Philips 2012 Annual Report Download - page 169

12 Group financial statements 12.11 - 12.11 31
Annual Report 2012 169
Other plans
Employee share purchase plan
Under the terms of employee stock purchase plans established by the
Company in various countries, substantially all employees in those
countries are eligible to purchase a limited number of Philips shares at
discounted prices through payroll withholdings, of which the maximum
ranges from 5% to 10% of total salary. Generally, the discount provided
to the employees is in the range of 10% to 20%. A total of 1,906,183
shares were sold to employees in 2012 under the plan at an average
price of EUR 15.69 (2011: 1,851,718 shares at EUR 17.93, 2010:
1,411,956 shares at EUR 22.54).
Convertible personnel debentures
In the Netherlands, the Company issued personnel debentures with a
2-year right of conversion into common shares of Royal Philips
Electronics starting three years after the date of issuance, with a
conversion price equal to the share price on that date. The last issuance
of this particular plan was in December 2008. From 2009 onwards,
employees in the Netherlands are able to join an employee share
purchase plan as described in the previous paragraph. The fair value of
the conversion option of EUR 2.13 in 2008 was recorded as
compensation expense. In 2012, 270,827 shares were issued in
conjunction with conversions at an average price of EUR 14.22 (2011:
1,079 shares at an average price of EUR 24.66, 2010: 279,170 shares at
an average price of EUR 20.86).
Lumileds plan
In December 2006, the Company offered to exchange outstanding
Lumileds Depository Receipts and options for cash and share-based
instruments settled in cash. The amount to be paid to settle the
obligation, with respect to share-based instruments, will fluctuate based
upon changes in the fair value of Lumileds. Substantially all of the holders
of the options and the depository receipts accepted the Company’s
offer. The amount of the share-based payment liability, which is
denominated in US dollars, recorded at December 31, 2011 was EUR
2.7 million. During 2012, the Company paid EUR 2.7 million as a final
settlement of the liability.
31 Related-party transactions
In the normal course of business, Philips purchases and sells goods and
services from/to various related parties in which Philips typically holds a
50% or less equity interest and has significant influence. These
transactions are generally conducted with terms comparable to
transactions with third parties.
2010 2011 2012
Sales of goods and services 240 278 288
Purchases of goods and services 229 117 130
Receivables from related parties 20 19 13
Payables to related parties 5 6 4
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 TP Vision, based
on Philips’ share of 30% in the venture, that can be extended until
April, 2017 depending on the venture’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 172 million non-refundable one-off advertising and
promotion support for the venture in two installments: EUR 122
million which was disbursed in 2012, and EUR 50 million to be paid in
2013.
• A EUR 100 million loan has been provided to TPV, due April, 2015.
In addition, depending on the funding needs of the venture, 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 Television business divestment.
In light of the composition of the Executive Committee during 2012,
the Company considered the members of the Executive Committee
and the Supervisory board to be the key management personnel as
defined in IAS 24 ‘Related parties’. In 2010 and 2011, the Company
considered the members of the Board of Management and the
Supervisory board to be the key management personnel.
For remuneration details of the Executive Committee, the Board of
Management and the Supervisory Board see note 32, Information on
remuneration.
For employee benefit plans see note 29, Pensions and other
postretirement benefits.