Company: NEOG
Filing Date: 2025-07-30
Form Type: 10-K
Source: 0000950170-25-100064
Chunk: 16

Company: NEOGEN CORP
Filing Date: 2025-07-30
Form: 10-K
Item: Item 6
Chunk 16
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 in Note 1 to consolidated financial statements. 

40

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS We have interest rate and foreign exchange rate risk exposure. Our primary interest rate risk is due to potential fluctuations of interest rates for our variable rate borrowings. Foreign exchange risk exposure arises because we market and sell our products throughout the world. Revenues in certain foreign countries as well as certain expenses related to those revenues are transacted in currencies other than the U.S. dollar. As such, our operating results are exposed to changes in exchange rates. When the U.S. dollar weakens against foreign currencies, the dollar value of revenues denominated in foreign currencies increases. When the U.S. dollar strengthens, the opposite situation occurs. Additionally, previously invoiced amounts can be positively or negatively affected by changes in exchange rates in the course of collection. We use derivative financial instruments to help manage the economic impact of fluctuations in certain currency exchange rates. These contracts are adjusted to fair value through earnings. Neogen has assets, liabilities and operations outside of the U.S. Our investments in foreign subsidiaries are considered long-term. As discussed in ITEM 1A. RISK FACTORS, our financial condition and results of operations could be adversely affected by currency fluctuations. Foreign Currency Exchange Rate Risk. We use forward foreign exchange contracts to reduce the effect of fluctuations in foreign exchange rates on the remeasurement of foreign currency denominated receivables and payables.Interest Rate Risk. The Company utilizes an interest rate swap contract to create fixed interest payments on portions of its variable rate debt instrument in order to manage exposure to fluctuations in interest rates. As of May 31, 2025 and when including our interest rate swap, approximately 38.9% of our total debt was at variable interest rates.The following table sets forth the potential loss in future earnings or fair values, resulting from hypothetical changes in relevant market rates or prices:  

     Risk Category
      
     Hypothetical Change
      
     May 31, 2025

     Impact

     (dollars in thousands)

     Foreign Currency — Revenue
      
     10% depreciation in exchange rates relative to USD
      
     $
     (44,873
     )
      
     Revenue

     Foreign Currency — Hedges
      
     10% depreciation in exchange rates relative to USD
      
     $
     612

     Earnings

     Interest Income
      
     75