(Exact name of registrant as specified in its charter)
Royal Philips Electronics
(Translation of registrant’s name into English)
The Netherlands
(Jurisdiction of incorporation or organization)
Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover
Form 20-F or Form 40-F.
Form 20-F þ Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule101(b)(7): o
Indicate by check mark whether the registrant by furnishing the information contained in this Form
is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes o No þ
Name and address of person authorized to receive notices
and communications from the Securities and Exchange Commission:
E.P. Coutinho
Koninklijke Philips Electronics N.V.
Amstelplein 2
1096 BC Amsterdam — The Netherlands
This
report comprises copy of the Quarterly Report of the Philips Group
for the three months ended December 31, 2006 as well as copies
of the press releases entitled:
-
“Philips appoints new CEO of Medical Systems division”, dated October 17, 2006;
-
“Philips reveals new wave of brand campaign to bring simplicity closer to customers”, dated October 30, 2006;
-
“Philips completes acquisition of Intermagnetics General Corporation”, dated November 9, 2006;
-
“Philips to acquire PLI, the leading European player in Home Luminairs”, dated November 13, 2006;
-
“Philips rated top climber in sustainability reporting leaders”, dated November 17, 2006;
-
“Philips to sell Philips Sound Solutions to D&M Holdings”, dated November 28, 2006;
-
“Philips plans to sell stake in FEI company”, dated November 30, 2006;
-
“Philips updates market on main consumer businesses”, dated December 5, 2006;
-
“Philips executes sale of stake in FEI Company”, dated December 15, 2006;
-
“Philips completes repurchase and cancellation of 86 million shares”, dated December 29, 2006;
-
“Philips announces 100% ownership of Lumileds”, dated December 29, 2006;
-
“Philips progresses with wind down of Corporate Investments portfolio”, dated January 3, 2007;
-
“Philips announces EUR 1.63 billion share repurchase program over ‘second trading line’ on Euronext Amsterdam”, dated
“Mr. Hayko Kroese appointed group Human Resources Director”, dated January 9, 2007.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf, by the undersigned, thereunto duly authorized at Amsterdam,
on the 22nd day of January 2007.
KONINKLIJKE PHILIPS ELECTRONICS N.V.
/s/ G.J. Kleisterlee
(President,
Chairman of the Board of Management)
/s/ P.J. Sivignon
(Chief Financial Officer,
Member of the Board of Management)
This document contains certain
forward-looking statements with
respect to the financial condition,
results of operations and business of
Philips and certain of the plans and
objectives of Philips with respect to
these items (including, but not
limited to, restructuring cost and
cost savings), in particular the
outlook paragraph in this report.
By their nature, forward-looking
statements involve risk and
uncertainty because they relate to
events and depend on circumstances
that will occur in the future. There
are a number of factors that could
cause actual results and developments
to differ materially from those
expressed or implied by these
forward-looking statements. These
factors include, but are not limited
to, levels of consumer and business
spending in major economies, changes
in consumer tastes and preferences,
changes in law, the performance of
the financial markets, pension costs,
the levels of marketing and
promotional expenditures by Philips
and its competitors, raw materials
and employee costs, changes in
exchange and interest rates (in
particular changes in the euro and
the US dollar can materially affect
results), changes in tax rates and
future business combinations,
acquisitions or dispositions and the
rate of technological changes,
political and military developments
in countries where Philips operates,
Philips’ ability to secure short-term
profitability and invest in long-term growth, and industry
consolidation.
Statements regarding market share,
including as to Philips’ competitive
position, contained in this document
are based on outside sources such as
specialized research institutes,
industry and dealer panels in
combination with management
estimates. Where information is not
yet available to Philips, those
statements may also be based on
estimates and projections prepared
by outside sources or management.
Rankings are based on sales unless
otherwise stated.
Use of non-US GAAP information
In presenting and discussing the
Philips Group’s financial position,
operating results and cash flows,
management uses certain non-US GAAP
financial measures. These non-US GAAP
financial measures should not be
viewed in isolation as alternatives
to the equivalent US GAAP measure(s)
and should be used in conjunction
with the most directly comparable US
GAAP measure(s). A discussion of the
non-US GAAP measures included in this
document and a reconciliation of such
measures to the most directly
comparable US GAAP measure(s) are
contained in this document.
Use of fair value measurements
In presenting the Philips Group’s
financial position, fair values are
used for the measurement of various
items in accordance with the
applicable accounting standards.
These fair values are based on market
prices, where available, and are
obtained from sources that are deemed
to be reliable. Users are cautioned
that these values are subject to
changes over time and are only valid
at the balance sheet date. When a
readily determinable market value
does not exist, fair values are
estimated using valuation models. The
models that are used are appropriate
for their purpose. They require
management to make significant
assumptions with respect to future
developments which are inherently
uncertain and may therefore deviate
from actual developments. In certain
cases, independent valuations are
obtained to support management’s
determination of fair values.
All amounts in millions of euros unless
otherwise stated; data included are unaudited.
Financial reporting is in accordance with US GAAP
unless otherwise stated.
Figures have been restated for the sale
of the Semiconductors and MDS businesses
now shown under ‘discontinued
operations’.
Philips reports strong Q4 with net income of EUR 680
million; proposes to increase dividend to EUR 0.60 per share
•
Fourth-quarter sales up 2% comparably to EUR 8,128
million, bringing full-year sales to EUR 26,976 million, comparably
up 6% on 2005.
•
Fourth-quarter net income increased to EUR 680 million from
EUR 332 million in Q4 2005, bringing full-year net income to
EUR 5,383 million, compared with EUR 2,868 million in 2005
•
Philips announced and/or completed seven strategically aligned
acquisitions in 2006 that will add to further growth
•
Continuation of the share repurchase program brings total cash returned to
shareholders in 2006 to over EUR 3.3 billion
•
Proposal to increase the dividend for 2006 significantly to EUR 0.60 from EUR 0.44 in 2005
Gerard Kleisterlee,
Philips’ President and CEO of Royal Philips Electronics:
“Strong results in the fourth quarter rounded out what was a busy
and successful year for Philips. A combination of strategically
aligned acquisitions and the divestment of cyclical components
businesses — not least the sale of a majority stake in
Semiconductors — have made us a less volatile, more brand-driven
company.
I’m very pleased to see that our 2006 performance validates the
key strategic decisions we have made. In the fourth quarter
alone, our Medical Systems division brought in EUR 311 million in
EBIT, which amounts to a margin of 15%. Our Consumer Electronics
division was able to post a full-year EBIT
1
margin of 3.9%, amid tough market conditions. This again
demonstrates the robustness of our CE business model.
In a landmark transaction, we sold a majority stake in our
Semiconductors division in September, which made our earnings
less volatile. This transaction completed efforts to transform
Philips into a stable company built around our brand, with
leading market positions in virtually all areas in which it is
active.
2006 also saw the redistribution of over EUR 3.3 billion to
shareholders by way of our ongoing share repurchase program and
dividends. We intend to buy back a further EUR 1.6 billion of
shares in 2007, in line with our earlier commitment.
As we close the book on 2006, it’s clear that we are
entering a new period in the Company’s history. I am confident
we will be able to continue to deliver sustainable growth and
improved profitability in our key business areas of healthcare,
lifestyle and technology.
Organic growth is strong and consistent where it matters
most, i.e. in our high-margin activities, driven by innovation
and an ever-stronger brand. Growth is further fuelled by the
seven acquisitions we have announced which, as far as completed,
are all performing at or above the level expected. At the same
time we have practically completed the divestment of cyclical
components activities.
Heading into 2007, we will continue to deliver on our promise to
achieve sustainable value creation by strengthening our existing
base of operations, making acquisitions where value creation is
possible and returning capital to shareholders. At the same
time, we will deepen and extend our commitment to our “sense and
simplicity” brand promise. I am deeply convinced that our
company is well positioned for an excellent future.”
2
Philips Group
Highlights in the quarter
Net income
in millions of euros unless otherwise stated
Q4
Q4
2005
2006
Sales
8,191
8,128
EBIT
795
665
as a % of sales
9.7
8.2
Financial income and expenses
23
(102
)
Income taxes
(485
)
(48
)
Results unconsolidated companies
(46
)
30
Minority interests
12
6
Income from continuing operations
299
551
Discontinued operations
33
129
Net income
332
680
Per common share (in euros) — basic*
0.27
0.60
*
Calculation of net income per common
share in euros is based on weighted
in-the-quarter average number of common
shares
Net income
•
Net income from continuing operations
amounted to EUR 551 million, compared to EUR 299
million in Q4 2005.
•
Income of EUR 129 million was
reported under discontinued operations following
further review of estimates made in the calculation of
the gain on the Semiconductors transaction, the
preliminary result of which was recorded in Q3.
•
Earnings before interest and tax (EBIT) of EUR
665 million included a EUR 42 million gain on the sale
of Philips Sound Solutions, as well as EUR 65 million
in charges related to the acquisition of
Intermagnetics. In Q4 2005, EBIT included a gain of
EUR 170 million related to the release of a
postretirement medical benefits provision, as well as
a EUR 76 million result on real estate.
•
Financial income and expenses included a
non-cash impairment charge of EUR 77 million on the
value of the investment in TPO Display Corp.
•
Income taxes reflected the impact of a reduction
(from 29.6% to 25.5%) in the Dutch corporate tax rate
on the net deferred tax position. Q4 2005 included a
EUR 240 million tax charge related to the intra-group
transfer of shares in TSMC.
•
Results relating to
unconsolidated companies included a EUR 76 million gain
on the sale of Philips’ stake in FEI.
Sales by sector
in millions of euros unless otherwise stated
Q4
Q4
% change
2005
2006
nominal
comparable
Medical Systems
2,029
2,068
2
7
DAP
787
963
22
13
CE
3,469
3,262
(6
)
(4
)
Lighting
1,346
1,455
8
7
Other Activities
560
380
(32
)
(2
)
Philips Group
8,191
8,128
(1
)
2
Sales by sector
•
Comparable sales for the Group
increased by 2% compared to Q4 2005 after adjustment
for the effect of currency movements and
consolidation changes. Strong comparable growth
delivered by all high-margin divisions was partially
offset by lower sales at Consumer Electronics, where
the focus remains on margin generation.
•
Comparable sales at Medical Systems rose by 7%,
driven by almost all businesses, notably Healthcare
Informatics and Customer Services. DAP’s comparable
sales grew by an exceptional 13%, led by increases in
Domestic Appliances and Oral Healthcare. Continued
comparable sales growth in Connected Displays and
Peripherals & Accessories was offset by sales declines
in the other Consumer Electronics businesses. At
Lighting, comparable sales were higher in almost all
businesses, led by Lumileds.
Sales by region
in millions of euros unless otherwise stated
% change
Q4
Q4
2005
2006
nominal
comparable
Europe/Africa
3,823
3,948
3
5
North America
2,286
2,326
2
6
Latin America
581
548
(6
)
1
Asia Pacific
1,501
1,306
(13
)
(10
)
Philips Group
8,191
8,128
(1
)
2
Sales by region
•
Comparable sales growth was led by North
America, driven by double-digit growth at DAP and
Medical Systems. In Europe/Africa, DAP and Lighting
supported the 5% comparable growth. In both Latin
America and Asia, comparable sales growth at DAP and
Lighting was tempered by lower sales at CE.
3
EBIT
in millions of euros unless otherwise stated
Q4
Q4
2005
2006
Medical Systems
267
311
DAP
167
164
CE
234
259
Lighting
157
141
Other Activities
24
3
Unallocated
(54
)
(213
)
Philips Group
795
665
as a % of sales
9.7
8.2
Earnings before interest and tax (EBIT)
•
The EBIT of Medical Systems included
acquisition-related and integration charges of EUR 65
million for Intermagnetics. Q4 2005 included a charge of EUR 46 million for
MedQuist customer accommodation payments.
Improvement was visible in most businesses, notably
Computed Tomography, Nuclear Medicine and Customer
Services.
•
Despite higher advertising and promotion expenses
and an EUR 8 million charge related to the Avent
acquisition, DAP’s EBIT in the quarter enabled the
division, excluding Consumer Healthcare Solutions, to
reach an annual EBIT margin of 16%, again achieving its
mid-term target of 15-16%.
•
Consumer Electronics achieved an EBIT margin of
7.9%, compared to 6.7% in Q4 2005, taking its
full-year margin to 3.9% of sales. Almost all
businesses showed improved margins compared to Q4
2005.
•
At Lighting, EBIT declined due to a
slower ramp-up and inventory adjustment in
backlighting solutions, restructuring charges of EUR
13 million and an EUR 8 million charge triggered by
the acquisition of the remaining 3.5% stake in
Lumileds.
•
The EBIT of Other Activities included a gain of
EUR 42 million on the sale of Philips Sound
Solutions as well as additional investments in the
Healthcare and Lifestyle Incubators. EBIT in Q4 2005
included a EUR 76 million result on real estate and
a EUR 42 million gain on the sale of the Philips
Pension Competence Center.
•
Due to the seasonality of spend, the EBIT of
Unallocated included brand campaign investments of
EUR 88 million, compared to EUR 54 million in Q4
2005. Q4 2005 EBIT included a EUR 116 million gain
on the adjustment of a provision for postretirement
medical benefits.
EBITA
in millions of euros unless otherwise stated
Q4
Q4
2005
2006
Medical Systems
292
373
DAP
168
171
CE
234
259
Lighting
164
149
Other Activities
24
2
Unallocated
(53
)
(212
)
Philips Group
829
742
as a % of sales
10.1
9.1
4
Financial income and expenses
in millions of euros
Q4
Q4
2005
2006
Interest expenses (net)
(42
)
(3
)
TPV option fair value adjustment
48
(48
)
TPO fair value adjustment
—
(77
)
Other
17
26
Total
23
(102
)
Financial income and expenses
•
Net interest expense was EUR 39 million
lower than in Q4 2005 due to a higher average cash
position during the quarter, mainly as a result of
proceeds received from the sale of 80.1% of the
Semiconductors business.
•
A EUR 77 million non-cash impairment charge to
adjust the value of the investment in TPO Display Corp
was recognized in the quarter. A fair-value adjustment
on the TPV bond option resulted in a loss of EUR 48
million, compared to a gain of the same amount in Q4
2005.
Results unconsolidated companies
in millions of euros
Q4
Q4
2005
2006
LG.Philips LCD: Operational results
101
(41
)
Sale of shares
211
—
TSMC
115
—
FEI
(1
)
76
Other
(472
)
(5
)
Total
(46
)
30
Results relating to unconsolidated companies
•
LG.Philips LCD’s operational result
decreased by EUR 142 million year-over-year as a
result of continued difficult market conditions.
•
A gain of EUR 76 million was recognized on
the sale of Philips’ entire shareholding in FEI
Company.
•
In Q4 2005 a charge of EUR 458 million was
recognized for LG.Philips Displays.
5
Cash balance
in millions of euros
Q4
Q4
2005
2006
Beginning balance
4,344
7,272
Net cash from operating activities
1,460
740
Gross capital expenditures
(206
)
(119
)
Acquisitions/divestments
(178
)
(768
)
Other cash from investing activities
124
12
Changes in debt/other
(549
)
(1,401
)
Cash provided by discontinued
operations
298
287
Ending balance
5,293
6,023
Cash balance
•
The cash balance decreased by EUR 1,249
million during the quarter, compared to an increase of
EUR 949 million in Q4 2005.
•
The main cash outflows were EUR 1,519 million for
the ongoing share repurchase program and EUR 993
million for the acquisition of Intermagnetics.
•
Q4 2005 included EUR 615 million proceeds from the
sale of a further stake in LG.Philips LCD and a EUR 788
million cash outflow for the acquisition of the majority
of Lumileds.
Cash flows from operating activities
•
Cash flows from operating activities
declined compared to Q4 2005, primarily due to a number
of positive reclassifications which were made from
continuing to discontinued operations following further
review of the Q3 2006 transaction to sell a majority
stake in the Semiconductors division.
Gross capital expenditures
•
Gross capital expenditures were below the
level of Q4 2005 as additional investments at Lighting
were more than offset by lower expenditure in the other
divisions.
6
Inventories
•
Inventories as a percentage of sales
decreased to 10.7%, compared to 10.9% in Q4 2005. Tight
inventory and supply chain management at Consumer
Electronics, Medical Systems and Lighting drove the
improvement.
Net debt and group equity
•
The net cash position of EUR 3.4 billion
reported at the end of Q3 2006 declined to EUR 2.2
billion, primarily due to the acquisition of
Intermagnetics and the share repurchase program.
•
Group equity decreased by EUR 0.8 billion compared
to the previous quarter. Increases in equity
attributable to net income and unrealized gains on the
value of available-for-sale securities (primarily TSMC)
were more than offset by the ongoing share buy-back
program and the implementation of FAS 158 rules
relating to pension accounting.
Employment
•
During the quarter the number of
employees declined by 3,832 due to the normal
seasonal reduction in temporary employees and several
divestments within Other Activities. These reductions were partly offset by the
consolidation of Intermagnetics in Medical
Systems.
•
Q4 2005 included 37,417 employees in businesses
classed as ‘discontinued operations’, primarily the
Semiconductors division.
7
Medical Systems
Key data
in millions of euros unless otherwise stated
Q4
Q4
2005
2006
Sales
2,029
2,068
Sales growth
% nominal
13
2
% comparable
8
7
EBITA
292
373
as a % of sales
14.4
18.0
EBIT
267
311
as a % of sales
13.2
15.0
Net operating capital (NOC)
3,400
4,332
Number of employees (FTEs)
30,978
32,843
Business highlights
•
Philips completed its EUR 1 billion acquisition of Intermagnetics General Corporation — a leading
manufacturer of superconducting magnets and
radio-frequency coils for magnetic resonance imaging
systems.
•
At the 92nd annual meeting of the
Radiological Society of North America, Philips
introduced the BrightView SPECT system — a compact
nuclear medicine camera that is also scalable to
accommodate overweight patients.
•
In the 2006 IMV ServiceTrak™ survey, customers
ranked Philips number 1 in overall service performance
in Patient Monitoring Systems for the 8th
year in a row, and number 1 in Ultrasound All Systems
for the 14th year in a row.
Financial performance
•
Equipment order intake for the full year
increased by 6% on a currency-comparable basis compared
to 2005. Net underlying order intake for the quarter
was practically flat due to some adjustments to the
existing order book.
•
Comparable sales grew 7% year-on-year, driven
by double-digit growth in Healthcare Informatics and
Customer Services. Sales of i-Site/PACS grew by
almost 50% on a comparable basis.
•
EBIT included EUR 65 million acquisition-related
and integration charges following the acquisition of
Intermagnetics. Excluding these charges and Q4 2005’s
MedQuist accommodation payment, EBIT improved,
primarily in Computed Tomography, Nuclear Medicine
and Customer Services.
•
Net operating capital and employee numbers
increased due to the consolidation of Intermagnetics
and Witt Biomedical.
Looking ahead
•
The North American sales organization will
be realigned to tighten customer focus and simplify
sales processes; we expect this to result in a minor
charge in Q1 2007, but to have an overall positive
impact on full-year earnings.
•
Q1 2007 will include approximately EUR 25
million of Intermagnetics-related acquisition and
integration charges.
•
Driven by ongoing
improvement actions, we expect the division to
achieve 14-15% EBITA for the year 2007.
