Lenovo 2012 Annual Report Download - page 169

2011/12 Annual Report Lenovo Group Limited 167
35 Notes to the consolidated cash flow statement (continued)
(b) Changes in bank borrowings
2012 2011
US$’000 US$’000
Change in short-term bank loans (11,726) 6,855
Repayment of term loans (200,000) (230,000)
(211,726) (223,145)
36 Retirement benefit obligations
Group
2012 2011
US$’000 US$’000
Pension obligation included in non-current liabilities
Pension benefits 191,413 63,120
Post-employment medical benefits 13,405 11,750
204,818 74,870
Expensed in income statement
Pension benefits (Note 10) 18,350 9,878
Post-employment medical benefits 1,333 1,106
19,683 10,984
Net actuarial loss recognized as a component of
other comprehensive income for the year 37,537 7,190
Cumulative actuarial losses recognized as a component of
other comprehensive income 48,542 11,005
On the acquisition of the personal computer business of IBM, the Group assumed a cash balance pension liability for
substantially all former IBM employees in Japan, and final salary defined benefit obligations for selected employees in other
countries.
In the United States, the Group operates a final-salary pension plan that covers approximately 20% of all employees. These
were former participants in the IBM US pension plan. In addition, the Group operates a supplemental defined benefit plan that
covers certain executives transferred from IBM and is intended to provide benefits in excess of certain US tax and labor law
limits that apply to the pension plan. Both plans are frozen to new participation. However, benefits continue to accrue.
In Germany, the Group operates a sectionalized plan that has both defined contribution and defined benefit features, including
benefits based on a final pay formula. This plan is closed to new entrants.
During the year, the Group completed two business combination activities as detailed in Note 37. Upon completion, the
Group assumed the cash balance pension liability and end-of-employment benefit obligation for all employees from the then
NEC personal computer division and pension commitment for the two Medion’s management board members.
For Medion, each Medion’s management board member is entitled to a lifelong pension upon leaving Medion after turning 60
or due to prolonged disability and consequently termination of the employment relationship with Medion. The pension liability
in Medion is unfunded.
The Group’s major plans are valued by qualified actuaries annually using the projected unit credit method.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited
to other comprehensive income in the period they arise.