BROADRIDGE FINANCIAL SOLUTIONS INC

Previous wording

The key performance indicators for the three and nine months ended March 31, 2024, and 2023, are as follows:

Current wording

The key performance indicators for the three months ended September 30, 2024, and 2023, are as follows:

Previous wording

The following discussions of Analysis of Condensed Consolidated Statements of Earnings and Analysis of Reportable Segments refer to the three and nine months ended March 31, 2024 compared to the three and nine months ended March 31, 2023. The Analysis of Condensed Consolidated Statements of Earnings should be read in conjunction with the Analysis of Reportable Segments, which provides a more detailed discussion concerning certain components of the Condensed Consolidated Statements of Earnings.

Current wording

The following discussions of Analysis of Condensed Consolidated Statements of Earnings and Analysis of Reportable Segments refer to the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The Analysis of Condensed Consolidated Statements of Earnings should be read in conjunction with the Analysis of Reportable Segments, which provides a more detailed discussion concerning certain components of the Condensed Consolidated Statements of Earnings.

Previous wording

Generally, mutual fund proxy activity has been subject to a greater level of volatility than the other components of event-driven activity. For the nine months ended March 31, 2024, mutual fund proxy revenues were 86% higher compared to the nine months ended March 31, 2023. During fiscal year 2023, mutual fund proxy revenues were 51% lower than the prior fiscal year. Although it is difficult to forecast the levels of event-driven activity, we expect that the portion of revenues derived from mutual fund proxy activity may continue to experience volatility in the future.

Current wording

Generally, mutual fund proxy activity has been subject to a greater level of volatility than the other components of event-driven activity. For the three months ended September 30, 2024, mutual fund proxy revenues were 16% lower compared to the three months ended September 30, 2023. During fiscal year 2024, mutual fund proxy revenues were 66% higher than the prior fiscal year. Although it is difficult to forecast the levels of event-driven activity, we expect that the portion of revenues derived from mutual fund proxy activity may continue to experience volatility in the future.

Previous wording

The inherent variability of transaction volumes and activity levels can result in some variability of amounts reported as actual achieved Closed sales. Larger Closed sales can take up to 12 to 24 months or longer to convert to revenues, particularly for the services provided by our Global Technology and Operations segment. For the three and nine months ended March 31, 2024 and for the fiscal year ended June 30, 2023, we reported Closed sales net of a 5.0% allowance adjustment. Consequently, our reported Closed sales amounts will not be adjusted for actual revenues achieved because these adjustments are estimated in the period the sale is reported. We assess this allowance amount at the end of each fiscal year to establish the appropriate allowance for the subsequent year using the trailing five years actual data as the starting point, normalized for outlying factors, if any, to enhance the accuracy of the allowance.

Current wording

The inherent variability of transaction volumes and activity levels can result in some variability of amounts reported as actual achieved Closed sales. Larger Closed sales can take up to 12 to 24 months or longer to convert to revenues, particularly for the services provided by our Global Technology and Operations segment. For the three months ended September 30, 2024 and for the fiscal year ended June 30, 2024, we reported Closed sales net of a 5.0% allowance adjustment. Consequently, our reported Closed sales amounts will not be adjusted for actual revenues achieved because these adjustments are estimated in the period the sale is reported. We assess this allowance amount at the end of each fiscal year to establish the appropriate allowance for the subsequent year using the trailing five years actual data as the starting point, normalized for outlying factors, if any, to enhance the accuracy of the allowance.

Previous wording

Closed sales for the three months ended March 31, 2024 were $79.6 million, an increase of $18.0 million, or 29%, compared to $61.6 million for the three months ended March 31, 2023. Closed sales for the three months ended March 31, 2024 and March 31, 2023 are net of an allowance adjustment of $4.2 million and $3.2 million, respectively.

Current wording

Closed sales for the three months ended September 30, 2024 were $57.5 million, an increase of $9.9 million, or 21%, compared to $47.6 million for the three months ended September 30, 2023. Closed sales for the three months ended September 30, 2024 and September 30, 2023 are net of an allowance adjustment of $3.0 million and $2.5 million, respectively.

