Abhijit Bhattacharya - Executive Vice President of Investor Relations François Adrianus van Houten - Chairman of the Board of Management, Chief Executive Officer and President Ron H. Wirahadiraksa - Chief Financial Officer, Executive Vice-President and Member of Board of Management

Andreas P. Willi - JP Morgan Chase & Co, Research Division Mark Troman - BofA Merrill Lynch, Research Division Martin Wilkie - Deutsche Bank AG, Research Division Ludovic Debailleux - Natixis Bleichroeder LLC, Research Division Ben Uglow - Morgan Stanley, Research Division Gael de Bray - Societe Generale Cross Asset Research Martin Prozesky - Sanford C. Bernstein & Co., LLC., Research Division Olivier Esnou - Exane BNP Paribas, Research Division Simon Toennessen - Crédit Suisse AG, Research Division Erwin Dut - Kempen & Co. N.V., Research Division Philip Wilson - Redburn Partners LLP, Research Division William Mackie - Berenberg Bank, Research Division Fredric Stahl - UBS Investment Bank, Research Division Andrew Carter - RBC Capital Markets, LLC, Research Division

Welcome to the Royal Philips Electronics Third Quarter Results 2012 Conference Call on Monday, the 22nd of October, 2012. [Operator Instructions] Please note that this call will be recorded and is available by webcast on the website of Royal Philips Electronics. I will now hand the conference over to Mr. Abhijit Bhattacharya, Head of Investor Relations. Please go ahead, sir.

Good morning, ladies and gentlemen. Welcome to this conference call on the third quarter of 2012 for Royal Philips Electronics. I'm here with Frans van Houten, CEO of Philips; and our CFO, Ron Wirahadiraksa. In a moment, Frans will make his opening remarks and give you an update on how we are executing on our performance improvement plans. Ron will shed more light on the details of the financial performance during the quarter. After this, both Frans and Ron will be happy to take your questions. As usual, our press release and accompanying information slide deck were published at 7:00 a.m. CET this morning. More documents are now available for download from our Investor Relations website. We will also make available a full transcript of this conference call on the Investor Relations website by tomorrow at the latest. With that, let me hand over the call to Frans to take it forward. François Adrianus van Houten: Thanks, Abhijit. Welcome. Thank you all for joining us today for our third quarter 2012 earnings conference call. Our operational and financial performance this quarter demonstrate that we are making further progress on our paths towards our 2013 financial targets, driven by our Accelerate! program. Before I walk you through the highlights of this quarter, let me provide you with a broader picture of the improvements that we are driving to change Philips. Early last year, it became clear that we had to address issues affecting our performance, like slowing growth and unsustainable overhead cost structure and lack of granularity in the performance management system, as well as a culture that needed to change. To address these and other issues, we launched our multiyear change and performance program, Accelerate!, which fundamentally changes the way we manage Philips. In the past several quarters, we have…

Thank you, Frans. Good morning, and welcome to all of you on the call. I will begin by giving you some color on the development in the markets we serve and then walk you through our financial performance for the third quarter. Let me start with healthcare. In the U.S., we are seeing that the recovery of the U.S. economy is challenging. Based on the latest surveys for hospital construction and contrary to earlier estimates, new starts from January to July 2012 were down 18% versus 2011. This typically has an impact on our industry. We remain cautiously optimistic that after we have the U.S. Presidential elections behind us, we will see the market return to modest growth in 2013. The ramification of the Supreme Court ruling on the Patient Protection and Affordable Care Act add another layer of complexity to the market outlook for next year. It is not yet clear which states will exactly participate in the Medicaid expansion, adding to the gridlock regarding healthcare reform and making it increasingly difficult for hospitals to perform adequate long-term planning. It is important to note that the Medicaid Expansion Act does not become effective until 2014. The court also upheld the medical device excise tax, which will become effective in January 2013, with a 2.3% tax on sales of most medical devices. This tax will be deductible for Philips, and we are looking at all opportunities across our value chain to mitigate the impact of this tax on our business. In Europe, we remain cautious on the economic outlook. Southern Europe continues to be very weak as the austerity measures undertaken in countries such as Italy, Spain and in Greece, significantly affect public spending on healthcare. Market growth for the remaining part of Europe showed the first signs of improvement.…

