ICU MEDICAL INC/DE 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk We are exposed to interest rate changes primarily as a result of our borrowings under our Credit Facility used to increase liquidity as a precautionary measure in response to market uncertainty driven by COVID-19. During March 2020, we drew down $150.0 million on our Credit Facility. Interest on the borrowed portion of the Credit Facility bears interest at our option, based on the Base Rate plus applicable margin or the LIBOR rate plus applicable margin, see further details in Part II, Item 8, of our 2019 Annual Report on Form 10-K. As a result of our Credit Facility, we are exposed to interest rate risk from changes in these interest rates. We use a sensitivity analysis to measure our interest risk exposure. Based on our Credit Facility balance of $150.0 million at June 30, 2020 and assuming the use of the LIBOR rate, a 1% change in interest rates could potentially result in additional annual interest expense or savings of $1.5 million. Foreign Exchange Risk 40 Table of Contents We have foreign currency exchange risk related to foreign-denominated cash, accounts receivable and accounts payable and accrued liabilities. In our European operations, our net Euro asset position at June 30, 2020 was approximately €50.8 million. A 10% change in the conversion of the Euro to the U.S. dollar for our cash, accounts receivable, accounts payable and accrued liabilities from the June 30, 2020 spot rate would impact our consolidated amounts on these balance sheet items by approximately $5.7 million, or 0.7% of these consolidated net assets. We expect that in the future, with the growth of our European distribution operations, net Euro denominated instruments will continue to increase. In our Canadian operations, our net Canadian dollar asset position at June 30, 2020 was approximately $32.8 million. A 10% change in the conversion of the Canadian dollar to the U.S. dollar for our cash, accounts receivable, accounts payable and accrued liabilities from the June 30, 2020 spot rate would impact our consolidated amounts on these balance sheet items by approximately $2.4 million, or 0.3% of these net assets. We currently do not hedge our Canadian dollar or Euro foreign currency exposures. We have manufacturing facilities and conduct business transactions denominated in the Mexican Peso. We hedge a portion of our manufacturing spend, which reduces our exposure to the foreign currency exchange risk related to the Mexican Peso (see Note 7: Derivatives and Hedging to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q).