ICU MEDICAL INC/DE 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk If we were to incur borrowings under our Credit Facility, we would face market risk stemming from changes in interest rates. In connection with the Smiths Medical acquisition on January 6, 2022 we entered into Senior Secured Credit Facilities totaling approximately $2.2 billion consisting of a variable-rate term loan A facility of $850.0 million, a variable-rate term loan B facility of $850.0 million and a revolving credit facility of $500.0 million. We will be exposed to changes in interest rates on all of these variable-rate debt instruments. In order to mitigate a portion of the interest rate risk exposure associated with these debt instruments in November 2021 we entered into forward-starting interest rate swaps to achieve a targeted mix of fixed and variable-rate debt (see Note 7: Derivatives and Hedging Activities to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K). Foreign Exchange Risk We transact business globally in multiple currencies, some of which are considered volatile. Our international revenues and expenses and working capital positions denominated in these foreign currencies expose us to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. As the receiver of foreign currencies we are adversely affected by the strengthening of the U.S. dollar relative to the foreign currency. In our European operations, our net Euro asset position at December 31, 2021 was approximately €35.9 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 December 31, 2021 spot rate would impact our consolidated amounts on these balance sheet items by approximately $4.1 million, or 0.9% of these net assets. We expect that in the future, with the growth of our European distribution operations, net Euro denominated instruments will continue to increase. We currently do not hedge our 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 Activities to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K).