Merck 2008 Annual Report Download - page 138

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Most of the guarantees issued exist in connection with our pharmaceutical business in
Italy, where pursuant to tax legislation, guarantees must be given for reimbursements of
tax receivables from the Italian fiscal authorities exist as well as to secure the supply of
products to public hospitals. Other contingent liabilities include, among other things,
collateral security given on property, plant and equipment, for example buildings and
potential obligations from legal disputes, for which the probability of an outflow of
resources did not suffice to recognize a provision as of the balance sheet date.
[42] Other financial obligations
Other financial obligations comprise the following:
€ million
Dec. 31,
2008
thereof
subsidiaries
Dec. 31,
2007
thereof
subsidiaries
Obligations to acquire intangible assets 1,643.1 – 1,247.7 –
Orders for capital expenditure on property,
plant and equipment 265.1 – 76.3 –
Future rental payments 70.0 – 62.9 –
Future operating lease payments 77.4 – 87.4 –
Long-term purchase commitments 8.3 – 0.3 –
Other financial obligations 22.6 – 30.9 –
2,086.5 – 1,505.5 –
Obligations to acquire intangible assets exist in particular within the scope of research
and development collaborations. Here Merck has obligations to make milestone pay-
ments when its partner achieves certain objectives. In the unlikely event that all con-
tract partners achieve all milestones, Merck would be obligated to pay up to € 1,643.1
million (2007: € 1,247.7 million) for the acquisition of intangible assets. The obliga-
tions are as follows:
€ million
potential
due date
in 1 year
potential
due date
in 1–5 years
potential
due date
over 5 years
Total
Dec. 31,
2008
Obligations to acquire intangible assets 50.8 405.6 1,186.7 1,643.1
Other financial obligations are carried at nominal value. Liabilities from lease agree-
ments are composed as follows:
€ million
Remaining
maturity less
than 1 year
Remaining
maturity 1 to
5 years
Remaining
maturity more
than 5 years
Total
Dec. 31,
2008
Present value of future payments
from finance leases 1.1 8.4 – 9.5
Interest component of finance leases 0.1 0.1 – 0.2
Future finance lease payments 1.2 8.5 – 9.7
Future operating lease payments 22.8 47.2 7.4 77.4
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
133