Pierre-Jean Sivignon – EVP, CFO Gerard Kleisterlee – Chairman, President, CEO

Nicolas Gaudois - UBS Simon Smith - Citigroup Simon Schaffer – Goldman Sachs Jan-Willem Berghuis- Kempen & Co Martin Wilkie – Deutsche Bank Julian Mitchell – Credit Suisse Andreas Willi – JP Morgan Timm Schulze-Melander – Bear Stearns Didier Scemama – ABN AMRO Gaël de Bray - Société Générale Luke Muzon – Calliette Galazete Management Maurits Heldring - Kepler Equities

(Operator Instructions) I would now like to hand the conference over to Mr. Pierre-Jean Sivignon, please go ahead sir. Pierre-Jean Sivignon: Ladies and gentlemen, let me first welcome you to this conference call for the Fourth Quarter Results of 2007 for Royal Philips Electronics. Specifically, I would like to welcome anyone calling from the United States as we are aware that it is the national holiday there. I will make a few introductory remarks and then Gerard Kleisterlee and I will take your questions. The Fourth Quarter completed a successful year for us and so as we achieve a number of our important objectives for the year as well as strengthening ourselves for our vision of 2010. Our EBITA for the year came to 7.7%, which achieved our target of over 7.5%, which is a major milestone for us on our way to higher levels. The annual comparable sales growth came to 5%, which met our objective of an annual average growth of 5% to 6%, again this is a good achievement considering that we are behind in the early quarters. Comparable sales growth for the company was for the Fourth Quarter, a robust 8%. DAP to point position was 12% and consumer electronics was 10%. We were particularly pleased with our growth across emerging markets, which have reached 17%. In medical systems, the comparable growth was 3% with growth driven by patient monitoring and customer services. Our comparable growth for the year came to 4%. In the quarter, emerging markets grew by 13%. The other intake in the quarter was a strong 10% with 4% of this being for four long-term orders. In total, this gave us 6% order gross for the year, which is a very creditable performance in this difficult year. Consequently, we have confidence in our future, however we expect continuance of the short-term market conditions for emerging systems in North America. The 18.1% EBITA margin in the quarter gave us 13.5% for the year, which means that the weakness in the imaging systems market have been made up elsewhere, particularly in ultrasound and patient monitoring as well as customer services where we had a good performance. We mentioned a few months ago, we were reviewing our options for shelving in MedQuist and are hoping to finalize this in the near future. In DAP, the excellent quarter has given us a 12% comparable growth following 17% in Q1, 14% in Q2 and 20% in Q3. This very strong growth came in virtually all product groups and geographical regions, once again, we are benefiting from our investments in innovation, emerging markets and the brand. In emerging markets, our growth rate was in excess of 20%. We continue to look forward to good growth for this product categories, however, the comparisons are now of course much tougher. EBITA of 19.6% in the quarter was strong and mainly a function of the highest sales and the management of our costs. This gave us 17.6% margin for the year, which is higher than the targets we gave you primarily due to higher sales. DAP has had an outstanding year. Sales in consumer electronics on the comparable basis increased by 10%, which was in line with our predictions. This growth came in all the individual businesses and with good growth in emerging markets, which was 17%. The one area that did not grow was connected displays in the United States, which reflected and often stated aim of focusing on profitability. The EBITA margin of 6.7% in the quarter gave us 3.1% for the whole year at consumer electronics, which is in line with our target of 3% in spite of price pressure on flat TV in the United States. We will continue to focus on improving the margin as rapidly as we can. We continue to see the benefits of our business model, which has kept the net operating capital at minimum level during the year and is again negative at the end of the year. The lighting sales growth was 8% with strong growth in lamps, luminaires and lighting electronics reflecting the growth of the sales of green products. In addition, we saw 17% sales growth in emerging markets, which we expect will continue. The growth this quarter will load us to achieve an annual growth of 6%, which is the target we gave ourselves. The lighting EBITA percentage was 11.2% after restructuring purchase accounting and other incidental charges of 22 million euros in the quarter. For the whole year 2007, our EBITA percentage was 11.9%, which is in line with our target of 12%. We continue to remain positive on the developments taking place in our lighting business, as well as in the lighting market and we look forward to a good future. The results for innovation and emerging businesses reflected the increase in IP income. Gains of this nature can be repeated but is difficult to forecast the timing. In group management and services, we see the continuing paths of our cost reduction actions as the corporate and regional costs were lower than last year. However, the costs were slightly higher than our recent run rate due to additional legal costs and charges of 8 million euros incurred to actually reduce our cost. However, this proves to us that our continued cost reduction plan is being successful. The brand expenditure of 54 million euros were slightly lower than we had guided and a total of 111 million euros for the year was in line. Our guidance for 2008 is that the amount will reduce further down to 95 million euros, more or less evenly spread over the quarters of 2008. The corporate sponsored brand campaign will be largely phased out in the coming two years. During the quarter, we generated 3.8 billion euros of cash. 1.4 billion came from operating activities, 2.4 billion came from the sales of LPL and TSNP shares. We will continue to focus on our cash generation and it remains part of our incentive scheme. The inventory percentage of 12% is 1.2 percentage points higher than one year ago. This is partly due to the impact of acquisitions as well as higher inventory in medical, some of which in services which is meant to increase customer service levels. We have no special concerns about our inventory position, other than we need to see some reductions. The results relating to equity-accounted investees at significantly improved due to the improved operational performance of LG Philips LCD as well as the gain on the sale of 13% of the shares. There are virtually no other items in this area of our results. In line with Vision 2010 commitments, we intend to have leverage on our balanced sheet before the end of 2009 consistent with our rating objective which is to keep both Moody’s and SMP in the A category. In fact, it is likely that after paying for acquisitions already announced, that is to say Respironics and Genlyte essentially late Q4 combined with accelerating our share buy back program, and the payments of the increased dividend, we could be in a net debt position at the end of April, subject to the further sales of stakes. We also have long-term debt repayment of 1.7 billion euros this year, so we could be going to the market to raise capital within a few months. Finally, I draw your attention to the proposed 16.7% in our dividend per share. It reflects our 2007 Revised Dividend Payout Policy as well as our optimism in our long-term future and commitment to Vision 2010. Let me now ask Gerard Kleisterlee for his comments. Gerard, any particular comments?

