Bank

EIB 03-02gd REV 8/2004 Page 1 of 10

Guidelines for Spreading Financial Statements

Purpose: This paper provides guidance on spreading the financial statements of foreign borrowers or guarantors using spreading software. While Ex-Im Bank uses Moody’s KMV’s Financial Analyst, this guidance can also be used for other spreading software. The analyst should review the item in the financial statement, then if in doubt, read the guidance on that item. This paper also lists which financial statements and reports Ex-Im Bank reviews when performing credit analysis.

General Items:

A. Combined or consolidated statements - Note on the spreads if the statements are combined or consolidated. B. Indicate on each page the currency and if the figures are actual or are in thousands or millions. C. Auditor’s reports -Enter the auditor’s name and type of opinion: unqualified, qualified, adverse or disclaimer of opinion. Compilations or reviews - If applicable, so note. D. Exchange rates to be used - If statements for individual years are being spread, the year-end rate should be used for both historical cost and inflation-adjusted statements. In the latter case, this is because under comprehensive inflation accounting techniques, such as I.A.S. 29 and Bulletin B-10 in Mexico, the balance sheet and income statement figures are adjusted to end-of-the-year equivalents. When comparative statements are issued, standard practice is for the first year’s figures to also be stated in end-of-the-second-year equivalents. Therefore, year two year-end exchange rate should also be used for the first year. With comparative statements distortions will not result if the inflation and devaluation rates (in terms of local currency per U.S. dollar) are about the same. If the rates are different, for example Turkey from 1998 to 2002, only the most recent year in a set of comparative statements should be used. Exchange rates provided by the IMF should be used, or if those rates are not available to the...