5 unchanged sentences
We are exposed to interest rate risk relating to our investment portfolio and from interest-rate sensitive assets underlying the customer balances we hold on our condensed consolidated balance sheets as customer accounts.
−Removed: As of March 31, 2022 and December 31, 2021, approximately 41% and 40%, respectively, of our total cash, cash equivalents, and investment portfolio (excluding restricted cash and strategic investments) was held in cash and cash equivalents.
+Added: As of June 30, 2022 and December 31, 2021, approximately 35% and 40%, respectively, of our total cash, cash equivalents, and investment portfolio (excluding restricted cash and strategic investments) was held in cash and cash equivalents.
The assets underlying the customer balances that we hold on our condensed consolidated balance sheets as customer accounts are maintained in interest and non-interest bearing bank deposits, time deposits, and available-for-sale debt securities.
1 unchanged sentence
We do not pay interest on amounts due to customers.
−Removed: If interest rates increased by 100 basis points, the fair value of our available-for-sale debt securities investment portfolio would have decreased by approximately $284 million and $272 million at March 31, 2022 and December 31, 2021, respectively.
−Removed: Changes in the fair value of our available-for-sale debt securities resulting from such interest rate changes are reported as a component of accumulated other comprehensive income (“AOCI”) and are realized only if we sell the securities prior to their scheduled maturities or the declines in fair values are due to expected credit loss.
−Removed: As of March 31, 2022 and December 31, 2021, we had $9.0 billion in fixed rate debt with varying maturity dates.
+Added: If interest rates increased by 100 basis points, the fair value of our available-for-sale debt securities investment portfolio would have decreased by approximately $250 million and $272 million at June 30, 2022 and December 31, 2021, respectively.
+Added: Changes in the fair value of our available-for-sale debt securities resulting from such interest rate changes are reported as a component of accumulated other comprehensive income (“AOCI”) and are realized only if we sell the securities prior to their scheduled maturities or the declines in fair values are due to expected credit losses.
+Added: As of June 30, 2022 and December 31, 2021, we had $10.4 billion and $9.0 billion, respectively, in fixed rate debt with varying maturity dates.
Since these notes bear interest at fixed rates, they do not result in any financial statement risk associated with changes in interest rates.
However, the fair value of these notes fluctuates when interest rates change, increasing in periods of declining interest rates and declining in periods of increasing interest rates.
−Removed: As of March 31, 2022 and December 31, 2021, we also had revolving credit facilities of approximately $5.5 billion and $5.2 billion, respectively, available to us.
+Added: As of June 30, 2022 and December 31, 2021, we also had revolving credit facilities of approximately $5.4 billion and $5.2 billion, respectively, available to us.
We are obligated to pay interest on borrowings under these facilities as well as other customary fees, including an upfront fee and an unused commitment fee based on our debt rating.
Borrowings under these facilities, if any, bear interest at floating rates.
−Removed: As a result, we are exposed to the risk related to fluctuations in interest rate to the extent of our borrowings.
−Removed: As of March 31, 2022 and December 31, 2021, we had ¥32.8 billion (approximately $269 million) and ¥11.3 billion (approximately $98 million), respectively, outstanding under these credit facilities.
+Added: As a result, we are exposed to the risk related to fluctuations in interest rates to the extent of our borrowings.
+Added: As of June 30, 2022 and December 31, 2021, we had ¥37.8 billion (approximately $277 million) and ¥11.3 billion (approximately $98 million), respectively, outstanding under these credit facilities.
A 100 basis points hypothetical adverse change in applicable market interest rates would not have resulted in a material impact to interest expense recorded in the period.
1 unchanged sentence
Interest rates may also adversely impact our customers’ spending levels and ability and willingness to pay outstanding amounts owed to us.
−Removed: Higher interest rates often lead to larger payment obligations by customers of our credit products to us, or to lenders under mortgage, credit card, and other consumer and merchant loans, which may reduce our customers’ ability to remain current on their obligations to us and therefore lead to increased delinquencies, charge-offs, and allowances for loans and interest receivable, which could have an adverse effect on our net income.
+Added: Higher interest rates often lead to larger payment obligations by customers of our credit products to us, or to lenders under mortgage, credit card, and other consumer and merchant loans, which may reduce our customers’ ability to remain current on their obligations to us and therefore lead to increased delinquencies, charge-offs, and allowances for loans and interest receivable, which could have an adverse effect on our net income (loss).
FOREIGN CURRENCY EXCHANGE RATE RISK
−Removed: We have significant operations internationally that are denominated in foreign currencies, primarily the British pound, Euro, Australian dollar, and Canadian dollar, subjecting us to foreign currency exchange rate risk, which may adversely impact our financial results.
+Added: We have significant operations internationally that are denominated in foreign currencies, primarily the British pound, Euro, Australian dollar, and Canadian dollar, which subject us to foreign currency exchange rate risk and may adversely impact our financial results.
