Philips 2009 Annual Report Download - page 173

The acquisition of Saeco is summarized in the following table and
described in the section below.
Acquisitions
net cash
outflow
net assets
acquired1)
other intangible
assets goodwill
Saeco 171 17 74 80
1) Net assets acquired includes an adjustment of EUR 10 million for Minority
interests and is net of cash acquired.
Saeco
On July 24, 2009, Philips reached an agreement with Saeco’s senior
lenders. Under the terms of the agreement, Philips acquired full
ownership of Saeco through the assumption of all outstanding senior
debt and related financial instruments for an upfront payment of
EUR 170 million plus a deferred consideration of EUR 30 million payable
no later than the 5th anniversary of the transaction.
The impact of the Saeco acquisition on Philips’ net cash position in 2009
was EUR 171 million, including acquisition-related costs of EUR 7
million and a loan of EUR 8 million provided by Philips to finance
working capital. The acquisition-related costs include legal fees and due
diligence costs.
This acquisition allowed Philips to strengthen its position in the
espresso machine market through the addition of a comprehensive
range of espresso solutions. As of the acquisition date, Saeco is
consolidated as part of the Domestic Appliances business unit within
the Consumer Lifestyle sector.
The condensed balance sheet of Saeco, immediately before and after
the acquisition is as follows:
before acquisition date1) after acquisition date
Assets and liabilities
Goodwill − 80
Other intangible assets 182 74
Property, plant and
equipment 94 41
Working capital 43 38
Deferred tax assets 31 40
Provisions (32) (48)
Cash 14 14
332 239
Financed by
Group equity 100 185
Minority interests 10 10
Deferred consideration − 30
Loans 222 14
332 239
1) Unaudited figures
Minority interest relates to minority stakes held by third parties in some
of Saeco’s group companies.
The fair value of goodwill and deferred tax assets is provisional pending
a final assessment of Saeco’s tax position.
The goodwill is primarily related to the synergies expected to be
achieved from integrating Saeco in the Consumer Lifestyle sector.
Other intangible assets are comprised of the following:
amount
amortization
period in years
Core technology 25 5
Trademarks and trade names 49 4-10
74
For the period from July 24 to December 31, 2009, Saeco contributed
sales of EUR 143 million and a loss from operations of EUR 18 million.
Pro forma disclosures on acquisitions
The following table presents the year-to-date unaudited pro-forma
results of Philips, assuming Saeco had been consolidated as of January 1,
2009:
Unaudited
January-December 2009
Philips Group
pro forma
adjustments1)
pro forma
Philips Group
Sales 23,189 66 23,255
Income from operations 614 (20) 594
Net income (loss) 410 (18) 392
Earnings per share - in euros 0.44 0.42
1) Pro forma adjustments include sales, income from operations and net income
from continuing operations of Saeco from January 1, 2009 to the date of
acquisition.
2008
During 2008, Philips entered into a number of acquisitions and
completed several divestments.
The acquisitions in 2008 primarily 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 with respect to the IFRS 3 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 nil, 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 10 860 1,024
Respironics 3,196 (152) 1,186 2,162
VISICU 198 (10) 33 175
1) Net of cash acquired
11 Group financial statements 11.12 - 11.12
Philips Annual Report 2009 173