Philips 2006 Annual Report Download - page 206

Philips Annual Report 2006206
Acquisitions in 2005 include goodwill related to acquisitions of Lumileds
and Stentor for EUR 523 million and EUR 114 million respectively.
Please refer to the Section Information by sector and main
countries in the chapter IFRS information of this Annual Report
for a specifi cation of goodwill by sector.
50
Accrued liabilities
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:
Commission payable - 55 65
Advertising and marketing-related costs - 125 119
Other sales-related costs - 222 180
Material-related costs 128 167
Interest-related accruals 124 118
Deferred income 483 483
Derivative instruments - liabilities (see note 36) 193 101
Other accrued liabilities 399 574
3,243 3,319
51
Provisions
2005 2006
long-
term
short-
term
long-
term
short-
term
Provisions for defi ned-benefi t
plans (see note 52) 703 77 677 91
Other postretirement benefi ts
(see note 52) 446 38 372 36
Postemployment benefi ts and
obligatory severance payments 102 49 92 50
Product warranty 20 358 17 348
Loss contingencies
(environmental remediation
and product liability) 196 91 417 93
Other provisions 197 167 225 137
1,664 780 1,800 755
Product warranty
The provision for product warranty refl ects the estimated costs of
replacement and free-of-charge services that will 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 57.
The changes in this provision are as follows:
2004 2005 2006
Balance as of January 1 268 275 287
Changes:
Additions 80 27 304
Utilizations (53 ) (43 ) (39 )
Releases (2 ) (3 ) (5 )
Translation differences (18 ) 31 (37 )
Balance as of December 31 275 287 510
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).
112 Group fi nancial statements 172 IFRS information
Notes to the IFRS fi nancial statements
218 Company fi nancial statements