Philips 2008 Annual Report Download - page 145

The following table presents the year-to-date unaudited pro-forma
results of Philips, assuming Genlyte, Respironics and VISICU had
been consolidated as of January 1, 2007:
Unaudited
January-December 2007
Philips
Group
pro forma
adjustments1)
pro forma
Philips
Group
Sales 26,793 2,142 28,935
Income from operations 1,841 69 1,910
Net income 4,160 59 4,219
Basic earnings per share –
in euros 3.83 3.88
Pro forma adjustments include sales, income from operations and net income
1)
from continuing operations of the acquired companies for 2007. As Philips
finances its acquisitions with own funds, the pro forma adjustments exclude
the cost of external funding incurred in 2007. The pro forma adjustments also
reflect the impact of the purchase-price accounting effects of 2007. These
effects primarily relate to the amortization of intangible assets (EUR 256
million, excluding the write-off of research and development assets) and
inventory step-ups (EUR 78 million).
Set-Top Boxes and Connectivity Solutions
On April 21, 2008, Philips completed the sale of its Set-Top Boxes
(STB) and Connectivity Solutions (CS) activities to UK-based
technology provider Pace Micro Technology (Pace). Philips received
64.5 million Pace shares, representing a 21.6% shareholding, with a
market value of EUR 74 million at that date. Philips recognized a gain
on this transaction of EUR 63 million which was recognized in Other
business income. Two days later, Philips reduced its interest to 17%.
The Pace shares are treated as available-for-sale securities and
presented under Other non-current financial assets. The shares
are subject to a lock-up period which expires in April 2009.
Philips Speech Recognition Systems
On September 28, 2008, Philips sold its speech recognition activities
to US-based Nuance Communications for EUR 65 million. Philips
realized a gain of EUR 45 million on this transaction which was
recognized in Other business income.
2007
During 2007, Philips entered into a number of acquisitions and
completed several disposals of activities. All business combinations
have been accounted for using the purchase method of accounting.
Major acquisitions in 2007 relate to the acquisitions of Partners in
Lighting and Color Kinetics, currently Philips Solid-State Lighting
Solutions. 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
2007, included in the Company’s consolidated statement of income
for 2007, amounted to EUR 262 million and a loss of EUR 39 million,
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
Partners in Lighting 561 47 217 297
Color Kinetics 515 (29) 187 357
Excluding cash acquired
1)
Divestments
cash
inflow1)
net assets
divested2)
recognized
gain (loss)
LG Display 1,548 1,040 508
Net of cash divested
1)
Includes the release of cumulative translation differences
2)
Partners in Lighting (PLI)
On February 5, 2007, Philips acquired 100% of the shares of PLI, a
leading European manufacturer of home luminaires. Philips acquired
PLI from CVC Capital Partners, a private equity investment company,
at a net cash consideration of EUR 561 million paid upon completion
of the transaction. As of the date of acquisition, PLI has been
consolidated within the Lighting sector.
The following table summarizes the fair value of PLI’s assets
and liabilities:
February 5, 2007
Total purchase price (net of cash) 561
Allocated to:
Property, plant and equipment 97
Other non-current financial assets 1
Working capital 114
Deferred tax liabilities (67)
Long-term debt (50)
Short-term debt (34)
Provisions (14)
Intangible assets 217
Goodwill 297
561
The goodwill recognized is related to the complementary technical
skills and talent of PLI’s workforce and the synergies expected to
be achieved from integrating PLI into the Lighting sector.
Intangible assets comprise:
amount
amortization
period in years
Customer relationships 156 20
Trademarks and trade names 61 20
217
PLI contributed income from operations of EUR 24 million to the
Group for the period from February 5 to December 31, 2007.
Color Kinetics
On August 24, 2007, Philips completed the acquisition of 100% of
the shares of Color Kinetics, a leader in designing and marketing
innovative lighting systems based on Light Emitting Diode (LED)
technology for a net cash consideration of EUR 515 million. As of
the date of acquisition, Color Kinetics has been consolidated within
the Lighting sector.
Philips Annual Report 2008 145
254
Corporate governance
250
Reconciliation of
non-US GAAP information
262
Ten-year overview
266
Investor information