Merck 2008 Annual Report Download - page 116

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In fiscal 2007, a € 2 billion multi-currency term loan and revolving credit facility was
agreed. The loan has a term of seven years and was placed with an international banking
syndicate.
The current and non-current liabilities of the Merck Group to banks are denomi-
nated in the following currencies:
in %
Dec. 31,
2008
Dec. 31,
2007
Euros 33.1 68.8
U.S. dollars 0.4 0.6
Pounds sterling 0.1 –
Swiss francs – –
Yen –1.8
Other currencies 66.4 28.8
100.0 100.0
In 2005, Merck KGaA launched its first euro benchmark bond in the European debt
capital market via Merck Finanz AG, Luxembourg. The size of the issue was € 500 mil-
lion with a maturity of seven years. The bond pays a coupon of 3.75% and was issued
at a price of 99.716%. The interest expense of the bond has been fixed to the six-month
Euribor rate through interest rate swaps. Since the hedging instruments are based
on the same fundamentals that determine the value of the underlying transaction,
changes in the market interest rates lead to opposite changes in the value of the bond.
The measurement of the bond reflects fair value taking into account disagios and
transaction costs. The costs of issuing the bond are reflected in the book value and are
distributed evenly over the term of the bond.
In 2007, Merck KGaA launched another euro benchmark bond for € 500 million in
the European debt capital market. It has a term of three years. The bond pays a coupon
of 4.75% and was issued at a price of 99.7%. The measurement reflects amortized cost.
In order to meet short-term capital requirements, Merck KGaA issued a commercial
paper program with a volume of € 2 billion, which had not been utilized as of the
reporting date. Liabilities from financial leasing represent the discounted amount of
future payments arising from finance leases. This item primarily relates to liabilities
from finance leases for buildings. Information on liabilities due to related parties can
be found in Note [48].
72 Income Statement
73 Balance Sheet
74 Segment Reporting
CONSOLIDATED FINANCIAL STATEMENTS OF THE MERCK GROUP
76 Cash Flow Statement
77 Free Cash Flow
77 Statement of Recognized
Income and Expense
78 Statement of Changes
in Net Equity including
Minority Interest
79 Notes
111