Philips 2009 Annual Report Download - page 72

4.2.9 Cash obligations
Contractual cash obligations
Presented below is a summary of the Group’s contractual
cash obligations and commitments at December 31, 2009.
Contractual cash obligations at December 31, 2009
in millions of euros
payments due by period
total
less
than 1
year
1-3
years
3-5
years
after 5
years
Long-term debt1) 3,648 115 1,022 704 1,807
Finance lease
obligations1) 138 31 47 19 41
Short-term debt1,4) 481 481 − − −
Operating leases1) 666 175 237 123 131
Derivative
liabilities1) 276 90 8 178 −
Interest on debt2) 2,295 195 331 265 1,504
Trade and other
payables3) 2,870 2,870 − − −
10,374 3,957 1,645 1,289 3,483
1) Short-term debt, long-term debt, lease obligations and derivatives are included
in the Company’s consolidated balance sheet.
2) Approximately 27% of the debt bears interest at a floating rate. Interest on debt
has been estimated based upon average rates in 2009.
3) Excluding derivatives, shown separately.
4) Excluding current portion of long-term debt
Philips has no material commitments for capital
expenditures.
On December 1, 2009, Philips entered into an
outsourcing agreement to acquire IT services from T-
Systems GmbH over a period of 5 years at a total cost of
approximately EUR 300 million. The agreement, which is
effective January 1, 2010, provides that penalties may be
charged to the Company if Philips terminates the
agreement prior to its expiration. The termination
penalties range from EUR 40 million, if the agreement is
cancelled within 12 months to EUR 6 million if the
agreement is cancelled within 36 months.
Additionally, Philips has a number of commercial
agreements, such as supply agreements, which provide
that certain penalties may be charged to the Company if it
does not fulfill its commitments.
The above table excludes any potential uncertain income
tax liabilities that may become payable upon examination
of the Group’s income tax returns by fiscal authorities.
Such amounts and periods of payment cannot be reliably
estimated.
Other cash commitments
In 2009, following Court ruling on a Plan of Reorganization
filed by a US subsidiary of the Company, an amount of
USD 900 million (EUR 597 million) was settled to an
Asbestos Personal Injury Trust including EUR 114 million
held in a restricted trust account. For further information
with respect to this and other contingent liabilities, refer
to note 24.
The Company and its subsidiaries sponsor pension plans
in many countries in accordance with legal requirements,
customs and the local situation in the countries involved.
Additionally, certain postretirement benefits are provided
in certain countries. The Company is reviewing the future
funding of the existing deficits in its pension plans in the US
and UK. Refer to note 18 for a discussion of the plans and
expected cash outflows.
The company has EUR 396 million restructuring-related
provisions by the end of 2009, of which EUR 318 million is
expected to result in cash outflows in 2010. Refer to
note 17 for details of restructuring provisions and
potential cash flow impact for 2010 and further.
A proposal will be submitted to the General Meeting of
Shareholders to pay a dividend of EUR 0.70 per common
share (up to EUR 650 million), in cash or shares at the
option of the shareholder, against the net income for 2009
and the retained earnings of the Company.
Guarantees
Philips’ policy is to provide guarantees and other letters of
support only in writing. Philips does not provide other
forms of support. At the end of 2009, the total fair value of
guarantees recognized by Philips was EUR 14 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, 2009 and 2008.
4 Our group performance 4.2.9 - 4.2.9
72 Philips Annual Report 2009