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<SEC-DOCUMENT>0001156973-09-000236.txt : 20090618
<SEC-HEADER>0001156973-09-000236.hdr.sgml : 20090617
<ACCEPTANCE-DATETIME>20090428115252
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001156973-09-000236
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090428

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]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			P7
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		BREITNER CENTER
		STREET 2:		AMSTELPLEIN 2
		CITY:			AMSTERDAM
		STATE:			P7
		ZIP:			1096 BC
		BUSINESS PHONE:		31 20 59 77777

	MAIL ADDRESS:	
		STREET 1:		BREITNER CENTER
		STREET 2:		AMSTELPLEIN 2
		CITY:			AMSTERDAM
		STATE:			P7
		ZIP:			1096 BC

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PHILIPS ELECTRONICS N V
		DATE OF NAME CHANGE:	19930727

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PHILIPS NV
		DATE OF NAME CHANGE:	19910903
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
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<HEAD>
<TITLE>Corresp</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">April&nbsp;28, 2009
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Jay Webb<BR>
Reviewing Accountant<BR>
Division of Corporation Finance<BR>
Securities and Exchange Commission<BR>
100 F Street, N.E<BR>
Washington, D.C. 20549

</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">Re:</TD>
    <TD>&nbsp;</TD>
    <TD><u>Koninklijke Philips Electronics N.V. &#151; Form&nbsp;20-F for the Fiscal Year ended
December&nbsp;31, 2008 (File No.&nbsp;001-05146-01)</u></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Webb:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Thank you for your letter dated March&nbsp;24, 2009 setting forth comments regarding the Form 20-F for
the fiscal year ended December&nbsp;31, 2008 (the &#147;2008 Form&nbsp;20-F&#148;) of Koninklijke Philips Electronics
N.V. (&#147;Philips&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To facilitate your consideration of Philips&#146; responses, we have included below the comments and
have provided Philips&#146; responses immediately following.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Philips acknowledges that (i)&nbsp;Philips is responsible for the adequacy and accuracy of the
disclosure in the filing, (ii)&nbsp;Staff comments or changes to disclosure in response to Staff
comments do not foreclose the Commission from taking any action with respect to the filing, and
(iii)&nbsp;Philips may not assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In certain of our responses, we have proposed to amend the wording of certain disclosures in our
future filings. We are doing that to respond to the comments and not because we believe our prior
filings are materially deficient or inaccurate. Accordingly, any changes in subsequent filings
should not be viewed as an admission that prior disclosures were in any way deficient.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Form&nbsp;20-F for the Fiscal Year ended December&nbsp;31, 2008</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Exhibit&nbsp;15(b)</I></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>US GAAP Financial Statements, page 124</I></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Significant accounting policies , page 136</I></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Revenue recognition, page 137</I></U>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><I>1.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We see disclosures herein that &#147;The Company recognizes revenue when persuasive evidence of an
arrangement exists, delivery has occurred or the service has been provided, the sales price is
fixed or determinable, and collectability is reasonably assured. For consumer-type products in
the segments Lighting and Consumer Lifestyle, these criteria are </I><U><I>generally</I></U><I> met at the
time the product is shipped and delivered to the customer...&#148;. With respect to each of your
segments, please describe for us in greater detail the nature of any revenue transactions that
result in revenues being recorded other than &#147;at the time the product is shipped and delivered
to the customer&#148;. Specifically tell us when, if ever, revenues are recorded prior to a
products shipment or delivery to a customer. Provide us with references to the authoritative
US GAAP that supports your accounting for any such transactions. When preparing future
filings, please consider whether use of the description &#147;generally&#148; when referring to your
revenue recognition policies is useful for the readers of your financial statements and notes
thereto.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response:</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Philips recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred
or the service has been provided, the sales price is fixed or determinable and collectability is
reasonably assured. The only exceptions to this policy are bill and hold transactions in the
Consumer Lifestyle and Lighting Sectors, which do not meet the delivery criteria. Revenue for
these transactions is, however, recognized in accordance with SAB 104 criteria. The Healthcare
Sector has multiple element transactions that are recognized in accordance with EITF Issue No.
00-21, &#147;Revenue Arrangements with Multiple Deliverables&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Philips recognizes revenue only when the applicable criteria are met. The use of the word
&#147;generally&#148; was not intended to reflect that the policy is applied in a general way.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We confirm that there were no transactions that resulted in revenues being recorded earlier than at
the time the product was shipped or delivered to the customer, with the exception of bill and hold
transactions in the Consumer Lifestyle and Lighting Sectors, as discussed above, which are
immaterial (less than EUR five million in 2008) and recognized in accordance with SAB 104 criteria.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have considered your comment and will remove the word &#147;generally&#148; from the revenue recognition
policy in future filings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Notes to the US GAAP financial statements, page 142</I></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Note 17. Goodwill, page 158</I></U>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><I>2.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We see you indicate that &#148;Due to deteriorating economic circumstances and the decline of the