Previous wording

•Recurring revenues increased $44.2 million, or 4%, to $1,126.2 million. Recurring revenue growth constant currency (Non-GAAP) was 4%, all organic, driven by Net New Business and Internal Growth in GTO and ICS.

Current wording

•Recurring revenues increased $29.1 million, or 3%, to $900.3 million. Recurring revenue growth constant currency (Non-GAAP) was 4%, driven by Net New Business in ICS and Internal Growth in GTO.

Previous wording

Total operating expenses. Operating expenses increased $64.7 million, or 5%, to $1,423.6 million from $1,358.9 million:

Current wording

Total operating expenses. Operating expenses increased $5.8 million, or 0%, to $1,288.4 million from $1,282.6 million:

Previous wording

Interest expense, net. Interest expense, net was $35.3 million, a decrease of $3.2 million, from $38.5 million for the three months ended March 31, 2023. The decrease of $3.2 million was primarily due to a decrease in average borrowings, partially offset by an increase in interest expense from higher borrowing costs.

Current wording

Interest expense, net. Interest expense, net was $32.3 million, a decrease of $1.2 million, from $33.4 million for the three months ended September 30, 2023. The decrease of $1.2 million was primarily due to a decrease in average borrowings.

Previous wording

Other non-operating expenses, net. Other non-operating expenses, net for the three months ended March 31, 2024 was $0.9 million, compared to Other non-operating income of $1.8 million for the three months ended March 31, 2023. The increased expense of $2.7 million was primarily driven by higher net gains on investments associated with our retirement plans and other investments in the prior year period.

Current wording

Other non-operating expenses, net. Other non-operating expenses, net for the three months ended September 30, 2024 was $1.9 million, relatively flat compared to Other non-operating expenses of $2.1 million for the three months ended September 30, 2023.

Previous wording

The decrease in the effective tax rate for the three months ended March 31, 2024 was primarily driven by a higher excess tax benefit related to equity compensation, relative to pre-tax income, as compared to the prior year period.

Current wording

The increase in the effective tax rate for the three months ended September 30, 2024 was primarily driven by a decrease in discrete tax benefits relative to pre-tax income due to a lower excess tax benefit related to equity compensation.

Previous wording

◦Regulatory rose 3% and 3%, respectively. The positive impact of equity position growth of 6% was offset by a delay in proxy communications, which shifted a portion of those communications into the fiscal fourth quarter. Mutual fund/ETF position growth was 2%.

Current wording

◦Regulatory rose 6% and 6%, respectively, which included the impact of equity position growth of 3% and mutual fund/ETF position growth of 6%.

Previous wording

◦Data-driven fund solutions rose 4% and 4%, respectively, driven primarily by growth in our retirement and workplace products.

Current wording

◦Data-driven fund solutions rose 6% and 6%, respectively, driven primarily by growth in our global distribution insights and retirement and workplace products.

Previous wording

◦Issuer rose 10% and 10%, respectively, driven by growth in our registered shareholder solutions and disclosure solutions.

Current wording

◦Issuer rose 8% and 8%, respectively, driven by growth in shareholder engagement solutions and disclosure solutions products.

Previous wording

◦Customer communications rose 1% and 1%, respectively, as growth in digital communications was partially offset by slower growth in print revenues.

Current wording

◦Customer communications rose 3% and 3%, respectively, driven by growth in print revenues and digital communications.

Previous wording

◦Capital Markets rose 10% and 9%, respectively, driven by Net New Business and Internal Growth, which benefited from higher trading volumes.

Current wording

◦Capital Markets rose 5% and 5%, respectively, driven by Net New Business and Internal Growth. Internal Growth benefited from higher trading volumes.

Previous wording

Loss before income taxes was $56.9 million for the three months ended March 31, 2024, an increase of $3.8 million compared to $53.1 million for the three months ended March 31, 2023.

Current wording

Loss before income taxes was $43.7 million for the three months ended September 30, 2024, an increase of $7.7 million compared to $36.0 million for the three months ended September 30, 2023.

