1 Royal Philips First Quarter 206 Results Information booklet April 25 th, 206
2 Important information Forward-looking statements This document and the related oral presentation, including responses to questions following the presentation, contain 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. 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, these 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 statements. These factors include, but are not limited to, domestic and global economic and business conditions, developments within the euro zone, 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 the Risk management chapter included in the Annual Report 205. Third-party market share data Statements regarding market share, including those regarding Philips competitive position, contained in this document are based on outside sources such as specialized research institutes, industry and dealer panels in combination with management estimates. Where information 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. Use of non-gaap Information In presenting and discussing the Philips financial position, operating results and cash flows, management uses certain non-gaap financial measures. These non-gaap financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures. A reconciliation of such measures to the most directly comparable IFRS measures is contained in our Annual Report 205. Further information on non-gaap measures can be found in our Annual Report 205. Use of fair-value measurements In presenting the Philips 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 quoted prices or observable market data are not readily available, fair values are estimated using valuation models, which we believe are appropriate for their purpose. Such fair value estimates 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 our Annual Report 205. Independent valuations may have been obtained to support management s determination of fair values. All amounts are in millions of Euro s unless otherwise stated. All reported data is unaudited. Financial reporting is in accordance with the accounting policies as stated in the Annual Report 205, unless otherwise stated. The presentation of certain prior-year information has been reclassified to conform to the current-year presentation. 2
3 Content. Company Overview 2. Strategy HealthTech Lighting 3. Accelerate! transformation program 4. Financial Performance Appendix
4 Company Overview Philips Businesses,2 Geographies,3 Personal Health Diagnosis & Treatment Connected Care & Health Informatics Lighting Western Europe North America Other Mature Geographies Growth Geographies 29% 27% 3% 3% 24% 34% 8% 34% Since billion sales in 205, 70% B2B ~05,000 employees in over 00 countries 50% of the portfolio has global leadership positions.9 billion R&D spend in 205 and ~76,000 patent rights More than /4 of revenues from recurring revenue streams 4 Based on sales last 2 months March Excluding HealthTech Other. 3 Growth geographies are all geographies excluding USA, Canada, Western Europe, Australia, New Zealand, South Korea, Japan and Israel.
5 Content. Company Overview 2. Strategy HealthTech Lighting 3. Accelerate! transformation program 4. Financial Performance Appendix
6 Continuing our multi-year Accelerate! journey to drive value creation Initiate new growth engines Invest in adjacencies Seed emerging business areas Expand global leadership positions Invest to strengthen our core businesses Resource allocation to right businesses & geographies Accelerate! Transform to address underperformance Turnaround or exit underperforming businesses Productivity & margin improvements Rebuild culture, processes, systems & capabilities Implement the Philips Business System
7 Creating two focused companies to capture highly attractive market opportunities Strategic benefits of the separation Establishing two focused winning companies Immediate opportunities to capture growth in attractive end-markets in transition Unique portfolio, insights and capabilities Operational benefits of the separation Higher growth and profitability Improved customer focus in attractive markets Faster decision making Royal Philips Focused on the EUR 40+ billion HealthTech opportunity Serving the Health Continuum Leveraging strengths of Healthcare and Consumer Lifestyle Philips Lighting Focused on the EUR 65+ billion Lighting opportunity Establishing stand-alone Lighting structure LED Components & Automotive Lean overhead structure, less management layers Focused management Focused balance sheets and capital allocation policies Enable investments in growth EUR 6.8 billion sales 205 EUR 7.4 billion sales Excluding LED Components & Automotive.
8 We are well on our way to create two winning standalone companies Today Establishing Royal Philips (HealthTech) operating model Establishing stand-alone Philips Lighting structure Assess strategic options for Philips Lighting Ongoing productivity measures across both organizations 206 Approval by Annual General Meeting of Shareholders New external reporting Employees allocated Decision on the separation of Philips Lighting 8
9 HealthTech: a EUR 40+ billion market opportunity Philips indicative addressable market 204 and approximate CAGR EUR 35+ billion CAGR ~4% EUR 5+ billion CAGR >0% EUR 35+ billion CAGR ~6% EUR 5+ billion CAGR ~7% EUR 5+ billion CAGR >0% Monitoring, informatics and connected care EUR 25+ billion CAGR ~4% Mid to high-single-digit market growth 9 Source: Philips Internal Study based on external sources such as COCIR, NEMA, Soreon, IBIS World.
