Philips 2007 Annual Report Download - page 167

Philips Annual Report 2007 173
−
−
−−−−−−−
− − −
Private nancing −
−
24
25
Other non-current liabilities
Other non-current liabilities are summarized as follows:
2006 2007
Accrued pension costs 442 369
Sale-and-leaseback deferred income 43 31
Income tax payable 36 1
Asset retirement obligations 7 21
Liabilities for employee stock options of subsidiaries 99 49
Uncertain tax positions − 429
Other liabilities 157 34
784 934
Please refer to note 6 for a specication of the income tax payable
and the uncertain tax positions.
26
Contractual obligations
payments due by period
less than
1 year 1-3 years 3-5 years
more
than 5
years total
Long-term debt 1,841 19 754 359 2,973
Capital leases 8 15 8 57 88
Operating
leases 147 232 134 217 730
For further details about uncertain tax positions amounting to EUR 627 million,
see note 6 of the notes to the Group nancial statements.
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 88 million (2006: EUR 59 million) for capital
leases and other benecial rights of use, such as buildings rights and
hire purchase agreements.
Long-term operating lease commitments totaled EUR 730 million
at December 31, 2007 (2006: EUR 796 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-leaseback
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
leaseback rental periods of 10 and 4 years respectively. Operating
lease payments for 2007 totaled EUR 14 million (2006: EUR 20 million,
2005: EUR 23 million).
The remaining minimum payments are as follows:
2008 13
2009 13
2010 9
2011 6
2012 5
Thereafter 25
25
26
27
Contingent liabilities
Guarantees
Philips’ policy is to provide only guarantees and other letters of
support, in writing. Philips does not stand by other forms of support.
At the end of 2007, the total fair value of guarantees was EUR 3
million (2006: EUR 4 million). The following table outlines the total
outstanding off-balance sheet credit-related guarantees and
business-related guarantees provided by Philips for the benet of
unconsolidated companies and third parties as at December 31, 2007.
Expiration per period
business-
related
guarantees
credit-related
guarantees total
2007
Total amounts committed 432 45 477
Less than 1 year 142 5 147
2-5 years 95 16 111
After 5 years 195 24 219
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
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, ‘Accounting for Contingencies’, and accrues for losses associated
with environmental obligations when such losses are probable and
reasonably estimatable.
Generally, the costs of future expenditures for environmental
remediation obligations are not discounted to their present value
since the amounts and the timing of related cash payments are not
reliably determinable. Potential insurance recoveries are recognized
when recoveries are deemed probable.
Legal proceedings
The Company and certain of its (former) group companies are
involved as a party in legal proceedings, including regulatory and other
governmental proceedings, relating to such matters as competition
issues, commercial transactions, product liability, participations and
environmental pollution. In respect of antitrust laws, the Company and
certain of its (former) group companies are involved in investigations
by competition law authorities in several jurisdictions and are engaged
in litigation in this respect. Since the ultimate disposition of asserted
claims and proceedings and investigations cannot be predicted with
certainty, an adverse outcome could have a material adverse effect on
the Company’s consolidated nancial position and consolidated results
of operations for a particular period.
Provided below are disclosures of the more signicant cases:
Asbestos
Judicial proceedings have been brought in the United States, relating
primarily to the activities of a subsidiary prior to 1981, involving
allegations of personal injury from alleged asbestos exposure. The
claims generally relate to asbestos used in the manufacture of unrelated
companies’ products in the United States and frequently involve claims
for substantial compensatory and punitive damages. The subsidiary’s
businesses which allegedly gave rise to these alleged liabilities were
completely sold in 1984 and the subsidiary’s ongoing operations are
not material to its parent or the Company.
27
Group nancial statements
Notes to the group nancial statements
Company nancial statements 250 Corporate governance246 Reconciliation of
non-US GAAP information 258 The Philips Group in the last ten years 260
Investor information