ACCENDRA HEALTH INC/VA/ 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are subject to price risk for our raw materials, the most significant of which relates to the cost of polypropylene and nitrile used in the manufacturing processes of our Global Products segment. Prices of the commodities underlying these raw materials are volatile and have fluctuated significantly in recent years and in the future may contribute to fluctuations in our results of operations. The ability to hedge these commodity prices is limited. In the normal course of business, we are exposed to foreign currency translation and transaction risks. Our business transactions outside of the United States are denominated in the euro, Malaysian ringgit, Mexican peso, Thai baht and other currencies. We may use foreign currency forwards, swaps and options, where possible, to manage our risk related to certain foreign currency fluctuations. We are exposed to market risk from changes in interest rates related to our borrowing under our Credit Agreement and Receivables Securitization Program. However, we enter into interest rate swap agreements to manage our exposure to interest rate changes. We had $511 million in borrowings under our term loans, $103 million in borrowings under our revolving credit facility, $153 million in borrowings under our Receivables Securitization Program, and $13.9 million in letters of credit under the Credit Agreement at December 31, 2020. After considering the effects of interest rate swap agreements outstanding as of December 31, 2020, we estimate an increase in interest rates of 100 basis points would result in a potential reduction in future pre-tax earnings of approximately $4.8 million per year based on our borrowings outstanding at December 31, 2020. Due to the nature and pricing of our Global Solutions segment distribution services, we are exposed to potential volatility in fuel prices. Our strategies for helping to mitigate our exposure to changing domestic fuel prices has included using trucks with improved fuel efficiency. We benchmark our domestic diesel fuel purchase prices against the U.S. Weekly Retail On-Highway Diesel Prices (benchmark) as quoted by the U.S. Energy Information Administration. The benchmark averaged $2.55 per gallon for 2020, a decrease from $3.06 per gallon in 2019. Based on our fuel consumption in 2020, we estimate that every 10 cents per gallon increase in the benchmark would reduce our Global Solutions segment operating income by approximately $0.2 million on an annualized basis. Item 8. Financial Statements and Supplementary Data See Item 15. Exhibits and Financial Statement Schedules. 28 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.