Communication from the Commission — Financial statements of the European Coal and Steel Community at 23 July 2002
Date: 2003-05-29
Institutions: European Commission
Subjects: ECSC, balance sheet, financial year, general budget (EU)

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Official Journal of the European Union

29.5.2003

COMMUNICATION FROM THE COMMISSION

Financial statements of the European Coal and Steel Community at 23 July 2002

(2003/C 127/02)

In accordance with the undertakings given by the Commission on behalf of the ECSC with regard to its
borrowing activities, the following financial statements, drawn up in conformity with Article 45c of the
Treaty establishing the ECSC, have been published:

— the balance sheet of the European Coal and Steel Community at 23 July 2002,

— the profit-and-loss accounts for the year ending 23 July 2002,

— the allocation of the surplus for the year ending 23 July 2002,

— the notes relating to the financial statements at 23 July 2002.

These financial statements are accompanied by the report of the Court of Auditors, as provided for under
Article 45c of the ECSC Treaty.

REPORT BY THE EUROPEAN COURT OF AUDITORS

on the financial statements of the European Coal and Steel Community as at 23 July 2002

— This report concerns the reliability of the accounts drawn up by the Commission in accordance with
Article 45c(5) of the Treaty establishing the European Coal and Steel Community, which expired at 23
July 2002.

— The Court has audited the accounts and financial statements of

the European Coal and Steel
Community on 23 July 2002 in accordance with generally accepted auditing standards and carried
out such checks as it considered necessary. By means of this audit the Court has obtained a reasonable
basis for the opinion expressed below.

— In the Court's opinion, the attached financial statements of the European Coal and Steel Community
(closing balance sheet at 23 July 2002, profit and loss account, statement of the allocation of the
surplus for the financial year then ended and notes to the financial statements), which have been drawn
up in accordance with generally accepted accounting principles, give a true and fair view of the assets
and financial situation of the European Coal and Steel Community at 23 July 2002 and of the results of
its operations for the year then ended. Taken as a whole, the legality and regularity of the transactions
underlying the accounts are sufficiently assured.

Done at Luxembourg, 27 March 2003.

Juan Manuel FABRA VALLÉS

Ioannis SARMAS

President of the Court of Auditors

Member of the Court of Auditors

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ECSC FINANCIAL STATEMENTS

The ECSC's balance sheet, profit-and-loss account and statement of the allocation of profit for the period
ending 23 July 2002 were submitted to the Commission for approval under written procedure No
E/2698/2002 of 7 January 2003 and are shown in this financial report as approved by the Commission.

ASSETS

Balance sheet at 23 July 2002

(Amounts in EUR) — Before allocation of result

23 July 2002

31 December 2001

Balances with central banks (Note C1)

28 730

63 130

Loans and advances
— repayable on demand
— with agreed maturity dates or periods of

notice (Note C2.1)
— loans (Note C2.2)

1 839 938

33 539 360
120 215 715

8 553 937

133 272 729
355 368 358

Total

155 595 013

497 195 024

Loans and advances to customers
— loans (Note C3.1)
— levy (Note C3.2)
— fines (Note C3.3)
— interest subsidies repayable (Note C3.4)

682 080 134
0
0
337 736

1 045 139 605
66 213
39 806 715
2 579 066

Total

682 417 870

1 087 591 599

Bonds and other fixed-income securities (Note
C.4)
— issued by public bodies
— issued by other borrowers
Shares and other variable-income securities (Note
C5)

1 129 370 124
399 531 331

27 998 410

1 090 184 127
478 711 875

44 205 202

Total

Other assets (Note C6)

Prepayments and accrued income (Note C.7)

TOTAL ASSETS

Off-balance-sheet commitments (Note C23)

1 556 899 865

6 023 377

47 568 362

2 448 533 217

290 511 586

1 613 101 204

7 092 794

82 534 005

3 287 577 756

310 674 984

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LIABILITIES

LIABILITIES VIS-À-VIS THIRD PARTIES

Amounts owed to credit institutions (Note C8)

— with agreed maturity dates or periods of

notice

Debts evidenced by certificates (Note C9)

Other liabilities (Note C10)

Accruals and deferred income (Note C11)

Liabilities vis-à-vis third parties

ECSC OPERATING BUDGET (Note C12)

PROVISIONS FOR LIABILITIES AND CHARGES

Guarantee Fund (Note C13.1)
Provisions for major exposures
Other provisions (Note C13.2)

Total provisions

BUDGET FOR FINANCING COAL AND STEEL
RESEARCH (NOTE C14)

RESERVES AND SURPLUS (Note C15)

Special Reserve
Former Pension Fund
Assets of the Coal and Steel Research Fund

Surplus brought forward

Surplus for the period (Note C16)

