WARSAW, Ind., Apr 15, 2008 (BUSINESS WIRE) -- Biomet, Inc. announced today financial market results for its third fiscal quarter ended February 29, 2008. -- Net sales increased 14% worldwide to $603.1 million -- Worldwide reconstructive device sales increased 18% (14% constant currency, ex-instruments) -- Worldwide knee sales increased 25% (21% constant currency, ex-instruments) -- Worldwide hip sales increased 15% (12% constant currency, ex-instruments) As previously announced, Biomet Inc. finalized the merger with LVB Acquisition Merger Sub, Inc., a wholly-owned subsidiary of LVB Acquisition, Inc. on September 25, 2007. LVB Acquisition, Inc. is indirectly owned by investment partnerships directly or indirectly advised or managed by The Blackstone Group L.P., Goldman Sachs & Co., Kohlberg Kravis Roberts & Co. L.P. and TPG Capital. The Company's unaudited condensed consolidated financial market statements as of and for the period ended February 29, 2008 and other financial market data included in this press release have been prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the U.S. and reflects the preliminary purchase accounting adjustments related to the Merger. The purchase price allocation was based on information currently available to the Company, and expectations, assumptions, and valuation methodologies deemed reasonable by the Company's management. The final valuation and associated purchase price allocation is expected to be completed as soon as possible, but no later than one year from the completion of the acquisition. To the extent that the estimates need to be adjusted, the Company will do so. In addition, the Company's international subsidiaries have historically reported financial market results on a one month lag. Due to improved financial market reporting capabilities, the reporting lag has been eliminated and all subsidiaries are now aligned with the corporate reporting calendar. The first and second quarters of fiscal year 2008 have been adjusted, from what was originally reported, to reflect the elimination of the lag, resulting in an increase in net sales of $14.2 million and an increase in operating income of $7.0 million for the six months ended November 30, 2008. The elimination of the lag does not materially affect the third quarter results. Net sales increased 13.9% to $603.1 million for the quarter ended February 29, 2008, from $529.5 million for the same quarter in the prior year. Excluding the impact of foreign currency, net sales increased 9.9%. U.S. revenue increased 9.4% to $351.6 million during the third quarter of fiscal 2008, while foreign sales increased 20.8% (12.0% constant currency) to $251.5 million. Excluding both the impact of sales of instruments (which the Company discontinued selling in the third quarter of fiscal 2007) and foreign currency, net sales increased by 10.2% for the third quarter of fiscal 2008 compared to the same quarter in the prior year. During the third quarter of fiscal year 2008, the Company incurred special charges (pre-tax) of $191.8 million, including purchase accounting charges of $177.1 million. The purchase accounting charges primarily relate to additional amortization for the intangible assets recorded in conjunction with the merger, as well as additional depreciation and cost of sales recorded due to inventory and fixed assets being written up to fair value for the merger. The other special charges primarily relate to the previously announced operational improvement program. Reported operating loss for the third quarter of fiscal year 2008 was $5.0 million, compared to operating income of $124.3 million for the third quarter of fiscal year 2007. Adjusted operating income for the third quarter was $186.8 million compared to $161.3 million for the third quarter last year, an increase of 16%. Reported net loss for the third quarter of fiscal year 2008 was $88.5 million compared to net income of $85.3 million for the third quarter of fiscal year 2007. Adjusted net income for the third quarter was $25.2 million compared to adjusted net income of $127.4 million for the same period last year. Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") for the third quarter of fiscal year 2008 was $214.1 million, or 35.5% of sales. A reconciliation of reported results to adjusted results is included in this press release, which is also posted on our website. Third Quarter Sales Performance Reconstructive Products Reconstructive device sales increased 18% worldwide to $448.8 million during the third quarter of fiscal year 2008 compared to $380.2 million for the third quarter of fiscal year 2007. Reconstructive device sales in the United States increased 14% (14% excluding instruments) and international reconstructive device sales increased 23%. Excluding instruments and on a constant currency basis, worldwide reconstructive devices sales increased 14%. Knee sales increased 25% worldwide during the third quarter and increased 22% in the United States as compared to the third quarter of fiscal year 2007. Excluding instruments and on a constant currency basis, knee sales increased 21% worldwide and 23% in the United States. The acceleration in Biomet's knee sales continued during the third quarter as a result of increased market demand for the Oxford(R) Partial Knee System and the Vanguard(TM) Complete Knee System. The Vanguard(TM) Complete Knee System is the only total knee replacement that allows for sizing of the femur and tibia independently, providing complete component interchangeability for a precise