BMET Biomet (MM)

Biomet, Inc. (NASDAQ:BMET) announced today that its Board of Directors declared a cash dividend of $0.25 per share, payable July 22, 2005, to shareholders of record at the close of business on July 15, 2005. The Board also authorized the repurchase of 2.5 million shares of Biomet's outstanding Common Shares to be automatically purchased daily in equal increments over the next twelve months, irrespective of market conditions. This is in addition to the March 2005 authorization to repurchase up to an additional $100 million of the Company's outstanding Common Shares in open market or privately negotiated transactions, of which approximately $84 million is currently available. Since December 2001, the Company has repurchased approximately 26.4 million of its Common Shares, for an aggregate amount of $841.6 million. President and Chief Executive Officer Dane A. Miller, Ph.D., stated, "The declaration of this dividend is in response to the Company's record financial performance during fiscal year 2005, and our anticipated results during fiscal year 2006. The expansion of our stock repurchase program is a reflection of the ongoing poor investment return environment and the Company's continued positive net cash flow from operations which amounted to $411 million during fiscal year 2005. During the fourth quarter of fiscal year 2005, Biomet's reconstructive devices continued to expand at market-leading growth rates. However, EBI's fixation, spinal stimulation and softgoods and bracing products continued to underperform management's expectations. As previously announced, Bart Doedens, M.D., former President of Biomet's 3i subsidiary, has been promoted to President of EBI. We are confident that Dr. Doedens will provide the leadership capabilities necessary to position EBI as a leader in the spinal and fixation market places." During the fourth quarter of fiscal year 2005, net sales increased 13% to $503,093,000, while operating income increased 33% to $155,734,000 and increased 8%, on an adjusted basis, to $158,178,000. Net income increased 29% to $103,200,000 and 10%, as adjusted, to $104,794,000, while diluted earnings per share increased 32% to $0.41 and 14%, as adjusted, to $0.42 per share. The Company's reported results reflect the acquisition of Merck KGaA's interest in the Biomet Merck joint venture on March 19, 2004, as well as the acquisition of Interpore International, Inc. on June 18, 2004. Adjusted results for 2005 and 2004, which are non-GAAP measures, exclude acquisition costs, including the amortization of inventory step-up and write-off of in-process research and development related to these acquisitions. A reconciliation to comparable GAAP measures is included in this press release. Adjusted results for 2004 also exclude the $25 million charge to selling, general and administrative expense reported in the fourth quarter of last year to revise the Company's estimates of future collections of EBI's insurance receivables. Excluding the impact of foreign currency, which increased fourth quarter sales by $8.8 million, net sales increased 11%. United States and international sales, excluding the effects of foreign currency, increased 10% and 12%, respectively, during the fourth quarter. Reconstructive device sales increased 16% worldwide during the fourth quarter of fiscal year 2005 to $344,147,000. Worldwide reconstructive device sales increased 13% during the quarter, on a constant currency basis. During the fourth quarter, knee sales increased 20% worldwide and 22% in the United States. Knee sales increased 18% worldwide, excluding the effects of foreign currency. During the fourth quarter, knee sales growth was driven by the continued rollout of new products. Hip sales increased 10% worldwide during the fourth quarter and 7% in the United States. Worldwide hip sales increased 7%, constant currency. Biomet's Metal-on-Metal Systems continue to gain increased market acceptance while the Company's porous-coated hip stems continued to experience excellent growth during the fourth quarter. Extremity sales increased 11% worldwide and in the United States during the fourth quarter. Excluding the impact of foreign currency, extremity sales increased 9% worldwide during the quarter. Dental reconstructive implant sales increased 15% worldwide during the fourth quarter and 10% in the United States. Worldwide dental reconstructive implant sales increased 13%, constant currency. Sales of bone cements and accessories increased 36% in the United States during the fourth quarter and 21% worldwide. On a constant currency basis, worldwide sales of bone cements and accessories increased 17%. During the fourth quarter of fiscal year 2005, worldwide fixation sales decreased 4% to $61,599,000 and decreased 5% worldwide, excluding the effects of foreign currency. Lorenz Surgical's craniomaxillofacial fixation sales increased 1% worldwide during the fourth quarter and decreased 7% in the United States. Worldwide craniomaxillofacial fixation sales were flat worldwide, on a constant currency basis. Electrical stimulation product sales decreased 7% worldwide and in the United States during the fourth quarter. Internal fixation sales increased 2% worldwide during the quarter and decreased 12% in the United States. Excluding foreign currency effects, worldwide internal fixation sales were flat. External fixation sales decreased 12% worldwide during the fourth quarter and decreased 16% in the United States. Worldwide external fixation sales decreased 12%, constant currency. Spinal product sales increased 27% to $55,283,000 during the fourth quarter of fiscal year 2005 and increased 21% in the United States. Excluding the impact of foreign currency, spinal product sales increased 26% worldwide. Domestic sales of spinal implants and orthobiologics for the spine