements for further information on the Amended Facility.
−Removed: As of December 28, 2019 , the company had $ 1.9 billion of borrowings outstanding under the Credit Facility, including $ 1.8 billion of borrowings in U.S.
−Removed: Dollars and $ 47.9 million of borrowings denominated in Euros.
−Removed: The company also has $ 13.3 million in outstanding letters of credit as of December 28, 2019 , which reduces the borrowing availability under the Credit Facility.
−Removed: Remaining borrowing availability under the Credit Facility was $ 1.1 billion at December 28, 2019 .
−Removed: At December 28, 2019 , borrowings under the Credit Facility accrued interest at a rate of 1.625 % above LIBOR per annum or 0.625 % above the highest of the prime rate, the federal funds rate plus 0.50 % and one month LIBOR plus 1.00 % .
−Removed: The average interest rate per annum on the debt under the Credit Facility was equal to 3.37 % at the end of the period.
−Removed: The interest rates on borrowings under the Credit Facility may be adjusted quarterly based on the company’s Funded Debt Less Unrestricted Cash to Pro Forma EBITDA (the "Leverage Ratio") on a rolling four-quarter basis.
−Removed: Additionally, a commitment fee based upon the Leverage Ratio is charged on the unused portion of the commitments under the Credit Facility.
−Removed: This variable commitment fee was equal to 0.25 % per annum as of December 28, 2019 .
−Removed: In addition, the company has other international credit facilities to fund working capital needs outside the United States and the United Kingdom.
−Removed: At December 28, 2019 , these foreign credit facilities amounted to $ 3.6 million in U.S.
−Removed: Dollars with a weighted average per annum interest rate of approximately 5.18 % .
−Removed: The company uses floating-to-fixed interest rate swap agreements to hedge variable interest rate risk associated with the Credit Facility.
−Removed: At December 28, 2019 , the company had outstanding floating-to-fixed interest rate swaps totaling $51.0 million notional amount carrying an average interest rate of 1.27% maturing in less than 12 months and $ 897.0 million of notional amount carrying an average interest rate of 2.27 % that mature in more than 12 months but less than 72 months.
−Removed: The Amended Facility matures on January 31, 2025, and accordingly has been classified as a long-term liability on the consolidated balance sheet.
−Removed: The terms of the Amended Facility limit the ability of the company and its subsidiaries to, with certain exceptions:
−Removed: incur indebtedness;
−Removed: engage in certain mergers, consolidations, acquisitions and dispositions;
−Removed: make restricted payments;
−Removed: enter into certain transactions with affiliates;
−Removed: and requires, among other things, the company to satisfy certain financial covenants:
−Removed: (i) a minimum Interest Coverage Ratio (as defined in the Amended Facility) of 3.00 to 1.00 and (ii) a maximum Leverage Ratio of Funded Debt less Unrestricted Cash to Pro Forma EBITDA (each as defined in the Amended Facility) of 4.00 to 1.00 , which may be adjusted to 4.50 to 1.00 for a four consecutive fiscal quarter period in connection with certain qualified acquisitions, subject to the terms and conditions contained in the Amended Facility.
−Removed: The Amended Facility is secured by substantially all of the assets of Middleby Marshall, the company and the company's domestic subsidiaries and is unconditionally guaranteed by, subject to certain exceptions, the company and certain of the company's direct and indirect material foreign and domestic subsidiaries.
−Removed: The Amended Facility contains certain customary events of default, including, but not limited to, the failure to make required payments;
−Removed: bankruptcy and other insolvency events;
−Removed: the failure to perform certain covenants;
−Removed: the material breach of a representation or warranty;
−Removed: non-payment of certain other indebtedness;
−Removed: the entry of undischarged judgments against the company or any subsidiary for the payment of material uninsured amounts;
−Removed: the invalidity of the company guarantee or any subsidiary guaranty;
−Removed: and a change of control of the company.
−Removed: At December 28, 2019 , the company was in compliance with all covenants pursuant to its borrowing agreements.
−Removed: Financing Derivative Instruments
+Added: The company is exposed to interest rate risk on its floating-rate debt.
The company has entered into interest rate swaps to fix the interest rate applicable to certain of its variable-rate debt.
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The company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income.
−Removed: As of December 28, 2019 , the fair value of these instruments was a liability of $ 23.3 million .
−Removed: The change in fair value of these swap agreements in fiscal 2019 was a loss of $ 24.1 million , net of taxes.
+Added: As of January 2, 2021, the fair value of these instruments was a liability of $51.1 million.
+Added: The change in fair value of these swap agreements in the first twelve months of 2020 was a loss of $20.7 million, net of taxes.
The potential net loss on fair value for such instruments from a hypothetical 10% adverse change in quoted interest rates would not have a material impact on the company's financial position, results of operations and cash flows.
+Added: In August 2020, the company issued $747.5 million aggregate principal amount of Convertible Notes in a private offering pursuant to the Indenture.
+Added: The company does not have economic interest rate exposure as the Convertible Notes have a fixed annual rate of 1.00%.
+Added: The fair value of the Convertible Notes is subject to interest rate risk, market risk and other factors due to its conversion feature.
+Added: The fair value of the Convertible Notes is also affected by the price and volatility of the company’s common stock and will generally increase or decrease as the market price of our common stock changes.
+Added: The interest and market value changes affect the fair value of the Convertible Notes but do not impact the company’s financial position, cash flows or results of operations due to the fixed nature of the debt obligation.
+Added: Additionally, the company carries the Convertible Notes at face value, less any unamortized discount on the balance sheet and presents the fair value for disclosure purposes only.
Foreign Exchange Derivative Financial Instruments
4 unchanged sentences
The potential loss on fair value for such instruments from a hypothetical 10% adverse change in quoted foreign exchange rates would not have a material impact on the company's financial position, results of operations and cash flows.
−Removed: The company accounts for its derivative financial instruments in accordance with ASC 815, Derivatives and Hedging .
−Removed: In accordance with ASC 815, these instruments are recognized on the balance sheet as either an asset or a liability measured at fair value.
+Added: Derivative financial instruments are recognized on the balance sheet as either an asset or a liability measured at fair value.
Changes in the market value and the related foreign exchange gains and losses are recorded in the statement of earnings.
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.