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Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Dixie Group Inc · 10-Q · Q2 FY2026 · Period ended Jun 27, 2026
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Our earnings, cash flows and financial position are exposed to market risks relating to interest rates, among other factors. It is our policy to minimize our exposure to adverse changes in interest rates and manage interest rate risks inherent in funding our Company with debt. We address this financial exposure through a risk management program that includes maintaining a mix of fixed and floating rate debt.
At June 27, 2026, $64,462, or approximately 76% of our total debt, was subject to short-term floating interest rates. A one-hundred basis point fluctuation in the variable interest rates applicable to this floating rate debt would have an annual after-tax impact of approximately $645. Included in the $64,462, is the amount outstanding for a term loan of $8,783. The term loan bears interest of 5% for the first five years. The interest rates reset at 7.11% for the term loan in 2025. The term loan rate will continue to reset every 5 years to reflect the then current 5-year treasury rate plus a margin. A one-hundred basis point fluctuation in the interest rate applicable to this floating rate debt would have an annual after-tax impact of approximately $88. See Note 9 to the consolidated condensed financial statements for further discussion of the term loan.