[GRAPHIC OMITTED]
For Further Information:
Charles W. Federico Thomas Hein
Group President & CEO CFO
Orthofix International N.V. Orthofix International N.V.
704.948.2600 704.948.2600
Orthofix Reports First Quarter Sales Increase of 16%;
For a Record $48.2 Million
HUNTERSVILLE, N.C., April 24, 2003 - Orthofix International N.V. (NASDAQ:OFIX)
today announced results for the first quarter ended March 31, 2003.
Sales for the first quarter ended March 31, 2003, were a record $48.2 million,
an increase of 16% over the $41.6 million reported during the same period in
2002. The positive impact of foreign currency on sales was $1.9 million.
Net income for the first quarter ended March 31, 2003, was $6.0 million, or
$0.41 per share. Based upon an assessment of the merits of the case, the Company
incurred $0.9 million in litigation costs in the first quarter related to the
KCI patent infringement case. Excluding these litigation costs, net income for
the first quarter ended March 31, 2003, would have been $6.8 million, or $0.47
per share, compared to $6.6 million, or $0.44 per share, for the same period in
2002. Diluted weighted average shares outstanding were 14,499,614 and 15,000,213
during 2003 and 2002, respectively.
Charlie Federico, President and Chief Executive Officer, stated, "We continue to
experience strong growth in our core businesses of orthopedic devices and
stimulation which grew 16% and 13%, respectively, over the same period of the
prior year. As expected, the growth in our vascular business returned to
double-digits for the first quarter with an impressive 22% increase over the
same period of the prior year and an 11% increase over the previous quarter. Our
Americas business continued its good growth, totaling $31.2 million, or 65% of
total sales. International sales, including the positive effect of foreign
currency, increased 33% over the same period of 2002."
Net sales by geographic destination for the three months ended March 31,
(In millions)
3 Months Ended March 31,
--------------------------------------------------------
2003 2002 % Increase
-------------- ------------- --------------------
Americas $ 31.2 $ 28.8 8%
International 17.0 12.8 33%
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Total $ 48.2 $ 41.6 16%
============== ============= ====================
Net sales by product group for the three months ended March 31,
(In millions)
3 Months Ended March 31,
--------------------------------------------------------
2003 2002 % Increase
-------------- ------------- --------------------
Orthopedic
Devices $ 15.2 $ 13.1 16%
Stimulation 21.1 18.7 13%
Vascular (DVT) 6.0 4.9 22%
-------------- ------------- --------------------
Total Orthopedic 42.3 36.7 15%
Non-Orthopedic 5.9 4.9 20%
-------------- ------------- --------------------
Total $ 48.2 $ 41.6 16%
============== ============= ====================
Gross profit margins for the first quarter were 74% compared to 76% for the same
period of the prior year, reflecting the impact of product mix of approximately
$0.2 million and foreign currency of approximately $0.9 million. Gross profit
margins held constant at 74% compared to the fourth quarter of 2002.
Operating income as a percent of sales dropped from 24% during the same quarter
of 2002 to 20% for the current quarter. This decrease represents approximately
$2.0 million and consists of $0.9 million for KCI litigation costs and $0.7
million of foreign currency impact. The Company also incurred additional
expenses associated with becoming a US registrant and invested in several areas
of sales and marketing during the first quarter. Twenty-two new direct sales
people were hired, trained and equipped to have a meaningful impact on sales in
2003. The Company launched the PC.CP product in the International market with a
large training seminar for surgeons in Verona, and in preparation for the launch
conducted a training meeting for the sales force. Expense ratios are expected to
return to prior year levels as the year progresses, with the exception of legal
expenses that will be incurred associated with the on-going patent infringement
action against KCI.
The Company's annualized tax rate of 32-33% was negatively impacted 3.5% due to
legal expenses incurred in a low tax jurisdiction.
Orthofix International N.V. is an international corporation, which develops,
produces and markets innovative products in the medical device sector. Its
products include Spinal-Stim(R) Lite for the enhanced healing of spinal fusions,
the Orthotrac Pneumatic Vest(R) for chronic low back pain, the EZBrace LSO(R)
for spine stabilization, the Physio-Stim(R) Lite for the healing of un-united
fractures, the OSCAR(R) ultrasonic bone cement removal system for hip revision
procedures, the A-V Impulse System(R) for enhancing venous circulation, the
Orthofix(R) external fixation range for fractures and limb reconstruction and
the Orthofix ISKD(R) internal lengthener.
For more information, please visit our corporate website at
http://www.orthofix.com.
