Philips 2004 Annual Report Download - page 108

Philips and Neusoft Medical Systems Co., Ltd.
In July 2004, the Company and China Neusoft Group formed a venture in which Philips has an
equity participation of 51%. The acquisition was completed through a series of asset transfers
and capital injection transactions. The effect of the transaction is that Philips paid EUR 59 million
in cash for the interest acquired. Neusoft contributed its manufacturing and R&D operations to
the venture and holds the other 49%. Intangible assets and goodwill have been recognized at
preliminary amounts totaling EUR 48 million, of which EUR 43 million relates to goodwill. The
final valuation of the assets and liabilities that were contributed to the venture by Neusoft is
expected to be finalized in 2005. The venture will license know-how from Philips. Through this
new venture Philips can deploy its strategy for the market in China and gain a direct link to a
long-term supply of skilled workforce including R&D capabilities. The entity has been
consolidated since July 2004.
Gemini Industries, Inc.
In August 2004, the Company acquired all of the shares of Gemini Industries, Inc., a North
American supplier of consumer electronics and PC accessories at a cost of EUR 49 million,
including the assumption of bank debt that was liquidated simultaneously with the acquisition.
The cost of the acquisition has been allocated based upon the fair value of assets acquired and
liabilities assumed. Based upon an independent appraisal, EUR 8 million has been assigned to a
customer-related intangible asset. Additionally, EUR 8 million, representing the excess of cost
over the fair value of the net assets acquired, has been recorded as goodwill. The
customer-related intangible asset is being amortized over its estimated useful life of 15 years. As
a result of this acquisition, Philips expects to achieve significant growth in peripherals and
accessories business activities on a global scale.
NAVTEQ
The IPO of our subsidiary NAVTEQ Corporation in August 2004 resulted in a EUR 635 million
gain on the sale of shares and a cash inflow of EUR 730 million. Following the IPO, Philips’
interest in NAVTEQ decreased from 83.5% to 34.8% (37.7% upon settlement of the purchase of
an additional 2.6 million shares). Accordingly, consolidation of NAVTEQ ceased as from August,
while our remaining interest is accounted for by the equity method.
Philips Consumer Electronics Industries Poland
In December 2004, Philips sold its Polish television assembly plant in Kwidzyn, Poland to Jabil
Circuit, Inc., a global electronics manufacturer. The transaction resulted in a cash inflow of
EUR 12 million. Jabil will continue production assembly for Philips from the facility.
Atos Origin
In December, the Company sold a 16.5% stake in Atos Origin. The cash proceeds from this sale
were EUR 552 million, while the gain amounted to EUR 151 million. After this sale, Philips still
holds a stake of 15.4%. As a result of this transaction, the Company ceased using the equity
method of accounting for Atos Origin as from December 2004, because no significant influence
in Atos Origin can be exercised. The remaining shareholding in Atos Origin will be accounted
for as available-for-sale securities from that date.
Industriegrundstuecks-Verwaltungs GmbH (IGV)
In December, the Company acquired the shares of IGV, a real estate company which held a
substantial part of the buildings that were rented by the Company in Austria. The transaction
involved a cash outflow of EUR 12 million.
107Philips Annual Report 2004