We transact business in various foreign currencies and have significant international revenues and costs.
1 unchanged sentence
Our cash flows, results of operations, and certain of our intercompany balances that are exposed to foreign currency exchange rate fluctuations may differ materially from expectations, and we may record significant gains or losses due to foreign currency fluctuations and related hedging activities.
−Removed: We are generally a net receiver of foreign currencies and therefore benefit from a weakening of the United States (“U.S.”) dollar, and are adversely affected by a strengthening of the U.S.
+Added: We are generally a net receiver of foreign currencies and therefore benefit from a weakening of the U.S.
+Added: dollar, and are adversely affected by a strengthening of the U.S.
dollar, relative to foreign currencies.
10 unchanged sentences
The accumulated gains and losses associated with net investment hedges will remain in AOCI until the foreign subsidiaries are sold or substantially liquidated, at which point they will be reclassified into earnings.
−Removed: dollar weakened by 10% at March 31, 2022 and December 31, 2021, the amount recorded in AOCI related to our foreign currency exchange forward contracts, before taxes, would have been approximately $696 million and $512 million lower, respectively, before considering the offsetting impact of the underlying hedged item.
+Added: dollar weakened by 10% at June 30, 2022 and December 31, 2021, the amount recorded in AOCI related to our foreign currency exchange forward contracts, before taxes, would have been approximately $785 million and $512 million lower, respectively, before considering the offsetting impact of the underlying hedged item.
We have an additional foreign currency exchange management program in which we use foreign currency exchange contracts to offset the foreign currency exchange risk on our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries.
1 unchanged sentence
The foreign currency exchange gains and losses on our assets and liabilities are recorded in other income (expense), net, and are offset by the gains and losses on the foreign currency exchange contracts.
−Removed: Adverse changes in exchange rates of 10% for all currencies would have resulted in an adverse impact on income before income taxes of approximately $184 million and $196 million at March 31, 2022 and December 31, 2021, respectively, without considering the offsetting effect of foreign currency exchange contracts.
−Removed: Foreign currency exchange contracts in place as of March 31, 2022 would have positively impacted income before income taxes by approximately $191 million, resulting in a net positive impact of approximately $7 million.
+Added: Adverse changes in exchange rates of 10% for all currencies would have resulted in an adverse impact on income before income taxes of approximately $30 million and $196 million at June 30, 2022 and December 31, 2021, respectively, without considering the offsetting effect of foreign currency exchange contracts.
+Added: Foreign currency exchange contracts in place as of June 30, 2022 would have positively impacted income before income taxes by approximately $37 million, resulting in a net positive impact of approximately $7 million.
Foreign currency exchange contracts in place as of December 31, 2021 would have positively impacted income before income taxes by approximately $203 million, resulting in a net positive impact of approximately $7 million.
2 unchanged sentences
Our strategic investments are subject to a variety of market-related risks that could substantially reduce or increase the carrying value of the portfolio.
−Removed: As of both March 31, 2022 and December 31, 2021, our strategic investments totaled $3.2 billion, which represented approximately 21% and 20% of our total cash, cash equivalents, and short-term and long-term investment portfolio at each of those respective dates.
+Added: As of June 30, 2022 and December 31, 2021, our strategic investments totaled $2.6 billion and $3.2 billion, which represented approximately 17% and 20% of our total cash, cash equivalents, and short-term and long-term investment portfolio at each of those respective dates.
Our strategic investments include marketable equity securities, which are publicly traded, and non-marketable equity securities, which are primarily investments in privately held companies.
−Removed: We are required to record all adjustments to the value of these strategic investments through our condensed consolidated statements of income.
−Removed: As such, we anticipate volatility to our net income in future periods due to changes in fair value related to our investments in marketable equity securities and changes in observable prices related to our non-marketable equity securities accounted for under the Measurement Alternative.
+Added: We are required to record all adjustments to the value of these strategic investments through our condensed consolidated statements of income (loss).
+Added: As such, we anticipate volatility to our net income (loss) in future periods due to changes in fair value related to our investments in marketable equity securities and changes in observable prices related to our non-marketable equity securities accounted for under the Measurement Alternative.
These changes could be material based on market conditions.
Additionally, the financial success of our investments in privately held companies is typically dependent on a liquidity event, such as a public offering, acquisition, private sale, or other favorable market event providing the ability to realize appreciation in the value of the investment.
−Removed: A hypothetical adverse change of 10% in the carrying value of our strategic investments as of March 31, 2022, which could be experienced in the near term, would have resulted in a decrease of approximately $319 million to the carrying value of the portfolio.
+Added: A hypothetical adverse change of 10% in the carrying value of our strategic investments as of June 30, 2022, which could be experienced in the near term, would have resulted in an incremental decrease of approximately $260 million to the carrying value of the portfolio.
We review our non-marketable equity investments accounted for under the Measurement Alternative for impairment when events and circumstances indicate a decline in fair value of such assets below carrying value.
1 unchanged sentence
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.