Philips 2007 Annual Report Download - page 223

Philips Annual Report 2007 229
Personnel-related costs:
Fixed-assets-related costs:
Taxes:
- Income tax payable
- Other taxes payable
Sales-related costs:
Please refer to note 42 for a specication on the income tax payable.
Provisions for dened-benet
Other postretirement benets
Postemployment benets and
54
55
The provision for product warranty reects the estimated costs
for product warranty are as follows:
Changes:
−
The changes in this provision are as follows:
Changes:
Postemployment benets and obligatory severance payments
The provision for postemployment benets covers benets provided
including salary continuation, supplemental unemployment benets
and disability-related benets.
EUR 79 million (2006: EUR 88 million) and expected losses on existing
projects/orders totaling EUR 14 million (2006: EUR 14 million).
Pensions and postretirement benets other
Dened-benet plans
Europe and North America are covered by dened-benet plans.
The benets provided by these plans are based on employees’ years
dened-benet plans is December 31.
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
56
Summary of pre-tax costs for pension plans and retiree
healthcare plans
2005 2006 2007
Dened-benet plans 382 381 350
Dened-contribution plans including
multi-employer plans 56 80 84
Medical retiree cost (222) 26 25
216 487 459
Movements in the net liability for dened-benet obligations:
2006 2007
Projected benet obligation at the beginning of year 21,134 20,410
Service cost 327 265
Interest cost 942 920
Employee contributions 10 4
Actuarial (gains) or losses (26) (756)
Plan amendments 3 4
Settlements (179) (502)
Curtailments (261) 2
Changes in consolidation (173) 49
Benets paid (1,147) (1,152)
Exchange rate differences (223) (564)
Miscellaneous 3 (1)
Projected benet obligation at end of year 20,410 18,679
Present value of funded obligations at end of year 19,532 17,866
Present value of unfunded obligations at end of year 878 813
Movement in plan assets:
2006 2007
Plan assets
Fair value of plan assets at beginning of year 20,830 21,352
Expected return on plan assets 1,214 1,216
Actuarial gains and (losses) on plan assets (164) (571)
Employee contributions 10 4
Employer contributions 928 332
Settlements (182) (577)
Changes in consolidation (23) 53
Benets paid (1,076) (1,083)
Exchange rate differences (185) (525)
Miscellaneous − (1)
Fair value of plan assets at end of year 21,352 20,200
Funded status 942 1,521
Unrecognized net transition obligation − −
Unrecognized prior service cost 12 8
Unrecognized net loss 558 456
Unrecognized net assets (2,235) (2,659)
Net balance sheet position (723) (674)
Classication of the net balance
2006 2007
Prepaid pension costs under other non-current
assets 343 331
Accrued pension costs under other non-current
liabilities (298) (261)
Provision for pensions under provisions (768) (744)
(723) (674)
Plan assets in the Netherlands
The Company’s pension plan asset allocation in the Netherlands at
December 31, 2006 and 2007 and target allocation 2008 is as follows:
Percentage of plan assets at December 31
2006 2007 2008
actual actual target
Matching portfolio: 57 59 62
- Debt securities 57 59 62
Return portfolio: 43 41 38
- Equity securities 29 28 25
- Real estate 9 8 5
- Other 5 5 8
100 100 100
Philips Pension Fund in the Netherlands
On November 13, 2007, various ofcials, on behalf of the Public
Prosecutor’s ofce in The Netherlands, visited a number of ofces of
the Philips Pension Fund and the company in relation to a widespread
investigation into potential fraud in the real estate sector. The company
was notied that one former employee and one current employee
of an afliate of the company were detained. This afliate, Philips Real
Estate Investment Management BV, has managed the real estate portfolio
of the Philips Pension Fund since 2002. The investigation by the public
prosecutor is aimed at the potential involvement of (former) employees
of a number of Dutch companies with respect to fraud in the context
of certain real estate transactions. Neither Philips Pension Fund nor
any Philips entity is a suspect in this investigation. The Philips Pension
Fund and Philips are cooperating with the authorities and have also
started their own investigation. Formal notications of suspected fraud
have been led with the public prosecutor against the (former) employees
concerned and with our insurers. At this time it is not possible to assess
the outcome of this matter nor the potential consequences. At present
it is management’s assessment that this matter will not cause a decline
in plan assets or an increase in pension costs, in any material respect.
Plan assets in other countries
The Company’s pension plan asset allocation in other countries at
December 31, 2006 and 2007 and target allocation 2008 is as follows:
Percentage of plan assets at December 31
2006 2007 2008
actual actual target
Equity securities 26 24 19
Debt securities 68 73 78
Real estate 2 2 3
Other 4 1 −
100 100 100
Plan assets include property occupied by the Philips Group with
a fair value of EUR 12 million (2006: EUR 42 million).
Group nancial statements
Notes to the IFRS 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