QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: We use various financial instruments, particularly interest rate caps and interest rate swaps, to manage and reduce the interest rate risk related to our debt.
+Added: We use various financial instruments, particularly interest rate caps, to manage and reduce the interest rate risk related to our debt.
Foreign currency forwards, spots, and swaps are also used to manage and reduce the foreign currency exchange rate risk associated with our foreign currency denominated receivables and payables, forecasted royalties, forecasted earnings, cash flows of foreign subsidiaries, and other transactions.
3 unchanged sentences
Our principal market exposures are interest rate and foreign currency rate risks.
−Removed: • Our primary interest rate exposures as of December 31, 2023, are to interest rate fluctuations in asset-backed commercial paper interest rates and SOFR interest rates due to their impact on variable rate borrowings and other interest rate sensitive liabilities.
−Removed: In the first quarter of 2023, we amended the credit agreement governing our revolving credit facility and term loan B facilities to replace LIBOR with Term SOFR as the benchmark rate.
−Removed: This change became effective on March 31, 2023, for both new borrowings and rollovers of then existing USD LIBOR based borrowings (except Base Rate borrowings) and eliminated our exposure to LIBOR.
+Added: • Our primary interest rate exposures as of December 31, 2024, are to interest rate fluctuations in asset-backed commercial paper interest rates and Simple Secured Overnight Financing (“SOFR”) interest rates due to their impact on variable rate borrowings and other interest rate sensitive liabilities.
In addition, interest rate movements in one country, as well as relative interest rate movements between countries, can impact us.
3 unchanged sentences
We assess our market risks based on changes in interest and foreign currency exchange rates utilizing a sensitivity analysis that measures the potential impact in earnings, fair values, and cash flows based on a hypothetical 10% change (increase and decrease) in interest and foreign currency exchange rates.
−Removed: We used December 31, 2023 market rates to perform a sensitivity analysis separately for each of our market risk exposures.
+Added: We used December 31, 2024 and 2023 market rates to perform sensitivity analyses separately for each of our market risk exposures.
The estimates assume instantaneous, parallel shifts in interest rate yield curves and exchange rates.
−Removed: We have determined, through such analyses, that a hypothetical 10% change in the interest rates would have resulted in a $2 million increase or decrease in annual consumer financing interest expense and $5 million increase or decrease in annual debt interest expense.
+Added: We have determined, through such analyses, that a hypothetical 10% change in the interest rates would have resulted in a $2 million increase or decrease in annual consumer financing interest expense and $5 million increase or decrease in annual debt interest expense for both the years ended December 31, 2024 and 2023.
We use a current market pricing model to assess the changes in the value of our foreign currency derivatives used to hedge underlying exposure that primarily consist of our non-functional current assets and liabilities and those of our subsidiaries.
The primary assumption used in these models is a hypothetical 10% weakening or strengthening of the U.S.
−Removed: dollar against all our currency exposures as of December 31, 2023.
−Removed: As of December 31, 2023, the absolute notional amount of our outstanding foreign exchange hedging instruments was $61 million.
−Removed: We have determined that a hypothetical 10% change in the foreign currency exchange rates would have resulted in an approximate increase or decrease to the fair value of our outstanding forward foreign currency exchange contracts of $5 million, which would generally be offset by an opposite effect on the underlying exposure being economically hedged.
+Added: dollar against all our currency exposures as of December 31, 2024 and 2023.
+Added: As of December 31, 2024 and 2023, the absolute notional amount of our outstanding foreign exchange hedging instruments was $72 million and $61 million.
+Added: We have determined that a hypothetical
+Added: 10% change in the foreign currency exchange rates would have resulted in an approximate increase or decrease to the fair value of our outstanding forward foreign currency exchange contracts of approximately $6 million during 2024 and $5 million during 2023, which would generally be offset by an opposite effect on the underlying exposure being economically hedged.
As such, we believe that a 10% change in interest rates or foreign currency exchange rates would not have a material effect on our prices, earnings, fair values, or cash flows.
Our variable rate borrowings, which include our term loan B facilities, non-recourse conduit facilities, and revolving credit facility, expose us to risks caused by fluctuations in the applicable interest rates.
−Removed: The total outstanding balance of such variable rate borrowings at December 31, 2023 was $364 million in non-recourse debt and $867 million in corporate debt.
+Added: The total outstanding balance of such variable rate borrowings at December 31, 2024 was $377 million in non-recourse debt and $1.06 billion in corporate debt.
A 100-basis point change in the underlying interest rates would result in a $4 million increase or decrease in annual consumer financing interest expense and a $11 million increase or decrease in our annual debt interest expense.
+Added: The total outstanding balance of such variable rate borrowings at December 31, 2023 was $364 million in non-recourse debt and $867 million in corporate debt.
+Added: A 100-basis point change in the underlying interest rates would have resulted in a $4 million increase or decrease in annual consumer financing interest expense and a $9 million increase or decrease in our annual debt interest expense.
The fair values of cash and cash equivalents, trade receivables, accounts payable, and accrued expenses and other current liabilities approximate carrying values due to the short-term nature of these assets and liabilities.
6 unchanged sentences
While probably the most meaningful analysis, these “shock tests” are constrained by several factors, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.
−Removed: We used December 31, 2023 market rates on outstanding financial instruments to perform the sensitivity analysis separately for each of our market risk exposures:
+Added: We used December 31, 2024 and December 31, 2023 market rates on outstanding financial instruments to perform the sensitivity analyses separately for each of our market risk exposures:
interest and foreign currency rate instruments.
2 unchanged sentences
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.