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8-K - FORM 8-K - ZIMMER BIOMET HOLDINGS, INC.d667348d8k.htm

Exhibit 99.1

 

LOGO    NEWS

Contacts:

 

   Media       Investors
   Jim Gill       Robert J. Marshall Jr.
   574-371-1984       574-371-8042
   james.gill@zimmer.com       robert.marshall@zimmer.com

Zimmer Holdings, Inc. Reports Fourth Quarter and 2013 Financial Results

 

    Net Sales of $1.24 billion for the fourth quarter represent an increase of 5.1% reported over the prior year period, an increase of 6.6% constant currency

 

    Diluted EPS for the fourth quarter were $1.36 reported, an increase of 54.5% over the prior year period, and $1.66 adjusted, an increase of 9.9% over the prior year period

 

    Net Sales of $4.62 billion for the full year represent an increase of 3.4% reported over the prior year, an increase of 4.9% constant currency

 

    Diluted EPS for the full year were $4.43 reported, an increase of 3.3% over the prior year, and $5.75 adjusted, an increase of 8.5% over the prior year

 

    The Company provides sales and earnings guidance for 2014

(WARSAW, IN) January 30, 2014—Zimmer Holdings, Inc. (NYSE and SIX: ZMH) today reported financial results for the quarter and year ended December 31, 2013. The Company reported fourth quarter net sales of $1.24 billion, an increase of 5.1% reported and 6.6% constant currency over the fourth quarter of 2012. Diluted earnings per share for the quarter were $1.36 reported and $1.66 adjusted, an increase of 9.9% adjusted over the prior year period. Full year net


sales were $4.62 billion, an increase of 3.4% reported and 4.9% constant currency over the prior year. Diluted earnings per share for the year were $4.43 reported and $5.75 adjusted, an increase of 8.5% adjusted over the prior year.

“In the fourth quarter, Zimmer continued to deliver accelerated top line growth. These strong results were led by the successful commercialization of a number of innovative new offerings, including Persona® The Personalized Knee System and its accompanying suite of next-generation intelligent instruments,” said David Dvorak, Zimmer President and CEO. “Zimmer will remain focused on developing clinically relevant solutions to better serve the evolving global healthcare landscape. We are confident that our strategy positions the Company for continued growth in 2014 and beyond, in concert with our ongoing commitments to quality and operational excellence and disciplined capital management.”

Net earnings for the fourth quarter were $235.9 million on a reported basis and $288.6 million on an adjusted basis, an increase of 9.5% adjusted over the prior year period. Operating cash flow for the fourth quarter was $300.2 million. Net earnings for the full year 2013 were $761.0 million on a reported basis and $988.4 million on an adjusted basis, an increase of 6.0% adjusted over the prior year. Operating cash flow for the full year was $963.1 million.

In the quarter, the Company recorded pre-tax charges of $61.2 million in special items and $12.8 million in cost of products sold pertaining to global restructuring, quality and operational excellence initiatives, certain litigation and recent acquisitions. Adjusted fourth quarter 2013 figures in this release exclude the impact of these charges, which include $40.0 million related to quality and operational excellence initiatives in manufacturing, logistics and sales; $14.5 million connected with certain outstanding litigation matters; and $19.5 million in integration and other costs.

 

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During the quarter, the Company utilized $240.6 million of cash to acquire 2.7 million shares. For the full year 2013, the Company utilized $718.8 million of cash to acquire 9.1 million shares. The Company issued 7.4 million shares during the year in connection with employee equity compensation plans, resulting in a net reduction of 1.7 million shares outstanding for the year. Further, the Company paid $34.0 million in cash dividends to stockholders during the quarter and $132.4 million in cash dividends for the full year 2013.

Guidance

The Company expects full-year revenues for 2014 to increase between 3.0% and 5.0% on a constant currency basis. The Company estimates that foreign currency translation will decrease revenues by approximately 0.5% for the full year 2014, resulting in reported revenue growth between 2.5% and 4.5%. Full-year 2014 diluted earnings per share are projected to be in a range of $5.00 to $5.20 on a reported basis and $6.10 to $6.30 on an adjusted basis.

Conference Call

The Company will conduct its fourth quarter 2013 investor conference call today, January 30, 2014, 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 call.

Individuals who wish to dial into the conference call may do so at (888) 878-3901. International callers should dial (706) 634-9520. Conference ID 31500984 may be used to access the call. A digital recording will be available two hours after the completion of the conference call from January 30, 2014, to February 28, 2014. 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 31500984.

