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Sales | ||
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€ million |
2008 |
2007 |
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Sales from deliveries of products and merchandise |
4,212.7 |
3,677.5 |
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Sales from other services |
85.4 |
103.8 |
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4,298.1 |
3,781.3 |
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Production Costs | ||
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€ million |
2008 |
2007 |
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Impairments of inventories included in cost of sales |
7.5 |
– |
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Other Operating Income | ||
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€ million |
2008 |
2007 |
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Gains from currency transactions |
281.7 |
88.8 |
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Income from reversal of provisions |
12.6 |
7.4 |
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Insurance compensation |
4.2 |
1.5 |
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Income from reversal of valuation allowances for receivables |
1.0 |
0.5 |
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Gains from disposal of assets |
15.5 |
2.4 |
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Subsidies/grants |
3.7 |
4.3 |
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Income from badwill |
14.3 |
– |
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Other |
11.6 |
11.5 |
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344.6 |
116.4 |
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Other Operating Expenses | ||
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€ million |
2008 |
2007 |
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Losses from currency transactions |
–258.2 |
–78.6 |
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Losses from valuation allowances for receivables |
–22.8 |
–2.3 |
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Losses from disposal of assets/impairment of property, plant, and equipment |
–33.7 |
–19.1 |
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Impairment of goodwill |
– |
–7.7 |
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Restructuring measures/project costs |
–1.1 |
– |
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Other |
–5.2 |
–29.4 |
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–321.0 |
–137.1 |
The other operating expenses include expenses not attributable to functional costs.
In the Siltronic segment, property, plant, and equipment – mainly located in the United States and in Japan – of €22.2 million has been impaired. Those assets consist of machinery and buildings and belong to product lines with estimated discounted cash flows being below the carrying amounts. The estimated lower realizable cash flows are related to the global economic crisis impacting Siltronic’s customers and thus the future orders for Siltronic’s products.
As a result of knowledge gained in the course of the integration regarding the associated production facilities at the U.S. locations, the Executive Board of Wacker Chemie AG decided to close the production facility in South Brunswick, New Jersey in 2009. This resulted in asset impairment of €5.5 million.
During the fourth quarter WACKER’s executive board decided to close the site operated by Wacker Polymer Systems (WUXI) Co. Ltd. in Wuxi, China, at the end of fiscal 2010. The reduction of expected cash inflows are after that date lead to a lower value in use and consequently to an impairment loss of €2.5 million.
In the previous year, impairment losses mainly impacted the assets of the WACKER POLYMERS, WACKER FINE CHEMICALS, and Siltronic segments. In the WACKER POLYMERS segment, PVB (polyvinyl butyral) activities were supposed to cease by the end of the 2008 fiscal year. The impairment losses related to the remaining assets of €8.9 million.
In the course of a restructuring program that started in 2006, the WACKER FINE CHEMICALS segment discontinued its ester/ketene activities as from the start of fiscal 2008. The impairment losses related to the remaining assets of €4.8 million.
In both cases, the impairment losses were recorded on the basis of the lower value in use. As the period until the shutdown of the property, plant, and equipment concerned was short, the calculated cash flows were not discounted.
In the Siltronic segment, machinery was shut down due to production-related restructuring measures. There were no positive net realizable values or values in use. The impairment loss totaled €2.5 million. Amortization of goodwill in the previous year related to the acquisition of the biotechnology business of the former Prothera GmbH in fiscal 2005 (WACKER FINE CHEMICALS segment). The expected cash flow is based on planned figures.
The goodwill impairment test has been based on a ten-year planning period that takes account of the special nature of the biotechnology business. The key indicators included anticipated sales, personnel expenses, and cost of materials. The experience gained from completed test periods has been taken into consideration. The discount rate was 6.9%.