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Last Update:
March 1, 2012
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7 – Other operating expenses

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Million €

2011

2010

Restructuring measures

233

276

Environmental protection and safety measures, costs of demolition and removal, and planning expenses related to capital expenditures that are not subject to mandatory capitalization

203

98

Valuation adjustments on tangible and intangible assets

366

247

Costs from miscellaneous revenue-generating activities

220

180

Expenses from foreign currency and hedging transactions as well as market valuation

399

601

Losses from the translation of the financial statements in foreign currencies

56

63

Losses from the disposal of property, plant and equipment and divestitures

40

24

Oil and gas exploration expenses

184

190

Expenses from additions to allowances for business-related receivables

124

107

Expenses from the use of inventories measured at market value and the derecognition of obsolete inventory

233

188

Other

632

638

 

2,690

2,612

In 2011, expenses for restructuring measures arose primarily as a result of the Cognis integration in the amount of €157 million and the restructuring of several sites in the Construction Chemicals division in the amount of €13 million. In 2010, these expenses primarily concerned the Ciba integration in the amount of €113 million and the Grenzach site in the amount of €24 million as well as the Cognis integration to a minor degree.

Further expenses were related to environmental protection and safety measures, costs of demolition and removal, and planning expenses related to capital expenditures that are not subject to mandatory capitalization according to IFRS. In 2011, expenses of €50 million were incurred for setting up provisions for the removal of several landfill sites. Additionally, expenses of €60 million resulted from demolition and removal measures at the Ludwigshafen site.

Valuation adjustments on tangible and intangible assets included an amount of €79 million in connection with the planned disposal of Relius’ decorative paints business and an amount of €83 million for property, plant and equipment in the Petrochemicals division at the Port Arthur, Texas site. Impairments in 2011 also included €46 million for assets taken over as part of the Cognis acquisition and €54 million for property, plant and equipment in the Paper Chemicals division at a site in the United States. Further impairments were also made on property, plant and equipment at the restructured Grenzach site, amounting to €14 million in 2011 and €40 million in 2010. In 2010, an impairment loss of €96 million was recognized on property, plant and equipment as well as on concessions for oil and gas production in the British and Norwegian North Sea.

Costs from miscellaneous revenue-generating activities were related to the respective items presented in other operating income.

Expenses from foreign currency and hedging transactions as well as market valuation concerned foreign currency translations of receivables and payables as well as changes in the fair value of currency derivatives and other hedging transactions. Furthermore, expenses of €125 million resulted from the long-term incentive program (LTI program). In 2010, expenses of €418 million resulted from the LTI program.

Losses from the disposal of property, plant and equipment and divestitures in 2011 included losses of €12 million from the sale of individual businesses and plants at the Hythe, England site.

Compared with 2010, there was an increase in expenses from additions to allowances for business-related receivables which related to an insolvent customer in the Oil & Gas segment.

Expenses from the use of inventory measured at market value and the derecognition of obsolete inventory were primarily due to the latter and amounted to €168 million in 2011 and €126 million in 2010. In addition, the use of inventories measured at market values from the Cognis acquisition resulted in charges of €58 million in 2011 as well as in 2010.

Other expenses were the result of a legal settlement in the United States, the implementation of various projects and the recognition of provisions for outstanding invoices and onerous contracts. Further expenses related to the introduction of REACH as well as to a number of other items. Other expenses in 2010 were attributable to the recognition of a provision for risks arising from legal disputes in relation to the closed site in Paulinia, Brazil; for the recognition of a provision for anticipated losses for a supply contract of BASF SE; and to long-term supply contracts in South America.

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