Philips 2012 Annual Report Download - page 159

12 Group financial statements 12.11 - 12.11 25
Annual Report 2012 159
Finance lease liabilities
2011 2012
future
mini-
mum
lease
pay-
ments interest
present
value of
mini-
mum
lease
pay-
ments
future
mini-
mum
lease
pay-
ments interest
present
value of
mini-
mum
lease
pay-
ments
Less than
one year 60 1 59 73 7 65
Between
one and five
years 123 9 114 137 25 113
More than
five years 35 4 31 88 23 65
218 14 204 298 55 243
Philips entered into contracts with several venture capitalists where it
committed itself to make, under certain conditions, capital
contributions to investment funds to an aggregated amount of EUR 48
million until June 30, 2021. These investments will qualify as non-
controlling interests once the capital contributions have been paid.
Philips made various commitments upon, signing the agreement with
TPV Technology Limited (TPV), to provide further funding to the
venture (TP Vision):
• A subordinated shareholder loan of EUR 51 million has been
provided to TP Vision based on Philips’ share of 30% of the venture.
EUR 21 million of this loan is due April, 2015 and EUR 30 million
due April, 2017. Both loans can be extended depending on the
venture’s funding needs;
• A Senior 12-month EUR 30 million bridge loan to the venture, based
on Philips’ share of 30% in TP Vision, that can be extended up to
April, 2017 depending on TP Vision’s funding needs. This bridge loan
replaced the 9-month EUR 100 million senior bridge loan to the
venture which was not drawn upon during 2012;
• Payment of EUR 50 million non-refundable one-off advertising and
promotion support for TP Vision to be effected in 2013.
In addition, depending on the funding needs of TP Vision, Philips has
committed to provide EUR 60 million based on its 30% share in TP
Vision. This additional funding is considered to have only a remote
possibility of occurring.
See also note 5, Discontinued operations and other assets classified as
held for sale for further details on the total loss related to the
discontinued operation.
25 Contingent liabilities
Guarantees
Philips’ policy is to provide guarantees and other letters of support only
in writing. Philips does not stand by other forms of support. At the end
of 2012, the total fair value of guarantees recognized by Philips in other
non-current liabilities amounted to less than EUR 1 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, 2012.
Expiration per period
in millions of euros
business-
related
guarantees
credit-related
guarantees total
2012
Total amounts committed 295 27 322
Less than one year 113 11 124
Between one and five years 114 − 114
After five years 68 16 84
2011
Total amounts committed 297 39 336
Less than one year 99 22 121
Between one and five years 126 − 126
After five years 72 17 89
Environmental remediation
The Company and its subsidiaries are subject to environmental laws
and regulations. Under these laws, the Company and/or its subsidiaries
may be required to remediate the effects of the release or disposal of
certain chemicals on the environment. The Company accrues for losses
associated with environmental obligations when such losses are
probable and reliably estimable. Such amounts are recognized on a
discounted basis since they reflect the present value of estimated future
cash flows.
Provisions for environmental remediation can change significantly due
to the emergence of additional information regarding the extent or
nature of the contamination, the need to utilize alternative
technologies, actions by regulatory authorities and changes in
judgments, assumptions, and discount rates.
The Company and/or its subsidiaries have recognized environmental
remediation provisions for sites in various countries. In the United
States, subsidiaries of the Company have been named as potentially
responsible parties in state and federal proceedings for the clean-up of
certain sites.
Legal proceedings
The Company and certain of its group companies and former group
companies are involved as a party in legal proceedings, including
regulatory and other governmental proceedings, including discussions
on potential remedial actions, relating to such matters as competition
issues, commercial transactions, product liability, participations and
environmental pollution.
In respect of antitrust laws, the Company and certain of its (former)
group companies are involved in investigations by competition law
authorities in several jurisdictions and are engaged in litigation in this
respect.
In relation to the fraud in the Dutch real estate sector uncovered in
2007, Philips and the Philips Pension Fund in the Netherlands are
currently assessing the amount of residual damages, if any, and the
possibilities of a settlement thereof. Reference is made to note 29,
Pensions and other postretirement benefits for further disclosures.
Since the ultimate disposition of asserted claims and proceedings and
investigations cannot be predicted with certainty, an adverse outcome
could have a material adverse effect on the Company’s consolidated
financial position, results of operations and cash flows.
Provided below are disclosures of the more significant cases:
LCD
On December 11, 2006, LG Display Co. Ltd (formerly LG Philips LCD
Co. Ltd.), a company in which the Company then held a minority
common stock interest, announced that officials from the Korean Fair
Trade Commission had visited the offices of LG Display and that it had
received a subpoena from the United States Department of Justice
(DOJ) and a similar notice from the Japanese Fair Trade Commission