Ossur hf. - Operating Budget for 2002

The consolidated operating budget for Össur Corporation has been approved by the board of directors.  The main points of the budget are the following:

Sales are projected 78 - 86 million USD

EBIDTA is projected 15,6 – 17,2 million USD.

Profit is projected 9,5 – 11,5 million USD


The operating budget is presented in USD, which is the functional currency of the Company. The plan is divided as follows by quarter based on the mean values of the estimates used in the calculations:


Profit and Loss Account 2001 
(USD million)  1 Q   2 Q   3 Q   4 Q   2001  
                                                                           
Operating revenues                             18.8  21.4  21.2  20.8  82.2
Profit for the period                           0.6   2.8   3.8   3.3  10.5
EBIDTA                                          1.9   4.2   5.4   4.9  16.4


The budget is based on the new organisational chart which has taken effect for the company.  Sales of the company are conducted through three sales companies: Össur North America (formerly Flex-foot Inc.) in California, Össur Europe B.V. in the Netherlands (formerly Flex-foot branch) and Össur Nordic A.B. in Sweden.   There are now two main production units: Össur hf. and Össur Engineering, Inc. in Albion.

This is the first time that the company issues an operating budget by quarter.  It should be noted that there is greater uncertainty regarding the outcome of individual quarters than the year as a whole.  

Sales of the Company are projected to increase by 12-24% from the year 2001 through organic growth.  The EBITDA ratio is expected to remain at 20% of revenues. The EBIDTA ratio is not expected to increase between years. There are three main reasons for this: first, investments in the development of a sales network and marketing work in Europe; second, increased activities in product marketing and global marketing and, third, the cost of the new business development division.

Based on experience, sales in the first quarter are somewhat short of sales in other quarters and costs proportionally higher.  It is not unlikely that some costs could shift from the first to the second quarter as a result of marketing projects which are being launched in the first half of the year and could well carry over between quarters.

Sales by main product categories are projected as follows.

Liners / socks                   30%
Socket systems / components       9%
Artificial feet /ankles          33%
Artificial knees                 19%
Other                             9%

Sales by main market areas are projected as follows:

USA                              53%
Western Europe, exc. Nordic      19%
Nordic                           12%
Iceland                           1%
Other                            15%


The operating budget is prepared in USD, and the same will apply to the financial reporting of the Company for 2002.  Sales by main currencies are projected as follows:

USD                                                    69%
Euro, British pound and other European currencies      27%
Other                                                   4%


The preparation of the budget is based on the following projected exchange rates in 2002 for the main currencies.

USD/ ISK105.49
USD / Euro1.1143
USD / SEK  10.59
USD / British pound0.6877