Symmetry Medical Reports Third Quarter 2010 Financial Results

WARSAW, Ind., Nov. 4, 2010 /PRNewswire-FirstCall/ — Symmetry Medical Inc.

(NYSE: SMA), a leading independent provider of products to the global
orthopaedic device industry and other medical markets, announced third quarter
2010 financial results for the three-month period ended October 2, 2010.

Third Quarter Vs Prior Quarter
(in millions, except
share data) 2010 2009 Change 3Q’10 2Q’10 Change
—- —- —— —– —– ——
Revenue $91.5 $87.2 5% $91.5 $88.8 3%
Operating Income 7.5 10.4 -28% 7.5 7.8 -4%
Net Income 3.6 5.4 -33% 3.6 4.5 -20%
EPS $0.10 $0.15 -33% $0.10 $0.13 -23%

Non-GAAP*
———
Operating Income* 7.6 11.1 -32% 7.6 8.1 -6%
Net Income* 3.6 5.9 -39% 3.6 4.7 -23%
EPS* $0.10 $0.16 -38% $0.10 $0.13 -23%

Revenue by Product:
——————-
Instruments $36.0 $41.3 -13% $36.0 $35.4 2%
Implants 28.3 24.2 17% 28.3 28.5 -1%
Cases 21.5 16.4 31% 21.5 19.8 9%
Other 5.7 5.3 8% 5.7 5.1 12%
— — — —
Total Revenue $91.5 $87.2 5% $91.5 $88.8 3%

* Excludes facility consolidation and severance costs incurred in
2010 and 2009. See “Non-GAAP Measures” below.

Revenue for the third quarter 2010 was $91.5 million, up 5.1% compared to $87.2
million in the same period last year and up 3.1% on a sequential basis from
$88.8 million in the second quarter 2010. The year-over-year and sequential
revenue growth reflects improved customer demand in the Company’s orthopedic and
medical device businesses. Sequential revenue growth also reflects the positive
impact from foreign exchange rates during the quarter.

Gross profit for the third quarter 2010 was $19.8 million, compared to $21.7
million in the same period last year and $20.4 million in the second quarter
2010. Gross margin percentage for the third quarter 2010 was 21.7%, compared to
24.9% in the same period last year and 22.9% for the second quarter 2010. The
year-over-year and sequential decline in gross margin was a result of extra
costs required to support customer deliveries. Such additional costs are not
expected to recur in the fourth quarter.

Selling, general and administrative expenses in the third quarter 2010 were
$12.2 million, compared to $10.6 million in the same period last year and
essentially flat on sequential basis from $12.3 million in the second quarter
2010. Selling, general and administrative expenses in the third quarter 2010
included $0.9 million of unanticipated expenses primarily related to medical
benefits. Since the third quarter of 2009, the company has also increased, as
planned, the investment in the distribution sales force and increased new
product development. Facility closure and severance costs were $0.1 million in
the third quarter of 2010, compared to $0.7 million in the same period last year
and $0.3 million in the second quarter of 2010.

Operating income for the third quarter 2010 was $7.5 million, compared to $10.4
million in the same period last year and $7.8 million in the second quarter
2010. Operating margin for the third quarter 2010 was 8.2%, compared to 12.0% in
the same period last year and 8.7% in the second quarter 2010. Excluding
expenses related to facility consolidation and employee severance payments
referenced above, operating income for the third quarter 2010 was $7.6 million,
compared to $11.1 million in the same period last year and $8.1 million in the
second quarter 2010.

The third quarter 2010 included a non-cash gain of $0.4 million for the mark to
market of the Company’s interest rate derivative, compared to a non-cash gain
for the interest rate derivative of $0.2 million in the third quarter 2009.

Income tax expense for the third quarter 2010 was $2.1 million, compared to a
tax expense of $2.9 million for the third quarter of 2009.

Net income for the third quarter 2010 was $3.6 million, or $0.10 per diluted
share, compared to $5.4 million, or $0.15 per diluted share, in the same period
last year and $4.5 million, or $0.13 per diluted share, in the second quarter of
2010. Excluding the facility consolidation and employee severance payments
referenced above, net income for the third quarter 2010 was $3.6 million, or
$0.10 per diluted share, compared to $0.16 in the same period last year and
$0.13 in the second quarter 2010.

The weighted average number of diluted shares outstanding during the third
quarter of 2010 was 35,869,760.

Brian Moore, President and Chief Executive Officer of Symmetry Medical, stated,
“Third quarter volume in our core orthopedic and medical device businesses was
in line with our expectations and reflected continued improvement in customer
orders. Offsetting these increases were higher manufacturing costs and
unanticipated medical related expenses. The manufacturing costs included extra
outsourcing to offset equipment break downs and heightened pressure on quality
and regulatory requirements, both of which were necessary to provide our
customers with the required level of service that is imperative to Symmetry’s
business. This resulted in lower gross margins for the third quarter. However,
we believe the impact will be isolated to the third quarter and we are already
back on track to achieving incremental operational efficiency. Accordingly, we
are forecasting the best quarter of the year in the fourth quarter.

Mr. Moore continued, “In addition, we recently closed on a new $200 million
credit facility that includes a $100 million accordion feature. This facility
provides us with ample resources to strategically invest in growth initiatives
and opportunities to diversify our business.”

Financial Guidance

The following forward-looking estimates regarding 2010 guidance reflect current
market conditions and foreign currency rates. Actual results may differ
materially, and the Company refers you to forward-looking statements located at
the end of the press release.

For the fourth quarter 2010, the Company anticipates revenue to be in a range of
$95 million to $99 million and earnings per share to be in a range of $0.14 to
$0.18. This guidance is based on current customer inventory levels, expected
customer product launch activity, expected positive impact from foreign exchange
rates, and an anticipated sequential improvement in operational efficiency
compared to the third quarter 2010.

Accordingly, for the full year 2010, the Company is increasing revenue guidance
to a range of $360 million to $364 million, up from the previously announced
range of $340 million to $350 million. For the full year 2010, the Company is
updating its earnings per share guidance to a range of $0.41 to $0.45, compared
to the previously announced range of $0.45 to $0.50.

Conference Call

Symmetry Medical will host a conference call to discuss third quarter 2010
financial results at 8:00 a.m. ET on November 4, 2010.A live Web cast of the
conference call will be available online from the investor relations page of the
Company’s corporate Web site at www.symmetrymedical.com. The dial-in numbers are
(866) 783-2139 for domestic callers and (857) 350-1598 for international. The
reservation number for both is 30602751.After the live Web cast, the call will
remain available on Symmetry Medical’s Web site through February 4, 2011. In
addition, a telephonic replay of the call will be available until November 18,
2010. The replay numbers are (888) 286-8010for domestic callers and (617)
801-6888for international callers. Please use reservation code 80710458.

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.

Non-GAAP Measures

The non-GAAP measures, including adjusted operating income, net income and EPS,
shown in this release exclude facility consolidation and severance costs.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP
measure are included after the financial information included in this press
release. These measures are not in accordance with, or an alternative for, GAAP
and may be different from non-GAAP measures used by other companies. Management
believes these non-GAAP measures improve management’s and investors’ the ability
to better compare the company’s ongoing financial performance between periods
and with other companies.

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.
Consolidated Statements of Operations

Three Months Ended YTD
—————— —
October October October October
2, 3, 2, 3,
2010 2009 2010 2009
—- —- —- —-
(In Thousands,
Except Per Share
Data)
(unaudited)

Revenue $91,538 $87,164 $264,856 $289,540
Cost of Revenue 71,708 65,441 207,627 216,488
—— —— ——- ——-

Gross Profit 19,830 21,723 57,229 73,052
Selling, general and
administrative expenses 12,248 10,587 37,124 37,007
Facility closure and
severance costs 57 702 917 864
— — — —

Operating Income 7,525 10,434 19,188 35,181
Other (income)/expense:
Interest expense 1,504 1,666 4,565 5,050
Derivatives valuation gain (389) (178) (1,177) (746)
Other 715 687 796 379
— — — —

Income before income taxes 5,695 8,259 15,004 30,498
Income tax expense 2,123 2,851 5,322 9,268
—– —– —– —–

Net income $3,572 $5,408 $9,682 $21,230
====== ====== ====== =======

Net income per share:
Basic $0.10 $0.15 $0.27 $0.60
===== ===== ===== =====

Diluted $0.10 $0.15 $0.27 $0.59
===== ===== ===== =====

Weighted average common
shares and equivalent shares
outstanding:
Basic 35,456 35,326 35,449 35,301
Diluted 35,870 35,620 35,802 35,498

Symmetry Medical Inc.
Consolidated Balance Sheets

October January
2, 2,
2010 2010
—- —-
(In Thousands)
(unaudited)
Assets:
Current Assets:
Cash and cash equivalents $13,869 $14,219
Accounts receivable, net 48,322 38,221
Inventories 72,422 62,301
Refundable income taxes 2,904 3,048
Deferred income taxes 4,822 5,816
Other current assets 3,922 3,648
—– —–

Total current assets 146,261 127,253
Property and equipment, net 108,068 113,369
Goodwill 153,983 153,813
Intangible assets, net of
accumulated amortization 40,418 42,729
Other assets 1,347 1,181
—– —–

Total Assets $450,077 $438,345
======== ========

Liabilities and Shareholders’
Equity:
Current Liabilities:
Accounts payable $27,765 $19,494
Accrued wages and benefits 7,863 7,607
Other accrued expenses 3,231 5,113
Accrued income taxes 196 257
Deferred income taxes – 78
Revolving line of credit 2,415 3,320
Derivative valuation liability 1,893 -
Current portion of capital lease
obligations 451 529
Current portion of long-term debt 1,424 20,400
—– ——

Total current liabilities 45,238 56,798
Accrued Income Taxes 6,534 6,362
Deferred income taxes 17,211 17,646
Derivative valuation liability – 2,982
Capital lease obligations, less
current portion 2,540 2,887
Long-term debt, less current portion 86,675 69,200
—— ——

Total Liabilities 158,198 155,875
——- ——-

Shareholders’ Equity:
Common Stock, $.0001 par value;
75,000 shares authorized; shares
issued October 2, 2010–35,942;
January 2, 2010–35,840 4 4
Additional paid-in capital 278,985 278,176
Retained earnings 9,959 277
Accumulated other comprehensive
income (loss) 2,931 4,013
—– —–

Total Shareholders’ Equity 291,879 282,470
——- ——-

Total Liabilities and Shareholders’
Equity $450,077 $438,345
======== ========

Reconciliation of Non-GAAP Financial Measures

Three Months Ended
——————
October October
2, July 3, 3,
2010 2010 2009
—- —- —-
(In Thousands, Except Per Share
Data)
(unaudited)

Operating Income, as reported $7,525 $7,751 $10,434
Facility closure and severance costs 57 340 702
— — —

Operating Income excluding facility
closure and severance costs $7,582 $8,091 $11,136
====== ====== =======

Net Income, as reported $3,572 $4,479 $5,408
Facility closure and severance costs 37 221 457
— — —

Net Income excluding facility
closure and severance costs $3,609 $4,700 $5,865
====== ====== ======

Earning per diluted share $0.10 $0.13 $0.15
Impact of facility closure and
severance costs per diluted share – – 0.01
— — —-

Earning per diluted share, excluding
facility closure and severance
costs $0.10 $0.13 $0.16
===== ===== =====

Contact: Investors:
Symmetry Medical Inc. The Ruth Group
Fred L. Hite Nick Laudico/Zack Kubow
Senior Vice President (646) 536-7030/7020
Chief Financial Officer nlaudico@theruthgroup.com
(574) 371-2218 zkubow@theruthgroup.com

Media:
Jason Rando
The Ruth Group
(646) 536-7025
jrando@theruthgroup.com

SOURCE Symmetry Medical Inc.