Annual Report 2010/11 - Sonova

124
20. Provisions
1,000 cHf 31.3.2011 31.3.2010
Warranty
and returns
earn-out
provisions
other
provisions
total Warranty
and
returns 1)
earn-out
provisions
other
provisions 1)
Balance april 1 126,549 84,289 36,912 247,750 44,097 43,324 15,358 102,779
changes through
business combinations 1,816 4,739 6,555 68,429 17,751 86,180
amounts used (35,397) (90,732) (14,475) (140,604) (30,594) (8,204) (10,537) (49,335)
Reversals (878) (6,517) (1,138) (8,533) (1,294) (9,278) (1,471) (12,043)
Increases 56,005 33,875 23,599 113,479 44,301 53,476 15,645 113,422
Present value adjustments 529 5,991 6,520 139 3,821 3,960
exchange differences (15,656) (3,261) (5,039) (23,956) 1,471 1,150 166 2,787
Balance March 31 132,968 23,645 44,598 201,211 126,549 84,289 36,912 247,750
thereof short-term 66,461 21,188 28,360 116,009 63,610 18,775 27,648 110,033
thereof long-term 66,507 2,457 16,238 85,202 62,939 65,514 9,264 137,717
1) Restated based on finalization of the acquisition accounting of advanced Bionics (for details refer to note 3.7).
the provision for warranty and returns considers any costs arising from the warranty given on products sold. on average,
the Group grants a 15 month warranty period for hearing instruments and related products and up to ten years on hearing
implants. during this period, products will be repaired or replaced free of charge. the provision is based on turnover, past
experience and projected warranty claims. the large majority of the cash outflows are expected to take place within the
next one to six years.
earn-out provisions reflect the present value of estimated earn-out payments for acquisitions prior to april 1, 2010. this
corresponds to the discounted variable purchase price of the acquired companies. cash outflows are expected to take
place within the next one to five years. the change in earn-out provision compared to previous year is primarily driven by
a change in the earn-out agreement with insound medical. on february 24, 2011, the Group announced a change in the
existing agreement with representatives of the former shareholders of insound medical. it was agreed that a one-time
payment of cHf 87.2 million will replace the previous earn-out agreement. the change in the earn-out agreement
resulted in a payment that was cHf 31.8 million higher than previously anticipated and was paid out earlier than previously
expected.
other provisions predominantly include reimbursement to customers as well as provisions in relation to the product recall
of advanced Bionics. cash outflows are expected to take place within the next one to two years. in addition, other provisions
include provisions for specific business risks such as litigation and restructuring costs which arise during the normal
course of business. the timing of cash outflows is uncertain since it will largely depend upon the outcome of administrative
and legal proceedings.
total 1)