Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISKS

The Company is exposed to market risks arising from adverse changes in foreign currency exchange rates and interest rates. In the normal course of business, the Company uses a variety of techniques and derivative financial instruments as part of its overall risk management strategy, which is primarily focused on its exposure in relation to the Chinese Renminbi, Swiss Franc, Malaysian Ringgit and the Japanese Yen. No significant changes have occurred in the techniques and instruments used.

Interest Rate Risk

As of June 30, 2021, the Company’s total borrowings include variable rate borrowings, which exposes the Company to changes in interest rates. In November 2019, the Company entered into an interest rate swap contract to limit the exposure of its variable interest rate debt by effectively converting a portion of interest payments to fixed interest rate debt. However in March of 2020, the Federal Reserve lowered the interest rates, putting our hedge in a negative position. With the hedge in place, a change in the interest rate of 100 basis points on these variable rate borrowings would have resulted in additional interest expense of $12 million for the year ended June 30, 2021.