Biomet (NASDAQ:BMET)
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Biomet, Inc. (NASDAQ:BMET) announced today that its
Board of Directors declared a cash dividend of $0.30 per share,
payable July 21, 2006, to shareholders of record at the close of
business on July 14, 2006. Interim President and Chief Executive
Officer Daniel P. Hann stated, "The declaration of this dividend is in
response to the Company's record financial performance during fiscal
year 2006 and our anticipated results during fiscal year 2007."
During the fourth quarter of fiscal year 2006, net sales increased
7% to $539,892,000. Operating income decreased 5% to $147,601,000 from
$155,734,000 and increased 5%, on an adjusted basis, to $166,501,000
from $158,178,000. Net income decreased 5% to $98,502,000 from
$103,200,000 and increased 8%, as adjusted, to $113,002,000 from
$104,794,000. Diluted earnings per share decreased 2% to $0.40 from
$0.41 and increased 10%, as adjusted, to $0.46 per share from $0.42.
Biomet, Inc. reported record sales and adjusted earnings results
(non-GAAP) today for its fiscal year 2006 and fourth quarter ended May
31, 2006. Adjusted results for the fourth quarter and fiscal year
2006, which are non-GAAP measures, exclude the following one-time
items: $9 million in connection with the separation package payable to
former President and CEO Dane A. Miller, Ph.D.; $5.4 million for
expenses related to the Company's review and reorganization of its EBI
operations; $4.8 million related to the discontinuation of the Acumen
Surgical Navigation product line and the Company's investment in
Z-KAT, Inc.; and $2.6 million for a cross-licensing and settlement
agreement between Biomet Biologics, Inc. and Cytomedix, Inc. Adjusted
results for fiscal year 2005, which are non-GAAP measures, exclude the
impact of inventory step-up related to the March 2004 acquisition of
Merck KGaA's interest in the Biomet Merck joint venture and the June
2004 acquisition of Interpore International, Inc.
Dr. Miller's retirement was announced in a Biomet press release
dated March 27, 2006, and the separation package is detailed in
Biomet's form 8-K filed with the Securities and Exchange Commission on
May 10, 2006. As a result of continued underperformance of the
Company's EBI subsidiary, during the fourth quarter the Company
conducted a management review and reorganization, including management
changes resulting in severance pay agreements and relocation packages.
Biomet discontinued the Acumen product line and is researching
surgical navigation options in order to offer surgeons improved
solutions. The agreement with Cytomedix provides Biomet Biologics with
a worldwide license under the "Knighton" patent.
The one-time items described above negatively impacted fourth
quarter and fiscal year 2006 results in the following manner: $3.8
million charge to cost of goods sold; $15.1 million charge to selling,
general and administrative expenses; and $2.9 million charge to other
income expense. A reconciliation to comparable GAAP measures is
included in this press release.
Net sales increased 10% worldwide, excluding the impact of foreign
currency, which decreased fourth quarter revenues by approximately
$11.7 million. International sales increased 11% on a constant
currency basis, while domestic sales increased 9% during the fourth
quarter. Unless otherwise noted, the following growth rates are quoted
on a constant currency basis.
Reconstructive device sales increased 11% worldwide to
$372,656,000 during the fourth quarter of fiscal year 2006, while
domestic reconstructive device sales increased 13%. Knee sales
increased 21% in the United States during the quarter and increased
15% worldwide. During the fourth quarter, Biomet continued to
experience strong demand for new total knee devices, as well as the
Company's unicompartmental systems.
Hip sales increased 10% worldwide and 9% in the United States
during the fourth quarter. Biomet's broad platform of acetabular
options continued to experience excellent surgeon acceptance during
the quarter, including metal-on-metal, ceramic-on-ceramic, and second
generation highly crosslinked polyethylene components. The Company's
titanium porous coated hip stems also contributed to the strong hip
performance during the quarter.
Extremity sales increased 17% in the United States and 14%
worldwide during the fourth quarter. Dental reconstructive implant
sales increased 16% worldwide during the quarter and 9% in the United
States. Sales of bone cements and accessories decreased 8% in the
United States and decreased 17% worldwide during the fourth quarter.
