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In November 2002, the FASB adopted FIN 45 ‘Guarantor’s Accounting and Disclosure Requirements
for Guarantees, including Indirect Guarantees of Indebtedness of Others, an interpretation
of SFAS 5, 57 and 107’, which prescribes the accounting treatment of guarantees and warranties.
This stipulates that at the time certain guarantees are issued, a provision corresponding to their fair
value must be set aside. Furthermore, this statement widens the scope of the disclosures required
in the notes to the accounts. FIN 45 is mandatory for fiscal years ending after December 15, 2002
with respect to the more extensive disclosures required in the notes to the accounts, and has been
implemented by the mg Group. The rules relating to the reporting of provisions at fair value apply
to certain guarantees and warranties issued or modified after January 1, 2003, and were also implemented
on a timely basis by the mg Group. They have had no material impact.
At the end of January 2003, the FASB published FIN 46 ‘Consolidation of Variable Interest Entities,
an interpretation of ARB No. 51’. Irrespective of whether a company can exert control over another
company by virtue of the voting rights it holds, this statement requires that such interests be consolidated
under certain conditions even if the company does not hold a majority of the shares in
the interest. According to the FASB’s interpretation, the requirement to consolidate such interests
depends on the extent to which an investor has a commercial interest in a company (‘variableinterest
entity’). If the opportunities and risks arising from a variable-interest entity are not shared
among its investors according to their shareholdings, the company deemed to be the main beneficiary
and bearing most of the risk is required to consolidate the variable-interest entity. FIN 46
was revised in December 2003. These amendments are essentially clarifications and exemptions and
have no impact on mg. Owing to its adoption of FIN 46r, mg has consolidated four variable-interest
entities for the first time at December 31, 2003. It has also identified one variable-interest entity that
does not need to be consolidated (for further information see Note D) ‘Scope of Consolidation’).
At the end of November 2002, EITF 00-21 ‘Accounting for Multiple-Element Revenue Arrangements’
was published in amended form after further discussion. EITF 00-21 addresses the issue of how revenues
arising from multiple-element arrangements should be allocated and recognized. The amended
version essentially identifies characteristics used to define separate revenue elements of multipleelement
arrangements and, consequently, for pro-rata revenue recognition. The amended version of
EITF 00-21 applies to agreements concluded in reporting periods commencing after June 15, 2003.
It therefore first applied to mg in the fourth quarter of last year. This had no material impact.
In May 2003, the FASB adopted EITF 01-8 ‘Determining Whether an Arrangement Is a Lease’. This
is intended to determine whether a sale or purchase agreement – particularly in the context of outsourcing
– constitutes a hidden lease. This is usually deemed to be the case if a seller works almost
exclusively for one customer or has a liability to the latter, and no fixed purchase price – in the sense
of a market price – has been agreed. EITF 01-8 is mandatory for accounting periods commencing
after May 28, 2003.