8
Domestic Appliances and Personal Care
Key data
in millions of euros unless otherwise stated
Q4
Q4
2005
2006
Sales
787
963
Sales growth
% nominal
6
22
% comparable
3
13
EBITA
168
171
as a % of sales
21.3
17.8
EBIT
167
164
as a % of sales
21.2
17.0
Net operating capital (NOC)
370
1,758
Number of employees (FTEs)
8,203
10,953
Business highlights
•
In France, Philips launched its new
Wake-up Light, with a roll-out in selected European
countries planned for 2007. This medically-proven lamp
prepares the body to wake up by emitting increasing
light, which reduces the production of melatonin, the
sleep-inducing hormone.
•
Following a successful trial year in 2006, Philips
Shavers increased its 2007 sponsorship commitment to the
WilliamsF1 Team to include on-car branding.
•
In December, Philips signed a deal to provide
floor care products to Dixons Store Group International
— the first ever pan-European product listing by
Dixons and a deal bringing Philips into the UK and
Nordic floor care markets.
Financial performance
•
Sales grew by 13% on a comparable basis
compared to Q4 2005; the increase was visible across
all businesses but was particularly strong in Oral
Healthcare and Domestic Appliances. Consumer Healthcare
Solutions reported sales of EUR 38 million, most of
which was attributable to Lifeline Systems.
Double-digit sales growth was visible in all regions,
most notably North America and the key emerging markets
of Russia, China and India.
•
EUR 164 million in-the-quarter EBIT brought the
full-year EBIT margin, excluding CHS, to 16% of sales,
again enabling the division to reach its mid-term
profitability target.
•
EBIT in the quarter included further investments
in CHS (EUR 8 million), charges related to the
acquisition of Avent (EUR 8 million) and a
significantly higher level of advertising spend, to
help DAP sustain its high growth level.
•
The increase in net operating capital and
personnel numbers was attributable to the acquisitions
of Lifeline and Avent.
•
Despite the strong sales
growth, DAP continued to operate with negative working
capital in the fourth quarter.
Looking ahead
•
DAP plans to introduce a series of
innovative products, in particular in shaving and
coffee-making, which will help it achieve its 2007
EBITA target of approximately 15%.
9
Consumer Electronics
Key data
in millions of euros unless otherwise stated
Q4
Q4
2005
2006
Sales
3,469
3,262
Sales growth
% nominal
4
(6
)
% comparable
6
(4
)
EBITA
234
259
as a % of sales
6.7
7.9
EBIT
234
259
as a % of sales
6.7
7.9
Net operating capital (NOC)
(296
)
(228
)
Number of employees (FTEs)
15,537
14,486
Business highlights
•
Philips sold its one millionth
Ambilight FlatTV. Introduced by Philips in 2004,
Ambilight creates a halo around the TV screen that
changes color and intensity and transforms viewing by
making the screen seem bigger.
•
Philips was named a global supplier of in-room
entertainment televisions to the Accor Group of hotels,
one of the largest hotel chains in the world, providing
a dedicated range of hotel FlatTVs for up to 480,000
rooms.
•
At the Consumer Electronics Show in Las Vegas,
Philips won 18 Innovation Awards and the Best of
Innovation Award for the DECT Cordless Phone/Answering
Machine. The SIM-card copier lets users copy their
mobile phonebook to their home phone — a true example
of “sense and simplicity”.
Financial performance
•
Sales of EUR 3,262 million were, on a
comparable basis, 4% below Q4 2005. Growth in
Connected Displays and Peripherals & Accessories was
offset by declines in Mobile Phones and Home Networks.
•
As a result of CE’s focus on margin management, the
division posted EBIT of 7.9%, compared to 6.7% in Q4
2005, helping it realize an annual EBIT margin of 3.9%
of sales. Almost all businesses recorded EBIT margin
improvements compared to Q4 2005.
•
Inventories remained under tight
control at 7.4% of sales, compared to 7.5% in
2005.
Looking ahead
•
Q1 is expected to be a challenging
quarter due to continuing pressure on margins as
supply of FlatTVs outstrips market demand.
•
The transfer of Philips’ remaining Mobile Phones
activities to China Electronics Corporation (CEC),
originally planned to be completed in Q4 2006, is still
subject to finalization.
•
Helped by the introduction
of a new range of Ambilight televisions, the division
expects to achieve an EBITA of approximately 3% in
2007.
10
Lighting
Key data
in millions of euros unless otherwise stated
Q4
Q4
2005
2006
Sales
1,346
1,455
Sales growth
% nominal
6
8
% comparable
1
7
EBITA
164
149
as a % of sales
12.2
10.2
EBIT
157
141
as a % of sales
11.7
9.7
Net operating capital (NOC)
2,491
2,527
Number of employees (FTEs)
45,649
47,739
Business highlights
•
Philips agreed to acquire Partners in
Lighting International, the European leader in the home
luminaire market. With this deal, Philips will foster a
shift to LED-based home lighting.
•
In December,
Philips organized an energy-efficiency forum in
Brussels to back European Union energy-conservation
initiatives and draw attention to the energy-saving
potential of lighting technologies.
•
Philips acquired the remaining 3.5% stake in
Lumileds — the world leader in high-power
light-emitting diodes (LEDs).
•
In Bangkok, at an
event attended by 100,000 people, the Princess of
Thailand opened the Inner Ring Road Bridge, which is
illuminated with Philips’ solid-state lighting.
Financial performance
•
Sales amounted to EUR 1,455 million, 7%
above Q4 2005 on a comparable basis, mainly
attributable to Luminaires and Lamps, which grew 15%
and 7% respectively.
•
Geographically, all regions posted positive
comparable growth rates, most notably the double-digit
growth in emerging
markets such as Russia, China and India.
•
EBIT declined due to an inventory write-down
caused by a lower-than-expected ramp-up in backlighting
solutions, restructuring charges of EUR 13 million and
a EUR 8 million charge triggered by the acquisition of
the final 3.5% stake in Lumileds.
Looking ahead
•
The division is expected to consolidate
Partners in Lighting International in Q1, further
strengthening its LED/solid-state lighting strategy.
•
Further optimization of the industrial footprint
will result in restructuring charges of approximately
EUR 15 million in Q1 2007.
•
The launch of innovative products and focus on
emerging markets in 2007 will support the division
in achieving an EBITA of around 12% for the year.
11
Other Activities
Key data
in millions of euros unless otherwise stated
Q4
Q4
2005
2006
Sales
560
380
Sales growth
% nominal
(18
)
(32
)
% comparable
(16
)
(2
)
Total EBITA
24
2
as a % of sales
4.3
0.5
EBIT Corporate Technologies
(45
)
(65
)
EBIT Corp. Investments and others
69
68
Total EBIT
24
3
as a % of sales
4.3
0.8
Net operating capital (NOC)
272
21
Number of employees (FTEs)
19,050
13,347
Business highlights
•
In October, Philips opened two new
research facilities — CareLab and ShopLab — to
research healthcare technologies for the home and
retail lighting technologies.
•
In December, Philips’ Technology Incubator group
made its first spin-out: Philips’ Polymer Vision Ltd —
focusing on the rollable display market — became a
stand-alone company through a EUR 21 million investment
by Technology Capital.
•
In November, the US-based Design Management Institute
— an international organization promoting design as
part of business strategy — named Philips Design one
of two “Design Management Teams of the Year”.
•
Philips Design and Rivers Run Red, the
virtual-world design agency, have agreed to establish a
Philips Design presence within the imaginary on-line
community known as Second Life®. Philips
intends to use this presence to obtain feedback on
innovative concepts and gain a deeper understanding of
virtual environments like Second Life®, which
was launched in 2003 and has more than 1.5 million
members.
Financial performance
•
Corporate Technologies’ results
included additional investments in innovation via
the Healthcare, Lifestyle and Technology Incubators.
•
Corporate Investments reported an improved EBIT,
including a EUR 42 million gain on the sale of Philips
Sound Solutions. EBIT in Q4 2005 included a EUR 76
million result on real estate and a EUR 42 million gain
on the sale of the Philips Pension Competence Center.
Looking ahead
•
Corporate Investments expects to complete
the wind-down of its portfolio in the first half of
2007.
•
Philips will continue to focus on driving
innovation and emerging businesses through
investments in the Incubators.
•
In 2007, this
reporting sector will be transformed into the
‘Innovation & Emerging Businesses’ sector, which will
help drive Philips’ future growth. The negative EUR
80 million expected annual result given in previous
guidance will be disproportionately skewed to earlier
quarters of the year.
12
Unallocated
Key data
in millions of euros unless otherwise stated
Q4
Q4
2005
2006
Corporate and regional overheads
(92
)
(107
)
Global brand campaign
(54
)
(88
)
Pensions/postretirement benefit costs
92
(18
)
Total EBIT
(54
)
(213
)
Total EBITA
(53
)
(212
)
Number of employees (FTEs)
2,392
2,346
Business highlights
•
Philips was rated top climber in
corporate sustainability reporting among the
‘Leading 50’ companies in an overview published by
SustainAbility in partnership with the United
Nations Environment Programme and Standard & Poor’s.
•
Philips won the Henri Sijthoff Prize for
best 2005 annual report among companies on the
Amsterdam Stock Exchange.
•
At the Investor Relations Continental Europe
Awards, Philips won the prize for ‘Best Corporate
Governance & Disclosure Policy’.
•
In 2006, Philips spent EUR 1.9 billion on
suppliers via e-auctions, exceeding its 2006
target of conducting at least 10% of its spending
through e-auctions.
Financial performance
•
The EBIT loss of Corporate and
Regional Overheads was EUR 15 million higher than
in 2005, almost entirely due to implementation
costs for Sarbanes-Oxley compliance, which totaled
EUR 26 million for the full year.
•
Investments in the global brand campaign
increased by EUR 34 million compared to Q4 2005,
though the full-year spend was EUR 12 million below
the 2005 level.
•
Pension and postretirement
benefit costs were in line with expectations. A EUR
116 million release of a FAS 106 provision was
recorded in Q4 2005.
Looking ahead
•
In 2007, pension costs for
continuing operations are expected to decline by
approximately EUR 50 million compared to 2006.
•
Expenditures on the brand campaign are
expected to be slightly below the level of 2006,
with the majority of the spend in the second and
fourth quarters of the year.
•
Simplification of
country management structures, the earlier transfer
of staff to NXP and removal of a regional
management layer will lead to a reduction in
corporate and regional costs of EUR 75 million on a
run-rate basis by the end of 2007.
13
Highlights full-year 2006
The year 2006
•
Net income amounted to EUR 5,383
million, compared to EUR 2,868 million in 2005.
This included the EUR 4,283 million net gain on
the sale of the Semiconductors division, whereas
2005 included a total gain of EUR 1,778 million on
the sale of several financial holdings.
•
Sales in 2006 amounted to EUR
26,976 million, representing 6% comparable growth
compared to 2005. Growth was mainly driven by
Medical Systems, DAP and Lighting.
•
EBIT amounted to EUR 1,183
million in 2006, compared to EUR 1,472 million
in 2005.
•
Results relating to
unconsolidated companies showed a loss of EUR 157
million, compared to a EUR 1,754 million profit
in 2005, which resulted from the sale of shares
in TSMC, LG.Philips LCD and NAVTEQ. Income from
discontinued operations of EUR 4,464 million
included both Semiconductors’ 2006 operational
result and the gain on the sale.
Net income
in millions of euros unless otherwise stated
January-December
2005
2006
Sales
25,775
26,976
EBIT
1,472
1,183
as a % of sales
5.7
4.4
Financial income and expenses
108
34
Income taxes
(506
)
(137
)
Results unconsolidated companies
1,754
(157
)
Minority interests
3
(4
)
Income from continuing operations
2,831
919
Discontinued operations
37
4,464
Net income
2,868
5,383
Per common share (in euros) — basic
2.29
4.58
Management summary
•
2006 was a year of decisive action and
change for the Philips Group. The Semiconductors
division was sold and seven strategic acquisitions were
announced. Net income, including the EUR 4.3 billion
gain on the sale of Semiconductors, showed a profit of
EUR 5,383 million.
•
Comparable sales growth increased to 6%, with
strong growth in all main operating divisions, led
by DAP and Lighting with 11% and 8% respectively.
Medical Systems (7%) and CE (5%) also showed solid
growth, while Corporate Investments declined by 10%.
•
EBIT decreased by EUR 289 million, mainly as a
result of lower income in Other Activities (impacted by
a EUR 265 million asbestos-related charge) and
Unallocated (due to the release of a EUR 170 million
postretirement benefits provision in 2005). EBIT at
Medical Systems, DAP and Lighting increased compared to
2005, as did EBIT at CE when excluding the 2005 gain on
the TPV transaction.
•
The negative result from unconsolidated companies
was mainly due to the loss incurred by LG.Philips LCD;
the 2005 result included gains on the sale of shares in
TSMC, LG.Philips LCD and NAVTEQ, as well as a charge of
EUR 458 million for LG.Philips Displays.
•
Cash flows from operating activities decreased
from EUR 1,141 million in 2005 to EUR 360 million in
2006, mainly due to higher pension contributions in
the United Kingdom and United States.
•
Further investments were made in the global brand
campaign and innovation. Philips also cancelled 173
million shares, of which over 100 million were
repurchased in 2006, thereby returning EUR 3.3 billion
to shareholders including the annual dividend.
14
Dividend and Outlook
Proposed dividend to shareholders
Philips’ present dividend policy is based on
an average annual pay-out ratio of 25-35% of
continuing net income. Philips will explain a
revised dividend policy at the 2007 General
Meeting of Shareholders, which raises this average
annual pay-out ratio to 40-50% of continuing net
income. Consistent with this revised dividend
distribution policy, the Company will submit a
proposal to the General Meeting of Shareholders to
declare a dividend of EUR 0.60 per common share
(approximately EUR 630 million), an increase for
the third consecutive year. In 2006 a dividend of
EUR 0.44 per common share was paid (EUR 523
million).
Outlook
A strong performance in the last quarter of
2006 enabled us to meet our objectives for both
profitability and sales growth, reinforcing our
confidence that we will realize our targets —
annual average top-line growth of 5-6% and EBITA
of at least 7.5% — in 2007.
In the coming year, we look forward to
introducing a number of exciting new products
that will further support our growth ambitions.
We will continue the reallocation of capital by
reducing our financial holdings, pursuing
value-creating acquisitions consistent with our
strategic direction and returning cash to
shareholders.
We will also continue our drive to simplify
Philips, reducing the cost of our organization
while stepping up our efforts to improve talent
management.
With rigorous execution of these plans, we expect
2007 to be a good year of continued growth and
increased profitability.
all amounts in millions of euros unless otherwise stated
restated for the sale of the Semiconductors business
4th quarter
January to December
2005
2006
2005
2006
Sales
8,191
8,128
25,775
26,976
Cost of sales
(5,721
)
(5,435
)
(17,834
)
(18,681
)
Gross margin
2,470
2,693
7,941
8,295
Selling expenses
(1,309
)
(1,417
)
(4,455
)
(4,669
)
General and administrative expenses
(162
)
(266
)
(829
)
(1,009
)
Research and development expenses
(414
)
(461
)
(1,602
)
(1,668
)
Other business income (expense)
210
116
417
234
Income from operations
795
665
1,472
1,183
Financial income and expenses
23
(102
)
108
34
Income before taxes
818
563
1,580
1,217
Income tax expense
(485
)
(48
)
(506
)
(137
)
Income after taxes
333
515
1,074
1,080
Results relating to unconsolidated companies,
including a year-to-date net dilution gain of
EUR 14 million (loss of EUR 165 million in
the 4th quarter of 2005)
(46
)
30
1,754
(157
)
Minority interests
12
6
3
(4
)
Income from continuing operations
299
551
2,831
919
Discontinued operations
33
129
37
4,464
Net income
332
680
2,868
5,383
Weighted average number of common shares
outstanding (after deduction of treasury stock)
during the period (in thousands):
• basic
1,222,944
1,135,336
1,249,956
1,174,925
• diluted
1,227,333
1,144,642
1,253,184
1,182,745
Net income per common share in euros*:
• basic
0.27
0.60
2.29
4.58
• diluted
0.27
0.59
2.29
4.55
Ratios
Gross margin as a % of sales
30.2
33.1
30.8
30.7
Selling expenses as a % of sales
(16.0
)
(17.4
)
(17.3
)
(17.3
)
G&A expenses as a % of sales
(2.0
)
(3.3
)
(3.2
)
(3.7
)
R&D expenses as a % of sales
(5.1
)
(5.7
)
(6.2
)
(6.2
)
EBIT or Income from operations
795
665
1,472
1,183
as a % of sales
9.7
8.2
5.7
4.4
EBITA
829
742
1,577
1,382
as a % of sales
10.1
9.1
6.1
5.1
16
Consolidated balance sheets
all amounts in millions of euros unless otherwise stated
restated for the sale of the Semiconductors business
Non-current liabilities of discontinued operations
341
—
Other non-current liabilities
1,103
784
Total liabilities
17,080
15,570
Minority interests
159
131
Stockholders’ equity
16,666
22,997
Total liabilities and equity
33,905
38,698
Number of common shares outstanding (after
deduction of treasury stock) at the end of
period (in thousands)
1,201,358
1,106,909
Ratios
Stockholders’ equity per common share in euros
13.87
20.78
Inventories as a % of sales
10.9
10.7
Net debt : group equity
(5):105
(10):110
Net operating capital
5,679
8,724
Employees at end of period
of which discontinued operations 37,417 end December 2005
159,226
121,732
17
Consolidated statements of cash flows *
all amounts in millions of euros
restated for the sale of the Semiconductors business
4th quarter
January to December
2005
2006
2005
2006
Cash flows from operating activities:
Net income
332
680
2,868
5,383
(Income) loss discontinued operations
(33
)
(129
)
(37
)
(4,464
)
Adjustments to reconcile income to net cash provided by
operating
activities:
Depreciation and amortization
224
250
740
834
Impairment of equity method investments
427
—
427
8
Net gain on sale of assets
(378
)
(181
)
(2,102
)
(289
)
Unconsolidated companies (net of dividends received)
(168
)
100
(324
)
232
Minority interests (net of dividends paid)
4
(6
)
15
4
(Increase) decrease in working capital/other current assets
1,038
(539
)
(119
)
(1,466
)
(Increase) decrease in non-current receivables/other assets
83
91
(250
)
(209
)
Increase (decrease) in provisions
(85
)
193
(108
)
298
Other items
16
281
31
11
Net cash provided by (used for) operating activities
1,460
740
1,141
342
Cash flows from investing activities:
Purchase of intangible assets
(26
)
(33
)
(74
)
(101
)
Capital expenditures on property, plant and equipment
(206
)
(119
)
(644
)
(703
)
Proceeds from disposals of property, plant and equipment
162
45
212
107
Cash from (to) derivatives
(12
)
—
(46
)
62
Proceeds from sale (purchase) of other non-current
financial assets
(5
)
(13
)
612
(3
)
Proceeds from sale (purchase) of businesses
(173
)
(755
)
1,627
(2,173
)
Net cash provided by (used for) investing activities
(260
)
(875
)
1,687
(2,811
)
Cash flows from financing activities:
Increase (decrease) in debt
108
67
(324
)
(437
)
Treasury stock transactions
(725
)
(1,553
)
(1,761
)
(2,755
)
Dividends paid
—
—
(504
)
(523
)
Net cash provided by (used for) financing activities
(617
)
(1,486
)
(2,589
)
(3,715
)
Net cash provided by (used for) continuing operations
583
(1,621
)
239
(6,184
)
Cash flows from discontinued operations.
