SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
------------------
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the period commencing July 16, 2002 through October 15, 2002
------------------
KONINKLIJKE PHILIPS ELECTRONICS N.V.
-----------------------------------------
(Name of registrant)
Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands
-----------------------------------------
(Address of principal executive offices)
Name and address of person authorized to receive notices
and communications from the Securities and Exchange Commission:
A. Westerlaken
Koninklijke Philips Electronics N.V.
Amstelplein 2
1096 BC Amsterdam - The Netherlands
This report comprises a copy of the Quarterly Report of the Philips Group for
the nine months ended September 30, 2002, dated October 15, 2002 as well as a
copy of the press releases entitled:
- "Philips concludes review of Components activities", dated October 9, 2002;
- "Philips CFO updates market on course of business", dated September 12,
2002;
- "Philips presents growth strategy for Semiconductor division", dated
September 12, 2002;
- "Philips places EUR 300 million Eurobond", dated August 28, 2002;
- "Philips to sell its Contract Manufacturing Services to Jabil", dated
August 28, 2002;
- "Philips and Rabobank announce Financing joint venture in North American
market", dated August 15, 2002;
- "Philips to sell its Communication, Security and Imaging business to
Bosch", dated August 7, 2002;
- "Philips to sell its X-Ray Analytical Business to Spectris for EUR 150
million", dated July 17, 2002.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf, by the
undersigned, thereunto duly authorized at Amsterdam, on the 15th day of October
2002.
KONINKLIJKE PHILIPS ELECTRONICS N.V.
/s/ G.J. Kleisterlee
G.J. KLEISTERLEE
(President, Chairman of the Board of Management)
/s/ J.H.M. Hommen
J.H.M. HOMMEN
(Vice-Chairman of the Board of Management and
Chief Financial Officer)
Q3 Quarterly report
October 15, 2002
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995 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.
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, the levels of marketing and promotional expenditures by Philips and
its competitors, raw materials and employee costs, changes in future 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. Market share estimates contained in this report are based on outside
sources such as specialized research institutes, industry and dealer panels,
etc. in combination with management estimates.
Report on the performance of the Philips Group
- all amounts in millions of euros unless otherwise stated
- the data included in this report are unaudited
Philips reports third quarter net loss of EUR 330 million - impairment
charges of EUR 387 million, mainly for Vivendi Universal
o SALES GROWTH OF 2% VS. Q3 2001
o INCOME FROM OPERATIONS OF EUR 135 MILLION
o CASH FLOW FROM OPERATIONS OF EUR 344 MILLION
o RECORD LOW INVENTORIES FOR THE FIFTH CONSECUTIVE QUARTER
o COST REDUCTION INITIATIVES ONGOING
The third quarter 2002
Philips recorded a net loss of EUR 330 million (a loss of EUR 0.25 per
share), including an impairment charge for Vivendi Universal (EUR 339
million), versus a loss of EUR 736 million (a loss of EUR 0.57 per share)
in the third quarter of 2001. Sales increased by 2% over the same period of
2001, driven by 9% higher volumes. Income from operations, including
positive special items of EUR 60 million, was a profit of EUR 135 million.
Excluding special items, income from operations showed an improvement of
EUR 301 million over the third quarter last year. Higher gross margins and
lower costs compensated for the increase in pension costs, which were
approximately EUR 125 million more than the third quarter last year.
Year-to-date overhead cost reduction programs delivered cost savings of EUR
176 million.
Unconsolidated companies contributed a loss of EUR 4 million, compared with
a loss of EUR 295 million in the third quarter of 2001. Cash flow from
operations amounted to EUR 344 million, more than doubling the cash flow of
Q3 2001.
Gerard Kleisterlee,
Philips' President and CEO:
"Whilst the economic environment remains difficult, we are focusing on what we
can control - reducing costs, managing the supply chain, and tackling our
problem areas with decisive actions. We have delivered positive comparable sales
growth, as we did in Q2, and through product and marketing innovation we are
gaining market share in DAP, Lighting, and parts of our Consumer Electronics and
Medical Systems businesses. Our divestment program is on track to deliver the
predicted EUR 1 billion cash for 2002-2003. We have announced action plans to
solve our problems at Components and reduce capacity at Semiconductors.
Underlying performance in our businesses has improved, as a result of cost
controls and better operating efficiencies, which is fundamental as we do not
see much of an economic improvement in the near future. We aim to maintain a
strong balance sheet through our cost reduction programs, consistently
record-low inventories, a faster cash conversion cycle, and further reducing
debt. Excluding special items, and despite the very difficult market
circumstances, we expect to report positive operating profits and net income
this year."
Net income (loss) excluding special items
----------------------------------------------------
in millions of euros unless otherwise stated
Q3 Q3
2002 2001
--------- ---------
As published (330) (736)
per common share in euros -
basic (0.25) (0.57)
Special items:
Affecting income from
operations 60 (236)
Affecting financial income
and expenses (339) --
Affecting results from
unconsolidated companies (7) (130)
Taxes related to special
items (10) 49
--------- ---------
Excluding special items (34) (419)
per common share in euros -
basic (0.03) (0.33)
Group sales and composition of changes (%)
----------------------------------------------------
in millions of euros unless other stated
Q3 Q3
2002 2001
--------- ---------
Philips group sales 7,313 7,187
% change from the previous
year:
Nominal change 2 (23)
Consolidation changes 5 (3)
Currency effects (5) (2)
Comparable change 2 (18)
Prices (7) (10)
Volume 9 (8)
Sales by sector
----------------------------------------------------
in millions of euros unless otherwise stated
% change
-----------------
Q3 Q3 nominal compa-
2002 2001 rable
------- ------- -------- --------
Lighting 1,130 1,170 (3) 1
Cons. Electronics 2,177 2,591 (16) (6)
DAP 519 488 6 12
Components 510 456 12 27
Semiconductors 965 898 7 15
Medical Systems 1,540 1,146 34 2
Miscellaneous 472 438 8 (2)
------- ------- -------- ---------
Philips group 7,313 7,187 2 2
Highlights in the 3rd quarter
Group sales and income
Sales in Q3 were EUR 7,313 million, 2% higher than last year. Year-over-year
positive growth was seen at Semiconductors, Components, Medical Systems and
Domestic Appliances and Personal Care (DAP), whilst sales fell sharply in
Wireless Phones and Digital Networks.
The comparable year-on-year sales growth of 2% in Q3 is slightly ahead of the 1%
increase in Q2, and was driven by 9% higher sales volumes. Price erosion
increased from 6% in Q2 to 7% in Q3.
Geographically, sales rose strongly in Asia
Pacific and North America, partly offset by lower sales in Latin America, while
sales in Europe were virtually unchanged from last year.
Income from operations was EUR 135 million including special items totaling a
positive EUR 60 million.
Special items included in the quarter were:
o Gains on the sale of Philips Broadband Networks (EUR 49 million) and
Analytical (EUR 85 million), partly offset by various divestment charges of
EUR 14 million.
o Gain on the sale of fixed assets of EUR 16 million.
o EUR 20 million in net releases of restructuring provisions.
o Acquisition related charges at Medical Systems of EUR 48 million (mainly
IT) and an impairment of EUR 48 million for the Healthcare product group.
Income from operations, excluding special items, was a profit of EUR 75 million
or 1.0% of sales, an improvement of EUR 301 million over the same quarter of
last year. The improvement in income from operations came despite a swing in
pension costs of approximately EUR 125 million.
Income (loss) from operations
---------------------------------------------------
in millions of euros
Q3 Q3
2002 2001
--------- ---------
Income from operations
excluding special items and
amortization of goodwill 75 (226)
Special items 60 (236)
Amortization of goodwill - (43)
-------- --------
Income (loss) from operations 135 (505)
Excluding special items, all sectors posted improved results in the quarter
benefiting from higher margins, cost savings and earlier restructurings. Results
at Lighting and DAP were particularly strong compared to Q3 of last year, mainly
driven by innovation and strict cost control.
