EXHIBIT 99.1
Contacts: | ||||
Media | Investors | |||
Brad Bishop | Marc Ostermann | Sam Leno | ||
574-372-4291 | 574-371-8515 | 574-372-4790 | ||
bradley.bishop@zimmer.com | marc.ostermann@zimmer.com | sam.leno@zimmer.com |
Zimmer Reports Second Quarter 2005 Financial Results
Quarter Highlights
• | Net Sales of $847 million represents an increase of 15% (includes 2% increase due to changes in foreign exchange rates) | ||
• | 15% Sales increases in all three geographic segments—Americas, Europe and Asia Pacific | ||
• | Worldwide Reconstructive Sales increased 16% (includes 2% increase due to changes in foreign exchange rates) with Americas Reconstructive Sales increasing 17% | ||
• | Spine and Dental both increased sales in excess of 20% | ||
• | Record profit margins—78% gross, 33% operating and 23% net reported; 78% gross, 34% operating and 24% net adjusted* | ||
• | Diluted EPS were $0.76 reported, and $0.80 adjusted*, an increase of 38% adjusted* over prior year | ||
• | Operating cash flow of $244 million, total debt reduced to $268 million and cash on hand of $95 million, resulting in net debt* of $173 million | ||
• | Increasing the Company’s 2005 EPS guidance by $0.07 to $2.93 reported and $3.07 adjusted* |
(WARSAW, IN) July 27, 2005 — Zimmer Holdings, Inc. (NYSE and SWX: ZMH) today reported financial results for the quarter ended June 30, 2005. For the quarter, the Company announced net sales of $847 million and diluted earnings per share of $0.76 reported and $0.80 adjusted*, exceeding First Call estimates of $842 million and $0.75 adjusted*, respectively. Reported results include acquisition and integration expenses and inventory step-up, as applicable.
“We had a strong and balanced quarter with 15 percent sales growth in each of our geographic segments and above market performance, with greater than 20 percent growth, in both Spine and Dental,” said Ray Elliott, Zimmer Chairman, President and CEO. “Almost a quarter of a billion dollars of operating cash flow this period creates the potential to become net debt free again early in the fourth quarter—only two years from the date of our Centerpulse acquisition.”
Zimmer said it continues to be pleased by the product, market and expense synergy opportunities realized as a result of the Centerpulse acquisition. With 2,594 integration milestones complete, the Company is three-quarters of the way through its comprehensive plan and is confident it will exceed $100 million in annual synergy expense savings.
The Company said it has completed more new product projects in the first half of 2005 than in the full year 2004, and continued to emphasize its leadership inMinimally Invasive Solutions™(MIS™) Procedures and Technologies. “We have trained twice as many surgeons at our 23 Zimmer Institute locations in the first half of this year than during the same period last year,” Elliott said. “We have greatly increased training on our newest procedures with more than 400 surgeons trained this quarter alone in ourMIS Quad-Sparing™ Total Knee Replacement Procedure and nearly 400 this quarter in theMISAnterolateral Hip Replacement Procedure.”
The Company noted that it released theZimmer® NexGen® MIS™Tibial Component, the first knee replacement implant that can be assembled inside the patient, facilitating minimally invasive procedures, and that it has released 5,000MISknee instrument sets since inception, including more than 1,250 for theMIS Quad-SparingProcedure. In computer navigation, Zimmer said that 180 surgeries have been performed with theZimmer® Computer Assisted SolutionsElectromagnetic Computer Navigation System, developed in cooperation with exclusive partner Medtronic, and that theiNav™ Portable Navigation System,a low-cost, convenient version of its electromagnetic surgical navigation system will be in limited release for knees this fall.
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The following tables provide sales results by geographic segment and product category, as well as the percent change compared to the prior year quarter and six months and the impact of changes in foreign exchange rates.
