<PAGE> 1
2000 - 4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
-------
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the period commencing April 4, 2000 through April 19, 2000
-------
KONINKLIJKE PHILIPS ELECTRONICS N.V.
--------------------
(Name of registrant)
Rembrandt Tower, Amstelplein 1, 1096 HA Amsterdam, The Netherlands
-------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934:
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2 (b): 82-
--------------
Name and address of person authorized to receive notices
and communications from the Securities and Exchange Commission:
Richard C. Morrissey, Esq.
Sullivan & Cromwell
St. Olave's House
9a Ironmonger Lane
London EC2V 8EY, UNITED KINGDOM
<PAGE> 2
This report comprises a copy of the Quarterly Report of the Philips Group for
the three months ended March 31, 2000, dated April 19, 2000, as well as a press
release entitled "Philips to again execute a Share Reduction Program" of the
same date.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf, by the
undersigned, thereunto duly authorized at Amsterdam, on the 19th day of April,
2000.
KONINKLIJKE PHILIPS ELECTRONICS N.V.
/s/ C. Boonstra
C. Boonstra
(President,
Chairman of the Board of Management)
/s/ J.H.M. Hommen
J.H.M. Hommen
(Executive Vice-President,
Member of the Board of Management
and Chief Financial Officer)
<PAGE> 1
Exhibit 1
Quarterly report
March 31, 2000
Philips
(LOGO)
<PAGE> 2
STATEMENTS OF INCOME
all amounts in millions of euros (EUR) unless otherwise stated
The data included in this report are unaudited.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
January to March
--------------------------
2000 1999
--------- ----------
<S> <C> <C>
Sales 8,329 6,837
- --------------------------------------------------------------- --------- ----------
Ebitda 1,147 915
- --------------------------------------------------------------- --------- ----------
Income from operations (Ebit) 663 549
Financial income and expenses 480 21
- --------------------------------------------------------------- --------- ----------
Income before taxes 1,143 570
Income taxes (124) (114)
- --------------------------------------------------------------- --------- ----------
Income after taxes 1,019 456
Results relating to unconsolidated companies 135 25
Minority interests (14) (12)
- --------------------------------------------------------------- --------- ----------
Income from continuing operations 1,140 469
Extraordinary items - net - -
- --------------------------------------------------------------- --------- ----------
NET INCOME 1,140 469
Basic earnings per common share in EUR (after stock split):
- - income from continuing operations 0.86 0.32
- - net income 0.86 0.32
</TABLE>
PRESENTATION AND ACCOUNTING ISSUES
The data per share in this report have been based on the (average) number of
shares outstanding after the 4-for-1 stock split which was effected per April
14, 2000. Prior-year data have been restated accordingly.
As of this quarter, the segment reporting is extended to nine segments. Consumer
Electronics and Domestic Appliances and Personal Care (DAP), formerly part of
Consumer Products, are shown separately, as is Medical Systems which was part of
Professional. Additionally, revenues and income from operations are provided for
the business groups within Consumer Electronics.
In order to further align Philips' accounting principles under Dutch GAAP with
US GAAP requirements, certain product development and process development costs
are no longer included in inventories. In line with Dutch GAAP, the relevant
costs included in the January 1 balance sheet were debited direct to
stockholders' equity.
<PAGE> 3
REPORT ON THE PERFORMANCE OF THE PHILIPS GROUP
- - Income from continuing operations in Q1 2000 was EUR 1,140 million (EUR
0.86 per share) vs. EUR 469 million (EUR 0.32 per share) in Q1 1999. Q1
2000 income included a EUR 526 million gain from the sale of a portion of
JDS Uniphase shares.
- - All sectors, except Origin, contributed to the increase in income.
- - Ebitda on a comparable basis was more than 50% up on the year-earlier
quarter.
- - RONA came to 25.1% vs. a comparable 16.2% last year.
- - Comparable sales growth was 11% vs. 3% last year.
Income from continuing operations in the first three months amounted to EUR
1,140 million (EUR 0.86 per share) compared to EUR 469 million (EUR 0.32 per
share) in the corresponding period of 1999. Included in income is a gain of EUR
526 million from the sale of a portion of the JDS Uniphase shares received upon
the sale of Optoelectronics in mid-1998. Income from operations in the first
quarter of 1999 included a gain of EUR 169 million (EUR 150 million after tax)
from the sale of Conventional Passive Components. Without these non-recurring
items, income from continuing operations in the first quarter improved by 92%
over the same period of last year. Improvement in income from continuing
operations was the result of strong sales performance in virtually all product
sectors, significantly lower employment costs, mainly as a result of pension
credits, and strong performance at unconsolidated companies.
