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Apr. 14. 2008 / 4:00AM, PHG - Q1 2008 Royal Philips Electronics Earnings Conference Call

As far as Europe is concerned, we had a high inventory as well. So there it's not a question of taking provision, it's a question of making sure that, in the course of the second quarter, we are extremely disciplined to take care of that inventory and that we come with the end of Q2 with an inventory balance in Europe at Television which has been taken care of. And that will be absolute point of attention in the course of Q2.

Francois Meunier - Cazenove - Analyst

But usually inventories go up after the Olympic Games so these are already quite high going into the Olympic Games for TVs, that's quite worrying.

Pierre-Jean Sivignon - Royal Philips Electronics - CFO

Well the selling season will start now basically on two events. One is the Olympic Games, but the other one is the World, excuse me, the European Championship of Soccer which I think it is in June, July. So the time to manage inventory is actually now because this is when -- this is right now that the selling season is starting.

Operator Your next question comes from Mr. Alex Surla from Merrill Lynch. Please go ahead.

Alex Surla - Merrill Lynch - Analyst

Good morning I have a follow-up question, I think, on Healthcare and the outlook for the second half. Obviously with the equipment growth of 9% it looks good for the second half. We also have hopefully a little bit of less of an impact from the DRA in the second half of this year. But then we have some other potentially negative things that I wanted to see what your stance is on. Firstly, the impact of GE coming back onstream with their CT arm, what do you feel is impact on your business, is it half a percentage point, a percentage point off the growth?

And then in terms of this June deadline for potentially discussing the DRA, could you just give us a little bit more flavor how you think about that deadline, especially because I feel maybe there's a lot of noise, but in fact the Congress will probably not be able to decide on doing anything in the year of elections, and likely this will be postponed to 2008 timeframe?

Pierre-Jean Sivignon - Royal Philips Electronics - CFO

Yes I wish I knew, and since I don't know I am cautious. You could be correct because it is true that that industry was very hardly hit in December '06, as you probably know. I think the last statistics I have was that those decisions has put belly up I think 13% to 14% of the private imaging centers, which was of course quite significant. I'm not aware that the number of examinations has actually come down and, as a result, obviously a lot of the workload has moved to hospitals.

We are doing obviously our job with intense lobbying with our peers in order to make sure that the right decisions are being made at the end of June, but I certainly am not in a position to say anything. I don't know, I hope you are correct, but until I know I will remain cautious. Of course we have a very encouraging start to the year, but I will remain cautious on the second half. I think it is too important a decision just to basically take a position on the Imaging business for North America for the second half.

Now for the rest of the world, what we've said all along, which is 3% to 4% for Imaging out of North America, 3% to 4% for the rest of the portfolio beside, of course, Respironics worldwide. Those numbers we maintain and we believe that we are all-in-all gaining share, so we expect to do a touch better than that in terms of revenue growth. And Respironics I think the kind of growth


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