[Operator Instructions] The first question comes from Andreas Willi from JPMorgan. Andreas P. Willi - JP Morgan Chase & Co, Research Division: My first question is on the earnings bridge. If I add all the positives from pensions, savings, lowest stranded costs, some volume leverage and foreign exchange, I get to about EUR 300 million year-on-year positives on the adjusted EBITA number compared to about EUR 170 million increase you have shown year-on-year. Maybe you could break down the negatives in terms of the still ramping up of investments you are doing, which is driving top line growth but maybe also other negatives in terms of price pressure or so that explains basically how we get to the net number in the earnings bridge. And the second question on top line growth, you're guiding to a slowdown going forward due to the economy. Would you still expect to continue to outgrow your end markets by a similar margin as we have seen in the last few quarters? Or would you expect that difference on the relative growth to also narrow now that maybe some other comparables get a bit more difficult from your investments that drove growth over the last few quarters? François Adrianus van Houten: Andreas, let me take the second question first and then Ron is preparing for the earnings bridge question. The Accelerate! program gets us to become more agile and entrepreneurial. We are speeding up innovation. We're taking many measures. By reducing overhead cost, we can actually do a bit more in research and development and customer penetration. So the sum total of all that should allow us to gain market share, which I think is behind your question. So we have seen good momentum in all 3 sectors with some market share gains. Of course, we aim and hope to do more of that. But I do consider the outlook of the world economy sufficiently in-transparent that I cannot already now promise you that we will outgrow competition. So we'll have to take it in strides. I think that we are becoming a more competitive company. And therefore, by and large, we should strive for gaining position. A good news piece that came in, in September was the SFDA approval for our Ingenia 1.5 and 3 Tesla MR systems that should help us also to grow further in the fourth quarter with order intake. In the meantime, I look to Ron. Are you ready for the earnings bridge?

Yes, thank you. So if we look at the absolute increase in the profit, you have to bear in mind that yes, our gross margin is growing, of course, at an absolute level because the sales growth and there is indeed some price pressure, but we don't see it outside the normal range on average. But we also still increase our cost. And if you look at that, there's a large part here on an absolute basis related to the impact of ForEx, that is the translation loss that I have to mention to you. Otherwise, we of course are saving from Fit to Grow. We're also doing restructuring and we're doing investments in IT infrastructure and process infrastructure. And then there is the ongoing investments that we're doing in growth, so that we come to the amount, you call it, EUR 170 million, as the result of these.

The next question comes from Mark Troman from Bank of America Merrill Lynch.

It's Mark here from Bank of America. Just got a question on Healthcare, Frans. Europe, you won some big orders, looked pretty good. U.S. went the other way, looked weaker. Are these ongoing trends that you see? Do you think that Europe has bottomed out or -- either from a market perspective or because of what you're doing on the product side or investment on the sales side that we just alluded to earlier? François Adrianus van Houten: Yes. Mark, I'm afraid we cannot derive a trend from what has just happened. Southern Europe continues to decline. And it is a couple of these bigger lumpy orders that made Europe shine in the third quarter with 18% order intake growth. I cannot guarantee you that, that will continue going forward. There's quite some uncertainty there. The U.S. has been going strong up until this summer. And with the uncertainty around the elections and the fiscal cliff, you see most people being very prudent. We expect that to be the pattern for the next 3 to 6 months. The underlying U.S. economy is actually improving. So it's a bit of a paradoxical situation. China, GDP growth, also uncertainty around government programs, again, I think we are faced with an uncertain period of maybe 3 to 6 months, and we'll have to take that in strides and take it as it comes. We will fight very hard for every order. And I think we are in a better shape. So sorry, no real trend lines to be derived out of this explanation.

