Philips 2010 Annual Report Download - page 168

13 Group financial statements 13.11 - 13.11
168 Annual Report 2010
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 Consumer Lifestyle sector.
The condensed balance sheet of Saeco, immediately before and after
the acquisition date was 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
Non-controlling
interests 10 10
Deferred consideration − 30
Loans 222 14
332 239
1) Unaudited figures
Non-controlling interests relate to minority stakes held by third parties
in some of Saeco’s group companies.
The goodwill is primarily related to the synergies expected to be
achieved from integrating Saeco in the Consumer Lifestyle sector.
Other intangible assets 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 2009 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 paragraph 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
Divestments
inflow of cash
and other
assets1)
net assets
divested recognized
gain
Set-Top Boxes and
Connectivity Solutions 742) (32) 42
Philips Speech Recognition
Systems 653) (20) 45
1) Net of cash divested
2) Assets received in lieu of cash
3) Of which EUR 22 million cash
Genlyte
On January 22, 2008, Philips completed the purchase of all outstanding
shares of Genlyte, a leading manufacturer of lighting fixtures, controls
and related products for the commercial, industrial and residential
markets. Through this acquisition Philips established a solid platform for
further growth in the area of energy-saving and green lighting
technology. The acquisition created a leading position for Philips in the
North American luminaires market. Philips paid a total net cash
consideration of EUR 1,894 million. This amount included the cost of
331,627 shares previously acquired in August 2007, the pay-off of
certain debt and the settlement of outstanding stock options. The net