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Biomet 2001 Annual Report

Biomet, Inc. and its subsidiaries design, manufacture and market products used primarily by musculoskeletal medical specialists in both surgical and non-surgical therapy, including reconstructive and fixation devices, electrical bone growth stimulators, orthopedic support devices, operating room supplies, general surgical instruments, arthroscopy products, spinal products, bone cements and accessories, bone substitute materials, craniomaxillofacial implants and instruments, and dental reconstructive implants and associated instrumentation. Headquartered in Warsaw, Indiana, Biomet has manufacturing and/or office facilities in over 50 locations worldwide. The Company currently distributes its products in more than 100 countries throughout the world.

About the CoverThe Biomet Team is committed to the compassionate care of patients throughout the world. Connecting with our stakeholders is essential to meeting the needs of our customers and patients. Building long-term relationships has always been a core philosophy of Biomet’s business. Nurturing these relationships is essential to the delivery of Biomet’s technologically advanced, quality products with unsurpassed service. We believe that by connecting people, ideas, technology, products and service, we provide a network that is of paramount importance to the needs of our customers and their patients and, ultimately, Biomet’s future success.

Annual Meeting1:30 p.m., local timeSaturday, September 29, 2001Biomet, Inc.Airport Industrial Park56 East Bell DriveWarsaw, IN 46582

Investor ContactBiomet, Inc.c/o Barbara A. Goslee Corporate Communications ManagerP.O. Box 587Warsaw, Indiana 46581-0587Phone 800.348.9500or 219.267.6639 barb.goslee@biometmail.com

Form 10-KA copy of the Company’s most recent Form 10-K, as filed with the Securities and Exchange Commission (including consolidated financial statements and schedules thereto), will be provided to shareholders upon written request to the Company’s investor contact. The Form 10-K is also available on the internet by accessing Biomet’s website at www.biomet.com.

Transfer AgentLake City Bank Trust Department c/o Jeanine Knowles P.O. Box 1387Warsaw, Indiana 46581-1387Phone 800.827.4522 or 219.267.9110

Mailing ProcedureOne annual report is mailed to shareholders with the same last name residing in the same household. Shareholders may request additional copies by calling the Company’s investor contact. With the popularity of the Internet as a means of accessing information, we have decided to discontinue the printing of quarterly reports in the brochure format. Biomet’s annual and quarterly reports are available on the Internet via our corporate website at www.biomet.com. If you do not have access to the Internet and would like to receive a hard copy of the quarterly report, please contact us and we will forward one to you.

DesignBiomet Marketing Communications

PhotographyRoberts Photography Inc.Ft. Wayne, Indiana

Printing and Pre-PressMossberg & Company Inc.South Bend, Indiana

(dollars in thousands, except per share amounts)

PercentYears ended May 31: 2001 2000 Change

Net sales $1,030,663 $ 923,551 +12%Gross profit 734,600 642,200 14Operating income 290,687 263,674 10Net income 197,546 173,771 14Basic earnings per share .74 .66 12Working capital 726,557 608,185 19Total assets 1,489,311 1,218,448 22Cash and investments 463,148 407,268 14Shareholders’ equity 1,146,186 943,323 22Book value per share 4.26 3.54 20Net profit margin 19.2% 18.8%Return on equity 18.9% 20.0%

The Company

Consolidated Financial HighlightsBiomet, Inc. & Subsidiaries

Web AddressesBiomet, Inc......................................................... www.biomet.comBiomet Merck Ltd............................................... www.biometmerck.co.ukIQL, S.L.............................................................. www.iql.esEBI, L.P. (“EBI”) ................................................... www.ebimedical.comImplant Innovations, Inc. (“3i”).......................... www.3i-online.comWalter Lorenz Surgical, Inc. (“Lorenz Surgical”)..... www.lorenzsurgical.comArthrotek, Inc..................................................... www.arthrotek.com

Cover photographyFeatured on the cover of the 2001 Annual Report: Margie Morrow (patient profile on pages 10–11); Margie’s orthopedic surgeon, Howard G. Miller, M.D.; Biomet distributor, Jim Jasinski (top right); and Biomet sales associate, Jeff Smith.

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Connecting

people

ideas

technology

products

and service

2

We are pleased to announce Biomet’s twenty-fourth year of record financial results. For fiscal year 2001, sales increased 12% to $1,030,663,000 from $923,551,000 in fiscal year 2000. Operating income increased 10% from $263,674,000 to $290,687,000 during fiscal year 2001, net income increased 14% from $173,771,000 to $197,546,000, basic earnings per share increased 12% from $.66 to $.74 and diluted earnings per share increased 12% from $.65 to $.73.* Excluding non-recurring items** during fiscal years 2000 and 2001, operating income increased 15% from $275,375,000 to $316,787,000 during fiscal year 2001, net income increased 19% from $181,171,000 to $214,746,000, basic earnings per share increased 16% from $.69 to $.80, while diluted earnings per share increased 16% from $.68 to $.79.*

Led by strong, balanced sales growth in our reconstructive, fixation, spinal and other product lines, net sales increased 16% during fiscal year 2001, excluding the impact of foreign currency fluctuations and discontinued products, which reduced sales by $31.4 million and $9.3 million, respectively. United States and international sales, excluding the effects of foreign currency fluctuations and discontinued products, increased 19% and 10%, respectively. Foreign currency translations reduced operating income by approximately $5.6 million during fiscal year 2001. The discontinued product line, which did not meaningfully contribute to the Company’s operating income, is associated with Biomet’s 3i subsidiary and its June 1, 2000 termination of a distribution agreement with W. L. Gore and Associates. As previously announced, the product line represented resorbable and non-resorbable membranes utilized in dental reconstructive procedures. 3i recently announced that it has signed a distribution agreement for a resorbable membrane called Ossix™.

Biomet’s balance sheet remains strong with $463 million in cash and investments, no long-term debt and a working capital ratio of 4.0-to-1. The Company’s cash flows from operations amounted to $190,506,000 during fiscal year 2001. Biomet’s strong balance sheet and positive cash flows from operations continue to allow the Company to pursue strategic investments in, and acquisitions of, other companies, product lines and technologies. As an example, on September 25, 2000, Biomet announced that its EBI subsidiary had acquired Biolectron, Inc. for $90 million in cash. Founded in 1977, Biolectron was a private company with annualized sales of approximately $45 million whose products principally address the spinal fusion, fracture healing and arthroscopy market segments. Biolectron’s SpinalPak® and OrthoPak® Systems have rounded out EBI’s electrical stimulation and spinal fusion product lines and the CurvTek® Bone Tunneling System has positively contributed to Arthrotek’s sales during fiscal year 2001.

To Our Shareholders

Biomet’s balance sheet remains strong with

$463 million in cash and investments,

no long-term debt and a working capital

ratio of 4.0-to-1.

* All earnings per share data have been adjusted to give retroactive effect to the three-for-two stock splits declared on July 9, 2001 and July 6, 2000.

** The non-recurring charges for fiscal year 2000 include a $2.7 million charge for merger-related costs in connection with the 3i acquisition and a $9 million charge related to the final determination of the interest element of the Orthofix judgment. For fiscal year 2001, the $26.1 million non-recurring charge relates to the appellate court’s decision in the Tronzo case.

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During fiscal year 2001, Biomet initiated the process of establishing a direct sales operation in Japan to strengthen the Company’s position in this attractive international market. We are pleased to report that Biomet has hired an experienced General Manager in addition to several new sales associates. Furthermore, the Company has made significant progress in registering Biomet’s products for distribution in Japan. However, the reduction of product purchases from Biomet’s former dealer organization in Japan has resulted in a decrease of approximately $6.0 million in revenues during fiscal year 2001.

Unless otherwise noted, all of the following percentages are quoted on a constant-currency basis and are adjusted for discontinued products as previously discussed. However, the following percentages do not include any adjustments for the reduction in revenues associated with Biomet’s sales to Japan.

Worldwide sales of Biomet’s reconstructive devices increased 12% during fiscal year 2001 to $614,308,000. Reconstructive device sales were led by total knee sales, which increased approximately 15% in the United States and approximately 12% worldwide. Biomet’s market-leading knee performance in the United States continues to be driven by the Repicci II® Unicondylar Knee System and the Ascent™ Total Knee System. Total hip sales increased approximately 11% in the United States and 7% worldwide during fiscal year 2001. Biomet is experiencing strong sales of the M2a™-Taper Metal-on-Metal Articulation System, which received Food and Drug Administration (“FDA”) clearance in May of last year. Additionally, the Company’s broad line of clinically proven cementless hip systems continues to experience increased market acceptance.

Sales of dental reconstructive implants increased 19% during fiscal year 2001. International sales of dental reconstructive implants increased 26%, while domestic sales increased approximately 13% led by the OSSEOTITE® Dental Reconstructive Implant System. In addition, revenues from bone cements and accessories increased 45% during the year. The introduction of Palacos® bone cement and the Optivac® Vacuum Mixing System in the United States continues to benefit sales of bone cements and accessories.

Niles L. Noblitt (seated), Chairman of the Board, and Dane A. Miller, Ph.D., President and Chief Executive Officer, lead the Biomet team into the twenty-first century and Biomet’s twenty-fifth year of operations.

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United States$722,372

70%

International$308,291

30%

Net Sales(in thousands)

$1,030,663

19% Increase* – United States10% Increase* – International

Fixation$202,152

20%

Reconstructive$614,308

59%

Other$123,100

12%

Spinal Products$91,103

9%

Net Sales(in thousands)

$1,030,663

12% Increase* – Reconstructive17% Increase* – Other70% Increase* – Spinal Products13% Increase* – Fixation

To Our ShareholdersFixation sales increased 13% to $202,152,000 during fiscal year 2001 and were led by electrical stimulation systems, which increased 20%, primarily driven by the EBI Model 2001 Bone Healing System® and Biolectron’s OrthoPak® System. Craniomaxillofacial sales, through Biomet’s Lorenz Surgical subsidiary, increased approximately 20% worldwide and 13% in the United States during fiscal year 2001. Internal fixation sales increased 6% worldwide and 5% in the United States, while external fixation sales increased approximately 4% worldwide and 5% in the United States during fiscal year 2001.

Spinal sales increased 70% to $91,103,000 during fiscal year 2001. Spinal sales in the United States increased 79%, including an increase of 55% in spinal implant sales and 90% in spinal stimulation sales. EBI’s expanded salesforce, the inclusion of Biolectron’s SpinalPak® System and new products such as the VueLock™ Cervical Fixation System and the Omega 21™ Spinal Fixation System are driving the robust sales increases in the rapidly growing spinal market segment.

Sales of Biomet’s “other products” increased 17% to $123,100,000. Other product sales in the United States increased 13%, while international sales of other products grew 24%. Arthroscopy sales increased 25% worldwide and 32% in the United States during the year as a result of Arthrotek’s procedure-specific products, the LactoSorb® line of resorbable arthroscopic products and the introduction of the CurvTek® Bone Tunneling System. Sales of softgoods and bracing products rose 18% worldwide and 20% in the United States during fiscal year 2001, principally as a result of EBI’s Support-On-Sight (“S.O.S™”) stock and bill program in the United States.

On July 9, 2001, the Company’s Board of Directors declared a cash dividend of $.135 per share ($.09 post-split), payable July 27, 2001, to shareholders of record at the close of business on July 20, 2001. The Company also announced on July 9 that the Board declared a three-for-two stock split on its outstanding Common Shares, to be distributed on or about August 6, 2001, to shareholders of record as of July 30, 2001. The Board’s decision to approve the increased dividend and three-for-two stock split reflects its continued confidence in the Company’s operational and strategic direction, and is further supported by Biomet’s record financial results during fiscal year 2001.

The reconstructive device market in the United States experienced a solid acceleration in growth throughout fiscal year 2001. We believe that the market for total hip and total knee procedures in the United States, which we currently estimate to be growing at approximately 10 to 13% per year, remains strong due to a variety of factors. Among those factors is a greater willingness of orthopedic surgeons to provide a variety of treatment options for increasingly younger patients and a larger number of elderly patients as a result of new products, technologies and improved instrumentation associated with state-of-the-art reconstructive device systems. Additionally, elderly individuals are healthier today due to improved lifestyles and available medical treatment options. As the elderly population worldwide continues to grow, we believe that Biomet is well positioned to capitalize on this trend in the years ahead. Biomet, through its EBI business unit, is poised to continue to gain market share in the rapidly growing market for spinal products. The worldwide spinal implant market is currently in excess of $1.5 billion and growing more than 20% per year. Biomet has invested

* Percentages are quoted on a constant-currency basis and adjusted for discontinued products. Percentages do not include any adjustments for the reduction in revenues associated with Biomet’s sales to Japan.

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considerable time, effort and resources in expanding its multiple, worldwide salesforces which now encompass approximately 1,500 knowledgeable, technical sales representatives throughout the world. These sales representatives are a vital support system for Biomet’s 100 new product introductions released to customers last year. We believe that our service-oriented sales representatives are the best in the industry and we thank them for their exemplary efforts during fiscal year 2001.

In twenty-four short years, Biomet has grown from a vision of an innovative orthopedic company to an established, major competitor in the worldwide musculoskeletal products market achieving over $1 billion in annual sales, operating income in excess of $315 million and a market capitalization of approximately $9 billion. Notably, the fourth quarter of fiscal year 2001 represented Biomet’s sixteenth consecutive quarter of 15% or greater growth in earnings. We would like to personally thank our Team Members for their efforts in assisting Biomet to achieve these excellent financial results. It is important to note that Biomet’s performance has principally been the result of organic growth, without the benefit of major acquisitions. In fact, the Company’s strategy has been to acquire small to medium-sized companies with complementary products, technologies, manufacturing operations or distribution organizations.

Propelled by our financial performance during fiscal year 2001, we anticipate continued growth in fiscal year 2002. Our goal is to achieve sales growth in the low to mid-teens range and earnings growth in the upper-teens to low 20% range. Biomet’s broad product offerings, strong intellectual property position, with over 750 issued and pending patents, and growing salesforces should allow the Company to achieve our internal goals. We appreciate your continued support and confidence in Biomet and we look forward to a very exciting fiscal year 2002.

Respectfully,

Dane A. Miller, Ph.D. Niles L. NoblittPresident and Chief Executive Officer Chairman of the Board

Biomet’s corporate headquarters and largest manufacturing facility is located in Warsaw, Indiana.

In twenty-four short years,

Biomet has grown from a vision

of an innovative orthopedic

company to an established,

major competitor in the

worldwide musculoskeletal

products market achieving over

$1 billion in sales, operating

income in excess of $315 million

and a market capitalization of

approximately $9 billion.

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Biomet, Inc. was incorporated nearly twenty-four years ago in November of 1977. The four founders envisioned an organization that was so efficient it would become known as the most responsive company in orthopedics. Dane Miller, Niles Noblitt, Jerry Ferguson and Ray Harroff strived to promote a unique culture in which individuals are part of a synergistic team, creating new ideas and generating new technologies. The founders also demanded a commitment to provide the highest quality products in the industry.

Biomet has remained focused on continual improvements in the utilization of materials, designs and technologies in order to manufacture and deliver products that exhibit the best long-term clinical results in the industry. Biomet was one of the first companies to promote the use of titanium alloy for its orthopedic implants. Titanium alloy is now the material of choice due to its high biocompatibility, strength, durability and its elasticity, which is more similar to that of natural bone than other metals. Biomet also pioneered the utilization of a proprietary titanium porous coating, known as plasma spray, to encourage bone growth onto the implant for stability. Another Biomet advancement was the development of hip stems with a tapered stem design, which offloads stress to the femur in a uniform manner and reduces stress shielding of the bone. Additionally, Biomet developed a patented process resulting in ArCom® polyethylene, a product that has been shown clinically to reduce wear by 40% compared to conventional polyethylene. These important advancements have significantly contributed to Biomet’s growth. Throughout the past twenty-four years, Biomet’s organic growth has been supplemented by a few external growth opportunities in the form of acquisitions and joint ventures.

Biomet’s first external growth opportunity was realized in May 1984 with the acquisition of Orthopedic Equipment Company (“OEC”). Biomet obtained manufacturing facilities in Swindon, England and Bridgend, South Wales, in addition to an established sales network in Europe. OEC also contributed a strong product line of internal fixation devices and operating room supplies.

History of Biomet, Inc.

Long-term clinical results for Biomet’s technologically-advanced products continue to differentiate Biomet from its competitors. Shown (clockwise) are the Anatomic Graduated Component (“AGC®”) Total Knee and Biomet’s premier hip stems: Bi-Metric,® Taperloc,® Mallory-Head® and Integral®.

Additionally, Biomet developed

a patented process resulting

in ArCom® polyethylene, a

product that has been shown

clinically to reduce wear by

40% compared to conventional

polyethylene.

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The 1988 acquisition of Electro-Biology, Inc., now operating as EBI, L.P. (“EBI”), provided Biomet with market-leading positions in the electrical bone growth stimulation and external fixation device market segments. Since the acquisition, spinal products and softgoods and bracing products have been added to EBI’s product mix. Based in Parsippany, New Jersey, EBI operates electronic assembly plants in Guaynabo, Puerto Rico and Allendale, New Jersey; a manufacturing facility in Parsippany; and a softgoods and bracing operation in Marlow, Oklahoma.

Biomet acquired Walter Lorenz Surgical, Inc., (“Lorenz Surgical”) in July 1992, affording Biomet access to the craniomaxillofacial market. Lorenz Surgical, based in Jacksonville, Florida, was already an established leader in the domestic market. Biomet’s vast distribution network outside the United States gave Lorenz Surgical the opportunity to develop an international presence.

In November 1994, Biomet acquired Kirschner Medical Corporation (“Kirschner”). This acquisition provided the Company with complementary reconstructive and softgoods and bracing products. EBI was later presented with the opportunity to further expand the softgoods and bracing product lines of Kirschner. Through the Kirschner acquisition, Biomet obtained a manufacturing plant located in Spain, giving the Company additional manufacturing capabilities and resources in Europe. An added benefit to Biomet was the acquisition of a casting operation in Fair Lawn, New Jersey, that now fulfills all of the casting requirements of the Company.

Biomet and Merck KGaA formed a joint venture in January 1998. Merck KGaA is a chemical, pharmaceutical and laboratory company located in Darmstadt, Germany. The joint venture offered additional opportunities for Biomet in Europe, particularly in France and Germany. Biomet also benefits by gaining exclusive rights to Merck’s vast collection of biomaterials products, in addition to future developments in biomaterials research. The joint venture has capitalized on the combined salesforces of Biomet and Merck, in addition to the expanded product lines of this partnership.

