Össur hf. Financial Statements

 

The Össur hf. interim Consolidated Financial Statements for the third quarter of 2002 was approved at meeting of the Board of Directors on 28 October. The statements have been reviewed and endorsed by the auditors of the Company.

 

The principal companies of the Össur Consolidation are Össur hf. in Iceland, the Össur Holdings Inc. Consolidation in the USA, the Össur Holding A.B. Consolidation in Sweden and Össur Europe B.V. in the Netherlands.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The first three quarters of the year were characterised by excellent organic growth. The third quarter is the best in terms of sales for the Company since it's founding, with sales increasing by 18% from the corresponding quarter last year. This is the third consecutive quarter of record sales for the Company. In all, income from sales grew by over 19% over the first nine months of the year in comparison with the first nine months of 2001. The entire increase is a result of organic growth.

 

All in all, third-quarter sales, and sales in the first nine months of the year, were in line with the median values of the operating budget, with deviation at less than 1%. The Company did not quite meet the goals of the operating budget regarding sales in North America, the Company's largest market, with sales at approximately 1% below budget. Sales through Össur Europe B.V., however, exceeded budget projections by just over 7% and third-quarter sales of Össur Nordic A.B. were 17% above budget projections. Sales in other international markets fell 21% short of budget projections, which is still considerably closer to established goals than in the first and second quarter. More precisely, the external sales of the Consolidation are divided as follows according to market areas:

 

 

The cost of goods sold, as a ratio of sales, was somewhat higher in the third quarter than projected in the operating budget, with the deviation at 2.9%. In comparison, the corresponding variance in the second quarter was unfavourable by 3.6%. There have always been some fluctuations in this ratio in the Company's operation, but fluctuations in 2002 were less than in 2001. Apart from normal deviations resulting from changes in the product composition of the Company's sales, the deviation is largely a result of the relocation and reorganisation of production units.

 

Sales and marketing costs were slightly less than 8% below projected costs in the third quarter. For the first nine months of the year, this cost is just over 6% below projections. In comparison with the preceding year, the ratio of sales and marketing costs as a proportion of sales has increased by just over 2% in the first nine months of the year.

 

Research and development costs amounted to 7.8% of sales in the third quarter, which is just over 6% above projections. In the second quarter, this cost was well below projections, but above projections in the first quarter owing to speeding up of projects. On the whole, the ratio of R&D costs to sales was 8.6% in the first three quarters, which is in line with the Company's overall strategy.

 

General and administrative costs were according to budget in the third quarter, but 2% over budget for the combined first three quarters. The ratio of general and administrative expenses as a proportion of sales, was in the first nine months of the year slightly over 16%, down from 24% in the preceding year.

 

Interest items continued to be slightly more favourable for the Company than budget projections.

 

Any comparison of operations in January to September between the years 2002 and 2001 must take account of the fact that inflation adjustments in the Financial statements were discontinued as of the year 2002.  Profit for 2001 would have been lower by USD 733 thousand based on the accounting principles used in 2002.

 

The manufacture of carbon-fibre artificial feet, which was started in a new production line in Iceland on 1 July, has been successful and according to plan.

 

As previously announced, the Company acquired the assets of the Swedish technology company Cabod Systems AB in Sweden last September. The transfer of technology and development of operations in the field of CAD/CAM solutions is proceeding as planned.  The impact of the acquisition on the Company's operations in 2002 is insignificant.

 

The updating of the Company's product line was concluded in the third quarter with the introduction of the new Stabilo and Transfemoral II liners in the United States. With these new products, the Company's entire range of liners has been updated on the basis of new materials technology with greater adaptation and differentiation based on user needs than ever before.

 

A new range of adaptors was introduced in the third quarter. With the new adaptors, the Company has succeeded in eliminating the head start previously enjoyed by its competitors in this section of the market.

 

 

Prospects for the remainder of the year

 

Despite growing competition in North America, the Company's principal market area, at this point in time, Össur management team believes that the result of operations over the year will be within the range projected in the operating budget.

 

 

Publication of Annual Financial Statement

 

The Company will publish its annual financial statement on 12 February 2003, one week from the originally scheduled date. The date of the Annual General Meeting remains 14 February, as announced earlier.

 

 

Open Conference with the Management

 

        Tomorrow morning investors and other interested parties are invited to join an open conference with the Company's Management. At the conference, Mr. Jon Sigurdsson, President & CEO, will review the results of the quarter and discuss the results with investors together with Mr. Hjorleifur Palsson, CFO. Hilmar B. Janusson, VP of the Technical division will attend the conference and discuss in brief patent issues.

 

 

The conference will be held tomorrow, Thursday 31 October, at 9:00 a.m. at the office of Össur hf. at Grjothals 5, Reykjavik.

 

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