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<SEC-DOCUMENT>0000891836-01-500033.txt : 20010421
<SEC-HEADER>0000891836-01-500033.hdr.sgml : 20010421
ACCESSION NUMBER:		0000891836-01-500033
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010417
FILED AS OF DATE:		20010419

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KONINKLIJKE PHILIPS ELECTRONICS NV
		CENTRAL INDEX KEY:			0000313216
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600]
		STATE OF INCORPORATION:			P7
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		
		SEC FILE NUMBER:	001-05146-01
		FILM NUMBER:		1606755

	BUSINESS ADDRESS:	
		STREET 1:		REMBRANDT TOWER AMSTELPLEIN 1
		STREET 2:		1096 HA AMSTERDAM
		CITY:			THE NETHERLANDS

	MAIL ADDRESS:	
		STREET 1:		REMBRANDT TOWER AMSTELPLEIN 1
		STREET 2:		1096 HA AMSTERDAM
		CITY:			THE NETHERLANDS

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PHILIPS ELECTRONICS N V
		DATE OF NAME CHANGE:	19930727
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>file0016.htm
<DESCRIPTION>REPORT OF FOREIGN ISSUER
<TEXT>

<HTML>
<HEAD>
<TITLE>
Form 6-K
</TITLE>
</HEAD>
<BODY>

<P ALIGN=RIGHT>
                                                                 <B>2001 - 5</B>
</P>

<P>&nbsp;</P>

<CENTER>SECURITIES AND EXCHANGE COMMISSION<BR><BR>

Washington, D.C. 20549<BR><BR>

<HR SIZE=1 NOSHADE WIDTH=10%>
<BR>
<B>FORM 6-K<BR><BR>

REPORT OF FOREIGN ISSUER</B><BR><BR>

Pursuant to Rule 13a-16 or 15d-16 of the<BR>
Securities Exchange Act of 1934<BR><BR>

For the period commencing March 20, 2001 through April 17<BR><BR><BR>

<HR SIZE=1 NOSHADE WIDTH=10%>
<BR><BR>

<B>
KONINKLIJKE PHILIPS ELECTRONICS N.V.</B><BR><BR><BR>

<HR SIZE=1 NOSHADE WIDTH=35%>
(Name of registrant)<BR><BR><BR>

Rembrandt Tower, Amstelplein 1, 1096 HA Amsterdam, The Netherlands<BR><BR><BR>

<HR SIZE=1 NOSHADE WIDTH=50%>
(Address of principal executive offices)<BR><BR><BR>

Name and address of person authorized to receive<BR>
notices and communications from the Securities and Exchange Commission:<BR><BR><BR>

Andrew D. Soussloff, Esq.<BR>
Sullivan &amp; Cromwell<BR>
125 Broad Street<BR>
New York, New York 10004<BR>
<BR><BR><BR>
</CENTER>

<PAGE>

<BR><BR>

<P>This report comprises a copy of the Quarterly Report of the Philips Group
for the three months ended March 31, 2001, dated April 17, 2001.</P>

<P>Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf, by the
undersigned, thereunto duly authorized at Amsterdam, on the 17<sup>th</sup> day
of April, 2001.</P>
<BR><BR><BR>


<CENTER><B>KONINKLIJKE PHILIPS ELECTRONICS N.V.</B><BR>
<BR><BR><BR><BR>

<U>/s/ G.J. Kleisterlee</U><BR>
<B>G.J. Kleisterlee</B><BR>
(Executive Vice-President,<BR>
Member of the Board of Management<BR>
and Chief Operating Officer)<BR>
<BR><BR><BR><BR>

<U>/s/ J.H.M. Hommen</U><BR>
<B>J.H.M. Hommen</B><BR>
(Executive Vice-President,<BR>
Member of the Board of Management<BR>
and Chief Financial Officer)

</CENTER>


<PAGE>

<B>1st Quarterly report<BR>
April 17, 2001</B><BR>
<BR>
<B>Report on the performance of the Philips Group </B>
<HR SIZE=1 NOSHADE>
<B>Key performance data for the period ending March 31</B> <BR>
all amounts in millions of euros unless otherwise stated<BR>
the data included in this report are unaudited


<PRE>
                                                      <U>                    </U>
                                                          January to March
                                                      <B><U>   2001</U></B>      <U>   2000</U>
Sales                                                   <B>8,208</B>        8,329


Income from operations, excl. amortization
   goodwill and other intangibles arising
   from acquisitions (Ebita)                              <B>412</B>          716
As a % of sales                                           <B>5.0</B>          8.6


Income from operations                                    <B>332</B>          663
As a % of sales                                           <B>4.0</B>          8.0


Net income                                                <B>106</B>        1,140
Per common share in euros                                <B>0.08</B>         0.86


Cash flows before financing activities                 <B>(1,184)</B>         535


Income from operations,
   as a % of net operating capital (RONA)                <B>11.5</B>         25.1
Net income,
as a % of stockholders equity (ROE)                       <B>2.5</B>         31.2
Net debt : group equity ratio                           <B>17:83</B>         4:96
Number of employees                                   <B>219,399</B>      229,341
</pre>

<P>
<B>PHILIPS REPORTS NET INCOME OF EUR 106 MILLION IN THE FIRST
QUARTER OF 2001</B>
</P>
<P>
<B>Weakness in telecommunications and PC industries continues</B>
</P>
<UL>
<LI><B>Net Income: EUR 106 million (EUR 0.08 per share)</B>
<LI><B>Sales declined 1%</B>
<LI><B>Income from operations: EUR
332 million (4.0% of sales)</B>
<LI><B>Unconsolidated companies: a loss of EUR 73
million, as a result of lower operational income and higher goodwill and merger
integration costs</B>
<LI><B>One-time charge in the second quarter of approximately EUR
350 million; headcount reduction of more than 6,000</B>
</UL>

<PAGE>

<P>
The rapid downturn in the telecommunications and PC industries that has affected
the businesses of Royal Philips Electronics since December 2000, continued
throughout the first quarter of 2001. Results at Components, Consumer
Electronics and to a lesser extent Semiconductors, were especially impacted by
this decline, the speed of which has been remarkable. Performance at Lighting,
Domestic Appliances and Personal Care (DAP), and Medical Systems was solid, as
expected.
</P>
<P>
<B><I>Net Income</I></B> in the first quarter amounted to EUR 106 million (EUR 0.08 per share)
compared to EUR 1,140 million (EUR 0.86 per share) in the corresponding period
of 2000. Included in income is an after tax gain of EUR 53 million from the sale
of the Philips Broadcast Group to Thomson Multimedia. The first quarter of 2000
included a gain of EUR 526 million (EUR 0.40 per share) from the sale of a
portion of the JDS Uniphase shares.
</P>
<P>
<B><I>Sales</I></B> in the first quarter came to EUR 8,208 million, a 1% decrease on the year
before. Changes arising from (de)consolidations had a neutral effect on balance.
Currency fluctuations had a positive effect of 3%. Price erosion in the first
quarter, at 6%, compares with 5% in the corresponding quarter in the year
earlier. Volume growth in the first quarter of 2001 was 2%.
</P>
<P>
<B><I>Income from operations excluding amortization goodwill and other intangibles</I></B> in
the first quarter was EUR 412 million (5% of sales). Income included an
incidental gain of EUR 70 million related to the sale of Philips Broadcast
activities to Thomson Multimedia, and EUR 25 million collected insurance
payments at Semiconductors. Also included were charges for the write-off of
components and inventory obsolescence at Consumer Communications of EUR 74
million, one-time acquisition related charges for ADAC at Medical Systems of EUR
20 million, and charges of EUR 37 million for various activities in
Miscellaneous. Last year's first quarter included charges of EUR 82 million for
various restructuring projects, and other incidental charges.
</P>
<P>
<B><I>Income from Operations</I></B> amounted to EUR 332 million compared to EUR 663 million
in the first quarter of 2000. The goodwill related charges came to EUR 80
million compared to EUR 53 million in 2000. The increase related to charges for
newly acquired companies in 2000 (MedQuist, ADAC and Optiva).
</P>
<P>
<B><I>Financial income and expenses</I></B> in the first quarter were EUR -84 million,
compared to income of EUR 480 million last year. The first quarter of 2000
included an incidental gain on the sale of a portion of JDS Uniphase shares of
EUR 526 million. Excluding this item, the financial income and expense amounted
to EUR -46 million. The difference mainly relates to higher interest expenses.
</P>
<P>
<B><I>Income tax charges</I></B> in the first quarter have been determined at a tentative rate
of 25%. This compares to 20% (excluding non taxable gain on the sale of JDS
Uniphase shares) in last year's corresponding quarter.
</P>


<PAGE>

<P>
Philips' <B><I>income from operational results relating to unconsolidated companies</I></B>
amounted to a loss of EUR 10 million in the first quarter, versus a profit of
EUR 153 million last year. Market weakness resulted in lower contributions from
TSMC, and negative contributions from SSMC and LG.Philips LCD Co. Philips' share
in the results of Atos Origin was included under income from operational results
on a three month delay basis (i.e. relating to Atos Origin's 4th quarter 2000
performance), and
included Philips' share of non-recurring merger integration costs of EUR 20
million.
</P>
<P>
<B><I>Goodwill charges relating to unconsolidated companies</I></B> amounted to EUR 63 million
compared to EUR 18 million in the first quarter of 2000. The increase related to
Philips' shareholdings in TSMC and Atos Origin.
</P>
<P>
The share of third-party <B><I>minority interests</I></B> in the income of Group companies
amounted to EUR 7 million, compared to EUR 14 million in the first quarter of
2000.
</P>
<P>
<I>Net <B>income</B></I> for the first quarter amounted to EUR 106 million (EUR 0.08 per
share) versus EUR 1,140 million (EUR 0.86 per share) in 2000.
</P>
<BR>
<P>
<B>Accounting policies</B>
</P>
<P>
Accounting policies applied are unchanged compared to the year 2000.
</P>
<BR>
<P>
<B>Segment reporting</B>
</P>
<P>
On February 8, 2001 it was announced that the activities listed under Consumer
Electronics Specialty Products would be reallocated within the Group. In the
first quarter of 2001, the respective businesses have been moved as follows:
</P>
<UL>
<LI>Institutional TV and Accessories to Mainstream CE
<LI>Broadband Networks to Digital Networks
<LI>Speaker Systems, Remote Control Systems, Creative Display Solutions,
and Imaging to Components
<LI>All remaining businesses to Miscellaneous
</UL>
<P>
Prior year financials for the year 2000 in the sectors have been restated
accordingly.
</P>
<BR>
<P>
<B>Sales and income from operations per sector</B>
</P>
<P>
Sales in the <B><I>Lighting</I></B> sector totaled EUR 1,295 million, 6% ahead of the year
before. Currency movements had a positive impact of 3% on sales. Volume growth
was 7%, while prices were 4% lower, on average. The strongest sales growth was
achieved by the business units Automotive &amp; Special Lighting and Luminaires.
<BR>
Income from operations came to EUR 202 million, approximately the same level as
last year. Margins remained strong at 15.5%, below the record 16.6% in the year
earlier quarter.
</P>