The December 1999 acquisition of Implant Innovations, Inc. (“3i”) presented Biomet with a market-leading company competing in a high growth market segment. Located in Palm Beach Gardens, Florida, 3i is a worldwide leader in the dental reconstructive implant market. Biomet and 3i are working together to cooperatively develop new products and technologies such as bone substitute materials and autologous growth factors.

In September 2000, the Company acquired Biolectron, Inc. As outlined in Biomet’s Letter to Shareholders, products obtained through this merger were external bone-growth stimulation devices for the spine and long bone fractures, as well as a bone tunneling product used for the reattachment of soft tissue to bone in arthroscopy procedures.

Over the past fifteen years, Biomet’s net sales have increased at a 23% compound annual growth rate (“CAGR”), while operating income has grown at a 27% CAGR and basic earnings per share has experienced a 27% CAGR (before non-recurring items). Additionally, Biomet’s market capitalization has grown at a 32.1% CAGR since 1983 to $9 billion on July 27, 2001.

Beginning with the four founders and their wives, Biomet’s team has grown to include over 4,400 Team Members. Biomet now encompasses over 50 facilities, including 18 manufacturing facilities, with a combined salesforce of over 1,500 sales representatives. In the first year of operations, the Company recorded sales of $17,000 and a net loss of $63,000. In fiscal year 2001, Biomet exceeded $1 billion in sales and shareholders’ equity with net income of almost $215 million. Since its humble beginning, Biomet has been a true example of the entrepreneurial spirit in action, connecting with people throughout the world to provide options for surgeons and patients.

Net Sales(in thousands)

2001 – $1,030,663

0

200,000

400,000

600,000

800,000

1,000,000

$1,200,000

Fiscal Years 1986–200123% Compound Annual Growth Rate (CAGR)

Operating Income(before non-recurring items)

2001 – $316,787 (in thousands)

0

50,000

100,000

150,000

200,000

250,000

300,000

$350,000

Fiscal Years 1986–200127% Compound Annual Growth Rate

Basic Earnings Per Share(before non-recurring items)

2001 – $.80(post-split)

0

.10

.20

.30

.40

.50

.60

.70

$.80

Fiscal Years 1986–200127% Compound Annual Growth Rate

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The 2001 musculoskeletal products market in the United States is estimated to be $6.445 billion. The musculoskeletal products market is comprised of nine segments: reconstructive devices; spinal products; fixation products; arthroscopy products; softgoods and bracing products; operating room supplies; dental reconstructive implants; powered surgical equipment; and bone cements and accessories.

Increasingly favorable demographics offer the potential for significant growth within the musculoskeletal products market in the United States. The baby boomer generation is beginning to enter the age range that customarily experiences a marked increase in utilization of musculoskeletal products. According to the United States Census Bureau projections, the 55 to 75 year-old population is expected to grow 75% to 74.6 million people within the next 20 years. Musculoskeletal injuries and disorders in the United States currently affect one out of every four individuals.

Reconstructive Device MarketThe largest segment, the orthopedic reconstructive device market, comprises almost 40% of the total musculoskeletal products market in the United States at $2.52 billion. The orthopedic reconstructive device market segment continues to be led by the knee market, estimated at $1.34 billion and currently growing at an annual rate of 12 to 14%. The hip market is estimated to be $1.08 billion and growing 10 to 12% annually. The shoulder market is a $70 million market segment exhibiting 8% growth annually. Biomet is the fourth-largest participant in the orthopedic reconstructive device market with approximately 14% market share. Contributing to the growth in the Company’s orthopedic reconstructive device market share is the continuous flow of new product introductions in combination with a 91% increase in the size of our salesforce during the last ten years. According to statistics from the United States Public Health Centers for Disease Control and Prevention, there are 43 million American children and adults affected by 100 different forms of arthritis. Biomet intends to continue to develop innovative products addressing these disabling disorders.

Spinal Products MarketThe spinal implant market segment is the fastest-growing segment of the musculoskeletal products market estimated at $1.1 billion and growing at an annual rate of greater than 20%. Biomet estimates the plate, rod and screw market to be $475 million, the fusion cage market to be $185 million and the electrical stimulation market is estimated at $155 million. Allograft and bone substitute materials make up approximately $285 million of the spinal market. EBI is the fourth-largest spinal products market participant in the United States with approximately 9% market share. In 2000, over 2 million spinal procedures were performed worldwide.

Fixation MarketThe fixation market is estimated to be $870 million, growing an estimated 7% per year. Internal fixation represents $390 million, while external fixation is estimated at $140 million. The electrical stimulation market, at approximately $135 million, is currently growing at an annual rate of 13%. EBI is a recognized leader in the external fixation and electrical stimulation market segments with new

U.S. Musculoskeletal Market Review

Spinal Products$1,100

ReconstructiveDevices$2,520

Fixation$870

Arthroscopy$635

2001 U.S. Musculoskeletal Products Market

(Biomet estimates in millions)

$6.445 Billion

O.R. Supplies$275Powered

Surgical Equipment

$190

Softgoods & Bracing

$455

Bone Cements & Accessories

$150

Dental Reconstructive

Implants$250

Hips$1,080

Knees$1,340

Other$30 Shoulders

$70

2001 U.S. Orthopedic Reconstructive Products Market

(Biomet estimates in millions)

$2.52 Billion

According to the United

States Census Bureau

projections, the 55 to

75 year-old population is

expected to grow 75% to

74.6 million people within

the next 20 years.

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Fusion Cages$185

Plates, Rods, Screws$475

Allograft/Bone Substitute Materials

$285

Electrical Stimulation

$155

2001 U.S. Spinal Products Market(Biomet estimates in millions)

$1.1 Billion

products adding to its already broad product line. Lorenz Surgical is a leader in the craniomaxillofacial market which is expected to be $130 million in 2001 with a 4% growth rate. Biomet has achieved a combined market share of 21% in the fixation market within the United States. The International Osteoporosis Foundation reports that the worldwide lifetime risk for osteoporotic fractures in women is at least 30% and probably closer to 40%. In men, the risk is 13%. According to the World Health Organization, the number of hip fractures worldwide could rise from 1.7 million in 1990 to 6.3 million by 2050.

Sports Medicine MarketThe sports medicine market continues to grow due to the increasingly active lifestyle of the general population. The arthroscopy market in the United States is believed to be $635 million and growing at a rate of 10 to 12% per year. Arthrotek competes in this market with a focus on knee and shoulder arthroscopic products and instruments and its market share is approximately 4%. Another segment of the sports medicine market consists of softgoods and bracing products. This market is estimated to be $455 million, growing 8% per year. EBI’s market share in the softgoods and bracing market segment is estimated at 9%.

Dental Reconstructive Implant MarketThe worldwide dental reconstructive implant market is estimated to be $740 million and growing at a rate of 12% per year. The dental reconstructive implant market within the United States is approximately $250 million with a growth rate of 13%. According to the United States Department of Health and Human Services, about 30% of adults 65 years and older are missing one or more teeth. In 1997, more than 500,000 dental reconstructive implant procedures were performed worldwide. A leader in the dental reconstructive implant market, 3i capitalizes on its 16% worldwide market share and its 21% share of the domestic market with its superior line of OSSEOTITE® dental reconstructive implants.

Bone Cements & Accessories MarketThe bone cements and accessories market is estimated to be $150 million in the United States with a 7% annual growth rate. Through the Biomet Merck joint venture, Biomet obtained the exclusive rights to distribute Palacos® bone cement in the United States on June 1, 2000. The combination of Palacos® bone cement with the Optivac® Vacuum Mixing System, also procured through the joint venture, has launched Biomet into this small, but growing, musculoskeletal market segment. We believe that Biomet controls 8% of the bone cements and accessories market in the United States.

International$490

United States$250

2001 Worldwide Dental Reconstructive Implant Market

(Biomet estimates in millions)

$740 Million

External Fixation$140

Internal Fixation$390

Craniomaxillofacial Fixation

$130

Electrical Stimulation

$135

2001 U.S. Fixation Market(Biomet estimates in millions)

$870 Million

Allograft/Bone Substitute Materials

$75

Bone Cements$75

Accessories$75

2001 U.S. Bone Cements and Accessories Market

(Biomet estimates in millions)

$150 Million

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In June 1997, Margie Morrow arrived for her first appointment to meet Dr. Howard Miller, an orthopedic surgeon who specializes in total joint reconstruction at The Orthopaedic Center in Huntsville, Alabama. At the time of her initial visit with Dr. Miller, Margie had been in a wheelchair since October 1986, a period of almost eleven years. Margie had been diagnosed with severe rheumatoid arthritis at the age of 17. The arthritis had progressed to the point that she was forced to utilize a wheelchair to avoid the excruciating pain caused by walking. Over those eleven years, Margie’s non-ambulatory status eventually resulted in spontaneous fusion of both her hips and knees into the sitting position, as a result of being confined to her wheelchair. Margie also suffered from deformities of her hands and feet due to the disease, as well as significant elbow and shoulder stiffness. Margie was unable to even feed herself for nine of those years.

At the age of 47, Margie decided to consult with an orthopedic specialist. She wondered what her life would be like if something happened to one or both of her parents, with whom she resided and depended upon for help with her everyday living needs. Would Margie eventually have to enter a nursing home due to her inability to function independently? Margie decided to explore her options and try to find an answer to this important question.

After assessment of Margie’s condition, Dr. Miller believed he could help her, although he was not certain if she could ever regain ambulatory status. Margie decided to proceed with Dr. Miller’s recommendations for surgery. Although every case is unique, Margie’s case would be especially challenging, in part because two joints were being replaced during one operation and also because Margie had not been ambulatory prior to the surgery.

Dr. Miller’s connections with Jeff Smith, his Biomet sales associate, and Jim Jasinski, his local Biomet distributor, were indispensable in this case. Impeccable planning, organization, and delivery of Margie’s product requirements would be crucial. Even with the availability of advanced diagnostic and evaluation tools, surgeons and sales representa-tives must plan for extenuating circumstances due to the potential complexities of these types of cases, such as the unknown quality of existing bone. Being prepared for unusual surgical situations is vital to the success of any procedure.

Margie’s Question

Would Margie eventually have to

enter a nursing home due to her

inability to function independently?

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Margie attributes her successful outcome to her deep personal faith and the many people who helped her find the answer to her question.

In July 1997, Margie’s first surgery was scheduled to replace her left hip and knee in a single operation. Three months later, Margie’s right hip and knee were replaced. Margie was a motivated patient, progressed very well with her rehabilitation process and walked for the first time in eleven years on December 3, 1997. On Christmas Eve, 1997, Dr. Miller saw Margie walk down the hallway at his office with a beaming smile on her face. Margie started walking on her own without a walker or assistance from anyone on January 30, 1998.

Since Margie’s hip and knee replacement procedures, Margie has also undergone surgeries to replace her shoulders and her elbows, as well as having her hands and feet reconstructed. All of Margie’s total joints are Biomet products with the exception of her elbows. Although Biomet now has an elbow product approved for sale in the United States, at the time of Margie’s elbow surgeries, this product was not yet available.

Margie is truly an amazing person to have had the fortitude to endure so many procedures along with the rehabilitation required to produce a successful outcome. Dr. Miller states, “Margie is doing extremely well, and is one of the most motivated and grateful patients in my practice. She has returned to a functional lifestyle, and is active in her church and civic affairs. She has also returned to various types of crafts which she enjoys, and has done some artwork for my office.” Margie has been able to participate in many activities that she thought she would never again be able to perform. Doing routine household chores such as vacuuming and washing dishes are a joy for her. She enjoys sewing and crafts, along with getting lots of exercise. Margie likes to work out on her exercise machine and walks twenty minutes nearly every morning on her treadmill. Margie searched for an answer to her question and, by connecting with many individuals who were committed to helping her, was successful in finding the answer. Margie, now that you have found the answer, do not look back…just keep walking.

Dr. Miller states, “Margie is doing

extremely well, and is one of the

most motivated and grateful patients

in my practice. She has returned to

a functional lifestyle, and is active

in her church and civic affairs. She

has also returned to various types of

crafts which she enjoys, and has done

some artwork for my office.”

12

Biomet14%

2001 Reconstructive Device Market Shares—United States

$2.52 Billion

Zimmer19%

J&J/Depuy23%

Smith & Nephew8%

Sulzer Medica6%

Other7%

Stryker/Howmedica23%

Biomet’s corporate headquarters is located in Warsaw, Indiana, which is known as the orthopedic capital of the world. Biomet’s campus also houses the Company’s largest manufacturing facility and the sales, marketing and distribution unit, Biomet Orthopedics, Inc. This location encompasses approximately 345,000 square feet devoted to manufacturing, distribution, research and development, and office space. The 1,100 Team Members at this location primarily focus on orthopedic reconstructive device products and instrumentation, internal fixation devices for the treatment of trauma cases, and numerous biomaterials products. In addition, Biomet Orthopedics has an independent, commissioned salesforce of 448 service-oriented sales representatives, an increase of 12% over last fiscal year.

A growth driver in Biomet Orthopedics’ total hip segment is the M2a™-Taper Metal-on-Metal Articulation System. This all-metal hip system is designed for young, active patients who require an implant that will meet their more demanding and long-term needs. This system demonstrates a 20 to 100-fold reduction in the amount of particulate generated in comparison to conventional metal-poly systems in simulator studies. Its unique design allows the M2a™ system to be utilized with the majority of Biomet’s femoral components, giving the surgeon total flexibility in treating the arthritic hip.

Biomet Orthopedics also recently introduced M2a™-RingLoc Liner Options. The M2a™-RingLoc Liner combines the technology of metal-on-metal articulation with Biomet’s proven RingLoc® acetabular technology. Biomet’s first RingLoc® Acetabular Components were introduced in 1992 and incorporated ArCom® molded polyethylene, the industry’s first improved polyethylene with long-term clinical results. ArCom® molded polyethylene has demonstrated a 40% reduction in wear compared to standard polyethylene. Biomet Orthopedics continues to explore and develop advanced hip articulating systems, such as the C2a™ Ceramic-on-Ceramic Articulation System, which is currently in clinical studies in the United States.

Biomet•Orthopedics

Biomet Orthopedics introduced 22 new products during fiscal year 2001. Products pictured (clockwise) are the M2a™-RingLoc Acetabular Component, the M2a™-Taper Metal-on-Metal Articulation System, the Repicci II® Unicondylar Knee, two components of the Exact™ Hip Instrumentation System and the Ascent™ Revision Knee System.

13

Clinical results for Biomet Orthope-dics’ superior cementless hip stems are unmatched in the industry. Notwithstanding the superb clinical results documented for Biomet’s cementless hip stems, only one available cemented hip in the world can claim proven clinical success for over 35 years, namely, Biomet Orthopedics’ Stanmore™ Modular Hip System. The Stanmore™ System, initially developed by Biomet’s OEC operations in Europe, features its original geometry, surface finish and material.

Biomet Orthopedics recently intro-duced the Exact™ Hip Instrumenta-tion System, which offers surgeons a common set of instruments for the Company’s hip systems. The Exact™ System provides unparalleled intraoperative flexibility and familiarity for use in all primary and revision situations. It is an “intra-family” instrumentation system and is designed with the most advanced engineering technology available today.

In addition to the Company’s advances in hip products for primary procedures, new revision hip products are equally important to Biomet’s future. The 2001 revision products market in the United States is estimated to be $345 million and growing approximately 15% per year. Further augmenting the Company’s broad line of revision products are two new products introduced this fiscal year, the PLR™ Proximal Loading Revision Hip System and the Patriot™ Modular Acetabular Cage. The goal of the PLR™ revision stem is to create stable, long-term fixation in hip reconstructive situations where proximal bone is missing or cavitated. The Patriot™ Acetabular System is the first protrusio cage with modular augments to allow the surgeon to fit the product to the patient and maintain desired anatomic positioning.

Biomet’s newest revision knee system, the Ascent,™ offers multiple modular options to surgeons, providing the ability to mix and match components to fit the unique anatomical needs of patients. Various sizes for both length and diameter of the stem, as well as augmentation blocks and wedges, compensate for bone defects common in revision surgeries. Additional options are available for intraoperative decisions with regard to constrained bearing or posterior stabilization needs. The Ascent™ System capitalizes on more than twenty years of clinical experience by incorporating design features of proven Biomet knee designs, such as the Performance® Total Knee System.

An example of one of the many Biomet Orthopedics knee implants with excellent long-term clinical results is the Anatomic Graduated Component (“AGC®”) Total Knee. The AGC® Knee System was introduced in 1983 and was the first knee to offer cobalt chrome construction in combination with titanium alloy porous coating. The AGC® Knee was also the first to provide complete femoral and tibial interchangeability. In 2000, the Swedish Knee Registry doc-umented the AGC® Knee as having one of the lowest revision rates of all knee implants in the Registry.

The Repicci II® Unicondylar Knee experienced strong market accep-tance during fiscal year 2001. The Repicci II® System utilizes a min-imally-invasive approach and is

Primary Cementless Hip Stem Revision Rates: 10 Year Follow-Up*

(% of Cases)

0%

5%

10%

15%

20%

Bi-M

etric

Tape

rloc

Tape

rloc

Mal

lory

-Hea

d

Biomet

Competitor A

Competitor B Competitor C

0.0%0.8% 1.0% 1.1%

2.0% 2.0%2.7% 3.0%

5.7%

8.6%

12.0%

1.0%

7.0% 7.0%

9.2%

17.1% 16.8%

5.0%

Primary Total Knee Replacement Revision Rates: 10 Year Follow-Up*

(% of Cases)

0%

5%

10%

15%

20%

AG

C

AGC

AGC

Biomet

Competitor A

Competitor B

Competitor C

1.6%

4.0% 4.0%

0.0%

1.3% 1.7%

3.2%

4.9%6.0%

11.0%

16.0%

4.8%

6.1% 6.5%

10.1%

13.0%

1.9%

4.0%

5.9%

7.4%

* These charts are the result of an internal compilation of published or publicly-presented clinical results. Numbers reflect performance of various products. Specific references will be provided upon request.

14

Biomet•Orthopedics

Displayed in this photograph (clockwise) are the new VHS® Supracondylar Plate and the VHS® Hip System. New upper extremity products for Biomet Orthopedics include the Copeland™ Humeral Resurfacing Head and the Discovery™ Elbow.

indicated for patients where osteoarthritis is confined to only one compartment of the knee, typically younger patients. As experience in the procedure has progressed, the instrumentation has evolved to become more accommodating to the smaller incision. When performed on patients whose arthritis has not become too advanced, this procedure has the potential to offer years of pain relief prior to the need for conversion to a total knee replacement.

The Biomet® Offset Tibial System was introduced at the end of fiscal year 2001. This product is designed to allow the surgeon the ability to fit a component into an abnormally aligned tibia. The Biomet® Offset Tibial System has a unique tibial tray design that allows the surgeon to custom-fit specific tibial deformities for both primary and revision knee replacement procedures.

The Biomet® Oncology/Salvage System (“OSS”) was also introduced at the end of this fiscal year. This expansive system builds upon the features of the very successful Finn® Rotating Hinge Knee. The OSS was designed for patients who have significant bone loss due to multiple revision procedures, deficient ligaments or bone tumors. The OSS is designed for the most difficult cases where surgical options historically would be extremely limited. These modular components may be combined to create numerous replacement systems, including one that incorporates a total hip and a total knee together in one system.

New shoulder and extremity products include the Absolute™ Bi-Polar Shoulder, the Copeland™ Humeral Resurfacing Head, the Bio-Modular® Choice Shoulder System and the Discovery™ Elbow System. The Absolute™ Bi-Polar Shoulder is a new version of Biomet’s Bi-Angular®/Bi-Polar Shoulder. With 10-year clinical results in the United Kingdom, the Copeland™ Humeral Resurfacing Head is scheduled to be released to the salesforce in the United States during the first quarter of fiscal year 2002. This product was developed to minimize bone removal in shoulder cases where the bone quality is adequate and only the articular cartilage and joint surface have been destroyed due to osteoarthritis or trauma. Scheduled to be released during the second quarter of fiscal year 2002, the Bio-Modular® Choice Shoulder System will have additional humeral head styles to aid in rotator cuff deficiencies and will include updated instrumentation. The Discovery™ Elbow System is a total elbow

15

replacement utilizing a molded bearing of ArCom® polyethylene. Its revolutionary hinge mechanism reduces the mechanical stresses seen in simple hinged elbow implants.

On June 1, 2000, Biomet obtained distribution rights in the United States to Palacos® bone cement from the Biomet Merck joint venture. Marketed in combination with the Optivac® Vacuum Mixing System, Palacos® has experienced considerable success. Palacos® bone cement has the lowest revision rate of leading bone cements in the Swedish Hip Study, which followed cases encompassing 169,419 primary hip procedures and 13,561 revisions performed since 1979.

New internal fixation products include the Ally™ Monofilament Cerclage System and the VHS®

Supracondylar Cable Plate. The Ally™ Monofilament Cerclage System is primarily used for the reattachment of the greater trochanter during hip surgery. The VHS® Supracondylar Cable Plate is designed for fixation of difficult distal femoral and subtrochanteric fractures. This product utilizes the vari-angle design feature that is offered in the VHS® Vari-Angle Hip Screw and can be adjusted intraoperatively. As a result, both of these vari-angle products reduce operating room time and provide an 80% reduction in inventory requirements for the hospital. Other internal fixation products currently receiving customer attention are the Biomet® Ankle Arthrodesis Nail System, the Low Profile Tibial Nail, and the ReUnite™ resorbable products specifically for foot, ankle, and hand applications.

Biomet’s research and development team is actively involved with a variety of biomaterials projects. Resorbable polymers and ceramics are being used to design better temporary implants for various craniofacial, dental, orthopedic, sports medicine and spinal applications. Biomet has forged the way in resorbable polymeric technology with various devices based on its patented LactoSorb® material. The primary advantage of resorbable fixation devices is the elimination of a second procedure to remove the implant after the fracture heals. The quest for improved polymeric formulations with enhancements, such as longer strength retention and osteoconductive properties, is underway. Devices fabricated from these formulations have the potential to not only stabilize the fracture site, but assist natural physiological chemistry to produce bone tissue to replace the implant.

As modern medicine enters the twenty-first century, more emphasis is being placed on finding ways to help the body heal itself through natural processes. When presented with a patient having a bony defect, such as a fractured bone or bone loss due to removal of a tumor, the surgeon often removes a portion of bone from the patient’s iliac crest (pelvis) or rib to use as a graft (autograft) to induce healing in the defect. To eliminate the additional pain at the graft site and the costs associated with the second surgical procedure, Biomet is developing novel bone graft substitute materials such as Calcigen™ S (calcium sulfate) bone substitute and Calcigen™ NaP (calcium sodium phosphate) bone substitute. Both products are involved in ongoing pre-clinical studies for orthopedic indications and are not yet approved in the United States. Appropriate regulatory submissions have been filed with the FDA. During the third quarter of fiscal year 2001, these bone substitute materials were released for sale in Europe and Canada.

In May 1999, Biomet and Selective Genetics, Inc. formed an alliance to develop gene therapy-based products for musculoskeletal repair indications, creating the world’s largest medical device and gene therapy collaboration. Products to be developed through this alliance include spinal fusion, fracture repair, bone void filling, and tendon and ligament repair devices. Pre-clinical studies are showing promise in the effective stimulation of bone formation.

As an adjunct to its broad product offering, Biomet also pioneered the concept of meeting surgeons’ needs through patient education and outcomes collection. Known as Health Care Initiatives (“HCI”), this new department was created to assist surgeons’ medical practices and hospitals by providing them with valuable practice enhancement tools and important patient feedback. Today, HCI has expanded to include such services and programs as state-of-the-art internet-based outcomes data collection, patient education via the internet, resident and fellow placement, and specialized patient education programs. Every surgeon and hospital that utilizes the programs can benefit from a team of dedicated individuals driven to provide a proven service designed to educate patients; improve patient care, treatment and satisfaction; and streamline the surgeon’s or hospital’s practice. HCI has successfully implemented its programs in over 2,400 locations worldwide, ensuring a successful future for surgeons in providing enhanced services to patients spanning the globe.

16

Biomet Merck is the joint venture formed in January 1998 between Biomet and Merck KGaA. The joint venture continues to strengthen its position in the estimated $3 billion European musculoskeletal products market. Biomet Merck, headquartered in Zwijndrecht, The Netherlands, is the fourth-largest orthopedic company in Europe with an estimated 9% market share. Its facilities comprise approximately 550,000 square feet of manufacturing, warehouse and office space, including a biomaterials research and development facility in Darmstadt, Germany. Biomet Merck’s manufacturing facilities are located in Swindon, England; Bridgend, South Wales; Valencia, Spain; Valence, France; Sjobo, Sweden; Berlin, Germany; and Staegard, Poland. In keeping with the strategy to build strong local relationships and provide superior responsiveness to its customers, Biomet Merck has created four divisions: Joint Replacement, Trauma, Spine, and Cements and Cementing Systems. Each of these divisions is developing a dedicated salesforce to service customers in each European country. Biomet Merck is comprised of 1,360 Team Members, including a direct salesforce of 396 sales specialists. In addition, 56 independent service agencies distribute Biomet Merck’s products throughout Europe.

Biomet Merck introduced a plethora of new reconstructive products during fiscal year 2001. New hip products include the cementless Exceed™ Acetabular Cup, the Scan Classic II Hip System, the Stanmore™ Long Hip Stem, the Advantage® Hip Cup, the Aura II® Hip Stem and the Eternity® Ceramic-on-Ceramic Hip Cup. New knee products include the Dual Articular 2000 Knee System

Biomet•Merck

Soft Goods & Bracing

$540

2001 European Musculoskeletal Products Market

(Biomet estimates in millions)

$3.035 Billion

Reconstructive Devices$1,125

Dental Reconstructive

Implants$335

Fixation$325

Spinal Products$245

Arthroscopy$215

Bone Cements & Accessories

$145

Powered Surgical Equipment

$105

Biomet Merck introduced 20 new products during fiscal year 2001. Shown are several of the new products, including (clockwise) two Stanmore™ Long Hip Stems, Aura II® Hip Stem, Advantage® Hip Cup, Oxford® Unicompartmental Knee and the Oxford® TMK (Total Meniscal Knee).

17

indicated for revision surgeries and difficult primary procedures, the RHK (Rotating Hinge Knee), theAlpina® Anterior/Posterior Stabilized Knee System and the Oxford® Unicompartmental Knee Phase 3. This product is a mobile bearing unicompartmental knee recently launched as a line extension to the Oxford® Unicompartmental Knee, which has demonstrated excellent long-term clinical results. Biomet Merck also introduced two new shoulder/extremity products, including an improvement of the Nottingham Shoulder System, as well as the Liverpool Radial Head Replacement, which is an extremity product for elbow reconstruction. The FD Femoral Nail, Bio-Drive Cannulated Screws and new hooks for the Omega 21™ Spinal Fixator were also introduced last year. With an extensive line of state-of-the-art metallic trauma products in combination with biomaterials for trauma indications, Biomet Merck is uniquely positioned to serve its customers with complete solutions for the management of trauma cases.

Biomet Merck regularly introduces new biomaterials-based products from the joint venture’s biomaterials research group located in Darmstadt, Germany. Topkin,® a new biodegradable transparent wound dressing, saves time for the caregiver since it does not need to be removed during the healing period. It also eliminates the patient discomfort experienced with the traditional method of changing bandages. Septocoll™ hemostatic agent is a collagen-based resorbable product with Gentamicin antibiotic. Launched in most European countries last year, the Septocoll™ product was well accepted in the market.

Biomet Merck enjoys a leading position in the development and marketing of bone substitute materials in Europe. Endobon® Hydroxyapatite Bone Substitute Material demonstrates ten years of clinical results, which differentiates it from other bone substitute materials. Additionally, Biobon® Bone Substitute, an injectable and resorbable calcium phosphate material, has been released in all major markets in Europe.

ScandiMed, a Biomet Merck company in Sweden, focuses its efforts in the field of bone cements and cementing systems. Biomet Merck continues to expand its product portfolio with unique products such as the Palamix® Bone Cement System, Palamed® and Copal® bone cements. The Palamix® System provides more convenient vacuum mixing as the powder component is pre-packaged in the mixing system. Palamed® bone cement combines the benefits of high-quality cement with improved handling characteristics and rapid setting. Copal® bone cement contains a combination of Gentamicin and Clindamicin antibiotics and is uniquely indicated for revision surgeries. As an adjunct to Biomet Merck’s broad line of bone cement products, the joint venture established “Cement University” in combination with the “bonecement.com” interactive website. This combination provides a complete training and educational program in modern cementing techniques for surgeons and nurses.

International – Rest of the WorldWith the establishment of offices in Japan, Korea and Argentina during fiscal year 2001, Biomet Orthopedics’ International Rest of World Division now employs 173 Team Members in its direct operations in nine major markets within North America (excluding the United States), Latin America and Asia Pacific. During fiscal year 2001, sales from our direct operations in Australia, Canada, Chile, Mexico, New Zealand and Puerto Rico all achieved record results. Outside the United States, Biomet International occupies office and warehouse facilities totaling approximately 48,000 square feet, while its management team is based in Warsaw, Indiana. The Company plans to continue its marketing efforts of its flagship international products with a focus on the minimally-invasive Repicci II® and Oxford® Unicondylar Knee Systems, the Maxim® and the AGC® Total Knee Systems, the Lateralized Mallory-Head® Hip System, and the M2a™ Metal-on-Metal and the C2a™ Ceramic-on-Ceramic Hip Articulation Systems.

Biomet Orthopedics has been active in the Japanese market for almost twenty years utilizing a third-party distributor. In August 2000, Biomet Orthopedics opened a direct office in Tokyo, the largest city in Japan with a population of approximately 45 million people. Biomet plans to open a second facility in Osaka, the second largest city in Japan with an estimated 24 million people. It is estimated that over 10,000 registered orthopedic surgeons in Japan treat patients with musculoskeletal disorders. The orthopedic market in Japan is estimated to be $1.1 billion and the Company is confident that a direct presence will provide greater sales penetration in this attractive market.

18

EBI Salesforce—United States

0

100

200

300

400

500

Fiscal Years 1993–2001322% Increase

EBI, L.P. (“EBI”), headquartered in Parsippany, New Jersey, has evolved from a small company specializing in the treatment of problem fractures to one of Biomet’s largest strategic business units armed with an array of products used in electrical bone growth stimulation, external fixation, spinal fusion and sports medicine (softgoods and bracing) applications. EBI’s largest facility, encompassing 165,700 square feet, houses manufacturing, distribution and administrative functions in Parsippany. Also located in New Jersey, the Allendale electronic assembly facility is 30,000 square feet and supports the SpinalPak® and OrthoPak® products. EBI’s softgoods and bracing facility, located in Marlow, Oklahoma, is 51,500 square feet and the Puerto Rico assembly plant is 34,700 square feet in size. The total area for all four locations is 281,900 square feet. EBI has a team of approximately 1,100 individuals, including a direct salesforce of 422 sales representatives. Internationally, EBI’s products are distributed primarily through independent dealer organizations and Biomet affiliates.

EBI leads the electrical bone growth stimulation market with over 70% market share in this $135 million market segment within the United States. EBI also is the market leader in the external fixation market segment with over 30% of the $140 million domestic external fixation market. In addition, EBI is gaining recognition for its growth in the $1.1 billion spine market and its development of innovative spinal products and instrumentation concepts. EBI is the fourth-largest company in the burgeoning spine market in the United States with approximately 9% market share. Rounding out EBI’s product line, the Support-On-Site (“S.O.S.™”) stock and bill program has contributed strong results to EBI’s softgoods and bracing product line. EBI controls approximately 9% of the $455 million domestic softgoods and bracing market segment.

EBI began a clinical trial in 1975 with its initial product, a non-invasive medical device for the treatment of patients with problem fractures. The world’s first non-invasive bone growth stimulator, the EBI Bone Healing System,® was introduced four years later. Since 1979, the EBI Bone Healing System® has been prescribed by 39,000 surgeons treating 292,000 patients and is indicated for nonunion fractures, failed fusions, and congenital pseudarthrosis. The EBI Bone Healing System® has been shown to promote bone growth and heal fractures by producing electrical impulses called Pulsed Electromagnetic Fields (PEMFs). Over 250 clinical papers have been published exhibiting successful patient outcomes for this technology. Additionally, over 300 basic scientific research studies have been published supporting EBI’s proprietary PEMF signal as an effective method for promoting fracture healing. Expansion of EBI’s bone growth stimulation technologies continues to be a priority, as demonstrated by the recent introduction of three new products. These products include the enhanced noninvasive EBI Bone Healing System® Model 1026, as well as the EBI OsteoGen™-D 40/M Mesh Cathode and the EBI OsteoGen™-D 40/S Straight Cathode, which are implantable devices providing direct current stimulation indicated for nonunion fractures. In addition, the non-invasive OrthoPak® Bone Growth Stimulation System was added to EBI’s broad product line through the Company’s acquisition of Biolectron, Inc. in September of 2000. EBI continues to expand and improve upon its core line of bone growth stimulation products for the treatment of recalcitrant fractures.

EBI has been servicing its customer’s needs with external fixation devices since 1983. External fixation is indicated to immobilize fractured bones when traditional casting is not a viable solution. Several new external fixation devices were recently introduced including the OptiROM® Elbow Fixator, the Vision® System Components, the pre-packaged sterile Wristfix® Distal Radius Fixator and deformity clamps for the DynaFix® Rail System.

EBI currently offers both implantable and non-invasive options for spinal fusion stimulation treatment. An implantable spinal fusion stimulation device was developed as a strategic evolution from EBI’s long-term clinical success with electrical stimulation for long-bone fractures. In 1990,

EBI

19

2001 Spinal Product Market Shares—United States

$1.1 Billion

Synthes-Stratec15%

EBI9%

Other17%

J&J/Depuy/Acromed

26%

Medtronic Sofamor Danek

33%

EBI first entered the spine market with the introduction of the SpF® Spinal Fusion Stimulation System for lumbosacral fusion employing direct current stimulation. In 1994, the SpF® XL series was launched, providing a product with the capability of delivering multi-level fusion stimulation for up to five levels. Several model enhancements of the implantable system have been developed to address specific fusion applications since its initial introduction. The Biolectron acquisition provided EBI with the SpinalPak® non-invasive stimulation system. The SpinalPak® System offers surgeons a patient-friendly device for utilization when non-invasive stimulation is the appropriate option. EBI’s expanded salesforce now has a complete spinal stimulation product line to meet surgeons’ needs in the operating room and office setting.

EBI also participates in the fast-growing spinal hardware market segment by offering an expanding variety of product solutions. The most recent addition to the spinal fixation product line is the EBI VueLock™ Anterior Cervical Plate System. This titanium alloy system features a unique, open design, which allows for enhanced intra-operative and post-operative visualization of the bone graft site. Other notable spine products contributing to EBI’s growth in the spine segment include the SpineLink™ Intrasegmental Fixation System, the SpineLink™ Anterior Cervical Spinal System, the Omega 21™ Spinal Fixation System, and the VueCath® Spinal Endoscopy System.

The Support-On-Site (“S.O.S.™”) stock and bill program enables EBI’s leading sports medicine physicians to dispense softgoods and bracing products at the time and place of treatment, facilitating total patient care. The S.O.S.™ program handles all of the details of softgoods and bracing product delivery, stocking, billing and follow-up. EBI’s sales representatives concentrate on product delivery and reimbursement, while the physicians focus on patient care.

EBI delivers “Excellence By Innovation” through its fracture management, spine systems and sports medicine product lines. Connecting with its customers and their patients allows EBI to offer technologically-advanced options which result in optimum patient outcomes.

EBI expanded its product line with 29 new products during fiscal 2001. Shown (clockwise) are the SpinalPak® Fusion Stimulation Device, the VueLock™ Anterior Cervical Plate System, the EBI OsteoGen™-D 40/S Straight Cathode and the OptiROM® Elbow Fixator.

20

Located in Palm Beach Gardens, Florida, Implant Innovations, Inc. (“3i”) is a dental implant manufacturer and distributor, which was founded in 1987. 3i offers a breadth of restorative and regenerative technologies complemented by education and development support for clinicians and their patients. Based in a manufacturing, distribution and administrative facility that is 80,000 square feet in size, 3i employs 461 Team Members in the United States, including 52 direct sales representatives. 3i is the second largest manufacturer in the $250 million domestic market and the third largest competitor in the $740 million worldwide market for dental reconstructive implants. 3i’s worldwide market share is approximately 16% for dental reconstructive implants and regenerative products. In international markets, 3i distributes its products through approximately 50 direct sales representatives in Brazil, Canada, France, Germany, Mexico, Scandinavia, Spain, Switzerland and the United Kingdom. In other countries throughout the world, 3i sells its products through 24 independent distributors. 3i employs a total of 143 Team Members outside the United States.

Dental reconstructive implants provide a natural appearance and can be a permanent solution for the replacement of missing teeth. Developed over thirty years ago, a dental reconstructive implant consists of a small titanium screw or cylinder that is surgically implanted into the mandible or maxilla. The implant replaces the root of the missing tooth and provides an anchor for the new artificial tooth. Dental reconstructive implant therapy is an elective procedure with current market penetration of less than 6%, providing significant opportunities for growth.

Implant Innovations

ITI Straumann14%

Dental Reconstructive Implant Market Shares—United States

$250 Million

Other8%

3i21%

Nobel Biocare29%

Lifecore Biomedical

5%

FriaDent4%

Sulzer Dental19%

During fiscal year 2001, 3i launched 7 new products. New products photographed are (clockwise) Simple Logic™ Restorative Components (4 components), the ZiReal™ Post and the TG OSSEOTITE® Implant. Also pictured is the OSSEOTITE® Dental Reconstructive Implant.

21

OSSEOTITE® dental reconstructive implants, as well as recent introductions such as the Simple Logic™ System, the ZiReal™ Post and Ossix™ resorbable collagen membrane, have been the primary drivers for 3i’s significant growth in fiscal year 2001. 3i continues to invest in sales and marketing infrastructure, as demonstrated this year by the formation of a European business unit and a new subsidiary in Brazil. The Company believes these initiatives, in addition to 3i’s salesforce expansion efforts, will support 3i’s continued worldwide market penetration.

OSSEOTITE® dental reconstructive implants continue to perform with unmatched success rates and are proven by more human histology and clinical studies than any other micro-textured dental reconstructive implant. OSSEOTITE® products are shown to be the most predictable dental reconstructive implants available with better integration in poor bone and earlier loading capability in good bone.

Intended to simplify the restorative process in single-stage implant therapy, the Simple Logic™ System is a new line of restorative components unique to TG OSSEOTITE® products. This implant solution is specifically designed for maximum simplicity and efficiency, with no compromise in outcomes or aesthetics. Another new dental reconstructive product, the ZiReal™ Post, offers a highly aesthetic restorative option. This zirconium-based product provides the natural translucence of ceramic, but with far greater strength, durability, and resistance to cracking than conventional aluminum oxide ceramic abutments. As part of the Prep-Tite™ Abutment Series, the ZiReal™ Post utilizes conventional crown and bridge techniques that clinicians are familiar with, while meeting the need for an aesthetic solution.

In April 2001, 3i announced a strategic alliance with Colbar Research & Development, Ltd. (“Colbar”) located in Ramat-Hasharon, Israel. Founded in 1994, Colbar is a privately-held company that focuses on the development of biotechnology products. Colbar developed a unique, patented technology for the production of collagen-based products. 3i now holds the exclusive distribution rights for Ossix,™ a resorbable collagen membrane used in guided bone regeneration, which offers superior handling characteristics and predictable clinical outcomes. The Ossix™ membrane resists degradation for a full six months, and then gradually resorbs within eight to ten months.

The Platelet Concentrate Collection System (PCCS™) is a device that is used in the rapid preparation of autologous platelet concentrate. One of the most effective systems available, this compact system maximizes platelet concentration, yield and viability from a small sample of blood. 3i recently received clearance from the FDA for use of the platelet concentrate in autograft and allograft bone grafting procedures. The PCCS has the potential to be used in a broad array of clinical indications.

In an effort to help customers develop their practices, 3i provides a wide spectrum of educational course offerings and specific practice enhancement programs. Innovation, proven in its products and services, drives the connection between 3i and its customers to bring about reliable outcomes for patients.

3i16%

Worldwide Dental Reconstructive Implant Market Shares

$740 Million

Nobel Biocare31%

ITI Straumann19%

Other12% Lifecore

4%

FriaDent7%

Sulzer Dental11%

22

Other18%

A-O Synthes34%

Lorenz Surgical22%

Stryker Leibinger

26%

2001 Craniomaxillofacial Fixation Market Shares—United States

$130 Million

Founded in 1966, Walter Lorenz Surgical, Inc. (“Lorenz Surgical”) has been a dedicated technological leader in the craniomaxillofacial sector for 35 years. Originally a distribution facility, Lorenz Surgical expanded its corporate headquarters located in Jacksonville, Florida, to include research and development capabilities and a state-of-the-art manufacturing operation approximately five years ago. Formerly 22,500 square feet, the facility is currently 82,500 square feet in size. A total of 159 Team Members are based in Jacksonville and 90 independent, commissioned sales representatives throughout the United States service Lorenz Surgical’s customers. Lorenz Surgical markets its products internationally through direct operations in Germany and Australia and a growing international network of independent sales representatives based in over 40 distribution organizations. Lorenz Surgical is a market leader in the $130 million craniomaxillofacial market segment in the United States with approximately 22% market share.

Lorenz Surgical remains committed to its traditional line of titanium craniomaxillofacial fixation components and associated surgical instrumentation. In addition, Lorenz Surgical is devoted to the ongoing development of new biomaterials technology in the craniomaxillofacial market segment. Lorenz Surgical is also currently developing a myriad of internal and external craniomaxillofacial distraction systems. New advancements in craniomaxillofacial treatment have led to the recent development of products such as the LactoSorb® Resorbable Fixation System, Mimix™ Bone Substitute Material and the Lorenz Total TMJ Replacement System.

In February 1996, Lorenz Surgical became the first worldwide company to introduce a resorbable line of products for craniomaxillofacial indications. Under the registered trademark LactoSorb,® resorbable materials have been utilized in more than 40,000 craniomaxillofacial cases to date. At initial placement, the LactoSorb® system’s strength is comparable to that of titanium plating and it retains 70% of its initial strength for approximately two months while bone healing occurs. The LactoSorb® system is the only resorbable craniomaxillofacial fixation system that completely resorbs within approximately one year. During fiscal year 2001, Lorenz Surgical introduced three new LactoSorb® products, as well as eight product enhancements to the resorbable product line under the LactoSorb® SE (System Enhancement) name. The three new resorbable products are the LactoSorb® Alveolar Distractor, the LactoSorb® Ethmoid Stent, and the LactoSorb® LeFort III Distractor. Resorbable products provide surgeons with an alternative to traditional titanium products, eliminating a second surgical procedure to remove the metal implants used in conventional treatment. As a result, these products are ideal for addressing pediatric craniomaxillofacial procedures.

In November 1999, Lorenz Surgical introduced Mimix™ synthetic bone substitute material, which is comprised of tetra-calcium phosphate/tri-calcium phosphate material and is used for the repair of cranial defects. Mimix™ bone substitute offers optimal handling properties and achieves 90% of compressive strength during the first hours of setting. Within 18 months of its launch, the Mimix™ product achieved more than 20% market penetration in the craniomaxillofacial bone substitute material market.

The Lorenz Total TMJ Replacement System (“Lorenz TMJ”) is a joint replacement product for the treatment of patients with temporomandibular joint syndrome. This product has received outstanding market response and is currently being marketed in Argentina, Australia, Brazil, England, South Africa and Sweden. In the second quarter of fiscal year 2002, the Lorenz TMJ will be introduced in Germany, Italy, and Spain. Regulatory approval for the Lorenz TMJ is currently in process in the United States where this product is in the sixth year of a clinical trial approved by the FDA. Over 200 implants have been successfully implanted in 140 patients in the United States. The Lorenz TMJ is an excellent example of product innovation that secures a leadership position for Lorenz Surgical in the craniomaxillofacial market.

Lorenz Surgical/Arthrotek

23

Arthrotek, Inc. (“Arthrotek”) principally competes in the $635 million domestic market for arthroscopy products with an estimated 4% share of this market. Arthrotek is also beginning to penetrate the $215 million European arthroscopy market. Arthrotek’s strong growth is being driven by procedure-specific arthroscopy products and associated instruments, including the LactoSorb® line of resorbable products. Arthrotek’s management team is located in Warsaw, Indiana, with manufacturing sites located in Ontario and Redding, California. The facility in Ontario is 35,400 square feet and the Redding site is 14,400 square feet. Arthrotek employs 80 individuals and distributes its products through approximately 200 Biomet/Arthrotek sales representatives, representing 64 independent distributorships. Of these, approximately 43 sales representatives focus exclusively on arthroscopy products. Arthrotek is in the process of further developing and expanding its network of independent distributors and associates.

Arthrotek’s primary product in the procedure-specific arthroscopy market has been the combination Bone Mulch™ Screw/WasherLoc™ Device, which is utilized to reconstruct torn anterior cruciate ligaments. In addition, LactoSorb® resorbable products are playing an increasingly larger role in knee and shoulder arthroscopic fixation procedures. New LactoSorb® products introduced during fiscal 2001 include the LactoScrew™ Anchor, the Meniscus Screw, the RC Pop Rivet, and the Revision Gentle Threads™ Interference Screw. On January 1, 2001, the CurvTek® Bone Tunneling System was added to Arthrotek’s product line through the Biolectron acquisition. This unique system is designed to create curved tunnels in bone for suture tie-down in the reattachment of soft tissues to bone in shoulder and hip procedures. The expansion of its product line, through the addition of innovative products, enables Arthrotek to build an increasing presence in the worldwide arthroscopy market.

During fiscal year 2001, Lorenz Surgical introduced 14 new products, while Arthrotek introduced 9 new products. Exhibited in the photograph (beginning at upper left) are Lorenz Surgical’s LactoSorb® Alveolar Distractor and LactoSorb® Ethmoid Stent, followed by Arthrotek’s LactoScrew™ Anchor (shown with inserter), WasherLoc™ Tibial Graft Fixation Device, Bone Mulch™ Screw and CurvTek® Bone Tunneling System. Also shown are Lorenz Surgical’s LactoSorb® LeFort III Distractor and the Lorenz Total TMJ Replacement System.

24

Anthony L. Fleming

Team Leadership

Prof. Dr. Bernhard ScheubleChairman and Chief Executive Officer of Merck KGaADarmstadt, Germany(pharmaceutical company)

L. Gene TannerVice Chairman of the Board NatCity Investments Inc. (investment banking)

Biomet, Inc. OfficersDane A. Miller, Ph.D.President and Chief Executive Officer

Niles L. NoblittChairman of the Board

Jerry L. FergusonVice Chairman of the Board

Garry L. EnglandSenior Vice President – Warsaw Operations

Daniel P. HannSenior Vice President, General Counsel and Secretary

Gregory D. HartmanSenior Vice President – Finance, Treasurer and Chief Financial Officer

Charles E. NiemierSenior Vice President – International Operations

Joel P. PrattSenior Vice President

James R. PastenaVice President

Kent E. Williams Vice President

Kenneth J. Beres, M.D.Vice President – Regulatory Affairs

Greg W. SassoVice President – Corporate Development and Communications

Darlene K. WhaleyVice President – Human Resources

SubsidiariesArthrotek, Inc.Joel P. PrattPresident

David A. Nolan, Jr.Vice President – Sales and Marketing

Biomet Manufacturing Corp.R. Craig BlaschkeVice President – Biomaterials Technology

Richard J. Borror, Jr. Vice President – Manufacturing

Anthony L. FlemingVice President – Research and Development

Biomet Orthopedics, Inc.Thomas R. AllenVice President – International Operations – The Americas and Asia Pacific

James W. HallerVice President – Finance

Board Of DirectorsDane A. Miller, Ph.D.President and Chief Executive Officer

Niles L. NoblittChairman of the Board

Jerry L. FergusonVice Chairman of the Board

Daniel P. HannSenior Vice President, GeneralCounsel and Secretary

C. Scott Harrison, M.D.Orthopedic Surgeon and founder of CCURE

M. Ray HarroffPresident, Stonehenge Links Village Development (real estate development)

Thomas F. Kearns, Jr.Retired Partner, Bear, Stearns & Co., Inc. (investment banking)

Jerry L. MillerPresident, Havirco, Inc. (private investment management)

Kenneth V. MillerVice President, Havirco, Inc.(private investment management)

Charles E. NiemierSenior Vice President – International Operations

Marilyn Tucker QuaylePresident and CEO of BTC, Inc.(private consulting firm)

Dane A. Miller, Ph.D.

Niles L. Noblitt

Jerry L. Ferguson

Daniel P. Hann

C. Scott Harrison, M.D.

M. Ray Harroff

Thomas F. Kearns, Jr.

Jerry L. Miller

Thomas R. Allen

Barreld J. Doedens

Richard J. Borror, Jr.

Joel P. Pratt

Kenneth J. Beres, M.D.

James W. Haller

R. Craig Blaschke

25William C. KolterVice President – Marketing

David L. MontgomeryVice President – Sales

EBI, L.P.

James R. PastenaPresident

James M. BechtoldVice President – Reimbursement Affairs

Salvatore C. BraccoVice President – Sales

Peter S. DambachVice President – Finance

Bartolomé GamundiVice President – Manufacturing

Nicholas L. GounarisVice President and Division Counsel

John S. MooreVice President – Development

Dan L. PageVice President – Research

Marshall L. PerezVice President – Marketing

Implant Innovations, Inc. (3i)Keith D. BeatyCo-Chairman

Richard J. Lazzara, DMD, MScDCo-Chairman

Barreld J. DoedensPresident

John T. AmberVice President – Research and Development

Glenn L. CriserVice President and Division Counsel

Lars A. JansonVice President – Global Marketing

Edward G. SabinVice President – Finance and Administration

Steven F. SchiessVice President – Global Sales and Marketing

James W. ScottVice President – Manufacturing

Sergio GilManaging Director – European Business Unit

Walter Lorenz Surgical, Inc.Kent E. WilliamsPresident

Mike G. AmosVice President – International Sales

James L. CavanaughVice President – Marketing

Joshua J. CroninVice President – U.S. Sales

C. Göran FredriksonVice President – Manufacturing

Stephen M. HerringtonVice President – Research and Development

John T. JenkinsVice President – Finance

Biomet International Ltd.Biomet Argentina S.A.Daniel DecastelliManaging Director

Biomet Australia Pty. Ltd.Tom PrichardManaging Director

Biomet Canada, Inc. James R. WilsonPresident

Biomet Chile, S.A.Pablo MartelliManaging Director

Biomet Korea Co., Ltd.H.D. ChoManaging Director

Biomet Mexico S.A. de C.V.Eduardo GarateManaging Director

Biomet Orthopaedic Ltd. Owen StobartManaging Director

Biomet Orthopedics Inc. Japan Branch Office Mitsuo TamaokiManaging Director

Kenneth V. Miller

Charles E. Niemier

Marilyn Tucker Quayle

Prof. Dr. Bernhard Scheuble

L. Gene Tanner

Gregory D. Hartman

William C. Kolter

David L. Montgomery

James R. Pastena

Greg W. Sasso

Roger P. Van Broeck

Darlene K. Whaley

Kent E. Williams

Garry L. England

26

Subsidiaries (Concluded)

Biomet Orthopedics Puerto Rico, Inc.Luis RodriguezManaging Director

Biomet Merck Joint VentureBioMer C.V.Roger P. Van BroeckChief Executive Officer

Harry NistorDirector – Manufacturing

Frank RobbenChief Financial Officer

Axel von WietersheimChief Operating Officer

Biomet Merck Austria GmbH Joe Henry SchulteManaging Director

Biomet Merck Belgium BVBABart LagaeManaging Director

Biomet Merck CZ, s.r.o. Radmilla FaberovaManaging Director

Biomet A/S (Denmark) Henrik GamsgaardManaging Director

Biomet Merck Deutschland GmbHAndreas SzostakManaging Director

Biomet Merck Finland OyJuha HanninenManaging Director

Biomet Merck France Sarl Pierre BoutinManaging Director

Biomet Merck Hellas S.A. Theologos BotisManaging Director

Biomet Merck Ltd.Robert A. ForsterManaging Director

Biomet Merck Norge A.S. Sigmund GrevstadManaging Director

Biomet Merck Polska Ltd. Marek MlodzianowskiManaging Director

Biomet Merck S.r.lStefano CastagnolaManaging Director

Biomet Merck (Switzerland) GmbHMarc StuckiManaging Director

IQL, S.L.Federico ArrizabalagaManaging Director

Merck Biomaterial GmbHDr. Berthold NiesManaging Director

Multiradix Lda.Antonio Jose RebeloManaging Director

Ortomed B.V.Hans van den BergManaging Director

ScandiMed Implant A.B.Ake KnutssonManaging Director

3i InternationalImplant Innovations do Brasil Ltda.Atilio YamamotoCountry Manager

Implant Innovations Canada, Inc.Rudy HuberCountry Manager

Implant Innovations Europe ApSMats HenningsonCountry Manager

Implantes e Innovaciones Iberica S.L.Pau GarciaCountry Manager

Implant Innovations de Mexico S.A.Xavier AngelesCountry Manager

Implant Innovations Switzerland GmbHMartin GerlachCountry Manager

Implant Innovations U.K., Ltd.Richard BealCountry Manager

Team ManagementBiomet, Inc.Thomas J. BautersDirector – Corporate Taxes

Robert E. DurginAssociate General Counsel

Jack F. HeeterDirector – Human Resources

Bradley J. TandyAssistant General Counseland Corporate Compliance Officer

Biomet Orthopedics, Inc.James S. BabcockDirector – Marketing, Trauma & Extremities

E. Chris ChristeaNortheast Area Vice President

Joseph P. CoenSoutheast Area Vice President

Gregory J. GarberDirector – Flight Operations

Terry G. GeurinkSouthwest Area Vice President

Stuart G. KleopferNorth Central Area Vice President

Eric C. MartinDirector – Corporate Sales

Lance D. PerryDirector – Marketing, Knee Reconstruction

Stephen J. StewartDirector – Sales Administration

John M. SusarabaDirector – Marketing, Hip Reconstruction

Dennis W. WallWest Area Vice President

Biomet Manufacturing Corp.Trevor CracknellDirector – Clinical Research

Troy W. HershbergerDirector – Product Development

Terry D. MartinDirector – Manufacturing Engineering

Kevin T. StoneDirector – Product Development

Samuel W. StutzmanDirector – Materials Management

Mark V. VandewalleDirector – Engineering Services

John J. WagonerDirector – Regulatory Compliance

John R. WhiteDirector – Patient Matched Implants

Rex A. WhiteDirector – Quality Assurance

Daniel E. Williamson Director – Business Development

Team Leadership

27

Income Statement DataYears ended May 31,(in thousands, except per share amounts)

2001 2000 1999 1998 1997 Net sales........................................................................... $1,030,663 $923,551 $830,835 $708,678 $625,958 Cost of sales ..................................................................... 296,063 281,351 262,362 226,829 203,428 Gross profit .................................................................. 734,600 642,200 568,473 481,849 422,530 Selling, general and administrative expenses .................... 374,793 326,618 295,401 256,509 230,240 Research and development expense.................................. 43,020 40,208 38,723 39,731 26,279 Special charges ................................................................. 26,100 11,700 48,447 – – Operating income ........................................................ 290,687 263,674 185,902 185,609 166,011 Other income, net ............................................................ 19,989 17,018 13,899 23,452 8,796 Income before income taxes and minority interest ......... 310,676 280,692 199,801 209,061 174,807

Provision for income taxes................................................ 105,906 99,738 67,317 81,058 64,842 Income before minority interest ................................... 204,770 180,954 132,484 128,003 109,965 Minority interest............................................................... 7,224 7,183 7,458 144 – Net income .................................................................. $ 197,546 $173,771 $125,026 $127,859 $109,965

Earnings per share: Basic............................................................................. $.74 $.66 $.48 $.49 $.42 Diluted......................................................................... .73 .65 .47 .48 .41

Shares used in the computation of earnings per share: Basic............................................................................. 267,915 264,294 261,662 260,330 264,938 Diluted......................................................................... 270,746 267,242 265,815 264,630 268,514

Cash dividends paid per common share ........................... $.07 $.06 $.05 $.05 $.04

Balance Sheet DataAt May 31,(in thousands)

2001 2000 1999 1998 1997 Working capital ................................................................ $ 726,557 $ 608,185 $ 497,010 $483,025 $400,259 Total assets ....................................................................... 1,489,311 1,218,448 1,110,940 879,382 650,230 Long-term obligations, including redeemable preferred stock ..... – – 8,074 7,330 6,935Shareholders’ equity ......................................................... 1,146,186 943,323 795,849 678,311 560,984

Selected Financial data

• All share and per share data have been adjusted to give retroactive effect to the three-for-two stock splits declared on July 9, 2001 and July 6, 2000.

• Amounts after January 1, 1998 include the impact of Biomet Merck. Other acquisitions during the five year period individually and in the aggregate have not been material to the Company’s operating results or financial position.

28

2001 2000 2001 2000 1999 vs. 2000 vs. 1999

Net sales......................................................................... 100.0% 100.0% 100.0% 12% 11%Cost of sales ................................................................... 28.7 30.6 31.6 5 7Gross profit .................................................................... 71.3 69.4 68.4 14 13Selling, general and administrative expenses ................. 36.3 35.3 35.5 15 11Research and development expense................................ 4.2 4.3 4.6 7 4Special charges ............................................................... 2.5 1.3 5.9 n/m n/mOperating income........................................................... 28.3 28.5 22.4 10 42Other income, net .......................................................... 1.9 1.9 1.7 17 22Income before income taxes and minority interest.......... 30.2 30.4 24.1 11 40Provision for income taxes.............................................. 10.3 10.8 8.1 6 48Income before minority interest...................................... 19.9 19.6 16.0 13 37Minority interest............................................................. 0.7 0.8 0.9 1 (4)Net income..................................................................... 19.2% 18.8% 15.1% 14% 39%

n/m – Not Meaningful

The following table shows the percentage relationship to net sales of items derived from the Consolidated Statements of Income and the percentage change from year to year.

Percentage Increase (Decrease)Percentage of Net Sales

Fiscal 2001 compared to Fiscal 2000*

On September 25, 2000, the Company through its EBI subsidiary acquired Biolectron, Inc. for $90 million in cash. The Company accounted for this acquisition as a purchase and the operating results have been consolidated from the date of acquisition. Biolectron’s sales are principally included in the fixation and spinal product categories.

Net Sales – Net Sales increased 12% in 2001 to $1,030,663,000 from $923,551,000 in 2000. Excluding the effect of foreign currency translation adjustments, net sales increased 15%. During the fourth quarter of 2001, the Company adopted Emerging Issues Task Force (“EITF”) 00-10 “Accounting for Shipping and Handling Fees and Costs.” This EITF requires certain shipping and handling fees billed to customers to be recorded as revenue instead of as a reduction of shipping expense. Accordingly, the Company has reclassified amounts billed to customers from cost of sales to net sales for all periods presented, with no effect on net income. All product categories experienced solid growth during the current year. The Company’s reconstructive sales increased 6% (10% excluding the effect of foreign currencies) in 2001 to $614,308,000 from $580,239,000 in 2000. The products experiencing the strongest growth are Biomet’s knee products, including the Repicci II® Unicondylar Knee System and the Ascent™ Total Knee System; 3i’s dental reconstructive implants, including the OSSEOTITE® Dental Reconstructive Implant System; and bone cements and accessories. The domestic introduction of Palacos® bone cement and the Optivac® Vacuum Mixing System was responsible for sales growth of bone cement and accessory products. The Company’s fixation sales increased 12% to $202,152,000 in 2001 compared to $180,336,000 in 2000. Products responsible for this increase are primarily electrical stimulation systems, which include the EBI Model 2100 Bone Healing System® and Biolectron’s OrthoPak® System and Lorenz Surgical’s craniomaxillofacial products, led by the successful introduction of Mimix™ bone substitute material. Spinal product sales increased 68% from $54,119,000 in 2000 to $91,103,000 in 2001. Products experiencing sales growth include EBI’s SpF® Spinal Fusion Stimulation System and Biolectron’s SpinalPak® Spinal Stimulation System, as well as recent introductions of the VueLock™ Cervical Fixation System and the Omega 21™ Spinal Fixation System. The Company’s “other product” sales increased 13% (17% excluding the effect of foreign currencies) to $123,100,000 in 2001 from $108,857,000 in 2000. Products contributing to this growth are Arthrotek’s procedure-specific products and LactoSorb® resorbable products, Biolectron’s CurvTek® Bone Tunneling System and EBI’s softgoods and bracing products. The Company’s United States sales increased 18% during the current year to $722,372,000 from $612,262,000 in 2000. Foreign sales increased 9% in local currencies, however, due to currency exchange rates, the Company reported a 1% decrease to $308,291,000 from $311,289,000 in 2000. In addition to currency exchange rates, foreign sales were negatively influenced by the non-renewal of the distribution agreement with the Japanese distributor of Biomet products during the current year.

Gross Profit – The Company’s gross profit increased 14% in 2001 to $734,600,000 from $642,200,000 in 2000. Cost of sales as a percentage of sales decreased to 28.7% in 2001 compared to 30.6% in 2000. The decrease in cost of sales as a percentage of net sales is a result of a higher growth rate in domestic sales as well as improved manufacturing efficiencies and the inclusion of Biolectron’s products. The Company continues to make improvements in manufacturing processes, including the purchase of newer, more efficient equipment.

Selling, General and Administrative Expenses – Selling, general and administrative expenses increased 15% in 2001 to $374,793,000 compared to $326,618,000 in 2000. As a percentage of sales, selling, general and administrative expenses were 36.3% in 2001 and 35.3% in 2000. The primary factor contributing to this change was an increase in commission

* For purposes of this Management’s Discussion and Analysis, the fiscal period is June 1 – May 31.

Management’s Discussion & Analysis of Financial Condition & results of operations

29

expense on increased product sales. Other factors contributing to the increase were higher staffing costs to expand salesforces worldwide, costs to open a direct operation in Japan, increased amortization of intangibles and the inclusion of Biolectron’s operations.

Research and Development Expense – Research and development expense increased 7% in 2001 from $40,208,000 in 2000 to $43,020,000 in 2001. The increase in research and development expenses in 2001 was mainly due to the increase in research and development personnel and other expenses associated with additional personnel and the increase in new product introductions.

Special Charges – In 2001, the Company recorded a $26.1 million special charge in connection with an appellate court’s decision in the Tronzo Case. In 2000, a special charge of $11.7 million was comprised of $2.7 million of merger costs related to the 3i merger and $9.0 million for the final determination of the interest element of the final judgment in the Orthofix litigation.

Operating Income – U.S. operating income increased 12% to $251,927,000 from $224,385,000 reflecting the growth in sales in this geographic segment and improved operating efficiencies. Non-U.S. operating income was flat at $38,760,000 reflecting primarily the effect of foreign currency translations on reported U.S. dollar results. Overall, operating income increased 10% to $290,687,000 in 2001 from $263,274,000 in 2000.

Other Income, Net – Other income, net increased 17% in 2001 to $19,989,000 from $17,018,000 in 2000. Increased investment income on cash and investments offset by increased interest expense on short-term borrowings was largely responsible for this increase.

Provision for Income Taxes – The provision for income taxes increased to $105,906,000 for 2001, or 34.1% of income before income taxes, compared to $99,738,000 in 2000, or 35.5% of income before income taxes. The decrease in the effective rate was a result of organizational changes implemented last year in the United States and internationally. The Company will continue to be adversely affected by changes in the Puerto Rican local tax structure, which reduces over time the historical U.S. tax benefits from operating in Puerto Rico.

Net Income – The factors mentioned above resulted in a 14% and 12% increase in net income and basic earnings per share, respectively, for 2001 compared to 2000. Net income increased to $197,546,000 from $173,771,000 and basic earnings per share increased to $.74 from $.66.

Fiscal 2000 compared to Fiscal 1999On December 16, 1999, Implant Innovations International Corporation (“3i”) was merged into a subsidiary of the Company through a stock-for-stock exchange in which 11.7 million Common Shares were issued for all of the issued and outstanding shares of 3i. The merger has been accounted for as a pooling-of-interests, and the discussion and analysis that follows reflects the combined results of operations, cash flows and financial condition of the merged operations.

Net Sales – Net sales increased 11% in 2000 to $923,551,000 from $830,835,000 in 1999. Excluding the effect of foreign currency translation adjustments, net sales increased 13%. The increase in net sales reflects the increased demand for the Company’s products, most notably reconstructive devices (including 3i’s dental reconstructive implants), spinal implants, internal fixation and bone healing devices, softgoods and bracing products and arthroscopy products. The Company’s United States sales increased 11% to $612,262,000 in 2000 from $551,443,000 in 1999. The products experiencing strong U.S. growth were Biomet’s knee products, including reconstructive revision systems, 3i’s dental reconstructive implants, EBI’s Bone Healing System® Model 2001, SpineLink™ and Omega 21™ Spinal Fixation Systems, Arthrotek’s arthroscopy products and EBI’s softgoods and bracing products. Foreign sales in local currencies increased by 17%, but due to the currency exchange rates, the Company reported an 11% increase to $311,289,000 in 2000 from $279,392,000 in 1999. Increases in foreign sales of reconstructive devices, EBI’s external fixation products and Lorenz Surgical’s craniomaxillofacial products contributed to this increase. The Company’s worldwide reconstructive device sales increased 11% during 2000 to $580,239,000 from $521,365,000 in 1999. This increase was primarily a result of Biomet’s continued penetration of the reconstructive device market led by revision products, the Repicci II® Unicondylar Knee, the Ascent™ Total Knee System and 3i’s penetration into the dental reconstructive implant market. Fixation sales increased 11% from $162,825,000 in 1999 to $180,336,000 in 2000. EBI’s Bone Healing System® Model 2001 was largely responsible for the increase in fixation product sales. Spinal product sales increased 20% to $54,119,000 in 2000 from $45,125,000 during 1999. The launch of the Omega 21™ Spinal Fixation System in the United States and continued penetration and line extensions of the SpineLink™ Spinal Fixation System contributed to this increase. The Company’s “other product” sales increased from $101,520,000 in 1999 to $108,857,000 in 2000, a 7% increase. Sales of Arthrotek’s LactoSorb® line of resorbable arthroscopic fixation products as well as EBI’s line of softgoods and bracing products were primarily responsible for this increase.

Gross Profit – The Company’s gross profit increased 13% in 2000 to $642,200,000 from $568,473,000 in 1999. This increase was a result of increased sales of higher margin products, including revision products, 3i’s dental reconstructive implants and EBI’s fixation products, and increased in-house manufacturing efficiencies. Cost of sales as a percentage of sales decreased to 30.2% in 2000 compared to 31.3% in 1999. The Company continues to invest heavily in improved, more efficient manufacturing equipment and monitors inventory levels on a consistent basis. As sales continue to grow and new products are introduced, the Company has been able to maintain inventory growth at reasonable levels.

Management’s Discussion & Analysis of Financial Condition & results of operations (continued)

30

Selling, General and Administrative Expenses – Selling, general and administrative expenses were $326,618,000 in 2000 compared to $295,401,000 in 1999, an increase of 11%. As a percentage of sales, selling, general and administrative expenses were 35.5% in 2000 and 35.7% in 1999. An increase in commissions on increased product sales was the primary reason for this increase.

Research and Development Expense – Research and development expense increased 3.8% to $40,208,000 in 2000 from $38,723,000 in 1999. This increase in research and development expenditures was due to continued funding in gene therapy technologies in the musculoskeletal field and increases in arthroscopy and dental reconstructive implant development. The Company understands the importance of research and development and the challenges placed upon companies to be competitive in the marketplace. As such, the Company intends to continue to invest heavily in the development of new products both domestically and internationally.

Special Charges – In 2000, the Company recorded $11.7 million of special charges which consisted of a $9 million charge to reflect the final determination of the interest element of the Orthofix judgment and a $2.7 million charge for merger related costs in connection with the 3i merger. In 1999, the Company recorded $48.5 million in special charges consisting of a $55 million charge to reflect the final judgment against the Company in the action brought by Orthofix, net of $6.5 million in proceeds from 3i’s recovery in a litigation matter.

Other Income, Net – Other income, net increased 22% to $17,018,000 in 2000 from $13,899,000 in 1999. Increased investment income on cash and investments is largely responsible for this increase.

Provision for Income Taxes – The provision for income taxes increased to $99,738,000 for 2000, or 35.5% of income before income taxes, compared to $67,317,000 in 1999, or 33.7% of income before income taxes. The increase in the effective rate is due to Biomet Merck benefiting from a one-time $4.2 million tax credit in 1999. Excluding this credit, the effective rate during 2000 was comparable with prior years.

Net Income – The factors mentioned above resulted in a 39% and 38% increase in net income and basic earnings per share, respectively, for 2000 compared to 1999. Net income increased to $173,771,000 from $125,026,000 and basic earnings per share increased to $.66 from $.48.

Liquidity & Capital ResourcesThe Company’s cash and investments increased to $463,148,000 at May 31, 2001, from $407,268,000 at May 31, 2000. Net cash from operating activities was $190,506,000 in 2001 and $137,828,000 in 2000. The principal sources of cash from operating activities were net income of $197,546,000, non-cash charges for depreciation and amortization of $42,824,0000 and increases in accrued litigation and other liabilities of $26,100,000 and $35,670,000, respectively. This was offset by uses of operating cash in accounts and notes receivable, inventories and deferred federal income taxes of $68,134,000, $37,648,000 and $15,635,000, respectively.

Cash flows used in investing activities were $156,673,000 in 2001 compared to $67,650,000 in 2000. The primary uses of cash for investing activities were purchases of investments, capital expenditures and business acquisitions, most notably Biolectron, partially offset by proceeds from sales and maturities of investments.

Cash flows used in financing activities were $14,835,000 in 2001 compared to a source from financing activities of $14,582,000 in 2000. The primary uses of funds during the current year were a decrease in the unsecured line of credit from a major European bank and a cash dividend of $.06 per share paid to shareholders on July 17, 2000. The primary source of cash from financing activities is proceeds on issuance of shares. On July 9, 2001, the Company announced a cash dividend of $.09 per share payable July 27, 2001 to shareholders of record at the close of business on July 20, 2001. The Company maintains its cash and investments in money market funds, certificates of deposits, commercial paper, debt instruments, mortgage-backed securities and equity securities. The Company’s investments are generally liquid and investment grade. The Company is exposed to interest rate risk on its debt instruments, fixed rate preferred equity securities and mortgage-backed securities.

The Company anticipates that uses of cash in fiscal 2002 for land, buildings and equipment to be at levels at least as high as 2001 and 2000. The Company continues to search for viable acquisition candidates that expand its worldwide presence as well as offer product diversification. The Company expects to spend in excess of $160 million over the next two fiscal years for capital expenditures and research and development costs, including the commitment to Selective Genetics to fund research and development efforts over a ten-year period. Other significant fundings for the coming year include the expansion of the Company’s direct sales operation in Japan; new product introductions, which were approximately 100 over the past year, and additional market penetration in Latin America. Funding of these activities is expected to come from currently available funds and cash flows generated from future operations.

Management’s Discussion & Analysis of Financial Condition & results of operations (concluded)

31

(in thousands, except earnings per share)

1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Year2001Net sales........................................................................... $231,134 $244,361 $267,162 $288,006 $1,030,663Gross profit ...................................................................... 162,966 173,334 192,121 206,179 734,600Net income....................................................................... 48,427 51,798 38,205 59,116 197,546Earnings per share: Basic ............................................................................ .18 .19 .15 .22 .74 Diluted ......................................................................... .18 .19 .14 .22 .73

2000Net sales........................................................................... $213,430 $225,448 $233,659 $251,014 $ 923,551Gross profit ...................................................................... 148,243 156,349 162,517 175,091 642,200Net income....................................................................... 41,172 38,786 43,192 50,621 173,771Earnings per share: Basic ............................................................................ .16 .15 .16 .19 .66 Diluted ......................................................................... .15 .15 .16 .19 .65

1999Net sales........................................................................... $193,609 $202,217 $210,429 $224,580 $ 830,835Gross profit ...................................................................... 131,885 137,693 143,552 155,343 568,473Net income....................................................................... 34,391 37,150 38,342 15,143 125,026Earnings per share: Basic ............................................................................ .13 .14 .15 .06 .48 Diluted ......................................................................... .13 .14 .15 .06 .47

• All per share data have been adjusted to give retroactive effect to the three-for-two stock splits declared on July 9, 2001 and July 6, 2000.

• The operating results for the third quarter of fiscal 2001 were adversely impacted by a $26.1 million special charge related to the appellate court’s decision in the Tronzo case.

• The operating results for the second quarter of fiscal 2000 were adversely impacted by a $9 million special charge related to the final determination of the interest element of the final Orthofix judgment.

• The operating results for the third quarter of fiscal 2000 were adversely impacted by a $2.7 million special charge relating to the closing of the merger with 3i.

• The operating results for the fourth quarter of fiscal 1999 were adversely impacted by a $55 million special charge related to the appellate court’s decision against the Company in the Orthofix litigation and positively impacted by a $6.5 million special credit which represented 3i’s share of certain litigation proceeds.

Quarterly Results

32

For the years ended May 31,(in thousands, except per share amounts) 2001 2000 1999 Net sales.................................................................................................................... $1,030,663 $923,551 $830,835Cost of sales .............................................................................................................. 296,063 281,351 262,362 Gross profit ........................................................................................................... 734,600 642,200 568,473 Selling, general and administrative expenses ............................................................. 374,793 326,618 295,401Research and development expense .......................................................................... 43,020 40,208 38,723 Special charges .......................................................................................................... 26,100 11,700 48,447 Operating income ................................................................................................. 290,687 263,674 185,902 Other income, net .................................................................................................... 24,099 20,211 15,810 Interest expense ........................................................................................................ (4,110) (3,193) (1,911) Income before income taxes and minority interest................................................. 310,676 280,692 199,801 Provision for income taxes ........................................................................................ 105,906 99,738 67,317 Income before minority interest............................................................................. 204,770 180,954 132,484 Minority interest........................................................................................................ 7,224 7,183 7,458 Net income............................................................................................................ $ 197,546 $173,771 $125,026 Earnings per share: Basic...................................................................................................................... $.74 $.66 $.48 Diluted .................................................................................................................. .73 .65 .47 Shares used in the computation of earnings per share: Basic...................................................................................................................... 267,915 264,294 261,662 Diluted .................................................................................................................. 270,746 267,242 265,815 The accompanying notes are a part of the consolidated financial statements.

