Philips 2008 Annual Report Download - page 153

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At December 31, 2008, operating loss carryforwards expire
as follows:
Total 2009 2010 2011 2012 2013
2014/
2018 later unlimited
4,198 14 16 58 12 8 27 852 3,211
The Company also has tax credit carryforwards of EUR 107 million,
which are available to offset future tax, if any, and which expire as
follows:
Total 2009 2010 2011 2012 2013
2014/
2018 later unlimited
107 2 2 5 7 3 12 49 27
Classification of the deferred tax assets and liabilities is as follows:
2007 2008
Deferred tax assets - under other current assets 399 837
Deferred tax assets - under other non-current assets 971 553
Deferred tax liabilities - under provisions (672) (1,165)
698 225
Classification of the income tax payable and receivable is as follows:
2007 2008
Income tax receivable - under current receivables 52 133
Income tax receivable - under non-current
receivables 14 1
Income tax payable - under accrued liabilities (154) (132)
Income tax payable - under other non-current
liabilities (1) (1)
Uncertain tax positions
The Company adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, on January 1, 2007.
A reconciliation of the beginning and ending amount of unrecognized
tax benefits is as follows:
2007 2008
Balance as of January 1: 719 627
Additions based on tax positions related to the
current year 116 67
Acquisitions −24
Additions for tax positions of prior years 23 15
Reductions for tax positions of prior years for:
- change in judgment (28) (4)
- settlement during the period (159) (28)
- lapses of applicable statute of limitation (1) (3)
- currency differences (43) 12
- provisional payment −(151)
Balance as of December 31: 627 559
The amount presented as ‘provisional payment’ represents a reduction
of the balance
of unrecognized tax benefits due to a provisional tax
payment, subject to the resolution of a disputed matter.
The estimated timing of cash payments associated with unrecognized
tax positions amounting to EUR 559 million (2007: EUR 627 million)
cannot be reliably estimated.
The total amount of unrecognized tax benefits that, if recognized,
would affect the effective tax rate is EUR 509 million (2007: EUR 577
million).
Unrecognized tax benefits including interest and penalties are
accounted for as follows:
2007 2008
Netted against deferred tax assets 143 155
Netted against income tax receivable 100 −
Non-current portion of other liabilities 429 452
Estimated interest and penalties relating to unrecognized tax benefits
are classified as a component of finance charges and income tax
expense, respectively. During the years ended December 31, 2008, 2007,
and 2006, the Company recognized EUR 7 million, EUR 14 million,
and EUR 6 million respectively in interest and penalties. The accrued
liability for interest and penalties was EUR 48 million and EUR 45
million at December 31, 2008 and 2007, respectively.
In many cases, unrecognized tax benefits are related to tax years that
remain subject to examination by the relevant tax authorities. The
following table summarizes these open years by major jurisdiction:
Major jurisdiction
Open tax years
United States 2003-2008
United Kingdom 2001-2008
Germany 1997-2008
France 2000-2008
Netherlands 2007-2008
Hong Kong 2002-2008
It is reasonably possible that the amount of unrecognized tax benefits
may change in the next twelve months due to expiring statutes, audit
activity, tax payments, competent authority proceedings related to
transfer pricing, or final decisions in matters that are the subject of
litigation in various taxing jurisdictions in which we operate.
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Investments in equity-accounted investees
Results relating to equity-accounted investees
2006 2007 2008
Company’s participation in income
(loss) (180) 271 81
Results on sales of shares 79 514 (2)
Gains arising from dilution effects 14 −12
Investment impairment/other charges (70) (22) (72)
(157) 763 19
In 2006 and 2008, Philips recorded dilution gains of EUR 14 million
and EUR 12 million respectively on its share in TPV Technology
(TPV), a Hong Kong based manufacturer of flat panels.
Detailed information on the other aforementioned individual line
items is set out below.
Company’s participation in income (loss)
2006 2007 2008
LG Display (196) 260 66
Others 16 11 15
(180) 271 81
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Philips Annual Report 2008 153
254
Corporate governance
250
Reconciliation of
non-US GAAP information
262
Ten-year overview
266
Investor information