ZOLL » Topics » Item 3. Quantitative and Qualitative Disclosures About Market Risk

This excerpt taken from the ZOLL 10-K filed Dec 15, 2006.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

We have cash equivalents and marketable securities that primarily consist of money market accounts and fixed-rate, asset-backed corporate securities. The majority of these investments have maturities within one to five years. We believe that our exposure to interest rate risk is minimal due to the term and type of our investments and that the fluctuations in interest rates would not have a material adverse effect on our results of operations.

 

We have international subsidiaries in Canada, the United Kingdom, the Netherlands, France, Germany, Austria, Australia, and New Zealand. These subsidiaries transact business in their functional or local currency. Therefore, we are exposed to foreign currency exchange risks and fluctuations in foreign currencies, along with economic and political instability in the foreign countries in which we operate, all of which could adversely impact our results of operations and financial condition.

 

We use forward contracts to reduce our exposure to foreign currency risk due to fluctuations in exchange rates underlying the value of intercompany accounts receivable denominated in foreign currencies. A forward contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates. These forward contracts are denominated in the same currency in which the underlying foreign currency receivables and forecasted sales are denominated and bear a contract value and maturity date that approximate the value and expected settlement date, respectively, of the underlying transactions. Unrealized gains and losses on open contracts at the end of each accounting period, resulting from changes in the fair value of these contracts, are recognized in earnings generally in the same period as exchange gains and losses on the underlying foreign denominated receivables and forecasted sales are recognized.

 

We had one forward exchange contract outstanding serving as a hedge of our Euro intercompany receivables in the notional amount of approximately 3 million Euros at October 1, 2006. The contract serves as a hedge of a substantial portion of our Euro-denominated intercompany balances. The fair value of the foreign currency derivative contract outstanding at October 1, 2006 was approximately $3.8 million, resulting in an

 

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unrealized gain of $34,000. A sensitivity analysis of a change in the fair value of the Euro derivative foreign exchange contract outstanding at October 1, 2006 indicates that, if the U.S. dollar weakened by 10% against the Euro, the fair value of this contract would decrease by $380,000 resulting in a total loss on the contract of $346,000. Conversely, if the U.S. dollar strengthened by 10% against the Euro, the fair value of this contract would increase by $346,000 resulting in a total gain on the contract of $380,000. Any gains and losses on the fair value of the derivative contract would be largely offset by losses and gains on the underlying transaction. These offsetting gains and losses are not reflected in the analysis above.

 

Intercompany Receivable Hedge

Exchange Rate Sensitivity: October 1, 2006

(Amounts in $)

 

    Expected Maturity Dates

  Total

 

Unrealized

Gain


  2006

  2007

  2008

  2009

  2010

  Thereafter

   

Forward Exchange Agreements (Receive $/Pay Euro) Contract Amount

  $ 3,842,000                       $ 3,842,000   $ 34,000

Average Contract Exchange Rate

    1.2808   —     —     —     —     —       1.2808      

 

We had no forward exchange contracts outstanding serving as a hedge of a portion our forecasted sales to our subsidiaries as of October 1, 2006.

 

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This excerpt taken from the ZOLL 10-Q filed Aug 11, 2006.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have cash equivalents and marketable securities that primarily consist of money market accounts and fixed-rate, asset-backed corporate securities. The majority of these investments have maturities within one to five years. We believe that our exposure to interest rate risk is minimal due to the term and type of our investments and that the fluctuations in interest rates would not have a material adverse effect on our results of operations.

 

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We have international subsidiaries in Canada, the United Kingdom, the Netherlands, France, Germany, Austria, Australia, and New Zealand. These subsidiaries transact business in their functional or local currency. Therefore, we are exposed to foreign currency exchange risks and fluctuations in foreign currencies, along with economic and political instability in the foreign countries in which we operate, all of which could adversely impact our results of operations and financial condition.

We use forward contracts to reduce our exposure to foreign currency risk due to fluctuations in exchange rates underlying the value of intercompany accounts receivable denominated in foreign currencies as well as forecasted sales to subsidiaries denominated in foreign currencies. A forward contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates. These forward contracts are denominated in the same currency in which the underlying foreign currency receivables and forecasted sales are denominated and bear a contract value and maturity date that approximate the value and expected settlement date, respectively, of the underlying transactions. Unrealized gains and losses on open contracts at the end of each accounting period, resulting from changes in the fair value of these contracts, are recognized in earnings generally in the same period as exchange gains and losses on the underlying foreign denominated receivables and forecasted sales are recognized.

We had one forward exchange contract outstanding serving as a hedge of our Euro intercompany receivables in the notional amount of approximately 3 million Euros at July 2, 2006. The contract serves as a hedge of a substantial portion of our Euro-denominated intercompany balances. The fair value of the foreign currency derivative contract outstanding at July 2, 2006 was approximately $3.8 million, resulting in an unrealized loss of $172,000. A sensitivity analysis of a change in the fair value of the Euro derivative foreign exchange contract outstanding at July 2, 2006 indicates that, if the U.S. dollar weakened by 10% against the Euro, the fair value of this contract would decrease by $383,000 resulting in a total loss on the contract of $555,000. Conversely, if the U.S. dollar strengthened by 10% against the Euro, the fair value of this contract would increase by $349,000 resulting in a total gain on the contract of $177,000. Any gains and losses on the fair value of the derivative contract would be largely offset by losses and gains on the underlying transaction. These offsetting gains and losses are not reflected in the analysis above.

Intercompany Receivable Hedge

Exchange Rate Sensitivity: July 2, 2006

(Amounts in $)

 

     Expected Maturity Dates   

Total

  

Unrealized

Loss

     2006    2007    2008    2009    2010    Thereafter      

Forward Exchange Agreements (Receive $/Pay Euro) Contract Amount

   $ 3,662,000                   $ 3,662,000    $ 172,000

Average Contract Exchange Rate

     1.2205    —      —      —      —      —        1.2205   

We had no forward exchange contracts outstanding serving as a hedge of a portion our forecasted sales to our subsidiaries at July 2, 2006.

This excerpt taken from the ZOLL 10-Q filed May 12, 2006.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have cash equivalents and marketable securities that primarily consist of money market accounts and fixed-rate, asset-backed corporate securities. The majority of these investments have maturities within one to five years. We believe that our exposure to interest rate risk is minimal due to the term and type of our investments and that the fluctuations in interest rates would not have a material adverse effect on our results of operations.

We have international subsidiaries in Canada, the United Kingdom, the Netherlands, France, Germany, Austria, Australia, and New Zealand. These subsidiaries transact business in their functional or local currency. Therefore, we are exposed to foreign currency exchange risks and fluctuations in foreign currencies, along with economic and political instability in the foreign countries in which we operate, all of which could adversely impact our results of operations and financial condition.

We use forward contracts to reduce our exposure to foreign currency risk due to fluctuations in exchange rates underlying the value of intercompany accounts receivable denominated in foreign currencies as well as forecasted sales to subsidiaries

 

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denominated in foreign currencies. A forward contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates. These forward contracts are denominated in the same currency in which the underlying foreign currency receivables and forecasted sales are denominated and bear a contract value and maturity date that approximate the value and expected settlement date, respectively, of the underlying transactions. Unrealized gains and losses on open contracts at the end of each accounting period, resulting from changes in the fair value of these contracts, are recognized in earnings generally in the same period as exchange gains and losses on the underlying foreign denominated receivables and forecasted sales are recognized.

We had one forward exchange contract outstanding serving as a hedge of our Euro intercompany receivables in the notional amount of approximately 3.5 million Euros at April 2, 2006. The contract serves as a hedge of a substantial portion of our Euro-denominated intercompany balances. The fair value of the foreign currency derivative contract outstanding at April 2, 2006 was approximately $4.2 million, resulting in an unrealized loss of $97,000. A sensitivity analysis of a change in the fair value of the Euro derivative foreign exchange contract outstanding at April 2, 2006 indicates that, if the U.S. dollar weakened by 10% against the Euro, the fair value of this contract would decrease by $424,000 resulting in a total loss on the contract of $521,000. Conversely, if the U.S. dollar strengthened by 10% against the Euro, the fair value of this contract would increase by $386,000 resulting in a total gain on the contract of $290,000. Any gains and losses on the fair value of the derivative contract would be largely offset by losses and gains on the underlying transaction. These offsetting gains and losses are not reflected in the analysis above.

Intercompany Receivable Hedge

Exchange Rate Sensitivity: April 2, 2006

(Amounts in $)

 

     Expected Maturity Dates    Total   

Unrealized

Loss

     2006    2007    2008    2009    2010    Thereafter      

Forward Exchange Agreements (Receive $/Pay Euro) Contract Amount

   $ 4,146,000                   $ 4,146,000    $ 97,000

Average Contract Exchange Rate

     1.1845    —      —      —      —      —        1.1845   

We had no forward exchange contracts outstanding serving as a hedge of a portion our forecasted sales to our subsidiaries at April 2, 2006.

This excerpt taken from the ZOLL 10-K filed Dec 15, 2005.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

We have cash equivalents and marketable securities that primarily consist of money market accounts and fixed rate asset-backed corporate securities. The majority of these investments have maturities within one to five years. We believe that our exposure to interest rate risk is minimal due to the term and type of our investments and those fluctuations in interest rates would not have a material adverse effect on our results of operations.

 

We have international offices in Canada, United Kingdom, Netherlands, France, Germany, Austria, and Australia. These subsidiaries transact business in their functional or local currency. Therefore, we are exposed to foreign currency exchange risks and fluctuations in foreign currencies, along with economic and political instability in the foreign countries in which we operate, all of which could adversely impact our results of operations and financial condition.

 

We use forward contracts to reduce our exposure to foreign currency risk due to fluctuations in exchange rates underlying the value of intercompany accounts receivable denominated in foreign currencies as well as forecasted sales to subsidiaries denominated in foreign currencies. A forward contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates. These forward contracts are denominated in the same currency in which the underlying foreign currency receivables and forecasted sales are denominated and bear a contract value and maturity date that approximate the value and expected settlement date, respectively, of the underlying transactions. Unrealized gains and losses on open contracts at the end of each accounting period, resulting from changes in the fair value of these contracts, are recognized in earnings generally in the same period as exchange gains and losses on the underlying foreign denominated receivables and forecasted sales are recognized.

 

We had one forward exchange contract outstanding serving as a hedge of our Euro denominated intercompany receivables in the notional amount of approximately 3.8 million Euros at October 2, 2005. The contract serves as a hedge of a substantial portion of our Euro-denominated intercompany balances and settles on October 4, 2005. The fair value of the foreign currency derivative contract outstanding at October 2, 2005 was approximately $4.5 million resulting in an unrealized gain of $24,000. A sensitivity analysis of a change in the fair value of the Euro derivative foreign exchange contract outstanding at October 2, 2005 indicates that, if the U.S. dollar weakened by 10% against the Euro, the fair value of this contract would decrease by $451,000 resulting in a total loss on the contract of $427,000. Conversely, if the U.S. dollar strengthened by 10% against the Euro, the fair value of this contract would increase by $410,000 resulting in a total gain on the contract of $434,000. Any gains and losses on the fair value of the derivative contract would be largely offset by losses and gains on the underlying transaction. These offsetting gains and losses are not reflected in the analysis above.

 

Intercompany Receivable Hedge

Exchange Rate Sensitivity: October 2, 2005

(Amounts in $)

 

    Expected Maturity Dates

  Total

  Unrealized
Gain /
(Loss)


    2006

  2007

  2008

  2009

  2010

  Thereafter

   

Forward Exchange Agreements (Receive $/Pay Euro) Contract Amount

  $ 4,532,000                       $ 4,532,000   $ 24,000

Average Contract Exchange Rate

    1.2085   —     —     —     —     —       1.2085     —  

 

We had no forward exchange contracts outstanding serving as a hedge of a portion our forecasted sales to our subsidiaries at October 2, 2005.

 

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This excerpt taken from the ZOLL 10-Q filed Aug 12, 2005.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We have cash equivalents and marketable securities that primarily consist of money market accounts and fixed rate asset-backed corporate securities. The majority of these investments have maturities within one to five years. We believe that our exposure to interest rate risk is minimal due to the term and type of our investments and that the fluctuations in interest rates would not have a material adverse effect on our results of operations.

 

We have international offices in Canada, United Kingdom, Netherlands, France, Germany, Austria, and Australia. These subsidiaries transact business in their functional or local currency. Therefore, we are exposed to foreign currency exchange risks and fluctuations in foreign currencies, along with economic and political instability in the foreign countries in which we operate, all of which could adversely impact our results of operations and financial condition.

 

We use forward contracts to reduce our exposure to foreign currency risk due to fluctuations in exchange rates underlying the value of intercompany accounts receivable denominated in foreign currencies as well as forecasted sales to subsidiaries denominated in foreign currencies. A forward contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates. These forward contracts are denominated in the same currency in which the underlying foreign currency receivables and forecasted sales are denominated and bear a contract value and maturity date that approximate the value and expected settlement date, respectively, of the underlying transactions. Unrealized gains and losses on open contracts at the end of each accounting period, resulting from changes in the fair value of these contracts, are recognized in earnings generally in the same period as exchange gains and losses on the underlying foreign denominated receivables and forecasted sales are recognized.

 

We had one forward exchange contract outstanding serving as a hedge of our Euro intercompany receivables in the notional amount of approximately 3.8 million Euros at July 3, 2005. The contract serves as a hedge of a substantial portion of our Euro-denominated intercompany balances. The fair value of the foreign currency derivative contract outstanding at July 3, 2005 was approximately $4.5 million resulting in an unrealized gain of $51,000. A sensitivity analysis of a change in the fair value of the Euro derivative foreign exchange contract outstanding at July 3, 2005 indicates that, if the U.S. dollar weakened by 10% against the Euro, the fair value of this contract would decrease by $448,000 resulting in a total loss on the contract of $397,000. Conversely, if the U.S. dollar strengthened by 10% against the Euro, the fair value of this contract would increase by $407,000 resulting in a total gain on the contract of $458,000. Any gains and losses on the fair value of the derivative contract would be largely offset by losses and gains on the underlying transaction. These offsetting gains and losses are not reflected in the analysis above.

 

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Intercompany Receivable Hedge

Exchange Rate Sensitivity: July 3, 2005

(Amounts in $)

 

     Expected Maturity Dates

   Total

  

Unrealized

Gain


     2005

   2006

   2007

   2008

   2009

   Thereafter

     

Forward Exchange Agreements (Receive $/Pay Euro) Contract Amount

   $ 4,532,000                             $ 4,532,000    $ 51,000

Average Contract Exchange Rate

     1.2085    —      —      —      —      —        1.2085       

 

We had no forward exchange contracts outstanding serving as a hedge of a portion our forecasted sales to our subsidiaries at July 3, 2005.

 

This excerpt taken from the ZOLL 10-Q filed May 13, 2005.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We have cash equivalents and marketable securities that primarily consist of money market accounts and fixed rate asset-backed corporate securities. The majority of these investments have maturities within one to five years. We believe that our exposure to interest rate risk is minimal due to the term and type of our investments and that the fluctuations in interest rates would not have a material adverse effect on our results of operations.

 

We have international offices in Canada, United Kingdom, Netherlands, France, Germany, Austria, and Australia. These subsidiaries transact business in their functional or local currency. Therefore, we are exposed to foreign currency exchange risks and fluctuations in foreign currencies, along with economic and political instability in the foreign countries in which we operate, all of which could adversely impact our results of operations and financial condition.

 

We use forward contracts to reduce our exposure to foreign currency risk due to fluctuations in exchange rates underlying the value of intercompany accounts receivable denominated in foreign currencies as well as forecasted sales to subsidiaries denominated in foreign currencies. A forward contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates. These forward contracts are denominated in the same currency in which the underlying foreign currency receivables and forecasted sales are denominated and bear a contract value and maturity date that approximate the value and expected settlement date, respectively, of the underlying transactions. Unrealized gains and losses on open contracts at the end of each accounting period, resulting from changes in the fair value of these contracts, are recognized in earnings generally in the same period as exchange gains and losses on the underlying foreign denominated receivables and forecasted sales are recognized.

