Document:

<PAGE>

                                Exhibit 10(b)(2)

                           First Quarterly Report 2002

--------------------------------------------------------------------------------

See attachment.

Note: Philips' first Quarterly Report 2002 is incorporated by reference in this
report on Form 20-F.

<PAGE>

         Report on the performance of the Philips Group

-        all amounts in millions of euros unless otherwise stated
-        the quarterly data included in this report are unaudited
-        financial reporting is changed to US GAAP - last year's figures have
         been restated

         1ST QUARTERLY REPORT
         APRIL 16, 2002

         PHILIPS REPORTS A NET PROFIT OF EUR 9 MILLION IN THE FIRST QUARTER OF
         2002

o        NET PROFIT OF EUR 9 MILLION, HELPED BY HIGHER MARGINS AND MUCH IMPROVED
         RESULTS AT UNCONSOLIDATED COMPANIES

o        COST REDUCTION PROGRAMS ARE ON-TRACK

o        ONGOING IMPROVEMENTS IN SUPPLY CHAIN MANAGEMENT

o        NET DEBT : GROUP EQUITY RATIO OF 28:72

o        US GAAP APPLIED

         The first quarter 2002

         SALES IN THE SEMICONDUCTORS AND COMPONENTS SECTORS OF ROYAL PHILIPS
         ELECTRONICS SHOWED AN IMPROVING TREND DURING THE QUARTER. LIGHTING
         EXPERIENCED LOWER SALES DUE TO DIFFICULT MARKET CONDITIONS. SALES AT
         MEDICAL SYSTEMS GREW STRONGLY AS A RESULT OF ACQUISITIONS. GROUP SALES
         WERE 7% LOWER THAN THE FIRST QUARTER OF 2001 WHEN MARKETS WERE STILL
         STRONG.

         PHILIPS REALIZED A NET PROFIT OF EUR 9 MILLION (EUR 0.01 PER SHARE)
         VERSUS EUR 93 MILLION (EUR 0.07 PER SHARE) IN THE FIRST QUARTER OF
         2001. THE COST REDUCTION PROGRAMS ARE ON-TRACK; SO FAR ANNUALIZED
         SAVINGS OF APPROXIMATELY EUR 130 MILLION HAVE BEEN REALIZED, NOT
         INCLUDING THE COST SYNERGIES AT MEDICAL SYSTEMS. IMPROVED MARGINS IN
         VARIOUS BUSINESSES HAD A POSITIVE IMPACT ON FIRST QUARTER'S INCOME FROM
         OPERATIONS COMPARED TO THE FOURTH QUARTER OF LAST YEAR. HIGHER PENSION
         COSTS NEGATIVELY AFFECTED GROUP INCOME FROM OPERATIONS IN THE FIRST
         QUARTER WITH APPROXIMATELY EUR 150 MILLION. RESULTS RELATING TO
         UNCONSOLIDATED COMPANIES IMPROVED SIGNIFICANTLY, WITH LG.PHILIPS LCD IN
         PARTICULAR MAKING A STRONG CONTRIBUTION OF EUR 37 MILLION COMPARED TO A
         LOSS OF EUR 25 MILLION LAST YEAR (EXCLUDING AMORTIZATION OF GOODWILL).
         AS A RESULT OF IMPROVED SUPPLY CHAIN MANAGEMENT AND REDUCED CAPITAL
         EXPENDITURES THE NET DEBT : GROUP EQUITY RATIO CAME TO 28:72.

<PAGE>

Gerard Kleisterlee, Philips' President and CEO:

"It seems that the worst slump in recent business history is behind us now, and
that we begin to see the start of a new upturn in the business cycle. We are
encouraged by the improved performance in many of our businesses, especially in
Semiconductors and Components, supported by a record Q1 performance at DAP,
strong sales growth at Medical Systems, and good performance at CE in Europe.
Our cost reduction programs are beginning to pay off and should pick-up speed in
the second half of the year, when the cost synergies at Medical Systems start to
make an impact. Our balance sheet provides us with a solid foundation for the
transformation Philips is undergoing, and through strict capital management and
diligent control of costs and investments, we plan to keep it strong."

<PAGE>

Net income excluding special items
----------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                       Q1              Q1
                                      2002            2001
                                      -----           ----

<S>                                    <C>            <C>
As published                              9             93
  per common share in euros -
  basic                                0.01           0.07

Special items:
  Affecting income from
  operations                             58            (52)
  Affecting financial income
  and expenses                           67              0
  Affecting results from
  unconsolidated companies              (91)            (5)
  Taxes related to special
  items                                 (15)            25
                                       ----           ----

Excluding special items                 (10)           125
  per common share in euros -
  basic                               (0.01)          0.10
</TABLE>

Group sales and composition of changes (%)
----------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                       Q1              Q1
                                      2002            2001
                                      -----           ----

<S>                                   <C>            <C>
Philips group sales                   7,598          8,208
% change from the previous
year:
Nominal change                           (7)            (1)
   Consolidation changes                  4              0
   Currency effects                       1              3
Comparable change                       (12)            (4)
  Prices                                 (7)            (6)
  Volume                                 (5)             2
</TABLE>

Sales by sector
----------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                                     % change
                                                --------------------
                        Q1           Q1                       compa-
                       2002         2001        nominal       rable
                       ----         ----        -------       ------

<S>                    <C>          <C>           <C>          <C>
Lighting               1,228        1,295           (5)           (7)
Cons Electronics       2,200        2,685          (18)          (13)
DAP                      454          440            3             3
Components               506          934          (46)          (11)
Semiconductors         1,010        1,420          (29)          (30)
Medical Systems        1,664          824          102            10
Miscellaneous            536          610          (12)          (14)
                       -----        -----        -----         -----

Philips group          7,598        8,208           (7)          (12)
</TABLE>

* adjusted for changes in currencies and consolidations

Group sales and income

In general, the first quarter of the year seems to confirm that markets are
bottoming out, and inventory corrections have stopped, but overall market
conditions are still fragile. The US economy is showing some positive signs,
including a recovery of consumer and business confidence to pre-September 11
levels. Economic conditions in Europe were slightly weaker, caused by lower
exports. The economies in Latin America remained depressed as the turmoil in
Argentina and weakness in Brazil affected the whole region. Business conditions
in Asia Pacific are developing very well, with China and Korea standing out.

