Philips 2013 Annual Report Download - page 43

4 Group performance 4.1.6 - 4.1.6
Annual Report 2013 43
2013 included past-service cost gains of EUR 81 million,
which included EUR 78 million related to the
announced freeze of accrual after December 31, 2015
for salaried workers in the Company’s US defined-
benefit pension plan. In the same US plan a settlement
loss of EUR 31 million was recognized in 2013 following
a lump-sum oering to terminated vested employees.
This oering resulted in settling the pension obligations
towards these employees. The past-service cost gain is
allocated to the respective sectors of the US employees
involved whereas the settlement loss is allocated fully
to Pensions in IG&S as it related to inactive employees.
In 2012, past-service cost gains of EUR 31 million were
recognized of which EUR 25 million in the Dutch
pension plan due to a restructuring. In one of the
Company’s defined-benefit retiree medical plans, a
past-service cost gain of EUR 25 million was recognized
due to a benefit change.
The overall funded status of our defined-benefit
pension plans in 2013 was comparable to that of 2012.
The deficits recognized on our balance sheet decreased
by approximately EUR 400 million due to a higher
discount rate in the US, cash contributions and the US
events described above. The surpluses of the plans in
the Netherlands and UK decreased, but as Philips does
not recognize a surplus in these countries, the net
balance sheet position was not impacted.
In 2013, major progress was made in managing the
financial exposure to defined-benefit plans, such as the
changes in the funding of the Dutch pension plan, the
changes in the US plan as described above, and a buy-
in in the UK plan.
For further information, refer to note 30, Post-
employment benefits.
4.1.6 Restructuring and impairment charges
In 2013, EBIT included net charges totaling EUR 101
million for restructuring. In addition to the annual
goodwill-impairment tests for Philips, trigger-based
impairment tests were performed during the year,
resulting in a goodwill impairment of EUR 26 million at
Consumer Luminaires, mainly as a consequence of
reduced growth rates resulting from a slower-than-
anticipated recovery of certain markets, as well as
delays in the introduction of new product ranges.
2012 included EUR 511 million of restructuring charges.
For further information on sensitivity analysis, please
refer to note 11, Goodwill.
Restructuring and related charges
in millions of euros
2011 2012 2013
Restructuring and related charges per
sector:
Healthcare 3 116 (6)
Consumer Lifestyle 5 38 10
Lighting 54 301 94
Innovation, Group & Services 23 56 3
Continuing operations 85 511 101
Discontinued operations 18 29 16
Cost breakdown of restructuring and
related charges:
Personnel lay-o costs 105 423 103
Release of provision (44) (35) (64)
Restructuring-related asset impairment 10 66 36
Other restructuring-related costs 14 57 26
Continuing operations 85 511 101
Discontinued operations 18 29 16
In 2013, the most significant restructuring projects
related to Lighting and were driven by the industrial
footprint rationalization. Restructuring projects at
Lighting centered on Luminaires businesses and Light
Sources & Electronics, the largest of which took place in
the United States, France and Belgium. Innovation,
Group & Services restructuring projects mainly focused
on the Financial Operations Service Unit, primarily in
Italy, France and the United States. Consumer Lifestyle
restructuring charges mainly related to Personal Care
(primarily in the Netherlands and Austria) and Coee
(mainly Italy).
In 2012, the most significant restructuring projects
related to Lighting and Healthcare and were driven by
Accelerate! transformation program. Restructuring
projects at Lighting centered on Luminaires businesses
and Light Sources & Electronics, the largest of which
took place in the Netherlands, Germany and various
locations in the United States. In Healthcare, the largest
projects were undertaken at Imaging Systems and
Patient Care & Clinical Informatics, in various locations
in the United States, to reduce operating costs and
simplify the organization. Innovation, Group & Services
restructuring projects focused on the IT and Financial
Operations Service Units (primarily in the Netherlands),
Group & Regional Overheads (mainly in the
Netherlands and Italy) and Philips Innovation Services
(in the Netherlands and Belgium). Consumer Lifestyle
restructuring charges mainly related to Coee (mainly
Italy) and Health & Wellness (in the United States).