Biomet Announces Fourth Quarter and Fiscal Year-End Results, and Cash Dividend.WARSAW Warsaw (wôr`sô), Pol. Warszawa, city (1993 est. pop. 1,655,700), capital of Poland and of Mazowieckie prov., central Poland, on both banks of the Vistula River. , Ind IND Investigational new drug Therapeutics A status assigned by the FDA to a drug before allowing its use in humans, exempting it from premarketing approval requirements so that experimental clinical trials may be conducted. See Phase 1.2, 3 studies, Sponsorship. . -- Biomet Biomet, Inc. NASDAQ: BMET is a medical device manufacturer located in Warsaw, Indiana. The company specializes in reconstructive products for hips, knees and shoulders, fixation devices, orthopedic support devices, dental implants and operating room supplies. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BMET BMET Biomedical Engineering Technology BMet Bachelor of Metallurgy BMET Bio-Medical Equipment Repair Technician ) announced today that its Board of Directors declared a cash dividend of $0.30 per share, payable July July: see month. 21, 2006, to shareholders of record at the close of business on July 14, 2006. Interim President and Chief Executive Officer Daniel Daniel, book of the Bible Daniel, book of the Bible. It combines "court" tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C. P. Hann Hann may refer to:
During the fourth quarter of fiscal year 2006, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 7% to $539,892,000. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. 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 diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of 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 one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. items: $9 million in connection with the separation package payable to former President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Dane Dane n. 1. A native or inhabitant of Denmark. 2. A person of Danish ancestry. [Middle English Dan, from Old Norse Danr. A. Miller, Ph.D.; $5.4 million for expenses related to the Company's review and reorganization of its EBI See electron beam imaging. operations; $4.8 million related to the discontinuation dis·con·tin·u·a·tion n. A cessation; a discontinuance. Noun 1. discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) discontinuance of the Acumen Surgical Navigation product line and the Company's investment in Z-KAT, Inc.; and $2.6 million for a cross-licensing In patent law, a cross-licensing agreement is an agreement according to which two parties grant a license to each other for the exploitation of the subject-matter claimed in patents. and settlement agreement between Biomet Biologics Biologics include a wide range of medicinal products such as vaccines, blood and blood components, allergenics, somatic cells, gene therapy, tissues, and recombinant therapeutic proteins. , Inc. and Cytomedix, Inc. Adjusted results for fiscal year 2005, which are non-GAAP measures, exclude the impact of inventory step-up step-up A scheduled increase in the exercise or conversion price at which a warrant, an option, or a convertible security may be used to acquire shares of common stock. related to the March 2004 acquisition of Merck Merck may refer to:
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 Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 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 Severance Pay Compensation that an employer gives to someone who is about to lose their job. Notes: Severance pay is not always paid to employees. It depends on the situation in which the employee is losing their job and whether legislation requires severance to be paid. agreements and relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. packages. Biomet discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: 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 Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. are quoted on a constant currency basis. Reconstructive re·con·struc·tive adj. 1. Relating to or characterized by reconstruction. 2. Serving to rebuild, restore, or correct the appearance and function of defective, damaged, or misshaped body structures or parts: 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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. 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 acetabular /ac·e·tab·u·lar/ (as?e-tab´u-lar) pertaining to the acetabulum. acetabular pertaining to the acetabulum. acetabular dysplasia see hip dysplasia. options continued to experience excellent surgeon acceptance during the quarter, including metal-on-metal, ceramic-on-ceramic, and second generation highly crosslinked polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n components. The Company's titanium titanium (tītā`nēəm, tĭ–) [from Titan], metallic chemical element; symbol Ti; at. no. 22; at. wt. 47.88; m.p. 1,675°C;; b.p. 3,260°C;; sp. gr. 4.54 at 20°C;; valence +2, +3, or +4. porous porous /por·ous/ (por´us) penetrated by pores and open spaces. po·rous adj. 1. Full of or having pores. 2. Admitting the passage of gas or liquid through pores. coated hip stems also contributed to the strong hip performance during the quarter. Extremity extremity /ex·trem·i·ty/ (eks-trem´i-te) 1. the distal or terminal portion of elongated or pointed structures. 2. limb. ex·trem·i·ty n. 1. sales increased 17% in the United States and 14% worldwide during the fourth quarter. Dental reconstructive implant implant /im·plant/ (im-plant´) to insert or to graft (tissue, or inert or radioactive material) into intact tissues or a body cavity. 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 fixation: see psychoanalysis. 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 internal fixation n. The stabilization of fractured bony parts by direct fixation to one another with surgical wires, screws, pins, or plates. sales increased 7% worldwide and in the United States during the fourth quarter. External fixation external fixation n. The fixation of a fractured bone by a splint or plastic dressing. external fixation Orthopedics Open reduction, stabilization and use of external fixators to manage fracture bone fragments 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 spinal /spi·nal/ (spi´n'l) 1. pertaining to a spine or to the vertebral column. 2. pertaining to the spinal cord's functioning independently from the brain. spi·nal adj. 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 Arthroscopy Definition Arthroscopy is the examination of a joint, specifically, the inside structures. The procedure is performed by inserting a specifically designed illuminated device into the joint through a small incision. sales increased 16% worldwide during the quarter and increased 5% in the United States. Sales of softgoods and bracing bracing, n a resistance to the horizontal components of masticatory force. 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 orthopedic /or·tho·pe·dic/ (-pe´dik) pertaining to the correction of deformities of the musculoskeletal system; pertaining to orthopedics. 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 Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost 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 musculoskeletal /mus·cu·lo·skel·e·tal/ (-skel´e-t'l) pertaining to or comprising the skeleton and muscles. mus·cu·lo·skel·e·tal adj. Relating to or involving the muscles and the skeleton. 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 Warsaw is a city in, and the county seat of, Kosciusko County, Indiana, United StatesGR6. The population was 12,415, as of the 2000 census. Cradled between Winona Lake, Pike Lake and Center Lake, Warsaw is nicknamed "Lake City , 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 Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. at (574) 372-1514. This press release contains certain statements that are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . 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 An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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.
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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