Annual Report 2010 - Enel.com

plan assets, are determined separately for each plan, using
actuarial assumptions to estimate the amount of the
future benefits that employees have accrued at the balance
sheet date. The liability is recognized on an accruals
basis over the vesting period of the related rights. These
appraisals are performed by independent actuaries.
As regards liabilities in respect of defined benefit plans,
the cumulative actuarial gains and losses at the end of the
previous year exceeding 10% of the greater of the present
value of the defined benefit obligation and the fair value
of the plan assets at that date are recognized in profit or
loss over the expected average remaining working lives of
the employees participating in the plan. Otherwise, they
are not recognized.
Where there is a demonstrable commitment, with a formal
plan without realistic possibility of withdrawal, to a termination
before retirement eligibility has been reached, the
benefits due to employees in respect of the termination
are recognized as a cost and measured on the basis of the
number of employees that are expected to accept the offer.
Share-based payments
Stock option plans
The cost of services rendered by employees and remunerated
through stock option plans is determined based on
the fair value of the options granted to employees at the
grant date.
The calculation method to determine the fair value considers
all characteristics of the option (option term, price and
exercise conditions, etc.), as well as the Enel share price
at the grant date, the volatility of the stock and the yield
curve at the grant date consistent with the expected life
of the plan. The pricing model used is the Cox-Rubinstein.
This cost is recognized in the income statement, with a
specific contra-item in shareholders’ equity, over the vesting
period considering the best estimate possible of the
number of options that will become exercisable.
Restricted share units incentive plans
The cost of services rendered by employees and remunerated
through restricted share units (RSU) incentive plans
is determined at grant date based on the fair value of the
RSU granted to employees, in relation to the vesting of the
right to receive the benefit.
The calculation method to determine the fair value
considers all characteristics of the RSU (term, exercise
conditions, etc.), as well as the price and volatility of Enel
shares over the vesting period. The pricing model used is
the Monte Carlo.
This cost is recognized in the income statement, with
recognition of a specific liability, over the vesting period,
adjusting the fair value periodically, considering the best
estimate possible of the number of RSU that will become
exercisable.
Provisions for risks and charges
Accruals to the provisions for risks and charges are recognized
where there is a legal or constructive obligation
as a result of a past event at period-end, the settlement
of which is expected to result in an outflow of resources
whose amount can be reliably estimated. Where the
impact is significant, the accruals are determined by discounting
expected future cash flows using a pre-tax discount
rate that reflects the current market assessment of
the time value of money and, if applicable, the risks specific
to the liability.
If the provision is discounted, the periodic adjustment for
the time factor is recognized as a financial expense. Where
the liability relates to decommissioning and/or site restoration
in respect of property, plant and equipment, the
provision offsets the related asset. The expense is recognized
in profit or loss through the depreciation of the item
of property, plant and equipment to which it relates.
Where the liability regards the treatment and storage of
nuclear waste and other radioactive materials, the provision
is recognized against the related operating costs.
Changes in estimates are recognized in the income statement
in the period in which the changes occur, with the
exception of those in the costs of dismantling, removal
and remediation resulting from changes in the timetable
and costs necessary to extinguish the obligation or a
change in the discount rate. These changes increase or
decrease the value of the related assets and are taken
to the income statement through depreciation. Where
they increase the value of the assets, it is also determined
whether the new carrying amount of the assets may not
be fully recoverable. If this is the case, the assets are tested
for impairment, estimating the unrecoverable amount
and recognizing any loss in respect of the impairment in
the income statement.
Where the changes in estimates decrease the value
of the assets, the reduction is recognized up to the
carrying amount of the assets. Any excess is recognized
immediately in the income statement.
163