Navigation Links
Zimmer Holdings, Inc. Reports First Quarter Financial Results
Date:4/24/2008


WARSAW, Ind., April 24 /PRNewswire-FirstCall/ --

-- Net Sales of $1.06 billion represents an increase of 11% reported (6%

constant currency)

-- Worldwide Reconstructive Sales increased 12% reported (6% constant

currency)

-- Diluted EPS were $1.02 reported, an increase of 4% over the prior year

period, and $1.04 adjusted, an increase of 6% over the prior year

period

-- Updates 2008 full year sales guidance and reaffirms earnings

-- Announces $1.25 billion stock repurchase program

Zimmer Holdings, Inc. (NYSE: ZMH; SWX: ZMH) today reported financial results for the quarter ended March 31, 2008. The Company reported first quarter net sales of $1.06 billion, an increase of 11% reported and 6% constant currency over the first quarter of 2007. Diluted earnings per share for the quarter were $1.02 reported, an increase of 4%, and $1.04 adjusted, an increase of 6% over the prior year period.

"We are pleased with our earnings performance and cash flow generation in the first quarter," said David Dvorak, Zimmer President and CEO. "Sales results reflect continued growth in our reconstructive business and we expect to achieve higher levels of penetration with new products as the year progresses. For instance, we are well positioned to move forward with our new knee offerings that are coming on line, including the Zimmer(R) NexGen(R) LPS-Flex Mobile Knee, the Gender Solutions(TM) Natural-Knee(R) Flex and the Gender Solutions(TM) Patello-femoral Joint System. In addition, our Kinectiv(TM) Technology for hip replacement, as well as our Fitmore(TM) Hip stem, which received FDA clearance for marketing in early March, are creative and innovative additions to our portfo (5.9)

Net cash used in investing

activities (110.9) (59.1)

Cash flows provided by (used in)

financing activities

Proceeds from issuance of common

stock 16.8 79.0

Excess income tax benefits from

stock option exercises 1.6 20.0

Repurchase of common stock (144.3) (173.4)

Net cash used in financing

activities (125.9) (74.4)

Effect of exchange rates on cash and

equivalents 6.2 0.8

Increase in cash and equivalents 12.1 60.3

Cash and equivalents, beginning of

period 463.9 265.7

Cash and equivalents, end of period $476.0 $326.0

ZIMMER HOLDINGS, INC.

NET SALES BY GEOGRAPHIC SEGMENT

FOR THE THREE MONTHS ENDED MARCH 31, 2008 and 2007

(in millions)

Three Months Ended March 31,

2008 2007 % Increase

(unaudited) (unaudited)

Americas $607.1 $567.8 7 %

Europe 305.5 258.8 18

Asia Pacific 146.6 123.6 19

Total $1,059.2 $950.2 11

ZIMMER HOLDINGS, INC.

NET SALES BY PRODUCT CATEGORY

FOR THE THREE MONTHS ENDED MARCH 31, 2008 and 2007

(in millions)

Three Months Ended March 31,

2008 2007 % Increase

(unaudited) (unaudited)

Reconstructive $872.2 $780.1 12 %

Trauma 55.5 50.1 11

Spine 54.2 46.7 16

OSP and other 77.3 73.3 5

Total $1,059.2 $950.2 11

ZIMMER HOLDINGS, INC.

RECONCILIATION OF REPORTED % GROWTH TO

CONSTANT CURRENCY % GROWTH

(unaudited)

For the Three Months Ended

March 31, 2008

Foreign Constant

Reported Exchange Currency

% Growth Impact % Growth

Geographic Segments

Americas 7 % 1 % 6 %

Europe 18 12 6

Asia Pacific 19 12 7

Total 11 5 6

Product Categories

Reconstructive

Americas 7 1 6

Europe 18 12 6

Asia Pacific 19 11 8

Total 12 6 6

Knees

Americas 7 1 6

Europe 18 12 6

Asia Pacific 25 13 12

Total 11 4 7

Hips

Americas 4 1 3

Europe 15 12 3

Asia Pacific 19 13 6

Total 10 7 3

Extremities 31 4 27

Dental 14 5 9

Trauma 11 5 6

Spine 16 2 14

OSP and other 5 4 1

ZIMMER HOLDINGS, INC.