Sales in the first quarter came to EUR 7,598 million, a decrease of 7% over a
year ago. Changes in the group portfolio on balance had a positive effect of 4%,
driven by the newly acquired companies at Medical Systems. Price erosion
declined from 9% in the fourth quarter of 2001 to 7% in the first quarter of
2002. The decline in sales volume versus last year occurred mainly in the more
cyclical sectors Consumer Electronics, Components and Semiconductors. Sales at
Medical Systems continued to grow strongly, while sales at Domestic Appliances
and Personal Care (DAP) rose by 3%. Lighting sales were negatively affected by
lower demand in Luminaires and difficult market conditions in Latin America.

Income from operations for the first quarter of 2002 came to a profit of EUR 73
million (1.0% of sales) and included special items totaling a positive EUR 58
million:

o        a EUR 40 million currency translation gain from the liquidation of
         certain Components activities in Japan;

o        a EUR 40 million gain related to sale of the CRT glass activities;

o        a gain of EUR 33 million related to real-estate transactions;

o        acquisition related charges at Medical Systems of EUR 22 million;

<PAGE>

Income from operations
----------------------------------------------------------
in millions of euros

<TABLE>
<CAPTION>
                                        Q1            Q1
                                       2002          2001
                                       ----          ----

<S>                                     <C>          <C>
Income from operations
  excluding special items and
  amortization of goodwill               15           410

Special items                            58           (52)

Amortization of goodwill                  0           (45)
                                       ----          ----

Income from operations                   73           313
</TABLE>

Income from operations by sector
----------------------------------------------------------
in millions of euros

<TABLE>
<CAPTION>
                                        Q1            Q1
                                       2002          2001
                                       ----          ----

<S>                                     <C>          <C>
Lighting                                152           202
Consumer Electronics                     45           (99)
DAP                                      65            53
Components                               19           (77)
Semiconductors                         (103)          231
Medical Systems                          27             1
Miscellaneous                           (49)           21
Unallocated                             (83)          (19)
                                       ----          ----

Philips group                            73           313
</TABLE>

Results relating to unconsolidated companies
----------------------------------------------------------
in millions of euros

<TABLE>
<CAPTION>
                                        Q1            Q1
                                       2002          2001
                                       ----          ----

<S>                                     <C>          <C>
Results excluding special
items and amortization of
goodwill                                 72            (5)

Special items                           (91)           (5)

Amortization of goodwill                (24)          (63)
                                        ---           ---

Total                                   (43)          (73)
</TABLE>

o        disentanglement costs of EUR 10 million related to the sale of the fax
         business to Sagem S.A.;

o        restructuring charges of EUR 23 million, notably in the Optical Storage
         business of Components.

Income from operations, when adjusted for special items and amortization of
goodwill, decreased from EUR 410 million in 2001 to EUR 15 million in 2002,
reflecting the still difficult business conditions, compared with the first
quarter last year. Increased pensions costs, predominantly due to reduction of
pension credits in the Netherlands, negatively affected group income in the
first quarter by approximately EUR 150 million.

Income from operations of a loss of EUR 103 million at Semiconductors decreased
by EUR 334 million compared to the first quarter of last year, but improved by
almost EUR 124 million (excluding special items) compared to the fourth quarter
of last year. The improvement at Consumer Electronics of EUR 144 million was
mainly related to the new business model for mobile phones and related special
charges of EUR 74 million recorded last year, as well as improved results at CE
outside the U.S.

Financial income and expenses amounted to a net expense of EUR 20 million and
included a gain of EUR 67 million related to the sale of a portion of ASML
securities. The net interest expenses increased by EUR 36 million due to a
higher debt level, but were almost offset by foreign exchange gains.

Income taxes are based on an effective rate of 21%, excluding the aforementioned
gain on the sale of ASML shares, which is not taxable.

Philips' results relating to unconsolidated companies amounted to a loss of EUR
43 million in the first quarter, versus a loss of EUR 73 million last year.
Results relating to unconsolidated companies, excluding special items and
goodwill amortization, improved strongly. Philips' share of restructuring
charges at LG.Philips Displays amounted to EUR 91 million.

<PAGE>

Results relating to unconsolidated companies
(excluding special items and amortization of
goodwill)
---------------------------------------------------
in millions of euros

<TABLE>
<CAPTION>
                             Q1            Q1
                            2002          2001
                            ----          ----

<S>                         <C>           <C>
SSMC                         (16)          (23)

LG.Philips LCD                37           (25)

LG.Philips Displays            1           --

Others                        50            43
                             ---           ---
Total                         72            (5)
</TABLE>

As the results related to Atos Origin are reported on a three-month delay basis,
amortization of goodwill of EUR 24 million referring to the fourth quarter of
2001 was included.

Results from LG.Philips LCD were encouraging due to rising demand and price
increases in recent months. LG.Philips Displays achieved a break-even result,
excluding special items. The CRT market, in general, although still difficult,
especially with pressure from the LCD products, has stabilized.

