Philips 2012 Annual Report Download - page 157

12 Group financial statements 12.11 - 12.11
Annual Report 2012 157
• Innovation, Group & Services restructuring projects focused on the
Global Service Units (primarily in the Netherlands), Group &
Regional Overheads (mainly the Netherlands, Brazil and Italy) and
Philips Design (Netherlands).
The movements in the provisions and liabilities for restructuring in 2011
are presented by sector as follows:
Dec. 31,
2010
addi-
tions utilized released
other
changes1)
Dec. 31,
2011
Healthcare 33 16 (17) (14) − 18
Consumer
Lifestyle 75 25 (56) (6) 1 39
Lighting 70 44 (47) (13) (2) 52
IG&S 48 37 (15) (14) 4 60
226 122 (135) (47) 3 169
1) Other changes primarily relate to translation differences and transfers
between sectors
The most significant projects in 2010
• Within Healthcare, the largest projects were reorganizations of the
commercial organizations in Imaging Systems (Germany, the
Netherlands, and the US).
• Consumer Lifestyle restructuring charges were mainly in Television,
particularly in China due to the brand licensing agreement with TPV
Technology Limited.
• Restructuring projects in Lighting were focused on reduction of
production capacity in traditional lighting technologies, such as
incandescent. The largest projects were in Brazil, France, and the US.
The movements in the provisions and liabilities for restructuring in 2010
are presented by sector as follows:
Dec. 31,
2009
addi-
tions utilized released
other
changes1)
Dec. 31,
2010
Healthcare 24 63 (39) (17) 2 33
Consumer
Lifestyle 142 32 (78) (14) (7) 75
Lighting 164 65 (128) (26) (5) 70
IG&S 66 11 (30) (20) 21 48
396 171 (275) (77) 11 226
1) Other changes primarily relate to translation differences and transfers
between sectors
Onerous contract provision
The provision for onerous contract includes provision for the loss
recognized upon signing the agreement with TPV Technology Limited
for the Television business of EUR 24 million (2011: EUR 248 million),
provision for onerous supply contracts of EUR 60 million, onerous
(sub)lease contracts of EUR 35 million and expected losses on existing
projects/orders of EUR 9 million.
More details on provision for losses on divestments can be found in
note 5, Discontinued operations and other assets classified as held for
sale
The Company expects the provision will be utilized mostly within the
next three years. The changes in the provision for Onerous contract
are as follows:
2011 2012
Balance as of January 1 − 248
Changes:
Additions 270 142
Utilizations (22) (277)
Releases − (6)
Reclassification − 21
Balance as of December 31 248 128
Other provisions
Main elements of other provisions are: provision for employee jubilee
funds totaling EUR 76 million (2011: EUR 72 million), self-insurance
liabilities of EUR 61 million (2011: EUR 65 million), liabilities related to
business combinations totaling EUR 36 million (2011: EUR 37 million),
provisions for rights of return of EUR 45 million (2011: EUR nil million),
provisions in respect of outstanding litigations totaling EUR 238 million
(2011: EUR 101 million) and provision for possible taxes/social security
of EUR 28 million (2011: EUR 22 million).
The reclassification of EUR 67 million in 2012 relates mainly to
provision for rights of return. The liability was recognized in previous
years in accrued liabilities.
There are provisions in respect of certain outstanding litigation within
various operations, of which management expects the outcomes of
these disputes to be resolved within the forthcoming five years. The
actual outcome of these disputes and the timing of the resolution
cannot be estimated by the Company at this time. The further
information ordinarily required by IAS 37, ‘Provisions, contingent
liabilities and contingent assets’ has not been disclosed on the grounds
that it can be expected to seriously prejudice the outcome of the
disputes.
Less than a half of the provision for employee jubilee funds is expected
to be utilized within next five years. Provision for self-insurance
liabilities and provision for liabilities related to business combinations
are expected to be utilized mainly within the next five years and all
other provisions within the next three years.
2010 2011 2012
Balance as of January 1 337 310 389
Changes:
Additions 205 201 396
Utilizations (246) (138) (260)
Releases (8) (9) (27)
Reclassification − − 67
Liabilities directly associated with assets
held for sale − (6) −
Translation differences 14 (4) (9)
Changes in consolidation 8 35 1
Balance as of December 31 310 389 557