fit. The Oxford(R) System is the only free-floating mobile-bearing partial knee approved by the U.S. Food and Drug Administration. Outside the United States, the success of the Oxford(R) Partial Knee with its excellent 20-year clinical results has contributed to the Oxford(R) System becoming the most clinically proven and widely used partial knee system in the world. Hip sales increased 15% worldwide and 7% in the United States during the third quarter of fiscal year 2008, compared to the same period last year. Excluding instruments and on a constant currency basis, third quarter hip sales increased 12% worldwide and 8% in the United States. Key growth drivers in hips during the quarter were the M(2)a-Magnum(TM) Acetabular System and the Taperloc(R) Hip Stem, as well as the ReCap(R) Total Resurfacing System that is marketed outside the United States. Fixation Products Fixation sales increased 4% worldwide to $56.8 million during the third quarter compared to $54.6 million for the third quarter of fiscal year 2007. Fixation sales were flat in the United States during the quarter. Spinal Products Spinal product sales decreased 2% worldwide to $50.1 million during the third quarter as compared to $51.2 million for the third quarter of fiscal year 2007. Spinal product sales increased 1% in the United States during the third quarter. Other Products Sales of the Company's "other products" increased 9% worldwide to $47.4 million during the third quarter of fiscal year 2008 compared to $43.5 million during the same period of fiscal year 2007. Sales of "other products" increased 3% in the United States during the third quarter. Biomet's President and Chief Executive Officer Jeffrey R. Binder commented, "Our reconstructive device category performed extremely well during the third quarter, continuing the positive sales growth trend for both knees and hips with exceptionally strong knee sales. I am pleased to report that our trauma and spine business exhibited additional signs of stabilization during the quarter, further positioning these product categories for sustainable growth. In addition, we are very encouraged by the EBITDA growth and margin expansion we attained in the quarter." All trademarks herein are the property of Biomet, Inc. or its subsidiaries unless otherwise indicated. About Biomet Biomet, Inc. and its subsidiaries design, manufacture and market products used primarily by musculoskeletal medical specialists in both surgical and non-surgical therapy. Biomet's product portfolio encompasses reconstructive products, including orthopedic joint replacement devices, bone cements and accessories, autologous therapies and dental reconstructive implants; fixation products, including electrical bone growth stimulators, internal and external orthopedic fixation devices, craniomaxillofacial implants and bone substitute materials; spinal products, including spinal stimulation devices, spinal hardware and orthobiologics; and other products, such as arthroscopy products and softgoods and bracing products. Headquartered in Warsaw, Indiana, Biomet and its subsidiaries currently distribute products in more than 70 countries. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Those statements are often indicated by the use of words such as "will," "intend," "anticipate," "estimate," "expect," "plan" and similar expressions. Forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from those contemplated by the forward looking statements due to, among others, the following factors: the results of ongoing investigations by the United States Department of Justice; the ability to successfully implement new technologies; the Company's ability to sustain sales and earnings growth; the Company's success in achieving timely approval or clearance of its products with domestic and foreign regulatory entities; the stability of certain foreign economic markets; the impact of anticipated changes in the musculoskeletal industry and the ability of the Company to react to and capitalize on those changes; the ability of the Company to successfully implement its desired organizational changes; the impact of the Company's managerial changes; and other factors set forth in the Company's filings with the SEC, including the Company's most recent annual report on Form 10-K (as amended) and quarterly reports on Form 10-Q. Although the Company believes that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or non-occurrence of future events. There can be no assurance as to the accuracy of forward-looking statements contained in this press release. The inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company's objectives will be achieved. The Company undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements which speak only as of the date on which they were made. Use of non-GAAP Financial Information To supplement Biomet's consolidated financial market statements presented on a reported basis, the Company discloses certain non-GAAP measures that exclude certain charges, including non-GAAP operating income and non-GAAP net income. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. Biomet management believes that these non-GAAP measures provide useful information to investors; however, this additional non-GAAP financial market information is not meant to be considered in isolation or as a substitute for financial market information prepared in accordance with GAAP. A reconciliation of the non-GAAP financial market measures to the corresponding GAAP measure is included in the tables below.
