Oct. 22, 2009 (PR Newswire) -- WARSAW, Ind., Oct. 22 /PRNewswire-FirstCall/ --
-- Net Sales of $976 million represents an increase of 2.4% reported (3.6%
constant currency)
-- Diluted EPS for the third quarter were $0.70 reported, a decrease of
26.3% from the prior year period, and $0.88 adjusted, a decrease of 9.3%
from the prior year period
-- Reaffirms full-year sales and adjusted EPS guidance
Zimmer Holdings, Inc. (NYSE: ZMH; SWX: ZMH) today reported financial results for the quarter ended September 30, 2009. The Company reported third quarter net sales of $976 million, an increase of 2.4% reported and 3.6% constant currency over the third quarter of 2008. Diluted earnings per share for the quarter were $0.70 reported and $0.88 adjusted, a decrease of 9.3% adjusted from the prior year period. Third quarter 2008 adjusted earnings per share included a gain of $0.08 on the sale of certain equity holdings.
"We are pleased that our sales momentum continued to build in the third quarter as we achieved year-over-year constant currency growth in revenues in each of our three geographic segments," said David Dvorak, Zimmer President and CEO. "Further, we believe we are stabilizing our core knee and hip franchises and establishing a solid foundation for future growth."
Operating profit on an adjusted basis for the third quarter of $264 million was flat compared to the prior year's third quarter. Net earnings for the third quarter were $149.9 million on a reported basis and $188.3 million on an adjusted basis, a decrease of 13.9% adjusted from the prior year period. Operating cash flow for the third quarter was $352.3 million. Net earnings for the first nine months of 2009 were $562.2 million on a reported basis and $613.8 million on an adjusted basis, a decrease of 12.3% adjusted from the prior year period.
During the quarter, the Company utilized $67 million of cash to acquire 1.5 million shares under its $1.25 billion repurchase program. At the end of the quarter, $730 million of share repurchase authorization remained available. The Board of Directors has recently extended this program until December 31, 2010.
The Company also recorded a provision of $35.0 million in the quarter, or approximately $0.10 per share net of tax, for known and anticipated claims relating to the 2008 temporary suspension of marketing and distribution of the Durom® Acetabular Component in the U.S. Adjusted figures in this release exclude the impact of this provision.
Guidance
The Company reaffirmed its 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 1.6%. 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 third quarter 2009 investor conference call today, October 22, 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 October 22, 2009 to November 5, 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, 31978979. 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 nine 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 SEPTEMBER 30, 2009
(in millions, unaudited)
Constant
Net Reported Currency
Sales % Growth % Growth
----- --------- --------
Geographic Segments
Americas $585 4% 4%
Europe 242 (3) 3
Asia Pacific 149 8 4
---
Total 976 2 4
Product Categories
Reconstructive
Americas 434 3 3
Europe 194 (6) -
Asia Pacific 110 8 4
---
Total 738 1 2
Knees
Americas 270 2 3
Europe 90 (5) 1
Asia Pacific 57 9 7
--
Total 417 2 3
Hips
Americas 138 - 1
Europe 99 (7) (1)
Asia Pacific 51 6 1
--
Total 288 (1) -
Extremities 33 19 20
Dental 48 (8) (6)
Trauma 58 6 6
Spine 62 24 26
OSP and other 70 8 7
NET SALES - NINE MONTHS ENDED SEPTEMBER 30, 2009
(in millions, unaudited)
Constant
Net Reported Currency
Sales % Growth % Growth
----- --------- --------
Geographic Segments
Americas $1,769 -% 1%
Europe 788 (11) 1
Asia Pacific 431 (3) (2)
---
Total 2,988 (3) -
Product Categories
Reconstructive
Americas 1,318 (1) -
Europe 638 (13) (2)
Asia Pacific 324 (2) (1)
---
Total 2,280 (5) (1)
Knees
Americas 818 (1) -
Europe 303 (11) 1
Asia Pacific 164 (3) 1
---
Total 1,285 (4) -
Hips
Americas 423 (3) (2)
Europe 319 (14) (4)
Asia Pacific 154 (2) (3)
---
Total 896 (7) (3)
Extremities 99 10 13
Dental 148 (13) (10)
Trauma 171 4 6
Spine 191 21 24
OSP and other 198 (5) (4)
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, the provision for certain Durom Acetabular Component product claims in the U.S., acquisition, integration, realignment and other expenses, net curtailment and settlement, and the tax benefit related to the 2007 civil settlement. The provision related to the Durom Acetabular Component is classified as a non-recurring item that is different from the Company's routine product liability claims for a number of reasons, including that the provision is limited to revisions associated with surgeries that predate the Company's voluntary suspension and which also occur within two years of the original surgery date. 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 success of our quality initiatives; the outcome of the informal investigation by the U.S.
