Philips 2014 Annual Report Download - page 181

Company nancial statements 13.4
Annual Report 2014 181
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.
When treasury shares are reissued under the
Company’s option plans, the dierence between the
cost and the cash received is recorded in retained
earnings. When treasury shares are reissued under the
Company’s share plans, the dierence between the
market price of the shares issued and the cost 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:
Koninklijke Philips N.V.
Employee option and share plan transactions
2013 - 2014
2013 2014
Shares acquired 3,984 7,254,606
Average market price EUR 22.51 EUR 24.53
Amount paid EUR 0 million EUR 178 million
Shares delivered 8,066,511 10,777,489
Average market price EUR 28.35 EUR 30.26
Cost of delivered shares EUR 229 million EUR 326 million
Total shares in treasury
at year-end 20,650,427 17,127,544
Total cost EUR 618 million EUR 470 million
In order to reduce share capital, the following
transactions took place:
Koninklijke Philips N.V.
Share capital transactions
2013 - 2014
2013 2014
Shares acquired 27,807,372 21,283,315
Average market price EUR 22.69 EUR 23.95
Amount paid EUR 631 million EUR 510 million
Reduction of capital
stock (shares) 37,778,510 21,837,910
Reduction of capital
stock (EUR) EUR 787 million EUR 533 million
Total shares in treasury
at year-end 3,857,595 3,303,000
Total cost EUR 100 million EUR 77 million
Stock purchase transactions related to employee
option and share plans, as well as transactions related
to the reduction of share capital involved a cash outow
of EUR 712 million, which includes the impact of taxes.
Settlements of stock based compensation plans
involved a cash inow of EUR 116 million.
Dividend distribution
A proposal will be submitted to the 2015 Annual
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 2014 net income
and retained earnings of the Company.
Legal reserves
As of December 31, 2014, legal reserves relate to the
revaluation of assets and liabilities of acquired
companies in the context of multi-stage acquisitions of
EUR 13 million (2013: EUR 23 million), unrealized gains
on available-for-sale nancial assets of EUR 27 million
(2013: EUR 55 million), unrealized losses on cash ow
hedges of EUR 13 million (2013: EUR 24 million
unrealized gains), ‘aliated companies’ of EUR 1,059
million (2013: EUR 1,319 million) and unrealized
currency translation gains of EUR 229 million (2013:
EUR 569 million unrealized losses).
The item ‘aliated 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 aliated 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 1,515 million
as at December 31, 2014. Such limitations relate to
common shares of EUR 187 million, as well as to legal
reserves included under ‘revaluation’ of EUR 13 million,
available-for-sale nancial assets of EUR 27 million,
unrealized currency translation gains of EUR 229
million and ‘aliated companies’ of EUR 1,059 million.
The unrealized losses related to cash ow hedges of
EUR 13 million, although qualifying as a legal reserve,
reduce the distributable amount by their nature.
As at December 31, 2013 the limitations on distributable
amounts were EUR 1,609 million and related common
shares of EUR 188 million, as well as to legal reserves
included under ‘revaluation’ of EUR 23 million,
available-for-sale nancial assets of EUR 55 million,
unrealized gains on cash ow hedges of EUR 24 million
and ‘aliated companies’ of EUR 1,319 million. The
unrealized losses related to currency translation
dierences of EUR 569 million, although qualifying as
a legal reserve, reduce the distributable amount by their
nature.