Volvo 2000 Annual Report Download - page 79

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Post-retirement expenses in accordance with U.S. GAAP include:
Defined-benefit plans in Sweden and U.S. 1998 1999 2000
Service cost 289 242 279
Interest cost 415 279 328
Actual return on plan assets (513) (817) (149)
Amortization, net 33 466 (310)
Pension costs for defined benefit plans 224 170 148
Other plans (mainly defined contribution plans) 3,030 1,332 2,253
Total pension costs in accordance with U.S. GAAP 13,254 1,502 2,401
Total pension costs in accordance with
Swedish accounting principles 13,567 1,542 2,231
Adjustment of net income for the year in accordance with
U.S. GAAP before tax effect 313 40 (170)
1 Excluding deduction attributable to SPP surplus funds of 683 under Swedish GAAP and 160 under U.S. GAAP. See (J) in this
footnote.
January 1, 2000 December 31, 2000
Book value Market value Book value Market value
Available for sale
Marketable securities 7,826 7,828 1,723 1,718
Shares and convertible debenture loan 5,583 4,741 29,877 23,781
Trading 12,674 13,258 7,175 7,211
The book values and market values for these listed securities are distributed as follows:
H. Items affecting comparability. In the Volvo Group’s
year-end accounts, costs for restructuring measures are
reported in the year that implementation of these meas-
ures was decided by each company’s Board of Directors.
In accordance with U.S. GAAP, costs are reported for
restructuring measures only under the condition that
a sufficiently detailed plan for implementation of the
measures is prepared at the end of the accounting period.
In accordance with U.S. GAAP, the gain on the sale of
Volvo Cars was lower than in accordance with Swedish
GAAP. This is mainly attributable to the accounting differ-
ences described under points A, E, H and I resulting in
a higher net asset value for the operations divested.
I. Provision for pensions and other postemployment
benefits. The greater part of the Volvo Group’s pension
commitments are defined contribution plans in which regu-
lar payments are made to independent authorities or
bodies that administer pension plans. There is no differ-
ence between U.S. and Swedish accounting principles in
accounting for these pension plans.
Other pension commitments are defined benefit plans;
that is, the employee is entitled to receive a certain level of
pension benefits, usually related to the employee’s final
salary. In these cases the annual pension cost is calculated
based on the current value of future pension payments. In
Volvo’s consolidated accounts, provisions for pensions and
pension costs for the year in the individual companies are
calculated based on local rules and directives. In accord-
ance with U.S. GAAP, provisions for pensions and pension
costs for the year should always be calculated as specified
in SFAS 87, “Employers Accounting for Pensions.” The
difference lies primarily in the choice of discount rates and
the fact that U.S. calculations of pension benefit obliga-
tions, in contrast to Swedish calculations, are based on
salaries calculated at the time of retirement. In addition,
under U.S. GAAP, the value of pension assets in excess
of the pension obligation is accounted for.
E. Interest expense. In accordance with U.S. GAAP,
interest expense incurred in connection with the finan-
cing of the construction of property and other qualifying
assets is capitalized and amortized over the economic
life of the related assets. In Volvo’s consolidated
accounts, interest expenses are reported in the year
in which they arise.
F. Leasing. Certain leasing transactions are reported
differently in accordance with Volvo’s accounting principles
compared with U.S. GAAP. The differences pertain to
sale-leaseback transactions prior to 1997.
G. Investments in debt and equity securities. In accord-
ance with U.S. GAAP, Volvo applies SFAS 115: “Account-
ing for Certain Investments in Debt and Equity Securi-
ties.” SFAS 115 addresses the accounting and reporting
for investments in equity securities that have readily
determinable fair market values, and for all debt securities.
These investments are to be classified as either “held-to-
maturity” securities that are reported at cost, “trading”
securities that are reported at fair value with unrealized
gains or losses included in earnings, or “available-for-
sale” securities, reported at fair value, with unrealized
gains or losses included in shareholders’ equity.
As of December 31, 2000, unrealized losses after
deducting for unrealized gains in “available-for-sale”
securities amounted to 6,101 (loss 840; loss 198).
Sale of “available-for-sale” shares in 2000 provided
SEK – billion (–; 6.6) and the capital gain, before tax, on
sales of these shares amounted to approximately SEK
– billion (–; 4.5).