Philips 2008 Annual Report Download - page 143

1
2006
Sales 194
Costs and expenses (165)
Income (loss) before taxes 29
Income taxes −
Results from discontinued operations 29
2
Acquisitions and divestments
2008
During 2008, Philips entered into a number of acquisitions and
completed several divestments. All business combinations have
been accounted for using the purchase method of accounting.
The major acquisitions in 2008 consisted of Genlyte Group Inc. (Genlyte),
Respironics Inc. (Respironics) and VISICU Inc. (VISICU). The remaining
acquisitions, both individually and in the aggregate, were deemed
immaterial in respect of the SFAS No. 141 disclosure requirements.
Sales and income from operations related to activities divested in 2008,
included in the Company’s consolidated statement of income for
2008, amounted to EUR 176 million and EUR 6 million loss, respectively.
The most significant acquisitions and divestments are summarized in
the next two tables and described in the section below.
Acquisitions
net cash
outflow
net
assets
acquired1)
other
intangible
assets goodwill
Genlyte 1,894 (2) 860 1,036
Respironics 3,196 (152) 1,186 2,162
VISICU 198 (10) 33 175
Excluding cash acquired
1)
Divestments
inflow of
cash and
other
assets1)
net assets
divested
recognized
gain
Set-Top Boxes and Connectivity
Solutions 742) (11) 63
Philips Speech Recognition
Systems 653) (20) 45
Net of cash divested
1)
Assets received in lieu of cash (see note 31)
2)
Of which EUR 22 million cash
3)
Genlyte
On January 22, 2008, Philips completed the purchase of all outstanding
shares of Genlyte, a leading manufacturer of lighting fixtures, controls
and related products for the commercial, industrial and residential
markets. Through this acquisition Philips established a solid platform
for further growth in the area of energy-saving and green lighting
technology. The acquisition created a leading position for Philips in
the North American luminaires market. Philips paid a total net cash
consideration of EUR 1,894 million. This amount includes the cost
of 331,627 shares previously acquired in August 2007, the pay-off
of certain debt, and the settlement of outstanding stock options. The
net impact of the Genlyte acquisitions on Philips’ liquidity position in
2008, excluding the pay-off of debt, was EUR 1,805 million. As of
the acquisition date, Genlyte has been consolidated as part of the
Lighting sector.
2
The following table summarizes the fair value of Genlyte assets
and liabilities:
January 22, 2008
Total purchase price (net of cash) 1,894
Allocated to:
Property, plant and equipment 191
Working capital 155
Current financial assets 3
Provisions (52)
Deferred tax liabilities (291)
Long-term debt (8)
In-process R&D 11
Other intangible assets 849
Goodwill 1,036
1,894
The goodwill recognized is related to the complementary
technological expertise and talent of the Genlyte workforce and
the synergies expected to be achieved from integrating Genlyte
into the Lighting sector.
The amount of in-process research and development acquired and
written off in 2008 was EUR 11 million. This amount is included in
the consolidated statement of income under Research and
development expenses.
Other intangible assets, excluding in-process research and
development comprise:
amount
amortization
period in years
Core technology and designs 81 1-8
Group brands 142 2-14
Product brands 5 2-5
Customer relationships and patents 614 9-17
Order backlog 6 0.25
Software 1 3
849
Genlyte contributed income from operations of EUR 49 million to
the Group for the period from January 22 to December 31, 2008.
Respironics
On March 10, 2008, Philips acquired 100% of the shares of Respironics,
a leading provider of innovative solutions for the global sleep and
respiratory markets. Respironics designs, develops, manufactures and
markets medical devices used primarily for patients suffering from
Obstructive Sleep Apnea (OSA) and respiratory disorders. The
acquisition of Respironics added new product categories in OSA and
home respiratory care to the existing Philips business. This acquisition
formed a solid foundation for the Home Healthcare Solution business
of the Company. Philips acquired Respironics shares at a net cash
consideration of EUR 3,196 million. As of the acquisition date,
Respironics has been consolidated as part of the Healthcare sector.
Philips Annual Report 2008 143
254
Corporate governance
250
Reconciliation of
non-US GAAP information
262
Ten-year overview
266
Investor information