Philips 2008 Annual Report Download - page 44

US GAAP basis of presentation
The financial information included in this document is based
on US GAAP, unless otherwise indicated. As used in this
document, the term EBIT has the same meaning as Income
from operations (IFO).
Use of non-US GAAP information
In presenting and discussing the Philips Group’s financial
position, operating results and cash flows, management uses
certain non-US GAAP financial measures like: comparable
growth; EBITA; NOC; net debt (cash); free cash flow; and cash
flow before financing activities. These non-US GAAP financial
measures should not be viewed in isolation as alternatives to
the equivalent US GAAP measures.
Further information on non-US GAAP information and
a reconciliation of such measures to the most directly
comparable US GAAP measures can be found in the chapter
Reconciliation of non-US GAAP information.
Statutory financial statements and management report
The chapters IFRS financial statements and Company financial
statements contain the statutory financial statements. The
introduction to the chapter IFRS financial statements sets out
which parts of this Annual Report form the management report
within the meaning of Section 2:391 of the Dutch Civil Code
(and related Decrees).
Revision and reclassifications
Philips has revised prior-year financials to reflect immaterial
adjustments of intercompany profit eliminations on inventories
in the Healthcare sector. Philips has determined that those
adjustments were not material for each of the individual prior
years. Further information is provided in the chapter Significant
accounting policies in the section Revisions and reclassifications.
As of January 1, 2008, Philips’ activities are organized on
a sector basis, with each operating sector – Healthcare,
Consumer Lifestyle and Lighting – being responsible for the
management of its businesses worldwide. The Healthcare sector
brings together the former Medical Systems division and Home
Healthcare Solutions (formerly Consumer Healthcare Solutions)
which has been transferred from Innovation & Emerging
Businesses. The former Consumer Electronics and Domestic
Appliances and Personal Care divisions have been integrated in
the Consumer Lifestyle sector. In addition, key financials of the
segment Television, part of the sector Consumer Lifestyle,
have been disclosed separately. As a consequence of the
aforementioned, prior-year financials have been restated.
Analyses of 2007 compared to 2006
The analysis of the 2007 financial results compared to 2006, and
the discussion of the critical accounting policies, have not been
included in this Annual Report. These sections are included in
Philips’ Form 20-F for the financial year 2008, which is filed
electronically with the US Securities and Exchange Commission.
Forward-looking statements
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, in particular the Outlook
section of the chapter Our group performance in this Annual
Report. Examples of forward-looking statements include
statements made about our strategy, estimates of sales growth,
future EBITA and future developments in our organic business.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances
and there are many factors that could cause actual results and
developments to differ materially from those expressed or
implied by these forward-looking statements.
These factors include, but are not limited to, domestic and
global economic and business conditions, particularly in light of
the ongoing recessionary condition prevailing in many markets,
the successful implementation of our strategy and our ability to
realize the benefits of this strategy, our ability to develop and
market new products, changes in legislation, legal claims, changes
in exchange and interest rates, changes in tax rates, pension
costs, raw materials and employee costs, our ability to identify
and complete successful acquisitions and to integrate those
acquisitions into our business, our ability to successfully exit
certain businesses or restructure our operations, the rate of
technological changes, political, economic and other developments
in countries where Philips operates, industry consolidation and
competition. As a result, Philips’ actual future
results may differ
materially from the plans, goals and expectations
set forth in such
forward-looking statements. For a discussion of factors that
could cause future results to differ from such
forward-looking
statements, see also the chapter Risk management.
Third-party market share data
Statements regarding market share, including those regarding
Philips’ competitive position, contained in this document are
based on outside sources such as specialized research institutes,
industry and dealer panels in combination with management
estimates. Where full-year information regarding 2008 is not
yet
available to Philips, those statements may also be based on
estimates and projections prepared by outside sources or
management. Rankings are based on sales unless otherwise stated.
Fair value information
In presenting the Philips Group’s financial position, fair values
are used for the measurement of various items in accordance
with the applicable accounting standards. These fair values are
based on market prices, where available, and are obtained from
sources that are deemed to be reliable. Readers are cautioned
that these values are subject to changes over time and are only
valid at the balance sheet date. When an observable market
value does not exist, fair values are estimated using valuation
models, which we believe are appropriate for their purpose.
They require management to make significant assumptions with
respect to future developments which are inherently uncertain
and may therefore deviate from actual developments. Critical
assumptions used are disclosed in the financial statements. In
certain cases, independent valuations are obtained to support
management’s determination of fair values.
Philips Annual Report 200844
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Our group performance
Management discussion
and analysis
18
We care about...
8
Message from
the President
6
Performance highlights
14
Who we are