Philips 2013 Annual Report Download - page 194

D E 12 Company financial statements 12.4 - 12.4
194 Annual Report 2013
31, 2013 the UK Pension Fund was not in surplus (on the agreed swaps
basis). The fair value of the arrangement was estimated to be EUR 14
million as of December 31, 2012. As of December 31, 2013 management’s
best estimate of the fair value of the arrangement is EUR 7 million, based
on the current funded status as of December 31, 2013 (swaps basis) and
the economic and demographic risks of the UK Pension Fund. The change
in fair value in 2013 is reported under Value adjustments in the table
above.
DReceivables
2012 2013
Trade accounts receivable 83 80
Affiliated companies 7,690 7,177
Other receivables 23 5
Advances and prepaid expenses 16 28
Derivative instruments - assets 176 210
7,988 7,500
EShareholders’ equity
Common shares
As of December 31, 2013, the issued and fully paid share capital consists of
937,845,789 common shares, each share having a par value of EUR 0.20.
In June 2013, Philips settled a dividend of EUR 0.75 per common share,
representing a total value of EUR 678 million. Shareholders could elect for
a cash dividend or a share dividend. Approximately 59.8% of the
shareholders elected for a share dividend, resulting in the issuance of
18,491,337 new common shares. The settlement of the cash dividend
resulted in a payment of EUR 272 million.
The following table shows the movements in the outstanding number of
shares;
Share movement schedule
2012 2013
Balance as of January 1 926,094,902 914,591,275
Dividend distributed 30,522,107 18,491,337
Purchase of treasury shares (46,870,632) (27,811,356)
Re-issuance of treasury shares 4,844,898 8,066,511
Balance as of December 31 914,591,275 913,337,767
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 (de facto) take over 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, 2013, 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. Please refer to note 31, Share-
based compensation, which is deemed incorporated and repeated herein
by reference.
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, performance and 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 FIFO basis.
Any dierence between the cost and the cash received at the time treasury
shares are issued, is recorded in retained earnings.
Dividend withholding tax in connection with the Company’s purchase of
treasury shares is recorded in retained earnings.
The following transactions took place resulting from employee option and
share plans:
2012 2013
Shares acquired 5,147 3,984
Average market price EUR 17.86 EUR 22.51
Amount paid EUR 0 million EUR 0 million
Shares delivered 4,844,898 8,066,511
Average market price EUR 24.39 EUR 28.35
Amount received EUR 118 million EUR 229 million
Total shares in treasury at
year-end 28,712,954 20,650,427
Total cost EUR 847 million EUR 618 million
In order to reduce share capital, the following transactions took place:
2012 2013
Shares acquired 46,865,485 27,807,372
Average market price EUR 16.41 EUR 22.69
Amount paid EUR 769 million EUR 631 million
Reduction of capital
stock 82,364,590 37,778,510
Total shares in treasury at
year-end 13,828,733 3,857,595
Total cost EUR 256 million EUR 100 million
Dividend distribution
A proposal will be submitted to the 2014 General Meeting of Shareholders
to pay a dividend of EUR 0.80 per common share, in cash or shares at the
option of the shareholder, from the 2013 net income.
Legal reserves
As of December 31, 2013, legal reserves relate to the revaluation of assets
and liabilities of acquired companies in the context of multi-stage
acquisitions of EUR 23 million (2012: EUR 54 million), unrealized gains on
available-for-sale financial assets of EUR 55 million (2012: EUR 54 million),
unrealized gains on cash flow hedges of EUR 24 million (2012: EUR 20
million), ‘affiliated companies’ of EUR 1,319 million (2012: EUR 1,161 million)
and unrealized currency translation losses of EUR 569 million (2012: EUR
93 million).
The item ‘affiliated companies’ relates to the ‘wettelijke reserve
deelnemingen’, which is required by Dutch law. This reserve 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.
Limitations in the distribution of shareholders’ equity
Pursuant to Dutch law, limitations exist relating to the distribution of
shareholders’ equity of EUR 1,609 million (2012: EUR 1,480 million). As at
December 31, 2013, such limitations relate to common shares of EUR 188
million (2012: EUR 191 million) as well as to legal reserves included under
‘revaluation’ of EUR 23 million (2012: EUR 54 million), available-for-sale
financial assets of EUR 55 million (2012: EUR 54 million), unrealized gains
on cash flow hedges of EUR 24 million (2012: EUR 20 million) and ‘affiliated
companies’ of EUR 1,319 million (2012: EUR 1,161 million).
The unrealized losses related to currency translation dierences of EUR
569 million (2012: EUR 93 million), although qualifying as a legal reserve,
reduce the distributable amount by their nature.