2003 - 4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
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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 April 15, 2003 through July 15, 2003
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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 three months ended June 30, 2003, dated July 15, 2003 as well as a copy of
the press releases entitled:
- "David Hamill to Step Down as CEO of Philips Lighting", dated May 5,
2003;
- "German Court Confirms Positive Decision on Triple Head Rotary Shavers
for Philips", dated May 9, 2003;
- "Philips CEO addresses CSFB technology conference", dated May 21, 2003;
- "North Carolina court rules in favor of Volumetrics. Philips will file
for appeal", dated June 12, 2003;
- "Philips and Societe Generale Announce Medical Financing Joint Venture
for Europe: Philips Medical Capital", dated June 18, 2003;
- "Philips Exercises Option to Redeem EUR 1 billion Debt One-Year Early",
dated June 27, 2003;
- "Philips appoints Barbara Kux to Group Management Committee as Chief
Procurement Officer", dated July 4, 2003;
- "Philips and Accton form Arcadyan joint venture", dated July 7, 2003.
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 July
2003.
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)
[QUARTERLY REPORT LOGO]
'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 (including,
but not limited to, cost savings).
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 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.
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
- financial reporting according to US GAAP
Philips reports second quarter a net profit of EUR 42 million
- Comparable sales decrease 1% - weaker currencies main cause for 18%
nominal sales decline
- Income from operations a loss of EUR 26 million
- 3% sequential comparable segment revenues increase (USD) at
Semiconductors, excluding Mobile Display Systems
- Medical Systems income from operations of EUR 153 million
- Strong positive contribution from unconsolidated companies
- Overhead cost reduction target of EUR 300 million surpassed
The second quarter 2003
Philips recorded a net profit of EUR 42 million (a profit of EUR 0.03
per share) versus a loss of EUR 1,355 million (a loss of EUR 1.07 per
share) in the same period last year. This year's quarter included
special items of positive EUR 5 million, whilst last year's special
items amounted to a negative EUR 1,539 million. Sales decreased by 18%
over the same period last year, negatively impacted by the weakening of
the US dollar and related currencies (13%), the downward effect from
various divestments in 2002 (4%) and lower consumer spending. Income
from operations was a loss of EUR 26 million, including EUR 84 million
in net special charges (before tax), versus a profit of EUR 165 million
last year, which included EUR 96 million net special gains (before
tax).
The overhead cost reduction program delivered EUR 338 million to-date,
already surpassing by more than 10% the annual savings' target of EUR
300 million. Integration savings at Medical Systems are in line with
the EUR 350 million targeted savings by year-end 2003. The overall cost
reduction programs are on-track to achieve the targeted EUR 1 billion
in savings by 2004.
Cash flow from operating activities was a cash inflow of EUR 148
million. Inventories as percentage of sales came to another record low
for a second quarter of 12.8%, compared to 13.4% last year. During the
quarter the net debt position decreased by EUR 133 million to a level
of EUR 5.4 billion.
1
Gerard Kleisterlee,
Philips' President and CEO:
"It is encouraging to see that our change program is paying off. Helped by a
good contribution from unconsolidated companies and the progress of the cost
reduction programs, our improvement was driven by a strong performance at
Medical Systems, reflecting the progress of the integration process. Lighting
and DAP were able to protect their bottom line from weaker markets.
Semiconductor losses have narrowed and we remain dedicated to bring the division
back to profitability in the fourth quarter. CE is suffering most from weak
consumer spending, but, as our increased Brand investment illustrates, we remain
equally determined here to meet our goals. Focus on cost and asset management
clearly remains the best course given the fragile market conditions, while we
are continuing to invest in product and marketing innovation to delight our
customers."
2
Philips Group
Net income
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
-----------------
Sales 7,986 6,532
Income (loss) from operations 165 (26)
in % of sales 2.1 (0.4)
Financial income and expenses (1,605) (80)
Income taxes 3 47
Results unconsolidated companies 92 108
Minority interests (10) (7)
-----------------
Net income (loss) (1,355) 42
Per common share - basic (1.07) 0.03
- diluted (1.07) 0.03
-----------------
Highlights in the quarter
Net income
- Net income came to a profit of EUR 42 million driven by solid
performance from Lighting, Domestic Appliances and Personal Care (DAP)
and the Medical Systems division, as well as from Licensing. Also
unconsolidated companies made a strong contribution this quarter.
- Income from operations was a loss of EUR 26 million, including EUR 84
million in net special charges (before tax), versus a profit of EUR 165
million last year, which included EUR 96 million net special gains
(before tax).
- Income taxes were calculated using an estimated effective tax rate of
25% on pre-tax income, excluding non-taxable gains.
Special items affecting net income
in millions of euros
Q2 Q2
2002 2003
------------------
Affecting income from operations: 96 (84)
Affecting financial income and exp.: (1,536) 78
Income taxes related to special items: 3 21
Affecting results uncons. companies: (102) (10)
-----------------
Special items affecting net income (1,539) 5
-----------------
Special items affecting net income
(Definition special items see Annual Report 2002 Management Report page
35)
- Special charges affecting income from operations were primarily related
to restructuring and other charges at Semiconductors of EUR 85 million.
- Special items affecting financial income and expenses included gains of
EUR 78 million resulting from selling shares of ASML and Vivendi
Universal.
Sales by sector
in millions of euros unless otherwise stated
% change
Q2 Q2 -------------------
2002 2003 nominal comparable
--------------------------------------
Lighting 1,192 1,037 (13) (1)
Cons. Electronics 2,408 1,980 (18) (5)
DAP 524 456 (13) 0
Semiconductors 1,311 1,114 (15) (1)
Medical Systems 1,757 1,446 (18) 8
Miscellaneous 794 499 (37) (11)
-----------------------------------
Philips group 7,986 6,532 (18) (1)
-----------------------------------
Group sales
- Nominal sales were 18% lower than in Q2 of last year. Weaker currencies
had a downward effect of 13%, while various divestments in 2002 had a
4% lower effect.
- Comparable sales decreased 1%. Positive growth of 8% in Medical Systems
was offset by 5% lower sales in Consumer Electronics and 1% lower sales
at Semiconductors.
- Consumer Electronics was suffering from weak consumer confidence in
major markets in Europe and the impact of the SARS virus in Asia. DAP
and Lighting also experienced softer markets in North America and
Europe.
3
Income (loss) from operations by sector
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
---------------
Lighting 126 119
Consumer Electronics 27 (42)
DAP 74 75
Semiconductors (59) (139)
Medical Systems 54 153
Miscellaneous 28 (61)
Unallocated (85) (131)
--------------
Income (loss) from operations 165 (26)
in % of sales 2.1 (0.4)
--------------
IFO
- Income from operations included EUR 84 million net special charges,
while Q2 2002 included EUR 96 million net special gains.
- Increase in pension costs of EUR 85 million compared to Q2 2002.
- Compared to Q1, Medical Systems more than doubled income to EUR 153
million.
- Losses in Semiconductors and Consumer Electronics.
- Lighting and DAP were able to deliver solid results despite softer
markets as a result of in particular innovation, marketing and tight
cost control.
Financial income and expenses
in millions of euros
Q2 Q2
2002 2003
----------------
Financial income and expenses (1,605) (80)
Impairment charges included in
Financial income and expenses (1,536) -
Gain on sale of securities included in
Financial income and expenses - 78
---------------
Financial income and expenses
- Financial income and expenses included EUR 78 million special gains
from the sale of securities, and a pre-tax currency loss of EUR 72
million coming from a deficiency in an automated currency conversion
system, which created an open position. This was further compounded by
an error in the control procedures built around the system. The IT
deficiency has been repaired and control procedures have been
sharpened. Of the total pre-tax currency loss, EUR 21 million related
to the second half of 2002 and EUR 4 million to Q1 2003.
