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98
Note 16 - Provisions for contingencies
Economic Customer Product
Environmental Restructuring
Other Provisions
risks risks risks risks risks
Dec. 31, 2004 59.6 47.0 120.3 34.7 108.0 59.2 428.8
Long-term portion 55.6 47.0 32.1 34.7 - 22.9 192.3
Additions 16.9 9.1 63.8 2.4 68.5 25.1 185.8
Discounting effect 0.3 4.8 (0.4) 0.6 (0.8) 0.5 5.0
Utilizations (5.6) (8.0) (51.0) (2.6) (81.9) (8.6) (157.7)
Reversals of surplus provisions (3.1) - (10.3) - (11.3) (3.0) (27.7)
Translation adjustments 2.2 7.7 8.7 1.7 3.6 3.7 27.6
Changes in the scope
of consolidation and other 4.8 7.1 8.8 2.9 7.7 (6.4) 24.9
Dec. 31. 2005 75.1 67.7 139.9 39.7 93.8 70.5 486.7
Long-term portion 37.0 43.6 34.4 32.6 20.0 42.4 210.0
(a) Economic risks
These include tax risks arising from tax audits per-
formed by various local tax administrations and finan-
cial risks arising primarily on guarantees given to third
parties in relation to certain assets and liabilities.
(b) Customer risks
These provisions primarily concern liability claims and
any ensuing recalls arising from alleged defects in
products sold to customers and other third parties.
They also cover losses at the end of various long-term
contracts in an amount of 12 million.
(c) Product risks
Provisions are recorded on a statistical basis for the
residual cost of product warranties not covered by
insurance. Such warranties may run up to 18 months.
The application of EU directive 1999/44/EC, which
calls for a mandatory extension to 24 months, had a
limited impact on the financial statements.
The Group also recognizes provisions to cover dis-
putes concerning defective products and recalls of
clearly identified products.
In 2005, the provision was increased by 10 million to
cover newly identified technical risks. The related dis-
putes were being resolved as of December 31, 2005.
The technical malfunction identified on an AFI Break-
er circuit breaker in 2004 was fixed in 2005. The resid-
ual provision maintained to cover remaining work
amounted to 4 million.
(d) Environmental risks
These provisions are primarily set aside to cover
potential reclamation costs. No new risks were identi-
fied during site reviews in 2005.
(e) Restructuring
New provisions were set aside during the year to cover
the costs of restructuring plans in France, Spain and
northern Europe (see note 25). Plans that were
announced and provided for at December 31, 2004
represent a residual provision of 25 million at Decem-
ber 31, 2005. This amount covers the remaining costs
of these plans.
Note 17 - Long and short-term debt
Non current financial liabilities breaks down as follows:
Dec. 31, 2005 Jan. 1, 2005 Dec. 31, 2004
Bonds 2,691.1 1,200.0 1,200.0
Perpetual bonds - - 73.3
Bank and other borrowings 89.9 89.2 68.2
Lease liabilities 18.5 23.4 23.4
Employee profit sharing 6.3 7.0 7.0
Short-term portion of long-term debt (51.1) (47.2) (73.8)
Non current financial liabilities 2,754.7 1,272.5 1,298.2