27. Income Tax Liabilities in millions 2011 2010 At January 1 697.9 644.7 Additions 411.0 583.9 Utilizations and advance payments for the current fiscal year -450.6-476.3 Reversals -9.2-71.1 Additions from the initial consolidation of subsidiaries 0.4 0.2 Foreign currency translation -1.3 16.5 At December 31 648.2 697.9 When reconciling the income tax liabilities with the income taxes paid in the cash flow statement, the cash changes in income tax receivables must be included in addition to the utilizations and current advance payments shown here. 28. Indebtedness Dec. 31, 2011 Dec. 31, 2010 Maturity Maturity in millions Total up to 1 year over 1 year Total up to 1 year over 1 year Bonds 2,996.2 2,996.2 2,988.5 2,988.5 Bank loans and overdrafts 1 4,492.6 1,551.2 2,941.4 5,144.9 729.6 4,415.3 Derivative financial instruments 163.0 161.2 1.8 234.0 19.4 214.6 Financial lease liabilities 122.9 15.7 107.2 149.0 18.8 130.2 Liabilities from factoring/assetbacked securitization programs 549.5 549.5 381.5 381.5 Other indebtedness 2 238.2 236.8 1.4 92.6 88.8 3.8 Indebtedness 8,562.4 2,514.4 6,048.0 8,990.5 1,238.1 7,752.4 1 Thereof 5.5 million (PY: 7.9 million) secured by land charges, mortgages and similar securities. 2 In 2011, other indebtedness includes 216.6 million (PY: 86.5 million) drawn down from the commercial paper program and 1.4 million (PY: 0.9 million) in liabilities on bills drawn and issued. 233
Consolidated Financial Statements of Continental AG, Hanover Annual Report 2011 Continental AG Continental issues Issuer/type Continental Tire Andina S.A. US dollar Continental Tire Andina S.A. US dollar Amount of issue in millions 750.0 625.0 1,000.0 625.0 1.2 5.6 3,006.8 Carrying amount Dec. 31, 2011 735.5 620.9 1,003.6 629.4 1.2 5.6 2,996.2 Stock market value Dec. 31, 2011 806.9 635.8 1,016.7 628.5 1.2 5.6 3,094.7 Carrying amount Dec. 31, 2010 732.3 619.7 1,003.9 629.7 2.9 2,988.5 Stock market value Dec. 31, 2010 814.4 636.8 1,040.2 638.6 2.8 3,132.8 Coupon p.a. 8.500% 6.500% 7.500% 7.125% Floating 7.750% Issue/maturity and fixed interest until 07.2015 01.2016 09.2017 10.2018 2008/ 09.2012 2011/ 11.2016 1 Issue price 99.005% 98.861% 99.330% 99.246% 97.299% 2 100.000% 1 Semi-annual redemption payments. 2 Quarterly redemption payments of the outstanding U.S. dollar. In the previous year, the average issue price of the two outstanding U.S. dollar s amounted to 97.61%. Total The carrying amount of s rose slightly from 2,988.5 million at the end of 2010 to 2,996.2 million as of the end of fiscal 2011. The increase is essentially due to the marketing of a with a nominal volume of $8.0 million and an interest rate of 7.75% p.a. launched by the company Continental Tire Andina S.A., Cuenca, Ecuador, in the fourth quarter of 2011. By the end of 2011, a nominal amount of $7.2 million of this was placed with investors. The remaining $0.8 million were issued in January 2012. Semi-annual redemption payments have been agreed for this. The s issued in the third quarter of the previous year by Conti-Gummi Finance B.V., Maastricht, Netherlands, with a total volume of 3.0 billion continue to participate as before in the extensive collateral package granted to the lending banks in line with the renegotiations of the syndicated loan in 2009. The option of early repayment of the s granted to the issuer under the issue conditions of all four s was measured, as in the previous year, as an embedded derivative in line with IAS 39 (please also see Note 29). 234
Breakdown of credit lines and available financing from banks in millions Amount Company Type 1 of issue Dec. 31, 2011 Dec. 31, 2010 Carrying amount Fair value Amount of issue Carrying amount CAG, Conti Automotive, CRoA,, Conti Benelux, Conti Autom. Benelux, Conti Autom. Holding Netherlands 3 SL 1,003.2 1,027.6 296.8 303.3 Fair value Interest Maturity Euribor / USD- Libor + 2012 2 SL 5,375.0 2,856.8 2,823.1 6,484.9 4,000.2 4,158.3 margin 2014 4 Conti Automotive LBL 40.0 40.2 3.90% 2011 LBL 55.0 15.0 15.2 3.76% 2011 PL 60.0 61.4 6.21% 2011 Conti Temic Electronics (Phils.) Conti Mabor PL 110.0 50.0 50.0 LBL 11.6 11.6 11.7 11.2 11.4 margin 2011 