Michelin couv courteGB

The following table presents a reconciliation of the theoretical tax charge to the actual tax charge:
Strategy • Fundamentals • Businesses • Résultats Earnings
Notes to the Consolidated Financial Statements
Dec. 31, 2004 Dec. 31, 2003
Tax, excluding withholding taxes, on the contribution of Group
companies to consolidated income, at standard local tax rates 296,787 299,095
Effect of permanent differences 8,697 7,578
Effect of unrecognized deferred taxes (40,755) (47,590)
Effect of changes in tax rates 24,393 2,800
Other effects 3,929 (18,716)
Income taxes reported in the income statement, excluding withholding taxes 293,051 243,167
Dec. 31, 2004 Dec. 31, 2003
Total unrecognized deferred tax assets 252,457 308,217
Deferred tax assets and liabilities break down as follows by category:
Dec. 31, 2004 Dec. 31, 2003
Deferred tax assets 847,676 912,973
Deferred tax liabilities (44,161) (41,531)
Net obligation 803,515 871,442
Breakdown:
- time differences 601,644 646,974
- tax loss carryforwards 163,924 221,837
- tax credits 37,947 2,631
13. Post-retirement and other employee benefit obligations
13.1. Description of current schemes
In a number of countries where Michelin Group operates, employees enjoy short-term benefits (such as paid holidays or annual bonuses),
and long-term benefits throughout the course of their employment (such as “seniority awards” or “work medals”) and post-retirement
benefits (such as retirement bonuses, pensions or retiree medical care).
Short-term benefits are recognized in the relevant Group companie’s liabilities. The other benefit obligations are treated and met
in different ways as described below:
a) Defined contribution schemes (or plans) take the form of payments to external bodies whereby employers are released of any
further obligation, as the recipient body will pay the benefits to the employees. In the case of Michelin Group, these are mainly public
pension schemes such as are in place in France. In a number of countries, defined benefit schemes are in place in favour of Group
employees (as in Poland, Switzerland, and 401K in the United States of America).
b) Defined benefit schemes (or plans), where companies have a legal or constructive obligation towards their employees. Obligations
under these plans can be:
• either funded over employees’ years of service by contributions to an external fund which pays the benefits due to employees. For
contributory plans, contributions are paid by the company and the employee; for non-contributory plans, contributions are paid only
by the Company.
• or unfunded and paid directly by the Company to eligible employees on the vesting date.
For Michelin group, this primarily concerns:
• U.S., U.K. and Canadian pension plans;
• German, Spanish and Italian supplementary pension schemes, retirement bonuses in France and the payment of retirees’ healthcare
costs in the USA and Canada.
The Projected Benefit Obligation (PBO) under these defined benefit plans is calculated by independent actuaries based on local practice
and the conditions of each plan. The projected benefit obligation changes each year based on the following factors:
• Recurring factors:
- Service cost, corresponding to the value of benefits attributed to services rendered by employees during the year,
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