Philips 2010 Annual Report Download - page 103

6 Sector performance 6.4.4 - 6.4.5
Annual Report 2010 103
6.4.4 Philips Design
Philips Design is one of the longest-established design
organizations of its kind in the world. It is headquartered
in Eindhoven, the Netherlands, with branch studios in
Europe, the US and Asia Pacific. Its creative force
comprises designers, psychologists, ergonomists,
sociologists, philosophers and anthropologists working
together to understand people’s needs and desires, in
order to generate designs which support people in
accomplishing and experiencing things in natural, intuitive
ways.
Philips Design’s forward-looking exploration projects
deliver vital insights for new business development,
supporting the transformation towards a health and well-
being company.
6.4.5 2010 financial performance
In 2010, sales were EUR 23 million higher than in 2009,
mainly due to higher license revenues and higher sales at
Assembléon.
EBITA in 2010 amounted to a loss of EUR 142 million,
compared to a loss of EUR 282 million in 2009. The year-
on-year improvement in EBITA was mainly attributable to
higher revenue, lower overhead costs and the
discontinuation of Molecular Healthcare.
EBITA at Corporate Technologies was EUR 99 million
higher than in 2009, attributable to higher license revenue,
the discontinuation of Molecular Healthcare and 2009’s
asset write-offs.
Corporate & Regional costs were EUR 32 million lower
than in 2009, attributable to lower restructuring charges
and continuous focus on cost reduction.
EBITA at Pensions was EUR 42 million lower than in 2009,
in part due to that year’s EUR 134 million curtailment gain
on retiree medical benefit plans, partly offset by a EUR 119
million gain in 2010, in part due to a change in indexation.
EBITA at Service Units and other improved from a loss of
EUR 88 million in 2009 to a loss of EUR 37 million. The
improvement was largely driven by lower restructuring
charges in our global service units.
Net operating capital declined to negative EUR 3.3 billion,
mainly attributable to lower prepaid pension cost related
to the pension plan in Netherlands, which is no longer
recognized as an asset.
Cash flows before financing activities improved from an
outflow of EUR 785 million in 2009 to an outflow of EUR
679 million, mainly attributable to higher cash earnings
and the EUR 485 million of final asbestos payments in
2009. This was partly offset by lower proceeds on the sale
of stakes, mainly reflecting the sale of LG Display and Pace
Micro Technology in 2009.
Key data
in millions of euros
2008 2009 2010
Sales 485 337 360
Sales growth
% increase (decrease), nominal (34) (31) 7
% increase (decrease),
comparable1) (26) (30) 6
EBITA Corporate Technologies (126) (162) (63)
EBITA Corporate & Regional costs (234) (174) (142)
EBITA Pensions 14 142 100
EBITA Service Units and other (355) (88) (37)
EBITA1) (701) (282) (142)
EBIT1) (701) (282) (147)
Net operating capital (NOC)1) (1,226) (1,514) (3,309)
Cash flows before financing
activities1,2) 1,815 (785) (679)
Employees (FTEs) 11,335 11,586 11,928
1) For a reconciliation to the most directly comparable GAAP measures, see
chapter 16, Reconciliation of non-GAAP information, of this Annual Report
2) Prior period amounts have been revised to reflect an adjusted sector allocation