USD- Libor + margin 2012 LBL 33.6 22.4 22.7 4.54% 11 2011 LBL 5.7 5.7 5.6 margin 2011 5 LBL 8.2 7.4 6.2 9.7 8.7 8.7 0% 6 2016 7 CRoA LBL 37.4 37.4 38.6 5.53% 2011 Conti Automotive LBL 20.0 20.0 20.1 20.0 20.0 20.4 4.38% 2012 Conti Autom. Hungary Kft. LBL 10.8 10.8 11.0 20.9 20.9 21.9 5.34% 2012 7 Conti Tire do Brasil LBL 3.4 3.4 3.3 14.4 14.4 13.6 8.22% 8 2012 9 CAG LBL 300.0 299.9 305.9 300.0 299.7 319.0 6.39% 10 2012 Conti Tire do Brasil LBL 7.6 7.5 11.4 11.3 3.51% 8 2013 7 LBL 15.3 7.7 7.8 22.6 11.2 11.6 4.78% 2013 7 CT Fluid Autom. Hungária Kft. LBL 13.9 13.9 14.1 22.4 22.4 23.1 4.35% 2013 7 Conti Tire China Production LBL 11.8 11.8 11.0 12.1 12.1 12.2 EUR- Libor + margin 2015 CAS Changshu LBL 12.3 12.3 11.7 11.3 11.3 10.1 5.18% 2014 Conti Matador Rubber Prod. Various bank lines LBL 20.0 20.0 18.7 935.1 206.2 206.2 765.6 174.1 174.1 Credit lines and available financing from banks 6,737.4 7,925.6 Liabilities to banks 4,492.6 4,485.9 5,144.9 5,332.7 margin 2014 mainly variable 1 SL: syndicated loan; LBL: long-term bank loan; PL: promissory loan. 2 The credit line permits an extension of any drawdown until April 2014 (PY: August 2012). 3 Following completion of the renegotiations at the end of March 2011, Conti Autom. Benelux and Conti Autom. Holding Netherlands are also entitled to draw upon the syndicated loan. 4 Prolongation of term until 2014 (PY: 2012). 5 Annual redemption payments. 6 Interest-free development loan. 7 Semi-annual redemption payments. 8 Average interest rate (matures in 2012 PY: 8.24%; matures in 2013 PY: 3.44%). 9 Monthly redemption payments. 10 Interest rate at December 31, 2010: 6.64%. 11 Average interest rate. mainly < 1 year The amounts for the prior year are presented comparably. 235
Consolidated Financial Statements of Continental AG, Hanover Annual Report 2011 Continental AG Abbreviations CAG, Continental Aktiengesellschaft, Hanover, Germany CAS Changshu, Continental Automotive Systems Changshu, Co. Ltd., Changshu, China, Conti-Gummi Finance B.V., Maastricht, Netherlands Conti Autom. Holding Netherlands, Continental Automotive Holding Netherlands B.V., Maastricht, Netherlands Conti Automotive, Continental Automotive GmbH, Hanover, Germany Conti Benelux, Continental Benelux BVBA, Herstal, Belgium Conti Autom. Benelux, Continental Automotive Benelux BVBA, Mechelen, Belgium Conti Tire do Brasil, Continental do Brasil Produtos Automotivos Lda., Camaçari, Brazil Conti Mabor, Continental Mabor Indústria de Pneus S.A., Lousado, Portugal Conti Matador Rubber Prod., Continental Matador Rubber s.r.o., Púchov, Slovakia Conti Temic Electronics (Phils.), Continental Temic Electronics (Phils.), Inc., Calamba-City, Philippines Conti Tire China Production, Continental Tires (Hefei) Co. Ltd., Hefei, China CRoA, Continental Rubber of America, Corp., Wilmington, Delaware, U.S.A. Conti Autom. Hungary Kft., Continental Automotive Hungary Kft., Veszprém, Hungary CT Fluid Autom. Hungária Kft., ContiTech Fluid Automotive Hungária Kft., Mako, Hungary On December 31, 2011, credit lines and available financing from banks amounted to 6,737.4 million (PY: 7,925.6 million). Of these, a nominal amount of 2,189.5 million was not drawn down as of the reporting date (PY: 2,774.2 million). The share of long-term credit lines in this amount was 1,473.6 million (PY: 2,196.7 million). In the year under review, the Continental Corporation utilized its commercial paper program, its factoring programs, and its various bank lines to meet short-term credit requirements. The reduction in credit line and available financing from banks is due primarily to partial repayments of the syndicated loan. Furthermore, the promissory loans of Conti-Gummi Finance B.V., Maastricht, Netherlands, with a total value of 110.0 million maturing in August 2011, were repaid. With the renegotiation in late March 2011 of the syndicated loan originally maturing in August 2012, Continental successfully completed the final step in the refinancing package to improve its financial and capital structure that was agreed in December 2009. The results of this renegotiation mainly provide for longer terms and improved