Philips 2008 Annual Report Download - page 237

The weighted average assumptions used to calculate the net cost
for years ended December 31:
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 year 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
Sensitivity analysis
Assumed healthcare trend rates have a significant effect on the
amounts reported for the healthcare plans. A one percentage-point
change in assumed healthcare cost trend rates would have the
following effects as at December 31, 2008:
increase
with 1%
decrease
by 1%
Effect on total of service and interest cost 5 (4)
Effect on postretirement benefit obligation 36 (32)
Historical data
2006 2007 2008
Present value of defined-benefit obligation 373 413 353
Fair value of plan assets −−−
(Deficit) surplus (373) (413) (353)
Experience adjustments in % on
- defined-benefit obligations (gain) loss (1.6%) (0.2%) (0.1%)
57
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 123 123
509 522
57
58
Short-term debt
2007 2008
Short-term bank borrowings 464 562
Other short-term loans 32 24
Current portion of long-term debt 1,854 136
2,350 722
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 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.
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Philips Annual Report 2008 237
254
Corporate governance
250
Reconciliation of
non-US GAAP information
262
Ten-year overview
266
Investor information