Merck 2010 Annual Report Download - page 181

Liabilities to related parties exist vis-à-vis the general partner E. Merck KG and result from profit
entitlements as of the balance sheet date. Other financial liabilities due to third parties include
liabilities due to insurance companies, contractually agreed payment obligations vis-à-vis other
companies, and EUR 13.6 million for the acquisition of Beijing Skywing Technology Co. Ltd. (see
“Scope of consolidation – Further acquisitions”). In 2010, a separate line was added for non-
income-related taxes (mainly value added tax). The previous year’s figures have been adjusted.
Tax liabilities amounted to EUR 57.5 million (2009: EUR 72.8 million). Tax liabilities total-
ing EUR 368.4 million (2009: EUR 274.5 million) also include provisions for tax liabilities of
EUR 310.9 million (2009: EUR 201.7 million).
Provisions developed as follows:
EUR million
Restruc-
turing Litigation Personnel
Environ-
mental
protection Other Total
      
Additions 26.4 85.0 49.6 0.2 53.4 214.6
Utilizations –30.4 –129.3 –33.6 –9.0 –44.7 –247.0
Release –5.2 –8.5 –12.6 0,0 –57.4 –83.7
Exchange differences 0.8 16.0 1.2 0.5 4.2 22.7
Changes in scope of
consolidation/Other 2.7 –0.4 26.6 6.6 5.2 40.7
December 31, 2010 40.1 482.0 171.7 70.4 134.5 898.7
thereof current 26.8 174.5 42.5 7.0 123.7 374.5
thereof non-current 13.3 307.5 129.2 63.4 10.8 524.2
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Provisions for restructuring mainly include provisions for severance payments for employees in
connection with restructuring projects, contractually agreed severance obligations and provisions
for onerous contracts. The relevant provisions are recognized when detailed restructur ing plans
have been prepared and communicated.
As of the balance sheet date, Merck recorded provisions for litigation amounting to EUR 482.0 mil-
lion. In 2010, additional provisions for litigation were set up and charged to other operating expenses.
Provisions for litigation take into account legal risks in connection with our former U.S. generics sub-
sidiary Dey Inc., USA, concerning allegedly false reporting of price informa tion. Although Dey Inc. was
divested within the scope of the sale of the Generics business to Mylan Inc., PA (USA) in 2007, Merck
continues to be liable for costs incurring from the aforementioned legal disputes since the mentioned
risk was not transferred to Mylan. In this context, claims in a number of states were settled during
the reporting period as well as in recent years. Moreover a settlement agreement was reached with
the U.S. Department of Justice against payment of EUR 214.5 million. Taking into acount the existing
provisions, this settlement payment led to expenses of EUR 67.2 million in 2010. These expenses have
been recorded under “Exceptional items”, as was the gain on the divestment of the Generics business.
Merck is entitled to claim reimbursement from Mylan to the extent and in the amount that Mylan
is able to claim the payment to the U.S. Department of Justice in its tax return. The exact amount
cannot be definitively determined at this point in time. As of December 31, 2010 Merck wrote down
this reimbursement claim by EUR 52.6 million.
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Company 177Management Report Corporate governance Consolidated Financial Statements
Notes
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