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 its weak profitability in consumer electronics and its exposure to the cyclical and capital-intensive semiconductor industry. Philips' net debt adjusted for leases was about €3.3 billion ($4.1 billion) at Dec. 31, 2003, compared with €5.9 billion a year earlier. The ratings on Philips are also supported by the expected long-term credit benefits of ongoing restructuring and streamlining of the group's business, in terms of profitability margins and operating cash flow generation. These steps are expected structurally to improve Philips' profitability and significantly increase the cash flow generated by its credit-friendly businesses,
