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consolidated financial statements notes pfleiderer ag 105
The following table shows the transition from expected to recognized tax expenses. In order
to calculate the expected tax burden, earnings before taxes are multiplied with the overall tax
rate applicable for the fiscal year under review.
2002 2001
‘000 euros ‘000 euros
Group EBT 33,629 55,224
Expected tax burden at tax rate of 37.5% (2001: 38.0%)
Increase/reduction of taxes due to:
12,611 20,985
Differences in tax rates, non-German companies – 2,086 – 2,831
Changes in tax rate – 630 0
Non-deductible operating expenses 265 810
Non-deductible amortization on investments 1,969 0
Tax-free income – 984 – 790
Taxes brought forward – 351 677
Increase in valuation adjustment to deferred taxes 10,375 0
Special effects on delimination of continued and
discontinued operations – 6,533 – 7,145
Special effects of deferred tax in Poland – 1,578 0
Other 142 – 2,526
Total tax burden 13,200 9,180
As of December 31, 2002 the Group has loss carryforwards of 188,062 thousand euros (2001:
45,826 thousand euros) for corporate income tax purposes and of 80,813 thousand euros
(2001: 37,610 thousand euros) for domestic municipal trade tax purposes, as well as non-German
loss carryforwards of 2,937 thousand euros (2001: 3,450 thousand euros). Under German
tax law applicable at the balance sheet date, domestic losses can be carried forward without
limit in time or amount. Of the non-German loss carryforwards, 2,937 thousand euros may be
used until 2007.
Valuation adjustments of 43,420 thousand euros (2001: zero) were made to deferred tax
assets mainly for tax loss carryforwards where their realization is uncertain within a foreseeable
period of time, based on the legal and financial situation or other information available to
the Company. Depending on the Company’s earnings situation, current estimates on the
recoverability of deferred tax assets may change in the years to come, necessitating higher or
lower valuation adjustments.