To explore practices with respect to these translation exposures, the survey
first identified the universe of respondents with foreign subsidiaries. As was
the case in our last survey, roughly three in four respondents (77%) indicated
that they had at least one foreign subsidiary as a result of their international
operations. A large majority indicated that the functional currency of the
subsidiaries is the local or foreign currency. This figure was well in excess
of 90% for the most frequently cited geographic regions. Thus, by definition,
when following US GAAP, the existence of these subsidiaries would mean that
consolidated financial statement results would be affected by FX rate volatility
and its effects on the translation of foreign subsidiary income statements and
balance sheets.