Zimmer Holdings, Inc. Reports Second Quarter 2008 Financial Results

•Net Sales of $1.08 billion represents an increase of 11% reported (5%
constant currency)

 •Worldwide Reconstructive Sales increased 14% reported (8% constant
currency)

•Worldwide Knee Sales increased 15% reported (10% constant currency)

•Diluted EPS were $0.99 reported and $1.03 adjusted, an increase of 5%
adjusted over the prior year period

•Zimmer voluntarily suspends U.S. marketing and distribution of Durom®
Acetabular Component while it updates labeling and implements surgical technique training

•Full-year Sales and EPS guidance revised

 

(WARSAW, IN) July 22, 2008—Zimmer Holdings, Inc. (NYSE and SWX: ZMH) today
reported financial results for the quarter ended June 30, 2008. The Company reported
second quarter net sales of $1.08 billion, an increase of 11% reported and 5% constant
currency over the second quarter of 2007. Diluted earnings per share for the quarter were $0.99 reported and $1.03 adjusted, an increase of 5% adjusted over the prior year period. “During the quarter, our worldwide knee sales grew by 10% constant currency as we
continue to expand our industry-leading knee business by offering surgeons a comprehensive portfolio of proven designs and innovative new treatment options,” said
David Dvorak, Zimmer President and CEO. “We are making substantial progress on our
operating and infrastructure initiatives, in a manner designed to position Zimmer for
sustainable growth in an expanding health care market. We have also been executing
plans under our enhanced compliance model, including holding numerous productive
meetings with surgeons to discuss how we will continue to collaborate to improve patient
care.”

The Company resumed Zimmer Institute training activities, which will support the
ongoing launches of several key products, including the Zimmer® NexGen® LPS-Flex
Mobile Knee, the Gender Solutions™ Natural-Knee® Flex and the Gender Solutions™
Patello-Femoral Joint System in knees. Hip products include the VerSys® M/L Taper
Hip with Kinectiv™ Technology and the Fitmore ™ Hip stem. Absent any unforeseen
events, the Company anticipates FDA clearance to market the EPOCH® Gender Solutions Hip during the second half of the year.

During the quarter, the Company utilized $276 million of cash and $220 million in borrowings to acquire 6.9 million shares. The Company completed its $1 billion stock repurchase program, which was scheduled to expire on December 31, 2008, and initiated the $1.25 billion repurchase program announced earlier in the year. Since its first repurchase program in 2006, Zimmer has used nearly $2 billion in internally generated funds to acquire more than 10% of its shares that were outstanding as of the end of 2005.

Read Entire Release

Click here for Durom Backgrounder
Click here for Durom Patient Communication
Click here for Durom Surgeon Letter - July 2008
Click here for Durom Press Release Excerpt

Note on Non-GAAP Financial Measures

As used in this press release, the term “adjusted” refers to operating performance measures that exclude inventory step-up and acquisition, integration and other expenses. The term “constant currency” refers to any financial measure that excludes the effect of changes in foreign currency exchange rates. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measure are included in this press release.

ZimmerSafeHarborStatement

This press release contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 based on current expectations, estimates, forecasts and projections about the orthopaedics industry, management’s beliefs and assumptions made by management. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to, our compliance with the Deferred Prosecution Agreement through March 2009 and the Corporate Integrity Agreement through 2012, the impact of our enhanced healthcare compliance global initiatives and business practices on our relationships with customers and consultants, our market share and our overall financial performance, the success of our quality initiatives, the outcome of the informal investigation by the U.S. Securities and Exchange Commission into Foreign Corrupt Practices Act matters announced in October 2007, price and product competition, rapid technological development, demographic changes, dependence on new product development, the mix of our products and services, supply and prices of raw materials and products, customer demand for our products and services, control of costs and expenses, our ability to obtain and maintain adequate intellectual property protection, our ability to successfully integrate acquired businesses, our ability to form and implement alliances, international growth, our compliance with governmental laws and regulations affecting our U.S. and international businesses including regulations of the U.S.Food and Drug Administration and foreign government regulators and tax obligations and risks, the impact of suspending U.S. distribution of one of our key hip replacement products, product liability and intellectual property litigation losses, reimbursement levels from third-party payors, cost-containment efforts of healthcare purchasing organizations, our ability to retain the independent agents and distributors who market our products, general industry and market conditions and growth rates and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. For a further list and description of such risks and uncertainties, see our periodic reports filed with the U.S. Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise,except as may be set forth in our periodic reports. Readers of this document arecautioned not to place undue reliance on these forward-looking statements, since, whilewe believe the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary statement is applicable to all forward-looking statements contained in this document.

Contacts

Media
Brad Bishop
574-372-4291
bradley.bishop@zimmer.com

Investors
James Crines
574-372-4264
james.crines@zimmer.com

Paul Blair
574-371-8042
paul.blair@zimmer.com