Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

Date of Report (Date of earliest event reported): October 27, 2015

EXACTECH, INC.

(Exact Name of Registrant as Specified in Its Charter)



Florida	0-28240	59-2603930
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2320 NW 66^th Court

Gainesville, Florida 32653

(Address of Principal Executive Office)

Registrant’s telephone number, including area code (352) 377-1140

(Former Name or Former Address, if Changed Since Last Report)

__________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

The disclosure set forth in Item 7.01 to this Current Report on Form 8-K is incorporated into this Item 2.02 by reference.

Item 7.01. Regulation FD Disclosure.

On October 27, 2015, Exactech, Inc. (the “Company”) issued a press release disclosing certain financial information about the Company. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is hereby incorporated by reference in this Item 7.01.

The press release attached as an exhibit to this report contain various “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company’s expectations or beliefs concerning future events, including, but not limited to, statements regarding levels of and expected growth in sales of the Company’s products. When used in the press release or this report, the terms “anticipate,” “believe,” “estimate,” “expect” and “intend” and words or phrases of similar import, as they relate to the Company or its subsidiaries or its management, are intended to identify forward-looking statements. These forward-looking statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the effect of competitive pricing, the Company’s dependence on the ability of its third-party suppliers to produce components on a cost-effective basis to the Company, market acceptance of the Company’s products, the outcome of litigation, the availability of third-party reimbursement for the Company’s products, high inventory maintenance requirements, the Company’s ability to protect its intellectual property, dedication of substantial resources towards research and development efforts, product liability risks and the effects of governmental regulation. Results actually achieved may differ materially from expected results included in these statements as a result of these or other factors, including those risks disclosed in the reports filed by the Company with the Securities and Exchange Commission. Exactech undertakes no obligation to update, and the Company does not have a policy of updating or revising, these forward-looking statements. The information in this report will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD. The furnishing of this information is not intended to, and does not, constitute a determination or admission by the Company that such information is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Company.

The information contained in Items 2.02 and 7.01 to this Current Report on Form 8-K, including Exhibit 99.1, attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.



Exhibit Number	Description
99.1	Press Release issued by the Company on October 27, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXACTECH, INC.



Date:	October 27, 2015	By:	/s/ Joel C. Phillips
			Joel C. Phillips
			Chief Financial Officer

EXHIBIT INDEX



Exhibit Number	Description
99.1	Press Release issued by the Company on October 27, 2015

EXHIBIT 99.1

Exactech Q3 2015 Revenue $56.2 Million. Net Income $2.9 Million. Diluted EPS $0.20.

Gainesville, Fla. - October 27, 2015 -- Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products for hip, knee, shoulder and spine, announced today revenue of $56.2 million for the third quarter of 2015, a 3% decrease from $57.9 million in the third quarter of 2014. On a constant currency basis for the quarter, revenue was flat. Net income was down 4% to $2.9 million, or $0.20 per diluted share, compared to $3.0 million, or $0.21 per diluted share, in the same quarter a year ago.

Third Quarter Segment Performance

The third quarter of 2015 continued to be impacted by a weakened Euro and Japanese Yen relative to the U.S. Dollar. The following are company revenue results, as well as adjusted revenue comparisons on a constant currency basis:


•	Extremity implant revenue increased 7% to $20.0 million, a 9% constant currency increase


•	Knee implant revenue decreased 16% to $15.3 million, a 13% constant currency decrease


•	Hip implant revenue decreased 2% to $9.9 million, a 4% constant currency increase


•	Biologic and Spine revenue increased 5% to $5.7 million, an 8% constant currency increase


•	Other revenue decreased 4% to $5.4 million, a 3% constant currency decrease

Nine Months Highlights and Segment Performance

For the first nine months of 2015, revenue was $179.1 million, a decrease of 3% over $185.1 million for the comparable period last year. On a constant currency basis, revenue for the first nine months of 2015 was flat. Net income for the first nine months of 2015 decreased 6% to $10.7 million, or $0.75 per diluted share compared to $11.4 million, or $0.81 per diluted share for the first nine months of 2014. First nine month product revenues were as follows:


•	Extremity implant revenue increased 7% to $61.5 million, a 9% constant currency increase


