COST Financial_Report

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Unformatted text preview: 284 a nd $24 7 a t the end of 2012 a nd 2011, respectively.</font></p> <p style=3D'MARGIN-TOP: 12px &#xA0 <p style=3D'MARGIN-TOP: 12px <font style=3D'FONT-FAMILY: ARIAL' siz e=3D2>The Compa ny seeks to ma na ge counterpa rty risk a ssocia ted with these contra cts by limiting tra nsa ctions to counterpa rties with which the Compa ny ha s a n esta blished ba nking rela tionship. There ca n be no a ssura nce, however, tha t this pra ctice effectively mitiga tes counterpa rty risk. The contra cts a re limited to less tha n one yea r in dura tion. See Note 3 for informa tion on the fa ir va lue of open, unsettled forwa rd foreign-excha nge contra cts a t the end of 2012 a nd 2011.</font></p> <p style=3D'MARGIN-TOP: 12px <font style=3D'FONT-FAMILY: ARIAL' siz e=3D2>The unrea liz ed ga ins or (losses) recogniz ed in interest income a nd other, net in the a ccompa nying consolida ted sta tements of income rela ting to the net cha nges in the fa ir va lue of open, unsettled forwa rd foreign-excha nge contra cts were imma teria l in 2012, 2011, a nd 2010.</font></p> <p style=3D'MARGIN-TOP: 12px <font style=3D'FONT-FAMILY: ARIAL' siz e=3D2>The Compa ny is exposed to fluctua tions in prices for the energy it consumes, pa rticula rly electricity a nd na tura l ga s, which it seeks to pa rtia lly mitiga te through the use of fixed-price contra cts for certa in of its wa rehouses a nd other fa cilities, prima rily in the U.S. a nd Ca na da . The Compa ny a lso enters into va ria ble-priced contra cts for some purcha ses of na tura l ga s, in a ddition to fuel for its ga s sta tions, on a n index ba sis. These contra cts meet the cha ra cteristics of deriva tive instruments, but genera lly qua lify for the &#x201C purcha ses or norma l sa les&#x201D guida nce a nd, thus, require no ma rk-to-ma rket a djustment.</font></p> <p style=3D'MARGIN-TOP: 18px <p style=3D'MARGIN-TOP: 6 px <font style=3D'FONT-FAMILY: ARIAL' siz e=3D2>The functiona l currencies of the Compa ny&#x2019 currency of the country in which the subsidia ry is loca ted. Assets a nd lia bilities recorded in foreign currencies a re tra nsla ted a t the excha nge ra te on the ba la nce sheet da te. Tra nsla tion a djustments resulting from this process a re recorded in a ccumula ted other comprehensive income. Revenues a nd expenses of the Compa ny&#x2019 a vera ge ra tes of excha nge preva iling during the yea r.</font></p> <p style=3D'MARGIN-TOP: 12px <font style=3D'FONT-FAMILY: ARIAL' siz e=3D2>The Compa ny recogniz es foreign-currency tra nsa ction ga ins a nd losses rela ted to reva luing a ll moneta ry a ssets a nd reva luing or settling moneta ry lia bilities denomina ted in currencies other tha n the functiona l currency (genera lly the U.S. dolla r ca sh a nd ca sh equiva lents a nd the U.S. dolla r pa ya bles of consolida ted subsidia ries to their functiona l currency) in interest income a nd other, net in the a ccompa nying condensed consolida ted sta tements of income. Also included a re rea liz ed foreign-currency ga ins or losses from a ll settlements of forwa rd foreign-excha nge contra cts. These items resulted in a net ga in of $4 1, $8 a nd $13 in 2012, 2011, a nd 2010, respectively.</font></p> <p style=3D'MARGIN-TOP: 18px <p style=3D'MARGIN-TOP: 6 px <font style=3D'FONT-FAMILY: ARIAL' siz e=3D2>The Compa n...
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