Philips 2004 Annual Report Download - page 124

The EUR 170 million decrease in the valuation allowance for deferred tax assets is mainly
related to significant improvements in the business outlook for Italy which prompted a change
in our view of the ability to realize related tax assets, evaluation of the potential future
realization of the claims per individual entity in Belgium, and the deconsolidation of NAVTEQ.
The deconsolidation of NAVTEQ had no impact on net income. For Hong Kong it was
necessary to increase the valuation allowance for deferred tax assets in view of additional
losses.
The portion of the valuation allowance relating to deferred tax assets, for which subsequently
recognized tax benefits will be allocated to reduce goodwill or other intangible assets of an
acquired entity or directly to contributed capital, amounts to EUR 38 million (2003: EUR 53
million).
At December 31, 2004, operating loss carryforwards expire as follows:
Total 2005 2006 2007 2008 2009 2010/2014 later unlimited
4,500 30 260 160 100 100 150 370 3,330
The Company also has tax credit carryforwards of EUR 280 million, which are available to offset
future tax, if any, and which expire as follows:
Total 2005 2006 2007 2008 2009 2010/2014 later unlimited
280 51191 22821 14
Classification of the deferred tax assets and liabilities takes place at a fiscal entity level as
follows:
2003 2004
Deferred tax assets grouped under other current assets 357 334
Deferred tax assets grouped under other non-current assets 1,417 1,463
Deferred tax liabilities grouped under provisions (157)(228)
1,617 1,569
Classification of the income tax payable and receivable is as follows:
2003 2004
Income tax receivable grouped under current receivables 138 46
Income tax receivable grouped under non-current receivables 19 23
Income tax payable grouped under current liabilities (235) (277)
Income tax payable grouped under non-current liabilities (78) (74)
The amount of the unrecognized deferred income tax liability for temporary differences of
EUR 141 million (2003: EUR 152 million), relates to unremitted earnings in foreign Group
companies, which are considered to be permanently re-invested. Under current Dutch tax law,
no additional taxes are payable. However, in certain jurisdictions, withholding taxes would be
payable.
123Philips Annual Report 2004