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€ million |
2010 |
2009 | ||
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Sales |
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Proceeds from deliveries of products and merchandise |
4,662.2 |
3,634.3 | ||
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Proceeds from other services |
86.2 |
85.0 | ||
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4,748.4 |
3,719.3 | ||
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Cost of goods sold |
-3,402.1 |
-2,875.8 | ||
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Cost of goods sold includes the following reversals/recognitions of impairments of inventories: |
-9.9 |
7.1 | ||
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Other operating income |
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Income from currency transactions |
143.2 |
123.2 | ||
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Income from reversal of provisions |
7.6 |
11.3 | ||
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Insurance compensation |
0.9 |
6.3 | ||
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Income from reversal of valuation allowances for receivables |
10.9 |
3.2 | ||
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Income from disposal of assets |
3.4 |
0.3 | ||
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Subsidies/grants |
5.6 |
6.2 | ||
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Income from disposal of equity-method investments |
18.5 |
– | ||
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Income from receipt of advance payments |
8.6 |
29.3 | ||
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Other operating income |
15.4 |
28.0 | ||
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214.1 |
207.8 | ||
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Other operating expenses |
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Losses from currency transactions |
-149.4 |
-150.2 | ||
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Losses from valuation allowances for receivables |
-0.9 |
-2.4 | ||
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Losses from disposal of assets |
-8.3 |
-2.0 | ||
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Impairment of property, plant and equipment |
-12.7 |
-182.1 | ||
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Restructuring measures |
-0.1 |
-21.1 | ||
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Losses from canceled/provisional contracts |
-9.0 |
-18.3 | ||
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Other operating expenses |
-29.4 |
-15.2 | ||
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-209.8 |
-391.3 |
The cost of goods sold includes an addition of €51.8 million to provisions for expected losses from the Group’s silicone business in China as a result of a long-term purchase obligation involving higher transfer prices from long-term agreements between WACKER’s Chinese subsidiaries and its siloxane-production joint venture with Dow Corning.
The other operating expenses include those expenses which are not attributable to functional costs.
Due to altered procurement and selling prices for the production and sale of pyrogenic silica (HDK®) in China, an impairment test was updated for the assets tied up in Chinese HDK® production. During comparison of the present value of the estimated future cash flows from HDK® production with the carrying values of the cash-generating unit, production and sales of HDK®, there was a renewed need to recognize an impairment of €7.5 million. An interest rate of 12 percent before tax was used for discounting purposes.
In addition, impairments on property, plant and equipment amounting to €1.7 million were carried out for the USA and China due to reductions in their fair values. Impairments of €3.5 million were taken into account for planned shutdowns of plants in Germany.
The impairments of the assets from the previous year impacted the following areas:
As the sales and earnings position at Siltronic deteriorated significantly and structural measures were agreed upon, impairment tests were conducted for the fixed assets tied up in this division. In the process, the present value of the estimated future cash flows from the use of the assets was compared with the carrying amounts. The companies included within the Siltronic segment were identified as the cash-generating units. An average interest rate of 12 percent before tax was used for discounting purposes. The total impairment was €139.2 million. €74.0 million of this sum was primarily accounted for by the cash-generating unit Siltronic AG, €38.8 million by Siltronic Japan Corp., and €26.2 million by Siltronic Corp. (USA).
In connection with substantial overcapacity in the pyrogenic silica (HDK®) area and an accompanying sharp price drop in China, an impairment test was carried out for the assets tied up in Chinese HDK® production. To do this, the present value of the estimated cash flow from HDK® production was compared with the carrying amounts of the cash-generating unit, production and sale of HDK®. The cash flows were discounted at an interest rate of 11 percent before tax. The total impairment amounted to €31.4 million.
In addition, impairments amounting to €4.3 and €3.5 million, respectively, were carried out for planned shutdowns of plants in China and Germany due to reductions in their fair values. A further impairment of €1.6 million concerned the grandstand at the stadium in Burghausen that is held as investment property.