Well, I think that you have summed it up quite well and in detail, for me the year 2007 was down to Philips having made major progress in three important areas. First of all, operationally, with meeting our growth target and exceeding our EBITA margin targets, in most of our businesses, we have made a significant step forward in terms of operational performance. Secondly, strategically and particularly with the acquisitions of Color Kinetics and Genlyte in lighting and Respironics in healthcare, we have significantly added to our global leadership positions for lighting and home healthcare and thereby strategically strengthened the position of our portfolio. Ultimately, on the financial side in terms of capital reallocation, both with the attractive acquisitions that we have made and the announced share buy back program of 5 billion, we have taken significant steps to accelerate the capital reallocation, which now also needs completion, so portfolio restructuring is nearing completion, capital reallocation is nearing completion. Operational performance is good and I would like to point out that we have now a portfolio of activities that has some proven resilience against downturn. I took the trouble to look back at our performance. Over the years, 2001-2003 where we also had severe market declines in the stock market and financial turbulence, and it is remarkable to see how and particularly our domestic appliances and personal care division and lighting division continued to perform well throughout that period. It is obvious that healthcare is a primary need in good and in bad times and I would like to remind you that the Deficit Reduction Act in the United States was enacted at the times of good economic growth because that dates from 2006 and as such has nothing to do with looming recession. And that since 2001, we have significantly de-risked our CE through business model re-engineering and I cannot stress enough that in terms of profit impact and that is what matters, not the revenue impact, but profit impact, CE represents less than 13% today of our sector EBITA. So, all in all, a robust portfolio with an ability to weather also slower economic times of slower economic growth and an excellent geographic spread with 30% of our sales across all divisions coming from emerging markets, emerging markets where we have shown in Q4 excellent growth in excess of 17, 18 and some territories well in excess of 20%. So if I take the combination of that all, I say, good progress operationally, strategically, financially in 2007, actual and starting point, both to cope with a short-term, deteriorating economic climate, but also to achieve our medium term objectives as set out in Vision 2010. And with that, I would like to open the floor for your questions.

(Operator Instructions) Our first question comes from Mr. Nicolas Gaudois, please state your name followed by your company name, followed by your questions. Nicolas Gaudois – UBS: First question on medical, can you maybe help us understand the likely margin that it makes you to 2008 where we are likely to see lower growth if any growth at all in the imaging equipment and stronger in monitoring dental care and on health care, as well as services which should all have got higher margins, so should we see EBITA margins improving year over year as a function of mix from earning? Pierre-Jean Sivignon: Before I go into the margin, let us go to revenue because you talked about no growth at medical, that is not the way we see it. I mean, I think I will send you to the guidance given by Steve Rusckowski, actually a few weeks back during the call on Respironics. The way we see it, it is probably flat, limited growth in the imaging market in the US in the first half and then we will wait and see what happens for the second half of the year and for the rest of the business, I would say, market growing at 3% to 4% and that is a market in which I think incoming orders tend to show that we are getting shares. And finally to comment on the service element that is obviously historically a higher level of growth which helps the mix, so I think, certainly, we are not seeing flat growth for medical in 2008 versus 2007, we see something along the criteria which I just described. Now to your point on the margin, I think there I will say that if you go back to the presentation we made in May at the analysts conference, we gave to you a list of drivers, actually, one was supply and demand and the other one was IT, the third one was supply chain, the fourth one was sales organization and the fifth one was industrial footprint. Those five levels, regardless, I would say of market circumstances or despite interesting levels of increase of the margin of medical obviously, very much in place and we will absolutely work on those five levels and we will update you on the progress made as we do every year on the next medical conference in the course of the second quarter. So to be more specific, we will obviously shoot for increasing our low cost sourcing, which if you remember stood at 27% level back in ’06 and we will obviously aim at increasing that that is quite the control. If you remember as well, as far as IT spending, we were at 3.4% in 2006 and we aim at being below 3%, so that is another important level, but I am not going to go through the list. It is so detailed in that particular analysis, Nicolas and I think, I would like to send you there because those plans are absolutely highlighted and those other plans we will absolutely follow. Nicolas Gaudois – UBS: And just on domestic compliances, obviously, I am aware that you are going forward as we have seen in consumer lifestyle, but if I was to think of your business and where revenues are, is it fair to say that the operating leverage has changed or has gone up a level, i.e. the corridor for pretty margins that can achieve this is inherently higher, and it has been by virtue of the size of the business? Pierre-Jean Sivignon: Well, I think it is several things, what you are alluding to is the volume, clearly with a 15% growth, 12% in Q4 and you have to realize that last year, we grew I think 30% in (gap) and we have told you at the end of Q3, obviously Q4 is the first quarter where we are now compared obviously to really spunk ’06, but that led to a 12% growth in Q4 ’07, so you are correct, volume adapt with the 15% for the year is helping, but it is more than that. I think, if you really go through that and you scrutinize our numbers, you will see that the geography mix of that has changed quite significantly in 2007, and they grew quite significantly in emerging markets and they now are business, which is more than a third actually in emerging markets, which certainly is helping. And the third thing, which is helping us, I would say, maybe not to grow, but certainly to defend what we have, I will take the example of a mature business in the market which is currently obviously exposed, and I will take shavers in the US. If you look at our numbers on shaving Q4, as Gerard mentioned, in the US, actually we had three PDs going down in Q4, one business going up, which was medical, but if you look at DAP which was interesting, is that we came down in shaving in the market where the customers went to the lower end of the range of products, which ended up with products with obviously lower sale prices, but which for us not carrying the same level of margin. So the other element I want to mention on that is that the bandwidth of the offering between I would say high-end to low-end of the range at margins which are consistent around that spectrum is something which is quite important for us as well going into this potential difficult times, so those are the elements, Nicolas, which certainly I have played a role and are playing a role in DAP. Nicolas Gaudois – UBS: Thank you very much.