Okay. And just one follow-up. Frans, the procurement program you mentioned before in your opening part of your presentation, can you just clarify, is that in addition to the Accelerate! program? Or is that part of some operational excellence drive within Accelerate!? And in terms of the scope of that, could you provide any sort of guidance as to what's going on? François Adrianus van Houten: Sure. We have made the procurement program part of Accelerate! As we went into the end-to-end programs and we look at innovation, the innovation process, the product creation process we have discovered. We have found that we are really not strong enough in what we call procurement engineering. And so we said that we need to come to fundamental strengthening of the role of procurement in the early stages of the innovation processes. So we have made a part of Accelerate!, we announced that we see possible -- will eventually lead to upside. At this stage, we are not changing our midterm targets. The scope will be all of Philips, but with more than 60 business units in the company, clearly, we cannot tackle all of them at the same time. So we are taking the most rewarding opportunities first. I realize very much that this is a substantial program. We are also shifting the resource allocation of our procurement staff. We have more than 2,000 procurement staff from the realization phase, basically handling the orders to suppliers to, what we call, procurement engineering, which is much more the strategic procurement work that happens early in the process. So some new competencies will also be required there. So the program has to 2 sides: one is an immediate toughening of the requirements on purchasing; and secondly, it's a structural process reengineering and capability enhancement program.

The next question comes from Martin Wilkie from Deutsche Bank.

It's Martin Wilkie from Deutsche Bank. The first question is on consumer. It sounds like you've had a very good mix in the quarter with some of the higher-margin businesses growing faster than the lower margin. Is there anything unusual in the quarter in terms of new product launches or anything like that, that might it mean that, that improvement is not sustainable? Or do you think this is the beginning of showing some of the benefit from investing in these growth markets? François Adrianus van Houten: Yes, a great question, Martin. I'd say it's a combination of a couple of initiatives that we have taken. You'll recall that when we started this Accelerate!, we actually said we are going to invest a bit more. We are going to invest to bring products like Sonicare into more markets, where we had to create the dental professional recommendation network in order to open up these markets. We are seeing the benefits of these geographical adjacencies. And for us, it's something that is there to stay. The second driver is product adjacencies, so more attractive products that are launched faster. Just in the third quarter, I can give you at least 4 different products in different categories that are quite exciting: so first of all, the HomeCooker that we have co-developed with Jamie Oliver, that should get busy families back into making healthy food in their home environment. The Senseo Sarista, which we did with Douwe Egberts Masterblenders that gets you freshly ground coffee both as single serve, as well as whole pots when you have a lot of friends over, that is a breakthrough product. The Sonicare, I just spoke about Sonicare in terms of geographical expansion. We are -- now have launched the Sonicare PowerUp, which is a product range extension, basically bringing Sonicare at lower price points to convert manual toothbrushing into the electrical category, expanding the market. And the final product that I'd like to mention and then I'll stop this advertisement is the StyleShaver. It's a great 3-in-1 shaver, groomer and haircutting device that is targeted at young guys, getting them to switch over from wet to dry. It's a real self-expression device that will appeal to them. So all proof points of a more dynamic entrepreneurial Consumer Lifestyle and very much what I would like to see them do. So I think the higher growth -- of course, there will be fluctuations but should be sustainable. It's a great business.

If I could just have one follow-up as well on IG&S, the central cost, it's come in a lot lower than I think was generally expected for the second quarter in a row. I think you have been talking earlier in the year that we should be expecting about EUR 300 million for that division for this year. Should we expect a sort of spike in Q4? Or do you think that the lower rate of cost in that division is sustainable?

