Philips 2006 Annual Report Download - page 155

Philips Annual Report 2006 155
Assumed healthcare cost trend rates at December 31:
2005 2006
Netherlands other Netherlands other
Healthcare cost trend rate assumed for next year − 9.0% − 8.0%
Rate that the cost trend rate will gradually reach − 5.0% − 5.0%
Year of reaching the rate at which it is assumed
to remain 2013 2014
Assumed healthcare cost trend rates have a signifi cant effect on the
amounts reported for the healthcare plans. A one-percentage-point
change in assumed healthcare cost trend rates would have the
following effects:
2005: one-percentage-point increase 2006: one-percentage-point decrease
Netherlands other Netherlands other
Effect on total of service and interest cost − 3 − (3 )
Effect on postretirement benefi t obligation − 31 − (26 )
Estimated future postretirement benefi t payments
The following benefi t payments, which refl ect expected future service,
as appropriate, are expected to be paid:
2007 36
2008 26
2009 27
2010 28
2011 28
Years 2012 − 2016 148
22
Other current liabilities
Other current liabilities are summarized as follows:
2005 2006
Advances received from customers on orders not
covered by work in process 141 133
Other taxes including social security premiums 401 339
Other short-term liabilities 115 133
657 605
2222
23
Short-term debt
2005 2006
Short-term bank borrowings 541 622
Other short-term loans 48 34
Current portion of long-term debt 578 207
1,167 863
During 2006 the weighted average interest rate on the bank
borrowings was 6.3% (2005: 4.6%).
In the Netherlands, the Company issues personnel debentures with
a 5-year right of conversion into common shares of Royal Philips
Electronics. Convertible personnel debentures may not be converted
within a period of 3 years after the date of issue. These convertible
personnel debentures are available to most employees in the Netherlands
and are purchased by them with their own funds and are redeemable
on demand. The convertible personnel debentures become non-
convertible debentures at the end of the conversion period.
Although convertible debentures have the character of long-term
fi nancing, the total outstanding amounts are classifi ed as current
portion of long-term debt. At December 31, 2006 an amount of
EUR 136 million (2005: EUR 155 million) of convertible personnel
debentures was outstanding, with an average conversion price of
EUR 21.93. The conversion price varies between EUR 16.81 and
EUR 33.19 with various conversion periods ending between
January 1, 2007 and December 31, 2011.
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 could act as
a back-up for the commercial paper program and can also be used
for general corporate purposes. Philips did not use the commercial
paper program or the revolving credit facility during 2006.
2323
226 Corporate governance224 Reconciliation of
non-US GAAP information
234 The Philips Group
in the last ten years
236 Investor information