Philips 2007 Annual Report Download - page 210

Philips Annual Report 2007216
2005
During 2005, Philips completed several divestments, acquisitions and
ventures. All business combinations have been accounted for using
the purchase method of accounting. Major business combinations in
2005 relate to the acquisitions of Stentor and Lumileds. 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 2005,
included in the Company’s consolidated statement of income for 2005,
amounted to EUR 488 million and a loss of EUR 25 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
Stentor 194 (29) 109 114
Lumileds 788 (3) 268 523
1) Excluding cash acquired
Divestments
cash inow
net assets
divested1)
recognized
gain
Connected Displays (Monitors) − (158)2) 158
Philips Pension Competence
Center 55 12 43
LG.Philips LCD 938 503 435
TSMC 770 219 551
NAVTEQ 932 164 768
Atos Origin 554 332 222
Great Nordic 67 54 13
1) Excluding cash divested
2) Represents net balance of assets received in excess of net assets divested
Stentor
In August 2005, Philips acquired all shares of Stentor, a US-based
company. The related cash outow was EUR 194 million. Stentor was
founded in 1998 to provide a solution for enterprise-wide medical
image and information management. Since the date of acquisition,
Stentor has been consolidated within the Medical Systems sector.
Lumileds
On November 28, 2005, Philips acquired an incremental 47.25%
Lumileds shares from Agilent, at a cost of EUR 788 million, which
brought Philips’ participating share to a level of 96.5%. The business
was included in the Lighting division. In 2006, Philips acquired the
remaining 3.5% of the shares.
The condensed balance sheet of Lumileds determined in accordance
with IFRS, immediately before and after acquisition date:
before
acquisition date
after
acquisition date
Assets and liabilities
Goodwill − 523
Intangible assets 4 5691)
Property, plant and equipment 110 132
Working capital 23 (45)
Deferred tax assets − 100
Cash 21 21
158 1,300
Financed by
Group equity 83 1,130
Loans 75 170
158 1,300
1) Comprises existing (EUR 4 million), acquired (EUR 268 million), revalued
existing Philips share (EUR 262 million; net of tax EUR 167 million) and
revalued minority share (EUR 35 million) of other intangible assets.
The equity included an amount of EUR 167 million caused by the
revaluation of Philips’ participating interest of 49.25% upon acquiring
the 47.25% from Agilent.
Other Intangibles, excluding in-process research and development,
is comprised of the following:
amount
amortization
period in years
Core technology 118 8
Existing technology 193 7
In-process R&D 11 8
Customer relationships 216 11
Luxeon trade name 29 16
Backlog 2 1
569
The following table presents the year-to-date unaudited results of
Lumileds and the effect on Philips’ results assuming Lumileds had
been consolidated as of January 1, 2005:
Unaudited
January-December 2005
Philips
Group
pro forma
adjustments1)
pro forma
Philips Group
Sales 25,445 235 25,680
Income from operations 1,506 (55) 1,451
Net income 3,374 (46) 3,328
Earnings per share - in
euros 2.70 2.66
1) The pro forma adjustments relate to sales, income from operations and
net results of Lumileds attributable to the period preceding the acquisition
(EUR 42 million positive impact after tax) and also reect the amortization
of intangibles (EUR 37 million after tax), share-based compensation expense
(EUR 29 million after tax), and the reversal of results relating to equity-
accounted investees (EUR 20 million after tax and remaining adjustments
of EUR 2 million after tax).
128 Group nancial statements 188 IFRS information
Notes to the IFRS nancial statements
240 Company nancial statements