Previous wording

These Non-GAAP measures are adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items, the exclusion of which management believes provides insight regarding our ongoing operating performance. Depending on the period presented, these adjusted measures exclude the impact of certain of the following items: (i) Amortization of Acquired Intangibles and Purchased Intellectual Property, (ii) Acquisition and Integration Costs, (iii) Russia-Related Exit Costs, (iv) Litigation Settlement Charge, and (v) Restructuring and Other Related Costs. Amortization of Acquired Intangibles and Purchased Intellectual Property represents non-cash amortization expenses associated with the Company’s acquisition activities. Acquisition and Integration Costs represent certain transaction and integration costs associated with the Company’s acquisition activities. Russia-Related Exit Costs are direct and incremental costs associated with the Company’s wind down of business activities in Russia in response to Russia’s invasion of Ukraine, including relocation-related expenses of impacted associates. Litigation Settlement Charge represents the reserve established during the third quarter of 2024 related to the settlement of a claim. Refer to Note 15, “Contractual Commitments, Contingencies and Off-Balance Sheet Arrangements” for further details. Restructuring and Other Related Costs represent costs associated with the Company’s Corporate Restructuring Initiative to exit and/or realign some of our businesses, streamline the Company’s management structure, reallocate work to lower cost locations, and reduce headcount in deprioritized areas. Refer to Note 10, “Payables and Accrued Expenses” for further details on the Company’s Corporate Restructuring Initiative.

Current wording

These Non-GAAP measures are adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items, the exclusion of which management believes provides insight regarding our ongoing operating performance. Depending on the period presented, these adjusted measures exclude the impact of certain of the following items:

Previous wording

We exclude Acquisition and Integration Costs, Russia-Related Exit Costs, Litigation Settlement Charge, and Restructuring and Other Related Costs from our Adjusted Operating income (as applicable) and other adjusted earnings measures because excluding such information provides us with an understanding of the results from the primary operations of our business and enhances comparability across fiscal reporting periods, as these items are not reflective of our underlying operations or performance. We also exclude the impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, as these non-cash amounts are significantly impacted by the timing and size of individual acquisitions and do not factor into the Company's capital allocation decisions, management compensation metrics or multi-year objectives. Furthermore, management believes that this adjustment enables better comparison of our results as Amortization of Acquired Intangibles and Purchased Intellectual Property will not recur in future periods once such intangible assets have been fully amortized. Although we exclude Amortization of Acquired Intangibles and Purchased Intellectual Property from our adjusted earnings measures, our management believes that it is important for investors to understand that these intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.

Current wording

We also exclude the impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, as these non-cash amounts are significantly impacted by the timing and size of individual acquisitions and do not factor into the Company's capital allocation decisions, management compensation metrics or multi-year objectives. Furthermore, management believes that this adjustment enables better comparison of our results as Amortization of Acquired Intangibles and Purchased Intellectual Property will not recur in future periods once such intangible assets have been fully amortized. Although we exclude Amortization of Acquired Intangibles and Purchased Intellectual Property from our adjusted earnings measures, our management believes that it is important for investors to understand that these intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.

Previous wording

(c) Calculated using the GAAP effective tax rate, adjusted to exclude $3.2 million and $9.5 million of excess tax benefits associated with stock-based compensation for the three and nine months ended March 31, 2024, respectively, and $0.3 million and $7.5 million of excess tax benefits associated with stock-based compensation for the three and nine months ended March 31, 2023, respectively. For purposes of calculating the Adjusted earnings per share, the same adjustments were made on a per share basis.

Current wording

(a) Calculated using the GAAP effective tax rate, adjusted to exclude $3.1 million and $5.0 million of excess tax benefits associated with stock-based compensation for the three months ended September 30, 2024, and 2023 respectively. For purposes of calculating the Adjusted earnings per share, the same adjustments were made on a per share basis.

