Philips 2007 Annual Report Download - page 209

Philips Annual Report 2007 215
Other intangible assets comprise:
amount
amortization
period in years
Trademarks and trade names 242 indenite
Customer relationships and patents 150 5 - 18
392
Intermagnetics
On November 9, 2006, Philips acquired Intermagnetics for USD 27.50
per share, which was paid in cash upon completion. Additionally, in
connection with the closing, Philips provided a loan to Intermagnetics
of approximately USD 120 million to pay off debt and certain other
obligations, including amounts related to the acceleration of stock-based
compensation and expenses incurred as a result of the transaction.
Since the date of the transaction, Intermagnetics has been consolidated
within the Medical Systems sector.
The condensed balance sheet of Intermagnetics determined in
accordance with IFRS, immediately before and after acquisition date:
before
acquisition date
after
acquisition date
Assets and liabilities
Goodwill 132 730
Other intangible assets 34 313
Property, plant and equipment 35 45
Working capital 67 66
Provisions − (6)
Deferred tax liabilities (6) (96)
Cash 19 24
281 1,076
Financed by
Group equity 137 1,017
Loans 144 59
281 1,076
Adjusted for the effects of the nal purchase price allocation completed in 2007
Other intangible assets comprise:
amount
amortization
period in years
Core and existing technology 181 6
In-process R&D 39 3
Trademarks and trade names 8 10
Customer relationships 81 9
Miscellaneous 4 2
313
Pro forma disclosures on acquisitions
The following table presents the year-to-date pro forma unaudited
results of Philips, assuming Lifeline, Witt Biomedical, Avent and
Intermagnetics had been consolidated as of January 1, 2006:
Unaudited
Philips Group
pro forma
adjustments1)
pro forma
Philips Group
Sales 26,682 236 26,918
Income from operations 957 (17) 940
Net income 4,664 (11) 4,653
Earnings per share - in
euros 3.97 3.96
1) Pro forma adjustments include sales, income from operations and net income
from continuing operations of the acquired companies from January 1, 2006 to
the date of acquisition. For that purpose, sales related to the pre-existing
relationship between Philips and Intermagnetics have been excluded. 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, 2006 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 81 million) and inventory step-ups (EUR 24 million).
The following table presents the year-to-date unaudited pro forma
results of Philips, assuming Lifeline, Witt Biomedical, Avent and
Intermagnetics had been consolidated as of January 1, 2005:
Unaudited
Philips Group
pro forma
adjustments1)
pro forma
Philips Group
Sales 25,445 415 25,860
Income from operations 1,506 (29) 1,477
Net income 3,374 (13) 3,361
Earnings per share -
in euros 2.70 2.69
1) Pro forma adjustments include sales, income from operations and net income
from continuing operations of the acquired companies of 2005. For that purpose,
sales related to the pre-existing relationship between Philips and Intermagnetics
have been excluded. As Philips nances its acquisitions with own funds, the pro
forma adjustments exclude the cost of external funding incurred in 2005. The
pro forma adjustments also reect the impact of the purchase-price accounting
effects of 2005. These effects primarily relate to the amortization of intangible
assets (EUR 87 million) and inventory step-ups (EUR 24 million).
CryptoTec
On March 31, 2006, Philips transferred its CryptoTec activities to
Irdeto, a world leader in content security and a subsidiary of multimedia
group Naspers. Irdeto purchased the CryptoTec assets for an amount
of EUR 30 million. The gain on this transaction of EUR 26 million has
been reported under Other Business income.
Philips Enabling Technologies
On November 6, 2006, Philips sold Philips Enabling Technologies Group
(ETG) to VDL. The recognized gain on this transaction (EUR 7 million)
has been reported under Other business expense.
Philips Sound Solutions
On December 31, 2006, Philips sold its Philips Sound Solutions (PSS)
business to D&M Holding for EUR 53 million. The transaction resulted
in EUR 12 million gain, reported under Other business income.
FEI Company
On December 20, 2006, Philips sold its 24.8% interest in FEI Company,
a NASDAQ listed company, in a public offering. The sale provided
Philips with net proceeds of EUR 154 million and a non-taxable gain
of EUR 103 million. The gain is included in Results relating to equity-
accounted investees.
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