QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: Our market risk disclosures involves forward-looking statements.
+Added: Our market risk disclosures involve forward-looking statements.
Actual results could differ materially from those projected in such forward-looking statements.
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We have exposure to changes in interest rates on our debt, as follows:
−Removed: Term Loan Facility .
−Removed: As of December 31, 2019 , we had an aggregate principal amount outstanding of $2,003 million on our Term Loan Facility .
−Removed: The interest rate fluctuates based on the LIBOR or a Base Rate, as defined in the agreement, plus an applicable margin.
−Removed: Assuming an average annual aggregate principal amount outstanding of $2,003 million , a hypothetical 1% increase in the interest rate would have increased our annual interest expense by $20 million .
−Removed: Additionally, we utilize short-term interest rate swaps to mitigate variability in forecasted interest payments on our Term Loan Facility .
+Added: Term Loan Facilities .
+Added: As of December 31, 2020, we had an aggregate principal amount outstanding of $2.0 billion on our Term Loan Facilities.
+Added: The interest rate fluctuates based on LIBOR or a Base Rate, as defined in the agreement, plus an applicable margin.
+Added: Assuming an average annual aggregate principal amount outstanding of $2.0 billion, a hypothetical 1% increase in the interest rate would have increased our annual interest expense by $20 million.
+Added: Additionally, we utilize short-term interest rate swaps to mitigate variability in forecasted interest payments on our Term Loan Facilities.
The interest rate swaps convert floating-rate interest payments into fixed rate interest payments.
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Assuming our $1.1 billion ABL Facility was fully drawn throughout 2020, a hypothetical 1% change in the interest rate would have increased our annual interest expense by $11 million.
−Removed: Asset Financing .
−Removed: As of December 31, 2019 , we had outstanding $11 million aggregate principal amount of asset financing.
−Removed: Most of our Asset Financing arrangements have floating interest rates that subject us to risk resulting from changes in short-term (primarily Euribor) interest rates.
−Removed: Assuming an average annual aggregate principal amount outstanding of $11 million , a hypothetical 1% increase in the interest rate would increase our annual interest expense by less than $1 million .
Fixed Rate Debt.
−Removed: As of December 31, 2019 , we had an aggregate of $3.1 billion of indebtedness (excluding finance leases) that bears interest at fixed rates.
+Added: As of December 31, 2020, we had an aggregate principal amount outstanding of $4.2 billion of indebtedness (excluding finance leases) that bears interest at fixed rates.
A 1% decrease in market interest rates as of December 31, 2020 would increase the fair value of our fixed-rate indebtedness by approximately 3%.
For additional information concerning our debt, see Note 12—Debt to our Consolidated Financial Statements.
+Added: We also have exposure to changes in interest rates as a result of our cash balances, which totaled $2.1 billion as of December 31, 2020 and generally earn interest income that approximates LIBOR.
+Added: Assuming an annual average cash balance as of $2.1 billion, a hypothetical 1% increase in the interest rate would reduce our net interest expense by $21 million.
Foreign Currency Exchange Risk
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Consequently, a depreciation of the EUR or the GBP relative to the USD could have an adverse impact on our financial results.
−Removed: In connection with the issuances of the senior notes due 2023 and the Senior Notes due 2022 , we entered into cross-currency swap agreements to partially manage the related foreign currency exchange risk by effectively converting a portion of the fixed-rate USD -denominated notes, including the interest payments, to fixed-rate, EUR -denominated debt.
+Added: In connection with the issuances of our Senior Notes due 2023 and Senior Notes due 2022, we entered into cross-currency swap agreements to manage our foreign currency exchange risk by effectively converting a portion of the fixed-rate USD-denominated notes, including the interest payments, to fixed-rate, EUR-denominated debt.
The risk management objective is to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign currencies.
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These theoretical calculations assume that an instantaneous, parallel shift in exchange rates occurs, which is not consistent with our actual experience in foreign currency transactions.
−Removed: Fluctuations in exchange rates also affect the volume of
−Removed: sales or the foreign currency sales price as competitors’ services become more or less attractive.
+Added: Fluctuations in exchange rates also affect the volume of sales or the foreign currency sales price as competitors’ services become more or less attractive.
The sensitivity analysis of the impact of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.
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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.