updated 2/24/2011 6:15:41 AM ET 2011-02-24T11:15:41

PLAINSBORO, N.J., Feb. 24, 2011 (GLOBE NEWSWIRE) -- Integra LifeSciences Holdings Corporation (Nasdaq:IART) today reported its financial results for the fourth quarter and full year ending December 31, 2010. Total revenues for the fourth quarter were $194.1 million, reflecting an increase of $10.6 million, or 6%, over the fourth quarter of 2009. Total revenues in the full year of 2010 were $732.1 million, reflecting an increase of $49.6 million, or 7%, over the full year of 2009. Excluding the impact of currency exchange rates, revenues increased 7% over the fourth quarter of 2009 and 7% over the full year 2009. We present revenues by product category in a table at the end of this press release.

"We successfully navigated the continued challenges presented by the economy in 2010. Our financial results highlight the strength of our diverse revenue base," said Integra's Chief Executive Officer, Stuart Essig. "We believe the investments we made throughout 2010 position our company well for long-term growth."

The Company reported GAAP net income of $18.8 million, or $0.63 per diluted share, for the fourth quarter of 2010, compared to GAAP net income of $15.7 million, or $0.53 per diluted share, for the fourth quarter of 2009. The Company reported GAAP net income of $65.7 million, or $2.17 per diluted share, for the full year 2010, compared to GAAP net income of $51.0 million, or $1.74 per diluted share in 2009.

Adjusted net income for the fourth quarter of 2010, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $24.0 million, or $0.80 per diluted share, compared to $21.0 million, or $0.71 per diluted share, in the fourth quarter of 2009. Adjusted net income for the full year 2010, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $89.9 million, or $2.97 per diluted share, compared to $76.5 million, or $2.61 per diluted share in 2009.

Integra generated $28.4 million in cash flows from operations and used $18.2 million of cash on capital expenditures in the fourth quarter of 2010. For the full year ended December 31, 2010, Integra's cash flows from operations totaled $105.6 million. The Company used $37.1 million of cash on capital expenditures during the year.

Adjusted EBITDA for the fourth quarter of 2010, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $41.5 million, flat compared to the same period last year. Adjusted EBITDA for the full year 2010, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $151.0 million, an increase of 4% compared to the full year 2009.

Adjusted EBITDA excluding stock-based compensation for the fourth quarter of 2010, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $45.8 million, an increase of 1% compared to the same period last year. Adjusted EBITDA excluding stock-based compensation for the full year 2010, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $166.7 million, an increase of 4% compared to the same period last year.

Outlook for 2011

The Company is providing revenues and earnings per share guidance for the full year 2011. The Company anticipates revenues between $765 million and $780 million, at current exchange rates. As has been the case in the past, we expect revenues in the first quarter of 2011 to be 7% to 8% lower than the fourth quarter of 2010, and earnings to be disproportionately lower, and that the fourth quarter of 2011 will be the strongest quarter of the year. The Company is guiding to GAAP earnings per diluted share of between $1.97 and $2.12 and to adjusted earnings per diluted share of between $2.87 and $3.02. In accordance with our usual practice, expectations for financial performance do not include the impact of acquisitions or other strategic corporate transactions that have not yet closed.  

In the future, the Company may record, or expects to record, certain additional revenues, gains, expenses or charges as described in the Discussion of Adjusted Financial measures below that it will exclude in the calculation of adjusted EBITDA and adjusted earnings per share for historical periods and in providing adjusted earnings per share guidance.

Conference Call

Integra has scheduled a conference call for 8:30 AM ET on Thursday, February 24, 2011 to discuss financial results for the fourth quarter and full year 2010 and forward-looking financial guidance. The conference call will be hosted by Integra's senior management team and will be open to all listeners.  Additional forward-looking information may be discussed in a question and answer session following the call.

Access to the live call is available by dialing 719-457-2693 and using the passcode 2097741. The call can also be accessed through a webcast via a link provided on the Investor Relations homepage of Integra's website at www.integralife.com. Access to the replay is available through March 10, 2011 by dialing 719-457-0820 and using the passcode 2097741. The webcast will also be archived on the website.

Integra LifeSciences, a world leader in medical devices, is dedicated to limiting uncertainty for surgeons, so they can concentrate on providing the best patient care. Integra offers innovative solutions in orthopedics, neurosurgery, spine, reconstructive and general surgery. For more information, please visit www.integralife.com.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and reflect the Company's judgment as of the date of this release. Forward-looking statements include, but are not limited to, statements concerning future financial performance, including projections for revenues, GAAP and adjusted net income, GAAP and adjusted earnings per diluted share, stock-based compensation, non-GAAP adjustments such as system implementations charges, acquisition-related charges, non-cash amortization of imputed interest as a result of the adoption of the current convertible debt accounting, intangible asset amortization, and income tax expense (benefit) related to non-GAAP adjustments. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from predicted or expected results. Such risks and uncertainties include, but are not limited to: the Company's ability to maintain relationships with customers of acquired entities; physicians' willingness to adopt and third-party payors' willingness to provide reimbursement for the Company's recently launched and planned products; the Company's ability to manufacture sufficient quantities of its products to meet its customers' demand; initiatives launched by the Company's competitors; the Company's ability to secure regulatory approval for products in development; fluctuations in hospital spending for capital equipment; the Company's ability to comply with and obtain approvals for products of human origin and comply with recently enacted regulations regarding products containing materials derived from animal sources; difficulties in controlling expenses, including costs to procure and manufacture our products; the impact of changes in management or staff levels; the Company's ability to integrate acquired businesses; the Company's ability to leverage its existing selling organizations and administrative infrastructure; the Company's ability to increase product sales and gross margins, and control non-product costs; the amount and timing of acquisition and integration related costs; the geographic distribution of where the Company generates its taxable income; the effect of legislation effecting healthcare reform in the United States; the timing and amount of share-based awards granted to employees; fluctuations in foreign currency exchange rates; the amount of our convertible notes and bank borrowings outstanding, and the economic, competitive, governmental, technological and other risk factors and uncertainties identified under the heading "Risk Factors" included in Item 1A of Integra's Annual Report on Form 10-K for the year ended December 31, 2010 and information contained in subsequent filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Discussion of Adjusted Financial Measures

In addition to our GAAP results, we provide adjusted revenues, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA excluding stock-based compensation, adjusted net income and adjusted earnings per diluted share. Adjusted revenues consist of growth in total revenues excluding the effects of currency exchange rates on the current period's revenues. The various measures of adjusted EBITDA consist of GAAP net income, excluding: (i) depreciation and amortization, (ii) other income (expense), net, (iii) interest income and expense, (iv) income taxes, (v) those operating expenses also excluded from adjusted net income and, as appropriate (vi) stock-based compensation expense. The measure of adjusted net income consists of GAAP net income, excluding: (i) acquisition-related charges; (ii) certain employee termination and related costs; (iii) intangible asset impairment charges; (iv) charges associated with discontinued or withdrawn product lines; (v) systems implementation charges; (vi) facility consolidation, manufacturing and distribution transfer charges; (vii) incremental professional and bank fees related to the possibility of obtaining a waiver under our revolving credit facility; (viii) charges related to restructuring our European subsidiaries; (ix) charges related to our Chief Operating Officer's fully-vested equity and cash signing bonus compensation and other expenses related to his joining the Company; (x) charges or gains related to litigation matters or disputes; (xi) gains and losses related to the early extinguishment of convertible notes; (xii) non-cash amortization of imputed interest as a result of the adoption of the current convertible debt accounting; (xiii) intangible asset amortization expense; (xiv) quarterly adjustments to income tax expense/benefit related to the cumulative impact of changes in estimated tax rates and certain infrequently occurring items; and (xv) the income tax expense/benefit related to these adjustments. The adjusted earnings per diluted share measure is calculated by dividing adjusted net income attributable to diluted shares by diluted weighted average shares outstanding. Reconciliations of GAAP revenues to adjusted revenues for the quarter and year ended December 31, 2010 and GAAP net income to adjusted EBITDA, adjusted EBITDA excluding stock-based compensation and adjusted net income, and GAAP earnings per diluted share to adjusted earnings per diluted share for the quarters and years ended December 31, 2010 and 2009 appear in the financial tables in this release.

Integra believes that the presentation of adjusted revenues and the various adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share measures provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. For further information regarding why Integra believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the Company's Current Report on Form 8-K regarding this earnings press release filed today with the Securities and Exchange Commission. This Current Report on Form 8-K is available on the SEC's website at www.sec.gov or on our website at www.integralife.com .


INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
 
 

(In thousands, except per share amounts)
   
  Three Months Ended

December 31,
Twelve Months Ended

December 31,
  2010 2009 2010 2009
 

Total revenues
$194,134 $183,526 $732,068 $682,487
         
Costs and expenses:        
Cost of product revenues 71,306 63,944 268,188 244,918
Research and development 13,331 11,810 48,114 44,280
Selling, general and administrative 82,590 76,484 305,055 281,102
Intangible asset amortization 2,744 3,441 12,017 14,363
         
Total costs and expenses 169,971 155,679 633,374 584,663
         
Operating income 24,163 27,847 98,694 97,824
Interest income 53 53 225 631
Interest expense (5,125) (4,876) (18,356) (23,227)
Other income (expense), net 349 (347) 1,551 (2,076)
         
Income before income taxes 19,440 22,677 82,114 73,152
         
Income tax expense (benefit) 633 6,946 16,445 22,197
         
Net income 18,807 15,731 65,669 50,955
         
Diluted net income per share* $ 0.63 $ 0.53 $ 2.17 $ 1.74
         
Weighted average common shares        
 outstanding for diluted net        
 income per share 29,935 29,540 30,149 29,292
         
*In accordance with the authoritative guidance related to determining whether instruments issued in share-based

payment transactions are participating securities, certain of the Company's unvested restricted share units contain

rights to receive non-forfeitable dividends, and thus, are participating securities requiring the two-class method of

computing earnings per share. The calculation of earnings per share for common stock shown above excludes the

income attributable to the unvested restricted share units with dividend rights from the numerator and excludes the

dilutive impact of those units from the denominator. This had an insignificant impact (impacts the rounding by

$0.01 or less per share) on diluted net income per share for all periods shown above.

 

Listed below are the items included in GAAP revenues and GAAP net income that management excludes in computing the adjusted financial measures referred to in the text of this press release and further described under Discussion of Adjusted Financial Measures.

Growth in total revenues excluding the effects of currency exchange rates

(In thousands)
 
  Three Months Ended Twelve Months Ended
  December 31, December 31,
  2010 2009 Change 2010 2009 Change
Orthopedics $ 74,074 $ 68,505 8% $ 290,050 $ 262,170 11%
Neurosurgery $ 74,150 $ 68,137 9% $ 275,046 $ 256,544 7%
Instruments $ 45,910 $ 46,884 -2% $ 166,972 $ 163,773 2%
Total revenues $194,134 $183,526 6% $732,068 $682,487 7%
             
Impact of changes in            
 currency exchange rates ($ 1,350) --   ($ 715) --  
Growth in total revenues            
 excluding the effects of            
 currency exchange rates $195,484 $183,526 7% $732,783 $682,487 7%
     
     
Items included in GAAP net income

(In thousands)
   
  Three Months Ended

December 31,
Twelve Months Ended

December 31,
  2010 2009 2010 2009
         
Acquisition-related charges (a) $425 $632 $2,509 $5,598
         
Certain employee termination and related        
 charges (b) 339 28 1,498 674
         
Intangible asset impairment charges (c) -- -- 856 1,519
         
Charges associated with discontinued        
  or withdrawn product lines (d) 432 -- 506 246
         
Systems implementation charges (e) 1,673 -- 3,462 --
         
Facility consolidation, manufacturing        
 and distribution transfer charges (f) 872 280 1,676 768
         
Incremental professional and bank fees related to        
 the possibility of obtaining a waiver under our        
 revolving credit facility (g) -- -- -- 350
         
Charges related to restructuring        
 European entities (h) 934 -- 1,329 1,876
         
Charges related to our Chief Operating Officer's        
 fully-vested equity and cash signing bonus        
 compensation and other expenses related to        
 his joining the Company (i) 2,188 -- 2,188 --
         
Litigation settlement (gain) and        
 related charges (j) -- -- -- (253)
         
Loss (gain) related to early extinguishment        
 of convertible notes (k) -- 448 -- (469)
         
Non-cash amortization of imputed interest as a        
 result of the adoption of the current convertible        
 debt accounting (l) 1,606 2,038 7,125 9,900
         
Intangible asset amortization expense** 4,200 4,854 17,019 19,404
         
Income tax expense related to above        
 adjustments, quarterly adjustments        
  to income tax expense related to the        
 cumulative impact of changes in        
 estimated tax rates and certain        
 infrequently occurring items that        
 affected the reported tax rate (7,483) (2,986) (13,957) (14,052)
         
Stock-based compensation expense* 4,256 4,058 15,709 15,580
         
Depreciation expense 6,304 7,720 21,298 18,766
 
(a) Q4 2010 -- $364 recorded in cost of product revenues, $61 recorded in selling general and administrative;

FY 2010 -- $1,760 recorded in cost of product revenues, $673 recorded in selling general and administrative, $76 included in research and development.

Q4 2009 -- $215 recorded in cost of product revenues, $134 recorded in research and development, $283 recorded in selling general and administrative;

FY 2009 -- $4,787 recorded in cost of product revenues, $410 recorded in research and development, $401 recorded in selling general and administrative.

(b) Q4 2010 -- $205 recorded in cost of product revenues; $134 recorded in selling general and administrative;

FY 2010 -- $555 recorded in cost of product revenues; $943 recorded in selling general and administrative.

Q4 2009 – all recorded in cost of product revenues;

FY 2009 -- $117 recorded in cost of product revenues, $160 recorded in research and development, $397 recorded in selling general and administrative.

(c) FY 2010 – all recorded in intangible asset amortization.

FY 2009 - all recorded in cost of product revenues.

(d) Q4 2010 -- $317 recorded in cost of product revenues, $115 recorded in selling general and administrative;

FY 2010 -- $391 recorded in cost of product revenues, $115 recorded in selling general and administrative.

FY 2009 - all recorded in cost of product revenues.

(e) All recorded in selling general and administrative.

(f) Q4 2010 -- $202 recorded in cost of product revenues, $670 recorded in selling general and administrative;

FY 2010 -- $936 recorded in cost of product revenues; $714 recorded in selling general and administrative; $26 recorded in research and development.

Q4 2009 – all recorded in cost of product revenues;

 FY 2009 -- $531 recorded in cost of product revenues, $237 recorded in selling general and administrative.

(g) FY 2009 – $200 recorded in selling general and administrative, $150 recorded in interest expense.

(h) FY 2010 – all recorded in selling general and administrative.

FY 2009 – all recorded in other expense (income).

(i) All recorded in selling general and administrative.

(j) FY 2009 - All recorded in other expense (income).

(k) All recorded in other expense (income).

(l) All recorded in interest expense.

 

* Q4 2010 and FY 2010 – This amount excludes $1,500 of stock-based compensation expense included in item (i) above.

** FY 2010 – This amount excludes $856 of intangible asset amortization expense included in item (c) above;

FY 2009 – This amount excludes $1,519 of intangible asset amortization expense included in item (c) above.

 
INTEGRA LIFESCIENCES HOLDINGS CORPORATION

RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP NET INCOME TO ADJUSTED EBITDA AND ADJUSTED

EBITDA EXCLUDING STOCK BASED COMPENSATION

(UNAUDITED)

 
 
(In thousands)
  Three Months Ended

December 31,
Twelve Months Ended

December 31,
  2010 2009 2010 2009
         
GAAP net income $18,807 $15,731 $65,669 $50,955
Non-GAAP adjustments:        
         
Depreciation and intangible asset        
 amortization expense 10,504 12,574 38,317 38,170
         
Other (income) expense, net (349) 347 (1,551) 2,076
         
Interest (income) expense, net 5,072 4,823 18,131 22,596
         
Income tax expense 633 6,946 16,445 22,197
         
Acquisition-related charges 425 632 2,509 5,598
         
Certain employee termination and related        
 charges 339 28 1,498 674
         
Intangible asset impairment charges -- -- 856 1,519
         
Charges associated with discontinued        
  or withdrawn product lines 432 -- 506 246
         
Systems implementation charges 1,673 -- 3,462 --
         
Facility consolidation, manufacturing        
 and distribution transfer charges 872 280 1,676 768
         
Incremental professional and bank fees        
 related to the possibility of obtaining a        
 waiver under our revolving credit facility -- -- -- 200
         
Charges related to restructuring        
 European entities 934 -- 1,329 --
         
Charges related to our Chief Operating        
 Officer's fully-vested equity and cash signing        
 bonus compensation and other expenses        
 related to his joining the Company 2,188 -- 2,188 --
         
 Total of non-GAAP adjustments 22,723 25,630 85,366 94,044
         
Adjusted EBITDA $41,530 $41,361 $151,035 $144,999
         
Stock-based compensation expense 4,256 4,058 15,709 15,580
         
Adjusted EBITDA excluding stock-based        
  compensation $45,786 $45,419 $166,744 $160,579
         
INTEGRA LIFESCIENCES HOLDINGS CORPORATION

RECONCILIATION OF NON-GAAP ADJUSTMENTS – GAAP NET INCOME TO MEASURES OF ADJUSTED NET INCOME

AND ADJUSTED EARNINGS PER SHARE

(UNAUDITED)
 
(In thousands, except per share amounts)
  Three Months Ended

December 31,
Twelve Months Ended

December 31,
  2010 2009 2010 2009
         
GAAP net income $18,807 $15,731 $65,669 $50,955
Non-GAAP adjustments:        
         
