2000
1999
1,061
246
945
Notes to the Consolidated Balance Sheet
Off-balance sheet obligations
Tenancy and operating leases
Assets on order, in so far as not included
52
44
under tangible fixed assets
Long-term raw materials purchase contracts
Declarations of liability
Other off-balance sheet obligations
68
32
261
14
57
72
208
14
Financial instruments
Contract value on 31 December
Currency hedging instruments US-dollar
Currency hedging instruments other currencies
Interest hedging instruments
690
180
219
Financial instruments are used in the normal course of business to hedge the effects of fluctuations
in exchange rates and interest rates on earnings.
The most important inflow of foreign currency is denominated in US dollars and is generated by
export activities. The expected net cash flow in US dollars, which totals some US$ 630 million on an
annual basis, is hedged well in advance by means of a combination of forward contracts and op
tions. This policy reduces the vulnerability of export proceeds and results from short-term fluctua
tions in the US dollar rate and delays the impact of long-term fluctuations in the result.
As far as is possible, temporary cash surpluses are held centrally and invested in bank deposits in
euros with a maximum term of one year. The risk of a reduction in interest income on these deposits
due to a fall in the interest rate and the risk of an increase in interest charges due to a rise in the
interest rate on interest-bearing loans, is hedged to approximately 60% through the use of interest
instruments. These interest-hedging instruments include interest rate swaps, forward rate agree
ments, and caps and floors.
The implementation of the currency and interest policy is tied to a stringently defined policy and
strict rules. Only a limited number of counterparties is used, all with excellent credit ratings. The ac
tivities are closely monitored, independently of implementation.
66