Philips 2006 Annual Report Download - page 194

Philips Annual Report 2006194
Intermagnetics
On November 9, 2006, the Company acquired Intermagnetics General
Corporation (Intermagnetics) for USD 27.50 per share, which was paid
in cash upon completion. Additionally, in connection with the closing,
Philips provided a loan to Intermagnetics of approximately USD 120
million
to pay off debt and certain other obligations, including amounts
related
to the acceleration of stock-based compensation and expenses
incurred
as a result of the transaction. Since the date of the transaction,
Intermagnetics has been consolidated within the Medical Systems sector.
The condensed balance sheet of Intermagnetics determined in
accordance with IFRS, immediately before and after acquisition date:
before
acquisition date
after acquisition
date
Assets
Goodwill 132 770
Other intangible assets 34 255
Property, plant and equipment 35 45
Working capital 67 56
Deferred tax liabilities (6 ) (78 )
Cash 19 24
281 1,072
Financed by
Group equity 137 1,014
Loans 144 58
281 1,072
The allocation of the purchase price to the net assets acquired had
not yet been fi nalized as of December 31, 2006, as further information
related to intangible asset valuations remained outstanding.
Other intangible assets comprised of the following:
amount
amortization
period in years
Core and existing technology 120 6
In-process research and
development 29 3
Trademarks and trade names 17 10
Customer relationships 86 9
Miscellaneous 3 2
255
Pro forma disclosures on acquisitions
The following tables present the year-to-date pro forma unaudited
results of Philips, assuming Lifeline, Witt Biomedical, Avent and
Intermagnetics had been consolidated as of January 1, 2006:
Philips Group
pro forma
adjustments
1)
pro forma
Philips Group
Unaudited
Sales 26,976 236 27,212
Income from operations 939 (17 ) 922
Net income 4,664 (11 ) 4,653
Earnings per share - in
euros 3.97 3.96
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 also refl ect the impact of the purchase-price accounting effects
from January 1, 2006 to the date of acquisition and the elimination of non-
recurring post-merger integration costs incurred by the Company. Purchase-
price accounting effects primarily relate to the amortization of intangible assets
(EUR 81 million) 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:
Philips Group
pro forma
adjustments
1)
pro forma
Philips Group
Unaudited
Sales 25,775 415 26,190
Income from operations 1,419 (29 ) 1,390
Net income 3,374 (13 ) 3,361
Earnings per share - in
euros 2.70 2.69
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 87 million) 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 assets for an amount
of EUR 30 million. The gain on this transaction of EUR 26 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. The recognized gain on this transaction
(EUR 7 million) has been reported under Other business expense.
112 Group fi nancial statements 172 IFRS information
Notes to the IFRS fi nancial statements
218 Company fi nancial statements