Consolidated Annual Financial Statement and Management Report
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168 | Telefónica, S.A. | Annual report 2004 Consolidated Annual Financial Statement 07/01 and Management Report Annual report 2004 | Telefónica, S.A. | 169 170 | Telefónica, S.A. | Annual report 2004 Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with generally accepted accounting principles in Spain (see Note 25). In the event of a discrepancy, the Spanish-language version prevails. TELEFÓNICA GROUP CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31 (Millions of euros) ASSETS 2004 2003 A) FIXED AND OTHER NONCURRENT ASSETS 43,982.13 45,003.93 I. Start-up expenses 409.18 543.59 II. Intangible assets (Note 6) 8,430.02 7,673.16 Research and development expenses 1,256.97 1,189.92 Administrative concessions 7,872.63 6,603.09 Rights on leased assets 55.51 92.77 Other intangible assets 5,184.70 4,306.95 Accumulated amortization and allowances (5,939.79) (4,519.57) III. Property, plant and equipment (Note 7) 23,348.14 24,315.78 Land and structures 6,626.27 6,071.16 Plant and machinery 2,089.89 2,385.42 Telephone installations 59,094.46 55,885.32 Furniture, tools and other items 3,067.04 2,831.18 Construction in progress 1,242.40 1,074.00 Advances on property, plant and equipment 9.05 7.21 Installation materials 264.91 185.66 Accumulated depreciation and allowances (49,045.88) (44,124.17) IV. Long-term investments (Note 8) 11,794.79 12,471.40 Investments in associated companies 1,159.08 1,507.40 Other investments 518.52 492.37 Other loans 1,331.57 1,212.53 Long-term deposits and guarantees given 558.85 582.39 Tax receivables (Note 18) 8,567.17 9,029.48 Allowances (340.40) (352.77) B) CONSOLIDATION GOODWILL (Note 5) 7,409.36 6,053.87 C) DEFERRED CHARGES (Note 9) 432.23 535.04 D) CURRENT ASSETS 11,642.62 10,482.36 I. Inventories 669.62 400.97 Inventories 704.05 451.17 Advances 23.42 1.38 Allowances (57.85) (51.58) II. Accounts receivable 6,935.79 6,218.26 Trade receivables (Note 10) 6,383.30 6,266.17 Due from associated companies 77.68 80.37 Sundry accounts receivable 563.93 393.67 Employee receivables 45.80 48.90 Tax receivables (Note 18) 1,424.23 1,122.84 Allowances for bad debts (Note 10) (1,546.68) (1,685.75) Allowances for sundry accounts receivable (12.47) (7.94) III. Short-term investments (Note 8) 2,288.35 3,199.64 Loans to associated companies 344.44 316.14 Short-term investment securities 1,054.22 2,205.05 Other loans 1,005.43 692.18 Allowances (115.74) (13.73) IV. Short-term treasury stock (Note 11) 690.18 133.46 V. Cash 855.02 336.42 VI. Accrual accounts 203.66 193.61 TOTAL ASSETS (A+B+C+D) 63,466.34 62,075.20 The accompanying Notes 1 to 25 and Exhibits I to VI are an integral part of these consolidated balance sheets. Annual report 2004 | Telefónica, S.A. | 171 Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with generally accepted accounting principles in Spain (see Note 25). In the event of a discrepancy, the Spanish-language version prevails. TELEFÓNICA GROUP CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31 (Millions of euros) STOCKHOLDERS’ EQUITY AND LIABILITIES 2004 2003 A) STOCKHOLDERS’ EQUITY (Note 11) 16,225.12 16,756.56 I. Capital stock 4,955.89 4,955.89 II. Additional paid-in capital 5,287.68 7,987.14 III. Revaluation reserves 1,357.86 1,357.86 IV. Other reserves of the Parent Company 9,326.14 9,204.69 Unrestricted reserves 7,840.62 8,413.26 Restricted reserves 1,485.52 791.43 V. Reserves at fully or proportionally consolidated companies (591.88) (1,956.68) VI. Reserves at companies accounted for by the equity method (835.89) (599.93) VII. Translation differences in consolidation (6,151.97) (6,395.99) VIII.Income for the year 2,877.29 2,203.58 Income of the Parent Company and subsidiaries 3,258.30 2,449.07 Income attributable to minority interests (Note 12) (381.01) (245.49) B) MINORITY INTERESTS (Note 12) 3,775.58 4,426.22 C) NEGATIVE CONSOLIDATION GOODWILL 4.97 11.42 D) DEFERRED REVENUES (Note 13) 328.97 657.97 E) PROVISIONS FOR CONTINGENCIES AND EXPENSES (Note 14) 7,574.21 7,688.23 F) LONG-TERM DEBT 16,003.71 18,495.42 I. Debentures, bonds and other marketable debt securities (Note 15) 9,319.47 12,408.71 Nonconvertible debentures and bonds 9,221.20 12,408.71 Other marketable debt securities 98.27 - II. Payable to credit institutions (Note 16) 5,450.37 4,932.56 III. Other