4. Balance sheet presentation

The following balance sheet presentation includes assets and liabilities held for sale which have been reported separately in the group's consolidated balance sheets.

The balance sheet total as well as significant balance sheet line items, particularly, inventories, trade accounts receivable and payables and stockholders' equity increased considerably compared to September 30, 2003. This mainly resulted from the improving economic situation of the steel business and the dramatic price increase for raw materials especially nonferrous metals. Fixed assets and net payables declined due to measures taken to reduce tied-up capital and through disposals. Shifts in exchange rate relations, primarily the relation of the US dollar to the Euro, which increased from 1.17 €/USD as of September 30, 2003 to 1.23 €/USD as of September 30, 2004, led to a reduction of the balance sheet total by €204 million. Income tax liabilities remained nearly constant whereas deferred income tax liabilities increased. The balance sheet total increased by €940 million.

Fixed assets decreased by €363 million or 2.3%, to €15,181 million. Taking into account the negative currency effects of €174 million, fixed assets adjusted by these effects declined by only €189 million, thus remaining nearly constant. Additions of €1,609 million exceeded depreciation of €1,516 million by €93 million. Disposals amounted to €345 million. Changes in the scope of consolidation, i.e. acquisition and divestitures of companies, increased the fixed assets by €63 million. Major individual transactions consisted of the acquisition of the Korean elevator companies Dongyang Group and a 60 % interest in the automotive sub-supplier Mercedes Benz Lenkungen (MB Lenk), resulting in a total increase of €245 million. The divestitures of major individual transactions led to a decline of €237 million.

Inventories climbed by €505 million to €6,340 million.

million €
			Sept. 30, 2003		Sept. 30, 2004		Change
Steel			2,750		3,037		287
Automotive			609		667		58
Elevator			249		287		38
Technologies			1,036		995		(41)
Services			1,114		1,277		163
Real Estate			77		77		0
Total			5,835		6,340		505

The increase in the Steel segment resulted primarily from the rise of raw material prices. Technologies was impacted by the disposal of activities by €48 million. Services posted an increase in inventories due to business expansion and rising raw materials prices, which was partially offset by the disposal of the business unit Information Services.

The trade accounts receivable as of September 30, 2004 were up by €467 million compared to September 30, 2003. It should be noted that the amount of sold receivables as of September 30, 2004 increased compared to the previous year by €136 million. The increase in the Steel segment was largely attributable to the improving economic situation as well as to the increase of raw material prices. The Automotive segment business expansion also led to an increase of trade accounts receivable. The acquisition of Dongyang led to an increase in the Elevator segment of €89 million. Contrary effects resulted from currency differences and the disposal of various activities in the Technologies and Services segments.

million €
			Sept. 30, 2003		Sept. 30, 2004		Change
Steel			1,226		1,531		305
Automotive			905		1,076		171
Elevator			697		725		28
Technologies			902		845		(57)
Services			1,570		1,604		34
Real Estate			25		18		(7)
Corporate/Consolidation			37		30		(7)
Total			5,362		5,829		467

Deferred income tax assets declined by €133 million, whereas deferred income tax liabilities increased by €213 million. The increase resulted primarily from the change in inventory valuation method to the weighted average method.

Stockholders' equity climbed by €656 million, to €8,327 million. The primary reason for this rise was the positive operating result of the fiscal year 2003/04. Additionally the increase in accumulated other comprehensive income, resulting from the decrease in additional minimum liabilities associated with accrued pensions and similar obligations, increased equity by €52 million. Dividend payment for fiscal 2002/03 and currency differences reduced equity by €249 million and €78 million.

Accrued pensions and similar obligations in the reporting period declined by €180 million to €7,221 million. Taking into account a currency effect of €(45) million, accrued pensions and similar obligations dropped by €135 million. This decrease resulted from the slight increase of the discount rate in all relevant currency zones - Euro, US dollar and GBP - as well as largely from the higher market value of plan assets of the funded pensions plans in the USA, Canada and UK as of the measurement date of June 30. Both factors led to reduced minimum liabilities, adjusted by currency effects, of €(83) million.

Trade accounts payable increased significantly by €603 million. This line item was also impacted by the previously described business expansion and price increases. In the Services and Technolgies segments this effect has been reduced by the disposal of activities. The first-time consolidation of Dongyang mainly led to an increase in the Elevator segment.

million €
			Sept. 30, 2003		Sept. 30, 2004		Change
Steel			969		1,293		324
Automotive			666		825		159
Elevator			203		234		31
Technologies			543		600		57
Services			654		695		41
Real Estate			24		15		(9)
Corporate/Consolidation			16		16		0
Total			3,075		3,678		603

Other accrued liabilities were €87 million lower than at the end of the previous year, whereof €22 million are caused by fluctuations in currency rates.

Gross financial payables decreased by €678 million from €4,948 million as of September 30, 2003 to €4,270 million as of September 30, 2004. Net financial payables, i.e. gross financial payables less cash and cash equivalents and marketable securities, declined by €1,402 million from €4,235 million to €2,833 million. Currency differences contributed to this result in the amount of €(38) million. Cash flow from current operations led to a decrease of €2,559 million, whereas capital expenditure and disposals increased the balance by €979. The dividend payment for fiscal 2002/03 resulted in an increase of €249 million. Gearing, i.e. the ratio of net financial payables to stockholders' equity, improved to 34.0% against 55.2% the previous year.

Net financial payables in million €