Audi 2010 Annual Report Download - page 230

228
Reconciliation statement for financial instruments measured according to level 3
EUR million 2010 2009
Positive fair values of level 3 derivative financial instruments as of Jan. 1 55 –
Income and expense (–) recognized in the operating profit 56 –
Income and expense (–) recognized in the financial result 0 15
Income and expense (–) recognized in equity 4 53
Reclassification from level 3 to level 2 – 45 – 12
Positive fair values of level 3 derivative financial instruments as of Dec. 31 71 55
Income and expense (–) recognized in the operating profit
from level 3 derivative financial instruments still held at Dec. 31 56 –
Income and expense (–) recognized in the financial result from level 3
derivative financial instruments still held at Dec. 31 1 4
Negative fair values of level 3 derivative financial instruments as of Jan. 1 – 224 – 23
Income and expense (–) recognized in the operating profit 43 – 224
Income and expense (–) recognized in the financial result – 2 2
Income and expense (–) recognized in equity 0 11
Realizations 55 –
Reclassification from level 3 to level 2 2 10
Negative fair values of level 3 derivative financial instruments as of Dec. 31 – 127 – 224
Income and expense (–) recognized in the operating profit
from level 3 derivative financial instruments still held at Dec. 31 43 – 224
Income and expense (–) recognized in the financial result from level 3
derivative financial instruments still held at Dec. 31 – –
The residual value hedging model is categorically allocated to level 3. The reclassifications from
level 3 to level 2 contain commodity futures for whose measurement it is no longer necessary to
extrapolate the exchange rates because these can now be observed again on the active market.
The effects of market price changes of used cars resulting from hedging arrangements are
shown in detail under Note 34.3, “Market risks.”
Risks resulting from fair value fluctuations in the derivative financial instruments measured
according to level 3 are calculated within the Audi Group by means of sensitivity analyses. In this
way, effects of changes in commodity price listings on profit and equity are shown. A 10 percent
rise (fall) in the commodity prices of commodity futures measured according to level 3 at
December 31, 2010 would impact on equity in the amount of EUR 20 (21) million. The effect on
profit of this rise (fall) would be EUR 3 million.
34 Management of financial risks
34.1 Credit risks
Credit risks from financial assets comprise the risk of default by a contractual party and there-
fore do not exceed the positive fair values in respect of the contractual party in question. The
risk from non-derivative financial instruments is covered by value adjustments for expected loss
of receivables. The contractual partners for cash and capital investments, as well as currency and
raw materials hedging instruments, have impeccable credit standings. Over and above this, the
risks are restricted by a limit system that is based on the credit ratings of international rating
agencies and the equity base of the contractual parties.