Philips 2006 Annual Report Download - page 198

Philips Annual Report 2006198
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 650 571 564
Amortization of internal-use software 93 79 71
Amortization of goodwill and other
intangibles:
Amortization of other intangible
assets
-
116 99 166
Amortization of development costs - 168 197 213
Impairment of goodwill - 588 − −
1,615 946 1,014
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 and other intangible assets are primarily included in cost of
sales. Amortization of development cost is included in research and
development expenses.
In 2006, no goodwill impairments were recorded (2005: nil, 2004:
EUR 588 million, of which EUR 587 million related to MedQuist).
Total depreciation and amortization
2004 2005 2006
Medical Systems 813 236 256
DAP 123 128 163
Consumer Electronics 209 178 179
Lighting 213 184 255
Other Activities 250 214 158
Unallocated 7 6 3
1,615 946 1,014
Other business income (expense)
Other business income (expense) consists of the following:
2004 2005 2006
Result on disposal of businesses 654 198 64
Result on disposal of fi xed assets 43 124 90
Remaining business
income - 170 218 91
expense - (222 ) (125 ) (68 )
645 415 177
Results on the disposal of businesses consisted of:
2004 2005 2006
Philips Sound Solutions − − 12
CryptoTec − − 26
Connected Displays (Monitors) − 158 23
Philips Pension Competence Center − 43 −
Initial public offering NAVTEQ 654 − −
Other − (3 ) 3
654 198 64
2006
The result on disposal of businesses in 2006 is related mainly to the
sale of the CryptoTec activities which delivered a gain of EUR 26
million, the sale of Philips Sound Solutions PSS to D&M Holding at a
gain of EUR 12 million and the sale of Connected Displays at a gain of
EUR 23 million. The result on disposal of fi xed assets is mainly related
to the sale of certain real estate assets in Austria with a gain of
EUR 31 million. The remaining business income consists of the
settlement of certain legal claims and some releases of provisions.
2005
The result on disposal of businesses in 2005 related mainly to the sale
of certain activities within the Company’s monitors and fl at TV
business to TPV at a gain of EUR 158 million and the sale of asset
management and pension administration activities to Merrill Lynch and
Hewitt respectively, for an amount of EUR 43 million. In 2005, the
result on disposal of fi xed assets related mainly to the sale of buildings
in Suresnes, France (EUR 67 million) and in the Netherlands (EUR 36
million). In 2005, remaining business income and expenses consists of
the settlement of some legal claims and some releases of provisions.
2004
The result on disposal of businesses in 2004 primarily consists of a
non-taxable gain of EUR 654 million on the initial public offering of
NAVTEQ which included cumulative translation profi t of EUR 8 million.
In 2004, remaining business income (expense) consists of a variety of
items, the most signifi cant being insurance recoveries of EUR 58 million,
releases of provisions related to the disentanglement of some former
businesses, and the payment of EUR 133 million for the settlement of
litigation in the US with Volumetrics, net of insurance.
112 Group fi nancial statements 172 IFRS information
Notes to the IFRS fi nancial statements
218 Company fi nancial statements