<PAGE>



<P>
Sales in <B><I>Consumer Electronics</I></B> totaled EUR 2,685 million, a decrease of 5% over
the same quarter in 2000. Currency movements had a positive effect of 2% on
nominal sales. Sales volume increased by 4%, while prices decreased on average
by 10%; price erosion rose particularly in mobile phones. Sales of Mainstream CE
products increased marginally, hampered by the slowdown in the U.S. market.
Sales edged up in Branded Monitors, DVD Video and Audio Systems. Digital
Networks recorded sharply lower sales of set-top boxes, in particular to U.S.
cable operators. Sales in mobile handsets were impacted by the weakness in the
telecommunications industry, particularly in Europe, caused by slowing consumer
demand and adjustment of the excess inventories throughout the
supply chain. Income from operations in Consumer Electronics turned from a
profit of EUR 83 million in 2000 to a loss of EUR 99 million. The decrease was
mainly attributable to Consumer Communications, which reported a loss of EUR 118
million, compared to a profit of EUR 24 million last year. Adjusted sales plans
in Consumer Communications resulted in a write down of components and an
obsolescence charge of EUR 74 million. Sales of handsets in Western Europe were
significantly lower. By contrast, performance in Asia was positive, mainly
driven by the Xenium product which has been well received in the region. Due to
the sales shortfall, income from operations at Digital Networks ended the
quarter at a loss of EUR 40 million, EUR 24 million lower than the loss of EUR
16 million of last year. Income in 2001 included a charge of EUR 3 million for
write-off of inventories.
<BR>
In the first quarter, Mainstream CE reported a loss of EUR 39 million, compared
to a loss of EUR 8 million in 2000. The performance was negatively impacted by
the slowdown of the U.S. economy, which left both manufacturers and retailers
with high inventory levels in the first few months of this year.
<BR>
License income in the first quarter increased with EUR 15 million to EUR 98
million.
</P>
<P>
Sales in the <B><I>DAP</I></B> sector totaled EUR 440 million, representing 15% growth. The
consolidated sales of Optiva Corporation was the main driver for the uplift
(12%). Price erosion was stable at 2%, while volume growth was 3%. Strong growth
was posted in Eastern Europe, Brazil and China. This was partly countered by
lower sales in North America, reflecting the weaker economy and slowing demand.
Sales in Europe were stimulated by the launch, together with Douwe Egberts, of
the Senseo Crema, a revolutionary new coffee-making system. Income from
operations increased by approximately 18% to EUR 53 million, mainly driven by
improvements in Body Beauty and Health, and the Oral Care business.
</P>
<P>
Sales in the <B><I>Components</I></B> sector totaled EUR 934 million, a decrease of 22% over
the first quarter of 2000. Changes in consolidations had a negative effect of
7%, while currency movements positively impacted nominal sales by 3%. Average
prices decreased by 7%, while sales volume decreased by 11%. Sales in the sector
were strongly affected by the slowdown in the worldwide PC industry and
telecommunications markets, affecting sales in monitor displays, optical storage
modules and mobile display systems.
</P>


<PAGE>

<P>
In the first quarter income of Components came to a loss of EUR 77 million,
compared to a profit of EUR 100 million last year. All businesses showed a
deterioration on last year. Within Display Components, this was caused by lower
sales and high cost levels in relation to reduced activity levels. Generally
weak conditions for the mobile market, resulting in price erosion and lower
capacity utilization, caused lower results within Mobile Display Systems.
Optical Storage was strongly influenced by the continued slowdown of the PC
market. Income also deteriorated compared to last year, due to higher
investments in New Business Creation and investment for e-business projects.
</P>
<P>
Sales in the <B><I>Semiconductors</I></B> sector came to EUR 1,420 million, an increase of 16%
over the same quarter in the year earlier. The consolidation of MiCRUS and SMP
(Malaysia) had a positive effect of 8% on nominal sales, in addition to a 4%
positive currency effect. Price erosion was 6%, up from 3% last year, while
volume growth came to 10%.
<BR>
Income from operations amounted to EUR 231 million, which is 4% lower than the
EUR 241 million of last year. Income in the first quarter 2001 included
collected insurance payments of EUR 25 million. Operating margin on revenues
declined from 16.8% in the first quarter of last year, to 14.5% this year.
</P>
<P>
Sales in the <B><I>Medical Systems</I></B> sector totaled EUR 824 million, 44% up from the
year earlier. The larger part of the increase relates to the consolidation of
MedQuist and ADAC (33%). Additionally, sales were positively influenced by
currency movements (5%). On a comparable basis, sales increased 6%, mainly
caused by Europe and North America. Order intake, excluding the effect of the
new consolidations, increased 21%, and was most significant in Magnetic
Resonance.<BR>
Income from operations in Medical Systems came to a small profit of EUR 1
million, compared to EUR 20 million last year. Higher goodwill charges of EUR 36
million, and one-time charges related to the acquisition of ADAC of EUR 20
million, mainly caused the deviation.
</P>
<P>
Sales in the <B><I>Miscellaneous</I></B> sector totaled EUR 610 million, a decrease of 8% over
the year before. In the first quarter Philips' stake in NavTech has been
increased from 50% to 80%, and the company has been consolidated as per January
1, 2001. <BR>
The income of Miscellaneous came to EUR 21 million and included special
charges of EUR 37 million for a number of items and the gain of EUR 70 million
on the sale of parts of Philips Professional Broadcast group to Thomson
Multimedia. Last year's income was a loss of EUR 23 million.
</P>
<BR>
<P>
Income from operations in <B><I>Unallocated</I></B> was breakeven, compared to a loss of EUR 9
million last year.
</P>
<BR>
<P>
<B>Geographic developments</B>
</P>
<P>
Geographically, <B><I>sales</I></B> growth was strong in North America (11% up), driven by
sales of new consolidations (MedQuist, MiCRUS, ADAC and Optiva) and the
appreciation of the U.S.
dollar. On a comparable basis, sales were lower by 11%, affected by the slowdown
of the U.S. economy. Sales in Asia Pacific ended 3% lower, particularly caused
by lower supplies of
</P>

<PAGE>

<P>
Components to the depressed PC industry. European sales
decreased 8%, mainly caused by the deconsolidation of Origin; on a comparable
basis, sales were virtually flat. Latin America saw 5% growth.
</P>
<P>
<B><I>Income from operations</I></B> in the first quarter weakened in all regions except Asia
Pacific. The weaker economic conditions in the U.S. affected the performance in
North America, in particular at Components, Mainstream CE and Digital Networks.
This resulted in a loss of EUR 115 million for this region, compared to a loss
of EUR 10 million last year. Income in Europe amounted to EUR 253 million and
was approximately half the amount of last year.
The lower performance in Europe was almost entirely due to the losses recorded
in Consumer Communications and Components, and the impact of the financial
crisis in
Turkey. Income in Latin America was at the same level as last year. With an
increase in income of EUR 51 million, Asia Pacific came to a profit of EUR 185
million. All sectors, except Components contributed to the improvement;
increases were particularly noticeable at Mainstream CE and at Semiconductors.
</P>
<BR>
<P>
<B>Cash flows and financing</B>
</P>
<P>
The <B><I>cash flow from operating activities</I></B> in the first quarter amounted to a
negative of EUR 349 million which was EUR 754 million lower than in the first
quarter of last year.
The variance was mostly related to the lower income, higher investment in
working capital and the decrease in provisions.<BR>
Expressed as a percentage of sales, inventories at the end of the first quarter
came to 15.6%, compared to 14.5% a year earlier. The biggest increases occurred
at Digital Networks, Components, Semiconductors and Lighting.
</P>
<BR>
<P>
<B><I>Cash flow from investing activities</I></B> in the first quarter totaled EUR 835
million, compared to a positive inflow of EUR 130 million in 2000. The deviation
is mainly caused by the absence of proceeds from the sales of securities, while
securities worth EUR 550 million were sold last year. An additional impact came
from net capital expenditures (mainly in Components and Semiconductors), which
were EUR 757 million, EUR 301 million higher than last year, though considerably
lower than the EUR 1,248 million of the last quarter of 2000.
</P>
<P>
In the first quarter of 2001, the <B><I>cash flow from financing activities</I></B> amounted
to an inflow of EUR 946 million, due to the impact of a EUR 1,108 million
increase in short term debt levels, mostly resulting from the USD 2.5 billion
Global Commercial Paper program, launched earlier in the year.
</P>
<P>
The net debt to group equity ratio amounted to 17:83 at the end March 2001,
compared to a ratio of 4:96 at the end of the first quarter of last year.
</P>
<BR>
<P>
<B>Employees</B>
</P>
<P>
The number of employees at the end of March 2001 totaled 219,399, unchanged from
January 1, 2001, but approximately 10,000 less than March 31, 2000.
</P>