Net cash provided by (used for) operating activities
428
320
948
512
Net cash provided by (used for) investing activities
(130
)
(33
)
(402
)
6,599
Net cash provided by (used for) financing activities
—
—
—
—
Net cash provided by (used for) discontinued operations
298
287
546
7,111
Net cash provided by (used for) continuing and discontinued
operations
881
(1,334
)
785
927
Effect of change in exchange rates on cash positions
68
85
159
(197
)
Cash and cash equivalents at beginning of period
4,344
7,272
4,349
5,293
Cash and cash equivalents at end of period
5,293
6,023
5,293
6,023
*
For a number of reasons, principally the effects of translation differences, certain items
in the statements of cash flows do not correspond to the differences between the balance sheet
amounts for the respective items.
Ratio
Cash flows before financing activities
1,200
(135
)
2,828
(2,469
)
Note: includes a reclassification between Other items and Cash from (to) derivatives of EUR
10 million, EUR 121 million and EUR 44 million in the first, second and third quarters of 2006
respectively.
18
Consolidated statement of changes in stockholders’ equity
Includes property, plant and equipment and intangible assets
21
Pension costs
all amounts in millions of euros unless otherwise stated
restated for the sale of the Semiconductors business
Net periodic pension costs of defined-benefit plans
4th quarter 2006
January-December 2006
Netherlands
Other
Netherlands
Other
Service cost
39
26
198
129
Interest cost on the projected benefit
obligation
128
106
531
411
Expected return on plan assets
(199
)
(98
)
(808
)
(390
)
Amortization of unrecognized transition
obligation
—
—
—
1
Net actuarial (gain) loss recognized
(19
)
19
(49
)
84
Amortization of prior service cost
(11
)
6
(56
)
25
Settlement loss
8
2
8
2
Curtailment loss (gain)
(21
)
(1
)
(21
)
(1
)
Other
5
23
5
23
Net periodic cost (income)
(70
)
83
(192
)
284
of which included in
discontinued operations
—
—
(12
)
29
The net periodic pension costs in the fourth quarter of 2006
amounted to EUR 32 million, of which EUR 13 million related to defined-benefit (DB) plans (the Netherlands income of EUR 70 million, other countries
cost of EUR 83 million) and EUR 19 million related to defined-contribution (DC) plans
(the Netherlands cost of EUR 2 million, other countries cost of EUR 17 million).
Full-year cost for DC is EUR 91 million, of which EUR 10 million included in
discontinued operations. Full-year cost for DB is EUR 92 million of which EUR 17
million included in discontinued operations.
Net periodic costs of postretirement benefits other than pensions
4th quarter 2006
January-December 2006
Netherlands
Other
Netherlands
Other
Service cost
—
1
—
4
Interest cost on the accumulated
postretirement benefit
—
7
—
26
Amortization of unrecognized transition
obligation
—
1
—
5
Net actuarial loss recognized
—
1
—
4
Curtailment gain
—
—
—
—
Net periodic cost (income)
—
10
—
39
of which included in discontinued operations
—
—
—
—
22
Consolidated statements of income in accordance with IFRS
all amounts in millions of euros unless otherwise stated
restated for the sale of the Semiconductors business
4th quarter
January to December
2005
2006
2005
2006
Sales
8,191
8,128
25,775
26,976
Cost of sales
(5,737
)
(5,396
)
(17,869
)
(18,696
)
Gross margin
2,454
2,732
7,906
8,280
Selling expenses
(1,313
)
(1,444
)
(4,445
)
(4,693
)
General and administrative expenses
(139
)
(354
)
(912
)
(1,213
)
Research and development expenses
(385
)
(437
)
(1,544
)
(1,612
)
Other business income (expense)
223
113
414
204
Income from operations
840
610
1,419
966
Financial income and expenses
28
(101
)
113
35
Income before taxes
868
509
1,532
1,001
Income tax expense
(496
)
(107
)
(481
)
(146
)
Income after taxes
372
402
1,051
855
Results relating to unconsolidated companies,
including a year-to-date net dilution gain of
EUR 13 million (loss of EUR 24 million in the
4th quarter of 2005)
341
27
2,279
(166
)
Minority interests
12
5
2
(4
)
Income from continuing operations
725
434
3,332
685
Discontinued operations
(72
)
128
42
3,948
Net income
653
562
3,374
4,633
Weighted average number of common shares
outstanding (after deduction of treasury stock)
during the period (in thousands)
• basic
1,222,944
1,135,336
1,249,956
1,174,925
• diluted
1,227,333
1,144,832
1,253,330
1,183,529
Net income per common share in euros*:
• basic
0.53
0.50
2.70
3.94
• diluted
0.53
0.49
2.70
3.91
Ratios
Gross margin as a % of sales
30.0
33.6
30.7
30.7
Selling expenses as a % of sales
(16.0
)
(17.8
)
(17.2
)
(17.4
)
G&A expenses as a % of sales
(1.7
)
(4.4
)
(3.5
)
(4.5
)
R&D expenses as a % of sales
(4.7
)
(5.4
)
(6.0
)
(6.0
)
EBIT or Income from operations
840
610
1,419
966
as a % of sales
10.3
7.5
5.5
3.6
EBITA
891
667
1,632
1,179
as a % of sales
10.9
8.2
6.3
4.4
*
Calculation of net income per common share in euros is based on weighted
in-the-quarter and weighted year-to-date average number of common shares
respectively.
23
Consolidated balance sheets in accordance with IFRS
all amounts in millions of euros unless otherwise stated
restated for the sale of the Semiconductors business
Recognized results on sale-and-leaseback transactions
80
52
Deferred income tax effects
424
232
Other differences in equity
(23
)
15
Stockholders’ equity in accordance with IFRS
16,319
21,974
25
Reconciliation of non-US GAAP performance measures
all amounts in millions of euros unless otherwise stated
restated for the sale of the Semiconductors business
Certain non-US GAAP financial measures are presented when discussing
the Philips Group’s performance. In the following tables, a reconciliation
to the most directly comparable US GAAP performance measure is made.
provisions on balance sheet EUR 2,710 million excluding deferred tax liabilities of EUR 325 million
Composition of cash flows before financing activities
4th quarter
January to December
2005
2006
2005
2006
Cash flows from operating activities
1,460
740
1,141
342
Cash flows from investing activities
(260
)
(875
)
1,687
(2,811
)
Cash flows before financing activities
1,200
(135
)
2,828
(2,469
)
27
Philips quarterly statistics
all amounts in millions of euros unless otherwise stated; percentage increases always in
relation to the corresponding period of previous year restated for the sale of the Semiconductors business
2005
2006
1st quarter
2nd quarter
3rd quarter
4th quarter
1st quarter
2nd quarter
3rd quarter
4th quarter
Sales
5,480
5,839
6,265
8,191
6,155
6,380
6,313
8,128
% increase
3
—
7
5
12
9
1
(1
)
EBIT
193
131
353
795
246
247
25
665
as a % of sales
3.5
2.2
5.6
9.7
4.0
3.9
0.4
8.2
Net income
117
983
1,436
332
160
301
4,242
680
per common share in
euros *
0.09
0.78
1.15
0.27
0.13
0.25
3.59
0.60
January-
January-
January-
January-
January-
January-
January-
January-
March
June
September
December
March
June
September
December
Sales
5,480
11,319
17,584
25,775
6,155
12,535
18,848
26,976
% increase
3
1
3
4
12
11
7
5
EBIT
193
324
677
1,472
246
493
518
1,183
as a % of sales
3.5
2.9
3.9
5.7
4.0
3.9
2.7
4.4
Net income
117
1,100
2,536
2,868
160
461
4,703
5,383
per common share in
euros *
0.09
0.87
2.01
2.29
0.13
0.39
3.96
4.58
Continuing net income as a %
of stockholders’
equity (ROE)
4.2
16.7
23.8
18.1
3.8
4.6
2.7
4.4
period ending 2005
period ending 2006
Inventories as a % of sales
11.4
12.9
12.9
10.9
11.9
11.9
12.7
10.7
Net debt : group equity ratio
8:92
8:92
0:100
(5):105
6:94
9:91
(16):116
(10):110
Total employees (in thousands)
161
160
161
159
161
158
126
122
of which discontinued
operations
37
38
38
37
37
37
—
—
*
Calculation of net income per common share in euros is based on weighted in-the-quarter
and weighted year-to-date average number of common shares respectively
Information also available on Internet, address: www.investor.philips.com
Printed in the Netherlands
PHILIPS APPOINTS NEW CEO OF MEDICAL SYSTEMS DIVISION
Amsterdam, The Netherlands — Royal Philips Electronics (NYSE: PHG, AEX: PHI) today announced the
appointment of Mr. Stephen H. (Steve) Rusckowski as CEO of Philips Medical Systems, effective
November 1, 2006. Mr. Rusckowski will succeed Mr. Jouko Karvinen, who has been named the next CEO
of Stora Enso Oyj, the global paper, packaging and forest products company. Mr. Karvinen will
transfer his responsibilities as CEO of Philips Medical Systems to Mr. Rusckowski as of the same
date. On December 1, 2006, Mr. Karvinen will relinquish his position as member of the Board of
Management of Royal Philips Electronics and leave the company. Mr. Karvinen was appointed CEO of
Philips Medical Systems on October 1, 2002, and became a member of the Board of Management on April1, 2006.
Steve Rusckowski (b. 1957, American) currently has global responsibility for Imaging Systems, one
of the business groups of the Medical Systems division. In addition, he plays a lead role in
designing strategies to expand Philips’ presence in the personal health and well-being domain.
Since 1984, Mr. Rusckowski has held numerous management positions with the healthcare division of
Hewlett-Packard/Agilent Technologies. He was the General Manager of Agilent’s Healthcare Solutions
Group when Philips acquired this business in 2001.
