Intangible assets excluding goodwill

The changes were as follows:

 
 
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 transfers 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

 
 
other intangible assets
product development
software
total
 
 
 
 
 
Balance as of January 1, 2012:
 
 
 
 
Cost
5,857
1,437
369
7,663
Amortization/ impairments
(2,593)
(793)
(281)
(3,667)
Book value
3,264
644
88
3,996
 
 
 
 
 
Changes in book value:
 
 
 
 
Additions
11
347
29
387
Acquisitions and purchase price allocation adjustments
137
137
Amortization
(455)
(190)
(44)
(689)
Impairments
(17)
(30)
(2)
(49)
Translation differences
(42)
(10)
(52)
Other
(2)
6
(3)
1
Total changes
(368)
123
(20)
(265)
 
 
 
 
 
Balance as of December 31, 2012:
 
 
 
 
Cost
5,868
1,584
369
7,821
Amortization/ impairments
(2,972)
(817)
(301)
(4,090)
Book value
2,896
767
68
3,731

The additions for 2013 contain internally generated assets of EUR 357 million and EUR 30 million for product development and software respectively (2012: EUR 347 million, EUR 29 million).

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 includes 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 acquisitions through business combinations in 2012 mainly consist of the acquired intangible assets of Indal for EUR 134 million.

The amortization of intangible assets is specified in note (3) Income from operations.

The impairment charges in 2012 for other intangibles mainly relates to brand names in Professional Lighting Solutions. As part of the rationalization of the go-to-market model in Professional Lighting Solutions, the Company decided to discontinue the use of several brands which resulted in the mentioned impairment charge. The impairment of product development of EUR 30 million relates to various projects in all three operating sectors.

Other intangible assets consist of:

 
 
 
December 31, 2012
 
December 31, 2013
 
gross
amortization/ impairments
gross
amortization/ impairments
 
 
 
 
 
Brand names
966
(374)
909
(424)
Customer relationships
3,045
(1,318)
2,856
(1,447)
Technology
1,759
(1,202)
1,678
(1,226)
Other
98
(78)
90
(76)
 
5,868
(2,972)
5,533
(3,173)

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

 
2014
310
2015
283
2016
253
2017
225
2018
217

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

 
Brand names
2-20 years
Customer relationships
2-25 years
Technology
3-20 years
Other
1-8 years
Software
1-3 years
Product development
3-5 years

The expected weighted average remaining life of other intangible assets is 10.3 years as of December 31, 2013 (2012: 11.2 years).

The capitalized product development costs for which amortization has not yet commenced amounted to EUR 356 million (2012: EUR 361 million).

At December 31, 2013 the carrying amount of customer relationships of Respiratory Care & Sleep Management was EUR 459 million with a remaining amortization period of 10.2 years.

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This is an interactive electronic version of the Philips Annual Report 2013 and also contains certain information in summarized form. The contents of this version are qualified in their entirety by reference to the printed version of the full Philips Annual Report 2013. This printed version is available as a PDF file on this website. Information about: forward-looking statements, third-party market share data, fair value information, IFRS basis of presentation, use of non-GAAP information, statutory financial statements and management report, reclassifications and analysis of 2013 compared to 2012.