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Restructuring
As a result of the global economic downturn, AMG and
its subsidiaries recorded restructuring costs of $423 and
$7,782 in the years ended December 31, 2010 and 2009,
respectively. Amounts paid related to current and previous
years’ restructurings were $3,857. During 2009, $6,634 of
the costs related to severance due to the reduction of
155 people within the group. Additional amounts related to
the termination of certain contracts.
Warranty
Engineering Systems offers certain warranties related
to their furnace operations. These warranties are only
provided on certain contracts and the provisions are
made on a contract by contract basis. Each contractual
warranty is expected to be utilized or derecognized within
12 months. The provisions for these warranties are based
on the historical return percentages. There were $5,723
of additional provisions during 2010 (2009: $5,684) and
payments of $1,087 (2009: $531).
Another German subsidiary provides for warranties
for certain products. The provision is based on actual
claims made by customers. There were $146 of additional
provisions during 2010 (2009: $778) and payments of $334
(2009: $36).
Project costs
Engineering Systems builds a project cost provision on
its percentage of completion contracts. The provision is
developed on a contract by contract basis. The amounts
recorded as a provision are the result of the expected total
project costs and are based on historical percentages.
Over the life of the percentage of completion contracts,
the provision for project cost is utilized or derecognized
depending on actual performance of the contracts.
Provision of $4,022 were recorded in 2010 related to
projects that are currently in process while $1,238 of
provisions were used.
Partial retirement
In an effort to reduce unemployment and create jobs
for younger job-seekers, Germany implemented certain
regulations in 1996 to enable employees to take early
retirement. Although the law is no longer in effect, our
German subsidiaries have made provisions for those
employees who are eligible per their employment
contracts. During 2010, there were additional provisions of
$1,421 (2009: $397) and payments of $1,745 (2009: $585).
122 Notes to Consolidated Financial Statements
Other
Other is comprised of additional accruals including
certain guarantees made to various customers.
28. Government grants
Balance at January 1, 2009
Government
grants
8,651
Provisions made during the period 619
Provisions used during the period (8,402)
Currency and reversals 35
Balance at December 31, 2009 903
Balance at January 1, 2010 903
Provisions made during the period 199
Provisions used during the period (216)
Currency and reversals (69)
Balance at December 31, 2010 817
Non-current 669
Current 234
Balance at December 31, 2009 903
Non-current 642
Current 175
Balance at December 31, 2010 817
The Engineering Systems entered into a grant in 2007
related to its site in Berlin. The State of Berlin obligated
that at least 70 permanent jobs be maintained at the site
by the end of 2007 and an additional 80 by the end of 2008
maintaining these 150 permanent jobs until the end of
2009. There were 157 employees at the Berlin site as of
December 31, 2009 which successfully completed the
terms of the grant. Under government grant accounting,
ALD established a provision for the personnel expenses
which was reduced by the income from the government
grant over the expected term that these expenses were
incurred. The initial estimate of personnel expenses and
revisions to those estimates led to income recognition
of $3,820 in the year ended December 31, 2009. As of
December 31, 2009, the entire Berlin grant was utilized.
GK has government grant obligations related to retention of
personnel and its capital investment in the state of Bavaria,
Germany. According to the grants received, GK is expected
to create or maintain a certain number of employees over
the course of the grant. The liability for the grant is being
reduced as money is spent on capital expansion. As of
December 31, 2010, the current and non-current portions
of the grants were $175 and $642, respectively. As of
December 31, 2009, the current and non-current portions
of the grants were $234 and $669, respectively.