<PAGE>

                                  [Bar chart]

                      Cash flow from operating activities
                              in millions of euros

<TABLE>
<CAPTION>
        Q1 2001     Q2 2001     Q3 2001     Q4 2001       Q1 2002
        -------     -------     -------     -------       -------
<S>       <C>         <C>          <C>       <C>             <C>
           -349        -250         160       1,687           -54
</TABLE>

                                  [Bar chart]

                          Inventories as a % of sales

<TABLE>
<CAPTION>
        Q1 2001     Q2 2001     Q3 2001     Q4 2001       Q1 2002
        -------     -------     -------     -------       -------
<S>       <C>         <C>         <C>         <C>           <C>
           15.6        16.0        14.9        13.3          14.0
</TABLE>

                                  [Bar chart]

                           Net debt and group equity
                              in billions of euros

<TABLE>
<CAPTION>
                      Q1 2001     Q2 2001     Q3 2001     Q4 2001       Q1 2002
                      -------     -------     -------     -------       -------
<S>                      <C>         <C>         <C>         <C>           <C>
Group equity             22.5        21.8        19.0        19.4          18.5
Net debt                  4.5         5.3         6.9         7.0           7.2

net debt:
 group equity ratio

                        17:83       20:80       27:73       26:74         28:72
</TABLE>

Cash flows and financing

The first quarter 2002 generated a cash outflow from operating activities of EUR
54 million, approximately EUR 300 million better than the first quarter of last
year. Improvements came entirely from the improved working capital management.

Inventories as a percentage of sales were 14.0% compared to 15.6% in the first
quarter of 2001. All sectors contributed strongly. The cash conversion cycle
showed continued improvements.

Cash used for investing activities of EUR 187 million in this quarter was EUR
648 million lower than in the first quarter of last year. The largest cash
outflow came from a EUR 120 million final settlement payment to LGE for the CRT
joint venture transaction. In addition, approximately EUR 100 million cash was
used for a planned capital increase to SSMC and the Ishoni investment at
Semiconductors. The partial sale of ASML securities resulted in a cash inflow of
EUR 72 million. Capital expenditures for the quarter amounted to EUR 225 million
and were reduced significantly compared to the level of EUR 753 million in last
year's first quarter. Disposals of properties resulted in a cash inflow of EUR
219 million.

Due to both the lower working capital and the lower investments, cash flow
before financing was EUR 241 million negative, which represented an improvement
of EUR 943 million compared with the first quarter of 2001.

The net debt : group equity ratio came to 28:72 compared to 26:74 at the end of
2001. Net debt increased by EUR 248 million in the first quarter of 2002, mainly
due to financing needs for investing activities. Group equity decreased in the
same quarter by EUR 889 million and was negatively impacted by the dividend
payable, amounting to EUR 459 million, and a fair-value adjustment for certain
financial assets of EUR 482 million.

<PAGE>

                                  [Bar chart]

                                   EMPLOYEES
                       position at the end of the quarter
                                   thousands

<TABLE>
<CAPTION>
             Q1 2001     Q2 2001     Q3 2001     Q4 2001     Q4 2002
             -------     -------     -------     -------     -------
<S>          <C>         <C>         <C>         <C>         <C>
             219,399     212,390     191,545     188,643     186,090
</TABLE>

The market value of our investments in publicly quoted companies, as of March
31, 2002, exceeded book value by EUR 10.3 billion. The market value of certain
securities (particularly Vivendi Universal) is currently below cost. If this
situation continues, it could lead to impairment in the second half of 2002.

Employment

At the end of March 2002, the number of employees was 186,090, a decrease of
2,553 over the position as per end December, 2001. Excluding portfolio changes
of 218, staffing levels were reduced by 2,335. The reduction was particularly
strong at Consumer Electronics.

<PAGE>

Lighting: key data
------------------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                            Q1                Q1
                                           2002              2001
                                           ----              ----

<S>                                       <C>               <C>
Sales                                      1,228             1,295
Sales growth
  % increase, nominal                         (5)                6
  % increase, comparable                      (7)                3

Income from operations                       152               202

IFO excluding special items and
amortization of goodwill:                    151               204
  in % of sales                             12.3              15.8

Net operating capital (NOC)                2,002             2,116

Number of employees (FTEs)                47,741            48,387
</TABLE>

Consumer Electronics: key data
------------------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                            Q1                Q1
                                           2002              2001
                                           ----              ----

<S>                                       <C>              <C>
Sales                                      2,200            2,685
Sales growth
  % increase, nominal                        (18)              (5)
  % increase, comparable                     (13)              (7)

Income from operations                        45              (99)

IFO excluding special items and
amortization of goodwill:                     52              (22)
  in % of sales                              2.4             (0.9)

Net operating capital (NOC)                  677            1,632

Number of employees (FTEs)                26,526           35,829
</TABLE>

DAP: key data
------------------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                            Q1               Q1
                                           2002             2001
                                           ----             ----

<S>                                        <C>              <C>
Sales                                        454              440
Sales growth
  % increase, nominal                          3               15
  % increase, comparable                       3                1

Income from operations                        65               53

IFO excluding special items and
amortization of goodwill:                     67               56
  in % of sales                             14.8             12.7

Net operating capital (NOC)                  705              742

Number of employees (FTEs)                 9,420           10,209
</TABLE>

Sales and income from operations per sector

Sales in the Lighting sector dropped by 5%, partly due to the transfer of its
battery activity to Consumer Electronics. Sales in Asia Pacific continued their
positive trend. North American sales levels were maintained, in spite of a weak
market. Sales in Latin America were adversely affected by the poor economic
environment. The lower European turnover was entirely caused by lower sales in
Luminaires, where market conditions are difficult. Automotive Lighting continued
to show growth. Focused cost management, as well as the normal seasonal effect
in the first quarter, supported an increase of the IFO margin over the fourth
quarter of 2001 by 2.1%, to 12.3%.

The sales decline in Consumer Electronics amounted to 18%, and was caused by
weaker performance of the Audio and VCR activities. The redesigned GSM business
and the refocused strategy for set-top boxes, together with a weak set-top box
market, led to sales declines.

TV, DVD and CE Accessories showed growth.
Improvement in income from operations versus last year was mainly caused by the
new business model for mobile phones and an insurance payout of EUR 16 million.
Last year included a write-off in mobile phones for an amount of EUR 74 million
as a special item.

Consumer Electronics in North America was still loss making, however, the
European activities performed well. License income amounted to EUR 73 million,
EUR 25 million lower than last year. This decline in income came from expiration
of certain patents related to CD, only partly compensated by higher license
income related to DVD. Certain activities, previously part of Digital Networks,
now reported under Miscellaneous, had a loss of EUR 7 million in the first
quarter of 2001.