Balance sheet at 23 July 2002

(Amounts in EUR) — Before allocation of result

23 July 2002

31 December 2001

604 294 572
836 250 262

301 104

78 061 265

1 518 907 203

530 720 948

736 699 271

240 000 000

36 202 081
706 302 342

36 616 446

22 564 190

801 685 059

400 916 712

586 012 724

240 000 000

580 000 000
6 000 000
150 699 271

118 000 000
40 000 000
92 632 605

2 029 066

8 588 663

529 000 000
—
57 012 724

112 300 000
36 000 000
109 700 000

3 250 334

158 668 388

Total reserves and surplus

419 918 722

TOTAL LIABILITIES

2 448 533 217

261 250 334

3 287 577 756

Off-balance-sheet
(Note C23)

commitments

entered

into

286 966 510

300 407 841

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CHARGES

Profit-and-loss account for the period ending 23 July 2002

(Amounts in EUR)

Interest payable and similar charges (Note C17)

Commission paid

Net losses on financial operations
— exchange difference (Note B2)
— losses on bonds and other

securities

fixed-income

— value adjustments for bonds and other fixed-

income securities (Note C4)
adjustments

for

— value

shares

and other

variable-income securities (Note C5)

Total

Administrative overheads (Note C18)

Other operating charges (Note C19)

Value adjustments for loans and advances and
provisions for liabilities and commitments

— value adjustment for loans and advances

— allocation to the Guarantee Fund (Note C13.1)

— allocation to other provisions for liabilities

and charges (Note C13.2)

Total

Extraordinary charges
Legal commitments for the period (Note C12)
Allocation to the budget for financing coal and
steel research (Note C14)

Surplus for the period (Note C16)

Total charges

TOTAL

1 January to 23 July 2002

1 January to 31 December 2001

53 081 195

314 770

141 299 615

379 849

268 248

2 248 893

6 760 668

3 072 877

4 743 980

15 000 000

2 057 973

—

4 427 896

63 570 916

1 405 587

916 445

—

3 215 253

69 404 399

2 794 520

715 908

4 131 698

39 771
127 988 619

—

258 470 880

158 668 388

417 139 268

12 350 686

5 000 000

1 711 089

21 801 953

31 139
184 554 560

240 000 000

607 128 891

8 588 663

615 717 554

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Profit-and-loss account for the period ending 23 July 2002

(Amounts in EUR)

INCOME

Interest receivable and similar income (Note C20)
securities:
including interest on fixed-income
EUR 37 749 670 in 2002 and EUR 69 658 619
in 2001

Commission received

Net profit on financial operations
— exchange difference (Note B2)
— profit on bonds and other

securities

fixed-income

— profit on shares and other variable-income

securities

— withdrawal of value adjustments for bonds
and other fixed-income securities (Note C4)
— withdrawal of value adjustments for shares
and other variable-income securities (Note C5)

1 January to 23 July 2002

1 January to 31 December 2001

91 425 315

141 300

214 741 377

253 300

381 759

5 253 120

3 491 224

7 580 807

—

—

696 145

—

17 200 348

1 179 177

Total

16 706 910

19 075 670

Withdrawals of value adjustments for loans and
advances and from the provisions for liabilities
and commitments:
— withdrawal of value adjustments for loans and

advances

— withdrawal of provision for major exposures
for
from other
— withdrawal

provisions

liabilities and charges (Note C13.2)

Total

Other operating income (Note C21)
Extraordinary income

from the provision for budgetary

Income relating to the ECSC operating budget
(Note C22)
Withdrawal
contingencies (Note C12)
Withdrawal from the provision for financing the
ECSC operating budget (Note C12)
Withdrawal
C13.1)

from the Guarantee Fund (Note

TOTAL INCOME

22 011 553
6 000 000

51 371 610

49 478 703
11 000 000

3 477 090

79 383 163

8 022 885
—

20 665 175

31 000 000

118 794 520

51 000 000

417 139 268

63 955 793

83 387
1 879 316

64 523 231

—

251 205 480

—

615 717 554

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Allocation of the surplus for the period ending 23 July 2002

(Amounts in EUR)

Surplus brought forward at 1 January

Surplus for the period to be allocated

1 January to 23 July 2002

1 January to 31 December
2001

3 250 334

158 668 388

2 029 066

8 588 663

Total

161 918 722

10 617 729

Allocation to the assets of the Coal and Steel Research Fund
(Note C15)

Surplus brought forward at the end of the period

158 300 000

3 618 722

7 367 395

3 250 334

NOTES TO THE FINANCIAL STATEMENTS AT 23 JULY 2002

(Amounts in euro)

A. THE ECSC

The European Coal and Steel Community (ECSC) was established by the Treaty of 18 April 1951.
According to the Treaty, the task of the ECSC was to contribute to the economic expansion of the
Member States through the establishment of a common market for coal and steel.

The ECSC Treaty expired on 23 July 2002. The Nice European Council decided to annex to the Nice Treaty
of 26 February 2001 (1) a protocol on the financial consequences of the expiry of the ECSC Treaty and on
the creation and management of the Coal and Steel Research Fund. It was decided that all ECSC assets at
the time of the expiry of the Treaty will be transferred to the European Community with effect from 24
July 2002. The net value of these assets is considered to be earmarked for research in the sectors associated
with the coal and steel industry. The income generated by these assets will be allocated exclusively to
research in these sectors.

Since the Nice Treaty was not ratified before the expiry of the ECSC Treaty, the Member States have
temporarily entrusted to the European Commission the task of managing the assets of the ECSC in
liquidation by applying the same principles (2), as provided for in the Protocol to the Nice Treaty. In a
referendum, Ireland agreed to the ratification of the Nice Treaty.