Reconciliation of Net Earnings and Adjusted Net Earnings

For the Three Months Ended March 31, 2008 and 2007

(in millions, unaudited)

Three Months

Ended March 31,

2008 2007

Net Earnings $239.3 $233.4

Inventory step-up 0.3 -

Acquisition, integration and other 7.3 2.7

Taxes on acquisition, integration

and other (2.6) (0.7)

Adjusted Net Earnings $244.3 $235.4

ZIMMER HOLDINGS, INC.

Reconciliation of Diluted EPS and Adjusted Diluted EPS

For the Three Months Ended March 31, 2008 and 2007

(unaudited)

Three Months

Ended March 31,

2008 2007

Diluted EPS $1.02 $0.98

Acquisition, integration and other 0.03 0.01

Taxes on acquisition, integration

and other (0.01) (0.01)

Adjusted Diluted EPS $1.04 $0.98

ZIMMER HOLDINGS, INC.

Reconciliation of 2008 Projected Diluted EPS

and Projected Adjusted Diluted EPS

(unaudited)

Projected Twelve Months Ended

December 31, 2008: Low High

Diluted EPS $4.12 $4.17

Acquisition, integration and other,

net of tax 0.08 0.08

Adjusted Diluted EPS $4.20 $4.25

lio."

The Company said it has made substantial progress on its strategic infrastructure and operating initiatives. "We are well on our way with construction and recruiting efforts at our recently announced Shannon, Ireland facility, and we are making additional investments across our global manufacturing network," Mr. Dvorak said. "Further, the April 17, 2008, announcement of our enhanced compliance model was an important milestone for our Company. These are all critical steps in preparing our Company to better serve the healthcare markets of the future."

The Company also announced that its Board of Directors has approved an additional $1.25 billion stock repurchase program, which expires on December 31, 2009. This is in addition to the remaining capacity of $477 million as of March 31, 2008, under the repurchase program authorized in December 2006. Purchases may be made in the open market or in privately negotiated transactions from time to time in compliance with Securities and Exchange Commission regulations, depending on market conditions and other factors. The Company had approximately 231.5 million shares of common stock outstanding as of March 31, 2008.

"As we continue to evaluate our potential uses of cash and other resources, the Board has confirmed that repurchasing shares is consistent with our confidence in the Company's long-term growth prospects and provides an effective avenue to return value to our stockholders," said Mr. Dvorak.

Sales Tables

The following tables provide sales results by geographic segment and product category, as well as the percentage change compared to the prior year quarter on both a reported and constant currency basis.

NET SALES - THREE MONTHS ENDED MARCH 31, 2008

(in millions, unaudited)

Constant

Net Reported Currency

Sales % Growth % Growth

Geographic Segments

Americas $607 7 % 6 %

Europe 305 18 6

Asia Pacific 147 19 7

Total 1,059 11 6

Product Categories

Reconstructive

Americas 482 7 6

Europe 275 18 6

Asia Pacific 115 19 8

Total 872 12 6

Knees

Americas 280 7 6

Europe 120 18 6

Asia Pacific 54 25 12

Total 454 11 7

Hips

Americas 148 4 3

Europe 129 15 3

Asia Pacific 53 19 6

Total 330 10 3

Extremities 32 31 27

Dental 56 14 9

Trauma 56 11 6

Spine 54 16 14

OSP and other 77 5 1

Net earnings for the first quarter were $239 million on a reported basis and $244 million on an adjusted basis, an increase of 4% adjusted over the prior year period. Operating cash flow for the first quarter was $243 million.

