Philips 2009 Annual Report Download - page 188

16 Accrued liabilities
Accrued liabilities are summarized as follows:
2008 2009
Personnel-related costs:
- Salaries and wages 438 392
- Accrued holiday entitlements 192 168
- Other personnel-related costs 161 190
Fixed-asset-related costs:
- Gas, water, electricity, rent and other 69 55
Taxes:
- Income tax payable 132 118
- Other taxes payable 16 10
Communication & IT costs 23 13
Distribution costs 92 73
Sales-related costs:
- Commission payable 53 52
- Advertising and marketing-related costs 87 92
- Other sales-related costs 249 183
Material-related costs 170 165
Interest-related accruals 79 87
Deferred income 664 651
Derivative instruments - liabilities (see note 32) 505 276
Other accrued liabilities 704 609
3,634 3,134
Please refer to note 5 for a specification on the income tax payable.
17 Provisions
2008 2009
long-
term
short-
term
long-
term
short-
term
Provisions for defined-benefit
plans (see note 18) 699 64 669 61
Other postretirement benefits
(see note 18) 329 23 296 21
Postemployment benefits and
obligatory severance payments 73 16 106 29
Product warranty 107 203 108 227
Loss contingencies
(environmental remediation and
product liability) 178 634 186 14
Restructuring-related provisions 161 40 78 318
Other provisions 247 63 291 46
1,794 1,043 1,734 716
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.
Product warranty
The provision for product warranty reflects the estimated costs of
replacement and free-of-charge services that will be incurred by the
Group with respect to products sold. The Group expects the provision
will be utilized mostly within the next two years. The changes in the
provision for product warranty are as follows:
2007 2008 2009
Balance as of January 1 365 323 310
Changes:
Additions 354 333 333
Utilizations (369) (357) (324)
Translation differences (16) (3) 3
Changes in consolidation (11) 14 13
Balance as of December 31 323 310 335
Loss contingencies (environmental remediation and product
liability)
This provision includes accrued losses recorded with respect to
environmental remediation and product liability. Half of this provision is
expected to be utilized within the next 10 years. The remaining portion,
which relates to longer-term remediation activities, is expected to be
utilized over approximately 60 years. The asbestos liability has been
settled in 2009, please refer to note 24.
The changes in this provision are as follows:
2007 2008 2009
Balance as of January 1 510 451 812
Changes:
Additions 16 318 25
Utilizations (66) (15) (583)
Releases 29 37 −
Translation differences (38) 21 (54)
Balance as of December 31 451 812 200
Restructuring- related provisions
The most significant projects in 2009
• Healthcare initiated various restructuring projects aimed at
reduction of the fixed cost structure, mainly impacting Imaging
Systems (Netherlands), Home Healthcare Solutions and Clinical
Care Systems (various locations in the US).
• Consumer Lifestyle restructuring projects focused on Television
(primarily Belgium and France), Peripherals & Accessories (mainly
Technology & Development in the Netherlands) and Domestic
Appliances (mainly Singapore and China).
• Restructuring projects at Lighting aimed at further increasing
organizational effectiveness, and centered on Lamps. The largest
restructuring projects were in the Netherlands, Belgium, Poland and
various locations in the US.
• In Group Management & Services restructuring projects focused on
reducing the fixed cost structure of Corporate Research
Technologies, Philips Information Technology, Philips Design, and
Corporate Overheads.
In 2009, restructuring provisions of EUR 81 million were released,
mainly as a result of transferring employees within the Company and the
release of a restructuring provision in conjunction with the sale of
Hoffmeister (Lighting).
While all these projects have been communicated, the completion of
many of these projects will be during 2010 and early 2011, and will affect
approximately 5,000 employees.
16 17 11 Group financial statements 11.12 - 11.12
188 Philips Annual Report 2009