Philips 2006 Annual Report Download - page 49

Philips Annual Report 2006 49
December 31, 2002, which do not have characteristics
defi ned in FIN45, 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
in millions of euros
total
amounts
committed
less than
1 year 1-5 years
after
5 years
2006
Business-related
guarantees 466 151 80 235
Credit-related
guarantees 42 14 2 26
508 165 82 261
2005
Business-related
guarantees 512 148 87 277
Credit-related
guarantees 57 13 2 42
569 161 89 319
Contractual cash obligations
Presented below is a summary of the Group’s
contractual cash obligations, contingent obligations
resulting from guarantees provided, and the capital
resources available to fund the cash requirements.
Cash obligations at December 31, 2006
in millions of euros
payments due by period
total
less
than 1
year
1-3
years
3-5
years
after 5
years
Long-term debt1) 3,154 184 1,710 874 386
Capital lease
obligations1) 59 23 10 7 19
Short-term debt1) 656 656 − − −
Operating leases1) 803 152 246 155 250
Bond interest 887 171 262 153 301
Total contractual
cash obligations 5,559 1,186 2,228 1,189 956
1) Short-term debt, long-term debt and capital lease obligations are included in the
Company’s consolidated balance sheet; please refer to bank note 23, note 24 and
note 26 of the notes to the consolidated fi nancial statements for additional details.
The Company has a number of commercial agreements
such as supply agreements, that provide that certain
penalties may be charged to the Company if the
Company does not fulfi l its commitments.
Based on past operating performance and current
prospects, supported by the company’s balance sheet
and unused borrowing capacity, Philips believes that
working capital is suffi cient for the company’s present
requirements. Furthermore, the Company has no
material commitments for capital expenditures.
The company had total amounts payable in relation
to accrued interest on debt of EUR 118 million as
at December 31, 2006.
The Company sponsors pension plans in many countries
in accordance with legal requirements, customs and the
local situation in the countries involved. The majority of
employees in Europe and North America are covered
by defi ned-benefi t plans.
Contributions are made by the Company, as necessary,
to provide suffi cient assets to meet future benefi ts
payable to plan participants. These contributions are
determined based upon various factors, including funded
status, legal and tax considerations and local customs.
The Company currently expects considerable cash
outfl ows in relation to employee benefi ts, which are
estimated to amount to EUR 433 million in 2007 (2006:
EUR 1,086 million), including EUR 288 million employer
contributions to defi ned-benefi t pension plans, EUR 80
million employer contributions to defi ned-contribution
plans and EUR 65 million expected cash outfl ows in
relation to unfunded pension plans.
The expected cash outfl ows in 2007 and subsequent
years are uncertain and may change substantially as
a consequence of statutory funding requirements as
well as changes in actual versus currently assumed
discount rates, estimations of compensation increases
and returns on pension plan assets.
For further details about cash obligations related to
pension plans, see note 20 of the consolidated fi nancial
statements in this Annual Report.
54 The Philips sectors 86 Risk management 100 Report of the Supervisory Board 110 Financial Statements