Philips 2014 Annual Report Download - page 144

Group nancial statements 12.9 13
144 Annual Report 2014
a specic 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 include an impairment
charge of EUR 32 million for customer relationships in
Consumer Luminaires. The charge is based on a trigger-
based test on specic 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 amortization of intangible assets is specied in
note 6, Income from operations.
Other intangible assets consist of:
Philips Group
Amortization of other intangible assets in millions of EUR
2013 -2014
Balance as of
December 31,
2013
Balance as of
December 31,
2014
gross
amortization/
impairments gross
amortization/
impairments
Brand names 909 (424) 1,018 (497)
Customer
relationships 2,856 (1,447) 3,045 (1,622)
Technology 1,678 (1,226) 1,543 (1,151)
Other 90 (76) 115 (101)
Other
intangibles 5,533 (3,173) 5,721 (3,371)
The estimated amortization expense for other
intangible assets for each of the next ve years is:
Philips Group
Estimated amortization expense for other intangible assets
in years
2015 321
2016 290
2017 265
2018 259
2019 244
The expected useful lives of the intangible assets
excluding goodwill are as follows:
Philips Group
Expected useful lives of intangible assets excluding goodwill
in years
Brand names 2-20
Customer relationships 2-25
Technology 3-20
Other 1-8
Software 1-10
Product development 3-7
The weighted average expected remaining life of other
intangible assets is 8.5 years as of December 31, 2014
(2013: 8.5 years).
The capitalized product development costs and
software for which amortization has not yet
commenced amounted to EUR 450 million as of
December 31, 2014 (2013: EUR 356 million).
At December 31, 2014 the carrying amount of customer
relationships of Respiratory Care & Sleep Management
was EUR 468 million (USD 569 million) with a remaining
amortization period of 9.2 years (2013: EUR 459 million,
USD 633 million; 10.2 years).
13 Other nancial assets
Other non-current nancial assets
The changes during 2014 were as follows:
Philips Group
Other non-current nancial assets in millions of EUR
2014
availa-
ble-for-
sale -
nancial
assets
loans
and re-
ceiva-
bles
held-
to-ma-
turity
invest-
ments
nan-
cial as-
sets at
fair val-
ue
through
prot or
loss total
Balance as of
January 1, 2014 192 273 3 28 496
Changes:
Reclassica-
tions 5 (119) – – (114)
Acquisitions/
additions 23 69 1 – 93
Sales/
redemptions/
reductions (15) (2) – (2) (19)
Impairment (10) (3) (1) – (14)
Transfer to
assets
classied as
held for sale (38) – – – (38)
Value
adjustments 50 6 – (7) 49
Translation and
exchange
dierences 3 2 (1) 5 9
Balance as of
December 31,
2014 210 226 2 24 462
Available-for-sale nancial assets
The Company’s investments in available-for-sale
nancial assets mainly consist of investments in
common stock of companies in various industries. An
amount of EUR 38 million has been reclassied to
assets held for sale mainly relating to the contribution
agreement between the Philips Pension Fund, Philips
and Dutch trade unions on July 1, 2013.