AutoZone 2013 Annual Report Download - page 97

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35
exposure. However, we have not designated the fuel swap contracts as hedging instruments; and therefore, the
contracts have not qualified for hedge accounting treatment. We did not enter into any fuel swap contracts during
fiscal 2013, fiscal 2012 or fiscal 2011.
Foreign Currency Risk
Foreign currency exposures arising from transactions include firm commitments and anticipated transactions
denominated in a currency other than our entities’ functional currencies. To minimize our risk, we generally enter
into transactions denominated in the respective functional currencies. Foreign currency exposures arising from
transactions denominated in currencies other than the functional currency are not material.
We are exposed to euros, Canadian dollars, and Brazilian reals, but our primary foreign currency exposure arises
from Mexican peso-denominated revenues and profits and their translation into U.S. dollars.
We view our investments in Mexican subsidiaries as long-term. As a result, we generally do not hedge these net
investments. The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end
exchange rates was $378.7 million at August 31, 2013 and $315.7 million at August 25, 2012. The year-end
exchange rates with respect to the Mexican peso decreased by approximately 1.1% with respect to the U.S. dollar
during fiscal 2013 and decreased by approximately 6.2% during fiscal 2012. The potential loss in value of our net
assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign
currency exchange rates at August 31, 2013 and August 25, 2012, amounted to approximately $34 million and
approximately $29 million, respectively. Any changes in our net assets in the Mexican subsidiaries relating to
foreign currency exchange rates would be reflected in the foreign currency translation component of Accumulated
other comprehensive loss, unless the Mexican subsidiaries are sold or otherwise disposed. A hypothetical 10
percent adverse change in average exchange rates would not have a material impact on our results of operations.
10-K