Zimmer Reports Third Quarter 2007 Financial Results
-
Net Sales of $903 million represents an increase of 10% reported (8% constant currency)
-
Worldwide Reconstructive Sales increased 11% reported (9% constant currency)
-
Zimmer Dental Sales increased 19% reported (17% constant currency) and Extremities Sales increased 36% reported (33% constant currency)
-
Diluted EPS were $0.19 reported, a decrease of 75% over the prior year period (including a $169.5 million settlement charge), and $0.91 adjusted, an increase of 18% over the prior year period.
(WARSAW, IN) October 24, 2007 -- Zimmer Holdings, Inc. (NYSE and SWX: ZMH) today reported financial results for the quarter ended September 30, 2007. For the quarter, the Company announced net sales of $903 million, an increase of 10% reported and 8% constant currency over the prior year period. Diluted earnings per share for the quarter were $0.19 reported, a decrease of 75% reported (including the previously reported $169.5 million charge related to the resolution of a federal investigation), and $0.91 adjusted, an increase of 18% adjusted, in line with First Call consensus estimates.
“This was a quarter of solid sales growth and earnings achievement while we advanced our strategic direction through acquisition,” said David Dvorak, Zimmer Holdings President and CEO. “Our Zimmer® Gender Solutions™ Knee drove growth in our knee product line during the quarter and we are looking forward to the full release of the Natural-Knee® Gender Flex Knee system in 2008, which will add gender-specific design features and high-flexion capability to an established and successful brand.”
During the quarter, the Company announced it had entered into a definitive agreement to acquire ORTHOsoft Inc., a market leader in computer surgical navigation in orthopaedics. “With our SmartTools strategic initiative, we are focused on becoming a leader in improving operating room efficiency and enhancing surgical outcomes through the use of innovative navigation devices and cutting tools,” said Dvorak. “The ORTHOsoft acquisition will enable us to advance these concepts across our various businesses and allow us to vertically integrate our existing Zimmer® Computer Assisted Solutions (CAS) efforts.” The Company expects this transaction to be completed in early November.
As previously announced, on September 27 the Company entered into resolution agreements with the federal government regarding an ongoing investigation into relationships between orthopaedic providers and consulting surgeons. As part of the settlement, the Company paid a civil settlement amount of $169.5 million during the quarter, which resulted in a non-recurring impact of $0.72 to reported diluted earnings per share.
In the third quarter, the Company purchased 1.97 million common shares for a total of $155 million under its stock repurchase program, leaving authority to make up to $736.8 million in additional purchases through December 31, 2008. The Company has purchased 5.6 million shares for a total of $460.6 million in the first nine months of 2007.
Note on Non-GAAP Financial Measures
As used in this press release, the term “adjusted” refers to operating performance measures that exclude 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.
ZimmerSafeHarbor Statement
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 ability to successfully integrate acquired businesses, the outcome of the Department of Justice investigations announced in March 2005 and June 2006, 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 form and implement alliances, international growth, governmental laws and regulations affecting our U.S. and international businesses, including tax obligations and risks, product liability and intellectual property litigation losses, reimbursement levels from third-party payors, 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 forward-looking 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 are cautioned not to place undue reliance on these forward-looking statements, since, while we 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.
Contact
Media
Brad Bishop
574-372-4291
bradley.bishop@zimmer.com
Investor Relations
James T. Crines
574-372-4264
james.crines@zimmer.com
Sean O'Hara
574-371-8032
sean.f.ohara@zimmer.com
