268 Financial Statements of AUDI AG as at December 31, 2008 Balance Sheet of AUDI AG ASSETS EUR million Notes Dec. 31, 2008 Dec. 31, 2007 Fixed assets 6,047 5,494 Intangible assets 1 201 190 Property, plant and equipment 2 4,064 3,682 Long-term investments 3 1,782 1,622 Current assets 10,267 9,618 Inventories 4 1,584 1,324 Receivables and other assets 5 7,766 6,852 Other securities 6 819 1,341 Cash on hand and balances with banks 98 101 Deferred charges 6 4 Balance sheet total 16,320 15,116 LIABILITIES EUR million Notes Dec. 31, 2008 Dec. 31, 2007 Equity 3,144 2,438 Issued capital 7 110 110 Capital reserve 8 1,617 911 Retained earnings 9 1,417 1,417 Special items with an equity portion 10 11 11 Provisions 11 7,870 7,071 Liabilities 12 5,295 5,596 Balance sheet total 16,320 15,116 269 Income Statement of AUDI AG EUR million Notes 2008 2007 Financial Statements of AUDI AG Revenue 13 28,303 27,693 268 Balance Sheet of AUDI AG 269 Income Statement of AUDI AG Cost of sales 14 – 25,242 – 24,423 Gross profit 3,061 3,270 Notes to the Financial Statements of AUDI AG 270 Development of fixed assets Distribution costs 15 – 2,336 – 1,826 in the 2008 fiscal year Administrative expenses – 154 – 138 272 General comments on Other operating income 16 1,684 1,376 the Balance Sheet and Income Statement Other operating expenses 17 – 771 – 384 272 Notes to the Balance Sheet Investment result 18 388 264 276 Notes to the Income Statement Net interest 19 274 89 279 Other particulars Depreciation of long-term investments and marketable securities 20 – 115 – 45 Profit from ordinary business activities 2,031 2,606 Income tax expense 21 – 801 – 1,194 Profit transferred under a profit transfer agreement 22 – 1,230 – 1,412 Net profit for the year – – 270 Notes to the Financial Statements DEVELOPMENT OF FIXED ASSETS IN THE 2008 FISCAL YEAR EUR million Gross carrying amounts Costs Costs Jan. 1, 2008 Additions Transfers Disposals Dec. 31, 2008 Intangible assets 376 76 1 51 402 Concessions, industrial property rights and similar rights and values, as well as licenses thereto 376 76 1 51 402 Property, plant and equipment 14,605 1,486 – 1 398 15,692 Land, land rights and buildings, including buildings on land owned by others 2,931 117 47 43 3,052 Plant and machinery 3,068 165 49 107 3,175 Other plant and office equipment 8,281 842 168 244 9,047 Payments on account and assets under construction 325 362 – 265 4 418 Long-term investments 1,781 193 – 121 1,853 Investments in affiliated companies 1,307 68 – 117 1,258 Loans advanced to affiliated companies 28 30 – 0 58 Participating interests 74 0 – 0 74 Investment securities 371 93 – 4 460 Other loans advanced 1 2 – 0 3 Total fixed assets 16,762 1,755 – 570 17,947 271 Reductions in gross carrying amounts Carrying amounts Cumulative Cumulative Depreciation depreciation depreciation and and and amortization amortization amortization Jan. 1, 2008 for current year Transfers Disposals Write-ups Dec. 31, 2008 Dec. 31, 2008 Dec. 31, 2007 186 66 0 51 – 201 201 190 186 66 0 51 – 201 201 190 10,923 1,091 0 386 – 11,628 4,064 3,682 1,745 92 0 40 – 1,797 1,255 1,186 2,492 248 0 106 – 2,634 541 576 6,686 751 0 240 – 7,197 1,850 1,595 – – – – – – 418 325 159 30 – 118 0 71 1,782 1,622 157 20 – 118 – 59 1,199 1,150 0 – – – 0 0 58 28 2 – – – – 2 72 72 – 10 – – – 10 450 371 0 – – – 0 0 3 1 11,268 1,187 – 555 0 11,900 6,047 5,494 272 GENERAL COMMENTS ON THE BALANCE SHEET AND INCOME STATEMENT For the sake of greater clarity and visibility, certain individual items in the Balance Sheet and Income Statement have been combined. These items are presented separately in the Notes to the Financial Statements. The Income Statement has been prepared in accordance with the cost of sales method. The accounting, measurement, recognition and currency translation methods used in 2007 have essentially been retained. The list of companies in which shares are held is prepared separately and can be consulted on the Audi website under www.audi.com/subsidiaries or www.unternehmensregister.de. This list can additionally be requested directly from AUDI AG, Financial Communication/ Financial Analysis, I/FF-12, 85045 Ingolstadt, Germany. NOTES TO THE BALANCE SHEET 1 Intangible assets Intangible assets comprise purchased development services, computer software and licenses to such rights and values, as well as subsidies paid. Measurement principles Intangible assets are recognized at cost of purchase and amortized pro rata temporis in accordance with their useful lives. 