Volvo 2000 Annual Report Download - page 80

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78
THE VOLVO GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In calculating the provisions for pensions in accordance with U.S. GAAP, the following assumptions were applied:
Sweden United States
1998 1999 2000 1998 1999 2000
Discount rate, % 6.5 5.5 5.5 7.0 7.5 7.5
Payroll increase, % 3.5 3.0 3.0 4.5 6.0 6.0
Expected return on assets, % 7.0 7.0 7.0 9.0 9.0 9.0
The table below shows the status in accordance with U.S. GAAP of defined-benefit plans.
Sweden United States
Pension benefits Pension benefits Other benefits
Reconciliation of benefit obligation 1999 2000 1999 2000 1999 2000
Benefit obligation at beginning of year 5,557 3,105 2,380 1,916 1,238 906
Service cost 158 166 84 113 35 45
Interest cost 153 168 127 161 60 76
Plan amendments (7) 0 134 103 (128) 11
Actuarial loss (gain) (201) 302 (140) 30 (46) 45
Acquisitions/divestments, net (2,459) – (678) – (252) –
Foreign-exchange translation – – 118 239 43 112
Benefits paid (96) (100) (109) (125) (44) (52)
Benefit obligation at end of year 3,105 3,641 1,916 2,437 906 1,143
Sweden United States
Pension benefits Pension benefits Other benefits
Fair value of plan assets 11999 2000 1999 2000 1999 2000
Fair value of plan assets at beginning of year 5,519 3,671 2,200 2,032 – –
Lump sums not yet paid at beginning of year – – 0 0 – –
Acquisitions/divestments, net (2,412) – (429) – – –
Actual return on plan assets 645 (39) 199 187 – –
Employer contributions (81) 0 49 46 – –
Foreign-exchange translation – – 117 246 – –
Benefits paid 0 (95) (104) (119) – –
Fair value of plan assets at end of year 3,671 3,537 2,032 2,392 – –
1 Assets in pension funds, estimated at fair value.
The projected benefit obligation, accumulated obligation
and fair value of plan assets for the pension plans with
an accumulated benefit obligation in excess of plan
assets were 704, 682 and 531 at December 31, 2000
and 516, 499 and 374 at December 31, 1999.
Other post-retirement benefit plans
In addition to its pension plans, the Company and certain
of its subsidiaries and associated companies sponsor
unfunded benefit plans, mainly in the U.S., to provide
health care and other benefits for retired employees who
meet minimum age and service requirements. The plans
are generally contributory, with retiree contributions being
adjusted periodically, and contain other cost-sharing
features such as deductibles and coinsurance. The esti-
mated cost for health-care benefits is recognized on an
accrual basis in accordance with the requirements of
SFAS 106, “Employers’ Accounting for Post-retirement
Benefits Other than Pensions.”
Sweden United States
Pension benefits Pension benefits Other benefits
Funded status 1999 2000 1999 2000 1999 2000
Funded status 567 (103) 116 (45) (906) (1,143)
Unrecognized actuarial loss (gain) 43 679 (110) 8 (159) (124)
Unrecognized transition obligation (asset),
according to SFAS 87 (net) (90) (71) 1 2 56 33
Unrecognized prior service cost 0 0 126 148 0 0
Adjustment to minimum liability (78) (261) 0 0 0 0
Net amount recognized 442 244 133 113 (1,009) (1,234)