<PAGE>

<P>
<B>Outlook</B>
</P>
<P>
We see no signs that the slowdown in economic activity in certain parts of the
world, particularly the USA, is near its end. This will continue to cause low
growth and high price
erosion for some of the markets in which Philips is active. As a result, net
income in the second quarter before special charges is likely to be negative.
Capital expenditures have been cut back to EUR 2.5 billion and will be reduced
further if needed.
</P>
<P>
Measures are being taken to bring costs in line with revenue levels, including a
headcount reduction of between 6,000 and 7,000 people. During the course of the
second quarter, detailed plans will be communicated, in particular with respect
to structurally underperforming activities in Components, and Consumer
Electronics. For the moment, we expect to take one-time pre-tax charges of
approximately EUR 350 million in the second quarter. This will include a charge
of approximately EUR 60 million for the disentanglement of the Display
Components business in preparation for the joint venture with LG.
</P>
<BR>
<P>
April 17, 2001<BR>
Royal Philips Electronics<BR>
<BR>

<B><I>Board of Management</I></B>
</P>



<PAGE>


<P>
<B>Statements of income</B><BR><BR>
all amounts in millions of euros unless otherwise stated
</P>
<HR SIZE=1 NOSHADE>
<B>Consolidated statements of income</B>

<BR>

<pre>
                                                  <U>                         </U>
                                                           January to March
                                                  <U>     <B>2001</B></U>       <U>     2000</U>
Sales                                                 <B>8,208</B>           8,329

Income from operations, excl. amortization
   goodwill and other intangibles arising from
   acquisitions (Ebita)                                 <B>412</B>             716

Amortization goodwill and other intangibles       <B><U>      (80</U>)</B>      <U>      (53</U>)

Income from operations                                  <B>332</B>             663

Financial income and expenses                     <B><U>      (84</U>)</B>      <U>      480</U>
Income before taxes                                     <B>248</B>           1,143

Income taxes                                      <B><U>      (62</U>)</B>      <U>     (124</U>)
Income after taxes                                      <B>186</B>           1,019

Results relating to unconsolidated companies:
o income from operational results                       <B>(10)</B>            153
o amortization goodwill and other intangibles     <B><U>      (63</U>)</B>      <U>      (18</U>)
                                                        <B>(73)</B>            135

Minority interests                                       <B>(7)</B>            (14)
<U>                                              </U>    <U>         </U>       <U>         </U>

<B>Net income</B>                                              <B>106</B>           1,140

<B>Weighted average number of common
   shares outstanding during the period</B>
   (after deduction of treasury stock)

o shares in thousands                             1,282,674       1,331,020

<B>Basic earnings per common share in
euros:</B>

o net income                                           0.08            0.86

<B>Diluted earnings per common share in
euros:</B>

o net income                                           0.08            0.85
</pre>
<P>
<B>Safe Harbor: Statement under the Private Securities Litigation Reform
Act of 1995</B><BR>
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, in
particular the Outlook paragraph. 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 affect results), changes in
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.
</P>

<PAGE>

<P>
<B>Balance sheets and additional ratios</B>
</P>
<P>
all amounts in millions of euros unless otherwise stated
</P>
<BR><BR>
<HR SIZE=1 NOSHADE>
<B>Consolidated balance sheets</B>

<pre>

                                           <B>2001</B>          2000          2000
                                       <B><U>March 31,</U></B>      <U>Dec. 31,</U>     <U>March 31,</U>
Cash and cash equivalents                   <B>907</B>         1,089         2,579
Securities                                  <B>124</B>           111         1,499
Receivables                               <B>6,517</B>         6,806         6,619
Inventories                               <B>5,905</B>         5,279         4,785
Unconsolidated companies                  <B>5,466</B>         5,328         2,429
Other non-current financial
assets                                    <B>3,762</B>         3,747           365
Non-current receivables                   <B>2,657</B>         2,713         2,113
Property, plant and equipment             <B>9,612</B>         9,041         7,640
<U>Intangible assets - net          </U>       <U>  <B>4,519</B></U>       <U>  4,427</U>       <U>  2,832</U>
<B>Total assets</B>                             <B>39,469</B>        38,541        30,861

Accounts payable and other
liabilities                               <B>8,205</B>         8,818         8,203
Dividend payable                            <B>462</B>             -           399
Debt                                      <B>5,394</B>         4,027         3,288
Provisions                                <B>3,351</B>         3,491         3,248
Minority interests                          <B>483</B>           469           365
<U>Stockholders' equity             </U>       <U> <B>21,574</B></U>       <U> 21,736</U>       <U> 15,358</U>

<B>Total liabilities and
stockholders' equity</B>                     <B>39,469</B>        38,541        30,861

<B>Ratios</B>
Stockholders' equity,
 per common share in euros                <B>16.85</B>         16.93         11.55

Inventories as a % of sales                <B>15.6</B>          13.9          14.5
Outstanding trade receivables,
in months' sales                            <B>1.6</B>           1.5           1.6

<B>Number of common shares
 outstanding at the end of period</B>

o shares in thousands                 <B>1,280,198</B>     1,283,895     1,329,965

