SWM - Mark Moore

contracts and, to a lesser extent, option contracts to selectively hedge our exposure to foreigncurrency transaction risk when it is practical and economical to do so”. These contracts help tolessen transactional exposure to exchange rate changes that will eventually offset the foreigncurrency exposure. They follow SFAS No. 52 “Foreign currency transaction” when SWMtranslates their foreign operations income statements into local US dollars.Foreign currency risks occur when firms conduct business in non-local currencies. SWMendured “losses resulting from re-measurement and settlement of such transactions andbalances, included in other expenses, net, were $4 million, $1.1 million and $1.3 million in2008, 2007 and 2006 respectively”. They reported these losses from exchange rates inunrealized for current charges on their consolidated statement. This is an example of how firmshave no room for flexibility in reporting the gains or losses of currency risk.Pensions and Other Postretirement Benefit PlansPension and Post-Retirement plans are made up of companies’ annualcontributions, which provide employees benefits when they retire. Management has asubstantial amount of flexibility because the planned assets are all based on estimatesdetermined by there certain accumulated and future benefit plan obligations.Companies have an option of the amount and what type of plan they intend to use. AtSchweitzer-Mauduit, they are in accordance with No. 87, “Employers’ Accounting forPensions”, and No. 106, “Employers’ Accounting for Postretirement Benefits Other thanPensions”, of the SFAS. In their 10-K, SWM states that “the company recognizes theestimated compensation cost of employees’ Pension and other Post-Retirement Benefitover their approximate period of service” in regards to the SFAS. In their United Statesfacilities, Schweitzer-Mauduit offers a defined benefit plan or a defined contributionplan. However, in France, which includes the Indonesian and Philippines branches,they are covered under a government-administered program.63