Limoneira CO 10-K

Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk Borrowings under the Farm Credit West Credit Facility and Farm Credit West Term Loans are or will be subject to variable interest rates. These variable interest rates subject us to the risk of increased interest costs associated with any upward movements in interest rates. For the Farm Credit West Credit Facility and Farm Credit West Term Loans, our borrowing interest rate is an internally calculated rate based on Farm Credit West’s internal monthly operations and their cost of funds and generally follows the changes in the 90-day treasury rates in increments divisible by 0.25%. At October 31, 2021, our total debt outstanding under the Farm Credit West Credit Facility and the Farm Credit West Term Loans was $111.3 million and $18.2 million, respectively. From time to time we enter into interest rate swap agreements to manage risks and costs associated with our financing activities. Based on our level of borrowings at October 31, 2021, a 100 basis points increase in interest rates would increase our interest expense $0.7 million for fiscal year 2022 and an annual average of $0.8 million for the three subsequent fiscal years. Additionally, a 100 basis points increase in the interest rate would decrease our net income by $0.5 million for fiscal year 2022 and an annual average of $0.6 million for the three subsequent fiscal years. Refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for additional information. 42