Annual Report 2013

Notes to the consolidated statement of
financial position

(16) Income tax provisions and other provisions

Development in 2013
in million euros Initial balance
January 1, 2013
Other changes Utilized Released Added End balance
December 31, 2013
Income tax provisions 255 –14 119 47 175 250
of which: non-current 66 0 3 35 50 78
of which: current 189 –14 116 12 125 172
Restructuring provisions 255 –22 100 20 127 240
of which: non-current 79 –11 7 3 30 88
of which: current 176 –11 93 17 97 152
Sundry provisions 1,274 –29 993 44 1,341 1,549
of which: non-current 186 4 46 4 107 247
of which: current 1,088 –33 947 40 1,234 1,302
Total 1,784 –65 1,212 111 1,643 2,039
of which: non-current 331 –7 56 42 187 413
of which: current 1,453 –58 1,156 69 1,456 1,626

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Provisions are recognized for obligations toward third parties where the outflow of resources is probable and the expected obligation can be reliably estimated. Provisions are measured to the best estimate of the expenditures required in order to meet the current obligation as of the reporting date. Price increases expected to take place prior to the time of performance are included in the calculation. Provisions in which the interest effect is material are discounted to the reporting date at a pretax interest rate. For obligations in Germany, we have applied interest rates of between 0.7 and 3.2 percent.

The income tax provisions comprise accrued tax liabilities and amounts set aside for the outcome of external tax audits.

Other provisions include identifiable contingent obligations toward third parties. They are measured at total cost.

Provisions have been made for risks arising from legal disputes in the amount of probable claims plus associated procedural costs.

Other changes in provisions include changes in the scope of consolidationscope of consolidation
The scope of consolidation is the aggregate of companies incorporated in the consolidated financial statements.
, movements in exchange rates, compounding effects, as well as adjustments to reflect changes in maturity as time passes.

Provisions are recognized in respect of restructuring measures, provided that work has begun on the implementation of a detailed, formal plan or such a plan has already been communicated. Additions to the restructuring provisions are related to the continued expansion of our shared services and to the further optimization of production and process structures in all business units.

The provisions for obligations arising from our sales activities cover expected burdens in the form of subsequent reductions in already generated revenues, and risks arising from pending transactions.

Provisions for obligations in the personnel sphere essentially cover expenditures likely to be incurred by the Group for variable, performance-related compensation components. The decrease of the current payroll provision is mainly attributable to the “Special Incentive 2012” payout.

Provisions for obligations in the production and engineering sphere relate primarily to provisions for warranties.

Analysis of sundry provisions by function
in million euros December
31, 2012
December
31, 2013
Sales 213 623
of which: non-current 5 10
of which: current 208 613
Payroll 690 517
of which: non-current 114 140
of which: current 576 377
Production and engineering 39 41
of which: non-current 22 21
of which: current 17 20
Various sundry obligations 332 368
of which: non-current 45 76
of which: current 287 292
Total 1,274 1,549
of which: non-current 186 247
of which: current 1,088 1,302

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