Fixation sales increased 5% worldwide to $64,168,000 during the
fourth quarter of fiscal year 2006. Fixation sales increased 2% in the
United States during the quarter. Lorenz Surgical's
craniomaxillofacial fixation sales increased 18% worldwide and 14% in
the United States during the fourth quarter. Internal fixation sales
increased 7% worldwide and in the United States during the fourth
quarter. External fixation sales were flat worldwide during the
quarter and decreased 1% in the United States. During the fourth
quarter, electrical stimulation device sales decreased 1% worldwide
and in the United States.
During the fourth quarter of fiscal year 2006, spinal product
sales increased 5% worldwide to $57,697,000 and increased 2% in the
United States. Sales of spinal implants and orthobiologics for the
spine increased 7% worldwide and 2% in the United States during the
fourth quarter, while spinal stimulation sales increased 2% worldwide
and in the United States.
Sales of the Company's "other products" increased 10% worldwide to
$45,371,000 and increased 4% in the United States during the fourth
quarter. Arthroscopy sales increased 16% worldwide during the quarter
and increased 5% in the United States. Sales of softgoods and bracing
products increased 1% in the United States and decreased 2% worldwide
during the fourth quarter.
Mr. Hann concluded, "Although the Company, as a whole,
underperformed our internal expectations during fiscal year 2006,
Biomet's orthopedic reconstructive products and dental reconstructive
implants continued to receive strong market demand. We continue to
implement structural and management changes at EBI and we are
confident that we will experience operational improvements at EBI
throughout fiscal year 2007. Biomet is in the midst of several major
product launches and the Company has an extremely strong product
development pipeline. Additionally, Biomet's management team has been
actively reviewing all operations to ensure the Company is well
positioned for continued, profitable growth throughout the
organization. Consequently, we remain comfortable with analysts' sales
and earnings estimates of $513 million to $530 million and $0.43 to
$0.45 per share for the first quarter of fiscal year 2007; and $2,150
million to $2,220 million and $1.85 to $1.95 per share for fiscal year
2007. This guidance does not incorporate the effect of FAS 123R,
Share-Based Payment, which the Company estimates to be $0.05 to $0.06
per share for fiscal year 2007."
Biomet, Inc. and its subsidiaries design, manufacture and market
products used primarily by musculoskeletal medical specialists in both
surgical and non-surgical therapy. The Company's product portfolio
encompasses reconstructive products, including orthopedic joint
replacement devices, bone cements and accessories, and dental
reconstructive implants; fixation products, including electrical bone
growth stimulators, internal and external orthopedic fixation devices,
craniomaxillofacial implants and bone substitute materials; spinal
products, including spinal stimulation devices, spinal hardware and
orthobiologics; and other products, such as arthroscopy products and
softgoods and bracing products. Headquartered in Warsaw, Indiana,
Biomet and its subsidiaries currently distribute products in more than
100 countries.
For further information contact Greg W. Sasso, Vice President,
Corporate Development and Communications at (574) 372-1528 or Barbara
Goslee, Manager, Corporate Communications at (574) 372-1514.
This press release contains certain statements that are
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, as amended. Although the Company believes that the
assumptions, on which the forward-looking statements contained herein
are based, are reasonable, any of those assumptions could prove to be
inaccurate given the inherent uncertainties as to the occurrence or
non-occurrence of future events. There can be no assurance that the
forward-looking statements contained in this press release will prove
to be accurate. Some of the factors that could cause actual results to
differ from those contained in forward-looking statements made in this
press release include the success of the Company's principal product
lines and reorganization efforts with respect to its EBI operations,
the Company's ability to develop and market new products and
technologies in a timely manner, government regulation, currency
exchange rate fluctuations, reimbursements from third party payors,
litigation, revenue and earnings estimates, and other risk factors as
set forth from time to time in the Company's filings with the SEC. The
inclusion of a forward-looking statement herein should not be regarded
as a representation by the Company that the Company's objectives will
be achieved. The Company undertakes no obligation to publicly update
forward-looking statements, whether as a result of new information,
future events or otherwise.
All of Biomet's financial information may be obtained on our
website at www.biomet.com or you may contact us by e-mail at
investor.relations@biometmail.com.
All trademarks are owned by Biomet, Inc., or one of its
subsidiaries.
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BIOMET, INC.
