Issue link: http://catalog.e-digitaleditions.com/i/275023
15 Dollar amounts in millions except per share amounts or as otherwise specified receivables in both years. We believe that our current reserves related to receivables are adequate and any additional credit risk associated with the Southern European Region is not expected to have a material adverse impact on our financial position or liquidity. We currently do not have any investments in the sovereign debt instruments of the Southern European Region. Any non-sovereign exposure in these countries in our investment portfolio is considered immaterial. Guarantees and Other Off-Balance Sheet Arrangements We do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, of a magnitude that we believe could have a material impact on our financial condition or liquidity. CONTRACTUAL OBLIGATIONS AND FORWARD- LOOKING CASH REQUIREMENTS As further described in Note 7 to the Consolidated Financial Statements, as of December 31, 2013 we have recorded charges to earnings totaling $790 representing the minimum of the range of probable loss to resolve the Rejuvenate and ABG II recalls. Based on the information that has been received, the actuarially determined range of probable loss to resolve this matter is estimated to be approximately $790 to $1,235, before third-party insurance recoveries. The final outcome of this matter is dependent on many variables that are difficult to predict. The ultimate cost to entirely resolve this matter may be materially different than the amount of the current estimate and could have a material adverse effect on our financial position, results of operations and cash flows. We are not able to reasonably estimate the future periods in which payments will be made. As further described in Note 12 to the Consolidated Financial Statements, as of December 31, 2013 our defined benefit pension plans were underfunded by $175, of which approximately $174 related to plans outside the United States. Due to the rules affecting tax-deductible contributions in the jurisdictions in which the plans are offered and the impact of future plan asset performance, changes in interest rates and the potential for changes in legislation in the United States and other foreign jurisdictions, we are not able to reasonably estimate, beyond 2013, the amounts that may be required to fund defined benefit pension plans. As further described in Note 11 to the Consolidated Financial Statements, as of December 31, 2013 we have recorded a liability for uncertain income tax positions of $204. Due to uncertainties regarding the ultimate resolution of income tax audits, we are not able to reasonably estimate the future periods in which income tax payments to settle these uncertain income tax positions will be made. Our future contractual obligations for agreements with initial terms greater than one year, including agreements to purchase materials in the normal course of business, are: Payment Period 2014 2015 2016 2017 2018 After 2018 Total Short-term and long- term debt $ 25 $ 500 $ 750 $ — $ 600 $ 900 $ 2,775 Unconditional purchase obligations 479 136 11 6 33 3 668 Operating leases 51 53 33 26 21 38 222 Contributions to defined benefit plans 20 — — — — — 20 Other 5 5 5 3 2 55 75 $ 580 $ 694 $ 799 $ 35 $ 656 $ 996 $ 3,760 CRITICAL ACCOUNTING POLICIES AND ESTIMATES In preparing our financial statements in accordance with GAAP, there are certain accounting policies that may require a choice between acceptable accounting methods or may require substantial judgment or estimation in their application. These include allowance for doubtful accounts, inventory reserves, income taxes, acquisitions, goodwill and intangible assets, and legal and other contingencies. We believe these accounting policies and the others set forth in Note 1 to the Consolidated Financial Statements should be reviewed as they are integral to understanding our results of operations and financial condition. Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts for estimated losses in the collection of accounts receivable. We make estimates regarding the future ability of our customers to make required payments based on historical credit experience and expected future trends. If actual customer financial conditions are less favorable than projected by management, additional accounts receivable write offs may be necessary, which could unfavorably affect future operating results. Inventory Reserves We maintain reserves for excess and obsolete inventory resulting from the potential inability to sell certain products at prices in excess of current carrying costs. We make estimates regarding the future recoverability of the costs of these products and record provisions based on historical experience, expiration of sterilization dates and expected future trends. If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write downs may be required, which could unfavorably affect future operating results. Income Taxes Our annual tax rate is determined based on our income, statutory tax rates and the tax impacts of items treated differently for tax purposes than for financial reporting purposes. Tax law requires certain items be included in the tax return at different times than the items are reflected in the financial statements. Some of these differences are permanent, such as expenses that are not deductible