Philips 2008 Annual Report Download - page 249

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H
Legal reserves
As of December 31, 2008, legal reserves relate to the revaluation of
assets and liabilities of acquired companies in the context of multi-stage
acquisitions of EUR 117 million (2007: EUR 133 million), unrealized
losses on available-for-sale securities of EUR 25 million (2007: gains of
EUR 1,183 million), unrealized losses on cash flow hedges of
EUR 28 million (2007: gains of EUR 28 million), ‘affiliated companies’ of
EUR 985 million (2007: EUR 1,343 million) and currency translation
losses of EUR 656 million (2007: losses of EUR 613 million).
The movement in unrealized results on available-for-sales securities
are especially due to the sale of shares (TSMC and LG Display) and
the recognition of impairment charges (see note 48). The item
‘affiliated companies’ relates to the ‘wettelijke reserve deelnemingen’,
which is required by Dutch law.
Limitations in the distribution of stockholders’ equity
Pursuant to Dutch law, limitations exist relating to the distribution of
stockholders’ equity of EUR 1,296 million (2007: EUR 2,915 million).
At December 31, 2008, such limitations relate to common stock of
EUR 194 million (2007: EUR 228 million) as well as to legal reserves
included under ‘affiliated companies’ of EUR 985 million (2007:
EUR 1,343 million) and ‘revaluation’ of EUR 117 million (2007:
EUR 1,344 million).
In general, gains related to available-for-sale securities, cash flow
hedges
and currency translation differences reduce the distributable
stockholders’ equity. By their nature, losses relating to available-for-
sale securities, cash flow hedges and currency translation differences
automatically reduce stockholders’ equity, and thereby distributable
amounts.
I
Net income
Net income in 2008 amounted to a loss of EUR 91 million
(2007: a profit of EUR 4,873 million).
J
Employees
The number of persons employed by the Company at year-end 2008
was 11 (2007: 13) and included the members of the Board of
Management and most members of the Group Management Committee .
For the remuneration of past and present members of both the Board
of Management and the Supervisory Board, please refer to note 34,
which is deemed incorporated and repeated herein by reference.
K
Obligations not appearing in the balance sheet
General guarantees as referred to in Section 403, Book 2, of the
Dutch Civil Code, have been given by the Company on behalf of
several group companies in the Netherlands. The liabilities of these
companies to third parties and equity-accounted investees totaled
EUR 1,249 million as of year-end 2008 (2007: EUR 1,232 million).
Guarantees totaling EUR 266 million (2007: EUR 256 million) have
also been given on behalf of other group companies, and guarantees
totaling EUR 42 million (2007: EUR 44 million) on behalf of
unconsolidated companies and third parties. The Company is the
head of a fiscal unity that contains the most significant Dutch
wholly-owned group companies. The company is therefore jointly
and severally liable for the tax liabilities of the tax entity as a whole.
For additional information, please refer to note 62.
L
Audit fees
For a summary of the audit fees, please refer to the Report of the
Supervisory Board, table ‘Aggregated fees KPMG’ in the section
‘Report of Audit Committee’.
M
Subsequent events
On January 26, 2009, the Company announced that it had stopped
the EUR 5 billion share repurchase program, which was announced
on December 19, 2007, until further notice.
February 23, 2009
The Supervisory Board
The Board of Management
I
J
K
L
M
Auditor’s report
To the Supervisory Board and Shareholders of Koninklijke Philips
Electronics N.V.:
Report on the Company financial statements
We have audited the accompanying Company financial statements
2008 which are part of the financial statements 2008 of Koninklijke
Philips Electronics N.V., Eindhoven, the Netherlands, which comprise
the balance sheet as at December 31, 2008, statement of income and
the statement of changes in equity for the year then ended, and the
notes as set out on page 244 to 249.
Management’s responsibility
The Board of Management is responsible for the preparation and
fair presentation of the Company financial statements and for the
preparation of the Management report, both in accordance with
Part 9 of Book 2 of the Dutch Civil Code. This responsibility includes:
designing, implementing and maintaining internal control relevant
to the preparation and fair presentation of the Company financial
statements that are free from material misstatement, whether due
to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in
the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on the Company financial
statements based on our audit. We conducted our audit in accordance
with Dutch law. This law requires that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance whether the Company financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the Company financial statements.
The procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatement of the Company
financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to
the entity’s preparation and fair presentation of the Company financial
statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the Company
financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the Company financial statements give a true and fair
view of the financial position of Koninklijke Philips Electronics N.V.
as at December 31, 2008, and of its result for the year then ended
in accordance with Part 9 of Book 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements
Pursuant to the legal requirement under 2:393 sub 5 part f of the
Dutch Civil Code, we report, to the extent of our competence, that
the Management report as set out on page 192 to 197, is consistent
with the Company financial statements as required by 2:391 sub 4
of the Dutch Civil Code.
Amsterdam, February 23, 2009
KPMG Accountants N.V.
M.A. Soeting RA
Philips Annual Report 2008 249
254
Corporate governance
250
Reconciliation of
non-US GAAP information
262
Ten-year overview
266
Investor information