</pre>

<PAGE>


<P>
<B>Statements of cash flows</B>
</P>
<P>
all amounts in millions of euros unless otherwise stated
</P>
<BR><BR>
<HR SIZE=1 NOSHADE>
<B>Consolidated statements of cash flows*</B>

<PRE>
                                                  <U>                         </U>
                                                           January to March
                                                  <U>     <B>2001</B></U>       <U>     2000</U>

<B><I>Cash flows from operating activities:</I></B>
Net income                                              <B>106</B>          1,140
Adjustments to reconcile net
   income to net cash provided by
   operating activities:
Depreciation and amortization                           <B>588</B>            502
Net gain on sale of investments                         <B>(84)</B>          (545)
Income from unconsolidated
   companies                                            <B>131</B>           (153)
Minority interests                                        <B>7</B>             14
Increase in working capital                            <B>(810)</B>          (555)
Decrease in non-current receivables                      <B>87</B>             80
(Decrease) increase in provisions                      <B>(186)</B>            70
Other items                                            <B>(188)</B>          (148)

<U>                                         </U>         <U>     <B>    </B></U>       <U>         </U>
Net cash (used for) provided by
operating activities                                   <B>(349)</B>           405

<B><I>Cash flows from investing</I></B>
<B><I>activities:</I></B>
Net capital expenditures                               <B>(757)</B>          (456)
(Purchase) proceeds from the sale
of securities                                            <B>(1)</B>           550
(Purchase) proceeds of other
non-current financial assets                             <B>(3)</B>           (45)
Proceeds from sale of businesses/
(purchase of businesses)                                <B>(74)</B>            81
<U>                                         </U>         <U>     <B>    </B></U>       <U>         </U>

Net cash (used for) provided by
investing activities                                   <B>(835)</B>           130

<B>Cash flows before financing                          (1,184)</B>           535
<B>activities</B>

</PRE>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P>* </P></TD>
<TD WIDTH=97%><P>
For a number of reasons, principally the effects of translation
differences and consolidation
changes, certain items in the statements of cash flows do not correspond to the
differences between the balance sheet amounts for the respective items.
</P>
</TD>
</TR>
</TABLE>


<PAGE>

<P>
<B>Statements of cash flows (continued)</B>
</P>
<P>
all amounts in millions of euros unless otherwise stated
</P>
<BR><BR>
<HR SIZE=1 NOSHADE>
<B>Consolidated statements of cash flows (continued)*</B>


<PRE>
                                                  <U>                         </U>
                                                           January to March
                                                  <U>     <B>2001</B></U>       <U>     2000</U>
<B>Cash flows before financing
activities                                          (1,184)</B>            535

<B><I>Cash flows from financing activities:</I></B>
Increase (decrease) in debt                           <B>1,108</B>          (174)
Treasury stock transactions                           <B>(162)</B>          (173)
Capital repayment to shareholders                         <B>-</B>              -
Dividends paid                                            <B>-</B>              -
                                                  <U>     <B>    </B></U>       <U>         </U>


Net cash provided by (used for)
   financing activities                                 <B>946</B>          (347)
                                                  <U>     <B>    </B></U>       <U>         </U>


<B>(Decrease) increase in cash and
cash equivalents</B>                                      <B>(238)</B>            188
Effect of changes in exchange rates
   and consolidations on cash positions                  <B>56</B>             60
Cash and cash equivalents at
   beginning of the period                            <B>1,089</B>          2,331
                                                  <U>     <B>    </B></U>       <U>         </U>

<B>Cash and cash equivalents at end</B>                        <B>907</B>          2,579
   <B>of period</B>

</PRE>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P>*
 </P></TD>
<TD WIDTH=97%><P>
For a number of reasons, principally the effects of translation differences
and consolidation changes, certain items in the statements of cash flows do not
correspond to the differences between the balance sheet amounts for the
respective items.

</P>
</TD>
</TR>
</TABLE>


<PAGE>
<P>
<B>Statements of changes in stockholders' equity</B>
</P>
<P>
all amounts in millions of euros unless otherwise stated
</P>
<BR><BR>
<HR SIZE=1 NOSHADE>
<B>Consolidated statements of changes in stockholders' equity</B>


<PRE>
                                                  <U>                         </U>
                                                           January to March
                                                  <U>     <B>2001</B></U>       <U>     2000</U>
Balance as of beginning of period                    <B>21,736</B>         14,757
Change in accounting policy:
o   product/process development costs
    inventories                                           <B>-</B>           (241)
o   derivatives                                           <B>-</B>             58
Exercise of convertible debentures                        <B>1</B>              6
Treasury stock transactions                           <B> (162)</B>          (173)
3% share reduction                                        <B>-</B>              -
Dividend accrual/payment                              <B> (462)</B>          (399)
Net income for the period                               <B>106</B>          1,140
Translation differences and other
(including deferred
   results on derivatives)                              <B>355</B>            210
                                                  <U>     <B>    </B></U>       <U>         </U>

Balance as of end of period                          <B>21,574</B>         15,358

