APC 2010 Annual Report Download - page 194

CONSOLIDATED FINANCIAL STATEMENTS
5NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pensions and termination benefits
Pension obligations primarily concern the Group’s North American
and European subsidiaries. These plans feature either a lump-sum
payment on the employee’s retirement or regular pension payments
after retirement. The amount is based on years of service, grade and
end-of-career salary. They also include top-hat payments granted
to certain senior executives guaranteeing supplementary retirement
income beyond that provided by general, mandatory pension
schemes.
The majority of benefi t obligations under these plans, which represent
78% of the Group’s total commitment or EUR1,828million at
December31, 2010, are partially or fully funded through payments
to external funds. These funds are not invested in Group assets.
External funds are invested in equities (around 51%), bonds (around
35%) and real estate or cash (around 14%).
Contributions amounted to EUR21million in 2010 and are estimated
at EUR12million for 2011.
At December31, 2010, provisions for pensions and termination
benefi ts totaled EUR1,032million, compared with EUR944million in
2009. These provisions have been included in non-current liabilities,
as the current portion was not considered material in relation to the
total liability.
Payments made under defi ned contribution plans are recorded in the
income statement in the year of payment and are in full settlement
of the Group’s liability. Defi ned contribution plan payments totalled
EUR59million in 2010 and EUR39million in 2009. The increase is
primarily attributable to the transformation of plans in the United
States in 2009 from a defi ned benefi t to a defi ned contribution basis.
Other post-employment and long-term benefits:
including healthcare, life insurance and long service
awards
The North American subsidiaries pay certain healthcare costs and
provide life insurance benefi ts to retired employees who fulfi ll certain
criteria in terms of age and years of service. These post-employment
benefi t obligations are unfunded.
Healthcare coverage for North American employees represents 90%
of this obligation.
The assumptions used to determine post-employment benefit
obligations related to healthcare and life insurance are the same as
those used to estimate pension benefi t obligations in the country
concerned.
Other long-term benefi t obligations include healthcare coverage
plans in Europe, for EUR44million, and long-service awards due by
subsidiaries in France, for EUR9million.
At December31, 2010 provisions for these benefi t obligations totaled
EUR472million, compared with EUR435million at December31,
2009. These provisions have been included in non-current liabilities,
as the current portion was not considered material in relation to the
total liability.
22.1 - Changes in provisions for pensions and other post-employment benefit obligations
Changes in provisions for pensions and other post-employment benefi t obligations (net of plan assets) were as follows:
Pensions
and termination
benefi ts Of which SE USA
Other post-
employment
and long-term
benefi ts Of which SE USA
Provisions for
pensions & other
post-employment
benefi ts
Dec.31, 2008 1,027
401 436 370 1,463
Net cost recognised in the statement of income (2) (66) 22 18 20
Benefi ts paid (64) -(25) (21) (89)
Plan participants’ contributions (18) (1) --(18)
Actuarial items recognised in equity* 5 (31) 11 216
Translation adjustment (2) (11) (9) (12) (11)
Changes in the scope of consolidation - ----
Other changes (2) 1-1(2)
Dec.31, 2009 944 293 435 358 1,379
Net cost recognised in the statement of income 63 225 18 88
Benefi ts paid (58) (1) (26) (21) (84)
Plan participants’ contributions (21) (1) 22(19)
Actuarial items recognised in equity 4 (18) -44
Translation adjustment 40 23 29 26 69
Changes in the scope of consolidation 58 -5-63
Other changes 2 12-4
Dec.31, 2010 1,032
299 472 387 1,504
* Of which in 2009, a EUR2million asset ceiling effect.
2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC192