Å kodaAuto ANNUAL REPORT 2003 - Skoda Auto

22. Research and development costs (in thousand CZK)Research and development related to new models of passenger cars amounted to CZK 4,851 million in 2003 (2002: CZK 4,304 million; 2001:CZK 4,361 million). In 2003 Škoda Auto recorded expenses amounting to CZK 639 million (2002: CZK 485 million; 2001: CZK 900 million) forthe production of prototypes and test vehicles. Additionally, development costs have been amortised by CZK 16 million (2002: CZK 16 million;2001: CZK 90 million) in 2003.23. Financial income and expense (in thousand CZK)2003 2002 2001Income Expense Income Expense Income ExpenseInterest 76,782 1,007,617 153,604 1,193,986 248,686 1,231,559Foreign exch. rate differences 1,634,969 2,388,252 3,562,613 2,268,078 1,988,947 1,739,451Factoring fees and other financial expenses 0 1,034,349 0 1,443,665 0 1,349,548Other income from financial investments 25,974 0 22,494 48,812 62,798 7,000Release of provision for exchange rate losses 0 0 27,862 0 86,332 27,862Total 1,737,725 4,430,218 3,766,573 4,954,541 2,386,763 4,355,42024. Derivative financial instruments (in thousand CZK)The fair value of the Company’s derivative financial instruments is recognised under “Other receivables” if the balance is positive and in“Other liabilities” if it is negative.31 Dec. 2002Fair valueNominal valuePositiveNegativeHedging derivativesCurrency forwards 40,088 438,132 23,624,019Currency swaps 15,917 808 597,350Interest rate swaps 0 380,515 2,000,000Trading derivativesCurrency options 21,872 0 9,461,525Total derivatives 77,877 819,455 35,682,89431 Dec. 2003Fair valueNominal valuePositiveNegativeHedging derivativesCurrency forwards 114,975 614,135 39,391,935Currency swaps 16,439 0 1,257,017Interest rate swaps 31,239 0 5,000,000Total derivatives 162,653 614,135 45,648,952Škoda Auto uses interest rate swaps for the hedging of floating interest rate bonds cash flow. Currency instruments are utilised for foreignexchange rate exposure hedging resulting from anticipated and contracted foreign exchange sales revenues as well as operational andinvestment payments.Škoda Auto has accounted for the fair value of financial derivatives since 1 January 2002. Before this date any such instruments wererecorded only as off-balance sheet items.Škoda Auto has not concluded any new currency options in 2003. During this period, only currency options concluded in June and July of2002 have been realised.73