Philips 2004 Annual Report Download - page 178
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Dutch law requires that previously recognized impairment charges for available-for-sale
securities are reversed through income when the fair value of these securities increases to a
level that is above the new cost price that was established on recognition of an impairment. In
view of this requirement, other-than-temporary increases in fair value of available-for-sale
securities are recognized in financial income. US GAAP prohibit such recognition.
Reconciliation of net income according to Dutch GAAP versus US GAAP
2004 2003
Net income as per the consolidated statements of income on a US GAAP basis 2,836 695
Adjustments to Dutch GAAP:
Goodwill amortization net of taxes (439) (607)
Lower impairment charges due to amortization of goodwill 68 399
Adjustment on gain on sale of securities/shares due to lower book value:
- financial income and expenses* (202) –
- results relating to unconsolidated companies 34 –
Reversal of impairment of available-for-sale securities * 19 218
Higher dilution gain LG.Philips LCD, due to amortization of goodwill 20 –
Net income in accordance with Dutch GAAP 2,336 705
Basic earnings per common share in euros:
Net income 1.82 0.55
Diluted earnings per common share in euros:
Net income 1.81 0.55
Reconciliation of stockholders’ equity according to Dutch GAAP versus
US GAAP
2004 2003
Stockholders’ equity as per the consolidated balance sheets on a
US GAAP basis 14,860 12,763
Equity adjustments that affect net income:
Goodwill amortization net of taxes (1,922) (1,483)
Lower impairment charges due to amortization of goodwill 814 746
Higher dilution gain LG.Philips LCD, due to amortization of goodwill 20 –
Adjustment on gain on sale of Atos Origin shares due to lower book value 34 –
Equity adjustments not affecting net income under Dutch GAAP:
Adjustment on increase of fair value securities in connection with lower book
value 32 –
Translation differences 178 142
Stockholders’ equity in accordance with Dutch GAAP 14,016 12,168
*The reversal of impairment of available-for-sale securities and the gain on sale of securities do not impact stockholders’ equity because
the increase in value is already recognized in equity under US GAAP.
177Philips Annual Report 2004