Saab 2010 Annual Report Download - page 82

employees covered by the plan. Actuarial gains and losses otherwise are not
taken into account.
If pension obligations are lower than assets under management and actu-
arial losses, this amount is recognised as an asset.
When there is a dierence in how the pension cost is determined for a
legal entity and the Group, a liability or receivable for the special employer’s
contribution arises based on this dierence.
Severance
A provision is recognised in connection with termination of personnel only if
the company is obligated to terminate an employment before the customary
time, e.g., when compensation is paid in connection with a voluntary termi-
nation oer. In cases where the company terminates personnel, a detailed
plan is draed containing at the minimum the workplaces, positions and
approximate number of individuals aected as well as compensation for each
personnel category or position and a schedule for the plan’s implementation.
Share-based payment
Share-based payment refers solely to remuneration to employees, including
senior executives. Share-based payment settled with the company’s shares or
other equity instruments is comprised of the dierence between the fair value
at the time these plans were issued and the consideration received. is
remuneration is recognised as sta costs during the vesting period. To the
extent the vesting conditions in the plan are tied to market factors (such as
the price of the company’s shares), they are taken into consideration in deter-
mining the fair value of the plan. Other conditions (such as earnings per
share) aect sta costs during the vesting period by changing the number of
shares or share-related instruments that are expected to be paid.
Share matching plan for employees
Saab has a Global Share Matching Plan where all employees are entitled to
participate. e payroll expenses for matching shares in the plan are recog-
nised during the vesting period based on the fair value of the shares. e
employees pay a price for the share that corresponds to the share price on the
investment date. ree years aer the investment date, employees are allotted
as many shares as they purchased three years earlier provided that they are
still employees of the Saab Group and that the shares have not been sold. In
certain countries, social security expenses are paid on the value of the
employee’s benet when matching takes place. During the vesting period,
provisions are allocated for these estimated social security expenses. Share
repurchases to full the commitments of Saab’s share matching plans are rec-
ognised in equity.
In addition, a plan was introduced for senior executives entitling them to
– matching shares depending on the category the employee belongs to. In
addition to the requirement that the employee remain employed by Saab aer
three years, there is also a requirement that earnings per share grow in the
range of  to  per cent. See also, Note .
Provisions
A provision is recognised in the statement of nancial position when the
Group has a legal or informal obligation owing to an event that has occurred
and it is likely that an outow of economic resources will be required to settle
the obligation and a reliable estimate of the amount can be made. Where it is
important when in time payment will be made, provisions are estimated by
discounting projected cash ow at a pre-tax interest rate that reects current
market estimates of the time value of money and, where appropriate, the risks
associated with the liability.
Regional aircra
A provision for an aircra lease is recognised when future lease receipts are
less than unavoidable lease disbursements.
Restructuring
A provision for restructuring is recognised when a detailed, formal restruc-
turing plan has been established and the restructuring has either begun or
been publicly announced. No provision is made for future operating losses.
Loss contracts
A provision for a loss contract is recognised when anticipated benets are
lessthan the unavoidable costs to full the obligations as set out in the con-
tract.
Guarantees
A provision for guarantees is normally recognised when the underlying
products or services are sold if a reliable calculation of the provision can be
made. e provision is based on historical data on guarantees for the prod-
ucts or similar products and an overall appraisal of possible outcomes in rela-
tion to the likelihood associated with these outcomes.
Soil remediation
In accordance with the Group’s publicly announced environmental policy
and applicable legal requirements, periodic estimates are made of Saab’s obli-
gations to restore contaminated soil. Anticipated future payments are dis-
counted to present value and recognised as a provision.
Contingent liabilities
A contingent liability exists if there is a possible commitment stemming from
events whose occurrence is dependent on one or more uncertain future
events and there is a commitment that is not recognised as a liability or provi-
sion because it is unlikely that an outow of resources will be required or the
size of the obligation cannot be estimated with sucient reliability. Informa-
tion is provided as long as the likelihood of an outow of resources is not
extremely small.
Taxes
Income taxes consist of current tax and deferred tax. Income taxes are recog-
nised in prot or loss unless the underlying transaction is recognised in net
comprehensive income or loss, in which case the related tax eect is also rec-
ognised in net comprehensive income or loss.
Current tax is the tax paid or received for the current year, applying the
tax rates that have been set or essentially set as of the closing day to taxable
income and adjusting for current tax attributable to previous periods.
Deferred tax is calculated according to the balance sheet method based on
temporary dierences that constitute the dierence between the carrying
amount of assets and liabilities and their value for tax purposes. Deductible
temporary dierences are not taken into account in the initial reporting of
assets and liabilities in a transaction other than a business combination and
which, at the time of the transaction, do not aect either the recognised or tax-
able result. Moreover, temporary dierences are not taken into account if they
are attributable to shares in subsidiaries and associated companies that are not
expected to be reversed within the foreseeable future. e valuation of
deferred tax is based on how the carrying amounts of assets or liabilities are
expected to be realised or settled. Deferred tax is calculated by applying the tax
rates and tax rules that have been set or essentially are set as of the closing day.
Deferred tax assets from deductible temporary dierences and tax loss
carry forwards are only recognised to the extent it is likely that they will be
utilised. e value of deferred tax assets is reduced when it is no longer con-
sidered likely that they can be utilised.
Significant differences between the Group’s and the Parent Company’s
accounting principles
e Parent Company follows the same accounting principles as the Group
with the following exceptions.
Business combinations
Transaction costs are included in the cost of business combinations.
Associated companies and joint ventures
Shares in associated companies and joint ventures are recognised by the Par-
ent Company according to the acquisition value method. Revenue includes
dividends received.
Intangible xed assets
All development costs are recognised in prot or loss.
FINANCIAL INFORMATION > NOTES
SAAB ANNUAL REPORT 2010 79