UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 27, 2004
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-26224 51-0317849
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
311 Enterprise Drive
Plainsboro, NJ 08536
(Address of principal executive offices) (Zip Code)
(609)-275-0500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits.
Exhibit
Number Description of Exhibit
------- ----------------------
99.1 Press release issued July 27, 2004 regarding earnings for the quarter
ended June 30, 2004
This exhibit is being furnished under Item 12, Results of Operations and
Financial Condition of this Form 8-K and shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
except as shall be expressly set forth by specific reference in such filing.
ITEM 12. Results of Operations and Financial Condition
On July 27, 2004, Integra LifeSciences Holdings Corporation issued a press
release announcing financial results for the quarter ended June 30, 2004. A copy
of the press release is attached as Exhibit 99.1 to this Current Report on Form
8-K.
The information in this Form 8-K and the Exhibit attached hereto shall not be
deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, except as shall be expressly set forth by specific reference in
such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
Date: July 27, 2004 By: /s/ Stuart M. Essig
-----------------------------
Stuart M. Essig
President and Chief Executive Officer
Exhibit Index
-------------
Exhibit
Number Description of Exhibit
------- ----------------------
99.1 Press release issued July 27, 2004 regarding earnings for the
quarter ended June 30, 2004
Exhibit 99.1
News Release
Contacts:
Integra LifeSciences Holdings Corporation
John Bostjancic Maria Platsis
Senior Director of Finance Director of Corporate Development
(609) 936-2239 and Investor Relations
jbostjancic@integra-ls.com (609) 936-2333
mplatsis@integra-ls.com
Integra LifeSciences Announces Second Quarter 2004
Financial Results
Plainsboro, New Jersey, July 27, 2004 -- Integra LifeSciences Holdings
Corporation (NASDAQ: IART) today reported net income of $7.5 million, or $0.24
per share, for the second quarter of 2004, compared to net income of $5.4
million, or $0.18 per share, in the second quarter of 2003, a 33% increase in
earnings per share over the prior year period.
Total revenues in the second quarter of 2004 increased by $13.7 million to $56.4
million, a 32% increase over the second quarter of 2003, as product revenues
increased by $15.2 million to $56.4 million and other revenues decreased by $1.5
million.
Excluding recently acquired product lines, second quarter 2004 product revenues
increased by $11.0 million, or 27%, over the prior year period.
Operating income for the period was $11.6 million, a 40% increase over the
second quarter of 2003.
"I am pleased with our performance in the second quarter," said Stuart M. Essig,
Integra's President and Chief Executive Officer. "In particular, our organic
revenue growth exceeded our expectations this quarter, with particularly strong
performances from the DuraGen(R) and DuraGen Plus(TM) products, the INTEGRA(R)
Dermal Regeneration Template and the INTEGRA(TM) Bilayer Matrix Wound Dressing.
JARIT(R) also had a very strong quarter, leading our instrument revenues to 20%
organic growth versus the prior year period. We also completed two acquisitions
during the quarter, which enhanced our neurosurgical product offerings and our
distribution capabilities outside the United States."
In May we acquired the MAYFIELD(R) Cranial Stabilization and Positioning Systems
and the BUDDE(R) Halo Retractor System from Schaerer Mayfield USA, Inc.
(formerly Ohio Medical Instrument Company). The acquired operations include a
facility located in Cincinnati, Ohio that manufactures, packages and distributes
MAYFIELD and BUDDE stabilization products, as well as a broad line of related
instruments and disposables used in many neurosurgical and spinal procedures. We
market these products through our Integra NeuroSciences sales force.
In May we also acquired Berchtold Medizin-Elektronik GmbH, now named Integra ME,
from Berchtold Holding GmbH. Based in Tuttlingen, Germany, Integra ME
manufactures and markets the Elektrotom(R) line of electrosurgery generators and
the Sonotom(TM) ultrasonic surgical aspirator, as well as a broad line of
related handpieces, instruments and disposables used in many surgical
procedures, including neurosurgery. We market these products to hospitals and
physicians primarily through a network of distributors.
Our revenues for the periods were as follows:
Three Months Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
---- ---- ---- ----
Product Revenue:
Neuromonitoring products $11,813 $10,552 $23,011 $21,084
Operating room products 19,412 12,833 37,744 25,421
Instruments 19,006 12,358 35,049 18,605
Private label products 6,205 5,494 12,068 11,257
- ------ - ------ - ------- ------
Total Product Revenue 56,436 41,237 107,872 76,367
Other revenue 5 1,499 1,013 3,149
----- - - ------ -- ------ - -----
Total Revenue $56,441 $42,736 $108,885 $79,516
Increased sales of our intracranial monitoring products and drainage systems
provided most of the year-over-year growth in neuromonitoring product revenues.
Continued strong growth in sales of our DuraGen(R) and DuraGen Plus(TM) Dural
Graft Matrix products and direct selling of the INTEGRA(R) Dermal Regeneration
Template accounted for the increase in operating room product revenues.
Sales of recently acquired product lines contributed $4.2 million of the
year-over-year increase in instrument revenues for the second quarter. Increased
sales of our JARIT(R) and Ruggles(TM) surgical instrument lines and of our
ultrasonic aspirator products contributed the remainder of the growth in
instrument product revenues.
The increase in our private label product revenues attributable to the
Absorbable Collagen Sponge that we supply for use in Medtronic's INFUSE(TM) bone
graft product more than offset the removal of INTEGRA Dermal Regeneration
Template revenues from this category.
Changes in foreign currency exchange rates contributed $0.5 million to our
year-over-year product revenue growth.
Gross margin on product revenues in the second quarter of 2004 was 62%. Our
gross margin was positively affected by changes in the mix of our products sold
during the quarter and by the resumption of direct sales of the INTEGRA Dermal
Regeneration Template.
Research and development expense decreased slightly from $2.8 million in the
second quarter of 2003 to $2.6 million in the current period. Sales and
marketing expense increased by $4.1 million to $13.2 million in the second
quarter of 2004. This increase was due to the continued expansion of the Integra
NeuroSciences and the Integra Plastic and Reconstructive Surgery U.S.-based
sales forces, increased marketing headcount and spending particularly to support
plastic and reconstructive surgery product lines, and additional spending to
support the MAYFIELD and Berchtold product lines. General and administrative
expense increased $1.6 million in the second quarter of 2004 to $6.3 million.
We reported net interest income of $160,000 in the second quarter of 2004, as
compared to net interest expense of $198,000 in the prior year period.
The Company generated $9.7 million in cash flows from operations in the second
quarter of 2004.
The Company's cash and investments totaled $194 million at June 30, 2004.
In the second half of 2004, we expect to incur approximately $1.5 million of
charges as a result of the Mayfield acquisition, including inventory fair value
purchase accounting costs, facilities consolidation expenses, and distributor
termination payments, and related to the planned relocation of our National
Distribution Center from Plainsboro, New Jersey to Reno, Nevada in the fourth
quarter. We have revised our guidance for the third and fourth quarters of 2004
to reflect these additional anticipated expenses.
In addition, our revised guidance excludes the impact of the $14.9 million
after-tax non-cash compensation charge related to the contract stock units
granted in connection with the renewal of our Chief Executive Officer's
employment agreement in the third quarter of this year. Our guidance also
excludes a potential in-process research and development charge related to a
$1.5 million milestone payment that may become due in connection with a product
development agreement.
Finally, in accordance with our usual practice, our expectations for 2004 and
2005 financial performance do not include the impact of acquisitions or other
strategic corporate transactions that have not yet closed.
We are updating our expectations for revenues, gross margin and earnings per
share for 2004 and 2005. We expect total revenues of between $227 million and
$232 million in 2004 and $270 million and $280 million in 2005. Consolidated
gross margin is expected to be 61% and 63% of product revenues in 2004 and 2005,
respectively. We expect our earnings to be within a range of $1.05 to $1.10 per
share in 2004 and $1.42 and $1.47 per share in 2005. Our guidance for the third
quarter of 2004 is for total revenues in the range of $58 million to $60 million
and earnings per share of $0.26 to $0.28.
We have scheduled a conference call for 9:00 am EDT tomorrow, July 28, 2004, to
discuss the financial results for the second quarter of 2004 and forward-looking
financial guidance. The call is open to all listeners and will be followed by a
question and answer session. Access to the live call is available by dialing
(973) 582-2732 or through a listen-only webcast via a link provided on the home
page of Integra's website at www.Integra-LS.com. A replay of the conference call
will be accessible starting one hour following the live event. Access to the
replay is available through August 11, 2004 by dialing (973) 341-3080 (access
code 4865967) or through the webcast accessible on our home page.
Integra LifeSciences Holdings Corporation is a diversified medical technology
company that develops, manufactures, and markets medical devices for use in a
variety of applications. The primary applications for our products are
neuro-trauma and neurosurgery, plastic and reconstructive surgery and general
surgery. Integra is a leader in applying the principles of biotechnology to
medical devices that improve patients' quality of life. Our corporate
headquarters are in Plainsboro, New Jersey, and we have research, manufacturing
and distribution facilities located throughout the world. We have approximately
1,100 employees. Please visit our website at (http://www.Integra-LS.com).
