SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of
Date of Report (Date of earliest event reported): April 12, 2011
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Warsaw, Indiana 46582
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Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
||Results of Operations and Financial Condition. |
On April 12, 2011, the Company issued a press release with respect to results for the third fiscal quarter of fiscal 2011. The press release attached hereto as Exhibit 99.1 is incorporated by
The earnings release attached as Exhibit 99.1 includes non-GAAP financial measures that differ from financial measures
calculated in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not
as a substitute for, or superior to, other measures prepared in accordance with GAAP. Management exercises judgment in determining which types of charges or other items should be excluded from non-GAAP measures. Management uses this non-GAAP
information internally to evaluate the performance of the core operations, establish operational goals and forecasts that are used in allocating resources and to evaluate the Companys performance period over period. Additionally, Biomets
management is evaluated on the basis of some of these non-GAAP financial measures when determining achievement of their incentive compensation performance targets. The Company believes that its disclosure of these non-GAAP financial measures
provides investors greater transparency to the information used by Biomet management for its financial and operational decision-making and enables investors to better understand the Companys period-to-period operating performance.
The non-GAAP financial measures included in the press release consist of net sales excluding the impact of foreign currency (constant currency),
operating income as adjusted, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), EBITDA as adjusted (as defined by our credit agreement, the method to calculate this is likely to be different from methods used by other
companies), net loss as adjusted, gross profit as adjusted, selling, general and administrative expense as adjusted, research and development expense as adjusted, cash and cash equivalents (as defined by our credit agreement), net debt, senior
secured leverage ratio, total leverage ratio (net debt), free cash flow, and unlevered cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included elsewhere in the press release.
The term as adjusted, a non-GAAP financial measure, refers to financial performance measures that exclude certain income
statement line items, such as interest, taxes, depreciation or amortization and/or exclude certain expenses as defined by our credit agreement, such as restructuring charges, non-cash impairment charges, integration and facilities opening costs or
other business optimization expenses, new systems design and implementation costs, certain start-up costs and costs related to consolidation of facilities, certain non-cash charges, advisory fees paid to the private equity owners, certain severance
charges, purchase accounting costs, stock-based compensation and payments, litigation costs, and other related charges.
The leverage ratios
provide a measure of the Companys financial ability to meet its debt service obligations. The Company believes these ratios provide valuable insight to understanding how Biomet management manages its operations and financial position with
respect to its debt obligations.
The following is an explanation of each of the items, as permitted by our credit agreement that management
excluded from one or more of the non-GAAP financial measures used in this press release and the reasons for excluding each of these items:
Impact of Foreign Currency. The Company excludes the foreign currency impact on net sales information compared to prior year results primarily because it is not reflective of the ongoing operating
results and is not used by management in evaluation of net sales performance. The Company further believes this information is useful to investors in that it provides period over period comparability. The impact of foreign currency exchange rates is
calculated by translating actual current period net sales at the prior year exchange rate. These results are used to determine year-over-year percentage increase or decrease that excludes the impact of changes in foreign currency exchange rates.
Purchase Accounting Depreciation and Amortization. Depreciation and amortization related to the Merger are excluded in
non-GAAP measures as they are not reflective of the Companys ongoing operational performance or liquidity. The Company further believes the exclusion of this information in the applicable non-GAAP financial measure is useful to investors in
that it provides period over period comparability.
Stock-Based Compensation Expense. Stock-based compensation expense
is excluded from non-GAAP measures primarily because it is a non-cash expense. The Company further believes that excluding this item is useful to investors in that it facilitates comparisons to competitors operating results.
Litigation Settlements and Reserves and Other Legal Fees. The Company excludes litigation related expenses from non-GAAP measures
that are not reflective of the Companys ongoing operational performance. The Company further believes this information is useful to investors in that it provides period over period comparability.
Operational Restructuring and Consulting Expenses Related to Operational Improvement Initiatives. Restructuring charges relate
principally to employee severance and facility consolidation costs resulting from the closure of facilities and other workforce reductions attributable to our efforts to reduce costs. Operational restructuring charges also include abnormal
manufacturing variances related to temporary redundant overhead costs within the Companys plant network as the Company
continues to rationalize and move production to its larger operating locations in order to increase manufacturing efficiency. The Company excludes these costs from non-GAAP measures primarily
because they are not reflective of the ongoing operating results and they are not used by management to assess ongoing operational performance. The Company further believes the exclusion of this information in the applicable non-GAAP financial
measure is useful to investors in that it provides period over period comparability.
Sponsor Fee. Upon completion of
the Merger, the Company entered into a management services agreement with certain affiliates of the Sponsors, pursuant to which such affiliates of the Sponsors or their successors assigns, affiliates, officers, employees, and/or representatives and
third parties (collectively, the Managers) provide management, advisory, and consulting services to the Company. Pursuant to such agreement, the Managers received a transaction fee equal to 1% of total enterprise value of the
Transactions for the services rendered by such entities related to the Transactions upon entering into the agreement, and the Sponsors receive an annual monitoring fee equal to 1% of the Companys annual Adjusted EBITDA (as defined in our
credit agreement) as compensation for the services rendered and reimbursement for out-of-pocket expenses incurred by the Managers in connection with the agreement and the Transactions. The Company excludes these costs from non-GAAP measures
primarily because they are not reflective of the ongoing operating results and they are not used by management to assess ongoing operational performance. The Company further believes the exclusion of this information in the applicable non-GAAP
financial measure is useful to investors in that it provides period over period comparability.
The following is an explanation of each of the
other items that management excluded from one or more of the non-GAAP financial measures used in this press release and the reasons for excluding each of these items:
Tax Effect on Special and Purchase Accounting Items. This amount is used to present the impact of the above non-GAAP adjustments on net income, as adjusted.
Net Debt. Net debt is the sum of the Companys total debt less cash and cash equivalents and time deposits with maturities of
less than two years. Net Debt is a measure defined in the credit agreement that is used to calculate the total leverage ratio.
The Company is
furnishing the information contained in this report, including the Exhibit, pursuant to Item 2.02 of Form 8-K promulgated by the Securities and Exchange Commission (the SEC). This information shall not be deemed to be
filed with the SEC or incorporated by reference into any other filing with the SEC.
||Financial Statements and Exhibits. |
||Press Release issued April 12, 2011.|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 12, 2011
/s/ Daniel P. Florin
||Daniel P. Florin|
Senior Vice President and
Chief Financial Officer