This chapter is covered by the Auditors' Report.
|
Warranty commitments |
Restructuring |
Project related |
Other |
Total |
|
2008 |
|
|
|
|
|
|
Opening balance |
1,814 |
1,051 |
2,619 |
4,242 |
9,726 |
|
Additions |
1,568 |
4,328 |
3,960 |
2,105 |
11,961 |
|
Reversal of excess amounts |
–392 |
–131 |
–799 |
–493 |
–1,815 |
|
Negative effect on Income Statement |
|
|
|
|
10,146 |
|
Utilization/Cash out |
–1,150 |
–1,756 |
–2,164 |
–970 |
–6,040 |
|
Balances regarding divested/acquired businesses |
–30 |
–2 |
–51 |
–15 |
–98 |
|
Reclassification |
1 |
71 |
45 |
–173 |
–56 |
|
Translation differences |
120 |
269 |
184 |
99 |
672 |
|
Closing balance |
1,931 |
3,830 |
3,794 |
4,795 |
14,350 |
|
2007 |
|
|
|
|
|
|
Opening balance |
2,961 |
2,277 |
3,272 |
5,372 |
13,882 |
|
Additions |
1,472 |
676 |
1,795 |
1,216 |
5,159 |
|
Reversal of excess amounts |
–861 |
–400 |
–1,080 |
–1,409 |
–3,750 |
|
Negative effect on Income Statement |
|
|
|
|
1,409 |
|
Utilization/Cash out |
–1,755 |
–1,680 |
–1,383 |
–1,490 |
–6,308 |
|
Balances regarding divested/acquired businesses |
22 |
– |
– |
–11 |
11 |
|
Reclassification |
–24 |
123 |
–5 |
510 |
604 |
|
Translation differences |
–1 |
55 |
20 |
54 |
128 |
|
Closing balance |
1,814 |
1,051 |
2,619 |
4,242 |
9,726 |
Provisions
Risk assessment in the ongoing business is performed monthly to identify the need for new additions and reversals. Management uses its best judgment to estimate provisions based on this assessment. The actual utilization for 2008 was SEK 6.0 billion compared with the estimated SEK 6 billion.
For 2008, new or additional provisions amounting to SEK 12.0 billion were made, and SEK 1.8 billion were reversed. Of the total provisions, SEK 311 (368) million are classified as non-current. In certain circumstances, provisions are no longer required due to more favorable outcomes than anticipated, which affect the provisions balance as a reversal. In other cases the outcome can be negative, and if so, a charge is recorded in the income statement. The expected utilization in 2009 is approximately SEK 9 billion.
For more information, see Note C1, “Significant Accounting Policies” and Note C2, “Critical Accounting Estimates and Judgments”.
Warranty commitments
Warranty provisions are based on historic quality rates for established products as well as estimates regarding quality rates for new products and costs to remedy the various types of faults predicted. The actual utilization for 2008 was SEK 1.2 billion and in line with the expected SEK 1 billion. Provisions amounting to SEK 1.6 billion were made and due to more favorable outcomes in certain cases reversals of SEK 0.4 billion were made. The expected utilization of warranty provisions during year 2009 is approximately SEK 1 billion.
Restructuring
In the first quarter 2008, a cost reduction plan of SEK 4 billion in annual savings was announced, including estimated charges of the same size. In the third quarter it was announced that further charges would be taken in the fourth quarter. As part of this cost reduction plan SEK 4.3 billion in provisions were made. The actual utilization was SEK 1.8 billion, where SEK 0.6 billion was related to restructuring programs before 2008. The expected utilization for 2009 is estimated to approximately SEK 3 billion.
Project related
Project related provisions include estimated losses on onerous contracts, contractual penalties and undertakings. The utilization of project related provisions were SEK 2.2 billion and in line with the estimated SEK 2 billion. Provisions amounting to SEK 4.0 billion were made and SEK 0.8 billion were reversed due to a more favorable outcome than expected. The expected utilization for 2009 is estimated to be approximately SEK 3 billion.
Other
Other provisions include provisions for income taxes, value added tax issues, litigations, supplier claims, off balance-customer finance and other provisions. The utilization was SEK 1.0 billion in 2008 compared to the estimate of SEK 2 billion. During 2008 new provisions amounting to SEK 2.1 billion were made and SEK 0.5 billion were reversed during the year due to a more favorable outcome. For 2009, the expected utilization is approximately SEK 2 billion.
