Philips 2006 Annual Report Download - page 45

Philips Annual Report 2006 45
In 2005, net capital expenditures amounted to EUR 506
million, mainly attributable to Lighting and Medical Systems.
Continuing operations recorded a cash outfl ow from
investing activities of EUR 2,811 million compared to
an infl ow of EUR 1,687 million in 2005.
Cash flows from acquisitions and divestments
in millions of euros divestments acquisitions
4,000
2,000
0
(2,000)
(4,000)
1,261
(520)
741
20021)
1,801
(377)
1,424
20031)
2,318
(371)
1,947
20041)
3,346
2,193
20051)
384
(2,498)
(2,114)
2006
(1,153)
1) Restated to present the Semiconductors division as a discontinued operation.
During the year, a total of EUR 2,498 million was used
for acquisitions, notably Intermagnetics (EUR 993
million), Avent (EUR 689 million), Lifeline (EUR 583
million) and Witt Biomedical (EUR 110 million).
In 2006, EUR 318 million cash was generated from the
divestment of several businesses within Other Activities,
notably CryptoTec, Philips Enabling Technologies Group,
Philips Business Communications, Optical Storage, and
the sale of the entire stake in FEI company. In addition,
EUR 62 million was received in relation to maturing
currency hedges.
In 2005, acquisitions totaling EUR 1,107 million included
the acquisition of a 47.25% share in Lumileds, which had
a cash impact of EUR 788 million, and the acquisition of
Stentor for EUR 194 million. In addition, cash payments
of EUR 46 million were made for maturing currency
hedges. Cash proceeds of EUR 3,346 million, mainly
related to the sale of shares in NAVTEQ (EUR 932
million), TSMC (EUR 770 million), Atos Origin (EUR 554
million), LG.Philips LCD (EUR 938 million) and Great
Nordic (EUR 67 million) were recognized.
Cash fl ows from fi nancing activities
Net cash used for fi nancing activities in 2006 was EUR 3,715
million. The impact of changes in debt was a reduction of
EUR 437 million, including a EUR 208 million scheduled
bond repayment. Philips’ shareholders were paid EUR 523
million in dividend. Additionally, cash outfl ows for share
repurchases totaled EUR 2,899 million. This included
EUR 414 million fi nal repurchases related to the EUR 1.5
billion share repurchase program announced in August 2005
that was completed in February 2006, a total of EUR 118
million related to hedging of obligations under the long-term
employee incentive and employee stock purchase programs
and a total of EUR 2,367 million of share repurchases for
cancellation between July and December 2006. Offsetting
the cash outfl ows in part was a net cash infl ow of EUR 144
million due to the exercise of stock options.
Net cash used for fi nancing activities in 2005 amounted
to EUR 2,589 million. The impact of changes in debt was
a reduction of EUR 324 million, including EUR 251 million
of scheduled bond repayments. Philips’ shareholders were
paid EUR 504 million in dividend. Additionally, EUR 1,836
million was used to acquire approximately 84 million shares
as part of the Company’s share repurchase programs. The
fi rst share repurchase program, which was completed in
June 2005, resulted in a total cash outfl ow of EUR 750
million. Of this, EUR 250 million was related to the hedging
of obligations under the long-term employee incentive and
employee stock purchase programs, with the remaining
EUR 500 million of shares repurchased for cancellation.
The second share repurchase program, which began in
August 2005, resulted upon completion in a total of EUR
1.5 billion worth of shares repurchased for cancellation.
Offsetting these amounts in part was a cash infl ow due
to the exercise of stock options for an amount of EUR
75 million.
Cash fl ow from discontinued operations
In 2006, net cash generated by discontinued operations
amounted to EUR 7,111 million, predominantly related
to the sale of a majority stake in the Semiconductors
division, amounting to EUR 7,059 million.
54 The Philips sectors 86 Risk management 100 Report of the Supervisory Board 110 Financial Statements