RTI Surgical (RTIX) 8-K Regeneration Technologies Announces 2004 Year End, Fourth Quarter Results

Exhibit 99.1

FOR RELEASE AT 4:00 PM ET	For more information, contact:
FEBRUARY 17, 2005	Thomas Rose
	Chief Financial Officer
	Wendy Crites Wacker, APR
	Corporate Communications
	Phone (386) 418-8888
	Susan A. Noonan
	The SAN Group
	Phone (212) 966-3650

REGENERATION TECHNOLOGIES ANNOUNCES 2004 YEAR END, FOURTH QUARTER RESULTS

Company Posts Record Net Revenue, Pursuing Strategic Alternatives To Enhance Shareholder Value

ALACHUA, Fla. (Feb. 17, 2005) – Regeneration Technologies, Inc. (RTI) (Nasdaq: RTIX), the Florida-based processor of orthopedic, cardiovascular and other allograft implants, announced today that the company’s net revenues were $92.7 million for the full year 2004 and $23.2 million for the fourth quarter of 2004. This compares to net revenues of $75.5 million for the full year 2003 and $12.4 million for the fourth quarter 2003.

For the full year 2004, the company reported net income of $6.2 million, compared to a net income of $6.4 million for the year 2003. Net income per diluted share for 2004 was $0.23 compared to net income per diluted share of $0.24 for the year 2003. Net income in the fourth quarter 2003 included the reversal of deferred tax valuation allowances of $2.7 million or $0.10 per diluted share.

For the fourth quarter ended December 31, 2004, the company reported net income of $1.6 million, compared to net income of $1.5 million for fourth quarter 2003. Net income per diluted share for the fourth quarter was $0.06, compared to net income per diluted share of $0.05 for fourth quarter 2003.

“We are pleased to report the highest annual net revenues in the history of the company,” said Brian K. Hutchison, RTI’s chairman, president and CEO. “We are proud of the strong foundation we have built of industry leadership in safety, effectiveness in maximizing the gift of donated tissue and focus on innovation that will fuel growth for our business in 2005 and beyond.”

Pursuit of Strategic Alternatives

RTI also announced today that it has retained financial advisor Lehman Brothers, Inc. to explore strategic alternatives available to the company.

“The officers and board of directors of RTI have been reviewing various opportunities that could enhance shareholder value,” Hutchison said. “As such, we have engaged Lehman Brothers to assist in exploring these strategic opportunities, which could include but are not limited to a possible sale to or merger of the company with a third party; new strategic alliances; or additional or alternative distribution models for both allograft and xenograft products.”

The company noted that that there can be no assurance that any transaction, new alliance, distribution arrangement or other corporate action will result from this effort. RTI assumes no obligation to make any further announcements regarding its exploration of these strategic alternatives unless and until a final decision is made.

Conference Call

RTI will hold a live conference call and simultaneous audio web cast today, Feb. 17, 2005 at 5:30 p.m. ET to discuss the fourth quarter and year end 2004 results. The conference call can be accessed by dialing 888-552-9191, passcode RTIXQ FOUR. The web cast can be accessed through the investor section of RTI’s web site at www.rtix.com. A telephone replay of the call will be available through March 17, 2005 and can be accessed by calling 866-431-7901; the replay will also be available at www.rtix.com.

About Regeneration Technologies, Inc.

RTI processes allograft tissue into shaped implants for use in orthopedic, cardiovascular and other surgeries with a commitment to science, safety and innovation. By processing allograft tissue into forms that can be used in many types of surgical procedures, RTI enables patients to benefit from the gift of donated tissues.

RTI also holds the patents on BioCleanse^®, the only proven tissue sterilization process validated to eliminate viruses, bacteria, fungi and spores from tissue without impacting the structural or biomechanical integrity of the allograft. The company has distributed more than 600,000 implants sterilized with the BioCleanse^® process with zero incidence of infection. RTI is accredited by the American Association of Tissue Banks and was named a 2004 Technology Pioneer by the World Economic Forum.

Except for historical information, any statements made in this press release about the company’s anticipated financial results, future operational results, regulatory approvals or changes to the company’s agreements with its distributors are forward-looking statements subject to risks and uncertainties, such as those described in the company’s public filings on file with the Securities and Exchange Commission. Actual results may differ materially from anticipated results reflected in these forward-looking statements. Copies of the company’s SEC filings may be obtained by contacting the company or the SEC or by visiting RTI’s web site atwww.rtix.com or the SEC’s web site atwww.sec.gov.

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REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(In thousands, except per share data)

	Three months ended December 31,						Twelve months ended December 31,
	2004			2003			2004			2003
Net revenues	$	23,207		$	12,443		$	92,703		$	75,510
Costs of processing and distribution		13,851			8,344			55,526			42,766
Gross profit		9,356			4,099			37,177			32,744
Expenses:
Marketing, general and administrative		6,073			5,269			23,224			23,515
Research and development		873			773			3,838			2,441
Asset abandonments		136			58			136			169
Total expenses		7,082			6,100			27,198			26,125
Operating income (loss)		2,274			(2,001	)		9,979			6,619
Other (expense) income:
Interest expense		(241	)		(62	)		(967	)		(981	)
Interest income		30			43			96			235
Total other expense - net		(211	)		(19	)		(871	)		(746	)
Income (loss) before income tax (expense) benefit		2,063			(2,020	)		9,108			5,873
Income tax (expense) benefit		(449	)		3,477			(2,953	)		483
Net income	$	1,614		$	1,457		$	6,155		$	6,356
Net income per common share - basic	$	0.06		$	0.05		$	0.23		$	0.24
Net income per common share - diluted	$	0.06		$	0.05		$	0.23		$	0.24
Weighted average shares outstanding - basic		26,640,438			26,510,440			26,593,030			26,365,348
Weighted average shares outstanding - diluted		27,049,488			27,042,522			27,063,283			26,999,175

REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES

Net Revenues

(In thousands)

	Three months ended December 31,				Twelve months ended December 31,
	2004		2003		2004		2003
Fees from tissue distribution
Spinal	$	14,795	$	5,068	$	60,611	$	46,159
Sports Medicine		2,035		2,221		9,002		8,855
Cardiovascular		2,177		1,251		7,355		5,141
General orthopedic		3,072		3,230		12,882		13,144
Other non-tissue revenues		1,128		673		2,853		2,211
Total	$	23,207	$	12,443	$	92,703	$	75,510

REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

	December 31, 2004		December 31, 2003
Assets
Current Assets:
Cash and cash equivalents	$	11,484	$	10,051
Restricted deposits		—		14,757
Accounts receivable - net		9,544		5,942
Inventories		40,431		41,655
Other current assets		7,550		6,177
Total current assets		69,009		78,582
Property, plant and equipment - net		44,424		43,689
Other assets		11,192		14,145
	$	124,625	$	136,416
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	7,797	$	18,919
Other current liabilities		7,117		19,967
Total current liabilities		14,914		38,886
Other liabilities		10,202		5,133
Total liabilities		25,116		44,019
Total stockholders’ equity		99,509		92,397
	$	124,625	$	136,416

REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2004			2003			2004			2003
Cash flows from operating activities:
Net income	$	1,614		$	1,457		$	6,155		$	6,356
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense		1,090			1,252			4,422			4,782
Change in working capital		(890	)		(1,802	)		(16,099	)		(11,636	)
Other		544			(3,919	)		2,676			(1,400	)
Net cash provided by (used in) operating activities		2,358			(3,012	)		(2,846	)		(1,898	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(529	)		(74	)		(2,717	)		(1,427	)
Additional cash paid for purchases of assets		—			—			—			(250	)
Proceeds from sale of property, plant and equipment		—			3,032			—			3,032
Net cash (used in) provided by investing activities		(529	)		2,958			(2,717	)		1,355
Cash flows from financing activities:
Proceeds of issuance of term loan		—			—			9,000			—
Payments on capital lease and note obligations		(859	)		(445	)		(1,632	)		(1,888	)
Payment on term loan		—			(3,032	)		(13,193	)		(3,032	)
Decrease in restricted deposits		—			3,620			14,757			3,753
Other		55			237			(1,936	)		1,950
Net cash (used in) provided by financing activities		(804	)		380			6,996			783
Net increase in cash and cash equivalents		1,025			326			1,433			240
Cash and cash equivalents, beginning of period		10,459			9,725			10,051			9,811
Cash and cash equivalents, end of period	$	11,484		$	10,051		$	11,484		$	10,051