Philips 2004 Annual Report Download - page 115
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Research and development expenses
Expenditures for research and development activities amounted to EUR 2,534 million,
representing 8.4% of Group sales (2003: EUR 2,617 million, 9.0% of Group sales; 2002:
EUR 3,043 million, 9.6% of Group sales).
Restructuring and impairment charges
A net charge of EUR 288 million was recorded for restructuring and fixed asset impairments.
Additionally, the Company recorded goodwill impairment charges aggregating to EUR 596
million, which primarily related to MedQuist. The components of restructuring and impairment
charges recognized in 2002, 2003 and 2004 are as follows:
2002 2003 2004
Personnel lay-off costs 245 173 153
Write-down of assets 214 254 125
Other restructuring costs 103 63 37
Release of excess provisions (78) (83) (27)
Net restructuring and impairment charges 484 407 288
Goodwill impairment 19 148 596
Total restructuring and impairment charges 503 555 884
The most significant new projects in 2004 were:
GIn Consumer Electronics, the R&D and production activities related to Creative Display
Solutions (front-projection) and the engine activities related to Liquid Crystal on Silicon (LCoS)
were stopped. Furthermore, certain restructuring costs were incurred in conjunction with the
Business Renewal Program. The charges to the income statement for these restructurings
amounted to EUR 140 million and consisted of:
Lay-off costs EUR 61 million (related to 1,000 people)
Write-down of assets EUR 50 million
Other costs EUR 29 million (contract obligations)
Please refer to the table below for a presentation of the December 31 balance and a
roll-forward within CE during the fiscal year:
Dec. 31, 2003 additions utilized released Dec. 31, 2004
Personnel costs 30 61 (69) – 22
Write-down of assets – 50 (50) – –
Other costs – 29 (16)(2)11
Total 30 140 (135) (2) 33
GWithin Other Activities, the Company closed the panel activities of LCoS. Furthermore, asset
impairment charges for buildings in Vienna and Aachen were recorded. Total charges to the
income statement for these and a number of smaller projects amounted to EUR 58 million and
consisted of:
Lay-off costs EUR 11 million (related to 100 people)
Write-down of assets EUR 42 million
Other costs EUR 5 million (contract obligations)
114 Philips Annual Report 2004
Financial statements of the Philips Group