Long-term and short-term liabilities

LONG AND SHORT-TERM FINANCIAL OBLIGATIONS			Million €
	Long-term		Short-term
	31.12.2003	31.12.2002	31.12.2003	31.12.2002
Bonds	1,199.1	1,485.9	260.0	592.1
Liabilities to banks	202.5	314.4	232.3	41.4
Financial obligations to others	59.6	118.0	34.7	18.3
Total financial obligations excl. cross border leasing	1,461.2	1,918.3	527.0	651.8
Financial obligations – cross border leasing	984.5	1,155.6	0.9	4.0
Long and short-term financial obligations	2,445.7	3,073.9	527.9	655.8

Mortgage-backed loans from creditors amount to € 0.3 million (previous year: € 0.4 million).

No new long-term financial obligations were incurred during 2003. Long-term financial obligations, excluding cross border leasing transactions, were reduced in the total amount of € 555.3 million through scheduled repayments. As for short-term financial obligations (cash advances), an amount of € 19.1 million was repaid and another € 87.6 million was raised on the money market. For fee and cost-related reasons, Verbund did not have any contracted credit lines with banks.

As for financial obligations from cross border leasing transactions, write-ups in the amount of € 79.1 million and repayments of € 41.6 million were carried out.

Discounts and financing costs of € 2.5 million (previous year: € 4.0 million ) have been included under financial obligations.

Further details relating to the financial obligations are provided in the following table.

LONG-TERM AND SHORT-TERM PROVISIONS		Million €
	2003	2002
Provisions for pensions	240.1	260.4
Provisions for other post employment benefits	44.6	42.9
Provisions for severance payments	103.9	97.7
Other provisions	392.1	426.5
Provisions for taxes	38.3	9.7
Long and short-term provisions	819.0	837.2

The provisions for pensions, other post employment benefits and severance payments are all considered long-term. For maturities of other provisions and provisions for taxes, please see below.

The provisions for impending losses from electricity purchase agreements were formed in 1998 as a result of the expected impact of deregulation on the electricity market. The appropriate value was calculated using the discounted cash flow method. Under this method, the valuation is based on an estimate of future inflows and outflows of funds. Discounting was subject to an interest rate of 7 %.

The provision for impending losses formed in 1998 in respect of a coal-supply agreement referred to the purchase of coals from GKB-Bergbau GmbH ("Other obligations and risks”). The provision was created for fuel costs no longer covered by future electricity sales. The changes result from the appropriate use of the provisions as well of from interest accrued on the provisions.

The provisions for early retirement provide for bridging payments within the framework of the earlyretirement models in the amount of € 103.7 million (previous year: € 102.0 million). These models allow employees to leave the company prior to the date of retirement under the General Social Security Act (ASVG).

Other staff-related provisions contain accruals for vacation entitlements, flextime balances and overtime and provisions for additional vacation pay, incentive pay and anniversary bonuses.

Other provisions include a provision for controversial trade payables in the amount of € 20.4 million.

PROVISIONS FOR TAXES (CURRENT TAXES)		Million €
	2003	2002
Corporate tax	36.6	7.7
Net-worth tax	0.6	0.6
Other taxes	1.1	1.5
Provisions for taxes (current taxes)	38.3	9.7

The provisions for taxes are all considered short-term.

Under this item, building-cost contributions made especially by provincial companies to Verbund, which are non-repayable, are carried as liabilities in the amount of € 451.0 million (previous year: € 461.7 million). These allow for electricity-purchase rights and user rights with respect to power plants and other facilities of Verbund for the duration of their useful life. The building-cost contributions are reversed on a pro-rata temporis basis upon depreciation of the facilities concerned.

Deferred assets and income includes cash inflows from cross border leasing transactions in the total amount of € 274.5 million (previous year: € 280.4 million). The portion that was reversed in the fiscal year as other operating income amounted to € 5.9 million.

OTHER LONG-TERM LIABILITIES AND PREPAYMENTS RECEIVED		Million €
	2003	2002
Fair value of financial instruments	17.3	71.4
Liabilities from water rights	2.2	2.2
Trade accounts payable	0.8	0.8
Prepayments received	0.0	6.9
Other long-term liabilities and prepayments received	20.3	81.3

The reduction in prepayments received is due to the merger of ÖVGL with Verbundgesellschaft; ÖVGL was thus included in the consolidation range.

OTHER SHORT-TERM LIABILITIES		Million €
	2003	2002
Trade accounts payable	71.3	42.9
Liabilities to revenue authorities	35.3	23.0
Liabilities form the valuation of financial instruments under IAS 39	24.4	1.7
Payables to non-consolidated affiliated companies	10.0	6.0
Payables to companies in which participating interests are held	5.8	4.5
Deferred income and assets	4.0	3.8
Social security (e.g. liabilities to social-insurance institutions)	3.8	4.0
Prepayments received	0.5	153.5
Other	7.9	8.0
Other short-term liabilities	163.0	247.4

The drop in prepayments received was caused, essentially, by a repayment in connection with the divestment of an interest.

The increase in liabilities from the valuation according to IAS 39 is attributable to the negative fair values of the derivative financial instruments.