Cost synergies expected from this transaction will be primarily based on supply chain optimization and savings in general and administrative expenses including IT related synergies to be achieved by leveraging Respironics' strong IT infrastructure. Respironics' respiratory management portfolio is synergistic with Philips' current offerings in patient monitoring, from pre-hospital admission to long-term disease management in the home. The combined businesses will profit from cross-selling opportunities leveraging Philips' existing strengths in both the hospital and the home. The transaction will be immediately accretive to revenue growth as well as EBITA margin to Philips and Philips Healthcare.

Over a twelve month period ending in September 2007, Respironics reported sales of approximately USD 1.2 billion with an EBITA margin of 19%. In its last five fiscal years Respironics has seen revenues grow at a compound annual growth rate of 19% whilst the EBITA margin grew at a compound annual growth rate of 20% over this period.


This transaction is structured as an all-cash tender offer by Philips for all of the issued and outstanding shares of Respironics, to be followed by a merger in which each remaining un-tendered share of Respironics will be converted into the USD 66 per share price paid in the tender offer. The tender offer is expected to commence by January 8, 2008 and is not subject to any financing contingency. The acquisition will be effected pursuant to a merger agreement and is subject to the terms and conditions of that agreement. These include the tender of a majority of the outstanding Respironics shares, as well as customary U.S. and EU regulatory clearances. The transaction is expected to close in the first quarter of 2008 upon which Respironics will become the headquarters for Philips Home Healthcare Solutions group within Philips Healthcare.

At 10.00 AM CET today, financial analysts are invited to join a telephone conference with Gerard Kleisterlee, Philips' President and CEO, Pierre-Jean Sivignon, Chief Financial Officer of Philips and Steve Rusckowski, Chief Executive Officer of Philips Healthcare. A live webcast of this conference call and a presentation with regard to this transaction will be made available on Philips' Investor Relations website at: http://www.philips.com/about/investor/index.page.

About Respironics

Respironics is a leading developer, manufacturer and distributor of innovative products and programs that serve the global sleep and respiratory markets. Focusing on emerging market needs, the Company is committed to providing valued solutions to help improve outcomes for patients, clinicians and healthcare providers. Respironics markets its products in 141 countries and employs over 5,300 associates worldwide. Further information can be found on the Company's Web site: www.respironics.com.

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