Sennheiser 2011 Annual Report Download - page 39

NOTES ON CONSOLIDATED FINANCIAL STATEMENTS 2011
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NOTES ON CONSOLIDATED FINANCIAL STATEMENTS 2011
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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, subsec-
tion 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 discounts, taking product releases into account, 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 €750,000 (€62,000 in
the previous year) have a remaining term to maturity of more than one year. Of the other receivables, an amount
of €803,000 (€233,000 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 commercial 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 tem-
porary 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 €1.975 million (previous
year: €2.980 million). The remaining deferred tax assets of €10.016 million result from differences in fixed assets
and inventories, receivables, liabilities and provisions. Deferred tax liabilities of €797,000 mainly relate to dif-
ferences in fixed assets. In accordance with the accounting policy choice under Section 274, subsection 1, sen-
tence 3 HGB, only the net amount of deferred taxes is reported. Offsetting results in net deferred tax assets of
€11.069 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 €53.425 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
shareholders 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 cor-
responds 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 5.14% (5.16% in the previous
year), 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 Deutsche Bundesbank, 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 tax asset values (€55,000), equating to the
acquisition cost and the fair value, 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 (€55,000).
Pension provisions include provisions for obligations to previous members of the Executive Team of €3.127
million (previous year: €2.930 million).
In the financial result, income of €2,000 from fund assets (€2,000 in the previous year) was offset against
interest expense of €2,000 resulting from imputed interest on pension obligations (€2,000 in the previous year).
The allocation of tax provisions and other provisions is at the discharge amount in accordance with sound
business judgment and takes into account all recognizable risks from pending contracts and uncertain liabilities.
Interest on other provisions with a term of more than one year is calculated at rates of interest as published by
Deutsche Bundesbank. Inflation is set at 1.69%. The interest rate for 2011 applied to discounting provisions
amounts to between 3.94 and 4.86% depending on the remaining term. Provisions with remaining terms of less
than one year are not discounted.
Liabilities are valued at their repayment and/or discharge amount.
They are as follows: