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MITTAL STEEL COMPANY N.V. AND SUBSIDIARIES
Background for Currency Fluctuations and Foreign Exchange
Mittal Steel's operations span 16 countries across four continents. Its geographic diversity is mirrored by its product diversity.
Currency Fluctuations
Mittal Steel operates and sells products in a number of countries, and as a result, its financial condition and results of operations could be adversely affected by fluctuations in exchange rates. Major changes in rates, particularly changes in the U.S. dollar against the currencies of countries in which Mittal Steel operates, could have adverse effect on its financial condition and results of operations.
The imposition of exchange controls or other similar restrictions on currency convertibility in the countries in which Mittal Steel operates could also adversely affect its financial condition and results of operations.
Net Gain or Loss from Foreign Exchange
Mittal Steel uses the U.S. dollar as its reporting currency. Movements in the exchange rates of the currencies of the countries in which Mittal Steel has operations versus the U.S. dollar have an impact on the earnings of Mittal Steel.
Adjustments for currency exchange rate changes are excluded from net income for those fluctuations that do not impact cash flows and are included for those that do. The requirements reflect these general conclusions:
? The economic effects of an exchange rate change on an operation that is relatively self-contained and integrated within a foreign country relate to the net investment in that operation. Translation adjustments that arise from consolidating that forei ...