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Provisions | 12 Months Ended
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Dec. 31, 2021
Provisions [Abstract] |
Provisions [Text Block] | ### 20Provisions Philips Group Provisions in millions of EUR
| 2020 | 2021
--- | --- | ---
| long-term | short-term | total | long-term | short-term | total
Post-employment benefit1) | 751 |  | 751 | 659 |  | 659
Respironics field action provision |  |  |  | 52 | 525 | 577
Product warranty | 28 | 139 | 167 | 32 | 207 | 238
Environmental provisions | 162 | 21 | 183 | 99 | 26 | 124
Restructuring-related provisions | 17 | 100 | 117 | 8 | 58 | 66
Legal provisions | 19 | 53 | 72 | 53 | 39 | 91
Contingent consideration provisions | 203 | 114 | 318 | 156 | 52 | 208
Other provisions | 279 | 93 | 372 | 257 | 92 | 349
Provisions | 1,458 | 522 | 1,980 | 1,315 | 998 | 2,313
1)For more details refer to Post-employment benefits. #### Respironics field action provision On June 14, 2021, Philips’ subsidiary, Philips Respironics initiated a voluntary recall notification in the United States and field safety notice outside the United States for certain sleep and respiratory care products related to the polyester-based polyurethane (PE-PUR) sound abatement foam in these devices. On December 23, 2021, Philips reported that test results to date for the first-generation DreamStation devices indicated that the volatile organic compound (VOC) concentrations are within the limits of safe exposure specified in the applicable safety standard (ISO 18562). Comprehensive particulate testing and analyses are expected to be completed in the second quarter of 2022. Following the substantial ramp-up of production, service and repair capacity, the repair and replacement program in the US and several other markets is under way. Because of prioritization of the repair and replace program, Philips is currently not taking new orders for sleep therapy systems, while masks and other consumables continue to be sold. As of January 2022, Philips Respironics has shipped a total of approximately 750,000 repair kits and replacement devices to customers and aims to complete the repair and replacement program in the fourth quarter of 2022. Philips has recognized a provision based on Philips' best estimate of the costs to repair or replace devices subject to the Respironics field action as follows: Philips Group Field action provision in millions of EUR
| 2021
--- | ---
Additions | 719
Utilizations | (175)
Translation differences | 33
Balance as of December 31 | 577
The future developments are subject to significant uncertainties, which require management to make estimates and assumptions about items such as quantities and the portion to be replaced or repaired. As of December 31, 2021, the impact of changes in these main assumptions and estimates, holding other assumptions constant, on the field action provision are as follows: Philips Group Main assumptions in millions of EUR unless otherwise stated
|  | Increase (decrease) in provision
--- | --- | ---
Assumption | Estimate | Increase individual assumption by 10% | Decrease individual assumption by 10%
Total quantity of devices | 5.2 million | 63 | (63)
Replacement share | 46% | 44 | (44)
Actual outcomes in future periods may differ from these estimates and affect the company's results of operations, financial position and cash flows. Philips Respironics continues to engage with the US Food and Drug Administration (FDA) and other relevant competent authorities. In addition, other charges related to the remediation, such as testing, external advisory and regulatory response, that are expensed as incurred amounted to EUR 94 million for the year ended December 31, 2021. Furthermore, Philips is a defendant in a number of consumer class action lawsuits from users of the affected devices and a number of individual personal injury and other compensation claims. For legal matters including claims refer to Contingent assets and liabilities. As of December 31, 2021, no provisions have been recognized for such remediation costs or legal matters. #### Product warranty The provisions for assurance-type product warranty reflect the estimated costs of replacement and free-of-charge services that will be incurred by the company with respect to products sold, and include costs to execute field change orders. The field action provision in connection with the Philips Respironics voluntary recall notification is shown separately above. The company expects the provisions to be utilized mainly within the next year. Additions in 2021 include quality actions of EUR 94 million in the Connected Care segment. Philips Group Provisions for assurance-type product warranty in millions of EUR
| 2020 | 2021
--- | --- | ---
Balance as of January 1 | 210 | 167
Additions | 239 | 364
Utilizations | (270) | (265)
Transfer to liabilities associated with assets held for sale |  | (37)
Translation differences and other | (12) | 10
Balance as of December 31 | 167 | 238
#### Environmental provisions The environmental provisions include accrued costs recorded with respect to environmental remediation in various countries. In the United States, subsidiaries of the company have been named as potentially responsible parties in state and federal proceedings for the clean-up of certain sites. Provisions for environmental remediation can change significantly due to the emergence of additional information regarding the extent or nature of the contamination, the need to utilize alternative technologies, actions by regulatory authorities as well as changes in judgments and discount rates. Approximately EUR 71 million of the long-term provision is expected to be utilized after one to five years, with the remainder after five years. For more details on the environmental remediation refer to Contingent assets and liabilities. Philips Group Environmental provisions in millions of EUR
| 2020 | 2021
--- | --- | ---
Balance as of January 1 | 170 | 183
Additions | 9 | 18
Utilizations | (16) | (15)
Releases | 0 | (64)
Changes in discount rate | 37 | (10)
Accretion | 3 | 3
Translation differences and other | (19) | 9
Balance as of December 31 | 183 | 124