Yes. Martin, we guided for about EUR 230 million and have started with the EUR 340 million. Then you take out restructuring and stranded costs and then the lower licensee income and add the Accelerate! investment, you come to EUR 230 million. So if you look, that would be EUR 80-plus million for the quarter. We had, in Q3, lower restructuring cost about EUR 20 million; lower stranded cost about EUR 7 million; and slightly lower license income; and also a little bit lower Accelerate! investment. So that explains why we came in better in the adjusted EBITA with EUR 53 million. We still would guide for the fourth quarter of around EUR 80 million.

The next question comes from Ludovic Debailleux from Natixis.

It's Ludovic Debailleux, Natixis. First of all, on Lighting, have you already benefited from the earth rare price decline? If yes, can you share with us the effect on margin? If no, what could be the impact in Q4 and in 2013?

Yes. For Q4, as hedges are rolling off, we expect some impact but not much. We expect the main impact to start in Q1 of 2013.

And a follow-up maybe on Lighting, you're working to further reduce losses in Consumer Luminaire and Lumiled segments. What is the impact on EBITA margin in Q3? And could you also confirm that Q4 will be profitable?

So with Lumileds, we are making really good strides to break even in this quarter with all the measures we took, replacing new management, addressing all the operational issues, cost roadmaps and what have you. For Consumer Luminaires, it proves to me more challenging. We're trying to meet this target. So this is not something that we are walking away from. But we have to also note that the economic headwinds don't really help in this category of products. So we expect to see improvement in Q4 year-on-year, which we hope to be around to breakeven, depending on the top line. If you look in the Lighting bridges, so Lumileds, compared to Q3 last year, is about 30 basis points improvement in the total difference in the Lighting margin, and Consumer Luminaires is about flattish.

The next question comes from Ben Uglow from Morgan Stanley.

I had a handful of questions but mainly around Healthcare. First of all, could you just give us a bit more color on the double-digit growth in Imaging Systems which is extremely strong? Is that coming from any one particular modality or any one particular product range? Or is -- or are you seeing this broad-based across the whole Imaging Systems portfolio? Is there anything special going on there which is driving a market share gain? That was question number one. Question number two, and I know it was alluded to on the transcript, but I couldn't write it down fast enough. Can you just give us a sense of the growth rate this last quarter in Imaging Systems in China versus the previous quarter? The third question was just on this large order intake in Europe. What was your comparison in the third quarter of 2011? Is there a big base effect there as well which is driving the organic growth? And then finally, a clarification from Ron on restructuring. I just want to make sure we got this right. You've got EUR 300 million of Accelerate! restructuring in the fourth quarter. What is the total industrial footprint restructuring as well? What I'd like to know is on a combined basis, Accelerate! plus industrial footprint, what will that amount to for the year?

Want to about Europe's double-digit order intake? François Adrianus van Houten: Yes. Well, the order intake in Europe, the question was compared to 2011.

Yes, so it's 18% plus. So this is mainly caused by 3 large deals, which were in Netherlands and in the U.K. mainly. If you would take those -- and we're happy with that because as said, the last orders that we had seen have kind of dried up in the past quarters. So very pleased that, that is coming back. If you take that out, then the order intake in Europe is actually low single-digit in Europe.

And was that on a very easy comp or anything like that or just low single-digit growth?

Yes. So we don't really guide for the quarter. We have seen flat for Healthcare in Europe so far, and that's a mixed bag between Southern Europe not getting better and a few of the Northern Europe countries getting somewhat better, okay? Then let me go into the last question that you asked, and that is on the restructuring. So the EUR 300 million that we mentioned is the overall restructuring that includes industrial footprint. And the fact that we are EUR 15 million lower than the amount I indicatively mentioned in Capital Markets Day, just to give a heads-up, was because we found in number of areas better ways to restructure. The overall amount is EUR 300 million. And then the double-digit growth, I think we talked about that, right? Then Imaging Systems in China, we don't really guide for a specific location, specific BGs, but the growth in Healthcare in China was double digits, solid double-digit growth still. And that is, of course, very good against the overall backdrop, now already for quite some time, of the China economy slowing. So we are happy to see that. It also somewhat points in time that says that the healthcare agenda in China is probably going to still proliferate and therefore provide for us better business opportunities. But we need to see in the near term how that will develop in China.