Biomet, Inc.
Consolidated Statements of Operations
(In millions, unaudited)
Three Months Ended
February 29, 2008
(Successor)
------------------------------------------
As Special Purchase As
Reported Items Accounting Adjusted
--------- ------- ----------- ---------
Net sales $ 603.1 - 0 $ 603.1
Cost of sales 262.1 (6.1)(1) (73.3)(2) 182.7
--------- ------- -------- ---------
Gross profit 341.0 6.1 73.3 420.4
Gross profit percent 56.5% 69.7%
Selling, general and
administrative 233.3 (8.4)(1) (13.0)(3) 211.9
Research and development 23.6 (0.2) (1.7)(3) 21.7
Amortization 89.1 (89.1)(4) -
--------- ------- -------- ---------
Operating income (5.0) 14.7 177.1 186.8
Interest expense (142.6) - - (142.6)
Other income (expense) (1.6) - - (1.6)
--------- ------- -------- ---------
Income before income
taxes (149.2) 14.7 177.1 42.6
Income taxes (60.7) 6.0 72.1 17.4
--------- ------- -------- ---------
Tax rate 40.7% 40.7% 40.7% 40.8%
Net income ($88.5) $ 8.7 $ 105.0 $ 25.2
========= ======= ======== =========
Three Months Ended
February 28, 2007
(Predecessor)
----------------------------------
Special As
As Items Adjusted
Reported
---------- ------- --------
Net sales $529.5 - $529.5
Cost of sales 163.7 (11.0)(5) 152.7
--------- ------- --------
Gross profit 365.8 11.0 376.8
Gross profit percent 69.1% 71.2%
Selling, general and administrative 215.4 (25.2)(6),(7) 190.2
Research and development 23.9 (0.8) 23.1
Amortization 2.2 - 2.2
--------- ------- --------
-
Operating income 124.3 37.0 161.3
Interest expense - -
Other income (expense) 4.4 - 4.4
--------- ------- --------
Income before income taxes 128.7 37.0 165.7
Income taxes 43.4 (5.1) 38.3
--------- ------- --------
Tax rate 33.7% 33.6% 23.1%
Net income $ 85.3 $ 42.1 $127.4
========= ======= ========
Fiscal 2008
(1) Represents consulting expenses related to operational improvement
initiatives, severance for former executives and Sponsor fees
(2) $73.3 million relates primarily to the following:
i) Additional costs associated with selling inventory that was
written up to fair value at the date of the merger
ii) Additional depreciation expense associated with the fixed
assets being written up to fair value at the date of the Merger.
(3) Stock compensation expense associated with the stock option grant
that occurred in December 2007
(4) $93.1 million of amortization expense associated with the
intangibles recorded at the date of the Merger
Fiscal 2007
(5) Represents charges for inventory at Biomet Trauma and Biomet Spine
to increase inventory reserves to the necessary levels
(6) $9.3 million related to renegotiating distributor agreements and
$5.0 million for investment banker fees related to the merger, with
the remaining amount for accounting and legal fees associated with
the merger and stock option restatement
(7) $4.2 million of stock compensation expense associated with stock
options
Biomet, Inc.
