<PAGE>

PAGE 1                                                            EXHIBIT (99.1)


                                 ANNUAL REPORT


                       Pursuant to Section 15(d) of the
                            Securities Act of 1934


                              For the Year Ended
                              December 31, 2000

                           ________________________


              THE LIFELINE EMPLOYEES' SAVINGS AND INVESTMENT PLAN
              ---------------------------------------------------
<PAGE>

The Lifeline Employees' Savings and Investment Plan
Financial Statements and Supplemental Schedule
To Accompany 2000 Form 5500
Annual Report of Employee Benefit Plan
Under ERISA of 1974
For the Years Ended December 31, 2000 and 1999
<PAGE>

The Lifeline Employees' Savings and Investment Plan
Index to Financial Statements and Supplemental Schedule
For the Years Ended December 31, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                       Page(s)
<S>                                                                                                    <C>
Report of Independent Accountants                                                                         2

Financial Statements:
  Statements of Net Assets Available for Plan Benefits,
    December 31, 2000 and 1999                                                                            3

  Statements of Changes in Net Assets Available for Plan Benefits
    for the years ended December 31, 2000 and 1999                                                        4

  Notes to Financial Statements                                                                          5-8

Supplemental Schedule:
  Schedule of Assets Held for Investment Purposes as of December 31, 2000                                 9
</TABLE>


Certain supplemental schedules have been omitted because they are either not
required or not applicable under the Employee Retirement Income Security Act of
1974.

                                       1
<PAGE>

                       Report of Independent Accountants


To the Participants and Administrator of the
Lifeline Employees' Savings and Investment Plan:

In our opinion, the accompanying statements of net assets available for plan
benefits and the related statements of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of the Lifeline Employees' Savings and Investment Plan (the
"Plan") at December 31, 2000 and 1999, and the changes in net assets available
for plan benefits for the years then ended in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Plan's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets Held
for Investment Purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.


/s/PricewaterhouseCoopers LLP

Boston, Massachusetts
June 6, 2001

                                       2
<PAGE>

The Lifeline Employees' Savings and Investment Plan
Statements of Net Assets Available for Plan Benefits
December 31, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                      2000                1999
<S>                                                                                <C>                 <C>
Assets
Investments (Notes C and D)                                                        $12,435,398         $12,110,164

Receivables:
 Employer contributions receivable                                                      38,125              28,466
 Employee contributions receivable                                                     100,537              79,945
                                                                              -----------------  ------------------

        Total receivables                                                              138,662             108,411
                                                                              -----------------  ------------------

        Total assets and net assets available for plan benefits                    $12,574,060         $12,218,575
                                                                              =================  ==================
</TABLE>


  The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>

The Lifeline Employees' Savings and Investment Plan
Statements of Changes in Net Assets Available for Plan Benefits
For the Years Ended December 31, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                      2000                1999
<S>                                                                               <C>                 <C>
Additions:
 Investment income (loss):
   Interest and dividend income                                                   $    506,151        $    805,903
   Net depreciation in fair value of investments (Note D)                           (1,069,673)           (416,574)
                                                                                  ------------        ------------

                                                                                      (563,522)            389,329

 Contributions:
   Participant                                                                       1,507,002           1,424,866
   Employer                                                                            471,814             403,516
                                                                                  ------------        ------------

                                                                                     1,978,816           1,828,382
                                                                                  ------------        ------------

      Total additions                                                                1,415,294           2,217,711
                                                                                  ------------        ------------
Deductions:
   Benefits and withdrawals paid to participants                                     1,057,159           1,063,091
   Administrative expenses                                                               2,650               1,550
                                                                                  ------------        ------------

      Total deductions                                                               1,059,809           1,064,641
                                                                                  ------------        ------------

      Net increase                                                                     355,485           1,153,070

Net assets available for plan benefits:
   Beginning of year                                                                12,218,575          11,065,505
                                                                                  ------------        ------------

   End of year                                                                    $ 12,574,060        $ 12,218,575
                                                                                  ============        ============
</TABLE>


  The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>

The Lifeline Employees' Savings and Investment Plan
Notes to Financial Statements
--------------------------------------------------------------------------------

A.       Description of the Plan

         The following description of the Lifeline Employees' Savings and
         Investment Plan (the "Plan") provides only general information.
         Participants should refer to the plan document for a more complete
         description of the Plan's provisions.

