Wright Medical Group Inc. is a global orthopaedic device company specializing in the design manufacture and marketing of reconstructive joint devices and bio-orthopaedic materials. Reconstructive joint devices are used to replace knee hip and other joints that have deteriorated through disease or injury. Bio-orthopaedic materials are used to replace damaged or diseased bone and to stimulate natural bone growth. Wright Medical Group Inc. has a market cap of $517.2 million; its shares were traded at around $13.6 with a P/E ratio of 22.3 and P/S ratio of 1.1.
Highlight of Business Operations:Significant Quarterly Business Developments. Net sales increased 0.4% in the second quarter of 2009 to $118.9 million, compared to net sales of $118.5 million in the second quarter of 2008. Our net income increased to $2.4 million in the second quarter of 2009 from a $2.4 million loss in the second quarter of 2008 as a result of lower levels of restructuring expenses, partially offset by increased costs of the ongoing U.S. government inquiries. In addition, during the second quarter of 2008, we recognized $2.5 million of acquired in-process research and development (IPRD) and $2.6 million of expenses due to an unfavorable appellate court decision.
Our international sales decreased 7% to $45.8 million in the second quarter of 2009, compared to $49.3 million in the second quarter of 2008. This decrease in the second quarter of 2009 is the result of an unfavorable currency impact of approximately $3.1 million as well as declines in sales in France and to our stocking distributor in Turkey.
Net Sales. Overall, our net sales increased 0.4% in the second quarter of 2009 compared to the second quarter of 2008. Although we experienced continued success in our extremity product line, which increased 17% over prior year, we experienced a decline in the performance of each of our remaining product lines, primarily due to unfavorable currency rates as compared to 2008. Geographically, our domestic net sales totaled $73.1 million in the second quarter of 2009 and $69.1 million in the second quarter of 2008, representing 62% and 58% of total net sales, respectively, and growth of 6% in 2009 compared to 2008. Our international net sales totaled $45.8 million in the second quarter of 2009, compared to $49.3 million in the second quarter of 2008. International sales in 2009 include an unfavorable currency impact of $3.1 million, principally resulting from the performance of the euro and British pound against the U.S. dollar in the second quarter of 2009 compared to the same period of 2008. Additionally, increased sales in Japan were offset by declines in certain of our European markets.
Selling, General and Administrative. Our selling, general and administrative expenses as a percentage of net sales totaled 55.3% in the second quarter of 2009, a 2.8 percentage point decrease from 58.1% in the second quarter of 2008, primarily due to a 2008 charge of $2.3 million (2.0% of net sales) due to an unfavorable appellate court decision. Our 2009 and 2008 selling, general and administrative expenses include $2.0 million (1.7% of net sales) and $1.5 million (1.2% of net sales), respectively, of costs, primarily legal fees, associated with the ongoing U.S. government inquiries. The remaining decrease in selling, general and administrative expenses as a percentage of sales was driven by expense savings, primarily in our European subsidiaries, and lower levels of cash incentive compensation, partially offset by increased expenses associated with global compliance efforts. We also recognized $3.2 million and $2.8 million of non-cash, stock-based compensation expense in the second quarter of 2009 and 2008, respectively, representing 2.7% and 2.4% of net sales in each of the years, respectively.
Amortization of Intangible Assets. Charges associated with the amortization of intangible assets in the second quarter of 2009 remained flat compared to the same period in 2008. Based on the intangible assets held as of June 30, 2009, we expect to recognize amortization expense of approximately $5.1 million for the full year of 2009, $2.3 million in 2010, $2.2 million in 2011, $2.1 million in 2012, and $1.8 million in 2013.
Interest Expense, Net. Interest expense, net, consists of interest expense of $1.6 million during 2009 and $2.0 million in 2008, primarily from borrowings under our convertible debt issued in November 2007 and in 2008, interest associated with the unfavorable arbitration ruling, offset by interest income of $340,000 and $1.2 million during the second quarter of 2009 and 2008, respectively, generated by our invested cash balances and investments in marketable securities.
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