2 Property, plant and equipment EUR million Dec. 31, 2008 Dec. 31, 2007 Land, land rights and buildings, including buildings on land owned by others 1,255 1,186 Plant and machinery 541 576 Other plant and office equipment 1,850 1,595 Payments on account and assets under construction 418 325 Total 4,064 3,682 Measurement principles Property, plant and equipment are measured at cost of purchase or cost of construction, less depreciation. The costs of purchase include the purchase price, ancillary costs and cost reductions. Property, plant and equipment paid for in foreign currency is translated at the mean of the buying and selling rate on the invoice date. In the case of self-constructed fixed assets, in addition to the directly attributable cost of materials and personnel costs, cost of construction also comprises the material overheads and production overheads that must be capitalized for tax purposes, including pro rata depreciation. Interest on borrowings is not included. Scheduled depreciation on property, plant and equipment is applied using either the straight- line method or – to the extent permissible under tax law – the declining balance method. A scheduled changeover is made from the declining balance method to the straight-line method as soon as the latter produces higher levels of depreciation. Depreciation of depreciable assets is generally dated from the time of their acquisition or completion. 273 Our depreciation plan is based on the following estimates of useful lives permissible under Financial Statements tax laws: of AUDI AG 268 Balance Sheet of AUDI AG 269 Income Statement of AUDI AG Useful life Buildings (excluding plant fixtures) 25–33 years Notes to the Financial Statements of AUDI AG Plant fixtures 8–30 years 270 Development of fixed assets Production machinery 5–14 years in the 2008 fiscal year Other plant and office equipment, including special tools, jigs and fixtures 3–10 years 272 General comments on the Balance Sheet and Income Statement 272 Notes to the Balance Sheet Fixed business assets of minor value are measured according to Section 6, Para. 2 and 2a of 276 Notes to the the German Income Tax Act. Income Statement 279 Other particulars Full use is made of opportunities for special depreciation for tax purposes. Due to the elimination of the declining balance method of depreciation by the Tax Amendment Act of 2008, additions to movable assets are depreciated under commercial law using the straight-line method as of January 1, 2008. Variances by comparison with depreciation under commercial law resulting from higher deductions under Section 7d of the German Income Tax Act (environmental protection), as well as from accelerated depreciation under Section 82d of the German Income Tax Directive (research and development) and pursuant to Section 6b of the German Income Tax Act (transfer of capital gains) are presented under special items with an equity portion. 3 Long-term investments EUR million Dec. 31, 2008 Dec. 31, 2007 Investments in affiliated companies 1,199 1,150 Loans advanced to affiliated companies 58 28 Participating interests 72 72 Investment securities 450 371 Other loans advanced 3 1 Total 1,782 1,622 The change in investments in affiliated companies stems mainly from additions of companies and from capital increases. There was an unscheduled reduction for impairment to the lower fair value of one domestic company amounting to EUR 20 (39) million. The increase in loans advanced to affiliated companies relates to one foreign importer. The investment securities are resources which are invested in retirement benefit plans and time credit funds on the basis of the fiduciary agreement with Volkswagen Pension Trust e.V. (Wolfsburg). AUDI AG invests pension contributions for retirement benefits in the pension fund as well as contributions by employees under the plan, which provides for the conversion of gross pay into pension contributions. The time credit funds substantially comprise components of the employees’ pay which they have contributed to these funds. Measurement principles Investments in affiliated companies, participating interests and investment securities are fundamentally measured at cost of purchase. Where impairment losses are likely to be permanent, they are depreciated to the lower fair value as of the balance sheet date. Non-interest-bearing and low-interest loans advanced are measured at present value on the basis of an arm’s length interest; other loans advanced are measured at their nominal value. Additions to investments in foreign currency are translated at the mean of the buying and selling rate on the day of the transaction. 274 4 Inventories EUR million Dec. 31, 2008 Dec. 31, 2007 Raw materials and supplies 216 217 Work in progress 286 240 Finished goods and merchandise 1,082 865 Payments on account 0 2 Total 1,584 1,324 Measurement principles Raw materials and supplies are recognized at the lower of the updated average cost of purchase or replacement value.