Philips 2012 Annual Report Download - page 153

12 Group financial statements 12.11 - 12.11 18
Annual Report 2012 153
The changes in the allowance for doubtful accounts receivable are as
follows:
2010 2011 2012
Balance as of January 1 261 264 233
Additions charged to income 24 20 11
Deductions from allowance1) (37) (31) (43)
Other movements 16 (20) 1
Balance as of December 31 264 233 202
1) Write-offs for which an allowance was previously provided
18 Equity
Common shares
As of December 31, 2012, the issued and fully paid share capital consists
of 957,132,962 common shares, each share having a par value of EUR
0.20.
In May 2012, Philips settled a dividend of EUR 0.75 per common share,
representing a total value of EUR 687 million. Shareholders could elect
for a cash dividend or a share dividend. Approximately 62.4% of the
shareholders elected for a share dividend, resulting in the issuance of
30,522,107 new common shares. The settlement of the cash dividend
resulted in a payment of EUR 259 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, 2012,
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 30, Share-
based compensation).
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:
2011 2012
Shares acquired 32,484 5,147
Average market price EUR 19.94 EUR 17.86
Amount paid EUR 1 million −
Shares delivered 4,200,181 4,844,898
Average market price EUR 20.54 EUR 24.39
Amount received EUR 87 million EUR 118 million
Total shares in treasury at
year-end 33,552,705 28,712,954
Total cost EUR 965 million EUR 847 million
In order to reduce share capital, the following transactions took place:
2011 2012
Shares acquired 47,475,840 46,865,485
Average market price EUR 14.74 EUR 16.41
Amount paid EUR 700 million EUR 769 million
Reduction of capital stock − 82,364,590
Total shares in treasury at
year-end 49,327,838 13,828,733
Total cost EUR 725 million EUR 256 million
Dividend distribution
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, from the 2012 net income and retained
earnings.
Limitations in the distribution of shareholders’ equity
Pursuant to Dutch law, limitations exist relating to the distribution of
shareholders’ equity of EUR 1,480 million (2011: EUR 1,418 million).
Such limitations relate to common shares of EUR 191 million (2011:
EUR 202 million) as well as to legal reserves required by Dutch law
included under revaluation reserves of EUR 54 million (2011: EUR 70
million), retained earnings of EUR 1,161 million (2011: EUR 1,094
million) and other reserves of EUR 74 million (2011: EUR 52 million).
In general unrealized gains relating to available-for-sale financial assets
and cash flow hedges cannot be distributed as part of shareholders’
equity as they form part of the legal reserves protected under Dutch
law. By their nature, unrealized losses relating to currency translation
differences reduce shareholders’ equity, and thereby distributable
amounts.
Therefore, unrealized gains related to available-for-sale financial assets
(2012: EUR 54 million) and cash flow hedges (2012: EUR 20 million),
both included in other reserves, limit the distribution of shareholders’
equity. The unrealized losses related to currency translation (2012:
EUR 93 million) reduce the distributable amount by their nature.
The legal reserve required by Dutch law of EUR 1,161 million (2011:
EUR 1,094 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.
Non-controlling interests
Non-controlling interests represent the claims that third parties have
on equity of consolidated group companies that are not wholly owned
by the Company. The Sales, Income from operations and Net income
of these companies is not material in view of the consolidated financial
data of the Company.
Objectives, policies and processes for managing capital
Philips manages capital based upon the measures net operating capital
(NOC), net debt and cash flows before financing activities.