PDF, 1.2 MB - Pfleiderer AG

19. Derivative financial
instruments
consolidated financial statements notes pfleiderer ag 101
of estimation in 2001 of 2 percent; weighted average life expectancy of the subscription right
3 years. SOP 2002 was not included in the estimate as the time limit for eligibility had not
expired as of the balance sheet date.
Adjusted pro-forma information (in thousand euros, except per share data):
Dec. 31, 2002 Dec. 31, 2001
Adjusted pro-forma (loss)/profit – 40,020 24,091
Adjusted undiluted pro-forma (negative) earnings per share – 0.93 0.56
All existing stock option plans were given prior approval by the Shareholders’ Meeting.
Derivative financial instruments are used to minimize or exclude risk resulting from day-to-day
operations where underlying transactions are exposed to fluctuations in currency and interest
rates. The corporate guidelines specifically state that hedging transactions be used to counteract
such risks. Only marketable interest rate derivatives and forward currency hedging managed
by banks of first-class standing are used. Derivative financial transactions are limited to
hedging operative business and related financing. The Company does not conduct derivative
financial business for purposes of speculation.
Interest rate risks are secured through interest swaps and caps. These instruments are
mainly used to hedge variable liabilities held in euros or US dollars.
The following interest rate derivatives were recognized at balance sheet date:
Nominal value
Dec. 31, 2002 Dec. 31, 2001
‘000 euros ‘000 euros
Interest swaps 257,919 370,022
Interest caps 8,150 –
266,069 370,022
Currency hedging is appled to mitigate fluctuation in US dollars, Swiss francs, pounds sterling
and euros. Hedging relates to transactions shown in the accounts, as well as to transactions
considered highly likely to occur.