10 Profound market trends are driving the HealthTech opportunity Healthy living Prevention Diagnosis Treatment Home care Monitoring, informatics and connected care Consumers increasingly engaged in their health Shift to value-based healthcare will reduce waste, increase access and improve outcomes + + Care shifting to lower cost settings and homes We see two major opportunities for Philips: Industrialization of care : enabling providers to deliver lower-cost care and better outcomes Personalization of care : driving convergence of professional healthcare and consumer health 0
11 We build off strong leadership positions Healthy living Prevention Diagnosis Treatment Home care Global leader Male electric shaving Global leader Power toothbrush Global top 3 Diagnostic imaging Global leader Image-guided interventions Global leader Sleep & Respiratory Care # in China Air Global leader Mother & Childcare Global leader Ultrasound Monitoring, informatics and connected care # in North America Home Monitoring Global leader Patient Monitoring # in North America Cardiology Informatics Global leader: # or #2 position in the global market. Source: GfK, Nielsen, Euromonitor, Frost and Sullivan, Home Healthcare TBS, PCMS market insight.
12 We target healthcare customer and consumer needs along the Health Continuum Help people to live a healthy life in a healthy home environment Enable people to manage their own health Ensure first time right diagnosis with personalized and adaptive care pathways Enable more effective therapies, faster recovery and better outcomes Support recovery and chronic care at home Monitoring, informatics and connected care Improve population health outcomes and efficiency through integrated care, real-time analytics and value-added services 2
13 We have a unique position to tap into the HealthTech opportunity We deliver leading solutions that improve personalized health outcomes and drive better productivity along the Health Continuum, building on our strengths: Deep consumer and customer insights Advanced technology and world class design capabilities Deep clinical know-how and rich data sets Broad channel access in home and clinical environment Digital analytics and clinical decision support expertise Trusted solutions partner with strong Philips brand HealthSuite digital platform enabling solutions along the Health Continuum 3
14 Our focus on multi-year strategic partnerships to optimize care Example - Marin General Hospital Customer needs Improve delivery of healthcare to patients in the region Adopt more strategic, long-term approach to improving care delivery and the overall patient experience Access to new digital health technologies and innovation afforded by larger health systems while maintaining community focus and independence Philips Solution & results USD 90 million, 5-year Enterprise Managed Services agreement Managed services agreement for imaging systems, patient monitoring and clinical informatics solutions as well as clinical education and consulting services Embedded Philips team Highly personal patient experience in new hospital building and state-of-the-art Breast Health Center (opening 2020) 4
15 Content. Company Overview 2. Strategy HealthTech Lighting 3. Accelerate! transformation program 4. Financial Performance Appendix
16 We are the clear global leader in lighting Components Light Sources Luminaires Systems Share of Lighting Sales 3 Services LED Components Automotive Lamps 37% Global leader with # market share in every region LED 9% Global leader, with # market share in Europe and Americas Luminaires, Systems and Services for professional and home 44% (Professional 37%, Home 7%) Global leader # market share in Professional in Europe, LatAm and Asia-Pacific and Top 3 in Home in Europe and Asia-Pacific Leading positions in conventional and key growth businesses: global reach with unmatched channel strength, brand value 3x higher than the next competitor Global leader, more than 2x bigger than next competitor 2 : # in Europe, # in Growth geographies, Top 3 in China Recognized track record of innovation and strong patent portfolio Leading the transformation to LED, Systems & Services 6 Excluding Japan. 2 Excluding segments which are not comparable to Philips Lighting. 3 Based on sales last 2 months March 206 Source: 205 Interbrand valuation study, TNS HeartBeat customer, consumer survey, customer panels, industry associations and internal analysis.
17 Our Lighting strategy and operational plan drive growth and cash flow generation Optimize cash from Conventional to fund growth Our industrial setup is flexible to cater for the conventional market decline dynamics Fuel growth in LED, Systems and Services Innovate in LED products to outgrow market Lead the shift to Systems building the largest connected installed base Capture adjacent value through new Services business models Boost performance and execution Be our customers best business partner locally, leveraging our global scale Accelerate! our operational excellence improvement journey 7
18 Lighting: attractive and growing EUR 65+ billion market Key macro trends drive market growth Overall market expected to grow 2 4%, with significant underlying shifts The world needs more light Global lighting market forecast Conventional products CAGR Mid-teens decline 2 LED products Mid-teens growth The world needs more energy efficient light 3 Systems & Services 2 Systems: 20% to 25% Services: 40% to 45% The world needs more digital light Systems & Services 2 LED Conventional 8 Source: Philips internal study. Excluding LED components and Automotive market. 2 Only professional market and lifecycle data-enabled services.
