03.05.2005 13:32:00

Syneron Medical Reports First Quarter 2005 Earnings; Q1 Sales Rise 53%

Syneron Medical Reports First Quarter 2005 Earnings; Q1 Sales Rise 53% Year-on-Year, Marking the 13th Consecutive Quarter of Growth


    Business Editors/Health Editors

    YOKNEAM, Israel--(BUSINESS WIRE)--May 3, 2005--Syneron Medical Ltd. (Nasdaq:ELOS), an innovator in the development, marketing and sales of ELOS(TM) combined-energy medical aesthetic devices, today announced first quarter financial results for the period ending March 31, 2005. The Company's revenues for the first quarter of 2005 were $18.5 million, compared to $12.1 million recorded in the first quarter of 2004.
    Net income for the first quarter was $7.5 million, on a GAAP basis, compared to net income of $5.5 million reported in the same period last year. Results for the first quarter of 2005 included a one-time charge in the amount of $1.1 million for expenses related to the secondary offering and legal costs. Diluted earnings per share (EPS) for the first quarter of 2005 were $0.27, which takes into account $0.05 of the one-time charge, compared to diluted EPS of $0.26 in the first quarter of 2004.
    Pro forma net income for the first quarter of 2005, excluding the one-time expenses related to the secondary offering and legal costs mentioned above, was $8.6 million. Pro forma diluted EPS were $0.32 for the first quarter of 2005, a 23% increase from $0.26 for the first quarter of 2004.

    Q1, 2005 sales surpass seasonally strong Q4 sales in 2004

    Sales for the first quarter demonstrated continued sequential momentum, rising 6% over the $17.5 million in sales in the fourth quarter of 2004, despite the seasonal tendency for the last quarter of the year to be the strongest for the sector. The higher Q1 revenues reflected a rise in sales across Syneron's portfolio of platforms and the successful worldwide market introduction of the Comet(TM) system for high-speed hair removal. The higher Q1 sales are also a result of recent strengthening of Syneron's global distribution network.

    Completion of secondary offering raises liquidity of shares

    During the first quarter, Syneron successfully completed its secondary offering, which increased the free float of shares from 5 million to 13 million shares, equivalent to 53% of 24.6 million total shares outstanding. The higher liquidity as a result of the secondary issue has contributed to a notable rise in average daily trading volume in Syneron shares, compared with the period prior to the announcement of the transaction. Following the secondary issue, equity research on Syneron has broadened to seven analysts, affording Syneron widespread institutional coverage.
    Syneron is confirming revenue guidance for FY2005 of $78-80 million, representing a 36% increase over 2004. Guidance for Q2, 2005 has been set at $18-19 million.
    Commenting on the higher Q1 numbers, Moshe Mizrahy, CEO of Syneron Medical, said: "The quarterly rise in sales during a period that is usually slower than the previous quarter reflects Syneron Medical's continued capture of market share. The global launch of the Comet in the first quarter, and the introduction of the VelaSmooth(TM) cellulite treatment system at the American Academy of Dermatology meeting in February, will serve to further solidify our leadership position in the market this year."
    Remarking on the secondary issue, Shimon Eckhouse, Chairman of the Board, observed that: "The success of the secondary issue and the higher trading activity in the aftermarket indicates that we achieved significant institutional interest in Syneron, which is supported by the higher free float of shares."

    Conference call

    Syneron Management will host a conference call to discuss the results and quarterly highlights at 10:00am ET today, May 3, 2005. Investors and other interested parties may access a live webcast through Syneron's web site at www.syneron.com. Please login at least 10 minutes prior to the conference call in order to download the applicable audio software. Following the conclusion of the call, a replay of the webcast will be available within 24 hours at the Company's web site.

    About Syneron

    Syneron Medical Ltd. (Nasdaq:ELOS) manufactures and distributes medical aesthetic devices that are powered by the proprietary, patented ELOS combined-energy technology of Bi-Polar Radio Frequency and Light. The Company's innovative ELOS technology provides the foundation for highly effective, safe and cost-effective systems that enable physicians to provide advanced solutions for a broad range of medical-aesthetic applications including hair removal, wrinkle reduction, rejuvenating the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. is located in Israel. Syneron has offices and distributors throughout the world (http://syneron.com/locations.html), including North American Headquarters in Canada, European Headquarters in Germany, and Asia-Pacific Headquarters in Hong Kong, which provide sales, service and support. Additional information can be found at www.syneron.com.

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning Syneron's financial expectations regarding financial results for the 2004 fiscal year are forward-looking statements within the meaning of the safe harbor provisions of the Act. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Syneron's actual results to differ materially from the statements contained herein. Syneron's second quarter financial results, as discussed in this release, are unaudited. Estimates of year-end financial results are subject to a number of assumptions regarding the future operation of Syneron's business. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date such statements are made. Syneron undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.

Syneron Medical Ltd. Soltam Technology Park P.O.B. 550 Yokneam Illit, 20692 Israel Tel: +972 4 909-6200 Fax: +972 4 909-6202 info@syneron-med.com



    Syneron, the Syneron logo, ELOS, Comet, and VelaSmooth are trademarks of Syneron Medical Ltd. and may be registered in certain jurisdictions. ELOS (Electro-Optical Synergy) is a proprietary technology of Syneron Medical. All other names are the property of their respective owners.