Previous wording

At March 31, 2024, Cash and cash equivalents were $235.6 million and Total stockholders’ equity was $2,267.2 million. At the current time, and in future periods, we expect cash generated by our operations, together with existing cash, cash equivalents, and borrowings from the capital markets, to be sufficient to cover cash needs for working capital, capital expenditures, strategic acquisitions, dividends and common stock repurchases.

Current wording

At September 30, 2024, Cash and cash equivalents were $292.8 million and Total stockholders’ equity was $2,206.4 million. At the current time, and in future periods, we expect cash generated by our operations, together with existing cash, cash equivalents, and borrowings from the capital markets, to be sufficient to cover cash needs for working capital, capital expenditures, strategic acquisitions, dividends and common stock repurchases.

Previous wording

We expect existing domestic cash, cash equivalents, cash flows from operations and borrowing capacity to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as regular quarterly dividends, debt repayment schedules, and material capital expenditures, for at least the next 12 months and thereafter for the foreseeable future. In addition, we expect existing foreign cash, cash equivalents, cash flows from operations and borrowing capacity to continue to be sufficient to fund our foreign operating activities and cash commitments for investing activities, such as material capital expenditures, for at least the next 12 months and thereafter for the foreseeable future. If these funds are needed for our operations in the U.S., we may be required to pay additional foreign taxes to repatriate these funds.

Current wording

We expect existing domestic cash, cash equivalents, cash flows from operations and borrowing capacity to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as regular quarterly dividends, debt repayment schedules, and material capital expenditures, for at least the next 12 months and thereafter for the foreseeable future. In addition, we expect existing foreign cash, cash equivalents, cash flows from operations and borrowing capacity to continue to be sufficient to fund our foreign operating activities and cash commitments for investing activities, such as material capital expenditures, for at least the next 12 months and thereafter for the foreseeable future. If these funds are needed for our operations in the U.S., we may be required to pay additional foreign taxes to repatriate these funds. However, while we may do so at a future date, the Company does not need to repatriate future foreign earnings to fund U.S. operations.

Previous wording

The Company has a $1.5 billion five-year revolving credit facility (as amended on December 23, 2021 and May 23, 2023, the “Fiscal 2021 Revolving Credit Facility”), which is comprised of a $1.1 billion U.S. dollar tranche and a $400.0 million multicurrency tranche. Under the Fiscal 2021 Revolving Credit Facility, revolving loans denominated in U.S. Dollars, Canadian Dollars, Euro, Swedish Kronor, and Yen initially bear interest at Adjusted Term SOFR, CDOR, EURIBOR, TIBOR and STIBOR, respectively, plus 1.100% per annum (subject to step-ups to 1.175% and step-downs to 0.805% based on public debt ratings) and revolving loans denominated in Sterling initially bears interest at SONIA plus 1.1326% per annum (subject to step-ups to 1.2076% and step-downs to 0.8376% based on ratings). The Fiscal 2021 Revolving Credit Facility also has an annual facility fee equal to 15.0 basis points on the entire facility (subject to step-ups to 20.0 basis points and step-downs to 7.0 basis points based on ratings). On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted Term SOFR. All other terms remained unchanged.

Current wording

The Company has a $1.5 billion five-year revolving credit facility (as amended on December 23, 2021 and May 23, 2023, the “Fiscal 2021 Revolving Credit Facility”), which is comprised of a $1.1 billion U.S. dollar tranche and a $400.0 million multicurrency tranche. Under the Fiscal 2021 Revolving Credit Facility, revolving loans denominated in U.S. Dollars, Canadian Dollars, Euro, Swedish Kronor, and Yen initially bear interest at Adjusted Term SOFR, Adjusted Term CORRA, EURIBOR, TIBOR and STIBOR, respectively, plus 1.100% per annum (subject to step-ups to 1.175% and step-downs to 0.805% based on public debt ratings) and revolving loans denominated in Sterling initially bears interest at SONIA plus 1.1326% per annum (subject to step-ups to 1.2076% and step-downs to 0.8376% based on ratings). The Fiscal 2021 Revolving Credit Facility also has an annual facility fee equal to 15.0 basis points on the entire facility (subject to step-ups to 20.0 basis points and step-downs to 7.0 basis points based on ratings). On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted Term SOFR. On July 1, 2024, we amended the Canadian interest rate index from CDOR to Adjusted Term CORRA. All other terms remained unchanged.

