Zimmer Holdings, Inc. today reported financial results for the fourth quarter and year ended December 31, 2007. For the fourth quarter, the Company announced net sales of $1.07 billion, an increase over the prior year period of 15% reported and 10% constant currency. Diluted earnings per share for the quarter were $1.12 reported, an increase of 10%, and were $1.18 adjusted, an increase of 16%. Full year net sales were $3.9 billion, and diluted earnings per share were $3.26 reported and $4.05 adjusted, an increase of 18% adjusted over the prior year.
“We are pleased with our overall results for the fourth quarter, especially the strength of our sales across our geographic segments,” said David Dvorak, Zimmer Holdings President and CEO. “Our business units around the world responded to strong underlying growth in procedures during the quarter.”
During the quarter, the Company announced FDA approval of the Zimmer(R) NexGen(R) LPS-Flex Mobile Knee, only the second mobile bearing knee system to be approved for sale in the United States. The Company says that it has begun limited release of the LPS-Flex Mobile Knee and expects general availability in the U.S. in mid-2008. In addition, the Company completed its acquisition of ORTHOsoft Inc., a leader in computer surgical navigation in orthopaedics.
In the fourth quarter, the Company purchased 1.62 million common shares for a total of $116 million under its stock repurchase program, leaving authority to make up to $621.1 million in additional purchases through December 31, 2008. For the full year 2007, the Company purchased 7.2 million shares for a total of $576.3 million.
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.
Net earnings for the fourth quarter were $264 million on a reported basis and $276 million on an adjusted basis, an increase of 13% adjusted over the prior year period. Net earnings for the full year 2007 were $773 million on a reported basis and $962 million on an adjusted basis, an increase of 14% adjusted over the prior year.
Guidance
Full year 2008 net sales are expected to be approximately 10 to 11% over 2007, including an approximate favorable foreign currency impact of 2%. Adjusted diluted earnings per share for the full year 2008 are expected to be $4.20 to $4.25, reflecting an increase of approximately 4 to 5% over prior year. The guidance reflects the expected costs for a number of ongoing infrastructure and operating initiatives, including upgrades to the Company’s U.S. sales and distribution capabilities, such as inventory tracking and instrumentation; enhancements to information technology and quality systems; increased investments in sales force and other marketing programs in the Spine, Dental and Trauma business units; and start-up costs for an expansion of worldwide manufacturing and distribution operations.
“We believe that investing today in the infrastructure needed to serve the health care market of the future will generate attractive returns in the years to come,” said Dvorak.
Conference Call
The Company will conduct its year-end 2007 investor conference call today, January 29, 2008, 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) 815-6162. International callers should dial (706) 634-9502. A digital recording will be available two hours after the completion of the conference call from January 29, 2008 to February 12, 2008. To access the recording, US/Canada callers should dial (800) 642-1687, or for International callers, dial (706) 645-9291, and enter the Conference ID, 30298922. A copy of this press release and other financial and statistical information about the periods to be presented in the conference call will be accessible through the Zimmer website at http://investor.zimmer.com.
About the Company
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer is a worldwide leader in designing, developing, manufacturing and marketing orthopaedic reconstructive, spinal and trauma devices, dental implants, and related orthopaedic surgical products. Zimmer has operations in more than 25 countries around the world and sells products in more than 100 countries. Zimmer’s 2007 sales were approximately $3.9 billion. The Company is supported by the efforts of more than 7,500 employees worldwide.
For more information about Zimmer, visit www.zimmer.com
Note on Non-GAAP Financial Measures
As used in this press release, the term “adjusted” refers to operating performance measures that exclude expenses incurred in connection with the third quarter 2007 settlement with the U.S. Department of Justice and acquisition, integration and other expenses. The term “constant currency” refers to any financial measure that excludes the effect of changes in foreign currency exchange rates. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measure are included in this press release.
Zimmer Safe Harbor Statement
This press release contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 based on current expectations, estimates, forecasts and projections about the orthopaedics industry, management’s beliefs and assumptions made by management. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to, our ability to successfully integrate acquired businesses, our compliance with the Deferred Prosecution Agreement through March 2009 and the Corporate Integrity Agreement through 2012, the impact of our enhanced healthcare compliance global initiatives and business practices on our relationships with customers and consultants, our market share and our overall financial performance, the outcome of the Department of Justice Antitrust Division investigation announced in June 2006, the outcome of the informal investigation by the U.S. Securities and Exchange Commission into Foreign Corrupt Practices Act matters announced in October 2007, price and product competition, rapid technological development, demographic changes, dependence on new product development, the mix of our products and services, supply and prices of raw materials and products, customer demand for our products and services, control of costs and expenses, our ability to form and implement alliances, international growth, governmental laws and regulations affecting our U.S. and international businesses, including tax obligations and risks, product liability and intellectual property litigation losses, reimbursement levels from third-party payors, general industry and market conditions and growth rates and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. 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.
CONTACT: Media: Brad Bishop, +1-574-372-4291, bradley.bishop@zimmer.com,
or Investors: Sean F. O’Hara, +1-574-371-8032, sean.f.ohara@zimmer.com, or
James T. Crines, +1-574-372-4264, james.crines@zimmer.com, all of Zimmer
Holdings, Inc.
Web site: http://www.zimmer.com/
http://investor.zimmer.com/
