Philips 2014 Annual Report Download - page 150

Group nancial statements 12.9
150 Annual Report 2014
Product warranty
The provision for product warranty reects the
estimated costs of replacement and free-of-charge
services that will be incurred by the Company with
respect to products sold. The Company expects the
provision will be utilized mainly within the next year.
Philips Group
Provision for product warranty in millions of EUR
2012 - 2014
2012 2013 2014
Balance as of January 1 378 319 266
Changes:
Additions 370 350 332
Utilizations (427) (363) (316)
Transfer to assets classied as held
for sale – (24) (3)
Translation dierences (4) (16) 23
Changes in consolidation 2 – –
Balance as of December 31 319 266 302
Environmental provisions
The environmental provisions include accrued losses
recorded with respect to environmental remediation in
various countries. In the United States, subsidiaries of
the Company have been named as potentially
responsible parties in state and federal proceedings for
the clean-up of certain sites.
Provisions for environmental remediation can change
signicantly due to the emergence of additional
information regarding the extent or nature of the
contamination, the need to utilize alternative
technologies, actions by regulatory authorities as well
as changes in judgments and discount rates.
Approximately half of this provision is expected to be
utilized within the next ve years. The remaining portion
relates to longer-term remediation activities.
Philips Group
Environmental provisions in millions of EUR
2012 - 2014
2012 2013 2014
Balance as of January 1 305 375 311
Changes:
Additions 48 30 29
Utilizations (22) (21) (23)
Releases (1) (16) (15)
Changes in discount rate 18 (40) 30
Accretion 6 6 8
Translation dierences (4) (8) 16
Purchase price allocation adjustment – (15) –
Changes in consolidation 25 – 4
Balance as of December 31 375 311 360
The increase of provision due to changes in discount
rate in 2014 relates to an overall decrease of the market
rates used in discounting.
For more details on the environmental remediation
reference is made to note 26, Contingent assets and
liabilities.
Restructuring-related provisions
The most signicant projects in 2014
In 2014, the most signicant restructuring projects
related to Lighting and IG&S and were driven by
industrial footprint rationalization and the Accelerate!
transformation program.
Restructuring projects at Lighting centered on Light
Sources & Electronics and Professional Lighting
Solutions, the largest of which took place in Belgium,
the Netherlands and France.
Innovation, Group & Services restructuring projects mainly
were related to IT and group and country overheads and
centered primarily in the Netherlands, US and Belgium.
Restructuring projects at Healthcare mainly took place
in the US and Netherlands.
Consumer Lifestyle restructuring projects were mainly
in the Netherlands.
The Company expects the provision will be utilized
mainly within the next year. The movements in the
provisions and liabilities for restructuring in 2014 are
presented by sector as follows:
Philips Group
Restructuring-related provisions in millions of EUR
2014
Jan. 1,
2014
addi-
tions
uti-
liza-
tions
relea-
ses
other
changes1)
Dec.
31,
2014
Healthcare 17 67 (27) (9) – 48
Consumer
Lifestyle 21 7 (10) (7) 1 12
Lighting 130 180 (90) (16) (9) 195
Innovation,
Group and
Services 35 110 (15) (5) – 125
Philips
Group 203 364 (142) (37) (8) 380
1) Other changes primarily relate to translation dierences and assets
classied as held for sale reclassications
The most signicant projects in 2013
In 2013, the most signicant restructuring projects
related to Lighting and were driven by the industrial
footprint rationalization.
In Healthcare, the largest projects were undertaken in
Customer Services, Home Healthcare Solutions and
Imaging Systems in the United States, Italy and the
Netherlands to reduce the operating costs and simplify
the organization.
Consumer Lifestyle restructuring charges were mainly
related to Personal Care (primarily in the Netherlands
and Austria) and Coee (mainly Italy).