What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-02-28 compared with 2021-03-04 · 45 added, 72 removed, 2 unchanged (98% of the section changed)

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We periodically use

derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain loans receivable and

Auction and Liquidation engagements with operations outside the United States.

During the year ended December 31, 2020, our use

of derivatives consisted of the purchase of forward exchange contracts in the amount of 12,700 Euros, of which 6,700 Euros were

As of December 31, 2020, forward exchange contracts in the amount of 6,000 Euros were outstanding.

The Company did not

use any derivative contracts during the year ended December 31, 2019.

The forward exchange

contracts were entered into to improve the predictability of cash flows related to a retail store liquidation engagement and a

loan receivable.

The net loss from forward exchange contracts was $285 during the year ended December 31, 2020.

This amount is

reported as a component of selling, general and administrative expenses in the consolidated statements of income.

We transact business in various foreign

In countries where the functional currency of the underlying operations has been determined to be the local country’s

currency, revenues and expenses of operations outside the United States are translated into United States dollars using average

exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using

period-end exchange rates.

The effects of foreign currency translation adjustments are included in stockholders’ equity as

a component of accumulated other comprehensive income in the accompanying consolidated balance sheets.

Transaction (losses) gains

were ($639), ($238) and 1,294, during the years ended December 31, 2020, 2019 and 2018, respectively.

These amounts are included

in selling, general and administrative expenses in our consolidated statements of income.

Interest Rate

Our primary exposure

to market risk consists of risk related to changes in interest rates.

We utilize borrowings under our senior notes payable and

credit facilities to fund costs and expenses incurred in connection with our acquisitions and retail liquidation engagements.

under our senior notes payable are at fixed interest rates and borrowings under our credit facilities bear interest at a floating

rate of interest.

In our portfolio of securities owned we invest in loans receivable that primarily bear interest at a floating

rate of interest.

The primary objective

of our investment activities is to preserve capital for the purpose of funding operations while at the same time maximizing the

income we receive from investments without significantly increasing risk.

To achieve these objectives, our investments allow us

to maintain a portfolio of cash equivalents, short-term investments through a variety of securities owned that primarily includes

common stocks, loans receivable and investments in partnership interests.

Our cash and cash equivalents through December 31, 2020

included amounts in bank checking and liquid money market accounts.

We may be exposed to interest rate risk through trading activities

in convertible and fixed income securities as well as U.S.

Treasury securities, however, based on our daily monitoring of this

risk, we believe we currently have limited exposure to interest rate risk in these activities.

Foreign Currency

The majority of our

operating activities are conducted in U.S.

Revenues generated from our foreign subsidiaries totaled $48.3 million for

the year ended December 31, 2020 or less than 5.3% of our total

revenues of $902.8 million during the year ended December 31 , 2020.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We periodically use derivative instruments, which primarily consist

of the purchase of forward exchange contracts, for certain loans receivable and Auction and Liquidation engagements with operations outside

the United States.

During the year ended December 31, 2020, our use of derivatives consisted of the purchase of forward exchange contracts

in the amount of 12.7 million Euros, of which 6.7 million Euros were settled.

As of December 31, 2021 and 2020, forward exchange contracts

in the amount of 6.0 million Euros were outstanding.

The forward exchange contracts were entered into to improve the predictability

of cash flows related to a retail store liquidation engagement and a loan receivable.

The net gain from forward exchange contracts was

$1.1 million and net loss was $0.3 million during the years ended December 31, 2021 and 2020, respectively.

This amount is reported as

a component of selling, general and administrative expenses in the consolidated statements of income.

We transact business in various foreign currencies.

In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates.

The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets.

Transaction gains (losses) are included in selling, general and administrative expenses in our consolidated statements of income.

Interest Rate Risk

Our primary exposure to market risk consists of risk related to changes

in interest rates.

We utilize borrowings under our senior notes payable and credit facilities to fund costs and expenses incurred in connection

with our acquisitions and retail liquidation engagements.

Borrowings under our senior notes payable are at fixed interest rates and borrowings

under our credit facilities bear interest at a floating rate of interest.

In our portfolio of securities owned we invest in loans receivable

that primarily bear interest at a floating rate of interest.

If floating rates of interest had increased by 1% during the year ended December

31, 2021, the rate increase would have resulted in an increase in interest expense of $4.3 million.

The primary objective of our investment activities is to preserve capital for the purpose of funding operations while at the same time maximizing the income we receive from investments without significantly increasing risk.

To achieve these objectives, our investments allow us to maintain a portfolio of cash equivalents, short-term investments through a variety of securities owned that primarily includes common stocks, loans receivable and investments in partnership interests.

Our cash and cash equivalents through December 31, 2021 included amounts in bank checking and liquid money market accounts.

We may be exposed to interest rate risk through trading activities in convertible and fixed income securities as well as U.S.

Treasury securities, however, based on our daily monitoring of this risk, we believe we currently have limited exposure to interest rate risk in these activities.

Foreign Currency Risk

The majority of our operating activities are conducted in U.S.

Revenues generated from our foreign subsidiaries totaled $50.5 million during the year ended December 31, 2021 or 2.9% of our total revenues of $1,741.0 million during the year ended December 31, 2021.

The financial statements of our foreign subsidiaries are translated into U.S.

dollars at period-end rates, with the exception of

revenues, costs and expenses, which are translated at average rates during the reporting period.

We include gains and losses resulting

from foreign currency transactions in income, while we exclude those resulting from translation of financial statements from income

and include them as a component of accumulated other comprehensive income (loss).

Transaction gains (losses), which were included

in our consolidated statements of income, amounted to a loss of $0.6 million and a loss of $0.2 million during the years

ended December 31, 2020 and 2019, respectively.

dollars at period-end rates, with the exception of revenues, costs, and expenses, which are translated at average rates during the reporting period.

We include gains and losses resulting from foreign currency transactions in income, while we exclude those resulting from translation of financial statements from income and include them as a component of accumulated other comprehensive income (loss).

Transaction gains (losses), which were included in our consolidated statements of income, amounted to a gain of $1.3 million and loss of $0.6 million during the years ended December 31, 2021 and 2020, respectively.

We may be exposed to foreign currency risk;

however, our operating results

during the year ended December 31, 2020 included $48.3 million of revenues from our foreign subsidiaries and a 10% appreciation

dollar relative to the local currency exchange rates would result in less than $5.0 million increase in our operating

income and a 10% depreciation of the U.S.

dollar relative to the local currency exchange rates would have resulted in a net decrease

in our operating income of less than $5.0 million for the year ended December 31 ,

STATEMENTS AND SUPPLEMENTARY DATA

The information required

by this Item 8 is submitted as a separate section beginning on page F-1 of this Annual Report on Form 10-K (the “Financial

Statements”).

IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

however, our operating results during the year ended December 31, 2021 included $50.5 million of revenues and $42.8 million of operating expenses from our foreign subsidiaries and a 10% appreciation or depreciation of the U.S.

dollar relative to the local currency exchange rates would result in an approximately $0.7 million change in our operating income during the year ended December 31, 2021.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item 8 is submitted as a separate section beginning on page F-1 of this Annual Report on Form 10-K (the “Financial Statements”).

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk