complete financial statement - Buhler Industries Inc.

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Management Discussion & Financial AnalysisAccounting Policy ChangesIn February 2008, the Canadian Accounting Standards Board confirmed that Publicly Accountable Enterprises were required to adoptInternational Financial Reporting Standards (IFRS) for interim and annual financial statements relating to fiscal years beginning on or afterJanuary 1, 2011. As described more fully in Note 6 to the consolidated financial statements, the Company adopted this change in thesestatements. These statements present the fiscal 2012 financial information using IFRS, as well as the fiscal 2011 and the October 1, 2010opening balances for comparison purposes.The initial adoption of IFRS under the provisions of IFRS 1, First-Time Adoption of IFRS has resulted in changes to the presentation of incometaxes, deferred income taxes, intangible assets, gains/losses on foreign exchange, amortization and interest income. The Company utilizedthe exemptions available to not revalue previous business combinations, property, plant and equipment or intangibles. Despite the change inaccounting principles, there was no impact on previously reported retained earnings.The consolidated financial statements for year ended September 30, 2012 have been prepared in accordance with IFRS applicable to thepreparation of interim financial statements, including IAS 34 and IFRS 1. The Company has consistently applied the same accounting policies inits opening IFRS balance sheet at October 1, 2010 and throughout all periods presented, as if these policies had always been in effect.Note 6 details the impact of the transition to IFRS on the Company’s reported balance sheet, statements of income and comprehensive income,including the nature and effect of significant changes in accounting policies from those used in the Company’s Canadian GAAP consolidatedfinancial statements for the year ended September 30, 2011. The following highlights the impacts of the more significant changes in accountingpolicies:First-Time Adoption of International Financial Reporting Standards – IFRS 1, First-Time Adoption of International Financial Reporting Standards,provides guidance for an entity’s initial adoption of IFRS and generally requires the retrospective application of all IFRS effective at the end of itsfirst IFRS reporting period. IFRS 1 however does include certain mandatory exceptions and allows certain limited optional exemptions from thisgeneral requirement of retrospective application. The exemptions and exceptions most relevant to the Company under IFRS 1 on the openingtransition date of October 1, 2010 are as follows:i. Business combinations – An exemption is available within IFRS 1 that allows a Company to carry forward its previous Canadian GAAPaccounting for business combinations prior to the transition date. The Company has elected to apply this exemption and as a result, acquisitionsprior to October 1, 2010 have not been restated to comply with IFRS 3 “Business Combinations”.ii. Fair value as deemed cost – This exemption allows a Company to revalue property, plant and equipment at fair value at its transition date anduse this fair value as the deemed cost. The Company did not apply this exemption.iii. Estimates – IFRS 1 prescribes a mandatory exemption from full retrospective application of IFRS as it relates to the use of estimates. Itrequires that a company’s estimates in accordance with IFRS at the date of transition to IFRS must be consistent with estimates made for thesame date in accordance with previous Canadian GAAP (after adjustments to reflect any difference in accounting policies), unless there isobjective evidence that those estimates were in error. The Company did not use hindsight in its estimates upon transition to IFRS, nor did it findany evidence that any of its previously made estimates were in error.Provisions – Under IAS 37, Provisions, Contingent Liabilities and Contingent Assets, the threshold for recording provisions is considerably lowerthan under Canadian GAAP as the probability for recording a provision for a cash outflow has to be only more likely than not under IFRS. UnderCanadian GAAP, the probability of a future outflow has to be viewed as likely before a liability is recorded, which is a much higher probability thanunder IFRS. As a result, provisions are inclined to be recorded more often and/or sooner under IFRS than under Canadian GAAP. Despite thislower standard for recognition, no changes were required for the transition date.12