Consolidated Statements of Operations
(In millions, unaudited)
Period Ended Period Ended
June 1, 2007 to July 12, 2007 to
July 11, 200 February 29, 2008
(Predecessor) (Successor)
--------------- --------------------------------------
As As Special
Reported Reported Items
--------------- ----------------- --------------------
Net sales $ 248.8 $ 1,498.9
Cost of sales 96.3 619.4 (37.5)(1),(6)
--------------- ----------------- --------
Gross profit 152.5 879.5 37.5
Gross
profit
percent 61.3% 58.7%
Selling,
general and (2),(1),(3),
administrative 208.9 819.1 (195.3)(5),(6),(4)
Research and
development 25.3 67.4 (25.1)(1),(3)
In-process
research and
development - 479.0
Amortization 0.8 227.1 -
--------------- ----------------- --------
Operating
income (82.5) (713.1) 257.9
Other income
(expense) 0.6 (372.8) -
--------------- ----------------- --------
Income before
income taxes (81.9) (1,085.9) 257.9
Income taxes (27.3) (213.2) 90.6
--------------- ----------------- --------
Tax rate 33.3% 19.6% 35.1%
Net income ($54.6) ($872.7) $ 167.3
=============== ================= ========
Nine Months Ended
February 29, 2008
--------------- -----------------
Purchase As
Accounting Adjusted
--------------- -----------------
Net sales $ 1,747.7
Cost of sales (171.2)(7) 507.0
----------- -----------------
Gross profit 171.2 1,240.7
Gross profit percent 71.0%
Selling, general and administrative (180.6)(10) 652.1
Research and development - 67.6
In-process research and development (479.0)(8) -
Amortization (227.1)(9) 0.8
----------- -----------------
Operating income 1,057.9 520.2
Other income (expense) - (372.2)
----------- -----------------
Income before income taxes 1,057.9 148.0
Income taxes 186.4 36.5
----------- -----------------
Tax rate 17.6% 24.7%
Net income $ 871.5 $ 111.5
=========== =================
Nine Months
Ended
February 28, 2007
(Predecessor)
--------------------------------------
As Special As
Reported Items Adjusted
--------- ------------------ ---------
Net sales $ 1,558.0 $ 1,558.0
Cost of sales 453.7 (11.0)(13) 442.9
--------- -------- ---------
Gross profit 1,104.3 11.0 1,115.1
Gross profit percent 70.9% 71.6%
Selling, general and
administrative 592.4 (31.2)(11), (12) 566.9
Research and development 71.1 (2.4)(12) 63.0
In-process research and
development - -
Amortization 5.7 - 5.7
--------- -------- ---------
Operating income 435.1 44.6 479.5
Other income (expense) 8.3 - 8.3
--------- -------- ---------
Income before income taxes 443.4 44.6 487.8
Income taxes 149.0 15.0 164.0
--------- -------- ---------
Tax rate 33.6% 33.6% 33.6%
Net income $ 294.4 $ 29.6 $ 323.8
========= ======== =========
Fiscal 2008 - Needs to be updated with Q3 activity
(1) $112.8 million of additional compensation expense to settle in-
the-money stock options of employees, as required by the Merger
agreement
(2) $41.7 million of distributor fee expense associated with
renegotiation of distribution agreements
(3) $29.6 million of investment banker fees associated with the Merger
(4) $26.9 million settlement with the Department of Justice
(5) $21.6 million of additional legal and merger-related fees
(6) $9.9 million primarily consulting expenses related to operational
improvement initiatives
(7) $171.2 million relates primarily to the following:
i) Additional costs associated with selling inventory that was
written up to fair value at the date of the merger
ii) Additional depreciation expense associated with the fixed
assets being written up to fair value at the date of the Merger.
(8) $479.0 million of in-process research and development expense as a
result of the Merger
(9) $226.5 million of amortization expense associated with the
intangibles recorded at the date of the Merger
(10) Amount primarily relates to transaction costs related to the
Merger
Fiscal 2007
(11) Primarily includes $9.3 million associated with renegotiation of
distribution agreements, $5.0 million for investment banker fees
related to the merger and $4.9 million for accounting and legal fees
associated with the merger and stock option restatement
(12) $12.0 million of stock compensation expense associated with stock
options
(13) Represents charges for inventory at Biomet Trauma and Biomet
Spine to increase inventory reserves to the necessary levelsSOURCE: Biomet, Inc. Biomet, Inc. Senior Vice President and Chief Financial Officer Daniel P. Florin, (574) 372-1687 or Director, Corporate Communications Barbara Goslee, (574) 372-1514 Copyright Business Wire 2008 yvan your source for financial market candian exchange rate | stock exchange | exchange rate | cost plus world market | stock market guide | stocks and bonds | toronto stock exchange | bonds investments | market research | stock market quote | market america | farmer market | market timing | flow chart | financial market | world market | trading forex | securities and exchange commis | new york stock exchange | bradford exchange | 1031 exchange | forex systems | sitemap PDF sitemap (c) Copyright 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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