Income from operations of $21.4 million in the second quarter of 2008 was $3.6 million, or 20.0% higher than that of the same period of the prior year, principally due to the aforementioned increase in gross profit, offset by $7.6 million of higher selling, general and administrative expenses. Selling, general and administrative expenses increased due to a $2.6 million increase in variable compensation accruals, $1.8 million of increased personnel costs related primarily to employee benefits, a $1.4 million increase related to acquisitions, a $1.0 million increase in professional fees and other expenses (some of which are one time expenses), $0.8 million in merit increases, and $0.6 million of additional investment in growth initiatives, offset by a $0.6 million decrease in bad debt expense.
Net interest expense for the second quarter 2008 was $1.1 million less than the same quarter last year primarily due to lower variable rates. In May 2008, the Company entered into two $75.0 million swap contracts that fixed $150.0 million of floating rate debt and locked in LIBOR at 3.4% for three years. As of June 30, 2008, $73.0 million, or 18.0%, of the Company's total debt of $406.4 million was subject to variable interest rates.
Net sales for the six months ended June 30, 2008 increased by $34.6
million, or 11.4%, to $338.8 million from $304.2 million for the same
period in the prior year. The sales growth was principally the result of a
$18.2 million, or 6.7%, increase in same-center sales in our patient care
business, a $6.7 million, or 23.5%, increase in sales of the Company's
distribution segment, and a $9.1 million increase related to acquired
entities. Gross profit for the six months ended June 30, 2008
|SOURCE Hanger Orthopedic Group, Inc.|
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