Acquisition-related charges 425 632 2,509 5,598
         
Certain employee termination and related        
 charges 339 28 1,498 674
         
Intangible asset impairment charges -- -- 856 1,519
         
Charges associated with discontinued        
  or withdrawn product lines 432 -- 506 246
         
Systems implementation charges 1,673 -- 3,462 --
         
Facility consolidation, manufacturing        
 and distribution transfer charges 872 280 1,676 768
         
Incremental professional and bank fees related to        
 the possibility of obtaining a waiver under our        
 revolving credit facility -- -- -- 350
         
Charges related to restructuring        
 European entities 934 -- 1,329 1,876
         
Charges related to our Chief Operating Officer's        
 fully-vested equity and cash signing bonus        
 compensation and other expenses related to        
 his joining the Company 2,188 -- 2,188 --
         
Litigation settlement (gain) and        
 related charges -- -- -- (253)
         
Loss (gain) related to early extinguishment        
 of convertible notes -- 448 -- (469)
         
Non-cash amortization of imputed interest as a        
 result of the adoption of the current convertible        
 debt accounting 1,606 2,038 7,125 9,900
         
Intangible asset amortization expense 4,200 4,854 17,019 19,404
         
Income tax expense related to above        
 adjustments, quarterly adjustments        
 to income tax expense related to the        
 cumulative impact of changes in        
 estimated tax rates and certain        
 infrequently occurring items that        
 affected the reported tax rate (7,483) (2,986) (13,957) (14,052)
         
 Total of non-GAAP adjustments 5,186 5,294 24,211 25,561
         
Adjusted net income $23,993 $21,025 $89,880 $76,516
         
Adjusted diluted net income per share * $0.80 $0.71 $2.97 $2.61
         
Weighted average common shares outstanding        
 for diluted net income per share 29,935 29,540 30,149 29,292
         
         
* In accordance with the authoritative guidance related to determining whether instruments issued in share-based

payment transactions are participating securities, certain of the Company's unvested restricted share units contain

rights to receive non-forfeitable dividends, and thus, are participating securities requiring the two-class method of

computing earnings per share. The calculation of earnings per share for common stock shown above excludes the

income attributable to the unvested restricted share units with dividend rights from the numerator and excludes the

dilutive impact of those units from the denominator. This had an insignificant impact (impacts the rounding by $0.01

or less per share) on diluted net income per share for all periods shown above.

 
INTEGRA LIFESCIENCES HOLDINGS CORPORATION

CONDENSED BALANCE SHEET DATA

(UNAUDITED)

 
 
(In thousands)    
 

 
December 31, December 31,
  2010 2009
     
 Cash and cash equivalents $128,763 $71,891
 Accounts receivable, net 106,005 103,228
 Inventory, net 146,928 140,240
     
Term loan 148,126 --
 Bank line of credit 100,000 160,000
 Convertible securities 155,154 225,514
     
 Stockholders' equity 499,963 444,885
 
 
INTEGRA LIFESCIENCES HOLDINGS CORPORATION

RECONCILIATION OF NON-GAAP ADJUSTMENTS – GUIDANCE
   
 (In thousands, except per share amounts)  
  Projected Year Ended
  December 31, 2011
  Low High
GAAP net income $59,700 $64,200
     
Non-GAAP adjustments:    
     
Acquisition-related charges 3,290 3,290
     
Systems implementation charges 14,000 14,000
     
Facility consolidation, manufacturing    
 and distribution transfer charges 2,230 2,230
     
Expenses related to our Chief Operating    
  Officer joining the Company 300 300
     
Non-cash amortization of imputed interest as a result of the    
  adoption of the current convertible debt accounting 6,710 6,710
     
Intangible asset amortization expense 16,960 16,960
     
Income tax expense related    
 to above adjustments and certain    
 infrequently occurring items (16,190) (16,190)
     
Total of non-GAAP adjustments 27,300 27,300
     
Adjusted net income $87,000 $91,500
     
GAAP diluted net income per share $1.97 $2.12
     
Non-GAAP adjustments detailed above    
 (per share) $0.90 $0.90
     
Adjusted diluted net income per share $2.87 $3.02
     
Weighted average common shares    
 outstanding for diluted net    
 income per share 30,300 30,300
     

IART-F

CONTACT: John B. Henneman, III
         Executive Vice President,
         Finance and Administration,
         and Chief Financial Officer
         (609) 275-0500
         jack.henneman@integralife.com
         
         Investor Relations:
         Angela Steinway
         
         (609) 936-2268
         angela.steinway@integralife.com

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

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