Previous wording

In March 2021, the Company entered into a term credit agreement, (as amended on December 23, 2021 and May 23, 3023, “Term Credit Agreement”), providing for term loan commitments in an aggregate principal amount of $2.55 billion, comprised of a $1.0 billion tranche (“Tranche 1”) and a $1.55 billion tranche (“Tranche 2,” together with Tranche 1, the “Fiscal 2021 Term Loans”). The Tranche 1 Loan was repaid in full in May 2021. The Tranche 2 Loan was to mature in May 2024. The proceeds of the Fiscal 2021 Term Loans were used by the Company to solely finance the Itiviti acquisition and pay certain fees and expenses in connection therewith. On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted Term SOFR. All other terms remained unchanged. Interest on the outstanding portion of the Fiscal 2021 Term Loans bore interest at Adjusted Term SOFR plus 1.000% per annum (subject to step-ups to Adjusted Term SOFR plus 1.250% or a step-down to Adjusted Term SOFR plus 0.750% based on ratings).

Current wording

In March 2021, the Company entered into an amended and restated term credit agreement, (as amended on December 23, 2021 and May 23, 3023, “Term Credit Agreement”), providing for term loan commitments in an aggregate principal amount of $2.55 billion, comprised of a $1.0 billion tranche (“Tranche 1”) and a $1.55 billion tranche (“Tranche 2,” together with Tranche 1, the “Fiscal 2021 Term Loans”). The Tranche 1 Loan was repaid in full in May 2021. The Tranche 2 Loan was to mature in May 2024. The proceeds of the Fiscal 2021 Term Loans were used by the Company to solely finance the Itiviti acquisition and pay certain fees and expenses in connection therewith. On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted Term SOFR. All other terms remained unchanged. Interest on the outstanding portion of the Fiscal 2021 Term Loans bore interest at Adjusted Term SOFR plus 1.000% per annum (subject to step-ups to Adjusted Term SOFR plus 1.250% or a step-down to Adjusted Term SOFR plus 0.750% based on ratings).

Previous wording

The increase in cash from operating activities of $241.1 million in the nine months ended March 31, 2024, as compared to the nine months ended March 31, 2023, was primarily due to a decrease in cash used for gross client-related platform implementation and development of $263.2 million included in the change in Other non-current assets, an increase in Net earnings of $68.4 million, and a decrease in cash payments related to accrued expenses and accounts payable of $58.7 million included in the change in Payables and accrued expenses. This was partially offset by a decrease in cash collections of advanced client billings of $87.7 million included in the change in Other non-current liabilities and an increase in cash payments for income taxes of $79.1 million, primarily related to the decrease in deductible client-related platform implementation and development spend, and the increase in pre-tax income relative to the prior year.

Current wording

The decrease in cash from operating activities of $63.5 million in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily due to a decrease in net earnings of $11.1 million, an increase in cash payments related to accrued expenses and accounts payable of $118.1 million included in the change in payables and accrued expenses, and an increase in cash payments for income taxes of $45.1 million. This was partially offset by an increase in cash collections of $111.4 million included in the change in accounts receivable.

Previous wording

The decrease in cash from investing activities of $27.5 million in the nine months ended March 31, 2024, as compared to the nine months ended March 31, 2023, was primarily driven by higher capital expenditures of $18.2 million.

Current wording

The decrease in cash from investing activities of $25.7 million in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily driven by higher capital expenditures of $17.7 million and higher acquisition spend of $8.0 million.

Previous wording

The decrease in cash from financing activities of $338.4 million in the nine months ended March 31, 2024, as compared to the nine months ended March 31, 2023, primarily reflects a decrease in net borrowings of $180.0 million and an increase in cash used for stock buybacks of $150.0 million.

