ZURICH, Aug. 23--PRNewswire-FirstCall-AsiaNet Centerpulse (NYSE: CEP), the medical device specialist formerly known as Sulzer Medica, has posted further operational improvement. During the first six months of 2002 the company boosted sales by CHF 6.0% over the prior-year figure to CHF 766.4 million. Net income before exceptional items was up 118.4% to CHF 94.8 million. Subsequent to the successful conclusion of settlement negotiations in the USA, the company has concentrated fully on raising profitability, additionally strengthening its market position in three core business sectors and on promoting innovation, which is key to the company's growth strategy. "In the second quarter of 2002 we were again able to meet our stated goal of profitable growth for the company," said Centerpulse Chairman and CEO Max Link. "During the second half of the year we intend to achieve greater improvements in profitability and in operating results." In mid-June the company announced that it planned to sell its cardiac and vascular businesses. The process is expected to be completed by the end of 2002. The group has shifted its strategic emphasis to the well-positioned core sectors of orthopedic, spine and dental implants. In doing so, Centerpulse is cultivating sectors where it enjoys attractive market positions and where strong growth is anticipated. The company plans to focus in particular on investing in the sales and distribution infrastructures and in product innovations within its Dental and Spine-Tech Divisions. Significant improvement in half-year results At CHF 766.4 million, consolidated sales were 6.0% higher in nominal terms in the first six months of 2002 compared with the same period in 2001. If currency adjustments are taken into consideration, growth amounted to 10.5%. Major contributions to this result came from the Dental, Spine-Tech, Orthopedics and Vascular Divisions while sales in the Cardiac Division were marginally lower. The earnings before interest, taxes, depreciation, goodwill amortization and exceptional items (EBITDA) rose by 12.4% in nominal terms compared with the first half of 2001, and by 16.0% when adjusted for currency effects, to CHF 180.6 million. Operating income before exceptional items was 26.5% higher in nominal terms than in the corresponding period in 2001, and 32.0% higher when adjusted for currency effects, at CHF 115.0 million. The figure for net income, before exceptional items, was 118.4% higher in nominal terms than in 2001, and 127.0% higher when adjusted for currency effects, at CHF 94.8 million. Settlement agreement in the USA During the second quarter, negotiations on a settlement agreement in the U.S. were concluded. This represents a significant step toward ensuring the company's future. After careful study, the company's management agreed to the settlement at the end of May. There were no appeals of the responsible court's declaration that the settlement was fair. The class members who did not "opt out" of the settlement class granted Centerpulse and others a release, which means that no member of the class, other than those members who opted out of the settlement, may bring any further claim against Centerpulse related to the affected products. As of August 13, 56 "opt outs" who received an affected product remain unresolved, of which 7 are known to be patients who have undergone revision surgery. Negotiations are currently underway with international investment banks regarding the financing of the USD 725 million settlement amount. An initial payment of USD 425 million is due on November 4, 2002. The second payment, of USD 300 million, is due on May 4, 2004. In April, Centerpulse concluded a new product liability insurance policy, under the leadership of Zurich Insurance, that provides worldwide product liability coverage. Continued strengthening of management team Dr. Max Link, the company Chairman, took over the CEO position in July 2002 and is fully committed to playing a hands-on role in leading the company for the future. Dr. Link has committed to withdrawing from at least five board mandates that he holds, over the next 12-to-24 months, in order to dedicate his full attention to Centerpulse. Outlook: further underpinning of efficiency and market position The rate of growth continues to advance in currency adjusted terms. In the second quarter of 2001, currency-adjusted growth was 7.0%. In the first quarter of this year, it was 8.5% and in the second quarter amounted to 12.0%. The company expects the closure of the facility in Baar, Switzerland to generate annual savings for the Orthopedics Division of up to CHF 15 million. The company's main goal in the second half of 2002 is to at least achieve the result reached in 2000. The Executive Committee emphasizes enhancing operating efficiency, strengthening market position in both the European and U.S. orthopedics markets, further growing the Spine-Tech and Dental Divisions and further focusing of the company's R&D activities. The company also wants to bring warehouse management closer to customer requirements. Centerpulse in figures Results for the 2nd quarter of 2002 CHF million April- April- Change June 2002 June 2001 Nominal In local currency Sales 380.2 362.5 +4.0 % +12.0 % EBITDA* 88.2 71.5 +23.5 % +30.0 % Operating result** 56.0 36.8 +52.2 % +60.0 % Net income** 51.1 14.2 +259.9 % +275.0 % Results for the first half of 2002 CHF million Jan.-June Jan.- June Change 2002 2001 Nominal In local currency Sales 766.4 722.8 +6.0 % +10.5 % EBITDA* 180.6 160.6 +12.4 % +16.0 % Operating result** 115.0 90.9 +26.5 % +32.0 % Net income** 94.8 43.4 +118.4 % +127.0 % * Earnings before interest, taxes, depreciation, goodwill amortization, and exceptional items ** Not including exceptional items Centerpulse's subsidiary companies develop, produce, and distribute medical implants and biological materials for orthopedic and cardiovascular markets worldwide. The product array includes artificial joints, dental implants, spinal implants and instrumentation, trauma products, heart valves, synthetic blood vessels and stents for vascular and non-vascular obstructions. This news release is available on the internet at: www.centerpulse.com. The company's 2nd quarter report is available under: www.centerpulse.com "Investors/Financial reports" SOURCE: Centerpulse CONTACT: Media, Beatrice Tschanz +41-1-306-96-46 mobile, +41-79-407-08-78 fax, +41-1-306-96-51 or Erwin Schaerer +41-1-306-96-53 mobile, +41-79-407-12-25 or [email protected] or Investors, Suha Demokan +41-1-306-98-25 or fax, +41-1-306-98-31 or Marc Ostermann +41-1-306-98-24 or [email protected] all of Centerpulse Corporate Communications Web site: http://www.centerpulse.com