Volvo 2002 Annual Report Download - page 49

Restricted Unrestricted Total share-
Change in shareholders’ equity Share capital reserves reserves holders’ equity
Balance at December 31, 1999 2,649 12,553 82,490 97,692
Cash dividend – – (3,091) (3,091)
Net income – – 4,709 4,709
Effect of equity method of accounting1–119 (119) –
Transfer between unrestricted and restricted equity – (261) 261 –
Translation differences – 1,385 (417) 968
Repurchase of own shares – – (11,808) (11,808)
Other changes – 8 (140) (132)
Balance at December 31, 2000 2,649 13,804 71,885 88,338
Cash dividend – – (3,356) (3,356)
Net income – – (1,467) (1,467)
Effect of equity method of accounting1–21(21)–
Transfer between unrestricted and restricted equity – (3,410) 3,410 –
Translation differences – 1,850 (828) 1,022
Repurchase of own shares – – (8,336) (8,336)
New issue of shares to Renault S.A – – 10,356 10,356
Minimum liability adjustment for post-employment benefits2––(1,417) (1,417)
Other changes – 32 13 45
Balance at December 31, 2001 2,649 12,297 70,239 85,185
Cash dividend – – (3,356) (3,356)
Net income – – 1,393 1,393
Effect of equity method of accounting1–45(45)–
Transfer between unrestricted and restricted equity – 4,219 (4,219) –
Translation differences – (2,468) 238 (2,230)
Minimum liability adjustment for post-employment benefits2––(2,542) (2,542)
Other changes – – (172) (172)
Balance at December 31, 2002 2,649 14,093 61,536 78,278
1Mainly associated companies’ effect on Group net income, reduced by divi-
dends received.
2Defined benefit plans for pensions in Volvo’s subsidiaries in the United
States are accounted for in accordance with U.S. GAAP (FAS87). In accor-
dance with these rules, a minimum liability adjustment should be charged to
shareholders’ equity with an amount that corresponds to the unfunded part
of accrued benefit obligations less unrecognized prior service costs. See
further in Note 22 and Note 33.
Note 22Provisions for post-employment benefits
2000 2001 2002
Provisions for pensions 1,294 6,677 9,643
Provisions for other post-employment benefits 1,338 7,970 6,593
Total 2,632 14,647 16,236
The provisions for post-employment benefits correspond to the actu-
arially calculated value of obligations not insured with a third party or
secured through transfers of funds to pension plans. The amount of
pensions falling due within one year is included. The Swedish Group
companies have insured their pension obligations with third parties.
Group pension costs in 2002 amounted to 4,472 (3,332; 1,548).
The greater part of pension costs consist of continuing payments to
independent organizations that administer defined-contribution pen-
sion plans. The pension costs in 2000 were reduced by Alecta
(previously SPP) surplus funds of 683 (see below).
In 1996 two Groupwide pension foundations for employees in
Swedish companies were formed to secure commitments in accord-
ance with the ITP plan (a Swedish pension plan). In conjunction with
the formation, plan assets corresponding to the value of pension
commitments were transferred to the foundations. During 2000 the
two foundations were merged to form a single foundation, The Volvo
Pension Foundation, which after the sale of Volvo Cars was common
to both the Volvo Group and Volvo Cars. In 2001 and 2002, a net of
40 and 0 was transferred to the pension foundation while in 2000
anet of 105 was received. The accumulated benefit obligations of
Volvo Group pensions secured by this foundation at year-end 2002
amounted to 4,355. Assets in Volvo’s Swedish pension foundation,
which are invested in Swedish and foreign shares and funds, as well
as interest-bearing securities, declined in value in 2001 and 2002
as a result of the downturn on the stock market. Consequently, the
value of the foundation’s assets was 1,099 less than pension com-
mitments at year-end 2002. As a result, a provision for coverage of
this deficit was reported in Volvo’s consolidated balance sheet per
December 31, 2002. The provision has in full been charged to the
Group’s reported operating income, whereof 292 in 2001 and 807
in 2002.