Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ZIMMER BIOMET HOLDINGS, INC. | d572501d8k.htm |
Exhibit 99.1
Contacts:
| Media | Investors | |
| Monica Kendrick | Robert J. Marshall Jr. | |
| 574-372-4989 | 574-371-8042 | |
| monica.kendrick@zimmer.com | robert.marshall@zimmer.com | |
Zimmer Holdings, Inc. Reports Second Quarter 2013 Financial Results
| • | Net Sales of $1.17 billion represent an increase of 4.0% reported over the prior year period (an increase of 5.5% constant currency) |
| • | Diluted EPS for the second quarter were $0.89 reported, a decrease of 27.0% from the prior year period, and $1.43 adjusted, an increase of 6.7% over the prior year period |
| • | Company updates full year sales and earnings guidance |
(WARSAW, IN) July 25, 2013—Zimmer Holdings, Inc. (NYSE and SIX: ZMH) today reported financial results for the quarter ended June 30, 2013. The Company reported second quarter net sales of $1.17 billion, an increase of 4.0% reported and an increase of 5.5% constant currency over the second quarter of 2012. Diluted earnings per share for the quarter were $0.89 reported and $1.43 adjusted, an increase of 6.7% adjusted over the prior year period.
“In the second quarter, Zimmer delivered strong sales results, driven by our innovative new product offerings and growth in key geographies,” said David Dvorak, Zimmer President and CEO. “We are confident that the Company will sustain this accelerated top line performance in the second half of the year. Through disciplined capital deployment and our commitment to operational excellence, we will remain focused on creating value for our stockholders.”
1
Net earnings for the second quarter were $152.1 million on a reported basis and $243.4 million on an adjusted basis, an increase of 3.3% adjusted over the prior year period. Operating cash flow for the second quarter was $189.7 million.
In the second quarter, the Company recorded an additional $47.0 million provision before taxes for known and anticipated worldwide claims related to the Durom® Acetabular Component. Adjusted second quarter 2013 figures in this release exclude the impact of this provision.
On May 2, 2013, Zimmer announced the acquisition of U.S.-based Knee Creations, LLC, which has expanded the Company’s knee treatment offerings with the addition of a proprietary new joint preservation procedure, Subchondroplasty®. Additionally, on June 4, 2013, the Company announced the acquisition of Germany-based NORMED Medizin-Technik GmbH. The acquisition of NORMED’s portfolio has expanded Zimmer’s Extremities and Trauma offerings, while strengthening the Company’s product development capabilities in the rapidly growing foot and ankle and hand and wrist segments.
During the quarter, the Company utilized $68.8 million of cash to acquire 0.88 million shares. At the end of the second quarter, $553.9 million of share repurchase authorization remained available under the current program, which expires on December 31, 2014. The Company also declared cash dividends of $33.6 million on its outstanding shares in the second quarter.
Guidance
The Company updated its full-year revenue and EPS guidance for 2013. Full-year revenues for 2013 are now expected to increase between 4.0% and 5.0% on a constant currency basis from 2012. Previously, the Company had estimated full-year revenues would increase between 2.5% and 4.5% constant currency. The Company now estimates that foreign currency translation will decrease revenues by approximately 2.0% for the full year 2013, resulting in reported revenue growth between 2.0% and 3.0%. Previously, the Company had estimated foreign currency translation would decrease revenues by approximately 1.5%.
2
The Company now projects full-year 2013 diluted earnings per share to be in a range of $4.70 to $4.80 on a reported basis and $5.70 to $5.80 on an adjusted basis. Prior guidance for full-year 2013 reported and adjusted diluted earnings per share was $5.05 to $5.25 and $5.65 to $5.85, respectively. This updated guidance reflects estimated charges for inventory step-up and other inventory and manufacturing related charges, certain claims and special items of $250 million on a pre-tax basis, or approximately $1.00 per diluted share, on an after-tax basis. Prior guidance reflected an estimate of $135 million, on a pre-tax basis, for these items.
Conference Call
The Company will conduct its second quarter 2013 investor conference call today, July 25, 2013, 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) 878-3901. International callers should dial (706) 634-9520. Either Conference ID 10637997 or 10641438 may be used to access the call. A digital recording will be available two hours after the completion of the conference call from July 25, 2013, to August 25, 2013. To access the recording, US/Canada callers should dial (855) 859-2056 or (800) 585-8367, or for International callers, dial (404) 537-3406, and enter the conference ID 10637997.
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.
3
NET SALES - THREE MONTHS ENDED JUNE 30, 2013
(in millions, unaudited)
| Constant | ||||||||||||
| Net | Reported | Currency | ||||||||||
| Sales | % Change | % Change | ||||||||||
| Geographic Segments |
||||||||||||
| Americas |
$ | 660 | 7 | % | 8 | % | ||||||
| Europe |
307 | 1 | — | |||||||||
| Asia Pacific |
202 | (2 | ) | 7 | ||||||||
|
|
|
|||||||||||
| Total |
1,169 | 4 | 6 | |||||||||
| Product Categories |
||||||||||||
| Reconstructive |
||||||||||||
| Americas |
476 | 5 | 5 | |||||||||
| Europe |
240 | — | — | |||||||||
| Asia Pacific |
152 | (1 | ) | 7 | ||||||||
|
|
|
|||||||||||
| Total |
868 | 2 | 4 | |||||||||
| Knees |
||||||||||||
| Americas |
282 | 5 | 5 | |||||||||
| Europe |
118 | 1 | — | |||||||||
| Asia Pacific |
81 | 3 | 10 | |||||||||
|
|
|
|||||||||||
| Total |
481 | 4 | 5 | |||||||||
| Hips |
||||||||||||
| Americas |
157 | 3 | 3 | |||||||||
| Europe |
113 | (2 | ) | (2 | ) | |||||||
| Asia Pacific |
68 | (6 | ) | 4 | ||||||||
|
|
|
|||||||||||
| Total |
338 | — | 2 | |||||||||
| Extremities |
49 | 14 | 15 | |||||||||
| Dental |
61 | — | (1 | ) | ||||||||
| Trauma |
74 | — | 3 | |||||||||
| Spine |
54 | 3 | 4 | |||||||||
| Surgical and other |
112 | 24 | 28 | |||||||||
Certain product sales have been reclassified from the Surgical and other category to Knees. Prior year amounts have been reclassified to conform to the 2013 presentation. Further information is available at www.investor.zimmer.com.
4
NET SALES - SIX MONTHS ENDED JUNE 30, 2013
(in millions, unaudited)
| Constant | ||||||||||||
| Net | Reported | Currency | ||||||||||
| Sales | % Change | % Change | ||||||||||
| Geographic Segments |
||||||||||||
| Americas |
$ | 1,295 | 4 | % | 4 | % | ||||||
| Europe |
615 | 1 | 1 | |||||||||
| Asia Pacific |
398 | (3 | ) | 5 | ||||||||
|
|
|
|||||||||||
| Total |
2,308 | 2 | 3 | |||||||||
| Product Categories |
||||||||||||
| Reconstructive |
||||||||||||
| Americas |
941 | 2 | 2 | |||||||||
| Europe |
482 | — | — | |||||||||
| Asia Pacific |
295 | (4 | ) | 3 | ||||||||
|
|
|
|||||||||||
| Total |
1,718 | — | 2 | |||||||||
| Knees |
||||||||||||
| Americas |
557 | 1 | 1 | |||||||||
| Europe |
240 | 2 | 2 | |||||||||
| Asia Pacific |
155 | 1 | 7 | |||||||||
|
|
|
|||||||||||
| Total |
952 | 1 | 2 | |||||||||
| Hips |
||||||||||||
| Americas |
309 | 1 | 1 | |||||||||
| Europe |
225 | (2 | ) | (2 | ) | |||||||
| Asia Pacific |
135 | (9 | ) | (1 | ) | |||||||
|
|
|
|||||||||||
| Total |
669 | (2 | ) | — | ||||||||
| Extremities |
97 | 10 | 11 | |||||||||
| Dental |
121 | — | (1 | ) | ||||||||
| Trauma |
156 | 4 | 7 | |||||||||
| Spine |
102 | (3 | ) | (3 | ) | |||||||
| Surgical and other |
211 | 19 | 22 | |||||||||
Certain product sales have been reclassified from the Surgical and other category to Knees. Prior year amounts have been reclassified to conform to the 2013 presentation. Further information is available at www.investor.zimmer.com.
5
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 2012 sales were approximately $4.5 billion. The Company is supported by the efforts of more than 9,000 employees worldwide.
###
Website Information
We routinely post important information for investors on our website, www.zimmer.com, in the “Investor Relations” section. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.
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 other inventory and manufacturing related charges, certain claims and special items. Included in special items are acquisition and integration costs and asset impairment charges related to prior acquisitions as well as employee termination benefits, consulting and professional fees, certain litigation matters, dedicated personnel expenses, certain contract terminations and asset impairment charges connected with global restructuring and operational excellence initiatives. 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.
6
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, the success of our quality and operational improvement initiatives; price and product competition; changes in customer demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform measures, including the impact of the new U.S. excise tax on medical devices, reductions in reimbursement levels by third-party payors and cost containment efforts of healthcare purchasing organizations; 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 (FDA) and foreign government regulators, such as more stringent requirements for regulatory clearance of our products; our ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA; changes in tax obligations arising from tax reform measures or examinations by tax authorities; product liability and intellectual property litigation losses; our ability to retain the independent agents and distributors who market our products; our dependence on a limited number of suppliers for key raw materials and outsourced activities; 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 impact of the ongoing financial crisis on countries in the Euro zone on our ability to collect accounts receivable in affected countries. For a further list and description of such risks and uncertainties, see our periodic reports filed with the U.S. Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be set forth in our periodic reports. 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.
###
7
ZIMMER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 2013 and 2012
(in millions, except per share amounts, unaudited)
| 2013 | 2012 | |||||||
| Net Sales |
$ | 1,169.5 | $ | 1,125.0 | ||||
| Cost of products sold |
323.6 | 281.9 | ||||||
|
|
|
|
|
|||||
| Gross Profit |
845.9 | 843.1 | ||||||
|
|
|
|
|
|||||
| Research and development |
54.9 | 57.2 | ||||||
| Selling, general and administrative |
458.0 | 453.3 | ||||||
| Certain claims |
47.0 | — | ||||||
| Special items |
75.6 | 30.7 | ||||||
|
|
|
|
|
|||||
| Operating expenses |
635.5 | 541.2 | ||||||
|
|
|
|
|
|||||
| Operating Profit |
210.4 | 301.9 | ||||||
| Interest income |
3.9 | 3.8 | ||||||
| Interest expense |
(18.3 | ) | (18.1 | ) | ||||
|
|
|
|
|
|||||
| Earnings before income taxes |
196.0 | 287.6 | ||||||
| Provision for income taxes |
44.3 | 73.6 | ||||||
|
|
|
|
|
|||||
| Net earnings |
151.7 | 214.0 | ||||||
| Less: Net loss attributable to noncontrolling interest |
(0.4 | ) | (0.5 | ) | ||||
|
|
|
|
|
|||||
| Net Earnings of Zimmer Holdings, Inc. |
$ | 152.1 | $ | 214.5 | ||||
|
|
|
|
|
|||||
| Earnings Per Common Share |
||||||||
| Basic |
$ | 0.90 | $ | 1.22 | ||||
| Diluted |
$ | 0.89 | $ | 1.22 | ||||
| Weighted Average Common Shares Outstanding |
||||||||
| Basic |
168.8 | 175.2 | ||||||
| Diluted |
170.7 | 176.2 | ||||||
| Cash dividends declared per common share |
$ | 0.20 | $ | 0.18 | ||||
8
ZIMMER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 2013 and 2012
(in millions, except per share amounts, unaudited)
| 2013 | 2012 | |||||||
| Net Sales |
$ | 2,308.4 | $ | 2,265.7 | ||||
| Cost of products sold |
616.5 | 570.6 | ||||||
|
|
|
|
|
|||||
| Gross Profit |
1,691.9 | 1,695.1 | ||||||
|
|
|
|
|
|||||
| Research and development |
108.4 | 116.8 | ||||||
| Selling, general and administrative |
918.8 | 916.6 | ||||||
| Certain claims |
47.0 | — | ||||||
| Special items |
109.1 | 64.2 | ||||||
|
|
|
|
|
|||||
| Operating expenses |
1,183.3 | 1,097.6 | ||||||
|
|
|
|
|
|||||
| Operating Profit |
508.6 | 597.5 | ||||||
| Interest income |
7.6 | 6.9 | ||||||
| Interest expense |
(36.5 | ) | (35.7 | ) | ||||
|
|
|
|
|
|||||
| Earnings before income taxes |
479.7 | 568.7 | ||||||
| Provision for income taxes |
110.0 | 145.8 | ||||||
|
|
|
|
|
|||||
| Net earnings |
369.7 | 422.9 | ||||||
| Less: Net loss attributable to noncontrolling interest |
(1.0 | ) | (1.2 | ) | ||||
|
|
|
|
|
|||||
| Net Earnings of Zimmer Holdings, Inc. |
$ | 370.7 | $ | 424.1 | ||||
|
|
|
|
|
|||||
| Earnings Per Common Share |
||||||||
| Basic |
$ | 2.20 | $ | 2.41 | ||||
| Diluted |
$ | 2.17 | $ | 2.39 | ||||
| Weighted Average Common Shares Outstanding |
||||||||
| Basic |
168.8 | 176.3 | ||||||
| Diluted |
170.7 | 177.3 | ||||||
| Cash dividends declared per common share |
$ | 0.40 | $ | 0.18 | ||||
9
ZIMMER HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, unaudited)
| June 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| Assets |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 709.9 | $ | 884.3 | ||||
| Short-term investments |
525.9 | 671.6 | ||||||
| Receivables, net |
942.5 | 884.6 | ||||||
| Inventories |
1,052.9 | 995.3 | ||||||
| Other current assets |
360.5 | 272.9 | ||||||
|
|
|
|
|
|||||
| Total current assets |
3,591.7 | 3,708.7 | ||||||
| Property, plant and equipment, net |
1,225.2 | 1,210.7 | ||||||
| Goodwill |
2,577.4 | 2,571.8 | ||||||
| Intangible assets, net |
719.0 | 740.7 | ||||||
| Other assets |
984.1 | 780.5 | ||||||
|
|
|
|
|
|||||
| Total Assets |
$ | 9,097.4 | $ | 9,012.4 | ||||
|
|
|
|
|
|||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities |
$ | 804.3 | $ | 765.9 | ||||
| Short-term debt |
— | 100.1 | ||||||
| Other long-term liabilities |
715.4 | 559.3 | ||||||
| Long-term debt |
1,688.1 | 1,720.8 | ||||||
| Stockholders’ equity |
5,889.6 | 5,866.3 | ||||||
|
|
|
|
|
|||||
| Total Liabilities and Stockholders’ Equity |
$ | 9,097.4 | $ | 9,012.4 | ||||
|
|
|
|
|
|||||
10
ZIMMER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2013 and 2012
(in millions, unaudited)
| 2013 | 2012 | |||||||
| Cash flows provided by (used in) operating activities |
||||||||
| Net earnings |
$ | 369.7 | $ | 422.9 | ||||
| Depreciation and amortization |
176.5 | 190.2 | ||||||
| Share-based compensation |
26.2 | 27.8 | ||||||
| Income tax benefits from employee stock compensation plans |
21.8 | 7.3 | ||||||
| Excess income tax benefits from employee stock compensation plans |
(5.1 | ) | (1.4 | ) | ||||
| Inventory step-up |
2.4 | 2.0 | ||||||
| Changes in operating assets and liabilities, net of acquired assets and liabilities |
||||||||
| Income taxes |
(47.8 | ) | 10.6 | |||||
| Receivables |
(90.0 | ) | (86.9 | ) | ||||
| Inventories |
(86.2 | ) | (29.7 | ) | ||||
| Accounts payable and accrued expenses |
8.8 | (15.7 | ) | |||||
| Other assets and liabilities |
(6.1 | ) | (88.2 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
370.2 | 438.9 | ||||||
|
|
|
|
|
|||||
| Cash flows provided by (used in) investing activities |
||||||||
| Additions to instruments |
(116.3 | ) | (68.3 | ) | ||||
| Additions to other property, plant and equipment |
(40.3 | ) | (44.3 | ) | ||||
| Purchases of investments |
(366.0 | ) | (537.5 | ) | ||||
| Sales of investments |
475.4 | 422.7 | ||||||
| Investments in other assets |
(74.4 | ) | (54.7 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by (used in) investing activities |
(121.6 | ) | (282.1 | ) | ||||
|
|
|
|
|
|||||
| Cash flows provided by (used in) financing activities |
||||||||
| Net payments under revolving credit facilities |
(100.1 | ) | (145.7 | ) | ||||
| Proceeds from term loans |
— | 147.3 | ||||||
| Dividends paid to stockholders |
(64.5 | ) | (31.7 | ) | ||||
| Proceeds from employee stock compensation plans |
216.7 | 18.0 | ||||||
| Excess income tax benefits from employee stock compensation plans |
5.1 | 1.4 | ||||||
| Debt issuance costs |
— | (3.3 | ) | |||||
| Purchase of additional shares from noncontrolling interest |
(1.8 | ) | — | |||||
| Repurchase of common stock |
(460.8 | ) | (248.1 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in financing activities |
(405.4 | ) | (262.1 | ) | ||||
|
|
|
|
|
|||||
| Effect of exchange rates on cash and cash equivalents |
(17.6 | ) | (12.0 | ) | ||||
|
|
|
|
|
|||||
| Decrease in cash and cash equivalents |
(174.4 | ) | (117.3 | ) | ||||
| Cash and cash equivalents, beginning of period |
884.3 | 768.3 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of period |
$ | 709.9 | $ | 651.0 | ||||
|
|
|
|
|
|||||
11
ZIMMER HOLDINGS, INC.
NET SALES BY GEOGRAPHIC SEGMENT
FOR THE THREE and SIX MONTHS ENDED JUNE 30, 2013 and 2012
(in millions, unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| 2013 | 2012 | % Inc/(Dec) | 2013 | 2012 | % Inc/(Dec) | |||||||||||||||||||
| Americas |
$ | 660.1 | $ | 614.3 | 7 | % | $ | 1,294.8 | $ | 1,248.7 | 4 | % | ||||||||||||
| Europe |
307.5 | 305.2 | 1 | 615.0 | 606.0 | 1 | ||||||||||||||||||
| Asia Pacific |
201.9 | 205.5 | (2 | ) | 398.6 | 411.0 | (3 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
$ | 1,169.5 | $ | 1,125.0 | 4 | $ | 2,308.4 | $ | 2,265.7 | 2 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
12
ZIMMER HOLDINGS, INC.
NET SALES BY PRODUCT CATEGORY
FOR THE THREE and SIX MONTHS ENDED JUNE 30, 2013 and 2012
(in millions, unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| 2013 | 2012 | % Inc/(Dec) | 2013 | 2012 | % Inc/(Dec) | |||||||||||||||||||
| Reconstructive |
||||||||||||||||||||||||
| Knees |
$ | 481.0 | $ | 464.6 | 4 | % | $ | 952.0 | $ | 939.2 | 1 | % | ||||||||||||
| Hips |
338.4 | 340.0 | — | 669.2 | 684.5 | (2 | ) | |||||||||||||||||
| Extremities |
48.6 | 42.5 | 14 | 96.4 | 87.3 | 10 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| 868.0 | 847.1 | 2 | 1,717.6 | 1,711.0 | — | |||||||||||||||||||
| Dental |
61.4 | 61.5 | — | 121.1 | 121.7 | — | ||||||||||||||||||
| Trauma |
74.1 | 73.9 | — | 156.1 | 149.4 | 4 | ||||||||||||||||||
| Spine |
54.2 | 52.4 | 3 | 101.9 | 105.6 | (3 | ) | |||||||||||||||||
| Surgical and other |
111.8 | 90.1 | 24 | 211.7 | 178.0 | 19 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
$ | 1,169.5 | $ | 1,125.0 | 4 | $ | 2,308.4 | $ | 2,265.7 | 2 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
13
ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED % GROWTH TO
CONSTANT CURRENCY % GROWTH
(unaudited)
| For the Three Months Ended | ||||||||||||
| June 30, 2013 | ||||||||||||
| Foreign | Constant | |||||||||||
| Reported | Exchange | Currency | ||||||||||
| % Change | Impact | % Change | ||||||||||
| Geographic Segments |
||||||||||||
| Americas |
7 | % | (1 | )% | 8 | % | ||||||
| Europe |
1 | 1 | — | |||||||||
| Asia Pacific |
(2 | ) | (9 | ) | 7 | |||||||
| Total |
4 | (2 | ) | 6 | ||||||||
| Product Categories |
||||||||||||
| Reconstructive |
||||||||||||
| Americas |
5 | — | 5 | |||||||||
| Europe |
— | — | — | |||||||||
| Asia Pacific |
(1 | ) | (8 | ) | 7 | |||||||
| Total |
2 | (2 | ) | 4 | ||||||||
| Knees |
||||||||||||
| Americas |
5 | — | 5 | |||||||||
| Europe |
1 | 1 | — | |||||||||
| Asia Pacific |
3 | (7 | ) | 10 | ||||||||
| Total |
4 | (1 | ) | 5 | ||||||||
| Hips |
||||||||||||
| Americas |
3 | — | 3 | |||||||||
| Europe |
(2 | ) | — | (2 | ) | |||||||
| Asia Pacific |
(6 | ) | (10 | ) | 4 | |||||||
| Total |
— | (2 | ) | 2 | ||||||||
| Extremities |
14 | (1 | ) | 15 | ||||||||
| Dental |
— | 1 | (1 | ) | ||||||||
| Trauma |
— | (3 | ) | 3 | ||||||||
| Spine |
3 | (1 | ) | 4 | ||||||||
| Surgical and other |
24 | (4 | ) | 28 | ||||||||
14
ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED % GROWTH TO
CONSTANT CURRENCY % GROWTH
(unaudited)
| For the Six Months Ended | ||||||||||||
| June 30, 2013 | ||||||||||||
| Foreign | Constant | |||||||||||
| Reported | Exchange | Currency | ||||||||||
| % Change | Impact | % Change | ||||||||||
| Geographic Segments |
||||||||||||
| Americas |
4 | % | — | % | 4 | % | ||||||
| Europe |
1 | — | 1 | |||||||||
| Asia Pacific |
(3 | ) | (8 | ) | 5 | |||||||
| Total |
2 | (1 | ) | 3 | ||||||||
| Product Categories |
||||||||||||
| Reconstructive |
||||||||||||
| Americas |
2 | — | 2 | |||||||||
| Europe |
— | — | — | |||||||||
| Asia Pacific |
(4 | ) | (7 | ) | 3 | |||||||
| Total |
— | (2 | ) | 2 | ||||||||
| Knees |
||||||||||||
| Americas |
1 | — | 1 | |||||||||
| Europe |
2 | — | 2 | |||||||||
| Asia Pacific |
1 | (6 | ) | 7 | ||||||||
| Total |
1 | (1 | ) | 2 | ||||||||
| Hips |
||||||||||||
| Americas |
1 | — | 1 | |||||||||
| Europe |
(2 | ) | — | (2 | ) | |||||||
| Asia Pacific |
(9 | ) | (8 | ) | (1 | ) | ||||||
| Total |
(2 | ) | (2 | ) | — | |||||||
| Extremities |
10 | (1 | ) | 11 | ||||||||
| Dental |
— | 1 | (1 | ) | ||||||||
| Trauma |
4 | (3 | ) | 7 | ||||||||
| Spine |
(3 | ) | — | (3 | ) | |||||||
| Surgical and other |
19 | (3 | ) | 22 | ||||||||
15
ZIMMER HOLDINGS, INC.
Reconciliation of Net Earnings and Adjusted Net Earnings
For the Three Months Ended June 30, 2013 and 2012
(in millions, unaudited)
| Three Months | ||||||||
| Ended June 30, | ||||||||
| 2013 | 2012 | |||||||
| Net Earnings of Zimmer Holdings, Inc. |
$ | 152.1 | $ | 214.5 | ||||
| Inventory step-up and other inventory and manufacturing related charges |
11.7 | 1.0 | ||||||
| Certain claims |
47.0 | — | ||||||
| Special items |
75.6 | 30.7 | ||||||
| Taxes on above items* |
(43.0 | ) | (10.6 | ) | ||||
|
|
|
|
|
|||||
| Adjusted Net Earnings |
$ | 243.4 | $ | 235.6 | ||||
|
|
|
|
|
|||||
| * | The tax effect is calculated based upon the statutory rates for the jurisdictions where the items were incurred. |
16
ZIMMER HOLDINGS, INC.
Reconciliation of Net Earnings and Adjusted Net Earnings
For the Six Months Ended June 30, 2013 and 2012
(in millions, unaudited)
| Six Months | ||||||||
| Ended June 30, | ||||||||
| 2013 | 2012 | |||||||
| Net Earnings of Zimmer Holdings, Inc. |
$ | 370.7 | $ | 424.1 | ||||
| Inventory step-up and other inventory and manufacturing related charges |
13.9 | 2.0 | ||||||
| Certain claims |
47.0 | — | ||||||
| Special items |
109.1 | 64.2 | ||||||
| Taxes on above items* |
(56.5 | ) | (23.4 | ) | ||||
|
|
|
|
|
|||||
| Adjusted Net Earnings |
$ | 484.2 | $ | 466.9 | ||||
|
|
|
|
|
|||||
| * | The tax effect is calculated based upon the statutory rates for the jurisdictions where the items were incurred. |
17
ZIMMER HOLDINGS, INC.
Reconciliation of Diluted EPS and Adjusted Diluted EPS
For the Three Months Ended June 30, 2013 and 2012
(unaudited)
| Three Months | ||||||||
| Ended June 30, | ||||||||
| 2013 | 2012 | |||||||
| Diluted EPS |
$ | 0.89 | $ | 1.22 | ||||
| Inventory step-up and other inventory and manufacturing related charges |
0.07 | 0.01 | ||||||
| Certain claims |
0.28 | — | ||||||
| Special items |
0.44 | 0.17 | ||||||
| Taxes on above items* |
(0.25 | ) | (0.06 | ) | ||||
|
|
|
|
|
|||||
| Adjusted Diluted EPS |
$ | 1.43 | $ | 1.34 | ||||
|
|
|
|
|
|||||
| * | The tax effect is calculated based upon the statutory rates for the jurisdictions where the items were incurred. |
18
ZIMMER HOLDINGS, INC.
Reconciliation of Diluted EPS and Adjusted Diluted EPS
For the Six Months Ended June 30, 2013 and 2012
(unaudited)
| Six Months | ||||||||
| Ended June 30, | ||||||||
| 2013 | 2012 | |||||||
| Diluted EPS |
$ | 2.17 | $ | 2.39 | ||||
| Inventory step-up and other inventory and manufacturing related charges |
0.08 | 0.01 | ||||||
| Certain claims |
0.28 | — | ||||||
| Special items |
0.64 | 0.36 | ||||||
| Taxes on above items* |
(0.33 | ) | (0.13 | ) | ||||
|
|
|
|
|
|||||
| Adjusted Diluted EPS |
$ | 2.84 | $ | 2.63 | ||||
|
|
|
|
|
|||||
| * | The tax effect is calculated based upon the statutory rates for the jurisdictions where the items were incurred. |
19
ZIMMER HOLDINGS, INC.
Reconciliation of 2013 Projected Diluted EPS
and Projected Adjusted Diluted EPS
(unaudited)
| Low | High | |||||||
| Projected Year Ended December 31, 2013: |
||||||||
| Diluted EPS |
4.70 | 4.80 | ||||||
| Inventory step-up and other inventory and manufacturing related charges and special items |
1.16 | 1.16 | ||||||
| Certain claims |
0.28 | 0.28 | ||||||
| Taxes on above items |
(0.44 | ) | (0.44 | ) | ||||
|
|
|
|
|
|||||
| Adjusted Diluted EPS |
$ | 5.70 | $ | 5.80 | ||||
|
|
|
|
|
|||||
| * | The tax effect is calculated based upon the statutory rates for the jurisdictions where the items have been or are projected to be incurred. |
20