HIGHLIGHTS
Client: Spectrum Brands
Business Objectives
Introduce an automated reporting and valuation tool for calculating and reporting on sophisticated hedges
Requirements
- Support for complex instruments
- Reduce manual processes and reliance on spreadsheets
"With FINCAD hedge accounting, we are guaranteed consistency and reliability."
John Beatty, VP & Treasurer, Spectrum Brands (Retired)
Background
Spectrum Brands Holding Inc. ("Spectrum") is a global consumer products company with a large portfolio of well-known consumer product brands.
Challenge
Due to its global strategy, Spectrum is exposed to interest rate, foreign exchange, and commodity price volatility. Spectrum performs hedge accounting on its hedges to avoid unnecessary volatility in its income statements. The company initially used plain vanilla average rate forwards to mitigate foreign exchange rate risk, but subsequently added participating average rate forwards to its portfolio to benefit from favorable exchange rate movements.
Solution
Spectrum was using an Excel-based solution to perform hedge accounting on its portfolio, but the manual nature of spreadsheets made the process time-consuming and error prone. Spectrum moved to FINCAD for hedge accounting because of its functionality, coverage, competitive rate, and FINCAD's positive reputation.
Results
Efficient Reporting: Spectrum has on average 750 to 1000 discrete foreign exchange and commodity hedge contracts on its books and once spent considerable time and resources reporting on them quarterly. Moving from a spreadsheet system to FINCAD means that all data is now in one place, and only needs to be entered once, thus reducing manual manipulation that was required with spreadsheets.
Reduced Risk: "In the past, there was an increased risk of an audit restatement. It was only through careful review and crosschecking of the outputs that we had the necessary confidence in the results. As there is less manipulation and more reliability with FINCAD (and its pre-built formulas), I can confidently say that it has decreased Spectrum's audit restatement risk," attests John Beattie, VP " Treasurer, Spectrum Brands.
Documentation: FINCAD provides built-in documentation for fast and simple reporting. "I can export the necessary reports at the click of a button, and they are available immediately. Reporting is now organized and much easier than our previous system," says Dave Kallenbach, Treasury Analyst, Spectrum Brands Holdings, Inc.
Expert Support: "FINCAD's product team is very supportive, have taken many of our suggestions to heart and are building in the functionality that we requested. We’ve very happy with the service provided by FINCAD." says Beattie.
Looking Forward
Spectrum sees its use of FINCAD for hedge accounting expanding in the future. The Company looks forward to increased time savings and a smoother audit process. "This web-based product is very comprehensive, and everything is now in one place. For all these reasons, it is the right solution for us," says Beattie.
"We’ve very happy with the service provided by FINCAD."