SWM - Mark Moore

their sales in U.S. dollars to minimize their interest rates and foreign currency risk.From the information given, it illustrates how SWM has moderate disclosure. The nextstep is to analyze whether the company is aggressive or conservative.Most companies that operate globally use hedging tactics. Hedging is a positionestablished in one market in an attempt to offset exposure to unwanted risk(Wikipedia.com). To allow hedging, the industry utilizes forward and swaps contractsand derivative instruments to have less foreign currency transaction risk. Forwardcontracts are contracts that allow a firm to negotiate prices for the future today andenter into a binding contract to lock in these prices. Swap contracts are contractsbetween two parties in which the parties: (a) promise to make payments to oneanother on scheduled dates in the future, and (b) use different criteria or formulas todetermine their respective payments (www.richard-­‐wilson.blogspot.com). Neither SWMnor its competitors provide information on what these derivative instruments are. Theydo however provide sufficient information on the dollar amount of benefit from thesetactics. For example, SWM had forward contracts used to purchase $42 million and $16million in 2008 and 2007, respectively. The contracts “were designated as cash flowhedges of foreign currency transactions to fix the Company's local currency cash flow”(SWM 10-k). UVV and AOI recognized $15.1 million and $4.1 million, respectively, ingains in 2008. SWM has a conservative accounting policy. They provide sufficientinformation on how they protect themselves from foreign currency risk and their gainsor losses in comprehensive income.Pension/Post Retirement BenefitsSchweitzer Mauduit offers two forms of pension plans: a defined benefits plan and anemployee contribution plan. A defined benefit plan promises a specified amount of monthlyincome after retirement. It is common for this amount to be based on salary and/or years ofservice. Conversely, in an employee contribution plan, the amount available at retirement is at67