Guidance

The Company updated its full year 2008 sales guidance and reaffirmed its earnings guidance. Reported sales for 2008 are expected to increase by 10 to 11% over the prior year. This sales guidance reflects a reduction in constant currency growth to 6 to 7%, countered by favorable foreign currency, now estimated at 4%. Full year 2008 adjusted diluted earnings per share are expected to be in the same range as previously issued guidance of $4.20 to $4.25. These estimates include the impact of previously announced actions at the Company's Ohio-based Orthopaedic Surgical Products operation. These actions are expected to adversely impact 2008 adjusted diluted earnings per share by $0.18 to $0.20, including $0.07 related to inventory charges, idle plant costs and other nonrecurring expenses. The Company expects this impact to be offset by reductions in planned operating expenses, share repurchases and other actions.

Conference Call

The Company will conduct its first quarter 2008 investor conference call today, April 24, 2008, at 8:00 a.m. Eastern Time. The live audio webcast can be accessed via Zimmer's Investor Relations website at http://investor.zimmer.com . It will be archived for replay following the conference.

Individuals who wish to dial into the conference call may do so at (888) 815-6162. International callers should dial (706) 634-9502. A digital recording will be available two hours after the completion of the conference call from April 24, 2008 to May 4, 2008. To access the recording, US/Canada callers should dial (800) 642-1687, or for International callers, dial (706) 645-9291, and enter the Conference ID, 41904442. A copy of this press release and other financial and statistical information about the periods to be presented in the conference call will be accessible through the Zimmer website at http://investor.zimmer.com .

About the Company

Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer is a worldwide leader in designing, developing, manufacturing and marketing orthopaedic reconstructive, spinal and trauma devices, dental implants, and related orthopaedic surgical products. Zimmer has operations in more than 25 countries around the world and sells products in more than 100 countries. Zimmer's 2007 sales were approximately $3.9 billion. The Company is supported by the efforts of more than 7,500 employees worldwide.

For more information about Zimmer, visit http://www.zimmer.com

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.

Zimmer Safe Harbor 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 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, 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 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.

ZIMMER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE MONTHS ENDED MARCH 31, 2008 and 2007

(in millions, except per share amounts, unaudited)

2008 2007 % Inc/(Dec)

Net Sales $1,059.2 $950.2 11 %

Cost of products sold 254.7 206.4 23

Gross Profit 804.5 743.8 8

Research and development 50.0 52.3 (4)

Selling, general and administrative 415.6 361.6 15

Acquisition, integration and other

expense (income) 7.3 2.7 175

Operating expenses 472.9 416.6 14

Operating Profit 331.6 327.2 1

Interest income (expense) 1.0 (0.2) 521

Earnings before income taxes and

minority interest 332.6 327.0 2

Provision for income taxes 93.1 93.3 -

Minority interest (0.2) (0.3) (16)

Net Earnings $239.3 $233.4 3

Earnings Per Common Share

Basic $1.03 $0.99 4

Diluted $1.02 $0.98 4

Weighted Average Common Shares

Outstanding

Basic 232.5 236.9

Diluted 233.9 239.2

ZIMMER HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

March 31, December 31,

2008 2007

(unaudited)

Assets

Current Assets:

Cash and equivalents $476.0 $463.9

Restricted cash 2.8 2.5

Receivables, net 759.3 674.3

Inventories, net 756.6 727.8

Other current assets 227.9 214.2

Total current assets 2,222.6 2,082.7

Property, plant and equipment, net 1,039.0 971.9

Goodwill 2,712.7 2,621.4

Intangible assets, net 734.8 743.8

Other assets 210.1 213.9

Total Assets $6,919.2 $6,633.7

Liabilities and Shareholders' Equity

Current liabilities $789.2 $748.6

Other long-term liabilities 303.6 328.4

Long-term debt 116.9 104.3

Minority interest 3.0 2.8

Shareholders' equity 5,706.5 5,449.6

Total Liabilities and Shareholders'

Equity $6,919.2 $6,633.7

ZIMMER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2008 and 2007

(in millions, unaudited)

2008 2007

Cash flows provided by (used in)

operating activities

Net earnings $239.3 $233.4

Depreciation and amortization 61.8 53.4

Share-based compensation 14.9 20.9

Income tax benefits from stock

option exercises 2.6 27.9

Excess income tax benefits from

stock option exercises (1.6) (20.0)

