Philips 2005 Annual Report Download - page 150

Philips Annual Report 2005150
Investments in, and loans to, unconsolidated companies
The changes during 2005 are as follows:
total
invest-
ments loans
Balance of equity method investments as
of January 1, 2005 5,590 5,541 49
Changes:
Transfer to/from consolidated companies (56) (56) −
Acquisitions/additions 207 207 −
Sales/repayments (917) (869) (48)
Share in income/value adjustments 453 453 −
Impairment losses (126) (126) −
Dividends received (312) (312) −
Translation and exchange rate differences 802 796 6
Balance of equity method investments as
of December 31, 2005 5,641 5,634 7
Cost method investments 57 57 −
Balance as of December 31, 2005 5,698 5,691 7
Included in investments is EUR 763 million (2004: EUR 980 million),
representing the excess of the Company’s investment over its
underlying equity in the net assets of the unconsolidated companies.
The principal amount is EUR 752 million (2004: EUR 857 million) for
LG.Philips LCD.
Transfer to consolidated companies relates to Lumileds, which was
consolidated as of the end of November 2005. Refer to note 2.
Acquisitions primarily relate to the shareholding in TPV (EUR 107
million) that resulted from the sale and transfer of certain activities
withintheCompany’smonitorsandatTVbusiness(refertonote2)
and an additional investment in Crolles2 (EUR 55 million).
Sales/repayments mainly relate to the sale of the remaining
shareholding in NAVTEQ (EUR 160 million). Furthermore, the sale
of shares in TSMC (EUR 248 million) and LG.Philips LCD (EUR 456
million) is included.
Dividends received mainly relate to TSMC of EUR 220 million (2004:
EUR 58 million) and InterTrust of EUR 90 million.
The total carrying value of investments in, and loans to, unconsolidated
companies is summarized as follows:
2004 2005
share-
holding % amount
share-
holding % amount
LG.Philips Displays 50 155 50 −
LG.Philips LCD 45 2,714 33 2,903
Taiwan Semiconductor
Manufacturing Company 19 1,864 16 2,017
NAVTEQ 35 132 − −
Other equity method
investments 725 721
5,590 5,641
Total cost method
investments 80 57
5,670 5,698
The fair value of Philips’ shareholdings in the publicly listed companies
TSMC and LG.Philips LCD, based on quoted market prices at December
31, 2005, is EUR 6,531 million and EUR 4,244 million respectively.
The investments in unconsolidated companies are mainly included in the
sector Other Activities.
SummarizednancialinformationfortheCompany’sequityinvestments
in unconsolidated companies on a combined basis is presented below:
January-December
2003 2004 2005
Net sales 17,439 17,349 20,180
Income before taxes 1,176 3,212 2,261
Income taxes (118) (122) 116
Income after taxes 1,058 3,090 2,377
Net income 1,034 3,132 2,285
Total share in net income of
unconsolidated companies recognized in
the consolidated statements of income 169 983 440
December 31,
2004 20051)
Current assets 8,766 11,363
Non-current assets 15,826 18,342
24,592 29,705
Current liabilities (5,455) (5,887)
Non-current liabilities (3,481) (3,811)
Net asset value 15,656 20,007
Investments in and loans to unconsolidated companies
included in the consolidated balance sheet 5,590 5,641
1) Excluding LG.Philips Displays
In December 2005 the investment in LG.Philips Displays was written off
and Philips decided to stop funding the company. As a result, the book
value of the investment was reduced to zero and equity accounting was
terminated. Philips is unable to determine and disclose the value of the
LG.Philips Displays equity per December 31, 2005.
8
Minority interests
The share of minority interests in the income of Group companies in
2005 amounted to EUR 31 million, compared with their share in the
2004 income of EUR 51 million and their share in the 2003 income of
EUR 56 million.
Minority interests in consolidated companies, totaling EUR 332 million
(2004: EUR 283 million), are based on the third-party shareholdings in
the underlying net assets.
9
Cumulative effect of change in accounting principles
In 2005 and 2004, there were no cumulative effects from changes in
accounting principles.
In 2003, the Company adopted SFAS No. 143 ‘Accounting for Asset
Retirement Obligations’. The cumulative effect of this change in
accounting principles related to prior years was a one-time, non-cash
charge to income of EUR 14 million (net of taxes).
Groupnancialstatements