conditions. Furthermore, an easing of the restriction on dividend payments provided for in the financing conditions and of the restriction on the annual investment volume was also agreed. The repayment of the first tranche of the syndicated loan of 625.0 million originally agreed for August 2012 was implemented early at the end of December 2011 thanks to the positive business performance. The other two tranches, one of which is a revolving credit line of 2.5 billion, mature in April 2014. Following an early partial repayment of 484.9 million in April 2011, the committed volume of this loan was reduced to initially 6.0 billion and, after the further repayment described above in December 2011, to 5,375.0 million (PY: 6,484.9 million) as of December 31, 2011. As of the end of 2011, the syndicated loan had been utilized by Continental AG and Continental Rubber of America, Corp. (CRoA), Wilmington, U.S.A., and had a total value as of the end of the reporting period of 3,860.0 million (PY: 4,297.0 million). As a further outcome of the renegotiation, the credit margins for the syndicated loan were lowered and have since been based on the Continental Corporation s leverage ratio (net debt/ebitda, as defined by the syndicated loan agreement) rather than its rating. The leverage ratio had already improved as of June 30, 2011, which meant that Continental benefited from a further margin reduction for the syndicated loan in the third quarter of 2011. The associated expectation of a lower cash outflow for this loan led to an adjustment in profit or loss of its carrying amount of 9.1 million as of June 30, 2011. Together with the adjustments of the carrying amount in profit or loss that were required in 2009 and 2010 due to rising margins and the associated anticipated higher cash outflow for the syndicated loan, the negative value of the carrying amount adjustments totaled 15.7 million as of the end of December 2011. These deferrals will 236
be amortized over the term of the loan and increase or reduce expenses accordingly. As of the end of December 2011, there were still interest rate hedges of 3,125.0 million for the syndicated loan (PY: 3,125.0 million). The average fixed interest rate to be paid resulting from the hedges maturing in August 2012 is still 4.19% p.a. plus margin. As of the end of July 2011, the cash flow hedge accounting for the partial amount of 2.5 billion of the tranche of the syndicated loan due in April 2014 was voluntarily terminated prematurely. In addition, hedge accounting for the partial amount of 625.0 million was terminated at the end of December 2011 on account of the early repayment of the tranche of the syndicated loan originally due in August 2012. There is still an economically effective hedge, also in the latter case, as the tranche repaid early at the end of December 2011 was refinanced in full by utilizing the revolving tranche of the syndicated loan, and the parameters of this utilization are still consistent with those of the interest hedge. As in the previous year, the agreed financial covenants were complied with in 2011 as of the respective quarterly balance sheet date. Please see Note 29 about the structure of maturities of indebtedness. Financial lease liabilities The future payment obligations resulting from financial leases are shown in the following table: December 31, 2011 in millions 2012 2013 2014 2015 2016 from 2017 Total Minimum lease payments 23.0 53.4 9.9 9.7 9.5 50.0 155.5 Interest component 7.3 5.5 3.5 3.0 2.5 10.8 32.6 Financial lease liabilities 15.7 47.9 6.4 6.7 7.0 39.2 122.9 December 31, 2010 in millions 2011 2012 2013 2014 2015 from 2016 Total Minimum lease payments 25.4 26.6 62.1 9.8 9.8 58.1 191.8 Interest component 6.6 5.9 8.5 4.1 3.8 13.9 42.8 Financial lease liabilities 18.8 20.7 53.6 5.7 6.0 44.2 149.0 The fair value of the financial lease liabilities is 151.1 million (PY: 166.3 million). The effective interest rate of the main leasing contracts lies between 5.5% and 8.8% (PY: between 5.1% and 8.8%). Minimum lease payments in 2013 result mainly from a purchase option for the passenger and light truck tire factory in Hefei, China. 237