In view of the expiry of the ECSC Treaty, the rate of the ECSC levy was reduced to zero in 1998, and the
ECSC's lending activity has been discontinued since July 1997 (Commission Decision of 22 June 1994).
Thus most of the ECSC's funds have come since from the return on its cash holdings.

B. ACCOUNTING PRINCIPLES AND METHODS

1.

Presentation of the financial statements

The financial statements are drawn up in accordance with generally recognised accounting prin-
ciples.

The accounting principles and evaluation methods used for the items in the financial statements take
account of the constraints imposed on and resolutions applicable to the ECSC under the Treaties and
other ECSC-related decisions adopted by the institutions of the European Communities.

The accounting methods used also take account of the absence of continuity after 23 July 2002,
when the ECSC Treaty expired.

(1) OJ C 80, 10.3.2001.
(2) Decision of the Representatives of the Governments of the ECSC Member States, meeting within the Council, of 27

February 2002 (OJ L 79, 22.3.2002).

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They are presented in accordance with Council Directives 78/660/EEC and 86/635/EEC (1) on the
annual accounts and consolidated accounts of banks and other financial institutions wherever these
are applicable and subject to the above-mentioned necessary adjustments. Directive 2001/65/EC (2)
amending the above-mentioned Directives concerning the valuation rules and in particular fair value
is not yet applicable to the ECSC financial statements. This Directive must be applied by 31
December 2003.

2.

Conversion of items expressed in foreign currency

The currency used by the ECSC for its annual accounts is the euro (‘EUR’ or ‘€’)

All foreign-currency transactions carried out by the ECSC are converted into euros at the monthly
rate communicated by the European Central Bank.

The value of non-financial assets/liabilities is converted into euros at the monthly rate applicable on
the date on which they were acquired or on which their value was last adjusted.

On the balance-sheet date, financial assets/liabilities are converted into euros at the monthly rate
applicable on that date. Negative differences are entered under ‘charges’
in the profit-and-loss
account, while positive differences are deferred and entered under ‘accruals and deferred income’
on the liabilities side.

2.1. Conversion rates

The following rates have been used for converting year-end balance-sheet amounts expressed in
national currency into euros:

Danish krone

Swedish krone

Pound sterling

Swiss franc

United States dollar

Japanese yen

23 July 2002

31 December 2001

7,43310

9,46450

0,63290

1,45490

0,99100

116,370

7,43650

9,30120

0,60850

1,48290

0,88130

115,330

2.2. At 23 July 2002, the various currencies listed above, together with the euro, made up the ECSC's balance sheet

as follows (EUR):

Euro

Danish krone

Swedish krone

Pound sterling

Swiss franc

Currency

Assets

Liabilities

1 974 960 860

1 997 616 326

780 877

296 523

—

—

365 168 225

343 890 375

6

—

United States dollar

107 326 726

107 026 516

Total

2 448 533 217

2 448 533 217

(1) OJ L 222, 14.8.1978 and OJ L 372, 31.12.1986.
(2) OJ L 283, 27.10.2001.

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3.

Treasury investment and valuation of bonds and other securities

The ECSC's internal prudential rules stipulate that portfolio investments are to be confined to
securities issued by first-ranking entities. However in 1998, under an agreement to restructure
the debt of a defaulting debtor, the ECSC exceptionally acquired shares and other variable-income
securities from a private-sector company.

Bonds and other fixed-income securities and shares and other variable-income securities are valued
at the average purchase price or the market value obtaining at the end of the financial year,
whichever is the lower.

This principle is not applied in the case of securities considered as financial fixed assets, which are
valued at the average purchase price or the redemption value, whichever is the lower.

4.

Special features of the ECSC financial statements

(a) ECSC operating budget

Part of the ECSC's funds are made available to the ECSC operating budget, which is adopted
annually by the Commission after
informing the Council and consulting the European
Parliament. The last budget was drawn up for the period from 1 January to 23 July 2002.

The commitments entered into by the operating budget vis-à-vis third parties and still
outstanding at 23 July 2002 are shown under the heading ‘Outstanding commitments under
the operating budget’ (see note C12).

EUR 79 million of
financing the 2002 ECSC operating budget
(EUR 149 794 520 at 31 December 2001) were used, and the balance at 23 July 2002 was
withdrawn (see notes C12, C16.1 and C16.2).

the provisions

for

(b) Budget for financing coal and steel research

The Member States of the European Union have decided that the income from the management
of ECSC assets after 23 July 2002 should be allocated to the general budget of the European
Communities (1). This income is earmarked for a research programme relating to the coal and
steel industries, as stated in note A to this report.

The ECSC has already constituted provisions in order to prepare the ground for this mechanism
for financing coal and steel research. These provisions are entered under the heading ‘Budget for
financing coal and steel research’ (see note C.14).

5.

Change in accounting methods

Until the 2001 financial year, fines and interest subsidies were not regarded as ECSC resources
until they had actually been received. Fines imposed but not yet paid and interest subsidies whose
repayment had been requested were transferred to the financing provisions (see note C13.2a). With
the financing provisions were withdrawn and, as a
the end of
precautionary measure, transferred to the value adjustment for bad debts.

the ECSC operating budget,

(1) Decision of the Representatives of the Governments of the ECSC Member States, meeting within the Council, of 27

February 2002 (OJ L 79, 22.3.2002).

