E_mg_GB_03_vorne-29_3_04

MANAGEMENT SHARE STRATEGY SPECIAL SECTION MANAGEMENT REPORT FINANCIAL STATEMENTS FURTHER INFORMATION
Consolidated Balance Sheets • Statements of Income • Statements of Cash Flows • Statements of Changes in shareholders’ Equity • Fixed Assets Schedule • Notes • Independent Auditors’ Report
Actuarial assumptions used to determine costs and benefit obligations for principal additional
domestic pension plans were as follows:
12/31/2003 12/31/2002
Weighted-Average Assumptions % %
Discount rate 5.5 6.0
Healthcare and life insurance inflation rate 4.0 4.0
The inflation rate for German pension plans with respect to healthcare and life insurance costs
is estimated to be 4.0% for 2004. The balance sheet date used to report German pension plans is
December 31, 2003.
Components of net periodic postretirement benefit cost for the plan are as follows:
1/1/2003 - 10/1/2002 -
12/31/2003 12/31/2002
u ’000 t ’000
Service cost 354 82
Interest cost 2,722 713
Amortization of actuarial losses (+) / gains (–) 2 -7
Net periodic pension cost 3,078 788
Additional postretirement benefits are also paid by two foreign companies. Their funded status at
December 31, 2003 comes to a3.710 million (prior year: a4.361 million) and the net amount recognized
for additional foreign postretirement benefits totals a4.242 million (prior year: a5.093 million).
The relevant cost of these benefits in 2003 amounted to a353,000 (prior year: a103,000). Actuarial
assumptions used to determine costs and benefit obligations for additional foreign postretirement
benefits include a discount rate of 6.25% (prior year: 7.0% and 6.75%). These assumptions also
took into account projections of the rising cost of medical and dental treatment benefits. The rise in
the cost of medical healthcare benefits amounts to 15.0% and 9.0% (prior year: 8.5% and 9.5%).
These costs will fall by 1.0% and 0.5% per year respectively (prior year: 0.5%) up to 2013 and 2011
(prior year: 2009 and 2011). The rise in the cost of dental healthcare benefits amounts to 7.5% and
9.0% (prior year: 7.5% and 9.5%). They will fall by 0.5% per year (prior year: identical) up to 2010
and 2011. There was no change on the prior year.
The following schedule presents the effect of a one percentage point change in the inflation
rate on the service cost and accumulated postretirement benefit obligations for pension plans at
December 31, 2003:
1% Increase 1% Decrease
German Foreign German Foreign
P ’000 P ’000 P ’000 P ’000
Effect on service cost
Effect on accumulated postretirement
+ 54 + 43 – 43 – 37
benefit obligations + 5,724 + 357 – 4,917 – 328
127