Philips 2008 Annual Report Download - page 219

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
Philips
Group
pro forma
adjustments1)
pro forma
Philips
Group
Sales 26,793 2,142 28,935
Income from operations 1,867 61 1,928
Net income 4,873 66 4,939
Earnings per share - in
euros 4.49 4.55
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 primarly relate to the amortization of intangible assets (EUR 256
million) 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 42 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 were 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 IFRS 3 disclosure requirements.
Sales and income from operations related to activities divested in 2007,
included in the Company’s consolidated statement of income 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 1,548 895 653
Net of cash divested
1)
Includes the release of cumulative translation differences
2)
Partners in Lighting (PLI)
On February 5, 2007, Philips acquired PLI, a leading European
manufacturer of home luminaires. Philips acquired 100% of the shares
of 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 condensed balance sheet of PLI determined in accordance
with IFRS, immediately before and after acquisition date:
before
acquisition date
after acquisition
date
Assets and liabilities
Goodwill 293 297
Other intangible assets −217
Property, plant and equipment 76 97
Other non-current financial assets
(liabilities) (30) 1
Working capital 75 114
Provisions −(14)
Deferred tax liabilities 8 (67)
Cash 23 23
445 668
Financed by
Group equity (46) 584
Loans 491 84
445 668
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.
Other intangible assets comprise:
amount
amortization
period in years
Customer relationships and patents 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 219
254
Corporate governance
250
Reconciliation of
non-US GAAP information
262
Ten-year overview
266
Investor information