As CEO of Philips Medical Systems, Mr. Rusckowski will report to Mr. Gerard Kleisterlee, President
& CEO of Royal Philips Electronics. From November 1, 2006, Mr. Rusckowski will be a member of
Philips’ Group Management Committee. The company’s Supervisory Board will propose to the next
regular General Meeting of Shareholders on March 29, 2007 to appoint Mr. Rusckowski as a member of
the Board of Management as of April 1, 2007.
In commenting on this planned top management change, Mr. Kleisterlee said: “We’re pleased to
welcome Steve Rusckowski to the Philips top team. Steve has a long track record running successful
growth businesses in healthcare, both at Philips and before. We’re confident he’s the right leader
for the next phase of growth and expansion at Medical Systems. We thank Jouko for his excellent
contributions to building a strong platform in the medical business for Philips, and wish him all
the best as CEO of Stora Enso corporation.”
For further information, please contact:
Jayson Otke
Philips Corporate Communications
Tel: +31 20 59 77215
Email: jayson.otke@philips.com
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR
30.4 billion in 2005, the company is a market leader in medical diagnostic imaging and patient
monitoring systems, energy efficient lighting solutions, personal care and home appliances, as well
as consumer electronics. News from Philips is located at www.philips.com/newscenter.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
PHILIPS REVEALS NEW WAVE OF BRAND CAMPAIGN TO BRING SIMPLICITY CLOSER TO CUSTOMERS
Campaign will provide customers with first hand experiences and benefits of simplicity
Amsterdam, The Netherlands — Royal Philips Electronics (NYSE: PHG, AEX: PHI) has unveiled its
latest brand campaign, which focuses on bringing the concept of simplicity closer to customers
around the world. Building on the company’s ‘sense and simplicity’ brand positioning, the campaign
focuses on highlighting the benefits offered by simplicity, as well as allowing customers to
directly experience simplicity first hand.
The new campaign spans TV, print, online and outdoor media in 10 markets around the world — China,
France, Germany, U.K., U.S.A., Brazil, Russia, The Netherlands, Italy and India. The campaign will
also see Philips expand on the creativity and originality that has already been commended for new
ideas that improve the consumer experience, such as the sole sponsorship of CBS’s ’60 Minutes’, a
deal to bring the contents pages of Time, Fortune, People and Business 2.0 to the first four pages
of the magazines, and allowing visitors to access premium content on the Wall Street Journal and
ESPN websites for free.
To stretch the envelope further beyond traditional advertising means, Philips’ latest campaign will
also include experiential marketing activities for the first time in each of the countries to help
allow consumers to fully experience simplicity in action. Some of these activities will include
‘Simplify New York’ which will provide New Yorkers with free access to the premium online service
from The New York Times, free copies of the magazine, The Week and a set of online tools to make
their daily lives easier; the launch of SimpliCity.com, a website
(www.philips.com.br/simplescidade) which will provide people in São Paulo and Rio de Janeiro with
the first central online resource to access and share useful information and tips that simplify
life in these cosmopolitan cities; and a Simplicity Squad in Canada providing consumers with free
vouchers for products and services to simplify their lives, as well as activities in other markets.
Andrea Ragnetti, Chief Marketing Officer of Philips commented: “The ‘sense and simplicity brand
promise is central to Philips vision of showing customers that technology and innovation can
provide meaningful benefits that can simplify, and fit within, their everyday lives. This new
campaign aims to creatively bring the concept even closer to customers by letting them experience
simplicity first hand through innovative and interactive activities, and will also encourage them
to contribute their own views.”
To encourage the discussion and debate about simplicity, Philips is also sponsoring an online forum
to allow people from all over the world to voice their opinions and share their experiences of
simplicity. The www.livesimplicity.net discussion forum allows people to contribute to online
discussions and also start discussions of their own about simplicity in areas as varied as travel,
business, communication, health and wellness, and technology. The site gives everyone a chance to
have their say, interact with others and discuss problems. It is hoped that this interactive
dialogue will contribute to helping find the solutions to meet future needs.
The success of the Philips ‘sense and simplicity’ brand campaign has been highlighted by the
results of Interbrand’s list of the world’s 100 most valuable brands. The annual ranking showed
Philips had the largest increase in the electronics sector, ranking the company 48th
overall up from 53rd in 2005, and 65th in 2004.
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
PHILIPS COMPLETES ACQUISITION OF INTERMAGNETICS GENERAL CORPORATION
Amsterdam, The Netherlands — Royal Philips Electronics (NYSE:PHG, AEX:PHI) announced today that it
has completed its acquisition of Intermagnetics General Corporation (“Intermagnetics”) (NASDAQ:
IMGC). Intermagnetics develops, manufactures and markets high-field superconducting magnets used in
Magnetic Resonance Imaging (MRI) systems and is viewed as the technological innovator in this
market. Intermagnetics also provides specialized MRI compatible patient monitoring devices and
Radio Frequency (RF) coils that are predominantly supplied to hospitals and independent imaging
centers.
Under the terms of the agreement, which was announced June 15, 2006, Philips acquired
Intermagnetics for USD 27.50 per share or a total equity value of approximately USD1.3 billion
(EUR1 billion), which was paid in cash upon completion. As a result of the transaction,
Intermagnetics, which employs approximately 1150 people, will be financially consolidated with
immediate effect within the Medical Systems division of Royal Philips Electronics. Intermagnetics’
headquarters in Latham, New York, will become the global headquarters of Philips’ enlarged Magnetic
Resonance business.
The acquisition of Intermagnetics will strengthen Philips’ position in the key market of Magnetic
Resonance Imaging. It will also allow Philips to participate in the fast growing market for RF
coils, significantly rationalize its supply chain, and enhance its competitive position. As
announced on June 15, 2006, Philips anticipates the transaction to be accretive to its operating
margin towards the end of 2007. Philips estimates it will take purchase-accounting and related
acquisition charges of approximately EUR 75 million in the fourth quarter of 2006 related to this
transaction.
For more information, please contact:
Jayson Otke
Philips Corporate Communications:
Tel: +31 20 59 77215
Email: jayson.otke@philips.com
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
PHILIPS TO ACQUIRE PLI, THE LEADING EUROPEAN PLAYER IN HOME LUMINAIRES
Strategic move to enter new market segment via extension of sales channels, and to capture a
leading position in solid-state lighting for the home.
Amsterdam, The Netherlands and Kontich, Belgium — Royal Philips Electronics (NYSE:PHG, AEX:PHI)
announced that they have reached an agreement for Philips to acquire Partners in Lighting (PLI),
the leading European manufacturer of home luminaires. PLI markets its products under brand names
such as Massive, Cucina and Aqua. Subject to receipt of regulatory approval, Philips will acquire
PLI from CVC Capital Partners, a private equity investment company, at an enterprise value of
approximately EUR 590 million to be paid in cash upon completion of the transaction. The
transaction is expected to close in the first quarter 2007.
PLI develops, manufactures and markets a wide portfolio of more than 10,000 distinct home lighting
luminaire products currently mainly for the European market. PLI’s revenue for 2006 is expected to
be around EUR 400 mln with a comparable growth rate of 6%. Philips Lighting expects the transaction
to be accretive to its operating margin from 2008 onwards.
“This is a strategic move for us to confirm our leadership position in solid state lighting, in
particular for the home where energy-efficient LED solutions and creating atmospheres will be the
name of the game,” said Theo van Deursen, CEO of Philips Lighting. “PLI entrepreneurship, design
innovation and 25% renewal rate of its products each year made them a true market driven company,
responding to market and consumer lifestyle trends,” he added. “This acquisition, and PLI’s strong
record of growth and margins, perfectly fits in our ambition to shape the lighting industry with a
growth of 6%, while maintaining a margin around 12%,” he said.
“Through Philips’ broad expertise in lighting, its wide capabilities in LEDs, and extensive global
reach and resources, we will be able to further expand our home lighting business,” says Jules
Noten, CEO of PLI. “We look forward to becoming a global player and industry shaper in the
transition towards LED applications.”
Founded in 1926, PLI is a leading manufacturer of home luminaires and currently employs
approximately 4700 people. Its headquarters are located in Kontich, Belgium, with manufacturing
operations based in China, Hungary and a specialized one in Belgium. PLI has 24 sales organizations
and the company exports to more than 70 countries. Through this acquisition both companies will be
able to benefit from their complementary expertise and sales channels in order to expand their
business.
For further information, please contact:
Royal Philips Electronics
Jeannet Harpe
Philips Corporate Communications
Tel +31 20 59 77199
emailjeannet.harpe@philips.com
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
About CVC
CVC is a leading independent private equity group which advises funds of over EUR 16.8 billion in
Europe and Asia. CVC European Equity Partners IV closed in July 2005 raising EUR 6 billion and
seeks to invest in a diverse range of companies across Europe, with CVC continuing its focus on
long-term investments and working in partnership with management. Since 1996, CVC has been the most
active private equity firm in Europe, with CVC funds investing some US$7 billion in buyout
transactions. During this time, CVC funds have also achieved top quartile performance based on
independent benchmark analysis undertaken by Cambridge Associates.
CVC operates an integrated European network of 12 offices. CVC’s European operations have an
experienced team of 62 investment professionals now led by 16 partners who are responsible for
evaluating investments, providing strategic input to portfolio companies and maintaining a regular
dialogue with investors. The current European portfolio totals 41 investments. CVC Asia Pacific is
an established network of four offices with 33 staff, of which 23 are investment professionals.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
PHILIPS RATED TOP CLIMBER IN SUSTAINABILITY REPORTING LEADERS
Proof that sustainability is being successfully embedded throughout the company
Amsterdam, The Netherlands — Royal Philips Electronics (NYSE: PHG, AEX: PHI) has been rated the
top climber among the ‘Leading 50’ companies in the latest biannual survey of leading practice in
corporate sustainability reporting. Philips now ranks number 12 in the survey, up from 39 in 2004,
an improvement of 54%.
