Reebok 2015 Annual Report Download - page 236

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232
4
CONSOLIDATED FINANCIAL STATEMENTS
Notes – Notes to the Consolidated Statement of Financial Position
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,
it is assumed that 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, 2015.
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. respec-
tively 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. respec-
tively FAHfT
Commodity futures The fair value is determined based on commodity forward
curves, discounted by deposit and swap interest rates.
Not applicable n.a. respec-
tively 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
FINANCIAL INSTRUMENTS LEVEL 3 MEASUREDAT FAIR VALUE
Type Valuation method Significant
unobservable inputs
Inter-relationship between significant
unobservable inputs and fair value
measurement
Category
Investment in FC
Bayern München AG
This equity security does not have a quoted market price in
an active market. Existing contractual arrangements (based
on the externally observable dividend policy of FC Bayern
München AG) are used in order to calculate the fair value as
at December 31, 2015.
See column
‘Valuation
method’
FAHfT
Promissory notes The discounted cash flow method is applied which considers
the present value of expected payments, discounted using
a risk-adjusted discount rate. The expected payments
are determined by considering the possible scenarios of
forecasted dividends, the amount to be paid under each
scenario and the probability of each scenario.
Risk-adjusted
discount rate
The estimated fair value would
increase (decrease) if the dividends
were higher (lower) or the risk-
adjusted discount rate was lower
(higher).
AfS
Earn-out
components
The discounted cash flow method is applied, which considers
the present value of expected payments, discounted using a
risk-adjusted discount rate.
Risk-adjusted
discount rate
The estimated fair value would
increase (decrease) if EBITDA were
higher (lower) or the risk-adjusted
discount rate were lower (higher).
n.a.