Philips 2009 Annual Report Download - page 124

In December 2007, the Dutch parliament adopted an
amendment to Dutch tax legislation, effective January 1,
2008, that increased the amount that companies may
spend on repurchasing shares free of withholding tax.
Subsequently, Philips announced that it planned to
repurchase EUR 5 billion worth of common Philips shares.
As a consequence of this new share repurchase program,
which includes the portion of the second trading line
program that had yet to be completed, Philips terminated
its second trading line.
At the end of 2008 share repurchases totaling EUR 3.3
billion, or two-thirds of the planned EUR 5.0 billion, had
been completed. Given the economic conditions in 2008,
we announced on January 26, 2009 that, in line with our
prudent financial management, we would suspend the
share repurchase program until further notice.
Further details on the share repurchase programs can be
found on the Investor Relations website. For more
information see the section 10.1, Corporate governance
of the Philips Group, of this Annual Report.
In 2008 the Company started the procedure for the
cancellation of Philips shares acquired pursuant to the
EUR 5.0 billion share repurchase program. The
cancellation has been effected in several tranches.
Impact of share repurchases on share count
in millions of shares
2005 2006 2007 2008 2009
Shares issued 1,316 1,143 1,143 972 972
Shares in treasury 115 36 78 49 45
Shares outstanding 1,201 1,107 1,065 923 927
Shares repurchased 72 102 26 146 −
Shares cancelled − 173 − 170 −
7.4 Risk management
Taking risks is an inherent part of entrepreneurial
behavior. A structured risk management process
encourages management to take risks in a controlled
manner. Philips has a structured risk management process
in place that recognizes different risk categories at
Strategic, Operational, Compliance and Financial level. A
more extensive explanation is published in section 6.1,
Introduction, of this Annual Report.
Philips’ rating
Philips’ existing long-term debt is rated A3 (with negative
outlook) by Moody’s and A- (with stable outlook) by
Standard & Poor’s. It is our objective to manage our
financial ratios to be in line with A3 / A-. There is no
assurance that we will be able to achieve this goal and
ratings are subject to change at any time.
Credit rating summary
Long-
term
Short-
term Outlook
Standard and Poor’s A- A-2 Stable
Moody’s A3 P-2 Negative
7 Investor information 7.3.3 - 7.4
124 Philips Annual Report 2009