The following table presents the carrying amounts of each category of financial assets and financial liabilities:
The following table presents the fair values and carrying amounts of financial assets and financial liabilities measured at cost or amortized cost:
September 30,
(in millions of €) 2013 2012
Financial assets:
Loans and receivables 29,331 28,439
Cash and cash equivalents 9,190 10,891
Derivatives designated in a hedge accounting relationship 625 1,918
Financial assets held for trading 1,705 1,410
Available-for-sale financial assets 2,161 1,546
43,010 44,203
Financial liabilities:
Financial liabilities measured at amortized cost 29,704 30,160
Financial liabilities held for trading 887 920
Derivatives designated in a hedge accounting relationship 160 204
30,751 31,284
September 30, 2013 September 30, 2012
Fair value
Carrying
amount Fair value
Carrying amount (in millions of €)
Financial assets measured at cost or amortized cost
Trade and other receivables 1 12,944 12,944 13,344 13,344
Receivables from finance leases 5,261 5,261 5,059 5,059
Cash and cash equivalents 9,190 9,190 10,891 10,891
Other non-derivative financial assets 11,126 11,126 10,036 10,036
Available-for-sale financial assets 2 – 167 – 293
Financial liabilities measured at cost or amortized cost
Notes and bonds 18,742 18,491 18,460 18,212
Trade payables 3 7,599 7,599 8,036 8,036
Loans from banks and other financial indebtedness 1,821 1,832 2,340 2,334
Obligations under finance leases 167 130 202 161
Other non-derivative financial liabilities 1,651 1,651 1,418 1,418
1 Consists of (1) €12,932 million and €13,310 million trade receivables from the sale of goods and services in fiscal 2013 and 2012, respectively, as well as (2) €11 million and €34 million receivables included in line item Other financial assets in fiscal 2013 and 2012, respectively.
As of September 30, 2013 and 2012, trade receivables from the sale of goods and services of €612 million and €685 million have a remaining term of more than twelve months.
2 Consists of equity instruments classified as
available-for-sale, for which a fair value could not be reliably measured and which are therefore recognized at cost.
3 As of September 30, 2013 and 2012, trade payables of
€32 million and €128 million have a remaining term of more than twelve months.
Cash and cash equivalents includes €320 million and €199 million as of September 30, 2013 and 2012, respectively, which are not available for use by Siemens mainly due to minimum reserve requirements with banks.
As of September 30, 2013 and 2012, the carrying amount of financial assets Siemens has pledged as collateral amounted to €344 million and €500 million, respectively.
The fair values of cash and cash equivalents, trade and other receivables and trade payables with a remaining term of up to twelve months, other current financial liabilities and borrow-ings under revolving credit facilities approximate their carry-ing amount, mainly due to the short-term maturities of these instruments.
Fixed-rate and variable-rate receivables with a remaining term of more than twelve months, including receivables from finance leases, are evaluated by the Company based on pa-rameters such as interest rates, specific country risk factors, individual creditworthiness of the customer, and the risk char-acteristics of the financed project. Based on this evaluation, allowances for these receivables are recognized. As of Sep-tember 30, 2013 and 2012, the carrying amounts of such receivables, net of allowances, approximate their fair values.
The fair value of quoted notes and bonds is based on price quotations at the period-end date. The fair value of unquoted notes and bonds, loans from banks and other financial indebt-edness, obligations under finance leases as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt of similar terms and remaining maturities.
