Philips 2007 Annual Report Download - page 46

Philips Annual Report 200752
Liquidity position
in millions of euros
20052) 20062) 2007
Cash and cash equivalents 5,143 5,886 8,769
Long-term debt (3,320) (3,006) (1,212)
Short-term debt (1,167) (863) (2,345)
Net cash 656 2,017 5,212
Available-for-sale securities at
market value 113 6,529 1,776
Trading securities − 192 −
Main listed investments in equity-
accounted investees at market value 11,139 2,803 2,688
Net available liquidity 11,908 11,541 9,676
Revolving credit facility / CP
program1) 2,109 1,898 1,698
Net available liquidity resources 14,017 13,439 11,374
1) The revolving credit facility could act as a back-up for the CP program
2) Restated to present the MedQuist business as a discontinued operation
The fair value of the Company’s listed available-for-sale
securities, based on quoted market prices at December
31, 2007, amounted to EUR 1,776 million, of which EUR
1,699 million related to TSMC. Philips’ shareholdings in
its main listed equity-accounted investees had a fair value
of EUR 2,688 million based on quoted market prices at
December 31, 2007, and consisted primarily of the
Company’s holdings in LG.Philips LCD with a value of
EUR 2,556 million and TPV Technology with a value of
EUR 130 million. The Company has a lock-up period
associated with the sale of shares in TPV that expires
in September 2008 and LG.Philips LCD that expired
in January 2008.
Philips has a USD 2.5 billion commercial paper program,
under which it can issue commercial paper up to 364
days in tenor, both in the US and in Europe, in any major
freely convertible currency. There is a panel of banks, six
in Europe and ve in the US, that support the program.
When Philips wants to fund through the commercial
paper program, it contacts the panel of banks. The
interest is at market rates prevailing at the time of
issuance of the commercial paper. There is no collateral
requirement in the commercial paper program. There
are no limitations on Philips’ use of the program, save for
market considerations, e.g. that the commercial paper
market itself is not open. If this were to be the case,
Philips’ USD 2.5 billion committed revolving credit
facility could act as back-up for short-term nancing
requirements that normally would be satised through
the commercial paper program. The USD 2.5 billion
revolving credit facility does not have a material adverse
change clause, has no nancial covenants and does not
have credit-rating-related acceleration possibilities. As of
December 31, 2007, Philips did not have any commercial
paper outstanding.
As at December 31, 2007, the Company had total cash
and cash equivalents of EUR 8,769 million; the Company
pools cash from subsidiaries in the extent legally and
economically feasible. Cash in subsidiaries is not
necessarily freely available for alternative uses due to
possible legal or economic restrictions. The amount
of cash not immediately available is not considered
material for the Company to meet its cash obligations.
The Company had a total debt position of EUR
3,557 million at year-end 2007.
The Company expects to have signicant cash outows
during 2008 that will affect the overall liquidity position
of the Company.
In November 2007, the Company
announced the aquisition
of Genlyte Group Incorporated
for an expected purchase price of EUR 1.8 billion. This
acquisition was completed in January 2008. During
December 2007 the Company announced further
acquisitions including Respironics for an expected
purchase price of EUR 3.6 billion and VISICU for
EUR 290 million. The Company has also announced its
intention to repurchase a further EUR 5 billion of shares
for cancellation, and this program is
largely expected to be
completed during 2008. Also
included within total short-
term debt is EUR 1,692 million of bonds, with EUR 130
million due to mature in February 2008 and EUR 1,562
million due to mature in May 2008. The dividend for
2008 is expected to be some EUR 715 million.
Guarantees and contractual cash obligations
Guarantees
Guarantees issued or modied after December 31, 2003,
having characteristics dened in FASB Interpretation No.
45 ‘Guarantor’s Accounting and Disclosure Requirements
for Guarantees, including Indirect Guarantees of
Indebtedness of Others’ (FIN 45), are measured at fair
value and recognized on the balance sheet. At the end
of 2007, the total fair value of guarantees recognized
by the Company was EUR 3 million.
Guarantees issued before December 31, 2003, and
not modied afterwards, and guarantees issued after
December 31, 2003, which do not have characteristics
dened in FIN 45, remain off-balance sheet.
8 Financial highlights 10 Message from the President 16 The Philips Group
Liquidity and
capital resources
62 The Philips sectors