Supplemental Guarantor Condensed Consolidating Financial Statements (Tables)

9 Months Ended

12 Months Ended

Sep. 29, 2012

Dec. 31, 2011

Two Thousand And Twelve

Schedule of Condensed Consolidating Balance Sheets

DJO Finance LLC

Unaudited Condensed Consolidating Balance Sheets

As of September 29, 2012

(in thousands)

	DJOFL		Guarantors		Non- Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	20,513	$	1,680	$	16,056	$	(24	)	$	38,225
Accounts receivable, net		—		125,112		35,044		—			160,156
Inventories, net		—		119,944		29,628		(5,771	)		143,801
Deferred tax assets, net		—		43,502		268		—			43,770
Prepaid expenses and other current assets		29		18,558		4,035		512			23,134
Total current assets		20,542		308,796		85,031		(5,283	)		409,086
Property and equipment, net		—		93,240		12,270		(580	)		104,930
Goodwill		—		1,150,269		108,413		(28,741	)		1,229,941
Intangible assets, net		—		1,031,162		28,774		—			1,059,936
Investment in subsidiaries		1,297,699		1,686,366		78,501		(3,062,566	)		—
Intercompany receivables		1,077,460		—		—		(1,077,460	)		—
Other non-current assets		42,859		3,657		1,636		(4	)		48,148
Total assets	$	2,438,560	$	4,273,490	$	314,625	$	(4,174,634	)	$	2,852,041
Liabilities and Equity
Current liabilities:
Accounts payable	$	—	$	48,397	$	9,667	$	11		$	58,075
Current portion of debt and capital lease obligations		8,608		6		—		—			8,614
Other current liabilities		44,730		58,817		26,259		1,111			130,917
Total current liabilities		53,338		107,220		35,926		1,122			197,606
Long-term debt and capital lease obligations		2,156,863		—		—		—			2,156,863
Deferred tax liabilities, net		—		241,888		9,923		(527	)		251,284
Intercompany payables, net		—		863,971		142,934		(1,006,905	)		—
Other long-term liabilities		—		13,712		1,475		—			15,187
Total liabilities		2,210,201		1,226,791		190,258		(1,006,310	)		2,620,940
Noncontrolling interests		—		—		2,742		—			2,742
Total membership equity		228,359		3,046,699		121,625		(3,168,324	)		228,359
Total liabilities and equity	$	2,438,560	$	4,273,490	$	314,625	$	(4,174,634	)	$	2,852,041

Schedule of Condensed Consolidating Statements of Operations

DJO Finance LLC

Unaudited Condensed Consolidating Statements of Operations

For the Three Months Ended September 29, 2012

(in thousands)

	DJOFL			Guarantors		Non - Guarantors			Eliminations			Consolidated
Net sales	$	—		$	241,368	$	60,905		$	(28,287	)	$	273,986
Cost of sales (exclusive of amortization of intangible assets of $9,837)		—			97,277		41,764			(30,744	)		108,297
Gross profit		—			144,091		19,141			2,457			165,689
Operating expenses:
Selling, general and administrative		—			91,661		19,080			(6	)		110,735
Research and development		—			6,735		1,203			—			7,938
Amortization of intangible assets		—			23,507		980			—			24,487
		—			121,903		21,263			(6	)		143,160
Operating income (loss)		—			22,188		(2,122	)		2,463			22,529
Other income (expense):
Interest expense		(46,386	)		—		(25	)		—			(46,411	)
Interest income		4			36		6			—			46
Loss on modification and extinguishment of debt		—			—		—			—			—
Other income (expense), net		—			625		1,245			—			1,870
Intercompany income (expense)		—			366		(407	)		41			—
Equity in income (loss) of subsidiaries, net		23,821			—		—			(23,821	)		—
		(22,561	)		1,027		819			(23,780	)		(44,495	)
(Loss) income before income taxes		(22,561	)		23,215		(1,303	)		(21,317	)		(21,966	)
Income tax (provision) benefit		—			605		(1,174	)		—			(569	)
Net (loss) income		(22,561	)		23,820		(2,477	)		(22,317	)		(22,535	)
Net income attributable to noncontrolling interests		—			—		(27	)		—			(27	)
Net (loss) income attributable to DJOFL	$	(22,561	)	$	23,820	$	(2,504	)	$	(21,317	)	$	(22,562	)

DJO Finance LLC

Unaudited Condensed Consolidating Statements of Operations

For the Nine Months Ended September 29, 2012

(in thousands)

	DJOFL			Guarantors		Non - Guarantors			Eliminations			Consolidated
Net sales	$	—		$	726,719	$	195,903		$	(83,712	)	$	838,910
Cost of sales (exclusive of amortization of intangible assets of $29,513)		—			290,889		132,130			(94,685	)		328,334
Gross profit		—			435,830		63,773			10,973			510,576
Operating expenses:
Selling, general and administrative		—			281,024		61,589			4			342,617
Research and development		—			18,346		3,349			—			21,695
Amortization of intangible assets		—			70,523		2,982			—			73,505
		—			369,893		67,920			4			437,817
Operating income (loss)		—			65,937		(4,147	)		10,969			72,759
Other income (expense):
Interest expense		(134,829	)		—		(70	)		—			(134,899	)
Interest income		14			72		65			—			151
Loss on modification and extinguishment of debt		(9,398	)		—		—						(9,398	)
Other income (expense), net		—			2,493		438			—			2,931
Intercompany income (expense)		—			728		(661	)		(67	)		—
Equity in income (loss) of subsidiaries, net		72,099			—		—			(72,099	)		—
		(72,114	)		3,293		(228	)		(72,116	)		(141,215	)
(Loss) income before income taxes		(72,114	)		69,230		(4,375	)		(61,197	)		(68,456	)
Income tax benefit (provision)		—			1,381		(4,425	)		—			(3,044	)
Net (loss) income		(72,114	)		70,611		(8,800	)		(61,197	)		(71,500	)
Net income attributable to noncontrolling interests		—			—		(614	)		—			(614	)
Net (loss) income attributable to DJOFL	$	(72,114	)	$	70,611	$	(9,414	)	$	(61,197	)	$	(72,114	)

Schedule of Condensed Consolidating Statements of Cash Flows

DJO Finance LLC

Unaudited Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 29, 2012

(in thousands)

	DJOFL			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash Flows from Operating Activities:
Net (loss) income	$	(72,114	)	$	70,611		$	(8,800	)	$	(61,197	)	$	(71,500	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation		—			19,063			3,883			(273	)		22,673
Amortization of intangible assets		—			70,523			2,982			—			73,505
Amortization of debt issuance costs and non-cash interest expense		7,729			—			—			—			7,729
Stock-based compensation expense		—			3,563			—			—			3,563
Loss on modification and extinguishment of debt		9,398			—			—			—			9,398
Loss on disposal of assets, net		—			485			451			—			936
Deferred income tax benefit		—			(1,247	)		(62	)		(527	)		(1,836	)
Provision for doubtful accounts and sales returns		—			16,281			161			—			16,442
Inventory reserves		—			4,198			242			—			4,440
Equity in (income) loss of subsidiaries, net		(72,099	)		—			—			72,099			—
Changes in operating assets and liabilities:
Accounts receivable		—			(16,296	)		(1,381	)		—			(17,677	)
Inventories		—			(12,871	)		6,175			(9,872	)		(16,568	)
Prepaid expenses and other assets		131			(2,856	)		(886	)		(59	)		(3,670	)
Accounts payable and other current liabilities		23,867			345			(3,533	)		3,189			23,868
Net cash (used in) provided by operating activities		(103,088	)		151,799			(768	)		3,360			51,303
Cash Flows from Investing Activities:
Purchases of property and equipment		—			(19,921	)		(3,519	)		(8	)		(23,448	)
Other investing activities, net		—			(656	)		—			—			(656	)
Net cash used in investing activities		—			(20,577	)		(3,519	)		(8	)		(24,104	)
Cash Flows from Financing Activities:
Intercompany		137,154			(131,288	)		(2,489	)		(3,377	)		—
Proceeds from issuance of debt		751,700			—			—			—			751,700
Repayments of debt and capital lease obligations		(754,792	)		(32	)		—			—			(754,824	)
Payment of debt issuance costs		(25,234	)		—			—			—			(25,234	)
Investment by parent		1,000			—			—			—			1,000
Net cash provided by (used in) financing activities		109,828			(131,320	)		(2,489	)		(3,377	)		(27,358	)
Effect of exchange rate changes on cash and cash equivalents		—			—			215			—			215
Net (decrease) increase in cash and cash equivalents		6,740			(98	)		(6,561	)		(25	)		56
Cash and cash equivalents at beginning of period		13,773			1,778			22,617			1			38,169
Cash and cash equivalents at end of period	$	20,513		$	1,680		$	16,056		$	(24	)	$	38,225

Two Thousand And Eleven

Schedule of Condensed Consolidating Balance Sheets

DJO Finance LLC

Condensed Consolidating Balance Sheets

As of December 31, 2011

(in thousands)

