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Ou r debt bears interest at variable rates and accordingly is sensitive to changes in interest rates.
+Added: Based upon the balances of the variable rate debt at January 31, 2025 , a hypothetical 1.0% increase or decrease in interest rates could result in approximately $7.1 million of additional pretax charges or credit to our net income per year.
This sensitivity is impacted by the amount of borrowin gs under our credit facilities, and amounts outstanding under finance leases.
Foreign Currency Rate Risk
−Removed: Our international operations have exposure to foreign currency rate risks, primarily due to fluctuations in the Euro, the British Pound Sterling and the Canadian Dollar.
+Added: Our int ernational operations have exposure to foreign currency rate risks, primarily due to fluctuations in the Euro, the British Pound Sterling, and the Mexican Peso.
From time to time, we enter into foreign exchange contracts associated with our operations to manage a portion of the foreign currency rate risk.
−Removed: There were no corresponding foreign currency derivatives as of July 31, 2024 or October 31, 2023.
−Removed: On May 2, 2024, we entered into a deal contingent foreign exchange forward currency contract to manage our exposure to foreign currency exchange rate fluctuations against the USD and GBP for approximately $605 million of the $1.1 billion purchase consideration for the Tyman Acquisition.
−Removed: During the three months ended July 31, 2024, we recognized a gain of $9.2 million related to this foreign exchange forward currency contract and the contract was concluded in August 2024 as a result of the completion of the Tyman Acquisition.
+Added: As of January 31, 2025, we have outstanding forward foreign exchange contracts to hedge our foreign currency exposures against the USD to GBP, with a notional principal amount of $8.3 million, and foreign currency exposures against the MXN to USD, with a notional principal amount of $18.0 million.
+Added: Hedge accounting is not applied to our foreign exchange contracts.
+Added: During the three months ended January 31, 2025 and 2024, we recognized a net gain of $0.1 million and zero, respectively, related to our forward foreign exchange contracts.
+Added: The value of our forward foreign exchange contracts fluctuates based on exchange rate fluctuations against the USD to GBP, and the MXN to USD.
Commodity Price Risk
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As such, our long-term exposure to increases in oil-based raw material prices is significantly reduced under this program.
−Removed: Similarly, NA Cabinet Components includes a price index provision in the majority of its customer arrangements to insulate against significant fluctuations in the price for various hardwood products used as the primary raw material for kitchen and bathroom cabinet doors.
+Added: Similarly, we include a price index provision to insulate against significant fluctuations in the price for various hardwood products used as the primary raw material for kitchen and bathroom cabinet doors.
Like our vinyl extrusion business, we are exposed to short-term volatility in wood prices due to a lag in the timing of price updates which generally could extend for up to three months.
+Added: In the Tyman business, contractual price adjustment mechanisms in place for key commodities including stainless steel and zinc for many large customers in the U.S.
+Added: For those customers not covered by these contractual mechanisms, we have successfully implemented surcharges and general price increases to share the impact of price changes with our customers.
+Added: Like our other commodities, there is exposure to short-term volatility due to a lag in the timing of implementing price increases.
We have begun implementing additional programs for other raw materials to facilitate more accurate pricing and reduce our exposure to changing material costs when necessary;
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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.