Philips 2007 Annual Report Download - page 206

Philips Annual Report 2007212
The following table summarizes the results of the MDS business
included in the consolidated statements of income as discontinued
operations for 2005 and 2006:
2005 2006
Sales 653 194
Costs and expenses (827) (160)
Income (loss) from operations (174) 34
Financial income and expenses − −
Income (loss) before taxes (174) 34
Income taxes − −
Results from discontinued operations (174) 34
The 2006 results of EUR 34 million mainly relate to translation
differences upon completion of the transaction. The 2005 results
included an impairment loss of EUR 163 million.
39
Acquisitions and divestments
2007
During 2007, Philips entered into a number of acquisitions and
completed several disposals of activities. All business combinations
have been accounted for using the purchase method of accounting.
Major business combinations in 2007 relate to the acquisitions of
Partners in Lighting and Color Kinetics, currently Philips Solid-State
Lighting Solutions. The remaining business combinations, both
individually and in the aggregate, were deemed immaterial in respect
of the IFRS 3 disclosure requirements.
Sales and income from operations related to activities divested in 2007,
included in the Company’s consolidated statement of income 2007,
amounted to EUR 262 million and a loss of EUR 39 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
Partners in Lighting 561 47 217 297
Color Kinetics 515 (29) 187 357
1) Excluding cash acquired
Divestments
cash inow1)
net assets
divested2)
recognized
gain (loss)
LG.Philips LCD 1,548 895 653
1) Net of cash divested
2) Includes the release of cumulative translation differences
Partners in Lighting (PLI)
On February 5, 2007, Philips acquired PLI, a leading European
manufacturer of home luminaires. Philips acquired 100% of the shares
of PLI from CVC Capital Partners, a private equity investment company,
at a net cash consideration of EUR 561 million paid upon completion
of the transaction. As of the date of acquisition, PLI has been consolidated
within the Lighting division.
The condensed balance sheet of PLI determined in accordance with
IFRS, immediately before and after acquisition date:
before
acquisition date
after
acquisition date
Assets and liabilities
Goodwill 293 297
Other intangible assets − 217
Property, plant and equipment 76 97
Other non-current nancial assets
(liabilities) (30) 1
Working capital 75 114
Provisions − (14)
Deferred tax liabilities 8 (67)
Cash 23 23
445 668
Financed by
Group equity (46) 584
Loans 491 84
445 668
The goodwill recognized is related to the complementary technical
skills and talent of PLI’s workforce and the synergies expected to be
achieved from integrating PLI into the Lighting division.
Intangible assets comprise:
amount
amortization
period in years
Customer relationships and patents 156 20
Trademarks and trade names 61 20
217
PLI contributed a positive income from operations of EUR 24 million
to the Group for the period from February 5 to December 31, 2007.
Color Kinetics
On August 24, 2007, Philips completed the acquisition of 100% of the
shares of Color Kinetics, a leader in designing and marketing innovative
lighting systems based on Light Emitting Diode (LED) technology at
a net cash consideration of EUR 515 million. As of the date of date
of acquisition, Color Kinetics has been consolidated within the
Lighting division.
128 Group nancial statements 188 IFRS information
Notes to the IFRS nancial statements
240 Company nancial statements