ELOS Syneron Medical Ltd. - Ordinary Shares

Syneron Medical Ltd. Reports Second Quarter 2004 Results - Second quarter revenue increases 70% to $13.7 Million - Second quarter net income increases 88% to $6.4 Million YOKNEAM, Israel and TORONTO, ON, Aug. 18 /PRNewswire-FirstCall/ -- Syneron Medical Ltd. (NASDAQ:ELOS), an innovator in the development and distribution of ELOS combined-energy medical aesthetic devices, announced its 2004 second quarter results, for the period ended June 30, 2004. Revenues for the second quarter of 2004 were $13.7 million, a 70% increase over the $8.1 million recorded in the second quarter of 2003. Net income for the second quarter was $6.4 million, or $0.30 per pro forma diluted share, compared to net income of $2.8 million reported in the second quarter of 2003. Expenses during the second quarter of 2003 included $0.6 million settlement and legal costs associated with litigation with Lumenis Ltd., which was settled in March 2004. (Pro-forma earnings per share reflect the conversion of all of the Company's Preferred shares into Ordinary shares in connection with the Company's initial public offering on August 11, 2004, but does not reflect the issuance of an additional 5 million Ordinary shares to the public in that offering.) The Company's revenues for the six months ended June 30, 2004 were $26.1 million, a 77% increase compared to $14.7 million recorded in the same period last year. Net income for the first six months was $11.9 million, compared to net income of $5.1 million reported in the same period last year. Expenses during the first six months of 2004 included $1 million settlement and legal costs associated with the Lumenis litigation. Management believes that the full year 2004 revenues will be approximately $55 million. "We are pleased with our progress in the first half of 2004," said Moshe Mizrahy, Syneron's Chief Executive Officer. "Our second quarter results confirm the growing market acceptance of our ELOS technology. We will continue to introduce new products into the market based on our ELOS technology and we will continue to expand and strengthen our worldwide sales and marketing network." Conference Call Syneron Medical will host a conference call at 10 a.m. ET on Wednesday, August 18, 2004 to discuss its second quarter and six month results. In North America you may call 1-800-387-6216. International participants may call 416-405-9328. The call will also be available through a webcast which can be accessed by visiting the Syneron website at http://www.syneron.com/. About Syneron Medical Ltd. Syneron Medical Ltd. 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 including North American Headquarters in Canada and European Headquarters in Germany which provide sales, service and support. Additional information can be found at http://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. CONSOLIDATED BALANCE SHEETS In thousands of U.S. dollars (Unaudited) Pro forma Shareholder's Equity June 30, June 30, December 31, 2004(x) 2004 2003 ----------- ----------- ----------- CURRENT ASSETS Cash and cash equivalents 5,186 6,153 Short term deposits 1,000 - Marketable securities 21,166 11,410 Trade receivables 6,990 4,845 Other accounts receivables and prepaid expenses 1,154 957 Inventories 1,889 1,487 ----------- ----------- Total current assets 37,385 24,852 ----------- ----------- LONG-TERM ASSETS Severance pay fund 148 120 Long-term bank deposit and others 23 1,035 Long-term trade receivables 409 488 ----------- ----------- Total long-term assets 580 1,643 ----------- ----------- PROPERTY AND EQUIPMENTS, NET 606 504 ----------- ----------- Total assets 38,571 26,999 ----------- ----------- ----------- ----------- CURRENT LIABILITIES Trade payables 2,256 2,208 Other current liabilities 7,527 8,131 ----------- ----------- Total current liabilities 9,783 10,339 ----------- ----------- LONG-TERM LIABILITIES Deferred revenues 3,582 2,184 Litigation settlement fee 117 900 Accrued severance pay 167 135 ----------- ----------- Total long-term liabilities 3,866 3,219 ----------- ----------- ----------- ----------- SHAREHOLDERS' EQUITY Ordinary shares 12 3 3 Convertible Preferred A shares 7 7 Convertible Preferred B shares 2 2 Additional paid-in capital 4,837 4,837 4,688 Accumulated other comprehensive income (loss) (236) (236) 168 Treasury Convertible Preferred A shares (461) (461) (226) Deferred stock compensation (400) (400) (473) Retained earnings 21,170 21,170 9,272 ----------- ----------- ----------- Total shareholders' equity 24,922 24,922 13,441 ----------- ----------- ----------- Total liabilities and shareholders' equity 38,571 26,999 ----------- ----------- ----------- ----------- SYNERON MEDICAL LTD. CONSOLIDATED STATEMENTS OF OPERATIONS In thousands of U.S. dollars except per share data (Unaudited) Three month ended Six month ended June 30, June 30, --------------------- --------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Revenues 13,717 8,083 26,027 14,697 Cost of revenues 1,759 987 3,379 1,858 --------- --------- --------- --------- Gross profit 11,958 7,096 22,648 12,839 --------- --------- --------- --------- Operating Expenses Research and development 506 202 1,153 564 Less-participation by the Office of the Chief Scientist - 36 - - --------- --------- --------- --------- Research and development, net 506 238 1,153 564 Selling and marketing, net 4,736 3,388 9,191 6,200 General and administrative 396 170 639 307 Settlement and legal costs - 602 - 1,000 --------- -------- --------- --------- Operating expenses 5,638 4,398 10,983 8,071 --------- -------- --------- --------- Operating income 6,320 2,698 11,665 4,768 Financial income, net 235 128 398 326 --------- -------- --------- --------- Income before taxes on income 6,555 2,826 12,063 5,094 Taxes on income (120) - (165) - --------- -------- --------- --------- Net income 6,435 2,826 11,898 5,094 --------- -------- --------- --------- --------- --------- --------- --------- Basic net earnings per share 0.79 0.35 1.43 0.63 --------- --------- --------- --------- --------- --------- --------- --------- Diluted net earnings per share 0.50 0.26 0.92 0.41 --------- --------- --------- --------- --------- --------- --------- --------- Weighted average number of shares used in per share calculations (in thousands): Basic 8,175 8,135 8,304 8,135 --------- --------- --------- --------- --------- --------- --------- --------- Diluted 12,754 10,970 12,904 12,356 --------- --------- --------- --------- --------- --------- --------- --------- Pro forma EPS(x) Pro forma basic net earnings per share 0.39 0.70 --------- --------- --------- --------- Pro forma diluted net earnings per share 0.30 0.55 --------- --------- --------- --------- Weighted average number of shares used in pro forma per share calculations (in thousands): Basic 16,534 16,974 --------- --------- --------- --------- Diluted 21,113 21,604 --------- --------- --------- --------- (x) All of the Company's Preferred shares were converted into Ordinary shares in connection with the Company's initial public offering on August 11, 2004. Pro forma shareholders' equity as of June 30, 2004, and pro forma basic and diluted EPS for the three month and six month periods ended June 30, 2004, reflect the conversion of the Preferred shares but not the sale of Ordinary shares by the Company in the initial public offering. SYNERON MEDICAL LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS In thousands of U.S. dollars (Unaudited) Six month ended June 30, 2004 2003 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income 11,898 5,094 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 57 26 Accrued severance pay, net 4 5 Increase in short-term and long-term trade receivables (2,066) (249) Increase in other accounts receivables and prepaid expenses (177) (257) Increase in inventories (402) (336) Increase in trade payables 48 402 Increase (decrease) in other current liabilities (990) 60 Increase (decrease) in long-term litigation settlement fee (783) Loss (gain) on available for sale securities 95 (25) Stock-based compensation 73 65 Increase in deferred revenues 2,011 900 Other - 5 Net cash provided by operating activities 9,768 5,690 --------- --------- CASH FLOW FROM INVESTMENT ACTIVITIES Purchase of available-for-sale securities (12,409) (3,409) Proceed from sale of available-for-sale securities 1,927 - Payment for acquisition of long-term bank deposit and others (8) (4) Purchase of property and equipment (159) (81) Other - 7 Net cash used in investing activities (10,649) (3,487) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of Ordinary and Preferred shares, net 149 - Exercise of options - 147 Short-term bank credit, net - (273) Repurchase of Preferred A shares from shareholders (235) - Net cash used in financing activities (86) (126) Increase (decrease) in cash and cash equivalents (967) 2,077 Cash and cash equivalents at the beginning of the period 6,153 4,126 --------- --------- Cash and cash equivalents at the end of the period 5,186 6,203 --------- --------- --------- --------- DATASOURCE: Syneron Medical Ltd. CONTACT: please contact Moshe Mizrahy, CEO of Syneron Medical Ltd., at +972 4 909-7424, email: ; or Domenic Serafino, President of Syneron Inc., at (866) 259-6661 ext. 247, email: .; Syneron Medical Ltd., Industrial Zone, Yokneam Illit, 20692, P.O.B. 550 Israel, Tel: +972 4 909-7424, Fax: +972 4 909-7417, ; Syneron Inc., 111 Granton Drive, Richmond Hill, Ontario, L4B 1L5, Canada, Tel: (905) 886-9235, Fax: (905) 886-7046, Toll Free: 1-866-259-6661,

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