Philips 2005 Annual Report Download - page 74

Philips Annual Report 200574
of EUR 42 million provided to LG.Philips Displays’ banks.
All amounts above were reported to Results relating to
unconsolidated companies in December. Future results of
LG.Philips Displays will not negatively impact Philips’ equity.
Philips will not inject further capital into LG.Philips Displays.
For further information, please refer to page 119.
Minority interests
The share of minority interests in the income of group
companies in 2005 reduced income by EUR 31 million,
compared to a reduction of EUR 51 million in 2004. The
main drivers behind the decrease were a share in the
loss of MedQuist due to its deteriorating results (largely
impacted by a charge of some EUR 50 million related to
current and expected customer accommodation payments)
as well as the impact of the deconsolidation of NAVTEQ.
These were partly offset by higher charges for SSMC as
better year-on-year results increased the share for the
third-party shareholders as well.
Discontinued operations
On November 10, 2005, Philips and Toppoly Optoelectronics
Corporation of Taiwan announced that they have signed
a binding letter of intent to join forces by merging Mobile
Display Systems (MDS) with Toppoly to create a leader in
mobile display technology. The new company will be named
TPO. The transaction, pending regulatory approvals, is
expected to be completed in the fi rst half of 2006. Upon
completion of the transaction, Philips is expected to hold
a stake of approximately 17.5% of the shares of TPO.
In this Annual Report, Philips reports the results of the
MDS business separately as a discontinued operation.
Consequently, the MDS results are shown separately in the
fi nancial statements in results from discontinued operations.
In 2005, MDS was reported in Other Activities. Prior to
2005, MDS was reported in Semiconductors. In accordance
with the applicable accounting principles, previous years have
been restated.
Net income
Net income amounted to EUR 2,868 million (EUR 2.29
per common share – basic), compared to EUR 2,836 million
(EUR 2.22 per common share – basic) in 2004.
Medical Systems
Key data
in millions of euros 2003 2004 2005
Sales 5,990 5,884 6,343
Sales growth
% increase (decrease), nominal (12 ) (2 ) 8
% increase, comparable 7 4 7
Earnings before interest and tax 431 35 679
as a % of sales 7.2 0.6 10.7
Net operating capital (NOC) 3,671 2,862 3,400
Cash fl ows before fi nancing activities 842 677 566
Employees (FTEs) 30,611 30,790 30,978
For a reconciliation to the most directly comparable US GAAP measures, see the
section that begins on page 120 .
Sales and net operating capital
in billions of euros sales NOC
8
6
4
2
0
2001 2002 2003 2004 2005
6.8
6.0 5.9 6.3
4.8
Earnings before interest and tax
as a % of sale
s
1,000
750
500
250
0
(250)
(500)
20%
15%
10%
5%
0%
(5%)
(10%)
2001 2002 2003 2004 2005
(163)
309
431
35
679
in millions of euros
Management discussion and analysis