Full Press Release Details
PLAINSBORO, N.J., March 2, 2009 (GLOBE NEWSWIRE) -- Integra LifeSciences Holdings Corporation (Nasdaq:IART) today reported its financial results for the fourth quarter and full year ending December 31, 2008. Total revenues in the fourth quarter of 2008 were $174.4 million, reflecting an increase of $16.7 million, or 11%, over the fourth quarter of 2007. Total revenues in the full year of 2008 were $654.6 million, reflecting an increase of $104.1 million, or 19%, over the full year of 2007. Excluding the impact of currency exchange rates, revenues increased 13% and 18%, respectively, for the quarter and year ended December 31, 2008. We have broken out our revenues by product category in a table at the end of this press release.
"Despite a challenging economic environment, Integra posted strong results for the full year 2008," said Integra's President and Chief Executive Officer, Stuart Essig. "We are pleased with the strength of our business under the circumstances, in particular our operating cash flow."
The Company reported GAAP net income of $24.8 million, or $0.85 per diluted share, for the fourth quarter of 2008, compared to GAAP net income of $5.4 million, or $0.19 per diluted share, for the fourth quarter of 2007.
In the fourth quarter of 2008, the Company reported a $10.0 million deferred income tax benefit related to the restructuring of a German subsidiary.
In addition to GAAP results, Integra reports adjusted net income and adjusted earnings per diluted share. A further discussion of these and other non-GAAP financial measures can be found below, and reconciliations of GAAP net income to adjusted net income and GAAP earnings per diluted share to adjusted earnings per diluted share for the quarters and full years ended December 31, 2008 and 2007 appear in the financial statements attached to this release.
Adjusted net income for the fourth quarter of 2008, computed to exclude the $10.0 million deferred income tax benefit and with the other adjustments to GAAP reporting set forth in the attached reconciliation, was $15.5 million, or $0.53 per diluted share. Adjusted net income for the fourth quarter of 2007, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $15.6 million, or $0.54 per diluted share.
Integra generated $27.1 million in operating cash flows in the fourth quarter and $72.6 million for the full year 2008, a 54% increase over full year 2007.
The Company reported GAAP net income of $34.9 million, or $1.22 per diluted share, for the full year 2008, compared to GAAP net income of $33.5 million, or $1.13 per diluted share in 2007. Adjusted net income for the full year 2008, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $60.0 million, or $2.09 per diluted share. Adjusted net income for the full year 2007, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $47.1 million, or $1.59 per diluted share.
The Company is reiterating its revenue and earnings per share guidance for the full year 2009. The Company is anticipating revenues between $720 million and $740 million and expects earnings per share to be between $1.86 and $2.06 on a GAAP basis and between $2.20 and $2.40 on an adjusted basis. We expect revenues in the first quarter of 2009 to be 3-5% lower than the fourth quarter of 2008, and earnings to be disproportionately lower, and that the fourth quarter of 2009 will be the strongest quarter of the year. In accordance with our usual practice, expectations for financial performance do not include the impact of acquisitions or other strategic corporate transactions that have not yet closed.
Our 2009 GAAP earnings per share guidance includes the impact of the application of Financial Accounting Standards Board Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments that May be Settled in Cash Upon Conversion ("FSP APB 14-1"), which we implemented on January 1, 2009. FSP APB 14-1 requires that we separately account for the liability and equity components of our convertible debt instruments, which may be settled in cash upon conversion, in a manner that reflects an applicable nonconvertible debt borrowing rate at the time that we issued such convertible debt instruments.
In the future the Company may record, or expects to record, certain additional revenues, gains, expenses or charges (such as acquisition-related charges, facility consolidation, manufacturing and distribution transfer, and system integration charges, and non-cash interest expense related to the application of FSP APB 14-1) that it will exclude in the calculation of adjusted earnings per share for historical periods and in providing adjusted earnings per share guidance.
On a quarterly basis, the Company expects to incur approximately $3.8 million, or $0.08 to $0.09 per share, of share-based compensation expense associated with FAS 123R in 2009. This non-cash compensation expense is reflected in both the GAAP and adjusted earnings per share guidance for 2009 provided above.
Integra has scheduled a conference call for 9:00 AM ET on Monday, March 2, 2009 to discuss financial results for the fourth quarter and full year of 2008 and forward-looking financial guidance. The conference call will be hosted by Stuart Essig, President and Chief Executive Officer of Integra, and will be open to all listeners. Additional forward-looking information may be discussed in a question and answer session following the call.
Access to the live call is available by dialing 719-325-4798 or through a webcast via a link provided on the Investor Relations homepage of Integra's website at www.Integra-LS.com. Access to a replay is available through March 16, 2009 by dialing 719-457-0820 (PIN 1460424) or through the webcast.
Integra LifeSciences Holdings Corporation, a world leader in regenerative medicine, is dedicated to improving the quality of life for patients through the development, manufacturing and marketing of clinically relevant, innovative and cost-effective surgical implants and medical instruments. The Company's products are used to treat millions of patients every year, primarily in neurosurgery, orthopedics and general surgery. Integra's headquarters are in Plainsboro, New Jersey, and it has research and manufacturing facilities throughout the world. http://www.Integra-LS.com.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and reflect the Company's judgment as of the date of this release. Forward-looking statements include, but are not limited to, statements concerning future financial performance, including projections for revenues, GAAP and adjusted net income, GAAP and adjusted earnings per diluted share, acquisition and integration related costs and non-cash compensation expense associated with FAS 123R. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from predicted or expected results. Such risks and uncertainties include, but are not limited to, the Company's ability to maintain relationships with customers of acquired entities; physicians' willingness to adopt, and third-party payors' willingness to provide reimbursement for the Company's recently launched and planned products; initiatives launched by the Company's competitors; the Company's ability to secure regulatory approval for products in development; fluctuations in hospital spending for capital equipment; the Company's ability to comply with and obtain approvals for products of human origin and comply with recently enacted regulations regarding products containing materials derived from animal sources; difficulties in controlling expenses, including costs of legal compliance matters or internal controls review, improvement and remediation; the impact of changes in management or staff levels; the Company's ability to integrate acquired businesses; the Company's ability to leverage its existing selling organizations and administrative infrastructure; the Company's ability to increase product sales and gross margins, and control non-product costs; the amount and timing of acquisition and integration related costs; the geographic distribution of where the Company generates its taxable income, the timing and amount of share-based awards granted to employees; fluctuations in foreign currency exchange rates; and the economic, competitive, governmental, technological and other risk factors and uncertainties identified under the heading "Risk Factors" included in Item 1A of Integra's Annual Report on Form 10-K for the year ended December 31, 2007 and information contained in subsequent filings with the Securities and Exchange Commission.
Discussion of Adjusted Financial Measures
In addition to our GAAP results, we provide adjusted revenues, adjusted net income and adjusted earnings per diluted share. Adjusted revenues consist of growth in total revenues excluding the effects of currency exchange rates. Adjusted net income consists of net income, excluding (i) acquisition-related charges, (ii) facility consolidation, manufacturing and distribution transfer and system integration charges, (iii) certain employee termination and related costs, (iv) charges associated with discontinued or withdrawn product lines, (v) charges related to restructuring our European subsidiaries, (vi) charges related to litigation matters or disputes, (vii) intangible asset impairment charges, (viii) incremental professional and bank fees related to the delayed closing of financial statements, (ix) charges recorded in connection with terminating defined benefit pension plans, (x) charges relating to the grant of restricted stock units in connection with the extension of the term of the CEO's employment agreement, (xi) non-cash interest expense related to the application of FSP APB 14-1, (xii) the income tax expense/benefit related to these adjustments, (xiii) quarterly adjustments to income tax expense/benefit related to the cumulative impact of changes in estimated tax rates and certain infrequently occurring items, and (xiv) income tax expenses or gains related to restructuring our European subsidiaries. Adjusted earnings per diluted share are calculated by dividing adjusted net income for earnings per diluted share by adjusted diluted weighted average shares outstanding.
Integra believes that the presentation of adjusted revenues, adjusted net income and adjusted earnings per diluted share provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. For further information regarding why Integra believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the Company's Current Report on Form 8-K regarding this earnings press release filed today with the Securities and Exchange Commission. This Current Report on Form 8-K is available on the SEC's website at www.sec.gov or on our website at www.Integra-LS.com.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
TOTAL REVENUES $174,370 $157,645 $654,604 $550,459
Cost of product revenues 68,138 62,426 252,826 214,674
Research and development 10,186 11,813 60,495 30,658
Selling, general and
administrative 67,373 64,861 280,997 225,187
amortization 3,705 2,991 12,875 12,652
-------- -------- -------- --------
expenses 149,402 142,091 607,193 483,171
Operating income 24,968 15,554 47,411 67,288
Interest income 584 1,174 2,114 3,552
Interest expense (4,889) (3,853) (17,614) (13,749)
Other income (expense),
net (1,552) 3,200 (905) 2,971
-------- -------- -------- --------
Income before income
taxes 19,111 16,075 31,006 60,062
(benefit) (5,734) 10,692 (3,927) 26,591
-------- -------- -------- --------
Net income 24,845 5,383 34,933 33,471
Diluted net income per
share $ 0.85 $ 0.19 $ 1.22 $ 1.13
Weighted average common
shares outstanding for
diluted net income per
share 29,142 28,842 28,703 29,578
Listed below are the items included in revenues and net income that management excludes in computing the adjusted financial measures referred to in the text of this press release and further described under Discussion of Adjusted Financial Measures.
(In thousands, except per share amounts)
A. Growth in total revenues excluding the effects of currency
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 Change 2008 2007 Change
----------------------------------------------------
NeuroSciences $ 64,317 $ 65,427 (2%) $256,869 $242,631 6%
Orthopedics $ 62,828 $ 45,033 40% $217,953 $143,917 51%
Instruments* $ 47,225 $ 47,185 0% $179,782 $163,911 10%
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Net Sales $174,370 $157,645 11% $654,604 $550,459 19%
FX impact $ 3,540 -- ($ 5,586) --
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exchange rates $177,910 $157,644 13% $649,018 $550,459 18%
*During 2008, we eliminated certain distributed product lines from
the LXU Medical business. In the fourth quarter, this reduced our
revenues by $3.2 million. Since we acquired the LXU Medical
business in May 2007, we have eliminated distributed product lines
representing 54% of the acquired revenue base.
B. Items included in GAAP net income
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------------------------------
--------------------------------------------
charges 2,008 6,831 32,253 9,701
Employee termination
and related costs -- (131) -- (160)
Facility consolidation,
distribution transfer
and system integration
charges 232 328 1,035 1,106
Charges associated with
withdrawn product lines -- 550 1,207 2,006
European legal entities -- -- -- 335
litigation matters or
disputes 437 -- 437 138
impairments -- -- -- 1,014
Incremental audit, legal
related to the delayed
closing of financial
statements -- 1,389 1,041 1,389
benefit pension plans 372 -- 372 --
Charge related to grant
with extension of the
employment agreement -- -- 18,356 --
(benefit) related to
above adjustments (1,136) (1,504) (21,515) (4,612)
Quarterly adjustment to
cumulative impact of