Philips 2008 Annual Report Download - page 159

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consequence of weaker demand for LED solutions in the automotive,
display and cell phone markets. The pre-tax discount
rate used for the Lumileds impairment test was 14.6%.
Please refer to Information by sector and main country that begins
on page 133 of this Annual Report for a specification of goodwill
by sector.
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Accrued liabilities
Accrued liabilities are summarized as follows:
2007 2008
Personnel-related costs:
- Salaries and wages 433 438
- Accrued holiday entitlements 178 192
- Other personnel-related costs 169 161
Fixed-asset-related costs:
- Gas, water, electricity, rent and other 62 69
Ta x e s :
- Income tax payable 154 132
- Other taxes payable 12 16
Communication & IT costs 31 23
Distribution costs 109 92
Sales-related costs:
- Commissions payable 43 53
- Advertising and marketing-related costs 66 87
- Other sales-related costs 206 249
Material-related accruals 134 170
Interest-related accruals 110 79
Deferred income 564 671
Derivative instruments - liabilities (see note 35) 144 505
Restructuring-related liabilities 20 163
Other accrued liabilities 549 536
2,984 3,636
Please refer to note 6 for a specification of income tax payable.
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Provisions
Provisions are summarized as follows:
2007 2008
long-
term
short-
term
long-
term
short-
term
Provision for defined-benefit
plans (see note 20) 745 68 697 64
Other postretirement benefits
(see note 21) 390 23 330 23
Postemployment benefits and
obligatory severance payments 92 11 73 16
Deferred tax liabilities
(see note 6) 671 1 1,145 20
Product warranty 133 190 107 203
Loss contingencies
(environmental remediation
and product liability) 432 49 153 651
Restructuring-related
provisions 22 2 161 49
Other provisions 227 33 243 34
2,712 377 2,909 1,060
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Product warranty
The provision for product warranty reflects the estimated costs
of replacement and free-of-charge services that are expected to be
incurred by the Group with respect to products sold. The changes
in the provision for product warranty are as follows:
2006 2007 2008
Balance as of January 1 378 365 323
Changes:
Additions 438 354 333
Utilizations (443) (369) (357)
Translation differences (13) (16) (3)
Changes in consolidation 5 (11) 14
Balance as of December 31 365 323 310
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 reasonably estimable. The asbestos
liabilities have been classified as current at December 31, 2008. Please
refer to note 27.
The changes in this provision are as follows:
2006 2007 2008
Balance as of January 1 287 576 481
Changes:
Additions 365 15 317
Utilizations (39) (66) (12)
Translation differences (37) (44) 18
Balance as of December 31 576 481 804
Postemployment benefits and obligatory severance payments
The provision for postemployment benefits covers benefits provided
to former or inactive employees after employment but before
retirement, including salary continuation, supplemental unemployment
benefits and disability-related benefits.
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 76 million (2007: EUR 79 million) and expected losses
on existing projects/orders totaling EUR 13 million (2007: EUR 14
million).
Philips Annual Report 2008 159
254
Corporate governance
250
Reconciliation of
non-US GAAP information
262
Ten-year overview
266
Investor information