Synthes first half-year 2004:
Pro forma continuing operations sales and profit growth of 23% and 21% (19% and 18% local currencies continuing operations), respectively, driven by new products

Solothurn/Switzerland, August 19, 2004

Synthes consolidated sales for the first half of 2004 grew by 45.0% to $858.1 million (39.8% in local currencies continuing operations). Pro-forma consolidated sales were $883.0 million for the first half of 2004, an increase of 22.6% versus the same period last year (19.2% in local currencies from continuing operations).

Net profit from continuing operations was $145.7 million compared to a net loss of $(69.7) million in the prior year. Excluding one-time charges related to the acquisition of Mathys in 2004 ($40.9 million after tax) and an in-process research and development charge (IPR&D) related to the acquisition of Spine Solutions in 2003 ($215.0 million), net profit from continuing operations grew $41.3 million or 28.4% (25.7% in local currencies).

Pro forma net profit from continuing operations was $191.0 million compared to a net loss of $(56.5) million in the prior year. Pro forma results are exclusive of one-time charges related to the acquisition of Mathys in 2004 ($40.9 million after tax), but include the one-time IPR&D charge related to the acquisition of Spine Solutions in 2003. Absent the 2003 IPR&D charge related to the acquisition of Spine Solutions, pro forma profits grew by $32.5 million or 20.5% (17.8% in local currencies).

Key Figures (unaudited)

Local currency – 2004 results translated at 2003 foreign exchange rates.

Key Figures (unaudited) - continued

	1	Includes a one-time $215 million write-off of in-process R&D (IPR&D) associated with the acquisition of Spine Solutions, Inc. in 2003 and one-time non-cash charge of approximately $40.9 million (net of tax) related to the write-up of inventory associated with the acquisition of Mathys, Inc. in 2004.
	2	Local currency – 2004 results translated at 2003 foreign exchange rates.
	3	10 for 1 stock split effective May 24, 2004 is reflected in both periods for comparative EPS purposes.
	4	Excludes $215 million write-off of IPR&D associated with the acquisition of Spine Solutions, Inc. in 2003, and one-time charge of approximately $40.9 million (net of tax) related to the write-up of inventory associated with the acquisition of Mathys, Inc. in 2004.
	5	Excludes $215 million write-off of IPR&D associated with the acquisition of Spine Solutions, Inc. and one-time non-cash charge of approximately $52.4 million related to the write-up of inventory associated with the acquisition of Mathys, Inc. in 2004.
	6	Excludes the one-time charge of approximately $40.9 million (net of tax) related to the write-up of inventory associated with the acquisition of Mathys, Inc. in 2004.

Synthes grew in all business areas

The sales increase for trauma products was significantly higher than market growth fueled by the continued strong sales of the Locking Compression Plate (LCP) plate and screw system and the Trochanteric Fixation Nail (TFN).

The Spine division continues to experience strong growth across all product segments mainly driven by continued market acceptance of several new products. Cervical sales have experienced growth due to the increased demand for the top loading Axon system introduced at the end of 2003. Also, the recently released Anterior Tension Band system used to stabilize the lumbar spine has been well received by surgeons. There is a continued and strong demand for the Click’X system which is an excellent procedure for the treatment of degenerative disc disease.

Cranio-maxillofacial division’s first half growth was driven through strong performance in cranial reconstruction and distraction osteogenesis. Additional investments have been made in expanding the dedicated cranio-maxillofacial field sales force.

Merger with Mathys Medizinaltechnik AG, closed

The merger between Synthes and Mathys Medizinaltechnik AG (Mathys) announced on August 13, 2003 was closed on February 6, 2004, with the exception of their operations in Germany. On March 29, 2004 Synthes was informed by the German competition authority (Bundeskartellamt) that the Bundeskartellamt has decided to prohibit the merger between Synthes and the Osteosynthesis business of Mathys. Although the decision prohibits the merger in its entirety, it will only have an effect on the German operations. Synthes has appealed this prohibition decision to the German court of appeals.

Integration of Mathys Medizinaltechnik AG

The integration continues to be ahead of schedule. Global integration teams are in place, goals have been defined and project activities are monitored and communicated company wide on a regular basis. Our European headquarters was relocated during the second quarter to Solothurn Switzerland.

Synthes: A leading orthopedic trauma company

Synthes is a leading provider of instruments, implants and power tools for the orthopedic trauma market. The company competes throughout the world. The company develops, manufactures, and distributes products for the surgical treatment of bone fractures, cranio-maxillofacial trauma or deformities, and a full range of products and systems for spine surgery.