The Company reported fourth quarter net sales of $2.074 billion.
- Net sales of $2.074 billion for the fourth quarter represent an increase of 3.0% over the prior year period, and an increase of 1.5% on a constant currency basis
|
| [30-January-2018] |
|
WARSAW, Ind., Jan. 30, 2018 /PRNewswire/ -- Zimmer Biomet (NYSE and SIX: ZBH) today reported financial results for the quarter and full year ended December 31, 2017. The Company reported fourth quarter net sales of $2.074 billion, an increase of 3.0% over the prior year period, and an increase of 1.5% on a constant currency basis. Diluted earnings per share for the fourth quarter were $6.16, and include a one-time tax benefit of approximately $6.40 resulting from the recently enacted U.S. tax reform legislation. Fourth quarter adjusted diluted earnings per share were $2.10, a decrease of 1.9% from the prior year period. Full-year 2017 net sales were $7.824 billion, an increase of 1.8% over the prior year, on both a reported and constant currency basis. Full-year revenues increased by 0.5% over the prior year on a constant currency basis, excluding approximately 130 basis points of contribution from the LDR Holding Corporation acquisition. Diluted earnings per share for the full year were $9.03. Adjusted diluted earnings per share for the full year were $8.03, an increase of 0.9% over the prior year. Bryan Hanson, President and CEO of Zimmer Biomet, said: "Since joining the Company last month, I have been performing a thorough review of the business. My immediate priorities are to improve Zimmer Biomet's execution and address a number of near-term challenges that have impacted, and will continue to impact, our performance. With that said, I fully believe in the power of the Zimmer Biomet global brand and portfolio of products, and I am confident that with sound strategy and enhanced execution we can drive sustained shareholder value." Net earnings for the fourth quarter were $1.257 billion, and $428.5 million on an adjusted basis. Operating cash flow for the fourth quarter was $402.9 million. Net earnings for full-year 2017 were $1.840 billion, and $1.636 billion on an adjusted basis. In the quarter, the Company paid $48.6 million in dividends and declared a fourth quarter dividend of $0.24 per share. The Company also repaid $300.0 million of debt during the quarter. For full-year 2017, the Company paid $193.6 million in dividends and repaid approximately $1.250 billion of debt. (1) U.S. tax reform legislation resulted in a net favorable provisional adjustment due to the reduction of certain deferred tax liabilities which were partially offset by provisional tax charges related to the toll tax provision of U.S. tax reform. The amount recognized is a provisional estimate and subject to change, possibly materially, due to, among other things, refinements of the Company's calculations, changes in interpretations and assumptions the Company has made or additional guidance issued by the U.S. Treasury, Securities and Exchange Commission or Financial Accounting Standards Board. Guidance Additionally, the Company expects its diluted earnings per share for the first quarter of 2018 to be in a range of $0.73 to $0.88, and in a range of $1.84 to $1.91 on an adjusted basis. Conference Call Individuals in the U.S. and Canada who wish to dial into the conference call may do so by dialing (888) 312-9837 and entering conference ID 7278985. For a complete listing of international toll-free and local numbers, please visit http://investor.zimmerbiomet.com. A digital recording will be available 24 hours after the completion of the conference call, from January 31, 2018 to March 1, 2018. To access the recording, U.S. callers should dial (888) 203-1112 and international callers should dial +1 (719) 457-0820, and enter the Access Code ID 7278985. Sales Tables NET SALES - THREE MONTHS ENDED DECEMBER 31, 2017
(in millions, unaudited)
Constant
Net Currency
Sales % Change % Change
----- -------- --------
Geographic Results
Americas $1,280 0.9% 0.8%
EMEA 473 6.4 (0.3)
Asia Pacific 321 7.0 7.2
---
Total $2,074 3.0% 1.5%
======
Product Categories
Knees
Americas $443 (0.3)% (0.5)%
EMEA 181 10.0 3.9
Asia Pacific 107 (4.1) (4.4)
---
Total 731 1.4 (0.1)
Hips
Americas 256 0.8 0.5
EMEA 137 1.5 (5.3)
Asia Pacific 106 13.8 14.6
---
Total 499 3.5 1.6
S.E.T * 454 5.9 4.6
Dental 108 2.1 (0.4)
Spine & CMF 194 1.5 0.5
Other 88 4.3 2.9
---
Total $2,074 3.0% 1.5%
======
* Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma
