COOPER COMPANIES, INC. 10-K

Item 7A. Quantitative and Qualitative Disclosure About Market Risk. We are exposed to market risks that relate principally to changes in interest rates and foreign currency fluctuations. We do not enter into derivative financial instrument transactions for speculative purposes. Foreign Currency Exchange Risk We operate multiple foreign subsidiaries that manufacture and market our products worldwide. As a result, our earnings, cash flow and financial position are exposed to foreign currency risk from foreign currency denominated receivables and payables, sales transactions, capital expenditures and net investment in certain foreign operations. Most of our operations outside the United States have their local currency as their functional currency. We are exposed to risks caused by changes in foreign exchange, principally our British pound sterling, euro and Japanese yen denominated debt and receivables denominated in currencies other than the United States dollar, and from operations in other foreign currencies. We did not have any cross-currency swaps or foreign currency forward contracts as of October 31, 2022. At October 31, 2022, a uniform hypothetical 5% increase or decrease in the foreign currency exchange rates in comparison to the United States dollar would have resulted in a corresponding increase or decrease of approximately $35.0 million in operating income for the fiscal year ended October 31, 2022. For additional information, see Item 1A. Risk Factors - " Our substantial and expanding international operations are subject to uncertainties which could affect our operating results. " and Note 1. Organization and Significant Accounting Policies for additional information. Interest Rate Risk We are exposed to risks associated with changes in interest rates, as the interest rates on our revolving lines of credit and term loans may vary with the federal funds rate and LIBOR. As of October 31, 2022, we had outstanding debt for an aggregate carrying amount of $2.7 billion. We have entered, and in the future may enter, into interest rate swaps to manage interest rate risk. Our ultimate realized gain or loss with respect to interest rate fluctuations will depend on interest rates, the exposures that arise during the period and our hedging strategies at that time. If interest rates were to increase or decrease by 1% or 100 basis points, annual interest expense would increase or decrease by approximately $4.6 million based on average debt outstanding, after consideration of our interest rate swap contracts, during the fourth quarter of fiscal 2022. For further information about our debt, see Item 1A. Risk Factors - " We are vulnerable to interest rate risk with respect to our debt. ", and Note 5. Financing Arrangements for additional information. 65 THE COOPER COMPANIES, INC. AND SUBSIDIARIES