Cost savings. Excluding transaction related costs and charges, the combined organization is expected to generate recurring cost savings from enhanced efficiency in manufacturing, purchasing, administrative, research and sales and marketing efforts.

Integra Guidance for 2008
The companies expect to initiate programs that are expected to enhance revenue growth in the long term. Concurrent with the signing of the merger agreement, the companies have announced a strategic alliance whereby Integra will sell on a private label basis IsoTis' DynaGraft® II and OrthoBlast® II demineralized bone matrix products through its Integra NeuroSciences and Integra Extremity Reconstruction direct sales organizations in the United States.

IsoTis has recently announced its intention to wind down its European operations. This process has begun and IsoTis expects to achieve pre-tax savings of approximately $3-$5 million per year from these actions. After elimination of its European entities and facilities, IsoTis will maintain research and manufacturing operations at a single site in Irvine, California.
"While the transaction will be dilutive to reported earnings for several quarters as we restructure the business, we expect the restructuring activities surrounding the IsoTis acquisition to generate projected pre-tax cost savings of approximately $9 to $11 million per year for 2008 and beyond, as compared to IsoTis' historical 2006 results." said Stuart M. Essig, Integra's President and Chief Executive Officer. "Substantial savings will come from the reduction of public company costs, duplicative board and executive management costs, redundant insurance costs, and reduced advisory, legal and accounting fees. Additionally, by the end of 2008, Integra expects to complete the integration of IsoTis', marketing, product development, administrative and logistics functions into Integra's existing infrastructure and generate additional cost savings."
Integra expects to incur pre-tax charges related to these activities of approximately $3 to $5 million. These charges are expected to be incurred during the fourth quarter of 2007 and the first half of 2008, depending upon the actual closing date of the transaction.

Upon the closing of the transaction, Integra will provide more detailed guidance regarding the financial aspects of the transaction and its expected impact on Integra's future financial results.

Timing and Approvals

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