Okay. And just the question regarding, is there any modality or product category in Imaging Systems which is dramatically outperforming or anything like that? François Adrianus van Houten: No. Last year, we introduced this new range of product mainly on radiology, the Imaging 2.0 suite. We are rolling that out. It took quite some time for the Sino FDA to approve the longer process time than we are used to, but we're doing that now. So that will also help and the stronger categories are probably more in MR and in CT because those were the areas where we made improvements.

The next question comes from Gael de Bray from Société Générale.

The first one is related to Healthcare. I mean, we had again an outstanding sales growth in the quarter. But how do you explain that the adjusted margin was actually down a little bit on a sequential basis, I think down like 50 bps quarter-on-quarter? Still related to Healthcare, could you remind us how much is the traditional seasonal positive effect on Q4 margins versus Q3? And the last question I've got is on the -- on IG&S. You look well on track to exceed EUR 150 million of IP varieties in 2012. What's your assessment for next year if you include the contribution of the TV license income? And also, are you happy with the performance of the TV joint venture so far?

Okay. On your first question, actually, the adjusted EBITA margin of Healthcare came to 13.6% and that was a 90 basis point improvement versus last year's 12.7%.

Yes, but it was down 50 bps on a quarterly basis, Q3 versus Q2?

There's a little bit of seasonality in this. So the expenses are slightly up, but I wouldn't take it as anything else than that currently. Then in IG&S, the -- we are quite well on track to achieve the guidance for IP license income, as I said. So I would just, for IG&S, sail with the guidance that I gave for the fourth quarter, about a little bit over EUR 80 million.

Yes. And what about the seasonal effect to be expected in Q4 Healthcare margins?

Yes. Well, normally, this expands significantly over a much higher sales volume in Q4. Last year, we thought we had good visibility, but we were confronted with the push-out of some of the sales and that took quite an impact in the results. Of course, we have looked at this year at visibility for the fourth quarter. We're not guiding for that, but we need to see how the actual sales are going to develop. And we do not have an expectation that the same would happen. We don't build that really in. That doesn't necessarily mean that it won't happen. It's just that the telltale signs are not there to say that right now. François Adrianus van Houten: Then your question was about the Television joint venture. We don't, let's say, publish results of our Television joint venture. The Television joint venture launched a whole series of exciting new products that were well received by the retailers. And so if that is any sign at least, we are on the right path there to get our result partner, TPV. We look at the future with confidence.

The next question comes from Martin Prozesky from Bernstein. Martin Prozesky - Sanford C. Bernstein & Co., LLC., Research Division: It's Martin from Bernstein. Two questions, please. The first, again, on margin mix in Healthcare, you mentioned that you expect Q4 seasonality to be more normalized than last year. But then in terms of your mix shift from the orders, it seems like Patient Care & Clinical Informatics, which is one of the best margin businesses within Healthcare, had a very good order intake from the comments in the release. So do you expect the mix within margin to be improving? Or is that being too optimistic? Then second question, just on Lighting, given on the residential side in the U.S., we're seeing pretty good construction data, what are you seeing on the prof lum side, the non-resi? Are you seeing it remaining pretty stable? Is it also being held back by election uncertainty?

Yes, so in the Professional Luminaires, we see it down somewhat. So we don't see a real uptick there, not as fully anticipated. Martin Prozesky - Sanford C. Bernstein & Co., LLC., Research Division: And is that also the expectation into next year?

