Philips 2005 Annual Report Download - page 204

Philips Annual Report 2005204
Postemploymentbenetsandobligatoryseverancepayments
Theprovisionforpostemploymentbenetscoversbenetsprovidedto
former or inactive employees after employment but before retirement,
includingsalarycontinuation,supplementalunemploymentbenetsand
disability-relatedbenets.
The provision for obligatory severance payments covers the Company’s
commitment to pay employees a lump sum upon the employee’s
dismissal or resignation. In the event that a former employee has passed
away, the Company may have a commitment to pay a lump sum to the
deceased employee’s relatives.
2004 2005
Balance as of January 1 283 158
Changes:
Additions 91 71
Utilizations (88) (54)
Releases −(20)
Translation differences (1) 1
Changes in consolidation (127) −
Balance as of December 31 158 156
Other provisions
Other provisions include provisions for employee jubilee funds totaling
EUR 109 million (2004: EUR 102 million) and expected losses on
existing projects/orders totaling EUR 26 million (2004: EUR 46 million).
2004 2005
Balance as of January 1 406 352
Changes:
Additions 89 164
Utilizations (71) (88)
Releases (65) (34)
Translation differences (7) 17
Changes in consolidation −(1)
Balance as of December 31 352 410
55
Pensions and postretirement benets other than pensions
Dened-benetplans
Employee pension plans have been established in many countries in
accordance with the legal requirements, customs and the local situation
in the countries involved. The majority of employees in Europe and
NorthAmericaarecoveredbydened-benetplans.Thebenets
provided by these plans are based on employees’ years of service and
compensationlevels.Themeasurementdateforalldened-benetplans
is December 31.
Contributions are made by the Company, as necessary, to provide assets
sufcienttomeetthebenetspayabletodened-benetpensionplan
participants. These contributions are determined based upon various
factors, including funded status, legal and tax considerations as well as
local customs.
Dened-benetplans:pensions
Dec. 31,
2004
Dec. 31,
2005
Present value of funded obligations (18,495) (20,075)
Present value of unfunded obligations (1,035) (1,059)
Fair value of plan assets 18,628 20,830
Present value of net obligations (902) (304)
Unrecognized actuarial losses 152 402
Unrecognized prior-service cost 23 16
Unrecognized net assets (745) (1,631)
Net balance (1,472) (1,517)
Classicationofthenetbalanceisasfollows:
Prepaid pension costs under other non-current
assets
•
77 95
Accrued pension costs under other non-current
liabilities
•
(573) (689)
Provision for pensions under provisions• (976) (923)
(1,472) (1,517)
Movementsinthenetliabilityfordened-benetobligations:pensions
recognized in the balance sheet
2004 2005
Balance as of January 1 (1,394) (1,472)
Employer contributions 371 367
Expense recognized in the income statement (398) (434)
Benetspaidforunfundedpensionplans 82 84
Changes in consolidationconsolidation (110) 2
Exchange rate differences 29 (64)
Miscellaneous (52) −
Balance as of December 31 (1,472) (1,517)
Plan assets include property occupied by the Philips Group with a fair
value of EUR 42 million (2004: EUR 52 million)
Pensionexpenseofdened-benetplansrecognizedintheincome
statement
2004 2005
Service cost 305 343
Interestcostontheprojectedbenetobligation 985 949
Expected return on plan assets (1,077) (1,102)
Net actuarial (gain) loss recognized 424 (607)
Prior-service cost (761) (28)
Settlement loss 14 3
Curtailmentbenet −(4)
Unrecognized net assets 518 878
Other (10) 2
398 434
Actual return on plan assets 2,091 2,495
IFRS information