Results unconsolidated companies
in millions of euros
Q2 Q2
2002 2003
---------------
SSMC (10) (7)
LG.Philips LCD 127 69
LG.Philips Displays (77) (1)
Others 52 47
--------------
Total 92 108
--------------
Results relating to unconsolidated companies
- LG.Philips LCD contributed EUR 69 million to net income, an increase of
EUR 86 million compared to Q1, resulting from higher volume at improved
pricing. Net income of Q2 included a currency gain of EUR 28 million.
- Results from LG.Philips Displays were at break-even level, including a
EUR 6 million restructuring charge and a EUR 17 million currency gain.
- Crolles 2, a joint semiconductor operation of Philips, Motorola and
STMicroelectronics, represented start-up losses of EUR 15 million.
4
Cash balance
in millions of euros
Q2 Q2
2002 2003
---------------
Beginning balance 773 1,568
Net cash from operating activities 496 148
Gross capital expenditures (220) (220)
Acquisitions/divestments (163) 308
Other cash from investing activities 258 349
Dividend paid (459) (460)
Changes in debt/other (2) (200)
---------------
Ending balance 683 1,493
---------------
Cash balance
- Cash in for divestments was mainly the result of the redemption of
preferred shares by TSMC of EUR 357 million.
- Sale of securities contributed to a cash inflow of EUR 74 million.
- Reset of currency hedges generated a cash inflow of EUR 202 million.
- 2002 dividend of EUR 0.36 per share was paid following the approval of
the General Meeting of Shareholders of March 27, 2003.
(CASH FLOWS FROM OPERATING ACTIVITIES BAR CHART)
in millions of euros
Q2 02 496
Q1 03 (205)
Q2 03 148
Cash flows from operating activities
- Positive cash flow from operating activities of EUR 148 million.
- Last year's quarter included a large reduction of working capital at
Consumer Electronics.
(GROSS CAPITAL EXPENDITURES BAR CHART)
in millions of euros
Q2 02 220
Q1 03 177
Q2 03 220
Gross capital expenditures
- Gross capital expenditures of EUR 220 million were at the same level as
last year.
- Capital expenditures at Semiconductors were EUR 67 million, and at
Lighting EUR 44 million.
- EUR 28 million was spent on the new Technology Campus in Eindhoven.
- In addition to gross capital expenditures, investments in software and
systems amounted to EUR 23 million.
5
(INVENTORIES AS A % OF SALES BAR CHART)
Q2 02 13.4
Q1 03 12.1
Q2 03 12.8
Inventories
- Inventories as percentage of sales came to 12.8%, which is another
record low for a second quarter.
- Improvements versus last year were visible in almost all sectors.
- Main focal point is continuous improvement of supply chain management.
(NET DEBT AND GROUP EQUITY BAR CHART)
Q2 02 Q1 03 Q2 03
in billions of euros
group equity 16.6 13.3 13.1
net debt 7.1 5.6 5.4
----- ----- -----
net debt : group equity ratio 30:70 30:70 29:71
Net debt and group equity
- In Q2 net debt was reduced by EUR 133 million to a level of EUR 5.4
billion, to a large extent caused by positive cash flow before
financing.
- The decrease in group equity to EUR 13.1 billion was mainly caused by
the translation effects from the decline of the US dollar and related
currencies.
- Net debt : group equity ratio ended at 29:71.
(NUMBER OF EMPLOYEES BAR CHART)
Q2 02 183,641
Q1 03 166,394
Q2 03 163,928
Employment
- During Q2 the number of employees was reduced by 2,466; no major
portfolio changes occurred.
- The reduction related mainly to Lighting: 1,924 employees, particularly
in USA and Mexico.
- An increase of 503 was posted in Miscellaneous, mostly resulting from
expanded Optical Storage activities in China.
6
\
Lighting
Lighting: key data
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
-----------------
Sales 1,192 1,037
Sales growth
% increase, nominal (6) (13)
% increase, comparable (6) (1)
Income from operations 126 119
in % of sales 10.6 11.5
Special items included in IFO (14) (6)
in % of sales (1.2) (0.6)
Net operating capital (NOC) 1,867 1,775
Number of employees (FTEs) 47,205 44,044
-----------------
Business highlights
- Overall market share gains spearheaded by Lamps North America and
Automotive & Special Lighting.
- Continued strong growth of 9% in the Asia Pacific region.
- Weaker markets in North America and Western Europe.
- Quadrupling of UHP lamp sales for large screen projector television
sets to all major industry players.
(LIGHTING SALES BAR CHART)
in millions of euros
Q1 '02 1,128
Q2 '02 1,192
Q3 '02 1,130
Q4 '02 1,295
Q1 '03 1,154
Q2 '03 1,037
Financial performance
- Nominal sales were 13% lower, almost all of which was due to weaker
currency rates, mainly US Dollar.
- Strong comparable sales growth in Automotive & Special Lighting.
- The Luminaires and Electronics businesses suffered from weaker markets
in Europe and North America.
- Compared to Q2 last year, income from operations as % of sales improved
to 11.5% driven by cost efficiencies.
(LIGHTING INCOME FROM OPERATIONS (IFO) BAR CHART)
IFO in millions of euros
Q1 '02 152
Q2 '02 126
Q3 '02 141
Q4 '02 183
Q1 '03 173
Q2 '03 119
(PLOT POINTS TO COME FOR LINE IN CHART)
Looking ahead
- Strong innovation action plan to counter the current softness in the
markets and further efficiencies in operations.
7
Consumer Electronics
Consumer Electronics: key data
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
-----------------
Sales 2,408 1,980
Sales growth
% increase, nominal 0 (18)
% increase, comparable 1 (5)
Income (loss) from operations 27 (42)
in % of sales 1.1 (2.1)
Special items included in IFO 1 (3)
in % of sales 0 (0.2)
Net operating capital (NOC) 537 201
Number of employees (FTEs) 27,124 18,609
-----------------
Business highlights
- All businesses are suffering from difficult markets. Lower consumer
spending, especially in Europe and Asia Pacific (also SARS related).
- Despite weak demand, market share position gained in Europe; continue
to gain market share in LCD TV in Europe.
- Global volumes of LCD monitors tripled.
(CONSUMER ELECTRONICS SALES BAR CHART)
in millions of euros
Q1 '02 2,262
Q2 '02 2,408
Q3 '03 2,232
Q4 '04 2,953
Q1 '03 1,943
Q2 '03 1,980
Financial performance
- A lower US dollar rate substantially impacted nominal sales.
- Sales decrease was particularly noted in Television and AV
Entertainment, reflecting lower demand for high-end products.
Comparable sales 10% down in Europe, 7% lower in Asia Pacific, 7% up in
North America.
- Price erosion increased from 10% to 12%.
- Cost of organization and working capital (inventories) adjusted to
lower sales level.
- A loss of EUR 25 million in North America, excluding EUR 10 million for
additional brand campaigns.
- License income from operations of EUR 56 million (including EUR 18
million past use licenses) compared to EUR 38 million last year.
(CONSUMER ELECTRONICS INCOME (LOSS) FROM OPERATIONS (IFO) BAR CHART)
IFO in millions of euros
Q1 '02 51
Q2 '02 27
Q3 '03 8
Q4 '04 122
Q1 '03 73
Q2 '03 (42)
(PLOT POINTS TO COME FOR LINE IN CHART)
Looking ahead
- Weak markets to continue for the time being.
- Strong focus on managing the supply-chain and cost control. Biannual
IFA electronics show in Berlin - strong line-up of new products to be
unveiled.
- Restructuring charges of approximately EUR 35 million expected in Q3
and EUR 10 million in Q4.
- Executing the North America turn around plan.
8
Domestic Appliances and Personal Care
DAP: Key Data
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
----------------
Sales 524 456
Sales growth
% increase, nominal 1 (13)
% increase, comparable 2 0
Income from operations 74 75
in % of sales 14.1 16.4
Special items included in IFO (7) -
in % of sales (1.3) -
Net operating capital (NOC) 672 589
Number of employees (FTEs) 9,519 8,525
----------------
Business highlights
- New Sonic Toothbrush 'Elite' introduced at the Dental Show in Cologne
(Germany).
- Senseo coffee maker reached 15% market share in German market since its
launch in October 2002.
- Philips DAP Hong Kong achieved the "Caring Company" Award.
- The Cologne Court of Appeals confirmed positive decision on triple head
rotary shavers for Philips, following a preliminary injunction from August
2002.
(DAP SALES BAR CHART)
in millions of euros
Q1 '02 454
Q2 '02 524
Q3 '02 519
Q4 '02 776
Q1 '03 458
Q2 '03 456
Financial performance
- Q2 sales were hampered by weak currencies, and remained at approximately
the same level as previous year's Q2 on a comparable basis.
- Ongoing sluggish demand in North America and slow down in Western Europe
hampered sales growth of most of the businesses.
- Expansion of coffee makers and Oral healthcare continued; the latter posted
a strong performance with a comparable sales growth of 23%.
- Despite lower nominal sales and adverse translation effects, record income
from operations for the second quarter.
- Purchasing efficiencies and lower costs main drivers for profit.
(DAP INCOME FROM OPERATIONS (IFO) BAR CHART)
IFO in millions of euros
Q1 '02 65
Q2 '02 74
Q3 '02 79
Q4 '02 183
Q1 '03 81
Q2 '03 75
(PLOT POINTS TO COME FOR LINE IN CHART)
Looking ahead
- Weakness in markets across all regions.
- Focus on innovation, new product introductions, enhancing purchasing
savings, reducing costs and gaining efficiencies in the utilization of
capital.
9
Semiconductors
Semiconductors: key data
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
-----------------
Sales 1,311 1,114
Segment revenues 1,439 1,155
Segment revenues growth
% increase, nominal 1 (20)
% increase, comparable 3 (6)
Income (loss) from operations (59) (139)
In % of segment revenues (4.1) (12.0)
in % of sales (4.5) (12.5)
Special items included in IFO 4 (85)
In % of segment revenues 0.3 (7.4)
in % of sales 0.3 (7.6)
Net operating capital (NOC) 4,377 3,132
Number of employees (FTEs) 35,615 33,943
-----------------
Business highlights
- Philips Nexperia(TM) multimedia processor deployed in Sony Ericsson P800
smart phone.
- Philips and Visa form an alliance to promote application of contactless
payment technology.
- Philips first to unveil semiconductors design for a DVD-recorder based
Home-Theater-in-a-Box.
- METRO Group uses Philips' RFID technology to shape the future of retail.
- First commercial wafers produced at Crolles 2.
(SEMICONDUCTORS SALES BAR CHART)
in millions of euros
Q1 '02 1,190
Q2 '02 1,311
Q3 '02 1,186
Q4 '02 1,345
Q1 '03 1,126
Q2 '03 1,114
Financial performance
- Consumer markets and demand for Standard products remained weak, while
Automotive was stable.
- Sequential revenues excluding MDS decreased by 3% in EUR terms and
increased by 3% in USD terms. Sequential comparable revenue growth in MDS
was 9%.
- SARS negatively affected sales of Mobile Communications and to a lesser
extent Consumer sales.
- Book-to-bill ratio of Semiconductors, excluding MDS, at quarter's end at
1.06 versus 1.05 at Q1 2003.
- Results of Crolles 2 (start-up losses of EUR 15 million) reported under
Unconsolidated Companies. Crolles 2 became operational during the second
quarter.
- Special items included EUR 20 million for accelerated depreciation of
assets at Albuquerque and EUR 70 million restructuring charges at San
Antonio.
- Utilization rate further up to 66% at quarter's end versus 61% at Q1 2003,
partly due to an increase of inventories.
(SEMICONDUCTORS INCOME (LOSS) FROM OPERATIONS (IFO) BAR CHART)
IFO in millions of euros
Q1 '02 (108)
Q2 '02 (59)
Q3 '02 (53)
Q4 '02 (304)
Q1 '03 (178)
Q2 '03 (139)
(PLOT POINTS TO COME FOR LINE IN CHART)
Looking ahead
- In Q3 sequential revenues growth (in USD) approximately at the same level
as Q2.
- Restructurings according to plan; expected special charges for Albuquerque
and San Antonio of approximately EUR 120 million in Q3.
- Q4 is expected to be profitable.
10
Medical Systems
Medical Systems: key data
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
-----------------
Sales 1,757 1,446
Sales growth
% increase, nominal 85 (18)
% increase, comparable 8 8
Income from operations 54 153
in % of sales 3.1 10.6
Special items included in IFO (34) (4)
in % of sales (1.9) (0.3)
Net operating capital (NOC) 5,217 4,634
Number of employees (FTEs) 31,340 31,166
-----------------
Business highlights
- Memorandum of understanding signed with Societe Generale to establish a
financing vehicle for Medical Systems' European customers.
- Very strong performance Patient Monitoring, supported by range of new
products, and Medical IT.
- Several large solutions orders in hospitals in USA, UK, Korea and Taiwan.
- Gold Award for the Heartstart Home Defibrillator in the 2003 Industrial
Design Excellence Awards, from the Industrial Designers Society of North
America
- Nine iF awards from the International Forum Design GmbH in Germany for
product designs of MR and X-ray systems.
(MEDICAL SYSTEMS SALES BAR CHART)
in millions of euros
Q1 '02 1,664
Q2 '02 1,757
Q3 '02 1,540
Q4 '02 1,883
Q1 '03 1,329
Q2 '03 1,446
Financial performance
- Nominal sales were 18% lower, of which weaker currencies had a 18% impact
and divestments 2002 had a 8% downward effect.
- The 8% sales increase on a comparable basis was mainly driven by higher
sales within Cardiac and Monitoring Systems (Patient Monitoring), Customer
Service and Medical IT.
- Sales growth came especially from European and Asia Pacific regions.
- Income from operations more than doubled compared to Q1, mainly due to
increased sales, higher margins and cost reductions.
- Special items included a restructuring charge for the North America region
of EUR 6 million.
(MEDICAL SYSTEMS INCOME (LOSS) FROM OPERATIONS (IFO) BAR CHART)
IFO in millions of euros
Q1 '02 27
Q2 '02 54
Q3 '02 (11)
Q4 '02 239
Q1 '03 70
Q2 '03 153
(PLOT POINTS TO COME FOR LINE IN CHART)
Looking ahead
- Cautious market outlook due to continued macro economic weakness and its
impact on Medical industry
- Integration program to achieve EUR 350 million savings at the end of 2003
on-track.
11
Miscellaneous
Miscellaneous: key data
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
-----------------
Sales 794 499
Sales growth
% increase, nominal (36) (37)
% increase, comparable (4) (11)
IFO Corporate Technology (67) (47)
IFO Corp. Investments and others 95 (14)
-----------------
Income (loss) from operations 28 (61)
in % of sales 3.5 (12.2)
Special items included in IFO 146 15
in % of sales 18.4 3.0
Net operating capital (NOC) 367 (135)
Number of employees (FTEs) 28,171 25,064
-----------------
Business highlights
- Since May the Optical Storage venture with BenQ has been successfully
operational and profitable.
- Shipments of new DVD+R/+RW data drive to HP by Optical Storage started in
June.
