- Net Sales of $1.02 billion represents a decrease of 5.5% reported (0.6% constant currency)
- Diluted EPS for the second quarter were $0.98 reported, a decrease of 1.0% from the prior year period, and $1.00 adjusted, a decrease of 2.9% from the prior year period
- Reaffirms full-year sales and adjusted EPS guidance
WARSAW, Ind., July 23 /PRNewswire-FirstCall/ -- Zimmer Holdings, Inc. (NYSE and SWX: ZMH) today reported financial results for the quarter ended June 30, 2009. The Company reported second quarter net sales of $1.02 billion, a decrease of 5.5% reported and 0.6% constant currency from the second quarter of 2008. Diluted earnings per share for the quarter were $0.98 reported and $1.00 adjusted, a decrease of 2.9% adjusted from the prior year period.
"Our second quarter results provide further evidence that we are successfully stabilizing our business and making progress toward restoring positive momentum," said David Dvorak, Zimmer President and CEO. "We achieved sequential improvement in revenue on a day-rate basis for the quarter in six of our seven product categories, including Knees and Hips. We are once again reaffirming our 2009 sales and earnings guidance."
Net earnings for the second quarter were $210.1 million on a reported basis and $215.5 million on an adjusted basis, a decrease of 9.0% adjusted from the prior year period. Operating cash flow for the second quarter was $195.1 million. Net earnings for the first six months of 2009 were $412.3 million on a reported basis and $425.5 million on an adjusted basis, a decrease of 11.6% adjusted from the prior year period.
During the quarter, the Company utilized $36 million of cash to acquire 0.8 million shares under its $1.25 billion repurchase program. At the end of the quarter, $797 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. Full year revenues for 2009 are expected to increase between 1% and 3% on a constant currency basis. Assuming foreign currency exchange rates remain consistent with current levels, the Company estimates that foreign currency translation will reduce revenue for 2009 by approximately 2.5%. 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 second quarter 2009 investor conference call today, July 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 July 23, 2009 to August 6, 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, 16739971. 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 and six months 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 JUNE 30, 2009
(in millions, unaudited)
Constant
Net Reported Currency
Sales % Growth % Growth
----- --------- --------
Geographic Segments
Americas $590 (1)% -%
Europe 280 (14) (1)
Asia Pacific 150 (6) (2)
-----
Total 1,020 (6) (1)
Product Categories
Reconstructive
Americas 441 (2) (2)
Europe 225 (16) (3)
Asia Pacific 114 (5) (1)
-----
Total 780 (7) (2)
Knees
Americas 272 (3) (2)
Europe 108 (14) -
Asia Pacific 58 (6) -
-----
Total 438 (6) (1)
Hips
Americas 143 (4) (3)
Europe 112 (19) (6)
Asia Pacific 53 (4) (2)
-----
Total 308 (10) (4)
Extremities 34 8 13
Dental 53 (17) (12)
Trauma 57 3 7
Spine 64 18 23
OSP and other 66 1 3
NET SALES - SIX MONTHS ENDED JUNE 30, 2009
(in millions, unaudited)
Constant
Net Reported Currency
Sales % Growth % Growth
----- --------- --------
Geographic Segments
Americas $1,184 (1)% (1)%
Europe 546 (14) -
Asia Pacific 283 (8) (4)
-----
Total 2,013 (6) (1)
Product Categories
Reconstructive
Americas 884 (2) (1)
Europe 444 (15) (2)
Asia Pacific 214 (7) (3)
-----
Total 1,542 (7) (2)
Knees
Americas 548 (2) (2)
Europe 213 (13) 1
Asia Pacific 106 (8) (1)
-----
Total 867 (6) (1)
Hips
Americas 285 (4) (3)
Europe 219 (17) (5)
Asia Pacific 104 (5) (5)
-----
Total 608 (10) (4)
Extremities 67 6 10
Dental 100 (16) (11)
Trauma 114 3 6
Spine 129 19 23
OSP and other 128 (11) (9)
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 more than 8,000 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, acquisition, integration, realignment and other expenses and net curtailment and settlement gain. 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 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; changes in customer demand for our products and services caused by demographic changes or other factors; dependence on new product development, technological advances and innovation; shifts in the product category or regional sales mix of our products and services; supply and prices of raw materials and products; 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; challenges relating to changes in and 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 temporarily suspending U.S. distribution of one of our key hip replacement products; product liability and intellectual property litigation losses; reductions in reimbursement levels from third-party payors and cost-containment efforts of healthcare purchasing organizations; our ability to retain the independent agents and distributors who market our products; changes in general industry and market conditions, including domestic and international growth rates and general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the costs of defending or resolving putative class action securities litigation and lawsuits, investigations or other proceedings resulting from our September 2007 settlement with the U.S. government and other matters.