</pre>

<PAGE>


<P>
<B>Product sectors
</B>
</P>
<P>
 all amounts in millions of euros unless otherwise stated
</P>
<BR><BR>
<HR SIZE=1 NOSHADE>
<B>Segment revenues and income from operations</B>
<pre>

                       <U>                                                                             </U>
                       <U>                          January to March                                   </U>
                       <U>                                 <B>2001</B></U>  <U>                                  2000</U>
                        segment  Ebita     income    as % of   segment   Ebita      income   as % of
                       revenues            (loss)    segment  revenues              (loss)   segment
                                             from   revenues                          from  revenues
                                       operations                               operations

Lighting                 <B>1,307    204        202        15.5</B>     1,237     207         205      16.6
Consumer Electronics*    <B>2,740    (99)       (99)       (3.6)</B>    2,875      83          83       2.9
DAP                        <B>446     58         53        11.9</B>       387      45          45      11.6
Components               <B>1,332    (77)       (77)       (5.8)</B>    1,640     100         100       6.1
Semiconductors           <B>1,592    257        231        14.5</B>     1,435     266         241      16.8
Medical Systems            <B>824     46          1         0.1</B>       574      30          20       3.5
Origin                       <B>-      -          -           - </B>      400       9           1       0.3
Miscellaneous              <B>664     23         21         3.2</B>       766     (17)        (23)     (3.0)
Unallocated            <B><U>      -</U>   <U>   0</U>  <U>        0</U> </B>             <U>       -</U>   <U>   (7</U>) <U>        (9</U>)
Total                    <B>8,905    412        332</B>                 9,314     716         663
Intersegment revenues  <B><U>   (697</U>)</B>                               <U>    (985</U>)
<B>Sales</B>                    <B>8,208</B>                                   8,329
<B>Income from operations
as a % of sales</B>                              <B>4.0</B>                                       8.0

* of which:
Mainstream CE            <B>2,073    (39)       (39)       (1.9)</B>    1,982      (8)         (8)     (0.4)
Consumer
 Communications            <B>372   (118)      (118)      (31.7)</B>      521      24          24       4.6
Digital Networks           <B>203    (40)       (40)      (19.7)</B>      278     (16)        (16)     (5.8)
Licenses               <B><U>     92</U>   <U>  98</U>  <U>       98</U>    <U>   106.5</U></B>  <U>      94</U>   <U>   83</U>  <U>        83</U>  <U>    88.3</U>


Consumer Electronics     <B>2,740    (99)       (99)       (3.6)</B>    2,875      83         83       2.9

</pre>

<PAGE>

<P>
<B>Geographic areas</B>
</P>
<P>
all amounts in millions of euros unless otherwise stated
</P>
<BR><BR>
<HR SIZE=1 NOSHADE>
<B>Segment revenues and income from operations</B>
<pre>

                          <U>                                                                             </U>
                          <U>                            January to March                                 </U>
                          <U>                                  <B>2001</B></U>  <U>                                 2000</U>
                           segment   Ebita      income   as % of   segment  Ebita      income   as % of
                          revenues              (loss)   segment  revenues             (loss)   segment
                                                  from  revenues                         from  revenues
                                            operations                             operations

Netherlands                  <B>2,921     221        220       7.5</B>     3,553    291         282        7.9
Europe excl. Netherlands     <B>4,879      34         33       0.7</B>     4,508    251         248        5.5
USA and Canada               <B>2,947     (37)      (115)     (3.9)</B>    2,385     31         (10)      (0.4)
Latin America                  <B>394       9          9       2.3</B>       383      9           9        2.3
Africa                          <B>32       0          0       0.0</B>        28      0           0        0.0
Asia                         <B>3,205     183        183       5.7</B>     3,131    138         138        4.4
Australia and New
  Zealand                 <B><U>      70</U>   <U>    2</U>  <U>        2</U>       2.9</B>   <U>     91</U>   <U>  (4</U>)  <U>       (4</U>)      (4.4)
Total                       <B>14,448     412        332</B>              14,079    716         663
Interregional revenues    <B><U>  (6,240</U>)</B>                               <U> (5,750</U>)
<B>Sales</B>                        <B>8,208</B>                                  8,329
<B>Income from operations
  as a % of sales</B>                                 <B>4.0</B>                                    8.0

</pre>

<PAGE>

<P>
<B>
Product sectors and main countries
</B>
</P>
<P>
all amounts in millions of euros unless otherwise stated
</P>
<BR><BR>
<HR SIZE=1 NOSHADE>
<B>Sales and total assets</B>
<pre>
                          <B>Sales (to third parties)         Total assets*</B>
                          <U>                        </U> <U>                             </U>
                                  January to March         <B> 2001</B>            2000
                               <B>2001</B>           2000     <B>March 31,</B>       March 31,
                          <U>         </U>  <U>             </U> <U>             </U>  <U>              </U>
Lighting                      <B>1,295</B>          1,226         <B>3,076</B>           2,972
Consumer Electronics          <B>2,685</B>          2,812         <B>4,346</B>           4,133
DAP                             <B>440 </B>           381         <B>1,116</B>             749
Components                      <B>934</B>          1,204         <B>5,795</B>           5,650
Semiconductors                <B>1,420</B>          1,224         <B>9,454</B>           5,628
Medical Systems                 <B>824</B>            573         <B>4,052</B>           1,869
Origin                            <B>-</B>            248             <B>-</B>             686
Miscellaneous                   <B>610</B>            661         <B>3,389</B>           1,769
Unallocated                       <B>-</B>              -         <B>8,241</B>           7,405
<U>                         </U> <U>         </U>  <U>             </U>  <U>            </U>  <U>              </U>
<B>Total</B>                         <B>8,208</B>          8,329        <B>39,469</B>          30,861


