Engineering

3.6 Consolidated financial statements Notes to the consolidated financial statements
As of September 30, 2011, €1,500 million (2010: €1,778 million) of
the total of other provisions are current, while €648 million (2010:
€829 million) are non-current. Provisions of €625 million (2010: €613
million) have a remaining term of more than 1 year.
Product warranties and product defects represent the Group’s
responsibility for the proper functioning of the goods sold (product
warranty) as well as the obligation that arise from the use of the
products sold (product defect).
Provisions for other contractual costs represent pending losses from
uncompleted contracts.
Provisions for employee compensation and benefit costs primarily
represent employment anniversary bonuses and obligations for the
management incentive plans, while social plan and related costs
pertaining to personnel related structural measures are reflected in the
provision for restructuring activities. Pension related obligations for
partial retirement agreements and early retirement programs, partly
resulting from restructurings, are part of the provision for pensions and
similar obligations.
The provision for restructurings consists of provisions for employee
termination benefits and exit costs which have been established by
operating divisions for costs incurred in connection with activities which
do not generate any future economic benefits for the Group. With the
exception of Steel Americas restructurings are being carried out in all
business areas. The reversals of restructuring provisions in the fiscal
year in the amount of €86 million result from adjustments to the
planned restructuring measures due to the finalization of details of the
measures during their implementation and to alternative courses of
action arising in the fiscal year.
The provision for decommissioning obligations mainly consists of
obligations associated with mining activities and recultivating landfills.
Obligations associated with mining activities and recultivating landfills
are generally handled over long periods of time, in some cases more
than 30 years. The technical parameters are very complex. As a result,
uncertainty exists with regard to the timing and concrete amount of the
expenses.
Provisions for environmental obligations refer primarily to rehabilitating
contaminated sites, redevelopment and water protection measures.
Consolidated financial statements
17 Financial debt
Carrying amounts in million €
Sept. 30,
2010
170 | 171
Sept. 30,
2011
Bonds 3,736 3,738
Notes payable 479 779
Liabilities to financial institutions 1,846 1,891
Finance lease liabilities 64 50
Other loans 32 36
Non-current financial debt 6,157 6,494
Bonds 749 0
Liabilities to financial institutions 376 135
Acceptance payables 18 13
Finance lease liabilities 23 18
Other loans 112 12
Current financial debt 1,278 178
Financial debt 7,435 6,672
Current financial debt includes financial debt with a remaining term up
to one year, while the non-current financial debt has a remaining term
of more than one year.
Financial debt in the amount of €5 million (2010: €100 million) is
collateralized by real estate.
As of September 30, 2011, the financial debt reflects a total discount
in the amount of €18 million (2010: €24 million), which is offset by a
total premium in the amount of €5 million (2010: €8 million).
Amortization of discounts and premiums of financial debt is included in
“financial income/(expense), net”.
In the context of the presentation of disposal groups and discontinued
operations financial debt of €480 million (2010: €26 million) were
reclassified to the balance sheet line item “liabilities associated with
assets held for sale/disposal”.