MDZ reports. Again leaving out the tables, with their bizarre formatting . . .
>>TORONTO, Dec. 11 /PRNewswire-FirstCall/ - MDS Inc. (TSX: MDS, NYSE: MDZ), the global health and life sciences company, today announced its fourth quarter and full year 2003 financial results.
"This was a year focused on making changes to allow us to manage our businesses in a more efficient and effective way at MDS. We maintained earnings growth in fiscal 2003 through our market leading positions. We are well into the implementation phase on a number of key initiatives that will contribute to improved performance in 2004 and beyond," said John Rogers, President & CEO. "For the coming year, we anticipate improvement across our entire business; but in particular an improvement in our pharmaceutical research services business, improved revenues from our increased cobalt supply, and continued success in our analytical instruments business. Additionally, we are well positioned for new opportunities for organic and acquisitive growth in a number of growing markets," Rogers continued.
Fiscal Year 2003
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Fiscal 2003 full year revenues increased to $1.8 billion, a 1% increase over the prior year. Operating income from continuing operations and before taking into account unusual items which include the restructuring charges, unusual gains, and valuation provisions, increased by 7% to $235 million and earnings per share (EPS) from continuing operations and before unusual items (see table) grew by 11% to $0.89. The Company significantly improved its cash position in 2003, increasing its cash from $184 million in 2002 to $260 million in 2003.
Our fiscal 2003 results have largely been sheltered from the impact of the weakening US dollar and this carried into the fourth quarter. Our strong hedge position has enabled us to maintain an effective rate for exports this year that is only slightly below the rate realized in 2002.
Unusual items in 2003 included the following pre-tax items: valuation provisions ($77 million); restructuring charges ($28 million); gain on patent suit ($39 million); and a gain on sale of businesses ($10 million). The prior year results included a pre-tax loss of $7 million resulting from the sale of a business. Fiscal 2003 net income and EPS were positively impacted in the fourth quarter by the release of tax reserves that are no longer required due to improved operating results in Europe and the resolution of other tax uncertainties.
In the fourth quarter of 2003, the Company began to account for its generic radiopharmaceutical business as a discontinued operation. For fiscal 2003, this business generated revenues of $15 million and a loss of $22 million, including provisions for shutdown costs.
Operating losses in our proteomics business were reduced to $33 million in 2003 from $52 million in 2002. The impact on EPS from this business was $0.24 in 2003 as compared to $0.27 in 2002. Beginning in 2003, we are no longer able to tax-effect the results of this business, whereas fiscal 2002 EPS reflected a $10 million tax recovery from the MDS Proteomics losses.
Fourth Quarter
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Fourth quarter 2003 revenues declined 5% to $449 million. Excluding the impact of divested businesses and adjusting for strong cobalt revenues in Q4 of last year, this decline is attributable to lower diagnostics and pharmaceutical research services revenues largely offset by growth in our analytical instrument business.
Operating income before unusual items increased 20% to $59 million due to continued strong performance in our analytical instruments business and reduced spending in our proteomics business, partly offset by lower operating income in our US diagnostics business.
The fourth quarter results include $28 million of restructuring charges and $22 million in shutdown costs related to our generic radiopharmaceutical business. These special pre-tax charges total $50 million compared to the previously announced range of $45-55 million.
EPS from continuing operations and before unusual items for the fourth quarter, improved to $0.26 from $0.18 in 2002 due to tax adjustments and lower expenditures in our proteomics business.
During the quarter, the Company announced a number of key initiatives targeted at strengthening our growth and financial performance over the next several years including:
- The reduction in overall positions at MDS by 450 people over 2004.
- A plan to exit the generic radiopharmaceutical business in Fleurus,
Belgium.
- The intent to improve performance in the US diagnostic business, while
looking at how the Company can best participate in the market.
- Revised management compensation plans to incorporate an expanded set
of financial metrics to further align them with shareholder interests,
- A seven-year outsourcing agreement with IBM,
- The implementation of an enterprise-wide common business system with
Oracle, and
- The creation of MDS Enterprise Services, which will provide support
services to the entire MDS organization.
The expectation is that operating costs will be reduced by approximately $10 million in fiscal 2004 and $40 million in fiscal 2005.
Life Sciences
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Revenues for 2003 in the Life Sciences segment increased 3% to $1,083 million from $1,053 million in fiscal 2002. Operating income for the year was $211 million before restructuring charges, up 3% from 2002.
For the quarter, revenues decreased to $275 million from $283 million in the same quarter last year. Operating income, excluding the impact of restructuring charges, increased 13% to $51 million from $45 million.
Our analytical instruments business continues to generate strong revenue growth, improving 19% compared to the same quarter last year. Revenues for the isotope business were down $12 million this quarter relative to last year, reflecting the impact of the sale of our Oncology Software Solutions business, which generated $10 million in the fourth quarter of last year, as well as a strong fourth quarter in our cobalt business in 2002. Cobalt inventories have now been replenished and we expect stronger cobalt sales beginning in the first quarter of 2004. Revenues from our pharmaceutical research services business were down 5% compared to the same period last year.
Key announcements for the quarter:
- The exit of the generic radiopharmaceutical business located in
Fleurus, Belgium. As a result of this decision, the generic
radiopharmaceuticals business is now treated as a discontinued
operation.
- Our isotopes business licensed technology to NTP Radioisotopes, a
subsidiary of the South African Nuclear Energy Corporation. NTP will
become a contract supplier of yttrium-90 to MDS Nordion.
- Our isotopes business licensed X-ray blood irradiation technology from
Rad Source Technologies, Inc. to provide a full breadth of products in
the blood irradiation business.
- Our analytical instruments business signed additional distribution
agreements to deliver the new NanoLC system in the United Kingdom,
Sweden, Germany and Canada.
- Our pharmaceutical research business and Iconix Pharmaceuticals, Inc.
introduced Pharmotif(TM) Solutions, a chemogenomics profiling service
for evaluating novel drug candidates.
- Our pharmaceutical research business expanded client access to data on
their studies to pharmacology and late stage clinical trials through
MDS Pharma Express(TM), an electronic data delivery system.
After the quarter, the Centers for Disease Control and Prevention (CDC) agreed to purchase 36 ELAN DRC ICP-MS systems. These systems, developed jointly by MDS Sciex and PerkinElmer, will be delivered to state health laboratories to upgrade their preparedness and response to bioterrorism, outbreaks of infectious disease, and other public health threats and emergencies in the US.
Health
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Revenues for the year in the Health segment decreased slightly to $715 million from $721 million in fiscal 2002, reflecting the impact of the sale of MDS Matrx in the second quarter of 2002. MDS Matrx contributed $10 million of revenues in 2002 prior to the sale.
Fourth quarter revenues decreased to $173 million from $188 million in the same quarter last year. Operating income for the quarter, excluding the impact of restructuring charges, was $14 million compared to $18 million last year, as a result of weaker than expected performance in our US diagnostics business.
Key announcements for the quarter:
- Implementation of steps to improve margins in the US diagnostics
business while examining the best way to participate in this market.
- Implementation of a mitigation plan to offset the impact of fee
reductions in the province of British Columbia.
- Steps to improve performance in the diagnostics business are expected
to deliver an improvement in operating income of 5-8% in 2004.
Proteomics
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In the Proteomics segment, operating losses declined to $8 million for the quarter compared to $14 million in 2002. Our proteomics business continues to focus on revenue creating opportunities and committed research and development while moving discussions forward on research collaborations and third party financing alternatives.<<
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Cheers, Tuck |
