Mercedes 2013 Annual Report Download - page 231

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F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
23. Provisions for other risks
The development of provisions for other risks is summarized
in table  F.64.
Product warranties. Daimler issues various types of product
warranties, under which it generally guarantees the perfor-
mance of products delivered and services rendered for a certain
period. The provision for these product warranties covers
expected costs for legal and contractual warranty claims as well
as expected costs for policy coverage, recall campaigns and
buyback commitments. The provision for buyback commitments
represents the expected costs related to the Group’s obligation
under certain conditions to repurchase a vehicle from a cus-
tomer. Buybacks may occur for a number of reasons including
litigation, compliance with laws and regulations in a particular
region and customer satisfaction issues. The utilization date of
product warranties depends on the incidence of the warranty
claims and can span the entire term of the product warranties.
The cash outflow for non-current product warranties is prin-
cipally expected within a period until 2016.
Personnel and social costs. Provisions for personnel and
social costs primarily comprise expected expenses of the Group
for employee anniversary bonuses, profit sharing arrange-
ments and management bonuses as well as early retirement
and partial retirement plans. The additions recorded to the
provisions for profit sharing and management bonuses in the
reporting year usually result in cash outflows in the following
year. The cash outflow for non-current provisions for personnel
and social costs is primarily expected within a period until 2021.
Other. Provisions for other risks include obligations for expected
reductions in revenue already recognized such as bonuses,
discounts and other price reduction commitments. They also
include expected costs in connection with liability and litigation
risks, provisions for optimization programs, provisions for
environmental protection risks, as well as provisions for other
taxes and various other risks.
Further information on other provisions for other risks
is provided in Notes 5 and 29.
Provisions for other risks
Product
warranties
Personnel and
social costs Other Total
In millions of euros
Balance at December 31, 2012 5,090 2,658 3,694 11,442
thereof current 2,562 1,302 2,428 6,292
thereof non-current 2,528 1,356 1,266 5,150
Additions 2,426 1,698 2,450 6,574
Utilizations -2,336 -1,387 -1,744 -5,467
Reversals -348 -68 -328 -744
Addition of accrued interest and effects of changes in discount rates 51 15 29 95
Currency translation and other changes1-178 317 -150 -11
Balance at December 31, 2013 4,705 3,233 3,951 11,889
thereof current 2,380 1,501 2,738 6,619
thereof non-current 2,325 1,732 1,213 5,270
1 Other changes include the reclassification of the outstanding settlement amount related to part-time early retirement
obligations from other financial liabilities to provisions for personnel and social costs.
F.64