Reclassification of Other Taxes within Current and Noncurrent Assets/Current Liabilities:

Other taxes are now recognized in the statement of financial position as either “other assets” or “other liabilities.” Previously, these taxes were recognized together with income taxes under the items “tax receivables” or “tax liabilities.” The prior-year figures have been adapted to improve comparability. As of December 31, 2012, € 14.5 million was reclassified from noncurrent tax receivables to other noncurrent assets. An amount of € 53.3 million was reclassified from current tax receivables to other current assets. These were, for the most part, VAT receivables. On the equity and liabilities side, € 16.0 million was reclassified from current tax liabilities to other current liabilities.

IAS 19 “Employee Benefits” (revised 2011):

WACKER is applying IAS 19 “Employee Benefits” (revised 2011) – which the IASB published in June 2011 – for the first time in fiscal 2013. The standard is mandatory for fiscal years which begin on or after January 1, 2013. On June 5, 2012, the revised standard was adopted by the European Commission for application in the EU.

The standard will have the following substantial impact on WACKER’s consolidated financial statements. IAS 19 (revised 2011) affects the recognition, measurement and statement of pension provisions. Previously, WACKER used the corridor method, in accordance with which actuarial gains and losses were carried off-balance-sheet and recognized as a provision pro rata throughout employees’ remaining service years only once they exceeded a specified corridor of 10 percent of the pension obligation. As a result, the net pension liability to employees and the pension provisions recognized in the statement of financial position differed significantly in the past. This method is no longer permitted under the new standard. Actuarial gains and losses are now recognized immediately in equity as “remeasurements of defined benefit plans” under “other equity items.” The pension provisions are thus calculated as the net defined benefit liability, i.e. the value of the defined benefit obligation (DBO) less plan assets at fair value.

Moreover, the interest expense from the present value of the DBO and the interest income – now likewise calculated with the discount rate – from plan assets are combined under “net interest expense” in the statement of income. This net interest expense is calculated by applying the discount rate to the net defined benefit liability. The applicable interest rate for assessing the defined benefit obligation is used as the discount rate. The net interest expense from the net defined benefit liability is therefore the difference between the calculated interest income from plan assets and the interest expense from the defined benefit obligation. The difference between the calculated interest income from plan assets and the actual return on plan assets is posted as “remeasurements of defined benefit plans” under “other equity items.” No effects for WACKER result from the fact that non-vesting past service cost is now recognized immediately in the statement of income when it is incurred rather than being recognized over the vesting period. Similarly, no impact ensues from the recognition – upon performance of service – of administrative expenses not associated with the management of plan assets.

Obligations from phased early retirement contracts now have to be revalued in accordance with IAS 19 “Employee Benefits” (revised 2011). The mandatory payment of top-up amounts will no longer qualify as termination benefits. As long as employee service is required to earn these benefits, the corresponding obligations represent long-term employee benefits to be accrued in line with the period of service. Due to this change in classification, WACKER adjusted its provisions for phased early retirement by € –7.8 million as of January 1, 2012. As per December 31, 2012, phased-early-retirement provisions were € 1.8 million lower. If the outstanding settlement amount is measured in actuarial terms at its present value, a shortfall of € 1.9 million results and fiscal-year 2012 earnings rose by € 5.9 million.

The following tables illustrate the effects of the amended reporting principles on the statement of financial position at December 31, 2012 and the impact on the prior-year period.

Statement of Income

Statement of Financial Position as of Dec. 31, 2012

Statement of Cash Flows

Statement of Comprehensive Income 12M 2012

Consolidated Statement of Changes in Equity 12M 2012

If WACKER had not applied IAS 19 (revised 2011) as of January 1, 2013, it would have reported additional after-tax expenses of around € 17 million. The provisions for pensions would have been around € 470 million lower. Deferred tax assets would have been around € 120 million lower. Other provisions would have been about € 15 million higher owing to provisions for phased early retirement. Equity would have been around € 350 million higher.