Intangible assets excluding goodwill

The changes were as follows:

Philips Group
Intangible assets excluding goodwill in millions of EUR
2014
 
other intangible assets
product development
soft­ware
total
Balance as of January 1, 2014:
 
 
 
 
Cost
5,533
1,761
344
7,638
Amortization/ impairments
(3,173)
(916)
(287)
(4,376)
Book value
2,360
845
57
3,262
Changes in book value:
 
 
 
 
Additions
15
323
101
439
Acquisitions
170
2
1
173
Purchase price allocation adjustment
(8)
 
 
(8)
Amortization
(355)
(231)
(31)
(617)
Impairments
(1)
(25)
(2)
(28)
Divestments and transfers to assets classified as held for sale
(62)
(96)
(158)
Translation differences
231
71
3
305
Total changes
(10)
44
72
106
Balance as of December 31, 2014:
 
 
 
 
Cost
5,721
1,853
446
8,020
Amortization/ impairments
(3,371)
(964)
(317)
(4,652)
Book Value
2,350
889
129
3,368

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Philips Group
Intangible assets excluding goodwill in millions of EUR
2013
 
other intangible assets
product development
soft­ware
total
Balance as of January 1, 2013:
 
 
 
 
Cost
5,868
1,584
369
7,821
Amortization/ impairments
(2,972)
(817)
(301)
(4,090)
Book value
2,896
767
68
3,731
Changes in book value:
 
 
 
 
Additions
19
357
30
406
Acquisitions
15
15
Amortization
(387)
(213)
(37)
(637)
Impairments
(50)
(33)
(2)
(85)
Reversal of impairment
5
5
Divestments and transfer to assets classified as held for sale
(28)
(9)
(1)
(38)
Translation differences
(118)
(25)
(1)
(144)
Other
8
1
9
Total changes
(536)
78
(11)
(469)
Balance as of December 31, 2013:
 
 
 
 
Cost
5,533
1,761
344
7,638
Amortization/ impairments
(3,173)
(916)
(287)
(4,376)
Book value
2,360
845
57
3,262

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The additions for 2014 contain internally generated assets of EUR 323 million for product development, and EUR 83 million for software. (2013: EUR 357 million, EUR 0 million). The acquisitions through business combinations in 2014 mainly consist of the acquired intangible assets of General Lighting Company (GLC) for EUR 158 million.

In addition, other intangible fixed assets changed due to the finalization of purchase price accounting related to acquisitions in the prior year. Transfer to assets classified as held for sale in 2014 mainly relate to combined businesses of Lumileds and Automotive.

The impairment charges in 2013 include an impairment charge of EUR 24 million in Imaging Systems, which relate to capitalized product development for EUR 7 million and other intangibles for EUR 17 million. The impairment charge is based on a trigger-based test on a specific business unit in Imaging Systems. A change in the business outlook coming from a slower than expected sales ramp up resulted in the mentioned impairment charge. The basis of the recoverable amount used in this test is the value in use and a pre-tax discount rate of 9,6% is applied. After the impairment charge the carrying value of the related intangible assets is zero.

The impairment charges in 2013 include an impairment charge of EUR 32 million for customer relationships in Consumer Luminaires. The charge is based on a trigger-based test on specific mature markets following the initiated turnaround plan, reconsidering product ranges and growth rates. The basis of the recoverable amount used in this test is the value in use and a pre-tax discount rate of 11.4% is applied. After the impairment charge the carrying value of the related intangible assets is zero.

The amortization of intangible assets is specified in note (6) Income from operations.

Other intangible assets consist of:

Philips Group
Amortization of other intangible assets in millions of EUR
2013 -2014
 
 
Balance as of December 31, 2013
 
Balance as of December 31, 2014
 
gross
amortization/ impairments
gross
amortization/ impairments
Brand names
909
(424)
1,018
(497)
Customer relationships
2,856
(1,447)
3,045
(1,622)
Technology
1,678
(1,226)
1,543
(1,151)
Other
90
(76)
115
(101)
Other intangibles
5,533
(3,173)
5,721
(3,371)

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The estimated amortization expense for other intangible assets for each of the next five years is:

Philips Group
Estimated amortization expense for other intangible assets in years
2015
321
2016
290
2017
265
2018
259
2019
244

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The expected useful lives of the intangible assets excluding goodwill are as follows:

Philips Group
Expected useful lives of intangible assets excluding goodwill in years
Brand names
2-20
Customer relationships
2-25
Technology
3-20
Other
1-8
Software
1-10
Product development
3-7

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The weighted average expected remaining life of other intangible assets is 8.5 years as of December 31, 2014 (2013: 8.5 years).

The capitalized product development costs and software for which amortization has not yet commenced amounted to EUR 450 million as of December 31, 2014 (2013: EUR 356 million).

At December 31, 2014 the carrying amount of customer relationships of Respiratory Care & Sleep Management was EUR 468 million (USD 569 million) with a remaining amortization period of 9.2 years (2013: EUR 459 million, USD 633 million; 10.2 years).

(0)
(0)

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SF6 (Sulfur hexafluoride) is used in the electrical industry as a gaseous dielectric medium.