Exhibit 99
Wright Medical Group, Inc. Reports Results for Fourth Quarter Ended
December 31, 2003
Company Posts Record Quarterly and Full Year Results
ARLINGTON, Tenn.--(BUSINESS WIRE)--Feb. 12, 2004--Wright Medical
Group, Inc. (NASDAQ:WMGI), a global orthopaedic medical device company
specializing in the design, manufacture and marketing of
reconstructive joint devices and biologics, today reported record
financial results for its fourth quarter and full year ended December
31, 2003.
Net sales totaled $68.9 million during the fourth quarter ended
December 31, 2003, representing a 32% increase over net sales of $52.3
million during the fourth quarter of 2002. Net sales during the fourth
quarter reached a record level for any quarter in Wright's history.
Excluding the impact of foreign currency, net sales increased 25%
during the fourth quarter. Generally Accepted Accounting Principles
("GAAP") net income for the fourth quarter of 2003 totaled $6.7
million, or $.19 per diluted share. GAAP net income for the fourth
quarter of 2002 was $10.4 million, or $.30 per diluted share,
including the favorable effect of a $5.5 million non-cash income tax
benefit and $4.9 million, or $.14 per diluted share excluding such
benefit.
For the full year 2003, the Company's net sales totaled a record
$248.9 million, representing a 24% increase over net sales of $200.9
million in 2002. Excluding the impact of foreign currency, net sales
increased 18% during 2003. For the full year 2003, GAAP net income
totaled $17.4 million, or $.50 per diluted share, including the
after-tax effect of a first quarter $4.6 million in-process research
and development ("IPRD") charge which resulted from the Company's
acquisition of certain ADCON(R) Gel technology assets. For the full
year 2002, GAAP net income totaled $25.1 million, or $.75 per diluted
share, including the fourth quarter 2002 $5.5 million income tax
benefit, the favorable after-tax benefit of the Company's first
quarter 2002 $4.2 million arbitration settlement award, and the
favorable after-tax benefit of the Company's second quarter 2002
resolution of an $800,000 royalty obligation. Excluding those
previously mentioned items, net income for the full year 2003 would
have been $20.2 million, or $0.58 per diluted share, compared to $16.4
million, or $0.49 per diluted share, for the full year 2002. A
reconciliation of GAAP to "as adjusted" results is included in the
attached financial tables.
F. Barry Bays, President and Chief Executive Officer commented,
"We are very pleased with our fourth quarter sales and operating
results, which exceeded the upper ends of their respective outlook
ranges and provided an excellent conclusion to what has been an
outstanding year for Wright Medical. Our fourth quarter net sales
growth rate of 32% represents the fastest annual rate of sales growth
we have reported as a public company. These results were driven by
continued outstanding performances across all product lines, including
excellent fourth quarter sales performances by our biologics and
extremity product lines, which experienced sales growth rates of 33%
and 31%, respectively. At the same time, the exceptional performance
experienced throughout the earlier part of this year by our hip
product line continued into the fourth quarter, with our domestic hip
business achieving growth of 63% over the prior year fourth quarter.
As anticipated, our hip business benefited during the fourth quarter
from the continued success of our LINEAGE(R) ceramic-on-ceramic
system, our CONSERVE(R) Total hip system with BFH(R) Big Femoral Head
technology and our PROFEMUR(R) line of primary stems featuring
innovative neck modularity.
Mr. Bays continued, "In addition to our excellent sales
performance, we are also very pleased with our fourth quarter and full
year 2003 profitability results. Our ongoing ability to leverage the
Company's existing infrastructure enabled us to achieve fourth quarter
and full year operating income growth, as adjusted, of 61% and 47%,
respectively, while still making a significant increase in our
investment in research and development activities. Additionally,
despite a higher tax rate, adjusted net income, grew 37% and 23%, for
the fourth quarter and full year, respectively. Looking ahead, our
outlook for 2004 reflects another solid year of continued sales and
earnings growth."
Sales Review
The Company experienced global growth across all its major product
lines during the fourth quarter and full year of 2003, with the
Company's hip, extremity, and biologics product lines again posting
exceptional growth rates. Specifically, global net sales of the
Company's hip, biologics, extremity and knee product lines increased
by 48%, 33%, 31% and 17%, respectively, during the fourth quarter of
2003 when compared to the fourth quarter of 2002, and 37%, 31%, 26%
and 9%, respectively during the full year of 2003 when compared to the
full year of 2002.
Domestic sales totaled $41.0 million during the fourth quarter of
2003 and $152.9 million for the full year, representing increases of
32% and 25% compared to the respective year-ago periods. Fourth
quarter 2003 domestic sales of the Company's hip, extremity,
biologics, and knee product lines reflected growth of 63%, 37%, 28%
and 13%, respectively. Full year 2003 domestic sales of the Company's
hip, extremity, biologics, and knee product lines reflected growth of
49%, 32%, 29% and 5%, respectively.
International sales totaled $27.9 million during the fourth
quarter, an increase of 31% compared to the fourth quarter of 2002.
For the full year 2003, international sales reached $96.1 million, an
increase of 22% compared to 2002. The Company's international sales
results included favorable foreign currency impacts totaling
approximately $3.5 million and $11.9 million during the fourth quarter
and full year 2003, respectively.
Outlook
The Company has upwardly revised its previously-communicated sales
target for the full year 2004 to a range of $280 million to $287
million, while its profit objectives remain consistent with previous
guidance for the full year, with operating income targeted in a range
of $38.5 to $42 million and earnings per share targeted at $0.66 to
$0.72 per diluted share.
The Company's anticipated targets for the first quarter of 2004
for net sales are in the range of $69 million to $71 million,
representing sales growth objectives between approximately 18% and 21%
for the quarter, with operating income results ranging from $9.5
million to $10.5 million and earnings per share results ranging from
$0.16 to $0.18 per diluted share. These targets for both the full year
and first quarter of 2004 exclude the effect of possible future
acquisitions or other material future business developments.
The Company's anticipated targets for net sales, income from
operations and earnings per share are forward-looking statements. They
are subject to various risks and uncertainties that could cause the
Company's actual results to differ materially from the anticipated
targets. The anticipated targets are not predictions of the Company's
actual performance. See the cautionary information about
forward-looking statements in the "Safe-Harbor Statement" section of
this press release.
Conference Call
As previously announced, the Company will host a conference call
starting at 3:30 p.m. (Central Time) today. The live dial-in number
for the call is 800-915-4836 (domestic)/ 973-317-5319 (international).
To access a simultaneous webcast of the conference call via the
internet, go to the "Corporate - Investor Information" section of the
Company's website located at www.wmt.com. A replay of the conference
call by telephone will be available starting today and continuing
until 10:59 p.m. (Central Time) on February 19, 2004. To hear this
replay, dial 800-428-6051 (domestic) or 973-709-2089 (international)
and enter the registration number 333606. A replay of the conference
call will also be available via the internet starting today and
continuing for at least 12 months. To access a replay of the
conference call via the internet, go to the "Corporate - Investor
Information - Audio Archives" section of the Company's website located
at www.wmt.com.
The conference call may include a discussion of non-GAAP financial
measures. Reference is made to the most directly comparable GAAP
financial measures, the reconciliation of the differences between the
two financial measures, and the other information included in this
press release or otherwise available in the "Corporate - Investor
Information - Supplemental Financial Information" section of the
Company's website located at www.wmt.com.
The conference call may include forward-looking statements. See
the cautionary information about forward-looking statements in the
"Safe-Harbor Statement" section of this press release.
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures, such as net income,
as adjusted, income from operations, as adjusted, and net income, as
adjusted, per diluted share. The Company's management believes that
the presentation of these measures provides useful information to
investors. These measures may assist investors in evaluating the
Company's operations, period over period. The measures exclude such
items as business development activities including purchased
in-process research and development and the financial impact of
significant litigation, which may be highly variable, difficult to
predict and of a size that could have substantial impact on the
Company's reported results of operations for a period. Management uses
these measures internally for evaluation of the performance of the
business, including the allocation of resources and the evaluation of
results relative to employee performance compensation targets.
Investors should consider these non-GAAP measures only as a supplement
to, not as a substitute for or as superior to, measures of financial
performance prepared in accordance with GAAP.
Safe-Harbor Statement
This press release may contain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements made in this press release, other than statements of
historical fact, are forward-looking statements. Forward-looking
statements reflect management's current knowledge, assumptions,
beliefs, estimates, and expectations and express management's current
views of future performance, results, and trends. The Company wishes
to caution readers that actual results might differ materially from
those described in the forward-looking statements. Forward-looking
statements are subject to a number of risks and uncertainties,
including the factors discussed in the Company's filings with the
Securities and Exchange Commission (including the Company's annual
report on Form 10-K for the year ended December 31, 2002, and in
subsequent quarterly reports on Form 10-Q), which could cause the
Company's actual results to materially differ from those described in
the forward-looking statements. Although the Company believes that the
forward-looking statements are accurate, there can be no assurance
that any forward-looking statement will prove to be accurate. A
forward-looking statement should not be regarded as a representation
by the Company that the results described therein will be achieved.
The Company wishes to caution readers not to place undue reliance on
any forward-looking statement. The forward-looking statements are made
as of the date of this press release. The Company assumes no
obligation to update any forward-looking statement after this date.
Wright Medical Group, Inc. is a global orthopaedic medical device
company specializing in the design, manufacture and marketing of
reconstructive joint devices and biologics. The Company has been in
business for more than 50 years and markets its products in over 40
countries worldwide. For more information about Wright Medical, visit
our website at www.wmt.com.
Wright Medical Group, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data--unaudited)
Three Months Ended Year Ended
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
--------- --------- --------- ---------
Net sales $68,890 $52,310 $248,932 $200,873
Cost of sales 19,436 14,648 67,815 55,616
--------- --------- --------- ---------
Gross profit 49,454 37,662 181,117 145,257
Operating Expenses:
Selling, general and
administrative 33,052 27,250 127,612 106,875
Research and development 4,311 2,468 16,151 10,357
Amortization of intangible
assets 935 1,096 3,562 3,946
Stock-based expense 757 408 2,068 1,724
Acquired in-process
research and development
costs - - 4,558 -
Arbitration settlement award - - - (4,200)
--------- --------- --------- ---------
Total operating expenses 39,055 31,222 153,951 118,702
--------- --------- --------- ---------
Income from operations 10,399 6,440 27,166 26,555
Interest expense, net 255 245 1,107 938
Other income, net (394) (289) (1,060) (1,277)
--------- --------- --------- ---------
Income before income
taxes 10,538 6,484 27,119 26,894
Provision (benefit) for income
taxes 3,791 (3,891) 9,722 1,834
--------- --------- --------- ---------
Net income $6,747 $10,375 $17,397 $25,060
========= ========= ========= =========
Net income per common share,
basic $0.20 $0.32 $0.53 $0.79
========= ========= ========= =========
Net income per common share,
diluted $0.19 $0.30 $0.50 $0.75
========= ========= ========= =========
Weighted-average number of
common shares outstanding,
basic 33,003 32,633 32,857 31,870
========= ========= ========= =========
Weighted-average number of
common shares outstanding,
diluted 34,948 34,127 34,561 33,550
========= ========= ========= =========
Wright Medical Group, Inc.