Income (loss) from operations by sector
---------------------------------------------------
in millions of euros
Q3 Q3
2002 2001
--------- ---------
Lighting 141 103
Consumer Electronics 24 (45)
DAP 79 67
Components (67) (119)
Semiconductors (58) (291)
Medical Systems (11) (77)
Miscellaneous 94 (110)
Unallocated (67) (33)
-------- -------
Philips group 135 (505)
Financial income and expenses amounted to a net expense of EUR 449 million
compared to a net expense of EUR 90 million in the third quarter of 2001. Net
interest expense was EUR 90 million, EUR 10 million lower than Q3 2001.
Financial expense in this year's third quarter included a EUR 339 million
impairment charge for Vivendi Universal.
Income tax has been calculated at a tentative tax rate of 21%, excluding
impairment for Vivendi Universal, in line with the previous quarter.
Results relating to unconsolidated companies
---------------------------------------------------
in millions of euros
Q3 Q3
2002 2001
--------- ---------
Results excluding special
items and amortization of 3 (104)
goodwill
Special items (7) (130)
Amortization of goodwill - (61)
-------- --------
Total (4) (295)
Philips' results relating to unconsolidated companies amounted to a loss of EUR
4 million compared to a loss of EUR 295 million in the same quarter of last
year. Excluding a EUR 7 million restructuring charge for LG.Philips Displays,
results relating to unconsolidated companies were a profit of EUR 3 million.
Sequentially, results relating to unconsolidated companies excluding special
items fell by EUR 182 million, mainly due to lower contributions from LG.Philips
LCD and TSMC.
(CASH FLOW FROM OPERATING ACTIVITIES CHART)
Cash flows and financing
Cash flow from operating activities amounted to EUR 344 million. The improvement
over Q3 2001 came mainly from better income from operations.
Net capital expenditures of EUR 318 million, were 11% lower than last year,
reflected in most sectors. Cash used for investing activities included a capital
contribution of EUR 21 million for the newly formed financing joint venture,
Philips Medical Capital. The sale of Analytical and Philips Broadband Networks
contributed EUR 220 million to cash flow from investing activities. In 2001,
cash flow from investing activities included an outflow of EUR 1.8 billion
associated with the acquisition of Agilent Healthcare Solutions Group (HSG).
(INVENTORIES AS A % OF SALES CHART)
The cash conversion cycle improved from 61 days to 40 days compared to last
year. The improvement is due to better working capital management, mainly at
Consumer Electronics and Components (especially Optical Storage). Inventories as
a percentage of sales were reduced from 14.9% last year to 14.1% and came to a
record-low for the third quarter, the fifth consecutive record.
(NET DEBT AND GROUP EQUITY CHART)
The net debt: group equity ratio ended the quarter at 30:70. Compared to the
last quarter, the net debt position decreased by EUR 216 million to EUR 6.9
billion. Group equity came to EUR 16.1 billion and was negatively impacted in Q3
by (non-cash) fair-value adjustments of EUR 302 million. In addition, net income
included an (non-cash) impairment charge of EUR 339 million for the impairment
of Vivendi Universal.
(EMPLOYEES CHART)
Employment
At the end of September 2002, the number of employees was 183,447, slightly
lower than the end of Q2. Divestments led to the reduction of 1,306 employees.
Permanent employees were reduced by 1,012, offset by an increase of 2,124
temporary employees.
Lighting: key data
---------------------------------------------------
in millions of euros unless otherwise stated
Q3 Q3
2002 2001
--------- --------
Sales 1,130 1,170
Sales growth
% increase, nominal (3) (4)
% increase, comparable 1 (2)
Income from operations 141 103
IFO excluding special items and
amortization of goodwill: 143 105
as a % of sales 12.7 9.0
Net operating capital (NOC) 1,869 2,084
Number of employees (FTEs) 47,776 49,088
Sales and income from operations per sector
Comparable sales at Lighting increased 1% compared to a decrease of 6% in Q2.
Sales of Lamps continued to develop favorably, notably in Asia, whilst sales of
Luminaires were down due to general market softness. Income from operations
increased EUR 38 million over the same period last year. The better operational
performance resulted from good marketing management, tight cost controls and an
improved product mix. The business showed strong positive cash flow.
Consumer Electronics: key data
---------------------------------------------------
in millions of euros unless otherwise stated
Q3 Q3
2002 2001
--------- --------
Sales 2,177 2,591
Sales growth
% increase, nominal (16) (18)
% increase, comparable (6) (17)
Income from operations 24 (45)
IFO excluding special items and
amortization of goodwill: 22 5
as an % of sales 1.0 0.2
Net operating capital (NOC) 573 1,333
Number of employees (FTEs) 26,492 35,098
Sales at Consumer Electronics decreased by 16%, mainly attributable to Digital
Networks, Licenses and Wireless Phones, however, the comparable decrease was 6%.
Income from operations came to a profit of EUR 24 million in Q3 and was EUR 69
million better than last year. The improvement was driven by Television, Audio
and VCR, in particular in Europe. In North America income improved over Q2, and
the loss of EUR 19 million was more than halved from a year ago.
Performance at Digital Networks was affected by continuing weakness in its main
markets. Provisions were made for certain business risks. Excluding the
provisions, the set-top box business showed a small operating profit. License
income of EUR 42 million was virtually unchanged from Q2.
DAP: key data
---------------------------------------------------
in millions of euros unless otherwise stated
Q3 Q3
2002 2001
--------- --------
Sales 519 488
Sales growth
% increase, nominal 6 0
% increase, comparable 12 (6)
Income from operations 79 67
IFO excluding special items and
amortization of goodwill: 79 70
as a % of sales 15.2 14.3
Net operating capital (NOC) 682 788
Number of employees (FTEs) 9,652 10,039
DAP's third quarter sales grew a comparable 12% on the same period of last year,
led by the Sonicare toothbrush and Senseo coffee machine, both driven by
regional market penetrations. In addition, the launch of the new Sensotec Shaver
in the US and Europe was positively received by the market. Relative to last
year, comparable profitability increased with 0.9% to 15.2%, as a result of
higher gross margins combined with an ongoing cost reduction and efficiency
program.
Components: key data
---------------------------------------------------
in millions of euros unless otherwise stated
Q3 Q3
2002 2001
--------- --------
Sales 510 456
Segment revenues 575 546
Sales growth
% increase, nominal 12 (63)
% increase, comparable 27 (36)
Income from operations (67) (119)
IFO excluding special items and
amortization of goodwill: (67) (116)
as a % of segment revenues (11.7) (21.2)
as a % of sales (13.1) (25.4)
Net operating capital (NOC) 350 492
Number of employees (FTEs) 13,545 16,023
Components' third quarter sales rose 27% in comparable terms from last year,
mainly driven by Mobile Display Systems and Optical Storage. Mobile Display
sales have improved by more than 50% from last year, and volumes have doubled.
The color program has been executed as planned, and revenues from color displays
were approximately 20% of the total.
Income from operations, excluding special items, improved by EUR 49 million,
compared to the third quarter of last year. Optical Storage accounted for more
than 50% of the losses in Components in the quarter.
Semiconductors: key data
---------------------------------------------------
in millions of euros unless otherwise stated
Q3 Q3
2002 2001
--------- --------
Sales 965 898
Segment revenues 1,105 1,018
Sales growth
% increase, nominal 7 (43)
% increase, comparable 15 (43)
Income from operations (58) (291)
IFO excl. special items and
amortization of goodwill: (65) (247)
as a % of segment revenues (5.9) (24.2)
as a % of sales (6.7) (27.5)
Net operating capital (NOC) 4,017 4,980
Number of employees (FTEs) 32,122 34,064
Semiconductors' segment revenues were nominally 8% higher compared with last
year's third quarter, but 12% lower sequentially. The drop in sales was mainly
the result of declines in almost all businesses. Utilization rates of 58% in Q3
were slightly lower than the 60% in Q2.
