Philips 2006 Annual Report Download - page 48

Philips Annual Report 200648
plan and convertible personnel debentures. At year-end
2005, 43.0 million shares were held in treasury against
rights outstanding of 69.0 million. 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
Including the Company’s net cash position, listed available-
for-sale securities, trading securities and listed equity-
accounted investees, as well as its USD 2.5 billion commercial
paper program supported by the revolving credit facility,
the Company had access to net available liquidity resources
of EUR 13,576 million as of December 31, 2006, compared
to EUR 14,167 million one year earlier.
Liquidity position
in millions of euros
2004 2005 2006
Cash and cash equivalents 4,349 5,293 6,023
Long-term debt (3,552) (3,320) (3,006)
Short-term debt (961) (1,167) (863)
Net cash (debt) (164) 806 2,154
Available-for-sale securities at
market value 662 113 6,529
Trading securities − − 192
Main listed investments in equity-
accounted investees at market value 10,288 11,139 2,803
Net available liquidity 10,786 12,058 11,678
Revolving credit facility / CP
program1) 1,838 2,109 1,898
Net available liquidity resources 12,624 14,167 13,576
1) The revolving credit facility could act as a back-up for the CP program
The fair value of the Company’s listed available-for-sale
securities, based on quoted market prices at December
31, 2006, amounted to EUR 6,529 million, of which
EUR 6,395 million related to TSMC and EUR 62 million
related to JDS Uniphase. The Company also held a total
of EUR 192 million of trading securities in TSMC based
on quoted market prices as at December 31, 2006.
Philips’ shareholdings in its main listed equity-accounted
investees had a fair value of EUR 2,803 million based on
quoted market prices at December 31, 2006, and consisted
primarily of the Company’s holdings in LG.Philips LCD
and TPV with values of EUR 2,673 million and EUR 126
million respectively. The Company has a lock-up period
associated with the sale of shares in TPV that expires
in 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 US and in Europe, in any major
freely convertible currency. There is a panel of banks,
six in Europe and fi ve in the US, 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 credit
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, 2006, Philips did not have any
commercial paper outstanding.
As at December 31, 2006 the company had total cash
and cash equivalents of EUR 6,023 million; the company
pools cash from subsidiaries in the extent legally and
economically feasible. Cash in subsidiaries is not necessarily
freely available for alternative uses due to possible legal
or economic restrictions. The amount of cash not
immediately available is not considered material for the
company to meet its cash obligations. The Company had
a total debt position of EUR 3,869 million at the year end.
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 2006, the total fair value of guarantees recognized by
the Company was EUR 4 million.
Guarantees issued before December 31, 2002 and
not modifi ed afterwards, and guarantees issued after
6 Financial highlights 8 Message from the President 14 Our leadership 20 The Philips Group
Liquidity and
capital resources