Reebok 2014 Annual Report Download - page 235

adidas Group
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2014 Annual Report
Consolidated Financial Statements
231
2014
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04.8
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Notes
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Notes to the Consolidated Statement of Financial Position
Due to the short-term maturities of cash and cash equivalents, short-term financial assets, accounts receivable
and payable as well as other current financial receivables and payables, their respective fair values approximate
their carrying amount.
The fair values of non-current financial assets and liabilities are estimated by discounting expected future
cash flows using current interest rates for debt of similar terms and remaining maturities and adjusted by an
adidas Group specific credit risk premium.
Fair values of long-term financial assets classified as ‘Available-for-sale’ are based on quoted market prices
in an active market or are calculated as present values of expected future cash flows.
The fair values of currency options, forward exchange contracts and commodity futures are determined on
the basis of market conditions at the balance sheet date. The fair value of a currency option is determined using
generally accepted models to calculate option prices. The fair market value of an option is influenced not only by
the remaining term of the option, but also by other determining factors such as the actual foreign exchange rate
and the volatility of the underlying foreign currency base.
In accordance with IFRS 13, the following tables show the valuation methods used in measuring Level 1,
Level 2 and Level 3 fair values, as well as the significant unobservable inputs used.
Financial instruments Level 1 not measured at fair value
Type Valuation method Significant unobservable
inputs
Category
Convertible bond The fair value is based on the market price of the
convertible bond as at December 31, 2014.
Not applicable FLAC
Eurobond The fair value is based on the market price of the
Eurobond as at December 31, 2014.
Not applicable FLAC
Financial instruments Level 2 measured at fair value
Type Valuation method Significant unobservable
inputs
Category
Short-term financial
assets
The discounted cash flow method is applied, which
considers the present value of expected payments,
discounted using a risk-adjusted discount rate. Due to
their short-term maturities, their respective fair value is
equal to the notional amount.
Not applicable FAHfT
Available-for-sale
financial assets
The fair value is based on the market price of the assets
as at December 31, 2014.
Not applicable AfS
Forward exchange
contracts
For EUR/USD, the adidas Group applies the par method,
which uses actively traded forward rates. For the other
currency pairs, the zero coupon method is applied. The
zero method is a model for the determination of forward
rates based on deposit and swap interest rates.
Not applicable n.a. respectively
FAHfT
Currency options The adidas Group applies the Garman-Kohlhagen model,
which is an extended version of the Black-Scholes
model.
Not applicable n.a. respectively
FAHfT
Commodity futures The fair value is determined based on commodity
forward curves, discounted by deposit and swap interest
rates.
Not applicable n.a. respectively
FAHfT
Financial instruments Level 2 not measured at fair value
Type Valuation method Significant unobservable
inputs
Category
Private placements The discounted cash flow method is applied, which
considers the present value of expected payments,
discounted using a risk-adjusted discount rate.
Not applicable FLAC