3
NET SALES — THREE MONTHS ENDED JUNE 30, 2005
(in millions, unaudited)
(in millions, unaudited)
Net | % | FX | ||||||||||
Sales | Growth | Impact** | ||||||||||
Geographic Segments | ||||||||||||
Americas | $ | 495 | 15 | % | 1 | % | ||||||
Europe | 228 | 15 | 4 | |||||||||
Asia Pacific | 124 | 15 | 4 | |||||||||
Total | 847 | 15 | 2 | |||||||||
Product Categories | ||||||||||||
Reconstructive | ||||||||||||
Americas | 398 | 17 | 1 | |||||||||
Europe | 206 | 15 | 5 | |||||||||
Asia Pacific | 101 | 17 | 5 | |||||||||
Total | 705 | 16 | 2 | |||||||||
Knees | ||||||||||||
Americas | 226 | 21 | 0 | |||||||||
Europe | 85 | 18 | 5 | |||||||||
Asia Pacific | 43 | 20 | 5 | |||||||||
Total | 354 | 20 | 2 | |||||||||
Hips | ||||||||||||
Americas | 138 | 9 | 1 | |||||||||
Europe | 106 | 11 | 5 | |||||||||
Asia Pacific | 50 | 12 | 4 | |||||||||
Total | 294 | 10 | 3 | |||||||||
Extremities | 17 | 17 | 2 | |||||||||
Dental | �� | 40 | 28 | 2 | ||||||||
Trauma | 44 | 2 | 2 | |||||||||
Spine | 41 | 22 | 1 | |||||||||
Orthopaedic Surgical Products | 57 | 8 | 2 |
** | Effect of changes in foreign exchange rates on growth |
4
Net earnings for the quarter were $191 million on a reported basis, and were $199 million adjusted*, an increase of 39% adjusted* over the prior year period. Diluted earnings per share for the quarter were $0.76 reported and were $0.80 adjusted*, an increase of 38% adjusted* over the prior year period. Included in the quarter is approximately $6.5 million of pre-tax income reflected in cost of goods related primarily to the favorable resolution of certain legal and other matters. These items contributed 0.8% to gross profit margin and a little less than $0.02 to diluted earnings per share.
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NET SALES — SIX MONTHS ENDED JUNE 30, 2005
(in millions, unaudited)
(in millions, unaudited)
Net | % | FX | ||||||||||
Sales | Growth | Impact** | ||||||||||
Geographic Segments | ||||||||||||
Americas | $ | 975 | 14 | % | 0 | % | ||||||
Europe | 463 | 12 | 5 | |||||||||
Asia Pacific | 237 | 12 | 4 | |||||||||
Total | 1,675 | 13 | 2 | |||||||||
Product Categories | ||||||||||||
Reconstructive | ||||||||||||
Americas | 783 | 17 | 1 | |||||||||
Europe | 420 | 11 | 4 | |||||||||
Asia Pacific | 191 | 13 | 4 | |||||||||
Total | 1,394 | 14 | 2 | |||||||||
Knees | ||||||||||||
Americas | 448 | 21 | 0 | |||||||||
Europe | 173 | 17 | 6 | |||||||||
Asia Pacific | 80 | 15 | 4 | |||||||||
Total | 701 | 19 | 2 | |||||||||
Hips | ||||||||||||
Americas | 270 | 9 | 1 | |||||||||
Europe | 218 | 6 | 4 | |||||||||
Asia Pacific | 98 | 9 | 4 | |||||||||
Total | 586 | 8 | 3 | |||||||||
Extremities | 34 | 14 | 2 | |||||||||
Dental | 73 | 24 | 2 | |||||||||
Trauma | 90 | 1 | 1 | |||||||||
Spine | 79 | 18 | 1 | |||||||||
Orthopaedic Surgical Products | 112 | 7 | 2 |
** | Effect of changes in foreign exchange rates on growth |
6
Net earnings for the six months were $364 million on a reported basis, and were $386 million adjusted*, an increase of 37% adjusted* over the prior year period. Diluted earnings per share for the six months were $1.46 reported and were $1.55 adjusted*, an increase of 36% adjusted* over the prior year period.
Guidance
The Company is updating its guidance for the balance of 2005 to incorporate the results of the second quarter and the significant change in expected contribution from foreign currency detailed in the Company’s June 15, 2005 press release.
Full year 2005 sales guidance provided at the end of the first quarter was a range of $3,325 to $3,345 million. Since then, the expected contribution to sales growth from foreign currency rate changes, using current rates, has decreased by $53 million as a result of the strengthening U.S. dollar against most foreign currencies. Incorporating the lower expected contribution from foreign currency differences during the last six months of 2005, and maintaining constant currency growth rates during the last six months of 2005 at the same 11% that the Company reported in the first six months, our revised full year 2005 sales estimate is approximately $3,325 million. In short, the Company is absorbing the $53 million in changes from foreign currency, while maintaining sales guidance within the range established at the end of the first quarter. Expectations for third quarter sales are approximately $777 million, consisting of constant currency growth of about 11% and zero contribution from foreign currency. Expectations for fourth quarter sales are approximately $875 million, consisting of constant currency growth of about 11% and a negative contribution from foreign currency of approximately $16 million or negative 2%. The fourth quarter and second half have one less billing day than prior year.
The Company’s diluted earnings per share guidance for the full year is being increased by $0.07 to approximately $2.93 reported and $3.07 adjusted*, representing a 27% increase over prior year. Diluted earnings per share guidance for the third quarter is approximately $0.63 reported and $0.66 adjusted*, representing an 18% adjusted* increase over prior year. Diluted earnings per share guidance for the fourth quarter is approximately $0.83 reported and $0.86 adjusted*, representing a 21% adjusted* increase over prior year. Third and fourth quarter earnings per
7
share guidance assumes continued increases in R&D spending primarily related, but not limited, to biologics, as well as increases in direct to consumer advertising spending related toMISprocedures and technologies, and incremental legal and IT costs. As noted in the Company’s June 15, 2005 press release, the Company utilizes forward contracts to hedge the short term effects of foreign currency movement on inter-company sales transactions. As a result, the short term effect of rapid foreign currency exchange rate movements on operating profit dollars is expected to be minimal.
Conference Call
The Company will conduct its second quarter 2005 investor conference call on Thursday, July 28, 2005, at 8:00 a.m. Eastern Time. The live audio webcast can be accessed via Zimmer’s Investor Relations website athttp://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 (800) 406-1106. International callers should dial (706) 634-7075. A digital recording will be available two hours after the completion of the conference call from July 28, 2005 to August 2, 2005. 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, 7234528. 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 athttp://investor.zimmer.com.
About the Company
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer is the worldwide #1 pure-play orthopaedic leader in designing, developing, manufacturing and marketing reconstructive and spinal implants, trauma and related orthopaedic surgical products. Zimmer has operations in more than 24 countries around the world and sells products in more than 100 countries. Zimmer’s 2004 sales were approximately $3 billion. The Company is supported by the efforts of more than 6,500 employees worldwide.
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Visit Zimmer on the worldwide web atwww.zimmer.com
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*Note on Non-GAAP Financial Measures
As used in this press release, the term“adjusted”refers to operating performance measures that exclude acquisition and integration expenses and inventory step-up. The term“net debt”refers to short-term and long-term debt obligations minus the Company’s cash and equivalents and restricted cash. Reconciliations of 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. The forward-looking statements include sales and diluted earnings per share guidance and other statements identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “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 Centerpulse AG and Implex Corp., the outcome of the Department of Justice investigation announced in March 2005 and the pending informal SEC investigation of Centerpulse accounting, 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 the disclosure materials filed by Zimmer with the U.S. Securities and Exchange Commission. Zimmer disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 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.
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ZIMMER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, except per share amounts, unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, except per share amounts, unaudited)
2005 | 2004 | % Inc/(Dec) | ||||||||||
Net Sales | $ | 846.8 | $ | 737.4 | 15 | % | ||||||
Cost of products sold | 188.8 | 201.9 | (7 | ) | ||||||||
Gross Profit | 658.0 | 535.5 | 23 | |||||||||
Research and development | 43.6 | 38.2 | 14 | |||||||||
Selling, general and administrative | 328.5 | 297.3 | 11 | |||||||||
Acquisition and integration | 10.1 | 24.2 | (58 | ) | ||||||||
Operating expenses | 382.2 | 359.7 | 6 | |||||||||
Operating Profit | 275.8 | 175.8 | 57 | |||||||||
Interest expense | 4.2 | 8.3 | (49 | ) | ||||||||
Earnings before income taxes and minority interest | 271.6 | 167.5 | 62 | |||||||||
Provision for income taxes | 80.7 | 51.4 | 57 | |||||||||
Minority interest | (0.2 | ) | 0.2 | N/A | ||||||||
Net Earnings | $ | 190.7 | $ | 116.3 | 64 | |||||||
Earnings Per Common Share | ||||||||||||
Basic | $ | 0.77 | $ | 0.48 | 60 | |||||||
Diluted | $ | 0.76 | $ | 0.47 | 62 | |||||||
Weighted Average Common Shares Outstanding | ||||||||||||
Basic | 247.0 | 244.3 | ||||||||||
Diluted | 249.9 | 247.9 |
10
ZIMMER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, except per share amounts, unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, except per share amounts, unaudited)
2005 | 2004 | % Inc/(Dec) | ||||||||||
Net Sales | $ | 1,675.3 | $ | 1,479.6 | 13 | % | ||||||
Cost of products sold | 379.1 | 421.4 | (10 | ) | ||||||||
Gross Profit | 1,296.2 | 1,058.2 | 22 | |||||||||
Research and development | 85.7 | 78.0 | 10 | |||||||||
Selling, general and administrative | 650.1 | 595.1 | 9 | |||||||||
Acquisition and integration | 27.0 | 55.5 | (51 | ) | ||||||||
Operating expenses | 762.8 | 728.6 | 5 | |||||||||
Operating Profit | 533.4 | 329.6 | 62 | |||||||||
Interest expense | 11.4 | 18.1 | (37 | ) | ||||||||
Earnings before income taxes and minority interest | 522.0 | 311.5 | 68 | |||||||||
Provision for income taxes | 157.3 | 97.8 | 61 | |||||||||
Minority interest | (0.4 | ) | 0.2 | �� | N/A | |||||||
Net Earnings | $ | 364.3 | $ | 213.9 | 70 | |||||||
Earnings Per Common Share | ||||||||||||
Basic | $ | 1.48 | $ | 0.88 | 68 | |||||||
Diluted | $ | 1.46 | $ | 0.87 | 68 | |||||||
Weighted Average Common Shares Outstanding | ||||||||||||
Basic | 246.5 | 243.6 | ||||||||||
Diluted | 249.5 | 247.2 |
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ZIMMER HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2005 AND DECEMBER 31, 2004
(in millions)
AS OF JUNE 30, 2005 AND DECEMBER 31, 2004
(in millions)
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and equivalents | $ | 78.8 | $ | 154.6 | ||||
Restricted cash | 16.6 | 18.9 | ||||||
Receivables, net | 573.4 | 524.8 | ||||||
Inventories, net | 568.0 | 536.0 | ||||||
Other current assets | 255.4 | 326.6 | ||||||
Total current assets | 1,492.2 | 1,560.9 | ||||||
Property, plant and equipment, net | 676.6 | 628.5 | ||||||
Goodwill | 2,434.2 | 2,528.9 | ||||||
Intangible assets, net | 779.1 | 794.8 | ||||||
Other assets | 169.4 | 182.4 | ||||||
Total Assets | $ | 5,551.5 | $ | 5,695.5 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities | $ | 613.9 | $ | 673.5 | ||||
Short-term debt | — | 27.5 | ||||||
Other long-term liabilities | 363.1 | 420.9 | ||||||
Long-term debt | 268.1 | 624.0 | ||||||
Minority interest | 1.8 | 7.1 | ||||||
Shareholders’ equity | 4,304.6 | 3,942.5 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 5,551.5 | $ | 5,695.5 | ||||