Biomet, Inc. & Subsidiaries Consolidated Statements of Income

To the Board of Directors and Shareholders of Biomet, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of shareholders’ equity and of cash flows present fairly, in all material respects, the financial position of Biomet, Inc. and its subsidiaries at May 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 2001, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Chicago, IllinoisJuly 9, 2001

Biomet, Inc. & Subsidiaries Report of Independent Accountants

33

At May 31,(in thousands, except per share data) 2001 2000

AssetsCurrent assets: Cash and cash equivalents ........................................................................................................ $ 235,091 $ 213,606 Investments............................................................................................................................... 52,627 34,129 Accounts and notes receivable, less allowance for doubtful receivables (2001 – $13,420 and 2000 – $8,241).................................................................................... 324,848 249,792 Inventories ............................................................................................................................... 277,601 240,162 Deferred and refundable income taxes ..................................................................................... 48,982 25,811 Prepaid expenses and other ....................................................................................................... 29,230 26,128 Total current assets ................................................................................................................ 968,379 789,628

Property, plant and equipment: Land and improvements............................................................................................................ 13,877 14,572 Buildings and improvements ..................................................................................................... 92,459 88,103 Machinery and equipment......................................................................................................... 219,554 196,619 325,890 299,294 Less, Accumulated depreciation .................................................................................................... 140,139 116,037 Property, plant and equipment, net ..................................................................................... 185,751 183,257 Investments................................................................................................................................... 175,430 159,533 Intangible assets, net of accumulated amortization (2001 – $23,183 and 2000 – $20,580) ................... 8,848 9,100 Excess acquisition costs over fair value of acquired net assets, net of accumulated amortization (2001 – $32,952 and 2000 – $22,869)............................................. 134,835 60,654 Other assets................................................................................................................................... 16,068 16,276 Total assets.......................................................................................................................... $1,489,311 $1,218,448

Liabilities & Shareholders’ EquityCurrent liabilities: Short-term borrowings and current maturities of long-term obligations .................................... $ 62,734 $ 70,546 Accounts payable ...................................................................................................................... 21,008 25,612 Accrued income taxes................................................................................................................ 31,085 17,288 Accrued wages and commissions............................................................................................... 33,030 24,224 Accrued litigation ...................................................................................................................... 26,100 – Other accrued expenses ............................................................................................................ 67,865 43,773 Total current liabilities ........................................................................................................ 241,822 181,443

Deferred federal income taxes ....................................................................................................... 5,783 5,386 Other liabilities.............................................................................................................................. 423 423 Total liabilities..................................................................................................................... 248,028 187,252 Minority interest............................................................................................................................ 95,097 87,873 Commitments and contingencies (Note L)

Shareholders’ equity: Preferred shares, $100 par value: Authorized 5 shares; none issued .......................................... – – Common shares, without par value: Authorized 500,000 shares; issued and outstanding 2001 – 269,124 shares and 2000 – 266,480 shares ......................... 108,918 85,086 Additional paid-in capital .......................................................................................................... 48,732 41,451 Retained earnings ...................................................................................................................... 1,044,564 866,011 Accumulated other comprehensive loss..................................................................................... (56,028) (49,225) Total shareholders’ equity ...................................................................................................... 1,146,186 943,323 Total liabilities and shareholders’ equity................................................................................. $1,489,311 $1,218,448

The accompanying notes are a part of the consolidated financial statements.

Biomet, Inc. & Subsidiaries Consolidated Balance Sheets

34

Accumulated Additional Other Total Common Shares Paid-In Retained Comprehensive Shareholders’(in thousands, except per share amounts) Number Amount Capital Earnings Income (Loss) Equity

Balance at June 1, 1998 .......................................... 261,063 $ 75,719 $20,586 $ 594,671 $ (12,664) $ 678,312 Net income ........................................................ – – – 125,026 – 125,026 Change in unrealized holding value on investments, net of $914 tax effect...................................... – – – – (1,257) (1,257) Reclassification adjustment for gains included in net income, net of $82 tax expense ............ – – – – 123 123 Currency translation adjustments....................... – – – – (2,568) (2,568) Comprehensive income.................................. – – – – – 121,324 Exercise of stock options.................................... 1,203 2,131 6,500 – – 8,631 Tax benefit from exercise of stock options .......... – – 1,211 – – 1,211 Cash dividends ($.05 per common share) ......... – – – (13,453) – (13,453) Other ................................................................. – – (26) (150) – (176)Balance at May 31, 1999 ........................................ 262,266 77,850 28,271 706,094 (16,366) 795,849 Net income ........................................................ – – – 173,771 – 173,771 Change in unrealized holding value on investments, net of $5,638 tax effect................................... – – – – (10,467) (10,467) Reclassification adjustment for gains included in net income, net of $344 tax expense .......... – – – – 638 638 Currency translation adjustments....................... – – – – (23,030) (23,030) Comprehensive income.................................. – – – – – 140,912 Net earnings of 3i for the five months ended May 31, 1999 ..................................... – – – 2,076 – 2,076 Exercise of stock options.................................... 2,555 7,235 4,418 – – 11,653 Exercise of warrants and conversion of preferred stock .. 1,659 1 2,504 – – 2,505 Tax benefit from exercise of stock options .......... – – 6,258 – – 6,258 Cash dividends ($.06 per common share) ......... – – – (15,785) – (15,785) Other ................................................................. – – – (145) – (145)Balance at May 31, 2000 ........................................ 266,480 85,086 41,451 866,011 (49,225) 943,323 Net income ........................................................ – – – 197,546 – 197,546 Change in unrealized holding value on investments, net of $2,138 tax effect................................... – – – – 3,967 3,967 Reclassification adjustment for gains included in net income, net of $41 tax expense ............ – – – – 74 74 Currency translation adjustments....................... – – – – (10,844) (10,844) Comprehensive income.................................. – – – – – 190,743 Exercise of stock options.................................... 2,644 23,832 – – – 23,832 Tax benefit from exercise of stock options .......... – – 7,281 – – 7,281 Cash dividends ($.07 per common share) ......... – – – (18,993) – (18,993)Balance at May 31, 2001 ........................................ 269,124 $108,918 $48,732 $1,044,564 $(56,028) $1,146,186 The accompanying notes are a part of the consolidated financial statements.

Biomet, Inc. & Subsidiaries consolidated Statements of Shareholders’ Equity

35

For the years ended May 31,(in thousands) 2001 2000 1999Cash flows from (used in) operating activities: Net income ........................................................................................................... $197,546 $173,771 $125,026 Adjustments to reconcile net income to net cash from operating activities: Depreciation ...................................................................................................... 30,890 30,678 23,689 Amortization...................................................................................................... 11,934 9,088 8,385 Minority interest ................................................................................................ 7,224 7,183 7,458 Other ................................................................................................................ (1,936) (1,467) 5,672 Deferred federal income taxes ............................................................................ (15,635) (9,037) (3,323) Tax benefit from exercise of stock options.......................................................... 7,281 6,258 1,211 Changes in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and notes receivable ........................................................................ (68,134) (31,326) (24,459) Inventories...................................................................................................... (37,648) (27,429) (26,689) Accounts payable ............................................................................................ (2,786) (2,089) 5,604 Accrued litigation............................................................................................ 26,100 (55,000) 55,000 Other .............................................................................................................. 35,670 37,198 (23,758) Net cash from operating activities ............................................................ 190,506 137,828 153,816

Cash flows from (used in) investing activities: Proceeds from sales and maturities of investments................................................. 62,256 45,826 33,008 Purchases of investments....................................................................................... (95,406) (46,491) (135,891) Capital expenditures ............................................................................................. (35,261) (43,067) (53,570) Acquisitions, net of cash acquired ......................................................................... (85,802) (22,177) (3,437) Other .................................................................................................................... (2,460) (1,741) (12,812) Net cash (used in) investing activities ...................................................... (156,673) (67,650) (172,702) Cash flows from (used in) financing activities: Increase (decrease) in short-term borrowings ........................................................ (13,792) 27,056 39,761 Payment of long-term obligations.......................................................................... (5,993) (7,664) (1,062) Issuance of shares.................................................................................................. 23,832 11,658 2,131 Cash dividends...................................................................................................... (18,993) (16,468) (13,453) Net cash from (used in) financing activities ............................................. (14,946) 14,582 27,377 Effect of exchange rate changes on cash..................................................................... 2,598 (3,235) 2,814 Increase in cash and cash equivalents ...................................................... 21,485 81,525 11,305 Cash and cash equivalents, beginning of year ............................................................ 213,606 132,081 120,776 Cash and cash equivalents, end of year...................................................................... $235,091 $213,606 $132,081

Supplemental disclosures of cash flow information: Cash paid during the year for: Interest .............................................................................................................. $ 4,076 $ 3,807 $ 1,974 Income taxes...................................................................................................... 109,822 69,555 90,318

Noncash investing and financing activities: Liabilities assumed in business acquisitions........................................................... 18,093 3,190 6,400 Capital leases entered into for the acquisition of property and equipment ............. – – 1,619 Dividends accrued on redeemable preferred stock................................................. – 81 150 Redeemable preferred stock converted to common shares ..................................... – 2,500 –

The accompanying notes are a part of the consolidated financial statements.

Biomet, Inc. & Subsidiaries consolidated Statements of Cash Flows

36

Note A: Nature of Operations.Biomet, Inc. and its subsidiaries design, manufacture and market products used primarily by musculoskeletal medical specialists in both surgical and nonsurgical therapy, including reconstructive and fixation devices, electrical bone growth stimulators, orthopedic support devices, operating room supplies, general surgical instruments, arthroscopy products, spinal products, bone cements and accessories, bone substitute materials, craniomaxillofacial implants and instruments, and dental reconstructive implants and associated instrumentation. Headquartered in Warsaw, Indiana, Biomet has manufacturing and/or office facilities in over 50 locations worldwide. The Company currently distributes products in more than 100 countries throughout the world. The Company operates in one business segment but has three reportable geographic segments.

Note B: Accounting Policies.The following is a summary of the accounting policies adopted by Biomet, Inc. and subsidiaries which have a significant effect on the consolidated financial statements.

Basis of Presentation – The consolidated financial statements include the accounts of Biomet, Inc. and its subsidiaries (individually and collectively, the “Company”). All foreign subsidiaries are consolidated on the basis of an April 30 fiscal year. Investments in affiliates in which the Company does not have the ability to significantly influence the operations are accounted for on the cost method, the carrying amount of which is not less than market. Investments in affiliates in which the Company does have the ability to significantly influence the operations, but does not control, are accounted for on the equity method. The financial statements of BioMer C.V. (a joint venture) are consolidated because the Company has the ability to control the operations of this entity. The minority shareholder’s interest in BioMer C.V. is reflected as minority interest.

Use of Estimates – The consolidated financial statements are prepared in conformity with generally accepted accounting principles and, accordingly, include amounts that are based on management’s best estimates and judgments.

Translation of Foreign Currency – Assets and liabilities of foreign subsidiaries are translated at rates of exchange in effect at the close of their fiscal year. Revenues and expenses are translated at the weighted average exchange rates during the year. Translation gains and losses are accumulated within other comprehensive income (loss) as a separate component of shareholders’ equity. Foreign currency transaction gains and losses, which are not material, are included in other income, net.

Cash and Cash Equivalents – The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Investments – Highly liquid investments with insignificant interest rate risk and with original maturities of three months or less are classified as cash and cash equivalents. Certificates of deposit with maturities greater than three months and less than one year are classified as short-term investments. Certificates of deposit with maturities greater than one year are classified as long-term investments. The Company accounts for its investments in debt and equity securities under Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” which requires certain securities to be categorized as either trading, available-for-sale or held-to-maturity. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within other comprehensive income (loss) as a separate component of shareholders’ equity. Held-to-maturity securities are carried at amortized cost. The Company has no trading securities. The cost of investment securities sold is determined by the specific identification method. Dividend and interest income are accrued as earned.

Inventories – Inventories are stated at the lower of cost or market, with cost determined under the first-in, first-out method.

Property, Plant and Equipment – Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is computed based on the estimated useful lives using the straight-line method. Gains or losses on the disposition of property, plant and equipment are included in income. Maintenance and repairs are expensed as incurred.

Intangible Assets – Intangible assets consist primarily of patents, trademarks, product technology, acquired license agreements and other identifiable intangible assets obtained through acquisition and are carried at cost less accumulated amortization. Amortization of intangibles is computed based on the straight-line method over periods ranging from three to fifteen years.

Excess Acquisition Costs Over Fair Value of Acquired Net Assets – Excess acquisition costs over the fair value of acquired tangible and intangible net assets (goodwill) are amortized using the straight-line method over periods ranging from eight to twenty years. The carrying value of goodwill is reviewed as circumstances warrant by the Company based on the expected future undiscounted operating cash flows of the related business unit. The Company believes no material impairment of goodwill exists at May 31, 2001.

Income Taxes – Deferred income taxes are determined using the liability method. No provision has been made for U.S. and state income taxes or foreign withholding taxes on the undistributed earnings (approximately $108 million at May 31, 2001) of foreign subsidiaries because it is expected that such earnings will be reinvested overseas indefinitely. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits), state income taxes and withholding taxes payable to the various foreign countries. Determination of the amount of any unrecognized deferred income tax liability on these undistributed earnings is not practical.

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements

37

Note B: Accounting Policies, Concluded.Fair Value of Financial Instruments – The carrying amounts of cash and cash equivalents, receivables, short-term borrowings, long-term obligations, accounts payable and accruals that meet the definition of a financial instrument approximate fair value. The fair value of investments is disclosed in Note D.

Revenue Recognition, Concentrations of Credit Risk and Allowance for Doubtful Receivables – Revenue is recognized when the product is shipped to the healthcare provider. The Company provides credit, in the normal course of business, to hospitals, private and governmental institutions and healthcare agencies, insurance providers and physicians. The Company maintains an allowance for doubtful receivables and charges actual losses to the allowance when incurred. The Company invests the majority of its excess cash in certificates of deposit with financial institutions, money market securities, short-term municipal securities and common stocks. The Company does not believe it is exposed to any significant credit risk on its cash and cash equivalents and investments. At May 31, 2001 and 2000, cash and cash equivalents and investments included $26 million and $65 million, respectively, of cash deposits and certificates of deposit with financial institutions in Puerto Rico. Also, at May 31, 2001 and 2000, investments included $11 million and $18 million, respectively, of municipal bonds issued by state and local subdivisions in Puerto Rico.

Stock-Based Compensation – The Company has not adopted the measurement requirements of SFAS No. 123, “Accounting for Stock-Based Compensation,” for stock option grants to Team Members and, accordingly, has made all of the required pro forma disclosures for the years ended May 31, 2001, 2000 and 1999.

Comprehensive Income – Other comprehensive income refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from net income as these amounts are recorded directly as an adjustment to shareholders’ equity. The Company’s other comprehensive income is comprised of unrealized gains (losses) on available-for-sale securities, net of tax, and foreign currency translation adjustments.

Special Charges – The special charges of $26.1 million for the year ended May 31, 2001 results from the appellate court’s decision in the Tronzo case (see Note L). Special charges of $11.7 million for the year ended May 31, 2000 are comprised of $2.7 million of merger costs related to the 3i merger (see Note C) and $9.0 million for the final determination of the interest element of the final judgment in the Orthofix litigation (see Note L). The special charges of $48.5 million for the year ended May 31, 1999 were comprised of a $55 million final judgment against the Company in the action brought by Orthofix, net of $6.5 million in proceeds from 3i’s recovery in a litigation matter.

Accounting Pronouncements – The Company adopted EITF 00-10 “Accounting for Shipping and Handling Fees and Costs.” This EITF requires certain shipping and handling fees billed to customers to be recorded as revenue instead of as a reduction of shipping expense. Accordingly, the Company has reclassified amounts billed to customers from cost of sales to net sales for all periods presented to account for this new accounting guideline, with no effect on net income. This reclassification did not exceed $3 million in any year.

The Company adopted EITF 00-15 “Classification in the Statement of Cash Flows of the Income Tax Benefit Received by a Company upon Exercise of a Nonqualified Employee Stock Option.” This EITF requires the income tax benefit on stock options to be classified as a component of operating cash flow. Accordingly, the Company has reclassified, for all years presented, this amount in the statement of cash flow from a financing activity to an operating activity.

In June of 2001 the Financial Accounting Standards Board (FASB) approved the issuance of Statement 141, “Business Combinations”, and Statement 142, “Goodwill and Other Intangible Assets”. FASB Statement 141, among other things, requires that all business combinations be accounted for using the purchase method; use of the pooling-of-interests method is prohibited. The provisions of FASB Statement 141 will apply to all business combinations initiated after June 30, 2001. FASB Statement 142, among other things, requires that goodwill not be amortized but should be tested for impairment at least annually. FASB Statement 142 must be applied by Biomet in fiscal year 2003; however, early adoption is permitted. The Company has not assessed the effect that the adoption of SFAS Statement 142 will have on its financial position or results of operations.

During fiscal year 2001 the Company adopted the provision of FASB Statement 133 “Accounting for Derivative Instruments and Hedging Activities” without any material impact on its financial position or results of operations.

The components of accumulated other comprehensive income (loss) at May 31, 2001 and 2000 are as follows:(in thousands) 2001 2000Net unrealized holding gain (loss) on investments......................................................................... $ (5,180) $ (9,221) Cumulative translation adjustment................................................................................................ (50,848) (40,004) $(56,028) $(49,225)

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements

38

Note C: Business Combinations.Biolectron – On September 25, 2000, the Company, through its EBI subsidiary, acquired Biolectron, Inc. for $90 million in cash. Biolectron’s products principally address the spinal fusion, fracture healing and arthroscopy market segments. Substantially all of Biolectron’s results are included in the U.S. geographic segment. The Company accounted for this acquisition as a purchase and the operating results of Biolectron have been consolidated from the date of acquisition. The acquisition cost was allocated to the fair value of the net tangible and identifiable intangible assets including $4.4 million to acquired product technology. Acquired product technology is amortized over 13 years and goodwill of $76.0 million, arising from this acquisition, is amortized over 20 years.