Financial instruments categorized as financial assets and financial liabilities measured at fair value are presented in the following table:
September 30,
(in millions of €) 2013 2012
Financial assets measured at fair value
Available-for-sale financial assets 1,994 1,252 Derivative financial instruments 2,330 3,328 Not designated in a hedge
accounting relationship 1,587 1,202
In connection with fair value hedges 472 1,783 Foreign currency exchange derivatives 6 22
Interest rate derivatives 466 1,761
In connection with cash flow hedges 153 135 Foreign currency exchange derivatives 152 132
Commodity derivatives 1 3
Embedded derivatives 118 208
4,324 4,580
Financial liabilities measured at fair value
Derivative financial instruments 1,047 1,125 Not designated in a hedge
accounting relationship 765 823
In connection with fair value hedges 8 11 Foreign currency exchange derivatives 3 2
Interest rate derivatives 5 9
In connection with cash flow hedges 152 193 Foreign currency exchange derivatives 148 185
Interest rate derivatives – 8
Commodity derivatives 3 –
Embedded derivatives 122 98
1,047 1,125
The fair value of available-for-sale financial assets quoted in an active market is based on price quotations at the period-end date. The fair value of unquoted debt instruments is estimated by discounting future cash flows using current market interest rates.
The Company limits default risks resulting from derivative financial instruments by a careful counterparty selection.
Derivative financial instruments are generally transacted with financial institutions with investment grade credit ratings. The fair valuation of derivative financial instruments at Siemens incorporates all factors that market participants would con-sider, including the counterparties’ credit risks. The exact calculation of fair values of derivative financial instruments depends on the specific type of instrument:
Derivative interest rate contracts – The fair values of derivative interest rate contracts (e.g. interest rate swap agreements) are estimated by discounting expected future cash flows using current market interest rates and yield curves over the remain-ing term of the instrument. Interest rate futures and interest rate options are valued on the basis of quoted market prices when available. If quoted market prices are not available, inter-est rate options are valued based on option pricing models.
Derivative currency contracts – The fair value of foreign cur-rency exchange contracts is based on forward exchange rates.
Currency options are valued on the basis of quoted market prices or on estimates based on option pricing models.
Derivative commodity contracts – The fair value of commodity swaps is based on forward commodity prices. Commodity options are valued on the basis of quoted market prices or on estimates based on option pricing models.
In determining the fair values of the derivative financial instruments, no compensating effects from underlying trans-actions (e.g. firm commitments and forecast transtrans-actions) are taken into consideration.
The following table allocates financial assets and financial liabilities measured at fair value to the three levels of the fair value hierarchy.
September 30, 2013
(in millions of €) Level 1 Level 2 Level 3 Total
Financial assets measured at fair value
Available-for-sale financial assets 1,884 110 – 1,994 Derivative financial instruments – 2,330 – 2,330
Total 1,884 2,440 – 4,324
Financial liabilities measured at fair value
Derivative financial instruments – 1,047 – 1,047
September 30, 2012
(in millions of €) Level 1 Level 2 Level 3 Total
Financial assets measured at fair value
Available-for-sale financial assets 1,252 – – 1,252 Derivative financial instruments – 3,328 – 3,328
Total 1,252 3,328 – 4,580
Financial liabilities measured at fair value
Derivative financial instruments – 1,125 – 1,125
The levels of the fair value hierarchy and its application to our financial assets and financial liabilities are described below:
Level 1: quoted prices in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices that are observ-able for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for assets or liabilities, not based on observ-able market data.
Net gains (losses) of financial instruments are as follows:
Year ended September 30,
(in millions of €) 2013 2012
Cash and cash equivalents (1) 11
Available-for-sale financial assets (99) 83
Loans and receivables (178) (238)
Financial liabilities
measured at amortized cost 408 (258)
Financial assets and
financial liabilities held for trading 363 (189)
Net gains (losses) in fiscal 2013 and 2012 on available-for-sale financial assets include net gains on derecognition as well as impairment losses. Net losses on loans and receivables con-tain changes in valuation allowances, gains or losses on derecognition as well as recoveries of amounts previously written-off. Net gains (losses) in fiscal 2013 and 2012 on finan-cial liabilities measured at amortized cost are comprised of gains (losses) from derecognition and the ineffective portion of fair value hedges. Net gains (losses) in fiscal 2013 and 2012 on financial assets and financial liabilities held for trading con-sist of changes in the fair value of derivative financial instru-ments, including interest income and expense, for which hedge accounting is not applied.
The amounts presented include foreign currency gains and losses from the realization and valuation of the financial assets and liabilities mentioned above.
NOTE 31