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C. EXPLANATORY NOTES TO THE HEADINGS IN THE BALANCE SHEET AND THE PROFIT-AND-LOSS

ACCOUNTS

1.

Balances with central banks

This item represents the ECSC's balances with the central banks of certain Member States.

2.

Loans and advances to credit institutions

2.1. With agreed maturity dates or periods of notice

The breakdown of the remaining time to maturity of these operations is as follows:

Up to three months

33 539 360

133 272 729

Total

33 539 360

133 272 729

23 July 2002

31 December 2001

(in EUR)

2.2. Loans

The breakdown of the remaining time to maturity of these operations is as follows:

Up to three months

Three months to one year

One to five years

Over five years

23 July 2002

31 December 2001

(in EUR)

3 312 991

27 844 126

29 060 876

59 997 722

33 692 382

218 222 375

39 999 682

63 453 919

Total

120 215 715

355 368 358

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3.

Loans and advances to customers

3.1. Loans

The loans granted to credit institutions are shown under ‘Loans and advances to credit institutions’
(see note C2).

The other loans break down as follows:

1. Loans disbursed from borrowed funds

— amounts outstanding

— value adjustments

23 July 2002

31 December 2001

(in EUR)

678 726 833

1 091 388 811

– 47 388 569

– 99 348 028

Sub-total

631 338 264

992 040 783

2. Loans

from the special

reserve for

financing

subsidised housing

17 214 002

17 483 206

Interim total

648 552 266

1 009 523 989

breakdown of

The
value
these
adjustments) by time remaining to maturity was as
follows at

(net of

loans

23 July 2002

31 December 2001

— Up to three
months

— Three months
to one year

— One to five

years

50 752 207

170 535 047

232 969 144

166 153 710

11 968 366

240 749 165

— Over five years

400 251 118

531 434 095

695 940 835

1 108 872 017

3. Loans paid from the former Pension Fund to
for

European Communities

officials
of
housing construction

the

33 527 868

34 817 280

4. Other loans

—

798 336

Grand total

682 080 134

1 045 139 605

N.B. Loans are generally guaranteed by Member States, banks or businesses or by mortgages.

Loans granted to a defaulting debtor were ceded to a third party on 5 August 2002. At 31
December 2001 a value adjustment of EUR 29 190 879 was applied to the loans, which totalled
EUR 50 463 192. This value adjustment was adjusted at 23 July 2002 to reflect the price paid for
the loans, namely EUR 27 064 451, which was fixed prior to 23 July.

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3.2. Levy

The levy rate for 1998 to 2002 was 0 %, so the claims at 23 July 2002 relate to previous years.

This item breaks down as follows:

(in EUR)

23 July 2002

31 December 2001

4 975 874

– 4 975 874

5 455 706

– 5 389 493

Amount net

0

66 213

Gross amount

Value adjustments

3.3. Fines

This item contains the Commission's claims on companies fined in accordance with the rules set out
in the Treaty. The recording method has been changed in view of the end of the ECSC operating
budgets (see note B5).

This item breaks down as follows:

Fines due under the ‘quota system’

— Capital

— Surcharges for late payment

Fines due under Decision 94/215/ECSC (1)

— Capital

— Surcharges for late payment

Fines due under Decision 98/247/ECSC (2)

— Capital

— Surcharges for late payment

Value adjustments

Total

23 July 2002

31 December 2001

(in EUR)

1 034 270

340 962

24 359 000

11 162 914

8 064 000

1 955 078

46 916 224

46 916 224

1 034 270

340 962

28 959 000

10 587 790

8 064 000

1 695 926

50 681 948

10 875 232

Amount net

0

39 806 715

(1) Seven companies have lodged appeals against the judgement of the Court of First Instance. Pending the decision of the

European Court of Justice, a total (without interest) of EUR 24 359 000 remained outstanding at 23 July 2002.

(2) Three companies have lodged appeals against the judgement of the Court of First Instance. Pending the decision of the

European Court of Justice, a total (without interest) of EUR 8 064 000 remained outstanding at 23 July 2002

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3.4. Interest subsidies to be recovered

This item comprises claims on companies in receipt of subsidised loans which the Commission has
been obliged to ask to reimburse all or part of the interest subsidy already paid.

Subsidies to be repaid

Value adjustments

(in EUR)

23 July 2002

31 December 2001

3 162 873

– 2 825 137

4 926 324

– 2 347 258

Net amount

337 736

2 579 066

4.

