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At inception, we designated the interest rate swap as a cash flow hedge and the fair value of the interest rate swap was zero.
−Removed: As of March 29, 2021, the fair value of the interest rate swap was recorded as a liability and as a component of other long-term liabilities in the amount of $12.6 million.
−Removed: No ineffectiveness was recognized for the quarter ended March 29, 2021.
−Removed: During the quarter ended March 29, 2021, the interest rate swap increased interest expense by $2.7 million.
+Added: As of June 28, 2021, the fair value of the interest rate swap was recorded as a liability and as a component of other current liabilities in the amount of $10.0 million.
+Added: No ineffectiveness was recognized for the quarter and two quarters ended June 28, 2021.
+Added: During the quarter and two quarters ended June 28, 2021, the interest rate swap increased interest expense by $2.8 million and $5.5 million, respectively.
See Liquidity and Capital Resources and Long-term Debt and Letters of Credit appearing in Part I, Item 2 of this Quarterly Report on Form 10-Q for further discussion of our financing facilities and capital structure.
−Removed: As of March 29, 2021, approximately 96.2% of our total debt was based on fixed rates.
−Removed: Based on our borrowings as of March 29, 2021, an assumed 100 basis point increase in variable rates would cause our annual interest cost to increase by $0.4 million and an assumed 100 basis point decrease in variable rates would cause our annual interest cost to decrease by $0.1 million.
+Added: As of June 28, 2021, approximately 96.2% of our total debt was based on fixed rates.
+Added: Based on our borrowings as of June 28, 2021, an assumed 100 basis point increase in variable rates would cause our annual interest cost to increase by $0.4 million and an assumed 100 basis point decrease in variable rates would cause our annual interest cost to decrease by $0.1 million.
On July 27, 2017, the Financial Conduct Authority (FCA) announced the desire to phase out the use of LIBOR by the end of 2021.
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banking regulators have made clear that U.S.-dollar LIBOR originations should end by no later than December 31, 2021, and that new LIBOR originations prior to that date must provide for an alternative reference rate or a hardwired fallback.
−Removed: In accordance with recommendations from the Alternative Reference Rates Committee (ARRC), U.S.-dollar LIBOR is expected to be replaced with the Secured Overnight Financing Rate (SOFR), a new index calculated by reference to short-term repurchase agreements for U.S.
+Added: On July 29, 2021, the Alternative Reference Rates Committee (ARRC) announced that it is now formally recommending CME Group’s forward-looking Secured Overnight Financing Rate term rates (SOFR Term Rates).
+Added: In accordance with recommendations from ARRC, U.S.-dollar LIBOR is expected to be replaced with the Secured Overnight Financing Rate (SOFR) and SOFR Term Rates, a new index calculated by reference to short-term repurchase agreements for U.S.
Treasury securities.
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Due to these uncertainties, we are unable to predict at this time the impact the transition from LIBOR to an alternative reference rate (or rates) could have on our business, risk management practices (including, but not limited to, our hedging activities), financial condition and results of operations.
−Removed: Foreign Currency Risks
+Added: Foreign Currency Exchange Rate Risks
In the normal course of business, we are exposed to risks associated with fluctuations in foreign currency exchange rates related to transactions that are denominated in currencies other than our functional currencies, as well as the effects of translating amounts denominated in a foreign currency to the U.S.
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Our foreign subsidiaries may at times enter into forward exchange contracts to manage foreign currency risks in relation to certain purchases of machinery denominated in foreign currencies other than our functional currencies.
−Removed: The notional amount of the foreign exchange contracts as of March 29, 2021 and December 28, 2020 was approximately $1.9 million (JPY 196.3 million) and $1.2 million (JPY 125.0 million), respectively.
+Added: The notional amount of the foreign exchange contracts as of June 28, 2021 and December 28, 2020 was approximately $1.2 million (JPY 132.3 million) and $1.2 million (JPY 125.0 million), respectively.
We designated certain of these foreign exchange contracts as cash flow hedges.
+Added: Commodity Price Risks
+Added: We are exposed to certain commodity risks associated with prices for various raw materials.
+Added: In particular, we have been experiencing increasing prices and lead times of copper clad laminates (CCLs), a key raw material for the manufacture of PCBs.
+Added: This may negatively affect our profitability.
+Added: CCLs are made from epoxy resin, glass cloth and copper foil, all of which are seeing limited supply and resulting in increased prices.
+Added: We only buy a small amount of copper directly.
+Added: However, copper is a major driver of laminate cost.
+Added: We are hedging copper as a proxy for hedging laminate.
+Added: As of June 28, 2021, we had commodity contracts with a notional quantity of 500 metric tonnes each for the periods (i) beginning June 29, 2021 and ending on September 23, 2021, (ii) beginning September 28, 2021 and ending on December 30, 2021, (iii) beginning January 4, 2022 and ending on March 31, 2022, and (iv) beginning April 5, 2022 and ending on June 29, 2022.
+Added: As of June 28, 2021, the fair value of the commodity contracts was recorded as an asset in the amount of $99 and included as a component of prepaid expenses and other current assets.
+Added: We will continue to evaluate our commodity risks and may utilize commodity forward purchase contracts more frequently in the future.
Debt Instruments
−Removed: The table below presents the fiscal calendar maturities of long-term debt through 2025 and thereafter of our debt instruments as of March 29, 2021:
−Removed: As of March 29, 2021
+Added: The table below presents the fiscal calendar maturities of long-term debt through 2025 and thereafter of our debt instruments as of June 28, 2021:
+Added: As of June 28, 2021
Remaining 2021
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Interest Rate Swap Contracts
−Removed: As of March 29, 2021, the fair value of the interest rate swap was recorded as a liability in the amount of $12.6 million.
−Removed: The table below presents information regarding our interest rate swap during the quarter ended March 29, 2021:
−Removed: Quarter Ended
−Removed: March 29, 2021
+Added: As of June 28, 2021, the fair value of the interest rate swap was recorded as a liability and as a component of other current liabilities in the amount of $10.0 million.
+Added: The table below presents information regarding our interest rate swap during the two quarters ended June 28, 2021:
+Added: Two Quarters Ended
+Added: June 28, 2021
(In thousands, except interest rates)
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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.