12 Other Provisions/Income Tax Provisions

Provisions for Personnel

These include obligations for anniversary payments and funeral expenses as well as provisions for early-retirement and phased-early-retirement plans. There is a continuous reduction in noncurrent provisions for anniversary payments and provisions for phased-early-retirement plans. Interest-rate effects increased anniversary-payment provisions, while provisions for phased-early-retirement plans increased due to newly concluded agreements with employees still working for the company. Compared with the prior year, personnel provisions declined primarily because of the deconsolidation of Siltronic.

Sales/Purchasing Provisions

These provisions cover warranty and product-liability obligations, as well as discounts, cash bonuses and other price reductions still to be granted, commissions payable to sales agents, and contingent losses from contractual agreements. The major portion of the provisions will probably be used for payouts over the next three years. The decrease in 2017 was attributable to the utilization of provisions for onerous contracts.

Provisions for Environmental Protection

Provisions for environmental protection are created for anticipated obligations regarding contaminated-site remediation, water pollution control, recultivation of landfills, the clean-up of contaminated storage and production sites, and similar environmental measures. These provisions also include environmental protection charges likely to be imposed by government bodies. Compared with the prior year, provisions for environmental protection declined due to a slight increase in the long-term discount rates in 2017. The noncurrent provisions for environmental protection are likely to be utilized within a period of 25 years.

Sundry Provisions

These provisions are formed for a multiplicity of identifiable individual risks and contingencies (e. g. damages, reimbursement claims, legal expenses).

Income Tax Provisions

These contain amounts for current income tax obligations as well as for risks from tax audits and legal action. The existing noncurrent tax provisions will not be utilized for another five years.

Depending on the situation in the individual countries, interest rates of up to 3 percent were used to determine the provisions. These provisions were primarily those associated with purchasing, environmental provisions, provisions for phased-early-retirement plans and anniversary-payment provisions.