DESTINATION XL GROUP, INC. 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk. In the normal course of business, our financial position and results of operations are routinely subject to a variety of risks, including market risk associated with interest rate movements on borrowings and foreign currency fluctuations. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of these and other potential exposures. Interest Rates We utilize cash from operations and from our Revolving Facility of our Credit Facility to fund our working capital needs. Our Credit Facility is not used for trading or speculative purposes. Until September 3, 2021, we also had a $17.5 million FILO loan. In addition, we have available letters of credit as sources of financing for our working capital requirements. Borrowings under the new Credit Facility, which expires October 28, 2026, bear interest at variable rates based on the prime rate or LIBOR. At October 30, 2021, we had no outstanding borrowings under our Credit Facility. The prime-based rate was 5.00% at October 30, 2021. Prior to the prepayment of the FILO loan, the interest rate was 8.50%. 25 Based upon a sensitivity analysis as of October 30, 2021, assuming average outstanding borrowing during the first nine months of fiscal 2021 of $21.8 million under our Revolving Facility and an average outstanding balance for the FILO loan of approximately $13.5 million, a 50 basis point increase in interest rates would have resulted in a potential increase in interest expense of approximately $176,500 on an annualized basis. Foreign Currency Our DXL store located in Ontario, Canada conducts business in Canadian dollars. Sales from this store were immaterial to consolidated sales. As such, we believe that movement in foreign currency exchange rates will not have a material adverse effect on our financial position or results of operations.