Philips 2006 Annual Report Download - page 78

Philips Annual Report 200678
Introduction
This sector comprises Corporate Technologies, Corporate
Investments and Other (Design, Supply Management, Global
Service Units). It also comprises various remaining activities
from businesses that have been sold, discontinued, phased
out or deconsolidated in earlier years.
In 2007, this reporting sector will be repositioned as the
“Innovation & Emerging Businesses” sector, which will help
drive Philips’ future growth. By leveraging Philips’ brand,
technology base and distribution network, the company
aims, through this sector, to invest in projects that are not
currently part of Philips’ operating divisions, but which
will − Philips believes − lead to additional organic growth
or create value through future spin-offs. Innovation &
Emerging Businesses includes Corporate Research, Philips’
Business Incubators and Intellectual Property & Standards,
as well as Consumer Healthcare Solutions.
Key data
in millions of euros
2004 2005 2006
Sales 2,482 2,041 1,547
Sales growth
% increase (decrease), nominal 12 (18) (24)
% increase (decrease), comparable 18 (5) (7)
EBITA 388 (155) (448)
as a % of sales 15.6 (7.6) (29.0)
EBIT Corporate Technologies (323) (219) (205)
EBIT Corporate Investments 102 (58) 14
EBIT Other 587 121 (257)
EBIT 366 (156) (448)
as a % of sales 14.7 (7.6) (29.0)
Net operating capital (NOC) 117 272 21
Cash fl ows before fi nancing activities 741 2,584 (115)
Employees (FTEs) 23,869 19,050 13,347
For a reconciliation to the most directly comparable US GAAP measures, see the
chapter Reconciliation of non-US GAAP information.
Corporate Technologies
Strong performance in research and development
(R&D) is critical for Philips to maintain or increase
its competitiveness. Through substantial investments
in R&D, Philips has created a vast knowledge base.
In direct response to the needs of the market, Philips
has in recent years adopted a more end-user-oriented
approach to R&D, with expenditures directed at projects
with more apparent short-term commercial prospects.
Philips’ R&D activities are spread over Corporate
Technologies and the operating divisions. Philips
CTO Offi ce manages Corporate Technologies and all
enabling technologies across the company. Corporate
Technologies, employing 4,500 people, invests in
worldclass competencies and technologies that are
relevant to the entire Philips Group. In the operating
divisions, some 10,000 employees in over 25 countries
are predominantly engaged in the development of
products and solutions. In 2006, Philips sold a majority
stake in its Semiconductors division. 550 employees of
Corporate Technologies went with the division, which
was subsequently renamed ‘NXP Semiconductors’.
Fueling innovation
Corporate Technologies feeds the innovation pipeline,
enabling its business partners – Philips divisions and
external businesses – to improve their time-to-market and
innovation effectiveness, and thus achieve profi table growth
.
Corporate Technologies supports Philips’ operating divisions
in turning innovations into advanced products which are
protected by patents. It stimulates the exploitation of
technology synergies across the operating divisions
through its shared labs and competencies. The High
Tech Campus in Eindhoven, Netherlands, and the Philips
Innovation Campus in Bangalore, India and Shanghai,
China, are prime examples of this approach.
Other Activities
6 Financial highlights 8 Message from the President 14 Our leadership 20 The Philips Group