increased 102% during the fourth quarter, while domestic spinal stimulation sales decreased 15%. Sales of Biomet's "other products" decreased 1% worldwide to $42,064,000 and decreased 2% in the United States during the fourth quarter of fiscal year 2005. Worldwide sales of "other products" decreased 2%, on a constant currency basis. During the fourth quarter, arthroscopy sales increased 15% in the United States and increased 13% worldwide. Arthroscopy sales increased 12% worldwide, constant currency. Softgoods and bracing sales decreased 8% worldwide during the fourth quarter and decreased 9% in the United States. Excluding foreign currency effects, softgoods and bracing sales decreased 8% worldwide. Dr. Miller concluded, "We are optimistic about our new product introductions scheduled throughout fiscal year 2006. Consequently, we remain comfortable with the range of analysts' sales and earnings estimates of $482 million to $492 million and $0.39 to $0.41 per share for the first quarter of fiscal year 2006; and $2,047 million to $2,109 million and $1.74 to $1.84 per share for fiscal year 2006." 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. -0- *T BIOMET, INC. RESULTS FOR THE QUARTERS AND YEARS ENDED MAY 31, 2005 (in thousands, except per share data) Three Months Ended Twelve Months Ended ----------------------- ----------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Net Sales $503,093 $447,188 $1,879,950 $1,615,253 Cost of Sales 135,497 128,652 508,846 459,052 Cost of Sales, current period impact of inventory step-up 2,444 2,450 24,250 2,450 ----------- ----------- ----------- ----------- Gross Profit 365,152 316,086 1,346,854 1,153,751 S, G, & A 188,265 180,461 694,254 595,234 R & D 21,153 17,186 79,696 63,636 In-process research and development -- 1,250 26,020 1,250 ----------- ----------- ----------- ----------- Operating Income 155,734 117,189 546,884 493,631 Other Income (Expense), Net 659 4,905 2,816 15,165 ----------- ----------- ----------- ----------- Income Before Taxes And Minority Interest 156,393 122,094 549,700 508,796 Income Taxes 54,043 42,292 206,508 176,951 Income Taxes related to inventory step-up (850) (853) (8,424) (853) ----------- ----------- ----------- ----------- Income Before Minority Interest 103,200 80,655 351,616 332,698 Minority Interest -- 798 -- 7,071 ----------- ----------- ----------- ----------- Net Income $103,200 $79,857 $351,616 $325,627 =========== =========== =========== =========== Earnings per Share Basic .41 .31 1.39 1.27 Diluted .41 .31 1.38 1.27 Basic Shares Outstanding 250,566 254,308 252,387 255,512 Diluted Shares Outstanding 251,825 256,185 254,148 257,204 U.S. sales $320,213 $291,215 $1,238,727 $1,079,532 Foreign sales 182,880 155,973 641,223 535,721 Reconstructive sales $344,147 $297,139 $1,254,234 $1,052,865 Fixation sales 61,599 63,932 246,730 248,821 Spinal product sales 55,283 43,660 214,039 159,927 Other product sales 42,064 42,457 164,947 153,640 Consolidated Balance Sheets May 31, 2005 May 31, 2004 Assets Cash and Investments $177,075 $235,612 Accounts and notes receivable, net 479,745 465,949 Inventories 469,791 389,391 Other current assets 111,177 91,256 Fixed Assets, net 322,887 268,826 Goodwill 435,621 262,068 Other Assets 102,746 69,803 ------------ ------------ Total Assets $2,099,042 $1,782,905 ============ ============ Liabilities and Stockholders' Equity Current Liabilities 503,793 $308,610 Other Liabilities 31,255 26,085 Stockholders' Equity 1,563,994 1,448,210 ------------ ------------ Total Liabilities and Stockholders' Equity $2,099,042 $1,782,905 ============ ============ *T 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 current 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.; and tax effect of item (a) above. 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 overstating cost of goods sold and understating 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 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. -0- *T BIOMET, INC. Reconciliation of non-GAAP financial information to GAAP financial information RESULTS FOR THE QUARTER AND YEAR ENDED MAY 31, 2005 (in thousands, except per share data) Three Months Twelve Months ------------------- ------------------- Percent Percent Amount of Sales Amount of Sales --------- --------- --------- --------- Operating income, as reported $155,734 30.9% $546,884 29.1% Inventory step-up 2,444 0.5 24,250 1.3 In-process research and development -- -- 26,020 1.4 --------- --------- --------- --------- Operating income, as adjusted $158,178 31.4% $597,154 31.8% ========= ========= ========= ========= Net income, as reported $103,200 20.5% $351,616 18.7% Inventory step-up 2,444 0.5 24,250 1.3 In-process research and development -- -- 26,020 1.4 Tax effect of inventory step-up (850) ( 0.2) (8,424) ( 0.5) --------- --------- --------- --------- Net income, as adjusted $104,794 20.8% $393,462 20.9% ========= ========= ========= ========= Three Months Twelve Months ------------------- ------------------- Basic Diluted Basic Diluted --------- --------- --------- --------- Earnings per share, as reported $0.41 $0.41 $1.39 $1.38 Inventory step-up 0.01 .01 .10 .10 In-process research and development -- -- .10 .10 Tax effect of inventory step-up -- -- (0.03) (0.03) --------- --------- --------- --------- Earnings per share, as adjusted $0.42 $0.42 $1.56 $1.55 Sales Sales Sales Sales Growth Growth in Growth Growth in As FX Local As FX Local Reported Impact Currencies Reported Impact Currencies Three Months Twelve Months ---------------------------- ---------------------------- U.S. sales 10% --% 10% 15% --% 15% Foreign sales 17 5 12 20 7 13 Total sales 13 2 11 16 2 14 Reconstructive sales 16% 3% 13% 19% 3% 16% Fixation sales (4) 1 (5) (1) 1 (2) Spinal product sales 27 1 26 34 1 33 Other product sales (1) 1 (2) 7 1 6 *T