Therefore revenues and expenses ccrinated in foreign

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more $US. Therefore, revenues and expenses 'cc;;::rinated in foreign currencies were translated to higher $US equivalents, yielding increased ~=:es and profits even when unit volumes remained unchanged. Pfizer also discloses that it .l::2:::::::;JfS to dampen the effect that these fluctuations have on reported profit: 'gn Exchange Risk A significant portion of our revenues and earnings is exposed to changes u-eign exchange rates. We seek to manage our foreign exchange risk in part through operational -:earlS, including managing same-currency revenues in relation to same-currency costs and same- :::nency assets in relation to same-currency liabilities. -=hrase "operational means" indicates that the company structures its transactions in $US man a foreign currency or attempts to match same-currency revenues and expenses (or and liabilities) to minimize the effects of currency fluctuatinos. Foreign currency financial ents are common and include forward and futures contracts, which lock in future currency _We explain how these instruments (called derivatives) work in Appendix 9A. In sum, we De cognizant of the effects of currency fluctuations on reported revenues, expenses, and - for companies with substantial foreign-currency transactions. ERATING COMPONENTS BELOW-THE-LINE - income statement includes a subtotal labeled "income from continuing operations." ically, this presentation highlighted the nonrecurring (transitory) portions of the income I1tso that they could be eliminated to facilitate the projection of future profitability. The . =continuing" was meant to imply that income was purged of one-time items, as these were red "below-the-line," that is, below income from continuing operations. Two categories of are presented below-the-line: 7 - continued operations Net income (loss) from business segments that have been or will x sold, and any gains (losses) on net assets related to those segments sold in the current -xriod. Extraordinary items Gains or losses from events that are both unusual and infrequent. Discontinued operations are generally viewed as nonoperating, and we discuss their account- =- zreatrnent in Module 9. Explanation of the accounting for extraordinary items follows. '- ordinary Items ordinary items refer to events that are both unusual and infrequent. Their effects are reported ing income from continuing operations. Management determines whether an event is unusual infrequent (with auditor approval) for financial reporting purposes. Further, management has incentives to classify unfavorable items as extraordinary because they will be reported ely, after income from continuing operations (below-the-line). These incentives derive from gers' beliefs that investors tend to focus more on items included in income from continuing ions and less on nonrecurring items that are not included in continuing operations.
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