Chrysler 2007 Annual Report Download - page 148

147Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes
The overall increase in Other financial assets from 382 million euros at December 31, 2006 to 703 million euros at December 31,
2007, and the increase in Other financial liabilities from 105 million euros at December 31, 2006 to 188 million euros at December
31, 2007 is mostly due to changes in exchange rates and interest rates during the year, and to a higher positive fair value (67
million euros) arising from the equity swaps on Fiat S.p.A. ordinary shares.
As this item consists principally of hedging instruments, the change in their value is compensated by the change in the value of the
hedged item.
Derivates for trading consist principally of the following types:
■Derivatives (mostly currency based derivatives) acquired to hedge receivables and payables subject to currency risk and/or
interest rate risk which are not formally designated as hedges at Group level.
■Derivatives relating to Fiat shares (Equity Swap) which are described further below.
■Embedded derivatives in certain bond issues in which the yield is determined as a function of trends in various stock indices and
the inflation rate and related hedging derivatives, which convert the exposure to floating rate. The total value of the embedded
derivatives is offset by the value of the hedging derivatives.
At December 31, 2007, the notional amount of outstanding derivative financial instruments is as follows:
(in millions of euros) At December 31, 2007 At December 31, 2006
Currency risk management 9,074 7,702
Interest rate risk management 10,634 8,249
Interest rate and currency risk management 913 –
Other derivative financial instruments 538 2,154
Total notional amount 21,159 18,105
At December 31, 2007, the notional amount of Other derivative instruments consists of, amongst the others:
■For 220 million euros (220 million euros at December 31, 2006) the notional amount of the two equity swaps, renewed in 2007
and expiring in 2008, stipulated to hedge the risk of an increase in the Fiat share price above the exercise price of stock options
granted in 2004 and 2006 to the Chief Executive Officer (see Note 25). At December 31, 2007, the Equity Swaps have a total positive
fair value of 146 million euros (a positive value of 79 million euros at December 31, 2006). Although these equity swaps were
entered into for hedging purposes, they do not qualify for hedge accounting under IFRS and accordingly are defined as trading
derivative financial instruments.
■For 271 million euros (385 million euros at December 31, 2006), the notional amount of derivatives embedded in certain bonds
with a return linked to stock market indices or inflation rates, as well as the notional amount of the related hedging derivatives,
which convert this exposure to floating market rate.
■For 47 million euros, the notional amount of derivatives linked to commodity prices hedging specific exposures arising from
supply agreements. Under these agreements there is a regular updating of the prices on the basis of trends in the quoted prices of
the raw materials.