TomTom 2015 Annual Report Download - page 107

CONSOLIDATED FINANCIAL STATEMENTS
TOMTOM / ANNUAL REPORT AND ACCOUNTS 2015 / 106
CLAIMS AND LITIGATION
The group made a provision for potential legal, tax and other risks in various jurisdictions. The legal matters consist mainly of intellectual property
infringement issues. In the normal course of business, the group receives claims relating to allegations that it has infringed intellectual property assets.
In such cases, the companies making the claims seek payments that may take the form of licenses and/or damages. While these claims will be resisted,
some are likely to be settled by negotiation and others are expected to result in litigation.
The cases and claims against the group often raise difficult and complex factual and legal issues which are subject to many uncertainties and
complexities, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction in which each suit is brought,
and the differences in applicable law. In the normal course of business, management consults with legal counsel and certain other experts on matters
related to such claims and litigation. The group accrues a liability when it is determined that an adverse outcome is more likely than not, and the
amount of the loss can be reasonably estimated. If the likelihood of an adverse outcome is reasonably possible or an estimate is not determinable, the
matter is disclosed, provided it is material. Management is of the opinion that the provision is adequate to resolve these claims.
The methodology used to determine the amount of the liability requires significant judgements and estimates regarding the costs of settling asserted
claims. Due to the fact that there is limited historical data available, the estimated liability cannot be based upon recent settlement experience for
similar types of claims.
Based on the best estimate, the portion of the claims and litigation provision expected to be settled in the coming twelve months amounts to
approximately €12.3 million (2014 €9.7 million).
OTHER PROVISIONS
Other provisions include an amount of €8.7 million (2014: €8.4 million) related to the defined benefit pension plan in Germany as disclosed in note 6.
Personnel expenses, and the remainder relates mainly to provisions for expected earn-out payments. The amount of 'Other provisions' estimated to be
settled/utilised within the coming twelve months amounted to €3.8 million (2014: €4.2 million).
32. COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES
The group has a number of long-term financial commitments, which are not shown in the group's balance sheet as at 31 December
2015.
OPERATING LEASES
These are operating leases for buildings, cars and office equipment, which consist of:
(€ in thousands) 2015 2014
Commitments less than 1 year 17,306 15,298
Commitments between 1 - 5 years 30,659 34,380
Commitments longer than 5 years 1,034 974
TOTAL 48,999 50,652
No discount factor is used in determining the operating lease commitments.
PURCHASE COMMITMENTS
As at 31 December 2015, the group had open purchase commitments with contract manufacturers for certain products and
components. Contract manufacturers order the requisite component parts from their suppliers on the basis of forecasts of the number
of units required. Manufacturers have commitments on these components. In certain circumstances, the group has a contractual
obligation to purchase these components from the manufacturers.
OTHER COMMITMENTS
The group has contracts with third-party suppliers or other business partners that include minimum royalty or revenue share
payments over the duration of the contracts that range from 1 to 5 years. The total commitments under these contracts are presented
below.
(€ in thousands) 2015 2014
Commitments less than 1 year 25,699 9,541
Commitments between 1 - 5 years 14,679 9,430
TOTAL140,378 18,971
1. Other commitments in 2015 include a commitment to purchase services with a total value of €26 million from our associate, Cyient Ltd.