Despite the sequential sales decline, losses stayed at a level of EUR 58
million. The book-to-bill ratio at the end of Q3 was 0.74 versus 1.0 at the end
of Q2, a continuing indication of the short-term order cycle being experienced
in the semiconductor industry.
Medical Systems: key data
---------------------------------------------------
in millions of euros unless otherwise stated
Q3 Q3
2002 2001
--------- --------
Sales 1,540 1,146
Sales growth
% increase, nominal 34 55
% increase, comparable 2 12
Income from operations (11) (77)
IFO excluding special items and
amortization of goodwill: 80 73
as a % of sales 5.2 6.4
Net operating capital (NOC) 5,105 4,375
Number of employees (FTEs) 32,036 25,120
Nominal sales growth of 34% at Medical Systems' was almost entirely driven by
the new acquisitions. On a comparable basis order intake grew 6% compared to Q3
last year. Third quarter sales of EUR 38 million were delayed to the fourth
quarter, due to new systems configuration.
Income from operations was a loss of EUR 11 million and was negatively impacted
by EUR 91 million special charges:
o An impairment charge for the Health Care Products (HCP) business amounting
to EUR 48 million.
o Other (mainly acquisition related) charges amounting to EUR 43 million.
Income from operations excluding special items came to EUR 80 million, an
improvement of EUR 7 million over Q3 of last year. There were also a number of
incidental items totaling EUR 28 million, mainly following the acquisition of
Marconi Medical Systems, which affected income from operations of Q3
unfavorably.
Miscellaneous: key data
---------------------------------------------------
in millions of euros unless otherwise stated
Q3 Q3
2002 2001
--------- --------
Sales 472 438
Sales growth
% increase, nominal 8 (39)
% increase, comparable (2) (17)
Income from operations 94 (110)
IFO excluding special items and
amortization of goodwill: (50) (89)
as a % of sales (10.6) (20.3)
Net operating capital (NOC) 41 385
Number of employees (FTEs) 17,327 16,165
Sales in Miscellaneous increased 8% in nominal terms, but showed a decrease of
2% on a comparable basis. In total three businesses have been divested in the
third quarter (HS&T, Analytical, and PBN) delivering EUR 226 million of cash.
Income from operations came to a profit of EUR 94 million, including gains on
sale of businesses of EUR 134 million. Releases of restructuring provisions
contributed EUR 18 million to income, while certain divestment charges had a
negative impact of EUR 8 million.
Unallocated: key data
---------------------------------------------------
in millions of euros unless otherwise stated
Q3 Q3
2002 2001
--------- --------
Corporate and regional overheads (69) (107)
Pensions 2 74
-------- --------
Income from operations (67) (33)
Number of employees (FTEs) 4,497 5,948
Corporate and regional overhead costs in Unallocated were 36% lower than the
same period last year. Pension costs in this sector were EUR 72 million higher
due to the USA and UK and lower pension credits in the Netherlands. At the end
of Q3 Philips' pension fund in the Netherlands remained overfunded, while the
funds in the U.S. and U.K. had a small underfunding.
Results relating to unconsolidated companies
(excluding special items and amortization of
goodwill)
---------------------------------------------------
in millions of euros
Q3 Q3
2002 2001
--------- ---------
SSMC (13) (20)
LG.Philips LCD 28 (43)
LG.Philips Displays 4 (62)
Others (16) 21
-------- --------
Total 3 (104)
Results related to unconsolidated companies
Results relating to unconsolidated companies, excluding special items, improved
with EUR 107 million over last year. Sequentially, results fell by EUR 182
million, mainly due to lower contributions from LG.Philips LCD and TSMC.
LG.Philips Displays achieved a profit of EUR 4 million, excluding special items,
compared to a loss of EUR 21 million in the second quarter. An improving sales
trend was visible during the quarter.
LG.Philips LCD joint venture (100%)
---------------------------------------------------
in millions of euros unless
otherwise stated
Q3 Q3
2002 2001
-------- -------
Sales 693 538
Sales growth
% increase, nominal 29 (14)
Income from operations 86 (69)
as a % of sales 12.4 (12.8)
Net income (100%) 56 (86)
Net income (Philips share = 50%) 28 (43)
Net income (Philips share = 50%,
incl. amortization of
goodwill) 28 (64)
Net operating capital (NOC) 2,791 2,644
Number of employees (FTEs) 5,727 4,674
LG.Philips LCD joint venture
Q3 witnessed the LCD market moving away from the peak price levels evident in
the second quarter. Demand slowed sequentially, but the largest impact came from
average prices declines of approximately 20%. Despite the panel surplus in the
market, LG.Philips LCD had high utilization levels, and consolidated its number
one position in monitors.
Philips' share in net income of EUR 28 million showed a reduction of EUR 99
million sequentially, although Q2 was favorably impacted by currency gains.
Net income (loss) excluding special items
---------------------------------------------------
in millions of euros unless otherwise stated
JANUARY- January-
SEPT. Sept.
2002 2001
--------- ---------
As published (1,676) (1,413)
per common share in euros -
basic (1.31) (1.10)
Special items:
Affecting income from 218 (738)
operations
Affecting financial income
and expenses (1,808) -
Affecting results from
unconsolidated companies (191) (203)
Taxes related to special
items (22) 204
-------- --------
Excluding special items 127 (676)
per common share in euros -
basic 0.10 (0.53)
Highlights in the 1st nine months
Sales in the first nine months amounted to EUR 22,897 million, a decrease of 1%
over the same period of 2001. Income from operations, excluding special items,
came to a profit of EUR 155 million, an improvement of EUR 225 million compared
to last year. Net pension costs were approximately EUR 400 million higher than
in the same period of last year. Gross margins improved whilst costs were
reduced, benefiting from last year's restructurings. Year-to-date overhead cost
reduction programs delivered cost savings of EUR 176 million. Special items
affecting financial income and expenses related mainly to the impairment charges
for Vivendi Universal (EUR 1,855 million). In the first nine months results from
unconsolidated companies, excluding special items and amortization of goodwill,
came to a profit of EUR 260 million, an improvement of almost EUR 400 million
over the same period of last year. This substantial improvement came mainly from
LG.Philips LCD.
Subsequent Events and other information
On October 9, Philips announced the results of a comprehensive review of its
Components division, involving a restructuring charge in the fourth quarter of
approximately EUR 175 million. This brings the total expected restructuring
charges for the fourth quarter to:
o EUR 200-225 million for capacity reduction at Semiconductors.
o Approximately EUR 175 million for the aforementioned refocusing at
Components.
o Additional restructuring charges could be announced during Q4, mostly
related to the sale of certain business activities, but will be mainly
compensated by gains made on the disposal of those activities.
The market value of certain securities held by Philips is currently below cost.
If this situation continues, it could lead to impairment in the fourth quarter.
The most significant consideration in this respect is Philips' stake in Atos
Origin, the market value of which was approximately EUR 800 million below book
value at the end of Q3.
Philips will review the goodwill it is carrying on the balance sheet for its
participation in LG. Philips Displays in the fourth quarter.
Cash from the sale of business activities will generate approximately EUR 400
million cash flow during Q4.
Outlook
On the basis of current information, we expect the fourth quarter to show the
usual seasonal improvement. We expect to see this reflected in virtually all
sectors and in the bottom line of our financial statements, excluding special
items.
We will continue to focus on implementing our cost reduction initiatives,
building on the progress we have made in managing our supply chain, maintaining
positive cash flow, and keeping our balance sheet healthy. Customer intimacy,
and product and marketing innovation remain central to our business planning.
