Philips 2006 Annual Report Download - page 157

Philips Annual Report 2006 157
2424
Secured liabilities
Certain portions of long-term and short-term debt have been secured
by collateral as follows:
collateral
amounts of
the debt
property,
plant and
equipment other assets
Institutional fi nancing 15 − 11
Other debts 6 2 −
21 2 11
Previous year 155 428 190
25
Other non-current liabilities
Other non-current liabilities are summarized as follows:
2005 2006
Accrued pension costs 663 442
Sale-and-leaseback deferred income 68 43
Income tax payable 59 36
Asset retirement obligations 18 7
Liabilities arising from guarantees 47 3
Liabilities for employee stock options of subsidiaries 87 99
Other liabilities 161 154
1,103 784
26
Contractual obligations
Contractual obligations
payments due by period
less than
1 year 1-3 years 3-5 years
more
than 5
years total
Long-term debt 184 1,710 874 386 3,154
Capital leases 23 10 7 19 59
Operating
leases 152 246 155 250 803
For an explanation of long-term debt, see note 24. For an explanation
of other long-term liabilities, see note 25. Property, plant and equipment
includes EUR 59 million (2005: EUR 103 million) for capital leases
and other benefi cial rights of use, such as buildings rights and hire
purchase agreements.
Long-term operating lease commitments totaled EUR 803 million
at December 31, 2006 (2005: EUR 861 million). These leases expire
at various dates during the next 20 years.
The long-term operating leases are mainly related to the rental
of buildings. A number of these leases originate from sale-and-back
lease arrangements. In 2006, a small sale-and-operational-leaseback
arrangement was concluded. In 2005, two sale-and-operational-
leaseback arrangements in the Netherlands were concluded, in which
buildings were sold for an aggregate amount of EUR 20 million, with
2525
2626
leaseback rental periods of 10 and 4 years respectively. Operating
lease payments for 2006 totaled EUR 20 million (2005: EUR 23 million,
2004: EUR 24 million).
The remaining minimum payments are as follows:
2007 15
2008 13
2009 13
2010 9
2011 6
Thereafter 32
27
Contingent liabilities
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’ (FIN 45), are measured
at fair value and recognized on the balance sheet. At the end of 2006,
the total fair value of guarantees recorded by the Company was
EUR 4 million.
Guarantees issued before December 31, 2002 and not modifi ed
afterwards, and certain guarantees issued after December 31, 2002,
which do not have characteristics as defi ned in FIN 45, remain off-
balance sheet.
Philips’ policy is to provide only written letters of support; Philips
does not stand by other forms of support. The following table outlines
the total outstanding off-balance sheet credit-related guarantees and
business-related guarantees provided by Philips for the benefi t of
unconsolidated companies and third parties as at December 31, 2006.
Expiration per period
business-
related
guarantees
credit-related
guarantees total
2006
Total amounts committed 466 42 508
Less than 1 year 151 14 165
2-5 years 80 2 82
After 5 years 235 26 261
2005
Total amounts committed 512 57 569
Less than 1 year 148 13 161
2-5 years 87 2 89
After 5 years 277 42 319
Environmental remediation
The Company and its subsidiaries are subject to environmental laws
and regulations. Under these laws, the Company and/or its subsidiaries
may be required to remediate the effects of the release or disposal of
certain chemicals on the environment.
In the United States, subsidiaries of the Company have been named as
potentially responsible parties in state and federal proceedings for the
clean-up of various sites, including Superfund sites. The Company applies
the provisions of SOP 96-1, ‘Environmental Liabilities’, and SFAS No. 5,
2727
226 Corporate governance224 Reconciliation of
non-US GAAP information
234 The Philips Group
in the last ten years
236 Investor information