Philips to acquire Digital Lifestyle Outfitters, a leading supplier of accessories for mobile devices

Amsterdam, The Netherlands and Charleston, South Carolina - Royal Philips Electronics (AEX: PHI, NYSE: PHG) today announced that Philips will acquire US-based Digital Lifestyle Outfitters (DLO) subject to receipt of regulatory approval. DLO designs, markets and distributes accessories, including docking stations, FM transmitters, cables and cases for mobile audio-visual devices such as MP3 and video players.

The transaction is expected to close in the second quarter of 2007, upon which DLO will become part of the Peripherals & Accessories business unit of Philips' Consumer Electronics division. No financial details on the transaction were disclosed.

Between 2003 and 2006, sales in Philips' Peripherals & Accessories business unit more than doubled, due to a combination of targeted acquisitions and organic growth through innovative products and a strong customer focus. Peripherals and accessories are among the fastest growing and higher-margin product categories in consumer electronics today, with retailers increasingly looking to offer these products as part of a complete consumer electronics portfolio to their customers. Within peripherals and accessories, Philips sees the mobility, audio and PC domains as strategic growth areas.

Through this deal, Philips will become a leading player in peripherals and accessories for the mobility domain, which will further strengthen Philips' contacts to key international retailers - relationships based on solid category management and operational excellence.

DLO's position as a leader in the field of MP3 accessories complements Philips' strong position in the headphones category. DLO realized sales of approximately USD 100 million in 2006, mainly in the United States, and is expected - upon closing of the deal - to make a positive contribution to operating margins in Philips' Peripherals & Accessories business unit.

In mobility, the global market for accessories around MP3-players exceeded USD 4 billion in 2006, and currently enjoys annual growth of more than 10%. "Besides building on our acquisition of Power Sentry last year and Gemini in 2004, acquiring Digital Lifestyle Outfitters will strengthen Philips' ability to address emerging trends in this market - such as peripherals and accessories for multi-functional phones - through innovative products that deliver on Philips' brand promise of sense and simplicity," Mr. Rudy Provoost, Chief Executive Officer of Philips Consumer Electronics, said.

DLO is a privately held company and operates from Charleston, South Carolina and Raleigh/Durham, North Carolina. "By teaming up with Philips, DLO will be able to expand outside of the United States, capitalizing on Philips' global distribution network with key retailers," explained Jeff Grady, president and CEO of Digital Lifestyle Outfitters.

About Royal Philips Electronics Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in healthcare, lifestyle and technology, delivering products, services and solutions through the brand promise of "sense and simplicity". Headquartered in the Netherlands, Philips employs approximately 121,700 employees in more than 60 countries worldwide. With sales of EUR 27.0 billion in 2006, the company is a market leader in medical diagnostic imaging and patient monitoring systems, energy efficient lighting solutions, personal care and home appliances, as well as consumer electronics. News from Philips is located at www.philips.com/newscenter.

**About Digital Lifestyle Outfitters **With a complete line of digital-device accessories available worldwide, DLO has all of your electronic essentials. From cases and cables to remotes and speaker systems, DLO offers everything you need to optimize your technology. With the digital revolution at hand, DLO is leading the way by outfitting your digital lifestyle. For more information about the TransDock for iPod or other DLO products, visit www.dlo.com.

Forward-looking statements This release may contain 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 and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.