Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
We are exposed to interest rate risk on certain of our short- and long-term debt obligations used to finance our operations and acquisitions. We have SOFR-based floating rate borrowings under the Credit Agreements, which expose us to variability in interest payments due to changes in the reference interest rates. From time to time, we use derivative instruments as hedges against the impact of interest rate changes on future earnings and cash flows. We do not enter into such derivative instruments for speculative or trading purposes.
At September 30, 2025, we had a total of $1.6 billion of variable rate borrowings outstanding. Holding other factors constant and absent the interest rate swap agreements described above, a hypothetical 1% change in our borrowing rates would result in a $16.3 million change in our annual interest expense based on our variable rate debt outstanding at September 30, 2025. The notional amount of the Company’s outstanding interest rate swap contract at September 30, 2025 was $300.0 million. The maturity date of this swap is June 30, 2027, and the fair value of the outstanding swap contract was $7.9 million as of September 30, 2025.
The following table presents the future principal payment obligations, interest payments, and fair values associated with the Company’s debt instruments assuming the Company’s actual level of variable rate debt as of September 30, 2025 (in thousands).
For the Fiscal Year Ending September 30, Fair
2026 2027 2028 Thereafter Total Value
Debt obligations
Term Loan A $ 30,000 $ 30,000 $ 30,000 $ 502,500 $ 592,500 $ 592,500
Term Loan B 8,500 8,500 8,500 818,125 843,625 843,625
Revolving Credit Facility — — — 190,000 190,000 190,000
Interest payments (1)
106,027 103,552 101,077 252,509 563,165 563,165
(1) Represents projected interest payments using the Company’s September 2025 SOFR-based floating rate of 6.32%.
See also Note 20 - Fair Value Measurements and Note 21 - Investments in Derivative Instruments to the consolidated financial statements included in this report.
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