Hydro Annual Report 2011b

Note 31 - Provisions
2011 2010
Amounts in NOK million Short­term Long­term Total Short­term Long­term Total
Warranties 53 1 54 80 5 84
Exit and disposal activities 153 1 154 123 34 157
Environmental clean­up and asset retirement obligations (ARO) 134 1 699 1 833 162 927 1 090
Medical and other employee benefits 337 452 790 376 468 845
Social security costs on pension ­ 644 644 ­ 644 644
Insurance 575 ­ 575 902 ­ 902
Other 117 532 650 115 26 141
Total provisions 1 369 3 331 4 700 1 758 2 104 3 862
The following table includes a specification of changes to provisions for the year ending December 31, 2011 and the expected
timing of cash outflows relating to the provisions:
Amounts in NOK million
Warranties
Exit and
disposal
Environmental
clean­up
and ARO
Medical
and other
employee
benefits
FINANCIAL STATEMENTS
Note 31 - Provisions F45
Social
security
costs
pension
Insurance
Other Total
Specification of change in provisions
December 31, 2010 84 157 1 090 845 644 902 141 3 862
Additions through business combinations ­ ­ 675 ­ ­ ­ 543 1 218
Other additions 77 127 44 473 49 ­ 108 877
Used during the year (62) (121) (74) (409) (48) (319) (66) (1 098)
Reversal of unused provisions (45) (9) (12) (117) (1) (9) (53) (245)
Accretion expense and effect of change in
discount rate ­ ­ 119 ­ ­ ­ ­ 119
Foreign currency translation ­ ­ (8) (2) ­ ­ (24) (34)
December 31, 2011 54 154 1 833 790 644 575 650 4 700
Timing of cash outflows
2012 53 153 134 340 49 575 117 1 421
2013­2016 1 1 963 165 190 ­ 13 1 333
Thereafter ­ ­ 737 285 405 ­ 519 1 946
December 31, 2011 54 154 1 833 790 644 575 650 4 700
Provisions for exit and disposal activities relate to labor force reductions, demolition costs and certain other costs.
Provisions for environmental clean-up relate to production facilities currently in operation and facilities that are closed. Asset
retirement obligations relate to restoration or rehabilitation of industrial or mining sites, disposal of contaminated material and
certain liabilities related to Norwegian power plant concessions to be reverted to the Norwegian government. See note 4
Critical accounting judgment and key sources of estimation uncertainty for additional information about environmental
liabilities.
Provisions for medical benefits primarily relate to post-retirement medical benefits for employees in North America. Provisions
for other employee benefits relate to expected short-term performance bonus payments and short and long-term provisions for
expected bonus payments that are based on the number of years of service, primarily for our European operations. Such
bonuses are expected to be paid in periods between 10 to 50 years of service, or upon termination of employment.
Provisions for social security costs on pension relate primarily to operations in Europe having defined benefit pension plans.
See note 32 Employee retirement plans for additional information.
Insurance provisions relate to insurance contracts issued by Hydro's captive insurance company, Industriforsikring AS, to
external parties including associates and jointly controlled entities. Related reinsurance receivables included in Accounts
receivables amounted to NOK 328 million and NOK 633 million as of December 31, 2011 and 2010, respectively.