Philips 2006 Annual Report Download - page 141

Philips Annual Report 2006 141
7
Investments in equity-accounted investees
Results relating to equity-accounted investees
2004 2005 2006
Company’s participation in
income and loss 1,033 513 (180 )
Gains on sales of shares 185 1,545 79
Gains arising from dilution effects 254 165 14
Investment impairment/other charges (8 ) (469 ) (70 )
1,464 1,754 (157 )
Detailed information on the aforementioned individual line items is
set out below.
Company’s participation in income and loss
2004 2005 2006
LG.Philips LCD 575 146 (196 )
LG.Philips Displays (69 ) (39 ) −
Others 527 406 16
1,033 513 (180 )
2006
The Company had a share in losses which were mainly related
to LG.Philips LCD.
2005
The Company had a share in income, mainly TSMC and LG.Philips LCD,
and losses, mainly LG.Philips Display. The operational loss of LG.Philips
Displays included restructuring costs of EUR 30 million.
2004
LG.Philips Displays’ loss included impairment charges of EUR 84
million, which were recorded in conjunction with the write-down of
its assets in Dreux (France), Ann Arbor (USA) and Barcelona (Spain).
InterTrust Technologies contributed a net gain of EUR 100 million
related to its license agreement with Microsoft. Various other
unconsolidated companies (primarily TSMC and Atos Origin) contributed
a net profi t of EUR 377 million. As of August 2004, NAVTEQ was
recorded under investments in unconsolidated companies.
Results on sales of shares
2004 2005 2006
FEI Company − − 76
NAVTEQ − 753 −
TSMC − 460 −
LG.Philips LCD − 332 −
Atos Origin 151 − −
Others 34 − 3
185 1,545 79
77
2006
In 2006, Philips sold its interest of 24.8% in FEI Company (see note 2).
2005
In 2005, Philips sold its remaining 33.1 million shares in NAVTEQ,
resulting in a non-taxable gain of EUR 753 million. As a result of this
transaction, Philips’ shareholding in NAVTEQ was reduced to zero.
Results on sales of shares include a gain of EUR 460 million resulting
from the sale of 567,605,000 common shares in the form of American
Depository Shares in TSMC. Following the aforementioned sale of
TSMC shares, Philips’ shareholding in TSMC was reduced to 16.4%.
During 2005, the Company was represented on the board of directors
and continued to exercise infl uence by participating in the policy-
making processes of TSMC. Accordingly, the Company continued to
apply equity accounting for TSMC. In January 2006, Philips’ infl uence
on TSMC’s fi nancial and operating policies, including representation on
the TSMC Board, was reduced. Effective January 2006, the investment
was transferred to available-for-sale securities since Philips is no
longer able to exercise signifi cant infl uence.
In 2005, Philips sold 27,375,000 shares of LG.Philips LCD common stock,
resulting in a gain of EUR 332 million. As a result of the sale, Philips’
shareholding in LG.Philips LCD was reduced from 40.5% to 32.9%.
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 151 million. As a result, Philips’ holding in Atos Origin
decreased to 15.4%. The remaining investment was no longer valued
according to the equity the method and was reclassifi ed to other
non-current fi nancial assets.
Gains and losses arising from dilution effects
2004 2005 2006
TPV − − 14
LG.Philips LCD 108 189 −
Atos Origin 156 − −
TSMC (10 ) (24 ) −
254 165 14
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
189 million, reducing Philips’ 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,
annual 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%. As in 2003, the Company’s interest 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%.
226 Corporate governance224 Reconciliation of
non-US GAAP information
234 The Philips Group
in the last ten years
236 Investor information