Bonds and other fixed-income securities

4.1. Composition

Bonds and other fixed-income securities break down as follows:

(in EUR)

23 July 2002

31 December 2001

Value adjustments
on bonds and other
fixed-income
securities
Net movement

1 199 224 006

1 102 728 104

57 309 905

– 69 853 882

– 12 543 977

1 129 370 124

1 090 184 127

401 025 136

481 525 476

– 1 319 796

– 1 493 805

– 2 813 601

399 531 331

478 711 875

1 600 249 142

1 584 253 580

55 990 109

– 71 347 687

– 15 357 578

1 528 901 455

1 568 896 002

Issued by public bodies:

Gross value

Value adjustments

Net value

Issued by other borrowers:

Gross value

Value adjustments

Net value

Total bonds and other fixed-income securities:

Gross value

Value adjustments

Net value

The net movement of value adjustments of EUR 55 990 109 breaks down as follows:

— allocation to value adjustments:

63 570 916

— withdrawal from value adjustments:

– 7 580 807

55 990 109

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4.2. Maturities at 23 July 2003

Securities in the portfolio reaching final maturity by 23 July 2003 represent the following amounts
(EUR):

— Issued by public bodies:

— Issued by other borrowers:

235 576 417

139 964 420

Total

375 540 837

4.3. Financial fixed assets (see note B.3)

Financial fixed assets are defined as securities that will remain in the portfolio until their final
maturity. They comprise long-term paper for servicing ECSC borrowings.

At 23 July 2002 financial fixed assets totalled EUR 161 922 895 in nominal terms, which was less
than the average acquisition price. A value adjustment of EUR 62 397 971 was therefore entered in
the result of the period ending 23 July 2002.

4.4. Return on investment

Treasury investments take account of the maturity dates and liquidity requirements applicable to
ECSC financial operations. They are subject to strict criteria with regard to the financial standing of
the counterparty.

The return on investment, including the variation in the market value of bonds (calculated by the
Modified Dietz Method) was 4,51 % for the period ending 23 July 2002.

5.

Shares and other variable-income securities

Shares and other variable-income securities break down as follows:

(in EUR)

23 July 2002

31 December 2001

Value adjustments
on shares and other
variable income
securities
Net movement

41 030 909

100 198 015

(42 960 314)

– 13 032 499

– 55 992 813

27 998 410

44 205 202

Gross value

Value adjustments

Net value

These shares and other variable-income securities were received by the ECSC as part of the restruc-
turing plan of a defaulting debtor (see note B.3).

The net movement of EUR 42 960 314 corresponds to the use of value adjustments in relation to
shares sold during the period ending 23 July 2002 to the value of EUR 44 365 901 and an
additional allocation of EUR 1 405 587.

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6. Other assets

Other assets break down as follows:

23 July 2002

31 December 2001

(in EUR)

— Current account, ECSC operating budget (see note 10)

— Withholding taxes and VAT to be reclaimed

— Loans to officials

— Miscellaneous

—

72 774

5 854 637

95 966

Total

6 023 377

724 633

2 446 873

3 900 732

20 556

7 092 794

7.

Prepayments and accrued income

Prepayments and accrued income break down as follows:

23 July 2002

31 December 2001

(in EUR)

— Interest on loans and swaps

— Interest on deposits and securities portfolio

— Issuing costs and redemption premiums

— Cumulative value adjustments

25 811 079

28 881 766

—

54 692 845

– 7 124 483

Total

47 568 362

65 111 062

25 205 627

868 748

91 185 437

– 8 651 432

82 534 005

8. Amounts owed to credit institutions

The remaining time to maturity on these operations is as follows:

23 July 2002

31 December 2001

(in EUR)

With agreed maturity dates or periods of notice:

— Borrowings

Up to three months

Three months to one year

One to five years

Over five years

2 651 400

23 866 625

8 631 817

1 052 239

211 944 169

371 209 437

18 846 752

2 294 214

Total

36 202 081

604 294 572

9. Debts evidenced by certificates

This item comprises loan securities issued by the ECSC.

An amount of EUR 228 673 526 is accounted for by borrowings with less than one year to
maturity (EUR 104 115 280 at 31 December 2001).

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10. Other liabilities

Other liabilities break down as follows:

23 July 2002

31 December 2001

(in EUR)

Current account, ECSC operating budget (see note 6)

Early loan repayment

Other

31 271 294

4 638 935

706 217

Total

36 616 446

—

301 104

301 104

11. Accruals and deferred income

Accruals and deferred income break down as follows:

Interest on borrowings and credit lines

Commissions on loans

Issuing premiums

Deferred positive exchange differences

23 July 2002

31 December 2001

(in EUR)

18 294 251

3 111

—

4 266 828

Total

22 564 190

65 877 350

86 307

1 700 611

10 396 997

78 061 265

12. Outstanding commitments under the ECSC operating budget

This item comprises commitments under the ECSC operating budgets which were still outstanding
on 23 July 2002 (see note B4.a).

During the period from 1 January to 23 July 2002 commitments for the ECSC operating budget
were as follows:

Amount at
31 December 2001

New legal
commitments

Payments

Cancellations

Redeployment

Research

Interest subsidies Article 56

Social measures (coal) (Rechar)

128 960 809

174 023 995

25 008 679

52 932 945

35 199 572

71 779 540

—

21 009 507

25 720 457

60 813 446

2 737 620

3 305 000

5 832 213

4 160 694

5 426 905

2 000

(in EUR)

Amount at
23 July 2002

132 607 711

180 829 395

16 844 154

70 635 452

Total

380 926 428

127 988 619

92 576 523

15 421 812

400 916 712

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The provision for
contingencies have been withdrawn (see also note C16.2).

financing the 2002 operating budget and the provision for budgetary

Amounts at 31
December 2001

Withdrawal 2002

Amounts at
23 July 2002

Provision for financing the future operating budget

— provision for the 2002 ECSC operating budget (1)

118 794 520

118 794 520

Provision for budgetary contingencies

31 000 000

31 000 000

Total

149 794 520

149 794 520

—

—

—

(1) Commission Decision No 2537/2001/ECSC of 21 December 2001 (2002 ECSC operating budget).

