Kraft 2014 Annual Report Download - page 37

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rate movements over the prior quarter for the calculation of VAR amounts at December 27, 2014, and December 28, 2013, and
over each of the four prior quarters for the calculation of average VAR amounts during each year. The values of commodity options
do not change on a one-to-one basis with the underlying currency or commodity, and were valued accordingly in the VAR
computation.
As of December 27, 2014 and December 28, 2013, the estimated potential one-day loss in pre-tax earnings from our commodity
and foreign currency instruments and the estimated potential one-day loss in fair value of our interest rate-sensitive instruments, as
calculated in the VAR model, were (in millions):
This VAR computation is a risk analysis tool designed to statistically estimate the maximum probable daily loss from adverse
movements in commodity prices, foreign currency rates, and interest rates under normal market conditions. The computation does
not represent actual losses in fair value or earnings to be incurred by us, nor does it consider the effect of favorable changes in
market rates. We cannot predict actual future movements in such market rates and do not present these VAR results to be
indicative of future movements in such market rates or to be representative of any actual impact that future changes in market rates
may have on our future financial results.
32
Pre-Tax Earnings Impact Fair Value Impact
At 12/27/14 Average High Low At 12/27/14 Average High Low
Instruments sensitive to:
Foreign currency rates $ 1
$2
$2
$ 1
Commodity prices 9 13 18 9
Interest rates $ 49 $35
$49
$27
Pre-Tax Earnings Impact Fair Value Impact
At 12/28/13 Average High Low At 12/28/13 Average High Low
Instruments sensitive to:
Foreign currency rates $ 2
$2
$2
$ 2
Commodity prices 7 7 8 7
Interest rates $ 32 $46
$71
$32