 

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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 full year on both a reported and constant currency basis.

 

4


NET SALES - THREE MONTHS ENDED DECEMBER 31, 2013

(in millions, unaudited)

 

     Net
Sales
    Reported
% Change
    Constant
Currency
% Change
 

Geographic Segments

      

Americas

   $ 692        7     8

Europe

     343        5        2   

Asia Pacific

     206        (2     10   
  

 

 

     

Total

     1,241        5        7   

Product Categories

      

Reconstructive

      

Americas

     508        8        8   

Europe

     269        7        4   

Asia Pacific

     151        (4     8   
  

 

 

     

Total

     928        6        7   

Knees

      

Americas

     308        10        11   

Europe

     136        10        7   

Asia Pacific

     79        (1     10   
  

 

 

     

Total

     523        8        10   

Hips

      

Americas

     162        4        4   

Europe

     123        2        (1

Asia Pacific

     68        (7     6   
  

 

 

     

Total

     353        1        3   

Extremities

     52        11        11   

Dental

     63        3        2   

Trauma

     81        (4     (1

Spine

     53        (2     (2

Surgical and other

     116        13        16   

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.

 

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NET SALES - YEAR ENDED DECEMBER 31, 2013

(in millions, unaudited)

 

     Net
Sales
    Reported
% Change
    Constant
Currency
% Change
 

Geographic Segments

      

Americas

   $ 2,620        6     6

Europe

     1,212        3        1   

Asia Pacific

     791        (3     7   
  

 

 

     

Total

     4,623        3        5   

Product Categories

      

Reconstructive

      

Americas

     1,904        5        5   

Europe

     947        3        1   

Asia Pacific

     583        (4     6   
  

 

 

     

Total

     3,434        3        4   

Knees

      

Americas

     1,136        5        5   

Europe

     468        5        3   

Asia Pacific

     306        (1     8   
  

 

 

     

Total

     1,910        4        5   

Hips

      

Americas

     621        2        3   

Europe

     445        —          (2

Asia Pacific

     264        (9     2   
  

 

 

     

Total

     1,330        (1     1   

Extremities

     194        11        12   

Dental

     239        1        —     

Trauma

     316        2        5   

Spine

     202        (3     (3

Surgical and other

     432        18        21   

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.

 

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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 2013 sales were approximately $4.6 billion. The Company is supported by the efforts of more than 9,000 employees worldwide.

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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, special items, goodwill impairment and certain tax adjustments. 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.

 

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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 excellence 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 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

 

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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 economic uncertainty affecting 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.

###

 

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ZIMMER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2013 and 2012

(in millions, except per share amounts, unaudited)

 

     2013     2012  

Net Sales

   $ 1,240.7      $ 1,180.5   

Cost of products sold

     340.8        298.9   
  

 

 

   

 

 

 

Gross Profit

     899.9        881.6   
  

 

 

   

 

 

 

Research and development

     46.4        55.3   

Selling, general and administrative

     477.0        460.5   

Goodwill impairment

     —          96.0   

Certain claims

     —          15.0   

Special items

     61.2        54.3   
  

 

 

   

 

 

 

Operating expenses

     584.6        681.1   
  

 

 

   

 

 

 

Operating Profit

     315.3        200.5   

Interest income

     4.2        4.9   

Interest expense

     (16.5     (18.9
  

 

 

   

 

 

 

Earnings before income taxes

     303.0        186.5   

Provision for income taxes

     67.6        34.2   
  

 

 

   

 

 

 

Net earnings

     235.4        152.3   

Less: Net loss attributable to noncontrolling interest

     (0.5     (0.5
  

 

 

   

 

 

 

Net Earnings of Zimmer Holdings, Inc.

   $ 235.9      $ 152.8   
  

 

 

   

 

 

 

Earnings Per Common Share

    

Basic

   $ 1.38      $ 0.88   

Diluted

   $ 1.36      $ 0.88   

Weighted Average Common Shares Outstanding

    

Basic

     170.7        172.8   

Diluted

     173.5        174.1   

Cash dividends declared per common share

   $ 0.20      $ 0.18   

 

10


ZIMMER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE YEAR ENDED DECEMBER 31, 2013 and 2012

(in millions, except per share amounts, unaudited)

 

     2013     2012  

Net Sales

   $ 4,623.4      $ 4,471.7   

Cost of products sold

     1,286.1        1,125.2   
  

 

 

   

 

 

 

Gross Profit

     3,337.3        3,346.5   
  

 

 

   

 

 

 

Research and development

     204.2        225.6   

Selling, general and administrative

     1,833.8        1,807.1   

Goodwill impairment

     —          96.0   

Certain claims

     47.0        15.0   

Special items

     216.7        155.4   
  

 

 

   

 

 

 

Operating expenses

     2,301.7        2,299.1   
  

 

 

   

 

 

 

Operating Profit

     1,035.6        1,047.4   

Interest income

     15.6        15.6   

Interest expense

     (70.1     (72.9
  

 

 

   

 

 

 

Earnings before income taxes

     981.1        990.1   

Provision for income taxes

     221.9        237.2   
  

 

 

   

 

 

 

Net earnings

     759.2        752.9   

Less: Net loss attributable to noncontrolling interest

     (1.8     (2.1
  

 

 

   

 

 

 

Net Earnings of Zimmer Holdings, Inc.

   $ 761.0      $ 755.0   
  

 

 

   

 

 

 

Earnings Per Common Share

    

Basic

   $ 4.49      $ 4.32   

Diluted

   $ 4.43      $ 4.29   

Weighted Average Common Shares Outstanding

    

Basic

     169.6        174.9   

Diluted

     171.8        176.0   

Cash dividends declared per common share

   $ 0.80      $ 0.54   

 

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ZIMMER HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, unaudited)

 

     December 31,      December 31,  
     2013      2012  

Assets

     

Current Assets:

     

Cash and cash equivalents

   $ 1,080.6       $ 884.3   

Short-term investments

     727.0         671.6   

Receivables, net

     936.6         884.6   

Inventories

     1,074.5         995.3   

Other current assets

     379.0         272.9   
  

 

 

    

 

 

 

Total current assets

     4,197.7         3,708.7   

Property, plant and equipment, net

     1,224.7         1,210.7   

Goodwill

     2,611.2         2,571.8   

Intangible assets, net

     707.7         740.7   

Other assets

     839.3         780.5   
  

 

 

    

 

 

 

Total Assets

   $  9,580.6       $ 9,012.4   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities

   $ 1,031.1       $ 765.9   

Short-term debt

     0.5         100.1   

Other long-term liabilities

     576.6         559.3   

Long-term debt

     1,672.3         1,720.8   

Stockholders’ equity

     6,300.1         5,866.3   
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 9,580.6       $ 9,012.4   
  

 

 

    

 

 

 

 

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ZIMMER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2013 and 2012

(in millions, unaudited)

 

     2013     2012  

Cash flows provided by (used in) operating activities

    

Net earnings

   $ 759.2      $ 752.9   

Depreciation and amortization

     358.5        363.1   

Goodwill impairment

     —          96.0   

Share-based compensation

     48.5        55.0   

Income tax benefits from employee stock compensation plans

     38.4        11.0   

Excess income tax benefits from employee stock compensation plans

     (8.6     (2.7

Inventory step-up

     8.0        4.8   

Changes in operating assets and liabilities, net of acquired assets and liabilities

    

Income taxes

     (29.4     (5.6

Receivables

     (74.3     (45.5

Inventories

     (128.4     (67.5

Accounts payable and accrued expenses

     38.3        47.8   

Other assets and liabilities

     (47.1     (57.4
  

 

 

   

 

 

 

Net cash provided by operating activities

     963.1        1,151.9   
  

 

 

   

 

 

 

Cash flows provided by (used in) investing activities

    

Additions to instruments

     (192.9     (148.9

Additions to other property, plant and equipment

     (100.0     (114.7

Purchases of investments

     (732.7     (1,130.1

Sales of investments

     830.8        878.5   

Investments in other assets

     (87.7     (76.9
  

 

 

   

 

 

 

Net cash used in investing activities

     (282.5     (592.1
  

 

 

   

 

 

 

Cash flows provided by (used in) financing activities

    

Net payments under revolving credit facilities

     (97.5     (50.1

Proceeds from term loans

     —          147.3   

Dividends paid to stockholders

     (132.4     (94.4

Proceeds from employee stock compensation plans

     474.8        46.9   

Excess income tax benefits from employee stock compensation plans

     8.6        2.7   

Debt issuance costs

     —          (3.3

Purchase of additional shares from noncontrolling interest

     (1.8     —     

Repurchase of common stock

     (719.0     (485.6
  

 

 

   

 

 

 

Net cash used in financing activities

     (467.3     (436.5
  

 

 

   

 

 

 

Effect of exchange rates on cash and cash equivalents

     (17.0     (7.3
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     196.3        116.0   

Cash and cash equivalents, beginning of period

     884.3        768.3   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 1,080.6      $ 884.3   
  

 

 

   

 

 

 

 

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ZIMMER HOLDINGS, INC.

