Electrolux 2013 Annual Report Download - page 104

Other facts
Pension agreement in the US
In the fourth quarter of 2013, Electrolux made an agreement
with pension plan participants in the US to accept a lump-sum
payment of SEK880m in total in lieu of accrued pension rights
and thereby leave the plan. This has reduced Electrolux defined
benefit obligation by SEK1,020m. The difference between the
agreed payment and the obligation led to an accounting gain of
approximately SEK140m, which has been reported within
operating income. This had no impact on the cash flow.
Changes in Group Management
Chief Design Officer Stefano Marzano, member of Group Man-
agement, left his position at year-end 2013. The new head of
design will report to Chief Technology Officer Jan Brockmann in
Group Management.
Asbestos litigation in the US
Litigation and claims related to asbestos are pending against
the Group in the US. Almost all of the cases refer to externally
supplied components used in industrial products manufactured
by discontinued operations prior to the early 1970s. The cases
involve plaintiffs who have made substantially identical allega-
tions against other defendants who are not part of the Electrolux
Group.
As of December 31, 2013, the Group had a total of 2,980
(2,864) cases pending, representing approximately 3,040
(approximately 2,936) plaintiffs. During 2013, 1,057 new cases
with 1,048 plaintiffs were filed and 941 pending cases with
approximately 944 plaintiffs were resolved.
The Group continues to operate under a 2007 agreement
with certain insurance carriers who have agreed to reimburse
the Group for a portion of its costs relating to certain asbestos
lawsuits. The agreement is subject to termination upon 60 days
notice and if terminated, the parties would be restored to their
rights and obligations under the affected insurance policies.
It is expected that additional lawsuits will be filed against
Electrolux. It is not possible to predict the number of future law-
suits. In addition, the outcome of asbestos lawsuits is difficult to
predict and Electrolux cannot provide any assurances that the
resolution of these types of lawsuits will not have a material
adverse effect on its business or on results of operations in the
future.
For information on certain additional legal proceedings, see Note 25 Contingent
liabilities.
Environmental activities
At the end of 2013, Electrolux operated 57 manufacturing facili-
ties in 19 countries. Manufacturing comprises mainly assembly
of components made by suppliers. Other processes include
metalworking, molding of plastics, painting and enameling.
Chemicals such as lubricants and cleaning fluids are used as
process aids. Chemicals used in Group products include insu-
lation materials, paint and enamel. Production processes gen-
erate an environmental impact through the use of energy and
water, as well as water- and air-borne emissions, waste and
noise.
Studies of the total environmental impact of the Group’s
products during their entire lifetime, i.e., from production and
use to recycling, indicate that the greatest environmental impact
is generated when the products are used. Electrolux aims to
develop and actively promote increased sales of products with
lower environmental impact.
Mandatory permits and notification in Sweden
and elsewhere
Electrolux operates three plants in Sweden, which account for
approximately 2% of the total value of the Group’s production.
Permits are required by authorities for two of these plants and
are also required to submit notification. The permits cover such
areas as thresholds or maximum permissible values for air- and-
water-borne emissions and noise. No significant non-compli-
ance with Swedish environmental legislation was reported in
2013.
Manufacturing units in other countries adjust their opera-
tions, apply for necessary permits and report to the authorities
in accordance with local legislation. The Group follows a pre-
cautionary principle with reference to both acquisitions of new
plants and continuous operations. Potential non-compliance,
disputes or items that pose a material financial risk are reported
to Group level in accordance with Group policy. No such signifi-
cant item was reported in 2013.
Electrolux products are affected by legislation in various mar-
kets, principally involving energy consumption, producer
responsibility for recycling, and restriction and management of
hazardous substances. Electrolux continuously monitors
changes in legislation, and both product development and
manufacturing are adjusted to reflect these changes.
board of directors’ report
102 ANNUAL REPORT 2013