Philips 2008 Annual Report Download - page 166

The weighted averages of the assumptions used to calculate
the postretirement benefit obligations as of December 31 were
as follows:
2007 2008
Discount rate 8.5% 9.7%
Compensation increase (where applicable) −
The weighted averages of the assumptions used to calculate the net
periodic cost for years ended December 31 were as follows:
2007 2008
Discount rate 7.2% 8.5%
Compensation increase (where applicable) −−
Assumed healthcare cost trend rates at December 31:
2007 2008
Healthcare cost trend rate assumed for next years 9.0% 10.0%
Rate that the cost trend rate will gradually reach 7.0% 7.5%
Year of reaching the rate at which it is assumed
to remain 2015 2016
Assumed healthcare cost trend rates have a significant effect on the
amounts reported for the retiree medical plans. A one-percentage-
point change in assumed healthcare cost trend rates would have the
following effects:
one-
percentage-
point
increase
one-
percentage-
point
decrease
Effect on total of service and interest cost 5 (4)
Effect on postretirement benefit obligation 36 (32)
Estimated future postretirement benefit payments
The following postretirement benefit payments are expected:
2009 24
2010 25
2011 26
2012 27
2013 28
Years 2014 - 2018 172
22
Other current liabilities
Other current liabilities are summarized as follows:
2007 2008
Advances received from customers on orders
not covered by work in process 133 148
Other taxes including social security premiums 253 251
Other short-term liabilities 123 124
509 523
23
Short-term debt
2007 2008
Short-term bank borrowings 464 562
Other short-term loans 32 24
Current portion of long-term debt 1,849 131
2,345 717
During 2008, the weighted average interest rate on the bank borrowings
was 8.6% (2007: 7.9%).
In the Netherlands, the Company issues personnel debentures with
a 5-year right of conversion into common shares of Royal Philips
Electronics. Convertible personnel debentures may not be converted
within a period of 3 years after the date of issue. These convertible
personnel debentures are available to most employees in the
Netherlands and are purchased by them with their own funds and are
redeemable on demand. The convertible personnel debentures become
non-convertible debentures at the end of the conversion period.
Although convertible debentures have the character of long-term
financing, the total outstanding amounts are classified as current
portion of long-term debt. At December 31, 2008, an amount of
EUR 72 million (2007: EUR 103 million) of convertible personnel
debentures was outstanding, with an average conversion price of
EUR 22.95. The conversion price varies between EUR 14.19 and
EUR 31.59 with various conversion periods ending between January 1,
2008 and December 31, 2012. As of January 1, 2009, Philips no longer
issues those debentures.
The Company has access to a USD 2.5 billion commercial paper
program which was established at the beginning of 2001. The Company
also has available a seven-year revolving credit facility for USD 2.5
billion, established in December 2004, that could act as a back-up for
the commercial paper program and can also be used for general
corporate purposes. The Company did not use the commercial paper
program or the revolving credit facility during 2008.
In addition to the USD 2.5 billion revolving credit facility, Philips has
a EUR 500 million standby roll-over loan agreement in place. The
availability of EUR 450 million out of this EUR 500 million is committed
until April 29, 2010. As of December 31, 2008, Philips did not have any
loans outstanding under these facilities.
As of December 31, 2008 Philips had an undrawn committed bilateral
loan of EUR 250 million in place which was fully drawn in January 2009.
Philips Annual Report 2008166
180
Sustainability performance
192
IFRS financial statements
244
Company financial statements
124
US GAAP financial statements
Notes to the US GAAP
financial statements