Annual Report 2005/06 - voestalpine

Consolidated Financial Statements
Employees of Austrian group companies, who
began their employment before January 1, 2003,
receive a one-off severance payment, if their
employment is terminated by the employer
or if they retire. The payment is dependent
on the number of years of service and the
relevant salary or wages at the time the employment
ceases. For employments beginning
after December 31, 2002, this obligation has
been converted into a contribution-oriented
system. These payments to external pension
funds are recognized as expenses.
Within the Group (especially in Austria and
the Netherlands) there are defined contribution
and defined benefit pension plans.
Defined contribution plans carry no future
obligation after the payment of premiums.
Defined benefit plans guarantee the employee
a specific retirement benefit, which is
based on a certain percentage of salaries or
wages depending on years of service or on a
valorized fixed amount per year of service.
Defined benefit plans are stated in the
financial statement of the respective entities
until the contractual date when the pensions
become irrevocable. After that date the
pensions are covered by the pension fund.
The Group applies IAS 19.93A retrospectively.
Actuarial gains and losses affecting
provisions for severance payments and pensions
are recognized in the year in which
they occur outside profit or loss. The previous
year has been adjusted accordingly. Actuarial
gains and losses affecting long-service
bonuses are recognized in the consolidated
income statement as incurred.
Annual Report 2005/06
The valuation of employee benefits is based
on the following parameters:
2005/06 2004/05
Interest rate % 4.5 5.5
Salary/wage increases % 3.0 3.0
Pension increases % 2.5 2.5
Retirement age
women/men years max. 60/65 60/65
Life expectancy tables Heubeck 1998 Heubeck 1998
Interest expenses related to employee benefits
are included in the “finance costs” in the
consolidated income statement.
oTher provisions
Other provisions are stated at the amount
which reflects the most probable value based
on a reliable estimate, when the Group has a
present obligation as a result of a past event,
where it is probable that an outflow of resources
embodying economic benefits will be
required to settle the obligation. If the effect
is material, provisions are determined by
discounting.
liaBiliTies
Liabilities are stated at their nominal value or
their redemption value.