Discontinued 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:

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.