Philips 2007 Annual Report Download - page 142

Philips Annual Report 2007148
The amount of purchased in-process research and development
acquired and written off in 2007 was EUR 1 million. This amount is
included in the consolidated statement of income under Research
and development expenses.
Other intangible assets, excluding in-process research and
development, are comprised of the following:
amount
amortization
period in
years
Trademarks and trade names 1 1
Developed and core technology 113 10-20
Customer relationships 68 7-18
Other 4 2-10
186
Color Kinetics contributed a loss from operations of EUR 8 million
to the Group for the period from August 24 to December 31, 2007.
Pro forma disclosures on acquisitions
The following table presents the year-to-date unaudited pro-forma
results of Philips, assuming PLI and Color Kinetics had been
consolidated as of January 1, 2007:
Unaudited
January-December 2007
Philips Group
pro forma
adjustments1)
pro forma
Philips Group
Sales 26,793 75 26,868
Income from operations 1,852 − 1,852
Net income 4,168 (2) 4,166
Basic earnings per share –
in euros 3.84 3.84
1) Pro forma adjustments include sales, income from operations and net income
from continuing operations of the acquired companies from January 1, 2007
to the date of acquisition. As Philips nances its acquisitions with own funds,
the pro forma adjustments exclude the cost of external funding incurred prior
to the acquisition. The pro forma adjustments reect the impact of the
purchase- price accounting effects from January 1, 2007 to the date of
acquisition and elimination of non-recurring integration costs. Purchase-price
accounting effects primarily relate to the amortization of intangible assets
(EUR 10 million, excluding the write-off of research and development assets).
The following table presents the year-to-date unaudited pro-forma
results of Philips, assuming PLI and Color Kinetics had been
consolidated as of January 1, 2006:
Unaudited
January-December 2007
Philips Group
pro forma
adjustments1)
pro forma
Philips Group
Sales 26,682 454 27,136
Income from operations 1,201 14 1,215
Net income 5,383 26 5,409
Basic earnings per share –
in euros 4.58 4.60
1) Pro forma adjustments include sales, income from operations and net income
from continuing operations of the acquired companies for 2006. As Philips
nances its acquisitions with own funds, the pro forma adjustments exclude
the cost of external funding incurred in 2006. The pro forma adjustments also
reect the impact of the purchase-price accounting effects of 2006. These
effects primarily relate to the amortization of intangible assets (EUR 26 million,
excluding the write-off of research and development assets) and inventory
step-ups (EUR 26 million).
LG.Philips LCD
On October 10, 2007, Philips sold 46,400,000 shares of common stock
in LG.Philips LCD (LPL) to nancial institutions in a capital markets
transaction. This transaction represented 13% of LPL’s issued share
capital and reduced Philips’ holding to 19.9%. The transaction resulted
in a gain of EUR 508 million, reported under Results relating to
equity-accounted investees.
Philips is represented on the board of directors and continued
to exercise inuence by participating in the policy-making processes
of LPL. Accordingly, Philips continued to apply equity accounting
for LPL in 2007.
2006
During 2006, Philips entered into a number of acquisitions and
completed several divestments. All acquisitions have been accounted
for using the purchase method of accounting.
Major acquisitions in 2006 relate to the acquisitions of Lifeline Systems
(Lifeline), Witt Biomedical, Avent and Intermagnetics. The remaining
acquisitions, both individually and in the aggregate, were deemed
immaterial in respect of the SFAS No. 141 disclosure requirements.
Sales and income from operations related to activities divested in
2006, included in the Company’s consolidated statement of income
for 2006, amounted to EUR 975 million and a loss of EUR 54 million,
respectively.
The most signicant acquisitions and divestments are summarized
in the next two tables and described in the section below.
Acquisitions
cash
outow
net
assets
acquired1)
other
intangible
assets goodwill
Lifeline 583 (77) 319 341
Witt Biomedical 110 (9) 29 90
Avent 689 (47) 392 344
Intermagnetics 993 (53) 313 733
1) Excluding cash acquired
Divestments
cash inow1)
net assets
divested2)
recognized
gain
CryptoTec 30 (1) 31
Philips Enabling Technologies (ETG) 45 42 3
Philips Sound Solutions (PSS) 53 10 43
FEI Company 154 78 76
1) Net of cash divested
2) Includes the release of cumulative translation differences
128 Group nancial statements
Notes to the group nancial statements
188 IFRS information 240 Company nancial statements