Sennheiser 2010 Annual Report Download - page 39

76 NO TES O N CO N SOLI DATED FIN A NCIA L STA TEME N TS 2 0 10 77
NOT ES O N CON S OLID ATED FINA N CIAL STA T EMEN T S 20 10
Inventories are separately valued at acquisition cost, subject to allocated surcharges and
discounts for incidental acquisition costs and acquisition cost reductions, or at production cost
in accordance with Section 255, subsection 2 HGB. Production costs include individual costs as
well as pro-rata allocated material overheads, production overheads and depreciation insofar as
it is related to production. The lower of cost or market principle is applied. Marketability dis-
counts were applied as required and retrograde valuation was followed.
Trade and other receivables are shown at nominal value. Any necessary itemized and general
provisions are set aside for bad and doubtful debts. Receivables denominated in foreign
currencies were converted at the mean exchange rate on the balance sheet date. Of the trade
receivables, an amount of €62,000 (€832,000 in the previous year) have a remaining term to
maturity of more than one year. Of the other receivables, an amount of €233,000 (€394,000 in
the previous year) have a remaining term to maturity of more than one year.
Other trade investments are valued at acquisition cost.
Cash and cash equivalents are valued at nominal value.
Accruals and deferrals on the assets side of the balance sheet are stated in the amount of
expenditure for the period following the balance sheet date.
Deferred taxes result from temporary differences between balance sheet items under commer-
cial law and for tax purposes, as well as consolidation entries. In case of temporary differences
arising from consolidation entries, an average tax rate of 25% (previous year: 25%) was applied.
In determining deferred taxes arising from temporary differences between balance sheet items
under commercial law and for tax purposes, local tax rates between approximately 8% and 43%
were applied. Deferred taxes continue to be accrued on losses carried forward. On the balance
sheet date, the deferred taxes on losses carried forward were €2.907 million (previous year:
€2.671 million). The remaining deferred tax assets of €12.506 million result from differences in
fixed assets and inventories, receivables, liabilities and provisions. Deferred tax liabilities of
€920,000 mainly relate to differences in fixed assets. In accordance with the accounting policy
choice under Section 274, subsection 1, sentence 3 HGB, only the net amount of deferred taxes
is reported. Offsetting results in net deferred tax assets of €14.566 million.
The fixed capital is shown at the nominal amount of the parent company’s general and limited
liability capital. The balance sheet profit includes a profit brought forward of €47.652 million.
The consolidation operations affecting net income are shown in the profit brought forward as
at the end of the previous year. The difference shown on the liabilities side of the balance sheet
arising from the capital consolidation has arisen through profit retentions by subsidiaries prior
to initial consolidation and therefore has the nature of profit brought forward. The net profit of
the parent company and the proportion of the consolidated net profit owing to minority share-
holders are credited to the company clearing accounts and are thus not included in the balance
sheet profit.
Special items contain the investment subsidies and advance payments granted to Sennheiser
Consumer Electronics GmbH, Branch Ireland, Tullamore, Ireland, by the Industrial Development
Agency for establishing the Irish production facility. The amortization of this special item for
investment allowances on fixed assets corresponds to the scheduled depreciation on the
subsidized fixed assets. Under the terms of the contract, liability for part repayment of the
allowances received may arise in certain circumstances.
In accordance with the Accounting Law Modernization Act (BilMoG), pension provisions were
generally valued according to the projected unit credit method (PUC method) at an interest rate
of 5.16% (as of January 1, 2010: 5.25%), a pay trend of 2.5% and a pension trend of 1.5%
annually. The interest rate is based on the average market interest rate for the last seven years
determined by the German Central Bank, which is derived under the assumption of a remaining
term of 15 years. The actuarial tables 2005 G by Klaus Heubeck were applied.
In accordance with Section 246, subsection 2, sentence 2 HGB, the assets from reinsurance that
are protected from the claims of all other creditors and serve exclusively to meet pension
obligations or similar long-term commitments were offset against said obligations. The fair val-
ue of the assets that were offset is €53,000, and the discharge amount of the offset liabilities is
€53,000. Pension provisions include provisions for obligations to previous members of the
Executive Team of €2.930 million (previous year: €2.566 million).
In the financial result, income of €2,000 from fund assets was offset for the first time against
interest expense of €2,000 resulting from imputed interest on pension obligations.
The formation of tax provisions and other provisions is at the discharge amount in accordance
with sound business judgment. Other provisions take into account all recognizable risks and
contingent liabilities and contain, among other things, provisions for warranty claims in the
sum of €7.267 million (previous year: €5.800 million), for profit shares, bonuses, fees and
provisions €10.593 million (previous year: €5.059 million), for anniversary awards €1.903 million
(previous year: €1.911 million), for vacation entitlement €2.037 million (previous year: €1.774
million), for pre-retirement reduction in work hours €1.936 million (previous year: €1.511 mil-
lion), and for severance payments €1.709 million (previous year: €508 ,000).
Liabilities are valued at their repayment and/or discharge amount.
They are as follows:
Other liabilities include tax liabilities in the amount of €4.901 million (previous year: €4.436 mil-
lion) and social security liabilities of €1.103 million (previous year: €983,000).
(€ IN THOUSANDS) LIABILITIES
Total Up to one year More than five years
Dec. 31, 2010 Previous year Dec. 31, 2010 Previous year Dec. 31, 2010 Previous year
Liabilities to credit institutions 197 5 197 5 0 0
Advance payment received for orders 369 55 369 55 0 0
Liabilities to shareholders 82,322 69,332 67,755 69,332 0 0
Trade payables 26,882 22,838 26,882 22,838 0 0
Own bills of exchange payable 0 1,102 0 1,102 0 0
Liabilities to associated companies 3 3 3 3
Other liabilities 19,337 19,462 19,153 19,218 0 0
129,110 112,797 114,359 112,553 00