Supercuts 2005 Annual Report Download - page 57

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Hedge of the Net Investment in Foreign Subsidiaries:
The Company has a cross-currency swap with a notional amount of $21.3 million to hedge a portion of its net investments in its foreign
operations. The purpose of this hedge is to protect against adverse movements in exchange rates.
The table below provides information about the Company’s net investments in foreign operations and derivative financial instruments by
functional currency and presents such information in United States (U.S.) dollar equivalents. The table summarizes the Company’s exposure to
foreign currency translation risk related to its net investments in its foreign subsidiaries along with the associated cross-currency instrument
with a notional amount of $21.3 million to partially hedge the Company’s Euro foreign currency exposure related to its $70.9 million net
foreign investment. The cross-currency swap hedged approximately nine and seven percent of the Company’s net investments in total foreign
operations at June 30, 2005 and 2004, respectively.
The cross-currency swap derivative financial instrument expires in fiscal year 2007. At June 30, 2005 and 2004, the Company’s net
investment in this derivative financial instrument was in an $8.5 and $8.7 million loss position, respectively, based on its estimated fair value.
See Note 5 to the Consolidated Financial Statements for further discussion.
Item 8.
Financial Statements and Supplementary Data
56
Net Investments:
(U.S.$ Equivalent in thousands)
Net investment (CND)
$73,799
Net investment (EURO)
70,904
Net investment (GBP)
56,832
Foreign Currency Derivative:
Fixed
-
for
-
fixed cross currency swap (Euro/U.S.)
Euro amount
€
23,782
Average pay Euro rate
8.29
%
U.S.$ amount
$21,284
Average receive U.S. rate
8.39
%
Index to Consolidated Financial Statements:
Management
’
s Annual Report on Internal Control over Financial Reporting
57
Reports of Independent Registered Public Accounting Firm
58
Consolidated Balance Sheet as of June 30, 2005 and 2004
60
Consolidated Statement of Operations for each of the three years in the period ended June 30, 2005
61
Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income for each of the three years in the period
ended June 30, 2005
62
Consolidated Statement of Cash Flows for each of the three years in the period ended June 30, 2005
63
Notes to Consolidated Financial Statements
64
Quarterly Financial Data (unaudited)
97