The next question comes from Mr. Simon Smith, please state your name, company name, followed by your questions. Simon Smith - Citigroup: I guess I just wanted if I could come back again to the consumer businesses, clearly you have given us the insights into the very strong dynamic you are seeing in emerging markets and you commented there, I think you were highlighting the fact that you had some negative progressions in Q4 in the US. I just wondered if you could maybe just broaden that out and talk within sort of in consumer electronics and DAP of the trends that you are seeing within regions and maybe if you are already starting to change your behavior in some of those markets which simply start you more at risk and I mean, particularly in areas of promotional spend, which you know is a quite large and quite flexible part of your cross base particularly in DAP. Pierre-Jean Sivignon: Yes, I think where we have seen, actually in Q4, when you really look at this within a distance, you are correct, we saw in the US what everybody is reading in the newspaper, which is indeed a slow down, but on the other end, we saw actually resilience of our portfolio already in Q4. I just gave the example of shavers, so I will not come back to it. Now, your question is, do you see it in other places on the planet? I think the countries on the consumer side where we saw a little bit of weakening probably was the UK where there was a little bit of a weakening there on the consumer market. Besides that, you saw that all in all in Europe, we were up 11% and that was not only our professional businesses, it was actually our consumer businesses showing still some pretty much resilience in those territories and certainly in Asia, no sign of a slow down. So, I think I would say UK-ish to answer your question and that Q4 is concerned. I think the year ’08 is way too young to say anything more. Are we taking measures to actually and obviously address a potential slow down out of the US, I think there are long term measures that we’ve already taken and those long term measures are a portfolio of products with a range which enables us to of course still satisfy customers with lower price point products on an as needed basis, with the same percentage margin for us, that is one level; innovation, I mean, I think we will not slow down on innovation. You will see, we are right now introducing brand new products for instance on all healthcare, so we are going into ‘08’s continuing to innovate that obviously is line of defense number two and line of defense number three and certainly that is important for DAP, fee to some extent was already there even though it grew quite nicely in emerging markets, line of defense number three is of course emerging markets. You want to obviously have a product mix because as Gerard said as well, we grew in Asia and China above 20% including in consumer businesses. Now, as we started treating three expenses, the answer is no. Simon Smith - Citigroup: In terms of consumer electronics, you obviously put in there the point that you are going to take decisive action to look at areas of the business particularly connected displays where you have got sort of unsatisfactory margins and clearly, comments would obviously points towards your US business, and I just take it that that sort of action given the seasonality of your business and the weaker quarters that you have earlier in the year that taking action earlier rather than later is what we should be looking for from you. Pierre-Jean Sivignon: I think, Simon, if you look, you are correct, in the press release we have actually referred to these decisive action points, on the other end, action in reality was referred to earlier than that. If you go back to Rudy Provoost and I think you will probably remember that early December, during our Consumer Day, I will take you to the presentation and to the verbatim, to the very explicit points that Rudy Proovost said during the Q&A I think, you have the elements and the ingredients of what we do in there and let me re-summarize them for you. On connected display, there obviously, absolutely in terms of product placements, total discipline which is something that we have done for quite a few years as you know in the domain of DAP because that is the recipe we have used in DAP for quite some time, and on the other end, and that applies with the US as well, we have product categories in the US where the model is closer you might say to the DAP model and that could be related to peripheral accessories and entertainment solution, and there we will play the DAP game as well in terms of innovation as well as in terms of course of leveraging of the brand. So those elements where absolutely, I would say highlighted in December and we have gone the extra mile to make it clear in our press release as well as in our management agenda for the year of 2008 so that everybody is clear about it. The one thing I will add, Simon, which we said a couple of times, but talking to investors and analysts in separate sessions, I want to reiterate the fact that we will disclose the connected display numbers in 2008 so that you and the market as well as investors can see exactly where we are on that particular dimension of the consumer lifestyle portfolio. Simon Smith - Citigroup: And in terms of custom, could you give us any indication as to whether you think the changes you make could lead to substantial run off costs? Pierre-Jean Sivignon: It is too early to say, we had already someone in the P & L in 2007. We did not disclose them. As you know, we usually only disclose run offs when they are, we see discrete items in excess of ten million that is more or less what we will follow. We will have someone else and we will disclose them at times on our consumer lifestyle plan which was presented to you as well as part of that same conference. I will send you to those slides. We refer to the geographical footprint, we referred to the organizational structure and we refer as well to the optimization of processes. I think there was a list of the particular points we focused on to indeed say that 100 to 200 million euros saving over the next two years, so those elements are there and if there is someone else which I guess there will be will disclose that as such as part of that particular process.