Implant Innovations International Corporation – On December 16, 1999, the Company and Implant Innovations International Corporation (“3i”) completed a merger transaction. The Company issued 11.7 million Common Shares for all of 3i’s issued and outstanding shares. 3i and its subsidiaries design, develop, manufacture, market, and distribute dental reconstructive products. 3i’s corporate headquarters and manufacturing facility are located in Palm Beach Gardens, Florida, and it has sales offices in Canada, Europe and Mexico. The business combination has been accounted for as a pooling-of-interests whereby all prior period financial statements of the Company have been restated to include the combined financial position, results of operations and cash flows of the Company and 3i. 3i’s fiscal year-end was December 31 and, accordingly, the financial information for the fiscal year ended May 31, 1999 include 3i’s financial information for its calendar year ended December 31, 1998. For the year ended May 31, 2000, the reporting period of 3i’s statements of income and cash flows has been conformed to the Company’s May 31 fiscal year. As a result, 3i’s results of operations for the five-month period ended May 31, 1999, have been excluded from the reported results of operations and, therefore, have been added to the Company’s retained earnings in the year ended May 31, 2000. 3i had net sales, expense and net income of $31,193,000, $29,181,000, and $2,076,000, respectively, for the five-month period ended May 31, 1999. For 1999 net sales and net income of 3i were $70,488,000 and $8,676,000, respectively. For the period June 1, 1999 through the date of acquisition, December 16, 1999, net sales and net income were $42,825,000 and $4,511,000, respectively. The Company recorded a one-time pre-tax charge of $2.7 million for merger-related costs during the third quarter of fiscal year 2000.

Other Acquisitions – During fiscal years 2001, 2000 and 1999, the Company has completed several acquisitions of foreign distributors and/or businesses. The acquisitions were accounted for using the purchase method of accounting with the operating results of the acquired businesses included in the Company’s consolidated financial statements from the date of acquisition. Goodwill recognized in connection with these acquisitions aggregated $4.1 million, $19.8 million and $1.3 million for the years ended May 31, 2001, 2000 and 1999, respectively and is amortized over 15 years. Pro forma financial information reflecting all acquisitions accounted for as purchases has not been presented as it is not materially different from the Company’s historical results.

Investment in Affiliate – In April 1999, the Company entered into an agreement with Selective Genetics, Inc. (“Selective Genetics”). Under the terms of the agreement, the Company paid $5 million cash for Series C preferred stock of Selective Genetics. In April 2000, the Company made an additional investment of $640,000 to acquire shares of Series D preferred stock of Selective Genetics. The Company accounts for this investment on the cost method. Under the agreement, the Company will fund as incurred certain defined research and development efforts of Selective Genetics over a ten-year period (see Note L) in exchange for license rights to market certain products to be manufactured by Selective Genetics. Amounts funded under the agreement are charged to research and development expense.

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

39

Note D: Investments.At May 31, 2001, the Company’s investment securities were classified as follows:

Amortized Unrealized(in thousands) Cost Gains Losses Fair ValueAvailable-for-sale: Debt securities.................................................................................. $169,733 $ 838 $ (6,043) $164,528 Equity securities ............................................................................... 12,986 1,507 (1,741) 12,752 Mortgage-backed securities .............................................................. 39,345 54 (2,581) 36,818 Total available-for-sale .................................................................. 222,064 2,399 (10,365) 214,098

Held-to-maturity: Debt securities.................................................................................. 2,701 1 – 2,702 Mortgage-backed obligations............................................................ 8,158 152 (267) 8,043 Total held-to-maturity................................................................... 10,859 153 (267) 10,745 Certificates of deposit ........................................................................... 3,100 – – 3,100 Total ................................................................................................. $236,023 $2,552 $(10,632) $227,943

At May 31, 2000, the Company’s investment securities were classified as follows:

Amortized Unrealized(in thousands) Cost Gains Losses Fair ValueAvailable-for-sale: Debt securities.................................................................................. $140,907 $ 52 $(13,468) $127,491 Equity securities ............................................................................... 10,417 3,248 (1,522) 12,143 Mortgage-backed securities .............................................................. 22,064 41 (2,537) 19,568 Total available-for-sale .................................................................. 173,388 3,341 (17,527) 159,202

Held-to-maturity: Debt securities.................................................................................. 11,895 53 (31) 11,917 Mortgage-backed obligations............................................................ 6,465 – (172) 6,293 Total held-to-maturity................................................................... 18,360 53 (203) 18,210 Certificates of deposit ........................................................................... 16,100 – – 16,100 Total ................................................................................................. $207,848 $3,394 $(17,730) $193,512

Proceeds from sales of available-for-sale securities were $32,251,000, $7,340,000 and $17,618,000 for the years ended May 31, 2001, 2000 and 1999, respectively. There were no sales of held-to-maturity securities for the years ended May 31, 2001, 2000 and 1999. The cost of marketable securities sold is determined by the specific identification method. For the year ended May 31, 2001, gross realized gains and (losses) on sales of available-for-sale securities were $2,172,000 and $(584,000), respectively. Gross realized gains and (losses) for the year ended May 31, 2000 were $1,581,000 and $(330,000), respectively. Gross realized gains and (losses) for the year ended May 31, 1999 were $1,635,000 and $(384,000), respectively. The Company’s investment securities at May 31, 2001 include $49,665,000 of debt securities and $2,962,000 of mortgage-backed obligations all maturing within one year, and $3,100,000 of certificates of deposit, $117,564,000 of debt securities, $12,752,000 of equity securities and $42,014,000 of mortgage-backed securities all maturing past one year.

Investment income (included in other income, net) consists of the following:(in thousands) 2001 2000 1999Interest income.......................................................................................................... $20,053 $15,640 $10,451 Dividend income....................................................................................................... 5,061 5,851 4,361 Net realized gains ...................................................................................................... 1,588 1,251 1,251 Total .................................................................................................................. $26,702 $22,742 $16,063

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

40

Note F: Debt.At May 31, 2001 and 2000, short-term borrowings, including current maturities of long-term obligations, consist of the following:(in thousands) 2001 2000Bank line of credit – BioMer C.V. ................................................................................................... $61,740 $68,718 Current maturities of long-term obligations................................................................................... 994 1,828 Total .......................................................................................................................................... $62,734 $70,546

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

BioMer C.V. has a EUR 71 million unsecured line of credit with a major European bank. This line of credit is used to finance its European operations and interest on outstanding borrowings is payable monthly at the lender’s interbank rate plus 0.7% (effective rate of 5.79% and 4.25% at May 31, 2001 and 2000, respectively).

3i leases certain equipment under capital leases and the capital lease obligations have been classified as a current liability at May 31, 2001, since the Company intends to repay the capital lease obligations during the next twelve months.

Note G: Team Member Benefit Plans.The Company has an Employee Stock Bonus Plan for eligible Team Members of the Company and certain subsidiaries. The amounts expensed under this plan for the years ended May 31, 2001, 2000 and 1999 were $4,401,000, $2,845,000, and $2,652,000, respectively.

The Company also has a defined contribution profit sharing plan which covers substantially all of the Team Members within the continental U.S. and allows participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code. The Company may match up to 75% of the Team Member’s contribution up to a maximum of 5% of the Team Member’s compensation. Prior to the merger, 3i maintained a defined contribution profit sharing plan which covered substantially all of its full-time employees. The 3i plan was frozen as of the merger date and the 3i Team Members became eligible to participate in the Company’s 401(k) plan. The amounts expensed under these profit sharing plans for the years ended May 31, 2001, 2000 and 1999 were $4,008,000, $3,252,000, and $2,051,000, respectively.

Note H: Stock Option Plans.The Company has various stock option plans: the 1984 Employee Stock Option Plan, as amended, the 1992 Employee and Non-Employee Director Stock Option Plan, the 1992 Distributor Stock Option Plan and the 1998 Qualified and Non-Qualified Stock Option Plan. At May 31, 2001, the only plan with shares available for grant is the 1998 Qualified and Non-Qualified Stock Option Plan.

Under the stock option plans, options may be granted to key employees, directors and distributors, at the discretion of the Stock Option Committee, and generally become exercisable in annual or biannual increments beginning one or two years after the date of grant in the case of employee options and in annual increments beginning at the date of grant for distributor options. In the case of options granted to an employee of the Company who is a 10% or more shareholder, the option price is an amount per share not less than 110% of the fair market value per share on the date of granting the option, as determined by the Stock Option Committee. No options have been granted to employees who are 10% or more shareholders. The option price for options granted to all other employees and directors is an amount per share not less than the fair market value per share on the date of granting the option. The term of each option granted expires within the period prescribed by the Stock Option Committee, but shall not be more than five years from the date the option is granted if the optionee is a 10% or more shareholder, and not more than ten years for all other optionees. All rights under the distributor options terminate upon the termination of an optionee’s distributorship with the Company unless such termination results from retirement, disability or death. For the years ended May 31, 2001, 2000 and 1999, the amount of compensation expense applicable to options granted to distributors was not material to the consolidated financial statements.

$ 4.00 – 10.00 1,505,430 2.4 years $ 6.81 708,365 $ 6.60 10.01 – 15.00 4,241,948 4.3 years 12.36 1,048,588 12.54 15.01 – 20.00 1,268,399 5.4 years 16.08 320,897 16.16 20.01 – 25.00 1,511,610 8.4 years 21.14 – – 25.01 – 29.95 183,030 6.3 years 28.71 – – 8,710,417 2,077,850

Outstanding Weighted- Weighted- Number Average Average Number Weighted- Range of Outstanding at Remaining Exercise Exercisable at Average Exercise Price May 31, 2001 Contractual Life Price May 31, 2001 Exercise Price

Note E: Inventories.Inventories at May 31, 2001 and 2000 consist of the following:(in thousands) 2001 2000Raw materials ................................................................................................................................ $ 32,024 $ 28,511 Work-in-progress .......................................................................................................................... 31,082 28,962 Finished goods .............................................................................................................................. 108,704 101,307 Consigned distributor ................................................................................................................... 105,791 81,382 Total .......................................................................................................................................... $277,601 $240,162

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Options outstanding at May 31, 2001, are exercisable at prices ranging from $4.00 to $29.95 and have a weighted-average remaining contractual life of 4.9 years. The following table summarizes information about stock options outstanding at May 31, 2001.

The following table, which includes options under 3i’s stock option plans, summarizes stock option activity: Number Weighted-Average of Shares Exercise Price

Outstanding, June 1, 1998 ........................................................................................ 8,246,486 $ 6.51 Granted................................................................................................................. 2,983,605 13.66 Exercised............................................................................................................... (1,511,526) 5.57 Terminated............................................................................................................ (711,327) 5.73

Outstanding, May 31, 1999....................................................................................... 9,007,238 8.71 Granted................................................................................................................. 3,214,876 12.05 Exercised............................................................................................................... (2,449,720) 5.41 Terminated............................................................................................................ (364,067) 8.67

Outstanding, May 31, 2000....................................................................................... 9,408,327 10.82 Granted................................................................................................................. 2,366,990 20.33 Exercised............................................................................................................... (2,694,668) 10.99 Terminated............................................................................................................ (370,232) 11.31

Outstanding, May 31, 2001....................................................................................... 8,710,417 $13.81

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Note H: Stock Option Plans, Concluded.

$ 4.00 – 10.00 1,505,430 2.4 years $ 6.81 708,365 $ 6.60 10.01 – 15.00 4,241,948 4.3 years 12.36 1,048,588 12.54 15.01 – 20.00 1,268,399 5.4 years 16.08 320,897 16.16 20.01 – 25.00 1,511,610 8.4 years 21.14 – – 25.01 – 29.95 183,030 6.3 years 28.71 – – 8,710,417 2,077,850

At May 31, 2000 and 1999, there were exercisable options outstanding to purchase 2,399,000 and 2,467,500 shares, respectively, at weighted-average exercise prices of $9.16 and $5.91, respectively.

As permitted by SFAS No. 123, the Company accounts for its employee stock options using the intrinsic value method. Accordingly, no compensation expense is recognized for the employee stock-based compensation plans, except for $6.5 million in fiscal year 1999 which related to certain Team Members who were allowed to surrender shares obtained through the exercise of an option to satisfy the exercise value. If compensation expense for the Company’s employee stock options issued in fiscal years 2001, 2000 and 1999 had been determined based on the fair value method of accounting, pro forma net income and diluted earnings per share would have been as follows:

2001 2000 1999 (in thousands, except per share data)Pro forma net income ................................................................................................ $193,430 $170,262 $122,815 Pro forma diluted earnings per share ......................................................................... .71 .64 .47 The weighted-average fair value of options granted during the year .......................... 7.09 4.11 4.42

Outstanding Weighted- Weighted- Number Average Average Number Weighted- Range of Outstanding at Remaining Exercise Exercisable at Average Exercise Price May 31, 2001 Contractual Life Price May 31, 2001 Exercise Price

Under SFAS No. 123, the fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2001, 2000 and 1999: (1) expected life of option of 3.6 years; (2) dividend yield of .42%, .40% and .36%; (3) expected volatility of 36%, 35% and 33%; and (4) risk-free interest rate of 4.47%, 6.28% and 5.62%, respectively.

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Earnings per share for the years ended May 31, 2001, 2000 and 1999 are computed as follows:(in thousands, except per share amounts) 2001 2000 1999Numerator: Net income ........................................................................................................... $197,546 $173,771 $125,026 Less: Preferred stock dividends.............................................................................. – 81 150 Numerator for basic earnings per share – income available to common shareholders.... 197,546 173,690 124,876

Effect of dilutive securities: Dividend on convertible preferred securities ......................................................... – 81 150 Numerator for diluted earnings per share – income available to common shareholders after assumed conversions.......................................... $197,546 $173,771 $125,026

Denominator: Denominator for basic earnings per share – weighted average shares..................... 267,915 264,294 261,662

Effect of dilutive securities: Warrants ............................................................................................................... – 359 359 Convertible preferred securities............................................................................. – 537 537 Stock options ........................................................................................................ 2,831 2,052 3,257 Dilutive potential common shares ............................................................................. 2,831 2,948 4,153 Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions ........................................................... 270,746 267,242 265,815

Earnings per share – basic ......................................................................................... $.74 $.66 $.48 Earnings per share – diluted...................................................................................... .73 .65 .47

Note I: Shareholders’ equity & Earnings Per Share.On December 16, 1999, the Company issued 11.7 million common shares in connection with the business combination with 3i (see Note C).

On July 9, 2001, the Company announced a $.09 per share cash dividend, payable July 27, 2001, to shareholders of record on July 20, 2001, and a three-for-two stock split payable August 6, 2001 to shareholders of record on July 30, 2001. On July 6, 2000, the Company announced a three-for-two stock split payable August 8, 2000 to shareholders of record on July 18, 2000. All shares and all per share data have been adjusted to give retroactive effect to all stock splits.

In December 1999, the Board of Directors of the Company adopted a new Shareholder Rights Plan (the “Plan”) to replace a 1989 rights plan that expired on December 2, 1999. Under the Plan, rights have attached to the outstanding common shares at the rate of one right for each share held by shareholders of record at the close of business on December 28, 1999. The rights will become exercisable only if a person or group of affiliated persons (an “Acquiring Person”) acquires 15% or more of the Company’s common shares or announces a tender offer or exchange offer that would result in the acquisition of 30% or more of the outstanding common shares. At that time, the rights may be redeemed at the election of the Board of Directors of the Company. If not redeemed, then prior to the acquisition by the Acquiring Person of 50% or more of the outstanding common shares of the Company, the Company may exchange the rights (other than rights owned by the Acquiring Person, which would have become void) for common shares (or other securities) of the Company on a one-for-one basis. If not exchanged, the rights may be exercised and the holders may acquire preferred share units or common shares of the Company having a value of two times the exercise price of $117.00. Each preferred share unit carries the same voting rights as one common share. If the Acquiring Person engages in a merger or other business combination with the Company, the rights would entitle the holders to acquire shares of the Acquiring Person having a market value equal to twice the exercise price of the rights. The Plan will expire in December 2009. The Plan is intended to protect the interests of the Company’s shareholders against certain coercive tactics sometimes employed in takeover attempts.

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

43

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate follows:

2001 2000 1999 U.S. statutory income tax rate.................................................................................... 35.0% 35.0% 35.0% Add (deduct): State taxes, less effect of federal reduction ............................................................. 2.6 2.9 3.2 Foreign income taxes at rates different from the U.S. statutory rate ....................... – (.8) (2.3) Tax benefit relating to operations in Puerto Rico.................................................... (.3) (.3) (.6) Tax credits............................................................................................................. (.9) (.4) (.7) Earnings of Foreign Sales Corporation................................................................... (.7) (.5) (.9) Other .................................................................................................................... (1.6) (.4) – Effective tax rate ........................................................................................................ 34.1% 35.5% 33.7%

The components of the net deferred tax asset and liability at May 31, 2001 and 2000 are as follows:(in thousands)

Current deferred tax asset: 2001 2000 Accounts and notes receivable............................................................................... $13,227 $ 8,063 Inventories ............................................................................................................ 17,139 14,499 Accrued expenses.................................................................................................. 18,616 3,249 Current deferred tax asset .................................................................................. $48,982 $25,811 Long-term deferred tax asset (liability): Depreciation.......................................................................................................... $ (4,158) $ (4,166) Financial accounting basis of net assets of acquired companies different than tax basis .... (4,958) (4,521) Other .................................................................................................................... 3,333 3,301 Long-term deferred tax liability ......................................................................... $ (5,783) $ (5,386)

Note J: Income Taxes.

The components of income before income taxes are as follows:(in thousands) 2001 2000 1999United States operations............................................................................................ $285,696 $260,107 $181,224 Foreign operations .................................................................................................... 24,980 20,585 18,577 Total ...................................................................................................................... $310,676 $280,692 $199,801

The provision for income taxes is summarized as follows:(in thousands)

Current: 2001 2000 1999 Federal .................................................................................................................. $100,483 $ 88,996 $55,174 State, including Puerto Rico .................................................................................. 13,736 13,622 12,168 Foreign.................................................................................................................. 7,322 6,157 3,298 121,541 108,775 70,640 Deferred .................................................................................................................... (15,635) (9,037) (3,323) Total ...................................................................................................................... $105,906 $ 99,738 $67,317 Effective tax rate ........................................................................................................ 34.1% 35.5% 33.7%

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Note K: Segment Data.The Company operates in one business segment, musculoskeletal products, which includes the designing, manufacturing and marketing of reconstructive products, fixation devices, spinal products and other products. Other products consist primarily of Arthrotek’s arthroscopy products, EBI’s softgoods and bracing products, general instruments and operating room supplies. The Company manages its business segments primarily on a geographic basis. These geographic segments are comprised of the United States, Europe and Other. Other geographic segments include Canada, South America, Mexico, Japan and the Pacific Rim. The Company evaluates performance based on operating income of each geographic segment. Identifiable assets are those assets used exclusively in the operations of each geographic segment. Revenues attributable to each geographic segment are based on the location in which the sale originated.

