Annual Report 2002 - Software AG

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Following Software AG’s IPO and in accordance with
section 20 of the German Stock Corporation Act, the
Software AG Stiftung (Foundation) disclosed on August
3, 1999, that it does not hold a majority interest
in Software AG.
Provisions
(8) Provisions for pensions
The provisions for pensions relate exclusively to
commitments to certain employees. They are based
on the calculations of an actuarial consultant.
The new British pensions accounting standard,
FRS 17, requires a change in the way pension assets
are valued. This has led to a deficit of 10.357
million euros in the pension fund operated by SAG-UK
that is not included on the balance sheet. This deficit
represents an indirect financial liability on the part
of the Software AG Group and, according to Article
28 of the EGHGB (Introductory Act to the German
Commercial Code), does not need to be disclosed
on the balance sheet.
(9) Provisions for taxes
The provisions for taxes relate to income and other
taxes. These include taxes payable for the period
1993 to 1997 as a result of the current audit of
Software AG by the German tax authorities.
(10) Other provisions
In 2002, other provisions principally comprised provisions
for restructuring, accounts payable, litigation
and bonuses as well as for vacation and overtime
entitlements. The company has formed appropriate
provisions for future operating expenses.
In addition, appropriate and adequate provision
has been made to cover all risks evident at the balance
sheet date.
Liabilities
(11) Liabilities to banks
All liabilities to banks were repaid in the course of
2002.
(12) Payments received on account of orders
This item chiefly comprises payments received for
services relating to customer projects that still have
to be invoiced.
(13) Other liabilities
This item relates principally to liabilities associated
with the acquisition of Instrumatic 2000 S.p.A., Milan,
Italy and of the IC-Group B.V., Capelle, The
Netherlands, as well as tax liabilities and social insurance
contributions.
(14) Deferred income
This item mainly consists of maintenance income
attributable to subsequent years.
Contingent liabilities
Liabilities from warranty agreements:
3.590 million euros (3.289 million euros in 2001)
The contingent liabilities at the balance sheet
date mainly relate to guarantees provided by banks
on behalf of Group companies and liabilities from
guarantees to customers.
Other financial commitments
Rental and leasing commitments for the next fiscal
year, 2003, amount to 24.661 million euros. Commitments
for future years total 69.098 million euros.