Fair value of financial assets and liabilities

The estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methods. The estimates presented are not necessarily indicative of the amounts that will ultimately be realized by the Company upon maturity or disposal.

The table below presents our assets and liabilities measured at estimated fair value on a recurring basis as required by SFAS No. 157. Comparative numbers are presented in line with SFAS No. 107, ‘Disclosure about Fair Value Instruments’. SFAS No. 107 requires disclosure of estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate their fair values. Because of the variety of valuation techniques permitted under SFAS No. 107 comparisons of fair values between entities may not be meaningful. The use of different market assumptions and/or estimation methods may have a material effect on the estimated fair value amounts.

Certain assets are measured at fair value on a non-recurring basis, and therefore not included in the preceding tables. The fair value identified as Level 2 of the fair value hierarchy is EUR 32 million relating to TPO Display as discussed in note 12. The fair value identified as Level 3 of the fair value hierarchy is EUR 255 million relating to NXP as discussed in note 12.

Additional information required by SFAS No. 107 is presented in the following table:

Current and non-current financial assets and debt

The carrying amounts of cash and cash equivalents, accounts receivable (current and non-current), current financial assets and accounts payable approximate fair value because of the short maturity of these instruments. The fair value of the debt is estimated on the basis of the quoted market prices, or on the basis of discounted cash flow analyses based upon market rates plus Philips' spread for the particular tenors of borrowing agreements. Accrued interest is included under accounts payable and not within the carrying amount or estimated fair value of debt. At December 31, 2008 total accrued interest expense was EUR 79 million (2007: EUR 110 million). The accrued interest on bonds, which is the main part of the accrual, was EUR 70 million. (2007: EUR 99 million).