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➔ Note 31 - Reserves for contingencies
and liabilities
a) Manufacturing and sales companies
1. Details of reserves for contingencies and liabilities
(in millions of euros) 2002 2001 2000
Long-term reserves for
operating liabilities
Retirement benefits (note 46) 240 238 228
Employee benefits 90 91 93
Claims and litigation 71 77 53
Warranty costs 279 120 123
Vehicles sold under
buyback contracts (*) 60 39 17
End-of-life vehicles 43 - -
Operations in Argentina 47 50 -
Losses on long-term contracts 63 93 26
Other 232 216 338
1,125 924 878
Other reserves for
contingencies and liabilities
Early-termination plan (note 45) 400 323 349
Reserve for debenture
redemption premiums - - 27
Restructuring reserves 127 63 13
Other 75 84 55
602 470 444
Total 1,727 1,394 1,322
* A reserve is recorded for vehicles sold under buyback contracts with a term in excess
of three years, where the Group expects to make a loss on resale. The Group does not
expect to incur any additional losses on these contracts.
2. Movements in reserves for contingencies and liabilities
(in millions of euros) 2002 2001 2000 (1)
As of January 1 1,394 1,322 1,459
Movements charged to income
- Additions 861 522
- Reserves utilized (412) (373)
- Reversals (89) (163)
360 (14) (190)
Other movements
- Translation adjustment (69) (22) 23
- Effect of changes in scope of
consolidation and other 42 108 30
As of December 31 1,727 1,394 1,322
(1) The breakdown of movements charged to the income statement in 2000 is not
available in the same form as for 2002 and 2001.
Reversals of reserves primarily include the following:
In 2002, €34 million released from the reserve for tax under the Flex
regime (trade balance) concerning Peugeot Citroën do Brasil.
In 2001, €84 million released from the reserve for risks relating to the
Group's operations in Argentina that was originally charged against
goodwill (note 14-a) 2), and €26 million released from the reserve for
redemption premiums on Peugeot S.A. convertible debentures which
matured during the year.
b) Finance companies
Reserves for contingencies and liabilities carried in the balance sheets
of the finance companies can be analyzed as follows:
(in millions of euros) 2002 2001 2000
Long-term reserves for
operating liabilities
Retirement benefits (note 46) 7 6 6
Other 38 28 25
45 34 31
Other reserves for
contingencies and liabilities
Other 8 11 0
Total 53 45 31
➔ Note 32 - Other long-term liabilities -
manufacturing and sales companies
Other long-term liabilities of manufacturing and sales companies
comprise:
(in millions of euros) 2002 2001 2000
Investment grants, net 51 45 47
Other 44 24 23
Total 95 69 70
➔ Note 33 - Convertible debentures
In March 1994, Peugeot S.A. issued convertible debentures for a total of
€604 million. The four million debentures were issued at a price of €150.92
and were convertible at any time on the basis of one share per debenture.
2002
The debentures no longer have any impact on the consolidated
financial statements.
2001
The debentures matured on January 1, 2001. Of the 747,329 debentures
outstanding as of December 31, 2000, 722,586 were converted into
shares and 24,743 were redeemed for cash.
The reserve set up to cover the premium of €35.7 per debenture due on
any unconverted debentures redeemed at maturity was released. Of the
total amount released, €26 million concerned converted debentures
and €1 million concerned debentures redeemed for cash.
2000
During 2000, 865,547 debentures were converted.
In accordance with the applicable early redemption clause, during 2000
the Group bought back and canceled 2,380,632 debentures.
The transaction gave rise to a non-recurring loss of €196 million.
An amount of €71 million was released from the reserve for redemption
premiums in connection with the cancellation of debentures referred to
above. In addition, an amount of €26 million was released from the
reserve in respect of debentures converted during the year.
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PSA PEUGEOT CITROËN - APPENDICES TO THE MANAGING BOARD REPORT