NET SALES - YEAR ENDED DECEMBER 31, 2017
(in millions, unaudited)
Constant
Net Currency
Sales % Change % Change
----- -------- --------
Geographic Results
Americas $4,866 1.3% 1.2%
EMEA 1,745 0.9 0.2
Asia Pacific 1,213 5.4 6.3
-----
Total $7,824 1.8% 1.8%
======
Product Categories
Knees
Americas $1,660 (1.7)% (1.7)%
EMEA 644 1.0 0.9
Asia Pacific 433 1.5 1.6
---
Total 2,737 (0.6) (0.6)
Hips
Americas $975 (1.2) (1.3)
EMEA 519 (0.7) (1.8)
Asia Pacific 385 7.5 9.1
---
Total 1,879 0.6 0.6
S.E.T * 1,709 3.9 4.0
Dental 419 (2.2) (2.6)
Spine & CMF 759 14.7 14.4
Other 321 (2.5) (2.6)
---
Total $7,824 1.8% 1.8%
======
* Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma
About the Company We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives. We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet. Website Information Note on Non-GAAP Financial Measures This press release 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. Sales change information for the three-month period and the year ended December 31, 2017 is presented on a GAAP (reported) basis and on a constant currency basis. The sales change information for the full year is also presented on a constant currency basis that excludes the contribution from the Company's acquisition of LDR Holding Corporation in July 2016. Projected revenue change information is also presented on a GAAP basis and on a constant currency basis. Constant currency rates exclude the effects of foreign currency exchange rates. They are calculated by translating current and prior-period sales at the same predetermined exchange rate. The translated results are then used to determine year-over-year percentage increases or decreases. Net earnings, diluted earnings per share and projected diluted earnings per share are presented on a GAAP (reported) basis and on an adjusted basis. Adjusted earnings and adjusted diluted earnings per share exclude the effects of inventory step-up; certain inventory and manufacturing-related charges connected to discontinuing certain product lines, quality enhancement and remediation efforts; special items; intangible asset amortization; certain claims; goodwill impairment; debt extinguishment charges; any related effects on our income tax provision associated with these items; the effect of U.S. tax reform; and other certain tax adjustments. Special items include expenses resulting directly from our business combinations and/or global restructuring, quality and operational excellence initiatives, including employee termination benefits, certain contract terminations, consulting and professional fees, dedicated project personnel, asset impairment or loss on disposal charges, certain litigation matters, costs of complying with our deferred prosecution agreement and other items. Other certain tax adjustments include a tax restructuring that lowered the tax rate on deferred tax liabilities recorded on intangible assets recognized in acquisition-related accounting, net favorable resolutions of various tax matters, a favorable tax rate change in a foreign jurisdiction and charges from internal restructuring transactions that provide the Company access to cash in a tax efficient manner. Management uses these non-GAAP financial measures internally to evaluate the performance of the business and believes they are useful measures that provide meaningful supplemental information to investors to consider when evaluating the performance of the Company. Management believes these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported operating results, to perform trend analysis, to better identify operating trends that may otherwise be masked or distorted by these types of items and to provide additional transparency of certain items. In addition, certain of these non-GAAP financial measures are used as performance metrics in the Company's incentive compensation programs. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release. Cautionary Statement Regarding Forward-Looking Statements This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding sales and earnings guidance and any statements about our expectations, plans, strategies or prospects. We generally use the words "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "assumes," "guides," "targets," "forecasts," "sees," "seeks," "should," "could," "intends" and similar expressions to identify forward-looking statements. All statements other than statements of historical or current fact are, or may be deemed to be, forward-looking statements. Such statements are based upon the current beliefs and expectations of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual outcomes and results to differ materially. These risks, uncertainties and changes in circumstances include, but are not limited to: our chief executive officer transition, including disruptions and uncertainties related thereto, the potential impact on our business and future strategic direction resulting from our transition to a new chief executive officer, and our ability to retain other key members of senior management; the possibility that the anticipated synergies and other benefits from mergers and acquisitions will not be realized, or will not be realized within the expected time periods; the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of acquired companies; the effect of the potential disruption of management's attention from ongoing business operations due to integration matters related to mergers and acquisitions; the effect of mergers and acquisitions on our relationships with customers, vendors and lenders and on our operating results and businesses generally; compliance with the Deferred Prosecution Agreement entered into in January 2017; the success of our quality and operational excellence initiatives, including ongoing quality enhancement and remediation efforts at the legacy Biomet Warsaw facility; 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 products; the ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA, while continuing to satisfy the demand for our products; the outcome of government investigations; competition; pricing pressures; changes in customer demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform measures; 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; the ability to obtain and maintain adequate intellectual property protection; the ability to form and implement alliances; changes in tax obligations arising from tax reform measures, including European Union rules on state aid, or examinations by tax authorities; product liability and intellectual property litigation losses; the ability to retain the independent agents and distributors who market our products; 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; changes in general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the impact of the ongoing financial and political uncertainty on countries in the Euro zone on the ability to collect accounts receivable in affected countries. For a further list and description of such risks and uncertainties, see our reports filed with the U.S. Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2016 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017. Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.zimmerbiomet.com or on request from us. Forward-looking statements speak only as of the date they are made, and 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. Readers of this release are cautioned not to rely on these forward-looking statements, since 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 release.
ZIMMER BIOMET HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2017 and 2016
(in millions, except per share amounts, unaudited)
2017 2016
---- ----
Net Sales $2,074.3 $2,013.1
Cost of products sold, excluding intangible asset amortization 591.4 621.8
Intangible asset amortization 151.5 141.2
Research and development 95.0 95.7
Selling, general and administrative 770.6 756.3
Certain claims 10.3 -
Goodwill impairment 272.0 -
Special items 206.4 214.8
----- -----
Operating expenses 2,097.2 1,829.8
------- -------
Operating (Loss) Profit (22.9) 183.3
Other expense, net (7.1) (62.6)
Interest income 0.8 0.2
Interest expense (80.0) (90.1)
----- -----
(Loss) earnings before income taxes (109.2) 30.8
Benefit for income taxes (1,366.2) (38.9)
-------- -----
Net Earnings 1,257.0 69.7
Less: Net (Loss) Income attributable to noncontrolling interest (0.2) 0.1
---- ---
Net Earnings of Zimmer Biomet Holdings, Inc. $1,257.2 $69.6
======== =====
Earnings Per Common Share
Basic $6.21 $0.35
Diluted $6.16 $0.34
Weighted Average Common Shares Outstanding
Basic 202.5 200.4
Diluted 204.1 202.5
Cash Dividends Declared Per Common Share $0.24 $0.24
ZIMMER BIOMET HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2017 and 2016
(in millions, except per share amounts, unaudited)
2017 2016
---- ----
Net Sales $7,824.1 $7,683.9
Cost of products sold, excluding intangible asset amortization 2,132.9 2,381.8
Intangible asset amortization 603.9 565.9
