Mercedes 2009 Annual Report Download - page 237

Consolidated Financial Statements |Notes to Consolidated Financial Statements |233
Fair value hedges. The Group uses fair value hedges primarily
for hedging interest rate risks.
The changes in fair value of these hedging instruments resulted in
net losses of €31 million in 2009 (2008: net gains of €540 million;
2007: net gains of €144 million). The offsetting changes in the value
of underlying transactions resulted in net gains of €53 million
in 2009 (2008: net losses of €567 million; 2007: net losses of
€150 million).
These figures also include the portions of derivative financial
instruments excluded from the hedge effectiveness test and the
ineffective portions.
Cash flow hedges. The Group uses cash flow hedges primarily
for hedging currency and interest rate risks.
Unrealized pre-tax gains and losses on the measurement of
derivatives, which are recognized in equity without an effect on
earnings, are as follows:
Reclassifications of pre-tax gains (losses) from equity to the
statement of income (loss) are as follows:
The unrealized gains and losses on the measurement as well as
reclassifications from equity to income do not include gains
and losses from derivatives of investments which are accounted for
using the equity method (see Note 19 for further information).
The consolidated net loss for 2009 includes net losses (before
income taxes) of €1 million (2008: net gains of €2 million; 2007:
net gains of €6 million) from the valuation of derivative financial
instruments which were ineffective for hedging purposes.
In 2009, the discontinuation of cash flow hedges resulted in
gains of €18 million (2008: €3 million; 2007: €5 million).
The maturities of the interest rate hedges and cross currency
interest rate hedges correspond with those of the underlying
transactions. As of December 31, 2009, Daimler utilized
derivative instruments with a maximum maturity of 36 months
as hedges for currency risks arising from future transactions.
30. Risk management
General information on financial risk
Daimler is exposed to market risks from changes in foreign currency
exchange rates, interest rates and equity prices, while com-
modity price risks arise from procurement. In addition, the Group
is exposed to credit risks mainly from its lease and financing
activities and from trade receivables. Furthermore, the Group is
exposed to liquidity risks relating to its credit and market risks
or a deterioration of its operating business or financial market
disturbances. With respect to the Daimler Financial Services
segment, the Group is exposed to credit risks arising from oper-
ating lease contracts, finance lease contracts and financing
contracts. If these financial risks materialize, they could adversely
affect Daimler’s financial position, cash flows and profitability.
Daimler has established guidelines for risk controlling procedures
and for the use of financial instruments, including a clear segre-
gation of duties with regard to operating financial activities,
settlement, accounting and the respective controlling. The guide-
lines upon which the Group’s risk management processes are
based are designed to identify and analyze these risks throughout
the Group, to set appropriate risk limits and controls and to
monitor the risks by means of reliable and up-to-date administra-
tive and information systems. The guidelines and systems
are regularly reviewed and adjusted to changes in markets and
products.
The Group manages and monitors these risks primarily through
its operating and financing activities and, if required, through
the use of derivative financial instruments. Daimler does not
use derivative financial instruments for purposes other than risk
management. Without these derivative financial instruments,
the Group would be exposed to higher financial risks (additional
information on financial instruments and especially derivatives
is included in Note 29). Daimler regularly evaluates its financial
risks with due consideration of changes in key economic indicators
and up-to-date market information.
Any market sensitive instruments, including equity and debt
securities, that the funds hold to finance pension and other post-
employment benefit obligations are not included in this quan-
titative and qualitative analysis. Please refer to Note 21 for addi-
tional information regarding Daimler’s pension plans and funds.
2007
20082009
.1.20.5
Unrealized gains (losses)
in billions of €
2007
20082009
707
(63)
(230)
–
414
487
14
30
2
533
1,090
(21)
(527)
–
542
Revenue
Cost of sales
Interest income (expense), net
Net profit (loss) from
discontinued operations
in millions of €