Philips 2005 Annual Report Download - page 97

Philips Annual Report 2005 97
At the end of 2005, the Group held 43.0 million shares
in treasury to cover the future delivery of shares in
conjunction with the 69.0 million rights outstanding at
year-end 2005 under the Company’s long-term incentive
plan and convertible personnel debentures. At year-end
2004 and 2003 respectively, 34.5 and 35.4 million shares
were held in treasury against rights outstanding 66.1 and
67.4 million respectively. At the end of 2005, the Company
held 71.7 million shares for cancellation. Treasury shares
are accounted for as a reduction of stockholders’ equity.
Liquidity position
The fair value of the Company’s listed available-for-sale
securities, based on quoted market prices at December 31,
2005, amounted to EUR 113 million, of which EUR 78 million
related to JDS Uniphase and EUR 35 million related to
D&M Holdings.
Philips’ shareholding in its main listed unconsolidated
companies had a fair value of EUR 11,139 million based on
quoted market prices at December 31, 2005, and consisted
primarily of the Company’s holdings in TSMC, TPV and
LG.Philips LCD with values of EUR 6,531 million, EUR 218
million and EUR 4,244 million respectively. The Company
has lock-up periods associated with the sale of shares in
some of its shareholdings in listed unconsolidated companies.
These lock-up periods, with their associated expiry dates,
exist for LG.Philips LCD (February 2006), FEI Company
(February 2006), TSMC (December 2006) and TPV
(September 2008). Furthermore, the LG.Philips LCD
shareholders agreement with LG Electronics includes an
agreement that both companies will maintain a holding
of at least 30% each until July 2007.
Philips has a USD 2.5 billion commercial paper program,
under which it can issue commercial paper up to 364 days
in tenor, both in the USA and in Europe, in any major freely
convertible currency. There is a panel of banks, 6 in Europe
and 5 in the USA, that support the program. When Philips
wants to fund through the commercial paper program, it
contacts the panel of banks. The interest is at market rates
prevailing at the time of issuance of the commercial paper.
There is no collateral requirement in the commercial
paper program. There are no limitations on Philips’ use of
the program, save for market considerations, e.g. that the
commercial paper 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 fi nancing
requirements that normally would be satisfi ed through the
commercial paper program. The USD 2.5 billion revolving
credit facility does not have a material adverse change clause ,
has no fi nancial covenants and does not have credit-rating-
related acceleration possibilities. As of December 31, 2005,
Philips did not have any commercial paper outstanding.
Including the Company’s net cash position, listed 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 14,167 million as of December 31, 2005, compared
to EUR 12,624 million one year earlier.
Liquidity position
in millions of euros 2004 2005
Cash and cash equivalents 4,349 5,293
Long-term debt (3,552 ) (3,320 )
Short-term debt (961 ) (1,167 )
Net debt/cash (164 ) 806
Available-for-sale securities at market value 662 113
Main listed unconsolidated companies at
market value 10,288 11,139
Net available liquidity 10,786 12,058
Revolving credit facility / CP program
1) 1,838 2,109
Net available liquidity resources 12,624 14,167
1) The revolving credit facility is a back-up for the CP program.
Guarantees and contractual cash
obligations
Guarantees
Guarantees issued or modifi ed after December 31, 2002
having characteristics defi ned 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 2005, the
total fair value of guarantees recognized by the Company
was EUR 50 million.
In connection with Philips’ decision not to inject further
capital into LG.Philips Displays, guarantees of EUR 42 million
related to the debt obligations of LG.Philips Displays have now
been fully recognized by the Company on the balance sheet.
Guarantees issued before December 31, 2002 and
not modifi ed afterwards, and guarantees issued after
December 31, 2002, which do not have characteristics
defi ned in FIN45, remain off-balance sheet.