19 We are the leading LED lighting company Increased R&D investment in LED leading to improved results Increased focus on LED portfolio developments R&D spend LED Indexed +43% We lead the technological revolution by investing significantly in LED R&D Total LED sales ~ EUR 3.2 billion in FY 205 LED revenue growth and cost productivity gains improve profitability FY 203 FY 205 LED sales increase (in EUR billion) LED as a % of Lighting sales CAGR +33% %.8 25% FY 203 FY 205 FY 203 FY 205 Leveraging Intellectual Property Scope: LED Controls and Basic Optics Patent portfolio: 90%+ LED and digital related ~400 Patent rights licensed Licensing program has more than 600 licensees 9 Note - Prior-period financials have been restated for the treatment of the combined businesses of Automotive and Lumileds as discontinued operations.
20 LED lamps margins improve as we focus on cost down and differentiating innovations Differentiation through innovation Replicates the effect of a dimmed halogen or incandescent lamp Measures are paying off Adjusted gross margin LED Lamps +30bps Warm glow The classic LED bulb Produced and launched in Europe at <EUR 5 Frosted incandescent look and feel through the use of glass bulb LTM Q 205 LTM Q 206 Gross margin gap vs. Conventional is narrowing Adjusted gross margin CorePro LED PL-C 60% energy saving for conventional PLC lamps used in downlights Direct retrofit LTM Q 205 LTM Q 206 Conventional lamps LED lamps 20
21 Philips Lighting has made connected lighting systems and services a reality across the globe 2 Source: Company information. Image supplied and used with permission of GVK Mumbai International Airport Pvt. Ltd.
22 Performance remains strong in conventional and our industrial setup is flexible to cater to the market decline # in conventional lamps and drivers We adapt capacity in response to market demand Measures deliver positive results Market share Philips # of manufacturing sites, Lamps & Electronics Fixed asset turnover ratio, conventional lamps and drivers -85% Competitor X.6 Competitor Capture value by leveraging our: Global market presence Leading technology, trusted brand Extensive customer channels Ability to adjust capacity with a 3- month lead time Closure of sites accelerated in line with market demand Sales/Fixed assets Total Fixed Assets (indexed) 22 Source: competitors filings and reports.
23 Content. Company Overview 2. Strategy HealthTech Lighting 3. Accelerate! transformation program 4. Financial Performance Appendix
24 Accelerate! driving further change and performance Customer Centricity Resource to Win End2End Execution Growth and Performance Culture Operating Model Increase local relevance of product portfolio Focused Business-to-Government sales channel; Develop digital and CRM capabilities Enhance sales capabilities for Solutions, Systems and Services Expansion into adjacent and new growth markets to drive growth Increase performance adherence to plan per BMC (Business Market Combination) > 90% Targeted investments to drive value creation and extend market leadership Strengthen BMC capabilities with global tools, training and ways of working Non-overhead productivity gains of 00 bps margin impact to be achieved by 206 Transform customer chains to 4 Lean business models Roll-out new integrated IT landscape Reduce Cost of Non Quality by 30%, Inventory reduction by 20% Accelerate innovation time to market by avg. 40%; Increase customer service to >95% EUR billion via Design for Excellence (DfX) over the period Focus on the 6 competencies that will accelerate our transformation Run and measure monthly performance dialogues to take ownership for the transformation Build Philips University to increase learning and competency development Excellence practices to increase operational performance; Lean skills for all employees Increase Employee Engagement in markets Simplify and de-layer organization, reduce overhead costs by EUR.8 billion Implement the Philips Business System in the organization Continue to transform Finance, HR and IT to increase productivity and effectiveness Align all employees to common performance management objectives Supported by dedicated senior Transformation Leadership to ensure execution 24
25 Productivity programs continue to improve operational performance (EUR million) Incremental gross overhead cost savings in the period 20-4 Actual 205 Actual 206 Plan Q 206 Actual, Procurement ~ End2End productivity gains ~90 4 Restructuring - Accelerate (456) (96) (50) (9) Investments 2 (433) (9) (40) (36) Accelerate! All savings numbers are gross numbers 25 The program started in Investments to enable overhead cost savings as well as on the overall execution of the Accelerate! transformation. Note - The above figures have been adapted to exclude results related to the Audio, Video, Multimedia and Accessories and the combined businesses of Automotive and Lumileds.
