10 unchanged sentences
At December 31, 2022, management considered a hypothetical 300-basis-point fluctuation in interest rates.
−Removed: Management determined that the impact of such a fluctuation on these investments would not have a material effect on Federated Hermes' financial condition or results of operations.
+Added: Management determined that the impact of such a fluctuation on these investments would not have a material effect on Federated Hermes’ results of operations or financial condition.
At December 31, 2022, these investments and additional investments in money market accounts ($281.8 million) exposed Federated Hermes to credit risk.
At December 31, 2022, management considered a hypothetical 300-basis-point fluctuation in credit spreads.
−Removed: Management determined that such a fluctuation could impact Federated Hermes' financial condition and results of operations by approximately $13 million.
−Removed: Federated Hermes was also exposed to interest-rate risk in connection with the Credit Agreement.
−Removed: The Credit Agreement bears interest based on LIBOR plus a 100 basis point spread.
−Removed: At December 31, 2021, the balance of the Credit Agreement was $223.4 million.
−Removed: Management considered a hypothetical 300-basis-point fluctuation in LIBOR interest rates running through the Credit Agreement's expiration in 2026 and determined that the impact of such a fluctuation could impact Federated Hermes' financial condition and results of operations by approximately $19 million.
−Removed: The Credit Agreement also exposed Federated Hermes to credit risk at December 31, 2021.
−Removed: If Federated Hermes' credit rating were to be downgraded, Federated Hermes would be subject to an increase in both the interest rate spread and commitment fee, in accordance with the Credit Agreement.
−Removed: Management determined that the impact of such a downgrade would not have a material effect on Federated Hermes' financial condition or results of operations.
+Added: Management determined that such a fluctuation could impact Federated Hermes’ results of operations and financial condition by approximately $10 million.
Price risk is the risk that the market price of an investment will decline and ultimately result in the recognition of a loss.
1 unchanged sentence
Federated Hermes’ investment in these products and strategies represents its maximum exposure to loss.
−Removed: At December 31, 2021, management considered a hypothetical 20% fluctuation in fair value and determined that such a fluctuation on these investments could impact Federated Hermes' financial condition and results of operations by approximately $16 million.
+Added: At December 31, 2022, management considered a hypothetical 20% fluctuation in fair value and determined that such a fluctuation on these investments could impact Federated Hermes’ results of operations and financial condition by approximately $11 million.
Foreign exchange risk is the risk that an investment’s value will change due to changes in currency exchange rates.
−Removed: As of December 31, 2021, Federated Hermes was exposed to foreign exchange risk as a result of its investments in Federated Hermes
−Removed: Funds holding non-U.S.
−Removed: dollar securities as well as non-U.S.
−Removed: dollar operating cash accounts and receivables held by certain foreign operating subsidiaries of Federated Hermes ($61.5 million).
−Removed: Of these investments, cash accounts and receivables held at December 31, 2021, management considered a hypothetical 20% fluctuation and determined that such a fluctuation could impact Federated Hermes' financial condition and results of operations by approximately $12 million.
−Removed: Federated Hermes also has certain investments in foreign operations, whose net assets and results of operations are exposed to foreign currency risk when translated into U.S.
−Removed: dollars upon consolidation .
−Removed: During 2021, a British Pound Sterling-denominated, majority-owned subsidiary of Federated Hermes entered into foreign currency forward transactions in order to hedge against foreign exchange rate fluctuations in the U.S.
−Removed: Dollar (combined notional amount of £69.6 million).
−Removed: This subsidiary is exposed to foreign currency exchange risk as a result of a portion of its revenue being earned in U.S.
−Removed: Management considered a hypothetical 20% fluctuation in the currency exchange rate and determined that such a fluctuation could impact Federated Hermes' financial condition and results of operations by approximately $11 million.
+Added: As of December 31, 2022, Federated Hermes was exposed to foreign exchange risk as a result of its investments in Federated Hermes Funds holding non-USD securities as well as non-USD operating cash accounts and receivables held by certain foreign operating subsidiaries of Federated Hermes ($49.1 million).
+Added: Of these investments, cash accounts and receivables held at December 31, 2022, management considered a hypothetical 20% fluctuation in applicable foreign exchange rates and determined that such a fluctuation could impact Federated Hermes’ results of operations and financial condition by approximately $10 million.
+Added: Federated Hermes also has certain investments in foreign operations, whose net assets and results of operations are exposed to foreign currency risk when translated into USD upon consolidation .
+Added: During 2022, FHL entered into foreign currency forward transactions in order to hedge against foreign exchange rate fluctuations in the USD (combined notional amount of £67.3 million as of December 31, 2022).
+Added: FHL is exposed to foreign currency exchange risk as a result of a portion of its revenue being earned in USD.
+Added: Management considered a hypothetical 20% fluctuation in the currency exchange rate and determined
+Added: that such a fluctuation could impact Federated Hermes’ results of operations and financial condition by approximately $11 million.
In addition to market risks attributable to Federated Hermes’ investments, nearly all of Federated Hermes’ revenue is calculated based on AUM.
3 unchanged sentences
Certain expenses, including distribution and compensation and related expenses, may not vary in proportion with changes in the market value of managed assets.
−Removed: As such, the impact on net income from a decline in the market values of managed assets may be greater or less than the percentage decline in the market value of managed assets.
+Added: As such, the impact on net income from a decline in the market values of managed assets can be greater or less than the percentage decline in the market value of managed assets.
For further discussion of managed assets and factors that impact Federated Hermes’ revenue, see Item 1A - Risk Factors and sections included in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - General and Asset Highlights.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.