Sales of Domestic Appliances and Personal Care continued to develop with
impressive growth of the Cool Skin shaver range, the Senseo coffee machine and
the Sonicare toothbrush. Despite adverse developments in the Latin

<PAGE>

DAP: key data
------------------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                             Q1                Q1
                                            2002              2001
                                            ----              ----

<S>                                       <C>               <C>
Sales                                        506               934
Sales revenues                               556             1,332
Sales growth
  % increase, nominal                        (46)              (22)
  % increase, comparable                     (11)              (19)

Income from operations                        19               (77)

IFO excluding special items and
amortization of goodwill:                    (47)              (77)
  in % of segment revenues                  (8.5)             (5.8)
  in % of sales                             (9.3)             (8.2)

Net operating capital (NOC)                  407             2,621

Number of employees (FTEs)                14,206            42,851
</TABLE>

<TABLE>
<CAPTION>
Components: special items in Q1 2002
------------------------------------------------------------------
in millions of euros

<S>                                                           <C>
o     A charge for restructuring at Optical Storage            (14)

o     A gain related to the sale of CRT glass activity          40

o     A currency translation gain from the liquidation
      of certain Components activities in Japan                 40
                                                              ----
Total special items                                             66
</TABLE>

Semiconductors: key data
------------------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                             Q1                Q1
                                            2002              2001
                                            ----              ----

<S>                                       <C>               <C>
Sales                                      1,010             1,420
Segment revenues                           1,143             1,592
Sales growth
  % increase, nominal                        (29)               16
  % increase, comparable                     (30)                4

Income from operations                      (103)              231

IFO excl. special items and
amortization of goodwill:                   (103)              243
  in % of segment revenues                  (9.0)             15.3
  in % of sales                            (10.2)             17.1

Net operating capital (NOC)                4,704             5,369

Number of employees (FTEs)                32,741            37,160
</TABLE>

American region and downscaling in Japan, the overall sales growth totaled 3%.

Income from operations came to a first quarter record level of EUR 65 million,
traditionally a seasonally weak quarter. The IFO margin (excluding special items
and goodwill amortization) increased by 2.1% to 14.8%.

Sales in the Components sector, excluding the deconsolidation of Display
Components, were 11% lower than the first quarter of 2001. A positive trend,
however, was seen during the quarter particularly in Mobile Display Systems and
Optical Storage. Mobile Display Systems gained 3% market share in volume terms
to 24%, and saw some minor price increases.

Income from operations, excluding special items and amortization of goodwill,
was a loss of EUR 47 million, which was a sequential improvement of EUR 97
million, coming from almost all businesses. Certain activities, previously part
of Components had a loss of EUR 3 million in the first quarter of 2001 and are
now reported under Miscellaneous.

Semiconductor sales showed positive sequential growth of 7% in the first quarter
and utilization rates improved to 50% by the end of March. Improvements were
largely visible in the standard analogue businesses and in display-related
products. The latter increased because of stronger demand for display drivers.

Income from operations, although negative, benefited from the higher utilization
rates, cost reductions and lower price erosion (9%). Demand from end-markets
appears to be picking up, but we remain cautious about the full year outlook.
This was reflected in the relatively low level of capital expenditure of EUR 47
million in the first quarter. The book-to-bill ratio for the first quarter was
1.3 compared to 0.9 in the fourth quarter of last year.

<PAGE>

Medical Systems: key data
---------------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                           Q1              Q1
                                          2002            2001
                                         ------          ------
<S>                                      <C>             <C>
Sales                                     1,664             824
Sales growth
  % increase, nominal                       102              44
  % increase, comparable                     10               6

Income from operations                       27               1

IFO excluding special items and
amortization of goodwill:                    49              48
  in % of sales                             2.9             5.8

Net operating capital (NOC)               5,593           2,830

Number of employees (FTEs)               31,105          19,788
</TABLE>

Miscellaneous: key data
---------------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                           Q1              Q1
                                          2002            2001
                                         ------          ------
<S>                                      <C>             <C>
Sales                                       536             610
Sales growth
  % increase, nominal                       (12)            (32)
  % increase, comparable                    (14)             (9)

Income from operations                      (49)             21

IFO excluding special items and
amortization of goodwill:                   (71)            (23)
  in % of sales                           (13.2)           (3.8)

Net operating capital (NOC)                 548             731

Number of employees (FTEs)               19,616          18,993
</TABLE>

Unallocated: key data
---------------------------------------------------------------
in millions of euros unless otherwise stated

<TABLE>
<CAPTION>
                                           Q1              Q1
                                          2002            2001
                                         ------          ------
<S>                                      <C>             <C>
  Corporate and regional
  overheads                                 (68)            (83)

  Pensions                                   (7)             56

  Other                                      (8)              8
                                         ------          ------

Income from operations                      (83)            (19)

Number of employees (FTEs)                4,735           6,182
</TABLE>

The strong sales increase in Medical Systems (102%) is mainly attributable to
the new acquisitions of Agilent Healthcare Solutions Group (HSG) and Marconi
Medical Systems. In addition, the increase in sales was particularly strong in
Magnetic Resonance and X-Ray.

Special items amounting to EUR 22 million related to the integration costs of
the new acquisitions. A provision of EUR 14 million was taken for the risk
exposure related to Argentina. A non-recurring adjustment of EUR 12 million for
material related costs impacted results unfavorably. Initial results of synergy
effects to reduce the cost structure are expected in the second half of the
year.

Sales in Miscellaneous were down by 12% compared with the first quarter 2001.
The reduction is mainly attributable to lower sales at Philips Enabling
Technologies Group, Philips Business Communications, and Assembleon, although
sales were stable compared to the fourth quarter 2001.

Special items mainly related to:

o        disentanglement costs of EUR 10 million for the fax business;

o        a gain on the sale of properties, mainly in Italy, totaling EUR 33
         million.

No gain was taken on the sale-and-lease-back transactions in Eindhoven, in
accordance with US GAAP.