•	Knee implant revenue decreased 12% to $52.7 million, a 7% constant currency decrease


•	Hip implant revenue decreased 1% to $31.8 million, a 4% constant currency increase


•	Biologic and Spine revenue decreased 6% to $16.7 million, a 2% constant currency decrease


•	Other revenue decreased 10% to $16.4 million, a 9% constant currency decrease

Management Comment

Exactech CEO and President David Petty said, “Another solid performance in our largest segment, Extremities, and third quarter improvement in our Biologic and Spine segment and gains in overall U.S. sales were not enough to offset strong international currency headwinds and soft results in European and Latin American markets. Worldwide sales for the first nine months of 2015 decreased 3% to $179.1 million but were flat on a constant currency basis. U.S. sales were relatively flat at $123.3 million compared with $123.8 million in the first nine months a year ago. International sales decreased 9% in the first nine months

--MORE--

EXACTECH INC.

Page 1 of 5

to $55.8 million and were up 1% on a constant currency basis. For the third quarter of 2015, U.S. sales were up 2% to $40.7 million compared with $40.0 million in the third quarter a year ago. International sales decreased 13% to $15.5 million. On a constant currency basis, international sales were down 4% and worldwide sales were flat for the third quarter. U.S. sales represented 72% of total sales and international sales were 28% of the total,” Petty said.

Chief Financial Officer Jody Phillips said, “Gross margins decreased to 70.5% for the third quarter of 2015 vs. 70.7% in the third quarter of 2014 due to pricing and currency impacts. Total operating expenses for the quarter decreased 1% to $35.1 million and as a percentage of sales were 62%, compared to $35.4 million and 61% for the same quarter of 2014. General and administrative expenses decreased 4% in the third quarter to $5.2 million and sales and marketing expenses decreased 3% to $20.6 million primarily due to currency impacts. We experienced an 18% increase in R&D spending to $5.3 million related to development and launch costs associated with our new revision products. We continued to produce positive cash flows, which resulted in a $2.9 million improvement in our cash and net debt position during the third quarter.”

Looking forward, Exactech confirmed its updated 2015 revenue guidance to $239-$241 million and updated its diluted EPS target to $1.02-$1.04. The resulting revenue guidance for the fourth quarter of 2015 is for revenues of $60-$62 million and a diluted EPS target of $0.27-$0.29. The foregoing statements regarding targets for the full year are forward-looking and actual results may differ materially. These are the company’s targets, not predictions of actual performance.

The financial statements are below.

Conference Call

The company will hold a conference call with CEO David Petty and key members of the management team on Wednesday, October 28th at 10:00 a.m. Eastern Time. The call will cover Exactech’s third quarter 2015 results. Petty will open the conference call and a question-and-answer session will follow.

To participate in the call, dial 1-888-417-8533 any time after 9:50 a.m. Eastern on October 28th. International and local callers should dial 1-719-457-2645. A live webcast of the call will be available at http://www.hawkassociates.com/profile/exac.cfm or http://public.viavid.com/index.php?id=116694.

This call will be archived for approximately 90 days.

About Exactech

Based in Gainesville, Fla., Exactech develops and markets orthopaedic implant devices, related surgical instruments and biologic materials and services to hospitals and physicians. The company manufactures many of its orthopaedic devices at its Gainesville facility. Exactech’s orthopaedic products are used in the restoration of bones and joints that have deteriorated as a result of injury or diseases such as arthritis. Exactech markets its products in the United States, in addition to more than 30 markets in Europe, Latin America, Asia and the Pacific. Additional information about Exactech, Inc. can be found at http://www.exac.com. Copies of Exactech’s press releases, SEC filings, current price quotes and other valuable information for investors may be found at http://www.exac.com and http://www.hawkassociates.com.

An investment profile on Exactech may be found at http://www.hawkassociates.com/profile/exac.cfm. To receive future releases in e-mail alerts, sign up at http://www.hawkassociates.com/about/alert.

This release contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which represent the company’s expectations or beliefs concerning future events of the company’s financial performance. These forward-looking statements are further qualified by important factors that could cause actual results to

--MORE--

EXACTECH INC.