NET SALES BY GEOGRAPHIC SEGMENT

FOR THE THREE MONTHS and YEAR ENDED DECEMBER 31, 2013 and 2012

(in millions, unaudited)

 

     Three Months Ended December 31,     Year Ended December 31,  
     2013      2012      % Inc/(Dec)     2013      2012      % Inc/ (Dec)  

Americas

   $ 692.1       $ 644.1         7   $ 2,619.8       $ 2,476.3         6

Europe

     342.6         325.8         5        1,212.6         1,177.4         3   

Asia Pacific

     206.0         210.6         (2     791.0         818.0         (3
  

 

 

    

 

 

      

 

 

    

 

 

    

Total

   $ 1,240.7       $ 1,180.5         5      $ 4,623.4       $ 4,471.7         3   
  

 

 

    

 

 

      

 

 

    

 

 

    

ZIMMER HOLDINGS, INC.

NET SALES BY PRODUCT CATEGORY

FOR THE THREE MONTHS and YEAR ENDED DECEMBER 31, 2013 and 2012

(in millions, unaudited)

 

     Three Months Ended December 31,     Year Ended December 31,  
     2013      2012      % Inc/(Dec)     2013      2012      % Inc/(Dec)  

Reconstructive

                

Knees

   $ 523.4       $ 483.0         8   $ 1,909.9       $ 1,833.8         4

Hips

     353.0         349.0         1        1,330.5         1,342.0         (1

Extremities

     51.9         46.8         11        193.8         173.8         11   
  

 

 

    

 

 

      

 

 

    

 

 

    
     928.3         878.8         6        3,434.2         3,349.6         3   

Dental

     63.1         61.3         3        239.3         237.7         1   

Trauma

     81.0         84.0         (4     315.6         307.9         2   

Spine

     52.4         53.5         (2     202.3         208.9         (3

Surgical and other

     115.9         102.9         13        432.0         367.6         18   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total

   $ 1,240.7       $ 1,180.5         5      $ 4,623.4       $ 4,471.7         3   
  

 

 

    

 

 

      

 

 

    

 

 

    

 

14


ZIMMER HOLDINGS, INC.

RECONCILIATION OF REPORTED % GROWTH TO

CONSTANT CURRENCY % GROWTH

(unaudited)

 

     For the Three Months Ended  
     December 31, 2013  
           Foreign     Constant  
     Reported     Exchange     Currency  
     % Change     Impact     % Change  

Geographic Segments

      

Americas

     7     (1 )%      8

Europe

     5        3        2   

Asia Pacific

     (2     (12     10   

Total

     5        (2     7   

Product Categories

      

Reconstructive

      

Americas

     8        —          8   

Europe

     7        3        4   

Asia Pacific

     (4     (12     8   

Total

     6        (1     7   

Knees

      

Americas

     10        (1     11   

Europe

     10        3        7   

Asia Pacific

     (1     (11     10   

Total

     8        (2     10   

Hips

      

Americas

     4        —          4   

Europe

     2        3        (1

Asia Pacific

     (7     (13     6   

Total

     1        (2     3   

Extremities

     11        —          11   

Dental

     3        1        2   

Trauma

     (4     (3     (1

Spine

     (2     —          (2

Surgical and other

     13        (3     16   

 

15


ZIMMER HOLDINGS, INC.

RECONCILIATION OF REPORTED % GROWTH TO

CONSTANT CURRENCY % GROWTH

(unaudited)

 

     For the Year Ended  
     December 31, 2013  
           Foreign     Constant  
     Reported     Exchange     Currency  
     % Change     Impact     % Change  

Geographic Segments

      

Americas

     6     —       6

Europe

     3        2        1   

Asia Pacific

     (3     (10     7   

Total

     3        (2     5   

Product Categories

      

Reconstructive

      

Americas

     5        —          5   

Europe

     3        2        1   

Asia Pacific

     (4     (10     6   

Total

     3        (1     4   

Knees

      

Americas

     5        —          5   

Europe

     5        2        3   

Asia Pacific

     (1     (9     8   

Total

     4        (1     5   

Hips

      

Americas

     2        (1     3   

Europe

     —          2        (2

Asia Pacific

     (9     (11     2   

Total

     (1     (2     1   

Extremities

     11        (1     12   

Dental

     1        1        —     

Trauma

     2        (3     5   

Spine

     (3     —          (3

Surgical and other

     18        (3     21   

 

16


ZIMMER HOLDINGS, INC.

Reconciliation of Net Earnings and Adjusted Net Earnings

For the Three Months Ended December 31, 2013 and 2012

(in millions, unaudited)

 

     Three Months  
     Ended December 31,  
     2013     2012  

Net Earnings of Zimmer Holdings, Inc.

   $ 235.9      $ 152.8   

Inventory step-up and other inventory and manufacturing related charges

     12.8        2.3   

Goodwill impairment

     —          96.0   

Certain claims

     —          15.0   

Special items

     61.2        54.3   

Taxes on above items*

     (21.3     (56.9
  

 

 

   

 

 

 

Adjusted Net Earnings

   $ 288.6      $ 263.5   
  

 

 

   

 

 

 

 

* The tax effect is calculated based upon the statutory rates for the jurisdictions where the items were incurred.

ZIMMER HOLDINGS, INC.

Reconciliation of Net Earnings and Adjusted Net Earnings

For the Year Ended December 31, 2013 and 2012

(in millions, unaudited)

 

     Year  
     Ended December 31,  
     2013     2012  

Net Earnings of Zimmer Holdings, Inc.

   $ 761.0      $ 755.0   

Inventory step-up and other inventory and manufacturing related charges

     70.5        4.8   

Goodwill impairment

     —          96.0   

Certain claims

     47.0        15.0   

Special items

     216.7        155.4   

Taxes on above items*

     (106.8     (93.7
  

 

 

   

 

 

 

Adjusted Net Earnings

   $ 988.4      $ 932.5   
  

 

 

   

 

 

 

 

* 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 December 31, 2013 and 2012

(unaudited)

 

     Three Months  
     Ended December 31,  
     2013     2012  

Diluted EPS

   $ 1.36      $ 0.88   

Inventory step-up and other inventory and manufacturing related charges

     0.07        0.01   

Goodwill impairment

     —          0.55   

Certain claims

     —          0.09   

Special items

     0.35        0.31   

Taxes on above items*

     (0.12     (0.33
  

 

 

   

 

 

 

Adjusted Diluted EPS

   $ 1.66      $ 1.51   
  

 

 

   

 

 

 

 

* The tax effect is calculated based upon the statutory rates for the jurisdictions where the items were incurred.

ZIMMER HOLDINGS, INC.

Reconciliation of Diluted EPS and Adjusted Diluted EPS

For the Year Ended December 31, 2013 and 2012

(unaudited)

 

     Year  
     Ended December 31,  
     2013     2012  

Diluted EPS

   $ 4.43      $ 4.29   

Inventory step-up and other inventory and manufacturing related charges

     0.41        0.03   

Goodwill impairment

     —          0.54   

Certain claims

     0.27        0.09   

Special items

     1.26        0.88   

Taxes on above items*

     (0.62     (0.53
  

 

 

   

 

 

 

Adjusted Diluted EPS

   $ 5.75      $ 5.30   
  

 

 

   

 

 

 

 

* The tax effect is calculated based upon the statutory rates for the jurisdictions where the items were incurred.

 

18


ZIMMER HOLDINGS, INC.

Reconciliation of 2014 Projected Diluted EPS

and Projected Adjusted Diluted EPS

(unaudited)

 

     Low     High  
Projected Year Ended December 31, 2014:     

Diluted EPS

   $ 5.00      $ 5.20   

Inventory step-up and other inventory and manufacturing related charges and special items

     1.48        1.48   

Taxes on above items*

     (0.38     (0.38
  

 

 

   

 

 

 

Adjusted Diluted EPS

   $ 6.10      $ 6.30   
  

 

 

   

 

 

 

 

* The tax effect is calculated based upon the statutory rates for the jurisdictions where the items are projected to be incurred.

 

19