in millions December 31, 2007 December 31, 2006

Transcription

1 6. Indebtedness December 3, 007 December 3, 006 With a term of Total up to year With a term of more than year Total up to year more than year Bonds Bank loans and overdrafts,397.7, , Derivative financial instruments Financial lease liabilities Liabilities on bills drawn and payable Liabilities from asset-backed securitization programs Liabilities from binding redemption offer to ContiTech AG shareholders Other indebtedness ,6.8 3,54. 9,87.6, ,08. Thereof 4.6 million (006: 9.9 million) secured by land charges, mortgages, and similar securities. Retrospective merger of Phoenix AG with ContiTech AG effective January, 006; offsetting of the liability with the money market funds held as collateral. 3 Other indebtedness includes million (006: 0.0 million) drawn down from the Commercial Paper Program. 74

2 Summary of bonds Issuer/type Issuing amount Coupon p.a. Effective interest rate Date of issue/ maturity and interest terms fixed until CRoA DIP Private placement % 5.66% 006/July % CRoA MTN and DIP Private placements Issue price 4.85% 5.4% -6.50% -6.67% / % CAG Eurobond % 6.87% 00/Dec % CGF Convertible bond % 4.84% 004/May % DIP = debt issuance program Variable interest rate agreement 3 MTN = medium-term note program Represents the amount outstanding of the original million issue On April 4, 007, the dividend increase proposed for fiscal year 006 changed the conversion ratio of the convertible bond issued by Conti-Gummi Finance B.V. in May 004 and guaranteed by Continental AG, in accordance with the terms of the bond. The conversion ratio of, shares for each 00,000 nominal value of the bond corresponds to a conversion price per share of (previously 50.65). In March 007, after the Annual Shareholders Meeting, the bondholders exercised their conversion rights and converted bonds with a principal amount of 0.8 million; this reduced the original issue amount from million to 377. million. The remaining value of the preferential coupon rate related to the bond is 36.7 million (006: 46.6 million). The conversion led to the creation of 5,794 shares of Continental AG. Claims arising from remaining fractions of shares were settled in cash. The convertible bond changed as follows in the year under review: 007 Nominal value of the convertible bond Carrying amount of the equity component At January 33.3 Conversions at nominal value of 0.8 million less pro-rata share of the previously recognized option value -0.7 Interest expense 9.8 At December A 500 million eurobond was issued by Continental AG in 00 under the.5 billion medium-term note program. This bond contains a covenant to increase the interest rate by.75% p.a. in the event and for the time that Continental AG no longer has a rating from two rating agencies or the rating for its non-subordinated unsecured liabilities drops to BB+ or lower (or Ba or lower). 75

3 Market values of bonds Market value on Change in market value if interest rate increased by % Change in market value if interest rate decreased by % Book value on Dec. 3, 006 Market value on Dec. 3, 006 CRoA MTN and DIP Private placements CAG Eurobond CGF Convertible bond The fair values of the Company s financial liabilities as of December 3, 007 and 006 were determined by discounting all future cash flows at the applicable interest rates for comparable instruments with the same remaining maturities. Although the convertible bond has a stock exchange listing, its fair value was also calculated through discounted cash flows in order to only measure the debt component of the convertible bond, i.e., without the value of the option. For all other primary financial instruments, the carrying amount is equivalent to the fair value. Explanation of company names CAG, Continental Aktiengesellschaft CGF, Conti Gummi Finance B.V., Amsterdam, the Netherlands Conti Benelux, Continental Benelux S.A., Zaventem, Belgium, Continental do Brasil Produtos Automotivos Ltda., Varzea Paulista, Brazil Conti Mabor, Continental Mabor Indústria de Pneus S.A., Lousado, Portugal Continental Automotive GmbH, Hanover, Germany CRoA, Continental Rubber of America, Corp., Wilmington, Delaware, U.S.A. CTSA, Continental Tyre South Africa (Pty.) Ltd., Port Elizabeth, South Africa Conti Teves, Continental Teves Hungária Kft., Veszprém, Hungary Siemens VDO Mechatronic GmbH & Co. KG, Stollberg, Germany 76

4 Breakdown of credit lines and available financing from banks Company CAG, Conti Automotive, CRoA, CGF, Conti Benelux GmbH & Co. KG GmbH & Co. KG CTSA CRoA Conti Mabor GmbH Conti Teves CAG Type Amount of issue in millions Syndicated euroloan, ,06.5 3,486. 4,979.9 Market value on 740.3,07.3 3,50.9 5,09.7 Interest floating,euribor + margin Effective interest rate 5.4% 5.3% 5.37% 5.4% Maturity bank loan % 3.5% 008 bank loan % 3.96% 0 bank loan floating, Jibar + margin.5% annual repayment until 0 bank loan % 5.63% 0 bank loan floating, Euribor + margin 4.47% 0 bank loan % 8.% 0 bank loan % 4.58% 0 bank loan % 4.% 0 bank loan % 4.59% 4.67% 4.59% 0 0 bank loan % 3.44% 03 bank loan % 4.78% 03 Various bank lines floating floating Credit lines and available financing from banks 3,598.9 mainly < year Liabilities to banks,397.7 The credit line permits an extension of any drawdown until 0. The credit line includes an extension option until 009. On December 3, 007, approved credit lines amounting to,0. million (006:,36.3 million) had not been drawn down, of which,797.6 million (006:,700.0 million) were long-term credit commitments. The loan granted by the European Investment Bank (EIB), Luxembourg, was fully drawn down in 007. In the year under review, the Continental Corporation utilized its commercial paper program, its asset-backed securitization programs, and its various bank lines to meet short-term credit requirements. In July 007, two banks made a commitment to Continental AG to provide 3.5 billion to refinance the acquisition of Siemens VDO. The loan was successfully syndicated in September and October, 007. The financing involved a total of 39 banks. To facilitate the timely repayment of debt, Continental AG placed 4.65 million new shares with institutional investors at the end of October, 007 as part of a capital increase at a price of 0.00 per share. Thus, the loan of 3.5 billion was reduced already in December, 007, by the amount received of just under.48 billion. The committed amount was accordingly reduced to.0 billion; 0. billion was drawn down on December 3,

5 The indebtedness of 3,6.8 million will mature in the next five years and thereafter as follows: December 3, Thereafter Total Total indebtedness 3, , , ,6.8 Interest rate swaps contained therein Includes a drawdown payable in 008 from a credit line valid until 0 with a fair value of million. Includes a drawdown payable in 008 with a fair value of,07.3 million, which can be extended for one year. December 3, Thereafter Total Total indebtedness ,785. Interest rate swaps contained therein The future payment obligations resulting from financial leases are shown in the following table: to 0 From 03 Total Minimum lease payments Interest component Financial lease liabilities The fair value of the financial Iease liabilities is 4. million (006: 7.7 million). The effective interest rate of the leasing contracts lies between 5.5% and 8.4% (006: between 6.0% and 8.3%). 78