Biomet Announces Record Second Quarter and First Half Results.

Business & Health/Medical Editors

WARSAW, Ind.--(BW HealthWire)--Dec. 13, 2000

Biomet (Nasdaq:BMET) announced today record second quarter results with reported net income increasing 34% to $51,798,000 and earnings per share increasing 32% to $0.29 per share.

Biomet announced that quarterly net income increased 16% to $51,798,000, compared with adjusted net income of $44,486,000 in the prior year's second quarter. Diluted earnings per share for the period ended November 30, 2000 increased 16% to $0.29 compared with adjusted earnings per share of $0.25 in the same period a year ago. The adjusted financial amounts above exclude the pre-tax charge of $9 million ($5.7 million net of taxes) which was recorded during the second quarter of fiscal year 2000 as a result of the final resolution of outstanding litigation matters. Led by strong sales growth in total knee reconstructive products, dental reconstructive implants, fixation products, spinal implants, arthroscopy products and softgoods products, net sales increased 14.4% during the second quarter of fiscal year 2001, excluding the impact of foreign currency and discontinued products, which reduced second quarter sales by $11 million and $2.4 million, respectively. United States and international sales, excluding the effects of foreign currency and discontinued products, increased 17% and 9%, respectively. Additionally, foreign currency reduced second quarter operating income by approximately $2 million. The discontinued product line, which did not meaningfully contribute to the Company's operating income, is associated with Biomet's 3i division and its June 1, 2000 termination of a distribution agreement with W. L. Gore & Associates. As previously announced, the product line represented regenerative and non-regenerative membranes utilized in dental reconstructive procedures. 3i is in the process of exploring additional distribution arrangements and internal development opportunities with respect to regenerative and non-regenerative membranes. Dane A. Miller, Ph.D., Biomet's president and Chief Executive Officer noted, "Biomet's sales and profit performance continues to be led by balanced growth throughout the Company's multiple strategic business units."

Unless otherwise noted, all of the following percentages are quoted on a constant-currency basis and adjusted for discontinued products as previously discussed.

Worldwide sales of Biomet's reconstructive devices increased 10% during the second quarter of fiscal year 2001 to $145,801,000. Reconstructive devices were led by total knee sales which increased over 12% in the United States and approximately 11% worldwide during the second quarter. The Company's market-leading knee performance continues to be driven by the Repecci II Unicondylar Knee System which is experiencing excellent market acceptance in the United States, and the Ascent Total Knee System which has now been introduced to the entire salesforce in the United States. The Ascent Revision Knee System has recently been launched to approximately 20% of the domestic salesforce. Additionally, the Finn Salvage/Oncology Knee System, which is utilized during difficult revision cases and in tumor/oncology cases, experienced increased market acceptance.

Total hip sales in the United States increased approximately 5% during the second quarter of fiscal year 2001 and approximately 4% on a worldwide basis. Biomet's M2a Taper Metal-on-Metal Articulation System, which received FDA clearance in May of this year, has been released to the entire domestic salesforce and the Company continues to experience increased market acceptance with this unique articulation system. Additionally, the M2a RingLoc Articulation System, which is a combination of Biomet's metal-on-metal bearing and the Company's RingLoc acetabular series, received clearance from the FDA in August. Biomet is in the process of building inventory and will begin to introduce the M2a RingLoc Articulation System in January 2001. Furthermore, Biomet will launch the Protrusio Par 5 which is a modular protrusio cage that accepts a modular RingLoc liner. The Par 5 System will be utilized in difficult primary hip reconstructive situations and in unique revision clinical indications.

Dental reconstructive implants, excluding discontinued products, increased 16% during the second quarter of fiscal year 2001. International sales of dental reconstructive implants increased 22%, while domestic sales increased approximately 11% led by the Osseotite dental reconstructive implant system. Bone cements and accessories increased 38% during the second quarter of fiscal year 2001. The domestic introduction of Palacos bone cement and the Optivac Preparation System which began June 1, 2000 continues to benefit bone cement and accessory sales in the United States.

Fixation sales increased 14% to $48,224,000 during the second quarter of fiscal year 2001. Fixation sales were led by sales of electrical stimulation systems which include both the EBI Model 2001 Bone Healing System and Biolectron's OrthoPak System, which increased 22% during the recently completed quarter. As previously announced, the Company acquired Biolectron on September 25, 2000, and the second quarter results include two months of Biolectron's operations. Biolectron's sales are principally included in the fixation and spinal product categories. External fixation sales increased 6% in the United States and approximately 3% worldwide, while craniomaxillofacial sales increased 14% worldwide and approximately 12% in the United States led by the recent introduction of the Mimix bone substitute material. Internal fixation sales increased 2% worldwide and were essentially flat in the United States.

Spinal sales increased 70% to $21,692,000 during the second quarter. Spinal sales in the United States increased 76%, with spinal implant sales increasing 58% and spinal stimulation sales increasing 83%. Spinal implant sales are benefiting from EBI's expanded salesforce and new products such as the Omega 21 Spinal Fixation System and the VueLok Cervical Fixation System. Spinal stimulation sales include EBI's SpF Spinal Fusion Stimulation System and Biolectron's SpinalPak Spinal Stimulation System. EBI's sales representatives now have spinal fusion stimulation technology for use in either inpatient or outpatient settings.

Sales of Biomet's "other products" increased 13% during the second quarter of fiscal year 2001 to $27,742,000. Other product sales in the United States increased approximately 15%, while international sales grew 8%. Softgoods products rose 23% worldwide and 28% in the United States during the recently completed quarter principally led by EBI's Support-On-Site (SOS) stock and bill program. Arthroscopy sales increased 23% in the United States and 10% worldwide during the recently completed quarter as a result of Arthrotek's procedure-specific and LactoSorb resorbable arthroscopic products.

Biomet, Inc. and its subsidiaries design, manufacture and market products used primarily by musculoskeletal medical specialists in both surgical and non-surgical therapy, including reconstructive and fixation devices, electrical bone growth stimulators, orthopedic support devices, operating room supplies, general surgical instruments, arthroscopy products, spinal implants, bone cements, bone substitutes, craniomaxillofacial implants and dental reconstructive implants and associated instrumentation. 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 [phone] or Barbara Goslee, Manager, Corporate Communications at [phone].

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 [e-mail].

                   BIOMET, INC. -- QUARTERLY RESULTS

                   FOR THE PERIODS ENDED NOVEMBER 30
                 (in thousands, except per share data)

                         Three Months Ended
                   2000                       1999
                 --------   -----------------------------------------
                               Before
                            Non-Recurring  Non-Recurring
                               Charges        Charges     As Reported

Net Sales        $243,459     $224,747                     $224,747
Cost of Sales      70,125       68,398                       68,398
                 --------     --------                     --------
Gross Profit      173,334      156,349                      156,349

S, G, & A          87,180       78,193         9,000         87,193
R & D              10,295        9,148                        9,148
                 --------     --------      --------       --------
Operating Income   75,859       69,008         9,000         60,008

Other Income, Net   4,711        4,410                        4,410
                 --------     --------                     --------
Income Before
 Taxes And
 Minority Interest 80,570       73,418         9,000         64,418
Income Taxes       27,562       27,087         3,300         23,787
                 --------     --------      --------       --------
Income Before
 Minority Interest 53,008       46,331         5,700         40,631
Minority Interest   1,210        1,845                        1,845
                 --------     --------      --------       --------
Net Income         51,798       44,486         5,700         38,786

Earnings per Share:
Basic                 .22          .29                          .25
Diluted               .29          .25                          .22

Basic Shares      178,486
Diluted Shares    180,472

U.S. sales       $173,778                                  $149,926
Foreign sales      69,681                                    74,821

Reconstructive
 sales           $145,801                                  $142,832
Fixation sales     48,224                                    43,329
Spinal products    21,692                                    12,951
Other product
 sales             27,742                                    25,635

                         Six Months Ended
                   2000                       1999
                 --------   -----------------------------------------
                               Before
                            Non-Recurring  Non-Recurring
                               Charges        Charges     As Reported

Net Sales         $473,716    $437,456                     $437,456
Cost of Sales      137,416     132,864                      132,864
                 --------     --------                     --------
Gross Profit       336,300     304,592                      304,592

S, G, & A          170,114     153,014         9,000        162,014
R & D               20,159      18,575                       18,575
                 --------     --------      --------       --------
Operating Income   146,027     133,003         9,000        124,003

Other Income, Net   10,181       7,028                        7,028
                 --------     --------                     --------
Income Before
 Taxes And
 Minority Interest 156,208     140,031         9,000        131,031
Income Taxes        53,512      51,112         3,300         47,812
                 --------     --------      --------       --------
Income Before
 Minority
 Interest          102,696      88,919         5,700         83,219
Minority Interest    2,471       3,261                        3,261
                 --------     --------      --------       --------
Net Income         100,225      85,658         5,700         79,958

Earnings per Share:
Basic                  .56         .49                          .46
Diluted                .56         .48                          .45

Basic Shares       178,256
Diluted Shares     180,086

U.S. sales        $331,392                                 $293,116
Foreign sales      142,324                                  144,340

Reconstructive
 sales            $287,893                                 $275,910
Fixation sales      94,755                                   85,363
Spinal products     35,801                                   25,119
Other product
 sales              55,267                                   51,064