(MISCELLANEOUS SALES BAR CHART)
in millions of euros
Q1 '02 800
Q2 '02 794
Q3 '02 706
Q4 '02 671
Q1 '03 489
Q2 '03 499
Financial performance
- Shortfall in sales was mainly visible in ETG and Assembleon.
- Optical Storage continued to show a positive trend, income from operation
slightly improved versus break-even in the first quarter and a loss last
year.
- Special items of EUR 15 million included gains on some real estate
disposals.
(MISCELLANEOUS INCOME (LOSS) FROM OPERATIONS (IFO) BAR CHART)
IFO in millions of euros
Q1 '02 (31)
Q2 '02 28
Q3 '02 38
Q4 '02 (281)
Q1 '03 (56)
Q2 '03 (61)
(PLOT POINTS TO COME FOR LINE IN CHART)
Looking ahead
- The divestment program of Corporate Investments is moving ahead.
- In Q3 the value of Philips' equity in Atos Origin will increase due to
conversion of Atos Origin's mandatory convertible bonds, which were issued
in connection with an acquisition at a price in excess of the current cost
price of our shares. The consequential dilution of our shareholding in Atos
Origin will lead to a non-cash dilution gain of approximately EUR 65
million (will be reported in results relating to unconsolidated companies
in Q3).
12
Unallocated
Unallocated: key data
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
-----------------
Corporate and regional overheads (86) (65)
Pensions 1 (66)
-----------------
Income (loss) from operations (85) (131)
Number of employees (FTEs) 4,667 2,577
-----------------
Business highlights
- DDB appointed as sole advertising agency.
- Transfer of employees from Unallocated to Miscellaneous, related to
headcount of Shared Service Centers. This had no impact on income from
operations.
(UNALLOCATED: CORPORATE AND REGIONAL OVERHEADS INCOME (LOSS) FROM OPERATIONS
(IFO) BAR CHART)
in millions of euros
Q1 '02 (76)
Q2 '02 (86)
Q3 '02 (69)
Q4 '02 (101)
Q1 '03 (66)
Q2 '03 (65)
Financial performance
- Corporate and regional overheads were 24% lower (EUR 21 million) than the
same period last year, mainly driven by savings from the overhead cost
reduction program.
- Pension costs have increased by EUR 67 million compared to previous year.
(UNALLOCATED: PENSIONS INCOME (LOSS) FROM OPERATIONS (IFO) BAR CHART)
in millions of euros
Q1 '02 (7)
Q2 '02 1
Q3 '02 2
Q4 '02 6
Q1 '03 (65)
Q2 '03 (66)
Looking ahead
- Ongoing focus on costs savings.
13
Joint ventures LG.Philips LCD and LG.Philips Displays
LG.Philips LCD joint venture (100%)
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
-----------------
Sales 882 954
Sales growth
% increase, nominal 65 8
Income from operations 224 125
in % of sales 25.4 13.1
Net income (100%) 254 138
Net income
(Philips share = 50%) 127 69
Net operating capital (NOC) 2,722 2,612
Number of employees (FTEs) 5,284 6,530
-----------------
LG.Philips LCD joint venture (100%)
- Q2 sales grew by 8% compared to last year, and 20% in Korean Won terms.
- 70% increase in number of panels shipped for monitors and TVs, coupled with
favorable mix. Increase in volume was driven by the additional output from
the new 5th generation facility.
- Average panel prices were 10% up compared to Q1.
- Net income included currency gains of EUR 56 million.
LG.Philips Displays joint venture (100%)
in millions of euros unless otherwise stated
Q2 Q2
2002 2003
-----------------
Sales 1,140 780
Sales growth
% increase, nominal . (32)
Income (loss) from operations (124) (35)
in % of sales (10.9) (4.5)
Net income (loss) (100%) (151) (2)
Net income (loss)
(Philips share = 50%) (76) (1)
Net operating capital (NOC) 3,096 2,419
Number of employees (FTEs) 34,290 28,835
-----------------
LG.Philips Displays joint venture (100%)
- Market share gained in shrinking market.
- In USD terms, sales deteriorated by 12%, largely driven by shrinking CRT
market both for monitors and television sets.
- IFO for the quarter included EUR 11 million restructuring charges.
- Functional currency at the holding company of the JV was adjusted to the
currency of the business (US dollar) retroactively January 1, 2003, which
improved net income by EUR 33 million as a result of currency gains.
- Second quarter witnessed a strong improvement in the cash flow, despite
lower income. Cash inflow from operating activities amounted to EUR 212
million. (Q1 2003: EUR 22 million inflow) largely driven by improvements in
working capital.
- Continued focus on cash flow and cost reductions.
14
Highlights in the 1st half year
Net income
in millions of euros unless otherwise stated
January- JANUARY-
June JUNE
2002 2003
-----------------
Sales 15,584 13,031
Income from operations 238 6
in % of sales 1.5 0.0
Financial income and expenses (1,625) (162)
Income taxes 6 59
Results related to unconsolidated
companies 49 84
Minority interests (14) (14)
-----------------
Net income (loss) (1,346) (27)
Per common share - basic (1.06) (0.02)
- diluted (1.06) (0.02)
-----------------
Group net income
Net income
- Nominal sales were 16% lower than in same period last year. Weaker
currencies had a downward effect of 12%, while a 4% downwards effect came
from various divestments carried out in 2002.
- On a comparable basis, sales were flat versus last year.
- Despite strongly improved results at Medical Systems, income from
operations was lower, mainly due to special charges at Semiconductors,
lower income at Consumer Electronics and EUR 163 million in higher pension
costs.
- Net income came to a loss of EUR 27 million. The loss of last year was
caused predominantly by impairment charges.
Special items affecting net income
in millions of euros
January- JANUARY-
June JUNE
2002 2003
-----------------
Affecting income from operations: 154 (115)
Affecting financial income and exp.: (1,469) 78
Income taxes related to special items: (12) 29
Affecting results uncons. companies: (196) (21)
---------------
Special items affecting net income (1,523) (29)
---------------
Special items affecting net income
- Special charges affecting income from operations were primarily related to
restructuring and other charges at Semiconductors of EUR 150 million,
partly offset by gains on sale of businesses of EUR 35 million.
- Special gains affecting financial income and expenses included EUR 78
million for gains on the sale of securities.
15
Other information and outlook
Other information
With respect to the claim of Volumetrics, Inc. against the Philips Ultrasound
business of Medical Systems, a trial judge in Winston-Salem, North Carolina, USA
confirmed a jury verdict against a Philips subsidiary and granted Volumetrics'
motion to treble the damages. As was announced earlier, the resulting verdict is
for approximately USD 319 million plus interest. Philips does not believe that
the facts of the case or the relevant legal principles support the decision and
has decided to appeal. The outcome of the appeal is not something Philips can
predict and it is impossible to come to reasonable estimate of a possible future
loss. Consequently, such a possible loss has not been accrued for.
Outlook
We expect that the Lighting and Domestic Appliances divisions will continue
their solid performance throughout the year. The integration of our Medical
Systems division remains on-track to achieve the performance targets for 2004
including the targeted EUR 350 million savings by year-end 2003. Consumer
Electronics will manage the costs and supply chain in line with lower sales.
Should low consumer confidence in major markets continue, it will have an impact
on the sales of Consumer Electronics. The recovery plan for the Semiconductor
division is expected to turn this division back into the black in Q4.
The company will continue cost reduction initiatives, including reduction in
overhead costs, and ongoing asset management programs.
Currency movements may continue to impact sales and to a lesser extent net
income, whilst the value of the Company's financial and pension assets remains
sensitive to volatility in financial markets.
Amsterdam, July 15, 2003
Board of Management
16
Consolidated statements of income
all amounts in millions of euros unless otherwise stated
2nd quarter January to June
2003 2002 2003 2002
-------- ---------- ---------- ---------
Sales 6,532 7,986 13,031 15,584
Cost of sales (4,449) (5,420) (8,852) (10,649)
-------- ---------- ---------- ---------
GROSS MARGIN 2,083 2,566 4,179 4,935
Selling expenses (1,034) (1,335) (2,106) (2,589)
General and administrative expenses (371) (380) (744) (721)
Research and development expenses (650) (786) (1,283) (1,545)
Write-off of acquired in-process R&D - - - -
Impairment of goodwill - - (9) -
Restructuring and impairment charges (117) (27) (183) (50)
-------- ---------- ---------- ---------
(2,172) (2,528) (4,325) (4,905)
-------- ---------- ---------- ---------
Other business income (expenses) - net 63 127 152 208
-------- ---------- ---------- ---------
INCOME (LOSS) FROM OPERATIONS (26) 165 6 238
Financial income and expenses:
- interest (96) (107) (177) (209)
- impairment charges - (1,536) - (1,536)
- other 16 38 15 120
-------- ---------- ---------- ---------
(80) (1,605) (162) (1,625)
-------- ---------- ---------- ---------
Income before taxes (106) (1,440) (156) (1,387)
Income taxes 47 3 59 6
-------- ---------- ---------- ---------
Income after taxes (59) (1,437) (97) (1,381)
Results relating to unconsolidated companies:
- impairment charges (9) (34) (9) (37)
- other 117 126 93 86
Minority interests (7) (10) (14) (14)
-------- ---------- ---------- ---------
NET INCOME 42 (1,355) (27) (1,346)
INCOME FROM OPERATIONS
as a % of sales (0.4) 2.1 0.0 1.5
as a % of net operating capital (RONA) 0.1 3.4
Weighted average number of common shares
outstanding during the period (in thousands):
(after deduction of treasury stock)
- basic 1,276,544 1,274,900
- diluted 1,277,740 1,282,248
NET EARNINGS PER COMMON SHARE IN EUROS:
- basic 0.03 (1.07) (0.02) (1.06)
- diluted 0.03 (1.07) (0.02) (1.06)
The Group financial statements have been prepared on a basis consistent with US
GAAP, which differs in certain respects from accounting principles as required
by Dutch law (Dutch GAAP). Net income determined in accordance with Dutch GAAP
amounted to a loss of EUR 383 million in the first six months of 2003, compared
to a loss of EUR 1,693 million in the corresponding period last year. These
aggregate amounts result in basic earnings per common share of a loss of EUR
0.30 in January-June 2003 compared to a loss of EUR 1.33 last year. The
difference between Dutch GAAP and US GAAP is caused by the fact that goodwill is
no longer amortized under US GAAP but instead tested for impairment.
17
Consolidated balance sheets and additional ratios
all amounts in millions of euros unless otherwise stated
Consolidated balance sheet
June 30, December June 30,
2003 31, 2002 2002
----------- ---------- ----------
Current assets:
Cash and cash equivalents 1,493 1,858 683
Receivables 4,801 5,068 5,393
Inventories 3,740 3,522 4,307
Other current assets 841 603 870
---------- ---------- ---------
TOTAL CURRENT ASSETS 10,875 11,051 11,253
Unconsolidated companies 5,893 6,089 7,645
Other non-current financial assets 1,193 1,306 1,819
Non-current receivables 234 219 137
Other non-current assets 2,381 2,553 2,733
Property, plant and equipment 5,234 6,137 6,784
Intangible assets excl. goodwill 1,520 1,742 1,692
Goodwill 3,003 3,192 3,349
---------- ---------- ---------
TOTAL ASSETS 30,333 32,289 35,412
Current liabilities:
Accounts and notes payable 2,743 3,228 2,975
Accrued liabilities 3,230 3,314 3,587
Short-term provisions 1,011 1,276 942
Other current liabilities 643 691 746
Short-term debt 1,749 617 1,392
---------- --------- ---------
TOTAL CURRENT LIABILITIES 9,376 9,126 9,642
Long-term debt 5,185 6,492 6,415
Long-term provisions 2,050 1,970 2,565
Other non-current liabilities 590 603 200
---------- --------- ---------
TOTAL LIABILITIES 17,201 18,191 18,822
Minority interests 182 179 191
Stockholders' equity 12,950 13,919 16,399
---------- ---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 30,333 32,289 35,412
NUMBER OF COMMON SHARES
OUTSTANDING AT THE END OF PERIOD
- shares in thousands 1,277,082 1,275,978 1,274,575
RATIOS
Stockholders' equity, 12,950 13,919 16,399
per common share in euros 10.14 10.91 12.87
Inventories as a % of sales 12.8 11.1 13.4
Net debt : group equity ratio 29:71 27:73 30:70
Stockholders' equity determined in accordance with Dutch GAAP amounted to EUR
12,109 million as of June 30, 2003 compared to EUR 12,950 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.
18
Consolidated statements of cash flows *
all amounts in millions of euros
-----------------------------------------------------------------------------------
2nd quarter January to June
2003 2002 2003 2002
------ ------- ------ --------
Cash flows from operating
activities:
Net income (loss) 42 (1,355) (27) (1,346)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 482 527 955 1,023
Impairment of equity investments 9 1,570 9 1,573
Net gain on sale of assets (116) (149) (160) (329)
(Income) loss from
unconsolidated companies (net
of dividends received) (108) (124) (83) (84)
Minority interests (net of
dividends paid) 1 10 14 14
(Increase) decrease in working
capital/other current assets (172) 85 (799) (413)
(Increase) decrease in
non-current receivables/other (2) (86) 58 112
assets
(Decrease) increase in provisions (59) 25 (97) (96)
Other items 71 (7) 73 (12)
---- ------ ----- -------
NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES 148 496 (57) 442
Cash flows from investing
activities:
Purchase of intangible assets
(software) (23) (42) (51) (80)
Capital expenditures on
property, plant and equipment (220) (220) (397) (445)
Proceeds from disposals of
property, plant and equipment 57 44 91 263
Proceeds from sale (purchase) of
other non-current financial
assets and derivatives 315 256 492 332
Proceeds from sale of businesses
(purchase of businesses) 308 (163) 151 (382)
---- ------ ----- -------
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES 437 (125) 286 (312)
CASH FLOWS BEFORE FINANCING
ACTIVITIES 585 371 229 130
* 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.
19
Consolidated statements of cash flows (continued)*
all amounts in millions of euros
------------------------------------------------------------------------
2nd quarter January to June
2003 2002 2003 2002
------ ------ ------ ------
CASH FLOWS BEFORE FINANCING
ACTIVITIES 585 371 229 130
Cash flows from financing
activities:
(Decrease) increase in debt (122) 141 (56) 221
Treasury stock transactions 8 (64) 16 (41)
Dividends paid (460) (459) (460) (459)
---- ---- ---- ----
NET CASH USED FOR FINANCING
ACTIVITIES (574) (382) (500) (279)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 11 (11) (271) (149)
Effect of changes in exchange
rates on cash positions (86 (79) (94) (58
Cash and cash equivalents at
beginning of the period 1,568 773 1,858 890
----- ---- ----- ----
CASH AND CASH EQUIVALENTS AT END
OF PERIOD 1,493 683 1,493 683
* 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.
