Philips 2007 Annual Report Download - page 151

Philips Annual Report 2007 157
Estimated interest and penalties relating to unrecognized tax benets
are classied as a component of nance charges and income tax expense,
respectively. During the years ended December 31, 2007, 2006, and
2005, the Company recognized EUR 14 million, EUR 6 million, and EUR
5 million respectively in interest and penalties. In addition, the Company
accrued EUR 45 million and EUR 37 million in interest and penalties
at December 31, 2007 and 2006, respectively.
In many cases, unrecognized tax benets are related to tax years that
remain subject to examination by the relevant tax authorities. The
following table summarizes these open years by major jurisdictions:
Major jurisdiction
Open tax years
United States 2003 − 2007
United Kingdom 2001 − 2007
Germany 1997 − 2007
France 2004 − 2007
Netherlands 2006 − 2007
HongKong 2005 − 2007
There are no positions for which it is reasonably possible that the
total amounts of unrecognized tax benets will signicantly increase
or decrease within 12 months of the reporting date.
7
Investments in equity-accounted investees
Results relating to equity-accounted investees
2005 2006 2007
Company’s participation in income
and loss 513 (180) 271
Gains on sales of shares 1,545 79 514
Gains arising from dilution effects 165 14 −
Investment impairment/other charges (469) (70) (22)
1,754 (157) 763
Detailed information on the aforementioned individual line items
is set out below.
Company’s participation in income and loss
2005 2006 2007
LG.Philips LCD 146 (196) 260
LG.Philips Displays (39) − −
Others 406 16 11
513 (180) 271
2007
The Company had a share in income, mainly related to LG.Philips LCD.
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
The Company had a share in losses, mainly related to LG.Philips LCD.
2005
The Company had a share in income, mainly TSMC and LG.Philips
LCD, and losses, mainly LG.Philips Display. The operational loss of LG.
Philips Displays included restructuring costs of EUR 30 million.
7
Results on sales of shares
2005 2006 2007
FEI Company − 76 −
NAVTEQ 753 − −
TSMC 460 − −
LG.Philips LCD 332 − 508
Others − 3 6
1,545 79 514
2007
In 2007, Philips sold 46,400,000 shares of LG.Philips LCD common
stock, resulting in a gain of EUR 508 million. As a result of the sale,
Philips’ shareholding in LG.Philips LCD was reduced from 32.9% to 19.9%.
2006
In 2006, Philips sold its interest of 24.8% in FEI Company (see note 2).
2005
In 2005, Philips sold its remaining 33.1 million shares in NAVTEQ,
resulting in a non-taxable gain of EUR 753 million. As a result of this
transaction, Philips’ shareholding in NAVTEQ was reduced to zero.
Results on sales of shares include a gain of EUR 460 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 inuence by participating in the policy-
making processes of TSMC. Accordingly, the Company continued to
apply equity accounting for TSMC. In January 2006, Philips’ inuence
on TSMC’s nancial and operating policies, including representation
on the TSMC Board, was reduced. Effective January 2006, the investment
was transferred to available-for-sale securities since Philips is
no longer able to exercise signicant inuence.
In 2005, Philips sold 27,375,000 shares of LG.Philips LCD common
stock, resulting in a gain of EUR 332 million. As a result of the sale,
Philips’ shareholding in LG.Philips LCD was reduced from 40.5%
to 32.9%.
Gains and losses arising from dilution effects
2005 2006 2007
TPV − 14 −
LG.Philips LCD 189 − −
TSMC (24) − −
165 14 −
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
189 million, reducing Philips’ 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.
Investment impairment/other charges
2005 2006 2007
LG.Philips Displays (458) (61) (22)
Others (11) (9) −
(469) (70) (22)
Group nancial statements
Notes to the group nancial statements
Company nancial statements 250 Corporate governance246 Reconciliation of
non-US GAAP information 258 The Philips Group in the last ten years 260
Investor information