Income from operations

For information related to sales and income from operations on a geographical and sector basis, see Information by sector and main country.

Salaries and wages include an amount of EUR 376 million (2007: EUR 35 million, 2006: EUR 78 million) relating to restructuring charges.

See note (20) Pensions for further information on pension costs.

Share-based compensation expense amounted to EUR 78 million (EUR 58 million, net of tax), EUR 111 million (EUR 84 million, net of tax) and EUR 107 million (EUR 78 million, net of tax) in 2008, 2007, and 2006, respectively. See note (33) Share-based compensation for further information on Share-based compensation.

For the remuneration of the Board of Management and Supervisory Board, please refer to note (34) Information on remuneration.

Employees

The average number of employees by category is summarized as follows (in FTEs):

In many countries, employees render services under collective labor agreements, of which a significant portion expires within a year.

Depreciation and amortization

Depreciation of property, plant and equipment and amortization of intangibles are as follows:

Depreciation of property, plant and equipment includes an additional write-off in connection with the retirement of property, plant and equipment amounting to EUR 40 million (2007: EUR 28 million, 2006: EUR 20 million).

Included in depreciation of property, plant and equipment is an amount of EUR 56 million (2007: EUR 22 million, 2006: EUR 17 million) relating to impairment charges.

Depreciation of property, plant and equipment and amortization of software are primarily included in cost of sales.

Rent

Rent expenses amounted to EUR 322 million (2007: EUR 334 million, 2006: EUR 392 million).

Selling expenses

Advertising and sales promotion costs totaled EUR 949 million (2007: EUR 994 million, 2006: EUR 865 million) and are included in selling expenses. Shipping and handling costs of EUR 595 million are also included (2007: EUR 533 million, 2006: EUR 558 million).

General and administrative expenses

General and administrative expenses include the costs related to management and staff departments in the corporate center, sectors and country/regional organizations, amounting to EUR 983 million (2007: EUR 885 million, 2006: EUR 882 million). Additionally, the pension costs and costs of other postretirement benefit plans relating to employees, not allocated to current sector activities, amounted to a net cost of EUR 33 million (2007: EUR 34 million, 2006: EUR 87 million).

Research and development expenses

Expenditures for research and development activities amounted to EUR 1,622 million, representing 6.1% of Group sales (2007: EUR 1,629 million, 6.1% of Group sales 2006: EUR 1,659 million, 6.2% of Group sales).

For information related to research and development expenses on a sector basis, see the section Information by sector and main country.

Impairment of goodwill

In 2008, a EUR 234 million goodwill impairment charge was recorded of which EUR 232 million was related to Lumileds (2007: EUR nil, 2006: EUR nil).

Other business income

Other business income consists of the following:

Results on the disposal of businesses consisted of:

The results on the sale of businesses in 2008 are mainly related to the sale of the Set-Top Boxes (STB) and Connectivity Solutions (CS) activities to Pace Micro Technology which resulted in a gain of EUR 63 million, and the sale of Speech Recognition activities to Nuance Communications which resulted in a gain of 45 million. The result on the disposal of fixed assets is mainly related to the sale of fixed assets in Taiwan with a gain of EUR 39 million.

In 2007, the results on the sale of fixed assets mainly related to the sale of certain buildings in Austria and the Netherlands as well as land in the US. Remaining business income is mainly attributable to certain settlements and the finalization of several divestitures.

The result on the disposal of businesses in 2006 is mainly related to the sale of the CryptoTec activities which resulted in a gain of EUR 31 million, the sale of Philips Sound Solutions PSS to D&M Holding at a gain of EUR 43 million and the sale of the monitor business in Television at a gain of EUR 23 million. The result on the disposal of fixed assets is mainly related to the sale of certain real estate assets in Austria with a gain of EUR 31 million. The remaining business income consists of the settlement of certain legal claims.