D.12) Taxes Payable
A breakdown of taxes payable, which totaled 12,193,000 euros, is as follows:
  12/31/05 12/31/04 Change
Law No. 289/2002 (all-inclusive tax amnesty) 2,440 11,998 (9,558)
IRAP 5,434 10,001 (4,567)
Withheld taxes payable 4,254 3,965 289
Other amounts payable 65 157 (92)
  12,193 26,121 13,928
D.13) Contributions to Pension and Social Security Institutions
This item, which amounted to 10,007,000 euros, represents benefit payments owed by the Company and the sums withheld from employees in accordance with current laws.
D.14) Other Liabilities
A breakdown of Other liabilities, which totaled 136,296,000 euros, is as follows:
  12/31/05 12/31/04 Change
Amounts owed to public institutions 11,557 11,841 (284)
Amounts payable to employees 15,144 14,504 640
Amounts owed to shareholders for unclaimed dividends 538 541 (3)
Miscellaneous liabilities 109,057 164,144 (55,087)
  136,296 191,030 (54,734)
The main components of Other liabilities are reviewed below:
  • Amounts owed to public institutions (11,557,000 euros) consist of royalties owed for the extraction of natural gas (8,869,000 euros) and fees payable for the right to divert the flow of rivers for hydroelectric generation (2,688,000 euros);
  • Amounts payables to employees (15,144,000 euros) refer to the deferred compensation owed to employees under the collective bargaining agreement currently in force;
  • The main components of Miscellaneous liabilities of 109,057,000 euros include 50,000,000 euros representing the liability for the year in connection with the put-and-call option on the Maire Tecnimont Spa affiliate, which is also discussed in the note to Financial assets not held as fixed assets; 26,175,000 euros owed to partners in hydrocarbon exploration and production projects, and 13,141,000 euros for services received mainly in connection with legal disputes.
E) Accrued Expenses and Deferred Income
A breakdown of this item, which totaled 85,368,000 euros (of which 1,163,000 euros are collectable after 5 years), or 7,139,000 euros less than at December 31, 2004, is as follows:
  • Financial accrued expenses of 72,675,000 euros, which include charges related to derivatives that hedge foreign exchange and commodity risks (36,750,000 euros), bond issues (33,082,000 euros) and other accrued expenses (2,843,000 euros).
  • Financial deferred income of 12,277,000 euros, which includes the cost of derivative transactions executed in connection with the ITALENERGIA 2002-2007 bond issue (6,406,000 euros), grants received from the Italian Ministry of Industry, Commerce and Crafts in connection with certain hydrocarbon production projects (2,973,000 euros) and sundry trade-related deferred income (2,898,000 euros).
Notes to the Memorandum Accounts
A breakdown of memorandum accounts totaling 7,425,360,000 euros is as follows:
  12/31/05 12/31/04 Change
1) Guarantees provided
Sureties and other guarantees on behalf of:
- subsidiaries 1,402,262 1,767,479 (365,217)
- affiliated companies 493,830 1,215,076 (721,246)
- controlling companies - - -
- outsiders 762,075 319,171 442,904
  2,658,167 3,301,726 (643,559)
2) Collateral provided for
Borrowings and other obligations of outsiders 926,667 966,750 (40,083)
Liabilities listed on the balance sheet 421,501 377,809 43,692
  1,348,168 1,344,559 3,609
3) Commitments, risks and other memorandum accounts
Commitments to purchase fixed assets 285,291 823,873 (538,582)
Transactions to hedge interest rate risks 2,021,639 2,157,639 (136,000)
Forward transactions and derivatives
to hedge foreign exchange risks:      
- purchases 231,700 98,031 133,669
- sales 63,731 920 62,811
Forward transactions in the commodities markets:
- purchases 6,572 102 6,470
- sales 45,441 302 45,139
Commitments to buy equity investments 177,010 167,590 9,420
Securities held by outsiders 228,560 288,674 (60,114)
Other company assets held by outsiders 159,779 144,400 15,379
Offsets of VAT credits 4,265 5,674 (1,409)
Obligations toward outsiders for leased assets 2,154 216 1,938
Assets of outsiders held by the Company 30,084 6,987 23,097
Guarantees provided by suppliers and customers 154,151 120,158 33,993
Other memorandum accounts 8,648 1,648 7,000
  3,419,025 3,816,214 (397,189)
Total memorandum accounts 7,425,360 8,462,499 (1,037,139)
1) Guarantees Provided
Guarantees provided totaled 2,658,167,000 euros, or 643,559,000 euros less than at the end of 2004. The cancellation of guarantees provided on behalf of Edipower and Tecnimont (sold in 2005) accounts for most of this decrease. A breakdown is as follows:
  • 772,511,000 euros in guarantees provided to the Milan VAT office on behalf of subsidiaries for offsetting VAT credits and those provided to subsidiaries in connection with the intra-Group assignment of tax credits.
  • 57,850,000 euros for a counterguarantee provided to secure the obligation undertaken by the Bluefare Ltd affiliate toward The Royal Bank of Scotland Plc, which owns a put option for the Edipower shares it holds (equal to 5% of the capital stock of Edipower Spa). This option is exercisable starting on the fifth year after the signing of the Coinvestment Agreement. If Bluefare Ltd fails to perform its obligation, the industrial shareholders of Edipower can be held jointly responsible, but they retain the right to pursue Bluefare Ltd.
  • 50,000,000 euros for a surety provided to Edipower Spa to secure the contractual obligations of Edison Trading, a wholly owned subsidiary of Edison Spa.