The ratings on Dutch diversified technology group Koninklijke Philips Electronics N.V. (Philips) reflect the company's diversified business portfolio and solid positions in several core business segments. These help temper the company's weak profitability in consumer electronics, as well as its exposure to the cyclical and capital-intensive semiconductor industry. Philips' net debt adjusted for leases was about €6.1 billion ($6.8 billion) at June 30, 2003 (€8.7 billion when including unfunded pension and postretirement liabilities at Dec. 31, 2002). The ratings on Philips are also supported by the fact that ongoing restructuring and streamlining of the group's business should provide long-term credit benefits in terms of profitability margins and operating cash flow generation. These steps are expected to structurally improve Philips' profitability