RESULTS FOR THE QUARTERS AND YEARS ENDED MAY 31, 2006
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
------------------ ---------------------
2006 2005 2006 2005
---- ---- ---- ----
Net Sales $539,892 $503,093 $2,025,739 $1,879,950
Cost of Sales 164,903 135,497 582,070 508,846
Cost of Sales, current period
impact of inventory step-up -- 2,444 -- 24,250
-------- -------- ---------- ----------
Gross Profit 374,989 365,152 1,443,669 1,346,854
S, G, & A 205,656 188,265 750,428 694,254
R & D 21,732 21,153 84,914 79,696
In-process research and
development -- -- -- 26,020
-------- -------- ---------- ----------
Operating Income 147,601 155,734 608,327 546,884
Other Income (Expense), Net 299 659 2,874 2,816
-------- -------- ---------- ----------
Income Before Taxes
And Minority Interest 147,900 156,393 611,201 549,700
Income Taxes 49,398 54,043 205,057 206,508
Income Taxes related to
inventory step-up -- (850) -- (8,424)
-------- -------- ---------- ----------
Net Income 98,502 $103,200 $406,144 $351,616
======== ======== ========== ==========
Earnings per Share
Basic .40 .41 1.64 1.39
Diluted .40 .41 1.63 1.38
Basic Shares Outstanding 245,518 250,566 247,576 252,387
Diluted Shares Outstanding 246,352 251,825 248,430 254,148
U.S. sales $349,508 $320,213 $1,325,113 $1,238,727
Foreign sales 190,384 182,880 700,626 641,223
Reconstructive sales $372,656 $344,147 $1,379,420 $1,254,234
Fixation sales 64,168 61,599 251,360 246,730
Spinal product sales 57,697 55,283 221,964 214,039
Other product sales 45,371 42,064 172,995 164,947
Consolidated Balance Sheets May 31, May 31,
2006 2005
Assets
Cash and Investments $225,471 $177,074
Accounts and notes receivable, net 507,883 479,745
Inventories 534,515 469,791
Other current assets 109,746 108,712
Fixed Assets, net 357,632 322,887
Goodwill 441,398 435,621
Other Assets 91,336 102,747
----------- -----------
Total Assets $2,267,981 $2,096,577
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities 528,274 501,391
Other Liabilities 28,432 31,255
Stockholders' Equity 1,711,275 1,563,931
----------- -----------
Total Liabilities and Stockholders' Equity 2,267,981 $2,096,577
=========== ===========
Management uses non-GAAP financial measures, such as net sales,
excluding the impact of foreign currency, operating income as
adjusted, net income as adjusted, and diluted earning per share as
adjusted. The term "as adjusted", a non-GAAP financial measure, refers
to financial performance measures that exclude the following charges:
(a) the period impact of inventory step-up related to the acquisition
of the interest of Merck KGaA in the Biomet Merck joint venture and
Interpore International, Inc.; (b) in-process research and development
written off as of the closing date related to the acquisition of the
interest of Merck KGaA in the Biomet Merck joint venture and Interpore
International, Inc.; (c) the period impact of the separation package
of the Company's CEO and termination and reorganization expenses
related to the Company's EBI subsidiary; (d) the period expenses
related to the discontinuance of the Acumen Surgical Navigation
Product Line and the investment in Z-KAT, Inc.; (e) the
cross-licensing and settlement agreement with Cytomedix, Inc. and tax
effect of the above items. Inventory stepped-up to its current fair
market value in an acquisition and subsequently sold, results in a
higher cost of goods sold during the periods in which the stepped-up
inventory is sold, thus increasing cost of goods sold and decreasing
gross margins versus historical and future periods in which the
inventory sold represents the actual cost of products manufactured.
In-process research and development written off as of the closing date
of an acquisition is a one time event that is not indicative of future
results. The separation, termination, reorganization, product
termination and licensing expenses incurred this quarter are current
period expenses and are not indicative of future results. The
Company's management believes that the presentation of these measures
provides useful information to investors. These measures may assist
investors in evaluating the Company's operations, period over period.
Management uses these measures internally for evaluation of the
performance of the business, including the allocation of resources and
the evaluation of results relative to team member performance
compensation targets. Investors should consider these non-GAAP
measures only as a supplement to, not as a substitute for or as
superior to, measures of financial performance prepared in accordance
with GAAP.
BIOMET, INC.