26 On track to achieve procurement transformation targets Design for X; X = cost, quality, manufacturing etc. End2End approach to product creation, with one integrated procurement team, supply chain, R&D, marketing, finance and the supplier upfront to drive breakthrough cost savings through: Value engineering Re-design the purchasing value chain Leveraging global spend Cost savings can be achieved in mature products as well as new product introductions Funnel of opportunities targeting additional cumulative savings of EUR billion over the period 204 to 206 Cumulative procurement gross savings EUR million ~, DfX challenges the value chain of products, drives decisions and follow-through 26
27 Capital allocation Continue to invest in high ROIC organic growth opportunities to strengthen each business Disciplined but more active approach to M&A, with a focus on HealthTech, while continuing to adhere to strict return hurdles Committed to a strong investment grade credit rating Dividend policy aimed at dividend-stability and a 40% to 50% pay-out of continuing net income. Following the intended separation of the Lighting business, the pay-out ratio with respect to future years could be subject to change Complete the current EUR.5 billion share buyback program by October
28 A history of sustainable dividend growth EUR per share Elective dividend, proposal subject to approval in the General Shareholders Meeting on May 2th, 206
29 Content. Company Overview 2. Strategy HealthTech Lighting 3. Accelerate! transformation program 4. Financial Performance Appendix
30 Performance Highlights - Q 206 Key highlights Comparable sales up 3% compared to Q 205 Comparable equipment order intake down 3% compared to Q 205 Adj. EBITA margin of 6.8%, up 70 bps compared to Q 205 Inventories amounted to 4.7% of sales, down 50 bps vs. Q 205 on a currency comparable basis Free cash outflow of EUR 77 million, compared to outflow of EUR 443 million in Q 205 ROIC was 9.9% excluding charges related to Pension settlements in the US and the UK Sales (EUR mln) CSG Adj. EBITA margin vs. LY (bps) EBITA margin vs. LY (bps) Personal Health,60 6% 4.% % 30 Diagnosis & Treatment,49 5% 2.3% 80.6% 260 Connected Care & Health Informatics HealthTech Other 03 (24)% 694 9% 3.9% % 70 Lighting,69 (2)% 7.2% % 0 Philips 5,57 3% 6.8% % Inventories as a % of sales excludes inventories and sales related to acquisitions, divestments and discontinued operations.
31 Adjusted EBITA margin development Rolling last 2 months Personal Health 4.6% Diagnosis & Treatment Connected Care & Health Informatics 0.2% 8.0% 3.5% 3.8% 4.3% 7.9% 7.9% 7.9% 8.6% 8.4% 9.7% Q25 Q35 Q45 Q6 Q25 Q35 Q45 Q6 Q25 Q35 Q45 Q6 Lighting Philips 7.6% 9.4% 7.0% 7.2% 7.4% Q25 Q35 Q45 Q6 8.9% 9.0% 9.2% Q25 Q35 Q45 Q6 3 Adjusted EBITA is EBITA excluding restructuring, acquisition-related charges and other items (details on slide 42). Note - Prior-period financials have been restated for the treatment of the combined businesses of Automotive and Lumileds as discontinued operations.
32 Sales by geography Q 206 Sales (EUR mln) Nominal growth CSG Share of sales Western Europe,334 0% 0% 24% North America,937 0% 5% 35% Other Mature Geographies 459 4% ()% 8% Growth Geographies,787 ()% 3% 33% Philips 5,57 3% 3% 00% 32 Growth geographies are all geographies excluding USA, Canada, Western Europe, Australia, New Zealand, South Korea, Japan and Israel.
33 Accelerate! improved operational performance and offset headwinds in Q 206.3% As % of sales 6.%.7% (3.2)% 2.4% 0.4% (0.7)% - 0.% 6.8% 07 (83) 23 (37) 35 (4) Price (24) (2.)% DfX 67 Adj. EBITA Q Q2 5 3 Volume, Mix Price, Wage inflation CoGS Overhead, End2End productivity Currency Cleveland Other Adj. EBITA Q2 Q Net effect of currency impact on sales and EBITA.
