Philips 2007 Annual Report Download - page 222

Philips Annual Report 2007228
54
Accrued liabilities
2006 2007
Personnel-related costs:
- Salaries and wages 492 433
- Accrued holiday entitlements 185 178
- Other personnel-related costs 120 169
Fixed-assets-related costs:
- Gas, water, electricity, rent and other 71 62
Taxes:
- Income tax payable 519 154
- Other taxes payable 2 12
Communication & IT costs 47 31
Distribution costs 64 109
Sales-related costs:
- Commission payable 65 43
- Advertising and marketing-related costs 119 66
- Other sales-related costs 180 206
Material-related costs 167 134
Interest-related accruals 118 110
Deferred income 471 556
Derivative instruments - liabilities (see note 68) 101 144
Other accrued liabilities 559 568
3,280 2,975
Please refer to note 42 for a specication on the income tax payable.
55
Provisions
2006 2007
long-
term
short-
term
long-
term
short-
term
Provisions for dened-benet
plans (see note 56) 677 91 676 68
Other postretirement benets
(see note 56) 372 36 364 23
Postemployment benets and
obligatory severance payments 92 50 113 13
Product warranty 17 348 133 190
Loss contingencies
(environmental remediation
and product liability) 417 93 402 49
Other provisions 213 137 227 39
1,788 755 1,915 382
Product warranty
The provision for product warranty reects the estimated costs
of replacement and free-of-charge services that will be incurred by
the Group with respect to products sold. The changes in the provision
for product warranty are as follows:
2005 2006 2007
Balance as of January 1 353 378 365
Changes:
Additions 491 438 360
Utilizations (472) (443) (369)
Releases (7) − (6)
Translation differences 20 (13) (16)
Changes in consolidation (7) 5 (11)
Balance as of December 31 378 365 323
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 can be estimated reliably. Please
refer to note 62.
The changes in this provision are as follows:
2005 2006 2007
Balance as of January 1 275 287 510
Changes:
Additions 27 304 16
Utilizations (43) (39) (66)
Releases (3) (5) 29
Translation differences 31 (37) (38)
Balance as of December 31 287 510 451
Postemployment benets and obligatory severance payments
The provision for postemployment benets covers benets provided
to former or inactive employees after employment but before retirement,
including salary continuation, supplemental unemployment benets
and disability-related bene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 79 million (2006: EUR 88 million) and expected losses on existing
projects/orders totaling EUR 14 million (2006: EUR 14 million).
56
Pensions and postretirement benets other
than pensions
Dened-benet plans
Employee pension plans have been established in many countries
in accordance with the legal requirements, customs and the local
situation in the countries involved. The majority of employees in
Europe and North America are covered by dened-benet plans.
The benets provided by these plans are based on employees’ years
of service and compensation levels. The measurement date for all
dened-benet plans is December 31.
For funded plans the Company makes contributions, as necessary,
to provide assets sufcient to meet the benets payable to dened-
benet pension plan participants. These contributions are determined
based upon various factors, including funded status, legal and tax
considerations as well as local customs.
128 Group nancial statements 188 IFRS information
Notes to the IFRS nancial statements
240 Company nancial statements