Philips 2007 Annual Report Download - page 170

Philips Annual Report 2007176
These matters remain in their initial stages and, on the basis of current
knowledge, the Company cannot determine whether a loss is probable
with respect to these actions.
CRT Investigations
On November 21, 2007, the Company announced that competition
law authorities in several jurisdictions have commenced investigations
into possible anticompetitive activities in the Cathode-Ray Tubes, or
CRT industry. As one of the companies that formerly was active in
the CRT business, Philips is subject to a number of these ongoing
investigations. The Company intends to assist the regulatory
authorities in these investigations.
Subsequent to the public announcement of these investigations, certain
Philips group companies were named as defendants in several class
action antitrust complaints led in the United States federal courts.
These actions allege anticompetitive conduct by manufacturers of
CRTs and seek treble damages on behalf of direct and indirect
purchasers of CRTs and products incorporating CRTs. The complaints
assert claims under federal antitrust law, as well as various state antitrust
and unfair competition laws and may involve joint and several liability
among the defendants.
These matters are in their initial stages and due to the considerable
uncertainty associated with these matters, on the basis of current
knowledge, the Company has concluded that potential losses cannot
be reliably estimated with respect to these matters. An adverse nal
resolution of these investigations and litigation could have a materially
adverse effect on the Company’s consolidated nancial position and
results of operations.
28
Stockholders’ equity
Common shares
As of December 31, 2007, the issued share capital consists of
1,142,826,763 common shares, each share having a par value
of EUR 0.20, which shares have been paid-in in full.
Preference shares
The ‘Stichting Preferente Aandelen Philips’ has been granted the right
to acquire preference shares in the Company. Such right has not been
exercised. As a means to protect the Company and its stakeholders
against an unsolicited attempt to acquire (de facto) control of the
Company, the General Meeting of Shareholders in 1989 adopted
amendments to the Company’s articles of association that allow the
Board of Management and the Supervisory Board to issue (rights to
acquire) preference shares to a third party. As of December 31, 2007,
no preference shares have been issued.
Option rights/restricted shares
The Company has granted stock options on its common shares
and rights to receive common shares in future (see note 33).
Treasury shares
In connection with the Company’s share repurchase programs, shares
which have been repurchased and are held in treasury for (i) delivery
upon exercise of options and convertible personnel debentures and
under restricted share programs and employee share purchase
programs and (ii) capital reduction purposes, are accounted for as
a reduction of stockholders’ equity. Treasury shares are recorded
at cost, representing the market price on the acquisition date. When
issued, shares are removed from treasury stock on a FIFO basis.
Any difference between the cost and the cash received at the time
treasury shares are issued, is recorded in capital in excess of par value,
except in the situation in which the cash received is lower than cost,
and capital in excess of par has been depleted.
In order to reduce potential dilution effects, the following transactions
took place:
2006 2007
Shares acquired 4,385,298 27,326,969
Average market price EUR 27.16 EUR 29.65
Amount paid EUR 119 million EUR 810 million
Shares delivered 11,484,092 11,140,884
Average market price EUR 27.04 EUR 30.46
Amount received EUR 171 million EUR 199 million
Total shares in treasury 35,933,526 52,119,611
Total cost EUR 923 million EUR 1,393 million
In order to reduce capital stock, the following transactions took
place in 2007:
Shares acquired 25,813,898
Average market price EUR 31.87
Amount paid EUR 823 million
Total shares in treasury 25,813,898
Total cost EUR 823 million
Proposed dividend
A dividend of EUR 0.70 per common share will be proposed to the
2008 Annual General Meeting of Shareholders.
Limitations in the distribution of stockholders’ equity
Pursuant to Dutch law certain limitations exist relating to the
distribution
of stockholders’ equity amounting to EUR 2,915 million
(2006: EUR 6,600 million).
29
Cash from derivatives
The Company has no trading derivatives. A total of EUR 385 million
cash was received with respect to foreign exchange derivative contracts
related to nancing of subsidiaries (in 2006 receipt of EUR 62 million
and in 2005 payment of EUR 46 million). Cash ow from interest-
related derivatives is part of cash ow from operating activities.
During 2007 there was a cash outow in relation to these derivatives
of EUR 2 million (in 2006 EUR 1 million cash outow).
30
Proceeds from other non-current nancial assets
In 2007, the sale of TSMC shares, Nuance Communications shares
and JDS Uniphase shares generated cash at an aggregate of EUR
4,002 million.
In 2006, there were no material proceeds from the sale of other
non-current nancial assets.
In 2005, the sale of all remaining shares in Atos Origin and Great
Nordic generated cash of EUR 554 million and EUR 67 million,
respectively.
31
Assets received in lieu of cash from the sale of
businesses
In 2007, the Company only received cash as consideration in
connection with the sale of businesses.
During 2006, several ownership interests were received in connection
with certain sale and transfer transactions.
At the beginning of July 2006, Philips transferred its Optical Pick Up
activities to Arima Devices in exchange for a 12% interest in Arima
Devices valued at EUR 8 million.
128 Group nancial statements
Notes to the group nancial statements
188 IFRS information 240 Company nancial statements