 

We had one forward exchange contract outstanding serving as a hedge of our Euro intercompany receivables in the notional amount of approximately 4.5 million Euros at April 3, 2005. The contract serves as a hedge of a substantial portion of our Euro-denominated intercompany balances. The fair value of the foreign currency derivative contract outstanding at April 3, 2005 was approximately $5.8 million resulting in an unrealized gain of $35,000. A sensitivity analysis of a change in the fair value of the Euro derivative foreign exchange contract outstanding at April 3, 2005 indicates that, if the U.S. dollar weakened by 10% against the Euro, the fair value of this contract would decrease by $581,000 resulting in a total loss on the contract of $546,000. Conversely, if the U.S. dollar strengthened by 10% against the Euro, the fair value of this contract would increase by $528,000 resulting in a total gain on the contract of $563,000. Any gains and losses on the fair value of the derivative contract would be largely offset by losses and gains on the underlying transaction. These offsetting gains and losses are not reflected in the analysis above.

 

 

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Intercompany Receivable Hedge

Exchange Rate Sensitivity: April 3, 2005

(Amounts in $)

 

     Expected Maturity Dates

   Total

  

Unrealized

Gain


     2005

   2006

   2007

   2008

   2009

   Thereafter

         

Forward Exchange Agreements (Receive $/Pay Euro) Contract Amount

   $ 5,843,000                             $ 5,843,000    $ 35,000

Average Contract Exchange Rate

     1.2985    —      —      —      —      —        1.2985       

 

We had no forward exchange contracts outstanding serving as a hedge of a portion our forecasted sales to our subsidiaries at April 3, 2005.

 

This excerpt taken from the ZOLL 10-Q filed Feb 11, 2005.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We have cash equivalents and marketable securities that primarily consist of money market accounts and fixed rate asset-backed corporate securities. The majority of these investments have maturities within one to five years. We believe that our exposure to interest rate risk is minimal due to the term and type of our investments and that the fluctuations in interest rates would not have a material adverse effect on our results of operations.

 

We have international offices in Canada, United Kingdom, Netherlands, France, Germany, Austria, and Australia. These subsidiaries transact business in their functional or local currency. Therefore, we are exposed to foreign currency exchange risks and fluctuations in foreign currencies, along with economic and political instability in the foreign countries in which we operate, all of which could adversely impact our results of operations and financial condition.

 

We use forward contracts to reduce our exposure to foreign currency risk due to fluctuations in exchange rates underlying the value of intercompany accounts receivable denominated in foreign currencies as well as forecasted sales to subsidiaries denominated in foreign currencies. A forward contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates. These forward contracts are denominated in the same currency in which the underlying foreign currency receivables and forecasted sales are denominated and bear a contract value and maturity date that approximate the value and expected settlement date, respectively, of the underlying transactions. Unrealized gains and losses on open contracts at the end of each accounting period, resulting from changes in the fair value of these contracts, are recognized in earnings generally in the same period as exchange gains and losses on the underlying foreign denominated receivables and forecasted sales are recognized.

 

We had one forward exchange contract outstanding serving as a hedge of our Euro intercompany receivables in the notional amount of approximately 4.5 million Euros at January 2, 2005. The contract serves as a hedge of a substantial portion of our Euro-denominated intercompany balances. The fair value of the foreign currency derivative contract outstanding at January 2, 2005 was approximately $6.0 million resulting in an unrealized gain of $138,000. A sensitivity analysis of a change in the fair value of the Euro derivative foreign exchange contract outstanding at January 2, 2005 indicates that, if the U.S. dollar weakened by 10% against the Euro, the fair value of this contract would decrease by $597,000 resulting in a total loss on the contract of $459,000. Conversely, if the U.S. dollar strengthened by 10% against the Euro, the fair value of this contract would increase by $543,000 resulting in a total gain on the contract of $681,000. Any gains and losses on the fair value of the derivative contract would be largely offset by losses and gains on the underlying transaction. These offsetting gains and losses are not reflected in the analysis above.

 

Intercompany Receivable Hedge

Exchange Rate Sensitivity: January 2, 2005

(Amounts in $)

 

     Expected Maturity Dates

   Total

  

Unrealized

Gain


     2005

   2006

   2007

   2008

   2009

   Thereafter

         

Forward Exchange Agreements (Receive $/Pay Euro) Contract Amount

   $ 6,109,000                             $ 6,109,000    $ 138,000

Average Contract Exchange Rate

     1.3576    —      —      —      —      —        1.3576       

 

We had no forward exchange contracts outstanding serving as a hedge of a portion our forecasted sales to our subsidiaries at January 2, 2005.

 

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