Philips 2007 Annual Report Download - page 89

Philips Annual Report 2007 95
98 Risk management 112 Our leadership 116 Report of the Supervisory Board 126 Financial Statements
Investments in the global brand campaign amounted to
EUR 111 million, a EUR 15 million reduction compared
to 2006.
Pension and other postretirement benet costs recorded
under Group Management & Services were EUR 53 million
lower than in 2006, largely due to an increase in plan assets
in 2006.
The EBITA improvement in the Global Service Units and
other businesses was primarily attributable to a product
liability charge of EUR 256 million recognized in 2006.
EBITA in 2007 was positively impacted by the result of
the Real Estate Service Unit, with various gains on real
estate transactions amounting to EUR 50 million, partly
offset by additional legal expenses, mainly in the US,
as well as investments in projects which target the
further simplication of the service units. In 2006, real
estate transactions yielded a prot of EUR 54 million.
On October 1, 2007, Philips completed the sale
of the Finance Shared Services Centers to Infosys.
As of 2007, parts of the corporate services costs
(EUR 162 million) have been allocated to the operating
divisions, which drive and create value from these
resources. Previous years have been restated accordingly.
Cash ows before nancing activities turned from
an outow of EUR 1,832 million in 2006 to an inow
of EUR 5,232 million in 2007. This inow was primarily
attributable to cash receipts related to the sale of shares
in TSMC (EUR 3,895 million) and LG.Philips LCD
(EUR 1,547 million). Cash ows from operating
activities improved, primarily due to EUR 742 million
lower pension contributions as compared to 2006.
Group Management & Services
The sector Group Management & Services comprises
the activities of the corporate center including Philips’
global brand management and sustainability programs,
as well as country and regional overhead costs, and
costs of pension and other postretirement benet plans.
Additionally, the Global Service Units such as Philips
General Purchasing and Real Estate are reported
in this sector.
Key data
in millions of euros
20051) 20061) 2007
Sales 136 167 197
Sales growth
% increase (decrease), nominal (60) 23 18
% increase (decrease), comparable (20) 14 31
EBIT (192) (699) (297)
EBITA Corporate & regional costs (171) (226) (156)
EBITA Brand campaign (138) (126) (111)
EBITA Service Units, Pensions, Other 117 (347) (30)
EBITA (192) (699) (297)
Net operating capital (NOC) (531) 208 705
Cash ows before nancing activities 1,736 (1,832) 5,253
Employees (FTEs) 6,312 6,879 5,299
1) Restated to present the MedQuist business as a discontinued operation
For a reconciliation to the most directly comparable US GAAP measures,
see the chapter Reconciliation of non-US GAAP information.
The EBITA of corporate and country overheads
improved signicantly in 2007 compared to 2006,
primarily as a result of the simplication of the regional
management structure and lower costs related to
Sarbanes-Oxley compliance, which totaled EUR 26
million in 2006.