Income from operations at Unallocated amounted to a loss of EUR 83 million in
2002 compared to a loss of EUR 19 million in 2001. The negative variance was
mainly caused by the lower pension credits in The Netherlands and higher pension
costs predominantly in the U.S., partly offset by an 18% reduction in corporate
and regional overhead costs.

<PAGE>

Outlook

In general, we see some of our markets strengthening, and economic conditions
around the world improving to a degree. We expect that the Semiconductor and
Components divisions will show further improvements. We see a stronger market
for LCD, in particular, although markets in telecommunications and especially IT
remain subdued. In addition, our Lighting business is facing difficult market
conditions.

Since the third quarter of 2001, margin improvements and cost management have
been the main drivers for improved results. During the remainder of the year, we
will maintain a cautious stance on costs, capital expenditure, working capital
and employment. We will continue to be selective with new investments, and be
vigilant in maintaining a strong balance sheet.

Amsterdam, April 16, 2002

Board of Management

'Safe Harbor' Statement under the Private Securities Litigation Reform Act of
1995

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.

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.

<PAGE>

            STATEMENTS OF INCOME

            all amounts in millions of euros unless otherwise stated

--------------------------------------------------------------------------------
Consolidated statements of income

<TABLE>
<CAPTION>
                                                           January to March                   January to March
                                                                 2002                               2001
                                                      -------------------------          ---------------------------
<S>                                                    <C>           <C>                 <C>              <C>
Sales                                                                     7,598                                8,208

Cost of sales                                                            (5,229)                              (5,616)
                                                                     ----------                           ----------

GROSS MARGIN                                                              2,369                                2,592

Research and development expenses                           (759)                              (825)

Selling expenses                                          (1,254)                            (1,143)

General and administrative expenses                         (341)                              (333)

Restructuring and other charges                              (23)                               (86)
                                                      ----------                         ----------
                                                                         (2,377)                               (2,387)

Other income (expenses) - net                                                81                                   108
                                                                     ----------                            ----------

Income (loss) from operations                                                73                                   313

Financial income and expenses:
- Interest                                                  (102)                               (66)
- Other                                                       82                                (18)
                                                      ----------                         ----------
                                                                            (20)                                  (84)
                                                                     ----------                            ----------

Income before taxes                                                          53                                   229

Income taxes                                                                  3                                   (56)
                                                                     ----------                            ----------
Income after taxes                                                           56                                   173

Results relating to unconsolidated companies                                (43)                                  (73)

Minority interests                                                           (4)                                   (7)
--------------------------------------------                         ----------                            ----------

NET INCOME                                                                    9                                    93

INCOME FROM OPERATIONS
  as a % of sales                                                           1.0                                   3.8
  as a % of net operating capital (RONA)                                    2.0                                  10.9

Weighted average number of common
  Shares outstanding (in thousands):
  (after deduction of treasury stock)

o basic                                                               1,274,920                             1,282,674
o diluted                                                             1,283,694                             1,293,705

NET EARNINGS PER COMMON SHARE IN EUROS:
o basic                                                                    0.01                                  0.07
o diluted                                                                  0.01                                  0.07
</TABLE>

The Group financial statements have been prepared on a basis consistent with US
GAAP, which differs in certain respects from Dutch GAAP. The application of US
GAAP ensures that the company's financial position is stated on a basis that is
best understood by the global financial markets and is applied by a majority of
the industry peers. Net income determined in accordance with Dutch GAAP amounted
to a loss of EUR 91 million in the first three months of 2002, compared to a
profit of EUR 106 million in the same period last year. These aggregate amounts
result in basic earnings per common share of a loss of EUR 0.07 in January-March
2002 compared to a profit of EUR 0.08 last year. The most important deviation,
is caused by the fact that goodwill is no longer amortized under US GAAP as from
January 1, 2002 but instead tested for impairment. Furthermore, results from
sale and lease-back transactions are recognized only proportionally during the
terms of the lease under US GAAP, whereas under Dutch GAAP these results would
have been realized in full.

<PAGE>

            BALANCE SHEETS AND ADDITIONAL RATIOS

            all amounts in millions of euros unless otherwise stated

----------------------------------------------------------------------
Consolidated balance sheets

<TABLE>
<CAPTION>
                                                      2002               2001              2001
                                                    March 31,          Dec. 31,           March 31,
                                                    ---------          ---------          ---------

<S>                                                 <C>                <C>                <C>
Cash and cash equivalents                                 773                890                907
Securities                                                859                692                840
Receivables                                             6,302              6,154              6,517
Inventories                                             4,452              4,290              5,905
Unconsolidated companies                                7,752              7,552              6,599
Other non-current financial assets                      2,131              2,789              3,443
Non-current receivables                                 3,413              3,596              2,657
Property, plant and equipment                           7,489              7,718              9,612
Intangible assets - net                                 5,563              5,521              3,382
--------------------------------------              ---------          ---------          ---------
TOTAL ASSETS                                           38,734             39,202             39,862

Accounts payable and other liabilities                  8,168              8,234              8,205
Dividend payable                                          459                 --                462
Debt                                                    7,997              7,866              5,394
Provisions                                              3,637              3,740              3,338
Minority interests                                        199                202                483
Stockholders' equity                                   18,274             19,160             21,980
--------------------------------------              ---------          ---------          ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             38,734             39,202             39,862

RATIOS
Stockholders' equity,                                  18,274             19,160             21,980
  per common share in euros                             14.32              15.04              17.17

Inventories as a % of sales                              14.0               13.3               15.6
Outstanding trade receivables, in months' sales           1.7                1.5                1.6
Net debt : group equity ratio                           28:72              26:74              17:83

Number of common shares
  outstanding at the end of period

o shares in thousands                               1,275,847          1,274,172          1,280,198
</TABLE>

Stockholders' equity determined in accordance with Dutch GAAP amounted to EUR
17,962 million as of March 31, 2002 compared to EUR 18,274 million under US
GAAP.