	DJOFL		Guarantors		Non- Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	13,773	$	1,778	$	22,617	$	1		$	38,169
Accounts receivable, net		—		125,097		33,885		—			158,982
Inventories, net		—		97,516		20,719		10,464			128,699
Deferred tax assets, net		—		43,190		268		—			43,458
Prepaid expenses and other current assets		160		15,001		3,186		444			18,791
Total current assets		13,933		282,582		80,675		10,909			388,099
Property and equipment, net		—		94,904		13,070		(866	)		107,108
Goodwill		—		1,150,269		107,344		(28,835	)		1,228,778
Intangible assets, net		—		1,101,314		31,380		—			1,132,694
Investment in subsidiaries		1,297,699		1,686,366		72,514		(3,056,579	)		—
Intercompany receivables		1,138,947		—		—		(1,138,947	)		—
Other assets		33,971		2,655		1,557		(2	)		38,181
Total assets	$	2,484,550	$	4,318,090	$	306,540	$	(4,214,320	)	$	2,894,860
Liabilities and Equity
Current liabilities:
Accounts payable	$	—	$	47,049	$	10,872	$	5		$	57,926
Current portion of debt and capital lease obligations		8,782		38		—		—			8,820
Other current liabilities		20,864		56,509		24,805		521			102,699
Total current liabilities		29,646		103,596		35,677		526			169,445
Long-term debt and capital leases obligations		2,159,091		—		—		—			2,159,091
Deferred tax liabilities, net		—		242,237		9,957		—			252,194
Intercompany payables, net		—		996,889		142,058		(1,138,947	)		—
Other long-term liabilities		—		14,689		1,485		—			16,174
Total liabilities		2,188,737		1,357,411		189,177		(1,138,421	)		2,596,904
Noncontrolling interests		—		—		2,143		—			2,143
Total membership equity		295,813		2,960,679		115,220		(3,075,899	)		295,813
Total liabilities and equity	$	2,484,550	$	4,318,090	$	306,540	$	(4,214,320	)	$	2,894,860

DJO Finance LLC

Condensed Consolidating Balance Sheets

As of December 31, 2011

(in thousands)

	DJOFL		Guarantors		Non- Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	13,773	$	1,778	$	22,617	$	1		$	38,169
Accounts receivable, net		—		125,097		33,885		—			158,982
Inventories, net		—		97,516		20,719		10,464			128,699
Deferred tax assets, net		—		43,190		268		—			43,458
Prepaid expenses and other current assets		160		15,001		3,186		444			18,791
Total current assets		13,933		282,582		80,675		10,909			388,099
Property and equipment, net		—		94,904		13,070		(866	)		107,108
Goodwill		—		1,150,269		107,344		(28,835	)		1,228,778
Intangible assets, net		—		1,101,314		31,380		—			1,132,694
Investment in subsidiaries		1,297,699		1,686,366		72,514		(3,056,579	)		—
Intercompany receivables		1,138,947		—		—		(1,138,947	)		—
Other assets		33,971		2,655		1,557		(2	)		38,181
Total assets	$	2,484,550	$	4,318,090	$	306,540	$	(4,214,320	)	$	2,894,860
Liabilities and Equity
Current liabilities:
Accounts payable	$	—	$	47,049	$	10,872	$	5		$	57,926
Current portion of debt and capital lease obligations		8,782		38		—		—			8,820
Other current liabilities		20,864		56,509		24,805		521			102,699
Total current liabilities		29,646		103,596		35,677		526			169,445
Long-term debt and capital leases obligations		2,159,091		—		—		—			2,159,091
Deferred tax liabilities, net		—		242,237		9,957		—			252,194
Intercompany payables, net		—		996,889		142,058		(1,138,947	)		—
Other long-term liabilities		—		14,689		1,485		—			16,174
Total liabilities		2,188,737		1,357,411		189,177		(1,138,421	)		2,596,904
Noncontrolling interests		—		—		2,143		—			2,143
Total membership equity		295,813		2,960,679		115,220		(3,075,899	)		295,813
Total liabilities and equity	$	2,484,550	$	4,318,090	$	306,540	$	(4,214,320	)	$	2,894,860

Schedule of Condensed Consolidating Statements of Operations

DJO Finance LLC

Unaudited Condensed Consolidating Statements of Operations

For the Three Months Ended October 1, 2011

(in thousands)

	DJOFL			Guarantors			Non - Guarantors			Eliminations			Consolidated
Net sales	$	—		$	222,120		$	60,319		$	(19,321	)	$	263,118
Cost of sales (exclusive of amortization of intangible assets of $9,688)		—			90,555			37,788			(20,880	)		107,463
Gross profit		—			131,565			22,531			1,559			155,655
Operating expenses:
Selling, general and administrative		—			94,502			21,352			—			115,854
Research and development		—			5,546			931			—			6,477
Amortization of intangible assets		—			23,328			1,107			—			24,435
		—			123,376			23,390			—			146,766
Operating income (loss)		—			8,189			(859	)		1,559			8,889
Other income (expense):
Interest expense		(42,756	)		—			(8	)		—			(42,764	)
Interest income		3			17			57			—			77
Other income, net		—			(1,820	)		(4,184	)		—			(6,004	)
Intercompany income (expense)		—			664			1,211			(1,875	)		—
Equity in income of subsidiaries, net		16,989			—			—			(16,989	)		—
		(25,764	)		(1,139	)		(2,924	)		(18,864	)		(48,691	)
(Loss) income before income taxes		(25,764	)		7,050			(3,783	)		(17,305	)		(39,802	)
Income tax benefit (provision)		—			15,306			(875	)		(335	)		14,096
Net (loss) income		(25,764	)		22,356			(4,658	)		(17,640	)		(25,706	)
Net income attributable to noncontrolling interests		—			—			(58	)		—			(58	)
Net (loss) income attributable to DJOFL	$	(25,764	)	$	22,356		$	(4,716	)	$	(17,640	)	$	(25,764	)

DJO Finance LLC

Unaudited Condensed Consolidating Statements of Operations

For the Nine Months Ended October 1, 2011

(in thousands)

	DJOFL			Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	654,999		$	194,502		$	(58,886	)	$	790,615
Cost of sales (exclusive of amortization of intangible assets of $28,831)		—			264,678			124,189			(77,158	)		311,709
Gross profit		—			390,321			70,313			18,272			478,906
Operating expenses:
Selling, general and administrative		—			292,764			68,997			—			361,761
Research and development		—			16,496			3,225			—			19,721
Amortization of intangible assets		—			66,129			3,244			—			69,373
		—			375,389			75,466			—			450,855
Operating income (loss)		—			14,932			(5,153	)		18,272			28,051
Other income (expense):
Interest expense		(126,173	)		(10	)		(137	)		—			(126,320	)
Interest income		10			111			119			—			240
Loss on modification of debt		(2,065	)		—			—			—			(2,065	)
Other income, net		—			396			(1,947	)		—			(1,551	)
Intercompany income (expense)		10,625			(8,134	)		(468	)		(2,023	)		—
Equity in income of subsidiaries, net		51,345			—			—			(51,345	)		—
		(66,258	)		(7,637	)		(2,433	)		(53,368	)		(129,696	)
(Loss) income before income taxes		(66,258	)		7,295			(7,586	)		(35,096	)		(101,645	)
Income tax benefit (provision)		—			40,559			(4,650	)		146			36,055
Net (loss) income		(66,258	)		47,854			(12,236	)		(34,950	)		(65,590	)
Net income attributable to noncontrolling interests		—			—			(668	)		—			(668	)
Net (loss) income attributable to DJOFL	$	(66,258	)	$	47,854		$	(12,904	)	$	(34,950	)	$	(66,258	)

DJO Finance LLC

Condensed Consolidating Statements of Operations

For the Year Ended December 31, 2011

(in thousands)

	DJOFL			Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	893,036		$	263,908		$	(82,174	)	$	1,074,770
Cost of sales (exclusive of amortization of intangible assets of $38,668)		—			360,601			168,307			(110,770	)		418,138
Gross profit		—			532,435			95,601			28,596			656,632
Operating expenses:
Selling, general and administrative		—			394,588			92,496			—			487,084
Research and development		—			23,050			3,800			—			26,850
Amortization of intangible assets		—			89,637			4,320			—			93,957
Impairment of goodwill and intangible assets		—			141,006			—			—			141,006
		—			648,281			100,616			—			748,897
Operating (loss) income		—			(115,846	)		(5,015	)		28,596			(92,265	)
Other income (expense):
Interest expense		(169,117	)		(22	)		(193	)		—			(169,332	)
Interest income		14			127			204			—			345
Loss on modification of debt		(2,065	)		—			—			—			(2,065	)
Other income (expense), net		—			986			(3,745	)		(55	)		(2,814	)
Intercompany income (expense), net		10,625			18,126			(18,381	)		(10,370	)		—
Equity in loss of subsidiaries, net		(53,926	)		—			—			53,926			—
		(214,469	)		19,217			(22,115	)		43,501			(173,866	)
(Loss) income before income taxes		(214,469	)		(96,629	)		(27,130	)		72,097			(266,131	)
Income tax benefit (provision)		—			57,173			4,775			(146	)		52,544
Net (loss) income		(214,469	)		(39,456	)		(31,905	)		72,243			(213,587	)
Net income attributable to noncontrolling interests		—			—			(882	)		—			(882	)
Net income (loss) attributable to DJOFL	$	(214,469	)	$	(39,456	)	$	(32,787	)	$	72,243		$	(214,469	)

Schedule of Condensed Consolidating Statements of Cash Flows

DJO Finance LLC

Unaudited Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended October 1, 2011

(in thousands)

	DJOFL			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash Flows from Operating Activities:
Net (loss) income	$	(66,258	)	$	47,854		$	(12,236	)	$	(34,950	)	$	(65,590	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation		—			17,281			4,091			(67	)		21,305
Amortization of intangible assets		—			66,129			3,244			—			69,373
Amortization of debt issuance costs and non-cash interest expense		6,270			—			—			—			6,270
Stock-based compensation expense		—			1,700			—			—			1,700
Loss on disposal of assets, net		—			391			292			—			683
Deferred income tax benefit		(1,925	)		(40,267	)		(736	)		(146	)		(43,074	)
Provision for doubtful accounts and sales returns		—			20,105			334			—			20,439
Inventory reserves		—			4,609			878			—			5,487
Equity in income of subsidiaries, net		(51,345	)		—			—			51,345			—
Changes in operating assets and liabilities:
Accounts receivable		—			(15,822	)		(993	)		—			(16,815	)
Inventories		—			(7,759	)		6,263			(9,629	)		(11,125	)
Prepaid expenses and other assets		79			3,295			(1,239	)		142			2,277
Accounts payable and other current liabilities		37,273			4,014			7,399			502			49,188
Net cash (used in) provided by operating activities		(75,906	)		101,530			7,297			7,197			40,118
Cash Flows from Investing Activities:
Cash paid in connection with acquisitions, net of cash acquired		—			(317,669	)		—			—			(317,669	)
Purchases of property and equipment		—			(24,917	)		(4,087	)		(213	)		(29,217	)
Other investing activities, net		—			(1,484	)		5			—			(1,479	)
Net cash used in investing activities		—			(344,070	)		(4,082	)		(213	)		(348,365	)
Cash Flows from Financing Activities:
Intercompany		(237,398	)		243,762			609			(6,973	)		—
Proceeds from issuance of debt		400,000			—			—			—			400,000
Repayments of debt and capital lease obligations		(83,586	)		(32	)		(2	)		—			(83,620	)
Payment of debt issuance costs		(7,612	)		—			—			—			(7,612	)
Investment by parent		3,176			—			—			—			3,176
Repurchase of vested options		—			(2,000	)		—			—			(2,000	)
Dividend paid by subsidiary to owners of noncontrolling interests		—			—			(682	)		—			(682	)
Net cash provided by (used in) financing activities		74,580			241,730			(75	)		(6,973	)		309,262
Effect of exchange rate changes on cash and cash equivalents		—			—			176			—			176
Net (decrease) increase in cash and cash equivalents		(1,326	)		(810	)		3,316			11			1,191
Cash and cash equivalents at beginning of period		16,601			621			20,910			—			38,132
Cash and cash equivalents at end of period	$	15,275		$	(189	)	$	24,226		$	11		$	39,323

DJO Finance LLC

Condensed Consolidating Statements of Cash Flows

For the Year Ended December 31, 2011

(in thousands)

	DJOFL			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash Flows From Operating Activities:
Net income (loss)	$	(214,469	)	$	(39,456	)	$	(31,905	)	$	72,243		$	(213,587	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		—			23,231			5,083			(1,020	)		27,294
Amortization of intangible assets		—			89,637			4,320			—			93,957
Amortization of debt issuance costs and non-cash interest expense		8,476			—			—			—			8,476
Stock-based compensation expense		—			2,701			—			—			2,701
Loss on disposal of assets, net		—			7,434			438			(3,487	)		4,385
Impairment of goodwill and intangible assets		—			141,006			—			—			141,006
Deferred income tax (benefit) expense		(2,599	)		(56,651	)		(1,224	)		(146	)		(60,620	)
Equity in loss of subsidiaries, net		53,926			—			—			(53,926	)		—
Provision for doubtful accounts and sales returns		—			31,000			673			—			31,673
Inventory reserves		—			6,798			908			—			7,706
Changes in operating assets and liabilities, net of acquired assets and liabilities:
Accounts receivable		—			(30,398	)		(1,833	)		—			(32,231	)
Inventories		—			(7,631	)		6,402			(11,961	)		(13,190	)
Prepaid expenses and other assets		(17	)		7,351			(1,090	)		2,191			8,435
Accounts payable and other current liabilities		5,336			3,877			13,062			(4,675	)		17,602
Net cash provided by (used in) operating activities		(149,347	)		178,899			(5,166	)		(781	)		23,605
Cash Flows From Investing Activities:
Cash paid in connection with acquisitions, net of cash acquired		—			(317,669	)		—			—			(317,669	)
Purchases of property and equipment		—			(33,673	)		(5,536	)		(188	)		(39,397	)
Other investing activities, net		—			(1,603	)		7			—			(1,596	)
Net cash used in investing activities		—			(352,945	)		(5,529	)		(188	)		(358,662	)
Cash Flows From Financing Activities:
Intercompany		(191,181	)		177,245			12,966			970			—
Proceeds from issuance of debt		439,000			—			—			—			439,000
Repayments of debt and capital lease obligations		(96,782	)		(42	)		(2	)		—			(96,826	)
Payment of debt issuance costs		(7,694	)		—			—			—			(7,694	)
Investment by parent		3,176			—			—			—			3,176
Cancellation of vested options		—			(2,000	)		—			—			(2,000	)
Dividend paid by subsidiary to owners of noncontrolling interests		—			—			(1,366	)		—			(1,366	)
Net cash provided by (used in) financing activities		146,519			175,203			11,598			970			334,290
Effect of exchange rate changes on cash and cash equivalents		—			—			804			—			804
Net increase (decrease) in cash and cash equivalents		(2,828	)		1,157			1,707			1			37
Cash and cash equivalents, beginning of year		16,601			621			20,910			—			38,132
Cash and cash equivalents, end of year	$	13,773		$	1,778		$	22,617		$	1		$	38,169

Two Thousand Ten

Schedule of Condensed Consolidating Balance Sheets

DJO Finance LLC

Condensed Consolidating Balance Sheets

As of December 31, 2010

(in thousands)

	DJOFL		Guarantors		Non- Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	16,601	$	621	$	20,910	$	—		$	38,132
Accounts receivable, net		—		112,250		33,273		—			145,523
Inventories, net		—		75,929		29,611		(11,080	)		94,460
Deferred tax assets, net		—		47,805		402		(146	)		48,061
Prepaid expenses and other current assets		162		18,199		2,418		2,640			23,419
Total current assets		16,763		254,804		86,614		(8,586	)		349,595
Property and equipment, net		—		85,856		13,357		(5,553	)		93,660
Goodwill		—		1,108,703		109,693		(29,509	)		1,188,887
Intangible assets, net		—		1,074,388		36,453		—			1,110,841
Investment in subsidiaries		1,296,776		1,663,969		127,148		(3,087,893	)		—
Intercompany receivables		1,003,751		—		—		(1,003,751	)		—
Other assets		34,115		1,177		1,479		36			36,807
Total assets	$	2,351,405	$	4,188,897	$	374,744	$	(4,135,256	)	$	2,779,790
Liabilities and Equity
Current liabilities:
Accounts payable	$	—	$	40,893	$	8,054	$	—		$	48,947
Current portion of debt and capital lease obligations		8,782		39		—		—			8,821
Other current liabilities		22,234		52,150		20,263		2,640			97,287
Total current liabilities		31,016		93,082		28,317		2,640			155,055
Long-term debt and capital leases obligations		1,816,250		41		—		—			1,816,291
Deferred tax liabilities, net		—		277,135		11,657		1,121			289,913
Intercompany payables, net		—		825,647		178,104		(1,003,751	)		—
Other long-term liabilities		—		10,160		1,552		—			11,712
Total liabilities		1,847,266		1,206,065		219,630		(999,990	)		2,272,971
Noncontrolling interests		—		—		2,680		—			2,680
Total membership equity		504,139		2,982,832		152,434		(3,135,266	)		504,139
Total liabilities and equity	$	2,351,405	$	4,188,897	$	374,744	$	(4,135,256	)	$	2,779,790

Schedule of Condensed Consolidating Statements of Operations

DJO Finance LLC

Condensed Consolidating Statements of Operations

For the Year Ended December 31, 2010

(in thousands)

	DJOFL			Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	830,186		$	276,295		$	(140,508	)	$	965,973
Cost of sales (exclusive of amortization of intangible assets of $36,343)		—			304,206			177,592			(136,528	)		345,270
Gross profit		—			525,980			98,703			(3,980	)		620,703
Operating expenses:
Selling, general and administrative		—			353,854			79,554			—			433,408
Research and development		—			18,062			3,830			—			21,892
Amortization of intangible assets		—			73,560			3,963			—			77,523
		—			445,476			87,347			—			532,823
Operating income		—			80,504			11,356			(3,980	)		87,880
Other income (expense):
Interest expense		(154,823	)		(51	)		(307	)		—			(155,181	)
Interest income		9			191			110			—			310
Loss on modification and extinguishment of debt		(19,798	)		—			—			—			(19,798	)
Other income (expense), net		—			2,567			(1,708	)		—			859
Intercompany income (expense), net		75,099			(34,980	)		2,302			(42,421	)		—
Equity in income of subsidiaries, net		46,981			—			—			(46,981	)		—
		(52,532	)		(32,273	)		397			(89,402	)		(173,810	)
(Loss) income before income taxes		(52,532	)		48,231			11,753			(93,382	)		(85,930	)
Income tax benefit (provision)		—			39,791			(5,536	)		—			34,255
Net (loss) income		(52,532	)		88,022			6,217			(93,382	)		(51,675	)
Net income attributable to noncontrolling interests		—			—			(857	)		—			(857	)
Net (loss) income attributable to DJOFL	$	(52,532	)	$	88,022		$	5,360		$	(93,382	)	$	(52,532	)

Schedule of Condensed Consolidating Statements of Cash Flows

DJO Finance LLC

Condensed Consolidating Statements of Cash Flows

For the Year Ended December 31, 2010

(in thousands)

	DJOFL			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash Flows From Operating Activities:
Net (loss) income	$	(52,532	)	$	88,022		$	6,217		$	(93,382	)	$	(51,675	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation		—			21,403			4,713			(120	)		25,996
Amortization of intangible assets		—			73,560			3,963			—			77,523
Amortization of debt issuance costs and non-cash interest expense		13,272			—			—			—			13,272
Stock-based compensation expense		—			1,888			—			—			1,888
Loss on disposal of assets, net		—			1,918			551			(402	)		2,067
Deferred income tax (benefit) expense		—			(85,634	)		45,947			—			(39,687	)
Equity in income of subsidiaries, net		(46,981	)		—			—			46,981			—
Provision for doubtful accounts and sales returns		—			31,918			1,159			—			33,077
Inventory reserves		—			5,890			706			—			6,596
Loss on modification and extinguishment of debt		19,798			—			—			—			19,798
Changes in operating assets and liabilities, net of acquired assets and liabilities:
Accounts receivable		—			(31,619	)		(1,486	)		—			(33,105	)
Inventories		—			(4,081	)		(7,449	)		(2,378	)		(13,908	)
Prepaid expenses and other assets		—			25,457			(30,294	)		—			(4,837	)
Accounts payable and other current liabilities		(12,653	)		101			1,141			—			(11,411	)
Net cash (used in) provided by operating activities		(79,096	)		128,823			25,168			(49,301	)		25,594
Cash Flows From Investing Activities:
Purchases of property and equipment		—			(26,111	)		(4,233	)		3,097			(27,247	)
Cash paid in connection with acquisitions, net of cash acquired		—			(2,045	)		—			—			(2,045	)
Other investing activities, net		—			1,180			(2,083	)		—			(903	)
Net cash used in investing activities		—			(26,976	)		(6,316	)		3,097			(30,195	)
Cash Flows From Financing Activities:
Intercompany		85,871			(102,826	)		(29,249	)		46,204			—
Proceeds from issuance of debt		447,000			—			130			—			447,130
Repayments of debt and capital lease obligations		(433,891	)		(17,278	)		13,802			—			(437,367	)
Payment of debt issuance costs		(10,282	)		—			—			—			(10,282	)
Investment by parent		—			1,489			—			—			1,489
Dividend paid by subsidiary to owners of noncontrolling interests		—			—			(557	)		—			(557	)
Net cash provided by (used in) financing activities		88,698			(118,615	)		(15,874	)		46,204			413
Effect of exchange rate changes on cash and cash equivalents		—			—			(2,291	)		—			(2,291	)
Net increase (decrease) in cash and cash equivalents		9,602			(16,768	)		687			—			(6,479	)
Cash and cash equivalents, beginning of year		6,999			17,389			20,223			—			44,611
Cash and cash equivalents, end of year	$	16,601		$	621		$	20,910		$	—		$	38,132

Two Thousand Nine

Schedule of Condensed Consolidating Statements of Operations

DJO Finance LLC

Condensed Consolidating Statements of Operations

For the Year Ended December 31, 2009

(in thousands)

