Porsche 2009 Annual Report Download - page 159

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Derivative financial instruments
The existing derivative financial instruments primarily relate to foreign currency forwards
and options, swaps, interest derivatives, commodity futures, stock options and equity forwards.
They are used to hedge interest and currency risks from existing balance sheet items or highly
probable forecast transactions as well as to secure commodity and stock prices. In addition, there
is a put option for Porsche SE and a call option for Volkswagen AG to the remaining 50.1% of sha-
res in Porsche Zwischenholding GmbH.
Derivative financial instruments are generally recognized at fair value through profit or loss
and remeasured at fair value in subsequent periods. As soon as the criteria of IAS 39 for hedge
accounting are fulfilled, the derivative financial instruments are designated either as fair value or
cash flow hedges. Otherwise, they are allocated to the category financial assets or liabilities held
for trading.
A fair value hedge hedges the exposure to changes in fair value of a recognized asset, a
recognized liability or an unrecognized firm commitment. Gains or losses arising from marking
hedging instruments to market and the secured portion of the risk of the hedged transaction are
recognized in profit or loss. If the fair value hedge ends, the adjustment of the carrying amount
arising from fair value hedge accounting for financial instruments measured at amortized cost as
hedged transaction is released to profit or loss over the remaining term of the hedged transaction.
In the case of portfolio-based fair value hedges, the accounting for changes in fair value
corresponds to the accounting for fair value hedges. Gains or losses from changes in measurement
are recognized through profit or loss.
A cash flow hedge is used to hedge exposures from highly probable future cash flows.
Hedges are only included in hedge accounting to the extent that they offset changes in the value of
the cash flows of the hedged transaction. The ineffective portion is immediately recognized in profit
or loss. When included in cash flow hedge accounting, changes in value are recorded directly in
other comprehensive income, taking deferred taxes into account. When the hedged transaction
occurs, the change in value is reclassified from other comprehensive income to profit or loss. If the
forecast transaction is no longer expected to occur, the cumulative gain or loss previously recog-
nized in equity is reclassified to profit or loss. Gains or losses from cash flow hedge accounting are
presented under other operating income or expenses in the income statement.
The stock options held by the Porsche SE group generally are not traded on a public mar-
ket. In such cases, IAS 39.48 et seq. requires that a suitable valuation technique or recent transac-
tion be used for measurement purposes. In the reporting period measurement was performed using
generally accepted valuation techniques based on observable market data and historical values. As
a large volume of the stock options had been sold shortly after the prior-year reporting date, Por-
sche assumed as of 31 July 2009 that this sales price was the best indicator to calculate fair value
at the reporting date.