Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our exposure to market risk primarily consists of (i) interest rate risk associated with our variable and fixed rate debt and (ii) foreign currency exchange rate risk associated with our foreign operations.

Interest Rate Risk. As of June 30, 2022, we had an aggregate of $3.5 billion of indebtedness that bears interest at variable rates, comprised of borrowings under the ABL, accounts receivable securitization and term loan facilities. As discussed in note 6 to the condensed consolidated financial statements, in June 2022, we entered into an uncommitted repurchase facility pursuant to which we may obtain short-term financing in an amount up to $100. The repurchase facility bears interest at a variable rate, however, there were no outstanding borrowings under this facility as of June 30, 2022. The amount of variable rate indebtedness outstanding under these facilities may fluctuate significantly. See note 6 to the condensed consolidated financial statements for the amounts outstanding, and the interest rates thereon, as of June 30, 2022 under these facilities. As of June 30, 2022, based upon the amount of our variable rate debt outstanding, our annual after-tax earnings would decrease by approximately $26 for each one percentage point increase in the interest rates applicable to our variable rate debt.

At June 30, 2022, we had an aggregate of $6.4 billion of indebtedness that bears interest at fixed rates. A one percentage point decrease in market interest rates as of June 30, 2022 would increase the fair value of our fixed rate indebtedness by approximately six percent. For additional information concerning the fair value of our fixed rate debt, see note 5 (see “Fair Value of Financial Instruments”) to our condensed consolidated financial statements.

Currency Exchange Risk. We primarily operate in the U.S. and Canada, and have a limited presence in Europe, Australia and New Zealand. During the six months ended June 30, 2022, our foreign subsidiaries accounted for $543, or 10 percent, of our total revenue of $5.295 billion, and $66, or 6 percent, of our total pretax income of $1.091 billion. Based on the size of our foreign operations relative to the Company as a whole, we do not believe that a 10 percent change in exchange rates would have a material impact on our earnings. We do not engage in purchasing forward exchange contracts for speculative purposes.

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