13.

Provision for liabilities and charges

13.1. Guarantee Fund

The Guarantee Fund is intended to cover lending and borrowing operations. After a withdrawal of
EUR 51 million, the Guarantee Fund totalled EUR 529 million at 23 July 2002.

On 11 September 1996 the Commission confirmed its intention of maintaining reserves to cover
100 % of those loans outstanding after 23 July 2002 which are not guaranteed by the government
of a Member State. At 23 July 2002 this coverage was 100 %. However, since some of the loans are
denominated in GBP, the 100 % coverage may change as a result of fluctuations in the GBP/EUR
exchange rate.

The Guarantee Fund decreased as follows:

31.12.2001

Withdrawal in 2002

23.7.2002

580 000 000

51 000 000

529 000 000

(in EUR)

13.2. Other provisions

This item comprises provisions for fines and repayable interest subsidies (EUR 42 385 781 at 31
December 2001) and other provisions totalling EUR 57 012 724 (EUR 108 313 490 at 31
December 2001).

(a) Provisions for fines and repayable interest subsidies (see note B.5):

31 December 2001

Change in 2002
balance sheet

23 July 2002

(in EUR)

Provision for fines and surcharges for late
payment to be paid

39 806 715

– 39 806 715

Provision for interest subsidies repayable

2 579 066

– 2 579 066

Total

42 385 781

– 42 385 781

—

—

—

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(b) Other provisions:

Provision for
risk (1)

interest-rate

Provision for special costs
relating
banking
to
activities (2)

Provision for appeal against
Decision 94/215/ECSC (3)

Provision for appeal against
Decision 98/247/ECSC (4)

Operations in the period 1 January-23 July 2002

31 December
2001

Allocation

Withdrawal

Exchange-rate
movement and
balance-sheet
movement

23 July 2002

(in EUR)

51 958 153

2 105 833

51 371 610

– 2 692 376

—

200 000

100 000

52 107 499

940 438

4 047 838

68 982

—

—

—

—

—

300 000

53 047 937

– 452 033

3 664 787

Total

108 313 490

3 215 253

51 371 610

– 3 144 409

57 012 724

(1) Following the default of one borrower, long-term securities issued by the ECSC (i.e. with a maturity date after 2002) are no

longer paired with asset items bearing an equivalent interest rate.
Under the principle of caution and in view of the expiry of the ECSC Treaty in 2002, a provision had been constituted to
fully cover interest-rate risks. In 2002 the ECSC acquired a dedicated portfolio which bears exactly the same interest as the
interest to be paid. The provision was therefore withdrawn.

(2) This provision was created to cover any legal costs and other unforeseen expenditure. The risk in question is primarily in the
legal field because the ECSC has less recourse, for its operations, to national agents who bear all expenditure relating to loan
operations.

(3) This provision was created from the fines paid and the interest accrued since these payments under Decision 94/215/ECSC
of 16 February 1994 to cover the possible reimbursement of the amounts received should the Court of Justice rule in favour
of the companies which have appealed against the judgement of the Court of First Instance of 11 March 1999 (note C3.3).
(4) This provision was created from the fines paid and accrued since these payments under Decision 98/247/ECSC of 21
January 1998 to cover the possible reimbursement of the amounts received should the Court of First Instance rule in favour
of the companies which have appealed against the judgment of the Court of First Instance of 13 December 2001 (note
C3.3).

14.

Budget for financing coal and steel research

This item breaks down as follows:

Provision for research in 2003

Provision for research in 2004

Provision for smoothing

(in EUR)

23 July 2002

31 December 2001

60 000 000

60 000 000

60 000 000

60 000 000

120 000 000

120 000 000

Total

240 000 000

240 000 000

In view of the expiry of the ECSC Treaty on 23 July 2002 and the winding-up of the ECSC, it has
been decided that all ECSC assets at the time of the expiry of the Treaty will be transferred to the
European Community with effect from 24 July 2002 (1). The net value of these assets is considered
to be earmarked for research in the sectors associated with the coal and steel industries. The income
generated by these assets will be allocated exclusively to research in these sectors.

In practice, the net profit from the management of the assets (invested mainly in the portfolio of
securities and term deposits) in year n will be transferred to the general budget of the European
Community and will be used for research in year n+2. On the basis of simulations of the net profit
from the management of the assets, it was decided to set the initial funding at EUR 60 million.

(1) Decision of the Representatives of the Governments of the ECSC Member States, meeting within the Council, of 27

February 2002 (OJ L 79, 22.3.2002).

