SMA: Symmetry Medical shareholders wait for delayed annual report; orthopedics business good

Demand for orthopedics implants remains strong and other medical devices are moving pretty well, but that’s about all four securities analysts could draw out of the executives of Symmetry Medical (SMA), a contract manufacturer of medical devices, during its Feb. 14 earnings conference call, which was just published on Seeking Alpha. SMA closed Wednesday at $17.03, down from a 52-week high of $19.22 and up from a low of $14.14. So investors don’t appear to be too concerned.

During the call, SMA executives promised to publish its annual report, which has been delayed by an investigation of an accounting problem at its UK plant, by the end of March. Now the report is promised for April 14. While SMA makes its shareholders wait for the annual report, it has published a news release that discloses that it expects to restate its earnings for the last several years as a result of the accounting irregularities it first disclosed last October.

On March 27, it reported:

The Company confirms that restatement of the accounting irregularities remains within the previously stated range of $24 million to $28 million. Approximately $10 million of the adjustment relates to the period prior to the acquisition of the Sheffield operating unit in June 2003 and will be reflected in the restated financial statement as an increase to goodwill associated with the Sheffield acquisition, with the remainder reflected as a reduction to earnings.

Furthermore, as a result of the Company’s annual evaluation of goodwill and intangibles, the Company will recognize a non-cash impairment charge of $33.3 million in the period ended December 29, 2007. This non-cash charge recognizes the impairment to acquired goodwill and intangibles associated with our Sheffield operating unit.

The expenses incurred for outside assistance relating to the investigation and restatement process included in 2007 results are approximately $3.5 million. The Company expects these expenses in 2008 to be approximately $3.0 million.

Full disclosure: I don’t own SMA. Investigate before you speculate.

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