Annual Report 2012 - Knorr-Bremse AG.

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164 Notes to the Consolidated Financial Statements 23 Financial results 2012 TEUR 2011 TEUR Miscellaneous interest and similar income 13,608 14,065 Depreciation on investments 0 (6) Interest and similar expenses (17,231) (18,005) (thereof for discounts on accruals) (10,876) (9,932) Income from associated, affiliated and other companies (657) (181) Total (4,280) (4,127) 24 Taxes on income Taxes on income and earnings amounted to TEUR 168,432 (2011: TEUR 168,794), and included deferred taxes in the amount of TEUR 7,696 (2011: TEUR 9,340). 25 Net income 2012 TEUR 2011 TEUR Net income 295,027 329,296 Minority interests in earnings of consolidated subsidiaries (40,220) (38,198) Retained earnings brought forward from the previous year (after 107,924 106,556 distribution of dividends) Transfers to retained earnings (121,713) (133,730) Unappropriated consolidated net income (Knorr-Bremse AG unappropriated retained earnings) 241,018 263,924 26 Financial derivatives Financial instruments are not held for trading purposes. Underlying transactions and their derivatives are bundled together as single items for valuation purposes (“macro hedges”). These bundled derivatives are netted out without affecting net income wherever the respective impact on income of the underlying transaction (hedged item) and the related hedge offset each other (net hedge presentation method). Forward exchange and option transactions are performed purely and exclusively in order to hedge current and future foreign currency payables and receivables from the sale and purchase of goods and services and the elimination of exchange rate risk for selected assets. The aim of hedging operations at Knorr-Bremse is to reduce the risks posed by foreign exchange fluctuations to the ordinary course of business. Currency hedging is based on the volume of open commitments arising or expected to arise from core business activities. Maturities are based on the lifespans of the underlying business transactions, whereby highly probable transactions are hedged over a rolling three-year planning period. Because the conditions and parameters of the hedges match those of the hedged items, any payment flows or changes in value are offset in full. The Knorr-Bremse Group uses forward exchange contracts, currency options, interest rate swaps and cross currency swaps as hedging instruments.
Notes to the Consolidated Financial Statements 165 Not included in the hedging report are forward exchange derivatives with a nominal value of EUR 40.2 million. Financial instruments amounting to EUR 857.5 million in total (representing hedged risks) are included in macro hedges. Of this amount, EUR 285.2 million is attributable to the hedging of assets (micro hedges), EUR 56.7 million to the hedging of open contracts (micro hedges) and EUR 515.6 million to the hedging of high-probability transactions (portfolio hedges). Commodity futures contracts are used exclusively to hedge price risks arising on fluctuations in the purchase prices of raw materials used in Knorr-Bremse Group products (portfolio hedges). The volume of underlying transactions (hedged items) is calculated on the basis of high-probability requirements for raw materials over a rolling two-year planning period. The derivatives are based on reference indices traded on commodity futures exchanges. The effectiveness of the hedging relationship is retrospectively analyzed using statistical correlation techniques, showing a correlation in excess of 80%. Concluded contracts totaling EUR 4.5 million are carried in full in macro hedges. The nominal and market values of financial instruments as at December 31, 2012 break down as follows: Total Total Total Total Dec. 31, 2012 Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2011 in EUR millions Nominal value Market value Nominal value Market value Foreign exchange contracts Forward exchange transactions 530 7 611 (26) Currency options 200 1 170 (3) Interest rate contracts Cross currency swaps 132 (24) 125 (30) Interest rate swaps 36 (7) 36 (4) Commodity-related contracts Swaps 4 0 7 (1) Negative market values correspond to the risks associated with financial derivatives; of these, EUR 0.05 million are recorded under accrued liabilities. Positive market values are offset by risks associated with the underlying transactions (hedged items) in the respective macro hedges. While cross currency swaps generally come under the heading of interest rate instruments, in terms of content they are used exclusively to hedge foreign currency risks, because the interest rates in the underlying currencies are exchanged at fixed rates. The market value of financial derivatives is best defined as the price one party is prepared to pay in order to assume the rights and/or obligations of another party. Market values are calculated on the basis of market information available at the balance sheet date and by applying standard market valuation methods as follows: • Currency hedging contracts are valued on the basis of reference rates, taking account of forward premiums and discounts. • Cross currency swaps are valued analogously to pure interest rate contracts or currency hedging contracts, on the basis of discounted, projected cash-flows using market interest rates and reference rates for the remaining lifespans of the instruments. • The lease payments for one real estate leasing contract were hedged by an interest rate swap.
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Knorr-Bremse Group Annual Report 20
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Main Majority-owned Subsidiaries of
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Supervisory Board 3 Overview 04 06
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2012 at a Glance 5 January Rolf Hä
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Executive Board 7 Klaus Deller Dr.
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Supervisory Board 9 Wolfgang Hubert
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Supervisory Board 11 and the compan
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14 The State and Development of Kno
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16 Development of the Knorr-Bremse
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18 velopment network continued. Thu
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20 Overall assessment of the econom
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22 Regional developments by divisio
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24 In this market environment, the
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26 to falling exports but also to s
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28 Research and development As a te
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30 Corporate responsibility and sus
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32 implicit in the changing state o
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34 Outlook In the next two years, K
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Report Despite a volatile business
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Report 39 YOU CHOSE TO DEFINE NEW C
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Report 41 partners and customers as
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Report 43 aiming to use them as a f
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Itupeva, Brazil Westminster, USA
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48 Report Site-specific projects //
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PRODUCTS TRADE FAIRS Technological
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60 Report ProduCts // Rail vehicle
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66 Report ProduCts // Commercial ve
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Report 73 PRODUCTS TRADE FAIRS Trad
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Report 75 Dr. Dieter Wilhelm, Membe
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Report 77 Heinz Hermann Thiele, own
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Report 79 Expo Ferroviaria 2012, Tu
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Report 81 tive service strategies -
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Report 85 Service Knorr Excellence
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Report 87 RailServices is a byword
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Report 89 the Sirio platform of Ita
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Report 91 largest mass transit oper
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Report 93 to roll out its service c
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Report 95 Bendix expands remanufact
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Report 97 NEO Version 5 is introduc
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100 Report Knorr Excellence A progr
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102 Report Knorr Excellence
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104 Report External ratings
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MARKET SUCCESSES Passion “We are
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110 Report Market successes // Rail
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112 Report Market successes // Rail
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Page 124 and 125: 122 Report Market successes // Comm
Page 133: Corporate Responsibility Employees
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Page 143 and 144: Report 141 Corporate Responsibility
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Page 147 and 148: Report 145 Knorr-Bremse certified i
Page 149: Report 147 Leadership excellence Kn
Page 152 and 153: 150 Notes to the Consolidated Finan
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Page 170 and 171: 168 SEGMENT REPORT Segment Report i
Page 172 and 173: 170 STATEMENT OF CHANGES IN GROUP E
Page 174 and 175: 172 CONSOLIDATED BALANCE SHEET Cons
Page 176: Contact Knorr-Bremse AG Moosacher S
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