Philips 2006 Annual Report Download - page 37

Philips Annual Report 2006 37
The write-off of in-process R&D of EUR 33 million
in 2006 relates to the acquisitions of Intermagnetics
(EUR 29 million) and Witt Biomedical (EUR 4 million).
In 2005, there was an in-process R&D charge of EUR
6 million related to Lumileds.
The Company performed the annual goodwill
impairment tests, resulting in zero charge to EBIT.
Net restructuring and impairment charges in 2005
amounted to EUR 147 million, consisting of gross charges
totaling EUR 155 million, partly offset by releases of
EUR 8 million.
The most signifi cant projects in 2005 were the closing of
the Audio/Video Innovation Center and the restructuring
of the Mobile Infotainment business in CE. Furthermore,
within Lighting, rationalization took place in Lamps through
downsizing of excess capacity and the transfer of production
to low-wage countries. Within Other Activities, a number
of activities were prepared for disentanglement or
divestment. The remaining restructuring in 2005 for
the Philips Group covered a number of smaller projects.
For further details of restructuring charges, see note 4 to
the consolidated fi nancial statements in this Annual Report.
Financial income and expenses
A breakdown of the fi nancial income and expenses is
shown in the table below.
Financial income and expenses
in millions of euros
2004 2005 2006
Interest expense (net) (258) (197) (183)
Sale of securities 440 233 −
Other 34 72 217
216 108 34
The net interest expense was EUR 14 million lower than
in 2005, mainly as a result of higher average cash positions
and higher average interest rates applied to these cash
positions during 2006, compared to 2005. This was offset
by increased interest expenses on derivatives related to
hedging of the Group’s foreign-currency-denominated
cash and intercompany funding positions.
54 The Philips sectors 86 Risk management 100 Report of the Supervisory Board 110 Financial Statements
“Simplicity is a place between too little
and too much. It is quality and value,
whether it be in your time, your space
or the products that you use. If one
reduces unnecessary clutter, the
mind perceives simplicity. In medical
equipment, we need the essentials –
enough technology to obtain an
accurate analysis – without a lot of
extra options that clutter and confuse.”
Peggy Fritzsche, former President of the Radiology Society
of North America and member of the Philips Simplicity
Advisory Board
More is often not better. In fact, it’s often too much. Determined
to deliver to the healthcare community on its brand promise
of “sense and simplicity”, Philips resolutely avoids technological
overkill, offering physicians advanced medical equipment that is
designed around their needs, to enable them to make the best
diagnosis possible.