Philips 2006 Annual Report Download - page 133

Philips Annual Report 2006 133
Pro forma disclosures on acquisitions
The following tables present the year-to-date unaudited pro-forma
results of Philips, assuming Lifeline, Witt Biomedical, Avent and
Intermagnetics had been consolidated as of January 1, 2006:
Unaudited
January-December 2006
Philips
Group
pro forma
adjustments
1)
pro forma
Philips Group
Sales 26,976 236 27,212
Income from operations 1,183 (7 ) 1,176
Net income 5,383 (2 ) 5,381
Basic earnings per share – in
euros 4.58 4.58
1) Pro forma adjustments include sales, Income from operations and net income
from continuing operations of the acquired companies from January 1, 2006
to the date of acquisition. For that purpose, sales related to the pre-existing
relationship between Philips and Intermagnetics have been excluded. As Philips
fi nances its acquisitions with own funds, the pro forma adjustments exclude
the cost of external funding incurred prior to the acquisition. The pro forma
adjustments refl ect the impact of the purchase-price accounting effects from
January 1, 2006 to the date of acquisition. Purchase-price accounting effects
primarily relate to the amortization of intangible assets (EUR 72 million,
excluding the write-off of research and development assets) and inventory
step-ups (EUR 24 million).
The following tables present the year-to-date unaudited pro forma
results of Philips, assuming Lifeline, Witt Biomedical, Avent and
Intermagnetics had been consolidated as of January 1, 2005:
Unaudited
January-December 2005
Philips
Group
pro forma
adjustments
1)
pro forma
Philips Group
Sales 25,775 415 26,190
Income from operations 1,472 (22 ) 1,450
Net income 2,868 (10 ) 2,858
Basic earnings per share –
in euros 2.29 2.29
1) Pro forma adjustments include sales, Income from operations and net income
from continuing operations of the acquired companies of 2005. For that purpose,
sales related to the pre-existing relationship between Philips and Intermagnetics
have been excluded. As Philips fi nances its acquisitions with own funds, the pro
forma adjustments exclude the cost of external funding incurred in 2005. The
pro forma adjustments also refl ect the impact of the purchase-price accounting
effects of 2005. These effects primarily relate to the amortization of intangible
assets (EUR 78 million, excluding the write-off of research and development
assets) and inventory step-ups (EUR 24 million).
CryptoTec
On March 31, 2006, Philips transferred its CryptoTec activities to
Irdeto, a world leader in content security and a subsidiary of multimedia
group Naspers. Irdeto purchased the CryptoTec net assets for an
amount of EUR 30 million. The gain on this transaction of EUR 31
million has been reported under Other business income.
Philips Enabling Technologies
On November 6, 2006, the company sold Philips Enabling Technologies
Group (ETG) to VDL for EUR 45 million. The gain on this transaction
(EUR 3 million) has been reported under Other business income.
Philips Sound Solutions
On December 31, 2006, Philips transferred its Philips Sound Solutions
(PSS) business to D&M Holding for EUR 53 million. The transaction
resulted in a EUR 43 million gain, reported under Other business income.
FEI
On December 20, 2006, Philips sold its 24.8 percent interest in FEI,
a NASDAQ-listed company, in a public offering. The sale provided
Philips with net proceeds of EUR 154 million and a non-taxable gain
of EUR 76 million. The gain is included in Results relating to equity-
accounted investees.
2005
During 2005, the Company completed several divestments, acquisitions
and ventures. All business combinations have been accounted for using
the purchase method of accounting. However, both individually and in
the aggregate these business combinations were deemed immaterial in
respect of the SFAS No. 141 disclosure requirements.
Sales and Income from operations related to activities divested in 2005,
included in the Company’s consolidated statement of income for 2005,
amounted to EUR 488 million and a loss of EUR 20 million, respectively.
The most signifi cant acquisitions and divestments are summarized
in the next two tables and described in the section below.
Acquisitions
cash
outfl ow
net
assets
acquired
1)
other
intangible
assets goodwill
Stentor 194 (29 ) 108 115
Lumileds 788 (34 ) 268 554
1) Excluding cash acquired
Divestments
cash infl ow
net assets
divested
1)
recognized
gain
Connected Displays
(Monitors) − (136 )2) 136
Philips Pension
Competence Center 55 13 42
LG.Philips LCD 938 606 332
TSMC 770 310 460
NAVTEQ 932 179 753
Atos Origin 554 369 185
Great Nordic 67 19 48
1) Excluding cash divested
2) Represents net balance of assets received in excess of net assets divested
Stentor
In August 2005, the Company acquired all shares of Stentor, a US-based
company. The related cash outfl ow was EUR 194 million. Stentor was
founded in 1998 to provide a solution for enterprise-wide medical
image and information management. The business was included in the
Medical Systems sector.
Lumileds
In November 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 was included in the Lighting sector. In 2006, the Company
acquired the remaining 3.5% of the shares.
226 Corporate governance224 Reconciliation of
non-US GAAP information
234 The Philips Group
in the last ten years
236 Investor information