Management Discussion & Financial AnalysisImpairment of Assets – Upon transition to IFRS, all of the Company’s property, plant and equipment and intangible assets, including goodwill,were reviewed to determine whether there were any indications of impairment. When these indications were present, the asset’s recoverableamount was estimated. IAS 36, Impairment of Assets, uses a one-step approach for both testing for and measurement of impairment, with assetcarrying values compared directly with the higher of fair value less costs to sell and value in use, which is based on discounted future cash flows.Canadian GAAP, on the other hand, generally used a two-step approach to impairment testing of long-lived assets and finite-life intangible assetsby first comparing asset carrying values with undiscounted future cash flows to determine whether impairment existed. If it was determined thatthere was impairment under this basis, the impairment was then calculated by comparing asset carrying values with fair values in much thesame manner as computed under IFRS. Additionally under IFRS, testing for impairment occurs at the level of cash generating units, which is thelowest level of assets that generate largely independent cash inflows. This lower level of grouping compared to Canadian GAAP along with theone-step approach to testing for impairment may increase the likelihood that the Company will realize an impairment of assets under IFRS in thefuture. It should also be noted that under IAS 36, previous impairment losses, with the exception of goodwill, can be reversed when there areindications that circumstances have changed whereas Canadian GAAP prohibited reversal of non-financial asset impairment losses. As of thetransition date of October 1, 2010, the Company determined that no assets were impaired.Income Taxes – Under Canadian GAAP, when the functional currency for accounting purposes differed from the functional currency for taxationpurposes, deferred taxes were first calculated in the currency in which income taxes were paid and then translated to the functional currency foraccounting purposes at the period end exchange rate. Under IFRS, IAS 12, Income Taxes, deferred taxes are calculated based on the functionalcurrency for accounting purposes, regardless of the functional currency used for taxation purposes. There was no impact on 2011 net income inregard to this change.Looking ForwardThe Company just finished 2012 with record sales and profit. The outlook for 2013 remains cautiously optimistic. While sales may be impactedin the first half of the year due to the drought in the U.S. and Russia, sales for the year are expected to be in line or greater than 2012. Domesticsales is expected to increase while a reduction in overseas sales is forecast due to higher levels of inventory at our overseas customers. Highercommodity prices will continue to drive farm incomes and as a result additional investments in new agricultural equipment.Sales of tractors, sprayers, seeding and tillage are expected to be stronger for 2013. The introduction of the new Versatile combine firstintroduced in 2012 is expected to grow into 2013 and the Company has also recently introduced a new drill and air cart as well as a grain cartwhich will yield higher sales for 2013.Research and development expenditures are expected to increase in 2013 as the company continues to invest in new products andtechnologies.Critical Accounting EstimatesThe Company believes the following accounting estimates are critical to determining and understanding the operating results and the financialposition of the Company.Allowance for doubtful accounts. The Company estimates allowances for potential losses resulting from the inability of customers to makerequired payments of accounts receivable. Additional allowances may be required if the financial condition of any customer deteriorates.Allowance for inventory obsolescence. The Company estimates allowances for potential losses resulting from inventory becoming obsolete andthat cannot be processed and/or sold to customers. Additional allowances may be required if the physical condition of inventory deteriorates orcustomer requirements change.Income taxes. The future income tax assets and liabilities are measured using the income tax rates that are expected to apply upon realizationor settlement. They are also determined on the basis of management’s best estimate of the period over which they will be realized or settled.Future income tax assets are realized to the extent that the realization of benefits is considered more likely than not. In the event that the actualoutcome differs from management’s assumptions and estimates, the carrying amounts may be adjusted. Management believes that estimatesemployed are reasonable and reflect the probable outcome of known tax contingencies.13
Page 1: 2012B u h l e r I n d u s t r i e s
Page 4 and 5: VersatileOne of the most important
Page 6 and 7: Chief Executive Officer’s Message
Page 8 and 9: Management Discussion & Financial A
Page 16 and 17: Consolidated Balance SheetAs at Sep
Page 18 and 19: Consolidated Statement of Cash Flow
Page 20 and 21: Notes to Consolidated Financial Sta
Page 28 and 29: Company InformationAudit Committee
Page 30: Stock DataBuhler (excluding dividen

complete financial statement - Buhler Industries Inc.

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