The most important deviations, compared to US GAAP, are:

-    securities available for sale, valued at cost or structurally lower net
     realizable value under Dutch GAAP, whereas under US GAAP these securities
     are valued at market price and changes in the unrealized gains or losses
     are accounted for directly in stockholders' equity.

-    goodwill under Dutch GAAP has to be amortized and charged to income,
     whereas under US GAAP it is no longer amortized, but instead tested for
     impairment.

<PAGE>

            STATEMENTS OF CASH FLOWS

            all amounts in millions of euros unless otherwise stated

--------------------------------------------------------------------------------
Consolidated statements of cash flows *

<TABLE>
<CAPTION>
                                               January to March
                                            -----------------------
                                             2002             2001
                                            ------           ------
<S>                                         <C>             <C>
Cash flows from operating
activities:
Net income                                       9               93
Adjustments to reconcile net
  income to net cash provided by
  operating activities:
Depreciation and amortization                  496              588
Net gain on sale of investments               (180)             (84)
(Income) loss from
  unconsolidated companies (net of
  dividends received                            43              131
Minority interests (net of
   dividends paid)                               4                7
Decrease (increase) in working
   capital                                    (438)            (810)
Increase in non-current
  receivables                                  198               87
Increase in provisions                        (121)            (173)
Other items                                    (65)            (188)
----------------------------------          ------           ------

NET CASH USED FOR OPERATING
  ACTIVITIES                                   (54)            (349)

Cash flows from investing
  activities:
Purchase of intangible assets
  (software)                                   (38)             (31)
Capital expenditures on
  property, plant and equipment               (225)            (753)
Proceeds from disposals of
  property, plant and equipment                219               27
Proceeds (purchase) from the
  sale of securities and other
  non-current financial assets                  76               (4)
(Purchase of business) proceeds
  from sale of business                       (219)             (74)
----------------------------------          ------           ------

NET CASH USED FOR INVESTING
  ACTIVITIES                                  (187)            (835)

CASH FLOWS BEFORE FINANCING
  ACTIVITIES                                  (241)          (1,184)
</TABLE>

*    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.

<PAGE>

            STATEMENTS OF CASH FLOWS (continued)

            all amounts in millions of euros unless otherwise stated

--------------------------------------------------------------------------------
Consolidated statements of cash flows (continued)*

<TABLE>
<CAPTION>
                                                   January to March
                                                -----------------------
                                                 2002             2001
                                                ------           ------

<S>                                             <C>             <C>
CASH FLOWS BEFORE FINANCING
ACTIVITIES                                        (241)          (1,184)

Cash flows from financing
activities:
Increase in debt                                    80            1,108
Treasury stock transactions                         23             (162)
------------------------------                  ------           ------

NET CASH PROVIDED BY FINANCING
  ACTIVITIES                                       103              946

DECREASE IN CASH AND CASH
  EQUIVALENTS                                     (138)            (238)
Effect of changes in exchange rates
  and consolidations on cash positions              21               56
Cash and cash equivalents at
  beginning of the period                          890            1,089
------------------------------                  ------           ------

CASH AND CASH EQUIVALENTS AT END
  OF PERIOD                                        773              907
</TABLE>

*    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.

<PAGE>

            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

            all amounts in millions of euros unless otherwise stated

--------------------------------------------------------------------------------
Consolidated statements of changes in stockholders' equity

<TABLE>
<CAPTION>
                                                                           January to March 2002
                                    ----------------------------------------------------------------------------------------------
                                                                        Accumulated other comprehensive
                                                                                   income (loss)
                                                                   ------------------------------------------
                                               Capital                                                                     Total
                                              in excess                         Available    Minimum    Cash   Treasury    stock-
                                    Common      of par   Retained  Translation   for sale    pension    flow    shares    holders'
                                     stock      value    earnings  differences  securities  liability  hedges   at cost   equity
                                    -------   ---------  --------  -----------  ----------  ---------  ------  --------   --------
<S>                                 <C>        <C>      <C>        <C>          <C>        <C>        <C>       <C>       <C>
Balance as of January 1, 2002           263         13    20,403       (766)        566        (18)        (7)   (1,294)   19,160
Net income                                                     9                                                                9
Net current period change                                                48        (433)                   (1)               (386)
Reclassifications into income                                           (40)        (49)         7                            (82)
                                                         -------    -------     -------    -------    -------             -------
TOTAL COMPREHENSIVE INCOME (LOSS)                              9          8        (482)         7         (1)               (459)
Dividend payable                                            (459)                                                            (459)
Purchase of treasury stock                                                                                          (22)      (22)
Re-issuance of treasury stock                        5                                                               45        50
Stock options accrual                                4                                                                          4
                                    -------    -------   -------    -------     -------    -------    -------   -------   -------
Balance as of March 31, 2002            263         22    19,953       (758)         84        (11)        (8)   (1,271)   18,274
                                    =======    =======   =======    =======     =======    =======    =======   =======   =======
</TABLE>

<PAGE>

            PRODUCT SECTORS

            all amounts in millions of euros unless otherwise stated

--------------------------------------------------------------------------------
Segment revenues and income from operations

<TABLE>
<CAPTION>

                                                                     January to March
                             ----------------------------------------------------------------------------------------------------
                                              2002                                                 2001
                             --------------------------------------        ------------------------------------------------------
                                             Income (loss) from                                      Income (loss) from
                                                  operations                                             operations *
                                             ----------------------                        --------------------------------------
                                                           as % of                                       before          as % of
                             Segment                       segment         segment         US GAAP     amortization      segment
                             Revenues        amount        revenues        revenues        basis         goodwill        revenues
                             --------        ------        --------        --------        ------      ------------      --------

<S>                           <C>            <C>            <C>            <C>            <C>             <C>            <C>
Lighting                       1,235            152            12.3          1,307            202            204            15.6
Consumer Electronics:
   Mainstream CE               2,060             (7)           (0.3)         2,445           (157)          (157)           (6.4)
   Digital Networks               80            (21)          (26.3)           203            (40)           (40)          (19.7)
   Licenses                       84             73            86.9             92             98             98           106.5
                              ------         ------         -------         ------         ------         ------         -------
                               2,224             45             2.0          2,740            (99)           (99)           (3.6)