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In order to reduce fluctuations in research funding resulting from movements on the financial
markets, a smoothing formula will be applied in accordance with the procedures approved by
the Member States. This smoothing formula will be applied for the first time to the results for
the 2003 financial year and will be used to determine the allocation for research in 2005. In order
to launch this mechanism, the ECSC constituted a provision for smoothing.

15. Reserves and surpluses

Situation at
31.12.2001
before allocation

Allocation at
31.12.2001

Situation at
31.12.2001 after
allocation

Changes in 2002

Situation at
23.7.2002
before allocation

Allocation at
23.7.2002

Situation at
23.7.2002 after
allocation

(in EUR)

Special reserve

Former Pension Fund

118 000 000

40 000 000

118 000 000

– 5 700 000

112 300 000

40 000 000

– 4 000 000

36 000 000

— 112 300 000

— 36 000 000

Assets of
Research Fund

the Coal and Steel

92 632 605

7 367 395

100 000 000

9 700 000

109 700 000

158 300 000 268 000 000

Surplus brought forward

2 029 066

1 221 268

3 250 334

3 250 334

368 388

3 618 722

Surplus for the period

8 588 663

– 8 588 663

0

158 668 388

158 668 388 – 158 668 388

0

Total

261 250 334

0

261 250 334

158 668 388

419 918 722

0 419 918 722

The Special Reserve is used to grant loans from ECSC own funds to finance subsidised housing. At
23 July 2002 the amount outstanding corresponding to the loans granted totalled approximately
EUR 112,3 million. Consequently, it proved possible to release EUR 5,7 million, which was trans-
ferred to free reserves.

The former Pension Fund originally represented the ECSC's total pension obligations prior to 5
March 1968. Since that date, the Member States have assumed responsibility, via the general budget,
for the payment of staff pensions. This fund is used to finance housing loans for officials of the
European Communities. At 23 July 2002 the amount outstanding corresponding to the loans
it proved possible to release
granted totalled approximately EUR 36 million. Consequently,
EUR 4 million, which was transferred to the free reserves.

The ‘Assets of
winding-up of the ECSC (see note 14), comprises the free reserves.

the Coal and Steel Research Fund’ reserve, constituted in the context of

the

16. Analysis of the result for the period from 1 January to 23 July 2002

Overall ECSC performance is influenced by both the result of non-budgetary operations (lending/
borrowing — treasury investment — exchange-rate variations) and the out-turn of the ECSC
operating budget.

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Official Journal of the European Union

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16.1. Non-budgetary operations

Result

23 July 2002

31 December 2001

(in EUR)

Gross operating margin before changes in provisions

— Lending/borrowing operations

— Interest on bank accounts

— Transactions concerning portfolio securities

— Loss on loans and advances

— Exchange-rate difference

— Miscellaneous

– 1 358 003

2 519 538

39 525 096

– 441 587

381 759

1 327 386

Total

41 954 189

Net changes in provisions

— Other provision for liabilities and charges

— Provision for major exposures

— Value adjustments in respect of loans and advances

— Provision for financing the operating budget/budgetary

contingencies (notes C12 and C16.2)

– 1 109 419

6 000 000

21 147 061

1 485 339

1 919 600

78 473 087

– 1 376 363

– 268 248

27 257

80 260 672

1 419 117

11 000 000

44 734 723

70 794 520

174 205 480

— Budget for financing coal and steel research

—

– 240 000 000

— Guarantee Fund (note C13.1)

51 000 000

– 15 000 000

Result after changes in provisions

189 786 351

56 619 992

Amount allocated to financing the operating budget (1)
(= net balance)

– 31 117 963

– 48 031 329

Result after deducting the net balance before allo-
cation of the surplus

158 668 388

8 588 663

(1) In accordance with the change of accounting method on 31 December 1992 income received during the 2002 financial year

has been allocated to financing the 2002 operating budget (net balance as in note C16.2).

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16.2. Out-turn of the ECSC operating budget

Out-turn of the budget

Expenditure

23 July 2002

31 December 2001

(in EUR)

— Administrative expenditure (note C18)

— Legal commitments (note C12)

2 794 520

127 988 619

5 000 000

184 554 560

Total

130 783 139

189 554 560

Revenue (net amounts)

— Levy (note C22)

— Fines (note C22)

— Repayment of interest subsidies (note C22)

— Miscellaneous (note C22)

— Cancellations of legal commitments (note C22)

— Financing of future operating budgets

— Net balance for the period (note C16.1)

—

4 600 000

370 492

272 872

15 421 812

79 000 000

31 117 963

—

4 540 000

826 462

1 158 428

57 998 341

77 000 000

48 031 329

Budget out-turn

0

0

Total

130 783 139

189 554 560

17.

Interest and similar charges

Interest on loans and swaps

Bank interest

Issuing costs and redemption premiums

(in EUR)

23 July 2002

31 December 2001

52 182 248

139 407 674

30 200

868 747

9 895

1 882 046

Total

53 081 195

141 299 615

18. Administrative overheads

The ECSC paid a lump sum of EUR 2 794 520 (EUR 5 million in 2001) to the general budget of
the Commission of the European Communities to cover its administrative expenditure.