<U>                                                                                 </U>
<B>Sales and total assets</B>

                          <B>Sales (to third parties)       Long-lived assets</B>
                          <U>                        </U> <U>                             </U>
                                  January to March          <B>2001</B>            2000
                               <B>2001</B>           2000     <B>March 31,</B>       March 31,
                          <U>         </U>  <U>             </U> <U>             </U>  <U>              </U>
Netherlands                     <B>385</B>            438         <B>1,941</B>           1,822
United States                 <B>2,071</B>          1,849         <B>5,190</B>           2,576
Germany                         <B>709</B>            795           <B>733</B>             625
France                          <B>480</B>            509           <B>495</B>             405
United Kingdom                  <B>438</B>            497           <B>346</B>             331
China (incl. Hong Kong)         <B>639</B>            579           <B>909</B>             681
Other countries               <B>3,486</B>          3,662         <B>4,517</B>           4,032
<U>                         </U> <U>         </U>  <U>             </U>  <U>            </U>  <U>              </U>
<B>Total</B>                         <B>8,208</B>          8,329        <B>14,131</B>          10,472
</pre>
<P>
*&nbsp;&nbsp;&nbsp;Includes book value of unconsolidated companies and intangible assets
</P>

<PAGE>


<P ALIGN=RIGHT><B>Philips quarterly statistics</B><BR>
all amounts in millions of euros unless otherwise stated; percentage increases
always in relation to the <BR>corresponding period of previous year
</P>
<pre>
<B>                                                             2000                                    2001
                           <U>                                      </U> <U>                                       </U>
                              1st      2nd        3rd       4th      1st       2nd        3rd       4th
                            quarter  quarter    quarter   quarter  quarter   quarter    quarter   quarter
                           <U>        </U> <U>        </U> <U>          </U> <U>         </U> <U>        </U> <U>         </U> <U>          </U> <U>         </U></B>

  Sales                       8,239    9,155      9,371    11,007   8,208
   % increase                    22       25         21        15      (1)

  Ebita                         716      779      1,016     2,112     412
   as % of sales                8.6      8.5       10.8      19.2     5.0
   % increase                    26       98        148       256     (42)

  Income from operations        663      724        945     1,949     332
   as % of sales                8.0      7.9       10.1      17.7     4.0
   % increase                    21      127        168       267     (50)

  Net income                  1,140    3,604      2,066     2,792     106
   % increase                   143    1,230        455       306     (91)
   per common share in euros   0.86     2.71       1.58      2.16    0.08

<B>
                           January-  January-  January-  January- January-  January-   January-  January-
                              March     June  September  December    March      June  September  December
                           <U>        </U> <U>        </U> <U>          </U> <U>         </U> <U>        </U> <U>         </U> <U>          </U> <U>         </U></B>
  Sales                       8,329   17,484     26,855    37,862   8,208
   % increase                    22       24         23        20      (1)

  Ebita                         716    1,495      2,511     4,623     412
   as % of sales                8.6      8.6        9.4      12.2     5.0
   % increase                    26       55         83       135     (42)

  Income from operations        663    1,387      2,332     4,281     332
   as % of sales                8.0      7.9        8.7      11.3     4.0
   % increase                    21       60         91       144     (50)
   as a % of net operating
   capital (RONA)              25.1     25.3       27.4      35.7    11.5

  Net income                  1,140    4,744      6,810     9,602     106
   % increase                   143      541        512       434     (91)
   as a % of stockholders'
   equity (ROE)                31.2     62.1       56.5      53.5     2.5
   per common share in euros   0.86     3.57       5.15      7.31    0.08

<B>
                                               Period ending 2000                      Period ending 2001
                           <U>                                      </U> <U>                                       </U>
</B>

  Inventories as % of          14.5     14.7       15.8      13.9    15.6
  sales
  Average collection
  period
   of trade receivables
   in months' sales             1.6      1.6        1.6       1.5     1.6
  Net debt: group equity       4:96        *       8:92     12:88   17:83
  ratio

  Total employees (in           229      232        239       219     219
  thousands)
</pre>

<P>
<B>*&nbsp;&nbsp;&nbsp;Not meaningful: net cash exceeded the debt level. </B>
</P>
<P>&nbsp;</P>
 <P>
Information also available on Internet, address: www.investor.philips.com<BR>
Printed in the Netherlands
</P>

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