Electrolux 2002 Annual Report Download - page 59

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Accounting for Pensions
The US GAAP information for the years ending December 31,
2001 and 2000 has been restated to reflect the prepaid pension
expense for unrecognized actuarial losses in accordance with
SFAS 87 related to the Swedish Pension Funds. This restatement
had no impact on reported US GAAP net income for the years
disclosed but increased reported US GAAP total equity and assets
as of December 31, 2001 and 2000 by SEK 407m and SEK 237m
respectively.
Comprehensive income
In addition, comprehensive income for 2001 and 2000 has been
restated to reflect the exclusion of certain components of equity
not qualifying as comprehensive income according to US GAAP.
The impact of these restatements on comprehensive income
and total equity according to US GAAP as previously reported
are as follows:
Year ended December 31
SEKm 2001 2000
Comprehensive income as reported 2,976 2,179
Effect of restatement
Pensions 170 237
Derivatives and hedging 539 —
Non OCI items 1,920 3,193
Comprehensive income after restatement 5,605 5,609
Shareholders’ equity as reported 27,721 26,110
Effect of restatement
Pensions 407 237
Derivatives and hedging 539 —
Shareholders’ equity after restatement 28,667 26,347
Consolidated statement of cash flows
The consolidated statement of cash flows presented in the Group’s
financial statements differs from the statement of cash flows
according to SFAS No. 95. The main differences are the
following:
SFAS No. 95 requires a reconciliation of cash and cash equiva-
lents (liquid assets with maturities of three months or less when
acquired), whereas Electrolux also includes financial instruments
with maturities of three months or more at the time of acquisition
in liquid assets.
SFAS No. 95 requires that changes in long-term accounts
receivable are included in cash flows from operating activities
whereas Electrolux includes these changes as investments.
SFAS No. 95 requires changes in long-term loans to be reported
gross showing proceeds and principal payments, whereas Electrolux
presents a net amount.
Recently issued accounting standards
SFAS 145 In April 2002, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards
No. 145 (SFAS 145),“Rescission of FASB Statements Nos. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical
Corrections.” This statement rescinds SFAS 4,“Reporting Gains
and Losses from Extinguishment of Debt,” an amendment of APB
Opinion No. 30, which required all gains and losses from the
extinguishment of debt to be aggregated and, if material, classified
as an extraordinary item, net of related income tax effects. As a
result, the criteria set forth by APB Opinion No. 30 will now
be used to classify those gains and losses. SFAS 145 also amends
SFAS 13 to require that certain lease modifications having eco-
nomic effects similar to sale-leaseback transactions be accounted
for in the same manner as sale-leaseback transactions. In addition,
SFAS 145 amends other existing authoritative pronouncements to
make various technical corrections, clarify meanings or describe
their applicability under changed conditions. The standard is
generally effective for transactions occurring after May 15, 2002.
The adoption of SFAS 145 has no significant impact on the
Group’s financial position and results.
SFAS 146 In June 2002, the FASB issued SFAS 146,“Ac-
counting for Costs Associated with Exit or Disposal Activities.”
This standard addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies EITF
94-3,“Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring).” SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred, rather than at the date
of an entity’s commitment to an exit plan. SFAS 146 is to be
applied prospectively to exit or disposal activities initiated after
December 31, 2002.
SFAS 148 In December 2002, the FASB issued SFAS 148,
“Accounting for Stock-Based Compensation – Transition and
Disclosure.” This standard amends SFAS 123,“Accounting for
Stock-Based Compensation,” to provide alternative methods of
transition for an entity that voluntarily changes to the fair value
based method of accounting for stock-based employee compen-
sation. It also amends the disclosure provisions of SFAS 123 to
require prominent disclosure regarding the effects on reported net
income of an entity’s accounting policy decisions, with respect to
stock-based employee compensation. Finally, SFAS 148 amends
APB Opinion No. 28,“Interim Financial Reporting,” to require
disclosure of these effects in interim financial information. SFAS
148 is effective for fiscal years beginning after December 15, 2002.
The Group has no current plan to change to the fair value method
of accounting for stock-based compensation under SFAS 123 and
does not expect SFAS 148 to impact its financial statements.
EITF 00-21 In January 2003, the Emerging Issues Task Force
(EITF) issued EITF 00-21,“Accounting for Revenue Arrange-
ments with Multiple Deliverables.” EITF 00-21 addresses the
issues of (1) how to determine whether an arrangement involving
multiple deliverables contains more than one unit of accounting
and (2) how arrangement consideration should be measured and
allocated to the separate units of accounting in the arrangement.
EITF 00-21 does not otherwise change the applicable revenue
recognition criteria. EITF 00-21 is effective for revenue arrange-
ments entered in fiscal periods beginning after June 15, 2003. The
Group is in the process of assessing the impact of adopting EITF
00-21 but does not expect it to be significant.
FIN 45 In November 2002, the FASB issued FASB Inter-
pretation No. 45 (FIN 45),“Guarantor’s Accounting and Disclos-
ure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others.” FIN 45 requires a liability to be recog-
nized at the time a company issues a guarantee for the fair value
of the obligations assumed under certain guarantee agreements.
The provisions for initial recognition and measurement of guar-
antee agreements are effective on a prospective basis for guarantees
that are issued or modified after December 31, 2002. The Group
is in the process of assessing the impact of FIN 45 on its consoli-
dated financial statements.
FIN 46 On January 17, 2003, the FASB issued FASB Inter-
pretation No. 46,“Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51.” The primary objective of FIN 46
is to provide guidance on the identification of, and financial re-
porting for, entities over which control is achieved through means
other than voting rights; such entities are known as variable-
interest entities (VIEs). Electrolux is in the process of assessing
the impact of FIN 46 on its consolidated financial statements.