Our next question comes from Mr. Simon Schaffer, please state your name, company name followed by your question. Simon Schaffer – Goldman Sachs: I want to ask a follow up question on medical. Perhaps, again the revenue and the margin a little below your own expectations, but in the other growth 10% of GE was talking about some contraction on the other side, and Pierre-Jean, you actually mentioned market share gains, I was wondering, what specific areas is it that you think is allowing that type of market share gain? And what else is it allowing Philips to do a little bit better in this quarter? Pierre-Jean Sivignon: Well, I think yes, I thank you for reiterating that 10%. I think 10% incoming order growth and I would not want you to read more than what we mean by us disclosing that the 10% including basically four points. We have had historically every year, long term orders, but I mean, in these difficult market on imaging, we want you to have absolute complete clarity on what we do and I think the fact that we are telling you that the ten could fall to come to a six, excluding the four is just one more step towards clarity and you should not read more than that. So that ten is indeed indicating some gain in market share. Where are we seeing this? I would say that on the imaging system, we have done well and by the way, these incoming order growth has been solid in both the US where it is at six, as well as the international, where it has been around ten. Now, talking about on imaging system, probably MR is a territory where we have started getting a little bit of ground and which is something we take some comfort on because usually when we acquire Inter Magnetics, remember, a year ago, we told you that the proof points on the success of Inter Magnetics would be not only integration cost, but could we actually get our market share on MR, on a very fundamental non-invasive modality back up. It is still young, I think it is only a year old, the acquisition of Inter Magnetic, but certainly MR members who are reportedly supplying in terms of incoming orders in Q4. On the monitors on cardiac care, then we are continuing to do very well. I mean, I will not give you too many numbers, but certainly there, we are continuously scoring points and definitely gaining share, both internationally as well as in the US. I think that would be probably your answer on orders, the weakness probably continued on CT, even though it was much better than we thought in terms of orders and still some difficulties on CV cardiovascular especially on the back of these tense points that has been alluded to in very various analyst reports which was confirmed in Q4. I think that is as precise as I can be. Simon Schaffer – Goldman Sachs: My second question would be specifically at the second half of ’07 obviously a period of M & A and that transformational change now being implemented. You talked about the change in the capital structure, but as far as M & A is concerned just to remind us as to what you think where you are now in terms of having to do more, wanting to do more, is that the upper threshold of the ceiling in terms of size. A good amount of integration to do, in other words, put simply is there more to come in terms of that magnitude of size or are you focused on the integration now? Pierre-Jean Sivignon: Before we talk about more acquisition, let us talk about, do we have the capacity to do that. I think one of the elements that is very important, I am sure that you have seen as part of our release, we go your long way towards our shoulders. We have done two things. I think, as you know it was a fact that Q4 was news. I just want to go back and turn back the clock one’s month, if I may. As you remember, in the last part of December, we announced that we were triggering another buy back on the capability, which had been given to us on the modification in the Dutch Tax Law, so we announced that 5 billion buy back completely tax free, which of course was extremely important. And this press release of this morning, we are giving you another very important piece of news which is to say that we are going to accelerate that buy back to be largely complete by the end of ’08, so in terms of capacity, this is close to 5 billion, which would be invested in buy back in the course of ’08, which of course given the development of the share price, it is probably something which is definitely creating value even more. The other thing you saw in that press release is obviously discipline in our balance sheet, not only going towards leverage and efficiency but discipline as well as in the area of waiting, I think that the A- territory is something certainly in current market circumstances, we feel good about because the time about being robust. So if you combine the 5 billion I just talked about, the leverage with discipline and of course the settlement we are going to have to make on the investment made on Respironics and Genlyte and if I may say, combined with the 17% increase in the dividends which will have to be paid as well in Q1, you do your math and you will see that our capacity is actually pretty much used, so to come to your final point which is what does that mean? We will definitely focus on integration. I think we were absolutely focused on that. You probably remember that we have created a dedicated department to integration early last year. That department is going to be even more busy obviously going into ’08. You will see that integration is in the management agenda of Philips, if you go to that particular agenda which was published this morning, and in terms of additional M & A, you might see small moves and particularly emerging markets, small tactical moves and particularly in the realm of medical as we had alluded to in the past and more than that, I in think probably essentially a focus on integration this year.

The next question comes from Mr. Jan-Willem Berghuis, please state your name, company name and please limit yourself to one question, thank you. Jan-Willem Berghuis- Kempen & Co: I just want to go back to the regional performance of the company, you have reported some very strong numbers for emerging market growth in areas like consumer electronics, DAP, lighting, what has been the recent trend, but you are saying 17% up in emerging markets in Q4, 20% in DAP, is that acceleration from previous quarters or was that the run rate even in previous quarters. Pierre-Jean Sivignon: Let us take them, and I will still call them division. This is the last time I will call them division because as you know, next year, we will talk about sectors, so let us call them division and let us go through them one by one. I will say that the growth of medical of PMS in emerging market is an acceleration. Actually, clearly our presence, as you know, we were the young kid on the block in emerging markets for medical and you know the whole story around those stuff et cetera. We have made some recent acquisition. You will remember the acquisition of the copy called PMI, in Brazil, basically we might have more to come. So the process of the increase of medical in emerging markets is something recent and some probably something which will accelerate in the future. So I would say, acceleration in ’07 with more acceleration in the quarters to come. The other one we just saw some acceleration is still in DAP. DAP certainly finished last year with a very strong backbone in the US. Last year being ’06, very solid presence in Europe and if you look at the emerging market mix of DAP across the quarter, you will see an acceleration, which now puts DAP as more than 30% of its mix in emerging markets and that is something which absolutely we will focus on continuing. Consumer electronics, we have gone down initially, I mean, if you remember look at the numbers. We had a percentage, they are both 50 %, which has come down for various reasons, the fact that we exited phones, that fact that we had a decline in (inaudible) earlier in the year and the emerging market is now in the consumer electronics portfolio is reaccelerating on the back of gains of shares and new product categories being introduced in that part of the world. And finally on lighting, there I would say, you would not see an acceleration because this is probably the product division which has had consistently the strongest mix in emerging markets over years. I would not say it is going to accelerate, it will stay a robust mix. You will see actually, we are expecting continued growth in lighting in Europe and the interesting thing is one of the trends which we are starting to see is the upcoming of solid state lighting technology in professional markets, and particularly in Europe, hopefully a trend which will carry us in the quarters to come and that is part of the comment that Gerard made on the resilience of a portfolio on the back of the green wave or cost of ownership wave in lighting. In Q4, let me give you a bit more numbers, the break in Q4 grew 21%. PMS grew 62%, just to give you a flavor. DAP grew 28%. CE grew 15% and lighting grew 25%. So just to give you a bit more flavor on the Fourth Quarter revenue growth. Jan-Willem Berghuis- Kempen & Co: And with your margin in emerging markets in CE, I am aware that it is higher than emerging markets than in the US but in other divisions, what will be the US versus emerging market mix and margins? Pierre-Jean Sivignon: If we cannot come up with the same level of margin and by the way that does not only apply to the emerging market, it is just our model, which is an international model. If we cannot come up with margin, I mean is those situations, we decide to actually skip the particular category in the particular market. I will give you two examples on that point in non-emerging markets, which are certainly relevant to the emerging markets as well. If you take all (inaudible) we are in a very few countries in Europe. Actually, we are not in France, we are not in most of the south market in Europe because there we cannot be endorsed by the professionals. Then we will skip the category because we could not get the proper margin. If you take Shavers in North America, there we have gone with a spectrum of products, which enable us to sell lower-end products in tough times but with the same type of margin percentage than we have with IRN products. So this is the nature of our model and that is what we tried very much to absolutely keep in the emerging/Asian territories. Jan-Willem Berghuis- Kempen & Co: And was the IP income a one-off? Pierre-Jean Sivignon: Well the IP of Q4, we disclosed that. Let me give you an IP, a little bit of a story, if you remember our innovation and emerging line, we guided you early in the year. I am sure you remember that well over of 100 million because we were actually at that time expecting some income on IP, so we knew we should get it. We thought actually to Q3, we were not quite sure we were getting it and then we guided you up in total transparency in that latter part of the year and we finally were capable of coming up with IP in coming Q4. So, the answer to your question is, we have IP income. It is the nature of our business. The only difficulty is that, it is sometime difficult to predict and if you want to turn these things perfectly and be able to absolutely guide, you might at times compromise value. So we prefer to basically, not necessarily guide you to the dot and come up with the income and maximize the value at the time we actually come up with the income, which is pretty much what happened on Q4, on IP on the line innovation and emerging.

The next question comes from Mr. Martin Wilky, please state your name, company name followed by one question and limit yourself to one follow up, thank you. Martin Wilkie – Deutsche Bank: Just a quick question on the genuine acquisition, which I think is going to be completed, sometime later this month. Given a generalized exposure is largely to be commercial at building sects with the US. Have you changed your outlook for how that sector could be growing in 2008? For example, should we be seeing for example the increasing energy efficiency rates to offsetting including the commercial building market? Just give me your thoughts on that please. Pierre-Jean Sivignon: Yes. I think first of all, before to be very specific about the exposure of Genlyte. Genlyte is exposed at the tune of 11% to the residential market. And the rest of Genlyte is so called commercial or industrials, so I think it is very much a business which is totally towards professional offices and factories and houses. So this is to say it is 10% exposed to the meltdown which is currently being seen on the residential market in North America. That is point number one. Point number two, by the way, that particular market, Genlyte, has gone through cycles. I mean that cycle is going down. There is no evidence yet that that cycle is coming down in the US. I am talking about the commercial one, but we have looked at the cycle historically and we have plotted as much as we could, this period of cycles because those cycles had been quite consistently coming in the past and we have plotted them in (inaudible) as much as we could, looking back at the past. Now, the importance of Genlyte in the later part of your question, which is a channel, the professional segment in the US have still been very conservative in introducing the new technologies which relates to the cost of ownership, i.e. technologies which enables professional to reduce the cost of energy using their lighting solutions. There are lots of new technologies coming in, which are already available, simply not leveraged enough, lack of awareness and lack of dedicated channels. The other thing is SSL, today is not very present in professional channels in the US solutions are now starting to be available. I was alluding to the growth of SSL via professional channels in Europe and our game or goal in the acquisition of Genlyte is absolutely to focus on that, which is to bring the technologies which are already in existence, via the channels of Genlyte in order to absolutely convince the end customers that there is money to be saved in the energy bill of businesses via lighting solutions, and that is what we are going to focus on. Now, in terms of return, we have to talk about being EVA positive after your fall and at this point of time, we have no reason to change our guidance. We gave at that time, we disclosed the acquisition of Genlyte.

The next question comes from Mr. Julian Mitchell, please state your name, company name followed by one question with one follow-up question. Julian Mitchell – Credit Suisse: My first question please is on your medical business. If you could talk a little bit about what is happening exactly in your Japanese business, which you mentioned has softened and also, if we think about the margin profile in medical, stripping out the inventory gain, your margins were down year-on-year in the Fourth Quarter. These margins in medical were also down, so could you talk a little bit about what you are seeing in the pricing environment particularly in the US imaging. Pierre-Jean Sivignon: Let me address your Japanese question. I think in Japan, the negative comparative between Q to Q was largely led by the fact that, and I cannot remember, I would have to go back to the release of Q4 ’06, which I do not have in front of me, but we had a very strong 2006 in Japan in particular, we, I think took the large percentage of the MR market in that particular year and defib as well. So we add, I would not call it abnormal, but we certainly enjoyed it at the time, but we probably had a higher market share that our normal market share in Japan in Q4 of 2006 which led to this, I would say, negative comparables for this particular part of the world as far as Q4 ’07 is concerned. Now, coming back to your question on margin, yes we disclosed the 1.1 point, I would say sweetener because our margin for Q4 2007, now what did we see specifically in Q4 2007 in medical, I would say that we essentially own the guidance for growth. We came up with that 4% we talked about, but the reality of it is that we would have liked to see a little bit more. So certainly, essentially our margin suffered from the shortage of volume and I would say probably a bit of an unfavorable mix even though the volume was there on CT on Computer Tomography on the fourth quarter. Did we see pricing pressure? I think the three to four percentage points of pricing pressure that we have seen in the past years was certainly there. Maybe one more point, I would say in addition in 2007 versus 2006, but I would not say that there was a significant deterioration of pricing in ’07 versus 2006 and I certainly would not send a message that the fact that our incoming orders at 10 plus in Q4 ’07 versus one of our competitors announcing lower numbers for orders in that same Q4 was actually the bought out market share, that is not the case. Julian Mitchell – Credit Suisse: And just for the follow up, could you please remind me of the length of visibilityyou’re your main businesses, how large is your order backlog versus your revenue run rate? Pierre-Jean Sivignon: Yes. It is very difficult to answer, I think maybe, I would say ultrasound/monitoring/cardiac care, we have a small backlog, so the orders of a particular quarter are the best proxy of the good health of this particular group of business units. So, there you could see that the Q4 order was probably a good sign of the health of that particular part of the business. For the rest of the portfolio, which is essentially imaging systems, there we have I would say a back log which could go up to a year for the heavy modalities in particular MR and to some extent nuclear medicine, a touch lower, I would say shorter term gradually for x-ray, cardiovascular and finally CT, which is probably the one with the shortest lead time in particular if you come up with the units which are more simple in the offering. So, I would say, very short-term backlog on ultrasound and specifically monitors and cardiac care and gradually longer for the imaging part. The most stable parts of the business is of course services because in there, that is where we have multi-contracts and that is where the guidance is probably the easiest to make. Julian Mitchell – Credit Suisse: And how about just very quickly if you can give sort of a broader sense of the backlog in lighting and consumer, thanks. Pierre-Jean Sivignon: Well, in the consumer businesses, very little, I mean that is representing 15%. I would say of probably maybe a notch more, now that we consolidate consumer luminaries,I would say the 15-plus we have as a total mix of lighting, it is very much a consumer business with the visibility, you are there, which is as you know very little. On the professional side, we have a portion of our business which via projects but that is still not the big portion of our business. So I would say on the professional side as well, maybe it was touched longer than we have on the consumer side but there you obviously scrutinize your backlog as more importantly your incoming orders to fill the trends of what is coming up next and that is why I alluded to in particular the upcoming SSL, I would say expressed orders or trends in the professional luminaire businesses in Europe which is probably something new, and encouraging because of course this is a technology which will save energy cost for professionals, in particular Europe.

Our next question comes from Mr. Andreas Willi, please state your name, company name, and please limit yourself to one question only. This will give more participants the opportunity to ask a question. Thank you. Andreas Willi – JP Morgan: I have a question on your corporate brand campaign. You said you will phase that out over the next two years. Obviously giving you quite a boost to profitability, what gives you the confidence that this will not affect sales growth given the success it has over the last two years in boosting your top line. Pierre-Jean Sivignon: I mean first of all, if you go back to the history of that program and go back to the press releases two three years ago, it was always meant to be an investment, it was not meant to be a spending or selling expense, it was meant to be an investment. One of our most precious assets which is our brand and we have very carefully monitored the impact this investment plan over the last few years, as others on brand and we have amply communicated on the progress our brand has made in the so called inter-brand ranking and you can see that over the last few years our progression has been quite robust. So, the fact that we are now going to scale down on that investment plan is something which was planned all along. At the same time, the selling expenses in the product divisions are there and will be there to support our business and I would add one more thing. The fact that we do not have brand spending at the corporate level or I would say disclosed at the corporate level does not mean we will not spend money on the brand in the sectors, I think what we are saying is that we will continue our brand spending program but the only thing is that, we feel that it is mature enough so that it should belong to the sectors. Andreas Willi – JP Morgan: Thank you, a quick follow up question, how will you account for LG Philips in 2008? Pierre-Jean Sivignon: Well it is quite simple, I think we are consolidating I think essentially because of two reasons, the fact that we are close to 20% and the fact that we have a very important couple of positions in that company and subject to the evolution of those elements, of course, which I cannot comment on at this particular point. We might end up at a later point in 2008. Stop being the accounting consolidation of that particular participation.

For clarity purposes, let me add on the brand, also in the past few years, the majority of the brand effort has been carried by the divisions that is where most of the advertising above and below the line, money is spent. The corporate campaign and the money that we had as corporate loss have boosted with the reintroduction and the repositioning of the brand and the introduction of sense and simplicity. That effort is now stabilizing and we are now going back to the normal situation that we had before that and that we should have under the brands effort that is carried by the divisions and there is no need for an additional boost and support from a corporate level. [Author ID1: at Mon Jan 21 19:41:00 2008 ]

The next question comes from Mr. Timm Schulze-Melander, please state your name, company name and please limit yourself to one question only. Timm Schulze-Melander – Bear Stearns: Maybe one question with two parts then, you commented about M&A capacity coming into 2008 and I just wanted to refer back to a slide in your Resperonics presentation pack. We talked about home healthcare being somewhere in the region of a billion and a half euros in annual revenues. And that as a sort of a second wave, where you indicated that you were looking to take that to about five billion. I just wanted you to comment on that and what kind of time frame we should be thinking about, that is clearly, that is a more meaningful expansion than you would get from making some sort of in-fill medical acquisitions in Asia. And as to the second part, I was just coming back to the sort of decisive steps comment, with respect to LCD TVs, just to make sure that I understand this correctly, in the most immediate sense, we should think of that decisive steps comment, what Rudy was outlining in the conference which was product placement discipline, product category management discipline et cetera. And that for the time being, that does not include considering divestment. Pierre-Jean Sivignon: I do not have the slide you are referring to on home healthcare. I think, from recollection, I think what we alluded to is that the respiratory business was a five billion business. I think that is something we refer to in a couple of slides, I would have to go back to that slide and I apologize for not having it in front of me but I think the five billion referred to is the size of the respiratory business. We interested at the home healthcare and to go beyond the 1.5 billion you are referring to. Yes, I think that is a fair point home healthcare was something which was actually spotted as part of a 2004 statement which was made by Gab Clextolei (ph) at the introduction of the health and wellness initiative, which lead to a mother-care, baby-care and home healthcare including respiratory. There we made some comments on, indeed the business we wanted to create, I mean we are now four years down the line, we have actually basically, gone into mother-care, baby-care but it have not. We have now gone into home healthcare in two steps, one, with the remote support of elderly people that was Life Line and El’s Watch followed by Rytell and we have completed the home healthcare move with, as you know very well now, Respironics, which has the beauty of combining largely service taking place at home with the sweet spot that we have spotted earlier on, which is respiratory, which is a fibrin business. When we go and focus that as a differentiated path of our healthcare strategy definitely. Timm Schulze-Melander – Bear Stearns: Okay, and just on the LCD side. Pierre-Jean Sivignon: Yes, LCD, I think it is hard to be more, I think you read us well, I think, Rudy has been clear and as I just mentioned, I think that decisive means that it is part of our management agenda in line with Rudy’s point, I think Rudy pre disclosed to you to the market what we were going to do there and very much by the way part of managing CE as we do manage today DAP as part of what he is now going to be consumer lifestyle and I think decisive refer to the fact that now, I mean the whole organization will absolutely be governed by those principles and it is up to the point that it is now one of the absolute bullet points of your management agenda for ’08.

The next question comes from Ms. Didier Scemama please state your name, company name, company name and then please limit your self to one question only. Didier Scemama – ABN AMRO: I will just start the question, if I may, on the yield fill for the inventory situation in consumer electronics/DAP in Europe and the US and if you see anything particular there to highlight. Pierre-Jean Sivignon: I think no, consumer electronics we do not disclose those numbers but consumer electronics finished with probably their lowest inventory level and absolutely no evidence of jamming the channels and as far as the DAP is concerned, they ended up with pretty low numbers, there is just one exception at DAP to be absolutely specific which relates to all healthcare, but there, there is a reason which is that we are right now introducing a brand new range on all healthcare and Sensiflex, which obviously obviously jamming a little bit the channels when you change from one generation to the next. Let me say that was on the back of a very robust culture at all healthcare, which is part of health and wellness in the Fourth Quarter. Didier Scemama – ABN AMRO: At the retail level, do you have a feel from your customers’ inventories? Pierre-Jean Sivignon: We are not aware, normally, we try that very, very carefully. But we are not aware of issues with our customers and usually, when there is a problem, they are usually pretty quick on their feet in telling us. Didier Scemama – ABN AMRO: And a quick question if I may on the innovation emerging business, good management and services, have you maybe considered that as one corporate division. Do you have a feel for 2008 EB to EBITA operating loss? Pierre-Jean Sivignon: On GMS, as you know, it is always three blocks. One block on which you are being guided both in terms of absolute numbers as well as in rhythm which is the brand. I think the number is 95 million and we said it would be more or less as well as we can obviously project it at this point evenly spread across the year. The second block is what we call really a quarter and the 50-basis points magic percentage. We will try to do better than that, but I think that is something which obviously we will stick to and then there is an amount for pension and there I think we have guided you there as well in the press release, so all in all you are capable of pretty much modeling what these will be in 2008. Didier Scemama – ABN AMRO: And just a final question, a very quick answer if you can. I mean in the case that the US economy enters a recession and that spreads over to the Western Europe and potentially emerging markets what sort of strategy will you implement to protect or to defend your margins in the consumer related businesses? Pierre-Jean Sivignon: Well, I think the best answer to that is to look at the past because Philips has a long history and one of the things that we looked at quite carefully and we will obviously dig into this even more, we have re-visited a little bit of past and if you go to the slides which are in the press conference, you will see a couple of slides which gives you the history of DAP and lighting over what was a difficult period in 2000 to 2004 wherein as you know, as an analyst, you know there was a couple, and we have picked up by the way one professional business and one consumer business because officially, we are looking at the two, if there is a recession, everybody talks consumer, but you could always make a point about professional sectors as well. And you will see that in the case of DAP, it is interesting that over the cycle, it is a period during which all in all DAP margin kind of stepped up and in the case of lighting, those were the years where lighting actually as well increased its margin over that particular period of time. So I mean, I do not want to say we are totally bullet proof, I do not think it would be nice, but I think, we can look at the past and all portfolios and I am taking the example of DAP and lighting, medical was in its infancy very much at that time because we were just on the following modeling following a lot of M & A, and growing on the back of integrating that M& A, but those PDs certainly during that cycle where it already lives. I think in the case of CE because then the next question is CE, look at ’07, we have been through that in ‘07. In ’07, we had a very difficult beginning of the year. We were obviously comparing to that fantastic year ’06 and in ’07, we had a tough time in connected display, but what helped us was our model, was the fact that the net operating capital depreciation analysis is almost minimal and finally with basically, the fact that we brought license income, we had obviously some IP income. The fact that we have outsource products and the fact as well that some of the portfolio, in particular entertainment solutions and I would say, peripheral accessories starts and I will stay starts bearing a little bit adapt and will obviously as part of commercial lifestyle, we will try to make sure that this is spread to those two to be used. We think that we have some kind of an edge as well for consumer electronics. I think, I would not call it a bullet proof jacket, but certainly history and models will help us and of course, obviously the geographic spread which is something, which is probably more of use in ’08 than it was in those years ’01 to ’04, I think in ’01 to ’04, I am looking at Gerard because I was not there at the time, but my sentiment was that, our portfolio was much more European centered and US centered. We are looking now at the portfolio on the consumer businesses which has a stronger presence in the emerging markets.

The next question comes from Mr. Jan-Willem Berghuis, please state your name, company name followed by your question. Jan-Willem Berghuis – Kempen & Co.: I had a question on the IP income in the innovation and emerging businesses line, can you tell me what the nature is and whether you had any IP gains in the normal consumer business or whether this is completely a different nature of the IP gain, and then secondly on the same line on innovation and emerging businesses, what is the guidance for corporate investments in 2008, would we close to zero, there is obviously consumer healthcare or we will be superior from that line? Pierre-Jean Sivignon: On IP, I cannot be much more explicit on the fact that we have the extra IP income on indeed the emerging innovation line, as I mentioned on an earlier question, it is something we had actually put in our forecast, in our budget, I have to say as well and so it did appear at the end of Q1, we guided probably wrongly, but conservatively and finally ended up delivering on it at the end of Q4, and I answered earlier on the nature of that IP income in terms of its difficulty to predict to the quarter if you want to maximize the value. On the CE side, there was nothing special in CE and I think the CE IP income year-on-year was more or less at level, so if you have to scrutinize the income of the 3.1 margin of CE, even though we do not disclose anymore to you the IP income part of CE, you would not see anything extraordinary or any I would say significantly different in the mix of margin coming from IP in the ’07 numbers versus the ’06 numbers. Now your question on INE, are you asking me guidance, there are a few elements in there. We will continue to invest of course in our incubators as well as in our research and there I said to you all the elements that we gave on Sunday, the holiday in December where we gave all kinds of details on the various programs and that obviously will be there in a sustained manner. We have still two businesses which we need to take care of, with negative returns which are part of the corporate investment portfolio which are still hurting us. We are looking at taking care of this situation in the course of the first quarter, but I cannot be much more precise right now, and finally, indeed we will transfer out of this line, the home healthcare business, but there is profit on the side of LifeLine and Health Watch, but to raise a few investments on some initiative which basically means that it should have a rather neutral effect on that line as far as that particular transfer to what is now going to be healthcare is concerned. So all in all, a number, we have guided you on that number in the first quarter of ’08. You have the guidance in the document and in terms of overall number, hopefully, I would say depending of course on license income number which obviously, we will always try to keep flat in absolute number in the worse case scenario and progressively reduce over time.

