APC 2004 Annual Report Download - page 89
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87
Note 15 - Provisions
for pensions and other post-
retirement benefit obligations
The Group has set up pension, life insurance, length-
of-service award and other post-retirement benefit
plans for its employees. These range from plans pro-
viding for the payment of a lump sum based on years
of service to supplementary pension plans and other
multi-employer plans.
Payments made under defined contribution plans are
recorded in the income statement, under operating
expense, in the year of payment and are in full settle-
ment of the Group's liability.
The Group's obligation for the payment of length-of-
service awards mainly concerns French companies in
the Group and is generally calculated based on the
seniority, grade and end-of-career salary of the
employees concerned.
For defined benefit plans, the accrued or prepaid
periodic pension cost is determined using the pro-
jected unit credit method and is recognized in accor-
dance with local accounting standards and tax rules
in the countries concerned. Where necessary, these
amounts are adjusted to comply with Group account-
ing policies.
Actuarial valuations are performed each year for the
main plans and at regular intervals for the other plans.
The assumptions used vary according to the eco-
nomic conditions prevailing in the country concerned.
Benefit obligations under defined benefit plans main-
ly concern the Group's North American subsidiaries
and are funded through payments to external funds.
The majority of plan assets are invested in equities
and bonds not issued by the Group and, occasional-
ly, in real estate.
15.1 - Provisions for
pensions and length-of-service awards
Annual changes in obligations, the market value of
investments and related assets and liabilities are
reflected in the consolidated balance sheet as follows:
(in millions of euros)
Dec. 31, 2004 Dec. 31, 2003
o/w US plans o / w US plans
1. Amounts recognized in the accounts
Other non-current assets 262.1
253.7
315.6
295.2
Deferred taxes - - 6.6 -
Provisions for pensions and
other postretirement benefit obligations (393.5)
(11.4)
(407.5)
(13.3)
Amounts recognized in the balance sheet (131.4)
242.3
(85.3)
281.9
(in millions of euros)
Dec. 31, 2004 Dec. 31, 2003
o/w US plans o/w US plans
2. Components of periodic pension cost
Service cost 48.5
14.8
46.9
16.3
Interest cost (impact of discounting) 87.9
48.7
89.1
52.7
Expected return on plan assets (87.4)
(64.6)
(87.6)
(70.2)
Amortization of other deferred items 4.1
3.1
4.5
3.4
Recognized net actuarial loss (gain) 25.4
20.4
24.9
16.7
Curtailments and settlements (0.8) - - -
Periodic pension cost (benefit) 77.7
22.4
77.8
18.9
Consolidated financial statements