Philips 2015 Annual Report Download - page 154

Group nancial statements 12.9 26
154 Annual Report 2015
Finance lease liabilities
Philips Group
Finance lease liabilities in millions of EUR
2014 - 2015
2014 2015
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 72 6 66
Between
one and
ve
years 117 19 98 128 17 111
More
than ve
years 54 11 43 42 8 34
Finance
lease 232 37 195 242 31 211
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 rst half
of 2016) and the subsequent damages trial (expected
to take place during the second half of 2016).
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 2015, the total fair
value of guarantees recognized on the balance sheet
amounted to EUR nil million (December 31, 2014: EUR
nil million). Remaining o-balance-sheet business and
credit-related guarantees provided on behalf of third
parties and associates increased by EUR 16 million
during 2015 to EUR 37 million (December 31, 2014: EUR
21 million).
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.
While it is not feasible to predict or determine the
ultimate outcome of all pending or threatened legal
proceedings, regulatory and governmental
proceedings, the Company is of the opinion that the
cases described below may have, or have had in the
recent past, a signicant impact on the Company’s
consolidated nancial position, results of operations
and cash ows.
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 nes on
(former) CRT manufacturers including the Company.
The European Commission imposed a ne of EUR 313
million on the Company and a ne of EUR 392 million
jointly and severally on the Company and LG
Electronics, Inc. In total a payable of EUR 509 million
was recognized in 2012 and the ne was paid in the rst
quarter of 2013. The Company appealed the decision of
the European Commission with the General Court
which appeal was denied on September 9, 2015. On
November 23, 2015 the Company lodged an appeal
against the decision of the General Court with the
European Court of Justice.
United States
Subsequent to the public announcement of these
investigations in 2007, certain Philips Group companies
were named as defendants in class action antitrust
complaints by direct and indirect purchasers of CRTs
led in various federal district courts in the United
States. These actions alleged anticompetitive conduct
by manufacturers of CRTs and sought treble damages
on a joint and several liability basis. In addition, sixteen
individual plaintis, principally large retailers of CRT
products who opted out of the direct purchaser class,
led separate complaints against the Company and
other defendants based on the same substantive
allegations. All these actions have been consolidated
for pre-trial proceedings in the United States District
Court for the Northern District of California.