Our next question comes from Gaël de Bray. Please state your name, company name followed by your question. Gaël de Bray - Société Générale: The first one is, really did you, your willingness focus on integration as from this year, but could you quantify the total amount of synergies from acquisitions that you expect for 2008 and also, you mentioned that you had a very strong innovation pipeline, so could you be a bit more specific on that and give us maybe some examples of the key new products that are coming in into 2008. Pierre-Jean Sivignon: Integration, let me answer you in two ways, you will see on synergies. We have communicators specifically on the synergies of both Genlyte as well as the synergies expected on Respironics. I think we have given you the details. You can almost plug them for the year ’08, and I think those synergies have been re-included in the detailed slides for these projects in the particular presentation which is in the website. So they were communicated and they basically are referred to on those slides for Genlyte and Respironics. The other thing is that we gave you on that same presentation the expected revenue growth as well as EBITA growth kind of number coming from the sigma of our acquisition that is included in two other slides which re summarizing our M&A over the last two years and a half that was included in the web site presentation. If you want more, we can call Alan and we will give you the highlight and we will bring back to the press release and the particular numbers mentioned on both Genlyte and the Respironics. For innovation, we are continuously introducing new products. I do not know I mean if the new products we have introduced in total in 2007 probably while you raise an excess of 100, I do not have the specific number, we can pull and find it for you if you are interested to the specific examples now for 2008, I will take two in professional and one in consumer. On the consumer side, I will select the new oral healthcare offering, a DAP which is coming now in Sensiflex and Sonycare which is coming now in its full leverage. On the professional side, let me take one example in medical, I will use the new scanner which is being introduced which has got 256 slices which should come up in the latter part of ’08 with a particular suite market which is in the domain of cardiology and I will take another example in the domain of professional and there, let me pick up Rebel which is the new line of products coming from LumiLed which will be addressing essentially our professional channels and to some extent as well, potentially consumer channels by the way out of LumiLed and lighting. Those are examples of innovation, imported innovation for us in the course of 2008.

The next questions comes from Mr. Luke Muzon (ph) please state your name, company name, followed by your question. Luke Muzon – Calliette Galazete Management: Just to come back on the cash flow focus that you mentioned at the beginning of the conference, could you just elaborate a bit on what could be done to improve one notch further the cash generation that sounds to me to be a bit soft over the past year, and second question, could you just consent that the 5 billion buy-back program will start very soon and that so far, we did not see anything in the first week of January. Pierre-Jean Sivignon: I think where can we indeed improve on working cap? I think we have elements which are increasing our working cap need which we need and will continue. One is of course on the service part of medical. There our service business of medical is growing strongly and a worldwide presence now calls for absolute, I would say, perfect execution and available of parts on a geographical basis. So, that is something that we will have probably to absolutely sustain. The other elements which has gone unfavorably, but that is structural in the case of lighting, in particular, the consolidation of PLI which is a business, which has delivered actually well beyond our expectations is coming up, one of the one bad news of PLI which is poppers in lighting or consumer luminous business is coming with a higher inventory as the percentage of revenues and the pre-existing portfolio we had in lighting. So, I would say that is unfavorable. Now, what are the things we can improve? I believe that we can improve our DSO. I think we have penetrated the new market in particular in medical and we need that to basically bring our DSO down. So, with the DSO down in medical as well as in some of the consumer businesses and we need to continue to work on inventory. You show that all inventories ending the year are 12%. It compares to 10.8% expressed as a percentage of revenue at the end of 2006. Some of these as I have mentioned is okay, some of these is something we need to work on and we will have to make progress and I will name the product divisions. One, some progress at the medical, in particular, in imaging systems and some progress as well at lighting were beyond the PLI situation I just alluded to, we need to make some progress there as well. Luke Muzon – Calliette Galazete Management: Okay, and with regard to your buy-back program, when will that be active? Pierre-Jean Sivignon: We have been active actually, we are communicating on a weekly basis, we do not do it on a daily basis, if you go to our website, you will see, you go to the Investor Relation Section, you will see that we are very well engaged into the buy back of the new plan which had been announced on the 20th, we have actually bought already to rebate, 300 million worth of shares and to be even more precise, as you know, the plan was announced, on the third week of December, we were active I think on the second of January. I think, as soon as law was enabling us to move, markets I think, was open on the second of January and we started trading that very day.

The last question comes from Mr. Maurits Heldring, please state your name, company name, followed by your question. Maurits Heldring - Kepler Equities: Two questions left, first one, what kind of CapEx levels should we expect for ’08 and secondly, could you share with us the growth rate of AVANT last year, to see how much the geographical leverage has worked out. Pierre-Jean Sivignon: I think in terms of the CapEx, I am not going to go into details. You can pretty much use the number of last year. You saw that it increased in medical. It was not an increase at medical, it was a change of accounting principles for some of the software which we are now capitalizing. All in all, we let the new accounting rule, CapEx would be pretty much at level, actually, on the AVANT questions (event) is a key part of health and wellness that was up 17% for the quarter and to your particular question on the leverage of the channels, I think AVANT is now absolutely starting to get traction and in the particular Fourth Quarter of ’07 that particular quarter was probably the best quarter we have had in AVANT, so AVANT is gradually getting traction to be absolutely specific to that part of your questions with Q4 ’07 being the best quarter we have had ever since we acquired it. So we are gradually increasing and leveraging the geographic presence without, which was the name of the game, compromising the high margin of that business and what is a consumer business. Maurits Heldring - Kepler Equities: Shortly going back to CapEx, the figure that you refer to is including the acquisitions you have made? Pierre-Jean Sivignon: No, of course we will come back to you, this is including the portfolio we have but that is not including the CapEx to come from GenLyte and Respironics but once, as mentioned in the press release. We would have to come back once we have digested those, we said we would come back to you sometime to re-guide you on that because you have to realize that none of those two deals are closed, so we have to come back to you on integration cost, cash and non-cash. We have to come back to you on things including CapEx as well and we will do that in the course of the first half.

Thank you, Mr. Kleisterlee. There are no questions at this time. Please continue with any other points you wish to raise.

Thank you very much gentlemen for your interest and your questions and once again, I think that the Fourth Quarter ended the year 2007 with a strong performance in slightly adverse circumstances, I think the quarter itself gives evidence to the robustness of our product portfolio and our business model and as such, we have achieved a good starting point for 2008 and we know the circumstances will be more difficult, but we look forward for this confidence and some optimism that 2008 will be the first step and as we are all set on the road towards the achievement of our Vision 2010 goals.

Thank you ladies and gentlemen. This concludes the Royal Philips Electronics Annual Results 2007 Conference Call. Thank you for participating you may now disconnect.