Cash obligations

Contractual cash obligations

Presented below is a summary of the Group’s contractual cash obligations and commitments at December 31, 2008

Philips has no material commitments for capital expenditures.

Philips has a number of commercial agreements, such as supply agreements, which provide that certain penalties may be charged to the company if the company does not fulfill its commitments.

The above table excludes any potential uncertain income tax liabilities that may become payable upon examination of the Group’s income tax returns by taxing authorities. Such amounts and periods of payment cannot be reliably estimated. Refer to note 6 of the notes to the Group financial statements for further explanation of the Group’s uncertain tax positions.

Other cash commitments

Under the terms of a proposed Plan of Reorganization filed by a US subsidiary of the Company – which is subject to Court approval – an amount of USD 900 million (EUR 639 million) would be required to be contributed to an Asbestos Personal Injury Trust. EUR 121 million is currently held in a restricted trust account and will be used in the settlement of this contingent obligation. For further information with respect to this and other contingent liabilities, refer to note 27 of the US GAAP financial statements.

The Company and its subsidiaries sponsor pension plans in many countries in accordance with legal requirements, customs and the local situation in the countries involved. Additionally, certain postretirement benefits are provided in certain countries. Refer to notes 20 and 21 of the notes to the Group financial statements for a discussion of the plans and expected cash outflows.

The Company announced the acceleration of restructuring and change programs across all sectors in 2008, which is expected to lead to a cash payment amounting to EUR 235 million in 2009. For further information, refer to note 4 of the notes to the Group financial statements.

A distribution for 2009 of EUR 0.70 per common share will be proposed to the 2009 Annual General Meeting of Shareholders. Assuming the distribution is approved, it is expected to amount to approximately EUR 646 million.

In light of current economic environment, in January 2009, Philips has stopped the EUR 5 billion share buy-back program until futher notice.

Guarantees

Guarantees issued or modified after December 31, 2003, having characteristics defined in FASB Interpretation No. 45 ‘Guarantor’s Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others’ (FIN 45), are measured at fair value and recognized on the balance sheet. At the end of 2008, the total fair value of guarantees recognized by the company was EUR 10 million.

Guarantees issued before December 31, 2003, and not modified afterwards, and guarantees issued after December 31, 2003, which do not have characteristics defined in FIN 45, remain off-balance sheet.

Philips' policy is to provide only guarantees and other letters of support, in writing. Philips does not stand by other forms of support. The following table outlines the total outstanding off-balance sheet credit-related guarantees and business-related guarantees provided by Philips for the benefit of unconsolidated companies and third parties as at December 31, 2008.