(19) Other Accruals

In accordance with IAS 37, accruals are created on the balance sheet in respect of legal or actual obligations to third parties resulting from past events where the outflow of funds to settle such obligations is probable and can be estimated reliably.

The accruals for personnel expenses have been created essentially for deferred compensation, pre-retirement part-time working arrangements, vacation and flexi-time not taken, service anniversary awards as well as severance payments. As a means of entering into early retirement, WINCOR NIXDORF International GmbH, Paderborn, offers a company-subsidized pre-retirement part-time working scheme using the “block model.” The term of the scheme is between two and six years, and entry to the scheme is permitted no earlier than the employee’s 55th birthday. Essentially, during the working phase, the employee performs full duties on half pay. During the release phase, the employee no longer works, but receives the remaining 50% of his or her remuneration. The employer subsidy takes the form of topping up of remuneration and contributions to social pension insurance. The insolvency protection has been handled by a guarantee agreement closed with an external bank.

Warranty accruals are created in respect of product warranty obligations, which are prescribed by statute or contractually agreed, or which have arisen de facto.

Where income from an order does not cover prime cost, accruals are created for onerous contracts to the value of the variance between income and expenses.

Where delay and contract penalties are agreed in contracts for the supply of goods and/or services, and where the incurrence of penalties is probable in the light of the current position, a corresponding accrual for delay and contract penalties is created.

Other miscellaneous accruals contain obligations associated with probable claims for damages and pending legal proceedings, and accruals for costs associated with year-end closing.