Notes to the Consolidated Financial Statements

1. Basic information and principles of the report

2. Changes in Group structure

3. Summary of significant accounting policies

4. Risk assessment and management

5. Management of capital

6. Marketable securities

7. Trade accounts receivable

8. Other current assets and current financial assets

9. Inventories

10. Property, plant and equipment

11. Other non-current assets and non-current financial assets

12. Goodwill and intangible assets

13. Short-term debt

14. Other current provisions and liabilities

15. Long-term debt

16. Derivative financial instruments

17. Retirement benefit plans

18. Participation plans

19. Deferred tax assets and liabilities

20. Other non-current provisions and liabilities

21. Contingencies

22. Capital stock and treasury shares

23. Earnings per share

24. Other operating expenses, net

25. Financial result, net

26. Income tax expenses

27. Research and development expenditures

28. Cashflow figures

Net cashflow is calculated as follows:

  2014 2013
EBITDA1 657.1 592.8
Financial result, net -1.7 -5.5
Income tax expenses -76.6 -69.4
Deferred taxes charged/credited (-) to net income ( Notes 19 and  26) 4.4 5.3
Changes in non-current provisions 25.8 26.5
Changes in other non-current assets and liabilities and other -0.7 -1.0
Net cashflow 608.3 548.7
1 EBIT + Depreciation + Amortization    

“Changes in non-current provisions” mainly includes the changes in provisions for operating risks, accrued pension obligations and non-cash expenses resulting from share participation and option plans charged or credited to net income. “Changes in other non-current assets and liabilities and other” mainly includes the changes in prepaid pension assets booked to net income and gains from the disposal of property, plant and equipment.

Free cashflow is calculated as follows:

  2014 2013
Net cashflow 608.3 548.7
Purchase of property, plant and equipment and intangible assets, net -102.3 -95.2
Changes in net working capital -35.2 2.4
Payments charged to non-current provisions -10.4 -11.6
Free cashflow 460.4 444.3

As per the Group definition, the term “Free cashflow” does not include cashflows from divestments or acquisitions of subsidiaries, proceeds or repayments of borrowings, the purchase or sale of treasury shares and dividend payments.

“Changes in net working capital” comprises the changes in the aggregate of trade accounts receivable, inventories and other current assets, less the aggregate of trade accounts payable and other current provisions and liabilities.

“Payments charged to non-current provisions” mainly includes outflows resulting from pension and warranty obligations.

“Net cashflow” and “Free cashflow” are no substitute for figures shown in the consolidated income statements and the consolidated statements of cashflows, but they may give an indication of the Group’s capability to generate cash, to pay back debt, to finance acquisitions, to buy back shares and to pay dividends.

29. Segment reporting

30. Related party transactions

31. Foreign exchange rates

32. Subsequent events

33. Additional disclosures on financial instruments

34. Group companies as of December 31, 2014