Nokia 2015 Annual Report Download - page 170

168 NOKIA IN 2015
28. Provisions
EURm Restructuring
Divestment-
related Warranty
Project
losses Litigation
Material
liability Other Total
At January 1, 2014 443 –94 152 70 19 144 922
Translation dierences 2 – 3 – (1) – 3 7
Reclassication(1) 7 94 – 17 (7) –(17) 94
Charged to income statement:
Additional provisions 116 72 70 64 15 28 87 452
Changes in estimates (56) (5) (10) (30) (6) (9) (15) (131)
60 67 60 34 9 19 72 321
Utilized during year (265) (24) (40) (96) (3) (14) (29) (471)
At December 31, 2014 247 137 117 107 68 24 173 873
Disposal of businesses – – – – (3) –(2) (5)
Translation dierences (4) (12) 2 – (11) – 7 (18)
Reclassication(2) (33) (6) – – 15 –(9) (33)
Charged to income statement:
Additional provisions 105 49 31 5 24 46 42 302
Changes in estimates (14) (22) (21) (25) (11) (20) (18) (131)
91 27 10 (20) 13 26 24 171
Utilized during year (107) (17) (35) (25) (13) (21) (45) (263)
At December 31, 2015 194 129 94 62 69 29 148 725
(1) The reclassication from other provisions consists of EUR 17 million to project losses. The reclassication from litigation consists of EUR 7 million to restructuring. The reclassication of EUR 94 million
was from accrued expenses to divestment-related provisions.
(2) The reclassication from restructuring consists of EUR 18 million to accruals and EUR 15 million to litigation. VAT deposits of EUR 6 million were reclassied to partially oset divestment-related
provisions. The reclassication of EUR 9 million from other provisions consists of EUR 5 million to allowance for excess and obsolete inventory and EUR 4 million to accrued expenses.
The restructuring provision includes EUR 194 million (EUR 247 million in 2014) relating to restructuring activities in Nokia Networks including
personnel and other restructuring-related costs, such as real estate exit costs. In 2015, Nokia Networks recognized a provision of EUR 71 million
relating to certain new cost reduction and eciency improvement initiatives in Germany, the United States, China and Japan. The majority of
restructuring-related outows is expected to occur over the next two years.
Divestment-related provisions relate to the Sale of the HERE Business and the Sale of the D&S Business and include certain liabilities for which
the Group is required to indemnify the consortium of leading automotive companies and Microsoft, respectively. Outows related to the
indemnications are inherently uncertain.
The warranty provisions relate to products sold. Outows of warranty provisions are generally expected to occur within the next 18 months.
Provisions for project losses relate to Nokia Networks’ onerous contracts. Utilization of provisions for project losses is generally expected to
occur over the next 12 months.
The litigation provision includes estimated potential future settlements for litigation. Outows related to litigations are inherently uncertain
andgenerally occur over several periods.
The material liability provision relates to non-cancellable purchase commitments with suppliers. Outows are expected to occur over the next
12 months.
Other provisions include provisions for various contractual obligations and other obligations. Outows related to other provisions are generally
expected to occur over the next two years.
Legal matters
A number of Group companies are and will likely continue to be subject to various legal proceedings and investigations that arise from time to
time, including proceedings regarding intellectual property, product liability, sales and marketing practices, commercial disputes, employment,
and wrongful discharge, antitrust, securities, health and safety, environmental, tax, international trade and privacy matters. As a result, the
Group may incur substantial costs that may not be covered by insurance and could aect business and reputation. While management does not
expect any of these legal proceedings to have a material adverse eect on the Group’s nancial position, litigation is inherently unpredictable
and the Group may in the future incur judgments or enter into settlements that could have a material adverse eect on its results of operations
and cash ows.
Notes to consolidated nancial statements continued