Consolidated Sales Analysis
(dollars in thousands -- unaudited)
Three Months Ended Year Ended
------------------------ --------------------------
Dec. 31, Dec. 31, % Dec. 31, Dec. 31, %
2003 2002 change 2003 2002 change
-------- -------- ------ --------- --------- ------
Geographic
- ------------------
Domestic $41,007 $31,007 32.3% $152,864 $122,348 24.9%
International 27,883 21,303 30.9% 96,068 78,525 22.3%
-------- -------- ------ --------- --------- ------
Total net sales $68,890 $52,310 31.7% $248,932 $200,873 23.9%
======== ======== ====== ========= ========= ======
Product Line
- ------------------
Knee products $20,897 $17,897 16.8% $78,338 $72,058 8.7%
Hip products 22,847 15,448 47.9% 78,071 56,945 37.1%
Biologics products 13,980 10,499 33.2% 50,056 38,347 30.5%
Extremity products 8,484 6,456 31.4% 31,876 25,367 25.7%
Other 2,682 2,010 33.4% 10,591 8,156 29.9%
-------- -------- ------ --------- --------- ------
Total net sales $68,890 $52,310 31.7% $248,932 $200,873 23.9%
======== ======== ====== ========= ========= ======
Wright Medical Group, Inc.
Reconciliation of Income from Operations
to Income from Operations, As Adjusted
(dollars in thousands -- unaudited)
Three Months Ended Year Ended
------------------ -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
--------- -------- --------- ---------
Income from Operations, as
reported $10,399 $6,440 $27,166 $26,555
Add: Acquired in-process
research and development costs - - 4,558 -
Less: Arbitration settlement
award - - - (4,200)
Less: Royalty resolution - - - (800)
--------- -------- --------- ---------
Income from Operations, as
adjusted $10,399 $6,440 $31,724 $21,555
========= ======== ========= =========
Wright Medical Group, Inc.
Reconciliation of Net Income to Net Income, As Adjusted
(in thousands, except per share data -- unaudited)
Three Months Ended YearEnded
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
---------- -------- --------- ---------
Net income, as reported $6,747 $10,375 $17,397 $25,060
Add: Acquired in-process
research and development
costs, net of tax - - 2,819 -
Less: Arbitration settlement
award, net of tax - - - (2,604)
Less: Royalty resolution,
net of tax - - - (593)
Less: Income tax benefit - (5,465) - (5,465)
---------- -------- --------- ---------
Net income, as adjusted $6,747 $4,910 $20,216 $16,398
========== ======== ========= =========
Net income, as adjusted,
per common share, basic $0.20 $0.15 $0.62 $0.51
========== ======== ========= =========
Net income, as adjusted,
per common share, diluted $0.19 $0.14 $0.58 $0.49
========== ======== ========= =========
Weighted-average number of
common shares outstanding,
basic 33,003 32,633 32,857 31,870
========== ======== ========= =========
Weighted-average number of
common shares outstanding,
diluted 34,948 34,127 34,561 33,550
========== ======== ========= =========
Wright Medical Group, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands--unaudited)
Dec. 31, Dec. 31,
2003 2002
--------- ---------
Assets:
Current Assets:
Cash and cash equivalents $66,571 $51,373
Accounts receivable, net 55,821 39,571
Inventories 64,204 55,628
Prepaid expenses and other current assets 23,928 26,417
--------- ---------
Total current assets 210,524 172,989
--------- ---------
Property, plant and equipment, net 66,915 59,215
Intangible assets, net 29,894 26,908
Other assets 14,770 17,258
--------- ---------
Total assets $322,103 $276,370
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $14,227 $9,878
Accrued expenses and other current liabilities 42,814 29,878
Current portion of long-term obligations 6,228 5,676
--------- ---------
Total current liabilities 63,269 45,432
--------- ---------
Long-term obligations 11,096 16,586
Other liabilities 9,420 9,353
--------- ---------
Total liabilities 83,785 71,371
--------- ---------
Stockholders' equity 238,318 204,999
--------- ---------
Total liabilities and stockholders' equity $322,103 $276,370
========= =========
CONTACT: Wright Medical Group, Inc., Arlington
John K. Bakewell, 901-867-4527
www.wmt.com