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Edwards Lifesciences to Sell Bentley Line to Jostra AG
Announces Pretax Charge of Approximately $360 Million
Irvine, Calif. (ots-PRNewswire) - Edwards Lifesciences Corporation (NYSE: EW) announced today that it has entered into a definitive agreement to sell its Bentley line of cardiopulmonary products (also called "perfusion products") to Jostra AG, a leading European manufacturer of medical devices for open-heart surgery based in Hirrlingen, Germany, for approximately $30 million. The transaction is expected to be completed in September, pending receipt of regulatory approvals. Edwards also announced it would record a pretax charge of approximately $360 million, the majority of which is associated with the sale, with the remainder relating to other asset impairments. Of this amount, approximately $300 million is related to goodwill and other intangible assets. It is expected that $350 million will be recorded in the second quarter, and the remainder will be recorded in the third quarter.
Under terms of the agreement, Jostra will acquire most of the assets associated with Bentley perfusion products, which are based primarily in the United States and Western Europe. Jostra will continue to make available the full line of Bentley products, which are used to support the heart during stopped-heart cardiac surgery, and include disposable oxygenators, blood reservoirs, and filters, as well as hardware and related products. Jostra also will assume responsibility for Edwards' perfusion products manufacturing operations in Anasco, Puerto Rico.
Edwards will retain its Macchi line of cardiopulmonary products, as well as its manufacturing facilities in Sao Paulo, Brazil and Uden, The Netherlands. Edwards also will maintain distribution rights for Bentley products in Japan and most other countries outside of the U.S. and Western Europe. In addition, the agreement calls for Edwards to provide transition support to Jostra.
Additional terms of the agreement enable Jostra to maintain Bentley's role as a preferred supplier to Edwards' worldwide perfusion services operations. Edwards is the world's leading supplier of trained clinicians, capital equipment and disposable supplies for open-heart surgery.
"Jostra clearly recognizes the value of the Bentley brand and the dedicated Bentley employees," said Michael A. Mussallem, Edwards' chairman and CEO, noting that the majority of Edwards employees who work in this area are expected to transfer to Jostra. "The strength of the combined Jostra and Bentley product offerings, as well as the company's new enhanced operations, will allow Jostra to greatly expand the scope of its business."
Pretax Charge and Earnings Impact
The $360 million pretax charge consists of approximately $300 million related to the write-down of certain goodwill and other intangible assets, with the balance related primarily to fixed assets, inventory, and severance costs related to the approximately 60 employees affected by this transaction. Eighty percent of the $300 million goodwill and other intangible asset write-down relates to the perfusion product line, while the remainder is related to various other product lines. Substantially all of the $360 million charge is expected to be non-cash.
In addition to the $350 million pretax charge to be recorded in the second quarter, the company will also record in the second quarter an estimated $35 million gain on sale of its Novacor business and approximately $17 million in non-recurring spin-off expenses related to the company's spin-off from Baxter International earlier this year. Both of these actions were previously announced.
The impact on 2000 net income is expected to add approximately $4 million, due to the reduction of goodwill expense, partially offset by a slightly higher income tax rate. Net income for 2001 is expected to benefit by approximately $10-12 million, resulting from a full year of lower goodwill expense and anticipated overhead cost savings from the sale of the perfusion products business, offset by the slightly higher income tax rate.
"We have been working very aggressively to focus our product portfolio and affect the transformation of Edwards Lifesciences following our spin-off earlier this year," Mussallem continued. "We feel we've made great progress in a very short period of time and are looking forward to focusing even more energy on pursuing future growth opportunities."
Edwards Lifesciences designs, develops and markets a comprehensive line of products and services to treat late-stage cardiovascular disease. Headquartered in Irvine, Calif., Edwards focuses on cardiac surgery, critical care, vascular systems and perfusion products and services, and is a worldwide leader in tissue replacement heart valves and heart valve repair products. With pro forma sales of more than $800 million in 1999, the company has a strong international presence in over 80 countries and generates more than 35 percent of its sales outside of the United States. Edwards' extensive manufacturing operations are located in North America, Europe, Japan (through a contractual joint venture with Baxter International) and Latin America. Additional information about Edwards Lifesciences can be found at www.edwards.com.
Edwards Lifesciences will be hosting an analyst conference call on Tuesday, July 18 at 12:00 p.m. EDT to discuss the transaction. The dial-in number for this call is 847-413-3751. A replay can be accessed for 72 hours by dialing (630) 652-3000 and using passcode 2575007. Additionally, the call will be archived on the company's website.
This news release includes forward-looking statements that involve risks and uncertainties, including those related to targeted financial and operating objectives, the successful completion of the Jostra transaction, technological advances in the medical field, product demand and market acceptance, and other risks detailed in the company's filings with the Securities and Exchange Commission. These forward-looking statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements.
Bentley and Macchi are trademarks of Edwards Lifesciences Corporation.
ots Original Text Service: Edwards Lifesciences Corporation Internet: http://recherche.newsaktuell.de
Contact: investors, David K. Erickson, +1 949-250-6826, or media, Scott Nelson, +1 949-250-5070, both of Edwards Lifesciences Corporation Web site: http://www.edwards.comOriginal-Content von: Edwards Lifesciences Corporation, übermittelt durch news aktuell