Page 2 of 5

differ materially from those in the forward-looking statements. These factors include the effect of competitive pricing, the company’s dependence on the ability of third party manufacturers to produce components on a basis which is cost-effective to the company, market acceptance of the company’s products and the effects of government regulation. Results actually achieved may differ materially from expected results included in these statements.

Investor contacts Julie Marshall or Frank Hawkins

Jody Phillips Hawk Associates

Executive Vice President of Finance & 305-451-1888

Chief Financial Officer E-mail: EXAC@hawkassociates.com

352-377-1140

--MORE--

EXACTECH INC.

Page 3 of 5



EXACTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

	(unaudited)			(audited)
	September 30,			December 31,
	2015			2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	17,051		$	10,051
Accounts receivable, net of allowances of $807 and $946	50,283			50,731
Prepaid expenses and other assets, net	3,692			2,436
Income taxes receivable	829			1,492
Inventories – current	72,348			72,827
Deferred tax assets – current	1,647			1,620
Total current assets	145,850			139,157

PROPERTY AND EQUIPMENT:
Land	2,692			2,742
Machinery and equipment	36,877			35,434
Surgical instruments	109,939			101,142
Furniture and fixtures	4,720			4,556
Facilities	20,247			19,981
Projects in process	711			1,166
Total property and equipment	175,186			165,021
Accumulated depreciation	(95,579		)	(84,915		)
Net property and equipment	79,607			80,106

OTHER ASSETS:
Deferred financing and deposits, net	582			676
Non-current inventories	18,733			17,465
Product licenses and designs, net	11,693			8,641
Patents and trademarks, net	1,492			1,701
Customer relationships, net	111			203
Goodwill	19,098			13,091
Total other assets	51,709			41,777
TOTAL ASSETS	$	277,166		$	261,040

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	12,642		$	13,615
Income taxes payable	167			146
Accrued expenses and other liabilities	9,113			9,194
Other current liabilities	1,381			250
Current portion of long-term debt	3,000			3,000
Total current liabilities	26,303			26,205

LONG-TERM LIABILITIES:
Deferred tax liabilities	3,756			2,794
Long-term debt, net of current portion	18,000			20,250
Other long-term liabilities	5,582			420
Total long-term liabilities	27,338			23,464
Total liabilities	53,641			49,669

SHAREHOLDERS’ EQUITY:
Common stock	141			139
Additional paid-in capital	80,347			76,126
Accumulated other comprehensive loss	(11,117		)	(8,397		)
Retained earnings	154,154			143,503
Total shareholders’ equity	223,525			211,371

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	277,166		$	261,040

--MORE--

EXACTECH INC.

Page 4 of 5



EXACTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)

	Three Month Periods						Nine Month Periods
	Ended September 30,						Ended September 30,
	2015			2014			2015			2014
NET SALES	$	56,237		$	57,884		$	179,106		$	185,061

COST OF GOODS SOLD	16,597			16,929			54,573			55,128
Gross profit	39,640			40,955			124,533			129,933

OPERATING EXPENSES:
Sales and marketing	20,587			21,304			63,901			67,902
General and administrative	5,180			5,380			16,803			16,832
Research and development	5,258			4,464			14,389			13,521
Depreciation and amortization	4,073			4,289			12,697			12,735
Total operating expenses	35,098			35,437			107,790			110,990

INCOME FROM OPERATIONS	4,542			5,518			16,743			18,943

OTHER INCOME (EXPENSE):
Interest income	3			5			7			13
Other income	26			3			91			53
Interest expense	(283		)	(253		)	(860		)	(860		)
Foreign currency exchange gain (loss)	(103		)	(652		)	(862		)	(452		)
Total other income (expense)	(357		)	(897		)	(1,624		)	(1,246		)

INCOME BEFORE INCOME TAXES	4,185			4,621			15,119			17,697

PROVISION FOR INCOME TAXES	1,307			1,610			4,468			6,328

NET INCOME	$	2,878		$	3,011		$	10,651		$	11,369


BASIC EARNINGS PER SHARE	$	0.20		$	0.22		$	0.76		$	0.83

DILUTED EARNINGS PER SHARE	$	0.20		$	0.21		$	0.75		$	0.81


SHARES - BASIC	14,058			13,766			13,996			13,690

SHARES - DILUTED	14,201			14,064			14,201			13,989