E_mg_GB_03_vorne-29_3_04

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142 Since fiscal 2001/2002, a uniform corporation tax rate of 25% and the so-called half-income system of taxation have applied to German limited companies. Under Germany’s flood victims’ solidarity legislation of September 19, 2002, the rate of German corporation tax for fiscal 2003 was raised on a one-off basis by 1.5 percentage points to 26.5%. At December 31, 2002, German companies therefore calculated deferred taxes for fiscal 2003 based on the corporation tax rate of 26.5% (28% including the solidarity surcharge) applicable for this year. German companies’ computation of deferred taxes was thus based on the pertinent tax rates of 26.4% and 28.0% and the relevant trade tax rates of 13.3% and 13.0% respectively. The calculation of German companies’ deferred taxes was therefore based on a total rate of 39.7% and 41.0% respectively. The impact of this tax increase due to the flood victims’ solidarity legislation, which was limited to one year, was not of material importance. At December 31, 2003, German companies are calculating their deferred taxes based on an overall tax rate of 39.7%. Deferred taxes are computed using national tax rates which, according to the enacted law in the respective countries at the balance sheet date, will apply on the date on which the timing differences are likely to be eliminated or net operating loss (NOL) carryforwards are likely to be utilized. The following breakdown of tax expense for fiscal 2003 is based on an overall tax rate of 39.7% and reconciliation to the effective tax rate of 30.6%: 1/1/2003 - 10/1/2002 - 12/31/2003 12/31/2002 u ’000 t ’000 Expected income tax benefit (prior year: income tax expense) – 71,870 10,391 Non-deductible expenses Foreign tax rate differential (including change in 12,068 1,365 valuation allowance on deferred tax assets) – 12,910 3,350 Effect of deferred taxes from affiliated and related companies 13,087 9,128 Change in valuation allowance on deferred tax assets – Germany 12,960 45,117 Other – 8,726 – 11,318 Actual income tax benefit (prior year: income tax expense) – 55,391 58,033 Deferred tax assets and liabilities are recognized for all temporary differences between the amounts reported in the tax accounts and those in the U.S. GAAP financial statements included in the consolidated accounts. Deferred taxes are also recognized in relation to various consolidation measures. Furthermore, deferred tax assets are recognized for losses carried forward. If deferred tax assets are unlikely to be realized, a valuation allowance is reported. Deferred tax liabilities on retained earnings at foreign subsidiaries of mg technologies ag were not established, because the vast majority of these earnings are not intended to be distributed in the future either, but constitute a permanent investment. The calculation of the deferred taxes not reported would have involved a disproportionate amount of time and effort. The primary components of deferred tax assets and liabilities and the related valuation allowances result from adjustments in the following items:
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 Deferred tax assets 12/31/2003 12/31/2002 u ’000 t ’000 Net operating loss carryforwards 1,308,799 1,223,826 Intangible assets 554,986 599,171 Investments and long-term financial assets 4,810 1,475 Inventories 16,872 43,004 Pension and other postretirement benefits 94,178 86,989 Other provisions and accruals 83,225 53,024 Deferred income 14,707 16,928 Other 4,458 5,270 Total 2,082,035 2,029,687 Less valuation allowance – 1,046,389 – 1,143,423 Total deferred tax assets Deferred tax liabilities 1,035,646 886,264 Intangible assets – 66,968 – 60,750 Property, plant and equipment – 70,285 – 58,397 Inventories – 40,061 – 35,844 Other provisions and accruals – 21,938 – 25,258 Liabilities – 16,303 – 4,227 Deferred income – 8,222 – 10,368 Other – 5,979 – 8,644 Total deferred tax liabilities – 229,756 – 203,488 Total deferred tax assets, net 805,890 682,776 Net deferred tax assets and liabilities are further broken down by current and non-current portions as follows: Deferred tax assets 12/31/2003 12/31/2002 u ’000 t ’000 Current 53,897 47,929 Non-current 813,863 701,018 Total deferred tax assets, net Deferred tax liabilities 867,760 748,947 Current – 34,086 – 46,291 Non-current – 27,784 – 20,313 Total deferred tax liabilities, net – 61,870 – 66,604 Total deferred tax assets, net 805,890 682,343 At December 31, 2003, the mg Group had corporate tax net operating loss (NOL) carryforwards of a3,175 million (prior year: a2,970 million) and German trade tax NOLs of a1,943 million (prior year: a1,411 million). The NOLs of German companies have an unlimited carryforward period. The losses of foreign companies can usually only be carried forward for a limited period. A deferred tax allowance of a1.036 billion (prior year: a1.138 billion) has been established against the total NOLs. The income taxes paid by the companies reported as discontinued operations amounted to a9.945 million in 2003 (prior year: minus a1.402 million). 143
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“2003 was a year of transition fo
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Consolidated Key Figures 2003 RESUL
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Creating freedom for action CONTENT
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MANAGEMENT SHARE STRATEGY SPECIAL S
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zation As the world’s population
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The pharmaceutical industry will co
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Milk Last year, over 160 million co
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The MODUL tablet press produced by
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For a technology-driven organizatio
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mg's mission is to ensure sustainab
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Page 185: Key Figures for the mg Group RESULT
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