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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-06-09 compared with 2021-06-08 · 46 added, 42 removed, 1 unchanged (99% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK INTEREST RATES

Our exposure to changes in interest rates results from our borrowing activities.

In the event interest rates were to move by 1%, our yearly interest expense would increase or decrease by approximately $0.1 million assuming

our average borrowing levels remained constant on our variable rate Revolving Credit Facility.

As of March 27, 2021,

$40.0 million was available under our Revolving Credit Facility, of which

$8.9 million was outstanding and included in long-term debt on the Consolidated Balance Sheets.

As described above under “Liquidity

and Capital Resources,” we also have a $15.0 million (original principal) term loan.

As of March 27, 2021, $10.6 million was outstanding

on the term loan and was included in long-term debt and current portion of long-term debt on the Consolidated Balance Sheets.

loan requires total principal and interest repayments of $0.2 million per month through December 2025.

At our option, we borrow from our Revolving Credit Facility at the variable

one-month LIBOR, subject to the 1% floor or at a fixed rate for a designated period at the LIBOR corresponding to such period, in each

case, plus a margin.

Our interest rate margin is determined on a quarterly basis based upon our calculated leverage ratio.

rate during fiscal year 2021 for our Revolving Credit Facility ranged from 1.4% to 2.7%.

Interest on outstanding borrowings of the 2018

Term Loan accrues at a fixed rate of 4.15% over the term of the loan.

On March 27, 2021, we had no hedging arrangements in place to limit

our exposure to upward movements in interest rates.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to changes in interest rates results from our

borrowing activities.

In the event interest rates were to move by 1%, our yearly interest expense would increase or decrease by approximately

$0.2 million assuming our average borrowing levels remained constant.

As of March 26, 2022, $80.0 million was available under our revolving

credit facility, of which $39.9 million was outstanding and included in long-term debt on the Consolidated Balance Sheets.

above under “Liquidity and Capital Resources,” we also have a $15.0 million (original principal) term loan.

The 2018 Term

Loan is considered a fixed interest rate loan.

As of March 26, 2022, $8.5 million was outstanding on the 2018 Term Loan and was included

in long-term debt and current portion of long-term debt on the Consolidated Balance Sheets.

The 2018 Term Loan requires total (principal

and interest) repayments of $0.2 million per month.

At our option, we borrow from our revolving credit facility

at the variable one-month LIBOR or at a fixed rate for a designated period at the LIBOR (subject to a 1% floor during the first quarter

of fiscal year 2022 and a 0.25% floor for subsequent periods) corresponding to such period, in each case, plus a margin.

rate margin is determined on a quarterly basis based upon our calculated leverage ratio.

Our interest rate during fiscal year 2022 for

our revolving credit facility ranged from 1.0% to 2.2%.

Interest on outstanding borrowings on the 2018 Term Loan accrued at a fixed rate

of 4.15% over the term of the loan during the first quarter of fiscal year 2022 and 3.90% over the term of the loan for subsequent periods.

Our revolving credit facility includes a mechanism for adoption of a different benchmark rate upon the discontinuation of LIBOR.

26, 2022, we had no hedging arrangements in place for our revolving credit facility to limit our exposure to upward movements in interest

FOREIGN CURRENCY

Approximately 93% of our total revenues for fiscal years 2021 and 2020

were denominated in U.S.

dollars, with the remainder denominated in Canadian dollars.

A 10% change in the value of the Canadian dollar

dollar would impact our revenue by less than 1%.

Since the onset of the COVID-19 pandemic in North America, the Canadian dollar

has weakened compared to the U.S.

We monitor the relationship between the U.S.

and Canadian currencies on a monthly basis and

adjust sales prices for products and services sold in Canadian dollars as we believe to be appropriate, including in response to the COVID-19

We continually utilize short-term foreign exchange forward contracts to

reduce the risk that future earnings would be adversely affected by changes in currency exchange rates.

We do not apply hedge accounting

and therefore the net change in the fair value of the contracts, which totaled a net loss of less than $0.1 million in each of fiscal

years 2021 and 2020, was recognized as a component of other expense in the Consolidated Statements of Income.

The change in the fair value

of the contracts is offset by the change in fair value on the underlying receivables denominated in Canadian dollars being hedged.

March 27, 2021, we had a foreign exchange contract, which matured in April 2021, outstanding in the notional amount of $3.9 million.

foreign exchange contract was renewed in April 2021 and continues to be in place.

We do not use hedging arrangements for speculative purposes.

Approximately 90% of our total revenues for each of fiscal

years 2022 and 2021 were denominated in U.S.

dollars, with the remainder denominated in Canadian dollars and Euros.

A 10% change in the

value of the Canadian dollar to the U.S.

dollar and the Euro to the U.S.

dollar would impact our revenue by approximately 1%.

the relationship between the U.S.

and Canadian currencies and the U.S.

and Euro currencies on a monthly basis and adjust sales prices

for products and services sold in Canadian dollars or Euros as we believe to be appropriate.

We continually utilize short-term foreign exchange forward

contracts to reduce the risk that future earnings denominated in Canadian dollars would be adversely affected by changes in currency exchange

We do not apply hedge accounting and therefore the net change in the fair value of the contracts, which totaled a loss of less

than $0.1 million during each of fiscal year 2022 and fiscal year 2021, was recognized as a component of other expense in the Consolidated

Statements of Income.

The change in the fair value of the contracts is offset by the change in fair value on the underlying accounts receivables

denominated in Canadian dollars being hedged.

On March 26, 2022, we had a foreign exchange contract, which matured in April 2022, outstanding

in the notional amount of $3.3 million.

The foreign exchange contract was renewed in April 2022 and continues to be in place.

use hedging arrangements for speculative purposes.

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.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk