Sonova Agrees With Former InSound Medical Inc. Shareholders to End Existing Earn-Out Agreement With a One-Off Payment of USD 94 Million

Sonova Holding AG, the world's leading provider of hearing systems, today announced a change in the existing acquisition agreement with representatives of the former shareholders of InSound Medical Inc., Newark, USA. A one-off payment of USD 94 million will replace all previous earn-out obligations. The change in the agreement will allow the Sonova Group to include InSound Medical, which was previously run separately due to the variable purchase price component, into the general Phonak US distribution strategy. This will enable the Group to better exploit the commercial potential in the United States.

Sonova Holding AG acquired privately owned InSound Medical Inc. on January 6, 2010 for USD 75 million plus earn-out payments that depend on the company's future financial success. In view of this background, InSound Medical Inc. was previously managed as a separate unit within the Sonova Group and independently responsible for the commercial business success of the product Lyric® in the United States.

Sonova today announced that the two parties had agreed to replace the existing complex earn-out agreement with a one-off cash payment of USD 94 million, which would release both Sonova Holding AG and the former owners of InSound Medical from all mutual obligations. This early cash payment replaces all future earn-out payments.

"This agreement will enable us to develop our business with Lyric in an optimal way," said Valentin Chapero, CEO of Sonova Holding AG. "Sonova is now enabled to focus its entire distribution organization on the commercial potential of Lyric in the US."

Sonova Holding AG confirmed the financial targets announced for the acquisition and aims to generate sales of CHF 200-300 million with Lyric® in approximately four years' time.

Lyric - the totally "invisible" hearing system

Lyric® is the first 100% invisible, extended-wear hearing device that can be worn in the ear for up to 120 days. Lyric® addresses the market segment with the highest growth potential - less than 10% of potential users with mild to moderate hearing loss today wear a hearing aid.

About Sonova

Sonova is the leading provider of innovative hearing healthcare solutions. The globally active group is the world's top manufacturer of hearing systems, the market leader in wireless communication systems for audiology applications, develops and manufactures advanced cochlear implant systems and provides professional solutions for hearing protection. Sonova is pursuing a clear growth strategy and is intent on growing faster than the market. To this end it is constantly expanding its existing business segments and branching out into other areas of the hearing healthcare industry.

Present in over 90 countries, and with a workforce of over 6,800 employees, Sonova generated sales of CHF 1.5 billion in the financial year 2009/10 and a net profit of CHF 355 million. This financially strong group of companies bases its success on innovation, customer focus and proactive cost management.

The company has been successfully promoting understanding and communication for over 60 years, and is ideally positioned to benefit from the trends in this growth industry.

For more information please visit www.sonova.com.