Research and development 367.4 365.6
Selling, general and administrative 2,973.9 2,932.9
Certain claims 10.3 -
Goodwill impairment 304.7 -
Special items 607.8 611.8
----- -----
Operating expenses 7,000.9 6,858.0
------- -------
Operating Profit 823.2 825.9
Other expense, net (18.3) (71.3)
Interest income 2.2 2.9
Interest expense (327.5) (357.9)
------ ------
Earnings before income taxes 479.6 399.6
(Benefit) provision for income taxes (1,359.6) 95.0
-------- ----
Net Earnings 1,839.2 304.6
Less: Net Loss attributable to noncontrolling interest (0.4) (1.3)
---- ----
Net Earnings of Zimmer Biomet Holdings, Inc. $1,839.6 $305.9
======== ======
Earnings Per Common Share
Basic $9.11 $1.53
Diluted $9.03 $1.51
Weighted Average Common Shares Outstanding
Basic 201.9 200.0
Diluted 203.7 202.4
Cash Dividends Declared Per Common Share $0.96 $0.96
ZIMMER BIOMET HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, unaudited)
December 31, December 31,
2017 2016
---- ----
Assets
Cash and cash equivalents $524.4 $634.1
Receivables, net 1,494.6 1,604.4
Inventories 2,081.8 1,959.4
Other current assets 481.5 465.7
----- -----
Total current assets 4,582.3 4,663.6
Property, plant and equipment, net 2,038.6 2,037.9
Goodwill 10,668.4 10,643.9
Intangible assets, net 8,353.4 8,785.4
Other assets 749.9 553.6
----- -----
Total Assets $26,392.6 $26,684.4
========= =========
Liabilities and Stockholders' Equity
Current liabilities $1,780.8 $1,805.9
Current portion of long-term debt 1,225.0 575.6
Other long-term liabilities 2,711.4 3,967.2
Long-term debt 8,917.5 10,665.8
Stockholders' equity 11,757.9 9,669.9
-------- -------
Total Liabilities and Stockholders' Equity $26,392.6 $26,684.4
========= =========
ZIMMER BIOMET HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 and 2016
(in millions, unaudited)
2017 2016
---- ----
Cash flows provided by (used in) operating activities
Net earnings $1,839.2 $304.6
Depreciation and amortization 1,062.7 1,039.3
Share-based compensation 53.7 57.3
Goodwill and intangible asset impairment 331.5 30.0
Inventory step-up 32.8 323.3
Debt extinguishment - 53.3
Changes in operating assets and liabilities, net of acquired assets and
liabilities
Income taxes (1,636.7) (164.1)
Receivables 176.5 (137.8)
Inventories (122.8) 76.4
Accounts payable and accrued expenses (163.1) 28.7
Other assets and liabilities 8.5 21.2
--- ----
Net cash provided by operating activities 1,582.3 1,632.2
------- -------
Cash flows provided by (used in) investing activities
Additions to instruments (337.0) (345.5)
Additions to other property, plant and equipment (156.0) (184.7)
Purchases of investments - (1.5)
Sales of investments - 286.2
LDR acquisition, net of acquired cash - (1,021.1)
Business combination investments, net of acquired cash (4.0) (421.9)
Other investing activities (13.8) (3.0)
----- ----
Net cash used in investing activities (510.8) (1,691.5)
------ --------
Cash flows provided by (used in) financing activities
Proceeds from senior notes - 1,073.5
Proceeds from multicurrency revolving facility 400.0 -
Payments on multicurrency revolving facility (400.0) -
Redemption of senior notes (500.0) (1,250.0)
Proceeds from term loan 192.7 750.0
Payments on term loan (940.0) (800.0)
Net payments on other debt (0.9) (33.1)
Dividends paid to stockholders (193.6) (188.4)
Proceeds from employee stock compensation plans 145.5 136.6
Net cash flows from unremitted servicing collections in revolving factoring 103.5 -
programs
Business combination contingent consideration payments (9.1) -
Restricted stock withholdings (8.3) (6.3)
Debt issuance costs (0.3) (10.0)
Repurchase of common stock - (415.5)
--- ------
Net cash used in financing activities (1,210.5) (743.2)
-------- ------
Effect of exchange rates on cash and cash equivalents 29.3 (22.7)
---- -----
Decrease in cash and cash equivalents (109.7) (825.2)
Cash and cash equivalents, beginning of period 634.1 1,459.3
----- -------
Cash and cash equivalents, end of period $524.4 $634.1
====== ======
ZIMMER BIOMET HOLDINGS, INC.
NET SALES BY GEOGRAPHY
FOR THE THREE MONTHS and YEARS ENDED DECEMBER 31, 2017 and 2016
(in millions, unaudited)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2017 2016 % Inc 2017 2016 % Inc
---- ---- ----- ---- ---- -----
Americas $1,280.0 $1,268.1 0.9 $4,865.6 $4,802.2 1.3%
%
EMEA 472.7 444.4 6.4 1,745.2 1,730.4 0.9
Asia Pacific 321.6 300.6 7.0 1,213.3 1,151.3 5.4
----- ----- ------- -------
Total $2,074.3 $2,013.1 3.0% $7,824.1 $7,683.9 1.8%
======== ======== ======== ========
ZIMMER BIOMET HOLDINGS, INC.