Amsterdam, October 15, 2002
Board of Management
Statements of income
all amounts in millions of euros unless otherwise stated
--------------------------------------------------------------------------------
Consolidated statements of income
3rd quarter January to September
------------------------ ------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Sales 7,313 7,187 22,897 23,077
Cost of sales (5,163) (5,320) (15,812) (16,417)
---------- ---------- ---------- ----------
GROSS MARGIN 2,150 1,867 7,085 6,660
Research and development expenses (756) (711) (2,301) (2,404)
Selling expenses (970) (1,173) (3,559) (3,554)
General and administrative expenses (347) (252) (1,068) (901)
Write-off of acquired in-process R&D -- (51) -- (51)
Restructuring and impairment charges (30) (112) (80) (804)
---------- ---------- ---------- ----------
(2,103) (2,299) (7,008) (7,714)
---------- ---------- ---------- ----------
Other income (expenses) - net 88 (73) 296 117
---------- ---------- ---------- ----------
Income (loss) from operations 135 (505) 373 (937)
Financial income and expenses:
- interest (90) (100) (299) (256)
- impairment charges (339) -- (1,875) --
- other (20) 10 100 8
---------- ---------- ---------- ----------
(449) (90) (2,074) (248)
---------- ---------- ---------- ----------
Income (loss) before taxes (314) (595) (1,701) (1,185)
Income taxes (5) 149 1 298
---------- ---------- ---------- ----------
Income (loss) after taxes (319) (446) (1,700) (887)
Results relating to unconsolidated companies (4) (295) 45 (523)
Minority interests (7) 5 (21) (3)
---------- ---------- ---------- ----------
NET INCOME (LOSS) (330) (736) (1,676) (1,413)
INCOME (LOSS) FROM OPERATIONS
as a % of sales 1.8 (7.0) 1.6 (4.1)
as a % of net operating capital (RONA) 3.8 (9.3)
Weighted average number of common shares
outstanding during the period (in thousands):
(after deduction of treasury stock)
- basic 1,274,861 1,279,548
- diluted 1,280,106 1,288,828
NET EARNINGS PER COMMON SHARE IN EUROS:
- basic (0.25) (0.57) (1.31) (1.10)
- diluted (0.25) (0.57) (1.31) (1.10)
The Group financial statements have been prepared on a basis consistent with US
GAAP, which differs in certain respects from Dutch GAAP. Net income determined
in accordance with Dutch GAAP amounted to a loss of EUR 2,208 million in the
first nine months of 2002, compared to a loss of EUR 1,463 million in the same
period last year. These aggregate amounts result in basic earnings per common
share of a loss of EUR 1.73 in January-September 2002 compared to a loss of
EUR 1.14 last year. As of January 1, 2002 the US GAAP treatment of available for
sale securities and the US GAAP rules for profit recognition on sale and
lease-back transactions are also applied for the determination of Dutch GAAP net
income and stockholders' equity; the remaining difference between Dutch GAAP and
US GAAP is caused by the fact that goodwill is no longer amortized under US GAAP
from January 1, 2002 but instead tested for impairment.
Balance sheets and additional ratios
all amounts in millions of euros unless otherwise stated
--------------------------------------------------------------------------------
Consolidated balance sheets
Sept. 30, Dec. 31, Sept. 30,
2002 2001 2001
--------- --------- ---------
Cash and cash equivalents 822 890 698
Securities 284 692 456
Receivables 5,934 6,154 5,999
Inventories 4,535 4,290 5,066
Unconsolidated companies 7,683 7,552 7,411
Other non-current financial assets 878 2,789 2,349
Non-current receivables 3,501 3,596 3,044
Property, plant and equipment 6,645 7,718 7,584
Intangible assets - net 5,021 5,521 4,523
--------- --------- ---------
TOTAL ASSETS 35,303 39,202 37,130
Accounts payable and other liabilities 7,932 8,234 7,230
Debt 7,730 7,866 7,590
Provisions 3,532 3,740 3,326
Minority interests 192 202 208
Stockholders' equity 15,917 19,160 18,776
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 35,303 39,202 37,130
Number of common shares outstanding at the
end of period
o shares in thousands 1,274,976 1,274,172 1,273,379
RATIOS
Stockholders' equity, per common share in euros 12.48 15.04 14.75
Inventories as a % of sales 14.1 13.3 14.9
Outstanding trade receivables, in months' sales 1.6 1.5 1.7
Net debt : group equity ratio 30:70 26:74 27:73
Stockholders' equity determined in accordance with Dutch GAAP amounted to
EUR 15,252 million as of September 30, 2002 compared to EUR 15,917 million under
US GAAP.
The deviation is caused by the fact that goodwill under Dutch GAAP has to
be amortized and charged to income, whereas under US GAAP it is no longer
amortized, but instead tested for impairment.
Statements of cash flows
all amounts in millions of euros unless otherwise stated
--------------------------------------------------------------------------------
Consolidated statements of cash flows*
3rd quarter January to September
-------------------- ---------------------
2002 2001 2002 2001
------ ------ ------ ------
Cash flows from operating activities:
Net income (loss) (330) (736) (1,676) (1,413)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 497 600 1,520 1,950
Impairment financial assets 339 -- 1,875 --
Net gain on sale of investments (142) 25 (471) (281)
(Income) loss from unconsolidated companies
(net of dividends received) 10 280 (37) 566
Minority interests (net of dividends paid) 7 (31) 21 (23)
Decrease (increase) in working capital 63 261 (350) (957)
(Increase) decrease in non-current receivables (86) (210) 26 (338)
Decrease in provisions (21) (47) (117) (24)
Other items 7 18 (5) 81
------ ------ ------ ------
NET CASH PROVIDED BY (USED FOR)OPERATING
ACTIVITIES 344 160 786 (439)
Cash flows from investing activities:
Purchase of intangible assets (software) (28) (49) (108) (151)
Capital expenditures on property, plant and
equipment (337) (327) (782) (1,794)
Proceeds from disposals of property, plant
and equipment 47 17 310 83
Proceeds from sale (purchase) of securities,
other non-current financial assets and
derivatives 63 (17) 395 467
(Purchase of businesses) proceeds
from sale of businesses 176 (1,653) (206) (1,587)
------ ------ ------ ------
NET CASH USED FOR INVESTING ACTIVITIES (79) (2,029) (391) (2,982)
CASH FLOWS BEFORE FINANCING ACTIVITIES 265 (1,869) 395 (3,421)
-------------------
* For a number of reasons, principally the effects of translation differences
and consolidation changes, certain items in the statements of cash flows do
not correspond to the differences between the balance sheet amounts for the
respective items.
Statements of cash flows (continued)
all amounts in millions of euros unless otherwise stated
--------------------------------------------------------------------------------
Consolidated statements of cash flows (continued)*
3rd quarter January to September
-------------------- ---------------------
2002 2001 2002 2001
------- -------- ------- -------
CASH FLOWS BEFORE FINANCING ACTIVITIES 265 (1,869) 395 (3,421)
Cash flows from financing activities:
(Decrease) increase in debt (125) 1,814 96 3,874
Treasury stock transactions 11 (46) (30) (340)
Dividends paid -- -- (459) (458)
------ ------ ------ -------
NET CASH (USED FOR) PROVIDED BY FINANCING
ACTIVITIES (114) 1,768 (393) 3,076
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 151 (101) 2 (345)
Effect of changes in exchange rates and
consolidations on cash positions (12) (117) (70) (46)
Cash and cash equivalents at beginning of
the period 683 916 890 1,089
------ ------ ------ -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 822 698 822 698
-----------------
* For a number of reasons, principally the effects of translation differences
and consolidation changes, certain items in the statements of cash flows do
not correspond to the differences between the balance sheet amounts for the
respective items.