Well, we need to see how we end this year. Last year, there was a -- towards the end of the year, there was an expectation into next year the construction there would increase and improve; that didn't really happen the way it was anticipated. I have to also reemphasize again that we're not only, of course, playing in the -- in new construction market but also, in the renovation and refurbishment market, where we have quite good position. But I would say that's a little bit too early to now comment on. The seasonal mix shift in gross margin, you would expect for Healthcare in Q4. We'll have to see exactly what the margin is going to be. It's a little early to comment on that seeing some of the uncertainties that we see. We're encouraged by what we have seen, of course, in the good order intake in PCCI. But then again, there is a lot of uncertainty and there's also still significant amount of, what we call, bookend-to-bill business in Q4. And that's why I said this year we don't plan for really push out, but we need to see if they will happen.

The next question comes from Olivier Esnou from Exane.

A couple of questions, maybe starting with Healthcare in Europe. I think earlier this year, you were still not guiding, but maybe mentioned you were looking for mid-single-digit decline. And even if we back out this large order, it looks like you're well ahead of that. So can you maybe talk about what you see as being really better than what you thought would happen this year? And how much of a pipeline activity for large orders do we have in Europe right now? Second question, on Lighting in North America, I think it seems to be down a little bit. How do you feel about that? Before, you were a bit disappointed with the progress in that region. Do you think you're more in line with the market and your peers here? François Adrianus van Houten: Olivier, Frans here. Let me take the second question and then Ron will come back on the order pipeline in Europe. The bottom line is that we still have a lot of work to do in Lighting, Philips Lighting North America. I mean the second quarter looked a little bit better, the third quarter is -- was not a good performance yet. So we have work to do. The new management there is taking strong action. I'm happy to see that. I think versus competition, we certainly delivered the performance that I would have liked to hope for.

On the Healthcare Europe, of course, we had said earlier we are encouraged by the fact that we saw large orders coming back this quarter -- or sorry, in Q3. We haven't seen that for a number of quarters. We won't draw the conclusion from – that, that would now be really returning to the surface because it goes a little bit in chunks here. So the large order intake probably is a bit more bumpy. And thereby, we would not really say that there could be, in the next quarter, something similar. Of course, we'll work it then. We will hope for it then, try to get it, but that's very uncertain. For the full year, perhaps healthcare Europe will be flattish both on the sales and the order intake. Yes?

Including large order?

Yes, yes, including large, yes.

The next question comes from Simon Toennessen from Crédit Suisse. Simon Toennessen - Crédit Suisse AG, Research Division: It's Simon Toennessen from Crédit Suisse. Just 2 questions from my side. The first one on the strong free cash flow performance obviously driven by the working capital inflows. Ron, you already mentioned the accounts payables there and the quarter falling on a weekend. Could you let us know how much of that was related to that and what kind of reversal would you expect then in the fourth quarter? And then the second question is on Lifestyle Entertainment, could you update us on any future plans of the division? Obviously, you flagged at the Q2 stage already about focusing on the growth categories there. The quarter obviously showed another double-digit decline, maybe an update on that would be great as well. François Adrianus van Houten: Yes. Simon, let me start with Lifestyle Entertainment. So we talked about looking for new business models in July and we announced the distribution deal with Funai, which is now in place. In the meantime, we are working hard to change the profile of the portfolio, just like you mentioned, with strong traction of our docking stations. And also, the headphone range is doing really well. The declines are in the traditional home theater products like DVD and Blu-ray. And that is regrettable, but I think that's the reality. I'm proud to say that the business continues to be profitable, which means that we are doing all the vigilant actions that are required. Let me leave it at that.

On your first question on the free cash flow, we estimate the impact of that to be a net of EUR 200 million plus. So EUR 200 million was -- flew into the payments of the Monday following Sunday, the 30th. So this is totally within our payment discipline. As you know, we enforce payment discipline in the group from last year onwards. So this is the normal use that you would make that is a balance between our customers paying us a little later and our payment runs being executed on the first of the next month. And I said the net effect is about EUR 200 million, yes.

