Philips 2005 Annual Report Download - page 193

Philips Annual Report 2005 193
Lumileds
On November 28, 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 condensed balance sheet of Lumileds determined in accordance
with IFRS, immediately before and after acquisition date:
before
acquisition
date
after
acquisition
date
Assets:
Goodwill −523
Other intangibles 4 569 1)
Tangiblexedassets 110 132
Working capital 23 (45)
Deferred tax assets −− 5
Cash 21 21
158 1,205
Financed by:
Group equity 83 1,130
Loans 75 75
158 1,205
1) Comprises of existing (EUR 4 million), acquired (EUR 268 million), revalued
Philips share (EUR 262 million), and revalued minority share (EUR 35 million) of
other intangible assets.
The equity includes an amount of EUR 262 million caused by the
revaluation of our participating interest of 49.25% upon acquiring the
47.25% from Agilent. The portion of the purchase price which has been
allocated to acquired intangible assets was based upon independent
appraisals.
The allocation of the purchase price to the net asset acquired had not
yetbeencompletelynalizedasofDecember31,2005.
Employees of Lumileds have vested options to Lumileds shares, which
must be offered to Lumileds when exercised 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 is comprised of the follows:
amount
amortization
period in years
Core technology 118 8.3
Existing technology 193 6.6
In-process research and development 11 8.2
Customer relationships 216 10.5
Luxeon trade name 29 16.0
Backlog 2 1.0
569
Since consolidation Lumileds contributed a loss to Philips of EUR 15 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 (111) (55)
Net income 53 (99)1) (46)
Earnings per share - in euros (0.04)
1) Consisting of amortization of intangibles (EUR 46 million), share-based payment
expense (EUR 23 million), reversal of results relating to unconsolidated companies
(EUR 19 million) and reversal of December results (EUR 11 million).
January-December 2004
reported
results
pro forma
adjustments
reported pro
forma results
Sales 234 234
EBIT 56 (90) (34)
Net income 52 (82)1) (30)
Earnings per share - in euros - in euros (0.02)
1) Consisting of amortization of intangibles (EUR 44 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 monitor 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 158 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 method since the
Companycanexercisesignicantinuence.
The Company also has representation 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 Meryll Lynch and Hewitt respectively.
ThetransactionsresultedinacashinowofEUR55millionanda
protofEUR43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 214 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ofEUR435milliononthesales
of shares, which has been reported as Results relating to unconsolidated
companies. As a result of these transactions, the Company’s participation’
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551million,whichhasbeen
reported as Results relating to unconsolidated companies. Philips’
shareholding after these transactions was reduced from 19.0% to 16.4%.
Notes to the IFRS consolidated nancial
Thereaderisalsoreferredtothenotestotheconsolidatednancial
Reclassications
Certainbalancesheetitemspreviouslyreportedunderspecic
nancialstatementcaptionshavebeenreclassiedtoconformwith
regulatoryapprovals,isexpectedtobe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
outow
cashinow
−
company.TherelatedcashoutowwasEUR194million.Stentorwas
4040
4141