Reconciliation of non-GAAP financial information to GAAP
financial information
RESULTS FOR THE QUARTER ENDED MAY 31, 2006 and 2005
(in thousands, except per share data)
2006 2005
---- ----
Percent Percent
of of
Amount Sales Amount Sales
------ ------- ------ -------
Operating income, as reported $147,601 27.3% $155,734 30.9%
Separation, termination and
Reorganization expenses 13,400 2.5 -- --
Discontinuance of product line 2,900 0.5 -- --
Licensing agreement 2,600 0.5 -- --
Inventory step-up -- -- 2,444 0.5
--------- ------- --------- -------
Operating income, as adjusted $166,501 30.8% $158,178 31.4%
========= ======= ========= =======
Net income, as reported $98,502 18.2% $103,200 20.5%
Separation, termination and
Reorganization expenses 14,400 2.6 -- --
Discontinuance of product line 4,800 0.9 -- --
Licensing agreement 2,600 0.5 -- --
Inventory step-up -- -- 2,444 0.5
Tax effect of adjustments (7,300) ( 1.3) (850) ( 0.2)
--------- ------- --------- -------
Net income, as adjusted $113,002 20.9% $104,794 20.8%
========= ======= ========= =======
2006 2005
---- ----
Basic Diluted Basic Diluted
----- ------- ----- -------
Earnings per share, as reported $0.40 $0.40 $0.41 $0.41
Separation, termination and
Reorganization expenses 0.06 0.06 -- --
Discontinuance of product line 0.02 0.02 -- --
Licensing agreement 0.01 0.01 -- --
Inventory step-up -- -- 0.01 0.01
Tax effect of adjustments (0.03) (0.03) -- --
--------- ------- --------- -------
Earnings per share, as adjusted $0.46 $0.46 $0.42 $0.42
BIOMET, INC.
Reconciliation of non-GAAP financial information to GAAP
financial information
RESULTS FOR THE YEARS ENDED MAY 31, 2006 and 2005
(in thousands, except per share data)
2006 2005
---- ----
Percent Percent
of of
Amount Sales Amount Sales
------ ------- ------ -------
Operating income, as reported $608,327 30.0% $546,884 29.1%
Separation, termination and -- --
reorganization expenses 13,400 0.7 -- --
Discontinuance of product line 2,900 0.2 -- --
Licensing agreement 2,600 0.1 -- --
Inventory step-up -- -- 24,250 1.3
In-process research and
development -- -- 26,020 1.4
--------- ------- --------- -------
Operating income, as adjusted $627,227 31.0% $597,154 31.8%
========= ======= ========= =======
Net income, as reported $406,144 20.0% $351,616 18.7%
Separation, termination and -- --
reorganization expenses 14,400 0.7 -- --
Discontinuance of product line 4,800 0.3 -- --
Licensing agreement 2,600 0.1 -- --
Inventory step-up -- -- 24,250 1.3
In-process research and
development -- -- 26,020 1.4
Tax effect of adjustments (7,300) ( 0.3) (8,424) ( 0.5)
--------- ------- --------- -------
Net income, as adjusted $420,644 20.8% $393,462 20.9%
========= ======= ========= =======
2006 2005
---- ----
Basic Diluted Basic Diluted
----- ------- ----- -------
Earnings per share, as reported $1.64 $1.63 $1.39 $1.38
Separation, termination and
reorganization expenses 0.06 0.06 -- --
Discontinuance of product line 0.02 0.02 -- --
Licensing agreement 0.01 0.01 -- --
Inventory step-up -- -- 0.10 0.10
In-process research and
development -- -- 0.10 0.10
Tax effect of adjustments (0.03) (0.03) (0.03) (0.03)
--------- ------- --------- -------
Earnings per share, as adjusted $1.70 $1.69 $1.56 $1.55
Current year sales growth as reported and in local currencies is as
follows:
Sales FX Sales Sales FX Sales
Growth Impact Growth in Growth Impact Growth in
As Local As Local
Reported Currencies Reported Currencies
Three Months Twelve Months
------------ -------------
U.S. sales 9% 0% 9% 7% 0% 7%
Foreign sales 4 7 11 9 3 12
Total sales 7 3 10 8 1 9
Reconstructive
sales 8% 3% 11% 10% 1% 11%
Fixation sales 4 1 5 2 0 2
Spinal product
sales 4 1 5 4 0 4
Other product
sales 8 2 10 5 1 6
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