Sales in the first quarter amounted to EUR 8,329 million, reflecting a 22%
nominal increase over the same period a year ago. Adjusted for exchange rate
fluctuations (9%), and consolidation changes (2%), comparable sales growth came
to 11% compared to 3% a year earlier. Sales growth is accelerating, especially
in Semiconductors, Components, Miscellaneous and Domestic Appliances and
Personal Care, and within the Consumer Electronics sector, in Consumer
Communications and Digital Networks.
Price erosion in the first quarter was 5%, substantially down from 8% in the
corresponding quarter last year and also down from the fourth quarter of 1999
(7%). Volume growth came to 17% compared with 11% a year ago.
Income from operations (EUR 663 million or 8.0% of sales, against EUR 549
million or 8.0% of sales in 1999), is reflecting higher
depreciation/amortization charges, mainly resulting from a number of
acquisitions in 1999. Excluding the non-recurring gains from the sale of
participations in 1999, income from operations was 8.0% versus 5.4% in the
year-earlier period. The result was positively impacted by pension credits
which are partly (EUR 50 million) allocated to the various segments. The RONA
ratio amounted to 25.1% compared to 16.2% in the year-earlier period, when
excluding the gain on the sale of Conventional Passive Components. Positive
income developments occurred across the board except at Origin, which is
suffering from a slow start of the IT sector post-millennium.
Financial income and expenses came to a positive balance of EUR 480 million
compared to a positive amount of EUR 21 million in the year-earlier period. The
current quarter includes a EUR 526 million gain from the sale of a block of JDS
Uniphase shares. This positive effect was partly offset by higher net interest
expense and exchange rate differences. The tax burden has been determined at a
tentative rate of 20% excluding the JDS Uniphase gain, which is not taxable.
This resulted in an overall tax burden of less than 11% compared with 20% in the
same period of last year.
Philips' results relating to unconsolidated companies rose to EUR 135 million
from EUR 25 million a year earlier, primarily coming from the joint venture
LG.Philips LCD Co., established mid-1999, and the sharply higher contribution
from Taiwan Semiconductor Manufacturing Co. Last year's figure included a
non-recurring gain in relation to the transfer of 27% of Philips' shareholding
in Navigation Technologies to a Dutch investor group. Minority interests were
virtually unchanged.
<PAGE> 4
TREND PER PRODUCT SECTOR
Growth is expressed on a comparable basis
In the Lighting sector, the nominal increase in sales was 10%, which was
attributable to strengthening Asian markets, combined with positive currency
influences. Comparable growth came to 2%. Income from operations improved to
EUR 205 million from EUR 178 million, benefiting from stronger market
conditions and improved margins, resulting from a richer product mix, as well
as from past restructuring initiatives which address continuing pricing
pressures.
Sales in the Consumer Electronics sector increased by 9%, reflecting 18% volume
growth partly offset by 9% price erosion. The larger part of the growth relates
to Consumer Communications, Digital Networks and CE Specialty Products.
Despite a restructuring charge of EUR 18 million, income from operations
improved to EUR 72 million from last year's EUR 40 million, mainly due to the
turnaround at Philips Consumer Communications and higher license income. The
results of Mainstream CE, however, were adversely affected by price erosion
offsetting volume growth, and a restructuring charge for downsizing of its
Singapore operations. Income in Digital Networks is reflecting the cost of
investments in new high-growth digital business opportunities, which will lead
to improved sales and earnings in the near future.
The Domestic Appliances and Personal Care sector saw a considerable sales
increase of 11%, primarily attributable to vigorous growth in Male shaving and
grooming.
Income from operations reached EUR 45 million versus EUR 25 million a
year-earlier, benefiting mainly from successful product launches such as the
Quadra action shaver, favorable currency effects, and improved economies in
emerging markets.
The Components sector reported a strong 20% increase in sales compared to the
prior year, mainly attributable to Display Components and Optical Storage.
Income from operations of EUR 95 million compares to last year's EUR 201
million, which included the EUR 169 million gain relating to the divestment of
Conventional Passive Components. The improvement is primarily attributable to
strong performance in Optical Storage and Advanced Ceramics & Modules.
