Philips 2014 Annual Report Download - page 159

26 Group nancial statements 12.9
Annual Report 2014 159
The remaining minimum payments under sale-and-
leaseback arrangements included in operating lease
obligations above are as follows:
Philips Group
Operating lease - minimum payments under sale-and-leaseback
arrangements in millions of EUR
2014
2015 36
2016 36
2017 35
2018 33
2019 33
Thereafter 142
Finance lease liabilities
Philips Group
Finance lease liabilities in millions of EUR
2013 - 2014
2013 2014
future
mini-
mum
lease
pay-
ments
inter-
est
present
value
of min-
imum
lease
pay-
ments
future
mini-
mum
lease
pay-
ments
inter-
est
present
value
of min-
imum
lease
pay-
ments
Less
than one
year 61 7 54 61 7 54
Between
one and
ve
years 112 20 92 117 19 98
More
than ve
years 68 15 53 54 11 43
Finance
lease 241 42 199 232 37 195
26 Contingent assets and liabilities
Contingent assets
Zoll
In June 2010, Philips led a patent infringement lawsuit
against Zoll Medical Corporation claiming that its
debrillator related patents were infringed by Zoll’s
Automatic External Debrillator (AED) products. Zoll
led a countersuit claiming patent infringement by
Philips’ Advanced Life Support (ALS) products and a
method for testing debrillator electrodes.
In December 2013, the liability phase of the Zoll lawsuit
was tried before a jury in the United States District Court
for the District Massachusetts. Philips and Zoll were
both held to infringe each other’s patents. Philips
expects that it will result in a net dierence in favor of
Philips. The Zoll liability judgment is now pending
before the United States Court of Appeals for the
Federal Circuit (CAFC). Resolution of the amount
ultimately owed to Philips in the Zoll lawsuit is
contingent upon both the CAFC arming the December
2013 jury decision on liability (expected in the second
half of 2015) and the subsequent damages trial
(expected to take place during the rst half of 2016).
Suframa
In 1996, CIEM (Labor Union of Manaus) representing,
amongst other companies Philips Brazil, led a scal
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. The estimated
amount as of year-end 2014 is EUR 43 million, the
increase explained by interest.
In 2014 an agreement was made with an external
investor under which agreement Philips received
upfront EUR 14 million in cash and has the right to
receive (“upward potential”) future amounts depending
on a favorable outcome of the case and the timeline in
which this outcome is reached (EUR 5 million – EUR 1.7
million). In case Philips will lose the case there is no
requirement to repay the upfront amount (no recourse
basis).
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 2014, the total fair
value of guarantees recognized on the balance sheet
amounted to less than EUR 1 million (December 31,
2013: less than EUR 1 million). Remaining o-balance-
sheet business and credit-related guarantees provided
on behalf of third parties and associates decreased by
EUR 13 million during 2014 to EUR 21 million. O-
balance-sheet guarantees for year end 2013 were
restated from EUR 333 million to EUR 34 million to
reect guarantees related to associates and third-party
only.
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.
Legal proceedings
The Company and certain of its group companies and
former group companies are involved as a party in legal
proceedings, 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.