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Last Update: 03/12/2009
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Part of the audited Consolidated Financial Statements and Management´s Analysis

21 -- Other provisions

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2008

 

2007

Million €

Total

Thereof
short-term

 

Total

Thereof
short-term

Recultivation obligations

796

1

 

703

4

Environmental protection and remediation costs

377

132

 

255

31

Personnel costs

1,369

947

 

1,756

1,091

Sales and purchase risks

1,282

1,264

 

1,033

997

Restructuring measures

105

83

 

79

62

Legal, damage claims, guarantees and
related commitments

164

83

 

156

81

Other

1,707

533

 

1,730

431

 

5,800

3,043

 

5,712

2,697

Recultivation obligations relate to the estimated costs for the filling of wells and the removal of production equipment after the end of production.

Environmental protection and remediation costs concern expected costs for rehabilitating contaminated sites, recultivating landfills, removal of environmental contamination at existing production or storage sites and other measures.

The increase in short-term provisions for environmental protection resulted chiefly from the allocation of emission certificates from the German Emissions Trading Authority or other similar bodies in the European Union.

The personnel cost provision includes obligations for the granting of long-service bonuses and anniversary payments, variable compensation including related social security contributions, and other accruals as well as provisions for early retirement programs for employees nearing retirement. BASF’s German Group companies have various programs that entitle employees who are at least 55 years old to reduce their working hours to 50% for up to 8 years.

Under such arrangements, employees generally work full time during the first half of the transition period and leave the Company at the start of the second half. Employees receive a minimum 85% of their net salary throughout the transition period.

The reduction in the personnel cost provision is primarily due to lower provisions for the BASF option program and variable compensation.

The sales and purchase risks provision includes warranties, product liability, customer rebates, payment discounts and other price reductions, sales commissions and provisions for expected losses on committed purchases as well as provisions for onerous contracts.

Restructuring costs provisions include severance payments to employees as well as specific site shutdowns or restructuring costs, including the costs for demolition and similar measures.

The increase resulted from restructuring measures in 2008, primarily for severance payments.

Provisions for legal, damage claims, guarantees and related commitments include the expected costs of litigation, obligations under damage claims, other guarantees and antitrust proceedings.

Others include long-term tax provisions. The reversal in 2008 was justified by the reassessment of provisions for previous years.

Other changes relate primarily to currency effects and the transfer to liabilities of obligations that have become more concrete as to the amount and timing. In addition, changes in the scope of consolidation led to an increase in provisions.

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Development of other provisions in 2008 (million €)

 

 

 

January 1, 2008

Additions

Interest
compounding

Utilization

Reversals

Other changes

Dec. 31, 2008

Recultivation obligations

703

58

11

(19)

(20)

63

796

Environmental protection and remediation costs

255

191

2

(61)

(13)

3

377

Personnel costs

1,756

828

25

(979)

(214)

(47)

1,369

Sales and purchase risks

1,033

1,541

1

(1,232)

(117)

56

1,282

Restructuring measures

79

85

(25)

(28)

(6)

105

Legal, damage claims, guarantees and related commitments

156

33

5

(10)

(14)

(6)

164

Other

1,730

518

3

(376)

(179)

11

1,707

 

5,712

3,254

47

(2,702)

(585)

74

5,800

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