Statement of changes in stockholders' equity
all amounts in millions of euros unless otherwise stated
--------------------------------------------------------------------------------
Consolidated statements of changes in stockholders' equity
January to September 2002
----------------------------------------------------------------
Accumulated other com-
prehensive income (loss)
-------------------------
Capital in Available
Common excess of Retained Translation for sale
stock par value earnings differences securities
-------- ---------- -------- ----------- ----------
Balance as of January 1, 2002 263 13 20,403 (766) 566
Net income (loss) (1,676)
Net current period change (538) (2,328)
Reclassifications into income (40) 1,808
------- ------- ------
TOTAL COMPREHENSIVE INCOME (LOSS) (1,676) (578) (520)
Dividend payable (459)
Purchase of treasury stock
Re-issuance of treasury stock
Stock options accrual (1) 7
------- ------- ------- ------- -------
Balance as of September 30, 2002 263 12 18,275 (1,344) 46
======= ======= ======= ======= =======
January to September 2002
--------------------------------------------------------
Accumulated other com-
prehensive income (loss)
------------------------
Minimum Treasury Total
pension Cash flow shares at stock-holders'
liability hedges cost equity
--------- --------- --------- --------------
Balance as of January 1, 2002 (18) (7) (1,294) 19,160
Net income (loss) (1,676)
Net current period change 4 (2,862)
Reclassifications into income 7 1,775
------- ------- -------
TOTAL COMPREHENSIVE INCOME (LOSS) 7 4 (2,763)
Dividend payable (459)
Purchase of treasury stock (102) (102)
Re-issuance of treasury stock 75 82
Stock options accrual (1)
------- ------- ------- -------
Balance as of September 30, 2002 (11) (3) (1,321) 15,917
======= ======= ======= =======
Product sectors
all amounts in millions of euros unless otherwise stated
--------------------------------------------------------------------------------
Segment revenues and income from operations
3rd quarter
--------------------------------------------------------------------------------
2002 2001
------------------------------- ----------------------------------------------
segment Income (loss) from segment
revenues operations revenues Income (loss) from operations*
-------------------- -----------------------------------
amount as a % of before as a % of
segment US GAAP amortization segment
revenues basis goodwill revenues
Lighting 1,136 141 12.4 1,176 103 105 8.9
Consumer Electronics:
Mainstream CE 2,053 9 0.4 2,309 (105) (105) (4.5)
Digital Networks 79 (27) (34.2) 194 (59) (59) (30.4)
Licenses 61 42 68.9 142 119 119 83.8
------ ------ ------- ------ ------ ------ -----
2,193 24 1.1 2,645 (45) (45) (1.7)
DAP 524 79 15.1 492 67 70 14.2
Components 575 (67) (11.7) 546 (119) (119) (21.8)
Semiconductors 1,105 (58) (5.2) 1,018 (291) (279) (27.4)
Medical Systems 1,542 (11) (0.7) 1,146 (77) (51) (4.5)
Miscellaneous 587 94 16.0 471 (110) (110) (23.4)
Unallocated (67) (33) (33)
------ ------ ------ ------ ------
Total 7,662 135 7,494 (505) (462)
Intersegment revenues (349) (307)
------ ------
SALES 7,313 7,187
INCOME (LOSS) FROM OPERATIONS
AS A % OF SALES 1.8 (7.0) (6.4)
-----------------
* For the sake of comparison with 2002, income from operations 2001 is also
reported before amortization of goodwill.
Product sectors (continued)
all amounts in millions of euros unless otherwise stated
--------------------------------------------------------------------------------
Segment revenues and income from operations
January to September
--------------------------------------------------------------------------------
2002 2001
------------------------------- ----------------------------------------------
segment Income (loss) from segment
revenues operations revenues Income (loss) from operations*
-------------------- -----------------------------------
amount as a % of before as a % of
segment US GAAP amortization segment
revenues basis goodwill revenues
Lighting 3,571 419 11.7 3,764 440 446 11.8
Consumer Electronics:
Mainstream CE 6,339 15 0.2 7,085 (644) (644) (9.1)
Digital Networks 240 (68) (28.3) 567 (283) (283) (49.9)
Licenses 205 153 74.6 313 285 285 91.1
------- ------- ------ ------- ------- ------- ------
6,784 100 1.5 7,965 (642) (642) (8.1)
DAP 1,512 218 14.4 1,464 191 200 13.7
Components 1,707 (103) (6.0) 3,055 (528) (528) (17.3)
Semiconductors 3,501 (225) (6.4) 3,867 (315) (279) (7.2)
Medical Systems 4,965 70 1.4 2,920 (34) 41 1.4
Miscellaneous 1,887 129 6.8 1,667 34 36 2.2
Unallocated (235) (83) (82)
------- ------- ------- ------- -------
Total 23,927 373 24,702 (937) (808)
Intersegment revenues (1,030) (1,625)
------- ------
SALES 22,897 23,077
INCOME (LOSS) FROM OPERATIONS
AS A % OF SALES 1.6 (4.1) (3.5)
-----------------
* For the sake of comparison with 2002, income from operations 2001 is also
reported before amortization of goodwill.
Product sectors and main countries
all amounts in millions of euros unless otherwise stated
--------------------------------------------------------------------------------
Sales and total assets
Sales (to third
parties) Total assets
---------------------- ----------------------
January to September Sept. 30, Sept. 30,
2002 2001 2002 2001
---------- --------- ---------- ----------
Lighting 3,550 3,733 2,804 3,003
Consumer Electronics 6,724 7,804 3,219 4,089
DAP 1,497 1,449 1,124 1,167
Components 1,526 2,197 4,379 4,154
Semiconductors 3,083 3,449 7,524 8,396
Medical Systems 4,961 2,918 7,301 6,137
Miscellaneous 1,556 1,527 2,992 2,854
Unallocated 5,960 7,330
---------- --------- ---------- ----------
TOTAL 22,897 23,077 35,303 37,130
--------------------------------------------------------------------------------
Sales and long-lived assets
Sales (to third
parties) Long-lived assets*
---------------------- ----------------------
January to September Sept. 30, Sept. 30,
2002 2001 2002 2001
---------- --------- ---------- ----------
Netherlands 1,095 1,102 1,682 1,791
United States 6,957 6,146 5,969 5,991
Germany 1,652 1,862 687 642
France 1,297 1,351 387 344
United Kingdom 1,037 1,149 197 200
China 1,789 1,675 435 498
Other countries 9,070 9,792 2,309 2,641
---------- --------- ---------- ----------
TOTAL 22,897 23,077 11,666 12,107
---------------
* Includes property, plant and equipment and intangible assets - net.
Philips quarterly statistics
all amounts in millions of euros unless otherwise stated; percentage increases
always in relation to the corresponding period of previous year
2001 2002
----------------------------------------------- --------------------------------------------
1st 2nd 3rd 4th 1st 2nd 3rd 4th
quarter quarter quarter quarter quarter quarter quarter quarter
-------- -------- -------- --------- -------- -------- -------- --------
Sales 8,208 7,682 7,187 9,262 7,598 7,986 7,313
% increase (1) (16) (23) (16) (7) 4 2
Income (loss) from operations
before amortization goodwill 358 (704) (462) (407) 73 165 135
as a % of sales 4.4 (9.2) (6.4) (4.4) 1.0 2.1 1.8
% increase -- -- -- -- (80) -- --
Income (loss) from operations 313 (745) (505) (458) 73 165 135
as a % of sales 3.8 (9.7) (7.0) (4.9) 1.0 2.1 1.8
% increase -- -- -- -- (77) -- --
Net income (loss) 93 (770) (736) (1,062) 9 (1,355) (330)
% increase -- -- -- -- (90) -- --
per common share in euros 0.07 (0.60) (0.57) (0.84) 0.01 (1.07) (0.25)
January- January- January- January- January- January- January- January-
March June September December March June September December
-------- -------- --------- --------- -------- --------- --------- --------
Sales 8,208 15,890 23,077 32,339 7,598 15,584 22,897
% increase (1) (9) (14) (15) (7) (2) (1)
Income (loss) from operations 358 (346) (808) (1,215) 73 238 373
before amortization goodwill
as a % of sales 4.4 (2.2) (3.5) (3.8) 1.0 1.5 1.6
% increase -- -- -- -- (80) -- --
Income (loss) from operations 313 (432) (937) (1,395) 73 238 373
as a % of sales 3.8 (2.7) (4.1) (4.3) 1.0 1.5 1.6
% increase -- -- -- -- (77) -- --
as a % of net operating
capital (RONA) 10.9 (6.9) (9.3) (9.3) 2.0 3.4 3.8
Net income (loss) 93 (677) (1,413) (2,475) 9 (1,346) (1,676)
% increase -- -- -- -- (90) -- --
as a % of stockholders'
equity (ROE) 2.1 (7.1) (9.8) (11.9) 0.2 (14.7) (13.3)
per common share in euros 0.07 (0.53) (1.10) (1.94) 0.01 (1.06) (1.31)
period ending 2001 period ending 2002
----------------------------------- -----------------------------------------
Inventories as a % of sales 15.6 16.0 14.9 13.3 14.0 13.4 14.1
Average collection period
of trade receivables
in months' sales 1.6 1.7 1.7 1.5 1.7 1.6 1.6
Net debt: group equity ratio 17:83 20:80 27:73 26:74 28:72 30:70 30:70
Total employees (in thousands) 219 212 192 189 186 184 183
Information also available on Internet, address: www.investor.philips.com
Printed in the Netherlands
July 17, 2002
Philips To Sell Its X-Ray Analytical Business To Spectris For EUR 150 Million
Amsterdam, the Netherlands and Egham, United Kingdom, July 17, 2002 - Royal
Philips Electronics (AEX: PHI, NYSE: PHG) and Spectris plc (LSE: SXS), a
precision instrumentation and controls company, announced today they have
reached a preliminary agreement that Philips will sell its x-ray analytical
business to Spectris for a total amount of EUR 150 million. Completion of the
transaction, which is subject to customary consultation procedures with trade
unions and works councils and clearance by the competition authorities, is
expected to take place later this year.
"This decision is part of the Philips strategy to continue focusing on our main
activities," says Tom Verbeek, CEO of Philips Corporate Investments. "We are
pleased to have found a buyer for the major part of our analytical business,
well suited to exploit the strengths of this business for further growth and
expansion into new markets. We are reviewing our options with respect to the
remaining parts; opto-acoustic and ellipsometry. Philips Analytical is one of
twenty-seven businesses that are being prepared for divestment or merger
generating, as announced earlier, an estimated EUR 1 billion."
Hans Nilsson, Chief Executive of Spectris, commented: "This acquisition is in
line with our strategy. Philips Analytical's market-leading x-ray-based
technologies complement our existing instrumentation businesses and enable us to
enter new markets such as materials research and life sciences."
The acquisition of Philips Analytical is in line with the Spectris strategy to
focus on niche businesses with good growth prospects and market-leading
positions, supplying high margin products developed using proprietary
technology. The business, which will be renamed PANalytical, is a logical
addition to the existing Spectris instrumentation businesses and will enable the
company to extend its product and service offering in the laboratory sector and
in industrial process control. PANalytical will form part of the Process
Technology sector.
With its headquarters in Almelo, the Netherlands, Philips Analytical's x-ray
activities employ approximately 850 people in development, production, sales,
service and technical support operations around the world. Philips Analytical's
x-ray business had sales in 2001 of EUR 159 million. All employees and the
existing management team of Philips Analytical's x-ray business will transfer to
Spectris. Philips Analytical's opto-acoustic, located in Boston, United States
(approximately 35 employees) and ellipsometry activities, located in Almelo, the
Netherlands and Munich, Germany (approximately 20 employees) will not be part of
this transaction.
Philips Analytical is a world leader in analytical x-ray systems, utilising both
x-ray diffraction (XRD) and x-ray fluorescence (XRF) technologies. XRD
instruments are mainly used in industrial and scientific research laboratories
to determine the structural characteristics of a wide range of materials in the
pharmaceuticals, biotechnology, life sciences, semiconductor and applications
materials research and engineering. XRF technology is used to measure the
composition and purity of
materials and is mainly applied in industrial quality control and in process
control for manufacturing processes in industries such as metals and mining,
construction materials, chemicals and petrochemicals.
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of EUR 32.3 billion in
2001. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:
PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips
is located at --- > www.philips.com/newscenter
Safe Harbor Statement
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. 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, the levels of marketing and promotional expenditures by Philips and
its competitors, raw materials and employee costs, changes in future exchange
and interest rates (in particular, changes in the euro and the US dollar can
materially effect results), tax rates and future business combinations,
acquisitions or dispositions and the rate of technical changes. Market share
estimates contained in this report are based on outside sources such as
specialized research institutes, industry and dealer panels, etc. in combination
with management estimates.
August 07, 2002
Philips to Sell Its Communication, Security and Imaging Business to Bosch
Amsterdam, The Netherlands and Ottobrunn, Germany - August 7, 2002 - Royal
Philips Electronics (AEX: PHI, NYSE: PHG) and Robert Bosch GmbH (Bosch), today
announced a preliminary agreement regarding the sale of Philips' business unit
Communication, Security & Imaging (CSI). Completion of the transaction, which is
subject to customary consultation procedures with trade unions and workers
councils and clearance by the competition authorities, is expected to take place
later this year. Financial details were not disclosed.
Philips CSI is headquartered in Eindhoven, the Netherlands, operating in 35
countries worldwide and employing approximately 1300 people, all of whom will
transfer to Bosch. CSI designs, manufactures, sells and supports a broad range
of professional communication and security products and systems including
closed-circuit video surveillance (CCTV), congress and public address systems.
CSI is profitable with sales of over EUR 300 million in 2001.
With the acquisition of Philips CSI, which will be placed within Bosch
Sicherheitssysteme GmbH, Bosch strengthens its market position in systems and
components for video surveillance, where it already employs 4200 people. This
acquisition will also give Bosch access to international markets for security
systems, especially in North America, South East Asia and China.
About Bosch
The Bosch Group, headquartered in Stuttgart, Germany, is a diversified, global
enterprise serving customers in 130 countries in three business sectors:
Automotive Technology - where the company is the world's second largest
manufacturer -, Industrial Technology, as well as Consumer Goods and Building
Technology. In 2001, Bosch worldwide sales were EUR 34 billion. The company has
221,000 employees. News from Bosch is located at www.bosch-presse.de
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of EUR 32.3 billion in
2001. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:
PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips
is located at --- > www.philips.com/newscenter
Safe Harbor Statement
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. 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, the levels of marketing
and promotional expenditures by Philips and its competitors, raw materials and
employee costs, changes in future exchange and interest rates (in particular,
changes in the euro and the US dollar can materially effect results), tax rates
and future business combinations, acquisitions or dispositions and the rate of
technical changes. Market share estimates contained in this report are based on
outside sources such as specialized research institutes, industry and dealer
panels, etc. in combination with management estimates.
August 15, 2002
Philips and Rabobank Announce Financing Joint Venture in North American Market
Amsterdam, Eindhoven, The Netherlands, August 15, 2002 - Philips Medical
Systems, a division of Royal Philips Electronics (NYSE: PHG, AEX: PHI), and
Rabobank Group's subsidiary De Lage Landen International today announced the
setting up of a joint venture to provide financing for the purchase of the full
range of diagnostic imaging equipment produced by Philips Medical Systems
throughout the United States. The new joint venture will be called Philips
Medical Capital and will be based in Wayne, Pennsylvania (United States). De
Lage Landen will own a majority stake (60 percent) in the joint venture and will
have operational control and will treat it as a fully consolidated subsidiary.
With the completion of Philips' multi-billion dollar, three-year acquisition of
ATL Ultrasound, ADAC Laboratories, Agilent's Healthcare Solutions group and
Marconi Medical Systems, this new venture will expand the availability of
products and services offered by Philips and strengthen its overall position in
the marketplace.
