Philips 2006 Annual Report Download - page 201

Philips Annual Report 2006 201
43
Investments in equity-accounted investees
Results relating to investments in equity-accounted investees
2004 2005 2006
Company’s participation in income
and loss 962 514 (188 )
Results on sales of shares 230 1,754 106
Gains and losses arising from dilution
effects 314 190 13
Investment impairment / other charges (8 ) (179 ) (70 )
1,498 2,279 (139 )
Detailed information of the aforementioned individual line items is set
out below.
Company’s participation in income and loss
2004 2005 2006
LG.Philips LCD 563 148 (192 )
LG.Philips Displays (55 ) (42 ) −
Others 454 408 4
962 514 (188 )
2006
The Company had a share in losses which were mainly related
to LG.Philips LCD.
2005
The Company has a share in income, mainly TSMC and LG.Philips
LCD, and losses, mainly LG.Philips Displays. The operational loss of
LG.Philips Displays included restructuring costs of EUR 30 million.
2004
LG.Philips Displays’ loss included impairment charges of EUR 70 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
investments in equity-accounted investees (primarily TSMC and
Atos Origin) contributed a net profi t of EUR 304 million. As of
August 2004, NAVTEQ was recorded under investments in equity-
accounted investees.
Results on sales of shares
2004 2005 2006
FEI Company − − 103
NAVTEQ − 768 −
TSMC − 551 −
LG.Philips LCD − 435 −
Atos Origin 196 _ −
Others 34 _ 3
230 1,754 106
4343
2006
In 2006, Philips sold its remaining interest of 24.8% in FEI Company
(see note 39).
2005
In 2005 Philips sold its remaining 33.1 million shares in NAVTEQ,
resulting in a non-taxable gain of EUR 768 million. As a result of this
transaction, Philips’ shareholding in NAVTEQ was reduced to zero.
Results on the sale of shares includes a gain of EUR 551 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. After giving up
signifi cant infl uence in 2006, the Company designated the investment
as available for sale.
In 2005, Philips sold 27,375,000 shares of LG.Philips LCD common
stock, resulting in a gain of EUR 435 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 196 million. As a result, Philips’ holding in Atos Origin
decreased to 15.4%. The remaining investment was no longer valued
according to the equity method, and has been reclassifi ed to other
non-current fi nancial assets.
Gains and losses arising from dilution effects
2004 2005 2006
TPV − − 13
LG.Philips LCD 168 214 −
Atos Origin 156 − −
TSMC (10 ) (24 ) −
314 190 13
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 214 million reducing our 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 equity-accounted investees 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%.
The Company’s interest in TSMC was diluted as a result of shares
issued to employees in 2004 and by 0.2%, 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