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noteS TO THE CONSolidated FINANCIAL StatementS
conSolidated FINANCIAL StatementS FOR THE Year ENDED 31 DECEMBER 2011
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(18) PENSionS, Severance PAYmentS AND ANNIVERSarY BONUSES
The expenses for defined benefit plans and statutory obligations upon termination of employment and periods of
employment entitling employees to anniversary bonuses are determined on the basis of actuarial calculations. The
actuarial assessment is based on assumptions on discount rates, future increases in wages and salaries, mortality
and future increases in pension payments. Each reporting date, these assumptions are reviewed. For the purpose
of determining the adequate discount rate, the management uses long-term market interest rates. The mortality
rate is based on publicly available mortality tables for the respective countries.
The future increases in wages and salaries as well as pension payments are based on the anticipated future
inflation rates for the respective countries.
Further details on the assumptions used are presented in Note (43) Non-current provisions.
(19) DEVELOPMENT EXpenditure
Development expenditure is capitalized in accordance with the accounting and valuation method presented. The
initial capitalization of these costs is based on the management’s assessment that the development’s feasibility
from a technical and economic point of view is proven. This is usually the case when a product development project
has reached a specific milestone of an existing project management model. For the purpose of determining the
amount to be capitalized, the management makes assumptions on the amount of the expected future cash flows
from the project, the discount rates to be applied and the time period in which the expected future benefits are to
be received. On 31 December 2011, the carrying amount of the capitalized development expenditure was
EUR 12,882 thousand (previous year: EUR 9,458 thousand) and included primarily development services in cranes,
access platforms, services and railway systems. The impairment test is geared to the benefit of the individual assets,
irrespective of the profit expectations of the entire area.
(20) PROVISionS FOR GUARANTEE AND WARRANTY EXpenSES
When forming provisions for guarantee and warranty expenses, guarantee and warranty obligations are taken
into consideration using a standardized method. This method is influenced considerably by the time of occurrence
of the warranty claim, specific product replacement campaigns, refund quotas of suppliers, developments of the
revenue subject to warranty and assumptions of gross profit margins on the basis of the implemented warranty
process.
In the 2011 financial year, the provisions for guarantee and warranty expenses amounted to EUR 11,296 thousand
(previous year: EUR 10,614 thousand).
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palfinger Annual Report 2011