Samsung 2008 Annual Report Download - page 83

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
17. ACCRUED SEVERANCE BENEFITS
Change in accrued severance benefits for the years ended December 31, 2008 and 2007, consist of the following:
As of December 31, 2008, the Company funded 60% of severance payable through severance insurance deposits with Samsung Life
Insurance and Samsung Fire & Marin Insurance. In addition, Samsung Card, one of SEC’s domestic subsidiaries, implemented a defined
benefit pension plan with Samsung Life Insurance in accordance with Employee Retirement Benefit Security Act. Retirement pension
operating assets as of December 31, 2008 consist mostly of financial instruments.
(In millions of Korean won)
1. Others include amounts from changes in scope of consolidation and changes in foreign currency exchange rates.
Balance at the beginning of the year
￦
2,041,713
￦
1,769,385
Provision for severance benefits 543,980 615,586
Actual severance payments (286,875) (346,803)
Others 1 14,605 3,545
2,313,423 2,041,713
Less: Cumulative deposits to the National Pension Fund (10,190) (11,467)
Severance insurance deposits (1,391,194) (1,239,563)
Retirement pension operating assets (61,806) (50,747)
Balance at the end of the year
￦
850,233
￦
739,936
2008 2007
18. ACCRUED EXPENSE
Changes in main liability provisions for the years ended December 31, 2008 and 2007, are as follows:
(In millions of Korean won)
(In millions of Korean won)
2008
Warranty reserves (A)
￦
929,077
￦
1,756,994
￦
1,489,231
￦
146,852
￦
1,343,692
Royalty expenses (B) 1,342,932 661,551 691,147 12,903 1,326,239
Long-term incentives (C) 39,145 178,329 40,587 - 176,887
Point reserves (D) 146,875 173,573 157,349 - 163,099
Allowance for
undrawn commitment (E) - 232,880 - - 232,880
Reference January 1, 2008 Increase Decrease Others1 December 31, 2008
2007
Warranty reserves (A)
￦
703,797
￦
1,126,488
￦
938,852
￦
37,644
￦
929,077
Royalty expenses (B) 975,238 706,384 340,328 1,638 1,342,932
Long-term incentives (C) 274,358 220,635 455,848 - 39,145
Point reserves (D) 124,870 156,445 134,440 - 146,875
Reference January 1, 2007 Increase Decrease Others1 December 31, 2007
1. Others include amounts from changes in consolidated subsidiaries and foreign currency exchange rates.
The Company accrues warranty reserves for estimated costs of future service, repairs and recalls, based on historical experience
and terms of guarantees (1 ~ 4 years).
The Company makes provisions for estimated royalty expenses related to technical assistance agreements that have not been
settled. The timing of payment depends on the settlement of agreement.
The Company introduced long-term incentive plans for its executives based on a three-year management performance criteria and
has made a provision for the estimated incentive cost for the accrued period.
(A)
(B)
(C)