3. Statements of cash flows

The statements of cash flows present the origin and use of cash flows during the fiscal years 2001/2002 through 2003/2004. It is of central importance for the evaluation of the financial position of the ThyssenKrupp Group. The statements of cash flows presented include the cash flows resulting from discontinued operations.

The amounts taken into consideration in the statements of cash flows correspond to the balance sheet item "Cash and cash equivalents".

The cash flows from investing activities and financing activities have been determined based on payments. In contrast, the cash flow from operating activities is determined indirectly by reconciling the Group's net income to cash provided by operating activities. The changes in balance sheet items in connection with operating activities have been adjusted for the effects of foreign currency translations and changes in the scope of consolidation. Therefore, they do not directly conform to the corresponding changes based on the consolidated balance sheets.

Operating activities provided €2.5 billion during the fiscal year 2003/2004 compared to €2.0 billion during the previous year. Compared to the previous year additional cash outflows due to an increase of net working capital were reduced from €(0.2) billion to €(0.1) billion. In 2002/2003 this is due to a significant decrease of asset backed transactions in the amount of €0.3 billion, whereas in fiscal year 2003/2004 asset backed transactions increased by approximately €0.1 billion.

The discontinued operations used cash flows from operating activities in the amount of €(32) million (2002/2003: cash flow provided €25 million).

The cash flows used in investing activities decreased by €0.2 billion to €(1.0) billion in the current reporting period. The decrease is the result of an increase in proceeds from disposals by €0.3 billion to approximately €0.7 billion offset by an increase in investment activities by €0.1 billion to €1.7 billion. The proceeds from disposals in the previous year were influenced especially by the sale of the Polymer activities in the Technologies segment and by the sale of the formwork and scaffolding activities in the Serv segment. During the current reporting period cash inflows result from the disposals of Triaton Group in the Services segment (€0.2 billion), of Novoferm Group in the Technologies segment (€0.2 billion) and of Berkenhoff GmbH in the Steel segment (€40 million). Like during the previous year disposals of property, plant and equipment and intangible assets led to an additional cash inflow totaling €0.2 billion.

The discontinued operations provided cash flows from investing activities in the amount of €208 million (2002/2003: cash flow used €(14) million) due to the cash inflows resulting from the disposal of the Triaton Group.

Again the cash flows from operating activities in 2003/2004 were sufficient to completely cover net capital expenditures of €0.9 billion. However, the excess amount i.e. the free cash flow of €1.6 billion was increased significantly by €0.7 billion. The free cash flow was used - after taking into account a decrease of net financial debt of €1.4 billion - for dividend payments of €0.3 billion.

Other cash flows presented within financing activities for fiscal year 2002/2003 include cash inflows of €8 million (2002/2003: €(2) million payments), resulting from Group overnight money transactions with non-consolidated subsidiaries, and cash receipts of €52 million (2002/2003: €26 million) from short-term financial accounts receivable.

The discontinued operations used cash flows from financing activities in the amount of €(206) million (2002/2003: €(16) million) due to the cash inflows resulting from the diposal of the Triaton Group.

Changes in foreign exchange rates reduced cash and cash equivalents by €(13) million (2002/2003: €(22) million), which primarily is due to the further weakening of the US dollar during fiscal 2003/2004.

Change in cash and cash equivalents million €

The internal financing capability, defined as the ratio of cash flow from operating activities and cash flow from investing activities, has improved to 2.6 (2002/2003: 1.7), primarily due to the clear increase in cash flows provided by operating activities. The debt to cash flow ratio, which indicates the period during which net financial payables can be theoretically covered by the cash flow from operating activities, is 1.1 years (2002/2003: 2.1 years).