Volvo 2002 Annual Report Download - page 50

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48/49
The Volvo Group
Notes to consolidated financial statements
Note 23Other provisions
In the mid-1990s and later years, surpluses arose in the Alecta
insurance company in the management of the ITP pension plan. In
December 1998 Alecta decided to distribute, company by company,
the surpluses that had arisen up to and including 1998. In accord-
ance with a statement issued by a special committee of the Swedish
Financial Accounting Standards Council, surplus funds that were
accumulated in Alecta should be recognized in the financial state-
ments when the present value could be calculated in a reliable man-
ner. The rules governing how the refund was to be made were
established in the spring of 2000 and a refund of 683 was recog-
nized in Volvo’s accounts during 2000. At year-end 2002, a refund
of 2 had not yet been settled with cash.
As a result of the acquisition on January 2, 2001 of Mack Trucks
Inc. and Renault V.I., provisions for post-employment benefits totaling
8.3 billion were added in the Volvo Group. The provisions pertained
to commitments for pensions and other post-employment benefits,
mainly healthcare benefits, which are not secured through the trans-
fer of funds to independent pension plans. During 2001, the provi-
sions within the acquired operations increased, partly due to contract-
ual occupational pensions in conjunction with decided restructuring
measures.
Provisions for post-employment benefits within Volvo’s sub-
sidiaries in the United States are reported in accordance with local
rules (U.S. GAAP). Consequently in accordance with U.S. GAAP, min-
imum liability adjustments were recognized in the Group’s financial
statements 2001 and 2002 as a result of deficits in separate pen-
sion plans. The table below includes specification of how the min-
imum liability adjustments affected the Group’s balance sheets as
per the respective year-ends.
Value in Value in Provisions Acquired and Trans- Value in
balance balance and divested lation Reclassi- balance
sheet 2000 sheet 2001 reversals Utilization companies differences fications sheet 2002
Warranties 3,644 5,989 6,414 (5,829) (6) (517) (74) 5,977
Provisions in insurance
operations 2,488 265 61 (62) – (18) 173 419
Restructuring measures 798 2,342 115 (782) – (196) (62) 1,417
Provisions for residual
value risks 725 1,716 355 (188) – (189) 4 1,698
Provisions for service
contracts 1,276 1,705 78 (262) 1 (109) 65 1,478
Other provisions 3,745 5,366 1,337 (1,250) 10 (545) (98) 4,820
Total 12,676 17,383 8,360 (8,373) 5 (1,574) 8 15,809
2000 2001 2002
Long-term receivable for prepaid pensions – 274 71
Deferred tax assets ––122
Total assets –274 193
Shareholders’ equity –(1,417) (2,542)
Provision for pensions –1,691 2,735
Total shareholders’ equity and liabilities – 274 193
Additional information regarding Volvo’s outstanding commitments for pension and other post-employment benefits and the status of the
Group’s pension plans are provided in Note 33. See also in Note 1 information regarding changes of accounting principles as of 2003.