Philips to Acquire Personal Emergency Response Company Lifeline Systems, Inc.; Acquisition of market leader in North America positions Philips to enter the home healthcare market

Royal Philips Electronics (NYSE:PHG, AEX:PHI) announcedtoday that they have signed a definitive merger agreement withLifeline Systems, Inc. (NASDAQ: LIFE) under which Philips will acquireLifeline, a leader in personal emergency response services. Philipshas agreed to acquire Lifeline for USD47.75 per share or a totalequity value of USD750 million (equaling an aggregate value of USD690million net of USD60 million cash and cash equivalents) in atransaction that has been unanimously approved by the Board ofDirectors of Lifeline. Completion of the transaction is subject to theterms and conditions of the merger agreement, which contains customaryclosing conditions and is subject to the approval of Lifeline'sshareholders.

"The acquisition of Lifeline is an important step on our roadmapfor growth in healthcare," says Gerard Kleisterlee, President and CEOof Royal Philips Electronics. "By targeting seniors and other peoplewho want to continue living independently and exerting more controlover their health and lifestyle," he added, "we aim to become a globalplayer in the evolving home healthcare market."

The aging of the population provides strong underlying marketgrowth for home healthcare solutions such as those offered byLifeline. Today, seniors represent around 15% of the population in thedeveloped world and are expected to almost double in size over thenext 25 years. At the same time they are becoming increasingly activein managing their own health and wellness. Personal response servicesare already the largest category of home healthcare solutionspurchased out-of-pocket by older adults and their caregivers. Still,penetration in the age group 65 years and older is just 2-3%, allowingfor significant future growth.

Lifeline's revenues in 2005 are expected to be approximatelyUSD150 million, representing a 15% increase over 2004. A large part ofthe revenues are recurring in nature. Lifeline's operating margins in2005 are expected to be approximately 15%. The company has a broadmarket presence in the United States and Canada. The company marketsits services through a network of more than 2,500 hospitals and otherhealthcare providers and serves a subscriber base of nearly 470,000.

Lifeline's twenty-four hours a day service gives independentlyminded seniors the confidence to maintain an active life at home,knowing if they suddenly need help, they can send an alert to amonitoring center that indicates that they need assistance. Two-waycommunication allows a caring and professionally trained operator -who has instant access to the pertinent health history and personalprofile of the caller - to establish the nature of the problem.Appropriate action can then be taken, including notifying a neighboror family member, or summoning emergency services.

"Our many years of understanding consumers and their needs haveled us to identify 'healthcare at home' as a key sector for us,"stated Ivo Lurvink, CEO of Philips Consumer Health & Wellness."Lifeline is a market-leader that offers us a platform for other homehealthcare products and services. As such it complements our existingpresence in telemedicine, showcased in Motiva, our advancedinteractive healthcare system. We believe our brand, global presence,technology and innovation capabilities will accelerate the growth ofthe company and we're very much looking forward to working with theirexperienced management team and talented employees."

Lifeline President and CEO, Ron Feinstein said: " Philips'acquisition of Lifeline represents the next phase in the continuedevolution and growth of our company. This combination of two industryleaders opens up numerous product and technology synergies, as well asgrowth opportunities designed to both further and broaden Lifeline'sfounding mission of providing personal emergency response and supportservices to the at-risk elderly and their families to enhance theirindependence and quality of life."

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI)is one of the world's biggest electronics companies and Europe'slargest, with sales of EUR 30.3 billion in 2004. With activities inthe three interlocking domains of healthcare, lifestyle and technologyand 160,900 employees in more than 60 countries, it has marketleadership positions in medical diagnostic imaging and patientmonitoring, color television sets, electric shavers, lighting andsilicon system solutions. News from Philips is located atwww.philips.com/newscenter

About Lifeline

Established in 1974, Lifeline is the leading provider of personalresponse services and emergency call systems in the United States andCanada. As of September 30, 2005, the company expects to report, asper 31 December 2005, it supported nearly 470,000 subscribers from itsresponse centers in Massachusetts, Ontario and Quebec. Lifeline alsosupplies emergency response equipment and services to owners anddevelopers of independent and assisted living and continuing careretirement communities across North America. To people who live aloneor in senior living communities, as well as their caregivers, thecompany provides reassurance and peace of mind with dedicated,well-trained people, advanced technology and a nationwide supportstructure designed to achieve service excellence. The company iscommitted to affording Lifeline subscribers and senior livingresidents the dignity, privacy and respect to which they are entitled.For more information about Lifeline Systems, visit:www.Lifelinesys.com.

Forward-looking statements

This release may contain certain forward-looking statements withrespect to the financial condition, results of operations and businessof Philips and certain of the plans and objectives of Philips withrespect to these items. By their nature, forward-looking statementsinvolve risk and uncertainty because they relate to events and dependon circumstances that will occur in the future and there are manyfactors that could cause actual results and developments to differmaterially from those expressed or implied by these forward-lookingstatements.