Philips 2013 Annual Report Download - page 169

11 Group financial statements 11.9 - 11.9 26
Annual Report 2013 169
Finance lease liabilities
2012 2013
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 73 7 65 61 7 54
Between
one and
five years 137 25 113 112 20 92
More than
five years 88 23 65 68 15 53
298 55 243 241 42 199
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 40 million (2012:
EUR 48 million) until June 30, 2021. As at December 31, 2013 capital
contributions already made to these investment funds are recorded as
available-for-sale financial assets within Other non-current financial
assets.
Based on its 30% share in the TP Vision venture, Philips had various
commitments to provide further funding to the TP Vision venture at
December 31, 2013 (see note 32, Related-party transactions).
On 20 January 2014, Philips has signed a term sheet to transfer its
remaining 30% stake in the TP Vision venture, which will also impact the
above commitments (see note 36, Subsequent events).
See also note 7, Discontinued operations and other assets classified as
held for sale for further details on the Television business divestment.
26 Contingent assets and liabilities
Contingent assets
In 1996, CIEM (Labor Union of Manaus) representing, among other
companies Philips Brazil, filed a fiscal claim against Manaus Free Trade
Zone Superintendence (SUFRAMA), in order to obtain a judicial
declaration of the illegality and unconstitutionality of the Public Price tax,
charged by SUFRAMA. The Lower Court ruled favorable for Philips.
In September 2007, Philips requested the Settlement of Declaratory
Judgment, in order to refund the amounts unduly paid to SUFRAMA
during 1992 to 1999. In August 2011, a ruling was issued to approve Philips
credit for the amount of EUR 36 million (BRL 118 million). The estimated
amount as of year-end 2013 is EUR 40 million (BRL 130 million), the
increase explained by interest.
In December 2008, SUFRAMA filed the appeal against the decision issued
in the records of the Settlement of Declaratory Judgment. The Regional
Court unanimously upheld the Lower Court decision to reject SUFRAMA’s
appeal. SUFRAMA filed two appeals against the Regional Court decision.
One to the Superior Court of Justice (STJ) and the other to Supreme Court.
Both appeals were denied. SUFRAMA filed a Bill of Review against the
decision that denied both appeals. The appeal was admitted in STJ. The
judgment is pending since October 2013. Final decision is expected in two
years.
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
2013, 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 o-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, 2013.
Expiration per period
in millions of euros
business-
related
guarantees
credit-
related
guarantees total
2013
Total amounts committed 292 41 333
Less than one year 107 19 126
Between one and five years 117 7 124
After five years 68 15 83
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
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 eects 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. Philips is
one of the companies that were inspected by officials of the European
Commission in December 2013. The European Commission is looking into
potential restrictions on online sales of consumer electronic products and
small domestic appliances. Philips is fully cooperating with the European
Commission.
Since the ultimate disposition of asserted claims and proceedings and
investigations cannot be predicted with certainty, an adverse outcome
could have a material adverse eect on the Company’s consolidated
financial position, results of operations and cash flows.
Provided below are disclosures of the more significant cases:
Cathode-Ray Tubes (CRT)
On November 21, 2007, the Company announced that competition law
authorities in several jurisdictions had commenced investigations into
possible anticompetitive activities in the Cathode-Ray Tubes, or CRT
industry. On December 5, 2012, the European Commission issued a
decision imposing fines on (former) CRT manufacturers including the
Company. The European Commission imposed a fine of EUR 313 million on
the Company and a fine of EUR 392 million jointly and severally on the
Company and LG Electronics, Inc. In total a payable of EUR 509 million
was recognized and the fine was paid in the first quarter of 2013. The
Company has appealed the decision of the European Commission. The