Philips 2006 Annual Report Download - page 147

Philips Annual Report 2006 147
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1717
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Accrued liabilities
Accrued liabilities are summarized as follows:
2005 2006
Personnel-related costs:
Salaries and wages - 459 500
Accrued holiday entitlements - 197 189
Other personnel-related costs - 132 120
Fixed-assets-related costs:
Gas, water, electricity, rent and other - 71 71
Taxes:
Income tax payable - 524 519
Other taxes payable - − 2
Communication & IT costs 52 47
Distribution costs 79 64
Sales-related costs:
Commissions payable - 55 65
Advertising and marketing-related costs - 125 119
Other sales-related costs - 222 180
Material-related accruals 128 167
Interest-related accruals 124 118
Deferred income 521 490
Derivative instruments - liabilities 193 101
Other accrued liabilities 399 584
3,281 3,336
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Provisions
Provisions are summarized as follows:
2005 2006
long-
term
short-
term
long-
term
short-
term
Provision for defi ned-benefi t
plans (see note 20) 779 77 787 91
Other postretirement benefi ts
(see note 21) 311 38 337 36
Postemployment benefi ts and
obligatory severance payments 102 49 92 50
Deferred tax liabilities
(see note 6) 298 27 508 121
Product warranty 20 358 17 348
Loss contingencies
(environmental remediation
and product liability) 196 91 483 93
Other provisions 197 167 225 137
1,903 807 2,449 876
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1919
Product warranty
The provision for product warranty refl ects the estimated costs of
replacement and free-of-charge services that are expected to be
incurred by the Company with respect to products sold. The changes
in the provision for product warranty are as follows:
2004 2005 2006
Balance as of January 1 378 353 378
Changes:
Additions 424 491 438
Utilizations (425 ) (472 ) (443 )
Releases (10 ) (7 ) −
Translation differences (8 ) 20 (13 )
Changes in consolidation (6 ) (7 ) 5
Balance as of December 31 353 378 365
Loss contingencies (environmental remediation and product liability)
This provision includes accrued losses recorded with respect to
environmental remediation and product liability (including asbestos)
obligations which are probable and reasonably estimatable. Please
refer to note 27.
The changes in this provision are as follows:
2004 2005 2006
Balance as of January 1 268 275 287
Changes:
Additions 80 27 370
Utilizations (53 ) (43 ) (39 )
Releases (2 ) (3 ) (5 )
Translation differences (18 ) 31 (37 )
Balance as of December 31 275 287 576
Postemployment benefi ts and obligatory severance payments
The provision for postemployment benefi ts covers benefi ts provided
to former or inactive employees after employment but before retirement,
including salary continuation, supplemental unemployment benefi ts
and disability-related benefi 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.
Other provisions
Other provisions include provisions for employee jubilee funds totaling
EUR 88 million (2005: EUR 87 million) and expected losses on existing
projects/orders totaling EUR 14 million (2005: EUR 24 million).
226 Corporate governance224 Reconciliation of
non-US GAAP information
234 The Philips Group
in the last ten years
236 Investor information