The next question comes from Erwin Dut from Kempen. Erwin Dut - Kempen & Co. N.V., Research Division: Yes, 2 questions. First question, I'm intrigued by the slowdown in China. Can you talk about whether that's destocking already? Or do you expect some destocking across your portfolio in China, both on the Consumer Lifestyle side, but also on the Lighting side? And secondly, on Automotive, what do you look for, for next year? It looks like all of those sales are going to be down next year for various automotive producers for 2013. Do you have any guidance or visibility as to what your volume is going to be in Automotive Lighting next year, 2013? François Adrianus van Houten: On the first question on China, destocking is not really the word. I don't think that plays a factor in the -- so slowdown in China, it starts with the GDP growth hovering now between 7% and 7.5%. We see that reflecting across the board, consumers being more careful, but also professional business slowing down somewhat also as government incentive programs are running out and the uncertainty is there until the new government will be in place. So we don't think that there is particular destocking happening. There is normal inventory in trade. And that's what I think we can say about that. In China, the Healthcare range will get a boost from the recently approved MR products, the Ingenia products that were already out there in the rest of the world or in China just approved by the SFDA in September. And also, the PET/CT was recently launched in China. So that should be good news for order intake. On the Lighting side, we see a stronger traction at the Professional Lighting Solutions side but a bit more carefulness at the lamps side. In terms of Automotive, I think you're implying that next year could be more challenging. And actually, we agree. The visibility on Automotive growth is muted. So we'll need to be careful.

The next question comes from Philip Wilson from Redburn.

I want to ask 2 questions, please. The first is on pricing in Lighting. Can you give us a sense on where the third quarter pricing is in Lighting, LED versus traditional? And perhaps how this has moved directionally versus the first half and how you see this moving going forward? That's the first question. And the second question on Healthcare. Have you seen any trading down from CT and MRI to ultrasound and x-ray? In other words, are you seeing any technology substitution in the industry from high-margin products to low-margin products for same application? François Adrianus van Houten: We gave at the Capital Markets Day an extensive update on the margin of LED and we showed that the margins across the board in LED are now pretty close to conventional. Since the Capital Markets date, we have no really new insights to tell you. So you can take this same information as a proxy. In Healthcare, we do see hospitals making more conscious choices when they need a high-end product and when a value product is good enough. So it is not a systematic trading downtrend, not at all, but there is a stronger segmentation going on, on the demand side about what product is needed and what not. Our strategy, in relation to that, is that at the high-end side, we try to create more value, more value by integration of imaging product with treatment, integration also with the clinical informatics, helping hospitals to become more productive throughout the care cycle while at the same time introducing value products in order to participate in the standalone product segment, where people are just looking for a good deal. I think, by and large, that strategy works. We still have some gaps in the value product range lineup with more to come next year from our Suzhou operation for Imaging Systems.

The next question comes from William Mackie from Berenberg Bank.

Will Mackie from Berenberg. One on Lighting and one on Healthcare. You mentioned earlier in the call that there was more to do across the Lighting division and following up to that, you've commented about luminaires in North America and the fall behind within Consumer. What else would you characterize as more to do to reach the target range for 2013 to speed up the cost side or at least to accelerate the growth side? On the Healthcare division, very strong growth in your growth geographies and favorable mix. You've given us some outlook on European revenue and order for this year. But given the order falls and the cautionary commentary you're making about the backlog -- sorry, the background to Healthcare North America, in the U.S. particularly, what would be your view on revenue in the fourth quarter for the U.S. and leading into 2013? I mean, are you prepared to at least flag that it's likely to turn negative at the back end of this year and into the start of next on the uncertainties? François Adrianus van Houten: Well, William, I think you know that we are not going to guide for sales in North America in the fourth quarter. It would be great if we could all have that knowledge right in front of us, but we can't, sorry. We'll be in fighting mode for sure in Healthcare, going for every -- for the orders that we can get. I think that's also the new culture at Philips, where we are reminded early on [ph] we are performance-oriented. I think that is really making the difference for Philips, and there should be more opportunity in that area, hopefully compensating for economic headwinds. In Lighting, yes, you of course point out 2 of the things that stare…