market capitalization of the Company, trigger-based impairment tests were performed in the
latter half of the year using updated assumptions. The trigger-based tests resulted in
goodwill impairment charges of EUR 234&nbsp;million...&#148;. Regarding your impairment analysis of
goodwill, please address the following:</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>tell us, in light of deteriorating market conditions, the last date you assessed
each of your reporting unit&#146;s goodwill for impairment and the results of such tests;</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>we note from your goodwill accounting policy disclosures on page 140 that you
generally use discounted projected cash flows to determine the fair value of your
reporting units. In light of the guidance in paragraph 19 of SFAS 157, which
indicates that multiple valuation techniques could be appropriate in determining the
fair value of reporting units, please specifically tell us how you considered other
valuation approaches in determining the fair value of your reporting units; and</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>tell us, when you are evaluating your individual reporting units for impairment,
how you validate the reasonableness of the fair values determined. For example, tell
us whether you received quoted market prices in active markets to validate the results
from your discounted cash flow projections. In this regard, we note that paragraph 23
of SFAS 142 indicates that quoted market prices in active markets are the best
evidence and should be used if available.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response:</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Last date of assessment and related results</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In Q4, &#147;triggered by Philips share price decline&#148;, all reporting units with goodwill were
re-tested. The effective date for those tests was October&nbsp;31, 2008. Only one reporting unit,
Lumileds, required a second step of the goodwill impairment test in line with paragraph 20 of SFAS
142. This second step test resulted in an impairment charge of EUR 232&nbsp;million. The effective
date of the Lumileds calculations was December&nbsp;31, 2008. Subsequent to the October impairment
test, we monitored the reporting units that we believe were most sensitive to changes in
assumptions in order to confirm the outcome of the Q4 test which resulted in no additional
impairment indicators.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Determination of valuation approaches</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Philips considered using the following approaches in assessing fair value of our reporting units:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Market approach</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cost approach; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income approach</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We did not apply the market approach primarily due to the absence of quoted market prices of our
reporting units nor the cost approach because, in our view, the replacement costs of our reporting
units cannot be determined in a reliable way. We considered the income approach the most
appropriate for goodwill impairment testing and have consistently applied a discounted cash flow
(DCF)&nbsp;technique because 1) it is an acceptable valuation technique which is commonly used by market
participants to determine an exit price; and 2) only the cash flow generated by the &#091;reporting
unit&#093; can be used for consumption or additional investment<SUP style="font-size: 85%; vertical-align: text-top">1</SUP>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Validation of reasonableness of fair values determined</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As we did not have quoted market prices in active markets for our reporting units, we prepared the
cash flow projections, used in the DCF, internally; these projections were then subjected to
further internal review. We used observable inputs, where available, related to our weighted
average cost of capital (WACC)&nbsp;and caps on terminal value growth rate assumptions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><I>Notes to the US GAAP financial statements, page 142</I></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Note 17. Goodwill, page 158</I></U>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><I>3.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>In a related matter, tell us the last date you assessed your property, plant and equipment
and intangible assets (excluding goodwill) for impairment and the results of such tests.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response:</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Property, plant and equipment and intangible assets (excluding goodwill) are reviewed for
impairment indicators every quarter. Long-lived assets were last reviewed for impairment
indicators during Q4 2008. For those assets where impairment indicators<BR>
existed, impairment tests were performed resulting in asset impairments of approximately EUR 80
million primarily related to Lighting.
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><I>Valuation &#150; measuring and managing the value of
Companies </I>by McKinsey, Copeland,
Koller and Murrin</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 10pt">*****
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Please direct any questions or comments regarding this letter to me at
(011) (31)&nbsp;20 59 77 142. Our fax number is (011) (31)&nbsp;20 59 77 140.
We are available to discuss any of the foregoing with you at your convenience, and thank you again
for your consideration of our response to the comment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Very truly yours,
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>/s/ Pierre-Jean Sivignon&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pierre-Jean Sivignon<BR>
Executive Vice President and Chief Financial Officer
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">cc:</TD>
    <TD>&nbsp;</TD>
    <TD>Angela Crane<br>
Kevin Kuhar<br>
(Securities and Exchange Commission)<br><br>
Jan van Leeuwen<br>
Eric P. Coutinho<br>
Hessel Hilarides<br>
Marnix van Ginneken<br>
(Koninklijke Philips Electronics N.V.)<br><br>
John O&#146;Connor<br>
(Sullivan &#038; Cromwell LLP)<br><br>
Michiel Soeting<BR>
(KPMG Accountants NV)<br></TD>
</TR>
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>



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