Exhibit 99.1
[ORTHOFIX LOGO]
For Further Information:
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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 Record Second Quarter Sales of
$51.6 Million; an Increase of 13%
HUNTERSVILLE, N.C., July 24, 2003 - Orthofix International N.V. (NASDAQ:OFIX)
today announced results for the second quarter ended June 30, 2003.
For the three months ended June 30, 2003, sales were a record $51.6 million, an
increase of 13% over the $45.6 million reported during the same period in 2002.
The positive impact of foreign currency on sales for the quarter was $2.2
million. Net income for the second quarter ended June 30, 2003, was $6.5
million, or $0.44 per share, compared with $6.8 million, or $0.45 per share, for
the same period in 2002. Net income for the second quarter ended June 30, 2003,
included $1.3 million in litigation costs related to the KCI patent infringement
case. Excluding these litigation costs, net income for the second quarter ended
June 30, 2003, would have been $7.8 million, or $0.53 per share, an increase of
15% over the same period of the prior year. Diluted weighted average shares
outstanding were 14,753,417 and 15,080,655 during the three months ended June
30, 2003, and June 30, 2002, respectively.
For the six months ended June 30, 2003, sales were $99.7 million, an increase of
14% over the $87.2 million reported during the same period in 2002. The positive
impact of foreign currency on sales for the six month period was $4.1 million.
Net income for the six months ended June 30, 2003, was $12.4 million, or $0.85
per share, compared with $13.4 million, or $0.89 per share, for the same period
in 2002. Net income for the six months ended June 30, 2003, included $2.2
million in litigation costs related to the KCI patent infringement case.
Excluding KCI litigation costs, net income for the six months ended June 30,
2003, would have been $14.6 million, or $1.00 per share, an increase of 9% over
the same period of the prior year. Diluted weighted average shares outstanding
were 14,628,146 and 15,031,153 for the six months ended June 30, 2003, and June
30, 2002, respectively.
Charlie Federico, President and Chief Executive Officer, stated, "We continued
to experience strong growth in our core businesses of orthopedic devices and
stimulation, which grew 15% and 16%, respectively, in the second quarter over
the same period of the prior year and which year-to-date have grown 16% and 15%,
respectively, compared with the same period of the prior year. Our vascular
business has grown 11% year-to-date over the same period of the prior year. Our
Americas business continued its good growth, totaling $34.5 million, or 67% of
total sales, for the second quarter, an increase of 9% for the second quarter
and year-to-date over the same periods of the prior year. International sales,
including the positive effect of foreign currency, increased 22% for the second
quarter and 27% year-to-date
over the same periods in 2002. Further, during the second quarter, the OrthoRx
joint venture made additional progress by increasing revenues and reducing
start-up losses. Orthofix made a further investment in the joint venture of $1.5
million during the second quarter, which was matched by our new partner, Ferrer
Freeman and Company, following their purchase of HealthSouth's investment in the
joint venture."
Net sales by geographic destination for the periods ended June 30,
(In millions)
Three Months Ended June 30, Six Months Ended June 30,
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2003 2002 % Increase 2003 2002 % Increase
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Americas $ 34.5 $ 31.6 9% $ 65.7 $ 60.4 9%
International 17.1 14.0 22% 34.0 26.8 27%
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Total $ 51.6 $ 45.6 13% $ 99.7 $ 87.2 14%
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Net sales by product group for the periods ended June 30,
(In millions)
Three Months Ended June 30, Six Months Ended June 30,
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2003 2002 % Increase 2003 2002 % Increase
---------- ---------- --------------- ----------- ----------- ---------------
Orthopedic
Devices $ 16.4 $ 14.2 15% $ 31.6 $ 27.2 16%
Stimulation 23.7 20.4 16% 44.8 39.1 15%
Vascular (DVT) 5.8 5.7 2% 11.8 10.6 11%
---------- ---------- --------------- ----------- ----------- ---------------
Total Orthopedic 45.9 40.3 14% 88.2 76.9 15%
Non-Orthopedic 5.7 5.3 8% 11.5 10.3 12%
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Total $ 51.6 $ 45.6 13% $ 99.7 $ 87.2 14%
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Gross profit margin for the second quarter was 75% compared with 74% for the
same period of the prior year, reflecting the favorable impact of higher
stimulation sales, partially offset by the negative foreign currency impact from
foreign production of external fixation and vascular products, a significant
portion of which are sold in US dollars. Year-to-date gross profit margin of 74%
compared with 75% for the same period of the prior year reflects the negative
currency impact on gross margins of foreign produced products sold in US dollars
described above.
Operating income as a percent of sales was 20% for the quarter and year-to-date
compared with 25% for the same periods of the prior year. The decrease is
primarily attributable to higher operating expenses resulting from KCI
litigation costs, negative foreign currency impact on operating expenses, and
higher sales and marketing expenses including higher commissions on stimulation
sales and the cost of adding new sales people, launching the new PC.C.P product,
and training and education of surgeons and sales force as products are
introduced worldwide.
The Company's effective tax rate for the three and six month periods ended June
30, 2003, was negatively impacted 4.0% and 3.5%, respectively, due to KCI 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.
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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 SEC filings (including its Annual Report on Form 10-K for the
year ended December 31, 2002 and Quarterly Reports on Form 10-Q) and the
Company's quarterly press releases.
This news release, together with any information that would be required under
Regulation G, will be available in the "Press Release" section of the Company's
website specified above.
- Financial tables follow -
ORTHOFIX INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, U.S. Dollars, in thousands, except per share and share data)
For the three months For the six months
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ended June 30, ended June 30,
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2003 2002 2003 2002
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Net sales $ 51,565 $ 45,580 $ 99,746 $ 87,175
Cost of sales 13,009 11,840 25,595 21,751
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Gross profit 38,556 33,740 74,151 65,424
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Operating expenses
Sales and marketing 19,507 15,666 37,107 30,752
General and administrative 5,118 4,640 10,099 8,784
Research and development 2,128 1,971 4,258 4,103
Amortization 119 147 397 312
KCI litigation costs 1,264 -- 2,126 --
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28,136 22,424 53,987 43,951
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Operating income 10,420 11,316 20,164 21,473
Other income (expense) 24 (661) (302) (936)
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Net income before income tax 10,444 10,655 19,862 20,537
and minority interests
Income tax expense (3,949) (3,406) (7,414) (6,311)
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Net income before minority interests 6,495 7,249 12,448 14,226
Minority interests -- (473) -- (861)
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Net income $ 6,495 $ 6,776 $ 12,448 $ 13,365
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Net income per common share - diluted $ 0.44 $ 0.45 $ 0.85 $ 0.89
Weighted average number of common
shares outstanding - diluted 14,753,417 15,080,655 14,628,146 15,031,153
ORTHOFIX INTERNATIONAL N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, U.S. Dollars, in thousands)
As of As of
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June 30, December 31,
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2003 2002
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Assets
Current assets:
Cash and cash equivalents $ 38,684 $ 48,813
Trade accounts receivable 60,214 54,654
Inventory 23,730 23,471
Deferred income taxes 3,271 3,271
Prepaid expenses and other 5,778 6,789
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Total current assets 131,677 136,998
Securities and other investments 7,145 4,753
Property, plant and equipment, net 13,055 13,841
Intangible assets, net 77,872 62,995
Other long-term assets 1,445 2,187
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Total assets $ 231,194 $ 220,774
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Liabilities and shareholders' equity
Current liabilities:
Bank borrowings $ 2,854 $ 6,977
Current portion of long-term debt 161 399
Trade accounts payable 8,200 7,562
Other current liabilities 22,562 22,188
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Total current liabilities 33,777 37,126
Long-term debt 48 44
Deferred income taxes 1,907 2,202
Deferred income 2,500 2,500
Other long-term liabilities 45 58
Deferred compensation 1,001 893
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Total liabilities 39,278 42,823
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Minority interests 0 9,867
Shareholders' equity
Common shares 1,423 1,384
Additional paid-in capital 53,479 50,884
Less: Treasury shares, at cost (2,513) (5,281)
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52,389 46,987
Retained earnings 135,642 123,194
Accumulated other comprehensive income 3,885 (2,097)
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Total shareholders' equity 191,916 168,084
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Total liabilities, minority interests and shareholders' equity $ 231,194 $ 220,774
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ORTHOFIX INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, U.S. Dollars, in thousands)
For the six months ended June 30,
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2003 2002
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Net cash provided by operating activities $ 14,724 $ 11,144
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Cash flows from investing activities:
Investment in subsidiaries and affiliates (23,659) (7,254)
Capital expenditure (2,194) (3,084)
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Net cash used in investing activities (25,853) (10,338)
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Cash flows from financing activities:
Net repayment of loans and borrowings (4,809) (2,611)
Proceeds from issuance of common stock 9,483 13,268
Acquisition of treasury shares (4,395) (10,335)
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Net cash provided by financing activities 279 322
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Effect of exchange rate changes on cash 721 1,123
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Net (decrease) increase in cash and cash equivalents (10,129) 2,251
Cash and cash equivalents at the beginning of the period 48,813 34,273
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Cash and cash equivalents at the end of the period $ 38,684 $ 36,524
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