Net sales of musculoskeletal products by product category and reportable geographic segment results are as follows:(in thousands)

2001 2000 1999Reconstructive products ............................................................................................ $ 614,308 $580,239 $521,365 Fixation devices......................................................................................................... 202,152 180,336 162,825 Spinal products ......................................................................................................... 91,103 54,119 45,125 Other products.......................................................................................................... 123,100 108,857 101,520 $1,030,663 $923,551 $830,835

Net sales to customers: United States ......................................................................................................... $ 759,465 $662,146 $597,336 Europe .................................................................................................................. 239,136 236,047 215,913 Other .................................................................................................................... 32,062 25,358 17,586 $1,030,663 $923,551 $830,835 Operating income: United States ......................................................................................................... $ 251,927 $224,385 $159,716 Europe .................................................................................................................. 34,772 34,841 22,910 Other .................................................................................................................... 3,988 4,448 3,276 $ 290,687 $263,674 $185,902 Long-lived assets: United States ......................................................................................................... $ 204,231 $129,978 $121,363 Europe .................................................................................................................. 109,758 121,350 113,719 Other .................................................................................................................... 17,640 5,635 4,723 $ 331,629 $256,963 $239,805

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

United States export sales, primarily to European countries, aggregated $37,093,000, $49,884,000 and $45,893,000 for the years ended May 31, 2001, 2000 and 1999, respectively. These sales are included in United States sales to customers above. The decrease in U.S. export sales for the year ended May 31, 2001 compared to the year end May 31, 2000 is attributable to the acquisition of foreign distributors and the changeover to direct representation in various foreign countries (principally Korea and Japan).

45

Note L: Commitments & Contingencies.BioMer C.V. Put Option – Pursuant to the terms of the Joint Venture Agreement with Merck KGaA, the Company granted Merck KGaA a put option whereby Merck KGaA has the right to elect to require the Company to purchase all, but not less than all, of Merck KGaA’s interest in BioMer C.V. Merck KGaA may exercise the put option by giving notice to the Company at any time during (a) the period beginning on May 1, 2001 and ending on May 10, 2008, or (b) a period of 180 days following receipt by Merck KGaA of notice from the Company that “a change of control” of the Company (as defined in the Joint Venture Agreement) has occurred prior to May 1, 2023. The put exercise price, which is payable in cash, is the greater of (i) a formula value based on earnings of BioMer C.V. and multiples, as defined in the Joint Venture Agreement, or (ii) the net book value of all the assets of BioMer C.V. less all liabilities of BioMer C.V. multiplied by Merck KGaA’s ownership percentage.

Medical Insurance Plan – The Company maintains a self-insurance program for covered medical expenses for all Team Members within the continental U.S. The Company is liable for claims up to $125,000 per insured annually. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims and a management-determined estimated liability for claims incurred but not reported.

Liability Insurance – Since 1989, the Company has self-insured against product liability claims, and at May 31, 2001 the Company’s self-insurance limits were $3,000,000 per occurrence and $5,000,000 aggregate per year. Liabilities in excess of these amounts are the responsibility of the Company’s insurance carrier. Self-insurance costs are accrued based on reserves set in consultation with the insurance carrier for reported claims and a management-determined estimated liability for claims incurred but not reported. Based on historical experience, management does not anticipate that incurred but unreported claims would have a material impact on the Company’s consolidated financial position.

Litigation – On January 18, 2001, the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”) reinstated a $20 million punitive damages award against the Company given to Raymond G. Tronzo by the United States District Court for the Southern District of Florida (“the District Court”) while affirming the compensatory damage award of $520. In its decision in this matter, the District Court had reduced the punitive damage award to $52,000. The Federal Circuit’s decision was based principally on procedural grounds, and concluded a finding that a relationship of 38,000 to 1 between the punitive award and the compensatory award was legally permissible. On March 28, 2001, the Federal Circuit denied the Company’s combined petition for panel rehearing and petition for rehearing en banc. The Company believes this result conflicts with controlling law, including decisions of the United States Supreme Court. Accordingly, the Company is seeking review of this case by the United States Supreme Court. This decision does not affect the ongoing sales of any of Biomet’s product lines. The Company has recorded a one-time special charge during the third quarter of fiscal 2001 of $26.1 million in connection with these damage awards which includes interest and related expenses.

On June 30, 1999, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) significantly reduced the judgment previously entered against the Company in an action brought by Orthofix SRL (“Orthofix”) against the Company and certain of its wholly-owned subsidiaries. The litigation related to events surrounding the expiration of a distribution agreement under which the Company distributed Orthofix’s external fixation devices in the United States. The final judgment of $55 million, including estimated interest of $5.1 million, was accrued at May 31, 1999 and that amount plus $9.0 million related to the final determination of interest was paid during the year ended May 31, 2000.

There are various other claims, lawsuits, disputes with third parties, investigations and pending actions involving various allegations against the Company incident to the operation of its business, principally product liability and intellectual property cases. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company. The Company establishes accruals for losses that are deemed to be probable and subject to reasonable estimate. Based on the advice of counsel to the Company in these matters, management believes that the ultimate outcome of these matters and any liabilities in excess of amounts provided will not have a material adverse impact on the Company’s consolidated financial position or on its future business operations.

Other Commitments – As discussed in Note C, the Company has a commitment to fund certain research and development efforts of Selective Genetics, not to exceed $2.5 million annually and $22.5 million over a ten-year period ending April 2009.

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (continued)

Biomet, Inc. & Subsidiaries Notes To Consolidated Financial Statements (concluded)

46

1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.2001High............................................................................................... $23.50 $26.92 $27.83 $30.67Low................................................................................................ 14.97 19.08 20.46 23.67

2000High............................................................................................... 19.39 16.79 19.79 17.54Low................................................................................................... 15.50 10.96 13.25 12.04

1999High.................................................................................................. 15.21 17.13 17.96 20.33Low................................................................................................... 12.46 11.54 14.38 15.58

The following table shows the quarterly range of high and low sales prices for the Company’s Common Shares as reported by the Nasdaq Stock Market for each of the three most recent fiscal years ended May 31. The approximate number of record holders of outstanding Common Shares as of May 31, 2001 was 6,696.

The Common Shares of Biomet, Inc. are traded on the Nasdaq Stock Market (Trading Symbol: BMET). The following firms currently make a market in Biomet Common Shares:

ABN AMRO Securities (USA) Inc.Advest, Inc.Archipelago, LLCAttain-ECNBanc Stock Financial ServicesBank of America SecuritiesBear, Stearns & Co. Inc.Bernard L. MadoffB-Trade Services LLCCantor, Fitzgerald & Co.Chase H&Q/Div of Chase SecsCincinnati Stock ExchangeCredit Suisse First Boston CpDain Rauscher Inc.Deutsche Banc Alex BrownDonald & Co. Securities Inc.Donaldson, Lufkin & JenretteFahnestock & Co. Inc.Fidelity Capital MarketsFirst Albany Corporation

First Union Capital MarketsFleet Trading/Div. Fleet Secs.Gaines Berland, Inc.Gerard Klauer Mattison & Co.Goldman, Sachs & Co.Herzog, Heine, Geduld, Inc.ING BaringsInstinet CorporationInvestec Ernst & CompanyIsland System CorporationJefferies & Company, Inc.Josephthal & Co.J.P. Morgan Securities Inc.Knight Securities L.P.Lehman Brothers Inc.MARKETXT, Inc.Merrill Lynch, Pierce, FennerMidwest Res. First TennesseeMidwest Stock ExchangeMorgan Stanley & Co., Inc.NatCity Investments Inc.

Needham & Company, Inc.Nextrade – ECNOlde Discount CorporationOTA Limited PartnershipPaineWebber Inc.Pershing Trading CompanyPiper Jaffray Companies Inc.Prudential Securities Inc. REDIBook ECN LLCRobert W. Baird & Co, Inc. Robertson Stephens Inc. Salomon Smith Barney Inc.Schwab Capital MarketsSG Cowen SecuritiesSherwood Securities Corp.Southwest Securities, Inc.Spear, Leeds & KelloggTHE BRUT ECN, LLCUBS WarburgWeeden and Co. Inc.William Blair & Co.

The Company paid cash dividends of $.07, $.06 and $.05 per share for the fiscal years ended May 31, 2001, 2000 and 1999, respectively.

Market Value of Common Shares & Related Matters

Principal Market for Common Shares

47

This report contains certain statements that are “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, as amended. Those statements include, but are not limited to, statements related to the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of population on demand for the Company’s products; the Company’s intent and ability to expand its operations; assumptions and estimates regarding the size and growth of certain market segments; the Company’s ability and intent to expand in key international markets; the anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of the Company’s capital resources to meet the needs of its business; the Company’s continued investment in new products and technologies; the ultimate marketability of products currently being developed; future declarations of cash dividends and stock splits; the Company’s intent and ability to efficiently expand its salesforces; the Company’s ability to sustain sales and earnings growth; the Company’s goals for sales and earnings growth; the Company’s success in achieving timely approval of its products with domestic and foreign regulatory entities; and the Company’s ability to take advantage of technological advancements. Readers of this report are cautioned that reliance on any forward-looking statement involves risks and uncertainties. Although the Company believes that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future events. There can be no assurance that the forward-looking statements contained in this report will prove to be accurate. The inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company’s objectives will be achieved.

Forward-Looking Statements

All trademarks are owned by Biomet, Inc. or one of its affiliates/subsidiaries, except for the following:

Ossix is a trademark of Colbar R&D, Ltd.

Palacos, Palamed and Palamix are trademarks of Heraeus Kulzer, GmbH.

VHS is a trademark of Implant Distribution Network, Ltd.

Biobon, Copal and Endobon are trademarks of Merck KGaA.

Many of the products described in this brochure are marketed for specific indications or uses and may not be available for sale in the United States.Please see individual product labeling for additional information.

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Biomet, Inc.Arthrotek, Inc.4861 E. Airport Drive Ontario, CA 91761 Phone 909.390.0356Fax 909.390.0364

6704 Lockheed DriveRedding, CA 96002 Phone 530.226.5800Fax 530.226.5803

Biomet Fair Lawn, L.P.20-01 Pollitt DriveFair Lawn, NJ 07410Phone 201.797.7300 Fax 201.797.0947

EBI/AOA1801 W. Nabor RoadMarlow, OK 73055Phone 580.658.5436Fax 580.658.6049

EBI, L.P. 100 Interpace ParkwayP.O. Box 346Parsippany, NJ 07054-0346Phone 973.299.9300Fax 973.299.0906

Electro-Biology, Inc.#1 Electro-Biology Boulevard Los Frailes Industrial ParkGuaynabo, Puerto Rico 00657-1359Phone 787.720.6855Fax 787.720.6859

EBI/Biolectron25 Commerce DriveAllendale, NJ 07401 Phone 1.800.584.0677Fax 201.760.6404

Implant Innovations, Inc. (3i)4555 Riverside DrivePalm Beach Gardens, FL33410Phone 561.776.6700Fax 561.776.6762

Walter Lorenz Surgical, Inc. 1520 Tradeport DriveP.O. Box 18009Jacksonville, FL 32229-8009 Phone 904.741.4400Fax 904.741.4500

Biomet Merck* Joint VentureBioMer C.V./Biomet Merck B.V.Fruiteniersstraat 233334 KA ZwijndrechtThe NetherlandsPhone 31.78.629.29.09Fax 31.78.629.29.41

European Distribution Center B.V. Fruiteniersstraat 233334 KA ZwijndrechtThe NetherlandsPhone 31.78.629.29.19Fax 31.78.629.29.41

Biomet Merck Austria GmbHEnzersberg 209A-5303 ThalgauAustriaPhone 43.6235.200330Fax 43.6235.200339

Biomet Merck Belgium BVBA Fotografielaan 5B-2610 WilrijkBelgiumPhone 32.3.870.65.65Fax 32.3.877.55.55

Biomet Merck CZ, s.r.o.Branicka 173/1932147 00 Praha 4Czech RepublicPhone 420.2.4100.1121Fax 420.2.4100.1127

Biomet A/S (Denmark) Hattingvej 78700 HorsensDenmark Phone 45.7.562.6022Fax 45.7.562.6845

Biomet Merck Deutschland GmbH Gustav-Krone-Str.214167 BerlinGermanyPhone 49.30.845.81.0Fax 49.30.845.81.11.0

Biomet Merck Finland OyVattuniemenranta 200210 HelsinkiFinlandPhone 35.8.968.22.500Fax 35.8.9.6822.435

Biomet Merck France SarlPlateau de LautagneB.P. 7526903 Valence Cedex FrancePhone 33.4.75759100Fax 33.4.75759110

Biomet Merck Hellas S.A.78, Syngrou Ave.GR-117 42 AthensGreecePhone 30.1.92.115.70Fax 30.1.92.15204

Biomet Merck Ltd.Waterton Industrial EstateBridgend CF31 3XASouth Wales, UKPhone 44.1656.655221Fax 44.1656.645454

Murdock RoadDorcan Industrial EstateSwindon Wiltshire SN3 5HYEngland, UKPhone 44.1793.644111Fax 44.1793.512235

Biomet Merck Norge A.S.Sorkedalsveienn 2570754 OsloNorwayPhone 47.241.24.343Fax 47.241.24.344

Biomet Merck Polska Ltd.UL. Przasnyska 901-756 WarszawPolandPhone 48.22.639.78.93Fax 48.22.639.83.51

Biomet Merck S.r.l.Via De Vecchi, No. 220090 Assago (Milan)ItalyPhone 39.02.488.7231Fax 39.02.488.43.384

Biomet Merck (Switzerland) GmbH Postfach 65WeisshausmatteCH-6460 AltdorfSwitzerlandPhone 41.41.875.77.77Fax 41.41.875.77.78

Industrias Quirúrgicasde Lavante, S.L. (IQL) Calle Islas Baleares, #50P.O. Box 9646988 Fuente del Jarro ValenciaSpainPhone 34.96.137.9500Fax 34.96.137.9510

Merck Biomaterialien GmbHFrankfurter Straße 250D-64271 DarmstadtGermanyPhone 49.6151.72.7873Fax 49.6151.725996

Multiradix Lda.Rua Alfredo da Silva, 3C1300-040 LisboaPortugalPhone 351.21.3651100Fax 351.21.3651160

Ortomed B.V.Postbus 10813330 CB ZwijndrechtHollandPhone 31.78.629.29.29Fax 31.78.610.42.65

ScandiMed ABForskaregatan 1S-27537 SjoboSwedenPhone 46.416.258.50Fax 46.416.258.52

Biomet, Inc.56 East Bell Drive • P.O. Box 587 • Warsaw, Indiana 46581-0587Phone 219.267.6639 • Fax 219.267.8137 • E-mail: biomet@biomet.com

*Merck KGaA, Darmstadt, Germany, is not affiliated with Merck & Co., Inc., Whitehouse Station, New Jersey.

Corporate Headquarters

Other Locations

Biomet International Ltd.Biomet Argentina S.A.Amenabar 1000Buenos Aires 1426ArgentinaPhone 54.11.4780.1046Fax 54.11.4785.0201

Biomet Australia Pty Ltd.P.O. Box 348 Unit 4, 6–8 Byfield StreetNorth Ryde 2113New South WalesAustraliaPhone 61.2.9878.6100Fax 61.2.9878.6473

Biomet Canada, Inc.790 Redwood Square, Unit 1Oakville Ontario L61 6N3CanadaPhone 905.825.8066Fax 905.825.8075

Biomet Chile, S.A.Pocuro 2255Providencia SantiagoChilePhone 56.2.269.0600Fax 56.2.269.0607

Biomet Korea Co. Ltd.8th Floor, Seil Bldg.727-13 Yeoksam-DongKangnam-kuSeoulKoreaPhone 82.2.5678.550Fax 82.2.5678.577

Biomet Mexico S.A. de C.V.Av. Acoxpa No 444 – Despacho 702Col. Ex. Hacienda de CoapaDelegacion TialpanC.P. 14390Mexico D.F.MexicoPhone 52.5.684.0700Fax 52.5.684.0702

Biomet Orthopaedic Ltd.515A Unit CMount Wellington HighwayMount Wellington, AucklandNew ZealandPhone 64.9.573.6161Fax 64.9.573.1514

Biomet Orthopedics, Inc.Japan Branch Office 1-1-8 Moto-akasakaMinato-kuTokyo 107-0051JapanPhone 81.3.5786.0243Fax 81.3.3478.0132

Biomet Orthopedics Puerto Rico, Inc.Edificio La EuskaldunaCalle Navarro 56 Esq. PenuelasHato Rey, Puerto Rico 00918Phone 787.751.0650Fax 787.763.3688

Ortopedica Biomet Costa Rica S.A.Paseo Colon,75 Mts Oeste Sala GarboEdificio MiliconSan Jose, Costa RicaPhone 506.258.6955Fax 506.258.7014

3i InternationalImplant Innovations do Brasil Ltda.Av. Paes de Barros, 588Sao Paulo-SPBrazil CEP03114-000Phone 55.11.6605.3434Fax 55.11.6606.1047

Implant Innovations Canada, Inc.5805 St. Francois, St. LaurentQuebecCanada H4S 1B6Phone 514.956.9843Fax 514.956.9844

Implant Innovations Deutschland GmbH Gerwigstr. 66BD.76137 KarlsruheGermanyPhone 49.721.6314.220Fax 49.721.6314.237

Implant Innovations Europe ApSDronningens Tvaergade 9Copenhagen K,Denmark DK 1302Phone 45.33.12.7008Fax 45.33.12.7003

Implant Innovations France S.A.38, Rue Anatole FranceLavallois PerretFrance, 92300Phone 33.1.41054343Fax 33.1.41054340

Implant Innovations Iberica, SLFrederic Mompou 562-B,08960 Sant Just DesvernBarcelonaSpainPhone 34.93.470.59.50Fax 34.93.372.11.25

Implant Innovations de Mexico S.A. de C.V. Mariano Escobedo No. 543.201C.P. 11580Mexico D.F.MexicoPhone 52.5.203.0168Fax 52.5.203.0949

Implant Innovations Switzerland GmbHMinervastrasse 998032 ZurichSwitzerland CH.8032Phone 41.1.3804646Fax 41.1.3834655

Implant Innovations U.K., Ltd. 15 Grove ParkWaltham Road, White WalthamSL6 3LWMaidenhead, BerkshireEnglandPhone 44.1628.829314Fax 44.1628.820182