Changes in operating assets and

liabilities

Income taxes 5.4 18.6

Receivables (53.1) (63.4)

Inventories (14.0) (19.6)

Accounts payable and accrued

expenses 12.7 (17.8)

Other assets and liabilities (25.3) (40.4)

Net cash provided by operating

activities 242.7 193.0

Cash flows provided by (used in)

investing activities

Additions to instruments (57.5) (34.5)

Additions to other property, plant

and equipment (53.4) (18.7)

Other -
'/>"/>

SOURCE Zimmer Holdings, Inc.
Copyright©2008 PR Newswire.
All rights reserved

Related medicine news :

1. Zimmer Holdings Offer and ORTHOsoft Directors Circular Mailed to Shareholders
2. Zimmer Holdings Announces Live Audio Webcast and Conference Call of Third Quarter 2007 Results
3. Zimmer Announces Successful Completion of ORTHOsoft Takeover Bid
4. Zimmer Holdings to Present at Upcoming Investor Conferences
5. Ray Elliott to Retire as Chairman of Zimmer Holdings; John McGoldrick to Serve as Non-Executive Chairman
6. Zimmer Holdings Receives FDA Approval to Market Mobile Bearing Knee
7. Zimmer Holdings to Present at JPMorgan Healthcare Conference
8. Zimmer Holdings Announces Webcast and Conference Call of Fourth Quarter and Full-Year 2007 Results
9. Zimmer Spine Introduces New Rigid to Dynamic Stabilization Transition System
10. Zimmer Reports Fourth Quarter and 2007 Financial Results
11. Zimmer Holdings to Present at Merrill Lynch Health Care Conference
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:12/2/2016)... ... December 02, 2016 , ... ‘Tis the season for giving! Today, 20 creative ... National Family Partnership and the Drug Enforcement Administration as part of the National Red ... 10 winning schools who decorated their campuses with this year’s Red Ribbon Week theme: ...
(Date:11/30/2016)... , ... November 30, 2016 , ... ... they now offer a comprehensive in-house dental plan for all patients. Understanding that ... a plan that gives patients a number of perks, including discounts on many ...
(Date:11/30/2016)... ... November 30, 2016 , ... ... Deloitte Wisconsin 75, an annual ranking and recognition of the largest closely held ... list, having ranked from 2008-2016. In addition, Standard Process was awarded the Talent ...
(Date:11/30/2016)... ... November 30, 2016 , ... Center For ... announced the opening of a new residential mental health treatment program in Chino ... issues such as severe anxiety, depression, bi-polar disorder, and other related issues. , ...
(Date:11/30/2016)... ... November 30, 2016 , ... ... and stylish design wanted by today’s consumers at an affordable price, is now ... says the new watch is “a game changer” when it comes to the ...
Breaking Medicine News(10 mins):
(Date:12/2/2016)... 2016 bioLytical Laboratories, un líder mundial en test rápidos ... HIV Self Test , a los miembros de la Kenya Pharmaceutical Association. ... ... INSTI HIV Self Test! (PRNewsFoto/bioLytical Laboratories) ...      (Photo: http://photos.prnewswire.com/prnh/20161201/444905 ) bioLytical fue invitada por la ...
(Date:12/2/2016)... GARDENS, N.Y. , Dec. 2, 2016  LifeVac, ... will be included in the Emergency Response Training and ... are very excited to have LifeVac become part of ... Lih , Founder and CEO of LifeVac. "Having an ... LifeVac safely and effectively will help leverage our efforts ...
(Date:12/2/2016)... India , December 2, 2016 ... report "In Vitro Diagnostics/IVD Market by Product (Instruments, ... Hematology), Application (Diabetes, Oncology, Cardiology, Nephrology, Infectious Diseases) ... global market is valued at USD 60.22 Billion ... at a CAGR of 5.5% during the forecast ...
Breaking Medicine Technology: