Mar 2, 2009

Integra LifeSciences Reports 2008 Financial Results

Revenues for the Full Year 2008 Increase 19 Percent to $655 Million

PLAINSBORO, N.J., Mar 2, 2009 (GlobeNewswire via COMTEX News Network) -- Integra LifeSciences Holdings Corporation (Nasdaq:IART) today reported its financial results for the fourth quarter and full year ending December 31, 2008. Total revenues in the fourth quarter of 2008 were $174.4 million, reflecting an increase of $16.7 million, or 11%, over the fourth quarter of 2007. Total revenues in the full year of 2008 were $654.6 million, reflecting an increase of $104.1 million, or 19%, over the full year of 2007. Excluding the impact of currency exchange rates, revenues increased 13% and 18%, respectively, for the quarter and year ended December 31, 2008. We have broken out our revenues by product category in a table at the end of this press release.

"Despite a challenging economic environment, Integra posted strong results for the full year 2008," said Integra's President and Chief Executive Officer, Stuart Essig. "We are pleased with the strength of our business under the circumstances, in particular our operating cash flow."

The Company reported GAAP net income of $24.8 million, or $0.85 per diluted share, for the fourth quarter of 2008, compared to GAAP net income of $5.4 million, or $0.19 per diluted share, for the fourth quarter of 2007.

In the fourth quarter of 2008, the Company reported a $10.0 million deferred income tax benefit related to the restructuring of a German subsidiary.

In addition to GAAP results, Integra reports adjusted net income and adjusted earnings per diluted share. A further discussion of these and other non-GAAP financial measures can be found below, and reconciliations of GAAP net income to adjusted net income and GAAP earnings per diluted share to adjusted earnings per diluted share for the quarters and full years ended December 31, 2008 and 2007 appear in the financial statements attached to this release.

Adjusted net income for the fourth quarter of 2008, computed to exclude the $10.0 million deferred income tax benefit and with the other adjustments to GAAP reporting set forth in the attached reconciliation, was $15.5 million, or $0.53 per diluted share. Adjusted net income for the fourth quarter of 2007, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $15.6 million, or $0.54 per diluted share.

Integra generated $27.1 million in operating cash flows in the fourth quarter and $72.6 million for the full year 2008, a 54% increase over full year 2007.

The Company reported GAAP net income of $34.9 million, or $1.22 per diluted share, for the full year 2008, compared to GAAP net income of $33.5 million, or $1.13 per diluted share in 2007. Adjusted net income for the full year 2008, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $60.0 million, or $2.09 per diluted share. Adjusted net income for the full year 2007, computed with the adjustments to GAAP reporting set forth in the attached reconciliation, was $47.1 million, or $1.59 per diluted share.

The Company is reiterating its revenue and earnings per share guidance for the full year 2009. The Company is anticipating revenues between $720 million and $740 million and expects earnings per share to be between $1.86 and $2.06 on a GAAP basis and between $2.20 and $2.40 on an adjusted basis. We expect revenues in the first quarter of 2009 to be 3-5% lower than the fourth quarter of 2008, and earnings to be disproportionately lower, and that the fourth quarter of 2009 will be the strongest quarter of the year. 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.

Our 2009 GAAP earnings per share guidance includes the impact of the application of Financial Accounting Standards Board Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments that May be Settled in Cash Upon Conversion ("FSP APB 14-1"), which we implemented on January 1, 2009. FSP APB 14-1 requires that we separately account for the liability and equity components of our convertible debt instruments, which may be settled in cash upon conversion, in a manner that reflects an applicable nonconvertible debt borrowing rate at the time that we issued such convertible debt instruments.

In the future the Company may record, or expects to record, certain additional revenues, gains, expenses or charges (such as acquisition-related charges, facility consolidation, manufacturing and distribution transfer, and system integration charges, and non-cash interest expense related to the application of FSP APB 14-1) that it will exclude in the calculation of adjusted earnings per share for historical periods and in providing adjusted earnings per share guidance.

On a quarterly basis, the Company expects to incur approximately $3.8 million, or $0.08 to $0.09 per share, of share-based compensation expense associated with FAS 123R in 2009. This non-cash compensation expense is reflected in both the GAAP and adjusted earnings per share guidance for 2009 provided above.

Integra has scheduled a conference call for 9:00 AM ET on Monday, March 2, 2009 to discuss financial results for the fourth quarter and full year of 2008 and forward-looking financial guidance. The conference call will be hosted by Stuart Essig, President and Chief Executive Officer of Integra, 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 719-325-4798 or through a webcast via a link provided on the Investor Relations homepage of Integra's website at www.Integra-LS.com. Access to a replay is available through March 16, 2009 by dialing 719-457-0820 (PIN 1460424) or through the webcast.

Integra LifeSciences Holdings Corporation, a world leader in regenerative medicine, is dedicated to improving the quality of life for patients through the development, manufacturing and marketing of clinically relevant, innovative and cost-effective surgical implants and medical instruments. The Company's products are used to treat millions of patients every year, primarily in neurosurgery, orthopedics and general surgery. Integra's headquarters are in Plainsboro, New Jersey, and it has research and manufacturing facilities throughout the world. http://www.Integra-LS.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, acquisition and integration related costs and non-cash compensation expense associated with FAS 123R. 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; 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 of legal compliance matters or internal controls review, improvement and remediation; 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 timing and amount of share-based awards granted to employees; fluctuations in foreign currency exchange rates; 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, 2007 and information contained in subsequent filings with the Securities and Exchange Commission.

Discussion of Adjusted Financial Measures

In addition to our GAAP results, we provide adjusted revenues, adjusted net income and adjusted earnings per diluted share. Adjusted revenues consist of growth in total revenues excluding the effects of currency exchange rates. Adjusted net income consists of net income, excluding (i) acquisition-related charges, (ii) facility consolidation, manufacturing and distribution transfer and system integration charges, (iii) certain employee termination and related costs, (iv) charges associated with discontinued or withdrawn product lines, (v) charges related to restructuring our European subsidiaries, (vi) charges related to litigation matters or disputes, (vii) intangible asset impairment charges, (viii) incremental professional and bank fees related to the delayed closing of financial statements, (ix) charges recorded in connection with terminating defined benefit pension plans, (x) charges relating to the grant of restricted stock units in connection with the extension of the term of the CEO's employment agreement, (xi) non-cash interest expense related to the application of FSP APB 14-1, (xii) the income tax expense/benefit related to these adjustments, (xiii) quarterly adjustments to income tax expense/benefit related to the cumulative impact of changes in estimated tax rates and certain infrequently occurring items, and (xiv) income tax expenses or gains related to restructuring our European subsidiaries. Adjusted earnings per diluted share are calculated by dividing adjusted net income for earnings per diluted share by adjusted diluted weighted average shares outstanding.

Integra believes that the presentation of adjusted revenues, adjusted net income and adjusted earnings per diluted share 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.Integra-LS.com.


               INTEGRA LIFESCIENCES HOLDINGS CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (UNAUDITED)

 (In thousands, except per share amounts)
                          Three Months Ended     Twelve Months Ended
                              December 31,            December 31,
                           2008        2007        2008        2007
                         --------------------    --------------------

 TOTAL REVENUES          $174,370    $157,645    $654,604    $550,459

 COSTS AND EXPENSES
 Cost of product revenues  68,138      62,426     252,826     214,674
 Research and development  10,186      11,813      60,495      30,658
 Selling, general and
  administrative           67,373      64,861     280,997     225,187
 Intangible asset
  amortization              3,705       2,991      12,875      12,652
                         --------    --------    --------    --------

   Total costs and
    expenses              149,402     142,091     607,193     483,171

 Operating income          24,968      15,554      47,411      67,288

 Interest income              584       1,174       2,114       3,552
 Interest expense          (4,889)     (3,853)    (17,614)    (13,749)
 Other income (expense),
  net                      (1,552)      3,200        (905)      2,971
                         --------    --------    --------    --------

 Income before income
  taxes                    19,111      16,075      31,006      60,062

 Income tax expense
  (benefit)                (5,734)     10,692      (3,927)     26,591
                         --------    --------    --------    --------

 Net income                24,845       5,383      34,933      33,471

 Diluted net income per
  share                  $   0.85    $   0.19    $   1.22    $   1.13

 Weighted average common
  shares outstanding for
  diluted net income per
  share                    29,142      28,842      28,703      29,578

Listed below are the items included in revenues and 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.


 (In thousands, except per share amounts)
 A. Growth in total revenues excluding the effects of currency
    exchange rates

                     Three Months Ended        Twelve Months Ended
                         December 31,               December 31,
                   2008      2007   Change    2008      2007   Change
                 ----------------------------------------------------
 Integra
  NeuroSciences  $ 64,317  $ 65,427   (2%)  $256,869  $242,631    6%
 Integra
  Orthopedics    $ 62,828  $ 45,033   40%   $217,953  $143,917   51%
 Integra Medical
  Instruments*   $ 47,225  $ 47,185    0%   $179,782  $163,911   10%
 --------------------------------------------------------------------
 Net Sales       $174,370  $157,645   11%   $654,604  $550,459   19%

 FX impact       $  3,540        --        ($  5,586)       --
 --------------------------------------------------------------------
 Growth in total
  revenues
  excluding the
  effects of
  currency
  exchange rates $177,910  $157,644   13%   $649,018  $550,459   18%

 *During 2008, we eliminated certain distributed product lines from
  the LXU Medical business. In the fourth quarter, this reduced our
  revenues by $3.2 million. Since we acquired the LXU Medical
  business in May 2007, we have eliminated distributed product lines
  representing 54% of the acquired revenue base.



 B. Items included in GAAP net income

                          Three Months Ended      Twelve Months Ended
                              December 31,            December 31,
                         --------------------------------------------
                           2008        2007        2008        2007
                         --------------------------------------------

 Acquisition-related
  charges                   2,008       6,831      32,253       9,701

 Employee termination
  and related costs            --        (131)         --        (160)

 Facility consolidation,
  manufacturing and
  distribution transfer
  and system integration
  charges                     232         328       1,035       1,106

 Charges associated with
  discontinued or
  withdrawn product lines      --         550       1,207       2,006

 Charges related to
  restructuring our
  European legal entities      --          --          --         335

 Charges related to
  litigation matters or
  disputes                    437          --         437         138

 Intangible asset
  impairments                  --          --          --       1,014

 Incremental audit, legal
  and/or bank fees
  related to the delayed
  closing of financial
  statements                   --       1,389       1,041       1,389

 Charges recorded in
  connection with
  terminating defined
  benefit pension plans       372          --         372          --

 Charge related to grant
  of restricted stock
  units in connection
  with extension of the
  term of the CEO's
  employment agreement         --          --      18,356          --

 Income tax expense
  (benefit) related to
  above adjustments        (1,136)     (1,504)    (21,515)     (4,612)

 Quarterly adjustment to
  income tax expense
  related to the
  cumulative impact of
  changes in estimated
  tax rates and certain
  infrequently occurring
  items(1)                 (1,284)      2,756       1,838       1,996

 Income tax expenses or
  (gains) related to
  restructuring our
  European subsidiaries    (9,962)         --      (9,962)        709

 (1) For 2008, the $1,284 increase and $1,838 reduction to income tax
     expense were made to reflect what the income tax expense would
     have been based upon a 30% effective income tax rate for the
     year. For 2007, the above $2,756 and $1,996 reductions to income
     tax expense were made to reflect what the income tax expense
     would have been based upon a 37.7% effective income tax rate for
     the year. The adjusted effective income tax rate is the
     effective income tax rate that would have been reported after
     excluding certain infrequently occurring items from the reported
     tax rate.



              INTEGRA LIFESCIENCES HOLDINGS CORPORATION
         RECONCILIATION OF NON-GAAP ADJUSTMENTS - HISTORICAL
                             (UNAUDITED)
 (In thousands, except per share amounts)

                          Three Months Ended      Twelve Months Ended
                              December 31,            December 31,
                           2008        2007        2008        2007

 GAAP net income         $ 24,845    $  5,383    $ 34,933    $ 33,471

 Non-GAAP adjustments:

 Acquisition-related
  charges (a)               2,008       6,831      32,253       9,701

 Employee termination
  and related costs (b)        --        (131)         --        (160)

 Charges associated with
  discontinued or
  withdrawn product
  lines (c)                    --         550       1,207       2,006

 Charges related to
  restructuring our
  European legal
  entities (d)                 --          --          --         335

 Facility consolidation,
  manufacturing and
  distribution transfer
  and system integration
  charges (e)                 232         328       1,035       1,106

 Charges related to
  litigation matters or
  disputes (f)                437          --         437         138

 Intangible asset
  impairments (g)              --          --          --       1,014

 Incremental audit, legal
  and/or bank fees
  related to the delayed
  closing of financial
  statements (h)               --       1,389       1,041       1,389

 Charges recorded in
  connection with
  terminating defined
  benefit pension
  plans (i)                   372          --         372          --

 Charge related to grant
  of restricted stock
  units in connection
  with extension of the
  term of the CEO's
  employment agreement (j)     --          --      18,356          --

 Income tax expense
  (benefit) related to
  above adjustments        (1,136)     (1,504)    (21,515)     (4,612)

 Quarterly adjustment to
  income tax expense
  related to the
  cumulative impact of
  the changes in
  estimated tax rates and
  certain infrequently
  occurring items          (1,284)      2,756       1,838       1,996

 Income tax expenses or
  gains related to
  restructuring our
  European
  subsidiaries (k)         (9,962)         --      (9,962)        709
                         --------    --------    --------    --------

   Total of non-GAAP
    adjustments            (9,333)     10,219      25,062      13,622
                         --------    --------    --------    --------

 Adjusted net income     $ 15,512    $ 15,602    $ 59,995    $ 47,093

 Weighted average common
  shares outstanding for
  diluted net income per
  share                    29,142      28,842      28,703      29,578
                         --------    --------    --------    --------

 Adjusted diluted net
  income per share       $   0.53    $   0.54    $   2.09    $   1.59
                         ========    ========    ========    ========

 (a) Q4 2008 - $2,008 recorded in cost of product revenues;
     Q4 2007 - $2,042 recorded in cost of product revenues, $4,600
     recorded in research and development. $189 recorded in selling
     general and administrative.
     FY 2008 - $6,667 recorded in cost of product revenues, $25,240
     recorded in research and development. $346 recorded in selling
     general and administrative;
     FY 2007 - $4,238 recorded in cost of product revenues, $4,600
     recorded in research and development. $189 recorded in selling
     general and administrative, $674 recorded in amortization of
     intangibles.
 (b) Q4 2007 - $ 18 recorded in selling general and administrative,
     Negative $149 recorded in cost of product revenues.
     FY 2007 - $6 recorded in cost of product revenues, Negative $166
     recorded in selling general and administrative.
 (c) Q4 2007 - all recorded in cost of product revenues.
     FY 2008 - all recorded in cost of product revenues.
     FY 2007 - $1,656 recorded in cost of product revenues, $350
     recorded in total revenues.
 (d) FY 2007 - all recorded in selling general and administrative.
 (e) Q4 2008 - all recorded in cost of product revenues.
     Q4 2007 - $21 recorded in selling general and administrative,
     $307 recorded in cost of product revenues.
     FY 2008 - $905 recorded in cost of product revenues, $130
     recorded in selling general and administrative.
     FY 2007 - $765 recorded in cost of product revenues, $341
     recorded in selling general and administrative.
 (f) All recorded in selling general and administrative.
 (g) FY 2007 - $848 recorded in cost of product revenues, $166
     recorded in amortization of intangibles.
 (h) All recorded in selling general and administrative.
 (i) All recorded in selling general and administrative.
 (j) All recorded in selling general and administrative.
 (k) All recorded in income tax expense.



 Condensed Balance Sheet Data (in thousands):

                                                 Dec. 31,    Dec. 31,
                                                   2008        2007
                                                 --------    --------
 Cash and marketable securities, including
  non-current portion                            $183,546    $ 57,339
 Accounts receivable, net                         112,417     105,539
 Inventory, net                                   146,103     144,535

 Bank line of credit                              260,000          --
 Convertible securities, current                       --     119,962
 Convertible securities, non-current              330,000     330,000

 Stockholders' equity                             350,206     260,429



               INTEGRA LIFESCIENCES HOLDINGS CORPORATION
           RECONCILIATION OF NON-GAAP ADJUSTMENTS - GUIDANCE

  (In thousands, except per share amounts)
                                                 Projected Year Ended
                                                      31-Dec-09
                                                   Low         High
 GAAP net income                                 $ 55,700    $ 61,700

 Non-GAAP adjustments:

 Acquisition-related charges                        4,500       4,500

 Facility consolidation, manufacturing and
  distribution transfer, and system integration
  charges                                             800         800

 Non-cash interest expense related to the
  application of FSP APB 14-1                      11,500      11,500

 Income tax expense (benefit) related to above
  adjustments                                      (6,600)     (6,600)
                                                 --------    --------

 Total of non-GAAP adjustments                     10,200      10,200

 Adjusted net income                             $ 65,900    $ 71,900

 Weighted average common shares outstanding
  for diluted net income per share                 29,900      29,900

 GAAP diluted net income per share               $   1.86    $   2.06

 Non-GAAP adjustments detailed above (per share) $   0.34    $   0.34
                                                 --------    --------

 Adjusted diluted net income per share           $   2.20    $   2.40

IART-F

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Integra LifeSciences Holdings Corp.

Integra LifeSciences Holdings Corporation
          John B. Henneman, III, Executive Vice President, 
           Finance and Administration, and Chief Financial Officer
            (609) 275-0500
            jhenneman@Integra-LS.com
          Karen Mroz-Bremner, Senior Manager, Corporate Development 
           and Investor Relations
            (609) 936-6929
            Karen.Mroz-Bremner@Integra-LS.com

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