Philips 2005 Annual Report Download - page 141

Philips Annual Report 2005 141
Lumileds
In November 2005, the Company acquired an incremental 47.25%
Lumileds shares from Agilent, at a cost of EUR 788 million, which
brought the Company’s participating share to a level of 96.5%. The full
business is allocated to the Lighting sector.L
The following table summarizes the fair value of the assets acquired
and liabilities assumed with respect to the acquisition of the 47.25%
additional Lumileds shares in November 2005.
November 28, 2005
Total purchase price (net of Lumileds cash) 788
Allocated to:
Property, plant and equipment 62
Goodwill 554
Working capital (77)
Deferred tax assets 17
Other intangibles 263
In-process R&D 5
Long-term debt (36)
788
The portion of the purchase price which has been allocated to
intangible assets acquired was based upon independent appraisal.
The amount of purchased research and development assets acquired
and written off in 2005 was EUR 5 million. This amount is included in
the consolidated statement of income under Write-off of acquired
in-process research and development.
The allocation of the purchase price to the net assets acquired had not
yetbeencompletelynalizedasofDecember31,2005.
Employees of Lumileds have vested options on Lumileds shares which
must be offered to Lumileds when executed and Lumileds is obliged
to acquire these shares. The liability at December 31, 2005 related
to these vested options is EUR 86 million. There are 3,187,545 and
3,018,442 unvested options at November 28, 2005 and December 31,
2005 respectively.
Other Intangibles, excluding in-process research and development, is
comprised of the following:
amount
amorti-
zation
period
in years
Core technology 55 8.3
Existing technology 91 6.6
Customer relationships 102 10.5
Luxeon trade name 14 16.0
Backlog 1 1.0
263
Since consolidation, Lumileds contributed a loss to Philips of EUR 11 million.
The following tables present the year-to-date unaudited results of
Lumileds and the effect on Philips’ results if Lumileds had been
consolidated as of January 1, 2004.
January-December 2005
reported
results
pro forma
adjustments
pro forma
results
Sales 252 (17) 235
EBIT 56 (76) (20)
Net income 53 (73)1) (20)
Earnings per share - in euros (0.02)
1)
Consisting of amortization of intangibles (EUR 21 million), share-based expense
(EUR 23 million), reversal of results relating to unconsolidated companies
(EUR 18 million) and reversal of December results (EUR 11 million)
January-December 2004
reported
results
pro forma
adjustments
pro forma
results
Sales 234 – 234
EBIT 56 (52) 4
Net income 52 (59)1) (7)
Earnings per share - in euros (0.01)
1) Consisting of amortization of intangibles (EUR 21 million), share-based payment
expense (EUR 13 million) and reversal of results relating to unconsolidated
companies (EUR 25 million)
Connected Displays (Monitors)
In September 2005, Philips sold certain activities within its monitors and
atTVbusinesstoTPVTechnologies,aHongKonglistedcompanyfor
a 15% ownership interest in TPV and a convertible bond of EUR 220
million. A gain of EUR 136 million was recognized in Other business
income (expense). TPV will continue to produce for Philips the
monitors that will be sold under the Philips brand. The Company
accounts for the investment in TPV using the equity value since the
Companycanexercisesignicantinuence.TheCompanyalsohas
represention on TPV’s board.
Philips Pension Competence Center / Pension Investment Management /
Philips Pension Management
In September 2005, the Company sold the legal entities which perform
the asset management function and the pension administration of the
Philips Pension Fund to Merrill Lynch and Hewitt, respectively.
ThetransactionsresultedinacashinowofEUR55millionandaprot
of EUR 42 million, which has been reported under Other business
income (expense).
LG.Philips LCD
In July 2005, LG.Philips LCD issued 65,000,000 American Depository
Shares or an equivalent of 32,500,000 shares, resulting in a dilution gain
of EUR 189 million. Contemporaneously, the Company sold 9,375,000
common shares. In December 2005 the Company sold 18 million common
shares. As a result of these two transactions, the Company had a cash
inowofEUR938millionandaprotonthesalesofsharesofEUR332
million, which has been reported as Results relating to unconsolidated
companies. As a result of these transactions, the Company´s participating
share in LG.Philips LCD was reduced to 32.9%.
TSMC
In July and September 2005, Philips sold 567,605,000 common shares in
theformofAmericanDepositoryShares.Thisresultedinacashinow
ofEUR770millionandaprotofEUR460million,whichhasbeen
reported as Results relating to unconsolidated companies.
to the group nancial statements
completedinthersthalfof2006.
SummarizednancialinformationforMDSactivitiesisasfollows:
−−−
−− −
−
Netcashprovidedbynancingactivities − − −
Themostsignicantacquisitionsanddivestmentsaresummarizedinthe
outow
cashinow
−
aUS-basedcompany.TherelatedcashoutowwasEUR194million.
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