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ZIMMER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
2005 | 2004 | |||||||
Cash flows provided by (used in) operating activities | ||||||||
Net earnings | $ | 364.3 | $ | 213.9 | ||||
Depreciation and amortization | 90.4 | 87.3 | ||||||
Inventory step-up | 4.1 | 49.6 | ||||||
Changes in operating assets and liabilities, net of acquired assets and liabilities | ||||||||
Income taxes | 79.9 | 93.6 | ||||||
Receivables | (66.6 | ) | (44.2 | ) | ||||
Inventories | (58.6 | ) | (14.3 | ) | ||||
Accounts payable and accrued expenses | (1.1 | ) | (27.0 | ) | ||||
Other assets and liabilities | (16.3 | ) | 39.4 | |||||
Net cash provided by operating activities | 396.1 | 398.3 | ||||||
Cash flows provided by (used in) investing activities | ||||||||
Additions to instruments | (90.6 | ) | (74.9 | ) | ||||
Additions to other property, plant and equipment | (42.2 | ) | (30.6 | ) | ||||
Centerpulse and InCentive acquisitions, net of acquired cash | — | (18.2 | ) | |||||
Implex acquisition, net of acquired cash | — | (103.7 | ) | |||||
Proceeds from note receivable | — | 25.0 | ||||||
Investments in other assets | (9.7 | ) | (1.1 | ) | ||||
Net cash used in investing activities | (142.5 | ) | (203.5 | ) | ||||
Cash flows provided by (used in) financing activities | ||||||||
Proceeds from exercise of stock options | 52.1 | 49.7 | ||||||
Net proceeds/(payments) on lines of credit | 174.7 | (239.4 | ) | |||||
Payments on term loan | (550.0 | ) | — | |||||
Debt issuance costs | (1.9 | ) | — | |||||
Equity issuance costs | — | (5.0 | ) | |||||
Net cash used in financing activities | (325.1 | ) | (194.7 | ) | ||||
Effect of exchange rates on cash and equivalents | (4.3 | ) | (0.7 | ) | ||||
Increase in cash and equivalents | (75.8 | ) | (0.6 | ) | ||||
Cash and equivalents, beginning of period | 154.6 | 77.5 | ||||||
Cash and equivalents, end of period | $ | 78.8 | $ | 76.9 | ||||
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ZIMMER HOLDINGS, INC.
NET SALES BY GEOGRAPHIC SEGMENT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2005 | 2004 | % Increase | 2005 | 2004 | % Increase | |||||||||||||||||||
Americas | $ | 494.7 | $ | 432.2 | 15 | % | $ | 975.1 | $ | 854.9 | 14 | % | ||||||||||||
Europe | 228.1 | 197.7 | 15 | 462.7 | 412.8 | 12 | ||||||||||||||||||
Asia Pacific | 124.0 | 107.5 | 15 | 237.5 | 211.9 | 12 | ||||||||||||||||||
Total | $ | 846.8 | $ | 737.4 | 15 | $ | 1,675.3 | $ | 1,479.6 | 13 | ||||||||||||||
ZIMMER HOLDINGS, INC.
NET SALES BY PRODUCT CATEGORY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2005 | 2004 | % Increase | 2005 | 2004 | % Increase | ||||||||||||||||||||||
Reconstructive | $ | 704.9 | $ | 607.8 | 16 | % | $ | 1,394.3 | $ | 1,219.1 | 14 | % | |||||||||||||||
Trauma | 44.4 | 43.4 | 2 | 89.8 | 88.4 | 1 | |||||||||||||||||||||
Spine | 41.1 | 33.8 | 22 | 79.4 | 67.3 | 18 | |||||||||||||||||||||
OSP | 56.4 | 52.4 | 8 | 111.8 | 104.8 | 7 | |||||||||||||||||||||
Total | $ | 846.8 | $ | 737.4 | 15 | $ | 1,675.3 | $ | 1,479.6 | 13 | |||||||||||||||||
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ZIMMER HOLDINGS, INC.
RECONCILIATION OF NET EARNINGS
AND ADJUSTED* NET EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
AND ADJUSTED* NET EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
Three Months | ||||||||
Ended June 30, | ||||||||
2005 | 2004 | |||||||
Net Earnings | $ | 190.7 | $ | 116.3 | ||||
Acquisition and integration | 10.1 | 24.2 | ||||||
Inventory step-up | 2.1 | 18.6 | ||||||
Tax benefit of acquisition and integration and inventory step-up | (3.7 | ) | (15.3 | ) | ||||
Adjusted Net Earnings | $ | 199.2 | $ | 143.8 | ||||
ZIMMER HOLDINGS, INC.