DAP                              459             65            14.2            446             53             56            12.6
Components                       556             19             3.4          1,332            (77)           (77)           (5.8)
Semiconductors                 1,143           (103)           (9.0)         1,592            231            243            15.3
Medical Systems                1,665             27             1.6            824              1             27             3.3
Miscellaneous                    642            (49)           (7.6)           664             21             23             3.5
Unallocated                                     (83)                                          (19)           (19)
                              ------         ------                         ------         ------         ------
Total                          7,924             73                          8,905            313           358
Intersegment revenues           (326)                                         (697)
                              ------                                        ------
SALES                          7,598                                         8,208
INCOME FROM OPERATIONS
  AS A % OF SALES                                                 1.0                        3.8                             4.4
</TABLE>

*    For the sake of comparison with 2002, income from operations 2001 is also
     reported before amortization goodwill.

<PAGE>

            PRODUCT SECTORS AND MAIN COUNTRIES

            all amounts in millions of euros unless otherwise stated

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------
Sales and total assets

                             Sales (to third parties)              Total assets
                             ------------------------        -------------------------
                                 January to March              2002            2001
                               2002            2001          March 31,       March 31,
                              ------          ------         ---------       ---------

<S>                            <C>             <C>             <C>             <C>
Lighting                       1,228           1,295           2,954           3,076
Consumer Electronics           2,200           2,685           3,181           4,346
DAP                              454             440           1,082           1,116
Components                       506             934           4,226           5,795
Semiconductors                 1,010           1,420           8,382           9,450
Medical Systems                1,664             824           7,955           4,052
Miscellaneous                    536             610           3,196           3,389
Unallocated                                                    7,758           8,638
---------------------         ------          ------          ------          ------
TOTAL                          7,598           8,208          38,734          39,862
</TABLE>

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------
Sales and long-lived assets

                             Sales (to third parties)           Long-lived assets *
                             ------------------------        -------------------------
                                 January to March              2002            2001
                               2002            2001          March 31,       March 31,
                              ------          ------         ---------       ---------
<S>                           <C>             <C>            <C>             <C>
Netherlands                      380             385           1,736          1,941
United States                  2,257           2,071           6,993          5,190
Germany                          585             709             656            733
France                           443             480             298            495
United Kingdom                   366             438             202            346
China                            533             639             499            909
Other countries                3,034           3,486           2,668          3,380
---------------------         ------          ------          ------         ------
TOTAL                          7,598           8,208          13,052         12,994
</TABLE>

*    Includes proporty, plant and equipment and intangible assets-net.

<PAGE>

                          PHILIPS QUARTERLY STATISTICS

 all amounts in millions of euros unless otherwise stated; percentage increases
    always in relation to the corresponding period of previous year

<TABLE>
<CAPTION>
                                                    2001                                             2002
                            -------------------------------------------------     ------------------------------------------
                               1st           2nd          3rd          4th          1st        2nd         3rd        4th
                             quarter       quarter      quarter      quarter      quarter     quarter     quarter    quarter
                            --------      --------     ---------     --------     --------    --------   ---------   --------

<S>                         <C>           <C>          <C>           <C>          <C>
Sales                        8,208         7,682         7,187        9,262        7,598
  % increase                    (1)          (16)          (23)         (16)          (7)

Income (loss) from
operations before
  amortization
  goodwill                     358          (704)         (462)        (407)          73
  as % of sales                4.4          (9.2)         (6.4)        (4.4)         1.0
  % increase                     .             .             .            .          (80)

Income (loss) from
operations                     313          (745)         (505)        (458)          73
  as % of sales                3.8          (9.7)         (7.0)        (4.9)         1.0
  % increase                     .             .             .            .          (77)

Net income (loss)               93          (770)         (736)      (1,062)           9
  % increase                     .             .             .            .          (90)
  per common share in
  euros                       0.07         (0.60)        (0.57)       (0.84)        0.01
</TABLE>

<TABLE>
<CAPTION>
                            January-      January-     January-      January-     January-    January-   January-    January-
                             March         June        September     December      March        June     September   December
                            --------      --------     ---------     --------     --------    --------   ---------   --------

<S>                         <C>          <C>           <C>          <C>           <C>
Sales                        8,208        15,890        23,077       32,339        7,598
  % increase                    (1)           (9)          (14)         (15)          (7)

Income (loss) from
operations before
  amortization
  goodwill                     358          (346)         (808)      (1,215)          73
  as % of sales                4.4          (2.2)         (3.5)        (3.8)         1.0
  % increase                     .             .             .            .          (80)

Income (loss) from
operations                     313          (432)         (937)      (1,395)          73
  as % of sales                3.8          (2.7)         (4.1)        (4.3)         1.0
  % increase                     .             .             .            .          (77)
  as a % of net operating
  capital (RONA)              10.9          (6.9)         (9.3)        (9.3)         2.0

Net income (loss)               93          (677)       (1,413)      (2,475)           9
  % increase                     .             .             .            .          (90)
  as a % of stockholders'
  equity (ROE)                 2.1          (7.1)         (9.8)       (11.9)         0.2
  per common share in
  euros                       0.07         (0.53)        (1.10)       (1.94)        0.01
</TABLE>

<TABLE>
<CAPTION>
                                              period ending 2001                                 period ending 2002
                              -----------------------------------------------    -----------------------------------------------

<S>                           <C>           <C>           <C>          <C>          <C>
Inventories as % of sales     15.6          16.0          14.9         13.3         14.0
Average collection period
  of trade receivables
  in months' sales             1.6           1.7           1.7          1.5          1.7
Net debt : group equity
ratio                        17:83         20:80         27:73        26:74        28:72

Total employees (in
thousands)                     219           212           192          189          186
</TABLE>

Information also available on Internet, address: www.investor.philips.com
Printed in the NetherlandsEXHIBIT 4.3

EXHIBIT 4.3

THE PEPSICO
SHARE AWARD PLAN

(effective
May 1, 2002)

1.     Purpose.

        The
purposes of The PepsiCo Share Award Plan (the “Plan”) are to provide
long-term incentives to certain non-employee advisors and consultants with
significant responsibility for the success and growth of PepsiCo, Inc. and its
subsidiaries, divisions and affiliated businesses (collectively,
“PepsiCo”), to assist PepsiCo in attracting and retaining such
advisors and consultants, and to associate the interests of such advisors and
consultants with those of PepsiCo’s shareholders. 