         General
         The Plan is a defined contribution profit-sharing plan covering all
         United States employees of Lifeline Systems, Inc. (the "Company") who
         work at least 1,000 hours during the plan year. Employees become
         eligible to participate on the entry date following six months of
         service. The Plan was established in 1984 to provide participants an
         opportunity to defer taxes on their savings and is intended to be a
         "qualified cash or deferred arrangement" under certain sections of the
         Internal Revenue Code. It is subject to the provisions of the Employee
         Retirement Income Security Act of 1974 (ERISA).

         The Plan was amended in December 1998 to qualify employees who
         transferred employment to the Company as of November 13, 1998 in
         connection with the Company's acquisition of AlertCall, Inc. as
         participants in the Plan effective January 1, 1999.

         The Plan was amended in December 1999 to qualify employees who
         transferred employment to the Company as of August 6, 1999, in
         connection with the Company's acquisition of TelCARE Systems, Inc. as
         participants in the Plan effective October 1, 1999.

         Contributions
         Participants may contribute from 1% to 15% of their pay on a pretax
         basis subject to the annual dollar limits established by the Internal
         Revenue Service (IRS) and plan limitations. Participants are
         immediately vested in their contributions and earnings thereon.
         Rollover contributions from qualified 401(k) plans are also allowed.
         Withdrawals are permitted as specified by IRS regulations.

         Employer contributions may vary from year to year in such amounts as
         have been voted by the Board of Directors of the Company pursuant to
         the provisions of the Plan. For the year ended December 31, 1999, the
         Company matched 100% of the first 2% contributed and 50% of the next 2%
         contributed up to a maximum of $500 per quarter, or $2,000 per year per
         participant. For the year ended December 31, 2000, the maximum
         increased to $600 per quarter, or $2,400 per year per participant.
         Participants are immediately vested in Company matched contributions
         and earnings thereon. The Board of Directors has the discretion to make
         additional contributions.

         Loans
         With the approval of the plan administrator, participants may borrow
         from their vested account balance attributable to employee pre-tax,
         matching, discretionary, and rollover contributions. The maximum amount
         that may be borrowed is 50% of a participant's vested interest or
         $50,000, whichever is less. The minimum loan is $1,000. The interest
         rate is fixed and will be equal to the prime rate plus one and one-half
         percent. The maximum loan period is five years. The interest rate
         charged on participant loans ranged from 10.25% to 11.00% in 2000 and
         9.25% to 10.00% in 1999.

         Benefits and Withdrawals
         Upon termination of service due to death, disability or retirement, the
         Plan allows benefits to be paid in the form of a cash payment or an
         in-kind distribution for employees who invest in the Company Stock
         Fund. Several annuity options may be selected by participants (or their
         beneficiaries) with account balances exceeding $3,500 as of December 1,
         1990.

                                       5
<PAGE>

The Lifeline Employees' Savings and Investment Plan
Notes to Financial Statements
--------------------------------------------------------------------------------

         The Plan also provides for a preretirement survivor annuity to
         participants of the Plan with account balances exceeding $3,500 as of
         December 1, 1990, which allows 100% of a married participant's benefits
         to be used to provide benefits to his/her spouse if the participant
         dies before benefit payments commence. This provision may be waived
         once the participant reaches age 35 and obtains written consent from
         his/her spouse. Benefits to participants not married who die before
         retirement will be distributed to designated beneficiaries.

         Hardship withdrawals are allowed under the provisions of the Plan.

         Vesting
         Plan participants are at all times 100% vested in the value of their
         own contributions, rollovers, employer matching contributions, and
         earnings thereon.

