Philips 2011 Annual Report Download - page 141

12 Group financial statements 12.11 - 12.11
Annual Report 2011 141
Deferred tax assets and liabilities relate to the balance sheet captions,
as follows:
assets liabilities net
2011
Intangible assets 55 (1,129) (1,074)
Property, plant and equipment 147 (70) 77
Inventories 231 (10) 221
Prepaid pension costs 6 (4) 2
Other receivables 56 (12) 44
Other assets 50 (31) 19
Provisions:
- pensions 619 (2) 617
- guarantees 18 − 18
- termination benefits 59 (17) 42
- other postretirement 70 1 71
- other 654 (18) 636
Other liabilities 267 (36) 231
Tax loss carryforwards (including tax
credit carryforwards) 732 − 732
2,964 (1,328) 1,636
Set-off of deferred tax positions (1,251) 1,251 −
Net deferred tax assets 1,713 (77) 1,636
assets liabilities net
2010
Intangible assets 104 (1,321) (1,217)
Property, plant and equipment 106 (66) 40
Inventories 267 (25) 242
Prepaid pension costs 2 (3) (1)
Other receivables 53 (15) 38
Other assets 50 (22) 28
Provisions:
- pensions 571 (2) 569
- guarantees 11 − 11
- termination benefits 70 (2) 68
- other postretirement 78 1 79
- other 579 (34) 545
Other liabilities 110 (28) 82
Tax loss carryforwards (including tax
credit carryforwards) 696 − 696
2,697 (1,517) 1,180
Set-off of deferred tax positions (1,346) 1,346 −
Net deferred tax assets 1,351 (171) 1,180
Deferred tax assets are recognized for temporary differences, unused
tax losses, and unused tax credits to the extent that realization of the
related tax benefits is probable. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income in
the countries where the deferred tax assets originated and during the
periods when the deferred tax assets become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment.
The net deferred tax assets of EUR 1,636 million (2010: EUR 1,180
million) consist of deferred tax assets of EUR 1,713 million (2010: EUR
1,351 million) in countries with a net deferred tax asset position and
deferred tax liabilities of EUR 77 million (2010: EUR 171 million) in
countries with a net deferred tax liability position. Of the total deferred
tax assets of EUR 1,713 million at December 31, 2011, (2010: EUR
1,351 million), EUR 487 million (2010: EUR 812 million) is recognized
in respect of fiscal entities in various countries where there have been
fiscal losses in the current or preceding period. Management’s
projections support the assumption that it is probable that the results
of future operations will generate sufficient taxable income to utilize
these deferred tax assets.
At December 31, 2011 and 2010, there were no recognized deferred
tax liabilities for taxes that would be payable on the unremitted earnings
of certain foreign subsidiaries of Philips Holding USA (PHUSA) since it
has been determined that undistributed profits of such subsidiaries will
not be distributed in the foreseeable future. The temporary differences
associated with the investments in subsidiaries of PHUSA, for which a
deferred tax liability has not been recognized, aggregate to EUR 36
million (2010: EUR 34 million).
At December 31, 2011, operating loss carryforwards expire as follows:
Total 2012 2013 2014 2015 2016
2017/
2021 later
unlimi-
ted
4,600 11 8 21 26 31 21 930 3,552
The Company also has tax credit carryforwards of EUR 120 million,
which are available to offset future tax, if any, and which expire as
follows:
Total 2012 2013 2014 2015 2016
2017/
2021 later
unlimi-
ted
120 1 1 3 − 8 75 30 2
At December 31, 2011 , operating loss and tax credit carryforwards
for which no deferred tax assets have been recognized in the balance
sheet, expire as follows:
Total 2012 2013 2014 2015 2016
2017/
2021 later
unlimi-
ted
1,847 3 − 5 2 5 25 11 1,796
At December 31, 2011, the amount of deductible temporary
differences for which no deferred tax asset has been recognized in the
balance sheet is EUR 164 million (2010: EUR 193 million).
Classification of the income tax payable and receivable is as follows:
2010 2011
Income tax receivable 79 162
Income tax receivable - under non-current receivables 2 1
Income tax payable (291) (191)
Income tax payable - under non-current liabilities (1) (1)
Fiscal risks
Philips is exposed to fiscal uncertainties. These uncertainties include
the following:
Transfer pricing uncertainties
Philips has issued transfer pricing directives, which are in accordance
with international guidelines such as those of the Organization of
Economic Co-operation and Development. As transfer pricing has a
cross-border effect, the focus of local tax authorities on implemented
transfer pricing procedures in a country may have an impact on results
in another country. In order to mitigate the transfer pricing
uncertainties, audits are executed by Corporate Fiscal and Internal
Audit on a regular basis to safeguard the correct implementation of the
transfer pricing directives.
Tax uncertainties on general service agreements and
specific allocation contracts
Due to the centralization of certain activities in a limited number of
countries (such as research and development, centralized IT, corporate
functions and head office), costs are also centralized. As a consequence,
for tax reasons these costs and/or revenues must be allocated to the