SYNERON MEDICAL LTD. CONSOLIDATED STATEMENT OF OPERATIONS U.S. dollars in thousands except per share data

Three month ended March 31, --------------------------- 2005 2005 2004 --------- -------- -------- PRO FORMA US-GAAP US-GAAP --------- -------- --------

Revenues $18,509 $18,509 $12,130 Cost of revenues 2,581 2,581 1,440 ------- ------- -------

Gross profit 15,928 15,928 10,690 ------- ------- -------

Operating expenses Research and development 991 991 647 Selling and marketing 5,850 5,850 4,455 General and administrative 716 716 243 One time expenses related to follow-on secondary offering and legal costs - 1,124 - ------- ------- -------

Total operating expenses 7,557 8,681 5,345 ------- ------- -------

Operating income 8,371 7,247 5,345 Financial income, net 354 354 163 ------- ------- -------

Income before taxes on income 8,725 7,601 5,508 Taxes on income 100 100 45 ------- ------- -------

Net income $ 8,625 $ 7,501 $ 5,463 ======= ======= =======

Basic net earnings per share $ 0.37 $ 0.32 $ 0.32 ======= ======= ======= Diluted net earnings per share $ 0.32 $ 0.27 $ 0.26 ======= ======= =======

Weighted average number of shares used in per share calculations (in thousands): Basic 23,616 23,616 17,005 ======= ======= ======= Diluted 27,380 27,380 21,232 ======= ======= =======



SYNERON MEDICAL LTD. CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands

March 31, December 31, --------- ------------ 2005 2004 --------- ------------

CURRENT ASSETS Cash and cash equivalents $ 24,510 $ 12,468 Short-term deposits 58,290 57,893 Marketable securities 22,127 23,071 Trade receivables 11,631 8,628 Other accounts receivables and prepaid expenses 1,615 1,532 Inventories 3,618 3,134 -------- --------

Total current assets 121,791 106,726 -------- --------

LONG-TERM ASSETS

Severance pay fund 225 196 Long-term bank deposit and others 1,031 28 Long-term trade receivables 462 754 Property and equipment, net 957 842 -------- --------

Total long-term assets 2,675 1,820 -------- --------

OTHER ASSET 1,364 1,000 -------- --------

Total assets $125,830 $109,546 ======== ======== CURRENT LIABILITIES Trade payables $ 2,185 $ 1,520 Other current liabilities 16,412 10,135 -------- --------

Total current liabilities 18,597 11,655 -------- --------

LONG-TERM LIABILITIES Deferred revenues 3,598 3,276 Accrued severance pay 259 214 -------- --------

Total long-term liabilities 3,857 3,490 -------- --------

SHAREHOLDERS' EQUITY 103,376 94,401 -------- --------

Total liabilities and shareholders' equity $125,830 $109,546 ======== ========

SYNERON MEDICAL LTD. CONSOLIDATED STATEMENT OF CASH FLOWS U.S. dollars in thousands

Three month ended March 31, ----------------- 2005 2004 -------- -------

CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 7,501 $ 5,463 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and Amortization 128 18 Accrued severance pay, net 16 4 Increase in short-term and long-term trade receivables (2,711) (548) Increase (decrease) in other accounts receivables and prepaid expenses 152 (423) Increase (decrease) in inventories (484) 189 Increase (decrease) in trade payables 665 (81) Increase (decrease) in other current liabilities 5,553 (1,571) Decrease in long-term litigation settlement fee - - Gain (loss) on available for sale securities 229 249 Stock-based compensation 37 37 Increase in deferred revenues 1,122 247 Loss on sales of property and equipment 12 - ------- -------

Net cash provided by operating activities 12,220 3,584 ------- -------

CASH FLOW FROM INVESTMENTING ACTIVITIES Investment in short-term deposits (397) - Purchase of available-for-sale securities (162) (6,266) Proceeds from sale of available-for-sale securities 650 646 Payment for acquisition of long-term loans and others (2,003) - Proceeds from long term loans 765 17 Purchase of property and equipment (183) (72) Purchase of other assets (436) - ------- -------

Net cash used in investing activities (1,766) (5,675) ------- -------

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of ordinary and preferred shares, net - 149 Exercise of options 1,588 - Repurchase of preferred A shares from shareholders - (235) ------- -------

Net cash provided by (used in) financing activities 1,588 (86) ------- -------

Increase (decrease) cash and cash equivalents 12,042 (2,177) Cash and cash equivalents at the beginning of the period 12,468 6,153 ------- -------

Cash and cash equivalents at the end of the period $24,510 $ 3,976 ======= =======

--30--AR/se*

CONTACT: Syneron Medical Ltd. Moshe Mizrahy, CEO, +972 4 909-6349 moshem@syneron-med.com or David Schlachet, CFO, +972 4 909-6376 davids@syneron-med.com

KEYWORD: ISRAEL INTERNATIONAL AFRICA/MIDDLE EAST INDUSTRY KEYWORD: PHARMACEUTICAL MEDICAL DEVICES MEDICAL BIOTECHNOLOGY EARNINGS CONFERENCE CALLS SOURCE: Syneron Medical Ltd.

Copyright Business Wire 2005

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