Philips 2009 Annual Report Download - page 172

probable. The Company will apply IFRIC 17 prospectively from
January 1, 2010. It is not expected to have a material impact on the
Company’s Consolidated financial statements.
IFRIC 18 ‘Transfers of Assets from Customers’
IFRIC 18 clarifies the requirements of IFRS for agreements in which an
entity receives from a customer an item of property, plant and
equipment that the entity must then use either to connect the customer
to a network or to provide the customer with ongoing access to a
supply of goods or services (such as a supply of electricity, gas or water).
The interpretation is applicable on January 1, 2010. The application of
this IFRIC is not expected to have a material impact on the Company’s
Consolidated financial statements.
IFRIC 19 ‘Extinguishing Financial Liabilities with Equity Instruments’
IFRIC 19 clarifies the accounting when the terms of debt are
renegotiated with the result that the liability is extinguished by the
debtor issuing its own equity instruments to the creditor (referred to as
a ‘debt for equity swap’). The interpretation requires a gain or loss to be
recognized in profit or loss when a liability is settled through the
issuance of the entity’s own equity instruments. The reclassification of
the carrying value of the existing financial liability into equity (with no
gain or loss being recognized in profit or loss) is no longer permitted.
IFRIC 19 is applicable on January 1, 2011 and will be applied
retrospectively. The application of this IFRIC is not expected to have a
material impact on the Company’s Consolidated financial statements.
Improvements to IFRSs 2009
In April 2009, the IASB issued ‘Improvements to IFRSs 2009‘, a collection
of amendments to twelve International Financial Reporting Standards,
as part of its program of annual improvements to its standards, which is
intended to make necessary, but non-urgent, amendments to standards
that will not be included as part of another major project. The latest
amendments were included in exposure drafts of proposed
amendments to IFRS published in October 2007, August 2008, and
January 2009. The amendments resulting from this standard mainly have
effective dates for annual periods beginning on or after January 1, 2010.
It is not expected to have a material impact on the Company’s
Consolidated financial statements.
11.12 Notes
All amounts in millions of euros unless otherwise stated.
Notes to the Consolidated financial statements of the Philips
Group
1Discontinued operations
2009
During 2009, there were no results from discontinued operations.
2008
MedQuist
On August 6, 2008, the Company announced that it had completed the
sale of its approximately 70% ownership interest in MedQuist to
CBaySystems Holdings (CBAY) for a consideration of USD 287 million.
The consideration was composed of a cash payment of USD 98 million,
a promissory note of USD 26 million, a convertible bond of USD 91
million, and a pre-closing cash dividend of USD 72 million. The
promissory note was redeemed during 2009. The convertible bond is
included in Other non-current financial assets.
The financial results attributable to the Company’s interest in MedQuist
have been presented as discontinued operations. The decision to
proceed with the sale, which was made in 2007, resulted in an
impairment of EUR 16 million in 2007. This charge did not affect equity
as it related to the cumulative translation differences of the USD-
denominated investment in MedQuist, which accumulated within equity
since the adoption of IFRS.
The following table summarizes the results of the MedQuist business
included in the Consolidated statements of income as discontinued
operations for 2007 and 2008:
2007 2008
Sales 244 128
Costs and expenses (271) (131)
Gain on sale of discontinued operations − 15
Impairment charge (63)1) −
Income (loss) before taxes (90) 12
Income taxes (8) (3)
Result of equity-accounted investees 1 −
Minority interests 4 1
Results from discontinued operations (93) 10
1) Including EUR 47 million following the 2007 annual impairment test.
Semiconductors
On September 29, 2006, the Company sold a majority stake in its
Semiconductors division to a private equity consortium led by Kohlberg
Kravis Robert & Co. (KKR). The transaction consisted of the sale of the
division and a simultaneous acquisition of a minority interest in the
recapitalized organization NXP Semiconductors (NXP). The
operations of the Semiconductors division have been presented as
discontinued operations.
The Company’s ownership interest in NXP is 19.8%. The Company
cannot exert significant influence over the operating or financial policies
of NXP and, accordingly, the investment is accounted for under Other
non-current financial assets.
Philips and NXP have continuing relationships through shared research
and development activities and through license agreements.
Additionally, through the purchase of semiconductor products for the
Consumer Lifestyle sector, Philips and NXP will have a continuing
relationship for the foreseeable future. The Company assessed the
expected future transactions and determined that the cash flows from
these transactions are not significant direct cash flows.
The following table summarizes the results of the Semiconductors
division included in the Consolidated statements of income as
discontinued operations. The 2007 results mainly relate to the
settlement of the transaction and various local income taxes. The 2008
results mainly related to the settlement of income taxes, largely
operational in nature.
2007 2008
Sales − −
Costs and expenses (65) −
Gain (loss) on sale of discontinued operations 15 (3)
Income (loss) before taxes (50) (3)
Income taxes 5 (4)
Results from discontinued operations (45) (7)
2Acquisitions and divestments
2009
During 2009, Philips entered into a number of acquisitions and
completed several divestments.
Saeco International Group S.p.A. of Italy (Saeco) was the only significant
acquisition in 2009. Other acquisitions, both individually and in the
aggregate, were deemed immaterial with respect to the IFRS 3
disclosure requirements.
There were no divestments in 2009 that were deemed material to
disclose in respect of IFRS disclosure requirements.
1 2 11 Group financial statements 11.11 - 11.12
172 Philips Annual Report 2009