19. Other operating charges

Borrowing costs

SWIFT/Reuters charges

Loss on loans and advances

Other

23 July 2002

31 December 2001

(in EUR)

78 123

132 483

441 587

63 715

715 908

133 559

192 668

1 376 363

8 499

1 711 089

Total

The loss on loans and advances is offset by a withdrawal from the corresponding value adjustment.

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20.

Interest received and other income

Interest on loans and swaps

Payment and redemption premiums

Bank interest

Interest on bonds and other fixed-income securities

Income from shares and other variable-income securities

(in EUR)

23 July 2002

31 December 2001

50 010 165

138 793 019

867 660

2 796 887

37 750 603

—

2 339 954

2 196 563

69 658 619

1 753 222

Total

91 425 315

214 741 377

21. Other operating income

23 July 2002

31 December 2001

(in EUR)

Other income from lending and treasury activities

Lapsed coupons and bonds

Miscellaneous

7 678 149

1 404

343 332

Total

8 022 885

—

39 383

44 004

83 387

22.

Income relating to the operating budget

23 July 2002

31 December 2001

(in EUR)

Levy (1)

Fines (2)

Cancellation of legal commitments (note C12)

Repayment of interest subsidies (note C3.4)

Miscellaneous

—

4 600 000

15 421 811

370 492

272 872

Total

20 665 175

—

4 540 000

57 998 341

826 462

1 158 428

64 523 231

(1) The ECSC is authorised under the Treaty to impose a levy on coal and steel produced by undertakings in the Community. The
levy is calculated on the basis of the average values in the Community of the various products concerned. The European
Commission decided to set the levy rate for the years 1998 to 2002 at 0 %.

(2) This item comprises the revenue from fines imposed by the Commission in accordance with Articles 58 and 65 of the ECSC

Treaty, together with surcharges for late payment.

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23. Off-balance-sheet commitments

23.1. Commitments received

23 July 2002

31 December 2001

(in EUR)

Commitments arising from swaps

— Notional capital commitments relating to interest-rate

swaps

— Capital commitments

relating to interest-rate and

currency swaps

195 709 880

212 071 862

94 801 706

98 603 122

Total

290 511 586

310 674 984

23.2. Commitments entered into

23 July 2002

31 December 2001

(in EUR)

(a) Commitments arising from swaps

— Notional

capital
interest-rate swaps

commitments

relating

to

— Capital commitments relating to interest-rate and

currency swaps

(b) Loans granted to EC officials but not yet disbursed

(c) Administrative overheads (1)

(d) Receipts from lapsed coupons and bonds (2)

195 709 880

212 071 862

88 085 042

1 715 972

1 455 616

—

88 085 042

211 554

—

39 383

Total

286 966 510

300 407 841

(1) According to Decision No 2002/234/ECSC of 27 February 2002 (Annex 1, point 6) of

the
Governments of the Member States, meeting within the Council (see note A), the administrative expenditure of the ECSC
in liquidation is to be assumed by the Commission. The ECSC is to transfer EUR 3,3 million to the European Union budget.
The amount corresponding to administrative overheads for the period from 24 July 2002 to 31 December 2002,
i.e.
EUR 1 455 616, is entered as a commitment entered into.
After the entry into force of the Nice Treaty, all ECSC assets will be transferred to the European Community, and the
obligation to pay a lump sum to the European Union budget will be replaced by the rules to be applied under the Protocol.
(2) The ECSC has always been keen to meet the commitments it has entered into and therefore has traditionally honoured

the Representatives of

coupons even after they have lapsed. The winding-up of the ECSC will see the end of this practice.

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24.

Financial situation for the period ending 23 July 2002

ORIGIN OF FUNDS

Balance of profit-and-loss account

Items not involving movements of funds

— Amortisation of issuing costs and redemption premiums

— Value adjustments in respect of financial assets (withdrawals)

— Value adjustments in respect of loans and advances, net

— Decrease in ‘ECSC operating budget’

— Increase (decrease)

in ‘Budget for financing coal and steel

research’

— Increase (decrease) in accruals and deferred payments

— Decrease in accruals and deferred income and issuing costs/

redemption premiums

— Increase (decrease) in other liabilities

— Increase in other assets

— Allocation to (withdrawal from) the provisions for liabilities

and charges

— Allocation to (withdrawal

from)

the provision for major

exposures

— Exchange-rate adjustments in respect of borrowings and loans

— Allocation to (withdrawal from) the Guarantee Fund/Special

Reserve

(EUR million)

Period 1 January to
23 July 2002

Period 1 January to
31 December 2001

158,7

8,5

0,9

13,0

– 62,3

– 172,2

—

– 59,3

42,7

32,1

47,8

– 51,3

– 6,0

2,4

– 51,0

1,9

– 8,5

– 40,2

– 304,7

240,0

– 7,6

9,8

– 28,5

12,8

– 8,1

– 11,0

– 12,4

15,0

Total funds

– 104,5

– 133,0

OTHER RESOURCES

— Proceeds from borrowings

— Loan repayments

— Decreases in bank balances and securities portfolio

Total resources

USE OF FUNDS

— Loan disbursements/increase in loans and advances

— Redemption of borrowings

Total uses

—

619,4

149,7

664,6

0,7

663,9

664,6

—

745,8

10,8

623,6

5,4

618,2

623,6