PDF, 1.2 MB - Pfleiderer AG

consolidated financial statements notes pfleiderer ag 83
Impairment of Long-Lived Assets and Intangibles with a Limited Useful Life
Long-lived assets and intangibles are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Where
facts and circumstances indicate that an asset has been impaired, the carrying amount of the
asset is compared to its estimated future undiscounted net cash flow. Where necessary, the
assets are depreciated to their fair value. Fair value is based on the discounted net cash flow
generated by the asset over its useful life.
An inventory of property, plant and equipment in the Group was carried out in fiscal
2002. Due to differences in the inventory and the lack of salability of certain assets, expenses
for retirements and scrapping of 1,358 thousand euros were taken into account.
Leasing
Leasing transactions are classified either as capital leases or operating leases. Transactions
which satisfy the criteria of SFAS 13 are treated as capital leases in the Group. In this case the
leased property is carried as a liability for the Group (lessee).
SFAS 13 sets out the following criteria:
– The lease transfers ownership of the property to the lessee at the end of the lease term
– The lease contains a bargain purchase option to acquire the leased property considerably
below its market value.
– The lease term of the leased property is equal to 75 percent or more of the estimated
useful life of the leased property
– The present value at the beginning of the lease term of the future minimum lease payments
equals or exceeds 90 percent of the fair value of the leased property.
All other lease agreements in which the Group appears as lessee are treated as operating
leases, with the consequence that the lease payments are expensed as they occur.
Stock-Based Compensation
The Company reports issued stock options according to the intrinsic value based method in
compliance with Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to
Employees” (APB No. 25) and pertinent legal precedent. In accordance with APB No. 25, the
difference between the market price of the company’s share at the date of issue of the option,
and the exercise price of the subscription right is disclosed under personnel expenses. With
regard to pro-forma disclosures in accordance with Statement of Financial Accounting Standards
121 (SFAS No. 123 “Accounting for Stock Based Compensation”) we refer to Section IV
No. 18.