PDF, 1.2 MB - Pfleiderer AG

80 being focused: being better
Revenues from long-term production are considered realized when total revenue, total
costs and percentage of completion can be determined sufficiently reliably (Percentageof-Completion
Method, as mainly defined in SOP 81-1 and ARB 45). Under the Percentage-of-
Completion Method, the Group reported revenues totaling 1,342 thousand euros (2001:
1,512 thousand euros).
Cash and cash equivalents
Cash and cash equivalents are cash on hand and bank balances, including those with an
original maturity of up to three months.
Concentration of Credit Risk
The Group sells a broad range of products and services to a wide circle of industrial and commercial
customers in Germany and abroad. Outside Germany, the Pfleiderer Group is mainly
represented in Europe, Asia, Australia, North America and South Africa. The concentration of
credit risk from accounts receivable is limited due to the large number of customers. A part
of the accounts receivable has also been insured through a credit insurance.
In the period under review, sales with one particular customer exceeded 5 percent of the
total volume of the sales. The Company does not see any credit risk arising in connection with
this major customer.
The Company invests cash reserves via bank accounts and in other high-value investments
that can be liquidated at short notice. The Company monitors the risk involved by
obtaining regular ratings on the creditworthiness of its counterparties. Apart from that, such
investments only take the form of deposits or short-term investments.
Receivables
Receivables are accounted at net realizable value, i.e. their nominal value less individual and
lump-sum valuation allowances. Individual valuation allowances are made when receivables
are partly or fully uncollectible, or where it is probable that collection will fail. In each case,
allowances must be determined sufficiently precisely. An estimated lump-sum valuation
allowance is applied to cover the general bad debt risk. Sufficient accrued liabilities are formed
to cover bonuses and discounts.
Sales of receivables by the Group are treated in accordance with Statement of Financial
Accounting Standards No. 140 (SFAS No. 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities”). According to SFAS No. 140, the company
must recognize the financial and servicing assets it controls and the liabilities it has incurred
and derecognized financial assets when control as defined by SFAS No. 140 has been surrendered.
The Group treats transferred receivables which are part of its asset-backed securities
scheme as sold. However, a transfer is only reported as a sale when receivables are beyond
the reach of the company and its creditors, this including bankruptcy or other forms of administration.
Additionally, there must be no rights to pledge or exchange transferred receivables
and the possibility or obligation of transferred receivables being sold back to the company
excluded.