This news release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
include, but are not limited to, statements concerning future financial
performance, including projections for revenues, gross margins, earnings per
share and cash flows. Such forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from
predicted or expected results. Among other things, our ability to maintain
relationships with customers of acquired entities, physicians' willingness to
adopt our recently launched and planned products and our ability to secure
regulatory approval for products in development may adversely affect our future
product revenues; our ability to increase sales and product volumes may
adversely affect our future gross margins; our ability to integrate acquired
businesses, increase product sales and gross margins, and control non-product
costs may affect our earnings per share; and our future net income results and
our ability to effectively manage working capital may affect our future cash
flows. In addition, the economic, competitive, governmental, technological and
other factors identified under the heading "Factors That May Affect Our Future
Performance" included in the Business section of Integra's Annual Report on Form
10-K for the year ended December 31, 2003 and information contained in
subsequent filings with the Securities and Exchange Commission could affect
actual results.
Regulation G, "Conditions for Use of Non-GAAP Financial Measures," and other
provisions of the Securities Exchange Act of 1934, as amended, define and
prescribe the conditions for the use of certain non-GAAP financial information.
In this news release, we provide "growth in product revenues excluding recently
acquired product lines", which is a non-GAAP financial measure. A reconciliation
of this non-GAAP financial measure to the most comparable GAAP measure is
provided in the tables of financial information contained at the end of this
news release.
Non-GAAP financial measures should not be relied upon to the exclusion of GAAP
financial measures. Management believes that this non-GAAP financial measure is
important supplemental information to investors which reflects an additional way
of viewing aspects of our operations that, when viewed with our GAAP results and
the accompanying reconciliations, provides a more complete understanding of
factors and trends affecting our ongoing business and operations. Management
strongly encourages investors to review our financial statements and filed
reports in their entirety and to not rely on any single financial measure.
Because non-GAAP financial measures are not standardized, it may not be possible
to compare these financial measures with other companies' non-GAAP financial
measures having the same or similar names.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
CONSOLIDATED FINANCIAL RESULTS
(In thousands, except per share data)
(UNAUDITED)
Statement of Operations Data:
Three Months Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
---- ---- ---- ----
Product revenues $56,436 $41,237 $107,872 $76,367
Other revenues 5 1,499 1,013 3,149
----- ----- ----- -----
Total revenues 56,441 42,736 108,885 79,516
Cost of product revenues 21,665 17,090 41,666 30,793
Research and development 2,639 2,777 5,462 5,427
Sales and marketing 13,160 9,082 24,311 16,658
General and administrative 6,328 4,736 12,185 9,570
Amortization 1,049 762 1,932 1,339
----- ------ ----- -----
Total costs and expenses 44,841 34,447 85,556 63,787
Operating income 11,600 8,289 23,329 15,729
Interest income (expense), net 160 (198) 217 578
Other income (expense), net 135 451 118 800
--- ---- --- ---
Income before income taxes 11,895 8,542 23,664 17,107
Provision for income taxes 4,377 3,124 8,708 6,251
- ----- - ----- - ----- - -----
Net income $7,518 $5,418 $14,956 $10,856
Diluted earnings per share $0.24 $0.18 $0.48 $0.36
Diluted weighted average
common shares outstanding 30,964 30,061 30,911 30,463
Condensed Balance Sheet Data:
June 30, December 31,
2004 2003
----- ----
Cash and marketable securities,
including non-current portion $194,250 $206,743
Accounts receivable, net 35,622 28,936
Inventory, net 50,509 41,046
Total assets 433,577 412,526
Current liabilities 23,184 20,618
Long-term debt 118,336 119,257
Total liabilities 147,128 143,996
Stockholders' equity 286,449 268,530
Reconciliation of non-GAAP financial measure to the most comparable GAAP
measure:
Growth in product revenues excluding recently acquired product lines
Excluding recently acquired product lines, second quarter 2004 product
revenues increased by $11.0 million, or 27%, over the prior year period.
Quarter Ended Increase
June 30, (Decrease)
2004 2003 $ %
-------- -------- ------- -----
($ in thousands)
Total product revenues, as reported $ 56,436 $ 41,237 $15,199 37%
Less: Product revenues acquired in
2004 and 2003 4,230 -- 4,230 NM
-------- -------- ------- -----
Product revenues excluding acquired products $ 52,206 $ 41,237 $10,969 27%
"MAYFIELD" is a registered trademark of SM USA, Inc., a wholly owned subsidiary
of Schaerer Mayfield USA, Inc.
Source: Integra LifeSciences Holdings Corporation