EX-99.1 2 v131582_ex99-1.htm

[logo]
 
PRESS RELEASE

Investors/Media:
The Ruth Group
Nick Laudico/Jason Rando
646-536-7030/7025
nlaudico@theruthgroup.com 
jrando@theruthgroup.com
Contact:
Symmetry Medical Inc.
Fred Hite
Senior Vice President
Chief Financial Officer
(574) 371-2218

Symmetry Medical Reports Third Quarter 2008 Financial Results

Increases Full Year Revenue Guidance to a range of $417 Million to $422 Million

Third Quarter 2008 Highlights:

 
·
Record revenue of $112.1 million, up 47.8% over third quarter 2007
 
·
Gross profit of $25.7 million a 126.8% increase compared to the third quarter 2007
 
·
Net income of $0.07 per share compared to a loss of $0.03 per share in the third quarter 2007
 
·
Net income includes unfavorable impact of foreign exchange, tax loss carry forward, a facility closure costs and Sheffield, UK headcount reduction costs

WARSAW, Ind., November 12, 2008 - Symmetry Medical Inc. (NYSE: SMA), a leading independent provider of products to the global orthopaedic device industry and other medical markets, announced today third quarter 2008 financial results for the period ended October 4, 2008.

Revenue for the third quarter 2008 was $112.1 million, up 47.8% from $75.8 million reported in the third quarter 2007. Third quarter 2008 revenue included an incremental $4.7 million from SSI and UCA, which was acquired in August 2007; and $14.0 million from the Company’s New Bedford, Massachusetts manufacturing facility, which was acquired from DePuy Orthopaedics, Inc. in January 2008. Excluding these acquisitions, the Company achieved organic revenue growth of 23.2% over the third quarter of 2007.

Gross profit for the third quarter 2008 was $25.7 million, an increase of 126.8% from $11.3 million for the third quarter 2007. Gross profit for the third quarter of 2008 was impacted by several unfavorable items which include $0.7 million related to the closure of the Company’s Switzerland facility, $0.5 million related to Sheffield headcount reduction and a $0.4 million gross profit reduction in the Company’s domestic forging operations as a result of a large press break down. The impact of these unfavorable items more than offset the lower loss experienced at our Sheffield operations of $0.8 million. 

Gross margin percentage for the third quarter 2008 was 22.9% compared to gross margin percentage of 14.9% for the third quarter 2007.

Selling, general and administrative expenses were $15.2 million for the third quarter 2008, compared to $9.0 million in the third quarter 2007. The year-over-year increase was driven by $2.3 million from the addition of expenses from the recent acquisitions, $0.9 million from the remaining professional fees and expenses related to the review of accounting irregularities at the Sheffield, UK operating unit and $0.7 million from an increase in restricted stock expense. The remaining increase is a result of increased sales commission expense to support the higher sales levels and general inflation.
 
Operating income for the third quarter of 2008 was $10.5 million, up 359.9% from $2.3 million for the third quarter 2007. Operating margin for the third quarter 2008 was 9.4%, an increase from 3.0% for the third quarter 2007. In addition to several items in gross profit and SG&A mentioned above, operating income was negatively impacted by continuing operating losses at the Sheffield UK unit.
 
The third quarter 2008 net income included the unfavorable gross margin items worth $1.6 million or ($0.03) per share, a net unfavorable foreign exchange impact of $2.1 million or ($0.04) per share primarily at our Sheffield, UK operating unit, the impact of recording a full tax valuation allowance on current year losses at the Sheffield, UK operating unit of $1.1 million or ($0.03) per share, and the remaining Sheffield investigation expenses of $0.9 million or ($0.02) per share. Given these items, the net loss at Sheffield was $4.7 million compared to a net loss of $3.2 million in the second quarter of 2008. The Company is beginning to benefit from sales price increases, material efficiencies and the third quarter reduction in headcount at the Sheffield facility showing up in improved operating income.

Net income for the third quarter 2008 was $2.5 million, or $0.07 per diluted share, compared to net income of $(1.1) million, or $(0.03) per diluted share, for the third quarter of 2007. The items noted above decreased net income by $4.1 million, or ($0.12) per diluted share.

The weighted average number of diluted shares outstanding during the third quarter of 2008 was 35,402,097.

Brian Moore, President and Chief Executive Officer of Symmetry Medical, stated, “We have continued to operate at a high level of capacity, with record revenues for the third quarter of 2008. While demand from major orthopaedic customers remained strong through the quarter, which we believe will be sustained through year-end and into 2009, we remain cautious in view of the economic environment. In the face of this challenging environment, we are finding that OEMs are seeking the highest quality and dependability from suppliers which provides Symmetry a major competitive advantage with customers who turn to us for our reliability and global Total Solutions approach.”

Mr. Moore continued, “While slower than we originally expected, our Sheffield operation is recovering with narrower losses and greater efficiencies. Our New Bedford instrument facility continues to perform at high levels and we are actively adding OEM customers to that site with shipment to those customers anticipated by the end of the calendar year.”

Financial Guidance

The following forward-looking estimates regarding 2008 earnings guidance are based on current market conditions and foreign currency comparisons. Actual results may differ materially, and we refer you to forward-looking statements located at the end of the press release.

For the full year 2008, the Company is increasing revenue guidance to a range of $417 million to $422 million, up from the previously announced range of $410 million to $420 million. This increase is based on current order flow and anticipated customer demand for the remainder of 2008.

For the full year 2008, the Company is adjusting guidance for diluted earnings per share in the range of $0.41 to $0.43, which reflects the third quarter results, additional non-cash foreign exchange impact given current market rates, a higher tax rate, and a delay in the Sheffield operating unit’s return to profitability. The Sheffield operating unit incurred a lower operating loss during the third quarter 2008 and recorded operating income in the month of September. However, given the impact of foreign exchange and slower than expected improvements, the Company does not expect the Sheffield unit to reach profitability for the full fourth quarter of 2008 as previously anticipated but does expect that Sheffield will exit the fourth quarter of 2008 at break-even operating income.
 
Conference Call
Symmetry Medical will host a conference all at 8:00 a.m. ET on November 12, 2008. A live Web cast of the conference call will be available online from the investor relations page of the Company’s corporate website at www.symmetrymedical.com. The dial-in numbers are (800) 706-7748 for domestic callers and (617) 614-3473 for international. The reservation number for both is 10092834. After the live Web cast, the call will remain available on Symmetry Medical’s Web site through February 12, 2009. In addition, a telephonic replay of the call will be available until November 19, 2008. The replay numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 24192002.

About Symmetry Medical Inc.
Symmetry Medical Inc. is a leading independent provider of implants and related instruments and cases to the orthopaedic device industry. The Company also designs, develops and produces these products for companies in other segments of the medical device market, including arthroscopy, dental, laparoscopy, osteobiologic and endoscopy sectors and provides limited specialized products and services to non-healthcare markets, such as the aerospace market.

Forward-Looking Statements
Statements in the press release regarding Symmetry Medical Inc.'s business, which are not historical facts, may be "forward-looking statements" that involve risks and uncertainties, within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictive in nature and are frequently identified by the use of terms such as "may," "might," "will," "should," "expect," "believe," “anticipate,” “plan,” "estimate," "intend," and similar words indicating possible future expectations, events or actions. Such predictive statements are not guarantees of future performance, and actual outcomes and results could differ materially from our current expectations. We refer you to the "Risk Factors" and "Forward Looking-Statements" sections in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission as well as the Company's other filings with the SEC, which are available on the SEC's Web site at www.sec.gov.

