Volvo 2001 Annual Report Download - page 86

THE VOLVO GROUP · NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
82
In calculating the provisions for pensions in accordance with U.S. GAAP, the following assumptions were applied:
Sweden Outside Sweden
1999 2000 2001 1999 2000 2001
Discount rate, % 5.5 5.5 5.5 7.5 7.5 5.5 - 7.25
Payroll increase, % 3.0 3.0 3.0 6.0 6.0 3.0 - 5.0
Expected return on assets, % 7.0 7.0 7.0 9.0 9.0 8.5 - 9.5
Post-retirement expenses in accordance with U.S. GAAP include:
Defined-benefit plans in Sweden, U.S. and France 1999 2000 2001
Service cost 242 279 412
Interest cost 279 328 1,188
Expected return on plan assets (366) (445) (1,335)
Amortization, net 15 (14) 32
Pension costs for defined benefit plans 170 148 297
Other plans (mainly defined contribution plans) 1,332 2,253 2,579
Total pension costs in accordance with U.S. GAAP 1, 2 1,502 2,401 2,876
Total pension costs in accordance with
Swedish accounting principles 1, 2 1,542 2,231 3,332
Adjustment of net income for the year in accordance with
U.S. GAAP before tax effect 40 (170) 456
1Excluding deduction attributable to Alecta surplus funds of 683 in 2000 under Swedish GAAP and 160 in 2000 and 111 in 2001
under U.S. GAAP. See (I) in this footnote.
2Excluding costs for special termination benefits in connection with restructuring measures during 2001 amounting to 402 under
Swedish and U.S. GAAP.
G. Restructuring costs and income from divestment of
Volvo Cars. Up to and including 2000, restructuring costs
were in the Volvo Group’s year-end accounts reported in
the year that implementation of these measures was
approved 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 mea-
sures is prepared at the end of the accounting period.
Effective in 2001, Volvo adopted a new Swedish account-
ing standard, RR16 Provisions, contingent liabilities and
contingent assets, which is substantially equivalent to
U.S. GAAP.
In accordance with U.S. GAAP, income from the divest-
ment of Volvo Cars in 1999 was lower than in accordance
with Swedish GAAP. This is mainly attributable to the
accounting differences described under points A, D, G and
H resulting in a higher net asset value for the operations
divested.
H. Provision for pensions and other post-employment
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.
January 1, 2001 December 31, 2001
Book value Market value Book value Market value
Available for sale
Marketable securities 1,723 1,718 1,652 1,654
Shares and convertible debenture loan 29,877 23,781 27,806 20,593
Trading 7,175 7,211 11,862 11,745
The book values and market values for these listed securities are distributed as follows: