Exhibit 99
Wright Medical Group, Inc. Reports Results for
Second Quarter Ended June 30, 2004
ARLINGTON, Tenn.--(BUSINESS WIRE)--July 27, 2004--
Company Posts Record Quarterly Sales Performance
and 34% Increase in Net Income
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 financial results for its second quarter ended June 30, 2004.
Net sales totaled $75.6 million during the second quarter of 2004,
representing a 22% increase over net sales of $62.2 million during the
second quarter of 2003. Net sales during the second quarter reached a
record level for any quarter in the Company's history, representing
Wright's third sequential quarter of all-time record quarterly sales
performance. Excluding the impact of foreign currency, net sales
increased 19% during the second quarter. Net income for the second
quarter of 2004 totaled $6.7 million, or $.19 per diluted share, an
increase of 34% compared to net income for the second quarter of 2003
of $5.0 million, or $.15 per diluted share.
For the first six months of 2004, the Company's net sales totaled
$150.5 million, representing a 25% increase over net sales of $120.8
million for the first half of 2003. Excluding the impact of foreign
currency, net sales increased 21% during the first half of 2004. For
the first six months of 2004, net income totaled $13.3 million, or
$.38 per diluted share. Net income for the first six months of 2003
totaled $7.0 million, or $.21 per diluted share, including the
after-tax effect of a $4.6 million in-process research and development
("IPRD") charge that resulted from the Company's acquisition of
certain ADCON(R) Gel technology assets during the first quarter of
2003. Excluding the effect of the 2003 IPRD charge, net income for the
first half of the year increased 35%, from $9.8 million in 2003, as
adjusted, to $13.3 million in 2004, while diluted earnings per share
increased 31%, from $.29 per diluted share in 2003, as adjusted, to
$.38 in 2004. A reconciliation of GAAP to "as adjusted" results is
included in the attached financial tables.
F. Barry Bays, Executive Chairman of the Board of Directors
commented, "We are very pleased with our second quarter earnings
performance, which achieved the upper end of our communicated outlook
range, and also our strong sales performance, which surpassed the
quarterly sales targets we had established previously. Notably, during
the second quarter we again posted a rate of sales growth that places
us among the leaders in our industry. Our second quarter success was
the result of continued growth across all product lines, including the
outstanding sales performances of our biologics and hip product lines,
which both achieved growth rates of 30% globally. Our hip business
continued to deliver broad-based growth, particularly in our domestic
markets, with ceramic and metal hard bearing surfaces leading the
way."
Laurence Y. Fairey, recently-appointed President and Chief
Executive Officer commented, "Our record second quarter sales
performance and exceptional operating results demonstrate the strong
momentum that resides within Wright. The operating expense leverage
that has contributed to our bottom-line expansion for the past several
years was once again evident during the quarter, as we continued to
leverage existing infrastructure. This, combined with our sales
performance, generated second quarter operating income and net income
growth of 40% and 34%, respectively. We believe that Wright has the
opportunity to maintain these trends, and we eagerly look forward to
the second half of 2004 and beyond."
Sales Review
Globally, the Company experienced growth across all of its major
product lines during the second quarter of 2004, 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 30%, 30%, 16%
and 14%, respectively, during the second quarter of 2004 when compared
to the second quarter of 2003.
Domestic sales totaled $44.8 million during the second quarter of
2004 and $89.1 million during the first half of 2004, representing
increases of 19% and 23%, compared to the respective year-ago periods.
Second quarter domestic sales of the Company's hip, biologics,
extremity and knee product lines reflected growth of 36%, 25%, 12% and
6%, respectively.
International sales totaled $30.9 million during the second
quarter, an increase of 25% compared to the second quarter of 2003.
For the first half of 2004, international sales reached $61.4 million,
an increase of 27% compared to the first half of 2003. The Company's
international sales results included favorable foreign currency
impacts totaling approximately $1.4 million and $4.9 million during
the second quarter and the first half of 2004, respectively.
Outlook
The Company has upwardly-revised its previously-communicated sales
target for the full year 2004 to a target range of $294 million to
$297 million, and has increased the lower end of its
previously-communicated earnings per share outlook, for a revised
target range of $0.72 to $0.75 per diluted share for 2004.
The Company's anticipated targets for the third quarter of 2004
for net sales are in the range of $68 million to $70 million,
representing sales growth objectives between approximately 15% and 18%
for the quarter, with earnings per share results ranging from $0.13 to
$0.15 per diluted share. These targets for both the full year and
third quarter of 2004 exclude the effect of possible future
acquisitions or other material future business developments.
The Company's anticipated targets for net sales, operating income
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 800-818-5264 (domestic) or 913-981-4910
(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 at 7:30
p.m. (Central Time) today and continuing until 12:00 a.m. (Central
Time) on August 2, 2004. To hear this replay, dial 888-203-1112
(domestic) or 719-457-0820 (international) and enter the registration
number 296158. 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 operating
income, as adjusted, net income, 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 contains "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, 2003), 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
the Company's website at www.wmt.com.
Wright Medical Group, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data--unaudited)
Three Months Ended Six Months Ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
-------- -------- --------- ---------
Net sales $75,616 $62,152 $150,533 $120,774
Cost of sales 21,383 17,386 41,769 32,926
-------- -------- --------- ---------
Gross profit 54,233 44,766 108,764 87,848
Operating expenses:
Selling, general and
administrative 37,714 31,963 74,848 62,268
Research and development 4,524 3,908 9,506 7,443
Amortization of intangible
assets 928 923 1,870 1,727
Stock-based expense 465 420 889 829
Acquired in-process research
and development costs - - - 4,558
-------- -------- --------- ---------
Total operating expenses 43,631 37,214 87,113 76,825
-------- -------- --------- ---------
Operating income 10,602 7,552 21,651 11,023
Interest expense, net 301 312 585 578
Other income, net (52) (481) (14) (511)
-------- -------- --------- ---------
Income before income taxes 10,353 7,721 21,080 10,956
Provision for income taxes 3,665 2,723 7,778 3,957
-------- -------- --------- ---------
Net income $ 6,688 $ 4,998 $ 13,302 $ 6,999
======== ======== ========= =========
Net income per share, basic $ 0.20 $ 0.15 $ 0.40 $ 0.21
======== ======== ========= =========
Net income per share, diluted $ 0.19 $ 0.15 $ 0.38 $ 0.21
======== ======== ========= =========
Weighted-average number of
common shares outstanding,
basic 33,347 32,772 33,212 32,744
======== ======== ========= =========
Weighted-average number of
common shares outstanding,
diluted 35,493 34,237 35,388 34,085
======== ======== ========= =========
Wright Medical Group, Inc.
Consolidated Sales Analysis
(dollars in thousands--unaudited)
Three Months Ended Six Months Ended
-------------------------- ----------------------------
June 30, June 30, % June 30, June 30, %
2004 2003 change 2004 2003 change
-------- -------- -------- --------- --------- --------
Geographic
- ----------
Domestic $44,751 $37,494 19.4% $ 89,128 $ 72,574 22.8%
International 30,865 24,658 25.2% 61,405 48,200 27.4%
-------- -------- -------- --------- --------- --------
Total net
sales $75,616 $62,152 21.7% $150,533 $120,774 24.6%
======== ======== ======== ========= ========= ========
Product Line
- ------------
Hip products $25,266 $19,502 29.6% $ 50,127 $ 37,192 34.8%
Knee products 22,475 19,755 13.8% 45,214 39,419 14.7%
Biologics
products 15,980 12,275 30.2% 30,700 23,684 29.6%
Extremity
products 9,059 7,805 16.1% 18,313 15,235 20.2%
Other 2,836 2,815 0.7% 6,179 5,244 17.8%
-------- -------- -------- --------- --------- --------
Total net
sales $75,616 $62,152 21.7% $150,533 $120,774 24.6%
======== ======== ======== ========= ========= ========
Wright Medical Group, Inc.
Reconciliation of Operating Income to Operating Income, As Adjusted
(dollars in thousands--unaudited)
Three Months Ended Six Months Ended
------------------ -----------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
-------- --------- -------- --------
Operating income, as reported $10,602 $ 7,552 $21,651 $11,023
Add: Acquired in-process
research and development costs - - - 4,558
-------- --------- -------- --------
Operating income, as adjusted $10,602 $ 7,552 $21,651 $15,581
======== ========= ======== ========
Wright Medical Group, Inc.
Reconciliation of Net Income to Net Income, As Adjusted
(in thousands, except per share data--unaudited)
Three Months Ended Six Months Ended
------------------ -----------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
--------- -------- -------- --------
Net income, as reported $6,688 $4,998 $13,302 $6,999
Add: Acquired in-process research
and development costs, net of tax - - - 2,819
--------------------------- --------
Net income, as adjusted $6,688 $4,998 $13,302 $9,818
========= ======== ======== ========
Net income, as adjusted, per
share, basic $ 0.20 $ 0.15 $ 0.40 $ 0.30
========= ======== ======== ========
Net income, as adjusted, per
share, diluted $ 0.19 $ 0.15 $ 0.38 $ 0.29
========= ======== ======== ========
Weighted-average number of common
shares outstanding, basic 33,347 32,772 33,212 32,744
========= ======== ======== ========
Weighted-average number of common
shares outstanding, diluted 35,493 34,237 35,388 34,085
========= ======== ======== ========
Wright Medical Group, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands--unaudited)
June 30, December 31,
2004 2003
--------- ------------
Assets
Current assets:
Cash and cash equivalents $ 72,235 $ 66,571
Accounts receivable, net 63,213 55,821
Inventories 70,714 64,204
Prepaid expenses and other current assets 19,843 23,928
--------- -----------
Total current assets 226,005 210,524
--------- -----------
Property, plant and equipment, net 67,552 66,915
Intangible assets, net 25,835 29,894
Other assets 16,315 14,770
--------- -----------
Total assets $335,707 $ 322,103
========= ===========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 17,818 $ 14,227
Accrued expenses and other current liabilities 41,609 42,814
Current portion of long-term obligations 6,242 6,228
--------- -----------
Total current liabilities 65,669 63,269
--------- -----------
Long-term obligations 8,191 11,096
Other liabilities 6,819 9,420
--------- -----------
Total liabilities 80,679 83,785
--------- -----------
Stockholders' equity 255,028 238,318
--------- -----------
Total liabilities and stockholders' equity $335,707 $ 322,103
========= ===========
CONTACT: Wright Medical Group Inc., Arlington
John K. Bakewell, 901-867-4527