Reebok 2014 Annual Report Download - page 237

adidas Group
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2014 Annual Report
Consolidated Financial Statements
233
2014
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04.8
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Notes
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Notes to the Consolidated Statement of Financial Position
The notional amounts of all outstanding currency hedging instruments, which are mainly related to cash flow
hedges, are summarised in the following table:
Notional amounts of all outstanding currency hedging instruments
(€ in millions) Dec. 31, 2014 Dec. 31, 2013
Forward exchange contracts 6,738 4,430
Currency options 278 472
Total 7,016 4,902
The comparatively high amount of forward exchange contracts is primarily due to currency swaps for liquidity
management purposes and hedging transactions.
Of the total amount of outstanding hedges, the following contracts related to the US dollar (i.e. the biggest
single exposure of product sourcing):
Notional amounts of outstanding US dollar hedging instruments
(€ in millions) Dec. 31, 2014 Dec. 31, 2013
Forward exchange contracts 3,192 2,605
Currency options 278 425
Total 3,470 3,030
The fair value of all outstanding currency hedging instruments is as follows:
Fair values
(€ in millions) Dec. 31, 2014 Dec. 31, 2013
Positive
fair value
Negative
fair value
Positive
fair value
Negative
fair value
Forward exchange contracts 245 (50) 47 (79)
Currency options 26 (0) 11 (13)
Total 271 (50) 58 (92)
A total net fair value of positive € 163 million (2013: negative € 36 million) for forward exchange contracts
related to hedging instruments falling under hedge accounting as per definition of IAS 39 ‘Financial Instruments:
Recognition and Measurement’ was recorded in the hedging reserve. The remaining net fair value of positive
€ 32 million (2013: positive € 4 million), mainly related to liquidity swaps for cash management purposes and to
forward exchange contracts hedging intercompany dividend receivables, was recorded in the income statement.
The total fair value of positive € 26 million (2013: negative € 2 million) for outstanding currency options related to
cash flow hedges. This consists of a positive time value of € 0 million (2013: positive € 8 million) and of a negative
time value of € 0 million (2013: negative € 12 million) and, in contrast to the preceding table above, does not
include the intrinsic value of the options.
The fair value adjustments of outstanding cash flow hedges for forecasted sales are reported in the income
statement when the forecasted sales transactions are recorded. The vast majority of these transactions are
forecasted to occur in 2015. At the balance sheet date, inventories were adjusted by negative € 1 million (2013:
positive € 20 million) which will be recognised in the income statement in 2015.
In the hedging reserve, a negative amount of € 4 million (2013: negative € 6 million) is included for hedging
the currency risk of net investments in foreign entities, mainly for the subsidiaries LLC “adidas, Ltd.” and adidas
Sports (China) Co. Ltd. This reserve will remain until the investment in the foreign entity has been sold. As at
December 31, 2014, no ineffective part of the hedges was recorded in the income statement.
In order to determine the fair values of its derivatives that are not publicly traded, the adidas Group uses
generally accepted quantitative financial models based on market conditions prevailing at the balance sheet date.
In 2014, the fair values of the derivatives were determined applying mainly the ‘par method’, which uses
actively traded forward rates.