Chrysler 2011 Annual Report Download - page 321

Fiat S.p.A.
Statutory
Financial
Statements
at 31 December
2011
Notes
320
current financial receivables principally consist of current account deposits with Fiat Finance S.p.A. (see Note 15), while current debt consists mainly
of loans received from Fiat Finance S.p.A. and liabilities related to advances on the sale of receivables to banks (see Note 25). In addition, non-current
debt to Fiat Finance S.p.A. (see Note 21) include variable rate loans. The cost of these positions is affected by changes in short-term interest rates. For
short-term or variable rate transactions, a hypothetical, immediate and adverse change of 10% in short-term interest rates would have led to pre-tax net
financial expense being approximately €2 million higher on an annualized basis (approximately €1 million at 31 December 2010)
Other risks relating to derivative financial instruments
As discussed in Note 7, Fiat S.p.A. holds certain derivative financial instruments whose value is linked to the trends in the price of listed shares (equity swaps
on Fiat and, following the demerger, Fiat Industrial shares). Although these transactions were entered into for hedging purposes, they do not always qualify
for hedge accounting under IFRS. As a result, fluctuations in their value could affect the Company’s results.
Assuming an immediate and adverse change in the market value of Fiat and Fiat Industrial shares of 10%, the potential loss in fair value of derivative financial
instruments held by the Company at 31 December 2011 would total approximately €17 million (€32 million at 31 December 2010). The decrease over the
prior year is attributable to the change in the share price at the balance sheet date (used as the basis for the sensitivity analysis) and the lower notional value.
29. Fair value hierarchy
IFRS 7 requires financial instruments recognized at fair value in the statement of financial position to be classified on the basis of a hierarchy that reflects the
significance of the inputs used in determining fair value. This hierarchical classification applies the following levels:
Level 1 – quoted prices in active markets for the asset or liability being measured
Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly
(i.e., derived from prices) on the market
Level 3 – inputs that are not based on observable market data
The following table provides the classification of financial instruments measured at fair value at 31 December 2011 according to this fair value hierarchy.
(€ thousand) Note Level 1 Level 2 Level 3 Total
Assets at fair value:
Investments in other companies (available for sale)
recognized at fair value directly in equity or through profit and loss (11) 255,360 9,795 - 265,155
Derivative financial assets (current) (15) - 38,327 - 38,327
Total assets 255,360 48,122 - 303,482
Liabilities at fair value
Derivative financial liabilities (current) (25) - 19,969 - 19,969
Total liabilities - 19,969 - 19,969
In 2011, there were no transfers from Level 1 to Level 2 of the fair value hierarchy or vice versa.
30. Intercompany and related-party transactions
Intercompany and related-party transactions for Fiat S.p.A. consist for the most part of transactions carried out with the Company’s subsidiaries, on
commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved.