DJO Incorporated Announces Financial Results for Third Quarter 2006.

* Record Third Quarter 2006 Net Revenues of $113.2 Million Exceed Expectations

* Strong Revenue Levels and Progress with Aircast Integration Drive Improvement in Earnings Per Share

SAN DIEGO -- DJO Incorporated, (NYSE:DJO), a global provider of products and services that promote musculoskeletal and vascular health, today announced financial results for the third quarter of 2006, ended September 30, 2006.

Third Quarter Results

Net revenues for the third quarter of 2006 were a record $113.2 million, reflecting an increase of 56.9 percent, compared with net revenues of $72.1 million in the third quarter of 2005. The third quarter of 2006 included revenue contributions from the Company's 2006 acquisitions of Aircast and Axmed. Third quarter revenue also included the benefit of a change in shipping terms for certain Aircast products from Aircast's historical terms of FOB destination to DJO's policy of FOB shipping point. Additionally in the third quarter, DJO cleared certain backorders that existed at the end of the second quarter of 2006 due to the impact of integration activities taking place at that time. Together, these two items contributed approximately $1.9 million of revenue in the third quarter. The third quarters of 2006 and 2005 each included 63 shipping days.

Non-GAAP net income for the third quarter of 2006 was $9.0 million, or $0.38 per share, compared to non-GAAP net income of $7.8 million, or $0.34 per share, for the third quarter of 2005. As of January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, resulting in the recognition of stock-based compensation expense beginning January 1, 2006. Non-GAAP results for the third quarter of 2006 exclude the after tax impact of this stock-based compensation expense and certain costs and expenses related to acquisitions and the Company's move into its new corporate headquarters, which occurred during the third quarter. Non-GAAP results for the third quarter of 2005 exclude the after tax impact of a write-off of previously deferred expenses related to discontinued acquisitions. GAAP net income for the third quarter of 2006 was $4.4 million, or $0.18 per share, as compared to GAAP net income of $7.5 million, or $0.33 per share, for the third quarter of 2005. As previously discussed by the Company, the acquisition of Aircast has had a short-term dilutive impact on the Company's financial results due to the impact of purchase accounting amortization expense and interest expense related to the acquisition financing being in excess of the pre-integration profit contribution from the Aircast business. The Company said it continues to expect the acquisition to be highly accretive to earnings in 2007, based on expected cost reduction synergies to be achieved through the integration of the acquired business into DJO.

Nine Month Results

Net revenues for the first nine months of 2006 were $302.3 million, reflecting an increase of 43.1 percent, compared with net revenues of $211.2 million for the first nine months of 2005. The first nine months of 2006 and 2005 included 191 and 192 shipping days, respectively.

Non-GAAP net income for the first nine months of 2006 was $23.5 million, or $1.01 per share, compared with non-GAAP net income of $21.3 million, or $0.94 per share, for the first nine months of 2005. Non-GAAP results for the first nine months of 2006 exclude the after tax impact of stock-based compensation expense, purchase accounting adjustments to write up acquired inventories to fair value, certain costs and expenses related to acquisitions, an arbitration that concluded in the second quarter of 2006, the Company's move into its new corporate headquarters and the write-off of previously deferred expenses related to discontinued acquisitions. Non-GAAP results for the first nine months of 2005 exclude the after tax impact of the write-off of previously deferred expenses related to discontinued acquisitions. GAAP net income for the first nine months of 2006 was $11.6 million, or $0.50 per share, compared to GAAP net income of $21.1 million, or $0.93 per share, for the first nine months of 2005.

"We are very pleased to report another strong quarter with record revenues exceeding our expectations. Our revenue growth continues to be driven by outstanding sales productivity across our existing business segments and by contributions from our acquisitions," said Les Cross, president and CEO. "While our total revenue growth has clearly been enhanced by our acquisitions, our core business is performing extremely well. At the bottom line, our strong revenue levels, combined with the results of good progress with the integration of Aircast, permitted us to show significant sequential improvement in our non-GAAP operating margins and earnings per share from the second quarter of 2006.

"Within our Domestic Rehabilitation business, each of our DonJoy[R], ProCare[R] and OfficeCare[R] sales channels posted solid growth rates over the prior year. We also reached a milestone in our OfficeCare channel by exceeding 1,000 total accounts in the quarter. As expected, growth of Aircast products is beginning to accelerate under DJO's leadership, with more feet on the street selling the products. We are pleased to see opportunities for Aircast sales synergies start to materialize as Aircast products were recently added to three large, multi-year GPO supply contracts and several smaller contracts.

"Our Regeneration segment also delivered another strong quarter, with revenue growing at 15.9% over the third quarter of 2005 and both our OL1000TM and SpinaLogic[R] product lines growing in double-digits. Revenue growth was particularly strong for our SpinaLogic product line in the third quarter, at 22% over the prior year.

"Revenue growth in our International segment of nearly 200% reflects contributions from both 2006 acquisitions, as well as continued progress against our growth strategies of product line and geographical expansion. We are very pleased with the progress we have made with the Aircast integration outside of the U.S. and with an expanded international sales force carrying Aircast, Axmed and DJO products, we are beginning to realize revenue synergies from the acquisitions.

"We are also pleased to report a significant improvement in our operating results in the third quarter. Our gross profit for the third quarter was reduced by charges related to stock-based compensation expense (approximately $0.3 million) and costs and expenses related to our acquisitions and our move into the Company's new corporate headquarters in Vista, California (approximately $1.9 million). Our non-GAAP consolidated gross profit margin before those items, aggregating approximately $2.2 million, was 62.4% of revenues in the third quarter, reflecting a slight improvement from the second quarter. As we have discussed, most of the manufacturing integration, which is expected to improve our gross profit and gross profit margin, will occur during the fourth quarter.

"The third quarter marked an improvement in our non-GAAP operating expenses as a percentage of revenues due to our increased revenue levels and progress made with the integration of the Aircast SG&A functions. Accordingly, our non-GAAP operating income margin improved sequentially from the second quarter of this year by 250 basis points to 18.4%. Due to reduced integration related costs, our GAAP operating income margin also improved. Total GAAP operating expenses included charges related to stock-based compensation expense (approximately $2.4 million) and costs and expenses related to acquisitions and to the Company's move into its new corporate headquarters (approximately $1.1 million). These charges aggregated approximately $3.5 million.

"Net interest and other expense for the third quarter of 2006 was $6.7 million, which was reduced by a net foreign currency transaction gain of $0.4 million. This amount also includes a non-cash charge of $0.9 million to write-off abandoned leasehold improvements and other assets in connection with the move of our corporate headquarters. Our non-GAAP net interest and other expense, before this non-cash charge, was $5.8 million.

"The total after-tax impact on our third quarter 2006 earnings from stock-based compensation expense was $2.3 million, or approximately $0.10 per share. The total after-tax impact on our third quarter 2006 earnings from other costs and expenses not deemed to be reflective of the Company's ongoing operations was also $2.3 million, or approximately $0.10 per share.

"We generated good cash flow in the third quarter, which permitted us to repay approximately $15 million of debt during the quarter. As a good start to cash flow for the fourth quarter, we completed the sale of the Aircast Summit, NJ headquarters facility in October, netting us cash of approximately $4.2 million.

"Completing the integration of the Aircast business remains a priority for us in the fourth quarter. We are now in the final phase, which includes relocating all the Aircast manufacturing operations from New Jersey to Mexico. To date, we have moved approximately half of the Aircast manufacturing volume to Mexico.

"With a strong third quarter behind us, we have increased our 2006 full year revenue expectations. We are now targeting 2006 revenues to be between $409 million and $412 million. For the fourth quarter, which will be our shortest quarter of the year with only 61 shipping days, we are targeting total net revenues of between $107 million and $110 million. We continue to expect the Aircast integration to be completed by the end of this year, providing DJO with annualized cost reduction synergies of between $18 million and $20 million in 2007."

Recent Business Highlights:

* DJO Incorporated successfully commenced Aircast customer service operations in August at its new distribution center in Indianapolis, Indiana. This new 110,000 square foot facility is the primary distribution hub for all Aircast products and Aircast customer service activities. It also supports distribution for DJO's DonJoy and OfficeCare channels.

* The expansion of the Company's facilities in Mexico was completed on schedule in early September, providing the additional capacity to relocate all remaining Aircast manufacturing from New Jersey to Mexico during the fourth quarter of 2006.

* The Company renewed or signed three major supply contracts during the third quarter. These contracts include a new sole-source supply agreement with Consorta, Inc. that includes all Aircast, DonJoy and ProCare branded bracing and soft goods products and vascular systems products for a three-year term. DJO also renewed its three-year supply contracts with both Broadlane, Inc. and Premier Purchasing Partners, to supply its full line of Aircast, DonJoy and ProCare rigid and soft bracing products and cold therapy systems. The Company also signed several other contracts during the quarter, including a new three-year supply contract with Amerinet Choice for pain management products, including cold therapy, two new government regional supply contracts for bracing and soft goods and two government supply contract renewals for vascular systems products.

* The Company announced a sponsorship agreement with Carson Palmer, NFL quarterback for the Cincinnati Bengals, who is now wearing DJO's custom DonJoy Defiance[R] knee brace. As part of the sponsorship agreement, Carson Palmer will be featured in DJO's award-winning "Faces of DonJoy" print advertising campaign.

* The Company completed the move to its new world headquarters in Vista, California in August.

* In September, DJO was named to the Deloitte & Touche "Technology Fast 50" list of San Diego's fastest growing companies.

* DJO received the "Competitive Strategy Leadership" award from Frost & Sullivan.

Conference Call Information

DJO Incorporated has scheduled an investor conference call to discuss this announcement beginning at 1:00 PM, Eastern Time today, November 2, 2006. Individuals interested in listening to the conference call may do so by dialing 706-634-0177, using the reservation code 9000426. A telephone replay will be available for 48 hours following the conclusion of the call by dialing 706-645-9291 and using the above reservation code. The live conference call also will be available via the Internet at www.djortho.com, and a recording of the call will be available on the Company's website.

About DJO Incorporated

DJO Incorporated is a global provider of solutions for musculoskeletal and vascular health, specializing in rehabilitation and regeneration products for the non-operative orthopedic, spine and vascular markets. Marketed under the Aircast[R], DonJoy[R] and ProCare[R] brands, the Company's broad range of over 700 rehabilitation products, including rigid knee braces, soft goods and pain management products, are used in the prevention of injury, in the treatment of chronic conditions and for recovery after surgery or injury. The Company's regeneration products consist of bone growth stimulation devices that are used to treat nonunion fractures and as an adjunct therapy after spinal fusion surgery. The Company's vascular systems products help prevent deep vein thrombosis and pulmonary embolism that can occur after orthopedic and other surgeries. Together, these products provide solutions throughout the patient's continuum of care. The Company sells its products in the United States and in more than 60 other countries through networks of agents, distributors and its own direct sales force. Customers include orthopedic, podiatric and spine surgeons, orthotic and prosthetic centers, third-party distributors, hospitals, surgery centers, physical therapists, athletic trainers, other healthcare professionals and individual and team athletes. For additional information on the Company, please visit www.djortho.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements relate to, among other things, the Company's revenue and earnings estimates for the fourth quarter of 2006 and for the full fiscal year 2006, the Company's belief that the Aircast integration will be completed by the end of 2006 and the expected cost synergies from this integration. The words "believe," "should," "expect," "intend," "estimate" and "anticipate," variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. These forward-looking statements are based on the Company's current expectations and are subject to a number of risks, uncertainties and assumptions. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ significantly from those expressed or implied by such forward-looking statements are risks relating to the successful execution of the Company's business strategies relative to its Domestic Rehabilitation, Regeneration and International businesses; the successful integration of the sales and distribution operations of Aircast; the successful and timely integration of Aircast's manufacturing and distribution operations into the Company's existing operations in Mexico and Indianapolis; the successful and timely integration of Aircast's administrative functions into the Company's Vista headquarters; the successful combination of the Company's and Aircast's respective operations in several countries in Europe; the continued growth of the markets the Company addresses; the impact of potential reductions in reimbursement levels by Medicare and other governmental and commercial payors; the Company's ability to successfully develop, license or acquire, and timely introduce and market new products or product enhancements; the Company's dependence on orthopedic professionals, agents and distributors for marketing its products; risks relating to the Company's international operations; resources needed and risks involved in complying with government regulations and in developing and protecting intellectual property; and the effects of healthcare reform, managed care and buying groups on prices of the Company's products. Other risk factors are detailed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2006, filed on August 9, 2006, with the Securities and Exchange Commission.

[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]