QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: 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.
−Removed: As of December 31, 2023 and 2022, no forward exchange contracts were outstanding.
−Removed: 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.
−Removed: The forward exchange contracts had a net gain of zero and $0.1 million during the years ended December 31, 2023 and 2022, respectively.
−Removed: This amount is reported as a component of selling, general and administrative expenses in the consolidated statements of operations.
We transact business in various foreign currencies.
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Interest Rate Risk
−Removed: Our primary exposure to market risk consists of risk related to changes in interest rates.
+Added: We have exposure to interest rate risk which primarily relates to changes in cost of borrowings as a result of 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 operations.
−Removed: Borrowings under our senior notes payable are at fixed interest rates and borrowings under our credit facilities bear interest at floating rates of interest.
−Removed: In our portfolio of securities owned we invest in loans receivable that primarily bear interest at a floating rate of interest.
+Added: Borrowings under our senior notes payable are at fixed interest rates and borrowings under our credit facilities bear interest at a floating rates of interest.
+Added: As of December 31, 2024, approximately 88% of our debt obligations bore interest at fixed rates and not impacted by changes in interest rates.
+Added: Our interest expense from variable-rate debt obligations is principally affected by changes in the published SOFR rate in connection with our credit facilities.
+Added: Our variable-rate debt obligations are principally used to provide financing to our
+Added: operating businesses which are supported by cash flows from operations for those businesses.
+Added: The cash flows of such operating businesses are utilized to help to mitigate any increases in interest expense as a result of an increase in interest rates.
+Added: Our Nomura credit facility is also a variable rate debt obligation which is collateralized by a portfolio of investment assets and certain operating businesses.
+Added: Increased interest costs on the Nomura facility as a result of a rise in interest rates are partially offset by variable rate investment assets that are securing the facility as well as cash flows from other businesses securing the facility.
+Added: Management monitors the composition of debt obligations and debt investments on a periodic basis, as well as projected net interest income, interest coverage, and sensitivity of interest income changes in interest rates.
+Added: This exposure is also monitored by our risk management group and reviewed periodically in risk committee meetings.
If floating rates of interest had increased by 1% during the year ended December 31, 2024, the rate increase would have resulted in an increase in interest expense of $5.3 million.
−Removed: 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.
+Added: If conditions existed in which Management would seek to mitigate potential interest rate risk, Management could elect to take steps such as entering into interest rate hedges, and refinancing debt obligations from floating-rate to fixed-rate.
+Added: An objective of our investment activities is to preserve capital for the purpose of funding operations while at the same time maximizing the income that 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.
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The majority of our operating activities are conducted in U.S.
−Removed: Revenues generated from our foreign subsidiaries totaled $232.1 million and $101.9 million during the years ended December 31, 2023 and 2022, respectively, or 14.1% and 9.4% of our total revenues of $1,643.6 million and $1,080.7 million during the years ended December 31, 2023 and 2022, respectively.
+Added: Revenues generated from our foreign subsidiaries totaled $134.5 million and $154.4 million during the years ended December 31, 2024 and 2023, respectively, or 16.0% and 10.5% of our total revenues of $838.6 million and $1.5 billion during the years ended December 31, 2024 and 2023, respectively.
The financial statements of our foreign subsidiaries are translated into U.S.
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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).
−Removed: Transaction gains (losses), which were included in our consolidated statements of operations, amounted to a loss of $2.8 million and gain of $2.2 million during the years ended December 31, 2023 and 2022, respectively.
+Added: Transaction gains (losses), which were included in our consolidated statements of operations, amounted to a gain of $2.8 million and loss of $2.3 million during the years ended December 31, 2024 and 2023, respectively.
We may be exposed to foreign currency risk;
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A 10% appreciation or depreciation of the U.S.
−Removed: dollar relative to the local currency exchange rates would result in an approximately $7.5 million and $5.9 million change in our operating income during the years ended December 31, 2023 and 2022, respectively.
+Added: dollar relative to the local currency exchange rates would result in an approximately $0.3 million change in our operating income during the years ended December 31, 2024 and 2023, respectively.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
2 unchanged sentences
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.