Philips 2014 Annual Report Download - page 31

Group performance 5.1.22
Annual Report 2014 31
5.1.22 Liquidity position
Including the Company’s cash position (cash and cash
equivalents), as well as its EUR 1.8 billion committed
revolving credit facility the Company had access to
available liquidity of EUR 3.673 million vs. Gross Debt
(including short and long term) of EUR 4.104 million as
of December 31, 2014.
As of December 31, 2013 the Company had access to
net available liquid resources of EUR 429 million
including the Company’s net debt (cash) position (cash
and cash equivalents, net of debt), listed available-for-
sale nancial assets, as well as its EUR 1.8 billion
committed revolving credit facility.
Philips Group
Liquidity position in millions of EUR
2012 - 2014
2012 2013 2014
Cash and cash equivalents 3,834 2,465 1,873
Committed revolving credit
facility/CP program/Bilateral loan 1,800 1,800 1,800
Liquidity 5,634 4,265 3,673
Available-for-sale nancial assets
at fair value 120 65 75
Short-term debt (809) (592) (392)
Long-term debt (3,725) (3,309) (3,712)
Net available liquidity resources 1,220 429 (356)
Philips has a EUR 1.8 billion committed revolving credit
facility that can be used for general group purposes and
as a backstop of its commercial paper program. In
January 2013, the EUR 1.8 billion facility was extended
by 2 years until February 2018. The commercial paper
program amounts to USD 2.5 billion, under which
Philips can issue commercial paper up to 364 days in
tenor, both in the US and in Europe, in any major freely
convertible currency. There is a panel of banks, in
Europe and in the US, which service the program. The
interest is at market rates prevailing at the time of
issuance of the commercial paper. There is no collateral
requirement in the commercial paper program. Also,
there are no limitations on Philips’ use of funds from the
program. As at December 31, 2014, Philips did not have
any loans outstanding under these facilities.
Philips’ existing long-term debt is rated A3 (with stable
outlook) by Moody’s and A- (with negative outlook) by
Standard & Poor’s. As part of the capital allocation
policy, it is Philips’ ambition to manage its nancial
ratios to be in line with an A3/A- rating. There is no
assurance that Philips will be able to achieve this goal.
Ratings are subject to change at any time. The
Company’s outstanding long-term debt and credit
facilities do not contain nancial covenants or cross
acceleration provisions that are based on adverse
changes in ratings or on material adverse change.
As at December 31, 2014, Philips had total cash and cash
equivalents of EUR 1,873 million. Philips pools cash
from subsidiaries to the extent legally and
economically feasible. Cash not pooled remains
available for local operational or investment needs.
Philips had a total gross debt position of EUR 4,104
million at year-end 2014.
Philips believes its current liquidity is sucient to meet
its present working capital requirements. Philips
intends to nance the acquisition of Volcano through a
combination of cash on hand and the issuance of short-
term debt.
5.1.23 Cash obligations
Contractual cash obligations
Presented below is a summary of the Group’s
contractual cash obligations and commitments at
December 31, 2014.
Philips Group
Contractual cash obligations1) in millions of EUR
2014
Payments due by period
total
less
than 1
year
1-3
years
3-5
years
after 5
years
Long-term
debt2) 3,665 94 6 1,030 2,535
Finance lease
obligations 232 61 80 37 54
Short-term
debt 244 244 – – –
Operating
leases 986 236 293 159 298
Derivative
liabilities 860 353 166 253 88
Interest on
debt3) 2,617 198 387 299 1,733
Purchase
obligations4) 131 70 51 10 –
Trade and other
payables 2,499 2,499 – – –
Contractual
cash
obligations 11,234 3,755 983 1,788 4,708
1) Obligations in this table are undiscounted
2) Long-term debt includes short-term portion of long-term debt and
excludes nance lease obligations
3) Approximately 15% of the debt bears interest at a oating rate. The
majority of the interest payments on variable interest rate loans in the
table above reect market forward interest rates at the period end and
these amounts may change as the market interest rate changes
4) Philips has commitments related to the ordinary course of business
which in general relate to contracts and purchase order commitments
for less than 12 months. In the table, only the commitments for multiple
years are presented, including their short-term portion
Philips has no material commitments for capital
expenditures.
Additionally, Philips has a number of commercial
agreements, such as supply agreements, which provide
that certain penalties may be charged to the Company
if it does not fulll its commitments.
Certain Philips suppliers factor their trade receivables
from Philips with third parties through supplier nance
arrangements. At December 31, 2014 approximately
EUR 357 million of the Philips accounts payables were
known to have been sold onward under such
arrangements whereby Philips conrms invoices.