Annual Report 2006 - Boehringer Ingelheim

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5 Notes to the cash flow statement
The cash flow statement shows how the total liquid funds (liquid assets and securities in fixed and
current assets) of the Boehringer Ingelheim Group have changed during the reporting year through
inflow and outflow of cash and cash equivalents. In accordance with German Accounting Standard
No. 2 (GAS 2), Cash Flow Statements, cash flows are classified by operating, investing or financing
activities.
Changes reported by consolidated companies are converted at the average annual rate. Liquid funds
are converted, as shown in the balance sheet, according to the year-end rate method. The influence
of exchange rate changes on liquid funds is provided separately.
6 Other information
6.1 Derivative financial instruments
Boehringer Ingelheim is, due to its extensive international structure, highly dependent on the
development of the major world currencies and interest rates. In order to hedge against the risks,
particularly those inherent in supplies and services and financial funding, use is generally made
of foreign exchange forward contracts in the case of currency risks. Regarding interest rate risks,
use is made of interest rate swaps and interest rate options.
The use of derivative financial instruments and the organisational procedure are laid down in internal
guidelines. Trade, processing, documentation, and control are kept strictly separate.
The risk positions are recorded, analyzed and assessed regularly in a special consolidated financial
report. The items are periodically re-evaluated and monitored. Derivative financial instruments are
only agreed on with banks of sound financial standing.
As of 31 December 2006, the nominal value of all foreign currency and interest rate hedging
transactions amounted to EUR 2,506 million (2005: 3,618 million). The corresponding market values
amounted to EUR +103 million (2005: EUR -63 million).
Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 6