"We are very pleased to be announcing this initiative today" said Hans Barella,
CEO Philips Medical Systems. "This financial program complements our innovative
products and professional services in being able to provide a more complete
solution to meet the needs of our customers. Given the growth of Philips Medical
Systems, the creation of Philips Medical Capital ensures that we can deliver the
best solutions in North America".
Karel Schellens, CEO of De Lage Landen International , said, "It is with great
pride that we announce this exciting joint venture with Philips Medical Systems.
It will possess the resources and expertise in vendor finance to provide Philips
Medical Systems customers with comprehensive solutions."
About De Lage Landen International B.V.
De Lage Landen International B.V. is a provider of high-quality asset-based
financing products. The company, headquartered in Eindhoven (Netherlands), has
offices and joint ventures in 17 countries throughout Europe and the Americas.
Specialising in asset financing and vendor finance programs internationally and
concentrating domestically on a broad range of leasing and trade finance
products, De Lage Landen grew its net profit to #eu#92.2 million (US $82.4
million) and its balance sheet total to #eu#11.7 billion (US$10.3 billion) in
2001. Additional information can be found at www.delagelanden.com. The company
is a wholly owned subsidiary of the triple-A rated Rabobank Group of the
Netherlands, recently named the "world's top safest bank" by Global Finance
magazine.
About The Rabobank Group
The Rabobank Group (http://www.rabobank.com) is a broad financial services
provider. Its cooperative foundation has given it a clear customer focus. All
the divisions of the Group work in close cooperation in order to jointly offer
customers the best possible price-quality ratio and a wide range of financial
services and products, such as payment, saving, lending, insuring and investing.
The Group consists of about 360 independent local cooperative Rabobanks, which
together have
more than 950,000 members, and encompasses well-known subsidiaries and entities
such as Robeco, Interpolis, Schretlen and Co., Effectenbank Stroeve, Rabobank
International, De Lage Landen, Rabo Vastgoed and Gilde Investment. The group is
represented internationally with 143 locations in 34 countries. The Rabobank
Group has received the highest credit rating from the major rating institutes.
In its Dutch home market, the Rabobank Group has nine million private and
business customers and is a market leader in virtually every area of financial
services.
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of EUR 32.3 billion in
2001. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:
PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips
is located at --- > www.philips.com/newscenter
Safe Harbor Statement
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. 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, the levels of marketing and promotional expenditures by Philips and
its competitors, raw materials and employee costs, changes in future exchange
and interest rates (in particular, changes in the euro and the US dollar can
materially effect results), tax rates and future business combinations,
acquisitions or dispositions and the rate of technical changes. Market share
estimates contained in this report are based on outside sources such as
specialized research institutes, industry and dealer panels, etc. in combination
with management estimates.
August 28, 2002
Philips to sell its Contract Manufacturing Services to Jabil
Amsterdam, the Netherlands/St. Petersburg, Florida, USA, August 28, 2002 - Royal
Philips Electronics (AEX: PHI, NYSE:PHG) and Jabil Circuit Inc. (NYSE:JBL), a
global leader in Electronic Manufacturing Services (EMS), today announced an
agreement for Jabil to acquire most of Philips Contract Manufacturing Services
(PCMS). Completion of the transaction, which is subject to the customary
consultation procedures with trade unions, workers councils and clearance by the
competition authorities, is expected to take place later this year. The purchase
price for the acquisition will be approximately EUR 235 million.
PCMS, with Philips Consumer Electronics as its largest customer, has grown from
a specialist in printed circuit board assembly into a full service provider
addressing both the internal and external EMS markets as a stand alone Philips
business. Now among the top ten contract manufacturers worldwide, PCMS offers a
broad range of services ranging from design, development and engineering to
full-scale manufacturing and customized supply chain management.
"This agreement follows our earlier announcement to look for a strong partner
for PCMS, in line with our strategy to focus on selected activities which fully
support the long-term ambitions of our Consumer Electronics division, and the
industry trend towards outsourcing," said Gottfried Dutine, Member of Philips'
Board of Management. "The acquisition of PCMS by Jabil, one of the world's
leading EMS players, offers the business exciting new opportunities for growth,
and we look forward to a growing supplier relationship."
"We are delighted to be selected as a strategic long term supplier for Philips'
consumer electronics business and welcome the PCMS people and management to
Jabil. Philips is a global technology and market share leader with a strong
brand identity and enviable financial condition. This is a meaningful alliance
in complete alignment with Philips and Jabil's long-term business objectives,"
said Tim Main, President and CEO of Jabil Circuit, Inc. Main said this
transaction would improve Jabil's customer, industry and operational
diversification and materially extends the EMS solution into the consumer
electronics industry, a $150 billion segment with a relatively low 9 percent
outsourcing penetration rate.
Under the terms of the agreement, Jabil will take over the management of
manufacturing operations on three continents, including sites in Austria,
Belgium, Brazil, China, Hungary, India, Poland and Singapore. From these
locations, Jabil will continue to provide key components for the manufacture of
a wide range of Philips products, including televisions, DVD and audio systems,
storage and display products and set-top boxes under a four year, four billion
Euro product supply agreement. Jabil will provide design and engineering
services, new product introduction (NPI), prototype and test services,
procurement, PCB assembly, and final assembly and integration. The agreement
will also include outsourcing requirements for additional PCMS customers outside
Philips.
About Jabil
Jabil Circuit, Inc. is one of the world's largest electronic manufacturing
services providers. Jabil manufactures for international electronics companies
in the automotive, computing and storage, consumer, instrumentation and
medical, networking, peripheral and telecommunications markets. Jabil offers
circuit design, board design from schematic, prototype assembly, volume board
assembly, system assembly, repair and warranty services from facilities in the
Americas, Europe and Asia. Further information about Jabil can be found on the
World Wide Web at jabil.com.
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of EUR 32.3 billion in
2001. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:
PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips
is located at --- > www.philips.com/newscenter
Safe Harbor Statement
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. 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, the levels of marketing and promotional expenditures by Philips and
its competitors, raw materials and employee costs, changes in future exchange
and interest rates (in particular, changes in the euro and the US dollar can
materially effect results), tax rates and future business combinations,
acquisitions or dispositions and the rate of technical changes. Market share
estimates contained in this report are based on outside sources such as
specialized research institutes, industry and dealer panels, etc. in combination
with management estimates.
August 28, 2002
Philips Places EUR 300 Million Eurobond
Amsterdam, The Netherlands, 28 August 2002 - Royal Philips Electronics (AEX:
PHI, NYSE: PHG) today placed a Eurobond issue ("the Notes") for a total amount
of EUR 300 million, maturing in August 2005.
The Notes will be listed at the Official Segment of Euronext Amsterdam N.V.'s
stock market.
Proceeds will be used to retire short term debt of Royal Philips Electronics.
The Notes have not and will not be registered under the U.S. Securities Act of
1933 (the "Act") and may not be offered or sold in the United States absent
registration under the Act or an applicable exemption from the Act's
registration requirements.
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of EUR 32.3 billion in
2001. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:
PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips
is located at --- > www.philips.com/newscenter
Safe Harbor Statement
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. 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, the levels of marketing and promotional expenditures by Philips and
its competitors, raw materials and employee costs, changes in future exchange
and interest rates (in particular, changes in the euro and the US dollar can
materially effect results), tax rates and future business combinations,
acquisitions or dispositions and the rate of technical changes. Market share
estimates contained in this report are based on outside sources such as
specialized research institutes, industry and dealer panels, etc. in combination
with management estimates.
September 12, 2002
Philips Presents Growth Strategy for Semiconductors Division
Continued Focus on Customer Partnership Expected to Increase Philips' Leadership
in Connected Consumer and Communications Markets
Amsterdam, the Netherlands, September 12, 2002 - In a meeting with investors and
financial analysts in Amsterdam today, Royal Philips Electronics (AEX: PHI,
NYSE:PHG) outlined its strategy for a return to profitable growth of its
Semiconductor division through an increased focus on customer partnership in its
served markets. The company gave a comprehensive overview of its Semiconductors
business, emphasizing that although the market remains weak with limited
visibility, the portfolio has been strengthened and the focus on customer
intimacy has resulted in a series of important design wins. Endorsements of
Philips' semiconductor solutions were heard from leading players across the
communications, consumer electronics and other industries.
