Philips 2006 Annual Report Download - page 136

Philips Annual Report 2006136
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Income from operations
For information related to sales and income from operations on
a geographical and segmental basis, see the section Information by
sectors and main countries in the chapter Group fi nancial statements
of this Annual Report.
Sales composition
2004 2005 2006
Goods 22,239 23,044 24,157
Services 1,995 2,225 2,317
Licenses 621 506 502
24,855 25,775 26,976
Salaries and wages
2004 2005 2006
Salaries and wages 4,595 4,612 4,805
Pension costs 235 216 155
Other social security and similar charges:
- Required by law 612 609 652
- Voluntary 185 (12 ) 116
5,627 5,425 5,728
Salaries and wages include an amount of EUR 78 million (2005: EUR
106 million, 2004: EUR 113 million) relating to restructuring charges.
See note 20 to the fi nancial statements for further information
on pension costs.
For the remuneration of the Board of Management and Supervisory
Board, please refer to note 34.
Employees
The average number of employees by category is summarized as
follows (in FTEs):
2004 2005 2006
Production 65,171 61,893 65,957
Research & development 14,282 13,770 13,397
Other 29,520 28,555 27,888
Permanent employees 108,973 104,218 107,242
Temporary employees 21,056 19,124 16,434
Continued operations 130,029 123,342 123,676
Discontinued operations 35,287 37,585 37,354
1)
1) Average number of fi rst nine months of 2006
In many countries, employees render services under collective labor
agreements, of which a signifi cant portion expires within a year.
Depreciation and amortization
Depreciation of property, plant and equipment and amortization
of intangibles are as follows:
2004 2005 2006
Depreciation of property, plant and
equipment 650 556 564
Amortization of internal use software 93 79 71
Amortization of other intangible assets 116 99 166
Impairment of goodwill 592 − −
Write-off of in-process R&D − 6 33
1,451 740 834
Depreciation of property, plant and equipment includes an additional
write-off in connection with the retirement of property, plant and
equipment amounting to EUR 20 million in 2006 (2005: EUR 13 million,
2004: EUR 24 million).
Included in depreciation of property, plant and equipment is an amount
of EUR 17 million (2005: EUR 42 million, 2004: EUR 115 million)
relating to impairment charges.
Depreciation of property, plant and equipment and amortization
of software are primarily included in cost of sales.
In 2006, no goodwill impairments were recorded (2005: nil, 2004:
EUR 592 million, of which EUR 590 million related to MedQuist).
Rent
Rent expenses amounted to EUR 396 million in 2006 (2005: EUR 383
million, 2004: EUR 361 million).
Selling expenses
Advertising and sales promotion costs incurred during 2006 totaled
EUR 959 million (2005: EUR 905 million, 2004: EUR 878 million)
and are included in selling expenses. Shipping and handling costs
of EUR 558 million are also included (2005: EUR 497 million, 2004:
EUR 443 million).
General and administrative expenses
General and administrative expenses include the costs related to
management and staff departments in the corporate center, divisions
and country/regional organizations, amounting to EUR 922 million in
2006 (2005: EUR 813 million, 2004: EUR 788 million). Additionally, the
pension costs and costs of other postretirement benefi t plans relating
to employees, not allocated to current division activities, amounted
to a net cost of EUR 87 million in 2006 (2005: EUR 16 million, 2004:
EUR 151 million).
Research and development expenses
Expenditures for research and development activities amounted
to EUR 1,668 million, representing 6.2% of Group sales (2005: EUR
1,602 million, 6,2% of Group sales 2004: EUR 1,615 million, 6.5%
of Group sales).
For information related to research and development expenses
on a segmental basis, see the section Information by sectors and
main countries of the chapter Group fi nancial statements of this
Annual Report.
112 Group fi nancial statements
Notes to the group fi nancial statements
172 IFRS information 218 Company fi nancial statements