Ribbon Communications Inc. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to a variety of market risks, changes in interest rates affecting the return on our investments and foreign currency fluctuations. To manage the volatility related to the exposure to changes in interest rates, we have entered into a derivative financial instrument. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in interest rates. Our policies and practices are to use derivative financial instruments only to the extent necessary to manage exposures. We do not hold or issue derivative financial instruments for trading or speculative purposes. Amounts reported in accumulated other comprehensive income (loss) related to our derivative are reclassified to interest expense as interest is accrued on our variable-rate debt. Our derivative had a fair value of $25.4 million at December 31, 2022, comprised of $13.2 million included in Other current assets and $12.2 million included in Other assets on our consolidated balance sheet. Based upon projected forward rates, we estimate as of December 31, 2022 that $13.2 million may be reclassified as a decrease to interest expense over the next twelve months. At December 31, 2022, we had outstanding debt totaling $330.4 million . A hypothetical movement of plus or minus 50 basis points in the interest rate of our outstanding debt would have changed our interest expense by approximately $ 2 million for the year ended December 31, 2022. This calculation does not take into account the impact of our interest rate swap. Based on a hypothetical 10% adverse movement in all foreign currency exchange rates, our revenue and net loss for the year ended December 31, 2022 would have been adversely affected by approximately $ 21 million and $ 16 million, respectively, although the actual effects could differ materially from this hypothetical analysis. 56