Current wording

The increase in cash from financing activities of $94.5 million in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily reflects a decrease in cash used for stock buybacks of $150.0 million partially offset by an increase in net borrowings of $40.0 million.

Previous wording

The Company is a party to an Amended and Restated IT Services Agreement with Kyndryl, Inc. (“Kyndryl”), an entity formed by IBM’s spin-off of its managed infrastructure services business, under which Kyndryl provides certain aspects of the Company’s information technology infrastructure, including supporting its mainframe, midrange, network and data center operations, as well as providing disaster recovery services. The Amended and Restated IT Services Agreement expires on June 30, 2027, however the Company may renew the agreement for up to one additional 12-month period. Fixed minimum commitments remaining under the Amended and Restated IT Services Agreement at March 31, 2024 are $91.6 million through June 30, 2027, the final year of the Amended and Restated IT Services Agreement.

Current wording

The Company is a party to an Amended and Restated IT Services Agreement with Kyndryl, Inc. (“Kyndryl”), an entity formed by IBM’s spin-off of its managed infrastructure services business, under which Kyndryl provides certain aspects of the Company’s information technology infrastructure, including supporting its mainframe, midrange, network and data center operations, as well as providing disaster recovery services. The Amended and Restated IT Services Agreement expires on June 30, 2027, however the Company may renew the agreement for up to one additional 12-month period. Fixed minimum commitments remaining under the Amended and Restated IT Services Agreement at September 30, 2024 are $91.2 million through June 30, 2027, the final year of the Amended and Restated IT Services Agreement.

Previous wording

The Company is a party to an information technology agreement for private cloud services (the “Private Cloud Agreement”) under which Kyndryl operates, manages and supports the Company’s private cloud global distributed platforms and products, and operates and manages certain Company networks. The Private Cloud Agreement expires on March 31, 2030. Fixed minimum commitments remaining under the Private Cloud Agreement at March 31, 2024 are $128.8 million through March 31, 2030, the final year of the contract.

Current wording

The Company is a party to an information technology agreement for private cloud services (the “Private Cloud Agreement”) under which Kyndryl operates, manages and supports the Company’s private cloud global distributed platforms and products, and operates and manages certain Company networks. The Private Cloud Agreement expires on March 31, 2030. Fixed minimum commitments remaining under the Private Cloud Agreement at September 30, 2024 are $94.8 million through March 31, 2030, the final year of the contract.

Previous wording

On December 31, 2021, the Company and Presidio Networked Solutions LLC (“Presidio”), a reseller of services of Amazon Web Services, Inc. and its affiliates (collectively, “AWS”), entered into an Order Form and AWS Private Pricing Addendum, dated December 31, 2021 (the “Order Form”), to the Cloud Services Resale Agreement, dated December 15, 2017, as amended (together with the Order Form, the “AWS Cloud Agreement”), whereby Presidio will resell to the Company certain public cloud infrastructure and related services provided by AWS for the operation, management and support of the Company’s cloud global distributed platforms and products. The AWS Cloud Agreement expires on December 31, 2026. Fixed minimum commitments remaining under the AWS Cloud Agreement at March 31, 2024 are $148.7 million through December 31, 2026.

Current wording

On December 31, 2021, the Company and Presidio Networked Solutions LLC (“Presidio”), a reseller of services of Amazon Web Services, Inc. and its affiliates (collectively, “AWS”), entered into an Order Form and AWS Private Pricing Addendum, dated December 31, 2021 (the “Order Form”), to the Cloud Services Resale Agreement, dated December 15, 2017, as amended (together with the Order Form, the “AWS Cloud Agreement”), whereby Presidio will resell to the Company certain public cloud infrastructure and related services provided by AWS for the operation, management and support of the Company’s cloud global distributed platforms and products. The AWS Cloud Agreement expires on December 31, 2026. Fixed minimum commitments remaining under the AWS Cloud Agreement at September 30, 2024 are $124.6 million through December 31, 2026.

