Philips 2004 Annual Report Download - page 75

banks. The interest is at market rates prevailing at the time of
issuance of the CP. There is no collateral requirement in the CP
program. There are no limitations on Philips’ use of the program,
save for market considerations, e.g. that the CP market itself is not
open. If this were to be the case, Philips’ USD 2.5 billion
committed revolving facility could act as back-up for short-term
financing requirements that normally would be satisfied through
the CP program. The USD 2.5 billion revolving credit facility does
not have a material adverse change clause, has no financial
covenants and does not have credit-rating-related acceleration
possibilities. As of December 31, 2004, Philips did not have any CP
outstanding.
In June 2002, Philips filed a Shelf Registration Statement (Form F-3)
with the Securities and Exchange Commission. This filing gives
Philips the flexibility to issue, subject to market conditions, debt
securities and/or to set up a US Medium Term Notes program for
an amount up to USD 2.5 billion.
Including the Company’s net debt, available-for-sale securities and
listed unconsolidated companies, as well as its USD 2.5 billion
revolving credit facility, the Company had access to net available
liquidity resources of EUR 12,624 million as of December 31,
2004.
2003 2004
Cash and cash equivalents 3,072 4,349
Long-term debt (4,016) (3,552)
Short-term debt (1,860)(961)
Net debt (2,804) (164)
Available-for-sale securities at market value 982 662
Main listed unconsolidated companies at market
value 7,311 10,288
Net available liquidity 5,489 10,786
Revolving credit facility / CP program1) 2,780 1,838
Net available liquidity resources 8,269 12,624
1) Reflects the USD 3.5 billion facility in 2003. In December 2004 this facility was replaced by a
new USD 2.5 billion facility. The revolving credit facility is a back-up for the CP program.
Guarantees and contractual cash
obligations
Guarantees
Guarantees issued or modified after December 31, 2002 having
characteristics defined in FASB Interpretation No. 45 ‘Guarantor’s
Accounting and Disclosure Requirements for Guarantees,
including Indirect Guarantees of Indebtedness of Others’ (FIN45),
are measured at fair value and recognized on the balance sheet.
At the end of 2004 the fair value of guarantees issued was not
significant.
Guarantees issued before December 31, 2002 and not modified
afterwards, and guarantees issued after December 31, 2002, which
do not have characteristics defined in FIN45, remain off-balance
sheet.
The following guarantees for the benefit of unconsolidated
companies/third parties were outstanding at December 31, 2004:
expiration per period
total
amounts
committed
less than 1
year
2-5 years after 5 years
422 189 92 141
The most significant guarantee relates to debt obligations of
LG.Philips Displays (LPD) for an amount of USD 50 million. In
addition to both Philips and LG Electronics each providing equity
contributions of USD 250 million, in 2004 both parties issued
USD 50 million guarantees as security for principal, interest and
fees payable by LPD. Simultaneously, the existing USD 200 million
guarantees of each shareholder were released.
Contractual cash obligations
Presented below is a discussion of the Group’s contractual cash
obligations, contingent obligations resulting from guarantees
provided, and the capital resources available to fund the cash
requirements.
The following table summarizes the Company’s cash obligations at
December 31, 2004:
payments due by period
total less than
1 year
2-3
years
4-5
years
after 5
years
Long-term debt 1) 3,956 482 677 1,749 1,048
Capital lease obligations 1) 83 5401226
Short-term debt 1) 474 474 – – –
Operating leases 2) 754 186 239 134 195
Total contractual cash
obligations 5,267 1,147 956 1,895 1,269
1) Long-term debt, capital lease obligations and short-term debt are included in the Company’s
consolidated balance sheet; please refer to notes 23 and 24 of the notes to the consolidated
financial statements for additional details.
2) The Company’s operating lease obligations are described in note 26 of the notes to the
consolidated financial statements.
74 Philips Annual Report 2004
Operating and financial review and prospects