Philips 2005 Annual Report Download - page 165

Philips Annual Report 2005 165
nancialpositionoftheCompanybutcouldbematerialtothe
consolidated results of operations of the Company for a particular
period. The Company cannot reasonably predict the number of claims
that may be asserted in the future. Accordingly, neither the Company
nor any of its subsidiaries has made an accrual for loss contingencies
related to any unasserted claims. If the general historical trends towards
(i) higher costs of resolving individual asbestos personal injury cases,
(ii) increasing numbers of cases and claimants, or (iii) the naming of more
peripheral defendants, such as the Company’s subsidiaries, in such cases
continue, or if insurance coverage is ultimately less than anticipated, the
Company’sconsolidatednancialpositionandresultsofoperations
could be materially and adversely affected.
30
Stockholders’ equity
Priority shares
In the 2005 Annual General Meeting of Shareholders it was approved to
withdraw the ten priority shares, which were held by the Dr. A.F. Philips-
Stichting. They were converted into 25,000 common shares.
Preference shares
The ‘Stichting Preferente Aandelen Philips’ has been granted the right
to acquire preference shares in the Company. Such right has not been
exercised. As a means to protect the Company and its stakeholders
against an unsolicited attempt to acquire (de facto) control of the
Company, the General Meeting of Shareholders in 1989 adopted
amendments to the Company’s articles of association that allow the
Board of Management and the Supervisory Board to issue (rights to)
preference shares to a third party.
Option rights/restricted shares
The Company has granted stock options on its common shares and
rights to receive common shares in future (see note 35).
Treasury shares
In connection with the Company’s share repurchase programs, shares
which have been repurchased and are held in treasury for (i) delivery
upon exercise of options and convertible personnel debentures and
under restricted share programs and employee share purchase programs
and (ii) capital reduction purposes, are accounted for as a reduction of
stockholders’ equity. Treasury shares are recorded at cost, representing
the market price on the acquisition date. When issued, shares are
removed from treasury stock on a FIFO basis. Any difference between
the cost and the market value at the time treasury shares are issued, is
recorded in capital in excess of par value.
In order to reduce potential dilution effects, the following transactions
took place:
2004 2005
Shares acquired 4,102,020 12,142,707
Average market price EUR 23.35 EUR 20.59
Amount paid EUR 96 million EUR 250 million
Shares delivered 4,942,894 3,628,775
Average market price EUR 17.80 EUR 20.67
Amount received EUR 88 million EUR 75 million
Total shares in treasury 34,543,388 43,057,320
Total cost EUR 1,239 million EUR 1,333 million
In order to reduce capital stock, the following transactions took place in
2005:
Shares acquired 71,679,622
Average market price EUR 22.13
Amount paid EUR 1,586 million
Total shares in treasury 71,679,622
Total cost EUR 1,586 million
Retained earnings
A dividend of EUR 0.44 per common share will be proposed to the
2006 Annual General Meeting of Shareholders.
31
Cash from derivatives
The Company has no trading derivatives. A total of EUR 46 million cash
was paid with respect to foreign exchange derivative contracts related
tonancingofsubsidiaries(in2004and2003receiptsofEUR125million
andEUR391million,respectively).Cashowfrominterest-related
derivativesispartofcashowfromoperatingactivities.
32
Proceeds from other non-current nancial assets
In 2005, the sale of all remaining shares in Atos Origin and Great Nordic
generated cash of EUR 554 million and EUR 67 million, respectively.
In 2004, the sale of all remaining shares in Vivendi Universal and ASML
generated cash of EUR 720 million and EUR 163 million respectively.
In 2003, a portion of available-for-sale securities was sold and generated
acashinowofEUR272million,consistingofASML,JDSUniphaseand
Vivendi Universal shares with a book value of EUR 126 million resulting
inagainofEUR146million,whichisincludedinnancialincomeand
expenses in the income statement.
33
Assets received in lieu of cash from the sale of businesses
In 2005, a 15% ownership interest in TPV and a convertible bond of
EUR 220 million were received in connection with the sale and transfer
ofcertainactivitieswithintheCompany’smonitorsandatTVbusiness.
In 2004, shares in Computer Access Technology Corporation were
sold in two tranches. In March 2004 shares were sold for an amount
of EUR 9 million. In December 2004 the remaining shares were sold
for EUR 8 million of which the proceeds were collected in 2005.
Furthermore, shares in Openwave Systems (EUR 6 million) were
received in connection with the sale of Magic4.
3030
3131
3232
3333