	DJOFL			Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	804,912		$	268,644		$	(127,430	)	$	946,126
Cost of sales (exclusive of amortization of intangible assets of $37,884)		—			290,097			175,464			(126,842	)		338,719
Gross profit		—			514,815			93,180			(588	)		607,407
Operating expenses:
Selling, general and administrative		—			343,574			76,201			983			420,758
Research and development		—			20,712			2,828			—			23,540
Amortization of intangible assets		—			74,433			2,821			—			77,254
Impairment of intangible assets		—			6,998			—			—			6,998
		—			445,717			81,850			983			528,550
Operating income		—			69,098			11,330			(1,571	)		78,857
Other income (expense):
Interest expense		(156,228	)		(635	)		(169	)		—			(157,032	)
Interest income		7			677			349						1,033
Other income, net		—			4,817			1,256			—			6,073
Intercompany income (expense), net		131,911			38,335			(2,778	)		(167,468	)		—
Equity in loss of subsidiaries, net		(26,123	)		—			—			26,123			—
		(50,433	)		43,194			(1,342	)		(141,345	)		(149,926	)
(Loss) income from continuing operations before income taxes		(50,433	)		112,292			9,988			(142,916	)		(71,069	)
Income tax benefit		—			23,555			1,876			(3,753	)		21,678
(Loss) income from continuing operations		(50,433	)		135,847			11,864			(146,669	)		(49,391	)
Loss from discontinued operations, net		—			(319	)		—			—			(319	)
Net (loss) income		(50,433	)		135,528			11,864			(146,669	)		(49,710	)
Net income attributable to noncontrolling interests		—			—			(723	)		—			(723	)
Net (loss) income attributable to DJOFL	$	(50,433	)	$	135,528		$	11,141		$	(146,669	)	$	(50,433	)

Schedule of Condensed Consolidating Statements of Cash Flows

DJO Finance LLC

Condensed Consolidating Statements of Cash Flows

For the Year Ended December 31, 2009

(in thousands)

	DJOFL			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash Flows From Operating Activities:
Net (loss) income	$	(50,433	)	$	135,528		$	11,864		$	(146,669	)	$	(49,710	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation		—			23,400			4,992			(496	)		27,896
Amortization of intangible assets		—			74,433			2,821			—			77,254
Amortization of debt issuance costs and non-cash interest expense		12,679			—			—			—			12,679
Stock-based compensation expense		—			3,382			—			—			3,382
Loss on disposal of assets, net		—			455			651			(142	)		964
Impairment of intangible assets		—			6,998			—			—			6,998
Deferred income tax benefit		—			(26,474	)		(3,228	)		6,012			(23,690	)
Equity in loss of subsidiaries, net		26,123			—			—			(26,123	)		—
Provision for doubtful accounts and sales returns		—			34,175			729			—			34,904
Inventory reserves		—			6,894			568			—			7,462
Gain on sales of product lines		—			(3,058	)		—			—			(3,058	)
Gain on disposal of discontinued operations		—			(496	)		—			103			(393	)
Changes in operating assets and liabilities, net of acquired assets and liabilities:
Accounts receivable		—			(17,962	)		2,806			—			(15,156	)
Inventories		—			(3,958	)		(705	)		2,795			(1,868	)
Prepaid expenses and other assets		141			17,353			(13,718	)		(338	)		3,438
Accounts payable and other current liabilities		(2,962	)		(6,143	)		(4,456	)		253			(13,308	)
Net cash provided by (used in) operating activities		(14,452	)		244,527			2,324			(164,605	)		67,794
Cash Flows From Investing Activities:
Purchases of property and equipment		—			(24,601	)		(5,961	)		1,690			(28,872	)
Cash paid in connection with acquisitions, net of cash acquired		—			(2,580	)		(10,506	)		—			(13,086	)
Proceeds received upon disposition of discontinued operations, net		—			21,846			—			—			21,846
Other investing activities, net		—			4,112			—			—			4,112
Net cash used in investing activities		—			(1,223	)		(16,467	)		1,690			(16,000	)
Cash Flows From Financing Activities:
Intercompany		56,101			(240,224	)		21,208			162,915			—
Proceeds from issuance of debt		68,000			12			248			—			68,260
Repayments of debt and capital lease obligations		(102,650	)		(76	)		(795	)		—			(103,521	)
Net cash provided by (used in) financing activities		21,451			(240,288	)		20,661			162,915			(35,261	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(2,405	)		—			(2,405	)
Net increase in cash and cash equivalents		6,999			3,016			4,113			—			14,128
Cash and cash equivalents, beginning of year		—			14,373			16,110			—			30,483
Cash and cash equivalents, end of year	$	6,999		$	17,389		$	20,223		$	—		$	44,611