Discontinued operations

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 is included in Other receivables, the convertible bond 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 325 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 date of acquisition.

The following table summarizes the results of the MedQuist business included in the consolidated statements of income as discontinued operations for 2006, 2007 and 2008:

The following table presents the assets and liabilities of the MedQuist business, classified as discontinued operations, in the consolidated balance sheets as at December 31, 2007.

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 for a total consideration of EUR 7,913 million and a simultaneous acquisition of a minority interest in the recapitalized organization NXP Semiconductors at a cost of EUR 854 million. A gain of EUR 4,283 million was recorded on the sale, net of taxes, and net of costs directly associated with this transaction of approximately EUR 367 million.

The operations of the Semiconductors division and the aforementioned gain have been presented as discontinued operations.

The Company's ownership interest in NXP Semiconductors is 19.8%. The Company cannot exert significant influence over the operating or financial policies of NXP and the investment is accounted for as a cost-method investment 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 by 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 for the period through its divestment on September 29, 2006. The 2007 results mainly related to the settlement of pensions and income taxes. The 2008 results mainly related to the settlement of income taxes, largely operational in nature.

The following table shows the components of the gain from the sale of the Semiconductors division, net of tax on December 31, 2006:

Philips Mobile Display Systems

On November 10, 2005, Philips and Toppoly Optoelectronics Corporation of Taiwan announced that they had signed a binding letter of intent to merge Philips' Mobile Display Systems (MDS) business with Toppoly. The company was named TPO, and the transaction was completed in the first half of 2006.

Philips separately reported the results of the MDS business as a discontinued operation.

The following table summarizes the results of the MDS business included in the consolidated statements of income as discontinued operations for 2006, which mainly relate to translation differences upon completion of the transaction.