Philips Gives Update on a Number of its Businesses

Analyst Meeting Demonstrates Company is Making Progress

Amsterdam, the Netherlands, November 19, 2002 – In a meeting with investors and financial analysts in Amsterdam today, Royal Philips Electronics (AEX: PHI, NYSE:PHG) will provide a comprehensive update on business developments in its Lighting, Consumer Electronics, and Medical divisions, as well as the businesses in the recently dissolved Components division.

On Philips Lighting, it will be shown that the business is outpacing it’s competitors, delivering EBIT margins of approximately 12% for the year-to-date, whilst achieving record high delivery reliability and record low inventories. The division has a number one position in almost all markets served, and its strategy of focusing on innovation, marketing excellence and delivery reliability, while tightly controlling costs and assets is paying off. The recent win to become the exclusive supplier of branded light bulbs to Home Depot’s 1,400 U.S. stores is a clear reflection of this winning approach. The high-tech aspect to the business will also be highlighted, including projection, extreme ultra-violet for use in wafer steppers, LCD backlighting, and solid-state lighting technology.

The changes at the Components division will be further explained, including the rationale and impact of the measures announced in October. Focus will be given on Mobile Display Systems (MDS), which has accelerated the pace in the transition to color displays and is now ahead of the market. From a financial perspective, the targets for the sum of the parts of the former Components is to get the group back into the black for the full year 2003. This target will be particularly based upon eliminating the heavy losses at Philips Optical Storage within two quarters.

Philips Medical Systems will confirm that the integration of recent acquisitions is on-track with the identified EUR 350 million cost synergies expected for the full year 2003. Excluding all special items and non-recurring items as well as the HCP business of the former Marconi Medical Systems, an EBITA of approximately 9% for the full year 2002 is expected, whilst the target of 14% EBITA for the business in 2004 will be confirmed. The annual sales target for 2004 remains unchanged in volume terms, but as a result of exchange rate movements becomes EUR 7.3 billion instead of EUR 8 billion (75% of sales are in USD or USD-related currencies). New product and technology introductions are expected to drive business development further, with the recent FDA approval of the HeartStart home defibrillator and live 3D Echocardiography ultrasound imaging of a beating heart indicated as two unique success points.

Philips Consumer Electronics will confirm that the turnaround of its business in the key US market is proceeding with success, and the strategy is paying off with 142% sales growth in up-market retailers, and 55% year-on-year growth in the branded TV segment, both cases reflecting the successful development of Philips as a premium brand. For the Consumer Electronics division as a whole, the business is on course for a good fourth quarter, October having been a record month, and November also looking strong, mainly as a result of operational improvements.

Consumer Electronics will also announce that the Digital Networks business will be integrated into other parts of the company, with the main set-top box business moving to Consumer Electronics. The change will deliver R&D synergies and enhanced cooperation, better utilization of the retail sales channel and lower overheads. No restructuring charge will be required, but savings will be realized. Digital networks will no longer appear as a separate line in Philips’ financial statements after the fourth quarter.

Jan Hommen, Philips’ Vice Chairman and Chief Financial Officer commented: “It’s encouraging to see that even in a continuing tough market, our focus on improving operational performance in many areas including costs, marketing and innovation, is delivering results. We reconfirm as we had already indicated at the release of the Q3 earnings, that we expect to take restructuring and impairment charges in the fourth quarter, and that there could also be adjustments to fair market value of certain securities we hold. We expect to go into 2003 with these issues largely behind us.”

Any questions? Please contact

Jeremy Cohen

Philips Corporate Communications
Tel:  +31 20 59 77213   
Email:  jeremy.cohen@philips.com

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 29 billion in 2003. It is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. Its 164,500 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, semiconductors, and medical systems. Philips is quoted on the NYSE (symbol: PHG), Amsterdam and other stock exchanges. News from Philips is located at www.news.philips.com


Safe Harbor Statement

This document contains 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. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, levels of consumer and business spending in major economies, changes in consumer tastes and preferences, the levels of marketing and promotional expenditures by Philips and its competitors, raw materials and employee costs, changes in future exchange and interest rates (in particular, changes in the euro and the US dollar can materially effect results), tax rates and future business combinations, acquisitions or dispositions and the rate of technical changes. Market share estimates contained in this report are based on outside sources such as specialized research institutes, industry and dealer panels, etc. in combination with management estimates.