Philips 2007 Annual Report Download - page 33

Philips Annual Report 2007 39
EBITA at Group Management & Services improved
by EUR 402 million compared to 2006, when the
EUR 256 million product liability charge was recognized.
The improvement in EBITA was also driven by a
EUR 146 million reduction in Corporate, Country &
Regional overheads, lower pension costs and reduced
investments in the brand campaign.
Pensions
In 2007, net periodic pension costs of dened-benet
pension plans amounted to EUR 27 million, compared
to EUR 75 million in 2006, mainly due to an increase
in plan assets in 2006. The payments to dened-
contribution pension plans amounted to EUR 84 million,
EUR 4 million higher than in 2006, largely due to acquisitions.
To tal pension costs
in millions of euros
of which operating divisions of which GMS
0
(100)
(200)
(300)
(400)
(500)
(162)
(223)
(385)
2003
(123)
(112)
(235)
2004
(122)
(94)
(216)
2005
(93)
(62)
(155)
2006
(99)
(12)
(111)
2007
The accounting rule for pensions and other
postretirement benets (SFAS No. 158) requires Philips
to recognize the funded status of pensions and other
postretirement benet plans on the balance sheet.
As a consequence, new actuarial gains and losses
and unrecognized prior service cost resulting from
plan amendments will directly affect stockholders’ equity
through changes in other comprehensive income.
The amortization of such costs is removed from equity
in the period that they are included in the net periodic
pension costs. The effect of SFAS 158 on stockholders’
equity resulted in an increase in other comprehensive
income of EUR 218 million in 2007, compared to a net
reduction of equity of EUR 477 million in 2006.
Restructuring charges
In 2007, EBIT included a net charge of EUR 37 million
for restructuring.
Restructuring charges
in millions of euros
20051) 20061) 2007
Restructuring:
Medical Systems 2 14 1
DAP 4 13 1
Consumer Electronics 67 12 7
Lighting 35 48 28
I&EB 26 − 1
GMS − − 4
Reduction of excess provisions (8) (5) (5)
126 82 37
1) Restated to present the MedQuist business as a discontinued operation
The most signicant new restructuring projects in 2007
were related to Lighting and consisted mainly of the exit
from the uorescent lamp-based LCD backlighting
business and several projects in the Lamps business.
The Company’s remaining restructuring in 2007 covered
a number of smaller projects.
The most signicant restructuring projects in 2006 were
Medical Systems’ transfer of the production of SPECT
cameras from Milpitas to Cleveland, the restructuring of
the Klagenfurt site (Austria), and a reduction of the xed
cost base and the creation of a more diverse and exible
supply base in DAP. Other projects included the
reallocation of parts of the Lighting activities in Weert
(Netherlands) to low-cost areas, the relocation in Mexico
of all Juarez Lighting-plant activities to the Monterrey
plant, and Lighting’s relocation of the standard Lead in
Wire business from Deurne (Netherlands) to Poland.
98 Risk management 112 Our leadership 116 Report of the Supervisory Board 126 Financial Statements