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Symmetry Reports 2008 Results

Symmetry Medical Inc. (Symmetry), a orthopedic devices company, has reported revenues of $423.4 million for the full year of 2008, up 45.5%, compared with the revenues of $290 million in the previous year-end. It has also reported a net income of $24 million, or $0.68 per diluted share, for the full year of 2008, compared with the net loss of $0.1 million in the previous year-end.

Revenue for the fourth quarter 2008 was $99.7 million, up 23.6% or up 30.9% assuming foreign exchange rates in 2008 consistent with those experienced in 2007 (“a constant currency basis”) from $80.7 million reported in the fourth quarter 2007. Fourth quarter 2008 revenue included an incremental $12.9 million from the company’s New Bedford, Massachusetts manufacturing facility, which was acquired from DePuy Orthopaedics, Inc. in January 2008. Excluding this acquisition, the company achieved organic revenue growth of 7.7% or 15.0% on a constant currency basis over the fourth quarter of 2007.

Gross profit for the fourth quarter 2008 was $23.3 million, up 57.4% from $14.8 million for the fourth quarter 2007. Gross margin percentage for the fourth quarter 2008 was 23.4% against a gross margin percentage of 18.4% in the same period last year and 22.9% in the third quarter 2008. Excluding the Sheffield, UK operating unit, gross margin was 26.2% in the fourth quarter 2008 and 27.4% in the third quarter 2008.

Selling, general and administrative expenses were $13.9 million for the fourth quarter 2008, against $11.3 million in the fourth quarter 2007. The two primary drivers for the year-over-year increase include non-cash stock based compensation and the addition of the New Bedford facility which was acquired in January 2008.

Operating income for the fourth quarter of 2008 was $9.5 million against $3.6 million for the fourth quarter 2007. Operating margin for the fourth quarter 2008 was 9.5%, an increase from 4.4% for the fourth quarter 2007.

The net impact of various tax items on the fourth quarter 2008 results was $6.9 million or $0.20 per diluted share, made up of income tax benefits primarily from the realization of losses on the company’s initial investment in the Sheffield, UK operations partially offset by additional tax provisions for uncertain tax positions worth $8.7 million. Fourth quarter net income was also adversely impacted by the provision of $1.8 million for tax valuation allowances associated with the company’s UK operations.

The company achieved organic revenue growth of 23.4% or 24.3% on a constant currency basis over the full year 2007. Gross margin percentage for the full year 2008 was 23.7% compared to 18.1% for 2007. Excluding the Sheffield operations, full year 2008 gross margin was 28.2%. Net income for the full year 2008 was $24.0 million, or $0.68 per diluted share, compared to a net loss of $0.1 million for the full year 2007. The net impact of the various tax items on the full year results was a favorable $5.0 million or $0.14 per diluted share, made up of income tax benefits primarily from the realization of losses on the company’s initial investment in the Sheffield, UK operations partially offset by additional tax provisions for uncertain tax positions worth $8.0 million. Full year net income was also adversely impacted by the provision of $3.0 million for tax valuation allowances associated with the company’s UK operations. Also impacting 2008 results is approximately $5.0 million non-recurring professional fees related to the Sheffield investigation.

The weighted average number of diluted shares outstanding during the fourth quarter of 2008 was 35,368,601.

Brian Moore, president and chief executive officer of Symmetry Medical, stated, “Fourth quarter results reflect the continuing strength of our business and position in the orthopedic industry, with revenue up 31% on a constant currency basis from 2007. Our bottom line was impacted by the favorable tax initiative that will have significant cash benefits.

“We are encouraged by the continuing improvement at our Sheffield, UK facility, the performance of our New Bedford facility which was well above expectations and the continued development of our Malaysia facility.”

Moore continued, “Looking forward into 2009, we have an optimistic outlook on the many opportunities that our strong market position offers. However, given the current macroeconomic climate, we are managing the business on a conservative basis as we gauge the extent and breadth of the impact on the orthopedic arena.”

Financial Outlook

For the full year 2009, the company projects revenue to be in the range of $405 million to $420 million. On a constant currency basis, the company expect a revenue increase of 2%-6% for the full year. The company currently expects full year 2009 earnings per diluted share in the range of $0.75 to $0.85. With regard to the company’s Sheffield, UK unit, the company expects to incur smaller net operating losses during the first half 2009 prior to reaching operating profitability in the second half of 2009.