Philips 2008 Annual Report Download - page 168

25
Other non-current liabilities
Other non-current liabilities are summarized as follows:
2007 2008
Accrued pension costs 369 937
Sale-and-leaseback deferred income 31 31
Income tax payable 1 1
Asset retirement obligations 21 20
Uncertain tax positions 429 452
Other liabilities 83 33
934 1,474
Please refer to note 6 for a specification of the income tax payable
and the uncertain tax positions.
26
Contractual obligations
payments due by period
less than
1 year 1-3 years 3-5 years
more
than 5
years total
Long-term debt 127 1,027 456 1,827 3,437
Finance leases 4 68 17 46 135
Operating
leases 171 229 137 178 715
302 1,324 610 2,051 4,287
For details about uncertain tax positions amounting to EUR 559 million,
see note note 6 of the notes to US GAAP financial statements.
For an explanation of long-term debt, see note 24. For other long-term
liabilities, see note 25. Property, plant and equipment includes EUR 135
million (2007: EUR 88 million) for finance leases and other beneficial
rights of use, such as buildings rights and hire purchase agreements.
Long-term operating lease commitments totaled EUR 715 million
at December 31, 2008 (2007: EUR 730 million). These leases expire
at various dates during the next 20 years.
The long-term operating leases are mainly related to the rental of
buildings. A number of these leases originate from sale-and-leaseback
arrangements. In 2008, a small sale-and-operational-leaseback
arrangement was concluded. Operating lease payments for 2008
totaled EUR 16 million (2007: EUR 14 million, 2006: EUR 20 million).
The remaining minimum payments are as follows:
2009 16
2010 12
2011 8
2012 8
2013 8
Thereafter 41
27
Contingent liabilities
Guarantees
Philips’ policy is to provide only guarantees and other letters of
support, in writing. Philips does not stand by other forms of support.
At the end of 2008, the total fair value of guarantees was EUR 10
million (2007: EUR 3 million). The following table outlines the total
outstanding off-balance sheet credit-related guarantees and
business-related guarantees provided by Philips for the benefit of
unconsolidated companies and third parties as at December 31, 2008.
Expiration per period
business-
related
guarantees
credit-
related
guarantees total
2008
Total amounts committed 443 42 485
Less than 1 year 205 18 223
1-5 years 78 7 85
After 5 years 160 17 177
2007
Total amounts committed 432 45 477
Less than 1 year 142 5 147
1-5 years 95 16 111
After 5 years 195 24 219
Environmental remediation
The Company and its subsidiaries are subject to environmental laws
and regulations. Under these laws, the Company and/or its subsidiaries
may be required to remediate the effects of the release or disposal
of certain chemicals on the environment.
In the United States, subsidiaries of the Company have been named as
potentially responsible parties in state and federal proceedings for the
clean-up of various sites, including Superfund sites. The Company applies
the provisions of SOP 96-1, ‘Environmental Liabilities’, and SFAS No. 5,
‘Accounting for Contingencies’, and accrues for losses associated with
environmental obligations when such losses are probable and
reasonably estimable.
Generally, the costs of future expenditures for environmental
remediation obligations are not discounted to their present value
since the amounts and the timing of related cash payments are not
reliably determinable. Potential insurance recoveries are recognized
when recoveries are deemed probable.
Legal proceedings
The Company and certain of its group companies and former group
companies are involved as a party in legal proceedings, including
regulatory and other governmental proceedings, including discussions
on potential remedial actions, relating to such matters as competition
issues, commercial transactions, product liability, participations and
environmental pollution. In respect of antitrust laws, the Company
and certain of its group companies and former group companies are
involved in investigations by competition law authorities in several
jurisdictions and are engaged in litigation in this respect. Since the
ultimate disposition of asserted claims and proceedings and investigations
cannot be predicted with certainty, an adverse outcome could have
a material adverse effect on the Company’s consolidated financial
position and consolidated results of operations for a particular period.
Provided below are disclosures of the more significant cases:
Asbestos
Judicial proceedings have been brought in the United States, relating
primarily to the activities of the Company’s US subsidiary TH
Agriculture & Nutrition L.L.C. (THAN) prior to 1981, involving
allegations of personal injury from alleged asbestos exposure. The
claims generally relate to asbestos used in the manufacture of unrelated
companies’ products in the United States and frequently involved
claims for substantial compensatory and punitive damages. THAN’s
businesses which allegedly gave rise to these alleged liabilities were
completely sold in 1984 and its ongoing operations are not material
to its parent, Philips Electronics North America Corporation
(PENAC), or the Company.
During the past several years, certain of the asserted claims were
settled. Additionally, various alternatives for resolving pending and
future claims were explored, including the possibility of THAN filing
for bankruptcy. In the fourth quarter of 2008, THAN solicited votes
for the acceptance of a plan of reorganization from the holders of
asbestos claims. Approximately ninety percent of the claimants (both
in number and value of claims) voted in favor of the plan, exceeding
the thresholds of seventy-five percent in number and two-thirds in
value which are required for a prepackaged bankruptcy under section
524(g) of the Bankruptcy Code. On November 24, 2008, THAN filed
Philips Annual Report 2008168
180
Sustainability performance
192
IFRS financial statements
244
Company financial statements
124
US GAAP financial statements
Notes to the US GAAP
financial statements