In the Semiconductors sector sales increased by 58% on a nominal basis, to which
VLSI contributed strongly. On a comparable basis, sales growth was 23%, in line
with the market served by Philips Semiconductors. Income from operations was up
at EUR 241 million or 16.8% of segment revenues from EUR 167 million or 17.7% in
1999. Higher sales delivered improvements in all businesses; the relative
decrease of the operating margin was due to higher goodwill amortization charges
related to VLSI.
Sales of the Medical Systems sector were 9% up on the prior year, largely
attributable to North America. Income from operations turned to EUR 20 million
from a break-even result last year, due to a strong sales performance and strict
cost control.
Sales at Origin remained 10% below last year as a result of reduced market
demand in the post-millennium period. Income from operations of EUR 1 million
was down on last year's EUR 25 million, mainly as a consequence of these lower
sales. Also a restructuring charge for the alignment of workforce and facilities
costs, and higher goodwill charges negatively impacted on the results.
The Miscellaneous sector saw a 25% increase in sales, mainly due to FEI/Micrion,
Machinefabrieken and Electronic Manufacturing Technology (EMT).
Income from operations was down at a loss of EUR 6 million versus a EUR 3
million loss in the year-earlier period, which included income contributions
from activities that have meanwhile been divested. This year's results include a
restructuring charge involving certain research activities in the Netherlands.
In the Unallocated segment, the quarter has been positively impacted by pension
credits of approximately EUR 70 million.
<PAGE> 5
TREND PER GEOGRAPHIC AREA
Growth is expressed on a comparable basis
Sales in Europe increased strongly (14%) in the first quarter, driven by
Consumer Electronics - in particular Mainstream CE and Consumer
Communications -, Components and Semiconductors. A major upturn occurred in
Eastern Europe, which saw a 46% increase in sales. North American sales were 7%
up on the prior year, mainly attributable to strong sales in Medical Systems,
Semiconductors and DAP.
Latin America posted strong sales growth, 23% ahead of last year. Brazil and
Mexico recorded the most significant increases, driven by Mainstream CE and
Components.
Sales in Asia Pacific were 7% up on the prior year with the main contributions
coming from Semiconductors, Lighting and DAP. Sales in China ended 5% higher.
Income from operations improved in all regions except North America. Europe
recorded higher results even including last year's one-off gain on the sale of
Conventional Passive Components. This was primarily driven by the turnaround in
Consumer Communications, as well as stronger performance in Semiconductors and
Components.
Latin America benefited from rationalization measures in prior years, which are
particularly visible in the results of Consumer Electronics and Components. Asia
Pacific saw the strongest improvement in income despite a substantial
restructuring charge for CE's Singapore operations.
BALANCE SHEET RATIOS AND CASH FLOWS
Inventories at the end of March 2000 came to 14.5% of sales as compared to 15.6%
a year earlier. The average collection period of outstanding trade receivables
was the equivalent of 1.6 months' sales, unchanged from one year ago.
Cash flow from operating activities was EUR 405 million versus EUR 71 million
last year mainly as a result of much higher operating performance. Cash provided
by investing activities of EUR 130 million was below 1999, because of higher
capital expenditures. The resulting cash flow before financing activities was
EUR 535 million compared with EUR 284 million in the first quarter of last year.
EMPLOYEES
The number of people employed at the end of March 2000 was 229,341, an increase
of 1,998 employees over the comparable position on January 1, 2000.
OUTLOOK
Results of the first quarter confirm our positive outlook for the year 2000, and
we continue to see opportunities for further improvements ahead. We have reached
our RONA target of 24% in the first quarter and will achieve double-digit growth
in earnings and a positive cash flow again this year.
