Company: HLI
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001302215-25-000092
Chunk: 42

Company: HOULIHAN LOKEY, INC.
Filing Date: 2025-08-05
Form: 10-Q
Item: Part I, Item 1
Chunk 42
---
 accounts. We have exposure to foreign exchange risks through all of our international affiliates, and through some of our investments. However, we believe our cash is not subject to any material interest rate risk, equity price risk, credit risk or other market risk. Consistent with our past practice, we expect to maintain our cash in bank accounts or invested in highly liquid securities.

Exchange Rate Risk

The exchange rate of the U.S. Dollar relative to the currencies in the non-U.S. countries in which we operate may have an effect on the reported value of our non-U.S. Dollar denominated or based assets and liabilities and, therefore, be reflected as a change in other comprehensive income, net of tax. Our non-U.S. assets and liabilities that are sensitive to exchange rates consist primarily of trade payables and receivables, work in progress, and cash. For the three months ended June 30, 2025 and 2024, the net impact of the fluctuation of foreign currencies in other comprehensive income within the Consolidated Statements of Comprehensive Income was $48.3 million and $(3.0) million, respectively. A hypothetical 10% depreciation in the U.S. Dollar relative to the functional currencies of our foreign subsidiaries as of June 30, 2025, would have resulted in an increase in our other comprehensive income, net of tax, of approximately $102 million for the three months ended June 30, 2025.

In addition, the reported amounts of our revenues and expenses may be affected by movements in the rate of exchange between the currencies in the non-U.S. countries in which we operate and the U.S. Dollar, affecting our operating results. We have analyzed our potential exposure to changes in the value of the U.S. Dollar relative to the Pound Sterling and Euro, the primary currencies of our European operations, by performing a sensitivity analysis on our net income, and determined that while our earnings are subject to fluctuations from changes in foreign currency rates, at this time we do not believe we face any material risk in this respect. 

From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of June 30, 2025, we had no open foreign currency forward contracts outstanding. As of June 30, 2024, we had three foreign currency forward contract outstanding between the U.S. Dollar and the Pound Sterling with an aggregate notional value of $67.0 million. The change in fair value