The additions and the releases of the provisions originate from additional insights in relation to factors like the estimated cost of remediation, changes in regulatory requirements and efficiencies in completion of various site work phases. Based on the progressive insight with respect to site remediation experience, technological progress and risk-based clean-up strategies, the estimated remaining duration of remediation activities for environmental liabilities for infinite environmental sites was revised in 2021 from 60 years to 30 years. The resulting release was EUR 55 million of which EUR 33 million is recorded in continuing operations and EUR 22 million in discontinued operations. #### Restructuring-related provisions Philips Group Restructuring-related provisions in millions of EUR
| Jan. 1, 2021 | additions | utilizations | releases | other changes | Dec. 31, 2021
--- | --- | --- | --- | --- | --- | ---
Diagnosis & Treatment | 33 | 23 | (19) | (13) | 1 | 26
Connected Care | 17 | 16 | (12) | (4) | - | 17
Personal Health | 28 | 6 | (21) | (6) | 2 | 9
Other | 38 | 10 | (21) | (16) | 4 | 14
Philips Group | 117 | 55 | (73) | (39) | 6 | 66
In 2021, the most significant restructuring projects impacted Diagnostic & Treatment and Connected Care businesses and mainly took place in the Netherlands and US. The restructuring comprised mainly product portfolio rationalization and the reorganization of global support functions. The company expects the provisions to be utilized mainly within the next year. ##### 2020 In 2020, the most significant restructuring projects impacted Diagnostic & Treatment and Other businesses and mainly took place in the Netherlands, US and Germany. The movements in the provisions for restructuring in 2020 are presented by segment as follows: Philips Group Restructuring-related provision in millions of EUR
| Jan. 1, 2020 | additions | utilizations | releases | other changes | Dec. 31, 2020
--- | --- | --- | --- | --- | --- | ---
Diagnosis & Treatment | 61 | 36 | (47) | (16) | (1) | 33
Connected Care | 28 | 17 | (21) | (5) | (3) | 17
Personal Health | 25 | 30 | (22) | (3) | (1) | 28
Other | 41 | 35 | (31) | (7) | - | 38
Philips Group | 156 | 118 | (122) | (32) | (4) | 117
#### Legal provisions The company and certain of its group companies and former group companies are involved as a party in legal proceedings, including regulatory and other governmental proceedings. Philips Group Legal provisions in millions of EUR
| 2020 | 2021
--- | --- | ---
Balance as of January 1 | 55 | 72
Additions | 72 | 43
Acquisitions |  | 38
Utilizations | (45) | (17)
Releases | (6) | (48)
Accretion | 1 | 1
Translation differences and other | (5) | 3
Balance as of December 31 | 72 | 91
The majority of the movements in the above schedule are: additions in part related to investigations in the Sleep & Respiratory Care business (unrelated to the Philips Respironics voluntary recall notification), provisions recognized for certain pending investigations inherited with the acquisition of BioTelemetry, Inc. and a release following the positive outcome of the investigation of the Italian Competition Authority (ICA) for which a provision was recorded in the prior year. For details of other legal matters, including regulatory and other governmental proceedings, refer to Contingent assets and liabilities. The company expects the provisions to be utilized mainly within the next three years. #### Contingent consideration provisions Philips Group Contingent consideration provisions in millions of EUR
| 2020 | 2021
--- | --- | ---
Balance as of January 1 | 354 | 318
Acquisitions | 70 | 16
Utilizations | (14) | (48)
Fair value changes | (93) | (78)
Balance as of December 31 | 318 | 208
The provision for contingent consideration reflects the fair value of the expected payment to former shareholders of an acquiree for the exchange of control if specified future events occur or conditions are met, such as the achievement of certain regulatory milestones or the achievement of certain commercial milestones. The provision for contingent consideration can change significantly due to changes in the estimated achievement of milestones and changes in discount rates. Changes in fair value of the contingent consideration liability are reflected in other business income. ###### EPD In 2020 and 2021, the fair value changes mainly related to EPD. In 2021, the decrease of EUR 67 million in the fair value of the contingent consideration comprised of EUR 41 million due to the revisions to EPD’s forecast due to more severe short-term impacts of COVID-19 and the competitive environment, and EUR 26 million due to delays in achievement of certain milestones. In 2020, revisions to EPD’s forecast due to delays in commercialization caused by the need to do more work on the maturity of the technology, resulted in a EUR 101 million decrease in the respective fair value of the contingent consideration. For more details of the EPD contingent consideration refer to Fair value of financial assets and liabilities. The company expects the provisions to be utilized mainly within the next three years. #### Other provisions Philips Group Other provisions in millions of EUR
| 2020 | 2021
--- | --- | ---
Balance as of January 1 | 392 | 372
Additions | 161 | 89
Utilizations | (109) | (87)
Releases | (49) | (29)
Accretion | (1) | (5)
Translation differences and other | (21) | 9
Balance as of December 31 | 372 | 349
The main elements of other provisions are: provisions for possible taxes/social security of EUR 37 million (2020: EUR 39 million); provisions for onerous contracts of EUR 12 million (2020: EUR 24 million), reflecting non-cancellable commitments on supplies for which no future demand or alternative usage has been identified, primarily caused by volatility in demand due to COVID-19. For more details refer to COVID-19. provisions for employee jubilee funds EUR 94 million (2020: EUR 92 million); self-insurance provisions of EUR 43 million (2020: EUR 45 million); provisions for decommissioning costs of EUR 33 million (2020: EUR 30 million); provisions for rights of return of EUR 40 million (2020: EUR 36 million); the releases in 2020 and 2021 are due to the reassessment of the positions in other provisions throughout the year; the remaining provisions relate to a variety of positions, for example provision for disability of employees and provision for royalty obligations. The company expects the provisions to be utilized mainly within the next five years, except for: provisions for employee jubilee funds of which half is expected to be utilized after five years; provisions for decommissioning costs of which half is expected to be utilized after five years; provisions for rights of return to be utilized mainly within the next year.

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