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The following disclosures about market risk provide an update to, and should be read in conjunction with, “Item 7A.
−Removed: Quantitative and Qualitative Disclosures about Market Risk” set forth in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023.
+Added: Quantitative and Qualitative Disclosures about Market Risk” set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024.
Commodity Risk.
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In addition, we focus on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction.
−Removed: Our hedging strategy is designed to protect us from excessive pricing volatility.
−Removed: However, since we do not typically hedge 100% of our exposure, abnormal price volatility in any of these commodity markets could influence operating income.
−Removed: We had no outstanding hedging positions as of September 30, 2023.
−Removed: For derivatives designated in cash flow hedging relationships, we record the gains and losses from the use of these instruments in accumulated other comprehensive income (loss) on the consolidated balance sheets and subsequently recognize the accumulated gains and losses into cost of products sold in the same period when the associated underlying transactions occur.
−Removed: At September 30, 2023, there were no unrealized gains or losses to report in accumulated other comprehensive income (loss).
−Removed: All other commodity derivatives are marked-to-market and recognized into cost of products sold with the offset recognized as an asset or accrued liability.
−Removed: See Note 9, Derivative Instruments and Hedging Activities, to the consolidated and condensed financial statements for further information on our outstanding derivatives.
+Added: We had no outstanding hedging positions as of March 31, 2024.
Interest Rate Risk.
−Removed: We are exposed to changes in interest rates as a result of our credit facility, which had a weighted-average interest rate of 8.93% as of September 30, 2023.
−Removed: Based on the amount of unhedged floating rate debt owed by us on September 30, 2023, the impact of a 100 basis point increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $0.6 million annually.
+Added: We are exposed to changes in interest rates as a result of our credit facility, which had a weighted-average interest rate of 8.68% as of March 31, 2024.
+Added: Based on the amount of unhedged floating rate debt owed by us on March 31, 2024, the impact of a 100 basis point increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $0.5 million annually.
We are not exposed to changes in interest rates with respect to our 2028 Notes as these obligations are at a fixed rate.
−Removed: Based on the quoted prices for identical liabilities in markets that are not active at September 30, 2023, the estimated fair value of the 2028 Note s was $406.1 million.
+Added: Based on the quoted prices for identical liabilities in markets that are not active at March 31, 2024, the estimated fair value of the 2028 Note s was $424.9 million.
Market risk is estimated as the potential decrease in fair value of our long-term debt resulting from a hypothetical increase of a 100 basis point increase in interest rates .
−Removed: Such an increase in interest rates at September 30, 2023, would result in a $12.5 million decrease in the fair value of our 2028 Notes.
+Added: Such an increase in interest rates at March 31, 2024, would result in a $11.5 million decrease in the fair value of our 2028 Notes.
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.