Philips 2006 Annual Report Download - page 197

Philips Annual Report 2006 197
Divestments
cash infl ow
net assets
divested
1)
recognized
gain (loss)
Philips HeartCare
Telemedicine Services (8 ) (6 ) (2 )
Atos Origin 552 356 196
NAVTEQ 672 18 654
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 transaction
was completed through a series of asset transfers and capital injection
transactions. Philips paid EUR 49 million in cash for the interest
acquired. Neusoft contributed its manufacturing and research and
development operations 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 related 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 654 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 196 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 held 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.
40
Income from operations
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 388 438 462
Other social security and similar charges:
Required by law - 612 609 652
Voluntary - 167 (133 ) 103
5,762 5,526 6,022
See note 52 to the fi nancial statements for further information
on pension costs.
For remuneration details of the members of the Board of Management
and the Supervisory Board see note 34.
For information on share-based compensation, see note 33.
The Company applies IFRS 2 for recognition and measurement of
share-based payments, which are similar to US GAAP requirements.
See note 33 for the disclosures.
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
Continuing 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
4040
226 Corporate governance224 Reconciliation of
non-US GAAP information
234 The Philips Group
in the last ten years
236 Investor information