EX-99.1 2 ex99-1_072704.txt 2ND QUART. AND 6-MONTH FINANCIAL RESULTS [ORTHOFIX LOGO] [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 Second-Quarter and Six-Month Financial Results HUNTERSVILLE, N.C., July 27, 2004 - Orthofix International N.V. (NASDAQ:OFIX) today announced results for the second quarter and six months ended June 30, 2004. Sales for the second quarter ended June 30, 2004, were $70.8 million, an increase of 37% over the $51.6 million reported during the same period in 2003. Second-quarter sales included the incremental impact of Breg, Inc., which was acquired on December 30, 2003. The incremental impact of foreign currency on sales for the second quarter of 2004 was a positive $1.5 million. Net income for the second quarter ended June 30, 2004, was $7.9 million, or $0.50 per diluted share, compared with $6.5 million, or $0.44 per diluted share, for the same period in 2003. Diluted weighted average shares outstanding were 15,872,346 and 14,753,417 during the three months ended June 30, 2004, and June 30, 2003, respectively. For the six months ended June 30, 2004, sales were $141.5 million, an increase of 42% over the $99.7 million reported during the same period in 2003. Sales for the six months ended June 30, 2004, included the incremental impact of Breg, Inc., which was acquired on December 30, 2003. The positive impact of foreign currency on sales for the six-month period was $3.8 million. Net income for the six months ended June 30, 2004, was $16.2 million, or $1.02 per diluted share, compared with $12.4 million, or $0.85 per diluted share, for the same period in 2003. Diluted weighted average shares outstanding were 15,826,981 and 14,628,146 for the six months ended June 30, 2004, and June 30, 2003, respectively. The following tables display net sales by geographic destination and by business segment, net of inter-company eliminations and by market sectors for the three and six months ended June 30, 2004, and 2003. We provide net sales by geographic destination and market sector for information purposes only. We maintain our books and records by business segment. more... Page Two Net sales by geographic destination for the periods ended June 30, (In millions) Three Months Ended June 30, Six Months Ended June 30, --------------------------- -------------------------- 2004 2003 % Increase 2004 2003 % Increase ---- ---- ---------- ---- ---- ---------- Americas $ 51.0 $ 34.5 48% $ 102.3 $ 65.7 56% International $ 19.8 $ 17.1 16% $ 39.2 $ 34.0 15% ------ ------ --------- ------- ------ ----------- Total $ 70.8 $ 51.6 37% $ 141.5 $ 99.7 42% ====== ====== ========= ======= ====== =========== Net sales by business segment for the periods ended June 30, (In millions) Three Months Ended June 30, Six Months Ended June 30, --------------------------- -------------------------- 2004 2003 % Increase 2004 2003 % Increase ---- ---- ---------- ---- ---- ---------- Americas Orthofix $ 31.1 $ 29.7 5% $ 60.9 $ 56.3 8% Americas Breg $ 16.4 -- -- $ 33.3 -- -- International Orthofix $ 23.3 $ 21.9 6% $ 47.3 $ 43.4 9% ------ ------ --------- ------- ------ ----------- Total $ 70.8 $ 51.6 37% $ 141.5 $ 99.7 42% ====== ====== ========= ======= ====== =========== Net sales by market sector for the periods ended June 30, (In millions) Three Months Ended June 30, Six Months Ended June 30,(1) --------------------------- ----------------------------- 2004 2003 % Increase 2004 2003 % Increase ---- ---- ---------- ---- ---- ---------- Orthopedic Products ------------------- Spine $ 20.3 $ 20.4 0% $ 39.9 $ 38.7 3% Reconstruction 29.2 12.3 137% 59.3 24.7 140% Trauma 16.1 14.3 13% 31.4 26.9 17% ------ ------ --------- ------- ------ ----------- Total Orthopedic 65.6 47.0 40% 130.6 90.3 45% Non-Orthopedic 5.2 4.6 13% 10.9 9.4 16% ------ ------ --------- ------- ------ ----------- Total $ 70.8 $ 51.6 37% $ 141.5 $ 99.7 42% ====== ====== ========= ======= ====== =========== (1) Six-month table contains a first quarter reclass from trauma to reconstruction of $0.4 million. more... Page Three Orthofix International N.V., a diversified orthopedic products company, offers a broad line of minimally invasive surgical, as well as non-surgical, products for the spine, reconstruction, and trauma market sectors that address the lifelong bone-and-joint health needs of patients of all ages -helping them achieve a more active and mobile lifestyle. Orthofix's products are widely distributed around the world to orthopedic surgeons and patients - via Orthofix's sales representatives, and via partnerships with other leading orthopedic product companies, such as Medtronic Sofamor Danek, Stryker Howmedica, and Kendall Healthcare. In addition, Orthofix is collaborating in R&D partnerships with leading medical institutions such as the Wake Forest University School of Medicine, the Orthopedic Research and Education Foundation, the Cleveland Clinic Foundation, Innovative Spinal Technologies and National Osteoporosis Institute. For more information about Orthofix, please visit www.orthofix.com. FORWARD-LOOKING STATEMENTS This communication contains certain forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which may include, but are not limited to, statements concerning the projections, financial condition, results of operations and businesses of Orthofix and are based on management's current expectations and estimates and involve risks and uncertainties that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. Factors that could cause or contribute to such differences may include, but are not limited to, risks relating to the integration of the businesses of Orthofix and Breg, unanticipated expenditures, the final purchase price allocation, changing relationship with customers, suppliers and strategic partners, risks relating to the protection of intellectual property, changes to the reimbursement policies of third parties, changes to governmental regulation of medical devices, the impact of competitive products, changes to the competitive environment, the acceptance of new products in the market, conditions of the orthopedic industry and the economy and other factors described in the most recent report on Form 10-K and other periodic reports filed by Orthofix with the Securities and Exchange Commission. - Financial tables follow - ORTHOFIX INTERNATIONAL N.V. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, U.S. Dollars, in thousands, except per share and share data)
For the three months For the six months ------------------------ -------------------------- ended June 30, ended June 30, ------------------------ -------------------------- 2004 2003 2004 2003 ------------------------ -------------------------- Net sales $ 70,794 $ 51,565 $ 141,533 $ 99,746 Cost of sales 19,697 13,009 39,243 25,595 ----------- ----------- ----------- ---------- Gross profit 51,097 38,556 102,290 74,151 ----------- ----------- ----------- ---------- Operating expenses Sales and marketing 25,638 19,507 51,774 37,107 General and administrative 7,418 5,118 14,667 10,099 Research and development 2,694 2,128 6,010 4,258 Amortization 1,813 119 3,145 397 Litigation and settlement costs 332 1,264 704 2,126 ----------- ----------- ----------- ---------- 37,895 28,136 76,300 53,987 ----------- ----------- ----------- ---------- Operating income 13,202 10,420 25,990 20,164 Interest income/(expense) (1,370) 18 (2,899) 78 Other income/(loss) (173) 237 17 223 Gain/(loss) in joint venture (180) (231) 225 (603) ----------- ----------- ----------- ---------- Income before income tax 11,479 10,444 23,333 19,862 Income tax expense (3,604) (3,949) (7,114) (7,414) ----------- ----------- ----------- ---------- Net income $ 7,875 $ 6,495 $ 16,219 $12,448 Net income per common share - basic $ 0.52 $ 0.46 $ 1.07 $ 0.89 Net income per common share - diluted $ 0.50 $ 0.44 $ 1.02 $ 0.85 Weighted average number of common 15,276,961 14,112,563 15,202,077 13,909,436 shares outstanding - basic Weighted average number of common 15,872,346 14,753,417 15,826,981 14,628,146 shares outstanding - diluted
ORTHOFIX INTERNATIONAL N.V. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, U.S. Dollars, in thousands) As of As of ------------ -------------- June 30, December 31, ------------ -------------- 2004 2003 ------------ -------------- Assets Current assets: Cash and cash equivalents $ 46,005 $ 33,559 Trade accounts receivable 73,783 70,690 Inventory 31,674 30,713 Deferred income taxes 3,978 3,978 Prepaid expenses and other 9,904 8,928 --------- ---------- Total current assets 165,344 147,868 Securities and other investments 4,700 5,775 Property, plant and equipment, net 17,641 19,169 Intangible assets, net 236,085 234,123 Other long-term assets 5,348 6,244 --------- ---------- Total assets $ 429,118 $ 413,179 ========= ========= Liabilities and shareholders' equity Current liabilities: Bank borrowings $ 1,999 $ 72 Current portion of long-term debt 11,294 11,063 Trade accounts payable 10,101 11,569 Other current liabilities 23,067 30,236 --------- ---------- Total current liabilities 46,461 52,940 Long-term debt 93,872 99,072 Deferred income taxes 17,861 16,642 Deferred income 2,500 2,500 Other long-term liabilities 203 186 Deferred compensation 1,080 1,063 --------- ---------- Total liabilities 161,977 172,403 --------- ---------- Shareholders' equity Common shares 1,544 1,498 Additional paid-in capital 92,800 81,960 Less: Treasury shares, at cost -- -- --------- ---------- 94,344 83,458 Retained earnings 164,143 147,924 Accumulated other comprehensive income 8,654 9,394 --------- ---------- Total shareholders' equity 267,141 240,776 --------- ---------- Total liabilities and shareholders' equity $ 429,118 $ 413,179 ========= ========= ORTHOFIX INTERNATIONAL N.V. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, U.S. Dollars, in thousands) For the six months ended June 30, ----------------------- 2004 2003 --------- --------- Net cash provided by operating activities $ 16,183 $ 14,724 --------- --------- Cash flows from investing activities: Investment in subsidiaries and affiliates (2,081) (23,659) Capital expenditure (7,758) (2,194) Proceeds from sale of joint venture 1,300 -- Proceeds from sale of assets 1,578 -- Other 440 -- --------- --------- Net cash used in investing activities (6,521) (25,853) --------- --------- Cash flows from financing activities: Net repayment of loans and borrowings (3,705) (4,809) Proceeds from issuance of common stock 7,135 9,483 Acquisition of treasury shares -- (4,395) Payment of debt issuance costs (529) -- --------- --------- Net cash provided by financing activities 2,901 279 --------- --------- Effect of exchange rate changes on cash (117) 721 --------- --------- Net (decrease) increase in cash and cash equivalents 12,446 (10,129) Cash and cash equivalents at the beginning of the period 33,559 48,813 --------- --------- Cash and cash equivalents at the end of the period $ 46,005 $ 38,684 --------- ---------