Philips 2011 Annual Report Download - page 39

5 Group performance 5.1.5 - 5.1.7
Annual Report 2011 39
5.1.5 Financial income and expenses
A breakdown of Financial income and expenses is
presented in the table below.
Financial income and expenses
in millions of euros
2009 2010 2011
Interest expense (net) (252) (225) (210)
Sale of securities 126 162 51
Impairment on securities (58) (2) (34)
Other 22 (56) (47)
(162) (121) (240)
The net interest expense in 2011 was EUR 15 million
lower than in 2010, mainly as a result of lower average
outstanding debt.
Sale of securities
in millions of euros
2009 2010 2011
Gain on sale of NXP shares − 154 −
Gain on sale of TCL shares − − 44
Gain on sale of LG Display shares 69 − −
Gain on sale of Digimarc shares − − 6
Gain on sale of Pace shares 48 − −
Others 9 8 1
126 162 51
In 2011, income from the sale of securities totaled EUR
51 million. This included a EUR 44 million gain from the
sale of the remaining shares in TCL and a EUR 6 million
gain on the sale of shares of Digimarc. In 2010, income
from the sale of securities of EUR 162 million was mainly
attributable to the sale of NXP shares.
Impairments on securities
in millions of euros
2009 2010 2011
NXP (48) − −
TPV − − (25)
Chi-Mei Innolux − − (4)
BG Medicine − − (2)
Prime Technology (6) (2) (1)
Other (4) − (2)
(58) (2) (34)
2011 was impacted by impairment charges amounting to
EUR 34 million, mainly from shareholdings in TPV
Technologies Ltd.
Other financial expenses totaled to a EUR 47 million
expense in 2011, compared to EUR 56 million in 2010. In
2011 these primarily consisted of a EUR 35 million other
financing charge and a EUR 33 million accretion expense
(mainly associated with discounted provisions) offset by
EUR 11 million dividend income and other financial
income, including a net gain of EUR 6 million mostly from
the revaluation impact of the option related to NXP.
Other financial expenses in 2010 primarily consisted of a
EUR 21 million expense related to the revaluation of the
convertible bonds received from TPV Technology and
CBAY, and a EUR 20 million accretion expense mainly
associated with discounted provisions.
For further information, refer to note 2, Financial income
and expenses.
5.1.6 Income taxes
Income taxes amounted to EUR 283 million, despite
losses incurred for the year, mainly due to goodwill
impairment losses, which are largely non-tax-deductible.
The tax charge was EUR 216 million lower than in 2010
due to lower taxable earnings, partly offset by higher
incidental tax expenses.
The tax burden in 2011 corresponded to an effective
income tax rate of negative 55.6%, compared to a positive
25.5% in 2010. The effective income tax rate is negative
attributable to goodwill impairment losses of EUR 1,355
million, which are largely non-tax-deductible. Excluding
the non-tax-deductible goodwill impairment losses, the
effective income tax rate increased mainly due to a change
in the mix of profits and losses in various countries, a
change in the country mix of income tax rates and higher
new loss carry forwards not expected to be realized.
For 2012, the effective tax rate excluding incidental non-
taxable items is expected to be between 32% and 35%.
For further information, refer to note 3, Income taxes.
5.1.7 Results of investments in associates
The results related to investments in associates declined
from EUR 18 million in 2010 to EUR 16 million in 2011,
largely attributable to the results on the sale of shares of
EUR 5 million in 2010.