April 19, 2000
Royal Philips Electronics
Board of Management
<PAGE> 6
PRODUCT SECTORS AND CASH FLOWS
all amounts in millions of euros (EUR) unless otherwise stated
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SEGMENT REVENUES January to March
AND INCOME FROM ------------------------------------------------------------------------------------------
OPERATIONS 2000 1999
------------------------------------------- ---------------------------------------------
segment income as % of segment income as % of
revenues (loss) from segment revenues (loss) from segment
operations revenues operations revenues
<S> <C> <C> <C> <C> <C> <C>
Lighting 1,237 205 16.6 1,122 178 15.9
Consumer Electronics * 3,178 72 2.3 2,863 40 1.4
DAP 387 45 11.6 327 25 7.6
Components 1,491 95 6.4 1,210 201 16.6
Semiconductors 1,435 241 16.8 946 167 17.7
Medical Systems 574 20 3.5 486 0 -
Origin 400 1 0.3 414 25 6.0
Miscellaneous 430 (6) (1.4) 409 (3) (0.7)
Unallocated (10) (84)
- ----------------------------- ----------- ----------- ------------ -----------
Total 9,132 663 7,777 549
Intersegment revenues (803) (940)
- ----------------------------- ----------- ------------
SALES 8,329 6,837
Income from operations
as a % of sales 8.0 8.0
* of wich:
Mainstream CE 1,868 (17) (0.9) 1,829 9 0.5
Consumer Communications 521 24 4.6 393 (37) (9.4)
Digital Networks 197 (21) (10.7) 170 (14) (8.2)
Specialty Products 552 3 0.5 430 11 2.6
Licenses 94 83 88.3 75 71 94.7
Intrasegment revenues (54) (34)
----------- ----------- ---------- ------------ ----------- -----------
3,178 72 2.3 2,863 40 1.4
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS* January to March
-----------------------
2000 1999
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income 1,140 469
Depreciation and amortization 502 366
Net gain on sale of investments (545) (240)
Income unconsolidated companies (153) 14
Minority interests 14 8
Increase in working capital (475) (450)
Increase in provisions 70 43
Other items (148) (139)
- ----------------------------------------------------------------------- --------- --------
Net cash provided by operating activities 405 71
Proceeds from the sale of securities 550 0
Net capital expenditures (456) (236)
Purchase/proceeds other non-current financial assets (45) (6)
Acquisition/sale of businesses 81 455
- ----------------------------------------------------------------------- --------- --------
CASH FLOWS BEFORE FINANCING ACTIVITIES 535 284
</TABLE>
* For a number of reasons, principally the effects of translation
differences and consolidation changes, certain items in the statements
of cash flows do not correspond to the differences between the balance
sheet amounts for the respective items.
<PAGE> 7
PRODUCT SECTORS AND MAIN COUNTRIES
all amounts in millions of euros (EUR) unless otherwise stated
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SALES AND TOTAL ASSETS
sales (to third parties) total assets
------------------------------------ -----------------------------
January to March 2000 2000 1999
------------------------------------ ------------- ------------
% growth March 31, December 31,
-----------------------
amount nominal comparable *
<S> <C> <C> <C> <C> <C>
Lighting 1,226 11 2 2,972 2,849
Consumer Electronics 3,160 18 9 4,875 4,683
DAP 381 19 11 749 777
Components 1,100 29 20 5,460 5,179
Semiconductors 1,224 58 23 5,628 5,188
Medical Systems 573 19 9 1,869 1,840
Origin 248 (10) (10) 686 683
Miscellaneous 417 21 25 1,416 1,545
Unallocated 7,206 6,752
- --------------------------- --------- ------------- ------------
TOTAL 8,329 22 11 30,861 29,496
</TABLE>
* Adjusted for the effects of changes in consolidations and exchange rate
movements
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SALES AND FIXED ASSETS
sales (to third parties) (in)tangible fixed assets
------------------------------------ -----------------------------
January to March 2000 2000 1999
------------------------------------ ------------- ------------
% growth March 31, December 31,
-----------------------
amount nominal comparable *
<S> <C> <C> <C> <C> <C>
Netherlands 438 8 9 1,822 1,811
United States 1,849 25 7 2,576 2,476
Germany 795 20 21 625 632
France 509 20 15 405 392
United Kingdom 497 9 (2) 331 321
China (incl. Hong Kong) 579 20 5 681 635
Other countries 3,662 25 14 4,032 3,887
- --------------------------- --------- ------------- ------------
Total 8,329 22 11 10,472 10,154
</TABLE>
* Adjusted for the effects of changes in consolidations and exchange rate
movements
`SAFE HARBOR' STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
OCTOBER 1995
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. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of 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, levels of consumer
and business spending in major economies, changes in consumer tastes and
preferences, the levels of marketing and promotional expenditures by Philips and
its competitors, raw materials and employee costs, changes in future exchange
and interest rates, changes in tax rates and future business combinations,
acquisitions or dispositions and the rate of technical changes. Market share
estimates contained in this report are based on outside sources such as
specialized research institutes, industry and dealer panels, etc. in combination
with management estimates.