NET SALES BY PRODUCT CATEGORY
FOR THE THREE MONTHS and YEARS ENDED DECEMBER 31, 2017 and 2016
(in millions, unaudited)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2017 2016 % Inc 2017 2016 % Inc /
(Dec)
----
Knees $731.2 $720.9 1.4% $2,737.1 $2,752.6 (0.6)%
Hips 499.1 482.2 3.5 1,879.1 1,867.9 0.6
S.E.T 454.6 429.4 5.9 1,709.1 1,644.4 3.9
Dental 107.5 105.4 2.1 418.6 427.9 (2.2)
Spine & CMF 194.3 191.3 1.5 759.5 662.0 14.7
Other 87.6 83.9 4.3 320.7 329.1 (2.5)
---- ---- ----- -----
Total $2,074.3 $2,013.1 3.0% $7,824.1 $7,683.9 1.8%
======== ======== ======== ========
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF REPORTED NET SALES % CHANGE TO
CONSTANT CURRENCY % CHANGE
(unaudited)
For the Three Months Ended
December 31, 2017
-----------------
Foreign Constant
Exchange Currency
% Change Impact % Change
-------- ------ --------
Geographic Results
Americas 0.9% 0.1% 0.8%
EMEA 6.4 6.7 (0.3)
Asia Pacific 7.0 (0.2) 7.2
Total 3.0% 1.5% 1.5%
Product Categories
Knees
Americas (0.3)% 0.2% (0.5)%
EMEA 10.0 6.1 3.9
Asia Pacific (4.1) 0.3 (4.4)
Total 1.4 1.5 (0.1)
Hips
Americas 0.8 0.3 0.5
EMEA 1.5 6.8 (5.3)
Asia Pacific 13.8 (0.8) 14.6
Total 3.5 1.9 1.6
S.E.T 5.9 1.3 4.6
Dental 2.1 2.5 (0.4)
Spine & CMF 1.5 1.0 0.5
Other 4.3 1.4 2.9
Total 3.0% 1.5% 1.5%
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF REPORTED NET SALES % CHANGE TO
CONSTANT CURRENCY % CHANGE AND
% CHANGE EXCLUDING LDR HOLDING CORPORATION
(unaudited)
For the Year Ended
December 31, 2017
-----------------
Foreign Constant
Exchange Currency
% Change Impact % Change
-------- ------ --------
Geographic Results
Americas 1.3% 0.1% 1.2%
EMEA 0.9 0.7 0.2
Asia Pacific 5.4 (0.9) 6.3
Total 1.8% - % 1.8%
Product Categories
Knees
Americas (1.7)% - % (1.7)%
EMEA 1.0 0.1 0.9
Asia Pacific 1.5 (0.1) 1.6
Total (0.6) - (0.6)
Hips
Americas (1.2) 0.1 (1.3)
EMEA (0.7) 1.1 (1.8)
Asia Pacific 7.5 (1.6) 9.1
Total 0.6 - 0.6
S.E.T 3.9 (0.1) 4.0
Dental (2.2) 0.4 (2.6)
Spine & CMF 14.7 0.3 14.4
Other (2.5) 0.1 (2.6)
Total 1.8% - % 1.8%
Impact of LDR Holding Corporation (1.3) - (1.3)
---- --- ----
% Change excluding LDR Holding Corporation 0.5% - % 0.5%
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF NET EARNINGS TO ADJUSTED NET EARNINGS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2017 and 2016
(in millions, unaudited)
Three Months
Ended
December 31,
------------
2017 2016
---- ----
Net Earnings of Zimmer Biomet Holdings, Inc. $1,257.2 $69.6
Inventory step-up and other inventory and 26.1 111.4
manufacturing-related charges
Intangible asset amortization 151.5 141.2
Certain claims 10.3 -
Goodwill impairment (2) 272.0 -
Special items
Biomet merger-related 74.4 173.8
