Exhibit 99
Wright Medical Group, Inc.
Reports Results for Third Quarter Ended September 30, 2005
ARLINGTON, Tenn.--(BUSINESS WIRE)--Oct. 25, 2005--
Company Announces Final Third Quarter Results In Line With
Preliminary Announcement
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 third quarter ended September 30,
2005.
Net sales totaled $73.5 million during the third quarter of 2005,
representing a 6% increase over net sales of $69.3 million during the
third quarter of 2004. The impact of foreign currency on net sales was
immaterial during the third quarter. Net income for the third quarter
of 2005 totaled $4.0 million or $.11 per diluted share compared to net
income of $4.4 million, or $.13 per diluted share, in the third
quarter of 2004, which included the after-tax effect of approximately
$800,000 of costs associated with the voluntary market withdrawal of
certain CONSERVE(R) hip components.
For the first nine months of 2005, the Company's net sales totaled
$238.9 million, representing a 9% increase over net sales of $219.8
million for the first nine months of 2004. Excluding the impact of
foreign currency, net sales increased 8% during the first nine months
of 2005. Net income for the first nine months of 2005 totaled $19.0
million, or $.54 per diluted share. For the first nine months of 2004,
net income totaled $17.7 million, or $.50 per diluted share.
F. Barry Bays, interim President and Chief Executive Officer
commented, "Our sales results of $73.5 million for the third quarter
of 2005 and our net income of $.11 per diluted share are both in line
with our preliminary announcement communicated earlier in the month.
Domestically, we experienced solid performance by our reconstructive
large joint and extremities businesses, both of which grew 14% during
the third quarter. However, as discussed in our October 4th
pre-release, our domestic biologics business did not meet our
expectations for the third quarter, as we noted a 10% decline compared
to the prior year's quarter, and our sales results in Italy and
southern France continued to have a dampening impact on our worldwide
growth rate."
Mr. Bays continued, "Our lower-than-expected sales, combined with
increased sales, marketing and research and development spending as
compared to the year-ago period, resulted in the lower than accustomed
operating results. However, we believe that these investments are
required for Wright Medical to return to the low- to mid-teens sales
growth that has been our corporate goal as a public company. We are
also evaluating and rationalizing expenses company-wide. We remain
optimistic about the growth prospects of our business for 2006 and
beyond, and confident in our ability to overcome the challenges that
have contributed to our disappointing financial performance in the
second half of 2005."
Sales Review
Globally, the Company experienced growth in its hip, knee, and
extremity product lines of 9%, 10%, and 14%, respectively and a
decline of 6% in biologics, during the third quarter of 2005 when
compared to the third quarter of 2004.
Domestic sales totaled $47.4 million during the third quarter of
2005 and $147.3 million during the first nine months of 2005,
representing increases of 7% and 10%, respectively. Third quarter
domestic sales of the Company's hip, extremity, and knee product lines
reflected growth of 15%, 14%, and 13%, respectively. Third quarter
domestic sales of the Company's biologics product line decreased by
10% compared to 2004.
International sales totaled $26.1 million during the third
quarter, an increase of 5% compared to the third quarter of 2004. For
the first nine months of 2005, international sales reached $91.6
million, an increase of 6% compared to the first nine months of 2004.
The Company's international sales results included favorable foreign
currency impacts totaling approximately $45,000 and $2.3 million
during the third quarter and the first nine months of 2005,
respectively.
Outlook
On October 4, 2005, the Company revised its full year 2005 sales
outlook to a target range of $315 million to $318 million,
representing a sales growth objective of approximately 6% to 7%, and
revised its full year earnings per share outlook to a target range of
$0.66 to $0.70 per diluted share.
The Company's anticipated targets for the fourth quarter of 2005
for net sales are in the range of $76 million to $79 million, with
earnings per share results ranging from $.12 to $.16 per diluted
share. These targets for the fourth quarter and full year of 2005
exclude the effect of special charges associated with recent
organizational changes, possible future acquisitions or other material
future business developments.
The Company also reiterated its stated long-term growth
objectives, calling for annualized percentage net sales growth in the
low- to mid-teens accompanied by improving operating profitability.
The Company plans to provide defined ranges of net sales and
profitability objectives for 2006 in conjunction with the release of
its full-year 2005 financial results. The Company's current objective
is to return the business to this growth profile by the fourth quarter
of 2006.
A reconciliation of 2004 net income, as adjusted, per diluted
share is available in the "Corporate - Investor Information -
Supplemental Financial Information" section of the Company's website
located at www.wmt.com.
The Company's anticipated targets for net sales 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 800-822-4794 (domestic) or 913-981-4912
(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 November 1, 2005. To hear this replay, dial 888-203-1112
(domestic) or 719-457-0820 (international) and enter the registration
number 9837043. 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 sales,
excluding the impact of foreign currency, gross profit, as adjusted,
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, 2004 under the
heading, "Factors Affecting Future Operating Results," and in its
quarterly reports), 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 60
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 Nine Months Ended
------------------- -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Net sales $ 73,479 $ 69,299 $238,869 $219,832
Cost of sales 20,263 19,998 67,398 61,767
--------- --------- --------- ---------
Gross profit 53,216 49,301 171,471 158,065
Operating expenses:
Selling, general and
administrative 40,045 36,611 120,896 111,459
Research and development 5,904 4,302 16,500 13,808
Amortization of intangible
assets 1,020 975 3,119 2,845
Stock-based expense (1) 65 271 396 1,160
--------- --------- --------- ---------
Total operating expenses 47,034 42,159 140,911 129,272
--------- --------- --------- ---------
Operating income 6,182 7,142 30,560 28,793
Interest (income) expense, net (171) 283 (91) 868
Other (income) expense, net 43 (5) 206 (19)
--------- --------- --------- ---------
Income before income
taxes 6,310 6,864 30,445 27,944
Provision for income taxes 2,324 2,434 11,423 10,212
--------- --------- --------- ---------
Net income $ 3,986 $ 4,430 $ 19,022 $ 17,732
========= ========= ========= =========
Net income per share, basic $ 0.12 $ 0.13 $ 0.56 $ 0.53
========= ========= ========= =========
Net income per share, diluted $ 0.11 $ 0.13 $ 0.54 $ 0.50
========= ======== ========= =========
Weighted-average number of
common shares outstanding,
basic 33,972 33,461 33,920 33,296
========= ========= ========= =========
Weighted-average number of
common shares outstanding,
diluted 35,285 35,311 35,240 35,355
========= ========= ========= =========
(1) Amounts presented as stock-based expense consist of; cost of sales
totaling $0 and $24 for the three months ended September 30, 2005
and 2004, respectively, and $11 and $75 for the nine months ended
September 30, 2005 and 2004, respectively; selling, general and
administrative expenses of $65 and $238 for the three months ended
September 30, 2005 and 2004, respectively, and $380 and $1,025 for
the nine months ended September 30, 2005 and 2004, respectively;
and research and development expenses of $0 and $9 for the three
months ended September 30, 2005 and 2004, respectively, and $5 and
$60 for the nine months ended September 30, 2005 and 2004,
respectively.
Wright Medical Group, Inc.
Consolidated Sales Analysis
(dollars in thousands--unaudited)
Three Months Ended Nine Months Ended
--------------------------- ----------------------------
Sept. 30, Sept. 30, % Sept. 30, Sept. 30, %
2005 2004 change 2005 2004 change
--------- --------- ------- --------- --------- -------
Geographic
- -------------
Domestic $ 47,406 $44,477 6.6% $147,277 $133,605 10.2%
International 26,073 24,822 5.0% 91,592 86,227 6.2%
--------- --------- ------- --------- --------- -------
Total net
sales $ 73,479 $69,299 6.0% $238,869 $219,832 8.7%
========= ========= ======= ========= ========= =======
Product Line
- -------------
Hip products $ 24,143 $22,240 8.6% $ 81,880 $ 72,367 13.1%
Knee products 21,471 19,568 9.7% 70,811 64,782 9.3%
Biologics
products 14,972 15,858 (5.6%) 46,490 46,558 (0.1%)
Extremity
products 9,861 8,686 13.5% 29,914 26,999 10.8%
Other 3,032 2,947 2.9% 9,774 9,126 7.1%
--------- --------- ------- --------- --------- -------
Total net
sales $ 73,479 $69,299 6.0% $238,869 $219,832 8.7%
========= ========= ======= ========= ========= =======
Wright Medical Group, Inc.
Reconciliation of Net Sales to Net Sales Excluding the Impact of
Foreign Currency
(dollars in thousands--unaudited)
Three Months Ended Nine Months Ended
September 30, 2005 September 30, 2005
------------------- ------------------
Net sales, as reported $ 73,479 $ 238,869
Less: Currency impact as
compared to respective prior
period (45) (2,320)
------------------- ------------------
Net sales, excluding the impact
of foreign currency $ 73,434 $ 236,549
=================== ==================
Wright Medical Group, Inc.
Reconciliation of Gross Profit to Gross Profit, As Adjusted
(dollars in thousands--unaudited)
Three Months Ended Nine Months Ended
------------------- -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Gross profit, as reported $ 53,216 $ 49,301 $171,471 $158,065
Add: Costs incurred for
voluntary market withdrawal
of certain CONSERVE(R) hip
components - 138 - 138
--------- --------- --------- ---------
Gross profit, as adjusted $ 53,216 $ 49,439 $171,471 $158,203
========= ========= ========= =========
Gross profit, as adjusted, as
a percentage of net sales 72.4% 71.3% 71.8% 72.0%
========= ========= ========= =========
Wright Medical Group, Inc.
Reconciliation of Operating Income to Operating Income, As Adjusted
(dollars in thousands--unaudited)
Three Months Ended Nine Months Ended
------------------- -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Operating income, as reported $ 6,182 $ 7,142 $ 30,560 $ 28,793
Add: Costs incurred for
voluntary market withdrawal
of certain CONSERVE(R) hip
components - 791 - 791
--------- --------- --------- ---------
Operating income, as adjusted $ 6,182 $ 7,933 $ 30,560 $ 29,584
========= ========= ========= =========
Wright Medical Group, Inc.
Reconciliation of Net Income to Net Income, As Adjusted
(in thousands, except per share data--unaudited)
Three Months Ended Nine Months Ended
------------------- -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Net income, as reported $ 3,986 $ 4,430 $ 19,022 $ 17,732
Add: Costs incurred for
voluntary market withdrawal
of certain CONSERVE(R) hip
components, net of tax - 511 - 511
--------- --------- --------- ---------
Net income, as adjusted $ 3,986 $ 4,941 $ 19,022 $ 18,243
========= ========= ========= =========
Net income, as adjusted, per
share, basic $ 0.12 $ 0.15 $ 0.56 $ 0.55
========= ========= ========= =========
Net income, as adjusted, per
share, diluted $ 0.11 $ 0.14 $ 0.54 $ 0.52
========= ========= ========= =========
Weighted-average number of
common shares outstanding,
basic 33,972 33,461 33,920 33,296
========= ========= ========= =========
Weighted-average number of
common shares outstanding,
diluted 35,285 35,311 35,240 35,355
========= ========= ========= =========
Wright Medical Group, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands--unaudited)
September 30, December 31,
2005 2004
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 55,027 $ 83,470
Marketable securities 20,525 -
Accounts receivable, net 60,935 61,662
Inventories 81,876 76,269
Prepaid expenses and other current
assets 36,518 33,621
------------- -------------
Total current assets 254,881 255,022
------------- -------------
Property, plant and equipment, net 77,142 70,207
Intangible assets, net 21,120 25,985
Other assets 11,662 9,944
------------- -------------
Total assets $ 364,805 $ 361,158
============= =============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 14,415 $ 13,969
Accrued expenses and other current
liabilities 40,015 45,256
Current portion of long-term obligations 6,065 6,331
------------- -------------
Total current liabilities 60,495 65,556
------------- -------------
Long-term obligations 2,574 5,952
Other liabilities 12,695 13,581
------------- -------------
Total liabilities 75,764 85,089
------------- -------------
Stockholders' equity 289,041 276,069
------------- -------------
Total liabilities and stockholders'
equity $ 364,805 $ 361,158
============= =============
CONTACT: Wright Medical Group Inc., Arlington
John K. Bakewell, 901-867-4527