34 Working capital & inventories EUR million Working capital as % of sales, 2 3,000 2,500 2,000 Working capital Working capital as % of LTM sales 2.7% 2.%.3% 0.0% 9.3% Q5 Q25 Q35 Q45 Q6 3% 9% Inventories as % of sales 2 4,500 4,000 3,500 Inventories 7.3% Inventories as % of LTM sales 7.0% 6.8% 4.2% 4.7% 3,000 Q5 Q25 Q35 Q45 Q6 4% 34 Working capital excluding HealthTech Other, Legacy Items and Pension liabilities formerly reported in IG&S. 2 Working capital as a % of last twelve months (LTM) sales and Inventories as a % of LTM sales exclude acquisitions, divestments and discontinued operations.
35 Development of Return on Invested Capital (ROIC) 3.9% 2.9%.6% 0.2% 9.7% 9.8% 9.7% 8.4% 8.% 7.9% 8.% 7.0% 9.9% 6.6% 7.5% 8.3% 6.9% 6.0% 5.% 4.5% 4.4% 4.% 3.0% Q3 Q23 Q33 Q43 Q4 Q24 Q34 Q44 Q5 Q25 Q35 Q45 Q6 ROIC was 9.9% in Q 206, excluding charges related to Pension settlements in the US and the UK in Q4 205 This compares to 0.2% in Q4 205 and to 7.9% in Q 205, excluding the charges related to the CRT antitrust litigation and the charges related to the jury verdict in the Masimo litigation 2 The net operating capital prior to Q4 204 still includes Lumileds and Automotive whereas the EBIAT of those businesses have been excluded from all periods shown ROIC ROIC excl. the charges related to the CRT antitrust litigation in Q4 202 and Q3 and Q4 204, the charges related to the Masimo litigation in Q and the charges related to Pension settlements in Q4 205 Notes: Philips calculates ROIC % as: EBIAT/ NOC Quarterly ROIC % is based on LTM EBIAT and average NOC over the last 5 quarters EBIAT are earnings before interest after tax; reported tax used to calculate EBIAT 35 CRT = Cathode-Ray Tubes, a business divested by Philips in Philips will pursue all relevant avenues of appeal.
36 Financial calendar 206 May 2 Annual General Meeting of Shareholders July 25 Second quarter results 206 October 24 Third quarter results 206 November 4 Capital Markets Day 36
37 37 Appendix
38 Key financials summary EUR million Column Q 205 Q 206 Sales 5,339 5,57 Adjusted EBITA EBITA Financial expenses, net (67) (4) Income taxes (3) (75) Net income (loss) Net Operating Capital 0,977,8 Net cash flow from operating activities (256) 0 Net capital expenditures (87) (87) Free cash flow (443) (77) 2 38 Q 205 excludes EUR (58)M of restructuring and acquisition-related charges and EUR (39)M other incidentals. 2 Q 206 excludes EUR (32)M of restructuring and acquisition-related charges and EUR (52)M other incidentals.
39 Working capital per segment EUR million Working capital Working capital as % of LTM sales Personal Health Diagnosis & Treatment % 6.6% 7.3% 3.8% 5.0% 5%,200,00 7.6% 7.3% 9.0% 7.4% 6.6% 20% 0 Q5 Q25 Q35 Q45 Q6 0%,000 Q5 Q25 Q35 Q45 Q6 6% Connected Care & Health Informatics Lighting % 0.2% 9.2% 8.2% 7.9% %, % 3.7% 3.8% 0.% 7.7% 3% 9% 200 Q5 Q25 Q35 Q45 Q6 7% 500 Q5 Q25 Q35 Q45 Q6 2 5% 39 Working capital as a % of sales excludes acquisitions and divestments. 2 Excludes Pension liabilities formerly reported in IG&S.
40 Gross capital expenditures & Depreciation by segment EUR million Gross CapEx Depreciation Q 205 Q 206 FY 204 FY 205 Q 205 Q 206 FY 204 FY 205 HealthTech Lighting Legacy Items Philips Capital expenditures and depreciations on property, plant and equipment only.
