Income Statements for the second quarter of 2009
Exchange rate trends had a significant negative impact on sales amounting to 7.7 million. Sales declined by 12% measured in and 3% measured in local currency. Customers are cautious related to uncertainty and slowdown in the economy, which is affecting the sales. Discontinuation of contracts with third party suppliers in EMEA and new structure of the bracing and supports sales in the Americas also affect the sales in the quarter.
The gross profit was $50.1 million compared to $56.4 million in the same period in 2008, decreasing by 11%. Net of exchange rate effects and unusual inventory adjustments due to the discontinuation of contracts with third party suppliers in EMEA, the gross profit margin remains at the same level.
Other income amounted to $120 thousand compared to $1.3 million in the second quarter of 2008. Included in other income in 2008 is a one-time sales gain of $1.0 million realized through the divestment of advanced wound care product line.
Operating expenses as a ratio of sales were 47%, compared to 49% in the second quarter of 2008. Net of exchange rate effects the operating expenses decreased by $1.4 million or by 3 percentage points.
Profit from operations amounted to $11.8 million or 14% of sales, compared to $12.7 million and 14% of sales in the same period of 2008.
Amortization of intangible assets relating to acquisitions amounted to $3.2 million, compared to $4.0 million in the second quarter of 2008. The amortization following acquisitions in the past is in accordance with accounting standards, affecting the income statements although the underlying intangible assets may not be decreasing in value.
Net financial expenses in the second quarter amounted to $7.3 million compared to $5.1 million in the same period in 2008. Exchange rate developments of the EUR against the $had a negative impact amounting to $4.5 million whereas the exchange rate difference in the second quarter of 2008 amounted to $0.5 million. Exchange rate effects are mostly due to the EUR portion of the long term liabilities. No forward contracts were in effect in the period.
Income tax was $0.9 million, corresponding to a 21% effective tax rate, compared to $3.7 million and 48% in the second quarter of 2008. In the second quarter of 2008 the effective tax rate was unusually high due to decreased tax rate in Iceland and Germany which caused a write-down of accumulated tax benefits.
EBITDA was $16.9 million, 21% of sales, compared to $19.0 million and 21% of sales in the second quarter of 2008. EBITDA adjusted amounted to $17.9 million and 22% of sales in the second quarter of 2009. One-time expenses in 2009 amounted to $638 thousand, including severance payments. In the second quarter of 2008 one-time income and expenses more or less evened out.
Ossur hf. is an Iceland-based company that operates in the field of medical equipment and supplies sectors.
