Assets

Balance-Sheet Trend: Assets

Effective December 31, 2008, the WACKER Group’s balance-sheet total made clear gains, up €707.0 million – or 18% – to €4.63 billion (2007: €3.92 billion). This growth resulted from higher business volumes and is made particularly apparent by the increase in noncurrent assets. The rise in current assets was only slight, primarily due to higher inventories. Current assets rose 3% to €1.46 billion (2007: €1.43 billion).

The WACKER Group’s Balance-Sheet Total Made Clear Gains

Among the noncurrent assets, property, plant and equipment showed the strongest growth. This was due to the further rise in capital expenditures, particularly at WACKER POLYSILICON, and the addition represented by our acquisition of Air Products’ dispersion business. The carrying amount of property, plant and equipment climbed to €2.66 billion (2007: €2.12 billion). Compared to the prior-year figure, this represents a €536.2 million or 25% gain.

The carrying amounts of the minority interests accounted for using the equity method and of the noncurrent financial assets remained almost unchanged. On the reporting date, they were €263.8 million (2007: €266.9 million), down €3.1 million or 1%. The decline is essentially due both to the disposal from noncurrent financial assets of our stakes in the APP companies amounting to €63.1 million and to the pro rata net income stemming from investments in joint ventures and associates. A €60.3 million shareholder loan to our Siltronic Samsung Wafer joint venture and a capital contribution to our siloxane-production joint venture with Dow Corning had the opposite effect. Other noncurrent assets made significant gains, up €105.1 million to €164.2 million (2007: €59.1 million). This is due to prepayments paid by WACKER SCHOTT Solar Vertriebs GmbH (our sales joint venture) to WACKER SCHOTT Solar Produktion (a production joint venture).

As for current assets, the main increase affected inventories, up 25% to €504.9 million (2007: €403.5 million). In contrast, cash and cash equivalents fell €61.2 million to €305.3 million. WACKER’s cash and cash equivalents as per December 31, 2008 included for the first time securities in the form of German government securities (Bundeswertpapiere). For reasons of risk diversification, surplus cash and cash equivalents were invested in this current asset. Much higher sales saw trade receivables climbing only €6.2 million to €466.8 million (2007: €460.6 million). Similarly, other assets, including tax receivables, fell slightly, dropping €9.8 million to €187.1 million (2007: €196.9 million). The decline was mainly due to lower receivables stemming from investment subsidies.

Balance-Sheet Trend: Liabilities

Primarily due to the high net profit, the Group’s equity on the reporting date rose €217.2 million to €2.08 billion (2007: €1.87 billion) – an increase of 12%. The balance-sheet total caused a slight drop in our equity ratio, which is now 45.0% (2007: 47.6%). WACKER distributed dividends in 2008 amounting to €149.4 million. Changes due to currency translation of foreign subsidiaries’ financial statements and to currency-hedging measures on balance increased equity by €7.4 million.

Noncurrent and current financial liabilities rose by €54.6 million year on year. The increase results from financing measures needed for investments made by Group companies in China. Provisions for pensions, in contrast, hardly changed at all. As per December 31, 2008, financial liabilities amounted to €272.4 million (2007: €217.8 million). This amount included €56.3 million (2007: €67.4 million) in liabilities stemming from financial leasing €158.7 million (2007: €164.2 million) were noncurrent and €113.7 million (2007: €53.6 million) were current financial liabilities. Net financial liabilities (the balance of financial liabilities and cash and cash equivalents) dropped year on year. On the reporting date, cash and cash equivalents exceeded financial liabilities by €32.9 million.

Altogether, noncurrent liabilities rose 17% to €1.70 billion (2007: €1.46 billion). Prepayments received for future polysilicon deliveries are the main reason for the increase in other noncurrent liabilities, up €246.1 million.

Corporate Acquisitions and the Sale of Corporate Entities

In 2008, we concluded our acquisition of Air Products’ shares in APP and WPS, formerly joint ventures. The companies, which had not been fully consolidated until now, have a major impact on our assets. When these companies were first consolidated on February 1, 2008, their assets amounted to €231.0 million, with debts at €55.8 million.

In fiscal 2008, WACKER did not sell any major corporate entities that would have significantly impacted assets.

Off-Balance-Sheet Assets

A major asset that does not appear on the balance sheet is the value of the WACKER brand and other Group trademarks. We consider the high profile and reputation of our trademarks to be a key influencing factor in the acceptance of our products and solutions by customers. However, there are other intangible assets that are vital for success and positively impact our business. These include long-standing relationships with customers and their trust in our product and solution-related expertise. Just as important are factors such as profound know-how and the experience of our employees, as well as our many years of expertise in R&D, production/business-process structures and project management.