Philips earned top scores in reporting on governance and strategy, illustrating that its efforts to
embed sustainability throughout the organization are taking hold. In what it calls ‘The Corporate
DNA test,’ Tomorrow’s Value explains that: “Philips describes how its business strategy links to
work it is doing in different markets, and how it is innovating to improve its contributions to
sustainable development.”
The report is published by SustainAbility in partnership with the United Nations Environment
Programme (UNEP) and Standard and Poor’s. Entitled Tomorrow’s Value, the survey ranks the world’s
leaders in corporate sustainability reporting, transparency and disclosure.
The survey notes that: “Value creation is increasingly surfacing as a theme in reports and their
titles, as in the 2005 Philips report Creating value.” According to the survey: “Leadership
companies — including BP, BT, GE and Philips — are shifting the focus of their sustainability
strategy away from risk management, towards a more progressive and entrepreneurial approach that
seeks to identify the sustainability opportunities for strategic innovation and market building.
However the pioneers are a minority, representing 28% of our Leading 50.”
Barbara Kux, Chair of the Philips Corporate Sustainability Board stated: “We are very pleased about
this recognition for our Sustainability work. I would like to personally congratulate our employees
around the globe who work with passion and dedication each and every day on sustainability. The
performance covered in our report is the direct result of our engagement and commitment.”
Mrs. Kux also explained that this pursuit of growth and innovation is an important part of Philips’
ongoing efforts. “Sustainability is at the heart of our strategy and values. We will continue to
implement our Sustainability program, focusing as it does on business opportunities, of which a
great example is the effort our Lighting division is putting into energy saving solutions.”
To achieve sustainable growth today and in the future, exploring new markets, new partnerships and
new business models are imperative for Philips. With a strong focus on tomorrow’s challenges,
Philips is taking sustainability further than social, environmental and economic performance,
equating sustainability with business opportunity.
For further information, please contact:
Royal Philips Electronics
Jeannet Harpe
Philips Corporate Communications
Tel +31 20 59 77199
Email jeannet.harpe@philips.com
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
PHILIPS TO SELL PHILIPS SOUND SOLUTIONS TO D&M HOLDINGS
Amsterdam, The Netherlands and Tokyo, Japan — Royal Philips Electronics (NYSE:PHG, AEX:PHI) and
D&M Holdings Inc. (TSE I:6735) of Japan today announced Philips will sell its Philips Sound
Solutions (PSS) business unit to D&M. As part of the transaction, all sites and activities of PSS
will be transferred to D&M. The transaction, which is expected to close in the fourth quarter of
2006, will be settled in cash. No further financial details about the transaction have been
disclosed.
Philips Sound Solutions is an OEM supplier of speaker systems, primarily to the automotive
industry. As an OEM component developer and manufacturer, PSS is considered a non-core activity for
Philips, forming part of Philips Corporate Investments. This transaction represents another step
Philips is taking to focus on its healthcare, lifestyle and technology activities supported by the
strength of the Philips brand.
D&M intends to accelerate its OEM business in this industry by building on the automotive assets
and relationships of PSS. The transaction will also provide D&M with technologies and know-how that
will enable D&M to introduce sound applications with new technology.
Headquartered in Dendermonde, Belgium, PSS has development centers in Belgium, China and India, and
production facilities in Belgium, Hungary, Ukraine, China and India. In 2005, PSS had revenues of
approximately EUR 120 million.
For more information, please contact:
Arent Jan Hesselink
Philips Corporate Communications:
Tel: +31 20 59 77415
Email: arentjan.hesselink@philips.com
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
About D&M Holdings Inc.
D&M Holdings Inc. is based in Kawasaki, Japan and owns the Denon, Marantz, McIntosh Laboratory,
Boston Acoustics, Snell Acoustics, D&M Professional, Denon DJ, ReplayTVâ and
Escientâ brands. Denon, Marantz, McIntosh and D&M Professional are global industry
leaders in the specialist home theater, audio/video consumer electronics or professional audio
markets, with a strong and long-standing heritage of manufacturing and marketing high-performance
audio and video components. Boston Acoustics, with its signature The Boston Sound, is a leader in
premium loudspeakers for home and audio markets. Snell is a super premium speaker brand. The
ReplayTV and Escient brands represent award-winning technologies in digital home entertainment.
Additional information is available at www.dm-holdings.com.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
Amsterdam, The Netherlands — Royal Philips Electronics (NYSE:PHG, AEX:PHI) today announced that
FEI Company (NASDAQ: FEIC), in which Philips currently owns approximately 24.8% of the issued share
capital, has filed a registration statement on Form S-3 with the United States Securities and
Exchange Commission (SEC) relating to the planned secondary offering of 8,406,007 common shares in
FEI. As a result of this transaction, Philips expects its share holdings in FEI will be reduced to
zero.
FEI designs and manufactures a variety of electron microscopes and nanotechnology tools and
components.
All of the shares included in this offering would be offered by Philips Business Electronics
International B.V. Philips would receive all of the net proceeds from the offering. The actual
number of FEI shares to be offered by Philips will depend upon prevailing market conditions at the
time of the offering.
A registration statement relating to these securities has been filed with the SEC but has not yet
become effective. The contemplated offering remains subject to a number of conditions, including
the circulation of a preliminary prospectus and the declaration by the SEC of the effectiveness of
FEI’s registration statement relating to the offering.
These securities may not be sold nor may offers to buy be accepted prior to the time that the
registration statement becomes effective. This press release shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these securities in any
jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions,
personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
Philips updates market on main consumer businesses
Amsterdam, the Netherlands — In a meeting with investors and financial analysts today, Royal
Philips Electronics (AEX: PHI, NYSE: PHG) will discuss how Philips’ two main consumer businesses —
Consumer Electronics and Domestic Appliances and Personal Care (DAP) — continue to deliver on
their aggressive value creation objectives. The company will also highlight steps being taken to
tighten the link between its research and development, business incubator activities and the market
to create additional value for Philips.
Consumer Electronics sustaining value creation with robust business model
Philips repeats its earlier stated guidance that the company expects the operating (EBIT) margin in
Consumer Electronics in 2006 to be slightly shy of 4%. “After 8 consecutive quarters of
profitability, I believe we’ve shown our asset-light business model is the right strategy for
succeeding in the highly-competitive consumer electronics market,” Rudy Provoost, CEO of Philips
Consumer Electronics, said.
To increase the division’s competitiveness and boost value creation further, Philips is drawing on
its strong track record of innovation to reinvent or create new product categories with higher
margins — such as in its high-definition FlatTVs with Ambilight, voice-over-IP telephony or
immersive AmbX gaming accessories that enhance the consumers’ gaming experience. The company also
continues to support innovation through targeted acquisitions in consumer electronic peripherals
and accessories — a business that is achieving double-digit growth and EBITA (earnings before
interest, taxes and amortization) margins of 8% to 10%.
DAP fully on track to continue delivering sustainable profitable growth
In DAP, Philips remains on track to delivering on its long-term, average annual growth rate of 7%.
“By enlarging the scope of our categories, leveraging our strong presence in high-growth emerging
markets, and further re-directing R&D investments towards breakthrough innovation, we’re on track
to building a substantially more valuable Domestic Appliances and Personal Care business over the
next three years,” Andrea Ragnetti, CEO of Philips DAP, said. Strong organic growth is expected in
all business units and geographies as Philips has entered new high growth segments such as rice
cookers and water purification for emerging Asian markets. Through the acquisition this year of
AVENT Holdings Ltd., Philips has also created a solid platform in the growing and profitable Mother
and Child Care space, and the company will continue exploring value-creating acquisitions across
the portfolio.
‘One Philips’ approach strengthens position with key international retailers
Rudy will also discuss how accelerated, closer collaboration between Philips’ main consumer
businesses is becoming a key success factor in growing the company’s business with international
retailers, which collectively accounted for approximately 40% of Philips’ retail business in 2005.
With the setup of an International Retail Board that oversees global key account management and
joint business planning with strategic customers, Philips has delivered on its brand promise of
sense and simplicity through an approach that is designed around the retailer, by offering an
aligned strategic partnership that is better customized to retailers’ needs.
Philips to continue investing successfully in its brand
According to the annual Interbrand ranking of the most valuable global brands, the value of the
Philips brand increased over the last two years from USD 4.4 billion to USD 6.7 billion, climbing
17 places to enter the top 50 global brands at number 48. The company will continue investing, and
will earmark approximately EUR 100 million for the corporate brand campaign in 2007. During the
meeting, Andrea will also review how centrally managed Strategic Marketing is helping optimize R&D
investments, improve go-to-market plans and ultimately deliver higher organic growth for Philips.
Philips to create additional value through Innovation & Emerging Businesses group
At today’s meeting, Philips will also announce that, as of January 2007, the main activities within
the company’s Other Activities business segment will be repositioned as the Innovation & Emerging
Businesses group. By leveraging the Philips’ brand, technology base and distribution network, the
company aims through this group to invest in projects that are not currently part of Philips’
operating divisions, but which will lead to additional organic growth or create value through
future spin-offs. The repositioned Innovation & Emerging Businesses group will include Corporate
Research, Philips’ Business Incubators and Intellectual Property, as well as Consumer Healthcare
Solutions. The Corporate Investments portfolio will be fully divested in the first half of 2007.
The global service units will become part of Group Management & Services costs, which will also
contains corporate and regional costs, pension costs, and corporate investments in the Philips
brand.
Group Management & Services (GM&S) costs to be reduced by EUR 75 million
Simplification of the country management structure, removal of a regional management layer and the
transfer of staff to NXP to establish their corporate center will lead to a reduction in corporate
and regional costs that make up part of Group Management and Services by EUR 75 million on a
run-rate basis by the end of 2007. Furthermore, part of these corporate services, as well as part
of Philips’ intellectual property portfolio maintenance costs, will be charged to the divisions
that drive and create value from these resources.
