Philips 2004 Annual Report Download - page 74

Company on June 1, 2006 upon notice given between April 1 and
May 1, 2006.
Assuming investors require repayment at the relevant put dates,
the average remaining tenor of the total outstanding long-term
debt was 4.4 years at year-end 2004, compared to 4.9 years in
2003. However, assuming the ‘putable’ bonds will be repaid at
maturity, the average remaining tenor at the end of 2004 was 5.4
years at year-end 2004, compared to 5.9 years at the end of 2003.
Long-term debt as a proportion of the total debt stood at 79% at
the end of 2004, compared to 71% at the end of 2003.
Philips arranged a new seven-year USD 2.5 billion revolving credit
facility in December 2004. The new facility replaced an existing
USD 3.5 billion facility arranged in July 2002 that would have
expired in July 2007 and was never drawn upon by the Company.
A USD 2.5 billion commercial paper (CP) program established at
the beginning of 2001 is available to Philips. The revolving credit
facility acts as a back-up for the global CP program and can also be
used for general corporate purposes. The CP program was not
used during 2004. During 2003, the maximum outstanding amount
under the program reached EUR 200 million, while at year-end
there were no outstanding amounts.
Net debt
Net debt to group equity
in billions of euros
ratio 11 : 89 26 : 74 27 : 73 1 : 9918 : 82
30
25
5
10
15
20
0
group equity net debt
23.2
2.9
19.4
7.0
14.1
5.3
12.9
2.8
20042003200220012000
15.1
0.2
See pages 210 and 211 for a reconciliation to the most directly comparable US GAAP measures.
The Company had a net debt position (debt, net of cash and cash
equivalents) of EUR 164 million at the end of 2004. The net debt
position at the end of 2003 amounted to EUR 2,804 million and at
the end of 2002 to EUR 5,251 million. The net debt to group
equity ratio amounted to 1:99 at the end of 2004, compared to
18:82 at the end of 2003 and 27:73 at the end of 2002.
Stockholders’ equity
Stockholders’ equity increased by EUR 2,097 million to
EUR 14,860 million at December 31, 2004. Net income
contributed EUR 2,836 million, whereas other comprehensive
income (losses) had a decreasing effect of EUR 322 million, mainly
related to available-for-sale securities (EUR 242 million) and
negative currency translation differences (EUR 43 million).
Furthermore, retained earnings were reduced by EUR 460 million,
due to the 2004 dividend payment to shareholders.
In 2003, stockholders’ equity decreased by EUR 1,156 million to
EUR 12,763 million. Negative currency translation differences in
equity of EUR 1,652 million and a reduction of retained earnings by
EUR 463 million due to a dividend to shareholders were only
partly compensated by the EUR 695 million positive net income
and a EUR 151 million increase in other comprehensive income
related to available-for-sale securities.
The number of outstanding common shares of Royal Philips
Electronics at December 31, 2004 was 1,282 million
(2003: 1,281 million shares).
At the end of 2004 the Group held 34.5 million shares in treasury
to cover the future delivery of shares in conjunction with the 66.1
million rights outstanding at year-end 2004 under the Company’s
Long-Term Incentive Plan. At year-end 2003 and 2002
respectively, 35.4 and 40.1 million shares were held in treasury
against a rights overhang of 67.4 and 67.0 million respectively.
Treasury shares are accounted for as a reduction of stockholders’
equity.
Liquidity position
The fair value of the Company’s available-for-sale securities, based
on quoted market prices at December 31, 2004, amounted to
EUR 662 million. This comprises Philips’ holdings in Atos Origin,
JDS Uniphase and GN Great Nordic.
Philips’ shareholdings in its main listed unconsolidated companies
had a fair value of EUR 10,288 million based on quoted market
prices at December 31, 2004, and consisted primarily of the
Company’s holdings in TSMC, LG.Philips LCD and NAVTEQ, with
values of EUR 5,126 million, EUR 3,992 million and EUR 1,040
million respectively.
Philips has a USD 2.5 billion CP program, under which it can issue
CP up to 364 days in tenor, both in the USA and in Europe, in any
major freely convertible currency. There is a panel of banks, 6 in
Europe and 5 in the USA, that supports the program. When Philips
wants to fund through the CP program, it contacts the panel of
73Philips Annual Report 2004