Financial Statements - Geberit

Geberit Group
Stock ownership plans
Differences between the fair market value of shares issued and proceeds
received from employees under the Group’s stock ownership plans are recorded
within shareholders’ equity. Options issued to employees under
the stock ownership plans are generally issued using market values on the
date of grant.
Earnings per share
Diluted earnings per share is calculated using the weighted average number
of ordinary shares issued and outstanding, adjusted for the number of shares
that could have been acquired at market price (determined as the average
annual share price of the Group’s shares) based on the monetary value of the
subscription rights attached to outstanding dilutive share options. These theoretical
“unpurchased” shares are added to the weighted average ordinary
shares outstanding by which attributable net income is divided to calculate
diluted earnings per share.
Financial instruments and risk management
The carrying amount of cash and cash equivalents approximates fair value
due to the short-term maturities of these instruments. The fair values of derivative
financial instruments were estimated based on quotes obtained from
brokers for similar instruments. Long-term debts are generally recorded at
amortised cost.
When necessary under its risk management policies, the Group uses financial
instruments, primarily collars and options, to reduce exposures to market
risks resulting from fluctuations in interest rates and foreign exchange rates,
principally on the Group’s floating-rate long-term debt, of which a significant
component is denominated in Euro. These instruments are described in
Note 13 and are accounted for as a hedge of the related asset, liability or
firm commitment when designated and effective as a hedge of such items.
Interest expenses under the interest rate risk management agreements, and
the respective debt instruments they hedge, are recorded as interest expenses
at the effective interest rate of the hedged transactions. Net gains and losses
on the revaluation of the Group’s foreign currency exchange rate risk management
instruments are recorded in equity. Excess portions of instruments
which are designated and otherwise effective as hedges are recorded in the
balance sheet at their pro rata fair value, with the related charge included
in financial income and expenses.
The counterparts to these agreements are major financial institutions and
the Group does not have significant exposure to anyone counterpart. Management
believes that the risk of loss from these contracts is remote. The
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