26. Other Reserves and Accrued Liabilities
As of December 31, 2003, accrued taxes include current and prior year tax obligations in the amount of €343,519 thousand (2002: €482,947 thousand) and deferred tax liabilities in the amount of €111,980 thousand (2002: €111,095 thousand).
Other reserves and accrued liabilities as of December 31 are as follows:
 |
|
|
|
|
|
|
|
2003 |
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
€(000) |
|
€(000) |
|
|
|
|
|
|
|
|
|
|
Other obligations to employees |
|
557,118 |
|
499,690 |
|
|
|
|
|
|
|
|
|
|
Obligations to suppliers |
|
179,698 |
|
173,782 |
|
|
|
|
|
|
|
|
|
|
Vacation and other absences |
|
137,191 |
|
126,765 |
|
|
|
|
|
|
|
|
|
|
STAR obligations |
|
50,948 |
|
58 |
|
|
|
|
|
|
|
|
|
|
Customer claims |
|
36,103 |
|
41,159 |
|
|
|
|
|
|
|
|
|
|
Unused lease space |
|
17,691 |
|
7,577 |
|
|
|
|
|
|
|
|
|
|
Contribution to employees’ accident insurance account |
|
8,561 |
|
4,019 |
|
|
|
|
|
|
|
|
|
|
Warranty and service costs |
|
7,600 |
|
4,729 |
|
|
|
|
|
|
|
|
|
|
Auditing and reporting costs |
|
5,312 |
|
4,905 |
|
|
|
|
|
|
|
|
|
|
Fair value of foreign exchange contracts |
|
1,644 |
|
9,790 |
|
|
|
|
|
|
|
|
|
|
Other |
|
11,690 |
|
10,217 |
|
|
|
 |
|
|
|
|
|
|
|
1,013,556 |
|
882,691 |
|
|
|
|
|
|
|
|
|
|
Other reserves and accrued liabilities payable after one year as of December 31, 2003 are €92,961 thousand (€29,450 thousand in 2002).
Obligations to employees relate primarily to variable bonus payments tied to earnings performance, paid out after the balance sheet date. Other obligations to employees also includes termination benefits required by law in certain foreign subsidiaries that constitute defined benefit plans under SFAS 87, “Employers’ Accounting for Pensions”. Such benefits are payable in a lump sum upon separation from the Company. The accrued liability for such plans amounts to €11,307 thousand as of December 31, 2003 (2002: €11,432 thousand).
Obligations to suppliers represent services received or goods purchased for which SAP has not yet been invoiced. Warranty and service cost accruals represent estimated future warranty obligations and other minor routine items provided under maintenance. SAP provides a six to 12 month warranty on its software. SAP determines the warranty accrual based on the historical average cost of fulfilling its obligations under these commitments. As of December 31, 2003 and 2002, SAP accrued €7,600 thousand and €4,729 thousand, respectively. The aggregate utilization of the warranty accrual in 2003 was €2,317 thousand (2002: €4,633 thousand) and the aggregate warranty expense was net €5,188 thousand in 2003 (2002: €4,762 thousand).
Exit activities include contract termination and similar restructuring costs for unused lease space as well as severance payments. Restructuring costs are included in the Consolidated Statements of Income in the line item Other operating expense, net. The following table presents the beginning and ending balances along with additions and deductions incurred:
|
|
|
|
|
|
|
|
|
|
Unused lease space |
|
Severance payments for restructuring |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
€(000) |
|
€(000) |
|
€(000) |
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 12/31/2002 |
|
7,577 |
|
11,159 |
|
18,736 |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses 2003 |
|
17,164 |
|
3,384 |
|
20,548 |
|
|
|
|
|
|
|
|
|
|
|
|
Payments in 2003 |
|
5,544 |
|
9,347 |
|
14,891 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments 2003 |
|
0 |
|
1,001 |
|
1,001 |
|
|
|
|
|
|
|
|
|
|
|
|
Currency |
|
1,506 |
|
666 |
|
2,172 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 12/31/2003 |
|
17,691 |
|
3,529 |
|
21,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,874 |
|
10,121 |
|
12,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,960 |
|
33,148 |
|
46,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,262 |
|
30,739 |
|
38,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
0 |
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
995 |
|
1,371 |
|
2,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,577 |
|
11,159 |
|
18,736 |
|
|
|
|
|
|
|
|
|
|
|
|
At most subsidiaries SAP does not have an ongoing severance benefit plan arrangement. SAP accounted for the majority of its 2003 one-time severance obligations in accordance with SFAS 146. Other severance obligations (affecting 768 employees and 322 employees in 2002 and 2001, respectively) were accounted for in accordance with SFAS 112, “Employers Accounting for Postemployment Benefits”, or EITF 94-3, as applicable. Because these severance benefits do not vest or accumulate, the liability for such benefits was recognized when it became probable that an obligation had been incurred and the amount could be estimated.
Provision for unused lease space relate to costs that will continue to be incurred for vacated space under various operating lease contracts that will have no future economic benefit to the Company in accordance with SFAS 146 in 2003 and EITF 94-3 in 2002. Those charges primarily relate to the training segment, when SAP has been streamlining its training facility requirements. |
