Philips 2006 Annual Report Download - page 135

Philips Annual Report 2006 135
a gain on the sales of shares of EUR 332 million, which has been
reported as Results relating to equity-accounted investees. As a result
of these transactions, the Company’s participating 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 of TSMC. This resulted in
a cash infl ow of EUR 770 million and a gain of EUR 460 million, which
has been reported as Results relating to equity-accounted investees.
Philips’ shareholding after these transactions was reduced from 19.0%
to 16.4%. In 2005, Philips to accounted for this investment using the
equity method of accounting. After giving up signifi cant infl uence in
2006, the Company designated the investment as available for sale.
Great Nordic
In September 2005, the Company sold its remaining share of 3.1% in
Great Nordic. This resulted in a cash infl ow of EUR 67 million and
a gain of EUR 48 million, which has been reported under Financial
income and expenses.
Atos Origin
In July 2005, Philips sold its remaining share of 15.4% in Atos Origin.
This resulted in a cash infl ow of EUR 554 million and a gain of EUR 185
million, which has been reported under Financial income and expenses.
NAVTEQ
In April and May 2005, the Company sold its remaining share of 37.1%
in NAVTEQ. This resulted in a cash infl ow of EUR 932 million and
a gain of EUR 753 million, which has been reported as Results relating
to equity-accounted investees.
2004
During 2004, 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
2004 for the period included in the consolidation amounted to
EUR 190 million and a profi t of EUR 60 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
Philips-Neusoft Medical Systems 49 1 5 43
Gemini Industries 48 32 8 8
Industriegrundstuecks-
Verwaltungs GmbH 12 12 − −
1) Excluding cash acquired
Divestments
cash infl ow
net assets
divested
1)
recognized
gain (loss)
Philips HeartCare
Telemedicine Services (8 ) (6 ) (2 )
Atos Origin 552 401 151
NAVTEQ 672 37 635
Philips Consumer Electronics
Industries Poland (24) (24 ) −
1) Excluding cash divested
Philips and Neusoft Medical Systems
In July 2004, the Company and China Neusoft Group formed a venture
in which Philips has an equity participation of 51%. The acquisition
was completed through a series of asset transfers and capital injection
transactions. The effect of the transactions is that Philips paid EUR 49
million in cash for the interest acquired. Neusoft contributed its
manufacturing assets and knowledge to the venture and holds the
other 49%. Intangible assets including goodwill have been recognized
at amounts totaling EUR 48 million, of which EUR 43 million relates to
goodwill.
Gemini Industries
In August 2004, the Company acquired all of the shares of Gemini
Industries, a North American supplier of consumer electronics and
PC accessories at a cost of EUR 48 million, including the assumption
of bank debt that was liquidated simultaneously with the acquisition.
The cost of the acquisition has been allocated based upon the fair
value of assets acquired and liabilities assumed. An amount of EUR 8
million has been assigned to a customer-related intangible asset.
Additionally, EUR 8 million, representing the excess of cost over the
fair value of the net assets acquired, has been recorded as goodwill.
The customer-related intangible asset is being amortized over its
estimated useful life of 15 years.
Philips HeartCare Telemedicine Services
In January 2004, the Company sold its 80% interest in the Philips
HeartCare Telemedicine Services (PHTS) venture to the other owner,
SHL Telemedicine International, an Israeli company in which the
Company holds an 18.6% interest. The investment in SHL Telemedicine
is accounted for using the cost method. The transaction resulted in
a cash outfl ow of EUR 8 million and a loss of EUR 2 million in 2004.
Accordingly, the PHTS entity was deconsolidated in January 2004.
NAVTEQ
The IPO of NAVTEQ in August 2004 resulted in a EUR 635 million gain
on the sale of shares and a cash infl ow of EUR 672 million. Following
the IPO, Philips’ interest in NAVTEQ decreased from 83.5% to 34.8%,
(37.7% upon settlement of the purchase by the Company of an
additional 2.6 million shares). Accordingly, consolidation of NAVTEQ
ceased as from August 2004, while the Company’s remaining interest
was accounted for using the equity method. In 2005 the Company’s
remaining interest was sold.
Philips Consumer Electronics Industries Poland
In December 2004, Philips sold its Polish television assembly plant
in Kwidzyn, Poland to Jabil Circuit, a global electronics manufacturer.
The transaction resulted in a cash outfl ow of EUR 24 million. Jabil
will continue production assembly for Philips from the facility.
Atos Origin
In December 2004, Philips sold a 16.5% stake in Atos Origin. The
cash proceeds from this sale were EUR 552 million, while the gain
amounted to EUR 151 million. At December 31, 2004, Philips held
a stake of 15.4%. As a result of this transaction, the Company ceased
using the equity method of accounting for Atos Origin as from
December 2004, because no signifi cant infl uence in Atos Origin
could be exercised.
Industriegrundstuecks-Verwaltungs GmbH
In December 2004, the Company acquired the shares of IGV, a real
estate company which owned a substantial part of the buildings that
were rented by the Company in Austria. The transaction involved
a cash outfl ow of EUR 12 million.
226 Corporate governance224 Reconciliation of
non-US GAAP information
234 The Philips Group
in the last ten years
236 Investor information