Philips 2013 Annual Report Download - page 161

11 Group financial statements 11.9 - 11.9 13
Annual Report 2013 161
other intangible
assets
product
development software total
Balance as of
January 1,
2012:
Cost 5,857 1,437 369 7,663
Amortization/
impairments (2,593) (793) (281) (3,667)
Book value 3,264 644 88 3,996
Changes in
book value:
Additions 11 347 29 387
Acquisitions
and purchase
price
allocation
adjustments 137 − − 137
Amortization (455) (190) (44) (689)
Impairments (17) (30) (2) (49)
Translation
dierences (42) (10) − (52)
Other (2) 6 (3) 1
Total changes (368) 123 (20) (265)
Balance as of
December 31,
2012:
Cost 5,868 1,584 369 7,821
Amortization/
impairments (2,972) (817) (301) (4,090)
Book value 2,896 767 68 3,731
The additions for 2013 contain internally generated assets of EUR 357
million and EUR 30 million for product development and software
respectively (2012: EUR 347 million, EUR 29 million).
The impairment charges in 2013 include an impairment charge of EUR 24
million in Imaging Systems, which relate to capitalized product
development for EUR 7 million and other intangibles for EUR 17 million.
The impairment charge is based on a trigger-based test on a specific
business unit in Imaging Systems. A change in the business outlook
coming from a slower than expected sales ramp up resulted in the
mentioned impairment charge. The basis of the recoverable amount used
in this test is the value in use and a pre-tax discount rate of 9,6% is applied.
After the impairment charge the carrying value of the related intangible
assets is zero.
The impairment charges in 2013 includes an impairment charge of EUR 32
million for customer relationships in Consumer Luminaires. The charge is
based on a trigger-based test on specific mature markets following the
initiated turnaround plan, reconsidering product ranges and growth rates.
The basis of the recoverable amount used in this test is the value in use and
a pre-tax discount rate of 11.4% is applied. After the impairment charge the
carrying value of the related intangible assets is zero.
The acquisitions through business combinations in 2012 mainly consist of
the acquired intangible assets of Indal for EUR 134 million.
The amortization of intangible assets is specified in note 3, Income from
operations.
The impairment charges in 2012 for other intangibles mainly relates to
brand names in Professional Lighting Solutions. As part of the
rationalization of the go-to-market model in Professional Lighting
Solutions, the Company decided to discontinue the use of several brands
which resulted in the mentioned impairment charge. The impairment of
product development of EUR 30 million relates to various projects in all
three operating sectors.
Other intangible assets consist of:
December 31,
2012
December 31,
2013
gross
amortization/
impairments gross
amortization/
impairments
Brand names 966 (374) 909 (424)
Customer
relationships 3,045 (1,318) 2,856 (1,447)
Technology 1,759 (1,202) 1,678 (1,226)
Other 98 (78) 90 (76)
5,868 (2,972) 5,533 (3,173)
The estimated amortization expense for other intangible assets for each of
the next five years is:
2014 310
2015 283
2016 253
2017 225
2018 217
The expected useful lives of the intangible assets excluding goodwill are
as follows:
Brand names 2-20 years
Customer relationships 2-25 years
Technology 3-20 years
Other 1-8 years
Software 1-3 years
Product development 3-5 years
The expected weighted average remaining life of other intangible assets is
10.3 years as of December 31, 2013 (2012: 11.2 years).
The capitalized product development costs for which amortization has not
yet commenced amounted to EUR 356 million (2012: EUR 361 million).
At December 31, 2013 the carrying amount of customer relationships of
Respiratory Care & Sleep Management was EUR 459 million with a
remaining amortization period of 10.2 years.
13 Non-current receivables
Non-current receivables include receivables with a remaining term of
more than one year.