42 Restructuring, acquisition-related charges and other items 42 Incidentals (EUR mln) Q4 Q24 Q34 Q Q5 Q25 Q35 Q Q6 Restructuring - - (7) (9) (6) () () () (35) (38) (2) Acq.-related charges - () () () Other Incidentals (3) (3) (44) - Personal Health - () (6) (6) () - (32) (48) (8) (2) Restructuring (9) (2) (4) (32) (47) (8) 3 - (9) (24) () Acq.-related charges - - () () (2) (24) (23) (38) (22) (07) (8) Other Incidentals - - (50) 3 (37) (7) (7) - Diagnosis & Treatment (9) (2) (55) (20) (86) (32) (20) (38) (48) (38) (9) Restructuring (0) - (2) (30) () - - (36) (37) (4) Acq.-related charges () () - Other Incidentals - - (366) 2 3 (363) (28) - - () (29) - Connected Care & Health Informatics (0) - (365) (8) (393) (29) - - (38) (67) (4) Restructuring () () (26) (30) (58) Acq.-related charges Other Incidentals HealthTech Other () () (26) (2) (40) Restructuring (27) (2) (35) (78) (26) (27) (9) (4) (42) (92) (8) Acq.-related charges (3) () (9) (7) (20) () (2) () () (5) () Other Incidentals (43) 3 (43) (4) (4) - Lighting (30) (22) (44) (228) (324) (28) () (5) (57) () (9) Restructuring (2) (2) () - Acq.-related charges () () Other Incidentals - - (42) (204) (246) 4 () (27) (59) (43) (528) 5 (52) 6 Legacy Items () - (40) (204) (245) () (26) (60) (430) (527) (52) Restructuring (49) (23) (69) (270) (4) (33) (3) (26) (73) (24) Acq.-related charges (2) (3) (9) (9) (23) (25) (25) (38) (24) (2) (8) Other Incidentals - - (458) (202) (660) (39) (27) (90) (429) (585) (52) Philips (5) (26) (536) (48) (,094) (97) (5) (4) (579) (868) (84) Includes charges related to the Volcano acquisition. 2 Represents charges related to the jury verdict in the Masimo litigation. 3 Includes EUR 68 million of impairment and other charges related to industrial assets and a EUR 3 million past-service pension cost gain in the Netherlands. 4 Includes EUR 244 million of charges related to CRT litigation. 5 Represents separation costs of EUR 83 million and charges of EUR 345 million related to pension de-risking. 6 Represents separation costs
43 Update funded status pension plans (IFRS basis) EUR million Funded status Balance sheet position (not reported) December 205 March 206 December 205 March 206 Major plans (,593) (,467) (,683) (,557) Minor plans (224) (230) (224) (230) Total (,87) (,697) (,907) (,787) The total funded status and balances improved in Q 206 due to a EUR 72 million cash funding to the US Defined benefit plan, as previously announced, partly offset by lower interest rates in Germany. 43
44 HealthTech: order intake Quarterly currency adjusted order intake growth Total Philips North America Western Europe Rest of the World Total Philips Rolling LTM 30% 25% 20% 5% 0% 5% 0% -5% -0% -5% -20% Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Currency adjusted order intake only relates to Diagnosis & Treatment and Connected Care & Health Informatics 44 Order intake includes equipment and software orders.
45 HealthTech: order book Indexed order book development 20 Typical profile of order book conversion to sales ~30% ~40% ~30% Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q+ Q+2 to 4 > year Quarter end order book is a leading indicator for ~45% of sales the following quarters Equipment and software book and bill sales Home Healthcare + Customer Services sales ~5% ~40% ~45% Equipment and software sales from order book - Leading indicator of future sales Approximately Approximately 70% 70% of the of the current order book results current in sales order within book the results next in 2 months sales within next 2 months 45 Order intake includes equipment and software orders.
46 HealthTech: North America market development Diagnosis & Treatment Patient Care & Monitoring Solutions and Health Informatics Out of Hospital Imaging Growth Economic Downturn DRA Economic downturn Balanced Budget Act 2 BBA Increases Outpatient Technical Charges CMS P4P Reduces Reimbursement for 80% of Hospitals Stark II Rules Limit Physician Ownership in Outpatient Imaging DRA announced Bond crisis Utilization, physician fee schedule Signing Healthcare Reform Supreme Court ACA Supreme Court; ACA affirms ACA Elections Incentives/ penalties Fiscal cliff, take effect Budget ceiling 46 The US market is expected to grow by low-single-digit in 206 Only refers to equipment market for Diagnosis & Treatment, Patient Care and Monitoring Solutions and Health Informatics
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