RECONCILIATION OF NET EARNINGS
AND ADJUSTED* NET EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
AND ADJUSTED* NET EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 and 2004
(in millions, unaudited)
Six Months | ||||||||
Ended June 30, | ||||||||
2005 | 2004 | |||||||
Net Earnings | $ | 364.3 | $ | 213.9 | ||||
Acquisition and integration | 27.0 | 55.5 | ||||||
Inventory step-up | 4.1 | 49.6 | ||||||
Tax benefit of acquisition and integration and inventory step-up | (9.3 | ) | (37.6 | ) | ||||
Adjusted Net Earnings | $ | 386.1 | $ | 281.4 | ||||
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ZIMMER HOLDINGS, INC.
RECONCILIATION OF DILUTED EPS
AND ADJUSTED* DILUTED EPS
FOR THE THREE MONTHS ENDED JUNE 30, 2005 and 2004
(unaudited)
AND ADJUSTED* DILUTED EPS
FOR THE THREE MONTHS ENDED JUNE 30, 2005 and 2004
(unaudited)
Three Months | ||||||||
Ended June 30, | ||||||||
2005 | 2004 | |||||||
Diluted EPS | $ | 0.76 | $ | 0.47 | ||||
Acquisition and integration | 0.04 | 0.10 | ||||||
Inventory step-up | 0.01 | 0.07 | ||||||
Tax benefit of acquisition and integration and inventory step-up | (0.01 | ) | (0.06 | ) | ||||
Adjusted* Diluted EPS | $ | 0.80 | $ | 0.58 | ||||
ZIMMER HOLDINGS, INC.
RECONCILIATION OF DILUTED EPS
AND ADJUSTED* DILUTED EPS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 and 2004
(unaudited)
AND ADJUSTED* DILUTED EPS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 and 2004
(unaudited)
Six Months | ||||||||
Ended June 30, | ||||||||
2005 | 2004 | |||||||
Diluted EPS | $ | 1.46 | $ | 0.87 | ||||
Acquisition and integration | 0.11 | 0.22 | ||||||
Inventory step-up | 0.02 | 0.20 | ||||||
Tax benefit of acquisition and integration and inventory step-up | (0.04 | ) | (0.15 | ) | ||||
Adjusted* Diluted EPS | $ | 1.55 | $ | 1.14 | ||||
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ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED
AND ADJUSTED* STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 2005
(in millions, except per share amounts, unaudited)
AND ADJUSTED* STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 2005
(in millions, except per share amounts, unaudited)
Reported | Adjusted* | |||||||||||
2005 | Adjustments | 2005 | ||||||||||
Net Sales | $ | 846.8 | $ | — | $ | 846.8 | ||||||
Cost of products sold | 188.8 | (2.1 | ) | 186.7 | ||||||||
Gross Profit | 658.0 | 2.1 | 660.1 | |||||||||
Research and development | 43.6 | — | 43.6 | |||||||||
Selling, general and administrative | 328.5 | — | 328.5 | |||||||||
Acquisition and integration | 10.1 | (10.1 | ) | — | ||||||||
Operating expenses | 382.2 | (10.1 | ) | 372.1 | ||||||||
Operating Profit | 275.8 | 12.2 | 288.0 | |||||||||
Interest expense | 4.2 | — | 4.2 | |||||||||
Earnings before income taxes and minority interest | 271.6 | 12.2 | 283.8 | |||||||||
Provision for income taxes | 80.7 | 3.7 | 84.4 | |||||||||
Minority interest | (0.2 | ) | — | (0.2 | ) | |||||||
Net Earnings | $ | 190.7 | $ | 8.5 | $ | 199.2 | ||||||
Earnings Per Common Share | ||||||||||||
Basic | $ | 0.77 | $ | 0.04 | $ | 0.81 | ||||||
Diluted | $ | 0.76 | $ | 0.04 | $ | 0.80 | ||||||
Weighted Average Common Shares Outstanding | ||||||||||||
Basic | 247.0 | 247.0 | ||||||||||
Diluted | 249.9 | 249.9 |
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ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED
AND ADJUSTED* STATEMENTS OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 2005
(in millions, except per share amounts, unaudited)
AND ADJUSTED* STATEMENTS OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 2005
(in millions, except per share amounts, unaudited)
Reported | Adjusted* | |||||||||||
2005 | Adjustments | 2005 | ||||||||||
Net Sales | $ | 1,675.3 | $ | — | $ | 1,675.3 | ||||||
Cost of products sold | 379.1 | (4.1 | ) | 375.0 | ||||||||
Gross Profit | 1,296.2 | 4.1 | 1,300.3 | |||||||||
Research and development | 85.7 | — | 85.7 | |||||||||
Selling, general and administrative | 650.1 | — | 650.1 | |||||||||
Acquisition and integration | 27.0 | (27.0 | ) | — | ||||||||
Operating expenses | 762.8 | (27.0 | ) | 735.8 | ||||||||
Operating Profit | 533.4 | 31.1 | 564.5 | |||||||||
Interest expense | 11.4 | — | 11.4 | |||||||||
Earnings before income taxes and minority interest | 522.0 | 31.1 | 553.1 | |||||||||
Provision for income taxes | 157.3 | 9.3 | 166.6 | |||||||||
Minority interest | (0.4 | ) | — | (0.4 | ) | |||||||
Net Earnings | $ | 364.3 | $ | 21.8 | $ | 386.1 | ||||||
Earnings Per Common Share | ||||||||||||
Basic | $ | 1.48 | $ | 0.09 | $ | 1.57 | ||||||
Diluted | $ | 1.46 | $ | 0.09 | $ | 1.55 | ||||||
Weighted Average Common Shares Outstanding | ||||||||||||
Basic | 246.5 | 246.5 | ||||||||||
Diluted | 249.5 | 249.5 |
18
ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED
AND ADJUSTED* STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 2004
(in millions, except per share amounts, unaudited)
AND ADJUSTED* STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 2004
(in millions, except per share amounts, unaudited)
Reported, | Adjusted* | |||||||||||
2004 | Adjustments | 2004 | ||||||||||
Net Sales | $ | 737.4 | $ | — | $ | 737.4 | ||||||
Cost of products sold | 201.9 | (18.6 | ) | 183.3 | ||||||||
Gross Profit | 535.5 | 18.6 | 554.1 | |||||||||
Research and development | 38.2 | — | 38.2 | |||||||||
Selling, general and administrative | 297.3 | — | 297.3 | |||||||||
Acquisition and integration | 24.2 | (24.2 | ) | — | ||||||||
Operating expenses | 359.7 | (24.2 | ) | 335.5 | ||||||||
Operating Profit | 175.8 | 42.8 | 218.6 | |||||||||
Interest expense | 8.3 | — | 8.3 | |||||||||
Earnings before income taxes | 167.5 | 42.8 | 210.3 | |||||||||
Provision for income taxes | 51.4 | 15.3 | 66.7 | |||||||||
Minority Interest | 0.2 | — | 0.2 | |||||||||
Net Earnings | $ | 116.3 | $ | 27.5 | $ | 143.8 | ||||||
Earnings Per Common Share | ||||||||||||
Basic | $ | 0.48 | $ | 0.11 | $ | 0.59 | ||||||
Diluted | $ | 0.47 | $ | 0.11 | $ | 0.58 | ||||||
Weighted Average Common Shares Outstanding | ||||||||||||
Basic | 244.3 | 244.3 | ||||||||||
Diluted | 247.9 | 247.9 |
19
ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED
AND ADJUSTED* STATEMENTS OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(in millions, except per share amounts, unaudited)
AND ADJUSTED* STATEMENTS OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(in millions, except per share amounts, unaudited)
Reported | Adjusted* | |||||||||||||||
2004 | Adjustments | 2004 | ||||||||||||||
Net Sales | $ | 1,479.6 | $ | — | $ | 1,479.6 | ||||||||||
Cost of products sold | 421.4 | (49.6 | ) | 371.8 | ||||||||||||
Gross Profit | 1,058.2 | 49.6 | 1,107.8 | |||||||||||||
Research and development | 78.0 | — | 78.0 | |||||||||||||
Selling, general and administrative | 595.1 | — | 595.1 | |||||||||||||
Acquisition and integration | 55.5 | (55.5 | ) | — | ||||||||||||
Operating expenses | 728.6 | (55.5 | ) | 673.1 | ||||||||||||
Operating Profit | 329.6 | 105.1 | 434.7 | |||||||||||||
Interest expense | 18.1 | — | 18.1 | |||||||||||||
Earnings before income taxes | 311.5 | 105.1 | 416.6 | |||||||||||||
Provision for income taxes | 97.8 | 37.6 | 135.4 | |||||||||||||
Minority Interest | 0.2 | — | 0.2 | |||||||||||||
Net Earnings | $ | 213.9 | $ | 67.5 | $ | 281.4 | ||||||||||
Earnings Per Common Share | ||||||||||||||||
Basic | $ | 0.88 | $ | 0.28 | $ | 1.16 | ||||||||||
Diluted | $ | 0.87 | $ | 0.27 | $ | 1.14 | ||||||||||
Weighted Average Common Shares Outstanding | ||||||||||||||||
Basic | 243.6 | 243.6 | ||||||||||||||
Diluted | 247.2 | 247.2 |
20
ZIMMER HOLDINGS, INC.
