Philips 2005 Annual Report Download - page 149

Philips Annual Report 2005 149
2003
LG.Philips Displays’ loss was primarily attributable to impairment
charges recorded in conjunction with a write-down of its assets. Various
other unconsolidated companies (primarily TSMC and Atos Origin)
contributedanetprotofEUR172million.
Results on sales of shares
2003 2004 2005
NAVTEQ − − 753
TSMC 695 −460
LG.Philips LCD − − 332
Atos Origin −151 −
Others 20 42 −
715 193 1,545
2005
In 2005, Philips sold its remaining 33.1 million shares in NAVTEQ,.1 EE
resulting in a non-taxable gain of EUR 753 million. As a result of this
transaction, Philips’ shareholding in NAVTEQ was reduced to zero.
Results on sales of shares include a gain of EUR 460 million resulting
from the sale of 567,605,000 common shares in the form of American
Depository Shares in TSMC. Following the aforementioned sale of
TSMC shares, Philips’ shareholding in TSMC was reduced to 16.4%.
During 2005, the Company was represented on the board of directors
andcontinuedtoexerciseinuencebyparticipatinginthepolicy-making
processes of TSMC. Accordingly the Company continued to apply
equityaccountingforTSMC.InJanuary2006,Philips’inuenceonTSMC,
including representation on the TSMC Board, will be reduced. Effective
January 2006, the investment will be transferred to available-for-sale
securitiessincePhilipswillnolongerbeabletoexercisesignicant
inuence,andwillceasetoapplyequityaccountingasofthatdate.
In 2005, Philips sold 27,375,000 shares of LG.Philips LCD common
stock, resulting in a gain of EUR 332 million. As a result of the sale,
Philips’ shareholding in LG.Philips LCD was reduced from 40.5% to
32.9%.
2004
In December 2004 Philips sold a total of 11 million shares in Atos
Origin for an amount of EUR 552 million, resulting in a non-taxable gain
of EUR 151 million. As a result, Philips’ holding in Atos Origin decreased
to 15.4%. The remaining investment was no longer valued according to
theequitymethod,andwasreclassiedtoothernon-currentnancial
assets (please refer to note 14).
2003
Results on the sale of shares included a gain of EUR 695 million
resulting from the sale of 100 million American Depository Shares, each
representing 5 common shares of TSMC. Following the aforementioned
sale of TSMC shares, Philips’ shareholding in TSMC was reduced to
19.1% at December 31, 2003.
Gains and losses arising from dilution effects
2003 2004 2005
LG.Philips LCD −108 189
Atos Origin 68 156 −
TSMC (15) (10) (24)
53 254 165
2005
The secondary offering of LG.Philips LCD of 65,000,000 American
Depository Shares in July 2005 has resulted in a dilution gain of
EUR 189 million reducing our share from 44.6% to 40.5%. Furthermore,
a loss of EUR 24 million related to the issuance of shares to employees
of TSMC was included. According to TSMC’s Articles of Incorporation,
yearly bonuses to employees have been granted, partially in shares.
Philips shareholding in TSMC was diluted as a result of the shares issued
to employees.
2004
The results relating to unconsolidated companies for 2004 were
affected by several dilution gains and losses. The IPO of LG.Philips LCD
resulted in a dilution of Philips’ shareholding from 50% to 44.6%.
The Company’s participation in Atos Origin was impacted by a dilution
gain resulting from the acquisition of Schlumberger Sema by Atos
Origin, which diluted the Company’s shareholding from 44.7% to 31.9%.
As in 2003, the Company’s shareholding in TSMC was diluted as a result
of shares issued to employees, in 2004 by 0.2%. Also in 2004, the TSMC
Board of Management decided to withdraw some share capital,
increasing Philips’ shareholding by 0.1%.
2003
In August 2002, Atos Origin purchased all of the common stock of
KPMG Consulting in the UK and the Netherlands. The consideration
for the acquisition consisted of the issue of 3,657,000 bonds
redeemable in shares (ORA bonds) with stock subscription warrants
attached at a price of EUR 64.20 each, representing a total amount of
EUR 235 million, and a cash payment of EUR 417 million. The bonds and
warrant bonds were redeemed in shares in August 2003. As a
consequence, Philips’ shareholding was diluted from 48.4% to 44.7%.
Investment impairment/guarantee charges
2003 2004 2005
LG.Philips Displays (411) −(458)
Others (20) (8) (11)
(431) (8) (469)
2005
Investment impairment charges in 2005 related to LG.Philips Displays
(LPD) and a few smaller investments. In December 2005, as a result of
various factors including lower demand and increased pricing pressures
for CRT, the Company concluded that its investment in LG.Philips
Displays was impaired. Accordingly, the Company wrote off the
remaining book value of the investment and recorded an impairment
charge of EUR 126 million. Additionally, the Company recognized the
accumulated foreign translation loss related to this investment of
approximately EUR 290 million. The recognition of this translation loss
had no impact on Philips’ equity.
The Company also fully provided for the existing guarantee of EUR 42
million provided to LPD’s banks. Philips will not inject further capital
into LPD.
2004
Investment impairment charges in 2004 related to a few smaller
investments.
2003
In 2003, LG.Philips Displays was impacted by worsening market
conditions and increased price erosion, mainly caused by the rapid
penetration of Liquid Crystal Display panels for application in TV and
monitors. For LPD, the revised market outlook resulted in a non-cash
asset impairment charge of USD 771 million and in restructuring
charges of approximately USD 171 million in 2003.
Companywillrealizethebenetsofthesedeductibledifferences,netof
jurisdictionswithrespecttomultiplescalyearswerenalized,resulting
forwhichsubsequentlyrecognizedtaxbenetswillbeallocatedto
Classicationofthedeferredtaxassetsandliabilitiestakesplaceata
scalentitylevelasfollows:
Classicationoftheincometaxpayableandreceivableisasfollows:
− −
companies(primarilyTSMCandAtosOrigin)contributedanetprot
77