APC 2011 Annual Report Download - page 193

1912011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
CONSOLIDATED FINANCIAL STATEMENTS
5
NOTES TO THE CONSOLIDATED FINANCIAL
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
76% of the Group’s total commitment or EUR2,027 million at
December31, 2011, 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 36%), bonds
(around54%) and real estate or cash (around 9%).
Contributions amounted to EUR83million in 2011 and are estimated
at EUR56million for 2012.
At December 31, 2011, provisions for pensions and termination
benefi ts totaled EUR1,263million, compared with EUR1,032million
in 2010. 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
EUR61million in 2011 and EUR59million in 2010.
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
84% of this obligation.
The assumptions used to determine post-employment benefi t
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 EUR62million, and long-service awards due by
subsidiaries in France, for EUR13million.
At December 31, 2011, provisions for these benefi t obligations
totaled EUR460 million, compared with EUR472 million at
December31, 2010. 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, 2009 944 293 435 358 1,379
Net cost recognized in the statement of income 63 2 25 18 88
Benefi ts paid (58) (1) (26) (21) (84)
Plan participants’ contributions (21) (1) 2 2 (19)
Actuarial items recognized in equity 4 (18) - 4 4
Translation adjustment 40 23 29 26 69
Changes in the scope of consolidation 58 - 5 - 63
Other changes 2 1 2 - 4
Dec.31, 2010 1,032 299 472 387 1,504
Net cost recognized in the statement of income 70 3 (22) (29) 48
Benefi ts paid (28) - (21) (20) (49)
Plan participants’ contributions (83) (66) 2 2 (81)
Actuarial items recognized in equity 247 143 20 - 267
Translation adjustment 20 17 9 9 29
Changes in the scope of consolidation (10) - (1) - (11)
Other changes 15 (1) 1 - 16
Dec.31, 2011 1,263 395 460 349 1,723