RECONCILIATION OF NET MARGIN
AND ADJUSTED* NET MARGIN
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005
(unaudited)
AND ADJUSTED* NET MARGIN
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005
(unaudited)
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2005 | 2005 | |||||||
Net Margin | 22.5 | % | 21.7 | % | ||||
Acquisition and integration | 1.1 | 1.7 | ||||||
Inventory step-up | 0.3 | 0.2 | ||||||
Tax benefit of acquisition and integration and inventory step-up | (0.4 | ) | (0.6 | ) | ||||
Adjusted* Net Margin | 23.5 | % | 23.0 | % | ||||
ZIMMER HOLDINGS, INC.
RECONCILIATION OF OPERATING MARGIN
AND ADJUSTED* OPERATING MARGIN
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005
(unaudited)
AND ADJUSTED* OPERATING MARGIN
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005
(unaudited)
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2005 | 2005 | |||||||
Operating Margin | 32.6 | % | 31.8 | % | ||||
Acquisition and integration | 1.1 | 1.7 | ||||||
Inventory step-up | 0.3 | 0.2 | ||||||
Adjusted* Operating Margin | 34.0 | % | 33.7 | % | ||||
21
ZIMMER HOLDINGS, INC.
RECONCILIATION OF GROSS MARGIN
AND ADJUSTED* GROSS MARGIN
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005
(unaudited)
AND ADJUSTED* GROSS MARGIN
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005
(unaudited)
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2005 | 2005 | |||||||
Gross Margin | 77.7 | % | 77.4 | % | ||||
Inventory step-up | 0.3 | 0.2 | ||||||
Adjusted* Gross Margin | 78.0 | % | 77.6 | % | ||||
ZIMMER HOLDINGS, INC.
RECONCILIATION OF DEBT AND NET DEBT*
AS OF JUNE 30, 2005 and DECEMBER 31, 2004
(in millions, unaudited)
AS OF JUNE 30, 2005 and DECEMBER 31, 2004
(in millions, unaudited)
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
Short-term debt | $ | — | $ | 27.5 | ||||
Long-term debt | 268.1 | 624.0 | ||||||
Total debt | 268.1 | 651.5 | ||||||
Cash and equivalents | 78.8 | 154.6 | ||||||
Restricted cash | 16.6 | 18.9 | ||||||
Total cash | 95.4 | 173.5 | ||||||
Net debt* | $ | 172.7 | $ | 478.0 | ||||
22
ZIMMER HOLDINGS, INC.
RECONCILIATION OF PROJECTED DILUTED EPS
AND PROJECTED ADJUSTED* DILUTED EPS
(unaudited)
AND PROJECTED ADJUSTED* DILUTED EPS
(unaudited)
Projected three months ended September 30, 2005: | ||||
Diluted EPS | $ | 0.63 | ||
Acquisition and Integration, net of tax | 0.03 | |||
Adjusted* Diluted EPS | $ | 0.66 | ||
Projected three months ended December 31, 2005: | ||||
Diluted EPS | $ | 0.83 | ||
Acquisition and Integration, net of tax | 0.03 | |||
Adjusted* Diluted EPS | $ | 0.86 | ||
Projected twelve months ended December 31, 2005: | ||||
Diluted EPS | $ | 2.93 | ||
Acquisition and Integration, net of tax | 0.12 | |||
Inventory Step-up, net of tax | 0.02 | |||
Adjusted* Diluted EPS | $ | 3.07 | ||
23