Global Finance 373EXHIBIT 12.12 Disclosure of net investment hedge: The Quaker Oats
Company, December 31, 1999 (in millions).
Currency Net Investment Net Hedge Net Exposure
Dutch guilders $15.1 $ 9.1 $6.0
German marks 18.3 11.9 6.4
SOURCE: The Quaker Oats Company, annual report, December 1999, 56.
EXHIBIT 12.13 Company references to hedging cost and the terms of
currency derivatives.
Company Reference
Hedging Costs
Baxter International Inc. (1999) The Company’s hedging policy attempts to manage these
risks to an acceptable level based on management’s
judgment of the appropriate trade-off between risk,
opportunity, and costs. As part of the strategy to manage
risk while minimizing hedging costs, the Company utilizes
sold call options in conjunction with purchased put
options to create collars.
Compaq Computer Corporation The Company also sells foreign exchange option contracts,
(1999) in orderto par tially finance(reduce their cost) the
purchase of these foreign exchange option contracts.
Interface Inc. (1999) The Euro may reduce the exposure to changes in foreign
exchange rates, due to the netting effects of having assets
and liabilities denominated in a single currency.As a result,
the Company’s foreign exchange hedging activity and
related costs may be reducedin the future.
Derivative Maturities
Blyth Industries Inc. (2000) The foreign exchange contracts outstanding at January 31,
2000 have maturity dates ranging from February 2000
through June 2000.
Compaq Computer Corporation The term of the Company’s foreign exchange hedging
(1999) instruments currently does not extend beyond six months.
Johnson & Johnson (1999) The Company enters into for ward foreign exchange
contracts maturing within five years to protect the value
of existing foreign currency assets and liabilities.
Pall Corporation (2000) The Company enters into for ward exchange contracts,
generally with terms of 90 days or less.
Polaroid Corporation (1999) The term of these contracts (for ward exchange contracts)
typically does not exceed six months.
Tenneco Inc. (1998) Tenneco uses derivative financial instruments, principally
foreign currency for ward purchase and sale contracts,
with terms of less than one year.
SOURCES: Companies’ annual reports. The year following each company name designates the annual re-
port from which each example is drawn.