         Investment Options
         The Plan's investment advisor, State Street Global Advisors ("SSGA"),
         offers eight investment options including stock of the Company to which
         employees may allocate their contributions and the Company-matching
         contributions.


B.       Summary of Significant Accounting Policies

         Basis of Presentation
         The financial statements of the Plan have been prepared under the
         accrual basis of accounting and in conformity with accounting
         principles generally accepted in the United States of America.

         Investment Valuation
         Investments in mutual funds, common collective trusts and the Company's
         common stock are valued at fair market value using year-end closing
         prices. Participant loans are valued at cost which approximates fair
         value. Interest and dividend income is recorded as earned on the
         accrual basis. The Plan presents in the statement of changes in net
         assets available for plan benefits the net appreciation (depreciation)
         in the fair value of its investments which consists of the realized
         gains or losses and the unrealized appreciation (depreciation) on those
         investments.

         Contributions
         Employee and employer matching contributions are recorded in the period
         in which the employee payroll deductions are made.

         Payment of Benefits
         Benefit payments are recorded when paid.

         Expenses
         All administrative expenses and fees are paid by the Company except for
         loan fees which are paid by the participants of the Plan.

         Use of Estimates
         The preparation of the Plan's financial statements in conformity with
         generally accepted accounting principles requires the plan
         administrator to make significant estimates and assumptions that affect
         the reported amounts of net assets available for plan benefits at the
         date of the financial statements and the changes in net assets
         available for plan benefits during the reporting period and, when
         applicable, disclosures of contingent assets and liabilities at the
         date of the financial statements. Actual results could differ from
         those estimates.

                                       6
<PAGE>

The Lifeline Employees' Savings and Investment Plan
Notes to Financial Statements
--------------------------------------------------------------------------------

         Risks and Uncertainties
         The Plan provides for various investment options in any combination of
         stocks, bonds, fixed income securities, mutual funds, and other
         investment securities. Investment securities are exposed to various
         risks, such as interest rate, market, and credit risks. Due to the
         level of risk associated with certain investment securities, it is at
         least reasonably possible that changes in the values of investment
         securities will occur in the near term and that such changes could
         materially affect participants' account balances and the amounts
         reported in the statement of net assets available for plan benefits.


C.       Investment Contracts with Insurance Company and Bank

         In January 1992 the Plan entered into an investment agreement with
         Bankers Trust Company to enter into the Bankers Trust Pyramid
         Guaranteed Investment Contracts Fund, a common collective trust
         established and managed by Bankers Trust Company. The Fund invests
         primarily in Guaranteed Investment Contracts ("GICs") and Bank
         Investment Contracts issued by life insurance companies, banks or other
         financial institutions, and any of the Bankers Trust Commingled
         short-term investments funds. The Fund's assets are valued at fair
         market value; however, assets for which there is no readily
         ascertainable market value are valued at fair value determined in good
         faith by the Trustee of the Fund. The Fund expects to maintain a
         constant unit value of $1.00. The average yield and crediting interest
         rates were approximately 6 percent for 2000 and 1999. The crediting
         interest rate is determined on a daily basis. Withdrawals are permitted
         and are subject to a deferred payout schedule.

         In February 1997, the plan terminated its participation in the Bankers
         Trust Pyramid Guaranteed Investment Contracts Fund and entered into an
         Investment Management Agreement with Bankers Trust Company. The
         Investment Management Agreement allows the Plan to receive payouts of
         the Plan's remaining balance in six installments from February 1, 1997
         through October 1, 2001.