Could I come back out to Healthcare with a quick follow-up? Your major U.S. competitor on Friday called out a challenging pricing environment. How would you characterize the pricing environment for the large healthcare equipment in Europe or North America? François Adrianus van Houten: I think across the board, we see that we need to fight for orders. I just, a few minutes ago, talked about the strategy at the high end that we try to focus on adding value through integration of our modalities, so that it is not just a price game. Whereas in the more standalone applications, just an x-ray or a simple ultrasound, products are more comparable and then automatically, you get more price pressure. So I can relate to more price pressure across the board. However, in our mix of sales, we do not see a significant deviation from previous patterns. So I'm making a distinction between, let's say, the average market outside and what we are able to realize thanks to innovation.

The next question comes from Fredric Stahl from UBS.

It's Fredric here at UBS. I just had a question on your -- the Accelerate! program. If I look at your headcount reductions, you've done -- about 40% have been realized in -- as of Q3 here. And then if I look at your cumulative growth savings, you've done -- I think you were between 25% and well just below 30%. So there's a bit of a gap there. And usually, from my experience, they follow hand in hand. I just wondered if you could provide some color on that, if there's a mix difference in the headcount reductions in terms of geographies and levels of salaries or if there are more announcements to -- or more headcount announcements -- headcount cuts to be announced?

Yes, okay. So with the EUR 800 million program, there was 4,700 people with a EUR 300 million extension of our overhead cost reduction program to EUR 1.1 billion. The total headcount is now 6,700. And you're right. It's a little over 2,900 people in the third quarter, but I think this comes a little bit lumpy in the various line items of that. I wouldn't draw too much of a conclusion off that. There is no significant mix shift in the geographical composition. And we're very pleased that we're fully on track in executing on this program.

The last question comes from Andrew Carter from RBC.

It's Andrew from RBC. The -- most of the questions have been asked -- answered, I think, but I just had 2, please. One was at Healthcare, just thinking about the Q4. I was wondering when you've been looking at sort of your customers at Healthcare and thinking about their behaviors, do you think given the sort of the budget uncertainties that they face in 2013 and how they're operating at the moment, are they going be looking to sort of spend all of the money in Q4, so to speak, and avoiding anything slipping into Q1? That was the first question. And just the second one was just looking at restructuring charges for 2013. In terms of the sort of usual restructuring, do you have any early thoughts as to where you think that might be? François Adrianus van Houten: Andrew, let me start with the first one. Will customers spend all the money that they have? Well, that would be nice. But actually, the telltale signs are the opposite. So if you looked at the order intake in the U.S. in the third quarter, it was a negative order intake. And actually, customers are postponing orders. And I think that is what we may expect in Q4 as well. And so -- and Veterans Administration having postponed their orders even until next year is a very realistic example of that. This is also why we need to be really cautious about Q4. There is a little unclarity on what customer behavior will be. But if anything, it will be on the negative side and not on the positive side. So I ask you to be very careful in your modeling and forecasts. Then on the restructuring charge, Ron?

Yes. So for the restructuring, we guide per quarter. So we have already given you the amount for the overhead cost reduction for the next quarter, which is EUR 125 million -- for the next year, sorry, for 2013. And as we said, in Q4, the overall restructuring charge will be EUR 300 million.

Thank you, Mr. Van Houten and Mr. Wirahadiraksa. There are no further questions. Please continue. François Adrianus van Houten: Okay. Well, then if we have answered all your questions for now, I imagine, then thank you so much for joining into this call. And be with us on our journey for further improvement with Accelerate! going on for the next couple of years. You will get the next installment hopefully soon. And if there's any questions remaining, then please reach out to our Investor Relations team. Thank you very much. Have a nice day.

Thank you.

This concludes the Royal Philips Electronics Third Quarter Results 2012 Conference Call on Monday, the 22nd of October, 2012. Thank you for participating. You may now disconnect.