Philips 2005 Annual Report Download - page 205
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The unrecognized net assets are primarily related to the prepaid
pension asset in the Netherlands.
Thepensionexpenseofdened-benetplansisrecognizedinthe
following line items:
2004 2005
Cost of sales 83 99
Selling expenses 57 47
General and administrative expenses 223 253
Research and development expenses 35 35
398 434
TheCompanyalsosponsorsdened-contributionandsimilartypesof
plansforasignicantnumberofsalariedemployees.Thetotalcostof
these plans amounted to EUR 68 million in 2005 (2004: EUR 54 million).
The contribution to multi-employer plans amounted to EUR 3 million
(2004: EUR 3 million).
The weighted average assumptions used to calculate the projected
benetobligationsasofDecember31wereasfollows:
2004 2005
Netherlands other Netherlands other
Discount rate 4.5% 5.4% 4.2% 5.1%
Rate of compensation
increase *3.5% *3.4%
The weighted average assumptions used to calculate the net periodic
pension cost for years ended December 31:
2004 2005
Netherlands other Netherlands other
Discount rate 5.3% 5.8% 4.5% 5.4%
Expected returns on
plan assets 6.0% 6.5% 5.7% 6.5%
Rate of compensation
increase *3.6% *3.5%
* The rate of compensation increase for the Netherlands consists of a general
compensation increase and an individual salary increase based on merit, seniority
and promotion. The average individual salary increase for all active participants for
the remaining working lifetime is 0.75% annually. The rate of general compensation
increasefortheNetherlandschangedin2004becauseofthechangefromanal-
pay to an average-pay pension system which incorporates a limitation of the
indexation. Until 2008 the rate of compensation increase to calculate the
projectedbenetobligationis2%.From2008onwardsarateofcompensation
increase of 1% is included.
Dened-benetplans:otherpostretirementbenets
Inadditiontoprovidingpensionbenets,theCompanyprovidesother
postretirementbenets,primarilyretireehealthcarebenets,incertain
countries.
TheCompanyfundsotherpostretirementbenetplansasclaims
are incurred.
2004 2005
Present value of unfunded obligations (715) (447)
Unrecognized actuarial losses 3 (38)
Unrecognized prior-service cost − −
Net balances (712) (485)
Classicationofthenetbalanceisasfollows:
Provisionforotherpostretirementbenets• (712) (485)
Movementsinthenetliabilityfordened-benetobligations:other
postretirementbenetsrecognizedinthebalancesheet.
2004 2005
Balance as of January 1 (714) (712)
Expense recognized in the income statement (58) 245
Benetspaid 38 40
Changes in consolidation (2) −
Exchange rate differences 24 (58)
Balance as of December 31 (712) (485)
Otherpostretirementbenetexpenserecognizedintheincome
statement.
2004 2005
Service cost 17 19
Interestcostonaccumulatedpostretirementbenets 41 40
Net actuarial loss recognized −4
Curtailment −(308)
58 (245)
Theexpenseforotherpostretirementbenetsisrecognizedinthe
following line items in the income statement:
2004 2005
Cost of sales 11 (50)
Selling expenses 4 (11)
General and administrative expenses 40 (156)
Research and development expenses 3 (28)
58 (245)
Postemploymentbenetsandobligatoryseverancepayments
Theprovisionforpostemploymentbenetscoversbenetsprovidedto
includingsalarycontinuation,supplementalunemploymentbenetsand
disability-relatedbenets.
−
−
−
Pensions and postretirement benets other than pensions
Dened-benetplans
NorthAmericaarecoveredbydened-benetplans.Thebenets
compensationlevels.Themeasurementdateforalldened-benetplans
sufcienttomeetthebenetspayabletodened-benetpensionplan
Dened-benetplans:pensions
Classicationofthenetbalanceisasfollows:
Movementsinthenetliabilityfordened-benetobligations:pensions
Benetspaidforunfundedpensionplans
−
Pensionexpenseofdened-benetplansrecognizedintheincome
Interestcostontheprojectedbenetobligation
Curtailmentbenet −
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