PHILIPSsense and simplicity

Shannon Dorsey

Brian Patera

Leslie Royer

Hope Sutton

Brandi Wisenbaker

History

1892: Philips & Co established 1912: Incorporated 1914: 1st research lab established Multiple reorganizations Marketing changes

“Let’s make things better.”“Sense and simplicity.”

2007: Vision 2010

Mission

"Improve the quality of people’s lives through timely introduction of meaningful innovations."

Vision and Values

“In a world where complexity increasingly touches every aspect of our daily lives, we will lead in bringing sense and simplicity to people.”

Delight Customers Deliver Great Results Develop People Depend on Each Other

Sectors

Healthcare Lighting Consumer Lifestyle

Goals

Group EBITA: 10-11% in 2010Healthcare EBITA: 15-17%Lighting EBITA: 12-14%Consumer Lifestyle: 8-10%

6% Sales growth for period 2008-2010 Return on invested capital: 12-13% in

2010

1st Quarter 2010 Financials Group EBITA: 9.8%

Healthcare : 10.7%Lighting : 14.0%Consumer Lifestyle: 9.2%

Sales growth: 12% increase ROIC

Financial RatiosYear 2005 2006 2007 2008 2009 Industry

RatioCurrent 1.44 1.64 1.85 1.35 1.48 1.80

Quick 1.18 1.32 1.52 0.96 1.12 1.40

D/A 0.50 0.40 0.40 0.51 0.52 -

D/E 0.27 0.17 0.16 0.27 0.29 0.50Total Asset Turnover 0.75 0.69 0.74 0.83 0.76 0.80Net Profit

Margin 15.30% 4.60% 25.30% -0.50% 2.40% -4.60%Return on

Equity 17.30% 3.90% 23.20% -0.50% 2.80% -10.00%Return on

Assets 8.50% 2.30% 13.80% -0.30% 1.30% -33.60%

Internal Stakeholders

• Employees• Board members• Stockholders

External Stakeholders

Customers Suppliers Creditors Government Communities General Public

Most Important Stakeholders Customers Employees Stockholders

Strategies

Corporate LevelUnrelated Diversification

Business LevelDifferentiation

Functional LevelR&D, Marketing

Five Forces Analysis

Low Threat of Entry because of economies of scale, high start-up costs

Increased Rivalry because of consolidated industry, high exit barriers, declining demand, and high fixed costs.

Five Competitive Forces

Increased Threat of Substitutes because many competing brands offer similar products and no switching costs

Low Power of Buyers because there is a large number of buyers

Low Power of Suppliers because there are many supplier firms and the supplied input is not highly differentiated

Macroeconomic Forces Global Technological Demographic Social Political & Legal Macroeconomic

Competitive Advantage

Innovation* Customer Responsiveness* Efficiency Quality

Core Competences

Humanities, design Life sciences Physics & Chemistry Electronics Informatics & mathematics Technology, engineering

Corporate Governance

Two Tier System

- Supervisory Board

- Board of Management Group Management Committee

- Highest consultative body within Philips

Ethics

General Business Principles Code of Ethics

Act honestly & ethicallyAvoid conflicts of interestComply with applicable govt laws, rules,

regulations

Any Questions?