HXM » Topics » 11. Employee retirement obligations

This excerpt taken from the HXM 20-F filed Jun 29, 2009.

m) Employee retirement obligations

 

The Company grants seniority premiums and termination pay, covering all its employees. The related calculations are based on the provisions of the Mexican Federal Labor Law (FLL).  Under FLL, workers are entitled to certain benefits at the time of their separation from the Company under certain circumstances.  Seniority premiums and termination payments are recognized periodically using the projected unit-credit method and financial assumptions (2007 and 2006 net of inflation).

 

As disclosed in Note 13, effective January 1 2008 the Company adopted MFRS D-3. As a result of this adoption, the transition liability of labor obligations is now being amortized over a four-year period. Prior to 2008, this liability was amortized on a straight-line basis over the labor life of our covered employees.

 

This excerpt taken from the HXM 20-F filed Jun 30, 2008.

m) Employee retirement obligations

 

The Company’s policy is to grant seniority premiums and termination pay, covering all its employees. The related calculations are based on the provisions of the Mexican Federal Labor Law.

 

Seniority premiums and termination payments are recognized periodically based on independent actuarial computations, using the projected unit-credit method and financial assumptions net of inflation.

 

Under Mexican labor law, workers are entitled to certain benefits at the time of their departure from the Company under certain circumstances.

 

This excerpt taken from the HXM 20-F filed Jun 28, 2007.

11.          Employee retirement obligations

The Company has a plan for covering seniority premiums which consist of a lump sum payment of 12 days’ wages for each year worked, calculated using the most recent salary, not to exceed twice the legal minimum wage established by law. Since 2005, the Company has recognized a liability for personal severance pay. The related liability and annual cost of such benefits are calculated by an independent actuary on the basis of formulas defined in the plans using the projected unit credit method.

F-26




As of December 31, 2005, the present values of these obligations and the rate used for the calculations are:

Accumulated benefit obligation

 

Ps.  (39,415

)

 

 

 

 

Projected benefit obligation

 

Ps.  (44,931

)

 

 

 

 

Unrecognized items:

 

 

 

Transition asset

 

23,272

 

Non-recognized actuarial losses

 

13,724

 

Net projected liability

 

(7,935

)

Additional liability

 

(31,480

)

 

 

Ps.  (39,415

)

 

 

 

 

Net period cost

 

Ps.     7,935

 

Contributions to plan assets

 

 

 

 

 

 

Real rate used in the calculation

 

3.30

%

 

This excerpt taken from the HXM 6-K filed May 16, 2007.

12.   Employee retirement obligations

        The Company has a plan for covering seniority premiums which consist of a lump sum payment of 12 days' wages for each year worked, calculated using the most recent salary, not to exceed twice the legal minimum wage established by law. Since 2005, the Company has recognized a liability for personal severance pay. The related liability and annual cost of such benefits are calculated by an independent actuary on the basis of formulas defined in the plans using the projected unit credit method.

20



        As of December 31, 2006 and 2005, the present values of these obligations and the rate used for the calculations are:

 
  2006
  2005
 
Accumulated benefit obligation   Ps. 50,381   Ps. 41,013  
   
 
 
Projected benefit obligation   Ps. 56,047   Ps. 46,752  
   
 
 
Unrecognized items:              
  Transition asset     (21,345 )   (24,215 )
  Non-recognized actuarial losses     (18,432 )   (14,280 )
   
 
 
Net projected liability     16,270     8,257  
Additional liability     34,111     32,756  
   
 
 
    Ps. 50,381   Ps. 41,013  
   
 
 
Integration of Net Period Cost:              
  Labor cost   Ps. 8,528   Ps. 3,554  
  Financial Cost     2,758     1,372  
  Transition Liability     2,858     2,660  
  Actuary losses     1,351      
  Inflation adjustment     541     671  
   
 
 
Net period cost   Ps. 16,036   Ps. 8,257  
   
 
 

        The transition liability will be amortized in a 10 to 22 year period, which is the average labor life remaining for the employees.

        The rates used in the actuarial analysis are as follows:

 
  2006
  2005
Discounts of labor obligations   5.25%   5.50%
Salary increases   1.25%   1.50%
Inflation rates   4.00%   3.30%

        As of December 31, 2006 and 2005 the additional liability was Ps.34,111 and Ps.32,756, respectively; the intangible asset which was included as part of the other assets, amounted to Ps.21,345 and Ps.24,215, respectively. The accumulated effect in the stockholders' equity as of December 31, 2006 and 2005 was Ps. 9,277 and Ps.(8,541), respectively.

This excerpt taken from the HXM 20-F filed Jun 29, 2006.

11.                   Employee retirement obligations

The Company has a plan for covering seniority premiums which consist of a lump sum payment of 12 days’ wages for each year worked, calculated using the most recent salary, not to exceed twice the legal minimum wage established by law. Since 2005, the Company has recognized a liability for personal severance pay. The related liability and annual cost of such benefits are calculated by an independent actuary on the basis of formulas defined in the plans using the projected unit credit method.

F-18




As of December 31, 2005, the present values of these obligations and the rate used for the calculations are:

 

Accumulated benefit obligation

 

Ps. (39,415

)

 

 

 

 

Projected benefit obligation

 

Ps. (44,931

)

 

 

 

 

Unrecognized items:

 

 

 

Transition asset

 

23,272

 

Non-recognized actuarial losses

 

13,724

 

Net projected liability

 

(7,935

)

Additional liability

 

(31,480

)

 

 

Ps. (39,415

)

 

 

 

 

Net period cost

 

Ps.    7,935

 

Contributions to plan assets

 

 

 

 

 

 

Real rate used in the calculation

 

3.30

%

 

This excerpt taken from the HXM 20-F filed Jun 28, 2005.
Employee retirement obligations - Statutory seniority premiums are recognized as costs over employee years of service and are calculated by independent actuaries using the projected unit credit method at net discount rates. Severance cost is charged to results when the liability is determined to be payable. Due to the low level of seniority for the majority of the Company’s employees, the liability for employee retirement obligations is not significant at December 31, 2004 or 2003.

 

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