Philips 2006 Annual Report Download - page 142

Philips Annual Report 2006142
Investment impairment/other charges
2004 2005 2006
LG.Philips Displays − (458 ) (61 )
Others (8 ) (11 ) (9 )
(8 ) (469 ) (70 )
2006
The voluntary support of social plans for employees impacted by
the bankruptcy of certain LG.Philips Displays activities amounted
to EUR 61 million.
2005
Investment impairment charges in 2005 related to LG.Philips Displays
(LPD) and a few smaller investments. In December 2005, as a result of
various factors including lower demand and increased pricing pressures
for CRT’s, the Company concluded that its investment in LG.Philips
Displays was impaired. Accordingly, the Company wrote-off the
remaining book value of the investment and recorded an impairment
charge of EUR 126 million. Additionally, the Company recognized the
accumulated foreign translation loss related to this investment of
approximately EUR 290 million.
The Company also fully provided for the existing guarantee of EUR 42
million provided to LPD’s banks.
2004
Investment impairment charges in 2004 related to a few smaller
investments.
Investments in, and loans to, equity-accounted investees
The changes during 2006 are as follows:
loans investments total
Investment in equity-
accounted investees as of
January 1, 2006 7 5,335 5,342
Changes:
Transfer from equity-
accounted investees − (2,017 ) (2,017 )
Acquisitions/additions − 12 12
Sales/repayments − (64 ) (64 )
Share in income/value
adjustments − (180 ) (180 )
Dividends received − (7 ) (7 )
Translation and exchange
rate differences (2 ) (106 ) (108 )
Investments in equity-
accounted investees as of
December 31, 2006 5 2,973 2,978
Included in investments is EUR 741 million (2005: EUR 763 million),
representing the excess of the Company’s investment over its underlying
equity in the net assets of equity-accounted investees. The principal
amount is EUR 731 million (2005: EUR 752 million) for LG.Philips LCD.
In January 2006, Philips’ infl uence on TSMC, including representation
on the TSMC Board, was reduced. Consequently, the 16.4% investment
in TSMC was transferred from equity-accounted investees to available-
for-sale securities effective January 1, 2006, as Philips was no longer
able to exercise signifi cant infl uence.
Sales/repayments mainly relate to the sale of FEI Company (see note 2).
The total carrying value of investments in, and loans to, equity-
accounted investees is summarized as follows:
2005 2006
share-
holding % amount
share-
holding % amount
TSMC 16 2,017 − −
LG.Philips Displays 50 − 50 −
LG.Philips LCD 33 2,903 33 2,625
Other equity method
investments 422 353
5,342 2,978
The fair value of Philips’ shareholdings in the publicly listed company
LG.Philips LCD, based on quoted market prices at December 31, 2006
was EUR 2,673 million.
The investments in equity-accounted investees are mainly included
in the sector Other Activities.
Summarized information of equity-accounted investees
Summarized fi nancial information for the Company’s investments in
equity-accounted investees, on a combined basis, is presented below:
2004 2005 2006
Net sales 17,317 20,088 13,606
Income (loss) before taxes 3,284 2,270 (625 )
Income taxes (134 ) 117 187
Income (loss) after taxes 3,150 2,387 (438 )
Net income (loss) 3,192 2,293 (474 )
Total share in net income of equity-
accounted investees recognized in the
consolidated statements of income 1,033 513 (180 )
December 31
2005
1) 2006
Current assets 11,314 4,761
Non-current assets 18,114 9,789
29,428 14,550
Current liabilities (5,811 ) (4,188 )
Non-current liabilities (3,734 ) (3,454 )
Net asset value 19,883 6,908
Investments in and loans to equity-accounted
investees included in the consolidated balance sheet 5,342 2,978
1) Excluding LG.Philips Displays
In December 2005, the investment in LG.Philips Displays was written
off and Philips decided to stop funding. As a result, the book value
of the investment was reduced to zero and equity accounting was
terminated. Philips was unable to determine and disclose the value
of the LG.Philips Displays equity at December 31, 2005.
112 Group fi nancial statements
Notes to the group fi nancial statements
172 IFRS information 218 Company fi nancial statements