Philips 2008 Annual Report Download - page 146

The following table summarizes the fair value of Color Kinetics’
assets and liabilities:
August 24, 2007
Total purchase price (net of cash) 515
Allocated to:
Property, plant and equipment 7
Working capital 16
Deferred tax (52)
Intangible assets 186
In-process R&D 1
Goodwill 357
515
The goodwill recognized is related mainly to the complementary
technological expertise of Color Kinetics’ workforce and the synergies
expected to be achieved from integrating Color Kinetics into the
Lighting sector.
The amount of in-process research and development acquired and
written off in 2007 was EUR 1 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
Trademarks and trade names 1 1
Developed and core technology 113 10-20
Customer relationships 68 7-18
Other 4 2-10
186
Color Kinetics contributed a loss from operations of EUR 8 million
to the Group for the period from August 24 to December 31, 2007.
Pro forma disclosures on acquisitions
The following table presents the year-to-date unaudited pro-forma
results of Philips, assuming PLI and Color Kinetics had been
consolidated as of January 1, 2007:
Unaudited
January-December 2007
Philips
Group
pro forma
adjustments1)
pro forma
Philips
Group
Sales 26,793 75 26,868
Income from operations 1,841 −1,841
Net income 4,160 (2) 4,158
Basic earnings per share –
in euros 3.83 3,83
Pro forma adjustments include sales, income from operations and net income
1)
from continuing operations of the acquired companies from January 1, 2007
to the date of acquisition. As Philips finances its acquisitions with own funds,
the pro forma adjustments exclude the cost of external funding incurred prior
to the acquisition. The pro forma adjustments reflect the impact of the
purchase-price accounting effects from January 1, 2007 to the date of
acquisition and elimination of non-recurring integration costs. Purchase-price
accounting effects primarily relate to the amortization of intangible assets
(EUR 10 million, excluding the write-off of research and development assets).
The following table presents the year-to-date unaudited pro-forma
results of Philips, assuming PLI and Color Kinetics had been
consolidated as of January 1, 2006:
Unaudited
January-December 2006
Philips
Group
pro forma
adjustments1)
pro forma
Philips
Group
Sales 26,682 454 27,136
Income from operations 1,198 14 1,212
Net income 5,381 26 5,407
Basic earnings per share –
in euros 4.58 4.60
Pro forma adjustments include sales, income from operations and net income
1)
from continuing operations of the acquired companies for 2006. As Philips
finances its acquisitions with own funds, the pro forma adjustments exclude
the cost of external funding incurred in 2006. The pro forma adjustments also
reflect the impact of the purchase-price accounting effects of 2006. These
effects primarily relate to the amortization of intangible assets (EUR 26 million,
excluding the write-off of research and development assets) and inventory
step-ups (EUR 26 million).
LG Display
On October 10, 2007, Philips sold 46,400,000 shares of common
stock in LG Display to financial institutions in a capital markets
transaction. This transaction represented 13% of LG Display’s issued
share capital and reduced Philips’ holding to 19.9%. The transaction
resulted in a gain of EUR 508 million, reported under Results relating
to equity-accounted investees.
2006
During 2006, Philips entered into a number of acquisitions and
completed several divestments. All acquisitions have been accounted
for using the purchase method of accounting.
Major acquisitions in 2006 relate to the acquisitions of Lifeline Systems
(Lifeline), Witt Biomedical, Avent and Intermagnetics. 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 2006,
included in the Company’s consolidated statement of income for 2006,
amounted to EUR 975 million and a loss of EUR 54 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
Lifeline 583 (77) 319 341
Witt Biomedical 110 (9) 29 90
Avent 689 (47) 392 344
Intermagnetics 993 (53) 313 733
Excluding cash acquired
1)
Divestments
cash
inflow1)
net assets
divested2)
recognized
gain
CryptoTec 30 (1) 31
Philips Enabling Technologies (ETG) 45 42 3
Philips Sound Solutions (PSS) 53 10 43
FEI Company 154 78 76
Net of cash divested
1)
Includes the release of cumulative translation differences
2)
Philips Annual Report 2008146
180
Sustainability performance
192
IFRS financial statements
244
Company financial statements
124
US GAAP financial statements
Notes to the US GAAP
financial statements