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): April 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 April 27, 2004 regarding earnings for the quarter
ended March 31, 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 April 27, 2004, Integra LifeSciences Holdings Corporation issued a press
release announcing financial results for the quarter ended March 31, 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: April 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 April 27, 2004 regarding earnings for the
quarter ended March 31, 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 First Quarter 2004 Financial Results
Plainsboro, New Jersey, April 27, 2004 -- Integra LifeSciences Holdings
Corporation (Nasdaq: IART) today reported net income of $7.4 million, or $0.24
per share, for the first quarter of 2004, compared to net income of $5.4
million, or $0.18 per share, in the first quarter of 2003, an increase of 37%
over the prior year period.
Total revenues in the first quarter of 2004 increased by $15.7 million to $52.4
million, a 43% increase over the first quarter of 2003, as product revenues
increased by $16.3 million to $51.4 million and other revenues decreased by $0.6
million to $1.0 million. Excluding recently acquired product lines, first
quarter 2004 product revenues increased by $7.3 million, or 22%, over the prior
year period.
Operating income for the period was $11.7 million, a 58% increase over the first
quarter of 2003.
"I am pleased with our performance in the first quarter," said Stuart M. Essig,
Integra's President and Chief Executive Officer. "During the quarter, we
successfully resumed direct selling of our INTEGRA(R) Dermal Regeneration
Template through our Plastic and Reconstructive Surgery sales force. We also
completed two acquisitions, which enhanced our extensive instrument product
offering."
On January 1, 2004 we resumed the direct marketing, sale and distribution of our
INTEGRA(R) Dermal Regeneration Template. During 2003, we doubled the size of our
Plastic and Reconstructive Surgery sales force in anticipation of the
termination of our distribution agreement with ETHICON, Inc. for this product.
Our larger sales force gave us the capacity to sell the INTEGRA product directly
from the beginning of the quarter.
In January we also acquired the R&B instrument business from R&B Surgical
Solutions and the Sparta disposable critical care devices and surgical
instruments business from Fleetwood Medical, Inc. The R&B instrument line is a
complete line of high-quality handheld surgical instruments used in neuro- and
spinal surgery that we market through our JARIT sales channel. The Sparta
product line includes products used in plastic and reconstructive, ENT, neuro,
ophthalmic and general surgery. We market these product lines primarily to
hospitals and physicians through a catalog and a network of distributors.
Our revenues for the periods were as follows:
Three Months
Ended March 31, % Increase/
2004 2003 (Decrease)
---- ---- ----------
Product Revenue:
Neuromonitoring products $11,198 $10,532 6%
Operating room products 18,332 12,588 46%
Instruments 16,043 6,247 157%
Private label products 5,862 5,763 2%
------ ------ ---
Total Product Revenue 51,435 35,130 46%
Other revenue 1,008 1,650 (39%)
------ ------ -----
Total Revenue $52,443 $36,780 43%
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 $9.0 million of the year-over-year
increase in instrument revenues. The increase in our private label product
revenues attributable to the Absorbable Collagen Sponge we supply for use in
Medtronic's INFUSE bone graft product was offset by the removal of INTEGRA
Dermal Regeneration Template revenues from this category for inclusion in
operating room revenues.
Acquisitions contributed significantly to our product revenue growth. Revenues
from product lines acquired since the beginning of the first quarter of 2003
accounted for $10.1 million of product revenues in the current period. Excluding
recently acquired product lines and changes in foreign currency exchange rates,
first quarter 2004 product revenues increased by $6.3 million, or 19%, over the
prior year period.
Gross margin on product revenues in the first quarter of 2004 was 61%. Our gross
margin was positively affected by changes in the mix of our products sold during
the quarter and the resumption of direct sales of INTEGRA Dermal Regeneration
Template.
Research and development expense increased slightly from $2.7 million in the
first quarter of 2003 to $2.8 million in 2004. Sales and marketing expense
increased by $3.6 million to $11.2 million in the first quarter of 2004 due to
the expansion of our direct sales organizations and because we owned JARIT for
the entire current period compared to a portion of the prior year period. As a
percentage of product revenues, sales and marketing expense remained constant at
22% in both periods. General and administrative expense increased $1.0 million
in the first quarter of 2004 to $5.9 million.
We reported net interest income of $57,000 in the first quarter of 2004, as
compared to net interest income of $776,000 in the prior year period. This
change resulted primarily from interest expense associated with the $120.0
million of contingent convertible subordinated notes that we issued in 2003.
The Company generated $10.9 million in cash flows from operations in the first
quarter of 2004.
The Company's cash and investments totaled $212.1 million at March 31, 2004.
We are updating our expectations for revenues, gross margin and earnings per
share for 2004 and 2005. We expect total revenues of between $215 million and
$220 million in 2004 and $250 million and $260 million in 2005. Consolidated
gross margin is expected to be 61% and 63% of product revenues in 2004 and 2005,
respectively. Excluding 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, we expect our earnings to be within a
range of $1.08 to $1.14 per share in 2004 and $1.35 and $1.40 per share in 2005.
Our guidance for the second quarter of 2004 is for total revenues in the range
of $51 million to $53 million and earnings per share of $0.24 to $0.25. 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 have scheduled a conference call for 9:00 am EST tomorrow, April 28, 2004, to
discuss the financial results for the first quarter of 2004 and to further
discuss 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) 935-8512 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 May 12, 2004 by dialing
(973) 341-3080 (access code 4664385) 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
1,000 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" and "growth in product revenues excluding recently
acquired product lines and changes in foreign currency exchange rates", which
are non-GAAP financial measures. A reconciliation of these non-GAAP financial
measures to the most comparable GAAP measures is provided in the tables of
financial information contained at the end of this news release.
These non-GAAP financial measures should not be relied upon to the exclusion of
GAAP financial measures. Management believes that these non-GAAP financial
measures are important supplemental information to investors which reflect an
additional way of viewing aspects of our operations that, when viewed with our
GAAP results and the accompanying reconciliations, provide 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
Ended March 31,
2004 2003
---- ----
Product revenues $51,435 $35,130
Other revenues 1,008 1,650
----- -----
Total revenues 52,443 36,780
Cost of product revenues 20,001 13,703
Research and development 2,823 2,650
Sales and marketing 11,151 7,576
General and administrative 5,856 4,834
Amortization 883 577
------ ------
Total costs and expenses 40,714 29,340
Operating income 11,729 7,440
Interest income, net 57 776
Other income (expense), net (17) 349
------- ------
Income before income taxes 11,769 8,565
Provision for income taxes 4,331 3,127
------ ------
Net income $7,438 $5,438
Diluted earnings per share $0.24 $0.18
Diluted weighted average
common shares outstanding 30,859 30,869
Condensed Balance Sheet Data:
March 31, December 31,
2004 2003
----- ----
Cash and marketable securities,
including non-current portion $212,081 $206,743
Accounts receivable, net 30,322 28,936
Inventory, net 44,894 41,046
Total assets 421,341 412,526
Current liabilities 19,694 20,618
Long-term debt 119,742 119,257
Total liabilities 143,124 143,996
Stockholders' equity 278,217 268,530
Reconciliation of non-GAAP financial measures to the most comparable GAAP
measure:
A. Growth in product revenues excluding recently acquired product lines
Excluding recently acquired product lines, first quarter 2004 product
revenues increased by $7.3 million, or 22%, over the prior year period.
Quarter Ended Increase
March 31, (Decrease)
2004 2003 $ %
-------- -------- ------- -----
($ in thousands)
Total product revenues, as reported $ 51,435 $ 35,130 $16,305 46%
Less: Product revenues acquired in
2004 and 2003 10,123 1,142 8,981 786%
-------- -------- ------- -----
Product revenues excluding acquired products $ 41,312 $ 33,988 $ 7,324 22%
B. Growth in product revenues excluding recently acquired product lines and
changes in foreign currency exchange rates
Excluding recently acquired product lines and changes in foreign currency
exchange rates, first quarter 2004 product revenues increased by $6.3
million, or 19%, over the prior year period.
Quarter Ended Increase
March 31, (Decrease)
2004 2003 $ %
-------- -------- ------- -----
($ in thousands)
Total product revenues, as reported $ 51,435 $ 35,130 $16,305 46%
Less: Product revenues acquired in
2004 and 2003 10,123 1,142 8,981 786%
Impact of changes in foreign
currency exchange rates 1,007 -- 1,007 N/A
-------- -------- ------- -----
Product revenues excluding acquired products
and changes in foreign currency
exchange rates $ 40,305 $ 33,988 $ 6,317 19%
Source: Integra LifeSciences Holdings Corporation
Source: Integra LifeSciences Holdings Corporation