Registration document 2007 - Total.com

7) Contingency reserves
As of December, 31 2006
Gross amount at Increases Decreases Gross amount
(in M€) beginning of year Used Not used at end of year
Reserve for financial risks 1,249 326 164 - 1,411 (a)
Reserves for retirement benefits, pension
plans and special termination plans (note 8) 98 26 16 - 108 (b)
Reserves for non-recurring items 33 39 29 - 43
Total 1,380 391 209 - 1,562
(a) Reserves for financial risks are mainly composed of:
- a guarantee granted to an upstream financing subsidiary for 1,021 M€;
- a reserve recorded for 138 M€ to cover the risks incurred by the attribution of Arkema shares;
- a reserve of 113 M€ for the attribution of restricted shares. The calculation was based on the value of the shares bought on plan cover prorated basis to the period of acquisition, ie:
two years, at the end of which the attribution of the shares to their beneficiary will be final, subject to the condition of performance is satisfied (note 22).
(b) Including 101M€ related to reserves for retirement benefits, pension plans, special termination plans and a provision of 7 M€ for long-service medal.
8) Employee benefit obligations
TOTAL S.A. enters into employee benefit and pension plans, pre-retirement and special termination benefits. Expenses for defined
contribution and multi-employers plans correspond to the contributions paid.
Provisions as of December 31 are as follows:
(in M€) 2006 2005
Pension benefits and other benefits 101 90
Restructuring reserves - 3
Provisions as of December 31 101 93
For defined benefit plans, commitments are determined using a prospective methodology called “projected unit credit method”.
The actuarial estimate depends on various factors such as the length of service, life expectancy, employee turnover rate, salaries
revalorization and actualization assumptions.
The actuarial assumptions used as of December 31, are the following:
2006 2005
Actuarial rate 4.24% 4%
Average expected rate of salary increase 4.14% 4.14%
Average expected rate of return on plan assets 5.35% 4.91%
Average remaining length of service 10-20 years 10-20 years
Commitments not covered through insurance companies are accrued for in TOTAL S.A. accounts.
Appendix 3 - TOTAL S.A.
Parent company’s statutory financial statements
Actuarial gains and losses resulting from changes in actuarial assumptions are amortized using the straight-line method over the estimated
remaining length of service of the plans participants involved.
The reconciliation between the total commitment for pension plans not covered through insurance companies and the provision booked is
as follows:
(in M€) 2006 2005
Actuarial liability as of December 31 191 267
Actuarial gains (losses) to be amortized (90) (177)
Provision for pension benefits and other benefits as of December 31 101 90
11
TOTAL - Registration Document 2006 261