"Our customer partnership program has received support of many of the world's
leading electronics brands behind our Philips Nexperia(TM) platform, both in the
consumer as well as communications markets - millions of Nexperia(TM) chips have
been shipped since the last quarter of 2001," said Scott McGregor, CEO of
Philips Semiconductors. "We continue to invest in innovation to drive growth,
and to develop a more flexible cost base, which could lead to a further
adjustment of capacity. We are on target to achieve our ambition of being the
leading provider of semiconductor-based solutions for connected consumer and
communications applications."
Third quarter sales are expected to be approximately 12%-14% above the third
quarter of 2001 in dollar terms, and will be impacted by unfavorable currency
comparisons when translated to Euros. Plans are in place to further reduce the
structural break-even point, including adjustments to bring capacity more in
line with market demand. This could result in charges of approximately EUR
200-225 million in the next six months.
Philips now has a clear leadership position in television (with the
semiconductor market being driven by LCD TV), DVD recording (a semiconductor
market experiencing 119% annual growth), and RF identification. The division is
also the global number one in Bluetooth connectivity, and holds global number
one or two positions in a number of other market sectors. The recently announced
design wins (in GSM, 2.5G, 3G) with some of the world's leading phone companies,
utilizing the substantial flexibility and time-to-market advantages offered by
the Nexperia(TM) platform, position the business as a leader in the
communications market.
Safe Harbor Statement
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. 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, the
levels of marketing and promotional expenditures by Philips and its competitors,
raw materials and employee costs, changes in future exchange and interest rates
(in particular, changes in the euro and the US dollar can materially effect
results), tax rates and future business combinations, acquisitions or
dispositions and the rate of technical changes. Market share estimates contained
in this report are based on outside sources such as specialized research
institutes, industry and dealer panels, etc. in combination with management
estimates.
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of EUR 32.3 billion in
2001. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:
PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips
is located at --- > www.philips.com/newscenter
September 12, 2002
Philips CFO Updates Markets On Course Of Business
Amsterdam, the Netherlands, September 12, 2002 - At the end of a meeting with
investors and financial analysts in Amsterdam today, Jan Hommen, Chief Financial
Officer of Royal Philips Electronics (AEX: PHI, NYSE:PHG), gave an update on the
course of business and specific company initiatives.
"The IT systems of the former Agilent Healthcare Systems Group were successfully
transferred to the systems of Philips Medical Systems on September 2. This is
providing strong support in realizing the targeted cost synergies of
approximately EUR 350 million by the end of 2003. We will start to see savings
accelerating in the fourth quarter," commented Hommen. "We remain totally
committed to reducing the company overhead costs by 25%, or approximately EUR
300 million on a run rate basis by the fourth quarter of 2002. These two
programs are part of total cost reductions amounting to EUR 1 billion which we
aim to show in our financial statements by the end of 2003. As part of our
divestment program, we have so far announced the sale of activities amounting to
EUR 825 million and are well on our way to achieving the EUR 1 billion program
announced earlier this year."
With regard to business performance, Jan Hommen confirmed the Company's outlook
for the second half of the year: "There still are no clear signs of a recovery
in the global economy, and we expect a seasonally weak third quarter to be
followed by an improved operational performance in the fourth quarter. A
comprehensive review of a number of business issues within the portfolio of the
Components division is underway with the results and required actions to be
presented before the release of third quarter earnings. Consistent with US GAAP
accounting practices, we will continue to mark to market the value of our
holdings as and when required."
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of EUR 32.3 billion in
2001. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:
PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips
is located at --- > www.philips.com/newscenter
Safe Harbor Statement
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. 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, the levels of marketing and promotional
expenditures by Philips and its competitors, raw materials and employee costs,
changes in future exchange and interest rates (in particular, changes in the
euro and the US dollar can materially effect results), tax rates and future
business combinations, acquisitions or dispositions and the rate of technical
changes. Market share estimates contained in this report are based on outside
sources such as specialized research institutes, industry and dealer panels,
etc. in combination with management estimates.
October 09, 2002
Philips Concludes Review of Components Activities
Implements Plan to Dissolve Components Division and Bring Businesses Back to
Profitability
Amsterdam, The Netherlands, October 9, 2002 - Royal Philips Electronics (AEX:
PHI, NYSE: PHG) today made public the conclusions of an earlier announced review
of its Components division. A plan will now be implemented to reduce costs and
simplify the structure and organization of Philips' electronics activities,
dissolving the Philips Components division, and bringing Philips Optical Storage
back to profitability.
The new structure will streamline innovation and create more value through
alignment of related businesses currently lying in different divisions. As a
result, Philips' telecom speaker activity will be combined with Mobile Display
Systems (MDS) and moved to Philips Semiconductors, offering customers a single
source for complete and integrated solutions for the telecom and PDA markets. In
the same way, certain digital display and wireless connectivity activities,
including the Pronto remote controls group, will move to Philips Consumer
Electronics. Again, this move will reduce organizational complexity and
duplication, and maximize synergies both for branded and OEM solutions. A
stand-alone new business initiative group will also be formed in order to give
more focus and attention to new high-growth display opportunities, including
Liquid Crystal on Silicon (LCoS) technology.
A comprehensive restructuring program for Philips Optical Storage will be
carried out to bring the activity back to profitability. Options are currently
being considered and final plans will be announced in the coming eight weeks.
The Optical Storage business model will be redesigned to better tackle the
market, and further drive the adoption of the DVD+RW standard. Both Philips
Optical storage and the new business initiative group will appear in the
Miscellaneous sector in Philips' financial reporting, as of 2003.
The action plan also includes next steps in Philips' ongoing portfolio
management program to bring focus on digital technologies and de-emphasize more
mature analog businesses. A small number of businesses, with a combined annual
turnover of approximately EUR 400 million, will therefore be transferred to the
Corporate Investments group for potential sale or merger.
Given the above changes, a divisional structure for Components is not required,
and the organization will be discontinued, including the closure of the
Components headquarters in Sunnyvale, California, USA. Matt Medeiros, currently
CEO of Philips Components, is unable to relocate, and will therefore leave the
Company as of November 1. Theo van Deursen will lead the transition process,
based in Eindhoven, the Netherlands.
The overall plan is expected to be implemented as of January 1, 2003, and will
involve restructuring charges and reorganization costs totaling approximately
EUR 175 million, to be taken in the fourth quarter.
Commenting on the plan, Matt Medeiros said: "These actions demonstrate our
strategic commitment to innovation, leveraging of the strengths of Philips'
electronics cluster and bringing our businesses back to sustainable
profitability."
"This program will enhance our customer focus even further, ensuring they can
expect more from Philips in terms of innovative solutions," said Arthur van der
Poel, Executive Vice President and Philips board member responsible for
Components. "Our customers remain our highest priority and we will work directly
with them over the coming period to assure the quality and supply of our
products. We will also work with all affected employees to make the transition
as smooth as possible. Given the current market conditions, we are accelerating
the process to heighten the cooperation between the businesses in our
electronics cluster and focus on higher growth activities. With this program we
will also deliver considerable cost savings."
About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of EUR 32.3 billion in
2001. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:
PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips
is located at --- > www.philips.com/newscenter
Safe Harbor Statement
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. 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, the levels of marketing and promotional expenditures by Philips and
its competitors, raw materials and employee costs, changes in future exchange
and interest rates (in particular, changes in the euro and the US dollar can
materially effect results), tax rates and future business combinations,
acquisitions or dispositions and the rate of technical changes. Market share
estimates contained in this report are based on outside sources such as
specialized research institutes, industry and dealer panels, etc. in combination
with management estimates.