Philips 2005 Annual Report Download - page 96

Philips Annual Report 200596
payments of EUR 47 million mainly consisted of convertible
personnel debentures and staff savings plans. New borrowings
included a USD 200 million three-year syndicated term
and revolving credit facility of SSMC. The remaining new
borrowings mainly consisted of capital lease transactions
of EUR 49 million and convertible personnel debentures
and staff savings plans of EUR 42 million. Currency effects
reduced total debt by EUR 105 million.
Philips had two ‘putable’ bonds outstanding at year-end
2005 for a total amount of USD 269 million. A USD 103
million bond at 7.125%, due 2025, carries an option of
each holder to put the bond to the Company on May 15,
2007 upon notice received between March 15 and April 15,
2007; a USD 166 million bond at 7.20%, due 2026, carries
an option of each holder to put the bond to the Company
on June 1, 2006 upon notice received 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 3.8 years at year-end 2005, compared
to 4.4 years in 2004. However, assuming the ‘putable’ bonds
will be repaid at maturity, the average remaining tenor at
the end of 2005 was 5.0 years compared to 5.4 years at
the end of 2004.
Long-term debt as a proportion of the total debt stood
at 74% at the end of 2005, compared to 79% at the end
of 2004.
The Company has access to a USD 2.5 billion commercial
paper program which was established at the beginning
of 2001. The Company also has available a seven-year
revolving credit facility for USD 2.5 billion, established in
December 2004, that acts as a back-up for the commercial
paper program and can also be used for general corporate
purposes. The Company did not use the commercial paper
program or the revolving credit facility during 2005.
Net debt
Net debt to group equity
group equity1) net debtin billions of euros
25
20
15
10
5
0
(5)
19.4
7.0
2001
ratio 26 : 74
14.1
5.3
2002
27 : 73
12.9
2.8
2003
18 : 82
15.1
0.2
2004
1 : 99
17.0
(0.8)
2005
(5) : 105
1) Stockholders’ equity and minority interests. For a reconciliation to the most
directly comparable US GAAP measures, see the section that begins on page 120
.
The Company had a net cash position (cash and cash
equivalents, net of debt) of EUR 806 million at the end of
2005, compared to a net debt position at the end of 2004
of EUR 164 million.
Stockholders’ equity
Stockholders’ equity increased by EUR 1,806 million to
EUR 16,666 million at December 31, 2005. Net income
contributed EUR 2,868 million, whereas other comprehensive
income had an increasing effect of EUR 1,137 million,
mainly due to the positive change of currency translation
differences (EUR 1,521 million), partly offset by the effect
of the sale of available-for-sale securities (EUR 184 million),
a negative change in the deferred result of forward exchange
rate contracts (EUR 84 million) and additional minimum
pension liabilities (EUR 116 million). Furthermore,
stockholders’ equity was reduced by EUR 504 million
due to the dividend payment to shareholders in 2005, and
by EUR 1,836 million due to the share repurchase programs
for capital reduction purposes and the hedging of long-
term incentive and employee stock purchase programs.
In 2004, stockholders’ equity increased by EUR 2,097 million
to EUR 14,860 million. The increase was primarily driven
by net income of EUR 2,836 million. This was partly offset
by decreases of EUR 242 million related to available-for-sale
securities, EUR 43 million in negative currency translation
differences and the dividend payment of EUR 460 million.
The number of outstanding common shares of Royal Philips
Electronics at December 31, 2005 was 1,201 million
(2004: 1,282 million).
Management discussion and analysis