Annual Report 2008 Did the report help you? Take survey (7 questions, 1 minute) |
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Restructuring and impairment
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In 2008, a EUR 520 million charge was recorded as a result of restructuring projects, including related asset impairments
and inventory write-downs. Inventory write-downs were recorded in cost of sales and amounted to EUR 19 million in 2008. In
2006 and 2007 there were no inventory write-downs as a result of restructuring projects. The components of restructuring program
charges recognized in 2006, 2007 and 2008 are as follows:
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Other restructuring costs
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Release of excess provisions
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The charges are included in the following line items in the income statement:
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The most significant new projects in 2008
- In Lighting, over 60 restructuring projects were active during 2008 and a total charge of EUR 221 million was recognized.
A significant portion of the charge related to actions taken to address the ongoing shift from incandescent bulbs to energy
efficient lighting solutions. Other main projects within the Lighting sector included the closure of lamp phosphor production
in Maarheeze (the Netherlands), the consolidation of production activities from Fairmont to Salina (USA), the reorganization
of the wire & lean coiling activities in Turnhout (Belgium) and Maarheeze (the Netherlands), the reorganization of R&D activities
within traditional lighting, mainly in Turnhout (Belgium) and Roosendaal (the Netherlands), and the reorganization and staff
reductions of the headquarters in Eindhoven (the Netherlands). Other smaller projects in Lighting, in various locations, were
aimed at further increasing organizational effectiveness and reducing the fixed cost base
- Consumer Lifestyle’s main projects primarily relate to the integration of the former DAP and CE businesses, the exit of TV
in North America, the restructuring and subsequent sale of the Television factory in Juarez (Mexico) and the optimization
of the European supply footprint within almost all businesses
- Healthcare's restructuring projects were undertaken to reduce operating costs and simplify the organization. The projects
affected many locations, most notably sites in Hamburg (Germany), Helsinki (Finland) and Andover (USA)
- Within Innovation and Emerging Businesses, the restructuring of Assembleon will adapt the company to ongoing weakness in the
semiconductor market
- Within Group Management & Services, most of the costs relate to the move of the US country organization headquarters from
New York to Andover, initiated in 2007
While all these projects have been communicated, the completion of many of these projects will be during 2009 and early 2010,
and will affect approximately 7,000 employees.
The movements in the provisions and liabilities for restructuring costs in 2008 are presented by sector as follows:
The total restructuring program charges in 2008 of EUR 520 million are presented by sector as follows:
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The most significant new projects in 2007
- Within Lighting: restructuring of the Oss plant in the Netherlands, from mass manufacturing to a competence center, and the
closure of fluorescent lamp-based LCD backlighting activities.
- Within Group Management & Services: the US country organization headquarters were moved from New York to Andover.
The movements in the provisions and liabilities for restructuring costs in 2007 are presented by sector as follows:
The total restructuring program charges in 2007 of EUR 37 million are presented by sector as follows:
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The most significant new projects in 2006
- Within Lighting: the relocation of parts of the loss-making activities in Weert, Netherlands, to low-cost areas, the relocation
in Mexico of all Juarez plant activities to the Monterrey plant and the relocation of the standard Lead in Wire business in
the Netherlands (Deurne) to Poland
- Within Healthcare: the transfer of the production of SPECT cameras from Milpitas to Cleveland
- Within Consumer Lifestyle: the restructuring of the Klagenfurt site in Austria, reduction of the fixed cost base and providing
a more diverse and flexible supply base.
The movements in the provisions and liabilities for restructuring costs in 2006 are presented by sector as follows:
The total restructuring program charges in 2006 of EUR 82 million are presented by sector as follows:
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This is an interactive electronic version of the Philips Annual Report 2008 and also contains certain information in summarized form. The contents of this version are qualified in their entirety by reference to the printed version of the Philips Annual Report 2008. The printed version is available as a PDF file on this website.
Information about: forward-looking statements, third-party market share data, fair value information, US GAAP basis of presentation, use of non-US GAAP information, statutory financial statements and management report, revision and reclassifications and analysis of 2007 compared to 2006.
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