The ratings on Netherlands-based diversified technology group Koninklijke Philips Electronics N.V. (Philips) reflect improvements in the group's business risk profile and solid consolidated financial performance leading to modest financial risk and improved underlying profitability, along with its diversified portfolio. Philips' total lease-adjusted debt at June 30, 2005, was €5.1 billion ($6.1 billion). A larger proportion of earnings now comes from the company's less cyclical businesses such as lighting and medical systems and domestic appliances, with a smaller portion from the more traditionally volatile consumer electronics and semiconductor segments. The underlying combined last-12-month profitability of Philips' five main divisions, excluding unallocated activities, has made good progress over recent quarters. In addition, reduced volatility from earnings should provide greater visibility regarding the
