Philips 2010 Annual Report Download - page 176

17 13 Group financial statements 13.11 - 13.11
176 Annual Report 2010
The changes in the allowance for doubtful accounts receivable are as
follows:
2008 2009 2010
Balance as of January 1 300 280 261
Additions charged to income 33 23 24
Deductions from allowance1) (63) (58) (37)
Other movements2) 10 16 36
Balance as of December 31 280 261 284
1) Write-offs for which an allowance was previously provided
2) Including the effect of translation differences and consolidation changes
17 Shareholders’ equity
Common shares
As of December 31, 2010, the issued and fully paid share capital consists
of 986,078,784 common shares, each share having a par value of EUR
0.20.
In April 2010, Philips settled a dividend of EUR 0.70 per common share,
representing a total value of EUR 650 million. Shareholders could elect
for a cash dividend or a share dividend. Approximately 53% of the
shareholders elected for a share dividend, resulting in the issuance of
13,667,015 new common shares. The settlement of the cash dividend
resulted in a payment of EUR 304 million.
Preference shares
The ‘Stichting Preferente Aandelen Philips’ has been granted the right to
acquire preference shares in the Company. Such right has not been
exercised. As a means to protect the Company and its stakeholders
against an unsolicited attempt to acquire (de facto) control of the
Company, the General Meeting of Shareholders in 1989 adopted
amendments to the Company’s articles of association that allow the
Board of Management and the Supervisory Board to issue (rights to
acquire) preference shares to a third party. As of December 31, 2010,
no preference shares have been issued.
Option rights/restricted shares
The Company has granted stock options on its common shares and
rights to receive common shares in the future (see note 29).
Treasury shares
In connection with the Company’s share repurchase programs, shares
which have been repurchased and are held in treasury for (i) delivery
upon exercise of options and convertible personnel debentures and
under restricted share programs and employee share purchase
programs, and (ii) capital reduction purposes, are accounted for as a
reduction of shareholders’ equity. Treasury shares are recorded at
cost, representing the market price on the acquisition date. When
issued, shares are removed from treasury shares on a first-in, first-out
(FIFO) basis.
Any difference between the cost and the cash received at the time
treasury shares are issued, is recorded in capital in excess of par value,
except in the situation in which the cash received is lower than cost and
capital in excess of par has been depleted.
The following transactions took place resulting from employee option
and share plans:
2009 2010
Shares acquired 2,128 15,237
Average market price EUR 19.10 EUR 25.35
Amount paid − −
Shares delivered 4,477,364 5,397,514
Average market price EUR 13.76 EUR 23.99
Amount received EUR 32 million EUR 71 million
Total shares in treasury at
year-end 43,102,679 37,720,402
Total cost EUR 1,162 million EUR 1,051 million
In 2009 and 2010 there were no transactions to reduce share capital:
2009 2010
Shares acquired − −
Average market price − −
Amount paid − −
Reduction of capital stock − −
Total shares in treasury at
year-end 1,851,998 1,851,998
Total cost EUR 25 million EUR 25 million
Net income attributable to shareholders
A proposal will be submitted to the General Meeting of Shareholders to
pay a dividend of EUR 0.75 per common share, in cash or shares at the
option of the shareholder, against the net income attributable to
shareholders for 2010.
Limitations in the distribution of shareholders’ equity
Pursuant to Dutch law, limitations exist relating to the distribution of
shareholders’ equity of EUR 1,500 million (2009: EUR 1,310 million).
Such limitations relate to common shares of EUR 197 million (2009:
EUR 194 million) as well as to legal reserves required by Dutch law
included under revaluation reserves of EUR 86 million (2009: EUR 102
million), retained earnings of EUR 1,078 million (2009: EUR 884 million)
and other reserves of EUR 139 million (2009: EUR 130 million).
In general, gains related to available-for-sale financial assets, cash flow
hedges and currency translation differences cannot be distributed as
part of shareholders’ equity as they form part of the legal reserves
protected under Dutch law. By their nature, losses relating to available-
for-sale financial assets, cash flow hedges and currency translation
differences, reduce shareholders’ equity, and thereby distributable
amounts.
Therefore, gains related to available-for-sale financial assets (2010: EUR
139 million) included in other reserves limit the distribution of
shareholders’ equity. The losses related to cash flow hedges (2010: EUR
5 million) and currency translation differences (2010: EUR 65 million)
reduce the distributable amount.
The legal reserve required by Dutch law of EUR 1,078 million (2009:
EUR 884 million) included under retained earnings relates to any legal
or economic restrictions on the ability of affiliated companies to
transfer funds to the parent company in the form of dividends.