Notes to the consolidated financial statements - Swisscom

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Notes to the consolidated financial statements 9 Retirement benefits Movements in the number of share appreciation rights outstanding were as follows: At beginning of year Granted Lapsed At end of year Vested appreciation rights totaled 169,956 rights at December 31, 2000 and 302,621 rights at December 31, 2001. All rights issued in conjunction with Swisscom’s public offering in October 1998 are automatically exercised in 2003. Swisscom made several amendments to comPlan in 2001. The most significant related to how the benefits will be determined for employees born in 1957 or later. The determination of their benefits changed from a final salary basis to a cash balance plan that is dependent on employee contributions. At December 31, 2001, all eligible employees are entitled to the same benefits under the new plan as the old plan. As this benefit is not effected by anticipated employee turnover, the present value of the obligation increased by CHF 55 million of which CHF 45 million was immediately vested and therefore recognized as an expense. In addition, the present value of obligations increased by CHF 26 million for other changes to the plan. In connection with the settlement of its obligation to retired employees in 1998, Swisscom retained a liability for pension indexation. Swisscom must pay the Pensionskasse des Bundes (PKB) the difference between the return on plan assets and the Government prescribed discount rate that is increased by an account maintenance fee. At December 31, 2001, included in the present value of obligations is CHF 357 million for these retired employees. The liability was determined based on an assumed payment of 1% per year over the life of the retired employees. The present value obligation that will be paid by PKB is CHF 3,950 million. Differences between the actual and estimated payments are deferred as part of the actuarial gain or loss. Net periodic pension cost of the plan in Switzerland includes the following components: CHF in millions Current service cost Interest cost Expected return on plan assets Past service cost Net periodic pension cost before curtailment and special termination benefits. See Note 7. Curtailment and special termination benefits Net periodic pension cost The curtailment and special termination benefits have been recorded under personnel expenses as termination benefits and represent increased pension benefits to employees who accepted voluntary early retirement offers. See Note 7. 30 Swisscom Consolidated financial statements 2000 256 236 3 210 (5 782) 253 664 2000 147 254 (202) 8 207 83 290 2001 253 664 61 140 (2 631) 312 173 2001 154 258 (213) 53 252 – 252
10 Other operating expenses The status of the pension plan in Switzerland is as follows: CHF in millions Amounts recognized in the balance sheet Present value of funded obligations Fair value of plan assets 1) Benefit obligation in excess of plan assets Unrecognized actuarial losses Unrecognized prior service cost Liability in the balance sheet CHF in millions Movement in the liability recognized in the balance sheet At beginning of year Net periodic pension cost Contributions paid Acquisition of subsidiaries. See Note 24. At end of year Less current portion 2) Long-term accrued pension cost The following weighted average assumptions were used in accounting for the defined benefit plan: The actual return on plan assets was CHF 50 million in 2000 and a loss of CHF 158 million in 2001, respectively. The pension plans outside of Switzerland are insignificant. Total operating lease payments in 2000 and 2001 were CHF 20 million and CHF 85 million respectively. 31 Swisscom Consolidated financial statements 2000 6 259 (3 941) 2 318 (289) (104) 1 925 2000 2 248 290 (624) 11 1 925 (238) 1 687 2001 6 316 (4 562) 1 754 (404) (132) 1 218 2001 1 925 252 (962) 3 1 218 (28) 1 190 The pension plan assets include Swisscom’s shares with a fair value of CHF 3.1 million and CHF 9.5 million at December 31, 2000 and 2001, respectively. The current portion represents the payments that Swisscom will make to the pension plan within 12 months of the balance sheet date relating to early retirement benefits. 1) 2) Discount rate Rate of increase in future compensation levels Expected long-term rate of return on plan assets CHF in millions Rent Repairs and maintenance Loss on disposal of fixed assets Energy Information technology costs Advertising and promotion Commissions and handset subsidies Contractors and consultancy expenses General and administration Miscellaneous operating expenses Total other operating expenses 2000 4.25% 3.0% 5.5% 2000 171 286 128 77 334 612 1 017 345 125 158 3 253 2001 4.25% 3.1% 5.5% 2001 239 312 119 52 316 465 802 336 140 310 3 091
Page 1 and 2: Financial Review 2001
Page 3 and 4: Review of the Group’s results
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Notes to the consolidated financial statements - Swisscom

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