Reebok 2015 Annual Report Download - page 235

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4
CONSOLIDATED FINANCIAL STATEMENTS
Notes – Notes to the Consolidated Statement of Financial Position
RECONCILIATION OF FAIR VALUE HIERARCHY LEVEL 3
€ in millions Fair value
Jan. 1,
2015
Additions Disposals Gains Losses Fair value
Dec. 31,
2015
Long-term financial assets This category relates to an 8.33% investment in FC Bayern
München AG of € 81 million. Dividends are distributed by FC
Bayern München AG instead of regular interest payments.
These dividends are recognised in other financial income. 80 – – 1 – 81
Promissory notes On January 23, 2015 the adidas Group signed a definitive
agreement to sell the Rockport operating segment which was
divested on July 31, 2015. The transaction included contingent
promissory notes. The discounted cash flow method is
applied. – 42 – – – 42
Earn-out components The aquisition of Runtastic includes earn-out components
which are measured based on the discounted cash flow
method. The earn-out components are dependent on
retention of the Runtastic management as well as on the
achievement of certain performance measures over the
first three years after the acquisition. – 21 – – – 21
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 equal 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, 2015.
Not applicable FLAC
Eurobond The fair value is based on the market price of the Eurobond as
at December 31, 2015.
Not applicable FLAC