payables 373.55 346.57 Other payables 256.69 225.80 Notes payable 116.86 120.77 IV. Taxes payable (Note 18) 855.82 801.63 V. Uncalled capital payments payable 4.50 5.95 G) CURRENT LIABILITIES 19,344.92 13,848.86 I. Debentures, bonds and other marketable debt securities (Note 15) 5,539.67 3,242.54 Debentures 3,350.95 1,652.51 Other marketable debt securities 1,892.65 1,275.39 Interest on debentures and other debt securities 296.07 314.64 II. Payable to credit institutions 4,244.53 2,721.06 Loans and other accounts payable (Note 16) 4,169.80 2,659.20 Accrued interest payable 74.73 61.86 III. Payable to associated companies (Note 8) 36.20 41.47 IV. Trade accounts payable 5,665.41 5,308.60 Advances received on orders 78.31 53.86 Accounts payable for purchases and services 5,569.60 5,235.06 Notes payable 17.50 19.68 V. Other nontrade payables 3,314.55 2,117.02 Taxes payable (Note 18) 1,859.40 1,181.09 Other nontrade payables (Note 19) 1,455.15 935.93 VI. Accrual accounts 544.56 418.17 H) SHORT-TERM PROVISIONS FOR CONTINGENCIES AND EXPENSES (Note 14) 208.86 190.52 1. TOTAL STOCKHOLDERS’ EQUITY AND LIABILITIES (A+B+C+D+E+F+G+H) 63,466.34 62,075.20 The accompanying Notes 1 to 25 and Exhibits I to VI are an integral part of these consolidated balance sheets 172 | Telefónica, S.A. | Annual report 2004 Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with generally accepted accounting principles in Spain (see Note 25). In the event of a discrepancy, the Spanish-language version prevails. TELEFÓNICA GROUP CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31 (Millions of euros) DEBIT 2004 2003 A) EXPENSES Decrease in inventories (32.97) 136.29 Procurements and other external expenses 7,558.69 6,276.61 Purchases 3,384.22 2,482.46 Work performed by other companies 4,174.47 3,794.15 Personnel expenses (Note 20) 4,411.81 4,641.32 Depreciation and amortization expense 5,980.15 6,274.22 Property, plant and equipment (Note 7) 4,629.92 4,941.97 Intangible assets (Note 6) 1,187.04 1,205.41 Deferred charges 163.19 126.84 Variation in operating allowances 336.16 420.60 Variation in allowances for inventories 8.07 (1.01) Variation in allowances for bad debts (Note 10) 318.98 380.82 Variation in other allowances 9.11 40.79 Other operating expenses 5,688.83 5,142.96 Outside services 5,082.47 4,558.45 Takes other than income tax 519.16 524.23 Other operating expenses 87.20 60.28 I. OPERATING INCOME 7,235.25 6,327.90 Interest on payables to associated companies 0.01 0.01 Interest on accounts payable and similar expenses (Note 20) 1,619.10 1,946.50 Amortization of deferred interest expenses 39.71 41.70 Variation in investment valuation allowances 0.41 (47.99) Exchange losses (Note 20) 111.98 339.74 II. FINANCIAL INCOME - - Share in losses of companies accounted for by the equity method 104.34 246.98 Amortization of consolidation goodwill (Note 5) 433.53 444.11 III. INCOME FROM ORDINARY ACTIVITIES 5,562.75 4,612.16 Variation in fixed asset and investment valuation allowances (Notes 7 and 8) 32.71 100.29 Losses on fixed assets (Note 20) 49.71 55.27 Losses on disposal of investments in consolidated companies (Note 8) 33.23 39.66 Extraordinary expenses and losses (Note 20) 1,459.11 2,221.60 IV. EXTRAORDINARY INCOME - - V. CONSOLIDATED INCOME BEFORE TAXES 4,397.01 3,362.50 Corporate income tax (Note 18) 653.03 (2.07) Foreign taxes (Note 18) 485.68 915.50 VI. CONSOLIDATED INCOME FOR THE YEAR 3,258.30 2,449.07 Income attributed to minority interests (Note 12) 472.82 420.25 VII. INCOME FOR THE YEAR ATTRIBUTED TO THE PARENT COMPANY 2,877.29 2,203.58 The accompanying Notes 1 to 25 and Exhibits I to VI are an integral part of these consolidated statements of income. Annual report 2004 | Telefónica, S.A. | 173 Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with generally accepted accounting principles in Spain (see Note 25). In the event of a discrepancy, the Spanish-language version prevails. TELEFÓNICA GROUP CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31 (Millions of euros) CREDIT 2004 2003 B) REVENUES Net sales and services (Note 20) 30,321.90 28,399.84 Variation in work-in-process - 0.80 Capitalized expenses of Group work on fixed assets 474.31 530.32 Other operating revenues 381.71 288.94 Non-core and other current operating revenues 173.09 192.21 Subsidies 16.95 12.93 Overprovision for contingencies and expenses 191.67 83.80 I.