20
Consolidated statement of changes in stockholders' equity
all amounts in millions of euros
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------
Accumulated other comprehensive income (loss)
----------------------------------------------
Capital in Available Minimum
Common excess of Retained Translation for sale pension Cash flow
stock par value earnings differences securities liability hedges
------ --------- -------- ----------- ---------- --------- ----------
Balance as of January 1, 2003 263 14 16,738 (1,712) 265 (353) 11
Net income (loss) (27)
Net current period change (533) 71 26 23
Reclassifications into income - (78) (15)
------ ------ ---- ---- ---
TOTAL COMPREHENSIVE INCOME (LOSS), NET OF TAX (27) (533) (7) 26 8
Dividends (462)
Purchase of treasury stock
Re-issuance of treasury stock 5
Stock options accrual 10
--- -- ------ ------ ---- ---- ---
Balance as of June 30, 2003 263 29 16,249 (2,245) 258 (327) 19
=== == ====== ====== ==== ==== ===
------------------------------------------------------------------------
January to June 2003
--------------------------
Treasury Total
shares at stock-holders'
cost equity
--------- --------------
Balance as of January 1, 2003 (1,307) 13,919
Net income (loss) (27)
Net current period change (413)
Reclassifications into income (93)
-------
TOTAL COMPREHENSIVE INCOME (LOSS), NET OF TAX (533)
Dividends (462)
Purchase of treasury stock (1) (1)
Re-issuance of treasury stock 12 17
Stock options accrual 10
--------- -------
Balance as of June 30, 2003 (1,296) 12,950
========= =======
21
Product sectors
all amounts in millions of euros unless otherwise stated
Segment revenues and income from operations
2nd quarter
----------------------------------------------------------------------------
2003 2002
------------------------------------ -------------------------------------
segment Income (loss) from segment Income (loss) from
revenues operations revenues operations
------------------------ ------------------------
as % of as % of
segment segment
amount revenues amount revenues
Lighting 1,042 119 11.4 1,200 126 10.5
Consumer Electronics 1,999 (42) (2.1) 2,425 27 1.1
DAP 459 75 16.3 529 74 14.0
Semiconductors 1,155 (139) (12.0) 1,439 (59) (4.1)
Medical Systems 1,450 153 10.6 1,758 54 3.1
Miscellaneous 698 (61) (8.7) 945 28 3.0
Unallocated (131) (85)
------ ----- ------ ------
Total 6,803 (26) 8,296 165
Intersegment revenues (271) (310)
------ ------
SALES 6,532 7,986
INCOME FROM OPERATIONS
AS A % OF SALES (0.4) 2.1
22
Product sectors (continued)
all amounts in millions of euros unless otherwise stated
Segment revenues and income from operations
January to June
----------------------------------------------------------------------------
2003 2002
------------------------------------ -------------------------------------
segment Income (loss) from segment Income (loss) from
revenues operations revenues operations
------------------------ ------------------------
as % of as % of
segment segment
amount revenues amount revenues
Lighting 2,202 292 13.3 2,435 278 11.4
Consumer Electronics 3,961 31 0.8 4,707 78 1.7
DAP 922 156 16.9 988 139 14.1
Semiconductors 2,328 (317) (13.6) 2,741 (167) (6.1)
Medical Systems 2,782 223 8.0 3,423 81 2.4
Miscellaneous 1,387 (117) (8.4) 1,890 (3) (0.2)
Unallocated (262) (168)
------ ----- ------ -----
Total 13,582 6 16,184 238
Intersegment revenues (551) (600)
------ ------
SALES 13,031 15,584
INCOME FROM OPERATIONS
AS A % OF SALES 0.0 1.5
23
Product sectors and main countries
all amounts in millions of euros
Sales and total assets
Sales (to third parties) Total assets
------------------------ --------------------
January to June June 30, June 30,
2003 2002 2003 2002
------ ------ -------- --------
Lighting 2,191 2,420 2,598 2,771
Consumer Electronics 3,923 4,670 2,421 3,017
DAP 914 978 925 1,051
Semiconductors 2,240 2,501 6,292 8,025
Medical Systems 2,775 3,421 6,427 7,297
Miscellaneous 988 1,594 5,277 6,798
Unallocated 6,393 6,453
------ ------ ------ ------
TOTAL 13,031 15,584 30,333 35,412
Sales and long-lived assets
Sales (to third parties) Long-lived assets*
------------------------ --------------------
January to June June 30, June 30,
2003 2002 2003 2002
------ ------ -------- --------
Netherlands 563 741 1,553 1,689
United States 3,508 4,757 4,865 6,201
Germany 991 1,099 643 649
France 882 904 226 293
United Kingdom 524 703 268 189
China 1,153 1,167 339 427
Other countries 5,410 6,213 1,863 2,377
------ ------ ------ ------
TOTAL 13,031 15,584 9,757 11,825
* Includes property, plant and equipment and intangible assets-net.
24
Philips quarterly statistics
all amounts in millions of euros unless otherwise stated; percentage increases
always in relation to the corresponding period of previous year
2002 2003
-------------------------------------------------- --------------------------------------------------
1st quarter 2nd quarter 3rd quarter 4th quarter 1st quarter 2nd quarter 3rd quarter 4th quarter
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Sales 7,598 7,986 7,313 8,923 6,499 6,532
% increase (7) 4 2 (4) (14) (18)
Income (loss) from 73 165 135 47 32 (26)
operations
as % of sales 1.0 2.1 1.8 0.5 0.5 (0.4)
% increase (77) - - - (56) -
Net income (loss) 9 (1,355) (330) (1,530) (69) 42
% increase (90) - - - - -
per common share in euros 0.01 (1.07) (0.25) (1.20) (0.05) 0.03
January- January- January- January- January- January- January- January-
March June September December March June September December
---------- ---------- ----------- ---------- ---------- ---------- ----------- ----------
Sales 7,598 15,584 22,897 31,820 6,499 13,031
% increase (7) (2) (1) (2) (14) (16)
Income (loss) from 73 238 373 420 32 6
operations
as % of sales 1.0 1.5 1.6 1.3 0.5 0.0
% increase (77) - - - (56) -
as a % of net operating
capital (RONA) 2.0 3.4 3.8 3.2 1.2 0.1
Net income (loss) 9 (1,346) (1,676) (3,206) (69) (27)
% increase (90) - - - - -
as a % of stockholders'
equity (ROE) 0.2 (14.7) (13.3) (19.2) (2.1) (0.3)
per common share in euros 0.01 (1.06) (1.31) (2.51) (0.05) (0.02)
period ending 2002 period ending 2003
-------------------------------- ------------------------------
Inventories as % of sales 14.0 13.4 14.1 11.1 12.1 12.8
Net debt : group equity ratio 28:72 30:70 30:70 27:73 30:70 29:71
Total employees (in thousands) 186 184 183 170 166 164
Information also available on Internet, address: www.investor.philips.com
Printed in the Netherlands
25
David Hamill to Step Down as CEO of Philips Lighting
Amsterdam, The Netherlands, May 5, 2003 - Royal Philips Electronics (AEX: PHI,
NYSE: PHG) today announced that Mr. David Hamill (45), President and CEO of
Philips Lighting and member of the Group Management Committee will leave the
Company as of December 31, 2003.
Mr. Hamill joined Philips in 1986 and has been in charge of Philips Lighting
since 2001. Since then, he has overseen three years of market share gains,
industry leading EBIT performance, and best-in-class delivery time and inventory
management.
Mr. Hamill accepted the above role on the basis of a limited period with a view
to subsequently returning to the United Kingdom to rejoin his family. He has
agreed to remain with Philips for a further six months after he steps down as
CEO of Philips Lighting, working closely with the Board of Management to advance
the company's performance improvement program.
Mr. Hamill will be succeeded by Theo van Deursen (56), currently ad-interim CEO
of the Lighting Electronics business group and until recently responsible for
the transition program of the Philips Components businesses. Mr. Van Deursen has
enjoyed a 30-year career with Philips including roles across the Components and
Lighting divisions. Previous to his special assignment with Philips Components,
Mr. Van Deursen was CEO of the Automotive & Special Lighting business unit of
Philips Lighting. He will take up his new position as of July 1, 2003, and has
been appointed a member of the Group Management Committee as of April 1.