Other special items 132.0 41.0
Merger-related and other expense in other 2.1 4.7
expense, net
Debt extinguishment - 53.3
Taxes on above items (3) (134.9) (152.0)
U.S. tax reform (4) (1,305.5) -
Other certain tax adjustments (5) (56.7) (8.9)
----- ----
Adjusted Net Earnings $428.5 $434.1
====== ======
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF NET EARNINGS TO ADJUSTED NET EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2017 and 2016
(in millions, unaudited)
Years
Ended December 31,
------------------
2017 2016
---- ----
Net Earnings of Zimmer Biomet Holdings, Inc. $1,839.6 $305.9
Inventory step-up and other inventory and 84.6 469.1
manufacturing-related charges
Intangible asset amortization 603.9 565.9
Certain claims 10.3 -
Goodwill impairment (2) 304.7 -
Special items
Biomet merger-related 248.0 487.3
Other special items 359.8 124.5
Merger-related and other expense in other 2.6 3.6
expense, net
Debt extinguishment - 53.3
Taxes on above items (3) (399.3) (449.0)
Biomet merger-related measurement period - 52.7
tax adjustments (6)
U.S. tax reform (4) (1,305.5) -
Other certain tax adjustments (7) (112.3) (2.5)
------ ----
Adjusted Net Earnings $1,636.4 $1,610.8
======== ========
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2017 and 2016
(unaudited)
Three Months
Ended
December 31,
------------
2017 2016
---- ----
Diluted EPS $6.16 $0.34
Inventory step-up and other inventory and 0.13 0.55
manufacturing-related charges
Intangible asset amortization 0.74 0.70
Certain claims 0.05 -
Goodwill impairment (2) 1.33 -
Special items
Biomet merger-related 0.36 0.86
Other special items 0.65 0.20
Merger-related and other expense in other 0.01 0.02
expense, net
Debt extinguishment - 0.26
Taxes on above items (3) (0.66) (0.75)
U.S. tax reform (4) (6.40) -
Other certain tax adjustments (5) (0.27) (0.04)
----- -----
Adjusted Diluted EPS $2.10 $2.14
===== =====
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
FOR THE YEARS ENDED DECEMBER 31, 2017 and 2016
(unaudited)
Years
Ended
December 31,
------------
2017 2016
---- ----
Diluted EPS $9.03 $1.51
Inventory step-up and other inventory and 0.42 2.32
manufacturing-related charges
Intangible asset amortization 2.96 2.80
Certain claims 0.05 -
Goodwill impairment (2) 1.49 -
Special items
Biomet merger-related 1.22 2.40
Other special items 1.77 0.62
Merger-related and other expense in other 0.01 0.02
expense, net
Debt extinguishment - 0.26
Taxes on above items (3) (1.96) (2.22)
Biomet merger-related measurement period tax - 0.26
adjustments (6)
U.S. tax reform (4) (6.41) -
Other certain tax adjustments (7) (0.55) (0.01)
----- -----
Adjusted Diluted EPS $8.03 $7.96
===== =====
ZIMMER BIOMET HOLDINGS, INC.
SUMMARY OF EXPENSES INCLUDED IN SPECIAL ITEMS
FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2017 and 2016
(in millions, unaudited)
Three Months Years
Ended Ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
Biomet merger-related
Consulting and professional $20.8 $82.0 $81.5 $220.4
fees
Employee termination benefits 0.2 36.5 12.1 50.8
Dedicated project personnel 17.4 15.0 50.6 79.8
Relocated facilities 1.6 1.6 7.7 19.1
Certain litigation matters 10.5 2.5 15.5 2.5
Contract terminations 5.2 11.1 5.2 39.9
Information technology 1.0 5.0 5.9 14.3
integration
Loss/impairment on assets 9.8 15.0 36.6 43.0
Other 7.9 5.1 32.9 17.5
--- --- ---- ----
Total Biomet merger-related 74.4 173.8 248.0 487.3
Other
Consulting and professional 59.8 2.7 218.1 33.0
fees
Employee termination benefits 1.4 3.8 3.5 7.0
Dedicated project personnel 10.2 5.8 45.6 17.3
Impairment/loss on disposal of - - - 1.1
assets
LDR merger consideration - - - 24.1
compensation expense
Relocated facilities 3.3 - 6.3 0.2
Certain litigation matters 53.2 27.1 63.2 30.8
Contract terminations 3.9 1.8 3.9 2.9
Information technology 1.1 0.2 2.9 1.3
integration
Certain R&D agreements - - 2.5 -
Contingent consideration (3.0) - (4.5) -
adjustments
Other 2.1 (0.4) 18.3 6.8
--- ---- ---- ---
Total Other 132.0 41.0 359.8 124.5
----- ---- ----- -----
Special items $206.4 $214.8 $607.8 $611.8
====== ====== ====== ======
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF FIRST QUARTER 2018 PROJECTED REVENUE % CHANGE TO
PROJECTED CONSTANT CURRENCY % CHANGE
(unaudited)
Projected
Three
Months
Ended
March
31,
2018: High Low
---- ---
Revenue
%
change 1.0% (1.0)%
Foreign
exchange
impact (3.0) (3.0)
---- ----
Constant
currency
%
change (2.0)% (4.0)%
===== =====
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF FIRST QUARTER 2018 PROJECTED DILUTED EPS
TO PROJECTED ADJUSTED DILUTED EPS
(unaudited)
Projected Three Months Ended March 31, 2018: High Low
---- ---
Diluted EPS $0.88 $0.73
Inventory step-up and other inventory and 1.27 1.37
manufacturing related charges, intangible asset
amortization, special items and other expense
Taxes on above items(3) and other certain tax (0.24) (0.26)
adjustments
Adjusted Diluted EPS $1.91 $1.84
===== =====
(2) The Company recognized a $272.0
million non-cash goodwill
impairment charge in the fourth
quarter of 2018 related to its
Spine less Asia Pacific reporting
unit during its annual goodwill
impairment testing. The
impairment was driven by
integration issues between the
legacy Zimmer, Biomet and LDR
businesses. In the third quarter
of 2018, the Company recognized a
$32.7 million non-cash goodwill
impairment charge related to its
Office Based Technologies
reporting unit. Operating
performance of this reporting
unit has been lower than expected
due to integration issues,
management turnover and poor
execution of its operating plans.
(3) The tax effect for the U.S.
jurisdiction is calculated based
on an effective rate considering
federal and state taxes, as well
as permanent items where the
items were or are projected to be
incurred. For jurisdictions
outside the U.S., the tax effect
is estimated based upon the
statutory rates where the items
were or are projected to be
incurred.
(4) U.S. tax reform resulted in a net
favorable provisional adjustment
due to the reduction of certain
deferred tax liabilities, which
were partially offset by
provisional tax charges related
to the toll tax provision of U.S.
tax reform.
(5) In 2017, other certain tax
adjustments relate to a favorable
tax rate change in a foreign
jurisdiction and net favorable
adjustments from internal
restructuring transactions. The
2016 adjustment primarily
includes a favorable resolution
of certain tax matters with
taxing authorities offset by
internal restructuring
transactions that provide the
Company access to offshore funds
in a tax efficient manner.
(6) The 2016 period includes negative
effects from finalizing the tax
accounts for the Biomet merger.
Under the applicable U.S. GAAP
rules, these measurement period
adjustments are recognized on a
prospective basis in the period
of change.
(7) In 2017, other certain tax
adjustments relate to a tax
restructuring that lowered the
tax rate on deferred tax
liabilities recorded on
intangible assets recognized in
acquisition-related accounting,
net favorable resolutions of
various tax matters, a favorable
tax rate change in a foreign
jurisdiction and net favorable
adjustments from internal
restructuring transactions. The
2016 adjustment primarily relates
to a favorable adjustment to
certain deferred tax liabilities
recognized as part of
acquisition-related accounting
and favorable resolution of
certain tax matters with taxing
authorities offset by internal
restructuring transactions that
provide the Company access to
offshore funds in a tax efficient
manner.
View original content with multimedia:http://www.prnewswire.com/news-releases/zimmer-biomet-announces-fourth-quarter-and-full-year-2017-results-300590037.html SOURCE Zimmer Biomet Holdings, Inc. |
||
Company Codes: NYSE:ZBH, Swiss:ZBH |
