Philips 2007 Annual Report Download - page 207

Philips Annual Report 2007 213
operations for 2005 and 2006:
Costs and expenses
Financial income and expenses − −
Income (loss) before taxes
Income taxes − −
The most signicant acquisitions and divestments are summarized
in the next two tables and described in the section below.
outow
cash inow
39
The condensed balance sheet of Color Kinetics determined in
accordance with IFRS, immediately before and after acquisition date:
before
acquisition date
after
acquisition date
Assets and liabilities
Goodwill − 357
Other intangible assets − 187
Property, plant and equipment 7 7
Working capital 10 16
Deferred tax − (52)
Cash 71 71
88 586
Financed by
Group equity 88 586
88 586
The allocation of the purchase price to the net assets acquired had
not yet been nalized as of December 31, 2007, as further information
related to intangible asset valuations and certain other matters
remained outstanding.
The goodwill recognized is related mainly to the complementary
expertise of Color Kinetics workforce and the synergies expected to
be achieved from integrating Color Kinetics into the Lighting division.
Other intangible assets comprised of the following:
amount
amortization
period in years
Trade marks and trade names 1 1
Developed and core technology 113 10-20
In-process research and patents 1 0.5
Customer relationships 68 7-18
Other 4 2-10
187
Color Kinetics reported 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 aquisitions
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 1,493 − 1,493
Net income 4,655 (2) 4,653
Earnings per share
- in euros 4.29 4.28
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 also reect the impact of the
purchase-price accounting effects from January 1, 2007 to the date of acquisition
and the elimination of non-recurring post-merger integration costs incurred by
the Company. Purchase-price accounting effects primarily relate to the
amortization of intangible assets (EUR 10 million).
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
Philips Group
pro forma
adjustments1)
pro forma
Philips Group
Sales 26,682 454 27,136
Income from operations 957 14 971
Net income 4,664 26 4,690
Earnings per share - in
euros 3.97 3.99
1) Pro forma adjustments include sales, income from operations and net income
from continuing operations of the acquired companies of 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)
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 653 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 business combinations have been
accounted for using the purchase method of accounting.
Major business combinations in 2006 relate to the acquisitions of
Lifeline, Witt Biomedical, Avent and Intermagnetics. 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 2006,
included in the Company’s consolidated statement of income for 2006,
amounted to EUR 975 million and a loss of EUR 21 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 (2) 29 83
Avent 689 (47) 392 344
Intermagnetics 993 (50) 313 730
1) Excluding cash acquired
Group nancial statements
Notes to the IFRS 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