D.       Investments

         Investments held by the Plan at December 31, 2000 and 1999 are
         summarized as follows:

<TABLE>
<CAPTION>
                                                                               2000                  1999
         Description                                                        Fair value            Fair value
         <S>                                                                <C>                   <C>
         Lifeline Fixed Fund
          SSGA Stable Value Fund                                             $ 1,117,941 *         $   930,611 *
          Bankers Trust Pyramid GIC Fund                                         184,958               368,042
         SSGA S&P 500 Fund                                                     1,302,979 *           1,328,463 *
         Scudder International Fund                                              524,421               543,628
         Strong Government Securities Fund                                       357,900               271,612
         SSGA Growth & Income Fund                                             3,629,058 *           3,568,457 *
         INVESCO Total Return Fund                                             1,877,310 *           2,072,817 *
         Dreyfus Emerging Leaders Fund                                         1,581,558 *           1,088,009 *
         Lifeline Systems, Inc. Common Stock                                   1,315,528 *           1,425,917 *
         Participant Loan Fund                                                   543,745               512,608
                                                                        -----------------     -----------------

                                                                             $12,435,398           $12,110,164
                                                                        =================     =================
</TABLE>

         * Investment represents 5% or more of net assets available for plan
           benefits.

                                       7
<PAGE>

The Lifeline Employees' Savings and Investment Plan
Notes to Financial Statements
--------------------------------------------------------------------------------

         During 2000 and 1999, the Plan's investments (including gains and
         losses on investments bought and sold, as well as held during the year)
         appreciated (depreciated) as follows:

<TABLE>
<CAPTION>
                                                                           2000              1999
         <S>                                                            <C>                <C>
         Mutual funds                                                 $   (881,503)       $  339,974
         Common collective trust                                            63,014            66,177
         Lifeline Systems, Inc. Common Stock                              (251,184)         (822,725)
                                                                   ----------------  ----------------

                                                                      $ (1,069,673)       $ (416,574)
                                                                   ================  ================
</TABLE>


E.       Tax Status

         The Internal Revenue Service has determined and informed the Company by
         a letter dated July 10, 1995 that the Plan and related trust are
         designed in accordance with applicable sections of the Internal Revenue
         Code (IRC). The Plan has been amended since receiving the determination
         letter. However, the plan administrator and the Plan's tax counsel
         believe that the Plan is designed and is currently being operated in
         compliance with the applicable requirements of the IRC.


F.       Plan Termination

         The Company intends to continue the Plan indefinitely but reserves the
         right to terminate the Plan at any time without any liability
         whatsoever for such discontinuance or termination. After payment of
         expenses by the trustee, the Plan would be liquidated and each
         participant would receive his or her interest in the form of a lump-sum
         payment.


G.       Related Party Transactions

         CitiStreet, formerly State Street Solutions, is the Custodian for the
         Plan. The Plan invests in mutual funds managed by State Street Global
         Advisors, a related entity to the Custodian. Therefore, CitiStreet is a
         party-in-interest. In addition, purchases and sales of the Company's
         common shares and participant loans are considered party-in-interest
         transactions.

                                       8
<PAGE>

The Lifeline Employees' Savings and Investment Plan
Supplemental Schedule
Schedule of Assets Held for Investment Purposes
December 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Identity of issue, borrower,                                                                             Current
lessor or similar party                          Description of investment                                value
<S>                                              <C>                                                   <C>
    Lifeline Fixed Fund
*    SSGA Stable Value Fund                      Common Collective Trust                               $ 1,117,941
     Bankers Trust Pyramid GIC Fund              Common Collective Trust                                   184,958

*   SSGA Growth & Income Fund                    Mutual Fund                                             3,629,058

*   SSGA S&P 500 Index Fund                      Mutual Fund                                             1,302,979

    Strong Government Securities Fund            Mutual Fund                                               357,900

    INVESCO Total Return Fund                    Mutual Fund                                             1,877,310

    Dreyfus Emerging Leaders Fund                Mutual Fund                                             1,581,558

    Scudder International Fund                   Mutual Fund                                               524,421

*   Lifeline Systems, Inc. Common Stock          Shares of Common Stock                                  1,315,528

*   Participant Loan Fund                        Participant Loans; rates
                                                  ranging from 9.25% to 11.00%                             543,745
                                                                                                  -----------------

                                                                                                       $12,435,398
                                                                                                  =================
</TABLE>

*  Party-in-interest

                                       9