Philips to report EBITA to increase financial transparency
Also beginning in 2007, Philips will increasingly make reference to EBITA when updating the market
on the margin performance of its businesses. Referencing EBITA will provide greater transparency
into the underlying performance of Philips’ businesses by factoring out the amortization of
intangible assets. Amortization of intangible assets occurs, for example, when acquisitions are
consolidated. In terms of EBITA, Philips’ group margin target will exceed 7.5% for 2007 onwards,
which is consistent with previous earnings guidance. The EBITA margins for the product divisions
for 2007 are expected to be approximately 3% in Consumer Electronics, 15% in DAP, 12% in Lighting
and 14% to 15% in Medical Systems.
For further information, please contact:
Jayson Otke
Philips Corporate Communications
Tel +31 20 5977215
email jayson.otke@philips.com
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
Amsterdam, The Netherlands— Royal Philips Electronics (NYSE:PHG, AEX:PHI) today announced the sale
of 8.4 million shares of common stock in FEI Company (NASDAQ: FEIC). All of the shares included in
this offering were sold by Philips Business Electronics International B.V. The sale will provide
Philips with net proceeds of approximately EUR 155 million. As a result of this transaction, the
company will book a non-taxable gain of approximately EUR 75 million in its earnings for the fourth
quarter of 2006.
This offering by Philips of FEI Company shares was announced on November 30, 2006, and priced on
December 14, 2006 at USD 25.0 per share of common stock. Upon closing of the transaction, which is
scheduled for Wednesday, December 20, 2006, Philips will have reduced its shareholding in FEI to
zero.
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
Philips completes repurchase and cancellation of 86 million shares
Amsterdam, The Netherlands — Royal Philips Electronics (NYSE:PHG, AEX:PHI) announced today that it
has completed the cancellation of in total 86,472,494 shares which have been acquired pursuant to
the share repurchase program the Company initiated in July 2006. All shares were acquired during
the period starting July 17, 2006 up to and including December 19, 2006 at an average repurchase
price of EUR 27.37 per share. As such, Philips has completed approximately EUR 2,367 million of the
EUR 4 billion return to shareholders announced on August 3, 2006.
In connection with this share capital reduction, Philips has notified the Netherlands Authority for
the Financial Markets (AFM) that it no longer holds 5 per cent of its own shares. As a result of
the cancellation of shares, Philips’ issued share capital as per today amounts to 1,142,826,763
shares of which 36,231,587 shares are held by Philips to cover long-term incentive and employee
stock purchase plans.
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
Amsterdam, The Netherlands — Royal Philips Electronics (NYSE:PHG, AEX:PHI) today announced it has
obtained full ownership of Philips Lumileds Lighting, the world leader in high-power light emitting
diodes (LEDs) and pioneer in LED technology for every day purposes.
Philips acquired Agilent LED International’s stake in Lumileds last year, and has now acquired the
remaining 3.5% of Lumileds share capital from Lumileds’ employees and management. The 3.5% stake
was related to an employee stock option program at Lumileds which has now been replaced by a new
incentive program. A one-time charge of approximately EUR 8 million will be taken in the financial
results for the fourth quarter 2006.
“In the last year we have made tremendous progress in aligning Philips’ and Lumileds’ business and
strategy to further strengthen our position in the fast growing, emerging solid state lighting
market,” says Theo van Deursen, CEO of Philips Lighting. “Philips now owns the entire new value
chain, from technology expertise to in-depth customer knowledge, which provides us with a real
competitive edge.”
For more information, please contact:
Jeannet Harpe
Philips Corporate Communications
Tel +31 20 59 77 199
email jeannet.harpe@philips.com
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
Philips progresses with wind down of Corporate Investments portfolio
Completes sale of Philips Sound Solutions to D&M resulting in a one-time gain
of EUR 41.7 million
•
Takes approximately EUR 70 million non-cash impairment charge on investment
in TPO Display Corp.
Amsterdam, The Netherlands — Royal Philips Electronics (NYSE:PHG, AEX:PHI) today announced that
the closing of the sale of its Philips Sound Solutions (PSS) business unit to D&M Holdings Inc. of
Japan will lead to a one-time earnings gain of EUR 41.7 million for the fourth quarter of 2006. The
sale of PSS to D&M was settled in cash and was completed on December 31, 2006. PSS had 2005
revenues of approximately EUR 120 million.
Philips also announced that it will take a EUR 70 million non-cash impairment charge in its
financial results for the fourth quarter of 2006 relating to the adjustment of the investment value
of Philips’ holding in TPO Display Corp. TPO is a leader in mobile display technology, in which
Philips owns a 17.5% stake.
In line with US GAAP accounting principles, the impairment of the investment value of Philips’
holding is triggered by a prolonged reduction in TPO’s share price. The charge will be recorded
against the financial income & expense line of the Philips income statement.
For more information, please contact:
Jayson Otke
Philips Corporate Communications
Tel +31 20 5977215
email jayson.otke@philips.com
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking
statements involve risk and uncertainty because they relate to events and depend on circumstances
that will occur in the future and there are many factors that could cause actual results and
developments to differ materially from those expressed or implied by these forward-looking
statements.
Philips announces EUR 1.63 billion share repurchase program over ‘second trading line’ on Euronext
Amsterdam
Amsterdam, The Netherlands — In line with earlier announcements on August 3 and October 16, 2006,
Royal Philips Electronics (NYSE:PHG, AEX:PHI) today announced that it will start a EUR 1,633
million share repurchase program for capital reduction purposes over a second trading line on
Euronext Amsterdam to complete the return of a total of EUR 4 billion to its shareholders. The
program over a second trading line will start January 22, 2007, and is expected to be completed
before the end of 2007. The second trading line will enable Philips to buy back shares from holders
who are tax-exempt or are able to achieve tax compensation. The maximum number of shares that will
be repurchased under this program depends on the development in the share price during the course
of the program.
Mechanics of ‘Second Trading Line’
This repurchase program will take place over a so-called ‘second trading line’ which has been
established on Euronext Amsterdam for this purpose and for which a separate security code will be
used (ISIN NL0000009322). On this trading line, shares will be purchased exclusively by Philips.
Trades on the second trading line will take the form of regular ‘off exchange’ transactions of at
least 10,000 shares and will be settled net of 15% dividend withholding tax. Furthermore, trades on
the second trading line shall include a small transaction cost reimbursement to take into account
the administrative and financing costs incurred by investors e.g. to claim relief from Dutch
dividend withholding tax.
Regular trading in Philips’ ordinary shares on Euronext Amsterdam and on the New York Stock
Exchange will continue as normal. Philips is at no time obliged to engage in transactions to buy
its own ordinary shares via the second trading line, and will act as buyer depending on market
conditions and the prevailing ordinary share price.
Holders contemplating selling shares over the second trading line should contact their tax advisers
to carefully examine their tax position. For more information about transactions on the second
trading line and the execution of the program, please click here
For more information, please contact:
Arent Jan Hesselink
Philips Corporate Comunications
Tel +31 20 59 77415
email arentjan.hesselink@philips.com
Selling restrictions
The repurchase program does not constitute an offer to purchase or a solicitation of an offer to
purchase any securities, or an invitation by or on behalf of Philips to purchase any such
securities in circumstances or in any jurisdiction in which such an offer or solicitation is
unlawful.
The repurchase program is not intended to constitute a tender offer by or on behalf of Philips for
its own ordinary shares. Philips has taken no steps to allow for a tender offer for its own
ordinary shares in any jurisdiction. Persons contemplating selling their shares on the second
trading line should consult their legal and tax advisers to verify whether they are legally
permitted to do so and to carefully investigate the tax consequences of such a sale.
This press release may not be distributed in any jurisdiction except in accordance with the legal
requirements applicable in such a jurisdiction.
This press release is only being made available to and directed at persons entitled to ordinary
shares in Philips and is not being made, and has not been approved, by an authorized person for the
purposes of section 21 of the UK Financial Services and Market Act 2000. No sales or offers to sell
ordinary shares under the share repurchase program may be made from or in the United States.
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
Forward-looking statements
This release may contain certain forward-looking statements with respect to the financial
condition, results of operations and business of Philips and certain of the plans and objectives of
Philips with respect to these items. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will occur in the future
and there are many factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
Mr. Hayko Kroese appointed group Human Resources Director
Amsterdam, The Netherlands — Royal Philips Electronics (NYSE:PHG, AEX:PHI) today announced the
appointment of Hayko Kroese as global head of Human Resources Management for the Company, reporting
to Gerard Kleisterlee, Philips’ President and Chief Executive Officer. Mr. Kroese (51), a Dutch
citizen, has extensive HR experience in and outside Philips and currently works as global head of
Human Resources Management in the Medical Systems division. The appointment will take effect from
February 1, 2007. Mr. Kroese will be proposed to the Supervisory Board as a member of Philips’
Group Management Committee as of the same date.
Mr. Kroese will succeed Tjerk Hooghiemstra who will leave the company at his own request, having
worked at Philips for over a decade, first as head of HRM in the Consumer Electronics division and
since January 2000 as global head of HRM for the Company.
Mr. Kleisterlee commented: “We respect Tjerk’s wish for a career change and thank him for his key
contribution to the development of the HRM function in Philips in a period of profound
transformation of the Company.With this foundation in place, I look forward to work closely with
Hayko to bring the company’s talent agenda to its next phase, in line with our ambitions to
accelerate profitable growth and step up our efforts in employee engagement.”
For more information, please contact:
Gerd Götz
Philips Corporate Communications
Tel +31 20 59 77 213
email gerd.goetz@philips.com
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in
healthcare, lifestyle and technology, delivering products, services and solutions through the brand
promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately
126,000 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the
company is a market leader in medical diagnostic imaging and patient monitoring systems, energy
efficient lighting solutions, personal care and home appliances, as well as consumer electronics.
News from Philips is located at www.philips.com/newscenter.
Dates Referenced Herein and Documents Incorporated by Reference
