Philips 2008 Annual Report Download - page 102

Estimated transaction exposure and related hedges
in millions of euros
maturity 0-60 days maturity over 60 days
exposure hedges exposure hedges
Receivables
USD vs AED 14 (10) 44 (23)
USD vs CNY 15 (14) 48 (20)
GBP vs EUR 23 (12) 53 (27)
PLN vs EUR 40 (27) 105 (38)
USD vs EUR 298 (361) 1,021 (1,161)
EUR vs GBP 8 (5) 46 (24)
EUR vs USD 145 (78) 561 (265)
JPY vs EUR 22 (34) 51 (95)
Payables
USD vs CAD (20) 19 (36) 25
PLN vs EUR (44) 27 (235) 100
USD vs EUR (518) 309 (899) 537
EUR vs GBP (20) 19 (98) 87
MXN vs USD (14) 12 (68) 48
MYR vs USD (10) 6 (63) 32
The first currency displayed is the exposure that is being hedged followed
by the functional currency of the hedging entity.
This Treasury section up to Other insurable risks
forms an integral part of the IFRS financial statements.
Liquidity risk
The rating of the Company’s debt by major rating
services may improve or deteriorate. As a result,
Philips’ borrowing capacity may be influenced and
its financing costs may fluctuate. Philips has various
sources to mitigate the liquidity risk for the group,
including EUR 3,620 million in cash and cash equivalents,
a USD 2,500 million Commercial Paper Program,
and a USD 2,500 million committed revolving facility
that could serve as back-up for short-term financing
requirements that would normally be satisfied through
the Commercial Paper Program. Additionally EUR 659
million of investments in its available-for-sale securities
and listed equity-accounted investees (market value at
December 31, 2008) are available. Furthermore, Philips
has a EUR 500 million standby roll-over loan agreement
in place, with EUR 450 million of the EUR 500 million
committed until May 2010. As of December 31, 2008
Philips did not have any loans outstanding under these
facilities.
In addition, as of December 31, 2008 Philips has an
undrawn committed bilateral loan of EUR 250 million
in place which will be fully drawn in January 2009.
Currency risk
Currency fluctuations may impact Philips’ financial
results. Philips is exposed to currency risk in the
following areas:
Transaction exposures, such as forecasted sales and •
purchases and on-balance-sheet receivables/payables
resulting from such transactions;
Translation exposure of net income in foreign •
entities;
Translation exposure of foreign-currency
•
intercompany and external debt and deposits;
Translation exposure of equity invested in •
consolidated foreign entities;
Exposure to equity interests in non-functional-•
currency equity-accounted investees and available-
for-sale investments.
It is Philips’ policy that significant transaction
exposures are hedged by the businesses. Accordingly,
all businesses are required to identify and measure
their exposures resulting from material transactions
denominated in currencies other than their own
functional currency. Philips’ policy generally requires
committed foreign currency exposures to be fully
hedged using forwards. Anticipated transactions may
be hedged using forwards or options or a combination
thereof. The hedge tenor varies per business and is
Philips is exposed to a number of different fiscal
uncertainties which could have a significant impact
on local tax results.
Philips is exposed to a number of different tax
uncertainties which could result in double taxation,
penalties and interest payments. These include, amongst
others, transfer pricing uncertainties on internal
cross-border deliveries of goods and services, tax
uncertainties related to acquisitions and divestments,
tax uncertainties related to the use of tax credits and
permanent establishments, and tax uncertainties due
to losses carried forward and tax credits carried
forward. Those uncertainties may have a significant
impact on local tax results.
For further details, please refer to the section
Details of fiscal risks that begins on page 108 of this
Annual Report
Details of treasury risks
Philips is, as mentioned before, exposed to several
types of financial risk. This section further analyzes
financial risks. Philips does not purchase or hold
derivative instruments for speculative purposes.
Information regarding financial instruments is
included in note 36 and note 69.
Philips Annual Report 2008102
42
Our group performance
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We care about...
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Message from
the President
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Performance highlights
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Who we are