Wright Medical Group Inc. (NASDAQ:WMGI) filed Quarterly Report for the period ended 2009-09-30.
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 $594.5 million; its shares were traded at around $15.4 with a P/E ratio of 26 and P/S ratio of 1.3.
Highlight of Business Operations:Operating Activities. Cash provided by operating activities was $50.1 million for the first nine months of 2009, as compared to $4.8 million for the first nine months of 2008. The increase in operating cash flow is attributable to improved profitability and changes in working capital. Favorable changes in accounts receivable and inventory were partially offset by unfavorable changes in accounts payable, accrued expenses and marketable securities.
Investing Activities. Our capital expenditures totaled approximately $26.4 million and $43.5 million in the first nine months of 2009 and 2008, respectively. The decrease is attributable to lower levels of expenditures related to the expansion of our Arlington, Tennessee facilities. Our industry is capital intensive, particularly as it relates to surgical instrumentation. Historically, our capital expenditures have consisted of purchased manufacturing equipment, research and testing equipment, computer systems, office furniture and equipment, and surgical instruments. We expect to incur capital expenditures of approximately $42 million in 2009 for routine capital expenditures, and approximately $6 million for the expansion of facilities in Arlington, Tennessee.
Financing Activities. During the first nine months of 2009, cash provided by financing activities totaled $90,000 compared to the first nine months of 2008 when cash provided by financing activities totaled $12.3 million. This decrease is primarily attributable to an $11.5 million decrease in proceeds from stock option exercises. During the first nine months of 2009, we terminated certain accounts receivable factoring agreements. While these factoring agreements were active, the cash proceeds, net of the amount of factored receivables collected, were reflected as cash flows from financing activities in our consolidated statements of cash flows. This had an immaterial year-over-year impact on our cash flows.
On September 30, 2009, our revolving credit facility had availability of $100 million, which can be increased by up to an additional $50 million at our request and subject to the agreement of the lenders. We currently have no borrowings outstanding under the credit facility. Borrowings under the credit facility will bear interest at the sum of a base annual rate plus an applicable annual rate that ranges from 0% to 1.75% depending on the type of loan and our consolidated leverage ratio, with a current annual base rate of 3.25%.
During 2007, we issued $200 million of Convertible Senior Notes due 2014, which generated net proceeds of $193.5 million. The notes pay interest semiannually at an annual rate of 2.625%. The notes are convertible into shares of our common stock at an initial conversion rate of 30.6279 shares per $1,000 principal amount of the notes, which represents a conversion price of $32.65 per share. We will make scheduled interest payments in 2009 related to the notes totaling $5.3 million.
Although it is difficult for us to predict our future liquidity requirements, we believe that our current cash and cash equivalents balance of $121.2 million, our marketable securities balance of $40.4 million, our existing available credit line of $100 million, and our expected cash flow from our 2009 operations will be sufficient for the foreseeable future to fund our working capital requirements and operations, permit anticipated capital expenditures in 2009 of approximately $48 million, and meet our contractual cash obligations in 2009.
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