Financial Statements and Management Report - Thyssenkrupp

2.3 Financial statements Notes
ThyssenKrupp AG only uses derivative financial instruments matched
directly to hedged transactions. ThyssenKrupp AG therefore has no
reportable risks, because any negative fair values applicable to
derivative financial instruments are offset by positive developments in
the associated hedged transactions.
The following methods are used to determine the fair value:
Foreign currency hedges
The fair value of foreign currency forward contracts is calculated on the
basis of the average spot exchange rates applicable as of the financialstatement
date, adjusted for time-related premiums or discounts for
the respective remaining term of the contract, compared to the
contracted forward rate.
The fair value of a foreign currency option is determined using the
Garman-Kohlhagen model (1982), based on the assumptions of Black-
Scholes. The fair value of an option is influenced not only by the
remaining term of the option but also by further determining factors,
such as the current value and the volatility of the foreign currency or
the implied interest rate levels.
Interest rate hedges
The fair value of interest and currency swaps is determined by
discounting the future cash flows based on the interest rates applying
for the remaining term of the contracts. In addition, the valuation of
interest/currency swaps takes into consideration the exchange rates of
the foreign currencies in which cash flows take place.
Commodity derivatives
The fair value of commodity derivatives is based on officially quoted
prices and external valuations by our financial partners at the financialstatement
date. It represents the estimated amounts that the company
would expect to receive or pay to terminate the agreements as of the
reporting date.
Notes to the statement of income
13 Net income from investments
million €
2009/2010 2010/2011
Income from profit-and-loss transfer agreements 1,155 1,388
Expense from profit-and-loss transfer agreements (38) (60)
Income from investee companies 14 50
amount thereof from affiliated companies ( 11) ( 0)
Total 1,131 1,378
The income and losses transferred under profit-and-loss transfer
agreements come from affiliated companies. In the past fiscal year the
largest profit was contributed by Thyssen Stahl GmbH with €754
million (prior year €813 million). On top of this came income from
ThyssenKrupp Technologies Beteiligungen GmbH of €437 million (prior
year €74 million) as well as ThyssenKrupp Elevator AG and
ThyssenKrupp Materials International GmbH. The slight increase in loss
transfers is due to the €46 million loss of ThyssenKrupp
Dienstleistungen GmbH in 2010/2011.
The main item under income from investee companies was the €42
million dividend distribution from Krupp Hoesch Stahl GmbH.
14 Other operating income
On the basis of the Group’s policy on corporate design, company
naming and trademarks, the corporate mark was made available to the
Group companies at a charge in fiscal year 2010/2011. ThyssenKrupp
AG collected license fees of €165 million in the reporting year.
In addition, income of €346 million resulted from intercompany tax
allocations in connection with the transfer of income from subsidiaries.
In the past fiscal year ThyssenKrupp AG collected non-period income
of €211 million in compensation for expenses it incurred that are
attributable to the operating business of a subsidiary. Another
subsidiary is entitled to this income (see Other operating expense).
In addition, this item includes the charging-on of usage fees for Group
licenses and intra-Group service charges.
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