Philips 2006 Annual Report Download - page 202

Philips Annual Report 2006202
Investment impairment/other charges
2004 2005 2006
LG.Philips Displays − (168 ) (61 )
Others (8 ) (11 ) (9 )
(8 ) (179 ) (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
and a few smaller investments. In December 2005, as a result of various
factors including lower demand and increased pricing pressures for
CRT, 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
131 million. Additionally, the Company recognized the accumulated
foreign translation gain related to this investment of EUR 5 million.
The Company also fully provided for the existing guarantee of EUR 42
million provided to LPD’s banks. Philips will not inject further capital
into LPD.
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
invest-
ments total
Investments in equity method
investees as of January 1, 2006 7 5,157 5,164
Changes:
Transfer from equity-accounted
investees − (1,931 ) (1,931 )
Acquisitions/additions − 12 12
Sales/repayments − (64 ) (64 )
Share in income/value adjustments − (188 ) (188 )
Dividends received − (7 ) (7 )
Translation and exchange rate
differences (2 ) (111 ) (113 )
Investments in equity-accounted
investees as of December 31, 2006 5 2,868 2,873
Included in investments is EUR 622 million (2005: EUR 641 million),
representing the excess of the Company’s investment over its underlying
equity in the net assets of the equity-accounted investees. The principal
amount is, EUR 612 million (2005: EUR 631 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 investments 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 39).
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
LG.Philips Displays 50 − 50 −
LG.Philips LCD 33 2,780 33 2,509
TSMC 16 1,930 − −
Investments in other
equity-accounted
investees 454 364
5,164 2,873
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 respectively.
The investments in equity-accounted investees are mainly included
in the sector Other Activities.
Summarized information of investments in
equity-accounted investees
Summarized fi nancial information for the Company’s investments in
equity-accounted investees, on a combined basis, is presented below:
January-December
2004 2005 2006
Net sales 17,317 20,088 13,606
Income (loss) before taxes 3,290 2,298 (612 )
Income taxes (138 ) 121 189
Income (loss) after taxes 3,152 2,419 (423 )
Net income (loss) 3,146 2,325 (460 )
Total share in net income of equity-
accounted investees recognized in the
consolidated statements of income 962 514 (188 )
December 31
2005
1) 2006
Current assets 12,247 4,955
Non-current assets 18,944 10,029
31,191 14,984
Current liabilities (6,607 ) (4,184 )
Non-current liabilities (4,944 ) (3,827 )
Net asset value 19,640 6,973
Investments in and loans to equity-accounted
investees included in the consolidated balance sheet 5,164 2,873
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 as of December 31, 2005.
112 Group fi nancial statements 172 IFRS information
Notes to the IFRS fi nancial statements
218 Company fi nancial statements