BMW 2006 Annual Report Download - page 95

reduced by the payment of the dividend for 2005
amounting to euro 419 million. As a result of the
withdrawal of treasury shares from circulation,
revenues reserves decreased by euro 679 million.
The unappropriated profit of BMW AG of euro
458 million for 2006 will be proposed to the Annual
General Meeting for distribution. A tax reimburse-
ment claim of euro 12 million arose in 2006 in con-
junction with the corporation tax system applicable
until 2001.
As a consequence of new German tax legislation
relating to transitional taxation measures enacted
in conjunction with the introduction of the European
company and other changes in tax regulations, the
BMW AG’s ability to recover tax reduction claims
of euro 156 million arising from the previous corpo-
ration tax system are no longer linked to actual distri-
butions. The corporation tax credit will now be
dis-
bursed in ten equal instalments over a ten-year period
between 2008 and 2017. The present value of the
tax reimbursement receivable amounted to euro
123 million and has been recognised in full as
an asset.
Accumulated other equity
Accumulated other equity consists of all amounts
recognised directly in equity resulting from the trans-
lation of the financial statements of foreign sub-
sidiaries, the effects of recognising changes in the
fair value of financial instruments directly in equity
as well as actuarial gains and losses relating to de-
fined benefit pension plans and similar obligations.
Accumulated other equity was increased by de-
ferred taxes amounting to euro 512 million (2005:
euro 727 million) recognised directly in equity.
Minority interest
The minority interest in the equity of subsidiaries
amounted to euro 4 million (2005: euro 0.188 million).
This includes a minority interest of euro 6 million
(2005: euro 0.098 million) in subsidiaries’ results for
the year.
94 Group Financial Statements
65 Group Financial Statements
65 Income Statements
66 Balance Sheets
68 Cash Flow Statements
70 Group Statement of
Changes in Equity
71 Statement of Income and
Expenses recognised directly
in Equity
72 Notes
72 – Accounting Principles
and Policies
79 – Notes to the Income Statement
86 – Notes to the Balance Sheet
104 – Other Disclosures
111 – Segment Information
Pension provisions
Pension provisions are recognised as a result of com-
mitments to pay future vested pension benefits and
current pensions to present and former employees
of the BMW Group and their surviving dependants.
Depending on the legal, economic and tax circum-
stances prevailing in each country, various pension
plans are used, based generally on the length of
service and salary of employees. Due to similarity
of nature, the obligations of BMW Group companies
in the U.S. and of BMW (South Africa) (Pty) Ltd.,
Pretoria, for post-employment medical care are also
disclosed as pension provisions. The provision for
these pension-like obligations amounts to euro 49
million (2005: euro 43 million) and is measured, simi-
lar to pension obligations, in accordance with IAS19.
In the case of post-employment medical care, it is
assumed that costs will increase on a long-term basis
by 6% p.a. (unchanged from the previous year).
The expense for medical care costs in the financial
year 2006 amounted to euro 6 million (2005: euro
8 million).
Post-employment benefit plans are classified as
either defined contribution or defined benefit plans.
Under defined contribution plans, an enterprise pays
fixed contributions into a separate entity or fund and
does not assume any other obligations. The total
pension expense for all defined contribution plans
of the BMW Group amounts to euro 409 million
(2005: euro 400 million). This includes employer
contributions paid to state pension insurance
schemes amounting to euro 388 million (2005: euro
381 million).
Under defined benefit plans, the enterprise is
required to pay the benefits granted to present and
past employees. Defined benefit plans may be fund-
ed or unfunded, the latter sometimes financed by
means of accounting provisions. Most of the pen-
sion commitments of the BMW Group in Germany
relate to BMW AG, whose pension plans, like all
those of all of the BMW Group’s German subsidiaries,
are unfunded and financed by means of accounting
provisions. In addition, a deferred remuneration re-
tirement scheme is in place which is funded by em-
ployee contributions. The main funded plans of the
BMW Group are in the United Kingdom, the USA,
Switzerland, the Netherlands, Belgium and Japan.
Pension obligations are computed on an actuar-
ial basis at the level of the defined benefit obligation.
This computation requires the use of estimates.
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