Electrolux 2003 Annual Report Download - page 62

60 Electrolux Annual Report 2003
Notes
Group Parent Company
Provisions Warranty Warranty
for restructuring commit- Pension Provisions for commit-
Acquisitions Other ments litigation Other Total restructuring ments Other Total
Closing balance Dec. 31, 2001 — 1,771 1,223 1,084 2,415 6,493 204 88 84 376
Provisions made 166 886 723 — 810 2,585 — — — —
Provisions used –13 –751 –390 –880 –656 –2,690 –7 –7 –2 –16
Unused amounts reversed — — –45 –75 –70 –190 — — — —
Exchange-rate differences 1 –113 –93 –129 –282 –616 — — — —
Closing balance Dec. 31, 2002 154 1,793 1,418 — 2,217 5,582 197 81 82 360
Provisions made — — 4,058 — 1,094 5,152 — — — —
Provisions used –136 –1,280 –3,744 — –684 –5,844 –103 –9 –1 –113
Unused amounts reversed — — –83 — –45 –128 — — — —
Exchange-rate differences –1 –62 –87 — –185 –335 — — — —
Closing balance Dec. 31, 2003 17 451 1,562 — 2,397 4,427 94 72 81 247
Note 24 Other provisions
Amounts in SEKm, unless otherwise stated
Other financial reserves include fiscally permissible appropriations referring
to receivables in subsidiaries in politically and economically unstable countries.
Note 23 Provisions for pensions and similar commitments
Pension liabilities
The Group sponsors pension plans in many of the countries in which it
has significant activities. Pension plans can be defined contribution or
defined benefit plans or a combination of both, and follow, in general,
the local practices.
The Group’s major defined benefit plans cover employees in the US,
UK, Switzerland, Germany and Sweden. The German plan is unfunded
and the plans in the US, UK, Switzerland and Sweden are funded.
The methods for calculating and accounting for pension costs and
pension liabilities differ from country to country. The companies report
according to local rules, and the reported figures are included in the
consolidated accounts of the Group.
In case of underfunding, US rules require the companies to record an
additional minimum liability. Following these rules, the Group recorded in
2002 an additional pre-tax pension liability of USD 245m, equivalent to
SEK 2,154m, at year-end exchange rate and which, after deduction of
deferred taxes, resulted in a charge to equity of SEK 1,335m. In 2003,
the additional minimum liability has increased to a pre-tax pension liability
of USD 272m, equivalent to SEK 1,976m at year-end exchange rate. After
deduction of deferred taxes and adjustment for changes in exchange
rates, the increase has resulted in a charge to equity of SEK 123m.
The adjustment will be reversed when the underfunding situation ends.
All pension assets are managed by external investment companies and
the portfolios comprise both shares and interest-bearing securities.
Other commitments
In addition to providing pension benefits, the Group provides other post
retirement benefits, primarily health care benefits, for some of its employ-
ees in certain countries (US).
In some countries and following local regulations, the companies make
provisions for obligatory severance payments. These provisions cover the
Group’s commitment to pay employees a lump sum upon reaching retire-
ment age, or upon the employees’ dismissal or resignation.
Swedish pension foundations
The pension liabilities of the Group’s Swedish defined benefit pension
plans were funded through two pension foundations established in 1998.
The two foundations were merged on October 1, 2003. The market value
of the assets of the foundation amounted to SEK 1,253m, while the
pension commitments amounted to SEK 1,271m as per December 31,
2003. In the Swedish companies a total of SEK 105m is recorded as
liabilities to the pension foundation.
Group Parent Company
2003 2002 2001 2003 2002 2001
Interest-bearing pensions 319 321 269 251 245 230
Other pensions 2,757 2,801 744 — — —
Other commitments 2,602 2,896 3,082 — — —
Total 5,678 6,018 4,095 251 245 230
Dec. 31, 2003 Appropriations Dec. 31, 2002 Appropriations Dec. 31, 2001
Accumulated depreciation in excess of plan on
Brands 405 99 306 108 198
Machinery and equipment 265 –11 276 32 244
Buildings 12 –1 13 –1 14
Exchange-rate reserve — –11 11 –10 21
Other financial reserves 4 –3 7 1 6
Tax-allocation reserve 70 70———
Total 756 143 613 130 483
Note 22 Untaxed reserves, Parent Company