|
|
 | | | |
- close
- close
- close
- close
| |||||||||
This excerpt taken from the VCI 10-K filed Mar 14, 2006. Item 7a. Quantitative and Qualitative Disclosures about Market Risk Our principal market risks are foreign exchange rates at Valassis’ international subsidiaries, interest rates on various debt instruments and credit risk on investments. Foreign Currency Currencies to which Valassis has exposure are the Mexican peso, Canadian dollar, British pound and the Euro. Currency restrictions are not expected to have a significant effect on our cash flows, liquidity, or capital resources. Valassis typically purchases the Mexican peso under three to 12-month forward foreign exchange contracts to stabilize the cost of coupon clearing in Mexico. Under SFAS No. 133, our Mexican peso forward exchange contracts meet the definition of a cash flow hedge. Accordingly, changes in the fair value of the hedge are recorded as a component of other comprehensive income. For the year ended December 31, 2005, we recorded an immaterial unrealized market value loss in other comprehensive income. Actual exchange losses or gains are recorded against production expense when the contracts are executed. As of December 31, 2005, Valassis had a commitment to purchase $2.2 million in Mexican pesos over the next 12 months. Interest Rates Valassis has a revolving line of credit of $125.0 million with a variable rate of interest calculated on either a Euro currency-based rate or a prime rate. As of December 31, 2005, there was no outstanding balance under this line of credit and, therefore, no exposure to interest rate risk.
21
|
| |||||||