2.     
Administration of the Plan.

        The Plan shall be administered by the Chief Executive Officer and Senior Vice President,
Personnel of PepsiCo, Inc. (the "Plan Administrators").

        The
Plan Administrators shall have all the powers vested in it by the terms of the
Plan, such powers to include the authority (within the limitations described
herein) to select the advisors or consultants to be granted awards under the
Plan, to determine the size and terms of awards to be made to each advisor and
consultant selected, to determine the time when awards will be granted and any
conditions which must be satisfied by the advisor or consultant before an award
is made, to establish objectives and conditions for earning awards, to determine
whether such conditions have been met and whether awards will be paid at the end
of the award period, and to determine whether payment of an award should be
reduced or eliminated. 

        The
Plan Administrators shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations, agreements, guidelines
and instruments for the administration of the Plan and for the conduct of its
businesses the Plan Administrators deem necessary or advisable. The Plan
Administrators’ interpretations of the Plan, and all actions taken and
determinations made by the Plan Administrators pursuant to the powers vested in
them hereunder, shall be conclusive and binding on all parties concerned,
including PepsiCo, its shareholders and any person receiving an award under the
Plan. 

        The
Plan Administrators may, in their sole and absolute discretion, delegate any or
all of the foregoing powers and authorities to such person or persons as they
deem necessary or advisable for the proper administration of the Plan. 

3.     Eligibility.

        Key
advisors and consultants of PepsiCo are eligible to be granted awards under the
Plan. An advisor or consultant is eligible to be granted awards under the Plan
only if such advisor or consultant is a natural person who provides bona fide
services to PepsiCo and such services are not in connection with the offer or
sale of securities in a capital-raising transaction and do not directly or
indirectly promote or maintain a market for PepsiCo securities. Employees and
directors of PepsiCo are not eligible for awards under the Plan. 

4.     Awards.

        Awards
under the Plan include only shares of PepsiCo Common Stock. 

5.     Shares of Stock Subject to the Plan.

        The
shares that may be delivered or purchased under the Plan shall not exceed an
aggregate of 150,000 shares of Common Stock, as adjusted, if appropriate,
pursuant to Section 6 hereof. 

6.     Dilution
and Other Adjustments.

        In
the event of any change in the outstanding shares of Common Stock by reason of
any split, stock dividend, recapitalization, merger, consolidation, combination
or exchange of shares or other similar corporate change, such equitable
adjustments shall be made in the Plan and the awards thereunder as the Plan
Administrators determine are necessary and appropriate, including, if necessary,
an adjustment in the maximum number or kind of shares subject to the Plan. Such
adjustment shall be conclusive and binding for all purposes of the Plan. 

7.     
Miscellaneous Provisions.

        (a)
Rights as Shareholder. A participant in the Plan shall have no rights as a
holder of Common Stock with respect to awards hereunder, unless and until
certificates for shares of Common Stock are issued to the participant. 

        (b)
Assignment or Transfer. Unless the Plan Administrators shall specifically
determine otherwise, no award under the Plan shall be assignable or transferable
by a participant prior to the time such award is made and certificates for
shares of Common Stock are issued to the participant. 

        (c)
Requirements for Transfer. No share of Common Stock shall be issued or
transferred under the Plan until all legal requirements applicable to the
issuance or transfer of such shares have been complied with to the satisfaction
of the Plan Administrators. The Plan Administrators shall have the right to
condition any issuance of shares of Common Stock made to any participant upon
such participant’s written undertaking to comply with such restrictions on
his subsequent disposition of such shares as the Plan Administrators or PepsiCo
shall deem necessary or advisable as a result of any applicable law, regulation
or official interpretation thereof, and certificates representing such shares
may be legended to reflect any such restrictions. 

        (d)
Withholding Taxes. With respect to any award, PepsiCo shall have the right to
require the participant to pay (through withholding from payments owed to the
participant or otherwise) any taxes required to be withheld under applicable
law. The obligations of PepsiCo to make delivery of awards shall be subject to
any other restrictions imposed by any government. 

        (e)
No Rights to Awards. Except as set forth herein, no person shall have any claim
or right to be granted an award under the Plan. Neither the Plan nor any action
taken hereunder shall be construed as giving any person any right to be retained
in the employ of PepsiCo. 

        (f)      Costs and Expenses.  The cost and expenses of administering the Plan shall be borne by
PepsiCo and not charged to any award nor to any person receiving an award. 

        (g)
Funding of Plan. The Plan shall be unfunded. PepsiCo shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any award under the Plan. 

8.      Effective
Date, Amendments and Termination.

        (a)      Effective Date.  The Plan shall become effective on May 1, 2002 (or, if later, the date
the Plan is approved by PepsiCo's Board of Directors).

        (b)
Amendments. The Plan Administrators may at any time terminate or from time to
time amend the Plan in whole or in part, but no such action shall adversely
affect any rights or obligations with respect to any awards theretofore made
under the Plan. Unless the Board of Directors of PepsiCo shall have first
approved thereof, no amendment of the Plan shall be effective which would
increase the maximum number of shares of PepsiCo Common Stock which may be
delivered under the Plan (except to the extent such amendment is made pursuant
to Section 6 hereof) or modify the requirements as to eligibility for
participation in the Plan. 

        (c)      Termination.  No awards shall be made under the Plan after May 1, 2012.

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