Previous wording

The Company has an equity method investment that is a variable interest in a variable interest entity. The Company is not the primary beneficiary and therefore does not consolidate the investee. The Company’s potential maximum loss exposure related to its unconsolidated investments in this variable interest entity totaled $35.0 million as of March 31, 2024, which represents the carrying value of the Company's investments.

Current wording

The Company has an equity method investment that is a variable interest in a variable interest entity. The Company is not the primary beneficiary and therefore does not consolidate the investee. The Company’s potential maximum loss exposure related to its unconsolidated investments in this variable interest entity totaled $33.4 million as of September 30, 2024, which represents the carrying value of the Company's investments.

Previous wording

In addition, as of March 31, 2024, the Company has a future commitment to fund $0.6 million to one of the Company’s other investees.

Current wording

In addition, as of September 30, 2024, the Company has a future commitment to fund $0.4 million to one of the Company’s other investees.

Previous wording

In January 2022, we executed a series of cross-currency swap derivative contracts with an aggregate notional amount of EUR 880 million which are designated as net investment hedges to hedge a portion of our net investment in our subsidiaries whose functional currency is the Euro. The cross-currency swap derivative contracts are agreements to pay fixed-rate interest in Euros and receive fixed-rate interest in U.S. Dollars, thereby effectively converting a portion of our U.S. Dollar denominated fixed-rate debt into Euro denominated fixed-rate debt. The cross-currency swaps mature in May 2031 to coincide with the maturity of the Fiscal 2021 Senior Notes. Accordingly, foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation within other comprehensive income (loss), net in the Condensed Consolidated Statements of Comprehensive Income and will remain in Accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets until the sale or complete liquidation of the underlying foreign subsidiary. At March 31, 2024, our position on the cross-currency swaps was an asset of $44.1 million, and is recorded as part of Other non-current assets on the Condensed Consolidated Balance Sheets with the offsetting amount recorded as part of Accumulated other comprehensive income (loss), net of tax. We have elected the spot method of accounting whereby the net interest savings from the cross-currency swaps is recognized as a reduction in interest expense in our Condensed Consolidated Statements of Earnings.

Current wording

In January 2022, we executed a series of cross-currency swap derivative contracts with an aggregate notional amount of EUR 880 million which are designated as net investment hedges to hedge a portion of our net investment in our subsidiaries whose functional currency is the Euro. The cross-currency swap derivative contracts are agreements to pay fixed-rate interest in Euros and receive fixed-rate interest in U.S. Dollars, thereby effectively converting a portion of our U.S. Dollar denominated fixed-rate debt into Euro denominated fixed-rate debt. The cross-currency swaps mature in May 2031 to coincide with the maturity of the Fiscal 2021 Senior Notes. Accordingly, foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation within other comprehensive income (loss), net in the Condensed Consolidated Statements of Comprehensive Income and will remain in Accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets until the sale or complete liquidation of the underlying foreign subsidiary. At September 30, 2024, our position on the cross-currency swaps was an asset of $35.1 million, and is recorded as part of Other non-current assets on the Condensed Consolidated Balance Sheets with the offsetting amount recorded as part of Accumulated other comprehensive income (loss), net of tax. We have elected the spot method of accounting whereby the net interest savings from the cross-currency swaps is recognized as a reduction in interest expense in our Condensed Consolidated Statements of Earnings.

Previous wording

In May 2021, we settled a forward treasury lock agreement that was designated as a cash flow hedge, for a pre-tax loss of $11.0 million, after which the final settlement loss is being amortized into Interest expense, net ratably over the ten year term of the Fiscal 2021 Senior Notes. The expected amount of the existing loss that will be amortized into earnings before income taxes within the next twelve months is approximately $1.1 million.

Current wording

In May 2021, we settled a forward treasury lock agreement that was designated as a cash flow hedge, for a pre-tax loss of $11.0 million, after which the final settlement loss is being amortized into Interest expense, net ratably over the ten year term of the Fiscal 2021 Senior Notes. The expected amount of the existing loss that will be amortized into earnings before income taxes within the next twelve months is approximately $1 million.