Values

138
Group Financial Statements
Notes
Accounting of Derivative Financial Instruments
and Hedges
All derivatives are reported at their fair value. When a contract
involving a derivative is entered into, it is determined whether
that contract is intended to serve as a fair value hedge or as a
cash fl ow hedge. Some derivatives do not meet the requirements
for recognition as hedges, however, even though they
function this way fi nancially.
Bertelsmann documents all relationships between hedging
instruments and hedged items as well as its risk management
Financial Derivatives
Bertelsmann uses standard market fi nancial derivatives, primarily
unlisted (OTC) instruments, and in particular forward
agreements, currency swaps, currency options, interest rate
swaps and individual commodities forwards. Transactions are
entered into solely with banks with an excellent credit rating.
Transactions by the Corporate Treasury and Finance department
are only conducted with banks approved by the Executive
Board. Th e nominal volume is the total of all underlying buying
and selling amounts.
objectives and strategies in connection with the various hedges.
Th is method includes linking all derivatives used for hedging
purposes to the underlying assets, liabilities, fi rm commitments
and forecasted transactions. Furthermore, the Bertelsmann
Group assesses and documents the degree to which changes
in the fair values or cash fl ows of hedged items are eff ectively
off set by changes in the corresponding hedging instruments,
both when the hedges are initiated and on an ongoing basis.
Th e majority of the fi nancial derivatives at the balance sheet
date are used to hedge against exchange rate risks from the
Group’s internal fi nancing (54 percent). Financial derivatives
used to hedge currency risks from operating business totaled
€506 million (25 percent) on the balance sheet date. Financial
derivatives are also used to hedge against interest rate risks
from fi nancial debt. No fi nancial derivatives were purchased
for speculative purposes.
Nominal Amounts of Financial Derivatives
Nominal amounts as of 12/31/2009 Nominal amounts as of 12/312008
in € millions
Currency derivatives
Forward contracts and
< 1 year 1–5 years > 5 years Total < 1 year 1–5 years > 5 years Total
currency swaps 1,291 296 9 1,596 1,247 231 38 1,516
Currency options
Interest rate derivatives
4 7 – 11 4 4 – 8
Interest rate swaps 139 297 6 442 120 381 33 534
Other derivative fi nancial
instruments – 15 – 15 – – – –
1,434 615 15 2,064 1,371 616 71 2,058
Fair Values of Financial Derivatives
Nominal amounts Fair values
in € millions
Currency derivatives
12/31/2009 12/31/2008 12/31/2009 12/31/2008
Forward contracts and currency swaps 1,596 1,516 (2) 101
Currency options
Interest rate derivatives
11 8 – 1
Interest rate swaps 442 534 11 (5)
Other derivative fi nancial instruments 15 – 3 –
2,064 2,058 12 97
Bertelsmann Annual Report 2009