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, 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 and actuarial assumptions, 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, contained in this document, including those regarding Philips’ competitive position, are based on outside sources such as specialized research institutes, industry and dealer panels in combination with management estimates. Where full-year information regarding 2009 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.
IFRS basis of presentation
The ﬁnancial information included in this document is based on IFRS, unless otherwise indicated. As used in this document, the term EBIT has the same meaning as Income from operations (IFO).
Use of non-GAAP information
In presenting and discussing the Philips Group’s ﬁnancial position, operating results and cash ﬂows, management uses certain non-GAAP ﬁnancial measures like: comparable growth; EBITA; NOC; net debt (cash); free cash ﬂow; and cash ﬂow before ﬁnancing activities. These non-GAAP ﬁnancial measures should not be viewed in isolation as alternatives to the equivalent GAAP measures.
Further information on non-GAAP information and a reconciliation of such measures to the most directly comparable GAAP measures can be found in the chapter Reconciliation of non-GAAP information.
Statutory ﬁnancial statements and management report
The chapters Group ﬁnancial statements and Company ﬁnancial statements contain the statutory ﬁnancial statements of the Company. The introduction to the chapter Group 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).
As of January 2009, the Hospitality business moved from Consumer Lifestyle to Lighting. In 2009, the activities of the Incubators, which are included in Innovation & Emerging Businesses, were charged to Research & Development cost of the operating sectors. Beginning in 2009, Innovation & Emerging Businesses is reported under Group Management & Services. As a consequence of the aforementioned, prior-year ﬁnancials have been restated.
Analysis of 2008 compared to 2007
The analysis of the 2008 ﬁnancial results compared to 2007, 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 2009, which is ﬁled electronically with the US Securities and Exchange Commission.