Symmetry Medical Inc.
Condensed Consolidated Balance Sheets

   
October 4,
  
December 29,
  
   
2008
  
2007
  
   
(In Thousands, Except Per Share Data)
  
   
(unaudited)
      
Assets:
          
Current Assets:
  
 
  
 
  
Cash and cash equivalents
  
$
17,791
  
$
12,089
  
Accounts receivable, net
    
58,825
   
42,992
 
Inventories
    
62,782
   
45,353
 
Refundable income taxes
    
5,105
   
6,516
 
Deferred income taxes
    
3,437
   
2,551
 
Derivative valuation asset
    
917
   
2
 
Other current assets
    
2,364
   
2,940
 
           
Total current assets
    
151,221
   
112,443
 
Property and equipment, net
    
120,397
   
100,424
 
Derivative valuation asset
    
261
   
-
 
Deferred income taxes
    
-
   
-
 
Goodwill
    
153,696
   
141,985
 
Intangible assets, net of accumulated amortization
    
46,800
   
44,567
 
Other assets
    
2,003
   
1,011
 
           
Total Assets
  
$
474,378
  
$
400,430
  
           
Liabilities and Shareholders' Equity:
          
Current Liabilities:
          
Accounts payable
  
$
32,250
  
$
34,518
  
Accrued wages and benefits
    
12,133
   
10,922
 
Other accrued expenses
    
4,803
   
8,096
 
Income tax payable
    
6,038
   
2,394
 
Derivative valuation liability
    
-
   
74
 
Deferred income taxes
    
352
   
407
 
Revolving line of credit
    
7,477
   
6,511
 
Current portion of capital lease obligations
    
1,393
   
2,487
 
Current portion of long-term debt
    
15,713
   
10,900
 
           
Total current liabilities
    
80,159
   
76,309
 
Deferred income taxes
    
12,063
   
12,136
 
Derivative valuation liability
    
2,286
   
1,917
 
Capital lease obligations, less current portion
    
3,603
   
4,032
 
Long-term debt, less current portion
    
126,825
   
68,500
 
           
Total Liabilities
    
224,936
   
162,894
 
           
Commitments and contingencies (Note 9)
              
               
Shareholders' Equity:
          
Common Stock, $.0001 par value; 72,410 shares authorized; shares issued October 4, 2008--35,831; December 29, 2007--35,444)
    
4
   
4
 
Additional paid-in capital
    
274,994
   
272,623
 
Accumulated deficit
    
(32,824
)
  
(45,526
)
Accumulated other comprehensive income
    
7,268
   
10,435
 
           
Total Shareholders' Equity
    
249,442
   
237,536
 
           
Total Liabilities and Shareholders' Equity
  
$
474,378
  
$
400,430
  
 
 

Symmetry Medical Inc.
Condensed Consolidated Statements of Operations

   
Three Months Ended
  
Nine Months Ended
  
   
October 4,
  
September 29,
  
October 4,
  
September 29,
  
   
2008
  
2007
  
2008
  
2007
  
       
(In Thousands, Except Per Share Data)
      
   
(unaudited)
  
(unaudited)
  
(unaudited)
  
(unaudited)
  
Revenue
  
$
112,095
  
$
75,823
  
$
323,744
  
$
210,259
  
Cost of Revenue
    
86,445
   
64,511
   
246,733
   
172,518
 
                           
Gross Profit
    
25,650
   
11,312
   
77,011
   
37,741
 
Selling, general, and administrative expenses
    
15,165
   
9,032
   
44,474
   
24,713
 
                           
Operating Income
    
10,485
   
2,280
   
32,537
   
13,028
 
Other (income) expense:
                          
Interest expense
    
2,683
   
1,808
   
8,300
   
5,001
 
Loss on debt extinguishment
                          
Derivatives valuation (gain)/loss
    
(972
)
  
1,372
   
(1,041
)
  
1,356
 
Other
    
3,079
   
(627
)
  
2,581
   
(1,290
)
                           
Income (loss) before income taxes
    
5,695
   
(273
)
  
22,697
   
7,961
 
Income tax expense
    
3,162
   
814
   
9,995
   
2,738
 
                           
Net income (loss)
  
$
2,533
  
$
(1,087
)
$
12,702
  
$
5,223
  
                           
Net income (loss) per share:
                          
Basic
  
$
0.07
  
$
(0.03
)
$
0.36
  
$
0.15
  
                           
Diluted
  
$
0.07
  
$
(0.03
)
$
0.36
  
$
0.15
  
                           
                           
Weighted average common shares and equivalent shares outstanding:
                          
Basic
    
35,174
   
35,130
   
35,161
   
35,074
 
Diluted
    
35,402
   
35,291
   
35,354
   
35,255