Certain of the matters discussed in this news release are forward-looking
statements that involve risks and uncertainties, including, without limitation,
the acceptance of new products in the market and the impact of competitive
products and other risks and uncertainties. These are detailed from time to time
in the Company's periodic reports (including the Annual Report on Form 10-K for
the year ended December 31, 2002, filed with the United States Securities and
Exchange Commission (the "SEC"), future Quarterly Reports on Form 10-Q and the
Company's quarterly press releases which are available to shareholders and filed
with the SEC on Form 8-K).
- Financial tables follow -
ORTHOFIX INTERNATIONAL N.V.
CONSOLIDATED INCOME STATEMENTS
In thousands,except per share and share data
For the three months
---------------------------------
ended March 31,
------------------
---------------------------------
2003 2002
--------------- ---------------
(Unaudited) (Unaudited)
Net sales $ 48,181 $ 41,595
Cost of sales 12,585 9,911
--------------- ---------------
Gross profit 35,596 31,684
--------------- ---------------
Operating expenses
Sales and marketing 17,600 15,084
General and administrative 4,982 4,145
Research and development 2,131 2,132
Amortization 278 165
KCI litigation costs 862 0
--------------- ---------------
25,853 21,526
--------------- ---------------
Operating income 9,743 10,158
Other income (loss) (326) (275)
--------------- ---------------
Net income before income tax 9,417 9,883
and minority interests
Income tax expense (3,464) (2,905)
--------------- ---------------
Net income before minority interests 5,953 6,978
Minority interests 0 (388)
--------------- ---------------
Net income $ 5,953 $ 6,590
--------------- ---------------
Net income per common share - diluted $ 0.41 $ 0.44
Weighted average number of common
shares outstanding - diluted 14,499,614 15,000,213
ORTHOFIX INTERNATIONAL N.V.
CONSOLIDATED BALANCE SHEETS
In thousands
As of As of
----------------- ----------------
March 31, December 31,
----------------- -----------------
2003 2002
----------------- ----------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 41,552 $ 48,813
Trade accounts receivable 53,936 54,654
Inventory 22,250 23,471
Deferred income taxes 3,271 3,271
Prepaid expenses and other 4,374 6,789
----------------- ----------------
Total current assets 125,383 136,998
Securities and other investments 5,787 4,753
Property, plant and equipment, net 13,330 13,841
Intangible assets, net 75,545 62,995
Other long-term assets 2,434 2,187
----------------- ----------------
Total assets $ 222,479 $ 220,774
================= ================
Liabilities and shareholders' equity
Current liabilities:
Bank borrowings $ 5,583 $ 6,977
Current portion of long-term debt 159 399
Trade accounts payable 8,039 7,562
Other current liabilities 20,332 22,188
----------------- ----------------
Total current liabilities 34,113 37,126
Long-term debt 46 44
Deferred income taxes 1,915 2,202
Deferred income 2,500 2,500
Other long-term liabilities 43 58
Deferred compensation 953 893
----------------- ----------------
Total liabilities 39,570 42,823
----------------- ----------------
Minority interests 0 9,867
Shareholders' equity
Common shares 1,421 1,384
Additional paid-in capital 54,091 50,884
Less: Treasury shares, at cost (1,878) (5,281)
----------------- ----------------
53,634 46,987
Retained earnings 129,147 123,194
Accumulated other comprehensive income 128 (2,097)
----------------- ----------------
Total shareholders' equity 182,909 168,084
----------------- ----------------
Total liabilities, minority interests
and shareholders' equity $ 222,479 $ 220,774
================= ================
ORTHOFIX INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
For the three months ended March 31,
---------------------------------------------
--------------- ---------------
2003 2002
--------------- ---------------
(Unaudited) (Unaudited)
Net cash provided by operating activities $ 11,309 $ 4,936
--------------- ---------------
Cash flows from investing activities:
Investment in subsidiaries and affiliates (22,071) (2,041)
Capital expenditure (974) (1,799)
Other (300) 0
--------------- ---------------
Net cash used in investing activities (23,345) (3,840)
--------------- ---------------
Cash flows from financing activities:
Net (repayment) proceeds of loans and borrowings (1,881) (1,239)
Proceeds from issuance of common stock 8,385 864
Acquisition of treasury shares (1,880) (3,069)
--------------- ---------------
Net cash provided (used) in financing activities 4,624 (3,444)
--------------- ---------------
Effect of exchange rate changes on cash 151 (336)
--------------- ---------------
Net (decrease) increase in cash and cash equivalents (7,261) (2,684)
Cash and cash equivalents at the beginning of the period 48,813 34,273
--------------- ---------------
Cash and cash equivalents at the end of the period $ 41,552 $ 31,589
--------------- ---------------