Philips 2005 Annual Report Download - page 161

Philips Annual Report 2005 161
The weighted average assumptions used to calculate the net cost for
years ended December 31:
2004 2005
Netherlands other Netherlands other
Discount rate 5.3% 6.5% 4.5% 6.6%
Compensation
increase (where
applicable) −5.3% −5.3%
Assumed healthcare cost trend rates at December 31:
2004 2005
Netherlands other Netherlands other
Healthcare cost trend
rate assumed for next
year 5.0% 8.5% −9.0%
Rate that the cost
trend rate will
gradually reach 5.0% 6.0% −5.0%
Year of reaching the
rate at which it is
assumed to remain 2005 2008 −2013
Assumedhealthcarecosttrendrateshaveasignicanteffectonthe
amounts reported for the healthcare plans. A one-percentage-point
change in assumed healthcare cost trend rates would have the
following effects:
one-percentage-point
increase
one-percentage-point
decrease
Netherlands other Netherlands other
Effect on total of
service and interest
cost −3−(3)
Effect on
postretirementbenet
obligation −33 −(28)
Estimatedfuturepostretirementbenetpayments
Thefollowingbenetpayments,whichreectexpectedfutureservice,
as appropriate, are expected to be paid:
2006 77
2007 27
2008 27
2009 27
2010 27
Years2011−2015 147
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Other current liabilities
Other current liabilities are summarized as follows:
2004 2005
Advances received from customers on orders not
covered by work in process 110 144
Other taxes including social security premiums 375 444
Other short-term liabilities 133 120
618 708
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Short-term debt
2004 2005
Short-term bank borrowings 446 541
Other short-term loans 28 48
Current portion of long-term debt 487 578
961 1,167
During 2005 the weighted average interest rate on the bank borrowings
was 4.6% (2004: 4.6% and 2003: 4.1%).
In the Netherlands, the Company issues personnel debentures with a
5-year right of conversion into common shares of Royal Philips Electronics.
Convertible personnel debentures may not be converted within a period
of 3 years after the date of issue. These convertible personnel debentures
are available to most employees in the Netherlands and are purchased
by them with their own funds and are redeemable on demand. The
convertible personnel debentures become non-convertible debentures
at the end of the conversion period.
Although convertible debentures have the character of long-term
nancing,thetotaloutstandingamountsareclassiedascurrentportion
of long-term debt. At December 31, 2005 an amount of EUR 155 million
(2004: EUR 160 million) of convertible personnel debentures was
outstanding, with an average conversion price of EUR 21.20. The conversion
price varies between EUR 16.81 and EUR 38.40, with various conversion
periods ending between January 1, 2006 and December 31, 2010.
Furthermore, included within the current position of long-term debt
is EUR 227 million that relates to a USD 400 million bond, with an
outstanding amount of USD 268 million, maturing on September 15, 2006.
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