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. -0- *T
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 *T
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