- Net Sales of $993 million represents a decrease of 6.3% reported (1.5% constant currency)
- Diluted EPS for the first quarter were $0.91 reported, a decrease of 10.8% from the prior year period, and $0.95 adjusted, a decrease of 8.7% from the prior year period
- Reaffirms full-year sales and adjusted EPS guidance
WARSAW, Ind., April 23 /PRNewswire-FirstCall/ -- Zimmer Holdings, Inc. (NYSE: ZMH; SWX: ZMH) today reported financial results for the quarter ended March 31, 2009. The Company reported first quarter net sales of $993 million, a decrease of 6.3% reported and 1.5% constant currency from the first quarter of 2008. Diluted earnings per share for the quarter were $0.91 reported and $0.95 adjusted, a decrease of 8.7% adjusted from the prior year period.
'Our performance for the first quarter was consistent with our expectations and we are reaffirming our 2009 sales and earnings guidance,' said David Dvorak, Zimmer President and CEO. 'We continue to make progress in our efforts to rebuild momentum in our business. Our success at the annual AAOS meeting was highlighted by the large number of surgeons who attended our booth. In addition, we showcased our Trabecular MetalTM Technology and other innovative products, as well as our enhanced medical education program. Moreover, we have now emerged from federal monitoring and the Deferred Prosecution Agreement with global business practices that position us for sustainable, long-term growth.'
Net earnings for the first quarter were $202.2 million on a reported basis and $210.0 million on an adjusted basis, a decrease of 14.0% adjusted from the prior year period. Operating cash flow for the first quarter was $185 million.
During the quarter, the Company utilized $54 million of cash and $247 million in borrowings to acquire 8.6 million shares under its $1.25 billion repurchase program. At the end of the quarter, $833 million of share repurchase authorization remained available under this program, which expires on December 31, 2009.
Guidance
The Company reaffirmed its full year 2009 sales and earnings guidance. It expects full-year revenues for 2009 to increase between 1% and 3% on a constant currency basis, with revenues anticipated to be flat in the second quarter of the year and improving thereafter. Assuming foreign currency exchange rates remain consistent with current levels, the Company estimates that foreign currency translation will reduce revenue by approximately 4% for the full year 2009. Adjusted diluted earnings per share are expected to show negative growth in the second and third quarters with positive growth in the fourth quarter. Full-year 2009 adjusted diluted earnings per share are projected to be in a range of $3.85 to $4.00.
Conference Call
The Company will conduct its first quarter 2009 investor conference call today, April 23, 2009, 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) 881-6248. International callers should dial (706) 634-6422. A digital recording will be available two hours after the completion of the conference call from April 23, 2009 to May 7, 2009. To access the recording, U.S./Canada callers should dial (800) 642-1687, and International callers should dial (706) 645-9291, and enter the Conference ID, 93622112. 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.
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. Beginning in 2009, the Company's Dental product category sales are no longer included within its Reconstructive products category. Prior year amounts related to Dental product category sales have been reclassified to conform to the 2009 presentation.
NET SALES - THREE MONTHS ENDED MARCH 31, 2009
(in millions, unaudited)
Constant
Net Reported Currency
Sales % Growth % Growth
----- --------- --------
Geographic Segments
Americas $595 (2)% (1)%
Europe 265 (13) 1
Asia Pacific 133 (9) (7)
---
Total 993 (6) (1)
Product Categories
Reconstructive
Americas 443 (2) (1)
Europe 219 (14) (1)
Asia Pacific 100 (8) (5)
---
Total 762 (7) (1)
Knees
Americas 276 (1) (1)
Europe 105 (13) 2
Asia Pacific 48 (10) (3)
--
Total 429 (5) -
Hips
Americas 142 (5) (3)
Europe 108 (16) (3)
Asia Pacific 50 (6) (7)
--
Total 300 (9) (4)
Extremities 33 4 8
Dental 47 (15) (11)
Trauma 57 2 5
Spine 65 20 24
OSP and other 62 (21) (19)
About the Company
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer designs, develops, manufactures and markets orthopaedic reconstructive, spinal and trauma devices, dental implants, and related surgical products. Zimmer has operations in more than 25 countries around the world and sells products in more than 100 countries. Zimmer's 2008 sales were approximately $4.1 billion. The Company is supported by the efforts of approximately 8,500 employees worldwide.
For more information about Zimmer, visit 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 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.
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.