"David Hamill has taken Philips Lighting from strength to strength and whilst we
respect his decision to return to the U.K. to be with his family, we are sorry
to see him leave," commented Gerard Kleisterlee, Philips' CEO. "Theo van Deursen
is an excellent successor with a strong track-record in Philips, and the
Lighting division in particular - the business will continue to move forward
under his leadership."
THEO VAN DEURSEN (56) Theo van Deursen was born on 22 May 1946 in Eindhoven, The
Netherlands and studied Electronics and Business Administration at the
Technische Universiteit Eindhoven.
Mr. Van Deursen joined Philips in 1973 as a Management Trainee in Purchasing. In
1976 he joined Philips Elcoma (Philips' then combined Components and
Semiconductor activities) where he held various management positions in the
Components businesses, including five years as an industrial director in South
Korea.
In 1987 he became CEO of the Magnetic Products business group within the
Components division. He held this position until 1994 when he joined the
Lighting division, becoming CEO of the Automotive business group, which was
extended to include the Special Lighting business group in 2000.
In 2002 he headed a special assignment for the strategic evaluation of the
Components division, eventually overseeing the integration of the different
businesses into other parts of the Company. He is currently acting as the ad
interim CEO of the Lighting Electronics business group.
Theo is married and has two sons.
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 31.8 billion in
2002. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 166,000 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
German Court Confirms Positive Decision on Triple Head Rotary Shavers for
Philips
Amsterdam, The Netherlands and Cologne, Germany - May 9, 2003 - Royal Philips
Electronics (AEX:PHI, NYSE:PHG) today announced that the Cologne Court of
Appeals ("Oberlandesgericht") in Germany confirmed a preliminary injunction
obtained by Philips in August 2002 prohibiting Remington from introducing and
selling triple head rotary shavers in Germany.
"We are pleased with this decision on one of our most important markets for
triple head rotary shavers - it is a positive sign for Philips," said Niels
Onkenhout, CEO of the Business Unit Shaving and Beauty of Philips Domestic
Appliances and Personal Care. "Since its first introduction about thirty years
ago, we have continuously invested in the unique design of one of the icons of
Philips, the Philishave triple headed razor. Since then, hundreds of millions of
Philishaves have been sold, an average of 700 products per hour everyday, making
Philishave the number one in electric razor shaving over its 63 year history.
People recognise the shape of our three-headed Philishave as Philips and can be
confused by identical products in the market. We shall do everything possible to
avoid that confusion so that our customers can continue to buy the quality they
expect."
The ruling of the Cologne Court of Appeals in Germany was in favour of Philips
after the earlier decision of the European Court of Justice (ECJ) dated 18 June
2002 setting the standards to register shape marks.
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 31.8 billion in
2002. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 166,000 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
Philips CEO addresses CSFB technology conference
Amsterdam, the Netherlands - 21 May 2003 - Gerard Kleisterlee, Chief Executive
Officer of Royal Philips Electronics will today address the annual Credit Suisse
First Boston European Technology Conference in Barcelona, Spain, and update the
meeting on the course of business at Philips.
Mr. Kleisterlee will give an overview of the roadmap towards "One Philips" where
synergies between the business groups can be fully exploited. The result will be
a more exciting company to work for and to do business with, a company more
focused on its customers and the end consumer, and a company that can be better
understood and appreciated by its investors.
The Philips CEO will reiterate that the Company remains fully focused on the
things management can control: cost and asset management, process improvement
and customer driven innovation.
The continuing difficult economic environment and declining US dollar are
putting pressure on revenues, in particular in the consumer electronics and
semiconductor businesses, whilst the impact of the SARS virus in Asia remains
too early to gauge. At the same time, Mr. Kleisterlee will confirm that these
challenges have invigorated efforts to deliver on the company's 2003 objectives,
to return the Semiconductors division and the Consumer Electronics activities in
the US to profitability by Q4 2003, to bring in cost savings of EUR 1 billion by
year-end, and to continue to move Medical Systems towards the objective of 14%
EBITA in 2004.
"Our company continues to become stronger as One Philips and I am proud of the
progress we have made in this respect," said Kleisterlee.
Gerard Kleisterlee's presentation will be available for download as from 10:30
CET, May 21, 2003, at www.philips.com/broker_conferences
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 31.8 billion in
2002. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 166,000 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.
North Carolina court rules in favor of Volumetrics. Philips will file for
appeal.
Amsterdam, The Netherlands, June 12, 2003 - Royal Philips Electronics (AEX: PHI,
NYSE: PHG) today announced that a trial judge in Winston-Salem, North Carolina
(USA) has confirmed a jury verdict decided in January, 2003, against a
subsidiary in the ultrasound business of Philips Medical Systems. The original
verdict consisted of compensatory damages of USD 106 million and USD 45 million
in punitive damages. The trial judge denied the subsidiary's motions to set
aside the verdict and for a new trial and has granted the plaintiff's motion to
treble the compensatory damages.
The resulting verdict, in favor of Volumetrics, Inc., is for approximately USD
319 million plus interest. The trebling of damages eliminates the punitive
damages verdict.
The existence of this claim and the jury verdict were previously disclosed in
Philips' annual report on February 11, 2003. Philips is disappointed with this
decision and has decided to appeal. The accounting treatment resulting from this
decision is under review.
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 31.8 billion in
2002. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 166,000 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
Philips and Societe Generale Announce Medical Financing Joint Venture for
Europe: Philips Medical Capital
Amsterdam, the Netherlands and Paris, France, June 18, 2003 - Royal Philips
Electronics (AEX: PHI, NYSE: PHG) and Societe Generale Group today announced the
signing of a memorandum of understanding with the aim of establishing a
financing joint venture for European customers of Philips Medical Systems.
It is intended that Philips Medical Capital in Europe will provide customers
with financing solutions for the full range of diagnostic imaging, patient
monitoring and other medical equipment of Philips Medical Systems. The joint
venture will initially cover six key European markets of Germany, the United
Kingdom, France, Italy, Spain and the Netherlands, with the intention of later
moving into other European countries. Societe Generale Group will have a 60%
share in the JV with Philips holding the remaining 40%.
Final terms will be negotiated between the parties over the coming months,
following which the joint venture will be officially launched.
The agreement follows the successful establishment in 2002 of a similar joint
venture, Philips Medical Capital, to provide the U.S. market with a broad
portfolio of financing options.
"With the establishment of this joint venture, we have added another significant
piece to our overall portfolio and improved our ability to provide our customers
with world-class healthcare solutions," said Jan Hommen, Executive
Vice-President and Chief Financial Officer of Royal Philips Electronics. "As we
have done in the U.S., we will now be able to offer our European customers a
wide variety of financing options that will make the purchasing process for our
customers easier, more flexible, more robust, which ultimately makes Philips a
better long-term partner."
The joint venture will be implemented within Societe Generale Group by Societe
Generale Vendor Services (SGVS), its vendor finance specialist. With a broad
presence in 13 countries across Europe and in Australia, SGVS is the leading
European organisation in asset based finance
Didier Alix, Chief Executive Officer of Societe Generale Retail Banking said:
"This agreement reflects the strong involvement of Societe Generale Group in
Specialized Financial Services which is a strategic business for the Group. The
joint venture gives us the opportunity to develop our vendor financing
activities in the medical sector by partnering with one of the world's biggest
medical equipment manufacturers. This partnership is a good example of our
strategy of supporting leading equipment manufacturers who are customers of the
bank. By providing them with flexible and innovative financing solutions across
Europe, we contribute to their success."
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 31.8 billion in
2002. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging
and patient monitoring, and one-chip TV products. Its 166,000 employees in more
than 60 countries are active in the areas of lighting, consumer electronics,
domestic appliances, 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
Societe Generale Group
Societe Generale is one of the largest financial services group in the eurozone.
The Group employs more than 80,000 people worldwide in three key businesses:
- Retail Banking : Societe Generale serves 14,7 million retail customers
worldwide.
- Asset Management & Private Banking : Societe Generale ranks third in the
eurozone in terms of assets under management (EUR 270 billion in 2002).
- Corporate & Investment Banking : SG is the third largest bank in the eurozone
based on net banking income.
Societe Generale is included in the four major socially responsible investment
indexes. www.socgen.com
Philips Exercises Option to Redeem EUR 1 Billion Debt One-Year Early
Amsterdam, The Netherlands, June 27, 2003 - Royal Philips Electronics (AEX:PHI;
NYSE:PHG) today announced that it will exercise its option to redeem in whole
floating rate Notes with a nominal value of EUR1.0 billion on July 30, 2003. The
floating rate notes were originally scheduled to mature in July 2004.
Philips placed the floating rate Notes in July, 2001. In accordance with their
conditions, the floating rate Notes are redeemable in whole at the option of
Philips at the price of 100.35%.
Commenting on the move, Philips' CFO Jan Hommen stated: "By redeeming this debt
early, we continue with our stated policy to further reduce the company's total
debt position. That we are able to do so is a reflection of the company's strong
balance sheet which has been and will remain a priority for Philips."
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 31.8 billion in
2002. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 166,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, 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.
Philips appoints Barbara Kux to Group Management Committee as Chief Procurement
Officer
Amsterdam, The Netherlands, July 4, 2003 - Royal Philips Electronics (AEX:PHI;
NYSE:PHG) today announced the appointment of Barbara Kux as Chief Procurement
Officer and member of the company's Group Management Committee.
Since 1999, Ms. Kux (Swiss, 49) has been Executive Director for Ford Europe with
responsibilities including maximizing corporate synergies in Europe across all
of Ford's brands, businesses and functions, including procurement. A graduate of
INSEAD's MBA program, she has almost 25 years business experience including five
years as a McKinsey consultant and senior roles with ABB and Nestle, where she
built up and headed the group's Central and Eastern European operations.
The Chief Procurement Officer at this level is a new position in Philips,
reflecting the company's continuing commitment to an increased focus on customer
intimacy and best-in-class supply chain management.
Commenting on the appointment, Jan Hommen stated: "We have made great progress
in managing our supplier relationships and indeed the total supply chain, but
the appointment of a Chief Procurement Officer is a demonstration of how serious
we are in achieving industry leading standards. Barbara possesses all the
talents and experience required for the job, and her place on the Group
Management Committee will ensure that she has a role in the general leadership
of Philips beyond her specific responsibilities in procurement."
Ms. Kux will report directly to Jan Hommen and will be based in the corporate
headquarters in Amsterdam. She will take up her role as of October 1, 2003.
Barbara Kux
Barbara Kux began her career with Nestle S.A., Germany as a Marketing Manager in
1979.
In 1984 McKinsey & Company offered her a position in its German office as a
management consultant, handling global assignments in strategy and business
transformation for major international clients.
After five years with McKinsey, she joined her McKinsey client Asea Brown Boveri
AG (ABB) as Vice President responsible for the entry into Central & Eastern
Europe. Overseeing the acquisition and restructuring of five major
power-engineering companies, she established the market leader in Power
Generation with sales of US$ 2 billion.
In 1993 she returned to Nestle as Vice President of the company's Central and
Eastern Europe region, covering 15 countries and 14,000 employees, before taking
responsibility for Nestle's Polish operations, establishing the country's market
leading food business.
In 1999 she joined Ford Europe as Executive Director, overseeing 19 European
markets with revenues of US$ 1.4 billion. In her role she strengthened the
position
of the business, increasing profitability by 30%, before taking up her current
role, responsible for capturing corporate synergies across Ford Europe, and
establishing common business processes and structures across all key functions,
including procurement.
Ms. Kux is Swiss, born in 1954, and has a Dutch spouse. She holds an MBA (with
distinction) from INSEAD, and speaks fluent English, German and French. She is a
member of INSEAD's Board of Directors and has been elected a Global Leader for
Tomorrow at the World Economic Forum. Her personal interests include cultural
activities, sports, and spending time with friends and family.
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 31.8 billion in
2002. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 166,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, 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
Philips and Accton form Arcadyan joint venture
Hsinchu, Taiwan/Amsterdam, The Netherlands- July 7th, 2003--- Accton Technology
Corporation of Taiwan (Accton) and Royal Philips Electronics (Philips), today
announced the formation of Arcadyan Technology Corporation. Established on July
7th, 2003, this joint venture brings wireless infrastructure expertise and
combines it with advanced A/V technology integration expertise. With an emphasis
on optimizing audio and video quality, Arcadyan offers a robust product
portfolio of wireless solutions.
Headquartered in Hsinchu, Taiwan, with offices in San Jose, Tokyo, Amsterdam,
Shanghai, and Bangalore, Arcadyan has outstanding shares of 52% for Accton, and
48% for Philips. Philips will have three seats on the board, and Accton will
also hold three seats. Both companies are customers and development partners of
the joint venture for wireless connectivity products.
Over the next few years, Arcadyan's advanced wireless solutions will be key
enablers in the growing broadband market for devices that deliver content-rich
always-on, always-connected applications. Arcadyan already provides innovative
wireless products for leading design-in (Original Equipment Manufacturing) and
add-on infrastructure to the MSO/ISP, consumer electronics, PC, and mobile phone
industries.
Arcadyan's objective is to address the increasing market requirements for
advanced, easy to use, and cost effective wireless solutions based on state of
the art technology in Wi-Fi (802.11), BluetoothTM and other industry standards.
This includes a full line of access points and gateways including a Powerline
Communication/802.11b bridge, worldwide-approved 802.11a/b/g solutions, emerging
consumer applications like the recently launched Home Wireless A/V Platform and
Bluetooth data and audio products.
About Arcadyan Technology Corporation
Arcadyan is an exciting new joint venture between Accton Technology Corporation
of Taiwan and Royal Philips Electronics of the Netherlands. Recently
established, the joint venture is designed to bring the best of wireless
infrastructure expertise and combine it with advanced integration expertise to
create a robust product portfolio of wireless solutions. Arcadyan provides
innovative wireless products for design-in (Original Equipment Manufacturing)
and add-on infrastructure to the MSO/ISP, consumer electronics, enterprise, PC
and mobile phone industries. Based on state-of-the-art technology in Wi-Fi
(802.11), Bluetooth and other industry standards Arcadyan delivers a full line
of access points and gateways including a Powerline Communication/802.11b
bridge, worldwide-approved 802.11a/b/g solutions, emerging consumer applications
like the recently launched Home Wireless A/V Platform and Bluetooth data and
audio products. www.arcadyan.com
About Accton Technology Corporation
Accton Technology Corporation, established in 1988, is a global outsourcing
partner of advanced communication products. It provides a variety of Ethernet,
Fast Ethernet and Gigabit products including hubs, switches, Internet Access
Device and Wireless solutions. The company has more than 3,000 employees and
around 654
engineers worldwide. Accton is at the center of a cast array of communications
technology and customer partnership spanning the globe. This technology ranges
from ASIC design through high performance chassis switches through to Internet
integration and application. "Making Partnership Work" is more than a
slogan---It is Accton's way of doing business. www.accton.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 31.8 billion in
2002. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 166,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, 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.