Philips 2005 Annual Report Download - page 198

Philips Annual Report 2005198
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 196 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hasbeenreclassiedtoothernon-current
nancialassets.
Gains and losses arising from dilution effects
2004 2005
LG.Philips LCD 168 214
Atos Origin 156 −
TSMC (10) (24)
314 190
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 214
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%.
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%.
Investment impairment/guarantee charges
2004 2005
LG.Philips Displays −(168)
Others (8) (11)
(8) (179)
2005
Investment impairment charges in 2005 related to LG.Philips Displays
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 131
million. Additionally, the Company recognized the accumulated foreign
translation gain related to this investment of EUR 5 million.
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.
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 5,361 5,312 49
Changes:
Transfer to/from consolidated companies (49) (49) −
Acquisitions/additions 233 233 −
Sales/repayments (860) (812) (48)
Share in income/value adjustments 453 453 −
Impairment losses (131) (131) −
Dividends received (312) (312) −
Translation and exchange rate differences 768 762 6
Balance of equity method investments as
of December 31, 2005 5,463 5,456 7
Cost method investments 57 57 −
Balance as of December 31, 2005 5,520 5,513 7
Included in investments is EUR 641 million (2004: EUR 866 million),
representing the excess of the Company’s investment over its underlying
equity in the net assets of the unconsolidated companies. The principal
amounts are EUR 631 million (2004: EUR 719 million) for LG.Philips
LCD and zero (2004: EUR 67 million) for LG.Philips Displays.
Transfer to consolidated companies relates to Lumileds, which was
consolidated as of the end of November 2005.
Acquisitions primarily relate to the shareholding in TPV (EUR 129 million),
that resulted from the sale and transfer of certain activities within the
Company’smonitorsandatTVbusiness,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 234 million) and LG.Philips LCD (EUR 415 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 50 163 50 −
LG.Philips LCD 45 2,572 33 2,780
Taiwan Semiconductor
Manufacturing Company 19 1,779 16 1,930
NAVTEQ 35 132 − −
Other equity method
investments 715 753
5,361 5,463
Total cost method
investments 80 57
5,441 5,520
IFRS information