Synthes, Inc. 2004 results: Record Sales and Profits in 2004
Solothurn/Switzerland, March 16, 2005Synthes sales and profits grew by 44.8% and 331.4%; whereas pro forma sales and profits grew by 20.7% and 18% respectively in 2004. Pro forma assumes the acquisition of Mathys occurred on January 1, 2003 excluding the German subsidiary of Mathys which was not acquired.
Synthes consolidated sales and profits were $1,779.3 million and $323.7 million respectively for 2004. Foreign exchange positively impacted pro forma sales by 3.4% and pro forma profits by 2.2%.
Significant investments were incurred in 2004 to support regulatory activity for ProDisc, both acquisition and operational expenses associated with Biomaterials, and costs related to the integration of Mathys. As a result of these non-recurring expenditures, 2004 profits were reduced by approximately $20 million.
In addition, 2004 activity included significant investments in product development efforts and expansion of the Synthes global sales force. As a result, the Synthes field sales force staffing was expanded by approximately 25% (on a pro forma basis), which was further supported by an additional capital investment of $68.5 million of field equipment to support the selling effort.
Audited key figures
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1) Includes Mathys results from date of acquisition in February 2004 to December 2004 only.
2) Pro-forma results
a) include Mathys for all of 2004 and 2003,
b) excludes one-time charge of $53.4 million ($41.7 million after-tax) for Mathys acquisition related write off of inventory profits in 2004,
c) excludes the Mathys Northern Germany business which was not acquired by Synthes, and
d) excludes $215.0 million of in-process R&D associated with the acquisition of Spine Solutions, Inc. in 2003.
Return on total assets increased by 17.4% in 2004.
2004 cash flows were $133.8 million positive absent $295.9 million utilized for the acquisition of Mathys.
Strong growth in all segments driven by new products, expanded sales force and increased training activities
The sales increase for trauma products was fueled primarily by the continued strong sales of the Locking Compression Plate (LCP) plate and screw system, and the Trochanteric Fixation Nail (TFN).
The strong growth of the Spine division was mainly driven by continued market acceptance of several new products. In particular, sales of products for the cervical spine continue to experience above average growth due to continued demand for the top loading Axon system. Additionally, the Anterior Tension Band system used to stabilize the lumbar spine continues to be increasingly adopted by surgeons.
Cranio-maxillofacial (CMF) division’s growth continues to outpace the market. Strong sales have primarily attributed to the neurosurgical reconstruction products, especially the new Patient Specific Implant offering, and the new External Midface Distractor.
Capital investment
Synthes continues to invest heavily in the future as evidenced by 2004 capital expenditures of $141.3 million, up 15.6% compared to the prior year due to continued investments in sales support and manufacturing capacity.
Job creation
On December 31, 2004, Synthes, Inc. employed 6,711 people worldwide, an increase of 782 employees compared to the prior year (pro forma basis). The majority of the staffing increases were in the areas of manufacturing and sales.
Dividend approval
The Board of Directors of Synthes, Inc. has approved a dividend of CHF 0.7000 per share for the year 2004 payable on April 25, 2005. The stock will trade ex-dividend on March 22, 2005. Stock positions held on the record date March 24, 2005 are entitled to dividend payments.
Synthes: A leading medical device company
Synthes is a leading global medical device company. We develop, produce and market instruments, implants and biomaterials for the surgical fixation, correction and regeneration of the human skeleton and its soft tissues.
Webcast and Annual Report 2004
Synthes will host a webcast-conference on March 16, 2005 at 3:30pm CET (9:30am EST) where the CEO, the COO, the CFO and the President Trauma will comment on the full year results 2004. As of this morning the Annual Report 2004 is ready for download on the company website.
For further information please contact
Peter Fehlmann, Investor Relations, Synthes, Inc.
Phone: +41 32 720 48 10 , Fax: +41 32 720 48 11
e-mail: ir.info@synthes.com