Philips 2005 Annual Report Download - page 142

Philips Annual Report 2005142
Philips’ shareholding after these transactions was reduced from 19.0%
to 16.4%. In 2005, Philips continued to account for this investment using
the equity method of accounting, because it continued to have
signicantinuence.
Great Nordic
In September 2005, the Company sold its remaining share of 3.1% in
GreatNordic.ThisresultedinacashinowofEUR67millionanda
protofEUR48million,whichhasbeenreportedunderFinancial
income and expenses.
Atos Origin
In July 2005, Philips sold its remaining share of 15.4% in Atos Origin.
ThisresultedinacashinowofEUR554millionandaprotofEUR
185 million, which has been reported under Financial income
and expenses.
NAVTEQ
In April and May 2005, the Company sold its remaining share of 37.1%
inNAVTEQ.ThisresultedinacashinowofEUR932millionanda
protofEUR753million,whichhasbeenreportedasResultsrelating
to unconsolidated companies.
2004
During 2004, the Company completed several disposals of activities.
Also, a number of acquisitions and ventures were completed. All business
combinations have been accounted for using the purchase method of
accounting. However, both individually and in the aggregate these business
combinations were deemed immaterial in respect of the SFAS No. 141
disclosure requirements.
Sales and EBIT related to activities divested in 2004 for the period
includedintheconsolidationamountedtoEUR190millionandaprot
of EUR 60 million, respectively.
Themostsignicantacquisitionsanddivestmentsaresummarizedinthe
next two tables and described in the section below.
Acquisitions
cash
outow
net assets
acquired1)
other
intangible
assets goodwill
Philips-Neusoft Medical
Systems 49 1 5 43
Gemini Industries 48 32 8 8
Industriegrundstuecks-
Verwaltungs 12 12 − −
1) Excluding cash acquired
Divestments
cashinow
net assets
divested1)
recognized
gain (loss)
Philips HeartCare
Telemedicine Services (8) (6) (2)
Atos Origin 552 401 151
NAVTEQ 672 37 635
Philips Consumer Electronics
Industries Poland (24) (24) −
1) Excluding cash divested
Philips HeartCare Telemedicine Services
In January 2004, the Company sold its 80% interest in the Philips
HeartCare Telemedicine Services (PHTS) venture to the other owner,
SHL Telemedicine International, an Israeli company in which the
Company holds an 18.6% interest. The investment in SHL Telemedicine
is accounted for using the cost method. The transaction resulted in
acashoutowofEUR8millionandalossofEUR2millionin2004.
Accordingly, the PHTS entity was deconsolidated in January.
Philips and Neusoft Medical Systems
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 transactions is that Philips paid EUR 49
million in cash for the interest acquired. Neusoft contributed its
manufacturing assets and knowledge to the venture and holds the other
49%. Intangible assets and goodwill have been recognized at amounts
totaling EUR 48 million, of which EUR 43 million relates to goodwill.
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 personnel including research
and development capabilities. The entity has been consolidated since
July 2004.
Gemini Industries
In August 2004, the Company acquired all of the shares of Gemini
Industries, a North American supplier of consumer electronics and PC
accessories at a cost of EUR 48 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.
NAVTEQ
The IPO of our NAVTEQ subsidiary in August 2004 resulted in a
EUR635milliongainonthesaleofsharesandacashinowofEUR672
million. Following the IPO, Philips’ interest in NAVTEQ decreased from
83.5% to 34.8%. (37.7% upon settlement of the purchase by the
Company of an additional 2.6 million shares). Accordingly, consolidation
of NAVTEQ ceased as from August 2004, while our remaining interest
is accounted for using the equity method.
Philips Consumer Electronics Industries Poland
In December 2004, Philips sold its Polish television assembly plant in
Kwidzyn, Poland to Jabil Circuit, a global electronics manufacturer.
ThetransactionresultedinacashoutowofEUR24million.Jabilwill
continue production assembly for Philips from the facility.
Atos Origin
In December 2004, Philips 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. At December 31, 2004, Philips held 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signicantinuenceinAtosOrigincouldbeexercised.
Industriegrundstuecks-Verwaltungs (IGV)
In December 2004, 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
outowofEUR12million.
2003
During 2003, the Company completed several disposals of activities.
Also a number of acquisitions and ventures were completed. All
business combinations have been accounted for using the purchase
method of accounting. However, both individually and in the aggregate
these business combinations were deemed immaterial in respect of
the SFAS No. 141 disclosure requirements.
The effects of divested activities in 2003 had no material impact on sales
and EBIT.
Groupnancialstatements