<PAGE> 8
BALANCE SHEETS AND ADDITIONAL RATIOS
all amounts in millions of euros (EUR) unless otherwise stated
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS 2000 1999
MARCH 31, December 31,
<S> <C> <C>
Cash and cash equivalents 2,579 2,331
Securities 1,499 1,523
Receivables 6,619 6,453
Inventories 4,785 4,566
Unconsolidated companies 2,429 2,091
Other non-current financial assets 365 340
Non-current receivables 2,113 2,038
Property, plant and equipment 7,640 7,332
Intangible assets 2,832 2,822
- ---------------------------------------------------- --------------- -------------
TOTAL ASSETS 30,861 29,496
Current liabilities 8,203 7,974
Dividend payable 399 -
Debt 3,288 3,314
Provisions 3,248 3,118
Minority interests 365 333
Stockholders' equity 15,358 14,757
- ---------------------------------------------------- --------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 30,861 29,496
Stockholders' equity:
Per common share in EUR (after stock split) 11.55 11.08
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
End of March
-------------------------------------
<S> <C> <C>
NUMBER OF COMMON SHARES OUTSTANDING
(after stock split)
Shares in thousands (December 31, 1999: 1,331,601) 1,329,965 1,445,350
- ------------------------------------------------------------------------------------------------
NUMBER OF EMPLOYEES
Comparable figure on 1.1.2000: 227,300 229,300 228,800
- ------------------------------------------------------------------------------------------------
RATIOS
Net debt : group equity ratio 4:96 *
Inventories as a % of sales 14.5 15.6
Outstanding trade receivables, in months' sales 1.6 1.6
</TABLE>
<TABLE>
<CAPTION>
January to March
-------------------------------------
<S> <C> <C>
Income from operations:
As a % of sales 8.0 8.0
As a % of net operating capital (RONA) 25.1 24.1
Income from continuing operations
as a % of stockholders' equity (ROE) 31.2 17.7
</TABLE>
* As the current net cash situation exceeds the level of debt, the net debt
to group equity ratio is not meaningful.
Information also available on Internet, address: http://www.philips.com
Printed in the Netherlands
<PAGE> 1
Exhibit 2
Amsterdam, 19 April, 2000
PHILIPS TO AGAIN EXECUTE A SHARE REDUCTION PROGRAM
Royal Philips Electronics announced today that it will execute again a Share
Reduction Program. A share reduction of 3% will be effected by reducing the
share capital, resulting in a total cash distribution of approximately EUR 1.7
billion to all shareholders, and a subsequent reduction of the number of
outstanding ordinary shares by 3%.
Consequently, Philips will convene an extraordinary General Meeting of
Shareholders to which it will propose:
1. Conversion of surplus paid-in capital into nominal share capital;
2. Reduction of the adjusted nominal share capital by distributing a cash
amount of EUR 1.26 per share to all Philips shareholders, which equals 3%
of yesterday's closing price in Amsterdam of EUR 42.05; and
3. Exchange of all presently existing 100 shares into 97 shares, each of
which will have a par value of EUR 0.20.
A detailed proposal will be submitted to the extraordinary General Meeting of
Shareholders to be held in May. Upon adoption, consummation is expected in
July/August upon completion of the required legal procedures and formalities.
The Board of Management believes that reducing the number of outstanding shares
represents an excellent use of cash for Philips at the moment. In 1999, Philips
successfully completed a similar Share Reduction Program.
FOR FURTHER INFORMATION PLEASE CONTACT:
Ben Geerts, Philips Corporate Communications, tel: +31 20 59 77215
ROYAL PHILIPS ELECTRONICS OF THE NETHERLANDS IS ONE OF THE WORLD'S BIGGEST
ELECTRONICS COMPANIES AND EUROPE'S LARGEST, WITH SALES OF EUR 31.5 BILLION IN
1999. IT IS A GLOBAL LEADER IN COLOR TELEVISION SETS, LIGHTING, ELECTRIC
SHAVERS, COLOR PICTURE TUBES FOR TELEVISIONS AND MONITORS, AND ONE-CHIP TV
PRODUCTS. ITS 226,900 EMPLOYEES IN MORE THAN 60 COUNTRIES ARE ACTIVE IN THE
AREAS OF LIGHTING, CONSUMER ELECTRONICS, DOMESTIC APPLIANCES, COMPONENTS,
SEMICONDUCTORS, MEDICAL SYSTEMS, AND IT SERVICES (ORIGIN). PHILIPS IS QUOTED ON
THE NYSE (SYMBOL: PHG), LONDON, FRANKFURT, AMSTERDAM (SYMBOL: PHI) AND OTHER
STOCK EXCHANGES.
NEWS FROM PHILIPS IS LOCATED AT WWW.NEWS.PHILIPS.COM
