Ossur acquires US orthopaedics company

January 18, 2006

Ossur hf. (ICEX: OSSR) a global orthopaedics company best known for its leadership in the prosthetics industry, but rapidly becoming a major player in the orthopaedics market, today announced that it has acquired Innovation Sports, Inc., a US-based developer and manufacturer of ligament braces, for USD 38.4 million. Effective immediately, Ossur will begin executing the planned integration.

The acquisition of Innovation Sports comes on the heels of Ossur's July 2005 acquisition of Royce Medical in the USA, and the December 2005 acquisition of IMP Holdings in the UK. These acquisitions, together with Ossur's 2003 acquisition of Generation II, make Ossur one of the world's largest, most innovative and diversified companies in the braces and support market.

Commenting on the transaction, Ossur president & CEO Jon Sigurdsson stated: "Innovation Sports will give us a leading edge in ligament braces, the largest segment of the braces and support market. The move also accelerates Ossur's strategic initiative to powerfully advance in the orthopaedics market, and is expected to deliver improved operating efficiencies and other synergies."

Innovation Sports, based in Foothill Ranch, California, was established in 1983 and has 150 employees. Its main markets are the US, Canada and central Europe; the US accounts for approximately 50% of sales, Europe 40% and Canada 10%. The company specializes in the innovative design and manufacturing of knee braces for the treatment of ligament injuries and rehabilitative uses, as well as protective braces for athletes. It also has product lines that address pain management and wrist braces, which are new to the Ossur product portfolio.

"Our know-how and strong market share in ligament braces, combined with our reputation for superior service, should increase Ossur's opportunities for further growth in this field," said John Turnbull, CEO of Innovation Sports.

For the fiscal year ending 31 December 2005, Innovation Sports is expecting sales of USD 19 million, a gross profit margin of approximately 64% and a normalized EBITDA margin of 19%. In connection with the acquisition, Ossur expects to incur approximately USD 3 million of integration and restructuring expenses in 2006 fully expensed in Q1, but projects that these efforts will yield approximately USD 4 million of annual cost savings beginning in 2007.

In connection with the acquisition, additional funding of 40 million USD has been provided by Kaupting bank hf. Repayment will be in 2011 and 2012 and interest is LIBOR +1.75%.

Ossur (Icelandic Stock Exchange: OSSR) is as much about helping people to live a life without limitations as it is about its orthopaedic products. A trusted and global leader in the development, manufacturing, distribution, sales and marketing of braces and support products and prosthetics, Ossur creates award-winning designs - including its bionic technologies - and partners with the health practitioners who use them to deliver successful clinical and business outcomes. Headquartered in Reykjavik, Iceland, the company has operations and a distribution network throughout the world. The company allocates an industry record of 6-8 percent of its revenue on research and development to conceive and harness the most advanced technologies for incorporation in its product designs, and provides extensive education programs through the Ossur Academy. Website: www.ossur.com

Forward-Looking Statements

This press release includes "forward-looking statements" including expectations about the anticipated benefits of the Innovation Sports acquisition, which involve risks and uncertainties that could cause actual results to differ materially from results expressed or implied by these statements. Ossur hf. undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.

Further information:
Jon Sigurdsson
President & CEO
Ossur hf.
Tel (US number): +1 949 293 7556

Brightsurf.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.