VERRA MOBILITY Corp 10-K/A

Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to interest rate market risk due to the variable interest rate on the New First Lien Term Loan described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources .” Interest rate risk represents our exposure to fluctuations in interest rates associated with the variable rate debt represented by the New First Lien Term Loan, which has an outstanding balance of $865.6 million at December 31, 2020. We refinanced the entire amount outstanding on the New First Lien Term Loan in February 2020 which reduced the previous applicable margin by 50 basis points. The New First Lien Term Loan now bears interest based, at our option, on either (1) LIBOR plus an applicable margin of 3.25% per annum, or (2) an alternate base rate plus an applicable margin of 2.25% per annum. At December 31, 2020, the interest rate on the New First Lien Term Loan was 3.4%. Based on the December 31, 2020 balance outstanding, each 1% movement in interest rates will result in an approximately $8.7 million change in annual interest expense. We have not engaged in any hedging activities during fiscal year 2020. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.